The end

NOT POOR1

“Living here in the heart of Silicon Valley, life appears to be incredibly blessed and privileged,” Sharon writes me. “I mean, constant sunshine… who can complain? No snow to shovel? Yes please.”

She may have deserted Canada, but not this blog (who can?).  “I must say, I still read it. Very interesting, to say the least. Perhaps it’s because of the lifestyle one leads here in the USA… but the money issues in your blog about what Millennials face and their parents face… seem incredibly distant to me right now. Almost unfathomable.”

So instead of stressing over the crap young people here are fixated on, like a cool condo, Sharon looks to the horizon. Retirement. Weird.

“I have a question for you. In your opinion, what is the amount of monies in cash or assets one needs to retire, to keep up one’s lifestyle, health care costs, vacations, cars etc? I know this is relative to the type of lifestyle one leads and where one lives, and where one vacations. But for hypothetical scenario, lets assume the average Canadian retiree, and as well, for my curiosity, the average American retiree at the current moment in time. If someone were to hit 60 or 65 and retire, and factoring a good long life is yet to come, how much money do you think one should have? I have a guess.. and I am thinking 3 million is not enough or even close.”

The question’s often asked. Never well answered. There is no answer, actually, since some people need bushels of money to chase their dreams and others think the goal of life is to be so frugal they might as well be a Chia pet.

Let’s start with the basics, since everyone gets a public pension. In Canada the average CPP cheque is $640 (the maximum is $1,065). You can collect a bit less starting at age 60 or hold out for a bit more starting at 65 (take it early – always). The OAS (Old Age Security) cheque is $563, which Millennials won’t start collecting until age 67 (at least – but probably later). This is clawed back depending on income, and disappears when you make $114,815. There’s also a GIS (Guaranteed Income Supplement) but that’s just for folks who are truly low-income, so we won’t go there.

That’s it – $1,200 a month, or $14,400 a year for a single person retiring in Canada. That’s grocery and gas money. Period. In the US, Social Security is critical to the support of a vast number of retirees. In fact, these benefits make up about 40% of the entire income of seniors, since a majority of Americans (51%), like us, don’t have corporate pensions. And 35% have no savings. No wonder 52% of couples and 74% of singles receive at least half their income from Washington. The average monthly payment is $1,300, or $15,600 – not much, but life ‘s cheaper in the south (maybe not Silicon Valley).

So layered on this is any corporate pension – and 70% of Canadians don’t have one. Defined-benefit pension plans are the preserve now of government workers, from cops to teachers to soldiers to bureaucrats, while the best that most people can hope for is a matched RRSP program. Of course money socked into retirement plans is taxable, so that must be factored in. TFSAs provide tax-free retirement income, but there’s no tax break when you contribute, and few employers offer matched-contribution TFSA programs.

So how much do you need?

Most financial dudes will tell you retirement income should be about 70% of the money you collected when you’re working. This would include all public and private pension cheques, cash flow from your RRSP (which must be converted to a RRIF during the year in which you turn 71) and income from investment accounts, including the tax-free portion.

So if you needed $70,000 a year that means roughly $55,000 has to come from sources other than the feds. (Ontario will have a pension plan in the future, too, but the average payout in 30 years will be just $10,000). If you want to generate fifty-five grand a year from investments and still retain the principal to pay for care when you’re a basket case or to pass on to your dog, figure on having about $1,000,000 invested to provide an average of 7%, with most of the returns in the form of dividends or capital gains.

To some, this may seem impossible, especially if they spend the middle three decades of their life saving for, carrying and financing a piece of inflated real estate. But I remind you of the simple money machine every Millennial has access to – the TFSA. If you start with $10,000 today and add that much yearly (eight hundred bucks a month), invested to get 7% (the historic norm for a balanced portfolio), in 35 years you have $1,489,134, of which $1.1 million was tax-free growth. Bingo. You rock.

Of course, 90% of kidults will never do this, and would prefer to spend $800 a month on property tax, house insurance and condo fees, while shouldering several hundred thousand in debt at rates destined to reset higher, knocking their equity lower. Millions more boomers, hitting 60 and beyond, will also soon understand they lack the liquid investments to throw off the cash flow needed to live happily. After all, they have another quarter-century to finance.

(Or, in my case, eternity. At least my leg.)

The bottom line is ugly. It’d be a shock if 10% of the population reached the $1 million mark by retirement, although lots of people will have paid-off real estate, and have spent their adult lives feeding it.

Sharon’s three mill? Probably obsessive. But she’s my kinda girl.

171 comments ↓

#1 TurnerNation on 06.24.15 at 5:38 pm

Must be an early happy hour now…

#2 North Compton on 06.24.15 at 5:45 pm

And even in SV, you can still buy a house for under $1 mil.

#3 RunningWithScissors on 06.24.15 at 5:46 pm

Like many people, I’ve used many online retirement savings calculators to figure out what I need to retire on, and how much I need to invest monthly. However, most of these calculators use a factor of your current earnings, such as 70%, to calculate the need for future retirement income. I’m a fan of the 4% Safe Withdrawal Rate theory as it uses your annual spending rate as the basis. Who cares what you earn, as long as you can pay your bills, and continue to do so in the face of inflation. Won’t plug his site here without Mr. Turner’s A-OK, but a Canadian blogger with a love for facial hair has helped me clarify my retirement goals.

#4 earthboundmisfit on 06.24.15 at 5:49 pm

OMG it feels soooooo good to be in your 10% club …. with three years to go until hangin’ ’em up.

#5 Spiltbongwater on 06.24.15 at 5:54 pm

When Sharon was talking about constant sunshine I thought she was living in Vancouver. We are the new California. California is now a dessert. When the climate refugees start to move in masses due to their running out of water, we will sell them our real estate and join Garths coveted 10%

#6 Smartalox on 06.24.15 at 5:55 pm

Looking at moving from Canada to the US to pursue new avenues in my career.

I’m well on my way to a plush retirement based on following Garth’s principles, but was wondering about how retirement / investment / education savings are different in the US compared to Canada.

Better? Worse? Anyone care to share stories about how they moved their own investments?

Thanks,

A.

#7 Arcs55 on 06.24.15 at 6:12 pm

Did you guys see the headline this morning? Wall Street is starting to short the Canadian housing market.

http://news.nationalpost.com/news/canada/u-s-short-sellers-betting-on-canadian-housing-crash-an-accident-waiting-to-happen

#8 seeing it from both sides on 06.24.15 at 6:13 pm

“Living here in the heart of Silicon Valley, life appears to be incredibly blessed and privileged,” Sharon writes me. “I mean, constant sunshine… who can complain? No snow to shovel?

How about no water……?? I’ll take rainy Vancouver, thanks. I like my long, hot showers and greenery.

“…people are forbidden to take a shower for more than five minutes and water bills become prohibitively expensive…

http://www.nytimes.com/2015/04/05/us/california-drought-tests-history-of-endless-growth.html?smid=tw-nytimes&_r=0

#9 Victoria Real Estate Update on 06.24.15 at 6:14 pm

There will be no US-style price rebound in Canada after house prices correct for a number of years.

As house prices in the US were falling fast and hard in 2008-09, interest rates were suddenly slashed from near-normal to emergency levels. This created a highly stimulative environment that limited how far prices fell. Naturally, prices rebounded in an unusually strong manner due to these extreme and abnormal conditions. Even with all of that excess stimulus, average US prices are still 17% below peak levels (9 years after peaking in 2006).

As prices fall in Canada, there will be no slashing of rates from near-normal to emergency levels and there will be no unusually strong price rebound

When it comes to the subject of a price recovery after a major housing price correction, Canadian housing bulls love to limit that conversation to the US experience. They fail to mention, for example, the Japan experience where prices peaked in 1991 and fell to depths that shocked the world. To date there has been an extremely limited price recovery, despite emergency interest rates since 1995.

The bigger the bubble, the bigger the price correction.

Canada’s housing bubble is much larger than the 2006 US housing bubble.

Quoting Wolf Richter:

“Canada’s truly magnificent housing bubble, incomparably more magnificent than the housing bubble in the US that blew up with such spectacular results…”

“Bubbles don’t land softly. They implode. It’s a brutal process. The longer bubbles are maintained, the more brutal their implosion.”

The US bubble took 6 years to inflate. So far it has taken 15 years for Canada’s bubble to inflate.
“Canada’s Housing Market More Overvalued Than U.S. At Its Peak, The Economist Says”

That was in 2011. Canada’s housing bubble has inflated for almost 4 more years since then (the US bubble only took 6 years to inflate).

#10 Mike S on 06.24.15 at 6:22 pm

4% is the safe withdrawal rate. with such a rate the money continues to grow forever (with high enough probability) and follow inflation

3M gives you 120K a year, which is good enough for most people, and lets you leave a good inheritance

#11 Salutations Sally on 06.24.15 at 6:22 pm

Hey! I’m ALMOST FIRST today !!! This is terrific!

#12 Jack on 06.24.15 at 6:26 pm

Garth I suppose this $70000 per year retirement income has not factored in the inflation rate? If inflation is 2% (which I argue is probably higher than that) then after 30 years when a Millennial retires the required $70000 will become approx. $125,000. That would require a portfolio of $1.8 million returning 7%.

#13 B Riding Dirty on 06.24.15 at 6:29 pm

Looking to rent a house in Langley BC, From a Asian Family who bought the home full asking back in April. They get possession June 28th and looking for tenants to start July 1st.

They are looking for a one year lease, then month to month.

I asked why, “his parents are moving from mainland china and need a house to live in”

Well I may be renting a house in a area I want to raise a family because I refuse to pay the piper and buy in a hot hot HOT market.

Who is smarter? Maybe them… dont know anymore…

#14 Jack on 06.24.15 at 6:29 pm

Sorry I forgot to count the CPP part which supplies about 20% of that income. Still requires a portfolio of 1.5 mil. And that 125k income is only what you will need on year 1 of retirement. Every year in retirement you need to withdraw 2% more to maintain the same level of spending power due to inflation.

#15 Thebarold on 06.24.15 at 6:34 pm

Problem is for many people they will never get there because they spend what they make. Until you create a budget and understand you actually SPEND and use that to figure out how much you’ll need, using a % of your income will push retirement beyond the reach of most people. Also go check out how much long-term care homes cost — sobering…

#16 Mark on 06.24.15 at 6:35 pm

Any chance of the government raiding CPP funds to pay for the CMHC bailouts? Or even not so much raiding CPP, but forcing the CPP to hold a good chunk of the extra GoC debt issuance that inevitably will be required?

#17 OU812 on 06.24.15 at 6:37 pm

Sounds aligned with my targets.

I’m targeting 1.3M in 2026 dollars, plus a paid-for place to live.
If I keep doing what I’m doing, will be there by age 54. That leaves 10 years runway to keep working if there are financial surprises if I’m not on track.

#18 Blogbitch on 06.24.15 at 6:38 pm

Sharon: You’re my hero.

#19 JustMe on 06.24.15 at 6:40 pm

I think 70% of working income is more than adequate for retirement. Even 50% would be enough for a person with a “saver” personality type, especially if they have a house that is mortgage free. Your income tax rate drops dramatically when your income is cut in half, plus you don’t have to pay CPP and EI on retirement income. Not only that, but you no longer need to save for retirement!

The strategy of only spending the interest generated by retirement savings and retaining the principal is flawed. This is your retirement fund, not your children’s. If you need a government run assisted care facility in later life they will charge you more if you have money. Why not enjoy life now instead of planning for something that might not happen?

#20 HFT Dude on 06.24.15 at 6:43 pm

Is a 7% withdrawal rate sustainable? A person withdrawing 7% of his portfolio today will need returns of 11.5% 25 years down the road to maintain the same lifestyle, assuming 2% inflation.

Sure, worry about returns a quarter century away. That seems useful. — Garth

#21 Derek R on 06.24.15 at 7:00 pm

#5 Spiltbongwater on 06.24.15 at 5:54 pm wrote
We are the new California. California is now a dessert.

Mmm, dessert. Strawberry or vanilla? Hope it’s a frozen dessert. They’re my favourite!

#22 Spacco on 06.24.15 at 7:04 pm

As a single guy I don’t need much. At nearly 40, with nearly $1mm and without doing the math if worse came to worst I think I could stop working now if I wanted to…rent cheaply or buy an apartment for 80-100k in overlooked areas/towns of Mediterranean Europe where you are no more than a few km from the ocean (where few speak English) and where the average income is €14k.

