Regret

Tim and his squeeze Shelley (…“just don’t call me ‘the wife’”, she says…) bought their first home in early March in Cambridge, a bluish-collar kinda place. It’s a withering 100-minute drive to DT Toronto on the Death Freeway (401), and about an hour from where Tim works in southern Mississauga.

There was a bidding war for the $1.2 million fixer-upper, storey-and-a-half, 60-year-old pile. So T&S shelled out $1.385 million, no conditions with 20% down ($277,000 – half coming from parents) to avoid CMHC insurance. Closing was last week. But close, it did not.

First, they flunked qualifying for a $1.1 million mortgage, so Shelley’s mom had to co-sign. Then the bank appraisal came in light. Way light. The property, its report said, is now worth $985,000. The maximum to be loaned is 80% LTV, or just under $800,000. “We don’t have another $300,000 to do this deal,” Tim says. “We’re first-time buyers with no house to sell, so this is just effing insane.”

Third, Cambridge is in a kind of free-fall. Like K-W, Whitby, Caledon and King. The local realtor cartel says the average for a detached in February, when the kids were battling for an accepted offer, was $1.09 million. Last month it was $880,000. This month, brokers say, sellers will be lucky to get anything with a eight-handle.

“We paid too much,” Shelley writes, simply. “We can’t afford it. Now we can’t finance it. Our parents have nothing more to give us. The sellers won’t renegotiate the deal and we just got a nasty letter from their lawyer demanding we close or our lives will be ruined. Garth, what can we do? Please help!”

It’s turning into a common story. Bunnypatch prices collapsing. Buyers walking. And in the city scads of investors who bought pre-con condos never intending to close, but to flip, now can’t find buyers for their assignments. The only happy guys have LLB or JD after their name.

Before we get back to the newbies, consider how fast things are unwinding as the Bank of Canada prepares for a massive rate hike in a couple of weeks. Our astonishing new inflation stat (7.7%, on its way past 8%) means housing affordability is collapsing, says a new RBC report. As the central bank tries to douse high prices with reduced credit, the pandemic froth in real estate is being blown off.

This defies logic: it now takes 111% of average pre-tax household income to afford the average detached in Vancouver, even with a huge 25% downpayment. So just imagine how impossible it is to swing this with after-tax dollars. As mortgages pass mid-5%, then 6%, this barrier increases.

In and around Toronto, households need to spend 75% of their pre-tax income (or 100% of after-tax earnings) to effect a property purchase and shoulder ownership costs. “The Bank of Canada’s ‘forceful’ interest rate hiking campaign will further inflate ownership costs in the near term, putting RBC’s national affordability measure on a path to worst-ever levels,” says the bank.

What’s the fix, if the young are not to be perpetual renters? “We think the factor most likely to move the needle is a price correction.”

No kidding.

Here’s another fresh poll done by a real estate outfit, asking houseless people in Ontario if they think owning will ever be possible, even as prices drop. The result: 57% say they’ll never own in the city or town they now inhabit. In the GTA, it’s 61%. In Toronto, 74%. Areas to be hardest hit as the market erodes: “Bancroft, Chatham-Kent and Windsor Essex.”

Oh, and here’s another kick in the Millennial/Z groin. A survey done for HOOP, the huge healthcare pension outfit, says the kiddos “are headed for a perfect storm on retirement insecurity.”

“Well over half of Canadians expect these factors to cause financial challenges and force them to retire later. At the same time, funding retirement through the sale of a home is becoming a less viable strategy for many individuals.”

The problem is simple: increasingly Canadians have opted for a one-asset strategy. Buy a house. Pay the house off. Sell the house to finance retirement. Along the way, save and invest little (who can save when paying for a $1.8 million home?), and end up with a crappy mutual-fund-based group RRSP from work, plus CPP/OAS. So without that real estate to dump at 65 or 70, you may be pooched (unless you read this blog and learn about B&D).

Back to Tim and Stacey.

The first option is to renegotiate. Clear the lawyers and realtors out of the way and talk straight, seller-to-buyer. The vendor will lose if they have to resell in a collapsing market with few buyers. The purchaser will lose if whipped and sued. Everybody can still get something if the price comes down.

Second, ask the vendors for a VTB. They can take-back a mortgage for a few years to bridge the amount the bank would not cough up. The vendor gets an income stream on several hundred thousand. The buyers get the house and don’t lose their deposit. Even the realtors get paid. Only the lawyers suffer.

Third, T&S can try to find conventional bridge financing through a broker. They get the house, and avoid being sued (for damages, costs, plus the difference between their offer and the new selling price). But this is very, very, very pricey money (double digits).

Fourth, worst, walk. Feel like a victim. Lose the deposit. Have a judgment levied. Face the potential of garnisheed wages until you’re 82 or (shudder) chose bankruptcy, screwing your credit for years and possibly your employment options.

The times are a-changing. Makes you wonder. What were we thinking?

About the picture: “I’ve been reading you ever since a much older wiser man led me to your blog and all it’s Dogglyness way back in 2017,” writes Ben. “So far I’ve enjoyed getting the team’s insight and I especially like your writing. Since catching on things have improved for me bigly- thanks for all you do educating us who are mere money knowledge mortals. Here is my Bella Coola sidekick, Alice. She only lived the the exact time I spent in my property in Bella Coola, where she was in charge of the property. She especially loved her roses.”

176 comments ↓

#1 Millennial Surrealist on 06.23.22 at 2:06 pm

Ouch…. that’s brutal. A million dollar mortgage… how could anyone ever consider such a thing… they are seriousily hooped.

#2 KNOW IT ALL on 06.23.22 at 2:07 pm

No housing supply problem?
I guess CMHC is lying?

https://www.bnnbloomberg.ca/over-22m-housing-units-needed-by-2030-to-solve-affordability-crisis-cmhc-1.1782918

#3 Philco on 06.23.22 at 2:08 pm

#23 The Regulator on 06.22.22 at 1:31 pm
The Canadian government, and all western governments, are pointing fingers everywhere except at themselves for this slow motion train wreck. It’s Putin’s, fault, it’s climate change, it’s oil company greed. Look in the damn mirror, and accept responsibility for once in your lives, you idiots!
——————
Amen brother and all predictable.
Maybe if she all blows up the sheeple will figure out why we are here.
Maybe change can happen lol

#4 Juste pour rire... on 06.23.22 at 2:13 pm

Remember by chance that High Park “town home(realtor.ca)” that was actually a ground floor unit in a dense condo building? It was a 3 bdrm with view of local apartment complexes garbage dump areas along with the smell and over a $1000 monthly maintenance and over $500 monthly taxes. It listed at $1.625m, which after dropping $400K up front would net you an above $9500 monthly carry with the large mortgage. Better place could be rented block over for under $3000 a month with a nicer view.

Anyhow, it’s off, no longer listed.

But I was thinking…

Even if that place was “just” $800K, it would still require over $200K up front to take the keys and $3800 mortgage with the new rates, plus the fees, so over $5300 monthly carry…when a place just like it can be had for $2500 less a month to rent next block over with a killer view.

These prices have to crash hard to make any sense vs. renting.

#5 alexinvestor on 06.23.22 at 2:14 pm

Just noticed that bank share prices are down on a 1 year basis despite surging profits. Worst offender is CIBC which is down 15%. Huh … looks like investors don’t like their loan book which is 60% mortgages.

#6 Concerned Citizen on 06.23.22 at 2:15 pm

“Well over half of Canadians expect these factors to cause financial challenges and force them to retire later. ”

Who knew that decades spent pumping asset bubbles to help boomers would destroy the economic prospects of the average young person? The running joke is that the average millenials’ retirement plan is assisted suicide.

If you want a future filled with dignity, a family, and a balanced lifestyle, large swaths of Canada are no longer for you. Some might call them a dystopian nightmare, unless you flourish living 10 to a basement until you drop dead.

The message to young Canadians ought to be abundantly clear by now. The policy makers don’t care a lick about you. Your only purpose is to support the boomers – pour their coffee, pay their OAS, etc. Your quality of life means absolutely nothing to the various political parties.

#7 T Rex and the dinosaur clique on 06.23.22 at 2:16 pm

Walking on that purchase is a really bad idea.

If the vendors list and sell for like, 700K (which is very likely in this rapidly collapsing market) then they will be on the hook for a $685,000 judgement + legal fees. For a house they don’t even get to live in.

Basically, they have to come up with the 1,385,000 anyway. Either as a judgement debt, or as payment for a house.

VTB mortgage is likely the best way out. It won’t have priority and if the buyers go bankrupt anyway, the vendor will likely get nothing, and it gets rid of the Court case.

Other than that, I have heard that organs are still selling well on the black market…..you only need one kidney…

#8 A confederacy of dunces on 06.23.22 at 2:16 pm

DELETED

#9 Shawn on 06.23.22 at 2:16 pm

Furniture weight in CPI basket?

Don at 180 of yesterday’s edition noted:

Thank Dog they include furniture cause we all have to buy furniture on a daily/weekly basis.

*****************************************
The Furniture weight in the basket is 1.81%. You’re welcome.

Stats Can also has tools where you can select your own weight to calculate your own CPI. For example you can put 20% on booze if that’s your situation.

#10 Shawn on 06.23.22 at 2:18 pm

CPI doubters: Here’s the Personal Inflation Calculator.

Have at it. Report Back.

https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2020015-eng.htm

#11 wallflower on 06.23.22 at 2:19 pm

“Canada will be short 3.5M homes by 2030 on current building pace: CMHC”
This is exactly the number of immigrants coming in over same period.
CMHC is a crown corporation. The Liberal government is bringing in these high numbers.
Do they not talk to each other?

If Canadians living here cannot afford their rent (and certainly not to buy), who are these 3,500,000 rich immigrants? or is everyone now scrapping for the same box studio condo?

I continue to watch the rental metrics in my southern Ontariowe city.
Clearly all those pre-build buyers who retained these condos to flip are getting screwed as the listings pile up and fewer people can even qualify based on income for these ridiculous $2100+ per month boxes.

Closing in on month 4 on more of these listings.
(Oh, and yep, the agents are dropping listings to relist to restart DOM just as they do with sales listings!)
If you are renting new, do your research and negotiate. Do NOT go with list prices!

#12 V. Happy Renter on 06.23.22 at 2:26 pm

Just curious – as I haven’t gone through the process myself, but don’t people need letters of approved financing (or whatever that’s called) from a lender before a RE agent will even work with them? How is this only uncovered after a legitimate offer has been made?

#13 Fact Checker Fred on 06.23.22 at 2:27 pm

I concur.

https://www.cbc.ca/news/canada/london/london-ontario-real-estate-1.6492420

#14 Linda on 06.23.22 at 2:28 pm

‘Alice’ was obviously a keen gardener pup:)

On the bright side of today’s gloom & doom, no fewer than 3 Canadian cities – Calgary, Toronto & Vancouver – made the top 10 livable cities in the world list. I don’t think the price of housing was a major factor in determining whether a city made the cut. The focus was more on service availability, stable environment, cleanliness etc.

About the strategy to sell the house to fund one’s retirement. I’ve no doubt it does take place, but seems like the majority when/if retirement is nigh instead hang onto the RE. The main reason given is lack of affordable alternative housing. Rents, for instance, are apparently rocketing upwards even as RE prices are crumbling. I’d imagine this is not due to unscrupulous landlords gouging tenants but because said landlords are passing on some of the inflated costs of ownership. Utility costs have jumped, taxes of all sorts associated with property are up, if the LL has a mortgage on the property & had to renew at a higher rate their carrying costs are up. Plus the jump in maintenance costs for materials & labor both.

One question about the VTB strategy. Am I correct in thinking that would have the buyers paying two separate mortgages? One to the bank & another to the seller for the dollar amount that the bank wouldn’t finance? Talk about brutal debt servicing costs. Eek!

