A little terrified

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I read your blog all the time and it terrifies me. — Glen Foster

Don’t you love testimonials?

Actually the other day someone mused that, perhaps, I fabricate the letters posted here from time to time. As much fun as that would be, it ain’t so. My imagination’s not that fertile or fecund. After all, I’m just a financial guy.

In fact, this blog terrifies me, too. No idea how it has attracted so many paranoid sociopaths, inconoclasts, survivalists, realtors, xenophobes and charismatic nut jobs. Musty, basement-dwelling moist Millennials, too. Last week I was asked for some audience stats on this site, and what analysis revealed was interesting.

Who reads this thing? The bulk is between the ages of 25 and 44 (49%), with those between 18 and 24 the second major group (27.5%) and the pre-wrinklies over 45 clocking in at 23.5%. And while you might not always detect it from the testosterone-drenched comment section, genders are about equally represented, with 45% female and 54% male. Caitlyn Jenner was not included.

Annually there are 6.5 million visits and 12.67 million page views. About 18% of those are new each month and 82% are sad, addicted, pathetic people who allow this soul-sucking site into their empty lives. Another stat of interest: my DELETED pages for 2015 number just 53 (singled-spaced, 10-point type), compared with 226 pages for all of 2014. So, this is progress. Or, people have become entirely catatonic and suicidal after reading Mark’s comments.

Finally, the revenue generated by this blog? Zero. So be nice to me.

In any case, here’s a letter from Evan, who rents in New Westminster, one of Van’s burbs. “We’ve delayed gratification,” he says, “by living simply in a 700-foot, $1,200-a-month place.”

But they wouldn’t mind a little more room, and thus this comment:

“A brand new building just down the road recently completed and of course a flood of new rental suites have come on the market at sky high prices. $2300/month for 999 sq ft. Many listings were posted well before the building completed. I told my wife to lowball the owner of one of the condos (they own multiple units) and offer $1600. Their response back left me scratching my head.

“We have lowered the asking rent price to $2,150 and will give it a try.  The units were expensive and purchased as a long term investment.  We will not be making any money on the rental price nor are we trying to.  We would just like to cover our costs.”

“So, I’m left wondering… why would anyone buy multiple condo units to rent out if they never planned on making any money? I don’t get it. What’s in it for them? Who would take on all that risk, work and effort only to cover their costs? How can anyone look at this real estate market and not see signs of insanity?”

Lurking behind the realtor’s monthly inflated, massaged, manicured sales stats is a bigger reality, one based on speculation, greed, ignorance and financial illiteracy. While the #DontHave1Million crowd flummoxes over hordes of mythical offshore buyers, the Asian invasion or rich people who can afford to keep properties dark and vacant, it’s the locals themselves who have created an unaffordable city. Needless to say, this is being repeated in Toronto, but with a vastly larger housing stock, less noticeably.

The last Re/Max survey on the subject found that 50% of all sales activity in downtown YVR, for example, was the result of amateur speculators. In Toronto that number soared to between 60% and 85%. Said the company: “The impact of speculation, especially in Canada’s largest condominium markets, has yet to be determined but concerns for the future are relevant. This is a major factor that could influence prices in the years to come.”

For example, Kijiji is crammed with ads like this, appealing to the specuvestor who’d rather gamble on being an amateur landlord than try and understand what a TFSA is:

The Bartholomew by Daniels just launched, is a new Pre-construction Condos & Towns to be ready for winter 2017.You can buy with only $4000 when you sign and $1000 per month till you reach 5% ONLY. Yes, right, You Can buy with $4000+$1000 Monthly Any Townhouse or Condo Suite (normally we see builders asking 5% down only when they sold over 90% of the any building &they already started construction so you buy the left over units). But here, New project, New launch, Not one unit Sold and Builder need Only 5% Down.PRICES STARTING FROM $210,300

And what happens when closing day comes around on these pre-build units? You bet, lots more money has to hit the table, plus closing costs and the stark reality of trying to find a tenant at the rental rates the condo saleslady told you were a sure thing. Quickly the over-extended little LL finds out positive cash-flow is elusive, if not impossible and. with new condo buildings hitting the market monthly, capital appreciation is but a dream.

So you can always go back to Kijiji, where bailing out distressed speculators is now a growing business:

Want to Get Rid of Your Investment Condo Units?
Tired of Being Landlord?
Behind on Payments?
Urgent?? Need Immediately Help?

Buy Your Condo Unit Fast!!
No equity No problems!
Fast Cash or Terms!!
Any Area Any Conditions!!! No Obligations !!!!

Evan’s right. The signs of insanity are everywhere, like those near-invisible little cracks when a stone hits your windshield – the ones that later blow it apart. You can be in the accident, or not.

A little terrified? Good.

198 comments ↓

#1 rosholt on 06.07.15 at 2:09 pm

simple answer; “cover our costs” means that the rent covers all the costs so the condo is essentially free. Slowly paid for by the renters and the owners can just forget about it as it gains in equity from the renters. Have multiple of these going and you’re on your way to being a real estate tycoon in Vancouver!!

Don’t know why the readers here don’t understand that but the rest of Vancouver does…maybe they are smarter as they are the ones becoming real estate millionaires why the others complain about them.

#2 Honey Dripper on 06.07.15 at 2:13 pm

Can we please have more comments on why a balanced diversified, low cost portfolio is so trash. How about a counter argument about why now is the right time to buy RE. Am I in the right place? or is there a better free personal finance blog?
This is all very exciting!

#3 drydock on 06.07.15 at 2:13 pm

I’ll have you know i’m not a paranoid sociopath.
Just a regular sociopath, thank you very much.

#4 Squirrel meat on 06.07.15 at 2:14 pm

At least 12 million of those page views are from mark alone. Stats biased. And clearly missing are the intersexuals. What about lumber sexuals. Don’t they count too. Google can’t detect those?! The blog is oddly addictive.

#5 bill on 06.07.15 at 2:17 pm

that advert at the end of todays blog says it all.
the bottom feeders have arrived?

#6 I'm stupid on 06.07.15 at 2:22 pm

Welcome to the new world, where money is no longer needed, savings are a thing of the past. It’s all about instant gratification, who cares about tomorrow. Buy today pay tomorrow, live life a day late and a dollar short. Who cares if the interest payments make up 50% of your take home pay and you’re eating cat food. We can just blame the 1%ers because they created the problem. Lol

#7 Kevin on 06.07.15 at 2:28 pm

Crazy Toronto house prices:
http://www.therecord.com/news-story/5664208-toronto-family-moves-to-kitchener-to-get-affordable-home/

#8 Jib Halyard on 06.07.15 at 2:37 pm

#1 Rosholt:
That’s an interesting investment philosophy you’ve got there. You’re basically saying that an income stock that earns the same return as a risk-free asset plus brokerage fees is a golden goose. Wow…

#9 waiting on the westcoast on 06.07.15 at 2:42 pm

Evan could double his space in the same building versus renting one of the new spaces at only 33% more space. ;-)

I would wait and keep checking CL/Kijiji boards. The new units may decline as people are making their payments but have not rented. Also, the other older units in NW will also feel the reduced price pressure from the new units in the market.

#10 profligate on 06.07.15 at 2:44 pm

#1 rosholt

It’s all fun and games until the special assessments come rolling in. I’ve got a friend who is one of those amateur landlords and the boiler replacement (12k for her unit) , parking garage repairs (3k) have wiped out a year’s worth of rental income. Add the fact that there has been no appreciation in the five years since she bought the place and you have one disillusioned land baroness! Rock on YMMV

#11 Rob on 06.07.15 at 2:47 pm

wowo ly five comments today, guess all the firsters have finally gotten a life.

anyways if you want to know more about investing than I highly reconmend Canadian Money Saver, much better than Money Sense.

Rob

#12 Retired Boomer - WI on 06.07.15 at 2:48 pm

Stats were interesting, and seemed to me very typical age as well as gender distribution.

Yes, the mildly pathetic blog is highly addictive to one who loves to read a great diversity of opinion, from the Italians who love RE, to the young highly paid who can’t see the rationale in buying ‘overpriced bricks’ presently.

While I view RE as nothing more than a place to hold one’s bones until final departure, when you won’t give a dam if you made, or lost on the venture. Whether you rent, or own in the meantime is immaterial, what you want is a life of balance, with “enough” to thoroughly enjoy it while not being indebted, or at least not very indebted.

When you have achieved that, I think you have mastered it.

Naturally, we don’t all have he same values. Sure would be boring if we did, we’d all drive the same color Kia’s, like
C & W, and vote for THAT party!! Gross…

#13 Honey Dripper on 06.07.15 at 2:52 pm

Mark is irrelevant

#14 waiting on the westcoast on 06.07.15 at 2:59 pm

#2 Honey Dripper on 06.07.15 at 2:13 pm
“How about a counter argument about why now is the right time to buy RE!”

I’ll play Devils Advocate… But there have been tons of anecdotes of why you should invest in RE over the past few years.

1. You will be priced out if you don’t get in now
2. You get the benefit of up to 95% leverage which is awesome when prices are going up
3. There is a lot of liquidity out there pushing up asset prices… It isn’t going to end for a long time
4. It is enforced savings. Your money is building a long term asset that you can sell
5. Your spouse “needs” a house (ie marriage will fail if you do not oblige this irrational desire).
6. You have a fetish for granite and stainless appliances and watch HGTV obsessively. ;-)

Listen – if you purchased in Vancouver 5-10 years ago, you made out like a bandit… That doesn’t mean the next 5-10 will be rosy.

Obviously, I think it is irrational to buy at inflated multiples. But you can make it work. In Vancouver, you have to be like my wife’s friend who makes mid 6 figures, has a two bedroom basement suite and takes in two student boarders to keep her house in the city. Sound like a great life…

#15 AlbertaGuy on 06.07.15 at 3:01 pm

#5..Bottom feeding? Not even started. These kijiji ads represent only slightly larger minnows in the pond. The tip of the iceberg if you will.

The little fish are still gorging on the plankton of free money. When and if the time is right we will see the pods of investo-whales come in and suck up the amateur LL like so much krill.

In the US between 2012 and 2014, it was the Private-equity firms, hedge funds, real estate investment trusts and other institutional investors that spent more than $20 billion to buy as many as 200,000 rental homes after the GFC.

http://www.bloomberg.com/news/articles/2014-03-14/blackstone-s-home-buying-binge-ends-as-prices-surge-mortgages

#16 Godth on 06.07.15 at 3:10 pm

Misanthropy
http://www.goodreads.com/quotes/tag/misanthropy

at the same time, courage & vulnerability are yin and yang.
https://www.youtube.com/watch?v=CAID_2iKO5Y

that said Mr. Robot knows the zeitgeist.
https://www.facebook.com/WhoIsMrRobot?fref=nf

#17 Freedom First on 06.07.15 at 3:16 pm

A little terrified? Is that like when your girlfriend tells you she’s a little bit pregnant?

Please, don’t anyone worry about me. I was snipped as a young man. I avoid terrorists so I live alone, work from home, have no boss or co-workers and no debt. I always put my Freedom First, live the Golden Rule, and help others. If you’re not loving your life, change, or change will be forced upon you.

#18 Bill Pritchard on 06.07.15 at 3:16 pm

Garth, Is there a website that would show you how much better in % terms it is to be renting instead of buying or vice-versa? For instance, it would be advantageous to rent in Vancouver and maybe more advantageous to buy in certain USA cities. And how could one figure this out for their local town?

#19 PM on 06.07.15 at 3:21 pm

They’ll get that rent though. I’ve been looking to move up in the rental market for a few months now and the prices are insane. $2400+ for a 2 bed?

