Your choice

Money’s everything these days. Most people just don’t have enough of it. No wonder a survey of HR people this week found 43% of Canadians would punt their existing job for another that pays more. Dudes, especially – 45%, compared to the fems (39%).

That sucks for employers. But we’re entering a new phase. Inflation and wages are moving up. The economy’s growing. As a guy who’s hiring right now, it’s evident there may be more professional jobs that applicants.

Besides, everybody needs more income. Real estate has done that. It’s brutalized household finances. New evidence of that surfaced Monday, just two days before the next interest rate hike. “When you look at the staggering number of people who are teetering on the edge, it’s clear that we are going to start seeing a rise in delinquencies as rates rise,” says the head of MNP, whose latest survey had sobering results.

  • If rates increase, 28% said they will probably move towards bankruptcy, unable to pay their monthlies.
  • If rates rise “much more” 42% say they will fear for their financial well-being.
  • Currently 27% say they have no cash left after paying their monthly expenses. No savings. No investments.
  • And 44% claim they are within $200 of insolvency on a monthly basis.

Seriously. In Canada, where unemployment has fallen, job creation has risen, the economy is vibrant, inflation has rekindled, financial markets are advancing and corporate profits are romping. Also, this personal financial disaster is taking place after almost nine years when interest rates were absurdly low, allowing people a once-in-a-generation change to reduce debt, get their personal lives in order and improve personal finances.

Did they do that?

Nah. Rhetorical question. Of course not. They blew it.

Now household debt’s at a record high. There is $2 trillion owed, most of it in the form of long-term mortgages getting more costly. And four in ten say they don’t have two hundred bucks extra. Pathetic. What a fail.

Home ownership has risen to the highest level in history, concurrent with the greatest recorded pile of mortgages and the most aggravated prices. It now takes 88% of pre-tax income (says RBC) to buy a house in Vancouver, 74% in the GTA, and 48% across the country. That is above every lending metric – yet people keep jumping into the borrowing abyss. If house prices reverse for a few years (immensely likely) these folks are pooched. They’ll be pouring income into debt-servicing costs for assets costly to own and depreciating at the same time. That’s been the warning call of this pathetic blog for years. Balance, baby. Seek and maintain it.

Well, the odds today for a rate hike Wednesday are over 80%. All home equity lines and VRMs will go up. So my conclusion, after being in the personal money business for four decades, is simple: the wealth divide will grow more extreme. Most middle-class, middle-income, going-nowhere people are shoveling money into maintaining debts (mostly on houses), while the 1%ers who hold the bulk of their net worth in financial securities get wealthier. Remember the adage: the rich hold assets. The poor have debt.

Here’s the classic evidence, from American academic Edward Wolff. The middle-class obsession with real estate is okay when prices are realistic. But in a volatile housing bubble economy, concentrating your wealth in one single asset seriously augments risk. Combined with big leverage, it can actually make you poorer. If the bubble deflates, equity goes but debt remains.

But, I hear you cry, don’t be a callous dink! Houses cost what they cost. What choice did I have?

There is always a choice. Over and again this blog has proven that for young people renting a condo, for example, is far smarter than buying one. Lower cost. Less risk. More flexibility. Additional cash flow to invest, and you can still live in an identical unit. Why on earth would a 25-year-old single man or woman want a mortgage, property tax bill, condo fees, closing costs, land transfer tax and a potential for loss, all to be in a 600-foot, one-bed room box that they can lease? How did we so lose our way?

Similarly, expecting to live in the same hood your parents did forty years ago within biking distance of downtown (Vancouver, Toronto, Calgary, Ottawa etc) is a fantasy. Populations have swollen, demographics have changed, cities have spread outwards like viruses, transit lines have skewed valuations and urban dirt has become vastly more precious. Meanwhile incomes have failed to meet inflation in any meaningful way. The economics just don’t work for most people.

So, move. It’s a big country.

Or you can obey society, moan, and pay the price.

198 comments ↓

#1 Reynolds531 on 07.09.18 at 4:33 pm

I’d like to see a version of the graphic with actual dollars instead of percentages. You’d need three pages to properly show scale and the difference in net worth.

#2 mortgagebroker on 07.09.18 at 4:35 pm

FUURST I would like to say. Thank’s Garth for your insight’s on finance. It is insane how highly leveraged people have become. With the cost of money growing higher, will those people really not have 200 per month? I find that hard to believe, maybe they just budget to spend all the money and not pay themselves first?

#3 Stan Brooks on 07.09.18 at 4:36 pm

It is a big world.

Stay as far away from the greedy fingers of the french villa guy as possible.

#4 Dave on 07.09.18 at 4:45 pm

The wealthest people I know are real estate developers and blue collar trades. Head and shoulders ahead of white collar smucks who try to protrait themselves as better off then you.

Now the pain will hit all debt fronts, whats in your bank account?

#5 crowdedelevatorfartz on 07.09.18 at 4:46 pm

Well, if my friends and co workers are any indication……
Potential insolvency is much higher than 45% of the population if rates keep rising…….

Happy housing debacle everyone…..

#6 Wrk.dover on 07.09.18 at 4:52 pm

So, this is a pic of Smoking Man enjoying New Port Beach?

And because California, that is where the smoke must blow? He looks quite comfortable with it! What evs.

#7 Doug t on 07.09.18 at 4:56 pm

Consume consume and consume some more – people are lost – they live a life of useless material consumption – void of contact with nature -void of any spiritual connection – losing real personal interaction more and more – mental health issues off the charts – addiction off the charts – living to get their next fix of consumption to fuel the rush of endorphins- struggling to make ends meet and cling to the hamster wheel in false hope that a miracle will save them

The reason we want to go on is because we live in an impoverished present

RATM

#8 Stan Brooks on 07.09.18 at 4:59 pm

Is that Poloz on the picture, blowing off the economy with his monetary policies?

Nice blowing….

#9 Leo Trollstoy on 07.09.18 at 5:00 pm

Furst

#10 Trump Baby on 07.09.18 at 5:05 pm

#6 Wrk.dover on 07.09.18 at 4:52 pm

So, this is a pic of Smoking Man enjoying New Port Beach?

And because California, that is where the smoke must blow? He looks quite comfortable with it! What evs.
..

Looks like smoker dude practicing to blow up Trump Baby… a lot of hot air in both

#11 Rallie Redforge on 07.09.18 at 5:18 pm

Garth, Time to buy more bonds with rates creeping higher? They’ll be stellar for the next time rates drop if we need help through a Trumpian Recession!

#12 Darts on 07.09.18 at 5:25 pm

Hey Garth, the other day you said a big recession was not in the cards. Do you think households can actually go through this deleveraging/ housing correction without pulling our economy down?

Yes, it’s the likeliest scenario. – Garth

#13 Reality is stark on 07.09.18 at 5:25 pm

If you want to be poor the formula is simple these days.
Get married, have children and buy a big house because you need the room.
That way you have the joy of dying uneasy.
You don’t have to be stupid.
You have choices.
You can live the dream, don’t listen to the crowd. Most of them are miserable because they are in debt up to their eyeballs.

#14 Honey Dripper on 07.09.18 at 5:32 pm

You have to have a life but living in the constant pressure of debt is NOT a life. You just become a slave wallowing in the misery of a dead end job you can’t quit. Pass the scotch!

#15 dakkie on 07.09.18 at 5:34 pm

Another Drawback to the Housing Bubble

http://www.investmentwatchblog.com/another-drawback-to-the-housing-bubble/

#16 Dolce Vita on 07.09.18 at 5:35 pm

“Or you can obey society, moan, and pay the price.”

Right on the money.

I asked my Realtor about this years ago, a top 1% ReMax guy in YVR that I’d known for about 15 years, and he replied:

“It’s all about ego.”

And “There is always a choice.” could not be more true.

Individualism is a lost art Garth. Social conformity nowadays the norm.

You just need read Twitter to know the perils of not conforming (Aside: drop the “ter” and you have their constituency by in large – again, recall the average IQ of humanity is 100; thus, half are below that and I have concluded they all post regularly on Twitter).

Giving weight to the saying “Misery does indeed love company” (>> than 35 sampled on Twitter w/little variance; hence, statistically significant).

#17 Reynolds531 on 07.09.18 at 5:35 pm

Legit first!

#18 Fish on 07.09.18 at 5:41 pm

Greyhound Canada cancelling all but one route in B.C.

https://bc.ctvnews.ca/mobile/greyhound-canada-cancelling-all-but-one-route-in-b-c-1.4005973

#19 darkselling on 07.09.18 at 5:44 pm

Hey Garth, the other day you said a big recession was not in the cards. Do you think households can actually go through this deleveraging/ housing correction without pulling our economy down?

Yes, it’s the likeliest scenario. – Garth

Is that assuming there’s no big trumpian nafta blowup / auto tariff?

#20 A J on 07.09.18 at 5:51 pm

Yes, people have a choice. And many choose to blame other people instead of looking in the mirror. In my opinion, that is the biggest folly in people these days. I see if all around me. Especially when it comes to blaming the government for EVERYTHING. I blame social media where people point fingers and then have others join in the finger pointing, making them feel validated. Meanwhile, the fault for their misery is all their own. Personal responsibility takes the back burner when you can complain on Twitter and have some troll stroke your ego and tell you that yes, “so-and-so” is at fault for all of life’s woes. It’s a sad state of affairs. People need to take control of their own lives and lead them in a better direction. We have more prosperity and better quality of life then millions of others throughout history and in other corners of the planet. You can either spend your life whining and complaining, or living and thriving. It’s your choice.

#21 Investx on 07.09.18 at 5:52 pm

Rise up!

Savers will finally be rewarded again.

#22 Shawn on 07.09.18 at 5:53 pm

“Yes, it’s the likeliest scenario. – Garth”

Don’t kid yourself. It will drag on Canadian bank eps which make up 50% of TSX earnings. No crash, just weaker earnings growth and occasional bouts of declines.
It’s a recipe for long term TSX underperformance relative to the S&P500. Just like the 80s and 90s as you eluded to in a previous post.

#23 yvr_lurker on 07.09.18 at 5:57 pm

“Similarly, expecting to live in the same hood your parents did forty years ago within biking distance of downtown (Vancouver, Toronto, Calgary, Ottawa etc) is a fantasy. Populations have swollen, demographics have changed, cities have spread outwards like viruses, transit lines have skewed valuations and urban dirt has become vastly more precious. Meanwhile incomes have failed to meet inflation in any meaningful way. The economics just don’t work for most people.

So, move. It’s a big country.

Or you can obey society, moan, and pay the price.”

——————-
Or in YVR you can work to enact political change and will to try to tackle the runaway housing market in the urban core fueled by speculation and foreign ownership, i.e. NDP policies. Let’s see where we are in 4 years on this one. Hopefully, YVR will have some resemblance to the place it was 15 years ago. Perhaps our kids won’t have to move out to Drayton Valley or Kamloops to try to scratch out a decent living.

#24 Dolce Vita on 07.09.18 at 6:01 pm

As a very sore loser Azzurri tifóso:

Thank You England for having eliminated Sweden.

They can now go back home and continue to make cheap unassembled furniture for the masses (and eating their hideous cuisine).

One beef though England, which I posted about yesterday very late and bears repeating:

Stop using OUR flag, the Saint George’s Cross.

It is Genova’s and you leased it from us from 1190 AD to 1771 AD; whereupon, you stopped paying.

You flew our flag in the Mediterranean for centuries to obtain protection from the powerful Genovese navy.

It’s time to pay up or use somebody else’s flag and NOT ours.

Besides, Italy’s GDP and Genova could use the cash.

All the best on Wednesday England (a game where I love both teams, the other 2 semi-final teams…not so much).

Genova Mayor Marco Bucci will try yet again England to invoice your threadbare Queen for use of our flag, with accumulated interest (compounded).

Time to pay up you flag abducting, cheap, pasty/toad in the hole eating (and other such English haute cuisine), children born out of wedlock.

Which reminds me, stop coming to Italy and trying to order “Spaghetti Bolognese”.

It does not exist and the thought of eating spaghetti with a meat sauce is revolting to we Italians – then again, we consider the source and what passes off as food in England (and the sewer water you call coffee, small wonder you are nation of tea drinkers).

#25 Baroque Millenial on 07.09.18 at 6:02 pm

I thought I didn’t have $200 at the end of the month, until I remembered that 10% is deducted off my paycheck and put into RRSPs. If I didn’t do that, guaranteed I’d go paycheck to paycheck, because I sorta do. Saving takes will power, having the money deducted first makes life more simple.

#26 jess on 07.09.18 at 6:06 pm

“reinventing manufacturing.”

digital localized personalized factories

https://www.wired.com/story/inside-speedfactory-adidas-robot-powered-sneaker-factory/

#27 KLNR on 07.09.18 at 6:07 pm

If rates increase, 28% said they will probably move towards bankruptcy, unable to pay their monthlies.
If rates rise “much more” 42% say they will fear for their financial well-being.
Currently 27% say they have no cash left after paying their monthly expenses. No savings. No investments.
And 44% claim they are within $200 of insolvency on a monthly basis.
______________________________
How the hell do folks let their lives come to this?
that’s a lot of stress to carry, for what?

#28 Fish on 07.09.18 at 6:09 pm

Greyhound Canada to end bus service in Western provinces

https://www.cbc.ca/news/business/greyhound-cancellations-alberta-manitoba-saskatchewan-british-columbia-1.4739459

#29 Zapstrap on 07.09.18 at 6:19 pm

Just glad I was born when I was. Won the lottery and I had no choice …

#30 Lisa Lisa on 07.09.18 at 6:22 pm

You’re quite out of touch, Garth. Yes, it’s a big country but unless you can find a job harpooning seals or hunting moose, you’re out of luck unless you live in or near a large city. Tech jobs are more mobile but that still leaves a lot of people out of the loop.

Unless you are creating jobs that are actual career jobs that pay enough for a family to live on, don’t crow about how well Canada is doing.

Fess up. You are just another schmuck creating minimum wage service jobs. This does not in any way equate with success for your applicants nor for the country at large.

Talk like an economist, not like a broker trying to talk up the economy. It’s kind of transparent. I feel I can speak my mind freely as you likely will not post this on your blog.

