Parenting

PARENTS 1

Forget the Chinese dudes. It’s the Bank of Mom that’s the prime driver the residential real estate market in Canada. This pathetic blog has given you the survey stats to prove it – and the consensus seems to be about half of first-time buyers are subsidized by parentals. Astonishingly, more than 40% of move-up buyers also leech off their folks.

But should parents be forking over their retirement dough so kids without money can own real estate?

Some financial advisors think so.

One vacuous TV network that will remain nameless (CTV) asked two of them the other day how parents can best help Millennials get digs they don’t deserve, but want. The suggestions were stunning. Like this: “When parents want to build up savings for their kids, they should begin with maximizing TFSA contributions. ‘You don’t pay any taxes at all on the growth, and you are in control of the money,” she (the advisor) said. “The account is in your name, and you could give (your kids) as much as you want.’”

Or this: “Parents who’ve suddenly found themselves sitting on plenty of equity on their homes are often tapping into that equity to invest in an income property, with the intention of eventually handing the property over to their children. In these cases, she recommends investing in a low-maintenance property, such as a condo or a townhouse.”

And my fav: “Delay downsizing so your kids move back home. Some parents are opting to stay in their larger homes with the intention of having their children live with them for longer than they may have once anticipated. Simmons said this can be a good way for children to save up for a future down payment on a property.”

Wow. Where to begin? Given the fact TFSAs can now contain serious money (almost a hundred grand for a couple), render taxless growth and provide a cash stream in retirement which does not count as income, push up your tax bracket or cause federal pogey payments to be clawed back, why would you give it to the kids? You like eating KD?

As for raiding equity in your paid-off house to buy a rental condo you intend on gifting to your spawn, better think that one through a bit more, Ms. Advisor. It’s virtually impossible to achieve positive cash flow on an urban rental these days (even Brad Lamb has stopped trying to convince anyone), so the only benefit would be a capital gain if prices continue to rise. But gifting a rental to your kid which has appreciated in value means capital gains taxes will be triggered upon transference of the deed. And guess who pays that?

Delaying downsizing your house so the kids can live there and mooch means equity cannot be liberated, can’t be invested and won’t start providing you a retirement cash flow. Given the fact most people seem to have most of their net worth buried in a single asset these days, that can be a serious crimp on the future.

So if you want to ensure your kids gain while you lose, you know where to go for advice. But the more important question is this: are you actually helping your offspring by launching them into real estate ownership when they don’t have the money to do it themselves? (Second question: did your parents do that for you?)

The legions of parents who do subsidize their kids through a Bank of Mom forgivable loan obviously believe they’re doing good. They think the child will start growing equity instead of ‘throwing away money on rent.’ (Throwing away money on interest, closing costs, condo fees and property tax is apparently better.) They argue this is a great time to take advantage of historically-low rates (which will reset higher when a mortgage renews). They believe the gift will help their kid become more financially mature (by taking free money). And, of course, when you have your own condo you can attract more chicks (not an official Mom reason).

Those gnarly financial advisors with stubble, cowboy boots, Harleys and no heart, point to a few counter-arguments. Like debt. A mortgage is not a car loan, since it’s typically amortized over 25 years, can cost a lot to get out of, and diminishes slowly. Why would you want your 23-year-old saddled? Worse, putting a kid into an owned property pretty much destroys her ability to be flexible and mobile, to move easily chasing a career or experiences. And how about marriage, or kids? Odds are the condo will have to be ditched, especially if it’s one of those new, spacious 550-square-foot deals.

Moreover, rents are somewhat controlled, while property taxes, condos fees, insurance and special assessments are not. And the big threat is a market correction – which absolutely will occur at some point. You could be crowbarring your little jewel into an asset that sends him underwater, crying for a bailout from the same people who got him into it.

Of course, if you want your offspring to feel emotionally indebted to you for decades to come, to be consumed with guilt if they don’t show you enough appreciation, to increase their reliance plus be physically and financially prevented from moving away and achieving their true independence, while you hobble your own future, go ahead.

148 comments ↓

#1 thepword on 05.03.16 at 6:55 pm

Garth – haven’t been to the blog in a while – keep fighting the good fight.

I’d like to remind you about the key ruling in the TREB vs Competition bureau case. This has the potential to change the real estate landscape in GTA and Canada as a whole- arguments ended last year and now a ruling.

https://www.thestar.com/business/2016/05/02/tribunal-finds-treb-engaged-in-anti-competitive-acts.html

#2 crowdedelevatorfartz on 05.03.16 at 6:59 pm

The Bank of Mom and Dad should come with a proviso included in the bank mortgage…..a free vasectomy so that stupidity cant reproduce.

#3 Jeff Gauld on 05.03.16 at 7:03 pm

First!

#4 brent garrity on 05.03.16 at 7:03 pm

First like Trump!

#5 Lone Ranger on 05.03.16 at 7:03 pm

You tell em cowboy. No one is listening! People are nutz.

#6 Freedom First on 05.03.16 at 7:03 pm

I hope everyone had a super duper Alberta day today! I know I did. Why bother having kids. All they’ll ever do is try to leach your hard earned money off of you. I live alone. I look around and see parents giving their hard earned money to their kids and think…are you crazy? Take it from me, being alone in your 60’s in Alberta is the best. I’m the best. I love myself. I love Alberta. I love cows. I love being a 007 agent.

Freedom First 007

#7 West Coast on 05.03.16 at 7:04 pm

http://www.vancouversun.com/news/local-news/breaking+fort+mcmurray+residents+told+evacuate+wildfire+rages/11893489/story.html

Well said Garth…….but sorry, in YVR, few are listening…….
meanwhile in what’s left of the oil patch………

#8 Kingdom of Trump on 05.03.16 at 7:05 pm

You should all listen to Gartho.. cause when I build my walls in 8 months .. yer screwed. TOTAL LOSERS.

#9 Research indicates on 05.03.16 at 7:09 pm

Homeowner are happier than renters.
Chew on this deleting loser.

https://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=7&cad=rja&uact=8&ved=0ahUKEwivgZ3ygr_MAhVO2WMKHV3nAG4QFgg9MAY&url=http%3A%2F%2Fhomebidz.co%2Farticles%2F2015%2F03%2Fwhy-homeowners-are-happier-than-renters%2F&usg=AFQjCNHLR191uizRv4KLFT1FbQmelG8bTg&sig2=XeiGjboOcJ_a_M6f8BG-vg

#10 Inquiring Minds... on 05.03.16 at 7:09 pm

Hi Garth.

Great blog! I was wondering; why is the Bank of Mom only pushing RE prices to high levels in Vancouver and Toronto?

Inquiring minds want to know…

Thanks!

#11 statsfreak on 05.03.16 at 7:11 pm

have I mentioned lately that I love you, Garth?

(sorry Wendy :D)

#12 Terrence on 05.03.16 at 7:21 pm

Big threat is mrkt correction & heavily indebted govt, looking 4 new ways to tax the masses! The danger is when the crap eventually hits the fan look 4 govt to go negative intrst rates on us & they will TAX u where u live literally! Thats when the silent(majority) public loses confidence in govt & we get guys like the Donald & Bernie (cdn version) gaining in popularity here also! Party on Garth

#13 pow hound on 05.03.16 at 7:26 pm

I just don’t understand why the concept of parents helping their offspring financially is so terrible to Garth. It’s normal for parents who can afford to help their offspring with finances to do so.

#14 For those about to flop... on 05.03.16 at 7:29 pm

#143 stagnation continues on 05.03.16 at 4:45 pm
Vancouver – The Real Estate Board of Greater Vancouver says home sales in the region hit a record level for April with prices sharply higher compared to a year ago.

The board says sales totalled 4,781 for April, up 14.4 per cent from 4,179 in the same month last year.

The increase came as the MLS composite benchmark price for all homes in Metro Vancouver climbed 25.3 per cent from a year ago to $844,800.

The benchmark price for detached homes for the month was $1.4 million, up ***30.1*** per cent compared with a year ago.

The board says home buyer competition remains intense across the region with April sales 41.7 per cent above the 10-year average for the month.

////////////////////////////

These numbers are clearly wrong as your title suggests.

I have it from an expert on 100 different topics that real estate in Vancouver is flat.

Just like the Rockies…

M41BC

#15 Damifino on 05.03.16 at 7:33 pm

(Second question: did your parents do that for you?)

Nope. In 1977 I quit playing in a professional band after four years on the road. I sold a truck I had been using for which my father had cosigned the loan (1976 Dodge Maxivan). That gave me $3500 ready cash.

The landlord of the house I was renting in Surrey offered to sell me the place for $35K. I asked my dad if he would let me use the $3500 as a 10% down payment on the house.

“No way son. Too much debt. Pay off the truck loan and save up your own down payment” he said.

And that’s just what I did. It all turned out OK.

That property was eventually subdivided into two lots and new homes were built on them. Either one would sell for maybe $750K today. But then again, it was almost 40 years ago.

