Not so bad

NUDIST modified
As predicted: No rate cut in Canada. Link.

I swear this will be the last post on interest rates until at least Wednesday. You can quote me on that. So let’s start with the news: our central bank is finished hacking. This is the bottom. Wave goodbye.

Five-year mortgages, still available for the ridiculous price of 2.5%, will not be here by Christmas. The recession is probably over, except in Alberta where it will linger for a long time thanks to a bad attitude. Plumped by the US recovery, improvements in China and commodity prices inching ahead, our national economy will slowly begin to expand. This is consistent with what the Bank of Canada forecast, and in 2016 it will begin raising the cost of money – before a beater Vancouver Special starts selling for two million.

In the States, markets now indicate there’s a 30% chance rates will increase next Thursday, a 60% chance by October and 100% odds by the end of the year. In other words, it will happen – for the first time since 2006. The increase will likely be a quarter point, kicking off a slow but steady normalization in the price of money which will extend out two or three years.

This is good. Embrace it.

Here’s why. First, higher rates mean hope for the same reason lower rates mean trouble. Central bankers do not increase the cost of money unless economies are growing, expanding, throwing off inflationary twinges with more people working and sniffing around for wage increases. They raise rates when corporate profits are robust and companies strong enough to withstand higher borrowing costs. They do this because things are getting better and need managing, as opposed to when things suck and need rescuing.

Second, higher rates kill asset bubbles. This is precisely the quandary the Bank of Canada has faced – trying to engender economic activity, but helplessly watching the real estate gasbag inflate at the same time. Because people have no self-discipline, with brains withered and pitted from watching Hilary on HGTV, Canadians have lapped up debt as never before. And that’s why average single-family detached houses in 416 or 604 cost over $1 million each. No, it ain’t the Chinese.

Third, financial markets are all primed and ready for rates to normalize. There’ll be no crash, correction or panic simply because the Fed is doing what it’s been saying it would do since last March. The doomer websites, apocalyptic newsletter hockers, breathless bullion-pushers and every clown with a survival book to sell are scamming you with fear. In fact, investors have found during times when interest rates tick higher that their portfolios do the same. It’s simply a myth that crazed central bankers are about to bring down the curtain.

Look at the facts.

Higher rates don’t kill stocks. They don’t even inflict a flesh wound. In fact during the four rate-increase cycles in the US over the past 30 years, corporate profits have marched higher and each time – save one (the dot-com bubble) – stock markets followed. This is because, as stated above, rates only go up when the economy’s growing. And these days growth is the US is unmistakable. Look at the GDP numbers. House sales. Job creation. Car sales. All the macro-economics are there, and the Fed’s move will not diminish them.

TIGHTENING

So how about bonds? Don’t they wilt when rates go up? Should you panic and bail?

Nope. The rate increase will be gentle, even if sustained. The bond market’s already been pricing this in, and yields are higher (prices lower) than a few months ago. But there’ll be no bond crash since there’ll be no unexpected rate spike. Besides, you can diminish the impact of higher rates by holding shorter-term bonds which are, like me, far less sensitive. And don’t forget why you bought bonds in the first place – to decrease volatility in your portfolio, hedge against temporary equity declines and prevent you from being an idiot and selling when things decline.

Finally, how do preferred shares behave when the cost of money rises? These puppies kick out a good yield, but lost some capital value this year as the Bank of Canada sliced its key rate and bond yields followed. What now?

Rate-reset preferred prices rise or fall with bond yields. There’s little doubt Canadian rates will follow those in the US, as they have for 93% of the time to date. So logic tells us preferred shares have a big upside. At the same time, they pay you to own them – a return these days of about 5%, plus the dividend tax credit. Compare that to the jam people. Add in the potential for healthy price appreciation, and these are things you probably want to own. Now.

So who doesn’t want rates to get normal again? The deflationists. Doomers. Mortgage brokers. People without money. Those with epic mortgages. Realtors. Or folks trying to get elected. Sadly for most of them, things aren’t so bad.

 

167 comments ↓

#1 TurnerNation on 09.08.15 at 6:31 pm

Everyone make their weekly donation at Dollarama economy. Soon to be carrying $4 items.

#2 BG on 09.08.15 at 6:32 pm

I stole someone’s job today.

I was chosen because I was cheaper and now the current guy in that position is going to lose his job.
The guy is actually a great guy. Down to earth. Family guy. Good at his job too.
I just happen to be cheaper because I have less experience and I’m not the best at negotiating wage.
I had another option too. but I preferred that job, so I took it.

I knew the guy would lose his job if I was picked but I thought “It’s going to happen… Me or someone else”. But now that it’s done I don’t find so much relief in that thought.
The fact that someone else might do something does not excuse or make deed a more ethic.

Not sure it makes sense to feel guilt over that anyway, but still I feel like crap tonight.

#3 Victoria Real Estate Update on 09.08.15 at 6:38 pm

FUN WITH THE FRANKEN-NUMBER “HPI”

* It’s been dubbed the “franken-number”. This, of course, refers to the home price index published by your local realtors. Several Canadian cities are on board.

* How do they calculate the numbers for their graphs? Victoria’s R/E board explains:
“The benchmark home does not represent any actual house, condo or townhouse…“
– Victoria’s R/E board (March 2014)

* Do they really use imaginary homes for their index? Does that mean they come up with imaginary results?

Let’s take a look at some facts.

THE HIGHLANDS: 4% PRICE INCREASE IN 2 MONTHS BASED ON 1 SALE

* The Highlands is an area of Greater Victoria (outskirts) made up mostly of acreages.

* In FEBRUARY 2014 there was one (1) (below average) SFH sale recorded in the Highlands ($520 k). (source: Victoria’s R/E board)

* The SFH benchmark price for the area increased from $765,500 to $782,300 that month ( + 2.2%).

* In MARCH 2014 there were no (0) SFH sales recorded in the Highlands.

* However, the SFH benchmark price for the area increased from $782,300 to $796,400 that month ( + 1.8%).

CRASHING SFH MARKET IN THE HIGHLANDS RESCUED BY THE FRANKEN-NUMBER

* In January 2014, the franken-number index indicated that SFH prices in the Highlands had fallen 18% from 3 years earlier. (source: Victoria’s R/E board)

* That month the local board removed the highly accurate and reliable median price data (for separate areas of Greater Victoria) from its stats package. It was replaced by the franken-number.

* Suddenly, the franken-number HPI showed a strong 4% price gain over February and March of 2014, based on only 1 SFH sale in the entire area.

* That 4% price gain wiped out almost a quarter of the ground lost by SFHs in the Highlands over the previous 3 years.

MORE GENEROUS CLAIMS

* Now realtors, through their index, want you to think that SFH prices across Greater Victoria have increased by 5.7% since January of this year.

Are you on board?

#4 Jane Doe on 09.08.15 at 6:39 pm

Governments are addicted to zero rates…any increase whatsoever/whenever…even 1/10th of one percent will torpedo the budgets of cities, municipalities, states , provinces and national governments the disease is permanent, there will be no increase in rates in our lifetime. No government can afford to pay back the interest on what they owe now. Borrowing must continue to pay contract increases already negotiated with civil service unions. Unless you’re forecasting an NDP election win and 100% taxation….rates will stay the same. The NDP has already said they will maintain the status quo of union workers with no reduction….who will pay? The governments need every penny they can scrape together….raising rates is political suicide.

#5 Oceanside on 09.08.15 at 6:40 pm

Lets hope improvements in China aren’t just “government mandated”

#6 Michael Snyder on 09.08.15 at 6:45 pm

September 13 is the last day of the Shemitah year. During the last two Shemitah cycles, we witnessed record-breaking stock market crashes on the very last day of the Shemitah year (Elul 29 on the Biblical calendar). For example, if you go back to September 17th, 2001 (which was Elul 29 on the Biblical calendar), we witnessed the greatest one day stock market crash in all of U.S. history up until that time. The Dow plunged 684 points, and it was a record that held for exactly seven years until the end of the next Shemitah cycle. On September 29th, 2008 (which was also Elul 29 on the Biblical calendar), the Dow plummeted 777 points, which still today remains the greatest one day stock market crash of all time in the United States. Now we are in another Shemitah year. It began in the fall of 2014, and it ends on September 13th, 2015.

So get ready for September 11th, the last day of trading on Wall Street before the end of the Shemitah year!

Check out my website and use promo code “squirrel meat” for a 10% discount!

http://DELETEDGarth

#7 Brian Ripley on 09.08.15 at 6:45 pm

On my “real” long interest rate chart, it has been profitable to go long real estate on the last major 4 lows notated on the chart:

http://www.chpc.biz/real-interest-rates.html

The current low has not led to an entry point yet for TSX real estate index bulls. The seasonal downdraft is in effect now.

#8 People without money on 09.08.15 at 6:50 pm

Unfortunately the overwhelming majority worldwide.

#9 Rainbows and Unicorns on 09.08.15 at 6:53 pm

Hmmm, Garth sounds like he is writing the next campaign speech for Harper! Not surprising given the ad hominem bashing of Mulcair on here of late. (Frankly, I don’t give a damn how many times he mortgaged his house – I am much more concerned, like most voters, about how badly conservatives have bungled our economy which is limping badly)

Seriously though, Garth, I must respectfully disagree.

We are heading towards a cliff in Canada. Real estate will crash (Garth deserves much credit for his warnings) quite badly, on the order of 40-80% in spots. Retail is withering as debt-addled consumers stop buying. Oil sands will be killed for good when the Paris meetings happen this year. Personal debts and financial calamities will overwhelm us.

The US “recovery” is a sham which will be soon exposed. They are a mess of underemployment and new bubbles all over. The bubbling social unrest will help tip this over into chaos.

The rest of the world? Name a hopeful, positive region – I can’t think of any.

The old style way of looking at cycles and interest rates is no longer relevant. The next twenty plus years will be very bleak, I am afraid.

#10 Vancouver Troy on 09.08.15 at 6:58 pm

Recent article in G&M bashing Preferreds recently. Says not to trust posted yield as they are trailing yields and the yields will be much lower going forward.

