Really?

Since this election is pivoting on house lust, let’s look at one more key promise: a return to 30-year mortgages.

Those of you who can remember the dark, stormy Harper years will recall Ottawa briefly lost its mind and told CMHC to insure people buying houses with 0% down and mortgages amortized over 40 years. I was a Conservative MP on the House of Commons Finance Committee at the time, and objected enough to cause a Parliamentary hearing into the proposal. Not only did my colleagues eventually vote me down, but this was one more reason the Prime Minister’s Office decided I’d become an enemy of the state.

Predictably, the changes helped create a housing disaster. The government retreated over the next two years as the financial crisis hit. Zero-down was gone, and the max amortization was reduced over time right down to 25 years, to ensure (a) people were borrowing within their means and could repay the loans and (b) the real estate market would go from boil to simmer.

Now the Conservative leader wants to return to long ams, at least for first-time buyers.

What does this mean? Why would it be a good (or bad) idea?

First, the math.

Mortgages are amortized over a long time so people can afford the payments, yet reduce their debt in a meaningful way. Payments are front-end-loaded, meaning in the early years more of each blended payment is interest and in the final years most is principal. (So, because Canadians move every eight years on average lenders make a boodle.) The longer the amortization, the more interest is collected on the loan and the harder it is to retire the debt. But long ams also reduce monthly costs, which is exactly why they are being proposed.

The logic is that lower monthly payments thanks to longer amortizations will render homes more affordable. But, of course, this increases demand and the borrowing potential of buyers. So houses rise in value. Payments may be lower. Debt grows.

Practically speaking, here’s what it means to a typical moister couple borrowing $500,000 to buy a weensy one-bedroom condo in downtown Toronto or Vancouver. The monthly payment (5-year fixed loan, 2.87%) would be $2,333 for a 25-year amortization and $2,068 for one of 30 years.

Nice. Over sixty months  they save a total of $15,900.

But after making $124,114 in payments on the longer-financed mortgage the kids still owe $443,331 five years later. If they had a 25-year mortgage the debt would be reduced to $426,300. So, they pay $15,900 less and end up owing $17,031 more. The ‘savings’ are illusory.

The Conservative leader countered this by saying that young people typically make more money as they progress in their careers, therefore paying less and owing more is just fine with him. That sounds oddly un-conservative, but I get the drift. The trouble is that paying down less of the debt means a reduction in the proceeds when the condo is inevitably sold – and it will be, since nobody can survive more than a few years in a 600-quare-foot concrete box.

In general a 30-year mortgage only makes financial sense when the borrowers take the monthly savings ($265 in this case) and dump them into a TFSA or use the funds  to make an annual prepayment against the principal owning. If it gets spent on vape pens, tats and cellphone bills, not so much.

Meanwhile, mortgage rates are unlikely to stay where they are, despite the popular meme. We’re at the bottom of the rate curve and five years from now – when a 30-year mortgage comes up for renewal – a great deal could change. The time to trash debt is when rates are low. Either do that with a shorter amortization or by savings/investing the difference.

But this is not the main event. That’s housing demand. The more of it, the higher prices rise.

That’s why higher homebuyer plan RRSP withdrawal limits, the shared-equity mortgage, enhanced first-time buyer tax credits, a gutted stress test and longer amortizations are all bad ideas. They fail the task of making houses into affordable homes, just as they delight commissioned realtors and anxious builders.

The higher prices rise and the more indebted our society becomes, the worse the outcome. You’d think people running to be prime minister would care. Really.

141 comments ↓

#1 Not So New guy on 09.24.19 at 3:17 pm

It seems the political pendulum swings between the government fearing/respecting the people and the people fearing/resenting their government.

I think we are now in the midst of the pendulum swinging towards the latter.

Probably the last time the Feds actually feared the people was during the rise of the Reform Party. With the Liberals in power, they had to pivot to steal Reform policies and ideas for fear of losing power

And to today:

So if the country votes conservative we basically continue to get the status quo, especially with regards to housing.

If the country votes Liberal, we still get the status quo but Scheer gets fired and we get a better alternative on the right. The Liberals will run with their Liberalism no matter who they have as a leader

#2 The Goddard Report on 09.24.19 at 3:19 pm

Retired BCTV News Reporter – Harvey Oberfeld with an interesting look at Maxime Bernier being included in the debates:

https://www.howestreet.com/2019/09/18/good-move-to-include-ppc-leader-maxime-bernier-in-debates/

#3 James on 09.24.19 at 3:40 pm

The Conservative leader countered this by saying that young people typically make more money as they progress in their careers, therefore paying less and owing more is just fine with him. That sounds oddly un-conservative, but I get the drift. The trouble is that paying down less of the debt means a reduction in the proceeds when the condo is inevitably sold – and it will be, since nobody can survive more than a few years in a 600-quare-foot concrete box.
____________________________________________
At the phase when my wife and I graduated from University our first purchase was a Condo. An 890 sq. ft. concrete box in the Lib Village area. Paid way over what it was worth. The Condo living lifestyle leaves much to be desired I might add. We could afford the unit however the fees kept creeping up and the neighbours liked ganja a little too much for our liking. Like every evening! It permeates throughout the floors. The constant noises and lack of privacy where you can hear your neighbours TV and their fights. As you so eloquently stated nobody can survive in a concrete box more than a few years is spot on. Sold within 3 years made a little money but didn’t really get to pay down the mortgage at all. It was a learning experience and a stepping stone. Have to say we do not miss the elevators rides any more.

#4 Rargary on 09.24.19 at 3:58 pm

Love the dog pic… just needs a pipe!
Living in a blue riding in a blue city in a blue province. Canada, esp. Alberta needs a pipeline so as far as my vote goes, when in Rome… I wish we went back to min. 10% down payments. 5% is too low. And yes, no longer amorts past 25 yrs. Trying to keep my millenial daughter in line. She knows who the Garth is! At least some hope for one millennial in this debt and house horny country! Geez

#5 Doug t on 09.24.19 at 4:14 pm

CARE – now there’s a word that has become empty of late – do world leaders CARE about peace anymore? Do regular people CARE about the human suffering by multi millions of people around the globe? Do people CARE that mass extinction of species is taking place right now? Do people CARE for anything of importance anymore besides all the sh*t they buy and consume? Do people actually CARE AT ALL?

#6 Flop... on 09.24.19 at 4:29 pm

My accent has softened the last 20 years, but if I had a dollar for everytime someone heard my voice and said one day they want to visit Australia, I would no longer need to work.

That said, I was a little bit surprised that Australia kicks Canada’s bum by this wide a margin (45 billion to 22 billion) with the good Ol U.S on the doorstep.

I think Vancouver has been setting new records every year, so maybe Toronto is letting us down?

MF, promised me that would never happen.

Need to get a few more U.S East Coast folks on the blog up to Nova Scotia and PEI…

M45BC

“A Snapshot of the Tourist Spending Around the Globe.

Despite signs of a global economic slowdown, it seems that there is no stop on tourism growth. For many individuals, traveling is an ideal way to experience new cultures, meet new people, and broaden horizons. At the same time, tourism is a major component of the economy for many countries. Our new visualization takes a look at which countries reap the greatest benefits from tourist spending.

In 2018, the global tourism industry was worth $1.7 trillion.

Revenues generated from tourists have grown faster than the world economy.

The Asia-Pacific region saw the greatest growth in tourist spending, with a 7% increase year-over-year.

At $570 billion, Europe is the region with the most tourist spending in 2018.

The visualization and trends are based on a report released by the UN World Tourism Organization. The map above shows the biggest international tourism receipts (tourist spending) in 2018. Each country is proportional to the value of its tourism receipts. Countries that attract more tourism receipts (such as the U.S. and Spain) appear larger, while countries that have fewer tourism receipts (such as El Salvador) appear smaller. We also color-coded the countries by region, as shown in the map legend. All monetary values are expressed in USD.

Top 10 Tourist Destinations by Money Spent

1. United States – $214 billion
2. Spain – $74 billion
3. France – $67 billion
4. Thailand – $63 billion
5. United Kingdom – $52 billion
6. Italy – $49 billion
7. Australia – $45 billion
8. Germany – $43 billion
9. Japan – $41 billion
10. China – $40 billion

Popular tourist destinations are subject to changes due to a variety of factors. Notably, media trends have surged to shape the new attractive destinations for tourists. For example, the UK city of Birmingham has seen a dramatic increase in tourism due to the popularity of the British drama “Peaky Blinders,” which takes place in the Midlands city. In addition, the political situation within a city can play a major role on its tourist performance, as shown by the negative effects that political protests have had on Hong Kong’s tourism industry. While developed countries in the West tend to have the highest tourist spending, developing countries like India are also gaining a larger share of tourism dollars. It is yet to be seen how fast-developing countries will reshape the tourist landscape in the future.”

https://howmuch.net/articles/worlds-top-tourist-destinations-money-spent

#7 Paul on 09.24.19 at 4:32 pm

Your boat is sinking when you are mocked.
Poor Justin!

Link DELETED

#8 mike from mtl on 09.24.19 at 4:32 pm

If it is not already clear, just buya da house! gooberment only cares about stable housing and bank profits. Rates are not going up anytime soon so forget that, been nothing but lower lows for decades.

Also can’t forget the last time with Cons knucklehead polices making this RE bubble so bad.

#9 Flop... on 09.24.19 at 4:43 pm

Now that I think of it…

Don’t recall Garth ever mentioning his wishes to ever visit Australia on our recent Ill-timed phone call.

If he was on the fence, maybe realizing he only wants to have to deal with one Australian idiot a day, might have made his mind up.

Happy to have been of service…

M45BC

#10 10 Years Later on 09.24.19 at 4:50 pm

Since 2008, pundits have been claiming the interest rates would rise, often referring to the 1980s rate increases. The real estate industry, and every house horny person, ignored the alarmist calls – and as a result, they were rewarded with unparalleled leveraged equity gains that far surpassed those of any portfolio returns. The average person who bought back then has house that the top 5% of income earners could only afford now in the hottest markets (which is where the majority of the population is centred).

After a tiny, almost minuscule drop in prices in only the most overpriced markets, the conditions are right for another rise in prices. The much waited for correction never materialized after over a decade of ’emergency’ low rates. After a glacial increase in rates the last year, any correction is about to be undone with the federal housing policy platforms that will all stimulate demand and

The old prudence of living within your means, eschewing debt, and living modestly has been replaced with an entire generation that only knows equity gains, and relentless debt that they are prepared to carry. 11 years after the great financial crisis, those that rented, were prudent, invested their money, are absolutely no where near the average person’s net worth who bought 11 years ago.

And every year, the same caution of rising rates at renewal was put out as a cautionary tale. And every year, those that failed to risk has faced increased rents, more frequent relocations or renovations, and diminishing take home pay to afford the simple luxuries.