You criticize me for creating jobs? Interesting. By the way, I am hiring for my financial business. No harpooning involved. – Garth

#31 rental property math on 07.09.18 at 6:30 pm

Has anyone looked at what current rental rates are these days? $1200-1300 for a basement in Hamilton.. That’s insane. B-20 sure slowed down that rapid price appreciation. Looks like it got shoved into rents. Now if only my tenants would leave so I can get market rent.

#32 Newcomer on 07.09.18 at 6:36 pm

“Similarly, expecting to live in the same hood your parents did forty years ago within biking distance of downtown (Vancouver, Toronto, Calgary, Ottawa etc) is a fantasy.
——

For some, yes. but if you look at major cities in other countries, particularly capitals and regional capitals that are much larger than our still relatively small cities, you find that there is a high concentration of young people. It is in no way the case that urban centers are normally the exclusive domain of rich old folks. This is a temporary aberration caused by abnormal financial conditions and will change back to normal.

Not a chance. – Garth

#33 crowdedelevatorfartz on 07.09.18 at 6:38 pm

@#20 AJ
“Especially when it comes to blaming the government for EVERYTHING….”
++++
Work for the govt do we?

Well,
Its not like the geniuses in govt dont give us plenty of ammo to aim and fire away …..

#34 Teddy Two Toes on 07.09.18 at 6:41 pm

What should I do?? Finances are in order, balanced and diversified, and I’m buying a nice house in a great location. Should I take the variable at prime -1 or go fixed rate? I can afford the additional payments as prime increases but it sounds like I may save money by locking it in over the 5 year term. Advice would be greatly appreciated. Thanks!

#35 Karl on 07.09.18 at 6:46 pm

Garth, you say renting is the better option. I’ve heard O’Leary say the same. Though you both seem to focus on young 20-something’s buying condos. What about those with families in their mid 30s? At what point is buying a house acceptable in your view given that you just laid out the fact that urban dirt is in very low supply (which would mean owning one is a great investment)?

Simple. If you can afford it without putting too much of your net worth in one asset. – Garth

#36 Screwed Canadian Millenial on 07.09.18 at 6:47 pm

Smoking Man the George Soros wannabe LOL. Fancies himself being a billionaire globalist elite, meanwhile back in reality he’s a thousandaire Canadian pleb.

You really are Smoking too much substance, Man.

#37 For those about to flop... on 07.09.18 at 6:47 pm

I am hiring for my financial business. No harpooning involved. – Garth

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

I didn’t apply last time.

I will this time if everyday is a whale of a time…

M44BC

#38 SunShowers on 07.09.18 at 7:02 pm

That chart is extremely misleading.

The principal residence makes up a larger percentage of a 99%er’s gross assets, because a 99%er HAS FEWER ASSETS.

If a 99%er’s principal residence costs 250 grand, that doesn’t mean that we should realistically expect a 1%er’s principal residence to cost ~22.5 million.

The rich don’t sagely eschew real estate, they just have more money to begin with so that they don’t need to choose between investing and having a place to live like everybody else does.

#39 crowdedelevatorfartz on 07.09.18 at 7:04 pm

@#29 Lisa Lisa

I guessed you missed the last few years where Garth employed dozens to rebuild the Belfountain general Store into a thriving shop that now employs locals who would otherwise be unemployed.
Or his latest endeavour rebuilding a historic building in another small town in another Province thus employing many more trades and townsfolk who might otherwise be unemployed.
But its all about you and “big city life”….yawn.

Just curious.
Whats your last name LisaLisa?
PizzaPizza?

#40 Kool Aid on 07.09.18 at 7:05 pm

Obviously the B20 rules function is to improve capital formation for our financial institutions at a time where capital will flow in a unbalanced volume from Canada to the USA.

Canada will need to go on sale soon as the USA downs NAFTA and shuns WTO authority, interesting times ahead, no debt, no problem.

#41 Nonplused on 07.09.18 at 7:06 pm

And the interesting thing is that the 1% still have more money in real estate than the 99% do, it’s just a smaller part of their overall portfolio. There are a number of hoods in and around Calgary where the houses go for more than a million and many of them are paid off. I’m sure that’s true of most cities in Canada.

But let’s face it, many of the 1% got that way because of the real estate boom. My dad got pretty rich as a carpenter by trade. He wasn’t making much money, carpenters aren’t usually in the 1% based on wages alone, but he was very close to the residential housing market. So he and his first partner mortgaged everything they had to buy a bunch of lots and build on them, and promptly went bust in the crash of ’82 and lost everything.

You’d he would have learned something, but he got a new partner and they promptly leveraged everything they had and then some to by some vacant lots and build. That worked out so they did it again, this time a small piece of and that they developed with even more leverage. That eventually cost them more than it made but by the time the bills came in they were on to an even bigger piece of land with even more leverage and the profits from that one covered the losses on the last one. That one turned out to be pay dirt because as the economy turned around they found themselves sitting on a half section of land (through options) purchased when the bank couldn’t wait to get ride of the property. Once that was built out they decided land prices had risen too much to make it work so they got in with a bunch of other investors, even more leverage, and went into commercial real estate. That exploded even higher so they got even more investors and even more leverage and expanded several times. So he has all his assets in one thing, commercial real estate, but it pays a surprisingly good dividend, part of which is a “return of capital” so his tax rate is pretty low. Notice Moronreau didn’t go after these types of structures because that would have affected his own tax rate. It’s basically a REIT dressed up as a limited partnership.

And that, my friends, is how a carpenter can join the 1% in Canada. Lots of risk, a bankruptcy or two, seeing an opportunity where others don’t, getting lucky, and leveraging the hell out of it. If he’d just kept to building houses, whether as a contractor or as an employee, he wouldn’t be driving around in that big-assed motor home he has now. His partner had a bigger slice of the pie (had more money coming in) so now he owns an aviation company on the side and has his own airplane.

I didn’t really feel to impacted when he went broke and we had to move because the bank took back the house, or the second time when we had to move because the landlord sold the house, or the third time because he was moving to one of the lots he was developing to be closer to work (I moved out at that point, enough moving!). But I was paying attention and I learned a lot about risk and wealth. It’s hard to get truly rich without opportunity, risk and leverage. Yes, if you have a good income, watch your pennies, and invest through Turner investments, you’ll have a nice life. But to get really rich you need opportunity, risk, and leverage.

I’ve been a sort of “business tourist” ever since, making note of other people who live in very nice houses based on what would be considered pretty trades-orientated careers. One of my wife’s friend’s family runs 50 tow trucks. The guy I bought this house from ran a stucco business with 20 employees. He left a Kabota tractor for me and has a big-assed motor home too. Another friend of my wife’s family got in on the “micro wave” internet for rural users that were out of the cable service area and that business is still going strong. It works kind of like cell phones, the set up towers and then put dishes on people’s roofs and beam them internet. They can still compete even though Shaw has moved into that space. Better service. All of these people created jobs. My dad and his partner didn’t hire a lot of people directly, but when the equipment arrived to pave the roads there were a lot of people getting a paycheck. And someone who took risks owned the company they hired too.

Heck even the guy who empties my septic tank has his own rig and company. Imagine how surprised I was one day when he sent his 21 year old daughter to do the job. You don’t see a cute 21 year old girl driving a septic truck when she’s on break from university every day.

This is and was the Canadian dream folks. Even a plumber can build a biggish company. The socialists need to understand that without these people, economic activity would be less, growth would be impossible. Many of these entrepreneurs wouldn’t exist if the socialists had there way and snuffed them out with excessive taxation. They are an important part of the economy.

I’ve often wondered what drove a man like my dad, journeyman’s certificate in hand, to take such risks. I think it became fairly clear to him at an early age that the only ways he had to make some serious cash were to work up north (which he did for a while), or bet it all. He was in a potion to do that because the alternative was to settle for a meager day to day existence. He’d had plenty of experience with that as an immigrant when he was a child, so he rolled the dice.

#42 For those about to flop... on 07.09.18 at 7:15 pm

Pink Lemonade Stand in Richmond

Picked up for 1.78 March 2017 ,they just took 80k off and are back down to pretty much what they paid for it.

Assessment only comes in at 1.74 so the realtor has their work cut out for them.

Been trying to exit the market since late 2017.

Hired a short term rental,didn’t read the signs ,and are now heading for the cliffs…

M44BC

4902 Duncliffe Rd, Richmond. Paid 1.78 March 2017.

Assessment 1.74 .

Asking 1.79

2017-10-18 : $1,968,000

July 9,2018 $1,799,000 Price Reduced
Jun 13, 2018 $1,880,000 Price Reduced
May 16, 2018 $1,988,000

https://www.zolo.ca/richmond-real-estate/4902-duncliffe-road

https://www.bcassessment.ca/Property/Info/RDAwMDBZMVRWOQ==

$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Feel free to make a donation.

Flop For Fox Fund…

http://www.terryfox.org/get-involved/ways-to-give/

#43 Dolce Vita on 07.09.18 at 7:15 pm

“Do you think households can actually go through this deleveraging/ housing correction without pulling our economy down?
Yes, it’s the likeliest scenario. – Garth”

Honest to God Garth (the Big Electron for all you atheists, the God part, not Garth; although, when it comes to finances it could be argued…) you exasperate me and as much, I am sure, as I exasperate you on this Recession issue.

Yesterday you posted a laundry list of how a rate increase will erode Cdn. finances as in, big time.

Today another laundry list of how far too many Canadians are teetering on financial ruin (certainly many more % than it took to push America into the Great Recession).

Yet you persist in saying that all is fine economically and that is the likeliest scenario. You are unsinkable.

I posted late yesterday that all the economic indicators were wonderful (a near mirror image of what they are now) and then out of nowhere, the 2006 Great Recession came and resulting Cdn. unemployment and some suffering in house prices, not like the Americans though.

It happened in America because people could not afford their home payments anymore.

Your Blog today outlines the same scenario.

A trusted ON Bankruptcy Trustee posted a few days ago on Twitter that what should be a sleeper month, July, instead has seen business boom.

I disagree with your likely scenario assessment. The only thing preventing a recession right now is Cdn. finances teetering on the brink and that they would rather commit Seppuku than not make their mortgage payments.

With rates going up, that ends. RE Inventories will peak yet more, sales will drop as house lust greed persists until bank account reality is felt and then prices will drop.

I say this happens sometime in 4th Qtr, sales plumetting, consumer spending dropping like a rock along with RE prices. That, like in 2006 America, will result in recession…same scenario…too many over leveraged people without enough cash to pay.

All that you have posted in the past few days points to this and only this.

To be honest, Canada got a “bye” on the Great Recession in terms of financial suffering, nowhere near as decimating as in America.

All we have done is delayed that Great Recession.

Time to pay the piper.
——————————–

The BoC should have acted sooner to raise rates – 9 years of low rates. As a result of their inaction and indecision, many more Cdns. will suffer.

OSFI also asleep at the wheel and did not reign in the banks on making low rate loans to so many that would not otherwise qualify and we learned about 1/3 of buyers are gone because of high risk lending in YVR and 416 where mortgage values are astronomical.

All in all, pray that we receive no external economic shock beyond what we have let happen, if Trump is that external shock to 1/3 of our GDP rather than bombast, well…catastrophic will be the end result. He has done this to China in the last few days. Canada may well be next on Trump’s radar…

#44 tccontrarian on 07.09.18 at 7:17 pm

So, you’re hiring? Let me guess: a precious-metals division for those seeking a better return (with higher risk, of course!)

TCC

#45 Vision on 07.09.18 at 7:18 pm

Dave

The wealthest people I know are real estate developers and blue collar trades.
….
Real estate developers because they sell to the greater fools.
Blue collar trades… because they deal in cash. No income tax.

Smear. – Garth

#46 Tanya Tate on 07.09.18 at 7:20 pm

Our family has loads of GIC’s, TFSA’s, RRSP’s, RESP’s, RDSP’s, ETF’s, REIT’s, dividend paying stocks, preferred shares, mortgage investments,annuities, life insurance, pensions, term deposits, step-up term deposits, government and corporate bonds, floating rate bonds, strip bonds, rental properties, cashable GIC’s, gold, platinum, silver coins, bars, collectible stamps, comic books, sports cards, art, paintings, classical cars, bitcoin and many alt coins.

Assets, investments, property make people winners.

We have no debt at all!!!!! It makes people losers!!!!!

#47 Darryl on 07.09.18 at 7:20 pm

It could be a BC anti pipeline protester sniffing the unicorn farts

#48 Timmy on 07.09.18 at 7:24 pm

Move to the middle of Canada and work at a 7-11

Urban ignorance on parade. – Garth

#49 Mattl on 07.09.18 at 7:29 pm

#129 The Dood

“And I suppose (according to your idiot logic) salaries in the Okanagan fully support that kind of pricing huh?”

Median income in Kelowna up almost 20% the last decade. Only slightly under Greater Vancouvers now. no where do the medium incomes support the property prices but 550k on 68k makes more sense then 72k on 900k. Or whatever crazy numbers you see in North or West Van.

There is a ton of money here, from the Coast and AB. It is going to continue to be the premier retirement destination in Canada, boomers love the place. 45 mins by air to Calgary or Van, direct flights to Toronto, Mexico, the US.

I imagine RE prices will soften, fall a bit, languish but unlike Maple Ridge and Milton the place is a gem. Apologies for the shilling but people that think Kelowna is going to take a beating are dreamers.

#50 renter in Surrey on 07.09.18 at 7:30 pm

0.25% rate hike is just extra $64/month on $500K mortgage – not worth talking about, same with forecasted 2-3 hikes next year.

There will be no bankruptcies; RE or rent will not be cheaper.

If there is no severe recession – nothing will change in La La Land.

#51 islander on 07.09.18 at 7:33 pm

“MNP Consumer Debt Index Jumps 10 Points to Highest Level Indicating Increasing Optimism Among Indebted Canadians
Canadians are more confident in their ability to absorb interest rate hikes and feel their debt situation has improved”

https://globenewswire.com/news-release/2018/07/09/1534448/0/en/MNP-Consumer-Debt-Index-Jumps-10-Points-to-Highest-Level-Indicating-Increasing-Optimism-Among-Indebted-Canadians.html

I guess MNP can put a positive spin on almost any debt scenario. Worth reading the article though….

“Earlier this month Stats Canada reported that Canadians’ household debt ratio saw the biggest drop on record, with many suggesting that new mortgage rules and higher interest rates are helping to slow the pace of borrowing.”

