Marketing

PEE modified

As I reported, more than 40% of the properties listed for sale in YVR or the GTA this year have not yet sold. So when realtors publish monthly stats and trumpet “average” prices, this number reflects only the best six of ten on the market. It doesn’t hint where average list prices have settled, nor give any useful market context. That’s deliberate.

The Toronto Real Estate Board, for example, has stopped reporting mid-month numbers and no longer broadcasts the total number of listings. In other words, potential buyers are blind to how much choice actually exists and unable to put numbers into perspective, guaging market conditions. So much for transparency, as the real estate industry goes in the opposite direction to the financial one.

So, we get this:

The MLS® Home Price Index (HPI) Composite Benchmark, which accounts for benchmark home prices in communities throughout the TREB market area, was up by 9.4 per cent year-over-year in July 2015.  Over the same period, the average selling price was up by a slightly greater amount, growing by 10.6 per cent annually to $609,236.

The result? Your mom, your idiot BIL, your house-lusty spouse and everyone at the office thinks all houses are appreciating at 9.4% a year. And now along comes a desperate, election-fighting federal government trying to stop an orangy wave of Millennial angst with candy like a reno tax credit and enhanced RRSP-as-downpayment plan. Suddenly your friends’ heads start to explode. This is just too orgiastic.

So we see the kind of email Jeremy got yesterday from marketers churning yet another condo tower in downtown Toronto, where speculation is rampant. “An amazing investment opportunity,” it says. “Join us for an exclusive one-day sale. We are unveiling the Insider Collection.” And in big type, “35.5% Return on Investment in Year 1 including Capital Appreciation.”

Hot damn. Thirty-five per cent is even better than 9.4%, so where do I sign?

Well, here’s the realtor math:

CONDO FINANCES modified modified

On a purchase price of about $350,000 for a 578-foot box (that’s over $600 a pied – ouch) the hustlers say the thing can be rented for $2,197 (a stretch, seeing a bigger unit in the nearby prestigious King Eddy goes for less) and return almost $6,000 a year in positive cash flow. Add in the principal part of the mortgage payment, and the income turns into $11,500. Add in guaranteed annual appreciation of twenty grand and, presto, you make 35% on the downpayment of $87,850.

Here’s the real world math: Put down $87,850 plus closing costs (including $7,000 in tax) and you have $95,850 into the deal. If this were invested at 7%, it would throw off a little over $6,000, so after a year you’ve really tied up $102,050. Even accepting the unrealistic rent, the mortgage, condo fees, property tax and insurance cost $1,950 a month, leaving $250 or a little under $3,000 a year in positive cash flow. It’s 100% taxable, so after-tax (at a 35% rate), that’s $1,900 – or a return of 1.9% on the ninety-five grand in after-tax money you tied up, which is really a hundred grand given the opportunity cost.

That’s the way normal people look at things – cash in, and cash out. The realtors, in contrast, count part of your mortgage payment as a return on investment (it’s only paying back debt), and then slather on a for-sure bump in the value of your unit. One is voodoo accounting, the other’s fabricated.

Imagine someone trying to pry $87,850 out of your hands to leverage up $350,000 in ETFs, stocks or mutual funds making these promises – guaranteed monthly returns, guaranteed annual increases in the capital value and counting your loan payments as capital gains. The regulator would have them hanging by their private bits high above Bay Street. And yet these condo hucksters can snare unsophisticated investors into their web of malinformation and greed, knowing it will be without consequence.

This is why the market is so laden with risk. Add to it the concerns CMHC expressed yesterday – that house prices in Toronto have outstripped income gains at the same time there’s a tsunami of new condos about to hit (over 50,000 are now being built). Meanwhile we could be facing three more years of an oil-induced funk, says Moody’s Investors Service, with the economy already bordering on recession.

If the men running to be prime minister cared about the people they serve, we might have more justice and vision, with less spam. See why I sucked at politics?

192 comments ↓

#1 GK on 08.13.15 at 6:26 pm

Alberta MP Brent Rathgeber has resigned from the caucus of Stephen Harper’s Conservatives, after his private member’s bill pushing for transparency on public sector salaries was watered down in a committee meeting.

He had proposed that the specific salary of any bureaucrat earning more than roughly $188,000 be disclosed upon request.

Alberta MP quits Conservative caucus over transparency bill

http://www.theglobeandmail.com/news/politics/alberta-mp-quits-conservative-caucus-over-transparency-bill/article12370980/

#2 David Lee on 08.13.15 at 6:28 pm

Wow! Talk about hypocrisy (from the mouth of Deceivin’ Stephen):

https://www.youtube.com/watch?v=tYmUGg4wTIM

Plus ca change. Plus c’est la meme chose.

#3 PrincipalInvestigator on 08.13.15 at 6:31 pm

You’d have to be 6 kinds of stupid to give your money to some dope who can’t even spell principal correctly!

#4 Rainclouds on 08.13.15 at 6:32 pm

Godth on 08.13.15 at 4:53 pm
#191 Bob Santarossa on 08.13.15 at 8:23 am

Harper was born in ’56 – he’s all yours boomer Bob. Lay off the drugs maybe?

Both Wrong re date, Born April 30 1959, But yes he is a Boomer.

Its called Google (in case you are interested in future “fact finding”)

https://www.google.ca/?gws_rd=ssl#q=stephen+harper+birthday

#5 Bill Gable on 08.13.15 at 6:34 pm

Great post, Mr. Turner.

Here in Vancouver, there is a lot of hooey floating around – and the PM is hinting that he is going to eyeball foreign (*read – Chinese) investment in R/E and its impact on our City.
Right.
Like I have said all along – how does a Chinese National buy a $3 million Condo in Vancouver – if a Chinese National is only allowed to take 50,000 RMB out of China?

#6 GK on 08.13.15 at 6:34 pm

How low can light crude oil go?

http://futures.tradingcharts.com/intraday/CL_U15

#7 Godth on 08.13.15 at 6:35 pm

I think it’s great! We’re going to truly get what we deserve. Once we have exterminated ourselves then the most intelligent species on the planet can have their way. Dolphins rule! Monkeys are passe.

#8 mathemagic on 08.13.15 at 6:36 pm

I sent this around the office earlier in the week:

Which is the better exchange rate?

a) $0.75 CDN = $1.00 US
b) $1.00 CDN = $1.33 US

Many of the replies said that B) was better because $1.33 is larger than $0.75

this is why we’re doomed

#9 Marco from van on 08.13.15 at 6:37 pm

I am seriously considering moving south of the 49th. We went to lol at several nice hoods east of Seattle, in the back yard of several multinationals. We’re looking to buy there because we get mortgage interest relief, income tax drops to less than half that in BC (hugely beneficial to my stock options) and public schools have not only a 20:1 student to teacher ratio (BC is north of 28 in Shaugnessy) but are outfitted as many private schools.

It is NOT nirvana by a far stretch, we would have to offset private health insurance (still way better off considering the much lower income tax rate), but in my income bracket we could buy a 4-5000 sqf family home close to the same naturals beauty as in BC.

I’d have to get rid of a lot of employees in Vancouver and rehire down south, but in the end I built everything I got since I moved to Canada 5 years ago by hard graft and quite frankly can’t reconcile the debt I would need to incur to buy a family home in Vancouverver despite making in excess of $400k/yr with how I could do that in cash while still maintaining a health investment portfolio on the side just 100 miles south.

If the middle class is priced out of the market in Vancouver, then it is time to change the market for me… Vancouver loses an employer and about $200k ish of income taxes and $ 6-10k of PST and other involuntary taxes.

But then again as part of the renting cohort, I’m guessing I’m less than a desirable resident in BC…

#10 LJ on 08.13.15 at 6:38 pm

Realtor math rarely works.

Try plugging a negative sign in somewhere and then watch the fun begin…

#11 Scumop on 08.13.15 at 6:38 pm

Wow. Just wow.

And given the assumption renters will be there all the time from day 1…

Wow.

How did these carpetbaggers avoid being under the same laws as other biz offering investments in the first place?

Wow, again.

#12 Smoking Man on 08.13.15 at 6:38 pm

The true meaning of life……..

Guess it all depends on your programing, your surroundings, and social community influences.

This is why I typically avoid hanging with people. They disturb my purity. My un biased observations. This is why I don’t read.

It’s just me and the little voice inside my head. Yes the wife yaks, I only pretend to pay attention. Not that I don’t love the Scottish phyco to death but she’s hooked on MSM. No chance of an intellectual connection, she cooks real good. I feed her cash, she feeds me. It works.

But I guess I’m at an age now with Time on my hands to try and figure out the big picture. To share with you un greatfull beasts.

I’m drawing a blank. There is no big meaning, we are put here to make as many copies of ourselves as posable, with as many partners to ensure the survival of the spices.

Everything else is a dance around the true purpose.

Jesus Christ, can you Imagen a feminist chicken in the pen challenging the Rooster. Put two Roosters in a pen with chics present, one will die fast. And egg production will continue.

So screw it,

I’m really lonely, it’s time for me to wear a pink shirt, support the Gay, Lesbian, Bi sexual Trans Gender show for acceptance.

Over look the evil of Wynnetario.

Pretend I’m oblivious to the crime of the century 911.

Egnor the brutalization of Gaza’s children. And my governments support of it.

Start Liking teachers.

Talk in a high ocative voice. Ride on track six to long branch. Soon the word long may be offensive.

Quit smoking and drinking. Stop bullying the literati.

Volunteer, and help people.

……..

Time to snap out of this madness..

“Sweety, I’ll need a double JD. Please.”

See I have manners, I said please.

What you don’t see is my mind wanting to make copies of myself with her. But we all do it, if you say you don’t your fibbing or on another team, nothing wrong with that.

Being a human is complicated.

Being a Nectonite is easy.

When it’s my turn to depart.

My tombstone should read.. And only this. No name, no start or end date.

“Beneath here lies a skeleton that gave no Fk. But tried. ”

Obviously Fk will not be abbreviated

#13 MSM-Free Zone on 08.13.15 at 6:41 pm

“…..If the men running to be prime minister cared about the people they serve, we might have more justice and vision, with less spam……”
_________________________

Vision?

“Friends, let me be clear. Clearly, without a doubt, now is the time to be clear. Without clarity, there is no clearness, friends, so let’s be perfectly clear. I want to be absolutely clear. Clearly, I am clear.”
– Stephen Harper

#14 I'm stupid on 08.13.15 at 6:43 pm

Well Garth you know the saying… A fool and his money will soon be parted.

#15 Smartalox on 08.13.15 at 6:46 pm

Who knew that Rudyard Kipling, writing in 1913, could sum up this blog:

If-

If you can keep your mind while all around you
are losing theirs and blaming it on you;
Trust yourself, when others doubt you,
but make allowance for their doubting, too.
If you can wait, and not be tired by waiting,
or being lied about, don’t deal in lies.
Or be hated, don’t give way to hating;
don’t look too good, or act too wise

If you can dream, and not make dreams your master,
think and not make thoughts your aim,
If you can meet with triumph and disaster,
and treat those two imposters just the same;
If you can stand to hear the words you’ve spoken,
twisted by knaves to set a trap for fools,
Or see the things you gave your life to broken,
and stoop, and build ’em up with worn out tools:

If you can make a heap of all your winnings,
and risk it on a turn of pitch-and-toss,
and lose, and start again at your beginnings,
and never breathe a word about your loss;
If you can force your heart, and nerve and sinew,
to serve your turn, long after they are gone,
and so hold on when there is nothing in you,
except the will which says to them, ‘Hold On!’

If you can talk with crowds, yet keep your virtue,
or walk with kings nor lose the common touch,
If neither foes, nor loving friends can hurt you,
and all men count with you – but not too much;
If you can fill the unforgiving minute,
with sixty seconds’ worth of distance run
Then yours is the world and all that’s in it,
And – which is more – you’ll be a man, my son!

#16 Victoria Real Estate Update on 08.13.15 at 6:48 pm

In 2008-09, house prices in Vancouver fell at a rate of 14.2% per year (for 10 months) until interest rates were suddenly slashed from near-normal to emergency levels.

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

(source: Teranet’s index)

In 2009, Vancouver’s (crashing?) housing market was rescued by emergency rates.

At that time, similar major price corrections were underway in Victoria, Edmonton and Calgary. These falling markets were also rescued by emergency rates.

