Nobody escapes

contrasts modified

Steve and his squeeze sold their condo in the Vancouver exburb of Port Moody a year ago, to get closer to work and, he says, “to escape the housing market mania that seems to have gripped this city for the past number of years.”

But there is no escape. On Thursday afternoon S&S were magically, irresistibly, hornily drawn to a preview of a new condo development which actually previews tomorrow. The project is three years (at least) away from being occupied, and will sit on the muddy banks of the Fraser in New West, where it has a special view of industrial barges floating by. For $230,000 you can buy a micro-condo suitable for storing luggage and for a hundred more, a replica Lilliputian one-bedroom.

“Apparently us 30-somethings have suddenly fallen in love with micro living, or so I’m told, and we just can’t get enough of em.” Says Steve. “Forgive me if I haven’t fallen in love yet..”

Pity. Everybody else has. And ‘affordable’ 300-foot condos are now coming to market in all of the exotic places, like sensuous Surrey. Anyway, here is what the kids saw when they opened the door to the Riversky sales office:

CONDO MADNESS modified

“We’re a young couple in our early 30’s, currently renting and have $500k split amongst investments and the bank. At some point we would like to plant our feet down somewhere.. But what we witnessed today leaves us confused and frustrated. We both simply refuse to enter into this housing market at this point.  What do we do?”

What a web we have woven here in this spidery land.

While panicked families are trying to sell in Calgary and Edmonton, with prices under pressure and buyers sitting on their hands, there are panicked purchasers in the burbs of YVR. It’s pretty much assured that when the Riversky order-takers start collecting cheques on Saturday, the project will sell out.

This juxtaposition is looking historic. Somebody has it wrong, when two big groups of people believe the opposite. In Alberta the oil shock has turned into an employment shock, as that high-flying province comes in for a hard landing. In Van, and to a lesser extent the GTA, it’s an alternative reality. Hard times elsewhere mean party time here, thanks to the Bank of Canada and its weeny, but highly symbolic, rate cut.

Well. Back to Steve. Hard to walk into that room and not be swept up into a steamy cauldron of competition – just as the condo marketing guys had hoped. Makes you question everything, when all around you are amped to buy.

So, is this a buy-now-or-buy-never moment in New Westminster? Or Mississauga? Did the central bank ignite something that will jack prices to a new plateau, making fools of those who wait?

Beats me. This is merely a blog about dogs and ETFs, with unfortunate sexual undercurrents. But this much appears clear: the mini-condo snorflers have it very wrong. Steve, dude. Get out.

Because why?

It’s not just an Alberta thing. Low commodity prices and a plunge in oil strikes at the very heart of the Canadian economy. Even before this, things were wobbly. We’re seriously lagging the US in job creation and overall growth. Households here are more indebted, more heavily taxed and are surrendering (on average) half their incomes just to afford a house. It’s unsustainable when there’s virtually no wage growth to support borrowing – which increases weekly. Oil is not the bullet. It’s the trigger.

This week the largest private mortgage insurer said it’s worried. Genworth is raising its target loss ratio by a whopping 50%, on expectations of more unemployment and lower house prices in Alberta. By the way, the company’s exposure there is huge.

TD Bank says this week house prices will fall by 10% in Calgary, Edmonton and St. John’s on the rock. “A significant softening in job markets will set the stage for a second major housing correction in Calgary and Edmonton since 2008.”

The Alberta government, is staring into a $7 billion hole where plump energy revenues used to be. Soon the province will announce a massive 9% across-the-board spending cut resulting in civil service layoffs, facility closures and reduced services. “We all need to be living in the real world and understand the consequences of what’s going on around us,” whimpered the premier. “We will all need to do a lot more with a lot less.”

Meanwhile, out in the world, Britain is bracing for the inflation rate to go below zero. The central bank says if it encounters “a vicious cycle of falling prices” that it will cut its interest rate. Like in Canada. In Sweden yesterday they pushed rates to below zero and brought in a massive bond-buying stimulus program. The European bank did the same two weeks ago, pulling out all the stops to fight the forces of deflation.

Steve reads this blog. He knows the facts. Like most producer nations, Canada’s caught in the web of wilting prices and sticky expectations. Those people immediately impacted, understand this perfectly. Those who get their news from Twitter and ride Vespas without testicles, do not.

Nobody escapes this, Stevo. Stay strong and free.

267 comments ↓

#1 Who's on Foist? on 02.12.15 at 8:25 pm

Yahtzee!

#2 ILoveCharts on 02.12.15 at 8:29 pm

Early 30s with $500k. Seems good. Is that on track, above normal or below where you would want to be?

#3 Forzudo on 02.12.15 at 8:30 pm

Get ready for three generations per micro condo.

#4 Victoria Real Estate Update on 02.12.15 at 8:32 pm

2014 was a breakout year (to the downside) for Victoria’s real estate market.

In late 2014, Brookfield’s price chart for Victoria showed that prices had fallen back to territory not seen since August 2007 (even lower than 2009’s lowest point).

I posted this chart on December 11, 2014 (comment #60). At that time, Brookfield’s October price chart for Victoria indicated that house prices were 3.6% lower than a year earlier.

. . . . . . . . . . .Victoria House Prices. . . . . . . . . . . . . . .
. . . . . . . . (Compared To October 2007). . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+13%. . . . . . . . . . . .x . . . . . . . . . . . . . . . . . . . . . . .
+12%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+11%. . . . . . . . . . . . . . .*. . . . . . . . . . . . . . . . . . . .
+10%. . . . . . . . . . . . . . . . . . . *. . . . . . . . . . . . . . . .
+ 9%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 8%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 7%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 6%. . . . . . . . . . *. . . . . . . . . . . . . . . . . . . . . . . . .
+ 5%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 4%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 3%. . . . . . *. . . . . . . . . . . . . . . . .*. . . . *. . . . . . .
+ 2%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
+ 1%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
..0%. . .*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– 1%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .*. . .
———————————————————————————————
. . . . .Oct. . Oct. . Oct. . Oct. . Oct. . Oct. . Oct. . Oct. .
. . . . . 07. . .08. . . 09. . . 10. . .11. . . 12. . . 13. . .14. .

x = peak (June 2010)

(Source: Brookfield’s index)

What have prices done since then (October 2014)?

* In January, the average price of detached houses in Victoria was 6.1% lower than in October 2014 (3-month average). Note that seasonal price fluctuations may be responsible for some of this move downward.
(Source: Victoria’s board)

What have prices done since January 2014 (one year ago)?

* In January, the average price of detached houses in Victoria fell 1.4% compared to a year earlier (3-month average).
* In January, the median price of detached houses in Victoria fell 2.0% compared to a year earlier (3-month median).
(Source: Victoria’s board)

Note what I observed about Brookfield’s Victoria price chart after December 11, 2014. See comment # 27.

(continued below)

#5 I hate idiots that say first on 02.12.15 at 8:34 pm

So basically Garth you are saying the governments will do anything to fight deflation? I would rather hold hard assets instead of cash.

#6 gladiator on 02.12.15 at 8:34 pm

So what’s holding the BOC from dropping rates below zero? It may as well do it. Then, house owners will feel even more like winners. Good for them and poor us renters…

#7 TRT on 02.12.15 at 8:36 pm

Advice:

Buy in YVR for minimum down. Many builders offer the 5% down payment under the table. Put in one person’s name.

All you have to pay is land tax, etc.

If market corrects, declare bankruptcy and let Canada pick up the tab. Gov policies are partially to blame so don’t try to be morally superior.

But if you can afford the monthly. And don’t tie any money in the place.

If things go south? The other half can buy the home in the future.

#8 mitzerboy aka queencity kid on 02.12.15 at 8:36 pm

poor old Saskatchewan we mite revert back to having
1 horse cities in a
2 bit province with a
semi-pro football team …..

#9 Bong-buying stimulus on 02.12.15 at 8:37 pm

Now that is one funny typo Gartho!!!.. maybe it wasn’t a typo being Sweden in all

#10 H on 02.12.15 at 8:37 pm

No graph of Oil? No comments on some of the oil professionals saying, “hold on this might be a bottom”

Or others starting to say, woops…too much was shut off and soon this will kick in.

Garth, part of being able to see down the road 6-9 months out is seeing the road signs.

Right now the oil market is beginning to price in the amount of rigs dropped and the impact this will have.

for example, without US Shale the market would have been undersupplied by 3 million barrels a day. That’s SHORTAGE.

The amount of rigs being dropped, which will be shown tomorrow at 1PM Eastern will amplify the shortage coming.

And to add, unlike 2008/09 who were laid off are leaving this industry.

What does this mean? Labor shortage by Fall of this year in the oil patch. And rigs that cant be scrambled as fast and uneducated people (in the industry) believe.

Rigs need re certification, re-training, etc. And Rigs in the Gulf that are cold stacked in the salt water air, are worse.

Golden opportunity for those who are looking further out than tomorrows headlines.

#11 I guess its different here afterall on 02.12.15 at 8:38 pm

If this does not prove its different here ( as in a nation full of RE raging hormones) I don’t know what will.

#12 bdy sktrn on 02.12.15 at 8:39 pm

but BC produces next to no oil.

our NG has been in the toilet for almost a decade so no problem there.

van port is breaking records. low dollar helps most all our industries.

but to buy a micro condo in new west is dumb.

buy something with LAND or buy nothing.

according to many here there is no land shortage in vancouver so why are ppl lining up for teeny condos way the hell out in New West?

#13 Mark on 02.12.15 at 8:40 pm

“So, by your calculation, if a very rich person bought a 1 mil East Van shack, their investment would seem like a fantastic bargain with very low P/E. “

Absolutely not!!! I used 1/3rd of average income to denote, for an average amount of $$$, available across the entire population, to pay for renting (imputed or actual) an average home. With the deductions as stated accordingly for maintenance, property taxes, and income taxes to arrive at a figure comparable to how P/E’s are calculated for common stocks.

Of course, some individuals out of the population will occupy housing above or below what their income normally would imply. But that’s not the point nor does it have any relevance to calculating an average P/E for Canadian housing.

#14 james on 02.12.15 at 8:40 pm

Pity, I enjoyed the New West waterfront when it wasn’t gentrified, and Columbia Street was an overlooked relic with 60s era shops and restaurants. The industrial view across the water was oddly soothing, because it was one of the few instances in the lower mainland of people being actually employed at something productive.

Given the massive change of events in Alberta, one can only assume that Vancouverites believe that they live in an isolated bubble. I should note that job opportunities in Vancouver are generally terrible, paying less than comparable jobs in such hot spots as London, Windsor, Thunder Bay or Halifax. What prompts people to take on a ton of debt is beyond me.

Just started dating a 30 year old professional here in Seattle; she happens to have just purchased a condo in a decent area downtown, for a fraction of the price of a similar dwelling in Vancouver. She makes significantly more than the median family income in Vancouver. There’s no way would I ever trade my detached house for a condo. Fun to visit, but at the end of the day there are too many downsides. The thought of lining up for a 300 square foot condo is kind of laughable, like lining up for a prostate exam.

#15 Living in Edmonton on 02.12.15 at 8:41 pm

It’s so crazy here in Alberta! With the deregulation of utilities by the conservative government, sending prices up over 400% with “delivery” fees & “Admin” fees, we will see huge household operation charges increase, as unemployment soars. Our water here in Edmonton will be raised dramatically because we aren’t using enough, so the CEO won’t get a bonus!

In the meantime there are over 18,700 listings under real estate on Kijiji-up over 100% since last year. Crazy. The RE market is going to go over a cliff I’m thinking in Edmonton!

#16 H on 02.12.15 at 8:43 pm

Sorry, wanted to add, to the last post.

I do think Alberta is going to take it in the pants. Housing wise.

Why?

Even when, and believe me WHEN, oil does return there will be 2 things occurring.

1) Forget about anyone from Ontario considering to move out that way. Period
2) Those who are there, are going to view this as a dodged bullet and say, “that’s it, we are out”

#17 Darryl on 02.12.15 at 8:43 pm

I never thought it would happen but I remember reading The Automatic Earth four or five years ago . They talked about this being a probable scenario.

#18 Mean Gene on 02.12.15 at 8:44 pm

New Westminster has a large sewage treatment plant nearby,during the summertime if the breeze is blowing in the wrong direction it can be unpleasant, especially if it’s warm outside and you need to leave the windows open.

Been there and done that.

#19 omg the original on 02.12.15 at 8:44 pm

The ever increasing real estate lust in YVR and TO is a hangover from Canada’s spectacular performance during the great recession.

We were simply the best performing of all larger developed countries due to conservative bank regulations and a resource boom in the mid 2000s.

We sailed through the recession and did very nicely compared to other G-20 nations.

So why worry, ain’t nothing bad goin’ happen here in good ol’ stable Canada.

But eventually some of those nasty unpredictable shocks will hit us and all shit will hit the fan. For Alberta its oil prices today, for TO and YVR it will likely be interest rates in the future.

The market reverts to the mean, always has, always will.

And 10s of billions will be lost by those into the housing market in the past few years.

I just hope that its such a big crapper that the government can’t piss away a bunch of money trying to bail everyone out.

#20 Heh on 02.12.15 at 8:44 pm

didn’t realize Sweden was so liberal and forward thinking what with their “massive bong-buying stimulus program”. Seems like it a no lose situation.

#21 Ex-Cowtown on 02.12.15 at 8:45 pm

In Sweden yesterday they pushed rates to below zero and brought in a massive bong-buying stimulus program.

++++++++++++++++++++++++++++++++
Sorry Garth:

You’re mistaken. The Bong buying was in Victoria. One of Christy Clarks campaign pledges. “Two bongs on every coffee table and Doritos to go with the pot.”

Try to get it right next time ‘eh?

#22 Victor V on 02.12.15 at 8:45 pm

http://m.theglobeandmail.com/news/alberta/the-good-times-are-over-again-for-alberta/article22973374/?service=mobile

People in other parts of the country would say Albertans have not resided in that world for some time. That is not their fault. When you live and work in a jurisdiction that has been awash with money the way Alberta has been for years, you come to accept the lavish wages, and benefits that go with it, as normal. The public service, in particular, has been the beneficiary of cash-rich governments that opted to give in to often obscene wage demands rather than endure a nasty strike.

Well, the moment of reckoning has arrived.

Nurses, doctors, teachers, all best be braced for wage cuts and future contracts with lots of zeroes in them. They will be the types of contracts public servants in other jurisdictions in the country have often had to accept, while casting an envious eye in Alberta’s direction.

#23 Musty Basement Dweller on 02.12.15 at 8:46 pm

I think the microcondos are a cool idea, but I’d only buy one if you could get one for like 10 or 20k.

You would still have your maintenance costs and zero appreciation on your investment if you are lucky.

If it turns out to be a decent idea it will probably catch on quickly and the developers will soon be building millions of them in no time flat, so I wouldn’t count on flipping these puppies and making a killing lol. (Or even having an economical place to live compared to the options when you do the math)

#24 raisemyrent on 02.12.15 at 8:47 pm

Steve, stay the heck away from New West, I know coming from Port Moody it looks awesome, but you’d be making a big mistake.

blog about dogs and ETFs with sexual undertones <— brilliant

#25 Adult-escents on 02.12.15 at 8:47 pm

To secure 500k by their early 30’s in the lower mainland, which routinely pays less in all professions for the ‘privilege’ of living in God’s country, they are: a) professionals in their early 30s with fantastic salaries; b) lucky individuals with an RE windfall; c) ‘adultescents’ before their port moody buy, and lived at home most of their lives.

This latter group is something that few have identified as a driving force within RE. Vancouver has the highest percentage of under 30s living at home in the country. This failure to launch, whether driven by laziness, economic necessity, or ethnicity and culture, creates a huge pool of young buyers with cash.

When you live with mommy and daddy until your late 20s, its easy to pocket a few hundred thousand. Making 50k while living at home is like making 100k when you have to take care of your own self.

#26 Bongs on the Brain on 02.12.15 at 8:48 pm

Hey you changed it…!!. can’t change history.

#27 Victor V on 02.12.15 at 8:52 pm

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/2015/02/12/cenovus-energy-inc-leaves-no-stone-unturned-in-campaign-to-preserve-cash&pubdate=2015-02-12

Cenovus missed analyst estimates for cash flow in the fourth quarter and said that a full-scale cost reduction initiative is underway, including a year-long salary freeze for employees and a 15% cut to its workforce that could eliminate 800 jobs, primarily among contractors.

“I can assure you, that there is no stone unturned in terms of where we are looking today to improve cost structure,” Cenovus president and CEO Brian Ferguson said in a conference call, where the dividends-for-discounted-shares program was announced.

#28 Mark on 02.12.15 at 8:53 pm

“This failure to launch, whether driven by laziness, economic necessity, or ethnicity and culture, creates a huge pool of young buyers with cash.”

Then why are purchases with a significant amount of cash rare in Vancouver/Canada in general? Where is all this ‘cash’? There’s always outliers, of course (which these folks appear to be), but more typical of the under-35 crowd these days is chronic underemployment, poor job opportunities, and very limited savings relative to housing prices.

