Today, as I sat to write this pathetic post about the sea of stupidity we sail upon, Randolph emailed me. “I am ready to overhaul my finances,” he says, “and I’m not sure where to start. Can you help me?”
Randy’s 30, has an unemployed, job-seeking wife with a Masters degree, makes $155,000 and has $20,000 in student debt, a $350,000 mortgage on a 5%-down house and a grand total of $11,800 in liquid assets. In other words, his net worth is about zero.
“I would like to thank you for starting your blog,” he sucks up. “It has been immensely helpful in re-orienting how I view my finances.”
Obviously not helpful enough. Why this couple would want to begin their lives together with almost four hundred thousand in debt, no mobility, property taxes and financial stress is beyond me. But, actually, I do understand – it’s a disease. And here are two more examples of why I am seriously considering dumping this blog and joining the priesthood. Except for celibacy. And the religious part.
“Oh, sweet Jesus,” (just to continue this theme) Mike texted me today. “This just popped up on my Facebook.”
Flip houses in Vancouver for a profit? Without using your own money? What are these people smoking?
Actually Tarek and Christina are reality TV stars, which gives them demi-god status and instant creds with the people who move their lips as they watch Closed Captioning. They appear on an HGTV series called ‘Flip or Flop’ (I will resist). They’re also realtors, but not from the Lower Mainland – where they’re hosting a series of special, limited-seating, flipology seminars this week – but Orange County, in California.
According to their web-approved bio, Tarek and Christina are “the top choice when looking to sell a home in Orange County at a price sellers will truly profit from. With California real estate, design, and construction backgrounds, Tarek and Christina are able to inspect every aspect of your home and advise you on minor changes that may be needed to ensure your luxury North Orange County home stands out above the competition.”
In reality the El Moussas, both 31, crashed and burned in the California real estate bust, crushed by a business failure, a $6,000-per-month mortgage and fat payments on their flash cars. They ended up walking away from their real estate, renting a $700-a-month apartment, then started flipping houses for a living. The first one cost $115,000. In Vancouver that buys time share in a bus shelter.
So there you go. Perfectly appropriate advice-givers for a market where the average detached house now costs $1.4 million, where real estate is peaking, not crashing, and crapola, unrenovated 1970s-era Vancouver Specials are going for seven figures. “Tarek and Christina built their successful house flipping business by building upon a few simple real estate strategies,” their promo says. “Now, Tarek and Christina have turned these strategies into an educational program that has helped people, just like you, start their own real estate business. The Success Path team is coming to present a live training (free to the first 100 to signup). Reserve your free seats now before they are gone.”
Real estate profits flipping houses in North America’s most expensive market, without requiring any money. When you see this, you know it’s over.
But wait, there’s more. Another come-to-Jesus moment, this time just south of Eglinton Avenue in mid-town Toronto. Local realtor Fraser Beach is taking the distasteful strategy of creating a blind auction for a house, and going big – turning it into a spectator sport and competition.
This is his mass email:
One of the most popular games in town these days is watching the real estate market and predicting what a particular piece of real estate might sell for. I’ve heard there are even office pools devoted to such predictions. So we’re joining in. I’ve just listed a desirable home in a demand Toronto neighbourhood. The Seller is receiving offers next Saturday. So our challenge for you is to predict what this property will sell for in the comment area here. We will announce the selling price and the winner of this pseudo contest when the sale of the property is firm.
Seriously. And boatloads of people are piling on, making their predictions for the auction price of this old two-bedroom bungalow on a 30-foot lot. The consensus seems to be well over $1 million which, of course, is why he priced is at $925,000. You can almost smell the coming breathless Toronto Star story, “Bidders boost beauty bung to $1.3 million. Buy now or Perish.”
Well, here is Mr. Beach’s fetching portrayal of his cute little house.
Meanwhile people actually going to see it will encounter a different reality – a property running along the side of a hulking, low-rent apartment building, one street south of one of Toronto’s busier arterial roads. That’s the house on the far right of the street view below:
Of course, it has granite counters, a marble backsplash, heated floors and a steam shower. Soon it will have a greater fool. Now, let us pray.
212 comments ↓
My TFSA funding should be arriving very soon. Time for CPD.TO holding these levels only.
I recently had a health scare. It can happen to any one of us at any time. I’m thankful to be liquid. If I needed to quit my job and move or pay for treatment, I could. Thankfully, I don’t think it will come to that today but being liquid reduces one major potential source of stress in the worst of times.
I don’t get it — how do you get to make $155k at the age of 30, and not have any sense whatsoever when it comes to money?
Especially when we have so many people who are responsible and both highly intelligent with money and other matters, who can’t find jobs these days.
Garth et al:
The owner of the home has installed a flower bed, directly up against the brick. The brick will absorb water and transfer to the wood behind…mold mildew and most important, potential structural problems due to rotting sil plates, etc. The home needs to be checked by qualified home inspector…(ie one that charges more than $199 to write a crappy report). Good luck with this one.
“When rates rise, one of the first things to go is the stock market and its associated basket of derivatives. “
The (Canadian) stock market has traditionally performed quite well in a rising rate environment. Why? The TSX index is packed full of the sorts of companies that respond well to higher inflation (ie: mining, O&G, etc.). And rates typically rise on expectation of higher future inflation.
So not a reason to be overly worried. The ownership base for “the stock market” in Canada is actually pretty solid these days, with not that many people buying stocks on credit. P/E multiples and P/B are below historic norms. Dividend yields as a ratio of the 10-year GoC bond have almost never been as high as they are today.
Not real estate related, but the “Freddie Gray riots” in Baltimore are consuming many people’s eyes & ears right now, Wow.
In Speedway, a suburb of Indianapolis, Indiana that house would go for $79,000 +\-. You guys will lose your butt one day soon just like we did. I want to feel sorry for you but……..
Sadly, it is the more reasonable people who are just now coming to the altar of house flipping.
These late adopters will be crushed the worst.
I spoke to some smart, good friends during Christmas and gulped in disbelief when they told me they had just made the plunge into house flipping, buying up two beater houses in Toronto at over 700K each, and deciding to do the renos themselves over a year to “save money”. This all involved three siblings and two parental couples to boot, just to guarantee a conflict-free outcome, of course.
Let us agree on one thing – real-estate prices in TO and YVR are bloated to grotesque levels.
They will correct but when and how is anyones’ guess.
My feelings are that only a meaningful rise in interest rates will begin the process.
Unemployment and a poor economy does nothing to correct this juggernaut as we are seeing in Calgary where 10’s or thousands of really well paying jobs have been lost but prices are as high as ever.
Bottom line – people HATE to lose money on their house and will sell their grampa’s war medals before taking a loss.
Only when people are forced to sell will we see a correction.
And only a change in the cost of money (interest rates) will force people into selling.
And the way the world economy is set right now there is little chance of a meaningful increase in interest rates.
So keep renting and stay miles away from real estate – it will be the best investment you never made.
TFSA pumped (already had one as index funds for several years, now a second “real” one with ETFs).
Happiness increased, even if value down on day 1 on 4 out of 4. Expecting them to bounce around, with no fear. Though I may still not be able to retire until I am 80, I am confident it will be a better funded retirement.
Thank Garth for encouraging this sort of behaviour.
“I am seriously considering dumping this blog and joining the priesthood. Except for celibacy. And the religious part.” – HonGT
#TrustMe… #ItCanBeQuiteGrueling… #PiesJesuDomine… #DonaEisRequiem
https://youtu.be/e4q6eaLn2mY
#OnTheOtherHand… #SmitingThineEnemies… #WithNoveltyMunitions*… #CanBeQuiteEntertaining
https://youtu.be/ashgP4YMdJw
[NoteToGT: *Always read the manual first. Seriously.]
Breathless alliteration.
Big Beta Baboons Bullishly Buying Blocks of Dollarama.
#4 miketheengineer
The home needs to be checked by qualified home inspector…
—————-
Hey Mike – how much you want to bet that with all the competition to buy the shack winning bid will not require an inspection.
Multiple offers must make it real easy for sellers to hide problems when they know they are likely to get a least one good offer with no inspection clause.
But get a load of Christina’s bikini pics!!
Memory’s Of the Legendary
Tom Vu.
https://youtu.be/hnda41lj6go
Your comment is awaiting moderation.
$625,000 old and small house. I think 925000 asking price is overvalued by 300k.
In case they don’t post my comment in their blog, and what I said I mean it. Lala is a player a little over 600,000 cash money forget the mortgage. They won’t give it me anyway, lala don’t like paying taxes, pls Mr.Turner don’t reveal my identity to CRA. Smoking Guy I can teach you how to write, but I have to charge.
#3 Mark on 04.27.15 at 7:02 pm
Because there is no correlation between one’s worth on the job market and one’s money sense. Remember all those money makeover stories about doctors living beyond their means?
The only 30 year olds I know only seem to show up on this blog. I wonder why that is?
Hahaha look at the second picture.
And you’re worried about a flower bed?
If we weren’t already at the RE-tips-from-the-shoe-shine-boy phase, we would be now. Good grief!
It shouldn’t be so that you can pay off a house in 10 or 15 years. That would be just too easy.
So prices have adjusted so that now it takes 25-30+ years of mortgage payments at 2.2% with a dual income.
Gotta keep the rats running the maze.
Meanwhile the future unfolds…
Rise of the New Black Radicals
http://www.truthdig.com/report/item/rise_of_the_new_black_radicals_20150426
Baltimore Burns: State Of Emergency Declared, National Guard Activated As Mob Attacks Cops, Loots & Torches Stores – Live Webcast
http://www.zerohedge.com/node/505587
unsustainable means just that.
Opinion: How this debt-addicted world could go the way of the Mayans
http://www.marketwatch.com/story/how-this-debt-addicted-world-could-go-the-way-of-the-mayans-2015-04-27/print
Especially when we have so many people who are responsible and both highly intelligent with money and other matters, who can’t find jobs these days.
They can’t be THAT ‘intelligent’ if they can’t find a job…
I heard ads on the radio for these seminars. Just more confirmation that 604 RE has peaked.
Thanks for eluding to the glorious background of these two “flip flop” failures.
The guy in the picture probably told his travel companion that he’s got the keys to a gold mine in Canada.
I don’t get it — how do you get to make $155k at the age of 30, and not have any sense whatsoever when it comes to money?
I’d also add to this in which market can a 30 year old (or anyone for that matter) gross $155k and buy a SFH for ~$400k?