Still a good time to buy preferred ETFs like CPD-T?

#11 Freedom First on 09.08.15 at 6:59 pm

Yes. Fixed income assets are an awesome part of a portfolio. Depending on your age, whether it is 40 50 or 60% of your assets, it makes it easy (for me anyways) to maintain a long range view of every investment, so I never panic sell, I stay diversified, and I re-balance as needed. I consider being broadly diversified to be absolutely critical, and anyone who says different to be a fool or a liar. No exception.

#12 Vundo on 09.08.15 at 7:03 pm

Why do people without huge piles of money but no epic debt (and no desire to sign up for a crazy mortgage) have anything to lose from rising rates? I see no reason to panic.

#13 Smartalox on 09.08.15 at 7:05 pm

Re: Mulcair’s (many) Mortgages:

So he’s remortgaged his house eleven times;

How many times has he re-mortgaged Stornoway?

#14 Londoner on 09.08.15 at 7:06 pm

So, at what point do you consider rates to no longer be “cheap”? 1%? 2%? The Fed may begin a rate hiking policy but won’t rates still be “cheap” for a long while?

Besides, what’s the rush? The Americans learned their lessons about gorging on debt, right? Aren’t they all about renting and investing now? No more bubbles in US housing or stocks, correct? So what’s the harm in the Fed keeping rates at 0% for a little while longer? At least until the labour force participation rate picks up and the quality of new jobs increase. Isn’t that what Yellen has been saying all along? So what if corporations can handle higher rates. Isn’t this recovery for the average, everyday, hard working American?

#15 TurnerNation on 09.08.15 at 7:11 pm

#2 BG – buy their house in a bidding war and it’ll even out.

– Like most guys, I like TA (technical analysis).

– E-wave I get on a long long term index chart
(1 initial pop off length bottom, 2 slight pull back no new lows; 3 large long wave of institutional buyers; 4 sharp pull back; 5 new highs/top.
In short term all this is useless.

#16 gut check on 09.08.15 at 7:23 pm

Doomers *do* want higher rates.
Higher rates = the long awaited doom scenario
.. or maybe I have misunderstood them all this time

#17 CP on 09.08.15 at 7:30 pm

Normalize rates? What’s normal? 20%? 15%? 10%? 5%? 1%? Garth being sensitive? It’s all so confusing.

#18 Daisy Mae on 09.08.15 at 7:35 pm

#2: “Not sure it makes sense to feel guilt over that anyway, but still I feel like crap tonight.”

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

I suppose it’s a matter of ‘survival of the fittest’. Don’t feel bad. If it wasn’t you, it’d be someone else.

#19 common sense on 09.08.15 at 7:37 pm

Record debt, over inflated housing, markets, bonds and still concerns about raising interest rates .025% that have not been raised in 80 months….

And everything is just all right?

Can me pessimistic or realistic? Please.

#20 Chris on 09.08.15 at 7:42 pm

Canadian economy would slowly expand? Really? More like the canadian public sector expanding while private sector continue to shrink relatively. Saw it with my own eyes. Many of my husband’s colleagues leaving the company to join TTC, metrolinx, etc.

#21 Mark on 09.08.15 at 7:45 pm

“Why do people without huge piles of money but no epic debt (and no desire to sign up for a crazy mortgage) have anything to lose from rising rates? I see no reason to panic.”

Because chances are, if they’re not directly exposed, good or bad, their employer is.

For instance, rising rates probably will damage public sector employment. As government will find it increasingly difficult to fund such lavish compensation packages with borrowed money.

OTOH, rising rates probably will help established businesses in existing capital intensive industries. As the hurdle rate (ie: minimum IRR) for competitive investment in the sector will rise.

The people who obviously have the most to worry are those who are doubly exposed. For instance, a highly mortgaged government employee or Realtor will probably suffer disproportionately compared to the rest of the population on account of loss in both income, higher financing costs, and a likely loss in asset value.

#22 Brian on 09.08.15 at 7:48 pm

I sure hope you’re right Garth, higher interests rates and an end to this insanity are my only hope.

#23 MF on 09.08.15 at 8:02 pm

Garth I love the optimism. I know I am not supposed to worry, but watching your hard earned money go so deep in the red (i’m down thousands since April) starts to get irritating after a while. This post and many others has had a very welcome calming effect. Keep up the great work and thanks.

Tons of people doubting the rate increase. It will be very interesting to see how it plays out.
#10 Vancouver Troy on 09.08.15 at 6:58 pm

I bought CPD in April and I am deep in the red. To make matters worse, some of the rate resets just renewed at a lower rate. This month my yield was down. It is cheaper now than what I paid back in April. I really hope it increases in value as rates rise slowly. It’s up to you.

#2 BG on 09.08.15 at 6:32 pm

Ouch. I can see how that would hurt and gnaw at your conscience. Just remember that in the end, it’s dog eat dog and you are doing what you have to survive in that environment. Maybe try and use it as motivation to work the best of your ability so you are “giving back” to the company and benefiting all that work there? I don’t know. That would bother me too.

#4 Jane Doe on 09.08.15 at 6:39 pm

Almost on cue.

#144 Smoking Man on 09.08.15 at 4:16 pm

“Two Philippineo dwarf lesbians.. Introduced myself and had a chat..

More on that when Ive had a few, being stone cold sobar, don’t think Im brave enough to share..”

-That caught my attention.

MF

#24 lee on 09.08.15 at 8:04 pm

#3, you’re analysis would be interesting if you could repeat it and show it for the downtown part of Vancouver whatever they call it.

#25 Frank on 09.08.15 at 8:21 pm

Yeah- higher interest rates don’t effect stocks- but they effect bonds! 10x larger! The stock market collapse will be a side show to the debt bubble collapse.

#26 Smoking Man on 09.08.15 at 8:25 pm

https://youtu.be/SqYG3f4PaWc

To my late nephew, and mom.

Miss you guys , you have no idea

Enjoy

#27 Sebee on 09.08.15 at 8:26 pm

…but helplessly watching the real estate gasbag inflate at the same time.

Come on Garth? Helplessly?

#28 mike nohouse on 09.08.15 at 8:28 pm

I don’t understand…. If so much of the market is filled with imaginary money, trillions and trillions of derivatives, how can anyone understand what is actually happening. Seems like an endless vortex or blackhole, yet we want action, like those suckers at the native casinos.

#29 love is a losing game on 09.08.15 at 8:38 pm

26% and dropping.

#30 BS on 09.08.15 at 8:42 pm

Frankly, I don’t give a damn how many times he mortgaged his house – I am much more concerned, like most voters, about how badly conservatives have bungled our economy which is limping badly

What is easier, balancing your household finances as a boomer with a 6 digit income or running Canada and its economy through global recessions, oil collapses and other things you have no control over?

If Mulcair can’t run a household how can he run a country?

If you ran a restaurant would your fire the chef because he didn’t get a Michelin star and replace him with a guy who can’t make toast?

#31 Babblemaster on 09.08.15 at 8:48 pm

“In the States, markets now indicate there’s a 30% chance rates will increase next Thursday, a 60% chance by October and 100% odds by the end of the year.” – Garth

——————————————–

Wow! Are these the geniuses that have predicted all the other rate increases?

#32 Jsan on 09.08.15 at 8:50 pm

Tired of your poor returns in China, than invest in Canada where Canadian houses are “So Cheap”!

It used to be used car salesman were considered to be sleazy. Nowadays I’m pretty sure the Real Estate industry wins in the sleaziness factor by far.

http://www.theglobeandmail.com/report-on-business/economy/housing/toronto-condo-developers-head-directly-to-china-to-court-investors/article26264066/

“Toronto’s people are pretty nice to outsiders, so there’s no discrimination against different people who come from other places,” he says, before launching into a detailed explanation of buying in Canada. He covers immigration, bank loan procedures, the differences in how home size is measured and other important subtleties. In China, many people buy concrete shells and decorate the interior on their own. In Canada, “they even install curtains,” Mr. Ma says.

Then he goes for the kill: “Canadian houses are so cheap. Why not invest?”

#33 MD on 09.08.15 at 8:51 pm

There are still many greater fools remaining in the housing market. The party will end when 5 year mortgages will be 5.0 and Helocs will be around 5.5.
People who will be renewing their mortgages at that rate will the ones starting the collapse till than its a upswing.

#34 I am the Babblemaster on 09.08.15 at 8:55 pm

“So who doesn’t want rates to get normal again?” – Garth

——————————————————

Simple. Anybody with debt. That meaqns most people with massive mortgages. Banksters. Central banksters too. Any government with debt. Etc.

#35 Mark on 09.08.15 at 8:57 pm

“If you ran a restaurant would your fire the chef because he didn’t get a Michelin star and replace him with a guy who can’t make toast?”

I would fire a chef who made okay meals, but could only cook a couple different meals. And that’s what Harper’s regime essentially created for Canada — an economy that saw the government hyper-stimulate the RE sector to such an extent that it, along with the O&G industry, and the public sector were basically where most of the growth was.

Harper had the option, during his time in office, to crack down on the government’s participation in the housing finance business by way of the CMHC. Instead, his government expanded the CMHC to $900B worth of loan guarantees against subprime loans. Harper had the option of cracking down on the size and compensation of the federal public service, yet Harper failed to implement meaningful reforms to public sector compensation. Harper, an ‘economist’ talked a good talk about wanting to reform Canada into more of a market economy, but there simply wasn’t any meaningful action by the government towards such. In fact, the public sector and the government’s involvement in the housing finance sector grew dramatically under Harper’s government.

Our gracious host tried to, as a part of the Tory caucus, reign in the government’s involvement in subprime mortgage finance. He was famously kicked to the curb as a result.

In fairness, I don’t know if Trudeau or Mulcair are committed to getting the Government of Canada out of the business of subsidizing private sector participants in Canada’s housing marketplace through the CMHC. But Harper’s record on such is clear and unequivocal for anyone who cares to look.

#36 Bill Gable on 09.08.15 at 8:59 pm

Those Chinese?