What caused these markets to begin falling the way they did?

It wasn’t a big spike in interest rates.

Those who claim that wealthy buyers from China are the reason for Vancouver’s sky-high house prices today can’t say that these buyers were weren’t around before 2009. Therefore, HAM won’t prevent another major price correction from beginning at any time in Vancouver.

The Canadian economy is in the tank. Many say we are already in recession. A weak, faltering economy is really bad for house prices.

Canadian 5-year fixed mortgage rates will begin moving higher this fall as an indirect result of rising rates in the US. If the Fed doesn’t move at the next opportunity, it will within months.

Higher fixed mortgage rates in Canada will result in fewer first-time buyers qualifying for mortgages. Those that do qualify will do so for less and less money as rates rise (at a rate of 1% per year). First-time buyers can’t qualify under variable rates. They must qualify under the 5-year fixed rate or the mortgage qualifying rate (which is even higher).

Anyone who knows anything about real estate knows that first-time buyers make or break a housing market. House prices fall without enough first-time buyers. The reason is simple – move-up buyers rely on first-time buyers to buy their properties, allowing them to move up the property ladder.

Without enough first-time buyers, prices from the bottom to the top of a housing market move down.

Vancouver’s housing market has a history of major price downturns.

This time rates will be rising as Vancouver’s housing market goes into price correction mode. As was the case with the US housing meltdown, problems that stem from liar loans (mortgage fraud) will take effect as prices fall across Canada.

Many experts around the world are predicting a major price correction for Canada’s housing market.

Vancouver may end up near the top of Canada’s biggest price losers list if it follows the trend set by American west coast cities in the American housing meltdown.

The bigger the bubble, the bigger the price correction.

#17 S.Bby on 08.13.15 at 6:49 pm

Realtor math: the only place where 1+1=3

#18 MSM-Free Zone on 08.13.15 at 6:50 pm

I wish I could get my dog to do that.

Sleeping in on winter mornings? Heaven.

#19 ed on 08.13.15 at 6:55 pm

Funny, I saw similar ads during the late 80s in Japan.

Many people think the current malaise in the Japanese economy is due to their aging population, yet these elderly have an average of over 150,000$ USD equivalent in savings which they use to pay for essentials (and living expenses there are way cheaper than here; half the cost or more; plus a national pension system).

The real reason for their prolonged economic molasses is that so much capital evaporated instantly when the RE bubble burst and they’ve been trying to recover ever since. Re prices fell 60% in 3 years (from 1989). During the height of the bubble, “The Imperial Palace was reported to be worth more than France. A ¥10,000 note dropped in Tokyo’s Ginza district was worth less than the tiny amount of ground it covered.” (The Japan Times, Jan 6, 2009). Seems like the equivalent here is average house price in Van being 1 million.
One borrower at the time described how he got in trouble: “Low interest rates were definitely one of the reasons for me to decide to buy my first home. I borrowed 47 million yen and I am on a 35-year repayment plan with an interest rate of 0.075%.”

#20 GA Observer on 08.13.15 at 6:55 pm

I don’t see why you sucked at politics but I do see how they suck at governance.

#21 omg the original on 08.13.15 at 6:57 pm

That’s the way normal people look at things – cash in, and cash out. The realtors, in contrast,
—————–

Yes, I love realtor ROIs and cap rates……..

– never any allowance for vacancy
– never any upkeep costs

If only my world worked so well.

#22 PeterfromCalgary on 08.13.15 at 6:58 pm

I know Garth and our PM have their differences to put it mildly. However it is worth remembering that this is the same PM that just increased what we can save in our TFSA.

These TFSAs will help smart Canadians save for their retirement by giving them a tax free investment opportunity that can be diverse, global and hopefully produces good returns over time.

As for the RRSP home loan and home reno tax credit programs. Well that is good politics. Smart people are free to ignore these dubious programs. Unless of course water is coming through the ceiling if and when they actually implement the home reno credit. Then you may want to look into the home reno tax credit.

#23 Steve French on 08.13.15 at 7:06 pm

Smoking Man:

“As for man, his days are as grass: as a flower of the field, so he flourisheth. For the wind passeth over it, and it is gone; and the place thereof shall know it no more.”

– Psalm 103:5

(by the way, i consider the Bible as European-Western culture’s founding text and code — as great literature… not for the fairy tale ending…)

#24 Ray Skunk on 08.13.15 at 7:07 pm

Any Blog Dogs have any experiences/thoughts on the Saskatchewan Pension Plan?

Seen it touted a few times on various messages boards as an alternative model to Wynne’s latest swindle.

Seems pretty straightforward, returns look par for the course, although the total asset $ managed is a smaller number than I’d expect.

Garth? Any insight?

#25 Godth on 08.13.15 at 7:08 pm

#4 Rainclouds on 08.13.15 at 6:32 pm

I think my 6 beer dyslexia kicked in. ’56 -’59, 69 – but then he’d be a gen-x. and possibly liberal. I’m so confused.

#26 Nick on 08.13.15 at 7:10 pm

@ #9 Marco from van

You’re right, Canada Gov would rather have cash buyers from China who gleefully plonk down a few million without complaint. As they say, it’s all about location, and no one wants to live in Seattle. Perhaps you should relocate to Alberta, RE much better value.

#27 Mister Obvious on 08.13.15 at 7:10 pm

If a condo development can generate that type of return why on earth would they want to sell those units off to first time investors when they can become landlords and managers and keep all that juicy profit for themselves?

Just asking.

#28 Leo Trollstoy on 08.13.15 at 7:13 pm

That realtor math is brutal.

If it wasn’t real estate, the OSC would come down on that developer so hard…

#29 Ponzius Pilatus on 08.13.15 at 7:13 pm

Re: Rathgeber’s resignation.
Tempting to say that the rats are are starting to jump over board.
Rathgeber, by the way, means Advise giver.
Under Ceasar, this guy obviously wasted his time.

#30 Ray Skunk on 08.13.15 at 7:15 pm

#27 Mister Obvious

Exactly. If there was no risk and all upside, why doesn’t Brad Lamb develop dozens of rental towers, form his own REIT and then go public with it?

#31 Llewelyn on 08.13.15 at 7:16 pm

The other day I mentioned that CHMC provides a wide range of housing information by municipality in their Canadian Housing Outlook. I must admit that I am perplexed why homeowners will commit to a $600,000 purchase without any examination of market fundamentals that are available on line while spending hours agonizing over an investment of $20,000 in the financial market.

Garth has a very good point when he states that investment professionals cannot deliberately mislead potential investors while real estate agents are allowed to mislead potential customers with fictional market values and rates of return with no consequences.

Based on market fundamentals it seems very risky to purchase any dwelling unit with the expectation of realizing a profit. More importanly the concept of leverage is a two way street and signing on for a high ratio mortgage at the peak of a market won’t be pretty.

Take a minute to ask why the value of oil has declined over the past year. Yep market fundamentals!! The housing market also has fundamentals and it would be prudent for any potential purchaser to become familiar with them before taking the plunge.

#32 Steve French on 08.13.15 at 7:16 pm

Smokey:

some retirement reading:

http://oliverbenjamin.net/writings.html

#33 Nick on 08.13.15 at 7:21 pm

Hedge funds and others are making a killing down in the states becoming land lords, buying up tens of thousands of apartment units…it’s happening in Canada too. Millennials can’t afford to buy… more importantly, do they even care?

#34 Smoking Man on 08.13.15 at 7:24 pm

#23 Steve French on 08.13.15 at 7:06 pm
Smoking Man:

“As for man, his days are as grass: as a flower of the field, so he flourisheth. For the wind passeth over it, and it is gone; and the place thereof shall know it no more.”

– Psalm 103:5

(by the way, i consider the Bible as European-Western culture’s founding text and code — as great literature… not for the fairy tale ending…)
……

Fellow Dudest Priest, please tell me you’ve not gone religiousoid on me.

That drug chops peoples heads off, drops bombs on little kids with fans chearing on the hill. Molestes little boys. Makes people stupid.

Dude your scaring me.

Quotes from the old control the herd manual.

#35 Heather on 08.13.15 at 7:25 pm

Garth,
I’m just curious why the principle part of the mortgage paid by a renter should not be considered in the ROI calculation? The government see it as taxable income too. Thanks for the help.

#36 Not a Realtor on 08.13.15 at 7:28 pm

The accounting is good:

On one hand he included the Principal Repayments in Income but on the other hand he deducted the whole Annual Mortgage Payments so the accounting is good.

Of course, the numbers provided are very very optimistic and it is before income tax.

#37 Harry Wilson on 08.13.15 at 7:32 pm

Disclaimer: I’m not that bright, I’ve never had a mortgage, and I was up until 5am last night, watching the meteor shower.

Aren’t mortgages set up so that the payments are roughly equal throughout their 25-year lifespan (assuming the interest rate is more or less the same)? Why is this one decreasing about 10% every five years? Are they re-amortizing to another 25-year mortgage at every renewal?

According to the CMHC mortgage calculator, the interest rate required to pay $1,108.50 per month ($13,302 per year) on a principle of $263,550 would be 1.94%. Are they assuming that this rate will be available in 2020 and 2025?

Sorry if I’m missing something obvious, but do my numbers make sense? I’m hoping someone can explain why the mortgage payment is going down every five years.

#38 Timing is Everything on 08.13.15 at 7:36 pm

#12 Smoking Man – The true meaning of life…
#23 Steve French

How about some ‘proto-rap’ written by a 24 year old. Might help a bit. Won’t hurt, that’s for sure…

‘But it’s alright, Ma, it’s life, and life only.’

https://vimeo.com/46077549

#39 Shawn on 08.13.15 at 7:39 pm

MER on Mutual Funds and Tax Impact versus Portfolio management fee

#277 Renter’s Revenge! on 08.13.15 at 5:06 pm asked me:
@Shawn

RE: MERs and tax Deductibility

So does that mean that a deductible 1% advisor’s fee only costs 0.2%?

1% (fee) – 0.4% (tax deduction) – 0.4% (tax not paid on interest not received)?

************************************
No in the second case the (portfolio management fee case) the interest is received and taxed. In the mutual fund case the MER reduces the interest or other return received.

Both approaches are equivalent in the case of taxable accounts if the MER is equal to the management fee percentage.

For non-taxable accounts the portfolio management fee may allow a tax deduction in some cases. I am not sure that applies to fees on TFSA, which really should not be tax deductible since the investment is not made to earn taxable dollars.

For RRSP it would be beneficial if the management fee is deductible. I think that may be a tax benefit versus MER in that case. It gets complicated because RRSPs are not exactly tax free in the end.

#40 Randy Randerson on 08.13.15 at 7:40 pm

Wait, so if I lend $1,000 to a friend at 2% interest rate and $100 principal repayment over the next 10 years, with realturd’s math, laced with pixie dust and unicorn droppings, my first year’s ROI would be $120, or 12% return?

#41 Unhinged Loon on 08.13.15 at 7:40 pm

Wow, I had no idea investing in condominiums was so lucrative!

35%! Hot damn!

We have some of world’s best managed funds struggling to scratch out double digit returns, while Toronto real estate will so effortlessly convert my investment into profits… Long Term Capital Management was an ambitious US hedge fund that, at it’s zenith, returned over 40% to its investors in 1997 and 1998, by applying clever technology and rocket-science (Ito calculus to be specific) to actively hedge their positions in bond arbitrage. It was overseen by veteran bond traders and math and physics Ph.Ds. And they failed when their positions began behaving erratically after a Russian default on state paper.

Had they know about 35% guaranteed returns in the Toronto real estate scene, none of that experience or knowledge or wit would have been necessary. Their clever analytical techniques in mitigating risk – all redundant because Toronto real estate HAS NO RISK!

Why don’t more people know about this brilliant money making environment? Someone email Warren Buffet! There may be a finder’s fee involved!

Why isn’t everyone a Toronto real estate investor?

#42 Harry Wilson on 08.13.15 at 7:41 pm

re #3 Principal Investigator

“You’d have to be 6 kinds of stupid to give your money to some dope who can’t even spell principal correctly!”

I originally had it spelled “p-a-l” in my earlier comment, but changed it when I saw the ‘correct’ spelling in the realtor email. Don’t I feel 12 kinds of stupid now!