The flipper thing really is annoying. I see it in the sidebar on CP24 all the time GUARANTEED PROFIT FLIPPING HOUSES. Seriously how can they can away with this shit?
The MSM has taken shilling to new heights of late. As Garth alluded we all know Susan Pigg is Queen of the Shills, but even Garry Marr over at the NP has a pro-RE undercurrent to his reporting these days. The last couple of weeks the Financial Post’s Family Finance column has recommended RE as an investment even though it makes no sense whatsoever and the entire recommendation up until the final paragraph suggests anything but RE.
The winner for me though was 680 News a couple of Saturdays ago as I was stuck going nowhere fast on the QEW. Mike Eppel promised to inform us about whether condos are still a good investment in this day and age. The report opened with a two minute Brad Lamb diatribe about how things are peachy. I was waiting for the other side of the debate (someone like Garth, perhaps) – but nope, that was it. The “report” was nothing but Lamb telling us things are awesome.
There’s a religion for that, Garth.
https://www.youtube.com/watch?v=Qt9MP70ODNw
In Speedway, a suburb of Indianapolis, Indiana that house would go for $79,000 +\-.
Plus you could walk to IMS which is awesome for the likes of me.
Hell, you’d make a good few dollars renting out your driveway/garden for parking for the Memorial Day weekend.
Has Apple’s share buyback replaced the Fed’s QE?
Doing Very Well for 30 Years Old
Randy’s 30, has an unemployed, job-seeking wife with a Masters degree, makes $155,000 and has $20,000 in student debt, a $350,000 mortgage on a 5%-down house and a grand total of $11,800 in liquid assets. In other words, his net worth is about zero.
***************************************
Congratulations Randy, you are doing very well indeed.
Pay no attention to the comments here (except, of course, maybe mine)
Some commenters will tell you what they WOULD have had at 30 had they your income. They may not tell you what they DID have.
But it matters not what they would have done nor what they did do. It’s easy to see that you are doing well. Your future is bright.
You have been criticized here even though your mortgage is well within the (made up) three times income rule often espoused here.
Given the comments here, consider seeking the exit door.
“They can’t be THAT ‘intelligent’ if they can’t find a job… “
Oh to the contrary, most employers out there don’t want to hire people who are too smart or whom are ‘overqualified’. Seen this happen to a lot of friends of mine who went through professional degree programs or programs for which the focus was quite narrow. With the labour glut we have these days, there’s no reason for employers to spend a lot of time considering transferrable skillsets. Labour market flexibility and mobility has suffered greatly. Its a problem that is only going to be made worse by a continuation of housing price declines and negative equity.
Dear friends, today we lay to rest the body of RE. Let us pray to our benevolent dictator, the great CHMC to preserve our interest rates, strengthen our market, and deliver us, C.O.D.
Retirement awaiteth the wrinkled Boomers until 2024. Let us pray to the Greater Fools until then. Here endeth the Bullshit.
If you believe this prayer call your Banker, he’s there to help himself. Gawd bless!
“It shouldn’t be so that you can pay off a house in 10 or 15 years. That would be just too easy. “
Really? Well if the 90s repeat themselves, paying a house off in 10 years should be easy in the future. Simply use your down-payment funds to buy the stock market, and a decade later, voila, enough in your account to buy the house outright in cash.
But seriously, 10-15 years should be the long-term norm for paying off a house given that houses typically cost 3 man years to construct, and it only being reasonable to devote 1/3rd of one’s income to housing. Anything above a 10-year payback period, IMHO, is either enriching the lenders, or is irresponsible personal behaviour as we see in spades over the past number of years with people treating their houses like “ATMs” with HELOCs.
I took a bit of a spring vacation and visited people in Vancouver and Victoria. There were a number of real estate for-sale signs displayed, a lot of sold signs too.
My question was “who is doing the buyig”?. the response by the locals was, “there is a lot of rich foreign money and laundered drug money coming to Canada buying real esgtate because of the global currency battles”.
it appears that everyone is expecting a upward trend in price for real estate. There is no shortage of money.
#155 Shawn Allen on 04.27.15 at 3:38 pm
Addicted to this Blog?
Mark do you think perhaps you are addicted to this blog. Just wondering
Nothing else goin on so I guess this is better than thinking about being underemployed, not having enough $ and poor economic prospects.
This house will be a teardown, who cares about finishes or inspection.
53 Westover Hill Rd. It looks like the houses in the neighbourhood where I grew up. Built in 1950, original price $10,000. In 1955 the husband planted a cute little spruce tree.
Final selling price: the way I understand it, if I have $50,000 I can bid up to $999,999 and get CMHC insurance, the deal goes through and I have a $949,999 mortgage but if I bid $1 million then CMHC will not insure the mortgage and the bank wants $200,000. How bizarre! CMHC needs to change its rules so that between $900,000 and $999,999 a 10% down payment is required.
“Nothing else goin on so I guess this is better than thinking about being underemployed, not having enough $ and poor economic prospects. ”
Weird that you mention that because my after-tax income is comparable to that the subject of today’s blog post, heavily derived through investment. And I’m really not much older. So instead of focussing on cutting down others, why don’t you focus on the debate at hand?
from the night before on TSFAs
Yes, this is starting to be serious money. If you max out today, put in the twenty grand for ten years and earn an investment return of 7%, a decade from now you’ll have $437,635, of which $155,635 is tax-free growth.
not sure how the 437,635 was reached, my calc shows 335,000
“CMHC needs to change its rules so that between $900,000 and $999,999 a 10% down payment is required.”
Why not just get the CMHC out of the subprime mortgage insurance business altogether and allow the free market to allocate capital where it best goes. Instead of this nonsense where the government effectively runs a mortgage credit price-fixing scheme under the guise of ‘insurance’ to the benefit of the RE and banking elite of Canada?
#26 Ralph Cramdown on 04.27.15 at 7:53 pm
There’s a religion for everyone Ralph.
Slavoj Žižek: Don’t Act. Just Think.
https://www.youtube.com/watch?v=IgR6uaVqWsQ
The Religion of Progress
http://thearchdruidreport.blogspot.ca/2013/04/the-religion-of-progress.html
Science: the religion that must not be questioned
http://www.theguardian.com/science/occams-corner/2013/sep/19/science-religion-not-be-questioned
Garth,
Randy does not own 30.
45 North
CMHC needs to change its rules so that between $900,000 and $999,999 a 10% down payment is required.
——————
No politician is going to stop this ride in an election year.
And after the election whoever is running things will be real careful not to upset the apple cart by naming changes to CMHC.
Too much at stake given housing’s contribution to the economy and how “up to the eyeballs” in mortgage debt a lot of people are.
So never expect the politicians to do anything responsible regarding the CMHC.
Hey, let’s all suck up to Garth today. Let’s call it the Great Garth Suckup.
I’ll get us started.
Days like today make me feel like Garth is an aspiring comedian, taking great pleasure at making us laugh. Except his hair is too good for comedy.
Garth, I don’t think I have ever heard you give your opinion as to why our Conservative government has allowed this housing madness to happen. Stephen Harper has a Masters degree in economics. It doesn’t take a Masters degree in economics to realize that when you have a generation buying houses at absolutely absurd levels while interest rates are at equally absurd in the other direction levels that you are setting up what will be the largest, most deeply in debt generation to ever live in this country. This is being done all at the hands of a Government organization the CMHC.
So I ask, why or how could a man who was educated and employed in the field of economics allow this all to happen under his watch? Is it purely to pump up the economic numbers to make himself look good? Is it purely to pump up the economic numbers to make his party look good? Is he just so delusional he doesn’t grasp what has happened under his watch?
This could have been reigned in years ago. It has all transpired thanks to the CMHC. I wouldn’t even blame cheap interest rates because I am quite confident that banks would not be lending the amounts they are lending without the CMHC insurance covering their @sses.
I would love to see you do a Blog post on your thoughts as to what is possessing this government to allow these crazy amounts of mortgage debt to basically enslave an entire generation. What is going to happen to this country when a few years down the road an entire generation has no money to pump into our economy because they will all be beyond house poor?
http://www.businessinsider.com/afp-growth-pause-greek-crisis-could-keep-fed-mum-on-rate-rise-2015-4
No June after all, then no September, then no 2015. Wait for it.
Dear lala,
Please forgive us for all the stress caused by our auditors. We couldn’t catch you, you outsmarted us. That’s why we are offering you to be the manager of reassessment team. Previous manager didn’t know how to fill out the paperwork, he was dyslexic so we fired him. We would like to use your expertise on catching Zoros like you and filling the gap we have with our budget. Please accept this one time offer.
Yours Truly
Canaduhhh Revenu Gynecology
#22 Godth on 04.27.15 at 7:47 pm
……
Baltimore.
You got to call a spade a spade, defiantly serious racism in the good old USA. If your Black and you live in the USA, your screwed.
You treat someone like a criminal from a young age for no reason at all, other that false fears and ignorance, they eventually become what you treat them like. . It feeds off itself. Viscous cycle.
Even the President is currently dealing with it in a off the cuff way.
It’s something about the USA, my cousin moved there when he was about 15, his best friend up here was black at the time.
He’s now pushing 60 , rasist as hell against blacks.
You defend them in anyway, you start losing white friends. It’s a social cancer of some kind.
Off course they’re going to loot and burn shit. You get treaded like a dog your whole life. What do you expect.
Dr Smoking Man PhD Herdonomics.
Luv the pic!
Is it a feminist trying to prove that being a man is easy?
Hey Garth, here is another one for you. I just logged into my Yahoo Mail account 2 minutes ago and this banner ad was flashing. I guess all of the reality TV show house flipping rats are heading to Canada, the land of flipping opportunity.
http://findandflipevent.com/dtm/index-banner.asp?contact0state=ON&clickid=a4728a8c-3ded-e411-93f7-a0369f1303c6
Say, Garth, how was your weekend?
Guess what else happened, while Smoking Man spread out shirtless on his couch, slurping Cheetos through the gap in his yellowed teeth and pulling lint out of his belly button with a Swiffer, all the while hoping to get his first glimpse of his boy parts in over a decade?
Here’s what:
Mark Carney aced the London marathon in 3 hrs 31 minutes, scoring in the top 25% of all runners, with media and babes all over Europe clamouring for a chance to get close to him, comparing him to George Clooney, only better.
And what did YOU do on the weekend, Garth?
