Really?

REALLY modified

It’s February 22, 2005. Rates are low, the economy’s okay, real estate’s hot, pricing are boiling and everybody’s buying. A new book hits Amazon, “Are You Missing the Real Estate Boom,” authored by David Lereah, the seasoned economist for the National Association of Realtors.

“Are you missing the real estate boom? Can you increase your wealth from it? For most people—including current homeowners—the answer is a resounding yes.

“But it’s not too late to increase your stake in the greatest real estate boom of our generation. Author David Lereah shows why the real estate market is poised to climb higher over the next decade—and explains what you can do to profit from it.

“Lereah calls today’s market a “once-in-every-other generation opportunity.” Today’s boom is not just driven by low interest rates—there are a host of demographic and economic reasons why real estate will continue to outpace other investments, from the growing needs of the baby-boomer generation and the rise of the “echo” boomer generation to the new ways real estate is marketed and sold.”

Six months later, Lereah was still at it. “The continuing shortages of housing inventory are driving the price gains,” he told the Wall Street Journal. “There is no evidence of bubbles popping.”

Well, we know how this story ended. By early 2006 sales were slowing, listings rising and home ownership levels had reached almost 70% amid a record run-up in household mortgage debt. Two years later real estate values had crashed by 32% across the US, and over 70% in areas of Arizona, Florida and California where buying had been orgiastic. The real estate collapse brought down venerable Wall Street investment banks, crashed equity markets, plunged the country into a recession and resulted in a global credit crisis that threatened a rerun of the Great Depression.

David Lereah lost his job. He remains a hated man. Eleven years after the housing bubble burst, average prices have just recovered. Family finances have not.

It’s July 30th, 2016. Rates are low, the economy’s slow, real estate’s hot, pricing are boiling and everybody’s buying. In Canada’s largest newspaper, real estate guru and housing info entrepreneur George Carras tells readers “incredible wealth is being created” for “those who own houses.” Best of all, it will continue for ten years.

“If a homeowner were to compare value gains earned via an RRSP investment versus the value gained by their home over the past decade, the house would be the top performer. The TSX was down 3 per cent year over year as of June 30, while the average price of a detached house in the GTA increased 19.9 per cent to $979,445 and $1,259,486 in the city of Toronto, according to the Toronto Real Estate Board.

“New and resale housing prices have been rising at double-digit rates over the last two years and are likely to continue to do so over the next decade, driven by three main factors: intensification, low interest rates and strong demand.”

Do we have a new David Lereah in our midst? You bet. In fact, Canada’s full of them. Builders like Brad Lamb. Marketers like Bob Rennie. Economists-for-hire like Helmut Pastrick. Pumper CEOs like Phil Soper. So long as the real estate business remains a Wild West for regulators, with 130,000 realtors roaming the nation and bold, unqualified statements being published by media “experts”, we edge closer to the cliff that Americans were lured over a decade ago.

As for George Carras, he made this stuff up.

Toronto stocks weren’t down 3% over the past year, but up 4%. So far in 2016 (seven months), the TSX has gained 12.09%, more than Toronto real estate. Over the past decade an exchange-traded fund mirroring the Toronto market (XIU) has gained 46.7%, plus a dividend yield of 2.8%.

So, did George fib, knowing nobody will censure him, or does the professionally-trained engineer not understand how to do research and craft a spreadsheet? Hmm. I’m going with the former.

Anyway, let’s compare “an RRSP investment” (actually an RRSP is not an investment vehicle, but merely a channel for investing in other assets) with the average Toronto house over the past decade. In 2006 that house was $351,941. Today it’s $756,546. Big capital gain which, less selling commission, equals 97% over ten years.

Meanwhile a balanced, conservative portfolio (40% fixed income and 60% growth assets) inside an RRSP over the same period of time, averaging 7.1% annually (including the credit crisis years) would today have increased by 96.7% . So is housing “the top performer”? You win, George. By 0.3%.

But wait. The RRSP didn’t suffer ten years of property taxes, ongoing maintenance costs, lawn care and snow removal, legal fees for closing, mortgage interest, new Caesarstone counters or insurance premiums. Of course, you can’t live inside an RRSP, but the financial assets can provide cash flow and are also 100% liquid – unlike listing a house then watching people tromp through on showings.

Also important are these questions: if something has jumped almost 20% in price during one year, isn’t that a sane time to be selling it, not trying to buy? Why would a smart guy like George Carras have to fudge the numbers so badly to make a point, if housing is unparalleled? Why set up a competition between real estate and financial assets, when balanced people should have the right mix of both? And if you’re going to be handing out financial advice in a newspaper column to a mass audience, isn’t it irresponsible to say one asset is “likely to rise at double-digit rates over the next decade”?

If George Carras were a regulated financial guy, he’d soon be selling shoes at The Bay.

David Lereah, by the way, is now self-employed. Guess why.

125 comments ↓

#1 manderson on 07.31.16 at 5:19 pm

First?!

#2 Exilled on 07.31.16 at 5:23 pm

Sir Garth: Is the store open tomorrow? Okay First!!

Of course. Pistachio ice cream just arrived. Ryan is scooping. — Garth

#3 Greg on 07.31.16 at 5:29 pm

Double digit gains for 10 years?

15% gains for 10 years will put Toronto prices over $4 million. That will probably be 30-40 times average income.

#4 Freedom First on 07.31.16 at 5:32 pm

Yes. It is so simple to reach a place of financial security, it is a wonder more people do not do it.

That being said, I must add, it is simple, but not easy, as we are surrounded by the liars, the unethical, the ignorant, the entitled, the lazy, fear, greed, and people who cannot or will not accept the truth. It is why I keep a very low profile in my personal life. Jealousy, envy, and resentments plague our society. Hence the sjw’s.

#5 The Dude on 07.31.16 at 5:35 pm

Now explain how someone under 30 could have leveraged an RRSP to match the gains in real estate over the last 10 years. I highly doubt many young professionals would have $351,941 in RRSP investments.

Leverage is not without risk, so gambling all your net worth on a single asset is just that – a gamble. It’s not investing. — Garth

#6 Sandy Brownstone on 07.31.16 at 5:40 pm

Do you think he is pumping the market and shorting housing through exotic investments somehow? Scary stuff, reminds me of the The Big Short.

#7 Ex-Vancouverite on 07.31.16 at 5:46 pm

But- but – haven’t you heard? Vancouver is literally the most livable city in the world! The most desirable! Literally every human on the planet is clamoring to move there! It’s true! It was in some consulting firm report.

It wasn’t until I left Vancouver that I really appreciated the cult-like way in which the residents repeat this narrative among themselves until they all believe in it absolutely. Dear Vancouverites – sure, you live in a nice city, but nowhere as singular or world-famous or uniquely beautiful as you think it is. Seriously, get over yourselves.

#8 fleabitten monkey on 07.31.16 at 5:50 pm

Hey Carras if you are reading this blog please post a detailed link in the comments section here today to demonstrate the figures, workings and analysis, plus the sources of your data to support the assertions you have made referenced in today’s post – enlighten us all LOL!

#9 paulo on 07.31.16 at 5:54 pm

great article:
so lets look at the big picture, the US is chugging along and licking the wounds of the 2008 dump consumers are cautious and paying off debt, and saving – once burned twice shy
South america well its a basket case if you live in some places,dependent on oil exports you can’t buy a Big Mac due to food shortages
Europe not withstanding the brixit thing half of the member country’s are living on ECB hand outs and Germany the economic engine of the zone is firing 4 of 8 cylinders and becoming increasingly pissed in having to support the rest
China the exporter of goods to the world with a slowing economy due to lack of customers and a growing percentage of there massive population unemployed and unhappy about it
and lastly Canada the worlds supplier of all things resource based , note our -30% dollar against the green back still can not compete with mexico for cheap labor
one thing the world has in common : artificially low interest rates in almost all cases .50 or less overnight rates many lower
a very challenging environment for investors seeking a reasonable return on there investments

so lets look at the real estate ponzi game playing out in Canada prices for homes have increased at least double digits in some of the high population centers , and spreading , This in a country that if you removed the GDP input from the real estate side of the economy is or would be in recession, with epic house hold debt exceeding that observed when the US crashed in 08
as a resource based economy with that trending lower with no sign of improvement what are you thinking?

long and short is the world is suffering from a glut in oil to manufacturing most households are tapped out a case of over capacity and the ability of most country’s citizens to be consumers.

so where whats the play book going forward?
In My Opinion carefully selected big caps with dividends
preferably in health care- aging populations, and essential services, utility’s, multi food producers, things people will have to consume, forget discretionary stuff
and if you are in canada, considering a real estate purchase in the YVR, 416,905,or parts of 705 forget it or be toast sooner rather than later

#10 Ex-Vancouverite on 07.31.16 at 5:57 pm

One other thing about living in Vancouver: people always cite the beaches and the mountains as one of the top reasons why someone would pay $1.5m for an East Van teardown, but the truth is that most people maybe go down to the beaches a few times a summer at most. Why? Parking down at the beaches is a bitch, the traffic to get there’s a bitch, the sand is mediocre, and half the time you don’t want to get into the water anyway because the e-coli is way over the safe limit.

