Crossroads

Sixty years ago my father was a high school principal. Salary, $10,000. With my mother he bought a house – two stories, four bedrooms, two baths, garage, big lot, stucco-on-brick in a small town just outside Toronto (now Mississauga). Price, $19,000.

I’ve no idea what the down payment was, but mortgages cost 8%. Within a decade they’d be almost 10%. To make ends meet, my parents took in a boarder, a nice young woman named Elizabeth. She taught me all I know about sex. (Just kidding. I was nine.)

The last time that house changed hands – renovated, but not expanded – the sale price was $1.8 million, or 100 times what my parents struggled with. The mortgage rate, however, was under 3% – less than half the historical norm. And a high school principal for the Peel District School Board (which my father eventually ran) earns $110,000.

So, salaries are ten times higher. A mortgage costs 60% less. House prices up a hundredfold.

How, then, did we lose our way over the decades? The answer is complex, including a massive increase in taxes (and the services people demand from government), a decade-long collapse in interest rates (pumping real estate) and a whole new attitude towards debt.

Today home ownership, house prices and mortgage borrowing are all at record levels. The wealth gap has widened as never before. As a direct result, politics are polarizing as people try to find solutions to an unsustainable financial situation. That’s bred a rush to protectionist populism in the States, and a drift left into a shared-economy, nanny state Canada. Neither are working. Or ever will.

More taxes just embellish government and impoverish citizens. Higher interest rates transfer further wealth from the middle to the top 1%. Trade wars whack everybody. The tribalism coming from the alt right/Trumpers is based on barriers – impossible to firewall in a Google world. The socialism of the lefties is another failed doctrine destined to kill investment, initiative and employment. Truly, we’re reached a crossroads.

Debate is useful but not a substitute for action. Moisters need to realize no government will produce houses that cost two times annual income in a major urban area. Those days died with my old man. Boomers must prepare for decades of volatility ahead, just when their working years are over and they’re most vulnerable. For those in the middle, now struggling with real estate burden, mid-career pressures, fading pensions and family costs, just getting by is no strategy.

Heed the lessons posted here. Don’t just do what everybody else does – since most of them are verifiably pooched. Stop borrowing. Seek balance. Don’t have a one-asset financial strategy. Use the generous tax shelters gifted to you. Stay single or stay married. Understand investing is not gambling. Be diversified. Don’t consume what you cannot afford. Don’t envy the wealthy, emulate them. Embrace some risk, if you want returns. Ignore FOMO. Don’t just save. Understand how you’re taxed, to avoid it. Plan. Be conservative and aggressive. Have global exposure. Find and keep one good friend. Besides the dog.

Above all, value your time. Waste none. Like $19,000 real estate, it’s not coming back. Every moment you spend wishing otherwise is a debit.

The minutes I devoted writing the above were an investment in you. Run with it.

156 comments ↓

#1 Reynolds531 on 07.22.18 at 4:06 pm

Did you have the beard when you were nine?

#2 Smoking Man on 07.22.18 at 4:07 pm

Great post Sr. Gartho.

#3 Fish on 07.22.18 at 4:15 pm

Please post from early today July 22 2018

#84 Fish on 07.22.18 at 10:42 am
@ #73 Stan Brooks on 07.21.18 at 10:42 am

#43 I’M A STABLE GENIUS! on 07.20.18 at 8:07 pm
When the lies become the truth, everyone seems to believe the fake numbers of 2.5% inflation.

The word Lie is really the correct term to use when inflation is raging at 7% and they tell us it is 2.5%.

But it seems most people don’t want to push back.
They will accept words like not correct or not true. That is, if they can even get to the fact that it isn’t true!

Many are given to believe the frankenumber given regarding inflation is a result of smart people in Stats Canada who are only reporting the real numbers.

Astonishing!

In my assessment cost of living/real inflation is above of 8-10 %.

Reporting 2.5 % inflation is an insult to everyone’s intelligence, outright lie and a moral crime (legal crime does not apply here as the legal system will never keep up with the true justice) as it results in theft of saving (past labour), including pensions theft (CPP indexed at sub 2 %)

the facts:
1. Housing increased by 10 % yearly for over a decade and a half
2. energy alone increased 20 % + on yearly bases compared to last year.
3. food everywhere increased by at least 30-50 % in the last few years, probably 15-25 % in the last year alone driven by increase of minimum wage.

and to report 2.5 % as ‘inflation’ is absolutely ridiculous.

Keep in mind, with real inflation of 8-10 % and GDP ‘growth’ of 2-3 % we are actually shrinking at an absolutely horrendous rate of 5 + % annually which is actually pretty normal considering the fact that we are coming out of the greatest credit bubble ever.

This has been going for at least 6-8 years and in my humble estimate the average standard of living of the Canadians will shrink in total between 2.5 and 3 times from the heights at the top of the credit bubble.

The sheeple is slowly boiled like a frog as it is indeed that stupid.

With the stupid unfortunately will suffer also the responsible, who live within their means.

Adding insult to injury all your ‘gains’ in real assets and even the ridiculous low interest on savings and GICs are taxed as ‘profit’ as the government deems that you are getting richer.

With people getting poorer and deeper in debt by the day it is not surprising that crime is increasing and Canada from today is becoming very different from the country it used to be 2-3 decades ago

I can only imagine what the situation will look like a decade from now with the current economic policies relying mostly on credit and cheap labour to US and with the pending disintegration of NAFTA.

It seems these are the times to be truly paranoid and defensive in any exposure, limiting your liabilities and protecting your interests as much as you can.

I have a very bad feeling about that, specially about pensions and RRSPs in long run.

**************[
well said, I’m am also worried

#4 Wrk.dover on 07.22.18 at 4:27 pm

When the US debt was 1/2 trillion and looking to double tout suite, I was heavily influenced by Mother Earth News Magazines from issue 20 though 60, which basically said learn several trades, buy a tiller, learn to garden, move out of the urban area and so on. Glad I did. The biggest payoff was becoming a master mechanic, not for hire but for personal consumption, saving me day after day, from paying ransom to have personal transportation.

Tooling up paid me as well as stocks have supported the suits.

#5 Dave on 07.22.18 at 4:28 pm

$1.8 was the going price in Metro Vancouver but thankfully its come down to 1.5
How low do you think it will go – whats the new normal???

#6 Sask to AB on 07.22.18 at 4:32 pm

Outstanding post. Really sobering.
Thank you for always trying to help us.

#7 FOUR FINGERS WATSON on 07.22.18 at 4:36 pm

https://www.msn.com/en-ca/video/animals/watch-this-adorable-2-year-old-play-the-best-game-of-fetch-with-neighbor%e2%80%99s-dog/vi-BBKR63A

#8 Awesome on 07.22.18 at 4:36 pm

Post

#9 For those about to flop... on 07.22.18 at 4:38 pm

The back up plan.

The East Coast of Tasmania is home to the more touristy and beachy side of the state.

When I looked the other day when some one on the blog was giving me the gears about not buying in Vancouver,I thought I would check in a place called Bicheno which was one of the more popular beach towns when I was a teenager.

While I was surprised at how much some of the deluxe beach houses were going for ,it has been over twenty years since I last visited I guess,there was still some affordable options for me to keep as a back up plan.

I spotted a nice block of land for 200k closer to the beach than this one,but it is gone presumedly sold

https://www.domain.com.au/lot-204-wedgetail-circuit-bicheno-tas-7215-2014337965

Then if I wanted the option of not building I could jump on something like this one for 359k,probably the best value for money out of the three.

https://www.domain.com.au/8-rose-street-bicheno-tas-7215-2012512270

And if I want to have a lash I could blow the budget and buy this one for 485k

https://www.domain.com.au/21-fraser-street-bicheno-tas-7215-2014507944

I don’t know where I will retire but it’s nice to have options and always remember to have a back up plan or else life can be a real Bicheno…

M44BC

#10 Here you go on 07.22.18 at 4:52 pm

Must be Sunday – Balance and Diversified sermon.

#11 Linda on 07.22.18 at 4:53 pm

Housing can still be affordable, though as Garth points out is not likely to cost only twice annual income for most Canadians. Keeping in mind that developers have to cover their costs AND make a profit, about the only way I can see lower costs for housing is if the government develops the raw land into serviced lots & sells them ‘at cost’. The idea would be that the buyer would then erect whatever housing unit they could 1) get approved by the municipal planning department & 2) could afford. Alternatively the government mass erects housing units on the serviced lots & sells ‘at cost’. The problem there is that most people think of government housing as ‘future slum’. Oddly enough, even though they eagerly purchase any number of identical builders models with ‘architectural controls’ that ensures homogenous neighborhoods they shy away from government provided ‘affordable’ housing because it ‘lacks variety’.

#12 Dan on 07.22.18 at 4:54 pm

You can get a great 4 BR 2 BA house in Calgary for 350-400k, which is just over 3x average family income.
So not bad.