#23 Tony Lopez on 06.24.15 at 7:27 pm

Our family, my wife, myself, both 42, 43 with 2 adult children, 20, 21, all max out our TFSA’s, $5,500 a year.

We did take advantage of the extra $4,500*4 for 2015 in our TFSA’s by moving some existing investments.

We also contribute to our yearly RRSP’s to the max, my wife and I, which is another $18,000 a year. My daughter and son contribute another $20,000 a year.

Our goal as a family, is to have a total of $15,000,000 million in RRSP’s, TFSA’s, investments in 35 years. We are already 10% of there.

#24 mitzerboy aka queencity kid on 06.24.15 at 7:32 pm

Marijuana dispensary regulations approved in Vancouver

free the herb ….

#25 the Jaguar on 06.24.15 at 7:36 pm

I hate to be a gloomy puss, but my observation is that the average life span after retirement for the majority of folks is about 15-18 years. Just read the obits. There is supposed to be a statistic that if you make it to age 60 you have a 50% chance to make it to age 80. A one in two chance. Whew! Those who make it to 80 might find everyday life quite challenging. Moral of the story? Live every day like it’s your last. Start today.
While money is a significant factor, your health and fitness level is everything. Lose your mobility and you are toast. Travel and enjoy life now. Stop blowing it all on superficial crap and impressing your colleagues . When you look back as an old fart your regrets won’t be about stupid granite countertops.

#26 Rexx Rock on 06.24.15 at 7:36 pm

Pay off your house in Toronto or Vancouver and by the time you retire just let Garth manage your million for old age.Very simple plan.

#27 GIS, we won't go there? on 06.24.15 at 7:49 pm

My neighbour spends 6 months a year overseas, has 2 suites generating cash income and has a business back home. GIS and OAS is “great” he says. Plus the “free” healthcare.

Good to see street smarts over book smarts.

It is the benefit of years of citizenship. We all enjoy it equally. — Garth

#28 MoneyDriven on 06.24.15 at 7:54 pm

Thanks Garth, love your blog and its an eye opener to say the least.

However you seem to leave out very relevant calculations as you see fit. ie inflation. In your example of 35 years investing would lead to $1,489,134 BEFORE inflation. If we adjust that number for 2.5% inflation then our investment worth $627,478 of today’s money. Descent portfolio but no $1M club.

Also love to know your opinion about foreign MONEY (NOT foreign INVESTMENT) as ONE of key factor in YVR prices. After all a lot of bank of mom are able to help their kids to buy the biggest debt since they were able to sell houses in west side to the foreign money.

There is no solid data and Victoria is irrelevant IMO. Here is an interesting article with a quote from Macdonald Realty :
“Macdonald Realty estimated that in 2013 roughly one-third of the houses it sold in the city of Vancouver went to buyers with ties to mainland China.”

Full article here along with Chinese Envoy response here:
http://www.bnn.ca/News/2015/6/24/Chinese-envoy-says-lack-of-oversight-behind-Vancouvers-house-price-crisis.aspx

Thanks again for your informative blog.

The inflation argument is specious. As the cost of living rises one can reasonably expect returns to keep pace. Thirty-five years is a long time to build wealth. Unless you manufacture excuses not to. — Garth

#29 james on 06.24.15 at 7:59 pm

Sharon hasn’t lived in Silicon Valley very long, I bet.

High living costs (rents are astronomical), crushing traffic, high taxes for people earning over 125k, a serious drought.

Don’t get me wrong, I love the Valley, but it is not a paradise. There’s quite a bit of poverty, but it is not as visible as in Vancouver or Detroit. People packed 16 to a 2 bedroom house in East San Jose, etc etc.

Nevertheless, it has an economy that is booming. It is strange to think that the Valley, which attracts people from all over the world, pays less than some dinky public sector agencies in Ontario, when you factor in their pensions. The local govs also. The city of Stockton has a payroll that would make your eyes water, despite being bankrupt. If you like the Liberal government in Ontario, you will love California’s municipalities and state government.

Houses in the valley? More affordable than Toronto or Vancouver, but remember that the Valley is up and down. People seem to forget that little hiccup known as the dot com bust.

#30 mike leblond on 06.24.15 at 8:09 pm

#9 Victoria Real Estate Update: great arguments, I couldn’t agree more with all of them.

Ottawa update: I know of dozens of homes that have been listed for up to four years now, not selling, and, while price reductions are still relatively few, I am seeing several adding up to 25%-35% over four years. House prices going up in Ottawa? what a load of …..

#31 GTA Observer on 06.24.15 at 8:12 pm

#6 Smartalox but was wondering about how retirement / investment / education savings are different in the US compared to Canada.

For more information, check books such as the The Border Guide (Keats), The American in Canada, etc.

Quick summary.

Retirement: Social Security (comp. to CPP) takes more from paycheques so it pays out more. However, less actuarial solidity & Repubs. keep trying to privatize. Pensions – also fast fading, with the switch from defined benefit to defined contribution. Retirement plans: 401ks, Keoghs (profit sharing 401ks), IRAs – various contribution limits per income, various withdrawal rules not unlike RRSPs except you have to wait till 59.5 years to avoid 10% penalty. All are tax deferred plans except for Roth IRA, which is comparable in that basic principle to the TFSA. Most states tax SS and pensions, and there is coordination between SS and CPP.

Investment – find out what a Canadian can do vis a vis opening brokerage accounts. Americans in Canada can’t have US brokerage accounts and tend to avoid Canadian mutual funds – the paperwork and potential penalties are onerous (look up PFIC). Otherwise, investing is investing but the variety is greater and the fees a lot lower. Check for treatment of cap gains and dividends. Again, Americans in Canada don’t get preferential treatment for dividend income. Check on the reverse.

Finally, education. With higher ed being both public and private, the government does not match. There is an education savings plan called a 529, administered at the state level with different investment/fixed income options per plan. No tax on the gain (unless you live in Canada, which does not recognize the tax benefit), but you have to show the receipts for use on your tax return. Withdrawals can be used at accredited Canadian institutions. It can also be used for mom and dad to go back to school, be handed down to the next generation etc. Private school tuition is obscene; public schools are more reasonable and can be quite good.

#32 Geoff on 06.24.15 at 8:14 pm

Real Estate Data: Prov Govt is, uhm, studying it:

http://www.vancouversun.com/business/Pete+McMartin+Real+estate+data+provincial+government+studying/11161070/story.html

#33 mike leblond on 06.24.15 at 8:15 pm

The poor clowns listing their homes to no avail for years on end. When they realize buyers have all but evaporated……

#34 Geoff on 06.24.15 at 8:16 pm

Many young residents consider leaving Vancouver

http://bc.ctvnews.ca/video?clipId=639061

#35 Bubu on 06.24.15 at 8:17 pm

70%…hmmmmm…. again bad advice…. I live on 30-35% now and I have to pay daycare, gas and parking to go to work, plus vacations… I think it depends on your income so you can’t say 70%….

Most of the Canadians can live decent on 35k per family when they are retired… Everything else is counted as “nice to have”.

#36 Geoff on 06.24.15 at 8:22 pm

Chinese Envoy Says Lack of Oversight behind Vancouver’s House Prices:

http://www.theglobeandmail.com/report-on-business/economy/housing/chinese-envoy-says-lack-of-oversight-behind-vancouvers-house-price-crisis/article25085285/

Hilarious that we have foreigners pointing this out when politicians in our own country are doing nothing about it.

Posted eight times. Enough, already. YVR people are obsessed. — Garth

#37 Investorz on 06.24.15 at 8:27 pm

Moving to the US is a fantastic move right now. Good job Sharon.

If you convert your savings in Canadian dollars, you get a 20% gain on the exchange. Not only that, but taxes are less. And houses are less.

Anyone with a degree that qualifies for a TN visa should look for California jobs in LinkedIn. Right now. It’s a good bet to get ahead.

#38 -=jwk=- on 06.24.15 at 8:28 pm

When Sharon was talking about constant sunshine I thought she was living in Vancouver. We are the new California. California is now a dessert. When the climate refugees start to move in masses due to their running out of water, we will sell them our real estate and join Garths coveted 10%

California is running out of water because smug vancouverites eat California strawberries, almonds, quinoa and other hippy food. You won’t be so smug when you find half the fruit and veggie’s missing from your health food store….

#39 Leo Trollstoy on 06.24.15 at 8:30 pm

I have a question for you. In your opinion, what is the amount of monies in cash or assets one needs to retire, to keep up one’s lifestyle, health care costs, vacations, cars etc.

In Canada, at least 25x annual expenses. Exclude primary residence.

#40 Geoff on 06.24.15 at 8:31 pm

It’s irresponsible to assume a rate of 7% when one retires. This is results in too much risk. Rates of 4-5% are more realistic for preservation of capital, which means you need more money….Of course if you are a financial salesman–I mean “advisor” you don’t have to worry because of those fat trailer fees and commissions you get, regardless of performance.

I wouldn’t know, as I sell nothing and refuse all commission. But anyone who plans on living more than five years should have a balanced portfolio with a good growth component (and, hence, 7% is reasonable), or you need to be some rich. Hopefully, unlike you, also mellow. — Garth

#41 Bob Dog on 06.24.15 at 8:32 pm

“Chinese envoy says lack of oversight behind Vancouver’s house-price crisis”

In other words, its your own inept puppet government causing your 3rd world standard of living.

http://www.bnn.ca/News/2015/6/24/Chinese-envoy-says-lack-of-oversight-behind-Vancouvers-house-price-crisis.aspx

#42 Retired Boomer - WI on 06.24.15 at 8:37 pm

Good advice as always.

Getting TO retirement is step one.
Having the resources to BE in retirement is step two.
Wisely use your resources to LIVE retirement step three.
A legacy to your favorites when you LEAVE, final step.

Any question? We all get the same ending…

#43 Freedom First on 06.24.15 at 8:43 pm

Yes. If you plan during your youth using sound financial principles and have a good work ethic combined with discipline, along with the ability to sacrifice your “wants” and avoid debt at all costs, you will be ok when you get older. This did not stop me from enjoying my life in any way. My Freedom First lifestyle enabled me to do what I wanted my whole life. I have plans to when I am 100, and I enjoy every day.

#44 Smoking Man on 06.24.15 at 8:50 pm

Don’t worry Garth and Dogs , I’m moving to LA area in Aug. It’s a dangerous move. Vegas a tiny four hour drive away. Just me , my wife, Our dogs, Wyatt and Sophie.

Good riddance Communism, tree huggers, bicycle Nazis. And finally my kids…WooooHooo

I’ll still visit here everyday and report from the front lines of the USA

#45 45north on 06.24.15 at 8:55 pm

Victoria Real Estate Update: As house prices in the US were falling fast and hard in 2008-09, interest rates were suddenly slashed from near-normal to emergency levels but as prices fall in Canada, there will be no slashing of rates

Canada followed the US in lowering interest rates and Canadian real estate sailed right on.

#46 Kreditanstalt on 06.24.15 at 9:02 pm

Out to lunch.

The problem for most people is *NOT* “wasting salary income on mortgages, property taxes and fees” as you would love us to believe.

The REAL problem is getting a salary in the first place. There are precious few jobs out there and NO careers.

#47 Ben F on 06.24.15 at 9:10 pm

Garth why was this comment deleted without even so much as your usual redaction? It’s a valid point. Or is all questioning of your “lazy millennial” standpoint now banned?

Is this a real letter? She’s in Silicon Valley which is experiencing unprecedented civil protests due to housing costs yet she can’t relate to Canadian millenials’ problems?

She says how can she complain when there is no snow. Is that what millenials are complaining about Garth? The snow?

What is the premise here? The intro makes zero sense other than to try and pain young people as complaining about nothing, but fails due to it’s transparent errors.

Garth, either get some new ideas or go to a post every other day.

The letter is real. Your comment was not deleted. Why don’t you read every other day? Or never? — Garth

#48 John on 06.24.15 at 9:12 pm

3 Million is not even close??!!
I almost fell out of my chair. The problem with financial advisers and financial media is they try to convince people that they need some extraordinary amount of money to retire at age 65 – 70. They do this because they want you to keep amassing financial assets for the longest possible time so that they can maximize their profits off of you in the form of mutual fund fees and commissions. If you know even the slightest bit about investing in quality dividend paying stocks and a balanced portfolio you will realize how silly it is to aim for a goal that high. Especially when you will be OLD. What do you think you will be spending your money on? Somewhere between 800,000 and 1 million should be more than enough for most people to retire on and enjoy themselves. Better yet, save up $500,000 and move to Panama. You will have a better and more fulfilling life than you will on 3 million in Canada.
Save, invest, retire early and enjoy yourself. Don’t worry about amassing so many millions into your 70s. Life’s short. Most people don’t even make it to their 80s (sorry).