(….let’s hope it didn’t involve thirsty underwear……)
GARTH: “I am seriously considering dumping this blog and joining the priesthood. Except for celibacy. And the religious part.”
********************
LOL Love it! ;-)
#33 pinstripe on 04.27.15 at 8:09 pm
My question was “who is doing the buyig”?. the response by the locals was, “there is a lot of rich foreign money and laundered drug money coming to Canada buying real esgtate because of the global currency battles”. – See more at: http://www.greaterfool.ca/2015/04/27/save-us/#comment-369278
———————————
While it may be true that there are some foreign investors in any market, people have an uncanny ability to focus on what they believe to be the trend and ignore the rest which they perceive as noise.
For instance, in 2013, there were a few (2 or 3) widely advertised Teslas that caught fire. I must have seen each Tesla fire covered by at least 5 different media outlets each time. Going by those reports, Teslas were obviously very prone to catching fire… or so you’d be lead to believe. Out of all the news reports I’ve seen, only one mentioned that “regular” car fire rank in the tens of thousands a year in the US alone, yet one Tesla bursting into flames after being involved in an accident somewhere in Europe and another one catching fire after a frontal collision (accidents from which all occupants emerged without any major injuries I might add) these were being widely reported in the US and Canada for some reason.
In summary, I don’t doubt that some foreign money may be involved in Vancouver (some surely comes from illegal sources as it always tends to) I just have a hard time believing that to be the main driver as Garth said time and again. I just haven’t seen any actual statistics confirming this (other than realtors and “neighbors” which often times operate on hearsay).
I think people in Calgary are delusional, you can check for yourself on the crea site statistics that the pricez are moving downwards, slowly is true because the Employment Insurance has just started. Wait another 6 months. Even the 0.25% drop in interest rate will be priced in soon in Vancouver and Toronto…
Ritchie Bros auction houses too…
https://www.rbauction.com/heavy-equipment-auctions/real-estate/lethbridge-ab-2015103?utm_campaign=Saskatoon-GetkateRealEstate-2015103&utm_medium=social-paid&utm_source=facebook.com
#43 Smoking Man
Indeed.
#40 Godth — Re: Slavoj Žižek
I enjoyed the earlier link to his lecture on cinema. Thanks.
There is no salvation, and prayers will be left unanswered. What must happen is math, and no water-walker is going to change debt into cash. No one will ask how much EI you want depending on your total debt, and then give you twice that. The welfare will not be calculated based on your n-th mortgage and car loans. No one will change the minus sign into the plus sign simply cause there’s so much debt they don’t want an implosion, nor will anyone print uncovered money to give you, never asking for the money back even with the smallest cherry on top. There will be no wheelbarrows of cash in the foreseeable future. Count on it.
I’ve got it! Big money to be made flipping tulip bulbs, don’t want to be left behind.
GARTH: “Of course, it has granite counters, a marble backsplash, heated floors and a steam shower. Soon it will have a greater fool. Now, let us pray.”
*****************
(groan….)
I’ve got it! Big money to be made flipping tulip bulbs.
Don’t want to miss out on that King Alfred growth.
@Boomer – WI on 04.27.15 at 1:13 pm
#114 Nagraj
You want to see crooks in high places? Try looking at who ran, and who still runs American Banks. These fools brought you 2008, none ever prosecuted, sure a few share holders in the banks paid some fines.
Our prosecutors couldn’t find a control fraud if their lives depended on it, especially when the elected guy in charge was mainly funded by banking interests. We are not done with bank fraud yet…stay tuned.
&&&&&&&&&&
It was ever thus
https://www.lewrockwell.com/2015/04/tyler-durden/hitlers-bankers-and-industrialists/
Also of interest to those enamoured with Germany’s efficiency and success in the postwar enviornment.
#36 45north
You have to wonder why CMHC would want to backstop a mortgage on any cracker that is that old?
No railings on the porch, just like it was sold in 1950. Hey, maybe I can take a tumble at the open house and file a $1M lawsuit. That dump has potential after all!
I too had one of Tarek and Christina’s spam posts pop up on my FB page. I immediately potsted the URL to this wonderfully pathetic blog in the comments; funnily, the comments were disabled soon after, and only the option to “like” remained…
“Mark Carney aced the London marathon in 3 hrs 31 minutes, scoring in the top 25% of all runners, with media and babes all over Europe clamouring for a chance to get close to him, comparing him to George Clooney, only better.”
Seriously? Impressive. I’m 31 and my PB is 3 hrs 34 minutes.
Speaking of which, the BMO Vancouver marathon is next weekend. Aiming for 3hrs 20 minutes.
Wish me luck dawgs….will report back on the result.
Best,
HD
# 44, and all the newspapers:
where did this “reigning” come from?
You rein in a horse, you REIGN over a kingdom.
#55 editor on 04.27.15 at 8:43 pm
#43 Smoking Man
Indeed
……..
I try to cover the topic in a screen
In my book, it’s first draft, needs a bit of work. It needs alot of work.
The boys (Nectonites) need to by some time so Barrington sobars up. So they shape shift as the cops and CIA are closing in on there room. .
“Gents there’s bad men in the elevators, they kill with impunity, they’re coming for us, they know our faces. We need to shape shift fast, I’m going with Johnny Depp. I need two females and a dude, celebrity characters only.” I said.
Ashman goes first, transforms into Denzel Washington, then Jeremiah, turns into George Bush Jr, Barrington transforms into Uma Therman.
“Ashman, are you out of your mind, 48 pissed off officers are going to break down our door and you go with a black dude. Not acceptable. Jeremiah, really Man, we need movie stars, humans are fascinated by them. Get rid of the politician.”I said.
Jeremiah turns into Miley Cyrus. Which is cool.
“Ashman, someone else please.” I said.
“Screw you Smoky, he’s my favourite actor. I’M not changing.” He said.
“Ok then Ashman, can you just move off to the side so when the cops break down the door, we don’t want the first thing they see is a black man. Now everyone, activate your personal force fields, these pricks might just start shooting before they see the rest of us.
#38 not as rich as you think on 04.27.15 at 8:17 pm
“not sure how the 437,635 was reached, my calc shows 335,000” – See more at: http://www.greaterfool.ca/2015/04/27/save-us/comment-page-2/#comment-369297
——————–
Garth assumed 82K invest (max for a couple 41K x 2). Then use a simple compounding calculator (compound annually) for 10 years at 7% with 20K added each year gives you $437,635.37
Here’s one such calculator you can use: http://www.getsmarteraboutmoney.ca/tools-and-calculators/compound-interest-calculator/compound-interest-calculator.aspx#.VT7dYyFVhHw
It is barely spring, and the riots are already breaking out. I thought it would take until August.
Baltimore tonight is in utter chaos, the military are on all the tv networks right now, laying down the law.
So many dispossessed young people, mostly non-white and poor across America are getting totally screwed by the so-called “recovery” there.
The same thing is starting here, too. CBC radio tonight had stories of how so many young adults can’t pay off student debt, can’t invest in a TFSA, can’t even hope to start a family, have a home…..this is all about to hit the fan, peope.
No wonder our “leaders” want to distract us with foreign wars.
The real ones will be breaking out soon, on a street near you.
Total social and economic chaos is coming, combined with opportunistic international campaigns from us and our “enemies”.
The wealthy, white, 1% have created all of this over the last decades. Let’s sign another trade deal that will screw our own middle class people and help the richest, and call it “progress”. Then we can blame the poor and middle class, as if it is all their own fault that the game has been so rigged.
Well, now, Mr. Shit, meet Mr. Fan.
As ye sow, so shall ye reap.
Randy, at age 30, has to overhaul his belief system before he can overhaul his finances. He, like a lot of Millennials, has lived his life according to a Millennial belief system. That belief is that the good life is only possible with massive debt, and debt is okay if you have a high income to service that debt. And to them, income is everything. I call these people HILW (High Income Little Wealth)—in his case, not just NO wealth, but NEGATIVE wealth! He owes over 10x what he is worth. All on a $155,000 a year income! Imaging that! No wonder this country is screwed.
Fortunately, all is not lost! Once he changes his value system, he can accumulate wealth. First change the mind, then redemption is possible.
“And here are two more examples of why I am seriously considering dumping this blog and joining the priesthood. Except for celibacy. And the religious part.”
The Catholic Church is the biggest owner of Real Estate in the World. First, 110 acres of The Holy See that constitute Vatican City (Location, location, location!). Also, roughly 177 million more acreage of various lands owned by the Catholic Church throughout the globe, including the hundreds of Vatican embassies that are legally titled to The Holy See as an independent nation.
One can argue that HM QEII actually is the biggest landowner in the world, considering Canada does not have private property enshrined in its Constitution. That said, it’s held “in trust” at her Name and she has no say on how its administered since 1982.
“I would like to thank you for starting your blog,” he sucks up.
Too funny! My GT chortle of the day. Garth you are the King of the Bon Mot. This comment and other amusing nuggets that you impart always brighten my day.
….and this is just a thankful acknowledgement, not a suck up, lol.
C$155,000??
Who are his customers? Why do they pay him so much? What does he do that is either so government-protected or so skilled that allegedly no one can do it for less?
The economy is shrinking: those participating in the job-salary-taxes treadmill are fewer and fewer in number while those of us living hand-to-mouth or paycheck to paycheck ~ with nearly-zero disposable income ~ grow…
#65 editor#2 on 04.27.15 at 9:06 pm
# 44, and all the newspapers:
where did this “reigning” come from?
You rein in a horse, you REIGN over a kingdom.
………
Brilliant choice of words, I confess, I had to google one. It’s how you learn.
How much longer are those house flipping shows going to be on HGTV? It seems like most of them originate in Canada, but you have various idiots buying property overseas for reasons that don’t make much sense to me.
My wife watches those things all the time, and gets all kinds of horrible ideas for renovations. I have half a mind to block that channel with the parental-lock on the cable box, but I would then I would probably have to sleep on the couch.
Is that a pic of Freedom First?
Can anybody recommended some good ishare etf’s to top up my tsfa
#47 smoking man:
Which came first? The chicken or the egg?
Is that a pic of Freedom First?
… And mail-order bride?
#75 joblo on 04.27.15 at 9:29 pm
Is that a pic of Freedom First?
********************
lol -the times are a changing.
Sorry freedom First but that was a good one.
Regarding today’s featured bungalow south of Eglinton Avenue in mid-town Toronto, would a bid of $1.3 million include the apartment building next door?
