Unboring

On Tuesday a dude named Ziggy sent the following in to the Salt Spring Exchange, which is a Kijiji-kinda thing serving that weird little island community between Vancouver and Victoria. Let us pray that he’s just one isolated delusional, greedy goof.

Tent with bed on private property
$40/night – $1,000/month
bed and tent in private area of yard, looking for a quiet easy going person who likes to camp, potential for longer term at off peak season rates to the right tennant.
you can bring your own tent, a possibility for electricity
We are open to having a single and quiet person who doesnt have visitors, this is a walk in site.
There is also a possibility to rent a pad that can fit a very small respectable looking trailer/camper no larger than 16ft in another spot.
If you feel like you might fit in here tell us a little about yourself

Seriously. Here’s the listing. You can’t make this stuff up. A thousand bucks a month to sleep in this moron’s backyard, in your own tent, begging for power and peeing in the hostas. If you pass the landlord’s vetting process – a single, quiet, friendless person. Preferably a nocturnal serial killer.

$     $     $

Bad-boy ex-realtor and self-styled housing analyzer Ross Kay has garnered a hot little following since he tasted fame on the pages of a certain pathetic blog seven or eight years ago. He’s done some good work over this time, becoming a thorn in CREA’s paw and proving the existence of bad realtor habits like miscounting sales and fudging stats.

His latest note to me is worth repeating, since it puts into context the overall economic impact of a declining national real estate market – one which peaked two years ago.

“What happens,” he asks, “when 15 million plus home owners lose an average of $40,000 in the value of their home?”

Well it’s simple, you get a drop in net wealth in your country of $600 Billion, the largest drop in the history of Canada.  So why the silence? To put this in perspective this is around 10% of the total equity held in Canadian homes. So, why the silence?

Since home prices began declining in Canada nationally in January of 2018 Canadians have added another $66 Billion in mortgage debt as net wealth has plummeted but again, silence? Not only silence but a Bank of Canada that brags this is happening!

What was the Frothy Myth in 2017 became the Stabilized Myth in 2018 and this month it was announced the housing market was a Boring Myth. Apparently a $600 Billion drop is wealth is boring?”

Or maybe the real estate cartel just wants people to chill, believing the market has bounced off the bottom. “But the wealth declines are not going back up,” Kay replies. “House prices dropped in June they did not increase as organized real estate this week claimed they did.”

Blog dog Steve has some evidence of this. He noticed a 4-bedder house on Trafford Cres. in Oakville that was listed at $1.3 million two summers ago (and didn’t sell) just re-listed for $875,000. “Teranet says home prices are roughly flat,” says Steve. “Tell that to this guy.”

$     $     $

Jacob’s dad died recently. Sadly. “Like many boomers, he did well in real estate,” says his son. “ He owned an income property in Victoria, fully paid off. He very generously left the house to my sister and I.”

Jacob says neither of them want to live there, and the place needs a big reno, which they are willing to tackle.

“Conservatively, after renovation the property would generate approximately $4k per month, likely a bit more. I’d estimate expenses to be about $1k/mo (including maintenance). This would leave $1500 each for my sister and I in pre-tax income going forward.

“The question is whether to hold and rent or to sell and walk away. I’d estimate current market value, sold as-is with no renovations, to be approximately $700k. This is approx $335k each for my sister and I after real estate commission. Capital gains tax is due in either scenario as the house was not his primary residence.

“I do worry about the next few years and if house values will drop in Victoria as we watch the scenario unfolding across the water in Vancouver. Thanks for any advice, and thanks for the very informative blog.”

First, yes, this is a taxable event for the offspring. The moment father passed the property was deemed to have been sold at market value, and capital gains tax must be paid by his estate on the appreciation in value. Hopefully the old guy was in a lower tax bracket, so the half-gain added to his taxable income would be lightly treated. As for the renting option, all of the net income generated and taken by the siblings would be taxed at their marginal rates. Any further increase in property value would also be subject to capital gains. But if they sell and split the proceeds now, none of that money will be taxed in their hands. They can use it to stuff TFSAs and get tax-free growth, or fuel an RRSP and generate a refund.

The big question is whether to hold for potential price growth, or take the gift now. The answer depends on where one thinks this over-inflated regional market will be in the future.

But there is another option, Jacob: keep the place, mortgage it to the gills, divide the tax-free money between you and let a tenant make the mortgage payments. That way you and sis aren’t sitting on a ton of equity earning a negligible ROI, and can use the cash to build diversified and tax-efficient personal portfolios. You own the house, benefit from cheap loan rates and still profit from any market rebound – after the BC Dippers are historical footnotes, of course. Shouldn’t be long.

121 comments ↓

#1 Boom on 07.18.19 at 3:52 pm

#112 Sail Away on 07.18.19 at 12:08 pm
Smokey and James, can you give it a break? We get it- you’re each successful, rich, handsome and smarter than the other. How does any of that benefit the blog?
———
Ah James is just tired hearing of smoking man and all his privileges that he was born into.

#2 NoName on 07.18.19 at 4:00 pm

#140 James on 07.18.19 at 3:15 pm

Coal usage is up, definitely up. Just not where carbon tax is applied.

https://youtu.be/tqBgzyywF3s

#3 Shawn on 07.18.19 at 4:16 pm

More and more central banks are cutting rates around the world. The BOC will cut 25 bps in the fall.

#4 Shawn on 07.18.19 at 4:17 pm

The FED July cut is done. Now the question is will they cut later in the year also?

#5 Axehead on 07.18.19 at 4:20 pm

Yeah, BC is a socialist experiment in delusion. But Alberta, now that we have punted the dippers and have a wannabe Klein, what say ye about condo or house value? Especially in Calgary. Looks kinda flat to me.

#6 Smartalox on 07.18.19 at 4:42 pm

Ahh, Salt Spring!

Lovely place to visit, but only the delusional can live there. It looks like the person who posted that link about the expensive backyard was soundly taken to task by the locals.

But there’s a big Yoga ranch / retreat (some might say cult) near the area referenced in the listing, so that may be the target market.

#7 adineko on 07.18.19 at 4:53 pm

Soooo…lets say i got a little brave, bought a bunch of a CDN preferred shares ETF, and have it as nearly half of my fixed income…but in registered accounts. Did i mess up? i took a smallish loss to do it on the bonds i sold, but i didn’t realize that preferred shares basically lose the tax benefit if it’s sitting in a registered account.

Halp?

#8 millmech on 07.18.19 at 4:56 pm

Mortgage stress test dropping to 5.19% tomorrow?

Could happen, since it based on a formula dictated by the posted rates of a majority of the Big Six banks. – Garth

#9 Smartalox on 07.18.19 at 5:00 pm

Vancouver Sun Headline:

Condo Project Presales Hit New Lows in Metro Vancouver

https://vancouversun.com/business/real-estate/presale-condo-project-sales-rates-hit-new-lows-in-metro-vancouver

Normally the ‘new lows’ in condo pre-sales involve morals and ethics, but recent data shows that only 14% of new condo offerings sell – the lowest number observed since 2012.

Where once there were line-ups that around condo sales offices for days, and where unemployables could make fairly good money of Craigslist ads looking for people to ‘hold places in line’ at pre-sales, it appears that this fad has gone out of style.

At least in the lower Mainland.

Makes one wonder why the sudden change of heart?
Is it:

A) Everybody in the Lower Mainland already owns two additional condos, so the market has finally caught up with demand.

B) The banks are tighter on HELOCs now that primary residences are falling in price, thereby limiting amateur property speculation

C) Recent, high-profile disclosures about money laundering in (amongst other things) the condo pre-sale markets have upended the practice – at least until it can be determined that, though acknowledged, nothing is being done regarding enforcement / prevention.

D) The CRA cracked down on taxable gains not reported from the practice of ‘assignment flipping’. Again, this is likely temporary, until practitioners realize that steady enforcement / disruption of the practice will not be forthcoming.

#10 leebow on 07.18.19 at 5:01 pm

Garth, a question. Say, I bought a house for $100K, and it appreciated to $200K. Next, I re-mortgage the house to $200K and buy a $100K bond with the proceeds (ignore LTV, etc). Then I sell the house for $200K that it’s worth now and repay the mortgage. However, I still hold the bond. Will the capital gain tax be triggered on the $100K appreciation immediately, or after I sell the bond? Is it possible to claim that the bond purchase is a part of the investment strategy and the gain is not realized until the bond is sold?

#11 Bob Dog on 07.18.19 at 5:02 pm

“Let us pray that he’s just one isolated delusional, greedy goof.”

You have just described every person in BC.

Friend selling in Bellevue.

https://nextdoor.com/for_sale_and_free/9bdf27d2-6881-45dc-89e6-ad48d7abde85/

Canadians are truly screwed in the head.

