Because things have happened recently, people think they will happen forever. That’s recency bias. So when the stock market loses 15% in a correction, folks believe it’ll go to zero. When houses rise 15% in a year, people are convinced they will inflate without end. It helps explain why we sell things at a loss and buy them too dear. It’ll never end so long as emotion trumps logic.
(By the way, remember Joanne the widow and her husband’s DB pension? Days ago I told you she was struggling with the decision to take the commuted value – about a million and a half – or be content with $60,000 a year until death. Commuting it would mean more income, less tax and her family gets to keep $1.5 million when she passes. Taking the pension means she doesn’t worry about temporary volatility. Commuting is logical. The pension is emotional. I told you I’d share her decision. Below.)
Well, here’s Guy – another person struggling through this brain-heart morass we call life. “Longtime reader of your blog,” he wrote me on the weekend, providing the necessary sucking-up intro to his personal questions. “You do us all a great service with your advice. I would love your feedback on our situation if you would be so kind as to spare a moment for us.”
So Guy & babe are mid-thirties, downtowners (TO), making $150,000 between them, with a two-year-old and another on the way. They also have $480,000 in savings.
What? Half a mil in the kitty plus kid at that age? Are they bank robbers? Special assistants to Kathleen Wynne? Rap musicians? Central bankers?
“We have a very fortunate living situation, 2 bedroom apartment and rent free thanks to the assistance of family. Part of me feels like a freeloader, we’ve offered to pay rent, but the folks refuse and they love having their grandchild around – I don’t think they even want us to leave. We will need more space when the second child comes along though. We will want to stay close to said parents to help them as they age and also avoid a commute.
“Since housing in Toronto is so overheated, and being a dutiful student of your blog, I’ve shared enough of your advice with my wife to have her resist the natural FOMO and house lust that we are both experiencing. Thing is, we have our money doing nothing, for fear of a stock market crash happening right when we want to buy. We hope to be able to follow the rule of 90, or at least as closely as possible, but this depends on mortgage approval and the price of the house. We really don’t want to rent.
“So my questions are:
“1) Are we one of those cases where we should buy? If it’s dependent on the value of the home, how much should we be looking to spend?
“2) If we should wait, what do we do if, when we do need more space, the housing market hasn’t corrected? Cause my reading of your comments suggest that you think a correction is coming. (You’re going to say rent, aren’t you)
“3) What do we do with our money until we do buy? GICs suck, but I’m worried about market risk when we do need the money. We’ve been paralyzed as a result.
“4) I suspect you will say apply rule of 90 to the savings and invest the rest. Seems stocks are overvalued, as I can’t see any reason for the recovery from January/February lows. Think we should wait? Thanks for your time either way Garth. And for the blog.”
First, Guy, the reason you have so damn much money is because you live for free. Duh. So buying a detached house in 416 will surely change that. The average is now over $1.2 million, which means (after closing costs) you’d end up with zero liquid investments, a mortgage of $800,000 and a monthly carrying cost of more than $4,000 (mortgage payments and property tax). Plus, with a new rug rat your spouse will be off work for a year, and may not feel like returning for a few more. If she does, day care costs are insane (unless the grandparents provide that, too).
In any case, buying a downtown SFD would clean you out, indebt you to the pits and may or may not reward you with a capital gain (or loss) in the future. You might also ask yourself if an inner city location is actually the best place to be raising two kids. No issue when they’re two years old, but 15 is another thing.
Can you afford it? Yup. The bank will think so. But 100% of your net worth will be in one asset, which certainly augments risk. You’ll be saving little at a time when family costs are rising and you should be pumping money into an RESP as well as your TFSAs and retirement accounts.
So, bottom line, you live for free and have wealth now. If you buy, it all changes. Is a house worth going into debt for, knowing you’re buying at an inflated price with financing destined to get more expensive, not to mention property taxes? And why do you need more than a two-bedroom apartment with two infants? Won’t that be fine for a few more years, allowing you to goose the savings and reduce the risk of buying? Isn’t that the logical way to think about an emotional purchase you don’t really need?
As for investing, if you read this blog you’ll now it does not equal “stock market.” A balanced, diversified portfolio has at least 40% in less volatile fixed-income assets, real estate trusts and a broad diversity of securities reflecting growth in Canada, the US and globally. Last year when the Toronto equity market tanked, this portfolio lost nothing. More than seven years out of ten, it gains. The average return over the last six years (two of which, 2011 and 2015, sucked) was 6.3%. So don’t even talk about GICs – which lock money up, whose returns are 100% taxable and give piteous interest on which you have to pay tax before you receive the money. You’re obviously smarter than that. After all, you come here.
But does your spouse?
Finally, Joanne. Three hours of talking could not break through her wall of worry. Like so many of us, she cannot trust. Nor can she allow reason to temper fear. Her decision to take a reduced pension, pay more tax, surrender control and leave more than a million on the table that could go to her family was entirely emotional. Pension plans and GIC-sellers love people like Joanne, who consistently make the wrong choice.
I’m starting to think hearts may be over-rated.
145 comments ↓
Wow. Living rent-free and with unlimited childcare on tap, and yet the lure of RE may win out. It’s beyond a cult, it’s absolute insanity.
The government, bankers and media enablers have this all sewn up. A population of indebted, immobile (who’ll be able to sell and move when the day of reckoning comes?) revenue tools who have no choice but to oblige what’s coming down the pipe to cover immense government debt.
As for Joanne. Sigh. That’s all you can say. If she’s happy and it makes her sleep better at night then so be it.
Was her pension with the Feds? You never say in your article……. What is the biggest selling ice cream flavor at your store? Inquiring minds want to know.
Interest rates are toast. Addicted governments, corporations and consumers to low debt service costs, interest payments is here to stay.
Every time interest rates are supposed to go up over the last 20 years or so never materializes.
If it does not have a 2030 in front of it then interest rates from savings accounts, GIC’s, bonds to mortgages, lines of credits etc. will not start to increase in a sustainable way.
This is reality nobody wants to hear and believe.
DELETED
The mid 30’s couple with 500k in cash and free rent should commit to taking the free rent deal for another 5 years while being fully invested 60/40.
If they run a little hot with their investment return over that 5 years they’d be in such a ridiculous good position to buy.
This is such a huge inflection point for them – you don’t have to be a spreadsheet wizard to realize how quickly a 500k base compounds for people who are only in their 30’s …. the risk vs reward of throwing all of it at a downpayment when the real estate market has been on fire the last 5 years just isn’t right imo.
First!
And now onto serious stuff… Wiser words Garth have never been spoken. Love your blog. Excellent advice and yes hearts are overrated. People fall in love with piles of bricks, mortar, stainless steel and wood thinking these will always go up in value (especially SFH). Homes are the only investment that the older it gets, the more costly it gets to keep in shape or keep up with the joneses for that matter. Fallacies like land is running out (has anyone looked at the Map of Canada!?!) prattled by RE agents and Kondo kings looking to suck every last dollar out buyer’s pockets. Older generations (boomers et al) pass down advice like heirlooms saying RE always go up in value. They fail to realize they were part of the largest generation creating urbanization and a huge demand for housing hence the rise in prices. (if you lie to yourself enough you’ll start believing it) Now their demographics tell the tale of an upcoming downfall as the generation fades into the sunset and brings about the glut of dwellings onto the market. The end is definitely here: revenue properties are emptying out as renters move to condos thinking it’s better to own the box instead. The condo craze is the last phase of it (similar to the last but this time on a much grander scale.) People (namely younger urban) pay large amounts of money to live in boxes piled on one another and financed to the hilt in some way shape or form.
