What’s more insufferable than Baby Boomers? Those wrinkly, aging, job-hoarding, wealth-sucking geezers who stole all the nice houses and now threaten to bankrupt pensions, the health care system and refuse to let The Eagles die the death they so richly deserve?
Well nothing, actually. But the interesting point is that the moribund hippies with gland issues have turned into the latest reason you’d better invest everything you have in real estate. Yes, it used to be the Chinese. But that’s so 2013. Then the Americans, trading real money for Canadian mansions in order to enjoy our climate and effective Senate. Now, it’s the wrinklies.
Listen to this twaddle from Sotheby’s, as regurgitated by the MSM:
Canada’s luxury home market driven by baby boom generation… Now in their 50s and 60s, the boomer buyers of luxury homes tend to have incomes of about $300,000 to $500,000 annually. So it’s no surprise they can afford the price of entry to traditional luxury neighbourhoods, even in Vancouver and Toronto, where $1 million buys only a modest detached home.
Really?
To be precise, there are about 9,600,000 people in Canada born between 1946 and 1965. During that time Canadian families were turning out roughly 415,000 screamers a year. On average, a woman had 3.7 kids – a massive difference from the 1.7 children born today. The impact of this wave was profound. It overwhelmed the public school system. It swamped universities. It launched a massive real estate market. It fueled consumer spending, economic expansion, inflation and runaway interest rates. It was no surprise the cost of living topped 14% and mortgages were 20% as these appalling people hit their 30s and 40s.
Now they’re aging, with the last Boomer set to hit 65 by 2030 or so. And the peckers are still at it – at least the house-floggers would have you believe so.
But there’s a real chasm between the realtors and reality. For example, it’s pure myth the Boomers are rolling in money, able to snap up luxury houses in YVR or the GTA, and pulling down “incomes of about $300,000 to $500,000 annually.”
In fact, StatsCan tells us (as of the last census) there are 192,250 people in the entire country who earn $250,000 a year or more. That’s 0.74% of the population. Of the whole Boomer cohort (assuming every single one of those high-earners is part of this group), this accounts for 2% – which means 98%, or more, make less. Most earn far less.
So, Sotheby’s is lying. Sort of. The company says these are the people snapping up luxury homes as never before. But, of course, the definition of ‘luxury’ certainly has changed, since a beater 1970s unrenovated Vancouver Special fit for dog training classes is now a ‘luxury’ property with a price in the seven figures.
Obviously it’s more of the same. Scare tactics. Pumping a market that’s now completely interest-rate dependent, building the illusion that housing has inherent value because the economy is chock-a-block with 9.6 million people earning over $300,000. Unbelievable. Too bad our reporters now print stuff that doesn’t even pass the smell test.
However, there is one piece of news about this self-obsessed group of former dopeheads and anti-war nuts that does have some validity – they’re sucking out their own equity to give to their kids. Here’s what Sotheby’s says about that: “Wealthy boomers are helping out their generation Y children with hefty down payments for those condos. A majority of young buyers of properties priced at over $800,000 had help from the bank of Mom and Dad.”
Eight hundred thousand for a starter home? Seriously? Can this company not say anything without its proboscis looking like a gorged zucchini?
Well the Mom-&-Dad bank thing is actually a well-established social phenom these days. A Genworth study we mentioned here recently found that about 40% of all first-time buyers in major markets used money gifted to them by their parents. In fact, if most of these kids were left on their own to buy a house, they couldn’t, being unable to raise even the minimum 5%.
What does this mean? Simply that Boomers are taking windfall equity out of houses that have inflated in value (because of cheap money) and are transferring it to their offspring so they can buy the same asset at similarly inflated values, while taking on a huge amount of that cheap debt.
Since there’s an inverse relationship between real estate prices and the cost of money, and current conditions will not be the same as future ones, we’re probably witnessing the coup-de-grace of Generation Screwed. When rates and prices normalize, the geezers will be shocked at the equity depletion, and their kids at the cost of their debt.
Not groovy.
241 comments ↓
My parents have offered to match a down-payment I make on a home. (I am 27 years old)
It is a very generous offer and very helpful and I intend to take them up on it when the time is right. It is disappointing though because I asked them if they instead could match my equity in the markets which would be far more helpful. Their response is that is far too risky. I just left it at that don’t look a gift horse in the mouth.
They are so prevalent in every facet of our economy and society today that we’re pretty much hooped. Unless of course, we elect a Prime Minister with a funny little mustache.
Also this seems relevant:
http://www.generationscrewed.ca/
I don’t agree with their fundamental “solution” (maintain spending on wrinklies, increase spending for smooth-skins), but they clearly lay out the gross inequity in public spending.
First!!
CPD almost at a sweet spot.
Another day, another new high for Dollarama. 20th (!)straight day of green. WHy is it that a stock can appreciate 6x in 5 years, but real estate screams bubble when it only doubles in that same time frame?
“Boomers are taking windfall equity out of houses that have inflated in value (because of cheap money) and are transferring it to their offspring so they can buy the same asset at similarly inflated values, while taking on a huge amount of that cheap debt.”
Well, yeah, that’s one theory that I’ve read. Another is that the Baby Boomer generation is also starting to take possession of all that inheritance money that THEIR wrinklie parents have left to them (I read it to be as much $1T – as trillion). Thus the Bank of Mom and Dad attempt to finally kick their adult spawn out of their basements – one way or another. Time will tell boys and girls.
OR, you could be wrong.
I agree completely with your logic and assumptions
but not necessarily with the conclusion.
Think of it this way — these parents / baby boomers don’t need the equity in their homes, and clearly, if they have enough money to lend/give to the kids to buy a place, then it’s just a form of estate planning.
So the baby boomers with money won’t be screwed… you’ve said it before – no crash. But in the last decade or two, the values of their homes have more than doubled. So no matter what, they are still ahead.
And the kids — well, they only lose mom’s money, no their own. It’s not like mom would say “hey snookums, here’s 150K for you to rent for the next 5 years.” It’s free money to the kids if and only if they buy a place. And the kids save on rent.
Been in business in bc for 10 years now and this is the slowest I have ever seen it! It’s pathetic, just glad I saved most of the money I made over the 10 years, I just wish rates were a lot higher. Thanks for your blog Garth!
Former dopeheads? zucchini noses……..yummy!
http://vancouver.craigslist.ca/van/csr/4971407650.html
Mommy and Daddy are gonna be livin in the basement of Buffy and Chads place tendin the young’uns when this blows.
The reason bubbles exist is because the masses stop using common sense. After the bubble pops the same people look back and realize how stupid they really are.
Fiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiirst
That looks new. Is it the new baby boomer thing?
“Now in their 50s and 60s, the boomer buyers of luxury homes tend to have incomes of about $300,000 to $500,000 annually.”
I stopped reading Sotheby’s twaddle (as you called it, and rightly so) right there. Their credibility just fell through the earth. They have the intellect and discernment of a shoe.
As somebody who lives in one of the neighbourhoods that Sotheby’s discusses, I can’t remember the last time I saw one of their signs gracing a lawn. Maybe they do all their work on the buy side? Maybe their expert realtors spend a lot of time talking to the ones at other brokerages who actually get the listings? I have seen their signs in Oakville, so there’s that.
They sure write a lot of reports, and our lazy media lap them up. Maybe in ten years they’ll have built a business here in Canada.
Days of most Winnipeg homes selling above list price are over
http://www.cbc.ca/news/canada/manitoba/days-of-most-winnipeg-homes-selling-above-list-price-are-over-1.3024857
First?
Great post tonight Garth. We are surrounded by stupidity , Bank of mom and dad believing ” we’re just helping the kids get a start ” LOL!
Any lawyers out there know if we can sue? The CRTC explicitly forbids the broadcasting of “false or misleading news”.
“When rates and prices normalize, the geezers will be shocked at the equity depletion, and their kids at the cost of their debt.” – Garth
——————————————————-
Normalize? Isn’t going to happen. This is the new normal. The economy will NEVER be able to withstand higher interest rates again. How can people not see this. Also, if there were to be some kind of financial apocalypse, it’s more possible than not that loans would be “restructured” as they were in the USA.
http://canadianimmigrant.ca/slider/program-fail-where-are-the-applications-for-the-investor-immigration-stream
On Jan. 28, 2015, Citizenship and Immigration Canada (CIC) launched the replacement to the federal investor immigration program, called the immigrant investor venture capital pilot program. CIC was apparently so confident about demand for the new program that it announced that it would only accept applications to the new program for two weeks, or until a maximum of 500 applications were received, whichever came first. It soon became apparent that no one was applying to the new program, and on Feb. 13, CIC quietly announced that it was extending its two-week deadline until April 15.
The question thus has to be asked … has CIC created an immigrant investor program that no one is interested in?
“Canada’s luxury home market driven by baby boom generation… Now in their 50s and 60s, the boomer buyers of luxury homes tend to have incomes of about $300,000 to $500,000 annually.”
——————————————————————-
LMFAO.. I would have to say that I am a few bricks short of that load…
C’mon Garth , when would rates get so high as to prick the bubble? Even if 5 yr money made it back to 5 % , that wouldn’t be enough to force people to sell and or forclosures, I’ll be retired by the time they make it back 7% (if ever at all ) and 7 is what it’s gona take to tame this beast.
Fan of your writing….but looks like you are twisting facts here….your quote only says that baby boomers who buy luxury homes have 300-500,000 income. This does not mean or claim all baby boomers have this income
Good Post, Garth. It reminded me of this interesting article:
http://twoicefloes.com/your-turn/reverse-engineer/energy-money-equilibrium-the-value-of-money-in-the-age-of-oil/
and this one from your favorite website:
http://www.zerohedge.com/news/2015-04-09/rich-middle-class-poor-middle-class
“It’s Not About the Nail” by Ben Hunt.This is a great piece on diversification:
http://www.salientpartners.com/epsilontheory/
Garth I’ve been reading your posts for years can you touch up more on the future of rental market condition particularly GTA. Should we be thinking of long term leases or wait to vulch in the near future?
Definitely not groovy.
So much time talking about vagueness which seems to be the attribute of nothingness.
Ethics ….remember this one?
Canadian Broadcast Standards Council
Conseil canadien des normes de la radiotélévision
Media Release
Violated Broadcast Codes, Says Canadian Broadcast Standards Council
http://www.cbsc.ca/english/documents/prs/2009/090527.php
I’m on the road and have some free hotel time on my hands today.
So just for fun I did a little fact check. Anderson Copper style.
Creb stats on site right now.
April 2014. Average price 463000. SFH 526000.
Resulting in some close 2014/2015 price comparisons.
Historical report for April 2014.
Average price 473000. SFH 547000.
Wha happened?
rates are going down down down look at the five year that is telling you where it is going………………………
#6. Earnings. Growth.
Houses don’t earn. They cost.
Definition of luxury:
http://www.luxuryrealestate.com/residential/2334507-6139-dovecote-lane-6139-dovecote-lane-memphis-tennessee-united-states#1
$1,599,000 USD
Canada version:
http://www.luxuryrealestate.com/residential/2259884-split-level-in-westmount-32-av-oakland-westmount-quebec-canada#11
$1,950,000 CAD
Toronto version:
http://www.realtor.ca/propertyDetails.aspx?PropertyId=15505481
$1,699,000 CAD
Proboscis? Is that something like a blood funnel?
Well I’m no boomer, I’m an immigrant to Van of 5 years, in my early 40’s (maybe a boomer huh?) have pulled north of $450k for 5 years straight working for multinationals, my office is in SFO as I couldn’t find that kind of oppty in Van and I used the word in plural as I left the first one and found a better one.
I don’t do or make drugs in BC, am not in the FIRE industry, a doctor, lawyer, hit man or con man – just to put “those” comments to rest. Just worked hard to keep my skills sharp and ported my career to the west coast at my risk and my dime.
I am Italian, don’t love real estate, did not buy because the economic fundamentals make absolutely no sense for me to buy in an over inflated market at top prices while we have the lowest interest rates EVER, and in a worsening economic environment where the majority of the cohort driving up real estate values is highly leveraged locals with stagnant incomes and uncertain futures.
I can’t find the investment and sense of venture in Van that is so prevalent in my industry in SFO.
Why would sotheby suggest re is valued to its intrinsic value on that basis of fundamentals I have no idea… Oh, hold on… It may well be because they are a marketing machine, withholding and releasing data selectively through proprietary channels to create scarcity… Or what is called in good old terms “selling”…
Maybe the reason for high home prices is this… You have some powerful institutions who are very good at selling a vision (now a religion) that most people are happy to buy with leverage that is so cheap as to be inconsequential (thanks to CMHC).
So from one Italian immigrant (born and bred there) who does not like the fundamentals under the veneer, I don’t buy into it.
If all you could see in this post was a “brag” then you may well be susceptible to marketing. The message was, just because you make good money (and I am so aware it can go as quickly as it comes) you should build wealth that is liquid and portable in a global economy, and most certainly not become a target for a mindless sales campaign.
I understand the value of liquid portable wealth and love every moment of freedom and good sleep it brings me.
When the yields of investment make enough (post favorable taxation) to pay for the rent of a massive home on van’s west side and cover your expenses to the degree of an upper middle class standard, job stability is no longer an issue, you can take risks and really focus on doing what you want.
