The worried

Several years ago I watched a fellow investment advisor sit on a growing mountain of client cash. “Things are just too expensive,” he kept insisting. “The bond market tells me stocks are overvalued and the economy’s headed for recession.”

Over the course of two years his clients made about 2% holding cash, a mess of bonds and few growth assets. Stock markets steadily added more than 20%. He bet wrong. Naturally he suffered the consequences, abiding by his Old School broker beliefs.

Lately the old guys have been muttering similar dark things. Despite that the S&P 500 is ahead 12% so far in 2019. Bay Street has added 13% this year, and sits just 3% below its all-time high. B&D portfolios have been doing just ducky. Despite Trump. The trade wars. Inverted yield curves. Brexit. Iran. The Raptors.

The why is simple. Global growth continues. Central banks have done a fine job tweaking monetary policy. Not too hot. Not too cold. The US economy is flourishing. Europe is proving bigger than the populists and nationalists. Corporate profits have been fine. Consumer sentiment has bucked up. The fundamentals suggest no imminent recession, although a slowdown could be here in a year or two. But there’s no reason to buy gold, short the banks, wait for a 50% housing crash or move into the school bus buried in your yard.

Emily asked me in a note on Wednesday if she should invest the $50,000 she’s saved in her TFSA all at once or in hunks of ten grand every three or four months. The answer’s simple: when you have money, invest it. Trying to time the market with zero idea what’s coming in weeks or months is nuts. There’s a 50% chance things will cost more, not less. Over the course of decades the entry point is irrelevant, since you risk missing good days as well as bad ones – and the good ones dominate. Especially if you’re young, just buy stuff. Stiffen up.

I see my advisor buddy is calling for the eighty-fourth recession of his 40-year career. He’s back into cash. His clients just gave up a lot of growth they’d want to harvest later. Since fear, not greed, is the predominant investing emotion – and yet markets rise 70% of the time – those who manage other’s money need to be clear-eyed and realistic.

The biggest risk remains running out of money, not losing it. Especially prone are women, who tend to be more risk-averse and live longer lives. Not a good combo. Young Emily needs to get her fifty smacks into the right mix of ETFs, and PDQ.

$     $     $

How bad’s the mortgage business these days? Crappy enough that a major Ontario lender has brought back the 1.99% home loan in a heroic attempt to snatch business. DUCA credit union now owns the lowest rate in the nation, offering the sub-2% price on a term of two years.

That’s a big reduction over the competition, but only for insured borrowers – less than 20% down, no rentals, no 30-year amortization, no property over a million dollars and no refinancing. Plus you have to pass the stress test.

Is it a risk taking cheap money only for two years?

Nah, not really. Rates are on hold now. Thanks to the Tariff Man central banks might even be cutting the cost of money once or twice in the next year, before they creep back up. So the odds are a 1.99% rate will look just as sweet in 2021.

$     $     $

“I’ve been a big fan of your blog for a while ow, says Carson who obviously wants something.

I’m a 31 year old male living in Vancouver making over $100K per year. I’ve got close to a $100K in my TFSA, $125K in my RRSP and $110K in non-registered investments. On top of that, I have about $300K in cash and cash equivalents that I’ve reserved for purchasing real estate or investing into equities.

I’m single and don’t plan to start a family soon, but I’ve been looking around some condos in Vancouver and prices are certainly far more reasonable than they were a few years ago (although still not as cheap as I’d want them to be). Mortgage rates are also not that high. I wanted to get your opinion on whether I should continue to deploy my cash towards equities or buy a place. I suppose I could do both, but because I believe that equities are a superior long-term investment, I struggle to find a reason to allocate cash to buy a place. With that said, I do eventually want to own something rather than paying rent all my life.

First, Carson, the Van market is in freefall and there’s more to come. So only buy if you can stomach the thought of cascading equity for a while. Maybe a long while. Last month the year/year benchmark price was down 9%. Values are back to 2017 levels, and gaining downward momentum. Sales in May were the worst in about twenty years. Listings are piling up fast.

Now a research firm (Eitel Insights) says prices will continue to erode for another couple of years, plus: “You’re going to see the cannibalization of the condo market where there’s a flood of new, built properties available to move in today and they’re going to be at relatively attractive prices.” More supply plus weak demand = lower prices.

Besides, Carson, you have more than $600,000 liquid at age 31. Invest it and at 60 you could be sitting on almost $5 million. Or, you can buy a condo now and at 60 you’ll have… an old condo.

Renting rocks, kid. Stay the course. No worries.

115 comments ↓

#1 Red_falcon on 06.06.19 at 4:17 pm

There is a saying Its it’s impossible to rich quick. But there’s a another less known saying… it’s impossible
Not to get rich long term.

First!!!

#2 Don on 06.06.19 at 4:19 pm

Interesting contrast of advice today — in the stock market, don’t worry, future can’t be predicted, things go up most of the time, and you won’t lose much, for long, if things do drop, so buy now — but in Vancouver houses for sure (experts say) they’ll continue to drop, therefore don’t buy now.

I recently advised a poster to go ahead and buy a Van condo so long as he was prepared for drops in equity (and could afford it without losing diversification). Ditto this time. But a condo is not a portfolio. It is one asset. Don’t fall for that false logic. – Garth

#3 Capt. Obvious on 06.06.19 at 4:22 pm

“The biggest risk remains running out of money, not losing it. Especially prone are women, who tend to be more risk-averse and live longer lives. Not a good combo. Young Emily needs to get her fifty smacks into the right mix of ETFs, and PDQ.”

That is one main reason why women live longer – they enjoy their lives and are happy with what they have!

Would you rather live longer or die early?

#4 tkid on 06.06.19 at 4:26 pm

That photograph is beyond brilliant.

#5 crowdedelevatorfartz on 06.06.19 at 4:36 pm

$600 k and he wants to “invest” in real estate.

And you read this blog?
Jayzus man.
Put it in the investment market and come back in 2 years to look around.
You’ll be glad you did.

#6 Cristian on 06.06.19 at 4:39 pm

“With that said, I do eventually want to own something rather than paying rent all my life.”

I have been a renter for 55 of my 57 years on Earth, and I still remember in horror those few years I’ve been an owner: the leaky roof that needed repair, the poor job done repairing the roof, calling back another team when rain started infiltrating the ceilings on the top floor, having to deal on my own with the malfunctioning heating system, and so on and so forth.
I’ll never, ever go back to that. What is wrong with being a renter? The income from my investments more than pays my rent, I have the freedom to move whenever I want if I want, any repairs are a phone call away…

#7 Tater on 06.06.19 at 4:40 pm

#93 Deplorable Dude on 06.06.19 at 1:11 pm
I see there’s a lot of modern day ‘book burners’ on here…..

————————————————————

Nope. Just folks who understand property rights. An area conservatives used to call their own.

#8 Paddy on 06.06.19 at 4:49 pm

i agree with crowdedelevatorfartz, i bought a house when i was 25(35 now)…if i knew about this blog and was aware of the whole cult of home ownership thing, i never would have bought, sure ide be living in a “crummy” house or apartment…but man i would have so much disposable income to go on trips and well…do whatever the hell i like….instead i sink money into my ol’ house…gnna need a new chimney soon(5-6k)…and lets not forget about the 30k in property tax that ill never see a dime of ever again(could have been 50k if invested, or 150k 20 years from now) “sigh”…oh well

#9 Shawn Allen on 06.06.19 at 4:58 pm

Nice to see Mortgage Competition

How bad’s the mortgage business these days? Crappy enough that a major Ontario lender has brought back the 1.99% home loan in a heroic attempt to snatch business. DUCA credit union now owns the lowest rate in the nation, offering the sub-2% price on a term of two years.

**********************************
Excellent truly wonderful, DUCA a fairly tiny credit union with $3.3 billion in assets has the lowest mortgage in the land. It can apparently compete with the big 5 and offers loans priced lower than theirs despite its lack of scale.

How? Well it (or its customers) gets access to the exact same CMHC insurance at the same price as the big guys.

It has deposit insurance that its depositors consider to be as safe as the big bank’s government backed deposit insurance.

It is no-doubt part a credit union collaborative on software that gives it scale.

It has been said about a million times that the Canadian Banks are an oligopoly. What a strange oligopoly when there are literally several hundred choices of where to deposit your money and where to get a loan.

The big 5 are highly profitable mostly because of customer inertia and habit rather than oligopoly power. Also, if oligopoly were a guarantee of profits Air Canada would not have gone bankrupt which it has done at least once and came close another time.

