That sucks

DOG LOOK modified

Young Eddie bought an ‘investment’ condo in the Toronto outback a year ago, from plans, for $385,000. He borrowed most of the down payment with a personal loan from the bank in order to meet the 20% requirement. This week, after talking to me – or at least suffering through my lecture – he realized he’ll have a negative cash flow of about $500 a month.

“That sucks,” he said. Now, I replied, you’re beginning to understand. “So,” he brightened, “I’ll sell it – should be able to make some money.” I asked if he has an assignment clause. Nope. So much for that plan. “But when it’s finished next year I’ll dump it and just take the capital gain. They’re already selling for more.” And then I told him any profit will be taxed not at the 50% cap gain rate, but 100% as income. The kid’s now morose. After closing costs and commission, financing charges and debt repayment, plus being hoovered by the CRA on any nominal gain, he’s pooched.

“But I just wanted to start investing,” Eddie whined.

Another greater fool bites the dust.

Over the next couple of years as dozens and dozens of condo towers come online, federal revenue auditors will have a field day. Buying pre-construction condos to speculate on, to flip, to assign or rent out for a few months and dump is considered a business activity. The proceeds are lumped atop your other income and taxed at the marginal rate. It will be a rude surprise for the thousands of lightly-educated amateur players who’ve been sucked into this vortex.

My developer buddies (who’ll still talk to me) say about seven of every 10 high-rise sales these days are completed by people with no intention of living there. This is in sharp contrast to the feeding frenzy for low-rise developments, where speculators are almost non-existent. With over 130 buildings on the go, the GTA has more condos under construction than any other city in North America. There are at least ten developments in the core area that will rise from 50 to more than 70 stories – visible symbols of the hipster fetish for pretending you’re a pigeon. With a bike locker.

In the last three months 7,731 new condos (not counting resales) sold in the GTA, most of them from developers to newbie buyers. That was 26% greater than the same period in 2015, and the second-highest level on record. Meanwhile there were 13,528 unsold units waiting for buyers, according to Urbanation, which sounds like a lot but was the lowest number in six years.

What does this tell us?

Simple. Millennials now outnumber Boomers, and in the urban areas of Toronto or Vancouver, there’s no way many of them can afford to buy a detached house, or any other kind of real estate the industry calls “ground oriented.” With the average hipster now about 27 years old, distrustful of financial markets, suspicious of liquid assets, having known nothing but sub-5% interest rates and growing up in a world steeped in house porn where real estate always goes up, this is what you get. A condo forest.

Says Urbanation dude Shaun Hildebrand, “With demand for condos in the GTA pressing forward strongly, new projects are being challenged to enter the market in greater volume. Should current conditions persist, price pressures for high-rise units can be expected to build, particularly as low-rise housing remains afflicted by record-low supply.”

Of course, it’s way cheaper to rent a condo than to own one, even with 2.4% five-year mortgages in place. Young people borrowing their brains out to buy a condo – whether as an investment or a nest – face rising strata fees, the potential of special assessments in the future, plus property tax bills they cannot control. And with 30,000 new units being added annually to the stock of new boxes in the GTA alone, the odds of a capital gain in the future may not be so hot. Even with a 26% jump in sales, new condo values are barely keeping up with inflation. The increase in the last 12 months was a mere 2%.

The bottom line: this is one tough way to make money. The risks are significant. The rewards sketchy. And owners, like poor Eddie, are subsidizing renters.

143 comments ↓

#1 Linda on 08.22.16 at 7:29 pm

Maybe there is a way out. Something that gets talked about is downsizing for those older folks who are tired of maintaining the big detached & want a place they can lock up & leave w/o worries (since maintenance is covered by condo fees) when traveling. So if the kids want the fancy detached & the seniors want to downsize – swap. The house costs more, but the condo price might just be enough to cover the downpayment of the house AND let the oldsters get their equity out to finance that longed for retirement. The kids are still pooched, but possibly reaching the pinnacle of house satisfaction will make up for it…..

#2 Wrinkly Stinkly on 08.22.16 at 7:30 pm

Retired and renting. Diversified portfolio. Filled up TSFA’s. Getting dividend stream that makes my weakened prostate envious. Hipsters read’em and weep. But aging intrudes, as I found out:

Lovey and I were sitting in the heat on the back deck and she looked over at me and said “What we need is a porch”.

I thought this was a capital idea and went out and brought home a 911.

And that’s how I found out I needed new hearing aids.

(Somewhat) true story.

#3 ronh on 08.22.16 at 7:33 pm

Re: the picture. My dog did that to me once. Lesson learned.

#4 Fred on 08.22.16 at 7:34 pm

Last!

#5 Whaaa on 08.22.16 at 7:36 pm

What no calls to get out of Toronto? Are the imaginary price declines present in Vancouver not present here?

#6 Sylar on 08.22.16 at 7:38 pm

First… and not the last to ask, what do you foresee Garth? Realize timing the market is impossible but with the VanCity Crash Tax and recent softening of market I’m wondering if now appropo to jump back into the fray.

#7 Bram on 08.22.16 at 7:38 pm

Sounds like a bad situation to be in, indeed.
I wonder about Toronto population growth.
Is it anywhere near the growth in condo capacity?
Maybe a Toronto growth spurt can save young Eddie?

#8 Doghouse Dweller on 08.22.16 at 7:39 pm

I was looking at the google finance close today and the square wave chart reminded me of my college electronics days.
Not a random walk on wall street. Its a square wave oscillator.
Something new for the technical analysts “the rigged market confirmation oscillator pattern”.

BOJ’s current stimulus plan, the central bank buys about 3 trillion yen ($27.2 billion) of ETFs every year. Now owning half of Japan’s ETF Market. Swiss National Bank’s U.S. stock portfolio jumped to a record in June, $61.8 billion.
Buy your ETFs now or be priced out forever!

Forbes Adam Sarhan , ~ ” But it is not normal to see global central banks print gobs of money everyday to stimulate markets and it is definitely not normal to see them buy stocks outright. I’m not a lawyer but it raises the question: Is it even legal?”

Those Zero guys also noticed ~
http://www.zerohedge.com/news/2016-08-22/orchestrated-chaos-stocks-rollercoaster-despite-oil-dollar-bond-yield-tumble

CBS 60 Minutes
https://www.youtube.com/watch?v=XpvS05WvHbk

#9 Hawk on 08.22.16 at 7:40 pm

Is there a clear demarkation time period for which real property must be owned before asset appreciation on it becomes elligible for capital gain as opposed to earned income?

I would think once any party has owned a real asset for more than 4-5 years it’s resale can’t reasonably be classified as “buy and flip”——(Ofcourse most condo purchasers don’t hold them for anything close to that long).

One thing that seems strange is the arbitrary nature of all these wacko policies. Why is someone allowed to hold Gold or financial assets for short periods and still allowed to have the gain as capital income vs. earned income but not Real Estate? Frankly important matter such as taxation should be decided by national referendum and the democratic will of the people as opposed to so called “public servants”.

I am waiting for the day when our democracy will evolve……….guess it will be a long time coming.

#10 jfish on 08.22.16 at 7:45 pm

#1 johnny Bower.

#11 Nat on 08.22.16 at 7:45 pm

I take it that the condos will be the first to take the biggest hit?..since there is an oversupply in Toronto? What about detached in the 905..there doesn’t seem to be enough supply? I’m awaiting this real estate correction Garth! Patiently awaiting!!!!’

#12 Sebee on 08.22.16 at 7:46 pm

Watched Big Short again. Here we are, 10 years later.

Wonder how many people own multiple properties in Canada as percentage of home owners, like that stripper.

#13 Bytor the Snow Dog on 08.22.16 at 7:47 pm

I refuse to participate in this “first” thing.

#14 salonist on 08.22.16 at 7:47 pm

sm
a relation

Teen girl calls 911 after parents ‘forced her’ to vacation with them

https://www.thestar.com/news/gta/2016/08/20/teen-girl-calls-911-after-parents-forced-her-to-vacation-with-them.html

#15 keepingyallhonest on 08.22.16 at 7:51 pm

Garth,

Did you see what Israel has done to try and tame their housing bubble? They now have a special tax for empty homes (using water consumption as the test) and a tax on multiple homes (1% of the value of the home for any homes after your primary and secondary home).

They basically realized that the longer it kept going, the nastier the end would be.

I wonder what T2 will do. My guess is they’ll try to frame it as a supply issue to keep the ponzi scheme going for a little while longer. There really isn’t anything else working at the moment.

Yet the eventual consequences will be disastrous since the massive misallocation of capital is reaching massive proportions…

#16 Ogopogo on 08.22.16 at 7:55 pm

Eddie reminds me a good friend who “owns” (the mortgage on) two condos in that dull, blighted provincial capital known as Deadmonton. He used to brag about how much he made as a long-distance landlord.

That was before the oil crash.

He has been stone silent for the last year and a half. Not a peep about “easy money.” I imagine he’s been desperately trying to keep the units rented since he has recently complained about the dearth of long-term tenants in Alberta.

Just a few months’ of units sitting empty can wipe out years of gains above the mortgage. I’ve exercised remarkable self-restraint in not bragging about how much my portfolio has grown since his braggadocio days…

Last laugh, etc.