#12 Mattl on 07.18.19 at 5:26 pm

Blog dog Steve has some evidence of this. He noticed a 4-bedder house on Trafford Cres. in Oakville that was listed at $1.3 million two summers ago (and didn’t sell) just re-listed for $875,000. “Teranet says home prices are roughly flat,” says Steve. “Tell that to this guy.”

————————————————————-

Very hard to take someone seriously on RE when they use an inflated ask price as a data point. That Oakville home – what did is sell for last and what are the comps in the area? If it was a 900K home two years ago, and its a 900K home today, then wth does a 1.3MM listing (that didn’t sell, duh) tell you about the market? Nothing of course. Homes in Oakville may be down 30% but that listing price tells us nothing.

An example.

My cousin bought a Condo 8 years ago in a suburb of YVR for 330K. He recently listed it for 545K. Highest sale of same unit was 580K. He just sold for 520K.

Did he:

a) lose 60K
b) lose 25K
c) make 190k

#13 Smoking Man on 07.18.19 at 5:27 pm

T2 is toxic. O’Leary nails it.

https://youtu.be/Gwsn3twqwZ0

#14 DON on 07.18.19 at 5:34 pm

#6 Smartalox on 07.18.19 at 4:42 pm

Ahh, Salt Spring!

Lovely place to visit, but only the delusional can live there. It looks like the person who posted that link about the expensive backyard was soundly taken to task by the locals.

But there’s a big Yoga ranch / retreat (some might say cult) near the area referenced in the listing, so that may be the target market.
*******************

Yup…

Salt Spring used to be a nice place to visit and camp on the beach anywhere you like, but that changed as the trendy hipsters started invading in the 90s then all the bylaws and nimby-ism set in. Most likely there are a lack of camping spots, but HOPEFULLY this was just a joke post highlighting the absurdity of our current times.

For instance, my neighbour was assembling a plastic shed 10X10 in his yard. I asked him if he was putting it up for rent (has a beer fridge and tv). He said a thousand a month but the porta potty was communal. I call it yardway housing.

#15 NoName on 07.18.19 at 5:44 pm

Addendum to my rant from other day, I go work OT and earn 650cad, gov takes half, I pay sitter and I am left with 125-150. Luckily there is no Inflation or I would be in some sirius trouble…

https://www.fraserinstitute.org/article/family-tax-bill-and-anxiety-rising-in-canada

#16 Linda on 07.18.19 at 5:44 pm

About Jacob – as the inheritors, won’t he & Sis have to pony up the taxes owed on the inherited house? Surely the CCRA will want that money asap. Even if this is an estate thing, where Dad’s tax status is what determined the eventual tax owing the estate or the kids who inherit must pay, yes?

As for mortgaging the house & renting it out, both Jacob & Sis will have to pay tax on the rental income plus will now be landlords with all the potential headaches such status brings. And what about the add on taxes the BC government has imposed on secondary properties? Would those apply?

Re: Salt Spring. Ay-yi-yi!

#17 CEW9 on 07.18.19 at 5:51 pm

#5 Axehead on 07.18.19 at 4:20 pm

Yeah, BC is a socialist experiment in delusion. But Alberta, now that we have punted the dippers and have a wannabe Klein, what say ye about condo or house value? Especially in Calgary. Looks kinda flat to me.

Calgary is on it’s own way to a crippling municipal recession thanks to the quadrupling of business taxes by a city council that could neither see the obvious trends on corporate vacancy nor reign in their spurious spending habits. (The famous overspend example was the City of Calgary job postings for a “Bicycle Commuting Coordinator” and a “Walking Coordinator” each for a yearly wage of around $135,000.)

Small business is leaving in droves, despite the optimism of the rest of the province. Condo prices in Calgary will likely remain flat for the time being.

#18 Dave on 07.18.19 at 5:53 pm

So in BC if NDP are gone..prices go back up? Liberals will kick start the market?

#19 HP Victoria on 07.18.19 at 5:54 pm

For James: mortgage interest would be a deductible expense from rental income. I would also consider the area the house is in. In a previous Victoria downturn, it was much more difficult to keep a place rented in the less desirable areas. You could end up with no tenant, mortgage payments and a bad market for selling the property.

#20 crowdedelevatorfartz on 07.18.19 at 5:54 pm

I was on the Salt Spring Ferry a few years back talking to one of the crew.
I asked him if singer Phil Collins ex-wife still lived on the island.
He said no she had moved.
But then he said,
” A few months ago a guy drove his brand new Harley to the front of the line and parked it. He had a brand new helmet , brand new sunglasses and a brand new leather jacket. I looked at him and said, “Buddy, if ya wanna look the part, take that jacket off and scuff it on the ground to make it look worn.”
The guy took off his sun glasses, smiled and said, “That’s pretty funny!”
It was Robin Williams.

#21 BC Renovator on 07.18.19 at 5:59 pm

“There are a few things to take away from this. First, the Chinese home buying boom has come to an end. Chinese dollar volumes peaked in the US in 2017 at $31.7B, it is now $13.4B. Note this wasn’t a result of foreign buyer taxes or speculation taxes, clearly there is much more to this.

Second, this has obvious implications for the province of BC, particularly in Vancouver. According to BC land transfer tax data, foreign purchases of BC real estate have also slowed, it was just $131M in May 2019, that’s down from a cycle high of $400M in June 2017. (Data was first collected in January 2017)”

https://stevesaretsky.com/chinese-home-buying-boom-slowing/

#22 CEW9 on 07.18.19 at 6:03 pm

#7 adineko on 07.18.19 at 4:53 pm

Soooo…lets say i got a little brave, bought a bunch of a CDN preferred shares ETF, and have it as nearly half of my fixed income…but in registered accounts. Did i mess up? i took a smallish loss to do it on the bonds i sold, but i didn’t realize that preferred shares basically lose the tax benefit if it’s sitting in a registered account.

Halp?

If you have the room in your registered accounts, it is no problem. The ‘tax benefit is the fact that taxes are way less on the dividend income from Pref’s than the taxes from interest income from bond’s or GIC’s.

I have lots of room, so I leave my Pref ETF’s in my registered account, where they pay zero taxes. Until I run out of registered room.

When I begin to fill my registered accounts up to the max, I will sell the registered Pref ETFs (in the same amount as I have cash to invest) to free cash in the registered for more high growth stuff. Then use the cash to invest to buy the prefs in non-reg.

But since I have the room, I might as well have it all in a tax efficient registered account.

As I save & have more cash to invest I will gradually balance between reg and non-reg. But until then, everything is tax-sheltered.

#23 crowdedelevatorfartz on 07.18.19 at 6:10 pm

@#33 Marco
“and never mention a Canuck drug dealer on death row in that country?”
****

Sorry Marco but ANYONE stupid enough to try and buy drugs in a country that has Capital Punishment on the books…..is an idiot.

The person is well known to the police and has gang connections here in BC.

https://www.cnn.com/2019/04/30/asia/canada-china-death-sentence-intl/index.html

The p.o.s. was caught in China allegedly buying and attempting to smuggle more life destroying drugs into Canada……we’ve had thousands of Canadians dying of overdoses each year and…… i for one…… hope that , if he isnt executed….. he rots.

#24 yvrguy on 07.18.19 at 6:11 pm

What’s your take Garth?

https://www.linkedin.com/pulse/paradigm-shifts-ray-dalio/

How you will prepare for the coming shift?

#25 Canadians for Canadians on 07.18.19 at 6:15 pm

DELETED

#26 IHCTD9 on 07.18.19 at 6:25 pm

This place is not too far from me:

https://www.quinte-mls.com/properties/35528710/

I think it’s been up for sale for about a year, and is down 200k from when I first noticed it. Looks unoccupied, furniture looks foreign; weeds left unchecked. I’m guessing someone is trying for a little fliparoo.

I hope they’re enjoying lopping six figure slices off the price while eating that $12,171.00 annual tax bill…

#27 TS on 07.18.19 at 6:41 pm

Re #19

“Small business is leaving in droves, despite the optimism of the rest of the province. Condo prices in Calgary will likely remain flat for the time being.”

Calgary condos remain flat??? If by flat you mean currently at August 2006 levels…nominally….

Add 2% inflation to 14 years and you are out almost 30% before you get to flat

#28 SSI Dunx on 07.18.19 at 7:04 pm

I can assure you that’s nowhere near the craziest thing listed on the Salt Spring Exchange. Not even in the top 10. And as for the listings that didn’t get approved… I am hoping that the guy who started it will publish those in a book one day.

#29 45north on 07.18.19 at 7:07 pm

Well it’s simple, you get a drop in net wealth in your country of $600 Billion, the largest drop in the history of Canada.  So why the silence? To put this in perspective this is around 10% of the total equity held in Canadian homes. So, why the silence?

it’s like religion – real estate is the means of wealth, personal vinidication. People avoid real estate the same as they avoid religion.

we were staying in a very nice bed-and-breakfast near High Park. The talk around the breakfast table turned to real estate. One guest said there was going to be a downturn. Our host countered that immigration would ensure that Toronto real estate would always go up. The conversation turned quickly to boating in the Kawarthas.