This credit union funds its loans largely with its member customer deposits which fund 76% of its assets.

https://www.duca.com/media/2604/2018-financial-statements_posted-on-web-mar-2019.pdf

There is a tiny but loud group of mistaken blog dogs here who believe that this credit union does not need to attract deposits to lend a mortgage loan. Well, true they don’t need a deposit to initiate the mortgage loan when the funds are still sitting in the borrowers deposit account (See Bank of England Paper). But when the borrower writes a cheque to buy a house with that mortgage the credit union has to have a replacement deposit to fund that loan. Otherwise their cash would soon be depleted.

What is true is the banking system in total does not need to attract deposits. Those are largely manufactured by the banking system (and their customers) in total when they make (and customers take) loans. Every loan tends to ricochet around always remaining as as a deposit in some bank or other. Few loans are taken away as paper cash.

Credit unions obviously compete for customer deposits. Some people have misinterpreted a Bank of England paper and other bank alarmists and think otherwise.

Check the balance sheet at the link I gave here. It’s pretty simple.

#10 Long-term investment returns on 06.06.19 at 4:58 pm

To keep investment returns in perspective, one should keep in mind that 7+ percent after-tax returns for a well-diversified portfolio are an anomaly, not the norm. When you look at the last 20+ years, the historical average above inflation is perhaps 3% before taxes. (Sorry, from where I am typing this I don’t have ready access to the official stats.) All that to say that the investment returns you keep mentioning may be true for the past 9 or so years, but this is indeed a crazy period in time….

Nowhere did I say returns were after-tax. Everyone’s tax profile is different. Remember that capital gains taxes are the lowest anyone will pay. – Garth

#11 Kerry Lancet on 06.06.19 at 4:59 pm

DELETED

#12 Penny Henny on 06.06.19 at 5:04 pm

Lately the old guys have been muttering similar dark things. Despite that the S&P 500 is ahead 12% so far in 2019. Bay Street has added 13% this year, and sits just 3% below its all-time high. B&D portfolios have been doing just ducky. Despite Trump. The trade wars. Inverted yield curves. Brexit. Iran. The Raptors.- Garth
////////////////////////

Garth is too bullish. TCC would say this is the time to short the markets.

Nobody should do shorts. – Garth

#13 Shawn Allen on 06.06.19 at 5:05 pm

The Wealthy Renter

#6 Cristian on 06.06.19 at 4:39 pm said

I have been a renter for 55 of my 57 years on Earth, …
The income from my investments more than pays my rent,

*************************************
Congratulations, well done. A renter and a rentier! Excellent. But you would likely agree that you are a rare exception. Most life-long renters who are 57 or older would have very little investments?

Surely the average savings of 57 year old home owners is larger than the average savings of 57 year old life-long renters? Not even counting the value of the house. Just investments?

#14 That's All, She Wrote on 06.06.19 at 5:09 pm

So get/stay invested in the markets because they’re tough to call and go up more often than not, but stay out of real estate because it’s obviously going to keep going down?

Maybe you got the wrong license?

Real estate is a single asset which, in Vancouver, is massively expensive and should be pursued only by people of means. That does not include Millennials who would have to use 100% of their net worth (plus debt). For them having a diversified, balanced approach is better, more promising and less fraught with risk. What parts of this do you not understand? – Garth

#15 Keyboard Smasher on 06.06.19 at 5:38 pm

Hey look, another 30-year old with half a million dollars in liquid assets!

No one else here find the tale of how someone arrived at half a million dollars in less than 10 years out of home/school more interesting than anything else?

Weed stocks? House flipper? Bitcoin? Certified plumber working since 16 years of age?

#16 Shawn on 06.06.19 at 5:41 pm

The post WW2 era annualized return for the S&P500 is 11.2%. Will the next 50 years be higher or lower? I think the contrarian view is higher.

#17 Joe Schmoe on 06.06.19 at 5:46 pm

I don’t know why people are being intentionally stubborn about the difference between RE and market investments.

Being forced to sell a house because of a job loss/move requirement a year after buying a house sucks. It’s slow. It’s expensive. Taking a non-deductible loss on an “investment” hurts.

I have not yet reached a point in my 25 working years where I was forced to sell any of my market investments at a loss.

#18 Damian on 06.06.19 at 5:48 pm

How does Garth know that the Vancouver real estate market will continue to fall (ie. Garth says he can time the Van RE market), but also says you shouldn’t try to time the stock market (or any other securities market for that matter)?

#19 Basil Fawlty on 06.06.19 at 6:02 pm

If the US economy is strong, why were the planned 2019 interest rate increases cancelled? In addition, why are bond investors betting on interest rate decreases, resulting in the inverted yield curve. Long term bond rates barely above the rate of inflation do not indicate a strong economy.

Not to mention huge unsold vehicle inventories, industry layoffs and seven million car loans over 90 days late on payments.

Something isn’t right

#20 Gravy Train on 06.06.19 at 6:07 pm

Garth, you’d have made an excellent special education teacher! :)

#21 According to Zolo... on 06.06.19 at 6:08 pm

According to Zolo…

Vancouver had 25 sales of 6 bedroom detached houses during the last month, with an avg selling price of $2.2M.

This is compared to the same month in 2018, where roughly the same number of sales were made (27), but with an avg selling price of $3.9M – a 42% price drop.

It’s a small sample size and averages can be misleading, but a 42% price drop is hard to assess as anything but a crash in the high end market.

The rest of the market segments have already started to follow the trend (e.g. 3br houses, down $700K / 29%).

There are a whole lotta sad Van speculators out there right now. I don’t shed a single tear for the greedy, do-nothing-good-for-society lot of them.

Once their foreclosures start, this crash is only going to pick up steam.

#22 Freedom First on 06.06.19 at 6:16 pm

#6 Cristian

Of course you are not the norm as shawn allen-so nutso pointed out. Cristian, you are exceptionally brilliant and thus in the vast minority, as I am.

Freedom First

#23 Yukon Elvis on 06.06.19 at 6:26 pm

I am 70 years old. Paid off my real estate two decades ago. My property taxes and maintenance fees are very minimal. I can’t imagine having to pay rent. I travel more than anyone I know partly cuz I have no rent to pay. 90% of my income is for having fun and travelling. Once you are “ over the hump” and mortgage free you can have a lot of fun.

News for you: it’s not two decades ago. Telling kids to throw everything at one, hideously-inflated asset is an old man’s folly. – Garth

#24 Linda on 06.06.19 at 6:31 pm

Carson, if you ‘must’ invest in RE, for the love of little green apples do not purchase a condo. Freehold only or just keep renting. Condos look tres sexy, especially when dressed up by developers wanting sales or professional stagers who were hired by current owners looking to unload. Those come hither looks soon fade into memory, especially when a special assessment notice hits your door. Ka-ching!

#25 Dutchy on 06.06.19 at 6:34 pm

Of course if we all follow the prevailing consensus of this blog there would no longer be any rental accommodation available for anyone anywhere.

Trust me. Not that many people are bent enough to come here. – Garth

#26 E40 on 06.06.19 at 6:38 pm

Special thanks to David Eby – not typically an ndp supporter – but will give credit where credit is due.. Great job so far on exposing ML and web of criminal finances and the what the BCLibs represent and how they screwed BC for many years to come.

Vancouver houses are going down 80% in price.

Anyways, the only thing I agree with in this post is renting. And renting in BC is going to become pretty damn good over the next decade as they roll out tons of rental housing right next to your work site on the cheap.

Say the market pops 15% on the year. Okay, I lost 15,000 on a 100,000 invested into it.

But let’s do some math here. If there is a good probability the market flops, how much is that 15,000 worth to you in risking and trying to time the market?

I know timing the market is foolish, but I can also tell you that timing is everything and using probabilities is where it is at. I can’t tell you the exact day but it is coming and can identify it once it arrives.

I am not pulling out money already invested. That stays the course. I am talking fresh new money being injected into investments in the market.

If you buy after a crash you will be 15 years ahead of the dummies who bought just before the crash. I applied this in 2010. I got fired from my job and was told it was going to take a full year to find a new job and that I should not waste time going on vacation, but rather start looking for employment. They never told me not to go shopping though. Where did I get the money? I saved like a rock star in the boom times. Then I dumped everything into the markets and bought a Vancouver house with debt leveraged against the spouse income. Who is the moron now? And I am doing the exact same thing in 2020 after I get fired again next year – minus the house buying (screw that). Owning a house sucks, as in sucks away any and all disposable income and are turning down in price majorly in Vancouver, Victoria and Kelowna. I sold 10% down off the peak and made a rap song about it. Houses are a never ending sink hole. The only benefit has been appreciation which came to an end a few years back and will not be revisited in BC for 11 more years.

I am betting on a money market plop in 2020, agreed among most hedge fund managers and will drop a couple hundred into the markets once I see a meaningful drop and in the meantime while waiting I will eat the 20,000-30,000 loss while waiting. Life’s good.

