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Oz Buzz #17 – INTEREST RATES – HAIRY AND SCARY!
“Dolce far Niente”.
Feel this. It means: loosely translated from the Italian: “The sweetness of doing nothing…” Think about the last time you actually sat back down, or walked without a phone and felt that sweetness, that ‘oh so’ sweet feeling of doing nothing. Remember when you were a child?
The Italians have something here … GO get into that sweetness at least once a week in 2019!
2 new Podcasts – Mayor of Kimberley and Ace Vancouver Island builder
Interest Rates and Economy – scary and hairy
Poloz is surprised at market downturn! Really?
Ozzie’s opinions on everything
The Numbers, The Numbers
Yellen, Bernanke and Powell say: “Don’t worry!”. That worries me!
Book of the Week
Songs of the Week
TIP OF THE WEEK – Long-term rate holds on new construction pre-sales.
THE OZ IN OZ BUZZ
Ozzie Jurock has managed some of the largest real estate corporations in Canada, the US an in Taiwan – (10,000+ employees). He is an author of several real estate books, wrote a chapter in Donald Trump’s 2009 real estate book (only Canadian). Ozzie is one of Canada’s leading business motivators. His investor outlook conferences attract over 600 attendees every time. In OzBuzz Ozzie interviews people that have followed their own unique road to success. Read more here at www.ozziejurock.com/about and ozbuzz.ca
Vancouver. Who?Real Estate Action Group.
Topic? Economy and Real Estate Investment Market 2019
When? January 14, 2019: 7 PM. Where? Vancouver Alpen Club Surrey. Who? Fraser Valley Real Estate Boards ‘Commercial Division’ Annual Meeting
Topic: Economy and Commercial Real Estate Markets in 2019
When? January 18, 2019:8 AM. Where? Fraser Valley Real Estate Board Vancouver. Who? World Outlook Financial Conference 2019
Topic: Real Estate Outlook 2019 When? February 1 and February 2. Where? Westin Bayshore Vancouver. Who? Jurock’s Real Estate Insider Landrush conference
When? May 4, 2019. Where? Pinnacle Hotel Harbourfront
Victoria: Lowest price SF home. $479,000 Surrey: Cashflow. Light industrial strata unit. 2 floors. $538,000
The Biggest Question…
Question: Ozzie, you seem to have turned negative in the last few issues?
Answer: I have felt since 1998 and written extensively about the fact (my opinion) that we live in the world’s most unreported inflation of all time. I quoted Milton Friedman a thousand times: “Inflation is primarily a monetary phenomenon”. I am a very simple guy with a very simple long-term forecast: Print (or create) money then we earn, we will have inflation hard assets. Period. Thus, for 20 years at every conference it was buy, buy, buy. We all have become rich thru Government creating inflation.
Now FOR THE FIRST TIME EVER governments of the world want to take money out and “clean up their balance sheets”. Nothing is scarier. I believe they will not be able to do it, but they will try, have tried. We will have more inflation again and with it higher prices. But this is not the time to be foolish. Only buy the absolute deal of a lifetime. And yes – again: Cash is not trash.
INTEREST RATES I or HAIRY AND SCARY!
In the summer of 2007 I sat on the beach on Thormanby Island and read a headline quoting Canada’s Finance Minister that I should not worry. What? I dropped my sausage in the sand and for the next three weeks I searched to find out what motivated him. I wasn’t worried. What was he scared about? (BTW I have been razzed about the sausage comment forever.)
Two weeks ago, there was the call from US Treasury Secretary Mnuchin to all large US Banks, looking for answers to questions none had asked. Like – are your liquid? A REAL eyebrow raiser! What was and what IS he still scared about?
Last week I noticed that Fed Chairman Powell changed his tune from hawk to dove – but that’s not the scary part. That he did it was an eyebrow raiser, nothing more. BUT…BUT…when he was flanked by past Chairman Bernanke (Mr. Quantitative Easing) as well as former Fed Chairwoman Yellen (Ms.Quantitative Tightening), I felt like dropping another sausage.
Major Point 1: To put in this heavy ammunition can only have one reason: they were scared. Their current untested waters (of taking money out of the balance sheet at 50 billion a month) crashed the markets plus – in my view created the mad gyrations of the stock market from December 19th to January 4th. Crazy. We wrote about the why last week. The real question for you and my dear reader, is what else are they scared about?
