Author: garth turner

Do kids make you poorer?

No, this pathetic blog isn’t opening up the spawning debate again. Too emotional. too pointless. You can’t fight hormones.

But children obviously cost a bundle, and in an age of relentless inflation, economic scares and income sloth, something has to give. We all know what it is. Financial security. So many Canadians are now headed for a wall. The social and political implications could be epic.

Today’s proof comes in the form of shocking survey results on retirement, and people thinking about it. We are pooched, if these numbers are right.

• Those who think they’ll never be in a financial position to retire: 59%
• Those believing they will need to work after retirement to survive: 66%
• Now working, but with no disposable income: 60%
• Have set aside no money for retirement in the past year: 49%
• Have never saved for retirement: 39%
• Living paycheque-to-paycheque: 55% (last year: 48%)
• Think owning a home is key to retirement: 62%
• Worried about the mortgage: 65% (last year: 51%. In 2023: 45%)
• Mortgage costs rose in last year: 66%
• Worried about Caada-US relations now: 67%

It seems to be a valid survey, conducted by Abacus for one of the largest pension plans in the country (HOOPP). The results suggest people lack the resources to save for their future, so they don’t. Most are spending every single dollar they earn. Rising debt levels prove they’re actually spending a chunk more than they bring in. Mortgage borrowing continues to grow at three times the rate of inflation, even as real estate values decline.

Worrisome. Things have deteriorated in the past year – but this has been a time when interest rates fell, inflation dropped to 2% or less, wage gains outpaced the cost of living, house prices went down and the economy grew.

So what happened?

First, most folks are incapable of envisioning their future. They don’t want to. Too scary. Until age fifty, retirement seems distant, fuzzy and remote. There’s always time for things to work out – until they don’t.

Second, that brings a lifetime of dodgy decisions, procrastination, lousy budgeting and financial illiteracy. Bad habits yield poor results. Sad. And so common.

Third, Canadians wildly underestimate how much money they’ll need to sustain themselves when the paycheque goes away. CPP and OAS don’t cut it. You may not be able to sell your house when you need to. Your 28-year-old daughter and her kid may show up on your doorstep two years after you retire because her marriage just went south. Your spouse could get early-onset A and need costly support. Or maybe you just live in Vancouver, Toronto, Victoria, Ottawa or other places where the cost of living continues to escalate.

After all, if you go paycheque-to-paycheque now with no disposal income, how can you exist after work on half or even 70% of what you made while employed? Most costs don’t go away. Moreover, these are supposed to be the ‘golden’ years – to do the stuff you never had time for. Which takes money.

Fourth, there’s no end to the excuses people come up with for not being responsible with their finances or their future. Maybe it’s because the children need expensive piano lessons, summer camp or their own iPhone 16 and data plan. Or Trump will start WW3, so what’s the point? Or the ‘government’ will take care of you in old age because you always paid your taxes. Or you really need a bigger house, a better car or Jimmy Choo pointy toe pumps.

Finally, yes, some are failing because the circumstances they inherited prevent any good outcome. In a compassionate society there are always folks needing a hand, and they should get it. But this is not the majority. It’s not the bulk of the population that the HOOPP survey identified as losers.

After all, if you’re 28, newly employed and can find $130 a week by not doing Starbucks twice a day, clubbing, spending money on The Weeknd tickets or cooking instead of eating out, you can fully fund a TFSA. Invest in the S&P 500 and by age 60 you’ll likely have close to $900,000. Not a fortune. Not penury. Just a minimum accomplishment.

So, look around you. And be different.

About the picture: “Angry cat pics are not cool,” Erin writes, agreeing with yesterday’s feline exposure. “Here is Roo, a young cowboy corgi, ready for her close up.  Roo loves everyone and everything which she often expresses with a yodel and lots of extremely fast kisses, preferably right in your ear and a couple nibbles thrown in for good measure.  Genuinely appreciate the blog and all the work that goes into it, it’s a treasure and should be treated as such. “

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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Today’s topic will be ‘children’. This is because, clearly, I am an expert.

Okay, full disclosure. No kids in this marriage. Just dogs. Many of them. In fact, I dislike children. They’re immature, expensive and inefficient. School buses irritate me. I turn the TV off if there’s an interview with anyone under 21. I don’t understand why being a good parent so your kid can grow up to be worthy is more important than trying to be worthy yourself.

But whadda I know? Apparently nothing.

So let’s talk about the economic implications of kids, population, immigration and the pickle Canada finds itself in.

First, too many Canadians think like me. It’s dangerous and weird. The birth rate here has plunged in recent years – accelerating rapidly over the past decade and a half. To maintain a stable population, the women in a nation need to produce an average of 2.1 children during their reproductive lifetime. The US has a level of 1.63, which is why Trump’s anti-immigration, mass-deportation policy is more racism than strategy. Canada is down at 1.26, and headed for a net population decrease.

This is a record. We have joined the lowest-fertility nations on earth (South Korea, Japan, Spain, Italy). Moreover, births are becoming more difficult and perilous as the percentage of preemies soars. Experts (not me) suggest this is because Canadian women have been putting off starting a family.