#15 Paddy on 06.23.22 at 2:29 pm

“57% say they’ll never own in the city or town they now inhabit. In the GTA, it’s 61%. In Toronto, 74%”

Hey, here’s an idea: Get the F&[email protected] out of the GTA. Lots of beautiful places with jobs in Canada other than Toronto/GTA/Ontario. Yes, I know it hard to believe being the center of the universe and all but take your head outa your ass. Just stay the hell outa NS, no jobs here and there’s no natural beauty.

#16 Victoria on 06.23.22 at 2:30 pm

One of the reasons this whole mess as started is because people like Tim and Shelly. They honestly think that a 60 year old fixer upper in Cambridge is worth 1.2 million?

One of the many reasons for over-priced property is people making stupid decisions. I don’t feel sorry for them. Moms fault too.

#17 TurnerNation on 06.23.22 at 2:30 pm

What could come next? Ok on a scale of 1-10 rank your surprise if our globalist-backed ruling junta regime introduced both an Inheritance Tax and a Principle Residence Gains tax.
(This is what is meant by ‘you will own nothing and be happy’. )
50% of income, 15% of consumption spent, and 40% of any remaining funds will be taken from us.

.Nearly half of Canadian renters will stay tenants indefinitely: survey (cp24.com)


— High Taxation is Like soooo worth it in this Former First World Country (It fell with the others that cold winter week 03/2020.)
Almost back to normal eh?! SO CLOSE. We are in Year 3.5.

.Quebec announces partial closure of 6 ERs amid staff shortages (globalnews.ca)

..Mask mandates on planes, trains a ‘minor inconvenience’ to protect others: minister (globalnews.ca)


— How they tell you there is a plan without telling you there is a plan?? We’ve seen this movie before.

.Higher oil and gas prices may be permanent: former Bank of Canada governor (cbc.ca)

.WHO considers declaring monkeypox a global health emergency (ctvnews.ca)

#18 Froggy on 06.23.22 at 2:31 pm

Hi Garth great blog again as always now l have a prediction not of one thing that will come from these rate increases
1.houses down 65-75 from peak and rents 30-40 from peak and all in 24 month’s you can still be a greater fool when prices are going down example when things get bad to worst learn to lowball thanks

#19 Froggy on 06.23.22 at 2:37 pm

Canada has been building 250,000 home’s per year how could we be short housing when we built 2.5 million home’s in 10 years and I think it’s more it’s all pumping no shortage just imagination there are maybe 500 thousand homes too many if not more

#20 HT on 06.23.22 at 2:37 pm

Sad, but what the heck were they thinking? 1.3m for a mediocre house in the sticks? At least it’s the fools now getting punished, rather than just the sensible folks. I’m afraid they are necessary collateral damage to get things back on the rails: Lower prices, linked to local incomes.

#21 Chris on 06.23.22 at 2:40 pm

I am amazed that people waive the financing clause when they are that tight on the budget. I realize you might lose the deal, however it’s better than the situation they are in.

Hard to feel sorry for these people. If pressured by parents, I hope parents continue to help them out as they deal with bankruptcy and gaining back a decent credit score.

#22 ogdoad on 06.23.22 at 2:43 pm

Ouch! Bet it felt great thinking that you made a great decision and that your house would be worth 2M in 5 years…then you’d be able to go to work (which must suck) and have something to brag about at lunch…Although, your story now is soooo much more interesting! Battle wounds, peeps!

But, look on the bright side. Its times of adversity that will bring you and your squeeze closer together. Like you’d actually be able to take on the world after weathering this storm. Like you’ll one day have the confidence to perhaps pull the trigger on another major purchase down the road…or the confidence to stop being a lemming. But good luck with that.

T $ S, you are the perfect candidates for my new HugVibes*(Og) procedure. First one is on the house (sorry)…They’ll be on their way shortly.

Og

#23 Mean Gene on 06.23.22 at 2:43 pm

If Shelly and Tim ever watched the TV show Better Call Saul, they want to track down a Vacuum Repair business that does other services.

Hopefully renegotiating works.

#24 Robert B on 06.23.22 at 2:48 pm

High inflation
High gas prices
Mortgage defaults
Higher interest rates
Lack of new oil pipelines

Trudeau will get the blame.
That just the way elections work
Pierre …….get ready

#25 TurnerNation on 06.23.22 at 2:48 pm

Cambridge? You could not pay me a million dollars to live in Cambridge.
An old side split there is worth $500,000 on a good day.

— Control over Travel/Movement is permanent. Secretive No-Fly Lists. This is Life in Kanada and only in Kanada.

https://www.cbc.ca/news/canada/montreal/air-canada-passengers-escorted-1.6496539
“The couple and 23 others were banned from Air Canada flights for next 24 hours
“The next row in front of us was also removed, and that included a couple that was in their 70s. At that point I was completely shocked. We had no idea what to make of what was happening,” Slatkoff said.
It wasn’t until the two reached the airport that an Air Canada agent told them the captain of the plane had asked for some people to be removed because they were drinking and not wearing masks.”

https://dailyhive.com/vancouver/air-canada-flight-motorsport-week
“On Monday, former NHL player Jeremy Roenick voiced his displeasure with the airline after flying out of a congested Montreal Trudeau Airport and now a motorsport publication out of London is accusing Air Canada of kicking off more than 30 passengers from a Montreal flight for “no good reason.””


— What is the end goal of all this, the Long Game?
Everything in this New System is run by A.I.

https://www.cp24.com/news/this-is-what-travellers-need-to-know-about-new-electronic-gates-at-toronto-pearson-1.5958728
“The eGates will be used to verify travellers’ identity and submit their customs and immigration declaration.
When travellers arrive at the eGates, they will scan their travel document at the machine. The device will then take a photo of the traveller before printing out a confirmation receipt. “

#26 Quintilian on 06.23.22 at 2:50 pm

Seems to me Tim and his squeeze Shelley are aware of this blog, and as such they would have undoubtedly read my posts. And yet they went ahead and purchased.

What did they think I meant when I repeatedly posted?

Tick Tock Tick T……

#27 Paul on 06.23.22 at 2:50 pm

So it starts divorce city!

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

#28 Faron on 06.23.22 at 2:53 pm

There’s that positive vix/spx correlation again. And, wow, commodities just getting murdered. 👀

#29 The Original Jake on 06.23.22 at 2:54 pm

Garth, please do an article on VTB. It’s something I remember from the 80’s when rates were through the roof and buyers needed to source other strategies to close. I think it’s coming back and hopefully my recent sale (end of July closing) doesn’t put me in that position if the buyers come a-beggin’.

#30 Søren Angst on 06.23.22 at 2:57 pm

My Lord.

That was devastating to read Garth.

Just devastating.

Tenderly written with some great advice in the end.

I truly hope it works out for them.

————-

The sun, for sorrow, will not show his head. Go hence, to have more talk of these sad things. Some shall be pardoned, and some punishèd.

– Prince Escalus, Epilogue, Romeo & Juliet

#31 Prince Polo on 06.23.22 at 2:58 pm

Tim says, “We’re first-time buyers with no house to sell, so this is just effing insane.”

No spidey-senses were tingling at the $1.385M price tag? What’s insane is people going frothy-FOMO nuts on any size mortgage and then crying about it afterwards! Reap it all. This industry needs an armageddonesque fire-cleansing, or a populace that has substantially better impulse-control.

Signed,
A loser renter & ironically impulsive commenter.

#32 pBrasseur on 06.23.22 at 3:02 pm

Canadian slow motion train crash under way!

At least these people may have the option to renegotiate but countless others have already moved in with their financial life in ruins.

CMHC message is clear, mass immigration is counted on to feed consumer demand to promote housing and sustain the Trudeaupia (productivity gains certainly can’t)! Never-mind if we are destroying the soul of this country in the process while overwhelming health care services (among other things) which are already severely rationed!

Guess what, this has already failed, the coming month and years will make that obvious!

#33 Summertime on 06.23.22 at 3:06 pm

Wait for a moment here.

https://ca.finance.yahoo.com/news/canada-hot-inflation-opens-rare-050850981.html

The slow start came in part because the bank locked itself into forward guidance in July 2020, promising to keep interest rates at rock-bottom levels until “the economic slack is absorbed,” which was expected to take years.

“If you’ve got a mortgage or if you’re considering making a major purchase… you can be confident rates will be low for a long time,” Macklem said in July 2020.

So the question is simple: Did or did not the governor of BoC mislead many ‘unlucky’ home buyers that are now thrown under the bus?

How stupid is to write cheques that your behind can’t handle?

And do they realize the consequences to people who trust ‘the authorities’?

Easy on Macklem. Two years later rates are still low when a five-year mortgage is 5%. When he gave the quote above, someone could lock in for sub-3% for half a decade. It’s FOMO, not CBs, principally responsible for bringing us here. – Garth

#34 Arctic Gringo: Qalunaaq on 06.23.22 at 3:07 pm

Tim has bigger problems.

Shelley (“the wife”) may know Stacey (“the gf”).

After all, Cambridge ain’t that big of a place.

That’s one one-asset strategy Tim needs to first figure out.

#35 db on 06.23.22 at 3:08 pm

Shockingly Garth, the ‘happy LLB’s’ you mentioned would actually probably give the same advice. The backlogs in the courts/tribunals is still very much a thing and a new civil case might be a long wait indeed. Though escaping a judgment against the buyers via bankruptcy is challenging it would depend on several factors; not necessarily an automatic win for the current homeowners. Strange times indeed.

#36 earthboundmisfit on 06.23.22 at 3:08 pm

Counter-claim / cross-claim against both the vendors and the purchasers realtors, citing breach of duty, lack of guidance and wrongful advice. Their errors and omission insurers have very deep pockets. But, you still don’t get the house. Then count your blessings … Cambridge is a bit of a s***hole.

#37 Eleanor Shellstrop on 06.23.22 at 3:09 pm

#7 T Rex and the dinosaur clique on 06.23.22 at 2:16 pm

Walking on that purchase is a really bad idea.

If the vendors list and sell for like, 700K (which is very likely in this rapidly collapsing market) then they will be on the hook for a $685,000 judgement + legal fees. For a house they don’t even get to live in.

Basically, they have to come up with the 1,385,000 anyway. Either as a judgement debt, or as payment for a house.

VTB mortgage is likely the best way out. It won’t have priority and if the buyers go bankrupt anyway, the vendor will likely get nothing, and it gets rid of the Court case.

Other than that, I have heard that organs are still selling well on the black market…..you only need one kidney…

___

I agree walking is not a great solution. But for the buyer to get the “best case scenario” judgment you describe, and to have it enforced, will take lots of $$$ spent on lawyers for the buyers.

So the best option is for T&S to try to renegotiate the deal, knowing the buyer likely doesn’t want to spent $50k to $100k+ on legal fees, plus many years of pain, to get that judgment (and there’s no guarantee the buyer will even get a single penny from the judgment).

T&S should consult a lawyer, and pay the relatively cheap consult fee of $200-$300 or so for decent advice, who will likely confirm what I’ve written.

P.S. I’m a lawyer who has chased after creditors…just my $0.02.

#38 DON on 06.23.22 at 3:12 pm

#9 Shawn on 06.23.22 at 2:16 pm
Furniture weight in CPI basket?

Don at 180 of yesterday’s edition noted:

Thank Dog they include furniture cause we all have to buy furniture on a daily/weekly basis.

*****************************************
The Furniture weight in the basket is 1.81%. You’re welcome.

Stats Can also has tools where you can select your own weight to calculate your own CPI. For example you can put 20% on booze if that’s your situation.

****
Thanks Shawn…but I know you know the main point…why is it even on their in the first place.

#39 Kuato Lives on 06.23.22 at 3:13 pm

Man. I’m in the Bahamas right now and got super drunk last night throwing money around like a drunken sailor. Bought an overpriced hat and a t-shirt and even gave a homeless guy a twenty spot. Money seems to have no value to me when I’m drunk. Woke up feeling terrible, not for the hangover, but for all the money I pissed away (about 200 bucks). But after reading that, I don’t feel so bad anymore.