#17 Damifino on 08.22.16 at 7:58 pm

“Sky Oriented” real estate is the way of the future.
—————————–

I saw a listing today for house on Vancouver’s east side. Asking 1.5M. The agent says the three suites within are bringing in a cool $3400/mo in total. ‘Don’t delay on this great investment opportunity’.

Come again? After carrying costs that’s easily a negative cap rate. Can no one do simple math anymore?

Why is this not recognized as an extremely bad deal? Just a few numbers in a calculator and one should dissolve in laughter.

How does a realtor keep a straight face nowadays?

#18 Bram on 08.22.16 at 8:03 pm

#8 Doghouse Dweller on 08.22.16 at 7:39 pm
I was looking at the google finance close today and the square wave chart reminded me of my college electronics days.
Not a random walk on wall street. Its a square wave oscillator.

Ha! I was thinking the exact same thing!
Why is there a square wave in the market index?

#19 WalMark of Sadkatoon on 08.22.16 at 8:07 pm

#117 Perspective on 08.22.16 at 11:10 am
# 110, Mark;

That’s how it works; rates suppression equals asset appreciation (negative correlation). The only asset class to benefit from increasing rates would be financials like insurers. I hope you have someone else doing your investing.

I hope so too. Last we read on this forum and others his investments were doing as well as his predictions – which is not so well.

#20 Freedom First on 08.22.16 at 8:08 pm

Another greater fool bites the dust-Garth.

Yes. Debt is not an asset. Bankers, realtors, and mortgage brokers are not your friends. Most co-workers, relatives, friends, and media are not a good source for financial advice. Knowledge is everywhere today, however, wisdom is in short supply. Garth has plenty of that, but it only works for you if you follow his advice. Saying “I know, I know, I know” or “but, but, but”, to yourself while reading Garth’s blog, will take you down the road of the “greater fools”. ANY 1 asset strategy falls in the extremely high risk category. Proven fact. Throughout history.

I am a numbers man. Since I was a kid. Plus, I am brilliant, so my friends and family tell me. Putting yourself First is not only very very under rated, but also seen as not allowed in our conformist brainwashed PC perverted society. Freedom First is the only option. For me, that is.

#21 keepingyallhonest on 08.22.16 at 8:08 pm

New tax on multiple homes in Israel to tame their housing bubble:

http://www.haaretz.com/israel-news/1.735156

#22 WalMark of Sadkatoon on 08.22.16 at 8:10 pm

Toronto condo prices going up because…

Toronto house prices going up and people can’t afford them

Irony

Prices in Toronto keep going to the moon. Crash landing. Guaranteed

#23 JO on 08.22.16 at 8:13 pm

With many friends and family and acquaintances in the trades it is well known that the majority of these new condos and cookie cutter homes in the burbs are very poorly built
UofT architecture prof has been publicly warning of the impending disaster the majority of these projects will be for these amateur debtrenters
Many will go broke with explosive condo fee increases and special assessments
It will trap many of these dwellers and reduce the supply of future detached buyers
Many of these new condos are sold using numbered Ontario companies so when the lawsuits start flying in a few years good luck to these so called owners
Caveat emptor

#24 Context on 08.22.16 at 8:20 pm

#11 Nat:- The condos will be the first to go and the bomb will drop on Union Station with the hardest hit spreading south along the lakefront both west and east. The tidal wave marches north taking condos down as far as College with full force both east and west of Yonge street and continue to Finch with a continual drop of value along the way from College. There will be pockets here and there holding up above average but what is the value drop at Union Station? I would say a minimum of 50%.

#25 Mark on 08.22.16 at 8:20 pm

The CRA can consider anything they want ‘business activity’. But will it stand up in court? I mean, its one thing to deny the principal residence treatment. There’s a well defined test for that, which involves occupancy. But to deny “capital” treatment to a speculative investment would appear to be far more difficult and would require an examination of the particular circumstances of the taxpayer. I’m not sure its a given that a pre-sale condo that is re-sold upon completion automatically does not qualify for capital gains treatment.

That is, if there is even a capital gain once his cost base and any capitalized financing and transactional expense is considered. With stagnation over the past 3 years pretty much across Canada, that’s not that likely of a scenario to have a gain. So maybe the kid is probably better off having things considered on the ‘income’ account. At least then he’ll be able to deduct the net loss from his current income as a business loss, rather than hope that future investment activities yield a capital gain against which he can deduct past losses.

#26 Shortymac on 08.22.16 at 8:28 pm

@Linda

That sounds like a good idea in theory but one thing I noticed is a lot of boomers actually “upgrading” their houses to their dream home, instead of downsizing.

#27 Smoking Man on 08.22.16 at 8:30 pm

Who in there right would by a condo in Toronto.

SFH is where it’s always been as I’ve been harping about it for years.

Shlong Branch Bungee yields on average 1500 per week of unrealized tax free capital gains. Compete madness that will keep going till growth returns and rates go up….

With 3 levels of communist govt with absolutely no clue what so ever on how business work, good luck to growth.

Wynee, with zero math skills teacher, no business at all. Completely focus on a Man hating agenda.

T2 Teacher, guided by a radical tree hugger collage buddy who’s on record supporting de-industrialzatIon.

John Tory, pandering to the loudest cry baby’s. “WE WANT OUR BIKE LINES NOW!”

They sure know how to attracted Investment.

Growth…… Not going happen… Low rates for ever.

#28 White Crock BC on 08.22.16 at 8:43 pm

Mark on 08.22.16 at 8:20 pm

The CRA can consider anything they want ‘business activity’. But will it stand up in court?

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

Good luck with that fight.

Years and years in the court system all the while paying your lawyer $400+/hr.

#29 Another Albertan on 08.22.16 at 8:45 pm

It’s been a while since I’ve posted…

We renegotiated our downtown Calgary office lease in the past few months. The short version of the story is that base price per sqft has been lowered 60%. We could have pushed for a deeper discount or could have easily moved, but we didn’t want the extra covenants in the lease and moving would have been a major disruption. There is a practical lower limit if you have an active business to run. It wasn’t worth it to us to continue grinding.

As it stands, our building has the equivalent of over 3 empty floors of 10 total and the parkade has close to 50% of the stalls available for lease.

Changing gears, it appears there is a bit of a trend in the interior of BC of keeping a low profile from the view of banks and the tax man. A few campgrounds around Vernon have a number of ex-oil patch workers living in their fifth wheel trailers with stealthly-covered, tarped 4×4 trucks. Once you’ve had enough beers with the neighbours, lips start to go loose. There are a number of highly-levered young families who have walked from their houses and other assets. There also appears to be a number who also owe taxes, GST, etc.

The telltale sign will be whether or not those trailers are still parked after September Long. A few have paid for their camping spots until the end of September and have been parked since the season opened.

By all accounts, it appears to be a semi-desperate attempt to buy some time to “figure things out”, although I doubt that creditors are going to be merciful on people who go dark.

Everyone else’s mileage may vary.

#30 TurnerNation on 08.22.16 at 8:47 pm

Debt is slavery. Which, is why college and university students are handed credit cards from the Big 5.

Our elites must be toasting and roaring from the Forest Hill and Bridle Path enclaves they repose.
The masses, crowed into 500sq foot condos in the city center.

#31 Context on 08.22.16 at 8:58 pm

There was a time that developers took pride in what they built in Toronto and what they could do with a one bedroom of 640 square footage. The condo building that I had in mind was constructed in 1998 in a great location, but there are no sales or rentals available. I found a video which I was tempted to post for you all to see but changed my mind. The setting is built around a mini park; the lobby would put to shame any hotel; and the elevator rises to display a hallway that is out of this world. Inside the condo unit there are real rooms in perfect balance with a real balcony for great views. The inside construction goes beyond the pale with expensive detail as no corners were cut. No wonder nothing is for sale, but did find an indication for the last 12 months and took the highest level at $415,000.

#32 The Wet Coast on 08.22.16 at 8:59 pm

Mark on 08.22.16 at 8:20 pm

They can hire more and better lawyers than you can.

They make the rules.

#33 45north on 08.22.16 at 9:05 pm

JO: the majority of these new condos and cookie cutter homes in the burbs are very poorly built

U of T architecture prof has been publicly warning of the impending disaster

Many will go broke with explosive condo fee increases and special assessments

Condos in Toronto are an impending disaster! The Province refuses to give City Council the power to control them. Developers know how to take advantage of the situation. Ottawa and Toronto need to have control of their own destinies.

The CBC documentary The Condo Game makes the point that developers are able to put up these condos because Toronto City Council does not have control.

http://www.cbc.ca/player/play/2419776936

#34 Doghouse Dweller on 08.22.16 at 9:07 pm

#18 Bram
Why is there a square wave in the market index ?
—————————————————————–
Because its not people trading, it`s a bunch of computer algorithms (programs) . 75 % of the daily action is HFT computers. They got synchronized and all began trading the same way as if they were all running the same program, with the same information input. Thus the square wave.
9:30,buy 10:30,sell 11:30,buy 12:30,sell 13:30, buy and 14:30 sell and then someone figured what was happening and intervened.