#49 Jurewicz on 06.24.15 at 9:14 pm

I just got back from San Francisco. Dirty, smelly city. 2-bedroom apartments in hipster Mission District going for $1.5 million. City services cut big time because of drought. Dog poop all over the sidewalks. Smell of urine everywhere because of rampant homelessness.

Thanks, but I’ll take Canada.

#50 Brian Ripley on 06.24.15 at 9:18 pm

I have been tracking the volume of real estate rental ads and one data provider that eludes me is Airbnb who caps their published totals of un-shared available units at 1000+ when it reaches 1000 (which is the number I use).

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

Karen Sawatzky used a data “scraping” tool as part of her data collection for her urban studies master’s thesis research on Airbnb and rental housing in Vancouver. She published a draft on June 20, 2015 and I took her data and created a chart to visualize
the results. Her results are 3x my Airbnb plot; ie +/- 3000. (bottom left hand corner of the page)

So add another 2,000 units to my 8,276 estimate in Vancouver which does not account for duplicates if an owner advertises in all 3 databases (Craigslist, Kijiji, Airbnb)

Even after discounting duplicates, there are a lot of real estate owners competing with each other in Vancouver to get the high rent short term tenants and each month a lot of units remain unfilled.

I suspect we will see vacancy rates rise in Vancouver which CMHC estimates at just under 1%. (they do a semi-annual survey – ” A unit is considered vacant if, at the time of the survey, it is physically unoccupied and available for immediate rental. “)

If and when rates rise, the need to sign up longer term tenants rather than competing with 3000 other short term Airbnb-ers should liberate more rental housing stock into the market.

CRA probably has scaping tools as well and they love to pry out unpaid taxes.

#51 Sunmonkey on 06.24.15 at 9:19 pm

We went to some open houses this past weekend in North York and saw a semi that needed new windows, roof, floor, 3 bathrooms and paint. The asking price was a 700k. There was only one offer and it sold for 790k. Who in their right mind would do that in a neighborhood whows average salary demographic is 70k. People have lost all their marbles.

#52 absurd on 06.24.15 at 9:20 pm

In Point Roberts 45 mins from downtown Vancouver and a border crossing you get duplex lot for 65k
http://vancouver.craigslist.ca/rds/reo/5070809777.html
2km north in Tsawwassen, 42mins from dt Vancouver and no border you can buy this
http://vancouver.craigslist.ca/rds/reb/5051877236.html
For 1 million more…

#53 cramar on 06.24.15 at 9:37 pm

#144 Ogopogo on 06.24.15 at 12:20 pm

#14 cramar on 06.23.15 at 5:37 pm
I think this is fundamental with humans—wanting to own your own shelter.

Spoken like a true 20th-century dino. Next thing someone will be touting “pride of ownership”… Wait, another brontosaurus did that a few comments down.

I pity you brick lickers, though I guess it’s thanks to you cultists that my portfolio continues to yield sweet, sweet divvies. Good luck dumping your beloved money pit on a greater fool once the bubble pop is felt across the nation.

——————————

Calling someone a dino and brontosaurus coming from Ogopogo? A mythical creature from the Jurassic era? Funny.

Labels aside, I guess you must be pitying other “brick lickers” since I haven’t seen mortgage papers in decades, and my house & finances conforms to Garth’s Rule of 90. If the bubble pops, I mean REALLY pops for some unfathomable imaginary reason we wake up tomorrow to find all RE across Canada is suddenly worth ABSOLUTELY HALF, it will effect my life very little. That is because the majority of my assets are in my portfolio, which did rather well last year also. Don’t cry for me Ogopogo.

#54 Panhead on 06.24.15 at 9:37 pm

#36 -=jwk=- on 06.24.15 at 8:28 pm
When Sharon was talking about constant sunshine I thought she was living in Vancouver. We are the new California. California is now a dessert. When the climate refugees start to move in masses due to their running out of water, we will sell them our real estate and join Garths coveted 10%

California is running out of water because smug vancouverites eat California strawberries, almonds, quinoa and other hippy food. You won’t be so smug when you find half the fruit and veggie’s missing from your health food store….
———————————————————-
As Ewel Gibbons once said on an old TV commercial … “did you know you can eat a pine tree?” Don’t know how good they are after the pine beetle though …

#55 fleabitten monkey on 06.24.15 at 9:39 pm

More YVR in news today was story of the short sellers on wallstreet betting against cdn housing market. Garth, you talked about this fact there was a hedge fund getting into this last year I believe. Not seen it in media til recently. Of course the story was countered by certain people saying the funds will lose their shirts. Is this another sign there is an imminent shift? Guess we’ll see.

#56 A Yank in BC on 06.24.15 at 9:44 pm

#51 Sunmonkey

And who in their right mind would offer 13% over asking if they are the only one making an offer. That’s even crazier. Collusion between agents?

#57 Squirrel meat on 06.24.15 at 9:44 pm

#44 Smoking Man on 06.24.15 at 8:50 pm

Don’t worry Garth and Dogs , I’m moving to LA area in Aug. It’s a dangerous move. Vegas a tiny four hour drive away. Just me , my wife, Our dogs, Wyatt and Sophie.

Good riddance Communism, tree huggers, bicycle Nazis. And finally my kids…WooooHooo

I’ll still visit here everyday and report from the front lines of the USA
———————————
Porn industry pick up your screen play?

#58 Granite_counters on 06.24.15 at 9:45 pm

Family structures vary in different countries and throughout the years. I see families that house the grandparents and this can be very financially advantageous. The grandparents contribute their social security to the family and the family saves on child care. Plus the kids develop a nice relationship with grandparents. Not to mention the grandparents avoid living in sometimes crappy retirement residences. You don’t need to worry about retirement as much in this situation.

#59 Mark on 06.24.15 at 9:50 pm

“Anyone with a degree that qualifies for a TN visa should look for California jobs in LinkedIn. Right now. It’s a good bet to get ahead”

Sure, but the problem is, those California companies aren’t really hiring Canadians in any significant numbers. Big shift in the early 2000s in the Silicon Valley was basically to stop hiring (expensive) Canadians and start hiring (relatively cheaper) southeast Asians on the H-1B visa.

Some might say the streets are paved in gold there, but the reality is, you have an astronomical amount of market cap vested with a relative small handful of companies. Who employ a relatively small number of people. Most Silicon Valley companies don’t even make money, and those which do receive so many applications that they don’t have to pay much.

Just like last time around, as soon as the tech bubble bursts, its going to be devastation all over again. Most of the long-term stuff, that requires long-term investment in R&D, moved to Asia or out of the region on account of the high costs. Similar to how Canada’s obsession with a housing bubble has driven out a lot of industry here.

#60 PM on 06.24.15 at 9:57 pm

That was in 2011. Canada’s housing bubble has inflated for almost 4 more years since then (the US bubble only took 6 years to inflate).

Lol. “See, it was wrong 4 years ago which means it’s more right today”.

#61 Mark on 06.24.15 at 9:57 pm

” It is strange to think that the Valley, which attracts people from all over the world, pays less than some dinky public sector agencies in Ontario, when you factor in their pensions. “

Most tech jobs in the Silicon Valley pay less than police officers in San Jose. That’s right, spend 4-6+ years in school, graduate pretty high up in your class, beat out thousands of other applicants for a single job, and have practically no job security whatsoever. All you end up being paid is less than a police officer in one of the safest zip codes in the USA (nerds tend not to commit a lot of crime!).

On top of that, if your employers allegedly conspired to illegally restrain trade in your labour, all you get when a class action lawsuit is settled against them is a few thousand bucks. The lawyers making out like bandits.

Silicon Valley, one a creator of so much value and so many exports for the USA that the trade deficit was eliminated for a brief time in the late 1990s — today is little more than a cesspool of various scams.

The housing bubble there is so bad that most techies can’t even afford the proverbial ‘basements’ or “garages” from which so many of the Valley’s great inventions emanated. And labour mobility is crap because every Valley firm worth mention is inundated with tens of thousands of qualified job applicants.

#62 Squirrel meat on 06.24.15 at 9:57 pm

#59 Mark on 06.24.15 at 9:50 pm

“Anyone with a degree that qualifies for a TN visa should look for California jobs in LinkedIn. Right now. It’s a good bet to get ahead”

Sure, but the problem is, those California companies aren’t really hiring Canadians in any significant numbers. Big shift in the early 2000s in the Silicon Valley was basically to stop hiring (expensive) Canadians and start hiring (relatively cheaper) southeast Asians on the H-1B visa.

Some might say the streets are paved in gold there, but the reality is, you have an astronomical amount of market cap vested with a relative small handful of companies. Who employ a relatively small number of people. Most Silicon Valley companies don’t even make money, and those which do receive so many applications that they don’t have to pay much.

Just like last time around, as soon as the tech bubble bursts, its going to be devastation all over again. Most of the long-term stuff, that requires long-term investment in R&D, moved to Asia or out of the region on account of the high costs. Similar to how Canada’s obsession with a housing bubble has driven out a lot of industry here.
————————————-
Is there anything you don’t know?

#63 PM on 06.24.15 at 10:01 pm

But anyone who plans on living more than five years should have a balanced portfolio with a good growth component (and, hence, 7% is reasonable),

7% is the long term return from the S&P 500 index (the best of the 3 major indicies in those extended periods) so a balanced portfolio with some safer, lower risk stuff thrown in there is going to, typically, be a few points lower.

Someone who is depending on that as their main source of income to keep them from the cat food is going to want to probably be on the more conservative side of ‘balanced’. So I think counting on 4-5% and hoping for 7% is fair.

US large cap stocks make up only about 12% of a balanced portfolio. A return in the 7% range over the long-term has been the experience of investors who are routinely rebalanced. — Garth

#64 Smoking Man on 06.24.15 at 10:08 pm

#57 Squirrel meat on 06.24.15 at 9:44 pm
#44 Smoking Man on 06.24.15 at 8:50 pm

Don’t worry Garth and Dogs , I’m moving to LA area in Aug. It’s a dangerous move. Vegas a tiny four hour drive away. Just me , my wife, Our dogs, Wyatt and Sophie.

Good riddance Communism, tree huggers, bicycle Nazis. And finally my kids…WooooHooo

I’ll still visit here everyday and report from the front lines of the USA
———————————
Porn industry pick up your screen play?
…..

Not enough of a wide angle lens if I was staring in it.
It just seams like the right thing to do.
I’m going to be a detective in movie, a c grade movie. But its more of networking plan, to sell a screen play. I got to see my madness on the big screen, I’ll take one buck for it.

I can’t do another winter here, got to get a green card while I still can so I can retire in the sunshine. Doing some code smithing on the side.

I’m visualizing a trailer retirement in a Arizona trailer park, close to Yuma.

Bet the characters there will blow away my buddies at South Side Johnny’s.

Why do I love hanging out with the hard done by..

Perhaps it gives me a feeling of greatness. But their story’s are gold. The country club I use to belong to. Boaring!!!!

Got California dreaming on the buds.

#65 PM on 06.24.15 at 10:11 pm

Sure, but the problem is, those California companies aren’t really hiring Canadians in any significant numbers. Big shift in the early 2000s in the Silicon Valley was basically to stop hiring (expensive) Canadians and start hiring (relatively cheaper) southeast Asians on the H-1B visa.

Yes and no. There’s been a shift but Canadians are still in demand. Our visas are much easier to obtain and we are closer to an American style ingenuity that keeps America a leader in innovation. The same cultural norms that see us leave the nest and buy our own homes as moist millenials to prove “look at me with a mortgage, I’m unique and independant” is celebrated. As is being creative and unique. Some cultural norms value saving and living with your parents until it’s prudent to make a large purchase they also put less emphasis on creative solutions as much as technical perfection.

Now these are broad strokes but the demand for Canadian developers is high. I’ve got a solicitation for a company in San Jose in my inbox right now.

Just like last time around, as soon as the tech bubble bursts, its going to be devastation all over again. Most of the long-term stuff, that requires long-term investment in R&D, moved to Asia or out of the region on account of the high costs. Similar to how Canada’s obsession with a housing bubble has driven out a lot of industry here.

