Boomers are so entitled.
“When the boomers started working, they enjoyed good starting wages and generous retirement benefits — thanks to strong labour unions. As they moved up the income ladder and as some of them took over positions in government, they gave themselves huge tax cuts, greatly weakened the strength of labour unions, and put in place plenty of other perks that they disproportionately benefited from — like income splitting and TFSAs. In a report from earlier this year, the parliamentary budget officer concluded that TFSAs overwhelmingly benefit older, wealthier Canadians. Did I mention the TFSA was first proposed by one of Canada’s most prolific millennial-mocking boomers, Garth Turner?”
Me a Millennial-mocker? Just for calling ’em moist and misguided? For the record, I also think Boomers are hilarious, listening to The Eagles while they drive to Shoppers for a bag of thirsty underwear. But it seems the re-writing of history – as exemplified by the Vancouver Housing Blog quoted above – is getting out of hand.
“When it comes to housing, boomers were able to buy a single-family home on one income. Then they got to enjoy decades of falling mortgage rates, giving them a nice bonus every time they renewed their mortgage. The outlook for millennials is much less rosy. As hard as it is now to buy a place, it’s likely to get much worse when they renew as interest rates have nowhere to go but up.”
Actually while the Boomers were moving through the real estate cycle, interest rates were at levels that would be considered fictional today. I remember renewing a mortgage at 14% in 1990, and thinking how fortunate I was they weren’t 18% any more. Ah well, every generation believes they live in the worst of times and loves to feel victimized. What most people fail to understand is that houses have become unaffordable, and society so lop-sided financially, because money is too cheap.
Wacko monetary policy, in place for the past eight years, has ruined a lot of things. It’s basically destroyed saving, with risk-free assets like savings accounts and GICs paying less than inflation. It’s created an historic bulge in debt at all levels, from governments to families. After all, when a five-year mortgage is 2.4% and inflation is 2.1%, isn’t that like free money? Cheap loans therefore lead to price inflation, since debt service costs are in the ditch. And nowhere is that more in evidence than with the real estate market, as average SFD prices in major cities drift steadily past the seven-figure mark.
So unlike 1990, when my mortgage was 14% on a beautiful property I bought in Ottawa for $319,000, home loan rates are in the 2% range and that same place is selling for almost $800,000. This is no Boomer thing, of course. It’s a function of central bank policy, and every day it remains in place, the world gets a little more screwed-up. The Canadian savings rate has toppled. Real estate values are insane. Debt numbers are off the chart. And now 55% of people (in last week’s BDO survey) say they’d start missing monthly payments if rates were to increase. At all.
As this blog has been yammering on about, this will soon change. US rates will rise for the second time in a decade in June or July, for the third time in the autumn, and for the fourth, fifth and sixth time next year. Five-year fixed mortgages will no longer be in the 2% range and Toronto houses will stop appreciating 15% a year. People taking out mortgages today will renew them at double the rate – a fact of life the bankers are not even stress-testing for.
The Bank of Canada will (of course) follow suit, lest the dollar take more hits, inflation spikes and the destructive asset bubbles continue to inflate. Anyone who believes rates will stay where they are is self-deluding. It won’t be quick, but it will be relentless. And this is the time to prepare.
So, it looks like financial assets have a lot more upside these days than residential real estate. When Millennials can’t afford houses with current loan rates, how can they buy them if rates rise? They can’t. It’s suicide. That’s why prices will fall. It’s also why housing poses such risk, especially in places where demand is greatest, and the Boomer-bashing rhetoric most acute. But the M-gen can certainly take the cash they save renting and plunk it into a TFSA. This blog has already given you the portfolio formula – balanced and diversified, liquid and tax-free. Way less heartache ahead.
Warren gets it.
“I am a 29 year old University educated male living in Vancouver. I am recently married, rent my housing, don’t own a car, and couldn’t be happier. I was inspired to write by your last few posts. Since graduating from our undergrad degrees six years ago, we maxed out our TFSAs and RRSPs and have amassed a liquid net worth of almost a quarter million dollars.
“To me it’s all about focusing on what you can control and who you associate yourself with. Many of your readers complain about social comparison and how they feel next to their home ‘owning’ friends and family. Many of our friends ‘own’ homes but they couldn’t care less if we do. Why should it matter to them if we send our money to a landlord or the bank on the first of the month?
“Our rent is by far our largest monthly expense but I pay it with glee! Crunching the numbers – accounting for condo fees, taxes, and maintenance – our Price to Rent ratio is 54! We live in a new building in a trendy neighbourhood with amazing views of the north shore mountains and downtown. What a benevolent deity our landlord is!
“I hope my story reinforces that not all us millennials are as moist as you seem to think. Some of us heed the sage advice of those who came before us and tune out the hysteria that is the Canadian real estate market. There is a lot to be thankful and happy about living in this country as long as you only focus on what you can control.”
There may be hope yet. And I still love my TFSA, dammit.
162 comments ↓
Hey Garth – I know you have outlined this before (cant seem to find it using the search function), but what is the formula to calculate Price to Rent ratio?
“When Millennials can’t afford houses with current loan rates, how can they buy them if (as) rates (inevitably begin to) rise (almost immediately)? They can’t. It’s suicide. That’s why prices will fall. It’s also why housing poses such risk, especially in places where demand is greatest (currently in Vancouver and Victoria (locals))…”
Nobody should be surprised as prices fall deep and probably steep on the west coast.
So little time to post lately…
“The A/C is on.”
Great. The car is idling, ILLEGALLY, destroying the environment and accelerating global warming. All for an animal so stupid that it can’t wait to slobber all over its moronic human masters and eat its own poop.
Dog owners are so frigging stupid and entitled!
Here’s an idea: put all dogs everywhere in hot cars, and leave them there for two weeks every summer, just to see what happens.
It’s SCIENCE – you’re not against SCIENCE, are you?
While we’re at it, let’s put all the dog owners in with them.
And keep the doors locked.
Here is an online calculator to compare the cost of buying or renting: https://david-systemsforecasting.shinyapps.io/app_rentorbuyer/
“It’s a function of central bank policy, and every day it remains in place, the world gets a little more screwed-up.”
Command & Control is what central bankers are about. Which means all asset prices are misaligned.
“So, it looks like financial assets have a lot more upside these days than residential real estate.”
It is wishful thinking to posit that R/E is over priced but stocks and bonds are not, especially with 4 quarters of declining earnings. Extreme GAAP P/Es and multi century extremes in yields….
The Central Bankers are radicals, and sane politicians need to rain them in, like, yesterday!
Of course, we need to go back to the root cause of low rates in the first place.
We wouldn’t be having this boomer vs. millennial conversation today, if it weren’t for the actions of a bunch of rogue, over-lobbying, deregulated investment banks leading up to 2008.
First again!!
That’s a big “don’t get your depends in a knot” you stupid boomers. Just be happy you are not as dumb as those idiot millenial’s.
Imagine what we will be saying on this pathetic blog in a few months from now. Average Vancouver crack shack ought to be going for 6.4 million by then.
#3 Felix on 05.29.16 at 5:12 pm
________________________
…confusion, agitation, slurred speech, irritability, delirium…..
Speaking of heat stroke, I’m guessing your own A/C has failed this evening and you are in the throes of said condition.
Best to calm down, drink plenty of fluids, avoid blogging nonsensical comments, and seek medical attention immediately.
#3 Really ……. did your parents work as guards at a Nazi death camp or something or are just a troll looking for a response ? i think your posting is one of the most ridiculous ones i have ever seen on this blog get a life
Lol, it would appear that “Felix” is a little less mentally stable than previously believed.
I feel boomers had it much easier, they born into an expanding economy, with high school education, you could become a police officer at age 18, no experience, work at GM factory for life with high pay, union job. Then you could buy a house in Toronto, if you got lucky, you bought in a area that has now increased 15-20 fold.
I am a Boomer.
Generations X,Y,Z, don’t kid yourself, when I was in my twenties, the envy, jealousy,and hostility of many from my generation towards the wrinklies for their wealth was just as prevalent as against the Boomers today. I know. I was there. I didn’t give a $hit. I was too busy looking after myself. Try it.
Self pity and blame never gets nobody anywhere. Think, and be creative.
Warren does indeed get it. He is a man, not a pussy.
Millennials can buy gold, out of favour assets in manufacturing and other productive and extractive industries for quite cheap. And their labour is likely to be worth a lot more in the long run on account of long-term demographics.
Only problem is, most millennials end up subscribing to the same paradigms as the generations previous, and thus, will not be able to participate in the upside to nearly the extent that, say, certain boomers did.
However, there definitely is a small group of Millennials who can do the math, and can understand history. Those people are poised to utterly clean up going forward.
@#10 paulo
“did your parents work as guards at a Nazi death camp….”
*******************************************
apparently you were passed over when they were handing out “sarcasm and humour” at the baby factory.
But you certainly recieved more than your fair share of “Politically correct animal rights empathy”………
it was a joke…..
Yeesh.