If the zoning would permit conversion of the apartment building to, say, a tannery or a creosote plant, then the economics would make sense.
[…] Source: http://www.greaterfool.ca/2015/04/27/save-us/ […]
#68 Apocalypse2015 on 04.27.15 at 9:15 pm
You can trust me on this, me and my pals, we’re not going to let it happen, you being young, fearful. Have some faith, not in God, but my message.
The world is a shit hole at moment. We know it. Time is near for full disclosure. It will break down all the control. Free up free energy, and technology like you can never Imagen.
Nectonites will save this planet. UCC Man..
Just watch… I do confess I’ve been drinking.. But that don’t change anything.
But I Realy think me and my partners can pull this off.
Save world thing, just try and launch an ICBM.
You will find, it’s a dud.
It’s how we roll, quit, powerful. And loved by anyone who meets us.
Can this woman with a modest income afford to buy a home?
http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/can-this-modest-earner-afford-to-buy-a-home-in-her-small-town/article24114223/
Why not just get the CMHC out of the subprime mortgage insurance business
Done.
CMHC is not in the subprime mortgage insurance business.
What’s the next topic?
The Hon. G. Turner
Dear, dear Garth,
Forget any priesthood, celibate or not; you haven’t been “called”, obviously.
But might I suggest a contemplative monastic order? Preferably cloistered. And silent.
Wouldn’t that be a welcome break from your current feverish lifestyle? Eh? Always battling the Invincible economic Ignorance of the proletariat – with nothing much as yet to show for your daily dedication. Except of course the promise of a celestial palm frond (symbol of martyrdom).
The Mississippi belle who sang at my son’s Christening in The Church of the Presidents in VA decided to chuck showbiz, and became a contemplative Prayer Representative to South Africa. She lived in a little hut attached to the cathedral in Johannesburg – and her only task was to constantly pray for South Africa. She did this for two years. Sent me lotsa postcards.
I myself accidentally converted to Hinduism while researching a trip to India.
I hope you find this inspiring.
Affectionately, Nagraj
#77 BobC on 04.27.15 at 9:37 pm
#47 smoking man:
Which came first? The chicken or the egg?
……
The atom….
#73 Smokey
Forgot to say: Don’t rain on my parade
#HistoricalAfterthoughts… #ThatWillPositivelyGiveYouTheWillys!… #ExclusivelyForGT… #OK,SnowBoid&Capt.HolyCrapMayAlsoWatch…
https://youtu.be/zRYd7hFnjkU
#HowGoodAreTheyToday?… #JustAskVlad….
https://youtu.be/_RoiBj1ybRg
[NoteToGT: GrandPa built ’em but CousinFrankie designs them now.]
Shawn Allen 29:
Doing well? Can only put 5% down on a $400K house with a $155K income is doing well? Net worth of ZERO with $155K income is doing well?
The only reason he only bought a $400K house is because he couldn’t put more than the $20K required as a DP on his credit card. People like this will live pay cheque to pay cheque and be broke for their entire life regardless of income.
#61 Setting the Record Straight —
>> Our prosecutors couldn’t find a control fraud if their
>> lives depended on it
It was ever thus”
I think not. Often thus? Perhaps. But the preceeding US Savings & Loan scandal netted a lot of convictions, and a lot of Federal jail time:
http://www.deseretnews.com/article/238259/JUSTICE-DEPARTMENT-BOASTS-905-CONVICTIONS-IN-SL-SCANDAL.html?pg=all
Which came first? The chicken or the egg?
Consciousness
#BonneChance,HD!… #ButIsItSafe?… #JustStayAwayFrom… #DentistsResemblingOlivier…
https://youtu.be/kzw1_2b-I7A
#85 Nagraj on 04.27.15 at 9:54 pm
All religions are ultimately atheistic. What do I mean, I mean that all forms emerge and retreat into space. Call it the void or the monad, it doesn’t matter, the demiurge of your choosing is rendered mute. This leaves the individual in the terrifying position of having to choose for themselves. The basic choice as I understand it is the choice of Christ in the desert which is this: is your intention to have power over people (with all the responsibility that requires), or is your intention to empower people and set them free?
Garth is obviously trying to do the latter for people (to an extent) but is advising them in a system that I see as hopelessly corrupt and unsustainable going forward.
Mark 30:
True. A big mistake many job seekers make is thinking more qualifications are better for any job posting. Not so, many employers do not want to hire over qualified people for a variety of reasons. Job seekers need to adjust their resume to fit with the qualifications desired for the job. Nothing more. You can always bring up those credentials later once you land the job and future opportunities come up which may require them. I have turned away more resumes over the years for being overqualified than being under qualified. Every resume should be customized for the job you apply.
Actually I think making $155k a year and having a 400k puts him in probably top 10% in terms of being in good shape financially these days. Seriously.
“CMHC is not in the subprime mortgage insurance business.”
Nice try, but not a shred of truth to your claim. If CMHC got out of the subprime insurance business the Canadian RE economy would collapse overnight.
#86 Smoking Man on 04.27.15 at 9:54 pm
#77 BobC on 04.27.15 at 9:37 pm
#47 smoking man:
Which came first? The chicken or the egg?
……
The atom….
——————————————
The god particle
#83 Centurion on 04.27.15 at 9:53 pm
Can this woman with a modest income afford to buy a home?
http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/can-this-modest-earner-afford-to-buy-a-home-in-her-small-town/article24114223/
————————————–
I don’t see why she would want to buy. The financial advisor in that article fails to mention how much that woman would end up with in retirement would she max out her TFSA and contributing the extra 2K/year to her RRSP instead of taking out all that cash and dumping it into a property that she will be done paying off at age 67 only.
Here’s the math:
She keeps her $11K TFSA and 12K RRSP and from now on maxes out her TFSA with the typical 12K/year that she currently saves. Given that she’s 30K below her max TFSA contribution room currently it will take her 15 years to max it out by contributing 12K/year. If by 2030 the yearly contribution limit is still 10K, she can then start re-contributing the difference to her RRSP (or do so earlier if she gets a promotion and gets into a higher tax bracket earlier on and/or has the employer matching, provided the RRSP investment options through the employer program allows her to use self-directed ETFs or other low MER funds).
Long story short: It will take her 15 years to max out her TFSA and contribute the total. Then she can contribute any excess to the RRSP. By the time she’s ready tor etire in 26 years her combined investments will have grown to $983,804.23 (assuming a 7% return). Out of those funds, $881,483.02 would be in her TFSA and the rest in her RRSP generating $61,703.81 per year in her TFSA and $7,162.49 from her RRSP, which is a lot better than the roughly $25-30K/year the advisor in that articles suggest she will have from her RRSP in retirement if she goes the house buying route.
#87 editor#2 on 04.27.15 at 10:00 pm
#73 Smokey
Forgot to say: Don’t rain on my parade
……..
To hammered to comprehensive what you’re saying.
Nothing like a Monday night drunk.
And it’s Smoky, Smokey don’t sound right when you have the hit British chic voice reading back your book on the app that reads and talks back your text.
44:
Stephen Harper is a politician not an economist. A politicians objective is to get elected. So far how has the housing bubble worked out in achieving his objective? Pretty well. He ended up with a majority nobody expected. If there was a housing correction do you think that would help the chances of Steven Harper getting re-elected with a majority? No way. Harper would probably be tossed as leader if things corrected as they should. He will push off the inevitable correction as long as possible. In his view he hopes it happens under someone else’s watch. Politicians rarely have the countries best interests in mind with their policy unless they happen align with getting elected. One of the negatives of a democracy.
My goodness. Premier Prentice is playing this election like a fiddle. By ignoring the Wildrose entirely and treating them as an irrelevancy, he is painting the threat of an NDP majority.
So, what happens next? The moderate supporters in the Wildrose lurch on election day to the PCs to avoid the inevitable forced march of 4 million Albertans to identical apartments in grey concrete buildings on the southeast outskirts of Edmonton where they will only dream of someday owning a second hand Lada.
Seen it for 43 years. Oh, and Ducks in 4.
#95 Squirrel meat on 04.27.15 at 10:40 pm
#86 Smoking Man on 04.27.15 at 9:54 pm
#77 BobC on 04.27.15 at 9:37 pm
#47 smoking man:
Which came first? The chicken or the egg?
……
The atom….
——————————————
The god particle
….
Nope it was the atom, the dudes at CERN, smoke way too much weed. I can’t keep up with them.
Learning English was bad enough, when your a scholar at Nectonite university. I was a Necto laungage major back in the day…
English, there, they’re, really.. Good thing Decker was only asking about Turtles at my interview.
Replicates, no bitch. We are Nectonite. Invisable.
The above, the chosen…
Read this MSM report for a laugh. Starts off by saying the picture of the carpenter is using a hammer.(Clearly a finish nailer) Then goes down hill from there. Gem of a quote……….
Once the renovation is complete, Tintinalli said homeowners may want then want to consider refinancing their mortgage to cover the amount on the line of credit.
http://www.cp24.com/news/home-equity-line-of-credits-increasingly-being-used-to-fund-renovations-1.2346396
We are so screwed. And the sad part is sheeple go for this junk. Cheers
Ah, Nemesis, cheers to you and the boffin bairns. Now we get a Jeep that makes its own gravy!
#Tonight’sLast… #JustForSmokingMan… #”MyGod,It’sFullOfStars”…
#OnTheShouldersOfTitan…
http://www.atlas.ch/multimedia/angels-demons-antimatter.html
#StrangerThanFiction…
https://www.youtube.com/watch?v=_yniLq0YjGE
#JustWatchUs…
https://www.youtube.com/watch?v=xcMmiKnbFyY
#102 Smoking Man on 04.27.15 at 10:53 pm
#95 Squirrel meat on 04.27.15 at 10:40 pm
#86 Smoking Man on 04.27.15 at 9:54 pm
#77 BobC on 04.27.15 at 9:37 pm
#47 smoking man:
Which came first? The chicken or the egg?
……
The atom….
——————————————
The god particle
….
Nope it was the atom, the dudes at CERN, smoke way too much weed. I can’t keep up with them.
Learning English was bad enough, when your a scholar at Nectonite university. I was a Necto laungage major back in the day…
English, there, they’re, really.. Good thing Decker was only asking about Turtles at my interview.
Replicates, no bitch. We are Nectonite. Invisable.
The above, the chosen…
———————————————
lol, that made even more sense than usual.