Sure man, just like every recession and market correction moves New York further away from being the global financial centre. The bay area has been the epicenter of technology business for 40 years. It’s seen ups and downs but you’re going to have to do a lot better than “Netflix P/E is ridiculous therefore the valley is losing it’s relevance”.

#66 sockeye sam on 06.24.15 at 10:18 pm

I’m starting to hear and see lot more young Russian couples with children around the west side of Vancouver.Will that be the next influx of money into the area?

#67 Ben F on 06.24.15 at 10:20 pm

Well if it is real she’s in for a real shock!

Go check out the main VC tech forum in Silicon Valley (https://news.ycombinator.com/news), it’s heavy with people lamenting cost of rent.

Her “logic” is just all over the place. She’s gone to one of the most expensive places in the world to live to escape the non-existent Canadian millenials lamenting snow.

It’s like young people leaving Italy (high unemployment) to move to Greece “because the ice-creams are better (are you crazy – Italians make the best!).

Was this the most cogent letter you got? It’s not great Garth…

#68 Llewelyn on 06.24.15 at 10:34 pm

In the words of Maroon 5

“I’m not a fortune teller
Don’t have a crystal ball
I can’t predict the future
Can’t see nothing at all”

Saving for the future is better than not saving but trying to predict what the next 25 years might bring requires powers I don’t pretend to possess.

I am however praying for a soft landing.

#69 waiting on the westcoast on 06.24.15 at 10:35 pm

#59 Mark… Fewer Canadians heading to US…

Mark – Canadians with Engineering/CompSci degrees are in great demand and can easily come to the US with a TN visa. Shit – I got a with a TN with a BA (but I had significant business experience back in 2011.

Did your Mother not love you? You seem to be perpetually victimized in your thinking… Is there anywhere that is doing well and opportunities abound??? You must be really depressed based on the answers you give here…

#70 whipster1 on 06.24.15 at 10:35 pm

#52 absurd

But it’s Tsawwassen, it’s different here…. ;)

1acre in Point bob vs. .25acre in Ttown

Quite an absurd price difference, agreed! And, there will be someone who will pay. Maybe.

But rentals are so costly as well; not sure where locally one can find a rental home for less than 2K that allows dogs. Just saw one for 4500/mth which is way more than a mortgage + fees etc.

It’s a crazy world. Even a small correction would be welcome at this point….

#71 Smoking Man on 06.24.15 at 10:41 pm

Dudes I got to tell you about marriage, most are unlucky .
My wife rocks, she don’t care how crazy my plans are. Shes all in every time, I’ve taken her from property to riches, back to poverty , and riches so many god damn times. Its unnaturally weird.

She adores me and sticks by me no matter how crazy my plans are. Sure let’s do it she says every time…

Dudes that’s a 50 million dollar lottery times a zillion.

Any millennial chics like that out there for my boys.?

I know this, if she goes before me, I’m 24 hours away after the send off.

We are one…

How did I get so lucky..its god, he fks with my mind.

I’m not allowed in California when I had a labido.
Now that its dead.. Do what you want son the mofo says to me..

I hate the basterd.. We are having heated words one day.

The prick has some explaining to do..

#72 DON on 06.24.15 at 10:42 pm

#55 fleabitten monkey on 06.24.15 at 9:39 pm

More YVR in news today was story of the short sellers on wallstreet betting against cdn housing market. Garth, you talked about this fact there was a hedge fund getting into this last year I believe. Not seen it in media til recently. Of course the story was countered by certain people saying the funds will lose their shirts. Is this another sign there is an imminent shift? Guess we’ll see.
**************************
I’m thinking the same thing…shift. Big boys are looking in from the outside. They hate to loose money. Reason for some concern.

#73 Panhead on 06.24.15 at 10:43 pm

#52 absurd on 06.24.15 at 9:20 pm
In Point Roberts 45 mins from downtown Vancouver and a border crossing you get duplex lot for 65k
http://vancouver.craigslist.ca/rds/reo/5070809777.html
2km north in Tsawwassen, 42mins from dt Vancouver and no border you can buy this
http://vancouver.craigslist.ca/rds/reb/5051877236.html
For 1 million more…

————————————————————-

Point Bob is like going back in time … you can still smoke at the pull tab counter in the Reef (Tavern once owned by Canada’s greatest athlete) if you want … try comparing prices with some of the “houses” on the western bluff though …

#74 Nacho Cheese on 06.24.15 at 10:51 pm

#44 Smoking Man on 06.24.15 at 8:50 pm
Don’t worry Garth and Dogs , I’m moving to LA area in Aug. It’s a dangerous move. Vegas a tiny four hour drive away. Just me , my wife, Our dogs, Wyatt and Sophie.
—–

Are you selling your long branch house?

#75 DON on 06.24.15 at 10:52 pm

#58 Granite_counters on 06.24.15 at 9:45 pm

Family structures vary in different countries and throughout the years. I see families that house the grandparents and this can be very financially advantageous. The grandparents contribute their social security to the family and the family saves on child care. Plus the kids develop a nice relationship with grandparents. Not to mention the grandparents avoid living in sometimes crappy retirement residences. You don’t need to worry about retirement as much in this situation.
*******************************

Coming to a split level near you. I am seeing more and more of this and when demand for houses weekends prices come down and people are forced to pay higher payments only thing to do will to bring in other family members.

#76 TurnerNation on 06.24.15 at 10:53 pm

Soo, you want to live in Toronto. Get protected.

– Seems the urban core is ruled by the Police gang – carding and cuffing the poor and visible:

http://www.torontolife.com/informer/features/2015/04/21/skin-im-ive-interrogated-police-50-times-im-black/

– 905 area code has its own:

“This is the fourth fatal daylight shooting in Woodbridge in the past 14 months.”

http://www.cp24.com/news/friends-former-co-worker-remember-woodbridge-shooting-victims-1.2437714

http://www.cp24.com/news/car-struck-by-bullets-in-humber-summit-1.2438169

#77 morry on 06.24.15 at 10:58 pm

FantasyLand comes to mind after reading these posts.

#78 Buddha on 06.24.15 at 10:59 pm

Ta Daaaahhh!
http://www.cbc.ca/news/business/cheap-loonie-has-cottage-market-booming-especially-among-foreigners-remax-says-1.3126064
Called it…
F’n Realtrrrzz.

#79 The American on 06.24.15 at 11:01 pm

49 Jurewicz on 06.24.15 at 9:14 pm
I just got back from San Francisco. Dirty, smelly city. 2-bedroom apartments in hipster Mission District going for $1.5 million. City services cut big time because of drought. Dog poop all over the sidewalks. Smell of urine everywhere because of rampant homelessness.

Thanks, but I’ll take Canada.

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

Tisk risk. You’ve lost your mind you jealous man. Drought is a concern but nobody up North recognizing Cali’s largest source of water is ground water, with options to source from other areas in the U.S. with abundance. My God, let go of the drought already… Is this all you can cling? Very, VERY sad. The drought affects surface. No comparison between SF and Vancouver. Either you did not visit SF or you can’t handle real culture in a true global city three and a half times bigger than Vancouver. 8.5MM people agree compared to Vancouver’s tiny 2.4MM. Vancouver is wannabe. I never visited Vancouver without smelling piss, grease, or hearing obnoxious self righteous NIMBYs who have no clue about anything outside of Canada, yet want to act like they do. Transportation in SF kicks ass compared to Vancouver. Never met smarter or better people in my life since SF and working there. Never had better food either (except NYC). Dude, Vancouver shopping, “arts scene,” weather, lame-ass food “culture,” and infrastructure simply SUCKS ASS. Sidewalks in Vancouver are torn up all over the place with grass growing from them, roads have no shoulders, ZERO highway infrastructure, and clearly failing in social outreach services. Hypodermic needles everywhere in Van. Empty retail everywhere in Van. Ghost town at night in Van, with 2/3 of the condos with no lights on. If you want to talk homelessness rates, drug usage, lousy jobs, and a sad life then you can have your Vancouver. Vancouver is a shell city that wants to be much more than it ever can be. You are full of it man. Rain, shit in the streets, stinch EVERYWHERE, no jobs, classless peeps, no culture, subpar transportation, and wannabees who drink WAY too much sums up Vancouver.

http://www.boredinvancouver.com/10-shades-grey-pessimists-guide-vancouver/

http://globalnews.ca/news/1579777/dirty-garbage-strewn-streets-of-vancouver-frustrate-residents/

http://www.cbc.ca/news/canada/british-columbia/city-of-vancouver-s-annual-homelessness-count-begins-monday-night-1.3006112

http://www.huffingtonpost.ca/2015/03/24/vancouver-mayors-promise_n_6933608.html

http://www.langleytimes.com/opinion/letters/292227241.html

#80 RayofLight on 06.24.15 at 11:03 pm

Everyone who questions Garth’s estimate of a 7% return must not be investors. I suspect they are preaching from the pulpit of ignorance. Try it, get wet, the water is fine. A 7% annual return is not a high bar.

#81 dirty debtor on 06.24.15 at 11:03 pm

B riding

Sounds like someone is getting horny!!! Buy on the downswing, not the up. When rates rise, the slide begins. Probably sometime around when the lease goes month to month.

Hopefully the thought that you may have to move in a years time will keep the wife from filling the house with too much junk from bed bath and beyond

#82 Ben F on 06.24.15 at 11:15 pm

Guess these guys don’t live in San Fran, right Sharon?

http://money.cnn.com/2015/06/24/real_estate/housing-middle-class-rent-affordability/index.html

Oh no wait she’s a kid who is wrong.

#83 Leo Trollstoy on 06.24.15 at 11:19 pm

Did your Mother not love you? You seem to be perpetually victimized in your thinking… Is there anywhere that is doing well and opportunities abound??? You must be really depressed based on the answers you give here…

Unfortunately it’s fairly obvious that Mark hasn’t achieved much success in his career nor when investing. This explains his need to downplay others successes and boost his own ego with creative writing.

#84 Squirrel meat on 06.24.15 at 11:48 pm

There are now more pot stores than Starbucks in YVR… LOL…

Naturopaths and yoga pants.

http://www.theguardian.com/world/2015/jun/24/vancouver-regulate-illegal-marijuana-stores-canada

#85 B Riding Dirty on 06.24.15 at 11:48 pm

dirty debtor

Only one unit for sale in my complex when there is usually 3 to 5. Same size as mine asking 329k. I thought I would be lucky selling for 300k after my reno here, but with this surge in our area I see a time to sell, invest, try out a rental home then buy back in when the time right. But I sold early last year and missed out on 10percent gain year to date so who is to say it will not be the same story next year. This blog of following dawgs has been wrong on house prices for 6 years. Whats one more? So lost at this point…

#86 wallflower on 06.24.15 at 11:58 pm

#28 MoneyDriven on 06.24.15 at 7:54 pm

interesting blog comment from your link:

I don’t live in Vancouver. I live in Toronto. I try’d to sell my 2 houses, a detached house and semi at Keele/Finch for the right price I was asking for. Nobody else except Chinese came and bought them. I was grateful the chinese paid for my houses which I paid a’lot in upgrades. Prior to that, no Canadian person offered me anything for it. And some other person non-canadian tried to low-ball me but I refused. As a matter of fact chinese people contribute to our house appreciation and I welcome them here.

#87 Zed on 06.25.15 at 12:00 am

Garth:
1. Renters many times have to enter fixed term leases, that are very expensive to break. There is risk here too in renting.
2. REal estate obsession in a country with so many immigrants and a welfare state like Canada is easily explained by a sociologist. Its a way to keep outsiders out of your neighborhood, and thus of your schools, etc. To make things so expensive that its so hard to move in. Its the lesser of two evils.

#88 Bottoms_Up on 06.25.15 at 12:03 am

#33 mike leblond
———————–
Actually sales in Ottawa are at regular levels. Buyers are still out there. So houses that are priced right are selling. Check the chmc stats.

#89 Squirrel meat on 06.25.15 at 12:07 am

Atwood’s advice on investing…. that’s one way to make some $$ off all you boomers!

http://www.theglobeandmail.com/globe-investor/investment-ideas/margaret-atwood-on-how-she-chooses-her-investments/article25100262/

“If the Urban Death Project [a human composting company] was floating stock, I would probably invest in that. Into a certain age group that is what we talk about. It’s no longer, ‘who’s having an affair with whom?’ It’s ‘what are you going to do with your corpse?”

