Why they worry

SPECIAL DOGS

Last week two Big 6 bank CEOs called for Ottawa to double the size of minimum down payments, to 10%. That was followed by the boss of a big BC-based credit union calling on the Trudeau gang to “immediately re-visit” the tax-free status of capital gains on real estate. This comes on the heels of a 29% year/year price romp in Van and a 15% jump in the GTA. Big important financial peeps are suddenly a lot more worried. This could end badly.

It’s all about risk. The bankers (like the credit union guy with 66% of CU assets in housing) know a bust would bring defaults, lower profits and flaccid share values. Everybody understands Canadians are over-extended, pickled in debt, falling behind in terms of wages, yet lust after our most-inflated asset.

Like Cartwright, who just sent me this:

“We’re looking at a $500,000 purchase price for a house (emotions running high after being extremely conservative for 5 years). Our young family has about $50k to put down. Parents will also need to co-sign (because of temporary job scenarios). We’re considering having them pull a HELOC on their house and then gift us $50k. This gives us the 20% down, enabling us to get a 30 amortization (near $150-200 lower monthly payments) while also avoiding the CMHC premium (around $18k). Between us we have enough liquid reserves ($60k) in the form of RRSP’s and TFSA’s to wipe out the $50k loan if it was ever called or if the rate went through the roof. Our cash flows are such that we can service the mortgage and loan along with all other housing costs, without moving into a bad zone with debt ratios. We have enough scraps elsewhere to cover closing costs.

“This idea stemmed from only being able to qualify for homes in the mid 400’s in our current situation. Consequently this idea enables us to get the purchase price needed to get into the neighbourhood we require (well aware of how dumb that sounds). Despite the slightly higher rate for the HELOC, it also enables us to repay as we go without a bunch of repayment rules. So – smart or stupid?”

Stupid, dude. Buying that house (you can’t afford) will put you $500,000 in debt, leave scant reserves, result in a 30-year amortization (bigger interest payments) and soak up your cash flow. It’s a classic one-asset strategy, exposing you to market risk (housing will correct), rate risk (you’ll renew higher) and employment risk (job loss would kill ya). Sounds like you have kids, yet no savings for them (RESPs), and buying this place will mean nothing to put aside for your family for years to come.

DEBT RATIO

Moreover, thinking people (like the bankers) know this bubble won’t last. So when YVR and the GTA stutter, all markets will stumble. Buying now because (a) you fear you never will or (b) the house will make you rich with sure-thing cap gains is emotional, not logical. Face it, if you (i) need your parents to co-sign for your debt, (ii) you have to borrow from family to buy, (iii) you opt for a ridiculous 30-year amortization, (iv) you end up with virtually no equity, half a million in debt and only sixty grand saved plus (v) owning means you become an irresponsible parent, then buying is foolish.

House lust. Debt embrace. So many people have no idea what they’re doing.

Career mortgage broker Paul Therien made some salient points two days ago, to an industry publication:

“When I started in the industry the minimum down payment was 10% with a maximum 25 year amortization. The difference between now and then? The biggest change is the % of income that is required to service a mortgage. While property values have been increasing at unprecedented rates, income levels have not been following the same pattern. In many parts of the country the opposite has been happening and incomes have actually been declining.

“I believe what is truly at issue here should not be the % of down payment, but rather the average homeowners ability to effectively service the mortgage. When I was a newbie one of the qualifying factors used was always the # of dependents the borrower had. There was a cost associated for each and this cost was included in the serviceability calculations for any debt incurred. Today, few, if any lenders take this into consideration when looking at extending credit. Children are expensive, and they are much more expensive than they were 25 years ago. I can remember a study done in 1996 that outlined the true cost of one child from birth to the age of 21. The average was $500,000 or roughly $1900 per month (this included costs for shelter, education – including university, food, extra-curricular activities, etc).

“These costs of living have a direct impact on the long term sustainability of an individual’s economic situation and yet we no longer consider much of this when looking at the extension of any type of credit, including mortgages.

“With interest rates sitting as low as they have there is an entire generation of homeowners who have no concept of anything approaching a rate of 5%, never mind 8% or more. Borrowers who are maxing out their capacity at today’s interest rates are seeing equity build in their homes, and that is great. What is not so great is the actual percentage of tangible income being used to service their mortgage debt. 32% GDS is actually 43% of their net income and TDS is hovering at 57% – what happens when rates increase?

“Most people who are maxed out in their capacity do not have the ability to weather an increase of as little as 1%. Personal savings are at an all-time low with the majority of working Canadians not even having 2 months savings. In fact only 4% of Canadian homeowners have the means to survive any economic challenges to their household incomes. The major issue is because household incomes are not increasing at rates that can compensate for higher inflation or cost of borrowing and as a result savings are diminished. What savings they do have, usually goes into the purchase of the home.

“The number one question I am asked by people: “Paul, when is it all going to come tumbling down?” My answer… “I don’t know, but what I do know is that 15+ years of consistent growth is not sustainable. I don’t believe it will collapse, but I do believe that the wave we are riding will at some point reach the shore, and when it does we will see economic changes. We will either coast to shore or we will get crushed. It’s complicated and even the greatest economic minds of our time have no idea what will happen.”

DEBT-INCOME

Bankers, lenders, brokers – people who daily watch Canadians plunging into historic levels of debt to buy assets at unheard-of levels with money that’ll get more costly – are worried. If not for the buyers and society, then for their own skins. These are the voices politicians listen to, lobbyists who now see public policy changes as the last, best hope of avoiding a train wreck.

And that, Cartwright, could be a bigger threat than your own inanity.

196 comments ↓

#1 Shawn on 06.05.16 at 12:02 pm

Real Risk.

At the TT motorcycle races I attended this week on Isle of Man. One rider dead in practice one side car racer dead in Saturday’s race. There is risk and then there is Real Risk

#2 Shawn on 06.05.16 at 12:06 pm

Career Advice

Go trades young man, go trades!

College grads are a dime dozen and Indian candiyour job cheaper. Yes you lawyer, engineer, accountant. Carpenter, plumber, plasterer, not so much.

#3 Shawn on 06.05.16 at 12:06 pm

Posted from the cavern club Liverpool

#4 Raging Ranter on 06.05.16 at 12:15 pm

I keep thinking I should bite the bullet and buy here in Ottawa. Prices look downright cheap here compared to Toronto. But I signed another two year lease just yesterday. So that’s that. Now I can stop thinking about it and save money for another two years. Sometimes i need to lock myself into something to stop myself from doing something foolish. :)

#5 Prairieboy43 on 06.05.16 at 12:19 pm

Did a drive through St.Albert, AB. Many homes for sale. Big increase from three months ago. A couple sold signs. Talking with contractor (always busy), selling home. Moving to 12,000′ mansion out by northern lake. He has concerns. Thinking hard about retirement. He will need a couple maids.
PB43

#6 Jimmy on 06.05.16 at 12:22 pm

Fifth feels pretty good considering it’s Sunday

#7 rosie on 06.05.16 at 12:32 pm

Back in 1981, after graduating from teachers college, I took the only teaching job on offer in Ft.McMurray teaching grade 4. I was broke and didn’t have enough money to get there. I borrowed $1000 from my single mother. That was a tough loan to get back then. Banks were hard assed and uncompromising. The interest rate was 19%. When I arrived, I was pleasantly surprised to receive an advance on my pay. Rents were very high and new hires were having a hell of a time finding digs. The Board was afraid we would just leave. I took $1000 from the advance and paid off the loan, paid rent on a shared 2 bedroom, $400 and had $150 left for the month. I didn’t have a car. At the end of the month I was paid again and sent $200 to my fiancé to join me. She did’t have a job, but jobs were plentiful at that time. After a couple of weeks of supply teaching she got a contract to. We bought a car in March of 82. Interest rate was 21 3/4 for a car loan. We paid that car off in 8 months. When I read of these fools bugging their parents for $50000 I think of those days back in the 80’s. We would not even consider having our parents mortgage their limited futures to fulfill our dreams. They were our dreams and we made them happen. This generation seems to be devoid of shame.

#8 Capt. Serious on 06.05.16 at 12:43 pm

College grads are a dime dozen and Indian candiyour job cheaper. Yes you lawyer, engineer, accountant.

Depends. If you are good you’ll find a job. Not everyone wants to ring India when it’s time to do a transaction. And actually Canada is a relatively low cost / high skilled place to have engineering work done for a multi-national.

#9 45north on 06.05.16 at 12:48 pm

Bankers, lenders, brokers – people who daily watch Canadians plunging into historic levels of debt to buy assets at unheard-of levels with money that’ll get more costly – are worried. If not for the buyers and society, then for their own skins. These are the voices politicians listen to, lobbyists who now see public policy changes as the last, best hope of avoiding a train wreck.

“the last, best hope” that’s what I think including raising interest rates.

Father Joe LeClair said the Irish knew how to manage poverty, it was managing wealth where they were lacking. I mean when you don’t have any money then your family is what you got and you keep what you got. Which is the opposite of what Cartwright is doing. He’s thinks he’s got money, in fact he promises he’s got money but if it turns out he doesn’t then he pretty much has guaranteed than he won’t have his family.

#10 Metaxa on 06.05.16 at 12:52 pm

There is one reason and one reason only to push amortization out as far as the lender allows.

And that reason is if you have studied the Australian credit union method of mortgage re-payment, or know, really know, how the Manulife ManuOne program works and have the ability and fortitude to stick to it.

Its that last bit, ability and fortitude, that is lacking in most mortgage holders I think. Take the bank’s sizzle and the bank wins. Dig into the real meat of the “how it works” and you win.

#11 AK on 06.05.16 at 12:53 pm

Complainants puzzled by lack of action on probe of Vancouver realty firm

#12 Ogopogo on 06.05.16 at 12:54 pm

Let’s hope the Fed does the right thing and increases rates at least once this year, but hopefully twice. If it eventually wipes out debt slaves who bought into the lies and manipulation of the real estate cartels and their lowly minions (i.e. the gaggle of realtor-parasites that infest the nation) so be it.

Meantime, savvy renter-investors laugh serenely as divvies continue to pile up. One of the benefits of having preferreds and REITs in my portfolio is not having to wait for every quarter to see divvies come in. Every two weeks more money gets DRIPped. Yet every day I see more Canadians blithely put a noose around their necks.

When my Facebook feed lights up with hysterical congratulations whenever a friend buys a house I can’t help but shake my head at the housing cult in this country. We enable each other in this madness.

#13 Diane Irvine on 06.05.16 at 12:56 pm

Which Credit Union called for this? I’d be interested to know – I can’t find a news story on this.

CCEC, Ross Gentleman, CEO. — Garth

#14 Estrella on 06.05.16 at 12:58 pm

Happy Sunday to all dog readers, grateful to see your post with my coffee!

This article thus morning has me convinced that we are at a turning point in BC. Furthermore it has me questioning what needs to be done to make realtor councils answer to the public. Are any public members on realtor councils? Their seemingly looking the other way and it carry-on as business as usual in BC is a serious disservice to the general public.

http://www.theglobeandmail.com/news/
national/no-action-taken-on-vancouvers-new-coast-realty-complainants-report/article30279257/

#15 Estrella on 06.05.16 at 1:00 pm

http://www.theglobeandmail.com/news/national/no-action-taken-on-vancouvers-new-coast-realty-complainants-report/article30279257/

This link may work better. Previous link flawed I think

#16 Shawn on 06.05.16 at 1:03 pm

Cheap canadia engineers?

Captnseroius mentioned cheapcanadian engineers, exactly my point. Go trades, young man, go trades!

#17 hope & ruin on 06.05.16 at 1:07 pm

A great example of the deranged thinking that is fuelling the vancouver housing market.

From a G&M article today on millennials and RE:

“It is frustrating to know that owning a house in vancouver might not be possible. We might be renting for the rest of our lives” says 23 year old Oliver Schmidt
________________

The rest of your of your life?!? You’re 23! Foreign money my ass.

#18 For those about to flop... on 06.05.16 at 1:31 pm

This is an example of how overheated the market is in Vancouver.

The house I’m working on at the moment will be a decent house in a decent neighborhood.
It will go on the market for 7 million CAD.

As a comparison in San Francisco,one of the hotter markets in the U.S the famous house from”Full House” is on the market for 4 million USD in one of,if not the nicest part of the city.

Nothing to see here…

M41BC

#19 common sense on 06.05.16 at 1:34 pm

4-5% rates? Please.

The FED CANNOT RAISE RATES WITHOUT THIS ENTIRE CHARADE FALLING DOWN ON THE MAJORITY OF THE POPULATION.

PAST RATES ARE IN THE PAST. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. Period.

Everyone on this planet KNOWS they should be raising rates, want to raise rates, I want them to raise rates BUT THEY ARE 99.9% afraid to!

Stock and Housing prices WILL fall rate increase or not.

Rant over, resume your normal Sunday afternoon activities and enjoy people!

#20 Shawn on 06.05.16 at 1:39 pm

St. Albert Alberta

Hey prairie boy that,s been my home lo these 21 years. Does not really matter not intending to buy or sell

#21 Michael King on 06.05.16 at 1:43 pm

I saw the interview with the gentleman from the credit union. I believe that he is genuinely concerned about the Vancouver RE bubble. However, he seemed to be floating the idea of a capital gains tax on primary residence sales. Any government that seeks to impose that will meet fierce opposition and rightly so. The majority of homeowners, even here in unhinged Vancouver, are not flippers or speculators. Bad idea. There are other ways to deal with the problem.