“Some Canadian banks allow wealthy Asian investors to skirt Chinese law by helping them bring in large amounts of money that is often used to buy real estate in Vancouver.”

Uh, but I thought…..

Link from The Globe:

http://tinyurl.com/q46u474

#37 Vancouver Troy on 09.08.15 at 9:06 pm

MF- Thanks for the response.

#38 MSM-Free Zone on 09.08.15 at 9:09 pm

With his popularity circling the bowl, our Prime Manipulator is in a bit of a fustercluck right now. He has the choice of:

(a) arm-twisting (at length, of course) the Poodle into a rate hold, thus substantiating his statement that our ‘teeny’ Canadian recession is over, or

(b) arm-twisting the Poodle into another desperate rate-cut, a month before the election, thus plucking our CPC-induced, one-trick resource extraction economy from the toilet, however making himself a liar about our ‘teeny’ Canadian recession being over.

(c) accept the truth that his popularity and credibility are approaching zero, pull a Mulroney and bail.

Myself, I’m hoping not (c), which will allow Canadians the prospect of gleefully punting this failed man from office.

Try to find something to vote for, not merely against. — Garth

#39 BS on 09.08.15 at 9:21 pm

I would fire a chef who made okay meals, but could only cook a couple different meals.

Better a chef who can make okay meals than one who can’t make toast or one who has no cooking experience at all other than his father being a cook (and not very good one).

In fairness, I don’t know if Trudeau or Mulcair are committed to getting the Government of Canada out of the business of subsidizing private sector participants in Canada’s housing marketplace through the CMHC.

Mulcair has already announced he will expand CMHC and give tax breaks to RE investors.

http://www.metronews.ca/news/canada/2015/06/07/mulcair-promises-cities-like-toronto-vancouver-housing-costs-reform.html

He (Mulcair) said an NDP government would work with Canada Mortgage and Housing Corp. (CMHC) on an income tax incentive that would allow people investing in rental housing units to avoid capital gains taxes if they plow money back into more “affordable” rental housing investments. An aide to Mulcair said the program would cost Ottawa $500 million annually.

#40 Mark in Guelph on 09.08.15 at 9:22 pm

Garth’s cognitive dissonance has the US economy improving for three years now while the Fed continually kicks the quarter point rate hike can further down the road.

Seriously Garth, either the improvement is there, or it isn’t. Why couldn’t they raise in June, or March, or last year, or next week? Why October? Which will certainly become December, before it becomes March again.

It’s a .25% rate hike, after SEVEN years at 0%, but these clowns still need more data, another month, better weather, etc. Garth, CNBC and some here buy this nonsense, but with every delay fewer are on board.

Now Leo Trollstoy will ask why us “wage slaves” are so consumed with timing? Well Leo, maybe we’re not mistaking a bubble for a recovery, and maybe the Fed agrees with us?

#41 Victor Y. on 09.08.15 at 9:25 pm

Hope Garth is right again. He has been right so far.
I can’t trust my guts feeling that economy is pretty fake in terms of the bubbles created by the Wall Street and Fed. The numbers are good in paper nowadays, however the life quality sucks so far for average joe.

#42 MSM-Free Zone on 09.08.15 at 9:31 pm

“..Try to find something to vote for, not merely against..” — Garth
_________________________

I appreciate your non-partisan reply. However, that’s like a doctor asking me to decide which STD is right for me.

Got just over a month to decide between a 4-way vacuum. I will try…

#43 Paul on 09.08.15 at 9:36 pm

#35 Mark on 09.08.15 at 8:57 pm
Our gracious host tried to, as a part of the Tory caucus, reign in the government’s involvement in subprime mortgage finance. He was famously kicked to the curb as a result.
————————————————————-
Ask Our gracious host who he will vote for?
He wouldn’t say but I but I would take odds even if his butt still hurt which way he would go!

#44 Someone stole my job today on 09.08.15 at 9:36 pm

Someone stole my job today. I walked into HR with a heavy stone in my stomach.
I’m 57. I knew it had to end sometime. The job had changed, and not for the better.
I had lucked out, a rookie hired into a blooming, high growth market where our company dominated. For field minions like me, the stock options, bonus checks, company cars, and regular raises were just amazing perks in an exciting time.
Money was being thrown about everywhere – once our whole department (250 plus) was flown to Hawaii for a week long meeting at one of the most expensive resorts on Maui.
But that was long ago. Now, only the long grinding days, the ever increasing tasks and responslbilites, and the intense pressure to to keep growing in a market that has flattened remain. The 1984 like monitoring and the constant audits and evaluation of my performance is suffocating.

Good thing I threw every bonus check and cashed out option at the mortage and investments.
The wife had been bugging me to get retired. I discovered a new/old passion that is the guitar.
And I discovered several other gigs and hobbies could actually earn money. Not that day to day cash flow is an issue. But some guitars are pretty pricey.

Still I feel bad, having that last chat with HR. A young turk is going to do all that slogging, with few benefits, minus all the perks, for a fraction of the money that I earned.
But heck. I’m going to sleep like a baby tonight.

#45 omg the original on 09.08.15 at 9:37 pm

Garth puts up a telling rate chart that goes back to 1992.

But for an even more frightening chart pull up a rate chart that goes back further – say post WWII to now.

The thing is rates move around – A LOT.

We have had pretty STATIC rates for 6 years which is way overripe for a change.

And there is only one direction a change can go in.

It is inevitable that rates will increase. Those that think low rates forever is the NEW NORMAL are just delusional or do not bother to look at history.

The only question is how fast and how high will rates go.

#46 omg the original on 09.08.15 at 9:40 pm

For instance, rising rates probably will damage public sector employment. As government will find it increasingly difficult to fund such lavish compensation packages with borrowed money.
————————-

Actually it all trickles down the municipalities.

The Feds and the Provinces are the Candy Men and will also preserve that.

When push comes to shove transfer payments get cut and the only level of government that doesn’t have transfer payments to cut are municipalities – so that is ultimately where the real cutting occurs.

#47 Paul on 09.08.15 at 9:42 pm

#38 MSM-Free Zone on 09.08.15 at 9:09 pm

With his popularity circling the bowl, our Prime Manipulator is in a bit of a fustercluck right now. He has the choice of:

(a) arm-twisting (at length, of course) the Poodle into a rate hold, thus substantiating his statement that our ‘teeny’ Canadian recession is over, or

(b) arm-twisting the Poodle into another desperate rate-cut, a month before the election, thus plucking our CPC-induced, one-trick resource extraction economy from the toilet, however making himself a liar about our ‘teeny’ Canadian recession being over.

(c) accept the truth that his popularity and credibility are approaching zero, pull a Mulroney and bail.

Myself, I’m hoping not (c), which will allow Canadians the prospect of gleefully punting this failed man from office.

Try to find something to vote for, not merely against. — Garth
———————————————————-
That would require some critical on his Part NO SHOT!

#48 MSM-Free Zone on 09.08.15 at 9:49 pm

#46 Paul on 09.08.15 at 9:42 pm
“…That would require some critical on his Part NO SHOT!…”
_________________________

???

#49 45north on 09.08.15 at 9:52 pm

MSM-Free Zone: Got just over a month to decide between a 4-way vacuum.

that sucks

#50 westcdn on 09.08.15 at 9:52 pm

Marianne Faithfull also had a song called Working Class Hero – listened to it a lot.

#51 Cici on 09.08.15 at 9:56 pm

#2 BG

I’d say go ahead and feel bad.

The company obviously has no respect for dedicated people who do good work, so you won’t be of much use them for long either anyways. They’ll love you while you’re cheap, and then adios. Funny thing though is that those kind of companies are usually badly managed and end up shooting themselves in the foot when they lose good people along with their reputations, and have to pay a lot more later to get the quality back.

#52 Trojan House on 09.08.15 at 9:56 pm

Hey Garth…just wondering what you think is going to crash exactly? Or I guess, what is not going to crash?

#53 crowdedelevatorfartz on 09.08.15 at 10:00 pm

@#30 BS
“If you ran a restaurant would your fire the chef because he didn’t get a Michelin star and replace him with a guy who can’t make toast?”
+++++++++++++++++++++++++++++++++++

No, I’d fire him because he’d “hired” some of his friends as waiters and then they falsified ‘drycleaning” expenses and were surprised when the cops were called.
I’d fire the guy because he’d run the “restaurant” in “deficit” 6 years in a row.
I’d fire the guy for not listening to his staff…ever.
I’d fire the guy running an oil line through the “kitchen” for pick up by “trucks.” in a neighborhood that specifically asks him not to.
I’d fire the “chef” for being arrogant, dismissive, secretive and dishonest…..

Time for a new chef.

#54 crowdedelevatorfartz on 09.08.15 at 10:06 pm

Hey BS! What PC stand for? Pee Cup

The media fenzy over this latest pc gaff has been described as a “Tempest in a pee cup!”

Ha ha get it?

#55 Sheane Wallace on 09.08.15 at 10:08 pm

If/when Fed hikes the rates commodities will decline and stock market will correct on the downside. Looking forward to it.

We have seen nothing from the Canadian recession yet, we have not deflated the bigged credit housing bubble in history. Looking forward to that one as well.

#56 Leo Trollstoy on 09.08.15 at 10:08 pm

So who doesn’t want rates to get normal again? The deflationists. Doomers. Mortgage brokers. People without money.

rekt

Tyranausaurus Rekt

Erektal dysfunction

So true.

#57 Annek on 09.08.15 at 10:09 pm

Re#2:BG-
If you stole someone’s job because you were cheaper, do you not think that company will do that to you in the future? Someone else will come around in a few years time and do,the same to you. Obviously, that workplace has no ethics. I would have advised you to take the other job offer. Anyways, don’t lose any sleep over it. It’s done. But be wary as you can be assured that it will happen to you.

#58 Sheane Wallace on 09.08.15 at 10:09 pm

Second, higher rates kill asset bubbles. This is precisely the quandary the Bank of Canada has faced – trying to engender economic activity, but helplessly watching the real estate gasbag inflate at the same time. Because people have no self-discipline, with brains withered and pitted from watching Hilary on HGTV, Canadians have lapped up debt as never before. And that’s why average single-family detached houses in 416 or 604 cost over $1 million each. No, it ain’t the Chinese.