#90 kommykim on 06.25.15 at 12:10 am

RE: #38 -=jwk=- on 06.24.15 at 8:28 pm
California is running out of water because smug vancouverites eat California strawberries, almonds, quinoa and other hippy food. You won’t be so smug when you find half the fruit and veggie’s missing from your health food store….

No one forces California to export food to Vancouver. On another note it looks like the moss and mould in Vancouver is drying up as they will probably move to stage 2 water restrictions in July.

#91 Mista Robota on 06.25.15 at 12:14 am

#79 The American on 06.24.15 at 11:01 pm
” No comparison between SF and Vancouver. …”

Absolutely right….Vancouver has much better sushi!

#92 Karl hungus on 06.25.15 at 12:16 am

Paid off real estate worth probably a mill. Sell it and rent and they are in the scenario you talk about.

#93 kommykim on 06.25.15 at 12:23 am

RE: #56 A Yank in BC on 06.24.15 at 9:44 pm
#51 Sunmonkey
And who in their right mind would offer 13% over asking if they are the only one making an offer. That’s even crazier. Collusion between agents?

A conversion I had with my realtor when buying my house (I already had a written offer in):

Her: “I think you should raise your offer by $10K”
Me: “Why, is there another offer?”
Her: “No, but just to be sure you’ll get it.”
Me: “I’m already offering them their asking price and I’m walking if they reject it.”

My offer was accepted as is.

#94 Squirrel meat on 06.25.15 at 12:24 am

#79 The American on 06.24.15 at 11:01 pm

49 Jurewicz on 06.24.15 at 9:14 pm
I just got back from San Francisco. Dirty, smelly city. 2-bedroom apartments in hipster Mission District going for $1.5 million. City services cut big time because of drought. Dog poop all over the sidewalks. Smell of urine everywhere because of rampant homelessness.

Thanks, but I’ll take Canada.

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

Tisk risk. You’ve lost your mind you jealous man. Drought is a concern but nobody up North recognizing Cali’s largest source of water is ground water, with options to source from other areas in the U.S. with abundance. My God, let go of the drought already… Is this all you can cling? Very, VERY sad. The drought affects surface. No comparison between SF and Vancouver. Either you did not visit SF or you can’t handle real culture in a true global city three and a half times bigger than Vancouver. 8.5MM people agree compared to Vancouver’s tiny 2.4MM. Vancouver is wannabe. I never visited Vancouver without smelling piss, grease, or hearing obnoxious self righteous NIMBYs who have no clue about anything outside of Canada, yet want to act like they do. Transportation in SF kicks ass compared to Vancouver. Never met smarter or better people in my life since SF and working there. Never had better food either (except NYC). Dude, Vancouver shopping, “arts scene,” weather, lame-ass food “culture,” and infrastructure simply SUCKS ASS. Sidewalks in Vancouver are torn up all over the place with grass growing from them, roads have no shoulders, ZERO highway infrastructure, and clearly failing in social outreach services. Hypodermic needles everywhere in Van. Empty retail everywhere in Van. Ghost town at night in Van, with 2/3 of the condos with no lights on. If you want to talk homelessness rates, drug usage, lousy jobs, and a sad life then you can have your Vancouver. Vancouver is a shell city that wants to be much more than it ever can be. You are full of it man. Rain, shit in the streets, stinch EVERYWHERE, no jobs, classless peeps, no culture, subpar transportation, and wannabees who drink WAY too much sums up Vancouver.

http://www.boredinvancouver.com/10-shades-grey-pessimists-guide-vancouver/

http://globalnews.ca/news/1579777/dirty-garbage-strewn-streets-of-vancouver-frustrate-residents/

http://www.cbc.ca/news/canada/british-columbia/city-of-vancouver-s-annual-homelessness-count-begins-monday-night-1.3006112

http://www.huffingtonpost.ca/2015/03/24/vancouver-mayors-promise_n_6933608.html

http://www.langleytimes.com/opinion/letters/292227241.html
————————————

SF rocks. Parts have an edge, but it’s alive. My retirement winter destination. Rent though. House prices are insane!.. All of North Cal amazing.

#95 Bottoms_Up on 06.25.15 at 12:25 am

#40 Geoff
————–
Geoff, Garth has frequently outlined how a balanced portfolio earns 7% on average. This has been replicated, or even bested, by large pension funds. Why would you think 7% is not attainable? Garth is a very reasonable dude who will look after your money. All you have to do is contact him…..

#96 Mark on 06.25.15 at 12:33 am

“Mark – Canadians with Engineering/CompSci degrees are in great demand and can easily come to the US with a TN visa. Shit – I got a with a TN with a BA (but I had significant business experience back in 2011.”

I know a couple guys with those credentials who have submitted their resumes to basically every SV employer they could find. Few bites, simply because they’re overwhelmed with applicants.

Its pretty bad for Americans with that background, so Canadians? Good luck with that. Just because a person can get a TN visa trivially doesn’t mean they can find a job.

#97 Godth on 06.25.15 at 12:53 am

#64 Smoking Man on 06.24.15 at 10:08 pm

It’s really hilarious that you’re moving fro Commie Canuckistan to California of all states – good lord! L.A. no less, what a dump. You really have no clue but I’ll look forward to your updates. I hope you enjoy short showers and lots of bureaucracy!

San. Fran. is a dump too, a more picturesque dump but a dump is a dump. I did have fun in San. Fran. though. L.A. hahaha! Good luck buddy! Stinky sewer.

#98 Fortune500 on 06.25.15 at 1:21 am

MrMoneyMustache and Garth Turner. Now the internet offspring of that combo …. Priceless.

#99 BS on 06.25.15 at 2:06 am

American:

Either you did not visit SF or you can’t handle real culture in a true global city three and a half times bigger than Vancouver.

SF true culture? Have you ever been outside the US? I guess if guns, racism, drive-thu’s, obesity and ignorance are culture then the US has lots of it.

Never met smarter or better people in my life since SF and working there.

That sentence speaks volumes. I bet you run into a lot of smarter people where ever you go.

#100 hamish42 on 06.25.15 at 3:47 am

RE 70% of pre-retirement income- I don’t think this is a helpful number.
Better to go bottom-up, and figure out what you need to get by on. I have watched one relative who retired on 60% of final salary 30 years ago (~35K) save a large chunk of that every month because he is simply not that active any more.
My best guess is CAD1.2M by age 60 to give CAD50K per year income, with the assorted govt payments as a top up.

#101 jane 24 on 06.25.15 at 3:50 am

I am a great fan of eat your principal, don’t just live on the interest it generates. The facts are that if you don’t spend the pension principal on fast cars and cruises then your kids will. And who saved to build it, you and not them. Enjoy. You worked hard all your life. Plus once you hit 55 your friends do start to die.

If you make the mistake of still having it when you need a nursing home then the home gets it instead. My parents have been living on the Ontario govt in a top nursing home for a decade courtesy of the tax-payer. Neighbouring rooms held onto their pension principal and are paying out $4000 a month.

Plus to a certain extent as you age you do eat the house as you may start retirement in a 4 bed detached but you usually finish it in a one bed retirement flat with a two bed townhouse in between.

I have been retired 18 months now and I am amazed at how little life costs with the major bills taken out and kids long gone. If I had known it was this cheap I would have retired at 55 rather than working to 59. Waste of 4 years there. My pensions don’t kick in for another 6 years either.

Travel is the big cost but if you have the freedom to go last minute or mid-week then the deals are tremendous. We have done Vietnam, Canada, Belgium, Italyx2 in the first half of this year. If you can be on the Southampton docks in 24 hours and jump on that departing cruise, we are talking cheap.

In a paid-up house, with paid-up cars and no debts and just the two of you – life is cheap!! These financial advisors are talking crap.

#102 Sosuke Aizen on 06.25.15 at 4:08 am

Asking Garth how much is needed to retire on is like asking an alcoholic how much alcohol is needed to get through a long weekend. Garth lives the life of an aristocrat. He drives a Lambo while telling people not to waste money on real estate.

Absolutely false. My Lambo is in for an engine rebuild. I’ve downgraded to the Tesla. — Garth

#103 Nagraj on 06.25.15 at 5:14 am

THE RUSTING YEARS

A look at Canadians’ retirement prospects via a sharp pencil – scary.

Scarier still – the calculator is sitting in the shadow of The Grim Reaper.

Time quits creeping along in its “petty pace from day to day” and starts galloping around in circles with loud aches and pains, screaming regrets and bereavements. And that shadow deepens.

Planning for your retirement are you? Go right ahead.

I can’t handle articles on retirement except for those that concentrate on the collective and political aspects.

Garth (shortened quote): “Millions will soon understand they lack the cash flow needed to live happily.” And then what? [Happily should have read comfortably.]

#104 pbrasseur on 06.25.15 at 7:48 am

The American

« Never had better food either (except NYC).»

Sure, but SF and NY are rare (and very expensive) exception in the US. I love the US for many reasons, but food is not one of them.

BTW, the best bet to find great food (at reasonnable price) in a North-American large city is BY FAR Montreal. Toronto pretty nice too.

#105 George S on 06.25.15 at 8:01 am

I am sorry but I couldn’t resist:
#64 Smoking Man:
“Not enough of a wide angle lens if I was staring in it.” I assume you meant starring to be funny, but I guess the truth comes out when you say staring because that is more likely what you would be doing.
Again Smoking Man:
“I’m not allowed in California when I had a labido.
Now that its dead.. Do what you want son the mofo says to me..”
It is from the smoking and drinking.

#106 B on 06.25.15 at 8:04 am

Hi Garth — I’m a newly minted millennial federal public servant (insufferable, I know). What do you figure are the odds that I will be able to collect my full pension in 20-30 years? Most people I work with (i.e boomers) just stare at me blankly when I ask, seemingly unaware of the many challenges facing the public service pension system down the road…

#107 tony on 06.25.15 at 8:50 am

excuse digression, since California is important, and desperate, why don’t we pipe water to them, we create a new industry, and they rock on.

#108 maxx on 06.25.15 at 8:58 am

#25 the Jaguar on 06.24.15 at 7:36 pm

One of the best posts- ever. Time inevitably becomes so much more limited than money. Number of travel-fit years after 60? Far less than we all think.

Time for another couple of months in the South Pacific. Now this is the BPOE, not the moldy wet coast.

#109 Axehead on 06.25.15 at 9:02 am

I think Garth got it right – 1M for 70k/year + CPP & OAC. If only the average Canadian could reach this – NOT going to happen. Anything above this is bonus spending for the average Canadian (i.e. new teeth, lift for bathtub, sheepskin seat cover for the Harley, etc.)

Consider also: RRSP and RRIF (for those with defined contrigution pensions) meltdown of capital due to current government requirements will erode the % return on capital, but hey – you’re going to die sometime – sdo might as well spend it.

#110 Leo Trollstoy on 06.25.15 at 9:26 am

I know a couple guys with similar credentials to myself who have submitted their resumes to basically every SV employer they could find. Few bites, simply because their credentials are bad.

Its pretty bad for me and my background. Good luck with that. Just because I can get a TN visa trivially doesn’t mean they can find me a job.

Fixed that for you.

Ps: my Canadian friends haven’t found a problem finding jobs in Seattle and SF with IT firms. Perhaps you should find more intelligent colleagues.

#111 Holy Crap Wheres The Tylenol on 06.25.15 at 9:43 am

“Living here in the heart of Silicon Valley, life appears to be incredibly blessed and privileged,” Sharon writes me. “I mean, constant sunshine… who can complain? No snow to shovel? Yes please.”
___________________________________________
Sharon is absolutely correct, constant sunshine, beautiful vistas, snow ski in the morning , beach in the afternoon. However the one thing that finally drove me to leave the valley was the Loma Prieta quake of 89. We were in Los Gatos (Near San Jose) when it hit. My wife could not take it any more she was nearing a breakdown. She is from Ireland where the only time the ground shakes is when someone falls off a bar stool.
We were near the San Andreas, Hayward and Calaveras faults. According to experts they should be treated as a single system with potential for earthquake ruptures generating quakes with magnitudes greater than 7, posing a higher seismic hazard to the East San Francisco Bay Area. Had many small and medium quakes when I was a teenager in SoCal however we were lucky to miss all of the big ones around us. Anyway you don’t have to be in the valley to make great money.
http://earthquake.usgs.gov/regional/nca/maps/index.php

#112 The American on 06.25.15 at 9:46 am

At #99: BS, you said, “SF true culture? Have you ever been outside the US? I guess if guns, racism, drive-thu’s, obesity and ignorance are culture then the US has lots of it.”