“Hey Garth – I know you have outlined this before (cant seem to find it using the search function), but what is the formula to calculate Price to Rent ratio?”
Price to rent is pretty simple. You take the current market monthly rent, and you divide by the current market price of the house.
ie: $400k house that rents for $2000 a month has a Price to Rent ratio of 200.
Most investors who hope to earn a competitive long-term return on RE compared to investing in, say, the stock market through index funds, look for a price to rent ratio of less than 100.
Obviously there are a lot of other factors (ie: paying a higher multiple may be justifiable in certain circumstances, and vice versa). But Price to Rent is a very crude measure, crudely and easily calculated.
Dear Dog-Lover Turner,
Please note that comments #9 and #10 demonstrate unacceptable anti-feline RACISM and you will be hearing from my attorneys if they are not removed.
Or do I have to claw your arm and thrust my elbow into your chest to make my point?
#3 Felix:
The world doesn’t want or need you.
http://winnipeg2016.liberal.ca/policy/poverty-reduction-minimum-income/
Mr Turner,
The clawbacks and elimination of Cpp And OAS is officially moving forward.
Please get it on the radar, it will be far more damaging to Canadians than a housing correction.
@All doubting Felix’s sanity-
Felix is a CAT what did ya expect?
“Why should it matter to them if we send our money to a landlord or the bank on the first of the month?”
————————————
Because misery loves company?
“Wacko monetary policy, in place for the past eight years, has ruined a lot of things”
Many people believe this holds true for financial assets as well. Lower earnings and borrowing cheap money for stock buybacks etc. may mean no upside in most future equity markets either.
Could we be in for a prolonged period of low growth ???
Felix, there’s no need for all that hate. its a gorgeous Sunday here on thr West Coast… Im chillin with cold beer.. You should try it. My price to rent is ratio is 52!
Garth, the pic is AWESOME! Made me giggle. I love all dog owners because they get dogs.
Hey Crowdie,yes the p.c police are out today.
Lucky for me they were asleep when I posted this…
M41BC
https://imgur.com/CXTfuOv
I’m getting a bit jealous of these contributors with astronomically high price to rent ratios. I’m somewhere in the 22-24 range, and thought that was pretty darn good until just recently.
#3 Felix on 05.29.16 at 5:12 pm
“The A/C is on.”
Great. The car is idling, ILLEGALLY, destroying the environment and accelerating global warming. All for an animal so stupid that it can’t wait to slobber all over its moronic human masters and eat its own poop.
+++++++++++++++++++++++++++++++++++
Umm…….13 degrees in the Fraser Valley where we used to live. Pouring rain for ten days. And yeah….global warming. Because CO2 is a toxic gas. It’s so toxic in fact…..that the more there is…the more FOOD THAT GROWS. Climatards……
If price to rent ratio is just the price of the house divided by the rent, I think I might be the all time winner.
Rent = 950 (was 865 until last year)
House Value is a tough one. On a regular lot it would be about 150k (1000 sq ft house, no basement). But I live on the st lawrence river (deck is 30 ft from the river) so I would probably say it would seel for around 300k or more. Also note I have to pay the utilities.
Not counting waterfront ratio: 158
Counting waterfront ratio: 315
I would like to collect my trophy now!
Your ratio is 26. Stop drinking the river water. — Garth
#3 Felix on 05.29.16 at 5:12 pm
Most serial killers were cat people.
#16 Mark
Price to rent is pretty simple. You take the current market monthly rent, and you divide by the current market price of the house.
ie: $400k house that rents for $2000 a month has a Price to Rent ratio of 200.
—————————————–
No, you have both numerator/denominator mixed up in your description but not your calculation, and you take the annual not the monthly rent. In other words, the correct formula is to take the current market price of the house, and then divide it by the annual rent.
i.e.
$400,000 / ($2000 * 12) = 16.67
Your ratio is 26. Stop drinking the river water. — Garth
Okay, I get it now. So anyone not sure how to calculate it, you need to take the price of your house and dived it by the ANNUAL rent.
Your welcome for learning from my embarrassment!
Price/rent ratio = 70+ for me.
Zing!
Ironic that just after Nutley slashed the fire fighting budget to up teacher salaries Fort Mac nearly burned to the ground, but luckily didn’t. Only a 10% total loss directly.
Unfortunately word coming out despite the gag orders is that all of the buildings are smoke damaged and need to be remediated to be habitable. And they are having trouble turning things like water, gas and electricity back on because well the house that did burn has a big gas leak if you turn the mains back on.
Not to mention your freezer is a total mess and yucky gross.
Bad day bag anyone?
We rebuilt Calgary after the flood, we will rebuild Fort Mac. But it won’t be done in a day.
Sorry Sam, It’s different in Canada. Pay Attention
http://www.zerohedge.com/news/2016-05-29/another-real-estate-crash-looms-sam-zell-dumps-holdings-warns-feds-deferred-reality-
We have something today they didn’t have in the early 90s to help fight increasing interest rates, and that’s two income families. Having at least one income for a while might be tough, but I think it’s what will keep the levy from breaking. In the last major recession, when one income went, that was it. And of course I’m positive Jt will stretch amortization periods when rates push too high. I keep telling people to stop waiting for a crash in Toronto bc it’ll never come, not in our lives.
Price to Rent Ratio here in Yaletown, 31.8
Listings for the Lower Mainland on Realtor. CA seem to have jumped this week
I read your blog everyday Garth and miss it when you holiday but you have to get away from this craziness as often as you can …I understand and appreciate you more when you come back….thanks so much for this blog and all it inspires….I would like to respond to the ones who continue you say that the tfsa is only helping the rich…my annual has been under $45,000 (and I really appreciate that it has gone up to this in the last 10 years)so I am definitely not even close to a 1%er who by the way I admire and not envy….I rent and live alone for the past 15 years although I did own homes in the past…1st one paid $67000 did $30000 of renos and sold for $160000….2nd one paid $285000 and sold for $299000 just before the oil bust in Alberta so I consider myself lucky on that one even though the gain was not significant …also had $25000 in inheritance and NOW have topped up tfsa and $160000 and building in rrsp…I will not consider buying again until the prices correct and they will…soooo to all those who DENY that the tfsa is for them …give your head a shake!!!…quit smoking and drinking or whatever is your fetish and get serious about YOUR life ambitions….no one can do that for you and it is NOT the responsibility of your parents to support your wants until they die….adjust your accommodations to support a savings plan while you are young and it has time to build for you…I rent a little old house (not the luxury I had in the last house)but it’s had some renos and is perfectly fine for $750 plus I pay all utilities and applicable insurance.I own a 2008 escape with less than $100000 kilometers and it will last me a long time….there are ways to improve your situation but you must decide first to make the necessary changes….start a tfsa(don’t recommend a bank for that as I made diddily squat there until I moved it to a self directed and am up over $4000 already this year alone) don’t just complain here about how the damn 1%er’s have all the money….yeah!! for them… they make the jobs and should get paid well for their risk!!!!…get out there and make your future, as for most of us, it will not get handed to us on a silver platter…you have to get serious and go after it no matter if you make close to 6 digits or much less like me….it is very possible and I am still working on it….can’t imagine making close to 6 digits and putting away a mere 300-400 per month….my take home is $2500 and I am 63 yr old so try to sock away at least $1000 and sometimes more each month…how do people spend so much as to save so little???chow…just my own experience and not much knowledge involved but an old chick CAN learn new tricks and you can too!!!! chow chow
#28 smoking man:
Most serial killers were cat people.
MMM Natasha Kinski
#26 Brazil expat:
Did you live in a gated compound in the Fraser Valley? The weather here today has been great but the last couple of days were like a monsoon (at least in North Van). Don’t get too smug about being an expat. Once the Olympic and Dilma circuses pass you might be much better off here at home, rain or no. Brazil is in deep trouble and no one can see an end to it. The wealthy Brazilians have bolt holes in places like Miami and even here in Vancouver. Hopefully you didn’t burn your bridges.
p.s. I forgot to add that I also have $45000 in unregistered account and $17000 in a LIRA from the past
It’s not just about the low interest rates. The German 10 year bund yields less than 0.2%, but the country has one of the least expensive housing markets in the developed world and one of the lowest proprty ownership rates at 43%. Why? It has a rational social policy and a government that actually governs for the benefit of the people.
people used to just live with their parents and then basically inherit the home when they pass on. like in europe. why do newly married people want to start where there parents left off after many years. so… lets take it one step further, you should have 4 houses by then when those kids are the age of their parents, and then the grandchild, no one mas more than one or two anyway these days, they go to 8 houses. in theory, people shouldnt be poor, there shouldnt be poor people in canada. everyone should have a house, just one owned by the goverment, we have it now already just administered via cmhc and the bank. people think they are more than pawns in the game, independence is the only way to get salvation, otherwise tomorrow is monday and you will be forced to go to work, manditory. while you argue should i rent and pay some landlord or the bank or refinance at a lower rate, let me know when you are free to not ask, and not go to work tomorrow.