#11 The Amazing Brentwood on 07.31.16 at 6:02 pm

Hence why you are also self-employed

#12 Lea on 07.31.16 at 6:05 pm

#7 Ex-Vancouverite

So true, there are other nice places to live and from my observation from south our your border many wonderful Canadians all over Canada.

#13 six_figure_renter on 07.31.16 at 6:17 pm

The amazing brentwood sounds like a realtor

#14 Kilt on 07.31.16 at 6:20 pm

Housing outperforms. Leverage. 70% of people own homes, but most are seriously leveraged. Very few people have seven figures in investments or their RRSP. Is it better to make 10% on $80,000 in my TFSA, or on a $1.6 million dollar home that I purchased with 5% down. Sure, there are costs with the home sale, but the leveraged sale is gonna make 10 to 1 what the TFSA does. Just like margin accounts or trading options, you will always outperform with a leveraged position if it is going up. Of course, you get punished bad if it goes down.
Kilt.

#15 NoName on 07.31.16 at 6:21 pm

#127 MF on 07.31.16 at 9:54 am


Cold war? I assume your talking about my support of more conservative leaders like Trump or Harper, which is the same as SM’s?
Byw, what does that have to do with the econimc situation in the US?

You se mf doesn’t matter who you support, who ever gets elected my favorite breakfast here will be bacon and eggs with rye toast. Ill be buying them regardless who is in office, perhaps only difference will be price i am/will be paying for it.


I do not see a cold war coming. That’s just fear mongering from the leftists who can only hurl insults like xenophobe and nothing else.

Cold war is already here, its lot closer to you and me, than you think. Stop thinking in terms of 50s and 60s. aka kgb, james bond style. Ask filipins how do they like commy china making all those “fake” islands to put claim on a sea that wasnt theirs…


The world today is much different than in the past because of a number of things. The first is the internet. The free flow of ideas across the globe is what will keep people together. Yes the internet can be used to spread hate, but i believe more often than not the importance of working together with your fellow man is also on full display. There are millions of websites that show the gory details of war or of what a depression is like as an example.

World is/was always the same, there was always a ruling class and serfs, and what we had in a last few decades rise of so called middle class is an anomaly, brought to us by us harvesting cheap energy, rapid technological advancements and improved agriculture practice. One man had a dream to cure world hunger and he gave us cheap food ( Norm Borlaug), so lot of people felt less “hungry” and they were more happy. Before middle class believed in super natural thing now days they believe in conspiracies, basicly same thing different form. I remember usto getting all bet out of shape about cookies and trackers, and correlating all that behavioral studies to companies giving to consumers bare minimum of the product, because some schmucks somewhere on internet were filling a forms and answering all questions, until my friend told that was always done just sample was smaller. Did i ever felt stupid that moment… keep i mind I lived under:
-dictatorship
-oppressive regime
-hyper inflation
-civil disobedience
-aggression
-civil war
-deflation of some kind
so don’t need some quuk on internet to tell me what i have to think when i see certain picture on internet. only thing what goes thru my mind when i see that $#!7 is i ask my self how far is this from me, than i say my family sits pretty here.


Also illegal immigrants in the US do drive down wages.

Illegal immigrants don’t drive wages down, that is just untrue, illegal/legal/tfw are doing jobs that an americans dont want to do. when i came here i had $#!7 jobs that no one wanted, worked my way up to where i am, i’m not sitting pretty just yet, but i am working on it.


Actually look at the results of more liberal economic and social policies as a whole to see where they lead. This is what Hilary more closely seems to align with. This is also why i am taking issue with the current administration in the US and the disastrous policies it has adopted.

Cant comment on us, they are doing lot better that we at this moment, take that one up with drama teacher, mot me.


Facts remain:

-Economic stimulus after stimulus after stimulus and very anemic growth to show for it.
-Huge debt that my millennial self and my kids/grandkids will be stuck with
-stock market at all time high (bubble)
-real estate bubbles all around the western world
-reduced wages/benefits for the middle class
-creeping socialism
-terrorism/division

So other than whining here, what are you doing to shield your self and your family if any of those things goes wrong.
-economic stimulus – i like this one
-stock market at all time high – my net worth is on all time high, funny thing it keeps increasing as market gos up and decreases as market goes down.
-rel est bub – all time hig for my house, could go up or down nothing i can do, i like living here nebours absolutly hate me, i dont take car of the lawn and a house we live like bill hillys
-reduced wages …. – i was never being paid more than i now, why lots of luck and i try to adopt to new situations as much i can.
-creaping socialism – yes but for the rich not for low/no lifes like me
-terrorism/division – do you think that bacon test will fix this problem?


I believe if these conditions persist and the debt gets bigger and the stimulus continues, the US will hit a wall and it will all come crashing down again like 2008. The difference is this time we have no ability to paper over it with 800 billion dollar “bailouts” like we did 8 years ago.

socialism for the rich, poor people will be give something shiny and free pokemon go, problem solved


It’s all about risk. How can you not see any risk currently?

I see lots of risk, but so much of it is outside of my control so i dont worry about what i cant change.
Let me an example how i deal with my own mist important percived risk, my son recently had a surgery and he need pills to live, so i when he was discharged, i was talking to doc and asked can she give me two prescriptions (keep in mind i am paying for meds) because i am i greave fear that we might lose meds and little guy will fall ill, and this and that… get a picture
so she did wrote me two prescriptions, went to one farmacy picked meds talked to farmacist, asked him all kind of questions like how much in inventory on average in his opinion etc, and took my second prescription to 2nd farmacy and repeated a process. If I just have you worries…

Stop gettin bent out of shape about wrong stuf

#16 Mark on 07.31.16 at 6:21 pm

“Over the past decade an exchange-traded fund mirroring the Toronto market (XIU) has gained 46.7%, plus a dividend yield of 2.8%.”

One minor note here. XIU’s return over the past 10 years was 46.7% on a total return (including dividend) basis. So its not “plus a dividend yield of 2.8%” (although that’s the current yield which is extremely attractive relative to housing, bonds, etc.).

XIU, on a price basis, is still down from its 2008 peak. Considering most of its cyclical components have had the tar pounded out of them relative to historic levels, it seems pretty attractive to me. Paying mostly “eligible” dividends to boot.

#17 greyhound on 07.31.16 at 6:25 pm

Older folks may remember that Mr. Lereah was also a useful advisor in stocks. When his book, “The Rules for Growing Rich,” which told readers to jump with both feet into tech equities, was published in early summer of 2000, the dot-com crash was just getting started. Does Brad Lamb write about stocks, too?

#18 NoOneOfConsequence on 07.31.16 at 6:25 pm

I do think that some mention of the leverage possibilities is warranted in your analysis.
Leverage works both ways – but your typical investment portfolio is based on money you have available.
So 100 grand invested in a balanced portfolio 10 years ago gives me an approximate return of $100 grand today.
$100 grand would have got me a million dollar property….IF it sold today – what’s my return?
Closer to $300 grand I would say.

#19 Context on 07.31.16 at 6:31 pm

One must look at the cottage country north of Toronto as there are lots of listings but fewer buyers and its going into August. Then there are the dark listings by the thousands on private sites for the GTA including new homes and existing homes that are empty and rentals too which are empty. One has to wonder what is going on here as there is a secondary market.

#20 Ryan on 07.31.16 at 6:35 pm

By having a mortgage aren’t you making money with the banks money? I am a layman, but it seems like a great point for being leveraged. It is a doubled edged sword of course, but being able to get in on those gains with potentially only 1/20th of the necessary capital is kind of cool.

#21 Barb on 07.31.16 at 6:43 pm

RRSP vs portfolio .3% interesting comparison.
Who’da guessed?!?!

Daughter in process of buying her third rental house in 12 years (not YVR or Tronta), and she’ll install basement suite into this one too. No vacancies…ever.
Plus owns her own on 5 acres at age 40.

Garth, please have the new guy teach us great words like ‘orgiastic’.

#22 Mark on 07.31.16 at 7:27 pm

“By having a mortgage aren’t you making money with the banks money?”

In the short term, yes, when housing goes up in price (ie: 1996-2013). In the long term, no.

Why? Because the long-term return of Canadian mortgage bonds exceeds the long-term return of Canadian housing. In other words, there is a net cost to consuming housing (on a mortgaged basis).

In the short term, this isn’t apparent. After all, houses have been going up, and interest rates going down for quite an extended period. However, its the other side of the cycle that is where the banks and the investors in the MBS really clean up — when house prices go down, yet mortgages still entitle the banks and MBS owners to a series of payments that exceed, by a vast margin, the return on a house.

Over the past 3 years, this has been the case, with MBS outperforming Canadian housing. It is likely to be the case for a considerable period going into the future. We know that MBS yields are very low, thus it logically follows that housing returns will probably be negative for quite a long time going forward.

Of course, those who say, “rent is just paying someone else’s mortgage” really don’t understand that because they don’t look at the full-cycle long-term cost of finance.