“Make no mistake about it, the level of household indebtedness in Canada is still very concerning. As a country, we owe an astounding $599 billion on credit cards and other non-mortgage consumer debt. Two things likely got us to this point: a lack of financial literacy, and credit providers lending to borrowers who are overconfident about their ability to repay.”

#52 Spectacle on 07.09.18 at 7:34 pm

The Point ::
” If rates increase, 28% said they will probably move towards bankruptcy, unable to pay their monthlies. ”

Garth Turner Quoted

My response ::
So to stay put or move forward financially, I should resign this Friday and take a position paying 28% more (it’s actually 30% more ).
Good idea, Again I thank you Mr. Turner for your help.

#53 Moh on 07.09.18 at 7:38 pm

Hey Garth,
Blame our middle aged parents who put so much value in real estate. Being 32 years old with a net worth of 100K, I am still in shock that it is not enough to buy a house. People are having orgasms over plywood and bricks. As I mentioned you yesterday, people have been brainwashed to think that owning a house is the best financial decision. According to parents today (mine personally) people who do not own houses are stupid and are bad people .

Hopefully rising interest rates will smarten folks up. For now in the eyes of my greedy real estate loving extended family which comprise of twenty and thirty something year olds getting hot and wild for real for boxes in the sky I am a loser. Funny I am close to securing a six figure salary at a prestigious IT org and yet I get no respect.

Just the other day my 40 something year old cousin called me to tell me that he found a great town house complex for me. 640K for a three bedroom town in Brampton according to him is a great deal. Throughout the conversation I tried to explain to him that the real estate situation is not looking good in GTA. However his constant argument was that real estate never goes down! I remember the phrase in Bugs Bunny when I was kid was “if you can’t beat them, join them”.

Is that my faith?

#54 For those about to flop... on 07.09.18 at 7:44 pm

I chuck my all my dead coins in Trevi Fountain…

M44BC

“The Multi-Billion Dollar ICO Market in 2018 Captured in One Graph.

The ICO market is continuing to sizzle this summer with new coins entering the market almost everyday. With so much activity, it can be difficult to keep things in perspective. What constitutes a large initial coin offering, and what’s small peanuts? Our new visualization makes things very simple.

We got the data for our visualization over at coindesk. We placed the total value of each initial coin offering into a color-coded and clustered bubble chart. We included the logo or name of each coin and the initial valuation (if size permitted), creating a quick snapshot of the ICO market today. For visualization purposes we only looked at ICOs worth more than $20M.
Top 10 Biggest ICOs in 2018
1. Telegram: $1.7B

2. Dragon: $320M

3. Huobi: $300M

4. Bankera: $150.9M

5. Orbs: $118M

6. Envion: $100M

7. Flashmoni: $72M

8. Neuromation: $71.7M

9. Elastos : $70M

10. Zeepin : $61M

Our visualization makes two points clear about the ICO market right now: only a couple are big in size, but there are dozens of opportunities to be had. First off, it puts Telegram’s monster $1.7B ICO into perspective. It was bigger than all the other top ten ICOs combined. And in fact, there is a similar inequality further down our list. Only 2 other ICOs broke $300M, and an additional 3 broke $100M. This suggests that ICOs struggle to break through the $100M threshold.

Second, the pace of cryptocurrency innovation is quite staggering. Consider for example thecumulative value of ICOs over the last five years. This trend manifests itself in the form of several low-value ICOs largely only known inside the cryptocurrency community. We set a floor for our visualization to only include ICOs worth $20M or more, which left us with 115 bubbles in our chart. That means we excluded 219 other ICOs from this year alone worth less than $20M but still tracked by coindesk. That’s about 2 new ICOs every single day this year.

The speed at which the market is changing can make it hard to know which cryptocurrencies deserve attention. This in turn creates an opening for things like cryptocurrency index funds. It also makes the market vulnerable to bad actors. A new study also found that the market is susceptible to scams, although investors don’t seem to be too concerned. A rapidly changing market also means that many ICOs burn out, leaving over 800 dead coins.”

https://howmuch.net/articles/ico-market-2018

#55 Trojan House on 07.09.18 at 7:49 pm

Assets are something that makes money. Liabilities are something that lose money.

The rich use debt to buy assets. The rest of us use debt to buy liabilities – in other words, a house, cars, a cottage, an in-ground pool, boats, motorcycles, big screen TVs, ipads, iphones, iwatches, so on and so forth.

Why is a house a liability? Factor in all the costs of home ownership, plus the lost opportunity cost of investing, and be honest with yourself – even if you sell, have you made money?

#56 Zapstrap on 07.09.18 at 7:51 pm

#29 Lisa Lisa on 07.09.18 at 6:22 pm

You’re quite out of touch, Garth. Yes, it’s a big country but unless you can find a job harpooning seals or hunting moose, you’re out of luck unless you live in or near a large city.

Can you believe Alberta just banned spearing bears? Really … how could that have been right?

#57 Great Recession Cometh... on 07.09.18 at 7:52 pm

#38 Dolce Vita on 07.09.18 at 7:15 pm

“Do you think households can actually go through this deleveraging/ housing correction without pulling our economy down?
Yes, it’s the likeliest scenario. – Garth”

Honest to God Garth (the Big Electron for all you atheists, the God part, not Garth; although, when it comes to finances it could be argued…) you exasperate me and as much, I am sure, as I exasperate you on this Recession issue.

———————————————————–

I’m in agreement with all you’ve written here! Bravo

#58 Sideshow on 07.09.18 at 7:57 pm

#4 Dave on 07.09.18 at 4:45 pm
The wealthest people I know are real estate developers and blue collar trades. Head and shoulders ahead of white collar smucks who try to protrait themselves as better off then you.

Now the pain will hit all debt fronts, whats in your bank account?
#########################
…whats in your account? – $1Mil, which is much these days.

#59 dr talc on 07.09.18 at 8:04 pm

keep it simple:
debt for investment -good
debt for consumption -bad

#60 Danny on 07.09.18 at 8:08 pm

Garth you correctly say:
“Home ownership has risen to the highest level in history”..yes but is it really not ….”Home Ownership by banks? …..of course until the mortgages are paid off by the next generation, the kids of the new neighbors on the block?

Our new miniature Trump, …..Premier Ford and friends have publicly blamed a recent wave of immigrants and refugees for the long-standing housing crisis.”

Did not hear much about this during the election.
Oh well actually Parrot Ford….only ran on slogans…..now we will see the real fangs of Ford’s puppet masters.

Making racist statements like this with no evidence, as Garth has said many times….it’s the Canadians (and some with foreign money )who have turned housing into a strong speculative force ……not poor immigrants.

Hey Ford where are your people from? You probably don’t know or care.

#61 The Real Mark on 07.09.18 at 8:20 pm

“are dreamers.
#48 renter in Surrey on 07.09.18 at 7:30 pm
0.25% rate hike is just extra $64/month on $500K mortgage – not worth talking about, same with forecasted 2-3 hikes next year.”

Sounds like you need a new calculator. A 0.25% hike is an extra $1250/year in interest expense, or over $100/month.

Additionally, due to declining equity, the risk premium the lender will demand to lend against the asset will increase.

Its the combination of rising spreads due to increasingly poor credit-worthiness, as well as rising benchmark interest rates that will crater the market well under the 2013 plateau levels we’ve experienced over the past 5 years.

#62 conan on 07.09.18 at 8:26 pm

England 2 Sweden 0

Rowdy England fans, that love to tear things apart, is the only negative.

https://www.youtube.com/watch?v=pHJoMwZ67nM

#63 Long-Time Lurker on 07.09.18 at 8:28 pm

#25 Dean on 07.08.18 at 6:29 pm
What should I do?? Finances are in order, balanced and diversified, and I’m buying a nice house in a great location. Should I take the variable at prime -1 or go fixed rate? I can afford the additional payments as prime increases but it sounds like I may save money by locking it in over the 5 year term. Advice would be greatly appreciated. Thanks!

#33 Teddy Two Toes on 07.09.18 at 6:41 pm

>Were you paying attention today? By the way, your other name was better.

Your choice
July 9th, 2018 — Book Updates — E-mail this blog post to a friend

…Well, the odds today for a rate hike Wednesday are over 80%. All home equity lines and VRMs will go up….

#40 Nonplused on 07.09.18 at 7:06 pm
And the interesting thing is….

>I liked that post.

#128 AGuyInVancouver on 07.09.18 at 4:00 pm
#13 Islander
#35 Long time lurker
That article in the Georgia Straight isn’t worth the paper it was printed on. It merely shows how far the Straight has fallen from being a counterculture paper to a tool of developers that only survives thanks to big ads from the latest condo project being pimped. They know where their bread is buttered and Ng Weng Hoon is helping them to spread it on thick.

>Try answering some questions. Go ahead. The floor is yours.

#64 georgist on 07.09.18 at 8:29 pm

I find this post a bit naive. The entire system is set up to pass all surplus value onto rentiers. If everyone worked 10% more (productivity up 10% to keep it simple and passed on in wages), rent / house prices (renting money) would soak up the difference, leaving us all in the same spot.

Same if we all worked 10% less.

The system adjusts because the supply of fiat money is infinite against a finite supply of land, with surplus value as the variable.

In aggregate we cannot *all* move somewhere cheaper. The system would adapt to soak up all surplus value.

This post focuses on individual choices but it forgets that we all live in the system and cannot in aggregate escape it.

#65 sharing economy on 07.09.18 at 8:35 pm

The buzz sentiment for coming generations will be to “share” whatever they have. Lifestyles have changed, housing and mobility requirements as well. The idea of cooperatively owning assets is being practiced across the globe in several communities already. The sharing philosophy will free up time, energy and finances. It will be mind blowing to economists and entrepreneurs when they realize how versatile and flexible people can be.
Great advantage of our time are connectivity and user friendly apps that will simplify the process.

Think about it. The traditional model of schooling, working, partnership, marriage, child rearing, family and so on are all evolving. For better or worse is too early to tell. Just roll with it.

#66 conan on 07.09.18 at 8:36 pm

Croatia beats Russia in Penalties.
I am hoping for a France vs England final.
Good team work from the Croatians.

https://youtu.be/OfM9j7QtiFk?t=120

#67 Kat on 07.09.18 at 8:36 pm

Yes moving is the only option for the young but the old who live in the large homes can defer taxes and stay put. So we are told to move if we cannot afford it but seniors can stay put if they cannot afford it and defer until they sell. I am wondering why no one tells them they need to move if they cannot afford the new reality of city life? I was listening to a conversation today of a senior who was mentioning how the can defer until they move. He drove away in a newer Mercedes. I am guessing they also use the money they would have had to pay for taxes and invest it for their gain and sadly we are short funding for schools. No wonder the pitch forks are out for the rich they know all the tricks while the average guy pays it all.

#68 Karl on 07.09.18 at 8:54 pm

Simple. If you can afford it without putting too much of your net worth in one asset. – Garth

Ok, and too much would be what exactly?

Rule of 90. – Garth

#69 islander on 07.09.18 at 8:56 pm

https://www.40listings.com/REBGV/R2287275/4-1350-w-14th-avenue-vancouver-west-fairview-vw-v6h1r1

This ad is interesting and informative.

A $2,900,000.00 Apartment/Condo with 3 bedrooms in Fairview VW, Vancouver West
Prime South Granville in the prestigious boutique “WATERFORD” Only 12 suites, each one with private secure elevator access occupying an entire floor – 2458 sqft.
** Special Note: $700 of the Monthly Strata Fees goes directly into the Contingency Fund.
Yes – the MONTHLY strata fees for this apartment are $1,828.21. Yearly tax $5,263.
Obviously, the owners (all 12 or them) are intent on increasing their building’s contingency fund. I guess they’ve read the depreciation report and have decided to be proactive. Built in 1996….trouble ahead!
How many ways can you spell liability??

#70 contemplator on 07.09.18 at 8:57 pm

if you had room in your TFSA and $10k available on an unsecured regular line of credit, would it be wise to use that leverage and put that 10k in your balanced portfolio, then switch your monthly contributions to your TFSA, to just paying down the line of credit? worth the hassle? thoughts?

similar concept to using a HELOC for investing, but on a much smaller scale

No. – Garth

#71 conan on 07.09.18 at 8:59 pm

I am hiring for my financial business. No harpooning involved. – Garth

What jobs are you trying to fill? Surely one of them has a need for harpooning skills……. : (

#72 WUL on 07.09.18 at 9:01 pm

Calgary newspapers have a more subtle way of pumping real estate than the fluff emerging from the CREB in its sponsored articles.

To wit:

– the looming final investment decision of Shell on its $30B LNG Canada at Kitimat – Montney formation gas drillers getting horny; and

– the recent hype about a looming spike in WTI to $150/bbl.

It is working. A more buoyant mood is perceptible here.

And a Stampede joke. “Sneak a Peak” is on the Thursday prior to the Friday commencement of Stampede. Why are the amusement rides free that day?

Somebody has to test whether the carneys tightened the bolts correctly.

#73 Spectacle on 07.09.18 at 9:02 pm

The Hypocracy, the shame having this Sociopath representing Canada.

If this is what Canada has representing us and safeguarding our financial future, it is over!

Really hope the links work for You.

Bell: Trudeau hypocrisy lingers after PM leaves Calgary | Calgary Sun
https://calgarysun.com › columnists › bel…

Story image for about trudeau not us from Calgary SunBell: Trudeau hypocrisy lingers after he exits Calgary
Calgary Sun – 12 hours ago

#74 For those about to flop... on 07.09.18 at 9:04 pm

CONFIRMED PINK SNOW

I was looking back at the recent condos I put up that are struggling in New West and came across this case.

It has a crust on it and has just been resold ,but it’s not everyday you see someone take a roughly 25% ,plus cost of six or so years of opportunity costs loss on a condo.

Let’s have a look what happened.

The details…

2402 280 Ross Drive,New Westminster.

Paid 706k June 2010.

Sold 572k November 2016

So they paid 706k in mid 2010 ,which was astonishing for the time and 8 years later the assessment has just caught up at 715k

This condo just sold for 720k supposedly ,and I am dealing with the previous one but this one seems remarkable in nature unless it is a typo.

So 19% loss straight up and 24% roughly after expenses.

When I looked in more depth at condos earlier in my study ,when people said they were bulletproof,i remember finding a few that had taken losses around 13-14% and expenses pushed them close to 20% but this is the largest percentage condo loss I can recall in recent history.