—————————
It was deliberate government policy by the great leader who loves Canada. coordinated by CMHC, the financial minister and the puddle at BOC.

#59 Leo Trollstoy on 09.08.15 at 10:12 pm

#36 Bill Gable on 09.08.15 at 8:59 pm

And the ‘source’ for that information is…

Nothing.

Par for the course.

Again.

#60 Not 1st on 09.08.15 at 10:13 pm

The Tiger 21 group disagree with you Garth. They have lightened their stock holdings considerably and increased RE accordingly.

You mean the Michael Sonnenfeldt real estate pumpers? That’s funny. — Garth

#61 Sheane Wallace on 09.08.15 at 10:15 pm

Higher rates don’t kill stocks.

We will see on September 16. When 0.15 % increase comes into play.

It’s the 17th. It will be a short-lived event. — Garth

#62 Fed-up on 09.08.15 at 10:15 pm

Ok so IF we see a whole quarter point rate increase before the end of the year, that will be 1st one in about 7 years.

So let’s see, just doing the math here…at that rate, we’ll be at 4.25% in about 30 years

The Fed has indicated it contemplates increases of about 100 basis points per year for the next two, as reported here a few times. Try to keep up. — Garth

#63 Cici on 09.08.15 at 10:15 pm

…but helplessly watching the real estate gasbag inflate at the same time.

I agree with Sebee, the word “helplessly” is hopelessly deceiving. At any time they could have turned that CMHC tap off, or at least reduced it to a trickle, and/or demanded more bank capitalization.

And it’s impossible not to vote “against” when there is no suitable party to “vote for.”

Elections is this country are costly joke.

The Bank of Canada has no connection to CMHC. — Garth

#64 do on 09.08.15 at 10:16 pm

44 Someone stole my job today on 09.08.15 at 9:36 pm

Great reply.

So funny as the next generation races to the bottom. Interns, precariats, no pensions…

How low will they go?

Thank goodness I am moving form a wage slave to the “rentier” class. So many young “educated” Canadians want to work for me so cheaply.

#65 Former Fool on 09.08.15 at 10:18 pm

The recession is probably over, except in Alberta where it will linger for a long time thanks to a bad attitude.

Can Garth or a fellow blog dog please elaborate on this point? What are you referring to by “bad attitude”? The NDP government with an agenda against corporate Alberta?

I’m a little confused with today’s post, as interesting as it is. I’m doubtful the Canadian economy can be in recovery mode if the housing bubble is about to burst. Doesn’t housing and housing related activities comprise one-third of Canada’s GDP? Seems to me if housing is going one way, the Canadian economy is going the same way.

Look forward to some insights. Cheers!

#66 Leo Trollstoy on 09.08.15 at 10:19 pm

#21 Mark on 09.08.15 at 7:45 pm

The government has never had a problem funding the ‘lavish compensation’ of public sector employees.

#67 lala on 09.08.15 at 10:25 pm

I don’t know why I keep coming back, anyhow I just got hight with the help of my loved grass. Why smoke tabaco when weed is cheaper. Canadian Weather and people sucks but weed is good, I’m thinking positive tonight..

#68 kommykim on 09.08.15 at 10:29 pm

RE #10 Vancouver Troy on 09.08.15 at 6:58 pm
Recent article in G&M bashing Preferreds recently. Says not to trust posted yield as they are trailing yields and the yields will be much lower going forward.

That only really applies to rate reset type preferreds. The hardest hit will be those that reset at the bottom of the rate cycle, but they should recover in 5 years. You have to invest for the long haul, anything else is a losers game.

#69 or do not bother on 09.08.15 at 10:33 pm

45 omg the original

Those that think low rates forever is the NEW NORMAL are just delusional or do not bother to look at history.

I looked at history and I have not found any other time when creating money was so easy and cheap.

I also have not found any other time in history when this amount of money was dumped into the economies worldwide.

Maybe I overlooked something.

#70 John in Mtl on 09.08.15 at 10:35 pm

@#51 Cici on 09.08.15 at 9:56 pm:

… Funny thing though is that those kind of companies are usually badly managed and end up shooting themselves in the foot when they lose good people along with their reputations, and have to pay a lot more later to get the quality back.

As if the company really cared… nowadays its all about asset stripping, CEO bonus/share options, the bottom line, cheap made-in-a-cheap-labour-country products; f**k the employees, just another cog in the Machine.

#71 Waterloo Resident on 09.08.15 at 10:36 pm

DELETED

#72 Sheane Wallace on 09.08.15 at 10:38 pm

The Bank of Canada has no connection to CMHC. — Garth

They are both Steve’s lapdogs.

#73 Washed Up Lawyer on 09.08.15 at 10:40 pm

I supply this link to an article in the Edmonton Journal, not for its content, but only for the picture.

The dream home construction next door seems to have gone awry.

Oops. I smell lawyers (Edward Abby).

http://www.edmontonjournal.com/news/edmonton/more+construction+horror+stories+emerge+edmonton/11348455/story.html

#74 John in Mtl on 09.08.15 at 10:42 pm

@ #30 BS on 09.08.15 at 8:42 pm

Mulcair has already announced he will expand CMHC and give tax breaks to RE investors.

…”He (Mulcair) said an NDP government would work with Canada Mortgage and Housing Corp. (CMHC) on an income tax incentive that would allow people investing in rental housing units to avoid capital gains taxes if they plow money back into more “affordable” rental housing investments. An aide to Mulcair said the program would cost Ottawa $500 million annually.”

Oh Sh*t !!!!!

#75 Estrella on 09.08.15 at 10:44 pm

http://www.theglobeandmail.com/report-on-business/economy/housing/toronto-condo-developers-head-directly-to-china-to-court-investors/article26264066/?cmpid=rss1&click=sf_globe&service=mobile

Clock is ticking on condos real estate. There will be blood.

#76 Washed Up Lawyer on 09.08.15 at 10:47 pm

Typo. Should read Edward Abbey. Developers, flabby assed white men.

If a man can’t piss in his own backyard, he’s living too close to town.

A song.

https://www.youtube.com/watch?v=o8CGKosMflA

#77 MSM-Free Zone on 09.08.15 at 10:51 pm

#66 Leo Trollstoy on 09.08.15 at 10:19 pm
“….The government has never had a problem funding the ‘lavish compensation’ of public sector employees….”
_________________________

It’s all about perspective.

The current government has never had a problem crushing (outsourcing, off-shoring, TFW’S, FTA’s) the compensation of PRIVATE sector employees, the same people required to fund the public sector.

#78 kommykim on 09.08.15 at 10:55 pm

RE: #69 or do not bother on 09.08.15 at 10:33 pm
I looked at history and I have not found any other time when creating money was so easy and cheap.

Maybe not this low, but rates being low for a long time and then gradually increasing over time has happened before:
http://www.bankofcanada.ca/wp-content/uploads/2010/09/selected_historical_v122486.pdf

http://www.ratehub.ca/prime-mortgage-rate-history

#79 Obvious Truth on 09.08.15 at 10:57 pm

#44 Someone stole my job today on 09.08.15 at 9:36 pm

Hilarious!!

#80 Mf on 09.08.15 at 11:00 pm

Vancouver Troy on 09.08.15 at 9:06 pm

Your welcome!

From what I’ve learned, Garth and others here cite the high tax efficient yield as the main attraction for preferred’s. I’m regretting buying cpd in April but I am sure just it’s a rookie mistake to worry over such a small timeframe. I also bought without totally understanding preferred’s – Also a rookie mistake since you should always understand what you are buying.

I guess it comes down to your preference: capital gains or cash flow. While both are part of a balanced portfolio like Garth and others have taught me, I think I am learning I’m more interested in capital appreciation. Of course rates will rise over time and the purchase may become a positive (hopefully).

Mf

#81 rhannic reid on 09.08.15 at 11:06 pm

westcdn : Working Class Hero is a John Lennon song …

#82 Sheane Wallace on 09.08.15 at 11:11 pm

#74 John in Mtl

Mulcair is an idiot, it is clear.

What he does not understand is that there is nothing left to loot in the great white stupid north. Period.

#83 plafoid on 09.08.15 at 11:25 pm

#10 Vancouver Troy on 09.08.15 at 6:58 pm
Recent article in G&M bashing Preferreds recently. Says not to trust posted yield as they are trailing yields and the yields will be much lower going forward.

Still a good time to buy preferred ETFs like CPD-T?”

http://www.theglobeandmail.com/globe-investor/investor-education/why-you-cant-trust-the-yields-on-preferred-etfs/article26231003/

Hey Garth, here is the article the guy is referring to you..what is your analysis of this?

#84 Mark on 09.08.15 at 11:27 pm

“The Bank of Canada has no connection to CMHC. — Garth

They are both Steve’s lapdogs.

Gotta agree with Garth here. There is no evidence whatsoever that the Bank of Canada has any element of political interference other than the mandate negotiated between them and the government to target inflation at 2%.

Since inflation numbers have been considerably below 2%, and looking to weaken further, the likelihood of additional policy rate cuts is high. If not tomorrow, then at the next meeting.

You do hit the nail on the head in your other posts Sheane, in that, there is a real lack of demand drivers within the Canadian economy on account of collapsing O&G and RE investment. Which is likely to result in a substantial period of fairly significant capacity slack.

Trollstoy, you gonna be a man and agree to leave for 2 weeks if the BoC cuts tomorrow? After all, I’ve stated I’ll leave for 2 weeks if the BoC fails to cut, and you’re always so adamant that I’m wrong.

#85 Mark on 09.08.15 at 11:27 pm

“Which is likely to result in a substantial period of fairly significant capacity slack.” — Mark

Err I meant demand slack, and over-capacity. Typo.

#86 Sam on 09.08.15 at 11:29 pm

Wrong. Rate freeze till 2017 is on the cards now. too bad garth you lose again. housing is not yet hosed.