Where I am condo values are tumbling and so are SFH, although nobody (ie RE agents) will admit it.
Can you afford it? Yup. The bank will think so.
Surely it’s in the interest of the bank to make you into their life long debt slave, so their opinion might be a bit biased.
What’s next up to further shut down Canada’s oil and gas industry? Pipeline leak? Tanker sinking or running around? Public protests?
We’ve already had a train disaster involving oil cars, a wildfire to hit the only area of importance for hundreds of miles. Bang on target it was.
What, next random event will hit O&G – before crippling carbon tax and emissions standards are sanctioned upon us? We must be softened up first.
This is a no-brainer. Stay in the apartment. The baby will sleep with you for the first year anyhow. Or can share a room with the other baby. Save your money and wait the market out. Once you increase your standard of living it costs A LOT more money and it’s near impossible to go back to living a cheaper lifestyle. Plus kids are expensive! Daycare will cost you $1500 a month. It might be a different story if you were buying into a market that isn’t so nuts, but it is!!
Yes. When it comes to money, leeches and parasites are determined and insatiable. This may well have been a very wise and prudent decision for Joanne.
Of course, if it was my decision, I would take the money. But then again, I am an anomaly, as I always put my own Freedom First. No exception.
I’m making a killing over the past 2 years in real estate. Just sayin’…
Sixth!!
If JTs spending gooses inflation Joanne will be happy she has guaranteed indexing.
Markets and investment returns rise with inflation. She still made the wrong choice on so many levels. — Garth
To bad about Joanne.
She should shadow me for a week. I’ll show her risk.
I’m calling a BOC cut next meeting.
Long USDCAD. Sure thing now that the oil sands will be down for who knows how long.
I just read an article about Peruvian banana picking. It was terrific. That’s why I always put myself first. I told Joanne not to get married in the first place. I always put myself first. I’ve got a spaceship inside of me. I love cows.
Aaaaand Joanne embraces the uncertainty of putting her fiscal eggs in someone else’s basket. Why would anyone refuse a lottery win?
The GOP elite should thank there lucky stars that Trump is in.
Voters are so pissed at the establishment gop voters would have given their votes to burnee the commie.
The 30’s folks are just showing off. They must know the market condition as they are following your blog, so, to me, buying make no sense for them ATM.
Poor Joanne, don’t know what is going through her mind, if she is my mom, I must convince her to take the million and a half, nowadays you never know what is gonna happen with the company, even with the government is unpredictable. She may still grieving over her hubby and not thinking clear. You try your best, Sir, let it be.
Why was my comment deleted?
You know. By the way, get lost. — Garth
It is indeed tragic when people like Joanne or those closing in on retirement make decisions like this. I had a conversation with a 50-year old on the weekend about investing. He told me I was too young to remember 2008; I’m not, but indeed I had little to my name at the time. The take-away was that putting my money in the markets was too dangerous and that I’d be wiser to put it in something safer like, you guessed it, a condo in Toronto. I then just had to say the risks to the Canadian housing market greatly outweigh the risks to a balanced portfolio and had to move on to something else.
Joanne is 80ish, if she took the 1.4 million and spent 60k per year without investing anything, the money would outlast her and there would be something left for her kids… opportunity knocks and nobody is listening.
#8 TurnerNation on 05.08.16 at 3:58 pm
What’s next up to further shut down Canada’s oil and gas industry? Pipeline leak? Tanker sinking or running around? Public protests?
We’ve already had a train disaster involving oil cars, a wildfire to hit the only area of importance for hundreds of miles. Bang on target it was.
What, next random event will hit O&G – before crippling carbon tax and emissions standards are sanctioned upon us? We must be softened up first.
—
Do you think it could be a conspiracy?
“…hearts may be over-rated.” Garth
Very unusual monthly absorption rate in Canadian housing at the moment:
http://www.chpc.biz/mar-moi.html
Even Calgary’s housing is in on the act. But the awesome city is Toronto with its emotionally led actors in the market. They posted a 96% absorption rate this last month.
I did not think it was possible but according to the TREB
APR Res Sales Total = 12,085
APR Total Listing Supply = 12,554
MAR = Sales/Listings = 96%
If you own a single family dwelling in the hot markets, you are living in an unredeemed mega-lottery ticket. The sooner you sell and get the last greater fool off the fence, the sooner the rest of us can start looking for affordable housing again… perhaps a yurt in the backyard:
https://www.airbnb.ca/s/Canada?type=yurt&s_tag=OApMNJOX
#7 nubbers writes:
Can you afford it? Yup. The bank will think so.
Surely it’s in the interest of the bank to make you into their life long debt slave, so their opinion might be a bit biased.
Years ago, well before this recent stuff, I did a local charity golf thing and a regional vice president of a Canadian Chartered Bank was in my foursome.
Chatty guy, full of the Kool Aid too. Told us with zero guile or embarrassment that if he could get you into his bank with a mortgage, LOC and a single credit card he had you for life.
Used those exact words…had you for life.
Stay at the ‘rents until the kid is in Grade 1 assuming you’re not miserable. Invest that money pile in something balanced to be ready in a few years. Having a 2500+ mortgage + 3K/year property taxes + every other thing that can go wrong with a house vs living for free and socking away everything extra should be a no-brainer.
Yves over at nakedcapiralism.com responds to the Rolling Stone article, http://www.rollingstone.com/politics/news/want-to-move-to-canada-if-trump-wins-not-so-fast-20160505
“See, I told you emigrating was not easy. But wait until China crashes and takes the Canadian real estate market and the loonie with it. There was a point when you could get permanent residence in Spain by investing 200,000 euros in Spanish residential property. I knew that was an opportunity of a lifetime but was unable to take advantage of it. The problem is US assets will be whacked when that happens too, but not as badly.”
Food for thought for folks with all assets in a single basket?
Needless to say, as I explained in the debates to the TOTAL LOSERS, I don’t need such a book.
Regarding the fires in Fort Mac, is it really possible for someone who owns a home there that burned down, to use this disaster as a means of escape? Can someone explain that? Wouldn’t the insurance company require them to rebuild where the house stood? And how do they value the house if a whole neighbourhood went up in flames? I’m hearing a lot of talk that people could just “walk away” with their insurance payouts. But I’m not so sure….
omgosh…Joanne stuck with the $60,000/yr pension instead of the $1.5 million?? Even invested and generating a realistic 5% return per year, she’d be $15,000 before tax ahead each year, had she taken the commuted value…. That’s a shame. Truly.
I’m in a similar situation to Joanne. My DB pension plan from a US company will pay out monthly about the same as hers when I pull their plug next year.
Except no COLA or other indexing.
If I commute the plan, the company offered buyout is about one half of what Joanne was offered. I envy her.
And for what it’s worth, I’m still really considering the buyout seriously. My money vs their money. Even though US pensions come with a guarantee (at a much reduced rate).
Too bad Joanne didn’t take your advice, here is hoping the inherited pension IS from some order of government, as that is the least likely to go under while she is still alive.
As for the couple with free rent, hang onto that while you can. Keep saving & max out the TFSA/RRSP/RESP. Once you must expand the living quarters keep renting if the housing market is still insane. Try out different areas to see whether they work for the family needs as they are & if not, keep moving yearly until you finally find ‘the one’.
#27 – I believe insurers will still pay out even if you do not rebuild at the same location. However, if you do choose to take the money & run, it is likely that they will pay you a lot less. It depends on the insurer & what the policy says.
Given the scale of this latest disaster, I’d not be shocked if insurers begin to demand higher premiums for homes that are not built to be very fire resistant. By that I mean brick, stone or cement walls instead of vinyl siding; roof materials made of metal, clay or slate rather than combustible asphalt shingles/wood shakes etc. It won’t stop the wildfires from occurring, but it might prevent entire neighborhoods being burned to the ground.