Dollar value I have recorded higher amounts.

Maybe somewhere in the vicinity of 170k kick in the crotch and that would hurt anyone.

Pain is genderless…

M44BC

https://www.zolo.ca/new-westminster-real-estate/280-ross-drive/2402

$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Feel free to make a donation.

Flop For Fox Fund…

http://www.terryfox.org/get-involved/ways-to-give/

#75 Freedom for the disadvantaged on 07.09.18 at 9:11 pm

DELETED

#76 Spectacle on 07.09.18 at 9:16 pm

So this is the the Hypocracy Canadians have to live with.

This top down attitude explains why the huge percentage say 28% to 45% of working Canadians are in the financial trouble: and no help is on the way .

Mr Turner, please get back into politics, we hope a Prime Ministership becomes vacant soon, with Your name on it.

Trudeau on groping allegations – Washington Post
https://www.washingtonpost.com › news

#77 Shawn Allen on 07.09.18 at 9:18 pm

One Man’s Debt is Another Man’s Wealth

“the rich hold assets. The poor have debt.”

*******************************************
True, and if most people are in debt there must be someone who is directly or indirectly owed that money. Like seniors with GICs or other bank deposits. Or the owner of bank shares. Or the owner of mortgage backed securities. Balance sheets gotta balance. The debt of the masses is part of the wealth assets of the rich or at least the richer.

“…the wealth divide will grow more extreme.”

Probably true. If more and more people are in debt by bigger and bigger amounts then there are fewer people (on a percentage basis) that are the rich on the other side.

The rich should say: thank you borrowers, thank you very much.

#78 If you are wrong about Wednesday Garth... on 07.09.18 at 9:23 pm

You owe me a million dollars…so, I can afford a house in Fort St. John, BC.

#79 FOUR FINGERS WATSON on 07.09.18 at 9:26 pm

We will end up doing what much of the rest of the world does: we will have 2 or 3 generations living under the same roof. Travel a bit, check it out.

#80 Lots of jobs away from Vancouver on 07.09.18 at 9:26 pm

Selling trinkets on the Okanagan beaches to those beach goers shooting up with heroin on a daily basis.

True story. Hard drug users at the parks and beaches are hitting crisis levels around small town BC.

It is out of control.

#81 Limited time offer, $100k off developers asking price...Steveston on 07.09.18 at 9:30 pm

Now at an affordable price of 1.5M for a condo.

I wonder why demand is so weak considering these prices and the fact that money laundering has left for the GTA.

#82 GTA Prices for the Fall of 2018 on 07.09.18 at 9:33 pm

Up 38% due to an influx of re-diverted money to be laundered through real estate.

It was originally headed for BC, but things are complicated now and the GTA is the weak link.

Hello GTA, hello increased house prices.

Mark my words. Recession or not, GTA houses smell dirty money approaching and the new gov. will claim it is just mother nature.

#83 Karl on 07.09.18 at 9:40 pm

Rule of 90. – Garth

I researched it, crunched the numbers and it seems I have 100K over allowance of net worth in my home.

In three years it should go down to 60-70K over allowance.

What to do, what to do…

#84 A J on 07.09.18 at 9:43 pm

#32 crowdedelevatorfartz

Nice try but I’m self employed. Re-read what I wrote and try again.

#85 For those about to flop... on 07.09.18 at 9:49 pm

CONFIRMED PINK SNOW

Let’s have a look what happened with this quick flip in Richmond.

The details…

10991 Dennis Crescent,Richmond.

Paid 1.53 July 2017

Sold 1.48 March 2018

Assessment 1.48

So they probably did 120k in less than a year after expenses.

So they went for a good time ,not a long time…

M44BC

https://www.bcassessment.ca/Property/Info/QTAwMDA1WDIzSA==

$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Feel free to make a donation.

Flop For Fox Fund…

http://www.terryfox.org/get-involved/ways-to-give/

#86 Greater Fool Fake News Team on 07.09.18 at 9:54 pm

TRUMP APPOINTS WUL AS SUPREME COURT NOMINEE!

WUL vows to Make Athabasca Great Again!

#87 For those about to flop... on 07.09.18 at 10:05 pm

CONFIRMED PINK SNOW

It would appear that these guys paid 3.41 million for a house just to have a Christmas party in and then back on the market and take the loss and pad their good friend the realtors pants.

The details…

2925 29th Avenue,Vancouver.

Paid 3.41 October 2017

Sold 3.38 February 2018

Assessment 3.26

So only roughly 1% but then the realtor comes a knocking and all of a sudden the Xmas Smorgasbord don’t taste so good when all up you get a bill for over 200k.

Someone spiked the punchbowl with some B20…

M44BC

https://www.zolo.ca/vancouver-real-estate/2925-w-29th-avenue

https://www.bcassessment.ca/Property/Info/QTAwMDAwME5RVQ==

$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Feel free to make a donation.

Flop For Fox Fund…

http://www.terryfox.org/get-involved/ways-to-give/

#88 arfmoocat on 07.09.18 at 10:06 pm

#77 Lots of jobs away from Vancouver on 07.09.18 at 9:26 pm
Selling trinkets on the Okanagan beaches to those beach goers shooting up with heroin on a daily basis.

True story. Hard drug users at the parks and beaches are hitting crisis levels around small town BC.

It is out of control.

……………………………………………………………………..

I’m 62 and still working because I have to, but I see a lot of younger 25ish males riding bikes and going through ash trays.

Like WTF man… get a job!!!

#89 Niagara Region on 07.09.18 at 10:20 pm

AN IMPORTANT DOG IS (NEARLY) DEAD

Greyhound announced today that, as of October 2018, it is stopping all routes outside Quebec and Ontario, with service in the latter province greatly reduced, although Canada-US routes will continue:
https://news.greyhound.ca/?utm_source=email&utm_medium=email&utm_send=Monday,%20July%2009,%202018&utm_jobid=7269&utm_campaign=Canada+Announcement+-+AJ

So, Fish, #18 and #22, things look even worse than you report.

Mass transit systems don’t die a natural death: they’re murdered. There is a long history in the U.S. of auto and oil companies executing them to force people to buy automobiles. Follow the link for information on the anti-trust verdict regarding collusion by GM, Standard Oil, and Firestone to destroy mass transit in 44 American cities in 1949:
http://www.brooklynrail.net/NationalCityLinesConspiracy.html

#90 robert james on 07.09.18 at 10:25 pm

Here we go,, when you see these butt kissing sh*t heads supporting on this forum, this gutter trash hateful POS President “Sh*tHole” just laugh at them.. They are disgrace to Canada.. The Orange Buffon wants to bring the world down to his level and if people are simple enough, he might just do it.. https://www.cnn.com/2018/07/09/us/mexican-man-beaten-brick-los-angeles/index.html

#91 april on 07.09.18 at 10:33 pm

#50- According to Ross Kay the real estate correction across Canada especially Van and Toronto is going to be “monumental”. Believe it or don’t.

#92 georgist on 07.09.18 at 10:33 pm

> $64/month

>> Sounds like you need a new calculator. A 0.25% hike is an extra $1250/year in interest expense, or over $100/month.

Renter in Surrey – can anyone really be that poor at math?

If people are reading through posts on this blog for advice, I’d recommend wearing gloves.

My kids learned percentages after addition, subtraction and multiplication.

#93 Graeme on 07.09.18 at 10:43 pm

#62 Sharing Economy,

Sharing economy should equal democratic socialism where incomes and capital gains of the wealthy are taxed more.

Really sick of the trickle up (to the elite) economy and all of the adjustments hard working individuals are supposed to make in the interest of ‘change’ and a ‘realistic attitude’ about how to live their lives.

The ones who have to “roll with it” are the super wealthy. Either that or they risk being collectively rolled.

#94 Ponzius Pilatus on 07.09.18 at 10:57 pm

One of the funniest pictures ever.
No stupid dog involved.
Priceless.

#95 genbizx on 07.09.18 at 11:04 pm

#65 sharing economy
You’re dreaming..ideas are nice but human nature hasn’t changed…wait till tough times come and see how the sharing goes
somebody told your generation it has all the fresh, world changing ideas, I guess to make you feel better but you really have some major blind spots that are going to trip you up in the end

#96 Too Much Month at the end of the Paycheck on 07.09.18 at 11:08 pm

For many years raising a Family this was the way it was until the last few years for me.
Now house payed for, RV paid for, New F150, paid for, Mercedes SL 500 paid for, Honda Accord paid for.
Greenhouse full of veggies. No Debt.
My wife and I have a maxed out TFSAs and a large professionally managed portfolio and since 2017 I have finally reached the 1% for income.
Had a huge windfall on stock investment in a start up Crypto deal late last year. Hive. Not smart just got lucky, right place, right time. And I am out of it. Traded as high as $6.00 now trading around $.90
Looking forward to purchasing a Kingfisher 27 ft pilot house boat. The last thing on my bucket list beyond travel.
The most valuable asset at my age, 72 is not money it is time.

Life is Good, however I fear for the younger generations coming up who have to learn as my generation has had to.
I am looking forward to higher interest rates

#97 Dean on 07.09.18 at 11:29 pm

#63 Long-Time Lurker

Thanks!
I tried to pay attention :(
It seems there would still be 3/4% difference between fixed and variable. Before 1% was an acceptable spread. This is only one increase, it seems we’ve still got a long ways to go before they’re even. Because of the certainty of this one increase are variable mortgages off the table?

Best regards,
Dean

#98 crowdedelevatorfartz on 07.10.18 at 12:05 am

@#84 OJ
“Re-read what I wrote ….”
+++++
I can’t.
I’m too busy whining and blaming you for all the worlds’ ills

#99 Linda on 07.10.18 at 12:20 am

I’m presuming those various percenters are the same group of people packaged per various scenario. So the 27% who have no money are part of the 28% who say they’d be moving towards bankruptcy should rates increase & the 42% who say they are concerned about their finances should rates rise ‘much more’ are part of the 44% who say they are within $200 of insolvency every month.

Sounds grim, but one must keep in mind that many of these people are likely house poor. Presumably as they pay down the mortgage their financial situation will improve. As for risk, there are always risks with any financial transaction. Basically people have to decide if the reward is worth the risk. Given the levels of home ownership it appears that the people still think the risk is worth taking.

#100 NEVER GIVE UP on 07.10.18 at 12:21 am

Excellent article in the Atlantic Magazine.
An important explanation of the restrictions of upward mobility.

Our choices are there but they are limited.
The bar keeps getting higher and higher until more and more of the bottom percentiles just give up.

If we as a society keep increasing the wealth gap then eventually wealthy “haves” will have to live in gated communities just to be safe.

Many areas of the USA are already well on the way there.
n
https://www.youtube.com/watch?time_continue=23&v=hb28kAavh0M

https://www.theatlantic.com/magazine/archive/2018/06/the-birth-of-a-new-american-aristocracy/559130/

#101 robert james on 07.10.18 at 12:22 am

#88 arfmoocat I was listening CBC radio today and the mayor of Vernon and Penticton were interviewed and they call it a crisis.. I am mean Kelowna a sh*t hole with junkies in the park shooting up in broad daylight along with occasional death threats for a grandmother and her grand children as were the news items on Castanet but I am surpized smaller Vernon and Penticton was that bad..

#102 Jim on 07.10.18 at 12:25 am

#38 Dolce Vita –

The Big Electron?
You mean George Carlin?
youtube.com/watch?v=cvz9uSK3zXo

#103 The Real Mark on 07.10.18 at 12:26 am

“I find this post a bit naive. The entire system is set up to pass all surplus value onto rentiers. If everyone worked 10% more “

But what’s stopping you, or anyone for that matter from becoming a rentier?

Everyone has choices. Nobody held a gun to the head of the hoardes of GTA homeowners and told them that they have to own GTA RE instead of a portfolio of XIU shares (for example).

One will perform better than the other probably for the next decade or two, however, if history is any indication. The whole situation for Canadian RE is shaping up to be rather like the 1990s when the stock market absolutely smoked the RE market (by a factor of 4X), and employment prospects weren’t actually all that bad. With capital finally flowing back to business investment, rather than being hoarded in RE.

#104 Patrick_star on 07.10.18 at 12:28 am

So, move. It’s a big country. – Garth

Spoken like a man who’s never had a real friend in his life (wives and dogs don’t count) . Just picking up and leaving ain’t easy for people with authentic relationship roots.

#105 NEVER GIVE UP on 07.10.18 at 12:33 am

#36 Screwed Canadian Millenial on 07.09.18 at 6:47 pm
Smoking Man the George Soros wannabe LOL. Fancies himself being a billionaire globalist elite, meanwhile back in reality he’s a thousandaire Canadian pleb.

You really are Smoking too much substance, Man.

==================================
SCM- You make me laugh! ROFL! Almost as much as SM makes me laugh!
Love all this Friction!

#106 Nonplused on 07.10.18 at 12:54 am

#83 Karl

Do nothing. The rule is good but it can’t be used to divide pie into e. No decimals allowed when using a rule of thumb. You just want to be close.

I started underweight on my house but then business was lousy and investments sucked and I got older and the house went up. So now I am overweight on my house. I’m not taking any action because I am hoping all of that will reverse. Except the fact that I am getting older of course.

But anyway don’t take any action if it looks like it will work itself off over time. You never get those realty fees back, and that’s after tax money.

#107 Smoking Man on 07.10.18 at 1:11 am

The double , double cross. When I’m sobar enough I will explane.

The bottom line liberalism is going extinct. And I have help it. I’m thinking Shlong Zumanga that dumb stupid sky pilot from Nictonite in my shit book. I’ve underestimated his ability.

Everything T2 and especially climate barbie says gauaranties they are toast. Was this by accident or a plan?

Who are the architects of the grand plan. Wanna meet these bastards. Smart as shit.

Never too old to learn.

Dr Smoking Man
White belt Herdonomics.

#108 Fortune500 on 07.10.18 at 1:35 am

I agree with all of this, except the moving to another part of Canada bit. I think moving out of the country is a better plan.

The sad reality is that we don’t have many mid-level cities in Canada, and as we urbanize, many of the life-supporting, family-supporting jobs (outside of government) are in one of our few major cities. For the private sector it is basically GTA, Vancouver, Calgary, and maybe Montreal if you speak french.

That, and as a former resident of rural Ontario, it isn’t like housing prices haven’t been exploding here to RELATIVE TO INCOME.