#27 Lost...but not leased on 06.06.19 at 6:40 pm

I’m a 31 year old male living in Vancouver making over $100K per year. I’ve got close to a $100K in my TFSA, $125K in my RRSP and $110K in non-registered investments. On top of that, I have about $300K in cash and cash equivalents that I’ve reserved for purchasing real estate or investing into equities.

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

Over $600 K saved by age 31 ????
…yeah right……

….and you ask if you should buy a depreciating asset with thousands more coming on stream ????

#28 PastThePeak on 06.06.19 at 6:42 pm

#15 Keyboard Smasher on 06.06.19 at 5:38 pm
Hey look, another 30-year old with half a million dollars in liquid assets!

No one else here find the tale of how someone arrived at half a million dollars in less than 10 years out of home/school more interesting than anything else?

Weed stocks? House flipper? Bitcoin? Certified plumber working since 16 years of age?
+++++++++++++++++++++++++++++++

Well, given that anyone who even comes close to claiming they made money in crypto or weed shout it from the rafters, I think you can mostly rule that out.

The most likely reason is inheritance / family gift of money. The person is making $100K now (quite believable in the right profession), but not how most start out. Even living & home, not paying for anything and saving most after tax dollars (who does that??), it would be challenging to get to over $650K in liquid assets after perhaps 8 full salaried years starting at first job. Not without a lot of luck.

I graduated engineering (coop) into a good job back in the day (94), and overall me & the Mrs have done quite well. But the majority of our net worth was earned (so far) in the 14 years after 35 – not the 14 before it. I takes awhile to get promoted, get higher salary, start with no investments and then make them worth something (especially going through 2 big market crashes in 2000/2, and 2008/9).

#29 Wait There on 06.06.19 at 6:46 pm

I am now noticing cannibalization of the new townhouse market in Richmond Hill.

#30 Sail away on 06.06.19 at 6:53 pm

#3 Capt. Obvious on 06.06.19 at 4:22 pm

That is one main reason why women live longer – they enjoy their lives and are happy with what they have!

——————————————–

Oh, really? I thought that since the phenomenon of women living longer than men has been found amongst all human civilizations worldwide throughout known history that it had a somewhat stronger link to biology and physiology.

Just acceptance and happiness, it seems.

#31 PastThePeak on 06.06.19 at 6:55 pm

#19 Basil Fawlty on 06.06.19 at 6:02 pm
If the US economy is strong, why were the planned 2019 interest rate increases cancelled? In addition, why are bond investors betting on interest rate decreases, resulting in the inverted yield curve. Long term bond rates barely above the rate of inflation do not indicate a strong economy.

Not to mention huge unsold vehicle inventories, industry layoffs and seven million car loans over 90 days late on payments.

Something isn’t right
++++++++++++++++++++++++++++++++++

Yes, something isn’t right. We don’t have low enough rates! Once the Fed cuts by 1%, it will save the world. People that are up to their eyeballs and can’t pay their auto loans can now borrow MORE and therefore get out of their debt problems. Easy peasy….

#32 tccontrarian on 06.06.19 at 7:05 pm

@ Penny Henny

“Garth is too bullish. TCC would say this is the time to short the markets.”

Nobody should do shorts. – Garth

//////////

“nobody”? Such absolutism.

Tell that to Steve Eisman (a few billion $$’s later).

How about a softer approach, like:

– “most shouldn’g do shorts”
– “shorting best left to seasoned professionals”
– “shorting is a dangerous strategy if not done with hedges”,
– etc.

As stated here before, it was my rather large short position late 2018 that protected my portfolio from that ‘unexpected’ plunge. But I shorted the entire US market, mostly (80% of my shorts) – not so much individual stocks (other than Tesla, Netflix, Amazon, and Nvidia)

I see you’ve been paying attention Penny H.

TCC

#33 Frank Santos on 06.06.19 at 7:06 pm

Don’t save your money anymore.

#34 6040willhurt on 06.06.19 at 7:12 pm

“The why is simple. Global growth continues. Central banks have done a fine job tweaking monetary policy. Not too hot. Not too cold. The US economy is flourishing. Europe is proving bigger than the populists and nationalists. Corporate profits have been fine. Consumer sentiment has bucked up. The fundamentals suggest no imminent recession, although a slowdown could be here in a year or two. But there’s no reason to buy gold, short the banks, wait for a 50% housing crash or move into the school bus buried in your yard.”

What ?

Industrial production continues to plummet in Europe and Asia, and the decline is now spreading to the US.

US Corporate debt is at unprecedented historic highs (most of it used for stock buy backs and subsidizing Uber riders and other mal-investment), much of it is near junk and profits have already started falling.

Yield curve(s) are inverted (lots of them).

Eurodollar futures are saying 75 basis point cut by Fed by end of 2019.

Fed can’t even control short term interest rates anymore through open market ops see EFF vs IOER debacle.

NZ and Australia central banks have already cut.

UK crashing out of the EU in October with no real plan.

US mired in political grid lock and staring down the barrel of yet another debt ceiling crisis. Reminder they only have 2 months to raise the debt ceiling.

Cash and Canadian bonds is where it is at.

#35 ImGonnaBeSick on 06.06.19 at 7:14 pm

#18 Damian on 06.06.19 at 5:48 pm

How does Garth know that the Vancouver real estate market will continue to fall (ie. Garth says he can time the Van RE market), but also says you shouldn’t try to time the stock market (or any other securities market for that matter)?
———————-

Oh, I don’t know… Maybe because the housing market literally takes weeks/months to make a sale, has 1 seller and 1 buyer per asset, is easily manipulated by externals (like populist governments)… whereas securities are the opposite. Deals take seconds, 1000s of buyers and sellers of 1000s of equities, not easily manipulated by externals…

And more than likely, he’s just a lot smarter about this stuff than you.

#36 not 1st on 06.06.19 at 7:24 pm

Garth there is still time for you to move west. Country will split now. You should be on our side.

https://globalnews.ca/news/5362641/senate-bc-tanker-ban-bill-report/

Senate votes to reject B.C. tanker ban bill report — now, the bill will proceed

#37 Darren on 06.06.19 at 7:25 pm

Carson,

Listen to Garth and rent. Keep doing what you are doing and sooner rather than later you will be one of those Financial Independence and Early Retirement folks everyone loves to hate.

#38 Howard on 06.06.19 at 7:27 pm

#15 Keyboard Smasher on 06.06.19 at 5:38 pm
Hey look, another 30-year old with half a million dollars in liquid assets!

No one else here find the tale of how someone arrived at half a million dollars in less than 10 years out of home/school more interesting than anything else?

Weed stocks? House flipper? Bitcoin? Certified plumber working since 16 years of age?

———————————————-

Indeed, and single living in Vancouver so his rent is very high unless he has a roommate. That would constrain his ability to put so much away every month even if he eats ramen noodles every night.

Though in fairness he never claimed to have acquired his wealth through traditional means. Likely an inheritance or a stock windfall. Perhaps even an insurance settlement.

#39 JSS on 06.06.19 at 7:29 pm

CNOOC head office in Calgary laying off 100 staff.

https://calgaryherald.com/commodities/energy/cnoocs-canadian-unit-laying-off-100-people/wcm/9397d9d9-dcdd-4586-b81c-a7caf22f4ddc

#40 AK on 06.06.19 at 7:34 pm

Kevin O’Leary gets blasted for being bullish

====================================
@EconguyRosie

“Kevin O’Leary boldly says the US economy is “on fire” and that it feels like the “mid-1960s”. He obviously hasn’t looked at the NY Fed recession-risk model which just hit its highest level since July 2007.”

#41 Greg Franklin on 06.06.19 at 7:36 pm

Get Duca’s 1.99% mortgage for 2 years and get their 3% 7 year compound GIC. You will make profit. Use TFSA and tax free too.

#42 TurnerNation on 06.06.19 at 7:41 pm

If only this pathetic comments section reflected our new reality:
– Posting here increases my feminism.
– No Dog? No opinion on Blog Dogs.

ON’s King Ford froze public employees’ wage hikes. Welcome to the rest of us. A modicum of sense from the King.

#43 crowdedelevatorfartz on 06.06.19 at 7:49 pm

” ….. less than $200 away from insolvency…..”

And the local news just keeps getting better.

*******

https://theprovince.com/news/local-news/more-british-columbians-declaring-bankruptcy

“Whatcha gonna do. Whatcha gonna do when they come for you….
Bad Debt! Bad debt!”

#44 Pfft on 06.06.19 at 7:53 pm

600k by 31yrs old! amazing.
Enjoy your life bruh.
You only get one shot at it.

#45 Flop... on 06.06.19 at 8:06 pm

Trust me. Not that many people are bent enough to come here. – Garth

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

Been wondering what to do with this piece of information as it has been in the back of mind, but I might as well cleanse my soul.