The often used phrase of ‘the government will not let the market collapse’ or ‘anytime is a good time to buy’ has been proven correct with this federal election.

The sooner that everyone admits that Canada’s economy is built on housing, and that the feds will help the 70% of the electorate who own, the better off they will be. This market is going nowhere but up, as utterly destructive and sad as that is…

Actually portfolio gains have outpaced real estate appreciation. But believe what you want. – Garth

#11 SimplyPut7 on 09.24.19 at 4:54 pm

There are still two problems with this plan:

#1 The stress test will still be based on your income, not the wild west days of 2016 where no one asked if you could afford the home, only if you could make the mortgage payments if you got a bigger downpayment (e.g. 2nd, 3rd mortgage, Bank of Mom and Dad, extended family HELOC, private MIC loan).

See The Globe and Mail article of why this needs to still be in place
https://www.theglobeandmail.com/business/economy/article-how-canadas-suburban-dream-became-a-debt-filled-nightmare/

#2 The stress test will probably be strict for investors.

There are 71,000 condos under construction in the GTA, another 37,000 pre-sale condos waiting to be constructed. If the banks are estimating half were bought by investors, how many rich professionals do you think want to buy a condo when rent is cheaper, the amount saved from renting instead of owning as well as the downpayment could be put in the stock market to get a higher return than investing in a condo (** insert updated FIRE article from Garth’s clients about rich people problems) and the renters could save for a better property once the conservatives start building townhouses and detached houses for the working class again?

https://vancouversun.com/real-estate/mortgages/toronto-condo-prices-see-weakest-growth-in-5-years-as-tight-lending-rules-bite/wcm/4fceade9-008e-46aa-b50c-db381714ab54

** https://www.businessinsider.com/early-retirement-downsides-challenges-losing-money-community-identity-2019-9

#12 Rainman on 09.24.19 at 5:03 pm

Garth – true that portfolio gains have outpaced RE returns, but that is misleading in the way you say it.
If you have $200,000 down in a 1 million dollar home you are benefiting from the increase in the full million, not just the $200,000.
If I had just invested with the same amount I put towards my house, I would be no where close to the amount of equity I have now, not even close. I do believe in diversification, but RE certainly worked out very well for us.

#13 conan on 09.24.19 at 5:07 pm

I was a Conservative MP on the House of Commons Finance Committee at the time- Garth

I seem to remember it being dysfunctional.
You got the boot . Strike one
The chair quit to become Premier of Manitoba. Another whiff.
It had Dykstra and Del Mastro on it. Nuff said.

#14 Shawn Allen on 09.24.19 at 5:23 pm

Believe Who You Want

Actually portfolio gains have outpaced real estate appreciation. But believe what you want. – Garth

*********************************
Yeah, but most houses were bought on 10% down or whatever. Buying a house in Toronto or Vancouver about 10 years has beat putting that 10% into equities (where margin is typically not used and is in any case very expensive) beat equities hands down.

10 Years later at 10 is right – about the past. The future, who knows.

But yes, always believe who you want. Or maybe believe who is actually right?

#15 Toronto Apartments on 09.24.19 at 5:23 pm

There are several buildings of height that are virtually unknown. They have numerous configurations unlike today, and probably were completed by 1971. Most on them are off of Yonge just to the east starting at St. Clair going northward. There is one on Bloor just west of Yonge. In all cases have double level units like a townhouse with three bedrooms upstairs. Even the Sutton Place Hotel had an elevator for apartments because I looked at one to rent. Eventually ended up with a fulltime doorman who clocked out at 6:00 PM, and that building was so much fun.

#16 Mattl on 09.24.19 at 5:26 pm

Actually portfolio gains have outpaced real estate appreciation. But believe what you want. – Garth

Maybe in some markets, and if RE was purchased with cash but not in YVR or the GTA when the purchase was leveraged. Most homebuyers start with a fairly small down payment. In my case we started with 18k in 2006 and have 600k equity. Lucky? Absolutely. But that 18k in a balanced would be around 50k. And we actually lived in the homes, at mortgage payments in line with local rents.

We also invested along the way. Our investments have done well but RE the past decade has been a rocketship.

#17 45north on 09.24.19 at 5:28 pm

The Conservative leader countered this by saying that young people typically make more money as they progress in their careers, therefore paying less and owing more is just fine with him. That sounds oddly un-conservative, but I get the drift. The trouble is that paying down less of the debt means a reduction in the proceeds when the condo is inevitably sold – and it will be, since nobody can survive more than a few years in a 600-quare-foot concrete box.

shallow, he’s so shallow

#18 Shawn Allen on 09.24.19 at 5:29 pm

Mortgage Interest Math

Garth says: [Mortgage] “Payments are front-end-loaded, meaning in the early years more of each blended payment is interest and in the final years most is principal.”

*********************************
True, but hopefully no one means to suggest this “front-end loading” is some evil policy of the banks. The payment is mostly interest at the beginning because the amount owed is larger. Interest is higher in the early months because the math demands it. If principal repayments were equal each month then the monthly payments would start out high and then decline as the amount owed declined because interest would decline.

#19 HowDeepThePain? on 09.24.19 at 5:37 pm

Bottomline
“Let’s address affordability but stimulating demand.”

Great so housing prices rise, including rents.

So what’s the next trick in 4 years?

40 year ams. Then 50 years ams.?

It makes me sick that the only way out of this mess is to hope for a massive recession.

#20 John on 09.24.19 at 5:43 pm

Garth, some questions: So the political parties understand very well that if they want to be in power they should make the home owners happy, by trying to keep the prices high and in the meantime make some kind of policies to allow the first buyers to be a little bit happy as well, correct? So there isn’t and never will be any policies to cool down the housing market because that means their own political death and by that the risk of a housing depreciation is minimized because the politicians will try to keep it low because it is too big to screw with it? Am I understanding it correctly? Please respond. Thank you.

#21 SunShowers on 09.24.19 at 5:44 pm

The monthly payment (5-year fixed loan, 2.87%) would be $2,333 for a 25-year amortization and $2,068 for one of 30 years.

Nice. Over sixty months they save a total of $15,900.

But after making $124,114 in payments on the longer-financed mortgage the kids still owe $443,331 five years later. If they had a 25-year mortgage the debt would be reduced to $426,300. So, they pay $15,900 less and end up owing $17,031 more. The ‘savings’ are illusory.

————

Nobody takes 30 year amortizations because they expect ‘savings’. People know that longer amortizations = more interest = higher overall costs.

People take longer loans because they have monthly budgets that expenses such as mortgages need to fit inside; an issue that your post doesn’t seem all too concerned with.

If people could ask their employers for X years’ salary up front, I’m sure they would be more than happy to immediately pay off their expenses as a lump sum and pay 0 interest, instead of financing them over those X years.

#22 Win - not lose on 09.24.19 at 5:45 pm

An investment question for a Registered Disability Savings Plan (RDSP).

The government has a program where it will deposit 3x the money deposited by a family of a disabled person into and RDSP. $3500 per year up to a max of $70,000.

This is a savings plan that is intended to help parents and others save for the long term financial security of a person who is eligible for the disability tax credit (DTC).

The money is in a Self-directed plan at the green place.

Can you and the blog dogs recommend some investment options?

#23 Sovavia on 09.24.19 at 5:51 pm

Who owns these mortgages?

Who will own these mortgages?

Blame and regret are the most potent emotions after greed has had its way.

#24 Yukon Elvis on 09.24.19 at 5:51 pm

Whatever happened to that hole in the ozone they were bleating about 30 years ago? Did it close? I got real constipated over that one.

#25 AGuyInVancouver on 09.24.19 at 5:52 pm

#6 Flop… on 09.24.19 at 4:29 pm
My accent has softened the last 20 years, but if I had a dollar for everytime someone heard my voice and said one day they want to visit Australia, I would no longer need to work.

That said, I was a little bit surprised that Australia kicks Canada’s bum by this wide a margin (45 billion to 22 billion) with the good Ol U.S on the doorstep…
_ _ _
Simple. Austrlia hot/warm most of the year, Canada not so much.

#26 Choir Boy on 09.24.19 at 5:55 pm

Hi Garth, I’m just trying to make sense of what the Cons are trying to do here… Remove the stress test for people renewing, gut it for first time home buyers. What about the people in between? For instance, myself. Not a first time buyer, owned from 2006 to 2011 and made absolutely nothing on my condo. Been on the sidelines ever since. Is there no incentive for people like me? Will the stress test remain for the unfortunate ones caught in the middle?(The non-speckers/investors) The ones who just want a home for themselves?? BTW I disagree with it all. Higher prices don’t make things more affordable! How do people not get that????

#27 Trumpocalypse2019 on 09.24.19 at 5:59 pm

Trump.

Impeachment coming.

War as distraction.

It’s all coming together. Are you paying attention?

PREPARE.

#28 The Totally Unbiased, Highly Intelligent, Rational Observer on 09.24.19 at 6:05 pm

DELETED

Any posts mocking the name of a federal party leader will be deleted. Those with the guts to be in public life deserve respect. Adolescent snipers deserve none. – Garth

#29 NoOneOfConsequence on 09.24.19 at 6:11 pm

Government for the people, by the people.

For most, that means ignore the future, live for today, and vote for the guy who saves me tomorrow.

Let ‘er rip. Add in some nice 10 year terms while we are at it.

Buy the banks folks, buy the banks.

#30 MF on 09.24.19 at 6:28 pm

#1 Not So New guy on 09.24.19 at 3:17 pm

I don’t know about that.

“So if the country votes conservative we basically continue to get the status quo, especially with regards to housing.”

-Gutting the stress test (a good idea) and bringing back 30 year mortgages will just accelerate the eventual decline as house prices creep further beyond anyone’s affordability:

The stress test distorted the market, and forced everyone into the lower-mid range, goosing condo prices (which was all anyone could afford). The overall market just stagnated at a high level afterwards, which was actually worse than having it decline.

Sure the 30 year mortgage idea is as stupid as can be, but A) unfortunately, it’s what’s needed to get elected these days and B) will just accelerate the eventual decline (again as house prices become even more rediculous).

And a Con government is far more sympathetic to businesses and investment. Where you got status quo from I don’t know. Maybe that was some loud emotional belch.

“I think we are now in the midst of the pendulum swinging towards the latter.”

-Sure, because Harper didn’t get any heat during his terms?

MF

#31 akashic record on 09.24.19 at 6:43 pm

#28

T2.

Push that delete button now :)

#32 Shawn Allen on 09.24.19 at 6:47 pm

The Ozone Hole versus Climate Change

#24 Yukon Elvis on 09.24.19 at 5:51 pm
Whatever happened to that hole in the ozone they were bleating about 30 years ago? Did it close? I got real constipated over that one.