#20 TheBarold on 06.07.15 at 3:22 pm

It’s the mis-pricing of the risk premium — these people believe making back ‘their costs’ (likely underestimated) is a worthwhile trade. So far though most who have chosen to do so are ok. But how long can it last?

#21 Linda on 06.07.15 at 3:37 pm

So – how many of the new condo buyers are trying to ‘get rich quick’ by doing the LL thing as promoted by X ‘get rich quick’ famous person who wrote ‘the book’ on how to do this? Still see some big flyer or news article launch at least yearly regarding how Mr. (mostly these are Mr’s – I think I’ve seen Mrs. or Ms. maybe once) who has made a mint will be happy to share ‘the secrets to RE success & wealth’ for ‘only’ X dollars; free invite to this event to YOU; only pay X for the secrets to wealth, yattada yattada.

Bring on the snake oil & the greed – suckers line up for be fleeced.

#22 IKnow on 06.07.15 at 3:39 pm

“We have lowered the asking rent price to $2,150 and will give it a try. The units were expensive and purchased as a long term investment. We will not be making any money on the rental price nor are we trying to. We would just like to cover our costs.”

———————————–

The owner probably sold a couple single family houses and net a couple millions tidy profits, allow them to speculate on condos now.

I’m saying again.
The underlying hope is to see Vancouver becomes like Hong Kong, so the condo will be worth $1.5M in three years, and $3M in 10 years.

The only difference between Vancouver and HK that still exists is that rent is truly expensive there.
Nonetheless the virus of speculation has firmly established in Vancouver.

#23 Victoria Real Estate Update on 06.07.15 at 4:06 pm

# 1 rosholt

“…simple answer; “cover our costs” means that the rent covers all the costs so the condo is essentially free. Slowly paid for by the renters and the owners can just forget about it as it gains in equity from the renters.”

You may not have seen this information:

In 2008-09 prices in Vancouver fell at a rate of 14.2% per year (for 10 months) until emergency interest rates were brought in.

. . . . . Vancouver House Prices. . . . . .
. Percent Below July 2008 Price Level . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .
. .0%. . .*. . . . . . . . . . . . . . . . . . . .
– 1%. . . . . . . . . . . . . . . . . . . . . . . .
– 2%. . . . . . . . . . . . . . . . . . . . . . . .
– 3%. . . . . . . . . . . . . . . . . . . . . . . .
– 4%. . . . . . . . . . . . . . . . . . . . . . . .
– 5%. . . . . . . . . . . . . . . . . . . . . . . .
– 6%. . . . . . . . . . . *. . . . . . . . . . . .
– 7%. . . . . . . . . . . . . . . . . . . . . . . .
– 8%. . . . . . . . . . . . . . . . . . . . . . . .
– 9%. . . . . . . . . . . . . . . . . . . . . . . .
-10%. . . . . . . . . . . . . . . . . . . . . . . .
-11%. . . . . . . . . . . . . . . . . . . . . . . .
-12%. . . . . . . . . . . . . . . . . . . . * . . .
—————————————————————-
. . . . . .July. . . . December. . . . May. . .
. . . . . 2008. . . . . 2008 . . . . . 2009. . .

(source: Teranet’s index)

Prices in Vancouver would have continued to fall in 2009 if rates hadn’t suddenly been slashed from near-normal to emergency levels.

Many Vancouver mortgage holders (who bought near the top) were simply lucky. They didn’t know that a major intervention would rescue Vancouver’s falling housing market in 2009.

Many of those who had made recent condo investments in Vancouver probably would have lost everything.

Investing in condos is risky.

It takes years for major housing bubbles to deflate. The 2006 US housing bubble took approx. 6 years to inflate. Prices peaked in July 2006 and (9 years later) have yet to recover.

In fact, prices in the US would have to increase 54% from where they are now to recover to 2006 peak levels (click on 20-city composite on chart).

Prices in the US would have fallen more if rates hadn’t suddenly been slashed from near-normal levels to emergency levels.

Vancouver’s next major price correction will not be stopped by a major rate slash. It simply won’t be possible to do that again (rates are already at emergency levels).

#24 Rainclouds on 06.07.15 at 4:06 pm

#1 Rosholt

Were u to be one of those who visit regularly and have had your soul dyson-d out of your body. Below wouldn’t be new information……..

1: with a 20% down payment on a beehive in DT Van the rent still wouldn’t cover the monthly costs (mortgage/condo fees/taxes/upkeep)
2: the lost gains of 7% in a balanced diverse portfolio that the 20%downpayment isn’t generating
3: Just try and raise the rent…………poof, tenant gone
4:When u check craigslist, lots of furnished suites in DT Van . Why? To try and minimize the financial bleeding. And gives the option of VRBO rentals (which will bring Rev Can and City of Van attention)

So no, this multi millionaire Is not going near that Toxic waste dump called Vancouver RE.

#25 Randy Randerson on 06.07.15 at 4:08 pm

#1 rosholt on 06.07.15 at 2:09 pm

So does putting your money in a saving account, and you get to skip all the commission, tax and fees. Now why would any sane person put their money in a condo and rent it out at cost, at the risk of being levied for a special assessment?

#26 Robbie on 06.07.15 at 4:14 pm

Covering costs should include the “opportunity cost” of the down payment…something that many owners who rent seem to forget. Many times I have talked to landlords who are renting out a home and saying they “cover costs” and when I ask about lost income from the down payment I get a puzzled look. Also conveniently ignored are the extra costs of maintenance, possible vacancies, damage to the rental, etc. Only if the property goes up in value significantly every year can a possible profit be realized. And, by definition, that which cannot continue to go up forever…won’t!

#27 not 1st on 06.07.15 at 4:15 pm

Does it count if smoking man passes out with his finger on the refresh button? That could be millions of views right there.

#28 seeing it from both sides on 06.07.15 at 4:18 pm

“why would anyone buy multiple condo units to rent out if they never planned on making any money”

Well an acquaintance from HK recently cashed in on the real estate frenzy in HK and sold 3 of her condos there. She doesn’t know where else to park her millions, so she bought multiple condos in downtown Van. , putting the 25% required on each and letting the rent cover the expenses. She’s ok being revenue neutral, that way she can claim low-income status (!). Real estate has been her road to riches in HK. She just traded HK for Van. and is now one of the locals buying. Oh, and no capital gains tax on those HK sales. Got more for her buck as Van prices are cheaper. Dollar for dollar, she got twice the sq. footage in Van. Not to mention that the HK dollar is pegged to the US$.
So, local buying, yes, offshore money …debatable.

#29 seeing it from both sides on 06.07.15 at 4:22 pm

#26

That should have been ‘35% required’ , not 25%.
No income verification.

#30 bb on 06.07.15 at 4:29 pm

I think landlords (pros and novices) are buying pre-sell condos and plan to re-sell later (lets say after 5 years) and count on the appreciation of the property and location. Then they flip their condo unit for a profit.

While waiting they look for a tenant to rent to cover some of their costs before flipping them. Unless of course they would want to rent it out longer till their kids grow up and gift the condo unit.

I live in a condo and my landlord just raised the rent. I really don’t think my landlord would profit from this rental investment right away. Maybe in the next 5 years. But with all the future projects within my area there’s going to be a lot of supply for condos.

I always hear from folks that RE prices will always go up because of high demand from 250k immigrants/year alone. I don’t think majority of the 250k immigrants have the $$$ to buy houses. Surely they will qualify for a loan just like the locals once they get a job.

#31 Squirrel meat on 06.07.15 at 4:30 pm

#17 Freedom First on 06.07.15 at 3:16 pm
A little terrified? Is that like when your girlfriend tells you she’s a little bit pregnant?

Please, don’t anyone worry about me. I was snipped as a young man. I avoid terrorists so I live alone, work from home, have no boss or co-workers and no debt. I always put my Freedom First, live the Golden Rule, and help others. If you’re not loving your life, change, or change will be forced upon you.

————
The eunuched monk. Hilarious. Wise choice to remove yourself from the gene pool. We are grateful. Thanks.

#32 PM on 06.07.15 at 4:34 pm

>In 2008-09 prices in Vancouver fell at a rate of 14.2% per year (for 10 months) until emergency interest rates were brought in.

Thanks Monday morning quarterback.

>Prices in Vancouver would have continued to fall in 2009 if rates hadn’t suddenly been slashed from near-normal to emergency levels.

Maybe but they didn’t.

>It takes years for major housing bubbles to deflate.

Took the US less than a year.

>Vancouver’s next major price correction

Speculation.

>will not be stopped by a major rate slash.

prices dipped 10% in 2012 and recovered on their own.

Look I want you to be right because my living costs are too high here but nothing you say says that you will be.

#33 Obvious Truth on 06.07.15 at 4:35 pm

Great post Garth. I’m thinking this blog is as good a cross section of people that are looking for some awareness about finances as there is. But the crossover to real life choices is where it gets interesting.

The one time posters who chime in to give good honest perspective show that there are caring but less vocal people reading. They know listening is often more important than voicing an opinion.

But what’s a blog without varied ideas and entertainment. It’s always the people that keep us coming back.

However boring or simple your message has been. And no matter how many ways you try to say the same thing. You don’t attract boring financial types. Self inflicted or otherwise we all have our burdens to bear.

#34 Quayside explorer on 06.07.15 at 4:35 pm

Blog dogs, this example couldn’t have come in at a better time. Like Evan I live in New West renting a 2 bed apartment for $1500. We have a 5 year old and the 750 square feet unit is getting a little small. Rental options are pretty limited and most listings of the bigger units are in the $1800- $2200 range. I am pretty sure the owner won’t knock off more than $100 to $150 a month.
We’d rather buy a unit than pay a rental of $2K. We are looking at apartments in the range of $395 to $405K because that’s the price range for apartment with 1000sgft or more without any rental restrictions. My wife and I make about $140K together. What do you guys think – buy or wait?

#35 I'm stupid on 06.07.15 at 4:37 pm

The genius’ in Toronto;

Construction on the 401,410,427and the 400 increase the carpool lane from 2 to 3 people in the carpool lane and the PanAm games coming. The the extra “economic activity” from a second rate sporting event will be put into the gas tanks of millions of daily commuters. Good job you managed to screw everyone over once again!

#36 Harbour on 06.07.15 at 4:53 pm

Picture perfect of today’s society.

Got their face stuck in that f’n screen when walking, talking, driving, eating, sleeping, showering and taking a shit.

#37 Love my Kia on 06.07.15 at 5:01 pm

No idea how it has attracted so many paranoid sociopaths, inconoclasts, survivalists, realtors, xenophobes and charismatic nut jobs.
—————————————–
Who else would you expect to attract with that slogan of yours, ‘This won’t end well’?

#38 Blogbitch on 06.07.15 at 5:03 pm

“I’m not a psychopath. I’m a high-functioning sociopath. Do your research.” – Sherlock Holmes (as played by B. Cumberbatch.)

Love your sense of humour, Garth.

#39 Jay on 06.07.15 at 5:07 pm

Being a landlord sounds great, except…

Except that you can’t necessarily rent a condo out for as much as you’re paying on your mortgage

Except that a condo isn’t free to hold and costs condo fees and special appraisals and routine maintenance costs, as well as insurance

Except that income from rental properties is taxable as income and so isn’t as much money as it first appears

Except that markets rise, but sometimes they fall

Except that in falling price environments real estate may become toxic and stagnant, impossible to sell even at a loss

Except that not all tenants pay their rent on time, and some will damage your property well in excess of the trivial damage deposit they’ve laid down. If they refuse to pay their rent and refuse to leave, you’re going to be paying for the process to legally kick them out. It’s also possible that you get the worst of all worlds: someone who doesn’t pay their rent, who refuses to leave, and you’re stuck paying for the process to get them to leave while you’re paying for the place they’re living in, and they damage the property well in excess of the amount of their deposit in the meantime

That’s not to say that being a landlord is automatically a losing proposition: If you buy a property in a jurisdiction where the price to ratio is relatively low so you’re going to be making enough in rent to price in the risk, the tax, the maintenance, and all that, then you’re going to come out ahead if you choose your tenants wisely, price your rent wisely, maintain and upgrade your properties wisely, and basically just have a solid holistic business plan.