There is also likely to be very significant opportunity cost in committing one’s equity to a mortgage, compared to other investments. For instance, the example I like to give is that if one took their down-payment equity in 1990 (ie: 25%, the legal minimum at the time to avoid CMHC subprime mortgage insurance) and invested it in equity (ie: the TSE index through the TIPS) — by the end of the decade, that equity was worth enough to buy 100% of an average house outright in cash.

So basically, in the future, leveraged homeowners will be hit on both fronts. Meanwhile, those who took advantage of the other side of the equation are likely to be dramatically wealthier. Balanced portfolio owners will have an outcome somewhere inbetween, depending on the nature of their ‘balance’.

#23 Ace Goodheart on 07.31.16 at 7:30 pm

Housing is eff’d. Too many people piling in. You can still make money in Toronto but you have to be smart about where you buy (ie that 2 million dollar semi in Roncy will not be worth four million next year). If you are in Van……get out. Really folks. It’s a freaking bubble.

Still some sweet deals in REITS. And if you’re in a speculative mood, look at near field communications. Supposed to be big in a few years. Only one company really doing it. And anothef company owns all the patents.

Happy long weekend.

Markets act intelligently and people who buy securities recognize value? Really? On what planet?

#24 Mark on 07.31.16 at 7:35 pm

” It is a doubled edged sword of course, but being able to get in on those gains with potentially only 1/20th of the necessary capital is kind of cool.”

BTW, the trick to making leveraged gains work for you, is to get into an asset class, with the extreme leverage, before everyone else does. Or find an asset class which isn’t leveraged at all (or is minimally leveraged), and essentially ‘bet’ on leverage being inflated against such asset class.

The way people get destroyed investing with leverage is when they arrive lately to the party (>70% of Canadians already own their own home which is a historic high), or they arrive too early and are too aggressive (ie: buying gold/silver stocks in 2014 at prices off of the 2011-2012 peaks, not realizing that they still had another 60-70% to fall!).

Housing is actually a very bad, IMHO, asset class to leverage because you really can’t spread out and diversify your purchases of it. At least if you enter into a leverage program with financial investments, you can somewhat mitigate your risk by spreading your purchases over a number of years (as advocated by Smith et al in the “Smith Manouevre”). With real estate, basically its such a large single investment that you can’t diversify. You can’t spread your purchases out over time. And many aspects of RE aren’t insurable.

#25 Jen on 07.31.16 at 7:35 pm

Great article today…. But wait…. Love it! This is exactly why my husband and I sold our house last year and are now happy renters in the GTA. While everyone around us may think we’re crazy, we are loving the flexibility and confidence from having control of our money.

#26 Context on 07.31.16 at 8:01 pm

#20 Ryan: the train left the station years ago and to consider a mortgage leverage for a home purchase today becomes a financial nightmare with serious consequences. Not cool at all anymore!

#27 Metaxa on 07.31.16 at 8:15 pm

I feel like I’m carrying Garth’s water on this but once again:
He has never said do not own property or hold a mortgage.
He has always said don’t make real estate a single asset strategy.

Personally I’ve done pretty good on real estate but never because I was good at it, almost always due to luck.
Never owned granite nor stainless but always striven to have my houses generate income.

plus a decade or more ago our accountant showed us how to set up and pay a mortgage off. Same theory is the core of ManuLife’s ManuOne plan. Investors offers a take on it, so does Primerica…only thing is they do it to make even more money for them. Australian credit unions set member’s mortgages such that the member gets the benefits…you can too.

Anyway, I’m sure I can say that even Garth would agree…you can have a house/mortgage as long as it is part of a balanced and diversified investment strategy and you can simultaneously fund both housing (personal and/or rental) and your portfolio.

#28 White Privilege on 07.31.16 at 8:21 pm

Am i the only one who found yesterday’s ‘rule of 20’ to make no sense, SnP500 + CPI = constant = 20 ?

If the CPI is up meaning inflation is up, then also stocks should be up, so how is that an offsetting factor?

If it were instead of CPI but yield on the US ten year or five year treasury, then that would make sense as interest rates go lower, the PE expands higher.

Sheesh, doesn’t anyone use critical thinking anymore… must by a dying art.

#29 Smoking Man on 07.31.16 at 8:25 pm

As we debate real estate vs portfolios

We are damn close to ww3.

http://www.paulcraigroberts.org/2016/07/29/the-democratic-party-no-longer-exists/

#30 Tony on 07.31.16 at 8:26 pm

Re: #21 Barb on 07.31.16 at 6:43 pm

From what I read if that isn’t a sign of a peak I don’t know what is. The stories from the peak back in the fall of 1987 weren’t even as far fetched as your daughter’s story as told by you.

#31 Vanreal on 07.31.16 at 8:27 pm

#10 ex-vancouverite

Bitter much?

#32 Context on 07.31.16 at 8:34 pm

A condo just sold at 3 Mc Alpine Street for $725,000 which was a ground floor 2 bedroom with 1,186 sq. ft. with a view from hell. The condo fees and taxes were a total of $17,158 per year; not to mention what the mortgage costs would be or if they paid cash they threw away @5% about $36,250 per year plus all the closing costs too. What a deal at the top of the market, and I wish the buyers the best of luck. Crap location too.

#33 james on 07.31.16 at 8:36 pm

#31

A childish rejoinder, devoid of any content. Juvenile.

The truth is that Vancouver is NOT a world class city. It has mediocre jobs at best, horrid architecture, terrible traffic and other ills. Median family income is less than in hotspots like London Ontario and Thunder Bay.

What makes it so attractive that the high living costs (e.g., rent, housing, gas, food, consumer goods) are worth it? Nice scenery?

At least SF has high paying jobs to compensate for the bums on the street and the high housing prices.

#34 MSM-Free Zone on 07.31.16 at 8:36 pm

“….The real estate collapse brought down venerable Wall Street investment banks, crashed equity markets, plunged the country into a recession and resulted in a global credit crisis that threatened a rerun of the Great Depression……”
_________________________

Au contraire, let’s give credit where credit due.

‘venerable’ Wall Street investment banks were hardly the victims of the 2008 financial crisis but rather their own unscrupulous financial lending and packaging practices were, in fact, the catalysts of the financial crisis, worldwide crashed equity markets, and subsequent recessions everywhere

#35 Andrew Woburn on 07.31.16 at 8:37 pm

Oops. Wonder who gets beheaded for this one.

– Texas shale oil has fought Saudi Arabia to a standstill

“Opec’s worst fears are coming true. Twenty months after Saudi Arabia took the fateful decision to flood world markets with oil, it has still failed to break the back of the US shale industry.

The Saudi-led Gulf states have certainly succeeded in killing off a string of global mega-projects in deep waters. Investment in upstream exploration from 2014 to 2020 will be $1.8 trillion less than previously assumed, according to consultants IHS. But this is a bitter victory at best.

North America’s hydraulic frackers are cutting costs so fast that most can now produce at prices far below levels needed to fund the Saudi welfare state and its military machine, or to cover Opec budget deficits.”

http://www.telegraph.co.uk/business/2016/07/31/texas-shale-oil-has-fought-saudi-arabia-to-a-standstill/

#36 common sense on 07.31.16 at 8:46 pm

#31 Smokey

Of course we shall see a war sooner than later.

How better to try and clean up the upcoming economic mess by diverting attention again, and utilize the American war machine – They just love starting wars..gotta use the weapons somehow.

I’ll say by 2018.

#37 Henry Gruver Visions on 07.31.16 at 8:50 pm

#29 Smoking Man on 07.31.16 at 8:25 pm

As we debate real estate vs portfolios

We are damn close to ww3.

http://www.paulcraigroberts.org/2016/07/29/the-democratic-party-no-longer-exists/

Check out Henry Gruver’s vision of war with Russia on youtube. He tells in vivid detail some of what is coming. He was given the vision in the 80’s. He’s a very conservative Christian dude so try not to shoot the messenger without hearing the message.

#38 Shawn on 07.31.16 at 8:52 pm

Is a House Really a Leveraged Asset?

Initially it usually is. But over the next 25 years the buyer typically intends to have a paid off house. Could be that house or a move up house but in any case at some point the intention is to have a paid off house.

So at the point it is paid off and ever after, the gain is not leveraged. Is it?

Borrowing allows you to buy a house at today’s price despite not having the full cash to do it. So your gain or loss starts from the time you buy. But by the time it is paid off there is no leverage, is there?

#39 MF on 07.31.16 at 8:55 pm

#15 NoName on 07.31.16 at 6:21 pm

So we pretty much agree. Theres risks present, the market is manipulated, and policy has been crap.

Why does the middle class have to be a fleeting thing from the 60’s? Can we not change this disasterous course we are in? Should we just accept it and move on? Of course not. Like you said history is littered with examples of leaders ignoring their populations and trying to get away with plundering for too long. Look how it ends up. It’s not too late, although T2 and Obama have set us all back.

Btw i’m doing pretty well too. I wouldn’t call identifying policy that is negatively impacting the future of the country “whining” though.

MF

#40 Shawn on 07.31.16 at 9:00 pm

Price War Winner?