#30 Howard on 07.18.19 at 7:09 pm

#12 Mattl on 07.18.19 at 5:26 pm

Very hard to take someone seriously on RE when they use an inflated ask price as a data point. That Oakville home – what did is sell for last and what are the comps in the area? If it was a 900K home two years ago, and its a 900K home today, then wth does a 1.3MM listing (that didn’t sell, duh) tell you about the market? Nothing of course. Homes in Oakville may be down 30% but that listing price tells us nothing.

—————————————————

Exactly my reaction. I found the listing – the property is a bit of a dump. No garage. House looks old. They did try to sell it for $899K last July. I’m thinking they’ll need to cut the price further, to the $800K range.

For comparison, a similar home in the area sold for $975K in November 2017. So definitely down, as we all knew, but not by 30%.

And get this – the $1.3M asking price wasn’t even where it started. They tried for $1.488M before reducing it to $1.3M.

#31 Howard on 07.18.19 at 7:13 pm

Should also mention that the owners of that Oakville home bought it for $369,900 in 2008. Assuming it ends up selling for around $800K, that’s well over 100% profit after 11 years before fees/maintenance/etc.

#32 Re: Mattl the Kelowna Realtor on 07.18.19 at 7:16 pm

d) $139,152

4.5% per year.

A balanced portfolio would have provided higher returns.

#33 Formafist Talks RK on 07.18.19 at 7:20 pm

The Truth About Real Estate Will Cost us 1 BILLION DOLLARS!!!

https://www.youtube.com/watch?v=V3QNOeDhQ58

#34 steerage steward on 07.18.19 at 7:22 pm

Salt Spring, along with the other Gulf Islands, has a critical shortage of rental property. This means locals and seasonal workers have a very hard time finding a place to stay, often having to crowd together into one house.

Paying $1000/month for open space and a bit of privacy actually makes some sense.

Again, it’s not like you can just rent a place in the condo down the street.

#35 45north on 07.18.19 at 7:23 pm

Smartalox: Condo Project Presales Hit New Lows in Metro Vancouver

from your link: The sales rate for presale condos hit a low of 14 per cent in June, with buyers signing sales contracts for only 73 out of the 519 units on the market in Greater Vancouver and the Fraser Valley.

so if the developers don’t sell before construction, they don’t begin construction

Here’s an article by David Flemming, which describes financing in Toronto

https://torontorealtyblog.com/blog/condominium-financing/

one thing, in BC the developer has nine months to make the pre-sales. Is there a time limit in Ontario?

#36 BC NDP isnt going anywhere on 07.18.19 at 7:27 pm

What are you smoking out East?

The British Columbia government ended its fiscal year in an operating surplus of $1.5 billion with the collection of less money from a softening real estate market.

The 2018-19 public accounts released today by Finance Minister Carole James show that the province has eliminated its operating debt for the first time in 40 years.

Who says you need dirty money to succeed? Liberals are finished for good. They need to rename / rebrand the party if they ever want to make a comeback.

We can also teach Ontario a lesson on how not to be insolvent.

#37 jess on 07.18.19 at 7:32 pm

“cafes” maybe should repay taxpayers by building affordable places to live!

https://www.cbc.ca/news/business/ccpa-rents-minimum-wage-1.5216258

…”two-year old wire tap and surveillance investigation that coalesced with raids involving 500 officers and 48 warrants on July 12, police seized a stunning amount of goods worth $35 million, including 23 high-end cars (including five Ferraris, one worth $880,000), 27 allegedly mafia-owned houses, and $1 million in cash.

https://www.yorkregion.com/news-story/9507340-figliomeni-crime-family-busted-through-laundering-gambling-crimes-police/

#38 Cottingham a bargain on 07.18.19 at 7:44 pm

The stress test has its days numbered . Between Tim Hudak, the cabal of CREA , TREB and the looming election , the pressure from all corners to abolish will be insurmountable .

Add in the business lost by chartered banks and CU ‘s to private , alternative lenders and their wish to see it go

Stress test is terminal and so is temporary dip in prices

You wish. – Garth

#39 Ponzius Pilatus on 07.18.19 at 7:51 pm

#81 crowdedelevatorfartz on 07.18.19 at 8:46 am
@#59 Pontificating Proletarian
” No wonder most African countries went communist during the Cold war.”
+++++
Ignorance was bliss.
And they African “leaders” have done a bang up job of running things themselves havent they?.

The majority of African countries are now failed, corrupt, burnt out shells of their former colonial selves with endless proxy wars, disease, famine and pestilence forcing millions of refugees to swarm from country to country overwhelming the soon to be next failed state…

I’m quite sure that the average African citizen would trade their “freedom” of today for the colonialism of yesteryear.
Infrastructure that works, a rudimentary justice system that works, hospitals, schools, jobs….you know. Imperialist things like that.
Unfortunately , since the average age of most Zimbabweans, South Africans, Nigerians, Somalians, Libyans has fallen dramatically since they have been liberated in the 1960’s and 1970’s….there are probably very few left who remember the time of their imperialist overlords…
Never mind.
Lets get back to the hyper inflation, corruption, disease, death, dictatorships and proxy wars shall we?
Freedom is so…..liberating.
————-
You just back from the Trump rally in North Carolina?
I can see the adrenaline is still pumping.
You’re probably hoarse from all the chanting.
I recommend Eucalyptus tea.
You’re welcome.

#40 Frank Parsons on 07.18.19 at 7:53 pm

Jess, peanuts. Trillions of dollars go unreported every year and government wastes at least 30% of all it spends through ineffiencies. This is trillions of dollars worldwide through corruption and waste. It is no big deal.

#41 Dogman01 on 07.18.19 at 7:58 pm

BMO offered my wife a pre – approved LOC of $20K at the interest rate of 7.48%

Zoinks!…….7.48%

Like it is 1995 again

#42 Out Of Work CEO, Will Travel on 07.18.19 at 7:59 pm

Ziggy is code for the social milieu best described as “progresive and diverse and inclusive”. These kidz talk in big words about “environment and sustainability” but they would sell their “yaya” for a dime. People ask is there a God but we know better than to inquire if there is “evil”?

#43 crowdedelevatorfartz on 07.18.19 at 8:14 pm

@#36 BC NDP isnt going anywhere
“Liberals are finished for good. They need to rename / rebrand the party if they ever want to make a comeback.”
*****

While I agree that Gordo Campbell and Christie Cluck have burned the Liberal name (kinda like Doogie Ford for the Cons in Ont?) to the ground.
As for a Party name?
Social Credit is still available if Bill Vanderslime is willing to sell it…..
Well, once again an NDP (dipper) claps their hands in smug self assurance.
I know counting is hard for the NDP but lets not forget they are in a MINORITY govt….
If the Greens throw them under the bus its election time….. but the Leader of the Greens is too busy enjoying the taste of power to ruin it so soon.

#44 John Dimas on 07.18.19 at 8:15 pm

More like BSO not BMO, 7.48% and they pay 2% on a GIC. Why would anyone take that ripoff offer. This is why I would rather save alot and get 3% in my maxed out RRSP, TFSA tax sheltered, tax free then put all my money in illiquid real estate and borrow from them.

#45 cowtown cowboy on 07.18.19 at 8:16 pm

I just got back from the Okanagan and while I was looking for a place, there was an add to stay in a 40yr old camper parked on guy’s driveway…or if you were really adventurous, you could rent out his yard for your tent….anything for a buck..

#46 Adineko on 07.18.19 at 8:18 pm

@#22.

Thanks:)

#47 crowdedelevatorfartz on 07.18.19 at 8:23 pm

@#39 Pontius Pilate
“You just back from the Trump rally in North Carolina?”
+++++++

Ahahahahaha
Wasnt it just a few short days ago you said you voted for a socialist in the 1960’s in Austria that hired former nazis?

And you accuse me of being a mindless follower…..

#48 Arctic Gringo: Qalunaaq on 07.18.19 at 8:31 pm

Rob McLister is stating that the stress test has, in fact, fallen to 5.19%.

https://www.ratespy.com/canadas-stress-test-rate-falls-first-time-in-three-years-071810107.

We knew that was coming, but a drop from 5.34% to 5.19% is not exactly a game-changer. – Garth

#49 Neo on 07.18.19 at 8:44 pm

Just in case you losers need more evidence that your elected government is a corrupt criminal organization.

$22/hr is average wage needed to afford a two-bedroom apartment in Canada: report

https://globalnews.ca/news/5510783/minimum-wage-renting-canada/

Bring on the guillotines

#50 Mattl on 07.18.19 at 8:53 pm

#32 Re: Mattl the Kelowna Realtor on 07.18.19 at 7:16 pm
d) $139,152

4.5% per year.

A balanced portfolio would have provided higher returns.