#87 Nosty, etc. on 09.08.15 at 11:42 pm

#93 Smoking Man on 09.08.15 at 7:30 am — “Very few people trust, watch, or believe MSM anymore.”

The m$m? Those worthless whores? To quote John McEnroe, “You can’t be serious!” This pic — Refugees — gives a much clearer understanding of what it’s like; Further to ISIS; FFs and guns; iPads replacing wait staff.

#88 Tony on 09.08.15 at 11:50 pm

Re: #5 Oceanside on 09.08.15 at 6:40 pm

“Less negative” if it’s actually true.

#89 plafoid on 09.08.15 at 11:52 pm

#144 Smoking Man on 09.08.15 at 4:16 pm

“Two Philippineo dwarf lesbians.. Introduced myself and had a chat..

More on that when Ive had a few, being stone cold sobar, don’t think Im brave enough to share..”

Be politically correct and hedgey for crissakes…

you should have written that you “may or may not have seen approximately two vertically challenged opposite gender preferential individuals of Asian heritage……”

#90 Seize the day! on 09.08.15 at 11:56 pm

#2 BG

Firstly, are you a contractor or an employee?

If a contractor, hire this guy back with a raise. Get him working the same job but for you. Then go for the next sale!

If an employee. Hire the guy (take a risk). Quit and the make a deal.

To this 10 times and you have a consulting company and you are a solutions/sales guy!

#91 Retired Boomer - WI on 09.09.15 at 12:12 am

Well I hope interest rates DO finally start going up. Us retired geezers like better interest rates on borrowed money! It even helps the gmmint spend less if they know the cost of money is going up. Sometimes, they don’t give a dam as ours can print there way to oblivion, which it HAS done over the past decade. Yours might be spending more due to the oil patch blow-out.

As for corporate business levels, my read is business has been kind of soften many sectors. I hope I am wrong here, but from what I read things there are not as rosy as I might wish. WHY simple, consumers (70%) of our economy haven’t been spending as hard. We still can’t have it both ways, consumers reducing debt,. AND spending. Where are the over-sized raises for the masses? MIA yet, still…

If you feel different show me the errors in my many ways.
(Where to start they say…)

#92 Fed-up on 09.09.15 at 1:22 am

Ok so IF we see a whole quarter point rate increase before the end of the year, that will be 1st one in about 7 years.

So let’s see, just doing the math here…at that rate, we’ll be at 4.25% in about 30 years

The Fed has indicated it contemplates increases of about 100 basis points per year for the next two, as reported here a few times. Try to keep up. — Garth

—————————————————————————–

I have kept up. Obviously I was being facetious.

Just raise the darn rates already.

#93 BC Guy on 09.09.15 at 1:43 am

Talking about real estate in Canada, wealth disparity and the 1% controlling the majority of land and resources in BC, Canada and worldwide, you might be interested in this series of factoids:

“Massive British Columbia ranch ‘Big Bar Ranch’ owned by Saudi billionaire”:

At this time the ranch includes 38,000 deeded acres and 700,000 acres under lease

2003 – BSA Investments is listed as the owner of the Gang Ranch, and Ibrahim Muhammad Afandi, a wealthy Saudi, is listed as the owner of BSA Investments.

The Gang Ranch included at one time or another, ranch land at Canoe Creek, the Kelly Ranch, the Harper Ranch at Kamloops, the Perry Ranch (17,000 acres, 3 miles from Cache Creek), 57 Mile property, Sullivan Pastures and Meadow Lake near Clinton, William’s Meadows, Fosberry Meadows, Big Meadows, Wycott Flats, Home Valley Ranch, Crows Bar (6,000 acres) but the Gang Ranch was always the considered the main ranch.

“National Post‘s ace investigative reporter, Stewart Bell, discovered a Swiss judge asked RCMP for help in looking into Afandi’s possible connection with a global web of charities and companies that bankrolled Osama bin Laden as he built the al-Qaeda terrorist network.”

So it is clear, the majority of Canadians will never get to own a piece of Canadian real estate anything larger than a city or suburban lot of 1/4 or 1/2 acre and if lucky, possibly a small cottage lot. And they will usually take on 25 or 30 years of debt to finance their purchase.

Meanwhile, the 1%ers, like the Saudi, American billionaires, own vast areas of the most beautiful parts of the province, put up barbed wire fence, and keep everyone out.

Some would say that these large ranches produce meat, which they do. However, many ranches barely break even and often lose money on cattle. By raising a few hundred head of cattle, the owners can claim their vast land holdings as “Agricultural Land” and pay a fraction of land taxes they otherwise would. So raising cattle is a racket used to reduce taxes, the owners outsourcing the cattle operation to a few locals.

So wealth disparity takes on many different forms, land ownership being just one of them.

#94 BC Guy on 09.09.15 at 1:52 am

I would like to see Land Reform as an election issue. Are there any political parties willing to take on this issue? The Conservatives wouldn’t tackle this one as they favour the 1%.

A federal party could take on Land Reform by applying punitive taxes for the large land holdings to discourage a handful of billionaires from buying up vast tracts of land.

It amazes me that there are so many people on Garth’s blog finger-pointing about the Chinese/Asian investors driving up the real estate market in Vancouver and Toronto, but no one is looking at the larger picture.

I’ve travelled across many parts of BC and it’s a beautiful province, but unfortunately, too much of it is vacant, unused, uninhabited, behind barbed-wire fence and off limits to everyone except the ultra-rich and their friends.

If you think this situation is fair, vote Conservative. If you want change, vote NDP.

#95 Munch on 09.09.15 at 1:55 am

“Here’s why. First, higher rates mean hope for the same reason lower rates mean trouble. Central bankers do not increase the cost of money unless economies are growing, expanding, throwing off inflationary twinges with more people working and sniffing around for wage increases. They raise rates when corporate profits are robust and companies strong enough to withstand higher borrowing costs. They do this because things are getting better and need managing, as opposed to when things suck and need rescuing.”

No, sorry Garth, but this is just disingenuous! They will raise rates because they have to have some ammunition for when things really fall apart, and because they have set the expectation. To quote their reasons for hiking as they pertain to a normal business cycle is to ignore that extraordinary situation the world now finds itself in. That is disingenuous and, quite frankly, dishonest!

Your apology is accepted, in advance.

#96 Great Canadian Bubble Co. on 09.09.15 at 1:56 am

When it comes to your list of people who don’t want to see interest rates normalize in Canada, it is the last group that has me most worried. Politicians, after all, are more interested in staying in power, and getting re-elected than anything else.

We have a bit of problem as the vast majority of Canadians have taken on too much real estate debt, and are looking to politicians who don’t want to upset the base, to keep things this way.

Slight increases over the next 5-10 years are likely not going to burst the bubble. I think you are right in your previous posts when you said that there will be a gradual deflation over time. That would be very ‘Canadian’ of us. Slow, mundane, frog-in-the-boiling-pot type disaster.

#97 Nagraj on 09.09.15 at 2:03 am

#10 Vancouver Troy
#68 Kommykim
#80 Mf

That article in the weekend G&M bashing rate reset preferreds, near the end, notes that the yield on the 5yr Canada can’t possibly stay as low as it is now.

I thought that the editorial point of the piece was to comfort readers gettin’ nervous about capital losses, as in – Fear not loyal readers, we know what’s on your minds and us Globe&Mailers is on the case (sort of). The G&M couldn’t, of course, like Garth, just say – hang on, rates is goin’ up.

(Particularly for #80: this stuff is way too convoluted for me. Makes me feel like a little kid learning how to tie a shoelace.)

#98 Joe2.0 on 09.09.15 at 2:05 am

World Bank warns FED not to raise rates.
Garth why don’t you admit it.
The markets are broken and would collapse without stimulus packages, plunge protection or false data.
The day of reckoning is very near.

#99 Rich Young on 09.09.15 at 2:08 am

Garth,

I’ve been reading your blog for Four(4) years I believe. Renting in Calgary for $1100 per month a half duplex sharing a can with my two girls and wife. They are sick of waiting. Yet, even with oil tanking R/E is only down 10% yoy. We had the chance to buy a nice place for $380K years ago but chose to rent. God help me now! My wife is sick of it.

However, we have saved a ton of money living this way. Yet, she still wants to own again. Please tell me that we will find a place for around $1500 per month to own that is decent. A similar place to what we rent just listed in our area for $400K … We pay $1100 in rent lol. This, despite the economy here looking ugly.

I’ve learnt local bank branches are giving current owners time off making payments! Is this not discriminatory to those that save and want to buy? Can we file a lawsuit lol.

Rich

#100 nubbers on 09.09.15 at 3:23 am

BG @2 “I stole someone’s job today”
Someone stole my job today @44

Priceless, but just too good not to be a set up.

OK, that’s enough dawdling. Lets all get back to work now (including you, young lady).

#101 Eddie on 09.09.15 at 4:15 am

There is so much household debt that, if interest rates rise significantly, half of households are going to be underwater.

This is never going to happen, and if it does, all it means is that the people will vote themselves more handouts.

Bank of Japan interest rate has been below 1% for 20 years. Canada is looking at exactly the same situation.

#102 TRT on 09.09.15 at 5:05 am

Harper said ” Canada has the highest receiver of immigrants per capita in the world”.

Of all 200+ countries. Australia is a close second.

Guess which countries have very high house prices? Hint : one has interest rates 500% higher than the other so it isn’t low rates causing this.

#103 TRT on 09.09.15 at 5:09 am

@shaene Wallace

Save your breath. Post on other blogs if you want the truth out. Some people still dream of being PM so will always be politically correct at the expense of truth.

#104 Victor V on 09.09.15 at 8:06 am

http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/workers-in-financial-squeeze-survey-finds/article26270638/

Almost half of the country’s workers say they are living paycheque to paycheque and more than one-third are feeling crushed by their debt loads.

An annual survey of employees by the Canadian Payroll Association (CPA) paints a bleak picture on the personal finance front, with 24 per cent of those surveyed saying they probably could not come up with $2,000 in the event an emergency arose within the next month.

More than one-third of respondents – 36 per cent – said they feel overwhelmed by their level of debt and 12 per cent indicated they doubt they will ever be completely free of debt.