So yes, if you have a lot of savings, maybe head to a smaller market in Canada. But if you are early in your career, consider the US or Middle East, or Asia.

Home prices may come down slowly, and incomes may grow slowly, but consider whether you can wait a decade or more to get to this point.

#109 Jon Buss on 07.10.18 at 1:42 am

Well said GT. Another excellent summation of our societies sorry financial condition.

#110 renter in Surrey on 07.10.18 at 1:51 am

coming to BC soon

https://asia.nikkei.com/Economy/Hong-Kong-s-worsening-housing-shortage-forces-thousands-into-coffin-homes2

#111 NEVER GIVE UP on 07.10.18 at 2:48 am

This one choked me up.
On the night of Monday, 8 December 1980 his friend died.
I was severely choked on that night as well.
I hope we don’t lose this gift of a man any time soon!

https://www.youtube.com/watch?v=QjvzCTqkBDQ&list=RDQjvzCTqkBDQ&index=2

#112 Howard on 07.10.18 at 4:43 am

Similarly, expecting to live in the same hood your parents did forty years ago within biking distance of downtown (Vancouver, Toronto, Calgary, Ottawa etc) is a fantasy. Populations have swollen, demographics have changed, cities have spread outwards like viruses, transit lines have skewed valuations and urban dirt has become vastly more precious. Meanwhile incomes have failed to meet inflation in any meaningful way. The economics just don’t work for most people.

So, move. It’s a big country.

—————————————-

I’m wondering why social housing is always built in big cities. Why not shut down the social housing at Jane & Finch and areas of Scarborough and recreate it in Bancroft or Kapuskasing. If hardworking, taxpaying middle class people are expected to shut up and move to the middle of nowhere, why shouldn’t poorer people living off the public dime?

#113 Howard on 07.10.18 at 4:50 am

#24 Dolce Vita on 07.09.18 at 6:01 pm

As a very sore loser Azzurri tifóso:

Thank You England for having eliminated Sweden.

They can now go back home and continue to make cheap unassembled furniture for the masses (and eating their hideous cuisine).

———————————-

Surströmming (Swedish fermented fish) : https://www.youtube.com/watch?v=_haw_YDC_zo

#114 Oft deleted much maligned stock.picker on 07.10.18 at 6:25 am

The TSX has lagged and passive investors have had another anemic year…..Wahhhhhhh. Stockpicker has been surfing a wave ……RCI.b…..ENB…. etc etc….gushers all…..2018 winners…..not holding back from crapping all over indexers and every ETF….. There is no end in sight. I’m actually convinced that specific
TSX stocks have 50 to 100% ++ room to grow in 2018 and ’19.

No one is paying attention to Trudeau…..he’s screwed up as much as he can. He’ll be invisible in business from here on because he’s busy with social programs. Three of Canadas five pillars are regrouping after being oversold because of political interferance.

The big bull is snorting and charging ….but I won’t give current picks in respect to Garth and Vo who give people basic honest advice…..those who aren’t bull chomping money bulls…..like me. I won’t give stock picks like in the past….but believe me…it’s exciting.

And looking at elite pickers…..compare these guys in Singapores wealth fund compared to Canada Pension returns

https://www.cnbc.com/2018/07/10/singapores-temasek-holdings-releases-annual-report.html

#115 Dana Lancaster on 07.10.18 at 7:01 am

I am only 23 years old and have no formal higher education.

What drives me right now is fear. I lost both my parents at 13 years old and was raised by my grandparents.

I saw how they worked hard and always set aside money everyday not weekly, monthly but daily. They don’t know much about about investing but never got into debt and paid cash for everything. They have a paid off house, $5,000 monthly C.P.P, OAS, RRIF payments and a few hundred thousand in GIC’s, bank stocks, Bell.

I would be scared and always worried having a large debt load over me. These people are nuts.

I work 65 hours a week on average with my take home pay being $735 a week. It is a low wage but after all deductions from my paycheck , rent, utilities, food etc. all expenses I still save on average $300 a week. I will try to increase that when possible.

Since I have been working 4.5 years now, I have $72,000 saved and have to start looking at RRSP’s, TFSA’s and educating myself about investing.

#116 A J on 07.10.18 at 7:24 am

#107 Smoking Man

Liberalism is going extinct lol. What kind of delusional, Fox News, MAGA bubble are you living in? Sorry to disappoint but Liberalism is alive and well. But keep telling yourself otherwise if it helps you sleep at night.

#117 Evangeline on 07.10.18 at 7:29 am

About dead-end, low paying jobs: I once read a “testimony” written by a well educated young man who could not get hired anywhere except as a busboy in a restaurant.

He was desperate and that translated into gratitude for the job. He took his gratitude further and decided he was going to be the best busboy he could be.

He did so and very soon he got a promotion; and not too long later, another promotion.

There’s an old saying that I think is applicable to finances: “Gratitude is riches, Complaint is poverty.”

In a dire situation, if you can find even one tiny thing to be grateful for, and hold on to it, it will act as a multiplier and open up more windows and doors.

#118 Victor V on 07.10.18 at 7:33 am

Luxury-home sales plunge in pricey Canadian markets as rules bite

https://www.bnnbloomberg.ca/luxury-home-sales-plunge-in-pricey-canadian-markets-as-rules-bite-1.1105216

Canada set out to cool a hot housing market, and did it ever.

Luxury-property sales in the nation’s priciest markets fell sharply in the first half of the year amid a slew of government regulations, according to a report released Tuesday by Sotheby’s International Realty Canada. Sales of homes above $1 million fell 46 per cent in Toronto and 19 per cent in Vancouver from a year earlier, while the number of homes sold above $4 million dropped 51 per cent in Toronto and 47 per cent in Vancouver.

The declines follow a wave of lending constraints and taxes implemented by both the federal and provincial governments to tame soaring prices fueled by speculative purchases.

#119 dharma bum on 07.10.18 at 7:50 am

Now household debt’s at a record high. There is $2 trillion owed, most of it in the form of long-term mortgages getting more costly. And four in ten say they don’t have two hundred bucks extra. Pathetic. What a fail. – Garth
——————————————————————–

“Some debts are fun when you are acquiring them, but none are fun when you set about retiring them.” ~ Ogden Nash

#120 SimplyPut7 on 07.10.18 at 8:10 am

#112 Howard on 07.10.18 at 4:43 am

Most crime does not take place in Scarborough and Jane and Finch as shown in the Toronto Police Map.

https://www.cp24.com/2.4060

It’s just what our media outlets want people to believe to keep home values high in more affluent neighbourhoods in downtown Toronto.

And no, I don’t want a large number of Torontonians to leave the city to try and turn nice small towns where people smile and wave at you, into places littered with hipsters, liberal social activists, and ugly poorly built houses, like the ones in the GTA that can’t find buyers because they are overpriced and were constructed next to older better-constructed homes selling for half the price.

I walked by one of the sketchiest areas of downtown Toronto I have ever seen in my life the other day, barely any news coverage on the area as townhouses sell for 800k – 1.2 million, detached houses sell for over 1.2 million and investment condos under construction were at every intersection I passed. The drug problem in downtown Toronto is getting out of hand. Jane and Finch and Scarborough do not have any places similar to what I saw and their homes sell for half of the value of that area. I was glad it was daytime.

#121 torontorocks on 07.10.18 at 8:36 am

I agree with much of what Garth has posted here. Anyone who made a move on urban toronto real estate over the past 10 years is a financial genius, or appears to be. anyone who bought a place in the hamptons 15 years ago is a financial genius. anyone who bought land by Pearson airport 20 years go is a genius. anyone who bought land at 404 and Hwy 7 is a financial genius. at the end of the day anyone here could have done it and could still do it, maybe not in the GTA but elsewhere.

Toronto is a place where people work. It is not world class by any stretch. It doesn’t have a world class mindset. They are eviscerating people who have to commute by car into the city by boneheaded idiotic moves like the King Street Pilot creating massive traffic jams and emotional stress on commuters all in support of a streetcar agenda foisted by Miller and perpetuated by that creep Cressy. And now those streetcars are piles of @hit afterall. I just came back into TO from NYC and yes, there is traffic there because it is a city that is ALIVE. yes they have bike lanes but only where they can afford it. they have patios in some dead space on the street ffs, that’s how much they use their space. when I hear land scarcity arguments in toronto, I laugh. when I see the ‘traffic jams’ in toronto, its like a mosquito on an elephants ass compared to NYC or other places. Toronto is run by idiots for a bunch of complacent wimps who will never have a voice because one leader is drowned out by all the ‘Oh wells!!! thats living in a big city”. We can’t move traffic in the city because we don’t have proper city planning. you cannot shut down a major thoroughway to cars and expect there to be no repercussions. while at the same time having massive condo development with zero infrastructure support all because the city takes those development dollars per door in order to support stupidity such as paying commercial landlords for VACANT properties. and putting $hitty muskoka chairs on King. and supporting drug dealing in moss park and the associated crimes we’re getting a taste of all over the city this last 2 weeks.

we have no proper infrastructure to transit. we have an archaic subway system that will never get the development dollars it needs because we have a union controlling that spend and it all goes to their pockets.

we’re a little more polished than cincinnati. I’d rather rent a place in this toilet where I make my dollars than be extended. stay cash flow positive and invested. buy a place where you can step away from this madness and look back and laugh and say, why did I kill myself to be thinking i’d overextend myself to live there?

let it be money laundering, or oligarchs or iranians or whoever it is from wherever. you have a government that supports idiocy and your children will be paying for things such as that pipeline Prime Idiot Trudeau bought. not to mention using the same subway line 20 years from now that looks exactly the same as the past FIFTY YEARS. this is not the indications of a world class city.

its world class if you come from a $hithole or post world war 2 europe. if you’re from TO, get out and live a bit. if you’re from Barrie or Sudbury, welcome to the BIG SMOKE!

#122 crowdedelevatorfartz on 07.10.18 at 8:41 am

@#116 OJ
“Liberalism is alive and well.”
+++++
I guess thats why voters all over the planet are tossing out “leaders” that promote Liberal PC agendas?
Hence the debacle of Trump ? The alternative was Hillary?
Another tax and spend liberal .
Nah. Voters may say their liberal but when they get in that booth to vote……
We see the rise of the populist(anti immigrant, inward looking, less taxes) leaders from the USA to Italy
( populist coalition govt) to Germany( coalition govt ready to fall on immigration issues) to Sweden( immigration issues) to Russia(xenophobic immigration issues) to Britian ( Brexit vote was largely on immigration issues) Ontario ( Doug Ford? Really?).
Yep.
The endless pandering to every fashionable social “issue” out there has voters in a bad bad mood.
Liberals….flocking to the nearest populist politician they can find….and that during economic “good times” in Canada.
The voters get real ugly with their choices when the economy tanks….
Trudeau may be a “one hit wonder” to the ugliest election fall a la Mulroney if the economy trips over its own housing bubble.
Hey! Speaking of Mulroney.
Maybe we can elect his daughter as the next PM….for old times sake.

#123 Asterix1 on 07.10.18 at 8:55 am

BREAKING NEWS:
“Real estate experts predict a return to normal for slumping GTA housing prices”

https://www.thestar.com/business/real_estate/2018/07/10/gta-housing-prices-forecast-to-shake-off-malaise.html

QUESTION:
When does it become a crime to print these lies? Deceiving the public, media printing anything if the price is right, tainted sources and absolutely no analysis.

This is not an “article” or a real “journalist”! This is propaganda at its finest.

Royal LePage CEO Phil Soper says….
Sotheby’s CEO Brad Henderson said…

Thank you Toronto Star, keep up the horrible work!

#124 Kiril Peev on 07.10.18 at 8:59 am

Debt is modern day slavery. The only difference is that now many people choose to enslave themselves. this is the crazy part. We have a choice, don’t enslave yourself. Be free. The top one percent own the debt and the bottom 80% are the slaves that pay interest to the top 1-5%.
Again it’s a choice though a hard one given the tv/cultural influences. As Kanye West said…. 400 years slave…. it’s a choice. Even back then. Now it’s a choice you can easily make it’s all in your brain.

As more people choose to forgo debt slavery the system will adjust. prices will regulate

#125 Lee on 07.10.18 at 9:01 am

According to Jesse Snyder of the Financial Post today, the Canadian housing market has bottomed out. That’s all we need to know. Hurray!!

#126 jack on 07.10.18 at 9:16 am

As interest rates increase debt holders discretionary income decreases. As discretionary income decreases, so does spending on ‘luxuries’ such as eating out, mani/pedis, spa treatments, etc and even on necessities. As this spending decreases so do the profits of the service providers which leads to layoffs – then these people don’t have money to spend … It is a domino effect that will cripple our economy.

#127 Macleod on 07.10.18 at 9:36 am

Hi Garth ! Maybe a bit off topic but On October 2014 , you blogged about starting from scratch . You talked about Linda at 35 . well I am 42 & starting over . I have 10 K in RRSP & will have another 20 K by years end and each year following . I am self employed & own a construction company in BC. Does the investment strategy from Oct 5 , still Apply ?

I have enjoyed your Blogs for years & now I need some direction.
Thanks for all your help thru the years.

#128 IHCTD9 on 07.10.18 at 9:38 am

#25 Baroque Millenial on 07.09.18 at 6:02 pm

Saving takes will power, having the money deducted first makes life more simple.
____

Humans adapt easily to their conditions. I work in an area that has a lot of folks on government support. Some need it, others are milking the system. All of them get by on very little. Those that can work choose not to as they are totally comfortable getting by on the handouts and whatever cash side work they can get.

The same kind of adaptability happens when you auto withdraw your investment deposits every week/Month. You never see the money, and before long your lifestyle has absorbed the income reduction and the day-to-day carries on with you sometimes even forgetting that a nest egg is being built.

Ms. IH and I did it this way since day one, paid ourselves first via automatic withdrawal, and more or less paid it no mind. We never panicked at world events or market crashes. We never sold into cash – not even once. Now, 20 years later; it’s nice to see the pile, and even nicer not being able to recall much pain or suffering experienced to build it. We still bought a house and cars etc. just like anyone else who never saved a dime.

I recommend to all folks to gather a retirement fund in this manner. It worked for us, and we didn’t even do anything other than set it up and forget it.

Once we’re used to a status quo, humans are loathe to change it, so set that tendency up to work FOR you rather than against!