BTW, music is a nasty, nasty business.

#16 tundra pete on 05.03.16 at 7:34 pm

That pic is truly scary. It may be a familiar scene in the not too distant future. Little johnny picking toonies out of the wishing well for mom and dad’s mortgage payment.

I suppose it is really not all bad when you consider the bank of mom and the house horny moist virgins really are the only economic drivers of our condo economy.

Let me know when the food banks launch their IPO’s so I can get in on the stock early. It’s sure to be a money maker.

#17 Freedom First on 05.03.16 at 7:35 pm

Yes. It’s Post like this that really bring it home to me just how brilliant I am. As always, my Freedom First.

#18 conan on 05.03.16 at 7:36 pm

RE: #1 WUL on 05.01.16 at 7:16 pm

“Well, it has started. Two fires visible from my back porch and one is very big and close to town here in Fort Mac. Can’t have +22 degrees Celsius in May and avoid a huge fire fighting budget here in the Taiga this year.

I’ll become a climate change refugee.

Three water bombers appeared in minutes. Unbelievable.

The real estate market here in the Mac might heat up.”

No Chit……….. waiting to hear from this poster…Fort Mac looks F’d up.

#19 That guy on 05.03.16 at 7:38 pm

Super man does good. Kids who get $$ from the bank of mom and dad are doing well.

You need to work on your grammar son.

#20 Brian Ripley on 05.03.16 at 7:43 pm

“It’s the Bank of Mom that’s the prime driver…” Garth

I just updated my earnings charts:

http://www.chpc.biz/earnings-employment.html

The biggest hit of course is to Alberta earnings that are now down 5% from their Oct 2014 peak.

But on the subject of “Bank of Mom”… at the bottom of my earnings chart page is the long term chart of men and women employed in Canada since the mid 1970’s and indeed there are many more part time female workers than men (ballpark: 3x more) AND full time older working women have closed the gap now (2015) on full time working younger women and those full time working women of all ages represent +/- 75% of the full time working men.

With respect to female ownership of real estate, data collection and publication is so bad that we only have CMHC’s tally from 2011…

Quote:
“In 2011 – the latest year for which data are available – women represented 65 per cent of condo owner occupants living alone, with that number rising to 76 per cent for those 55 and older.” AND “Also in 2011, 28 per cent of households were one-person, more than twice their 13 per cent share in 1971. In comparison, couples with children over the same time span shrank to 29 per cent from 50 per cent.”
Source: http://www.theglobeandmail.com/real-estate/the-market/canadas-home-prices-may-have-surged-but-less-so-than-some-markets/article21665668/

Since women earn less than men and live longer than than men, I suggest that the Bank of Mom will dry up soon as our demographics tick more and more into retirement.

The good news for the following generation of course, is that the boomers will die off and leave a lot of real estate in their wake. Maybe then we will have affordable housing via a glut of rentals.

#21 WUL on 05.03.16 at 7:44 pm

I am about to evacuate Fort Mac. Without a car, I was going to hitch hike. The neighbour, a Newfie (match) came by and asked if I needed a ride. Grid lock. We are going to wait until rush hour is over. Toronto folks will understand that.

Hug your loved ones and take care of your neighbours. Ignore your stuff. See you down the trail.

Luv ya Garth.

#22 crowdedelevatorfartz on 05.03.16 at 7:45 pm

@#13 pow hound.
“I just don’t understand why the concept of parents helping their offspring financially is so terrible to Garth. It’s normal for parents who can afford to help their offspring with finances to do so….”
*******************************************
Well, unfortunately.
Most parents CANT afford to do what their spoiled rotten brats expect ( and possibly guilt them into doing) from their house “rich” parents .
This also creates a false economy where thousands of kids who otherwise wouldnt qualify for a mortgage get the down payment “free” from Momsey thus driving prices up to statosphereic levels…
Comprendez vous?

#23 WUL on 05.03.16 at 7:45 pm

Should read “natch”.

#24 Cottingham is a bargain on 05.03.16 at 7:50 pm

Canadians are unique in the fact that their need and want for home ownership is at extreme obsession. No one doubts that.

What people here seem to disagree on is how to proceed and profit personally from it.

Some say the tide will turn and that a day of reckoning approaches(Garth et all). Others ( me , smoking man a few others)say that it is best to move with the tide . Don’t fight. Embrace the reality of what the market movements are telling you loud and clearly.

Best of luck to all but nobody has ever scored a goal or won a game sitting on the sidelines .

#25 For those about to flop... on 05.03.16 at 7:53 pm

Be safe WULLY,looks like Mother Nature is looking after that perma frost problem for ya…

M41BC

#26 conan on 05.03.16 at 7:53 pm

Re #21 WUL on 05.03.16 at 7:44 pm

Maybe “borrow” a bike…… get out of Dodge…

#27 TurnerNation on 05.03.16 at 7:56 pm

Is that a national poll or specific to Woodbridge ON?

#28 Andrewt on 05.03.16 at 8:00 pm

Wow. The shills are out in full force for spring.
Add this to the hall of shame:

“An opportunity to build some wealth is exactly the reason why Sonia Varkey, a marketing director at a Toronto technology company, says she now owns two properties – one in Mississauga, where she lives, and another in Guelph, Ont., that she rents out – and is looking to buy one more in Toronto. She says she started buying real estate after sitting down with her financial adviser a few years ago and saw how dismally her investments were doing. Sticking the money under her mattress would have earned the same returns.

Maybe real estate was the way to go.

“I’m a single woman working in jobs where there is no pension. I need to take care of myself later on,” she says. “Even though everybody keeps talking about a bubble coming, it never does. I can’t just wait for it to supposedly burst.”

http://www.theglobeandmail.com/report-on-business/a-836000-home-on-a-single-salary-the-reality-of-pink-mortgage-living/article29840551/?service=mobile

#29 Brazil ex-pat on 05.03.16 at 8:03 pm

https://www.google.ca/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=republican%20delegate%20count&eob=m.09c7w0/R/5/short/m.09c7w0/

There is no stopping the Donald now. It will be Trump vs Hillary “Destroy the world by revoking the Glass-Stegal Act” Clinton. I wonder which one will win?

#30 Mike on 05.03.16 at 8:03 pm

That Freedom First Guy is a real weirdo. Get a life.

#31 hope & ruin on 05.03.16 at 8:05 pm

not a surprise. The same parents who invented the concept of “all kids get a medal”. Would come up with the bright idea that “all kids should get a house”.

Nobody can fail, everyone’s a winner. It’s good for the self-esteem.

#32 Grey Dog on 05.03.16 at 8:11 pm

13. Pow hound. My rant from yesterday, continued today…
Parents helping/pouring their money into their adult kids teach them to be mooches for the rest of their lives. My brother who had help to buy his house, then decided that he needed a PhD loan…Poppa has Dough loan…to build a new cottage! There was a cottage there already but alas, it was old and he felt it had to be torn down. Hence the need to steal from my parents retirement fund.

Guess how much I have borrowed? Nothing…what we have…home and investments…we have done by ourselves, yet bro feels need to live an entitled life, a recent new vehicle too, while his wife brags…we,ve done all this by ourselves! Yet to repay a 200k$ PhD loan??? I really don’t understand some people!

At the end of the day who is the idiot in this scene?

Pow…get a BACKBONE!

#33 Y m o 3 on 05.03.16 at 8:16 pm

#13 – because he doesn’t have any. Nothing wrong with that. Just difficult to understand parental motivations from the outside.

#34 Smoking Man on 05.03.16 at 8:20 pm

Brilliant Post tonight Garth

Every kid my kids know that own property has been financed by the back of mom.

Good thing for my kids, who now go to go it alone and learn to hunt for them selves.

Mom, where is she? The penny slots at the Casino.

Sorry kids. No down payment for you. We blew it all.
Start that business we were talking about now. Only way you’re going to make it

:)

#35 MSM-Free Zone on 05.03.16 at 8:21 pm

While many of the above are valid points, I’m guessing the #1 reason for the Bank of Mom isn’t any of the above, but rather the flawed stigma of a former soccer mom having to admit to her other former soccer mom BFF’s that she is a epic-failed parent, and her children are uber-failure homeless renters. (are they still saying epic and uber these days?).

#36 Andrew Woburn on 05.03.16 at 8:22 pm

A short but penetrating read on why bond yields are important to the exchange value of the loonie.

“A lot more than oil driving the Canadian dollar”

http://www.theglobeandmail.com/globe-investor/inside-the-market/a-lot-more-than-oil-driving-the-loonie/article29826944/

#37 Nagraj on 05.03.16 at 8:27 pm

Re #21 WUL fleeing Ft Mac.
Let us know when you’re safe and sound.

#38 cramar on 05.03.16 at 8:29 pm

Our hearts and prayers go out to the people in Ft. Mac. Talk about a community being kicked when it is down! May all be safe—at least!