(Hey, what’s that? You want to buy a half million dollar condo and charge me $1200/mo for living there? Please do! I’m sure you’ll get rich that way!)

#40 Honey Dripper on 06.07.15 at 5:07 pm

#14 waiting on the westcoast
I sold my digs in Victoria, BC in 2004 for a handsome profit. That was then this is now. The trend is your friend until it ain’t. It ain’t right now and those flogging it are… well.. I can’t even…

#41 LL on 06.07.15 at 5:23 pm

#23 RE Update

…”Many of those who had made recent condo investments in Vancouver probably would have lost everything”….

..”Investing in condos is risky”…

Completely agree with you.

Some insurance companies doesn’t insure anymore condo owner (because in the past there were too much request to pay for hot water tank mess), or condo fees can be much much more after couple of years, etc…

Condo are the first who lost money when market is going down….and there is a lot for sale (too much) on the market.

Really not good…

#42 SWL1976 on 06.07.15 at 5:26 pm

Just trying to figure out where I fit in the mix between paranoid sociopaths, and charismatic nut jobs. Since I know I am not a basement-dwelling moist Millennial.

Garth you’re a fantastic writer who makes reading about finance enjoyable. You also, every so ofter give us that laugh out loud on liner. Today Catatonic was the one.

I wonder if the deleted content has any direct correlation to JD sales in the long branch area?

#43 Victoria Real Estate Update on 06.07.15 at 5:43 pm

# 32 PM

“Took the US less than a year.”

A typical realtor/housing bull comment. You are incorrect and obviously didn’t bother to look at the link I provided. Prices in the US bottomed in 2012, 6 years after peaking in 2006 and would have to increase over 50% from current levels to recover fully.

“prices dipped 10% in 2012 and recovered on their own.”

Incorrect. You obviously didn’t look at the chart I provided with information from Teranet’s index.

Prices in Vancouver fell hard and fast in 08-09 by a total of 12%.

Prices did not recover on their own. That’s ridiculous.

As Garth has explained many times and anyone who knows anything about real estate knows: falling rates boost house prices and rising rates shrink prices. It’s simple.

Prices in Vancouver stopped falling in 2009 as a direct result of interest rates being suddenly slashed from near normal to emergency levels. Prices would have continued to fall without that massive rate drop. It’s simple and obvious. If you think otherwise I would like to hear that argument.

#44 Mark on 06.07.15 at 5:45 pm

“Covering costs should include the “opportunity cost” of the down payment…something that many owners who rent seem to forget. “

Indeed. And what is an appropriate “opportunity cost” to use? Realtors will tell you to use the rate on some short-term GIC, as though housing equity is just as risk-less as a GIC. Some might say a balanced portfolio with an implied return of around 7% — again, far less risk than a 20% housing downpayment.

Far more appropriate is to use at least the implied return on equity investments — at least 10% these days, and perhaps higher. And even at that, a 20% downpayment in a house, equity, would appear to be far riskier than a 100% equity portfolio. After all, stocks have never gone to zero, but there have been many occasions in which a 20% down-payment was destroyed.

So to come up with an equally risky “opportunity cost” to a 20% housing down-payment, we need to go even higher than the implied 10-12% return on equity investing. ie: introduce leverage to the equation.

How many people buying houses, sitting down and evaluating opportunity costs, are really doing a proper evaluation of opportunity costs? I would suggest, almost none. And those few who do, are not really doing a proper job of it. They’re comparing a relatively low risk portfolio (balanced, or otherwise), to a highly risky investment in home equity.

#45 Diversified in Oakville on 06.07.15 at 5:45 pm

#2 Honey Dripper,

I have had a rental condo for the last 7 years, and a diversified investment portfolio for longer than that.

The condo delivers a small (2% condo value) positive cash flow, and MAYBE another 2% unrealized appreciation per year, after what it would cost to me to sell. I keep it as it is a small part of my overall financial plan.

My diversified portfolio of TFSA, RSP’s, and non -registered investments has returned more than double that over the same time frame.

Your decision depends on how large a percentage of your assets you want in real estate. I would rather have more REIT’s than more physical property.

#46 Ed on 06.07.15 at 5:55 pm

Xenophobes; don’t you think the thinly veiled racism is really getting gross? I live in Nanaimo and Chinese-blaming is happening even here too. A few weeks ago a new neighbor (Chinese ancestry, born in Canada) received a note on their door that they were not welcome. In a country of immigrants (well, anyone not Aboriginal), this is really ironic.

#47 Andy on 06.07.15 at 6:02 pm

“Finally, the revenue generated by this blog? Zero. So be nice to me.” – Garth

And for that I thank you Garth but I wonder if we should start a group called the GFA – Greater Fool Anonymous…

#48 Gin Gin on 06.07.15 at 6:03 pm

Bubbles either make you look foolish before (if you don’t participate) or after they burst (you get killed if you participated)

#49 Habs76-79 on 06.07.15 at 6:03 pm

The elderly lady in Garth’s photo heading this post likely thinks all the other people in that room are NUTS! Which they probably are.

But the point is that we are surrounded in life with efftards. Efftards wasting away on social media and efftards who line up in herds in terms of lack of understanding money, investing and the brainwashing of modern Canadian real estate.

The thing is with these dolts (just like as in the photo) who sit all day staring at the damn phone or tablet, they have tools available for these devices that can educate them about money and the power of investing in a mature way.

Eg:

If we just take as a formula for investing say putting away a simple $3000.00 PER YEAR starting at age 20 and investing to maintain a 7% avg. return over the next 45 years will get you $920,255.29.

That money over the 45 years is liquid, it can be if need be easily moved around and withdrawn from in part or in whole as it grows. Though I’d recommend trying not to touch it

$3000.00 per a year would not over the course of 45 years cripple most persons/households of a general good quality of life. Oh maybe you won’t eat out for work lunch everyday or go out for dinner 3-4-5 times per week. Maybe you won’t pi$$ as much money away at bars or clubs every weekend. Maybe you won’t buy that $25,000-$35,000- $50,000 vehicle every 3-4-5 years. Maybe you won’t go on quite as many fancy vacations. But you will still be able to eat out for lunch at work once in a while or go for dinner say 1-2 times per week (BTW likely still sitting at the table staring into your damn phone as you dinner gets cold and not actually talking to your sig. other, family member(s) or other guest(s) or friend(s) ). You will still be able to over pay for your coffee but maybe not 2-3 times per day but maybe only 2-3 times per week. You will maybe buy a $10,000- $15,000-$20,000 vehicle. You will only go on a fancy vacation maybe only every other year or so. But you will still be able to have a good life and know that you are responsibly putting money away for a safer future and in liquid investments.

But, but, but, I hear the BOO HOOS by some thinking they would suffer a crippling lifestyle change by doing things as I wrote. CRY ME A RIVER! By cutting back just a few needless and often frivolous daily expenditures and stupid product purchases will not cripple your lifestyle but may actually give you even that $3000 per year (or more if you gain the financial ability to do so) to put away for a more secure financial future.

My biggest financial regret in life was to not start with a serious investment mindset when I was about age of 20 because the time I have now lost between age 20 and when I began to GET IT money wise means that I will never have the same amount of money available to me when I do get to my so called golden years.

Too much money PI$$ED away on stupid products not needed nor in actual reality maybe even wanted. Too much money to being wasted on work lunches or buying more car than I should have and what have you.

But as time passes I see that many human resources are just efftards and often run blindly like herds of sheep.

Oh one last thing PUT YOUR DAMN PHONE DOWN FOR A WHILE AND ENJOY THE DAY AND THE REAL COMPANY OF OTHERS! There is a time and a place for Facebook, Twitter, LinkedIn, Instagram and such. BALANCE FOLKS BALANCE!

Peace Out \/

#50 Henry on 06.07.15 at 6:06 pm

Now I know that no one can project the past into the future, but I was blown away by this statistic : Canadian house prices have increased 75.56% over the last ten years! Truly anyone renting over the last ten years has lost big time! The future ten years may be completely different, but this is what it is.

In this period the stock market (US) is up 88% and a balanced portfolio about the same. No closing costs, no property tax, no land transfer charge, no 5% commission to sell, no realtors, open houses, no maintenance or insurance, plus instant liquidity. And now, far less risk with financial assets. — Garth

#51 Henry on 06.07.15 at 6:10 pm

I forgot the link to the statistic:

http://www.globalpropertyguide.com/North-America/Canada/price-change-10-years

#52 will on 06.07.15 at 6:10 pm

“82% are sad, addicted, pathetic people who allow this soul-sucking site into their empty lives. ”

lolololol.

#53 crowdedelevatorfartz on 06.07.15 at 6:18 pm

No idea how it has attracted so many paranoid sociopaths, inconoclasts, survivalists, realtors, xenophobes and charismatic nut jobs. Musty, basement-dwelling moist Millennials……
++++++++++++++++++++++++++++++++++++

Can you be a sociopath AND a realtor?
Or a basement dwelling survivalist?
A xenophobic Millennial?
Charismatic?
Nut job?

Haiku over.

#54 Freedom First on 06.07.15 at 6:21 pm

#31 Squirrel meat

No worries. The human population is around 7 billion, and I don’t even count, as I am a man. Women and children first.

#55 John on 06.07.15 at 6:22 pm

Wow, don’t see where the age stats and male or female are posted here as a point of access to read or comment.
So is Smokin Man really a ‘man’ and does “he” really ‘smoke’ ? Let’s guess how old Smokin’ Man is….

#56 John on 06.07.15 at 6:25 pm

In other news, BMO turned down some wrinklie friends for bridge financing as they cash out of their castle and move into the tiny stuff. Reason: Not sure the deal will close on the ‘castle’ at the end of June. So when BeeMO cranks up the drawbridge…….. they be scaredee pant wussies. Now why is that?

#57 Smoking Man on 06.07.15 at 6:25 pm

Annually there are 6.5 million visits and 12.67 million page views. About 18% of those are new each month and 82% are sad, addicted, pathetic people who allow this soul-sucking site into their empty lives. Another stat of interest: my DELETED pages for 2015 number just 53 (singled-spaced, 10-point type), compared with 226 pages for all of 2014. So, this is progress. Or, people have become entirely catatonic and suicidal after reading Mark’s comments.
…….

Ha, oh mark, you’ve been bitch slapped , rebuttal please Mr Robot.

Don’t worry Gartho..I’ve been focusing on the book as of late..haven’t been to active here.

But next Saturday , I’m off to Laughlin for 3 days jet skiing the Calordo river.. Then off to Vegas form Tue to Sunday, I can guarantee, with the town full of Hotties for the electronic music festavis.. Un regulated and endless supply of Tennessee honey, Your deleted folder will grow exponentially….. Its a promise.

Follow me on Twitter you bugger..amazing pics will be posted.

@SmokingMan. Do it Garth.

#58 Honey Dripper on 06.07.15 at 6:26 pm

#45 Diversified in Oakville
point is, I wouldn’t ever buy a concrete box in the sky in TO right now. Was there a time? of course. Now? not even close.
Congratulations on your investing success:)
Disclosure: I own lots of REITs and I’m mortgage free

#59 Mark on 06.07.15 at 6:27 pm

“As Garth has explained many times and anyone who knows anything about real estate knows: falling rates boost house prices and rising rates shrink prices. It’s simple.”