On Tuesday afternoon I peered out the window of the house I am in the process of completing, and I spied a tripod and a cameraman setting up on the footpath.

I went downstairs and asked what was going on.

“They want someone to do an interview.”

From what I understand Global News seemingly wanted to get a contractor on film saying that things are slowing down.

What was I supposed to do, go out to my truck and get my SuperFlop cape on and tell them everything that I knew?

No, I have a stalker now.

I went back upstairs and continued my work.

I was warned to quietly live amongst the masses, which I now do and always thought I was.

I could have been more guarded with my personal details when I started The Pink Snow Project but I had already been on the blog for two years before something told me to step up to the plate.

Good people getting crushed for no good reason other than greed.

The main point I am trying to make is no one has ever mentioned GreaterFool blog to me.

I know exactly how many Tasmanians live in Vancouver with my height and weight and other details dropped.

One.

I thought I made it perfectly clear to everyone that when Boom passed, just to remember there is another living soul on the end of the line.

Can’t tell you the development name as my stalker will hold it against me.

Someone did the interview, I was an innocent bystander.

Pity, they could have gotten the truth…

M44BC
M64WI

#46 Ronaldo on 06.06.19 at 8:12 pm

Is this the PDQ etf you are talking about?

http://etf.stock-encyclopedia.com/PDQ.html

#47 Blue angel on 06.06.19 at 8:22 pm

PDQ???

#48 Les on 06.06.19 at 8:39 pm

Hey, Keyboard Smasher, all of the above, and living off of Mom & Dad.

#49 Chaddywack on 06.06.19 at 8:44 pm

What is interesting is if you look in Vancouver there are still houses listed above $1.5M on the eastside and over $3M on the west side that are crack shacks.

They’re not selling and most have been listed at that price for over a year. I walked by one today and saw the owners doing some landscaping and cleaning it up and I asked them how the market was doing…..

“Slow, but picking up soon, hopefully if we make this place look at bit better it’ll go”

I said “Have you thought about cutting the price?”

He just laughed and “No” was all he said to me.

This is an east van house listed at $1.6M for over a year and he’s now on his third RE agent.

#50 BC Renovator on 06.06.19 at 8:53 pm

Now a research firm (Eitel Insights) says prices will continue to erode for another couple of years, plus: “You’re going to see the cannibalization of the condo market where there’s a flood of new, built properties available to move in today and they’re going to be at relatively attractive prices.” More supply plus weak demand = lower prices.

_____________________

Dane Eitel, Eitel Insights- impressive to listen to. He uses high level analysis to reveal opportunities in the RE market. Listened to him on a Podcast. He says Toronto will drop to 2015 prices, and Vancouver will bottom in 2021. Worth the listen, convincing guy.

https://www.vancouverrealestatepodcast.com/podcast/will-vancouver-condo-prices-drop-in-2019-with-dane-eitel-from-eitel-insights/

#51 Spectacle on 06.06.19 at 8:57 pm

Ronaldo on 06.06.19 at 8:12 pm
Is this the PDQ etf you are talking about?

http://etf.stock-encyclopedia.com/PDQ.html

#47 Blue angel on 06.06.19 at 8:22 pm
PDQ???

——————-:::—————-
Um, PDQ. = Pretty Darn Quick !

AKA, Girl, get in the game. Time is going by.

Lots of health issues going through close family. Younger one , 20’s, hit by Cancer. Clock is ticking, and value of this time we have, is becoming more evident . Cutting out serious parts of body, roasting what is there…….time.

#52 crowdedelevatorfartz on 06.06.19 at 9:28 pm

@#45 Flop
“From what I understand Global News seemingly wanted to get a contractor on film saying that things are slowing down….”
*****

Just the fact that Global “News” the lickspittle of the Real Estate Cartel was actually wanting to suggest that sales were slowing ….. is an epic shift change.

All Global has to do is talk to suppliers of drywall, carpet, appliances, etc etc etc.

It’s slowing everywhere.
I spoke to some finish drywallers the other day at a highrise condo that were on the street smoking.
They’re almost done, been working 6-7 days a week to get the places cleaned up …..nothing coming up in the future.
Carpet salesman told me its the slowest Spring he’s seen in 10 years.

And now GlowBall wants to get someone to acknowledge the 800lb (RE sales tanking) Gorilla in the room.

No worries, after a dismal Summer….
It should be evident to all by Christmas.

#53 Tony on 06.06.19 at 9:30 pm

The Fed funds rates will likely hit zero or go into the negative near the end of 2021. So a two to three year mortgage would be ideal.

#54 yvr_lurker on 06.06.19 at 10:15 pm

A 31 year old with over 600K in assets. Ride this well and don’t mess up as you are well above the masses. However, you have managed to get this far ahead in a short time it is a huge asset going forward.

————————

Have a family friend who is in his early 50s. Was a ski bum in Canmore for about a decade in his 20s smoking pot daily and having dropped out of college. In his early 30s when it came into his head that he no longer wanted vogue to be ski bum he went to his Dad, who was a well-off Toronto lawyer, and got a whack of cash (roughly 250K) to go from essentially zero net worth to being a small business owner in a few months interval. He has worked hard at his business and done reasonably well with it, but without this huge boost on the family plan he would have been behind well behind the eight ball in comparison to those who spent their 20s furthering their education, starting their career etc.

His is not the story of many, many people who have had to slowly,and incrementally gain their education, build their business or career, starting from a big zero (except their own dedication). Once they get into the higher earning category in Canada they are now punished with over 50% marginal rates; rather difficult to amass a 250K windfall in a short period if you are paying over 50% for every dollar over 200K. Huge incentive to go overseas (Hong Kong, Singapore, etc..) for a few years where the tax rate is low and one can save a bundle in a shorter period than here. I have much more understanding and empathy with this latter group as I have been one of its members.

#55 JettaFlair on 06.06.19 at 10:36 pm

I’m glad that there are at least 4 others that openly question how the 31 year old got so much wealth in such a short time.

As someone who benefitted from a rent free home on condition I help and save (and yeah I took unapologetic advantage of it) it for a house these numbers are a little too high even with godly tax planning, lucky or shrewd investment, and a 100k from the outset salary.

To people I would say to seize the opportunity of your situation but don’t let letters like this discourage or confuse you that this is the norm.

Question everything but don’t wear a tinfoil hat. :)

#56 The Great Gordonski on 06.06.19 at 10:43 pm

Phhhffffttttt, Dude, the DOW will be 60% higher in 24 months, whether the globalist haters like it or not. I’m not going to regurgitate my research , it’s neither politically correct or liberal. It has nothing to do with Canada being a genocide killing field and ISIS deserving a free home from Habitat because Trudeau says so. It’s just going to happen. Stocks are the only game in town. Seriously though, a 30% boost isn’t extraordinary. I’ve given you plenty of stock picks that have done way better. The fact that stock picking is alien acid-blood for you is neither here nor there to me.

A couple weeks ago there was a heaving rage expressed by the globalist about Japan selecting peaceful happy migrants vs the EU model. I posted a report from the Japanese authority but that was censored. I guess it’s not politically correct to disagree with Trudeau’s globalists propaganda. But Japan is publishing again

http://www.bbc.com/capital/story/20181210-more-seniors-more-foreigners-how-japan-is-rapidly-changing

#57 TRUMP on 06.06.19 at 10:44 pm

Renting is a money saver for sure if you have the fortitude to save and invest the leftovers…

However if you making a decent wage today then how much do you really need for your older years.

Sure 5 million at 60 sounds great but with a bad back, bad knees, and no ex-drive….

The money won’t make up for it.

LIVE YOUR LIFE AND HAVE FUN WHILE YOU CAN.

Your not guaranteed tomorrow.

#58 JettaFlair on 06.06.19 at 10:48 pm

I have no real issue with Eitel analytics but it is in their interest to collect and sell this type of info.

I encourage people to read and listen to the 2 links from Eitel and consider the tone in which it is being disseminated, the background of the person speaking and for whom the information is targeted to. It might also benefit readers and listeners to see how the info and opinions have changed yearly.

These are the 2 previous times he’s shared free opinion based on his research:

https://biv.com/article/2018/10/housing-downturn-will-last-another-four-years-analyst-says

https://biv.com/audio/2019/03/vancouver-real-estate-how-low-can-it-go-biv-today-no-218

#59 Madcat on 06.06.19 at 10:51 pm

Carson… NEVER BUY A CONDO. EVER. NO. THE END.

#60 Capt. Serious on 06.06.19 at 10:58 pm

The 31 kid with $600k in assets… what? Is he into extortion rackets or something?

#61 Vampire studies (doctoral thesis) on 06.06.19 at 11:20 pm

43 fartz – from the article:

“Social media use can lead to overspending for some
people”

Too funny.

