Balance

MATTRESS modified

No rate decrease this week. The Bank of Canada now understands the reduction in January was bozo. It sent the wrong signal, tanking the dollar, driving up inflation and flooding the streets with moist Millennials, their loins stirred, their eyes glassy and their house money pre-approved.

The move was alarmist and unnecessary. Pure Vespa. It pandered to realtors, but spooked investors. This year 80% of people who qualify will contribute zip to their RRSPs. Those who do will commit to only about four thousand. And three-quarters of Canadians say they don’t have the money to put away for retirement just now. Guess why?

Right, it’s all going into mortgage repayment.

Most of the people you know have no idea what risk is. So they stumble into houses and GICs. The real estate cartel feeds that, highlighting volatility on financial markets. The result is what I referenced above – a nation of people with property assets, and without cash. Hard to imagine a greater risk these days, given the growing gap between home prices and incomes. Lots of folks in Calgary are learning that one.

That financial assets pose a greater risk than real estate is a myth. Over time, there’s no evidence to support it. Investors who snooze through corrections and crashes with well-built portfolios, come out just fine. People who have houses make money, too. But at the end of the day, we all need cash flow more than a roof. Never concentrate on one, at the total expense of the other.

Rich people get that way by staying invested. They hire advisors, forget about market timing, and concentrate on generating income. They don’t buy a condo to rent out, park money in a GIC at some Ukrainian online credit union in Saskatchewan or pay off a 2.25% mortgage. Mostly, they seem to have confidence, which the huddled masses do not. Successful folks think the future is pretty cool. Your indebted brother-in-law fears it.

A year ago this pathetic blog was overrun (as usual) by those warning the US was a failed state, financial markets are rigged and stocks were dangerously bubbly at record levels. So, let’s have a little review.

In the US, equity investors have scored big. The Dow is 14.5% higher now than it was then, with the S&P 500 gaining about 16%. (So far in 2015, both have added 3%.) A year ago the Fed was still pumping out stimulus dollars, which are now entirely gone. Unemployment has tumbled, profits have been robust and now the central bank is just four or five months from its first rate increase in six years. Looks like markets have years of gains ahead, despite the inevitable corrections.

In Canada, even with the oil price collapse, a federal government too chicken to bring in a budget, the Poloz poodles, the world’s biggest condo economy and a populace pickled in debt, most banks have just delivered higher dividends and record earnings. The TSX is ahead 4.5% in the last two months, and has risen 10.5% in the last twelve months.

In Europe, despite deflation, the piteous Greeks, the dork leading Russia, structural unemployment and Sam Smith, investors are doing just fine. Germany’s DAX has surged 16% so far in 2015 and has added 17% in a year. The FTSE in London is ahead 6% over the past twelve, and the European Central Bank is in the middle of a trillion-euro stimulus program that even has the lefties in Athens wanting in.

Hey, look at what some ETFs in a balanced portfolio have delivered. XIU contains the biggest sixty companies on the Toronto market and its one-year advance is 9.6%. The real estate trust index fund called XRE has jumped 7%, plus giving investors a 4.74% distribution. Preferred shares have also benefited from the low-rate environment, with XPF up almost 6% while pumping out a 4.6% yield. Even bonds have continued to race ahead. The fund called XGB holds riskless government debt, and has advanced 7% since last March, plus its modest 2.6% distribution.

In other words, that balanced and diversified portfolio I keep yakking about works. Why would you pay down a 2.25% mortgage when your money makes 8%? How can you rationally expect to retire with only the government pogey and a paid-off house? And with a whack of this stuck inside a taxless TSFA, the outcome is even better.

By the way, here are 10 reasons (from Bloomberg) US quant strategist Savita Subramanian says the current equity market bull has many years yet to run:

1. Wall Street sentiment is still bearish. Strategists are only recommending 52% stock allocation.
2. Fund managers still have a lot of cash they haven’t put into stocks.
3. We still haven’t seen a great rotation from bonds to stocks.
4. S&P companies are much less leveraged than they were at the last peak.
5. U.S. companies have tons of cash.
6. Lots of S&P companies are paying a dividend that beats returns on bonds.
7. On many measures, stock valuations look normal (though p-e ratios are getting high)
8. The U.S. is still the world’s biggest innovator.
9. S&P 500 stocks are the world’s “best-in-breed.”
10. Plunging oil and easy monetary policy around the world are good news for companies.

Nothing goes up forever. That includes your house. Maybe it’s time you stopped being obsessed with paying off the mortgage, and started to invest. It’s about money, not stuff.

214 comments ↓

#1 Yogi Bear on 03.02.15 at 6:51 pm

Or #11. Everyone is front-running central banks.

#2 shawnG in TO on 03.02.15 at 6:56 pm

on the weekend a news show on TV invited an expert to answer some money questions. one of the questions was if you have a huge mortgage, should you buy rrsp first, or pay down the debt first.

the answer goes something like this — if you have a 600k or 700k mortgage, and you can’t sleep at night, then you should probably pay down the debt first.

ha!

if you have a huge mortgage, and you can’t sleep at night, you should probably sell the house, ’cause it’s clear you can’t afford it.

we need better money experts on tv, those who aren’t afraid to tell the hard truth.

#3 not 1st on 03.02.15 at 6:58 pm

Garth, if only a fraction of people make contributions to their TFSA and only a fraction of those actually infest in it, then how can the govt go broke on this? Never heard the same about RRSPs and there is a whole lot more money going in there.

The talk about TFSA is making me real nervous. Feels like income trusts all over again. Govt cannot resist taxing things like that.

#4 Lookinin on 03.02.15 at 6:58 pm

Thanks as always Garth for your solid advice. I honestly don’t know where the average working stiff could glean such information otherwise. Please continue to enlighten us, even if maintaining this blog becomes a thrice a week thing. It must be very challenging to commit to this and run your investment firm. Again, many thanks.

#5 LH on 03.02.15 at 7:02 pm

All wise statements, but there is still something to be said for being free and clear. And so I will continue repaying debt until that day arrives.

#6 Derek R on 03.02.15 at 7:10 pm

Guess I’d better invest some more then.

#7 OttawaguyRenting Worried but not too worried still a worrier but look on the brightside on 03.02.15 at 7:12 pm

Just re-balanced. Felt good. Tip top this REIT over here and some Bond ETFs over there.
I have like a “few” single stocks. I like Dividends.

I need to touch the racist BS that came up here a few days ago. Good on Garth. Just amazing. He is one alright dude and I often wonder why he isn’t back in office.

Free speech and all that aside – Harsh financial times bring on jingoistic concerning ideals among all kinds of people.

I have seen it myself talking among friends here in Ottawa.
I’ve never seen more groups of friends around me without any money –
Less vacations
More long term car payments (friends wife wrote off and wrecked a car = in conversation admitted the car was on a 7 year loan) – same bar convo another pal “our car payments are for 6 years…nice and low”

Within this group of what I think are liberal dudes –
they complain that their street is full of car where “lebs” and “chinese” have 2 families living in one house.

You see the seething and hate –
I dunno so sad.

Long Live the Garth

#8 mitzerboy aka queencity kid on 03.02.15 at 7:12 pm

thanks again garth for the insight of the money world

#9 Londoner on 03.02.15 at 7:12 pm

Hey Garth, what did you invest in when you were younger? You know, before they had ETFs (and the Internet).

Btw – have you seen gilt yields recently?

#10 Happy Renting on 03.02.15 at 7:13 pm

Alas, it is all about education and exposure. People understand RE, investments are very “complicated” and “scary”.

I am awaiting the outcome of an attempt I made to help. I suggested some basic reading and financial education to a fellow member of an online community (who asked for some financial advice). I am curious to see if the member opts to put the effort into learning, or just turns to a slickly marketed mutual fund (horrifically high MER) because it is easier. I’ll try not to get too discouraged if the mutual fund wins this one. It’s an illustration of the point that the greatest rewards are found in the extra mile (in this case, effort, education, and discipline) that the majority opt not to go.

#11 Mike S on 03.02.15 at 7:18 pm

“Fund managers still have a lot of cash they haven’t put into stocks.
3. We still haven’t seen a great rotation from bonds to stocks.”

Balanced/Conservative fund managers hold cash reserves as part of their Fixed Income.
I.e. Under-allocation is in bonds.

For instance 60% equities, 30% bonds, 10% cash, in the 60/40 portfolio
This 10% cash can’t go to equities …

#12 Mike S on 03.02.15 at 7:20 pm

“6. Lots of S&P companies are paying a dividend that beats returns on bonds.”

This is true.

However, when bond rates normalize (in US) this will no longer be the case

#13 wallflower on 03.02.15 at 7:22 pm

One of Garth’s points about holding real estate as an income investment is the rate of tax is penalizing. But I have always wondered,”Well, but, how many of these income generating people claim these revenues?” because I have known so many people who do not. (Including my current circumstance where I am renting.)
And, if airbnb style accommodations is set to explode, exactly how many of these dollars are not being taxed …

http://business.financialpost.com/2015/01/17/how-airbnb-renters-are-helping-canadians-pay-off-their-mortgage-in-a-grey-market-area/

I have used airbnb, wimdu, and homestays over the past year and I can say with certainly (ie, speaking with the hosts), these funds are NOT all declared. That has to be the best investment deal going…
How many of these folks (what percentage) get away with it? I am thinking probably huge numbers.

Dread the day you get a call from the CRA. Is it worth it? — Garth

#14 HD on 03.02.15 at 7:22 pm

Sorry if I’m off topic but I was wondering if any female blog dogs/ male blog dogs could assist with an ACB (Average Cost Base) question?

I am trying to calculate the ACB of some of my ETF holdings by using adjustedcostbase.ca but the results don’t make sense and I’m not sure what I’m doing wrong.

I suspect the problem is from the info found on the Statement of Trust Income Allocations: Return of Capital. Is it always reported “per unit” or could it be reported in “total”? I’m assuming per unit (total wouldn’t make sense) but the amount is so high that it significantly drives down the ACB.

Anyway, if someone has any knowledge about this I’d like to have a conversation/exchange. Your insight is much appreciated. Thanks.

Best,

HD

#15 Obvious Truth on 03.02.15 at 7:22 pm

Personally houses just don’t qualify as investments to me. They cost too much to buy operate, and fix. I consider it a cost. You just can’t argue with the history of prices.

To the list of continuing upward markets I would add that it seems that a rotation is starting to anticipate a slow rise in rates. Although everything could do ok again. Balance indeed.

As for Canada. Two reports today underline the serious weakness. Poloz actually should cut in my opinion. My guess is if he doesn’t he might telegraph one.

The housing story is over regardless. I’m just waiting to see the extent of the lending leverage out there. It may be bigger than anyone thought. A wonder nobody has money. And let’s see if the oil and bank bounce sticks. Alberta is finished may have to broaden his or her scope.

Back to investing fun!

#16 Ralph Cramdown on 03.02.15 at 7:24 pm

Would inflation have ended up significantly below target if the Bank of Canada hadn’t cut rates? Probably. Given that, does it also have an obligation to factor in house horniness, investor fear, the dollar and blog dog arrhythmia? Probably not.

From what I’ve seen the last few years, pretty much everyone who’s railed against central bankers for too-loose monetary policy has ended up on the wrong side of the trade, and of history. Don’t be one of those guys.

#17 zedgt87 on 03.02.15 at 7:29 pm

Garth seems to be blind to the risk in Equity markets.. Or he is seeking a greater fool..

Risk is mitigated by balance and diversification, as well as reading comprehension. — Garth

#18 Freedom First on 03.02.15 at 7:31 pm

Yes. it’s about money, not stuff. I must not ever forget this as this line of thinking has kept me living in freedom for a long time, as well as living a very comfortable lifestyle. May I never forget my youth starting out with a rented a room in a basement, a beater car, and saving 50% of my income, while going to school at the same time. I am very very grateful for my beginnings as it gave me the incentive to not stay there and to always have freedom first as my goal. I have been blessed with the nice stuff, travel, and many great experiences, and at times I think of everything I have ever done as being paid for by the interest I never paid. I have been blessed, and I give back. I believe in Karma, and living free.

#19 Setting the Record Straight on 03.02.15 at 7:33 pm

@221yesterday
“#70 Mark on 02.26.15 at 9:56 pm

My brother, who is a teacher in Toronto and a white Anglo-Saxon Canadian, says that he much prefers teaching his Chinese pupils. They work harder and are less disruptive.

There is no way that the local entitlement brigade could be trained to be doctors. For that, you need actual dedication and hard work.

Good riddance.”

Isn’t this a racist response?
You are implying Chinese are different than other races?
Smarter and work harder?
Does that not meet the criterion for racism?

And you are suggesting that Caucasians are lazy and stupid? That too would look like it meets the criterion.

If Mark is too be banned unless he apolgizes I think the policy should apply to you as well

#20 allroses! on 03.02.15 at 7:34 pm

If all the markets are doing the best ever, my intuitive sense is that it is riding for a fall.

One would think the time to buy is when markets are doing poorly.

Houses will correct, the economy will suffer. And the markets.

#21 Pitch Fork Pete on 03.02.15 at 7:37 pm

Re: Mark.
Now that the Witchhunt is over, I’d like to remind everyone who wants to return their pitchfork, that the deadline is 14 days after purchase and that a 20% restocking fee applies.

#22 Goldie on 03.02.15 at 7:44 pm

At 1.31 per ltr, gas prices in the Vancouver region have gone up $.21 in one month. We now have the highest gas prices in North America. Now oil producers and gasoline consumers both get pooched.

The curve might not be a straight line, but it seems that some things do go up forever.

#23 Balance is Good on 03.02.15 at 7:45 pm

OK,
You mentioned about the portfolio. What do you guested about small cap and foreign?