Its actually not that simple. When rates are low for a prolonged period as applicable to any asset class, too much of that asset class is delivered to market by its vendors. Ironically, low rates actually cause low prices.

On the other extremity, a prolonged period of high rates severely truncates the formation of new housing supply, and actually causes prices to rise.

The ‘model’ that you cite, of rates pushing up prices, only works on a “small signal” basis, with relatively small inputs. It does not work over the long term.

You have hit a new low. — Garth

#60 Brian Ripley on 06.07.15 at 6:30 pm

There is no shortage of rentals available. I track the 3 month average of Craigslist, Kijiji and Airbnb stock for rent in the 6 largest Canadian Markets:

http://www.chpc.biz/6-canadian-metros.html#Rentals

Someone is not reporting all their expense items when they say they want to get a certain rent to “cover their costs”

I would like to see some real income and expense statements that reflect the ability to cover costs in the Vancouver market. That also applies to the Toronto market as well since the condo prices there have caught up to Vancouver’s now:

http://www.chpc.biz/compare-toronto–vancouver.html

By the way… the average price of a Vancouver+Toronto+Calgary condo is now 28% higher than a median priced single family detached house in Montreal:

http://www.chpc.biz/6-canadian-metros.html

The math does not add up in my book. If it does in yours, lets see the statements.

#61 Goldie on 06.07.15 at 6:30 pm

Today’s picture is pretty depressing. I was at a family gathering not long ago and most of the young kids spent the majority of the time with their heads down, not talking, and using their various devices. No running around, playing, and getting into trouble like the old days.

#62 Raisemyrent on 06.07.15 at 6:33 pm

I don’t understand why you’d live in New West. If you feel
Forced away from downtown, ok, but you’re buying into suburb realtor bs. I had a gf who had bought a condo (terrible decision) there and I never saw the appeal. Neither did she but once you take the plunge you start convincing yourself everyday that you made the right decision. She was actually featured by Garth a while back for all of you sceptics.
I rented between Yaletown and the west wend for less than $1200 incl underground parking. Yes it was only 550sqft but I was in the heart of everything. We saw Yaletown or false creek 2 bedroom units for $2400 in the 900-1000 sqft range before we found our ocean view Yaletown penthouse (which is 2 bedrooms for $1400 each and 1100ft). You just have to look. Anyways each to their own. But I’d do some research and bide my time (same to you quayside).

Ps thanks for your comments yesterday. Word is that the baby has improved slightly.

#63 Interstellar Old Yeller on 06.07.15 at 6:33 pm

82% are sad, addicted, pathetic people who allow this soul-sucking site into their empty lives

We laughed at this one. While perhaps true, I would argue that some other aspects of our lives suck more of our souls than this blog, so reading and commenting at GF is like a reprieve. ;)

#64 mic on 06.07.15 at 6:33 pm

Quayside Explorer @34

Negotiate a lower rent for present unit
Adopt a (more) minimalist approach
Optimize storage and functional space
Want what you have

That’s my current approach. :-)

#65 Mark on 06.07.15 at 6:34 pm

“You have hit a new low. — Garth”

I beg your pardon?

Low rates create excess supply, which cannot be absorbed by demand. Prices fall. This isn’t specific to just housing — it applies to all asset classes which are subject to overstimulation.

Go look at Japan. Low rates. Yet falling prices. Why? Because the Japanese housing industry has fully satiated Japanese demand for housing.

Likewise, in the late 1970s/early 1980s — the gold industry was severely overstimulated with access to cheap capital (ie: a gold stock bubble and a gold price bubble). Production grew dramatically. I think we all know what happened to gold for the next 25 years or so.

#66 Investorz on 06.07.15 at 6:36 pm

Garth saying that Kijiji shows businesses aiming at bailing out distressed speculators? That’s big. A first real sign of trouble.

I’ll add another sign just as meaningful. Take the Yonge line subway in Toronto and look at the advertisements. It’s FULL of services to help people manage their debt. If there were not thousands of people that have this issue, those adverts would not stay up long.

This reminds me of California in 2008 (we lived there). Same types of adverts.

#67 MSM-free Zone on 06.07.15 at 6:36 pm

“….The last Re/Max survey on the subject found that 50% of all sales activity in downtown YVR, for example, was the result of amateur speculators. In Toronto that number soared to between 60% and 85%…..”
_________________________

With fewer and fewer provinces allowing tenant rental deductions (thus losing their ability to track landlord rental incomes), I’m guessing close to 100% of these speculators rarely report their rental income, not to mention their capital gains, to the CRA.

#68 Smoking Man on 06.07.15 at 6:41 pm

I posted the first few paragraphs of my book on my blog, I then put a link on my twitter profile.

I have no idea how famous authors are finding me. But they are all following the Smoking Man.. Had a few private messages from well known famous fiction writers encouraging me to finish it. Do they read this blog , then find me.. Probably, as I don’t do any book promotion on twitter. Most of my tweets are chirping politicians

So Garth you must have a huge reach is what I’m thinking . who would have known…

At any rate , thanks for having me here. I should have been banished a long time ago.

Back up those deletes ..especially mine.. Will be gold for the homeless. And you.

#69 lee on 06.07.15 at 6:41 pm

#19 PM,

Then move to Toronto. You can rent a two bedroom for under $2,000 a month near transit and a better job market. I’m beginning to get the feeling you’re a real estate agent pumping.

#70 Butch on 06.07.15 at 6:43 pm

Hey Garth – still predicting a 15% slow melt in real estate? Didn’t prices just shoot up another 18% this spring?

No, they did not. — Garth

#71 PM on 06.07.15 at 6:49 pm

In this period the stock market (US) is up 88% and a balanced portfolio about the same. No closing costs, no property tax, no land transfer charge, no 5% commission to sell, no realtors, open houses, no maintenance or insurance, plus instant liquidity. And now, far less risk with financial assets.

You still had to live somewhere and rent has risen 30% over the same time. Owners won last decade. We’ll see how the next decade treats us.

Rents have barely kept up with inflation. Investors won. — Garth

#72 PM on 06.07.15 at 6:52 pm

There is no shortage of rentals available. I track the 3 month average of Craigslist, Kijiji and Airbnb stock for rent in the 6 largest Canadian Markets:

No shortage of overpriced houses either. SFH rentals are much cheaper than buying (rent has a ceiling). Condo and townhouses are often closer. I know because I’ve done the math and it’s a couple hundred apart. You just lose a shit load if you move.

#73 mitzerboy aka queencity kid on 06.07.15 at 7:03 pm

I wouldn’t git my kicks anywhere else on the internet
then this here blog with all its doggz

#74 Macrath on 06.07.15 at 7:10 pm

Musical Interlude
—————————
Jesse J Price tag

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

#75 prairie person on 06.07.15 at 7:11 pm

I’m back for there summer on the prairies. Something does not add up. Went to a party last night. Asked about the businesses in town. Business is so weak that many of them shut down for the winter. There are at least four that have gone out of business. Some businesses have been for sale for years. Yet, when I check houses for sale (no, I’m not buying) prices are in the 300 to 800,000 range. It’s not foreign buyers. No HAM here. Folks in the capital city selling and buying and building in the country. There are condos that have been for sale for at least three years. The price has come down slightly. No buyers. I was told that people drive an hour into the city to buy at Costco and Walmart. The disconnect is the building of more and more houses but no local business benefiting. As the retirees become ill, die, lose their driver’s licenses, there aren’t going to be secondary buyers. Young people need jobs. The way things are going, there won’t be any businesses here to serve the residents.

#76 Setting the Record Straight on 06.07.15 at 7:20 pm

@46
In a country of immigrants (well, anyone not Aboriginal), this is really ironic.

$$$$$$&&
The first Europeans were Settlers not immigrants. They were creating a society not joining the existing ones.

People born in Canada either descending from Settlers or immigrants are not immigrants.

#77 Julia on 06.07.15 at 7:31 pm

#44 Mark
“How many people buying houses, sitting down and evaluating opportunity costs, are really doing a proper evaluation of opportunity costs? I would suggest, almost none. And those few who do, are not really doing a proper job of it. They’re comparing a relatively low risk portfolio (balanced, or otherwise), to a highly risky investment in home equity.”

I would say that most people look only at rent vs mortgage payment, barely even looking at property taxes. “I can buy for less than my rent!” is the common refrain. People don’t even consider maintenance/repairs etc… let alone opportunity cost.

Look at comments on social media talking about real estate. Not sure how much is driven by realtors. Drives me crazy.

#78 NWO on 06.07.15 at 7:33 pm

Garth; If you are a fan of Dilbert you will get a chuckle out of this one
http://dilbert.com/

#79 LH on 06.07.15 at 7:35 pm

I am terrified… For overextended condo buyers. Especially the owners of condos in the 905. The supply demand picture there is the reverse of that of solid brick SFHs in the M5T M5S M5R block where I own.

Here’s a tip folks.. Proximity to a university is gold. Just look at the outperformance of Vancouver West vs West Vancouver over the past decade.

#80 sideline sitter on 06.07.15 at 7:37 pm

New condos don’t make money, period.

The only people who made money are the ones who bought a while ago and immediately sold, but that was 2+ years ago – the price appreciation is now gone.

As I’ve said before, my landlord subsidizes my life to the tune of $1000+ a month, never mind the $200k upfront to get a mortgage!

#81 Snowboid on 06.07.15 at 7:44 pm

#19 PM on 06.07.15 at 3:21 pm…

A quick search of CL and Kijiji for New West rentals shows dozens of larger 2 bed/2bath condos for under $ 2000 a month.

Many are newer with views, eg. http://vancouver.craigslist.ca/bnc/apa/5021072005.html

Over $ 2000 seems to be restricted to one building “Trapp and Holbrook”, where it’s obvious wannabe landlords overpaid for their units!

#32 PM on 06.07.15 at 4:34 pm…

Sorry PM, but the fundamentals cannot support much more, if any growth in the Vancouver market.

All our six-figure-income relatives and friends in Greater Vancouver rent, they are risk-averse, they know buying in YVR is like throwing the dice in Vegas.
********************************************

#34 Quayside explorer on 06.07.15 at 4:35 pm…

Unless you are getting a smoking deal, the risk of buying a condo, especially in leaky condo land, outweighs any benefit of ownership.

It took us four years to reel in an accepted lowball offer, patience rewarded us with a great deal, but we were happy to have a landlord subsidize our temporary home in the meantime.

#82 Smoking Man on 06.07.15 at 7:46 pm

Practicing drinking and gambling here at Seneca. Practice makes perfect.. vegas next week.

Yes I got to be at the tax farm at 6:30 am.. Good chance I’ll make it.. The diverse characters in this join book worthy. Id never do it.. I like em all too much. Even the pricks that hate me.. I don’t take it personal , its the individuas programing. I’m a writer that is bad at writing. Only a true writer will understand that.

I may change their real names , put em on another planet and share the story…book 2.

But I’m in an amazing utopia of sorts.. Me the unschooled have set the bar so high for any mortal man or woman to breach it gives me great satisfaction..

On the other side of the coin. My wife and I balled our eyes out today.. We visited our late nephew’s grave today. No flowers, the kid broke the attendance record for a viewing at Glendale Cemetery, can you imagen his parents going there and he’s already forgotten…

I’m rich, with a cell phone and a credit card.. You should see it now…

We miss him.. And don’t know how we can help his mom and dad….

Life I tell you..

#83 Randy Randerson on 06.07.15 at 7:47 pm

#46

Disgusting behavior by such neighbors. Rednecks are even in Nanaimo, amazing.