Unpopular, yes, but a valid solution. Making residential real estate the only asset class to give tax-free capital gains has resulted in the situation we now face: unaffordable houses, and a nation of speculators. Time to revisit this anachronism. — Garth

#22 Mountain Dew on 06.05.16 at 1:52 pm

We were set on selling our paid for home in metro Vancouver last fall, and renting for a few years. However, we were not organized enough to go ahead with the sale at the time — thank goodness. Now prices in our area are up some 40 percent since the time we had planned on selling. Some analysts are saying prices could rise another 27 percent through the end of the year. We have thrown our our hands up. We’ve come to the conclusion it is too tricky to game this thing.

Selling too soon is far superior to selling too late. — Garth

#23 NoName on 06.05.16 at 1:57 pm

Children are expensive, and they are much more expensive than they were 25 years ago. I can remember a study done in 1996 that outlined the true cost of one child from birth to the age of 21. The average was $500,000 or roughly $1900 per month (this included costs for shelter, education – including university, food, extra-curricular activities, etc).

—————-

we (my family) have, both “regular/average” and special need child, i can tell you those number look bit to high for regular kid, but not high enough for special needs kid.

#24 West van on 06.05.16 at 1:59 pm

I don’t buy the fear of higher rate renewal shock , we can’t even get off the ground as it is. Where is all this new growth going to come from to warrant a 5 percent interest rate? How can the us fed raise rate and achieve inflation at the same time ? An appreciating currency is deflationary.

#25 Michael King on 06.05.16 at 2:21 pm

Re: 21. Garth, as a loyal and regular reader I highly value and respect your opinion. Having primary residences exempt from capital gains tax could certainly lead to speculation. But, as you have pointed out, historically low interest rates and lax lending practices have also contributed to creating the RE bubble and I would argue that they are the main factors. As for protecting asset classes from capital gains, TFSAs are wonderful. Too bad the new government imposed a cut on contributions. Thank you for this blog!

#26 New West on 06.05.16 at 2:21 pm

Ah Vancouver. One of my kids just got back from Berlin, and said, “Mum, you need to go there as soon as possible.” I was thinking about that yesterday as I was driving down 49th, orange snow fence around the street trees, anything with character being knocked down and replaced with giant stucco boxes that no one apparently lives in, or the lot being sold for condo development.

I have friends my age who live in fully paid for houses, who think carefully about whether or not they can afford a class at the community centre or a night out with a decent bottle of wine. They are “afraid to sell” because they “won’t find anything else to buy” or “they will miss out on more gains”.

There is little talk of business other than real estate development. For those who observe, the commercial vacancy rate isn’t great, and there are more buildings going up –

https://www.biv.com/article/2016/3/white-elephants-weigh-metro-office-market/

I understand that real estate speculation has always been rampant in this place, starting before 1858. Governor Douglas and his HBC cronies were infuriated when Colonel Moody of the Royal Engineers decided on New Westminster as the site of the new city, not the area around Fort Langley. Which land had been conveniently been bought up by said cronies. I remember talking to my grandpa, who had bought 10 acres on 152nd street in Surrey in the thirties. It was hard for him to come up with the 5 bucks cash a year for taxes, but he did, as he knew it “would be worth something someday”. It was when he sold 50 years later, but most of that was just inflation, and he couldn’t enjoy his gains by then anyway. Speculation is in the DNA of this place, but now it’s gotten way out of hand.

I’m tired of it. No matter what people say this is not even close to a “world class city”. When all you have is new build spec houses and condos to talk about, or what someone got for their lot in Langley, it’s boring. A dwindling few care about music, or art, or heritage, or history, or having a drink on a patio and enjoying the sun – oh wait, we don’t build patios any more, not when you can fit in another condo or two to sell for a stupid price.

Yes, the mountains are beautiful, and the weather is good. But the beast now seems to be heading north to destroy the uniqueness of the Sunshine Coast and other places that used to be paradise. Maybe my son is right. Maybe it is time to go to Berlin. At least I might find someone there who can talk about something other than real estate.

#27 Metaxa on 06.05.16 at 2:26 pm

Garth writes:
Unpopular, yes, but a valid solution. Making residential real estate the only asset class to give tax-free capital gains has resulted in the situation we now face: unaffordable houses, and a nation of speculators. Time to revisit this anachronism. — Garth

There will always be give and take, eh?
If they tax cap gains on homes then they would “give” mortgage interest deduct-ability maybe.

Maybe you could “live” your way out of cap gains tax…100% taxed in years one through 3, sliding scale down until you suffer no tax if you have lived in same house for fifteen years or more?

But wait! What about corporate transfers? Military and RCMP postings? We need exemptions! We need a new bureaucracy to admin this thing!! we need to have a, gasp, Royal Commission to look into this before we send it to the Senate who will conduct their independent analysis of the initiative.

!!!

#28 Brazil ex-pat on 06.05.16 at 2:41 pm

You moldcouver guys from yesterday were funny has heck. Thanks for making all of us laugh down here !! Enjoy your three days of nice weather…..

#29 The American on 06.05.16 at 2:52 pm

At #18: For Those About to Flop, I have to say I travel the West coast weekly. As expensive Vancouverites *think* Vancouver may be, San Francisco is by FAR more expensive.

I’m not sure where you got your data, but the Full House home for sale is selling for $4.15MM, and it is an okay part of San Francisco at BEST. Also, the home has less than 1,700 square feet in it. Compared to Vancouver, well, that kind of insanity isn’t happening as a “norm” there. However, this is quite normal in markets like San Francisco. You can see in the link below the price per square foot as a whole in SF is significantly greater than Vancouver (meaning, no cherry picking of data). Additionally, these prices are in USD. Convert, and it makes market like Vancouver look like a bargain.

http://www.zillow.com/homes/for_sale/san-francisco,-ca_rb/?fromHomePage=true&shouldFireSellPageImplicitClaimGA=false&fromHomePageTab=buy

#30 The American on 06.05.16 at 2:54 pm

At #18: For Those About to Flop, also, please note the home for sale in SF is NOT one of the painted ladies as you’d believe. It is a standard home in that near vicinity. Here you go…

http://www.zillow.com/homes/for_sale/1709-Broderick-ST-San-Francisco-CA-94115_rb/?fromHomePage=true&shouldFireSellPageImplicitClaimGA=false&fromHomePageTab=buy

https://localwiki.org/sf/Full_House

#31 Bigjack on 06.05.16 at 2:56 pm

The solution to all this foolishness is very simple: Shut down CMHC.
Federal government needs to stop tinkering with private enterprise (banking).
Once this happens, banks will be much more careful about lending money. Prices, amortizations & down payments will revert back to what the market can bear. AND, taxpayers won’t be on the hook for the irresponsible decisions of others.

#32 Smartalox on 06.05.16 at 2:59 pm

@Cartwright:

If you’re young and starting out, it’s best to build your savings, before betting everything on a mortgage.

Save up $250k to $300k in RRSPS and TFSAs early on, and let compound interest do the rest. Once you hit those targets, (plus whatever you need for a down payment), you can divert the salary that you had been saving, from you savings to your mortgage, and save less in your TFSAs and RRSPs.

The money that’s in those accounts before you buy the house will continue to grow through compound interest, while you pay off your mortgage. Then, when you’ve paid off the house, you’ll be able to go back to saving for retirement, while in the mean time you’ll have accumulated thousands in contribution room in your RRSP and TFSA accounts.

This is so much easier than trying to manage mortgage payments and retirement savings in the same budget at the same time.

#33 NoName on 06.05.16 at 3:03 pm

#26 New West on 06.05.16 at 2:21 pm

never been in Berlin, but acording to my friends and cousins they describe it, its like a Munich, just 10x better.

http://tipsypilgrim.com/blog/drink-proudly-on-berlins-streets-and-trains-especially-if-yo.html

#34 Smartalox on 06.05.16 at 3:11 pm

Re: capital gains taxes on RE:

This doesn’t mean all gains are taxed. You’d have to deduct for costs, improvements, commissions, etc. And if the goal is to curb speculation, institute a sliding scale after the first 3 years of ownership: 100% net gains in the first year, reduced by 5 percent of gains per year of ownership every year thereafter. Maybe institute a minimum threshold of gains ($500k gains tax free?) as well.

Of course, new builds (spec houses) would be hit for GST paid by the seller, but with the opportunity to claim input credits on goods and services required to complete the build.

#35 The American on 06.05.16 at 3:21 pm

As far as San Francisco is concerned, here are some listings currently available:

How about this 1,200 square foot gem selling for only $8,500,000 ($11,000,000 CAD) http://www.zillow.com/homes/for_sale/2103140100_zpid/7000000-_price/24916-_mp/any_days/zest_sort/37.86469,-122.317658,37.685042,-122.56382_rect/11_zm/

There’s also this beauty for only $22,000,000 ($28,500,000 CAD)
http://www.zillow.com/homes/for_sale/2098518647_zpid/7000000-_price/24916-_mp/any_days/zest_sort/37.809479,-122.394261,37.764574,-122.455802_rect/13_zm/

Or my personal favorite within city proper at the low, low price of $28,000,000 ($36,000,000 CAD)
http://www.zillow.com/homes/for_sale/2122290005_zpid/7000000-_price/24916-_mp/any_days/zest_sort/37.802138,-122.421362,37.779687,-122.452133_rect/14_zm/

But if you prefer a high-rise, this one might suffice for $8,200,000 ($10,600,000) http://www.zillow.com/homes/for_sale/2098889768_zpid/7000000-_price/24916-_mp/any_days/zest_sort/37.789218,-122.385528,37.766763,-122.416298_rect/14_zm/

Now, if you want to get to the *expensive* stuff, you have to cross a bridge, the Golden Gate Bridge, as one might do over the Lion’s Gate Bridge in Vancouver. Once you cross the GGB, you might find yourself priced out of the market.

#36 For those about to flop... on 06.05.16 at 3:35 pm

#29 The American on 06.05.16 at 2:52 pm
At #18: For Those About to Flop, I have to say I travel the West coast weekly. As expensive Vancouverites *think* Vancouver may be, San Francisco is by FAR more expensive.

I’m not sure where you got your data, but the Full House home for sale is selling for $4.15MM, and it is an okay part of San Francisco at BEST. Also, the home has less than 1,700 square feet in it. Compared to Vancouver, well, that kind of insanity isn’t happening as a “norm” there. However, this is quite normal in markets like San Francisco. You can see in the link below the price per square foot as a whole in SF is significantly greater than Vancouver (meaning, no cherry picking of data). Additionally, these prices are in USD. Convert, and it makes market like Vancouver look like a bargain.

////////////////////
Hey American, I seen it on CNN this morning.
Yeah it looked small and needed some updating.

The San Fran vs Van thing wasn’t where I was going.

I am working on a house at the moment and when I saw this story it just made me shake my head.

I was going for a ‘ famous ‘ house price vs a ‘normal’ house in an overheated market.

Both cities have beautiful parts and grimy parts,but I wasn’t comparing the two cities.

Hope this helps…

M41BC

#37 Russ on 06.05.16 at 3:43 pm

Metaxa on 06.05.16 at 2:26 pm

Garth writes:
Unpopular, yes, but a valid solution. Making residential real estate the only asset class to give tax-free capital gains has resulted in the situation we now face: unaffordable houses, and a nation of speculators. Time to revisit this anachronism. — Garth

There will always be give and take, eh?
If they tax cap gains on homes then they would “give” mortgage interest deduct-ability maybe.

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

Metaxa & Smartlox offer good counterpoint. If gov’t chooses to tax gains then all the costs to get the gain become deductible. And here’s the rub -> in the year the costs were incurred.

Personally I don’t believe we have many examples of a problem being solved by giving the government more tax dollars.
That action just leads to more bureaucracy and morons on the taxpayer payroll.

#38 Vangrrl on 06.05.16 at 3:55 pm

#26 New West
I’m living in Malta and have heard great things about Berlin. I plan to go in the fall- but first, summer in Vancouver.
And yes, people here in Europe do talk about lots other than real estate. Expats with children rent and hang out with people with or without kids, and everyone talks about travel and food, wine and politics. Interesting people.
I’m looking forward to summer in Van and seeing my friends, but I bet I’m barely out of the airport before I overhear a real estate conversation!! Eeeks

#39 Sayed Ahmed on 06.05.16 at 3:56 pm

DELETED

#40 For those about to flop... on 06.05.16 at 3:56 pm

#33 NoName on 06.05.16 at 3:03 pm
#26 New West on 06.05.16 at 2:21 pm

never been in Berlin, but acording to my friends and cousins they describe it, its like a Munich, just 10x better.

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

Hey Noname,my wife and I traveled Germany for a month in 06.

I couldn’t wait to go to Munich….perhaps my expectations were too high and I was disappointed.

Berlin on the other hand I really enjoyed as I did most of the other places we visited on that trip.

I would go back to Germany in a heartbeat.
If you get a chance,go…

M41BC

#41 Life among the stars on 06.05.16 at 3:56 pm

Co-sign a loan. Haha. Not a chance kiddos. Travel the world get skills. Save yer $$. Live life. Buy A house when ya truly can. But people are nuts. Can’t see any
Politician taxing house capital gains. Min to 10% and 25 years max. That the most they will do. Those crazy cons 0/40!! Only if the banks took all the risk for that which would have meant big premiums over prime.