Canada’s plunging births, falling residents

Source: BMO Economics

In 1993 the number of new moms over 35 was less than 11%. Now it’s more than one in four. The average age for giving birth is 32. Having children later means having fewer of them over a lifetime, which is one big reason the fertility rate has rocked lower.

So, we are not reproducing ourselves. In fact, the population of Canada would decrease rapidly – and the economy shrink dramatically – if walls went up across our border and around our shores. That, of course, brings us to immigration.

This is the single biggest topic of blog comments which are deleted. Every single day. The rapid post-pandemic population increase which was an economic policy of the Trudeau government stoked, fed and amplified prejudices while providing a convenient rational for all our woes. Inflation. Rents. House costs. Health care shortages. Wait times. Job loss.

Some of that (like lease costs) had validity. Much of it (real estate values, for example) had none. But humans are humans. They like to blame. Canadians are really good at it. Nothing wrong is ever our own fault. We’re perfect.

Well, that immigration has just dried up.

Chopped immigration is big financial news

Source: Bloomberg

The international students have been told to stay home. Temporary foreign workers are highly restricted now. We have a national ban on non-residents buying real estate, and a special federal tax on all those who already own. On an annualized basis, population growth just hit zero. Seasonally-adjusted, it is 0.8%. There’s a net outflow of non-permanent residents now of 100,000 a year. Permanent immigration levels (folks who have gone through years of waiting and a vetting process) have stabilized at about 300,000. But that is not enough, going forward, to prevent a declining population.

By the way, one of the most barren places in Canada for kids is BC. The birth rate there is down to 1.00, or less than half the natural replacement level. You should also know that each year 350,000 babies are born in Canada. And each year about 330,000 of us die.

So, were it not for immigration since Covid, the economy would have been in recession with higher unemployment, lower corporate profits, a poor equity market, lousy returns in your TFSA – but lower rents in your city and (maybe) more stable house prices – albeit at elevated pandemic levels. Now with immigration slashed and the birthrate abysmal, plus a Trumpian trade war in play, the odds of a shrinking GDP are with us. You can also blame that on immigrants. Not enough of them.

Finally, why are women having fewer kids? Are couples putting it off because of high housing and living costs, despite all the government freebies for parents? Undoubtedly, many are. Thus, the average mom is now mid-30s.

But analysts also say the fertility rate falls as education rises. These days a majority of uni students are female. Women have careers, just like the men. Trad wives are fewer and far between. The goal of marriage, for many, is not just family, but to build an economic unit anchored in love and trust.

Don’t judge.

About the picture: “Will you take one more feline pic?” asks Shira, in Toronto. “This is Furby. My friend has been cat-sitting Furby. This is Furby’s reaction to Trump’s tariffs.  “It’s a ‘cat’-astrophe”, he meowed! Thanks for your daily informative and entertaining column – I love reading it.”

Note to readers: Yes, we are down to the ‘angry cat’ pictures. This is therefore an urgent call for fresh canine faces to grace this pathetic blog. You can send to ‘garth@garth.ca’. Or we capitulate. 

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This pathetic blog has taken grief for the past five years in saying there’ll be no real estate price collapse. Instead, expect a slow melt.

So far, right on. Prices are down single-digits in the last year. The decline since the peak in 2021 is about 15%. Steady, relentless, drip, drip, drip.

But wait. What if all this has just been a striptease for the main event?

What if Trump, trade wars, Ukraine, Iran, Putin, Gaza, oil and debt blow up our consumer-spending-based economy in which average people can no longer afford average homes, and deliver a fatal blow? After all, things are not exactly getting better. The orange guy quitting Carney’s G7 gabfest wasn’t cool. Now there are fears America may itself bomb Tehran. Oh my.

So if buyers stay on strike, if high oil pumps inflation and leads to a rate increase, how can stupid real estate prices stay aloft?

Maybe if we’re going over a cliff, it will be those assignment condos that lead the way. After all, they’re the premier symbols of a market that totally lost its mind. Buyers – mostly investors – paid top dollar for pre-con units they thought would deliver fat capital gains by the time the construction cranes had come down. Moreover, they’d be able to rent those units out to eager tenants for enough to cover ownership costs.

Well, fail. Wrong n both counts. Rents are going down. Costs are going up. And the value of those units is plunging. Take a look at some recent listings from a GTA brokerage that specializes in assignments.

(These are units for sale by owners who don’t own them yet and are willing to ‘assign’ the right to buy to a new purchaser before the original closing day. In many cases those pre-construction buyers cannot afford to close, given current values and mortgage conditions. So, ouch, they’re bailing out at whatever level is possible.)

Source: Assignment Plus

There is no sympathy for the speckers and flippers who flocked into sales offices during the crazy days of Covid with minimum downpayments. But at the time, it looked like a no-brainer. FOMO stalked the land. People lost their minds. Resale homes flew higher in value amid bidding wars. And condo developers could ask outrageous amounts – like $1,400 per square foot – for boxes in the sky that were three or four years from being ready to set foot in.