#101 Washed Up Lawyer
Wildrose is dead. I don’t know who to blame more the members who crossed the floor or the party members who voted down the proposed inclusiveness policy, but it is dead.
And Flames in 7.
#101 Washed Up Lawyer on 04.27.15 at 10:50 pm
My goodness. Premier Prentice is playing this election like a fiddle. By ignoring the Wildrose entirely and treating them as an irrelevancy, he is painting the threat of an NDP majority.
So, what happens next? The moderate supporters in the Wildrose lurch on election day to the PCs to avoid the inevitable forced march of 4 million Albertans to identical apartments in grey concrete buildings on the southeast outskirts of Edmonton where they will only dream of someday owning a second hand Lada.
Seen it for 43 years. Oh, and Ducks in 4.
—————————————————
Indeed, intriguing… no way the commies are winning.. he would probably even enjoy having them as the opposition.
Ducks in 5.
Mark 30:
The last job interview I went to was for an entry-level clerical position at a big company. Some family connections arranged it for me. I was ambivalent about the job, so instead of doing the usual thing where I demonstrate how S-M-R-T and awesome I am, I passed myself off as kind of a loser.
I got the job.
See, for corporate cog-in-wheel jobs, employers don’t want people who are overqualified. They’ll upstage their bosses. They’ll get bored with their tasks and their minds will wander and then they’ll think about the big picture. It’s better to hire somebody less qualified so that they can be better indoctrinated into the corporate culture. They’ll drink the Kool-Aid without asking what’s in it.
Don’t worry about the religion thing Garth, being a priest means you get to tell other people what to believe and forgive their sins as defined by you all for a hefty fee. It’s not like you have to believe any of it yourself! I mean who would? Well the flock does because we tell them to, thank goodness, but nobody else does. I mean look at the whoppers we can get them to believe! Kids riding dinosaurs, a global flood with 5 million animals on a tiny wooden boat, the sun stopping in the sky to allow more time for murder, A guy hitching a ride inside a whale, a talking snake and a woman who isn’t at all suspicious of said talking snake, and the whole 6 day creation thing, they buy it all! Just speak like you know what you are talking about because you are in direct communication with Dog and you too can drive a Mercedes.
And remember whatever of the 1000’s of available religions there are to choose from you decide upon, you and your followers have the “true” one.
@ #92 Nemesis on 04.27.15 at 10:18 pm
Thanks Nem!
And I’ll do my best to stay away ;)
Best,
HD
hey lot,
Garth has been on fire lately. Maybe because the government and, well, everyone, has been the opposite of on fire.
today’s post reminded me of this:
http://lifemarkproperties.ca
some weird rent-to-own and ‘investment property’ service. run by a younger couple. one is a RMT by day.
in other news, we’re full-on downtown penthouse dwelling, rent-paying, TFSA self-directing blawg dawgs now, as we have added a member to our family in the form of an actual puppy dawg named (Pink) Floyd. He already knows how to sit… and bark at realtors.
There no way I would live in that tiny little dump! The mentally insane who would well good for them, enjoy living like a pauper… The sad part is Canadians look like total fools to the rest of the world overpaying for garbage homes like this… How sad!
#138 TurnerNation on 04.27.15 at 12:22 pm
BU, Dollarama is almost blue chip status these days. ;-)
Such a pervasive trend which may not be ignored.
Five and Dime Stores. Bread lines. Everything old is true again.”
Plus ca change, plus c’est la meme chose…..Maybe time for Sir Bryan Adams to tweak and re-release his classic ditty….
♫♫♫♫I got my first little six string….got it at the Dollarramaaaa♫♫♫♫♫♫♫…..lalalalalala
I smell an opportunity as this anthem could become the musical opiate of the real estate hoarding hordes while they rattle the coins in their wallet filtering through the discount shop aisles….
#68
“So many dispossessed young people, mostly non-white and poor across America are getting totally screwed”
I see you treat single white women, who even Jesse Jackson had admitted make up the largest growing demographic of ‘poor’ people, as unworthy of mention.
Note that Asian Americans have higher income, higher savings rates (etc) than ‘white’ americans.
“Real estate profits flipping houses in North America’s most expensive market, without requiring any money. When you see this, you know it’s over.”
Exactly the thought that crossed my mind when I read “profit without using your own funds”. If that doesn’t say the sharks are starting to circle, nothing does.
Brings back memories of the 80’s…
#56 Ralph Cramdown on 04.27.15 at 8:45 pm
Volcano Choir – Almanac
https://www.youtube.com/watch?v=W-wcu3kfTcY
SMan, Spectacle, swl1976, Godth, shanks et al — The west is prodding the bear, but the bear isn’t laughing. Guess the dragon will bare its teeth and TROTW is in deep shit! Russia has lifted sanctions on Hungary, Greece and Cyprus, so all four trade freely now.
But it appears that Obama — like the same Obama administration that opposes the Keystone XL pipeline — is delighted with the prospect of dealing an economic blow to Russia by allowing the U.S. to become a major competing supplier of natural gas to Europe.
Re: the garbage last week about Dr. Oz and the ten doctors claiming he was a fraud — check out Monsanto, the Koch brothers and a few others. Blatantly obvious, plus this pic.
#3 Mark
”I don’t get it — how do you get to make $155k at the age of 30, and not have any sense whatsoever when it comes to money?”
You work in the oil sands.
#44 An indebted nation is a compliant nation.
Garth,
The only kind of priest your detractors might call you would be a Judas Priest.
Having the requisite motorcycle, this is the Judas Priest I was thinking more apropos:
http://www.usridernews.com/2011/09/time-for-a-trike-for-judas-priest-halford/
(Jokes about the Boomer falling off his bike notwithstanding).
http://upload.wikimedia.org/wikipedia/en/1/16/Judaspainkiller.JPG
I like Christina, her lisp is adorable. True story, Tarek’s thyroid cancer was detected by a viewer. A nurse watching Flip or Flop noticed Tarek’s throat/neck lump and correctly diagnosed that he had a large thyroid nodule. After she sent an email to the show’s producers advising that Tarek get it checked out, sure enough, he had thyroid cancer that had already moved into his lymph nodes. After surgery and treatment, he beat the cancer. Guess he’s doing okay now. A little morbid but if you watch some of the early episodes you can see signs of his neck lump in some of the shots.
#76 Show Me The Money –
XTR
#64 HD
Will be rooting for you. Good luck young fella.
For $375 I can rent a furnished studio in Malaga Spain and $625 left for food and entertainment.The winter months in Puerto Vallarta I”ll rent a furnished studio for $300 and $700 for food and fun.$1000 a month and I”m done with Canada.All next year god willing.Live cheap and within your means and you to can escape crazy expensive B.C. or Canada.
Garth you are right on all of your foretelling. I just don’t know if I can put up with all your “I told you so”
And this is a test to see if I’ve been expelled.
#65 editor#2 on 04.27.15 at 9:06 pm
# 44, and all the newspapers:
where did this “reigning” come from?
You rein in a horse, you REIGN over a kingdom.
=================
True, but half the people can’t tell the difference between “loose” and “lose” so how would they know?
FIRE STORM !
That’s what our real estate market has become; a fire storm.
Have you ever seen a fire storm. Its where the fire gets so large and so hot that it begins to create it’s own wind, fanning the flames much hotter than would normally be possible given the current circumstances. Normally some water could put out a fire but when a fire storm is roaring its hopeless, the water evaporates before it even hits the ground, so you just stand back and let the fire consume all of the consumables.
Well, that’s what our real estate market is like right now, its sucking up consumer’s discretionary spending, all of it, and you see that in the massive numbers of businesses closing down because no one has any money left over to spend on anything other than houses.
So the housing fire-storm rages on consuming every last bit of available spending people have; both savings and potential borrowing limits. Once everything has been spent, once everyone can borrow as much as they can until the banks finally say “No More”, then that is what’s going to finally be the end of this FIRE STORM.
When a Fire storm is finished, the result is total devastation. Sometimes the fire was so hot that even the ground has been melted into glass so nothing can grow there anymore. Sometimes when a real estate fire storm (like Japan’s) runs its course, the result is economic devastation that lasts for 3 to 5 decades, perhaps more. When Canada’s real estate bubble pops our economy will be a mess for at least 60 years, perhaps much longer. We don’t have any manufacturing, we don’t make anything, we just consume and spend on houses. Most new jobs are those that either build houses, or are for things that go into the houses (selling, repairing, servicing) or government positions that regulate or tax those houses. When housing is a dead part of the economy then the Canadian economy will be as dead as the economy of Detroit. Go online and check out what Detroit is like; that is the future of Canada after our real estate bubble finally pops. It’s not pretty, not at all.
#90 Ralph Cramdown on 04.27.15 at 10:15 pm
But the preceeding US Savings & Loan scandal netted a lot of convictions, and a lot of Federal jail time:
====================
The moral of the story seems to be that if you are just the sweaty CEO of some cheesy little regional credit union in flyover country, you’re doing time. If you run a systemically important financial institution, and you went to school with the right regulators and white shoe lawyers, no one could believe you knew anything about the crimes committed by your company. Obviously rogue traders were to blame.
Gentlemen trust gentlemen. It was ever thus.
Where have I heard that theme before.
“My Name is TOM VU” , you loser….
And there was another info-mercial rock star, a white guy who made his money not from flipping houses, but by selling his courses and seminars.
Remember when the dot com was going nuts in 1999, you can throw a dart at the stock list and make money. Same with Housing in vancouver several years ago.
But now…… Its peaking, the risk is higher and the returns are getting stingier. In 2007 you can get a huge return after all expenses are paid in 2010, it was getting close to break even after all expenses and weighed against potential gains from not buying.
Now. I would grit my teeth. Its like playing the roulette wheel except the return is not 32 to 1 .
#102 Sorry smoking man, it was energy / matter before the atom.
But before energy there had to be an explosion, like a black hole blowing up.
But then you have to ask what came first the black hole or energy? Because its like the chicken and the egg scenerio
#2 ILoveCharts on 04.27.15 at 7:01 pm
Sorry to hear about your health scare. I’m glad that having your fiances liquid takes one worry off your plate. Look after yourself – My best wishes to you.
Nice try, but not a shred of truth to your claim. If CMHC got out of the subprime insurance business the Canadian RE economy would
What (subprime) rate do individuals who qualify for CMHC get?
Exactly.