#42 Lowell Smith on 06.05.16 at 4:10 pm

So what will you do Cartwright? You have heard from an expert (Garth) that this is stupid. But xyz says its smart and you used their talking points on El Gartho. But Garth used his impenetrable logic to defend reality. Good Luck and please report back on what you’ve decided!

#43 I HAVE NOTHING BUT CONTEMPT on 06.05.16 at 4:11 pm

I am angry at our governments who have stood by while locally employed people have taken it up the A**.

The CMHC – Government tool.
Low interest rates – Goverment tool.
Loosening Credit at the bank level – Government tool.
Lax immigration policy – Government tool.
Lax money laundering policy – Government tool.

You think the banks do not listen to the Government?
Remember when Dear departed “F” laid down the law for the banks?

The Politicians have used the above policies for their own shallow political gain and left the average young person without a way to fund a home unless they go into serious life long debt.

Who cares?

I laugh when Christie Clark who by default has not ever looked into the statistics of foreign home ownership when they know anecdotally the foreign money coming into BC has virtually saved their butts in the last election.

She says she will not do anything that will affect home prices downward because her world ends at her own home whereby she has made a killing in appreciation.

These politicians will use you like the French Rentiers used Le Miserables’ . Let them eat cake!

#44 Simple Question on 06.05.16 at 4:13 pm

Why not just eliminate capital gains on homes not paid for and owned by Canadian tax payers and residents.

Even then, how do we deal with “students” owning $30 Million homes.

Dealing with this would curb the speculative mania.

#45 Westvan on 06.05.16 at 4:22 pm

Australia puts conditions on foreign money and their market is settling down …… Weird

#46 Give us this Blog our daily Garth on 06.05.16 at 4:23 pm

#6 Jimmy on 06.05.16 at 12:22 pm

Fifth feels pretty good considering it’s Sunday
————————————
I now understand this half-wit game you are playing with yourself. You are trying to guess your post position. It is purely a guess, Jimmy. Posts are moderated in batches, so your number (after it is moderated) will likely ALWAYS BE DIFFERENT! If you do guess it correctly, it was purely luck.

We all know this, except you for some reason.

#47 dontcallmeshirley on 06.05.16 at 4:28 pm

Nice mea culpa Garth. You’ve finally conceded it is the gov’t who controls the RE credit bubble.

Bravo.

#48 Damifino on 06.05.16 at 4:29 pm

I wonder…

Do these people who seek Garth’s blessing for their hair-brained house purchase plans actually know who he is or what he’s been saying publicly these past ten years? Do they even read greaterfool?

Would they ask the Pope to condone artificial birth control because their case is “special”?

Would they ask Donald Trump to say a few kind words about Hillary because it might be nice once in a while?

Would they seek Elizabeth May’s endorsement of oil tanker traffic in the Gulf Islands because they’re really going to be careful?

Or… are they just f*****g stupid?

#49 JSS on 06.05.16 at 4:30 pm

More troubling question…Are common share dividends for Canadian banks in trouble?

#50 Dee on 06.05.16 at 4:38 pm

“Parents will also need to co-sign (because of temporary job scenarios).”

Why on God’s green earth are you buying real estate if your jobs are temporary? All of Garth’s very salient points aside, if you don’t at least have permanent employment, why would you even consider a mortgage?!

Boy howdy, I can’t wait to have to bail out these idiots and all the others like them.

#51 Paully on 06.05.16 at 4:46 pm

#31 Bigjack on 06.05.16 at 2:56 pm

“The solution to all this foolishness is very simple: Shut down CMHC.”

Hear, hear! Well said!

#52 mc on 06.05.16 at 4:47 pm

Trudeau revisit PRE? Haha where’s he gonna get time for that between selfies and pride parades?

#53 jay on 06.05.16 at 4:47 pm

It won’t be long until the realturd’s start revving up their propaganda machines.They’ll be on red alert on Monday morning,gotta keep the bubble growing.

#54 Frank on 06.05.16 at 5:09 pm

A correction needs an event to change momentum the other direction. We all thought it would be a rate increase but growing worry about brexit and a downward trend of US jobs numbers, culminating in the worst month yet, is making a rising rate environment less and less likely.

#55 Felix on 06.05.16 at 5:17 pm

“Special Needs Dogs” ?

I don’t think so – that one looks positively gifted compared to the rest of them.

Dogs and Realtors, a match made in heaven. I come to this blog so I can sneer down my nose at both at the same time. Leaves more time for napping.

Meow

#56 North Burnaby Investor on 06.05.16 at 5:19 pm

Renters are losers ’nuff said

#57 Tony on 06.05.16 at 5:22 pm

Re: #34 Smartalox on 06.05.16 at 3:11 pm

A Valuation Day would have to be set and the ironic part is Canadian housing is probably one the the worst investments one could make going forward. This means Revenue Canada missed the boat and many will be deducting loses against other capital gains from Canadian housing.

#58 Tony on 06.05.16 at 5:25 pm

Re: #43 Simple Question on 06.05.16 at 4:13 pm

Ronald Reagan did basically just that to foreigners just before he left office thanks to the Japanese who tried to buy up all of Hawaii.

#59 Self Directed on 06.05.16 at 5:34 pm

Another beautiful day on the coast. Everyday, I take care of my landlord’s house. I wash windows and cut the grass… and I do this with a little blissful smirk on my face.

My Price to Rent ratio is a little over 50, and I silently thank him everyday for allowing me to pursue a long term investment strategy.

I am a former home owner, so I know how to take care of a house. But there is something really peaceful about renting, knowing that all the risk is not in your hands but with else. Almost seems unfair.

#60 Casual Observer on 06.05.16 at 5:34 pm

#37 Russ on 06.05.16 at 3:43 pm

Garth writes:
Unpopular, yes, but a valid solution. Making residential real estate the only asset class to give tax-free capital gains has resulted in the situation we now face: unaffordable houses, and a nation of speculators. Time to revisit this anachronism. — Garth

There will always be give and take, eh?
If they tax cap gains on homes then they would “give” mortgage interest deduct-ability maybe.

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

Metaxa & Smartlox offer good counterpoint. If gov’t chooses to tax gains then all the costs to get the gain become deductible. And here’s the rub -> in the year the costs were incurred.

There’s nothing that says gains can’t be taxed without allowing all sorts of deductions. We pay tax on income and don’t get to deduct the cost of getting to work, etc.

Tax the gains unless they are being rolled over into another home purchase within a year. Put the money into providing affordable social housing (Co-ops, etc.).

This would discourage speculation and increase the housing stock at the same time.

When professionals and other high income earners can make more money sitting on real estate than they can working for a living, something’s got to change.

#61 Give us this Blog our daily Garth on 06.05.16 at 5:41 pm

#50 Paully on 06.05.16 at 4:46 pm

#31 Bigjack on 06.05.16 at 2:56 pm

“The solution to all this foolishness is very simple: Shut down CMHC.”

Hear, hear! Well said!
——————————————-
Yes!!! Turn it off, take the money in the fund and use it for a Rental study (i.e. just blow it on something), turn on 20% minimums down payments.

Believe it or not, my suggestion STILL WOULDN’T burst this bubble here in 604, but things would plateau really _!#@g fast!

Then start pumping up rates BEFORE the US!!! Why the hell not save our own economy FIRST! Show them what a set of truck nutz looks like in action.

Bunch of wussies working this country… (not you Garth, you were cool).

#62 For those about to flop... on 06.05.16 at 5:42 pm

Billybob and Jaguar,saying you don’t like all Australians because of their accents is no less racist than saying you hate all people with slanty eyes.

Billybob being an international airline pilot should have been around enough to realize yes certain stereotypes abound but not everyone should be tarred with the same brush.

One minute your sayin your not all bad and in the next sentence your calling us all female private parts.

Whenever I am having a bad day I remind myself that having a choice to live in either Canada or Australia is a situation that probably 5 billion people would like to be able to do.

Two great countries ,not without issues but overall very safe and clean.

This whole thing started because Ronaldo was upset over something that had nothing to do with me and we have shaken virtual hands and moved on.Biilybob has been trying to goad me for weeks and decided to pile on but I stood up for myself.

But you guys continue to race bait and deserved the bitchslap I gave you both.

There are a lot of great people on here that I am proud to call blog buddies,I do not agree with a lot of what they say but that doesn’t stop us from being friends.

I like all the different opinions, it keeps things interesting.

My suggestion is to turn off the Hugh Jackman voice assistance on your iPhones…

M41BC

#63 jess on 06.05.16 at 5:42 pm

In 2011-hum…
http://www.ctvnews.ca/interest-rates-have-nowhere-to-go-but-up-says-flaherty-1.662328

… three years ago the bank heads were listening to the “natural forces” ?
Mar 4, 2013 – Today, Mr. Flaherty is warning banks not to cut rates too low ….
“My expectation is that banks will engage in prudent lending – not the type of ‘race to the bottom’ practices that led to a mortgage crisis in the United States,” Flaherty said in a statement to the Globe and Mail.

=============================
World faces pensions crisis, warns OECD

“We’ve had more than half a decade of very low interest rates and that means someone who has been putting money into a savings account or into a pension fund – the value of their lifetime retirement is about half the value of someone who retired in 2000,” said Catherine Mann, the OECD’s chief economist…Tom McPhail, head of pensions research at Hargreaves Lansdown, said the OECD’s findings were consistent with its UK research.”

“Someone that started putting money in a pension in the 1960s was investing at a time when baby boomers were entering the workforce. But the last 16 years and the financial crisis have had an extremely negative impact on asset prices.”
..”It shows that a person buying an annuity today who saved 10pc of their wages into a pension for 40 years can expect just over half the earnings of someone who saved the same amount but retired 15 years ago.”
http://www.telegraph.co.uk/business/2016/06/04/world-faces-pensions-crisis-warns-oecd/
=============
In the 19 90’s allowances were made for pensions in surplus to have holidays?
How many companies at the time had surpluses ? Were the surpluses used for buybacks / dividends?

…”Collectively, according to Inland Revenue figures, employers saved almost £18bn during the 1990s pension holidays – although staff were forced to carry on making payments. It was a time of booming corporate profits, although in hindsight much of that profit came directly from the savings in pension contributions.

Unilever, the maker of Wall’s ice cream and Persil enjoyed seven years of pension holidays. It not only saved millions of pounds but in 1999 also swiped the fund’s £270m “surplus”, adding it to Unilever’s profits. Since 1992 it has stripped £1.2bn from its fund and about two thirds, £726m, was handed back to shareholders in the form of higher profits and bigger dividends. Bitter? Unilever pensioners certainly are. They have run a long-term campaign for the money to be used to boost their pensions rather than directors’ salaries, but without success.
http://www.theguardian.com/money/2004/jul/10/pensions.jobsandmoney

BHS demise shows the failure of predatory capitalism
Prem Sikka 3 June, 2016 (2 days ago)

case study:British Home Stores BHS
Thousands are facing unemployment and depleted pension payments —
http://leftfootforward.org/2016/06/bhs-demise-shows-the-failure-of-predatory-capitalism/

#64 Casual Observer on 06.05.16 at 5:43 pm

RE: Capital Gains Tax on Principal Residences

Mortgages and mortgage rates have already been subsidized by the government (taxpayer) through CMHC. No need to provide interest deductibility too.

#65 Lee on 06.05.16 at 5:52 pm

Michael King,

Nobody would tax house gains earned prior to a change in the law.

#66 Doug Saunders on 06.05.16 at 5:55 pm

My wife and I have been married 20 years and don’t like being in debt to our eyeballs. We have decided that many years ago.

So we decided to rent and raise a family by renting a house. We have lived for about 10 years at one house and now it has been 5 years at this same house.

Yes, rent increases every year but we managed to save and invest quite a decent amount of money while raising our 2 kids, 9 and 12 years now. We can move around where better jobs and pay are. This flexibility is great.

We currently are 40 and 42 years old and have $445,000 in RRSP’s, $90,000 in TFSA’s, $47,000 in RESP’s, $135,000 in dividend paying stocks and $70,000 in REIT’s all in non-registered accounts plus 2.75 years of living expenses around $80,000 in non-registered savings accounts, cashable GIC’s, staggered maturity GIC’s.

We did take out 2 term life insurance policies round when our first child was born. It is $300,000 for each of us, 30 year terms that expires in 2035.

We don’t make a huge family income but I guess about average $14.55 and 16.45 an hour, 42 hour week jobs.

We make about $70,000 or so a year. We don’t get a bunch of benefits like dental, life insurance, prescription, pensions, paid 15, 20 sick days a year, 8% vacation pay etc.

We are just good managers of our money and finances. Canadians need a real lesson in money 101.

I don’t know how Canadians can live with so much debt and live their lives in peace.

#67 Doug Saunders on 06.05.16 at 5:57 pm

We lived and rented 15 years at one house and 5 years at another, typo!!!!!!

#68 Rabbit One on 06.05.16 at 6:09 pm

The fed rate needs to be raised? I don’t think so.

Banks just have to assess real risk of lending hundreds of thousand of dollars to those whom makes $50K on not so sure prospect jobs.

Big bank CEO calling fed to tighten insured mortgage rule is funny.

Why Canadian banks lending so much money in not so great economy, secured by the properties likely not worth what people are paying for?

They keep doing it, meaning, there is no risks?

#69 BOOM! on 06.05.16 at 6:22 pm

“parents may have to cosign because of the nature of my temporary job.”

You are unfit to buy a permanent home. Any questions on how to buy the Ponderosa, Mr. Cartwright?