Get it? Freedom vs. being a slave to an image and an illiquid, high risk asset because a predatory industry created an unstoppable trend so strong that it drives popular belief, media, financial institutions and then policy.
Good luck (wholeheartedly) to all irrespective of the choices you make. I made mine…
I know there are problems coming when the hype goes crazy.
When everyone was yelling “buy Nortel!”…I should not have listened.
When everyone was yelling “Buy Bre-x”…I should not have listened.
When everyone was yelling “Buy gold!”…I should not have listened.
When everyone was yelling “Buy silver!”…I should not have listened.
Now everyone is yelling about cheap mortgages (both banks I deal with (RBC and TD) are pushing 5 year mortgages, fixed, at 2.74.
WELL THIS TIME I AINT LISTENING!!
First the Chinese, then Americans, now it’s Boomers!
Before it was the Olympics………heard that one for years too……
I love realtors…..ugh.
Garth, I still think you are wrong on Mom-and-Dad bank conclusion.
Math Example:
Mom&Dad: 1m assets. 1.5m house, no mortgage. 2.5m net worth, age 65., kids age 30.
Mom&Dad – give kid $300K to buy home. They still have 700K. Your assumptions of balanced portfolio 7% return, they will be just fine — even if house drops 30%.
Kids: let’s say they saved up 100K. add mom 300K. They have 400K now. And they buy an 800K house.
You said: no crash, so even sideways or mas 30% depreciation after 5 years.
So what?
Mom&Dad will be just fine. They’ll live in the 1.5m house (now 1m) until they die. You should know – are they planning to deplete the 700K capital, or just live off the income/dividends? 700K @7% will be enough… and if not, they can sell their (now 1m, instead of 1.5m) place and downsize to a retirement home.
Kids: Get to live in a house and save on rent. It’s not like mom and dad would just give them 300K to rent. And besides, eventually mom and dad will die and they’ll get their inheritance.
So who really loses?
Grandkids inheritance.
That’s not what I call screwed. Sheesh, talk about fear mongering!
Those with over $2 million in assets constitute the top 1% of the population. In fact, the top 10% richest households in Canada have $774,000 in liquid assets (stocks, bonds, etc.), own more than $800,000 in real estate and carries more than $225,000 in debt. Obviously you work in the Sotheby’s Disinformation Deot. — Garth
“My parents have offered to match a down-payment I make on a home. (I am 27 years old)
It is a very generous offer and very helpful and I intend to take them up on it when the time is right. It is disappointing though because I asked them if they instead could match my equity in the markets which would be far more helpful.
“
You are a very smart guy!
rates are going down down down look at the five year that is telling you where it is going………………………
Of course they are. Doesn’t mean that residential retail RE borrowers will be able to access such lower rates though.
C’mon Garth , when would rates get so high as to prick the bubble?
The bubble is already deflating. Higher rates weren’t needed. What was needed is overcapacity and demand exhaustion. Don’t know why RE-istas keep appealing to a need for ‘higher rates’ to prick the bubble.
The question thus has to be asked … has CIC created an immigrant investor program that no one is interested in?
More “proof” that there isn’t really a line-up of money’ed people wanting to come to Canada. As Garth et al have laid out many times here, the domestic RE bubble is driven almost entirely by domestic actors and a domestic RE credit bubble. The consequences, that of deflation, will be almost entirely domestic, although severe demand truncation should push up the currency and further damage exporters who are currently enjoying a bit of a reprieve.
< I just wish rates were a lot higher.
Higher rates typically imply lower real returns in Canada. If anything, the low rate environment has provided savers with significantly augmented returns compared to the returns available in the past. However, in truth, you should be reading and taking Garth’s advice of a ‘balanced portfolio’ to heart instead of merely relying upon ‘interest’. Cash and fixed income are just one of the many asset classes you should be exposed to.
#IfYouDidn’tGetLaidInThe60’s… #You’reNotABoomer… #RichardLinklater’sOriginalGenerationScrewed:
https://youtu.be/Z6XIGZ51VMo
I greatly appreciated the faux news stories about Americans buying into Vancouver.
As if Americans, having witnessed their own stupidity in the housing bubble, would be eager to buy into another one. In fact, the only coverage I see down here of Canadian real estate is that it is in a horrific bubble and about to crash.
I suppose there could be a few clueless Americans who think that 20% of a boost in foreign exchange rates is enough to mitigate the risk of buying into a market at historical highs (and one which just about everyone outside of Canada is laughing at).
At #39: James, EXACTLY! You’re spot on! Americans are not touching Canadian real estate AT ALL. Its like kryptonite to Americans. Also, just to point out that if there is an ill-informed American who would even CONSIDER Vancouver real estate, he/she would be a more well-to-do person. Well-to-do Americans are not stupid, and they are certainly smarter than putting their money in a tanking market, with shit weather, when they could purchase in real cities right at home.
Nice to come to this Blog and read the truth. What a gift.
My updated ear to the ground report I started about the layoffs starting in Alberta, before it hit the news and I was called a liar by some people on this blog saying if it was true they would have heard of the layoffs by now. Idiots. Trusting the MSM to tell it like it really is.
Well, the latest ear to the ground news. I am hearing directly from Boomers who are being laid off/downsized with 20+years on the job, who have helped their kids out, and now find their Company pensions/RRSP’s/TFSA’s/Savings, are not matching up with what their expectations were. They are stating clearly that their retirement is not going to be anything like they had planned. This is more truth that will take a while to become public. When the truth can no longer be hidden, then it becomes public. I read this Blog for truth, and the MSM for a laugh.
“Now they’re aging, with the last Boomer set to hit 65 by 2030”
So weird. a friend of mine, like 10 years ago gave me your “after the boom 2015” book as a must read. I liked it. Looks like it shifted to the right by 15 years though.
I’m surprised you got through my book when you obviously can’t read. I said the “last Boomer” hits 65 in 2030. The bulk do so starting this year, 2015. — Garth
#83 Smoking Man on 04.08.15 at 9:55 pm
Unreal..
And as far as pumping a book here, blog dogs will get a promo code, ebook will be free.
I promise.. Hell probably at most 50 fans…
Where I make the big loot, smoking man haters buy the paper version just to burn it.
Sorry, wasting time, back to the book.
===========
Books are less than a dime a dozen – https://www.oysterbooks.com
you might have to pay people to read your gibberish
#295 Vancity604 on 04.08.15 at 6:21 pm
“The city grows by 40000 every year.”
—————————————————————
Garth,
This is a number quoted often by various people all the time on this blog. And it’s not incorrect, but it might just be outdated…
I’ve been playing around with the 2011 and 2006 Census Age Pyramid for Metro Vancouver recently. I would like to share some interesting points from it:
Pop ’06: 2,116,800
Pop ’11: 2,313,325… delta of 196,745.
Average that out over 5 years = 39,349 per annum
So that number is definitely plausible.
But here’s the interesting part, particularly when talking about housing lust: of the 196,745, only 81,915 (41.6%) of them were alive in 2006!
That means, in 2011, 115,180 of the growth in population (58.4%) are screamers between the age of 0-4. That increase in young families explains some of the housing lust… But it also means that only 82k have immigrated to Metro Van (net of deaths). Or, only 16,383 per annum.
With that context, the housing demand from new immigration doesn’t sound too strong… It’s less than half of all population growth, which is not what’s mentioned in the MSM. Of course, there are plenty of those immigrants that have kiddies when they arrive, or bring their screamers with them.
@james – Not to mention taxation on ALL world income since taxation is based on citizenship in the US and not “residency” (might be the only country left that does it).
“””Another day, another new high for Dollarama. 20th (!)straight day of green. WHy is it that a stock can appreciate 6x in 5 years, but real estate screams bubble when it only doubles in that same time frame?”””
Do you not find it worrisome when Dollarama is Canada’s success story while most other Canadian stocks (Not tied to real estate) are dying a slow death for a good part of the past 10 years? The real estate market has sapped all the money and capitol out of the Canadian economy. Hopefully some Blackberry employees who for some strange reason can’t go to the US can find a job stocking shelves at Canada’s most successful company where most everything is priced under $2 (dam that inflation) and debt strapped Canadians are forced shop.
We are doing this to ourselves, and I will say that we will deserve what comes of it because we had a front row seat 7 years ago so no excuses even for those that aren’t financially literate. The only crime is that the responsible people will be paying for this too as the money will have to come from somewhere (higher taxes), and our economy will continue to suffer – even more so when the housing economy rolls over.
And for those in Ontario who think Alberta is screwed. Well, oil always comes back as it’s self correcting on the supply side through production declines, and as the world economy grows, demand with it. When the housing sector rolls over and hits BC and Ontario, the economy will get hit once again, and a 65 cent dollar (maybe we should change the name to Toonirama soon) will work wonders in the Canadian oil sector which fetches $US. How do you fix Ontario which has been breaking down for over a decade? That will be a tough slog for many many years.
“When rates and prices normalize, the geezers will be shocked at the equity depletion, and their kids at the cost of their debt.”
***************************
As you say….”unbelievable”. What else is there to say?
What a shame.
Garth,
For some more depressing demographic insight:
The age cohort in which the population starts to shrink by 2011 (based on 2006 and 2011 census): 55-59. This cohort, comparing 55-59 in 2011 to 50-54 in 2006, shrank by 1,560 people. This is only 1.1% of the cohort, but it’s just the starting point.
The next cohort, aged 60-64 in 2011, shrank by 3.0%… 65-69 by 4.3%, 70-74 by 5.7%, 75-79 by 11.8%, 80-84 by 24.5%…
This may not seem important, but remember that this was 4 years ago. The biggest cohort in Vancouver, in 2011, was the 50-54 year-olds at 182,430. In 2016, if the trend continues, the census should report that this cohort is starting to shrink. In 2011, there are 565,465 people aged between 55 and 85, representing 24.4% of Metro Van. That compares to 473,775 in 2006, or 22.4% of the pop.
Conclusion, the boomers leaving Vancouver, either by death or immigration, is going to accelerate, which will open up supply over the next decade.
#6 seeing it from both sides on 04.09.15 at 6:43 pm
Another day, another new high for Dollarama. 20th (!)straight day of green. WHy is it that a stock can appreciate 6x in 5 years, but real estate screams bubble when it only doubles in that same time frame
____________________________________
Dollarama is a money machine that is growing(opening more stores and increasing in store sales) and thus making more money every Q. Houses are an expense and costs you money. Have rents doubled? Can you even buy and rent a house that cash flow positive? If you have let me know as I haven’t been able to find one for the past 6 years and especially in the GTA. Yes Dollarama is blowing my mind 20 trading days in a row of green.
#40 The American
Nobody wants you up here anyways, you’re doing us a favour by staying put in your “real” cities… like Detroit.
That was ignorant. BTW, why do you post here under five names? — Garth
My apologies, the biggest cohort in Metro Van in 2011 was 45-49 at 192,090. 50-54 cohort was second biggest.
in order to enjoy our climate and effective Senate.
Ha! Too funny.
People still read and believe MSM RE stories?
#50 MTVmademedoit
Don’t be an asshole
#33 Soon Italiano from Van
You are definitely in the minority of Italian Cdns who simply froth at the mouth at the mere thought of a bricks and mortar “investment”
You had to watch CP24 tonight to believe it. Al Sinclair opens the show by telling everyone that ” paying the increase in CMHC fees is worth it because prices will only be higher next year and the year after that.”
Practically every discussion throughout the program included the use of CMHC to make purchases as the assumption among the experts as well as Ann Rohmer and the call ins was that the interested buyers would be buying on minimal down payments. Call ins asked about details regarding property insurance costs ad application on rental properties.
Definitely supports the viewpoint held by our blog host and others that the buyers in this market are marginal for sure.
Pure RE Madness !
#6 seeing it from both sides
The company has grown its market share, revenues and profits. Rents and incomes did what?
I just checked current temperatures on the Environment Canada website.
Fort McMurray – 19 degrees
Lillooett – 20 degrees
Darn. I will take some solace in my choice of a few Starbucks locations and 170 billion barrels of recoverable oil.
Some serious Geo political crap going on between Obama and the Neocons. Not to mention the chess game being played out in the middle East and Ukraine.
Will prove to be market moving huge.
John McCain is going nuts on Obama, Obama white house account taking serious shots at NutAndYahoo on Twitter.
Getting a growing feeling, if this keeps up building 7 will fall again, except this time on the right people..
But then again..Kennedy springs to mind.
You crossed the line when you dissed The Eagles.
Is it possible for Mom/Dad to give money to Son/Daughter to buy a house without attracting any tax obligations for Son/Daughter?
What about inheritance tax? is there such a thing in Canada?
Canadians must be much kinder, and gentler than us Americans. My kid was told from about 12 yrs old “I brought you in, I can take you out. Behave, my rules oct else!”
Adding, when we are done, and hit room temperature, everything we might have is yours kid. You are the only one, but if you piss us off…don’t count a g-d dam thing.”
So, he grew up respecting the powers that rule. IF there is anything left, it is all his whether a down payment on a used KIA, or eight figures so he can become a “Trust Fund Baby.”
Since I don’t own a working crystal ball, he best plan on his own wits, not our largesse.
He could get lucky of course!
By the way, move out of my basement -soon!
Great blog post as always. Commentary I decide whether I want to read by the second sentence and then move on, but we all have our days.
My question is if you could do a post about bonds. I am sorely lacking in finesse in this regard. I think if rates go up my bond worth will go down.