This is what I have you recommending:
40% Bonds and Preferred; 60% Stocks and REITS

XCB – 20% Bonds
XPF – 20% Preferred
XRE – 8% REIT
XIU – 17% (?)
??? – 35% US and Foreign.

What amounts of the 17% CDN and 35% US and Foreign to large and Small Caps? What kind of ETF?

#24 jess on 03.02.15 at 7:48 pm

read about the people who boil oil for a living:

Boiling Point: Why Do We Let Big Oil Send Workers to Their Deaths?
by Jonathan Rosenblum
http://www.tikkun.org/nextgen/boiling-point-why-do-we-let-big-oil-send-workers-to-their-deaths
February 27, 2015
Safety Is Life-or-Death, Say Refinery Strikers
February 26, 2015 / Samantha Winslow
– See more at: http://www.labornotes.org/2015/02/safety-life-or-death-say-refinery-strikers#sthash.lhnRG39J.dpuf

#25 Ponzif on 03.02.15 at 8:01 pm

Garth,
thanks again for reminding us that Canadians don’t understand risk.
That’s why I again put all my RRSPs into a GIC.
That’s what the [email protected] (nice lady at the Ukrainian Credit Union in Sasquatch Town) told me.

#26 ANON on 03.02.15 at 8:07 pm

Balance

#27 TurnerNation on 03.02.15 at 8:10 pm

Mystery of the PanAm Games tunnel is solved.
Apparently it was a pair of sometimes-blog dogs who wanted a place to lick and kiss (their bullion).
Yep it was dug by metalheads/Doomers.

#28 Blacksheep on 03.02.15 at 8:17 pm

Holy Crap # 255,

“Our current situation isn’t any different than it was 40 years ago”

“except for the internet and instant communication. ”
——————————————————-
That is a very big “except,” as the net HAS changed everything.

The system has completely lost control of the message to the masses as few under 50 put much weight in the MSM anymore.

The system is aware and has taken to “anonymously participating” in popular blogs / forums, including this one I suspect, in the hopes of “influencing opinions.”

So…next time your arguing with someone on line and they seem very intelligent, yet somehow unable to see obvious truths, regardless of evidence provided, think twice about whom you might be actually debating with.

#29 Mark on 03.02.15 at 8:20 pm

Inflation? What inflation? YoY inflation for January was 1%, and that was coming off a number closer to 2% for December. Thus the implication is, January was in outright deflation for Canada. This solidly points to the need for an additional BoC policy cut unless the belief is that such is transitory. Since a lot of demand has been lost on account of the falling RE market (did you see how bad Christmas sales were??) and the so-called wealth-effect going in reverse, the deflationary trend is likely to continue for a considerable period going forward.

So no reason for Poloz to delay the next scheduled BoC rate cut. He might, but that would be a mistake. All the way down to zero, IMHO, and US-style QE eventually.

Core inflation was 2.2%, right within the BoC target range. Seven of eight categories increased, food by 4.6%. No second cut coming. — Garth

#30 Mark on 03.02.15 at 8:25 pm

“Would inflation have ended up significantly below target if the Bank of Canada hadn’t cut rates?”

Inflation was nowhere near target, even with the rate cuts. And the rate cuts mostly weren’t even passed onto consumers. As the issue is credit-worthiness. If Poloz doesn’t continue to cut rates, the risk is, the yield curve will invert, and the recession that Canada is likely now facing will turn more into a liquidity crisis for the banking system. I’m not sure that’s really the desired result nor something that would enhance the credibility of central bankers or the banking system.

I don’t think the “financial community” (ie: bond traders) really understand the spectre of the problem that Canada is facing deflation-wise. For a while there, the BoC didn’t even seem to really understand it, and let the Canadian economy mostly stagnate in 2014 as housing decelerated dramatically. That’s why “pundits” were shocked by the January interest rate cut announcement, and why they’re again, most likely wrong this time around.

#31 mf on 03.02.15 at 8:25 pm

Thank you for all your advice. I am not sure by what you mean in ” S&P 500 stocks are the world’s “best-in-breed.””

#32 Ray Vasquez on 03.02.15 at 8:25 pm

To Shawn G in TO #2

You are so right. I would agree with you that getting rid of debt no matter what the interest rate is 2%, 3% etc. is just a risk reducing decision that more should do.

Once people start using debt to borrow to invest or use margin, it can be risky but not always.

I would say 10% to 20% of people know what they are doing when it comes to borrowing money.

#33 My Life is a Pile of Shit on 03.02.15 at 8:26 pm

“Why would you pay down a 2.25% mortgage when your money makes 8%?”

How will your money make 8%?

Annualized 15-year returns of index funds (from GlobeFund):
TD Dow Jones Average Index (DJIA): 3.85%
TD US Index (S&P 500): 2.89%
TD European Index (MSCI Europe): 2.39%
TD International Index (MSCI EAFE): 0.91%
XIU: 6.11%
TD Canadian Bond Index: 5.68%

Annualized 2-year returns:
XRE: 6.1%
XPF: 2.8%
XGB: 5.4%

If you say I’ve picked unfavorable starting points, I would say that’s exactly my point — how do you know now is a better time?

#34 the jaguar on 03.02.15 at 8:30 pm

Go ahead Garth. Look into Bandits eyes and tell him it’s about money, not stuff.

#35 TFSA - Who Benefits? on 03.02.15 at 8:31 pm

I note that many, of not most visitors, to this site strongly support TFSAs. But do they appreciate that TFSAs only benefit the wealthy and that most of the wealthy in this country did not earn their wealth? Those who think they will get there by their own efforts may be in for an unpleasant experience.

Let’s look at the wealthiest man in Canada and now owner of Garth’s one time employer. I have never heard David Thompson described as being talented in any way other than to have the foresight to be the son of Ken Thompson.

Next look at Conrad Blackisted (brilliant parody). All of his wealth? Inherited. To the best of my knowledge all he has done since is lose a considerable part of it.

Let’s look at the other end, namely moi. My partner and I worked hard all our lives and did semi-retire early. We had enough to get by but probably not enough to fully fund TFSAs every year. That all changed a year of two after retirement when we inherited a substantial amount from our respective parents. Since then this inheritance has increased markedly but not due to any merit on our part. All we did was place it with a highly recommended investment advisor (no not Garth) and collect the benefits.

Fans of TFSAs would be well advised to start with the Vertical Mosaic by John Porter, published in 1965. In it he describes how the vast part of wealth in this country is passed down. Many of the accounts that I have read in recent years say that his description is more valid then ever and several articles point out that upward mobility is higher in much of Western Europe then it is here.

Those who expect to be upwardly mobile, in part through the use of TFSAs, may be unpleasantly disappointed.

#36 Ponzif on 03.02.15 at 8:35 pm

Talking about the contribution that immigrants make:
Herbert Grubel has a different take:
http://fullcomment.nationalpost.com/2011/05/18/herbert-grubel-the-invisible-price-tag-of-immigration/
——————————
I know the study is dated.
Does anyone know a study that is more recent and contradicts the views of Mr. Grubel?

#37 For those about to flop... on 03.02.15 at 8:36 pm

#10 Happy Renting on 03.02.15 at 7:13 pm
Alas, it is all about education and exposure. People understand RE, investments are very “complicated” and “scary”.

I am awaiting the outcome of an attempt I made to help. I suggested some basic reading and financial education to a fellow member of an online community (who asked for some financial advice). I am curious to see if the member opts to put the effort into learning, or just turns to a slickly marketed mutual fund (horrifically high MER) because it is easier. I’ll try not to get too discouraged if the mutual fund wins this one. It’s an illustration of the point that the greatest rewards are found in the extra mile (in this case, effort, education, and discipline) that the majority opt not to go.
-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Yeah I know this comment is going to get me bashed but I,ll put it out there.
I have a mutual fund I pay into in Australia and it is up 14.5% this year( July to June year ending)
Last year 12.1%
I know ETF’s are sexier and cheaper but I have been paying into this one since 1992 and don’t want to pay the early withdrawal costs .
Plus to my knowledge you HAVE to have a retirement fund of some sort for you or your employer to pay into .
So if I ever go back I don’t want to start again.

#38 nonplused on 03.02.15 at 8:43 pm

#129 Smoking Man (yesterday)

Regular programming is where Garth shares his wisdom rather than having to chastise blog-dogs for misbehavior. Today was a return to regular programming.

This whole business about immigration and all that bores the crap out of me. I’ve been doing a lot of work lately for a US company on the east coast and let me tell you, multiculturalism works. In the global economy we all got to get used to it. In the office down there there are Russians, Indians, Blacks, Whites, Asians, and even orthodox Jews with the little hat and they all seem to work and live together just fine. Get used to it.

In fact one of my best friends is Indian, and one of my wife’s Asian (and she’s married to a wonderful black man). I couldn’t care less about their background, in fact if anything it makes them more interesting.

And yes I know Indians are actually also Asians. To me it’s like Canadians and Americans, they are still unique.

One of my son’s best friend is Chinese and his family invited us to a traditional Chinese New Year’s dinner. Wonderful. His other good friend is Indian. He also has white friends. He doesn’t know the difference or seem to care at all. That’s how I want him to be too.

I also coached a fair amount of soccer in my time (and played as well in a former fitness level) and soccer much more so than say hockey leads you to appreciate and embrace all cultures and backgrounds. My son’s hockey team doesn’t have a brown person on it but his soccer team reflects the multicultural world we now inhabit. And he loves it.

So I hate all this HAM talk and immigrant bashing, and would rather talk about money thank you.

#39 JSS on 03.02.15 at 8:44 pm

Paying off a mortgage is not a bad idea. Depends how many years are remaining in your outstanding balance. If you’re within, say, five years, focus on paying it off.

Once the mortgage is paid off, it’s like getting a tax-free raise. You can then redeploy the amount you used to pay against the mortgage towards a balanced portfolio. Imagine – yesterday you owed the banks, today the banks owe you in the form of dividends via stocks or ETFs!

There’s also the feeling of owning an asset outright. Feels good to own your home, and it’s yours as long as you keep paying the property tax.

Personally, if you could focus on both – mortgage and investment portfolio – this is obviously the best.

#40 growing gap between home prices and incomes on 03.02.15 at 8:45 pm

“growing gap between home prices and incomes”

Exploring all the details of this half sentence would be a good article.

Some considerations why people rush to pay off the 2.25% mortgage:

– they suspect that this rate might not last… the memory of huge rate hike is still in the public psyche

– your money makes 8% – this is great if it’s in a registered account you don’t need to touch it until you stop working.

But if you want to use the gain to pay off mortgage debt (because you bought the house before you found this blog)? Your taxed gain is probably more like 4%, which leaves only 1.75% gap (if your mortgage was perfectly timed to the bottom, which is as difficult or more than timing the bottom of your equity investment purchase). For most people probably 1-1.25% is the gain gap.
This gain involves two risk factors: realized gain on equity investment and mortgage rate hike risk. Mortgage rate hike risk is higher and it can wipe out easily your gain gap profit.

In an ideal world your house/mortgage would be seen as part of your diversified investment (the REIT and partially the bond portion of it) and your equity investment, held in TFSA and RRSP would be mostly higher risk growth stocks, not touched before you retire.

This is not something new, one of my relative had that.
A former immigrant in the mid 50’s, he graduated in Canada as an economist, daytime working for a top Canadian company and an avid self-directed investor, before ETSs were invented. His wife never had to work for money and as widow she inherited a large house in Oakville and a few million dollar worth of investment account.

The reason why this ideal and previously existed model does not work now is what you started with Garth: “the growing gap between home prices and incomes”.

#41 nonplused on 03.02.15 at 8:48 pm

Oh and I forgot, when I go down to the US office, I’m the outsider because I’m Canadian. They seem to figure I should move down there and become one of them, like all the other people from all over the world did. They definitely see a Russian or Indian who moved to the US as being “American”, whereas I am an outsider because I didn’t chose to become one of them. It’s a little weird feeling the shoe on the other foot.

#42 Smoking Man on 03.02.15 at 8:51 pm

#28 Blacksheep on 03.02.15 at 8:17 pm
Holy Crap # 255,

“Our current situation isn’t any different than it was 40 years ago”

“except for the internet and instant communication. ”
——————————————————-
That is a very big “except,” as the net HAS changed everything.

The system has completely lost control of the message to the masses as few under 50 put much weight in the MSM anymore.

The system is aware and has taken to “anonymously participating” in popular blogs / forums, including this one I suspect, in the hopes of “influencing opinions.”

So…next time your arguing with someone on line and they seem very intelligent, yet somehow unable to see obvious truths, regardless of evidence provided, think twice about whom you might be actually debating with.
…….

Good point black sheep.

The Germans are abandoning MSM print and online line MSM… Reason they know the real score in Ukraine, angry at the outrageous coverage. People can fat check.

Germans are tuned into the debating tactics of MSM.

As an example, if you look at clips of building 7 free fall they are pretty compelling. Anyone trying to argue against a controlled demolition looks pretty stupid, they are left with one option, they to resort to attacks. You tin foil hat, you conspiracy therorist.

The masses especially in Germany are onto…

The machine has taken notice.. And get ready to lose your Internet as you know it.

As for MSM if they want to build an aduance they need to do the unthinkable.

Tell the truth… For a change. Short German MSM they’re finished.

#43 Retired Boomer - WI on 03.02.15 at 8:53 pm

Yup. Just finished taking my yearly distribution (based on last years earnings) from my balanced, domestic, and international holdings. Thanks to sage advice from a free Canuck blog who can remain nameless.

Distribution was less than 3% which means, we should be in good shape going forward.

It is NOT how much you make, rather how much you save that allows you to go pfffft to those who decided to live differently. On a fixed income, and I get to spend it NOW!!

No, it wasn’t nice, but that separates those who DO from those who DO NOT.