That had me laughing. Were it not for the dead serious question from this guy who foams FOMO, it would even be more hysterical.

Take a cold shower, put the training wheels back on your savings, and call me in a couple hundred grand Mr. Cartwright. Maybe buy then, the kids will be in college, the parents have croaked off, and you won’t be in a hurry for a ‘house.’

Funny one, Garth. Gotta wonder who writes this material.

#70 Dave on 06.05.16 at 6:27 pm

“Pressures on housing the Lower Mainland are constants, but what has been happening recently has nothing do to with those constants. Something new has been distorting the market. Everyone knows what that new factor is, but no government seems able or willing to confront the problem.

Ms. Clark’s relative indifference to what is happening is strange, she being a self-styled populist. Politicians of the populist variety are supposed to have their fingers on the pulse of public concerns. She does not on this issue, and the New Democratic Party is making hay with her relative indifference.

Perhaps Ms. Clark thinks that this Chinese money is a vote of confidence for the province and her government. Perhaps she knows that those in the housing market for a long time consider themselves big winners from their windfall gains, and she doesn’t want to spoil their party.

Perhaps, given that her party gets so much money from local real estate developers, she’s reluctant to pluck their golden geese. Perhaps, as a free-market devotee, she doesn’t know what good any government intervention or policies would do, even when the market isn’t working. Perhaps she’s just stumped.

Jeffrey Simpson, Globe and Mail

http://www.theglobeandmail.com/news/politics/globe-politics-insider/jeffrey-simpson-why-isnt-bc-really-cracking-down-on-cause-of-rising-home-prices/article30219088/

#71 bill on 06.05.16 at 6:36 pm

1 Shawn on 06.05.16 at 12:02 pm
Very sad . The deaths rather overshadow the new lap records.
watching highlights on superbike race.
dunlop and huthcheson dominating so far with the rest right behind them.

#72 Mark on 06.05.16 at 6:36 pm

Of course the banks want to, at this point, crash the market. Its not about risk. Its about making money, especially in a well past the peak period in which banks actually benefit through the deflation of the housing market. Three years of relative stagnation has only brought minimal growth in bank revenues, and even margin compression as the same pool of lenders compete for mortgages against the same properties. Banks tend to make more $$$ during deflation (the banks, of course, holding money-good mortgages) than they make during inflation of asset bubbles.

Defaults and foreclosures are good for banks — they convert their paper claims against housing, into real hard assets. With CMHC covering $900B+ of subprime paper in Canada, so long as they pay up, deflating the housing market is basically a no-lose proposition for the banks. The banks didn’t acquire the CMHC subprime mortgage insurance for no reason — they bought it because they believed in a reasonable prospect of being able to profit from it.

#73 Mark on 06.05.16 at 6:40 pm

““The solution to all this foolishness is very simple: Shut down CMHC.””

True, but the question is “how”? If CMHC were to be ‘shut down’, the Canadian housing market would almost instantly crash. As it stands, just the mere act of limiting CMHC’s subprime issuance authority stopped price appreciation in Canada dead in its tracks as the result of Budget 2013. Of course, a crashing of the housing market would either lead to severe systemic crisis for the Canadian economy, *or* the CMHC itself would find itself on the hook for a very large chunk of its insurance in force, thus requiring a government bail-out.

The best case scenario is a balanced approach in which CMHC is gradually tightened, while credit to other sectors of the economy, particularly those that create quality jobs, is loosened. I think Flaherty (RIP) recognized this and cracked down at the CMHC accordingly in Budget 2013. Of course, that was like shutting the barn door after all the animals had run out, but it was at least a start. CMHC is about as anti-free market capitalism as the Canadian system gets, and it, along with agricultural “marketing boards”, need desperately to be phased out.

#74 BOOM! on 06.05.16 at 6:45 pm

I am definitely in favor of eliminating the capital gains deductions on ANY home held less than, say 5 years minimum.

Said home owned more than five years, but less than ten years you would lose half of your capital gains deduction.

Over 10 years no loss of any gain.

Would this peeve people? Yes, so would a market turn.
Get used to it.

This “TAX CHANGE’ would automatically ‘sunset’ when Canada’s household indebtedness ratio returns to within 4% of its long term historical average (20 year average).

#75 NoName on 06.05.16 at 6:48 pm

#39 For those about to flop… on 06.05.16 at 3:56 pm

dont know why Munich fel short of your expectations but i absolutely love Munich… i am afraid if i go there again i might not come back. When i was there in 2003 i walked in addeco office and ask recruter how dificult would be difficult to get me a job…

every time i go home i make sure i stay in munich 2-3 days (funnt i ws also there in 2006), last time whole family was there in 2012 but we stayed close to airport before we took of to where ever we were going, so we didn’t any time to enjoy a city…

When i go by my self i usually stay at one hostel or hotel close to Goetheplatz, walking distance to bars clubs and nigh life, regardles how incapacitated i am.

next time you go make sure its oktober!
https://www.youtube.com/watch?v=ZisJqOpsG4c

#76 Andrew Woburn on 06.05.16 at 6:58 pm

#7 rosie on 06.05.16 at 12:32 pm
We would not even consider having our parents mortgage their limited futures to fulfill our dreams. They were our dreams and we made them happen. This generation seems to be devoid of shame.
======================

How do you even know what “shame” means unless your parents teach it to you?

#77 gut check on 06.05.16 at 7:01 pm

@ #7 rosie on 06.05.16 at 12:32 pm
They were our dreams and we made them happen. This generation seems to be devoid of shame.”

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

Well Rosie, I have a little story to tell you. It’s about my day today – apartment hunting with my daughter in a mid sized city in Ontario.

First – I’m Gen X and my daughter a late Millennial.
Second – she is moving because her current landlady wouldn’t fix the unlivable kitchen after 5 months of trying.

So, we scoured the ads. We went to see 7 places.
ALL OF THEM WERE EMBARRASSING.

Illegal bedrooms, lies in the ads (4 out of 7 changed the advertised rent when we arrived), unsafe stairs, bugs… one was nothing more than a bedroom with a fridge and stove stuck in the corner.

The landlords showing the properties didn’t seem to have the good sense to blush when they opened the doors.

How old were the landlords/ladies? To which generation did they belong? Why they were boomers. Smug and entitled. Slimy and Scurrying.

WHICH generation has no shame? Please tell us again.

#78 Smoking Man on 06.05.16 at 7:02 pm

Good bye Mrs Clinton

http://drudgereport.com/flashss.html

#79 nubbers on 06.05.16 at 7:12 pm

It seems to me that the banks are taking a view that if you are their debt slave for life, then you have a problem, but if everyone is their debt slave for life, then the bank has a problem.

#80 chelsea on 06.05.16 at 7:26 pm

Australian real state seems to be turning around, and hopefully Canada follows suit, a bit slow and behind in the shuffle, but it will eventually happen here. The fallout will not concern too many wise savers and investors. But, CASH is KING, and when the time is right to buy a decent, affordable home, we have made a wise choice that we will be content with. Lust and greed are not our agenda …. rushing in to buy now is heading for misery and heartache ….

#81 Andrew Woburn on 06.05.16 at 7:31 pm

158 Lead Paint on 06.04.16 at 4:09 pm

#52 Andrew Woburn on 06.03.16 at 8:04 pm and #110 drydock on 06.04.16 at 12:12 am

Re: Mt. Gox – This was a private company that stored people’s Bitcoins. It was hacked and violated and its customers lost a lot of money, but this says nothing about the integrity of Bitcoin itself.
=========================

It is the integrity of the block chain rather than Bitcoin that concerns me. Really Clever People want us to use it for banking, securities registration and land titles. I found the following on Wikipedia. Why doesn’t it apply to any asset tracked by a block chain? What am I missing?

“There have been many cases of bitcoin theft. One way this is accomplished involves a third party accessing the private key to a victim’s bitcoin address, or of an online wallet. If the private key is stolen, all the bitcoins from the compromised address can be transferred. In that case, the network does not have any provisions to identify the thief, block further transactions of those stolen bitcoins, or return them to the legitimate owner.

Theft also occurs at sites where bitcoins are used to purchase illicit goods. In late November 2013, an estimated $100 million in bitcoins were allegedly stolen from the online illicit goods marketplace Sheep Marketplace, which immediately closed. Users tracked the coins as they were processed and converted to cash, but no funds were recovered and no culprits identified. A different black market, Silk Road 2, stated that during a February 2014 hack, bitcoins valued at $2.7 million were taken from escrow accounts.

Sites where users exchange bitcoins for cash or store them in “wallets” are also targets for theft. Inputs.io, an Australian wallet service, was hacked twice in October 2013 and lost more than $1 million in bitcoins. In late February 2014 Mt. Gox, one of the largest virtual currency exchanges, filed for bankruptcy in Tokyo amid reports that bitcoins worth $350 million had been stolen. Flexcoin, a bitcoin storage specialist based in Alberta, Canada, shut down on March 2014 after saying it discovered a theft of about $650,000 in bitcoins. Poloniex, a digital currency exchange, reported on March 2014 that it lost bitcoins valued at around $50,000. In January 2015 UK-based bitstamp, the third busiest bitcoin exchange globally, was hacked and $5 million in bitcoins were stolen. February 2015 saw a Chinese exchange named BTER lose bitcoins worth nearly $2 million to hackers.”

#82 crowdedelevatorfartz on 06.05.16 at 7:32 pm

Well I just got back from an awesome 40k bike ride in record breaking temps(for all you climate change deniers out there) and unlike Sao Paulo or Rio……I didnt get shot, mugged or infected with Zika!

Yo! #28 Brazilian Wax! Wuddup?
The Olympics on track? Or will the drug enhanced Russian pull a “no show” and the US refuse to attend citing security and filthy venues when the real reason will be…..the “rooskis” aint commin so why bother?
Hows that recession and devaluating “RE-AL” workin? Zimbabwe here we come!
Time for a swim in the pool and a drink.

@#56 North Burnaby Imbecile
Got a pool at your place? No? Shame. I got one at my rental and the hired help keeps it sparkling clean and tidy…….sorry , gotta go check out the overheated renters in bikinis.

#83 Contrarian Coyote on 06.05.16 at 7:33 pm

#66 Doug Saunders on 06.05.16 at 5:55 pm
My wife and I have been married 20 years and don’t like being in debt to our eyeballs. We have decided that many years ago.

So we decided to rent and raise a family by renting a house. We have lived for about 10 years at one house and now it has been 5 years at this same house.

Yes, rent increases every year but we managed to save and invest quite a decent amount of money while raising our 2 kids, 9 and 12 years now. We can move around where better jobs and pay are. This flexibility is great.

We currently are 40 and 42 years old and have $445,000 in RRSP’s, $90,000 in TFSA’s, $47,000 in RESP’s, $135,000 in dividend paying stocks and $70,000 in REIT’s all in non-registered accounts plus 2.75 years of living expenses around $80,000 in non-registered savings accounts, cashable GIC’s, staggered maturity GIC’s.

We did take out 2 term life insurance policies round when our first child was born. It is $300,000 for each of us, 30 year terms that expires in 2035.

We don’t make a huge family income but I guess about average $14.55 and 16.45 an hour, 42 hour week jobs.

We make about $70,000 or so a year. We don’t get a bunch of benefits like dental, life insurance, prescription, pensions, paid 15, 20 sick days a year, 8% vacation pay etc.

We are just good managers of our money and finances. Canadians need a real lesson in money 101.

I don’t know how Canadians can live with so much debt and live their lives in peace.

Thanks for sharing these types of numbers, Doug Sanders. This is more along the lines of what my wife and I are at…minus the big savings & kids. What you and your wife have saved gives me hope! :)

#84 Herb on 06.05.16 at 7:45 pm

#75 NoName,

just don’t go near the Oktoberfest. Not for nothing do they have annual competitions to see how many liters of beer stewards can get out of 100-liter barrels, or how many quarter-chickens carvers can get out of one whole chicken.

Tourist trap, but the rest of Munich is great.

#85 David on 06.05.16 at 7:55 pm

The Scots call it time to bell the cat.
The system is out of control there is nothing left to do.
The literal meaning is to “take the danger of a shared enterprise upon oneself”.

#86 New West on 06.05.16 at 7:58 pm

#38 Vangrrl

Sadly, you probably will hear more than you want to about Vancouver real estate before you even touch down at YVR. A couple of years ago plane conversation usually included at least a couple of oilpatch guys talking about the outrageous amounts of money they were making, with the occasional diamond mine guy thrown in for variety.

Now it’s all real estate, endless anecdotal stories about someone’s brother, niece, or friend-of-a-friend who has made it big selling a house (or would make it big if they sold).

The weather has been really nice, though. 25c today and sunny. And there are some mighty fine craft beers, and the seawall. Have a good summer!

#33 NoName

Back in the day I had a friend, a post-doc from Germany, who introduced me to his favourite breakfast – a nice lager with sausage, cheese and good dark rye bread. Pretty good when you are camping, actually! And he was disbelieving when he found out you couldn’t drink in public parks in Vancouver, much less transit……

#87 For those about to flop... on 06.05.16 at 8:01 pm

#75 NoName on 06.05.16 at 6:48 pm
#39 For those about to flop… on 06.05.16 at 3:56 pm

dont know why Munich fel short of your expectations but i absolutely love Munich… i am afraid if i go there again i might not come back. When i was there in 2003 i walked in addeco office and ask recruter how dificult would be difficult to get me a job…

every time i go home i make sure i stay in munich 2-3 days (funnt i ws also there in 2006), last time whole family was there in 2012 but we stayed close to airport before we took of to where ever we were going, so we didn’t any time to enjoy a city…

When i go by my self i usually stay at one hostel or hotel close to Goetheplatz, walking distance to bars clubs and nigh life, regardles how incapacitated i am.