Forty-eight per cent of those surveyed said it would be difficult to meet their financial obligations if their paycheque were delayed just one week, up slightly from the annual poll’s average of 47 per cent over the past three years.

#105 Nomad on 09.09.15 at 8:12 am

Keith Roy a Realtor with Remax Select Realty is of a different opinion about Chinese hot money.

“… the latest wild swings in the Chinese stock market and currency bringing a lot of investment capital into Canada. He says that while a lot of people are buying their second place or third place in Canada with the money they already have here, the extra money they are using is coming in from China.”

On BNN: http://www.bnn.ca/Video/player.aspx?vid=699416

What else would you expect a realtor to say? They’ve been throwing out the Yellow Peril threat for years – because it works. — Garth

#106 Liz Slaps Down That Loser Vicky - Oh YEAH!!! on 09.09.15 at 8:13 am

Today, Elizabeth II has reigned for 63 years, 7 months and 16.5 hours, SMASHING the previous record of Victoria.

Take that, b$%&$!!

All hail the Queen!!!

Some honourable mentions:

Garth’s blog is now pushing 8 years!

Stephen Harper has not said “clearly, my friends, the fact of the matter is…” for over 8 hours!

Jerry Bance has not peed in a customer’s cup for 5 days!

Mark has not left his parents’ basement for 3 years!

Smoking Man has not flossed for 18 months!

Freedom First has not had a date in 22 years!

CREA has consistently told the truth for over 40 years!

#107 fancy_pants on 09.09.15 at 8:16 am

Will rates normalize as Garth says? yes, but they already have. Welcome to the new ‘normal’.

Oh but look at the historical charts, you say. Well, that was then and this is now. Large debts are the new norm.

We will never see “high” rates again – way too much debt in all levels of gov’t and society. QE is boss, especially when your nation is swimming in debt and devaluing your own currency is the new stimulus tool

This is why you do not go into any monetary union as QE is removed from your toolbox. Just ask Greece how that has worked out.

So many people are going to be surprised. Will be interesting. — Garth

#108 Veg Bad on 09.09.15 at 8:18 am

Canadian developers are also concerned about rising interest rates

http://www.newswire.ca/news-releases/economic-slowdown-doesnt-dent-housing-industry-confidence-report-525887251.html

#109 OttawaMike on 09.09.15 at 8:38 am

Let me try to pose the question again after my first attempt disappeared into the ether.

Nikkei up 7.7% in one session. Normal for equity markets, right Garth??

It was posted at 6:49 am. Now you’re complaining about equity gains? — Garth

#110 Daisy Mae on 09.09.15 at 9:14 am

#9: “I am much more concerned, like most voters, about how badly conservatives have bungled our economy which is limping badly)…”

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

If Harper — the economist — can screw up our economy, just imagine what damage Mulcair can do.

#111 axehead on 09.09.15 at 9:27 am

I’m very happy that that lady is on strike.

What I like about interest rate increases:

1) dept gets more expensive
2) housing gets cheaper
3) inflation starts to rise

In short, reality is back and opportunity (for those with cash) begins to surface.

What I don’t like about interest rate increases:

1) more KIA’s on the road because the economy is doing better (barely) allowing employees to buy a new car but only cheap ass, weird looking, under engineered appliances made in Korea.

2) more KIA’s on the road because stupid people with fat mortgages and no money can now only afford to drive the same car as their grandmother.

#112 crowdedelevatorfartz on 09.09.15 at 9:32 am

@#93 BC guy

“2003– BSA Investments is listed as the owner of the Gang Ranch,”
++++++++++++++++++++++++++++++++++

Gee it only took you 5 days to respond. and with info from 2003. Wow. Do your lips move when you read?
Lets try finding infor from 2015 shall we?

A Saudi billionaire, and American billionaire,” po-TAY-to, Po-TAH-to”
Its a working , 200,000 acre “dude ranch” . Who cares. Obsess all you want about “foreign money” owning a money losing ranch to stroke their billionaire egos. As for “putting up barbed wire around it to keep people out, Dont be ridiculous. Its about 20 miles wide by 50 miles long. They’ll just call the RCMP to chase you grubby little litterbugs off their piece of Canadian paradise. Thats what they pay property tax for.
Stop whining .You will never own it. Especially if you cant scratch together enough debt to even buy a 30ft x 120ft plot of $1,000,000 East Vancouver. Or do you live in Merritt where a piece of dust choked “paradise” costs 300k and you still cant afford it.
Merritt where you can keep staring over the barbed wire fence at what stupid billionaires can afford….its as close as you’re gonna get to “owning” the Gang Ranch……
Or better yet, become a politician and seize it and break it up into 5 acre plots that all your equally jealous xenophobic redneck friends can “own” . That way when you toss empty beer cans and beef jerky wrappers. Load your guns and wait for the bears.
Yeeeeeee Hawwwwwwwwwww

#113 axehead on 09.09.15 at 9:38 am

#99 Rich in Calgary.

What are you complaining about? $1100 is cheap in Calgary and you claim you’ve made a pile of money renting. Do the math for rent vs buy and you will see that you are winning, even at $1500/month.

You can get a really nice place for $1500 (especially now) and by renting you can let the dog scratch the hardwood and pee in the back yard and not worry when your kids draw pictures on the closet walls.

I’d wait, until at least Febuary, when all the money runs out and people begin to get panicky (sp?). Housing prices are sticky BUT when a seller needs to sell, and nobody is buying, then the price a buyer is will to pay means everything and stupid realtor salesy (sp?) list price he recommended – to beat out the other realors for the listing – means nothing.

#114 Ret on 09.09.15 at 9:43 am

It takes all three levels of government to bring down an economy and Canadians voted for all three levels of those governments the last time that I checked.

The federal leader is largely irrelevant in the big picture of our daily lives. The majority of the taxes that you pay, roads, medical care, schools, city planning, power utilities etc. are determined and governed by provincial and municipal governments.

Canada as a country is unproductive and uncompetitive in the global economy and has no intention of changing. Please turn the lights out when the party is over.

#115 Reality Bites on 09.09.15 at 9:54 am

No HAM you say? How about reality…where it’s HAM ONLY?

http://www.bnn.ca/News/2015/9/9/Toronto-condo-developers-head-directly-to-China-to-court-buyers.aspx

More people on this blog should grow up. Comments like this are embarrassing and irrelevant. — Garth

#116 AfterTheHouseSold on 09.09.15 at 10:18 am

#112 crowded
@#93 BC guy

Rant over? Thanks for that! LOL

#117 maxx on 09.09.15 at 10:20 am

#1 TurnerNation on 09.08.15 at 6:31 pm

“Everyone make their weekly donation at Dollarama economy. Soon to be carrying $4 items.”

No doubt, this and other chains like it have their place in people’s lives. However, buying “off the grid” or second-hand is a beautiful thing:

– you save big, even over dollar store prices;
– you often find premium quality;
– you help a charitable organization – some staff get paid, others have a chance to volunteer and a very large part of the proceeds go to the needy in a local community;
– it’s green – you recycle stuff that would only serve to swell landfill at a horrid rate of knots;
– you and millions of others help slooooow down the incessant importation of junk from Asia and this collective effort is gaining momentum;
– when you’re done with a quality second-hand item, you can donate it back to charity once again and it gets re-appreciated, thereby further slowing the imported tsunami of Asian stuff;
– if you lose or damage an item, the resulting disappointment is practically non-existent as you paid nearly nothing for it;
– premium items can be resold on buy/sell websites to make tidy profits.

Totally WIN-WIN (add your own additional win-win). Over the years, we’ve saved a fortune.

The money we make is only part of the equation- how we buy and invest is the other.

#118 Dave's my hero on 09.09.15 at 10:24 am

God Madani’s good. Finally he got a prediction right.

Even a blind squirrel finds a nut sometimes.

Since this blog likes squirrel analogies.

#119 FitBitKid on 09.09.15 at 10:26 am

Ha Ha… Your hatred for Alberta is laughable… smh

#120 fancy_pants on 09.09.15 at 10:30 am

whether you are into reading crystal balls or truck nutz, writing on the balls is that the economic lemmings appear to be on track for that 60% chance of rate increase in the fall and 100% chance by end of year (tongue in cheek)

http://www.businessinsider.com/skyscrapers-correlated-with-economic-doom-2015-6

remove tin foil hat. nope, was never on. rose colored glasses back on. check. good to go again.

#121 Tony on 09.09.15 at 10:46 am

A miracle occurred:

The Bank Of Canada didn’t lower interest rates today.

From the Globe And Mail:

http://www.theglobeandmail.com/report-on-business/economy/interest-rates/bank-of-canada/article26271760/

#122 maxx on 09.09.15 at 10:53 am

#4 Jane Doe on 09.08.15 at 6:39 pm

– “Governments are addicted to zero rates”
– yes. Nevertheless, they now readily admit it- first step on the path to robust economic health and it won’t take decades.

-“…any increase whatsoever/whenever…even 1/10th of one percent will torpedo the budgets of cities, municipalities, states , provinces and national governments”
– not if these moronic groups stop wasting money on “business expenses” and mostly stupid vanity projects in the name of “rescuing” the economy. Moreover, probably half of the people empowered with deciding how much gets spent on what ought to be fired- immediately. Were that done, rates could be raised at a smarter clip than is being proposed. And that would do wonders to improve the economy. Money needs to be worth something once again.

– “the disease is permanent”
– illogical. And silly, if not purely motivated by self-interest.

– “there will be no increase in rates in our lifetime.”
– Watch this space. And get out the tissues.

Many Jane and John Does are now feeling the first stabbing tremors of panic.

#123 Mike T. on 09.09.15 at 11:32 am

http://www.cbc.ca/news/canada/edmonton/pembina-institute-hosting-climate-summit-in-edmonton-1.3220738

I don’t know what a Pembina Institute is and there is really no point in finding out

the sun is causing global warming and this is a good thing

so when ass clowns like this have a conference, I can promise you it is to invent man made rules to steal your money and your mind

they invent a man made problem and invent man made rules

the sun is heating the planet

next time I will teach you how sound makes electricity

https://www.youtube.com/watch?v=tGT5PB733a0

#124 Smoking Man on 09.09.15 at 11:51 am

A Twitter fan asked me last week

Leroy:
BoC gonna hold or cut? Trade balance still out of whack

Smokey;
Boc hold, great exports last too month’s
Fed. Probably spiking.