I have a BC government bond at 9% i bought in 2005. It is due in 2024. It has appreciated 69%. Any thoughts?
My concern is oblivously inflation until 2024 depleting the original value of my investment. Do I cash out now?
It is totally driven by corrupt foriegn money. Everyone but you and the media seems to acknowledge this.
P.s I am not a boomer, I was born in the age of Aquarius, but even I still like the Eagles……
Hi Garth, I find your insight invaluable, but do find it hard to believe that rates will “normalize”. Ever. If rates do go up like you predict, would that not throw the entire country into financial chaos? And how would the government ever let that happen?
I cannot speak intelligently on this rate-increase topic, obviously, but want to know how and why you think that this will happen? Just wanting to become informed.
Thanks.
#53 Harbour on 04.09.15 at 8:23 pm
#50 MTVmademedoit
Don’t be an asshole
———-
How is he the asshole? What a Canadian response! Lol
#95 Don on 04.08.15 at 10:34 pm
– The house next to us and the one across the street were involved with the Red Scorpions who migrated from Van to expand their operations.
——————–
If you live in BC, you will be living near a drug dealer. We had a grow op across the street in West Van until we caught on and called the cops. Something about four Rottweilers didn’t seem quite right. The local Hell’s Angel capo lived just up the street and sent his kid to the best WV high school. No burglaries in his neighborhood though.
– Retirees cannot prop up the market forever.
——————————–
They do and always have in Victoria.
Oil will come back. The real risk to pricier properties on the Island is when the deep freeze hits YVR and the imaginary boomer equity evaporates.
– It is only a matter of time, whole sub divisions on a mountain side (Qualicum River Village) catering to the older generation, pricey 400k up to 1 million – 15 km from any stores. Who exactly will replace them, people started to move there in the early 2000’s – now things are getting quiet.
———————–
Totally agree. I can’t see a lot of younger boomers adopting this lifestyle. I would be very cautious about paying a lot for Qualicum RE at this time.
– Sell and move to Nanoose – it has always been a higher end area. You can also get a view of West Van.
—————————
We carefully looked at Nanoose and almost made an offer on a place in Fairwinds. The thing that held us back was the same issue we had with other scenic spots.
This point is for the benefit of 50-somethings who are thinking about retiring somewhere scenic and rustic. Like most people, I had no real idea what happens to night driving ability at around 65. There are basically two vision circuits, one for colour and one for contrast. I don’t care if you do yoga or eat bean sprouts for breakfast all your life, the contrast circuit fades. People my age know this but don’t talk about it much. It’s not a problem in daylight when colour contrasts are fine. After dark, on country roads, sorting the grays from the blacks is a big problem. At 70, you may find you don’t want to go anywhere at night.
We elected to live where there are streetlights even though other places may be more scenic. We also thought buses, stores and hospitals had a certain charm.
#44 Karma
The population growth number doesn’t tell you everything. Even more important is the growth in households. When a family of 6 moves into the city, they don’t buy 6 houses. When a family of 3 gains another 1, they don’t buy an extra house. When a couple of “young professionals” get married, they don’t buy a 3rd condo.
Just don’t look for that kind of depth of analysis from the real estate industry.
You don’t like the greatest rock and roll band of all time? As my buddy James Bond would say, “You must be joking.”
Garth,
Now for the millennials and Gen Z in 2011’s census.
After the large cohorts of 40-44, 45-59, and 50-54, the next biggest cohort is 25-29 at 170,065. This cohort is the largest millennial cohort, and the one in which I am a part of. It’s probably the one you call “moist virgins” too, but that is also falling on the 20-24 year-olds in 2011.
In 2011, those in their 30s numbered 321,255. This compares to 329,150 in their 20s. So it’s pretty comparable, and has produced strong housing demand, particularly as these two groups account for close to all of those 115,180 screamers. So strong housing demand…
But what happens when we look at those in their teens and pre-teens? Well, the 10-19 year-olds amount to 270,065. Or 59,085 less house-humping souls to pick up demand looking to buy in the next 10-15 years when those wrinkly baby boomers start leaving Vancouver via the undertaker, or by ferry, or by road trip.
Now, of course, immigration can potentially offset the demographics inverted pyramid over the next decade. And that’s what will continue to be pumped by the MSM and others not interested in numbers.
Making the assumption that comparing total population of a cohort, say 25-29, to the total pop in 2006 of 20-24 yo, is the net effect of immigration: the net immigration of 20-39 yo was 89,890 over the 5 years. That’s 17,978 people per year moving to Metro Van who will likely settle for the long-term. That’s very similar to the number I mentioned above (16,383) that were responsible for population growth between 2011 and 2006 who were alive in 2006.
But that assumes immigration remains at the same pace it did between 2006 and 2011. This is doubtful, considering StatsCan said that BC had a net outflow of 25-54 year-olds in 2014. And the high cost of living is higher today than it was 4 years ago.
Furthermore, using StatsCan’s quarterly estimation of population growth for BC shows that BC grew by 264,524 between Q1 2006 and Q1 2011. This is 52,905 per annum.
But between Q1 2011 and Q1 2015, BC grew by 176,934, or 44,234 per annum.
Comparing the two data sets, between 2006 and 2011, Metro Van accounted for 74.4% of BC’s population growth. If that continues, Vancouver would be adding 32,900 people between 2011 and 2015. Assuming screamers account for 58.4% of pop growth, that would be 19,279 kiddos per year, and only 13,620 immigrants per year.
Overall, using the assumptions mentioned above, Vancouver’s likely growing by 16.4% less per annum during 2011 to 2015 than 2006 to 2011.
Hence, I started off this (much longer than I expected) post saying that Vancouver growing by 40,000 people per year may be outdated.
1.49% 18 month fixed mortgage announced by Meridian CU in Ontario.
What’s this about?????
DELETED (Anti-American)
Today, the United Nations Disengagement Observer Force, which monitors the ceasefire borders dividing Syria and Israel on the Golan Heights, has filed a report alleging a network of contact and collaboration between the Israeli Defense Forces and Salafist Islamist rebels (including ISIS and Al-Qaeda) currently engaged in a war against Assad, Hezbollah, and Iran.- from Veterans Today
….
Now if this is the case, no doubt Russia will get involved in a covert way at first..Then who knows. They won’t let east Ukrane or Assad to fall that easily.
Watch Crude Dogs all it will take is for this to heat up just a bit.. And Calgary might come back to life fast.
“Is it possible for Mom/Dad to give money to Son/Daughter to buy a house without attracting any tax obligations for Son/Daughter?”
Absolutely, providing its Mom/Dad’s own personal money. If its money that belongs to their business, or money that’s in a RRSP, of course, it is taxed in the usual fashion.
No gift taxes in Canada, and “inheritance” tax consists of all capital gains/losses being deemed to have been crystallized at the time of death.
As a pre-boomer, I would offer an answer to your question.
“What’s more insufferable than Baby Boomers”?
The Canadian Senate!
Sadly the herd is listening and buying and running the bubble prices even higher. There seems to be no top and no end to the housing bubble.
What is going to turn this around?
No rate hike is coming.
I am completely priced out and renting makes you a social reject. The comments I get about being a renter would shock most people.
“You don’t really clean your house, why would you, you rent.”
“Do I have to take my shoe’s off, what do you care about the wood floors, you rent.”
“Your landlord drives by to see how his house is doing, while you pay his mortgage.”
“The house you rent is worth $850,000 and you pay his mortgage. Doesn’t that piss you off?”
“Why don’t you buy a house? Why are you throwing your money away paying someone else’s mortgage?”
The endless suggested house’s that they know of that are for sale, as if I can’t figure out how to find a house that is for sale. Everyone assumes that I want to buy a house, I just don’t know how or can’t find one to buy.
I’m tired, and this is endless. There is always something that keeps this market going. My portfolio is starting to look very, very weak in comparison to the endless gains of the house prices.
I got to wondering how close is the connection between this realty firm and Sotheby’s of London, the venerable art and antique dealer. As it turns out, not so much. Worse, Sotheby’s is effectively now an American firm. That at least explains how a such a storied British name was sullied by contact with scruffy colonial realtors whose only flair is for exaggeration.
“About Sotheby’s International Realty Affiliates LLC
Founded in 1976 to provide independent brokerages with a powerful marketing and referral program for luxury listings, the Sotheby’s International Realty network was designed to connect the finest independent real estate companies to the most prestigious clientele in the world. Sotheby’s International Realty Affiliates LLC is a subsidiary of Realogy Holdings Corp. (NYSE: RLGY), a global leader in real estate franchising and provider of real estate brokerage, relocation and settlement services. In February 2004, Realogy entered into a long-term strategic alliance with Sotheby’s, the operator of the auction house. The agreement provided for the licensing of the Sotheby’s International Realty name and the development of a full franchise system. Affiliations in the system are granted only to brokerages and individuals meeting strict qualifications. Sotheby’s International Realty Affiliates LLC supports its affiliates with a host of operational, marketing, recruiting, educational and business development resources. Franchise affiliates also benefit from an association with the venerable Sotheby’s auction house, established in 1744.”
http://www.sothebysrealty.com/eng
Neato. Guess I missed the boat on the bank of mom and dad. They have worked hard over the years for what’s theirs. And that’s just it. It’s theirs.
I’m a millenial (by the skin of my teeth in the early 80s) and I have none of this to expect for purchasing a house.
Actually if I ever do buy a house it will be due to the lot price dropping and me being able to build the 750 Sq ft house I one day would like to live in.
Until then..hell no. I’m a renter and content with it. Keeps the ‘roof over my head’ expenses nice and low so I can save for a rainy day, retirement(if I make it there), or maybe that lot and home build when the bottom finally falls out of this bubble.
#59 scars
Is it possible for Mom/Dad to give money to Son/Daughter to buy a house without attracting any tax obligations for Son/Daughter?
What about inheritance tax? is there such a thing in Canada?
******************************************
I flunked tax law so you would be nuts to rely on my advice. In Alberta, I say no to both of your questions.
But ultimately, I rely on the legal maxim that where there is a will, there is a lawsuit.
I hope the generation-screwed doesn’t expect a big inheritance when the time comes.
1) Bank Mom&Dad already lend then a lot for their down payment. Sure it’s not their all, but a lot less than they think.
2) Fighting over the beach house? check with bank first, maybe there’s a big Heloc waiting to be paid back. At least the granite top is nice. Can the gen-screwed afford 2 mortgages?
3) hope that bank is not CHIP bank.
you are poorer than you think
#WhoKnew?… #It’sAlwaysAboutTheRealEstate… #TheEagles:LastResort…
http://youtu.be/iE1pMLkwLKU
I heard a real estate pumping ad on a local Van radio station for condos selling for as low as 93,000. The participants mention where they are going this weekend to see the units. The dad says: “going to ____ this to purchase a unit to get son out of the basement.”
Pure marketing playing on insecurities.
If they don’t buy junior a condo then they’re not a good parent, hahaha. People actually buy this crap including the closet of a condo.
Incidentally there are far more radio ads recently pumping condos. Buy for kids, buy with partners, buy for retirement fund, etc…
Entitlement seems rife.
Cheers.
So realtors all that oil that spilling onto Vancouver beaches is that a good thing for RE? How about the radiation that’s washing up on Vancouver shores? I hate realtor scum
Market timing is delusional in real estate just like it is in the stock market.
There may be a lot of fools out there leveraging like crazy to get into a house.
But it sure looks to me like there’s a few fools om the other side, waiting for a meaningful price correction. It won’t come.
Boomers rule! Oh, and they vote as a block too. Something the idiot also ran generations have yet to figure out. Boomers will still be in control for at least two more elections.
Sotheby’s is lying but the MSM tells the truth about stocks and bonds and lies about the housing market?? Cherry picker. The president of the USA-JP Morgan’s CEO, Jamie Dimon – Another Crisis Is Coming “No Investors Will Be Safe”
http://investmentwatchblog.com/jp-morgans-ceo-jamie-dimon-another-crisis-is-coming-no-investors-will-be-safe/#5MAmKxkVEmpmTUpw.99
The workforce participation rate is a 38 !! year low. Keep in mind that in 1977 in most families could get by on one wage.
The baltic dry index is an all time LOW!
The interest rate derivatives market is estimated to be over 1 QUADRILLION DOLLARS.
There is no 7 year cycle yet any easy search can see that a 7 year cycle has gone back to the early 1900’s
EVERY MAJOR COUNTRY IN THE WORLD has joined Chinese-Backed Development Bank except the USA and Canada.
Yet— keep your money in the stock market -a diversified portfolio weighted in the USA. There will be no collapse of the US dollar and everything will be status quo.
WTF are you smoking?? Really?? Really? Unbelievable!!
I should have said yes to the first question. No tax obligations for the kids arising out of the gift.
No to the inheritance tax.
On the other hand….
You need another lawyer.
#21 Victor V on 04.09.15 at 7:03 pm
“The question thus has to be asked … has CIC created an immigrant investor program that no one is interested in?”
That was the point…
“but do find it hard to believe that rates will “normalize”. Ever. If rates do go up like you predict, would that not throw the entire country into financial chaos? And how would the government ever let that happen? “
If governments could arbitrarily control interest rates over the long term, do you think they would have allowed the double digit rates of the 1970s to happen? Would they have allowed hyperinflation to happen in various countries? Of course not. So I wouldn’t over-estimate government’s role in setting interest rates.