Despite all this ‘living at home’, the under-35 crowd in Canada is constantly moving backwards in the overall wealth distribution in Canada, and poor job opportunities (no employment growth since 2000 I am told, and most gross employment growth since 2000 was largely in the trades and unskilled sectors) and significant student debt feature prominently into the reasons for this.

#29 Simplyput7 on 02.12.15 at 8:53 pm

I don’t know what to think of the housing market anymore. I don’t know how people can spend 500k or more on real estate when they don’t have savings, couldn’t pay the mortgage if they lost their jobs and can’t afford retirement. I think I am ready to live off the grid and prepare for the nuclear winter that is coming.

#30 omg the original on 02.12.15 at 8:54 pm

#3 Forzudo
Get ready for three generations per micro condo.
—————

Maybe roomies can “hot bunk” just like in submarines. Likely somebody will be working night shifts stocking shelves at Walmart.

#31 lala on 02.12.15 at 8:54 pm

DELETED

#32 John on 02.12.15 at 8:54 pm

Indeed. No one escapes. Zero velocity. The vast majority don’t want to know and exhibit avoidance behaviour syndrome. ie. Book a winter holiday on credit. Buy a Timmies’ on credit. Buy granite on credit. Ignore the flashing red lights up ahead. Snooze on cruise. They’re determined to ignore until the front door crashes in…..
Better have some back up advice, Garth, when the pups find their food bowls are empty.

#33 joblo on 02.12.15 at 8:55 pm

Oh boy!
Look what Justintime Trudough inherits.
Gonna need to legislate pot an tax it to crawl outta this mess.

#34 Catalyst on 02.12.15 at 8:56 pm

The plate spinners (economists) really pooched this one. Deflation is primarily caused when debt reaches unsustainable levels and forces a pull back in spending. So far, the only medicine has been to lower rates and encourage more debt and less saving. Pretty backward logic if you ask me.

I shrug my shoulders, and accept it as illogical. What I am trying to figure out is how to work it to my advantage. Saving in this environment is laughable and that is what they are trying to destroy. The 60/40 split (growth stuff/safe stuff) I feel may have been appropriate for when safe stuff was yielding 6%. Bonds have been kept afloat by capital appreciation due to spiraling yields but how long can this go on as we approach the zero bounds. Some countries have decided to go negative. This still doesn’t make sense to me as I would rather hold the currency (yielding 0%) then a bond or GIC which yields negative. If someone knows why a negative rate fixed income product is even saleable please fill me in.

“This is merely a blog about dogs and ETFs, with unfortunate sexual undercurrents.”

Love it. I much prefer your posts on investing than housing so you know, keep em coming. Blackrock should appoint you to the board.

#35 Don Derc on 02.12.15 at 8:58 pm

Yes, the world will end at 10pm…details at eleven!! But seriously folks, as Garth has pointed out many of the global “canaries in the coal mine” like the EU (Greece/Italy) and the shameful position the UK’s money is in , we ask 2 questions: 1) what’s next (unknown unknowns) and 2) where do we run too (hint – buy amerikan).

No one predicted oil at $50 a barrel – only the Saudis (and a few close investor buddies) knew what was coming. So that’s one nail in the coffin. What’s the next nail in Canada’s coffin? The lowering of rates by Poloz…sealing the deal of the collapse of anyone who bought real estate in Canada between 2009 and today?

What happens to Canada if the USA fails? Garth may have been making a 6% ROI on his amerikan portfolio but I’ve always called the US economy an old war horse with an overweight jockey on it. I agree with billionaire Paul Singer when he says:

“Nobody can predict how long governments can get away with fake growth, fake jobs, fake financial stability, fake inflation numbers and fake income growth. ”

Cripes he could have been talking about Christie Crunch and her BC gov’t, or my favorite bovine delights Watts and Heppner, the new religious act down the road at Surrey City Hall.

It’s not enough when even real estate boards fudge and flip the data. As Geoff Tate sings “who can you trust when everyone’s a crook” – except you Garth – you’re just misguided with your buy American approach to investing – the usa is a short term bet – be careful. So….where do you (and your money) run too….Mexico? Nunavit? We are really going to feel some serious pain over the next 5 years.

I sat in one of those micro-condos for about 20 minutes, trying to figure out how I would live my life in a shoe box – hey they do it in Europe right? I think, at the age of 50, i’ll just move back home with mother.

No wonder I’m single….bucks in the bank….but single nonetheless.

#36 Smoking Man on 02.12.15 at 8:59 pm

The world going in the deflation shitter, then I watch the News.

Watching Harpo towing the NeoCon narrative on Ukrainian today on CTV was absolutely hilarious.

His body language screamed out, do I really have to say this. He was talking about sending Canadian soldiers to Ukraine to train its troops.
Then he shakes his head, sadly pointing out a lot of Ukrainians soldier’s were killed..

Huh, so I guess the civilian Ukrainians killed aren’t a big deal..

As far as training soldiers, they have none, they are all deserting, the ones getting called up, run and are hiding in Russia.

The leader of Canada sees nothing wrong with an army killing it’s civilian population… And a impotent Media here that questions nothing, all is fine.

Harpo, wake the hell up, people don’t watch MSM seriously anymore.

They know who brought down building 7, who shot down MH17. And who’s responsible for all the madness in the world..

The peasants are starting to figure it out, and soon will be coming for the 1% with pitch forks.

Your screwing everything up for me.. You Idiot.

By the way Jr made 9k today… It’s on the shit blog.

#37 @Mark on 02.12.15 at 9:01 pm

Mark, put you books away.

“Then why are purchases with a significant amount of cash rare in Vancouver/Canada in general? Where is all this ‘cash’? ”

–> because people don’t want to tie up money in housing. The more financed the better. Why not when money is 2.5%??

There is a reason the government lowered how much equity you can take out of a paid off house (65%). Street smarts will tell you why they did that. Books won’t.

#38 John on 02.12.15 at 9:04 pm

Mississauga passed its 2015 budget. 4% property tax hike. Big bank loan or something, they say, to cover the rest of the shortfall. The “electomundi” gave themselves a raise. Guess they’ll be able to pay their property tax hikes. Anyone know of any municipality which balanced its budget? Oh, and wait until Wynnie rams her deficit through the wringer……. Carbon taxes, fees and pension plan grabs and computer hard drive jive. Wylie. Canyon. Gravity.

#39 devore on 02.12.15 at 9:05 pm

I like living in a small space, as long as it is functional and has sufficient storage. I’ve been downsizing with every move, and it is definitely a huge plus that I have a nice size balcony for some outdoor space and plants and stuff. I don’t like having too much space, feels so empty and then needs furnishing and cleaning and such.

The problem with these new condos is that they’re actually TOO small, especially without parking, auxiliary storage or outdoor space. If you can wingspan any 2 parallel walls (hallways excepted), it’s way too tiny. Also, build quality seems to decrease in lock-step with square footage. Especially when it comes to sound proofing.

The one thing Canadians (and north americans in general) DON’T know how to do, it’s how to live in proximity to other people. The “it’s my house and I can do whatever I like” attitude it far too prevalent, so sound dampening and acoustic separation all around is really essential, unless you like hearing everything your neighbors say and do. These newfangled micro condos just don’t deliver, and their hipster owners are going to be very disappointed.

#40 Victor V on 02.12.15 at 9:07 pm

http://m.thestar.com/#/article/news/crime/2015/02/12/toronto-lawyer-facing-426-charges-in-15m-condo-fraud.html

Toronto lawyer Meerai Cho is facing 426 new charges in relation to an alleged condo fraud where buyers lost $14.9 million in a building that never went up.

Last August, Cho was charged with 75 counts of fraud over $5,000, possession of property obtained by crime and breach of trust. Another 426 charges were added after new complainants came forward, her lawyer’s office said.

The new charges include 142 counts of criminal breach of trust, 140 counts of fraud over $5,000 and 144 counts of possession of property obtained by crime over $5,000.

Cho is now facing 501 charges in total.

#41 Obvious Truth on 02.12.15 at 9:07 pm

And could we be on the cusp of the next leg down for oil?

#42 aardvark phartz on 02.12.15 at 9:08 pm

Slippery moments in the world’s economy just now.

Should one give up much of their savings for a home, or condo, and a mortgage? Does your rent cost more? Want to be in debt for much of your working life, or would you rather have that cash invested, and growing for your use later?

A job loss is no fun anytime. A wage cut is no fun anytime.
Being unable to pay your debt with the likelihood of losing your investment is even worse than moving from your rental to a new location with a job.

Think very carefully before jumping into a long term debt right now. The world is having problems, and no place in north america shall remain immune.

If you have savings, that balanced portfolio will serve you best. Better to have few assets, and no or, little debt at a time like now.

#43 Babblemaster on 02.12.15 at 9:09 pm

Zero inflation in Canada! What a load of crap. I went grocery shopping today and saw nothing of the sort. Bacon alone was $6.99 for a 375 gram package. Deflation? Yeah, sure.

You eat bacon? Explains much. — Garth

#44 OttawaMike on 02.12.15 at 9:13 pm

Hey Smoking man,

You were right on the money about shorting Bombardier.

Nice call!

#45 NoOneOfConsequence on 02.12.15 at 9:17 pm

Wow…can you imagine the pain coming for these folks? In three years…before they even move in, their “investment” is going to be worth 20% less than what they paid for it.
OUCH.
The amusing thing to me…is that essentially they are buying a lifetime of payments for maintenance fees.
Hope those ellipticals in the exercise room last a while!

#46 calator on 02.12.15 at 9:17 pm

Hi guys,

What do you think it is a fare offer now for a SFH in Edmonton? 10% less of the city assessment? 20%? Now, not next fall:)

#47 HD on 02.12.15 at 9:18 pm

Sun TV news will shut down tomorrow.

Best,

HD

How will we know? — Garth

#48 Porsche on 02.12.15 at 9:18 pm

500k saved by their early 30’s ??

I’d be lucky if I had 50K back then… I’d have to sell my 454 72 bumper Vet too

#49 Smoking Man on 02.12.15 at 9:20 pm

#41 Babblemaster on 02.12.15 at 9:09 pm
Zero inflation in Canada! What a load of crap. I went grocery shopping today and saw nothing of the sort. Bacon alone was $6.99 for a 375 gram package. Deflation? Yeah, sure.

You eat bacon? Explains much. — Garth
…..

Bubble Master get with the program, inflation is when wages rise, has nothing to do with the price of things. It’s banker code..

Mind you, I understand your confusion bacon eaters get that way some time.

I also eat bacon..

#50 Babblemaster on 02.12.15 at 9:20 pm

Yes Garth. I eat bacon. All red-blooded Canadians eat bacon. What are you, some kind of commie pinko?

#51 Mark on 02.12.15 at 9:22 pm

“Mark, put you books away.”

Can you start your posts without an insult? For once, at least?

“There is a reason the government lowered how much equity you can take out of a paid off house (65%). Street smarts will tell you why they did that. Books won’t.

Too much leverage, and, I personally believe, abuse by certain Canadians using such products to secret money outside of Canada where it can’t be readily claimed by judgement creditors when the RE market inevitably returns to more historically normal valuations. In other words, the opposite of bringing cash to the table.

#52 As per John @32 on 02.12.15 at 9:24 pm

Indeed. No one escapes. Zero velocity. The vast majority don’t want to know and exhibit avoidance behaviour syndrome. ie. Book a winter holiday on credit. Buy a Timmies’ on credit. Buy granite on credit. Ignore the flashing red lights up ahead. Snooze on cruise. They’re determined to ignore until the front door crashes in…..
Better have some back up advice, Garth, when the pups find their food bowls are empty.

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

Not at all.
The canadian gov will always bail them out, be it business or overextended mortgage borrowers,PERIOD.
Anyone who does not see this already is probably still renting and paying someone’s mortgage….sad really.
Rest in piece capitalism.
RENTERS ALWAYS LOOSE,UNFORTUNATELY.!!!!!

#53 Failure to Launch on 02.12.15 at 9:25 pm

Think of what happens when an airplane rises too quickly,

eventually it stalls and the nose points downwards and it

loses altitude very rapidly as it speeds up on the way

down.

Now think of the housing market.

Do you get the picture ?

Nobody Escapes.

#54 Ex-Cowtown on 02.12.15 at 9:26 pm

All bongs aside… for the moment anyway…

One issue that I’ve wondered about is whether shale oil is capable of destroying the N. Am. oil market in the same fashion that shale gas permanently destroyed the N.Am. natural gas market. Even shale oil did only half the damage that shale gas did, we may never see $100 oil again, or not for a very long time anyway.

World prices for Nat Gas have been $12-15 depending on the market, but we’ve been stuck sub $4 for almost a decade now.

With so much US and Canada manufacturing capacity exported, energy consumption is not as big a deal as it once was. If we really become “energy independent” the world oil price may recover, but ours may permanently decouple, similar to how our Nat Gas price has decoupled.

Whoa…. scared myself!!

#55 Paul on 02.12.15 at 9:28 pm

http://www.castanet.net/edition/news-story-132789-1-.htm#132789

#56 HD on 02.12.15 at 9:28 pm

Sun TV news will shut down tomorrow.

Best,

HD

How will we know? — Garth

——————————–

Not sure. That’s all the CBC headline said. More details to come….

Best,

HD

#57 Joe2.0 on 02.12.15 at 9:32 pm

Vancouver will have something for everyone.
Check out the pods in Japan.
Divide(land) and (conquer) the consumer.
Tapas town.
Suck you dry.

#58 Porsche on 02.12.15 at 9:32 pm

I got an idea Mark

Write your own posts instead of copying and correcting people in bold

#59 Smoking Man on 02.12.15 at 9:34 pm

#44 OttawaMike on 02.12.15 at 9:13 pm
Hey Smoking man,

You were right on the money about shorting Bombardier.

Nice call!
……….

Never saw that coming, I still believe in that plane, I’m buying more.

Good move they got rid of the Grand kid.

One good CEO, and up it goes.. 10% down today, not a big deal, Canada will follow what every other country is doing, rates down, asset bubble inflation. Low dollar, lots of orders.

Just watch.

#60 Bottoms_Up on 02.12.15 at 9:35 pm

As a 30-something responding from my 300-sqft living room, in a house dozens of feet removed from neighbours, I can’t believe people will spend what they do to live as a sardine-in-the-sky, without land.

S+S, take a page out of Garth’s book and be ‘beholden to no one’.

#61 Mark on 02.12.15 at 9:35 pm

“Think of what happens when an airplane rises too quickly,
eventually it stalls and the nose points downwards and it
loses altitude very rapidly as it speeds up on the way

Nice analogy. And actually, in an airplane, if the stall is so bad, it is actually progress into a situation known as a ‘deep stall’, where even the elevators lose authority and can’t even push the nose down to regain lift. Similar to the situation that the BoC is now in, where dropping the policy rate is useless because the lenders will tack on the difference in risk premia. Defeating any sort of authority the BoC is trying to assert over the system.

#62 Smoking Man on 02.12.15 at 9:37 pm

#53 Failure to Launch on 02.12.15 at 9:25 pm
Think of what happens when an airplane rises too quickly,

eventually it stalls and the nose points downwards and it

loses altitude very rapidly as it speeds up on the way

down.

Now think of the housing market.

Do you get the picture ?

Nobody Escapes.
…….

That’s correct, go to teranet, look at Toronto, very gradual accent… This bitch still has lots of airspeed left.

Now look at Cowtown…. You’ll see it.

#63 Dave on 02.12.15 at 9:38 pm

Have a look at what $300 K will get you 20 miles South of New West?

#64 bono on 02.12.15 at 9:42 pm

Sun News shutting down friday.. another 200 jobs gone!!

#65 As per John @32 on 02.12.15 at 9:42 pm

#49 Smoking Man on 02.12.15 at 9:20 pm
#41 Babblemaster on 02.12.15 at 9:09 pm
Zero inflation in Canada! What a load of crap. I went grocery shopping today and saw nothing of the sort. Bacon alone was $6.99 for a 375 gram package. Deflation? Yeah, sure.

You eat bacon? Explains much. — Garth

******************************************8

And you don’t.
I kinda shows you’re not in touch with regular people at all garth!
I guess its all caviar for you, right .

#66 Marco Polo on 02.12.15 at 9:46 pm

Smoking Man. I still think you’re lost in the haze of casino smoke. I miss the significance of the Ukrainian conflict against this blog’s subject of housing and investment choices. I don’t care much about your son either. Whether he makes 9K a day, or is homeless. Don’t care.

It’s obvious again, that you have still never been to Ukraine. I have lived there, and find your analysis troubling and irrelevant.

You have never seen fielded Ukrainian forces yourself, near Odessa as I have, and you are ignorant as to how the country operates.

I volunteer for you to emigrate to the people’s republics of Donestsk and Luhansk. You will get to experience true libertarianism. You’ll learn the true meaning of graft, corruption, and know life where if you’re honest and skilled, you get nowhere. You can live your gangsters lifestyle there.

#67 Freedom First on 02.12.15 at 9:48 pm

I don’t get it? The Greater Fool isn’t a family rated Financial Blog? Reads like it to me, but then again I can’t write what goes through my mind like Smoking Man does or every comment of mine would be DELETED.