#44 live within your means on 03.02.15 at 8:54 pm

DH & I chatted via Skype to an old H School girlfriend of mine from Mtl who rented an apt. on Nuns Island. She is/was fluent in 4 languages – was an Expo 67 Hostess & then worked for Alitalia. Turns out she bought a condo there. She’s 70, a few yrs. older than I. Guess she wants to leave it to her twin daughters & son.

I & 2 sisters lived on Nun’s Island decades ago.

#45 Ray Vasquez on 03.02.15 at 8:56 pm

Another bunch of important factors that people don’t take into account is the true cost of home ownership.

If you add up not just the monthly mortgage payment but all the property taxes, insurance, maintenance, utilities, H.S.T., real estate commission, land transfer taxes etc., it is much more.

It is probably a 2.5% annual cost per year on the value of your home which excludes the mortgage.

For every $100,000 home bought, it would cost over a 25 year period using an average 4.00% annual increase, inflation about $108,279.

Now save or invest the monthly mortgage payment plus that money above over 25 years in an RRSP plus the annual income tax refund or in a TFSA and it would total anywhere from $400,000 to $550,000, TFSA vs. RRSP.

This is why people with too much debt and house never have any money.

#46 Nemesis on 03.02.15 at 8:56 pm

#SpeakingOfWellBalanced… #BlastFromThe… #MapleLeafPast,Or… #OntologyOfYouth

http://youtu.be/37z6eAp3D4A

#47 joblo on 03.02.15 at 9:04 pm

#40 Smoking Man on 03.02.15 at 8:51 pm

“The machine has taken notice.. And get ready to lose your Internet as you know it.”

You can say that again, rush is on before more Snowden reveals.

#48 Mr. Frugal on 03.02.15 at 9:05 pm

#14 HD

Canadian Couch Potato has some good resources for calculating Adjusted Cost Base of ETFs;

http://canadiancouchpotato.com/2013/04/04/calculating-your-adjusted-cost-base-with-etfs/

https://www.pwlcapital.com/pwl/media/pwl-media/PDF-files/White-Papers/PWL_Bender_As-Easy-as-ACB_2015-January.pdf?ext=.pdf

#49 kommykim on 03.02.15 at 9:06 pm

RE: #14 HD on 03.02.15 at 7:22 pm
I suspect the problem is from the info found on the Statement of Trust Income Allocations: Return of Capital. Is it always reported “per unit” or could it be reported in “total”? I’m assuming per unit (total wouldn’t make sense) but the amount is so high that it significantly drives down the ACB.

The entry (Statement of Trust Income Allocations: Return of Capital) is actually a PERCENTAGE of the total distribution. So, you can use this figure to calculate how much of each distribution is actually ROC.

#50 nonplused on 03.02.15 at 9:08 pm

#190 Carousel (from yesterday)

You can come hang with my peeps anytime.

#51 Linda on 03.02.15 at 9:08 pm

Regarding RRSP contributions: IF you are fortunate enough to have a company pension plan, the amount you can contribute to your RRSP is limited by the amount you pay into said pension plan. Which might explain some of those $4,000 or less contributions. It has been years since I was able to contribute more than $4,000 to my RRSP. Most years I’m lucky to be able to put in more than $3,500 & some years I can’t even put $3,000 in, unless I want to pay a ferocious penalty for over contributing.

I freely admit I am a government worker, albeit municipal so yes, I have one of those ‘rich’ DB pension plans. As per my most recent statement, I will get no more than $27,500 (gross, not net) after contributing to that sucker for 33 years this year. Oh, I only get that if I don’t have a pension partner. I do, so drop my estimated annual gross to $22,000 before tax. Which is fair, because now the plan is covering for two people, not just one person.

However, the Alberta government wants to re-write the pension plan rules for all Albertans (not just gov’t employees of any stripe) so that the pension plan members pay more & get less. This supported by howls of approval from the public who feel that since they have not got a pension plan (hello, you do – it is even a DB plan & is called the CPP) they see no reason why those who do have such a plan should continue to have it. Although why they don’t agitate for a pension plan from their own employers or demand that the CPP be enriched to something approaching an actual sum one can live on is beyond me.

Anyway, my point – if my pension plan is wrested away, who if anyone is going to 1) give me my share of my contributions – not my employers – for the past 33 years; 2) give me my RRSP room back for the same time frame & 3) compensate me for the loss of all those years of growth within my RRSP (matching say market growth for that same time period) so that I don’t end up beating off the competition with my cane at the nearest dumpster? I will add that I have always contributed the full amount I could to my RRSP every year & have done the same with my TFSA, so yes, I would have taken all those pension contributions that were deducted & put it away for my old age.

#52 Mike in the Okanagan on 03.02.15 at 9:11 pm

All good with the exception of not paying off your mortgage. Why not pay down the principal when the rates are low rather than wait for the inevitable rate hikes on renewal?

There is no guarantee you will earn 8%+ on your investments this year but you are guaranteed an after tax return of 3%+ by paying down your mortgage.

People tend to ignore the risk difference between investing and your mortgage. If you are paying more than 25% of your take-home pay on your mortgage each month you will be really squeezed when you renew at higher rates a few years down the road.

I recommend you stick 15% of your income into retirement (RRSP/TFSA) and put whatever else you can manage on your mortgage. Do a budget and stop pissing away your money. ;)

Paying a mortgage is reducing debt. It is not an investment. If your house loses value your leveraged losses can be substantial. Paying debt that is at or near the inflation rate when invested money yields three time the return is emotional, not rational. — Garth

#53 HD on 03.02.15 at 9:12 pm

#35 For those about to flop… on 03.02.15 at 8:36 pm

I know ETF’s are sexier and cheaper but I have been paying into this one since 1992 and don’t want to pay the early withdrawal costs .

http://canadiancouchpotato.com/2013/11/27/pulling-off-the-bandage-quickly/

Best,

HD

#54 kommykim on 03.02.15 at 9:13 pm

RE: #14 HD on 03.02.15 at 7:22 pm

Also,
You can verify the ROC numbers by comparing them with the numbers from your “Summary of trust income T3” that you should get later from your brokerage.

#55 Joe2.0 on 03.02.15 at 9:14 pm

If the stock market hasn’t crapped the bed by Jan 2016 I will do you all a favor and vamoose.

Why would it? — Garth

#56 Mike in the Okanagan on 03.02.15 at 9:16 pm

Good post Linda. I love your comment regarding DB pension for everyone being your CPP. I have never looked at it that way before but you’re absolutely right!

I think people regularly get screwed with PA adjustments when they leave employers. It frees up room on the RRSP but does nothing to deal with lost growth.

#57 Mr. Frugal on 03.02.15 at 9:17 pm

#17 zedgt87 on 03.02.15 at 7:29 pm
Garth seems to be blind to the risk in Equity markets.. Or he is seeking a greater fool..

Price volatility does not equate with risk. In fact the opposite is true. Cash and GICs are perceived as safe investments because they don’t fluctuate in value. But, with today’s low rates they are guaranteed to lose value after inflation and taxed. So, I would argue that cash is a high risk investment because you are guaranteed to lose money. On the other hand, the value of equity ETFs will fluctuate. But, the odds of losing money are actually quite low provided you are willing to hold them for 10 years or more. Equities are less risky than cash.

#58 everythingisterrible on 03.02.15 at 9:19 pm

#36 nonplused
I think most people’s sentiment on here has nothing to do with race or immigration. We need immigration to sustain our population. It’s more questioning how/why foreign real estate ownership benefits the majority of canadians. It has been noted on here there is no real relevant quantitative data on it. The host of this blog seems to think foreign ownership is negligible while some of us in the yvr region think it is far more pervasive then 1 or 2% and has had an high amount of impact on the real estate prices specifically in the GVRD.
Australia re-enacted some regulations on foreign real estate ownership in 2010 after a surge in property prices made housing increasingly unaffordable in the big cities. Switzerland has also had regulations for years. So should we.

#59 Mr. Frugal on 03.02.15 at 9:24 pm

#52 Joe2.0 on 03.02.15 at 9:14 pm
If the stock market hasn’t crapped the bed by Jan 2016 I will do you all a favor and vamoose.

If the stock market “craps the bed” as you put it, that would be the time to back up the truck. Balanced investors will sell off some of their bond ETFs and buy some U.S. equity ETFs at fire-sale prices in order to rebalance their portfolios. Then they will go back to sleep until the next opportunity comes along. If you remember last December provided a fabulous opportunity. Price volatility is a balanced investor’s best friend.

#60 HD on 03.02.15 at 9:26 pm

@ #46 Mr. Frugal @ #47 kommykim

Thanks for your help!

The entry (Statement of Trust Income Allocations: Return of Capital) is actually a PERCENTAGE of the total distribution. So, you can use this figure to calculate how much of each distribution is actually ROC.

Bang on! That was the problem!

Thanks again!

Best,

HD

#61 Mike Hunt on 03.02.15 at 9:32 pm

Enjoy the next 6 months things are about to change!

Why? — Garth

#62 John on 03.02.15 at 9:38 pm

AUSTRIAN BANK TANKS.
Austria’s Heta bank is in resolution. “The immediate debt moratorium means €950 million of bonds due March 6 and March 20 won’t be paid. It affects €9.8 billion in outstanding bonds, supplementary capital and Schuldschein loans, €1.24 billion debt to Pfandbriefbank, a bank that handles bond issues for Austrian provincial banks”. No further bailouts. Bail-ins and massive haircuts.
O, yes and Austrian bank news redux: “Creditanstalt had to declare bankruptcy on 11 May 1931. This event resulted in a global financial crisis and ultimately the bank failures of the Great Depression.
Not Greece. Not Russia. Austria. As Garth wrote a while ago: NOBODY ESCAPES. We can hope, but buckle up.

1931? Seriously? — Garth

#63 Kaganovich on 03.02.15 at 9:39 pm

If the stock market hasn’t crapped the bed by Jan 2016 I will do you all a favor and vamoose.

Why would it? — Garth

Because of trends like this:
https://confoundedinterest.wordpress.com/2015/03/01/dream-lover-stock-market-continues-to-rise-as-expected-global-gdp-growth-continues-to-tank/

Or this:
https://confoundedinterest.wordpress.com/2015/03/02/q4-gdp-rose-less-than-previously-thought-down-60-percent-from-q3-growth-slows-where-the-government-grows-2/

Who is Anthony Saunders? Not impressed. — Garth

#64 Smoking Man on 03.02.15 at 9:39 pm

#45 joblo on 03.02.15 at 9:04 pm
#40 Smoking Man on 03.02.15 at 8:51 pm

“The machine has taken notice.. And get ready to lose your Internet as you know it.”

You can say that again, rush is on before more Snowden reveals.
……..

Forget Snowden leaks, now that the Democrats and Republicans are at each others throats over the Bibi speech.

Look out is all I’m saying.

I have a strong hunch, UCC thing. That Putin and Obama are are secretly working together on doing in the Neocons. There are events I’m observing that make no sence, unless to tie that possibly, that they have teamed up.

Ukraine is the magicians slight of hand.

I can’t believe the dudes at CSIS haven’t came begging for me to work for them.

An to Holy Crap, Tylenol…

On my first solo in a 150 Cessna arobat, away from the field, I looped and rolled it. So unlike you, probably cause I’m rather insane, I don’t have the fear gene.

I should have been named Wyatt.

#65 Robbie on 03.02.15 at 9:41 pm

Risk is mitigated by balance and diversification, as well as reading comprehension. — Garth

LOL

#66 Ole Doberman on 03.02.15 at 9:47 pm

Looks like BNN is saying the Toronto condo market is back to life!

http://www.bnn.ca/News/2015/3/2/Toronto-condo-market-booming-again.aspx?hootPostID=10515b427be8dc6604bddd4c0fe64cb1

BNN says what TREB tells it to. — Garth

#67 John on 03.02.15 at 9:50 pm

11th largest gold heist just happened on I-95. $4M in gold bullion …………….. Where’s John McClane when you need him?! Why would the perps want such a useless thing as gold bullion? Maybe they just wanted to top up their preferreds, REITS, and do a little balancing. After all, a top of the mountain moment on the Nasdaq is a pretty heady experience, not meant to go to waste. All in @ the casino. Wahoooooooooo.

The Nasdaq took 15 years to recover, and the market today looks nothing like it did in 2000. Maybe you failed to notice the world has gone online. Metalheads just wish it was 1825 again. — Garth

#68 bigtown on 03.02.15 at 9:56 pm

The Canadians were out jumping in the surf today in Daytona Beach and all the cash registers were busy at the BEALL’S department store in Daytona Beach Shores.

Target was a mistake in Canada in part because of demographics. Target attracts the young under 35 crowd and BEALLS is the boomer over 60 crowd.

BEALLS is like the Bay and Sears but all in for the boomer…most of the fashion is for the elastic waist band and the retired boomer. BEALLS would do well in Canada as there is no place exclusively for the boomer and over 60 crowd. That is why today in Daytona Beach on a MONDAY the line up out the door and all the registers busy with the boomer set retired but still wanting to dress in stylish sporty outifts…there is nothing in Canada that is totally worshipping the boomers.

#69 Leo Trollstoy on 03.02.15 at 9:58 pm

Canadian inflation numbers are on target. The BoC won’t cut.

The U.S. Fed is seeing numbers that aren’t unanimously fantastic so they may kick their rate hike can down the road by a month or few. But it’s coming. Sooner rather than later.

The U.S. economy is getting stronger, no doubt. Investors with U.S. exposure will do well.

#70 Porsche on 03.02.15 at 10:03 pm

#13 wallflower

Oh it’s huge scam, more people don’t claim than do !!!!