Some people didn’t like Felix’s post at #3.
Jimmy did though ,because it distracted everyone from seeing his post come in at number 7.
Jimmy ,either retire or take off the oven mitts when you type…
M41BC
Wacko monetary policy, in place for the past eight years, has ruined a lot of things. It’s basically destroyed saving, with risk-free assets like savings accounts and GICs paying less than inflation. It’s created an historic bulge in debt at all levels, from governments to families. After all, when a five-year mortgage is 2.4% and inflation is 2.1%, isn’t that like free money?
Dead on but haven’t savings accounts always paid less than the rate of inflation? The same policies have also created massive asset bubbles which have made some commoners quite rich.
The kids today are upset with the older generation for perceived wrongs. My question is this: when has a politician followed the wishes of his/her constituents ? It seems to me that once elected they do whatever is in their business friends’ best interest and splash our tax money back at us where it will get them the most votes in the next election. In 20 or 30 years it will be the next generation raging against the Millennials for electing T2 and the Liberal profligates. Sheesh, it never seems to end.
The Fed Motto….Inflation or Die.
Yes, Garth & people, every generation “thinks” they have it ‘bad’ specially when they are living through it. I remember thinking the Silent Generation had the world by the tail!
I remember our 1st home purchase. 8.75% mortgage for 30 years. The next one was even slightly more, but since then forgot the number.
When we finished on our last mortgage, it had been re-fied down to 4%. No more now.
Yes, Boomers lived in both the BEST of times, and the WORST of times. So will you, get used to the concept, look out for #1, and stop your whining.
M64WI
36th!!!!!!!!!!!!!!!!
“What a benevolent deity our landlord is!”
I like that line, Warren.
Garth, the thing is that the younger generation focuses on the fact you only had to pay $319,000 for the place you purchased way back then. 14% (or higher) interest rates in their minds was a mere pittance, as the original purchase price was so low compared to prices today. Of course, people way back then were also earning a lot less. Buying on one income was possible for the high income earners but the vast majority of purchasers needed that second income to cover off the cost of living while one income went toward paying the mortgage (plus 14% interest).
The $64 question is… can the FED be trusted to raise rates? This has ben debated ad nauseum, here and elsewhere.
We shall see… I’ll be a believer, when I see higher rates!
M64WI
Mrs Flop said this is a few weeks old but I never saw it.
Putin and Donny Rump getting on rather well…
M41BC
https://imgur.com/SpyKQEP
Folks, Felix’s comments are a tongue-in-cheek bit of fun written from the perspective of a fictional cat that, wait for it, happens to hate dogs… Get over yourselves!
RioCan has some prime vacant spaces on Fairview St. in Burlington. On either side of the Chapters store which is sandwiched between these large vacant retail outlets were previously a Jyst furniture store and a large sit-down diner both now vacant. Burlington seems to be on a glide path to be the next Oakville but this glaring economic sore spot in upper middle class Canadiana says something about our suburban hinterland. Burlington is on the politically correct GO train route and connected to the navel Toronto so …que pasa RioCan?
#34 Lee on 05.29.16 at 7:59 pm
“…I’m positive Jt will stretch amortization periods when rates push too high.”
—-
Certainly possible, but if rates climb fast enough then it won’t matter because the increased interest expense will more than offset the decrease in principle payments.
“listening to The Eagles while they drive to Shoppers …” on Thursdays!
With your average millennials couples making $100,000 to $150,000 they will still be able to make the mortgage payments if rates rise but we all know they won’t.Canada will welcome the USA raising rates so our dollar will go lower which is better for exports.Like I said many times before Canada will adopt Japan style economics and will have zirp like the EU and Japan.Its already accepted by the public.Why do you think Poloz brings it up once in awhile.I know its very sad but Canadians didn’t speak up about this terrible policy that is driven our cost of living up so high.
Your thirsty underwear fetish is a tad disturbing.
M41BC I can’t wait till you discover Instagram. (Way more hotties.)
Anyway today great time at Italian expo. Temperature went uppa for outside party.
Sadly no home exhibits. http://www.castelloitalia.ca
Back in ’82-83, interest rates got up to as high as 24%. Associates at work and friends were taking mortgages out at this rate…from 19% to 24% on 6 month renewable terms in the hope that in the next six months, interest rates will have dropped. People who HAD TO buy a home because they were transferred by head office, were purchasing homes because they (homes) were locked into a more favourable interest rate…who cared what the house looked like! Back in those days everything was laminate with asbestos based floor tiles in the kitchen. Had granite made it into the 416/905 yet?
As aside…what is wrong with Millenials, ask your parents about the tiles you crawled on and picked your Cheerios up from? Just saying….
Another rather ominous sign, a dark cloud in the allegedly “booming” home reno business, has come to my attention yet again this weekend.
The new “Improve” home renovation super mall in Vaughan, north of Toronto, has been struggling to secure financing and tenants, for years now.
First it was supposed to open 3 years ago:
http://www.theglobeandmail.com/report-on-business/small-business/a-mall-built-exclusively-for-your-home-reno-needs/article555198/
Then it was supposed to open last year:
http://www.torontosun.com/2015/03/02/improve-canada-set-to-open-this-summer
This week, I have driven past a few times. It’s a vacant, half empty, unfinished wasteland of a mall, virtually no cars ever in the lot. No people in sight. The website alleges that it may now “open June 25.”
I am doubtful.
Even more spooky, all of the Vaughan/Richmond Hill home improvement stores seem eerily quiet, especially on weekends when you would expect exactly the opposite.
This does not seem good. Overpriced Mcmansions everywhere in the 905, yet people don’t seem to be able to spend to put in any more granite countertops or hot tubs on the back deck.
Why not?
Probably because when lines of credit are already maxxed out, spending real cash on such things does not make sense.
Uh, oh…
It actually feels downright spooky driving past places like this, like passing one of those Chinese ghost cities.
This is not going to end well……
Gen X blog dog here. Graduated Uni during the recession in the early 90s – not a walk in the park for our co-hort to get our lives started, but in due course most of us landed on our feet.
Fast forward 25 years, married, kids, stable career, diversified portfolio (maxed TFSA, RESP, RRSPs), no debt (except the deductible kind for investing in our non-reg account)…and renting a lovely detached home in central Toronto at a P/R ratio of 41.
“US rates will rise for the second time in a decade in June or July, for the third time in the autumn, and for the fourth, fifth and sixth time next year.” – Garth
There isn’t even a remote possibility the Fed will hike FIVE more times in the next 18 months. They may move in June, if so the market will reject it just like last time, and that will be the end of tightening.
I like how Garth attempts to hedge his bet with mention of a hike in “June or July.” So he believes we’re getting five more hikes over 18 months, but thinks things may be too weak in June to move forward, and that six more weeks of data will remedy that?
Can anyone explain why a central bank determined to hike five times over the next year and a half would concern themselves about whether to start in June or July?
#49. No, way more hateful than the cartoon. You’re as much an idiot as Felix.
#55 TurnerNation on 05.29.16 at 9:06 pm
M41BC I can’t wait till you discover Instagram. (Way more hotties.)
////////////////////////////////
Hey TN,what are you talking about?
I pulled the dog in the car photo out of my hot bitches folder…
M41BC
#31 price to rent ratio calculation doesn’t work if you’re in the basement suite.
Correction, your biggest monthly expense is taxes, and will continue to be for your lifetime, and brace yourself because the varying levels of government will be coming for more, and the fact that taxation costs more than keeping a roof over your families head is a travesty, a theft of wealth by incompetent money wasters, a reality that affects people of all age groups, hard to make any headway in life when your tax rates can be as high as 50% or more
#45 stop encouraging jimmy.
#3…Felix…
do you not realize that the photos may just be fabricated by someone for the laugh factor ?
Relax…
#26 Brazil ex-pat
Because CO2 is a toxic gas. It’s so toxic in fact…..that the more there is…the more FOOD THAT GROWS. Climatards……
Um no. Plants do not grow significantly faster in CO2-enriched atmosphere because other growth-limiting factors come into play(most notably soil fertility). But since you show no scruple at calling other people ****tards, let’s assume that you certainly knew that, didn’t you?
“With your average millennials couples making $100,000 to $150,000 “
Yet your average Canadian family income is only about half of that. And millennials certainly aren’t doing as well as older people, that’s for sure, with extreme underemployment and unemployment. So where do you come up with this $100-$150k?
After all, when a five-year mortgage is 2.4% and inflation is 2.1%, isn’t that like free money?
The money might appear to be ‘free’, but such credit is mostly used to buy depreciating assets. So for what the borrower is not paying on the money, they’re losing on the asset itself. Quite evident as we enter the 4th consecutive year of housing stagnation/depreciation in Canada after the 2013 apex.
No, you have both numerator/denominator mixed up in your description but not your calculation, and you take the annual not the monthly rent.
As long as whomever you’re talking to has a consistent definition in mind, all is well. The rule of thumb of “100” applies to a price to monthly rent ratio. Others might use annual, which is just a matter of dividing the monthly by 12 months.