Andrew Woburn said: “– Texas shale oil has fought Saudi Arabia to a standstill”

**************************************
Most businesses if they could get away with it would collude and curtail supplies to raise prices and not compete on price. The opposite of this is to engage in a vicious price war.

What business has ever really won by engaging in a price war? You would have to literally kill your competitor and there would have to be no new competitor before a price was would be beneficial.

Under what math was Saudi Arabia EVER going to benefit by pushing oil prices down by 50%?

Was it just stubbornness or a necessary political move to starve their enemies or what? Surely it was not a wise business strategy to engage in a vicious price war?

#41 jess on 07.31.16 at 9:03 pm

Markets | Fri Jul 29, 2016 7:52am EDT
Ireland jails three top bankers over 2008 banking meltdown
http://www.reuters.com/article/us-ireland-banking-court-idUSKCN10912E

#42 TRT on 07.31.16 at 9:11 pm

USA housing boom: caused by loose and excessive credit

YVR housing boom: caused by foreign money. 600 billion CMHC limit never exceeded.

#43 MF on 07.31.16 at 9:14 pm

#36 common sense on 07.31.16 at 8:46 pm

Libya, syria, ukraine…all under obama.

MF

#44 jess on 07.31.16 at 9:18 pm

The Saudi conglomerate defaulted on billions of dollars of debts in what was described as one of the largest corporate collapses of the global financial crisis in 2009.
https://www.caymancompass.com/2016/07/25/saudi-conglomerate-agrees-to-debt-repayment-plan/

http://www.economist.com/news/business/21646751-six-years-claims-arising-huge-corporate-scandal-gulf-are-still-being

#45 Melania Obama on 07.31.16 at 9:27 pm

You know, Mr. Turner, to reduce your workload you could just get Ryan to write your weekend blog and then sign your name to it.

Then you and Bandit would have more time for your modelling careers.

I could respect that.

#46 Mark on 07.31.16 at 9:28 pm

“Borrowing allows you to buy a house at today’s price despite not having the full cash to do it. So your gain or loss starts from the time you buy. But by the time it is paid off there is no leverage, is there?”

You’re stating the obvious there Shawn. However, since we can’t fix our interest rate for anything more than 5 years in Canada, the true cost of the mortgage obligation, and hence, the true long-term price of home ownership really isn’t known at the outset.

Today we have low interest rates, which, at least on the face of it, make leveraged ownership look very attractive. But what’s going to happen to families who already struggle to maintain their existing equity at currently low interest rates when the double-whammy of rising rates and falling prices becomes a longer-term trend? These families, many in their 20s and early 30s at this point, will wake up in their 50s. No money in the kids’ college funds. Little in the RRSPs, and empty TFSAs. Wondering how the ‘miracle’ sold to them by Realtors of building your own equity (instead of “paying the landlords mortgage”) through home ownership turned into such a financial nightmare that has left them with little to no equity built.

As far as your question yesterday, with TSX earnings, just like you, I don’t have good data sources on that. Much, like the TSX trading at ~35X earnings, came from recall of calculations I did in 2000 when I received a lump sum of money and was comparing the TSE index (heavy on Nortel at the time) against buying a 6.5% GIC and some semi-distressed debt in an agricultural company. No matter how I twisted the numbers at the time, I couldn’t justify buying the TSE/TSX. Given that the index dropped from ~11k to the low 6k’s, while my assets outperformed, the ‘math’ worked out.

I think your website shows TSX earnings in 2000 around ~250 or so. Which sounds about right, about 35X earnings at an index level of ~10k. There’s enough short-term volatility that it probably doesn’t matter a lot.

#47 46 and 2 on 07.31.16 at 9:30 pm

Couple more years of this and Calgary is going to one cheap place to buy.

I’m renting right now and rents have and are dropping monthly in YYC.

Then again, why would anyone be so stupid to buy when rents are so cheap.

#48 JacqueShellacque on 07.31.16 at 9:41 pm

Garth, we need to set up a glossary of ways to counter the stupid arguments people make in defense of jumping into housing:

“You’re just paying someone else’s mortgage by renting”.

That argument assumes a renter is paying for something they otherwise wouldn’t have to. A mortgage holder pays for shelter just as a renter does. Except the renter has not leveraged herself or paid interest, property tax and opportunity cost for their shelter. Any back-of-the-envelope calculation would show that renting is cheaper.

#49 Interstellar Star Stuff on 07.31.16 at 10:17 pm

#29 Smoking Man on 07.31.16 at 8:25 pm

As we debate real estate vs portfolios

We are damn close to ww3.

http://www.paulcraigroberts.org/2016/07/29/the-democratic-party-no-longer-exists/


Smoker Dude.. What happened to flight MH370?

#50 Long Branch Apprentice on 07.31.16 at 10:20 pm

My dog and I are watching this right now:

https://www.youtube.com/watch?v=7LYRUOd_QoM

Clinton Cash.

I bet if you dig just a little deeper in Ontario, the story wouldn’t be too different.

Don’t believe me? Just wait a few years.

#51 dark listings on 07.31.16 at 10:20 pm

dark listings by the thousands on private sites for the GTA including new homes and existing homes that are empty and rentals too which are empty…

===

Any links, please?

#52 Smoking Man on 07.31.16 at 10:34 pm

#36 common sense on 07.31.16 at 8:46 pm
#31 Smokey

Of course we shall see a war sooner than later.

How better to try and clean up the upcoming economic mess by diverting attention again, and utilize the American war machine – They just love starting wars..gotta use the weapons somehow.

I’ll say by 2018.
….

I’m going with when Trump polls @ 60% to Killary 40%

#53 Clinton cash and TD on 07.31.16 at 10:38 pm

#50 Long Branch Apprentice on 07.31.16 at 10:20 pm

My dog and I are watching this right now:

https://www.youtube.com/watch?v=7LYRUOd_QoM

Clinton Cash.

I bet if you dig just a little deeper in Ontario, the story wouldn’t be too different.

Don’t believe me? Just wait a few years.

No need to wait for years. Keep watching and you will hear how much TD contributed to the Clinton Cash.

#54 Nelley on 07.31.16 at 10:42 pm

#50Long-You and your wild conspiracy theories-no important Ontario government official would ever delete thousands of emails like Crooked Hillary-uh-wait a minute-nevermind.

#55 Smoking Man on 07.31.16 at 10:45 pm

#49 Interstellar Star Stuff on 07.31.16 at 10:17 pm
#29 Smoking Man on 07.31.16 at 8:25 pm

As we debate real estate vs portfolios

We are damn close to ww3.

http://www.paulcraigroberts.org/2016/07/29/the-democratic-party-no-longer-exists/


Smoker Dude.. What happened to flight MH370?
……

The detailed answer is in my upcoming fiction novel. Hint. Aliens.. Two scientists who figured out how plasma fliers work needed to be removed.

Humans are forbidden from flying past the moon. To uncivilized for interstellar travel at the moment.

#56 Smoking Man on 07.31.16 at 10:46 pm

#53 Clinton cash and TD on 07.31.16 at 10:38 pm
#50 Long Branch Apprentice on 07.31.16 at 10:20 pm

My dog and I are watching this right now:

https://www.youtube.com/watch?v=7LYRUOd_QoM

Clinton Cash.

I bet if you dig just a little deeper in Ontario, the story wouldn’t be too different.

Don’t believe me? Just wait a few years.

No need to wait for years. Keep watching and you will hear how much TD contributed to the Clinton Cash.
….
Ed Clark was a regular at Bilderburg.

#57 jay on 07.31.16 at 11:03 pm

This is the disgusting crap we have to put up with in Vancouver. http://bc.ctvnews.ca/foreign-buyers-get-15-off-home-sellers-look-to-beat-new-tax-1.3010180

#58 Mark on 07.31.16 at 11:07 pm

“Am i the only one who found yesterday’s ‘rule of 20’ to make no sense, SnP500 + CPI = constant = 20 ?

If the CPI is up meaning inflation is up, then also stocks should be up, so how is that an offsetting factor?

I didn’t read Ryan’s post that carefully. However, it is well known that the US markets do really poorly in an environment of rising inflation and long-term rising interest rates (ie: see the 1970s). If you test that “rule of 20” (I’d call it more of a hypothesis, but let’s ignore that for a moment), it does seem to be valid for the 1970s scenario in which P/E multiples compressed with rising CPI and rising long term interest rates.

However, for the Canadian markets (ie: the TSX) which is resource and inflation-sensitive company heavy, it probably is not applicable. In the 1970s, the TSE thoroughly trounced the US markets. The reason for this was quite simple — the TSE is full of resource companies, gold companies, etc., while the US indices are full of firms which appear to be negatively correlated to such.

For a P/E of >20 to be justified under that “rule of 20”, deflation (ie: negative CPI) has to be assumed. Shawn, usually pretty good with numbers, claimed that the S&P500 P/E was 27. Does anyone really believe that USA CPI = -7%? I don’t. It is probably close to zero, but definitely nowhere near that negative. Hence, the “rule of 20”, given real data, would appear to imply that the S&P500 is definitely not a buy or an overweight in a balanced portfolio.

