June 5, 2021
“Now, it is a funny thing about life; if you refuse to accept anything but the best you very often will achieve it.” –Somerset Maugham
THE NUMBERS, THE NUMBERS – MAY 2021, 2020, 2019, 2018
REAL ESTATE QUESTION BLITZ
WILL CRYPTO COLLAPSE AFFECT REAL ESTATE?
OZZIE TAKES A SHOT ON BLACK SWANS AND OTHER THINGS
NEW LISTINGS ARE SOARING – ARE WE NEAR THE TOP?
INDUSTRIAL REAL ESTATE IS GOING BANANAS
IT’S INTEREST RATES, BABY!
CRYPTO AND THEN AGAIN CRYPTO
GOING ‘CABIN ONE’
INFLATION OR DEFLATION? CONTINUED!
WATCH OUT FOR CRYPTO SCAMS
LOST $200,000 In A Bitcoin SCAM… It’s all gone: https://www.youtube.com/watch?v=3gO6jCFAHic
WILL THERE BE AN ELECTION?
Yes. The Liberals’ have an “electoral urgency” plan. This means they can nominate 338 candidates immediately and call an election. They’re doing this because they already know exactly when they plan to have the next election.
IT’S INTEREST RATES, BABY!
In several Facts by Email issues (this piece from December 2015) we mused “What is Poloz thinking?” I mean, he called us “the most indebted nation with house prices that are up to 30% overvalued”. Then he followed up that statement with the action of lowering interest rates – making it even easier to borrow! Huh, what gives?
I rest my case with this:
Q: What is the mortgage payment on $400,000 loan?
A: Silly question. What rate, what term, what kind? If you had a 1.55% mortgage with a 30-year amortization (5-year variable closed) you would pay $1,390.
Of interest would be…had you done this mortgage in 1991 at 13.5% you would have had to pay $4,582 OR 3.5 TIMES AS MUCH! Now, do you still blame foreigners for price increases?
It is interest rates baby! Ask: Who sets the rates?
GOING ‘CABIN ONE’
I receive comments from time to time about my “Living Life Large” or “Go live life large, or your heirs will”. Often comments are of the “yeah, but” variety . “Yeah, but:“…easy for you to say”, yeah but “covid”, yeah but, yeah but.
Actually, I do believe that we should all live our life with passion and expect the best to happen. In my motivational card set (look below) I try to set the PERSONAL stage.
Somerset Maughan (see quote above) wrote it a hundred years ago…a thousand others followed.
It is a funny thing indeed: Expect the best, get the best, expect to worry, get worries, expect a loss – lose. The law of expectations. What do you have to lose? Expect the best!
My favorite 3 words are when life hands you a lemon? “So, what. Next!”
Too many comments to feature. This is normal for me. My ‘Jurock’s Real Estate Insider’ – a subscription-based service since 1993 – featured the debate in almost every issue. I said it in every speech and printed books on the premise – my steadfast view – that inflation was here, that it was mostly unreported and that it would continue to result in vastly higher real estate prices.
I was always targeted as being “no true economist”, did not understand the ‘concept of inflation’ etc. etc. Why did I care? Well, if I were right (turns out I was and am), real estate values would soar. (Revisit the last issue for excerpts from my books.) The “this is not inflation, Ozzie crowd”- always ended with: “Ozzie, the headline inflation is what matters, etc., etc.”
This year, comments change…”I now see inflation everywhere too”. “I am so glad I kept my house”, “my real estate, I now have several condos, etc., etc.”
Now over 200 comments on the ‘yes, inflation (asset prices) are soaring’?
My worry? They are now all in the “yes, I agree inflation is here” camp. What? They all agree with me? Time for me to re-evaluate.
The 80/20 principle by Koch. (updated). When I started my internet company FEATUREWEB I learned of this book in which Koch expanded on the Pareto principle and the professor Zipf – Harvard – follow up. Koch explains and I agree that the 80/20 principle is one of the great secrets of highly effective people and organizations.
Did you know, for example, that 20 percent of customers account for 80 percent of revenues? That 20 percent of our time accounts for 80 percent of the work we accomplish. The 80/20 Principle shows how we can achieve much more with much less effort, time, and resources, simply by identifying and focusing our efforts on the 20 percent that really counts. Buy it at Amazon or listen to it on Audible.
REAL ESTATE QUESTION BLITZ
What is the best mortgage rate currently?
(June 4) If you did not have your TV repossessed this month, you can prove that your DP was in your bank account for 3 months, if you have a job, if you can prove your tenants (if any) paid their rent…and know how to jump thru more hoops: The best rate is 1.48%. The second-best rate is 1.55% variable 5-year 30 YEAR AMORIZATION.