#40 Søren Angst on 06.23.22 at 3:14 pm

Some GOOD news. Some bad news, by inference.

GOOD

StatCan today on EI Insurance April report, Cdns receiving EI, 2021 vs. 2022:

-69.3%

Mar —> April 2022 monthly change:

-3.8%

https://www150.statcan.gc.ca/n1/daily-quotidien/220623/dq220623a-eng.htm?HPA=1

——-

bad, by inference.

UK May Inflation = 7.9%, BofE rate = 1.25%
Canada May Inflation = 7.7%, BoC rate = 1.5%

Bank of England forecasting an 11% inflation rate by October.

ELEVEN PERCENT.

https://www.theguardian.com/business/live/2022/jun/16/bank-of-england-interest-rate-decision-markets-pound-ftse-business-live

Rationalize for yourselves.

——————

High Inflation will get much worse before it gets better. Brace.

Death by a thousand cuts.

#41 WTF on 06.23.22 at 3:14 pm

#10 CPI doubters: Here’s the Personal Inflation Calculator. Have at it. Report Back.
—————————————————————-
Yes “Finally” housing can be calculated above 3%. The percentage Stats Can apparently has been USING in THEIR calcs for “years”.

Jun 22
From http://td.com economics, note the highlight of shelter costs, which are now, finally, showing up in CPI. For years shelter costs never rose above 3% growth while house prices gained about 7% p.a.

#42 Polozified on 06.23.22 at 3:15 pm

A million dollar mortgage for a house in CAMBRIDGE!?

In what world does anyone think this is a good financial decision?

#43 Felix on 06.23.22 at 3:16 pm

Ah, yes, Regret.

Regret, and dogawful mutts, are an inseparable combination.

All truly honest and self-reflective dog owners deeply regret ever getting a canine.

Do not simply demean them. Be empathetic for their suffering and the lower level intelligence that led them to that decision in the first place.

And get a cat.

#44 Sail Away on 06.23.22 at 3:17 pm

#6 Concerned Citizen on 06.23.22 at 2:15 pm

“Well over half of Canadians expect these factors to cause financial challenges and force them to retire later. ”

The message to young Canadians ought to be abundantly clear by now.

——-

Crystal. To wit:

Enlist in the US Army for 4 years and gain US citizenship. It’s known as ‘options expansion’.

#45 Spring Fwd on 06.23.22 at 3:17 pm

Rate hikes due to reverse next year and likely back to zero.

Hold on kiddies, all will be back to normal soon and the real inflation can take hold.

Not a chance. – Garth

#46 DON on 06.23.22 at 3:19 pm

I know not the best choice…espescially if employment depends on not declaring bankruptcy, but if young they might be able to weather a bankruptcy storm…rather than years of high crushing payments. Buying the house was most likely somewhat of an irrational choice. The fix could be yet another irrational choice but one they could justify making in the short term to feel relief.

A bankruptcy of any kind at any time disqualifies a person from working with me or any other financial organization. Ever. Hardly worth it. Besides, it is the most amoral solution to personal actions. – Garth

#47 A01 on 06.23.22 at 3:23 pm

Great article, I feel for Tim and Stacey. The VTB is an interesting strategy, in this scenario who would hold the first mortgage, the bank or the sellers? I would get the nice lady at the bank would get paid first.

Bank, 1st. VTB, 2nd. – Garth

#48 Jacoubbi Palmeretto on 06.23.22 at 3:23 pm

DELETED

#49 the Jaguar on 06.23.22 at 3:24 pm

What a delightful photo of Alice with the eggplant coloured leafy background. One word comes to mind..Faithful.

As for Tim and Shelley……a more common predicament than many know. Unfortunately house porn has ruined the country , spurred on by the herd instinct and a lack of critical thinking. As for vendor take back…hmmm. Maybe go ask Doug Porter, Benny Tal, etc., what their employers position is on that solution.

#50 WTF on 06.23.22 at 3:24 pm

Watching the market unfold in DT Van specifically in my building. 2 identical Condo’s now up for sale.

1: Listed 3 months ago, started $1.7m now 1.6 asking
2: Just listed, higher floor, otherwise exact floor plan view. ask $1.5m

My Rent. 1/3 of the:

3/4 mortgage/insurance/tax/condo fees/lost opportunity of 1/4 DP. Aprox 10k per Month.

I am gob smacked anyone would purchase at this juncture unless they had buckets of $ to throw around.

#51 DON on 06.23.22 at 3:29 pm

#32 DON on 06.23.22 at 3:19 pm
I know not the best choice…espescially if employment depends on not declaring bankruptcy, but if young they might be able to weather a bankruptcy storm…rather than years of high crushing payments. Buying the house was most likely somewhat of an irrational choice. The fix could be yet another irrational choice but one they could justify making in the short term to feel relief.

A bankruptcy of any kind at any time disqualifies a person from working with me or any other financial organization. Ever. Hardly worth it. – Garth

*********
In full agreement. Crazy things happen when people are financially stressed and not forward looking at the consequences.

#52 Søren Angst on 06.23.22 at 3:29 pm

Hope last to die.

Hope for Tim & Shelley reaching an accomodation with the Seller.

Having said that and the unpalatable alternatives that Garth describes if matters do not go well for T&S will be an example of:

CREATIVE DESTRUCTION

Bad economic players taken out of the economy for decades and money they would have used/borrowed put into the hands of others.

——————

I hope the “other Cdns” learn to use that money for purposes other than the folly of Cdn RE.

Garth lists what can been done.

As usual, you outdid yourself Garth.

#53 wallflower on 06.23.22 at 3:34 pm

#33 Summertime on 06.23.22 at 3:06 pm
“…trust the authorities…” ???

Dude/dudette – interest rates are still low.
Get a history lesson.
Anyone spending anything above $20,000 should have basic financial literacy which includes history.

My grandparents did VTB for 18% in the 80s.
We have a long way to go before we move out of cheap interest rate zone. Variables still available well under 5%.

#54 T-Rev on 06.23.22 at 3:44 pm

Young kids. No one to guide them. Parents encouraging or at least enabling. Bad story, but no one died or got hurt so not tragic. They’ve got their health and their youth, the rest is just details. If option #1 doesn’t play out, and Depending on the assets at risk, might be better off to walk, get sued, declare bankruptcy, and just stay renting and keep your jobs. Bankruptcy probably sucks but that’s what it’s their for- better than suicide or a life of indentured penury paying off a property that you never even took possession of. Bankrupt people can still eat, sleep, f#*k, spend time with family, take the dog on walks and find meaningful jobs and hobbies. The rest is just details.

#55 Leftover on 06.23.22 at 3:47 pm

#34 Arctic Gringo: Qalunaaq on 06.23.22 at 3:07 pm

Good catch!!

#56 Søren Angst on 06.23.22 at 3:47 pm

Brave, Death Wish me went to WebBroker to assess the damage from yesterday and today wrought upon my Threadbare Portfolio, YTD:

+8%

excl. dividends.

Was 13% before the recent Mr. Market carnage. 17% the other week. And over 20% the week before.

Gargantuan June dividend coming this Monday.

59.16%

annualized. yeah oil.

Garth et. al. strategies + dividend Carpe Diem, Audentis Fortuna iuvat, me =

Head above water, so far.

Staying vested. Investing more in July. June my reno month.

—————–

Super duper A/C that laughs at Italia’s mid to upper 30s temps as of late & a kitchen reno…ya I know, on the latter still a Cdn to the core. But hey, I will pay a lot less for

Made in Italy

than you will Canada as I live in Italia. Eat your hearts out.

And best of all, designed by Italians, well except for the Siemens 40×65 cm, oven to 300 deg C (pizza), microwave, self-clean that also does steam cooking and has a temp probe that reads 3 locations for no undercooking.

Render unto Caesar the things that are Caesar’s and to Deutschland what are Deutschlands.

#57 T Rex and the dinosaur clique on 06.23.22 at 3:59 pm

RE: #37 Eleanor Shellstrop on 06.23.22 at 3:09 pm

I agree walking is not a great solution. But for the buyer to get the “best case scenario” judgment you describe, and to have it enforced, will take lots of $$$ spent on lawyers for the buyers.

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

The buyers would have to declare bankruptcy. That would be their only way out.

It is very easy to enforce a judgement. They would be garnished on their wages and their assets very quickly. It is as easy as clicking a mouse. Their lawyer, once they have the judgment, can now thanks to the pandemic, do it from their laptop.

And the seller already has their $277,000 deposit, so they are halfway there…..

#58 Philco on 06.23.22 at 4:00 pm

Awesome writeup Garth.
Yup what the hell were they thinking!!

#59 B&D on 06.23.22 at 4:03 pm

Speaking of B&D..
Black and Decker down 43% YTD.
Good opportunity or fool’s gold?
I’ll let you know in a year…

#60 Concerned Citizen on 06.23.22 at 4:04 pm

While it may look bad for this couple right now, they can take solace in the fact that central banks are doing next to nothing to control inflation. Take the Bank of Japan, for example. I read recently that if the Fed were to print as much as the BoJ is right now – adjusted to the size of the economy – then they would be printing $750B USD. And that’s not per year – it’s per month!

At any real interest rate, most western governments and a good chunk of the citizens are insolvent. That’s why central bankers will keep inflating away the debt by keeping real rates highly negative. For example, notice how the Bank of Canada has its prime policy rate below 2% while official CPI rages close to 8% (and inflation on a basket that actually represents the average Canadian is certainly well above 10%). This is no accident.

I bet we’ll see nominal rates of negative 4% before we see rates of positive 4%.

So just think, by 2030 this couple may be taking home a few million dollars in middle class income per year. They may not be able to afford a loaf of bread at that point, but at least their mortgaage payments will be very affordable!

#61 Søren Angst on 06.23.22 at 4:09 pm

#43 Felix

Better hope you don’t croak at home with your cat(s) there Felix. ‘Cause this is what’s ‘gonna happen to you:

https://twitter.com/BigImpactHumans/status/1537896876514500609

Even Elon weighed in on the article:

https://twitter.com/elonmusk/status/1537966358394073090

——————-

Get a dog. At least there will be something left to bury besides some gnawed upon bones and a lot of Regurgitate of you, here, there and everywhere.

#62 Richard L on 06.23.22 at 4:14 pm

People like the couple in your post have made poor economic decisions. They should suffer the results of these decisions without bringing many others down with them.

This is the basic principle underlying a free market economy.

#63 ogdoad on 06.23.22 at 4:22 pm

#34 Arctic Gringo: Qalunaaq on 06.23.22 at 3:07 pm

Hey, if you’re up front about it? Could be a win-win….Now that’s how to live, Tim.

Although, that was a slight, right G?

Og

#64 Penny Henny on 06.23.22 at 4:22 pm

Using ZEB as a proxy for Canadian banks they are now in Bear Territory.

#65 That Guy on 06.23.22 at 4:24 pm

I gotta push back on your assessment regarding pensions Garth. A DB pension doesn’t pay out to the children of the pensioner after death. A DC pension will have the remaining value passed on to the children of the pensioner. This prevents the transfer of wealth from generation to generation, leaving the middle class struggling to keep going.

#66 Diamond Dog on 06.23.22 at 4:25 pm

Easy on Macklem. Two years later rates are still low when a five-year mortgage is 5%. When he gave the quote above, someone could lock in for sub-3% for half a decade. It’s FOMO, not CBs, principally responsible for bringing us here. – Garth

Not to mention in the context of what Macklem said, 8 months later we could have had 10 year mortgages for 2.5 – 2.6%. That’s dirt cheap for a 10 year horizon on debt. Anyone variable or up for renewal not acting on 10 year terms like that…

Whenever things go south, people look for someone to blame. It’s usually going to be the leaders top down and there is culpability, not saying there isn’t but the blame game or conversely the credit game reminds me of something we’ve touched on years and decades ago in the this blog and it has to do with the guy who when things go right for him, takes all the credit.