#84 Nagraj on 06.07.15 at 7:57 pm

Are you a LANDLORD?
You’re probably a very nice person who worked very hard to be able to buy extra property you don’t really need.
Be that as it may, Canadians HATE you.
Canadians HATE paying rent, they’d rather become debt slaves buying a stupid expensive house than pay YOU rent.
If you are a Landlord, print out the above sentences and read them to yourself at least once a day. That will help you get through your day.

On a lighter note: there are people who say that if gov’t didn’t forever – in myriad ways – futz around with housing policy, we wouldn’t have insane housing bubbles, wouldn’t have had to invent public housing, rent controls, what have you. (These people are very nice people too.)

In my third year as a student, ca 1970 in Mtl, I was often hungry, and unable to pay my rent on time. The Landlady, a very well-dressed woman, would come around on the last Friday of the month to collect. I figgered out a way to keep the bejeweled and beehived bitch at bay. I left the door wide open and lay naked on the bed pretending I was drunk. She’d come waltzing in, and scream and run off. HA HA HA. About a week later she’d send her stupid husband – but it gave me a week’s grace.

#85 gladiator on 06.07.15 at 8:04 pm

We live in Toronto and rent a 3-bedroom apartment for 1,265$ per month. The apartment has 2 bathrooms and also the garage is included in the rent. Last year, the landlord replaced the roof. This year, he is replacing all the windows and balcony doors (2 of them). Our renting allows us to save about 25% of the after-tax income (we have only one) and to indulge in many of the life’s pleasures, like buying lots of books for my kids, buying a bbq for about 800$, paying for ROM and zoo memberships, vacationing in Europe etc. etc. – all these expenses are after saving the 25% I mentioned.
If we bought now, we would be living like slaves to our dwelling (well, it will be to the bank that lent us the money for the dwelling). Why would I basically destroy my current amazing lifestyle and deprive my kids of many cool things they are getting now? I would be a fool, wouldn’t I?

#86 bigtown on 06.07.15 at 8:12 pm

Shopping in Vaughan near 7 and Weston Road in the very authentic PLAZA DEL SOLE pretend Italian shopping mall I noticed one of the sit-down eateries is shuttered.

Well, you need to notice the typical Vaughan family budget after paying the mortgage…. is there $70 left over to chow down?

Jeff Rubin’s new title: THE CARBON BUBBLE is a very good read. I always thought the Canada Project was built on big immigration not the oil sands so the book is surely a stocking stuffer for next Christmas. If I have offended any of you anti-yule time people rest assured I am full of “politically correct Canadian guilt”.

#87 A Nightmare On Bay Street on 06.07.15 at 8:20 pm

The guy who took that picture :

“I found that photo on my phone the next day. I was trying to take a selfie, in fact. And I messed up. But its so funny, you know, to see my grandma. She has no phone !!! lol !!! Like, shes doing nothing. So boring lol !!!”

#88 lala on 06.07.15 at 8:20 pm

Just got back from Quebec City, first let me remind you of tomorrow being Monday so you have to go to work and how that sucks. Second, a verde sign everywhere. French dudes looks in trouble.

#89 Squirrel meat on 06.07.15 at 8:25 pm

#81 Smoking Man on 06.07.15 at 7:46 pm

Practicing drinking and gambling here at Seneca. Practice makes perfect.. vegas next week.

Yes I got to be at the tax farm at 6:30 am.. Good chance I’ll make it..
—————————
I thought they were gonna fire your ass and you were heading south.

#90 giving up today on 06.07.15 at 8:26 pm

well, after thinking we are in a huge bubble in vancouver for the past ten years i am officially giving up. it will never pop here and i guess it isn’t a bubble. i drive around and see sold signs everywhere on homes that have been for sale for less than a week….STILL, after all this time. it is simply insane. I’m throwing in the towel….vancouver, for some reason , defies all history on bubbles-leading me to believe we are not in a bubble. prices here will be going up forever. every single detached house west of the p.n.e. is now trading for over 1 million. ten years, prices up 400% and climbing and people still buying it all up. i quit.

#91 Squirrel meat on 06.07.15 at 8:33 pm

#68 Smoking Man on 06.07.15 at 6:41 pm

I posted the first few paragraphs of my book on my blog, I then put a link on my twitter profile.

I have no idea how famous authors are finding me. But they are all following the Smoking Man..
——

LOL
Names…………….

#92 Smoking Man on 06.07.15 at 8:35 pm

Shit, the odds of making it to the tax farm by 6:30 am have significantly dropped. My old buddy Edddy just entered the chairman lounge, I was minding my business , talking to myself , seeing how my sentences soundef in chapeter 6..

He’s going for the 18 year scotch….I love challenges.

Tax farm dogs, heads or tails.

#93 Sheane Wallace on 06.07.15 at 8:39 pm

You have hit a new low. — Garth
———————————
There might be actually some hope for Mark as he is trying to describe the particular case of market saturation, one can skew markets only so much and when demand is pulled-up excessively, then future demand vanishes actually driving down the prices in long run.

Are we already there?

We were there long time ago, the current demand is made-up demand driven by the insane CMHC and government policies that will cause destruction of the dollar.
The will literally destroy the dollar and the economy to keep the banks going, yep, they are that insane.

And Harper is considering Canada rich country because is part of G7. Rich by what measure?

GDP per capita? Canada is number 20 in the list:
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita

Overall GDP?
Number 15, after Russia
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29

Mark my word, we won’t be in top 20 by 2017.

#94 Smoking Man on 06.07.15 at 8:42 pm

How does one know your a seriously screwd up human being.. A lush behind repair.

You reach for a straw of an abandond drink to use to scrap out and fling off plack on your teeth.

Its a low point.

#95 DisgustMadeMePost on 06.07.15 at 8:42 pm

#83 Nagraj on 06.07.15 at 7:57 pm

Ahaha

See? Guys can just get away with so much more.

Nice visual though.

A close friend just broke down and bought her ‘dream home’.

Can’t help but have doubts about my choices though in my head I know not to follow suit!

#96 Zinc on 06.07.15 at 8:45 pm

Just curious…what’s ReMax’s definition of an “amateur speculator”?

#97 Godth on 06.07.15 at 8:45 pm

#82 Randy Randerson on 06.07.15 at 7:47 pm

bwahahaha – rednecks in Nanaimo, OMG, call the authorities…oh right, wait. Nanaimo is a mill town, a fishing port – duh on the redneck front.

I live in the Cowichan valley, same difference only smaller and we have more Indians per capita. This place
exists in a state of perpetual, quiet, apartheid. Two worlds slide past each other with only an occasional glance and nod. The Indians on the Res. are still wards of the state, not citizens. How exactly do you think this land, Canada we call it, was conquered?

It’s all part and parcel of our collective mentality. The RCMP know who is who and what is what…and all that’s required. You apparently are pretending. Amazing indeed.

#98 Mister Obvious on 06.07.15 at 8:46 pm

I read your blog all the time and it edifies me.

#99 devore on 06.07.15 at 8:49 pm

Tired of Being Landlord?

But I thought rental income was passive. How can you get tired of receiving free money? This makes no sense to me.

#100 Millmech on 06.07.15 at 8:51 pm

Yup feeling remorseful that I sold my condo last year and didn’t become a LL and make good cash off my investment that was fully paid off.But I’m not on the hook for the special assessment for the underground parking foundation that needs immediate remediation(emergency meeting being called for by strata for all owners),the elevators that need replacing in three of the four buildings,the sinking ground floor patios which led to the discovery of foundation issues,the rotting patios that need replacing on the second and third floor of one of the buildings.I have kept in touch with some neighbours who still own and they figure high five figure assessment to do immediate repairs.With more to come,it’s not even a leaky condo(leaks cash though).This is why I would never own a condo again.

#101 Smoking Man on 06.07.15 at 8:53 pm

#89 Squirrel meat on 06.07.15 at 8:33 pm
#68 Smoking Man on 06.07.15 at 6:41 pm

I posted the first few paragraphs of my book on my blog, I then put a link on my twitter profile.

I have no idea how famous authors are finding me. But they are all following the Smoking Man..
——

LOL
Names…………….
….

Follow me man look at the names of my followers. I don’t read .. So I’m going by their self promotion.
.

Some of em have millions of followers, dosent take a rocket scientist to assume some of the bull shit artists are real.. Tapping into that market on book delivery day.

But names?

Their is only one Smoking Man…only book that counts.

#102 Snowboid on 06.07.15 at 8:56 pm

#89 giving up today on 06.07.15 at 8:26 pm…

How did your open house go today? Don’t you love working on Sundays?

#103 Cloud on 06.07.15 at 9:02 pm

Last week the US 5 year variable rate came up from 3.0% to 3.4%. On a 500K mortgage, this an increase of monthly interest of 150$. Things can get bad pretty quickly when you are leveraged. Live wisely, cheers!

#104 Karma on 06.07.15 at 9:05 pm

“So you can always go back to Kijiji, where bailing out distressed speculators is now a growing business:

Want to Get Rid of Your Investment Condo Units?
Tired of Being Landlord?
Behind on Payments?
Urgent?? Need Immediately Help?

Buy Your Condo Unit Fast!!
No equity No problems!
Fast Cash or Terms!!
Any Area Any Conditions!!! No Obligations !!!!”

Garth,

What did you search for on kijiji to find these types of ads?

#105 BS on 06.07.15 at 9:05 pm

Now I know that no one can project the past into the future, but I was blown away by this statistic : Canadian house prices have increased 75.56% over the last ten years! Truly anyone renting over the last ten years has lost big time! The future ten years may be completely different, but this is what it is.

That blew you away. You don’t get out much do you?

I have some other news for you that might blow you away. People who own real estate have not gained anything unless they sell. They still have the same house or condo after 10 years (actually an older, more dated one that requires more maintenance). Nothing has changed other than the market value they can sell if for. Unless they sell they have gained nothing. Same as someone renting. The renter still rents the same place at marginally higher rent. The RE owner will have higher property taxes and maintenance costs which may be similar to the higher rental rates over 10 years. If the renter invested the capital over 10 years they would have put into RE they would also have a nice portfolio producing income, not a property that consumes income. That portfolio is liquid and they don’t have to move and pay 5% commission to realize the gain.

Now lets see what happens over the next 10 years. All of those people who own RE and don’t sell will see those paper gains evaporate when interest rates reverse course and credit dries up. The property will be another 10 years older and require more maintenance. I bet that will really blow you away.

#106 Smoking Man on 06.07.15 at 9:07 pm

DELETED

#107 omg the original on 06.07.15 at 9:10 pm

“So, I’m left wondering… why would anyone buy multiple condo units to rent out if they never planned on making any money? I don’t get it. ”
—————

I see a few of these types of people every month in Victoria. They bought in the early 2000s with the expectations of continued 10 to 20% annual price increases in Victoria real estate. Back then, Victoria was the “next” San Diego accord to real estate guys.

Problem is the market stalled in 2007 and most have not made any money, most in fact are $10s of thousands underwater.

Typically they paid $400 to $500k for a new condo they could rent out at a loss of $800 to $1500/month. Then when they go to sell in 2015 the condo is worth about what they paid, less $18K realtor fees and $20K in paint, new carpet and minor repairs.

All told most walk aways with a loss of $50 to $100K.

Victoria is a foreshadow of things to come in the rest of Canada over the next decade.

#108 Godth on 06.07.15 at 9:12 pm

#100 Smoking Man on 06.07.15 at 8:53 pm

You might be a wooden spoon survivor but when she’s broken all the wooden spoons in the house on you and she comes after you with the metal spoons it’s up to you to say “enough is enough, you’re going way too far”.

Words are more effective than weapons.