Higher mortgage rates ahead? YES
Does a higher credit score mean a better mortgage rate? YES
The new mortgage stress test is 5.25%?
It is right now, but there is a twist: It is 2% better than the best rate you can get or 5.25% whichever is higher. Why the twist? They get ready for rates to go to 4% – then that rate plus 2% means an effective test at 6%. A 5% rate would be a test at 7% and so on!
My credit score is 830. Is that good enough?
The highest qualifying scores run around 900 the lowest around 600. Not only good enough but you should get the very best rate. Shop around with an ace broker! Right now, best 5-year variables run 1.48% – 1.99 %
I have not sold my house. Should I wait before I buy?
Yes, nothing like living with 2 mortgages to be miserable. (If you have not sold in this market your price is too high. Change your agent).
My agent says I can waive the home inspection.
In this crazy market, he means you should not make that a subject now. You and he/she have to decide. But you should get an inspection anyway and walk with the inspector when he does his thing.
I have bought a rental property, should I rush to get a tenant?
No, never. Check them out. Credit checks etc. Also, ask for the highest rent. In BC you cannot increase the rate this year and after that who knows. But in any case, no more than 2%. So, wait for the right tenant that will pay the top.
Q: I like your comments about the benefits of commercial and industrial real estate. I saw a video by Kevin O’Leary in which he likes residential and does not like commercial/industrial.
A: I like him, you should listen to what he says. (In his book he states that to be successful to “pick.up.the.phone”), but I have not seen this video. In a general sense (not in response to a video I have not seen) industrial and commercial business will change but will soar with reopening the economy and with population increases. Stronger residential markets will bring with it commercial and industrial too. Maybe different kind of businesses. Urban properties that have a use will always have value. Industrial real estate is absolutely going bananas right now.
OZZIE TAKES A SHOT (Opinion):
Here I have received a question and I take a shot: Not a prediction, heck no! No advice…just a wild guess!
WILL CRYPTO COLLAPSE AFFECT REAL ESTATE?
Yes. Several people and at least 2 RE companies accepted crypto as part payment…are now in a terrible loss position. But the trillion that the momentum ‘unwashed’ players lost will mean some of that that money is not available for the new house etc. etc. Some real estate will be sold to cover crypto losses.
YOU SHOULD NOT CALL BITCOIN CORRECTION A CRASH. IT IS NORMAL FOR CRYPTO TO HAVE WIDE SWINGS.
Ha-ha, its down 53% and investors lost 1 trillion 150 billion in a week. That is a crash, baby!
I SHOULD HAVE STAYED IN REAL ESTATE. SHOULD I BUY BACK INTO BITCOIN OR OTHERS?
Do not know, do not venture an opinion.
WHO LOST THE MONEY IN CRYPTO CRASH?
Staggering losses by the momentum traders that lost all their bets (Dave Dodge called Bitcoin a casino).
THE CRYPTO KILLERS?
“Big Boy Manipulators” that helped Bitcoin and other crypto coins rise up (Musk, others), then talking it down and selling massively into the panic and then buying back to lower prices, while the poor guys capitulated.
Millennials, first timers, diamond hands. The ones that can least afford it. Hundreds of thousands, most cannot make it back and wont come back. It is a tragedy.
I DON’T UNDERSTAND WHY WE DON’T HAVE ANYTHING IN MAINSTREM MEDIA ABOUT THIS CRASH?
You and me both. Its is a massive event on a “Black Swab level” if you add the Archegos debacle. Very little in main media
WHAT ABOUT BILL C-10?
It is free speech more and more curtailed, brought about by Liberals, NDP and Quebec politicians. The ‘unholy’ trinity. No other country is doing it. Censorship is the real objective. First, we ban the books, then we rewrite history…
IS BITCOIN HERE TO STAY?
Yes, but for the wrong reason. Brokerage houses and financial institutions make money with it. See Black Swan below.
YOU MUST AGREE. ELON MUSK IS A GENIUS
Yes! But no angel. His company made profits only because he sold $1.5 billion of energy credits to gas guzzlers. Without these sales, Tesla would not have made a profit. That bit and his sale of Bitcoin making $100 million helped his balance sheet. Genius? Yes. But think, selling ENERGY credits to gas automobiles actually helps gas guzzlers! (Tesla dominates the renewable energy credit (REC) market for clean vehicles, an environmental financing tool that is responsible for the company’s string of quarterly profits.)
THE PROVERBIAL BLACK SWANS
Man, oh man. You gals/guys are really after me. Whatever I forecast, whenever I opine, you want to know, what about the ‘black swans. What do you see?
What is a Black Swan?