The numbers come out dramatically different enough (ie: a factor of 12) that any confusion should be fairly easily identified and rectified.
If trump gets elected (dont laugh – it’s possible), wouldnt that lead to the USD cratering and the real possibility of the rates not going anywhere?
Mind you, perhaps its not the USD i should be worried about being in a crater…
economic tsunami: ( yesterday ) linked to David Stockman.
Stockman refers to main-street American as fly-over America. He says fly-over America has actually experienced declining wages, is heavily in debt and now experiences declining standard of living because it can no longer borrow against its houses which is why it is voting for Donald Trump.
David Stockman shows a chart by the St Louis Fed: Homeowners equity in Real Estate as a Percentage of Household Real Estate: The chart shows homeowners equity cut in half in the course of 21 years:
http://davidstockmanscontracorner.com/losing-ground-in-flyover-america-part-3/
Canadians closely resemble fly-over American: their wages are not increasing and they are heavily in debt. However unlike fly-over America they can still borrow against their houses.
the charts aggregator gave yesterday show that Canadian’s level of debt is still increasing. Still increasing a lot.
Just a note to all the “happy” renters out there. Rents could be rising by 8% this year in the U.S. : http://fortune.com/2015/10/07/rents-rise-housing/
Of course in regulation happy Canada it’s different … for a while. Ontario has rent increases at 2.0% and B.C. is at 2.9%. The question is – how long before actual market forces put an end to this nonsense and rent skyrocket?
#3 Felix on 05.29.16 at 5:12 pm
Go. Away!
Dog lovers…
Cat lovers…
Where are the people who make People?
banks sell fewer mortgages at 18% or millions of mortgages at 2.5%,
it’s just like a supermarket
loss leader mortgages may be in our future .
Thank you for the TSFA Garth, I now have a financial vehicle that gives me the opportunity to do better for myself, if I use it wisely. Thank you.
DELETED
What is the likelihood of the following scenario…
A couple walks into a mortgage brokers’ office (we’ll call him MB) and wants a mortgage for $450,000. Problem is they have zero down payment available and also a negative net worth due to LOC and CC debt – let’s say about $20K total.
MB says not to worry. He puts together an additional LOC in the amount of $30K (how this is accomplished I do not know). But, what MB says to the couple is “do not pay the down payment upfront”… he actually advises the couple to put the $30K into an RRSP in January and wait to receive the tax credit. After the tax credit is paid and the 90 day holding period for removing the $30K behind them, the couple then withdrawals the cash from the RRSP to use as a downpayment. Now the couple has the $30K plus the tax credit. On $30K let’s say it’s approx $9K (give or take).
So the couple now has access to $39K in new financing (on top of the $20K debt they already carried to begin with). But because they now have more then the 5% minimum, MB manages to scoop them the mortgage and at a pretty decent rate. But, this does not come free of course. MB needs his fees and large ones because of the complexity of the financing. He makes bank!
He also sets the couple up to go to market in spring… yes, the most competite time of the year. Too bad for them.
MB advises the couple that this is a zero risk scenario because property values (in you guessed it – Vancouver) will continue to escalate at “unprecedented levels”. And, don’t worry about paying back the RRSP – ever! The Govt will charge an additional 1/15 to your annual taxes, but it’s just a minor blip and becomes a small expense. The 30K will never be paid back nor was there ever any intention for this.
So now a couple that has a negative net worth has just secured a mortgage for over $400,000 plus they have 2 existing LOC’s that they need to service plus the 1/15th annual RRSP fee.
But, MB says it will be a tough slog for 5 years only and then it’s rainbows and blue skies ahead because in 5 years the increased equity will make the couple’s net worth turn positive and then sky rocket from there as they now have no LOC to pay off and their equity continues to skyrocket from escalating real estate prices.
This is reality in Vancouver. The exact secnario was told to me by 2 different MB’s at a dinner party over the weekend. When I asked how often this scenario plays out, their response “this is what everyone is doing”. When I asked if it’s foreign buyers or locals, their response “it’s all locals in our clientele”.
When I asked about the risk they thought was present, their response: “it’s risk free. Properties values will not decline in Vancouver”.
When I said I had no intention of buying I was looked at like I was a foreign entity. That was after the look of pity of course… There were at least 30 people there… all between the ages of 28 to 36. 80% of them were “owners” the others looking to get into the market…
I finally agree that we’re all Eff’d! It’s just time now… the longer the fuse the larger the detonation.
DELETED
#68 Blobby on 05.29.16 at 10:53 pm
If trump gets elected (dont laugh – it’s possible), wouldnt that lead to the USD cratering and the real possibility of the rates not going anywhere?
Mind you, perhaps its not the USD i should be worried about being in a crater…
+++++++++++++++++++++++++++++++++++
He will get elected. He has so many bombs he can drop on the “career politician” establishment it would carpet the entire of the USA.
#70 sham
Actually rents ARE climbing in vanstupid. With a vacancy rate at about 0 due to airbnb/ vrbo/ empty suits the landlord has the big stick. You are correct that once a lease is in place subsequent increases are capped at a prescribed interest rate. 2.9 currently
Not sure this is a level playing field
As an example. A friend is now looking to rent. One place on Craigslist was $2500 he called. no answer . Today same suite on CL $2850.
The place I’m renting is $2200 but would fetch $2500 today. This in 3 yrs.
I am all for the “market forces” dictating valuations BUT it isn’t a free market.
UNTIL the city goes after the black market and hits them with fines for running businesses without insurance ,paying taxes, or having a licence
Until CRA clamps down on those manipulating the system by a avoiding their responsibilities to society are a long way from allowing your vaunted “market forces” to dictate prices.
Hey everybody, if you have a Windows 7 computer, PLEASE TURN OFF THE WINDOWS UPDATE feature on it right now, otherwise you will soon have Windows 10 installed on your computer. If you don’t believe me, just GOOGLE the term “windows 10 forced upgrade” and you will see what I mean.
Just go to: Control Panel -> Windows Update -> Change settings -> select ‘Never Check for Updates’, and un-check all of those ‘update’ boxes also.
Just do a YouTube search on this and you will hear about how people woke up one day, turned on their computer, and suddenly they were faced with Windows 10, and many of their files on their computer were gone.
first!
did i make it?
thirsty underwear… not sure what to think about that…
YVR and YYZ real estate prices will stop increasing double digit % yoy definitely when rates rise. enjoy the party while it lasts
Boomers had it easy? Except there was HUGE competition for jobs because so many of us were coming out of school at the same time. Unemployment was higher then than it has been for most of the past 30 years.
People who work hard succeed. People who just whine and complain fail. It doesn’t change.
hmmmm… very interesting.
https://kingstonrealestateweb.wordpress.com/
We are Gen Y, and it can be frustrating when you speak to some boomers and they say our generation just needs to pound the pavement or put away their phones, like this is the real issue. But for the most part, I think the generational extremes have gone too far. Things were certainly not easy for everyone in Canada throughout the 80s and 90s.
We will achieve far more from working together to fight back against some of the more negative aspects of globalization, corporate interests, and political corruption and waste, than we will arguing over which generation had it better or worse.
Look, if you think Gen Y is lazy and entitled, fine, then lets all find some common ground. How about your grandchildren (our children)? Do you really want them to be paying their entire lives for a roof over their heads while they live off of precarious work and never retire or enjoy a sense of security? Forget us. Think about them.
What do you want their future to be?
DELETED
Guys, before y’all get so lopsided about “Felix”…do keep in mind that he’s playing on the persona of Felix the Cat, a popular character from a TV series from a way back when. He’s just trying to get you dog lovers riled up cat-style, LOL.
Another story of house lust:
http://www.cbc.ca/news/business/toronto-housing-plea-privacy-1.3597317?cmp=googleeditorspick&google_editors_picks=true
When will people realize it’s the bottom line that counts not a sapy story!
I really do feel sorry for all those people waiting for a correction that never came, nor will it ever come.
Amen.
I almost hesitate to post this, as this blog is largely populated by people who actually liked Harper and who were slagging T2 for his record after only two days of being in office. The pre-election poll on this blog indicating a Harper majority pretty much tells it all.
Still, this just makes me shudder :
http://winnipeg2016.liberal.ca/policy/poverty-reduction-minimum-income/
Not because it’s not a good idea – I’ll go to my grave convinced that we can do better as a society for everyone once we get past the Conservative view of “what’s in it for me” and “hey.. i earned it. Your problems are not my problem” and “hey .. I gave a few bucks to charity”.
But this part of TFA : “Savings in health, justice, education and social welfare as well as the building of self-reliant, taxpaying citizens more than offset the investment. ” just make we want to shake my head. There will be no savings – we all know that.
Suck it up people. Making sure everyone has better than a basic standard of living (heat, clean water, 800 calories a day) will not be cost neutral. It might cost YOU something. And it might hurt a bit – one less boat at the cottage or a smaller condo at Whistler. But I can guarantee that your personal hurt will be a whole lot less that what we force many Canadians to deal with every day.