Stronger inflation and hence higher rates will occur eventually. More than likely when the labour market really starts tipping in favour of the younger generation. Dependancy ratios will soon be some of the highest in history, and such implies significant wage inflation. I know it might be hard to imagine in the short term that the labour market is going to shine again, but the simple ‘math’ and demographics of the situation will eventually drive much higher inflation. Not only will rates normalize in such an environment, but there will be substantial overshoot as is always implied through mean reversion.
Higher inflation and the resulting rates, of course, will destroy the wealth of the fixed income crowd and destroy the value of RE.
Market timing is delusional in real estate just like it is in the stock market.
There may be a lot of fools out there leveraging like crazy to get into a house.
But it sure looks to me like there’s a few fools om the other side, waiting for a meaningful price correction. It won’t come.
So if they’re just buying and selling RE without timing the market, you wouldn’t call them ‘fools’. Right?
Remember Peak Oil? Was that before or after Y2K?
“New oil rush as drillers discover 100 billion barrels of black gold near Gatwick in largest UK onshore find for 30 years”
The comic potential of this massive UK oil find in the heart of the wealthier bits of British countryside is endless. Imagine the looks on the faces of the separatist Scottish Nationalist Party as the North Sea oil runs out and the Sassenachs cash in. The protest industry will take off. Everyone from country vicars to the save-the-badger crowd will be there. They may even forget about Canadian “tar sands”.
http://www.dailymail.co.uk/news/article-3032066/Drillers-discover-100billion-barrels-oil-near-Gatwick.html#ixzz3Wrfl2tfv
#82 pete
Ah, but you are so naïve, Pete.
The beautiful iridescent hues given off by English Bay’s new patina of oil will only enhance the beauty of the offerings on the land. It actually looks terrific in the pictures I have just taken.
I am increasing prices by 5%, stat.
It is different here, get over it.
“Canada’s Viking Air is slashing production of its Model 400 Twin Otter turboprop by 25 percent and laying off 116 employees, nearly 20 percent of its workforce, in the face of slowing orders. The company will continue to employ 432 and plans to deliver 18 aircraft this year, down from its earlier forecast of 24. Most of the layoffs will be among unionized employees at Viking’s plant in North Saanich, British Columbia, not far from Seattle.
A senior company executive blamed the decline in orders on a variety of factors, including global currency fluctuations, weakness in the oil sector and growing economic problems in Russia, a leading customer market where the company expected to sell more than 100 aircraft over the next decade. Viking is also storing an unspecified number of aircraft for customers who have failed to make full payments.”
[…] Source: http://www.greaterfool.ca/2015/04/09/generation-screwed/ […]
Ross pays huge royalties for the Sothebee name
Gotta get the ‘name’ out there.
#76 Andrew Woburn — “I got to wondering how close is the connection between this realty firm and Sotheby’s of London, the venerable art and antique dealer. As it turns out, not so much.”
Interesting, had me fooled. License your venerable marque to the gang who run Century 21. Well, that’s business I guess. Here’s what the franchise costs:
http://www.worldfranchising.com/directory/real-estate-services/real-estate-brokers-services/sotheby-s-international-realty
#43 Life in the fast lane on 04.09.15 at 7:51 pm
#83 Smoking Man on 04.08.15 at 9:55 pm
Unreal..
And as far as pumping a book here, blog dogs will get a promo code, ebook will be free.
I promise.. Hell probably at most 50 fans…
Where I make the big loot, smoking man haters buy the paper version just to burn it.
Sorry, wasting time, back to the book.
===========
Books are less than a dime a dozen – https://www.oysterbooks.com
you might have to pay people to read your gibberish
…..
You simpleton.
I have 50 sales for sure from blog dogs. Mostly long term dudes, not the newbees. Takes awhile but I win em over.
This isent just an entertaining action packed book, situational life experiences. I’m a code smith, any brilliant code smith always loads a few easter eggs in applications.
We are in the world of nerds, and they will find the eggs in the book.. They tell their buddies, book will go viral. An example of an ester egg in a book, and I have hundreds , this one is obvious to a Serb.
When Ashmans dad comes to releave Smokey of his command he refers to him with His Nectonite name. Better reserve your signed copy.
“гигантски пенис, good to see you again too, things are much different now on Nectonite.” He said.
“Please call me Smokey, I never liked or lived up to that name. What do you mean different.” I said.
This is a tough economy for millenials. I’m starting to consider my options outside of Canada.
#24 ram
Actually you read too fast and missed the point where he clarified that shanty shacks in Toronto and Vancouver that are priced at, around or above $1 million qualify as “luxury properties.” The obvious point is that the majority of boomers who are purchasing such properties are not pulling in $300,000 to $500,000. But. if you choose to belleve the Sothebys banter, go ahead.
Twisted Facts?
ram on 04.09.15 at 7:08 pm
Fan of your writing….but looks like you are twisting facts here….your quote only says that baby boomers who buy luxury homes have 300-500,000 income. This does not mean or claim all baby boomers have this income
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My thoughts, exactly. No lie was exposed, just a different interpretation of the sentence.
Dollarama sells junk …..
still wondering if we will see lower rents in the GTA …
Garth would you recommend millenials in their early 30 take out a HELOC to either top up their TFSAs or self directed accounts IF their mortgage debt is low and equity at least 50% or more? When I say low mortgage I mean equivelant to a years salary. Thanks.
Omg hes a big boy, you are all so delicate over there in eastern canada. People have said far worse on here, the inconsistency of the tempeant of this comments section is mind boggling.
#67 devore on 04.09.15 at 8:46 pm
“#44 Karma
The population growth number doesn’t tell you everything. Even more important is the growth in households. When a family of 6 moves into the city, they don’t buy 6 houses. When a family of 3 gains another 1, they don’t buy an extra house. When a couple of “young professionals” get married, they don’t buy a 3rd condo.
Just don’t look for that kind of depth of analysis from the real estate industry.”
—————————————————————
Thanks Devore for reading!
Yes, I am well aware of the inadequacies of the data. But it’s still better than BS MSM information floating around. My reason for looking into it is to verify the accuracy of the “40,000” per year number.
StatsCan does have information on household formation, HH income and many other stats, but it’s not easily accessible in excel, and I don’t want to spend the time to click on a bunch of things and then type out a number in order to do the analysis.
Check this out:
http://www12.statcan.gc.ca/census-recensement/2011/as-sa/index-eng.cfm
#76 Andrew Woburn:
I’m afraid Sotheby’s history is not as venerable as one would believe:
http://www.theguardian.com/uk/2002/oct/31/arts.artsnews
I don’t know if the series American Greed is available on Canadian TV; it would appeal to most readers of this blog with its tales of financial crimes. The Sotheby’s-Christies’ scandal was the subject of one episode.
@John #85
You’re scaring me.
I’m surprised you got through my book when you obviously can’t read. I said the “last Boomer” hits 65 in 2030. The bulk do so starting this year, 2015. — Garth
And while I cant read, as you claim, its worth noting I am in the .74% gang too.
Severely north of the bar.
Ironic.
Is that supposed to impress me? — Garth
First Ones in the Scheme vs (becoming) the (New) Bag Holders. Same old…except on a larger scale.
On a broader picture:
The Master Resource swings +-5% almost daily. Credit dries up in the periphery, while is no longer sucked up in the centre, even when promised to be given back with almost no cherry on top… Almost no cherry on top is becoming still too much of a cherry on top.
Looks like drain circling, alright.
Garth,
What do you make of the advice of this guy…..
http://alexdoulis.com/
seems to suggest abandoning ship and leaving the country for young’uns….just curious..
Tax evasion is illegal. — Garth
“still wondering if we will see lower rents in the GTA …”
Rents tend to be a lot stickier than prices. I wouldn’t expect rents to really fall much, if any in the GTA/GVR. However, if they even only track inflation over the next decade, that will represent a significant financial disaster for the landlords.
In Calgary, OTOH, I would expect rents to fall simply because they have been so overheated and disconnected with reality over the past decade.
#50 MTVmademedoit
I want him here so there!
Too bad no one told my mom the average was under 4 kids per family as my parents had SEVEN of us kids and my dad worked six days a week but MOM PUT IN SEVEN. Who cooked all the meals? MOM. Who cleaned the clothes and the house seven days a week? MOM. MY parents had baby number one in 1942 and the lucky 7 in 1960….all without daycare; credit cards; no television; and we all walked to school as mom did not drive and dad worked all day. CRAZY WORLD back then. Thank God for church…free time for mom as kids were supervised by the church people.
Funny back then I don’t remember jealousy or envy of other people’s stuff…People matter not stuff.
Could the instant evaporation of this boomer “wealth” due to increased rates be Canada’s version of a giant sucking sound????
Tax Evasion
Garth,
What do you make of the advice of this guy…..
http://alexdoulis.com/
seems to suggest abandoning ship and leaving the country for young’uns….just curious..
Tax evasion is illegal. — Garth
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I had bought a copy of his book, My Blue Haven years ago. My vague recollection is that it was about tax evasion and was useless to me.
I think I bought it at an airport and soon regretted it.
we’re probably witnessing the coup-de-grace of Generation Screwed
And instead of taking some responsibility, these kidults will just whine more and blame they previous generations like they always do. I mean, if Mom and Dad are gifting cash, these kidults can simply say no. Or they can take it and use it for a huge downpayment on a moderate home instead of a small downpayment on a expensive one.
BTW, is the Bank of Mom & Dad paying a dividend these days?
Members of the Eagles have described the album as a metaphor for the perceived decline of America into materialism and decadence.
http://en.wikipedia.org/wiki/Hotel_California_(Eagles_album)
we get it – the decline of America – the Federal Reserve gets it which is why it will raise interest rates 1%
in August this year
#108 dofuss — “What do you make of the advice of this guy…..”
I usually take it as a bad sign when I start typing his name into the google bar and it suggests “alex doulis osc” as a popular search.
Mark on 04.09.15 at 10:23 pm
“still wondering if we will see lower rents in the GTA …”
Rents tend to be a lot stickier than prices. I wouldn’t expect rents to really fall much, if any in the GTA/GVR. However, if they even only track inflation over the next decade, that will represent a significant financial disaster for the landlords.
___________________________________
Rents are taking a huge hit in the GTA as the glut of empty houses, apartments and condos hit the market at an ever growing rate. Word from realtor buddy is that the kids who rented condos are waking up to the fact they are spending a large Part of their income to live in a fancy condo while having no money to save and or go out and party. These same kids are returning home leaving an incredible amount of empty rentals that can’t find a renter or a renter willing to pay an amount that would make the unit cash flow positive. A lot of “landlords” are trying to sell out before condo prices in the GTA fall off a cliff.
Now add the fact all those newly built condos in toronto are ticking financial time bombs and you have a condo crash.
Could the instant evaporation of this boomer “wealth” due to increased rates be Canada’s version of a giant sucking sound????
********************************************
Um, no, that would just be a figment of your imagination.
Wait till it actually happens and THEN gloat.
We have been waiting what? 7 years so far? Seen a few false stats but not the real thing yet. Be patient. It’s coming. (Maybe…sometime)
False stats, false starts, whatever seen ’em both…
Freudian slip…
#66 Andrew Woburn…
We carefully looked at Nanoose and almost made an offer on a place in Fairwinds. The thing that held us back was the same issue we had with other scenic spots.
————
Not to mention golf balls through the window :-)
I’m an immigrant, a decade here now. I love Nanaimo, and i live in the ‘south end’ (Cinnarbar valley). So much access to fantastic countryside, sea, lakes, beaches, trails, etc, plus all good shopping. Sure there are shitty areas (e.g. Harewood), but we had a Grow Up in our ‘middle class’ neighbourhood till they got busted. We live in BC, it’s our biggest export.
Sometimes i think locals here don’t appreciate what they have. I recently returned to my native land of the UK and my previous hometown. What a dump. No comparison.
We sold our 2100sq ft 4 bed SFH last Oct, $380k. Seems to be a big barrier to break $400k around here in this bracket. Took 8 months to sell.
[incomes of about $300,000 to $500,000 annually] for 9.6million wrinklies!
It seems to me that all Canadians who are 50 and above are all CEOs! How many companies are there in Canada?
Garth, about the fertility rate you missed another conclusion.
A country where the fertility rate is less than 2.1 cannot renew its population and is doomed to disappear – hence the immigration in Canada where the fertility rate is 1.7. It should be somewhere around 1.4 in Quebec..
Analysts’ being a bit of a debbie on China after a tour.
“We Traveled Across China and Returned Terrified for the Economy”
http://www.bloomberg.com/news/articles/2015-04-09/we-travelled-across-china-and-returned-terrified-for-the-economy
” Or they can take it and use it for a huge downpayment on a moderate home instead of a small downpayment on a expensive one.”
Or do as the smart poster I responded to earlier would have done, and that is, buy a balanced/diversified portfolio with it. And actually have some resources to scoop up housing when the prices are more reasonable.
Unfortunately, I believe we’re going to be hearing a lot of “the blame game” in years to come. Folks will get blamed for intimating to the kids that they should buy as soon as possible even with gifted down-payment funds. Kids will get blamed for buying and being irresponsible.