#129 For those about to flop... on 07.10.18 at 9:48 am

Money?

It’s all about how you dispose of it…

M44BC

“Visualizing Countries with the Highest Household Wealth.

We all know it costs money to make money, but is there a direct correlation between income and overall personal wealth? If there is, we would expect to see the relationship in our new visualization comparing accumulated wealth and disposable income at the household level across the OECD.

We got our numbers directly from the OECD. Our visualization roughly corresponds to the geographic location of each country on the map—the U.S. is furthest “west” and Japan is further “east.” The size of each bubble represents average household wealth for each country, or assets minus liabilities. This takes into account things like savings, securities, stocks and loans (but not real estate). We then color-coded each bubble based on the average disposable income for each household, which equates to the amount of income left over after taxes and transfers have been taken out. Basically, it’s how much you can spend on living expenses and other discretionary purchases.

These are the top ten countries among the OECD with the highest household wealth, together with the average disposable income.

1. United States: $176,076 with $44,049 in disposable income

2. Switzerland: $128,415 with $36,378 in disposable income

3. Belgium: $104,084 with $29,968 in disposable income

4. Japan: $97,595 with $28,641 in disposable income

5. Sweden: $90,708 with $30,553 in disposable income

6. Netherlands: $90,002 with $28,783 in disposable income

7. Canada: $85,758 with $29,850 in disposable income

8. United Kingdom: $83,405 with $28,408 in disposable income

9. Luxembourg: $74,141 with $41,317 in disposable income

10. Denmark: $73,543 with $28,950 in disposable income

Our visualization reveals several key insights about personal wealth accumulation across the OECD. First off, the U.S. clearly dominates the rankings with over $170k on average per household. The other standout on our list, Switzerland, is far behind the U.S. with $128k of accumulated household wealth on average. The rankings then become much tighter further down the list with countries grouped together in the $70-90k range. There are also a few countries in the OECD for obvious political reasons. It is hard to see why Russia should be counted with only $16,657 in disposable income and $2,260 in net financial wealth.

Now take a look at the color of each bubble, which corresponds to the average disposable income for each country. You might think that having a higher disposable income is directly associated with building household wealth, but clearly there are other factors involved. Granted, Americans enjoy both the most disposable income on average ($44,049), but this only partly explains their lead in household wealth. For example, Luxembourgers have only $3,000 less in disposable income ($41,317), but over a $100,000 less in average household wealth. And take a look at the Norwegians who have $35,739 in disposable income but only $20,347 in household wealth. Clearly all that extra money is going somewhere, and it’s not to a savings account.

One obvious assumption behind our numbers is the longstanding decline of defined benefit pension systems in the U.S. Whereas European countries maintain social programs that provide for a secure retirement, many workers are largely left alone in the U.S. to save for their golden years. Another factor is wealth inequality. Since we are only looking at average figures, a small number of millionaires and billionaires in the U.S. inflate average wealth figures, when in reality most people are barely getting by.

All these caveats aside, clearly the U.S. enjoys a leg up in wealth accumulation within the OECD. Also keep in mind that owning your own home is closely associated with building personal wealth, but the OECD excluded the value of land and dwellings from its analysis. This means that in all likelihood, our visualization actually understates the real value of American accumulated wealth.”

https://howmuch.net/articles/household-net-financial-wealth-around-the-world

#130 Another Deckchair on 07.10.18 at 9:49 am

@65 sharing economy

Wait til you find something like:

– you help someone with some computer graphics code, and a few years later, he’s a multi-millionaire. (I enjoy bumping into him, he’s a nice guy, but…)

– you write documentation for an obscure part, and at a trade show, you find that what YOU wrote, and put on the Internet for free, was taken by a business for them to earn money.

Naah – I now sell my words and software, thanks! It actually pays quite well – I should have been smarter and toned down the “I’ll help you, and you’ll help me” 10-15 years ago.

#131 Rick Danger on 07.10.18 at 9:54 am

#20 AJ

Best comment on here today.

#132 IHCTD9 on 07.10.18 at 10:10 am

#115 Dana Lancaster on 07.10.18 at 7:01 am
I am only 23 years old and have no formal higher education.

What drives me right now is fear. I lost both my parents at 13 years old and was raised by my grandparents.

I saw how they worked hard and always set aside money everyday not weekly, monthly but daily. They don’t know much about about investing but never got into debt and paid cash for everything. They have a paid off house, $5,000 monthly C.P.P, OAS, RRIF payments and a few hundred thousand in GIC’s, bank stocks, Bell.

I would be scared and always worried having a large debt load over me. These people are nuts.

I work 65 hours a week on average with my take home pay being $735 a week. It is a low wage but after all deductions from my paycheck , rent, utilities, food etc. all expenses I still save on average $300 a week. I will try to increase that when possible.

Since I have been working 4.5 years now, I have $72,000 saved and have to start looking at RRSP’s, TFSA’s and educating myself about investing.
___________________________

Thank you for commenting – and you are ROCKING IT.

In fact, you are living proof of some of the things that have been rolling around in my head the last few years.

23 years old and 72K saved already? Stuff it all into RRSP’s as your limit allows and then stuff the tax return into TFSA’s. Once that 72K is all in RRSP’s, then start maxing out your TFSA for the rest or your working life – let’s just call that 800.00/month.

If you can do that every month till 65 and get a return of 5.0% – you’ll hit 65 with 2 million in the bank, and most of that in TFSA’s where you can withdraw tax free. Proceeds alone would pay you 90K/yr without touching the principal.

Do the same but with a 500.00/month deposit and you’ll hit 65 with 1.4 Million and proceeds of 66K.yr.

You don’t even need that much. I recommend getting set up with some strong growth stuff and auto withdrawals weekly for retirement savings. Also get yourself educated and/or pay someone like Garth to direct you.

At 23, most kids your age are still in school and buried in school debt. If you keep going like you are, you’ll still be ahead of kids who went to Med School well into your 40’s. In fact, you’ll be ahead of any white collar professional who doesn’t make a conscious effort to catch up – and they’ll get none of the interest bias you’ll get in your nest egg due to your long time horizon.

The wife and I started investing at 25 with $0.00, and we will easily crack 7 figures if things carry on normally. You’re way ahead of us – keep up the good work!

#133 Ubul on 07.10.18 at 10:23 am

#115 Dana Lancaster on 07.10.18 at 7:01 am

I am only 23 years old and have no formal higher education.
I work 65 hours a week on average with my take home pay being $735 a week. It is a low wage but after all deductions from my paycheck , rent, utilities, food etc. all expenses I still save on average $300 a week. I will try to increase that when possible.

Since I have been working 4.5 years now, I have $72,000 saved and have to start looking at RRSP’s, TFSA’s and educating myself about investing.

Good for you. Get the $72,000 working for you ASAP. Maybe Turner Investment could do some pro bono goodness here, to put you and keep you on the right path.

The only catch is that you work 65 hours a week for saving $300. You are basically the slave of your own, unless you put in those hours to build your business.

At 23 it’s OK to work 65 hours, but this amount of time and extra money hardly would allow you to have your own kid, or raise one like your grandparents did.

I don’t know what your chances are to increase your income, but maintaining a life of working 65 hours per week in exchange for such a relatively small financial reward can’t be easy.

Maybe Turner Investment could “adopt you” not only to help with your investment, but with an all-inclusive successful life path coaching. I see you as a great candidate.

#134 crowdedelevatorfartz on 07.10.18 at 10:26 am

@#131 Dangerous Rick
“Best comment on here today”
++++
It was posted yesterday.

#135 Dumb luck on 07.10.18 at 10:30 am

So my old “financial advisor” called me. I put that In quotes as all he did was renew my mortgage with me. He is now a mortgage broker and asked if I wanted to be a private lender to people leveraging on RE. Lend out 500-2million for a year, secured by real estate and then charge 8-14 percent interest. These are folks who’ve been turned down by the banks, some of whom are foreign nationals/new Canucks who do not declare any income and therefore can’t get a mortgage the conventional way but are somehow buying 2 million dollar homes. People are gettin more and more desperate I tell you. It’s all gone crash soon (I said no to the offer as I can get a similarif not better return just by buyin VFV and with much less risk). Houses in Vancouver are already not selling.next year prices will drop even more (prices have crashed already but the media is not reporting it)

#136 Heloguy on 07.10.18 at 10:36 am

Can you believe Alberta just banned spearing bears? Really … how could that have been right?

I have done this and I feel the bear has more of a chance at survival than if I shot it with my rifle. Do you know how hard it is to sneak up on a bear?

#137 Smoking Man on 07.10.18 at 10:51 am

Drama in Thialand. All boys out of the cave.
2 milles under water for non swimmers.

Good for them and every dyslexic fiction writer out there.

#138 Ubul on 07.10.18 at 11:16 am

#135 Dumb luck
So my old “financial advisor” called me. I put that In quotes as all he did was renew my mortgage with me. He is now a mortgage broker and asked if I wanted to be a private lender to people leveraging on RE.

I get these offers regularly from people I dealt with in the past, mostly for smaller commercial RE financing, though.

#139 Ogopogo on 07.10.18 at 11:16 am

Even slime-bag realtors are now admitting the correction in that blighted pocket of misery we call Vancouver. Check out this article. Music to the ears of any British Columbian keen to see the bubble crushed to smithereens (notice that they’re actually it a bubble):

“Vancouver’s bubbly real estate market is deflating, say realtors”

“My advice to sellers is, it’s not 2017 anymore,” Watt said. “It’s back to reality.”

But as inventory continues to build because of the dramatic drop in sales, a much bigger price correction could be on the way, Saretsky warned.

https://www.thestar.com/vancouver/2018/07/10/vancouvers-bubbly-real-estate-market-is-deflating-say-realtors.html

#140 IT Minion on 07.10.18 at 11:26 am

I think this site would love to be proven wrong, the article below proves it, https://business.financialpost.com/real-estate/mortgages/market-has-bottomed-out-housing-prices-in-toronto-region-set-to-rise-after-brief-slump#comments-area. I mean the Royal Le Page forecast would never lie would it………would it?

#141 IHCTD9 on 07.10.18 at 11:28 am

#41 Nonplused on 07.09.18 at 7:06 pm

Yes, if you have a good income, watch your pennies, and invest through Turner investments, you’ll have a nice life. But to get really rich you need opportunity, risk, and leverage.
_______

There is another way to get really rich, the building and passing on of wealth from one generation to the next.

I don’t need a pile of money to be happy and content, but I love the idea of passing it along down the line as I ender my golden years. My kids could build it some more and then retire on the proceeds. My Grandkids would be the first to be able to quit working upon receipt of the funds – and live great.

Only takes one ding-a-ling offspring to screw it all up though :).

#142 Ubul on 07.10.18 at 11:30 am

Good debt, bad debt … you would think financially illiterate individuals take on bad debt.

The US government managed to create 44 cents of economic output per 1 borrowed dollar in the past decade!

https://www.zerohedge.com/news/2018-07-10/root-crisis-every-1-debt-generates-just-44c-economic-output

#143 Ubul on 07.10.18 at 11:32 am

#117 Evangeline on 07.10.18 at 7:29 am
There’s an old saying that I think is applicable to finances: “Gratitude is riches, Complaint is poverty.”
In a dire situation, if you can find even one tiny thing to be grateful for, and hold on to it, it will act as a multiplier and open up more windows and doors.

Absolutely!

#144 Hawk on 07.10.18 at 11:36 am

#129 For those about to flop… on 07.10.18 at 9:48 am

========

I don’t think the study has much value unless one takes in to account all assets including RE.

In addition, there is also the matter of public debt. The US probably also has a larger $ value of public debt per citizen, than many other countries.

#145 Ubul on 07.10.18 at 11:40 am

#134 crowdedelevatorfartz on 07.10.18 at 10:26 am
@#131 Dangerous Rick
“Best comment on here today”
++++
It was posted yesterday.

It survived the test of time, as good today, as it was yesterday.

#146 Ministry of Truth on 07.10.18 at 11:46 am

#123 Asterix1 on 07.10.18 at 8:55 am
BREAKING NEWS:
“Real estate experts predict a return to normal for slumping GTA housing prices”
————

Multiply any news from MSM about anything with -1.

#147 Guy in Calgary on 07.10.18 at 11:56 am

“#72 WUL on 07.09.18 at 9:01 pm
Calgary newspapers have a more subtle way of pumping real estate than the fluff emerging from the CREB in its sponsored articles.

To wit:

– the looming final investment decision of Shell on its $30B LNG Canada at Kitimat – Montney formation gas drillers getting horny; and

– the recent hype about a looming spike in WTI to $150/bbl.

It is working. A more buoyant mood is perceptible here.

And a Stampede joke. “Sneak a Peak” is on the Thursday prior to the Friday commencement of Stampede. Why are the amusement rides free that day?

Somebody has to test whether the carneys tightened the bolts correctly.
—————————————————————-

Went for Alexisonfire. It was awesome.

#148 Fish on 07.10.18 at 12:01 pm

Thialand, thankgoodness for Navy Seals

#149 Zapstrap on 07.10.18 at 12:02 pm

#136 Heloguy on 07.10.18 at 10:36 am

Can you believe Alberta just banned spearing bears? Really … how could that have been right?

I have done this and I feel the bear has more of a chance at survival than if I shot it with my rifle. Do you know how hard it is to sneak up on a bear?

Oh yeah … I do. Grizzly and blackie …

#150 A J on 07.10.18 at 12:02 pm

#134 crowdedelevatorfartz

LOL I really touched a nerve with you didn’t I Fartz? Do I get a prize?

#131 Rick Danger

Thanks Rick :)

I was thinking more about what I wrote and I think that what a lot of people lack is an ability to adapt. The world is constantly in flux and chaos, and the most important trait you can have is adaptability. However, it’s much easier for people to finger point and lay blame, than push themselves to become better and adapt to changes. Life’s not supposed to be easy, but people make it harder than it needs to be. Debt, greed, fear, all playing into people’s personal misery. But, where did it all come from? Debt, greed, and fear are all put onto yourself. If you choose to buck the trend, and live small and adapt, that’s when you can truly thrive. But playing into the whole cycle of shame and blame is a trap that only brings misery and pain. Personal responsibility and adaptability are freedom.

#151 Wrk.dover on 07.10.18 at 12:12 pm

100 NEVER GIVE UP on 07.10.18 at 12:21 am
Excellent article in the Atlantic Magazine.
An important explanation of the restrictions of upward mobility.