#39 Prairieboy43 on 05.03.16 at 8:31 pm

Struggle is good. You cannot purchase struggle at Costco. Struggle builds Character. You may know a few on this blog, that have Character. You strengthen like the caterpillar, turn into beautiful Butterfly.
PB43

#40 Brian on 05.03.16 at 8:34 pm

Is a 1000x $1000 REALLY that much money?

#41 Mean Gene on 05.03.16 at 8:38 pm

Real Estate fire sale in Fort Mac, get’m while they are hot.

#42 WUL on 05.03.16 at 8:39 pm

Oh, and to remain on topic (for a change!)on this financial blog, go long oil, mui pronto. The entire oil sands workforce cannot get to work tomorrow.

#43 acdel on 05.03.16 at 8:42 pm

#21 WUL

Take care WUL, bad situation getting worst with this heat.

#44 Chris 3 on 05.03.16 at 8:44 pm

For those of you who are being forced to leave Fort Mac, be sure to take your insurance policies, and numbers with you.

#45 meslippery on 05.03.16 at 8:45 pm

Delaying downsizing your house so the kids can live there and mooch means equity cannot be liberated, can’t be invested and won’t start providing you a retirement cash flow. Given the fact most people seem to have most of their net worth buried in a single asset these days, that can be a serious crimp on the future.
———————
It seems more and more people are looking to make
better use of their assets. Think Uber use my car to make money, or air b and b.
So why not use your house to home your offspring and
collect money from them till the end.
Then you dont need its theirs.
Maybe I just need a app for that.

#46 bdy sktrn on 05.03.16 at 8:48 pm

re wul – go now , use the left lanes.

#47 Smoking Man on 05.03.16 at 8:51 pm

Cruz drops out

Trump will clinch the nomination then destroy Hillary.

There goes my TN Visa.

Now can you imagine what will happen to YYZ real estate if the million or so x-pats working in the USA lose there TN Visa’s.

2 million dollar bungs in Shlong Branch.

#48 Andrew Woburn on 05.03.16 at 8:53 pm

A long, reasonably thorough. read on the issues with driverless automobiles.

https://medium.com/@alexrubalcava/a-roadmap-for-a-world-without-drivers-573aede0c968#.hbegq3wfy

It raises the point that Mark made about the dangers of hackers taking over vehicles. I agree this is an issue but if it can’t be solved or the risks diminished, we’re probably not going to get the so-called internet of things either. Granted your e-fridge can’t suddenly run, you over but if the nerdy neighbourhood brat figures out how to switch it off every time you go to the cottage
you won’t be pleased.

As to driverless trucks, 45north said a couple of days ago:

“GPS has put truck drivers on a short leash. I mean it used to be the driver had a fair bit of leeway. Not any more.”

Yeah, it’s hard to fantasize that you’re Smokey and the Bandit any more when head office has you by the curlys 24/7. But even 15 years ago, an executive of one of America’s bigger highway trucking firms told me he was grateful his annual driver turnover rate was only 100%. Many of his competitors were dealing with 200%. This was even though pay rates then ran as high as $50K per year. He said if it weren’t for Mexican drivers, the industry would be screwed. I can’t imagine what it is like now.

This is one of the less obvious drivers for semi or fully automated trucking soon. US industry is heavily dependent on timely truck delivery and young Americans just don’t want to drive.

Amazon is as much a logistics company as a department store and they are already looking at setting up their own trucking system. Do you really believe Jeff Bezos is going to shrink from the challenges of automating his fleet?

#49 WalMark of Sadkatoon on 05.03.16 at 8:55 pm


Cruz drops out

Trump will clinch the nomination then destroy Hillary.

you’re like some kind of omniscient alien god…

#50 Smoking Man on 05.03.16 at 9:02 pm

#49 WalMark of Sadkatoon on 05.03.16 at 8:55 pm

Cruz drops out

Trump will clinch the nomination then destroy Hillary.

you’re like some kind of omniscient alien god…
………………

Call it like I see it. Herdonomics is so under-rated. I should teach it, but the lazy gene makes that impossible.

#51 Parsonage on 05.03.16 at 9:10 pm

WUL

Our thoughts and prayers are with you and your neighbors.

#52 Freedom First on 05.03.16 at 9:10 pm

#30 Mike on 05.03.16 at 8:03 pm

That Freedom First Guy is a real weirdo. Get a life.

007

Well Mike, you’re probably just jealous that your not a single white male in his 60’s living in Alberta loving cows. Too bad for you!!!!! I always put myself first. Freedom First.

#53 meslippery on 05.03.16 at 9:11 pm

48 Andrew Woburn
———-
Truck Driver here, 55 years old was fun yeah.
Quit not fun anymore and would not recommend it.
No freedom left.

#54 Suede on 05.03.16 at 9:13 pm

The herd doesn’t think.

The herd doesn’t use logic.

The herd only uses reptilian brain.

Everyone in YVR is now 100% convinced you must buy now. Whatever means necessary

RIP home inspection companies. You are now out of work with no subjects on ANY property.

If you want to write a book on bubble behaviour, come to Vancouver.

Thing is..

You might not release it for a few years. The panic buying shows no signs of slowing down. Short of interest rates tripling overnight. Nothing can ease the frenzy of this land.

Pass the popcorn..

#55 Freedom First on 05.03.16 at 9:24 pm

The thought of being married with kids makes my bladder go into overdrive. Anybody else have this problem or is it just me?

#56 common sense on 05.03.16 at 9:29 pm

WUL

All the best, stay safe.

#57 Smoking Man on 05.03.16 at 9:33 pm

Phase 4 of the trump herdonomics strategy unfolding right before your eyes.

#58 Vundo on 05.03.16 at 9:41 pm

I sure wouldn’t mind if imposters like #53 got DELETED.

And I hope WUL and any other readers of this blog are okay. None of the crap we talk about around here is as important as staying alive. http://www.redcross.ca/ has an Alberta Fires Appeal going now, for those of us who want to help with our wallets.

#59 Squish on 05.03.16 at 9:45 pm

#21 WUL.

Stay safe, man. Get the hell out of there. The entire city of Fort Mac is quite seriously in danger of burning down. My husband is currently at the camp just north where they’re evacuating people to…says he’s talking to families who’ve just lost everything. Very grim.

#60 Chaddywack on 05.03.16 at 9:45 pm

No rental controls in Alberta. Landlords can raise it ANY amount once a year. That means uncertainty for renters. At least in BC there is rent control.

Mr. Market does a decent job of rent control. — Garth

#61 Christopher Dillon on 05.03.16 at 9:46 pm

@#9 Research indicates on 05.03.16 at 7:09 pm

According to research by Wharton professor Grace Wong Bucchianeri, homeowners are not happier than renters.

But they are fatter
http://knowledge.wharton.upenn.edu/article/so-you-think-owning-a-home-will-make-you-happy-dont-be-too-sure/

#62 Metaxa on 05.03.16 at 9:47 pm

You know in many parts of Europe, the Mediterranean, etc. it is not at all uncommon for the third, fourth, more generation of the same family to occupy the same home.

Of course those homes are made of stone, have been there for centuries and will provide housing for generations to come.

But, not a bad idea to plan your end days around transferring the family home to the kids. Provided you aren’t talking about a press board, about to fall down spec built McMansion.

My home is built of first growth spruce, you have to drill a pilot hole on a joist or rafter in order to hammer in a nail, not a knot to be seen.

It will be here long long after I am done with it.

But I chose to live where I can make 70-80% of the money I would in Van or TO but need only 40% of the money to live well so I don’t need to cash out my house to fund my retirement.

So…my kids own a cash flow positive duplex, are poking around on another one and then we gift them this one…that plus their investments (their TFSA’s are out performing mine!) should have them in a good position, no?

so, why not?

#63 Life among the Stars on 05.03.16 at 9:57 pm

#50 Smoking Man on 05.03.16 at 9:02 pm

#49 WalMark of Sadkatoon on 05.03.16 at 8:55 pm

Cruz drops out

Trump will clinch the nomination then destroy Hillary.

you’re like some kind of omniscient alien god…
………………

Call it like I see it. Herdonomics is so under-rated. I should teach it, but the lazy gene makes that impossible.

Trump University must have openings.

#64 Life among the Stars on 05.03.16 at 10:02 pm

#55 Freedom First on 05.03.16 at 9:24 pm

The thought of being married with kids makes my bladder go into overdrive. Anybody else have this problem or is it just me?

Garth can help you out with some thirsty underwear.

#65 Russ on 05.03.16 at 10:05 pm

For the Islanders:

What does a Texas tornado, forest fire at Fort Mac and a divorce in Cedar have in common?

Somebody is agonna lose a trailer.

#66 Smoking Man on 05.03.16 at 10:13 pm

Hey Bottoms Up

One of the top climate scientists who for years was a global warming alarmist, just switched teams. Just after he retired.