On another note, ran into casual acquaintance at dinner last night. Knew he had sold house (beautiful place on acreage). He said he and wife were enjoying renting and the security $1M liquid brings.

#62 T on 06.06.19 at 11:40 pm

#15 Keyboard Smasher on 06.06.19 at 5:38 pm
Hey look, another 30-year old with half a million dollars in liquid assets!

No one else here find the tale of how someone arrived at half a million dollars in less than 10 years out of home/school more interesting than anything else?

Weed stocks? House flipper? Bitcoin? Certified plumber working since 16 years of age?

——

Inheritance. A simple explanation which seems to elude a few of the geniuses here.

Envy never looks good on anyone, keep that in mind.

#63 VicPaul on 06.06.19 at 11:50 pm

#15 Keyboard Smasher on 06.06.19 at 5:38 pm
Hey look, another 30-year old with half a million dollars in liquid assets!

No one else here find the tale of how someone arrived at half a million dollars in less than 10 years out of home/school more interesting than anything else?
***********

My son turns 25 at the end of the month – Journeyman Electrician, works full-time, lives with with his sweetheart.
Made 92k last year in his 24th year. If he lived in the basement, he could probably save 40k to his investment account – x 7 more years…I’ll let you accountants do the math, but 400k is easily within reach.
Makes you wish you could have another go ’round – get it righter this time. )

P.S. Garth, could you speak to the virtues/detriments of commuting a DB plan…gotta do it this year if I’m doing it.
M55BC

#64 DON on 06.07.19 at 12:10 am

The worried alright!

https://vancouversun.com/news/local-news/more-british-columbians-declaring-bankruptcy

“What’s most alarming is that people appear to be maxed out with no real plan for paying back what they have borrowed,” MNP licensed insolvency trustee Lana Gilbertson said in a news release. “With so many questions about how and if the debt can be repaid, particularly if the real estate market continues to deteriorate and interest rates rise, it is important that individuals struggling financially get professional advice.”

#65 DON on 06.07.19 at 12:21 am

#89 Leo Trollstoy on 06.06.19 at 12:05 pm

#67 DON on 06.06.19 at 12:11 am
From what I have seen all ‘experts’ are in agreement that a recession is near.

Ignore them. They’re idiots. Only idiots listen to idiots

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

So in theory I shouldn’t listen to you.

You think this up all on your own?

#66 DON on 06.07.19 at 12:23 am

Can we handle a slow down, isn’t downward momentum the hardest to control. And companies make money by selling to consumers, what happens when they become tapped out?

#67 jane24 on 06.07.19 at 12:44 am

Garth you keep saying that renting is the new black and buying house only worked 2 decades ago. There is more to life than making money you know. Most humans including me need a nest and a nest you own 100% beats a nest that you rent and may be asked to move from at any time. Forget the money and think of the human need for security of the person.

My owned nest I can redecorate at my leisure and I do so and the perennials I put in the garden years ago now put on a stunning display. My kids and grandkids come back to their home weekly and it gives them security too. Their school friends are still here. Owning means I can have pets and my little dog has added greatly to our lives. I made sure that I had my investments and pensions too as life is a balance. Now in our 60s with no mortgage or rent to pay we live a fortunate life with most of our income being disposable.

I have nieces and nephews in Toronto who cannot buy so are forced to rent. The rents they pay are extremely high and they have no security of tenure. This makes for an uncomfortable life as they don’t see themselves building a future. Promoting renting works well when there are affordable and well managed places to rent long term as in most of Europe. Unfortunately Toronto today does not have enough of such places so your advice to rent does not work in this particular city.

With our own kids we gifted them small downpayments and insisted they set up investment accounts. Balance is the key.

#68 Oh Canada, I weep. on 06.07.19 at 1:35 am

DELETED

#69 Smoking Man on 06.07.19 at 2:09 am

You can’t bend what you cant offend.
Free speach is everything.

Freak show freaks what to take your voice away.

Nazis. Brown shirts

#70 millmech on 06.07.19 at 2:23 am

Carson,
Best financial advice to receive would be to go talk to a good Family Lawyer and learn how to protect yourself. Do not go for the cheap/free consultation pay the money, it will be the best investment with the greatest returns you will ever make.

#71 Dolce Vita on 06.07.19 at 5:13 am

#23 Yukon Elvis

Garth is correct.

Since you paid your home off 2 decades ago, meaning you bought circa 1974 or later and it took 25 years of less to pay off your home, thus the 1974 Toronto average house price (and median Cdn. income then):

$52,806 (about $14,900)
Ratio = 3.5 X

In 2018, the average price of a house in Toronto was then (and median Toronto income then):

$787,300 ($75,270).
Ratio = 10.5 X

It will take them 3 times longer to pay off their home than it did you. Exactly how many years did it take you to pay off your home?

Take that number and MULTIPLY BY 3 to appreciate their situation, on average.

——————————
Source Data: StatCan, BoC and TREB.

#72 Dolce Vita on 06.07.19 at 5:36 am

#15 Keyboard Smasher, et. al.

Read the Blog at about 7 Comments last night and, as you all did, pondered the > $100K/yr gross income vs. $600K numbers at age 31.

Thought to myself that gross income had to be >>> $100K or, like you, I took the easy way out and concluded:

https://i.imgur.com/w4GuGI1.jpg

Only on Garth’s Blog do you get Financial Virtue Signalers.

I liked a lot of the theories per the above gross income vs. $ saved conundrum. There are some very good comedians and/or number crunchers that read and comment on this Blog. It would seem that on this Blog, Accounting not that dull after all.

One of the many reasons this Blog keeps me coming back day after day.

—————————

Kudos for your creation My Liege.

#73 Trumpocalypse2019 on 06.07.19 at 7:28 am

Worried is right.

USA and Russia almost at war.

https://edition.cnn.com/2019/06/07/politics/us-russia-navy-near-collision-intl/

Take nothing for granted. Things will quickly spin out of control, and soon.

PREPARE

#74 Tater on 06.07.19 at 8:02 am

#13 Shawn Allen on 06.06.19 at 5:05 pm
The Wealthy Renter

#6 Cristian on 06.06.19 at 4:39 pm said

I have been a renter for 55 of my 57 years on Earth, …
The income from my investments more than pays my rent,

*************************************
Congratulations, well done. A renter and a rentier! Excellent. But you would likely agree that you are a rare exception. Most life-long renters who are 57 or older would have very little investments?

Surely the average savings of 57 year old home owners is larger than the average savings of 57 year old life-long renters? Not even counting the value of the house. Just investments?
—————————————————————
Well, homeowners tend to have higher incomes, so it makes sense. I’d love to see a comparison of renters and homeowners with equivalent incomes.

#75 Neo on 06.07.19 at 8:03 am

“The why is simple. Global growth continues. Central banks have done a fine job tweaking monetary policy.”

You’ve got to be kidding with this? As I’ve said, if they did a good job and this was a real sustainable recovery then rates would be normalizing at this point. But no, once we get north of 3% on the 10 year all hell breaks loose. Every. Single. Time.

And don’t bother bringing up how many Fed hikes there has been because you know full well that hasn’t materialized in the bond market whatsoever. Rates are lower than when they started hiking.

#76 Westcdn on 06.07.19 at 8:05 am

Ever trust free advice? God gave you a brain for a reason. I admit I have been stupid but I learn. Life is not fair yet I fight to win with decency. I don’t know why God keeps me around – lot of rough edges to grind down… I intend to live and punish the jerks in my mind. I think I am coming back as a woman in my next life.

I am guessing the future – I fear nuclear war more than climate change. I am with bitumen and gold plus dividends. I am buying and selling shares – better early than late. Yes the glory days are done for reset preferred today, I am looking at perpetual. I find life to be easier to get than keep so expect a fight.

#77 Remembrancer on 06.07.19 at 8:13 am

#67 jane24 on 06.07.19 at 12:44 am
Garth you keep saying that renting is the new black and buying house only worked 2 decades ago.
———————————-
No he doesn’t, he says buying is an option if it makes sense to your fiscal situation, you have the readies and it doesn’t impose an undue financial burden when you include the extras; taxes, upkeep etc. – and don’t treat it as an automatically appreciating “investment” but as a place to live…

Renting is indeed an option, though now, exactly like 25 years ago, not everyone can afford to live at Yonge / Front or Yonge / Eglinton or a block over from your parents in Etobicoke…

#78 crowdedelevatorfartz on 06.07.19 at 8:26 am

@#67 jane24

It must be terrible for you.
Being so rich and having poor, renting, relatives.
The embarrassment of it all.
Just pretend they dont exist.
Its easier that way.