Even over the past decade, with large numbers of university grads not able to find employment, a housing crash may very well be the great equalizer. The employed people mostly bought houses and went into a pile of debt. The unemployed, well, no house, and not anywhere near as much debt. Yes, the unemployed haven’t had much income for much of the past decade, but at least they won’t end up losing most of their equity in the housing crash. Also, the unemployed will have labour mobility which they can exploit, while the employed will basically be held hostage to their houses on account of minimal to negative equity. Two of my friends in the Calgary area are already stuck in this situation — unable to sell their houses because they would owe more on it at a realistic and timely liquidation price than the house is actually worth.
#97 Red Deer Rob on 04.09.15 at 9:39 pm
This is a tough economy for millenials. I’m starting to consider my options outside of Canada.
—————————–
Good move. This is what young people have always done when opportunity dried up in the home country. For 19th century Brits, it meant moving to places that needed skills and know-how, places like Canada.
We take our sophisticated systems for granted but most of the world is still struggling with the basics. As recently as the 1980’s, China had hardly anyone who knew basic business skills like double entry book-keeping. Canadians went there to teach. There is literally a world of opportunity in Asia and Africa for young Canadians who can help them develop. Beats working at Starbucks.
I doubt those MSM stories about Boomers getting set to inherit $1 trillion from their parents. The cost of housing seniors is high. Accommodation at a good quality retirement or nursery home can drain all the money that a senior has in their bank account. There will be less remaining for the Boomers than they currently expect.
#115 Hot Albertan Money on 04.09.15 at 10:36 pm
BTW, is the Bank of Mom & Dad paying a dividend these days?
=======================
Why not? You don’t need cash to pay a dividend. You can use promissory notes. Cash is so last century.
Thanks, as always, Garth for an amusing and informative read.
I take your point that there are a limited number of Boomers making 300+K. However, I wonder about the impact of Boomers with comparable household incomes, i.e., a couple making 100K+200K together (as opposed to a couple in which a stay at home partner and working partner earn 0+300K) on the market; they seem not to register so clearly in StatsCan data.
Many of my colleagues fit into this dual incomes over 300K threshold (paying lower taxes because the marginal rate for each is lower than if only one worked and made 300K). A common pattern among them seems to be selling houses they’ve owned since the 90s and using a combination of income, equity, and in some cases family money to buy a house that should be well beyond their means based on salaries alone. Not saying that this is a good idea — it’s crazy. But my workplace is full of people who have done this.
Auction houses and their related real estate brokerages are simply in the business of selling pre-owned stuff, just really expensive pre-owned stuff. Selling museum-quality work to museums is a tiny fraction of their business; the rest is like a wholesale car auction lot for upscale merchandise. Like any successful business they do what they need to do to make sales happen. Caveat emptor.
Equity depletion sounds scary & is scary if 1) you still have a mortgage, HELOC, loan of some sort to pay off & 2) if you are relying on selling the asset (house, condo, whatever) in order to have ‘enough’ to live on. Retirement being the most commonly noted reason, but lots of people who are now unemployed & maybe carrying a heck of a lot of debt obviously would like to sell their asset (if they have one to sell, that is) at top price so they will have money to live on after the debts are paid. But if that asset is depreciating in value maybe they might end up selling & still owing a lot, in which case they are indeed screwed.
Before anyone gets too smug & says ‘they should have known’ market crashes are easy to predict in hindsight. Even savvy operators who have been through the mill before have been caught short by economic downturns & end up in bankruptcy.
Flames going to the show…..man-o-man do the leafs suck.. spectacularly bad.
#121 Chris in Nanaimo on 04.09.15 at 11:06 pm
i live in the ‘south end’ (Cinnarbar valley). So much access to fantastic countryside, sea, lakes, beaches, trails, etc, plus all good shopping. Sure there are shitty areas (e.g. Harewood), ….
Sometimes i think locals here don’t appreciate what they have.
================
Cinnabar is lovely as are many areas south of the downtown. It is only the south end of the city centre that is dodgy. My buddy has a place overhanging the cliff above the university where you can see an incredible panorama of sea and Coastal mountains. I have travelled the whole West Coast to San Diego and there is nowhere as scenic, livable and affordable as Nanaimo. Yet, as you say, the natives don’t get what they have in their hands. Even the run-down areas are full of the kind of “heritage housing” that Vancouver hipsters weep over and will be gentrified in time.
#96 Smoking Man on 04.09.15 at 9:37 pm
I have 50 sales for sure from blog dogs. Mostly long term dudes, not the newbees. Takes awhile but I win em over.
This isent just an entertaining action packed book, situational life experiences. I’m a code smith, any brilliant code smith always loads a few easter eggs in applications.
We are in the world of nerds, and they will find the eggs in the book.. They tell their buddies, book will go viral. An example of an ester egg in a book, and I have hundreds , this one is obvious to a Serb.
When Ashmans dad comes to releave Smokey of his command he refers to him with His Nectonite name. Better reserve your signed copy.
———————-
fine, you are a nectarine.
Just peachy.
So THAT was the source of the double digit inflation and credit card rate mortgages in the ’80s. The market was flooded with demand.
The party is obviously going to keep going for awhile via market manipulation and cheap money because there are not enough of us (gen Y) to buy all of their 700k suburban chateaus, even if we wanted to.
The demographics clearly cannot support the status quo. But to those who think the central bank stimulus of the fed et al is going to drive us to economic doomsday, I submit to you that nobody has died from a lack of economic growth in Japan with its 250% debt to GDP ratio. 40% of the population will be over 65 by 2030, and they just keep adapting, for example through a new and burgeoning senior porn industry.
Here’s a history lesson, Garth. Americans quit having “real money” in 1971 when Nixon cancelled the direct convertibility of United States Dollar to gold.
However, I wonder about the impact of Boomers with comparable household incomes, i.e., a couple making 100K+200K together (as opposed to a couple in which a stay at home partner and working partner earn 0+300K) on the market; they seem not to register so clearly in StatsCan data.
This table seems to make it pretty clear:
http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/famil106a-eng.htm
4.1% of families over $250k combined income.
1.8 million for 3,300 SF vancouver crack shack VS 1.1 million for 26,000 SF Midwestern castle
https://www.locatehomes.ca/bc-real-estate-listings/vancouver/mls-V1102808/3633-Rae-Ave-Vancouver-V5R2P6?id=261488818
http://www.dailymail.co.uk/news/article-3031396/Gaudy-Midwestern-castle-built-five-ranch-homes-cobbled-Indianapolis-pimp-turned-construction-magnate-priced-just-862-000.html
The vacant truth about rental condos
Condo investors who think vacancy rates are ultra-tight will be disappointed
Jason Kirby
April 9, 2015
http://www.macleans.ca/economy/realestateeconomy/the-vacant-truth-about-rental-condos/
And, as usual, GenX will be left picking up the pieces.
The thing I find hard to believe is the peak of the boomers hits in 2016 to 2020. Meaning most are suppose to retire.
When they do, they will be living off their savings with hardly any income. So they will take their 80,000 dollar jobs and reduce that to mabey 20,000 per year. Most don’t have savings and will have to live of the government cheques (about 1000 per month) . They will dig into their saving if they have any, or sell their one asset their house.
How does this company come up with their figures. BTW in our company anyone within the age of 58 and up got a package and were sent off. The company wants to get younger, more enthusiastic workers, not old geezers going to work just to punch in and out. And not wanting to learn new things, in a world that is ever changing.
I guess we will see what will happen pretty soon. The show cannot go on forever and the truth always win. The Mom and Dad taking money out of their house to pay for their kids down payment does not sit well with me.
#19 Michael…one would have to consult with a lawyer (try several) to know if one can and how to go about it.
#111 bigtown…sounds like the same family situation except for the Sunday Church. Family values and morals.
“I doubt those MSM stories about Boomers getting set to inherit $1 trillion from their parents.”
Even if the boomers did inherit $1T — much of it is in GICs and other debt instruments that have financed the housing bubbles. So if these boomers inherit the GICs, and start selling them to buy RE, the housing market goes kaboom for the lack of funds available in the marketplace to finance it.
After all, every last dollar borrowed from Canadian banks was actually borrowed by the banks themselves from sources such as all those old people.
Garth…I can’t tell you how many bsmt dwellers I’ve met who after they inherit grandma or moms estate …move upstairs ..and re-brand themselves as ‘successful entrepreneurs’ for the sake of polls and bank statements.
It only takes a brief conversation to expose them….because no one who has made their own money is a complete idiot…..at least they have a better business vocabulary than these furnace room trolls.
So…I think Sotheby’s is drinking the bathwater of polls gleaned by agents who say…..silly things…because it’s in their best vested interests to say so.
Many half baked sons and daughters are coming into an inheritance…of grandma’s musty semi…or Mom & Dada’s house that might have sold for 2 million….and they’re moving into the manor house of their dreams…..even taking mortgages…large mortgages…and they’re way past 60…and into their 70’s. “To the Manor Born”…so to speak.
It’s kind of like a rerun of the Beverly Hillbillies playing out.
Garth said:
Those with over $2 million in assets constitute the top 1% of the population. In fact, the top 10% richest households in Canada have $774,000 in liquid assets (stocks, bonds, etc.), own more than $800,000 in real estate and carries more than $225,000 in debt. Obviously you work in the Sotheby’s Disinformation Deot. — Garth
I don’t disagree with you about the 1% or 10%… but I used math numbers echoing _YOUR_ example of a parent helping a kid buy an 800K starter home.
e.g. this could mean a home in Vancouver or the GTA. Therefore, it is completely reasonable that the parent owns a 1.5m property. And if they can help a kid put a down payment on 800K mortgage, is it unreasonable to say they would have 1m in liquid assets?
Therefore, my math, I think, is still correct, as it was your based on logical consequences from your example.
“A majority of young buyers of properties priced at over $800,000 had help from the bank of Mom and Dad.”
I guess to be fair to both of us, the question is, now much help? Maybe the kids put in 150K, and the parents put in 50K. But, if it is really just 50K, that’s hardly screwed (if the parents own a 1.5m property).
Am I wrong?
We represent what I think is a fairly large part of the Canadian experience. Both sets of Baby Boomer parents have little to no savings other than home equity. They never lived in a hot housing market, and will likely stay in their home until they move to the nursing home. They will exist on CPP, OAS, GIS and a bit of savings.
My wife and I have received NO handouts. Not because they didn’t want to, but because there were NO handouts to be given.
We paid off our student loans, and have built our own equity. We are well ahead of the game. But the best part is that we did it on our OWN.
Sadly, we will likely be helping our own parents in old age, but that is the way it goes. But the confidence we have built from truly fighting hard against all odds is not worth any down payment we could have received.
100 + comments from know it alls. Not one asking a question.
Now, how’s your prediction of housing prices going for Vamcouver and Toronto?
Maybe need to start asking a few questions.
Please don’t mind me posting drivel.
I got banned from another Vancouver blog so I migrated here. I pretended to be a west side realtor but people there didn’t buy it. So now I’m here.
I hope my writing impresses everyone. It makes me feel superior.
The dog aint so weird. The dog is jes doin what he thinks is suppose to be done. His owner works for the entrapment unit of the Tronna vice squad.
The neighbours, nice people who never roam downtown at night, put up the sign.
Gosh.
(I dread to think of what the next post’s picture is gonna be.)
Which reminds me: just before goin’ on, Mick Jagger used to get his tongue injected with botox. (I kid you not.)
Virtue is its own reward. They say.
#24 & #99
I agree. Been reading this blog for about a year now, but more for entertainement than for getting facts. Garth is wrong some times, so do all of us. Maybe he could acknowledge that, but if he did I wonder if all his followers that treat him as a God reincarnation would still be interested by his blog… And if they leave, the comment section will be so much less entertaining that it is today.
#6 seeing it from both sides on 04.09.15 at 6:43 pm
——————————————————————-
Because stocks build in future expectations (more shoppers = higher future profits), whereas buying a house is based on the *actual* ability to afford it (ie, wages). If wages don’t go up, then real estate going up doesn’t make a whole lot of sense.
#24 ram on 04.09.15 at 7:08 pm
—————————————–
Word trickery deliberately meant to mislead? But you’re right, they were careful enough to use the word ‘luxury’ in a couple places, but by not defining, they place onus on the reader to decide what a ‘luxury’ home actually is.
http://m.theglobeandmail.com/report-on-business/top-business-stories/how-high-will-canadas-jobless-rate-climb-amid-oil-shock-target-shutdown/article23875173/?service=mobile
Economists are divided on what to expect when Statistics Canada releases its March employment report at 8:30 a.m. ET.
BMO Nesbitt Burns, for example, expects to see a loss of 10,000 jobs and a rise in the unemployment rate to 6.9 per cent from February’s 6.8 per cent.
But Royal Bank of Canada, on the more optimistic side, predicts a gain of 14,000 positions and an easing in unemployment to 6.7 per cent.
Smokey:
I want an autographed copy of your book!
Blog dawgs: you are completely and utterly insane if you think Smoking Man’s book is not going to get at least… 30 readers.
…. MINIMUM!
ps: Smokey whats the book title?
“Call Me Smokey: Memoirs of a Dyslexic Working Class Gambler in the Era of Insanity”
“Insights of a Smoking Man: My Life Drinking JD, Gambling and Late Night Commenting on Canada’s Most Infamous Blog”
“The Legend of Smokey: Stories From a Long Branch Greater Fool”
“Smoking Man: The Inside Story Behind a DELETED Greater Fool”
I still don’t understand who are these people. The ones that buy these houses, lease the expensive cars, fill the restaurants, go see concerts and sporting events etc…
I manage our family’s finances somewhat tightly, we don’t spend on a lot of this stuff if it doesn’t fit in our budget (and most of the time it doesn’t). But I see the families renovating their homes or upsizing, with multiple expensive cars, that go on nice family vacations, go out often etc… and I just don’t see how they do it.