#109 boonerator on 06.07.15 at 9:18 pm

People who buy condos to rent out have most likely not rented to students in their basement.
In 1990 or so, renting 2 basement rooms to students was the only way to meet the mortgage. Then later, international students placed by the university.
Mostly positive, but there was enough hassle and general PIA to the process to make me glad that I did not have a separate dwelling to rent. Renters can get up to all sorts of fun when the landlord is far away (3 streets is probably far enough).
So, when we sold last fall, I considered buying a condo to rent for about 7 nanoseconds.

#110 BS on 06.07.15 at 9:20 pm

PM:

You still had to live somewhere and rent has risen 30% over the same time. Owners won last decade. We’ll see how the next decade treats us.

I moved into a brand new downtown Vancouver condo 5 years ago. My net rent is 2% of the market value (rent minus property tax and maintenance fees). My rent has not increased in 5 years.

My landlord paid $1 million for the place as a presale around 2007/08. Todays market value is about $800K to $850K. Over the past 5 years while I have had no rent increase the maintenance fees and property taxes the landlord pays have gone up $1800 per year.

You do the math on who won.

#111 Smoking Man on 06.07.15 at 9:32 pm

DELETED

#112 Karma on 06.07.15 at 9:38 pm

#1 rosholt on 06.07.15 at 2:09 pm
“simple answer; “cover our costs” means that the rent covers all the costs so the condo is essentially free. Slowly paid for by the renters and the owners can just forget about it as it gains in equity from the renters. Have multiple of these going and you’re on your way to being a real estate tycoon in Vancouver!!

Don’t know why the readers here don’t understand that but the rest of Vancouver does…maybe they are smarter as they are the ones becoming real estate millionaires why the others complain about them.”
———————————————

While you are correct that the rent pays off their mortgage, if the person is on a variable mortgage, and rates rise at all, their effective amortization will extend by many more years. This is a risk. On renewal, it might become cash flow negative without significant rent growth. That’s the bigger risk, particularly when new condos are coming online all the time and interest rates are very low. And if the guy has multiple units and all are cash flow negative, he’ll be in trouble.

#113 Geofferson on 06.07.15 at 9:41 pm

My parents just sold their executive home in Grande Prairie, AB for $490k after realtor commission (over 100k less then they wanted). They paid $465k four years ago, so the market for these homes is definitely in a pile of hurt right now.

#114 crowdedelevatorfartz on 06.07.15 at 9:54 pm

@#36 Harbour
“Picture perfect of today’s society.

Got their face stuck in that f’n screen when walking, talking, driving, eating, sleeping, showering and taking a shit….”
++++++++++++++++++++++++++++++++++++

Classic observation!

Its a whole new “improved” Millennial world out there.

#115 Leo Trollstoy on 06.07.15 at 9:55 pm

“You have hit a new low. — Garth”

Translation: Your rationale is moronic.

#116 Godth on 06.07.15 at 10:00 pm

#113 crowdedelevatorfartz on 06.07.15 at 9:54 pm

We all play our part. ‘Reality’ is to painful and stinky.
https://www.youtube.com/watch?v=xLqrVCi3l6E

#117 young & foolish on 06.07.15 at 10:34 pm

“We live in Toronto and rent a 3-bedroom apartment for 1,265$ per month. The apartment has 2 bathrooms and also the garage is included in the rent”

There are plenty of those kinds of deals in Toronto …. if you believe in unicorns.

#118 Julie K. on 06.07.15 at 10:44 pm

The only thing I am really terrified about is the frank self realization I am simply not smart enough.

Not smart enough to figure out who is really telling the truth about anything and everything that matters (besides peace, love, happiness, family & friends — I have that part nailed thankfully and maybe that is enough).

Also somewhat terrified, but probably more disappointed, I do not have a deep, academic based intelligence on the economy (local and global) or finances (in all its facets). Which is probably, in part, why I am driven to read GT’s pathetic blog daily — and majority of the comments.

I did learn how to save at a young age and stay out of consumer debt but somehow that discipline & practice does not seem enough anymore.

The only knowledge I am 100% sure of includes (1) no body really knows what is going on and (2) nothing is ever, ever as it seems and (3) that I will go to my grave, in 30 years give or take, knowing very, very little in the grand scheme of things.

What is also troubling is fact ~ 35 years ago, I really believed I knew everything.

Yup. I am terrified.

Having said all that, I do take some measure of comfort in knowing I am at least consciously unconscious.

Peace.

#119 Trojan House on 06.07.15 at 10:47 pm

Coming up next…a cashless society. Wait for it…

#120 Robbie on 06.07.15 at 11:02 pm

#89 “giving up today”

I’m a B.C. Realtor and I just did a search of single family homes selling in Vancouver for under $1,000,000 and found 74 of them.

Exaggerate much??

#121 Squirrel meat on 06.07.15 at 11:02 pm

#100 Smoking Man on 06.07.15 at 8:53 pm

#89 Squirrel meat on 06.07.15 at 8:33 pm
#68 Smoking Man on 06.07.15 at 6:41 pm

I posted the first few paragraphs of my book on my blog, I then put a link on my twitter profile.

I have no idea how famous authors are finding me. But they are all following the Smoking Man..
——

LOL
Names…………….
….

Follow me man look at the names of my followers. I don’t read .. So I’m going by their self promotion.
.

Some of em have millions of followers, dosent take a rocket scientist to assume some of the bull shit artists are real.. Tapping into that market on book delivery day.

But names?

Their is only one Smoking Man…only book that counts.
———————————–

You need to invite the “Dyslexic Speedreaders” to be the musical entertainers for the grand book launch.

If I post the links the host is sure to delete it!

#122 Happy in New West on 06.07.15 at 11:03 pm

I picked a good day to post. I’m renting in New West – best decision I could have made. 1100 sq ft in a ten year old building for $1700 a month. Beautiful pet friendly building, all amenities, includes parking and storage locker and an amazing outdoor space. I can walk to shop or go to the park, take the skytrain downtown Van to go to the symphony or run the seawall, and I’m 20 minutes from work by car. What’s not to like? I worked in Yaletown for four years and I don’t miss it. And if I bought here, the equivalent suite would be well over $430k.

One of my kids is renting a few blocks away, sharing with a friend, one year old building, smaller space than mine but two bedrooms and a den and two balconies, for $1500 a month.

Oh, and the bubble in the Lower Mainland is at it’s peak. I know this because my ex just bought a place in North Delta because “houses in Vancouver only go up in price”. He left me for his girlfriend (now long gone, apparently) and the house in Burnaby sold last November in one week, $30k over asking. We’d been there 30 years, and did very nicely, thank you, on the sale.

I’ve been reading Greater Fool for while now and have paid off all my debts (divorces are expensive, sadly), maxed out my RRSP and TFSA, and am slowly getting a diversified portfolio in place. I’m thrilled that I no longer have to worry about a leaky roof, gutters, waterlines, painting, drainage, or the manic construction going on on my old street. I may even be able to retire now. And I’m planning trips to Montreal, London and San Francisco next year; all I have to do is call the pet-sitter and lock the door and I’m good.

Ex? 60-some odd years old, poor health, self-employed, no pension, no work benefits, a small RRSP, no handy man. Went to the bank and asked for the maximum mortgage he could get and then bought a place on price alone. His commute is now going to be well over 2 hours a day on a good day, up from 30 minutes. And it’s a circa 1970s house, too, so I wish him luck on keeping it up.

Life is good. Thanks, Garth – this blog was a real help, and the paranoid sociopaths, inconoclasts, survivalists, realtors, xenophobes and charismatic nut jobs always entertaining. Even Mark!

#123 Balmuto on 06.07.15 at 11:05 pm

Japan Q1 GDP 3.9% vs. 2.4% estimate. Global deflationary crisis thesis takes another hit.

#124 Obvious Truth on 06.07.15 at 11:07 pm

#117 Julie K

You’ve probably already found most of the answers you need in order to help yourself. That should be enough for anyone.

As for everything else. The Beatles put it best. ‘Let It Be’

Sometimes it’s better to just observe.

#125 45north on 06.07.15 at 11:08 pm

The Bartholomew by Daniels just launched, is a new Pre-construction Condos & Towns to be ready for winter 2017.You can buy with only $4000 when you sign and $1000 per month till you reach 5% ONLY.

key word being sign. Once your name is on paper the bank looks at you and decides if it likes you or not. Here’s David Fleming on how condos are financed:

http://www.torontorealtyblog.com/archives/9775/9775

relevant, even crucial is the quality of the condo build. I checked CBC and found “The condo game”.

Kevin: from your link: Toronto residents Stephen and Melissa Heidebrecht have done the math and they’re moving on — to Kitchener.

according to Google Maps, Kitchener to 215 Huron Street ( where I used to work ) is 1 hour 10 minutes without traffic. I’d say anytime it’s less than 2 hours it’s a good trip.

Victoria Real Estate Update: Vancouver’s next major price correction will not be stopped by a major rate slash. It simply won’t be possible to do that again (rates are already at emergency levels).

Toronto’s next major price correction will not be stopped by a major rate slash. It simply is not possible.

#126 Annek on 06.07.15 at 11:08 pm

No idea how it has attracted so many paranoid sociopaths, inconoclasts, survivalists, realtors, xenophobes and charismatic nut jobs.

Hey Garth,
I don’ t think I am any of the above. But I read your blog daily. I am a health professional who earns a decent salary. I own a house which is paid for. In fact, I never had a mortgage. I never bought beyond my means. But, I bought 25 years ago and could not afford my house today. I am reading your blog because I read your first book and I do agree with much of what you write.
I am also trying to understand how so many people are convinced about housing as a best investment. I show people copies of your blogs . I caution them to be careful. Yet, those same people go out an buy a condo. One young millennial that I work with is so excited because she has bought at The Shops in Don Mills in the GTA. No one seems to give a thought as what happened across the border with housing. They all say Canada is different because we did not have subprime mortgages.
As well, with these latest job stats in Ontario, people will feel more secure and go out and buy houses. And people who have houses are putting in so much money to renovate. They have to have the best of the best. I just don’t get it. I think the writing is on the wall. But , most people do not see it that way. If so,they will continue to buy houses. If rates go up slowly, this may not deter the masses.

#127 Druidly on 06.07.15 at 11:13 pm

paranoid sociopath – check
inconoclast – check
survivalist – check
xenophobe -check
charismatic nut job -check
realtor – no way….would never lower my standards!

#128 Godth on 06.07.15 at 11:20 pm

#117 Julie K. on 06.07.15 at 10:44 pm

Don’t worry about it, we’re just making it up as we go – same as it ever was. Story telling apes that like to pretend we’re in control, rational and objective. It’s very funny actually, when it’s not absolutely tragic but when hasn’t that been the case?
http://www.amazon.ca/The-Lost-Science-Money-Mythology/dp/1930748035

#129 Steve French on 06.07.15 at 11:24 pm

Smokey: it’s real tough about that nephew of yours.

His whole life as head of him. All that taken away.

Where’s the life “lesson” in that?

I struggle to find one sometimes.

But I know one thing.

… We all got it comin’, kid.

#130 Steve French on 06.07.15 at 11:26 pm

“It’s a hell of a thing…”

https://www.youtube.com/watch?v=3zKCIf-vfbc

#131 crowdedelevatorfartz on 06.07.15 at 11:27 pm

@#121 Happy in New West
Congrats!
I dropped my truck off for a warranty service Sat am and went for a walk down along the New West boardwalk. Had never been there. The condos on the river are amazing but I overheard some “owners” berating a contractor for some repairs that were ongoing.
Beautiful spot to be renting.

#132 crowdedelevatorfartz on 06.07.15 at 11:34 pm

@#115 Godth
Uhhhh, sorry.
Dont have 2hours to watch paranoid internet drivel.
But I’m sure you can summarize for me.
The “family” photo at the top does bring a tear to the eye…….
All that family “bonding”.