Some day soon some hacker is going to send the whole wealth effect fraud over the cliff.

#35 mental health provider on 08.22.16 at 9:14 pm

Mark would just have his mom iron his best short pants and tee shirt and go argue it himself. First time out of his mom’s basement in years but he can do it. No lawyers for him.

#36 TRT on 08.22.16 at 9:17 pm

First I told this blog years ago that YVR house prices will detach from incomes. Advice was ignored.

Now I say that rents will get detached from incomes. Why? Cause new demand is from foreign nationals. Heed this advice renters in YVR. Or be really sorry this time.

#37 Leslie Blindscope on 08.22.16 at 9:25 pm

Great Job Fast Eddie! Enjoy life in the fastlane!

#38 WallOfWorry on 08.22.16 at 9:30 pm

The argument is far more complicated than this blog is willing to acknowledge. As long as interest rates remain low, the real estate market will remain vibrant. It may suffer a correction but not anywhere near the depths being postulated here – unless rates or an economic shock occurs.

Canada, and Toronto and Vancouver in particular are acknowledged as one of the best places to live in the world. In the urban centre, density of population swells increasing demand, even for condos. Additionally, hi-rise app’t buildings aren’t being developed so the rental market for condo’s continues to flourish.

I have no real skin in this game…but from what I see, I wouldn’t be proclaiming victory on calling the real estate top as the market still seems very robust to me.

#39 Smoking Man on 08.22.16 at 9:34 pm

#30 TurnerNation on 08.22.16 at 8:47 pm
Debt is slavery. Which, is why college and university students are handed credit cards from the Big 5.

Our elites must be toasting and roaring from the Forest Hill and Bridle Path enclaves they repose.
The masses, crowed into 500sq foot condos in the city center.
….

You should have seen the digs on Lake Jo. I took the boat up to my Maskoka flip. Once you pass Port Carling… Different world.

Got some great Intel and gossip..

#40 Nero on 08.22.16 at 9:34 pm

TRT#36…..Hahaha…Yep last thing landlords need is angry tenants.
Who’s living in your house/investment property?
Sleep well…

Pass me my fiddle…

#41 Mark on 08.22.16 at 9:34 pm

“That’s how it works; rates suppression equals asset appreciation (negative correlation). The only asset class to benefit from increasing rates would be financials like insurers. I hope you have someone else doing your investing.”

Actually insurers, just like nearly all other FIRE sector participants, benefit from the falling rate and low rate environment. And many assets have been suppressed due to low rates.

I’ll give you an example: railways. Railways borrowed extensively, at long-term fixed rates, to build and upgrade their infrastructure. Based on the idea that the inflationary environment of the past would persist. Two things happened to the railways — the inflationary environment they were predicting no longer existed, and the lower interest rates allowed competitive forms of transportation that could be financed with shorter-term capital investment to compete. The result — railway assets have seen their value suppressed.

Similar logic applies to other long-term assets, particularly in telecom and the mining sector. Low rates have actually suppressed asset valuations in those sectors. Thus laying waste to your claim that low rates push *all* assets up. They clearly don’t (although more assets tend to be correlated to interest rates, than inversely correlated — the beauty of the TSX is that it tends to contain more of the latter than the former, hence its underperformance and likely future outperformance vs. the S&P500!).

Insurers, especially, have benefitted from the low long-term rates, not only for financial market returns that have exceeded the quoted coupon rates on their (mostly long-term) bond portfolios, but also for expanding insured values. The housing bubble, which most of us agree has been caused by low rates, has been quite the bounty for insurers. Instead of writing a paltry $300k policy against an average Toronto SFH, the insurers get to write a $800k-$1M policy. The result — insurers collect far more premiums for what essentially is the same activity. Go to a high rate environment, and wham, the insurers will find themselves writing a $300k policy against an asset that used to sell for $800k. Insurers can be best thought of as an “assets under management” business, and rising rates tend to damage the value of most of the sorts of assets that insurers hold in their portfolios.

BTW, I’ve done just fine investing through the years, largely with a balanced portfolio and a relatively small portion that I manage myself outside of the sort of strict rebalancing and asset allocation framework that Garth talks about here. And on a cumulative basis, I have beat the benchmark. So your last comment was completely and utterly uncalled for.

#42 John in Mtl on 08.22.16 at 9:34 pm

Garth wrote: … “There are at least ten developments in the core area that will rise from 50 to more than 70 stories – visible symbols of the hipster fetish for pretending you’re a pigeon. With a bike locker.”…

Priceless!

#43 John in Mtl on 08.22.16 at 9:37 pm

Garth wrote: …”Meanwhile there were 13,528 unsold units waiting for buyers, according to Urbanation, which sounds like a lot but was the lowest number in six years.”

But but but… Won’t T2 buy all these up with our tax money and gift them to refugees and the like? After all, can’t have them living in second hand “used” apartments now, can we?

#44 Context on 08.22.16 at 9:41 pm

#25 Mark:- It costs a fortune to take the taxman to court as a friend of mine hired a young attorney to fight it out and never lived long enough to see the result. This young lawyer was recommended as the best tax expert in the City of Toronto as they went into a formal court setting. He won the case and apparently made utter fools of them all by reciting tax law with documentation that they had no clue about.

#45 John in Mtl on 08.22.16 at 9:44 pm

#38 WallOfWorry on 08.22.16 at 9:30 pm
… “Canada, and Toronto and Vancouver in particular are acknowledged as one of the best places to live in the world. In the urban centre, density of population swells increasing demand, even for condos.”

It is at times like these that I like my “small” city of Montreal. Sure, there’s lots of people in the DT core but overall the city is still quite livable because its not yet too crowded. The “orange cones” gotta go though!

#46 TurnerNation on 08.22.16 at 9:50 pm

Prediction: Tesla’s new model never will get produced and the company will go down in a smear of media pap and government regulation. TSLA.

GM’s invested 1B in self driving technology. What’s good for GM is good for USA right? They will remain on top – bailed out but was not forced into merger.

When you’re this big they call you General.

#47 Andrew Woburn on 08.22.16 at 9:55 pm

This is just what you need for your next gated community.

“Aptonomy introduces the self-flying security guard”

https://techcrunch.com/2016/08/22/drone-startup-aptonomy-has-created-robotic-flying-security-guards/

#48 Totalchaos on 08.22.16 at 9:56 pm

#1 Linda

Not many “oldsters” want to move to a teensy condo down town. Those places were not built for living in. Kitchens designed for take-out, no space for having the family over for holidays, walls too thin for the grandkids to visit, forget about EMS making it past the 3rd floor if you have a heart attack… I could go on.

People love their stuff way more than they should and you won’t find many willing to trade a 3500 sq ft sfh for a 600 sq ft sky box when it means giving up the bulk of their posessions. If they have to sell, they would prefer to move further out of the city to a comparable house. This is what my parents friends who needed the house cash have done. Let’s face it, the current crop of condos were built for the young and single. And the greater fools.

#49 TurnerNation on 08.22.16 at 9:56 pm

Ps even Government of Canada was forced into owning “new” GM stock post GFC. Serious shell game power from elites.

John Z DeL wrote “On a clear day you can see General Motors” book. To wit: hecho in Mexico.

Learn from the past. Our future.

#50 Smoking Man on 08.22.16 at 9:57 pm

While sitting on my 90 k dock in Maskoka. Staring at the stars having sips of my favorite brew. A whispering wind was sing, Smokey, oh Smokey…

There will be green helicopters in Japan in September.

Bet accordingly..

#51 Hawk on 08.22.16 at 10:06 pm

#24 Context on 08.22.16 at 8:20 pm

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

Why would you say that?

I would think that the condos in remote places in GTA are far more over-priced than those at Union Station, which is atleast prime business area.

For example, the Tridel condos in Etobicoke (my area of town) are priced at just 10 – 20% below downtown, which seems strange as Union Station is way more likely to have invest bankers needing residence than West Mall Etobicoke………..as an example.

#52 Freedom First on 08.22.16 at 10:08 pm

DELETED

#53 Context on 08.22.16 at 10:17 pm

#51 Hawk:- I don’t consider Etobicoke as part of the greater core area of Toronto. In fact parts of northern Etobicoke have already had their bubble busted and are write offs.

#54 TRT b on 08.22.16 at 10:18 pm

#40 Nero on 08.22.16 at 9:34 pm
TRT#36…..Hahaha…Yep last thing landlords need is angry tenants.
Who’s living in your house/investment property?
Sleep well…

Pass me my fiddle…

——–
My track record speaks for itself. Price of a detached home went up over $1,000,000 in Vancouver since the Great Recession.

Rents going up 25% year over year as we speak.

Keep laughing. Probably very productive for you. ;)

#55 Bob Loblaw on 08.22.16 at 10:21 pm

#17

That’s a terrible deal in so many ways. realturds marketing that as a great investment opportunity should have their license revoked.

Even under the best case scenario, if you bought that place with $1.5M cash, so had no carrying costs and had good tenants locked in paying rent on time each month, you gross $40.8K in a year on that $1.5M.

Subtract property tax, maintenance, business income tax, etc..you’d be lucky to earn 1% ROI.