#13 dakkie on 07.22.18 at 4:54 pm

Global Real Estate Prices DROP! Canada, Australia, Sweden SIGNIFICANT Price and Sales Tumble!

http://www.investmentwatchblog.com/global-real-estate-prices-drop-canada-australia-sweden-significant-price-and-sales-tumble/

#14 Karl on 07.22.18 at 4:57 pm

This post sounds like a wake up call to those on here expecting big RE crashes, among other things of course (yes, I can read).

Though I don’t get the “stay single/stay married” part. What does staying single have to do with anything? Why can’t someone who’s single get married? Is that a bad investment strategy? Lol

#15 Loonie Doctor on 07.22.18 at 4:59 pm

Pretty much all the key messages for personal finance is one succinct post. Nicely done.

#16 theoryAndPractice on 07.22.18 at 5:01 pm

Thank you for sharing great post

#17 Retired in Kelowna on 07.22.18 at 5:03 pm

Great post! Thank you.

#18 NEVER GIVE UP on 07.22.18 at 5:05 pm

Say for example there are only 100 people left on earth.

And say for example that robot technology reached a point where robots could do all the work a human could do and 100 times faster, and work 24 hours a day.

And lets assume we kept our present system of capitalism and over time the only people who owned all the factories that made robots controlled the recipients of robots to the upper 10 friends and family of the 100.

In accordance to capitalist principles they can also rent robots to the bottom 90 people.

By controlling the supply of robots the owners would guarantee the power to keep the bottom 90% of the people at whatever bare minimum living standard they want so the bottom 90% are always somewhat needy.

All excess wealth is kicked up to the “owners” of the technology. Giving no credit to the society that educated them and provided the support systems and inheritance laws that enabled the lucky ones at the top 10%. Not to mention that in order to be wealthy you need customers who enable you to rise to a level of wealthiness.

Lets compare the Robots in the above story to present day Machines and high tech assembly lines, Amazon like efficient distribution systems that do the work of 1000’s of men and work 24/7. The speed of food processing equipment for example has increased steadily over the last 50 years upping the per minute processes of task completion from 10 per minute to 2000 per minute in some cases.

My argument is that incrementally over the last 60 years the industrial revolution has made us rich on an average basis but made the bottom 90% poorer compared to the upper 10% that really own all the machines, patents, copyrights (with Disney laws extending copyright for likely centuries as they keep extending the law when it gets closer to the public domain.). Our laws backed up by the guns of our court systems protect the artificial advantages big business enjoys.

The fact is that the working class person has not had a raise in pay since the 1960’s when accounting for inflation.

http://www.pewresearch.org/fact-tank/2014/10/09/for-most-workers-real-wages-have-barely-budged-for-decades/

Government favors tax and regulation breaks to large corporations. Banks and stock markets finance the big guys and leave small business to fend for themselves with their 26% credit cards for financing.

We are a society that does not respect anyone who cannot go to work for 8 hours a day. Those who cannot do such work, the ill the tired, old, or mentally ill are essentially regulated out of the marketplace unlike Asian cities where anyone with a street stall or 2 wheeled noodle cart can make a living. Government hates micro business because it is hard to collect their tax cut.

If a poor person wants to work from home and it is visible to any neighbor who complains, the full force of city bylaws will come crashing down on them.

We have created an over regulated society of Nimbies. We cater to the very large businesses and give them all the Carte Blanche they need and if they want more they just pay off politicians to get what they want. (cost of doing business)

(Looking at the numbers a bit closer, there were 13,260 lobbyists targeting the House of Representatives in 2009. That’s 30 lobbyists per legislator. In the Senate, the problem is worse with fewer legislators (100) and 13,134 lobbyists. The ratio of lobbyists to legislator is 131 to 1. Wiki)

At street level those young and those disenfranchised in China have a seemingly brighter future economically rather than our difficult to employ and mentally ill who have seen paltry increases in assistance. We force them on social programs as we wont let them work.

The forces of automation are going to gradually force all but the well educated off the work roles with the exception of government who seem to hire 50,000 workers here and there to avoid embarrassing unemployment stats.

Even if one is well fed and reasonably clothed but those around him are doing significantly better it will cause depression and anxiety.
Lets keep stepping on the necks of the less fortunate! It keeps the rest of us more privileged in gravy!

#19 the Awakened One on 07.22.18 at 5:06 pm

Sir Garth,

Always enjoy your post for past 4 years: it got me learn about ETF (VFV), preferred… and been doing very well.

NOW, I’ve just learned something invaluable about your style: humour is the key to sex! :o]=

Methinks I shall grow a manly beard, and get a cuddly, fluffy beast like Bandit !

#20 Grouch Douglas on 07.22.18 at 5:17 pm

“To make ends meet, my parents took in a boarder, a nice young woman named Elizabeth. She taught me all I know about sex.”

Thanks Garth, that makes me nostalgic for my younger days…sigh…

#21 Millennial Realist on 07.22.18 at 5:20 pm

“So, salaries are ten times higher. A mortgage costs 60% less. House prices up a hundredfold.”

Excellent synopsis of the exponential increase in prices we now pay. Clearly illustrates the predicament that Boomers have put millennials into. Spare us the judgment older folks, you could not manage at all if you faced what we have to now. And salaries are going down, with a huge portion of “new jobs” actually precarious contract or short term positions now. Plus the Boomer impulse to increase immigration and more ‘free trade’ brings millions more desperate souls willing to work for even less, lowering the floor, totally shafting younger Canadians hoping for a middle class life.

” The wealth gap has widened as never before.”

True, and this will completely determine our collective future. Make excuses for it, and we are all toast, especially the gilded elites and the 9.9% supporting them.

“More taxes just embellish government and impoverish citizens.”

Totally wrong. It works beautifully in Scandanavia, the most egalitarian, peaceful, educated, functional, non-violent societies on earth. Give your head a shake Garth, and remove the cobwebs of failed neo-con ideology. You are simply wrong. Even Dwight Eisenhower had it right when it comes to taxation and the industrial elite, but sadly the Boomers have betrayed him and all reasonable conservative leaders ever since.

” The minutes I spent writing the above words were an investment in you.”

And as much as I disagree, I thank you for it.

#22 TS on 07.22.18 at 5:22 pm

Thanks for sharing your pearls of wisdom, Garth. So when do you predict gta real estate will fall or not?

#23 Spectacle on 07.22.18 at 5:23 pm

1) ” Find and keep one good friend.”

2) “Above all, value your time. Waste none………., it’s not coming back. ”