True. A big mistake many job seekers make is thinking more qualifications are better for any job posting.
Job seekers are deluded if they believe that anything except experience matters.
Paper ‘smarts’ is a paradox.
I do remember that the last stage of the late 1980’s boom also featured a lot of ‘get rich quick house flipping’ schemes or ‘how to buy RE without actual funds’ schemes.
Theses free seminars brought out hundreds of people in downtown Toronto hotels. They gave you the pitch and then asked you to sign up. Very slick jobs. I went to a few with friends to talk said friends out of it.
In those days before internet you couldn’t check out who the speaker actually was, other than American, now you can, so may suck less fools in. However the saying that a fool and their money are soon parted is always true.
Anyway if these seminars are all over Toronto again it is truly a sign of the peak as they feed on the desperate.
Guess the agent on the bungalow thinks that living near the Allen and the future Crosstown streetcar/sardine can will boost the price. Keeping the religious theme, let’s pray that interest rates increase soon to stop this madness.
#101 WUL
Alberta politics is riding on oil prices. Any party with high oil price will look genius.
Just like garth could have coached Gretzky and the boys in Edmonton to just as many cups.
Of course there is always the possibility of a pocklington type that can screw it up.
Flames in 6. They will meet the Habs in the final.
Long shot. But better use of prayers.
Good luck HD!
We have discussed this point before. CMHC guarantees high-ratio loans. High-ratio does not mean sub-prime.
Lending conditions include a minimum debt coverage ratio (TDS), proof of income etc… and minimum credit score.
Banks will do low-ratio loans all by themselves (no proof of income or very high TDS), which may be considered sub-prime depending on the metrics.
Garth, if you start a cult, or found a new country, please take me with you. The sea of stupidity is making me nauseous.
Thanks, as always.
Lovely. The apartment dwellers in the low rent next door can fling beer cans into your 30 foot wide back yard.
This city, nay country has an irreversible affliction of re psychosis and is malleable as hell.
Buy now or buy never, but I think Garth has it in one: Buy now or Perish”.
Idiots.
#127 Andrew Woburn on 04.28.15 at 1:26 am
#65 editor#2 on 04.27.15 at 9:06 pm
# 44, and all the newspapers:
where did this “reigning” come from?
You rein in a horse, you REIGN over a kingdom.
=================
True, but half the people can’t tell the difference between “loose” and “lose” so how would they know?
——————
And 3/4 don’t know the difference between “to” and “too”!
As always, thanks Garth for the clear thinking AND the great humour!
“Father Garth” does have a certain ring to it.
#138 Julia — “High-ratio does not mean sub-prime.”
High ratio means subprime.
This is not just my opinion. Hundreds of papers have been written, studying default rates in portfolios with millions of mortgages. Negative equity is the biggest predictor of default, and the easiest way to end up with negative equity is to start with low equity in the first place. Laws have been passed in many countries forbidding banks with government guaranteed deposits from making high ratio loans, or forcing them to purchase credit enhancement (mortgage insurance) for them… because they’re more likely to default.
My boys on patrol.
https://m.youtube.com/watch?v=o6KfTjRR2q0
Nosty, I caught that yesterday, sold Nat Gas Futures.
Now with LNG prices heading to the gutter, and electricity set to skyrocket in Ontario, we might be at a point where generating our own power using nat gas might be cost effective.
Calling all entrepreneurs..
Heard on the radio today, Wynee is changing the municipal elections act, changing it in a way that Ford can never win again, and ensure that who ever has the top spot at City Hall will always be on hand for the Gay Pride sausage display.
@ 124 Ronaldo on 04.28.15 at 12:45 am #64 HD
Will be rooting for you. Good luck young fella.
—————
Cheers!
Best,
HD
Regarding: #44 Jsan
I think your assessment and others, saying this is all about CMHC and Stephen Harper, is incorrect. Yes, that is a big part of it, just like the GSE debacle of USA 2007-08.
However, I offer two proofs the banks love to lend money without CMHC, too. Ally Bank was the lending arm of a car maker. It was bankrupt and made into a bank to rescue it. Royal Bank bought it in 2013. That is subprime debt with no CMHC.
Secondly, we all guessed USA banks had off-loaded risk to GSEs (CMHC in USA): wrong! They ate their own sub-prime cooking too.
Conclusion: The economics taught in University is Keynesian/Monetarist and it ignores asset inflation, only looking at CPI. Our leaders and bankers are blind to the fact they are causing the problem. To them, nothing is sub-prime/excess debt/credit boom. Then it goes bust and then they reflate. That is what they are taught and practice.
MIT school of economics dominates. Fischer, the deputy Chair of USA Fed., taught Bernanke and the European central banker, Draghi, at University.
It is the central bankers of USA, Europe Canada, Australia, UK, calling the plays, not Stephen Harper.
http://www.bloomberg.com/news/articles/2013-06-30/bernanke-draghi-policies-mit-lessons-fischer-says-of-his-pupils
excerpt:
July 1, 2013 (Bloomberg) — When it comes to economics, the professor has become the pupil as far as Stanley Fischer is concerned.
Fischer stepped down yesterday as governor of the Bank of Israel after eight years. His mark on global policy-making will endure through onetime students Federal Reserve Chairman Ben S. Bernanke and European Central Bank President Mario Draghi. “
#143 Ralph Cramdown
Let me add an extra word in: High ratio does not NECESSARILY mean sub prime. You can have sub prime BORROWERS on low ratio loans.
And you can have high quality borrowers on high ratio loans.
Yes, higher ratio loans means higher likelihood of negative equity in a downturn. However, the major difference is that a sub prime BORROWER has a greater chance of default on payments on a loan.
Lenders asses borrower default risk and loan loss risk differently. Both are factored in to evaluate credit worthiness. Generally Banks lend money to get it back, with the first route of repayment being cashflow, not the security backing it.
@ 137 Obvious Truth on 04.28.15 at 6:19 am
Merci!
Best,
HD
1.3 million and this thing is called ‘house’? Wow!
With bidding wars? OMG.
Our stupidity knows no borders.
Without CHMC no bank will lend more than 300 k for this ‘house’, I personally will not pay anything for it,
The craziness is reaching biblical proportions and when this thingy blows the whole ‘economy’ will disappear.
Moving all your have out of Canada or Canadian assets might not be that bad of idea.
And sorry Garth, but I don’t buy it that this ‘house’ is 10 % overpriced, it seems more like 300 % overpriced for me. There goes the soft landing. It would be crash on unimaginable scale.
It seems strong consensus is built around the world (excluding Canada) that the current Canadian housing bubble is really something unique and extremely dangerous, probably far ‘outshining’ the Japanese bubble. End when (not if) it blows…
They must sprinkle some magic dust in Toronto there is no other way…1.2M for that garbage!!! Why would anyone sane buy that?
What do you say to your family visiting? Let me show you my million dollar home? WOW… be sure you give them an age simulation suit before they enter:
http://www.age-simulation-suit.com/
#140 maxx
Idiots or not, all we, the taxpayers, you and me, are on the hook for their idiocy. And certainly not Joe Oliver or Poloz will be paying the CHMC losses and the baby boomers pensions.
Nice try, but not a shred of truth to your claim. If CMHC got out of the subprime insurance business the Canadian RE economy would
What (subprime) rate do individuals who qualify for CMHC get?
Exactly.
———————
The same rate as everyone else. There is no need to artificially segment the market into ‘prime’ and ‘sub prime’. With CMHC there is no risk to lenders, so every borrower looks the same. Borrowers in the US who would have been labelled ‘sub prime’ and charged higher rates are simply *approved* here without the higher rates.
Actions, not words.
#144 Ralph Cramdown on 04.28.15 at 8:53 am
————————————————————
I would agree with Julia and disagree with you. But it’s just a matter of semantics.
‘Sub-prime’ refers to lending to individuals with poor credit rating.
‘High-ratio’ refers to a low down payment relative to the value of the real estate.
Someone can be a ‘prime’ borrower, yet have a ‘high-ratio’ mortgage. Vice versa, someone can be a ‘sub-prime’ borrower and have a conventional mortgage.
Thus, the terms are not the same.
#145 Smoking Man on 04.28.15 at 8:55 am
My boys on patrol.
https://m.youtube.com/watch?v=o6KfTjRR2q0
—————————————————-
Pot is legal in Colorado!… sausages too I believe.
#138 Julia
Of course it means sub-prime mortgages.
Unimaginably, magnificently, stupidly sub-prime.
Remove CHMC and stupidity of politicians (and yes, when this thing blows up they will be hold accountable) and no bank will lend even 40 % of the current valuations.
SM – but did he ask you about your feelings…. About your Mother?
Still don’t know what (subprime) rate CMHC qualified individuals get?
Still waiting…
The Calgary Flames and the TO housing market have a lot in common
despite logic, common sense, and underlying numbers, DON’T BET AGAINST THEM
(ok maybe not a lot in common – just that)
Flames in 5
#138 Julia
“Of course it means sub-prime mortgages.
Unimaginably, magnificently, stupidly sub-prime.
Remove CHMC and stupidity of politicians (and yes, when this thing blows up they will be hold accountable) and no bank will lend even 40 % of the current valuations.”
Not NECESSARILY sub prime. Without CMHC, Banks would continue assess BORROWER risk (repayment capacity, income, job stability, credit history etc…) which is what ultimately defines if a borrower is prime or sub prime.
Depending on the quality of the borrower, the Banks would continue to determine how much to lend (ratio up to 80% which is what the Bank act allows without mortgage insurance) and what the pricing should be.
Yer all watchin’ that Poloz person on CBC this morning?
(He’s talkin’ to the Commons Finance Group.)
Animated lil bugger.
I lasted seven minutes.
In Other News: get a load of this from The National Post [aka The Rusting Alberta Strumpet]: “First the oil crash and now this: What happens to the oilsands if Alberta’s petro-dynasty falls?”
I say, What happens to the junkbondsands whether Alberta’s poodle-dynasty falls flat on its stupid face or not. (Not really fair to poodles.)
And 3/4 don’t know the difference between “to” and “too”!
*************************
Thats to true. These people should not be on the lose. Someone should reign them in.
Actually, I’m with Smoky on a lot of this it’s anal to get worked up about common spelling errors. Language evolves. The meanings and spelling of words change.
The purpose of writing is to get a meaning across. If that is accomplished what is the harm of a spelling error here or there? Many of which are just typos anyhow.