“You might also ask yourself if an inner city location is actually the best place to be raising two kids”
5/7/2016
Police summoned to a girls squirt gun battle in Oakville
cbc.news
#27 Don’t Believe The Hype on 05.08.16 at 5:58 pm
Regarding the fires in Fort Mac, is it really possible for someone who owns a home there that burned down, to use this disaster as a means of escape? Can someone explain that? Wouldn’t the insurance company require them to rebuild where the house stood? And how do they value the house if a whole neighbourhood went up in flames? I’m hearing a lot of talk that people could just “walk away” with their insurance payouts. But I’m not so sure….
——————————-
Sit down and think for a few minutes.
Think of the hundreds of ways things would go wrong/get mismanaged/be done inefficiently if an Insurance company would dictate to you to rebuild
Are they going to tell you to make an exact replica of the house? Who is going to inspect and audit to make sure it’s the same? They going to measure every room?
It’s much more efficient for them to just cut a cheque and move on.
When your car is a write off you get a cheque and that’s it, what you do with the money is irrelevant to the insurance company.
RIP pension…. my employer changed the commuted thing now. such is life.
atleast their propaganda pamphlets said if everyone were to be paid out we would have a surplus. maybe.
5 more days to go visit the states in locations with no reception. do I care about my portfolio while I’m MIA for 7 days? nope. balanced portfolio’s rock!
thanks Garth!
“We pray to rain gods for mercy,”
Armed guards at India’s dams as drought grips country
Government says 330 million people are suffering from water shortages after monsoons fail
http://www.theguardian.com/world/2016/may/02/armed-guards-at-indias-dams-as-drought-grips-country
@27, yes, they can take Actual Cash Value as described here.
http://www.macleans.ca/news/canada/what-now-for-those-in-fort-mcmurray-whove-lost-their-homes/
searchable on monday
http://money.cnn.com/2016/05/06/technology/panama-papers-search/index.html?iid=surge-stack-intl
As a person living in Toronto I wouldn’t buy a house here and it’s not just the prices.
Soul sucking commutes of 1 to 2 hours being stuck in on and off traffic
Proliferation of passive aggressive ironic types
Sticking to their own. I am a first generation immigrant myself, but I do not see people integrating here and sticking to their own. In fact I mingled more with other culture back in Fort Mac than here in the diversity capital of Toronto.
Strong PC culture in workplace and outside of it. You really got to keep your opinions to yourself if you ever want to get promoted.
If I ever had that money pile as that couple and wanted a single home I would move to robust small town like Guelp or Kitchener, as the RE prices are reasonable and they fare well compared to Toronto.
Talking about interest rates. Japan’s 30 year bond yield at 0.25%.
It was 1.5% just about a year ago and 2.5% just 4 years ago.
I remember Canada’s 30 year bond was 3.81% just 6 years ago and it is now 1.98%.
Anyone see a trend here.
the masses want to be poor. they do everything in their power to destroy wealth. they crave being poor. fight for it. joanne is no different. she desires to be poor and will get what she wants. that’s how life works. the rich will always be in the minority
Regarding the pic . The book up top.
It only needs two words to be a best seller as I’ve recently discovered.
Quit Smoking.
We are taking 25 years old again. Bring on Sherly.
No need to hide in shame anymore.
This is getting pathetic. At Senica on a Sunday night
Mrs smoking man had a great afternoon, she’s ready to do the vows again…..
Who knew……
We escaped out of the big smoke Toronto Last week to eastern Ontario….how we forget the beauty; the wonder; the views; the fresh air; the nice people; and little or no traffic what a fabulous five days of heaven.
If any of you kids need a day away from the big stink…get on the 401 and once you get to Belleville and on to Kingston and on both the American and the Ontario side of the St. Lawrence river you will find what you know in your heart is the Canada you thought had been politically correct and viscerated but alas yes my dear fellow creature go it is still there.
All the yamering about GTA as if we would miss out on the noise; the traffic; the cranky folks; the high prices; the high rent; the lack of civility ….get out of town kids and you will see ya Canada does exist outside this microcosym of socially engineered veneer of pretend greatness
I’m looking at a quasi-governmental pension with a COLA in a couple of years. Wife will have little income other than the spousal RRSP I have been funding since we got together. I don’t know what the commuted value of my pension would be, but I’m wondering if the ability to split the pension income makes a difference.
My RRSP is larger than hers and I have small non-registered account. TFSA’s are maxed in growth assets.
Three beers and I’m buzzed.
Life. It’s short…. why does the herd walk the world in a bewildering cage of fear and lothing.
Fear of not doing the right thing, ensuring the need to fit in is not in jeopardy.
Loathing = Friends, family, classmates who have a bit more luck.
Anyone who disagrees is a bad lier or stupid.
“Jim’s gift to her was extraordinary. Most people don’t have pensions at all, let alone ‘defined benefit’ ones that promise a specific amount in the future”…….your words Garth…….and yes I understand – it’s your job, but with 4 adult kids (spouses/ grand kids ?) that million and a half could disappear quite quickly!
‘Why wait til I’m dead – I wanna help my kids/grandkids- needy friends and relatives now!”
Going with the pension means Joanne will have peace of mind, her family will know that she’s well taken care of (her husband’s wishes) and she will be more realistic about ‘helping out’ the clan. As I said before, this lady probably has a house – let the kids have that one day.
Well done Joanne – you will not regret your decision.
That made absolutely no sense. — Garth
carry the two and… have to call BS on the $500k in savings, the number just don’t add up. Have they ever bought groceries, own a car, live? do they grown their own veggies and live off the grid on hopes and dreams?
it is possible rent free with extremely frugality to amass that sum but highly improbable. I feel like the internet add as few extra inches to folks…bank accounts.
seems like a lot of folks that email you Garth have these wonderfully large down payments on modest incomes(150k household is not ballin anymore in this city)
I smell a parental layup – because they live rent free suspect their education costs were financed at mom and dad financial, in addition to any other large expenses they have incurred.
@#24 Metaxa
“Surely it’s in the interest of the bank to make you into their life long debt slave…”
As Bob Dylan said: “But you’re gonna have to serve somebody…”
You are going to either serve the bank or the landlord, your choice.
#38 Toronto Dweller on 05.08.16 at 7:11 pm
As a person living in Toronto I wouldn’t buy a house here and it’s not just the prices.
Soul sucking commutes of 1 to 2 hours being stuck in on and off traffic
Proliferation of passive aggressive ironic types
Sticking to their own. I am a first generation immigrant myself, but I do not see people integrating here and sticking to their own. In fact I mingled more with other culture back in Fort Mac than here in the diversity capital of Toronto.
Strong PC culture in workplace and outside of it. You really got to keep your opinions to yourself if you ever want to get promoted.
If I ever had that money pile as that couple and wanted a single home I would move to robust small town like Guelp or Kitchener, as the RE prices are reasonable and they fare well compared to Toronto.
…
I do fine not being pc. But I’m a gambler not a suck up. The world wide Web is full of good business ideas.
You trade time for crumbs you someone’s bitch.
It’s so easy to start a business. You got mind fkd kids with obidiance certificates that have been programmed by the machine to work for free and be loyal. Interns..
Why are you still punching a clock?
Humans is all I’m saying.
Rail traffic in the US was down 11.8% in April 2016 vs April 2015, according to the Association of American Railroads. There are currently 292 Union Pacific locomotives idle in the Arizona desert, near Tucson.