Box will not follow suit to raise rates. Polis has already stated his aim is to crush the loon.
http://www.doctorhousingbubble.com/one-in-five-millennials-living-at-home-millennials-and-parents-real-estate/
#66 Larry Gaffer Plants do grow significantly better in CO2 environment. Any indoor grow worth its salt has a CO2 bottle on a timer that releases the gas in a slow measured manner. Last year anecdotal evidence was overwhelming that the long fire season in B.C. interior produced extraordinary “vegetable ” growth. Not that burning down the forests will solve our food production. Mind you, burns bring fireweed, honey producers will score big. Ft. Mac honey futures for sure. Burning down the pecker poles is also good for the wildlife, lots of browse. Good hunting in a few years.
My mother became a teacher in Victoria in 1967. They were so desperate for staff, they waived the bachelor degree requirement and hired people with three years of university education.
Four percent unemployment, the peak of union power, pay raises well above the cost of living, most workers had a company or govt. pension expensive financing but cheap houses. The real difference was the sense of security. If they stayed the course, didn’t do anything stupid they had guarantees that simply don’t exist anymore.
We are now in the new gilded age of the plutocrat. For the rest, it’s divided and conquered.
I wonder what these blog dogs would think of the following:
I work directly in the “transportation of goods by heavy truck” industry. We are the first to see changes in the economy. In BC and Alberta, we are seeing a huge slowdown in the amount of goods being moved.
During this time of year, we are usually busy. We are often left scrambling and driving long hard miles to cover all the loads to be moved.
This year, we are scrambling trying to find enough loads to cover all the trucks and keep them working steady. Everybody I talk to in both provinces echo this sentiment. Many companies have trucks sitting during the week, we have only had to park two of ours a couple of times. We have been fortunate, but we have many contracts. Most trucks are not so lucky.
Knowing that money doesn’t move unless trucks do, I wonder how long this lasts and what effect it has ?
The slowdown in the oil patch has far reaching effects, is what I think. I also think it will affect more than just Cowtown and Edmonchuk.
*TFSA…doh !
“…….as long as you only focus on what you can control.”
You’re playing your own game, focusing on your own goals and getting rich. Ignoring the seething wannabees, the brainwashed and boomer-haters gets you there faster. Building wealth means preserving precious time by ignoring whiners. What next? Loser millennials vs. successful ones?
“There may be hope yet. And I still love my TFSA, dammit.”
Me too! Reversing the TFSA limit was simply capitalizing on the green-eyed monster of a surplus of the effete and vindictive.
Once financial idiots and bile-encumbered losers wake up to the fact that they also could benefit from one of the best wealth-building tools in the history of this country, they’ll turn like leaves in the fall.
I can’t wait to hear the forthcoming justifications for doing so.
In the mean time, the savings continue and it’s business as usual.
#34 Lee on 05.29.16 at 7:59 pm
… And of course I’m positive Jt will stretch amortization periods when rates push too high.
___________________________________
You’re probably right about that because T2 is just that stupid, but I have a sneaky suspicion that if 30-40 year amortizations come back, the market will eat that slack in no time. House prices would hockey stick until affordability more or less matches what it was before the amortization periods were extended.
At that point a 416 teardown will be near 2M. Somewhere we need to fit in just how far lenders and buyers are willing to go when we talk prices. They’ve both already gone further than anyone could have imagined…
CMHC-acceptable amortization periods will not be lengthened. — Garth
#40 crossbordershopper on 05.29.16 at 8:10 pm
“…..people think they are more than pawns in the game, independence is the only way to get salvation, otherwise tomorrow is monday and you will be forced to go to work,….”
The younger you are when you realize this, the richer you’re likely to become…………
Garth: Wacko monetary policy, in place for the past eight years, has ruined a lot of things. It’s basically destroyed saving, with risk-free assets like savings accounts and GICs paying less than inflation.
________________________
Actually GIC’s historically have paid less than inflation. Nothing new here on that front, it’s just more obvious when they are at such low rates.
Apparently dogs are easily distracted by cats.
@#76 Vanman
As I was reading your comment, about halfway through I realized it was a real life scenario.
I dont know which is worse, the arrogance and stupidity of the MB’s, or the clients they “serve”.
“Vancouver prices will never go down” is like saying “Bubbles never pop”
This will not end well.
the milli’s like these ideas
This New Neighborhood Will Grow Its Own Food, Power Itself, And Handle Its Own Waste
ReGen Village, outside of Amsterdam, doesn’t need a grid or food systems. It’s a model for a future, fully closed-loop settlement.
======
mills of a different kind
https://www.equities.com/news/devry-dv-ceo-steps-down-due-to-federal-lawsuit
A Dubious Benefit: Big Employers Steer Workers to
the U.S. Department of Education, which last year sent nearly $8 billion in taxpayer money for student grants and loans to seven big for-profit colleges under law enforcement investigation — DeVry, University of Phoenix, and Career Education Corporation, plus EDMC, ITT Tech, Kaplan, and Bridgepoint — thus essentially giving those schools the Department’s seal of approval, needs to keep asking itself the same question.
http://www.republicreport.org/2016/a-dubious-benefit-big-employers-steer-workers-to-troubled-for-profit-colleges/
=================
Business Of Disaster: Insurance Firms Profited $400 Million After Sandy
May 24, 20167:28 PM ET
Heard on All Things Considered
http://www.npr.org/2016/05/24/478868270/business-of-disaster-insurance-firms-profited-400-million-after-sandyTroubled For-Profit Colleges
This New Neighborhood Will Grow Its Own Food, Power Itself, And Handle Its Own Waste
ReGen Village, outside of Amsterdam, doesn’t need a grid or food systems. It’s a model for a future, fully closed-loop settlement.
All 391 condos gone in 4 hours—and check out those prices!
I guess Canucks in YVR and 416 are not only crazies in the world!
http://www.msn.com/en-ca/money/topstories/gone-in-four-hours-lendlease-sells-all-391-sydney-apartments/ar-BBtD998
#39 Pepito on 05.29.16 at 8:07 pm
Why? It has a rational social policy and a government that actually governs for the benefit of the people.
___________________________________________
I would have agreed with you last year, not no more though. Merkel is risking Hitler #2 coming to power with her migrant policies. Look at what almost happened in Austria.
All of Europe just got even more broke, more dangerous, and MUCH more right wing (in a bad way) – and they all pretty much can thank Merkel for that.
Merkel is doing nothing good for Germany and her Citizenry right now.
#1 – here ya go :) http://bfy.tw/615S
you can search a site in google by using the sites name followed by a colon, e.g. “greaterfool.ca: price to rent ratio” to search all of Garth’s posts where “price to rent ratio” is mentioned…
looking at the results, you do go on a bit, Garth. ;)
#26 Brazil ex-pat on 05.29.16 at 7:27 pm
———————————
There are a couple key concepts you must understand.
CO2 is also a greenhouse gas (traps heat from radiating out into outerspace. Methane (natural gas) is also a greenhouse gas.
And although adding carbon into our atmosphere has had a global surface warming effect, locals climates can varying, and in fact can be colder than normal.
Remember this phrase and you won’t get confused about this topic again:
“Climate is local, warming is global”
#53 Rexx Rock on 05.29.16 at 8:57 pm
Canada will welcome the USA raising rates so our dollar will go lower which is better for exports.Like I said many times before Canada will adopt Japan style economics and will have zirp like the EU and Japan.Its already accepted by the public.Why do you think Poloz brings it up once in awhile.I know its very sad but Canadians didn’t speak up about this terrible policy that is driven our cost of living up so high.
__________________________________________
This type of thinking is obsolete if you are talking about manufactured goods. We have to compete with Mexico and China these days, not just US manufacturing. We can’t win against these folks, they are already very good, and get better and better every year, plus their governments throw 100’s of millions worth of incentives at big manufacturers. These folks work for 3.00/hr, manufacturers pay next to nothing for taxes, and no Unifor, no MOL, no WSIB.
The low Loonie will help exports like Oil, mining products, and forest products, but our governments will be hindering these industries of the behalf of environmental and Climate Change concerns from here on in. Not to mention the global economy needs to take off before Canadian commodities become valuable and in demand again. We will probably not see WCS ever go for as much as it did in the run up to 08 unless US fracking somehow dies…
How do you quote, a quote? Hmmm…
“…disproportionately benefited from — like income splitting and TFSAs”.
Maybe the younger generations (I am gen X/millennial, born 1979) could ‘disproportionately benefit’ from TFSA’s if we stopped overpaying for housing. Most Canadians with an average income can benefit from TFSA’s if they don’t overspend in other areas IMO.
#106 Bottoms_Up on 05.30.16 at 9:16 am
#26 Brazil ex-pat on 05.29.16 at 7:27 pm
———————————
There are a couple key concepts you must understand.
CO2 is also a greenhouse gas (traps heat from radiating out into outerspace. Methane (natural gas) is also a greenhouse gas.
And although adding carbon into our atmosphere has had a global surface warming effect, locals climates can varying, and in fact can be colder than normal.