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

Hey Noname ,yeah we were there in May for 3 days.
It was a long weekend and so the central part of town was sleepy.
I guess I thought it was going to be bigger and more happening.
It was not football season and so if Bayern Munich had been playing ,well that would have changed things.
We went to some of the big beer halls and had a great time meeting people from all over Europe and there was 20 year olds having a session with 80 year olds.

Definitely go check out Berlin.

One question though…where is ‘home’ for you?

Cheers,Flopper…

M41BC

#88 gladiator on 06.05.16 at 8:04 pm

@Doug Saunders:

Doug, good for you that you save and invest and stuff, but just like Garth takes into consideration opportunities lost when investing in something, you have to factor in what you lost.
For example, let’s say you want to start a business. You estimate that the rate of return on your new venture will be 10% per year. Let’s assume that you could have earned 6% per year in a balanced portfolio by doing nothing – just have your money invested. In this case, the extra return that your business is generating is just 4% per year for the extra effort that you put into it.

Now, compare the return you got from your portfolio with the forgone return on a real estate investment. Please don’t cry too hard. You are in the hole. You could have made so much more, but you didn’t. Sucksto be who?

And no, I am not a realtor. I am one who swallowed the red pill and sees the reality as it is. Right now, real estate is the only game that generates obscene returns and will continue to be so for years to come. At least the masses’ psyche suggests so. At this point in time, this is a game that you cannot lose. There are lots of happy people around and they are the RE game players. Don’t mention your portfolio to them. Don’t embarass yourself.

#89 Arfmooocat on 06.05.16 at 8:10 pm

My friend saved hard, had everything paid off, retired on a full pension and died in 18 months.

#90 Habs76-79 on 06.05.16 at 8:15 pm

Canaries are falling over dead all over this place called Canada, yet those at the hands of power either do not see this or maybe want it to be.

#91 TheSpangler on 06.05.16 at 8:17 pm

Change the principal resident exemption to only (tax) residents of Canada, and just audit it in general (take property tax roll changes and trace through to tax returns). Will help the real estate market and bring in tax revenue.

There is the “the ordinarily inhabited rule” when applied in that process will also help compile some of the data on foreign ownership.

#92 Scumop on 06.05.16 at 8:19 pm

On Cartwright:

“… WE’RE considering having THEM pull a HELOC on THEIR house and then GIFT us $50k. …”

If I had kids as predatory as that, they could live in an outhouse in the Yukon for all I’d care. Not even $0.02 for them. Maybe a bill for the cost of raising them.

Plus what BOOM! said in #69.

As for #56 North Burnaby Investor on 06.05.16 at 5:19 pm

That was pathetic. You need to take trolling lessons. I can provide remedial lessons for a low fee of only $150 an hour, 4 hour minimum.

In other rage, I read a long wikipedia page on ‘Regulatory Capture’ and really wonder why wikipedia did not have a few para on CMHC. Yes, shut them down. Honor existing contracts, but no more new ones. And when the clock runs out, out with CMHC.

#93 the other white meat (pork) on 06.05.16 at 8:41 pm

A mortgage without steady employment is a recipe for foreclosure, and a parent who lends consigns for said mortgage deserves to eat dog food in their “golden years ”

#62. You’re confusing racism with the correct term “nationalism” . Australians are a nationality made up of many different races (though there is really only one race, the human one)

Why are young white people so damned sensitive these days? Not much grit and very thin skins.

#94 Brazil ex-pat on 06.05.16 at 8:43 pm

#78 Smoking Man on 06.05.16 at 7:02 pm
Good bye Mrs Clinton

http://drudgereport.com/flashss.html

++++++++++++++++++++++++++++++++++

Don’t forget about the movie Clinton Cash. You can google. There are Canadians in that movie of corrupt money to the Clinton Foundation.

#95 meslippery on 06.05.16 at 8:51 pm

I can remember a study done in 1996 that outlined the true cost of one child from birth to the age of 21. The average was $500,000 or roughly $1900 per month (this included costs for shelter, education – including university, food, extra-curricular activities, etc).
———————-
Who comes up with these numbers the same people who
tell you how much it costs to own and operate a motor vehicle? Study stats Can. info if these numbers are true
almost no cars owned and not many kids born.

#96 Vampire Studies GMST 454 on 06.05.16 at 8:52 pm

“CCEC is a single branch credit union on Commercial Drive founded by your self-help community of co-ops and not-for-profit groups.”

No that I disagree with the CEO but i think we need to hear from a bigger player.

#97 Mr RUM on 06.05.16 at 8:55 pm

Buy lithium junior companies…splurge 10 to 20k

they will make you millions!!!

nevermind real esttae

or garth balanced approach… take a gamble

#98 roxy on 06.05.16 at 8:56 pm

#26 “Maybe it is time to go to Berlin. At least I might find someone there who can talk about something other than real estate.”

Actually…when I was in Germany, I met tons of Germans who liked to talk about the investment homes they own in Vancouver. Lol. Sorry to burst your bubble…

#99 For those about to flop... on 06.05.16 at 9:05 pm

#93 the other white meat (pork) on 06.05.16 at 8:41 pm
A mortgage without steady employment is a recipe for foreclosure, and a parent who lends consigns for said mortgage deserves to eat dog food in their “golden years ”

#62. You’re confusing racism with the correct term “nationalism” . Australians are a nationality made up of many different races (though there is really only one race, the human one)

Why are young white people so damned sensitive these days? Not much grit and very thin skins.

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

Hey Porkie,I get what you are saying.
I used racism to keep it simple.
Hating someone because of where they were born because you had a run in with a co worker from the same country is petty.

For what it is worth I am in an interracial marriage and yet my wife and I have the same skin colour.

One of us is considered white and the other brown…

I’ve heard it all…

M41BC

#100 Metaxa on 06.05.16 at 9:08 pm

# 56 North Burnaby Investor writes:

Renters are losers ’nuff said

What an ill considered comment.

I have been a tenant, home owner and landlord in my time. While I was a landlord we (brother and I) had two houses that were used as executive rentals by the University of Calgary for visiting professors, business persons, etc who were in town on university business that was too long for a hotel stay but not long enough to warrant a lease.

These tenants had more IQ in what they voided in the morning than you apparently do.

#101 diharv on 06.05.16 at 9:19 pm

So the ones actually enabling the historic levels of consumer debt have suddenly developed a conscience and are worried now ? Anyone see the hypocrisy here ? My guess is they are past the point of no return now and it is in their best interests to keep inflating the debt gasbag . And if any rules are changed they will just look for creative ways to circumvent them anyway to ensure that people keep lining up to sign up for a lifetime of debt slavery just so they can live in the school catchment zone they desire with all the other moo moo lemon moms that they crave to be accepted by . Its not a matter of keeping up with Joneses , people want to be the Joneses.

#102 NoName on 06.05.16 at 9:24 pm

#87 For those about to flop… on 06.05.16 at 8:01 pm

One question though…where is ‘home’ for you?
———–
Home is where my family is, now we live here
https://www.youtube.com/watch?v=E6s-5IbNeek

#103 Bank of Millennial on 06.05.16 at 9:27 pm

#49 JSS-
More troubling question…Are common share dividends for Canadian banks in trouble?

-To varying degree’s depending on the exposures of each bank.

Stick to your day job at Starbucks. No Canadian bank will miss or reduce a single dividend payment. — Garth

#104 DON on 06.05.16 at 9:28 pm

#54 Frank on 06.05.16 at 5:09 pm

A correction needs an event to change momentum the other direction. We all thought it would be a rate increase but growing worry about brexit and a downward trend of US jobs numbers, culminating in the worst month yet, is making a rising rate environment less and less likely.

#105 Damifino on 06.05.16 at 9:29 pm

#100 Metaxa

Never feed a troll.

#106 Grey Dog on 06.05.16 at 9:34 pm

Cartwright, ARE YOU SERIOUS? This scenario displays your complete ignorance of the COST OF BORROWING and LEECHING off parents, to quote the dogs today…have you NO SHAME? Have you any SELF PRIDE?

My assignment for you is to read Garth’s blog each and every single blog posted on this site for the last few years…then impress the rest of us dogs with YOUR NEW GRASP OF FINANCIAL REALITY!!!

#107 DON on 06.05.16 at 9:40 pm

#54 Frank on 06.05.16 at 5:09 pm

A correction needs an event to change momentum the other direction. We all thought it would be a rate increase but growing worry about brexit and a downward trend of US jobs numbers, culminating in the worst month yet, is making a rising rate environment less and less likely.
**************************

oops forgot to post.

High debt loads, bad economy – loss of job, stress, divorce, death all can counter forward momentum. I am still keeping an eye open for the lag due to the Oil downturn. Things take time to play our and big severances are ending. As more and more are priced out momentum will stall. It is only a matter of time till the heard gets spooked – even my in-laws have decided against the buy-reno-flip in Duncan BC. Now going to wait a bit – all because they know Victoria house numbers are unsustainable – (she used to be a realtor up until 2 years ago).

#108 Grey Dog on 06.05.16 at 9:48 pm

Saunders, your accomplishments are fantastic! A family that walks in truth and not beholden to anybody is something to be proud of indeed. Keep it up…do not get complacent. This is the reason I stay true to this blog…I believe it is so easy to get lost in LOCs cause each and every friend has one. Garth’s blog is really the only consistent one out there that reinforces the message of financial management and investment. I spent the weekend with a friend on the east coast whose home has been for sale for 2 years…believe Garth real estate outside of Van and TO is just not moving.

#109 jay on 06.05.16 at 9:50 pm

http://www.bloomberg.com/news/articles/2016-06-05/world-s-most-battered-market-is-the-worst-place-to-find-bargains The Chinese know how to make bubbles.

#110 The Dude on 06.05.16 at 10:02 pm

Garth- “Stupid, dude. Buying that house (you can’t afford) will put you $500,000 in debt, leave scant reserves, result in a 30-year amortization (bigger interest payments) and soak up your cash flow. It’s a classic one-asset strategy, exposing you to market risk (housing will correct), rate risk (you’ll renew higher) and employment risk (job loss would kill ya). Sounds like you have kids, yet no savings for them (RESPs), and buying this place will mean nothing to put aside for your family for years to come.”

Yet this strategy has proven to be the correct choice, every year, for the last 15 years, particularly in Vancouver and Toronto. For the average young person starting out, saving and investing no longer keeps up with the investment gains in real estate (inflation). Isn’t saying “housing will correct” just as speculative as saying “it will always go up”, without knowing for certain whether you will be priced out of the market before the illusive correction occurs? It could be next year, or take an entire generation. How deep will it correct? 5%, 20%, 50%. Nobody knows. And predicting rate risk has been nebulous at best over the same period.

We have tirelessly debated this very question on this blog, and the outcome has been this: the longer you wait, the less you will get, as land space becomes increasingly more sought after in urban centres with growing populations. What is happening in Vancouver and Toronto, is an increasing demand for limited land, and continued densification of urban cores resulting in less value for your dollar over time. This is easily seen with micro-suites coming onto the market, and what is now essentially impossible barriers-to-entry for purchasing farmland as a viable business.

It’s not about the asset, but the purchaser. If you can’t afford it, don’t buy. Especially if you have a family to support. Totally irresponsible. — Garth

#111 Newbie on 06.05.16 at 10:02 pm

Where is the April archive?

We have archives? — Garth

#112 Mark on 06.05.16 at 10:13 pm

“More troubling question…Are common share dividends for Canadian banks in trouble?”

Not only are the common share dividends of the Canadian banks rock-solid, but they probably will accelerate as housing prices continue to decline. Why? Because as balance sheets at the banks shrink, the banks won’t need to retain earnings to increase their capital base for the purpose of regulatory capital adequacy. Additionally, risk premia will likely expand in a falling house price environment, accreting more profit to the bank’s bottom line.

The experience in the 1990s was that the value of the Canadian big-5 bank’s common equity was able to grow 4-5 fold in value from 1990 until the bank merger peak ~1998 or so. In an environment mostly of house price declines.

#113 For those about to flop... on 06.05.16 at 10:20 pm

#102 NoName on 06.05.16 at 9:24 pm
#87 For those about to flop… on 06.05.16 at 8:01 pm

One question though…where is ‘home’ for you?
———–
Home is where my family is, now we live here
https://www.youtube.com/watch?v=E6s-5IbNeek

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

That’s some good footage there Noname ,but what I meant was you said when I visit home in Europe I like to visit Munich.
That is the first time I have seen what Hamilton looks like though.

I hope you understand…

M41BC

#114 acdel on 06.05.16 at 10:23 pm

#19 common sense

Finally someone who gets it! We are too far gone for all this fear mongering; raise the rates as suggested and all hell breaks loose. The days of the 80’s are over; it will be a complete collapse if rates where to creep to those levels; most people are barely making it as is. Man, the future does not look good even though I am a foolish optimist at heart; good-night dogs!

#115 Bursting bubbles on 06.05.16 at 10:23 pm

No Canadian bank will miss or reduce a single dividend payment. — Garth

Who’s gonna take the losses when the bubble (supposedly) bursts?