3) “The minutes I spent writing the above words were an investment in you. Run with it.”

~~~~~~~~~~~~~~~~~|~~~~~~~~~~~~~~~

Hi again ” for those about to Flopp…”

Thank You for the reply. Man, does your response from yesterday ( to me) fit well with that of our grand host Mr. Turner this evening! I appreciate both of You. Just read your entry tonight , not my most current plan, “an exit plan” , but I have one of those for the longer term retirement if that ever happens.

In my years of experience in business and living in the changing YVR market, the events I see are beyond frightening. Making a substantial protective change myself, and running with the blog knowledge .

Regards All.

#24 Ron on 07.22.18 at 5:24 pm

Why can’t we open up the Green Belt to development if land is so scarce? Is it Holy Land?

There is a trend in the U.S. of migration from large cities to smaller ones, as every corner of the country becomes a ‘Tech Center’ – google ‘Kansas City/Cincinnati/Iowa..etc. tech center’ if you don’t believe me. Why would companies keep jobs in expensive big city office towers when they could move them to smaller cities. I expect this will ultimately lead to deflation of big city real estate prices.

#25 Yorkville Renter on 07.22.18 at 5:33 pm

If RE costs more than 5x income – stay away!
Doing everything possible to own your home is a cult… and irresponsible.

I would LOVE a Ferrari, but I wouldn’t put all I have to get one… besides, if it’s really important I could always rent one!

Life’s more fun with you’re not sweating the finances.

#26 8 percent on 07.22.18 at 5:33 pm

Interestingly, a stock portfolio doing 8% per yr over 60 years, would also have gotten you the exact same 100x growth!

But in practice, taxes would have made that growth much lower than that, unfortunately. So house still wins.
Also, you can live in it, unlike the portfolio.

#27 TrailerSailor on 07.22.18 at 5:36 pm

@Karl, Divorces are costly…

#28 Fish on 07.22.18 at 5:37 pm

Thankyou great post

“Find and keep one good friend. Besides the dog.”

absolutely

#29 It's down and going down further on 07.22.18 at 5:42 pm

My call remains a 50% drop in the Lower Mainland. If you run reasonable numbers in a housing affordability calculator, it gets tough to pass $1M in affordability. For all those with AirBnBs that laundered cash, good luck. It was nice while it lasted and some of us won the lottery (by actually cashing out).

#30 Honey Dripper on 07.22.18 at 5:52 pm

Timely post. Our nephew just asked via messenger if he could borrow money for a down payment on a $410K house. They need (him and husband) 10% down. Nobody wants to work, save and struggle. That’s how life works. Deal with it and the answer is NO. We have 4 kids of our own with their hats out in hand.

#31 salmon rear end arm on 07.22.18 at 6:06 pm

The chief says thank you and it’s about time

#32 Cheese on 07.22.18 at 6:07 pm

Wonderful post Garth, Thanks :)

#33 DeVante on 07.22.18 at 6:08 pm

Great post. Thank you Garth!!

#34 Lifexprt on 07.22.18 at 6:09 pm

Priceless!

Thanks Garth, dont always follow your strategies but have been an avid reader since the beginning.

#35 NoName on 07.22.18 at 6:11 pm

#24 Ron on 07.22.18 at 5:24 pm
Why can’t we open up the Green Belt to development if land is so scarce? Is it Holy Land?
There is a trend in the U.S. of migration from large cities to smaller ones, as every corner of the country becomes a ‘Tech Center’ – google ‘Kansas City/Cincinnati/Iowa..etc. tech center’ if you don’t believe me. Why would companies keep jobs in expensive big city office towers when they could move them to smaller cities. I expect this will ultimately lead to deflation of big city real estate prices.

—-

Interesting observation, we driving on I-79 vw and in a middle of the nowhere there it was technology park. I just checked out tenants and many of them are big companies.

#36 Reality is stark on 07.22.18 at 6:13 pm

To #21 millennial realist.
Globalization has lifted the lives of those residing in the east.
If you were to take a world view things are improving for the average world citizen. Is it not selfish for you to only consider citizens of the west in your analysis?
A myopic view does not make you right.
The boomers were good world citizens.
It’s unfortunate that their own offspring had to suffer for the greater good.
Life is unfair but much of this was foreseeable.

#37 Sherry Townson on 07.22.18 at 6:13 pm

The fact remains nothing has really changed. If you are a financial and economic loser meaning your employment income and future assets, investments, income are low to worse in deep debt like many seniors, retirees now then tough luck.

Universal basic income, social programs and whatever else they throw at the kitchen sink will just give the illusion that the Liberals, NDP, Green Party, Labour Party etc. and whatever these socialists wanted to hide through name confusion are on the people’s side.

It is all BS and nobody wants to believe it and admit.

#38 paracho on 07.22.18 at 6:15 pm

Wise advice once again !
Thank you !

#39 The Hammer on 07.22.18 at 6:17 pm

Bingo!

#40 not so liquid in calgary on 07.22.18 at 6:21 pm

So, sixty years ago you were nine. I remember you in Mulroney’s cabinet (I was the only sophomore geeky enough to be reading McLean’s).

You’re only 51 now… those political years must have been hard ones! lol

Tax consumption, not income!

#41 FOUR FINGERS WATSON on 07.22.18 at 6:22 pm

As long as the cost of borrowing is LESS than the real rate of inflation ( some say it is 6-8 % ) people are better off being debtors. There will be bubbles. When the savings rate is MORE than the real rate of inflation people will start saving/investing again….If a mortgage or a heloc costs 3-5 % and the real rate of inflation is 6-8% people are better off borrowing. Why save/invest money when you can’t keep up with inflation ? People are better off riding the bubbles and trying to get ahead that way. And that is what has been happening for the past 10 or so years.

#42 Divorcing Gal on 07.22.18 at 6:28 pm

I needed to hear this today as my divorce is leading me to move out of the family home that is big and spacious with a yard to match, into a small condo with a patio for a yard. But I will own the condo outright, be in the neighbourhood with the kids’ schools, owe nothing and have some decent investments.

#43 For those about to flop... on 07.22.18 at 6:38 pm

Recent sale report/ Realtor assistance needed.

This East Vancouver detached just sold.

Let’s see if I can get a realtor to step up to the microphone and tell us what this relative new build went for.

They paid 2.08 in December 2017 and it comes with the latest must have accessory in Vancouver real estate,a laneway house.

Asking 2.25 ,it’s not much more than break even territory on a new building after expenses.

Step right up to the microphone.

Everyone wins a prize…

M44BC

2870 22ND AVE E VANCOUVER price: $2,250,000, bought on 29-Dec-2017 for 2.085 assessment $2,073,000

https://www.zolo.ca/vancouver-real-estate/2870-east-22nd-avenue

http://tonywan.ca/mylistings.html/listing.r2281296-2870-e-22nd-avenue-vancouver-v5m-2y2.76717618

#44 NEVER GIVE UP on 07.22.18 at 6:53 pm

#29 It’s down and going down further on 07.22.18 at 5:42 pm
My call remains a 50% drop in the Lower Mainland. If you run reasonable numbers in a housing affordability calculator, it gets tough to pass $1M in affordability. For all those with AirBnBs that laundered cash, good luck. It was nice while it lasted and some of us won the lottery (by actually cashing out).
==================================

So far the forces of inflation raging at over 7% will soon light a candle under any corrections.
Say if the correction deflates home prices by half It will take only 9 years for the money to inflate by double at 8% per year.
That will bring back to zero any deflation not counting other factors like immigration, interest rate manipulation, lack of supply, especially in Lower Mainland.

It isn’t so much that the value of the home went up it is that the value of money declined through manipulation via interest rate manipulation, CMHC manipulation.

So all our speculation all these years listening to Garth call a correction with good and sound reasoning has been made worthless by sheer greed and manipulation of the markets by the power brokers.

So much for market forces. None of the old rules apply any more.

#45 Darryl on 07.22.18 at 7:00 pm

Well said Garth . Completely logical .

And now for the very stable genious .( yes I know its spelled wrong )

https://www.facebook.com/RandyRainbowOfficial/videos/1465224200246185/

#46 Squire on 07.22.18 at 7:02 pm

Thanks for taking the time to dispense this wisdom, Garth.

Please, please, please, never give up preaching truth.

#47 Fiendish Thingy on 07.22.18 at 7:03 pm

Garth,

Since Canada doesn’t have the bloated military budget the US has, what would you cut in order to bring taxes down?

Please be specific, don’t just say “government workers”.

Also, if interest rates were to rise back to 8-10%, houses could fall back to the 2-4 x annual income level in most areas.

#48 Stone on 07.22.18 at 7:05 pm

#26 8 percent on 07.22.18 at 5:33 pm
Interestingly, a stock portfolio doing 8% per yr over 60 years, would also have gotten you the exact same 100x growth!

But in practice, taxes would have made that growth much lower than that, unfortunately. So house still wins.
Also, you can live in it, unlike the portfolio.

———

The municipal taxes paid over those 60 years and all the repairs and maintenance completed over the same period more than equalizes the playing field versus an investment portfolio. That doesn’t consider the mortgage interest paid while it’s financed. There is a cost to owning a house. Don’t be naive.

Would be good if you took your blinders off.

#49 jas on 07.22.18 at 7:08 pm

#12 Dan
You are right. If one is to release funds from their home for retirement and stay in Canada, then I guess Calgary is very good choice. (I don’t know how things are around Okanagan, BC). I sometimes laugh when I read on other blogs which give options for retirements in developing countries. I think such bloggers never consider an extremely crucial aspect, it is, that, we need the kind of community/culture we spent our working life in to be around in retirement too. How is going to be available in such foreign countries? I am of Indo-Canadian background and purely from financial angle, I see many small places in this country for retirement, But I see the crucial aspect missing. And based on that, Dan, I agree that even for me, Calgary is the best option!