————————————————-

My post has nothing to do with RE vs ETF investing. But since you want to go down this path, they bought the condo with 35k down. Its called leverage. Their return is on the down payment. And they lived in it, comparable rents are in the 2200 range for a two bedroom if you want to do a full balanced vs condo breakdown.

You also have the selling costs overloaded, it won’t cost them 60k to sell a 520k place. Closer to 25k.

Oh ya one more thing, the gains are all tax free.

So why don’t you run the numbers again assuming they would have had to rent and would be investing 35k?

You Kelowna doomers really are the best. Its no wonder you missed the 20 year buying opportunity here, you don’t even have a basic understanding on how RE is acquired.

And I’m not a realtor, more of a RE bear. One mortage at less then 2x income. Most of net worth in a balanced.

Homes will go down here but you will miss the next buying opp just like you did the last, and the one before that, because you don’t understand the math. Hint: nothing is selling right now, dirt cheap mortages, tons of inventory and lots of deals to be made.

#51 50 YEARS OF MAPLE LEAF INCOMPETENCE! on 07.18.19 at 8:54 pm

Talk about unboring!

The Make Believes have now surpassed ……….(drum roll please !)………………………..

85 DAYS WITHOUT A LOSS!!!!!

Who would have guessed such greatness would emerge
from this formerly laughable franchise!?

Toronto, you are EPIC!!!

#52 Stan Brooks on 07.18.19 at 8:56 pm

Living in a tent? It was way overdue in the land of ignorant idiots. Back to the land, living like the natives 500 years ago.

Did they mention about abundance of garbage bins to raid in the ‘hood’?
And only a thousand bucks a month? It seems like a bargain to me….

I had living in a garage or a basement cell (6×7 feet, no window, 5 people in the basement, 1 shared bathroom/no shower/use wet napkins) at the top of my list but as I said countless times, this place really continues to surprise me.

Keep up the good work folks!

Even better times to come with the loonie in the sink, absolutely idiotic liberals/T2 as a true epitome of ‘stupid’, that term requires redefinition and our PM daily redefines it in a genre neutral way.

Combined with the french villa guy who wants to tax the crap out of ya, it really becomes quite amusing picture up to a point where you so happy to be able to escape that idiocy that that single fact alone makes you life suddenly quite fulfilling.

#53 Shawn Allen on 07.18.19 at 9:25 pm

Cash Notes in Circulation

The Bank of Canada data indicates that actual cash money notes in circulation has grown at 5% per year or so in the last five years.

https://www.bankofcanada.ca/rates/banking-and-financial-statistics/bank-of-canada-assets-and-liabilities-weekly-formerly-b2/

All else equal paper cash notes in circulation should probably rise with inflation and population growth and nominal GDP. And it has…

But all else is not equal.

Have most of us not shifted massively to debit cards and credit cards (for points even if paid off monthly) and to paying almost all bills electronically?

10 years ago, even five years ago we all visited ATMs regularly to get cash. Many of us no longer do. A hundred or two in my wallet can almost rot from lack of use. The number of ATMs at the large banks peaked a few years ago. They are being removed for lack of use.

I feel a little weird paying with cash these days when I occasionally do so. Especially if I use $50’s.

If millions of consumers carry less cash and if most businesses are taking in far less paper cash, who is holding onto $90 billion in paper cash?

Why is paper cash in circulation not dropping like a stone?

Sure certain contractors prefer cash but that was always the case and should be on the decline?

Many people still prefer to pay in cash. But millions have switched from cash to plastic, no?

#54 Ray on 07.18.19 at 9:25 pm

I read this blog daily and I am amazed at the work and generosity Garth contributes. I believe he is a higher spirit, reincarnated into this plane to help us all have a better go at it. A question I have, for the blog dogs, or perhaps a member of Garths team: Can a leveraged ETF be considered for a long-term hold? For example, “SPXL” is a 3X leveraged ETF for the S&P 500. When I plot it over the last ten-year period, it appears to have a growth slope rate of approximately 32%. I connected the lows with a trend line, then measured the slope as an annual percent growth rate. I know the leveraged ETFs will split during this length of time, but the number of shares should /will change accordingly. So, my question to the group is If I bought SPLX in mid 2009, would my investment really have grown by a factor of about 27 by now? I know there are large management fees, but this, I would think, be reflected in the current/subsequent share price at the time. This is a serious question for me, I truly do not know if I am missing something.

#55 Parksville Prankster on 07.18.19 at 9:41 pm

Rental markets continue to tighten, and the wage amount needed to acquire stable housing can be troublesome for many, as indicated here:

https://www.policyalternatives.ca/rentalwages

#56 Ace Goodheart on 07.18.19 at 9:58 pm

So, Toronto gut and Reno’s getting interesting. Usually it’s dump the bin out front and go at it hot and heavy with the hammer and crow bar till there’s nothing left but studs (sweating, bulging biceps studs standing in a pile of lathe and plaster and splintered wood – and oh those studs in the wall might still be there too).

Turns out this sort of behavior is kinda deadly.

Like pushing the EPS-5 button on a pre 1990’s Russian nuclear reactor.

The reason?

These old houses are full of asbestos.

It wraps around the duct work.

It is in the floor tiles. It was mixed with the plaster in the walls. It was sprayed into the spaces between the beams as insulation.

The average 75 + year old Toronto house is a veritable toxic waste dump. So hazardous you should be wearing one of those suits they handed out at the Nuit Blanche “Stranger Things” exhibit.

Forget about impressing the neighbourhood ladies as you rip out that old plaster. You are breathing in enough asbestos to kill a race horse.

Get out the Hepa combs and the encapsulation. A billion dollars of remediation later and you might be able to live there again.

We have an odd bird up here in The Mount.

The house that wasn’t.

If you take a walk down our storied streets, in a state of general decay and collapse since Kodak left, and now experiencing an urban renewal that can only come from an Express train station with a 9 minute commute to Union Station with trains every ten minutes, you will see something odd.

Double lots. A house. And then vacant land. Big enough for another house. Never built on.

The Toronto council has decided to densify us. They need more people for their subway, Express train and transit hub.

Which means it is now possible to easily sever land.

This is huge.

The average building lot here goes for north of 600k. So purchase a crap shack on one of these double wide lots, apply to sever, get approved, and you just made 600k.

Taxed at 1/2 because it is a capital gain.

For like maybe four hours worth of work and a 3500 dollar legal bill.

Easiest money you ever made.

And it is happening right now on the Mount.

Toronto’s most interesting neighborhood.

Ever….

#57 Mr White on 07.18.19 at 10:18 pm

The idea that an increase in the market value is wealth is flawed. Mark to market accounting is part of the cause of the 2008 financial collapse.

Cashing in on mythical increases in real estate values resulted by in massive and ultimately unsecured debt that could not be crystallized.

The idea that wealth is somehow lost on unrealized gains is well proven to be the cause of this inflationary increases in both money supply and cheap credit.

The imaginary idea that we are now bulletproof to financial meltdown is only promulgated by neo-Marxist economists.

The melt down will not be identical but the result will be similar.

Bottom line zero or close to it ‘wealth is gone.

#58 islander on 07.18.19 at 10:40 pm

I’m certainly not interested in seeing the NDP as an historical footnote. The ‘Liberals/Socreds’ were only to happy to turn BC into a giant real estate/Bitcoin operation.
https://vancouverisland.ctvnews.ca/b-c-posts-1-5b-surplus-as-tax-revenue-increases-and-real-estate-market-cools-1.4514439
“The previous Liberal government relied on a speculative real estate market to grow resources.
The British Columbia government ended its fiscal year in an operating surplus of $1.5 billion with the collection of more revenue from taxation and less money from a softening real estate market.”

#59 Paul on 07.18.19 at 10:49 pm

Listings like that on SS are becoming more frequent out here in BC. I told you years ago about the housing crisis for renters that was coming. NDP will get a majority next time. At least they’re trying to get a handle on the greed of homeowners and they’re tax free rental income from not claiming it. Chances of getting caught are zilch.
https://www.cbc.ca/news/canada/british-columbia/bc-finances-operating-surplus-1.5217333

#60 Cottingham a bargain on 07.18.19 at 10:49 pm

#38 Cottingham a bargain on 07.18.19 at 7:44 pm
The stress test has its days numbered . Between Tim Hudak, the cabal of CREA , TREB and the looming election , the pressure from all corners to abolish will be insurmountable .

Add in the business lost by chartered banks and CU ‘s to private , alternative lenders and their wish to see it go

Stress test is terminal and so is temporary dip in prices

You wish. – Garth
—————-

No I really don’t wish but I do wish that you would offer a retort commensurate with your knowledge and expertise .