I paid $900 a month for a basement suite while working in Toronto for a year and I know that Italian older couple wasn’t claiming it. I paid her cash every month… and she said more than once… don’t tell nobody.
It was close to where I worked so I could walk and it was good for me.

What’s Italian got to do with it? — Garth

#71 Porsche on 03.02.15 at 10:07 pm

What’s Italian got to do with it? — Garth

Nothing… your the one making something out of it

#72 Linda on 03.02.15 at 10:10 pm

#54 Mike: thank you. ‘If onlys’ are useless I know, but if I could have one ‘if only’ I’d wish that CPP rules had been changed decades ago (say in 1980) so that eventual CPP benefits would be at least twice what they are today. Then all the baby boomers would have a DB pension to look forward to that might actually cover their living expenses (this presuming they all worked to 65 & didn’t take CPP early of course). I don’t know why the CPP wasn’t ‘fixed’ way back when – it isn’t like it was going to be a surprise that 9 million plus baby boomers were eventually going to become old age pensioners if they lived long enough. And even way back then lots of companies didn’t have any pension plan other than the mandatory CPP deductions. Of course, lots of people believed we’d blow ourselves up via nuclear war so maybe everyone thought fixing CPP wouldn’t be necessary…..

#73 pwn3d on 03.02.15 at 10:10 pm

Housing had a good 2014, but not as good as the markets. Also having a great year – large pension plans. The fed civil service plan did a >16% year and omers did >10%. Those are fantastic numbers and great news for all the people who think they’re going to fail and the taxpayer will be on the hook.

Not having had such a good 2014… bond yields, doomers, and mark

#74 Ray Vasquez on 03.02.15 at 10:16 pm

To John #65

Nasdaq will be 5,500 to 6,000 an then 3,500 to 4,000 is just around the corner. Just watch and see.

#75 Keith in Calgary on 03.02.15 at 10:24 pm

The TRILLIONS of federal stimulus dollars the FED has pumped out over the last 8 years are not “entirely gone” as you imply.

They are with us, floating around the financial markets from bubble to bubble, looking for anything resembling a yield. Which is why the stock markets will always be “bubbliscous”………..the bond markets are destroyed………..any significant raising of rates, which will not happen for several decades, will increase debt service and blow up the world’s greatest bond bubble ever, and immediately bankrupt the western world’s many nations that are currently riding on Occam’s razor………..the RE market is flat and dying……..so the only place where this money can eke out a return if thru Ponzi scheme called the stock market. If you want to play it, go right ahead. Eventually the music stops and the chairs will be full, of hedge fund managers, bank CEO’s, and other elite’s……..

History tells a story that many today have forgotten in the rush to greed, or never even read about before…….

I hope you live alone. — Garth

#76 kommykim on 03.02.15 at 10:26 pm

RE: #70 Linda on 03.02.15 at 10:10 pm
I don’t know why the CPP wasn’t ‘fixed’ way back when

For the same reason taxes today don’t cover expenditures thus adding to the debt. No one actually wants to pay their own way. Imagine the hue and cry from peons and the business community if the government suggested we raised taxes and CPP premiums to cover the actual costs!

#77 Joe2.0 on 03.02.15 at 10:28 pm

53 Garth
“Why would it.”
The markets cyclical and the time for it to dump is nearing, beginning in oct.

Weeds and lambs are cyclical. The market is not. — Garth

#78 BlackDog on 03.02.15 at 10:29 pm

What is balance? I’ve got 3/4 million of hard earned savings in mutual funds and GIC’s that could be doing better. But at least the IRS is not on to me yet! Why do I care about the IRS cops anyway? I should just focus on how to invest as a Canadian (and lie to TNLTB), but for some reason the whole injusticeness thing just takes over and my reasoning skills go out the window…must be the woman in me.

The IRS is American. — Garth

#79 Keith in Calgary on 03.02.15 at 10:34 pm

On the subject of paying off a mortgage…….

While I don’t have one, consider this…………a $250K piece of RE with 10% down costs about $1,500 a month over 25 years depending on rate and the final overall numbers……..that’s $18,000 a year…….no mortgage equals a net savings expressed as an after-tax cap rate of 7.2% +/- (because you pay a mortgage with net dollars, not pre-tax)………….try and get that kind of return on an ETF.

Paying off debt does not constitute a return on the leveraged asset. Wow. — Garth

#80 tkid on 03.02.15 at 10:41 pm

#70, CPP was fixed decades ago. It was fixed when the government offered RRSPs as a savings incentive. It was fixed when they reduced the rate of tax paid on dividend income. If folks didn’t take advantage of these offerings … *shrugs*

I save and invest in the TFSA, in the RRSP, and the rest goes into a regular self-directed account. I cut back where I can (no cable tv for me and I commute to work for an average of 2.5 hours a day). My pension plan at work will not cover my needs, but every couple of years I ambush one of the financial advisors at BMO and ask ’em if I can afford more than cat food for my retirement.

Ya gotta take care of yourself. No one else will take care of you for you.

#81 Fed-up on 03.02.15 at 10:42 pm

Since 2011 interest rates were supposed to have gone up several times by now. Warning after warning and prediction after prediction that never materialized. Now we should gloat that rates weren’t actually cut , yet again, by our mentally challenged bank governor?

Sigh…

Nobody predicted the BoC would tighten, actually. The loosening was a shock, and likely a mistake. — Garth

#82 Balance | Realties.ca on 03.02.15 at 10:45 pm

[…] Source: http://www.greaterfool.ca/2015/03/02/balance-2/ […]

#83 John on 03.02.15 at 10:46 pm

“Metalheads just wish it was 1825 again. — Garth”

No doubt the metalheads, who heisted the $4M in gold, aren’t too worried about what century they’re in, as they’re probably scuba diving down in the Caymans, after banking the loot in a vault. Meanwhile, we freeze our Canucky backsides off reading the pixel’s on our 2015 high-teckie apples, counting our pixel wealth.

Guess that’s why the US military guards the USA gold hoard and not the banks. Losers.
lol

#84 For those about to flop... on 03.02.15 at 10:56 pm

John 73
Guess that’s why the US military guards the USA gold hoard and not the banks. Losers.
lol
-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Fort Knox is empty is it not?

#85 jimmmy on 03.02.15 at 11:00 pm

DELETED

#86 Smoking Man on 03.02.15 at 11:02 pm

Nobody predicted the BoC would tighten, actually. The loosening was a shock, and likely a mistake. — Garth
……….

Wasn’t a shock to me, as is well documented in the archives. Trading Forex daily, if you can’t spot a currency war, we’ll your not going to be in forex long.

21 central banks have cut this last month. It ain’t over…

#87 r daniel on 03.02.15 at 11:04 pm

if stores and factories are closing, malls have empty units etc why buy XRE now when it should be 30 plus % cheaper when the sheeple are running down the street waving their arms in the air thanks for doing your thing

What empty malls? Target’s locations have been gobbled up by other retailers. — Garth

#88 AB Boxster on 03.02.15 at 11:07 pm

Garth,

You make an excellent case for investing.
And frankly I hope you are right.

But as a financial advisor, you well know that any recommendation will come with the caveat:
“Past performance is no guarantee of future results”

In 2006 all was rosy too.
Markets were making huge returns, housing was increasing at far faster than inflation, etc.
Everything coming up roses for you and for me!

But, there were significant issues in the whole system that resulted in 2008, almost crashed the financial system, and has resulted in massive problems for the entire world, in terms of jobs, growth etc. for the next decade.

Some people are reluctant to ‘invest’ because other experts (that know a whole lot more about it than I do) suggest that the same underlying conditions still exist today, and are in fact possibly worse.

http://www.forbes.com/sites/robertlenzner/2014/12/08/the-ten-reasons-why-there-will-be-another-systemic-financial-crisis/

My comment is not to promote a ‘doomer’ perspective.

My question though, is why do you think that the underlying conditions have changed since 2007?

Yes, arguably, our economy is better, and equity markets are better, and corporate profits are great.

But, if these fundamental systemic issues still exist, and all that is required is an unexpected external shock, why will 2007 or worse, not just happen all over again?

In the GFC a balanced, diversified 60/40 portfolio lost 20% in 2008, recovered 23% in 2009 and made 15% in 2010. The three-year average was about 5%. How was that so bad? The only people who lose money when markets decline are the ones who sell. — Garth

#89 Chicken or Egg on 03.02.15 at 11:08 pm

Garth,

If the rich hire advisors, who do rich advisors hire? Richer advisors?

#90 Fed-up on 03.02.15 at 11:09 pm

Nobody predicted the BoC would tighten, actually. The loosening was a shock, and likely a mistake. — Garth

———————————————————————–

Sheesh I have to lay off of those cheap drugs. Seems like I read that increases were inevitable at least 100 times in the past 5 years.

http://www.theglobeandmail.com/report-on-business/economy/interest-rates/bank-of-canada-warns-of-rate-increase-flags-debt-concerns/article4630682/

Then again, what do I know? Gonna watch some Family Guy.

#91 Mr.Hulot on 03.02.15 at 11:11 pm

Refugees reporting higher earnings in Canada than investor immigrants

http://news.nationalpost.com/2015/03/02/refugees-reporting-higher-earnings-in-canada-than-investor-immigrants/

I guess the National Post is racist too, Garth. Or more like everyone else but you sees the truth

Take your immigrant-bashing meme elsewhere. — Garth

#92 notaliberalfan on 03.02.15 at 11:12 pm

Yesterdays BNN headline was about Canadian real estate is now on sale for foreigners……because of our tanking dollar……..yay?

The editors should have talked to Garth first to confirm that foreigners don’t buy Canadian real estate. 5 minutes on the ground is enough to qualify you in Garth’s mind as a citizen buyer driving up prices.

#93 John on 03.02.15 at 11:24 pm

#82 Fort Knox is empty is it not?

How would you answer that question if you were Janet Yellen?

#94 BlackDog on 03.02.15 at 11:32 pm

@Garth #74, Yeah, so am I apparently. Some of us are born free, but some of us are not so lucky.

#95 BlackDog on 03.02.15 at 11:33 pm

ooops, meant #76…lol…getting late again.

#96 BlackDog on 03.02.15 at 11:41 pm

Grrr…seriously, after everything you have said the last couple days…just GRRRRR!

#97 Waterloo Resident on 03.02.15 at 11:43 pm

I rent a house and invest my money into U.S. equities, have been doing that for quite a long time now.

As a result, I have no worries, no debt, and a ton of free time to do whatever I want in life, whenever I want to do it. (No stress, zero.)

Now most other people will say; “Oh great for you, but I’m up to my eyeballs in debt and I’m barely surviving.”

Well, here’s a way to get OUT of your debt prison:

1 – I’m not sure about selling your house and renting a place instead, because if this real estate rocket keeps going to the moon and you sell now then you will really feel sorry in 5 years when everyone who didn’t sell has their house worth 2 times what it is now. So I don’t want you to do something that will hurt you instead of helping you, so just keep put where you are for now.

2 – Keep your old car a LOT longer, this is how you will save the most money in your budget.
After a house, the biggest spending is on your car.
Most people keep their car until their lease is finished, then they roll over the debt into another leased car: BIG MISTAKE.
If you do that you will never get out of debtors swamp.

At the end of your car’s lease; buy it outright with a bit more financing. I assume it will take about 3 to 4 more years of payments to buy it outright. By then your car will be 7 to 8 years old. That’s okay, keep fixing it and driving that UGLY old mess until it is 12 to 14 years old. At year 7 or 8 when its fully paid off, take that monthly payment that you were going to put onto a new car and invest it into a U.S. self-directed brokerage account ( LIKE TD WATERHOUSE , you can find one near you.)

Don’t invest in individual stocks, instead invest in ETFs (Exchange traded funds). If you like real estate and think homes will go up forever, buy DRN (U.S. exchange) , it’s U.S. real estate times 3. Or if you like Canadian real estate, you can buy XRE (Canadian exchange) and enjoy that going up also.
If you like banks, buy XFN (Canadian exchange).

When the 12 year mark comes around, you will have 4 years of savings in your investment account, something you can use to buy a brand new car with cash. Then with a fully paid off new car, you can keep making monthly deposits into your investment account with the money you WERE going to put towards a financed / leased car.

Now if you are like MOST morons out there, when the time comes to buy that new car with cash, you’ll take that cash and blow it on some stupid Mexican vacation, or upsize to a larger more expensive house. If you keep doing something like that you are dumb as dirt and I cannot help you.
There is a saying that goes like this:

“YOU CAN’T FIX STUPID.”

“Life is hard, it’s even harder when you’re STUPID.”

#98 Joe2.0 on 03.02.15 at 11:45 pm

Re 75 Garth
Weeds n lambs n history.
Always repeats it self, same outcome.

#99 BlackDog on 03.02.15 at 11:46 pm

GRRrrrr….snoooZzze….SssnifFff…whatever…Whoo cares….Zzz……

#100 Jerry on 03.02.15 at 11:50 pm

Normally a big fan but you’ve gotten ever so slightly intoxicacted with triumphalism there and have picked XPF for your preferred example. This fund is half invested in the US but reports in CAD so all the gains are merely a currency boondoggle.

Should you wish to restore some credbility, why not have a look a little graph of ZPR’s behaviour for the last year…..

Actually I like XPF just fine. But buy what you want. — Garth

#101 Cici on 03.02.15 at 11:55 pm

I don’t know what the heck Poloz is up to, but rest assured, I don’t think he does either. He’s probably trying to stay ahead of the markets, to throw them off from speculation and shorting. But one thing’s for sure, that last little rate cut surely did help out the big five.

Who knows what’s next? Personally, another rate cut wouldn’t surprise me…especially since he’s just said not to expect one. If he does stand by his word and keeps the status quo on Wednesday, I expect another rate cut the next time round.