No dividend was cut or lessened in 2008-9. It sure won’t happen now. — Garth

#116 Victor V on 06.05.16 at 10:26 pm

Dinner party tonight…sat next to a friend who has a teen set to go to University in the fall. Kid’s likely to get qualified for OSAP so mom was telling me how her and hubby think it may be a great idea to “take” the kid’s surplus OSAP funds (because it’s interest free) to put down on a condo downpayment as an investment in the kid’s future.

This won’t end well?

#117 Millmech on 06.05.16 at 10:41 pm

#66
Spectacular work,truly impressive,I thought I was doing good but you have raised the bar.Renting is by far a better option in my opinion at this point in the market,for the next thirty years my landlord will subsidize my finances by about 26k/yr into my RRP(renters retirement plan).

#118 Donna Swanson on 06.05.16 at 10:58 pm

I am a young man 28 years old just piling up cash right now and investing it too. I work 2 jobs 60 hours a week and saved average $4,000 a month.

The last 8 years doing this I accumulated $485,000. This is $435,000 in non-registered investments and $50,000 in TFSA’s. None is RRSP’s.

I am not buying a house with these 25%+ overvalued prices. I am only paying $750 a month plus utilities in rent and have no maintenance, repairs, property taxes, insurance and other hassles, headaches.

In the next 6 to 6.5 years or so I will be in the $1,000,000 range with my total investments. Real estate is supposed to only earn annual inflation+3% so things will slow down and over indebted Canadians better watch out if they think this real estate mania will last another 15 to 20 years like the last 15 to 20 years.

Nobody wants to believe that it will end but it will and times running out. I’m sure glad I am not in debt and over leveraged with Toronto, Vancouver etc. real estate.

#119 acdel on 06.05.16 at 11:00 pm

Sad, how many stories like this do we have to read over what???? What is the real truth?

http://business.financialpost.com/investing/global-investor/zurich-insurance-boss-suicide

#120 Donna Swanson on 06.05.16 at 11:01 pm

I got so caught up in all the details I wrote incorrectly. I am a young 28 years old woman.

#121 Linda on 06.05.16 at 11:08 pm

If you have to have the parents cosign in order to get the mortgage, then it is not a good deal. Having someone cosign means the bank knows you can’t afford it, but are willing to add more people to the list of whom they can pursue for repayment when the balloon pops.

Regarding the person moving to a 12,000+ square foot house, sure hope that comes with a ride on vacuum cleaner. Because all you will be doing all day long is cleaning house unless you don’t mind dust & dirt.

#122 Mark on 06.05.16 at 11:08 pm

“Who’s gonna take the losses when the bubble (supposedly) bursts?”

Borrowers, the CMHC, and lenders to the banks (ie: GIC owners) who will see their returns forced to something close to zero as the Bank of Canada is forced into an extended period of ZIRP/NIRP in response to the deflationary pressures in the Canadian economy.

Unlike the US mortgage bubble, in which the lenders had little to no ability to re-price the debt to reflect changed market conditions, nearly all Canadian mortgage debt at risk is guaranteed by the CMHC, and can be rapidly re-priced to reflect market risk.

I do believe that certain credit unions, who participate in uninsured subprime lending, are vulnerable. In that case, obviously their owners of those institutions will suffer and depositors may be subject to bail-ins. A more likely scenario is some rather creative political arm-twisting of the big-5 to acquire failing credit unions rather than bail-ins. The big-5 themselves, are rock solid.

#123 A Canadian Abroad on 06.05.16 at 11:30 pm

RE: tax-free status of capital gains on real estate.

I actually agree that there SHOULD BE capital gains tax on homes (both primary and investment) at the SAME LEVEL as those on financial investments (to be fair) with a maximum lifetime exemption. No grandfathering either.

This might sound unfair to those who invested into the “get rich quick MLM of real estate” but those who actually invest in the economy (through the stock market) face the same CAP rates.

#124 will on 06.05.16 at 11:48 pm

#112

“Because as balance sheets at the banks shrink, the banks won’t need to retain earnings to increase their capital base for the purpose of regulatory capital adequacy. Additionally, risk premia will likely expand in a falling house price environment, accreting more profit to the bank’s bottom line.”

That’s a very interesting comment Mark.

#125 BillyBob on 06.06.16 at 12:18 am

#62. You’re confusing racism with the correct term “nationalism” . Australians are a nationality made up of many different races (though there is really only one race, the human one)

Why are young white people so damned sensitive these days? Not much grit and very thin skins.

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

Hey Porkie,I get what you are saying.
I used racism to keep it simple.
Hating someone because of where they were born because you had a run in with a co worker from the same country is petty.

For what it is worth I am in an interracial marriage and yet my wife and I have the same skin colour.

One of us is considered white and the other brown…

I’ve heard it all…

M41BC

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

*sigh*

1. As aptly pointed out before I could, “Australian” is not a race.

2. Expressing an opinion, in this case of a certain accent, may be rude, but it not racist or hate speech. This ridiculous leap of rhetoric is the kind of idea that fuels the current PC hysteria. (And it’s backlash, exemplified by the rise of clowns like Trump).

3. I do not “hate” Australians, or you, flopper. How ridiculous. It’s true I do have a strong dislike and little patience with big mouths, who when called on it, act like wounded babies. And those types certainly come from any and all nationalities.

As the other poster said – very thin skin. Dish it out all day long, but can’t take it when someone points it out. Seen it all before.

Really wanted to drop it from yesterday, but when you play the race victim card, you can expect a response.

#126 Ponzius Pilatus on 06.06.16 at 12:40 am

#98 roxy on 06.05.16 at 8:56 pm
#26 “Maybe it is time to go to Berlin. At least I might find someone there who can talk about something other than real estate.”
Actually…when I was in Germany, I met tons of Germans who liked to talk about the investment homes they own in Vancouver. Lol. Sorry to burst your bubble…
———-
you are a stupid vancouver realtor.
Tons of Germans.
Be specific, asshole.

#127 NoName on 06.06.16 at 12:53 am

#86 New West
only time i crack beer in a mornig is to quench a thirst after heavy drinking privios knight. for brekfast i like grapefruit beer, vitamin c for imun system, and alchocol to make day more bearable.
Just kidding!

@#84 Herb
Oktoberfest, being sobar tourist in one of the beer tents, priceless, for everything else there is a mastrecadr…

@Floppy
at some piont it was one country, now it’s 7 different states, by the looks of maybe more to come. so i am from one of those.

#128 fleabitten monkey on 06.06.16 at 1:08 am

88 gladiator RE: 66 Doug Sanders – would like to know where you have been living for 20 yrs Doug. Gladiator do you realize DS has cash and investment of almost $900K??? On and income of now $70K per year (and likely less than that 20 yrs ago assuming gradual raises along the way). Bloody impressive if factual. Depending upon where they live they are not in the hole.

#129 Unknown on 06.06.16 at 1:22 am

Millmech,

You are an idiot. Hope you enjoy the soup kitchen.

#130 family beagle on 06.06.16 at 1:26 am

“We will either coast to shore or we will get crushed. It’s complicated and even the greatest economic minds of our time have no idea what will happen.”

Translation: We don’t know what the Fed will do, however, Mdme Christy sings her siren’s song, tempting fresh buyers onto our rocks.

The inanity of it all. Growth and progress are lifestyle buzzwords, neither of which have kept the common citizen at pace with regulators or speculators. Soon the real “we built that” crowd will demand govt survives on less and profiteers pay more. Shelter and taxes leave little left. Everybody knows who’s scamming who.

#131 jay on 06.06.16 at 1:42 am

Forget real estate ,here’s how to get money. http://www.reuters.com/article/us-cyber-heist-bangladesh-idUSKCN0YR0VN?il=0

#132 Give us this Blog our daily Garth on 06.06.16 at 1:46 am

#118 at only 28, you learned this pretty fast. It will be a long wait, but sounds like you can handle delayed gratification. Very few of you out there.

#133 WalMark of Sadkatoon on 06.06.16 at 1:59 am

#118 Donna Swanson on 06.05.16 at 10:58 pm

kudos that’s awesome

#134 WalMark of Sadkatoon on 06.06.16 at 2:07 am

…believe Garth real estate outside of Van and TO is just not moving.

i agree. YVR and YYZ are different animals. for now

#135 Bob Patterson lll on 06.06.16 at 2:09 am

DELETED

#136 A Yank in BC on 06.06.16 at 2:35 am

“Stick to your day job at Starbucks.”

Jeez Garth.. kind of a low blow to Sbux.

Good company. Certainly no shame in working there. Good wages, and in the U.S. they pay a hefty percentage of the college tuition of employees, even part-timers. Is this a bad thing?

Next time say “Timmy’s”.

#137 Internal Shock Starting... on 06.06.16 at 3:54 am

Everybody talking US, Brexit etc.

Wake-up and look at GDP and Job numbers last few months. Almost all major GDP sectors negative, jobs negative…2nd Quarter will be negative and Jan GDP revised down last GDP report.

It has already started…we are in recession.

Historic high debt and job losses will make YVR/416 RE a mess. Higher rates will only extend the misery for those renewing a mortgage and make the economy a long slow slide into oblivion.

#138 Larry Laffer on 06.06.16 at 3:54 am

#45 Westvan
Australia puts conditions on foreign money and their market is settling down …… Weird

This is happening mostly in provinces depressed by low commodity prices, such as Perth (Western Australia is a major ore producer) and Brisbane (Queensland is a major coal producer). In Sydney and Melbourne, prices are still crazy, and going up, fed by ever lower rates. CBD condos are still being marketed as “equity”, many house loans are interest-only, and Australian banks are highly-leveraged. Draw your conclusions.

#139 family beagle on 06.06.16 at 3:56 am

#2 Shawn on 06.05.16 at 12:06 pm
Trades, travel

My kid, second year industrial electrician with first aid, toured GB and Europe for four months last year… Loved it. Opportunities to work in various cities with international boss. Liked Rotterdam architecture, Berlin transport. Irish smiling eyes.

#56 North Burnaby Investor on 06.05.16 at 5:19 pm
Renters are losers ’nuff said

Banks rent. If you’re paying a million $ for a sfh where you can listen to the neighbour in the can while you’re cooking dinner…

#70 Dave on 06.05.16 at 6:27 pm

Mdme Christy is quite clear on her priorities, economic development. Her words: https://youtu.be/zko6Uh3hARs

#86 New West on 06.05.16 at 7:58 pm
Now it’s all real estate, endless anecdotal stories about someone’s brother, niece, or friend-of-a-friend who has made it big selling a house (or would make it big if they sold).

Same, until I mention I have a ranch, then they all want to know about the wildlife, chores, countryside, lifestyle.

#54 Frank on 06.05.16 at 5:09 pm
A correction needs an event

A tax event? An indicator of change in 604 might be if govt language shifts from “affordable housing” to “sustainable prices”. When? Maybe after July (mill rate is due). People pay groceries, then shelter, then taxes. This summer has a weird vibe already.

#108 Grey Dog on 06.05.16 at 9:48 pm
I believe it is so easy to get lost in LOCs cause each and every friend has one.

Yes, some people I know owe more than they originally paid for the house. It was too tempting to borrow on equity.

#115 Bursting bubbles on 06.05.16 at 10:23 pm
No Canadian bank will miss or reduce a single dividend payment. — Garth
— Who’s gonna take the losses when the bubble (supposedly) bursts?
….
Bank employees.

#140 cto on 06.06.16 at 6:54 am

Why do I have this feeling Yellen is going to waffle and find yet another excuse to leave rates unchanged.

#141 cto on 06.06.16 at 6:57 am

What’s not to stop fed from raising rates 2 more time then adjusting them back downwards to 0. Then maybe -1….

#142 BillyBob on 06.06.16 at 7:02 am

I would welcome a capital gains tax on principal residences. Best suggestion yet for pricking the housing bubble and huge potential income for cash-strapped governments.

It’s absurd and completely backwards that cap gains on investment income – investments in actual companies that provide real jobs, products, and services – are taxed, but gains in housing (primary residence) are not.

If investors/savers are penalized by inflation, so then should debtors be.

#143 Grey Dog on 06.06.16 at 7:55 am

Donna Swanson, WOW, amazing investments, however, why are you totally staying away from RRSPs? I’m just a humble student of Garthology and just wondering why…

#144 IHCTD9 on 06.06.16 at 7:56 am

#4 Raging Ranter on 06.05.16 at 12:15 pm

Sometimes i need to lock myself into something to stop myself from doing something foolish. :)
___________________________________

Good job – sometimes when you understand the big picture, it is better to close your eyes and do what you know is right. You can contemplate the merits of the decision later after you are locked in and stuck :).

#145 maxx on 06.06.16 at 8:15 am

This debt to income ratio stat got me thinking. What was our DTI at its highest? The mortgage, at .99%.

Acquired no consumer credit as we were and still are completely repulsed by debt.

House paid off in just over 3 years.

Bought first cottage at DTI .50%. Paid off in 2 years.

Then came the wonderful mid-90s. Job situation horrid, with big government purges. Time to shovel savings aside furiously, like coal into a freight train’s furnace. I felt that the “train” was unstable and knew that over time it would only get worse. And it has. Much worse than I had imagined. And I’m a skeptic.

12 years of shoveling later, freedom. 47 and 48.

We now owned our time – lock, stock and barrel. Our very lives. Felt like we were, and still are, on a high, on a plateau, safe and looking down at our former lives.