*********************************
It never was a hole, but a thinning. Calling it a hole was brilliant marketing. It got attention. Countries and people paid attention. The use of certain refrigerants and aerosols that were causing the problem plummeted due to world action. I believe I recently read where the thinning has been greatly reduced. Success!

Contrast that with Climate Change. Trust in scientists and the media and governments and global institutions has eroded to the point where global action is no longer nearly as easy.

The lunatic fringe has exploded in size as they can talk to each other on the internet and reinforce their conspiracy theories.

Problem not being addressed. Sad.

I said some months ago that Climate Change needed a more urgent name like Climate Emergency. It’s happening. Marketing matters.

#33 Stone on 09.24.19 at 6:56 pm

#24 Yukon Elvis on 09.24.19 at 5:51 pm
Whatever happened to that hole in the ozone they were bleating about 30 years ago? Did it close? I got real constipated over that one.

———

I don’t know. I’m more concerned about your constipation problem. 30 years of that has got to be a doozie. LOL

#34 TurnerNation on 09.24.19 at 6:57 pm

Besides keeping bankers happy a government’s
main role lies in keeping people under a pharmaceutical dose/haze from cradle to grave.

– A pregnant monther is given drugs ,and at time of birthing.
– The newborn is then dosed and injected in short order.
– During school years high IQ boys especially will be pulled aside and dosed due to ‘behavior’ issues.
– Once older kids may order weed via government web site.
– When they royally f up and land on the streets safe injection sites provide a steady dose.
– Or if a tax paying normie they may elect an assisted suicide.
(Saves on CPP I guess. ..).

From cradle to grave the government services will keep you dosed up with pharmaceuticals.

#35 Terms of endearment on 09.24.19 at 7:03 pm

#28 The Totally Unbiased, Highly Intelligent, Rational Observer on 09.24.19 at 6:05 pm

DELETED

Any posts mocking the name of a federal party leader will be deleted. Those with the guts to be in public life deserve respect. Adolescent snipers deserve none. – Garth

…..

Comrade Horgan
Dewalt Tool Ford

OTOH provincial dudes are fair game it seems………

Comrade Horgan is a statement of belief, not mockery. To the Ford reference: guilty as charged. Once. I now have more respect for quality tools. – Garth

#36 Troy McClure on 09.24.19 at 7:03 pm

#24 Yukon Elvis on 09.24.19 at 5:51 pm

Whatever happened to that hole in the ozone they were bleating about 30 years ago? Did it close? I got real constipated over that one.

It’s slowly closing, thanks to the banning of CFCs.

From this article:

Earlier this month, National Institute of Water and Atmospheric Research (Niwa) atmospheric physicist Dr Richard McKenzie said action 30 years ago to ban ozone-depleting chemicals had stopped a significant jump in New Zealand skin cancer rates.

Without the Montreal Protocol, he said UV radiation as measured by the UV index would actually have risen by about 20 per cent during the past three decades, meaning skin damage from exposure to that increasing UV radiation would now happen in about eight to 10 minutes in the height of summer rather than the current 12 to 15 minutes.

The protocol was signed by 196 states and the European Union in 1987 and came into force in September 1989.

Its aim was to ban chlorofluorocarbon (CFC) gases, used largely in the refrigeration industry, which were causing ozone depletion and the ozone hole.

#37 Capitalist on 09.24.19 at 7:05 pm

CMHC is socialist, but government taking equity in your home is just plain communism!
Is Canada the new USSR?

#38 The Totally Unbiased, Highly Intelligent, Rational Observer on 09.24.19 at 7:08 pm

Okay, Garth, I looked up these politicians and how to spell their names.

All the political smoke and mirrors at election time confuses a lot of people. They do not really know what is actually going on. They do not know what to do. It needs to be explained simply.

The basic problem, of course, is that there is no one like Donald J. Trump here to Make Canada Great Again. Sad! His type is so rare, so special, so awesome, that only very lucky nations are blessed to have them, and then only on rare occasions. They come, save the nation, and then ride off into even more glory.

Here are the current options (all TWO of them) being offered in the upcoming Canadian federal election of October 2019:

Justin Trudeau: Liberal (full strength, with Marijuana as one of the active ingredients). For those who want a female Prime Minister, this is pretty close.

Andrew Scheer: Liberal (lite) posing as a conservative. Promises if elected to maintain the Liberal policies until another Liberal wins again.

Maxime Bernier: An actual factual true conservative!!! Where do you find these nowadays???

Jagmeet Singh: Liberal running under the NDP name, for the appearance of more variety.

Elizabeth May: Liberals calling themselves green because they are too yellow to admit that they are actually red. red.

#39 Shawn Allen on 09.24.19 at 7:11 pm

Bond Price Capital Gain Potential

I have been educated that, these days, bonds are bought not for interest but to probably give a capital gain when equities go down. They add stability to a portfolio – Ideally.

A 10 year Canada bond yielded 1.6% as of yesterday. Paying $16 per year in $1000. Over 10 years you get $160 (which you can reinvest for a bit more interest – say another $16 or so.

So the math is that if interest rates on the ten year Canada Bond go all the way to zero tomorrow then the potential capital gain here is 16%. Ultimately it must mature at zero capital gain, but a buyer today could potentially sell for the gain if rates plummet tomorrow.

#40 Remembrancer on 09.24.19 at 7:12 pm

#24 Yukon Elvis on 09.24.19 at 5:51 pm
Whatever happened to that hole in the ozone they were bleating about 30 years ago? Did it close? I got real constipated over that one.
———————————-
With CFCs and related chems all but completely dealt with the Montreal Protocol international agreements, its fixing itself and projected to be good in the north by 2030s and 2060s in south polar regions last I heard, but you probably don’t really care, do you? You’re trying to make some point, right?

Oh, still constipated or just full of it?

#41 conan on 09.24.19 at 7:19 pm

Those with the guts to be in public life deserve respect.- Garth

So no more sock boy Justin, or the Orange One?

Mr. Socks is merely a descriptor. I think he asked for that one. Real men wear boots. – Garth

#42 will on 09.24.19 at 7:24 pm

“That sounds oddly unconservative”

Lol. Yep. Like I have been saying nauseatingly over and over: the “Conservatives” don’t want YOU to be conservative.

Great pic btw.

#43 Flop... on 09.24.19 at 7:25 pm

Can’t believe that so many people believe the great Canadian climb is still on.

It was a great run in a few cities, but for the short term it is in reverse.

I could show some recent losses, and actually showed one on the second rung the other day that is likely to take a heavy loss, but I will use this one a an example of the current predicament speculators are in.

These guys paid 1.23 at the peak, now 3 years later they are asking someone to pay the associated costs of the sale.

No money will be made, opportunity cost only seems to go one way for some of you so I won’t bother with that detail.

I can show example after example of this.

This example is so pertinent because at the time of sale it was at the bottom of the Vancouver ladder.

It was a good run for 15 years but the cycle is over.

Just accept it and move on.

I need 4 new builds a year to keep me busy, this year only two.

Next year looking the same.

You can’t have a continually out of control real estate market and expect a soft landing.

Look at what is even happening with New York real estate.

It will rise again one day down the line but crippling local people for life won’t make that rise as prosperous.

Nothing happening federally can override what is being done here provincially.

The market buckled under its own weight, and then the real estate association and B.C Liberals handed it a crutch to keep it hobbling along.

The NDP removed the crutch and said walk at your own pace…

M45BC

https://www.zolo.ca/vancouver-real-estate/4293-perry-street

#44 Remembrancer on 09.24.19 at 7:27 pm

#37 Capitalist on 09.24.19 at 7:05 pm
CMHC is socialist, but government taking equity in your home is just plain communism!
Is Canada the new USSR?
————————————–
Easy comrade er bud, the government is offering to share equity in your home, you don’t need to accept the state’s offer you can stick to your capitalist ideals and pay full freight on your first time home purchase. Hey maybe a 30 year amort is more to your liking – you get to pay more interest, free market being free…

#45 crowdedelevatorfartz on 09.24.19 at 7:31 pm

@#6 Flop
“Need to get a few more U.S East Coast folks on the blog up to Nova Scotia and PEI…”
++++

No worries Flop.
The East Coast of Canada has been the playground of US Tourists for years.
Quebec tourist would also inundate PEI in the summers up until the 1990’s then the Boomer camping craze subsided.
PEI population in the winter 140,000.
And that hasnt changed for decades.
In the summer during peak tourist season… 500,000 in the 60’s, 70’s, 80’s.
Its dropped off somewhat.
But Chinese money is snapping up farms, housing, etc at a steady pace over the past two years…. and then they move on…….PEI winters are a mind numbing, soul sucking exercise in mental preparedness.

https://www.cbc.ca/news/canada/prince-edward-island/pei-house-prices-1.5230305

#46 tccontrarian on 09.24.19 at 7:33 pm

Is it any wonder increasing numbers of people choose to NOT vote? It seems to be out of the frying-pan and into the fire with these 2 parties.

Maybe I should run. I have at least 3 followers here and a couple more in my town. But I have a cat…is that cool?
tcc

#47 SunDays on 09.24.19 at 7:34 pm

Zero-down was gone, and the max amortization was reduced over time right down to 25 years, to ensure (a) people were borrowing within their means and could repay the loans and (b) the real estate market would go from boil to simmer.

——-

Why should borrowers repay the loans? The lenders would lose assets, GDP would take a hit due to loss in consumption, and borrowers would just get irritated. Lose-lose all-around. Repaying is old school.

#48 Treasure Island CEO $31,000,049.00 offshore on 09.24.19 at 7:36 pm

I am jumping ship.

My vote is now going to Andrew Scheer.

All because of this:

New on campaign promise this mornExplained: Scheer promises to launch national inquiry into money laundering.

Toss up on who wins the election now. Not because of my vote. Because many Canadians want this and Scheer is listening.

#49 Accept cookies on 09.24.19 at 7:42 pm

Demand for RE is pretty constant, it just gets suppressed. When this synthetic contraction of credit ends, we will see the mother of all booms.

#50 Capitalist on 09.24.19 at 7:48 pm

#44 Remembrancer:
Easy comrade er bud, the government is offering to share equity in your home, you don’t need to accept the state’s offer you can stick to your capitalist ideals and pay full freight on your first time home purchase. Hey maybe a 30 year amort is more to your liking – you get to pay more interest, free market being free…
—————————
No thanks.
I agree with Garth: both ways it just pushes home prices higher, so it defeats the purpose of helping people afford homes.

#51 tccontrarian on 09.24.19 at 8:04 pm

It just came to me. They’re re-defining ‘affordability’!
How Clever!