We know the examples, the guy who says that he is highly successful and did it all alone with no one’s help…. completely dismissing the reality that he had help all along the way from public schools and parents that taught him how to read and write to the trades and universities that honed his thinking and the many bosses, managers and mentors that flattened his learning curve.

I could go on, from the mother/father or caregiver who fed and clothed him as an infant when he could not, to the tax dollars that built the roads, schools and libraries full of old ghosts reaching to the future with works they have learned, the machinery of economics that built the roads, bridges, highways, cars, internet, gas/power and employed him and kept him warm to the farms and manufacturers that fed him and on and on that helped this man succeed… or fail. Because no one does it alone.

We should be mindful of this for all of our future shared successes and failures, welcome to the human condition, no one person can take all the credit or blame much as some might try.

#67 wuhan we got y'all in check on 06.23.22 at 4:26 pm

A bankruptcy of any kind at any time disqualifies a person from working with me or any other financial organization. Ever. Hardly worth it. – Garth

in another lifetime I was a Chief Compliance Officer for an IIROC regulated firm. I was registering someone as a Registered Representative and this person had declared bankruptcy when she was much younger. If I remember right she had co signed for a boyfriend’s car and he stopped making payments. There were not a lot of assets – mostly the car payment. I was surprised that the bankruptcy trustee took than on.

Her registration was accepted in the end but she had to be placed in “close supervision” for a few years. Basically some extra paperwork.

I do know if you declare a criminal record due to a DUI IIROC really does not care.

#68 Joke of the day on 06.23.22 at 4:33 pm

A guy walks into a town with his cool dog.
The name of the town is Bella Coola.
So instead of naming his dog Bella, the most common name for dogs since Dog created Earth, he names it…. ALICE!? WTF?

#69 Caffeine Monkey on 06.23.22 at 4:36 pm

#2 KNOW IT ALL
No housing supply problem?
I guess CMHC is lying?
———-
I’m not inclined to trust their research. I think they lack objectivity.

The OECD says that the number of dwellings in Canada is a little on the low side, but not out of line with much of the OECD. In fact, Canada has a higher supply of housing than the US, where the bubble isn’t nearly as bad, and significantly more housing than South Korea and Mexico, which again have cheaper housing.

https://www.oecd-ilibrary.org/sites/c8b53b9b-en/index.html?itemId=/content/component/c8b53b9b-en

https://www.bnnbloomberg.ca/world-s-bubbliest-housing-markets-are-flashing-warning-signs-1.1782289

#70 Quintilian on 06.23.22 at 4:36 pm

The realtor cartel has always baited their victims with the idea that it’s ok to load up on debt because inflation would magically erase it away.

Ah the irony!

Inflation teams up with higher interest rates and slaughters RE in the end.

#71 yvr_lurker on 06.23.22 at 4:37 pm

A bankruptcy of any kind at any time disqualifies a person from working with me or any other financial organization. Ever. Hardly worth it. Besides, it is the most amoral solution to personal actions. – Garth
———–

Indeed not the best solution. However, when corporations or businesses go bankrupt, and use this strategy to avoid pension commitments or paying creditors (i.e. Sears, Nortel, Indalex, etc… a long list), are they not “amoral”. Corporations under U.S. law have been assigned the attribute of “personhood” , so I think the label “amoral” should apply. Many workers have been completely stiffed of their pensions by companies that left them under-funded and then went under. Bankruptcy laws on who gets the crumbs are stacked against former employees, as banks are first in line.

Can we use the term “amoral” to refer to this scenario as well? (hint: “yes and yes”).

#72 NOSTRADAMUS on 06.23.22 at 4:41 pm

MURPHY’S LAW.
Old man Murphy has been sleeping for quite a long time. In fact some people even think he has died. I can assure you he is alive and well, and in fact is starting to stir. He will always get the last laugh. He has a nasty habit of never allowing foolish behavior to go unpunished.
Banker, “Bar The Doors, They’re Not Getting Out”. It’s not a prison until you try the door. ZZZZZZZZZ, Maybe they slept through all the media reports, concerning the strong possibility of both a stock and real estate correction.
New point. On an early journey through the financial minefield, I think it would be in my best interest to let the young and foolish take the point. I’ll just follow behind at a safe distance, pay my debts down, and build up a war chest full of ready cash.
New Point. Look for a bombshell tax raid on pensions as governments everywhere will be looking to raise cash to pay back the growing pandemic bill. When it is all said and done pension savers will be thousands of dollars worse off in retirement as they suffer a steep reduction boost to all the money saved in their pensions. Politically speaking, it is far easier to implement tax grabs during a crisis. Look for government paid media hacks to leak their schemes prior to implementation. Steady lads, hold the line.

#73 Søren Angst on 06.23.22 at 4:52 pm

#62 Penny Henny

ZEB

YTD = -14.9%
Dividend Yield = 3.95%

I would rather commit Seppuku.

Wait a minute, I did. I bought TWTR at nearly $51. Today, oddly:

+0.6%
$38.68

My one and ONLY Albatross investment dragging down my YTD Rate of Return to +8%.

No wish whatsoever to add another Albatross like ZEB with a paltry dividend yield which is negative after inflation.

If you want Cdn dividend preferential treatment buy NXF instead like I did. YTD +10%, dividend yield 8.2% paid qrtrly. At least you’re keep up with inflation and then you too can write:

yeah oil.

#74 Squire on 06.23.22 at 4:56 pm

#2 KNOW IT ALL on 06.23.22 at 2:07 pm
No housing supply problem?
I guess CMHC is lying?

https://www.bnnbloomberg.ca/over-22m-housing-units-needed-by-2030-to-solve-affordability-crisis-cmhc-1.1782918
——————–
Not quite. The past 2 years greedy people were taking out HELOC’s to buy 2nd or 3rd properties because of their greed as prices were skyrocketing. Now they are going to get their asses handed to them. Soon lot’s of inventory.

#75 Faron on 06.23.22 at 5:03 pm

#59 B&D on 06.23.22 at 4:03 pm
Speaking of B&D..
Black and Decker down 43% YTD.
Good opportunity or fool’s gold?
I’ll let you know in a year…

With RE headed south, I wouldn’t touch anything having to do with new home nesting. Also, there is excess inventory of small, household gadgets among retailers. Not great for prices.

#76 crowdedelevatorfartz on 06.23.22 at 5:04 pm

@#26 Quinty’s questionable Query’s
“What did they think I meant when I repeatedly posted?”

+++
Your obsessive compulsive disorder was running rampant?

+++++
Trustees in Bankruptcy are going to be busy over the next few years…….

#77 millmech on 06.23.22 at 5:05 pm

#51 DON
Bankruptcy is more than seven years in this case, it could take three plus years before it goes to court and knowing that your done once judgement is rendered against you, what do you do in the time before court.
Garth states that you can kiss any financial job good bye, a lot of companies that do business with the USA have a security clause in the hiring process you have to clear a criminal records and credit check.
The next couple of decades of ones life can be severely financially restricted by that decision.
Do you take that golden opportunity job knowing that in bankruptcy you will be paying back even more or they may not even grant you a discharge at all.
Not a decision to be taken lightly, the same as with purchasing a home.

#78 Penny Henny on 06.23.22 at 5:05 pm

#34 Arctic Gringo: Qalunaaq on 06.23.22 at 3:07 pm
Tim has bigger problems.

Shelley (“the wife”) may know Stacey (“the gf”).

After all, Cambridge ain’t that big of a place.

That’s one one-asset strategy Tim needs to first figure out.

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

Maybe if the three of them move in together they will be able to afford the house.

#79 NOSTRADAMUS on 06.23.22 at 5:07 pm

DO YOU LIKE ME NOW?
Tim and Shelly, if you listen to the herd and do the honorable thing (so yesterday) and put yourself into a life of servitude, you will live your life as a cripple’s. Health and marriage issues will dog you until the end of time. The absolute best advice, call it a day and declare bankruptcy. Now!
That’s what bankruptcy laws are for.

#80 Jason on 06.23.22 at 5:08 pm

LOL cry me a river Tim and Stacey. Maybe they can start a gofund me page lol

#81 Mattl on 06.23.22 at 5:15 pm

Couldn’t sleep at night if my retirement was dependent on selling my home. I mean who wants to have to sell and move to a crappier place after spending your whole life working. I want to live a better life in retirement, and that may involve downsizing, but would hate to be forced into a 2 bedroom wood frame in my 60’s.

#82 Editrix on 06.23.22 at 5:17 pm

I have no sympathy for this couple. And to think they might be pulling down their parents with them, since the oldsters coughed up a big chunk of cash. You would think that since the parents lived through the mess the early 90s that they would have known better.

On the bright side, inflation in the UK is 9.1%, heading for 11% by year end. Things look a little better in our backyard.

#83 Penny Henny on 06.23.22 at 5:22 pm

#73 Søren Angst on 06.23.22 at 4:52 pm
#62 Penny Henny

ZEB

YTD = -14.9%
Dividend Yield = 3.95%

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

ZEB
52 week high $43.00
Closing price today $33.94

Down $9.06 or 21.1%

The dividend has not yielded 3.95% YTD.

There you go folks, Dolce math is wrong again.
I feel bad for and York U students who had to sit through your classes and spend good money on inferior teaching.

#84 gfd on 06.23.22 at 5:37 pm

https://www.rcmp-grc.gc.ca/en/news/2022/rcmp-investigation-leads-fraud-charges-two-individuals

#85 Sail Away on 06.23.22 at 5:42 pm

#68 Joke of the day on 06.23.22 at 4:33 pm

A guy walks into a town with his cool dog.
The name of the town is Bella Coola.
So instead of naming his dog Bella, the most common name for dogs since Dog created Earth, he names it…. ALICE!? WTF?

——–

A man meets a dog in the park and says, ‘Oh, what a pretty girl. What’s your name?’

Dog: ‘Alice’
Man: ‘Wow! You can talk! You should get a job at the circus!’
Dog: ‘They’re hiring electricians at the circus?’

#86 Banker's Note on 06.23.22 at 5:53 pm

#5 alexinvestor on 06.23.22 at 2:14 pm

Just noticed that bank share prices are down on a 1 year basis despite surging profits. Worst offender is CIBC which is down 15%. Huh … looks like investors don’t like their loan book which is 60% mortgages.

————-

You are right. Excellent news it is. Backing up the truck yet again! Who new the road to wealth was paved with Greater Fools.

Sometimes the Greater Fool is the seller, not the buyer.

Still lots of loan provisions on the Canadian banks books.
Fully 1/3 of Canadian bank mortgages are insured.
The vast majority of the remaining mortgages were written years ago, on favorable terms.. To be renewed at much higher profit to the bank… From people with considerable equity in their home.

Rising interest rates are a boon to financials.. Which includes banks and insurance companies both.

Further, people’s HELOC payments dont change unless the trigger rate is reached. This means that their entire monthly payment is not enough to cover the interest. So now the bank adds on the difference to your balance… Voila, even more interest will eventually be paid to the bank over time.

Besides, as Garth said today.. Personal bankruptcy would be a worst case scenario for homeowners. Most will do what they can to live another day.

Betting against Canadian banks has never, ever been a smart move. It’s like betting against the house. They make the rules so the odds are always in their favor.
Why be the greater fool?

#87 Andrewski on 06.23.22 at 5:54 pm

Hubris to humility. Ouch.

#88 JSS on 06.23.22 at 5:59 pm

Canadian dividend stocks on sale.

Here’s a few:
GWO $30.41 (6.4% dividend)

MFC @ 21.43 (6.2% dividend)

ENB @ $52 something (6.5% dividend)

CWB @ $25.57 (a buy at $24, when you get over 5% dividend)

CIBC @ $62 (less than a tank of gas)

Too many to name these days.