#102 Bill Gable on 03.03.15 at 12:13 am

Poloz gave Canadian Investors a swift kick in the “returns” by his expedient, bonehead cut – as our buck cratered and so did our Canadian denominated Investments.

He will cut again, because he is a lap dog of Harpie and that’s all she wrote.

On the brighter side.
Our Son sold his Townhouse, here in Vancouver. Ridiculous money.

#103 Brian on 03.03.15 at 12:16 am

I live in port moody BC and am putting my townhome up for sale very soon. I’ve spent the last 6 weeks interviewing realtors and every time I have their ear I ask about HAM.

They insist HAM is a significant factor in the market and give examples of overbidding to secure SFH purchases.
Today realtor told me about a 1M dollar home in westwood plateau that had 10 offers and then 1 offer of 85K over asking with no subjects. Realtor confirmed that it was foreign Chinese money.

Same thing happened last year a SFH we were considering was scooped up by foreign buyer 30k over list and no subjects.

I also spoke with a mortgage broker at RBC and asked her the same question re HAM and her eyes nearly bugged out of her head when she said ‘oh yes, there are A LOT of deals going through’

So maybe they are all lying, or maybe not. But Garth won’t consider this type of anecdotal evidence – must be in some professional study or it’s not true.

So I’m reporting in – boots on the ground here in PoMo

So tell us how many foreign Chinese nationals bid on your townhouse. — Garth

#104 Keith in Calgary on 03.03.15 at 12:22 am

“Paying off debt does not constitute a return on the leveraged asset. Wow. — Garth”

—————————

Shelter is a net expense to your bottom line cash flow unless the asset you live in is paid for. Then it is not considered as leveraged.

If you don’t own real estate free and clear, it costs you “something” to have shelter over your head…….

Operating expenses aside, factor in the lost opportunity cost of the money tied up in the asset, and then the net after tax savings from not having to service the debt of a mortgage, plus the gained opportunity cost on that money compounded over time, and you’re ahead. My father lives in a paid for 275K house (mortgage free since 1986) and saves roughly $36K a year after the fact, by living within his means.

Not saying RE is a thing you should buy today, but there are angles to every argument.

And, no, I do not live alone, I am a happily married DINK.

#105 Mr.Hulot on 03.03.15 at 12:33 am

Yes, I guess that makes me a racist who is accepting of a Refugee yet has a problem with the abomination called an “Investor-class immigrant”

They’re supposed to be poor, right? — Garth

#106 Ron Davidson on 03.03.15 at 12:34 am

I agree with Garth on many things but his total belief in the US recovery is a mystery to me. Yes, the US appears to be in full recovery but how did it happen? Very simple they became the largest counterfeiter in the history of the world. They have been able to psychologically turn the economy around but it is just an illusion. In the late 40’s over 40% of he population was employed in manufacturing. Today it is less than 10%. Over the same period of time employment in the financial industry has grown to over 20% of the population. Lawyers in the US take approx. 10% of GDP. In short the US no longer produces. Instead it is a nation of white collar workers sucking the life blood out of a dwindling pool of actually productive people. To keep the illusion of wealth they borrow and when they can’t borrow enough they revert to counterfeiting. I follow this blog and agree with so much that is written by Garth but his belief in the US
I totally disagree with. It is simply history…..the rise and fall of the Roman Empire. Everyone wants to be a boss but nobody wants to work. You cannot borrow and print money and not expect it to end badly. Sorry Garth…..I hope you don’t rip me to shreds with my viewpoint.

It’s not 1940. The U.S. leads a globalized, tech-centric economy, concentrating wealth as never before. It will continue. — Garth

#107 everythingisterrible on 03.03.15 at 1:34 am

#103 Mr.Hulot on 03.03.15 at 12:33 am
Yes, I guess that makes me a racist who is accepting of a Refugee yet has a problem with the abomination called an “Investor-class immigrant”

They’re supposed to be poor, right? — Garth
————————————-

Wouldn’t it be more equitable if canada offered a hand up to people who need it (poor immigrants& refugees) Garth? Rather than rich people looking to park their disposable income somewhere? Why give people help and opportunity who don’t need it, especially to the detriment of the domestic population. Rich foreigners don’t need unfettered access to real estate here.

#108 MGTOW on 03.03.15 at 1:36 am

OH MY GOD; CANADA IS DEAD.
I mean, if Canadians are investing everything they have in real estate like this guy is doing, and everyone has the same attitude that real estate is only going up and up forever (like this guy does), then when the bubble pops they are going to end up homeless and on the street, living under a bridge.
Heck, I think there won’t be enough bridges for all of the homeless who will be caught off guard.

This is the site I got the comment from:
http://business.financialpost.com/2015/01/14/how-once-booming-calgary-is-now-becoming-the-drag-on-national-home-prices/

And this is the guy’s comments (I shake my head, he must be high on Crack or something):

—————
QUOTE: (((“Being smart is buying a house 100 km west of Toronto with $30,000 down …. renting the house out at $1300/mo , creating a positive cash flow of $400/month…. successfully severing off 30′ of frontage off the lot and selling the lot for $60,000 to a small builder.

Being smarter is repeating this scenario every year to 2 years.

Being really smart is buying 5 homes in 6 years and severing off 5 building lots….. i’ve made over $400,000 profit…and have $2,500 monthly positive cash flow from these properties…. on top of which is the build up of equity by paying down the mortgage and the long term appreciation of value.

And for all you renters who say the market will crash for no other reason than “….ít just has to…look at the prices…” What you really should look at is where prices were 25 years ago in 1989 at the peak of that market… and look where prices are today. Huge difference. Prices have at least doubled… if not tripled.
Look at what you missed.

And what you can expect over the next 25 years is more of the same….massive gains in real estate.

Why? Because central banks are printing insanely massive amounts of currency which will make today’s real estate prices look like chump change.
Never before in human history have we seen the kind of currency expansion and debasement like we have seen since 2008. And the money printing is going to get a lot bigger too. Way bigger. Which means prices for everything are going up. Way, way up.

In the meantime i’m currently looking for house #6.

And if anyone has a better way of turning $30,000 into more than $500,000 in just 8 years while being in 100% control of your own destiny… let me know. I didnt make up the financing rules… i’m just playing by them, like everyone else is.”)))
———-

#109 Fed-up on 03.03.15 at 1:37 am

#89 Mr.Hulot on 03.02.15 at 11:11 pm

Refugees reporting higher earnings in Canada than investor immigrants

http://news.nationalpost.com/2015/03/02/refugees-reporting-higher-earnings-in-canada-than-investor-immigrants/

——————————————————————————-

I read that article as well. When you really look at it,the issues are mainly regional (BC Coast and Southern Ontario) created by a relatively small group of citizens taking advantage of some loose legislation of The Immigrant Investor Class program that was scrapped last year. Hopefully the smaller program, The Immigrant Investor Venture Capital that was announced at the end of 2014, will have stricter guidelines and be more beneficial to all Canadians, newly arrived and otherwise.

There are more than enough native born Canadians cheating the system as it is.

#110 Christopher Lackey on 03.03.15 at 1:40 am

The nasdaq had a p/e of 194 last time it was at this level. Hard to imagine that level of euphoria today. But the technology “story” factor is as alive now as it was then although more concentrated to individual companies than the broader market as any investor in netflix, gopro, zynga, candy crush, facebook, twitter, or tesla can attest. Invest in these current and former high flyers at your peril.

#111 Christopher Lackey on 03.03.15 at 1:43 am

And dont forget the year groupon was the top performer with a 2500% return…

#112 tundra pete on 03.03.15 at 1:50 am

#101 brian. Nice one. [email protected] has your number doesnt she. As do the realtors you are interviewing. Remember the 3 lies. I love you. Its okay im a realtor. I promise i wont c€m in your mouth.

#113 Dee on 03.03.15 at 2:06 am

Spending a few days down in Chicago for work. Walked up Magnificent Mile this morning before work, walked around the Loop after work. Didn’t see a single closed storefront or boarded-up building.

Been to Chicago a lot. Never seen it quite this happening. Was nice to see that, at least here, the good times you read about seem to be going on everywhere, not just concentrated in the banks.

Meanwhile, back in my home of Toronto, seems like every day another business is gone, another building boarded up, another thousand layoffs somewhere…

#114 TakingResponsibility on 03.03.15 at 2:14 am

Little off the post’s topic but…

Holy cows! Did not know the Canada Economic Action Plan used CMHC to fund a Municipal Infrastructure Lending Program – oops! Now that little Ontario town doesn’t look like it can make payments on their $49.5 million CMHC loan.

http://ottawacitizen.com/news/national/plasco-fallout-questions-arise-over-approval-process-of-cmhc-loan-to-town-of-blind-river

Canadians are in dire need of some very assertive journalism regarding CMHC.

#115 Mr.Hulot on 03.03.15 at 2:19 am

This past New Years’ Eve, I had the pleasure of sitting beside a prominent Vancouver immigration lawyer. I had heard his name often in the media. During the evening, we began talkng about his work and the immigration situation in BC. He had serious issues with policy and was frustrated. He asked me how many CareCards did I think were in existence in BC. I figured with the population being 4.5 million I would subtract infants and some newcomers and guessed 4 million. I was way off. He told me 7 Million BC Health Cards were in circulation and the Government was aware of it. Immigrants, he said were taking advantage of our goodwill by creating fake CareCards. The Government was aware but wouldn’t do anything about it because it wasn’t politically correct it.

Sort of like you.

You have been warned about the incessant hate for immigrants. That is not the subject of this blog. Go away. — Garth

#116 Mr.Hulot on 03.03.15 at 2:28 am

Let me ask you one simple question: Do you think the Fed distorted the Stock and Bond market by doing QE? Irregardless whether it was good or not. Did they distort the markets?

#117 Lobster Man on 03.03.15 at 2:58 am

#98 – Jerry
ZPR is an “odd-ball”, with an index mainly composed of rate-reset preferred shares. Therefore, it performed poorly with the BOC interest rate cut. In fact, the market might have priced in a second rate cut for ZPR.

#118 BS on 03.03.15 at 3:05 am

Brian 101

Realtor confirmed that it was foreign Chinese money.

Same thing happened last year a SFH we were considering was scooped up by foreign buyer 30k over list and no subjects.

I also spoke with a mortgage broker at RBC and asked her the same question re HAM and her eyes nearly bugged out of her head when she said ‘oh yes, there are A LOT of deals going through’

If a realtor or mortgage broker told you it is true it must be. After all they would never tell you anything that may encourage you to list your place and borrow more money to buy a new one.

One question though. If the Realtor confirmed ‘it was foreign Chinese money’ why are mortgage brokers involved? Wouldn’t mortgage brokers be supplying good old borrowed Canadian money? If it was Chinese money the mortgage broker would not be involved and have no first hand knowledge.

Never mind. I am sure the realtor and mortgage broker are just looking out for your best interest and providing invaluable market insight that will steer you in the right direction. After all it is not like they are commission sales people.

#119 Lobster Man on 03.03.15 at 3:25 am

#98 – Jerry
Just want to point out also that XPF is CAD hedged. USD gains should have had minimal impact on XPF’s superior performance.

#120 Industrial Guy on 03.03.15 at 3:33 am

#101 Brian on 03.03.15 at 12:16 am

I’m in Brantford, Ontario. When ever I ask about HAM around here, I always hear the same thing …”with eggs or a little Dijon, sir”?

I’ll never understand the basic premise of HAM. Wealthy Chinese business people who were smart/skilled enough to amass all this wealth suddenly walk into this new, unknown market, don’t do any due diligence, massively overpay for property and somehow this is normal. Give me a break! It’s like a cardiac surgeon suddenly forgetting how to apply a Band Aid.

Most business people I have encountered over the last 30 years have a very good grasp of dollars and sense. They tend to be very skeptical toward sales pitches with claims like “Guaranteed returns” or “low to no risk.”.

Fear of HAM is just a closing tool used by real estate agents to panic buyers into signing really dumb offers they can’t afford.

Have you visited World heritage Site, Head-Smashed-In Buffalo Jump near Fort Macleod, Alberta?? That’s the model for the real estate markets in Vancouver and Toronto. Let panic reign. Rational thought flies out the window and bingo …… you’re the proud parents of a $700,000 mortgage.

Will that be KD, canned soup and crackers or hotdogs again for supper? Welcome to the ranks of the house rich and cash vanished generation.

http://history.alberta.ca/headsmashedin/

Good luck on the house sale …

#121 Mr.Hulot on 03.03.15 at 3:33 am

#103

Actually they can be poor or rich as long as they contribute to this country and “not treat Canada as some kind of holiday resort or educational/retirement bolt hole, while doing business back ‘home’“
-National Post

#122 David McDonald on 03.03.15 at 3:43 am

Thanks for the post. I would add one more positive point. The stimulus is still in place albeit no longer increasing.

Nevertheless I have always been a pessimist who expects the other shoe to fall. What would be the harm in selling in May before the Fed rate increase? I would lose some dividends but isn’t the downside risk greater than the upside at least until October?

#123 nubbers on 03.03.15 at 4:45 am

Setting the Record Straight @19

Good point, the way that I expressed myself could be interpreted as (inverted?) racist, although my actual intention was to avoid that. Therefore, I apologise to anyone offended on a racist basis. Also, my intention was more about ex-pat vs established populations.

Still, I seem to have touched a raw nerve with my comment. Those who think they are entitled to a living merely be being longer established in Canada appear to feel under threat when more recent immigrants do well. I was always puzzled by some aspects of South Park’s parody of Canadians, but it is beginning to make more sense to me now. Thanks for filling the gap.