Today thousands of assignments flood the market. They join 17,000 available new condo units in the GTA alone. Sales of new units have ground to a complete halt. No fresh cranes are being erected. Lenders have pulled in their horns. Mortgage rates may be about to increase. And equity is being lost by the hour.

And what of these significant losses? After all, the assignment seller has to pony up the difference between the original selling price and the deeply discounted amount the assignment buyer is paying. Are these mounting losses deductible? Like buying Tesla stock before Elon does something stupid?

Nope.

The meanies at the CRA will not accept this as a capital loss, and also not as a business loss. Here is the logic, as spelled out in federal interpretation bulletins:

• Buying a pre-con unit, or selling an assignment for one is a purely speculative action. The government does not consider this a business activity, or a capital investment. Your personal risk, and your personal finances.
• The assignment right isn’t a capital asset like a stock or an ETF or a rental house. So, a loss when sold isn’t deductible under capital gains rules.

Sorry. Now suck it up.

The impact of the condo collapse is as yet unknown. It could be absorbed by a few thousand miserable, regretful flippers enmeshed in their own greed and delusion. Or it could ripple and ricochet through an entire urban market. After all, logic tells us when house prices have not meaningfully fallen to reflect supply, incomes, household debt levels or the fact a crazy dude is running the world, there’s probably more to come.

But how much?

About the picture: “I offer a picture of an exceptional blue heeler, Smoky,” writes Richard, in Calgary. “Although originally hired as my dad’s fishing buddy, Smoky was later reassigned as a companion to my mom after my dad’s fatal cancer diagnosis. Stubborn, needy, whiny, and incredibly intelligent, Smoky was one of a kind. He had a habit of jumping into bed with you to sleep, but only if he could lay beside you with his head on a pillow. Unfortunately, we also lost him to cancer earlier this year at age 6.”

To be in touch ro send a picture of your beast, email to ‘garth@garth.ca’.

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Some buildings have, literally, dozens of them. Condos. Largely identical, all for sale.

In one Toronto tower a desperate owner ended up abandoning the $1 million asking price and took an offer for more than a hundred grand less. Now every other lister had a fresh comp. In an environment like that, there’s no escaping comparables. So just as new price ceilings were set weekly three years ago, now new floors are established with an equal intensity.

As the industrialized world’s leaders meet today in Alberta to deal with conflict, trade wars and real ones, there is little clarity on whether people selling real estate for less are unwise, or if the ones buying are the greater fools. Is there reason to believe we’ve hit Peak Trump and the recession threat is fading, bringing FOMO? Or will surging oil combine with MAGA tariffs to pooch the economy and send home values cascading lower?

Dunno. Nor do you. Or anyone. But this headline carried by Bloomberg today was sunny.

The latest news from CREA does indeed show a growth in sales (nationally) last month, compared to April. But year/year the story is still one of decline, with deals down more than 4% – and last year sucked. The cartel’s economist says, “maybe the expected turnaround in housing activity this year was just delayed for a few months by the initial tariff chaos and uncertainty.”

Then again, perhaps this is a bull trap. If Trump stomps out of this G7 the way he did in Quebec seven years ago, the rest of the year could see a tumble in buyer confidence and house prices. But if the president turns out to be TACO, just the opposite. It’s a coin toss.

Meanwhile listings continue to pile up. In May there were 201,880 properties for sale across Canada. This morning there are 342,343 listed on realtor.ca. The increase last month was 13% over 2024 and 3% above April. Demand is not even coming close to supply – and yet we have governments at all levels that continue to pump out as many new units as possible.

By the way, here is how the supply of condos in the GTA stacks up against previous years. We are on uncharted ground.

Meanwhile, we should expect to be bombarded with soothing reports about ‘recovering’ real estate markets. The assumption of governments, economists and (of course) realtors, lenders, homeowners and builders is that a ‘robust, healthy’ market is one in which sales and prices trend higher.

Here’s the latest analysis, for example, from RBC: “The weight of the trade war on Canada’s housing markets could be lifting as reports from local real estate boards indicate home resale activity picked up in May in some of the markets that had pulled back.

“The de-escalation of tariffs has taken centre stage since May, alleviating some of the worst fears about the potential economic fallout even though recent doubling of steel and aluminum tariffs increases risks in some communities. We expect to get a clearer view in the coming months.

“Still, markets in southern Ontario and parts of British Columbia—the country’s least affordable areas—remain especially soft. Activity in many of them is close to cyclical lows and will take time to rebound to more robust levels.”

See what we mean? ‘More robust’ is good and ‘especially soft’ is bad. Gone from view is the institutional hope by banks or elected people that prices will actually fall to levels in keeping with historic trends. Recall that the new housing minister, Poor Gregor Robertson, fell into this trap during his first day on the job.

When asked by reporters if he thinks home prices need to go down, he told reporters: “No, I think that we need to deliver more supply, make sure the market is stable.”