Scam of the century.

https://www.youtube.com/watch?v=c8MJD5y2Kiw

#67 Life among the Stars on 05.03.16 at 10:18 pm

#66 Smoking Man on 05.03.16 at 10:13 pm

Hey Bottoms Up

One of the top climate scientists who for years was a global warming alarmist, just switched teams. Just after he retired.

Scam of the century.

https://www.youtube.com/watch?v=c8MJD5y2Kiw

WTF is wrong with that guys eyeballs..they’re popping out of his head.. he looks like an alien.

#68 the Jaguar on 05.03.16 at 10:25 pm

It’s shocking to read these comments when Fort Mac is on fire. This on top of everything else that has happened in Alberta the past 18 months. It’s biblical.
The horsemen of the apocalypse. When you consider the location, what is going on in the province,….it is truly beyond the pale. Never mind your jokes about Texas tornados. What is going on in Alberta is beyond the pale. Show a little empathy.

#69 Freedom First on 05.03.16 at 10:25 pm

#64 Life among the Stars on 05.03.16 at 10:02 pm

#55 Freedom First on 05.03.16 at 9:24 pm

The thought of being married with kids makes my bladder go into overdrive. Anybody else have this problem or is it just me?

Garth can help you out with some thirsty underwear.

$$$$$

That would be awesome, but how would I look in them? I may be single in my sixties, but I want to look cool like I did in the sixties.

#70 Sheane Wallace on 05.03.16 at 10:29 pm

No, it is not the bank of mom that is driving this ‘market’, it is the f….ng CMHC and the idiots at BOC.

Negative Interest rates are coming:

https://ca.finance.yahoo.com/blogs/insight/negative-interest-rates-aren-t-likely-in-canada–but-here-s-what-that-would-look-like–anyway-194540882.html

#71 Observer on 05.03.16 at 10:31 pm

Trump unstoppable Garth….told ya.

My opinion is that US corp cash about to be UNLEASHED….FED rates to POP

#72 TCContrarian on 05.03.16 at 10:33 pm

Funny you post this today, Garth. I was just informed (by a ‘bank of dad dude), earlier today that he ‘helped’ his daughter and husband buy a condo in Vancouver for $550k!

Said he “didn’t want them renting any longer”!

All I could do is…smile, then uttered:
“Wow! $550k for just a condo?”

“No den either!”, he continued.

Had the look of an unwavering belief that prices are going to stay high forever. I wasn’t about to argue…

$550k for a 1-br condo??

#73 Life among the Stars on 05.03.16 at 10:46 pm

67 Life among the Stars on 05.03.16 at 10:18 pm

#66 Smoking Man on 05.03.16 at 10:13 pm

Hey Bottoms Up

One of the top climate scientists who for years was a global warming alarmist, just switched teams. Just after he retired.

Scam of the century.

https://www.youtube.com/watch?v=c8MJD5y2Kiw


That dude’s not evening slightly a scientist… but he is stark raving bonkers, thinks he’s a Lord and won the Nobel Peace prize.. and is a tad touchy about gays.

“There is only one way to stop AIDS. That is to screen the entire population regularly and to quarantine all carriers of the disease for life. Every member of the population should be blood-tested every month … all those found to be infected with the virus, even if only as carriers, should be isolated compulsorily, immediately, and permanently.”

#74 Sheane Wallace on 05.03.16 at 10:49 pm

#72 TCContrarian on 05.03.16 at 10:33 pm

$550k for a 1-br condo??
—————-
What you consider as ‘$’ is useless confetti/coupons with expiration dates that are ‘supposed’ to represent your labour. Shove it up where the sun does not shine.

#75 jane 24 on 05.03.16 at 10:49 pm

This is a timely topic Garth for us. Getting the kids on the housing ladder.

First kid earns $300,000 Cdn a year, senior marketer married to an accountant, so no worries there. Her house is her problem.

Second kid lives happily in Asia on peanuts so no worries there.

Third kid is facing having to pay $2000 Cdn monthly to rent in Oxford, England so yes we are lending them a down payment interest free for 5 years to get on the damn housing ladder. If we lend 5% then they qualify for an interest free govt loan for 20%. Only a loan from us in case peanut living kid return to England and needs to borrow the same money for the same reason.

The key is that we are 1%s so can afford to do this without impacting our own retirement. I would never even think of it if it came out of needed retirement savings. You do your kids no favours by bankrupting yourself. They will only have to dig you out in the future.

#76 Sheane Wallace on 05.03.16 at 10:50 pm

Honestly what do you expect from the currency of a country ruled by the single bit substitute drama teacher with IQ of 70 (in his good days)?

#77 Julia on 05.03.16 at 10:56 pm

Would have never asked my parents and they didn’t offer. They sold their house, downsized to a small condo and travel the world. Love it.

#78 AK on 05.03.16 at 11:16 pm

Lawsuit alleges 60 property owners in Richmond fell victim to
shadow-flipping-scam

#79 Gregor Samsa on 05.03.16 at 11:19 pm

>You know in many parts of Europe, the Mediterranean, etc. it is not at all uncommon for the third, fourth, more generation of the same family to occupy the same home.

The stick built, particle board specials they have been putting up in Canada for the past 20 years will all need to be torn down long before their current owners are even dead.

Work your entire life to pay off something that’s worthless by the time you pay it off.

THAT’S what I call “the scam of the century.”

#80 Victoria on 05.03.16 at 11:34 pm

I was told that property in Victoria is going to go up and up and up because everyone from Vancouver is now moving to Victoria and commuting to work in Vancouver.

They are apparently flocking to the island…flocking ….

OKAAAAY

#81 TRUMP on 05.03.16 at 11:39 pm

Good-Bye CRUZ!!!

#82 Prepper on 05.03.16 at 11:51 pm

I don’t know if anyone else has noticed, but they just evacuated Fort McMurray. Yup the whole frecking town. Worse they are sending many of the people north where they could get further trapped. This is 30,000 people folks, possibly the largest emergency evacuation in Canadian history.

So newer readers may not remember Garth’s short live prepper online store, but I bet there are a bunch of people that wish they had bought a box of “meals-ready-to-eat” from Garth at the time.

And here’s a big shout out to all the tree-huggers who want the forest left “natural”. Well, natural forests burn now and again and the can apparently take a whole city with them. It’s common across North America now that you cannot collect deadwood for firewood in campgrounds and parks. Mostly this is so they can sell 4 pieces of bark for $8 if you want a campfire and to stop people from damaging healthy trees, but the downside is eventually the campsite will burn to the ground. Collecting the deadwood actually makes the forest less susceptible to fires, something the natives proved on their reserves years ago.

Anyway I digress, things are pretty dry right now so forest management may not be the only contributor. But let’s just say it isn’t a bad idea to plan for a really bad day. The stories coming out of Fort Mac are pretty bad, no gas, no food, people stranded, and a huge wildfire heading right for them. And only a 2 lane highway to get out of there if you can, which you can’t because there’s no gas. There was gas for normal operations, but when 30,000 people had to head south all at once guess what? No.

Trees, it turns out, are much like friends. Very helpful one day, a dangerous enemy the next.

Hopefully the fires don’t eventually torch the oil infrastructure in the area. It would be good for world oil prices but it would mean that Alberta won’t participate. Oh and also a couple major financial institutions and oil companies could go tits up.

This could turn out to be the Canadian 9-11, only no terrorists just mismanagement.

#83 45north on 05.03.16 at 11:54 pm

shocking video of Fort McMurray! I thought “washed up lawyer” was being dramatic.

but it is heartening to see that the people of Fort McMurray are not panicking. It’s like everyone realizes that the chance of survival goes down if people panic.

By contrast, there will not be an orderly exit from Vancouver. Or Toronto. I’m afraid Smoking Man has it right. When it comes to buying houses, people act like a herd of cows. But it works the other way too.

#84 Ronaldo on 05.03.16 at 11:59 pm

#60 Chaddywack on 05.03.16 at 9:45 pm

”No rental controls in Alberta. Landlords can raise it ANY amount once a year. That means uncertainty for renters. At least in BC there is rent control.”

Mr. Market does a decent job of rent control. — Garth
——————————————————————
If your sitting invested with multiple properties vacant and no renters in sight, the renters you do have for those other properties you own will be coming to you for a decrease in their rents. This is already happening in Alberta. Garth is right. Mr. Market does a good job of fixing things.

#85 Mrs. Bluesky on 05.03.16 at 11:59 pm

I’m grateful that my parents paid for braces for each of us three kids and also helped save for one university degree each. We all had part time jobs and had skin in that game too. Once we graduated (debt free) out the door we went. Things my parents did not contribute to: cars or houses. Now I have kids of my own and I’m returning the favor by doing the exact same thing for them.

#86 Prepper on 05.04.16 at 12:02 am

PS the gas stations heading out of Fort Mac are turning out to be just like the ones in Louisiana during Katrina. You can’t get in because of the long lines. You can’t get out because idiots tried to jump the line by coming in the exit. And even if you could get to the pump there in no gas. There won’t be any gas coming because the truck driver isn’t driving into a hurricane and even if he did he can’t drop fuel because he can’t get there due to all the cars in the way on both sides.