Let me break that down for you.
1) Yes, I have been outside the U.S. many,many, many times. In fact, I just returned from Toronto. Additionally, leaving for the home I own in Spain June 30th-July 12th. Then I will be heading to Morocco in October to visit my niece who lives there, working for the U.S. State Department.
2) Canadian civilians own more guns than American civilians, per capita. Only when military might is thrown into the equation does the U.S. own more, and significantly more at that, because we have a real military. Even while I write this, the CBC is reporting on the morning news a Toronto-area shooting as the police chase after the gunman, who they still haven’t caught.
3) Canada’s racism problem is worse than the U.S.
http://www.macleans.ca/news/canada/out-of-sight-out-of-mind-2/
4) Sure housing in SF is expensive, but once again, Vancouver can learn a thing or two as to why:
http://www.bcbusiness.ca/real-estate/what-vancouver-can-learn-from-san-francisco-on-housing
5)Fat Americans… yeah, this never gets old. Canadians are nearly just as fat. Canadians may be getting even fatter soon… Watch out for those trans fats that we are banning in the U.S. (like it really matters as Tim Hortons constitutes a favorite national pastime). Canadian obesity rate is 60% and growing…literally. Your comment was rich as Canada is also one of the fattest countries on the planet.
http://www.salon.com/2015/02/25/nyt_pays_karl_ove_knausgaard_to_travel_around_america_—%C2%A0and_he_almost_loses_two_decades_of_writing/

http://globalnews.ca/news/2059351/could-the-u-s-trans-fat-ban-affect-canadian-consumers/

http://www.besthealthmag.ca/best-you/health/are-canadians-too-fat?
show_desktop_mode=true#EaEusp3MQpIYVTIw.97
6) Sure, I could have included the word, “I’ve” in the last sentence to my previous post to make it complete, but I would have though anyone with cognitive abilities could figure it out. Apparently, I was wrong. I should also point out to you, BS, that you incorrectly used the words “where ever” in your post to me. You should have used the word “wherever.” Pot calling kettle?

Also, there was a great little piece on CBC this morning about Vancouver’s drought, vanishing water reservoirs, and record low snowpack. Driest May ever on record, yet Vancouverites have used 17% more water this year over the same time last year. 18% of usual rainfall in June. Water resoivors are down 7% more in just TWO WEEKS. Wildfire risk is higher, and getting higher, after having over a dozen wild brush fires in the last week alone. Only to compound this little problem, hotter and dryer weather is coming, too. Vancouver now facing implementation of water restrictions. These conditions are forcing VANCOUVER AND SOUTHERN BC TO BUY WATER. So, again, why is it so many Canadians believe BC will be the savior to Cali? Ugh… Always pointing that one finger south, while forgetting there are three pointing right back at you.

CBC reported another story about Canadians driving their cars into moose. A man loathes memory after a moose crash and drove 20km before realizing something was wrong. No joke.

#113 Holy Crap Wheres The Tylenol on 06.25.15 at 10:00 am

#44 Smoking Man on 06.24.15 at 8:50 pm
Don’t worry Garth and Dogs , I’m moving to LA area in Aug. It’s a dangerous move. Vegas a tiny four hour drive away. Just me , my wife, Our dogs, Wyatt and Sophie.
Good riddance Communism, tree huggers, bicycle Nazis. And finally my kids…WooooHooo
I’ll still visit here everyday and report from the front lines of the USA
__________________________________________
If you are going to make the move Smoking Man I would highly suggest that you make a few trips there first and scout it out. LA is like Toronto on Crack and Steroids. It is a massive area with hundreds of little cities that make up the greater LA area. If you have friends there contact them and ask for as much help as possible for your relocation. The difference between one town and another is literally blocks. They are all stacked on each other and each town whether incorporated or not is completely different vis-à-vis relating to demographics and crime. Also bring lots of cash of your are going to purchase a home
http://maps.latimes.com/neighborhoods/violent-crime/neighborhood/list/

#114 4 AM Sunrise on 06.25.15 at 10:08 am


#27 GIS, we won’t go there? on 06.24.15 at 7:49 pm
My neighbour spends 6 months a year overseas, has 2 suites generating cash income and has a business back home. GIS and OAS is “great” he says. Plus the “free” healthcare.

Is “cash” another word for “unreported”? The maximum income to qualify for GIS is rather low. Garth! Release the CRA hounds!

#115 Water Woes on 06.25.15 at 10:30 am

American, watched that segment on CBC News this morning about the drought here. I am very confused. We were told we should be fine through the summer a few weeks ago. Now BC is in drought and not prepared to deal with it. What gives?

#116 Mike T. on 06.25.15 at 10:40 am

people are so funny

American, Canadian, Asian….
white brown black

we are all the SAME

focus on the 99.9% that is the same, not the 0.1% that is different

for it is in rapport we thrive

#117 Katherine on 06.25.15 at 10:40 am

Thoughts? I hope you comment on this on your next blog. I know you talk about it all the time, but I would like your thoughts on this article: http://www.theprovince.com/business/Will+Vancouver+real+estate+bubble+burst/11160850/story.html

#118 Grantmi on 06.25.15 at 10:51 am

Jonathan Manthorpe on CKNW right now talking about the gutting of Vancouver real estate.

http://www.factsandopinions.com/galleries/opinion-columns/jonathan-manthorp-international-affairs/vancouver-not-mind-numbingly-boring-but-vacuously-vain/

#119 NewWorldParty.org on 06.25.15 at 10:52 am

People are clued out about the value of pensions.

The richest people in the country are unionized, government workers because of their pensions, which are worth over $1 million. They retire at 55 and don’t need to sweat about this like the rest of you. They are travelling the world and sitting on the beach.

http://www.newworldparty.org/2008/11/unions.html

Yes, you are certainly clued out. Teachers, cops, firefighters, soldiers, municipal workers are hardly ‘traveling the world’ in retirement. The average Ontario teacher retires at 58 with $46,000 in pension (including CPP bridge). Nice, but not rich. — Garth

#120 Joe2.0 on 06.25.15 at 11:01 am

US home ownership lowest in two decades.

Americans learned a valuable lesson. Coming to a delusional northern country near you, soon. — Garth

#121 john on 06.25.15 at 11:04 am

Re: CPP ‘take it early always’ The hit to take it early is now 36% so you won’t get the average of 640.00. Most people take it early so I gather the average reflects the discount? So the govt income is likely to be closer to about 13,000.00 a year.I didn’t take it at 65 and am now almost 30 months times .7 into the increased pension plus still self employed working and contributing so getting the admittedly small extra but I will at at least 20,400,00 a year.To those with DB pension the increase is chump change but to me will help maybe big time. As for Sharon’s three mil ‘probably obsessive’ Do you think? She should be out there getting the most out of life and forgetting about the three mil. Always being ‘incredibly blessed and privileged’ to imposes an obligation to give back. She looks like she is doing well so give back big time. Help build a school in the third world,fund an orphanage,better yet put your feet on the ground there.Can’t tell for sure from this but if she isn’t doing that she isn’t my type of person at all

#122 Broke Dick on 06.25.15 at 11:09 am

Since the topic of the day is retirement. Here is the best retirement calculator that I have ever found. Too many other ones are ridiculously basic or try to guesstimate needs based on current income. So have at ‘er. If anyone knows of a better one please post.

http://financialmentor.com/calculator/best-retirement-calculator

#123 Smoking Man on 06.25.15 at 11:16 am

#74 Nacho Cheese on 06.24.15 at 10:51 pm
#44 Smoking Man on 06.24.15 at 8:50 pm
Don’t worry Garth and Dogs , I’m moving to LA area in Aug. It’s a dangerous move. Vegas a tiny four hour drive away. Just me , my wife, Our dogs, Wyatt and Sophie.
—–

Are you selling your long branch house?
……

Not a chance, Rock Solid , rates are going nowhere for years. Bungalows are in, and will stay in high demand.

When it hits a million bucks in a few years, I might be tempted.

#124 Nemesis on 06.25.15 at 11:21 am

#FigurativelySpeaking… #It’sAJuxtapositionalRace… #ToTheBottom…

[Guardian] – Revealed: how developers exploit flawed planning system to minimise affordable housing

…”It is a phenomenon, in the view of housing expert Dr Bob Colenutt at the University of Northampton, that “threatens the very foundations of the UK planning system”; a legalised practice of fiddling figures that represents “a wholesale fraud on the public purse”. What was once a statutory system predicated on ensuring the best use of land has become, in Colenutt’s and many other experts’ eyes, solely about safeguarding the profits of those who want to develop that land.”…

http://www.theguardian.com/cities/2015/jun/25/london-developers-viability-planning-affordable-social-housing-regeneration-oliver-wainwright

[NYT/OpED] – Who’s Speaking Up for the American Worker?

…”At the other end of the front row sat another septuagenarian retiree, whose eyes filled with tears, as I showed pictures of and spoke about the people who line up outside the region’s food pantries two hours before the doors open. His story was like that of others in the crowd: His mother was raised in a Bassett-owned home, and his father lost fingers to the company’s saws. He’s also a native of Henry County, which has lost nearly half its jobs in the past two decades — not just factory work but also jobs in the smaller companies that supplied the factories, and in the mom-and-pop stores and diners where factory workers used to spend their cash.

Unfettered free trade has not only put the Henry County region near the top of Virginia’s unemployment rankings for more than a decade, but it has also ushered in an era of soaring food insecurity and Social Security disability claims.”…

http://nyti.ms/1SMoxmF

[Telegraph] – Testicle-munching fish species found in US lake: The pacu is native to the Amazon, but one was caught this week in New Jersey

…” “They are almost identical to the piranha, you couldn’t even tell from the outside,” he explained after the Scandinavian pacu sighting. “It’s just that they have different teeth. Flatter and stronger, perfect for crushing.”

“The pacu is not normally dangerous to people but it has quite a serious bite, there have been incidents in other countries, such as Papua New Guinea where some men have had their testicles bitten off,” Mr Carl said. The freshwater fish can grow up to 90 centimetres and weigh up to 25 kilograms.”…

http://www.telegraph.co.uk/news/worldnews/northamerica/usa/11697491/Testicle-munching-fish-species-found-in-US-lake.html

#125 Broke Dick on 06.25.15 at 11:23 am

The calculator convinced me that I could retire now, at 50.
And yes the house will be funding the retirement as I move away from Toronto and into Niagara region.

#126 Squirrel meat on 06.25.15 at 11:37 am

#112 The American on 06.25.15 at 9:46 am

At #99: BS, you said, “SF true culture? Have you ever been outside the US? I guess if guns, racism, drive-thu’s, obesity and ignorance are culture then the US has lots of it.”

Let me break that down for you.
1) Yes, I have been outside the U.S. many,many, many times. In fact, I just returned from Toronto.
———————————
You went to Bette Midler in TO – your credibility is shot forever.

#127 Godth on 06.25.15 at 11:43 am

#112 The American on 06.25.15 at 9:46 am

Yes, we all know that the USA is #1, the shining city on the hill; the indispensable nation; American exceptionalism stands taller and sees further, etc.

#128 waiting on the westcoast on 06.25.15 at 11:54 am

101 jane 24 on 06.25.15 at 3:50 am
“Travel is the big cost but if you have the freedom to go last minute or mid-week then the deals are tremendous. We have done Vietnam, Canada, Belgium, Italyx2 in the first half of this year. If you can be on the Southampton docks in 24 hours and jump on that departing cruise, we are talking cheap.”

Jane 24 – just curious where you are finding the last minute cruise deals. Would love to be aware for my parents as they have the flex and desire…

#129 Mike S on 06.25.15 at 11:58 am

“Any chance of the government raiding CPP funds to pay for the CMHC bailouts? Or even not so much raiding CPP, but forcing the CPP to hold a good chunk of the extra GoC debt issuance that inevitably will be required?”

Mark, you said that the CAD is going to shoot higher because Canada doesn’t run deficits, now you say additional GoC debt?

Don’t pensions already hold some MBS?

While we at that, maybe you can comment on the following changes?

http://www.bankofcanada.ca/2015/06/changes-margin-requirements-bank-canada/

#130 Ogopogo on 06.25.15 at 12:06 pm

#53 cramar on 06.24.15 at 9:37 pm
#144 Ogopogo on 06.24.15 at 12:20 pm

#14 cramar on 06.23.15 at 5:37 pm
I think this is fundamental with humans—wanting to own your own shelter.