Robertson said his work as housing minister will focus on building up supply of affordable housing in Canada.

Sigh. It’s hopeless. The kiddos in Surrey and Mississauga will have to move to New Brunswick, or maybe Estevan where, for three hundred grand, they can get a decent house.

Maybe a decent life, too.

About the picture: “Name unknown, this fellow is one of a litter of 14 Great Pyrenees pups born on a friends farm in Southern Ontario,” writes Mike. “Adopted a few weeks later, I suspect they are enjoying the good life and not reading the international news. Thanks for all the great advice!”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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“My father passed away earlier this year,” Deanna tells me. “I went with my mother to the bank to get all the paperwork sorted.  Since the lady that used to help them retired years ago, we took whoever was available that day.  She wasn’t young, but she certainly didn’t inspire my confidence.”

Ah yes, another TNL@TB tale. Sadly the bulk of the population gets financial help, advice and guidance from bank branch employees who are thinly trained and lightly qualified. And don’t even ask about their compensation. Pathetic.

Dee says the yellow flag went up during that first meeting when they discussed dad’s TFSA. The banker confused ‘beneficiary’ with ‘successor holder’, failing to understand the difference or the implications for mom. Then came this zinger: “She scrolled through my mother’s accounts and suggested that she transfer the TFSA to her chequing account.”

“I gave her the look I give my kids when they are inexcusably negligent,” Dee admits. “I had to spell it out to her that we wanted to preserve that money in a TFSA account.  She, hackles up, lectured me about how the bank will not simply put a different name on a TFSA account of a deceased person.  I pointed out the text in the canada.ca website that explicitly states that a simple name change is what should happen.  In the end we agreed that instead the funds would be transferred in kind to my mother’s direct investing TFSA account. I think she hates me now, but so what?

My mother would have simply signed away that TFSA if I wasn’t in the same room.   I was incandescent with first-world rage. However I found that most of my family and friends couldn’t truly grasp the enormity of that bank lady’s mistake.   I didn’t feel like they were indignant enough.  So I had to turn to the one place where I knew I would get some high quality commiseration on this topic. You.”

So let’s just recall what the options are for a TFSA when you croak. The account can be liquidated and added to your estate. Since you funded it with after-tax dollars and growth was tax-free, there is no extra levy upon death. (This is not the case with an RRSP, for example, which is taxed mercilessly if not passed to a qualified bene.) Or you can hand it off, no tax, to a spouse, partner, dependent child, charity or your Corgi’s trust fund.

As Dee points out, trashing the TFSA means the loss (forever) of that account’s tax-free growth potential. And why would you want that?

As for naming a beneficiary for an account as opposed to a successor holder, there’s a meaningful difference. As SH, mom actually takes over the TFSA, folding it into her own, retaining all of the assets and the tax-free growth status.

That would not be so if she were named the beneficiary.

Yes, the TFSA still passes on free of tax, but the income and growth from the date of dad’s death until the distribution (which can easily be months) is taxable as income. Also, a beneficiary would need enough empty contribution room in their TFSA to incorporate this money into that account (if not a spouse or common-law partner), to continue enjoying tax-free returns. Successor holders, in contrast, don’t need to have this room available. They can just suck the existing account into their plan.

Here’s some advice this blog has proffered before: If your spouse messed up and named you as a bene instead of a SH, it may still be possible to roll the TFSA assets of the deceased into your own. This ‘exempt contribution’ must be done before the end of the year in which death came, and be registered with the CRA within 30 days. (In Quebec a valid will is required to move a TFSA, by the way.)

The moral(s) of this story: everybody needs a will, a POA, an executor (hopefully not your kid) and registered accounts that are correctly designated. Know who you can pass an account to in a tax-efficient manner, not just the money or assets. Also be careful where you seek advice. TNL@TB is there to serve the bank, not you. A lawyer, accountant or financial advisor you hire to do these things, in contrast, works for your interests.

Never forget. Free advice is worth what you pay for it. Oh, wait…

About the picture: “Enjoying the wonderful cities and mountains of Chile and Argentina,” write Julie and Neil. “Lots of street dogs roaming around everywhere and for the most part very well fed. They like their naps and tune out the crazy world! Here’s one from the Atacama desert.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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Source: Purewow/Anna Averianova/500px/Getty Images

   By Guest Blogger Ryan Lewenza

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From physics we know that for every action, there is an equal and opposite reaction. Well, one of the reactions to Trump’s tariff policies and deeply insulting ‘51st’ state comments is that Canadian expats (and American citizens) are deciding to pack their backs, load up the moving truck and return home to Canada.

Recently, I had a very interesting and informative call with a new client that is strongly considering moving back to Canada, in part due to what they are witnessing down south.

During our call, I was joined by our senior Financial Planner, our in-house cross-border tax specialist, and our new clients. We began by addressing the significant unrealized capital gains in their investment portfolio. However, the conversation quickly expanded into a comprehensive review of the various considerations and tax implications involved with their potential move back to Canada. As I diligently noted the key points, I realized the multitude of factors that must be carefully planned for and addressed for such a significant transition.