#56 Brian Ripley on 08.22.16 at 10:22 pm

“Should current conditions persist, price pressures for high-rise units can be expected to build…” Shaun Hildebrand of Urbanation

For those who have not seen my plot of the average of the sum of Vancouver, Calgary and Toronto condo sale prices over the last 14 years, here it is:
http://www.chpc.biz/6-canadian-metros.html

That’s right… the greater fools are saying that a condo in the hot markets is a better value bet than buying an average priced single family house in Montreal, Ottawa and soon Edmonton.

Well I guess if one has a good (satisfying and secure) job, then owning a condo close to that job is a reasonable bet… but as an investment it looks more like NIRP.

#57 Smoking Man on 08.22.16 at 10:26 pm

Wow you never know when that thing pissing you off about the book. Something you don’t like has been holding you up for years.

Not even drinking the hard shit in your long branch Gazibo compound.

Boom you finaly figure out the ending.

It’s not Jews or protestants that run the world in the shadows.

It was the Nikola Tesla’s grand father from Nictonite with his hybrid his evil hybrid kids….

Shlong Zinger, it’s all his doing and the bastard just got into my imaginary cab..

Got a best seller here. Figuring 100 sold on the first day….

This blog has been my God send, I’ve learned to write, figured out what the herd likes and hates…

Going to exploite it dogs…..

I got the ending…….. Right now, tonight…

Love you Garth…

#58 Smoking Man on 08.22.16 at 10:36 pm

Shit last few sentence might give of the wrong idea, on second reading sounded like was going to eat a bullet.

Saving one for when doc says your full of cancer. Or I some how accidentally become famous.

Had great check up last week. Vietnam b10 was lacking. Well I got Internet…. It’s a little over indulgence in the evenings…

Nothing a weekly shot of B12 to overcome your fun.

#59 Insurance Guy on 08.22.16 at 10:40 pm

Mark, insurers do not benefit from low rates. You’re explanation is flawed on several levels. But the easiest way to explain is that with low rates, insurers don’t have the investment gains. When this occurs, more pressure is placed on underwriting as insurers seek yield, which results in an overcapacity of the marketplace as risk appetite becomes expanded. The majority of the P&C market in Canada has been in a soft market environment now for 13 years.

#60 Farm Wife on 08.22.16 at 10:44 pm

#27 another albertan ” few campgrounds around Vernon have a number of ex-oil patch workers living in their fifth wheel trailers”

Pretty common in the campgrounds around Alberta as well.

Another interesting thing that we have noticed in Alberta and Sask campgounds over the last eight years or so is that a great many are being managed by boomers who have sold out and bought fifth wheels . and one tons.

Summer working up here and winters in a park in Yuma Arizona. Same thing with most of the older season campers. Can’t imagine this kind of living arrangement being a blissful retirement situation but each to their own.

I guess my point is that there are worse investments then condos.

#61 Greg on 08.22.16 at 10:47 pm

Anyone believe Smokey is now flipping cottages in Muskoka?

#62 Tony on 08.22.16 at 10:49 pm

Re: #5 Whaaa on 08.22.16 at 7:36 pm

I estimate the lag period of time between price declines in Vancouver and the GTA to be about 4 to 6 months. Soon we’ll see tens of thousands of under the Power Of Sale signs around the GTA.

#63 Aggregator on 08.22.16 at 10:55 pm

Is there really a shortage of listings in Toronto and Vancouver or are more agents listing properties on non-MLS sites?

Juwai Canada Listings

#64 Smoking Man on 08.22.16 at 10:56 pm

#61 Greg on 08.22.16 at 10:47 pm
Anyone believe Smokey is now flipping cottages in Muskoka?
……

It’s not that hard…

Writing good fiction as a dyslexic .. It’s like a 10 foot wall with a midget from Mexico trying to jump the wall in one leap holding a tuba he makes a living with next year..

#65 Tony on 08.22.16 at 10:59 pm

Re: #41 Mark on 08.22.16 at 9:34 pm

Insurers only benefit from rising interest rates. With rates soon to turn negative in America you want to short the insurance companies down there.

#66 Nobody on 08.22.16 at 11:03 pm

Garth wrote: … “There are at least ten developments in the core area that will rise from 50 to more than 70 stories – visible symbols of the hipster fetish for pretending you’re a pigeon. With a bike locker.”…

You would prefer an endless sea of 2car-garage SFHs in Houston style suburbs stretching to the US and Albertan borders, with 12 lane freeways taking all the workers into downtown?

Building high density towers along transit lines is one thing the city has got right

#67 bdwy sktrn on 08.22.16 at 11:11 pm

#28 White Crock BC on 08.22.16 at 8:43 pm
Mark on 08.22.16 at 8:20 pm

The CRA can consider anything they want ‘business activity’. But will it stand up in court?

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

Good luck with that fight.

Years and years in the court system all the while paying your lawyer $400+/hr.
———————————
it;s not rocket science, heck it’s not even changing your brakes.

a simple explanation to the judge of what is and what is not part of your normal business activities will suffice.

#68 Sam the Sham on 08.22.16 at 11:24 pm

#15 keepingyallhonest

I’m wondering if Israel would have less of a housing problem if they stopped bulldozing the homes of Palestinians. Just a thought.

#69 Mental Health Advisor --- Those mentioned below have mental health issues on 08.22.16 at 11:48 pm

“While sitting on my 90 k dock in Maskoka. Staring at the stars having sips of my favorite brew. A whispering wind was sing, Smokey, oh Smokey…”

Oh come on for Christ’s sake the only dock you get near is the one at Marie Curtis park or as you Long Branch yoyos call it Mary Curtis park. The whispering you heard was Ukrainian immigrants asking you to get out of the way of their smelt fishing nets.

The only thing Smoking Douchebag is flipping is the pop tops on really cheap beer cans. What an idiot. He may have gotten himself a part time job or supervisor though because he doesn’t type nonsense and then go back and change it to complete gibberish before hitting submit anymore.

Still he has growing competition here for who is the most imbecilic poster. Mark, Shawn, Context, Long Branch all the girls I approach are apprehensive, Devils Anus….I could go on but you know who you are and so does everyone else.

#59 Insurance Guy on 08.22.16 at 10:40 pm

This should probably be a separate post but I have an insurance question that no one wants to answer. Why do the insurance companies keep lying about car insurance? You can’t tell me it’s a money losing business yet all the banks spent tons of money and fought like hell to get into it. They don’t lose money on anything.

#70 A Canadian Abroad on 08.23.16 at 12:02 am

“Investors” subsidizing renters;

You bet!

We are subsidized in our sub-penthouse high-rise downtown condo paying $1600/mo to one of those “investors”. Who, BTW also pays the $550/mo condo fee while my money is in the markets in a balanced portfolio.

I wonder who sleeps better at night?

…hint: It might be US in his condo… OUCH

#71 Brazil ex-pat on 08.23.16 at 12:08 am

#155 NoName on 08.22.16 at 4:56 pm
hey brazil dude, you where right its not zika that is a problem in brazil, its syphilis, crazy, crazy…

http://qz.com/763105/brazil-zika-syphilis-infant-mortality/

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

Hahaha….yes you are correct. Notice how NO ONE is talking about all the hundreds of thousands of people that did NOT get the ZIKA virus? Another virus scam down the drain just like bird flu, pig flu, SARS blah blah blah….

#72 Ronaldo on 08.23.16 at 12:08 am

#44 Context on 08.22.16 at 9:41 pm

” #25 Mark:- It costs a fortune to take the taxman to court as a friend of mine hired a young attorney to fight it out and never lived long enough to see the result. This young lawyer was recommended as the best tax expert in the City of Toronto as they went into a formal court setting. He won the case and apparently made utter fools of them all by reciting tax law with documentation that they had no clue about.”
————————————————————-
And here is a man that spent millions and 19 years proving he had done nothing wrong and owed them nothing. Absolutely disgraceful.

http://globalnews.ca/news/2443608/b-c-man-pays-revenue-canada-10-after-19-year-battle/

#73 Island Girl on 08.23.16 at 12:15 am

So I was talking to a colleague the other day, he’s based out of Toronto. He is currently living at home and has a condo rented out downtown and recently bought a shitty house 30-45 minutes out of the GTA in suburbia as an investement. Figures he’ll clear enough to cover the mortgage and property taxes and condo fees and it will be a great investment. When I told him he’d have to add the rents in as income he responded that he’d have lots of write offs as a landlord, and that he’d be silly not to invest now before prices get too high. I just sighed and changed topics. He literally described the house as a shitty house in suburbia, why would someone do that?

#74 Ronaldo on 08.23.16 at 12:20 am

#48 Totalchaos on 08.22.16 at 9:56 pm

”#1 Linda

Not many “oldsters” want to move to a teensy condo down town. Those places were not built for living in. Kitchens designed for take-out, no space for having the family over for holidays, walls too thin for the grandkids to visit, forget about EMS making it past the 3rd floor if you have a heart attack… I could go on.