#50 Tony on 07.22.18 at 7:14 pm

Resale townhouses can be had in Edmonton today for about one hundred thousand dollars or ONE times a two person family income. The bid to ask is about 85 to 90 percent on resale. It all depends on where you live.

#51 Slowly Boiling Frogs on 07.22.18 at 7:19 pm

#3 Fish on 07.22.18 at 4:15 pm

The sheeple is slowly boiled like a frog as it is indeed that stupid.
——————————————

Well of course they are, hence my name.

#52 Money Laundering Investigation Spreads to Kelowna on 07.22.18 at 7:20 pm

The proceeds of large streams of criminal money flowing into real estate has been flagged in Kelowna with links to the big fish well known in the gateway of Vancouver.

Market is freezing and will stay frozen without this money.

#53 BillM on 07.22.18 at 7:22 pm

Sorry, I don’t buy the 100X number. There is a Canada outside of the GTA and Vancouver.
Many decades ago on a salary of $7000 I built my first modest home myself (sweat equity) for $13500, 8% mortgage. Sold a year later for $23000. Today it would sell for about $230,000. About 10X. Not much has really changed except cheaper money.
Those starting out should learn how to do some things them selves rather than paying others with after tax dollars and lower their expectations by not watching HGTV.

#54 acdel on 07.22.18 at 7:24 pm

Good post Garth!

#55 Wrk.dover on 07.22.18 at 7:25 pm

#40 FOUR FINGERS WATSON on 07.22.18 at 6:22 pm
As long as the cost of borrowing is LESS than the real rate of inflation ( some say it is 6-8 % ) people are better off being debtors. There will be bubbles. When the savings rate is MORE than the real rate of inflation people will start saving/investing again….If a mortgage or a heloc costs 3-5 % and the real rate of inflation is 6-8% people are better off borrowing. Why save/invest money when you can’t keep up with inflation ? People are better off riding the bubbles and trying to get ahead that way. And that is what has been happening for the past 10 or so years.

———————————–

Send memo to Poloz

#56 prairie person on 07.22.18 at 7:38 pm

Garth is right. However, l am very glad that I bought a house in 1975I in victoria for 47,000. I sold it, bought another, sold that recently to downsize. Maybe if I had put that money into a balanced portfolio, I would be just as far or further ahead but I did not know anything about investing or stock markets or bonds. Like most people. My father gambled on penny mining stocks and that, to me, was what the stock market represented. It took a long time to understand about investing. No point in saying to me, you should have known. I did not come from that kind of background. A wife, kids, a full time job take up a lot of time. There were no Garth Turners to explain that Murray Pezim was not the be all and end all of investing. That house turned into 750,000 when I sold it some years ago. The majority of people are like me re money.

#57 West coast on 07.22.18 at 7:38 pm

It’s obvious, principals were overpaid 60 years ago and maybe should have been only making $1, 000 a year.

#58 TheDood on 07.22.18 at 7:46 pm

#29 It’s down and going down further on 07.22.18 at 5:42 pm
My call remains a 50% drop in the Lower Mainland. If you run reasonable numbers in a housing affordability calculator, it gets tough to pass $1M in affordability…..
___________________________

I’m in the same camp as you, I think more than 50% though.

I’ve said it a dozen times on this blog – There is no industry operating in BC that pays the kind of dough needed to buy for 99% of available buyers. The fact that ANY RE is selling lends to the theory that there are ALOT of dumb people in this neck of the woods.

#59 NoName on 07.22.18 at 7:53 pm

@ flop

i hope that plan B, where ever it is, comes with guest bedroom and fishing boat. :)

#60 For those about to flop... on 07.22.18 at 7:53 pm

Pink Lemonade Stand in Vancouver.

The listing on this East Vancouver detached talks about extensive renovations and they already have it on the market below purchase price.

Did these guys or the previous guys pay for the fix-up we’ll probably never know ,but either way it’s not good.

Paid 1.57 in February 2017 and started off the bidding at 1.66 and the latest ask is 1.55

We are not taking about a 5-6 million Westside house ,we’re talking your average East Van detached.

Can’t buy them and flip them like you used to.

Not even Spider-Man can get out of this one…

M44BC

2018-04-30 : $1,669,000
2018-05-13 : $1,649,000
2018-05-22 : $1,599,000
2018-06-18 : $1,550,000

2754 PARKER ST VANCOUVER price: $1,550,000, bought Feb-2017 for 1.57 assessment $1,448,000

https://www.zolo.ca/vancouver-real-estate/2754-parker-street

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

Feel free to make a donation.

Flop For Fox Fund…

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

#61 Dr Omer Mallhi on 07.22.18 at 7:56 pm

Your last line is just amazing
Thanks

#62 MillennialMe on 07.22.18 at 7:56 pm

#21 Millennial Realist on 07.22.18 at 5:20 pm

———

You should change your name to blind millennial cause you seem to only know how to blame others for your problems.

#63 waiting on the westcoast on 07.22.18 at 8:21 pm

She taught me all I know about sex. – Garth

It started off so well…

#64 Go Kart Mozart on 07.22.18 at 8:23 pm

Canada used its resource money to create a theatrical production, scripted to mimic the economies of our resource customers. The casting was based on lifestyle, look, and pedigree.
If there’s a fix , it should start with the $100k SUV’s – proudly displaying empty boxes of Timbits and the National Enquirer on their dashboards.

#65 Invictus on 07.22.18 at 8:35 pm

It’s been a while since I felt shudder like i did when I reached the end of this post.
Genuine BRAVO and thank you.

Invictus
M44O

#66 For those about to flop... on 07.22.18 at 8:40 pm

#58 NoName on 07.22.18 at 7:53 pm
@ flop

i hope that plan B, where ever it is, comes with guest bedroom and fishing boat. :)

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

Hey NoName,let’s try this scenario.

So this is what we are gonna do.

We work ten more years.

I go back home.

You go back home.

We buy or rent places beside the ocean in each country.

We then spend six months a year in Tasmania and the other six in Croatia drinking beer and fishing.

What will we do with our wives?

Maybe buy properties with multiple buildings.

And ear plugs…

M44BC

#67 LL on 07.22.18 at 8:41 pm

# 3 – The word Lie is really the correct term to use when inflation is raging at 7% and they tell us it is 2.5%.

They base their inflation rate on the computer prices.
Oh..computer prices are going down, inflation is at 2%!

(Of course computer prices are going down, each 6 months they create new model! That’s why prices are going down.)

Their inflation calculation are not really credible.

#68 FOUR FINGERS WATSON on 07.22.18 at 8:50 pm

#48 jas

I sometimes laugh when I read on other blogs which give options for retirements in developing countries. I think such bloggers never consider an extremely crucial aspect, it is, that, we need the kind of community/culture we spent our working life in to be around in retirement too. How is going to be available in such foreign countries?
……………………………….

You are right about that. Most of the expats i meet when I am abroad miss the community/culture that you speak of. BUT there are a lot of expats in places like the Philippines where I like to hang out. And they are mostly eager to make expat friends. I have friends in Cebu City from Canada, UK, AUS, NZ, USA, France,Germany etc. Two of my closest married friends in Cebu are from Kitchener and Edmonton ! We meet often for coffee, beers, bar hopping, bike rides, cards, Bbq,etc. You can have the best of both worlds if you know where to look.

#69 steph on 07.22.18 at 8:50 pm

Amen.

#70 Istabraq on 07.22.18 at 8:59 pm

And wear sunscreen

#71 Know 1 on 07.22.18 at 9:02 pm

One of my favourite posts of all time, thank you Garth

#72 Divorcing Dude on 07.22.18 at 9:03 pm

@Divorcing Gal #41:

Instead of settling for a condo outright, accepting a pation in lieu of a yard, talk to your attorney and consider the benefits of a liquid and diversified portfolio, while renting a place.

Renting is a ‘pay as you go’ solution.

When the judge (or arbitrator) asks you to lay out your monthly costs – for alimony purposes, rent goes at the top of the list. Especially if you’re housing any kids. Owning a place negates that.

You might not get your ex to pay for your retirement, but paying for shelter is well-enshrined in law.

#73 Peter McLean on 07.22.18 at 9:08 pm

Thank you Garth. I appreciate what you do on the daily here, and I’ve started following some advice you’ve given.

#74 Millennial Realist on 07.22.18 at 9:19 pm

#36 Reality is stark

To #21 millennial realist.
Globalization has lifted the lives of those residing in the east.
If you were to take a world view things are improving for the average world citizen. Is it not selfish for you to only consider citizens of the west in your analysis?
A myopic view does not make you right.
The boomers were good world citizens.
It’s unfortunate that their own offspring had to suffer for the greater good.
Life is unfair but much of this was foreseeable.
—————————————————————-

What a lame and predictable Boomer straw man distraction/pseudo-argument you just presented!

Truly Laughable!

So…while your generation has exploited workers around the globe through “free trade”, offering them jobs at only a tiny fraction of a living wage here and eliminating employment for people born here while padding the wallets of Boomer elites through enhanced profits, you want to take credit for that as some kind of moral achievement, suggesting that millennials should just accept their resulting suffering as part of “global fairness?”