Tell me how with such pressure from so many entities that my assertion is wrong

#61 Ponzius Pilatus on 07.18.19 at 11:01 pm

Fartz,
Read and weep
https://www.richmond-news.com/news/1-5-billion-b-c-surplus-for-2018-19-minister-says-1.23889984

#62 Al on 07.18.19 at 11:10 pm

A 700 k house in Victoria will not generate anywhere near the required amount of rent to cover a mortgage “to the gills”. If it’s a sfh and “only” 700, prolly not in a prime location in Victoria proper. Dump it. Yes the capital gains suck but it’s gonna get worse before it gets any better. It’s starting to sink in and everyone is listing their income property or renting their primary residence hoping to wait out the declining market. They could be waiting a decade for all they know, meanwhile their portfolio could’ve doubled.

#63 Ponzius Pilatus on 07.18.19 at 11:16 pm

Trudeau knows the future of Canada is in BC.
He’s courting Horgan:
https://www.vancourier.com/79m-for-new-buses-in-b-c-announced-by-pm-during-victoria-visit-1.23890123

#64 Billy on 07.18.19 at 11:36 pm

#54 Ray on 07.18.19 at 9:25 pm

Have a look at the Direxion educational video series – and understand what you’d be getting into. Leverage generally equates to higher volatility. Daily compounding is wonderful in a steadily rising market (opposite for the Bear fund), but not so much when it’s moving down or sideways.

https://www.direxioninvestments.com/jackjill

#65 Old Dog New Tricks on 07.19.19 at 12:32 am

Renting out yards and driveways is definitely becoming more common. Especially in tourist type towns. I’ve seen driveways in Kelowna going for 4-600 month in peak summer months. Not sure about a g note for a tent in some dudes backyard with no power and no water. But the whole idea makes sense. Why not offer it… No one is being forced to rent it.

#66 DON on 07.19.19 at 12:36 am

#12 Mattl on 07.18.19 at 5:26 pm

Blog dog Steve has some evidence of this. He noticed a 4-bedder house on Trafford Cres. in Oakville that was listed at $1.3 million two summers ago (and didn’t sell) just re-listed for $875,000. “Teranet says home prices are roughly flat,” says Steve. “Tell that to this guy.”

————————————————————-

Very hard to take someone seriously on RE when they use an inflated ask price as a data point. That Oakville home – what did is sell for last and what are the comps in the area? If it was a 900K home two years ago, and its a 900K home today, then wth does a 1.3MM listing (that didn’t sell, duh) tell you about the market? Nothing of course. Homes in Oakville may be down 30% but that listing price tells us nothing.

An example.

My cousin bought a Condo 8 years ago in a suburb of YVR for 330K. He recently listed it for 545K. Highest sale of same unit was 580K. He just sold for 520K.

Did he:

a) lose 60K
b) lose 25K
c) make 190k
******************

Did your cousin still have a mortgage prior to the sale?

#67 islander on 07.19.19 at 12:38 am

https://www.cbc.ca/news/canada/british-columbia/bc-leaky-condo-crisis-1.4609418

Remember it’s ‘buyer beware’! The Vancouver lower mainland condo market is a minefield.

21 years after B.C. inquiry into the leaky condo crisis, it’s still buyer beware!
“At its peak, B.C.’s leaky condo crisis affected more than 65,000 homes across the province.
Twenty one years ago, the province established the Barrett Commission of Inquiry into the Quality of Condominium construction in the Province of British Columbia to look into the problem.”
As of 2019, up to 200 leaky condo buildings still remain in the Lower Mainland, Kelowna and Vancouver Island because they were never properly repaired.”

For wage earners, renting in BC usually brings greater peace of mind than owning.
For the wealthy, it’s another story!

#68 Bobby on 07.19.19 at 12:49 am

For #36 BC NDP aren’t going anywhere,
You can always tell the myopic lefty, they will believe anything. The surplus is due solely to a plethora of additional taxes heaped upon British Columbians by the NDP. Sadly, they couldn’t run a hot dog stand. When the economy falters, and it will, and when the good residents of B.C. realize they are actually paying for all the supposed free stuff, the NDP will be gone for another generation. There is a reason why they only were able to form a minority government after 16 years in Opposition, the public see them as being incompetent. Let’s remember the Premier was appointed, not elected. Sad, but true.

#69 Mousey on 07.19.19 at 1:27 am

Can somebody send me whatever that dog just ate? Or even just the recipe…I could make it myself.

#70 Smoking Man on 07.19.19 at 1:33 am

Do not mix bozze and gummy bears from a lost Vegas dispensary.

It’s not bats you’re trying to swat that scare you.

Aggresive fast moving sloths showing thier teeth and you cant run.

Wake me up mom..

#71 DON on 07.19.19 at 1:46 am

#50 Mattl on 07.18.19 at 8:53 pm

#32 Re: Mattl the Kelowna Realtor on 07.18.19 at 7:16 pm
d) $139,152

4.5% per year.

… Homes will go down here but you will miss the next buying opp just like you did the last, and the one before that, because you don’t understand the math. Hint: nothing is selling right now, dirt cheap mortages, tons of inventory and lots of deals to be made.
******************

What do you consider to be a deal in terms of income 4 times earnings or …7 ? And it doesn’t appear that the cheap mortgages will be going away any time soon (at least a year). Tons of inventory is not an incentive to buy but maybe a incentive to wait and see how things play out a bit more before jumping into the biggest financial purchase in a life time based on recency thinking. Why not wait a little longer? Not like prices are going up at the moment. Catching a wave or catching a falling knife.

#72 Smoking Man on 07.19.19 at 1:46 am

DELETED

#73 DON on 07.19.19 at 2:03 am

#43 crowdedelevatorfartz on 07.18.19 at 8:14 pm

@#36 BC NDP isnt going anywhere
“Liberals are finished for good. They need to rename / rebrand the party if they ever want to make a comeback.”
*****

While I agree that Gordo Campbell and Christie Cluck have burned the Liberal name (kinda like Doogie Ford for the Cons in Ont?) to the ground.
As for a Party name?
Social Credit is still available if Bill Vanderslime is willing to sell it…..
Well, once again an NDP (dipper) claps their hands in smug self assurance.
I know counting is hard for the NDP but lets not forget they are in a MINORITY govt….
If the Greens throw them under the bus its election time….. but the Leader of the Greens is too busy enjoying the taste of power to ruin it so soon.
***************
Weaver going after the votes of disillusioned BC Liberal voters as there seems to be a mountain of dirt swept under the carpet from the previous government. He also benefits from any inquiry. He came out as the first party to call for it in an official manner. Gotta love politics.

#74 Smoking Man on 07.19.19 at 2:04 am

My late mom was a Greek.

She lived this. My first born his birthday today July 19th. Her brother died a day earlier. Aids.

Grandmas pain was short lived .

For mom and phyco grandma that would tie me and my cousins to the poll in the basement for being boys.

We still love her . She made us men. Miss you grand ma.

https://youtu.be/QskFT7AaKH0

#75 DON on 07.19.19 at 2:26 am

Wow…

Yesterday…oil down to $55-56 down from recent high as Trump softens stance on Iran.

Today…Trump is reporting via Bloomberg that the US shot down an Iranian drone, Iran denies.

Oil price increases and stock market increases.

And this convenient note from Bloomberg:
https://www.bloomberg.com/news/articles/2019-07-18/trudeau-gains-momentum-from-economy-boost-ahead-of-fall-election?srnd=premium-canada

…? How much did the feds give to media this last year?

#76 Stan Brooks on 07.19.19 at 3:45 am

#53 Shawn Allen on 07.18.19 at 9:25 pm

It is simple: Annual inflation at 8-10 %, 5 % of it in cash circulation growth, the rest in credit use growth/plastic.

But surely official ‘inflation’ is 2 %. Of course it is all lies.

#77 Howard on 07.19.19 at 5:37 am

#60 Cottingham a bargain on 07.18.19 at 10:49 pm

Tell me how with such pressure from so many entities that my assertion is wrong

—————————————

You made a prediction, not an assertion.

And a prediction is neither right nor wrong, until it either happens or doesn’t.

#78 Juggs on 07.19.19 at 6:01 am

Saltspring Island is famous for it’s dopey, smokey, mushroom eating burnouts, flakes and many who hate any idea but thier own. There are sun worshippers, witches, satanic ashrams, much underarm and leg hair and way too much mind altering stench dampening musk patchouli. Don’t them to harshly, beating bad dogs and fools is a time waster.

On the upside, the meltup side, our dear FED is on it’s knees before the Great Donald.

https://www.cnbc.com/2019/07/19/us-stocks-dow-futures-aggressive-easing-fed.html

I predict that temples will emerge in his honour. People will pray to him, worship him.

#79 Rational Optimist on 07.19.19 at 7:15 am

Data point from Kitchener-Waterloo, né Berlin, but formerly Canada’s Tech Triangle (or something) and western anchor of the Toronto-Waterloo Tech Corridor:

A coworker reported yesterday that she and her husband were going to delist their rental property after the first weekend produced only one offer, which was merely at their asking price.

The real estate agent advised them to relist “in September or October” when “people return from holidays.” Apparently he thinks pricing low to generate a “bidding war” will still be the right strategy then- as it was in July, by the way- it was the market’s fault, not his, that it didn’t work.