Either they make a heck of a lot more money than we do, inherited large sums of money or are in deep doodoo.
That was my shallow side coming out, whine over. Carry on.
Inflation News
A “left-leaning” (sez the Toronto Star!) think-tank has updated a calculation they did in 2008. Back then, they figured both adults in a family of four in Toronto would need to make $16.60/hour to give the family a reasonable, no-frills quality of life. Seven years later, the figure is $18.52. That’s 11.6% higher, for a compounded inflation rate of 1.6% per year.
You can’t accuse these people of trying to minimize inflation, or of focusing on the inflation of a rich person’s market basket.
Executive summary, from The Star: http://www.thestar.com/news/gta/2015/04/10/toronto-couples-with-kids-must-make-1852hr-each-to-get-by-report-finds.html
The report, from the Canadian Centre for Policy Alternatives: https://www.policyalternatives.ca/sites/default/files/uploads/publications/Ontario%20Office/2015/04/CCPA-ON_Making_Ends_Meet.pdf
AN increase of 29,000 part time and public sector jobs. Stats Can saying Natural Resource jobs increased in March too. That sounds…very wrong. And given the massive mistakes made in Stats Can on Employment Reports the last few years I’m sceptical…to say the least.
Unemployment stays at 6.8%.
@139 Juno re: “BTW in our company anyone within the age of 58 and up got a package and were sent off. The company wants to get younger, more enthusiastic workers, not old geezers going to work just to punch in and out. And not wanting to learn new things, in a world that is ever changing. ”
Wow. What a sad attitude. No wonder, over 50’s have a hard time finding a job if they are unemployed. I mean, sure, some people take their jobs for granted, but that attitde is not exclusive to the 58+ age group.
So, at your company, that poor 58 year old who works his butt off (yes, they are out there), is given the boot just because he is 58? Let me guess – you are no where near 58.
We at Stats Can, as we like to call it, feel an explanation is in order. As Alberta is a HAVE province we decided that anyone that doesn’t HAVE a job today will probably HAVE a job soon. So we decided not to count Alberta for March. Thank you.
To #124 Mark (on 04.09.15 at 11:18 pm)
Oh for sure, investing would be the better option. But I was just playing devil’s advocate where if these gifts from Mom/Dad are contingent on buying a house, it’s better to end up with the smallest mortgage rather than the biggest house.
Between the job stats and housing starts why would anyone believe this economy is headed for a crash?
http://ca.reuters.com/article/businessNews/idCAKBN0N115W20150410
Over 56,000 new part-time jobs created. Over 28,000 full-time jobs lost. I wouldn’t get too excited. — Garth
http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/news/economy/canadas-job-growth-blows-past-expectations-with-28700-gain&pubdate=2015-04-10
The Canadian economy unexpectedly added 28,700 jobs in March, driven by a surge in part-time positions and gains in the retail and wholesale trade sector, data from Statistics Canada showed on Friday.
The figures topped economists’ expectations for the employment level to be unchanged last month and kept the unemployment rate steady at 6.8 per cent.
But the composition of jobs was not as robust as the increase in the overall figure suggested. The gain came from 56,800 new part-time positions, the most since July, as employers cut 28,200 full-time jobs.
“The Canadian economy unexpectedly added 28,700 jobs in March, driven by a surge in part-time positions and gains in the retail and wholesale trade sector, data from Statistics Canada showed on Friday.
The figures topped economists’ expectations for the employment level to be unchanged last month and kept the unemployment rate steady at 6.8 percent.
But the composition of jobs was not as robust as the increase in the overall figure suggested. The gain came from 56,800 new part-time positions, the most since July, as employers cut 28,200 full-time jobs.
By industry, the gain in jobs came predominantly from the country’s services sector, with retail and wholesale trade leading the way. The industry added 19,800 jobs, its first gain since October.”
http://ca.reuters.com/article/businessNews/idCAKBN0N118N20150410
Move over wrinklies the new generation is coming. We might not have your riches, but we will get your homes when you are gone!!!
Kabuki theater from the Finance Minister:
– Claims GM shares sold at a profit, won’t release details until later
– Claims “not necessary” to sell ’em, but wouldn’t answer whether the budget could have balanced without it
– Won’t reveal the private sector consensus 2015 oil price that his budget will be based on
For a guy who doesn’t talk much, the Peter MacKay influence is strong in this one.
“The Canadian economy unexpectedly added 28,700 jobs in March, driven by a surge in part-time positions and gains in the retail and wholesale trade sector, data from Statistics Canada showed on Friday.”
I wonder how much of this was related to Target alone?
For instance, people moving from the employment of “Target Inc.” to the employment of “The [Bankrupt] Estate of Target Inc.”?
On the way into work, I saw these two informative nuggets:
Apple – Demand will outstrip supply when they release their watch.
Tim Hortons – Soon to start selling nutella based products
Do people know or care that news is mostly just press releases now?
#40 THE AMERICAN: “….with shit weather, when they could purchase in real cities right at home.”
************************
Now, now…be nice. Many years ago I lived in California for six months. And found the constant sunny weather boring, actually — same, every day. I like the changing seasons.
Over 56,000 new part- time jobs created. Garth
The comment was meant to point out that the MSM and Government message that the masses are hearing continues unabated. For the average indiscriminate headline reader, all is good, might as well buy a house.
We lost 28,000 full time positions.
28,000 households which are now on a much tigthter budget.
Part time jobs typically pay less, carry less benefits and offer less jog security. Spending habits change as well.
They managed to create more public service sector jobs? Go figure. More sucklings at the teet. Maybe more domestic spies for CSIS? Because that’s important…/sarc
Harpo said there won’t be a government stimulus going forward. He likes a balanced budget when most people can’t even balance their checkbooks. Private household debt loads have risen to 163% and climbing further…
Generation Screwed is appropriate. Canada is at such a massive disadvantage compared to leaner and meaner economies out there. It had great growth opportunities for the last 20 years but that tide has gone out.
I wouldn’t start a business here now and I don’t think Canada is going to attract many investors or entrepreneurs from the outside either.
#153 Steve French on 04.10.15 at 7:50 am
ps: Smokey whats the book title?
“Call Me Smokey: Memoirs of a Dyslexic Working Class Gambler in the Era of Insanity”
…..
Called The Miss Adventures of Steve French.
You of all people I thought would figure out the easter egg
Obviously you have never heard of google translate..
:)
World at 6:00 on CBC radio yesterday…
Podcast at:
http://podcast.cbc.ca/w6/worldatsix.mp3
News story at around 20 mins.
News story on offshore money coming from China to Canada.
When rates and prices normalize, the geezers will be shocked at the equity depletion…
————————————————-
In other words, “When hell freezes over..”
Rates are going nowhere for the foreseeable future. By the time rates normalize, geezers will be scouting for homes in that place which never freezes over.. or perhaps the other nicer corner of the cosmos.
The denial of history, based on the last six years, is amusing. — Garth
All is well, housing has nearly double since 2008, debt is being stacked in record amounts, interest rates about to climb, the economy is struggling, GM sales way down, and your bank deposits are no longer yours.
I cannot see how anything bad could happen when interest rates go up.
It is going to be nothing but sunshine and good times for everyone from here on!
Well, that is the attitude of everyone in the market, so I’m selling my house and renting. I’ve seen this before, greed trumping reality. I don’t do timing, but Garth is right, get your money diversified, that includes diversified out of CAD, which just got squashed 30% lately.
‘when rates normalize’. I stopped choking on my cereal long ago on that comment b/c it is getting old and more and more removed from reality. yawn it off as a scratch on the vinyl.
BofC rates are normal now. new normal. when they go ‘weird’, aka. above 5%, we will both be pushing daisies.
or they pick rates like 6/49 picks numbers and anything could happen. What I have learned is the best way to determine the future is toss textbooks and old school logic and get a crystal ball and/or a tin hat and go to weatherman school
Current rates are not normal, and anyone borrowing money on a five-year fixed mortgage now needs to understand the future will not reflect the present. Denying this is not a strategy. — Garth
Oh, I got the translation SM. But it was pretty infantile, hardly worth commenting on, and doesn’t bode well for the quality of your literary attempt.
Compensating perhaps?
@Mark 37
“The question thus has to be asked … has CIC created an immigrant investor program that no one is interested in?
More “proof” that there isn’t really a line-up of money’ed people wanting to come to Canada. As Garth et al have laid out many times here, the domestic RE bubble is driven almost entirely by domestic actors and a domestic RE credit bubble. The consequences, that of deflation, will be almost entirely domestic, although severe demand truncation should push up the currency and further damage exporters who are currently enjoying a bit of a reprieve.”
Please explain why Vancouver prices exceed Toronto prices given a smaller population and lower incomes.
Please explain why Toronto appears so much higher than the rest of Ontario.
Your thesis that it is primarily domestic demand should be able to explain internal differentials as well.
i’d like to comment that parents giving a gift of money to help children get into the market is not new: it isn’t limited to boomers helping millennials.
many generous, caring, not super well-off parents have helped lots of children with down payments over the years. children who have experienced this are lucky (and many of those children are now themselves boomers). perhaps they want to pay it forward in turn to their own children (risk of investment in real estate aside!). perhaps one of the biggest differences is the AMOUNT given to children, and the PRICE of the real estate?
Gifts in past years to help children buy houses did not come at a time when prices were at record highs and rates at record lows. Great caution is now required, as these conditions will not last. — Garth
When rates equalize houses in Vancouver will be 30% + more then they are now.
It’s a trap the sheeple are being fleeced.
Invest in Chinese currency.
#165 KARMA: “….By industry, the gain in jobs came predominantly from the country’s services sector, with retail and wholesale trade leading the way….”
******************
And why not? The tourist season is gearing up. Happens every year. Temporary, part-time positions.
Over 56,000 new part-time jobs created. Over 28,000 full-time jobs lost. I wouldn’t get too excited. — Garth
—————————————————————-
Given that corporations (if they were people) are psychopathic, we need laws to protect good jobs, and to penalize corporations that shift employees to part-time work in order to avoid paying benefits etc.
The time has come.
Yes, comrade. — Garth
#GenerationStewed,Or… #Nanaimo’sBuddingEntrepreneurs… #”TharsGoldInThemTharFlowerTops”…
[TimesColonist] – Medical marijuana grower Nanaimo’s Top Employer
“Tilray has made a massive investment in security. I know their current facility has been described as a bank vault inside a castle wrapped in a prison, kind of like the Premier’s office in Victoria – ya know?”
Pausing briefly to fondle his trademark maple burl wood bong, Sasha Angus, CEO of Nanaimo Economic Development Corp., exhaled with gusto and inveigled his credulous luncheon audience to thunderous applause, “I know from a community perspective we’re going to do everything we can to support them in their expansion.”
The Greater Nanaimo Chamber of Commerce promptly obliged their guest speaker by designating Tilray “Best Startup Company” in its 2015 business achievement awards.”…
http://www.timescolonist.com/news/local/medical-marijuana-grower-a-top-employer-in-nanaimo-1.1818070
(NoteToGT: I may have exercised some editorial liberties viz. the Sasha transcripts.)
QUOTE: (“boomer buyers of luxury homes tend to have incomes of about $300,000 to $500,000 annually.”)
Wow, where have I been living, under a rock?
I don’t know of any Boomers who make anywhere near that.
Fort McMurray MLS listing stats comparing current to 2 years ago Apr 9, 2013 vs Apr 10, 2015:
-Prices are down by about $40k, or ~ 7% from 2 years ago
-Total listings are also up 23.1% from 2 years ago
Sorry I don’t have April stats for last year, but I do for May 20, 2014 which is about the same as Apr ’13
#177 fancy_pants on 04.10.15 at 10:20 am
—————————————————
Interesting point, with boomers holding the bulk of wealth/assets, and Gen X/Y struggling to make ends meet and accumulating debt, higher rates are just going to DESTROY the economy.
Gen X/Y are the consumers, and we need to make it easier for them to consume, not harder. That means good jobs (full time jobs), low rates, and house prices that normalize.
“Please explain why Vancouver prices exceed Toronto prices given a smaller population and lower incomes.”
I’d suggest that the speculative environment in Vancouver historically has by far exceeded that in Toronto. Vancouver also is the administrative home, far more so than Toronto on a per capita basis, to the extremely out of favour precious metal mining sector. At some level, in Vancouver, people have bid up real estate either in refuge from severe losses in the precious metal miners, and/or in anticipation of extreme future gains in the precious metal miners which eventually will see demand being vested in Vancouver residential real estate.
The upside in downtown Toronto’s main raison d’etre, the banks, is somewhat muted in comparison. Although the banks do provide great income to their employees at the moment.
Land limitations are not meaningful in either place as density is pretty low.
Perhaps there are some differences in provincial banking regulations and/or regulatory policy that I’m not aware of as well. We know that Vancity Credit Union, one of the dominant credit unions in the lower mainland, is heavily into subprime lending and isn’t shy about promoting such publicly. Policy such as deferred property taxation for seniors with low interest rates can have some impact as well.