A nice way to buy some cash flow. If you have anything left at the end of the month ha ha.

#89 Reality Check on 06.23.22 at 6:01 pm

24 Robert B
Trudeau will get the blame.
That just the way elections work
Pierre …….get ready
————

And Trudeau will be re-elected because Ontario and Quebec will go liberal.

There is a huge void on the center/fiscal-right that the conservatives are throwing away by trying to appease the conspiracy/antivax/gates-is-satan crowd.
I am a life king fiscal-con and do not believe I will have anyone to vote for if the social/aluminum hat conservatives run the con party.

Liberal governments will be the result until the social-con geniuses figure it out.

#90 yorkville renter on 06.23.22 at 6:02 pm

I read this as “help, we gambled our life savings and parent’s savings away”.

WHO THE HELL THINKS $1.4mm in Cambridge was a good idea?!?! He could have bought in Misery-sauga for that kind of money and been a 10-minute drive to work.

Also, parental fail.

Emotional Train Wreck

#91 One potato two potato on 06.23.22 at 6:02 pm

@Linda

One question about the VTB strategy. Am I correct in thinking that would have the buyers paying two separate mortgages? One to the bank & another to the seller for the dollar amount that the bank wouldn’t finance? Talk about brutal debt servicing costs. Eek!

Yup.. You got it. This is done all of the time in commercial and development property transactions… First mortgage… Second mortgage… And even third mortgages.

#92 Victor Llearna on 06.23.22 at 6:04 pm

Everyday stupid sheep are learning lessons on not buying crappy overpriced houses. Hell, houses in Toronto and Vancouver were overpriced a decade ago.
Toronto had the worst of everything for canadian cities, worst traffic, worst public transportation, worst airport, worst gun crime, worst hockey team….

#93 yorkville renter on 06.23.22 at 6:07 pm

#75 – Faron – With RE headed south, I wouldn’t touch anything having to do with new home nesting

When times get tough people often renovate instead of move as it’s cheaper and they might not be able to sell to get what they need to move.

I’m not saying Black/Decker is a good buy, I’m just saying don’t dismiss the entire category because housing.

#94 Cole Harbour on 06.23.22 at 6:10 pm

#15 Paddy on 06.23.22 at 2:29 pm

Just stay the hell outa NS, no jobs here and there’s no natural beauty.

——

Couldn’t agree with you more. I visited once when my aunt was sick a dozen years ago. Thanking my stars she passed away and I needn’t return.

#95 Shawn on 06.23.22 at 6:20 pm

Why is Furniture in the CPI basket?

#38 DON on 06.23.22 at 3:12 pm
#9 Shawn on 06.23.22 at 2:16 pm
Furniture weight in CPI basket?

Don at 180 of yesterday’s edition noted:

Thank Dog they include furniture cause we all have to buy furniture on a daily/weekly basis.

*****************************************
The Furniture weight in the basket is 1.81%. You’re welcome.

Stats Can also has tools where you can select your own weight to calculate your own CPI. For example you can put 20% on booze if that’s your situation.

****
Thanks Shawn…but I know you know the main point…why is it even on their in the first place.

***************************************
Don, furniture of course is in CPI because it is a consumer good. CPI has to be based on the average spending on consumer goods and the things people spend their incomes on.

There is no such thing as an average consumer but there is such a thing as the average spending of all consumers.

Every month some people buy furniture.

It is a bit surprising that it is 1.81% of the basket but it seems some people spend a lot on furniture.

What other items would you suggest they simply leave out because they are not in your own typical monthly basket?

#96 Stone on 06.23.22 at 6:20 pm

#46 DON on 06.23.22 at 3:19 pm
I know not the best choice…espescially if employment depends on not declaring bankruptcy, but if young they might be able to weather a bankruptcy storm…rather than years of high crushing payments. Buying the house was most likely somewhat of an irrational choice. The fix could be yet another irrational choice but one they could justify making in the short term to feel relief.

A bankruptcy of any kind at any time disqualifies a person from working with me or any other financial organization. Ever. Hardly worth it. Besides, it is the most amoral solution to personal actions. – Garth

———

I agree with Garth that bankruptcy is definitely not a path to consider if other options are available however a bankruptcy stays on the credit bureau for 6 years after the discharge or 7 years without a discharge. After that, it’s gone. It’s a long time but it is gone.

Garth, how would you know after that period that someone was bankrupt? I’m really curious.

#97 tc-contra on 06.23.22 at 6:23 pm

I can’t help but think this situation may have the same ending as “When Harry Met Sally”. Mistakes like this NEED to have severe punishment. I mean, these two have been reading the blog and learned nothing??

Alternatelly, this could be thought of when FOMO led to YOLO, and then to… LLTL (Lesson Learnt Too Late)

#98 Happy hour on 06.23.22 at 6:26 pm

#9 Shawn on 06.23.22 at 2:16 pm
Furniture weight in CPI basket?

Don at 180 of yesterday’s edition noted:

Thank Dog they include furniture cause we all have to buy furniture on a daily/weekly basis.

*****************************************
The Furniture weight in the basket is 1.81%. You’re welcome.

Stats Can also has tools where you can select your own weight to calculate your own CPI. For example you can put 20% on booze if that’s your situation.

****

Actually, that is the number I have been using. Further, this whole inflation thing is overblown and doesn’t bother me at all. Sure, it has cut into my KD allocation but I’m willing to do my part to help the team.

#99 MadHatter on 06.23.22 at 6:33 pm

Garth what would happen to Shelley’s mom if Tim and Shelley decided to choose option 4? If Shelley’s mom co-signed the loan would her wages be garnisheed, her credit be screwed, and her employment options ruined? Is it true if you co-sign for a loan you are responsible for the payments if the borrower defaults?

#100 Reddy on 06.23.22 at 6:33 pm

I have to add a few more options for T&S. First off, I hope they are going to ‘make it’. What a stressful situation, I feel for them.

In addition to all the good ideas that Garth presented I wonder if they could get some money if they remortgaged their parents houses.. that’d be the same as getting an unsecured loan but at a far cheaper interest rate….

I was in the exact same situation a few years back… Three years to be exact… I put an offer in on a house no conditions… I used the same realtor as the vendor. Something went wrong and I tried to back out of the deal and hired… I had the same situation that T&S are in now, with the vendors threatening to sue me and also the real estate agent ready to sue me…. I made a lot of phone calls to the realtor, crying & tears etc. Finally the real estate agent came around to helping me. She had me get bank letters from the bank indicating I had no money and that I was financially destitute because of stock losses…. Then she told me she went back to the vendors and convinced them to drop the deal… She was successful, the vendors dropped the deal. Fast forward a few years, I bought two houses with the help of the same realtor, and we’re the best of friends.

#101 Eleanor Shellstrop on 06.23.22 at 6:36 pm

#57 T Rex and the dinosaur clique on 06.23.22 at 3:59 pm

The buyers would have to declare bankruptcy. That would be their only way out.

It is very easy to enforce a judgement. They would be garnished on their wages and their assets very quickly. It is as easy as clicking a mouse. Their lawyer, once they have the judgment, can now thanks to the pandemic, do it from their laptop.

And the seller already has their $277,000 deposit, so they are halfway there…..

_________

While T&S put 20% down (i.e. $277,000), Garth didn’t state what their deposit was – it could be 5% of the original price (i.e. $69,250).

It’s usually not easy to enforce a judgment unless the debtor happily hands over the money to the creditor. The process is usually long and annoying for the creditor – it can involve a bunch of third parties and lots of $$$ being spent.

Also, garnishing wages from average or even above-average wage earners like T&S (from what they sound like) is like trying to get a bucket of blood from a paper cut. It’s very painful for the debtor, but not terribly satisfying for the creditor. This is because Garth is correct that if T&S’ wages are garnished it will be until they’re almost dead, and likely the sellers won’t fully collect until they’re almost dead too.

Bankruptcy is not the only way out, and from the limited info given, should not be the first choice for T&S. If they do consider it, however, they should consult a reputable bankruptcy lawyer to determine how filing for bankruptcy could help/hurt them.

Negotiating with the buyers still appears to be T&S’ best and most reasonable option in this situation IMO.

#102 Reddy on 06.23.22 at 6:42 pm

Cash out rrsps? Cash out tsfa. And resp. Parents do the same?

Garth did a set on the same situation in the east end of Toronto. I don’t think it ended well for the buyer who walked away (got sued)

#103 Eleanor Shellstrop on 06.23.22 at 6:43 pm

#37 Eleanor Shellstrop on 06.23.22 at 3:09 pm

P.S. I’m a lawyer who has chased after creditors…just my $0.02.

___

I mean debtors, not creditors. Doh!

#104 Legal beagle on 06.23.22 at 6:47 pm

A bankruptcy of any kind at any time disqualifies a person from working with me or any other financial organization. Ever. Hardly worth it. Besides, it is the most amoral solution to personal actions. – Garth

_______________

Stop spewing your nonsense, Garth. While you may decide this for your organization based on your personal biases and preferences , I can assure you this is not true of most any other financial organization… And it is certainly not permitted for public sector employment.

I have provided legal counsel on this very topic to corporate clients over the past 2 decades. It rarely becomes an issue.

Sorry, counsellor. It is fact. Are you one of those back-of-the-bus-ad guys? – Garth

#105 Islanddave on 06.23.22 at 6:48 pm

Bella Coola… translation, beautifull valley, as I recall when I was up that way years ago
Personally I think Alice is a fine choice

#106 Reality is stark on 06.23.22 at 6:53 pm

Tim is going to find out that this is his problem and his problem alone.
Reality is stark.
He’ll be crewing on a boat in the Caribbean for food money in 6 months and the sellers can sue him all they want.
Will likely be the best move he’ll make in his life. At least he’ll be happy.

#107 Quintilian on 06.23.22 at 6:56 pm

#79 NOSTRADAMUS on 06.23.22 at 5:07 pm
“The absolute best advice, call it a day and declare bankruptcy. Now!
That’s what bankruptcy laws are for.”

Exactly, it is a tool of commerce, billionaires use it all the time.
It’s not like these two had fraudulent intentions from the start.
They were duped by society, the media, and their own parents.

I know what it’s like to go against the grain, I have been ostracized for resisting the stampede to the cliff.
Takes guts.

#108 jess on 06.23.22 at 7:00 pm

oxy+ Anadarko deal …who really won here?

https://www.texasmonthly.com/news-politics/how-the-most-hyped-u-s-oil-merger-in-a-decade-went-bust/

#109 Linda on 06.23.22 at 7:01 pm

#71 ‘yvr’ – Amoral indeed. What is even more so is that our government(s) with the exception of Ontario have never created or enforced laws that would prevent companies from offloading their pension obligations via bankruptcy. Ontario has some very slight pension protections in place as I understand it; insofar as I’m aware the other Canadian provinces/territories haven’t followed suit. There is I believe a federal pension receivership type of deal where the federal government can assume the obligation of administering ‘orphaned’ pension funds. However that doesn’t mean pension plan members will receive what was promised by the employer. I think what happens is that whatever funds remain are used to pay retiree benefits, often at a much reduced rate until such time as the fund is fully depleted. Plan members who are not retired effectively receive nothing. ‘We stand on guard for thee’ does not apply.

#110 Barb on 06.23.22 at 7:06 pm

Banks don’t want real estate departments. They don’t want the houses!
But that’s what bankruptcies will produce.

I feel sorry for these two.
Bad mistake, compounded.

#111 Stone on 06.23.22 at 7:12 pm

#99 MadHatter on 06.23.22 at 6:33 pm

Is it true if you co-sign for a loan you are responsible for the payments if the borrower defaults?

———

I guess there are people out there who actually believe co-signers have zero responsibilities. Actually, I know it.

When I was still working for a bank, we’d call co-signers for loans that were in default to cover the payments.