#79 JB on 06.07.19 at 8:33 am

#59 Madcat on 06.06.19 at 10:51 pm

Carson… NEVER BUY A CONDO. EVER. NO. THE END.
………………………………………………………………..
#2 Don on 06.06.19 at 4:19 pm

Interesting contrast of advice today — in the stock market, don’t worry, future can’t be predicted, things go up most of the time, and you won’t lose much, for long, if things do drop, so buy now — but in Vancouver houses for sure (experts say) they’ll continue to drop, therefore don’t buy now.

I recently advised a poster to go ahead and buy a Van condo so long as he was prepared for drops in equity (and could afford it without losing diversification). Ditto this time. But a condo is not a portfolio. It is one asset. Don’t fall for that false logic. – Garth
……………………………………………………………………..
#24 Linda on 06.06.19 at 6:31 pm

Carson, if you ‘must’ invest in RE, for the love of little green apples do not purchase a condo. Freehold only or just keep renting. Condos look tres sexy, especially when dressed up by developers wanting sales or professional stagers who were hired by current owners looking to unload. Those come hither looks soon fade into memory, especially when a special assessment notice hits your door. Ka-ching!
……………………………………………………………………..
#50 BC Renovator on 06.06.19 at 8:53 pm

Now a research firm (Eitel Insights) says prices will continue to erode for another couple of years, plus: “You’re going to see the cannibalization of the condo market where there’s a flood of new, built properties available to move in today and they’re going to be at relatively attractive prices.” More supply plus weak demand = lower prices.

_____________________

Dane Eitel, Eitel Insights- impressive to listen to. He uses high level analysis to reveal opportunities in the RE market. Listened to him on a Podcast. He says Toronto will drop to 2015 prices, and Vancouver will bottom in 2021. Worth the listen, convincing guy.

https://www.vancouverrealestatepodcast.com/podcast/will-vancouver-condo-prices-drop-in-2019-with-dane-eitel-from-eitel-insights/
…………………………………………………………..
Its always the small details in Condo living that eventually turn everyone off of communal living. The big ones are just so much in you face but people are stupid and purchase them anyway.

#80 Headhunter on 06.07.19 at 8:34 am

#67 jane24 on 06.07.19 at 12:44 am
With our own kids we gifted them small downpayments and insisted they set up investment accounts. Balance is the key.
_______________________________

think of 8 tracks then CD’s now MP 4.. buying now is a fools errand as properties cannot be supported by local incomes.. unless “bank of Mom” steps in perhaps? (blog has beaten this to death)

Fortunate life? Ya just be able to fog a mirror and we had cradle to grave jobs.. pay hikes every year.. house lottery winnings kids today dont better to stay mobile.

Housing will revert to the mean 3-4X income. Even with 0% rates. Incomes cannot support GTA valuations. Ur kids may end up hating you for “boxing them in” Sorry

#81 crowdedelevatorfartz on 06.07.19 at 8:39 am

@#69 Smoking Man
“Freak show freaks what to take your voice away.”

++++

Smokey….

Either
My deductive reasoning skills aren’t working this am.
OR
You woke up from a whiskey induced slumber and typed out an idea for a new book….?

#82 IHCTD9 on 06.07.19 at 8:41 am

#67 jane24 on 06.07.19 at 12:44 am
Garth you keep saying that renting is the new black and buying house only worked 2 decades ago. There is more to life than making money you know. Most humans including me need a nest and a nest you own 100% beats a nest that you rent and may be asked to move from at any time. Forget the money and think of the human need for security of the person.
____

Mr. T does not advise everyone to rent, rather; to not put all your assets in one basket. This would be the case for one stretching to buy a house as it all ends up going into ownership costs, and none ends up in the financial markets leaving you with a “one asset strategy”.

I would think Garth would feel the same about dumping everything you have into rent, thereby producing a “zero asset strategy”.

Your nieces and nephews in Toronto sound like they will be living hand to mouth, and should find a new City to live in that allows them to do something for themselves (ie build a life) rather than just paying bills and feeding the landlord.

If a dude/ette can’t even afford to rent in a City, said city is not for them or their skill set. Time to move.

#83 Tater on 06.07.19 at 9:00 am

#69 Smoking Man on 06.07.19 at 2:09 am
You can’t bend what you cant offend.
Free speach is everything.

Freak show freaks what to take your voice away.

Nazis. Brown shirts
—————————————————————
This is rich: a Proud Boy calling others Nazis. Will wonders never cease.

#84 milly on 06.07.19 at 9:18 am

As a millenial (27) I am interested in hearing your pro/con home ownership stories. We were thinking of buying or renting a condo back when we graduated with only 30k to our name. We decided to rent, and have amassed $250k liquid thanks to this blog. However, it’s a hard pill to swallow seeing rents around $2,500 for a 1 bedroom when we could have bought a similar unit for $350k back in the day (now worth $650k). Now that we are talking about starting a family I get FOMO that we made the wrong decision… such is life.

#85 Warren Saunders on 06.07.19 at 9:18 am

Neo, you too are tired of this manipulating of interest rates. U.S. non-farm payrolls came at only 75,000 for May-2019. This is pretty weak and central banks did not do a good job of a strong recovery for the economy.

The last time the U.S.10 year treasury, 30 year was close to or at 4%, 4.8% was April-2010. These are the closes to almost normal rates in a long time.

#86 Captain Uppa on 06.07.19 at 10:11 am

>>#84 milly on 06.07.19 at 9:18 am
As a millenial (27) I am interested in hearing your pro/con home ownership stories. We were thinking of buying or renting a condo back when we graduated with only 30k to our name. We decided to rent, and have amassed $250k liquid thanks to this blog. However, it’s a hard pill to swallow seeing rents around $2,500 for a 1 bedroom when we could have bought a similar unit for $350k back in the day (now worth $650k). Now that we are talking about starting a family I get FOMO that we made the wrong decision… such is life.>>

Milly, you’ve done quite well.

Personally, I think it depends on lifestyle and what you prioritize.

I am a homeowner (twice now) and I find it the best option for my family and raising my children. That is not to say that if you rent you cannot successfully raise a family, but I personally prefer ownership.

A few colleagues of mine at work in similar familial positions are renting and have rented for some time; they absolutely hate it. Always at the whims of their landlords and they too have missed large housing price gains.

Having said all that, 250K liquid is pretty darn good for raising a family too. So long as you can keep that up and remain disciplined in saving/investing.

Perhaps not the concrete answer you were looking for, but everyone is different; every situation is different.

#87 NoName on 06.07.19 at 10:39 am

interesrting read from pew study, social media use. table on page 4b is most interesting, less money you make and further from city you live less brainwashing you get, or you just have no time for it. which ever of those two is corect.

https://www.pewinternet.org/2018/03/01/social-media-use-in-2018/

and on a side note fakebook feeds news man apires 2x more than woman, iam thinking that is not good, i am wondering will something be done about it?

#88 NoName on 06.07.19 at 10:43 am

addendum to privious post, look at those 50+ watching youtube, iam thinking fake news mainly…

#89 Central Banks on 06.07.19 at 10:45 am

#75 Neo on 06.07.19 at 8:03 am
“The why is simple. Global growth continues. Central banks have done a fine job tweaking monetary policy.”

You’ve got to be kidding with this? As I’ve said, if they did a good job and this was a real sustainable recovery then rates would be normalizing at this point. But no, once we get north of 3% on the 10 year all hell breaks loose. Every. Single. Time.

And don’t bother bringing up how many Fed hikes there has been because you know full well that hasn’t materialized in the bond market whatsoever. Rates are lower than when they started hiking.

————————————————————-

The Fed raising 9 times from 0 and the Bank of Canada raising 5 times from 0.5%, landing at 2.25% and 1.75% respectively. And now immediate rate cuts on the horizon from these ridiculously low rates during “boom times”. And it took nearly 10 years to see a single rate hike.

This what is considered as doing a fine job of tweaking? We’re starting to sound like a realtors fellow blog dogs, seriously.

#90 The Ryguy on 06.07.19 at 11:04 am

#80 Headhunter on 06.07.19 at 8:34 am

Housing will revert to the mean 3-4X income.
—————————————————

This a thousand times. Try to explain this to people and their eyes just gloss over.

It’s simple, last 2 decades saw EXPLOSIVE gains in housing due to a combination of consistently lowering interest rates, foreign investments, commoditization (air bnb, VRBO etc,) psychology and HGTV.

The peak has come and gone folks, you’ve been warned.

#91 PastThePeak on 06.07.19 at 11:25 am

Weak jobs report => expectations of Fed rate cuts => markets blast higher.

So predictable. The more the news worsens the higher the market will go now…until it doesn’t.

Checkout a historical chart of Fed interest rates and the S&P 500. Checkout the raises, flat tops, and declines of the Fed vs. the stock market. Stocks will go up…for a time.