Spoken like a true 20th-century dino. Next thing someone will be touting “pride of ownership”… Wait, another brontosaurus did that a few comments down.

I pity you brick lickers, though I guess it’s thanks to you cultists that my portfolio continues to yield sweet, sweet divvies. Good luck dumping your beloved money pit on a greater fool once the bubble pop is felt across the nation.

——————————

Calling someone a dino and brontosaurus coming from Ogopogo? A mythical creature from the Jurassic era? Funny.

Labels aside, I guess you must be pitying other “brick lickers” since I haven’t seen mortgage papers in decades, and my house & finances conforms to Garth’s Rule of 90. If the bubble pops, I mean REALLY pops for some unfathomable imaginary reason we wake up tomorrow to find all RE across Canada is suddenly worth ABSOLUTELY HALF, it will effect my life very little. That is because the majority of my assets are in my portfolio, which did rather well last year also. Don’t cry for me Ogopogo.

Ogopogo is for the “vultching” of underwater (get it?) mortgage owners many of us are prepared to do when the time is right.

“Brick lickers” refers to the irrational cultists worshipping at the altar of real estate at any cost. This includes realtors and their uneducated ilk. You bought pre-bubble and are thus protected from the ongoing correction. Whoopee-dee-do. Surely you know folks who will be/are being devastated by the correction.

Cry for them cramar.

#131 Smoking Man on 06.25.15 at 12:07 pm

#125 Broke Dick on 06.25.15 at 11:23 am
The calculator convinced me that I could retire now, at 50.
And yes the house will be funding the retirement as I move away from Toronto and into Niagara region.
…..

Go to Windsor, even cheaper. Quick drive for cheap flights to anywhere.

Cross boarder for all your shopping.

#132 Bottoms_Up on 06.25.15 at 12:11 pm

#155 Mf on 06.24.15 at 2:21 pm
——————————————
I am here because of the free advice and entertainment that Garth offers, as well as insight from fellow dawgs. Why would you question why a ‘home owner’ (*gasp*, the horror) would come to this site?

ps. I made my first post to this blog (as a renter) in the spring of 2008 (or was it ’07?) (you were likely fresh out of diapers)….Garth’s work helped me to analyze my own personal situation, and figure out what was best for me and my family.

#133 Chris on 06.25.15 at 12:18 pm

>The average Ontario teacher retires at 58 with $46,000 in pension (including CPP bridge). Nice, but not rich. — Garth

I don’t believe that. The current Ontario teacher’s pension plan provides a 70% income replacement, and by retirement age virtually every teacher is at the top of column 4 of the salary grid, which varies from district to district, but averages around $94-97k currently. So they’re looking at about a $67k pension, fully adjusted for inflation.

Believe it if you want. But that’s the average. — Garth

#134 Bottoms_Up on 06.25.15 at 12:19 pm

#119 NewWorldParty.org on 06.25.15 at 10:52 am
————————————————————-
There are also a few things you need to know about public pensions. Contributions are significant (hundreds of dollars per pay cheque), and the pension funds are actively managed and well-funded. I believe the Ontario teacher’s pension fund is currently fully funded for example (ie, current projections show it can meet future obligations). Remember, this is money that these people did not receive, every paycheque, for their entire working career.

Another thing you should know, is the pension asset essentially dies with the individual (survivor benefits are sometimes 1/2 the value). So a public servant spends their career paying 10 or 15% of their paycheque into their pension, only to die at 65 and have that asset evaporate. No “pension estate” to pass along (unless younger children or a spouse). Kind of a gamble and a bum deal don’t you think? The winners are those that live the longest…..

#135 Bottoms_Up on 06.25.15 at 12:22 pm

#106 B on 06.25.15 at 8:04 am
——————————————-
Recent analysis of the federal pension fund shows it will continue to grow to the 2040’s. After that, it may begin to draw down. I’m not sure what happens then, do contributions go up?

Anyway, here’s a link to the federal pension fund (it’s likely over $100 billion by now):

http://www.investpsp.ca/en/invt-fast-facts.html

#136 Bottoms_Up on 06.25.15 at 12:25 pm

#106 B on 06.25.15 at 8:04 am
—————————————-
Another thing you should be aware of, you get a ‘full’ pension if you work 35 years (funded at 70% of your best 5 years), and if you were hired post-2013, you can’t retire until age 65.

#137 JoeTFC on 06.25.15 at 12:28 pm

“Yes, you are certainly clued out. Teachers, cops, firefighters, soldiers, municipal workers are hardly ‘traveling the world’ in retirement. The average Ontario teacher retires at 58 with $46,000 in pension (including CPP bridge). Nice, but not rich. — Garth”

I work at a tour company that specializes in travel for Seniors. At least a third of our clients are teachers because they have the money. They also make the worst clients in a lot of ways. Some say it’s because ‘they never left school’. I think it’s because they have no clue of the struggles of people outside their profession.

#138 Blair (Tony) on 06.25.15 at 12:40 pm

Bought in Toronto in 2007. Last night found out I need to rip up my front lawn and do plumbing work. 2-4k.

#homeownership

#139 Mister Obvious on 06.25.15 at 12:42 pm

BC Minister of Housing Rich Coleman was interviewed on CBC radio this morning. He had nothing whatsoever to say about the cost of Vancouver RE as it relates to either interest rates or average wages. Zip… Nada.

He did mention though that investment in BC residential rental property was a low profit endeavor, thus the ongoing dearth of suitable family rental accommodation especially close to the city core. Maybe that’s his back-handed way of saying that building $500K condos is still where the smart money is going.

He also said the BC government would not be setting housing policy based on a few small pockets of extremely high priced residences in choice areas. By ‘choice area’ I think he means inside the boundaries of Vancouver city.

#140 Leo Trollstoy on 06.25.15 at 1:03 pm

Speaking of vacations, assuming that I enjoy a variety of good food and relaxation, what options do I have outside of sterile resorts?

#141 saskatoon on 06.25.15 at 1:25 pm

garth is catching on:

http://www.msn.com/en-ca/money/homeandproperty/wealthier-boomers-are-shunning-homeownership/ar-AAc3ajy

Actually, they’re catching up. — Garth

#142 Julia on 06.25.15 at 2:09 pm

#138 Blair (Tony)
“Bought in Toronto in 2007. Last night found out I need to rip up my front lawn and do plumbing work. 2-4k.

#homeownership”

We did that. Your front lawn will look like you buried a dead body until it settles again. Always something to be fixed/replaced in a house, especially if you live in the older parts of the City (we do).
We just had an exterminator over this week. The fun (and expenses) never ends!

That is the part of the equation that people obsessed with buying are missing. It is much more than a mortgage payment vs rent.

#143 Julia on 06.25.15 at 2:15 pm

#140 Leo Trollstoy
“Speaking of vacations, assuming that I enjoy a variety of good food and relaxation, what options do I have outside of sterile resorts?”

You can stay at a resort or hotel as a “pied-à-terre” and explore. You could cruise (not the Caribbean necessarily but south America or the Mediterranean) and tack on a rental pre and/or post cruise? South America is wonderful, Buenos Aires especially. Or you could rent an apartment /condo? Spain is great to rent.

#144 Gordon Freeman on 06.25.15 at 2:23 pm

Sharon has it right…3 million would almost do….if she becomes one of the rare .8% of Canadians who will ever have $1,000,000 or more in CASH.

“figure on having about $1,000,000 invested to provide an average of 7%, with most of the returns in the form of dividends or capital gains.”

I wonder how it works when I have to withdraw 7% or $70,000 continually through good markets and bad? If I start with a million and withdraw 7% for living…I have only $930,000 to earn with…..another 7% withdrawal means I have only $65000 to live on in year 2. In year 3 I have only$864900 to earn my 7% which drops my income to $60543. In 3 years my income has dropped $9500 bucks a year….in 4 years my million is down to $803520 and my income falls to $56,000.

And in a bad market or another fed led recession I may realistically lose up to 10% in a correction….meaning my 7% withdrawal becomes a bigger chunk of my equity and that will drive my income earning potential down dramatically.

So…if a person is actually retired and has to count on a secure income, without the smoke and mirrors of “in 35 years you have $1,489,134″…is 7% likely or just a lucky year or period from time to time?

What is actual monthly income on your ‘balanced portfolio’…and what has to sit there for 35 years to see the results…good or bad?

Your thoughts?

#145 TurnerNation on 06.25.15 at 2:26 pm

Smoking man….a going away party at Duke of Devon for your 17 fans?

#146 Debtfree on 06.25.15 at 2:57 pm

Mark Cohodes on bc1 today . His main concern for the re bubble is TO and Vancouver . He thinks that the worst part of the bubble are the private mortgage brokered mortgages . He thinks his chickens could get a private mortgage in canada . Say it ain’t so Garth .

#147 Bottoms_Up on 06.25.15 at 3:04 pm

#133 Chris on 06.25.15 at 12:18 pm
———————————————
don’t forget they likely have to work 35 years to get the maximum (70%). That means working from 25 to 60.

Someone that begins their career at 30 and retires at 55 would only get 50%.

#148 Robert on 06.25.15 at 3:08 pm

You said concerning CPP ‘take it early always’. I received the same advice at a pre-retirement seminar recently (I’m 56 yrs old). As I will receive a DB pension of approximately $70k/year, my TFSA is max’d out, and have an RRSP of $225k (both are in ETFs, and dividend paying stocks), no debt (own my house and 10 yr old car) and pay off my credit cards every month, I predict I won’t be hard up for money when I retire. So why take the CPP now? I could re-invest it for more money down the road, which does make some sense (cents?). But considering I’m in good health, and hope to live a long life, wouldn’t deferring the CPP until later be better to help against the rising inflation down the road?
ps. I’ve yet to find a great on-line calculator that shows the break even point when deciding to take CPP early or not. There are some ex-Federal employees who worked in the CPP program who will do a personalized calculation (for a price), but I’m not there yet.

#149 The American on 06.25.15 at 3:16 pm

At #127: Godth, who ever said America is #1? I didn’t say that. Careful, because your own insecurities are showing through. My post was in response to Canadian exceptionalism mindset, however often never looking inward at Canada’s own set of problems. Instead, obsessing over the U.S. with a boner the U.S. will fail. I set the record straight with facts and provide support to back up those facts. All I get is “you’re fat,” “you’re stupid,” “America is racist,” blah blah blah. How about trying to understand where my response was stemming instead of, once again, making a snide remark with no credence or baring to anything I’ve said. Good luck.

#150 Holy Crpa Wheres The Tylenol on 06.25.15 at 3:17 pm

#127 Godth on 06.25.15 at 11:43 am
#112 The American on 06.25.15 at 9:46 am
Yes, we all know that the USA is #1, the shining city on the hill; the indispensable nation; American exceptional-ism stands taller and sees further, etc.
___________________________________________
The USA beats us in every class. God we have a lot of catching up to do! I actually do miss the USA for one dollar bills, imperial measurement and reasonably priced beverages. Surprising I’m and engineer and I still can not relate to the metric system here?

http://www.msn.com/en-us/news/crime/50-most-violent-cities-in-the-world/ss-AAc3X6t

#151 Holy Crpa Wheres The Tylenol on 06.25.15 at 3:26 pm

#137 JoeTFC on 06.25.15 at 12:28 pm

“Yes, you are certainly clued out. Teachers, cops, firefighters, soldiers, municipal workers are hardly ‘traveling the world’ in retirement. The average Ontario teacher retires at 58 with $46,000 in pension (including CPP bridge). Nice, but not rich. — Garth”

I work at a tour company that specializes in travel for Seniors. At least a third of our clients are teachers because they have the money. They also make the worst clients in a lot of ways. Some say it’s because ‘they never left school’. I think it’s because they have no clue of the struggles of people outside their profession.
___________________________________________
My wife was a calculus teacher in the US and here. Pay for teachers in the US is terrible. Pay and perks here are ridiculous, even she agrees. My wife left here position here to take care of our children and had intended to return after raising the little ones. Started to go back many years ago and quickly learned the system is rife with bureaucracy the system is broken. She wanted to help fix it but would be framed as an outcast or dissident. She said to hell with it and worked for me instead in our accounting dept.