Time for a simplification of what is most important in life. Look after your health first and foremost. Health is wealth. Stay debt free, save and invest in a liquid and diversified balanced portfolio. Anybody in debt is living with added unnecessary stress, and the more indebted, the more stressed.

Use this as a gauge on how stress free, relaxed, and calm your life is: “If you’re not reading Garth’s Blog every day and learning while laughing at the same time, it means that your nutz are getting all banged up, or are just too tense.

#68 Mister Obvious on 02.12.15 at 9:48 pm

Check out this ‘Historical Age Pyramid’ from statistics Canada. It’s fantastic! Who knew?

http://tinyurl.com/kqag87v

Put the slider at 1961. Note that except for the ‘dents’ in either side because of the low population growth during the second world war the graph is still looking much like a pyramid.

Then move the slider all the way up to 2011 and you will see the face of the monster. It tells you pretty much everything you need to know.

I postulate that many of the social programs we have in Canada were conceived when the pyramid actually looked a pyramid and was expected to maintain roughly that shape.

#69 experienced.optimist on 02.12.15 at 9:50 pm

Our Canadian hero, Dudley Do-Right, is written about in the United Kingdom on his ability to save the property of the poor from banker’s bearing gifts.

http://wolfstreet.com/2015/02/12/beware-of-bankers-bearing-gifts/

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/11194160/Take-your-mortgage-to-the-grave-older-borrowers-told.html

http://www.dailymail.co.uk/news/article-2813497/Family-inheritance-threat-lifetime-mortgages-Experts-warn-schemes-used-resort.html

I thought lifetime mortgages were something that had occurred during the 1980’s when Japan’s real estate was going into the stratosphere. In fact if memory serves me correctly, there may have even been a type of generational mortgage offered at the time in Japan . Apparently these types of lifetime and interest only mortgages have been available for some time in the U.K.. I wonder if they would ever make it over here. Banks and realtors do not like to lose business.

#70 As per John @32 on 02.12.15 at 9:51 pm

Everyone knows you eat out at fancy restaurants and not much into bacon I guess.
What gets me is that you fail to admit the simple fact that your call on RE and interest rates was 100% wrong.
Countless many listened you you and lost miserably.
Oh well, at least you can go out to a nice restaurant and have agency nacon free meal on that fancy public pension of yours.
Rant over.

#71 For those about to flop... on 02.12.15 at 9:51 pm

I would have walked into that sales centre ,dropped my guts and walked back out.

#72 OttawaMike on 02.12.15 at 9:52 pm

#59 Smoking Man on 02.12.15 at 9:34 pm

Yes I tend to agree. Low fuel costs always goose aerospace to.

#73 Washed Up Lawyer on 02.12.15 at 10:04 pm

I used my six year old LG flip phone to do some calculations. I hope I am right. $230K for 300 sq. ft. is $766 per sq. ft. The other day Garth’s blog featured that $1.19M house in Shaganappi in Cowtown with almost 4000 sq. ft. That is $299 per sq. ft.

Steve and Squeeze, round up another couple and buy the house in Shag. 1000 sq. ft. per person in the house and 400 sq. feet in the garage plus street parking. No tugboats to watch though.

You can host either 5 people at the house warming in New West or 50 at the house warming in Calgary. Way more gifts and stock tips on up and rising oil juniors.

#74 Old Bacon on 02.12.15 at 10:05 pm

Mark #51

“to secret money . . . ”

The use of secret as a verb is by definition idiomatic. Hide is simpler.

#75 Waterloo Resident on 02.12.15 at 10:11 pm

If deflation is slowly spreading around the globe, what signs of deflation do we have to keep an eye out for here in Canada?

– Would job loss and falling commodity prices be a sign of a deflationary spiral?

– I remember how all of Europe was beginning to fall into deflation, but Germany was one of the only countries that was still strong. But now Germany TOO is also beginning to suffer from deflation.
Sounds familiar: America is strong, but when will it TOO begin to suffer from deflation: 2017 , maybe 2018?

What happens to stocks, cash, prices of houses, prices of gold, prices of food, during times of deflation?

What happens to jobs and income during times of massive deflation?

I ask this because in 5 years that is exactly the future we will be facing.

Last year you said houses would cost $25 million in five years. — Garth

#76 Victoria Real Estate Update on 02.12.15 at 10:11 pm

It is a really bad time to buy a house in Victoria right now. Consider the following:

* Prices are falling (see my previous comment). If historically-low (emergency level) interest rates can’t stop Victoria’s price decline, what will? The answer: much lower prices.

* Sales of detached houses are well below Victoria’s long-term average (see comment # 20). Slow sales lead to lower prices.

* The BC government’s 3 year hiring and pay freeze (that started in Sept. 2012) is still in effect. Victoria is a government town. A government hiring and pay freeze obviously creates major problems for Victoria’s economy and house prices.

* The prices of oil has crashed and this has resulted in major job losses for those Victorians who commute to northern BC and Alberta to work in the oil patch. This will negatively impact Victoria’s (already struggling) economy and housing market.

* Demand, price of BC bud continues to drop. This will continue to negatively impact Victoria’s economy.

* Falling house prices are always accompanied by a diminishing wealth effect. As house prices fall people stop feeling rich (negative equity) and stop spending as much. This has a negative effect on the economy and helps to push (already falling ) house prices lower.

* It is always a bad time to buy a house when the housing market is in a major housing bubble. This is what happened to house prices in the US as their bubble deflated. All housing bubbles deflate (50 examples, see price to income ratio chart in Garth‘s post).

* It is always a bad idea to buy a house when 5-year mortgage rates are at historically-low levels and have nowhere to go but higher in the future.

Victoria’s housing bubble will take years to deflate. With household incomes in Canada at similar levels to those in the US, houses in Victoria shouldn’t cost 4 to 6 times the value of similar houses in many US cities.

Houses like these would probably be valued at approximately $600 to $800 K in Victoria (or $400 to $500 K in frosty Winnipeg). Obviously Canada’s housing bubble is massive.

Arizona:

$103 K, Coolidge (Phoenix), AZ (5 beds, 3 baths, 2,287 sq. ft., built in 2006, attached double garage).

$125 K, Maricopa (Phoenix), AZ (4 beds, 2.5 baths, 1,893 sq. ft., built in 2006, attached double garage, private, backyard pool).

Florida:

$113 K, Palm Bay, FL (3 beds, 2 baths, 1,955 sq. ft., built in 2005, attached double garage).

$120 K, Jacksonville, FL (3 beds, 3 baths, 2,027 sq. ft., built in 2005, attached double garage).

Girls and guys, becoming a first-time buyer in Victoria right now is a really bad idea.

Renting for now makes a lot of sense when you can rent a similar property (worry-free and risk-free) for less than owning it, on top of all the reasons I listed above.

Do the responsible thing for your family and rent for now while prices continue to fall. You will thank yourself in the future.

Until next time – Cheers!

#77 RayofLight on 02.12.15 at 10:11 pm

54 Ex CowTown:
North American gas prices being about 1/3 of the Asian prices are a “God Send” for North America. The US is also “Re Shoring” back many jobs that left for China a decade ago. The US is recovering so well mainly because of the lower prices in energy. This has been a huge tailwind for the US economy, even stronger than Obama’s Administrations dysfunctional head winds.

#78 aardvark phartz on 02.12.15 at 10:14 pm

I like bacon, I like eggs, tobacco, booze, and lots of other stuff….

Money is nice as well, but you can’t take it with you (no pockets on a shroud). As yet, I’m not going anywhere, except to the petrol station for that $2.15 gas.

Financial advice is SO overrated, stick to broad indexes at least you get what the market delivers -for better, or worse

#79 Smoking Man on 02.12.15 at 10:16 pm

#65 Marco Polo on 02.12.15 at 9:46 pm
Smoking Man. I still think you’re lost in the haze of casino smoke. I miss the significance of the Ukrainian conflict against this blog’s subject of housing and investment choices. I don’t care much about your son either. Whether he makes 9K a day, or is homeless. Don’t care.

It’s obvious again, that you have still never been to Ukraine. I have lived there, and find your analysis troubling and irrelevant.

You have never seen fielded Ukrainian forces yourself, near Odessa as I have, and you are ignorant as to how the country operates.

I volunteer for you to emigrate to the people’s republics of Donestsk and Luhansk. You will get to experience true libertarianism. You’ll learn the true meaning of graft, corruption, and know life where if you’re honest and skilled, you get nowhere. You can live your gangsters lifestyle there.
……..

Dude wake up, honest and skilled get no where in any country..

The liers and gangsters rule the world, it’s a fact… It’s always been that way, and will always be that way. Even though you teacher told you otherwise.

Learn to Lie Man, buy and sell shit.. Make deals. Live a little.

Get with the program..

As far as relevance, MSM lies, especially when it comes to real estate, but it also lies about world events.

And Harpo is a goof.. Unfortunately he’s the only game in town.. Are choices are tree huggers and communists.

He reads this blog, so I like to piss him off once in awhile.

#80 markozy- are you that blind???? on 02.12.15 at 10:16 pm

get status in Canada, get free medical insurance (huge) – no need to work. taxes are 0.75% of 6 y ago market value (in average) – cost of food like basmati rice is peanuts! this is le vie en ROSE, my men!
safety, and free SCHOOLS!!!!!!!

expect the RE ORGY To continue! it’s 10pm, 4 more hours to go!!!! (4 years)

take your neck out of Canadian tar sands and see the GLOBALIZATION – is not around anymore. It’s here.

#81 aardvark phartz on 02.12.15 at 10:18 pm

Walgreen’s special this week BACON 2 pounds for $7 US
gotta love it!!

#82 Plan B Guy from Calgary on 02.12.15 at 10:20 pm

Great photo today Garth. Really hits the heart.
Have been enjoying the early retirement from the oil patch since my last contract was up Dec 18, I noticed a few things while surrounded by layoff announcements. Although contractors are being ejected by the dozens, the front-end boomers on staff are holding in, hoping for a package. Not sure if that’s going to happen. Also, there are a few adds for professional services. Saw a 3 day old add with 500 hits. Think I’ll pour another dark rum and coke and sit this out a bit longer.

#83 JacqueShellacque on 02.12.15 at 10:25 pm

Early 30s and 500K invested? Even if you never put another dime into savings, and what you had now compounded at 7.5% per year (as a balanced portfolio could reasonably project to do), that’s $4.3 million in 2045. Why worry about buying a condo when you’ve done so well?

#84 Mr Stats on 02.12.15 at 10:32 pm

Hong Kong Dollar just hit a decade high against the Canadian Dollar!

Expect more upward pressure on Vancouver.

#85 NorthOf49 on 02.12.15 at 10:32 pm

Sun TV news will shut down tomorrow.

Best,

HD

How will we know? — Garth

——————————–

Not sure. That’s all the CBC headline said. More details to come….

Best,

HD

——————————————————–

That whooshing sound is Garth’s sarcasm going over your head, lol.

#86 Republic_of_Western_Canada on 02.12.15 at 10:39 pm

Whatever.

Anybody know what the retail discount on Bombardier bonds should be in the next week or so?

#87 Canmore on 02.12.15 at 10:41 pm

I saw this micro-condo phenomenon in San Diego 13 years ago, just before the big US crash (of course). Back then, the condos were a bit bigger at ~580 sq feet.

http://housingpanic.blogspot.ca/2006/03/scenes-from-san-diego-pre-construction.html

Play-by-play commentary here (I am so disappointed that the pics are now gone): http://www.capitalstool.com/forums/index.php?showtopic=7644

Check out the commentary about the Murphy bed next to the dining table.

Again, too bad the pics are gone from these old links – my favourite was the view of the hot “staged neighbor” doing calisthenics in scanty clothes in her own condo for all prosective buyers to see. You Dogs can use your imaginations.

Could these new micro-condos be sign of a market top?

#88 Smoking Man on 02.12.15 at 10:43 pm

#66 Freedom First on 02.12.15 at 9:48 pm
I don’t get it? The Greater Fool isn’t a family rated Financial Blog? Reads like it to me, but then again I can’t write what goes through my mind like Smoking Man does or every comment of mine would be DELETED.
……

Now I have Lala stocking my shit blog, it gets deleted all the time here. like I told it, Garth only allows one loon on here. And I have seniorty..
…..

Only reason I get away with it, Gartho realizes I have amazing writing skills, he knows one day I will publish the greatest book ever written..

He’s in possession of all my drunkin crazy beyond belief deletes.

Once I’m a famous author, he knows I’ve green lighted him to Sell them so long as his splits profit with the homeless.

Garth is truly a good soul..

He’s tolerating me for them.

Awesome.

#89 Baconater on 02.12.15 at 10:44 pm

Just bought the 65 gram size of Maple Leaf Ready Crisp bacon (less fat, more additives) for $5.00 on sale at Safeway. That’s about 50 cents per piece.

Maybe we can turn this into a Bacon blog. (Dogs like bacon).

#90 MSM-free Zone on 02.12.15 at 10:49 pm

“…….And ‘affordable’ 300-foot condos are now coming to market in all of the exotic places……”
___________________________

300-foot condos? Why stop there?

For a really good time, why not lower the ceilings to 5 feet and double number of condo floors (1, 1.5, 2, 2.5, 3, 3.5 etc) and as in the movie, “Being John Malkovich (1999) ”

To fully experience this effect, try being “rouged” for 11 hours on an 28-inch seat pitch Air Canada flight from Toronto to Hawaii. When you de-plane in Honolulu, you won’t even have to bend over to receive your flower lei; your spine will be permanently fused in that position.

#91 Zen on 02.12.15 at 10:49 pm

The primary culprit in blowing the Canadian housing bubble sky high is the central bank holding interest rates artificially low for too long.

This zero rate policy is somewhere between financial catnip and heroin to investors and would-be homeowners.

One of the most powerful concepts in finance is reversion to the mean. Across all markets and asset classes, valuations eventually revert to the mean. While you can never tell in advance precisely when this will happen, all bubbles, eventually reverse and pop.

The psychology that allows bubbles to form always breaks, sometimes on a dime, then turns and heads the other direction. Not just sometimes. Always. This is not theoretical; looking back over the centuries, the data unequivocally proves it.

It looks like real-estate across Canada is in the cross-hairs of a physiological change in sentiment. Once the herd turns the reversal will be violent and the sheep will get trampled.

#92 Jean-Claude VanDammeCouver on 02.12.15 at 10:50 pm

“Those people immediately impacted, understand this perfectly. Those who get their news from Twitter and ride Vespas without testicles, do not.”

LMAO!!! Oh Garth, everyday you make me laugh! Dont ever stop with the humour! Love it

#93 HD on 02.12.15 at 10:51 pm

#85 NorthOf49 on 02.12.15 at 10:32 pm
Sun TV news will shut down tomorrow.

Best,

HD

How will we know? — Garth

——————————–

Not sure. That’s all the CBC headline said. More details to come….

Best,

HD

——————————————————–

That whooshing sound is Garth’s sarcasm going over your head, lol.
.

———————————–

Yep, it did all right LOL

Best,

HD

#94 Darryl on 02.12.15 at 10:52 pm

Porsche on 02.12.15 at 9:32 pm
I got an idea Mark

Write your own posts instead of copying and correcting people in bold

—————————————
At least Mark puts out some decently thought out and interesting posts. Right or wrong. Opinion is not correcting.

What are you so jealous of? Does Mark have a Lamborghini?

#95 45north on 02.12.15 at 10:54 pm

nothing wrong with bacon

over the kitchen table I heard that Vancouver real estate is going strong. Very strong.

#96 Gargle & Spit off the Balcony on 02.12.15 at 10:54 pm

I can just imagine whats going to happen to all those ‘relationships’ when two fat ‘hipsters’ get stuck staring at each other in a 300 sq ft box for weeks on end when the rain is pounding down so hard it’ll dent the hood of your car. You’d really have to be nutz to buy this product. And….if you don’t know New West…OMG…are you in for a shock…….can any one S**t H*le?

What happens when ‘Boobie’ gets pregnant? LMAO.

And …why are Central Banks buying so much gold do you think?

http://www.bloomberg.com/news/articles/2015-02-12/central-banks-hungry-for-gold-bought-enough-for-75-dreamliners

#97 ANON on 02.12.15 at 11:02 pm

Nobody escapes #2: because “So it begins” already looks a tad tardy. That escalated quickly, as expected.

#98 Frustrated Kiwi on 02.12.15 at 11:05 pm

Bacon == meat candy.

In other news, the number of Auckland houses for sale has reached an all time low (as prices, not surprisingly, continue to rise):
http://www.interest.co.nz/property/74014/auckland-housing-inventory-drops-lowest-level-more-8-years-realestateconz-says

#99 Victor V on 02.12.15 at 11:06 pm

Sun News Network going off the air on Friday: sources

http://m.theglobeandmail.com/news/national/sun-news-network-going-off-the-air-on-friday-sources/article22978387/?service=mobile

The channel was known for provocative and opinionated personalities such as Ezra Levant‎, who drew rebukes from regulators more than once.