#92 Samantha on 06.07.19 at 11:29 am

Yes, the Vancouver housing market looks in pretty rough shape, however it seems that the Toronoto’s RE market has stabilized somewhat.

#93 Russ on 06.07.19 at 11:50 am

Trumpocalypse2019 on 06.07.19 at 7:28 am

Worried is right.

USA and Russia almost at war.

https://edition.cnn.com/2019/06/07/politics/us-russia-navy-near-collision-intl/
=====================

CNN is wrong? Oh my.

It sure looks like the Russian ship was the “stand-on vessel”. The stand-on vessel is generally obligated to keep a steady course, unless conditions state otherwise. The Russians should have issued 5 short blasts (sound signals) if she felt there was a problem.

Which makes the US Navy ship the bad girl for not keeping clear.

https://www.safeboater.com/learn-the-rules/rules-of-the-road.html

#94 James on 06.07.19 at 11:54 am

#86 Captain Uppa on 06.07.19 at 10:11 am

>>#84 milly on 06.07.19 at 9:18 am
As a millenial (27) I am interested in hearing your pro/con home ownership stories. We were thinking of buying or renting a condo back when we graduated with only 30k to our name. We decided to rent, and have amassed $250k liquid thanks to this blog. However, it’s a hard pill to swallow seeing rents around $2,500 for a 1 bedroom when we could have bought a similar unit for $350k back in the day (now worth $650k). Now that we are talking about starting a family I get FOMO that we made the wrong decision… such is life.>>

Milly, you’ve done quite well.
Personally, I think it depends on lifestyle and what you prioritize.
I am a homeowner (twice now) and I find it the best option for my family and raising my children. That is not to say that if you rent you cannot successfully raise a family, but I personally prefer ownership.
A few colleagues of mine at work in similar familial positions are renting and have rented for some time; they absolutely hate it. Always at the whims of their landlords and they too have missed large housing price gains.
Having said all that, 250K liquid is pretty darn good for raising a family too. So long as you can keep that up and remain disciplined in saving/investing.

Perhaps not the concrete answer you were looking for, but everyone is different; every situation is different.
_______________________________________
This was one of the things that irked me when I did own a condo first out of University. Surprisingly with about $35K my wife and I needed a place. Condos were reasonably priced back then Now they are a money pit. Pet-peeve before the family started it was always the grocery haul and it was just the two of us then.

Bringing groceries into a single-family home is easy: You park in your garage or the driveway, and lug them in. Bringing large bags of groceries into a condo can be more work. It’s no fun to lug them upstairs to get to your unit. Even if your building has an elevator, you’ll still have to make multiple trips to bring in all your bags. If you buy heavier items such as soda, beer, and water, that trip back and forth from your car to your condo can develop into a real pain. It’s why so many condo owners take several smaller trips to the grocery store instead of one large one. Be careful here, though: Running to the grocery store every two or three days is an easy way to blow your monthly spending budget. Been there and done that. We were spending a lot on grocery runs.

#95 Eks dee Siple on 06.07.19 at 11:55 am

#51 Spectacle: I was very sorry to hear about your health situation that you mentioned. Hearing about yet another young person with cancer makes my blood boil because to me, it represents yet another failure of our health care system. I believe I can be of significant help if you would email me (Garth can give you my email), as I do have some knowledge of how to help you and yours recover from this type of illness without going the chemo or drugs route. If you start on chemo, it is something like a 95% certainty of death within 5 years. Never mind that you may think I’m a crazy conspiracy theorist, just let me help you. I have some information that has helped many families. – XD

#96 IHCTD9 on 06.07.19 at 11:57 am

#84 milly on 06.07.19 at 9:18 am
As a millenial (27) I am interested in hearing your pro/con home ownership stories. We were thinking of buying or renting a condo back when we graduated with only 30k to our name. We decided to rent, and have amassed $250k liquid thanks to this blog. However, it’s a hard pill to swallow seeing rents around $2,500 for a 1 bedroom when we could have bought a similar unit for $350k back in the day (now worth $650k). Now that we are talking about starting a family I get FOMO that we made the wrong decision… such is life.
_____

350K houses are gone for good in the GTA/YVR, but so are big increases in RE value. GTA/YVR SFD’s are not near worth the price, but they will not drop big in value quickly. Sideways and down slowly for a long, long time.

Everyone has RE regrets – even I do, and we bought for less than 2X income, and potentially could sell for 4X what we paid for it 18 years ago. Forget the past, you could not have known what was coming. It’s a place to live.

Apartments really suck for raising kids. We also bought a SFD when the kiddies were on deck.

All condos go to zero. Suck for kids. Suck to live in. Keep these off the list of options. You don’t really “own” a thing with a condo. Same as renting, just more expensive and you’re chained down.

Many young families are bailing out of GTA/YVR, and it looks like you’re about to learn the same truths as those before you. It’s not a family friendly city. Priced daycare lately?

We make near half what we might earn in the GTA, but our prosperity and quality of life would take a drastic cut if we moved there. Even with the bigger incomes, it still wouldn’t be enough to live the way we do out here.

If you want to raise a family, own an SFD, and save for retirement simultaneously in a place like the GTA – you’ll need to make 3X more money just to start with compared to some of the best bang for the buck smaller Cities out there.

Becoming new parents is a challenge on all fronts – and you will be tested like never before. Don’t heap burning coals on your head. Think long and hard about this one.

#97 NoName on 06.07.19 at 12:04 pm

Interesting read

https://www.technologyreview.com/s/613630/training-a-single-ai-model-can-emit-as-much-carbon-as-five-cars-in-their-lifetimes/

The artificial-intelligence industry is often compared to the oil industry: once mined and refined, data, like oil, can be a highly lucrative commodity. Now it seems the metaphor may extend even further. Like its fossil-fuel counterpart, the process of deep learning has an outsize environmental impact.

#98 IHCTD9 on 06.07.19 at 12:33 pm

#87 NoName on 06.07.19 at 10:39 am

…and further from city you live less brainwashing you get, or you just have no time for it.
____

It’s hard to check Facebook when you’re fishing where there is no cellular service, or when you’re riding an ATV down some rough trails. : )

A lot different than when you’re sitting at a hockey game, sitting at a restaurant, sitting in a bus, sitting in your car etc…

#99 F1 on 06.07.19 at 12:53 pm

There is still no reason to own gold. You will regret saying that sooner than you think Garth. Markets will be artificially kept up by the FED cutting rates and doing QE4 but the risk of a crash gets larger and larger the longer they keep this going.

#100 Lost...but not leased on 06.07.19 at 12:55 pm

New Study Of Old Real Estate Bubbles (1582-1810) Finds Two Surprising Similarities With Modern Bubbles

https://realestatedecoded.com/new-study-of-old-real-estate-bubbles-1582-1810-finds-two-surprising-similarities-with-modern-bubbles/

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

A VERY good read….highly recommended.
Main gist is people buy on OLD news

#101 WHEN? on 06.07.19 at 1:13 pm

#80 Headhunter on 06.07.19 at 8:34 am

Housing will revert to the mean 3-4X income.

Will that happen before or after the CoT population increases by 77,435 each year (most in NA and more than the combined gains of the next three fastest growing cities in NA)?

#102 crowdedelevatorfartz on 06.07.19 at 1:14 pm

@# 89 Central Bank
“The Fed raising 9 times from 0 and the Bank of Canada raising 5 times from 0.5%, landing at 2.25% and 1.75% respectively. And now immediate rate cuts on the horizon from these ridiculously low rates during “boom times”. And it took nearly 10 years to see a single rate hike.

This what is considered as doing a fine job of tweaking? We’re starting to sound like a realtors fellow blog dogs, seriously.

++++++

Yep.
The scary scenario?
People are so indebted and the rates are so low now….that a rate drop does nothing to stimulate the economy.

#103 That's All, She Wrote on 06.07.19 at 1:23 pm

“It sure looks like the Russian ship was the “stand-on vessel”. The stand-on vessel is generally obligated to keep a steady course, unless conditions state otherwise. The Russians should have issued 5 short blasts (sound signals) if she felt there was a problem.”

Except that the CNN aritcle cited claims that the US vessel was “travelling in a straight line and trying to recover its helicopter when the incident occurred” — which would have restricted its ability to manouvre, which would have made it, not the Russian vessel, the stand on vessel.

If you’re going to cite COLREGS, don’t be half-assed about it. Also, even the stand on vessel is obliged to manoeuvre once the situation becomes in extremis. Your obligation doesn’t stop at giving five short.

Frankly, if navies and air forces want to play their silly little games of chicken, I don’t much care, but it is a bit disappointing to see people everywhere jump up and defend the totalitarian enemy.

#104 LP on 06.07.19 at 1:30 pm

#95 Eks dee Siple on 06.07.19 at 11:55 am

If this person truly has discovered healing properties in some food, metal, herb or spice…anything at all. why hasn’t society and the medical profession pounced on it? Why hasn’t Eks dee Siple offered up his/her cure or treatment to the world?