Major Point 2: There is fear in our governments, not just the US. There are absolute scary numbers coming out of Germany and France. The Chinese economy is slowing (some talk of deflationary pressures there). The enormous debt load (printing press) must be tackled. They know it, they are doing it, but no one knows the outcome. What exactly is the relation between QT and the mad stock markets? We have not been here before. That’s why the overreaction…Central Banks must get to higher interest rates without triggering a collapse. For most of 2018 the US has taken out $50 bn per month (QT). That money has to be found elsewhere. All this gives me only one firm thought: Right now – particularly if you are older – cash is not trash!
(I repeat, I am not an economist, I have no special knowledge … I am just musing. I am a real estate guy. But we are married to our economies, the actions of our governments and forecasts and our actions must take this new world into consideration.)
INTEREST RATES II
On January 9th, Minister Poloz announced that the Central bank will not raise rates. His reasons were obscure, but likely followed mad conference calls between some of the world’s leading Central Banks. He made some astounding statements:
“BOC rates will need to raise over time to neutral.” Really!? What’s neutral? Mr. Poloz: “We won’t know what the neutral range is until we get there.” – Really? We won’t know until we get there? Where?
“Housing activity is lower than expected! “ Really?! Government regulations, countless taxes and stress tests have killed the real estate market in Canada. What did you expect?
“Surprisingly weak export growth despite the low Canadian dollar” Really!? I have argued for more than 7 years that lowering your currency does not help any economy in the long term. In fact, it worsens it. Our exports – he reported – are ‘disappointing’. But that’s why we have a low currency to strengthen Ontario’s exports?
NOTE: The US has the strongest currency in the world and the strongest economy at the same time. Enough said. Revisit Jurock’s Real Estate Insider issues on this point.
In 2019 the US will be fine; however, the rest of the world will not be and that’s the wild card. Europe and the emerging markets may export their problems to the US.
Watch the bond market, it will indicate trouble ahead far sooner than the stock market.
Watch the inverted yield curve (ten year – (may) below 2.5%) will indicate recession is imminent (6-12 months ahead).
Trade war: China will make a lot of minor concessions and make promises that it will not keep. Just hope – after the pain – the US does not cave. Canada (and most of the world) has caved continuously. China plays the game a lot better.
The power of fear is stronger and comes faster than the power of optimism. Watch the leaders of the world carefully. When treasury secretary’s call bankers to ask questions that they had not asked and three chairmen on the Federal Reserve need to be at a press conference to quieten markets (which is not their job), there is a lot of fear in our leaders.
Note: Insolvencies are at the highest level since 2011.
The average stock advisor talks about buybacks as a good thing. I disagree. Dozens of companies bought back their own stocks. For instance, GE bought back $20bn of its stock, which stock has dropped like a stone. What a waste of $20bn!
Smart phone market is collapsing…
Apple stocks down … not surprised. It’s not China. They like to be way ahead of the average user. Ever increasing prices, always new connections, new cables … added costs. It’s worked so far, but now: No more earphone plugs, no more USBs in their computer. They may attract the millennials, but any business person does not want to be in 2023, they are in 2019 and stuff they know has to work and machines have to talk to each other. It isn’t and there are not now. Unless you buy countless new gadgets. No USB give me a break! I still have my iPhone 10 but its back to PCs for me.
Note: Developers buy up large parcels of land along Surrey’s King George boulevard. 2019 could be an unprecedented record year for high-rises in Surrey. Developer TienSher has bought several large properties near 108th Avenue. Their plan? Create the ‘Yaletown of Surrey’. They will be successful because they have the magic combination: Quality and price!
You should have received your assessments by now – if not go to www.bcassessment.ca. You can simply put in your address and find your assessments this year, last year, a map of your property and a great search engine to compare your property to others. If you disagree with your assessment, call your local assessor and tell them why you feel you are over-assessed. If you still are not satisfied, you only have until January 31st to dispute and challenge the assessment.
Highest valued property in Vancouver? Lululemon’s Chip Wilson’s Kitsilano home is the most expensive at $73.12 million – but it’s down 7% from 2018!
Canada housing starts were reported at 189,000 in September vs a projection of 210,000. We expect this slow down to continue.
The mortgage stress tests and the now new HELOC stress test will continue to hurt the markets, as well as employment and income for government.
The mortgage stress tests and the now new HELOC stress test seriously hurt small town Canada – actually all of Canadian cities other than maybe cooling Vancouver and Toronto.
THE NUMBERS, THE NUMBERS
According to the Real Estate Board of Greater Vancouver home sales in 2018 were the lowest annual total in the region since 2000! 2000!