People love their stuff way more than they should and you won’t find many willing to trade a 3500 sq ft sfh for a 600 sq ft sky box when it means giving up the bulk of their posessions. If they have to sell, they would prefer to move further out of the city to a comparable house. This is what my parents friends who needed the house cash have done. Let’s face it, the current crop of condos were built for the young and single. And the greater fools.”
————————————————————
I am the oldest of the boomers and I agree with what you say. Most of my fellow boomers feel the same way. For most, a condo is the last place they want. We are all too familiar with the problems associated with these things. Goofy boards, self-appointed condo cops. too many rules, special assessments, ever rising condo fees, etc. etc.

Developers havn’t quite figured it out yet it seems.

#75 cramar on 08.23.16 at 12:45 am

Just as Garth has stated, Hilary would be better for economy than Trump:

http://money.cnn.com/2016/08/22/news/economy/hillary-clinton-donald-trump-economy/index.html

#76 Damifino on 08.23.16 at 1:25 am

#38 WallOfWorry

“Canada, and Toronto and Vancouver in particular are acknowledged as one of the best places to live in the world.”
—————————–

I can’t speak to Toronto but I was born in Vancouver and have lived here practically all of my 65 years.

This city has always had detractors, but now even I concede its metamorphosed into a vacuous, silly place catering mostly to the young and clueless. “La-la land” doesn’t even begin to describe it anymore.

Sad. There was so much potential.

#77 WalMark of Sadkatoon on 08.23.16 at 1:26 am

Insurers, especially, have benefitted from the low long-term rates…

wrong.

again.

http://www.wsj.com/articles/SB10001424052748704405704575596932278239578

#78 WalMark of Sadkatoon on 08.23.16 at 1:27 am

when is WalMark going to stop posting misleading and wrong information? after he finds a job perhaps? idk.

#79 Vanreal on 08.23.16 at 1:32 am

#65 Tony
There are no price declines in Vancouver. It’s just Garth’s wishful thinking.

#80 Condo price drop, not so sure? on 08.23.16 at 2:04 am

Clearly Young Eddie is financially illiterate in that he can’t even calculate/project the very simple: Revenue – Expenses must be > 0, whether that be in rent operations or a capital gain sale, to turn a profit. A greater fool for certain, enough said.

If you look at YVR RE, Condo/Townhome unit sales skyrocketed in Feb 2016 coincident with Avg. Detached prices peaking at $2.9 MM in Feb (Zolo.ca data) – Detached average sits at $2.7 MM in July (a 7% drop).

Tells you that buyers or speculators have been priced out of the Detached market and are turning to lower priced RE – one reason why Avg. Sales Price down in YVR RE – indeed sales mix matters in that calculation.

People need a place to live, whether renting or buying and of course, speculators with limited cash and that are financially illiterate (a.k.a., Young Eddie) will chase after that desire to make a buck.

It will take a severe job loss recession to eliminate these single asset thinkers from the market, nothing less. Then, and only then, will the FOMO, single asset investment crowd learn. A drop in unit sales only slows down the phenomenon, it will take a large price drop to crash it…since 1980, only severe job loss recessions have done that in Cdn. RE.

Until a severe job loss recession happens, condo/townhome sales will flourish due to affordability…precisely what the builders are counting on.

#81 Cam Neil on 08.23.16 at 2:16 am

Where is the sage advice from our Peter Pan youth minister, 44 year old ex baby sitter , Justin “Juice Box” Trudeau? What of the quality of his cabinet? Philpott just admitted to lying on the “did u use a limo” line of her expense accounting. If this had been a Con Our prince of the hate Harper campaign mansbridge would have set his last strands of head hair on fire and haunted the offending party for a decade every night. Where’s the liberal outrage ? Bad Beverage Ota only overcharged a glass of orange juice, philpott was reserving space in the first class lounge between limos.

#82 Mark on 08.23.16 at 2:47 am

“Mark, insurers do not benefit from low rates. You’re explanation is flawed on several levels. But the easiest way to explain is that with low rates, insurers don’t have the investment gains. “

I’ve explained it many times, but insurers absolutely benefit from low rates and the asset inflation that low rates cause (as they get to write insurance against a higher priced asset base). Investment gains are only a small part of the overall business of insurance. And investment gains tend to be priced into products at the time of underwriting (ie: an annuity or life insurance policy is priced based on current long-term interest rates, and typically an insurance company will attempt to duration match to a great extent in their investing).

Its actually pretty simple. As rates rise, the values of things that need to be insured tend to fall in real terms. This hurts insurers. Rising rates also tend to damage investment returns as insurers tend to invest in longer-term bonds, rather than the short-term paper. Insurers have actually done very well over the past 30-35 years of falling rates, so it logically follows that they might not do so well in the next few decades of rising rates if you subscribe to the view that long-term interest rates are cyclical.

#83 Mark on 08.23.16 at 2:53 am

“Insurers only benefit from rising interest rates. With rates soon to turn negative in America you want to short the insurance companies down there.”

Insurers benefit greatly from falling interest rates. So that would be good for the insurers. Go look at the insurer index for the past 5 years which has mostly featured falling long-term rates:

http://www.google.com/finance?q=INDEXDJX%3ADJUSIR

Basically over the past 5 years, its been only up for the insurers, as long-term rates have fallen. But if you expand that chart out 10 years, guess where the insurers ran into disaster? In 2008/2009 when interest rates exploded.

#84 MF on 08.23.16 at 7:56 am

#68 Sam the Sham on 08.22.16 at 11:24 pm

Oh look another terror apologist. How dare Jews defend themselves.

MF

#85 MF on 08.23.16 at 8:01 am

#80 Condo price drop, not so sure? on 08.23.16 at 2:04 am

Good post. Everyone is being herded into this garbage condos. The problem lies with those who are buying both houses and condos as investments to rent out. When the market collapses (Garth is being nice about the slow melt), the SFH being rented out will be dumped and condos will be slammed hard as the glut in the GTA becomes obvious. It’s all being masked right now.

MF

#86 Mr. Frugal on 08.23.16 at 8:10 am

#75 cramar on 08.23.16 at 12:45 am
Just as Garth has stated, Hilary would be better for economy than Trump:

http://money.cnn.com/2016/08/22/news/economy/hillary-clinton-donald-trump-economy/index.html
_____________________________

Wrong. Hillary is only good for Hillary. America will prosper under a Trump Presidency. Bet accordingly.

#87 WallOfWorry on 08.23.16 at 8:10 am

If the US economy is producing all of these wonderful well paying jobs…why are taxes being collected going down?

http://www.safehaven.com/article/42340/proof-the-economic-recovery-has-ended

#88 MF on 08.23.16 at 8:17 am

#81 Cam Neil on 08.23.16 at 2:16 am

Ha I love it. You can see the CBC propaganda machine in full force. Has it ever been this obvious? Mansbridge is actually alright. The problem is he is told what to say. I watched a segment with him and McCallum and you could tell he was embarrassed for the guy, but was forced to follow the script. He was basically sighing in disbelief.

#75 cramar on 08.23.16 at 12:45 am

Now let me ask you. Do you think a career politician or a lifelong businessman will be better for businesses in the US?

MF

#89 Julia on 08.23.16 at 8:19 am

#12 Sebee

“Wonder how many people own multiple properties in Canada as percentage of home owners, like that stripper.”

I got blasted on a message board by a young woman who thought I was stupid to not invest everything I have in buying properties in Toronto. She proudly told me that at 29 she owns 5 of them, she is richer than most her age and buys as much as she can before all the Asians buy them.
I wished her good luck.

#90 crowdedelevatorfartz on 08.23.16 at 8:21 am

@#71 Brazil ExPat
“Another virus scam down the drain …”
********************************************
The Olympics has been over two days and you’re claiming “i told you so”?

Perhaps you’ve been bitten and dont realized it yet due to the “shrinkage factor’?

http://www.google.ca/url?url=http://www.bloomberg.com/news/articles/2016-08-19/zika-may-cause-brain-damage-in-adults-too&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwie2Pz_wtfOAhVN_mMKHcUWCGEQFgghMAM&usg=AFQjCNEF3QTxizxCAlIGW5q1HsiFcwVXEQ

Confirms the old adage…… “Sucks to be you”.

#91 Julia on 08.23.16 at 8:25 am

#29 Another Albertan

I have heard that some new space coming onto the market in Downtown Calgary is being offered for op. cost only.

#92 Nero on 08.23.16 at 9:31 am

Hey TRT,
Don’t get all sensitive now. ;)
I’ve been both a renter and a landlord and the best life is being neither.
….Oh, and the value of your YVR house hasn’t really gone up, the value of your Cdn money is going down…

Pass me my fiddle…

#93 gladstunned on 08.23.16 at 9:32 am

….this is what you get. A condo forest Garth”

Interesting words Garth….in most big Asian cities, that is exactly what happens…HK, Tokyo and others. The landed properties become scarcer and scarcer…everyone else into the urban filing cabinets. Karl Marx would call it concentration of capital….not sure what Groucho would call it, though he would most likely say “I would not want to be a member of any club that would have me as a member”

#94 gladstunned on 08.23.16 at 9:35 am

#38 WallOfWorry

“Canada, and Toronto and Vancouver in particular are acknowledged as one of the best places to live in the world.”

hate to be a stickler for detail, but aren’t they two cities rather than one, or have they been merged into one in the collective zeitgeist

#95 Real Muskoka guy on 08.23.16 at 9:35 am

#50 Smoking Man on 08.22.16 at 9:57 pm

While sitting on my 90 k dock in Maskoka. Staring at the stars having sips of my favorite brew. A whispering wind was sing, Smokey, oh Smokey…

There will be green helicopters in Japan in September.