Today I’ll summarize the talking points from the call and outline the key considerations that Canadians need to address when returning home.

Due to the sizeable capital gain that will be triggered for US tax purposes either over time or on their potential exit from the U.S. tax system, our first step was determining if our clients are considered ‘covered expatriates’. A covered expatriate is a designation under US tax law for individuals who renounce their US citizenship or give up their green card status, and who meet specific income and asset thresholds. If deemed a ‘covered expatriate’, they are subject to a US exit tax upon their renunciation which can create a significant tax liability.

US permanent residents and green card holders for 8 or more years out of the last 15 are considered former long-term residents (FLTR). US citizens and FLTRs will be considered covered expatriates for US expatriation exit tax purposes if they meet any of these three tests:

1. Net Worth Test – Client’s net worth is US$2,000,000 or more (on an individual basis)
2. Average Income Tax Test – Client’s average tax liability in the previous five years was above US$206,000
3. Certification Test – Client fails to certify that they satisfied all applicable US tax obligations for the five years before expatriation

Thankfully, while our clients are considered FLTR’s, our clients fall below these thresholds and are therefore not considered covered expatriates so will not be subject to expatriation tax. We will need to monitor this on an annual basis to ensure they remain below these thresholds.

Next, we discussed their long-term goals and objectives to consider which US status option was most likely for their long-term planning, as well as considerations for each:

• Keep green card
• Surrender green card
• Apply for US citizenship

Keeping their green cards would keep the doors open if one decided to move back and work in the US at a future date. However, this would require our clients to file annual federal income tax returns and information returns such as Reports for Foreign Bank and Financial Accounts (FBAR) for foreign asset disclosure with the IRS. These filings are complex and time consuming and would be better prepared by a cross-border tax accountant, which of course would trigger additional fees.

Keeping their green card would also highly restrict their investment options and accounts. Any investment made in tax-sheltered vehicles such as TFSAs, RESPs and FHSAs would need to be reported as worldwide income on their annual federal US tax returns. They would also be subject to punitive tax rules for any investment made in Passive Foreign Investment Corporations also known as PFICs (Canadian ETFs or mutual funds). This comes with added reporting obligations and fees for each individual PFIC holding.

Abandoning the USA – there are benefits

While surrendering your green card would restrict your ability to live and work in the US in the future, it has many potential upside opportunities that should be considered:

1. Opens the door to unlimited investment options for your portfolio – maximize TFSA, RESPs and FHSAs with no need to limit PFIC investments
2. Alleviates you from your ongoing and complex US tax reporting obligations (and accounting fees)
3. Has the potential to save thousands in US tax on unrealized capital gains if you are not considered a covered expatriate when giving up your green card
4. The CRA allows a ‘step up’ in your portfolio cost base on entry into Canada which effectively resets your cost to the current market value for Canadian tax purposes. You could therefore avoid paying capital gains tax in both countries!

In addition to the above, if an individual were to keep their green card and spend a significant amount of time outside of the US, they could be at risk of losing their green card status, which may result in them being considered a covered expatriate with negative US tax consequences.

Having dual citizenship would provide our clients with the most flexibility in that they can easily move back and forth to the US as tax residents of Canada while continuing to work for their existing US employers. While this is quite attractive and would meet their objectives and goals, it would also add ongoing onerous tax reporting and disclosure obligations that would require the help of a cross-border tax accountant.

On the investment end, similar to keeping their green card status, they would either have to absorb the expensive accounting costs in meeting their filing requirements of form 8621 for each individual PFIC holdings or be limited in their investment options.

While the focus of our call was on their US status, tax implications and their investment portfolio, we also discussed other critical factors like his future employment options, housing and the outlook for the Canadian dollar (FX is an important financial factor when coming back to Canada).

If our client gives up his US status, then he may have to terminate his employment with his US employer. We advised our client to speak with his employer to see if he can work remotely from Canada. If not, then he’ll need to find a job in Canada or decide to retire.

Finally, housing will be an important consideration for when they return to Canada. Given the high costs of Toronto real estate they are considering living in a smaller town outside of the ‘big smoke’. We discussed the outlook for interest rates and housing, how much they will have to draw from their investment portfolio to fund the purchase and whether they would be able to secure a mortgage.

That’s a high-level summary of the important considerations when returning to Canada. When considering a move from the US to Canada, it is imperative you review all these considerations and engage a qualified cross border tax professional to consider the tax implications of potentially being considered a covered expatriate.

Ryan Lewenza, CFA, CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Investment Advisor, Private Client Group, of Raymond James Ltd.

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This blog is not for average people.

That was the snarky reply given to a visitor whining and moping about the economic ills of Canada. You know the list. Lettuce is $3.99. The servers at Tims wear turbans. A house in Kits is $2.3 million. Rents are ridiculous. Incomes are stagnant. Everybody’s in debt. Immigration, inflation, speculators and politicians have destroyed Canada. It’s a shithole country.

This blog spares you from most of that drivel. The Delete Finger always wins.