24,619 sales in 2018, represented a 31.6 per cent decrease from the 35,993 sales recorded in 2017, and a 38.4 per cent decrease compared to the 39,943 residential sales in 2016. Last year’s sales total was 25 per cent below the region’s 10-year sales average.
THE NUMBERS DECEMBER
Major Point 1: Sales are way down across the board. Active listings are way up! Fraser Valley condo listings are up 208% – more in other areas. Prices are hanging in there – on average. However, some areas are down up to 21% (West side single family). It also depends what you measure this month against. For instance, the average condo price in August 2018 was $712,500.
NOTE: From April on our numbers will look better… But only, because we measure ourselves against the already falling market … so this year will look better … yet 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 47% downturn! 53% of all houses are selling! Act to get your sale into the 53%! How? Look at 21 ways to make your home sell faster. Free at www.jurock.com
Least Expensive Single-Family Home in the CORE of Victoria. Esquimalt, 3 bdrm,1 bath
1,018 sq. ft home,6,098 sq. ft lot – that is multi-family zoned!! RM-1 (low density townhouse!)
Asking $479,000 (Only four other properties listed in the CORE at present under $549,000 and ALL have SMALLER lots than this).
Commercial. Light industrial strata unit – 1,800 sq. feet…2 levels — Use? Office retail etc. Income1 ,800. Owner will carry. Price: $538,800
“The Point of It All” By Charles Krauthammer. I enjoyed this book. It is a deeply personal section offering insight into Krauthammer’s beliefs about what mattered most to him – friendship, family and the principles. The Point of It All is a timely demonstration of what it means to cut through the noise of petty politics with clarity, integrity and intellectual fortitude. Original thought on the state of American politics, the nature of liberal democracy and the course of world history.
TIP OF THE WEEK
EXCLUSIVE OPPORTUNITY TO LOCK IN YOUR RATES FOR YOUR PRE-SALE. Banks are forecasting that interest rates will rise as much as 1.5% in the next 2 years. Are you worried about locking in the best rates available today? Oz Buzz’s top mortgage broker has special access to a lender program that can offer long-term rate holds on new construction pre-sales.If you are concerned about rates rising and would like to lock in send me a note at firstname.lastname@example.org.
NOTE: This is a full approval. You will not need to get re-approved once the documents have been reviewed and signed off. If further government regulations impact mortgage rules, your approval will be unaffected.
If you believe that interest rates will rise between now and completion of your pre-sale, contact us and lock in your rate. If rates do not increase, you will be able to float down your rate to market rates at closing so there is no risk of “missing out”. Rates will differ depending on length and term of your pre-sale and are priced at higher than current interest rates to protect the bank from rising rates.
SONGS OF THE WEEK
I wanna fly away: Lenny Kravitz
Whoever said it was easy: John Newman
Protect me from what I want: Placebo
(Thanks for all the songs you share. I listen to them all. I have a lot of questions on which website I play at being a DJ. And yes, I have 15,230 listeners. Unfortunately, it will be out of business soon, but I will share it next week)
Too busy to read? Want to listen to Ozzie’s book for free? Sign-up for a free trial at Audible by clicking HEREand get Real Estate Action 2.0 FREE!
WANT TO PARTICIPATE?
Go to www.realestatetalks.com– Some 2,500 members (47,009 posts) talk real estate. Ozzie created this bulletin board in 1998!
If you are in a real estate related industry of any sort (realtor, appraiser, lawyer, home inspector, etc.) list yourself in Ozzie’s free British Columbia real estate directory at www.bcred.ca.
OZZIE’S YOUTUBE CHANNEL
Look at Ozzie’s YouTube videos – Watch his new video on the Legalization of Pot here: https://www.youtube.com/watch?v=ZUxpL6_4nOUand you can subscribe to his channel and see all his videos, including selected bits of the fabulous Michael Campbell show and the “Blast of the Pasts” – watch what Ozzie said in 2010 on BCTV and more.
On air with Michael Campbell on fabulous MONEYTALKS every Saturdaysometime between 8:30AM – 10 AM. The Hot Property that we discuss there, is available by subscribing to the OzBuzz Dispatch at Jurock.com
HAVE A QUESTION OR COMMENT?
You can reach me at email@example.com with all of your questions, comments and concerns regarding the Oz Buzz publication.
LIVE LIFE LARGE
The world is
I thrive on my sense of wonder
I love the beauty and joy of the
World and, without lecturing, I am
Committed to protect it
I will grow into my future best!
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