It’s certainly fine to be careful in your own spelling and grammar. But it seems to me that it is rude and ignorant to publicly point out errors that others make. (And perhaps I am slightly guilty with this comment.)
Similarly it may be slightly bad manners to use the “wrong” fork at a fancy dinner. But it would be absolutely terrible manners to embarrass someone about it during such a dinner and beyond the pale of bad manners to let the other guests hear you berate anyone, even your family member, at such a dimmer.
Once again, I am sad to see the lack of regulations in this RE industry. All these flippers out there are creating undue competitions, speculating the market by holding on to houses. Rest of the sheeples got brain washed to think that they must act now or they will never own a house in their live.
I know quite a few friends who bought a house recently because they are afraid that they will be priced out if they don’t act now. If it wasn’t for all the “stories” they are hearing and all the bidding wars they are seeing, a house will probably never make it on their priority list.
Here is how to get your “house horniness” going, just go check out a few bidding wars. Soon you will be bidding and competing with the people you used to laugh at.
Always an interesting read here… Thanks everyone
Riots in the streets. Sad really that things have to go like this, and what’s even more sad is that it is all by design. Too bad we couldn’t harness this energy for good, and too bad the aggressors on both sides don’t see who the real enemy is
Freedom is just another word for nothing left to loose… Back a population into a corner and remove all hope… Well what are you to expect?
The ones who really need to wake up are the ‘authorities’ who think they are doing the right thing while failing to see the big picture and realizing that they are also just disposable pawns in the game. It might be easier for now to keep your head in the sand and deny what us ‘nutters’ have been saying for years but it won’t be long before the truth can no longer be ignored
Just like Canadian real estate… The stage has been set
Still don’t know what (subprime) rate CMHC qualified individuals get?
Still waiting…
——————
I always thought sub-prime meant below ideal borrower- nothing to do with a lesser rate than the prime rate. Prime means prime borrower. Sub-prime means less than prime borrower. Cmhc insures loans for people that are less than ideal
History is about to repeat itself.
https://www.youtube.com/watch?v=CrMlmXfvuLk
GARTH – can’t wait for your comments for 1.3 million dollar milk crate!
Shawn Allen on 04.28.15 at 11:24 am And 3/4 don’t know the difference between “to” and “too”!
…
Similarly it may be slightly bad manners to use the “wrong” fork at a fancy dinner. But it would be absolutely terrible manners to embarrass someone about it during such a dinner and beyond the pale of bad manners to let the other guests hear you berate anyone, even your family member, at such a dimmer.
****************
Hi Shawn,
That should be “beyond the pall of bad manners” and “dinner, not dimmer”.
Glad I can help. :)
Cheers, Russ
U.S. Home Prices Continue to Increase
From today’s news:
“The S&P/Case-Shiller National Index has seen 34 consecutive months with positive year-over-year gains; all 20 cities have shown year-over-year gains every month since the end of 2012,” said David M. Blitzer of the S&P Dow Jones Indices. “While prices are certainly rebounding, only two cities – Denver and Dallas – have surpassed their housing boom peaks.”
******************************************
In 2011 and 2012 many on this blog predicted the slide in U.S. house prices would continue. But Garth said, as I recall, “Sell Canada buy America”.
Given that the U.S. housing starts at around one million per year are well below the long-term average and far less than 10 times the Canadian number and given the low interest rates and high affordability, I believe a rational analysis would suggest that home prices in the U.S. will continue to rise. So I could say I “see” them rising but I always view such visions as looking unsubstantiated. Instead I will point out that the data suggests that U.S. home prices will continue to rise. (Disclosure, I own shares in a U.S. luxury home builder)
An interesting word choice above where they say “only” two cities have surpassed their boom peaks. Replace that with “and” rather than “only” and suddenly the comment is more optimistic.
Others can point to data about millions on food stamps and unemployment. But the direct home price data is positive. There are always reasons for despair and reasons for optimism. Optimism tens to win in the long term, though it’s not a rule and does not mean that reckless optimism will win.
In 2011 and 2012 many on this blog predicted the slide in U.S. house prices would continue. But Garth said, as I recall, “Sell Canada buy America”.
This was Garth’s best call bar none. Especially since the collapse of the CAD from parity with the USD.
My peers and I went all in. FL, TN, GA, everything was crazy cheap.
I had other friends who were scared. They were more comfortable paying $700/sq ft in godless Vancouver than $70/sq ft in the U.S.
Monthly USD and a doubling of U.S. prices within 5 yes sure is sweet
I always thought sub-prime meant below ideal borrower- nothing to do with a lesser rate than the prime rate. Prime means prime borrower. Sub-prime means less than prime borrower. Cmhc insures loans for people that are less than ideal
So your position is that the term ‘sub-prime’ has no relevance whatsoever to the prime rate. Got it.
Perhaps Mark can enlighten us to what (sub-prime) rate individuals who qualify for CMHC mortgage insurance get.
Weird that those who are adamant that individuals who qualify for CMHC mortgage insurance are ‘definitely sub-prime’ borrowers don’t seem to know…
12 Foot wide home in Vancouver sells for 1.35 million
http://www.cbc.ca/news/canada/british-columbia/thin-home-sells-for-1-3m-in-vancouver-s-point-grey-1.3051838
Leo Trollstoy Bought America
My peers and I went all in. FL, TN, GA, everything was crazy cheap.
******************************************
Congratulations. An older family member of mine bought a house in Florida around late 2010 after having been a snowbird for over 20 years and having found houses too expensive for most of that period. The spoils go to the brave in these situations.
I bought the home builder stock because I was not a snow bird and not prepared for the work and hassle including paper work and taxes of actually owning U.S. property and the problem of management from afar. How did that all work for you?
Only because I have time on my hands –
SHAWN ALLEN & RUSS L:
If I catch either one of you barbarians using the wrong fork, I shall snatch that fork out of your presumptuous little hands, and stab you in the eyes with it. My other dinner guests will say nothing, and carry on as if nothing of note had happened – while you run around blind, screaming, and bleeding to death.
Both of you colonials would do well to attend the Anglican Ladies’ tea parties (Murder With Class). But then I can’t see where you two would ever be invited in the first place. You’d probably talk about religion and politics and state the obvious, presume to pour, and dunk yer cookies.
Poloz says Toronto and Vancouver are quite robust market.
http://ca.reuters.com/article/businessNews/idCAKBN0NJ1YQ20150428?pageNumber=1&virtualBrandChannel=0
Homeownership rate in the U.S. is now at a 25 year low.. and still falling. This despite fixed-rate 30 year mortgages of 3.75%, lower taxes overall, and a far more diverse economy than Canada.
http://www.marketwatch.com/story/homeownership-rate-drops-to-quarter-century-low-2015-04-28
But Canadian’s know better.. don’t they.
#148 Julia — “Let me add an extra word in: High ratio does not NECESSARILY mean sub prime. You can have sub prime BORROWERS on low ratio loans.
And you can have high quality borrowers on high ratio loans.”
And one is riskier than the other. Which one? The guy with the high credit score and the low downpayment.
If somebody with poor credit but 30% equity loses his job and ends up earning less, he can perhaps refinance with a subprime lender or sell the house. The bank gets its money either way, without having to foreclose. Few people are dumb enough to let the bank repossess when they’ve got significant equity. Even if that happens, the bank usually gets all its money.
But when someone with a high credit score and low equity loses his job, refinancing is difficult, and he may find it much harder to sell the home and net enough to pay out the mortgage, especially if it coincides with a widespread economic downturn and consequent soft housing market. If he doesn’t have other assets, the bank will probably end up repossessing, or even dealing with the bankruptcy trustee, and taking a loss.
“Yes, higher ratio loans means higher likelihood of negative equity in a downturn. However, the major difference is that a sub prime BORROWER has a greater chance of default on payments on a loan.”
How does a borrower who started off with a high credit rating become a bad risk? Job loss, illness, business failure, divorce, housing downturn. It matters not that he had good credit when the loan was originally underwritten.
“Lenders asses borrower default risk and loan loss risk differently. Both are factored in to evaluate credit worthiness. Generally Banks lend money to get it back, with the first route of repayment being cashflow, not the security backing it.”
I agree. But history has shown that in a credit boom, bankers get sloppy on collateral. Appraisal by postal code and electronic valuation model, drive-by appraisal, no appraisal at all. All the bankers convince themselves that the loans will work out. This is why many countries codify loan to value ratios for banks — because we KNOW that bankers will otherwise make stupid loans.
As I said before, the academic studies are quite clear: Loan to value is a very good predictor of the probability of default independent of the borrower’s credit score.
http://www.calculatedriskblog.com/2008/08/reflections-on-alt.html
Mom is pissed
https://www.youtube.com/watch?v=mVTlYvi35Xk&app=desktop
Another tax break for the rich! CRA extends filing deadline five days. Happening once looked like an accident, but happening now for the second year running is starting to look like carelessness.
We really need lessons on how forks are used?
https://www.youtube.com/watch?v=9eJ0iGZ7Ms8
Barbarians with forks……. fine dining. A glorious stab at Thatcherism…
https://www.youtube.com/watch?v=VAIG_M28g7w
Yesterday they wouldn’t let us breed chickens….
http://calgaryherald.com/news/local-news/no-to-hen-raisers-council-votes-against-a-backyard-coop-pilot-program
and now we have to keep our pants on…..
http://calgaryherald.com/news/local-news/people-need-to-wear-pants-and-not-set-off-fireworks-celebrate-responsibly-say-police-following-six-red-mile-arrests
Can you imagine the coming restrictions if the commies get in power.
Debt is better than money. Let’s just embrace it.
I’ve been fighting it too long I guess. People are going to laugh at my current mindset just like they laugh at great-grandpa burying gold.
It made sense once, but those days are over.
Oh this could be fun… grim jim is farcked!
A commie-nutter alliance
http://www.calgarysun.com/2015/04/27/wildrose-leader-brian-jean-says-hed-happily-buddy-up-with-rachel-notleys-ndp-in-cleaning-up-tories-mess
#160 Julia
Sure, Let’s then dissolve CHMC and transfer the risk back to the banks.
#125 Rexx Rock on 04.28.15 at 12:58 am
“For $375 I can rent a furnished studio in Malaga Spain and $625 left for food and entertainment.The winter months in Puerto Vallarta I”ll rent a furnished studio for $300 and $700 for food and fun.”