For something to be ‘affordable’, it’s now a simple matter of being able to make those monthly payments – till death, if necessary.
No matter what the ‘balance owing’ is. Even if it’s $5M – who cares? Just make those payments and you’re ‘good’.

wow! It’s debt-slavery what they’re after – the permanent kind. No longer just a ‘theory’. Plain as day to see …

tcc

#52 Yukon Elvis on 09.24.19 at 8:04 pm

#40 Remembrancer on 09.24.19 at 7:12 pm
#24 Yukon Elvis on 09.24.19 at 5:51 pm
Whatever happened to that hole in the ozone they were bleating about 30 years ago? Did it close? I got real constipated over that one.
———————————-
With CFCs and related chems all but completely dealt with the Montreal Protocol international agreements, its fixing itself and projected to be good in the north by 2030s and 2060s in south polar regions last I heard, but you probably don’t really care, do you? You’re trying to make some point, right?

Oh, still constipated or just full of it?
………………………………..
Thanks for clearing that up. How about that Mayan Calendar thing ? I needed suppositories for that one.

#53 Thomas Schmidt on 09.24.19 at 8:34 pm

#125 SunShowers on 09.24.19 at 1:04 pm
#37 Nonplused on 09.23.19 at 7:09 pm

Every single person on earth who has died from malnutrition in the last decade: Killed by capitalism

Every single person on earth who has died from a preventable/treatable disease in the last decade: Killed by capitalism

Every single homeless person on earth who has died of exposure in the last decade: Killed by capitalism

Add the numbers up. Do it.
*******************************
Hang on, what about all of the scientific (medical and agricultural) advancements that are the direct result of capitalism’s rewards?
Do you believe that without capitalism we’d be further ahead or behind? Seriously, without the possibility of financial reward do you think thatmore people would invent things that benefit us?
I’m pretty sure that I (like many people) would do exactly the minimum required amount of work in whatever job your commie utopia assigned me.

#54 Nonplused on 09.24.19 at 8:37 pm

Anybody been following the WeWork insanity? I don’t get it. Why would self employed people see the need to rent a shared office space if they have a kitchen table at home? I just don’t get it.

Uber I get, rent out your own car without having to purchase a taxi medallion and paint the care yellow. AirBnB I sort of get, it is not dissimilar to the long standing practice of ski-hill condo owners renting out their place on the days they aren’t using them, but equally unlikely to produce much actual revenue. Skip The Dishes I get for sure they are awesome.

But renting a shared work space to write blog posts or freelance or whatever it is you do? No thanks, I’ll stay home and pay nothing.

But yet this WeWork venture went into the billions in valuation!!! How could this occur in an Adam Smith economy? It is an obvious fraud, somewhere or another. I think it is nothing more than a fraudulent effort on the part of real estate companies to maintain a positive mark to market on properties that should be in receivership. “See! It’s not vacant, it’s leased to WeWork! PS I need to borrow a ton of money to invest in WeWork.”

#55 Sad for Greta on 09.24.19 at 8:48 pm

No clearer case of mental child abuse has ever been observed. What’s going to happen to poor Greta 30 years from now when she reaches the grand old age of 46 and realizes the world is just fine? She should have been more concerned about the insects being killed by pesticides, that is a real issue.

And when did it become acceptable to use emotional vitriol from a 16 year old child to inform important adult discussions? Are we really thinking of turning over policy making to a bunch of kids drawing rocket ships with crayons?

Oh ya, I forgot Justin Trudeau. Looks like we already did.

#56 akashic record on 09.24.19 at 8:50 pm

Greta sues 5 countries (probably not from his antifa t-shirt wearing parent’s money), Democrats decide to impeach Trump for Biden’s Ukranian sins.

Refill popcorn.

#57 Thomas Schmidt on 09.24.19 at 8:50 pm

Hey Flop,
I like some of those how much articles you post, but I’m pretty sure you can trim them down a bit.
e.g. the following really doesn’t do much for Garth’s readers:

” The map above shows the biggest international tourism receipts (tourist spending) in 2018. Each country is proportional to the value of its tourism receipts. Countries that attract more tourism receipts (such as the U.S. and Spain) appear larger, while countries that have fewer tourism receipts (such as El Salvador) appear smaller. We also color-coded the countries by region, as shown in the map legend.

#58 The Election on 09.24.19 at 8:54 pm

Canadians living outside of the country have already voted by sending in their ballot. Who and when does the counting of these ballots from all over the world?

#59 Shawn Allen on 09.24.19 at 9:00 pm

Bond ETF Observation

I am looking at some bond ETF data now from ishares and Vanguard. I have looked at these many times in the past.

Now if you were buying individual bonds you would want to know thinks like the maturity of the bond, the credit rating, the price in relation to par, the cash yield and the yield to maturity.

So, in a bond ETF you might like to see the weighted average of all those things.

Sure enough they do give you weighted average maturity and information on the credit rating and the companies involved and the sector weightings, all good.

But the weighted average price compared to par (probably above 100% these days) is not shown as far as I can see. That’s disturbing.

AND, even figuring out the cash yield is difficult for a few reasons. The problem is that even though the underlying bond interest may be quite constant each month or quarter or (in some cases half year), the cash distributions are surprisingly volatile. One reason for that is the the cash distributions would represent the underlying interest on the bonds less management fees and expenses. It may be that management fees vary. Also, if the distribution is monthly or quarterly, some months and quarters simply have more underlying bond interest. In the end it will be difficult to know the approximate future cash yield to any accuracy. On Yahoo Finance you can click history and then distributions only and that shows the past distributions. Add up a years worth and divide by price. Also note the variability. ishares today was understating the yield on some ETFs because due to a temporary timing difference there were only three quarterly distributions in the past year. That would only happen once in a great while, but it was the case today.

They also show the yield to maturity. That minus the MER is about what you should expect to earn on the bond ETF if interest rates remain stable (which they never do).

I shall ask them tomorrow why the weighted average price compared to par is not shown. In the unlikely event anyone is interested, let me know, and I will share the answer.

And yes, I know, apparently, no one buys these for the cash yield just for diversification and speculation of capital gains.

#60 Shawn Allen on 09.24.19 at 9:02 pm

If anyone (and, if so, I commend you) read that far, I meant “It may be that ETF expenses vary monthly or quarterly”, the Management fee does not change except very rarely.

#61 Flop... on 09.24.19 at 9:33 pm

#57 Thomas Schmidt on 09.24.19 at 8:50 pm
Hey Flop,
I like some of those how much articles you post, but I’m pretty sure you can trim them down a bit.

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

Hey Thomas, yeah I trimmed it down a bit, I guess I could have gone further but scrolling get the job done also.

I’m glad overall you like them.

Most of them are around 5 paragraphs, the ones where they go around the global regions are usually too long, so I focus on the North American part.

They have certain wishes if republished and do I try to represent the article in a fair way and always put the link up for those interested in further inquiries.

My connection to Howmuch has been documented on here before but could be repeated.

I found them online after someone in this blog’s comments section went out of their way to help me set up a imgur account.

I kept seeing these maps and decided after finding the source to pay the favour back.

I have written hundreds of people on here the last 5 years and had many a positve integration, many more I have just read and made a mental note.

I try to focus on the positive energy on here and block out the negative.

Many people have helped myself on countless topics on here and I’m grateful everyday…

M45BC

#62 CJohnC on 09.24.19 at 9:53 pm

#57 Thomas Schmidt

It would be very easy for Flop to trim down his pasted articles, since he is simply copying and pasting whole articles instead of showing some respect and following Garth’s helpful reminder #4:
Please avoid pasting the text of excessively long articles or news stories within your comment – provide a link to the item instead.

#63 S.Bby on 09.24.19 at 9:54 pm

DELETED

#64 Doug t on 09.24.19 at 10:03 pm

“Public Life” doesn’t deserve respect – respect is earned not just given because someone decides they are going to enter public life – I don’t respect JT – I don’t respect Scheer – heck I don’t respect any of them because none of them have done ANYTHING to earn it

#65 Dorel West on 09.24.19 at 10:05 pm

Garth, Can you please write about what a Liberal coalition government would do to this country? It has a 25-50% chance of happening it seems. I’m terrified. Should I be? Should every Canadian with an investment portfolio who wants to retire some day?

#66 Sebee on 09.24.19 at 10:18 pm

Garth, Garth, Garth….trying to do right and responsible things? I see you haven’t lost your inner child innocence.

Why would politicians say no to blowing up the housing market? It means more tax revenue. Higher values mean re-assessments and higher property taxes. Transfer taxes…double! It drives the economy as you’ve repeatedly highlighted.

People priced out of the market? Generation in debt? Small price to pay.

#67 Flanneur on 09.24.19 at 10:19 pm

No comments on reversing small business rules?

#68 Remembrancer on 09.24.19 at 10:19 pm

#54 Nonplused on 09.24.19 at 8:37 pm
Anybody been following the WeWork insanity? I don’t get it. Why would self employed people see the need to rent a shared office space if they have a kitchen table at home?
—————————–
Can’t vouch for the valuation or viability of their business model long term, but in terms of individual users, it can really depend on the type of business you are in and work habits – there are people who want or need a definite separation between home and work space, or when on the road for an extended period and are in need of temp office space for instance or when the family room decor won’t cut it for a business meeting with potential clients…

#69 leebow on 09.24.19 at 10:20 pm

#59 Shawn Allen

For major ETFs that invest in high quality credit, your main consideration will be the duration. You may also be insterested in NAV, composition (credit rating, geo, issuer type, etc), whether the fund invests in synthetic instruments and can buy or sell derivatives.

#70 Bdog on 09.24.19 at 10:27 pm

“Mortgage rates unlikely to stay where they are?”

Not falling for that one again.

#71 SunShowers on 09.24.19 at 10:52 pm

#53 Thomas Schmidt on 09.24.19 at 8:34 pm
Hang on, what about all of the scientific (medical and agricultural) advancements that are the direct result of capitalism’s rewards?

Common misconception.
The vast majority of technological advancement that we have enjoyed over the past several decades have been funded overwhelmingly using public funds. Entities in the USA like the NIH do most of the medical research. Pharmaceutical companies simply patent drugs/processes after they have been discovered by the NIH.

The case is the same for luxury goods like iPhones. Almost all of the physical technology that makes an iPhone work was developed by the DOD and DARPA, and even CERN.

These technologies were not developed by private entities with the hope of financial reward.

#72 palebird on 09.24.19 at 10:54 pm

There is no hope in this election. Just a bunch of idiots.

Meanwhile the Dems next door have finally pulled the trigger and are about to self destruct. What a farce. Trump in a landslide for 2020. There is no other way.

#73 baloney Sandwitch on 09.24.19 at 10:54 pm

My working career lasted 29 years. I was given the pink slip as a director in a multinational drug company in my mid 50’s. Now I can’t even find a job as a janitor. No one wants a 60 year old janitor (nothing against janitors). The thing is I am glad I paid off my mortgage asap. I can always grow potatoes in the backyard and survive.