#152 Holy Crap Wheres The Tylenol on 06.25.15 at 3:34 pm

#126 Squirrel meat on 06.25.15 at 11:37 am

#112 The American on 06.25.15 at 9:46 am

At #99: BS, you said, “SF true culture? Have you ever been outside the US? I guess if guns, racism, drive-thu’s, obesity and ignorance are culture then the US has lots of it.”

Let me break that down for you.
1) Yes, I have been outside the U.S. many,many, many times. In fact, I just returned from Toronto.
———————————
You went to Bette Midler in TO – your credibility is shot forever.
_________________________________________
Don’t say its so! The Divine Miss M? Jesus they used to blast The Boogie Woogie Bugal Boy on our air force base loudspeakers all the time when I was overseas. Jesus was that supposed to lift our spirits?

#153 Nemesis on 06.25.15 at 3:35 pm

#TrollStoy’sUnorthodoxExcursionOptions…

[DailyMail] – Russian holiday company offering guided tank-tours of war-torn Ukraine in radical shift from their usual ‘health orientated trips’

…”With tank-transport and personal bodyguards included, a holiday company is testing the boundaries quite literally with guided tours of war-torn eastern Ukraine.”…

http://www.dailymail.co.uk/travel/travel_news/article-2953397/Russian-holiday-company-offering-guided-tank-tours-war-torn-Ukraine-radical-shift-usual-health-orientated-trips.html

[NoteToGT: Frankly, Donetsk seemed the more appealing option as compared to the recent ISIS Jihadi Raqqa Honeymooners Package]

#154 saskatoon on 06.25.15 at 4:10 pm

death by pole:

http://www.citynews.ca/2015/06/24/toronto-couple-says-view-from-million-dollar-dream-home-spoiled-by-toronto-hydro-pole/

#155 Hosè on 06.25.15 at 4:14 pm

In a new report today, Economists at CIBC World Markets are downplaying fears of a U.S.-style housing bubble in Canada. In their latest report, Benjamin Tal and Andrew Grantham argue the market is unique and driven by local factors including:

Geography
Demographics
New home construction
Availability of rental units
Real Estate investors

http://research.cibcwm.com/economic_public/download/feature3.pdf

#156 Godth on 06.25.15 at 4:23 pm

#149 The American on 06.25.15 at 3:16 pm

Oh, the irony. Re-read what you wrote in front of a mirror.

The USA is failing, so are we, so is every mature western economy. Unless systemic corruption, greed, selfishness, denial, hypocrisy, alienation and fantasy are counted as success. Feel better?

#157 What is life like in USA? on 06.25.15 at 4:23 pm

I am American. But I left.

Each region in the USA is different. Some Canadians think USA is paradise. Each place will have pluses, and minuses. In NW usa is rain. Nice and green and pretty in summer. Miserable in fall and winter. In Arizona it is warm and hot year round with water issues, transient mentality, there is a reason why Arizona is cheap-it sucks! In southern California nights are cool during the spring months. Texas is cheap all around with redneck mentality to match. The list goes on.

The second part of this entry lists retirement strategies. Get some sound investments, rsp’s, mutual funds, and then make as much money as possible and dont focus on the gift that retirement is. Retirement in the future may not even be possible. I use my job as simply the time in between my exercise/training sessions when I am not at work being paid. A job isnt a part of my identity and never will be. It is simply that pays money, because it order to make money you 1)must have a skill, and 2) be recognized by someone for that skill and 3) realize that everyone at every level is replaceable by someone else, and therefore identity attached to a profession is a self defeating because you are therefore defined by what others give you credit for. You may be the smartest, strongest person in the world, but if noone acknowledges it, you wont make any money off it. And chances are the people most suited for skilled jobs are not the ones in those jobs, so your ability is irrelevant. Therefore focus on getting by, learning politics, and then do your own thing when you arent in the money making prison called work.

#158 raisemyrent on 06.25.15 at 4:37 pm

#148 Robert on 06.25.15 at 3:08 pm
time value of money. same amount now is worth more. stop fearing inflation in the future. 5 years at your age (no offence) is not as guaranteed as at 25. stay away from former crown people trying to make a buck on people with questions (isn’t their DB pension enough?).

Tylenol
well I’m an engineer trained here and I wish we were all metric, but there are economic considerations there. Most people I know in the field of eng are comfortable with both systems and can convert on the fly or speak both in the same sentence.

agreed teachers make too much; they think they’re god’s gift to mankind. imagine if they put caps on their undergrad programmes!
they’ve carved their niche out and it works out for them. say with nurses (though because many of our doctors go south).
now, don’t even get me started on pharmacists…

#159 Godth on 06.25.15 at 4:38 pm

#149 The American on 06.25.15 at 3:16 pm

Here’s some reading for you if you choose to get over the irony and fact spinning and really want to look inward:

http://www.oftwominds.com/blogjune15/collapse-Greece6-15.html

http://www.oftwominds.com/blogjune15/collapse-Rome6-15.html

http://www.oftwominds.com/blogjune15/collapse-contraction6-15.html

http://www.oftwominds.com/blogjune15/collapse-institutions6-15.html

Have fun!

#160 OttawaMike on 06.25.15 at 5:04 pm

Dean De Maestro heard muttering on his way to jail ” I would have gotten away with it if it wasn’t for those meddling kids”

#161 Squirrel meat on 06.25.15 at 5:06 pm

#159 Godth on 06.25.15 at 4:38 pm

#149 The American on 06.25.15 at 3:16 pm

Here’s some reading for you if you choose to get over the irony and fact spinning and really want to look inward:

http://www.oftwominds.com/blogjune15/collapse-Greece6-15.html

http://www.oftwominds.com/blogjune15/collapse-Rome6-15.html

http://www.oftwominds.com/blogjune15/collapse-contraction6-15.html

http://www.oftwominds.com/blogjune15/collapse-institutions6-15.html

Have fun!
———————————-
I’ll skip.
The eternal doomer pornsters with a book to flog.

#162 The American on 06.25.15 at 5:07 pm

At #156 and #159: Godth, again, nothing you’ve provided pertains to anything I’ve said. You provided links completely off subject, let alone off continent. LMFAO. You’re trying WAY too hard, man, and to prove what? Nobody has claimed the Western countries aren’t failing. But, I can assure you, imperialism exists in abundance North of the 45th. It shows in nearly every anti-American and ignorant post, clinging to decades old data and sentiments, without considering the same things are going on right in your own back yard. That’s MY point. Now you’re trying to mince subject matters, and you’re failing yourself.

#163 4 AM Sunrise on 06.25.15 at 5:10 pm

#148 Robert on 06.25.15 at 3:08 pm

The Grim Reaper starts stalking people at about age 55, even the healthy ones…just saying.

Don’t need to live on CPP money? Got adult children that you love? Take the CPP early, stick it their TFSA and let them earn the average annual 7%. Intergenerational wealth transfer, dude.

Got minors in your family that you love? Can that CPP money go to work in an RESP with government matchy-matching and stuff?

Your RRSP’s and TFSA’s are way better inflation hedges than a CPP that’s taken at age 65. I don’t have numbers for this, but in the context of YOUR net worth, those “lost” 5 years aren’t going to make THAT big of a difference.

Do you really want to waste time crunching numbers to find your breakeven point when the Grim Reaper is standing right behind you? I have friends whose parents went DOA right at retirement. Not exaggerating.

#164 JuliaS on 06.25.15 at 5:29 pm

And if you had $1 mil and simply spent $70k a year out of it (not even counting CPP), then it would last you 14.29 years, or till the age of 81.29.

And the current average lifespan in Canada is… drum roll, ladies and gentlemen… 81.24 according to 2012 census data.

But if you want your 7% out of thin air – go ahead, put it in your wonderfully balanced guaranteed never to loose a penny portfolio.

Or, and don’t confuse Tax Free Savings Account, with Risk Free Investment Returns. One exists and the other one doesn’t.

Investment returns do not come from thin air, nor are they (like sustained god health) guaranteed. Balanced portfolios contain a mix of assets, from low-risk ones turning out interest and dividends, to growth assets that mirror economic growth. There are fluctuations, of course, but in no 10-year period in history has such a portfolio every ended up lower than it started, with the average return over the past 15 years being 7.4%. So, you can just consume your money and hope to die at the correct moment, worrying about it all the time – or not. Seems like a simple choice to me. — Garth

#165 Smoking Man on 06.25.15 at 5:46 pm

#145 TurnerNation on 06.25.15 at 2:26 pm
Smoking man….a going away party at Duke of Devon for your 17 fans?
…..

Hell ya..

#166 Godth on 06.25.15 at 5:59 pm

#162 The American on 06.25.15 at 5:07 pm

Of course imperialism exists north of the 49th (45th?), we’re all the product of colonial imperialism. Racism is inherent in the system here, like everywhere else. I provided a link that clearly demonstrates that fact a few days ago. Here it is again in case you missed it:
http://www.theglobeandmail.com/globe-debate/dear-canada-first-nations-dont-want-to-be-wards-of-the-state/article7028879/

To be honest I usually just scroll past your jingoistic nonsense as it’s YOU that’s trying too hard – to prove what exactly? Oh right, the USA is the best. Like we haven’t all grown up hearing that “look at me” narcissistic crap all our lives.

The USA is the global empire at the moment, 5% of the world’s population that consumes 25% of the world’s resources. How is that achieved? How many foreign (that means off continent) military bases does the USA maintain? How many international organizations does it direct (including NATO) blah, blah, blah. It won’t last forever. If your country wants to dictate terms to the rest of the world…there’s a downside too, so stop whining and pointing the finger elsewhere. Of course we’re along for the ride too, we’re “sleeping with an elephant”.

If you get off on coming to a Canadian housing/finance site and telling us all how much better you are, well…

I get off on being the a$$hole that bursts everyone’s delusional bubble. There will be no retirement for me, or my generation, though so what the hell why not?

p.s. those links are inherently linked into ‘the continent’ and it’s business, a couple take direct aim. Welcome to Globalization.

#167 maxx on 06.25.15 at 6:18 pm

#33 mike leblond on 06.24.15 at 8:15 pm

“The poor clowns listing their homes to no avail for years on end. When they realize buyers have all but evaporated……”

Absolutely correct and it’s becoming more prevalent. Most sellers are still at the stunned pecker stage. In the past week, two realtards have told me that there are a LOT of tire-kickers but few buyers. Most offers are conditional on selling the current millstone.

#168 Godth on 06.25.15 at 6:21 pm

#161 Squirrel meat on 06.25.15 at 5:06 pm

Yeah, I wouldn’t trust anyone that’s written a book either. If they offer their thoughts freely they’re doubly suspect.

Just keep repeating the mantra – the world is getting better and better, we’ve made the world a better place for future generations. Look into your navel while repeating it over and over and it will be true.

It doesn’t really matter to me. Nature is a uncompromising, she’ll restore some semblance of balance regardless of what I, or you, think.

#169 jess on 06.25.15 at 7:26 pm

“The Consumer Financial Protection Bureau’s Office for Older Americans says 30% of homeowners 65 and older (6.5 million people) were paying a mortgage in 2013, up from 22% in 2001. Federal Reserve numbers show the share of people 75 and older carrying home loans jumped from 8% in 2001 to 21% in 2011.

What’s more, the median mortgage held by Americans 65 and older has more than doubled since 2001 — to $88,000 from $43,400, the financial protection bureau says.

In markets hit hardest by the housing bust, a substantial share of older Americans are stuck with mortgages that exceed their home’s value. In Atlanta, it’s 23% of homeowners 50 and older, according to the real-estate research firm Zillow. In Las Vegas, it’s 26%.

…”Seniors fell into housing trouble in varying ways. Some lost jobs in the recession or its aftermath. Some overpaid for homes during the housing boom, thinking they could cash in later.”

http://www.usatoday.com/story/money/2015/06/02/older-americans-housing-debt-retirement/28358093/

Prices crashed instead.

#170 Ken Jensen on 06.25.15 at 8:13 pm

I wonder how much those homes will cost in California when they no longer have running water? How valuable will business be in the Silicon Valley when theirs no water left to flush the toilets? At least the Sun will still be shining, just don’t plan on showering:-)

#171 maxx on 06.25.15 at 8:31 pm

#43 Freedom First on 06.24.15 at 8:43 pm

“……along with the ability to sacrifice your “wants”….”
Our wants are in large part what makes us human.

Sacrificing most anything is miserable. Sublimating them is far more creative, productive, instructive and profitable.