But it also suffered heavy financial losses after drawing low ratings, losing $14.8-million in 2013, and $46.7-million over one three-year span.

The closure will mean the loss of 150 full-time jobs and affect about 200 employees and contributors.

#100 Republic_of_Western_Canada on 02.12.15 at 11:06 pm

#91 Zen on 02.12.15 at 10:49 pm

The primary culprit in blowing the Canadian housing bubble sky high is the central bank holding interest rates artificially low for too long.

This zero rate policy is somewhere between financial catnip and heroin to investors and would-be homeowners.

Nah. Not really.

Low interest rates allow you to pay off your debts, and borrow to improve your commercial rates of return with better equipment.

Irresponsibility driven by excess immigration and propensity to breed, creating domestic overconsumption, as well as deliberate social isolation, is the real culprit.

Financial investors don’t like ZIRP, as payback on financial capital also approaches zero.

#101 aL pacino on 02.12.15 at 11:07 pm

#91 Zen on 02.12.15 at 10:49 pm
The primary culprit in blowing the Canadian housing bubble sky high is the central bank holding interest rates artificially low for too long.

This zero rate policy is somewhere between financial catnip and heroin to investors and would-be homeowners.

One of the most powerful concepts in finance is reversion to the mean. Across all markets and asset classes, valuations eventually revert to the mean. While you can never tell in advance precisely when this will happen, all bubbles, eventually reverse and pop.

The psychology that allows bubbles to form always breaks, sometimes on a dime, then turns and heads the other direction. Not just sometimes. Always. This is not theoretical; looking back over the centuries, the data unequivocally proves it.

It looks like real-estate across Canada is in the cross-hairs of a physiological change in sentiment. Once the herd turns the reversal will be violent and the sheep will get trampled.

****************************************
What part of ZIRP FOREVER do you not understand????

#102 John on 02.12.15 at 11:07 pm

NOBODY ESCAPES.
Canadian container ports might get busier……. but generally the Baltic Dry Index is now @ an historic low of 540, dropping 13 points today. Meanwhile, the US west port of LA is completely jammed with unloaded ships. STRIKE. $140,000 a year isn’t enough. Makes you wonder how you load up western coal onto outbound ships, backing up the whole thing. The world sure is tied together ….. with bailing wire. This makes the photo of the sales office, above, even more surreal!

http://www.dryships.com/pages/report.php

http://www.zerohedge.com/news/2015-02-12/catastrophic-shutdown-americas-supply-chain-begins-stunning-photos-west-coast-port-c

#103 Washed Up Lawyer on 02.12.15 at 11:08 pm

#88 Smoking Man

“…he knows one day I will publish the greatest book ever written…”
************************************

Hurry up for crying out loud. I am getting old and I cannot wait to read it. Is your publisher putting pressure on you yet?

#104 Mark on 02.12.15 at 11:09 pm

“What happens to stocks, cash, prices of houses, prices of gold, prices of food, during times of deflation?”

Stocks, prices of houses, prices of food, generally significantly down. Prices of risk-free (ie: government) bonds go up. Prices of risky credit, consumer credit-backed bonds, MBS, etc., go down.

Gold tends to go up in a deflation because of demand for a hedge against default in other asset classes, particularly risky credit.

Gold stocks tend to perform very well in deflations on account of the real price of gold rising, and the cost of producing gold declining due to declining real costs of the various commodities, machinery, and labour involved in its production.

Widespread deflation is not on. BTW, gold gets less valuable as deflation makes money more valuable. — Garth

#105 NoName on 02.12.15 at 11:11 pm

@36 Smoking Man

just watch first 5 min, and you will see why you are wrong about Ukraine.

http://youtu.be/r-8KV_GurLY

#106 amazon girl on 02.12.15 at 11:15 pm

Amazon girl to smoking man ..
has bottom up on oil ,or is this me and garth that are
vegeterians umm pass the carrot…

#107 Islandgirl on 02.12.15 at 11:16 pm

So part of me is unsure but another part of me thinks we are at least looking at it the right way. Hubby and I are looking at buying a house on the island after renting for 4 years. It is not t hat we don’t like the idea of renting anymore but that we are tired of the house and we can’t find anything else that will consider renting to people with 4 legged family members.
At least we are sticking to a very tight budget, house has to have a monthly with property taxes that cost no more than we would pay in rent and be less than 3 times our combined annual income in total. Going to see a house tomorrow, hoping it is what we are looking for and that they will consider what we are willing to offer $25 below asking. It is an estate sale and it has been sitting empty for the last 6 months at least if not longer.

#108 nonplused on 02.12.15 at 11:21 pm

Wait… there are people who have testicles that ride Vespa’s? Get a KLM 250. Same price.

Here in Cowtown every time I go to knock on the door of a potential employer I get run over by the hoard exiting as they just got let go. Yet nobody seems to be panicking.

#109 Jas on 02.12.15 at 11:24 pm

Based on the investment logic used by Garth, when stock market declines, investors instead of panicking, should look upon it as an opportunity to buy investments ‘on sale’ and load up.
Similarly, the decline (now and in the coming year or so) in Alberta RE should be looked upon as income generating investment opportunity.

If an income seeking investor doesn’t care about the value of stock market portfolio as long as the income is relatively stable, then what is wrong in buying rental income generating RE at a reasonable price whether Alberta or elsewhere?

#110 salonist on 02.12.15 at 11:26 pm

#88 Smoking Man
idiot

#111 lala on 02.12.15 at 11:28 pm

I’ll behave and stay to the topic. A micro-condo is so small even small people can’t live there. So I suggest to small people in Vancouver not to buy them because they are small and not confy. Myself I rent because I like the idea of renting things.

#112 Smoked squirrel meat on 02.12.15 at 11:31 pm

Northern dreams go south……..

http://www.theglobeandmail.com/news/alberta/plunging-oil-sidelines-fort-mcmurray-downtown-dream/article22976627/

#113 ANON on 02.12.15 at 11:40 pm

#91 Zen on 02.12.15 at 10:49 pm
The primary culprit in blowing the Canadian housing bubble sky high is the central bank holding interest rates artificially low for too long.

———-
Zen, I respect your posts, and there’s truth in that, no doubt.
But the primary “culprit” is a lot older than that, and is, in fact lending at interest, which is mathematically impossible to pay back.
However, since more than 99.99% of the population (in both lenders and borrowers) at any time insists this time is possible, even if they have been educated in at least basic logic and simple math, we are all culprits. No use blaming, really, focus the energy on riding the wave the best you can, because tonight’s blog title is very telling. No one can stop the wave, or should ever try to, you have to ride it.

#114 Bongs n Bacon on 02.12.15 at 11:43 pm

Smoking man….that you?

http://www.theglobeandmail.com/news/national/man-arrested-during-final-table-at-poker-tournament-still-wins-80000/article22976837/

#115 Smoking Man on 02.12.15 at 11:45 pm

#98 salonist on 02.12.15 at 11:26 pm
#88 Smoking Man
idiot

….

I know this is a big word, but can you elaborate.

#116 B.O.B. on 02.12.15 at 11:47 pm

68 Mister Obvious on 02.12.15 at 9:48 pm

Check out this ‘Historical Age Pyramid’ from statistics Canada. It’s fantastic! Who knew?

http://tinyurl.com/kqag87v

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

1961 was also the year in which the FDA approved the birth control pill.

Who knew that removing fertile females from a population would have a contracting effect on its birth rate…

#117 Hawk on 02.12.15 at 11:50 pm

#32 John on 02.12.15 at 8:54 pm

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

The front door may crash in and the house and a few assets “re-possessed” but the bottom-line is that for most people that isn’t a deterrent.

In Dubai, if you can’t repay your debts………..you BETTER make it to the airport, with your one way flight out in time, kissing the leased Lexus in the parking lot goodbye forever :-)…….cause the word “bankcruptcy” does NOT EXIST over there.

#118 Cymbalista on 02.12.15 at 11:59 pm

To #36 Smoking Man ” As far as training soldiers, they have none, they are all deserting, the ones getting called up, run and are hiding in Russia.”

Don’t read russian propaganda sites. I thought you are smarter, but I was so wrong.

#119 Mark on 02.13.15 at 12:07 am

“If an income seeking investor doesn’t care about the value of stock market portfolio as long as the income is relatively stable, then what is wrong in buying rental income generating RE at a reasonable price whether Alberta or elsewhere?”

There’s nothing wrong with investment RE as a reasonable part of a balanced portfolio (see Garth’s “Rule of 90” if you want what might be a reasonable portfolio allocation to RE, ie: subtract your age from 90, to determine what is a reasonable upper bound of one’s RE exposure). But whether it is investment-worthy largely “turns” on whether you can acquire it at a ‘reasonable price’.

When leverage (ie: a mortgage) is involved, which it often is, the need to ensure that one is buying an asset at a reasonable price is even more acute. Because leverage, in and of itself, generally comes at a significant price.


Widespread deflation is not on. BTW, gold gets less valuable as deflation makes money more valuable. — Garth”

When deflation makes money ‘too valuable’, the economic necessity of devaluing money, through extreme government/central bank action, arises. Otherwise, the economy implodes in a chain of mass defaults because the burden of debt service simply cannot be met with the available money supply.

This is where gold becomes interesting as an asset class, which is why it tends to perform well in strong deflations. We’re not there yet, but a hard Greek default, defaults in the O&G sector, etc., certainly could create a default cascade which would require significant policy intervention.

#120 devore on 02.13.15 at 12:08 am

#12 bdy sktrn

according to many here there is no land shortage in vancouver so why are ppl lining up for teeny condos way the hell out in New West?

Price.

Was this a real question? For real?

Lets go over this again.

BUY prices are driven up by speculative demand, easy credit and low rates. Buy now or buy never atmosphere drives the uninformed to line up for anything they can afford.

Meanwhile, RENT prices are going nowhere.

BTW, every pre-sale project has a line up. That’s how they arrange it. Marketing and image, you may have heard of it.

#121 Snowboid on 02.13.15 at 12:12 am

“…And ‘affordable’ 300-foot condos are now coming to market…”

The idea of buying a condo that is half the size of our Phoenix garage is not something I can easily imagine.

May as well buy a motorhome, it will probably depreciate about the same as a micro-condo, but at least you can move it around for jobs, vacation, squirrel-hunting and the like!

#122 Ralph Cramdown on 02.13.15 at 12:14 am

Offered without comment:

https://www.youtube.com/watch?v=tCcxr-fyF4Q#t=2077

#123 Mr. Furley on 02.13.15 at 12:27 am

*Pay* for 300 sq ft??? Why bother? Just steal a few cars, or roll a liquor store, and soon you’ll be in larger accomodations. With someone to cook for you, to boot.

#124 Nobody escapes | Realties.ca on 02.13.15 at 12:33 am

[…] Source: http://www.greaterfool.ca/2015/02/12/nobody-escapes-2/ […]

#125 Washed Up Lawyer on 02.13.15 at 12:34 am

I love the smell of litigation in the morning.

http://www.edmontonjournal.com/news/edmonton/Syncrude+sues+Diversified+Transportation+more+than/10809554/story.html

At $50 per barrel, success in the lawsuit would up production by 460,000 barrels.

Nasty lawsuit.

#126 Grasshopper 604 on 02.13.15 at 12:44 am

@73 Washed Up Lawyer

Enjoy your posts…You usually give me a chuckle, or two!

#127 kommykim on 02.13.15 at 12:57 am

RE #34 Catalyst on 02.12.15 at 8:56 pm
This still doesn’t make sense to me as I would rather hold the currency (yielding 0%) then a bond or GIC which yields negative. If someone knows why a negative rate fixed income product is even saleable please fill me in

They are not negative coupon bonds. They return at rates below inflation, which means you get a negative return as far as purchasing power is concerned.

#128 Zen on 02.13.15 at 1:01 am

#113 Aon
#101 Pacino
#100 Republic of W-Canada

Let’s go to school …

Central banks follow a policy of financial repression by forcing interest rates down to allow highly indebted governments to borrow at a manipulated cheap rate with an explicit goal of creating inflation. The policy is also explicitly designed to create a false sense of well-being (wealth effect) among the serfs by boosting the nominal value of the stock and housing markets. The role of interest rate policy in society is to manipulate behavior by ensuring saved funds are borrowed and spent into the economy. This is what makes the economic machine work. However, if interest rates are held too low for too long asset bubbles form, because low rates encourage speculation with borrowed money, e.g., Canadian real-estate … just as an example.

Al Pachino – I agree, central banks are now trapped. They cannot raise rates, except perhaps a token few basis points just to make a show. So you you are right it will be ZIRP forever.

Republic of CA – I agree with you as well, foreign buyers, specifically Chinese, are looking to exchange their fiat paper dollars for something real as well as find a safe place to hide their money. They have chosen Canada, but they aren’t looking for a family home, they are looking for a safe deposit box with a view. Canada’s loose immigration policy has played a role in driving real-estate prices to the moon, but not nearly as big a role as loose interest rate policy.

Anon – thanks for the kind words, however I respectfully decline your invitation to go surfing on this tsunami. My advice to you is get your ass out of the water and head to high ground!

#129 kommykim on 02.13.15 at 1:09 am

RE: #50 Babblemaster on 02.12.15 at 9:20 pm
Yes Garth. I eat bacon. All red-blooded Canadians eat bacon. What are you, some kind of commie pinko?

Naw, that’s me and I eat bacon.

#130 Vanecdotal on 02.13.15 at 1:29 am

#21 Ex-Cowtown

LOL. Christy’s next campaign slogan?

“THC – The New LNG!”

#131 Republic_of_Western_Canada on 02.13.15 at 1:32 am


#112 Smoked squirrel meat on 02.12.15 at 11:31 pm

Northern dreams go south……..

http://www.theglobeandmail.com/news/alberta/plunging-oil-sidelines-fort-mcmurray-downtown-dream/article22976627/

Not quite sure what that particular article is trying to accomplish, but core revitalization of a 1960’s backwater downtown is absolutely critical. Fort Mac is now way beyond just some collection of worn-out lowrises which may have served for the last half century. It’s in a totally different league now.

It needs advanced, high-quality office and commercial space badly. Just like the new airport it got, and the new mega-recreation center which is already being expanded.
Residential rental, too. If I’m paying 3 grand a month for an apartment, it better be good well-made large concrete construction not a mouldy sofa in some guys 1970’s basement.

The situation is somewhat similar to the coast city of Dubai – grow or choke.

Expropriation and plans for some stupid hockey rink may have been handled crudely (pardon the pun), but something seriously has to be done.

#132 bdy sktrn on 02.13.15 at 1:36 am

putting aside debt, RE, balance and house horniess; there are 3 kinds of people in this world

1. people who eat bacon

2. misguided, depraved, deprived,(brainwashed?) people who defer from bacon bliss.

3 people who eat bacon and eggs with their fingers. RIP jim.

#133 Shawn Allen on 02.13.15 at 1:39 am

Breaking my Hiatus for one quick post…

Mr. Obvious at 68 posted a great link

Check out this ‘Historical Age Pyramid’ from statistics Canada. It’s fantastic! Who knew?

http://tinyurl.com/kqag87v

*****************************************
I believe this suggests we are in for a big decline in housing formations since there are so few teenagers… We may have a few more years since they don’t live on their own until age 25 these days but it is coming.

Check it out, in 2001 the sharp decline at the base of the “pyramid” started at age 10, in 2011 it starts at age 20. There is a dearth of housing formations baked into the numbers.

And immigration I understand is stable, so that won’t fix the dearth.

P.S. Young people, don’t worry about paying for the health care of us aging boomers. We will pay it ourselves. After all we have the vast majority of the wealth.

#134 drydock on 02.13.15 at 1:39 am

BONG BONG BONG BONG BONG…

…and therefore never send to know for whom the bong tolls;
it tolls for thee. . . .

#135 Spectacle on 02.13.15 at 1:45 am

Re:
#84 Mr Stats on 02.12.15 at 10:32 pm
Hong Kong Dollar just hit a decade high against the Canadian Dollar!

Expect more upward pressure on Vancouver.
———————–
Interesting note about the comment.
Chinese New Year is quickly upon us in many parts of the world, BC, Australia, Western US cities. This is celebration vacation/travel time , and when there may be a once yearly blip in the purchase of “Vacation Home” Purchases.

Central Vancity may see some investment/Vacation home purchases.

Minor impact on prices? Will it influence “upward pressure”……next month will tell if that demographic has any impact. Rich investors do not buy 300 square foot anything! Just prepped a place for immediate sale, and the heated garage is larger than that.

#136 NorthOf49 on 02.13.15 at 1:51 am

The high price of bacon is an anomaly in a deflationary world, due to one fact: marketing. I’m surprised some of you bacon-heads hadn’t cottoned on to this. A few years back I’d noticed bacon prices starting to take off, yet everyone I knew had all but stopped eating bacon (Garth too apparently!). So where was all this new demand to suport higher prices coming from? Ahh, manufactured demand, of course! I knew the scam was in full-on assault mode when I saw the bacon t-shirts, I-brake-for-bacon bumper stickers, etc.