At least you can probably survive a hurricane in your car if you have some MRE’s. Not so a forest fire. You need gas, and you need to bug out.

My other question is why did they wait so long to advise people to head for Edmonton if at all possible. Never trust the government they are always too little too late.

#87 macroman on 05.04.16 at 12:06 am

Woooh WUL, you gata a flamer on your marshmallow Mac.

Try to avoid the weinny roast.

Jewish lightning on those underwater morts.

Be safe, mm

#88 SWL1976 on 05.04.16 at 12:15 am

WULLY – Stay safe on your exodus and don’t forget that silk suit. If you make it all the way out to the coast, we have a nice little shack we can put you up in. Sans kitchen for now.

I’ve been texting with some of the boys I used to work with, and much to their dismay flights are still going to and from site. For now at least anyways.

You seem to me, the type of person who knows how to make lemonade in a sour situation

#89 Russ on 05.04.16 at 12:52 am

the Jaguar on 05.03.16 at 10:25 pm

It’s shocking to read these comments when Fort Mac is on fire. This on top of everything else that has happened in Alberta the past 18 months. It’s biblical.
The horsemen of the apocalypse. When you consider the location, what is going on in the province,….it is truly beyond the pale. Never mind your jokes about Texas tornados. What is going on in Alberta is beyond the pale. Show a little empathy.
=======================

Oh dear. let’s not get hysterical.
Or maybe you meant it’s a pale ale by comparison.

Anyhow, you cannot have vast prairie if trees are going to grow on it. It’s been burning off & on for millennium.

Kinda like what I tell the tree huggers out here, “If we don’t clear-cut then Mother Nature will clear-cut it, with fire.”

Be at peace.

#90 Buy? Curious? on 05.04.16 at 1:24 am

Hey Garth, do you think the forest fires in Ft Mac will have an effect on property prices?

#91 Greyswam on 05.04.16 at 1:55 am

Time for inheritance tax on large capital gains concerning
principal residence.

#92 jakethesnake on 05.04.16 at 2:52 am

DELETED

#93 Frank on 05.04.16 at 2:57 am

Brian Ripley

Dude. Your charts are terrible. You’re like the guy in the office who gives a powerpoint presentation where every slide is a novel.

Your charts are too dense to the point they’re unreadable. You put a lot of time into this, if you had better presentation you might even be a resource people listened too, like Garth, instead of the nutty chart guy. See this:

Simple

http://4.bp.blogspot.com/-3E41ov9u1KI/UTEpGJY9CMI/AAAAAAAAAhI/2AalQeNuk8E/s1600/GTA+average+house+price+inflation+adjusted.jpg

Beautiful

http://econintersect.com/wordpress/wp-content/uploads/2010/10/EconomicGreenfield-9-28-10-MacroMarkets-Projection-Chart.gif

Take a few steps back.

#94 WUL on 05.04.16 at 3:03 am

Beyond belief. I am fine but many thousands are in tough right now. Two hours to get out of Fort Mac onto the highway and a total of 7 hours before I checked into this oil sands work camp north of town. Normally a one and one half hour trip at most.

We’ll see if an airlift out is what comes to pass.

So hold out good wishes for all my fellow McMurrayites.

#95 BillyBob on 05.04.16 at 3:04 am

#90 Mark on 05.03.16 at 2:54 am
Ding, Ding, Ding.

CAD$ back over 80 cents.

Where’s Sheane Wallace? I’m getting worried.

Smoking Man, whatever happened to your friend who went all those futures contracts short the CAD$? Did he make it out of the trade with his hide still intact?

====================================

Hmm…I realize that your whole schtick is predicated on this amazing comeback of the CAD but it might be a bit early to be celebrating…

http://business.financialpost.com/investing/market-moves/tsx-wall-street-tumble-as-investors-fret-about-slipping-oil-and-global-growth

http://www.theglobeandmail.com/globe-investor/inside-the-market/the-loonies-terrible-tuesday-could-be-a-sign-of-things-to-come/article29841614/

“The 80-cent loonie lasted for all of two hours before succumbing to the largest single-day drop in more than one year to as low as 78.55 cents…”

The loonie was not strengthening so much as the USD was weakening. Never bet against the USA. (Has that ever been said before?!?)

#96 Freeman on 05.04.16 at 3:31 am

2012 = ALBERTA REAL ESTATE SALES ARE ON FIRE.
2016 = ALBERTA REAL ESTATE IS ON FIRE. (Literally).

#97 Love My Kia on 05.04.16 at 3:51 am

My prayers are for everyone’s safety up in Fort Mac. I am on standby as a Canadian to be called to help our fellow citizens.

If you are looking for a sign that climate change is real, this is it.

#98 Ace Goodheart on 05.04.16 at 6:48 am

Another good reason NEVER to gift your child a house or give a house as an inheritance: Ontario Family Law. About 1/2 marriages end in divorces. When property is divided up, you can exclude all gifts, inheritances, and property you owned on the date of the marriage EXCEPT a “matrimonial home” which is just divided in two.

Do you really want your daughter’s squirrelly, shifty, affair having husband, or your son’s questionable “trophy wife” getting 1/2 of your net worth?

Talk to an experienced family lawyer before you give a child a house.

#99 Smoking Man on 05.04.16 at 6:59 am

#67 Life among the Stars on 05.03.16 at 10:18 pm
#66 Smoking Man on 05.03.16 at 10:13 pm

Hey Bottoms Up

One of the top climate scientists who for years was a global warming alarmist, just switched teams. Just after he retired.

Scam of the century.

https://www.youtube.com/watch?v=c8MJD5y2Kiw

WTF is wrong with that guys eyeballs..they’re popping out of his head.. he looks like an alien
……

Lol he’s a lord you know.

#100 Fort Mac Realtor on 05.04.16 at 7:13 am

Forget what Garth and the naysayers tell you.

Fort Mac real estate is scorching hot!

Buy now or be locked out of this lucrative market forever!

Inventories and DOM are shrinking as I speak!

Asian buyers welcome!

Offers accepted Tuesday, 6p.m. to midnight.

Good luck all!

#101 TurnerNation on 05.04.16 at 7:21 am

I remember in late 90s the outer ring of Calgary always was threatened with wildfires.

What’s this global warming proof nonsense. T2 will not lift a finger for Fort Mac. He gave 2.6B to corrupted countries to “fight global warming” eg wasted.

Is our army still serving the middle east or helping Canadians in need? Why give money to Red cross how exactly are they helping? Exact examples. .

#102 hot pet on 05.04.16 at 7:30 am

best way to pet an alligator or wash your hands. wow. climate change Karma on FortM? terrible.

#103 mishuko on 05.04.16 at 8:05 am

sister just ‘bought’ a condo… parents won’t say if they helped with closing costs/down payment. I’ve advised them not to, but they insist on ‘helping her out’.

she doesn’t even pay her insurance either. whenever I raise concern they just smugly disregard me and say ‘when the time comes we will help you too’

I look at them and say ‘No. you keep your money’ I want to be the one who makes it with my own efforts. I atleast want to be able to say I own deez nuts.

On another note my car is running a glorious 15.5L / 100 km on premium. Changed my tires to another set of some ultra high performance tires and will be heading to NC/TN to the Tail of The Dragon in a few weeks.

People can spend their thousand on some crappy all inclusive central/southern American resort. I’ll spend it on a nice road trip to the US-of-A before that wall goes up.

#104 God Emperor of Mankind Trump on 05.04.16 at 8:08 am

I think Lyin’ Ted’s kids are in danger after his showing in the last primary…

“Let’s go kids, we’re going to meet Jesus”.

Someone call CPS.

#105 Paomo on 05.04.16 at 8:11 am

three forces are powering Canadian housing bubble

1. low interest rate
2. hot money from China, I am not talking about foreign buyers here, some lucky Chinese immigrants are lucky to have a 2 bed room apartment who can sell it and easily buy a million dollar house in Toronto.
3. sub-lease basement to pay the mortgage, I know a lot of immigrants do that.

#106 lee on 05.04.16 at 9:10 am

Now prices of properties in York Region are pretty much what prices in Toronto were three years ago. So if people want to buy a sfh now it’s Orangeville or Keswick, or you can move to Detroit. The new real estate agent motto in Toronto should be “buy never”. Time to give lowly renting a good look. Time for the real estate vultures to admit they have been duped or never had the balls to make a move in the first place. That’s all right. There are always desperate people ready to leverage themselves and hope the government saves them with long amortization, pushing low interest rates and great mortgage insurance.

#107 fancy_pants on 05.04.16 at 9:38 am

#101 TurnerNation on 05.04.16 at 7:21 am
He gave 2.6B to corrupted countries to “fight global warming”

It doesn’t matter how many selfies T2 performs in boxing gloves, he is the weakling on the playground and the real politicians are laughing at him as he hands over his (our) lunch money!