#124 jim tandy on 03.03.15 at 6:56 am

Toronto Real Estate Board demands brokers halt online sales stats

Brokers cave in following threat they could lose access to MLS database

http://www.cbc.ca/news/business/toronto-real-estate-board-demands-brokers-halt-online-sales-stats-1.2978746

#125 drydock on 03.03.15 at 7:04 am

#61 Kaganovich on 03.02.15 at 9:39 pm
Who is Anthony Saunders? Not impressed. — Garth

Link to who Anthony B. Sanders is.
http://mason.gmu.edu/~asander7/

#126 Tripp on 03.03.15 at 7:29 am

This is how far we are from US and their Zillow:

http://www.cbc.ca/news/business/toronto-real-estate-board-demands-brokers-halt-online-sales-stats-1.2978746

#127 Ray Skunk on 03.03.15 at 7:45 am

#64 Ole Doberman

I saw that syndicated article/TREB press release in the G&M yesterday.

One of the most shameless pieces of RE bullshit I’ve ever read, and there’s been no shortage of candidates these past few years.

For those who read the article, it goes into how thousands of condos – in the pipeline for years – are finally hitting completion and are now adding to the already overstocked and plumped inventory which, by any rational measure of a market, is a bad thing.

So what’s the headline?
“Toronto condo market booming again!”

Staggering. Simply staggering.

At least over at the Financial Post they tried for a different angle, with some cock and bull story about how institutional investors will be snapping up these condos for rental stock, to try and make us feel under pressure to buy.

#128 Joe on 03.03.15 at 7:59 am

It’s all about the confidence people have in real estate and the lack of confidence mutual funds, etfs, etc. The
major factor is that real estate is far more transparent (you actually get to SEE what you’re buying) despite all the pitfalls (maintenance, taxes).

This is why most people have indebted houses and no money. They think like you. — Garth

#129 Charles Ponzi on 03.03.15 at 8:07 am

Yes: Corrections are a part of life. You correct your mistakes. Or they correct you. No other outcome is possible. But along comes the doctrine and practice of modern central banking. All these MIT-educated central bankers have a different idea.

https://zirpqe.wordpress.com/2015/03/01/the-end-of-honest-money/#more-8756

#130 Kevin on 03.03.15 at 8:21 am

Why would you pay down a 2.25% mortgage when your money makes 8%?

Apples and oranges. Paying down the mortgage gives me a guaranteed 3.69% return on my money, risk-free, and tax-free.

Is there a guarantee that if I invest that money instead, it will make 8% again next year? Of course not.

Paying off debt is not earning a return on your money. Meanwhile real estate appreciation is not guaranteed. Without it, your debt gets bigger. — Garth

#131 Sky on 03.03.15 at 8:31 am

DELETED

#132 fancy_pants on 03.03.15 at 8:32 am

#122 jim tandy on 03.03.15 at 6:56 am
#124 Tripp on 03.03.15 at 7:29 am

what a godless monopoly those devils run. No productive value to society. Thirsty parasites. House traffickers.

But it’s different here. We are far more polite when getting financially raped everywhere we turn.

Good news, we do have a saviour, bad news, he needs directions. http://www.thespec.com/news-story/5456061-rate-bets-turn-to-coin-tossing-as-poloz-buys-time/

#133 Ralph Cramdown on 03.03.15 at 8:45 am

#114 Mr.Hulot — “Let me ask you one simple question: Do you think the Fed distorted the Stock and Bond market by doing QE? Irregardless whether it was good or not. Did they distort the markets?”

The question has a poor foundation, for it implies that, but for the Fed, the markets would be undistorted, or rationally priced.

There are people who would have you believe that investing was easy and the markets rational in the good old days, but now, everything is skewed because of factor X (often the Fed). Markets were never rational, nor was investing ever easy.

If anything, investing has been easier since the advent of what was originally called the “Greenspan put.” There seem to be people who said years ago that Fed actions were going to drive up asset prices, but who didn’t make the trade.

#134 HogtownIndebted on 03.03.15 at 8:57 am

How unbalanced are we in Toronto? Two glimpses.

Yesterday at the food market, there were huge lineups at 7 of 8 checkouts, five or six carts each with long waits.

The short line? Cash or debit only. Breezed through in 30 seconds.

Then the bank. Last week they could be heard telling everyone to “book your RSP appointment early, it will be crazy”.

Crickets. The bank was empty as I walked by at 5. Later, still empty. Closed at 6 – no need for extended hours on RSP D-day anymore.

#135 Londoner on 03.03.15 at 9:09 am

“Nobody predicted the BoC would tighten, actually. The loosening was a shock, and likely a mistake. — Garth”

Actually it wasn’t a shock and a lot of people predicted the BoC would tighten. The writing was on the wall as early as Sept when Poloz said that broader economic growth would have to be driven by foreign exports. This was followed by a further drop in oil prices and subsequent trade deficits. At the time I even posted on here that the BoC’s next move would be a cut rather than a hike. Your response was something like “of course they won’t”.

No mainstream economists predicted a cut. And it was a mistake. — Garth

#136 workingarchitect on 03.03.15 at 9:42 am

Oh, my.

http://www.cbc.ca/news/business/toronto-real-estate-board-demands-brokers-halt-online-sales-stats-1.2978746

That story was examined here in some depth several weeks ago. — Garth

#137 crowdedelevatorfartz on 03.03.15 at 9:47 am

@#49 Linda

Good points.
I guess try and forgo the RRSP option and perhaps invest in a TFSA? You wont recieve the tax (deferred) refund of an RRSP but at least you can keep investing. With the ‘Tax Free” investment a nice piece of cash down the road.

P.S.
Loved your comment :

” so that I don’t end up beating off the competition with my cane at the nearest dumpster? “

#138 crowdedelevatorfartz on 03.03.15 at 9:49 am

@#52 Joe 2.0

Nah, stick around and we’ll feed you crow.

#139 CP on 03.03.15 at 10:08 am

“He who controls the past controls the future”

http://www.cbc.ca/news/business/toronto-real-estate-board-demands-brokers-halt-online-sales-stats-1.2978746

#140 Joe2.0 on 03.03.15 at 10:10 am

#136
Thanks buds, I do enough squawking.

#141 Daisy Mae on 03.03.15 at 10:19 am

“The Bank of Canada now understands the reduction in January was bozo…”

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

Aren’t they supposed to UNDERSTAND this stuff?
Just askin’……

#142 Nagraj on 03.03.15 at 10:28 am

The central bank of Australia yesterday (or today? what day is it Down Under?) (don’t tell me, I don’t really care) UNEXPECTEDLY left rates alone. UNEXPECTEDLY as, evidently from what I’ve read, many men were expecting a rather large cut. [I say “men” instead of “analysts”, in an attempt to liven up this rather dull paragraph.]

On another subject: Mr. Turner provocatively wastes space by reprinting Swami Snake Charmer’s 10 (ten) reasons why the SPX, for example, will continue to hit NEW RECORD HIGHS for the next 10 (ten) years. And this via Bloombible to boot.
Ain’t that the mother of all sell signals, eh.
Of course Garth smilingly adds, “Nothing goes up forever.”

Mother Angelica: “I hear that some of you don’t believe in hell. I hope some of you like a surprise. Because you’re gonna get a surprise. A big surprise. And you know what? You’s gonna stay surprised. For a long long long time.”

Me: “I hear some of you don’t believe a prolonged bear market is likely. I hope some of you like a surprise . . .

#143 consistency on 03.03.15 at 10:34 am

Curiously, Garth singles out a “Ukrainian online credit union” but then asks a commenter why they pointed out someone doing something was “Italian” and tells another not to immigrant bash.

Consistency.

Idiocy. — Garth

#144 brazenways on 03.03.15 at 10:50 am

Re of Calgary just passed the magical one billion $ sold mark….nearly 4 weeks later compared to 2014.

In terms of re agents themselves, compared to this point last year:
Total commission -24 million $
Total disposable -22 million $
Collision per agent -5k (12.4 Vs 7.7)

All figures above bases on ytd sales to march 2 and assuming 4% commission rate.

#145 Holy Crap Wheres The Tylenol on 03.03.15 at 10:58 am

#62 Smoking Man on 03.02.15 at 9:39 pm

#45 joblo on 03.02.15 at 9:04 pm
#40 Smoking Man on 03.02.15 at 8:51 pm
I can’t believe the dudes at CSIS haven’t came begging for me to work for them.

An to Holy Crap, Tylenol…

On my first solo in a 150 Cessna arobat, away from the field, I looped and rolled it. So unlike you, probably cause I’m rather insane, I don’t have the fear gene.

I should have been named Wyatt.
_____________________________________________
The first plane I ever flew was a Cessna 150H back in 1969 with my father. He was a pilot in the RCAF during WWII. He was the one that introduced me to flying. Ive rolled and looped in my younger days. Its easy to tear the wings off one of those little baby’s in a roll though. As for fear, your dam right Ive got fear. We didn’t fear being blown out of the sky but crashing and surviving. Talk to any pilot from any air-force in the world and they will tell you that a good pilot has fear.
I have invested in a plane in the past and had it for about 15 years before I decided it was like pouring cash down the drain.

#146 Rob on 03.03.15 at 11:06 am

What do you know. The Canadian economy is stronger than most people thought and the cunuck buck is rallying. How are people on this blog so constantly wrong?

#147 Tiger on 03.03.15 at 11:08 am

Chinese property developers eye Vancouver in growing numbers.There’s a new class of developer in town. Mainland China-based property developers are bidding on unbuilt sites across Canada in increasing numbers, according to a report from the property brokerage Colliers. While there is strong evidence of Chinese investors piling into residential real estate in Metro Vancouver, this activity is more oriented around land development. The report points to the January purchase of a 232-acre site on the eastern end of the Burrard Inlet by the Shenzen-based Brilliant Curcle Group For around $40 million.

http://www.bcbusiness.ca/sites/default/files/styles/article_full_standard/public/Screen%20Shot%202015-03-02%20at%201.18.37%20PM.png?itok=n0xb-GIV

http://www.vancouversun.com/business/Metro+Vancouver+land+package+including+Ioco+townsite+sold/10736523/story.html

#148 Kilt on 03.03.15 at 11:10 am

Seems the truth will be even harder to find.

http://www.cbc.ca/news/business/toronto-real-estate-board-demands-brokers-halt-online-sales-stats-1.2978746

Kilt

#149 Londoner on 03.03.15 at 11:16 am

“No mainstream economists predicted a cut. And it was a mistake. — Garth”

Why do you think it was a mistake? Despite the headline number, full-time employment is actually down and retail sales remain weak. The trade deficit has grown bigger and the just released GDP was in line with the BoC’s expectations. This may indicate that the “insurance” is actually warranted. Please explain.

#150 Mark on 03.03.15 at 11:18 am

“One question though. If the Realtor confirmed ‘it was foreign Chinese money’ why are mortgage brokers involved? Wouldn’t mortgage brokers be supplying good old borrowed Canadian money? If it was Chinese money the mortgage broker would not be involved and have no first hand knowledge.”

Extremely good points. If a small down-payment comes from “China”, is it really “HAM” if the other 95% is borrowed just like other Canadians usually borrow — from other Canadians? I’d suggest “not really”.

So-called “HAM” would be a great thing coming to Canada for the long-term stability of the RE market, but sadly, there’s just no evidence for it. Vancouver might actually see some increases in personal income if true “HAM” actually arrived as such would imply investment (not just debt-fuelled speculation which does not enhance aggregate income).

“At the time I even posted on here that the BoC’s next move would be a cut rather than a hike. Your response was something like “of course they won’t”.

I’m not so sure what’s so hard about simply understanding that the ongoing in deflation in housing is profoundly bad for aggregate demand in Canada. And that inflation has persistently been weak in Canada, as has been the labour market. These factors all pointed to the necessity of rate cuts. Maybe being ensconced in the bubble of a high paid job in Canada’s financial sector led many astray from the true fundamentals out there, and that is, the Canadian economy has been under-stimulated and under-performing for a long time now. We can only hope that Poloz finally sticks to his guns and delivers monetary policy that might actually have a chance of fixing that , rather than the overly tight economy-killing policy that’s been run by his predecessors.

#151 Realtor commissions in trouble! on 03.03.15 at 11:24 am

http://www.repmag.ca/news/toronto-brokerage-ruffles-industry-feathers-over-commissions-188797.aspx

#152 Broke Dick on 03.03.15 at 11:25 am

First you say- Core inflation was 2.2%, right within the BoC target range. Seven of eight categories increased, food by 4.6%. No second cut coming. — Garth

So I read, inflation on target no need for second cut.

Then you say- Nobody predicted the BoC would tighten, actually. The loosening was a shock, and likely a mistake. — Garth

So I read, rate cut was a mistake.

Inflation on target and rate cut a mistake? Which is it?

Both, obviously. — Garth

#153 Tyler Durden on 03.03.15 at 11:30 am

Does nobody read affordability trends before buying?!

http://www.rbc.com/economics/economic-reports/pdf/canadian-housing/house-march2015.pdf

#154 lee on 03.03.15 at 11:40 am

#146 – The privacy issue is a bunch of crok. The sale price of a house is public information in the land registry offices. The list prices were also public at one point so they are out there. The government may have to legislate to protect the public here.

#155 Nemesis on 03.03.15 at 11:54 am

#TerrificTuesday’s… #FunnyAuldWorld… #Kommies,Kitties,Peckers&… #NoodlesOfIrony…

#JustOneMoreBelt,Or… #AllRoadsLeadTo… #TheFourFormsOfDecadence!