“By 2008, bacon had completed its journey from an ignored, unwanted meat to a viral meme—the edible equivalent of cat videos. That year, according to the website Babycenter, 11 out of every million babies born in America were named Bacon. With each bacon lovers festival and Bacon baby conceived with bacon-flavored lube, the price of pork belly futures rose. At one point in 2010, futures jumped from 90¢ per pound to a record $1.40 in just four months. Bacon prices rose from about $3 a pound in 2005 to around $5.40 today, according to government statistics.”

http://www.bloomberg.com/bw/articles/2014-10-06/bacon-why-americas-favorite-food-mania-happened

Thankfully the article mentions bacon-flavoured lube, therefore still on topic for the blog. :)

#137 Leo Tolstoy on 02.13.15 at 2:00 am

#104 Mark on 02.12.15 at 11:09 pm
Gold tends to go up in a deflation because of demand for a hedge against default in other asset classes, particularly risky credit.

Gold stocks tend to perform very well in deflations on account of the real price of gold rising, and the cost of producing gold declining due to declining real costs of the various commodities, machinery, and labour involved in its production.

This is so wrong.

As per usual.

#138 Real Estate Edmonton on 02.13.15 at 2:04 am

Talking to Realtors that are Friends with me, they are saying in edmonton, up to a 40% correction on the South Side where they have overbuilt so much and everything is heavily mortgaged, and a 25% decline in Real Estate in the more Mature central areas, like Eastwood, Westmount and Glenora….

#139 Industrial Guy on 02.13.15 at 2:19 am

Poor Ezra Levant ….. without SUN TV … who will he slander now?

#53 Failure to Launch on 02.12.15 at 9:25 pm
Think of what happens when an airplane rises too quickly, eventually it stalls and the nose points downwards and it loses altitude very rapidly as it speeds up on the way.

Stalls are a funny thing. Most aircraft are benign and after the nose drops you’re quickly back to flying speed. Some planes have a nasty habit of dropping a wing in a stall and entering a spin …. it’s recoverable … well assuming you have the altitude. Pilots always remember their fist spin. You never forget that feeling in your stomach.

#140 New Westminster on 02.13.15 at 2:21 am

Dear Garth Turner,

Please correct the spelling of “New Westminster” – the Royal City. There is only one “i” in “Westminster”.

Queensborough was proclaimed the capital of British Columbia in 1859 by Gov. Douglas. Queen Victoria didn’t like the name of the new city so she changed it to New Westminster. Garth Turner, you, as an honourable statesman of Canada, should get the spelling of Queen Victoria’s city correct.

At that time, the colony of BC was just the mainland and Vancouver Island was a separate colony, with its capital, Victoria. When the two colonies merged in 1866, Victoria stayed on as the capital and New Westminster, the Royal City, ceased being the capital of BC.

New Westminster is a historically important city to BC, and indeed to Canada. It is 27 years older than Vancouver, which was incorporated in 1886.

#141 Vanecdotal on 02.13.15 at 2:48 am

I would wager the vast majority of potential “buyers” in that sales room are SPECULATORS, not owner occupiers. Run, run away Steve. This is not a “smart money” snapshot by any measure. A few of those bodies are likely craigslist plants as well imho, to up the froth factor.

On a related note, a stones throw across the mighty trickle from the pseudo-toxic New West waterfront, FVREB’s latest stats, for those who may care.

Hint: Market direction, all property types; doooown she goes. Only category slightly “up” in price is SFH (and skewed by the presence of luxury SFH sales in White Rock / South Surrey in the mix), even these are no longer outpacing inflation… which the report prices do not reflect. So on top of the massaged stated price decline or teeny-tiny-token “increase”, don’t forget to adjust downwards on top of that for annual inflation = losing value yoy. This downtrend was established long before oil got a major haircut, economic ripple effects from that haven’t even begun to show up locally… yet.

The last 5 years of total price gains in all categories have substantially slowed from the prev. 5 years of gains, most pronounced in the last few years, momentum drying up rapidly. Hmmm. As an investor, would you buy a financial instrument at this point in its chart?
http://www.fvreb.bc.ca/statistics/Package%20201501.pdf

Keep in mind these numbers are heavily “massaged” IN the Board’s favour prior to release, yet, they can no longer hide all’s not so rosy South of the Fraser anymore:
http://www.fvreb.bc.ca/blog/index.php/2015/02/03/new-year-kicks-off-with-average-activity-for-fraser-valley-real-estate-market

2 NEW interesting disclaimers added to this month’s report:

“*Note: The national MLS® Home Price Index (MLS® HPI) underwent its annual review in January, 2015. This led to
two changes:

1. Neighbourhoods where home sales over the past three years totaled 12 or less have been removed from the model. Neighbourhoods where sales have increased to 20 or more over the past three years have been added. Composite and aggregate historical MLS® HPI data now reflect these changes.

2. Benchmark property descriptions have been updated to reflect current buying trends. Background: MLS® HPI Benchmark prices represent the value of a ‘typical’ property within a market. When the national HPI was developed in 2011, a composite description was created for every neighborhood and property type based on MLS® sales data for that specific neighbourhood. What people typically purchase can change over
time due to changes in affordability.”

So, hypothetical: if housing were a financial instrument like an ETF of mutual fund, and the fund manager decided to just “omit” the poorest performing securities (geographic regions) from their fund (regional RE) disclosures, to appear to improve performance and ROI calculations, (so the fund (regional RE) appears to be better performing with a higher rate of return than it actually has) that would be FRAUD and subject to criminal charges under securities law. But It’s Just Housing, the single most leveraged (taxpayer backstopped in many cases), and expensive asset purchase most average folks will ever make. No such disclosures required. Ridiculous.

THIS is why we need regulatory oversight and mandated data transparency of RE industry comparable to that of the financial services industry. For those who say you can’t fix stupid, I say who do you think is on the hook if / when Cdn. RE goes really south and the indebted masses are crying for a Govn’t. bailout? All of us. Every Single Taxpayer.

#142 J-Dub on 02.13.15 at 8:07 am

Man… Everyone on here is so smart! You guys wanna argue about sex and religion next??lol Good read Garth as always.

#143 Victor V on 02.13.15 at 8:47 am

https://ca.finance.yahoo.com/news/brent-holds-above-59-more-030128253.html

LONDON (Reuters) – Oil rose above $60 a barrel on Friday for the first time this year, bringing gains this week to 4 percent, supported by signs that deeper industry spending cuts may curb excess supply.

Also supporting oil, euro zone economic growth accelerated unexpectedly in the final quarter of 2014 as the bloc’s largest member, Germany, expanded at more than twice the expected rate.

The price of Brent crude collapsed from $115 in June to $45.19, the lowest in almost six years, in January due to oversupply. Since January, mounting signs of lower industry spending have helped prices rally by more than 30 percent.

#144 Victor V on 02.13.15 at 8:58 am

https://ca.finance.yahoo.com/news/prentice-albertans-not-ok-cuts-another-oil-boom-213112660.html

New Democrat Brian Mason says people remember job losses and service cuts when former premier Ralph Klein pared budgets to the bone to address deficits in the 1990s.

“Anyone that was around during that period will remember the pain, will remember the terrible cuts to our services, the losses of jobs, losses of homes (and the) breakup of families,” Mason said Thursday.

“People accepted it then because they thought it was a first-time occurrence, something that we just weren’t expecting and we needed to deal with.”

But for the next two decades a succession of Progressive Conservative governments have promised, but failed, to disconnect Alberta’s day-to-day spending from volatile oil prices, Mason said.

“It’s been entirely predictable. The government has had nearly 20 years to fix things so that it never happened again, so I don’t think that Albertans are prepared to accept the kind of strong medicine that Jim Prentice is trying to administer.”

#145 Victor V on 02.13.15 at 9:00 am

AND IT WENT FOR – 226 Riverside Drive – SWANSEA

http://themashcanada.blogspot.ca/2015/02/and-it-went-for-226-riverside-drive.html

It sold!!!!!!!!

The house with the tusks…

And the amazing view at 226 Riverside Drive in Swansea has finally sold!

I first posted this 3+1 bedroom, 4 bathroom house on a 120 x 185 foot lot overlooking the Humber River in July 2012.

The asking price was $3,198,000. It had also been listed in 2008 for $2,998,000 but I still thought that even if it sold for asking then, it wasn’t going to sell for the $3.2 ask in 2012.

It didn’t and a year later in June 2013 the price was dropped to $2,799,000. In October, it was relisted at the same price.

Then in May 2014, it was down to $2,788,000. I suggested they stage, and perhaps remove the tusks.

They didn’t.

The price was dropped again in September 2014 to $2,600,000.

By December, it was still on the market for $2,600,000, but I posted it again because they added a new angle of the tusks…

Perhaps that was what did it because this house has finally sold….

For $2,450,000.

#146 Buy Low Sell High on 02.13.15 at 9:17 am

Re picture:

The tide is eerily far out allowing the viewing of severely financiaIly disabled individuals. Only a matter of time before the oncoming tsunami wipes them out.out.

#147 honeybooboo on 02.13.15 at 9:47 am

Hey Garth,
it’s Friday the 13th. When you heading down to Port Dover?

#148 Jeff in Moose Jaw on 02.13.15 at 9:53 am

I look at that photo and think: herdenomics. After so many youthful years gone by trying to fit in… who would stop and think like an individual, maybe pull out a calculator and do some math. (I agree with Smoking Man and herdenomics, its real).

I think Robert Schiller calls it social contagion?

Wiki says behavioral contagion….

“Behavioral contagion is a type of social influence. It refers to the propensity for certain behavior exhibited by one person to be copied by others who are either in the vicinity of the original actor, or who have been exposed to media coverage describing the behavior of the original actor. It was originally used by Gustave Le Bon (1895) to explain undesirable aspects of behavior of people in crowds”
http://en.wikipedia.org/wiki/Behavioral_contagion

#149 Grantmi on 02.13.15 at 9:59 am

Here’s a $9 Trillion Question

(Bloomberg) — When Group of 20 finance ministers this week urged the Federal Reserve to “minimize negative spillovers” from potential interest-rate increases, they omitted a key figure: $9 trillion.

That’s the amount owed in dollars by non-bank borrowers outside the U.S., up 50 percent since the financial crisis, according to the Bank for International Settlements. Should the Fed raise interest rates as anticipated this year for the first time since 2006, higher borrowing costs for companies and governments, along with a stronger greenback, may add risks to an already-weak global recovery.

The dollar debt is just one example of how the Fed’s tightening would ripple through the world economy. From the housing markets in Canada and Hong Kong to capital flows into and out of China and Turkey, the question isn’t whether there will be spillovers — it’s how big they will be, and where they will hit the hardest.

http://bloom.bg/1ywmGFL

Oh oh!!!

#150 Ralph Cramdown on 02.13.15 at 10:15 am

Oil price crash, massive provincial government spending cutbacks, and now mad cow. It would appear that Alberta’s beleaguered residents have hit the trifecta.

#151 Prairieboy43 on 02.13.15 at 10:18 am

Three hundred square feet. Crazy! 30×10!! Atco work shacks are 40×10. Ice fishing shack 15×10 on skids.
All this space in this huge country. The people want to live in the sky downtown YVR.
SM is correct, people do not know how to think.

#152 Grantmi on 02.13.15 at 10:27 am

Prairieboy43 on 02.13.15 at 10:18 am

Three hundred square feet. Crazy! 30×10!! Atco work shacks are 40×10. Ice fishing shack 15×10 on skids.
All this space in this huge country. The people want to live in the sky downtown YVR.
SM is correct, people do not know how to think.

It’s essentially a High end Hotel Room size apartment. That’s it.. no more!!

http://www.westinbayshore.com/rooms

#153 Mark on 02.13.15 at 10:34 am

“This still doesn’t make sense to me as I would rather hold the currency (yielding 0%) then a bond or GIC which yields negative. If someone knows why a negative rate fixed income product is even saleable please fill me in”

A few reasons:

1) Just like the Canadian banks, and their zero interest on “savings” accounts, and the high service fees, there will always be a class of people who, for whatever reason, desire the safety/security of having a ‘bank’ take care of their money. And will keep buying those bonds/GICs without abandon, simply out of tradition, if not legislative mandate in the case of pension funds/governments/etc.

2) Speculation. If a bond yields -0.5%, what is to say that 6 months from now, it won’t end up yielding -1%? Or -2%? And generate a capital gain for the purchaser if the bond is sold?

Additionally, such a bond may be purchased on short-term credit, which is also at a negative rate of interest. If you borrow at, say, -1%, to buy a longer-term bond that goes from a yield of 0% to a yield of -2%, that certainly can yield a profit.

I personally tend to agree that the bond bubble is rather long-in-the-tooth, and will eventually be subject to a substantial inflation-induced reversal. But as with anything, timing is difficult.

“This is so wrong.

As per usual.

Are you done, troll? Most of your posts are the epitome of disrespect and are devoid of content other than taking random shots at specifically one poster.

#154 rosie "moving forward" in the knowledge that, "this won't end well" on 02.13.15 at 10:40 am

This house is being sold by a realtor. Just under 1100 houses on Kijiji this morning. I guess these folks don’t get it yet. Your house in Ft. Mac is not worth anything if no one buys it. These listing are spreading like the measles.

http://www.kijiji.ca/v-house-for-sale/fort-mcmurray/60k-below-appraised-value-one-of-a-kind-home-in-eagle-ridge/1051130186?enableSearchNavigationFlag=true

#155 Leo Tolstoy on 02.13.15 at 10:42 am

#119 Mark on 02.13.15 at 12:07 am
This is where gold becomes interesting as an asset class, which is why it tends to perform well in strong deflations. We’re not there yet, but a hard Greek default, defaults in the O&G sector, etc., certainly could create a default cascade which would require significant policy intervention.

Proof that these stories should be taken as seriously as those created by my 8 year old son.

Horribly wrong.

But par for the course.

#156 Greg on 02.13.15 at 10:46 am

109 Jas

Where are you finding rentals in Calgary that’s cash flow positive?

I’ve looked at many different properties both condo and SFH and my bottom line calculation always begins with a “-” sign.

Investments are supposed to make money, not require monthly subsidation which Calgary rentals do at today’s prices.

#157 Mark on 02.13.15 at 10:48 am

“Proof that these stories should be taken as seriously as those created by my 8 year old son.”

I hope your “8 year old son” doesn’t grow up to be the r00b-ish boor that you’re behaving as at the moment. Disagree with me if you must, but at least try and make an effort to explain yourself.

#158 Ronaldo on 02.13.15 at 10:53 am

This is where real estate is heading in Toronto and YVR.

https://www.youtube.com/watch?v=9wh3-zzd_w0

#159 Ying Yang:):( on 02.13.15 at 10:54 am

I’m out, now to go spend what Ive earned to date! No condos for me thanks.
Smoking Man you’ve been very quiet lately are in on the WPT? Break in the $2500 Event, 47 players remain. Avg. stack @ $270,600, chip leader @ $2M. Play resumes level 19, blinds $4000-$8000, $1000 ante.
I’m staying over with girlfriend for Val Day!

#160 cramar on 02.13.15 at 10:58 am

I have been studying the “Tiny House” movement that seems to have started on the norhwest coast of the U.S. I’ve read several books and done some Google work. Here is an interesting reference:

http://www.tumbleweedhouses.com/

It is interesting and relevant that one of the main reasons a person or couple say they get a tiny house is to get out of their mortgage payments with a conventional home! They want to be free of debt! Contrast this to RE-horny Canucks who want to spend their investment cash on a micro apartment, or go into debt to buy one. Idiocy!

Steve should keep their half mil invested and growing! That would be the logical and wise thing to do. Think of what they could have at retirement time! Trouble is most 30 somethings cannot look long term—only as far out as their nose.

#161 Andy on 02.13.15 at 11:02 am

Hey Garth,
So its not only you who is talking about impact of Fed rate increase this year on Canadian Real estate .

http://www.bloomberg.com/news/articles/2015-02-13/-9-trillion-question-is-how-tighter-fed-will-impact-world

Read the third paragraph.

Yes. This has been evident for some time, despite all the deniers who flock here. Oh well. They’ve been warned. — Garth

#162 Ying Yang:):( on 02.13.15 at 11:11 am

DELETED

#163 Ronaldo on 02.13.15 at 11:22 am

#73 Washed Up Lawyer on 02.12.15 at 10:04 pm
I used my six year old LG flip phone to do some calculations. I hope I am right. $230K for 300 sq. ft. is $766 per sq. ft. The other day Garth’s blog featured that $1.19M house in Shaganappi in Cowtown with almost 4000 sq. ft. That is $299 per sq. ft.
————————————————————

But it’s only $96.00 per cu. ft. of air space. What’s wrong with that?

#164 Mark on 02.13.15 at 11:30 am

“This is where real estate is heading in Toronto and YVR.

https://www.youtube.com/watch?v=9wh3-zzd_w0

So you’re calling for an epic crash in Toronto/YVR real estate? Because buyers accepting density of that nature in those cities would result in exactly that.