The co-signers response: What? I signed to be a co-signer. I didn’t sign to be responsible for the loan payments or to pay the loan off myself.

Me: What do you think you signed for?

You can’t make this shit up.

#112 Rowdie on 06.23.22 at 7:15 pm

Excellent and insightful information Garth. Enjoy your writings, keeping our spirits up for any good news!

We saved for 20 years to purchase a home, have also invested. The writing is on the wall, now it is patience. B.C. is still in the high prices (out of this world), but time will shake the sellers to drop their asking prices. And yes cash is King, for those who saved, good for you, you will be rewarded with a lovely home (and affordable for a change).

Cheers (no we are rockin!)

#113 Flop… on 06.23.22 at 7:19 pm

#93 yorkville renter on 06.23.22 at 6:07 pm
#75 – Faron – With RE headed south, I wouldn’t touch anything having to do with new home nesting

When times get tough people often renovate instead of move as it’s cheaper and they might not be able to sell to get what they need to move.

I’m not saying Black/Decker is a good buy, I’m just saying don’t dismiss the entire category because housing.

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

Hey Yorkie, another point could probably be made on this too.

When money gets tight, people go and buy the tool they need and do it themselves, to try and save on labour costs.

My 81 year old Father in law just bought a $50 drill with a cord , just in case something goes wrong at the house.

He hasn’t got a hope in hell if using it, but at least I’ll be able to use it when I go around to rescue the situation…

M48BC

#114 Linda on 06.23.22 at 7:22 pm

#71 ‘yvr’ – did a quick search. Turns out the receivership deal I mentioned IS the pension protection offered by Ontario & Ontario alone. So the federal government isn’t who offers it. Ontario will guarantee benefits for pension funds belonging to bankrupt employers (presumably only those employers who operate in Ontario) up to $1,000 per month. I’d expect that if a retirees pension was less than $1,000 prior to bankruptcy that they would only receive whatever benefit they were previously entitled to, so if they got $750 a month Ontario would only pay up to $750 per month.

#115 crowdedelevatorfartz on 06.23.22 at 7:27 pm

@#104 Legal Beetle
” I can assure you this is not true of most any other financial organization…
+++++

It’s the Law in BC.
Any person who declares bankruptcy cannot become OR retain their Financial Advisor’s License.

For obvious reasons.
Perhaps your were thinking of Realtors?

#116 This joke is on ewe on 06.23.22 at 7:29 pm

#85 Sail Away on 06.23.22 at 5:42 pm
#68 Joke of the day on 06.23.22 at 4:33 pm

A guy walks into a town with his cool dog.
The name of the town is Bella Coola.
So instead of naming his dog Bella, the most common name for dogs since Dog created Earth, he names it…. ALICE!? WTF?

——–

A man meets a dog in the park and says, ‘Oh, what a pretty girl. What’s your name?’

Dog: ‘Alice’
Man: ‘Wow! You can talk! You should get a job at the circus!’
Dog: ‘They’re hiring electricians at the circus?

——-

Wow. All those nasty people on this blog said you didn’t have a sense of humour.

Personally though… I would have chosen “software developer” instead of electrician. Everyone knows an electrician requires an opposing phalange.

#117 CL on 06.23.22 at 7:44 pm

Is it just me or does it seem crazy that the world is wobbling with still historically low Fed funds rate? Canadian real estate can’t even handle a 2.5% overnight rate? amazing.

#118 Shawn on 06.23.22 at 7:45 pm

In other News…

Supreme court strikes down New York’s added rules on carrying guns.

The news story said 43 states require a licence to own a gun.

So seven states don’t even require a licence? Can’t make this stuff up. Crazy country.

Half their rules carved in a stone constitution over 200 years ago.

The other half based on some bible stories written 2000 years ago.

Most advanced country on earth? Yikes?

#119 DON on 06.23.22 at 7:46 pm

#95 Shawn on 06.23.22 at 6:20 pm
Why is Furniture in the CPI basket?

#38 DON on 06.23.22 at 3:12 pm
#9 Shawn on 06.23.22 at 2:16 pm
Furniture weight in CPI basket?

Don at 180 of yesterday’s edition noted:

Thank Dog they include furniture cause we all have to buy furniture on a daily/weekly basis.

*****************************************
The Furniture weight in the basket is 1.81%. You’re welcome.

Stats Can also has tools where you can select your own weight to calculate your own CPI. For example you can put 20% on booze if that’s your situation.

****
Thanks Shawn…but I know you know the main point…why is it even on their in the first place.

***************************************
Don, furniture of course is in CPI because it is a consumer good. CPI has to be based on the average spending on consumer goods and the things people spend their incomes on.

There is no such thing as an average consumer but there is such a thing as the average spending of all consumers.

Every month some people buy furniture.

It is a bit surprising that it is 1.81% of the basket but it seems some people spend a lot on furniture.

What other items would you suggest they simply leave out because they are not in your own typical monthly basket?

************
I might attempt to replace items that some buy for items that most buy all the time. That’s the type of inflation that hits home and truly matters.

#120 Gerry on 06.23.22 at 7:50 pm

We have lost our way in Canada for sure when it comes to money. We used to be a nation of savers. I remember we had 15% to 19% savings rates back in late 80’s early 90’s. I do blame the rapid drop in interest rates from 9%, 10% or higher which I know was not sustainable but the past few years of 1% to 2% was really ridiculous. I know many people if had the chance had 5%, 6% or near normal interest rates to save in and central banks that actually did their jobs instead of helping prop up real estate, speculation and massive borrowing, debt financing by governments, corporations, consumers instead of dealing with price stability, inflation fighting and unemployment at decent levels 5% or lower.

#121 Shawn on 06.23.22 at 7:52 pm

Inflation – Shop Around

“The wife” bought a big package of pork chops today for $11.75. They were $3.50 a pound. Not marked down, that was the regular price.

Grapes are usually more than that per pound.

Apples can be $3.50 a pound.

So this seem pretty good.

Vote with your wallet and buy pork instead of beef. Buy the deals.

#122 T-Rev on 06.23.22 at 7:56 pm

As much as this sucks for this young couple, as I’ve mentioned above they will survive. And o hope this story, and stories like it, get shared far and wide and passed down to the next generation and we never again see the level of stupidity we’ve seen over the last 2 years…or the last 10 for that matter. All the bubbles, all the debt…hope we learn.

#123 Flop… on 06.23.22 at 7:59 pm

Flop Drops.

Yeah, I’ve been slacking lately, the boss of this blog doesn’t make excuses so I won’t make any.

It’s just a slow grind down in Vancouver by the looks of it.

I tagged 10 or so detached houses to see if anyone is talking porkies, we’ll see what happens with them.

Can you define a slow melt one or two sales, probably not but this combination seems to match up with most numbers I’ve seen bandied
about.

The first side of the duplex sold in February for 985k.

They wanted over a million, but got close enough.

https://www.zealty.ca/mls-R2645975/737-E-26-AVENUE-Vancouver-BC/

This side of the duplex just sold for 942k.

Slightly bigger even on this side, most likely less waiting time to move in.

4.3% cheaper, pretty much like for like product as your gonna get without the lower/ higher floor price to work out on a condo combination.

https://www.zealty.ca/mls-R2645955/715-E-26TH-AVENUE-Vancouver-BC/

Nothing earth shattering, just a bit more jangle in ya jeans.

No fire sale yet, just a few Westside mansions being burned for insurance money…

M48BC

#124 Legal Beagle on 06.23.22 at 8:20 pm

#104 Legal beagle on 06.23.22 at 6:47 pm
A bankruptcy of any kind at any time disqualifies a person from working with me or any other financial organization. Ever. Hardly worth it. Besides, it is the most amoral solution to personal actions. – Garth

_______________

Stop spewing your nonsense, Garth. While you may decide this for your organization based on your personal biases and preferences , I can assure you this is not true of most any other financial organization… And it is certainly not permitted for public sector employment.

I have provided legal counsel on this very topic to corporate clients over the past 2 decades. It rarely becomes an issue.

Sorry, counsellor. It is fact. Are you one of those back-of-the-bus-ad guys? – Garth

————

Actually, no… In fact, we are just down the street from your office. We have no need to advertise anywhere, especially not on blogs that pass suspect advice under the guise of fact. In reality, we have more clients than we know what to do with.

That being said, I have no doubt you would have difficulty affording our per diem rate, so I’ll make this short.

– public sector cannot discriminate based on bankruptcy
– only a minority of positions can use bankruptcy as a valid reason for not employing someone, typically related to matters around bonding. A small percentage of people at best
– you cannot fire one of your employees because they declare bankruptcy.But if you decide to, please pass on my email address. I would be happy to meet you in person in the courthouse where I would be happy to teach you the finer points of bankruptcy laws as they pertain to employment in Canada… At your expense, of course.

Why do you come to a blog that you then slag? Weird. Anyway, nothing you said refutes my statement. Bankruptcy = no job on Bay Street. Have a lovely tort. – Garth

#125 Phylis on 06.23.22 at 9:14 pm

#10 Shawn on 06.23.22 at 2:18 pm
CPI doubters: Here’s the Personal Inflation Calculator.

Have at it. Report Back.

https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2020015-eng.htm
Xxxxxxx
8.5

#126 crowdedelevatorfartz on 06.23.22 at 9:33 pm

Legal Beetle.

Check the link

https://www.mymoneycoach.ca/blog/cant-file-for-bankruptcy-canada-need-alternatives.html

The seventh item down is titled
“Occupations affected by bankruptcy”.

What firm do you represent?
I want to avoid it.

#127 Bezengy on 06.23.22 at 9:40 pm

#104 Legal beagle on 06.23.22 at 6:47 pm
#115 crowdedelevatorfartz on 06.23.22 at 7:27 pm

————-
My financial advisor went bankrupt, shit happens I guess. Sure miss his secretary.

#128 1984 on 06.23.22 at 9:40 pm

#17 TurnerNation on 06.23.22 at 2:30 pm
#25 TurnerNation on 06.23.22 at 2:48 pm

—-

You just need more abusers of your own system since March 2020. Do you live in Canada and that is why you concerned? Are you posting this through an identifiable IP that can be linked to your location and who you are? Is it an AI? Is it a honeypot that is allowed by default? It sounds smarter than average after all…

#129 PeterfromCalgary on 06.23.22 at 9:59 pm

I guess some folks felt that interest rates lower than ever would last forever. I couldn’t find the forever chart of interest rates but here is one that goes back to 1350.

https://www.visualcapitalist.com/the-history-of-interest-rates-over-670-years/

#130 Shawn on 06.23.22 at 10:01 pm

Thanks for Moving to Alberta!

Looks like a bunch of you took me up on the invitation.

Data out yesterday shows that in Q1 of this year the net migration of people into Alberta surged to levels last seen in 2014 (yes, the last oil boom). Most are coming from other provinces. Smart move.

As someone else posted a day or so, we got room for more.

https://economicdashboard.alberta.ca/NetMigration

#131 Russ on 06.23.22 at 10:05 pm

Shawn on 06.23.22 at 7:45 pm

In other News…

Supreme court strikes down New York’s added rules on carrying guns.
The news story said 43 states require a licence to own a gun.
So seven states don’t even require a licence? Can’t make this stuff up. Crazy country.

Half their rules carved in a stone constitution over 200 years ago.

The other half based on some bible stories written 2000 years ago.

Most advanced country on earth? Yikes?
======================================

I hear ya Shawn,

Crazy to be sure, especially since that whole thing was based onna typo.

It was supposed to read “… the right to bare arms…”

Long sleeve shirts were the norm back then but some younger people wanted to be goin out in public with short sleeves.
As they say, “The rest is history.”

Nothing wrong with guys wearing T-shirts and you shouldn’t need a license for it, is my belief.