I didn’t make any comment, and have no comment to make. I heard similar things here last year, but this is the first this summer. How much were they expecting over their ask, by the way? Thirty or forty more.

#80 Ray on 07.19.19 at 7:54 am

#64 Billy on 07.18.19 at 11:36 pm
#54 Ray on 07.18.19 at 9:25 pm

Have a look at the Direxion educational video series – and understand what you’d be getting into. Leverage generally equates to higher volatility. Daily compounding is wonderful in a steadily rising market (opposite for the Bear fund), but not so much when it’s moving down or sideways.

https://www.direxioninvestments.com/jackjill
————————————-
Thank You for this. I understand volatility is a concern. If I ignore the volatility, is not the chart a plot of ask/bids through time ? Is the cost of leverage not absorbed in the stock price at the time, the cost of doing business? So , is the approx 32% annual growth rate, as indicated by the chart true?

#81 IHCTD9 on 07.19.19 at 8:14 am

#79 Rational Optimist on 07.19.19 at 7:15 am

A coworker reported yesterday that she and her husband were going to delist their rental property after the first weekend produced only one offer, which was merely at their asking price.
____

Seems dumb that a buyer would get shot down after offering the asking price. Buddy goes to the open house, puts some time and mental energy into looking/assessing the place, and when he is willing to pay the asking price, “ah sorry, not enough”.

Why even bother attaching a price at all? Sellers should be legally obligated to sell at the price listed on the ad. That would cut out a lot of games.

#82 IHCTD9 on 07.19.19 at 8:25 am

#61 Ponzius Pilatus on 07.18.19 at 11:01 pm
Fartz,
Read and weep
https://www.richmond-news.com/news/1-5-billion-b-c-surplus-for-2018-19-minister-says-1.23889984
___

I weep for the taxpayers of BC who have evidently been taxed way more than needed by their “government”.

Half the reason they got this surplus is because you guys are paying 4-5X more for car insurance than the rest of the country.

#83 oh bouy on 07.19.19 at 8:51 am

@#56 Ace Goodheart on 07.18.19 at 9:58 pm
So, Toronto gut and Reno’s getting interesting. Usually it’s dump the bin out front and go at it hot and heavy with the hammer and crow bar till there’s nothing left but studs (sweating, bulging biceps studs standing in a pile of lathe and plaster and splintered wood – and oh those studs in the wall might still be there too).

Turns out this sort of behavior is kinda deadly.

Like pushing the EPS-5 button on a pre 1990’s Russian nuclear reactor.

The reason?

These old houses are full of asbestos.
_______________________________

don’t forget the layers of lead based paint.
maybe the most dangerous hazard

#84 Sail Away on 07.19.19 at 9:31 am

#54 Ray on 07.18.19 at 9:25 pm

A question I have, for the blog dogs, or perhaps a member of Garths team: Can a leveraged ETF be considered for a long-term hold? For example, “SPXL” is a 3X leveraged ETF for the S&P 500. When I plot it over the last ten-year period, it appears to have a growth slope rate of approximately 32%. I connected the lows with a trend line, then measured the slope as an annual percent growth rate. I know the leveraged ETFs will split during this length of time, but the number of shares should /will change accordingly. So, my question to the group is If I bought SPLX in mid 2009, would my investment really have grown by a factor of about 27 by now? I know there are large management fees, but this, I would think, be reflected in the current/subsequent share price at the time. This is a serious question for me, I truly do not know if I am missing something.

————————————-

Ray, what you see is what you get. You would have done fantastically well with SPXL since 2009. If you recognize the risks, there’s no reason not to buy it as a long term hold.

#85 Stan Brooks on 07.19.19 at 9:39 am

Peoplekind has new fancy organic birdie socks.

Rejoice sheeple, you are in safe hands.

#86 Stan Brooks on 07.19.19 at 9:39 am

https://ca.finance.yahoo.com/news/trudeau-tusk-open-talks-eu-133653116.html

#87 Leo Trollstoy on 07.19.19 at 9:42 am

Late 90s 1/1 Yonge St condos sub-200 all day long

Easy $

#88 jess on 07.19.19 at 9:48 am

oh the irony! relocations

protested the demolition but General Motors and the city of Detroit leveled a neighborhood to build a factory.

https://www.freep.com/picture-gallery/news/local/michigan/2018/11/26/poletown-detroit-neighborhood-demolished-gm-plant/2115707002/

https://www.nbcnews.com/news/us-news/thousands-gm-workers-soon-be-closed-u-s-plants-face-n966801

#89 Glengarry Girl on 07.19.19 at 9:53 am

The offering to camp on private land for a nominal fee may be unusual to some, but not to me, I live a Nomadic Lifestyle. My travel trailer was actually a Prop for the National Geographic show called Doomsday Prepper. My husband and I camp for most of the past 2 years in US and Canada and use different kinds of sites ranging from Resort RV parks to Free Bureau of Land Management camping. We have had and could own a home and work anywhere in the World. My husband is a high level Consultant in IT. We have mostly met cool and adventurous people along our journey. This winter we camped for $8 a day for 2 months on a citrus orchard in Florida, salt water pool, one hour to Ava Maria Beach. Boondockers Welcome is a growing community of members offering their land for various levels of camping. This Community of Nomads and full time travelers are very organized with many options for health care, mail and package delivery, insurance etc. There are some eccentric folks for sure, but I like it. Mostly more interesting, more intelligent, more inclusive and adventurous….don’t knock it til you try it.

#90 Oakville Rocks! on 07.19.19 at 9:54 am

#12 Matt is right – this Oakville listing says nothing about the market.

1.4 Mill in the summer of 2017 would have been quadruple the price paid for the place in 2008 (as per Zoocasa).

The only houses in this area that seem to sell for more than 1 Mil have been renovated or torn down with a new build.

At 875K this house in this area might still be somewhat over valued (the house has a huge back yard backing onto Speers road businesses, lots of room for tents) It looks like it is now listed by Sam McDadi and his team so who knows. Sam can afford to sit courtside at the Raps so he must be successful selling houses.

As a point of interest, Florence Meats (which is in the backyard of this house on Speers Rd) is a high quality South African butcher – if you are so inclined.

So what does it prove – when the market is hot some people will take their shot hoping to find the greater fool. No one bought in at the higher price so there is hope!

Lastly, lots of good advice found in Jacob’s story – thanks.

#91 Love Guru's Dad on 07.19.19 at 10:10 am

#39 Ponzius Pilatus on 07.18.19 at 7:51 pm
#81 crowdedelevatorfartz on 07.18.19 at 8:46 am
@#59 Pontificating Proletarian
” No wonder most African countries went communist during the Cold war.”
+++++
Ignorance was bliss.
And they African “leaders” have done a bang up job of running things themselves havent they?.

The majority of African countries are now failed, corrupt, burnt out shells of their former colonial selves with endless proxy wars, disease, famine and pestilence forcing millions of refugees to swarm from country to country overwhelming the soon to be next failed state…
————————
Here’s a little truth about Africa. Its a song about the coal trains in South Africa. Listen to the words.

https://www.youtube.com/watch?v=7lMQWnRBQr0

#92 millmech on 07.19.19 at 10:49 am

#71 Don
Just wait a while, the Okanagan has at least 30%-50% decline still to go, you can get houses for around $250k as of now and cheaper houses to come on the market this fall/winter.

#93 Ray on 07.19.19 at 10:51 am

#64 Billy on 07.18.19 at 11:36 pm
#54 Ray on 07.18.19 at 9:25 pm
Have a look at the Direxion educational video series – and understand what you’d be getting into. Leverage generally equates to higher volatility. Daily compounding is wonderful in a steadily rising market (opposite for the Bear fund), but not so much when it’s moving down or sideways.
https://www.direxioninvestments.com/jackjill

Thank You for this. I have read the legal disclaimers before about leveraged ETFs being volatile. That aside, my question is: Is the chart representative of the performance of the ETF? The chart is supposed to be a plot over time of the historical prices of the equity. If this is so, then the long term performance of the leveraged ETF appears to be in the 30% / year plus range. Is there something unique about the leverage process within the ETF that negates the accuracy of the charts? Is there something fundamental I am missing?

#94 Juggs on 07.19.19 at 10:56 am

PS. Larry Fink, Blackrock says, “You’re nuts to be underinvested in equities”.

https://www.cnbc.com/2019/07/19/blackrock-ceo-larry-fink-us-stocks-will-trend-even-higher.html

“We deserve it”, Larry says if the United States. ‘Damn right’, I say. There’s no doubt, in a world full of incompetant, the USA is a singularity, the event horizon, nirvana. Travel the world and there is no doubt. As imperfect as the western world can be, we are also carrying the rest if the world on our shoulders. Without us, chaos. Like it or not. Invest in the empire or die poor.