With the extremely small ‘families’ we have these days, with all the space-saving innovations such as wall-mountable flat TV’s, Youtube/Netflix streaming instead of shelves full of 8-tracks and Beta tapes, etc., if not for speculation, who really needs all the space that they own today? As RE prices continue to fall in YVR/YYZ/YYC, a good chunk of the 70% of Canadian owners will most likely be looking at ways of rationalizing their living expenses and reducing their consumption of RE.

#165 Daisy Mae on 02.13.15 at 11:35 am

Sun News Network shuts down

Broadcaster had grappled with CRTC over right to be carried on basic cable packages

CBC News Posted: Feb 13, 2015 5:38 AM ET| Last Updated: Feb 13, 2015 8:37 AM ET

#166 Rational Optimist on 02.13.15 at 11:37 am

114 Bongs n Bacon on 02.12.15 at 11:43 pm

What the OPP did just does not seem cricket.

#167 bdy sktrn on 02.13.15 at 11:39 am

short-term credit, which is also at a negative rate of interest. If you borrow at, say, -1%
—————————-
really?
pls provide a link to the lender offering said deal.
or is this just made up?

#168 Ronaldo on 02.13.15 at 11:42 am

#137 Leo Tolstoy on 02.13.15 at 2:00 am #104 Mark on 02.12.15 at 11:09 pm

”Gold tends to go up in a deflation because of demand for a hedge against default in other asset classes, particularly risky credit.

Gold stocks tend to perform very well in deflations on account of the real price of gold rising, and the cost of producing gold declining due to declining real costs of the various commodities, machinery, and labour involved in its production.”
—————————————–

This is so wrong.

As per usual. – Leo Tolstoy
———————————-

So what in your opinion would be the correct answer?

Gold is commodity and devalues as money grows more valuable. Without inflation or systemic financial collapse – neither of which exist – gold is just another speculative play. Amateur investors will continue to be chewed by professional traders. — Garth

#169 Alberta houses will be woth $50k on 02.13.15 at 11:44 am

Alberta is finished. There is nothing more to say. Alberta faces a world of financial pain as they are now hit with man cow disease which would explain why they vote conservative. Now they face going not only bankrupt but going crazy with mad cow. It couldn’t happen to a more backwards province.

#170 maxx on 02.13.15 at 11:48 am

“…….“a vicious cycle of falling prices” that it will cut its interest rate. Like in Canada.”

I used to believe that this rate-cutting desperation mostly concerned price-support and sustaining a floor under re investments.

I now feel that the new and eclipsing object of this desperate exercise is simply to keep as many people in their homes as possible. So as to “stabilize” the economy and also, preserve the mirage of re investment as a great deployment of personal wealth, via mortgages, sucking up to as much as twice (or more) the purchase price.

However, rates have nearly nowhere to go and jobs, good jobs, government jobs, are disappearing daily.

So taxes, in myriad forms, must necessarily go up, up and up.

Those most directly behind the eight ball are condo owners, with ever-increasing fees, taxes and special assessments, followed by those who overbought for whatever misguided reason(s). And energy in some provinces, most notably Ontario, is a complete nightmare of increases.

Risk mitigation by consumers, lowering and controlling costs, whatever the income, is here to stay.

As Garth frequently says, beware the provenance of fiscal info.

Mr. Poloz gets bank stats long before the rest do. When rates drop, I know that a new and impactful level of fiscal stench has been discovered. Banks have their fingers on the pulse at the grass roots level. It’s their job. Debt, risk and change is parsed 24/7 in a microsecond and down to the last unit of currency.

If you think government’s role is to protect its citizens…….why is their so much increasing consumer debt?

#171 bdy sktrn on 02.13.15 at 11:51 am

#120 devore on 02.13.15 at 12:08 am

Meanwhile, RENT prices are going nowhere.
——————————-
admittedly anecdotal but a dark, ugly, eastside 1br basement apt that i just bumped the rent to 1200/mo , a 20% increase from 18 months ago , still had a flood of ppl practically begging to see it. had to pull the ad after 3 days as a new renter was found and the emails were clogging up my inbox.

#172 Squirrely nutz on 02.13.15 at 11:55 am

A million smackaroos for a house in fort mac…. there are no words.

#173 dogman01 on 02.13.15 at 11:57 am

Alberta – going from bad to worse.

The last time the second sector in AB – Agriculture had Mad Cow we were flush with O&G cash and I believe they were able to help out the ranchers and keep them a float. Mad Cow I understood was a disaster for AG

No way this time I suspect.

http://www.cbc.ca/news/canada/mad-cow-disease-confirmed-in-alberta-1st-case-in-canada-since-2011-1.2955910?cmp=rss

I have built some firewalls around my finances; small paid off house bought in 1999 and an international somewhat balance portfolio. But I live here and only so many ways to protect oneself.

May well feel impact personally for my family despite precautions and wisdom.

In Alberta it is O&G, AG and crazy ass Real Estate.
Nothing else that I can see.
I do not think there is anything else.

#174 Mark on 02.13.15 at 12:00 pm

“I now feel that the new and eclipsing object of this desperate exercise is simply to keep as many people in their homes as possible. So as to “stabilize” the economy and also, preserve the mirage of re investment as a great deployment of personal wealth, via mortgages, sucking up to as much as twice (or more) the purchase price. “

The problem with perpetually stimulating, particularly a single industry, is that severe over-capacity is induced in that industry. Which is why we are now seeing prices drop in most of Canada — there is simply too much supply of RE relative to the now shrinking demand. This is why BoC policy rate cuts won’t (and aren’t) having any effect on the RE market, and may actually serve to damage it further by, at least in the short term, allowing non-viable businesses in business of RE supply to continue to exist, and allowing RE developers to continue to hoard inventory at a low cost of carry (although the market will continue to fall in anticipation of the eventual necessity of such inventory being dis-hoarded).

“If you think government’s role is to protect its citizens…….why is their so much increasing consumer debt?”

For every dollar lent, there is a dollar saved by someone. Canada’s “savers” aren’t willing to invest in significant private sector job-creation, but they most certainly are willing to invest in consumer loans. I would suggest that both the savers, and the spenders are equally responsible in creating the debt bubble we have today, and both will suffer as it pops.

#175 SWL1976 on 02.13.15 at 12:02 pm

Who the f*%k names their offspring Bacon???

Waking up on coast in my own bed is such a breath of fresh air

The sheeple lining up and fighting over 300 sq ft boxes in the sky you say. Reminds me of when I was a kid and we used to let the cows out into fresh pasture. At first they would all stand there looking at the open gate to fresh pasture, but not one would cross the line, all just sniffing and wondering. Then once one decided I’m gonna do it, all of the sudden they all had to go at once and it was a stampede to get through the gate. Sometimes involving broken fences and gates.

Herdonomics. All this reminds me of and excerpt I read not long ago… ‘Effective execution of agenda 21 will require a profound reorientation of all human society, unlike anything the world has ever experienced. A major shift in the priorities of both governments and individuals, an unprecedented redeployment of human and financial resources. This shift will demand that concern for environmental consequences of every human action be integrated into individual and collective decision making at every level…’ There’s much more to these 300 sq ft boxes that the herd are trampling one another for. And yes they are oblivious.

Did you know that the CIA is in cahoots with Google and has been from the start? Google that.

Well Garth you will be happy to know it is re-balancing time of year for me. Time to take some profit and I am ditching all my individual stocks in favor ETF’s. Thanks to this site I now know that a basket of stocks is going to out perform my individual pick of a few hundred shares here and there and be considerably less stress to manage.

Excellent blog and forum you have created here for all us eccentrics on the fringe to gather and share our proverbial thoughts and ideas. Now in true west coast fashion I’m and going to go collect my thoughts in the forest today

#176 Mark on 02.13.15 at 12:03 pm

“really?
pls provide a link to the lender offering said deal.
or is this just made up?”

Such a trade would be synthesized in futures and/or derivatives, in the practical sense. But large institutional players, in the money markets, using repo’s and similar, can implement such directly. Obviously its all secured lending, such that risk premia doesn’t destroy the returns.

#177 Mark on 02.13.15 at 12:06 pm

“Gold is commodity ….”

But it can, and does act as ‘money’ at some points in the overall cycle. Which is why treating it purely as a ‘commodity’ and applying analysis purely as a commodity leads to results which are not consistent with the historical behaviour.

#178 Daisy Mae on 02.13.15 at 12:08 pm

Oops! Just heard the tail end of the news on the radio. Daily flights to Fort McMurray out of Kelowna will cease immediately because of low flight traffic….

#179 rosie "moving forward" in the knowledge that, "this won't end well" on 02.13.15 at 12:11 pm

#172 Squirrely nutz.

The blame for million dollar houses in Canada rests squarely on the Harper government. If CMHC insured up to $500,000, that house would be selling for $499,900. People are stupid and they believe the media, the government, the bank of Canada and worst of all, the real estate industry.

#180 bdy sktrn on 02.13.15 at 12:14 pm

admittedly anecdotal but a dark, ugly, eastside 1br basement apt that i just bumped the rent to 1200/mo , a 20% increase from 18 months ago , still had a flood of ppl practically begging to see it. had to pull the ad after 3 days as a new renter was found and the emails were clogging up my inbox
————
its amazing what a shortage of rental units can do.
i checked out the competition in the area, there was none. every ad i checked was already rented.

sp500 making new all time highs – whoop whoop!

#181 For those about to flop... on 02.13.15 at 12:20 pm

Hey Cramer @ 160,I too have been watching the evolvement of the tiny house scene .
I watch “tiny house nation” and “tiny house hunting ” on shaw cable station 108.
Most of the ones on the nation one are on trailers so you can move around as you wish.
Also I am a interior decorator so I get ideas on space saving solutions and design.
I believe tiny houses have a big future but investing in micro condos is just plain dumb.a

#182 TurnerNation on 02.13.15 at 12:21 pm

Killer move in oil. “Three days in play, take your pay”.
I did.

#183 Alex N Calgary on 02.13.15 at 12:22 pm

Rental update: Benchwarmer and I talk about the market every day, for years now, as we both rent and wait, its happening now in Calgary. We signed the lease on the new rental (5th in 5years) its getting real old Garth, moving, rentals, but its happening hard! a 30yr old house the Chinese owners just bought in Jan, whoopsies!!!

We estimate between MLS and the free sites 8000 properties for sale in the Greater calgary area. About 5000 rentals as well, previous years was around 2000 total, and its not even the end of drilling season yet.

All I hear about now is layoffs everywhere, we layed off two more today here at O&G Co of 40ppl. Its amazing the speed things are happening here.

My wife and I openly talk about house prices going down and waiting to buy now, people actually agree. You couldn’t say that 3 weeks ago as everyone just looked at you like you were the stupidest person on the planet, so we never say anything really.

Traffic has been so good since Dec, so good….:)

#184 Leo Tolstoy on 02.13.15 at 12:33 pm

#168 Ronaldo on 02.13.15 at 11:42 am
So what in your opinion would be the correct answer?

—————

Gold is commodity and devalues as money grows more valuable. Without inflation or systemic financial collapse – neither of which exist – gold is just another speculative play. Amateur investors will continue to be chewed by professional traders. — Garth

Nail on the head.

It’s too bad that there are blog dogs that are unable to distinguish between reality and Mark’s reality.

Thankfully we have Garth or the wackos would dupe all the newbies.

I’m not insulting Mark when I say that he doesn’t know what he’s talking about. That’s reality. He mixes facts and turds and passes it off as gold. Pun intended. Stick with Garth’s comments. Seriously.

#185 rosie "moving forward" in the knowledge that, "this won't end well" on 02.13.15 at 12:44 pm

Harper took office in Feb. 2006. These charts show that the housing market began to disconnect from reality that year. The blame for this is Harper’s and Harper’s alone.

http://www.macleans.ca/economy/economicanalysis/the-under-the-radar-changes-that-may-soon-deflate-or-pop-the-housing-bubble/

#186 bdy sktrn on 02.13.15 at 12:46 pm

#176 Mark on 02.13.15 at 12:03 pm
Such a trade would be synthesized in futures and/or derivatives, in the practical sense. But large institutional players, in the money markets, using repo’s and similar, can implement such directly. Obviously its all secured lending, such that risk premia doesn’t destroy the returns.———————————-

so you can’t provide any evidence. not even a hint of it.

when you are in a hole, stop digging!

#187 Holy Crap Wheres The Tylenol on 02.13.15 at 12:49 pm

Told you guys its going to start a war. Politics vs oil.

http://article.wn.com/view/2015/02/13/RollsRoyce_warns_of_oil_price_fall_impact/?utm_medium=twitter&utm_source=twitterfeed

#188 bdy sktrn on 02.13.15 at 12:50 pm

#182 TurnerNation on 02.13.15 at 12:21 pm
Killer move in oil. “Three days in play, take your pay”.
I did.
——————-
nice. second time for you?

prob back to sub50 again.

tell us when you buy next time.

#189 Leo Tolstoy on 02.13.15 at 12:52 pm

#177 Mark on 02.13.15 at 12:06 pm
“Gold is commodity ….”

But it can, and does act as ‘money’ at some points in the overall cycle. Which is why treating it purely as a ‘commodity’ and applying analysis purely as a commodity leads to results which are not consistent with the historical behaviour.

Wow…

Just wow…

#190 Holy Crap Wheres The Tylenol on 02.13.15 at 12:52 pm

BTW Garth nice photo but “Nobody Escapes” These guys in the photo have it all figured out! They just don’t give a Sh#t about anything except now, here right now, this day!

#191 Madcow squirrel meat on 02.13.15 at 12:56 pm

Millenials vs the boomers.. have at it.

http://news.nationalpost.com/2015/02/13/tasha-kheiriddin-cry-me-a-river-millennials/

#192 Guessing Game on 02.13.15 at 12:58 pm

169 Alberta houses will be woth $50k on 02.13.15 at 11:44 am
Alberta is finished. There is nothing more to say. Alberta faces a world of financial pain as they are now hit with man cow disease which would explain why they vote conservative. Now they face going not only bankrupt but going crazy with mad cow. It couldn’t happen to a more backwards province.
———————————————————

Ha Ha… The HATE here for Alberta is real….

#193 For those about to flop... on 02.13.15 at 12:59 pm

Mark and Leo ,why don’t you guys call a truce for the weekend being valentines day and all.
Back at each other 6 am Monday morning.
Either that or get a room.

#194 Madcow squirrel meat on 02.13.15 at 1:04 pm

#179 Rosie

Spectacular.. a million bucks for basically nothing special in the middle of the tundra..and on kijiji!!

Harpo and Jim started all this for sure with those crazy zero down/40 year mortgages… and here we now are.

Fort Mac is 5 hrs north of Edmonton…!!! 5hrs!!..which is already 3 hrs north of where anyone should be paying crazy houses prices.

#195 Yogi Bear on 02.13.15 at 1:10 pm

So its not only you who is talking about impact of Fed rate increase this year on Canadian Real estate .

http://www.bloomberg.com/news/articles/2015-02-13/-9-trillion-question-is-how-tighter-fed-will-impact-world

Read the third paragraph.

The Fed doesn’t have a lot of options if it wants to unwind its $4.5 trillion dollar balance sheet. And it wants to unwind it, lest it end up like the BoJ which is a disaster waiting to happen.

This is just a theory, but if I was the Fed and I was trying to find suckers to consume trillions of dollars of US bonds I would aggressively raise interest rates. This (along with a few other policy moves) would precipitate a correction in the stock market causing major capital flight into bonds, not to mention increasing the outright demand for bonds due to higher yields. Keep cranking rates every quarter and keep dumping bonds off the balance sheet.

Of course, this only works if you can afford to raise rates, which is a difficult thing to do when you’re flirting with deflation.

Maybe the Fed should just lower their Interest on Excess Reserves. That will put more money into the real economy.

#196 Industrial Guy on 02.13.15 at 1:10 pm

The U.S. Energy Information Administration Crude oil inventory increased by 4.90 million barrels from the previous week. Market expectation were 3.67 million barrels.

As of the week of Feb 6th … 418 million barrels are sitting in inventory …. highest level in 8 decades. Things to remember … this is the heating season, a traditional high demand period for oil in the USA. You would expect stock to be down after a cold and snowy winter.

http://www.eia.gov/petroleum/heatingoilpropane/#itn-tabs-2

418 million barrels is a lot of oil …. but in 1929, U.S. crude stocks peaked at a staggering 545 million barrels.
127 million barrels to go.

A little Canadian perspective … Alberta oil sands production was expected to increase from 1.9 million barrels per day in 2012 to 3.8 million barrels per day in 2022.

Does the USA need our oil?????

#197 Victor V on 02.13.15 at 1:34 pm

Warren Kinsella weighs in re: Sun News Network

http://warrenkinsella.com/2015/02/dear-sun-news-network-folks/

#198 Madcow squirrel meat on 02.13.15 at 1:37 pm

#169

“…man cow disease…”

Disturbing image.

#199 Bottoms_Up on 02.13.15 at 1:37 pm

#13 Mark on 02.12.15 at 8:40 pm
————————————–
Housing P/E ratio is calculated as such:

Price to buy, divided by 12 months of what the place would fetch in rent.