#108 IHCTD9 on 05.04.16 at 9:54 am

#98 Ace Goodheart on 05.04.16 at 6:48 am
Another good reason NEVER to gift your child a house or give a house as an inheritance: Ontario Family Law. About 1/2 marriages end in divorces. When property is divided up, you can exclude all gifts, inheritances, and property you owned on the date of the marriage EXCEPT a “matrimonial home” which is just divided in two.

Do you really want your daughter’s squirrelly, shifty, affair having husband, or your son’s questionable “trophy wife” getting 1/2 of your net worth?

Talk to an experienced family lawyer before you give a child a house.
____________________________________________

There probably isn’t a more efficient natural way of destroying the total wealth of 3 families simultaneously, than a messy divorce where the matrimonial home was heavily subsidized by the parents on both sides.

I honestly don’t have issues helping out my boys in the future – but gifting 6 figures for houses isn’t happening – I don’t care how “perfect” my future daughters in law might be.

#109 The American on 05.04.16 at 9:56 am

Enough is enough, folks. As an elected Congressional Delegate, let me speak with authority to some thing about the U.S. Presidential Election coming up that most Canadians just don’t understand about American politics. First, the U.S. is not a simple democracy. The U.S. is a federal republic and Constitutional representative democracy. What does this mean? The Delegates represent the will of the constituents they represent. It means there is no way in hell that Trump will ever win against Clinton (or Sanders for that matter), given how the Delegate system works, as well as the Electoral College.

I am a little shocked to realize that most of my Canadian friends had no idea that each vote from each citizen is not recognized and counted toward a simple-majority-rules-styled election. What counts is DELEGATES and SUPER DELEGATES. That’s it. Nothing else matters.

So, the nominations will absolutely be Clinton and Trump. What does this mean? It means by every measurable poll, projection, existing Delegate count, future expectations within the Electoral College and allocation of Delegates as they change sides once nominations are picked, that Clinton will indeed annihilate Trump.

This isn’t wishful thinking. This is simple math that we’ve all been taught since we were children. The media is having a great time with the notion that Trump could get this far. However, you need to keep in mind the nomination is not at all reflective of how the Presidential elections ever turn.

For those who have the time, this is an interesting and informative history of the Electoral College and why it exists…

http://www.huffingtonpost.com/2012/11/06/what-is-the-electoral-college_n_2078970.html

http://www.history.com/topics/electoral-college

#110 Truenorth on 05.04.16 at 10:03 am

Garth,

The above advice may seem shocking to you. But in most ethnic communities it’s the absolute norm. A lot of us come from parts of the world where property is insanely expensive and inter-generational transfers have been normalized as a way of affording property. You think Toronto is expensive? Ha! Look at Price-Earnings ratio in Mumbai or Shanghai.

Sometimes it works out well. I know young couples who benefited from lower prices a decade ago and with help from their parents. They own homes and often use the starter condos as investment properties.

And these days, it’s a terrible investment. But the practices persist, for first homes, at least. It’s normal in a lot of ethnic communities, for kids to stay at home well into their 20s. Rent-free even. With their earnings going towards paying off student loans or savings (with the expectation that it will go towards a home). It’s also normal for parents to help with downpayments. It’s seen as helping your kids start life. Just like helping pay for post-secondary is seen virtually as an obligation in most ethnic communities. It’s also seen as an investment, in a child, who will return the favour in your old age.

Canadian cultural norms may be different, of course. But understand that there’s a huge chunk of the population that already has generational transfers as normal.

Not going to discuss which approach is better. Just explaining that it is what it is. And there are communities where such norms (like contributing to downpayments) are normalized.

#111 unbalanced on 05.04.16 at 10:07 am

I just love it when people suggest how I spend my money.

#112 Life among the Stars on 05.04.16 at 10:12 am

#109 The American on 05.04.16 at 9:56 am

Enough is enough, folks. As an elected Congressional Delegate, let me speak with authority to some thing about the U.S. Presidential Election coming up that most Canadians just don’t understand about American politics. First, the U.S. is not a simple democracy. The U.S. is a federal republic and Constitutional representative democracy. What does this mean? The Delegates represent the will of the constituents they represent. It means there is no way in hell that Trump will ever win against Clinton (or Sanders for that matter), given how the Delegate system works, as well as the Electoral College.

I am a little shocked to realize that most of my Canadian friends had no idea that each vote from each citizen is not recognized and counted toward a simple-majority-rules-styled election. What counts is DELEGATES and SUPER DELEGATES. That’s it. Nothing else matters.

So, the nominations will absolutely be Clinton and Trump. What does this mean? It means by every measurable poll, projection, existing Delegate count, future expectations within the Electoral College and allocation of Delegates as they change sides once nominations are picked, that Clinton will indeed annihilate Trump.

This isn’t wishful thinking. This is simple math that we’ve all been taught since we were children. The media is having a great time with the notion that Trump could get this far. However, you need to keep in mind the nomination is not at all reflective of how the Presidential elections ever turn.

For those who have the time, this is an interesting and informative history of the Electoral College and why it exists…

http://www.huffingtonpost.com/2012/11/06/what-is-the-electoral-college_n_2078970.html

http://www.history.com/topics/electoral-college

Suspect you are correct. Who cares.. This is gonna be hilarious.

#113 John on 05.04.16 at 10:22 am

And yet people are waiting to downsize their homes and these houses are gaining in price like crazy. I have a friend who can do renovations by himself. Helped him with some demolition in the house since it wasn’t renovated for 30 years. He bought his house almost a year ago for 750 and now the same kind of house near him (non-renovated) has been sold for 820. And yet, because this friend of mine is renovating his house, with an additional investment in it of 50k he will be able to sell it for 890-900k. Tell me, which other investment brings you a profit of 20% per year? Non yet. This is why people go crazy. And I don’t see an end to this until the homeowners will begin eating a 1.5$ hot dogs at costco every day while being at the limit of existence. In other words if it was considered ok to spend for housing 30% of income, now people are ready to spend 80% of income. And tell me, why would the government regulate the market if they make soooo much money on taxes because houses rise in price? Another thing I heard lately, don’t know if it’s true.. that the foreigners are able now to take mortgages from Canadian banks if they have the 20% down-payment and can demonstrate that they will pay the mortgage for the next 4-5 years… how’s that?

#114 Centre Wing on 05.04.16 at 10:28 am

Why are people blaming “Climate change karma” for the Fort Mac fires? It started from a transformer that exploded. In a dry climate. Surrounded by trees.

#115 TurnerNation on 05.04.16 at 10:53 am

Cracks are appearing in this Kanadian housing ponzi scheme. Look at stock prices lately of Home Crapital Corporation (HCG) and Canadian Western bank (CWB).

#116 Calamity Jane on 05.04.16 at 10:59 am

http://www.cbc.ca/news/business/real-estate-prices-suburbs-soar-1.3562481

I’m in the area and as mentioned also involved in the construction trade and we are definitely seeing this. A semi-detached backsplit that we did some purely cosmetic work in (and it could have used a LOT more work) just went for $71,000 over the list price. Showings over 4 days, over 100 people through the place, and 21 offers. It’s not all windfall though, this place was a rental unit where the tenants moved in and didn’t pay a dime after that so hopefully the owner recouped some of the costs. I’d guess about $20,000 in rent for a year, plus legal fees and stress to get them evicted, plus all the repairs and lipstick on the pig to get it prettied up, plus closing costs… not sure there is really anything left other than a good lesson that being a landlord isn’t for everyone and residential real estate isn’t a guaranteed money maker.

They were lucky to get out with the money they did to make up for the other losses but I doubt they will have learned their lesson thanks to the stupidity of the buyers who way overpaid for this place. Another real estate guru in the making!

Also from observation it’s been bonkers out at the far reaches of the GTA and heading as far out as Peterborough as the 407 extension nears completion. The future highway dumps out a few short kms south of the crap shack I purchased and reside. There’s the sentiment that it’s different here because our location is so in demand because of this highway opening soon. Same model of house across the street from sold for 85,000 more than I purchased for 1.5 years ago. Nuts!

#117 jess on 05.04.16 at 11:04 am

…”buyers in the Greater Toronto Area will need 15 years to save for a 20% down payment on an average priced detached home, while those in Vancouver would have to work and save for 23 years” (kershaw UBC)

======
i wonder how cities will react to mobile gas trucks as the “innovative appheads” say the law is clear and we are compliant”

Gas On Demand: Filling Up Without the Station

On-demand gas startup Filld raises $3.25 million – Business Insider
http://www.businessinsider.com/on-demand-gas-startup-filld-raises-325-millio...
Oct 29, 2015 – Filld, a startup that delivers gas on demand, day or night, is taking on gas stations. If the idea of on-demand gas delivery sounds familiar, you ..