#95 NoName on 07.19.19 at 11:26 am

New twitter layout is very bad, for what reason I can just assume, but we wont go there now.

to put thing in perspective
Few yrs back an opple had a savire problems with one of their products so to “hide” problem they de index product help pages and made icons and fonts huge and pushed all negative comments to the bottom, so if you had problem would have hard time finding other product users with same problem… At the best you could read one or two entries per page, and then you could not just scroll down and go to next one, they made you click for next two or one if its longer.

I am very disappointed with what I am seeing what big media and tech does.

My scr res is something x 720, i cant see $#!7 now, if this is a progress ill gladly take regress.

scr grab 1
https://imgur.com/a/t9Ytvxj
scr grab 2
https://imgur.com/a/CWnGcSG

#96 jess on 07.19.19 at 11:27 am

“no big deal?….least 30% of all it spends through ineffiencies.” what do you mean by ineffiencies?

and how did you get that number?

when the truth comes out the people start distancing themselves from knowning the knowns
https://www.cbc.ca/news/canada/toronto/toronto-cafe-cannabis-dispensaries-1.5217307

#97 Mattl on 07.19.19 at 11:29 am

#71 DON on 07.19.19 at 1:46 am
#50 Mattl on 07.18.19 at 8:53 pm

#32 Re: Mattl the Kelowna Realtor on 07.18.19 at 7:16 pm
d) $139,152

4.5% per year.

… Homes will go down here but you will miss the next buying opp just like you did the last, and the one before that, because you don’t understand the math. Hint: nothing is selling right now, dirt cheap mortages, tons of inventory and lots of deals to be made.
******************

What do you consider to be a deal in terms of income 4 times earnings or …7 ? And it doesn’t appear that the cheap mortgages will be going away any time soon (at least a year). Tons of inventory is not an incentive to buy but maybe a incentive to wait and see how things play out a bit more before jumping into the biggest financial purchase in a life time based on recency thinking. Why not wait a little longer? Not like prices are going up at the moment. Catching a wave or catching a falling knife.

————————————————————–

Don I was addressing the group of Kelowna posters that pop in here and tell us about the coming doom in this market. They lie about what’s actually happening here – most notably using MOM in place of YOY. This is a VERY seasonal market and MOM is a stupid metric to use and they know it (I think).

By all means wait as long as you want. These posters that are calling for doom missed an incredible buying opp in THIS market. Adjusted for inflation, homes here were essentially flat from 2008-2015. The boom came late, and was short. Homes were pretty affordable – I’d argue they still are but that’s debatable. You can get lake view, walk to beach, pool, 1acre lot, 20 mins from downtown for under 900K. About the cost of a basement walkout on a 2500 sqft lot in Maple Ridge. You can still get a starter home in West Kelowna for under 500K.

Believe it or not, lots of families have over 100K family income, so these prices are not super insane, especially at today’s interest rates. And rents here are ridiculous. So a ‘deal’ is relative to the situation of the buyer. Lots of us buy homes to live in for a long time, it is not about realizing the actual best price possible. We just bought a home we could afford loved – I truly couldn’t care less what it’s worth between now and when we decide to sell. What good or harm does it do me if it goes up or down by 20%?

Here is my main point…lots of folks have been waiting since 2008 and that strategy has not worked out very well. By all means try and time the market. Prices will continue to fall until they don’t, when it turns – whenever that is, could be 10 years – inventory will become tight and we will be in the next cycle. I have a very hard time believing that those that have been waiting since 2008 and missed the last bottom will be able to see the next one.

#98 Damifino on 07.19.19 at 11:35 am

#68 Bobby

Let’s remember the Premier was appointed, not elected. Sad, but true.
—————————

All Premieres govern at the pleasure of Her Majesty’s representative in the former colonies. Sad, but true.

#99 IHCTD9 on 07.19.19 at 11:52 am

#83 oh bouy on 07.19.19 at 8:51 am

The reason?

These old houses are full of asbestos.
_______________________________

don’t forget the layers of lead based paint.
maybe the most dangerous hazard
___

Even decades old guano and bird $h!t is really dangerous stuff. Tearing the guts out of any 100+ year old house should be done with caution.

In my old farm house, I found asbestos “linoleum” under the carpet in one room, and pretty much all the old original trim I’ve removed over the years had at least 1 coat of lead paint.

#100 James on 07.19.19 at 11:53 am

#78 Juggs on 07.19.19 at 6:01 am

Saltspring Island is famous for it’s dopey, smokey, mushroom eating burnouts, flakes and many who hate any idea but thier own. There are sun worshippers, witches, satanic ashrams, much underarm and leg hair and way too much mind altering stench dampening musk patchouli. Don’t them to harshly, beating bad dogs and fools is a time waster.

On the upside, the meltup side, our dear FED is on it’s knees before the Great Donald.

https://www.cnbc.com/2019/07/19/us-stocks-dow-futures-aggressive-easing-fed.html

I predict that temples will emerge in his honour. People will pray to him, worship him.
______________________________________
Tech still needs diversification, I limit my tech exposure.
We have a few similar islands up at my cottage here where I can see them just off Lake Joseph Road. The party time just off Hamer Bay road is insane. These are extremely wealthy people with bad habits.

#101 Tater on 07.19.19 at 11:56 am

Ray (and anyone else interested in lever d ETFs)

In order for these products to perform the way you like, you need a high Sharpe ratio on the underlying index. Since inception SPXL has returned 33% per year, vs 14% for the SPY. So, you have had a return 2.35x greater. Over this time period, the Sharpe for SPY has been 1 vs the historical average of 0.5.

So, under the best conditions ever for this product, it hasn’t he the 3x you’d hope for. In a period of normal historical volatility, the underperformance would be even worse.

#102 Shawn Allen on 07.19.19 at 12:05 pm

The Stress Test

The stress test mortgage rate based on the average of the big banks posted rates is total B.S. and never should have been implemented.

2% over the actual rate is perfectly fine. But a test based on posted rates that are not actually charged and that apparently exist mostly to rip people off on interest-rate differentials to break a mortgage is total B.S.

The Bank of Canada and or whoever designed the stress test is arguably risking being complicit in potential collusion by referencing that rate.

The banks have huge incentive to manipulate that posted rate without it affecting the rates they actually charge. It’s bizarre.

Just because the high stress test rate helps to push borrowing down and push house prices down which may be a laudable goal is no reason to support or condone such a B.S. approach.

The stress test should be linked to market interest rates. Not to fake interest rates.

#103 Linda on 07.19.19 at 12:54 pm

Cash has been stigmatized. Once a sign of true financial success, it is now looked upon as only used by those who are ‘too poor’ to afford the fees associated with ‘instant’ technology – payment via cell phone, credit or debit card. Cash is now associated with the underground economy & those who use cash on a regular basis, particularly if they are carrying a large sum, are often subject to scrutiny. Even deposits for large amounts are checked as it is automatically presumed that such sums MUST be due to some sort of illegal activity.

I find it ironic that so many champion the end of cash, given that the cost of not using it is higher for the consumer. The argument that cash enables criminal activity to flourish ignores that criminal activity is thriving in the cashless society. One no longer needs a gun & gang to steal; just sharpen up those hacking skills & with the push of a button financial assets can be transferred from the legal owners account to your criminal one. Even better, it may well be unrecoverable & untraceable if you are smart enough to hide your electronic trail.

Speaking of electronic trails, I also find it ironic that those who champion the end of cash are apparently o.k. with their every financial transaction being recorded, mined for data & tracked by both retailers & the government. It takes mere seconds for bots to recognize & tailor a response to Internet usage; use a site even once & the next time you visit your previous preferences are retrieved & the user is presented with suggestions or advertising custom made for the target audience based on the previous visit.

Odd how so few are concerned about the loss of privacy in the cashless society. Far as I can tell, most don’t even realize that privacy no longer exists. Certainly cell phone users don’t seem to realize that those standing right beside them can hear their conversations. I guess they think a ‘cone of silence’ surrounds them:)

#104 Sail away on 07.19.19 at 12:59 pm

#54 Ray on 07.18.19 at 9:25 pm

——————————

Ray, one thing to keep in mind, especially with a leveraged product, is your entry point. The Nasdaq is at an all-time high right now. You’ll have to make your own decision, but I personally never ever buy at a high (haha- now I’m older and smarterer than young Sail Away, that is). Patience is your friend.

I’ve been busy taking profits, rebalancing and stockpiling cash during these heady times.

And yes, the SPXL chart does reflect reality: it has returned an average of 33% in the last 10 years.

#105 Stan Brooks on 07.19.19 at 1:16 pm

#102 Shawn Allen on 07.19.19 at 12:05 pm

The stress test should be linked to market interest rates. Not to fake interest rates.

—————————-

Absolutely.

Market interest rates on MONEY, not on paper garbage manipulated by the incompetents at BoC would be north of 8 %.

For suppression of cash – the explanation is simple. Private banks ‘money’ is pushed down your throat as credit so hard earned cash is made almost criminal.

Who do you think owns this place and your labour? You? Don’t make me laugh.