Remember this phrase and you won’t get confused about this topic again:
“Climate is local, warming is global”
===============================
In the spirit of Monty Python, I’m sending some methane in your general direction.
https://www.youtube.com/watch?v=FWBUl7oT9sA
I am very similar to Warren. I came to Canada from South Korea about 9 years ago and graduated a university 6 years ago.
Got a car and renting a place nearby my work within a 10 minutes walking distance.
We save about 60% of our monthly takehome pay and invest in our own. 40% is more than enough for us to enjoy good quality home meals with lots of fresh fruits, vegetables and meats and enough for renting a place nearby work.
We have a net worth of about $170K and we have been investing in quality dividend &growth stocks and some ETFs. Although my wife’s TFSA room is lower than others because she wasn’t a resident of Canada when TFSA started, we maxed out TFSA and RRSP as much as we can and keep saving and investing in quality appreciating assets.
It is really all about understanding the environment you are in and go with what you have to make the best out of it. I spoke no English when I first came but how the random Korean immigrant amassed $170K while maintaining the quality of life? The answer is simple.
Frugality, quality of assets you buy(or don’t go near to bubbled assets that you can afford) and keep saving and investing.
BeSmartRich
Fishing northern Saskatchewan. Awesome picturesque scene with a little fog on the lake. 5 fish in 6 casts. White jig, red hook, white tail. Drives walleye crazy. Talking with my oilfield buds. Still many sitting on sidelines waiting for oil $$, To climb. They cannot believe many business have not cratered yet. Same with housing holding steady.
Happy not part of real estate madness. This country Canada has much to offer(monetary/non-monetary).Few will ever realize.
PB43
This blog might as well shut down till FED increasss rates – will never happen in an election year btw.
Buddy in 905 area (GTA) listed 5 yr old house. Close to a million. Had literally hundreds come by open house. Cars lined up on street.
Bully offers too.
This blog is reserved for dog photos and crazy letters from crazy blog dogs.
Just playing around with a mortgage calculator yielded the following results:
http://www.canadamortgage.com/calculators/amortization.cgi#top
$350,000 @ 16.5% over 25 years, monthly payment $4,745
$1,000,000 @ 3.0% over 25 years, monthly payment $4,732
Buddy in 905 area (GTA) listed 5 yr old house. Close to a million. Had literally hundreds come by open house. Cars lined up on street.
Bully offers too.
something funny in the water over there
Except there was HUGE competition for jobs because so many of us were coming out of school at the same time.
this makes no sense. that happens every year. likely far more graduating simultaneously today
#80 Freeman on 05.29.16 at 11:53 pm
Hey everybody, if you have a Windows 7 computer, PLEASE TURN OFF THE WINDOWS UPDATE feature on it right now, otherwise you will soon have Windows 10 installed on your computer. If you don’t believe me, just GOOGLE the term “windows 10 forced upgrade” and you will see what I mean.
Just go to: Control Panel -> Windows Update -> Change settings -> select ‘Never Check for Updates’, and un-check all of those ‘update’ boxes also.
Just do a YouTube search on this and you will hear about how people woke up one day, turned on their computer, and suddenly they were faced with Windows 10, and many of their files on their computer were gone.
====================================
Thanks Freeman. I’ve been “hard” shutting down my laptop (pushing button) to avoid the Windows 10 Update because even when I unchecked the update it stayed on the “shutdown”. Just did what you said & it’s finally gone. Yay!
#111 Prairieboy43 on 05.30.16 at 10:12 am
Fishing northern Saskatchewan. Awesome picturesque scene with a little fog on the lake. 5 fish in 6 casts. White jig, red hook, white tail. Drives walleye crazy.
_______________________
That’s my speed right there :). I like going out early to my favourite swamp, glass smooth water under a translucent mist, about 6-8 feet deep, and in the spring you can see right to the bottom. White swans cruising along, and the semi-regular splash of a bass or bowfin exiting the water while chasing breakfast.
I pull a big Mepps spinner 2-3″ from the surface, and the big pike come up like a cruise missile and hit it hard enough to give you a heart attack on a silent morning.
20 minute drive from my house, there’s nothing for me in an urban environment.
#107 IHCTD9 on 05.30.16 at 9:47 am
We can’t win against these folks, they are already very good, and get better and better every year, plus their governments throw 100’s of millions worth of incentives at big manufacturers. These folks work for 3.00/hr, manufacturers pay next to nothing for taxes, and no Unifor, no MOL, no WSIB.
//////////
few weeks ago i had an conversation with dude hwo travels around, to different plants, what he told me its interesting that technology used here and in cheap jurisdictins (lets call them that way) are more or lese same so problem and productivity can not be much diferent, but what is interesting what he sad that in 20yo plan you rearly see anyone older than 45-50…
80-90 of workforce is relatively young 30 or mid 30, plus accidents galore. So my point is we cant compite just for the reason of low wages, technology used for the most comes from same place and is priced similarly.
plus canda gives very generosly to corps.
toyota
http://www.cbc.ca/news/canada/toronto/province-feds-to-pledge-millions-to-toyota-at-pre-election-event-1.3174774
honda
http://www.cbc.ca/news/business/honda-to-invest-857m-in-3-alliston-plants-in-ontario-1.2825806
gm
http://www.theglobeandmail.com/report-on-business/canadian-taxpayers-lose-35-billion-on-2009-bailout-of-auto-firms/article23828543/
chrisler
http://business.financialpost.com/news/transportation/canadas-budget-gives-automakers-500-million-boost-amid-chrysler-plant-talks
parts makers
http://www.theglobeandmail.com/report-on-business/economy/auto-makers-get-250-million-as-ottawa-renews-innovation-fund/article6934817/
what he sad that in 20yo plan you rearly see anyone older than 45-50…
should read
in a plat that is 20 year old or older you rearly see anyone older than 45-50…
Garth
Many buyers now advertising….not just in BC
https://ca.news.yahoo.com/come-selling-yourself-buy-house-050000325.html
CREA wants competition ruling to apply in Toronto only
This part was interesting…
Ahh, so if the deal doesn't close because the sales data was viewable and ended up saving the buyer from overpaying, it's a problem. But if the deal closes because the buyer was bidding blind and had no idea the property was listed $100k lower weeks ago, that's not a problem.
Even if 5% of buyers are foreign, a liquidity crisis in China could spook them to exit and put over-leveraged locals underwater… finally this thing may pop?
http://www.bloomberg.com/news/articles/2016-05-29/china-default-chain-reaction-threatens-products-worth-35-of-gdp
Seems the goal of elites is to get us like Scandinavian countries. A bunch of passive stoners and johns/prostitutes paying 75% of income in taxes. Most. Advance. Culture. Evar.
It’s what we fight for. 1000 year reign indeed. Believe it.
#115 WalMark of Sadkatoon on 05.30.16 at 11:06 am
Except there was HUGE competition for jobs because so many of us were coming out of school at the same time.
this makes no sense. that happens every year. likely far more graduating simultaneously today
/////////
actualy it does makes sense because “good” job market is shrinking, more people are competing for less available jobs.
#88 citizen of canada on 05.30.16 at 1:13 am
I really do feel sorry for all those people waiting for a correction that never came, nor will it ever come.
Amen.
———————————————————————————
Yes your sincerity warms the heart.
Douche.
#89 ww1 on 05.30.16 at 1:20 am
I almost hesitate to post this, as this blog is largely populated by people who actually liked Harper and who were slagging T2 for his record after only two days of being in office. The pre-election poll on this blog indicating a Harper majority pretty much tells it all.
Still, this just makes me shudder :
http://winnipeg2016.liberal.ca/policy/poverty-reduction-minimum-income/
Not because it’s not a good idea – I’ll go to my grave convinced that we can do better as a society for everyone once we get past the Conservative view of “what’s in it for me” and “hey.. i earned it. Your problems are not my problem” and “hey .. I gave a few bucks to charity”.
But this part of TFA : “Savings in health, justice, education and social welfare as well as the building of self-reliant, taxpaying citizens more than offset the investment. ” just make we want to shake my head. There will be no savings – we all know that.
Suck it up people. Making sure everyone has better than a basic standard of living (heat, clean water, 800 calories a day) will not be cost neutral. It might cost YOU something. And it might hurt a bit – one less boat at the cottage or a smaller condo at Whistler. But I can guarantee that your personal hurt will be a whole lot less that what we force many Canadians to deal with every day.
________________________________________
Your faith in government ability knows no bounds.
You honestly expect that modern government can benefit its citizens to a great extent?
Tell you how it will pan out:
1. No worthwhile benefit to no one
2. Billions of borrowed money incinerated for squat
And if governments like we have in Ontario, Alberta, and now Ottawa keep doing this kind of thing over and over we will end up with:
1. Austerity
2. The undoing of every progressive accomplishment in the last 40 years.
It just don’t matter how many boats are at the cottage.