Our choices are there but they are limited.
The bar keeps getting higher and higher until more and more of the bottom percentiles just give up.

If we as a society keep increasing the wealth gap then eventually wealthy “haves” will have to live in gated communities just to be safe.

Many areas of the USA are already well on the way there.
n
https://www.youtube.com/watch?time_continue=23&v=hb28kAavh0M

https://www.theatlantic.com/magazine/archive/2018/06/the-birth-of-a-new-american-aristocracy/559130/

——————————–

You out Jessed Jess!

The Atlantic link is the best hour of reading I have ever spent on line!

#152 Oft deleted much maligned stock.picker on 07.10.18 at 12:12 pm

#115…Dana….I can’t figure out why your grandparents didn’t put you through school …and didn’t your parents gave any life insurance? Term insurance is really cheap….lesson to all young parents and father’s. But….life is a bag biter sometimes and you survived…..

#137….SM…..the cave kids are not out of the woods yet….two weeks in a bat cave, drinking fetid water and breathing spores and fungus is a toxic combo…miracle if all the kids survive. All in hospital now though. They divers had to hurry due to big rains starting today as we are on the leading edge of Typhoon Maria and the rain is intense…..likely the kids would have drowned today if they hadn’t got out……yikes….very close call.

Three boat loads of Chinese tourists we’re capsized and dozens dead und unrecovered. Shallow water kicks up big waves within minutes. If any of you visit Thailand this time of year stay away from touts selling snorkelling tours away from the islands…..storms only take minutes to appear…..this year has been deadly….but people die every year. The boat tours should be seasonal due to weather danger….but such regulations don’t appear to be forthcoming. It’s like a Trudeau govt….all talk, no action.

Huge action in the Texas deserts….any Canadian companies on the gravy train…you bet. Our Montenay might be a producing LNG field finally by the plant talk in Kitimat…lots of action on the ground. Which companies will benefit…..?

#153 Torontosux on 07.10.18 at 12:20 pm

#121 torontorocks

GREAT post…and Cincinnati is actually a pretty cool town!

#154 TheDood on 07.10.18 at 12:21 pm

#49 Mattl on 07.09.18 at 7:29 pm

…..Median income in Kelowna up almost 20% the last decade. Only slightly under Greater Vancouvers now. no where do the medium incomes support the property prices but 550k on 68k makes more sense then 72k on 900k…..

__________________________

So are you suggesting a 550k RE purchase on a 68K salary makes a little sense? Wow. Just…..WOW!

#155 Stan Brooks on 07.10.18 at 12:30 pm

DELETED

#156 meslippery on 07.10.18 at 12:32 pm

Meanwhile incomes have failed to meet inflation in any meaningful way.
——-
That is the root of most of all problems.
Cost of living shooting up, wages stagnant.

#157 A J on 07.10.18 at 12:43 pm

#147 Guy in Calgary

The only band ever!

#158 IHCTD9 on 07.10.18 at 12:43 pm

#133 Ubul on 07.10.18 at 10:23 am

Good for you. Get the $72,000 working for you ASAP. Maybe Turner Investment could do some pro bono goodness here, to put you and keep you on the right path.

The only catch is that you work 65 hours a week for saving $300. You are basically the slave of your own, unless you put in those hours to build your business.
________

Dana saves 300.00/WEEK – or 1300.00/month, although I agree 65 hours a week can not be banked on for the long haul.

Given that, I suggest making hay while youth persists. The more he/she pounds into savings early in life, the more magnifying benefit over the long haul.

Slog thru those hours, you’ll forget all about how much work it was 20 years from now – and you’ll have a SWEET pile to look at then. Dana’s only got one chance to make youth and time pay big. Much easier to work like a dog as a 20 something than a 40 something – either way you’ve got to do the work.

Most folks his/her age these days will squander their youth burning all their cash “having fun”. That’s just wasting a once in a lifetime opportunity to put your nose to the grindstone sans consequences you get if you do the same when older.

#159 Ezzy on 07.10.18 at 12:47 pm

#25 Baroque Millenial on 07.09.18 at 6:02 pm

I thought I didn’t have $200 at the end of the month, until I remembered that 10% is deducted off my paycheck and put into RRSPs. If I didn’t do that, guaranteed I’d go paycheck to paycheck, because I sorta do. Saving takes will power, having the money deducted first makes life more simple.

—-
I respectfully disagree. A far more effective impetus for “saving” is fear. Fear of being an old, poor person depending on scraps from the government. That’s what drives me.

#160 Bob on 07.10.18 at 12:49 pm

#104 Patrick_star on 07.10.18 at 12:28 am

Spoken like a man who’s never had a real friend in his life (wives and dogs don’t count) . Just picking up and leaving ain’t easy for people with authentic relationship roots.
<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<

Wow…nasty.

#161 Tony on 07.10.18 at 12:50 pm

Re: #103 The Real Mark on 07.10.18 at 12:26 am

Good luck with that theory, Trump can only do two terms, he may only do one term. When he’s gone the stock market will make the ’29 era and great depression era look very good. The Rothchilds et al. were going to implode the market when Hillary won the election. Through a fluke of fate Trump won the election. Well sometimes thing work out for the worst.

#162 Penny Henny on 07.10.18 at 1:00 pm

#61 The Real Mark on 07.09.18 at 8:20 pm
“are dreamers.
#48 renter in Surrey on 07.09.18 at 7:30 pm
0.25% rate hike is just extra $64/month on $500K mortgage – not worth talking about, same with forecasted 2-3 hikes next year.”

Sounds like you need a new calculator. A 0.25% hike is an extra $1250/year in interest expense, or over $100/month.

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

Mark for such a smart guy you are quite the idiot.
First check out a mortgage calculator (there are many online).
Next plug in the numbers for a 500k mortgage and compare rates of 3.24 and 3.49.
Then please pay attention and SEE that the difference is approx $64/month as mentioned above and NOT the $100+/month that you quote.
Once you have done that think long and hard about where YOU and your math were WRONG.
At that point you can return here and apologize to ‘Renter in Surrey’

#163 The Real Mark on 07.10.18 at 1:03 pm

“#160 Tony on 07.10.18 at 12:50 pm “

I don’t really understand. What does Trump have to do with any of this, particularly the implied claim of mine that the TSX index is far better value for money (and thus poised for outperformance) relative to GTA RE?

I know people are divided on whether Trump is the Devil or the Messiah himself, but you’re going to have to elaborate much further (if Garth permits) on such claim.

#164 Ezzy on 07.10.18 at 1:04 pm

#60 Danny on 07.09.18 at 8:08 pm

Garth you correctly say:
“Home ownership has risen to the highest level in history”..yes but is it really not ….”Home Ownership by banks? …..of course until the mortgages are paid off by the next generation, the kids of the new neighbors on the block?

Our new miniature Trump, …..Premier Ford and friends have publicly blamed a recent wave of immigrants and refugees for the long-standing housing crisis.”

Did not hear much about this during the election.
Oh well actually Parrot Ford….only ran on slogans…..now we will see the real fangs of Ford’s puppet masters.

Making racist statements like this with no evidence, as Garth has said many times….it’s the Canadians (and some with foreign money )who have turned housing into a strong speculative force ……not poor immigrants.

Hey Ford where are your people from? You probably don’t know or care.

———-

Yet it was the magically progressive SJW NDP party in BC that enacted the highly xenophobic anti-foreign ownership tax on housing (let’s be honest and call it what it is; an anti-Chinese & Hong Kong tax). I guess that makes the NDP in BC quite Trumpian [sic], too?

It’s unlikely the Ford admin are going to pass a law like this as it’s shown itself to be ineffective at curbing the cost of housing.

The fact that Doug Ford is now the Premier of Ontario says one of two things; he knows exactly who voted for him, or people simply couldn’t stand any more time with the Liberals, let alone the NDP. Personally I think it’s the latter, but that doesn’t matter anymore.

#165 jess on 07.10.18 at 1:09 pm

rudy should close his trap!

Journalist reveals she provided source’s identity to the FBI — and explains why she’s speaking out now
by Oliver Darcy @oliverdarcy July 10, 2018: 8:03 AM ET
https://money.cnn.com/2018/07/09/media/marcy-wheeler-journalist-reveal-source-fbi/index.html/

A prominent national security blogger revealed last week that she had provided the identity of a source last year to the Federal Bureau of Investigation, a move that led to her becoming a witness in special counsel Robert Mueller’s investigation into Russian election meddling.
Journalist reveals she provided source’s identity to the FBI — and explains why she’s speaking out now
by Oliver Darcy @oliverdarcy July 10, 2018: 8:03 AM ET
https://money.cnn.com/2018/07/09/media/marcy-wheeler-journalist-reveal-source-fbi/index.html/

A prominent national security blogger revealed last week that she had provided the identity of a source last year to the Federal Bureau of Investigation, a move that led to her becoming a witness in special counsel Robert Mueller’s investigation into Russian election meddling.

#166 fancy_pants on 07.10.18 at 1:18 pm

Your store may be the canary in the coalmine. When people can no longer afford ice cream, it’s time to exchange squirrel recipies

Sold it. Bought squirrel farm. – Garth

#167 Howard at 116 on 07.10.18 at 1:21 pm

Swedish eating hideous fermented fish?
You wouldn’t say that about the Chinese, would you?

Typical Canadian white PC coward.

#168 The Real Mark on 07.10.18 at 1:44 pm

“Then please pay attention and SEE that the difference is approx $64/month as mentioned above and NOT the $100+/month that you quote.”

Okay some lenders and some mortgage structures allow for the extra interest to be capitalized and added to the principal. Which, over time, renders the loan itself riskier and subject to a higher interest rate as the lender will inevitably demand more spread going forward.

Doesn’t change the fact that a 0.25% increase on a $500k loan results in over $1200 additional interest expense to a household annually.

Considering the amount of debt stress Canadians are already under, I don’t see how that’s not a big deal. I don’t mind the extra spread showing up as dividends from my bank stocks personally, but an increase to debt service costs for the prolifically consuming public probably will put the brakes on consumption. Hopefully the BoC governor is mindful of this with the coming announcement, that the recently vibrant CPI numbers are transient at best.

#169 Ezzy on 07.10.18 at 1:57 pm

#166 Howard at 116 on 07.10.18 at 1:21 pm

Swedish eating hideous fermented fish?
You wouldn’t say that about the Chinese, would you?

Typical Canadian white PC coward.

——-

For the record I think saying that about the cuisine of the Chinese, Swedish, or anyone else is wrong. But I’m so glad I’m not the only one who calls out the virtue signalling, self-sensoring, hypocritical white folks. They talk down to others from their ivory towers all while being completely oblivious to the fact they’ve created a catch-22 prison for themselves.

#170 Mike G on 07.10.18 at 1:58 pm

A little out of touch in the Ivory Tower these days… I just lost a rental in Miss City Center (owner divorce) luxury condo @ $1620 (amazing how many thought rent control laws apply to new condos)… it now goes for $2200, thanks the R/E scam artists who’ve made renting harder than buying and pushed investors to raise prices!
They’ve making a killing at these levels!

#171 NEVER GIVE UP on 07.10.18 at 2:01 pm

#152 Oft deleted much maligned stock.picker on 07.10.18 at 12:12 pm
Three boat loads of Chinese tourists we’re capsized and dozens dead und unrecovered. Shallow water kicks up big waves within minutes. If any of you visit Thailand this time of year stay away from touts selling snorkelling tours away from the islands…..storms only take minutes to appear…..this year has been deadly….but people die every year. The boat tours should be seasonal due to weather danger….but such regulations don’t appear to be forthcoming. It’s like a Trudeau govt….all talk, no action.
===================================

In 1983 on Patong Beach Phuket, 7 tourists died on a part of the beach near the center where there is a natural rip tide.

The Government put up a No Swimming, warning sign, but the local businessmen whose business dropped as soon as the signs went up just simply took the signs down.

Same everywhere in the Third World. In the first world we just like to let the Plebs get defrauded by businessmen without any warning.
Just keep them alive so there are more of them to rape financially.

#172 Mike in Toronto on 07.10.18 at 2:04 pm

#163 Ezzy

Ford’s “mandate” is 40% of the vote. Dismantling the previous goverment’s genuine mandates is wasteful and ignorant.

He knows who voted for him though. He knows they’re puppets to fear. They’re the chronically indebted. The temporarily embarassed millionaires of the 905.

Everyone is a millionaire in the 905… once they pay off the debt and sell their homes to leave the 905.

#173 Stan Brooks on 07.10.18 at 2:09 pm

#154 Stan Brooks on 07.10.18 at 12:30 pm

DELETED?

That is the top news for the day on yahoo.ca/finance,
open podcasts.

Cheers.

Tough. It does not belong here. – Garth

#174 jess on 07.10.18 at 2:14 pm

what no time to go to the laundery? investigation is ongoing…

… totalling about $234,000 — money found mostly as small-denomination bills, stuffed in bags stashed in the homes searched.

Waterloo Region police arrest five in major drug bust
Organized drug crime ring was so prolific, players couldn’t find places to hide cash profits
News Jul 05, 2018 by Lisa Rutledge Cambridge Times
https://www.cambridgetimes.ca/news-story/8726002-waterloo-region-police-arrest-five-in-major-drug-bust/

=========

update: July 2017: Glencore’s subsidiary Katanga Mining is reportedly the subject of a Canadian regulator’s investigation of more than $100 million in payments made to a company owned by Dan Gertler; a notorious businessman accused of bribing officials in Democratic Republic of Congo.

https://www.globalwitness.org/en/blog/bad-year-glencore/

‘festival of bright energy ideas’ –
https://www.globalwitness.org/en/blog/shells-vision-for-the-future/

“Total Systems Failure” shows how a global web of secrecy – made up of tax havens and shell companies listed in Liechtenstein, Dubai and Hong Kong – is facilitating this illegal international trade whilst protecting three Portuguese brothers at the head of the company from scrutiny. Norsudtimber’s detailed response to the allegations is included in Global Witness’ report.

#175 Penny Henny on 07.10.18 at 2:21 pm

#167 The Real Mark on 07.10.18 at 1:44 pm
“Then please pay attention and SEE that the difference is approx $64/month as mentioned above and NOT the $100+/month that you quote.”