How about fairness with Boomers and their enormous unearned wealth and privileges? Constant manipulation of global markets for the benefit of the wealthy few, creating a temporary illusion of “average” improvements but reducing accountability to local populations through internationalization and money-laundering business models, seeking always to have impoverished countries in a race to the bottom competing against each other for a few handouts of short term factory production, often with devastating environmental and social outcomes.

Boomers – born on third base, thinking they “earned” a triple. Ha! You are in no position to moralize to anyone. You’ve been handed everything on a silver platter, and you want to take credit now for employing offshore butlers to hand the next silver platter to you?

Just like the real estate cartels, you attempt to use Frankenumbers, suggesting that the “global average” has improved, even though the loss of opportunities and unfairness to non-Boomers over the last decades has been so obvious in North America.

You do realize the irony of that, I hope, on this blog where this kind of bs math is called out all the time by the host?

The “world view” you offer is just a useful distraction from the obvious local and national realities we all can see ourselves. How convenient for you, while your generation continues to fill its pockets

Nice little self-serving shell game you Boomers with this attitude are playing…but we’re too smart to be fooled.

Remember: Be part of the change, or be run over by it.

#75 Hit The Wall on 07.22.18 at 9:25 pm

No where to turn. No one to lend you money. Your borrowing and spending days are over. Time to pay it all back. No soup for you.

#76 ll on 07.22.18 at 9:27 pm

If the real inflation number were revealed, every one will ask for a big increase in salary.
They cannot reveal the truth! Chuutttttt…..2.5%

Why not 1.25%!!!!

#77 Big Kahuna on 07.22.18 at 9:33 pm

It rained today in the GTA-somehow this must be the fault of Donald Trump or the all powerful “Alt-right”-since these two have to be mentioned whatever the topic.

#78 retiree on 07.22.18 at 9:33 pm

Great post thanks
agree with poster RE: lies of inflation we are given by the Government Thinking 5% if you are living without keeping up with the Politicians

#79 ll on 07.22.18 at 9:34 pm

# 3 – Canada from today is becoming very different from the country it used to be 2-3 decades ago.

Just look at Ottawa..it is now the capital of crime!
It change really fast.

#80 Wrk.dover on 07.22.18 at 9:35 pm

Back there on comment #4 tonight, the point I meant to make was that even back in the ancient era of ’78-83, financial armegeddon seemed perilously immanent, and making a contingency plan paid off regardless with a better lived life ever since then for the effort. Each day it hasn’t occurred thus far has been a gift, increasing my standard of living well beyond expectation exponentially. I’m still getting richer on chump income.

Canadian city life though is unsustainable with globalised corporate driven cost of living inflation/real wage deflation, slowly boiling you all….except for the extreme top tier of course.

Carry on, good luck and good night!

#81 rental property math on 07.22.18 at 9:55 pm

The millennials that keep shitting on boomers are the ones that come from financially illiterate parents. If your parents did most their investing in cigarettes, cases of beer or the education of the children of the local bartender.. then that should have taught you something. Sometimes the greatest lessons learned are what not to do.

#82 Moh on 07.22.18 at 9:59 pm

Hey Garth I’m getting an employee discount on a mortgage at 1.25 percent. Should I buy a 499k townhouse with 5 percent down?

#83 tf on 07.22.18 at 10:13 pm

Just have to say it…
I’m a socialist leftie on the wet coast, have no tangible assets to speak of, and disagree with you on most political issues.
And yet, it’s articles like this one that keep me reading your blog – thank you for the insights; you offer a straight-forward financial perspective.
Thanks to you, I at least keep my taxes down, invest in both RRSPs and TFSAs, and no longer envy houseowners:)
Cheers!

#84 Out Of Work CEO, Will Travel on 07.22.18 at 10:18 pm

FYI…about the one good friend an American always fits the bill. Without a doubt your best friend is an American.

#85 akashic record on 07.22.18 at 10:25 pm

When time runs out, all that matters is whether you asked yourself in time that who am I, why am I here, what is my purpose.

The best reason for being well-off is to create the condition for yourself to serve best all the spirits around you.

Getting is pretty good, but nothing compares to giving.

#86 mikey on 07.22.18 at 10:39 pm

Actually the insane real estate prices are mainly in the big citys. I cashed out and move to Saint John, New Brunswick where the average price is under 200K. 4 bedroom home on my street just sold for 63K after being listed for 6 months! Greater fools don’t live here, lol

#87 BlorgDorg on 07.22.18 at 10:41 pm

A very sincere thank you, Garth, for the investment. Many who come here will scoff and waste it, but some like myself will listen and make the most of it.

Hard to believe I’ve been reading your posts every day for a decade now — and this was possibly the most impactful thing I can recall seeing.

We spoke on the phone a few years ago when you were starting your investment business, and I was considering becoming a client. You had some very similar advice for me then — it was hard to hear, but I took it.

These are indeed scary and strange times, but once you really begin to think for yourself and ignore what most (frankly ignorant or stupid or both) people do and say, life becomes a lot more enjoyable.

All I’m missing now is a dog. Thanks Garth.

#88 fishman on 07.22.18 at 10:48 pm

In front of the coffee shop early this morning yakking with Bob Rennie. Nothing about R/E. I don’t have anything to say to somebody that’s done 40,000 R/E deals, & never been to court because both sides always make money.
So we’re just kibitzing as a dumpster diver drops his huge bag of bottles on the other side of the road & comes over. Vancouver still has egalitarianism in use of the can & coffee..
We start watching another dumpster diver come along & begin hoisting the bag onto his bike. Suddenly the first diver bursts through the door full tilt for his bag without looking. Exactly at that moment a cab doing 50 in the curb lane. I swear the cab brushed the guys clothes. For a split second we all froze & marvelled at the nearness of death. Then Bobbi turns to me & says; “I didn’t see anything, I’m too busy to be a witness”. And the lucky to be alive fellow takes off screaming down the street after the bike rider that stole his bottles.
Its a cruel world out here in the big smoke.

#89 Priced Out In Toronto on 07.22.18 at 10:49 pm

Why does this sound like a farewell post?
How are you doing Garth?

#90 the straw man on 07.22.18 at 11:02 pm

#73 Millennial Realist

All the whining and whinging won’t change a thing. Much like your generation today, most of the Boomers were never in control of anything. When was the last time a politician followed through on their promises? You cast your ballot, hope for the best, and get on with making a living and feeding your family.

Time to burn your ” Victim’s Club” membership card and take some responsibility for yourself.

#91 jane24 on 07.22.18 at 11:02 pm

Some interesting points this morning. I read in an English newspaper that a top divorce lawyer for Britain said that the average person should never divorce as financially you never recover. Just grit your teeth and keep on going.

Thinking on that, it is true that of my lifelong friendship group, the ones that stuck together are the ones enjoying early retirement and financial security. They also have the financial assets to not live in each other’s pockets if they don’t wish too. Hubby and I have a spare furnished property that we leave empty for personal space. Comes in useful. The ones that split-up one or more times through their lives are still working and paying their third house and second family down.

When my parents immigrated from Britain to Montreal in 1967, the norm was to buy a plot of land and hire a builder to build you a house. No developers’ profits involved. We should move back to this system. Currently all building land is controlled by huge developers. Very hard to find a building plot that is individually for sale.

#92 NoName on 07.22.18 at 11:05 pm

@ flop

I can’t go back, I’m limited to only English speaking countryies, because of NoName Jr.

#93 Jo on 07.22.18 at 11:07 pm

So do not often comment. Garth, I need to thank you for liberating and educating me, You have empowered me, what else can I say. Have followed your advice for many years, I live this awesome life, partly because of the daily blog, you are a Canadian treasure for sure. Thanks for all the frees stuff, I really appreciate it. You have been a huge influence on my life. Would love to shake your hand or give you a hug one day.
Sincerely Jo

#94 S.Bby on 07.22.18 at 11:21 pm

#42 Flop
That picture says a lot. 1930s bungalow on the left, 1970s Vancouver Special on the right, and a 2010s monstrosity in the middle. Lots of history there.

#95 Millenial1982 on 07.22.18 at 11:27 pm

Great post. I agree, no more taxes please and a whole lot less regulation. More self reliance would go a long way but I’m not holding my breath waiting.

#96 TRON on 07.22.18 at 11:28 pm

Every now and then an artist will create a masterpiece. This post needs to be hung on the wall.

#97 Mortgage Free on 07.22.18 at 11:57 pm

Priceless post. Just forwarded it to my wife with the header “compulsory reading”.

#98 Patrick on 07.23.18 at 12:00 am

Hey Garth, taking your parent’s numbers (Year: 1958, Cost $19K) and plugging it into the Bank of Canada Inflation calculator, your parent’s house in today’s dollars should cost $168,105.96.

That’s a huge delta from the $1.8 million it last sold for. Would love to get some commentary from you about this.

#99 Bruce on 07.23.18 at 12:08 am

Great post.

#100 Russ on 07.23.18 at 12:13 am

36 Reality is stark

To #21 millennial realist.
Globalization has lifted the lives of those residing in the east.
If you were to take a world view things are improving for the average world citizen. Is it not selfish for you to only consider citizens of the west in your analysis?
A myopic view does not make you right.
The boomers were good world citizens.
It’s unfortunate that their own offspring had to suffer for the greater good.