But don’t the stats published this morning add credence to the litany of complaints – at least on the surface? The amount of debt Canadians are shouldering is up again – to 173.9% of disposable income. So, on average, we owe $1.74 for every buck earned. When it comes to servicing that debt (the household debt service ratio), just under 15% of income is required.

Sounds bad. And it is. The household savings rate is going down, too. At 5.7%, it has declined every quarter since late 2023. Now with tariffs making imports more expensive, inflation may eat further into disposable income while it also crimps business expansion and wage gains. Meanwhile house prices have not collapsed (and likely won’t) at the same time over a million families are renewing mortgages taken out during the pandemic, at higher rates.

So, add it up. Shithole country?

Not so fast. There are no troops with automatic weapons and flash-bangs on our streets. No immigration cops lurking at Home Depot. No government attack on universities. No Diddy. No defunding of science, vaccines or the public broadcaster. Compared to the US, it’s a bucolic paradise here, with lower public debt ratios, universal health coverage and Jann Arden.

But what we do have is a yawning disparity between the whiners and the bulk of society. At least that’s what the stats tell us.

Since the pandemic became a thing (2020) only the top 40% of income earners in Canada have been saving money. Lower-earning households have been on the losing end of the stick. In fact the gap in income between the top 40% and the bottom 40% is an astonishing 47%. As you stretch out the data, it becomes starker. The top 20% of families (by income) hold almost 70% of the nation’s personal wealth, averaging about $3.5 million. The bottom 40% have a net worth of less than $68,000. (Real estate included.)

By the way, the percentage of Canadians earning $100,000 or more is 21%. The top ten per cent earn at least $126,000. The top five make $162,000. And to be a 1%er, you need income of about $285,000.

So why do the 40% of Canadians at the bottom own just 3% of total net worth? Are they less talented? Or lazier? Is this because of their cultural background, education or from listening to too much rap?

Nah, probably not. Likely it’s more about financial illiteracy. If folks don’t know what to do to make their situation better, they won’t. Money skills are not taught widely in school. Governments do a horrible job showing citizens how the various tax shelters and benefit programs work. Banks, brokerages and online investment platforms suck at providing accessible, credible info.

As a result, the bottom 40% have an average of $84,000 in debt, surpassing income. Overall, Canadians owe $3.1 trillion, three-quarters of which is mortgages. Just as troubling is the fact that 80% of assets in TFSAs are interest-generating GICs, high-interest savings accounts or regular no-income bank deposits. We know people hold more in high-fees mutual funds than low-cost ETFs. And there’s solid proof RRSP contributions have declined. It seems tats are more important to a broad chunk of the population than seeking financial security. This is the YOLO mentality of generations which are headed for a wall.

So, surprised at the stats, or the nihilism gushing from them?

Don’t be. As night follows day, money woes flow from ignorance. Lack of good information does not explain all financial misfortune (of course), but large numbers of those who blame others (newcomers, elected officials, Trump) should blame themselves.

No, this is not a blog on how to be average. Average doesn’t cut it. For that, there’s Reddit.

About the picture: “Longtime readers and podcast listeners here,” write Aleksandra and Greg in Calgary. “A few days ago, we said goodbye to our 13-year-old miniature weenie Doglog.  She taught us the true meaning of resilience and brought boundless love to each and every day we shared with her.  She was dearly loved and will be forever remembered and missed by her Meatbag and Hooman. Run free sweetie Doglog. We would be honored to have her featured on your blog.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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Why not build houses in a factory? On an assembly line?

No weather to hold you back. Materials stacked, dry and ready at each stage of construction. Comfortable working conditions for the trades. Predictability and controlled costs. Finished houses – right down to the switch plates – popped out the big loading doors, onto a flatbed and then plopped on the foundation.

First nail to finished house ready to be bricked and hooked to services: about 10 days.

That was Peter Gilgan’s vision. The Mattamy Homes founder and boss was the first person in Canada to drag the archaic process of residential construction into the new age. For a while, anyway. Almost twenty years ago he toured me around his hulking white plant in the mushrooming town of Milton. The media tagged along, too.

Can an assembly line chop the price of housing?

A house  factory near Toronto 17 years ago. The guy behind the project says he’ll do it again. 

Source: CTV

Well, Miton got built out. The Mattamy plant came down. Since then the the old ways have returned. These days homebuilders are in tough shape with buyers refusing to show up and unsold inventory stacking. The average price of a new-build in the Toronto area, for example, is $1.5 million – which includes townhomes and row houses as well as detacheds.

One of Mark Carney’s Big Ideas is to do what Gilgan did all those years ago, and take the construction dudes indoors. The future of affordability may be modular and pre-fab, so Gilgan’s getting back into the game. (He’s now a billionaire, which makes things easier.)

This week Gilgan unveiled plans for Stelumar Advanced Manufacturing – a giant new facility to be located somewhere in the GTA, employing 300 workers who will churn out component parts – first for low-rise condo projects, then individual houses. Projects that took three years to build, he says, will be done in six months. Throwing a house together will be 50% faster.