#43 MSM-Free Zone on 08.13.15 at 7:47 pm

#22 PeterfromCalgary on 08.13.15 at 6:58 pm
“….As for the RRSP home loan and home reno tax credit programs. Well that is good politics. Smart people are free to ignore these dubious programs…..
__________________________

You’re not exactly propping up the IQ of the ReformaCon voter base.

#44 Shawn on 08.13.15 at 7:48 pm

Old News

#1 GK on 08.13.15 at 6:26 pm said:

Alberta MP Brent Rathgeber has resigned from the caucus of Stephen Harper’s Conservatives…

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

June 2013 called, it wants its news back.

As far As I know, Rathgeber is running as an independent and I am in his riding and will likely vote for him unless it becomes clear that he stands no chance.

#45 Shawn on 08.13.15 at 7:54 pm

ROI

#35 Heather on 08.13.15 at 7:25 pm asked:

Garth,
I’m just curious why the principle part of the mortgage paid by a renter should not be considered in the ROI calculation? The government see it as taxable income too. Thanks for the help.

*************************************
You are correct to think that yes, it should be. In this case part of the return MUST be used to pay down the mortgage principal because the mortgage requires that. But you are right it is still part of the return (even if some would like to argue it is not).

The example may be unrealistic as to rents and costs and especially appreciation / depreciation but counting the principal repayment as part of the return over and above the cash return is correct.

#46 VICTORIA TEA PARTY on 08.13.15 at 7:54 pm

#1 GK — YOU MIGHT WANNA CHECK THE DATE, MATE!!

If you read this story without checking the date, June 5/6 2013 (!) you’d think this was NEW Breaking News. A bit more honesty would have been nice. This is NO RECENT STORY…

#6 GK

ABOUT OIL, AND NO, HARPER’S NOT TO BLAME

Yes, oil is in the tank.

It’ll be thus for a while yet, even while the new NDP government in Alberta is cobbling together its first budget, for an apparent October release.

Unfortunately the Harper government, and the Alberta one as well, have no control over the world oil price.

First, there are three oil prices for Canadians to consider each day:

–The Western Canada Select heavy oil gauge, which looks just dreadful, includes the oil sands complex in Alberta ($29.79 CDN/bbl). “We” sell this heavy oil at a discount, in USDs, because of the added refining and shipping costs. That accounts for this lower price;

-WTI, Cushing/NYMEX ($42.23 US/bbl) the US gauge which we all concentrate on;

-Brent crude gauge ($49.27 US/bbl) which is the official world price;

-all prices were WELL down.

Not only do Canadian governments have no control over the price of oil, neither do the Obama government, nor the rest.

Why? The price of oil is governed by a complex of players, each with well established conflicts of interest and other bad stuff, for instance:

-OPEC schemers, whose favourite sport is to screw other OPECers over oil prices and supplies;

-local Mideast and other dictatorships which sell the stuff for whatever they can get, all the while producing it like there’s no tomorrow;

-and Russia, another key oil and natural gas seller. It has its own opaque issues.

Then there are the buyers:

-China used to be chief amongst them (the rest of ’em don’t matter).

Now that its economy is imploding in a big way, at the behest of their government as a way of collapsing all bubbles, the price is all over the bloody map.

As an aside here, adding insult to world economic injury, China’s also joined the Currency Wars in a big way by devaluing its yuan as a way of making it THE new world reserve currency to replace the US dollar,at the best of the IMF! Interesting.

Just try to be an Alberta premier and go to Saudi Arabia and China to demand $100.00 a barrel Canadian oil price, even though “we” are a major oil producer. Forget about it! We don’t have the clout of OPEC or Russia, and they’re getting shafted, too, in a self-inflicted wound kinda’ way.

In conclusion, and to repeat, you can’t tie our American dollar denominated non-renewable resources prices to Harper and Co. That is plain disgraceful and stupid.

BTW, it’ll be interesting to watch the machinations of the new Alberta NDP government when it releases its new budget.

It will be chock ablock with magic numbers, vaporized dreams, smoke from suspicious sources, and assorted other fake alchemies.

No I don’t have the inside track.

Sorry.

I’ve just seen this movie too many times before emanating from upstart Socialist governments in these here parts.

#47 Smoking Man on 08.13.15 at 7:56 pm

On the ear buds.

Only man in earth I would ever bow too, and knowing him he would slap me and say, have you lost your mind. What is wrong with you.

His name…..

Lenord Cohen…

Roger waters too, but he would like the bow.

#48 Max on 08.13.15 at 8:06 pm

#41 Unhinged Loon

Wow, I had no idea investing in condominiums was so lucrative!

35%! Hot damn!

Why isn’t everyone a Toronto real estate investor?

———-

Because not everyone is smart. Duh.

#49 sideline sitter on 08.13.15 at 8:08 pm

For $200 more a month, I live in Yorkville, with more than double the living space, and a 700+ sq ft terrace.

No sane person would pay the proposed rent.

#50 ronh on 08.13.15 at 8:08 pm

#5 Bill Gable
They get family and friends to move 50,000 each how many times need. Why do we care? As long as they pay the property tax and keep the place clean.

#51 sideline sitter on 08.13.15 at 8:12 pm

#35 Heather – yes, it’s income, but I think the actual repayment is an expense in that you are returning borrowed money.

I could absolutely be wrong

#52 I'm stupid on 08.13.15 at 8:16 pm

Why bother selling a condo unit? The builder should just keep them all and become a billionaire in a matter of weeks with 35% return.

#53 Smoking Man on 08.13.15 at 8:19 pm

Holy Crap Tylenol

For you my man…

https://youtu.be/lroU7apzma8

#54 Blacksheep on 08.13.15 at 8:25 pm

Smoking man # 12,

“I’m drawing a blank. There is no big meaning, we are put here to make as many copies of ourselves as posable, with as many partners to ensure the survival of the spices.”
——————————————
You figured it out.

That there is no point or deep f–king meaning beyond your genetic programming. The Cattle can’t deal with the fact their nothing more than advanced pond scum, so they create illusions on a grand scale to help them sleep at night.

As far as mankind goes, we’re by and large, warring pieces of shit, a true blight on the planet, but that’s OK, cause it’s this behaviour that allowed us to evolve into the dominant species on the planet.

Many will disagree with this statement, claiming to have a higher propose, but what they don’t realize is that they have simply ‘created /adopted a purpose’ to fill the cavernous hole than can be, the human experience.

Once one can take a deep breath and accept the randomness of humanities existence, you can get the hell on with making the most of the ever decreasing number of days you have left, before you must give back the atomic materials from whence you came.

It’s almost Friday:

https://www.youtube.com/watch?v=e7v0V58V3Uw

#55 JG on 08.13.15 at 8:36 pm

I got the same email. I agree with Garth….sigh……criminal IMHO

#56 Oilsand Prince on 08.13.15 at 8:38 pm

#6 GK

I say it turns up from here. No lower.

#57 Smoking Man on 08.13.15 at 8:42 pm

#32 Steve French on 08.13.15 at 7:16 pm
Smokey:

some retirement reading:

http://oliverbenjamin.net/writings.html

……

Im a true writer, refuse to read others shit.

Not doing it

#58 Shawn on 08.13.15 at 8:49 pm

Oil, OPEC and Price Manipulations

Victoria Tea Party said:

The price of oil is governed by a complex of players, each with well established conflicts of interest and other bad stuff, for instance:

-OPEC schemers, whose favourite sport is to screw other OPECers over oil prices and supplies;

***************************************
Exactly. OPEC was formed to collude and be a cartel on oil prices. It was successful in artificially raising oil prices for most of the last 45 years or so.

Albertans should be extremely grateful as they benefitted by selling at the artificially high price that OPEC achieved by curtailing supply over the years.

As you say, some OPEC members cheated and went past agreed quotas.

Alberta and the rest of the world’s oil producers were free riders. They got the OPEC contrived world price without having to curtail supply.

Non-oil producing provinces and countries paid the higher oil price for this price-fixing for the last 45 years. (Perhaps a good thing as otherwise we’d a burned up maybe all the oil by now)

But now, apparently OPEC and Saudi Arabia are no longer able to maintain the price fix.

OPEC / Saudi in no way crashed oil prices by 40% in order to gain say 5% market share. That is a preposterous (but widely held) theory. It’s a particularly dumb theory when you consider that the low price will not eliminate North American oil. If Shale oil producers are driven out the shale will still be there when oil prices recover, so how would this ever benefit Saudi Arabia or OPEC in the end?

The OPEC price cartel collapsed due to the cheating of which you speak. Saudi Arabia got tired of being the only party curtailing production when all producers benefited. That, at least, is my theory of why the oil price is down.

After all the OPEC members experience the pain of low oil prices for long enough then maybe the cartel can be reestablished for the good of all oil producers.

#59 Shawn on 08.13.15 at 8:52 pm

“You’d have to be 6 kinds of stupid to give your money to some dope who can’t even spell principal correctly!”

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

well, lets not be anil about the spelling.

Today’s auto-correct spelling programs often work at crosswinds to accuracy. — Garth

#60 Smoking Man on 08.13.15 at 8:57 pm

https://youtu.be/0sB3Fjw3Uvc

Lead belly RIP off. But in my condition and the place I hang my hat tonight. It works..

Cheers to humanity.

#61 Nagraj on 08.13.15 at 8:59 pm

I, Virginia Poppins Worthington, a re-incarnated 19th century rural schoolmarm, have carefully read the essay submission, “Marketing”, and care to note the use therein of violent and other peculiar language.

ADJECTIVES: blind, lusty, rampant, desperate, orgiastic
VERBS: snare, sucked, slather, pry, churn, explode
FOOD NOUNS: candy, spam
FOREIGN NOUNS: voodoo, angst, tsunami
SINFUL WORDS: hot damn, private bits

NOTABLE ERRORS: principal vs principle (a principal is a principled prince’s consort) and guaging vs gauging (a poetic amalgam of quagmire, gagging and gouging) (reminiscent of plums)

I have taken the liberty of forwarding “Marketing” to Dr. Freud and asked him if he would care to meet with you.

VPW

#62 Freedom First on 08.13.15 at 9:04 pm

Reading the realtor math that Garth provided us with today immediately had three words enter my mind. “Run Forrest, run.”

#63 magnummtl on 08.13.15 at 9:05 pm

using the same realtor logic can turn my car loan into a 15% ROI.

#64 math is easy on 08.13.15 at 9:08 pm

fake terror+psyops=c51

go ahead and vote
but ask yourself ‘if the terror is fake, who is c51 aimed at?’

thats right , you

#65 devore on 08.13.15 at 9:11 pm

#11 Scumop

And given the assumption renters will be there all the time from day 1…

And paying 15% annual rent increases. Right, totally happening.

#66 bigtown on 08.13.15 at 9:14 pm

The real estate industry in Canada needs transparency where only Image and Rhetoric rule.

#67 MikeS on 08.13.15 at 9:15 pm

@5

A friend of mine’s parents in Langley dealt with this a few months back. They were selling their multi-acre place for $2.9 million. Chinese couple offered them $3.4 as long as they agree to get paid in $100,000 monthly increments. The parents even get to stay living there until the full amount is paid off.

They’re pretty happy with the deal. I’m left shaking my head.

#68 amazon girl on 08.13.15 at 9:17 pm

Amazon Girl to #12 Smoking Man…
Day 13 of retirement. I read post #12 ,for a moment
I thought it was Friday the 13.
Nightmare
It hurts, especially when you start liking Teachers.
It might inspire you, if you read my last post to
you ( Throttled) . Keep the JD going and get a Amazon
Girl.

#69 Smoking Man on 08.13.15 at 9:17 pm

https://youtu.be/0sB3Fjw3Uvc

To beyond to explain the link….

Ten glasses of wine, unlimited shots of JD, chairman at senica.

Figure it out, good night

#70 Ronaldo on 08.13.15 at 9:21 pm

#8 – mathemagic

”I sent this around the office earlier in the week:

Which is the better exchange rate?

a) $0.75 CDN = $1.00 US
b) $1.00 CDN = $1.33 US”

Let’s see. 1.00/.75 = 1.33 1.33/1.00 = 1.33.
Geez, their the same. How about that?

Ok, here’s one. If you have $100 and it gains 100% to $200 and later drops by 50%, how much would it have to gain to get back to where it was?

