Oz Buzz #26 – The BC Numbers – First Look, Hot Property
We said before that from April on our numbers will look better … they are … but we also said … ’only’, because we measure ourselves against the already falling market. So, this year will look better … yet be down more.
Oz Buzz #26 – The BC Numbers – First Look, Hot Property
“Remember, today is the tomorrow you worried about yesterday.”
QUESTIONS, QUESTIONS, & QUESTIONS
THE BC NUMBERS – FIRST LOOK
INTEREST RATES – OUTLOOK US AND CANADA
THE REVENGE OF THE ‘LITTLE MAN’?
BC APPEAL COURT REJECTS BC AMENDMENTS UNANIMOUSLY
CHINA, TRUMP & THE EUROPEAN ELECTIONS
HOW TO DO PROPER GAS PROTESTS
YES OR NO ON REITS?
BOOK OF THE WEEK
LATEST OZ BUZZ PODCASTS
Olga Rickards is a best-selling author, regular guest speaker on positive psychology at the University of British Columbia, and coach to high achievers. Olga’s clients include multi-millionaire entrepreneurs and executives running mutli-billion dollar companies. Olga helps achievers become more successful, happier and enjoy pursuits that deeply enrich their lives. Using her proven yet unconventional system, Olga helps her clients remove inner blocks that silently sabotage their potential, and rewire the brain for more confidence and inner peace, even when they sleep. Meet Olga at OlgaRickards.com
Ozzie Jurock talks to Dave Steele, CEO of Western Canadian Properties Group wcpg.ca Warren Buffett says “Be fearful when others are greedy and greedy only when others are fearful”. Easier said than done. Today in British Columbia, real estate investors are uncertain and many are frozen at a time when they should be taking action. Dave Steele is the CEO of Western Canadian Properties Group, a development firm focused on developing multi-family projects in the top high growth markets in North America. Over the past 30 years, Dave and his team have helped over 12,000 investors acquire more than $2.0 billion worth of cash flowing investment properties. Today WCPG is developing projects in some of the top markets in British Columbia Including Fort St. John, Dawson Creek, Surrey and Victoria.
INTEREST RATES OUTLOOK
I have received several /questions comments on “sell in May and go away.” This week I received three questions and two phone calls on the “conversion of the interest rate curves deepening”. Does this mean a recession is ahead?
Answer: Yes, investors are diving into the 10-year bond in droves! Thus, driving the field sharply lower. It is not necessary a harbinger of recession … but it needs watching!
The last time this happened was August 2007. In Germany now people are so eager for safety that they will accept TO PAY to leave their money in the bank as banks PAY -0.7%! That means you put in $100,000 and it costs you $700 to be there! Never mind earning interest.
Major Point: Trouble ahead? Yes. We will likely muddle through but once again: cash is not trash. The older you are, the closer you should be to your favourite commodity: Cash!
Immediate impact on mortgages. The long-term rates (Canada’s 5-year term rate, US 30-year rate) are tied to the long-term bond rates. With them crashing, long term mortgages will follow.
US: The 30-year mortgage is down to 3.9%. At the end of June there will be 2 million US households able to refinance their rates … they will and will have more cash to spend.
CANADA: The 5-year rate is down to as low as 2.7 % (if you did not just have your TV repossessed!). This makes it easier on households, but the stress test still places the new borrower at 5.4% to qualify. NUTS! Again: WE SHOULD ACTIVELY PURSUE AND SUE, CREDIT CARD COMPANIES AND STORES THAT CHARGE 20% – 27%. IT IS USURY!
Q: How is the real estate market in the US? I understand the market is slowing.
A: Always remember to look at statistics in detail. My statistics show that US new sales are down 7% over March, used sales are higher.
1. New sales represent less than 6% of the overall real estate sales. Used sales represent 94% of the market and are up by 4% (according to NAR).
2. Monthly swings from one month (March to April etc.) to the next are a useless exercise. What matters is how April 2019 performance measured against April 2018 or 2017? Now you can make an informed decision as to the direction of the market (Vancouver March-April sales were higher, yet April vs April 2018 were 30% lower and against April 2016 65% lower!