[SCMP] – Cutting through the jargon at China’s parliamentary sessions: A guide to the slogans that are likely to pepper the speeches of political leaders during the National People’s Congress and the Chinese People’s Political Consultative Conference

http://www.scmp.com/news/china/article/1728351/cutting-through-jargon-chinas-parliamentary-sessions

#PussiesGalore…

[Independent] – Japanese island overrun with cats after population explodes

“If people coming to the island find the cats healing, then I think it’s a good thing,” 65-year-old Hidenori Kamimoto, who makes a living as a fisherman, told ABC.

http://www.independent.co.uk/news/world/asia/japanese-island-overrun-with-cats-after-population-explodes-10082073.html

#IsThatAWeaselOnYourPecker?…

[Independent] – This is what the photographer has to say about the picture of a weasel riding a woodpecker

http://www.independent.co.uk/environment/nature/this-is-what-the-photographer-has-to-say-about-this-pretty-incredible-picture-10081890.html

#TheUnbearableLightnessWhenPeeing?…

[Independent] – Average penis size revealed: Scientists attempt to find what is ‘normal’ to reassure concerned men

http://www.independent.co.uk/life-style/love-sex/average-penis-size-revealed-scientists-attempt-to-find-what-is-normal-to-reassure-concerned-men-10081589.html

#CondosOfFury…

[CBC] – Vancouver’s Chinatown shouldn’t be new Yaletown, says heritage advocate: Carnegie Community Action Project calls for temporary moratorium on new market housing

“As these changes happen, Chinatown is at a threat of being no longer Chinatown, but a new Yaletown, a new Gastown.” – King-Mong Chan, Carnegie Community Action Project

http://www.cbc.ca/news/canada/british-columbia/vancouver-s-chinatown-shouldn-t-be-new-yaletown-says-heritage-advocate-1.2979173

#156 Holy Crap Wheres The Tylenol on 03.03.15 at 12:25 pm

Rich people get that way by staying invested. They hire advisors, forget about market timing, and concentrate on generating income. They don’t buy a condo to rent out, park money in a GIC at some Ukrainian online credit union in Saskatchewan or pay off a 2.25% mortgage. Mostly, they seem to have confidence, which the huddled masses do not. Successful folks think the future is pretty cool. Your indebted brother-in-law fears it.
___________________________________________

“Unto everyone that hath shall be given.” In simpler terms, “the rich get richer.”
Markovnikov’s Rule

#157 Holy Crap Wheres The Tylenol on 03.03.15 at 12:32 pm

#146 Kilt on 03.03.15 at 11:10 am

Seems the truth will be even harder to find.

http://www.cbc.ca/news/business/toronto-real-estate-board-demands-brokers-halt-online-sales-stats-1.2978746

Kilt
__________________________________________
That’s because the truth or what appears to be the truth hurts…………………

#158 Ray Vasquez on 03.03.15 at 12:42 pm

There is the Ukrainian Credit Union here in Toronto that has a 4 month GIC, RRSP, RRIF, TFSA rate of 2.75%.

#159 GTA Observer on 03.03.15 at 12:43 pm

It’s Tuesday midday and much as Garth has been moving on from real estate, I’d love to have this covered:

http://www.cbc.ca/news/business/toronto-real-estate-board-demands-brokers-halt-online-sales-stats-1.2978746

So that’s it, TREB makes ever more clear it wants people to buy in an information vacuum. The question is: why now?

#160 Ralph Cramdown on 03.03.15 at 12:46 pm

Who issues a quarterly earnings report and doesn’t put per-share numbers on anything but the dividend increase? Enercare, that’s who. Sold, to the guy in the greed shirt.

Nemesis, if they’re overrun with cats, maybe they should introduce a predator species?
https://www.youtube.com/watch?v=N0p1t-dC7Ko

#161 Oil Is Sticky on 03.03.15 at 12:49 pm

Gas back to $1.32 a litre in Scamcouver. No inflation here. No increases in MSP, insurance, property tax, smaller boxes of food, high meat prices, high veggie prices and now they want to increase the PST by 0.5% so translink can piss it away. Nope….no inflation here.

Really? You can’t believe ANYTHING govt says. Why bother posting phoney inflation numbers?

#162 DisgustMadeMePost on 03.03.15 at 12:57 pm

Irregardless…..

Garth.. there should be a penalty just for using that non-word…

#163 bdy sktrn on 03.03.15 at 1:04 pm

So tell us how many foreign Chinese nationals bid on your townhouse. — Garth
—————————–
probably none will.

if there 2+ bids , chances are one will be somebody asian. but canadian.
not ham.

ham has no interest in a used townhouse in poco.

his examples were sfh.
they were well outside of the traditional ham zones, which i found surprising.

W side/van Richmond or NEW condos in bby nv etc otherwise not interested.

Comm drive hood is on the doorstep of downtown , transit,walking,shopping(esp if u need a hemp drum)
but is totally shunned by ham. not one of a hundred deals in 20 yrs have i heard of ham here. no status it seems.
the people bidding up the 1m teardowns are developers and very well paid couples who can seemingly afford it .
west side prices have been driven up, way up, by something other than local incomes. certainly not cmhc on 2.5m shacks. in 1980 this was the case too. china was dirt poor then.

‘foreign’ cash has been flowing to Vancouver since long before ham existed. from all over the world. china is just the latest , and largest, wave. van is “sexy beautiful and everyone wants a taste”.

ps:no supercar required, but you’ll need better than a base ferrari if you want to stand out.

#164 DisgustMadeMePost on 03.03.15 at 1:06 pm

Care Cards or rather as they are known now, BC Services Cards…

I recently encountered a patron using their care card for services that I am in a position to provide. In the small talk during information gathering, this patron offered up that they don’t live in BC, but the States. They just pay the monthly premiums to maintain coverage.

Just giving you an idea of what is going on.

Talk about ‘Universal’ health care…

#165 Ralph Cramdown on 03.03.15 at 1:06 pm

#152 lee — “The privacy issue is a bunch of crok. The sale price of a house is public information in the land registry offices.”

Actually, there IS a bit of an issue, but it isn’t what you think.

Realtors update their MLS with the sale price as soon as a deal ‘goes firm,’ that is, all conditions are removed, but before the deal actually closes — which is when it goes into the land registry. If a deal subsequently falls through (it happens), every agent on the board knows the number that the seller said ‘yes’ to.

As far as I’m concerned, this is a big disservice to the seller in this situation, who’d rather that buyer agents didn’t know his bottom line.

But I guess agents hew to Spock’s maxim that the needs of the many outweigh the needs of the client.

#166 bdy sktrn on 03.03.15 at 1:09 pm

Irregardless…..

Garth.. there should be a penalty just for using that non-word…
————–
seconded.

#167 DisgustMadeMePost on 03.03.15 at 1:10 pm

#159 Oil Is Sticky on 03.03.15 at 12:49 pm

…..

And could someone PLEASE explain why I’m paying 1.30 per litre of gas again? The exchange rate alone can’t possibly be the cause.

Feels like extreme gouging. Or maybe the oil companies think we all have hot money in YVR.

#168 Broke Dick on 03.03.15 at 1:14 pm

#150 Broke Dick on 03.03.15 at 11:25 am
First you say- Core inflation was 2.2%, right within the BoC target range. Seven of eight categories increased, food by 4.6%. No second cut coming. — Garth

So I read, inflation on target no need for second cut.

Then you say- Nobody predicted the BoC would tighten, actually. The loosening was a shock, and likely a mistake. — Garth

So I read, rate cut was a mistake.

Inflation on target and rate cut a mistake? Which is it?

Both, obviously. — Garth
================================

But if the first cut brought us on target, how can it be a mistake?

#169 Herb on 03.03.15 at 1:24 pm

#157 GTA Observer,

just discussed this with my wife. I thought it was because TREB was just getting greedier. Her take: they are not making enough sales to feed their 41,600 “members”, so they are removing an obstacle to higher prices and closings.

C’mon Competition Bureau, stick a fork in that windbag!

#170 NoName on 03.03.15 at 1:42 pm

Why Paying Off Your Mortgage Will Cost You Millions…

https://www.youtube.com/watch?v=SdFQPeor9NE

#171 Debtfree on 03.03.15 at 1:50 pm

Kind of a profetic photo as the TREA is handing out muzzles . The cartel needs a shock collar . News piece at cbc.ca .

#172 NoName on 03.03.15 at 1:52 pm

don’t watch past min 11 guy is selling something, but everything he say up to that point makes sense.

#173 DM in C on 03.03.15 at 1:58 pm

” Paying down the mortgage gives me a guaranteed 3.69% return on my money, risk-free, and tax-free.”

How on earth did you come to that conclusion? Were you smoking BC Bud?

Are you considering interest in your calculations? Unbridled appreciation in your house? WTF? This statement baffles me.

Shaking my head.

#174 DisgustMadeMePost on 03.03.15 at 2:42 pm

#161 bdy sktrn on 03.03.15 at 1:04 pm

Comm drive hood is on the doorstep of downtown , transit,walking,shopping(esp if u need a hemp drum)

Ok, that was too funny.

That trendy drive… I grew up around that area. Certainly that was the place for the kids shoes and mortadella salami! I still go there occassionally but find it kind of slummy. Especially after dark. I was there recently and couldn’t help noticing what seemed like a large number of ‘street’ people. Too many of which were youths.

Is this what’s meant by the term ‘gentrification’?

You feel bad that you can’t afford a house? I can only imagine how some of today’s young people feel.

#175 Simon Cowel on 03.03.15 at 3:02 pm

Consumer’s debt is raising, already over 1.5 trillion dollars including mortgages, up 7.7 % on yearly basis (end of 2014 vs end of 2013),

We use the lower rates to pile on new debt, not to pay it.

It is going to end really really bad.

Just watch the currency going forward.

#176 Victor V on 03.03.15 at 3:40 pm

From the RateSupermarket Debt Denial Study, “42% of those who think their credit card debt is average actually owe more than the norm.”

http://www.shedoesthecity.com/getting-credit-card-debt

#177 Leo Trollstoy on 03.03.15 at 3:46 pm

The BoC rate cut may have been a mistake, but as somebody who has rentals in FL, I can’t complain too loudly as this ‘mistake’ increased my rental income and property value as far as the CAD is concerned ;)

The U.S. is booming baby!

#178 Transplant on 03.03.15 at 3:46 pm

#124 Tripp: re Zillow

Zillow is fine, in fact I just checked on my home a couple of days ago. I’m not sure how Zillow derives its figures but it’s a good estimate of relative current values and gives a full history of previous sales, taxes, etc.

However, one can do even better than Zillow. Every Sunday my edition of the Tampa Bay Times publishes a list of all properties sold in Hillsborough County and surrounding areas-purchaser’s name, property address and purchase price. Perhaps some Canadian papers do the same. Notwithstanding the lack of forthrightness of Canadian real estate boards, is this information even available to the public if one wishes to search for it?

#179 oilfieldwhitehair on 03.03.15 at 3:48 pm

165 Disgust made me post

Check out all of the extra taxes that you have tacked on to your litre of jiggle juice in YVR. Oil is over 50 bucks / bbl today.

#180 Dumb Question on 03.03.15 at 3:50 pm

dumb question, but because TFSA is tax free earnings, should the content of it, be the higher risk investments? (within the 60/40 framework as Garth recommends)

Thanks for any advice

#181 Smoked squirrel meat on 03.03.15 at 3:53 pm

Buy a house every month with no money and become a millionaire.. nothing can go wrong!

https://www.youtube.com/watch?v=AznS8kO77hw

#182 Mark on 03.03.15 at 3:57 pm

“We use the lower rates to pile on new debt, not to pay it.
It is going to end really really bad.
Just watch the currency going forward.

Debt deflation is profoundly currency positive. When people stop consuming because the debt taps have been turned off, they start saving and attempting to repay the debt. We’re seeing this unfold in the US right now, which, along with other international events, is causing the USD$ to be stronger than it has been in a long time. Canada will soon join the party and likewise, see a very strong currency.

Lower rates only cause more debt to be taken out to a point of diminished credit-worthiness. Credit-worthiness is now *the* issue in Canada. The banks made this loud and clear when they refused to cut “Prime” for a number of days after the BoC policy decision in January and may very well repeat such in tomorrow if the BoC makes an additional predicted rate cut.

#183 Jim B on 03.03.15 at 4:01 pm

#7 OttawaGuyRentingWorried

You “often wonder why [Garth] isn’t back in office”…??? Really? Do you ever actually talk to your fellow Canadians? Look at their pathetic voting record (those precious few who bother to get off their fat asses)? They are morons, period, full stop. Garth doesn’t/wouldn’t have a chance!

#184 robert james on 03.03.15 at 4:07 pm

This guy would have been great at selling presale condos as he is apparently a very good BS er.. LOL http://news.nationalpost.com/2015/03/03/gurmeet-ram-rahim-singh-indian-guru-mass-castrations/

#185 DisgustMadeMePost on 03.03.15 at 4:16 pm

#177 oilfieldwhitehair on 03.03.15 at 3:48 pm
165 Disgust made me post

Check out all of the extra taxes that you have tacked on to your litre of jiggle juice in YVR. Oil is over 50 bucks / bbl today.

I don’t buy that explanation. Gas was 98-99 c/l a few weeks ago when oil was just a few dollars less per barrel. Have we had huge new taxes added in the last 4 weeks that would warrant a 30% rise in gas prices??

If you’ll pardon the pun, it seems like just plain highway robbery.

What’s the price in Ottawa today? Calgary? I’m too disgusted to google it!

#186 peter on 03.03.15 at 4:17 pm

You were recommending investors buy Preferred shares last year. They tanked while bonds rallied. The bond bears have had it wrong for 30 years. Deflation is sinking in everywhere. Even China’s PMI is below 50 (a sign of economic contraction). The CRB index has crashed while Stocks in Japan & Europe are on fire for no good reason other than currency burning and hopes of more QE. No surprise Canadians stick with what they know which is bricks and mortar. I agree, its a game of musical chairs. When the music stops nobody knows.