There may also be a cultural mix of Canadians in Vancouver that, compared to Toronto, implies a greater affinity for RE. But I haven’t seen any data on that, and you have to start making some really wild assumptions to even attempt to draw any hard conclusions from such.
“I don’t know of any Boomers who make anywhere near that.”
Really? You don’t use the services of a dentist, a doctor, or a surgeon? Most of them fall into that income category if they’re boomers.
I absolutely agree Garth, just wanted to put it out there that parents helping children isn’t a new phenom particular to well-off boomers and house-hungry millennials! parents would be much wiser to match quality balanced equity investments as suggested by a young poster!
” perhaps they want to pay it forward in turn to their own children”
What a nonsense argument if there ever was one. So mommy and daddy give junior a downpayment. Let’s say they’re extra generous and give 20% down. So $80k for an average property of $400k.
We know that Canadian RE is probably twice that of its long-term mean price.
So RE collapses. That 20% equity that was given becomes -30% equity. The gifted down-payment not only is destroyed, but also the finances of junior are destroyed as well. Extrication from negative equity is a long and arduous process that either requires a good job and a huge burden of extra payments (after all, with negative equity, lenders typically demand a greater interest rate to compensate for the default risk), or the declaration of personal bankruptcy.
See the problem here? The ‘gift’ of a downpayment, when houses are systemically overvalued by 100% or more, and are set to drop 50% or more, if not in nominal terms, then certainly in real terms, is like the folks buying the kid rope with which to hang themselves with financially.
The Canadian economy unexpectedly added 28,700 jobs in March, driven by a surge in part-time positions and gains in the retail and wholesale trade sector, data from Statistics Canada showed on Friday.”
Let me get this straight. Retail sales are DOWN and so retailers increased hiring? They love to make up numbers
#139 “BTW in our company anyone within the age of 58 and up got a package and were sent off. The company wants to get younger, more enthusiastic workers, not old geezers going to work just to punch in and out. And not wanting to learn new things, in a world that is ever changing.”
That was hilarious, thanks for the chuckle. Now for the other perspective.
Got a “package” at 55, (which I asked for a year earlier) now free:
No more performance Management “process” that has infected the corporate world (but bolstered the ranks of the cost item known as HR )
http://www.performancepreview.com/
Don’t have to watch 20 something peers taking 2 days performing a task that might take me an hour.
Don’t see the texting across the floor to another “early adopter” because talking is sooo yesterday.
Avoided the mandatory 2 computer screens, whilst checking the “smart phone” and sending poorly constructed emails cause hey, “old people can’t multi task”.
Enjoy your Lower salaries, diminished benefits Unrealistic workloads, constant restructuring and manufactured “crisis” to keep you eager beavers occupied
Witness the throw your peers under the bus mentality to be one of the few in the bell curve to get a meagre raise(see perf mgmt. above)
“learning new things in an ever changing world” Yes your power point presentation was killer but too wordy and didn’t make the Sr Mgmt slide deck, try harder .
When MY TURN came the poor beleaguered HR lady who had already whacked several unsuspecting, victims that AM was looking decidedly drained and listless. Her heart wasn’t really in by now (clearly some of the whackees were less than amenable to the “new direction” they were going)
After the obligatory 1 min script was done. I spy “the envelope” and exclaim! “You have just made me a millionaire! ” THE Look on browbeaten HR Lady and now Ex “leaders” faces? Priceless.They get to stay and babysit……………..
Eventually you will find out, in spite of what mommy said, you ain’t special. But you are cheap.
Youth. Wasted on the young……
“Please explain why Vancouver prices exceed Toronto prices given a smaller population and lower incomes.”
Pacific Ocean
#173 Smoking Man on 04.10.15 at 10:06 am
#153 Steve French on 04.10.15 at 7:50 am
ps: Smokey whats the book title?
“Call Me Smokey: Memoirs of a Dyslexic Working Class Gambler in the Era of Insanity”
……………………………………………………..
Called The Miss Adventures of Steve French.
You of all people I thought would figure out the easter egg
Obviously you have never heard of google translate..
:)
_____________________________________________
Smoking Man don’t use Easter eggs as it may appear too associative with the death of Jesus. You may loose 1/2 your audience. Do use red herrings though! It will make the book very complex.
Agatha Christie had the idea go with it!
http://www.repmag.ca/news/key-development-in-treb-tribunal-hearing-190178.aspx
http://www.macleans.ca/economy/realestateeconomy/the-vacant-truth-about-rental-condos/
What are those numbers? According to the Canada Mortgage and Housing Corp., the federal agency that insures lenders against mortgage losses while simultaneously serving as one of the main sources of real estate data in the country, the vacancy rate for condo rentals is just 1.3 per cent—about as close to zero as you can get.
As Berube points out, several things don’t make sense. After 20 years in the business she’s seen periods of ultra-tight vacancy rates during which scores of applicants would respond to listings. Nothing like that is happening now. A tight rental market should also lead to higher rents, but CMHC’s own rental market report from the fall of 2014 noted that rent collected from condo tenants declined 1.5 per cent from the previous year. She’s seen the same trend with her own clients, with rental units regularly fetching the same or less than they did five years ago. (In the end Berube rented that downtown unit after slashing the rent 10 per cent, to $1,500.) There’s also the fact a roughly one per cent vacancy rate is just an astonishingly, almost unbelievably low number. New York City, arguably the most brutal place to try to find a place to rent anywhere in the world, has a rental vacancy rate of 3.45 per cent. For higher-end units, it’s 7.3 per cent. Sorry, but Toronto isn’t New York, as much as people in Toronto like to think it is….
…..
Is the bank of mom and dad supporting Jr’s investment in condos too?
Doesn’t sound wise.
#194 Porsche on 04.10.15 at 11:38 am
“Please explain why Vancouver prices exceed Toronto prices given a smaller population and lower incomes.”
Pacific Ocean
…..
Really? It’s been here the whole time.
#4 Nodebt on 04.09.15 at 6:42 pm
First!!
**********************
Not even close!
I laughed so hard at this. I just love it when Garth tears a new orifice into cocky know-it-alls how think they’ve got him cornered. I’d be willing to bet “H” is a realturd.
If these clowns (I’m also looking at you, “bob”) had any decency they’d apologize, but the laughs alone are worth they’re uneducated drivels.
“The question thus has to be asked … has CIC created an immigrant investor program that no one is interested in?”
Why would anybody be interested in such program when it is less expensive, and there are better investment opportunities in the US?
Moreover, this government makes it harder on new immigrants on all fronts and there will be consequences down the line, especially when Obama (or the next US president) opens skill based immigration system in the US
For instance take foreign students. It used to be:
– in the US universities are better, but are expensive and path to Green Card/Citizenship is not guaranteed
– in Canada the universities were less good, but they were not as expensive, and the path for Canadian residency/eventual citizenship was practically guaranteed.
Now Canadian universities became much more expensive for foreign students. However they have nothing to show for it, as they didn’t advance in international ranking. On top of that, getting Canadian residency is no longer sure thing.
“Is the bank of mom and dad supporting Jr’s investment in condos too? ‘
Good post overall. There might be some issues with the overall ‘mix’ of units in the rental marketplace (after all, with RE ownership now at 70%, the pool of renters is somewhat less and is more confined to those in relative poverty). The other issue may very well be that of the hoarding of units — causing a low official vacancy rate, but no genuine shortage of supply.
“Moreover, this government makes it harder on new immigrants on all fronts and there will be consequences down the line, especially when Obama (or the next US president) opens skill based immigration system in the US”
Skills based immigration is alive and well in the USA, under the H-1B/L-1 visa systems. Its hard to imagine a USA with a more open immigration policy, in practice, than the one that already exists today. Which is so wide open and loose that basically much of the domestic workforce, particularly in the STEM fields (engineering, scientists, etc.), has been displaced from their jobs in favour of guest workers and immigrants. This is seen particularly acutely in the IT sector where top graduates of high-grade US universities can’t even get job interviews, while foreign workers have largely displaced domestics in the ranks of most US technology companies.
If anything, severely limiting immigration in both Canada and the USA might be the force to restore health to the labour market, and thus create RE demand.
#180 JL
Garth is right. The valuations are crap and the market is not as liquid as the propaganda would have you believe.
The kids getting in way over their heads on their parents dime better have an exit strategy or at least a provision to pay their parents back at the same time they’re making the mortgage payments.
Depends on each individual case of course but when the parents go in deep with a HELOC or a Reverse Mortgage to raise the funds for their kids in this market… well let’s just say the buck has to stop somewhere.
If the kids can’t compete with the Jones’s and they need to live here, then renting is the only option. Who ever said that they need to own their shelter?
The religion of real-estate and the mantra “prices going up will continue forever, because they have for the last 20 years” – is alive and well.
This blog is important. It crunches the numbers, and is full of realists. In this real-estate obsessed country – this blog is a refuge for the last remaining thinkers.
AHH … the Eagles. Saw them the last 2 times they were in Vancouver. Last time a bud bought the cheapest seats in the house. $65.00 plus the dreaded fees. We showed up early and took our seats. Shortly after an usher came over and said she had a few better seats that would not be used and asked if we wanted them. So we got some of the best seats in the house for the cheapest price.
Great show too … right up there with Roger Waters …
Vancouver and English Bay suffering from their first real threat to the lifestyle. One ship leaking just a bit of oil is causing a massive spill and clean-up.
Tanker traffic will increase 2x, 3x or even 4x into the Burrard Inlet? When I lived downtown, I could count maybe 6 or 7 ships on average about 20 years ago. Now when I visit, I’m counting 15 or more ships and soon even more with the pipeline.
The ships out in the bay have changed the views already. It’s not cool to see all these ships from every vantage point.
Million Dollar properties with views on hard core industrial shipping and potentially hard core environmental damages.
Yeah, it was nice while it lasted. Vancouver’s attraction is sinking fast now. It bothers me because I’m not used to it. Residents of Hongkong or Shanghai don’t care because they’re used to it. Residents of Beijing are escaping the massive pollution there which stands in no comparison to Vancouver of course. Don’t get me wrong. Hongkong and Shanghai are cool cities on their own. Good for business but I wouldn’t want to live there.
Vancouver used to be the Pearl of the Pacific.
Now this oil slick was the last argument why this city is way overrated and way too expensive. It’s cheaper to rent in Monaco and that says something.
#175 Kris on 04.10.15 at 10:16 am
In other words, “When hell freezes over..”
Just so you know Kris ,Hell froze over back when the HD Sportster got a 5 speed…..
So what’s a normal interest rate, Garth?
There’s a great lump of boomers. They control much of the country’s wealth, and their parents control the rest. Every year, almost all of them get a year older, and they dial back portfolio risk by tilting the allocation further towards fixed income. That’s a big grey wall of bond buyers.
I totally agree that buying a house at today’s rates on a 25 year amortization and a five year rate is risky. But calling for a rise in rates? Japan. The creditworthy (and grey) parts of Europe. And China’s one child policy, which drove up its saving rate, will lead to the same thing in ten years:
http://www.worldlifeexpectancy.com/china-population-pyramid
So demand will be soaked up by India, Indonesia and Nigeria?
#TheWeek’sBestPoliticalThinkPiece,Or… #WhyWe’reAllScrewed… #TheBestDemocraciesMoneyCanBuy… #PureOptics:21stCenturyRetailPolitics…
(Guardian) – The great unvetted public locked out as party leaders tour sanitised Britain
…”This election is being run as a pseudo-event. Back in the 1960s, the writer Daniel Boorstin defined a pseudo-event as one that would not happen if the cameras were not there. It’s almost as if he could foresee the day when journalists would travel to Somerset to watch George Osborne smile at a vacuum cleaner.”…
http://www.theguardian.com/politics/2015/apr/10/the-great-unvetted-public-locked-out-as-party-leaders-tour-sanitised-britain
“It launched a massive real estate market. ”
No, it didn’t. Ten seconds consideration is enough to realize that, save for the rare house collector, after buying their primary residence they were no longer a significant market force. Every house jump afterward was inventory neutral.
Ageism is the last socially acceptable bigotry, work that audience while it still plays.
Hmm. Ten seconds just told me that when you have the biggest cohort in history aging together and buying houses, it creates a massive market. As for ageism, Boomers are hilarious. So are moist Millennials. — Garth
#170 Daisy Mae on 04.10.15 at 10:02 am…
“…found the constant sunny weather boring…”
My take is that snow, fog and ice are boring, having spent almost 30 winters under the grey skies in the Okanagan.
I love sun and 24C average temps all winter, if I want to see snow (or ski) it’s only about 2.5 hrs north of Phoenix.
You can’t be serious saying you would rather winter in West Kelowna over California!?
#59 scars
Money given by parents to the kids is considered a gift, and there is no tax on it. There are rules and limits that apply.
Inheritance works differently. Anything not specially protected or exempted is considered to be sold at the time the estate is settled, triggering relevant taxes (such as capital gains). Money received by the kids, unless specially protected, is treated as income.
These can be very complex issues, and there are all kinds of nuances and exceptions. You most likely want to consult a tax lawyer.
#99 Shawn Allen
I don’t think so. I don’t even think it’s splitting hairs. The meaning is quite clear, assuming no grammar or punctuation mistakes were made.
“Now in their 50s and 60s, the boomer buyers of luxury homes tend to have incomes of about $300,000 to $500,000 annually.”