The US labour particpation rate is the lowest in 40 years. Beware of normalcy bias, I would take the indexed pension.
off topic
What is going on, are we as a society this stupid…
Academic questioned by American Airlines officials for doing math on plane
Technically Incorrect: An Ivy League expert in search theory says the math he was writing may have been mistaken by a passenger for some sort of code, possibly terroristic.
http://cnet.co/1TwI74w
#ThoseNumbersWereAllInArabic
#AlGebra
#WeaponOfMathDestruction
What is up with Hillary and her crazy eyes. I am sure she is half loopy. You all see it too.
Most of a houses value is in the land. Walking away would be walking away from a large percentage of the original house value by leaving the land. If there is a mortgage that would have to be paid first anyway which would leave nothing but debt and a vacant lot. I suspect vacant lots in Fort Mac won’t be selling for much going forward.
On the other hand what will a newly built house be worth now with a town that has just burnt to the ground with the threat of future fires. Insurance companies may not insure this town any more for fires. The best course for many may be walking away and claiming bankruptcy. Especially if they are out of work for a while.
Of course those who rented in Fort Mac just walk away, collect the insurance cheque for their belongings and find a new place to live.
Good advice might be to sell the base metal stocks short for about one years time starting October 03 this year. Looking for at least a 50 percent gain. Or using a hedge buy platinum (PALL) and sell the base metal stocks short starting this October.
Joanne. Don’t feel bad about your stupid choice. Let’s face it. You don’t have balls.
Joanne your going to die within in the next 30 years or so and that’s pushing it.
You could have had so much fun between now and death day.
But you made a track 6ers choice. Old timers here will know what a track 6er is..
You fit in nicely. “Ahhhhh someone else’s responsible for me now!!!!”
I don’t need to think, what a relief right.
Education industrial complex has reach is all this drunk has to say.
Sherly Valintine. Send me a pic.
Re: #36 Insurance Guy on 05.08.16 at 7:11 pm
Arson, with hundreds or thousands of arrests to follow. The commoners just don’t seem to get it just yet but they will soon enough.
Guy. Admit it. You don’t actually read this blog. It’s that or you think you are so special that the advice Garth gives out (frequently, repeatedly, in easy-to-understand sentences) doesn’t apply to you. It applies to you. Sheesh.
Garth, sorry that despite all your time and effort Joanne went with the timid, illogical choice. She may just not have the capacity to do more than live off an allowance, let alone stay level headed during a market correction or resist entitled kidults trying to get their hands on the principal while she’d still be alive and living off it. A shame she couldn’t make the most of this opportunity, though. I hope the organization behind the pension is rock solid, for her sake.
Joanne did as I expected. I’ve known many Joannes. Each would have done likewise.
HAM IS HERE AND THERE’S NO DENYING IT. Citizens are being displaced by foreign nationals laundering money and our governments are complicit in a cover up for political reasons.
http://vancouversun.com/business/real-estate/foreign-buyers-crushing-home-dreams-in-vancouver-as-canada-b-c-do-zip-study
The political game of distraction and denial has fallen flat on it’s face. People have become tired of being called racists when all that is is a word game to cow people from speaking the truth. When will citizens stand up and set the the legislatures proverbially afire with the flame of truth?
Trudeau Liberals should be ashamed of themselves for this blatant pandering and anti-Canada stand where other other countries have already put legislation in place. It is not racism when the buyers are foreign nationals…no one has said anything about local ethnicities. It’s time to burn down the house.
An estimated 95% of all trades in YVR real estate are done by locals. Focus on what actually matters. — Garth
@#11 North Burnaby Inn/ Anton’s Pasta
“I’m making a killing over the past 2 years in real estate…….”
*******************************************
Sooooo that means you’ve bought AND sold.
Because if you bought and are still holding……you havent made a dime until you sell…..Its all “castles in the sky ” until you sell.
Just sayin.
Definitely not the Chinese influencing the Vancouver real estate market – sarcasm off.
http://www.theprovince.com/business/local+business/foreign+buyers+crushing+home+dreams+vancouver/11905053/story.html
You can deny all you want, but those of us that live here know it is all too real
#44 Smoking Man on 05.08.16 at 7:37 pm
Three beers and I’m buzzed.
Life. It’s short…. why does the herd walk the world in a bewildering cage of fear and lothing.
Fear of not doing the right thing, ensuring the need to fit in is not in jeopardy.
Loathing = Friends, family, classmates who have a bit more luck.
Anyone who disagrees is a bad lier or stupid.
——————————–
Mr. Smoking Man, you’re my new bff. I love the way you write and expound. We need more guys like you to leave the center of the universe and move to Alberta. “Home on the range.” ;)
#61 Freedom First on 05.08.16 at 8:51 pm
#44 Smoking Man on 05.08.16 at 7:37 pm
Three beers and I’m buzzed.
Life. It’s short…. why does the herd walk the world in a bewildering cage of fear and lothing.
Fear of not doing the right thing, ensuring the need to fit in is not in jeopardy.
Loathing = Friends, family, classmates who have a bit more luck.
Anyone who disagrees is a bad lier or stupid.
——————————–
Mr. Smoking Man, you’re my new bff. I love the way you write and expound. We need more guys like you to leave the center of the universe and move to Alberta. “Home on the range.” ;)
….
It’s Dr Smoking Man
Joanne would have to surrender control under any circumstance. To an adviser or to her pension plan. If she is a worrier then she made the right decision. She chose certainty over uncertainty. Markets go up and down, her income will be steady and she will adjust to inflation. We spend what we make. The kids will be fine. It’s healthier not to worry. There is so much more to these decisions that financial gain. Especially when it’s not guaranteed and in this uncertain world (China, climate change, Greece, EU opt outs, Trump etc. etc.) somewhat over sold.
Well, Joanne I am disappointed, but not surprised. You want “security” over “freedom” and here we say people with such attitudes deserve neither. ’nuff said…
As for the 30 year old, don’t be in a hurry, try to stretch it for a couple of years. You may get a bargain, or be ‘priced out forever’ if you are to believe the local hokum.
Besides, in 2 years you could get canned, a great opportunity opens up in a place your family could afford, and it is beautiful!
Two years, an awful lot of change goes down in two years, are you flexible enough for it?
I miss the days when most people here were seeking alpha. Now it’s more the seeking Alpo crowd.
Profit from wrinklies burning through their DB pensions (psst your returns there are coming from the…gasp…stock market – via a balanced portfolio) with the likes of Chartwell or Extendicare REITs.
5% yields – for the schlock pickers.
I was just reading your blog on the way back to the mainland from Victoria. My wife and I took the weekend to go look at homes where it is still affordable, or is it? Every realtor, or new build we went to insisted the market was flat for about 5 years and now it’s booming. My balanced portfolio has done nothing in the past yearbut give me anxiety. Rentals are asking crazy amounts and no choice but to buy or spend 2500 on a rental, 30k a year for something you can’t even paint without asking is a lot.
@Niel M
They are right, Niel. Or kind of right: prices were actually going down for about five years, but realtors have a hard time pronouncing “decrease” so they say “flat” instead. We’ll be making the same trip for the same purpose trip next week.
There is a lot of good info here:
http://househuntvictoria.ca/
A prominent German news magazine reports the natives are very restless there.
“More than two-thirds of Germans reject the planned trans-Atlantic free trade agreement. And even in circles within Merkel’s cabinet, the belief that TTIP will ever become a reality in its currently planned form is disappearing.
That’s because on Monday morning, Greenpeace published classified documents from the closed-door negotiations. Even if the papers only convey the current state of negotiations and do not document the end results, they still confirm the worst suspicions of critics of TTIP.”