Cheers, R

#132 Doug t on 06.23.22 at 10:08 pm

Life is full of lessons – everyone young and old must deal with them and you either learn from them or not – that’s LIFE

#133 Jane24 on 06.23.22 at 10:08 pm

Kids just walk. So what if you declare bankruptcy, that is what bankruptcy laws are for. You don’t have a house so you have nothing to lose. Even better move out of Canada now. Lots of opportunities in the States and Europe. Take your intended house deposit with you.

If you close on this house you will hate the house, your parents and each other for years. That house is going to $750,000 tops. Maybe less. $1.4 million plus closing costs will take you a lifetime to pay off. It is just impossible.

I believe that Royal Lepage was touting house prices in Canada to continue to increase in 2022. Why aren’t these clowns being sued?

#134 Shawn on 06.23.22 at 10:23 pm

Lowest interest rates ever and perpetual bonds

#129 PeterfromCalgary on 06.23.22 at 9:59 pm

I guess some folks felt that interest rates lower than ever would last forever. I couldn’t find the forever chart of interest rates but here is one that goes back to 1350.

https://www.visualcapitalist.com/the-history-of-interest-rates-over-670-years/

******************************
Great chart. It shows perpetual bonds some of which still exist.

Those are great fun. Their value approaches infinity if the going rate on perpetuals approaches zero. And their value falls precisely in half every time the going rate doubles.

Such a bond worth $100 at 1% becomes $50 at 2%, $25 at 4% $12.50 at 8%. Of course the going rate on a perpetual never did get as low as 1% I imagine. Those are probably really collector pieces these days since so few exist. Where can I get one?

#135 wallflower on 06.23.22 at 10:31 pm

#124 Legal Beagle on 06.23.22 at 8:20 pm
You are the epitome of screwball.

And now that we all know where your offices are located, we know to avoid the offices of the screwball legal team.

#136 Diamond Dog on 06.23.22 at 10:33 pm

#124 Legal Beagle on 06.23.22 at 8:20 pm

If memory serves as it’s been discussed years ago here (more recently as well I think), to sell goods or services outside ones place of business (in some cases within) one needs to be licenced (usually by municipalities) and bonded by the provinces to do so.

Take note, bonding requirements vary greatly from province to province and case by case, so there is no one size fits all answer other than to say that with bonds, background checks are sometimes voluntary (depends on what insurance is looking for) and as such can open the door for flaws. Some provinces focus specifically on theft and fraud meaning one can have a wide range of criminal offenses on their record (from intoxication to murder) and still be bondable.

As to bankruptcies specifically:

https://www.bankruptcy-canada.ca/after-bankruptcy/2007/10/bondable.htm

There is a period of time where someone filing for bankruptcy has to wait to be discharged to be bondable. The normal timeline is 3 to 5 months. Bankruptcies are automatically discharged after 9 months and looks to be a nationwide norm.

Btw, it’s called the internet where such answers aren’t terribly hard to find.

#137 crowdedelevatorfartz on 06.23.22 at 10:42 pm

@#@133 jane24
“Kids just walk. So what if you declare bankruptcy, that is what bankruptcy laws are for.”

++++

It’s hard to be the first person in the pool with all your clothes on at a party.
But.
In this looming financial nightmare case.
I’d rather be the first in the pool than the last.

A friend who worked for Trustees in Bankruptcy once commented ( early 1990’s )
“It’s easy to declare bankruptcy the first time….the second time….not so much…”

So if anyone out there is thinking if going “Big casino”…”All in” and taking the plunge…..

Do your homework first.

#138 crowdedelevatorfartz on 06.23.22 at 10:46 pm

@#127 Berzengy
“My financial advisor went bankrupt, shit happens I guess. Sure miss his secretary.”

+++
Yep.
The useless P.O.S. financial grifter i once had was close to bankruptcy and one of his more stunning “assistants” eventually married the #1 “Whale” in his portfolio of clients……and promptly moved his account away.

#139 Doing my Part on 06.23.22 at 10:48 pm

Buying bitcoin is like buying lottery tickets, a few winners but many losers, all looking to get rich quick. Odds are you will lose.

#140 Ponzius Pilatus on 06.23.22 at 10:52 pm

#136 Diamond Dog
Btw, it’s called the internet where such answers aren’t terribly hard to find.
————————-
That’s the problem.
Nowadays everyone who knows how to Google thinks he’s an Einstein.
CEF is a good example.

#141 morry on 06.23.22 at 10:55 pm

Dear T&S. Tell the vendor to take a long walk off a short pier…

#142 Cowtown Cowboy on 06.23.22 at 10:57 pm

This is simply God’s wrath for voting liberal…reap what you sow.

#143 Reynolds753 on 06.23.22 at 11:10 pm

So many opinions on Tim and Shelley and so little time to respond. Without any evidence to prove otherwise I will assume that they are a good Canadian couple. They want to settle down. They may well want a family. They have been priced out of the near GTA. They end up buying a property that in retrospect may well have not been a good decision. They made their decision at the time based on the current circumstances. They wanted a place to call “home”. This is the great Canadian dream. Please tell me, all you naysayers, did they not follow the usual “life in Canada” rules?

I do not have a good answer for this couple’s conundrum and my heart goes out to them. Perhaps this should be settled with a good attorney well versed in real estate. I believe that some sort of price renegotiation would be appropriate. When did the sellers buy this property and for how much? What can they reasonably expect to gain from this property? Did I mention the good attorney? Find this out. All (sellers and buyers) stand to lose if a reasonable compromise cannot be achieved.

If the sellers decide to be hard assed non-negotiators then the negotiation options are limited. If a presumably decent couple need to declare bankruptcy as the last resort then Canada is in big trouble.

#144 islander on 06.23.22 at 11:26 pm

https://www.cia-ica.ca/docs/default-source/research/2022/rp222024e.pdf

Thinking of buying a condo?
Worth a read before you fork over your millions!

“In February, the Canadian Institute of Actuaries (CIA) released a paper “Longevity of Infrastructure – Reserving and Risk Management in Condominium Maintenance in Canada” that looked into the likely repair needs and financial preparedness of condominiums across the country. Its case-studies focused on a normal high-rises (less than 50 storeys)……. found wide-spread under funding compared to their likely needs.
…one of its key recommendations focused on the reality that with a different legal regime in every province and territory and almost no effective oversight, the true physical and financial health of the multi-billion dollar stock of residential buildings is impossible to predict.”

#145 Cars on 06.23.22 at 11:28 pm

Today’s proliferation of SUVs encompasses everything from the school run to high-end luxury, but they are still considered anathema by many car enthusiasts. So imagine the angst it caused amongst the Porsche faithful when their beloved company announced that it was going to be launching a high-riding off-roader. But, make no mistake, this model was sorely needed.

Ten years before the Cayenne made its debut at the Paris motor show in 1992, Porsche was struggling. By the end of that year it had registered a loss of some 240 million Deutschmarks and in the 1992-93 fiscal year had sold only 14,362 cars. Relying on the legendary 911 sports car simply wasn’t enough, and while the arrival of the more affordable Boxster in 1996 marked the beginning of better times, more was still needed.

Enter Project Colorado. Porsche had reportedly been considering an MPV (people carrier) but the US operation convinced the company that an SUV was the way forward. It could have been a joint venture with Mercedes-Benz, but when that foundered Porsche turned to a collaboration with Volkswagen, developing the Cayenne alongside the latter’s Touareg.

Even within Porsche this was a controversial project, but being seen as crucial to the company’s survival they went all in, going so far as building an entirely new factory in Leipzig to produce the Cayenne.

The result was a car that did nothing to convince the sceptics. Applying 911 design cues to a two-tonne behemoth wasn’t an easy marriage, and while Stephen Murkett’s styling efforts can be viewed more kindly two decades on, the resulting car still presents a visual challenge to many.

Love it or hate it – I veer towards the former – the Porsche of today owes its success to the Cayenne. It is perhaps hard to imagine saying such a thing 20 years ago, but it’s part of the ubiquity of the SUV.

https://www.telegraph.co.uk/cars/classic/porsche-cayenne-car-saved-company/

#146 DON on 06.23.22 at 11:42 pm

#110 Barb on 06.23.22 at 7:06 pm
Banks don’t want real estate departments. They don’t want the houses!
But that’s what bankruptcies will produce.

***************************
JPMorgan starts cutting jobs in mortgage unit as homebuying demand cools
1 day ago Yahoo

#147 Mr. X on 06.23.22 at 11:48 pm

I am now an avid reader and have deciphered many abbreviations but I do not know what ‘B&D’ is. Can anyone expand on this for me? Thanks. Party on Garth

#148 Waystar Royco Shareholder on 06.24.22 at 12:12 am

I’ve heard of a guy that declared bankruptcy several times and still became president of the United States!

#149 Terry on 06.24.22 at 12:12 am

It’s all coming apart and blowing up now. Real Estate is crashing, Stock and Bond markets are slowly melting away as the Bear market gets underway, price inflation is everywhere, crypto markets are imploding, the auto industry is a wreck, war is raging, shortages are becoming permanent, world trade is falling as globalization fails everyone, our beautiful county and the whole indebted world is broken, we are all distracted, divided, anxious, angry and are puttering along hoping it will get better…………..but we are all too “woke” and too fearful of the Kens and Karen’s of the left that have led us here. This decade, the decade of the 2020’s is a 10 year long Depression that we are now going through. 2022 is the pivotal year that is showing us what the true damage is that we did to our economies when we locked down in 2020 & 2021. The lock-downs were a HUGE mistake! Now everyone can see what the true damage is. It will be bad and it will get worse for years to come. I don’t wish what is happening and how much worse it’s going to get on anyone. Life is difficult and short enough without everyone having to live through a Depression. But it’s now here and it will affect everyone in the years to come.

#150 fishman on 06.24.22 at 12:15 am

Its not the end of the world going broke when R/E deals go sideways. It happened to Arthur Currie in Victoria prior to him becoming Canada’s 3rd greatest General. 1st. was Wolffe, otherwise we’d all be speaking french. 2nd was Brock, we’d all be speaking amurrican. I know, Delaire is a good one too, but you don’t get top ten if you lose. So hang in there all you failing R/E wannabe titans. There’s a “good” war happening as we speak waiting for you to redeem yourself. Just remember, theres no redemption from a basement cell in Lubyanka.

#151 Johnny on 06.24.22 at 12:24 am

You forgot to mention that the parents also co signed and are screwed as well. T says “ the parents have no more to give”, sadly not true. The parents are in the hook for everything. Sniff.

#152 yvr_lurker on 06.24.22 at 12:33 am

#71 Amoral indeed. What is even more so is that our government(s) with the exception of Ontario have never created or enforced laws that would prevent companies from offloading their pension obligations via bankruptcy.
——

Thanks for checking into this. Indeed, the scenario of a hedge fund based in the U.S. taking over a company, raiding the assets, and then declaring the business no longer viable, has sometimes been the shrewd “business” model employed. Long-standing employees with supposed pension benefits due to years of work at the firm are left collecting crumbs, with scant Gov’t laws to protect their interests. It is the way the system works unfortunately.

As for declaring bankruptcy, I would be loathe to pull that final card, but it is not my place to judge those who do. Moreover, whether one would or would not get a job on Bay street with a bankruptcy on file is not a concern for most of us. Frankly, the idea of working with money all day would not be my panacea under any circumstances. Deadly dull.

#153 Bunnypatch Bust on 06.24.22 at 12:45 am

Well, there is zero sign of the same Ontario like conditions on Vancouver Island in the bunny patch here.

Listing prices remain at levels actually above the February peak in the mid-seven figures – but nothing is selling except the very best, and inventory is now above pre-pandemic levels. There are still some questionable buyers bidding over the asking price in days. But the majority have gone from selling in 3-7 days, to simply languishing. Investors largely bailed after 100-150% returns in 18-24 months, leaving the locals to hold the bag of inflated prices.