VanMan: A couple walks into a mortgage brokers’ office (we’ll call him MB) and wants a mortgage for $450,000. Problem is they have zero down payment available and also a negative net worth due to LOC and CC debt – let’s say about $20K total.
the couple now have a debt to income ratio of 5 to 1. They are the weak link in the housing market. $500,000 house, that’s well within the CMHC limit, but the bank has to foreclose to prove that it’s doing its due diligence.
Thanks for the TFSA Garth!
We need you as our next Finance Minister in the next Conservative Gvt.
Millennials, enter Garth’s mortgage info into a payment calculator:
1990 price of $318k at 14% for 25 years = $3745 monthly.
2016 price of $800k at 2.5% for 25 years = $3584 monthly.
Stop complaining. Listen to Garth about the inverse relationship between rates and homes prices, he speaks the truth!
Tactical Fund Storage Arrangements. Time to take out all your equity, max your lines of credit, and withdrawal on credit cards… convert it all to cash and bury it, or buy a big ruby and sew it into your belly button.
#88 citizen of canada on 05.30.16 at 1:13 am
I really do feel sorry for all those people waiting for a correction that never came, nor will it ever come.
Amen.
…
As a bank shareholder, I endorse this message. Now, I’m off to pay rent.
Willowbrook Chrysler instant credit approval.
From their (obnoxious) radio ad…
No job?
No proof of income?
No down payment?
Want an extra $10,000 cash added onto your car loan?
Want to roll the car insurance into your loan?
NO PROBLEM !!!
http://www.willowbrookchrysler.ca/en/financing/express/
129 WarrenBuffettRules
Sure with no money down the monthlies are comparable.
That’s why in the 1990’s, you would *save* money and then buy with a *downpayment*
In 2016, saving is futile. Prices rise 4x faster than typical savings. I’m saving over $100k/year and still falling behind. I’ve been saving for over 16 years. First to pay off student debt, then for a house… Bought something not-quite-right once, now I’m priced out.
#129 WarrenBuffettRules on 05.30.16 at 12:26 pm
1990 price of $318k at 14% for 25 years = $3745 monthly.
2016 price of $800k at 2.5% for 25 years = $3584 monthly.
Stop complaining. Listen to Garth about the inverse relationship between rates and homes prices, he speaks the truth!
____________________________________________
Almost looks like a massive wealth transfer from the banks to homeowners no?
#89 this is an old line. And I fell for it 20 years ago. I didn’t want children going without breakfast, or little old ladies not heating their apartments. So I happily paid taxes. The result?
Children are going without breakfast, little old ladies aren’t heating their apartments, and the national debt is bigger than ever.
If we don’t get the debt levels down, we will hit a wall sooner rather than later, and then no one will be able to afford to heat their place.
Just go to: Control Panel -> Windows Update -> Change settings -> select ‘Never Check for Updates’, and un-check all of those ‘update’ boxes also.
Is this now an IT blog? Anyway, if you go that route better set yourself a reminder to manually check for security updates for Win7.
Garth – millennials want to buy houses because renting with kids is scary. Sure, in Toronto there are houses available in decent areas. Based on my research, the rents are generally significantly higher than mortgage interest + property taxes + maintenance would be. On top of that, your family is at the risk of having to move on short notice if the property is sold – which in a hot market is highly likely. At which point you need to find another rental. Rental rates could have gone up substantially, you could be forced to move to a new school district, or into a location where the mandatory routine of dropping kids off at daycare (oh yeah need to find a new one of those as well) before and after work is just infeasible.
Expecting ALL milennials in the GTA or Vancouver to just take it on the chin and navigate that level of complexity in their lives, with children, is ridiculous. We already have both parents working (except for the top 0.5%, if that), and on top of that we have to deal with a choice of buying into a scalding hot housing market (a massive risk to our financial futures) or basically holding off having families until it cools down?
Of course the root of the problem is cheap money, but there’s nothing we can do about that. It isn’t about house lust, it’s about a desire for certainty in a world and economy that is massively uncertain. Blaming millennials for wanting that is silly.
Just wanted to share a comment from ZeroHedge (yes, I do read it):
“i work in real estate in china, primarily selling US property to wealthy chinese. the flow over here has definitely tapered. the capital controls make it next to impossible to get money out of the country and the stagnation in RE prices over here plus the fact that credit is drying up for second mortgages is making demand for foreign properties begin to tank. say goodbye to a huge component of high end demand in the US.”
But this shouldn’t have any effect on Canadian RE, as less than 4% are foreign buyers, so party on, people!
/sarc off
meanwhile in suburbia
http://www.thespec.com/news-story/6697242-fists-fly-in-bloody-fight-over-costco-parking-in-mississauga/
Get’em early, get’em young.
Scare them to death from early childhood, so that when they grow up, they gladly agree to live in shoeboxes and pay carbon taxes to “save the Earth” “for children’s future”.
http://www.theweathernetwork.com/videos/Gallery/cutest-and-most-emotional-plea-to-save-the-earth-right-here/2312993038001/2312993038001_0
Now, I am not saying we should all be pigs and not care about the environment and such. What is bothersome is that this agenda is being pushed way too hard and scares the crap out of the kids (including mine).
This cannot be done without long-term purposes.
Now, I’ll put on my tin foil fedora and bid farewell.
Boom,happy Memorial Day.
Here is the latest candidate for you to vote for in the upcoming election
Boom is right…
https://imgur.com/H4vW0HE
Working outside this beautiful Memorial Day. Edged driveway and from walk. Next up, that filthy car from last weeks’ road trip. Amazing how many dead bugs accumulate in 450 miles.
Flopper….
Nice bumper sticker, but don’t rush things, the end will come for old guys like me soon enough. A friend from town, ED went into hospital for colon cancer surgery never came off the table, heart gave out. 57 skinny, hard worker, all around good guy.
See, just proves we jerks will finish closer to the top. (yeah, right)
Just proves you never know, the direction of stocks, interest rates, or yourself. Looking Back you have a 100% correct view of where they WERE, and we might ‘think’ we know what’s next, but… not a dam thing in life, or stocks, or interest rates are guaranteed.
Death, and taxes are assured. Trust that one.
#129 WBRules
Millennials, enter Garth’s mortgage info into a payment calculator:
1990 price of $318k at 14% for 25 years = $3745 monthly.
2016 price of $800k at 2.5% for 25 years = $3584 monthly.
This comparison neglects the reality of 5 year renewal rates. In early 80’s nobody was committing to 16.5 % for 5 years, much less 25!
It is way preferable to have lower debt and higher interest given identical monthly payments.
Continue to disagree, partially, with the opinion set out by the author of this forum with regard to housing prices.
I understand the idea is that Canada is in a housing bubble, with a crash likely. This is due to low interest rates, which have created an opportunity for people to borrow more money, thus driving up prices as “everyone” can now afford a house.
I still have to continue to disagree. There is a very weird situation in Canada right now, and yes two real estate markets look like bubbles. But the entire country is not reacting the same way. We have two markets with insane property valuations, Toronto and Vancouver.
The rest of the Country has real estate either stable and affordable, or in slight decline in value.
We have heavily indebted governments, both Federal and Provincial. The relationship between Federal and Provincial governments creates a situation where if a Province is unable to pay its debt, the Federal government will be obliged to help out, meaning that any increase in interest rates will likely result in currency devaluation (because there will need to be more money printed, at the Federal level, to pay off the debt).
It is understood that Toronto and Vancouver real estate is said to be being purchased by very stupid people, taking on huge amounts of debt, with no foresight or understanding of interest rates, and with no hope of ever paying any of the borrowed money back. However again, if that is the case, why only in Toronto and Vancouver? Are people sane everywhere else?
There is also the problem of the monthly payments. Yes it may be possible for a couple of “moisters” as this forum routinely refers to them, to purchase a million dollar house in Toronto, using their credit cards, money borrowed from friends and family, and then survive month to month on a wing and a prayer. But is anyone actually doing this? Again it is not at all clear.
Also, have a look at Toronto’s housing landscape. It is almost impossible right now to purchase a single family detached home, or even a semi, without either paying a huge amount of money, or bidding with multiple bidders. That does not seem to be because interest rates are low. There is plenty of housing stock available, if a person is not choosy where they live. That seems to be the case, because most people do not seem to want the available housing stock, they are looking for a very specific type of housing, that being, detached, parking, backyard type housing. The available housing stock is predominately condominiums, and they can be had for as little as $110,000.00 at last check on “realtor.ca”.
So there is no problem at all in terms of affordable real estate being available in Toronto. There is lots and lots of it. The problem seems to occur when everyone tries to live in a house with a backyard, that is detached, has a driveway, three bedrooms, etc. That is the impossible situation that people are looking to get into.
So the question again, is will that situation change, if interest rates go up? Will everyone suddenly decide they are better off living in condos? If 1/2 of the bidders disappear, so you have 20 people bidding on the latest detached 3 bedroom fixer upper with laneway parking and a leafy backyard, will that cause the price to go down? If so, by how much?
I still don’t entirely see it. But at any rate it continues to be fun to read these entries and post replies. Gives me a break from work.