Ie, the boomers buying (luxury homes) have incomes of 300-500k.
How can you interpret that any other way? How do you read that as “all boomers” or “boomers in general” or “boomers on average”?
Garth is (hopefully) just using some poetic license and stirring the pot with color and flavor.
Garth;
Have you seen the Real Estate section of today’s Globe and Mail? There’s an article about a family of a man, woman, and 5 kids who are renting a 1000 square foot condo in overpriced Vancouver. Now the punch line, they have NO intention of buying a house. They see the economics of renting, and are quite content to stay put. They even said that if they got a million dollars they would sock it away rather than buy a house. In the midst of all that housing madness out there, it’s good to see some Vancouverites have common sense about housing. I wonder if they read this blog! Better yet, it’s good to see some long overdue common sense in the Real Estate section of The Globe, compared to some of the rubbish I’ve read there in the past.
#146 Vanecdotal
Not me. GT can we ditch this impersinator troll please, I think it’s about time.
“So demand will be soaked up by India, Indonesia and Nigeria?”
Sounds like you’re arguing for eventual higher rates, as the young populations aren’t likely to have the sort of resources, especially if burdened by high RE prices, to actually save. Remember that every dollar borrowed from a bank is actually someone else’s savings (or investment, in the case of the tiny sliver of bank equity that backs a loan!).
IMHO, there is no argument for housing to remain at prices permanently elevated over its cost of production, depreciated accordingly. Interest rates are always, over the long-term, cyclical. And what low interest rates giveth to the market, high rates definitely will taketh.
#212 devore — “Inheritance works differently. Anything not specially protected or exempted is considered to be sold at the time the estate is settled, triggering relevant taxes (such as capital gains). Money received by the kids, unless specially protected, is treated as income.”
Clarification is needed here. If the estate contained cash, probate fees would be payable on the amount (varies by province), otherwise no tax due by the estate or the beneficiaries. Assets other than cash would be deemed sold by the estate at death, with capital gains tax payable as usual. RRSPs deemed collapsed and taxed as income, TFSAs collapsed with no tax due. Spousal rollovers available for both of those.
As far as I understand.
I really need to research details about how long an estate can exist before liquidating and paying out and the tax ramifications thereof.
Anyone got any good pointers?
P.S. For the Legal beagle blog dogs: Apparently the least fun you can have IN THE ENTIRE WORLD is when you’re the executor of the estate of someone who’s died while THEY were the executor of an estate.
Thinking of ditching my company RRSP match program.
They match 5% of salary (4000), so 8k total, but its gotta be put in Manulife crappy funds.
Thinking of just saving the 4000, and doing TFSA with 60/40 ETF split. If you run the numbers long term, the 4000k catches up due to MER fees being 1.5 less each year, etc.
Am I nuts?
HFT, Canadian style:
The ask was $698.98. The dame talked the talk, but she didn’t walk the walk. Something seemed fishy about the way her digits lined up. Then the penny dropped — it was a clue! This dame wasn’t a computer at all, but a flesh-and-blood damsel in… no, the panicky dames always put in a market order. This one was smart. Too smart? I played it cool, bidding $697.97. Crickets, for way longer than it would take a smart dame like her to do the math. Just as I was about to help her out with her multiplication, everything went black.
Victoria Real Estate Update “where are you.”
Just change your words and come on back.
Kris #175,
“Rates are going nowhere for the foreseeable future.”
“The denial of history, based on the last six years, is amusing. — Garth”
———————————————-
Assumption: Rates rise when, upward pressure on wages begins.
A good recession, like the metaphorical biblical flood, washes away the sins of our past (excess supply of services). Trouble is the systems done everything in it’s power to avoid a flood, including something’s, it should not have done.
So here we are, bumbling along with debt saturation or debt fear and few significant growth opportunities. We need a driver: Small scale cold fusion, large scale war, guinea pig flu, ect.
A 70 year debt super cycle has peeked, but no one wants to accept that the endless consumption model, is no longer viable. I truly believe we are in uncharted waters.
Happy Friday
With housing prices so high and interest rates so low, why are not more baby boomers selling now to either downsize or rent ??
“They match 5% of salary (4000), so 8k total, but its gotta be put in Manulife crappy funds.”
Why not take the free money, put it in a Manulife “crappy” money market fund, and invest in some deep-in-the-money call options with a similar notional value in your self-directed accounts (ie: if you have $10000 to invest, you buy 4 $25 XIU calls for a buck or two a piece that expire a year or two from now in your self-directed account, and you keep the Manulife group RRSP account in a money fund).
You’ll have similar notional exposure to whatever balanced portfolio is appropriate for your risk tolerance, and you will still get the match.
When you eventually leave the employer, you should be able to move the account to a self-directed brokerage as a locked-in RRSP, and eventually convert it to the asset allocation of your choice directly without using the call options.
Just a few thoughts… Not advice!
#217 Ralph Cramdown on 04.10.15 at 3:02 pm
P.S. For the Legal beagle blog dogs: Apparently the least fun you can have IN THE ENTIRE WORLD is when you’re the executor of the estate of someone who’s died while THEY were the executor of an estate.
——————————————————
Double screwed.
“A 70 year debt super cycle has peeked, but no one wants to accept that the endless consumption model, is no longer viable. I truly believe we are in uncharted waters.”
Not really. The 1930s deflation is a good model for what’s coming down the pipe. Take a look at the sort of investments that worked back then, and invest accordingly. If you accept the premise that the debt cycle has peaked, then politicians and the market will be likely to do everything possible to destroy debt — and destroying debt is fundamentally excellent for the asset class that is most inversely correlated to debt.
Curious that you said “70 year super cycle”. Because that basically puts us back into the 1930s. Actually I’m a believer in the theory that no single generation will ever see the same economic conditions repeat exactly. Nobody is talking about deflation, high precious metals prices, and consumption collapse because nobody alive (not in diapers in a nursing home) has actually experienced such. But just remember, every asset class eventually has its day in the sun!
The 1930s deflation scenario is not even remotely likely to occur. — Garth
#214 – Doug in London
Although I didn’t read the article, and generally I’m on board with the idea of what Garth says….
I think a family of 7 living in 1000 square feet is an absolute gong show. I’ve done it with a family of 4, and that was just right.
You shouldn’t be that extreme – it’s OK to rent a 2000 square foot home…. and if Vancouver rents don’t allow that, then maybe Vancouver isn’t the place for you and your family to be.
“Over 56,000 new part- time jobs created. Garth
The comment was meant to point out that the MSM and Government message that the masses are hearing continues unabated. For the average indiscriminate headline reader, all is good, might as well buy a house.”
Elections are on the way …
Lovely 4 mill beater house anyone ????????????????
Debt cycle has peaked?
Blacksheep says:
A 70 year debt super cycle has peeked, but no one wants to accept that the endless consumption model, is no longer viable. I truly believe we are in uncharted waters.
******************************************
These are complicated matters. Debt is not inherently bad.
Debt is an inherent feature of a financial and trading economy, one with specialization of labour. Debt as a percent of GDP has likely been growing for thousands of years as specialization of labour increases and as more and more transactions become financial based.
(We used to grow our own food now its a financial transaction. We used to have the grandmother look after the kids now its daycare, a financial transaction.)
All the while the standard of living and the ability to consume has increased exponentially.
This process is NOT about to end.
I have made money almost every year in the markets since 1989. I never pay any attention to anything with the word cycle in it. Yes there are cycles but they are unpredictable. I pay no attention to forecasts or talk of bull or bear markets. All of that is useless garbage.
If stocks (or houses) get too expensive sell some, but do it because they are expensive, not because of cycles (which you imagine you can predict) or sun spots or any such nonsense.
Another win for Canada when comparing against the US…
Return on social spending:
“So the U.S. actually spends a lot on social benefits – and, the paper goes on to argue, we aren’t getting that much of a return on our investment. ”
http://www.washingtonpost.com/blogs/wonkblog/wp/2015/04/09/how-the-u-s-spends-more-helping-its-citizens-than-other-rich-countries-but-gets-way-less/
the scarecrows said rates will rise in 2012….and nothing yet…. but the opposite
what guarantees we have mortgages 5y fixed wont be offered at 1.99% in 2018 and house prices another 20% higher by them
it’s all a casino. totalitatian govt. at horizon, is history is of any use, lol
I wonder if listings will start surging like they did in 2008/2009…with 20,000 listings exploded.
Anyways, this Van maket is soooo manipulated.
“Skills based immigration is alive and well in the USA, under the H-1B/L-1 visa systems. Its hard to imagine a USA with a more open immigration policy, in practice, than the one that already exists today. Which is so wide open and loose that basically much of the domestic workforce, particularly in the STEM fields (engineering, scientists, etc.), has been displaced from their jobs in favour of guest workers and immigrants. This is seen particularly acutely in the IT sector where top graduates of high-grade US universities can’t even get job interviews, while foreign workers have largely displaced domestics in the ranks of most US technology companies.”
You are correct, of course, about the current situation. But Obama proposed a much broader immigration reform which not only increase the number of H1 visas, but also create a point based system like in Canada/Australia.
The main problem was that republicans were opposing the legalization of undocumented immigrants. Sooner or later the issues will be resolved.
“If anything, severely limiting immigration in both Canada and the USA might be the force to restore health to the labour market, and thus create RE demand.”
Canada and the US are different from demographic point of view
Limit the immigration to Canada and we will have your Japan style deflation for the next couple of decades
#157 Julia: you are very likely correct in thinking that all those people you see whooping it up with expensive renos, new vehicles, luxury vacations & endless restaurant meals are living on credit. Unless you just happen to be surrounded by big time lottery winners or a whole whack of people whose parents have just died & left them a huge inheritance or live in CEO central for your end of the world.
Most likely scenario is that they are all living on credit & if they lose their income stream they will lose the lot. Saw that in Alberta in the early 80’s – like you, wondered how the heck all these people were managing to afford the lifestyle. Found out they were merely servicing the debt & once the party stopped, the shiny toys all had to be returned to the true owners (the banks).
“Thinking of ditching my company RRSP match program.
They match 5% of salary (4000), so 8k total, but its gotta be put in Manulife crappy funds.
Thinking of just saving the 4000, and doing TFSA with 60/40 ETF split. If you run the numbers long term, the 4000k catches up due to MER fees being 1.5 less each year, etc.
Am I nuts?”
Manulife charge 1.5% MER?
I would check if they have a lower cost index fund (not actively managed).
Also would you be able to transfer their funds to self managed RRSP down the line?
If so it might be better to take the match and the high MER for a few years, in order to transfer it or even withdraw it later …
#231 paul -the scarecrows said rates will rise in 2012….adn nothing yet on 04.10.15 at 4:46 pm
the scarecrows said rates will rise in 2012….and nothing yet…. but the opposite
what guarantees we have mortgages 5y fixed wont be offered at 1.99% in 2018 and house prices another 20% higher by them
it’s all a casino. totalitatian govt. at horizon, is history is of any use, lol
*********************************************
Dude…try 1.49% fiver and 0.99% variable and 30% more expensive houses by 2018.
Good grief.
@ Nerf Herder, post #226:
You’re right, a family of 7 in 1000 square feet is extreme, not everyone would find that to their liking. They keep it manageable (in their view) by not buying too much junk to clutter up their small living space.
Coast guard says 80% oil spill contained….Bull S….
Damage control In full swing reassuring property owners……PATHETIC !!!!!
In 2009, when shite hit the fan, bought some infrastructure cos. on leverage. It worked out but just because of low rates, not because of infrastructure spending which is so needed. Shame on western govn’t for their lack of real fiscal policy (other than tax cuts for the rich).
Incredible…..
Tenants just dropped off the rent, all used to work as bike courriers in cowtown, now unemployed!?!?no courrier to deliver at all in cowtown, and these guys are the hard core type, no breaks, one gear.
asking to renegotiate the terms of their lease.
Things are changing quickly down here.
@#139 Juno
“BTW in our company anyone within the age of 58 and up got a package and were sent off. The company wants to get younger, more enthusiastic workers, not old geezers going to work just to punch in and out. And not wanting to learn new things, in a world that is ever changing…..”
++++++++++++++++++++++++++++++++++++
Younger more enthusiastic “workers”!
Bwahahahahahahahahahahaha.
If by “enthusiasm” your mean texting, surfing the net, personal phones calls ALL during work hours. Then Yup!
You little “emperors” are certainly enthusiastic.
Oh, and when you perform the most basic of tasks and expect a “Great job!” pat on the back…….dont be surprised if it isnt forth coming.
Your supervisor is probably busy completing endless soul sucking reports to a much younger less experienced upper management type that just graduated from 4 years of MBA type drivel that has no basis in the real world.
I particularly loved one former president of the company who was a) barely 30, b) single, c)a workaholic, d)socially inept.
He would issue directives from on high that totally demoralized the masses of workers for their unrealistic expectations. All while he would tweet his “choices” of favourite business self help books that all the plebes would enjoy reading on their spare time. (Like single moms have time for anything ).
Anywho he finally burned out.
But not before he was almost killed by an employee(that was soon to be terminated) that jumped from the roof of the building he was walking into.
He quit very soon after that.
My impression of the “enthusiatic younger workers”
Self absorbed, narcissistic, navel gazing sloths that will soon grow old and be replaced by real workers from asia.
Time ISNT on your side. :)