#59 Interstellar Star Stuff on 07.31.16 at 11:08 pm

#55 Smoking Man on 07.31.16 at 10:45 pm

#49 Interstellar Star Stuff on 07.31.16 at 10:17 pm
#29 Smoking Man on 07.31.16 at 8:25 pm

As we debate real estate vs portfolios

We are damn close to ww3.

http://www.paulcraigroberts.org/2016/07/29/the-democratic-party-no-longer-exists/


Smoker Dude.. What happened to flight MH370?
……

The detailed answer is in my upcoming fiction novel. Hint. Aliens.. Two scientists who figured out how plasma fliers work needed to be removed.

Humans are forbidden from flying past the moon. To uncivilized for interstellar travel at the moment.

Super, I see your book is coming out this fall !!.. getting close…Great stuff. they can then stop searching for it….

And hey ..speaking of WWIII… Did you notice that N. Korea and the USA have declared full on war apparently.. but no one noticed

#60 Subprime Sam on 07.31.16 at 11:11 pm

TRT on 07.31.16 at 9:11 pm
USA housing boom: caused by loose and excessive credit

YVR housing boom: caused by foreign money. 600 billion CMHC limit never exceeded.

Gee, I don’t know TRT. Perhaps you should review the past a little bit better in regards to lax lending practices in Canada. A couple links of interest.

http://www.cbc.ca/news/business/home-capital-scandal-may-presage-a-slowdown-don-pittis-1.3173990

http://www.bloomberg.com/news/articles/2012-01-30/canada-s-subprime-crisis-seen-with-u-s-styled-loans-mortgages

http://www.cbc.ca/news/business/cmhc-to-limit-mortgage-insurance-product-offerings-1.2622822

http://www.cbc.ca/news/business/cmhc-to-insure-interest-only-mortgages-in-a-bid-to-make-ownership-easier-1.571519

#61 Mark on 07.31.16 at 11:14 pm

“YVR housing boom: caused by foreign money. 600 billion CMHC limit never exceeded.”

The CMHC provides another ~$300B in support to Canada’s housing market by way of 90% re-insurance of Canada Guaranty and Genworth Canada’s subprime mortgage insurance operations.

There was a poster here who postulated that the government/CMHC’s involvement was even larger, but I never was able to wrap my head around his figures. At any rate, government participation in Canada’s mortgage finance marketplace is significantly larger, per capita, than even experienced in the USA at its peak (with Fannie Mae/Freddie Mac being $5-$6T entities!).

#62 Boom on 07.31.16 at 11:14 pm

#9 Paulo

Well stated.

Your last paragraph, on overall investing strategies is pretty much what I am doing in a 60/40 portfolio (the individual stocks) the rest is a balance of equities is INDEX funds, utilities, and RE ETF’s.

Happy returns!

#63 waiting on the westcoast on 07.31.16 at 11:17 pm

#56 SM

I know you think we are amoebas compared to your alien intelligence but I think we can go a little past the moon (maybe even Pluto) before we risk interstellar issues… ;-)

#64 My Life is a Pile of Shit on 07.31.16 at 11:20 pm

“if something has jumped almost 20% in price during one year, isn’t that a sane time to be selling it, not trying to buy?”

I know a guy whose portfolio jumped 20% in value in one year. He promptly sold everything, and used the money to buy a house. The house also jumped 20% in value in one year, and he sold that. That was three years ago. He’s been renting and waiting to get back into the stock or real estate market ever since. What happened to his cash? If he deducts his rent from that cash, he still has 75% of it.

#65 Interstellar Star Stuff on 07.31.16 at 11:26 pm

Hey Smoker Dude.. do aliens have balls as big as this crazy bastard..???……

Hits a net from 25000 ft without a parachute… and all for a stick of gum!!

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

#66 Smoking Man on 07.31.16 at 11:39 pm

#63 waiting on the westcoast on 07.31.16 at 11:17 pm
#56 SM

I know you think we are amoebas compared to your alien intelligence but I think we can go a little past the moon (maybe even Pluto) before we risk interstellar issues… ;-)
…..

I was thinking the same thing. But the elites back on Nictonite are hard ass phyco paths just like the ones here..

Bit of luck, bit of money they think they’re smart.

I’m enjoying my time on earth. But because of the superiority complex of my people back home I got to work hard now keeping the peace between the planets.

You want to see the truth. It resides with your eyeball stuck at the top of an empty bottle of bourbon thinking ah shit..

#67 Mark on 08.01.16 at 12:02 am

“That was three years ago. He’s been renting and waiting to get back into the stock or real estate market ever since. “

Such chaotic structure (or lack of structure more properly stated) is usually the downfall of investors. He had such an eloquently stated rule of when to get “out” of an asset class (ie: sell when it goes up 20% in a year), but what was his framework to get into an asset class?

From the 2014 peak of the TSX to the bottom early this year, the market lost approximately 20%. In hindsight, that would have been a great buying opportunity. But here he is, without anything in his framework telling him to “buy”, he’s lost out on what has been a 20% gain from the bottom, or roughly a 14% YTD gain.

This is why people like Garth advocate balanced portfolios, asset allocation, and methodical rebalancing. Sure, chances are, you’re not going to buy or sell at the exact optimal moments if you own the “Garth” portfolio. But at least you’re not going to be sitting on the sidelines when there are big moves higher. Or be “all in” when there’s big moves lower. A relatively steady 6-8%/year, is a lot less stressful and is a better return than seeing 20% one year, and then sitting in cash for 3 years gaining nothing, wondering when to get back in.

#68 WalMark of Sadkatoon on 08.01.16 at 12:43 am

Two years later real estate values had crashed by 32% across the US, and over 70% in areas of Arizona, Florida and California where buying had been orgiastic.

I was orgiastic picking up FL properties for $0.40 on the dollar. US dollar. Rofl

#69 WalMark of Sadkatoon on 08.01.16 at 12:46 am

Housing is actually a very bad, IMHO, asset class to leverage because you really can’t spread out and diversify your purchases of it.

REITs

Thanks for playing

#70 Josef on 08.01.16 at 1:01 am

Heeeerrreee’s David Lereah!!! OH Yeah BABY!!! Yeah!!!

http://content.time.com/time/specials/packages/article/0,28804,1877351_1877350_1877336,00.html

#71 Bram on 08.01.16 at 1:19 am

Wall st investment banks going under, and global credit crisis were technically not caused by RE prices falling.

RE may have been the ‘trigger’.
The ‘Smith & Wesson loaded with a .44 round’ was the credit default swap derivative.

#72 Peas in a pod- Auzzie RE bubble on 08.01.16 at 2:02 am

Not only a Vancouver problem. It’s down under too

http://worldhousingbubble.blogspot.ca/

#73 Subprime Sam on 08.01.16 at 2:05 am

I’m not going to argue the numbers regarding foreign ownership in Vancouver because it is irrelevent to the stupidity that Canadians have indulged in over the last 7 -10 years.

I was born in Vancouver and have lived in B.C. for close to 60 years. It is one thing for our youth to be suckered into this mother of all gasbags, it is quite another to see my contempories dipping into unrealized equity to purchase investment homes here and more astoundingly the U.S.A., regardless of Garth’s recommendations to those who were financially capable, I presume.

I understand greed but every one of these boomers lived through previous crashes. I personally listed my home in 2002 and watched my equity disappear as I futilely followed the market down to try and save some shred of equity.

If this is indeed the turning point, we will be realizing the biggest recession this country has ever encountered. We may all be to blame for this bubble but the media, realtors and boomers collectively pushed our kids over that cliff…..and yes I do realize a minority of people have been responsible….just not enough.

These are headlines over the last several years. Wow.

Canadians, which had led international purchases since 2008, ranked second with US$11.2 billion in spending and a 14 per cent share of sales.

http://business.financialpost.com/personal-finance/mortgages-real-estate/move-over-canadians-chinese-buyers-now-leading-foreign-purchases-of-u-s-homes-for-first-time

Cash is king

Some of those multiple bids are actually coming from other Canadians. It’s still extremely difficult for all but the most credit-worthy Americans to get financing, so Canadians who can make all-cash offers – as most Canadian buyers do – still have a big advantage.

Since Canadian real estate prices have not collapsed the way they did in the U.S., home equity lines of credit are frequent sources of that cash.

http://www.cbc.ca/news/canada/canadian-buyers-face-more-competition-as-u-s-housing-recovers-1.1143312

Jerry Jarson, a 74-year-old retiree from Shanty Bay, Ont. said he was able to use the equity in his Canadian home to buy his condo. ‘‘We never had any money but the bank has lots,’’ he said about the line of credit on his Canadian home he was able to use to finance the purchase.

There’s no country that even comes close to Canada when it comes to buying, with No. 2 United Kingdom accounting for 7% of all international purchases.