Life is unfair but much of this was foreseeable.
—————————————————————-

What a lame and predictable Boomer straw man distraction/pseudo-argument you just presented!

Truly Laughable!

So…while your generation has exploited workers around the globe through “free trade”, offering them jobs at only a tiny fraction of a living wage here and eliminating employment for …
————————————–

Ha ha. Good one Millie,

“My straw man can beat the stuffing out of your straw man.”

I think yours’ made the better point but most of us probably saw it mostly as you got trigger’d.

Cute.

#101 Smoking Man on 07.23.18 at 12:16 am

Two circular superconductor plates separated by thin layer of silicone High Voltage low amps. One plate clockwise the other counter-clockwise.

No speed limit at the right frequency. The faster you go the mass inverts to anti-mass. If done right you can blow by several galaxies in seconds.

Disclosure is near. Keep watching the sky…

https://youtu.be/cC1OWShSpYc

#102 Leftover on 07.23.18 at 12:22 am

Garth, your father was a high school principal, but what did your mother do?

Not a personal question because the biggest change in the past 60 years is the emergence of two income families (a good thing) which, on their own, account for a 100% increase in real estate values.

Attitudes to debt, FOMO, etc, etc, but that’s the biggest social change that’s directly affected the price of housing.

#103 Russ on 07.23.18 at 12:26 am

The minutes I devoted writing the above were an investment in you. Run with it.
— Garth Turner
====================

Thanks again Garth.

We spoke many years ago when you were a guest on CKNW radio, Vancouver.

I was working in my shop when I called in and had recently paid off the mortgage on a house the missus and I had bought for 30K. I had 20K to invest and was asking if I should put it into a Nanaimo rental.

Your advice is as consistent and relevant now as it was more the two (maybe 2 1/2) decades ago. I took it.

In the meantime we’ve enjoyed owning yachts, motorcyles and had many trips abroad.

We sort of kept in touch as I have all your books and recently was ready to retire at 60 with no real worries.

Thanks once more, Russ

#104 Moved Out Of TO Due To The Smoke on 07.23.18 at 12:51 am

I owned a few houses in Toronto in the late 80’s and early 90’s. Made a lot of money but also got my ass kicked. My ex and I fixed up several houses and sold with a large profit each time, then one day we didn’t. I remember that day so well. For Sale sign on the house, but no action. Hmmmm? Then 300 people came to the open house, no action. Then reduction, no action. It takes a bit of time but here is how it’s going to go down now. 1. Bubble ‘Must deflate’.
2. How to deflate the bubble? In the 90’s, it happened overnight, but now, must ask idiots in Govt jobs that don’t have a clue how to deflate the bubble.
3. Idiots get together to discuss deflation of housing bubble.
4. Can’t figure it out, so lets go with the NDP attitude. Make the rich suffer, (no need to reiterate Garth’s thoughts on this) Let’s take money from the rich to give to the ‘poor’. Let’s tax the ‘rich’ house owners and put the money into ‘programs’. Some of these ‘rich’ people are pensioners with a spouse who is dead. They may live in million dollar properties but to you vultures ; they have enormous property taxes to pay on properties that their modest incomes could support back in the day but not now.
5. Housing sales drop significantly, prices take a little longer to drop, but they drop. Once they do and your neighbour decides that he/she has waited long enough, the jig is up. Your neighbours fall like flies when they start to feel like it’s now or never. We are almost there. It’s quiet, but it’s there. Garth is never going to say this to you, so I will. Get out now if you have plans for your retirement or moving back to Italy, France, Iran, etc. Run!!! You won’t have another chance in your lifetime if you are older (60+). That’s my rant. Have been a Garth reader for 4 or 5 years thanks Garth. I look forward to your blog every day. Your knowledge and influence in my life and my children’s life has been greatfully appreciated.

#105 NEVER GIVE UP on 07.23.18 at 1:15 am

This Stable Genius is so unstable that it would be highly likely for him to tilt the USA into an avoidable war. One of the suckers will bite! Be it Iran, North Korea, or even China in the South China Sea?

Donald J. Trump (Jingoist, itchin fer a war!)

@realDonaldTrump
To Iranian President Rouhani: NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!

8:24 PM – Jul 22, 2018
95K
76.2K people are talking about this

#106 re: Moh on 07.23.18 at 1:38 am

#81 Moh on 07.22.18 at 9:59 pm

If you can lock that rate for 10 years, then absolutely yes!

If variable rate, I would skip it.

#107 Tedfiftyfour on 07.23.18 at 2:17 am

Dear Garth,
Thank you for all the time you have invested in me over the past decade. It has changed my life and possibly saved me from financial ruin.

#108 Howard on 07.23.18 at 4:48 am

I like how Garth sidesteps the Boomers’ grostequely obscene privileges by claiming that, actually, it’s the Greatest Generation (you know, the one that had the fortune to fight in a world war?) that had all the luck.

Oh and Millennial Realist, several of things you mentioned – one in particular – have been made vastly worse with the election of Trudeau. He is not a Boomer and the kids who elected him most certainly are not.

#109 Howard on 07.23.18 at 6:13 am

Hey Garth – could I humbly suggest a blog post on NYC? It seems to be undergoing quite the correction right now. In one article I read, at the luxury level ($3 mil+) one broker described it as a bigger correction in both real and percentage terms than during the GFC.

I don’t see how perma bulls can spin the idea that NYC – world financial capital – can experience a sharp correction but somehow Toronto is immune.

https://www.bloomberg.com/news/articles/2018-04-03/manhattan-home-sales-tumble-most-since-2009-as-buyers-push-back

#110 Howard on 07.23.18 at 6:24 am

#102 Russ on 07.23.18 at 12:26 am

—————————————————

When did a spirited defence of one’s viewpoint become known as “triggered”? Can we have a moratorium on that stupid word? And I’m no leftie.

#111 Hamsterwheelie on 07.23.18 at 6:31 am

Really enjoyed this post – totally believe in a planning for a happy life.
Anyone who thinks keeping up with anything seen on social media (beauty ideals, lifestyle glam, luxury brand names etc) or comparing themselves to vacuous ‘thing buyers’ will be forever the hungry ghost, chasing a figment of someone else’s imagination while running off a cliff.
Try living in an area where folks have a little less than you and you will feel wealthy, try volunteering for something you believe in and you will feel purpose, try investing in your friends, family and partner to grow love.
I read this blog to gain insight into a chunk of education I never received, to plan for an enjoyable old age with spice in my life. Seems one needs money for the years coming where work will be less available, and the need for medical care will be higher. Planning in my forties for life beyond my 50’s is what this blog helps with.
Thanks for all the fish. ;-)

#112 Karl on 07.23.18 at 7:10 am

Terrible tragedy in Toronto again last night. What is happening here?!?

My desire to leave is growing. Those poor people just enjoying a night out in the summer. Horrible.

#113 the Jaguar on 07.23.18 at 7:14 am

Streetsville or nearer to Thornlodge, I imagine.
Hard to know if life was less complicated in those days. (the 1950’s). A lot like Hearts of Atlantis, I think.
Very good advice on living. Only one in fifty will be able to resist their impulses and the call of the herd to apply the advice to their own lives. Cynicism? No, just reality.

#114 mitzerboyakaQueencitykidd on 07.23.18 at 7:29 am

dogs are great
beer is good
people are crazy

#115 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 07.23.18 at 7:48 am

14 people gunned down in Toronto, omg what is happening with that city?

Thoughts and prayers to the victims and families.

#116 Alex on 07.23.18 at 8:17 am

Our esteemed host of this blog, he of the many-splendored abs, full head of hair, and blessed with a good tailor has once again provided us with his keen insights.

That right there is the clearest indication of why we are very well served by our politicians in this country. Our host’s commitment to public service continues long past his service in government as he shines a light into the darkness ahead to help us all see where we are going (hell, hand basket, tunnels, and oncoming trains seem come to my tiny mind). He also traces a path from our past and interprets this with a keen insight into human behaviour.

I make these points because I do not believe it is the fault of “those in power” be it politicians, the illuminutty, or any other phantom power figure. No, we live in a democratic society. We can vote. We can exercise our rights as citizens. And we can curb our appetites, which is perhaps the biggest contribution to our well being and our health.

We got ourselves into this mess. Only we can get ourselves out.

#117 Tater on 07.23.18 at 8:26 am

#26 8 percent on 07.22.18 at 5:33 pm
Interestingly, a stock portfolio doing 8% per yr over 60 years, would also have gotten you the exact same 100x growth!

But in practice, taxes would have made that growth much lower than that, unfortunately. So house still wins.
Also, you can live in it, unlike the portfolio.
—————————————————————–
Let’s not forget 25 years of interest and 60 years of maintenance on the house when comparing returns.

#118 TurnerNation on 07.23.18 at 8:40 am

The kids are alright? I know many into Crapto currencies.

From Stockwatch dot com:

“The Globe and Mail reports in its Saturday edition that as clients of advice firms, the young adults born between the early eighties and mid-nineties are close to statistically insignificant. The Globe’s Rob Carrick writes that a study by PriceMetrix shows this cohort accounted for just 2 per cent of assets at investment advisory firms in North America last year. The study says the scarcity of young clients helps explains why the average age of advisory clients was 64.2 years in 2017, up from 63.6 in 2014”

The average age of my clients: 42. – Garth

#119 Smoking Man on 07.23.18 at 9:38 am