#133 crowdedelevatorfartz on 06.07.15 at 11:42 pm

@#115 Godth
One link deserves another
http://www.technologyreview.com/view/525616/data-mining-reveals-how-conspiracy-theories-emerge-on-facebook/

#134 Ponzius Pilatus on 06.07.15 at 11:50 pm

Evan is a typical Caucasian renter in Vancouver.
He wastes his time on Craiglist.
The savy renters know that the deals are in the Chinese Newspapers.

#135 JimH on 06.08.15 at 12:05 am

Whatever you do, Garth, please don’t tell Mark’s mother that he’s a full-time poster here.
She honestly believes he plays piano in a whorehouse.

#136 kommykim on 06.08.15 at 12:08 am

RE: #53 crowdedelevatorfartz on 06.07.15 at 6:18 pm
Can you be a sociopath AND a realtor?

I think it is a requirement.

#137 kommykim on 06.08.15 at 12:17 am

RE: #65 Mark on 06.07.15 at 6:34 pm
Go look at Japan. Low rates. Yet falling prices. Why?

Japan’s falling RE has got nothing to do with falling interest rates and everything to do with a falling population levels:
http://www9.ocn.ne.jp/~aslan/pfe/jpeak1.gif

#138 Bobdod on 06.08.15 at 12:30 am

Alter lecturing my coworkers to abandon canada and seek a much higher standard of living in the U.S. someone paid attention and is on their way to San Francisco. That’s one talented highly educated software engineer that will not be helping BC shift to a modern economy.

I wonder if any of the minions toiling deep within the harper regeim have considered the great Canadian brain drain while orchestrating the worlds biggest housing bubble?

I plan to follow soon and watch the debt bomb explode from over the border.

It’s odd that U.S. tech companies can pay 75% more for doing the same job on top of expensive health care. Not to mention stock options.

I suppose when you treat everyone as a labourer you can’t have a successful software industry.

Hey let’s sell more trees and oil. It’s worked for the last 200 years.

#139 rc on 06.08.15 at 12:39 am

http://www.dailyreckoning.com.au/china-60-billion-might-only-be-the-beginning/2015/05/30/

And not canada?

#140 lisa t on 06.08.15 at 1:24 am

Re: your site stats; how do you know the gender of your visitors who don’t leave comments?

#141 Vangrrl on 06.08.15 at 1:55 am

#34: ‘We’d rather buy a unit than pay a rental of $2K.’

Why? You’d rather ‘own’; ie rent from the bank, at 400k then pay 2 grand rent, and there are two of you making a combined income of 140k? You do realize that at 750/mth rent you’ve practically been living for free for however long that went on. I guess that’s where the skewed perspective comes in? I think there are a lot of Vancouver-area people who think like you- long time renters whose rent hasn’t risen, got used to paying so little, and think a shelter cost of 1/5 their income is too much… Ridiculous.

#142 TRT on 06.08.15 at 3:58 am

Vancouver average price now $2.23million.

Garth, it’s sickening to think that you impose the view that it’s locals that have caused this. I know your eyes are open and politician blood runs deep but come on…

“The benchmark price for a detached property in Metro Vancouver increased in May to $1,104,900.” (Greater Van RE Board). — Garth

#143 SWL1976 on 06.08.15 at 4:53 am

117 Julie K.

The only thing I am really terrified about is the frank self realization I am simply not smart enough.

No one should ever have to worry about that. After all we simply don’t know what we don’t know.

As far as who is telling the truth these days? Well that is a tough one. I think that it’s safe to say, if there is profit to be made you are probably being led astray.

Grass roots media and people sharing there observations of the world around them is probably your best bet for the real story. There are plenty of good honest people who have a story to tell and who have had enough with the lies being spewed by the MSM.

The truth is out there and just because it sounds far fetched and rediculous doesn’t mean it can’t, won’t, or isn’t happening. Tee vee programing is called programing for a reason and just because the herd thinks its true, doesn’t make it true.

Now more then ever it is time to question everything you think you know about the world around you.

I think the reason most people don’t want to know or simply deny the truth is… Once they know they have a moral obligation to do something about it. Hence the saying…

Ignorance is bliss… But, it’s still ignorant

#144 nubbers on 06.08.15 at 5:02 am

Quayside explorer @34

Perhaps break the problem up?

I know the vested interests on this blog will have no choice to disagree with this, but wait to see how sentiment changes when the US increase their base rate in September. And then you can justify waiting for another 6-9 months for an increase in the Canadian rate. At that point, either waiting or driving a hard bargain will be easier as prices will be coming down.

Or just jump in now (as I did in the 1990s UK house price crash) and pay an increasing amount of interest on a place that is dropping in value and that you can’t afford to move away from.

#145 Stupesing in Cabbagetown on 06.08.15 at 7:03 am

A friend of mine had an investment condo purchased at the end of the last housing bubble back in the 1980s. He sold it for a very modest gain in the late ’90s after subsidizing a tenant for about a decade. While that seems like complete idiocy to me, he says that at the time he was making loads of money as a commissioned salesman and the condo “investment” saved him thousands of dollars in income tax. Maybe that’s the reason so many amateur landlords are able to keep going?

#146 David McDonald on 06.08.15 at 7:14 am

#117 Julie K. on 06.07.15 at 10:44 pm

Long ago my wife and I were at a Ottawa cocktail party. I was seated beside a distinguished gentleman who listened politely as I explained the state of the economy and the evolution of the dollar. When I went for a glass of wine I asked my wife who he was. “Take out your wallet” she says; “look at the dollar bill – he signs it”.

He was Louis Rasminski, the third governor of the Bank of Canada. Suitably chastened I sat back down and listened hard to what he had to say. It was very educational naturally.

I guess the moral is to keep listening; especially to those with a track record like Garth’s. This is especially true for young people who need to make strategic life decisions. Find a guru. In fact find several and don’t be shy to ask for an opinion.

#147 Ray Skunk on 06.08.15 at 8:47 am

Uh oh. Looks like the “world class city” of Toronto’s transit has gone tits-up again.

Quick Realtors… how to spin this?

How about: “steps to streetcar line”?
Ah, that’ll do it. Phew. Slap 10% extra on the asking.

#148 David Hawke on 06.08.15 at 9:03 am

” No idea how it has attracted so many paranoid sociopaths, inconoclasts, survivalists, realtors, xenophobes and charismatic nut jobs. Musty, basement-dwelling moist Millennials, too. Last week I was asked for some audience stats on this site, and what analysis revealed was interesting.

Who reads this thing? The bulk is between the ages of 25 and 44 (49%), with those between 18 and 24 the second major group (27.5%) and the pre-wrinklies over 45 clocking in at 23.5%. And while you might not always detect it from the testosterone-drenched comment section, genders are about equally represented, with 45% female and 54% male.”

Some info you can add to your stats, about 5 yrs ago I was introduced to your blog over a beer in a hostel in Phnom Penh one day by an expat on a visa run from Bangkok where he lived with his family.

We kind of use it as a way to keep in touch with the insanity going on in Canuckistan and as a daily chuckle/head-shake at the antics of the brainwashed sheeple.

Belong to the 3rd group, actually now have graduated to the wrinklie stage and drive a Kia.

#149 20th Century Limited on 06.08.15 at 9:10 am

Garth –

Great photo.

They’re probably texting each other!

Small wonder snowflakes feel so lonely and ‘disconnected’.

#150 Julia on 06.08.15 at 9:27 am

“Crowe Mackay, in its capacity as bankruptcy trustee, is soliciting offers for the assets of Richmond, British Columbia’s For Real Foodmart, which was touted as Canada’s largest Asian supermarket. ”
Source: insolvencyinsider.ca

With all the talk out west of “non-locals” buying real estate, this is an interesting bankruptcy. I have not read the details but they filings should be available online.

#151 Daisy Mae on 06.08.15 at 9:49 am

“Fecund” – fertile, prolific. Well, you certainly keep us on our toes, Garth. ;-)

#152 Squirrel meat on 06.08.15 at 9:51 am

#129 Steve French on 06.07.15 at 11:26 pm
“It’s a hell of a thing…”

https://www.youtube.com/watch?v=3zKCIf-vfbc
——–
The cloud formation behind him is a classic Chinook arch of Alberta.

#153 Rational Optimist on 06.08.15 at 9:52 am

Great testimonial: Glen Foster is one hilarious guy.

#154 Daisy Mae on 06.08.15 at 9:54 am

“…82% are sad, addicted, pathetic people who allow this soul-sucking site into their empty lives.”

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

Hey! I resent that! LOL And you didn’t include seniors in your percentages. You DO keep me on my toes.

#155 cramar on 06.08.15 at 10:03 am

So 3/4 of the readers are under 44. And the “pre-wrinkles” make up the rest. That leaves zero % of actual wrinkles who read this pathetic blog, unless they are lumped in wtih the pre-wrinkles. THAT explains why Boomers are not selling their paid-for houses in the GTA by the thousands and smiling all the way to retirement heaven. It is because they don’t read this blog!

That needs to be changed. Maybe a ad or two in Zoomer. Or a mass mailing from CARP.

But it does raise a flag. Are those stats really credible? How is it possible to determine the age (and gender) of a reader?

What scares me is not the people this blog attracts, but the universal financial ignorance of the under 44 crowd that think the way to the good life is taking on as much debt as the system will give you, the system will continue forever as is, and that RE always rises.

The letters are the real terrifying part of this blog.

#156 Daisy Mae on 06.08.15 at 10:29 am

#28: “….so she bought multiple condos in downtown Van. , putting the 25% required on each and letting the rent cover the expenses. She’s ok being revenue neutral, that way she can claim low-income status (!).”

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

How so? Isn’t she required by law to report income generated from these rental properties?

#157 S.Bby on 06.08.15 at 10:33 am

#121 Happy
North Delta? He will soon regret that decision.

#158 NoName on 06.08.15 at 10:48 am

#155 Daisy Mae

She is using any wrtite-offs that she can find in a book to lower her taxable income.

#159 Daisy Mae on 06.08.15 at 10:51 am

#61 Goldie: “…and most of the young kids spent the majority of the time with their heads down, not talking, and using their various devices. No running around, playing, and getting into trouble like the old days.”

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

So true. I was in Vegas recently with my two daughters…both addicted to social media every spare moment. I felt like saying: “How often do you get to spend time with ME, your mom?”

#160 TurnerNation on 06.08.15 at 11:06 am

Bigarider at Shops at Don Mills the other weekend in Joey’s restaurant valet parking I saw at least 8 high end luxury cars parked. AMG and M models.

I lol’d at the lives of the new bourgeoisie.

#161 seeing it from both sides on 06.08.15 at 11:17 am

#155 How so? Isn’t she required by law to report income generated from these rental properties?
—————-

She is reporting, but revenue neutral means she shows no income (or under the threshold) . Hence no income tax payable and she qualifies for low-income subsidies, while parking her funds in real estate which she has grown accustomed to as a safe and sure investment. I disagree but what do I know, she has made millions more than me :(

#162 Mike T. on 06.08.15 at 11:25 am

The BIG TRUTH that is hidden from us is what it is to be human

What it truly means to be human

That, and the sun is getting hotter

work backwards from there

yesterday I said if politicians lie, well check out ‘scientists’…

it is amazing if you get to the end

#163 Happy in New West on 06.08.15 at 11:25 am

@ #130 crowdedelevatorfartz

If you were at the Ford dealership on Stewardson, there is a really good craft beer place across the way on 4th under the overpass, called Steel and Oak. Excellent beer and good music – I recommend the smoked hefeweizen.