#71 Dave on 08.13.15 at 9:27 pm

You think Harper cares about Canadians? He pushes through big omnibus bills with no debate, muzzles his own cabinet, prorougues Parliament, guts environmental laws, denies global warming, creates a false scare about terrorism in Canada to distract people from his dismal management of the economy. Even if you are a Con, you have to admit, he’s the worst PM in our lifetime.

#72 Llewelyn on 08.13.15 at 9:33 pm

If you follow the logic that getting your own money back represents income a stock bought for $10.00 that you sell for $8.00 represents $8.00 of income. Sure that makes sense.

If the GOC can’t find a way to tax it then it is not income. You might get to reduce tax by applying CCA but the CRA will be waiting at the end to tax any capital gain.

The question as to why a developer would pass on such a sure thing tells you all you need to know. Take a look at the returns earned by REIT’s to get an idea of what thousands of well managed units might generate. Renting a single condo unit good luck!!

#73 Don Derc on 08.13.15 at 9:52 pm

“If the men running to be prime minister cared about the people they serve, we might have more justice and vision, with less spam. See why I sucked at politics?”

We might also see less reacting, and more foresight. Foresight – a dirty “F” word.

Yes Garth, you have to be a liar and a very good card player to stay in politics. Telling it like it is / saying it like it is , does not wash in Ottawa or in business for that matter.

I’m amazed when I look at loopnet, or Zillow and see a ton of info. I look at some sellers and say “I got you my friend” as I see all the cards, costs, and info. Very easy to research taxes, property revenues, sales history etc. (hint – they really took a beating in Nevada this last few years).

We need a Donald Trump in Cdn politics, except an honest budget has to be presented for every off the wall promise. Same with Cdn realtors. Didn’t think so…

#74 Smoking Man on 08.13.15 at 9:54 pm

#66 amazon girl on 08.13.15 at 9:17 pm
Amazon Girl to #12 Smoking Man…
Day 13 of retirement. I read post #12 ,for a moment
I thought it was Friday the 13.
Nightmare
It hurts, especially when you start liking Teachers.
It might inspire you, if you read my last post to
you ( Throttled) . Keep the JD going and get a Amazon
Girl.

Don’t need an Amazon Girl right now. Unless sort of.
Need a puke reflex.

I hate God.. Why have you put me on the spot you bastard.

#75 Blacksheep on 08.13.15 at 9:56 pm

“The people of the earth stood waiting watching as the ships came one by one setting fire to the sky as they landed carrying to the world children of the sun”

https://www.youtube.com/watch?v=XR2oct3zeTM

#76 gut check on 08.13.15 at 10:02 pm

Hey Nectonite (Smoking Man, in case you’re doing Ctrl+F)
I left a comment on your blog.

#77 bobo on 08.13.15 at 10:09 pm

garth

Yes those numbers are rather optimistic at best
however when calculating real estate investments – multi units- there are 3 main returns generally accepted

1. cash on cash (return on start up costs down payment legals etc)
2. ROI (which includescash on cash & principal reduction)
3. Internal rate of return (the first 2 plus appreciation)

#78 Shawn on 08.13.15 at 10:09 pm

Logic?

#70 Llewelyn on 08.13.15 at 9:33 pm said:

If you follow the logic that getting your own money back represents income a stock bought for $10.00 that you sell for $8.00 represents $8.00 of income. Sure that makes sense.

***************************************
Not what was suggested. What was suggested is that just because you use part of the profit to pay down a loan, that does not mean that the profit was reduced.

Just replace annual mortgage payments $13,302 with annual interest portion of mortgage (13,302 minus $5519 = $7783) and then you won’t have to add back the principal became it will already be in the profit line. Profit will be $19,269 minus $7783 = $11,486, exactly the same as stated above (well $1.00 off due to rounding). So, no need to get your shorts in a knot about that part of the example.

Interest is an expense, principal repayment is not a profit but it’s not an expense either. It was added back here because it was missing from the cash return because it had been paid down on the mortgage. Basically it had been “improperly” (Because it was not on hand in cash) subtracted from the profit and so needed to be added back.

#79 Kevin Unfortunately in Wpg on 08.13.15 at 10:10 pm

Will Winnipeg fall off the cliff?

http://members.shaw.ca/shomimore/winnipeg_real_estate.jpg

#80 Johnathan on 08.13.15 at 10:10 pm

Actually, I think their math about the mortgage sort of makes sense. Payment – Principal = Interest. Like you said, the principal is just paying back the debt, so it’s the interest portion that we should consider as an expense.

The biggest issue with the math is ignoring opportunity cost. They assume a capital appreciation of 5.6%, which is generous by historical standards, but maybe this is what we’ll see in Toronto for the next few years. Even still, since a balanced portfolio should be able to give 7% there is still an opportunity cost that increases annually.

The part that had me scratching my head though.. is the mortgage payments that are decreasing over time. Are they saying interest rates will continue to be lowered over time? Or are they assuming a re-amortization every 5 years. As someone who has never owned before, maybe someone else can shed some light?

#81 Freddie on 08.13.15 at 10:13 pm

Could something explain to me how the principal repayment is larger in the first year than the tenth year? Interest dominates in the first year of amortization in any mortgage that I am aware of. Also, the principal payment is just putting more skin in the game (i.e. upping your investment – forced retained earning). You do not get it until you sell, so there an opportunity cost of having it tied-up.

Finally, capital appreciation is not realized until you sell. BTW a 50% annual ROR over 10 years means that you double your money every 18 months, resulting in 64 times your original investment in 10 years. That is the biggest lie in the realtor math.

#82 Stupesing in Cabbagetown on 08.13.15 at 10:17 pm

Seems the Australian financial regulator is cracking-down on realtors offering financial advice. When will we do the same here? See http://www.theadviser.com.au/breaking-news/32725-asic-weighs-in-on-property-investment-schemes.

#83 Dual Citizen In Canada on 08.13.15 at 10:23 pm

#68 Ronaldo on 08.13.15 at 9:21 pm
Ok, here’s one. If you have $100 and it gains 100% to $200 and later drops by 50%, how much would it have to gain to get back to where it was?

Hmmm…33%.

#84 TurnerNation on 08.13.15 at 10:32 pm

Congrats all 416 and 905 SFH owners now you are millionaires due to H govt ongoing measures. Less outstanding mortgage balance.

Special shout out to Long Branch.

#85 Randy Randerson on 08.13.15 at 10:34 pm

Boys and girls, you can now tell your realturd friends how to easily make 10% ROI in the first year. First ask them to lend you $10,000 interest rate free, then return $1,000 principal to them every year for the next 10 years whilst you enjoy this interest free loan!

You can now use realturd’s math against them.

#86 GW on 08.13.15 at 10:39 pm

Good for you Garth! Thanks for being the calm voice of reason rather than the anxiuous property hustler.

And let’s not forget these frankennumbers (yes your term, thx!) also forgets maintenance expense and risk expense. Um… GROSS returns? Er no: NET returns.

“it’s not how much you make, it’s how much you keep that counts” :wink

#87 Tony on 08.13.15 at 10:47 pm

The same unit in America would cost about one-tenth or 35 thousand dollars and sell for between 25 to 30 thousand.

#88 cd on 08.13.15 at 10:48 pm

has anyone seen this campaign video…

https://youtu.be/DG6fhub9HDQ

if I lived in bc, I would strongly consider him

#89 Mark on 08.13.15 at 10:48 pm

“Any Blog Dogs have any experiences/thoughts on the Saskatchewan Pension Plan? “

My thoughts on the Sask Pension Plan is that its great for the person who maybe has only a small amount of money to contribute. Why? Because the management fees are very low compared to taking it to a bank and putting the money in a RRSP with the 2.5% MER mutual funds. The ideal client is someone who really doesn’t meet the sort of asset minimums required by the likes of Garth.

Of course, with the introduction of the TFSA, the whole calculus of contributing to a pre-tax investment plan versus an after-tax investment plan must be considered very carefully. Especially if someone anticipates being low income in retirement.

So its a mixed bag that appeals to a relatively limited clientele. Not a bad option, but contribution limits are going to necessitate that it be, at best, only one piece of the overall asset allocation puzzle for most serious savers.

#90 MJW on 08.13.15 at 10:49 pm

Tonight’s post is terrific, and Garth’s calculation and interpretation of the true costs are spot on. However, it is unfortunate that Garth does not have such a sound appreciation of the negative effect for housing affordability and sustainability of foreign buyers on large swaths of districts in GTA and YVR. On this latter topic he more closely resembles our dear “friend” Tsur Sommerville of UBC. Tonight, however, is a stark warning to being sucked into the bogus numbers that are put forth by realtors.

#91 mathemagic on 08.13.15 at 10:58 pm

#68 Ronaldo on 08.13.15 at 9:21 pm

That’s a trick question.

For most people, they would have freaked after the 50% drop, cashed out and stayed away.

#92 Greg on 08.13.15 at 11:01 pm

Hi Garth, re: See why I sucked at politics?

In the middle of a discussion with Jim, a machinist I was working with more, before the oil price drop effected the oil sands, and the manufacturing sector slowed down. Jim came out with, ‘see you’re just too honest to be a politician’. Which is a sad commentary on the type of Government some people perceive we end up with.

H wanted you to warm a seat, but clearly he and the average vote very much underappreciated your efforts. If the people of Canada get lucky maybe some other people that ‘suck at politics’ will try running and get elected this time!

Maybe some blog dogs with run, and Why not. I’m sure you’d do a good job. Will you step up and run this time. There is still time! Garth had already run a number of times. It’s your turn to run now you blog dogs. You know you want too!

To run it looks pretty straight forward. I don’t believe there is a limit on the number of people running in a riding.

You have until 21 day before the election to file the forms.
So there is still time if you get in gear! So don’t delay.

You get your $1,000 back, if you file your required expense & donation forms in time after the election.

To get the signatures of at least 100 electors in your riding, just go stand in the mall and ask people to sign the form, and you can have some friend help get people to sign the form. It might be quicker than door knocking for signatures?

Yes, you can run as an independent. Or under a Party banner, but I think most of the Party spots are already taken, this time.

For more Information for candidates,
http://www.elections.ca/

#93 Kreditanstalt on 08.13.15 at 11:07 pm

“…when realtors publish monthly stats and trumpet “average” prices, this number reflects only the best six of ten on the market. It doesn’t hint where average list prices have settled, nor give any useful market context.”

But when they purport to issue “aggregate” statistics they call the result “HOUSE PRICES”. Never “house VALUES”. Prices are set at the margin even if ONE house is all that sells.

Does a house even HAVE a “value”? Somehow the taxing authorities manage to calculate one, again based on margin sales denominated by PRICE, the better to tax us. And they mail it to us every year.

It seems that each house is an individual. They are not – what’s the word? – FUNGIBLE.

Does anyone – real estate floggers or other – really know either the true PRICE of “a house” or the “value” of any of them?

#94 Jeff B on 08.13.15 at 11:18 pm

A portion of my last conversation with a realtor: “I’ve discovered a failure in a load-bearing member in the house. I’m an engineer, I can see that the failure has locked in and can’t collapse, but I need to add this to the SPIS.” “No, no, you don’t need to inform anyone of this.” “I think I do, and I’m the one who might get sued later, not you.” (No reply).

So did I tear up the contract? Absolutely not. This realtor has the mind of a criminal and I knew he would get my house sold. But I updated the SPIS.

Caveat emptor.

#95 };-) aka Devil's Advocate on 08.13.15 at 11:25 pm

As I reported, more than 40% of the properties listed for sale in YVR or the GTA this year have not yet sold. So when realtors publish monthly stats and trumpet “average” prices, this number reflects only the best six of ten on the market. It doesn’t hint where average list prices have settled, nor give any useful market context. That’s deliberate. – GT

Awe come on. Really? Seriously? … Really? You’re gonna try make that one fly? Ya, anywhere else but here I suppose it would be seen for the lack of truth it is.

The Toronto Real Estate Board, for example, has stopped reporting mid-month numbers and no longer broadcasts the total number of listings. In other words, potential buyers are blind to how much choice actually exists and unable to put numbers into perspective, guaging market conditions. So much for transparency, as the real estate industry goes in the opposite direction to the financial one. – GT

All a “potential” homebuyer need do is look around at the proliferation of “FOR SALE” signs for a definitive sign on that proposition. AND just hook up with a REALTOR® who’ll be happy to show you home after home after home until you find the one you want. You’ll then see how much, or little, inventory there really is.