The German public also doesn’t like CETA, the Canada-Europe trade deal still in negotiation.
http://www.spiegel.de/international/world/protest-movement-threatens-ttip-transatlantic-trade-deal-a-1091088.html#spLeserKommentare
Every human wants to be loved.
They just go about it in stupid covert ways. Just ask, it’s that easy.
Good night dogs.
Joanne, if you really wanted to pass on substantial $ to your 4 kids you would have taken the commuted value.
To the young family thinking of buying Why do you need the room right now anyway? I know a lot of posters are a bit older than you and are focused on the $ side, but Im a mom of a 3.5 year old and 14 month old so I speak from practical experience. It’s likely your kids won’t want to stray far from you, nor do they need their own rooms. At least wait until after your second is born cause you will soon find out the childrearing work more than doubles with 2 and you will want to be close to the grandparents if you want/they are willing to help. Stay where you are and with the free rent maybe mom can stay home with the kids for awhile and by the time you get out of the infant/toddler trenches it will be a prob be a better time to buy. You are in such a luxurious position and don’t even realize it!
#59 crowdedelevatorfartz
“you havent made a dime until you sell…..Its all “castles in the sky ” until you sell. Just sayin.”
——————————-
I completely agree. And, after selling, there’s one more important step to take. Diversify that tax-free cash and resist the urge to dump it back into risky RE.
The leisure Society?
#49 Basil Fawlty on 05.08.16 at 7:55 pm said:
The US labour particpation rate is the lowest in 40 years.
********************************************
People are living without working? Sounds like good news.
Keep in mind 100% labour participation can only happen if, all Kids start work at 16 years old. No one ever retires. No one is disabled or unable to work for any reason. Careful what you wish for.
Jealous Much?
#59 crowdedelevatorfartz on 05.08.16 at 8:47 pm said:
if you bought and are still holding……you havent made a dime until you sell…..Its all “castles in the sky ” until you sell.
**
###################################
The notion that one has made no money until they sell is completely false. Wealth is MEASURED in money, wealth need not BE in cash money. On a mark to market basis you make money as prices rise. You might later lose but you have made the money (technically the increase in your wealth) as prices rise.
If the statement were true then Warren Buffett has not made any money in Berkshire stock which is a preposterous notion.
People who say that someone has not made any money until they sell are either uniformed or just jealous.
Of course, yes the gain should be calculated on an after-tax basis and after transaction fees as well when those are significant.
Like most people, you have probably never taken Bitcoin seriously. However heavy hitters including central bankers are taking a hard look at blockchain, the technology behind it. In the not too distant future it could be chewing into bank profits. Banks make money as middlemen. Blockchain removes the need for middlemen.
“No, the real significance of Bitcoin is not its value as a digital currency, but the algorithm that lies behind it – a technology called blockchain. What this in essence does is allow payments to be made without reference to a centralised ledger. Instead of relying on a trusted third party to clear and settle any given transaction, the blockchain provides a so called “distributed ledger”, where the transaction becomes widely recorded by all users and therefore verified in multiple form. Blockchain thereby renders existing payments systems pretty much obsolete.
In itself, this is revolutionary enough. Santander InnoVentures, the Spanish bank’s fintech investment fund, recently estimated that blockchain could save lenders $20bn a year in cross border settlement payments alone. Another study by Autonomous Research estimated that the cost of clearing and settling securities in G7 countries was $54bn a year. Theoretically, blockchain could obviate all these costs.”
http://www.telegraph.co.uk/business/2016/05/03/central-banks-conspire-to-harvest-bitcoins-revolutionary-technol/
#15 Freedom First on 05.08.16 at 4:29 pm
=========================================
would the real Freedom First please stay sitting down? this copy is much funnier
#54 Smoking Man on 05.08.16 at 8:31 pm
Sherly Valintine. Send me a pic.
XOXOXOXOXOX
Dr. Smokey stud… surely you have an image formed in your alien mind’s eye…. how could I possibly compete with that?
Smoking Man on 05.08.16 at 8:31 pm
Sherly Valintine. Send me a pic.
========================================
please put an end to all this sadness and just send him your ‘richard’ pic
Actually I think westcoast might be right about Joanne. She is scared by her family…. But I still think this decision is really wrong
#76 Shirley Valentine on 05.08.16 at 10:26 pm
#54 Smoking Man on 05.08.16 at 8:31 pm
Sherly Valintine. Send me a pic.
XOXOXOXOXOX
Dr. Smokey stud… surely you have an image formed in your alien mind’s eye…. how could I possibly compete with that?
……………….
You got a good chance. My standers from 19 years old have been computerized by baldness and rotten teeth and most important, wisdom.
Don’t be shy babe……
#68 Andrew Woburn on 05.08.16 at 9:39 pm
A prominent German news magazine reports the natives are very restless there.
“More than two-thirds of Germans reject the planned trans-Atlantic free trade agreement. And even in circles within Merkel’s cabinet, the belief that TTIP will ever become a reality in its currently planned form is disappearing.
That’s because on Monday morning, Greenpeace published classified documents from the closed-door negotiations. Even if the papers only convey the current state of negotiations and do not document the end results, they still confirm the worst suspicions of critics of TTIP.”
The German public also doesn’t like CETA, the Canada-Europe trade deal still in negotiation.
http://www.spiegel.de/international/world/protest-movement-threatens-ttip-transatlantic-trade-deal-a-1091088.html#spLeserKommentare
======
The masses have enough cheap Made-in-China garbage, now they want their jobs, identity, political power back.
Garth, how do elected politicians of democratic governments imagine they have the right to negotiate global trade agreements in secret, basically closing out their entire constituency from the process, making the agreements public after signing and ratification?
And you “wont” post the SFU link on RE in Vancouver why exactly?
Done ten times already. And it’s a useless regurgitation of media articles. — Garth
The S&P 500 is now trading at the highest price-to-sales (PS) and price/earnings-to-growth (PEG) ratios in the history of the stock market. So a major correction is coming. Secondly, the reality is that there is no legal duty for any financial advisor to act solely in Joanne`s interests. She dodged a bullet.
Incorrect on all counts. — Garth
DELETED
A boy in The Sky, can you explain your theory on this supposed inflection point? We are also mid 30s with $600,000 saved/invested and with young kids. No debt. Rent. But it feels like savings alone is doing most of the lifting these days while housing continues to reward the indebted.
In the early days our NW increases seemed promising, but at this stage in life it feels like we will still be behind as ‘real inflation’ (ie. homes, education) skyrockets out of reach.
#28 Don’t Believe The Hype on 05.08.16 at 5:58 pm
Regarding the fires in Fort Mac, is it really possible for someone who owns a home there that burned down, to use this disaster as a means of escape? Can someone explain that? Wouldn’t the insurance company require them to rebuild where the house stood? And how do they value the house if a whole neighbourhood went up in flames? I’m hearing a lot of talk that people could just “walk away” with their insurance payouts. But I’m not so sure….
——————————————————————
It is quite likely that the value of the lot is or was 2/3 of the total value. The insurance would only be for the replacement cost of the home. The banks will have first dibs on the insurance and they are still responsible for the mortgage on the remaining value in the land. If the total value was $900,000, the home may only be worth $300,000. Even if they have $300,000 in equity in the property, they still owe the bank $600,000. They will not be walking away scott free. No insurance on the land. It’s still there only scorched. Nothing to celebrate here.
#33 A box in the Sky on 05.08.16 at 6:38 pm
” When your car is a write off you get a cheque and that’s it, what you do with the money is irrelevant to the insurance company.”
No comparison in house vs car. A car is not tied to a piece of land. The bank will get the money first since the cheque will only be for the replacement cost of the house. You can’t just walk away from the land which is the biggest part of the mortgage. Think about it.