#106 Shawn Allen on 07.19.19 at 1:28 pm

Cash versus Cash

#103 Linda on 07.19.19 at 12:54 pm

Cash has been stigmatized.

***************************
Good points. But paying with a cheque or debit card or electronic transfer is paying with cash.

Cash on a balance sheet always included bank deposits.

It is paper cash that has been stigmatized.

I think it is correct and appropriate that paper cash become obsolete and holding large amounts of paper cash should be suspect.

#107 SoggyShorts on 07.19.19 at 1:29 pm

#103 Linda on 07.19.19 at 12:54 pm

I love not having a wallet.
I also couldn’t care less if the gov or companies know my spending habits- in fact, I welcome it. I’m going to get bombarded with ads no matter what so isn’t it better that the stuff is actually relevant to me?

#108 Yanniel on 07.19.19 at 2:04 pm

#54 Ray on 07.18.19 at 9:25 pm

“If I bought SPLX in mid 2009, would my investment really have grown by a factor of about 27 by now?” Ray

Yes, but if you bought SPLX in mid 2008 (just a year earlier), your initial investment would have gone to almost zero in a few months. Try to understand how this work a little better. Without any pretense, we recently bounced some ideas back and forth about this topic.

See below in chronological order (I might have missed some).

https://www.greaterfool.ca/2019/07/15/bid-ask/#comment-659226

https://www.greaterfool.ca/2019/07/15/bid-ask/#comment-659283

https://www.greaterfool.ca/2019/07/16/homeless/#comment-659360

https://www.greaterfool.ca/2019/07/16/homeless/#comment-659408

https://www.greaterfool.ca/2019/07/16/homeless/#comment-659415

https://www.greaterfool.ca/2019/07/16/homeless/#comment-659419

https://www.greaterfool.ca/2019/07/16/homeless/#comment-659423

https://www.greaterfool.ca/2019/07/16/homeless/#comment-659444

https://www.greaterfool.ca/2019/07/16/homeless/#comment-659453

#109 Yanniel on 07.19.19 at 2:11 pm

#54 Ray on 07.18.19 at 9:25 pm

“If I bought SPLX in mid 2009, would my investment really have grown by a factor of about 27 by now?”

Yes, but if you bought SPLX in mid 2008 (just a year earlier), your initial investment would have gone to almost zero in a few months. Try to understand how this work a little better. Without any pretense, we recently bounced some ideas back and forth about this topic.

See below in chronological order (I might have missed some).

https://www.greaterfool.ca/2019/07/15/bid-ask/#comment-659226

https://www.greaterfool.ca/2019/07/15/bid-ask/#comment-659283

https://www.greaterfool.ca/2019/07/16/homeless/#comment-659360

https://www.greaterfool.ca/2019/07/16/homeless/#comment-659408

https://www.greaterfool.ca/2019/07/16/homeless/#comment-659415

https://www.greaterfool.ca/2019/07/16/homeless/#comment-659419

https://www.greaterfool.ca/2019/07/16/homeless/#comment-659423

https://www.greaterfool.ca/2019/07/16/homeless/#comment-659444

https://www.greaterfool.ca/2019/07/16/homeless/#comment-659453

#110 jess on 07.19.19 at 2:34 pm

So why should you care who’s through the keyhole?

the “forever home” buyer beware

Article / 28 Jun 2019
Offshore freeholders use “legalised extortion” against UK homeowners

New analysis shows how tens of thousands of leaseholders are at the mercy of unscrupulous freeholders who hide behind anonymous companies

The first time Keith heard of Abacus Land was when he received a letter telling him he owed them ground rent for his leasehold flat. The Jersey based anonymous company was at least the third company he had been asked to pay since he bought his flat in Kent in 2014.
Keith resized.png Keith Hince – Leaseholder

“I didn’t know anything about the leasehold business before I bought the flat. I didn’t know that when the lease runs out they can take your property from you, I didn’t know they can charge you for painting your front door or changing your carpets. I didn’t know I’d be sending money off to a tax haven every year until I can sell the flat.”

Keith isn’t alone. When Katie bought her house in Cheshire through the Government’s Help to Buy scheme, she thought it would be her “forever home”. Like Keith, she was told she would have the opportunity to buy the freehold.

https://www.globalwitness.org/en-gb/campaigns/corruption-and-money-laundering/anonymous-company-owners/legalised-extortion/

#111 jess on 07.19.19 at 3:06 pm

and this guy wants to be prime minister?

https://www.theguardian.com/politics/2019/jul/16/boris-johnson-accused-of-costing-taxpayers-1bn-on-london-mayor-projects

#112 Yanniel on 07.19.19 at 3:55 pm

Apologies for the duplicate comment.

Three demerits. – Garth

#113 Joy Sinclair on 07.19.19 at 3:57 pm

Linda, when people realize that the less choices they have means less freedom then it will be too late. People have to always learn the hard way.

#114 Yanniel on 07.19.19 at 4:27 pm

#112 Yanniel on 07.19.19 at 3:55 pm

Apologies for the duplicate comment.

Three demerits. – Garth

—————————

Deserved.

#115 Jack Manning on 07.19.19 at 4:35 pm

Jess, why would Britain want to be under the thumb of the EU and their tyranny and dictatorial power grab socialist bureaucracy. Britain should keep its own currency and sovereignty.

#116 Hogtown Harry on 07.19.19 at 4:39 pm

#100 James on 07.19.19 at 11:53 am

“We have a few similar islands up at my cottage here where I can see them just off Lake Joseph Road. The party time just off Hamer Bay road is insane. These are extremely wealthy people with bad habits.”

Is your cottage on Lake Joseph? My buddy, a retired CEO own an entire bay on Lake Joseph (so nobody could build there, hence privacy). He has a three boat garage and a guest house that would itself make most people salivate. The main home is roughly 30,000 sq ft and sits on a mountain of granite… no bad habits on his part but his kids have wild parties in the guest house.

#117 Sail away on 07.19.19 at 4:40 pm

#111 jess on 07.19.19 at 3:06 pm

and this guy wants to be prime minister?

https://www.theguardian.com/politics/2019/jul/16/boris-johnson-accused-of-costing-taxpayers-1bn-on-london-mayor-projects

—————————–

I think he’s running for king, but am a little fuzzy on the English political system.

#118 Stan Brook's Fan Club on 07.19.19 at 4:45 pm

#76 Stan Brooks on 07.19.19 at 3:45 am

“It is simple: Annual inflation at 8-10 %, 5 % of it in cash circulation growth, the rest in credit use growth/plastic.
But surely official ‘inflation’ is 2 %. Of course it is all lies.”

Stan, welcome back and please run for office and put this country back on track!! Canada needs you Stan and it is your duty to help it!!

#119 Billy on 07.19.19 at 7:53 pm

#54 Ray on 07.18.19 at 9:25 pm

Haven’t researched all the technical commentary about leveraged ETF’s, but have a look at the corresponding 3X Bear ETF SPXS over the same period. It has dropped far more than SPLX has risen. That’s enough for me to steer clear.

#120 Dominoes Lining Up on 07.20.19 at 11:00 am

Heard some interesting observations this week from friends who are looking for rental homes in Toronto.

Seems like the market is very slow and rentals are sitting for weeks and months (not apartments, just houses)

And according to my two friends, they have looked at twenty properties listed on MLS as rentals in the past week. But when they arrived on site, 15/20 actually had ‘For Sale’ signs on the lawn, nothing about rental. And they tell me most of these homes are already emptied out.

So the Toronto sales market is obviously cooling very quickly now, and sellers are getting desperate just to have some kind of cash flow, so adding rental as a possibility to existing listings.

That sure sounds like a canary in the coal mine….

#121 Glengarry Girl on 07.20.19 at 1:30 pm

#120 it sure is a canary in a coal mine. I landed in Seattle just before the housing crash in 2008 looking for an executive home to rent. There were little to no inventory, real estate agents treated us like schmuck because we wanted to rent a house, not buy. It was nuts,we finally found a reluctant and greedy home owner that could not sell at the top of the market and decided to rent to us. During the next 18 months the air came out of the tires. The homes in that million dollar neighborhood plummeted by 30%. Very well documented by the Seattle Bubble blog. My landlord’s that bought 2 houses speculatively went bankrupt along with many others. We continued renting 7 executive homes throughout the US over those correction years. Most were reluctant home owners, underwater, not able to sell, had to rent it out. It was a deal for us to rent homes at 1800 to 2400 per month, no commitment, totally mobile, moving for more and more pay and opportunity. My husband built his skills and credentials during that time period which gives us the Freedom we have today. We continued renting 3 more condos after downsizing from large executive homes until all of our kids moved home to Canada. Now we are free birds traveling full time. We know very well the signs of a housing bubble in all of its stages. We are watching Ontario like hawks hoping to swoop in and buy after the correction. We consult our kids to hold off from their desire to buy now…be patient little ones.