Sign an EBA to ensure the REALTOR® is working for YOU and disallow him/her from double ending the deal which otherwise is the only real conflict of interest.

The result? Your mom, your idiot BIL, your house-lusty spouse and everyone at the office thinks all houses are appreciating at 9.4% a year. And now along comes a desperate, election-fighting federal government trying to stop an orangy wave of Millennial angst with candy like a reno tax credit and enhanced RRSP-as-downpayment plan. Suddenly your friends’ heads start to explode. This is just too orgiastic. – GT

Yup… pretty much.

So we see the kind of email Jeremy got yesterday from marketers churning yet another condo tower in downtown Toronto, where speculation is rampant. “An amazing investment opportunity,” it says. “Join us for an exclusive one-day sale. We are unveiling the Insider Collection.” And in big type, “35.5% Return on Investment in Year 1 including Capital Appreciation.”
Hot damn. Thirty-five per cent is even better than 9.4%, so where do I sign?
Well, here’s the realtor math:

Yup.. that is an embarrassment to the Real Estate Community. Not unlike those bags of potato chips that claim they are actually a “healthy” alternative.
That’s the way normal people look at things – cash in, and cash out. The realtors, in contrast, count part of your mortgage payment as a return on investment (it’s only paying back debt), and then slather on a for-sure bump in the value of your unit. One is voodoo accounting, the other’s fabricated. – GT

Yup… again too true.

This is why the market is so laden with risk. Add to it the concerns CMHC expressed yesterday – that house prices in Toronto have outstripped income gains at the same time there’s a tsunami of new condos about to hit (over 50,000 are now being built). Meanwhile we could be facing three more years of an oil-induced funk, says Moody’s Investors Service, with the economy already bordering on recession.

If the men running to be prime minister cared about the people they serve, we might have more justice and vision, with less spam. See why I sucked at politics? – GT

Sadly… again, too true. And ya… you sucked at “Politics” capital “P” };-) sorry but good can be bad too.

Like they say “A fool and their money…” };-)

Do You Get It?

#96 Tony on 08.13.15 at 11:26 pm

Re: #19 ed on 08.13.15 at 6:55 pm

One of the lowest birth rates in the world doesn’t help either.

#97 Guy Willoughby on 08.13.15 at 11:37 pm

Garth, you failed to mention that the Canadian dollar has devalued over the last year. In dollars to cents value, the house value has already dropped.

#98 };-) aka Devil's Advocate on 08.13.15 at 11:38 pm

And don’t kid yourselves… we don’t market properties we market ourselves.

#99 whitehorn on 08.13.15 at 11:39 pm

In the hot days of summer, I occasionally cycle 100km in oil rich central Alberta. This year compared to past years, I’ve noticed the changes from the road:
– more oil pumpjacks idled compared to full out.
– virtually no heavy equipment being hauled on the road. This is the most noticeable trend. In the past numerous pilot and wide load convoys were the norm.
– lack of service equipment such as welding trucks and maintenance. In the past some would fly by you at 150km/hr probably due to an immediate call.
– noticeable decline in overall traffic.
– virtually no rig equipment.
I’m guessing many people are hurting big time in Alberta and will likely get worse with the continuance of low oil prices. I know in some downturns people can usually wait out about 6 months of lack of work with EI and savings but now exceeding. I think with each passing month this will start to trickle into a lot of areas in the economy. This definitely can’t be good for real estate – that is reality.

#100 Greg on 08.13.15 at 11:54 pm

Hi #86 cd,

Thanks for the link. Maybe it’ll go viral?!
Yes, that marketing thing is important for votes.

What else does he want to get done? Certainly he can have an entertaining video add.
Is he the best person running in that riding?

If I lived there I’d look closer and attend some debates & meet the candidates meetings to check out all the people running and I might ask some questions.
(Ask your question sooner than later, because if you don’t like the answerers, you still have time to run yourself.)

It’s kind of a shame our Federal Government is presently Party driven, were the leader of the Party with the most seats gets to be PM. Kind of like a King.

So it’s a real plus if the best person running in your riding is also running under the best person you want as PM. Hopefully there is at least one.
So I’m afraid it does mater who the Party Leader is when deciding whom to vote for.

Hopefully whom ever ends up being the MP of your area will work for all the people in the ridings. And the PM will works for all the Canadian people.

#101 Larry1 on 08.14.15 at 12:53 am

#9 Marco from van on 08.13.15 at 6:37 pm

Ok great, move then. Let us know what you think!

#102 Jackson on 08.14.15 at 1:11 am

Relevant to 416/905
apologies if already posted

http://www.mrmoneymustache.com/2015/07/27/rent-vs-buy/

#103 Entrepreneur on 08.14.15 at 1:14 am

Looks like our world is lies upon lies with the leaders, real estate, etc.

#215 BC Working Guy…I hate to break it to you but it is “who your know” as in the Bank of Mom. It is not about honesty, hard work, be kind to your neighbour. You have to learn to lie about your work to get into another job or loan, get people to back you up, play the I deserve all this with the help of my parents. But as the wealthy act the earth belongs to them, and only to them, do not realize that they are not the rulers. Hang in there, We All Have A Purpose. Keep to your values.

#104 Entrepreneur on 08.14.15 at 1:17 am

#215 BC Working Guy…I hate to break it to you but it is “who your know” as in the Bank of Mom. It is not about honesty, hard work, be kind to your neighbour. You have to learn to lie about your work to get into another job or loan, get people to back you up, play the I deserve all this with the help of my parents. But as the wealthy act the earth belongs to them, and only to them, do not realize that they are not the rulers. Hang in there, We All Have A Purpose. Keep to your values.

#105 BC on 08.14.15 at 2:18 am

Reporting from Vancouver….I am in and around Vancouver daily in the auto-mobile-office of mine….the number of Alberta plates is steadily rising …sure some are rentals on Vacation but the majority are trucks with nuts suvs etc….I guess they come looking for here. Also I follow Vancouver detached houses like nobody’s business. ..the amount of quick flips here is quite high this yr take that outa the equation and things not so rosy here. Oh and it’s impossible to not overhear or encounter something or one talking about real estate prices here. It’s pathetic. ..the pots boiling here and getting so very near the blow of the lid point. The writing is all over the walls SGHTF. Cheers blog dogs

#106 Jeff B on 08.14.15 at 2:43 am

From #93: “Sign an EBA to ensure the REALTOR® is working for YOU …”

I don’t think a piece of paper compels a realtor to treat your interests as paramount to theirs, no matter what it says. I’ve met more than a few realtors and more than a few lawyers, and if the business terminology was identical you’d never be able to tell them apart.

#107 family beagle on 08.14.15 at 2:47 am

Well, son of basset hound, was I ever using that thing the wrong way!

#108 BUY MY VOTE on 08.14.15 at 2:50 am

#5 Bill Gable on 08.13.15 at 6:34 pm
Like I have said all along – how does a Chinese National buy a $3 million Condo in Vancouver – if a Chinese National is only allowed to take 50,000 RMB out of China?
—————————————————————–
Simple:
Because Asian and all third world businessmen are 7 levels of deceit above you…..
They will ask only one question whenever confronted with a problem like “how to get money out of here”

Well, one way is businessmen buying whatever in China sends USD to Hong Kong and leaves it in Chinese Businessman’s Account in Hong Kong or anywhere in the world.

At the same time Chinese businessman or Crooked bureaucrat while still in China will give the equivalent in Chinese RMB to the Factory or wherever instructed and add a reasonable commission for the effort.

As a Soft Touch Canadian, most of our people and our Government do not even ponder these things, thinking everyone in the world plays by the rules! HA!

#109 BUY MY VOTE on 08.14.15 at 2:56 am

We as a Nation are at or near the top of the list of Nations with the loosest foreign property Investment laws.

With our lax Government not watching, Hot money is arriving from all over the world to the extreme HARM of our Children.

These Children can no longer afford a home and we have literally Stolen their future from them.

We Boomers are to be known as the Most Selfish Generation to have ever walked the face of the earth!

#110 Bob Santarossa on 08.14.15 at 3:00 am

#4 Rainclouds

Here Garth and I thought we could blame Harper on GenX and get away with it…darn.

Having said that, Google is of 2 minds here: they state Boomer (USA) age bracket = 1946 and 1964 and GenX (USA) age bracket = 1960 and 1980.

So 1960 to 1964 are? BoomerX? GenBoom? So much for checking facts using Google.

Will Rogers, 1920s Cowboy Philosopher/Comedian: “All I know is just what I read in the papers, and that’s an alibi for my ignorance”, well, so Google quotes him.

#111 Londoner on 08.14.15 at 6:54 am

#40 Randy Randerson

Your examples are incorrect.

#5 Bill Gable

I seem to recall a court case from a year ago where a CIBC banker was helping clients move money from China to Vancouver by opening up multiple accounts to get past the 50k RMB limit. The banker’s boss eventually fired her but she turned around and sued CIBC stating the bank was aware of this practice and actually supported it. She also stated that getting “fired” also prevented her from getting another job as a financial advisor. The judge agreed with her stating that because the bank was aware of what she was doing that they were in the wrong for using this as an excuse to fire her. In the end CIBC was ordered to pay compensation to the banker.

#112 Londoner on 08.14.15 at 6:57 am

Found the article…

“In September 2010, Ogden received a panicked call in the middle of the night from a client. The client was trying to transfer $500,000 into the country for the deposit on a home, something she needed 10 separate Chinese and Canadian accounts to do. But she was short two Canadian accounts and the money needed to arrive the following day or the real estate deal would collapse. The client asked to transfer the money via two of Ogden’s own accounts. She agreed.”

“The issue was not the fact that Ogden used the work around — a practice CIBC supported, Wong wrote — but the unconventional way she did it.”

http://www.vancouversun.com/Judge+slams+CIBC+firing+Vancouver+employee/9550845/story.html

#113 Julia on 08.14.15 at 7:11 am

“Principle”payments? Only if you’re a realtor i suppose.

#114 Investorz on 08.14.15 at 7:19 am

Harper’s promise on increasing the Home Buyers’ plan will remind those here that the government will ALWAYS do what they can to keep home owners happy, because that gets them votes.

Do you really think that if there was a housing 15% slump the government wouldn’t help? You bet they would.

Also, we’ve been wrong over and over again on when rates would go up. Dead wrong. Look at the 10 year yield. All it takes is some new headline scare and those yields get crushed.

And looking at the TSX, it’s become harder and harder to convince people that investing is better. The stock market reflects the economy, and the world economy isn’t strong. Ok at best.

#115 Llewelyn on 08.14.15 at 7:58 am

Shawn # 76

I think you might have missed my point.

When you invest equity to purchase a revenue-generating asset you cannot count all of your chickens until the asset is liquidated. If you invest $100,000 to purchase an asset for $500,000, realize net income of $100,000 over ten years and then decide to sell the asset for only $400,000 your net return on investment will be substantially less than advertised. Sure you recover a portion of your original equity and retire a portion of your loan through the collection of rent but ROI is based on a net gain. Garth’s point was that quoting a potential rate of return from an investment in real estate should not incorporate a recovery of your original equity and simple logic supports this point.

The hope that rental income will cover all operating costs including full recovery of all equity invested will remain just that, a hope, until the asset is sold.

Many accountants and realtors suffer from chronic optimism where depreciation is only applied to save taxes and does not occur in the real world. They also have a tendency to assume than any increase in operating costs can be seamlessly passed on to potential tenants.

There is a direct relationship between rent and disposable income available to pay rent. Ignoring fundamentals related to average disposable income in your market area is not recommended.

I am also concerned that the average selling price of real estate assets only reflects what willing sellers were prepared to accept over a defined period. It is human nature to avoid losing equity until there are no other options. I would suggest that the volume of sales and length of time on the market are far better indicators of market health than the average price accepted by willing sellers.

I understand how accountants record income generated from rental properties but respectfully suggest that borrowing 80% of the cost of a rental property only makes sense if market fundamentals indicate that the value of the asset will definitely increase over time.

“Counting their chickens way to soon, kids of the Baby Boom”

#116 Steve French on 08.14.15 at 8:01 am

smoking Man:

Nah, I’m not going religiosity….

The opposite.

my gf… She’s leaving. said she’s had enough.

I’m thinking the same.