#74 Raging Ranter on 09.24.19 at 10:56 pm

@#42 Shawn Allen, we do have a climate emergency. We are seeing funding for other environmental problems drying up as money gets eaten up by more and more ridiculous climate change programs, most of which are totally ineffective. We need a drastic repurposing of environmental funding AWAY from climate change initiatives and into environmental problems that are actually solvable.

I’m far more worried about the garbage we are putting into the oceans, the massive decline in the bird populations, and the destruction of natural habitat that continues unabated. All those problems are inherently fixable, yet we focus on the one problem that we can never get a handle on (mostly because we cannot even measure it properly). I’m getting extremely tired of every environmental problem, every species at risk, every invasive species, being blamed on climate change. We do have an emergency – people have been taken by a new religion, have become fanatical zealots, and they threaten to destroy the environment via misappropriated resources and misplaced focus. There’s your emergency if you need one.

#75 PastThePeak on 09.24.19 at 10:57 pm

#25 AGuyInVancouver on 09.24.19 at 5:52 pm

Simple. Austrlia hot/warm most of the year, Canada not so much.
++++++++++++++++++++++++++++++++++++++++++++++++++++

Indeed, Canada is too cold for most people. That is why the greatest threat to Canada is Global Warming.

In the US, there is net migration from the northern states (too cold) to the south. Because people prefer warm weather (as long as they have air conditioning).

And that is why global warming so frightens people, because it makes the world warmer, which is what they they want…

The world becomes a funnier, non-funny place more & more these days…

#76 IHCTD9 on 09.24.19 at 11:48 pm

#53 Thomas Schmidt on 09.24.19 at 8:34 pm

I’m pretty sure that I (like many people) would do exactly the minimum required amount of work in whatever job your commie utopia assigned me.

—————-

Correct, as the Soviet era workers were fond of saying:

“They pretend to pay us, we pretend to work.”

Unrelated but still funny (?):

Q: How do you deal with mice in the Kremlin?

A: Put up a sign saying “collective farm”. Half the mice will starve, the rest will run away.

Ok, one more :)

Three men are sitting in a cell in the (KGB headquarters) Dzerzhinsky Square. The first asks the second why he has been imprisoned, who replies, “Because I criticized Karl Radek.” The first man responds, “But I am here because I spoke out in favor of Radek!” They turn to the third man who has been sitting quietly in the back, and ask him why he is in jail. He answers, “I’m Karl Radek.”

There you go, communism in a nutshell!

#77 april on 09.24.19 at 11:51 pm

According to Ross Kay today, home prices are not going up and won”t due to these new stupid policies. He explains on Howestreet.com

#78 Thomas Schmidt on 09.24.19 at 11:52 pm

#61 Flop… on 09.24.19 at 9:33 pm
#57 Thomas Schmidt on 09.24.19 at 8:50 pm
Hey Flop,
I like some of those how much articles you post, but I’m pretty sure you can trim them down a bit.

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

Hey Thomas, yeah I trimmed it down a bit, I guess I could have gone further but scrolling get the job done also.
——————-
Yeah in case I wasn’t clear, it’s the part of the post explaining a picture that we can’t see that I think should be cut lol
I don’t want to scroll past, I was enjoying reading it =)

#79 Nonplused on 09.24.19 at 11:58 pm

#53 Thomas Schmidt

You did a pretty good job of it but I decided to add on, because SunShowers is so out to lunch.

Capitalism, speaking in the simplest terms, is the idea of taking extra production not needed for current consumption and improving the land or investing in additional equipment, such that future production can be even greater. How SunShowers thinks a farmer buying a tractor results in millions of deaths is beyond me. We a dealing with a compromised person here.

Although I am not going to give all capitalists a pass, capitalism, along with other modern (going back 400 years) changes to society, are why we are mostly not crawling around in the mud looking for eatable roots and instead sit in coffee shops complaining about our plight by typing on our iPhones.

Capitalism is by far the worst economic system ever conceived, except for all the other ones.

And if you want to count up deaths, perhaps look at what Mao and Stalin did to their own people. Socialism at it’s finest. Makes what Hitler did look like primary school. Socialism always results in great evil. It has to, because it is based on force.

#80 yorkville renter on 09.25.19 at 12:05 am

WeWork is destined to fail… it feels like the dot com bubble half the time… Theranos? FitBit almost bankrupt, Uber, Lyft all failing

however, people need a workspace… Shared space includes private offices, boardrooms, cafe, etc, reception and other stuff. Condos are too small, some people like to go out and you can’t stay at a coffee shop all day.

But WeWork did nothing special. They snatch up tons of space, pay too much renovating them, agree to long-term leases and rent fractional pieces out to small players. Not a great business model, and certainly not a tech company.

#81 Jimers on 09.25.19 at 12:30 am

The only thing ‘we adults” owe children like Greta is a good education, which they obviously are not getting now.

Amusing how a wispy 16-year-old female has so many angry men running scared. – Garth

#82 Smoking Man on 09.25.19 at 1:24 am

Garth says real men wear boots.

I say Gamblers wear flip flops…
The freeks hate me. I’m cool with it. You can’t bend what you can’t offend..
https://youtu.be/Py6U3XMy-AM

#83 ronh on 09.25.19 at 2:45 am

Since it is election time:

“When the people find that they can vote themselves money that will herald the end of the republic.”
― Benjamin Franklin

#84 SimplyPut7 on 09.25.19 at 4:01 am

#54 Nonplused on 09.24.19 at 8:37 pm
WeWork insanity is based on the Netflix or Tesla model of doing business: assume you will eventually become a viable company and act like billionaires in the meantime.

Yes, an entrepreneur could find a quiet place to work at home, go to the local library or use a meeting room in their condo to get work done. But if you think you will be rich soon why not spend the money from the startup investors now and worry about how you will pay for it later.

#55 Sad for Greta on 09.24.19 at 8:48 pm
Greta Thunberg filed a legal complaint to the UN (along with other young activists) and mentioned the following countries in the complaint: Argentina, Brazil, France, Germany, and Turkey.

China was not mentioned. French President Macron was also not happy to be mentioned. The kids choose those 5 countries over China?

I’m so glad this news story will be finally over once their followers find out they didn’t care to mention one of the biggest polluters in the world.

#56 akashic record on 09.24.19 at 8:50 pm
It’s an INQUIRY to see if there’s a case for impeachment. As the Democrat on Fox News said, Pelosi is just doing this to shut up the far-left so they don’t divide their base more and tank their chances for re-election. No party in recent history that has tried to impeach a sitting president wins the next presidential election.

#85 Oh Canada I weep on 09.25.19 at 6:20 am

You know your leader is a chump when you see an American company, Kinder Morgan, take the 5 billion they tricked Trudeau out of and lickety split, build a new pipeline in the US, all with the money Trudeau gave them out of the taxpayers pocket.

https://finance.yahoo.com/news/gulf-coast-express-pipeline-placed-201000844.html

Aren’t you proud of our wheeler dealer PM? All Kinder Morgan got was a new pipe and gave the entire team million dollar bonuses. We screwed them good. We took the moral high ground.

#86 Drake Shefield on 09.25.19 at 6:35 am

I am tired of all this crap about stress tests, amortizations, shared equity mortgages and other dumb head policies but the real culprit is the lower to lower to ultra lower interest rates and mortgage rates, borrowing rates that is tied to real estate.

We all know that we could have a 50 year amortization mortgage, RRSP home buyers plan and all other gimmicks but if interest rates were at least 2000 year levels, mortgage rates of 7% to 8%, house, condo and other real estate prices would be at least 40% to 50% lower than they are today.

This means that $800,000 to $1,000,000+ homes would not exist in Vancouver, Victoria, Toronto, GTA etc. and most homes would be much cheaper from $400,000 to $500,000 than they are today.

#87 Captain Uppa on 09.25.19 at 6:40 am

I normally never wade into the climate “debate” waters, but I have to say this:

Why do we fight so much about climate change? Let’s just simplify and take action, political lines be damned.

Example: we know that the burning of coal in all its facets is not good for our environment; Answer? Find alternatives and fast. Oh we have alternatives?! Great, promote and expedite it’s usage!

It really does not need to go any further than that.

#88 Captain Uppa on 09.25.19 at 6:44 am

As for real estate, I bought in early 2016 … so not exactly a winner of the “birth lottery”. Only time will tell if I actually hold a golden ticket.

#89 IHCTD9 on 09.25.19 at 7:18 am

#71 SunShowers on 09.24.19 at 10:52 pm
#53 Thomas Schmidt on 09.24.19 at 8:34 pm
Hang on, what about all of the scientific (medical and agricultural) advancements that are the direct result of capitalism’s rewards?

Common misconception.
The vast majority of technological advancement that we have enjoyed over the past several decades have been funded overwhelmingly using public funds. Entities in the USA like the NIH do most of the medical research. Pharmaceutical companies simply patent drugs/processes after they have been discovered by the NIH.
_____

Pretty much all the developments that have allowed First World economies to exist were invented/discovered before taxes were even a thing. Agriculture, Steam power, Oil, Chemicals, Electricity, Internal Combustion Engines, cars, trucks, planes, trains, it’s a long list. Zero public dollars.

A new way to get rid of a headache or a smart phone ain’t “technological advancement” on a societal scale.

So, not a common misconception – rather, common knowledge…

#90 IHCTD9 on 09.25.19 at 7:37 am

#73 baloney Sandwitch on 09.24.19 at 10:54 pm
My working career lasted 29 years. I was given the pink slip as a director in a multinational drug company in my mid 50’s. Now I can’t even find a job as a janitor. No one wants a 60 year old janitor (nothing against janitors). The thing is I am glad I paid off my mortgage asap. I can always grow potatoes in the backyard and survive.
___

I know several guys like you who upon nearing 60, found themselves kicking pebbles. Lucky for every one of them, everything was paid off, and their financial ships were in order. Most found menial jobs that they enjoyed doing to give them something to do 2-3 days a week.

IMHO, this is a good thing to keep in mind for Gen X’ers working for big corps. Tough row to hoe trying to become re-employed at that age. Better to be in good financial shape and can drive around delivering auto parts part time – than attempting to re-establish yourself in your career 5/10 years before retirement age.

#91 Gravy Train on 09.25.19 at 8:02 am

#73 baloney Sandwitch on 09.24.19 at 10:54 pm
“My working career lasted 29 years. I was given the pink slip as a director in a multinational drug company in my mid 50’s.” I presume you’ve saved and invested over those years, and can afford to retire comfortably. If not, or even if you can retire but are bored of retirement, then I strongly recommend that you get hold of Dick Bolles’s book What Color is Your Parachute? 2020: A Practical Manual for Job-Hunters and Career-Changers. The author shows you how to tap the hidden job market, and helps you figure out how best to use your transferable skills and abilities.