Major Point: US Interest rates have come down; sales remain strong and US consumers are spending. Finally, we are being asked which cities we like – just revisit Oz Buzz #25 for our top 5 favourite cities. The total ‘about turn’ of the FED will see US rates cut further by September.
Q: You mentioned the ‘Revenge of the Little Man’. What does that mean?
A: Yes, several people wondered about that. It comes from the German – “Die Rache des kleinen Mannes!” It simply means that if you can’t fight and win (and know it!) you take revenge wherever you can. So, against all corporations, powerful individuals etc. that annoy us we can do something. They won’t know, often not care, but we – the little men/women know and feel good about it. For instance: Not flying a particular airline for a month, removing TV channels that flash commercials while you’re watching a movie or simply not parking in a specific parking company lot etc. Maybe it should be the revenge of the ‘little people’.
Major Point: It may not have an impact on them, but it will have an impact on you and me as in feeling better – the little men/women.
Q: There was a TV media ran a story on previous BC gas protests, where drivers were urged not to get any gas for a few days. That did not work 15 years ago, and it won’t work now.
A: You are right. People can’t stop buying gas. BUT! The ‘Revenge of the Little Man’ would be if, for 3 days, everybody agreed not to buy gas at say: Shell, or Chevron, or any of the other stations. Then rotate. Gas staying in the tanks at gas stations must be sold – at whatever price. No, I am not organizing, just musing after I just paid $1.92 a liter.
Q: You do not talk much about REITs, don’t you like them?
A: In principle the answer is that REITs go up when interest rates go down and fall when interest rates go up. The biggest benefit is that this is a security; trading in a stock market, so getting in and out is easy. REITs have had great performance when rates went down but you must examine and study the great variety of REITs available (residential, office, retail, apartments, mini-storage, hotels, etc.) In a REIT you will always buy the management, performance and the asset class base. And yes, sit down with your broker and study their research.
Major Point: Please note that REITs go down in the beginning of a recession (like an early warning system).
Q: I saw on TV that ‘Uber and Lyft drivers’ are spies for real estate flippers?
A: I did not see it, but what a brilliant idea. In my ‘25 secrets of buying and selling real estate’, I talk about getting and wooing your bird dogs, by that I meant your local notary public, your property managers, etc. ‘Uber’ drivers drive people from out of town, visitors, and speculators, so to have one or two as your spies just may work to find out all the ‘by owners’ etc.
Q: You talk often about inflation and deflation. In one you talk about it being at the same time. How can that be? Covering all bases?
A: Please look forward to the next edition of Oz Buzz, where I will go into detail about inflation/deflation and how they can exist at the same time.
THE NUMBERS – EARLY LOOK
West Side Price SF
West Side Price Condo
Major Point 1: Sales of 2,645 are starting to come in line … only down 7% over 2018 but still almost 50% down over the 4,772 of May 2016. Active listings are up 23% – not as bad as last months. Condo listings were up 101% last month now they are up ‘only’ 60%! Surrey sales are even, SF prices are even with last May and condo prices only down by 7% in price over 2018 … but show a whopping increase still over 2016.
Again … make offers, lots of them. Only buy the absolute deal of a lifetime. And yes – again: Cash is not trash. NOTE: We said before that from April on our numbers will look better … they are … but we also said … ’only’, because we measure ourselves against the already falling market. So, this year will look better … yet be down more.
Major Point 2:Again: This downturn will continue … Markets become the stories people tell about them … and they are all negative now. As a buyer: Rejoice … realtors have time, multiple offers are dead, and owners look at offers! As the owner: Forget the downturn! 93% of all houses are selling!
As you know, we at Oz Buzz look around the world to see what – if any – influences different peoples to consider immigrating to Canada (helping our real estate!). Montreal and the East coast benefit from European uncertainty – Miami from South America and BC from Asia. Since 2011 we warned about Italy & France. We also have been predicting the eventual demise of the European Union and a falling euro that would drive more safety conscious Europeans here. Common currency – yes, we said, common union politically, educationally, etc. won’t work!