Is Malaga cold in winter? Are you allowed only 6 months in Spain? Flights back and forth? Why ? Please enlighten
This is just weirdly funny. Rent a foreigner!
http://www.nytimes.com/2015/04/28/opinion/rent-a-foreigner-in-china.html?hp&action=click&pgtype=Homepage&module=c-column-top-span-region®ion=c-column-top-span-region&WT.nav=c-column-top-span-region&_r=0
#177 Ralph Cramdown on 04.28.15 at 2:00 pm
———————————————————
Ralph, I disagree with you again.
If you had $100,000 to lend to someone, who would you lend to?
The ‘credit worthy’ individual that now owes you $100,000 on a $110,000 home.
Or,
The ‘not-credit worthy’ individual who owes you $80,000 on the $110,000 home?
I would put more weight on the track record of the borrower, that is, the credit-worthy individual is going to find a way to pay you back.
ps. the link you provide is to another blog, who’s owner has an @yahoo.com email account.
Had a discussion on CMHC insurance and how I wonder how many people know that the insurance covers the lender and not themselves. Replies from some realtors I know:
“And the biggest reason our market did not tank like the U.S. In 2008 is because we have insured mortgage. A good thing, not bad.”
“Further it is federal policies like this that make the Canadian housing industry one of the best in the world.”
Oh, brother.
Banker behaviour, from 2013:
http://www.bloomberg.com/news/articles/2013-09-11/jpmorgan-removes-lending-barriers-in-booming-u-s-markets
When US homes were cheap, you needed a bigger downpayment and a higher credit score to get a loan. Now that home prices are moving up again, bankers will lend with a lower downpayment and a lower score. Cuz’ they’re smart like that.
#165 The original dave on 04.28.15 at 11:38 am
————————————————————-
CMHC insures anyone, including any size downpayment, and charges rates from 0.6% to 4.9%, depending on the circumstance.
https://www.cmhc-schl.gc.ca/en/co/moloin/moloin_005.cfm
#175
It’s so predictable. Check the date.
http://www.nytimes.com/2005/05/21/business/21fed.html?_r=0
#187 Bottoms_Up — “I would put more weight on the track record of the borrower, that is, the credit-worthy individual is going to find a way to pay you back.”
I’m sure he probably will, unless he can’t. The whole point of lending against assets at a lower rate than unsecured lending is that it’s a safer loan. One of the things that makes it safer is the collateral value (hopefully). Another is the borrower’s skin in the game, as his equity is in a first loss position. And I reiterate that loan to value has statistically been shown to make a big difference in default rates.
There’s all kinds of lending models and interest rates, from conservative A lenders through people who are indifferent as to whether you pay, because they’re perfectly willing to repossess and profit through fees.
But history has shown that, periodically, lenders who do high LTV loans against inflated assets get burnt in the subsequent bust, as default rates go way up due to widespread unemployment, and collateral values go down due to same.
“ps. the link you provide is to another blog, who’s owner has an @yahoo.com email account.”
Yep. But it is a top US economic blog, whose principal called the US housing bubble, documented it AND the bust in real time, and called the bottoms in US new and used housing as well. When he started the blog, he and his (now deceased) co-author were both anonymous. You could learn a lot from it. I did.
#188 Mac on 04.28.15 at 3:09 pm
——————————————–
That’s right, and we wouldn’t have a housing market without CMHC because banks wouldn’t lend.
Or, they would lend, but would require astronomical downpayments.
Without CMHC, real estate in Canada would easily be cut in half.
this Poloz is on crack!!
Degree of housing overvaluation not unusual, no risk of bubble: Poloz – http://bit.ly/1JywzgO
Oh, the house….
Let me see, 50-60 yr old bung, needs updating, busy street, itty-bitty lot, questionable area….
Yeah, here would bring between 60 to 85 Grand.
There, probably 500-600 Grand….. who knows its FREE$$
Toronto is a Fantasyland these days, and it is beginning to show -badly.
#193
Yes…and maybe there would be a lot less paycheque to paycheque, broke and indebted people around. Like the 1.8 million families Garth mentioned the other day.
Bank of Canada’s Poloz: degree of housing overvaluation not unusual
https://ca.finance.yahoo.com/news/bank-canadas-poloz-degree-housing-155320134.html
He is either insane or a liar.
#128 Waterloo Resident
Probably the best summary I have ever read.
#177 Ralph
Prime is not just based on credit score but that does give an indication of historical behavior. Income, job stability, debt servicing including the new proposed mortgage and costs. All to assess credit worthiness.
Your risk of loan loss may be greater on a high ratio loan but your risk of default is lower in the first place with a credit worthy (prime) borrower.
It’s a balance between the 2.
Read the CMHC guidelines. There is a reason why they want a better credit score the higher the loan advance is.
#160 Julia on 04.28.15 at 11:20 am
————————————————-
Thank you Julia for setting the record straight. It use to be that if you were a well-qualified borrower (low risk), you got the prime rate. If you were a higher-risk borrower, your mortgage rate would be higher.
These days, the sad truth of the matter, is that subprime borrowers are given the prime borrower rate. Then, depending on the amount of downpayment, may have to pay a higher CMHC fee.
“The whole point of lending against assets at a lower rate than unsecured lending is that it’s a safer loan. One of the things that makes it safer is the collateral value (hopefully). Another is the borrower’s skin in the game, as his equity is in a first loss position. And I reiterate that loan to value has statistically been shown to make a big difference in default rates.”
Agreed. But there is a big difference between skin in the game in the form of a downpayment or loan paydown from payments and equity built on market appreciation.
Twitter earning leak a day before FED talks.
Coincidence?
Haha. Trying to change FED views by sacrificing billions (Twitter) to protect trillions (NASDAQ).
Twitter revenues up 74%, membership ahead 17%, quarterly loss widens to $162 million. No leak, an announcement — Garth
#184 Sheane Wallace
“Sure, Let’s then dissolve CHMC and transfer the risk back to the banks.”
I would certainly make significant changes to it.
1st it should be only for 1st time buyers.
5% down is not sufficient (at least 10%) and the downpayment should only be from personal sources, non of this “non traditional” sources of downpayment. If you can’t save that amount, what does that say in the first place?
Up to a $1Million dollar purchase price? Lets look at that.
Credit scores and debt servicing ability calculations should be tighter.
Just my 2 cents…
#170 Leo Trollstoy
They were more comfortable paying $700/sq ft in godless Vancouver than $70/sq ft in the U.S.
Vancouverites have a god. They worship Mammon.
#199 Julia — “Read the CMHC guidelines. There is a reason why they want a better credit score the higher the loan advance is.”
Yeah, but CMHC says:
LTV > 80%: Recommended minimum score of 600
LTV 60.01 – 80%: Mininimum score of 580
LTV ≤ 60%: No minimum score required
Standard variable rate mortgages (LTV 90.01% – 95%): Recommended minimum score of 610*
And JPM Chase says**:
Score < 500 Very Poor
Score < 620 Poor
Score < 680 Fair
Score = 720 Excellent
Note these are US scores vs. Canadian scores, but I believe them to be roughly comparable.
* – http://www.cmhc-schl.gc.ca/en/hoficlincl/moloin/hopr/hopr_004.cfm
** – https://www.chase.com/mortgage/home-loans/credit-history
$500 vacation homes in Detroit.
http://www.themorningnews.org/article/detroit-state-of-mind
#168 Russ L on 04.28.15 at 11:51 am
Shawn Allen on 04.28.15 at 11:24 am And 3/4 don’t know the difference between “to” and “too”!
beyond the pale of bad manners
AND
That should be “beyond the pall of bad manners”
*******************
Actually, you’re (note the correct use of that word too) both wrong. The correct phrase is “beyond the Pale”, capital on pale. The Pale was once an area of Ireland under English law beyond which were presumably lower class people who didn’t know good manners.
And further to that, it’s a little like being below or above the salt. Breeding will out in either case it seems.
If he put the phone down.. he likely could have had a greater haul. Folks are getting bitchen pissed.
http://i2.cdn.turner.com/cnnnext/dam/assets/150428165341-selfie-baltimore-riots-exlarge-169.jpg
Deflation is no longer the risk. Nor is there any evidence the economy is falling into it. The BOC will follow the Fed, as always. The path will be gentile, but it will be up.
Garth.
Deflation fears encircle the planet. Just out that the Q1 US GDP grew by a wimpy .2% and that the strong US dollar is crunching USA exports further. Neither is helpful in proclaiming ‘Inflation rules.’ Whether the Fed or BofC raise interest rates or not can’t match the big stick of the withdrawal of ACCESS TO CREDIT unfolding everywhere.
• Canadian Banks are increasingly refusing to do bridge financing for home jumpers. (BMO)
• Small businesses are increasingly finding they are shut out of bank revolving credit to meet payroll and other monthly in/out accounting needs.
• Customers are told they can’t take out $5,000 today in cash from their brimming accounts. (RBC)
• Harper’s balanced budget means fewer new Canadian Bonds will need to be issued next fall, further pushing down yield. Balanced budgets are deflationary.
• Further consumer denial of access to credit OR refusal to spend/eat more debt instead is deflationary.
• Paying down debt rather than maxing out credit cards is deflationary.
• Margin debt call increases is deflationary.
• Bond defaults (in oil alone) is deflationary.
• Death watch on Calgary housing is Bandit barking deflationary with red lights flashing.
• Canada is now left only with 2 house rising zones. Deflationary for everywhere else.
We hope Garth’s assessment is correct because Deflation is a massive economic and human crisis hole. Maybe Janet Y will bump up a little…………… But it’s almost certain that’s she’s reactive not pro-active and just looking busy because Deflation is next. Big time. After which it’s QE4 or Chinese prints like nuts or both +++….. until Deflation trumps those moves, too.
Actually there is no credible deflation threat. Unless you live in Portugal. We don’t. — Garth
Actually there is no credible deflation threat. Unless you live in Portugal. We don’t. — Garth
We’re about to find out. Pray you’re right, Garth. I would love to be wrong. Alas….
It’s amazing how naïve we can become, the crowd mentality has taken hold and refuse to look at reality. I recently spoke with my “landlord”, I rent a suite in him home. He’s from India and I was suggesting that a real estate correction is imminent, that is simply not sustainable. He’s tell me “never, it won’t happen”. He’s pretty wealth and was a lawyer in India, seems pretty smart…..I though anyway. This bubble is unprecedented in Canada and I simply do not see how this can end even as a “soft landing”.