“Now I can’t even find a job as a janitor. No one wants a 60 year old janitor (nothing against janitors).” The jobs are out there! You’re likely using the least effective job-search methods. For example, if you’re merely replying to newspaper or online ads, your chances of getting a job are about 5%. The book will teach you the most effective job-search methods.

“The thing is I am glad I paid off my mortgage asap. I can always grow potatoes in the backyard and survive.” I am glad your mortgage is paid off. Do read the book! :)

#92 Tater on 09.25.19 at 8:05 am

All else equal, a 30y amortization lets you spend 13% more on a house. Considering Toronto is 15% below the highs, that doesn’t even get this market to a new high. Add in that 5y yield is 30% higher than it was at the peak, and you have a market that will likely struggle to go much higher.

So, in a market that has been driven by fomo and credit expansion, you now have slowing momentum and higher funding costs. Historically, that’s not good for an asset’s price. And if we do get a sustained move higher in rates, or a recession, it will be very ugly.

#93 Mr519 on 09.25.19 at 8:24 am

Bdog on 09.24.19 at 10:27 pm
“Mortgage rates unlikely to stay where they are?”

Not falling for that one again.

___________________________________

Wait until inflation really rears its ugly head. Core CPI is starting to “warm up”.

#94 IHCTD9 on 09.25.19 at 8:30 am

#84 SimplyPut7 on 09.25.19 at 4:01 am

Greta Thunberg filed a legal complaint to the UN (along with other young activists) and mentioned the following countries in the complaint: Argentina, Brazil, France, Germany, and Turkey.
___

I had to look that up, and you are correct. No mention of China, India etc… basically the worst of the worst.

Just another reason why, when I am reading the words of a Climate Activist; my eyelids start to get heavy…

She’s totally freaking out about how Germany and France are coming up short.

I wonder how she’d react to a good solid dose of what is going on in China?

I’ll wake up when the Western activists are preaching their doctrines directly to the Chinese and Indian Governments.

#95 Mr519 on 09.25.19 at 8:31 am

Rainman on 09.24.19 at 5:03 pm
Garth – true that portfolio gains have outpaced RE returns, but that is misleading in the way you say it.
If you have $200,000 down in a 1 million dollar home you are benefiting from the increase in the full million, not just the $200,000.
If I had just invested with the same amount I put towards my house, I would be no where close to the amount of equity I have now, not even close. I do believe in diversification, but RE certainly worked out very well for us.

_____________________________
Let’s compare apple’s to apple’s, since that 200k was a LEVERAGED investment in RE.

Imagine if you had used LEVERAGE in your portfolio of stocks/bonds, say 4x (Similar to your RE).

Leverage is awesome on the way up… it can be devasting on the way down.

Garth remains correct – portfolio gains outpaced RE on a level playing field.

#96 Tater on 09.25.19 at 8:33 am

@39- Shawn Allen

Did someone here say you claim to have a CFA? Might want to review your bond math, chief.

If rates go to zero (or close) that 10 year will go up a lot more than 16%

#97 Phylis on 09.25.19 at 8:54 am

Lets just go with the 100 year amortization. You just have to include your first born. Generational debt slaves. Vote for me.

#98 Dharma Bum on 09.25.19 at 9:13 am

“They fail the task of making houses into affordable homes, just as they delight commissioned realtors and anxious builders.” – Garth
——————————————————————–

And don’t forget property fat boomers. Cha-Ching!

#99 oh bouy on 09.25.19 at 9:17 am

@#94 IHCTD9 on 09.25.19 at 8:30 am
#84 SimplyPut7 on 09.25.19 at 4:01 am

Greta Thunberg filed a legal complaint to the UN (along with other young activists) and mentioned the following countries in the complaint: Argentina, Brazil, France, Germany, and Turkey.
___

I had to look that up, and you are correct. No mention of China, India etc… basically the worst of the worst.

Just another reason why, when I am reading the words of a Climate Activist; my eyelids start to get heavy…

She’s totally freaking out about how Germany and France are coming up short.

I wonder how she’d react to a good solid dose of what is going on in China?

I’ll wake up when the Western activists are preaching their doctrines directly to the Chinese and Indian Governments.
_________________________

lol sure man, folks like you will never wake up.

#100 crowdedelevatorfartz on 09.25.19 at 9:34 am

I thought that speech at the UN in front of the all the posing , hypocritical “leaders” of the world was bang on.

This kid has energized a new environmental crusade.

Just wait for all the companies and “leaders” to throw themselves on the bandwagon……even if they have no intention of doing anything but talk.

Brave for a 16 year old kid to get up there in front of a huge audience and rip into them like that.
Barely even looked at her notes while raging at the “machine”.

She’s going places.

#101 SunShowers on 09.25.19 at 9:40 am

#79 Nonplused on 09.24.19 at 11:58 pm
You need to open literally any dictionary and read the definition of capitalism, because you’re not even close.

You also need to re-read what was quoted in #53 (or go back to yesterday’s comment for the full context), because capitalism has far more blood on its hands than any other -ism you can name.

#89 IHCTD9 on 09.25.19 at 7:18 am
Agriculture/oil/chemicals: Literally predate capitalism by thousands of years.
Electricity: Heavily regulated public utility.
Steam power/Internal Combustion Engines: Based on the accumulation of thousands of years of scientific knowledge and progress. Some private, some not (as it occurred before the concept of capitalism and intellectual property even existed.
Cars, trucks, planes, trains: 100% dependent on massive public infrastructure expenditures to be of any use.

#102 PastThePeak on 09.25.19 at 9:44 am

#90 IHCTD9 on 09.25.19 at 7:37 am

IMHO, this is a good thing to keep in mind for Gen X’ers working for big corps. Tough row to hoe trying to become re-employed at that age. Better to be in good financial shape and can drive around delivering auto parts part time – than attempting to re-establish yourself in your career 5/10 years before retirement age.
+++++++++++++++++++++++++++++++++++++++++++++++++

Yup. Hitting the half century mark in a few months. In a large international corp (as an engineer), but I know that after that any layoff a very high probability of never getting a similar job at similar pay & benefits.

I was aggressive in tackling the mortgage 10 years ago (more so that Garth would recommend), but mortgage rates for most my terms were in the 5+% rate. Good savings, wife works, RESPs stuffed, etc. It is coming down to what level of retirement – not whether we will be able to.

Most friends of mine have taken similar paths, but I certainly hear horror stories from the bankers…

#103 Sail Away on 09.25.19 at 10:07 am

#101 SunShowers on 09.25.19 at 9:40 am
#79 Nonplused on 09.24.19 at 11:58 pm

You also need to re-read what was quoted in #53 (or go back to yesterday’s comment for the full context), because capitalism has far more blood on its hands than any other -ism you can name.

#89 IHCTD9 on 09.25.19 at 7:18 am

Agriculture/oil/chemicals: Literally predate capitalism by thousands of years.
Electricity: Heavily regulated public utility.
Steam power/Internal Combustion Engines: Based on the accumulation of thousands of years of scientific knowledge and progress. Some private, some not (as it occurred before the concept of capitalism and intellectual property even existed.
Cars, trucks, planes, trains: 100% dependent on massive public infrastructure expenditures to be of any use.

——————————————

But… the vast majority of inventions and advancements to the above were made in capitalist, not socialist, countries, no?

#104 Ponzius Pilatus on 09.25.19 at 10:08 am

#89 IHCTD9 on 09.25.19 at 7:18 am
#71 SunShowers on 09.24.19 at 10:52 pm
#53 Thomas Schmidt on 09.24.19 at 8:34 pm
Hang on, what about all of the scientific (medical and agricultural) advancements that are the direct result of capitalism’s rewards?

Common misconception.
The vast majority of technological advancement that we have enjoyed over the past several decades have been funded overwhelmingly using public funds. Entities in the USA like the NIH do most of the medical research. Pharmaceutical companies simply patent drugs/processes after they have been discovered by the NIH.
_____

Pretty much all the developments that have allowed First World economies to exist were invented/discovered before taxes were even a thing. Agriculture, Steam power, Oil, Chemicals, Electricity, Internal Combustion Engines, cars, trucks, planes, trains, it’s a long list. Zero public dollars.

A new way to get rid of a headache or a smart phone ain’t “technological advancement” on a societal scale.

So, not a common misconception – rather, common knowledge…
———–
But, but.
Did ancient rulers not collect taxes?

#105 Blacksheep on 09.25.19 at 10:49 am

I don’t care what you guys say…Greta friggen rocks!

https://www.youtube.com/watch?v=aJg4OJxp-co

#106 IHCTD9 on 09.25.19 at 10:51 am

#104 Ponzius Pilatus on 09.25.19 at 10:08 am

But, but.
Did ancient rulers not collect taxes?
____

Sure they did Ponzie, but other than agriculture, none of the stuff I mentioned was invented or brought to bear by ancient rulers.

#107 Shawn Allen on 09.25.19 at 10:52 am

Bond Capial Appreciation

#96 Tater on 09.25.19 at 8:33 am
@39- Shawn Allen

Did someone here say you claim to have a CFA? Might want to review your bond math, chief.

If rates go to zero (or close) that 10 year will go up a lot more than 16%

**********************************
Yes, CFA 2003… is my math not correct.

I said 10 year pays 1.6% that’s $16 per year per $1000 bond. Think about that! (My mistake, it is actually a bit lower but let’s use the the 1.6%.

If rates immediately fall to zero the ten year bond is worth the sum of all the cash flows. (The cash is “discounted at 0% meaning no discount) 10 times $16 = $160 plus $1000 returned at year ten.

That adds to $1160. That’s a capital gain of $160 or $16%.

Is my math not correct? Hey no one get’s 100% on the CFA exams, and mine were a while ago. So, if I am wrong show me the math

Now if we were talking a perpetual bond, different story, a 30 year bond at 1.6% gains 48% ($16 times 30) if the rate is suddenly 0%.

#108 Tater on 09.25.19 at 11:02 am

@ Shawn Allen

My apologies. Despite you saying very clearly, 10 year, I was thinking 30 year.

#109 James on 09.25.19 at 11:02 am

91 Gravy Train on 09.25.19 at 8:02 am

#73 baloney Sandwitch on 09.24.19 at 10:54 pm
“My working career lasted 29 years. I was given the pink slip as a director in a multinational drug company in my mid 50’s.” I presume you’ve saved and invested over those years, and can afford to retire comfortably. If not, or even if you can retire but are bored of retirement, then I strongly recommend that you get hold of Dick Bolles’s book What Color is Your Parachute? 2020: A Practical Manual for Job-Hunters and Career-Changers. The author shows you how to tap the hidden job market, and helps you figure out how best to use your transferable skills and abilities.

“Now I can’t even find a job as a janitor. No one wants a 60 year old janitor (nothing against janitors).” The jobs are out there! You’re likely using the least effective job-search methods. For example, if you’re merely replying to newspaper or online ads, your chances of getting a job are about 5%. The book will teach you the most effective job-search methods.