Last weekend’s election showed that populism is well in force, while the mainstream media talks that the elite won – nothing could be further from the truth. Nigel Farage got 30% of the vote vs the Labour Party (11%) and Theresa May (10%). That tells the story. Why? Farage formed the Brexit Party only 6 months ago (!) and beat everyone hands down! Okay so what does it mean? Boris Johnson (running on a pro-Brexit platform) will be the next Prime Minister, will not renegotiate Brexit and will simply leave the European Union on October 31. Our prediction: a no-deal exit.
Will it be terrible for the UK? Not in our view. Will it be terrible for the European Union? Absolutely! It is a crack in the dam that may well spell demise of the EU. Italy no longer obeys any of its monetary targets. France & most southern members don’t either and the northern states like Germany, etc. have their own massive problems. Populism won everywhere. The existing elites are running for cover.
Major, Major Point: More and more Europeans will look for safety, certainty, and a place to hide. Canada is on top of the list.
I think it is dastardly of China to single out individual Canadians, throw them into court, cancel existing relationships (Granola) all in retaliation for acting on the US’s behalf. If major nations retaliate like this, great difficulties lie ahead.
TRADE WAR? Everybody talks trade war, but the Global Economy was deteriorating without such a war. China’s retail is at a 16-year low. Germany is getting crushed and the Italian banks are in continuous “near default”.
Major, Major Point: China’s only option is to lower its currency. This is the main reason why they fight so hard on trade – if they can bring down the Yuan by 12% then the tariffs will be all (effectively) but wiped out. Once again China is very smart – ostensibly doing one thing but in reality, doing another. There will be a slowdown of Chinese tourism, but immigration will continue.
BEING A POPULIST
The American president was elected as a populist. China and the rest of the world are not used to dealing with such a person. They’re used to dealing with the big corporations, which handled most of the US exports to China (say: self interest?). Donald Trump, not being a corporatist, the rest of the world finds very difficult to handle.
Major Point: Millions of people around the world are fed up with establishment politics. The ludicrous parliament battles in Britain and the vicious, dirty infighting in the United States are watched by most people (other than elitists) with distaste and downright horror. Current elections worldwide show that people want thoughtful legal immigration, thoughtful respectful government. People want political parties that have their intertest in mind and not only fight the ever-pending next election. That’s why we see a lot of mini Trumps (as we predicted at Outlook 2017 conference).
BOOK OF THE WEEK
Mark Manson “Everything is #@%!ed”. We live in an interesting time. Materially, everything is the best it’s ever been—we are freer, healthier and wealthier than any people in human history. Yet, somehow everything seems to be irreparably and horribly f*cked—the planet is warming, governments are failing, economies are collapsing, and everyone is perpetually offended on Twitter. At this moment in history, when we have access to technology, education and communication our ancestors couldn’t even dream of, so many of us come back to an overriding feeling of hopelessness. What’s going on?
I don’t like his use of language, but it is a very good book. A book – actually – about hope. Why we can’t state an opinion without being labelled … and a host of other burning questions.
SONG OF THE WEEK?
Go see the new ROCKETMAN – Elton John’s journey … I absolutely adore his music. So, I am biased, but Taron Egerton is a believable Elton – with heart.
NEWS! BC APPEAL COURT REJECTS BC AMENDMENTS UNANIMOUSLY
It even ruled that BC Environmental rules are unconstitutional!!! Everyone knew it but for political reasons the NDP went ahead with the lawsuits (multi-million dollars) and further … will put the question to the Supreme Court of Canada, knowing full well that with a unanimous BC appeal court ruling, there’s no way that the Supreme Court of Canada will overrule them. More millions spent to pacify their environmental nut base.
West Vancouver 3,600 sq. ft house, panoramic view,2017 assessed at 2.8 mil, last year at 2.5 million, now for sale at $1,990,00 million!
West/North Van. $2,198,000 assessed value is $2,258,000. Renovated 3800sqft home on a 10,361 sq ft view property with a pool. Motivated seller.
Victoria house on 4.4 acres, 3 Bdr, 2 baths in highlands … but there was cannabis grown in basement in the 1980s. Deal?
New Westminster: 2 bed, 1 bath. Rental top floor unit with views. 850 sq./ft. Price: $350,000
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