So a $500,000 place divided by monthly rent of $2000 (yearly = $24,000) gives a P/E ratio of 20.8.

On average (and we know how averages apply in real estate…they don’t), you want to buy when P/E is 18-20.

Use as a general guide to figure out whether housing is relatively cheap or expensive where you live.

#200 Stan Colimor on 02.13.15 at 1:38 pm

Gold is commodity and devalues as money grows more valuable. Without inflation or systemic financial collapse – neither of which exist – gold is just another speculative play. Amateur investors will continue to be chewed by professional traders. — Garth

…………………………
Gold Is Money, Everything Else Is Credit – J P Morgan

#201 Ralph Cramdown on 02.13.15 at 1:39 pm

#184 Leo Tolstoy — “I’m not insulting Mark when I say that he doesn’t know what he’s talking about. That’s reality.”

Here’s a tip: NOBODY KNOWS WHAT THEY’RE TALKING ABOUT. We’ve all got theories, none of which are right all the time, and some of which are wrong all the time. Our timing sucks, and timing, when sufficiently off, is financially indistinguishable from being wrong.

The people most likely to be right are the ones who propose the most diversified and innocuous long term strategies, on the self-effacing theory of “I don’t know.” These people are BORING, so they don’t get any media time compared to the far more exciting people whose theories include “THIS ONE’S GOING TO THE MOON!” and “TOTAL COLLAPSE AND GLOBAL RESET!”

The people talking the loudest, the longest and with the most conviction are the most likely to be wrong — if only because they’re psychologically married to their positions and unwilling to admit error. The looniest of these start inventing ever crazier conspiracy theories to explain that they’re actually right, but for dark manichean forces on the other side of their trades.

N.B. Eric Sprott, patron saint of goldbugs, just blew up one of his hedge funds. The fund’s position with the third-highest VaR was “Short EUR/CHF 5 year Volatility.” The classic “picking up nickels in front of a steamroller” play — and fiat nickels at that! How such a position had any business being in a fund called “Sprott Absolute Return Income Fund” is a mystery for the regulators. He was spectacularly, disastrously (for his customers, anyway) wrong… but with conviction!

#202 Stan Colimor on 02.13.15 at 1:41 pm

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

A gold reserve is the gold held by a national central bank, intended as a store of value and as a guarantee to redeem promises to pay depositors, note holders (e.g., paper money), or trading peers, or to secure a currency.

That was true in the 19th Century, not today. Gold is just another asset class held by central bankers along with various currencies and other securities. — Garth

#203 Mark on 02.13.15 at 1:47 pm

“Mark and Leo ,why don’t you guys call a truce for the weekend being valentines day and all.”

He’s the one running his mouth off, claiming I’m so ‘wrong’, yet not actually saying anything to bolster his claim. Not discussing the subject matter at hand. What a freakin’ troll. Should change his nickname to “Leo Trolllstoy” to more accurately reflect what 99% of his posts have been over the past few weeks.

#204 Mark on 02.13.15 at 1:51 pm

“Price to buy, divided by 12 months of what the place would fetch in rent.
So a $500,000 place divided by monthly rent of $2000 (yearly = $24,000) gives a P/E ratio of 20.8.

Except that you need to deduct expenses, taxes, and depreciation from such. To arrive at a “E” that is similar to the way that “E” is derived and commonly quoted for common stocks and broad market indices.

What you’re calculating is just Price/Gross CashFlow. Some people do that for stocks, ie: calculate a Price / EBITDA multiple. But its not a particularly useful metric as it leads to a lot of inconsistency between various types of businesses.

#205 Mark on 02.13.15 at 1:54 pm

“Does the USA need our oil?????”

Hell yeah they do. They still import 8-10 million barrels per day of the stuff, and Canadian production is only offsetting depletion elsewhere. Even if shale production were to continue at full-blast, barring either economic collapse, or a dramatic push towards energy efficiency, there is no realistic way that the US could stop using imported oil.

#206 Stan Colimor on 02.13.15 at 1:58 pm

That was true in the 19th Century, not today. Gold is just another asset class held by central bankers along with various currencies and other securities. — Garth
…………………………..
US offically removed redemption of US dollars to gold in 1974. It is the second half, at the border of 4th wuarter of 20th the century.

And we surely enjoy the inflation since.

As for the other reserves:
DEFINITION of ‘Bank Reserve’
Bank reserves are the currency deposits which are not lent out to the bank’s clients. A small fraction of the total deposits is held internally by the bank or deposited with the central bank. Minimum reserve requirements are established by central banks in order to ensure that the financial institutions will be able to provide clients with cash upon request.

Central Bank Reserves are ForEx/currencies and gold. mortgage backed securities and bonds do not really qualify as reserves.

#207 Iconoclast on 02.13.15 at 2:05 pm

#118 Cymbalista

On the contrary – it’s vitally important to read Russian propaganda sites.
And Chinese ones (Epoch Times). And Al-Jazeera, and Irna, Jpost, and Haaretz.
And NYT and the Washington Post. And BBC. Maybe even CNN.
(You can generally skip Fox and the real wacko blogs)

Because almost all journalists know not to shit where they eat, you have to have an outsiders view.
The truth is out there, somewhere between the words.

#208 Victor V on 02.13.15 at 2:06 pm

http://business.financialpost.com/2015/02/13/yahoo-inc-cuts-up-to-125-jobs-mostly-affecting-canada-offices/?__lsa=a0db-2632

Yahoo! Inc. Chief Executive Officer Marissa Mayer is cutting about 1% of the company’s workforce as she looks to trim costs, according to a person familiar with the matter.

The reductions, which would be fewer than about 125 people, affect editorial staffing in Canada, among other areas, said the person, who asked not to be named because the matter is private. The Sunnyvale, California-based company had 12,500 employees at the end of the fourth quarter.

“We constantly make changes to better align our resources and investments with our strategic priorities,” Yahoo said in a statement Friday.

#209 Chris on 02.13.15 at 2:13 pm

Although I do agree that $600K+ houses in Ft Mac is insane, why is that more ridiculous than what’s going on in Toronto or Vancouver? Yeah Ft Mac is literally in the middle of nowhere, but (up until recently) anyone with a pulse and a minor skill could easily make 6 figures. Often $200k/yr. So keeping that in consideration, are all the $600K+ homes up there really that crazy? I’m glad I sold mine when I did though!

#210 S. Bby on 02.13.15 at 2:16 pm

Those micro-condos are just another way for developers to fleece Joe Public. Remember the saying: If you don’t know who the sucker in the room is…

#211 bdy sktrn on 02.13.15 at 2:16 pm

#192 Guessing Game on 02.13.15 at 12:58 pm
Ha Ha… The HATE here for Alberta is real….
—————————–
i don’t get why the hate.

AB has carried the economy of the country on it’s back for years.
From here in BC gratitude is what i feel. And sorrow that it is ending.

#212 For those about to flop... on 02.13.15 at 2:17 pm

Mark ,dude it can’t believe it you actually said something funny for once calling your nemesis “Leo Trollstroy”
Good for you ,if some one has a pop at you have a pop back once in a while .
It’s better than trying to argue the same point over and over again.
Nothing wrong with a healthy debate ,just try to keep it upbeat and humorous a little more .
It’s not all about the money.

#213 crazed and a little confused on 02.13.15 at 2:27 pm

Hi all,

500 k in there 30 s is impressive I am 43 and I have 300 k myself 95 k in rrsp, 90 k in stocks, etfs
100 k in gics . i was at a TD investment seminar only 9 people , room designed for 15 . Some people in 40-50 years old clueless in investing .
i pretty sure they have real estate though …such is the state of lower mainland

Sorry garth you are wrong about real estate for people here it is a religion

#214 Ronaldo on 02.13.15 at 2:32 pm

#211 Bdry Skytrn

”AB has carried the economy of the country on it’s back for years.
From here in BC gratitude is what i feel. And sorrow that it is ending.”
————————–

Absolutely, right from the Kootenays, the Okanagan to Vancouver Island, the Albertans have had a dramatic impact on these economies.

#215 Zen on 02.13.15 at 2:38 pm

Garth – from what I’ve gathered in reading your blog you’re generally contrarian in your thinking, however regarding the topic of gold you’re thinking is so very consensual.

Your comment (line #184) only makes sense in our current monetary construct, however over the long arch of history this monetary experiment only represents the last 30 yrs.

Sadly, in one short generation we have moved the US dollar (worlds reserve) from the Gold standard to the PHD standard. US Congress has entrusted the value of the US dollar to an independent committee (Fed) dominated by academics and monetary scholars. Over the last 30 years topic of gold has been banished from our school curriculums and has been disparaged by all those who make a living selling, trading, and dealing in paper, e.g., all those in the financial planning and asset gathering business.

At one time scholars, teachers and students of economics had to understand gold because it accounted for how you determined a country’s reserves, it was a line item in capital accounts, and played a role in the balance of trade. Once the US went off the gold standard in 1971, the topic of gold was pulled from the economic books and relegated to the history books. We have an entire generation of people who do not understand the importance of gold, and you appear to be one of them.

Governments much prefer the fiat system because it offers them unrestrained power to print money, expand credit, and redistribute wealth by changing the value of that money. Throughout history governments have been forced to go back to commodity based systems only after they [government] have severely depreciated the value of the money due to unconstrained printing, which is exactly where we are at today.

Eventually unrestrained money printing will cause people will loose faith in paper money, and when this happens people will turn to gold. History is unequivocally clear in this regard. People will eventually recognize the central banks are are ruining their paper wealth so they will look to trade out of their paper and exchange their dollar bills for tangible assets (like gold) that cannot be conjured digitally on a key board.

As always, the time to buy an asset is when it is out of favor, unloved, and on sale. Gold fits that criteria.

No it doesn’t. It’s dead money. Buy assets that pay you to own them. — Garth

#216 maxx on 02.13.15 at 2:43 pm

#174 Mark on 02.13.15 at 12:00 pm

Good points. To your last one, I will say this: I am a consummate saver, more now than ever. Started as a child.
When interest rates were “normal”, I spent more- a lot more. On lots of stuff. Retail. Not now. Not because I can’t, I simply will not spend the principal. Never. Any interest and dividends, however, are completely up for grabs.

#217 april on 02.13.15 at 2:59 pm

These people must be stupid and they don’t all look that young. You can buy much larger units in good condition in New West for less than these closets that their lining up for.
By the way what’s so wrong about living in New West –according to some of you bloggers???

#218 Victor V on 02.13.15 at 3:00 pm

http://business.financialpost.com/2015/02/13/eric-sprott-gives-dire-warning-on-currency-volatility-right-before-one-of-his-funds-gets-hit-by-swiss-national-bank-losses/

Sprott then referred to the knock-on effects of the decision by the Swiss National Bank to unpeg its currency to the euro. One such effect was to wipe out a hedge fund with US$850 million “got wiped out in a day. The leverage out there is just staggering. That’s just one example. I think it’s the leveraging of the financial system, the use of derivatives, and someday there will be a claim on somebody and that bank will not be able to honour.”

It was all rather dire.

The next business day it was revealed that one of the hedge funds managed by Sprott — Sprott Absolute Return Income Fund — had closed down just days earlier because it was hit by losses as a result of the decision by the Swiss National Bank.

The fund had been around for almost four and a half years and was formed for the goal of maximizing “absolute total returns on investments with low volatility” largely by investing in fixed income securities, currencies and derivatives.

Reports indicated that the fund had invested 10% of its assets in a derivative linked to the Swiss Franc. For January the fund was down by almost 20%.

We were unsuccessful in reaching Sprott. Glen Williams, the firm’s spokesman is away until early next week.

#219 Obvious Truth on 02.13.15 at 3:03 pm

Nobody in Alberta wants a reversal in oil today. The machines are watching.

#220 bdy sktrn on 02.13.15 at 3:03 pm

“The future is always coming up with surprises for us, and the best way to insulate yourself from these surprises is to diversify,” Shiller said

http://finance.yahoo.com/news/robert-shillers-depressing-advice-investors-130622396.html
———————————
now where have i heard that before?

he’s stealing your goods Garth!

#221 honeybooboo on 02.13.15 at 3:04 pm

Dearest Mark,
I’ve finally figured out who you remind me of.
Spock.
You are full of facts and figures and theories (not that I agree with half of them) and you use your logic to guide you to a belief or position lets call it. But you don’t have humans figured out yet.
Leo Trollstoy, ha that was funny. Where did you read up about humour?

#222 rosie "moving forward" in the knowledge that, "this won't end well" on 02.13.15 at 3:07 pm

For all of you believers in HAM.

http://in.reuters.com/article/2015/02/10/canada-china-investment-idINL1N0VK06S20150210

#223 Holy Crap Wheres The Tylenol on 02.13.15 at 3:07 pm

#172 Squirrely nutz on 02.13.15 at 11:55 am

A million smackaroos for a house in fort mac…. there are no words.

_______________________________________________
Must be a million dollar view?

#224 DisgustMadeMePost on 02.13.15 at 3:08 pm

From Andy 161 :

http://www.bloomberg.com/news/articles/2015-02-13/-9-trillion-question-is-how-tighter-fed-will-impact-world

Hong Kong, which has fixed its currency to the U.S. dollar since 1983, typically raises borrowing costs in tandem with the Fed. Property prices in the city may fall as much as 20 percent this year because of a weaker rental outlook and the potential for interest-rate increases, according to a December report from investment bank Bocom International Holdings Co.

…………

Well, pegged currency aside, seems to me if Hong Kong could slip 20%… So too could Vancouver and TO.

#225 Holy Crap Wheres The Tylenol on 02.13.15 at 3:10 pm

Well at least we are in the fancy expensive car manufacturing business. Guys who can afford this car don’t give two sh#ts about the economy, the price of oil, the rising or falling dollar and or real estate.
I think I want one of these in Red.

http://www.cbc.ca/news/business/ford-turns-to-ontario-s-multimatic-to-make-gt-concept-car-1.2956454

#226 45north on 02.13.15 at 3:18 pm

Marco Polo: Smoking Man.

It’s obvious again, that you have still never been to Ukraine. I have lived there, and find your analysis troubling and irrelevant.

I have never lived there either but I identify with the Ukraine and believe that the people are engaged in a courageous struggle against a bully.

#227 Ray Skunk on 02.13.15 at 3:20 pm

Mad cow disease confirmed in Alberta.

Talk about kick a province while they’re down.

#228 S. Bby on 02.13.15 at 3:21 pm

#120 devore on 02.13.15 at 12:08 am
Meanwhile, RENT prices are going nowhere.

My rent has not gone up in the three years we’ve lived in the place. But my investments certainly have increased.

#229 45north on 02.13.15 at 3:21 pm

Ralph Cramdown: the Chicago Trading Pit from the youtube video: Ron Beebe “a 16 year ride isn’t bad”

very interesting, a path I never went down

#230 For those about to flop... on 02.13.15 at 3:21 pm

Hey crazed and a little confused @213,you know why real estate is considered a religion in Vancouver?
Because the people who don’t find the greater fool say
“Oh god ,what have I done.”when the bubble bursts.

#231 bdy sktrn on 02.13.15 at 3:23 pm

Hi all,

500 k in there early 30 s is impressive
——————-
not likely earned/saved at that age.
they got a gift somewhere. does anybody save anything (more than pocket change)in their 20’s?

#232 Chris on 02.13.15 at 3:32 pm

“This week the largest private mortgage insurer said it’s worried. Genworth is raising its target loss ratio by a whopping 50%, on expectations of more unemployment and lower house prices in Alberta. By the way, the company’s exposure there is huge.” C’mon Garth, you are trying to make things sound much more dramatic than they actually are. Yes, going from 20 to 30 % target loss ratio is a 50% increase, but it’s not really that dramatic, this year their target was 25% so in the same ballpark. Also Alberta represents 20% of their business, I wouldn’t say exposure there is “huge”. No need to write like a newspaper headline editor.

“Genworth MI Canada Inc. is raising its target loss ratio, a measure of claims paid compared to premiums earned, from 20 per cent to 30 per cent on expectations of rising unemployment and a 3-5 percent drop in Alberta home prices.

“Clearly, the current environment, specifically the low oil prices, will put some pressure on losses and potentially the size of the housing market in Alberta,” Stuart Levings, Genworth’s president and CEO, prices, told analysts during a conference call to report its fourth-quarter earnings Wednesday Alberta represents a fifth of the company’s mortgage insurance business, although the province accounted for 27 percent of new insurance premiums written last year. The bulk of Genworth’s Alberta portfolio consists of insured mortgages dating back to 2012 and now average 20 percent equity, offing a buffer against “a moderate downturn in house prices,” chief risk officer Craig Sweeney said.

For the $8.8-billion worth of outstanding Alberta mortgages from the last two years, however, the borrowers tended to have relatively high loan-to-value ratio, with equity averaging just 16 percent in 2013 and 9 percent in 2014, due to slow home price appreciation and borrowers paying off less of the principal on their mortgages in those years, the company said.