#127 45north on 05.30.16 at 12:17 pm
VanMan: A couple walks into a mortgage brokers’ office (we’ll call him MB) and wants a mortgage for $450,000. Problem is they have zero down payment available and also a negative net worth due to LOC and CC debt – let’s say about $20K total.
the couple now have a debt to income ratio of 5 to 1. They are the weak link in the housing market. $500,000 house, that’s well within the CMHC limit, but the bank has to foreclose to prove that it’s doing its due diligence.
________________________________
Has to foreclose? Intervention will continue to ensure this bomb continues to tick… meddling in the market has been happening for a long time by everyone with something to lose, including Gov’t & CMHC, Banks, Real Estate firms, etc.
My strong assumption (at least within my circle of acquaintances) is that the credit scenario I mentioned is the norm. The same goes for financing for the Mercedes, BWM, Porsche, Audi, etc…
Re Mike in Toronto
If you are saving $100k/yr you are doing fantastic, keep it up and don’t worry about owning a home. Prices will normalize and you will be sitting pretty. Patience will be rewarded. And enjoy renting, believe me, owning a home is a lot of work! I live in an old home (built in 1923) in East York and it constantly needs my time and money.
Dieter Behring claimed he could beat the market with a software programme
Financier accused of CHF800 million fraud
http://www.swissinfo.ch/eng/month-long-trial_financier-accused-of-chf800-million-fraud/42188448
==========
vancouver shell was involved?
A good background story By Stephanie Ayres
February 2005 Basle, Switzerland
http://www.hedgefundsblog.com/article/750679743/a-swiss-mystery-dieter-behring-and-the-missing-millions/
#142 BOOM! on 05.30.16 at 2:06 pm
Flopper….
Nice bumper sticker, but don’t rush things, the end will come for old guys like me soon enough. A friend from town, ED went into hospital for colon cancer surgery never came off the table, heart gave out. 57 skinny, hard worker, all around good guy.
See, just proves we jerks will finish closer to the top. (yeah, right)
///////////////////////////////////////
This theory is why I believe Mark Farquar will live to be 110…
M41BC
#122 Montreal Guy
Even if 5% of buyers are foreign, a liquidity crisis in China could spook them to exit and put over-leveraged locals underwater… finally this thing may pop?
Any sort of crisis in China is likely to mean more capital coming here. It’s hard to envision any likely scenario where there aren’t major continuing flows of money from China to Vancouver. That definitely includes any so-called “anti-corruption” drives. Here’s how those actually work in the PRC:
1. A cadre falls out of favor with the Party.
2. THEN he gets charged with corruption.
Also in addition to what I posted above, if anyone thinks low interest rates lead to real estate bubbles, have a look at this:
https://takloo.files.wordpress.com/2010/06/fixed-mortgage-rates-historical.png
That’s the historical fixed mortgage rate chart, from 1980 to 2009.
Now have a look at this:
http://www.randi-emmott.com/market.htm
Scroll down to the average selling price graph for 1980 to 2015.
See what I see?
That’s right. During the last big Toronto “real estate bubble”, five year mortgage interest rates ROSE right up to the peak of the bubble, and then DECLINED into the “bursting of the bubble”.
In other words, a linear rise in five year mortgage interest rates, from 1988 to 1990, had the effect of INCREASING the value of a Toronto house.
Five year mortgage interest rates then fell consistently throughout the decline in housing values in Toronto, and five year mortgage rates did not start increasing again until Toronto house prices began GOING BACK UP.
So, this may be hard to believe but it is right there, in the graphs.
An increase in mortgage interest rates, seems to go along with an increase in housing prices (at least in Toronto) and a decrease in mortgage interest rates, seems to go along with a decrease in housing prices (again, at least in Toronto).
Weird, eh?
#148 Flopper…
Careful what you wish for, and upon whom.
Time for a shower now, after all that timing edging, and nauseating work under an 80 degree sun. The ‘joys’ of being a home owner. Yeah, sure is, you betcha…
I was going to cut the grass, but why do what you can put off until tomorrow?
Besides, getting close to cocktail time here in the land of the spotted cows. Yeah, the shower and a cool down.
Good days work behind the old goat.
#144 Ace Goodheart on 05.30.16 at 2:33 pm
——————————
I think you’re missing the fact that about 10 million people live in the golden horseshoe (30% of Canada), and largely property values have been affected by whats going on in “Toronto”. Should a townhouse in Croakville cost $600,000? Should a suburban cookiecutter house in Barried cost $500,000? Even look at Hammeredton, over $400,000 for anything half decent.
I think Garth is right, this ain’t gunna end well for these folks. And as always, location, location, location will rule the day.
gold, the non-productive, crap asset junk continues to flounder…
http://business.financialpost.com/investing/market-moves/fed-rate-hike-talk-sends-gold-spiralling-below-1200-as-u-s-dollar-rises
thx goodness for diversified and balanced
Wow !
Where do people think all this money will come from ?
Where do they think all this growth will come from ?
How many people are there, that can afford a $600,000 property ?
Logic tells me that this will eventually end, because it will eventually dry up all the qualified buyers.
Am I daft to think so ?
The economy is slagging horribly here in the west, and I don’t see anything that indicates things are going to get any better.
Coal mines – all closed.
Metal mines – mostly running, but not all of them.
Oil and Gas – slowed right down to a crawl.
Forestry – Keeping afloat, nothing like it used to be.
People – already under enormous pressure and it just keeps getting worse.
What’s a guy to think ?
#81 Walmark, don’t be a firster idiot. you are not funny.
#104 IHCTD9 on 05.30.16 at 8:58 am
#39 Pepito on 05.29.16 at 8:07 pm
Why? It has a rational social policy and a government that actually governs for the benefit of the people.
___________________________________________
I would have agreed with you last year, not no more though.
____________________________________
My comment was about the relationship between the housing bubble and prolonged low interest rates. My point was that low interest rates in and of themselves do not necessarily cause housing bubbles when a nation has a proactive housing policy. Germany incentivizes renting and discourages speculation in the property market and, thus, has managed to provide her citizens with decent, well built and inexpensive housing. Germany’s housing policy has not changed regardless of any other issues that are currently playing out in that country.
Garth and the readership here would do well to stop the self indulgent, naval gazing and broaden their perspective to more clearly understand the issues and solutions available.
#155 Give us this Blog our daily Garth on 05.30.16 at 5:19 pm
#81 Walmark, don’t be a firster idiot. you are not funny.
C’mon man, firsting at comment #81 is hilarious!
“did I make it?” LOL
#121 Aggregator
Provincial privacy commissioners have to rule first.
Real estate boards will monetize their data.
RE: #152 Bottoms_Up
Totally agree with you. My point is, if you’re like me, and you’re sitting in a pile of bricks in Toronto, that you bought back in 2012 for $329,000, and that pile of bricks happens to be south of Highway 401, not attached to any other similar piles of bricks, has at least one parking spot and a backyard with a couple of trees and some grass, then provided you still want to live in said brick-pile, there is no point in selling it.
I could not say the same for any other Southern Ontario city. The fact that people are paying 600K for houses in Barrie’s endless urban sprawl, and then facing 2 hr commutes down the 400 into the T-dot so they can pay off $550,000 mortgages, perplexes me and probably always will.
But I do know one thing. They are not making any more detached houses south of Highway 401 in Toronto, and they have not made said houses in a long, long time. Toronto is full of condo dwellers who yearn quite desperately for a backyard that they don’t have to share with 1000 other people. They all want detached houses. They will pay a million dollars for a semi in poor condition, provided it comes with a scrap of land that could be used for growing something green.
I remember living in South East Asia, on the Island of Formosa (ie, Taiwan) and watching insane property valuations in that location. There, a “backyard” was a two foot by six foot scrap of dirt, that two people could not comfortably stand on. Such an item would raise the value of a house by about 1/3 to 1/2 depending on location.
That is the way of the world I am afraid. As we all pack ourselves into Cities, any available space to “spread out” is coveted and people pay huge amounts of money for such space. Hence, the current situation with Toronto detached houses.
One should be careful when generalizing about Boomers. Boomers born between 1960 and 1964 have a lot more in common with Gen-X than they do with Boomers born after the war up until the late 50’s. Early Boomers benefitted from almost three decades of economic growth with the standard of living doubling every 7 years up until the mid-70’s. Late Boomers came of age as economic growth plateaued and and oil shock put a wrench in the world economy. The 1980’s and 1990’s saw robust economic growth but it was lop-sided as the wealth-gap began to decimate the middle class year after year.
#98 Herb on 05.28.16 at 7:13 am
just let me know when she answers the question:
http://www.greaterfool.ca/2016/05/20/chutzpah-2/#comment-449925
================================
Part 3 available. Question still not really answered.
http://www.millennial-revolution.com/invest/how-we-got-here-part-3-after-the-crash/
What about a ten-year fixed rate mortgage, for someone who really absolutely wants to buy now?
That would give them a decade at low rates while they rise.