#118 WalMark of Sadkatoon on 05.04.16 at 11:07 am


#90 Mark on 05.03.16 at 2:54 am
Ding, Ding, Ding.

CAD$ back over 80 cents.

it sucks when you’re wrong while I have a deposits on houses in escrow.

stop sucking

#119 maxx on 05.04.16 at 11:14 am

“Those gnarly financial advisors with stubble, cowboy boots, Harleys and no heart………..”

Not sure about that last point, but I am sure I’d like to see the rest of those traits in office. Now.

Segue to a scene similar to a 3 year old showing off to daddy. Oh, the withering embarrassment:

http://www.cbc.ca/news/trending/trudeau-invictus-trash-talk-eyerolls-1.3562910

Where were the media interface and image consultant babysitters? On a long coffee break?

Pauvre Canada.

#120 WalMark of Sadkatoon on 05.04.16 at 11:16 am

if Clinton becomes the nominee she may well keep her superdelegates but bernies delegates will go to trump. trump wins

#121 IHCTD9 on 05.04.16 at 11:16 am

#110 Truenorth on 05.04.16 at 10:03 am
Garth,

The above advice may seem shocking to you. But in most ethnic communities it’s the absolute norm. A lot of us come from parts of the world where property is insanely expensive and inter-generational transfers have been normalized as a way of affording property. You think Toronto is expensive? Ha! Look at Price-Earnings ratio in Mumbai or Shanghai.
___________________________________

Interesting, and undoubtedly correct.

Most of the immigrants I work with in the GTA tend to be newer and younger. None of these have parents living on this side of the pond. They work day and night to scrape out a living, and pay for Canadian University education. None of these will buy RE ever, their financial condition is that of a 21 year old university student, but they are late 20’s/early 30’s and single. No houses coming to these unfortunate folks.

I deal with 1 guy from Mumbai, Gen Xer, two kids like me and same ages of kids even. Lives in Brampton of course, been here 17 years or so. No way he’s forking out big bucks to his kids future RE purchases. He just recently bought himself, which means he will be working till 70 at least to pay off the Mortgage.

IIRC, the average Canadian Immigrant comes here with less than 35K in cash. The ones I know surely did not have even that. One young Russian single mother recently immigrated that I know in Toronto would marry me at the drop of a hat in order to exit her current life of hell on earth trying to provide for her son.

If there are immigrants getting paid by Mom and Dad to buy a house, they must have been here several decades, or were quite well off before they moved here. I deal with many immigrants of all kinds, and I usually see the same thing – financial strife, and life consisting of all work, and no play.

#122 Sean on 05.04.16 at 11:54 am

https://www.thestar.com/business/2016/05/04/average-price-of-a-gta-home-up-more-than-100000-in-a-year.html

Looks like more and more the only dummies are the ones who aren’t lucky to have gotten a house at a reasonable price in this city.

#123 family beagle on 05.04.16 at 11:55 am

Never assume other people are as smart as you. They’re not. If you’re reading this blog, chances are you are one of the most intelligent people in your social circles — whether you agree with the commentary or not. Unfortunately, the smartest people aren’t always the most successful in a dumbed-down paradigm. Throughout history, the smartest people were often martyred or burned at the stake.

Home ‘ownership’ is a maturity rite in some subcultures. That may change. Few have the wherewithall to clear land and build shelter, so they migrate to concentrated population centers with more bidders for the available product. If the market economy becomes unbalanced, a topple or correction will occur.

The current real estate market in Canada is unbalanced relative to the overall market economy. A topple or correction WILL occur.

#124 Brydle604 on 05.04.16 at 12:10 pm

#36, 48 Andrew Woburn
Andrew thank you for your well researched postings.
Always look forward to reading.
Very topical and informative.
I am on the Tesla 3 waiting list, living in Coquitlam B.C.
We can look forward to a very exciting and interesting future.
Regards John
70 M B.C.

#125 Alistair McLaughlin on 05.04.16 at 12:17 pm

Of course, if you want your offspring to feel emotionally indebted to you for decades to come, to be consumed with guilt if they don’t show you enough appreciation, to increase their reliance plus be physically and financially prevented from moving away and achieving their true independence, while you hobble your own future, go ahead.

That’s exactly the reason they do it. What better way to ensure they stay close to home, and loyal, than to hitch them to a property that you helped them pay for?

#126 family beagle on 05.04.16 at 12:18 pm

The day’s pic… I used to do that with my kid. We’d snag enough change to take the Seabus to North Van and buy smoothies. At four years, he was treating fountains like a personal ATM. Ah, to see that glee again.

Give a kid a nickel and you create a tight wad. Teach a kid to pilfer and you raise a leader of nations.

(Sending Poco rain to bretheren in Ft. McMurray.)

#127 Ogopogo on 05.04.16 at 12:18 pm

#82 Prepper on 05.03.16 at 11:51 pm

Trees, it turns out, are much like friends. Very helpful one day, a dangerous enemy the next.

You need new friends.

#128 Renter's Revenge! on 05.04.16 at 12:22 pm

#113 John on 05.04.16 at 10:22 am
“Tell me, which other investment brings you a profit of 20% per year? Non yet. This is why people go crazy.”

The US stock market, from 1990 to 2000. Up 17.5% per year (plus dividends) for 10 years. They called it a “bubble”. It didn’t end well. Who knew?

Or the Japanese stock market from 1985 to 1991. Up 22% per year for 6 years. Didn’t end well.

Or land prices in the GTA (Greater Tokyo Area) during the same time period. Up 26% per year for 6 years. Didn’t end well.

Sound familiar? Better hope it’s different this time!

#129 Calgary Rip Off on 05.04.16 at 12:40 pm

Chaddywack on 05.03.16 at 9:45 pm
No rental controls in Alberta. Landlords can raise it ANY amount once a year. That means uncertainty for renters. At least in BC there is rent control.

That is correct. In B.C. if they raise the rent too high a percentage you can stop them.

“Mr. Market does a decent job of rent control”. — Garth
So the solution is to move every time the landlord decides to raise the rent? What a hassle. And this is why people buy mortgages.

The MLS shows as usual rip off properties in Calgary, there was a decent place in GlenEagles in Cochrane, a 2005 house for $399K. Likely they paid $250K when it was built.

As a sidebar, God help Canada if Hillary Clinton is elected. It would be very Canadian to have a woman at the helm though.

#130 cramar on 05.04.16 at 12:42 pm

My wife just went to Rona and while there got into a conversation with another woman who said they moved back here to Leamington, ON after 8 years in Calgary. The woman said that husband lost his job, she missed this area when living in Calgary, and besides, “Why pay $500k for a house when you can get one here for $200k?”

Good point.

#131 Rook on 05.04.16 at 1:25 pm

It isn’t racist to talk about foreign money. No doubt Vancouver locals are leveraging themselves (and their children) to the eyeballs. But to deny foreign money, fraud, and money laundering as playing a big part in the housing crisis in Vancouver is just silly. Do decry any talk of such things as racist is off point.

http://omnyapp.com/shows/the-john-mccomb-show/vancouvers-housing-bubble-could-soon-burst-the-jon

#132 Ponzius Pilatus on 05.04.16 at 1:30 pm

Mr. Market?
Must be the guy with the invisible hands.
Advise: Don’t shake hands with him.

#133 Truenorth on 05.04.16 at 1:56 pm

@IHCTD9

You’re both right and wrong. You’re right that immigrants don’t come here with a lot of money. But you’re wrong in their willingness to help their kids. This is a major difference in cultures. Immigrant parents, consider supporting their kids an obligation above all else. And they view their children’s property as their own. It’s all viewed as “family” wealth. And prestige to a family within a community is also accorded based on how well the whole family is doing. Kids doing well carries massive bragging rights for the parents. And parents who are financially successful but have pauper children will be looked down upon.

You will never see a regular white Canadian family thinking of the whole family’s assets as one big pool of wealth. But that is literally how immigrants see it and how they are raised to see it. Parent are expected to help children. Children are expected to help parents as they age. And older siblings are expected to support younger ones (especially with post-secondary costs).

I’ve never had one white friend who thought it was his/her obligation to pay his/her younger brother’s or sister’s tuition. But it’s rather rare to find an older Indian or Chinese sibling who doesn’t think it’s their obligation to help.

With the housing market, this means that you aren’t bidding against just one person. You are bidding against his parents and possibly his siblings.

#134 Brazil ex-pat on 05.04.16 at 2:06 pm

Kasich just dropped out. I remember 4 or 5 months ago the “smartest guys” saying “Trump will never win. Jeb Bush is their man” etc etc….

How did that work out?

#135 WUL on 05.04.16 at 2:20 pm

Wanna see “social licence” enhanced? The oil guys are throwing $millions in aid at the evacuees and thousands at me and my family. Private room, good grub 24/7.

This camp is shutting down. Bus to another camp and flight to YYC from private aerodrome.

Sorry Garth, folks with pets, and there are a lot, fly out last.