Thanks for confirming the correctness of my 50% notation. Yes, 27% of new Genworth business is in Alberta and its customers there have an 80% leverage ratio. Like I said, huge. — Garth

#233 Mark on 02.13.15 at 3:41 pm

“Good points. To your last one, I will say this: I am a consummate saver, more now than ever. Started as a child.
When interest rates were “normal”, I spent more- a lot more. On lots of stuff. Retail. Not now. Not because I can’t, I simply will not spend the principal. Never. Any interest and dividends, however, are completely up for grabs.”

That’s an interesting psychological construct, and certainly one that has implications in behavioural finance.

However, ‘principal’ is, in and of itself, subject to debasement through inflation. A low inflation environment, yes, has low interest rates. But the value of principal is not eroded. So its a trade-off, between keeping the value of principal with little interest, or having high interest (and in your case, ostensibly high spending), with depleting purchasing power of principal.

I think people get way too caught up in memes such as “only spend the interest, don’t touch the principal” and “high interest rates are good for savers” without actually looking at the true implications of such.

For instance, a 10% interest rate may seem “good”, but if its accompanied by an 8% rate of inflation, and a 40% tax rate, the real after-tax return on the money invested is actually negative. While a 3% interest rate, 2% rate of inflation, and low taxes, in comparison, will probably outperform such quite considerably. Those who are griping about “low interest rates” today, should really be fearing the return of high rates, IMHO, because that’s when their savings accounts, GICs, bonds, etc., will see their real value and real returns significantly impaired due to such. Even if its not apparently obvious by the explicit rate of “interest” paid.

#234 Scott on 02.13.15 at 3:41 pm

I tried to explain to my crazy in-laws that as far as the rest of the world is concerned, EVERYTHING IN CANADA is now worth 20% less than it was 6 months ago.

The only people who think houses are worth more, are a dwindling number of Canadians.

They didn’t understand.

#235 Mark on 02.13.15 at 3:43 pm

“We were unsuccessful in reaching Sprott. “

Google Sprott’s comments on San Gold and Veris Gold if you want more humour for your day.

#236 bdy sktrn on 02.13.15 at 3:44 pm

As always, the time to buy an asset is when it is out of favor, unloved, and on sale. Gold fits that criteria.

No it doesn’t. It’s dead money. Buy assets that pay you to own them. — Garth
——————————-
as good an argument as that was, good ole’ ‘murican fiat remains in pretty strong demand.

could the ‘death of gold’ be tied to the ‘birth of computers’? ya know, where all those zeros get made?
and how we learn about companies that pay you to own them?

#237 Econoom on 02.13.15 at 3:48 pm

#183 Alex N Calgary

5,000 rentals available in Calgary? That’s news to me. I have a rental property that I listed last week. 11 showings this afternoon. The market says you’re wrong, bud.

#238 bdy sktrn on 02.13.15 at 3:50 pm

#217 april on 02.13.15 at 2:59 pm
These people must be stupid and they don’t all look that young. You can buy much larger units in good condition in New West for less than these closets that their lining up for.
———————————
some people are very serious about NEW. very serious.
i have a sibling like that. shiny, new, novel – they just cant resist. the 5k that vanishes the moment of driving a new car off the lot is worth it for the rush of new shit.

————
By the way what’s so wrong about living in New West –according to some of you bloggers???
————
lots. get out asap. come to east van we will welcome you with open arms ;)

#239 Pump and Dump on 02.13.15 at 4:11 pm

BBD dropping like a rock again today. Are you “buying” or continuing to P&D?

#240 Frustrated Kiwi on 02.13.15 at 4:24 pm

#107 Islandgirl

1. Can you buy with at least 20% down and not violate Garth’s rule of 90?
2. Are you pretty sure you will live in the place you buy for the next 15 years?
3. Will the mortgage payments still leave you money for saving as well (say 10% of gross income)
4. How much regret will you have if the market falls 30% in the next 10 years?

If your answers are yes, yes, yes, and not much, then sounds like you can afford to buy. Probably won’t be your best financial move but it may well be worthwhile for the lifestyle – many people enjoy owning their own home.

#241 Zen on 02.13.15 at 4:27 pm

Regarding #215, – “No it doesn’t. It’s dead money. Buy assets that pay you to own them”. — Garth

Thoroughly convincing argument against gold. Well done.

Well, at least we agree gold is money, albeit “dead money” in your opinion.

Ok then, so what asset would you recommend buying today that pays you to own it yet offers margin of safety and that is NOT part of this insane central banking induced bubble?

Set aside the whole argument for vs against gold, virtually every asset class outside of precious metals is strenuously overvalued, overbought, and overbullish.

I’ll grant you that it is a great idea to buy assets that pay you to own them, but not at the risk of over paying and loosing 50% in a correction when the asset reverts to the mean.

Seems to me the vast majority of those in finance are leading their clients out to the bitter end of the tree limb in search of some kind of a yield or return in this zero bound world, yet they fail to consider the downside risks of stretching that far out to get it.

In todays environment of central bank artificially inflated everything, our primary concern should be with the return ‘of’ our money, NOT the return ‘on’ it.

Mindless fearmongering. A balanced, diversified portfolio is designed to mitigate risk and put capital to work. The return on a 60/40 over the last decade is 7.4%. That’s real cash flow. Even including the worst market correction in 80 years. You metalheads are so misguided. — Garth

#242 Rational Optimist on 02.13.15 at 4:30 pm

191 Madcow squirrel meat on 02.13.15 at 12:56 pm

Oh, man. From that article: “Under-45s can thank [the boomers] for… even today’s low interest rates (Bank of Canada governor Stephen Poloz is 59 years young).”

That was the last item on the list. “Even” low interest rates! Yup, guess the young’uns should be down on their knees in gratitude then.

#243 bdy sktrn on 02.13.15 at 4:34 pm

may fall as much as 20 percent this year because…the potential for interest-rate increases, according to a December report from investment bank Bocom International Holdings Co.
…………
Well, pegged currency aside, seems to me if Hong Kong could slip 20%… So too could Vancouver and TO.
——————-

zirp. for a good while yet.

#244 Smoking Man on 02.13.15 at 4:35 pm

#226 45north on 02.13.15 at 3:18 pm
Marco Polo: Smoking Man.

It’s obvious again, that you have still never been to Ukraine. I have lived there, and find your analysis troubling and irrelevant.

I have never lived there either but I identify with the Ukraine and believe that the people are engaged in a courageous struggle against a bully.
……..

Dude again, how do I put this, I’m Super Gambler, I trade Forex, make anywhere from 50 to 200k, a week.

I am a news Junky, Bloomberg, Reuters,
Veterans Today, that ones wild, I built a 25 window twitter browser, each with a custom search. I get my news before Bloomberg.

Do you think my amazing market calls here for the last few years are an accident.

I could care less about Ukraine, Or Russia, Or Greece or any country..

But I need to know what’s going on on order to put on bug bets.

Now I know what’s going on with Russia and Ukraine.. My version, you can bet on.

Yours, leave your loot under your matriss

#245 april on 02.13.15 at 4:38 pm

#237 bdy sktrn- You have to tell me what’ wrong with New West… pLease? Surely East Van is no prize either???
Thanks

#246 bdy sktrn on 02.13.15 at 4:38 pm

#228 S. Bby on 02.13.15 at 3:21 pm
#120 devore on 02.13.15 at 12:08 am
Meanwhile, RENT prices are going nowhere.

My rent has not gone up in the three years we’ve lived in the place. But my investments certainly have increased.
—————————-
no mtge +good tennant = no rent increases.
bump it up between tenants, try to keep the good ones.

#247 Ralph Cramdown on 02.13.15 at 4:58 pm

#215 Zen — “As always, the time to buy an asset is when it is out of favor, unloved, and on sale. Gold fits that criteria.”

It isn’t like you need to read ancient manuscripts to see that isn’t true. In the last cycle, it took gold 20 years to go from peak to trough, and it lost about 2/3 of its nominal US dollar value, while inflation took off about another 50%.

The ‘Cash for Gold’ stores haven’t even all folded yet. We could be a long, long way from capitulation and revulsion.

#248 aL pacino on 02.13.15 at 4:59 pm

#120 devore on 02.13.15 at 12:08 am
#12 bdy sktrn

according to many here there is no land shortage in vancouver so why are ppl lining up for teeny condos way the hell out in New West?

Price.

Was this a real question? For real?

Lets go over this again.

BUY prices are driven up by speculative demand, easy credit and low rates. Buy now or buy never atmosphere drives the uninformed to line up for anything they can afford.

Meanwhile, RENT prices are going nowhere.

BTW, every pre-sale project has a line up. That’s how they arrange it. Marketing and image, you may have heard of it.

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

Let me say this for the last time you pazos.
Increase capital tax exemption form 1.5 to 5 years and flipping stops over night. THE END

#249 kommykim on 02.13.15 at 5:00 pm

RE:#211 bdy sktrn on 02.13.15 at 2:16 pm
#192 Guessing Game on 02.13.15 at 12:58 pm
Ha Ha… The HATE here for Alberta is real….
—————————–
i don’t get why the hate.
AB has carried the economy of the country on it’s back for years.
From here in BC gratitude is what i feel. And sorrow that it is ending.

The “hate” comes from years of listening to rightwing Albertans telling us how they are financial geniuses because they pump black goo out of the ground. Years of Albertans whining about making transfer payments to other provinces and how the rest of us “owe” them. Alberta putting homeless people on busses and shipping them out of province so other people can pay taxes to support them. The fact that Albertans have largely helped put Harper in power. Etc.

#250 cramar on 02.13.15 at 5:23 pm

You can never tell that there are problems in much of the country. Business as usual in TO. Things are just different there.

http://www.theglobeandmail.com/life/life-video/video-done-deals-cool-design-and-a-casa-loma-view-helped-sell-this-condo/article22912927/

#251 Harbour on 02.13.15 at 5:33 pm

#248 kommykim

That’s a crock a shit

Didn’t even know Harper was from Alberta and not everybody in this province pumps black goo. I bet most of them are from outside Alberta.

#252 calgaryPhantom on 02.13.15 at 5:48 pm

Mark dude, i don’t have any opinion about you nor your comments. I like to read various perspectives and all are valuable to me.

But i must say, you have managed to piss off a lot of people on this blog in a relatively short period of time. Come on people, give Mark a break. He adds his perspective to a very wide range of opinions expressed on this blog. What’s wrong with that?

#253 Wildrose spanked nutz on 02.13.15 at 5:48 pm

So apparently Fort Mac is # 3 for sex toys… well there ya have it.

#254 Wildrose spanked nutz on 02.13.15 at 5:49 pm

http://www.calgarysun.com/2015/02/13/alberta-a-top-spot-for-sex-toys-and-bdsm-gear-sales

#255 Mark on 02.13.15 at 5:51 pm

“Increase capital tax exemption form 1.5 to 5 years and flipping stops over night.”

What ‘capital tax exemption’ might you be talking about? Principal residences are tax-exempt, and people who ‘flip’ houses in the course of being a business are already taxed at ‘income’ rates.

Are you arguing for greater CRA enforcement of the rules that are already on the books? I can live with that. But flippers do take risk, and they do serve a useful purpose in society by providing liquidity to the marketplace. Additionally, there is no long-term evidence that flipping is anything but a zero-sum game (it only takes one unsuccessful/failed flip to wipe out a huge amount of wealth!).

If government wanted to really shut down the excess housing prices, they could attack the problem at the root by shutting down the oodles of subprime credit available in the Canadian marketplace. Ironically guaranteed by the government itself through the CMHC. Of course, that would detonate the CMHC guarantee portfolio in fairly short order, so the goal is to achieve as much of a soft landing as possible. Price declines have only been minor over the past 2 years, so thus far, they are succeeding, although Genworth Canada’s rumblings the other day would indicate there’s trouble a’brewin.

#256 Nerf Herder on 02.13.15 at 6:02 pm

Garth, obviously gold and housing has an emotional connection that extends beyond logic and ROI.

To deny that this has an impact upon their perceived value is being too flippant.

(I’m not a gold hoarder either… FYI)

How can I possibly be flippant when I’m correct? — Garth

#257 aL pacino on 02.13.15 at 6:02 pm

Mad cow in Alberta.
I guess sometimes when disaster hit it just keeps on hitting.

#258 bdy sktrn on 02.13.15 at 6:38 pm

#244 april on 02.13.15 at 4:38 pm
#237 bdy sktrn- You have to tell me what’ wrong with New West… pLease? Surely East Van is no prize either???
Thanks
————————–
i’m sure there are perfectly lovely parts of town.
it was kinda tongue in cheek, sorry.

my biggest beef is with the crooked streets. whats up with that? it puts the mountains in the wrong place and makes me get lost! (and i never get lost)N-S E-W , easy. so what if yours were there first!

it’s a bit far from d/t and hard to get into and out of, but only for driving. transit works.

still think you’d have more fun here on the drive!

#259 rawdiswar on 02.13.15 at 6:50 pm

#231 bdy sktrn

A few of us do save, I’m 30 and I have 100K saved, no gifts. Wife is 28 and has just over 40K. We rent.

#260 kommykim on 02.13.15 at 7:01 pm

RE:#251 Harbour on 02.13.15 at 5:33 pm
#248 kommykim
That’s a crock a shit

The truth hurts, doesn’t it?
http://www.apnewsarchive.com/1997/Stalker-Banished-to-Next-Province/id-b209d7c3ae608cf868907dae93feb38f
At the end of the 1997 article is this snippet:
The incident had some parallels with a controversy two years ago, when Alberta angered the British Columbia government by giving welfare recipients one-way bus tickets to the far-western province.

#261 Snowboid on 02.13.15 at 7:43 pm

#252 calgaryPhantom on 02.13.15 at 5:48 pm…

calgaryPhantom dude, I don’t have any opinion about you or your comments.

But I have my suspicions you are posting from the same IP address as the Mark dude.

I read some of Mark dudes’ posts, and some of them are interesting, but are they factual? I think he is probably correct <50% of the time.

I would give him a break if he didn't reply to almost every post on this blog.

He needs to set up his own, where he can post his observations ad infinitum.

#262 Zen on 02.13.15 at 7:44 pm

“Mindless fearmongering. A balanced, diversified portfolio is designed to mitigate risk and put capital to work. The return on a 60/40 over the last decade is 7.4%. That’s real cash flow. Even including the worst market correction in 80 years. You metalheads are so misguided”. — Garth

Glad we could engage in an intelligent discussion on the topic.

Fear-mongering is not the sole domain of the “metal heads”. There happens to be plenty of fear-mongering coming from a traditional mainstream media, central planners, and especially salesmen in finance who earn a living espousing the dangers of holding cash and gold. This is done as a way to steer clients towards buying their commission based products.

Of course I would never accuse you of such a thing, nor would I suggest the sole purpose of your blog is to harvest new clients for your financial planning business, I am however suggesting that many in your profession quickly digress to name calling and resort to shallow platitudes when cornered with a question that challenges the highly consensual viewpoint held by the vast majority of folks in your line of work.

My line of work is helping people avoid making failures of themselves. In that, we indeed differ. — Garth

#263 maxx on 02.13.15 at 9:48 pm

#233 Mark on 02.13.15 at 3:41 pm

Works for me!

….has for decades! :-)

#264 Barry on 02.14.15 at 1:30 am

Im only 6 grand off my all time high of 1.842 million BECAUSE I don’t have that highly leveraged oil garbage but instead own banks, utilities, pipelines, BCE, CN Rail JNJ. Ya can’t go wrong with that stuff as long as the divvies keep going up. Hint – Today Trans Canada Pipelines raised their dividend by 8.3%. Last Friday it was Emera for the second time since Sept. for a 10% total. BCE 5.3%, CN Rail 25% … a record. ENB 33% (!)

Am I blowing my trumpet? SURE and I’m not modest about it. I’ve offered free advice to friends and neighbors alike and after all these years only ONE has followed it. Everyone else is lured by TV promoters and self serving advice from the banks … which is why I own them. Listen to the guys with the nice suit instead of the bum upstairs who wears second hand clothes because I’m considered a “little too much” but getting richer every year.

#265 tdarron on 02.15.15 at 3:00 pm

We will be OK as long as the China debt bubble does not pop. They tear down the housing and build new 2 mil units. Actually it might be a good idea if they imported some china law here also. That way we can rid of the corrupt ontario liberals and you what that means.

#266 tdarron on 02.15.15 at 3:18 pm

The international reits have recently taken a big hit in Canada. Rent controls and a 20% devaluation.
No doubt about …currency wars are in full swing. One has to sympathize with the BOC to some degree. All central banks are going into negative interest rates and devaluations in an attempt to control money in and money.. Could it be that the Nobel laureate Robert Shiller bond crash trigger is near???

Little reason to believe bond prices will crash, but they will certainly decrease as yields increase. I think we all know that. — Garth

#267 tdarron on 02.15.15 at 4:34 pm

So what’s driving yields so low?
“The story is longer and deeper than that; it’s not just central banks,” Shiller said on Thursday. “It’s something about our investment opportunities and our fears and our culture, so it’s a very deep phenomenon. And the question in my mind is: Will it last?”