Bet accordingly..
……………………………………………………………………..
Buddy if you paid $90K for a dock you are an sucker and an asshole. You were taken. I have a cottage on Lake Joseph and I am a member of the MLA.. There are only a few decks in the Muskoka’s worthy of half that value. I put in a 12 metre long floating deck and a Bertrand 2000 lift from “On The Water Designs” last year for $10K and it is an amazing deck. You comment about flipping your place for $1M plus is completely wrong. Cottages here have been sitting all season without selling. It is a buyers market now and you took the dive at the wrong time. Not going to happen if anything you will loose money. Even the multi million dollar cottages are sitting. Sorry but its not about making money up here, it is a lifestyle. Apparently your a bad investor and your $90K dock tells all of us your either a bull-shittter or an idiot. Perhaps you should stick to your imaginary lifestyle in the casinos.

#96 NoName on 08.23.16 at 9:39 am

#88 MF on 08.23.16 at 8:17 am

Now let me ask you. Do you think a career politician or a lifelong businessman will be better for businesses in the US?

—–

In my simpleton mind i believe that country should NOT be run a business, just because 2 basic business premise of business, which is growth and revenue/profit increase. Only way country can grow is through “expansion” and you raise revenue thru taxation, and before you know that country will become former “cccp”, where citizenry was neglected but main onus was put in to growth because revenue growth stolled years back.
WHAT AM I MISSING ???
How about that my tfsa question from yesterday?

#97 IHCTD9 on 08.23.16 at 9:47 am

In a big city, all condos go to zero eventually, apartments are not sold to the benefit of their tenants, and SFD’s on real dirt sell for millions. For most big city folks, the cost of living precludes any saving or investing no matter what roof is over your head.

We may be embarking upon a fairly comprehensive separation of wealth and class in the GTA. Those that own land will sell for millions and pass the wealth on. Those that have lived in apartments and condos will pass on next to nothing.

The next generation of born Canadians in the GTA will have a pretty good financial gap between them outside the 1%’ers.

#98 Arthur on 08.23.16 at 10:21 am

The entire country needs an education in risk management. I doubt the majority of new condo owners ever examined the downsides of ownership, more likely to reverberate the sales pitch then have a critical view.

People need to weigh the opportunity cost of renting and investing or mortgage payments in one asset. One is cheaper and flexible, the other in much more expensive and inflexible. Put down the Koolaid, take a step back and think, “what happens if this goes wrong?”

Of course people told property can only go up in value don’t even know a downside can occur.

#99 WalMark of Sadkatoon on 08.23.16 at 10:23 am

You’re explanation is flawed on several levels. But the easiest way to explain is that with low rates, insurers don’t have the investment gains.

WalMark is obvious horribly wrong again but just be glad he’s not managing your investment portfolio :)

#100 Paul on 08.23.16 at 10:31 am

Brexit all in the wat you look at it.

https://grrrgraphics.wordpress.com/2016/06/11/abandon-ship-brexit-great-britains-escape-ben-garrison-cartoon/

#101 Another Albertan on 08.23.16 at 10:35 am

#91 / Julia –

I have been through some of those new (and old) op-cost-only spaces. The rub is that the cost per square is quite high in the new spaces, to the point where it greatly exceeds the all-in costs at many other locations.

In addition, in order to “fit in”, you better be willing to invest a significant chunk of change to outfit your space. There aren’t too many “normal” companies whose cash flow can justify those types of expenses these days. We have a two dozen employees and it would have still cost us close to 6-figures just to do the move, never mind upping the trim level.

There is one particular well-known head lease where the particular energy company has about 100,000 sqft of finished but unfurnished space available for sublet in a new building. It’s opulent, frankly. That space is available notionally until at least 2022 for ops only. The rub is that the ops are starting at $34 per square in 2016. We surmise the company is eating about $50 to $55 per square on the head lease. Barf. You had to be pretty confident in yourself to sign a 10-year deal at well over $80 per square as the starting price.

As for the rest of downtown Calgary, there is a ton of space where you walk in and immediately say to yourself “No”. Dank and depressing space, layouts, and furniture. Clearly it was thrown together in the boom as quickly and cheaply as possible to herd employees like cattle.

The bottom line is that there are rubs to getting space “for free”. They vary from building to building and landlord to landlord and term length to term length.

Everyone else’s mileage may vary.

#102 salonist on 08.23.16 at 10:39 am

Bloomberg

Detroit is advertising for squatters

“squatters mow lawns”

http://www.bloomberg.com/news/articles/2016-08-23/what-detroit-needs-now-more-squatters

#103 NoName on 08.23.16 at 11:14 am

#95 Real Muskoka guy on 08.23.16 at 9:35 am

Cottages here have been sitting all season without selling.
—-
noone wants cottage on lake jo, especially on top end where that dude sprays “agent orange” like product, like there is no tomorow…

#104 MF on 08.23.16 at 11:40 am

#96 NoName on 08.23.16 at 9:39 am

20% vab
20% vv
10% zre
15%vgk
15%vpl
15% zcn
5% cash

MF

#105 the Jaguar on 08.23.16 at 12:32 pm

#29 & 101 – Another Albertan
Sounds like the new Meg Energy building on 3rd avenue, but it could be others.
I also wonder if some of those ‘camped out’ in the BC interior did so out of the necessity of fleeing the Ft Mac fire. Easier to tarp your truck and assume the cloak of vacationing Albertan than respond to painful questions about losing your job, your home, and your hope for the future. That big fire occurred just as the kids were getting out of school for the summer. Why not go to the lake for the summer and consider options. We live in uncertain times. Living a lean and simple life is actually a luxurious life. Flexibility, liquidity, choices, and mostly free from worry.
As for hiding from creditors – good luck. In this digital age the bounty hunters close in…

#106 Context on 08.23.16 at 12:40 pm

#95 Real Muskoka guy:- Cottages sitting around and nothing is selling so agents must be hurting. I guess we will soon be passing the hat to help those in need like Sandy Cornell.

#107 Brazil ex-pat on 08.23.16 at 12:59 pm

#90 crowdedelevatorfartz on 08.23.16 at 8:21 am
@#71 Brazil ExPat
“Another virus scam down the drain …”
********************************************
The Olympics has been over two days and you’re claiming “i told you so”?

Perhaps you’ve been bitten and dont realized it yet due to the “shrinkage factor’?

http://www.google.ca/url?url=http://www.bloomberg.com/news/articles/2016-08-19/zika-may-cause-brain-damage-in-adults-too&rct=j&frm=1&q=&esrc=s&sa=U&ved=0ahUKEwie2Pz_wtfOAhVN_mMKHcUWCGEQFgghMAM&usg=AFQjCNEF3QTxizxCAlIGW5q1HsiFcwVXEQ

Confirms the old adage…… “Sucks to be you”.

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

I rest my case…..”sigh”

#108 Brazil ex-pat on 08.23.16 at 1:03 pm

#87 WallOfWorry on 08.23.16 at 8:10 am
If the US economy is producing all of these wonderful well paying jobs…why are taxes being collected going down?

http://www.safehaven.com/article/42340/proof-the-economic-recovery-has-ended

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

Because large swaths of those jobs are Govt or Govt contractor jobs which pay no taxes but rather “consume” taxes.

#109 Self Directed on 08.23.16 at 1:06 pm

#33 45north on 08.22.16 at 9:05 pm

The CBC documentary The Condo Game makes the point that developers are able to put up these condos because Toronto City Council does not have control.

http://www.cbc.ca/player/play/2419776936

Started watching this. Just wow. I owned a condo in an aging tower in 2005… never again. Detached is where it’s at. I look forward to the day I can put an offer on a house with actual subjects… until then, I rent.

#110 chopstix on 08.23.16 at 1:17 pm

and Garth, even for those wanting a condo as a safe investment for what it really is, aka a ‘home’, nothing is guaranteed, as out here in greed driven Vancouver can attest to:
”BC’s new strata laws means some buyers may be forced to sell”
http://www.theglobeandmail.com/real-estate/vancouver/bcs-new-strata-laws-mean-some-owners-may-be-forced-to-sell/article31387492/

#111 NoName on 08.23.16 at 1:20 pm

@MF

nice yield 3%+ and gains.

i am wondering why you puts bond fund inside of tfsa, 20% is not big enough to koushun “bigger” down side, plus if anyone hates to subsidize gov. spending its you.

That is why is a bit surprising to see it there, plus you can ofset volotility equity only tfsa with apropriate bond holding in rsp acc. TFSA is “capped non tax account”, get as much growth as you can.