#73 Shawn
People who say that someone has not made any money until they sell are either uniformed or just jealous.
———————————
I sold a house in 2010 for 7.6 times what I paid for it 25 years earlier. The day I deposited the check is the very same day the money was “made”.
Of course, it wasn’t all made. There were many expenses over that time. Still, I estimate I gained 8% average annually. Then I sold and actually “made” the money.
No jealousy, no misinformation. Just good old fashioned, real liquid cash. I still have all of it. It’s spun off lots of other real, usable money in the meantime. Something the house never did.
# 15 & # 61 Freedom First Fakes
I am enjoying my fan club. Even the idiots. I have to admit, your humour is making me laugh. Don’t know if #15 & #61 are the same woman, but keep it up.
Most of my other impersonators are just ridiculous, but #15 & #61 are a funny idiot/s.
#54 Smoking Man
You don’t have balls.
…………………………………………………….
That’s true Smokey, but then again, she’s a widow.
Many women today keep their husbands balls in their purse. Sure, the husbands can give another man a hard time, but your wives, they are your owner. SJW’s, like your leader.
#75 liquidincalgary
Funnier? Of course. I say the truth. And the truth is painful to the herd. It’s why Garth gets death threats.
#70 Vs
Right on about the young family. Wisdom from experience. Priceless. Like what Garth teaches. Of course, many many many people cannot recognize wisdom. Herd think is powerful.
Nope, we are just smart enough to realize the vast majority of people who have “made money” in this bubble will never see or spend any of that money. That is the way bubbles work.
Berkshire stock is diversified and supported by earnings which means it is not in a bubble and not likely to collapse like housing prices.
Warren Buffet spends about $40 million per year to live funded by his investments in stocks. How much does the average home owner get from their house? Nothing in most cases, their house costs money to hold.
#69 Smoking Man
Women in my life have not been able to grasp that I love myself enough for the both of us. I’ve loved all my girlfriends. Until they insist I live with them. They know I only live alone from the getgo. I am an honest, kind, loving and monogamous man.
Which government negotiations are held in public? Politicians are elected to negotiate on your behalf. The public get their say at election time. T2 supported the deal and was just elected. Harper supported it and came in second. Mulcair didn’t support it, lost opposition status, and was just turfed from his party as leader.
DELETED
#9 LS in Arbutus
“daycare will cost you $1,500”.
Make that $1,800 in most parts of the city. But by the time they are in preschool it will be close to $1,300.
#31 Linda
#27
Besides, the insurance will only pay up to the rebuilding value of the house itself. Don’t know about Fort Mac but here in Toronto the value of the building vs the land isn’t much.
Still shaking my head in shock. Only in Kanada the land of scared sheeple would someone turn down $1,500,000 cash.
So used to ineffective socialism and limiting handouts (after the public unions feast on our taxes)are we.
What if in a few years, one needs a life changing medical procedure which has a two-year waiting list here, but is available now in USA at say $100,000
How you gonna raise that cash at age 75. Cash is king.
My mother told me no woman would ever be good enough for me, she was right. There’s no shame in still living with my mom. She’s the only woman I’ll ever need.
#38 Toronto Dweller on 05.08.16 at 7:11 pm
As a person living in Toronto I wouldn’t buy a house here and it’s not just the prices.
Soul sucking commutes of 1 to 2 hours being stuck in on and off traffic
Proliferation of passive aggressive ironic types
Sticking to their own. I am a first generation immigrant myself, but I do not see people integrating here and sticking to their own. In fact I mingled more with other culture back in Fort Mac than here in the diversity capital of Toronto.
Strong PC culture in workplace and outside of it. You really got to keep your opinions to yourself if you ever want to get promoted.
If I ever had that money pile as that couple and wanted a single home I would move to robust small town like Guelp or Kitchener, as the RE prices are reasonable and they fare well compared to Toronto.
– – – – –
I know how you feel. Sometimes I wish I could leave the small town Alberta and go live in the big smoke also. I would get out and enjoy the nightlife and show the locals how its done. No more nights alone with mom. I bet she’d let me go if I asked real nice. Anyways, just hold onto that dream and don’t ever let go. Someday you’ll make it to the big city and you’ll thank me. Thank me for giving you the sort of support that only someone as special as me can give. That howdy y’all sort of Alberta, get your gun, find me a woman who won’t talk back and try to cut off my balls sort of man to man support. It’s an honor to help and I’m thanking you continue to come and visit this blog Garth and I have set up for feeble little people like yourself.
FF007
P.S. – If you need an secret information about how to make it to the big smoke, just ask. As a member of MI6, I’ve got endless amounts of great data.
@42
go even further east… the squeeze and I did a trip to the east coast. stopped in quebec city, Fredericton, cape Breton and Halifax. Great food, friendly people and good company.
Even the places we stayed in Quebec the locals were more kind than walking through the #1 douche land in Canada. ie: Toronto
@#73 Shawn
“The notion that one has made no money until they sell is completely false.”
*******************************************
Not true.
If North Burnaby Inn/ Anton’s pasta has leveraged himself to the max to “buy” the aforementioned property/properties and the value drops….he/she/it are still on the hook for the whole kaboodle…..unlike Warren Buffet who OWNS his entire portfolio.
As i previously mentioned. “castles in the sky” until its sold and the money is his/her/its grubby little bragging hands.
Guy & Babe have died and gone to heaven, and don’t know it! Bizarre!
Rent free? $480K in savings? Parents there for care? And they want to throw it all away?
With that cash pool, why not visit Garth and get him to invest the treasure properly? And in another decade retire, move the family to a tropical island while grandparents are still around?
Naw we want a house instead.
The reason Joanne took the Pension and not the payout is that people think they are going to live forever and don’t want to think or plan ahead in life.
Look at all the boomers in denial STILL living in their houses, their empty nests all packed with old furniture and dinnerwares etc. They want to stay put until they die. A big segment of the population lives like this.
If they suddenly get a big financial asset like 1.5 Million they get nervous and are deathly afraid of losing it or having it stolen by the bank etc because they are not used to holding such a large financial asset. They aren’t going to suddenly feel normal about doing this without their spouses help who handled the finances their whole marriage.
For people who don’t like to handle money and have trust issues the Pension payments are the right option because the other option increases their worry and quality of life. Pension plans know this and that is the reason they exist!
I’m sure he’ll be discredited, but watching BNN this morning and John Zechner stated that our real estate market is hugely impacted by uncontrolled and unmonitored foreign buyers. Without it, the market would implode. He went on to say that he had no clue why it so misunderstood, dismissed and underestimated.
Seems like a pretty smart fellow with no reason to cook that all up.
“We have a very fortunate living situation, 2 bedroom apartment and rent free thanks to the assistance of family. Part of me feels like a freeloader, we’ve offered to pay rent, but the folks refuse and they love having their grandchild around – I don’t think they even want us to leave. We will need more space when the second child comes along though. We will want to stay close to said parents to help them as they age and also avoid a commute.
___________________________________________
Guy, Funking with your current accommodations is insane, especially in the GTA, especially now, ESPECIALLY at your age given your excellent savings for mid 30’s.
How’s your job security?
School debt?
How’s your marriage doing – good?
If I were you, I’d stay there and invest like a savage beast with a goal of getting a million by 40, and 2 million by 50. I think with your good income and cheap as dirt living you could do it. Then you could bail on working full time with an average 100K income stream from that 2 mil.
I’m only 43, and I already love the idea of retiring – trust me – you will too! You actually have the chance to do what virtually no one can – invest with the reality of exiting the workforce a decade or two early.