Canada has been number one for seven straight years, cooling on Florida real estate after a 2011 peak but rebounding since.

http://business.financialpost.com/personal-finance/mortgages-real-estate/foreign-buyers-taking-over-this-time-its-canadians-in-florida

#74 Nightmares on 08.01.16 at 2:22 am

Why is anyone worried about real-estate, retirement planning, or TFSA’s? We’re all dead about 1 year after Hitlery gets elected, or steals the election. It’s been a long time since we have been living with the bomb, and an absolute surprise they haven’t been launched since WWII, but they are still there, more numerous and much more destructive.

No weapon of war except the H-bomb has been built and then not used. The H-bomb will eventually join the list of all weapons designed and built that got used (100% and counting for other weapons). At that point your finances mean nothing.

Submarine: Used before design was complete
Airplane: In use as soon as it could fly
Mortar: A favorite since inception
Machine gun: In use everywhere
Cruise Missiles: The US and Russia couldn’t wait to show them off once they got them working (took Russia about 10 more years)
Stealth technology: Well, I guess that’s all we can buy now
Aircraft carriers: Well they float them everywhere

Fact is the boys that build this stuff love showing it off and eventually the bombs are going to go off. Even if they don’t, the radiation in containment either in the nuclear plants or in the bombs is all out within 100 years and life on the planet will cease to exist. I used to think there was a way out, and maybe there still is, but as Einstein warned years ago it will require a new way of thinking.

Your best investments are a good cigar, a bottle of whiskey, and a horney girlfriend. The way things are going you won’t need to worry about retirement.

PS don’t have kids, just more fuel for the fire that is coming.

And it’s worse than that, the US vs Russia side show. Did you read about the coup attempt in Turkey? Well, Erdogon now has over 50 US nukes at his disposal. If they can figure out how to use them of course but they aren’t totally stupid. Erdogon probably staged the coup himself as an excuse to seize the airbase and with it a formidable nuclear armament. Now what are we going to do? I am going to drink some whiskey and have another cigar. Russia will not allow those weapons to come into Turkey’s control without a “defensive first strike”, no matter how they might be playing nice now.

#75 jane 24 on 08.01.16 at 3:10 am

Garth

Cottage country sales really are the canary in the coal mine with real estate. Low sales in peak season does not sound healthy.

What is happening there guys as I would be interested to know.

#76 Turtle on 08.01.16 at 4:20 am

A long time ago there was one paycheque per household. Then everything changed and you needed two paycheques per house to support it. Then your kid wanted to live in your basement, so there are three paycheques per house. And pretty soon it will be a norm when your kid brings his/her spouse to live in your house… so there will be four paycheques coming in.

I guess this is the only way to keep the party going – to bring more people under one roof.

So if you have a strong family (on some sort of survival mission) you will survive. If you wanna be alone away from people on your kitchen – you have to rent.

#77 debtified on 08.01.16 at 6:23 am

Hi Garth! Just want to say Thank You once more for all the great work and public service. :)

#78 Barking dog on 08.01.16 at 7:07 am

Garth, you always insisted there would never be any bail in policy, but here we are with Baby T with just that being pushed through. Any thoughts on the major fail to see this coming from our amateur communist government?

Old news. No depositor bail-in. No bank failures. — Garth

#79 Arfmooocat on 08.01.16 at 7:47 am

Global equities are at the upper end of their “fat and flat range,” according to Goldman Sachs, who downgraded stocks to “underweight” on Monday as part of its 3-month asset allocation.

https://finance.yahoo.com/news/goldman-sachs-downgrades-equities-underweight-070526291.html

#80 Happening now on 08.01.16 at 7:48 am

Markets – Bloomberg
http://www.bloomberg.com/news/articles/2016-08-01/deutsche-bank-says-u-s-gdp-flop-is-a-sign-of-secular-stagnation

No rate hikes for the US…..now what ??

#81 Grey Dog on 08.01.16 at 8:20 am

Garth, agree with you 100%. I had a 1 acre lot in Caledon north of Campbell’s Cross. My neighbour across the street sold her lot for the going price around 2005. I hung onto my lot in case we decided to build and live our retirement dreams out there, leaving the amenities of Unionville behind.

2015, now in our 60s, decided to sell the lot. $362k, best price my Dad ever heard about a Caledon lot going for at the time. Knowing what my neighbour sold for plus knowing the percentage our investment accounts did for each year, I did the math. Needless to say, I should have sold much sooner and let my invested money compound merrily. Plus I immediately owed CRA a HUGE whack of cash.

#82 Penny Henny on 08.01.16 at 8:40 am

#32 Context on 07.31.16 at 8:34 pm
A condo just sold at 3 Mc Alpine Street for $725,000 which was a ground floor 2 bedroom with 1,186 sq. ft. with a view from hell. The condo fees and taxes were a total of $17,158 per year; not to mention what the mortgage costs would be or if they paid cash they threw away @5% about $36,250 per year plus all the closing costs too. What a deal at the top of the market, and I wish the buyers the best of luck. Crap location too.
——————————————————–

Here is a house on McAlpine for only $117,900

https://www.realtor.ca/Residential/Single-Family/16951307/424-MCALPINE-Avenue-N-Welland-Ontario-L3B1T3

#83 cropgrower on 08.01.16 at 8:45 am

Hey Garth, didn’t the rrsp suffer from rent and utility payments for a comparable house over those 10 years. So that money never got invested …..you took that off right?

#84 Context on 08.01.16 at 9:23 am

#82 Penny:- You got the wrong city as that is a different hood as my subject property is in Toronto. A 14 year old condo building with repairs due going forward and no practical way of getting to either the subway stop to the north or south. Maybe they can hitch a ride living in Neverland.

#85 Chopper Dude on 08.01.16 at 10:23 am

They say you only really made the money on your house when you sell it…..

Bought the house in 2006 – $500k

Sold the house 10 years(+/- a bit) later for $1 mil

So now I have it in the bank and it HAS made me money. About $50k a year by my math. Aside from normal bills, I never paid for any renos or high maintenance items (new roof ect). Not a bad investment…

Now if you’ll excuse me…. Mrs Chopper Dude and I are off for a nice vacay somewhere warm. Found a nice rental in Costa Rica that my income from all the real money will now pay for. See you all next Spring.

Muchas Gracias Mayor Idiota! :)

#86 Cory on 08.01.16 at 10:54 am

Oh the TSX has definitely gone up this year. I bought several companies in late Jan, early February and if it holds as it is today, my TD purchase alone will do almost 18-19% total return.

This is a great year in the markets. January/Feb 2016 was what we were waiting for and so far, so good. Hopefully the US election will rock the markets for another buying opp.

#87 Marlene from Victoria on 08.01.16 at 11:18 am

Trump is toast.

https://www.thestar.com/news/world/2016/07/31/is-donald-trump-ok-erratic-behaviour-raises-mental-health-questions.html

Add this to the abusive and bizarre comments against the US muslim war dead this week.

Trump has now painted himself into a corner. All by himself. Not a very bright fellow.

Only the subset of misogynist, neocon dinosaur readers of this blog, fabulously out of touch in their prediction of a Harper victory last fall, would think otherwise.

Bu-bye, Donald :)

#88 DON on 08.01.16 at 11:24 am

Insolvency up 35% in Alberta, marking largest jump across the country

http://www.cbc.ca/news/canada/calgary/insolvency-alberta-gdp-growth-1.3701162

Only a few months ago the “experts” told us everything was fine and this would not happen.

#89 Ihavenoname on 08.01.16 at 11:33 am

Vancouver, the best city on earth to live in. When I came to Vancouver, it took 6 weeks to see the mountains through all that gloomy rain, we bought a house on Boundary for $19,000, total cost of my builder friend’s house in West Van above Upper Levels was $32,000. Nobody who valued their life ever went to Davie or Commercial Streets. Nobody ever hang out in that Yale warehouse district, Gastown was an unsafe dump and we stood in line to see movies on Granville Street. Beaches were made of pebbles, bacteria and dog poop. Everybody was mostly well off and happy.

Now…ta-da…. we have “Davie Village” for the village idiots, Yale Town and the LOL “Drive” with even more China souvenirs stores in Gastown. Leaky sea-foam green condos all over, including where people used to earn real money. But with all that…. Vancouver is now a miserable town, still not a city, but the most pretentious place on earth by far.
Never liked balanced portfolios, but got rich in real estate, forex and stock markets by never following anybody’s self-appointed guru status…. If you want to make it…it’s all or nothing, depending on the flavor of the day. It’s monetary metals these days. Now I live on the best island on earth re. Conde Nast Traveller Magazine, having a real life and look once in a while at the webcam overlooking the Burrard Street Bridge, full with people stuck in the rainy commute, leaving their stick framed chip board abodes to pay for downtown parking.

#90 Context on 08.01.16 at 12:06 pm

Its a great time to load up on more debt with another purchase and roll the dice before it snows. Make it an early Christmas gift for the wife and call it a happy hour. Now go to MLS and work it carefully around the northern cottage country as there is at least 1000 listings.

#91 crowdedelevatorfartz on 08.01.16 at 1:01 pm

@#74 Nightmares
“We’re all dead about 1 year after Hitlery gets elected….”
********************************************

Apocalypse 2016 I presume?