Start with a TFSA. This is a gift from that peckerette, F, who for once in his life listened to me. You’re allowed up to $25,500 in there now ($51,000 with your spouse, and add another twenty-five grand for each kid over 18), and all growth is untaxed. That means it is a crime against nature to put TFSA money in a savings account, a GIC or a bond. This is where the higher-growth, more volatile parts of your portfolio go. The bonds should migrate to an RRSP, while stuff that churns out dividends belongs in a non-registered account.

http://www.greaterfool.ca/2013/09/27/investing-101/

#112 chopstix on 08.23.16 at 1:59 pm

agree below…but i know of a couple, early 50s who decided to move into a bachelor suite downtown (500 sq ft!) so they could ‘enjoy the lifestyle’ in Telus gardens….were in East Van on marine drive by fraser river earlier…seriously that is just nuts….500 sq feet!

48 Totalchaos on 08.22.16 at 9:56 pm
#1 Linda

Not many “oldsters” want to move to a teensy condo down town. Those places were not built for living in. Kitchens designed for take-out, no space for having the family over for holidays, walls too thin for the grandkids to visit, forget about EMS making it past the 3rd floor if you have a heart attack… I could go on.

People love their stuff way more than they should and you won’t find many willing to trade a 3500 sq ft sfh for a 600 sq ft sky box when it means giving up the bulk of their posessions. If they have to sell, they would prefer to move further out of the city to a comparable house. This is what my parents friends who needed the house cash have done. Let’s face it, the current crop of condos were built for the young and single. And the greater fools.

#113 Context on 08.23.16 at 2:03 pm

The integrity and reason for buying a high rise condo is pride of ownership. This means owner occupied units from the pre-sale until closing and formulating a board of directors to ascertain the reserve account and other needs to be addressed. Now for those that bought a few years ago with debt have you been watchful and prudent by looking on the net on a monthly basis to see how your building has been doing? In your daily activity do you meet new faces at the elevator or see people coming and going that don’t fit in and some are creepy? This indicates units were bought by investors who are renting out. The one thing that destroys your unit value is the transformation from owner occupied to tenants renting to the point of no return. Upon seeing these signs in your tower in the sky SELL.

#114 The Wet Coast on 08.23.16 at 2:15 pm

One of the reasons Vancouver gets “Most Livable City” tag city is because of its recycling program. For example does the polystyrene go in the same recycling bin as the polybutylene? what about if it has non FDA rated adhesive labels on it? My in laws have to wash their egg shells. Its crazy and I am not sure it has added much to the quality of my life.

#115 Ace Goodheart on 08.23.16 at 2:30 pm

Condo building in Toronto simplified:

– Condo company “promotes” a new building, pre-sells a certain number of units, and obtains bank financing.

– City will usually try to stop the Condo, because the towers are generally built by tearing down whatever is still left of the old Downtown, razing shops, restaurants and buildings that date from the 1800’s, destroying the character of the streets (Yonge Street is now mostly demolished, they are hard at work on King Street and Queen Streets 1800’s era buildings and quirky shops and restaurants are under threat).

-OMB over rules City of Toronto, condo project goes ahead. Old buildings come down, history is lost, and the streetscape becomes an endless succession of glass and concrete with boring “big box” retail and restaurants.

The big question is, when the Condo developers have finished tearing down all of Toronto’s inner City and replacing it with glass and steel towers, with the help of the OMB which always over rules the City of Toronto and the will of the locals (who want to keep the character of the old streets intact) – will anyone actually want to live down there?

I think we are one of the only cities in the world in which this is being permitted to happen, and it is due to the curious structure of urban planning in Toronto, where the final decision lies with a Provincial body as opposed to with City authorities.

We are losing our downtown. It is being replaced with condos that no one lives in. And these condos for the most part are UGLY (capitals intended).

#116 Context on 08.23.16 at 2:31 pm

#1 Linda:- You have made a critical error about the old folks as their way out was not condo, but rather the joy of a nice apartment building. They could lock the door with no worry while enjoying the cash flow on the dividend tax credits being earned. It is possible to set up separate tax returns with a gross income between husband and wife of $75,000 and pay no tax.

#117 jess on 08.23.16 at 2:37 pm

Apollo Charged With Disclosure and Supervisory Failures
FOR IMMEDIATE RELEASE
2016-165
Washington D.C., Aug. 23, 2016 —

The Securities and Exchange Commission today announced that four private equity fund advisers affiliated with Apollo Global Management have agreed to a $52.7 million settlement for misleading fund investors about fees and a loan agreement and failing to supervise a senior partner who charged personal expenses to the funds.

An SEC investigation found that the Apollo advisers failed to adequately disclose the benefits they received to the detriment of fund investors by accelerating the payment of future monitoring fees owed by the funds’ portfolio companies upon the sale or IPO of those companies. The lump sum payments received by the Apollo advisers essentially reduced the portfolio companies’ value prior to their sale or IPO and reduced amounts available for distribution to fund investors.

The SEC also found that one of the Apollo advisers failed to disclose certain information about interest payments made on a loan between the adviser’s affiliated general partner and five funds. The purpose of the loan was to defer taxes on carried interest due the general partner. The loan agreement obligated the general partner to pay interest to the funds during the course of the loan, and the funds’ financial statements disclosed that interest was accruing as an asset of the funds. But that interest was instead ultimately allocated solely to the general partner, which made the disclosures in the financial statements misleading.”…

https://www.sec.gov/news/pressrelease/2016-165.html

https://en.wikipedia.org/wiki/Apollo_Global_Management

#118 Rexx Rock on 08.23.16 at 2:40 pm

Canada’s real estate boom continues in B.C. and Ontario.The economy and tsx at all time highs reflect a strong and confident outlook for the remainder of 2016 and 2017.Houses selling within hours of listings,high homeownership reflects the low unemployment rate.

#119 SickofBC on 08.23.16 at 2:40 pm

“The average Canadian family spends more on taxes than on housing, food and clothing combined,” says the Fraser Institute, described as a conservative and libertarian think-tank. It says that 42.4 per cent of the average family’s income went to taxes while 37.6 per cent was spent on basics.

The think-tank notes that “this represents a marked shift since 1960, when the average family spent 33.5 per cent on taxes and 56.5 per cent on housing, food, and clothing.”

As personal taxes have gone up, the corporate tax rate has decreased dramatically. The left-leaning Canadian Centre for Policy Alternatives notes that Canada’s corporate tax rate has gone from 36 per cent in the 1980s to 15 per cent today.

http://www.rcinet.ca/en/2016/08/23/individual-taxes-up-corporate-taxes-down/

#120 For those about to flop... on 08.23.16 at 2:42 pm

NoName,go easy on MF he is trying his best to avoid the pitfalls a lot of his generation have fallen into.

As far as having bonds in your Tfsa everyone has their reasons for what they do with it.

I am 70/30 in my tfsa as I don’t have RRSP.

I am 60/40 in my Australian portfolio

I am 50/50 in non registered accounts.

I know this is not perfect but things can be changed quickly and at the end of the day you are responsible for your own plan ,no good doing what everyone is doing if you don’t feel comfortable with it.

I’m sure sometimes the boss shakes his head when I talk about my investments. I’m sure the other day he thought ” What kind of dickhead has money invested in India” but when I was filling my tfsa I did vanilla for 35k and decided to do 1.5k in India because I thought China was about to blow,which since happened but I got the India thing wrong.

I care about my tfsa but I am not going to take it too seriously until it gets over 100k.
At the moment if one of my funds goes down a few percent and on paper I am down a few hundred dollars ,how can you beat yourself up over that.

Anyway back to MF ,he seems passionate,hardworking and not looking for handouts and is trying to make a better life for himself.

Nothing wrong with that,he will probably retire at 60 and me at 70 …around the same time.

Lots of mistakes to be made, but more importantly lots of memories to make before then…

M42BC

#121 Jas on 08.23.16 at 2:48 pm

Excuse my ignorance folks.
What does FOMO stand for?
thanks

#122 robert james on 08.23.16 at 2:52 pm

Now here is a fine citizen that would be more that welcome in Vancouver.. The Vancouver real estate board would probably kiss his azz to get him there…. http://m.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11699236

#123 Sean on 08.23.16 at 3:00 pm

Garth,

You should hear about what’s going on at the Aura building. The tallest and most expensive condo that was built only 2 years ago. The rain storm a few weeks back has resulted in major flooding which has caused the elevators to stop working for many of the upper floors. You can’t even get to your unit on certain floors and this may go on till at least OCTOBER! Wild. That’s what you are lining up to buy.

#124 Jas on 08.23.16 at 3:01 pm

The sooner the Canadian RE bubble bursts or deflates the better.
I do own a house but I want the prices to be normalized.
As Garth had suggested few weeks back, those who want to get out should do so…I think they still can do with some perceived loss.

#125 EB on 08.23.16 at 3:07 pm

#1113 Context – “Do you meet new faces at the elevator or see people coming and going that don’t fit in and some are creepy?”

Vancouver’s deluded mini-Trumps in a nutshell. The only way to be a respectable citizen is to mortgage your life for an overpriced property.

#126 Victor V on 08.23.16 at 3:21 pm

Shares of Home Capital Group taking a beating today.

https://ca.finance.yahoo.com/echarts?s=HCG.TO#symbol=HCG.TO;range=5d

#127 Barb on 08.23.16 at 3:33 pm

#121 Jas on 08.23.16 at 2:48 pm

Excuse my ignorance folks.
What does FOMO stand for?
thanks
———————————–
Fear of Missing Out.