Just think – you’ll be out fishing while all your buddies are slaving away because they still owe 500K on their mortgages :).
But – only if you stay with the parents…
#15 Freedom First on 05.08.16 at 4:29 pm
That made me laugh out loud.
Wealth Gains versus Cash Gains
Three people claim I was wrong to say that the following was wrong.
“if you bought and are still holding……you havent made a dime until you sell…..Its all “castles in the sky ” until you sell.”
It is wrong and it’s wrong for real estate and stocks.
Wealth (which is measured in money but is usually not cash as such) rises and falls with the market prices of houses and stocks and farmland owned. It should be measured after tax which is a requirement for any asset marked to market under accounting rules.
The wealth is realised in cash money when sold.
The notion that there has been no increase in wealth when asset prices rise since the wealth is not cash is wrong. All wealth is not cash. Most wealth is not cash.
This comment applies to all assets including houses.
Would anyone argue that if house prices fall by half, nothing has been lost if the house is not sold? Preposterous.
After being kicked to the curb Thought about taking the commuted value but would have been hammered with taxes, RRSP was already maxed.
Was on the Sunshine coast this weekend, RE feeding
frenzy.
FFirst imposter, instead of just scrolling past I now have to scan for humour. please, please, please dont impersonate Mark…………………..
Will Poloz cut rates again in the future…
http://www.bloomberg.com/news/articles/2016-05-09/imf-says-poloz-should-consider-rate-cuts-if-economy-falters
#95 BS on 05.09.16 at 2:13 am
Globalism on 05.08.16 at 11:00 pm
Garth, how do elected politicians of democratic governments imagine they have the right to negotiate global trade agreements in secret, basically closing out their entire constituency from the process, making the agreements public after signing and ratification?
–
Which government negotiations are held in public? Politicians are elected to negotiate on your behalf. The public get their say at election time. T2 supported the deal and was just elected. Harper supported it and came in second. Mulcair didn’t support it, lost opposition status, and was just turfed from his party as leader.
—
Referendums are not new.
Nothing prevents politicians to consult the public or even run referendum before signing agreements that propose fundamental economic, social changes in multiple countries.
Once agreements are signed, it takes much more effort to change or eliminate them, even if the majority of the population finds not serving their own interest.
The German public’s growing opposition, Brexit and Trump are all the reflection of the displeasure of “negotiating on your behalf”.
Ignoring the public interest too much, too long always creates swings to extreme.
Agreements closing wars, not pre-approved by the broader public created Hitler and WWII.
This comment applies to all assets including houses.
Would anyone argue that if house prices fall by half, nothing has been lost if the house is not sold? Preposterous.
————————-
as we all know anyone still holding NT shares has not lost a cent until they sell!
when spoken about van RE nothing but pure jealousy.
Hwy robery
http://www.bankrate.com/mortgage.aspx?market=68&loan=200000&perc=20&points=All&fico=740&prods=1&zip=
#38 Toronto Dweller on 05.08.16 at 7:11 pm
If I ever had that money pile as that couple and wanted a single home I would move to robust small town like Guelp or Kitchener, as the RE prices are reasonable and they fare well compared to Toronto.
__________________________________________
Why wait?
The Koreans and Philippinos are showing up in droves – get in now or forever be locked out!!
#109 Shawn on 05.09.16 at 11:00 am
“Wealth Gains versus Cash Gains
Three people claim I was wrong to say that the following was wrong”…etc.
You’re all wrong. You can’t eat your house. Wealth is cash flow. Adam Smith figured that out 241 years ago.
Your house is saving you a certain amount of rent. If the house goes up in price but the rent you save is the same, you haven’t gotten anywhere. If your property tax goes up at the same time, you’re further behind.
If stocks and bonds are overpriced, and you can’t increase your cash flow by selling your overpriced house, you’re even further behind.
Millions of starving, house-rich seniors across the country can attest to that, I’m sure.
I don’t know why Garth can’t come to terms with the fact our country has been sold out by government and banks who are colluding to let foreign money sustain our RE.
And it will get worse.
Until we can replace spineless sissys like Harper and Trudeau with the likes of a The Donald, nothing will change.
Sorry it hurts to say that.
DELETED
How can a large company like Valeant lose 90% of its value and no one goes to jail?
A house could never lose that much because it is a need and you can see it.
I know I know… Buy an etf. But should people buy entire subdivisions and not the houses? Because one or two may be bad.
Where there is smoke there is fire. (Ask Fort Mac). There must be lots more corruption in Canadain companies and Valeant just tip of the iceberg.
On another note,
An extended relative passed away. Had huge portfolio and had much farmland. He enjoyed the farm life but the portfolio was abstract. I guess it was an inheritance gift to this kids.
Moral of story: invest in things you can enjoy. Like classic Harley’s , ocean side mansions, etc. You can’t enjoy a portfolio.
Not trying to be an ass or troll but I think it’s the Asian thinking inside me that’s coming out.
Maybe we think of assets differently than North Americans.
Victoria is rocking!!!I remember a realtor told me years ago just buy a house.He said can you save $1000 a week because that’s what house prices are going up every week.2016,now its $3000 a week.Unbelievable,everyone in Victoria is just giddy about real estate.Many coworkers say they feel so blessed of becoming a millionaire just from buying a dumpy old house and will retire with lots of easy money.Good times for Vancouver and Victoria,so said for millineals.
People like Joanne are the reason I’m in favour of soilent green.
shhh. don’t tell the centre of the universe or hong kong’s twin sister.
http://business.financialpost.com/news/economy/bank-of-canada-should-mull-rate-cut-again-if-needed-says-imf-report
uh oh, people are blaming the big bad chinese again. they have less that zero effect on the market. Right Garth?
http://www.theprovince.com/business/real-estate/foreign+buyers+crushing+home+dreams+vancouver+canada/11905053/story.html
The blog will not descend into xenophobia. Go away. — Garth
What many have suspected all along. A new Simon Fraser University study that points to the smoking gun.
http://www.calgaryherald.com/business/foreign+buyers+crushing+home+dreams+vancouver+canada+study/11905004/story.html
Posted a dozen times already. — Garth
#109 Shawn
“Would anyone argue that if house prices fall by half, nothing has been lost if the house is not sold? Preposterous.”
———————————–
I would, preposterously.
Garth is always saying that you shouldn’t sweat unrealized losses in your portfolio. For example, the drop in preferred shares that occurred in when the BOC made those unexpected interest rate cuts last year.
There is no need to make your “loss” real if your investment continues to provide yield. If I have so-called “losses” I have no desire to make them real unless I am forced to do so. I feel the opposite way about so-called “gains”.
Money I can spend. Drywall, I can’t.
I would agree that the example house you mention does, in a way, represent real loss in that it continues to have actual out-of-pocket carrying costs regardless of whether its potential sale price rises or falls.
disruptive?
April 15, 2015
10/6/2015 Bloomberg Business
Lending Club CEO Says He’s No Threat to Banks, Just Their Model
LendingClub Corp
NYSE: LC – May 9, 1:28 PM EDT
5.15USDPrice decrease1.95 (27.46%)
LendingClub Plunges as Firm Finds Loan-Sale Abuse, CEO Quits
sonalibasak- bloomberg
May 9, 2016 — 9:48 AM EDT
http://dealbook.nytimes.com/2014/12/10/lending-club-prices-i-p-o-at-15-a-share-surpassing-expectations/
Updated on May 9, 2016 — 12:24 PM EDT
http://www.bloomberg.com/news/articles/2016-05-09/lendingclub-plunges-after-ceo-quits-firm-finds-loan-sale-abuse
Victoria is rocking!!!I remember a realtor told me years ago just buy a house.He said can you save $1000 a week because that’s what house prices are going up every week.2016,now its $3000 a week.Unbelievable,everyone in Victoria is just giddy about real estate.Many coworkers say they feel so blessed of becoming a millionaire just from buying a dumpy old house and will retire with lots of easy money.Good times for Vancouver and Victoria,so said for millineals.
damn I feel like I’m missing out
Can Money Buy Happiness?