#92 crowdedelevatorfartz on 08.01.16 at 1:03 pm

@#89 Ihavenoname
“Now I live on the best island on earth re. Conde Nast Traveller Magazine,…..”
*******************************************
Conde Nast was in Prince Edward Island?

#93 jess on 08.01.16 at 1:11 pm

How substituting a word earns a doctorate in economics?

The New York Times», NEIL MacFARQUHAR
By Russian Standards, Melania Trump Would Be a Plagiarism Amateur

«Диссернет» устанавливает мировые стандарты.

http://retractionwatch.com/2016/07/30/weekend-reads-what-lurks-in-clinical-trial-databases-plagiarism-by-russian-ministers-why-journals-shy-away-from-fraud-allegations/

International standards should be developed to deal with allegations of research misconduct
see: The illusion of self-correction 4 January 2016 Chemistry World
Thomas Hettinger is a research associate at UConn Health, US
http://www.rsc.org/chemistryworld/2015/12/self-correction-illusion-misconduct-retraction

https://www.federalregister.gov/articles/2015/11/09/2015-28437/findings-of-research-misconduct

Baggerly and Gunsalus explain, “…millions of taxpayer dollars misused, totally fabricated research, damage to hundreds of patients recruited for treatment with “the holy grail” of cancer treatment, and a poor institutional response…”

#94 Smoking Man on 08.01.16 at 1:36 pm

#87 Marlene from Victoria on 08.01.16 at 11:18 am
Trump is toast.

https://www.thestar.com/news/world/2016/07/31/is-donald-trump-ok-erratic-behaviour-raises-mental-health-questions.html

Add this to the abusive and bizarre comments against the US muslim war dead this week.

Trump has now painted himself into a corner. All by himself. Not a very bright fellow.

Only the subset of misogynist, neocon dinosaur readers of this blog, fabulously out of touch in their prediction of a Harper victory last fall, would think otherwise.

Bu-bye, Donald :)
………..

By a large factor the herd is sick of PC. Around the water cooler at the office many just play the game. Trump is Discusting. Bla bla bla.

In the private voting booth in November , were you don’t need to worry about getting fired for what think is wrong with America…

I’m calling a Trump Landslide victory…

Dr Smoking Man
PhD in Herdonomics.

#95 Ronaldo on 08.01.16 at 2:40 pm

#89 Ihavenoname on 08.01.16 at 11:33 am

” Vancouver, the best city on earth to live in. When I came to Vancouver, it took 6 weeks to see the mountains through all that gloomy rain, we bought a house on Boundary for $19,000, total cost of my builder friend’s house in West Van above Upper levels was $32,000”

My guess is early 60’s. Big changes since then. Moved there in 67, upper levels house in 1969 was $50,000, an average sfh $25,000. Highest buildings in the city at the time were the BC Hydro building, Marine building at foot of Burrard, and Blue Horizon. Then came the Mac and Blo in 1968 and I watched many more being built from my office on the 12th floor of the Board of Trade tower on W. Hastings. The 60’s and 70’s were humming. It was actually a nice time to live in Vancouver and especially the West End which was a nice 5 minute walk to work.

#96 BOOM! on 08.01.16 at 2:44 pm

#94 Smoking Man

If EVER I hope you are absolutely wrong, it is on your “call” for a TRUMP victory in November.

I am no fan of Hillary either, and my personal vote will not likely be cast for either of those candidates.

My fear is the damage to this country, so called anyway, by the thought of a Trump presidency. Your Canadian T2 would be the ultimate brain trust compared to the Donald.
That, was not a flattering remark just for your ready reference.

#97 crowdedelevatorfartz on 08.01.16 at 2:46 pm

@#94 Smoking Man.

While I agree that there is a well deserved backlash to the endless politically correct drivel that spews forth from an endless “pride” parade of vote pandering politicians…….

Trump is a crass, boorish braggart that believes his own Public Relations spin.

As the old saying goes, ” Give the Devil a horse and he’ll ride it straight to Hell’

I fully expect Donald Trump to “nuke” his own campaign with his unstatesmanlike braggadoccio and delusional self promotion……But I guess things could have been worse…..
The ultra religious “End of Days” “believer” Ted Cruz could be at the helm of the Republican party vying for his chance to push the button and unleash atomic war on the rest of us “heathens”.

The only thing I think we can agree on…..

Its been the most entertaining US Presidential race in many a decade…

#98 crowdedelevatorfartz on 08.01.16 at 2:51 pm

@#95 Ronaldo
“It was actually a nice time to live in Vancouver….”
********************************************
Moved to Van in 1981. Right at the beginning of the recession. Unemployment climbing up. Interest rates at 18.5%. Houses were $240k one year and 80k the next…..there were lots of “unexplained” fires in vacant houses……
Vancouver still had than “small city” feel to it.
Then Expo 86.
And everything changed.

#99 Smoking Man on 08.01.16 at 3:17 pm

This is what’s going to replace communist Twitter.
#freemilo

http://www.trsst.com

#100 When Will They Raise Rates? on 08.01.16 at 3:25 pm

Just watching the ticker… WTI Crude currently @ $39 handle. Watch out below!

#101 Context on 08.01.16 at 3:31 pm

I left SF in 1968 leaving a few girls heart broken at the corner of Haight Ashbury. I was on my way to Vancouver to check the action out. I walked into a hotel asking where the city was located and guy said this is the middle of it all. Phoned an old girlfriend from high school whose daddy was a banker dude that got transferred. She said you can stay here at our home, but that would be trouble. In hindsight that was a mistake and rode on to my next adventure.

#102 Vince on 08.01.16 at 3:48 pm

Which asset class had more volatility, stocks or houses?
Houses are bought with extreme leverage, so the return on a house, adjusted for volatility, is far ahead of stocks.

The important question to ask is what is the future for home prices, in a country with a vast amount of land and stretched income to home price ratios, in the next few years?

#103 Andrew t on 08.01.16 at 4:23 pm

@#94 Smoking Man.

While I agree that there is a well deserved backlash to the endless politically correct drivel that spews forth from an endless “pride” parade of vote pandering politicians…….

Trump is a crass, boorish braggart that believes his own Public Relations spin.

As the old saying goes, ” Give the Devil a horse and he’ll ride it straight to Hell’

I fully expect Donald Trump to “nuke” his own campaign with his unstatesmanlike braggadoccio and delusional self promotion……But I guess things could have been worse…..
The ultra religious “End of Days” “believer” Ted Cruz could be at the helm of the Republican party vying for his chance to push the button and unleash atomic war on the rest of us “heathens”.

The only thing I think we can agree on…..

Its been the most entertaining US Presidential race in many a decade…

Gotta agree. Trump is starting to crack.
Seeing him fumble his reply to Ghazala Khan wasn’t shocking or provocative– it was just kind of sad. Pitiful, really.

He’s painted himself into a corner by acting infallible and his behaviour has become entirely predictable.

Once the polls numbers start turning for Hillary (give it a week) he will only self destruct at a faster rate as he scrambles for attention.

#104 The Last Post on 08.01.16 at 4:29 pm

Consider this;

In 1997 (with impeccable personal credit histories), we started buying Industrial / commercial MULTI TENANTED buildings with low vacancies yielding 10 % or better with good occupancy histories at 65 % of replacement cost.

We had to put 35 to 42 % down and fight RBC for a mortgage with no personal guarantees at 7.5 % for a 3 year term.

Recently, a business acquaintance obtained a cash out refinance mortgage on his SELF OCCUPIED AND SOLE TENANT building for 10 years at 3.125 % with NO personal guarantee with 10% equity (based on third party evaluation).

Lenders have no fear of risk today, which inherently makes all RE investment today that much more risky.

#105 The Last Post on 08.01.16 at 4:44 pm

Consider this;

Risk is often most heavily discounted (perceived to be lowest) precisely when it is at its peak, but been camouflaged by recency bias.

In 2006 I believe, I was offered a 5 % down mortgage with 5 % CASH BACK !!! (i.e. no money in the deal but land transfer and closing costs) by Bank of N S. on a $ 1.6 million dollar house in Forest Hill, Toronto.

Remember they removed the CMHC cap a few years before. It was only available on a 5 year term at their posted rate with no discount.

I thought that it was madness so I declined the purchase.

#106 The Last Post on 08.01.16 at 4:54 pm

re # 103 Andrew t

Obviously you did not understand Mr. Trump’s initial response to the Khan family.

It was essentially this;

Your son died fighting in a war that the Democrats exacerbated through the incompetence and treachery of their now candidate for president, Hillary, for which you, the Khans are now championing and shilling. I believe the term is “useful idiots”.

This higher meaning and clear thinking is lost on SJW dimwits, perhaps not unlike yourself, who value “feelings” over facts.

#107 dirty debtor on 08.01.16 at 5:23 pm

Take it from another engineer – all we are is somewhat educated monkeys that got where we are by being very obedient while taking orders and following instructions. Almost everyone is in it for the money and prestige, very little of which is deserved.

#108 Nelley on 08.01.16 at 5:50 pm

#106Last-the zombies simply follow whatever nonsense CNN or other MSM outlets feed them-logic is never part of the equation.