I’m warming up for one heck of a mid life crisis.

might be time for a bit of the ole JD. And some accompany in’ Bob Dylan.

https://vimeo.com/39267368

“You just wasted 9 years
Of my precious time
but don’t think twice its alright”

#117 miketheengineer on 08.14.15 at 8:24 am

Garth et al:

And so it starts:

http://investmentwatchblog.com/donald-trump-now-accepting-gold-as-lease-payment-rather-than-cash/

The gold bugs must love articles like this.

Have a great day Garth!

#118 The Canadian on 08.14.15 at 8:41 am

Hey Garth – Good column. Junk math, like junk science – e.g. ‘global warming’ – sucks the rubes in every time.

A tipoff that these guys aren’t on the level: Check out Line 12 on the calculation sheet. Principle? S/B principal. Real outfits don’t put out typos.

#119 4 AM Sunrise on 08.14.15 at 8:53 am

#5 Bill Gable on 08.13.15 at 6:34 pm

As others have said before, they distribute it in CAD $50,000 chunks among family and friends. I was [email protected] and maybe once a week or more I’d see multiple CAD $49,000 wire transfers arrive in one account in one day.

As for people wondering why we should “care”, I hear our government is working with the Chinese to help them track down bureaucrats hiding stolen public funds in our country.

#120 Keith in Calgary on 08.14.15 at 9:10 am

For that down payment amount you can buy a 700 square foot, one bedroom, one bathroom, beach front condo with a huge balcony in Natal, Brasil. The place we are going to look at this weekend is about 5 years old and is made of concrete, it includes an underground parking stall, 24 hour doorman, and condo fees are about 100 USD a month. Just based on photos alone, if it were in a Canadian MLS listing in YVR it would be $1MM at least…….

And right now, Brasil is at the peak of their RE bubble…….

#121 J on 08.14.15 at 9:27 am

#12 Smoking Man

The Meaning of Life, by Oliver Reed:

Don’t drink. Don’t smoke. Don’t eat red meat. Die anyway.

#122 crowdedelevatorfartz on 08.14.15 at 9:30 am

@#108 Bob S.

Last time I checked the description of a Boomer was
b Jan 1 1946. To dec 1964.
They were born during the post war baby “boom”………..

As for Gen X ( or Generation “why bother”, depending on ones outlook)
And I quote “google”
Generation X is the group born in the EARLY 1960’s to 1980 AFTER the western post war baby “Boom” …..

time to upgrade those reading skills?

#123 cramar on 08.14.15 at 9:49 am

#8 mathemagic on 08.13.15 at 6:36 pm
I sent this around the office earlier in the week:

Which is the better exchange rate?

a) $0.75 CDN = $1.00 US
b) $1.00 CDN = $1.33 US

Many of the replies said that B) was better because $1.33 is larger than $0.75

this is why we’re doomed

————-

Ah, don’t be so hard on us humans with our frail minds. Sometimes math doesn’t look “logical.”

It is easy to look at a) and say the Loonie has dropped 25% from par and is only worth 3/4 that of the Greenback.

Then look at b) and say that the Greenback is worth 1/3 more now than the Loonie.

Conclusion, a) is better since the spread is only 1/4 vs 1/3. Hard to get my mind around this. Sumpin’ does seem right.

It is when you go to the bank and exchange Loonies for Greenbacks, then bring in Greenbacks to get Loonies again, that is when you get shafted.

#124 -=jwk=- on 08.14.15 at 9:55 am

A 35% ROI would mean that at the end of 3 years you would have all your original investment back (in cash or capital gains) , and still own the asset.

As the model assumes a 100k downpayment, that would mean every 3 years you could buy another one with no additional investment. You would use the cash, plus borrow against the capital gains to do this.

There is no better time to start than right now!

#125 Marco on 08.14.15 at 10:03 am

@Bob Santarosa

Trudeau is Gen X Harper and Mulcair are Boomers.

Gen X vs Boomers, you decide. Get out and vote!

Cheers.

Grow up. It’s not a competition based on birth dates. — Garth

#126 Holy Crap Wheres The Tylenol on 08.14.15 at 10:04 am

#53 Smoking Man on 08.13.15 at 8:19 pm
Holy Crap Tylenol
For you my man…
https://youtu.be/lroU7apzma8
____________________________________________
Thanks Smoking Man, this was actually an anti-war song but was adopted by many pilots and our own mantra. Brings back some good and bad memories. Saw the Animals on leave in London once they were fantastic. I’m definitely oriented towards blues based groups.
Here is a tidbit for you. After many KC135’s this was the last time I flew a B-52. It was also the worst time I ever had. Complete disaster on our side, not so much re bogies but decimated by SAM’s.

https://www.youtube.com/watch?v=BWVTvfD3bmU

#127 #883 on 08.14.15 at 10:04 am

“If the men running to be prime minister cared about the people they serve, we might have more justice and vision, with less spam. See why I sucked at politics?”

It is not that they do not care. They are puppets with about 15 to 20% power, the rest is up to the string pullers ($$$ $$$) behind the scenes. Politicians come and go, the shot callers are there to stay, hidden as they always have been since men had pants…

#128 countrymusicfan on 08.14.15 at 10:08 am

#120 and #108

Generation X always is a bit murky to some.

But the guy who put the term in the popular vocabulary more than anyone else used it to describe his own age group was named Douglas Coupland. He was born in 1961.

https://en.wikipedia.org/wiki/Douglas_Coupland

So I think it’s a fair bet that Gen X refers to about 1960 and younger.

I know from my own experience entering the job market in the mid-80s, there was a hell of a difference in the general opportunities (jobs, housing etc…) for those my age compared to the boomers born less than ten years earlier, in the 1950s. Not to whine too much, but that group born before about 1960 walked into a housing market that was affordable and a job market where you got hired onto the management track if you had a pulse, simply because there were so many older guys close to retirement and the growing population bulge of boomers was expanding the overall economy. Good times if you had the foresight to pick your parents well and ensure that you were conceived before about 1957. Guess that’s where most of us Gen Xers screwed up, LOL!

#129 Pegger on 08.14.15 at 10:08 am

Winnipeg Agents Puzzled!

http://www.cbc.ca/news/canada/manitoba/housing-market-s-high-risk-in-winnipeg-puzzles-local-real-estate-agents-1.3190304

#130 Holy Crap Wheres The Tylenol on 08.14.15 at 10:12 am

Smoking Man if you want to see what “death from above looks like.” Google M117.

#131 Diogenes on 08.14.15 at 10:14 am

Smoking Man wrote: “she cooks real good. I feed her cash, she feeds me. It works.”

Hire a food taster.

#132 Ronaldo on 08.14.15 at 10:27 am

”Does anyone – real estate floggers or other – really know either the true PRICE of “a house” or the “value” of any of them?”

Well, the price of the house itself can be determined fairly accurately based on building costs and profit margin and that will change with inflation over time. The big unknown is the chunk of land that it is sitting on. This is where the illusionary increases are created. When housing prices crashed back in the 80’s we saw houses selling for equal to or less than building costs at the time. It became cheaper to buy than to build. You got the lot for nothing. I know because I was building a home at around that time(spring 79). Luckily I was able to lock into a 5 year mortgage at around 10% before the rapid rise in interest rates that took the rate to around 23% by 1983. After completion my house was valued at around what it cost me to build it. The land value had disappeared into thin air and stayed that way til sold 10 years later. Zero gain. This is what can happen to real estate.

I know a couple who bought a tear down in Vancouver in 2008 for around $850,000. Now assessed at around 1.2 million. They had plans to renovate it. The place is an early 1920s model and in basically original state. They had an appraiser come and assess it to see if was worthwhile for them to renovate and he suggested that they not do so as the value was only in the land and the house had basically no value and cost to renovate would be extreme and they would never get their money out of it. I wonder how many have made this mistake already.

#133 Nora Lenderby on 08.14.15 at 10:34 am

#114 Steve French on 08.14.15 at 8:01 am

Great video! The London Tube driver looked like my grandfather although he was two years before retirement, driving British Rail commuter trains to London out of Bedford at the time. The London street scenes are familiar. Not that I hung around Piccadilly Underground much at the time. I was eight!

As for your sorrows, well…sympathies…personally, I focus only on the good times and move on…

#134 LowRent of Arabia on 08.14.15 at 10:37 am

All this math lately?!? What’s up Garth?

I already know my 3 R’s.

Reading, Riting (SM spelling), and Real Estate

#135 Shawn on 08.14.15 at 10:55 am

The 7% solution

Boston Pizza Royalties Income Fund is currently yielding 7.0% and has a history of slowly increasing the distribution.

Disclosure: I own units in this.

#136 Broke Dick on 08.14.15 at 10:58 am

As I reported, more than 40% of the properties listed for sale in YVR or the GTA this year have not yet sold. So when realtors publish monthly stats and trumpet “average” prices, this number reflects only the best six of ten on the market. – GT
==============================
Very interesting theory that only the best six out of ten actually sell. When you say best you are no doubt referring to the the “best deals” and this is of course totally independent to the sale price or condition of the house for that matter seeing that many are considered tear downs.
Way to spin it.

#137 Leo Trollstoy on 08.14.15 at 11:11 am

Do you know what’s the worst thing about a mid life crisis?

It ends.

#138 A Canadian Abroad on 08.14.15 at 11:21 am

CONDOS IN CALGARY – We are renting in a 30 story d/t Calgary condo and each night when you look out the windows at the other 2 25 and 41 story condo buildings across from us and on average you only see 10 other units with the lights on. Even less so now that the bust has hit Calgary.

We had a fire drill in our condo building and everyone was shocked to learn only about 150 people live in 30 stories.

#139 NoName on 08.14.15 at 11:21 am

#124 Holy Crap Wheres The Tylenol

how about this mighty machine, no engine but flys.

https://www.youtube.com/watch?v=1UTCZYeOYBw

#140 sm_yyc on 08.14.15 at 11:23 am

Garth, time to patent realtor math!

#141 Nick on 08.14.15 at 11:26 am

@#118 Keith in Calgary – Brazil is the next Greece. You may be better served by investing in a bodyguard. Also…when their economy falters, who’s going to buy your undervalued condo on the beach? Certainly not a wealthy Chinese investor looking for a safehaven. ;)

#142 Lillooet, BC on 08.14.15 at 11:42 am

#52 I’m stupid on 08.13.15 at 8:16 pm
Why bother selling a condo unit? The builder should just keep them all and become a billionaire in a matter of weeks with 35% return.

– See more at: http://www.greaterfool.ca/2015/08/13/marketing-3/#sthash.PkbVAEk1.dpuf

*****************
excellent counter-argument!!!

I assume the developer’s profit should be far less than 35% after selling out all the condo units.

#143 Lillooet, BC on 08.14.15 at 11:45 am

#133 Shawn on 08.14.15 at 10:55 am
The 7% solution

Boston Pizza Royalties Income Fund is currently yielding 7.0% and has a history of slowly increasing the distribution.

Disclosure: I own units in this.

– See more at: http://www.greaterfool.ca/2015/08/13/marketing-3/comment-page-3/#comment-390500

***********************
What about D.UN or NWH.UN?
But hell, TA is offering more but for how long?

#144 Mike T. on 08.14.15 at 11:53 am

#54 Blacksheep

that is some pretty silly thinking

I reject 100% of what you said that post, what you described is not what I am, it’s not what any of us are and I suggest you reconsider where that information comes from

humans are the creators in the Universe and you have been tricked into accepting less than this

hopefully you find the strength to reconsider

#145 Llewelyn on 08.14.15 at 12:01 pm

#133 Shawn

Not to rain on your observation but;

On March 12, 2015 the purchase price of a Boston Pizza Royalty Trust share was $23.12 and earlier today the same share was selling for $18.50. The average dividend over the past few years was $1.25 and the yield ranged from 5.31% to 6.98%.

Using the real estate analogy if you bought high and were forced to sell low, a margin call maybe, you would have realized dividend income of 60 cents and lost $4.62 in equity.

Your rate of return on investment would certainly not be 7.0% per share as advertised.

Clearly monthly dividend income and monthly rental income have an impact on net ROI but the most important factor is the underlying value of the asset. This is why market fundamentals are so important in both the equity and the real estate markets.

#146 Mister Obvious on 08.14.15 at 12:05 pm

The CREA recently published some ‘Frankennumbers’ showing that Vancouver house prices have risen 22.77% over the last five years. That’s 4.2% per annum on average.