Garth’s pages of acronyms link is here:
https://docs.google.com/document/pub?id=1EVlDhkf7qkUsihOM5HdNfECc6sahkF2iOn7G8vXqiL4

#128 Victor V on 08.23.16 at 3:53 pm

#121 Jas

Here you go: http://lmgtfy.com/?q=What+does+FOMO+stand+for%3F

#129 Smoking Man on 08.23.16 at 3:56 pm

University To Students: You’re a Criminal If You Don’t Use Transgender Approved Language

http://www.breitbart.com/big-government/2016/08/22/west-virginia-transgender-pronoun-crime/

…………………………………..

This is getting ridiculous, these kids go into crazy debt to get an obedience certificate, hoping to get a job that has already been off-shored.

But hey, that’s modern progressive education today.

Machine figures, they will get everyone kill each-our over nothing keep them from figuring out what’s really going on.

Soros is a bad, bad BOY

#130 Victor V on 08.23.16 at 4:09 pm

Alberta mired in worst recession on record as deficit balloons to almost $10.9 billion

http://business.financialpost.com/news/economy/alberta-in-worst-recession-since-government-began-recording-data-in-the-1980s-as-deficit-balloons-to-10-9-million

#131 Context on 08.23.16 at 4:10 pm

#123 Sean:- The Aura building has elevators that have not worked for many weeks because they don’t know how to fix the problems. The mini mall has turned into a ghost town with those that got sucked into buying a business space with a class action suit against the builder. This building is toast but there will be many more just like it. Man it sucks for those that bought with debt as their unit has no material value now.

#132 jess on 08.23.16 at 4:29 pm

22 robert james on 08.23.16 at 2:52 pm

New Zealand
Is this an example of – tax free shelf companies to hide funds?
======
Property crisis: 1 in 3 have looked at leaving Auckland
6:00 AM Wednesday Aug 24, 2016

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11699683

#133 Context on 08.23.16 at 4:43 pm

AURA:- I have no idea why there are so many ads to sell units there and the prices are way too high. My good eye caught a few photos and the construction looked like an IKEA special on steroids. I went to you tube to take a look at the kitchen slapped on the wall; the tiny balcony; and the typical narrow box structure, and these are selling for big money? Who in their right mind buys this stuff?

#134 Barb on 08.23.16 at 5:21 pm

U.S. new home sales increase 12.4% in July (Y/Y), due to low interest rates.

http://www.bbc.com/news/business-37169950

#135 NoName on 08.23.16 at 5:31 pm

#120 For those about to flop… on 08.23.16 at 2:42 pm

He allocated vell 80/20 is what i like or prefer. only thing is i would ditch bonds with preferds or get something like fie more volotile but also bigger yield, but that just me…

should I put small disclaimer or not..
ok i will.
i do t have any money in tfsa, most of my money is in registered accounts, that stupid funny, i forsee great discomfort and maybe suffering trying to take it out…
my wife does have tfsa, 100 equity she ant chicken.

MF is ok, if he keep doing what he say he is doing, it’ll work out for him.
but if i do what i am doing, ill just, might be able to retire at age 85 if I am lucky…

let me tell this if i am to write a book about my life it would be titled “what not to do”, ive done all rigt things wrong way, lot more fun living that way.

#136 Context on 08.23.16 at 5:33 pm

#134 Barb: The charts tell a difference story as prices are down 5.1% from last month, and 0.47% from a year ago. In order to boost the sales to get things going the homes were discounted.

#137 Insurance Guy on 08.23.16 at 5:46 pm

Auto in Ontario is a loss leader. RBC recently sold their insurance ops to Aviva, I know we don’t make money (don’t want to name my co), TD ran a 160% combined in 2014 I believe. If a carrier can write at around a 97-99% combined I think they would call that VICTORY. Just too unpredictable of a product line.

#138 Insurance Guy on 08.23.16 at 5:49 pm

And Mark you are missing the point here, more capacity drives down pricing severely. So sure that 300k house is now 800k say 5 years later. But guess what, suddenly there’s 3x insurers that quote, so the 300k price 5 years ago, same price, except now the limit is 800k. Net zero, higher exposure.

#139 For those about to flop... on 08.23.16 at 6:20 pm

#135 NoName on 08.23.16 at 5:31 pm
#120 For those about to flop… on 08.23.16 at 2:42 pm

He allocated vell 80/20 is what i like or prefer. only thing is i would ditch bonds with preferds or get something like fie more volotile but also bigger yield, but that just me…

should I put small disclaimer or not..
ok i will.
i do t have any money in tfsa, most of my money is in registered accounts, that stupid funny, i forsee great discomfort and maybe suffering trying to take it out…
my wife does have tfsa, 100 equity she ant chicken.

MF is ok, if he keep doing what he say he is doing, it’ll work out for him.
but if i do what i am doing, ill just, might be able to retire at age 85 if I am lucky…

let me tell this if i am to write a book about my life it would be titled “what not to do”, ive done all rigt things wrong way, lot more fun living that way.

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

Yeah NoName,run your own race.

My wife has RRSP but I don’t.

I like the tfsa because it seems a lot more flexible and I don’t want the tax bomb later on.

I might have got an RRSP if I grew up here but I have other things going on so I will reassess things as my life evolves.

MF and I don’t have one fund the same although we most likely will have similar results because of similar assets and percentages of allocations.

I didn’t think he would put his whole portfolio up for scrutiny but I’m glad he did because I find him to be one of the more honest and transparent contributors on here.

We run our own race ,but he ain’t heavy he’s my brother…

M42BC

#140 Zolo.ca Data Needs Better Interpreting on 08.23.16 at 6:50 pm

Used to teach Excel at BCIT and decided to look at their Vancouver numbers and enter them into Excel. From their misleading 100% Stacked Area Chart (Sales Volume by Property Type) I loaded all the sales volumes from Aug 2015 to July 2015.

Conclusion: Unit Sales Peaked in Feb/Mar (no kidding, that’s when the 5% dwn pmt rule changed) BUT PRICES DID NOT.

Next, I wanted to determine how Zolo.ca calculated Average Sales Price. From the unit sales data, I calculated a sales mix (e.g., in Aug. 2015 Det/Twn/Condo unit sales were 284/112/634 for a total of 1030 units, this gives a sales mix of 28%/11%/62%, rounding down error here, adds to 101%).

Finally, you multiply sales mix by the average sales price to get a weighted average sales price and in MATCHES ZOLO.CA calculations.

For example the May 2016 sales mix was (Det/Twn/Condo): 31%/10%/59% and from their 3 month ago average price table I got (Det/Twn/Condo, $ 000’s): 2900/1200/699. Multiply sales mix by average price and you get an overall Average Price of $1.42 MM, Zolo’s number was $1.46 MM (I am using their rounded numbers from their table).

What you find is that the detached price in May 2016 dropped from $2.9 MM to $2.6 MM in July 2016 (a direct read from their table), townhouse’s stayed the same at $1.2 MM and condo’s increased from $699K to $814K.

By directly reading the 3/6/12 mo. ago and the July 2016 number, PEAK PRICE OCCURRED IN MAY 2016, NOT Feb/Mar 2016.

From this you get WHY the Overall Average Price (May: $1.42 MM to July: $1.29 MM, -9.5%) has dropped so much is because the detached price has dropped considerably (-10.3%) and its weight vs. townhouse’s and condo’s.

More importantly, today Zolo.ca is showing a $1.1 MM overall average price. If so, and assuming the townhouse avg. price remains at $1.2 MM, Condo goes up to $820 K (used Trendline to project the August number from 3/6/12 month ago data), then using the current August sales mix, Detached prices are projected to be (to end up with a $1.1 MM average price, used Goal Seek to calculate this):

$2.15 MM – August Detached price projection using current Zolo.ca data.

which vs. May 2016 is -26% drop in price from the peak.

In another week or two we will have all the August data in and see if this holds true…I hope not, that would be devastating to that market.

BTW, unit sales have been going down, down from the Feb/Mar 2016 peak:

Feb (Det/Twn/Condo): 395/137/898
July (Det/Twn/Condo): 210/95/566 or -47%/-31%/-37%, respectively. Overall unit sales down by -39.1%.

This cannot bode well for YVR RE.

#141 Flopper Fan on 08.23.16 at 10:50 pm

#120 For those about to flop… on 08.23.16 at 2:42 pm
#139 For those about to flop… on 08.23.16 at 6:20 pm

Nice touch…

#142 Victoria Real Estate Update on 08.24.16 at 5:17 pm

Do not post.

$183 K, Palm Bay, FL
4 beds, 3 baths, 2,159 sq. ft., built in 2006, attached double garage

$195 K, Jacksonville, FL
* 4 beds, 2 baths, 2,169 sq. ft., built in 2011, attached double garage

#143 Victoria Real Estate Update on 08.24.16 at 5:22 pm

Do not post.

$184 K, Palm Bay, FL
* 4 beds, 3 baths, 2,159 sq. ft., built in 2006, attached double garage

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$195 K, Jacksonville, FL
* 4 beds, 2 baths, 2,169 sq. ft., built in 2011, attached double garage

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