“The thing is I am glad I paid off my mortgage asap. I can always grow potatoes in the backyard and survive.” I am glad your mortgage is paid off. Do read the book! :)
____________________________________________
You are correct that society is biased against older workers. My fathers best friend was in a situation like yours he lost his position at 56 with a large firm. Could not get a job anywhere. He thought he was lucky as his wife and him were empty nesters and had already downsized into a condo. Then after two years of searching for a job they realized the $698 per month strata fees plus taxes were eating into their retirement savings. They sold and moved to a small town into a freehold town and actually pocketed money. He actually was offered a position with a small local company at much less salary but he also has flex hours and zero commute. He told my father that his job loss was actually a blessing as he has less stress now and will retire when he wants to.

#110 Sail Away on 09.25.19 at 11:07 am

Looks like another Trump impeachment nothingburger starting up. Anyone want to weigh in from the Canadian Democratic Party?

#111 Tannhäuser Gatekeeper on 09.25.19 at 11:24 am

Shawn Allen re: Bond ETFs.

BMO has one that holds only discount bonds (i.e. bought below par). This has tax advantages, but a disinterested observer might question the sanity of holding a passively managed portfolio of bonds trading below par.

You can look at the annual tax documents for bond ETFs and see how much of their payouts are allocated as interest, capital gains and return of capital.

I fantasize about a debate between a reanimated Ben Graham and a modern proponent of the “hold bonds because the little line on the chart wiggles” theory of portfolio construction. I can never picture Graham having his mind changed. It always ends with Graham comparing the after tax yields and growth of blue chip common versus the miserly yields on offer from government or IG bonds, screaming “no margin of safety,” and whacking his opponent upside the head with Security Analysis (often the 5th edition, but it varies…)

#112 IHCTD9 on 09.25.19 at 11:26 am

#101 SunShowers on 09.25.19 at 9:40 am

Agriculture/oil/chemicals: Literally predate capitalism by thousands of years.

Electricity: Heavily regulated public utility.
Steam power/Internal Combustion Engines: Based on the accumulation of thousands of years of scientific knowledge and progress. Some private, some not (as it occurred before the concept of capitalism and intellectual property even existed.
Cars, trucks, planes, trains: 100% dependent on massive public infrastructure expenditures to be of any use.
____

“Agriculture/oil/chemicals: Literally predate capitalism by thousands of years.”

Agriculture predates all formal governments (duh). The Oil age did not begin thousands of years ago (lol!). Try the 19th century.

“Electricity: Heavily regulated public utility.”

…and not invented via public funds. 100% private undertaking from start to finish. This one was super Capitalistic by the time AC coursed through a grid. (if you’ve done any reading on it).

“Steam power/Internal Combustion Engines: Based on the accumulation of thousands of years of scientific knowledge and progress. Some private, some not (as it occurred before the concept of capitalism and intellectual property even existed.”

EVERYTHING that has EVER been accomplished owes some debt to previously assembled knowledge (duh). No government handouts were involved in developing steam engines, and ICE’s. These inventions do not predate Capitalism (lol).

“Cars, trucks, planes, trains: 100% dependent on massive public infrastructure expenditures to be of any use.”

Nope. These vehicles well predate massive public infrastructure. Cars and trucks drove on mud first. Planes took off and landed on fields first. Both were super useful, so useful that they spawned the infrastructure you mentioned.

I’m getting the feeling you might be suffering from a little tunnel vision.

#113 n1tro on 09.25.19 at 11:29 am

#74 Raging Ranter on 09.24.19 at 10:56 pm
@#42 Shawn Allen, we do have a climate emergency. We are seeing funding for other environmental problems drying up as money gets eaten up by more and more ridiculous climate change programs, most of which are totally ineffective. We need a drastic repurposing of environmental funding AWAY from climate change initiatives and into environmental problems that are actually solvable.

I’m far more worried about the garbage we are putting into the oceans, the massive decline in the bird populations, and the destruction of natural habitat that continues unabated. All those problems are inherently fixable, yet we focus on the one problem that we can never get a handle on (mostly because we cannot even measure it properly). I’m getting extremely tired of every environmental problem, every species at risk, every invasive species, being blamed on climate change. We do have an emergency – people have been taken by a new religion, have become fanatical zealots, and they threaten to destroy the environment via misappropriated resources and misplaced focus. There’s your emergency if you need one.
—————-
^ the 1st politician that says the above calling out the carbon tax grab would get my vote. I wouldn’t care what their position is on any other issue.

#114 n1tro on 09.25.19 at 11:41 am

#87 Captain Uppa on 09.25.19 at 6:40 am

Why do we fight so much about climate change? Let’s just simplify and take action, political lines be damned.

Example: we know that the burning of coal in all its facets is not good for our environment; Answer? Find alternatives and fast. Oh we have alternatives?! Great, promote and expedite it’s usage!

It really does not need to go any further than that.
————
You are so right. But I just need to add a few minor tidbits to your example.

The biggest burners of coal isn’t participating in using alternatives so the plan is to take money from people like you and me to shower them with it to beg them to do so.

#115 mike from mtl on 09.25.19 at 11:48 am

Hmm… HomeCapital is selling some of their toxic waste MBS to secondary investors i.e. amateurs, Pension funds, ETFs. Of course the BoC loves this as the dumbmoney will backstop them as opposed to the BoC/FED themselves.

“Home Capital Group to sell $425M worth of uninsured mortgage-backed securities”

https://www.cbc.ca/news/business/home-capital-1.5295195

#116 conan on 09.25.19 at 11:57 am

“Looks like another Trump impeachment nothingburger starting up”

Looks like a Trumpinator to me.

#117 Sail away on 09.25.19 at 12:15 pm

#112 IHCTD9 on 09.25.19 at 11:26 am
#101 SunShowers on 09.25.19 at 9:40 am

—————————————-

Cars, trucks, planes, trains: 100% dependent on massive public infrastructure expenditures to be of any use.
____

Agriculture predates all formal governments (duh). The Oil age did not begin thousands of years ago (lol!). Try the 19th century.

EVERYTHING that has EVER been accomplished owes some debt to previously assembled knowledge (duh).

…vehicles well predate massive public infrastructure.

I’m getting the feeling you might be suffering from a little tunnel vision.

—————————————–

Hey, when your only tool is theoretical ideology all concepts look like capitalism.

#118 James on 09.25.19 at 12:24 pm

Have fun reading more boring crap.
We all know Trump is corrupt so show me something exciting.

https://www.vox.com/2019/9/25/20883325/transcript-trump-ukraine-president-impeachment

#119 James on 09.25.19 at 12:29 pm

#113 n1tro on 09.25.19 at 11:29 am

#74 Raging Ranter on 09.24.19 at 10:56 pm
@#42 Shawn Allen, we do have a climate emergency. We are seeing funding for other environmental problems drying up as money gets eaten up by more and more ridiculous climate change programs, most of which are totally ineffective. We need a drastic repurposing of environmental funding AWAY from climate change initiatives and into environmental problems that are actually solvable.

I’m far more worried about the garbage we are putting into the oceans, the massive decline in the bird populations, and the destruction of natural habitat that continues unabated. All those problems are inherently fixable, yet we focus on the one problem that we can never get a handle on (mostly because we cannot even measure it properly). I’m getting extremely tired of every environmental problem, every species at risk, every invasive species, being blamed on climate change. We do have an emergency – people have been taken by a new religion, have become fanatical zealots, and they threaten to destroy the environment via misappropriated resources and misplaced focus. There’s your emergency if you need one.
—————-
^ the 1st politician that says the above calling out the carbon tax grab would get my vote. I wouldn’t care what their position is on any other issue.
________________________________________
I have to say when was the last time anyone saw a frog? When I was a child we could catch them in the backyard and nearby field lots near creeks. So where are the frogs? Have they all croaked?

#120 Sail away on 09.25.19 at 12:37 pm

#71 SunShowers on 09.24.19 at 10:52 pm
#53 Thomas Schmidt on 09.24.19 at 8:34 pm

————————————————-

Hang on, what about all of the scientific (medical and agricultural) advancements that are the direct result of capitalism’s rewards?

————————————————-

Common misconception.

The vast majority of technological advancement that we have enjoyed over the past several decades have been funded overwhelmingly using public funds. Entities in the USA like the NIH do most of the medical research. Pharmaceutical companies simply patent drugs/processes after they have been discovered by the NIH.

The case is the same for luxury goods like iPhones. Almost all of the physical technology that makes an iPhone work was developed by the DOD and DARPA, and even CERN.

These technologies were not developed by private entities with the hope of financial reward.

————————————————

Yes!

Let’s take this further. All the raw materials used in today’s products were previously available:

Metals- big bang
Oil and plastics- dinosaurs and vegetable matter
Portland cement- fossilized ancient sea life
etc…

And in technology, chimps were using tools for ants and termites ages ago

I’m not sure if the dinosaurs ever finalized the iPhone, but they had all the materials. A capitalist just made the last few tweaks. No credit due.

Thanks for the enlightenment, SunShowers.

#121 leebow on 09.25.19 at 12:50 pm

#111 Tannhäuser Gatekeeper

It is what it is. Bond yield at this time is just a vestige to remind us that once upon a time bonds could produce income. Just like our tailbones are humbling reminders of our recently lost tree climbing ability.

#122 Capt. Serious on 09.25.19 at 1:01 pm

#111 Tannhäuser Gatekeeper on 09.25.19 at 11:24 am
I fantasize about a debate between a reanimated Ben Graham and a modern proponent of the “hold bonds because the little line on the chart wiggles” theory of portfolio construction. I can never picture Graham having his mind changed. It always ends with Graham comparing the after tax yields and growth of blue chip common versus the miserly yields on offer from government or IG bonds, screaming “no margin of safety,” and whacking his opponent upside the head with Security Analysis (often the 5th edition, but it varies…)

Why would one compare the yield on blue chips to bond yields? They are not the same thing, remotely. You are literally last in line as an equity holder. Nobody on the bond side of this argument would be trying to argue bonds are better than blue chips. They are different animals.

#123 Shawn Allen on 09.25.19 at 1:05 pm

Bond ETFs respoonses

#108 Tater on 09.25.19 at 11:02 am
@ Shawn Allen

My apologies. Despite you saying very clearly, 10 year, I was thinking 30 year.

*****************************
Thank you. Admitting an occasional mistake is a sign of confidence. I respect that.

*********************
#111 Tannhäuser Gatekeeper on 09.25.19 at 11:24 am
Shawn Allen re: Bond ETFs.

BMO has one that holds only discount bonds (i.e. bought below par). This has tax advantages, but a disinterested observer might question the sanity of holding a passively managed portfolio of bonds trading below par.

You can look at the annual tax documents for bond ETFs and see how much of their payouts are allocated as interest, capital gains and return of capital.