Leroy:
So still long USDCAD

Smokey:
Yes, hoping for s fed spike. I think it will peek at about 1.35
Oil is the wild card…

#125 pwn3d on 09.09.15 at 11:52 am

Got a good 5 year rate hold just in case… 5 year already back up to .8

#126 Lorne on 09.09.15 at 11:56 am

#110 Daisy Mae
#9: “I am much more concerned, like most voters, about how badly conservatives have bungled our economy which is limping badly)…”
********************
If Harper — the economist — can screw up our economy, just imagine what damage Mulcair can do.
…………………………………
News flash….when the NDP wins, Mulcair will not be the next Finance Minister…nor is he a control freak like Harper…who thinks he knows everything (who, in their right mind, would sign the ridiculous 35 year contract with China)!

#127 GTAHouseHunter on 09.09.15 at 12:02 pm

With the interest rate unchanged ….the news is that this rate of half a percent might be prolonged till 2017.What does this mean……would the house prices remain ever increasing till 2017 ? And then drop by 10 -15 %. How long can the BoC keep its rate unchanged even though the Feds might increase it.

#128 Daisy Mae on 09.09.15 at 12:06 pm

#126: “Mulcair will not be the next Finance Minister…nor is he a control freak like Harper…”

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

Harper isn’t our finance minister, either…..but as we know, MPs don’t say ‘boo’ with express permission.

#129 Daisy Mae on 09.09.15 at 12:07 pm

“without”…not “with”. You get the gist…

#130 all grown up on 09.09.15 at 12:14 pm

“Harper said ” Canada has the highest receiver of immigrants per capita in the world”.

Of all 200+ countries. Australia is a close second.

People forget that the USA has taken in 12 million Latino’s and are experiencing a flood every single day…plus all the millions of ‘refugee’s who have overstayed their visa’s. Our ‘sudden’ recognition of the politically correct ‘refugee problem’ currently in the headlines is nothing by comparison…we’re just sheep bleating on cue.

#131 Roial1 on 09.09.15 at 12:14 pm

#30 BS on 09.08.15 at 8:42 pm

If Mulcair can’t run a household how can he run a country?

If you ran a restaurant would your fire the chef because he didn’t get a Michelin star and replace him with a guy who can’t make toast?

I really don’t know the answer to that one——-

BUT!

Do you really re-hire a known LIAR!

Remember “open and accessible government”, “I won’t touch your trusts”

“I know how difficult it is to run a small business in this country. I ran my own. (A lobby for big pharma and US style private health insurance. Totally payed for by them.)(look up “National Citizens Coalition” in wikapedia)

The ONLY truth he ever told is “You won’t recognize this country when I am finnished”

You can tell him all about that can’t you Garth.

#132 JimH on 09.09.15 at 12:19 pm

#121 Tony on 09.09.15 at 10:46 am
“A miracle occurred: The Bank Of Canada didn’t lower interest rates today.”
===================================
With 23 of 24 economists polled predicting no move and the data clearly indicating no need for a third rate-cut this year, why would you call this a miracle?

#133 pbrasseur on 09.09.15 at 12:31 pm

#114 Ret

The federal leader is largely irrelevant in the big picture …. The majority of the taxes that you pay … are determined and governed by provincial and municipal governments … Canada as a country is unproductive and uncompetitive

So true! That’s why I think the get rid of Harper/Elect NDP party may be very short indeed. We’re in the mess we’re in because of governments and generations of politicians, those who think more government will help are delusional.

#134 Mister Obvious on 09.09.15 at 12:39 pm

#9 Rainbows and Unicorns

“…given the ad hominem bashing of Mulcair on here of late.”
———————————–

It’s quite a stretch to classify references to Tom Mulcair’s excessive home refinancing as ad hominem.

Such information is a matter of public record. Sooner or later an adversary would dig it up and spread it around. That’s the nature of politics. There’s always a brisk trade in dirt at election time. This dirt happens to have the advantage of being true.

Under your logic, reporting the actions of the cup peeing candidate must also be seen as ad hominiem since his propensity to candidly relieve himself in a client’s kitchen while they are in the next room should in no way reflect upon his future effectiveness in the house of commons. Or should it? You tell me.

Just so you are clear, here’s and genuine example of ad hominem:

How can man with hair like a helmet and a permanent, condescending smirk ever be taken seriously at a G7 meeting?

Here’s another one:

You can’t be serious! Are you taking financial advice from that miserable old curmudgeon Garth Turner?

#135 Roial1 on 09.09.15 at 12:47 pm

And how do you choose between a guy who re-mortgaged his house 11 times, a leader who’s ‘just not ready’ and a dude whose candidate pees in people’s mugs?

Okay.
here goes.

I remortgaged several times myself.
It allowed me to finance my present, retired, life style. Debt free! Trough investment of said raised money.

Garth, just how old where you when you where made minister of revenue? where you “to young and inexperienced”?

As for the last one, we know that the ONLY requirement for con. candidacy is strict obedience to heir Harperman, and the ability to keep ones mouth SHUT, and mind shut off.

I’m sure this made sense to you. — Garth

#136 S.Bby on 09.09.15 at 12:54 pm

94 BC Guy
you are correct about the scam going on regarding getting an acreage property classified as a “farm” or agricultural for tax purposes. a person I am aware of bought several acres in the Fraser Valley a few years ago and wants to convert into agricultural status to avoid property taxes. It is clearly not a farm, but if he buys a few chickens and grows some corn in the backyard, he can apply for agricultural status and save big $$$ on property taxes. This is going on with acreages all over BC. It is a loophole that should be closed.

#137 Roial1 on 09.09.15 at 1:02 pm

I’m sure this made sense to you. — Garth

What did you not understand about my answers to your question about the three (of 4) candidates?

Too “lefty” for you????

Too incomprehensible. — Garth

#138 Bottoms_Up on 09.09.15 at 1:12 pm

#123 Mike T. on 09.09.15 at 11:32 am
————————————————–
Sure the sun heats the planet, but did you know average temperature would be something like -40 oC without greenhouse gases?

So yes, sun = heat, greenhouse gases = more heat.

Humans are responsible for digging up millions of years worth of greenhouse gases, and releasing it into the atmosphere over only a period of a few hundred years.

#139 Llewelyn on 09.09.15 at 1:16 pm

“And these days growth is the US is unmistakable. Look at the GDP numbers. House sales. Job creation. Car sales. All the macro-economics are there” -Garth

These so called macro-economics seem to be based on the assumption that the current rate of consumption in the United States will continue for the foreseeable future. Is this a realistic assumption?

Media cheerleaders report that the average income of all households in the United States is a very healthy $65,630 in 2015. Sounds terrific!!

Further examination reveals that the average household income of the bottom 60% of the 123,730,000 households in the United States in 2015 will approach $33,000. Not quite so terrific!!

The average household income of the top 40% of all households in the United States will approach $115,000. However most of these households already have lots of stuff!!

The average household income of the top 5% of all households in the United States will approach $331,000. Now this is definitely impressive but not a large enough foundation to influence macro-economics.

The United States economy is driven by domestic consumption one would expect that the odd economist might become concerned when the average household income of 60% of the total population is only one half of the average household income.

Let me express this a slightly different way. The total income of all households in the United States will approach $8.3 trillion in 2015 and only $2.5 trillion, or 30% of total income will be received by 60% of the population.

When I look at optimistic projections related to the construction of new houses, the purchase of new automobiles, the purchase of luxury items, the availability of capital for future investment, etc. most projections seem out of line with projections of the household income available to make these purchases.

The only projections that correlate with household incomes are the projected increases in social expenditures by all governments in the United States. ($600 billion in total government deficits in 2015)

All American households are $11.85 trillion in debt, including $8.17 trillion in mortgages, $890.9 billion in credit card debt and $1.19 trillion in student loans

The 60% of American households with an average income of $33,000 can only assume so much debt. I am pretty sure that these households are approaching their purchasing limits. When a household has maxed out their credit cards and are applying for nutritional subsidies they are not in a position purchase of a new home, a new car, a vacation or a basket of ETF’s.

My concern, labelled as an obsession by our host, is that confidence in the US economy may not be based on economic fundamentals. When 60% of all households receive only 50% of the average household income and social expenditures continue to escalate each year it might be time to question where all that predicted purchasing is actually going to come from.

The assumption of debt at the same pace as the last five years might not be the right answer.

#140 Leo Trollstoy on 09.09.15 at 1:19 pm

Trollstoy, you gonna be a man and agree to leave for 2 weeks if the BoC cuts tomorrow? After all, I’ve stated I’ll leave for 2 weeks if the BoC fails to cut, and you’re always so adamant that I’m wrong.

Rekt

Tyranausaurus Rekt

Erektile dysfunction

#141 johnk on 09.09.15 at 1:26 pm

Re: Victoria Real Estate

Facts and figures today about Highlands in Victoria.
No mention that the population of Highlands is just about 2,000.
Maybe 5-600 households? Not exactly representative of a metro area with about 350,000 population.
Basically, a rugged quite unbuilt area which attracts people who like very low density and unspoiled natural environments.

#142 The Other Chris on 09.09.15 at 1:36 pm

Mulcair’s refinancing pattern is certainly odd, but in some sense at least it shows that he understands how difficult it can be to make ends meet. (I *don’t* think it’s a good way of making ends meet, mind you.)

Compare that to Trudeau’s trust fund lifestyle where money was never, ever a concern, where he was a perpetual student for years, dropping out of an engineering program halfway through and a Master’s program halfway through, like he didn’t have any care in the world for money, and no context or anchor for how the rest of us struggle to live. That’s worse/more embarrassing in my mind than multiple refinancings.