As for costs, the discount over a site-built structure will be about 20%. In real dollars (in that market) this translates into roughly $300,000. Gilgan says he learned a lot after the Milton assembly-line experience (where he claims Mattamy lost money), and new technologies will allow for both profits and houses people can afford.

Why not? Nothing else has worked.

Now, let’s flip to the nightmare spreading across the world of Canadian landlords. It’s estimated half of all the apartment units in major Canadian cities are held by investors. Some are corporate outfits. Most are mom-&-pops. When mortgage rates were low, house prices romping and tenants competing for a lease, picking up a highly-leveraged, little-cash-down rental unit was a no brainer.

No more.

Provinces have tilted landlord-tenant legislation dramatically in favour of renters. Investment mortgages that were under 2% during the pandemic are renewing at twice that rate. The hikes in condo/strata fees and property taxes are relentless. Tens of thousands of new units have hit the market. And the feds tapped the brakes hard on immigration, which means (for example) a whole lot fewer international students looking for a place to crash.

All his has brought the one outcome chilling these rentiers fear most: falling rents.

The national average, says Urbanation and Rentals.ca, has dopped about 3% year/year at the same time landlord costs have gone up. This is the eighth month running for declines. There is more to come.

Purpose-built rentals (apartment buildings) are down 2% to an average at just over $2,100/month and condo rents are off closer to 4%, at about the same current price. Rents for houses and townhouses have careened lower 7%.

“The easing in rents this year across most parts of the country is a positive for housing affordability in Canada,” says Urbanation, “following a period of extremely strong rent inflation lasting from 2022 to 2024.”

True. Rents have popped about 4% a year for the last five. But now they’re pacing the residential real estate market, which is sinking slowly but profoundly. It’s all good news if you’re after a lease – lower monthly costs, no line of 30 bidders ahead of you, and landlord perks like free transit passes, free furniture, free cable or even free health care benefits.

For mom-and-pop landlords who leveraged up their house to buy a condo or two because, you know, real estate always goes up, it’s a mess. Recall that over 40% of all landlords were in negative cash flow even before this real estate reversal. They were happy to hang on because the capital gains outpaced the losses.

Well, no more. Tens of thousands are shedding wealth every month as they subsidize tenants in depreciating units. Worse, they can’t sell. There are close to 40,000 new and resale units on the market in the GTA alone. Competition is insane. Buyers know it.

Moral: next time get a REIT.

About the picture: “Ashely Bell and Daisy… on the road ahead was a deer, thank goodness,” writes Kim. “I wasn’t dragged thru the wilderness!  Other times, off leash, they both will take off after squirrels, marmots and the occasional deer.  They usually get tired then stop to see if I am coming with them on the chase.LOL!”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’

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Jen, my neighbour, put a new three-piece into her old house last year. It was brutal. The building is ancient, built like a fort, and the contractor had to burrow through and around twelve-by-twelve main beams.

Wasn’t cheap. And Jen wasn’t fussed about making sure the renovator pays his taxes. Give me cash, he said, and it’ll be cheaper for you anyway. She did – $12,500 in hundreds she got from BeeMo on the corner (after ordering it a week in advance and signing a form saying the bank was not responsible if she got mugged).

Well, soon Jen would be party to a criminal act.

If Parliament passes Bill C-2 (and it will), legislation to toughen up the border and be harder on crime, then such a payment will be illegal. The provision is contained in a section (77.5) which makes paying for anything with ten grand in folding money a criminal act. The assumption is that only fentanyl dealers, free financial blog hosts and human traffickers walk around with that kind of money. Here it is:

But wait. What if this is part of a more sinister move to eradicate cash? After all, most people now buy almost everything with their phones, credit cards, e-transfer, online banking or through direct debit. That means every transaction is recorded, tracked and permanently stored – somewhere. Nothing is anonymous, personal or hidden. And some people worry that every time politicians move in to squish the use of cash it’s another step on the path to a central bank-issued digital currency.

And, yup, the Bank of Canada has been working on that.

“CBDC is the next step towards this government and the intended direction The One World Government has been heading,” blog dog Sandy insists. “Certainly with the amount of cell phones in the world today they could easily be the method of both personal identification and purchasing. What is your thoughts on CBDC and do you see it as ‘the mark of the beast’ as you wrote years ago?”

Well, it’s true. I did. Two years before the last paper Canadian dollar was printed, to be replaced by the loonie, people were talking wildly about the endangered future of cash. Almost forty years ago I wrote about one of the chief alarm-raisers, a bible-thumping American academic named Mary Stewart Relfe.

For a spell she was a thing. Electronic funds transfer, she said, “is designed to remove all money from individuals, but by doing so will eliminate all personal freedom and privacy.” Her vision of the future included all humans receiving a worldwide card with a barcode, replacing money. That would eventually be supplemented with an implanted chip (in your forehead). This would be the mark of the beast, 666, as detailed in Revelation 13, verses 16-18, she told her followers.