Okay some lenders and some mortgage structures allow for the extra interest to be capitalized and added to the principal. Which, over time, renders the loan itself riskier and subject to a higher interest rate as the lender will inevitably demand more spread going forward.

Doesn’t change the fact that a 0.25% increase on a $500k loan results in over $1200 additional interest expense to a household annually.
////////////////////////////

Still WRONG Mark.
It is not an additional $1200 of interest ‘annually’ since the outstanding balance is being paid down year by year.
On a $500k mortgage at 3.49% and 25 year am.
After year 5 the balance would be $416,946.
After year 15 the balance would be $252,601.
At year 20 the balance is only $61,705.
So the $1200+ additional interest would only apply in the first couple of years beyond that the interest component is steadily decreasing.
And this is why the monthly payment in this example only increases by $64/ month and not the $100+/month that you so wrongly claim.

Would you care to now admit you were wrong?

#176 Stan Brooks on 07.10.18 at 2:34 pm


Tough. It does not belong here. – Garth

Agree, BoC and CMHC produce much better (house) porn.

#177 Doug in London on 07.10.18 at 2:43 pm

I hear a lot about how most people just don’t have enough money these days. If that’s so, why have the best selling vehicles in recent times been gas guzzling trucks and SUVs? I see that a lot here in London and area, more so than say 7 years ago. Last night I filled up my fuel sipping Honda, driven on the back roads of Oxford County seldom above 85 Km/hour to save fuel (the speed limit is 80) and was SHOCKED about the price of gas when I filled up. Now the punch line, I filled up at night when gas dropped to a “low” price of $1.26/litre, usually it’s over $1.30 during the day. I figure if so many people are so short of money, why aren’t more people driving fuel sipping econocars like a Mazda 2, or riding their bike more around town like I do?

Oh, I almost forgot, Doug Ford is going to save us all with a 10 cent per litre cut in the price of gas and diesel fuel.

#178 Ace Goodheart on 07.10.18 at 2:52 pm

Had a long look at the Hong Kong housing market recently. Parking spaces there cost upwards of 500K US.

The govt has thrown all the speculation taxes and buyers taxes at the problem that they could. The result is houses are more expensive.

The problem is not speculators, it is supply.

This is the same problem that Toronto has, and also Vancouver. There are just not enough houses anymore.

So while the suburbs, with their endless green fields and new housing developments, continue to experience a decline in RE prices, it does not seem like the same will ever happen in inner city Toronto. There are houses in Toronto that are priced out of the range of affordability, but at the same time, there are so many people who want to live there, for whatever reasons, that you can usually find a buyer.

The taxes levied to control the market will control the wrong places. Inner city Toronto and Van are not going to be affordable any time soon.

Coincidentally, for those who care, it is STILL possible to purchase a large house, with parking, right next to what is currently the largest transit project in North America, with a 19km underground LRT, a UPX stop that will get you downtown to Union Station in 9 minutes, for $5.00 with one intervening stop, a massive transit hub, and at least three Go trains, for $600,000.00.

Yeah, people have still not heard of us. While you are all paying a mil and a half for a townhouse in Vaughan, and spending three hours in your car every day, there are houses for sale with more land than your town house, more parking spaces, larger backyards, and larger square footage, for less than 1/2 what you paid.

And these houses, come 2021, will have arguably the best shortest, cheapest, most comfortable commute downtown of any detached or semi detached house, in the entire GTA.

The world is a funny place sometimes…..

#179 RyYYZ on 07.10.18 at 2:56 pm

There’s no good reason that most Canadian employees wouldn’t jump ship for more money. At least for those of us who work for corporations, it’s clearly been demonstrated that it’s only about the money as far as they’re concerned. Why would employees be any less mercenary?

#180 PastThePeak on 07.10.18 at 2:56 pm

#141 IHCTD9 on 07.10.18 at 11:28 am
#41 Nonplused on 07.09.18 at 7:06 pm

Yes, if you have a good income, watch your pennies, and invest through Turner investments, you’ll have a nice life. But to get really rich you need opportunity, risk, and leverage.
_______

There is another way to get really rich, the building and passing on of wealth from one generation to the next.

I don’t need a pile of money to be happy and content, but I love the idea of passing it along down the line as I ender my golden years. My kids could build it some more and then retire on the proceeds. My Grandkids would be the first to be able to quit working upon receipt of the funds – and live great.

Only takes one ding-a-ling offspring to screw it all up though :).
+++++++++++++++++++++++++++++++++++

Shirtsleeves to shirtsleeves in 3 generations. Pretty hard for your offspring to avoid the fate – human nature.

https://www.tennessean.com/story/money/2017/09/08/how-prevent-proverb-shirtsleeves-shirtsleeves-3-generations/639116001/

#181 Dan Franco on 07.10.18 at 2:57 pm

IHCTD9

I am in a similar situation but have a much higher education and annual income.

I am single, 28 but my take home pay is $1,500 a week and I save $1,000 a week. I rent and don’t have any debt and never will. I managed to work long hours for years now and have $300,000 in RRSP’s, TFSA’s, GIC’s, ETF’s, REIT’s etc.

My main goal is to have a cool $6,000,000 by 60 years old and make sure staying debt free. A 6% to 7% annual return should achieve this by then.

#182 bill on 07.10.18 at 3:03 pm

Really great to hear all the Kids got out!
Please spare a thought for Retired Thai Navy SEAL P.O. First Class Saman Kunan eh?

#183 crowdedelevatorfartz on 07.10.18 at 3:12 pm

@ AJ, Rick Danger( man of Mystery), and Ubul( Ubers Brother?)
” Do I get a prize?”
++++++

Yes, if you’re nice.
You all get to a ride in the elevator.

#184 Mattl on 07.10.18 at 3:18 pm

#153

“So are you suggesting a 550k RE purchase on a 68K salary makes a little sense? Wow. Just…..WOW!”

Wow, you are pretty dense. I said home prices are more in line to median incomes then many other places. And what you and every other RE doomer fails to realize is what median actually means, and that not everyone bought at peak. Jan 2015 median sfh was 360k. Homes were affordable here forever, sorry you missed it.

#185 AGuyInVancouver on 07.10.18 at 3:19 pm

#163 Ezzy on 07.10.18 at 1:04 pm

Yet it was the magically progressive SJW NDP party in BC that enacted the highly xenophobic anti-foreign ownership tax on housing (let’s be honest and call it what it is; an anti-Chinese & Hong Kong tax). I guess that makes the NDP in BC quite Trumpian [sic], too?

It’s unlikely the Ford admin are going to pass a law like this as it’s shown itself to be ineffective at curbing the cost of housing.

The fact that Doug Ford is now the Premier of Ontario says one of two things; he knows exactly who voted for him, or people simply couldn’t stand any more time with the Liberals, let alone the NDP. Personally I think it’s the latter, but that doesn’t matter anymore.
_ _ _
Wrong, thanks for playing. The BC Liberals enacted the Foreign Buyers Tax after data showed up to 25% of the homes in some areas going to offshore buyers.

The overall buying rate was 5%. Yes, xenophobic and racist. Kinda like Trump, but awkward. – Garth

#186 jess on 07.10.18 at 3:20 pm

They ended up here in America’s Dairyland, the nation’s top cheese state and No. 2 milk producer, attracted by a dairy industry dependent on undocumented immigrant labor to keep cows milked three times a day, year-round. They have raised their children in communities where American workers stopped answering “help wanted” ads for cow milkers long ago.

And now, they are going home.

https://www.wisconsinwatch.org/2017/06/americas-dairyland-and-trump-in-the-rearview-mirror-as-workers-return-to-mexico/

=========

“The market in general is not normal,” said Smith, who examines single-family housing values in submarkets of the city and suburbs as part of the report, which is updated every six months. “The crash put a lot of people in a frustrating position.”

Many homeowners in the city and suburbs are still waiting for homes to reach the prices they paid or to reach the level that was assumed to be the value when they refinanced mortgages and took on more debt, he said.

The problem is slow population growth in this region, he said. “We need more people to create demand for houses.”

http://www.chicagotribune.com/business/ct-chicago-housing-recovery-0427-biz-20170426-story.html

The Suburbs That Haven’t Recovered From the Recession – The Atlantic
https://www.theatlantic.com/business/archive/2017/12/suburban-poverty…/549350/

Dec 29, 2017 – The suburbs of the American west are struggling, too. … The Rust Belt isn’t the only region left behind by the economic recovery. … Such communities have high shares of poverty, many housing vacancies, a large proportion of …/

#187 Ubul on 07.10.18 at 3:29 pm

#157 IHCTD9

Working 65 hours a week is a hard trade off, no matter what. You pay either upfront or later.

Saving money early is a one time opportunity, just like living and enjoying life as twenty.

#188 jess on 07.10.18 at 3:30 pm

Wade Park was pitched as the biggest of the projects along Frisco’s heavily marketed (but now defunct) $5 Billion Mile, which also included the $1.5 billion Star complex — home to the Dallas Cowboys — and the $1.5 billion Frisco Station.

http://www.dallasnews.com/business/real-estate/2018/07/08/friscos-floundering-2-billion-wade-park-development-says-d-fw-economy

North Texas cities turn incentives arsenals against each other in fight for businesses, jobs

https://www.dallasnews.com/business/economy/2018/03/29/playing-incentives-game-texas-economic-development-wars-zero-sum-deal

#189 jess on 07.10.18 at 3:35 pm

cities against cities …state against state

good question!

“If you said all Texas cities could double or triple the size of their incentive budgets or allocations, what would that really do?” said Nathan Jensen, a government professor at the University of Texas at Austin and a critic of tax incentives. “Would it really generate more jobs or would it just double the price of incentives?”

Across Texas, municipal economic development corporations paid out $139 million in 2015 in grants, tax rebates and rent subsidies to businesses, according to the most recent report from the Texas Comptroller of Public Accounts. That’s up 53 percent from 2007.

And those sales tax-funded corporations are just one possible weapon in Texas cities’ incentive arsenals.

Any city can agree to property tax breaks or grants of its own, and the state doesn’t track those. Meanwhile, Gov. Greg Abbott’s office can sweeten local deals by dipping into the state’s “deal-closing” enterprise fund, which has doled out more than $482 million to companies since being formed almost 15 years ago.

As the ante rises from millions to billions for the nation’s highest-profile economic development prizes, critics argue tax incentives are the least efficient way to boost local economies, shortchanging taxpayers in favor of what are often the world’s biggest and richest companies.

#190 Moller on 07.10.18 at 3:43 pm

Penny Henny is spot on. I don’t think “The Real Mark” is the real Mark. That’s such a rookie mistake.

#174 Penny Henny on 07.10.18 at 2:21 pm

#167 The Real Mark on 07.10.18 at 1:44 pm
“Then please pay attention and SEE that the difference is approx $64/month as mentioned above and NOT the $100+/month that you quote.”

Okay some lenders and some mortgage structures allow for the extra interest to be capitalized and added to the principal. Which, over time, renders the loan itself riskier and subject to a higher interest rate as the lender will inevitably demand more spread going forward.

Doesn’t change the fact that a 0.25% increase on a $500k loan results in over $1200 additional interest expense to a household annually.
////////////////////////////

Still WRONG Mark.
It is not an additional $1200 of interest ‘annually’ since the outstanding balance is being paid down year by year.
On a $500k mortgage at 3.49% and 25 year am.
After year 5 the balance would be $416,946.
After year 15 the balance would be $252,601.
At year 20 the balance is only $61,705.
So the $1200+ additional interest would only apply in the first couple of years beyond that the interest component is steadily decreasing.
And this is why the monthly payment in this example only increases by $64/ month and not the $100+/month that you so wrongly claim.

Would you care to now admit you were wrong?

#191 Howard on 07.10.18 at 4:12 pm

#166 Howard at 116 on 07.10.18 at 1:21 pm
Swedish eating hideous fermented fish?
You wouldn’t say that about the Chinese, would you?

Typical Canadian white PC coward.

————————————————

Yeesh. It was a tongue in cheek response to a comment about bad Swedish food. Surströmming is considered by many the worst-smelling food in the world. Though apparently the taste isn’t nearly as bad as the smell; just really briney raw fish.

#192 NEVER GIVE UP on 07.10.18 at 4:19 pm

#166 Howard at 116 on 07.10.18 at 1:21 pm
Swedish eating hideous fermented fish?
You wouldn’t say that about the Chinese, would you?

Typical Canadian white PC coward.
==============================
If you said it on this blog you’ll possibly be kicked off!
I like this blog so I am careful what I say!
I am allowed to self deprecate my own race just not other races.

#193 Alberta Ed on 07.10.18 at 4:25 pm

Imagine the impact of the estimated annual $1,000-per-household carbon tax that Mr. Dressup wants to impose, on top of mounting interest charges.

#194 IHCTD9 on 07.10.18 at 4:30 pm

#186 Ubul on 07.10.18 at 3:29 pm

Saving money early is a one time opportunity, just like living and enjoying life as twenty.
_____

Yep, pick your poison, chose the lesser evil etc…

I have fond memories of my youth though – even though I was saving money…

#195 Sask to AB on 07.10.18 at 4:41 pm

re #150 A J on 07.10.18 at 12:02 pm
Excellent post on the ability to adapt.

One of the most important skills you can teach your children is resiliency.

#196 LL on 07.10.18 at 4:49 pm

…”Also, this personal financial disaster is taking place after almost nine years when interest rates were absurdly low, allowing people a once-in-a-generation change to reduce debt, get their personal lives in order and improve personal finances”…

Seriously, that was the goal? Every body was encouraged to buy a house, IR were so low..go for it..buy 2 houses!

Even reno programs on TV!

After tech.com, houses.com, I am curious to see what will be the next bubble!

#197 Mark Peters on 07.10.18 at 7:31 pm

To Albert Ed

I read in the Financial Post that $1,000 is just to start. It is more like $2,200+ in 5 years. This is if Trudeau can stay in power. See what happened to Ontario’s Liberal Wynne cap and trade, $3 billion collected and will soon be gone.

#198 Don Saunders on 07.11.18 at 1:06 pm

We are in our 40’s and I don’t see the big deal about people working 6 days a week.

My wife and I work 62 hours a week each and bring home $2,500 a week net. We are able to maximize RRSP’s, TFSA’s, non-registered etc.

This is around $1,200 a week or so. Our net worth house, life insurance, investments, savings etc. is $1,300,000.