I sold my detached Vancouver residential property just over five years ago and that money (as well as the proceeds of a recreational property sold 4 years earlier) was invested with two major financial institutions using fee-based advisors.

My compounded average annual return over the same time period has been very close to 8% after fees.

Consider too that the houses were a money suck while the investments have been spinning off real, usable income over the same time period. I now rent accommodation better located and more comfortable than the bungalow I used to live in.

I’m sure glad I jumped out of the ‘sizzling’ detached Vancouver housing market before it’s relative ‘slump’ against diversified liquid investments.

#147 Llewelyn on 08.14.15 at 12:11 pm

I meant Boston Pizza Royalties Income fund, not Trust fund. Sorry for any confusion.

#148 Debtfree on 08.14.15 at 12:26 pm

And don’t kid yourselves… we don’t market properties we market ourselves.

DA you have completely lost it this time . You really think that a guy/gal looking to spend , More money than on any other item in ones lifetime gives a crap about what you look or sound like . Most of the people that I have spoken to about real estate agents wish they would go the way of bank tellers ,switch board operators or elevator operators . It should be only an app away .

#149 Ogopogo on 08.14.15 at 12:30 pm

The G & M’s editorial today takes the Harper regime to task for further bloating the bubble. It’s about time the MSM begins to take notice, albeit too little, too late:

http://www.pressreader.com/canada/the-globe-and-mail-ottawaquebec-edition/20150814/281698318479079/TextView

#150 Mister Obvious on 08.14.15 at 12:34 pm

Why Nigel Wright did it as reported today in the NP:

“…he did it because he thought the claims were a disgrace, that the taxpayers had been robbed and because, as a wealthy man, he could.”
—————————-

Man… what a pantload!

#151 Van real on 08.14.15 at 12:49 pm

Thanks #103. BC Reporting from Vancouver. There is nothing so reliable as subjective anecdotal data.

#152 Smoking Man on 08.14.15 at 12:54 pm

Damn it Garth. This blog rocks.

Very talented people read this pathetic blog. Talk about luck. I’ve found an amazing artist and illustrator from here to do my book cover. Very excited. The drawing style is perfect.

I’m staying at senica one more night. One more chapter.

I’ll be back tonight. Once in the writing sweet spot.

You still think a Fed hike in Sept? It not logical with mfg inventorys surging.

Just saying

#153 Eva on 08.14.15 at 12:55 pm

#5 Bill Gable
Great post, Mr. Turner. Here in Vancouver, there is a lot of hooey floating around – and the PM is hinting that he is going to eyeball foreign (*read – Chinese) investment in R/E and its impact on our City. Right. Like I have said all along – how does a Chinese National buy a $3 million Condo in Vancouver – if a Chinese National is only allowed to take 50,000 RMB

—————–

But it is not illegal to bring money into Canada, if reported. YVR only fines small amount to people who don’t claim what they bring, then allow them to bring all the cash. $$$$ brought via YVR daily. Perhaps China and Canada should have an agreement to report these people! Just a thought, how else can you stop this money laundering via YVR.

#154 S.Bby on 08.14.15 at 1:07 pm

These realtor’s inclusion of paid down principal in the ROI calculation is similar to Return of Capital from a financial instrument. Getting paid your own money back in no way increases your profit and RoC should be excluded from the overall calculated yield.

#155 MF on 08.14.15 at 1:20 pm

#126 countrymusicfan on 08.14.15 at 10:08

I think every generation gets a chance at some point. Gen X was screwed to have been born in the wake of the Boomers but they are the ones, I would argue, that had a good opportunity to get in on the current housing run up. This is since they would have been buying and forming households anywhere from 1998-2008. A lot of them also entered the job market in the mid to late 90’s, which was a pretty good time. Probably the last decent time to enter the job market tbh. There is a stark difference between Gen X and we millennials. Even 35-40 year old Gen X is miles ahead of us millennials from what I see.

Here in the GTA, I think a lot of the house horniness is attributed to indebted Gen X exchanging overvalued houses that have appreciated in the last 15 years with each other. A lot are highly leveraged with multiple rental properties/units. After experiencing a big run up in prices/reduction in interest rates, and watching everyone get burned in the 2001 and 2008 stock market crashes they are completely hooked on housing. Who can blame them, I guess.

As for the CMHC report, no surprises there. The market in the GTA is an unmitigated disaster. Add the CMHC to the chorus of people and organizations recognizing it.

MF

#156 Holy Crap Wheres The Tylenol on 08.14.15 at 1:38 pm

#137 NoName on 08.14.15 at 11:21 am
#124 Holy Crap Wheres The Tylenol
how about this mighty machine, no engine but flys.
https://www.youtube.com/watch?v=1UTCZYeOYBw
____________________________________________
Right on buddy, have been up only once in one. Couldn’t do any of that shit with a B-52. Perhaps that is why I like to sail now. Silent!

#157 David on 08.14.15 at 2:11 pm

The recession has already hit the oil patch. The other shoe is yet to drop.

http://wolfstreet.com/2015/08/14/worlds-most-hated-major-currency-hits-11-year-low-canadian-dollar/

#158 AhGeez on 08.14.15 at 2:20 pm

If you want a depressing story of where things are going in old age:

https://www.canlii.org/en/bc/bcwcat/doc/2014/2014canlii91535/2014canlii91535.html

Worker’s Comp Claim – the lady took out a 35yr mortgage at age 65, expecting to work until she was 80.

#159 Ronaldo on 08.14.15 at 2:21 pm

#146 Debt Free

”Most of the people that I have spoken to about real estate agents wish they would go the way of bank tellers ,switch board operators or elevator operators . It should be only an app away’

Hopefully it will only be ”a nap away”. Although, if you are trying to sell a property when you are several hundred miles away from it, realtors do serve a purpose. Even though I am skeptical of their morals I have to admit that if you can find a good realtor, they can save you a pile of headaches when it comes time to unload. I just put my Okanagan property on the market and I now live on the island so for me to try and DIY wuld not be possible.

#160 pwn3d on 08.14.15 at 2:23 pm

#148 Mister Obvious on 08.14.15 at 12:34 pm
Why Nigel Wright did it as reported today in the NP:

“…he did it because he thought the claims were a disgrace, that the taxpayers had been robbed and because, as a wealthy man, he could.”
—————————-

Man… what a pantload!
——————-

Usually I am that cynical also, but I actually believe it to be true. He routinely paid for items that could have been expensed. Either way unlike the bastards running Ontario he did not delete his emails or have the husband of someone in the office come in to wipe computers. Kinda tells you something, no?

#161 pwn3d on 08.14.15 at 2:26 pm

#156 AhGeez on 08.14.15 at 2:20 pm
If you want a depressing story of where things are going in old age:

https://www.canlii.org/en/bc/bcwcat/doc/2014/2014canlii91535/2014canlii91535.html

Worker’s Comp Claim – the lady took out a 35yr mortgage at age 65, expecting to work until she was 80.
——————–

Obviously that was a horseshit story to get more disability. The amazing part of that story was it worked! They gave her disability to 80 years old. Crazy.

#162 duncan herbert on 08.14.15 at 2:32 pm

dont know why garth gets so hung up on the fact that only 50-60 percent of listings get sold. It’s always been that way. If the owners decide to resist at a lower price that’s there choice. If it is eventually sold at a lower price and the local board wants to say that it sold at x percent of its lowered new listing price, who cares. It still just works into the groups sale average. Doesn’t mean anything. Investors often focus on listings that are close to 3 months old. There is opportunity there. Why on earth new buyers only focus on brand new listings with a artificially low price where the agent is hoping to induce multiple bids upwards is beyond me. When there are hundreds of listings that are going to fall off after 90 days, this is where they should be looking.

#163 Lorne on 08.14.15 at 2:47 pm

#98 Greg
“Hopefully whom ever ends up being the MP of your area will work for all the people in the riding. And the PM will work for all the Canadian people. ”
…….
That is what we all want, I am sure, but, unfortunately, this does not happen!!

#164 Blacksheep on 08.14.15 at 2:51 pm

Mike # 142,

#54 Blacksheep

that is some pretty silly thinking

I reject 100% of what you said that post, what you described is not what I am, it’s not what any of us are and I suggest you reconsider where that information comes from
humans are the creators in the Universe and you have been tricked into accepting less than this

hopefully you find the strength to reconsider
——————————————————
So it’s all about ‘us’ Mike…the arrogance of mankind is truly astounding.

Sorry, I don’t want to bum you out on a Friday, but one of us is dead wrong and simply lacks the balls to accept the reality of our anomalous situation.

Humanity is not predestined. Humanity was not chosen. Humanity just, is.

Humanity has no more right or higher purpose than a house fly. Our extra helpings of grey matter allows (burdens us with?) self awareness, but that’s the price we’ve paid to become the dominant life form on this planet.

We can of course ‘apply purpose’ to ourselves, but from a purely evolutionary perspective, beyond the continuation of the species, meaning simply does not exist.

Don’t misinterpret my comments, as dark or depressed thoughts.

I know the real deal, realize my time is precious and decided not to waste energy here, bickering about interest rates or who will form the next government.

Who really gives a shit and imagine how irrelevant it will all the be one day. Besides, everybody reading this blog already won the lottery, by being born in a first world country.

We need to stop pissing and wining and realize how fortunate we truly are.

Thanks for the response.

#165 S.Bby on 08.14.15 at 2:59 pm

“how else can you stop this money laundering via YVR.”

====================
Undeclared cash should be confiscated and treated the same as seized drugs, with the same penalties.

What a sad place this is becoming. Nannystate. — Garth

#166 westcdn on 08.14.15 at 3:03 pm

Well, SWL1976, I do agree you have a lot to offer: re #245 on Aug 13
People are thinking about ways to dominate – the curse of humanity. Scary what is possible from nimrods who are more concerned about their own butts than the future.
http://www.realitynext.ca/wp-content/uploads/2015/08/NASA-War-document.pdf

My favourite from the power point slide presentation (#9?):
SPACESHIP EARTH
The crew are:
– Plundering the ship’s supplies
– Tinkering with the temperature and life-support controls
– Still looking for the instruction manual
– Engaging in bloody skirmishes in every corner of the vessel
– Increasing the size of the crew by 2 million per week

The last slide is probably the most important as it measures peoples acceptance of the future. I don’t give a damn about the virus warning – I am not afraid to criticize VIPs and accept being sent to a FEMA camp if social riots become a problem to “management”.

I lost respect for Harper when he demonstrated his desire to save his ass at the expense of others during the shooting at Parliament hill. I read somewhere he spends 21 million a year to protect his ass. Canadians can live with his passing – he is not important and is replaceable. If he learns he was elected to serve rather than dominate – I might consider voting for him.

I think the Bible quotes I have been reading prove mankind haven’t changed in 3,000 plus years despite our technological advances and are stupider on a collective basis. I don’t see anywhere where is it wrong to think for yourself if it doesn’t hurt someone else. Emotions are still more powerful than logic and (IMO) it is getting worse.

I am stunned by products such as “Powers of Attraction” and “Where is my Cheese”. People want to believe in simple solutions to complex problems. At the end of the day, you decide tomorrow if you want to be a thief or a contributor to a better future. I am frustrated by the elites desiring to retain their status. I am depressed by their simple desire to impress others.

#167 Blacksheep on 08.14.15 at 3:04 pm

Hey Mike,

Sounds like you think we’re alone.

Have you heard of ‘The Great Filter’?

So….are we pre, or post, filter?

https://en.wikipedia.org/wiki/Great_Filter

#168 OXI in GREECE !! on 08.14.15 at 3:11 pm

#5 Bill Gable on 08.13.15 at 6:34 pm
Great post, Mr. Turner.

Here in Vancouver, there is a lot of hooey floating around – and the PM is hinting that he is going to eyeball foreign (*read – Chinese) investment in R/E and its impact on our City.
Right.
Like I have said all along – how does a Chinese National buy a $3 million Condo in Vancouver – if a Chinese National is only allowed to take 50,000 RMB out of China?

<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

It's called money laundering. All the banks in Vancouver do it. It's known world wide. Use that thing called GOOGLE and you can read about it all over the world.

#169 Almost A Boomer on 08.14.15 at 3:12 pm

Most people prefer to be lied to.