@ #156 S.Bby

I can’t even imagine moving to Delta. The bridges alone would drive me nuts. But when you buy for speculation, rather than for a place to live, I guess you don’t worry about stuff like that. The older I get, though, the less I want to spend my valuable time in traffic……

At least it isn’t Whalley.

#164 Shlomo on 06.08.15 at 11:25 am

For all those wondering how they know your gender online, you’re easily identifiable by the plethora of variables your browser and configuration broadcasts about you. By itself, a variable is useless, but in combination with the others, you’re easily identifiable.

Try it out, https://panopticlick.eff.org/

If you’re uniquely identifiable in your normal browser (no biggie), in Incognito/Private mode and through Tor as well, then you have a real problem. You might as well give up your alias and use your real name, since that’s how it’s seen to everyone else.

#165 Mike T. on 06.08.15 at 11:27 am

I’ve been re-watching the X-Files to get ready for new episodes

it’s like watching the news

this is all the weird stuff that happened during the human experiments we’ve done….

#166 South Burnaby gardener on 06.08.15 at 11:35 am

Article in the Telegraph describes three warning signs in 2005/2006 that the London RE boom was peaking. Could be applied to the TO/Vancouver markets now?

1 “You would go to a bank with £5 and they’d give you £1m. We were getting calls saying: ‘Don’t put in any money, we’ll fund it all.’
2 People were buying property, then flipping it six months later, having done nothing to it.
3 The chatter from the agents was that this was the new norm.”

http://www.telegraph.co.uk/finance/property/11658364/Luxury-property-chief-on-social-housing-Armaggedon-and-how-to-spot-the-next-housing-market-crash.html

#167 Bottoms_Up on 06.08.15 at 11:54 am

#160 seeing it from both sides on 06.08.15 at 11:17 am
——————————————————————
I’m fairly certain the CRA doesn’t give special tax breaks to landlords because they have a mortgage.

Sure her income and expenses are ‘revenue neutral’, however she will be paying tax on rent money received, she has to claim that as income. If she has multiple units, her income from rent received could put her in the highest tax bracket.

#168 Bottoms_Up on 06.08.15 at 11:55 am

#160 seeing it from both sides on 06.08.15 at 11:17 am
——————————————————————
Come to think of it, I think your friend is doing something illegal. I do not think she is claiming the rent received.

Therefore she is screwing the taxpayer by tens of thousands of dollars a year.

Ok, so yes, that IS a way to get rich right?

#169 Bottoms_Up on 06.08.15 at 11:56 am

#157 NoName on 06.08.15 at 10:48 am
————————————————
Such as?

#170 Squirrel meat on 06.08.15 at 12:00 pm

Makes sense….

http://www.calgaryherald.com/Canada+oilsands+paving+driverless+trucks+threat+layoffs/11118375/story.html

#171 Cowpoke on 06.08.15 at 12:16 pm

“So, I’m left wondering… why would anyone buy multiple condo units to rent out if they never planned on making any money? Two + reason.
1. Amortization and time.
2. This is really a renters market so exercise your power.

#172 Sheane Wallace on 06.08.15 at 12:20 pm

#137 Bobdod

You think they care about the brain drain?

Why would the intellectually challenged bureaucrats not be looking at the white collar workers as trash and general laborers?
We are stupid enough to stay here mortgaged for live for that cardboard particles houses or glass walled condos, eating cheap GMO, so we deserve what we get.

Why we pride ourselves to be the highest educated nation and have lower productivity than many other countries including the states?

Look at the leaders and you will get the reason.

#173 Ponzius Pilatus on 06.08.15 at 1:02 pm

#159 TurnerNation on 06.08.15 at 11:06 am
Bigarider at Shops at Don Mills the other weekend in Joey’s restaurant valet parking I saw at least 8 high end luxury cars parked. AMG and M models.

I lol’d at the lives of the new bourgeoisie.
——————-
Joey’s is an unusual name for a Chinese Restaurant.

#174 Ponzius Pilatus on 06.08.15 at 1:11 pm

#162 Happy in New West.
They will close the Patulla for a year.
All the construction trucks will then go right trough New West towards the Knight Street bridge.
New West is a traffic nightmare as it is now.

#175 Mike S on 06.08.15 at 1:22 pm

Garth,

Any buzz from your sources in Ottawa?

What are the chances of early federal elections before September?

#176 Calgary Rip Off on 06.08.15 at 1:24 pm

Dude your blog is too much for Calgary, things move slowly here, everything, real estate, stop lights, etc. Its prairieland and the actions and thoughts reflect this. Post a separate blog, like once a year, for Calgary. Unless there are serious interest rates changes mortgages and rentals will remain….a rip off. “Mortgage owners screwing other mortgage owners with lousy advice”(home hardware)

#177 MF on 06.08.15 at 1:31 pm

#159 TurnerNation

Lol yeah I have been there.

That area is mega pretentious, but at the same time offers nothing. A microcosm for the rest of Toronto.

Usual two groups of losers at The Joey’s.

1) mostly dumb millennials my age and younger spending all their money on cars and condos and who work in RE. But there is also the
2) Gen x who bought a house 10 years ago who now think they are rich and are trying to recapture their youth.

Why do I live here?

MF

#178 Mike in Toronto on 06.08.15 at 1:36 pm

Nice part about a balanced portfolio.

Good news is bad news and bad news is bad news.

Shouldn’t have looked at the charts.

#179 Ponzius Pilatus on 06.08.15 at 1:37 pm

The Landlady in the picture has just informed her musty basement dwelling renters that they must move out by the end of the month, because her 60 year old son is moving back home.
They’re all checking Craigslist for new digs.

#180 waiting on the westcoast on 06.08.15 at 1:59 pm

Millennials – check out this article on affordability in US… Sure it’s tough in the Bay, etc., but if you look at the table lower in the article, you will see how truly affordable it can/should be..

http://www.bloomberg.com/news/articles/2015-06-08/these-are-the-13-cities-where-millennials-can-t-afford-a-home

#181 Squirrel meat on 06.08.15 at 2:02 pm

Naked Canadians causing earthquakes

http://www.theglobeandmail.com/news/world/canadians-among-foreigners-blamed-for-malaysian-earthquake/article24838099/

Human flying squirrels – deadmontonian to be sure.

http://www.theglobeandmail.com/news/national/edmonton-area-man-wearing-wingsuit-jumps-to-death-near-canmore-alta/article24839870/

#182 Squirrel meat on 06.08.15 at 2:26 pm

That was fast….
#idonthave2million

http://www.theglobeandmail.com/report-on-business/economy/housing/blistering-bc-housing-prices-put-pressure-on-politicians/article24836765/

#183 Craig on 06.08.15 at 2:33 pm

Hi Garth

I’m looking for some good recommended investment reading/education for today’s world.

Can you suggest some books, blogs or other information sources to increase my financial/investment knowledge?

#184 Bigrider on 06.08.15 at 2:48 pm

#159 TurnerNation on 06.08.15 at 11:06 am
Bigarider at Shops at Don Mills the other weekend in Joey’s restaurant valet parking I saw at least 8 high end luxury cars parked. AMG and M models.

I lol’d at the lives of the new bourgeoisie.

This has what to do with me Turner ?

#185 None on 06.08.15 at 3:19 pm

#59 Mark on 06.07.15 at 6:27 pm

===========

What do you do for a living?

#186 None on 06.08.15 at 3:20 pm

#17 Freedom First on 06.07.15 at 3:16 pm

Please, don’t anyone worry about me. I was snipped as a young man. I avoid terrorists so

=======

terrorists = women or terrorist-terrorists?

#187 None on 06.08.15 at 3:22 pm

#54 Freedom First on 06.07.15 at 6:21 pm

No worries. The human population is around 7 billion, and I don’t even count, as I am a man. Women and children first.
======

Seriously? You feel you are an oppressed man?

#188 TurnerNation on 06.08.15 at 3:39 pm

Ah it is bigtown not bigarider

I saw Hwy 7 and assumed…

I never get up that way.
Chilling in the ‘6.

#189 Holy Crap Wheres The Tylenol on 06.08.15 at 3:50 pm

#88 Squirrel meat on 06.07.15 at 8:25 pm
#81 Smoking Man on 06.07.15 at 7:46 pm
Practicing drinking and gambling here at Seneca. Practice makes perfect.. vegas next week.
Yes I got to be at the tax farm at 6:30 am.. Good chance I’ll make it..
—————————
I thought they were gonna fire your ass and you were heading south.
_____________________________________________

Yes that was the last word I recall from Smoking Man said drinks with the guys later that evening as he got his ass voted off the Island. OR is this just another rambling line of BS?
I thought he was out of the tax farm business as he calls it and heading to LA for bigger and better things?
So Smoky, what is it?

#190 Holy Crap Wheres The Tylenol on 06.08.15 at 3:55 pm

In fact, this blog terrifies me, too. No idea how it has attracted so many paranoid sociopaths, inconoclasts, survivalists, realtors, xenophobes and charismatic nut jobs. Musty, basement-dwelling moist Millennials, too. Last week I was asked for some audience stats on this site, and what analysis revealed was interesting.
___________________________________________

What again left out…..no Zombies.
What we need is Russell Oliver to start loaning cash for homes. The coup de grâce!

#191 Deb on 06.08.15 at 4:19 pm

Thank you for the pic, Garth. Very sad, however, one of the most powerful examples of distracted living that I have seen in some time.

#192 Leo Trollstoy on 06.08.15 at 4:23 pm

So true. I was in Vegas recently with my two daughters…both addicted to social media every spare moment. I felt like saying: “How often do you get to spend time with ME, your mom?”

Guilt doesn’t work on children at that age.

You either decide to immerse yourself in their world, or you don’t. Choice is yours. Good luck.

#193 NoName on 06.08.15 at 4:58 pm

#168 Bottoms_Up

could be like this, or some other ways…

“Maybe a sole proprietorship might be the thing – still allowing you to deduct expenses from earned income – and way cheaper. Besides, you can earn RRSP room that way and end up with more retirement options.”

http://www.greaterfool.ca/2015/05/10/the-bomb-2/

#194 Idea ! on 06.08.15 at 5:22 pm

Hey Garth, here’s an idea-

Maybe you could shut down the comments section of this blog to everybody besides Mark & Victoria Real Estate Update. They could then just debate each other’s made up statistics, knowledge & incorrect analysis?

#195 april on 06.08.15 at 5:25 pm

#173 – closed nights and weekends two lanes only open during the week.

#196 Macrath on 06.08.15 at 5:31 pm

Friday Ready?
The Canadian economy rose from the dead-
In the US, there were more new jobs in May than the previous five months-
there will be no recession –
It proves the economic recovery is intact,-
————————————–
Stormy Monday, Mr. Market begs to differ ?

#197 Realitybytes on 06.08.15 at 5:34 pm

[“#50 Henry on 06.07.15 at 6:06 pm
Now I know that no one can project the past into the future, but I was blown away by this statistic : Canadian house prices have increased 75.56% over the last ten years! Truly anyone renting over the last ten years has lost big time! The future ten years may be completely different, but this is what it is.

In this period the stock market (US) is up 88% and a balanced portfolio about the same. No closing costs, no property tax, no land transfer charge, no 5% commission to sell, no realtors, open houses, no maintenance or insurance, plus instant liquidity. And now, far less risk with financial assets. — Garth”]

—-
Except no one is buying a leveraged stock portfolio with 5% down. So that 75% increase of the asset value recalculated on the value of the down-payment is… a bunch more (I hate math).

I agree with Garth’s financial philosophy, Just saying… let’s not compare apples and oranges.

#198 crowdedelevatorfartz on 06.08.15 at 9:24 pm

@#164 Happy in NW
Nope, as much as I like the new F150.
It was the Toyota dealership on 12th and the Dutch panekoeke house has excellent breckies