#136 Shawn on 05.04.16 at 2:21 pm

Racism versus Nationalism

#131 Rook on 05.04.16 at 1:25 pm said:

It isn’t racist to talk about foreign money.

************************************
No, it’s not (necessarily) racist to be against foreign money or foreign anything.

But it is highly nationalistic to suggest that Canada should adopt policies that block foreign anything money or people from economically harming Canadians individually or collectively.

For now, nationalism is okay and is politically correct. Ancient tribal instincts of favoring one’s own group die hard. Racism came from the same ancient tribal instincts but is not politically incorrect and is slowly being eliminated. Racism is FAR from gone but it is on the decline, on the run even.

Nationalism will also decline in future. Someday it will be politically incorrect to adopt policies that strongly favor Canadians over foreigners. The word foreigner will be politically incorrect as well.

That day is very far off however. Today it’s still somewhat politically correct for Americans to speak of illegal immigrants as illegal “aliens”. That will change.

Someday most advanced countries will accept that humans have a basic right to move to another country and they will no longer be barred except if they are deemed to be dangerous. It will no longer be politically correct to think that Canada has some right to sop immigrants from coming especially if they have financial means. Quotas like no more than 250,000 immigrants per year for Canada will be frowned upon at the very least or deemed illegal under international law.

I was born a nationalist and attended Expo ’67 (I was seven). But like most people my thinking has evolved. I don’t particularly think it is any more correct for me to favor Canadians in my dealings than it would be for me to favor people of my own race.

Views will evolve. Nationalism will be for sports only and have no place in economic policy.

#137 Noel on 05.04.16 at 2:53 pm

Wow, some harsh condemnation for parents who want to give gifts to their kids.

A huge hunk of national income is made up of inheritences:

http://www.economist.com/blogs/buttonwood/2014/03/inequality

Whats the difference between helping your kids while you’re alive as opposed to when you’re dead?

Sounds like sour grapes from those who weren’t lucky enough to get help from their parents.

Newsflash – no one successful does it alone. From using the institutions that are built on centuries of cooperation to become ‘self-made’ or simply winning the genetic lottery and having rich parents, you ain’t getting by without help.

#138 Ex Pat CDN on 05.04.16 at 3:45 pm

#109 The American on 05.04.16 at 9:56 am

Enough is enough, folks. As an elected Congressional Delegate, let me speak with authority to some thing about the U.S. Presidential Election coming up that most Canadians just don’t understand about American politics. First, the U.S. is not a simple democracy. The U.S. is a federal republic and Constitutional representative democracy. What does this mean? The Delegates represent the will of the constituents they represent. It means there is no way in hell that Trump will ever win against Clinton (or Sanders for that matter), given how the Delegate system works, as well as the Electoral College.

I am a little shocked to realize that most of my Canadian friends had no idea that each vote from each citizen is not recognized and counted toward a simple-majority-rules-styled election. What counts is DELEGATES and SUPER DELEGATES. That’s it. Nothing else matters.

So, the nominations will absolutely be Clinton and Trump. What does this mean? It means by every measurable poll, projection, existing Delegate count, future expectations within the Electoral College and allocation of Delegates as they change sides once nominations are picked, that Clinton will indeed annihilate Trump.

This isn’t wishful thinking. This is simple math that we’ve all been taught since we were children. The media is having a great time with the notion that Trump could get this far. However, you need to keep in mind the nomination is not at all reflective of how the Presidential elections ever turn.

For those who have the time, this is an interesting and informative history of the Electoral College and why it exists…

http://www.huffingtonpost.com/2012/11/06/what-is-the-electoral-college_n_2078970.html

http://www.history.com/topics/electoral-college
………………………………………………………………..
As an ex pat living in America you are correct 100 % on US electorate system. Re Simple math: don’t try to teach that Smoking Man any math. We saw that several months ago when he couldn’t even convert liters to US gallons. What a joke that was.

#139 IHCTD9 on 05.04.16 at 3:51 pm

#122 Sean on 05.04.16 at 11:54 am
https://www.thestar.com/business/2016/05/04/average-price-of-a-gta-home-up-more-than-100000-in-a-year.html

Looks like more and more the only dummies are the ones who aren’t lucky to have gotten a house at a reasonable price in this city.

____________________________________________

Which is more dumb:

Sinking everything into a 750,000.00 metro-mortgage at 10X a GTA income, just as prices are hockey sticking; and [maybe] “make” 100K in a year or two on paper, and retiring broke with a house? For this privilege, you also get to live in a freakishly congested hell hole, with ever increasing population, transit issues galore, along with perpetual promises by politicians to fix it all that go nowhere.

Or buying elsewhere for 3X income or less, paying it off in 10-15 years, saving big time for your golden years, but waiting to “make” 100K on your house for 14 years, but retiring on a giant stack of cash? While you do this you can enjoy a stress free 15 minute drive to work on smooth, scenic, rural roads, steady population numbers, surrounded by genuine Canadian outdoors and culture on all sides.

Fact is, prices in GTA are out to lunch, and I’ll never understand anyone that stays there trying to buy a house while simultaneously complaining about the cost.

#140 Entrepreneur on 05.04.16 at 3:54 pm

The Bank of Mom and Dad have to save face (oh, the talk) and buy (down payment) for their son/daughter (don’t want them in the basement, the looks). To me this is just as silly as kicking them out . Most youth do not want to live with their parents, would rather go to work and move on (harder now, takes longer).

#131 Rock…if money laundering is not checked and allowed to freely flow with no spot checks then this is what happens! Give us a reason, some form, that this is carefully monitored, now. Not tomorrow, not the next day, but now!!!

Oh, but CRA is here to check on us Small Businesses to make sure we have the right amount in the right column and to make sure we pay our fair share of the taxes, taxes, taxes.

#114 Center Wing…dry trees around this time of the year, early spring. With Climate Change: forget spring hot summer moved in; fall is disappearing, winter moved in. We have summer/winter seasons, short spring/fall.

#109 The American…the delegate system will only make the people angrier. I suppose this was set up as I heard this happened when Abraham Lincoln came into power. How long ago did this come into play?

#55 cramer…Yesterdays blog, about Putin, takes one to know one (about being corrupt) but the real challenge is to figure out which one is the lesser of the two evils, lol.

#141 D on 05.04.16 at 4:12 pm

Love My Kia on 05.04.16 at 3:51 am

If you are looking for a sign that climate change is real, this is it.

…………………………….

Really, A forest fire? Give your head a shake!

#142 Josh in Calgary on 05.04.16 at 4:13 pm

http://www.cbc.ca/news/business/real-estate-prices-suburbs-soar-1.3562481

“If you see a house you like … you’ve only got one chance!”

And in other news the fox assures us that the hen house is completely safe.

#143 Vundo on 05.04.16 at 5:29 pm

From the article posted by #142 Josh:
“We’re first-time buyers trying to make smart decisions as we enter the difficult market and not to be discouraged by our condition of finance.”
If you are trying to make smart decisions then you should be discouraged from entering a difficult market due to the reality of your financial condition. The smart decision is to refuse to participate in that market until it starts making sense.

#144 ILoveCharts on 05.04.16 at 6:29 pm

It will be impossible to post tonight without mentioning truck nuts. I just hope you show a reasonable amount of respect for our friends in Alberta.

I’d also be interested in hearing your advice on insurance in general. Should home owners in BC own earthquake insurance? Is there a difference between home insurance providers? Is life insurance on a mortgage a bad idea?

#145 IHCTD9 on 05.04.16 at 6:57 pm

#133 Truenorth on 05.04.16 at 1:56 pm

——-

I was actually referring to the fact that most of the immigrants I see in my GTA travels are younger, and with limited family in Canada. I’m sure their families back home would love to help, but they are too poor to do so.

The point was, the immigrants I know will be too broke to help their kids buy a house, if they even have kids at all.

#146 TCContrarian on 05.04.16 at 8:28 pm

#74 Sheane Wallace on 05.03.16 at 10:49 pm

#72 TCContrarian on 05.03.16 at 10:33 pm

$550k for a 1-br condo??
—————-
What you consider as ‘$’ is useless confetti/coupons with expiration dates that are ‘supposed’ to represent your labour. Shove it up where the sun does not shine.

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

An obnoxious SOB, aren’t you!

#147 Tony on 05.04.16 at 9:23 pm

The bank of the brainless with a ? (question mark) instead of a brain inside their heads.

#148 Heavy metal Mormon on 05.05.16 at 3:09 pm

So Trump getting in is a bad thing? It seems unlikely given that there are so many liberal left wingers. Female chauvinist pigs. The type that expect their husbands to go to work, rub their feet, and then do the dishes. Hillary isnt as smart as Donald. Given that the electoral college will likely decide, not the popular vote, Donald may or may not be doomed. Doesnt matter to me. I voted when I left the USA in 2003 for good. What is a 1040 tax form? I recommend for any american that isnt pleased with the usa to leave. Find some Canadian and then marry them