**************************************
Thank you. That goes to show that if anyone DID want to use bonds for income, it gets complicated. Not only the the quarterly distributions are unpredictable to an extent but so is the tax treatment. The alternative is to buy individual bonds especially if they are high credit. But the buy/sell spreads (hidden commission) are huge so we might want to stick with new issues and hold till maturity. (I know, so 1980…)

Preferred share and REIT ETFs have the same issues of somewhat unpredictable cash flows and complicated tax.

I very much like the idea of ETFs in general but I am discovering things are not as simple as I thought.

#124 thebarold on 09.25.19 at 1:49 pm

Here’s a stat i’d like to see. A breakdown of the interest Canadians pay. Interest on a home, car, credit card, student debt and lastly investments. The challenge will be HELOCs – if they were to renovate and improve your home then housing, but if you use it for vacations and a new car, then put it with the credit card. To me interest to a bank on a mortgage is not that different from rent to a landlord unless you plan on paying off that mortgage. Most people budget based on monthly payments and will NEVER be out of debt.

#125 Trumpocalypse2019 on 09.25.19 at 1:54 pm

Trumpland is crumbling as I write.

This will be explosive.

PREPARE

#126 Sail away on 09.25.19 at 1:55 pm

#116 conan on 09.25.19 at 11:57 am

“Looks like another Trump impeachment nothingburger starting up”

Looks like a Trumpinator to me.

——————————————–

$100 says it’s not. But you’ll have to pay up instead of making excuses when impeachment once again fails to materialize. We could throw in a Kavanaugh bet as a sweetener.

I’d be way richer today if my Canadian Democrat friends didn’t welsh on previous similar bets. Bunch of pot-smoking non-debt paying hippies.

#127 IHCTD9 on 09.25.19 at 2:00 pm

#102 PastThePeak on 09.25.19 at 9:44 am

Yup. Hitting the half century mark in a few months. In a large international corp (as an engineer), but I know that after that any layoff a very high probability of never getting a similar job at similar pay & benefits.

I was aggressive in tackling the mortgage 10 years ago (more so that Garth would recommend), but mortgage rates for most my terms were in the 5+% rate. Good savings, wife works, RESPs stuffed, etc. It is coming down to what level of retirement – not whether we will be able to.
___

I got a taste back when I was 38. Employer of 15 years went down the tubes. I was lucky to get another decent job right away, but it took several years to get back to the same $. Today the $ is decent all things considered, but benefits are worse than before, and no pension anymore.

You’ve mentioned several ways you’ve future proofed your household: working wife, killing the debt, killing the mortgage, saving/investing. I was/am in the same boat. If I hadn’t got another job right away, it would not have been the end of the world.

Dual incomes makes a huge diff right across the board. No debt/mortgage means if one loses their job, the other can likely carry the regular household bills indefinitely if need be. Saving/investing covers the unexpected and builds for retirement: if one income dries up later in life, at least you made some hay while the sun was shining.

IMHO, these things will determine success vs failure in the future. Almost no one is going to put in 40 years steady with one employer and then sail off happily into retirement.

#128 Eks dee Siple on 09.25.19 at 2:16 pm

“Home Capital Group to sell $425M worth of uninsured mortgage-backed securities”

https://www.cbc.ca/news/business/home-capital-1.5295195

——————-

Shawn Allen is backin’ up the truck…

Itchy thinks that capitalism produces inventions. LOL. Again, mistaking one thing for another. Freedom is what produces progress. Socialism engenders freedom while capitalism suppresses it. If capitalist junkies had their way, we would still have a segregated Gator Bowl in Jacksonville, Florida like on September 11, 1964 when the Beatles refused to play. Heck, we would still have actual slavery.

Socialism is a progressive improvement over capitalism. A less selfish one, and more user-friendly, like Windows over DOS. Eastern bloc states from decades ago are not valid examples of socialism, they are examples of suppression of freedom aka communist rule. I recommend you not continue to confuse the two.

#129 IHCTD9 on 09.25.19 at 2:27 pm

#119 James on 09.25.19 at 12:29 pm

I have to say when was the last time anyone saw a frog? When I was a child we could catch them in the backyard and nearby field lots near creeks. So where are the frogs? Have they all croaked?
__

Frogs and toads are down this year – but I still see them pretty much every day, either hopping around my yard or squashed out on the road. Usually there are more of them though.

This year is the year of the bumblebee, butterfly, and all kinds of hopping insects. Never seen so many of these particular things around before, especially the bumblebees.

I think the spring sets the stage for what organism dominates for the summer. This year was a wet cool start.

Other years we’ve been swarmed with earwigs, box elders, wasps, sometimes nothing stands out. Different every year.

This year we’ve been seeing more opossums too – mostly dead on the road. Seen one alive crossing the road about 6-8 weeks ago, first time ever for me.

Things change. When I was a kid, you NEVER saw a fox. If someone saw a live fox, it was a big deal. Now they’re all over the place.

#130 Not So New guy on 09.25.19 at 2:38 pm

#30 MF on 09.24.19 at 6:28 pm

And a Con government is far more sympathetic to businesses and investment. Where you got status quo from I don’t know. Maybe that was some loud emotional belch.

“I think we are now in the midst of the pendulum swinging towards the latter.”

-Sure, because Harper didn’t get any heat during his terms?

MF

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

They may be more sympathetic to business but unfortunately, it is the big business kind and not the little guys on the ground floor in small business where most employment happens (or at least it did the last time I checked)

Both the L and C parties are basically globalist oriented and more interested in serving the international order than the country. The C party doesn’t do it in the same way of course. They don’t have a problem flooding the country with foreign workers in order to serve the mega corps and, of course, they are all for international imperialism

As for Harper, no. He ran the PMO like a little dictatorship. I’m sure Garth can fill you in on that. That is what got him fired. Unfortunately, he was replaced with more of the same just from the other side of the aisle and the fear of the voter is long gone

#131 Russ on 09.25.19 at 2:39 pm

maybe off topic but right on target…

Here is the link. Don’t do that again. – Garth

#132 N on 09.25.19 at 2:40 pm

Liberal Leader Justin Trudeau is promising Canadians access to interest-free loans of up to $40,000 to upgrade old furnaces, replace leaky windows or retrofit their homes to make them more energy-efficient and resilient to floods and wildfires caused by climate change.
https://www.cbc.ca/news/politics/liberal-climate-change-plan-home-retrofits-1.5296400

#133 Jackie DiAngelis on 09.25.19 at 2:45 pm

Greta will find out in who knows maybe 20 to 30 years that she will be Regreta.

She will be remembered, in any case. And you? – Garth

#134 Eks dee Siple on 09.25.19 at 2:47 pm

Tater actually apologized. Talk about progress. I’m leaning toward voting for the new Scheer government this time around. Of course, I don’t expect him to keep his promises, but it seems Andrew is getting in because Brett Gretzky is tired of playing PM based on all the ‘suddenly-found’ fake photos/videos from the Vancouver businessman. JT may even resign mid-campaign.

“Michael Adamson, a Vancouver businessman, provided the picture to the magazine. As of filing deadline, The Hill Times was not able to locate Mr. Adamson, by phone or online. As part of this effort, calls were also made to local political insiders who said they were not aware of him.” – The Hill Times

There are tools available on the net that allow you to determine if a photo or video has been modified. I’m sure none of you will make use of them because you schmucks believe the media 100%.

Greta is most likely a younger member of the Swedish royal family. From her speech I am sure you can tell she’s had training as an actor. As soon as I have confirmation I will let you know.

#135 Sandy Saez on 09.25.19 at 2:56 pm

If socialism is so great then how come India didn’t stay that way? It is because it sucks straight out.

#136 Shawn Allen on 09.25.19 at 3:08 pm

Canadian Home Prices versus U.S.

Maybe time to update that price chart showing the two countries.

In general we hear that Canadian houses cost more than American houses for similar.

Why?

In part due to higher costs? Basements needed due to frost, need more insulation, higher labour costs, more difficult to service our land?, taxes?, zoning laws?, many factors?

Americans can get 30 year basically open mortgages today at 3.5% with the option to refinance to a lower rate if that happens. No stress test needed because the rate is locked in for 30 years if the buyer wants though they have the option to get out or pay early if they want.

Why do the super attractive mortgages not result in higher U.S. home prices?

Could it be that it’s harder to actually get approved for a mortgage in the U.S.? Cheap locked in rate no good if you can’t access it.

#137 Tannhäuser Gatekeeper on 09.25.19 at 3:18 pm

“Why would one compare the yield on blue chips to bond yields? They are not the same thing, remotely.”

If I offered to sell you a new Porsche 911 at a certain price, or a new Hyundai Santa Fe at another price, which one would you choose?

#138 Doug in Londinium on 09.25.19 at 3:58 pm

You’d think people running to be prime minister would care. Really.
————————————————————–
If you find yourself in Drumheller, Alberta take a side trip into the Badlands, where the bones of prehistoric creatures like the dinosaurs have been found. I’m told that back in the days when those bones were still inside living animals governments cared more about such things and how they could affect people’s lives. Fast forward to now, your best defense is to fend for yourself and not depend on governments anymore than absolutely necessary.

#139 Dan In Calgary on 09.25.19 at 8:20 pm

LOL! I know Ken, he was part of my team for a short while. I read this post and immediately knew it was him. He actually quit and moved back to the midstream company within 60 days, turns out Trudeau makes a better boss…

Guess a defined benefit pension isn’t the be all end all of career planning, if your boss isn’t to your liking.

#140 DON on 09.26.19 at 12:36 am

#74 Raging Ranter on 09.24.19 at 10:56 pm

@#42 Shawn Allen, we do have a climate emergency. We are seeing funding for other environmental problems drying up as money gets eaten up by more and more ridiculous climate change programs, most of which are totally ineffective. We need a drastic repurposing of environmental funding AWAY from climate change initiatives and into environmental problems that are actually solvable.

I’m far more worried about the garbage we are putting into the oceans, the massive decline in the bird populations, and the destruction of natural habitat that continues unabated. All those problems are inherently fixable, yet we focus on the one problem that we can never get a handle on (mostly because we cannot even measure it properly). I’m getting extremely tired of every environmental problem, every species at risk, every invasive species, being blamed on climate change. We do have an emergency – people have been taken by a new religion, have become fanatical zealots, and they threaten to destroy the environment via misappropriated resources and misplaced focus. There’s your emergency if you need one.
*****************

Well said!

Let’s start with cleaning up our own back yards. There’s more than enough to do. Surely coming from a cave to a modern life is not the end of human progress. No extremes just a balanced and steady approach and careful timing (much like an engine). Throw in some critical thinking and never assume.

#141 Dave Stockbridge on 09.27.19 at 6:57 am

Well that is a good play on words, Regreta. Most of society is so brainwashed. People can’t remember what they had for dinner a day or two ago.