Politicians who talk about harsh realities don’t get elected. Hudak tried. Ontario has a majority government that wastes billions but says “sorry”; puts up with spoiled teachers; can’t pay people who work with the elderly and disabled a living wage; and will not pick up the health costs for an out of province baby who arrived two months early unless there is public outrage.

#170 Blacksheep on 08.14.15 at 3:22 pm

‘whining’ not wining.

#171 Keith in Calgary on 08.14.15 at 3:31 pm

#139 Nick…..

Of course Brazil is a fiscal mess…….and it’s cherry picking for a financial investor like myself. I have owned RE down here since 2002, not for investment because RE is relatively illiquid and expensive to resell, but for shelter. Douuhhh….what a concept.

If I wanted to live in Greece I would…..and nw would be a great time to buy. But I have no fascination with Mediterranean countries.

To suggest that anyone needs abodyvuard in Greece or Brazil tells me that you haven’t travelled to either country recently or at all.

You are an idiot.

#172 Godth on 08.14.15 at 3:41 pm

Hey Garth, you should tackle mark to market vs. mark to model accounting next. That should keep you busy for a while.

#173 Holy Crap Wheres The Tylenol on 08.14.15 at 3:51 pm

#150 Smoking Man on 08.14.15 at 12:54 pm
Damn it Garth. This blog rocks.
Very talented people read this pathetic blog. Talk about luck. I’ve found an amazing artist and illustrator from here to do my book cover. Very excited. The drawing style is perfect.
I’m staying at senica one more night. One more chapter.
I’ll be back tonight. Once in the writing sweet spot.
You still think a Fed hike in Sept? It not logical with mfg inventory’s surging.
Just saying
___________________________________________
Fed hike coming America is not on fire but is warming up!
Have to ask Smoking Man whats with the fascination at Seneca Casino, looked it up on the net and the reviews all said it sucks. Too smoky and slot machines don’t pay, not like old days with jackpots etc ? So are you a card player? Your Smoking Wife must love it too! Just don’t get the Casino thing at all! I gambled back in 1969 and it didn’t go well, ended up in far east AFB!

#174 Frank on 08.14.15 at 4:09 pm

dont know why garth gets so hung up on the fact that only 50-60 percent of listings get sold.

What he’s saying is that it should be called the average ‘sales’ price instead of average house value because how much goes unsold is important metric when calculating what a given property is worth.

For example if Tesla cars are selling like crazy right now and there are bidding wars and you need to sell your Toyota then the fact that the average car sale goes for $90,000 doesn’t (versus $80K a year ago) doesn’t mean your car is worth 10% more than when you bought it. It means that you have to look at what is selling and what isn’t and find out what’s causing that.

The one thing Garth IS leaving out is context for this unsold/de-listed number. Is that average? Is it higher than usual? What does it mean?

#175 ed on 08.14.15 at 4:25 pm

Wow, I think I have enough of the common person’s opinions to stay away from blogs / comment sections of newspapers for good. This modern myth about rich Chinese buying up the whole show illustrates more than anything that Canada must really be a back-woods, inbred nation of red necked hicks. “Yep, them thare Chinese with their suitcases of money Hank ehh.” “Yep Joe; bring on the leguslashun. Hey, you got yur marble counter tops in yet or what?”

#176 45north on 08.14.15 at 4:26 pm

Jeff B: I’ve discovered a failure in a load-bearing member in the house. I’m an engineer, I can see that the failure has locked in and can’t collapse, but I need to add this to the SPIS.

SPIS?

At a recent decision of a discipline panel of the Real Estate Council of Ontario (RECO) a Real Estate broker was charged with a breach of several sections of the RECO code of ethics because they failed to ensure the information given on a Seller Property Information Statement (SPIS) was accurate.

http://ontarioachi.ca/realtors-the-spis-and-home-inspections/

#177 pwn3d on 08.14.15 at 4:32 pm

dont know why garth gets so hung up on the fact that only 50-60 percent of listings get sold.

What he’s saying is that it should be called the average ‘sales’ price instead of average house value
—————–
Huh? It’s not called average house value anywhere. They are very specific that they are talking about the average sold price:

1 – Sales, dollar volume, average sale prices and median sale prices are based on firm transactions entered into the TorontoMLS® system between the
first and last day of the month/period being reported.

#178 Quick Surfer on 08.14.15 at 4:35 pm

Current blogdogs on my scrollpast list:

1. Smoking Dork
2. Victoria Real Estate Upchuck.

That is all.
Have a great weekend!

#179 S.Bby on 08.14.15 at 4:47 pm

What a sad place this is becoming. Nannystate. — Garth

People should have more respect for our laws. If they don’t, they should pay the price.

#180 Propaganda is alive on 08.14.15 at 4:54 pm

the propaganda continues

http://www.msn.com/en-ca/money/homeandproperty/average-house-price-up-9percent-in-july-to-dollar437699-crea-says/ar-BBlKeXQ?ocid=mailsignoutmd

#181 Nagraj on 08.14.15 at 5:13 pm

Two quick comments on the comments:

– a blogdog who lives in a very tall condo tower in a town in the Prairie Provinces wrote that ding!dingy!dingy! fire drill and they all run outside and OMG there’s only about 150 residents!
Lotsa food for thought here.
(Let’s not just like that write off my theory that overbuilding of condos everywhere is part of a conspiratorial Martian plot to prepare Canada for an invasion of oversized alien vampire bats from outer space. (That theory is actually more complimentary to the Fawlty towers industry … )

– what bloody business of yours is it to question well-heeled Chinese people’s non-compliance with China’s anti capital flight laws? If you’re so into complying with Chinese regulations go and live in China. Praise the Politburo. Maybe you declare everything when comin’ back to Tronna from a little shopping excursion to Buffalo, eh? Got sumpin agin the “underground economy”, bribery and tax evasion? Got no friends?

#182 Smoking Man on 08.14.15 at 5:33 pm

#171 Holy Crap Wheres The Tylenol on 08.14.15 at 3:51 pm
#150 Smoking Man on 08.14.15 at 12:54 pm
Damn it Garth. This blog rocks.
Very talented people read this pathetic blog. Talk about luck. I’ve found an amazing artist and illustrator from here to do my book cover. Very excited. The drawing style is perfect.
I’m staying at senica one more night. One more chapter.
I’ll be back tonight. Once in the writing sweet spot.
You still think a Fed hike in Sept? It not logical with mfg inventory’s surging.
Just saying
___________________________________________
Fed hike coming America is not on fire but is warming up!
Have to ask Smoking Man whats with the fascination at Seneca Casino, looked it up on the net and the reviews all said it sucks. Too smoky and slot machines don’t pay, not like old days with jackpots etc ? So are you a card player? Your Smoking Wife must love it too! Just don’t get the Casino thing at all! I gambled back in 1969 and it didn’t go well, ended up in far east AFB!
…….

Only place within a thousand miles where you can throw dice with a half smoked cigarette dangling from your mouth.

All the free premium booze you can drink.

And a security staff that know me well and gives me a two Man escort back to my room, even when my legs stop functioning..

All the salad eating bicycle nobs don’t come here. They go to Fallsview, and have there wallets rapped by Kathleen, OPG the tightest and most profitable slot machines in the world.

#183 Smoking Man on 08.14.15 at 5:36 pm

#176 Quick Surfer on 08.14.15 at 4:35 pm
Current blogdogs on my scrollpast list:

1. Smoking Dork
2. Victoria Real Estate Upchuck.

That is all.
Have a great weekend!
…….

Glad you got that off your chest. I visualize you doing the Tarzan howell after you clicked the submit button.

#184 Godth on 08.14.15 at 5:40 pm

#180 Smoking Man on 08.14.15 at 5:33 pm

That’s the problem with so many money obsessed Canadian monkies, they don’t actually know how to enjoy life. Really sad.

Here, this kid knows more than you do:
https://www.youtube.com/watch?v=OlqqpNYurHY

#185 Nora Lenderby on 08.14.15 at 5:41 pm

#164 westcdn on 08.14.15 at 3:03 pm
I lost respect for Harper when he demonstrated his desire to save his ass at the expense of others during the shooting at Parliament hill.

Hmm…I don’t care for Mr. H. but saving the PM and the government is the job of his bodyguard and of the police/military on the Hill. All this talk about him hiding in a closet is unfair, imo.

We are very fortunate that the dolt with a hunting rifle wasn’t better armed, better supported and trained.

However, I think C51 is a total over-reaction. Opportunistic even. Like the U.S. after 9/11. I would respect all parties better if they admitted that stuff happens and you have to be brave in public life and cannot always be safe.

I think the Bible quotes I have been reading prove mankind haven’t changed in 3,000 plus years despite our technological advances and are stupider on a collective basis. I don’t see anywhere where is it wrong to think for yourself if it doesn’t hurt someone else. Emotions are still more powerful than logic and (IMO) it is getting worse.

Well, we aren’t burning witches on the village common anymore, so I think there is some collective progress. Not so much in a some other benighted parts of the world, but there is definitely hope in general.

I am stunned by products such as “Powers of Attraction” and “Where is my Cheese”. People want to believe in simple solutions to complex problems. At the end of the day, you decide tomorrow if you want to be a thief or a contributor to a better future. I am frustrated by the elites desiring to retain their status. I am depressed by their simple desire to impress others.

Well said! Although I am more depressed by the non-elite apeing the elite in personal appearance and life-style. (Hence the fetish for stupid high heels and posh granite’n’steel kitchens in which people don’t cook.)

We are just silly monkeys, after all!

#186 Smartalox on 08.14.15 at 5:50 pm

Ruh-roe!

Looks like Home Trust Canada wasn’t the ONLY ones to find evidence of mortgage frauds!

http://www.theglobeandmail.com/report-on-business/equitable-group-combing-through-mortgage-loans-for-possible-fraud-link/article25968903/

#187 nubbers on 08.14.15 at 5:55 pm

Just a thought – Why try to educate the greater fools? Surely people who buy into this guff represent a huge opportunity for those willing to predate. A bit like the Eloi and the Morlocks in ‘The Time Machine’.

#188 Godth on 08.14.15 at 5:59 pm

#183 Nora Lenderby on 08.14.15 at 5:41 pm

hmmm…
http://www.globalresearch.ca/canadas-false-flag-terror-fingerprints-of-u-s-involvement/5412838

Why are there always intelligence/military drills at the same time? I don’t know. I’m absolutely a Machiavellian theorist though.

#189 family beagle on 08.14.15 at 6:33 pm

#177 S.Bby on 08.14.15 at 4:47 pm

People should have more respect for our laws. If they don’t, they should pay the price.

——–

The law is an ass.
Law School 101

Pineers, braves, n rebels built dis countery. When we got da repeeter, we shoulda shot the birtish and ther bankers instead of da beefalo.

#190 Smoking Man on 08.14.15 at 6:45 pm

#186 Godth on 08.14.15 at 5:59 pm
#183 Nora Lenderby on 08.14.15 at 5:41 pm

hmmm…
http://www.globalresearch.ca/canadas-false-flag-terror-fingerprints-of-u-s-involvement/5412838

Why are there always intelligence/military drills at the same time? I don’t know. I’m absolutely a Machiavellian theorist though.
…..

Of course it was one of those. You can’t pass bills like C51 without shit like that.

Machine got away with 911, it’s confidence now over the moon.

Which is dangerous, they think the got Russia by the short hairs….. Big mistake.

One thing I like, the Sargent at Arms.

When he was crying in Parliament , it was for allowing himself to be bent over…

But then again.. Those crazy bent overs facing east breed like rabbits and the leaders are all crazy.

They chop heads off atheists, so I’m sort of cool with it in a demented sort of way.

#191 isthatapoodle? on 08.14.15 at 6:53 pm

My little nephew saw the picture and wondered what type of dog it is.

“I think its a PEEdle” I replied.

He fell over laughing.

His mom wasn’t amused.

His dad was choking back his laughter.

#192 westcdn on 08.16.15 at 2:54 pm

Nora Lenderby
Thank for the feedback. There are times where my head swells so much I have to turn sideways to get through a doorway or have others wear sunglasses in my presence. It doesn’t last long as I get punished for being arrogate. I remember a quote: “Men build empires, Women build civilization”. Getting slapped sharpens my focus but it is not a whip to keep me in place. I will fight for what I believe in.
PS. SM, I am on the sidelines willing to help – don’t know how. Yes, I am minor dyslexic.