I suspect Ontario has volume which speeds up the price declines while we have the odd sale which is not enough to spook sellers. When I look at how my pre-approval rates have spiked, I cannot see how this ends well. While there is a lot of retirement money, you still need young naive buyers flush with cash to fund that ‘retirement money’ purchasing here.

#154 WTF on 06.24.22 at 1:17 am

#144 Islander

Thanks for that link, Very interesting

#155 Pulp Faction on 06.24.22 at 1:54 am

I wonder if you would financially eviscerate yourself like this, in the absence of a woman in your life ?

#156 sean on 06.24.22 at 2:19 am

RE: #10 Shawn on 06.23.22 at 2:18 pm

CPI doubters: Here’s the Personal Inflation Calculator.

Have at it. Report Back.
—————————————–
Shawn – interesting link – thanks for posting it.

14.9% yoy for us ending May 2022 (vs. 7.8 for CPI number) using Ontario data.

I suspect the discrepancy is because rapidly inflating regular purchase items such as food and fuel are a higher proportion of our spending vs. the official basket, and less volatile infrequent purchases such as clothing, furniture, appliances, AV equipment, etc. are lower proportion.

A while back we traded posts regarding the accuracy of the printed CPI numbers, and I suggested that unrepresentative basket weights are one of a number of reasons why I believe that the CPI significantly underestimates the actual inflation rate. Given that I don’t think our spending is particularly unusual, and that almost everyone I talk to says they have a similar experience, this exercise tends to confirm my opinion.

#157 under the radar on 06.24.22 at 5:30 am

Chasing deposits in collapsed real estate deals is clerk work. Standard boilerplate statement of claim, motion for summary judgment etc. Likely a year if buyers try and stall, maybe longer. Seller must mitigate their damages and re-list.
Perhaps sellers could take back a second to bridge the shortfall. Parents could cross collateralize their homes to secure a second , I would lend them the difference with additional security , easy deal if parents have equity in their home. On the other hand I never lend money out of the 416 because places like these might as well be on different planets when it comes to real estate valuations.

Deposits- Whenever I do an Agreement for a seller , I always include a clause which directs the Listing Broker to irrevocably pay to the seller the deposit if ,through no fault of the seller, the transaction is not completed on the date scheduled for completion. This saves all of the above for a jilted seller. See why I get 700.00 an hour , because if it goes off the rails , I saved a seller $$$$$$$$$$

#158 New Day ...for all! on 06.24.22 at 7:10 am

New Day! …soon, as July 1st is coming up.

Get a new flag made to celebrate New Day Garth.

Make sure your design uses all 64 colours in the crayon box too!

Be hip. Be with it. Keep up with the times. Don’t be left behind.

What TurnerNation doesn’t tell us is that Canada won’t last much longer as an entity. All part of a well overdue upcoming reset. Those Treaties with the Monarchs don’t stand a chance of being upheld and legally binding once light is shined upon them in Supreme Court.

Lease over! Get out(say the Natives rightfully)…it is our home and native land!

…wonder what will happen to all the “lease holds” for $2m slanted semis or $1.2m Cambridge fixeruppers? Hahaha

But hey…all ex-Canadian Citizens, as people with no homeland will probably get UN Passports…so bonus there!

https://nationalpost.com/news/cancel-cultures-new-target-renaming-canada-day-events-in-winnipeg-sparks-controversy

#159 National Apology Advisory Committee on 06.24.22 at 7:31 am

This has got to be the silliest government that has ever existed… could T2 aplogise for that

#160 Diamond Dog on 06.24.22 at 7:40 am

#140 Ponzius Pilatus on 06.23.22 at 10:52 pm

I wish folks researched more than they opined personally, at times myself included. As for CEF…. if I could change the subject for a sec. :) I’ve been thinking about the three largest world economies slipping into recession and how that might compress the timeline of dropping U.S. inflation. It’s an unusual environment to consider, interesting times.

Old economy vs new economy is another theme sloshing around the noodle. No shortage of thought after watching a video like this:

https://www.youtube.com/watch?v=r71yNnfY6ss&t=1508s

#161 Basic Math on 06.24.22 at 8:00 am

#147 Mr. X on 06.23.22 at 11:48 pm

To answer your question B&D is short for Balanced and Diversified portfolio the investment plan that Garth encourages

#162 crowdedelevatorfartz on 06.24.22 at 8:19 am

@#123 Floppie
“No fire sale yet, just a few Westside mansions being burned for insurance money…”
+++
In the 1980’s …there were a lot of half finished housing projects….going up in flames.

#163 Pierre-Paul Lièvre on 06.24.22 at 8:43 am

Too bad for them!

#164 the Jaguar on 06.24.22 at 8:47 am

A few friday morning snippets before Jaguar flys off to Horganville. Fishman, will you be picking me up at YVR in the armour plated 1987 Buick Grand National GNX? Oh well, there is always the Skytrain…+++

Under the headline of ‘Divisions” (Also known as “The Gang that couldn’t shoot straight):

“Conservative MP Michelle Rempel Garner says she will not run for leadership of Alberta’s United Conservative Party. The longtime MP from Calgary says she realized she had concerns about the UCP caucus. . The MP says there are divisions within that caucus and questioned how she would be able to lead it as an outsider.” ( Maybe cut loose from those Wildrose Evangelical types…) +++

“Two more federal Conservative leadership campaigns are casting doubt on presumed front-runner Pierre Poilievre’s claim of selling 312,000 memberships, with one campaign asking the party to investigate a “misleading” Poilievre email.” ( More ‘Divisions’, I guess. How the hell do you expect to mount a campaign against the Libs if you keep trying to bury one another?) +++

” A federal research unit detected what might be a Chinese Communist Party disinformation operation that aimed to discourage Canadians of Chinese heritage from voting for the Conservatives in the last federal election.” ( We grow more like the Americans every day. They blamed Russian interference in their elections, and now we will blame the Chinese. Accountability just went up in flames.)+++

And finally this sad little piece of news:

“Canadian banks fell more than 20 per cent from their record high set in early February as recession fears send investors fleeing.” (Fear not blog dogs, for Canadian Banks are ancient warriors. Like Alice, the beautiful dog in the photo, they too will always be “Faithful”. Amen)

#165 Annek on 06.24.22 at 9:05 am

I think that Tim and Shelley should declare bankruptcy. So what if their credit rating becomes terrible. It is not forever. So what if they cannot work for a financial institutions. There are many other jobs out there.
This would save them lots of stress.
Did you know that Mel Lastman ( former Mayor of Toronto) owned Bad Boy, declared bankruptcy on Bad Boy stores many years ago. They were closed for a time. Then he re-emerged , reopening the stores and became Mayor afterwards. Lot of harm that did him!

#166 maxx on 06.24.22 at 9:09 am

@ #6

I’ve had it. Ready to hurl with millennial whining.

At 15, I got my first job – a 5-hour, part-time split-shift at McDonalds. Worse than a gig, for many. But I was over the moon and grateful as heck.

From that point on, I worked my butt off, not buying useless crap. I bought second-hand, coupon clipped and bartered. Unwaveringly.

I “retired” at 47 and started a business.

Today, I answer to no one. There are undoubtedly many more like me who feel nothing but contempt for nauseating crybabies who choose to blame it on “the boomers”. It’s getting really old.

We’ve all seen you: supremely resentful, sporting subtly nasty snarls, staying on private calls while a customer is physically present at a point of sale. A huge chip with a seething undercurrent of wanting payback. Pity the business owner who hired you. I regularly hear from people who have patronized a business for years and then stop because they’ve encountered this attitude.

There are tons of young people out there who don’t give a toss about wasting their time playing the blame game. They choose to get on with building a future.

You will be pouring their coffee.

So STFU already, you’re boring the proverbial out of humanity. Life is tough and surprise, surprise, it’s been tough on boomers as well.

Question is, do you have the humility and stones to stow your reeking attitude and build through it or will you simply carry on sniveling?

It’s much easier to do the hard stuff when you’re young. Otherwise, old, bitter and poor is the coffee-pouring result.

#167 millmech on 06.24.22 at 9:31 am

Another Anne Landers Letter!
https://www.reddit.com/r/PersonalFinanceCanada/comments/vj7acc/closing_is_in_less_then_2_weeks_and_im_stressing/
It seems so much carnage is occurring because everyone is taking the advice of commissioned sales people who are self classified experts.
Critical thinking and economic self preservation is now a super power.
Amazing how six months ago there would be line ups and fights to buy at the new price of $980,000 and now crickets.

#168 Quintilian on 06.24.22 at 10:01 am

#155 Pulp Faction on 06.24.22 at 1:54 am
“I wonder if you would financially eviscerate yourself like this, in the absence of a woman in your life ?”

Men have hormones too. The ones my age could possibly have over 70 pg/ml estrogen.
Causes all kinds of problems. In past generations the nesting instinct was more a female attribute.

But I notice that most of male friends seem to be more lady like than their dads.

It could be the food, or perhaps it’s cultural.

#169 millmech on 06.24.22 at 10:09 am

Another $100 million in crypto stolen by hackers from Horizon, add that to the $600 million stolen from the Ronin Network and $320 million from Wormhole.

#170 Dr V on 06.24.22 at 10:13 am

153 Bust (regarding Bunnypatch VI)

“Listing prices remain at levels actually above the February peak in the mid-seven figures”
————————————————-

What palaces are you looking at??

#171 Shawn on 06.24.22 at 10:48 am

Personal Inflation Rates?

#156 sean on 06.24.22 at 2:19 am
RE: #10 Shawn on 06.23.22 at 2:18 pm

CPI doubters: Here’s the Personal Inflation Calculator.

Have at it. Report Back.
—————————————–
Shawn – interesting link – thanks for posting it.

14.9% yoy for us ending May 2022 (vs. 7.8 for CPI number) using Ontario data.

I suspect the discrepancy is because rapidly inflating regular purchase items such as food and fuel are a higher proportion of our spending vs. the official basket, and less volatile infrequent purchases such as clothing, furniture, appliances, AV equipment, etc. are lower proportion.

A while back we traded posts regarding the accuracy of the printed CPI numbers, and I suggested that unrepresentative basket weights are one of a number of reasons why I believe that the CPI significantly underestimates the actual inflation rate. Given that I don’t think our spending is particularly unusual, and that almost everyone I talk to says they have a similar experience, this exercise tends to confirm my opinion.

***************************************
Thanks for the polite response.

Inflation depends on your particular basket as you agree.

Alcohol inflation is lower than average at 4.4% in the past year. Simply vastly increase your alcohol consumption to get your average inflation rate down. Cannabis inflation is even lower.

If all your friends are similar to you, then get a more B&D portfolio of friends.

#172 Shawn on 06.24.22 at 10:52 am

Boycott the U.S.A.?

It’s too bad that it is not realistic for Canadians to boycott the bible-thumping, gun-toting, U.S.A. for a couple of decades until enough old white republicans die off. (One in particular.)

I’m starting to regret I have a trip to Maui booked next January.

#173 Gabriel on 06.24.22 at 12:12 pm

I do business across the continent. I have clients and associates who live in places like Foggy Bottom, Georgetown, Chevy Chase, Cupertino and everywhere in between.

Canadians have somehow deluded themselves into thinking that Sarnia is San Jose, Richmond Hill is Richmond Virginia, Whitby is Washington and Cambridge Ontario is Cambridge England. $1.4M for a pile of crap in Cambridge. That’s …… well, that’s just crazy.

#174 Tony on 06.24.22 at 1:31 pm

Choosing bankruptcy would be the best option. They don’t need professional advice its so clear cut.

#175 Tony on 06.24.22 at 2:52 pm

Re: #91 One potato two potato on 06.23.22 at 6:02 pm

As the property falls in value the bank can and likely will ask for more money upfront or call the mortgage.

#176 Anonymous poster on 06.25.22 at 9:27 pm

When it comes to gambling, everyone has an angle. But, however they play the game, the house always wins!