Assuming he/she will not be doing that, then I fail to see the usefulness of posts like these and heartily wish they were deleted.

#105 Mm on 06.07.19 at 1:51 pm

#90 The Ryguy on 06.07.19 at 11:04 am
#80 Headhunter on 06.07.19 at 8:34 am

Housing will revert to the mean 3-4X income.
—————————————————

This a thousand times. Try to explain this to people and their eyes just gloss over.

It’s simple, last 2 decades saw EXPLOSIVE gains in housing due to a combination of consistently lowering interest rates, foreign investments, commoditization (air bnb, VRBO etc,) psychology and HGTV.

The peak has come and gone folks, you’ve been warned.
_______________________

Housing reverts to 3-4 times income when interest rates revert to 8-10%.

We all know either one ain’t going to happen in our lifetimes!

#106 Sail away on 06.07.19 at 1:52 pm

#67 jane24 on 06.07.19 at 12:44 am

Garth you keep saying that renting is the new black and buying house only worked 2 decades ago. There is more to life than making money you know.

————————————————–

Jane, your and Garth’s philosophy may be closer than you know. There’s nothing wrong with buying a house that’s needed and is reasonably priced. The warning is to avoid excessively overpriced real estate; if there is not good value gained for the price paid, then think carefully about purchasing.

My philosophy is a bit different than renting, though, since I enjoy owning my place like you do. I choose to live in a less expensive community and cash in on my greatly appreciated holding in Vancouver to people who are willing to buy.

There is no way I would currently re-purchase my Van house at that insane price. I’m very happy to sell it, though. Interested? I’ll be richer and you’ll be a homeowner. We’ll both be happy. Win-win.

#107 Tater on 06.07.19 at 2:06 pm

#95 Eks dee Siple on 06.07.19 at 11:55 am
#51 Spectacle: I was very sorry to hear about your health situation that you mentioned. Hearing about yet another young person with cancer makes my blood boil because to me, it represents yet another failure of our health care system. I believe I can be of significant help if you would email me (Garth can give you my email), as I do have some knowledge of how to help you and yours recover from this type of illness without going the chemo or drugs route. If you start on chemo, it is something like a 95% certainty of death within 5 years. Never mind that you may think I’m a crazy conspiracy theorist, just let me help you. I have some information that has helped many families. – XD
—————————————————————–

Look how quick the scummy snake-oil salesman is!

5 year Survival rates for some nasty cancers, like lung, are well over 5%. Because chemo and radiation work, you self-serving piece of garbage.

https://www.cdc.gov/cancer/dcpc/research/articles/concord-2.htm

#108 Tater on 06.07.19 at 2:16 pm

#90 The Ryguy on 06.07.19 at 11:04 am
#80 Headhunter on 06.07.19 at 8:34 am

Housing will revert to the mean 3-4X income.
—————————————————

This a thousand times. Try to explain this to people and their eyes just gloss over.

It’s simple, last 2 decades saw EXPLOSIVE gains in housing due to a combination of consistently lowering interest rates, foreign investments, commoditization (air bnb, VRBO etc,) psychology and HGTV.

The peak has come and gone folks, you’ve been warned.
—————————————————————-

Income multiples are a pretty dumb metric as they don’t take into account interest rates. If 5 year mortgage rates go to 6%, then a mortgage at 3.6x your income is 30% of gross. At 10% rates its 2.5x income and at 15% it 1.8x.

With rates around 3%, 5x your income, keeps you under 30% gross.

#109 Russ on 06.07.19 at 3:07 pm

That’s All, She Wrote on 06.07.19 at 1:23 pm

Except that the CNN aritcle cited claims that the US vessel was “travelling in a straight line and trying to recover its helicopter when the incident occurred” — which would have restricted its ability to manouvre, which would have made it, not the Russian vessel, the stand on vessel.

If you’re going to cite COLREGS, don’t be half-assed about it. Also, even the stand on vessel is obliged to manoeuvre once the situation becomes in extremis. Your obligation doesn’t stop at giving five short.

Frankly, if navies and air forces want to play their silly little games of chicken, I don’t much care, but it is a bit disappointing to see people everywhere jump up and defend the totalitarian enemy.
============================================================

So, you jump in to defend CNN and an imperial navy without knowing the facts?

My statement is correct.

It is recognized the Russian vessel is obligated to avoid collision too and apparently both vessels met that obligation.

A slight decrease in US boat speed even a few hundreds yards back would easily allow it to cross clear astern of the Russian. Don’t tell me a helicopter cannot adjust to such a small speed reduction in practice. The guy shouldn’t be flying if such is the case.

Other facts not known:
was the US vessel displaying a D flag?
did the US vessel communicate an inability to alter course?
were there exceptional egos at work here (seeing how close before someone flinches)?

By the Navy releasing the video, my guess is they flinched and are looking for social media support.

It looks like you were manipulated.

Cheers, R
(time to go sailing)

#110 Lost...but not leased on 06.07.19 at 3:19 pm

Got nasty a few posts back re: “Cancer”.

Suggest review “Dr. Mary’s Monkey” or read a summary.

Also the “Flexner Report” and roots of modern medicine.

Even review history of AIDS… Many patients were conned into taking AZT, an extremely toxic drug that Big Pharma had on the shelf but no market. Many AIDS patients took it and died(ie Arthur Ashe), while others became very ill and quit taking it and are alive today ..Magic Johnston is an example.

Do the homework.

#111 Tater on 06.07.19 at 3:34 pm

#110 Lost…but not leased on 06.07.19 at 3:19 pm
Got nasty a few posts back re: “Cancer”.

Suggest review “Dr. Mary’s Monkey” or read a summary.

Also the “Flexner Report” and roots of modern medicine.

Even review history of AIDS… Many patients were conned into taking AZT, an extremely toxic drug that Big Pharma had on the shelf but no market. Many AIDS patients took it and died(ie Arthur Ashe), while others became very ill and quit taking it and are alive today ..Magic Johnston is an example.

Do the homework.
———————————————————-
Description of Dr Mary’s Monkey, for those not familiar:

“The 1964 murder of a nationally known cancer researcher sets the stage for this gripping exposé of medical professionals enmeshed in covert government operations over the course of three decades. Following a trail of police records, FBI files, cancer statistics, and medical journals, this revealing book presents evidence of a web of medical secret-keeping that began with the handling of evidence in the JFK assassination and continued apace, sweeping doctors into coverups of cancer outbreaks, contaminated polio vaccine, the arrival of the AIDS virus, and biological weapon research using infected monkeys.”

Riiiiight.

#112 That's All, She Wrote on 06.07.19 at 3:58 pm

“A slight decrease in US boat speed even a few hundreds yards back would easily allow it to cross clear astern of the Russian. Don’t tell me a helicopter cannot adjust to such a small speed reduction in practice.”

OK men, here’s the plan. We’re going to reduce speed and retrieve the helicopter while passing a few cable’s lengths astern of a non-allied warship who is plainly trying to screw with us — assuming he holds his course and speed. After that, I’ll be resigning my commission before I can be court martialled for pulling such a stupid stunt.

N.B. COLREGS say that if you are taking action to avoid a collision, that action mush be large enough to be readily apparent to the other vessel. Just slowing down a bit doesn’t cut it.

Just admit that you don’t know what happened out there, and you don’t know your COLREGS.

#113 Robert Ash on 06.07.19 at 4:16 pm

I would really like to share GT’s optimism, about the markets, and normal business activities…. But Emergency level Interest rates, Trade wars, Brexit, Ideological Differences… Economic, Social, and Religious, simply don’t support the new normal for me…
In my opinion, one of the worst results of the Great Financial crisis, is the lack of Confidence, and Trust in our Institutions. Let’s face it… Negative interest rates, Currency Manipulation, 3-4 Person Majority Provincial governments, with no real Mandate to Govern… purposely tanking, other peoples Equity, or Provincial/National Resource strategies/advantages… Lack of Criminal investigations, but lots of Traffic Citations, Policy Decisions, purposely targeting/disadvantaging one Demographic The national politics of envy.. etc. etc.. .. I can go on…. an on… it must be me… what can go wrong… I guess I am a pessimist ???

#114 Freedom First on 06.07.19 at 11:15 pm

#69 Smoking Man

Apt # for your post to fall on today. I have been fan #31 of yours for years now. It is a pleasure seeing both your wit and brilliance still growing over the years. It still amazes me how many readers here miss it.

Freedom First

#115 Boots on the ground in Portland on 06.08.19 at 3:54 am

Re: #110 Lost…but not leased reply to Tater
——————–+++-
Tater isn’t worth replying to. 100% brain washed.