Any proof you might need, Relfe added, was the licence plate of Pierre Trudeau’s vintage Mercedes (ENB-666).

Just to remind me, Sandy sent this syndicated column, a clipping he saved from 1985 published in the Edmonton paper. Please note what great hair I had…

Well, critics are lining up to dump on C-2. The global conspiracists see it as a sneaky Mark Carney way to ensure Canadians are enslaved by the cabal that actually runs the world, with the goal of stripping you of all personal property, freedom of movement and individual choice. The tech guys and civil libertarians worry about how the bill would force social media platforms, email services, telecoms, cloud storage companies and others to disclose personal info on their clients and subscribers – without judicial order or oversight. A TikTok went around last night saying Ottawa wants the same mass deportation authority that Trump is using to tear up US society.

As for restricting cash transactions, there’s no doubt privacy and freedom from political snooping would be lessened. Is that an issue for people? Does anyone fuss about it anymore when they are so careless with personal data and hand over live credit cards to Amazon and their Apple wallet?

And what of Jen’s new ensuite john?

Maybe the Beast lives.

About the picture: “I would like to thank you for reminding me there is more to life than finances,” writes Cindy. “I got a dog after years of reading your blog. It was a great decision. Benny is a 1 year old Havapoo living his best life and enhancing mine.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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He’s from the Miramichi. Everybody knows the best fishing in New Brunswick is there. She’s from south Florida, and looks it. Now they own a place down the street from me – and a condo in the sunshine state which nobody wants to buy.

Incredibly there are 59,000 condos for sale in that one state. The most ever. Listings have exploded. Sales have tanked. Prices are plunging. It’s a real estate disaster – and likely only in its early stages.

Some folks look at what’s happening there and see parallels here. Detached home values in Vancouver, the GTA, Calgary and elsewhere may be slowly melting. But condos are a whole other thing. And they face serious, irreversible threats.

So what happened with all those units Canadian snowbirds bought? Right now they’re devaluing daily. Seven years ago half of all home sales in Florida were to foreign buyers. Now it’s down to 10%. Realtors report it’s hard to find a Canadian owner who has not signed a listing contract.

Face it. They’re pooched.

The Canadian dollar may be a tad stronger lately, but declines in the past year have meant living costs down south have become untenable for many little northern beavers. Climate change and some devastating hurricanes have boosted insurance premiums skyward. US mortgage rates have topped 7%. The 2021 collapse of the Champlain Towers South, squishing 98 people, spurred laws requiring all older buildings to be inspected, repaired, recertified and for condo boards to establish fat reserves. As a result, many owners are facing special assessments in the hundreds of thousands.

Then there’s Trump. The immigration raids, deportation of government non-supporters and deep polarization of American society is rattling the snowbirds. Now the border is scary, where agents can seize phones and scroll through social media posts looking for anything the orange guy might not like. For a while it seemed all Canadians would be finger-printed when they crossed. Now anyone staying over a month must register in a database Homeland Security maintains.

In short, risks abound and are multiplying. Meanwhile Canadians have to pay higher property taxes to own in Florida, and surrender a portion of their proceeds in the unlikely event they find a buyer for their unit.

As for Canada, certain markets are tilting towards a condo meltdown. Like the GTA – likely the first to suffer widespread and deep declines in value. Pre-con buyers have flooded the assignment market, desperate to unload their units before closing day, occupancy and the need to pony up the full purchase price. Tens of thousands of new units are hitting the market in 2025, pushing the inventory of unsold apartments beyond 17,000 in the GTA alone. Another 13,000 sit on the resale market.

As in the US, costs are escalating. Insurance premiums, condo/strata fees and property taxes are all on the rise. Mortgage rates are stuck in the mid-4% range. The economy is slowing and unemployment is swelling. And in cities (like Toronto and Vancouver) where investors own a huge swath of the condo market, falling rents are fostering landlord panic. Rental companies are routinely offering free transit passes, free months of rent, even free health care services in order to attract tenants. Meanwhile lower immigration levels and a serious slash in the ranks of foreign students mean there are far fewer renters.

As for Tariff Man, he swipes Canada, too. Most Canadians, polls tell us, now expect a recession. Confidence in America as a stable or trusted partner has fallen for 81% of the population. Buyers aren’t buying because they fear layoffs – and the future. Scenes of riots, soldiers with automatic rifles, government overreach and clouds of tear gas in LA sure don’t help.

Well, Canada is not America. Vancouver is not Dade or Orange County. Condo buildings are not collapsing here. We didn’t elect a radical as prime minister. We don’t fuss about the border and refuse to lump people into classes. In so many ways, this is the better country.

But a condo crash may still be coming. Be ready.

About the picture: “Here is Baby Jaxx, diligently taking notes on how to properly chew a stick, as demonstrated by his experienced older cousin, Whiskey,” writes Kathy in Vancouver. “Thank you for everything you’ve done for all of us here on the blog.  You are a true national treasure.  I am enjoying retirement only due to your wise advice over these many years.”

To be in touch or send a picture of your beast, email to ‘garth@garth.ca’.

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