#109 Jas on 08.01.16 at 5:54 pm

Garth:
My wife’s source of ‘information’ and facts is Facebook ad whats App.
I keep telling her to cash out and downsize. Inspite of having lived thorough a crash in the UK in 1989 (when interest rates double from 7% to 14% in ONE year) she still does not get it and won’t listen.
My only hope before the taking ‘D’ option is if you can kindly send an email and hammer some sense into her ‘head’. You have my email. Kindly do me a favour. Send the email

#110 Jas on 08.01.16 at 6:18 pm

Garth:
Visited my kid downtown Toronto last month.
Want to share another example of herd mentality I noticed there:
on John St between Adelaide St W and Richmond St W, there is a small ice cream place named after Jesus! Each day the lineup after noon time got so long that you have to wait for over half hour or 45 minutes just for moments of taste in the mouth. I was shocked to see the age of the herd…..between perhaps 14 to 24!!
Each day I passed by the place I just shook my head and thought of no hope for this nation.

#111 Entrepreneur on 08.01.16 at 6:21 pm

#106 The Last Post…it does seem that anything that Trump says, some of it is taken out of context. I am sure Trump feels empathy for the Khan family, and should emphasize that part, but I believe Trump was attacking the Democratic Party. Am I not correct?

Anyways, I am having trouble picking Democrats (I know, I am Canadian) because of one thing that I noticed at the beginning of the term, Obama spoke and said that “he is one of us” but at the end not so much. Hillary’s speech, she spoke of her father’s business and how so much in touch she is and wish I could believe her but is that just to get votes?

I see the BC Liberals do this all the time, say things at election time then do the nothing or the opposite. Looks like the Federal Liberals are about the same.

My conclusion, I would vote for the person who would tear up the international free trade since as they are not working for the people that live in that state/province. That is the most important priority for now.

Brexit leaving the EU and Nigel Farage saying that now the people will be heard or similar.

Heard Trump talk about factories moving down to Mexico. So how is that going to help the people of U.S.? But on that note, Trump would open the Enbridge Pipeline from Canada down to the State, endless oil (day and night) from us.

#112 Ryan Lewenza on 08.01.16 at 6:22 pm

White Privilege “Am i the only one who found yesterday’s ‘rule of 20’ to make no sense, SnP500 + CPI = constant = 20 ? If the CPI is up meaning inflation is up, then also stocks should be up, so how is that an offsetting factor?”

P/E’s increase with inflation up to a certain level. Then as inflation moves even high (typically above 4-5%) then the P/E contracts. This makes sense to me. As the economy picks up, investors will pay more for stocks, P/E’s rise, and so does inflation. But then the Fed reacts by tightening rates and slowing down the economy and inflation. So when this metric gets into the 24-28 zone, then we know the Fed will likely start hiking rates aggressively with the bull market likely topping out shortly after, hence why that 24-28 level is key. You referenced doing this analysis using bond yields and I run those numbers as well. It tells a similar story. – Ryan L

#113 Andrew t on 08.01.16 at 6:50 pm

re # 103 Andrew t

Obviously you did not understand Mr. Trump’s initial response to the Khan family.

It was essentially this;

Your son died fighting in a war that the Democrats exacerbated through the incompetence and treachery of their now candidate for president, Hillary, for which you, the Khans are now championing and shilling. I believe the term is “useful idiots”.

This higher meaning and clear thinking is lost on SJW dimwits, perhaps not unlike yourself, who value “feelings” over facts.
—-

It’s hard for me to seriously consider a lecture about facts from someone who can’t even accurately quote Trump’s remark, instead substituting their own feelings , on a seperate issue no less

#114 Ronaldo on 08.01.16 at 6:55 pm

#98 crowdedelevatorfartz on 08.01.16 at 2:51 pm

”Interest rates at 18.5%. Houses were $240k one year and 80k the next…..there were lots of “unexplained” fires in vacant houses……
Vancouver still had than “small city” feel to it.
Then Expo 86.
And everything changed.”

Remember it well. We invited the world to come and they did. And then the flight out of Hong Kong a short time later when houses were being bought sight unseen mainly in Richmond (Rich Man).

I remember looking at a 3 bdrm 2 level condo next to Cap College selling for $72,000 when we went to Expo 86. The condo just down the hill from there (Lynnmor Village) that I bought in Dec. of 69 was selling for around the same price. A price that I had seen going back to 76 so you can see what had happened to real estate in that time. Crash and sideways for years.

A nice home near 41st and Rupert and next to a golf course was around $130.000 which at the time seemed like a lot of money since the place would have sold for around $30,000 15 years before. How times have changed from when a person on single average salary could buy a home.

#115 Ben on 08.01.16 at 8:54 pm

I wonder if you will ever get this next bit Garth.

“If a homeowner were to compare value gains earned via an RRSP investment versus the value gained by their home over the past decade, the house would be the top performer.”

RRSP requires savings.

Real estate is the only access the common man has (so far as he is aware) to leverage.

This isn’t a comment on the direction of the housing market.

http://image.slidesharecdn.com/debtandinequality-140603083400-phpapp02/95/debt-and-inequality-by-adair-turner-7-638.jpg?cb=1401784733

Money is created by the act of lending as debt. Most of that goes into land. Debt is fungible with money and instantly becomes a deposit for the seller. GDP is measured as the amount of money in circulation. GDP changes define “growth”.

Get a book on modern banking.

#116 Jas on 08.01.16 at 9:01 pm

Today is the DEADLINE for Foreign Buyers to register in BC.
11 PM pst is the deadline.
My Question for all BC residents is : DEMAND FROM BC GOVT to disclose the number of foreign buyers and Canadian residents.
KRISTY COME ON, TELL US.

#117 Ben on 08.01.16 at 9:10 pm

Also on reading further down I see another poster made the same point, to which you retort that it’s not investing, it’s gambling.

I’d agree but state it differently: it’s not creating wealth. if you do not create wealth but still walk away with money to spend on assets you are taking from somewhere.

That somewhere is the kids.

Regarding the criticism of gambling, Canada is in a real mess because the permutations over the past 20 years have been:

1. work => you lose as asset prices outstrip wages.
2. gamble => you might win, might lose.

Turns out gambling saw you win big time.

The west is pretty screwed since the around year 2000 banking coup.

Oh dear.

#118 Ben on 08.01.16 at 9:20 pm

North American culture in a nut-shell:

“They say you only really made the money on your house when you sell it…..

Bought the house in 2006 – $500k

Sold the house 10 years(+/- a bit) later for $1 mil”

Paraphrased!

Hi – I did no work and got $500K for it, which I’m now going to use to consume actual resources.

And I’m as pleased as punch about it!

Really great stuff. Tell me again are the kids queuing for ice creams the problem or these guys?

#119 };-) aka Devil's Advocate on 08.01.16 at 9:37 pm

“At the end of day money will go to where investors perceive better value and opportunities. Put another way, equities look attractive when compared to other asset classes such as bonds or Canadian housing.” – Ryan Lewenza
For as long as I’ve been an adult responsible for keeping a roof over my own head this has been the mantra. Equities are in competition with housing. It shouldn’t be. The two are different. One is primarily shelter the other is, or should be, investing. Neither shelter nor investing is in vague today… it’s all about speculation today. That’s the problem, everybody today is a wanna-be rock star gambler

#120 };-) aka Devil's Advocate on 08.01.16 at 9:38 pm

“vogue”

#121 Freedom First on 08.02.16 at 2:19 am

Yes. It is easy to see the majority of people worship at the altar of home ownership. It is everywhere, world wide, like a disease.

For the afflicted, there is only one cure. It is far beyond horrible and excruciatingly painful, and, most unfortunately, they have to experience it before they believe it. There is no reasoning with the afflicted. Time Proven Fact.

#122 The Last Post on 08.02.16 at 5:08 am

comment 113 Andrew t

So, you have a reading comprehension problem as well.

I paraphrased Mr. Trumps’ response, I did not quote him, as indicated by writing ‘It was essentially this ; ‘.

If I quoted him, I would have used quotations.

But, hey, I am used to deflection from SJW dimwits when they can’t deal with the facts.

I am too smart to attempt to lecture anyone , let alone SJWs like you, who can only parrot someone else’s agenda.

#123 The Last Post on 08.02.16 at 5:11 am

comment 107 dirty debtor

Absolutely !
GREAT comment.

#124 Andrew t on 08.02.16 at 8:05 am

Wrong again Last Post. I’m not a “social justice warrior”, I’m just an old fashioned believer that we’re about freedom and equality for all in this great land of ours.
Plus I know an idiot when I see one, and Trump is a sad, pathetic idiot. Take away the free ride he got and he wouldn’t have got past selling bootleg DVDs on Canal St.
I don’t you well enough to judge, but your rebuttals and taunts seem awfully generic and rehearsed.

#125 Hank Posilijka on 08.02.16 at 9:45 am

Todd C. Slater from The Simple Investor was on CFRB this morning and said Toronto was in a stable bubble and will be steady for years to come.

Good luck real estate guys!