Took early CPP. Started a business. A fun one that fits around our schedule. One that we can drop at a moment’s notice, so that we can traipse off somewhere.

Not a single soul helped us.

Mortgages were at around 11.5% at the time. Couldn’t imagine, let alone stomach, sitting on a mountain of debt for an excess of precious lifetime working for someone else. To this very day, I thank the banking soul(s) who came up with the idea of double-up and annual supplementary payments on mortgages. My reaction then was “are you kidding me?” What a savings wormhole!!

A friend who still has a mortgage at 71 is still working, with no time nor money to travel. The rare trip is on borrowed funds, adding to the poisonous pile.

Life is so short – amazingly, we almost never seem to factor in that the end of life is always far more complicated and sudden, in a “plans drop off the cliff” sort of way.

At work, I’d sometimes visualize dolphin and sea turtles gliding through the South Pacific in the sunshine. It seemed so far away and even more out of reach.

Then, it was our turn. Much better than winning a lottery, because the joy of accomplishment is part of the texture of this freedom.

An investment banker once told us “you made no mistakes”. That unforgettable remark was totally unexpected.

Not that big a deal, really, once the decision is made that most debt is absolutely toxic to quality of life. I can’t imagine living life other than debt-free.

And life is really all we’ve got.

The rest is up to us.

#146 Millmech on 06.06.16 at 8:25 am

#129
Actually work in one on the weekends and the local food bank and help the down and out through sponsorships,working my way to 700k investments by the end of the year will be financially independent and retired before 50!

#147 Smoking Man on 06.06.16 at 8:27 am

My Theory of why Real Estate will stay solid.

This crazy thought popped into my head a few minutes ago.

The one thing that everyone misses regarding the real estate pig is culture. Mind Fking as I call it.

Where is the crazy demand for real estate coming form? Some folks blame China but I have another theory.

Traditionally a young man would court a young woman, she would hold out till there was at leased a ring on here finger, at which point they would get married, rent. then buy.

Two occupants for one dwelling.

Their moms and dads happy they are gone. Dad gets a new office.

Today, these kids delay the marriage, off to university to be taught how evil men are. Epically the white patriarchy, girls are encouraged to sleep around, you have made it girl, your equal. And they do.

Now the dudes, not talking fairies like our PM but real men and they are still out there have a real problem with sharing the ones they love.

And they know it’s inevitable in this day and age. Why bother, access to easy free sex is a tinder click away.

Example:

Son1 split with his wife after a few years. Two dwellings required now. Increase demand.

Son2 engaged and will be ok.

Son3 Pulling a Freedom First. A new Tinder date every weekend. Plans to stay single and enjoy all the free fruit till he hits 40, then off to a third world village to find a lady with traditional values to act as a baby producing factory, and cook.

Hench they aint getting married like they use too. So it’s now One Dwelling per head.

Now with mom and dad tired of the adult kids living in their space pony up a down payment to get rid of them, as they wont leave to be a rent slave.

I give you primary cause of the real estate madness.

Dr Smoking Man
PhD Hedonomics

#148 cropgrower on 06.06.16 at 8:39 am

#66….huh? you should write a book!

#149 fancy_pants on 06.06.16 at 8:47 am

A peek inside the heads of the 1% and the political puppets they control…

Queue the excuses as they hold rates. Rinse. Repeat. The San Andreas fault line seems to be holding well too. The tall apple carts wish for nothing more. Everyone that ‘matters’ ($) wins this way

#150 fancy_pants on 06.06.16 at 8:52 am

sanity prevails over leftist minds
http://www.ctvnews.ca/world/swiss-vote-no-against-unconditional-basic-income-for-all-1.2932226

#151 Lee on 06.06.16 at 9:02 am

I am sure you have all read today’s report by Ben Tal about the 7.5 Billion dollar wealth transfer looming from mom and dad to kids in Canada. The Star also reports that within two decades population of GTA to grow by 3.5 Million. Where do you think all that inheritance money is going to be spent? When mom dies, her two or three kids will each buy homes with that money, creating more demand for housing. Someone has really misread the impact of demographics in the GTA.

#152 NoName on 06.06.16 at 9:21 am

#95 meslippery on 06.05.16 at 8:51 pm

cids and kars

Cost of reising kids (cad)

http://www.canadianliving.com/life/money/how_much_does_it_cost_to_raise_kids_in_canada.php

Cost of reising kids (us)

http://www.collegecareerlifeplanning.com/Documents/2%20Get%20Motivated/Cost%20to%20Raise%20a%20Child.pdf
———-

Cost of owning a car calculator cost per km

http://caa.ca/car_costs/index.php

#153 maxx on 06.06.16 at 9:28 am

#14 Estrella on 06.05.16 at 12:58 pm

“…..it has me questioning what needs to be done to make realtor councils answer to the public. Are any public members on realtor councils? Their seemingly looking the other way and it carry-on as business as usual in BC is a serious disservice to the general public.

http://www.theglobeandmail.com/news/
national/no-action-taken-on-vancouvers-new-coast-realty-complainants-report/article30279257/”

This is the land of “voluntary compliance” and “guidelines”.

Protection of the public? FAIL. YOYO.
Spinning money is the order of the day.

Protection from realtors? FAIL.

Food safety assurance? FAIL.

Imported goods safety? FAIL.

The list goes on.

Fed up with “business as usual” by a slum owner, I took matters in hand and dragged its a$$ to court. Took years to resolve, but 100% in my favour and a full judgement against it.

Don’t expect gubbmint to help. They just want to see the money SPIN.

#154 Segan O'Reilly on 06.06.16 at 9:36 am

DELETED

#155 fancy_pants on 06.06.16 at 9:39 am

Denmark. property crash in ’08 and negative rates. worth a read.

http://www.bloomberg.com/news/articles/2016-06-06/denmark-land-below-zero-where-negative-interest-rates-are-normal

#156 Life among the Stars on 06.06.16 at 9:45 am

#147 Smoking Man on 06.06.16 at 8:27 am

Traditionally a young man would court a young woman, she would hold out till there was at leased a ring on here finger
—-

And since wedding rings are now depreciating assets… it’s a good reason to “lease” them!

#157 Mark on 06.06.16 at 9:48 am

“Where do you think all that inheritance money is going to be spent? “

Not so fast! “inheritance money” only largely exists on account of the sale of assets of the deceased, such as RE, and to a lesser extent, stocks, bonds, and other assorted assets. There is no net gain in wealth when an elderly person passes away to the economy (if anything, there is a decrement of wealth as a significant chunk is spent on final arrangements).

So if “grandma” passes away and her 1 house is divided up in some formula between her children and perhaps grandchildren — the net incremental demand on RE and other asset classes is exactly equal to zero.

Let’s also remember the bulk of this money now belongs to Boomers, who have 20+ years to live – long, expensive lives ahead. Methinks the booty is overstated. — Garth

#158 Sonny on 06.06.16 at 9:52 am

Bond guru: Forget June—but a summer Fed rate hike may still be in the cards

http://www.cnbc.com/2016/06/06/bond-guru-forget-june-but-heres-why-the-fed-may-still-provide-summer-sizzle.html

#159 CHERRY BLOSSOM on 06.06.16 at 10:06 am

All my life the rules for mortgages were low ratio mortgages you had to have 25% or more as a dow payment. It you did this you did not have to pay CMHC. High ratio mortgage you had less than 25% down payment and you did have to pay the CMHC. Somehow the snakes lessoned the down to 5% and then 10% etc. How about we re instate the higher downpayment – very high. Every interest rate hike the banks could lower the downpayment requirements. Make the downpayment not only high but have the downpayment and interest rates correlational

#160 Neil Armstrong on 06.06.16 at 10:27 am

#119 acdel
Sad, how many stories like this do we have to read over what???? What is the real truth?
======================
If it’s reported in the monopoly press, it’s fake news.

#161 mark on 06.06.16 at 10:29 am

There is not as big of debt problem and housing is NOT in as big of trouble as we think according to this study.
Alot of this is going to be taken care of from inheritance!

http://business.financialpost.com/personal-finance/parents-will-pass-on-750-billion-to-kids-over-next-decade

#162 Lee on 06.06.16 at 10:36 am

#157 Mark,

Two or three new home buyers (kids) replacing one deceased home owner creates demand on real estate. Unless the kids just move into mom’s house.

#163 Neil Armstrong on 06.06.16 at 10:43 am

The Big 5 are only rock solid until the Boomers expire. So most of this blog has nothing to worry about. For the rest of us… DISRUPTION in the fintech sector will ensure the demise of the incumbents. Those who criticize Block Chain are mainly those of a certain age (ahem 50+) who simply do not understand what it is and why it will change the world for the better.

http://www.wired.com/insights/2015/01/block-chain-2-0/

IHTDC976 … or whatever your name was… thanks for the correct but irrelevant math calculation from the 1970s which I’ve seen a hundred times… You forgot about efficiencies, like I said. Most of the power needed is in take-off and landing, and jet fuel wastes close to 90% of it. Take that 90%, add it back in with stored batteries, and voila, bye bye, jet ICE.

There are at least two types of solar energy generation. The first is generally known photovoltaic, the second is using molten salts.

http://www.solarreserve.com/en/technology/molten-salt-energy-storage

Check back for more free investing clues for the coming DISRUPTION. – Neil Armstrong (John Lear)

#164 Donna Swanson on 06.06.16 at 10:56 am

I avoid RRSP’s because of higher income taxes coming and does not give me the flexibility I need for my money.

TFSA’s and tax-efficient investments in my non-registered accounts are a much better longer term choice. The income tax free income and dividend tax credit from dividends, capital gains taxed at lower income tax rates.

#165 For those about to flop... on 06.06.16 at 11:00 am

Hey Common,I was surprised to see Janet Yellen ranked number 3 on most powerful women on the planet behind Merkel and Clinton.

That’s not bad for a NFL punter who gets paid to kick the can down the road…

M41BC

#166 Renter's Revenge! on 06.06.16 at 11:02 am

Methinks the booty is overstated. — Garth

Yarrr! And what does a pirate care for real estate, when he has the high sea to call his home? Avast, ye landlubbers!

#167 For those about to flop... on 06.06.16 at 11:16 am

#125 BillyBob on 06.06.16 at 12:18 am
#62. You’re confusing racism with the correct term “nationalism” . Australians are a nationality made up of many different races (though there is really only one race, the human one)

Why are young white people so damned sensitive these days? Not much grit and very thin skins.

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

Hey Porkie,I get what you are saying.
I used racism to keep it simple.
Hating someone because of where they were born because you had a run in with a co worker from the same country is petty.

For what it is worth I am in an interracial marriage and yet my wife and I have the same skin colour.

One of us is considered white and the other brown…

I’ve heard it all…

M41BC

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

*sigh*

1. As aptly pointed out before I could, “Australian” is not a race.

2. Expressing an opinion, in this case of a certain accent, may be rude, but it not racist or hate speech. This ridiculous leap of rhetoric is the kind of idea that fuels the current PC hysteria. (And it’s backlash, exemplified by the rise of clowns like Trump).

3. I do not “hate” Australians, or you, flopper. How ridiculous. It’s true I do have a strong dislike and little patience with big mouths, who when called on it, act like wounded babies. And those types certainly come from any and all nationalities.

As the other poster said – very thin skin. Dish it out all day long, but can’t take it when someone points it out. Seen it all before.

Really wanted to drop it from yesterday, but when you play the race victim card, you can expect a response.

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

Hey Billbob,I see a tiny bit of remorse in this post so I will take it easy on you.

We used to get on but your attitude changed towards me when you found out I was originally from Australia.

My point of saying you hate a nation because of the way they sound is no less racist than saying you don’t like a race because of the way they look still holds true.

There are annoying people from each country and Australia is no exception ,but I really think you need to deal with your issues individually with your co workers venting anger at a guy who has not been to that country since 1999 is a little futile.

Safe travels…

M41BC

#168 Ole Doberman on 06.06.16 at 11:42 am

LOL is the media prepping people for the inevitable:

http://www.bnn.ca/News/2016/6/6/Pattie-Lovett-Reid-Bubble-or-not-heres-how-homeowners-can-avoid-financial-ruin-when-rates-rise.aspx

#169 Fed-up on 06.06.16 at 11:51 am

#151 Lee on 06.06.16 at 9:02 am

I am sure you have all read today’s report by Ben Tal about the 7.5 Billion dollar wealth transfer looming from mom and dad to kids in Canada. The Star also reports that within two decades population of GTA to grow by 3.5 Million. Where do you think all that inheritance money is going to be spent? When mom dies, her two or three kids will each buy homes with that money, creating more demand for housing. Someone has really misread the impact of demographics in the GTA.

———————————————————————————-

3.5 million more humanoids in the GTA in the next 20 years. This on top of the population more than doubling in the last 25 years. How is this possible when the average Canadian family is having 1 or 2 children at best?

It’s a sustainable mystery.

#170 IHCTD9 on 06.06.16 at 11:59 am

#151 Lee on 06.06.16 at 9:02 am
I am sure you have all read today’s report by Ben Tal about the 7.5 Billion dollar wealth transfer looming from mom and dad to kids in Canada. The Star also reports that within two decades population of GTA to grow by 3.5 Million. Where do you think all that inheritance money is going to be spent? When mom dies, her two or three kids will each buy homes with that money, creating more demand for housing. Someone has really misread the impact of demographics in the GTA.