#120 TRT on 05.09.16 at 12:33 pm said:
Moral of story: invest in things you can enjoy. Like classic Harley’s , ocean side mansions, etc. You can’t enjoy a portfolio.
************************************
Some people enjoy watching a portfolio grow.
Maybe it is true that Money Can’t Buy Happiness. But I am taking no chances. I am working to provit for myself one way or the other.
Ophra said rich people who say money can’t buy happiness are shopping in the wrong stores.
Adam Smith said what?
Renter’s Revenge! on 05.09.16 at 12:14 pm said:
Shawn: You’re all wrong. You can’t eat your house. Wealth is cash flow. Adam Smith figured that out 241 years ago.
****************************************
I happen to be just about finished my second reading of the Wealth of Nations.
I am pretty sure the actual term cash flow does not appear in the book.
Adam Smith wrote a lot about a man’s “stock”. This “stock” was real goods like a stock of clothing and a stock of inventory in a business. Wealth to Smith was clearly “stuff” and not money as such. An increased stock was clearly increased wealth.
But I will say that in Smith’s time inflation was very low and one did not look to get rich by merely holding a house.
Though he certainly spoke of land owners who had tenant farmers obtaining an income.
Again, wealth is measured in money. Money represents a claims check on “stuff”, not the other way around.
The amount of wealth in the world as measured in dollars vastly exceeds the amount of cash in the world. Vastly.
Joanne.
“And she’s buying a stairway to heaven”
Re: pictures.
Penis enlarging, a few posts back: condoms.
A new trend?
Peasants around the globe are indeed getting antsy.
Trump is just the tip of the ice berg.
Keep your pitchfork ready and sharp.
What went wrong at UrbanCorp? They built condos and didn’t sell enough? Anyone knows?
http://www.bloomberg.com/news/articles/2016-05-09/developer-urbancorp-owes-creditors-70-3-million-documents-show
Joanne took the easy zero risk option….it’s been shown that as we age our perception of risk increases and we do everythung we can do to minimise that pereived risk, whether its true or not.
I tried a year ago to convince my FIL to put a few tens of thousands in a balanced porfolio to give a small steady income (not needed, but nice anyway)…..’nope, got burnt in the past on the stock market’ (presumably with single stocks i guessing)….anyway he wanted zero risk, so went with [email protected]…..GICs….even though i pointed out he was actually losing money and paying full tax on the pittance of the interest.
Them Boomers want zero risk and no dramtic changes in their lives, hence turning down $1.5m in cash or refusing to cash in their nest egg of a house.
Time to lighten up on some stuff. Credit bubble getting ready to shrink, or pop.
Not saying get to of the market, but do lighten up on weaker credits, that goes for junkier bonds and lower credit equities.
My read…
Hi Garth,
I’m a long-time supporter of yours (volunteered on your election campaign actually) and wanted to share my crazy YVR RE story with you. My wife and I relocated from YYZ to YVR 4 years ago (traded smog for mountains or so we thought!) At the time we believed the market here was crazy and that local salaries couldn’t justify the prices. So we rented. Fast forward to today, add a 2 year old baby, and our landlord has sold the 2 bed/bath 1200 sq condo we are renting for well over $2 million. It’s nice (but very very dated) West End condo. We’re on a fixed term lease that ends next month. The new owner (eager to make up his massive “investment”) just informed us that if we want to stay the rent is going up 40% (to over $3000 per month with no upgrades or improvements). Our first reaction was naturally to scoff at that… however, having spent the weekend researching rentals here it’s clear that this may be the going rental ate for 2beds in YVR. Worse still is that there appears to be bidding wars happening in the rental market too, with some prospective landords telling us that the price has moved from what they had posted just days ago. We’re both well compensated professionals, grossing over $200k combined which for YVR is quite good but apparently not near enough to rent in the city! We have been pre-approved for a $1m mortgage, but can’t bring myself to even consider purchasing right now. In fact, we went to a few open houses on the weekend just to see and it was a zoo, people arguing over getting in to see the RE agent first so that they can make the ‘right’ impression (presumably in the hopes that their over asking bid is the ‘lucky’ winner). One person told the agent that she was willing to waive the inspection if that put her over the top. Sadly it appears none of us out here can avoid getting burned by this mania…let’s hope the coming correction comes swiftly.
#122 Rexx Rock
Housing prices are going up $500/day now.
What a dumb statement. — Garth
Re: Next Steps, Fort Mac
Insurance policies will only pay to rebuild the lost structures, (labour and materials) not the value of the land, since the land is still there – only empty.
The upshot is that the resources in the area aren’t going anywhere; the oil sands producers are still standing, relatively unscathed. What’s more, the demand for homes in the Fort Mac area is set to soar, as so many people will be without housing now.
The winning move is to rebuild quickly, then sell while demand is strong (supply is low), and before everyone else has rebuilt.
Sellers may not recover all their costs, but they’ll do a lot better than if they walked away, and won’t have to deal with competition from future new developments on the thousands of hectares of local land that have now been cleared – without the hassle of having to obtain permits.
I wonder if Ft. Mac will become an agricultural centre now; back in the pioneer days, they used fires to clear the land for farming.
Last post of the evening: time for a highly unscientific poll; did you get the long-form census or the short(10 questions)? Due tomorrow.
To YVR renter saying the new landlord wants to increase your rent 40%…I think that they can only increase it 3% annually. Of course, maybe landlords are playing by chaos-rules rather than the landlord-tenancy act. However, I think that you should be okay but may have to fight a bit to ensure that your tenancy rights are protected. For the record, I am a landlord and an owner, and have been a tenant many a time also in BC so think I know of what I speak :-)
Hi Garth,
I am a long time reader of your blog, and I must admit that, I look forward to reading your articles, sometimes several in a row, those that I missed when busy . Many times I laugh to your subtle jokes, and pictures are always refreshing.
This past weekend, I read the latest Investment Outlook by Bill Gross at Janus Capital, and was pretty surprised by his outlook and investment implications. I used to read his Outlook several years back, then stopped reading it as I found it somewhat harsh after a while.
I am wondering what your view is on his conclusions in the latest Investment Outlook.
Thanks and keep doing good work, as you have always been.
Nick
“Housing prices are going up $500/day now.
What a dumb statement. — Garth”
It’s based on the new math. You take the average Toronto or Vancouver SFD year over year increase and divide it by 365.
It’s quite accurate based on Realtor figures. I fail to see what’s dumb about it. It’s how much I would have had to save after taxes to have my savings keep pace with the housing market.
Hard to criticize Joanne. As someone else pointed, at a certain age, you’re likely to give up control of your portfolio anyways.
Regarding the $500k / $150k annual: it obviously doesn’t make sense to buy a detached (unless you move farther from downtown and are the do-it-yourself renovator type). If the parents end the free daycare train, it’s closer to $3k/month for daycare, not the $1500 someone mentioned. The right comparison is versus buying an condo apartment: Of course, then you can do the rent vs buy and will likely find it’s better to rent (assuming you don’t invest the savings in a GIC).
And obvious paying rent vs renting from parents is an easy decision to evaluate (in terms of dollars and cents). That’s just a lifestyle choice. Like vacations.
They mention the parents are aging. There may be an expected inheritence there.