114 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 07.23.18 at 7:48 am
14 people gunned down in Toronto, omg what is happening with that city?

Thoughts and prayers to the victims and families.
………..
It’s in all the news feeds here in LA.
Motive?
1 Crazy Bastard.
2 Terrorist.
3 Domestic dispute.
4 All of the Above.

Toronto use to be so nice.
Sad….RIP

#120 InterestRates on 07.23.18 at 9:44 am

interest rates and sentiment (in that order). period.

#121 For those about to flop... on 07.23.18 at 9:48 am

This one is sure to leave a Mark…

M44BC

“Visualizing the Best and Worst Paid Jobs in the Tech Sector.

Most people think getting into the upper middle class is straightforward: go to school, study technology, and get a job somewhere in the tech sector. But is it really that simple? We did some research and discovered that there are plenty of great high-paying gigs out there, but there are also several positions with relatively low pay.

Our data come from the Bureau of Labor Statistics, which tracks a wide variety of metrics on jobs and the American economy. We took a subset of figures from the technology sector and placed the 15 highest and lowest paying jobs in a unique visualization. Think of our graphic as a two-sided pyramid, illustrating in a vivid way the highest and lowest rungs of the tech ladder. We included average base salary expressed both as an overall number and on a per hour basis. This lets you easily see which jobs are worth going after (and which ones are probably a dead end).

As you might expect, managers generally sit at the top of the food chain. Computer and Information Systems Managers take home the best money on average, pulling in just under $72/hour. Compare that with lowly technical support representatives at the bottom, who make roughly 75% less at $16.70/hour. Remember to be nice to the guy who helps you the next time you have a technical problem!

Our two-sided pyramid also reveals a few key insights about the tech sector. First off, things aren’t actually so bad at the low end. Keep in mind all the jobs in our visualization pay above average compared to the rest of the economy. Median household income in the U.S. is about $59,000. Two spouses who both earn $16.70/hour would pull in over $69,000 a year. That’s great work if you can get it.

The visualization also suggests that slight changes in a job title can directly impact compensation even if the on-the-job duties are very similar. Look at all the positions with “representative,” “specialist” and “administrator” in the title. They come with lower pay as opposed to “analyst,” “developer” and “architect.” But what’s the difference between a specialist and an analyst?

This makes us believe that changing your job title might be worth it in the long run even if it doesn’t mean getting an immediate raise.”

https://howmuch.net/articles/highest-lowest-paying-jobs-in-tech

#122 Matemathics on 07.23.18 at 9:55 am

#39 not so liquid in calgary on 07.22.18 at 6:21 pm

So, sixty years ago you were nine … You’re only 51 now…

Let me guess, English major?

#123 Garth on 07.23.18 at 10:02 am

#81 Moh on 07.22.18 at 9:59 pm

Is this the Inuvik special you were mentioning? Tough call, let your heart decide.

#124 Triplenet on 07.23.18 at 10:04 am

Alt-right trade barriers and left wing socialism interfere with natural economics. Interesting how our Premiers can come up with a 320 page memorandum on enhanced provincial trade – with the last 160 pages dealing with exemptions.
Crossroads to be sure.

#125 Russ on 07.23.18 at 10:34 am

Howard on 07.23.18 at 6:24 am

#102 Russ on 07.23.18 at 12:26 am

—————————————————

When did a spirited defence of one’s viewpoint become known as “triggered”? Can we have a moratorium on that stupid word? And I’m no leftie.
=============================

When it comes across as hysterical, with excessive blame-storming and/or “finger-pointing”.

Good idea on the moratorium, albeit “triggered” does seem succinct enough.

What is your suggestion for a simple term to describe the hysteria? And it has to something that is suitable to use on campus.

#126 232 on 07.23.18 at 10:52 am

#114 50 YEARS OF MAPLE LEAF INCOMPETENCE!

When did you start carrying for this city?
Your previous posts state otherwise. I’m surprised Garth has not banned you.
Also, the Leafs will win a few cups in the coming years. Which team do you cheer for? Let me know, so we can compare in 5 yrs.

#127 Paul W on 07.23.18 at 10:53 am

Outstanding post Garth, thanks…

#128 Q2 Class 4-4-6-4 on 07.23.18 at 11:18 am

Hey Garth –

Five years ago you wrote a great blog. I read it at a point in my life when it made perfect sense, so I summed it up in a three-point maxim:

Live Simply – Live Small – Be Frugal

I follow this maxim EVERY DAY and I have never been as happy as I am now. Others might want to follow it.

#129 RC on 07.23.18 at 11:24 am

Thanks for sharing your time and thoughts with us!

#130 Damifino on 07.23.18 at 11:38 am

#90 jane24

Hubby and I have a spare furnished property that we leave empty for personal space. Comes in useful.
———————————–

Hopefully not located in many parts of BC. Horgan’s Heros have ensured that will cost you dearly.

#131 young & foolish on 07.23.18 at 11:50 am

“Boomers must prepare for decades of volatility ahead … ”
— Garth

Yup, sounds like a return to active management ahead.

#132 Bottoms_Up on 07.23.18 at 12:24 pm

thanks Garth, your time is appreciated.

#133 Grey Dog on 07.23.18 at 12:47 pm

Garth, thank you so much for your insights. I’m certain Dorothy and Bandit believe you spend too much valuable time moderating the whining snarling blog dogs, however, we sure appreciate it.

#134 Jonathan on 07.23.18 at 12:50 pm

Great post today. Health, time, family, and good friends – as I get older I realize these are what truly matter in life. Hope everyone finds what makes them happy!

#135 FOUR FINGERS WATSON on 07.23.18 at 1:08 pm

Recent report from Royal Lepage re Kelowna housing :

Balanced market conditions prevail with June being the fourth consecutive month where sales volume was substantially down over last year (526 units vs. 680 units). The changing real estate market is welcomed by many and part of the natural market cycle, historically every 7-10 years.

New housing construction should ease some of the pressure on both prospective buyers and renters in the next 12 to 24 months as many projects reach completion. Current house inventory is rising at 21.58% higher than last year this time.

Prices are holding strong at an average house price of $716,274 (+6.48%), condo $351,281 (+4.91%), townhouse $489,712 (+7.45%), Lot $286,389 (+1.73%)

Why would you bother posting a ‘market report’ from a marketing company? Don’t waste our time. – Garth

#136 AGuyInVancouver on 07.23.18 at 1:11 pm

#51 Money Laundering Investigation Spreads to Kelowna on 07.22.18 at 7:20 pm
The proceeds of large streams of criminal money flowing into real estate has been flagged in Kelowna with links to the big fish well known in the gateway of Vancouver.

Market is freezing and will stay frozen without this money.
_ _ _
Good. Bring on The Freeze!

#137 Reality is stark on 07.23.18 at 1:20 pm

To millennial realist.
History repeats itself.
When America took jobs from Britain and opportunities were created here did you think that was evil?
As an economist I believe in free trade.
You believe in mediocrity.
Societies with your belief system eventually languish.

#138 Learner on 07.23.18 at 1:22 pm

Does anyone know why preferred share ETF CPD dividend is decreasing? Please see http://www.dividendchannel.com/symbol/cpd.ca/, the dividend per shares is going down over these couple years like 0.056, 0.054, 0.052, 0.050, 0.051, 0.049. I thought the dividend per share is stable so investors can count on it as income portion, while its share price may fluctuate with the interest rate.

Apparently my understanding is not complete, can anyone please shed light on this topic?

#139 Newcomer on 07.23.18 at 2:01 pm

Thanks for the reminder about time, Garth.

Here is another: My neighbor in East Van, a modest working class guy, like most of my original neighbors, put his modest working-class home on the market in April for 1.7 M. He picked the price because that is what his brother had got for his house, which was even more modest. He decided to save a few bucks by not using a realtor and just put a for-sale sign out front with this phone number written on it. After two months without an offer, he said screw it and listed with a realtor. It sat for another month. And then he died. He was in his early 70s and had waited for the top, and then tried to make sure he got all the return he could.

#140 Almost A Boomer on 07.23.18 at 2:06 pm

Thank you Garth. Excellent post.
It is relevant for every age group reading your blog. Hope people are paying attention.
Finances are not complex – live within your means, invest in the future, don’t spend every cent you earn, stay out of debt and value the things money can’t buy more than the things it can buy. Follow Garth’s advice and you will be happier and healthier in the long run.

#141 Giggz on 07.23.18 at 2:37 pm

Garth, in this article you discuss house price to income ratio and compare between 1958 and 2018. With the market correction underway do you think it will correct to the ratios seen that far back or are our countries demographics and financial culture to different now to compare with that time period?

#142 mike from mtl on 07.23.18 at 2:46 pm

#137 Learner on 07.23.18 at 1:22 pm

Does anyone know why preferred share ETF CPD dividend is decreasing?
//////////////////////////////////////////////////////////////////////

Thank the BoC for that idiotic oil bust kneejerk rate cuts. That’s them being reissued following those lower rate days, eventually they should start to slowly increase but that is years off.

ZPR is worse off because it is supposed to be nearly all rate reset.

#143 Ben on 07.23.18 at 2:55 pm

Housing doesn’t win over stocks. In 1988 my parents bought their east van house for 250k. In 2018 this same house would sell (maybe but with the slow market who knows) for 1.9m. Less than 10x. S and P in 1988 was about 250. It is about 2800 today. This is excluding all the property tax, mortgage costs, maintenance etc. Sure it’s all tax free but stocks still win. Less risk, easier to unload for cash.