___________________________________________

This article refers to wealth transfer from the very elderly to recipients in the 50-75 year old range.

I seriously doubt these folks are anywhere near as house horny as the average millennial. They likely already own their digs, and are well into retirement planning with a good many already retired.

If the boomers live as long or longer than their parents did, than we can expect the transfer of wealth to fall upon an even older demographic maybe 55-80, or even 60-85. If they live longer, they will also have less to pass on.

Personal anecdote. My Maternal grandfather was 99 when he passed away. His oldest child was almost 80 years old when the wealth transfer took place.

The GTA will continue to be a major landing spot for your garden variety 3rd world immigrant – and more and more so, a temporary one as our economy worsens.

#171 TREB ordered to show data on 06.06.16 at 12:02 pm

http://www.mortgagebrokernews.ca/news/treb-data-to-open-up-208440.aspx

#172 For those about to flop... on 06.06.16 at 12:03 pm

Billybob,upon further reflection perhaps you are being more prejudice than racist.

I was lucky to be born in Australia,but there is a whole world out there to explore.

I settled in Vancouver because of the affordable real estate…

M41BC

#173 bdwysktn on 06.06.16 at 12:14 pm

#159 CHERRY BLOSSOM on 06.06.16 at 10:06 am
——————–
have another drink girl!

kinda of early to be drunk, unless of course you are in eastern europe .

keep making up silly numbers and party on!

#174 RentYVR on 06.06.16 at 12:16 pm

Garth, not sure if you’ve discussed this already (I’m relatively new to the blog) but even if the central banks fail to raise rates beyond current levels that does not mean that rates in the real economy can’t increase. Indeed, Canadian banks didn’t pass along last year’s surprise rate cut and if they view risk levels as increasing they could decide to raise them on borrowers independent of what the central bank does.

#175 Luc on 06.06.16 at 12:25 pm

Bank of Mom and Pop to the rescue…

Inheritance will help pay for renos and house payments says CIBC…

http://www.cbc.ca/news/business/baby-boomer-inheritance-1.3617891

#176 james on 06.06.16 at 12:36 pm

#157 Mark on 06.06.16 at 9:48 am

“Where do you think all that inheritance money is going to be spent? “

Not so fast! “inheritance money” only largely exists on account of the sale of assets of the deceased, such as RE, and to a lesser extent, stocks, bonds, and other assorted assets. There is no net gain in wealth when an elderly person passes away to the economy (if anything, there is a decrement of wealth as a significant chunk is spent on final arrangements).

So if “grandma” passes away and her 1 house is divided up in some formula between her children and perhaps grandchildren — the net incremental demand on RE and other asset classes is exactly equal to zero.

Let’s also remember the bulk of this money now belongs to Boomers, who have 20+ years to live – long, expensive lives ahead. Methinks the booty is overstated. — Garth
===================================
Arrrrrge there now matey. The booty is fine now all that gold and silver. Boomers will probably blow it on Crack and Hawaiian Homegrown Hay. Hell I think Smoking Man has already blew though his inheritance in JD.

#177 WUL on 06.06.16 at 12:40 pm

For many months I have regularly reviewed Kijiji entries for shared accommodation room rentals in Fort McMurray. Two days prior to the evacuation there were 1000 – 1100 available rooms. Today there are 528. Obviously the asked for monthly rents are jumping.

Now thousands of contractors are coming up here for the cleanup and rebuild. Jobs galore. It is going to be an extremely tight market.

A different form of boom.

How quickly things change.

#178 Rational Optimist on 06.06.16 at 12:59 pm

143 Grey Dog on 06.06.16 at 7:55 am

“Donna Swanson, WOW, amazing investments, however, why are you totally staying away from RRSPs? I’m just a humble student of Garthology and just wondering why…”

The refund isn’t worth as much now as it will be. When she’s nearer the height of her career in a few years’ time, earning the big bucks, she’ll do a few big contributions in-kind, and get the really big refunds.

#179 Caught on 06.06.16 at 1:15 pm

Prepare for rising rates is right!

http://www.bloomberg.com/news/articles/2016-06-06/yellen-sees-rates-rising-gradually-without-giving-precise-timing

#180 Julia on 06.06.16 at 1:20 pm

#72 Mark
“Defaults and foreclosures are good for banks — they convert their paper claims against housing, into real hard assets. With CMHC covering $900B+ of subprime paper in Canada, so long as they pay up, deflating the housing market is basically a no-lose proposition for the banks. The banks didn’t acquire the CMHC subprime mortgage insurance for no reason — they bought it because they believed in a reasonable prospect of being able to profit from it.”

Banks usually go power of sale, nor foreclosure. They don’t want to own the assets and maintain them until they sell, it’s much too expensive and bigger risk of loss. Banks are not in the business of owning and selling real estate. Go power of sale, get all your money back after costs or claim the loss to CMHC.

The Banks don’t take CMHC insurance to profit from the sale of property they would foreclose on. Banks want CMHC insurance to reduce their cost of capital allocated to these mortgages thanks to CMHC backstopping. Then can then lend even more. That’s how they make money.

#181 Bytor the Snow Dog on 06.06.16 at 1:38 pm

@157 Mark- The problem is that some of the family members will “leverage” their inheritances to purchase real estate or other assets. Because as everyone knows, debt creates wealth.

#182 The York School on 06.06.16 at 1:57 pm

Could homes near good schools really drop in value? People are always going to pay more money for education whether it is private education in Toronto or buying a home within the borders of a good school.

#183 jess on 06.06.16 at 2:24 pm

The NYT’s has an interesting article as to why some are worried: how-to guide

Panama Papers Show How Rich United States Clients Hid Millions Abroad

By ERIC LIPTON and JULIE CRESWELLJUNE 5, 2016

=========
The email by the “entitled daughter ” made me laugh especially going on about socialist obama as her reasons for obscurity.
======================
“sovereign society”
http://taxjustice.blogspot.ca/2008/10/tax-justice-network-toadies-liars.html

#184 Inheritance alley on 06.06.16 at 2:51 pm

Has anyone factored in this????

http://www.cbc.ca/news/business/baby-boomer-inheritance-1.3617891

Same will be going on in the US

#185 A Canadian Abroad on 06.06.16 at 3:50 pm

#184 Inheritance alley on 06.06.16 at 2:51 pm
Has anyone factored in this????”

Yes, that’s when they sell the homes to lock-in the gains/losses (if any). If they buy into the same asset class (homes) then there won’t be a gain/loss as it is apples-to-apples in the same ‘hood.

I suspect the money will end up mostly in the stock market as that is where the greatest returns will be made next.

#186 salonist on 06.06.16 at 4:03 pm

cereal sales down and expected to decline substantially

millennials are abandoning cereal as it’s a bowl to washhttp://www.dailymail.co.uk/news/article-3462763/Millennials-lazy-eat-cereal-Forty-cent-younger-generation-skip-traditional-breakfast-don-t-want-washing-up.html

so much for a balanced portfolio

#187 Christopher E Huff on 06.06.16 at 4:21 pm

Cant wait for the painfully soft landing that will last 10 years as the CDN govt sucks up to idiot homeowners!!

#188 Toothless Measures on 06.06.16 at 4:33 pm

“These are the voices politicians listen to, lobbyists who now see public policy changes as the last, best hope of avoiding a train wreck.”

Yawn….

Another proposed measure to feign interest in addressing the affordability issue.

Another ‘potential’ measure to curb rising prices.

Anyone who works with bureaucracy knows that this type of measure will take 1.5 or more years to implement. First, you have to consult with impacted parties – those that want the party to stop and those that want it to keep going. Second, you have to draft something up that will be a compromise to all parties – which means its effectiveness just became eroded and watered down. Then, you have to worry about timing its implementation as so many provincial GDPs are based on RE – pre election, post election considerations, RE seasonal cycle.

If you can implement at new down payment rule that actually achieves its intended target, then you might get somewhere.

Oh, and even if they did increase it, you can look at what provincial governments do to keep the party going. In BC, the property transfer tax was eliminated on new builds up to 750k, which effectively neutered the new minuscule down payment rule changes that T2 put in.

You can add this ‘potential’ change to the long list of toothless measures the government put in to the curb the price increases – the elimination of the 40 year/0 down; elimination the 35 year amortization; changed rules on HELOC withdrawals; changed bank capitalizations; new downpayment rules.

8 years of tweaking the system has simply resulted in higher and higher prices…

The glimmer of a down payment change gives those sideline renters a glimmer of hope that things will change if they keep renting, and waiting, and renting and waiting – for next half or full decade.

#189 Dan Duran on 06.06.16 at 4:34 pm

How funny it is to see bears only look at facts that reinforce their case. At any point there are those, and there are facts that contradict their beliefs. Yet they choose to only look at one side of the story. Take the debt load. Sure, it was lower when interest rates were 6-10 times higher. How about amortization periods? You say it should be shorter while in the same breath you advise people to rent (infinite amortization period). Or think HELOCs are the way to ruin, although, if used judiciously, they can be the way to financial freedom (personal example could follow, but who cares, right?). I have a question: how does it feel to be smarter, yet poorer, than everybody else?

#190 M on 06.06.16 at 4:36 pm

It’s actually great since all this guarantee a TSX down 30 to 50% and me a many times millionaire :)
What is wrong with riding the stupidity wave ?
These are great times to be in the stock market long betting downwards. All of us here should NOT complain, but cherish the good times we are living.
Depressions are very good: eradicate excess liquidity and dumb money, re-educate the society “en masse”, teach a thing or two about how to be frugal and modest.
Why do so many people complain about it ?
with 164 debt to income ratio, half a trillion $ banks exposure to fracking oil nobody needs and most likely over 2 trillion (with a T) banks exposure to RE of all kinds, this is the dream of an investor. Time enough to place cheap bets and guaranteed through the roof incomes. Remember NFLX going almost 300 b4 splits ?
..and then is AAPL…the new BB kid around the block.
We live golden years people. We are very lucky indeed.
And then are the banks… a drooly prey.. with guaranteed half price/share during a year time.. did anyone cared to calculate a leap short at 30c a share ?
These are magnificent times.

#191 Dan Duran on 06.06.16 at 4:43 pm

@Donna Swanson You’re right.. Real estate will not continue on the tear it’s been so far .. even I (an optimist) don’t think so.. are there any bulls left? Not if you consider the stupidity of our politicians, which are sure to do “something (stupid, of course) about it”. That being said, if you just bought a modest home 6 years ago, when you had , say, 50k down payment, you’d have 1 mil equity by now. Even more importantly, you’d have peace of mind and not care what prices will do next or what governments ‘will do about it”. Now what you have to do, is sign some online petition to tax those foreign buyers or anybody really, just tax somebody (Please!!) until they have to sell their house so you can buy.

#192 Grey Dog on 06.06.16 at 4:48 pm

The York School, here where I live in Uville, being in the Berczy Public School district gets you an extra 100k$ and a day or two on the market, unfortunately, we live 1 block away from this prized public school district of a 10 ranking.

I had a neighbor in this district, also with a grey dog, who sold their home without a lot of fuss of repainting, de cluttering, and staging. 200k$ more than asking, just cause the school is exceptional. There were feathers flying when the buyers had to legally own the home by June 1, (to register kids) and the original closing date was in August, the buyers THEN wanted to charge the sellers rent, yet the sellers were doing them a favour by allowing this paperwork to go through!

#193 Metaxa on 06.06.16 at 4:59 pm

#105 Damifino writes:

#100 Metaxa

Never feed a troll.

Understood, absolutely.

However I took the opportunity to work under the corollary to the rule which is never, ever pass up the opportunity to post a poop joke.

Won’t happen again.
Unless I have beets for supper and forget about it, like I always do…

#194 maxx on 06.06.16 at 5:01 pm

#21 Michael King on 06.05.16 at 1:43 pm

“I saw the interview with the gentleman from the credit union. I believe that he is genuinely concerned about the Vancouver RE bubble. However, he seemed to be floating the idea of a capital gains tax on primary residence sales. Any government that seeks to impose that will meet fierce opposition and rightly so. The majority of homeowners, even here in unhinged Vancouver, are not flippers or speculators. Bad idea. There are other ways to deal with the problem.

Unpopular, yes, but a valid solution. Making residential real estate the only asset class to give tax-free capital gains has resulted in the situation we now face: unaffordable houses, and a nation of speculators. Time to revisit this anachronism. — Garth”

Completely agree with Garth – cap gains on re ought to be taxed at full marginal rate, given that it is not an investment. Re is a store of money on the sidelines and behaves much as GICs do. GIC interest gets taxed at full marginal, no exceptions.

If re is a flip, all the more reason to tax at marginal.

If re is purchased by foreign nationals, tax at 1.5 X the highest marginal rate.

That oughta go a very loooong way to stabilize all things re and what a store of tax wealth, present and future, which could fix nearly all that ails Canada.

If re is an inheritance, same deal. Deemed to be sold at market rate.

#195 Lee on 06.06.16 at 5:10 pm

#184, Inheritance Alley

Yes it has been factored in. It is what will keep the real estate market in Toronto rolling along smoothly and upward for the next 30 years, when the soft landing will finally happen.

#196 Raincouver on 06.06.16 at 5:15 pm

Interest rates will have to be increased in Canada. How are we supposed to pay for all this debt that JT has piled on us? Increase taxes? I don’t think so. We need foreign governments to buy our bonds, so we can get some cash to pay off our national debt. That’s how the interest rates are going to go up, NOT by relying on the Feds and their policy.