Preferreds did not ‘tank.’ I recommended them as more stable than common shares with a fixed dividend in the 5% range. Hope you listened. — Garth

#187 Wildnutter on 03.03.15 at 4:18 pm

Yeah baby… party on, pump it up.

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/canadian-debt-load-including-mortgages-hits-153-trillion-report-finds/article23263701/

#188 HD on 03.03.15 at 4:20 pm

#178 Dumb Question on 03.03.15 at 3:50 pm

dumb question, but because TFSA is tax free earnings, should the content of it, be the higher risk investments? (within the 60/40 framework as Garth recommends)

Thanks for any advice

——————–

No such thing as a dumb question. Ok, maybe not always but yours is definitely not dumb.

http://canadiancouchpotato.com/2013/10/30/making-smarter-asset-location-decisions/

Best,

HD

#189 AAA on 03.03.15 at 4:21 pm

While I agree with Garth that a Balanced portfolio will work – if you hold it through thick and thin, I think that the case for poor future returns is certainly in. Yes, the monetary manipulation (or is it masturbation?) of Central Banks everywhere has worked its magic and levitated markets since 2009. And while valuation is irrelevant in the short-term, it is quite relevant to long-term returns, and world markets are priced for perfection right now! See link below for more on valuation:

http://globaleconomicanalysis.blogspot.com/2015/03/illinois-pension-plans-39-funded.html

#190 Smoking Man on 03.03.15 at 4:35 pm

#180 Mark on 03.03.15 at 3:57 pm
“We use the lower rates to pile on new debt, not to pay it.
It is going to end really really bad.
Just watch the currency going forward.

Debt deflation is profoundly currency positive. When people stop consuming because the debt taps have been turned off, they start saving and attempting to repay the debt. We’re seeing this unfold in the US right now, which, along with other international events, is causing the USD$ to be stronger than it has been in a long time. Canada will soon join the party and likewise, see a very strong currency.

Lower rates only cause more debt to be taken out to a point of diminished credit-worthiness. Credit-worthiness is now *the* issue in Canada. The banks made this loud and clear when they refused to cut “Prime” for a number of days after the BoC policy decision in January and may very well repeat such in tomorrow if the BoC makes an additional predicted rate cut.
……….

Grasshopper

Mark, only the legendary Smoking Man can make those accurate BOC moves…

Did you not see the CA GDP numbers today, and your calling for a rate cut after those numbers come out. … Obviously you don’t use a BBG terminal. I was leaning that way myself , but not before the spring real estate market is done.

Now if by some miracle BOC drops the rate tomorrow, you can bet your last dollar that the Friday Job numbers will be a disaster.. Not likely.

Watch and learn Grasshopper.

P’s, you do know I was joking when I said you have the potential to be a serial killer based on your robotic writing style.

#191 Chris in Nanaimo on 03.03.15 at 4:45 pm

So i brought a newish car over the weekend, paid cash. I was expecting the stealership to be dead…end of february, typically a quiet month…

The place was buzzing. About 12 ongoing sales that weekend looking at their salesboard. I was one of only 2 people paying cash. Everyone else was financing.

I dont think this housing bubble is going to burst until something major happens. Either mass defaults due to mega job losses, or interest rates doubling. Until then folks will keep piling on the debt and we will or already have reached a natural ceiling on house prices for the average family, ultimately dictated by how much the banks can get away lending mortgages.

#192 Mr.Hulot on 03.03.15 at 4:55 pm

#160
#164

You guys are IRRitating.
I’l be looking for slips-ups in your spelling from now on.

#193 jess on 03.03.15 at 4:56 pm

huh?

scalping test seat tickets.

Referred to as huangniu, literally translated to ‘yellow cow,’ ticket scalpers buy up seats for tests, then sell them at a higher price, Yang said. Although she said it was most common with sporting event tickets, the operations had recently moved over to student exams.

Read more: http://www.businessinsider.com/chinese-students-go-to-crazy-lengths-in-us-university-applications-2015-2#ixzz3TMHNHMHU

http://www.businessinsider.com/chinese-students-go-to-crazy-lengths-in-us-university-applications-2015-2

#194 TREB getting fumed again LOL on 03.03.15 at 4:56 pm

TREB demands broker stop online stats
This week, three real estate brokers are cutting off customers’ online access to recent final home sales prices — coveted information that can help buyers and sellers gauge a property’s worth. According to the CBC, the trio are the latest to give in to a threat made by the Toronto Real Estate Board (TREB) to stop doing out home sales information or risk losing a lifeline to all privileged industry data. It’s just the latest battle in a war on multiple fronts over the traditional industry’s monopoly on vital real estate information. Real estate broker Fraser Beach explained to his almost 30,000 registered users that he is temporarily halting daily emails connecting them online to the latest prices of homes sold in Toronto. Read more here.

http://www.repmag.ca/news/do-you-use-sales-stats-188763.aspx

#195 Tony on 03.03.15 at 5:04 pm

someone typed:

TREB makes ever more clear it wants people to buy in an information vacuum

this is not true
people buying fsbos are more likely in a vacuum
people with an agent have access to all stats
Why? because TREB respects the representation of buyers by fee paying members. TREB doesn’t care about armchair spectators who want access to information that is none of their business.
You accept the fact that the Toyota dealer won’t disclose what your neighbor paid. Right? Why? You know that it’s none of your business. What your neighbor next door sold his house for
is similarly none of your business, unless you decide to sell and call an agent. Up until you’re ready to sign a listing, you don’t count.

#196 young & foolish on 03.03.15 at 5:18 pm

“This is why most people have indebted houses and no money ….. ”

It’s because you can get a property for 5% down, but the equal amount invested in financial assets would be a pittance with barely a noticeable return. Since you have to pay to live somewhere, people choose the mortgage over rent. I think this is quite clear.

Sure it so. So they end up with a house, debt, and no money. That does not make it smart. — Garth

#197 bdy sktrn on 03.03.15 at 5:21 pm

#190 Mr.Hulot on 03.03.15 at 4:55 pm
You guys are IRRitating.
I’l be looking for slips-ups in your spelling from now on.
———————-
nothing to do with spelling

it’s a double negative and not a real word.

regardless, you have been punished enough. just don’t do it again, irrespective of your need to use bigger words than needed.

now, pls excuse me, i must go and de-thaw some steak for dinner :)

#198 mark on 03.03.15 at 5:39 pm

WOW

A HARBOUR front mansion illegally bought by a foreign investor for almost $40 million last year will be sold on the orders of Treasurer Joe Hockey.

The mansion is in exclusive Wolseley Rd, Point Piper.

‘Villa del Mare’ was purchased illegally by a company listed on the Hong Kong Stock Exchange through shelf companies based in Australia, Hong Kong and the British Virgin Islands … without notifying the Foreign Investment Review Board.

It now has 90 days to sell up.

“Under Australia’s foreign investment policy, foreign investment should increase Australia’s housing stock. Non-resident foreign nationals cannot buy established dwellings as homes or investments,” Mr Hockey said.

http://www.dailytelegraph.com.au/news/treasurer-joe-hockey-is-forcing-chinese-investor-to-sell-40-million-sydney-mansion/story-fni0cx4q-1227246614447

#199 kabloona on 03.03.15 at 5:40 pm

Jeff Macke on Home Ownership….

;-)

http://finance.yahoo.com/news/sell-your-toys–don-t-buy-a-house—other-things-millennials-need-to-know-125742602.html

“1. Stop buying houses. The idea of home ownership as vague American dream dates back to the immigrants who founded this nation. For people coming from countries where only the elite could own property, having your own home was synonymous with freedom. We instinctively genuflect before the idea, but after owning 5 homes in 18 years I can tell you first hand there is nothing less free than buying a house. If you worked backward from a scheme by which the government replaced feudal lords and made homeowners serfs we’d end up with pretty close to the system we have now. To buy a home is to sink a ton of money in a totally illiquid sinkhole. For every 1,500 feet you effectively hire a part time employee to take care of your stuff. When you leave, if you can find a buyer, you end up paying 5% in brokering fees. A house is an investment under one condition: you find the place of your dreams when you’re 25 and never move. Otherwise suck it up and rent…”

#200 Mark on 03.03.15 at 5:41 pm

“Did you not see the CA GDP numbers today, and your calling for a rate cut after those numbers come out. …”

Those GDP numbers weren’t really that good (and the inflation numbers we saw the other week were extremely low). And such numbers were in hindsight. The BoC sets monetary policy looking to the future, not to the past. The future of aggregate demand in Canada is very weak on account of the falling RE market, the very weak oil price environment, the slow US economy, and not even the slightest of inklings of counter-cyclical industry in Canada starting to gain some traction.

Even at the grocery store, I’ve been noticing a bunch of price reductions on the produce lately. Sure, there was some short-term shock and awe, as supply previously contracted in USD$ was marked up in January. But even most of that has been rolled back as demand is so weak on both sides of the border and pricing power non-existent. My friends in business are also reporting along similar lines — their import costs aren’t meaningfully rising as suppliers are over-stocked with inventory and are desperate to make sales at prices that completely compensate for the temporary CAD$ devaluation.

#201 For those about to flop... on 03.03.15 at 5:48 pm

195 bdy sktrn

now, pls excuse me, i must go and de-thaw some steak for dinner :)
-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

I just hope for your case it’s not mad cow.

#202 Mike S on 03.03.15 at 6:00 pm

“I’m not so sure what’s so hard about simply understanding that the ongoing in deflation in housing is profoundly bad for aggregate demand in Canada. And that inflation has persistently been weak in Canada, as has been the labour market. These factors all pointed to the necessity of rate cuts”

If the CAD were to appreciate, your point would be correct, but since the CAD declined, lowering rates is not a good decision

Another point is that (like Poloz himself said) central banks shouldn’t only be about keeping inflation in check.

There is also a case for leaning gently against speculative bubbles (such as we have in Canadian RE). Shiller’s Irrational Exuberance is a good read on that point

I.e. until we have Visible correction in RE and strong CAD, there is no reason to lower the rates

#203 Mike S on 03.03.15 at 6:09 pm

“just discussed this with my wife. I thought it was because TREB was just getting greedier. Her take: they are not making enough sales to feed their 41,600 “members”, so they are removing an obstacle to higher prices and closings.

C’mon Competition Bureau, stick a fork in that windbag!”

Higher Prices equals less sales

#204 Mike S on 03.03.15 at 6:17 pm

“The BoC rate cut may have been a mistake, but as somebody who has rentals in FL, I can’t complain too loudly as this ‘mistake’ increased my rental income and property value as far as the CAD is concerned ;)”

I guess you didn’t file the taxes yet?

What’s so good about getting taxed more on the same exact asset, just because the CAD value declined?

#205 Mike S on 03.03.15 at 6:20 pm

“Lower rates only cause more debt to be taken out to a point of diminished credit-worthiness. Credit-worthiness is now *the* issue in Canada. The banks made this loud and clear when they refused to cut “Prime” for a number of days after the BoC policy decision in January and may very well repeat such in tomorrow if the BoC makes an additional predicted rate cut.”

If there is a rate cut this week, the CAD declines (unless there is a huge rebound in oil)

#206 Mike S on 03.03.15 at 6:26 pm

“Preferreds did not ‘tank.’ I recommended them as more stable than common shares with a fixed dividend in the 5% range. Hope you listened. — Garth”

Each time some asset class “tanks” people come here to complain about that particular asset class

Why is that hard to understand:
– Be balanced at all times
– if only a single asset class “tanks” it is actually good for you, since it provides opportunity to re-balance, which enhance your long term returns

#207 Arch Douche Ferdinand on 03.03.15 at 6:27 pm

#55 Mr. Frugal on 03.02.15 at 9:17 pm

“Price volatility does not equate with risk. In fact the opposite is true. Cash and GICs are perceived as safe investments because they don’t fluctuate in value. But, with today’s low rates they are guaranteed to lose value after inflation and taxed. So, I would argue that cash is a high risk investment because you are guaranteed to lose money. On the other hand, the value of equity ETFs will fluctuate. But, the odds of losing money are actually quite low provided you are willing to hold them for 10 years or more. Equities are less risky than cash.”
——————-

High volatility might not equate exactly to high risk, but it will assuredly kill returns unless you are a sage. There’s a reason why the stock market goes up and down; people become gamblers at tops and misers at bottoms. Risk never changed, but after 7 years of gains, people’s perceptions change and equities become as safe as cash. That’s why the GF portfolio mix stays the same I guess; to protect you from your former investing self one way or another.

#208 Mike S on 03.03.15 at 6:29 pm

“Now if by some miracle BOC drops the rate tomorrow, you can bet your last dollar that the Friday Job numbers will be a disaster.. Not likely.”

You mean you see a case for even more self employed in February?

#209 S. Bby on 03.03.15 at 6:32 pm

I am glad we are more or less back on track topic-wise here. I found the last few days quite distressing.

You mean you have no life? — Garth

#210 Paul on 03.03.15 at 6:56 pm

Re 195
De-thaw? A steak hope you don’t hurt your tooth. Lol

#211 Anthony B. Sanders on 03.03.15 at 8:06 pm

S&P500 rising as global gdp forecast sinks. Keep flooding the global sea with liquidity, Central banks! https://confoundedinterest.wordpress.com/2015/03/03/sp500-index-continues-to-climb-as-world-gdp-forecast-plunges-and-atlanta-fed-says-q1-real-gdp-grew-at-1-2-percent/

#212 MGTOW on 03.03.15 at 11:36 pm

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#213 Doug in London on 03.04.15 at 12:27 am

Well, here we are in the first week of March, 2015. Does anyone else here realize what a glorious anniversary this week is? Only 6 years ago, stocks all over the world were selling at Boxing Week blowoff clear the inventory out NOW fire sales! Did anyone here take advantage of those sales?

#214 Brad on 03.04.15 at 11:22 am

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