#144 Mattl on 07.23.18 at 3:15 pm

“Housing doesn’t win over stocks. In 1988 my parents bought their east van house for 250k. In 2018 this same house would sell (maybe but with the slow market who knows) for 1.9m. Less than 10x. S and P in 1988 was about 250. It is about 2800 today. This is excluding all the property tax, mortgage costs, maintenance etc. Sure it’s all tax free but stocks still win. Less risk, easier to unload for cash.”

Like Garth always says its not a contest. You parents bought, lived in and now have a have an asset worth 1.9MM that they paid 250,000 for 30 years ago. Yes there are other costs associated with living in a home.
There are also costs associated with renting, like…..rent. How can you list all of the costs associated with owning a home and not aknowledge what it would cost to rent for 30-60 years. SFH’s in YVR will run you 3000-5K. Much cheaper then buying in at 1.9, but significantly more expensive than buying for 250K in 1988.

And based on how cheap the original house was, they would have been able to pay off the home AND invest.

The comments on this blog have gone insane, people arguing that 250K to 1.9 tax free and providing of shelter is somehow a loss to long term renting. Homes are NOT investments, the fact that your parents picked up 1.65 tax free on something they acquired to live in is astounding, and is not an argument against owning homes. Quite the opposite.

In short, your parents KILLED it, home run, slam dunk, will never happen again type of scenario. The guy that buys that house, he will likely have a sad tale in a few years. That house went from an amazing creator of wealth to a wealth trap in 30 years.

#145 Linda on 07.23.18 at 3:15 pm

#21 – Boomers apparently are to blame for all your woes. Sorry kid, but blaming another group for your woes isn’t the answer. Boomers are not the ones bidding up housing to the insane heights in markets like Toronto & Vancouver. Boomers CAN be blamed for gifting $ to their young to buy in such a market, thereby locking said young into a level of debt that is simply not sustainable. As an adult, you need to take responsibility for your actions & that means being realistic about whether you can afford that goodie you want.

As for the wave of immigration, you might want to look at what your tax burden would be w/o that immigration to spread out the load. There are now more Canadians over the age of 65 than there are under the age of 14 as per Stats Can. This is not an anomaly to Canada – most of the world with the exception of Africa has a rapidly growing seniors population – all those improvements to health care mean more people are living to age 65 plus than ever before. Canada’s population would be in decline by now if not for immigration. As for the competition angle, Boomer’s were previously the largest generation ever (Millennials are now in 1st place – congratulations!). Was there plenty of work post war? Yep – & plenty of bodies to compete against for jobs, just like today. The main Boomer advantage was that prices were reasonable in comparison to today – because no one would buy unless they could afford it. This whole ‘get it on credit’ was fine when it was accompanied by a ‘pay off your debts asap’ mentality. These days, everyone wants the big house with granite, annual vacations to somewhere hot/exotic, fancy electronics and/or fancy vehicle to drive etc. w/o first saving for it or even thinking about whether they can afford it in the first place. In other words, the Boomer lifestyle w/o having to work decades to acquire & pay for that lifestyle.

#146 FOUR FINGERS WATSON on 07.23.18 at 3:38 pm

Why would you bother posting a ‘market report’ from a marketing company? Don’t waste our time. – Garth
………………………..

To provide readers with a more complete picture of the “photo grande”.

#147 Blacksheep on 07.23.18 at 3:50 pm

Ben #142,

“Housing doesn’t win over stocks. In 1988 my parents bought their east van house for 250k. In 2018 this same house would sell (maybe but with the slow market who knows) for 1.9m. Less than 10x. S and P in 1988 was about 250. It is about 2800 today. This is excluding all the property tax, mortgage costs, maintenance etc. Sure it’s all tax free but stocks still win. Less risk, easier to unload for cash.”
———————-
If they needed a mortgage to buy a home, how could they buy the 250K worth of the S&P index in cash in 1988?

How much would rent have cost your parents, over that same 30 year period? Cant live in a portfolio….

Not to mention the social stigma of being a renter, 30 years ago. I think your parents made the wisest choice for their family, just like mine did.

#148 Blacksheep on 07.23.18 at 3:52 pm

Garth, this one of your best.

Thanks.

#149 Ben on 07.23.18 at 4:22 pm

My folks killed it but so am I. Mid thirties 3.1 million in net worth. Not in real estate. Financially independent. Easily retired but working just for fun. Way more money than my folks ever amassed in 35 plus years of slaving for their mortgage when rates were 15 plus percent. And I’m just your average joe. I just happen to live extremely frugally (cyclist, one car for our family, eat well (organic, grass fed stuff if you’re into that) but I cook well myself). We have two kids too so spend a lot on them but our life is nice.

Yeah my folks “killed it”. But that’s almost all their net worth. If they downsize to a 2 bedroom condo (that’s IF they could sell in this dead market) in a transit oriented area (they will not move outside YVR) will eat up more than half of that. So what will they have left? 600k maybe? Not much to live on for 25-30 more years.

And it’s less than what I’ve been able to amass in 15 years of working/schooling. And yeah you should count rent too. But renting doesn’t come with all the headaches of interest rate worries, maintenance etc. People got lucky with real estate.

#150 Mattl on 07.23.18 at 4:35 pm

Ahh yes, the early thirties guy with millions that got there by renting and riding a bike. A classic tale of frugality. Just the Average Joe who in 9 years post school was able to save more than what the median Canadian family would earn, gross, in a lifetime.

Your parents really did screw up, slaving to that 250K mortgage. If only they had saved 2-3x their gross earnings they would be much farther ahead. Quite unreal that they didn’t just sock away a few hundred grand a year, did they really need that second Honda Accord?

#151 TheDood on 07.23.18 at 5:29 pm

#146 Blacksheep on 07.23.18 at 3:50 pm

…..Not to mention the social stigma of being a renter…

__________________________

Social stigma ??!!

We’re homeowners who happen to have a rental suite in our basement. Is rented out to a mid 30’s couple – a teacher and a plumber with his own business. They are awesome tenants who’ve figured out how to live cheap, save and invest all their extra money, travel the world, and laugh at us – the homeowners – when something breaks and needs fixing. They used to be homeowners as well, but were smart enough to figure out they’d rather live their lives with 6 figure bank accounts than be homeowners.

I’m counting the days when kids will be done university and gone. We can sell this place and be free to join the renters.

#152 Sudburian on 07.23.18 at 8:12 pm

Thankfully, I live in Sudbury. I’m a civil servant who makes about 100k a year. My common law and I found a 150k Power of Sale house in a super cute neighbourhood. He’s extremely thrifty, as am I. Most of the mortgage on that is paid off, we’re under 35. Costs us $900 a month to live in that house (4 bedrooms, 2 bathrooms), including taxes, insurance and bills. Is it glamorous? No. Is every bit of extra cash we have going toward investments? Yes. We chose not to spend our money on a wedding so we could put some of our savings into a 190k duplex that is very stable and cash positive. Anyway, fortunate to live in a place where it’s possible to own a home that costs double my income (not including my spouses income, we bank that).
I didn’t move to Toronto. My commute is 10 minutes. I’m a stupid red neck in a hick town but my hope is freedom 35. Kidding. But, I can comfortably say I can see retirement at 55 if all goes well. Who knows. Life small, within your means, save, buy used and reuse. Bless this blog Garth, you’re a folk hero. Yes, I’m sucking up.

#153 Islander on 07.24.18 at 1:06 am

https://calgaryherald-com.cdn.ampproject.org/v/s/calgaryherald.com/business/real-estate/the-gothic-scottish-castle-calgary-is-named-after-is-up-for-sale/amp?amp_js_v=a2&amp_gsa=1#amp_tf=From%20%251%24s&ampshare=https%3A%2F%2Fcalgaryherald.com%2Fbusiness%2Freal-estate%2Fthe-gothic-scottish-castle-calgary-is-named-after-is-up-for-sale

OMG GARTH! You can buy Calgary for 1.2million!!

#154 Doug in London on 07.24.18 at 2:17 pm

That’s bred a rush to protectionist populism in the States, and a drift left into a shared-economy, nanny state Canada. Neither are working. Or ever will.
**************************************
Wow, that sums it up quite well!

@Sudburian, post #151:
You say you’re a stupid red neck in a hick town? I think you’re quite smart and know a good thing when you see one. I’ve never lived in Sudbury, but have spent a lot of time there and see it’s actually a good place to live. Being a regional centre it’s got a lot of amenities for a city that size, a lot of fun recreational opportunities nearby, and the cost of living isn’t outrageously high. I’ve lived in Timmins and could live Sudbury. If you decide to move to Toronto, I’ll refer you to a psychiatrist.

#155 James on 07.24.18 at 3:30 pm

#118 Smoking Man on 07.23.18 at 9:38 am

114 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 07.23.18 at 7:48 am
14 people gunned down in Toronto, omg what is happening with that city?
Thoughts and prayers to the victims and families.
………..
It’s in all the news feeds here in LA.
Motive?
1 Crazy Bastard.
2 Terrorist.
3 Domestic dispute.
4 All of the Above.

Toronto use to be so nice.
Sad….RIP
________________________________________
The GTA represents over 6.5 million people and there’s always a fly in the ointment. First it is not known what this guys intentions were so stay calm old man. It is looking more like a clinical case of psychosis Secondly your not here so all is good! You should be very familiar with this malady.

#156 Marcus on 07.24.18 at 10:49 pm

Thanks Garth!