Are we now electing the least-worst party leader? Get a grip, people. — Garth

#143 Victoria Real Estate Update on 09.09.15 at 1:44 pm

# 141 johnk

You obviously didn’t understand what I wrote.

I wasn’t trying to extrapolate the results from the Highlands to the rest of Greater Victoria, as you seem to think I was.

You missed the overall point.

The overall point is what the franken-number index is capable of. Read my original post again.

Do I need to spell it out for you letter by letter?

Realtors, through their index, claimed that there was a 4% price increase (applied to all SFHs in the Highlands) based on just one (1) SFH sale over a two month period.

What you should have been able to do on your own is that if this was done with one area, then it is entirely possible it was done to more or less the same degree with other areas as well. In fact, there’s proof of that.

It puts into doubt all of the results of the index, whether you are talking about Oak Bay, Sidney or Sooke or anywhere in between.

You are obviously in denial.

#144 Lee on 09.09.15 at 1:46 pm

Its nice to see people generally did not dump their equities during this last market tumble. Bodes well for financial markets and equity investors in the future to know people are getting it. Probably bad news for day traders.

#145 Shawn on 09.09.15 at 2:04 pm

Impossibilities

#144 Lee on 09.09.15 at 1:46 pm
Its nice to see people generally did not dump their equities during this last market tumble.

*****************************************
Well, it is not possible for “people generally to dump their equities” since every sale requires a buyer.

Perhaps you meant that the prices of equities were not bid down too severely during this last market tumble.

But then again there was a tumble so that can’t be it..

So not sure what you might mean.

Possibly you mean the tumble was on low volume so few sellers / buyers. I doubt that.

Possibly you mean it was institutions selling and not “people generally”? And you exclude institutions from people. Any evidence it was largely institutions selling to retail?

#146 ShawnG in To on 09.09.15 at 2:04 pm

besides RE, people have accumulated junk using the cheap debt. now they have to get rid of it

http://www.cbc.ca/news/canada/calgary/pawn-calgary-recession-rolex-louis-vuitton-1.3220591

but there can be only so many lv bags to pawn before for sale sign goes on the house. trying to force sell in cold cold Calgarian winter is not ideal.

#147 Ponzius Pilatus on 09.09.15 at 2:15 pm

Mini I-Pad, then The Watch. Now a larger I-Pad.
Is Apple losing direction?
Time to dump the shares?

#148 Axehead on 09.09.15 at 2:16 pm

Garth, can you install a spell checker on this blog?

#149 Lee on 09.09.15 at 2:17 pm

#145 Shawn,

Just seems the fall halted and reversed rather quickly. I was looking to jump in big around 10% lower than it went but it never happened. An 8-9% drop is really not a buying opportunity.

#150 Nuke on 09.09.15 at 2:22 pm

#74 John in Mtl on 09.08.15 at 10:42 pm

The big issue is that Toronto property taxes are 3+ times more on multi-residential than personal residence. New multi-residential looks fairer.

Residential 0.5081190%
Multi-Residential 1.5290188%
New Multi-Residential 0.5081190%

What is interesting is that a renter never gets to see what the property tax would be. A commercial tenant would be responsible for paying the tax.

$600,000 multi-residential unit property tax is $13,177 versus $4,983 residential.

#151 straight six on 09.09.15 at 2:39 pm

Does anyone know what they’re doing!
In ’81 “they” totally screwed the economy by jacking up rates weekly to over 20% to ‘cool’ an overheated RE market. result.. RE flatlined, people holding 19% T-bills were happy for at least 2 yrs and others lost their shirts and the whole mess came to a grinding halt for about a decade.

Then twenty years later they went the other way.. lowering interest rates to near zero to stimulate the economy which has only served to create humungous personal debt and a massive RE zit.

Can hardly wait.. for the next “experiment”. I’ll be over in the corner, clutching my shirt.

#152 Bill on 09.09.15 at 2:40 pm

China is improving!?? Certainly not.
http://jugglingdynamite.com/2015/09/09/chanos-chinese-debt-implosion-in-process/

#153 pwn3d on 09.09.15 at 2:42 pm

Too “lefty” for you????
———

Ontario is too lefty for me. We’re this close from an activist premier from hell running the country. We need to stop pandering to teachers unions and activists and start pandering to the people who provide value and jobs.

#154 Sheane Wallace on 09.09.15 at 2:56 pm

No news:
1. Poloz did not cut rates, it is the ‘right thing to do’ in his mind but politically incorrect with the boss.
2. Market retracted today as Fed will most likely increase rates maybe with 0.10 or 0.15 next week, I bet on .15 % increase with 60 % probability, it seems this is what stock market is pricing at the moment.

CAD sinks as usual (after initial ‘gains’)

#155 TurnerNation on 09.09.15 at 3:11 pm

Torontp Star today reporting allegations of deceit in OPP. Similar to allegations of bullying etc last year in RCMP.
Oh these sunshine listers with gold plates all round.
Why go to university?
Public service all the way kids.

Or transit union or hydro union.

#156 Canadian on 09.09.15 at 3:14 pm

Garth will you be going on record with an endorsement for a candidate at any point in the election? Not looking for a gotcha or anything like that, genuinely curious about it.

Wait for it. — Garth

#157 Shawn on 09.09.15 at 3:22 pm

Impossibilities

#144 Lee on 09.09.15 at 1:46 pm
Its nice to see people generally did not dump their equities during this last market tumble.

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

Okay so a newspaper survey. Yeah sure, few people panicked and sold low. That’s why there was no market tumble… oh but wait.. there was.

Silly survey. Look at what people did. The market tells the story not surveys. Some people sold low and some people bought low.

Winners Win and Losers Lose. It has ever been so and will always be so.

#158 AfterTheHouseSold on 09.09.15 at 3:23 pm

#117 maxx
“second-hand is a beautiful thing”

Yes it is. Very insightful post. Our nomadic lifestyle doesn’t lend itself to buying much, but when we do settle down, thats where I’ll be shopping.

#159 Victoria Up and Up on 09.09.15 at 3:33 pm

#141 Johnk

Exactly – you beat me to the point.

Nice extrapolation of Highlands to all of greater Victoria.

It is telling that you picked the Highlands to debunk a measurement instead of picking Victoria or Saanich.

Perhaps you found a lack of errors in those community HPIs and simply wanted to make a point by selecting Highlands.

#160 Steve on 09.09.15 at 3:56 pm

Are we now electing the least-worst party leader? Get a grip, people. — Garth

___________________________________________

Sadly, it seems so, although everyone has their own perspective on who is worst and why.

It appears that public life is not so attractive to the ‘best’.

#161 Doug in London on 09.09.15 at 4:31 pm

@Bottoms Up, post #138:
Makes sense to me. It’s ridiculously simple, like something right out of my grade 7 science class back in school year 1973-74. I don’t know why more people don’t get it.

#162 Calgary Rip Off on 09.09.15 at 4:46 pm

# 99 Rich Young in Calgary:

I wish you the best. Calgary is knife edged when it comes to real estate and has been since 2004. Then there were the times in the 80’s when real estate crashed due to interest rates.

No, house prices arent really coming down. Ive been following this nonsense since 2007 and housing in Calgary(all of it) is overpriced crap. But that is normal life in Canada(this isnt Texas).

I remember thinking that this blog was the answer and yet for several years I watched and no changes. My rent was $1600/month, about the same for a mortgage on a same size house. So I got the mortgage in 2011. That’s around $80K in rent that went towards a mortgage since then. Why did I do it? Everything is a gamble. Unless you are consisting of eating top ramen and no furniture to pay the mortgage and can requalify when rates go up, why worry about it? Wait for what? If you are not late 50’s and about to retire and employment is reasonably secure, why wouldnt you want to own the mortgage? Make no mistake, though, “Home ownership” is total bs. The bank owns it until it is paid, and even then, you dont own the ground under it, just the land and the house on it, above ground. Still, it is better than taking the risk of just giving your money away to some guy in Calgary that bought a bunch of properties when it was cheap in Calgary and consequently he does that for his “living”. Cut that sob off. Tell him to get a real job. And stop subsidizing his decisions and start making your own. I even showed the property for my landlord because he was in the hospital for some disorder at the time.

The passage of time is inevitable. The truth is no one really knows what is happening in the economy. For example, if the Saudis want oil to be at $20/barrel, that will happen. It’s funny because there are so many people in Calgary that based their livelihood on oil when the reality is that their lifestyle is apologetic and a total joke based on what the people who face towards Mecca decide to do. There is no control over that. So decide what you want, then take the risk rather than assuming that global variables and those in media have any clue other than speculating to protect their own incomes.

#163 M on 09.09.15 at 5:38 pm

No rate cut YET Gartho baby !
It’s coming :)

#164 Got a Question on 09.09.15 at 6:40 pm

Hello Garth,

I’m in the process of diversifying my portfolio thanks to the great advice you have given. I came rather late to the party and have read quite a few articles going back. I want to max my TFSA as advised, but I’m not sure what I should be holding in there? I have some mutual funds, some stocks I received a previous job (shares not options), cash, and that’s about it. I am interested in turning the cash into preferred shares as well as ETFs next.

Maybe you can respond, or some of the commenters can repeat what you have already told previously: Out of all those items, which are best to hold in the TFSA, RRSP and in non-registered respectively?

#165 maxx on 09.09.15 at 8:46 pm

#44 Someone stole my job today on 09.08.15 at 9:36 pm

Lucky man! Also very clever, for doing what you did with your earnings, not to mention the wonderful wife you married. Congratulations! Enjoy!!

#166 Milla on 09.10.15 at 4:46 pm

#142 agree. Not to have university education is not an indication of weekness. However, to drop university on the middle of the road is.

Not being able to spell “weakness” means you probably should not be an expert on others’ education. — Garth

#167 milla on 09.11.15 at 5:21 pm

Not being able to spell “weakness” means you probably should not be an expert on others’ education. — Garth

Thank you. I wish. But, do not claim anything beside Mechanical Engineering. English is a second language, sorry:)) However, 6 years of University road is well known. I do not have much respect for quitters in Mechanical Engineering :)