Nassim Taleb in his book “The Black Swan” said: ‘A black swan is a highly improbable event with three principal characteristics: It is unpredictable; it carries a massive impact; and, after the fact, we concoct an explanation that makes it appear less random, and more predictable, than it was’.
So, for you that maintain that the Bitcoin crash was a Black Swan…it was not. It was predicted over and over and now we have a world full of ‘concocting explanations on why it crashed’. So, no Black Swan here.
However, with that argument there would never be any true black Swans, because in one way or another some of the fringe of society, or the fringe of economics/politics, almost all possible scenarios have been predicted.
Ozzie’s Back Swans that would affect real estate markets seriously.
- Archegos and the crypto crash is the beginning of a massive, massive worldwide financial crash.
- The unbelievable speculation in derivatives (trillions) wipes out 20% of the financial institutions.
- No one is CEO at Bitcoin? What we need is a global financial interactive operating system. We need global protocols. But how to do it without anyone in charge?
8000 crypto currencies. Some outright frauds. Price driven by momentum NOT value
- The euro digital currency and all 65 percent of all central banks are studying their own creation of digital money. It means that all governments will know everything about you and me. Everything! Where we go, what we spend our money on…Unintended consequences.
- Interest rates soar unexpectedly by 3%. Likely no, possible yes.
- All tech innovation (becomes cheaper – good ) BUT, rapidly evolving and increasingly affordable A.I. technologies can be used for malicious purposes by individuals and governments.
Cheaper and more useful tech, will also do away with 40% of all current jobs
COMMENT: I LOVED YOUR TAKE ON THE REVENGE OF THE LITTLE PEOPLE. PLEASE KEEP IT UP.
THE NUMBERS, THE NUMBERS IN CANADA
BC APRIL 2021, 2020
BCREA reports a total of 13,683 residential unit sales in April 2021, an increase of 312.3 per cent over April 2020 when the onset of the COVID-19 pandemic prompted a lockdown of the provincial economy.
The average MLS® residential price in BC was $946,606, a 29.1 per cent increase from $733,330 recorded in April 2020.
Total sales dollar volume was $12.9 billion, a 432.2 per cent increase from last year.
NOTE: See above BC stats comparing April 2021 to the “covid – no open houses “ April 2020.
VANCOUVER AND FRASER VALLEY/SURREY MAY 2021, 2020, 2019 and 2,018
Major Point: Remember that we are comparing ‘boom-time’ to covid ‘no open house’ time.
So, take the large percentage increases with a large dose of salt.
SF sales are still up more than 100% over 2018 in SF and Condos over May 2019 and May 2018!
Also Note: Overall prices are down slightly over April; SF prices stay well up over all 4 years. Condo prices were slightly higher in 2018! As well, as in April, listings in SF home sector remain lower, but condo listings are now higher than they were in 2018!
We said last month: “Anecdotally, markets are slowing…not yet visibly in the numbers.” No longer anecdotally… Listings are soaring (Note Fraser Valley), sales are still strong, but the area of multiple offers is coming to an end.
Again: Last month: “Realtors talk say fewer multiple offers, far fewer showings, and hard time to get financing. We see more signs of a slowdown”. We also said: “When vendors realize that markets slow, we will get a flood of listings. Interesting times ahead.”
THE FRASER VALLEY
Fraser Valley’s extraordinary pandemic real estate market continued to break sales records – for the ninth consecutive month – while at the same time, reaching near‐historic levels of new listings in May.
2,951 sales showed an increase of 267 per cent compared to May 2020. The previous record high for sales in May for the Fraser Valley region was 2,911 in 2016.
Larry Anderson, President of the Board, said, “Demand hasn’t changed. What is changed is supply. In the last three months, buyers have 40 per cent more inventory to look at in the Fraser Valley and it has allowed them to take back a little control.”
The Board received the second‐highest volume of new listings ever, approaching May 2018 levels. It received 3,926 new listings in May, an increase of 78 per cent compared to last year. This month’ Active listings stood at 5,868, a 3 per cent decrease compared to April, and 9 per cent less than May of last year.
Across Fraser Valley, in May, the average number of days to sell a single‐family detached home was 14 and a townhome was 12 days. Apartments took, on average, 20 days to sell.
Fraser Valley sales in total? UP 340%! Prices? +35%! Active listings? +-0%!
As we predicted…values grow where people go, and people go where the jobs are…like in Surrey. Our RE company (JCIR) helped market a 140-unit presale building in Surrey and it sold out in just over an hour! Fraser Valley real estate hit of 340 percent increases in sales and a 35% increase in price with zero increases in listings will also go down in the annals of a superlative market. BUT like in Vancouver the comparison does not hold water. It does however show a 100 plus percent increase over 2019 and 2018. So, yes, covid notwithstanding it was an outstanding April indeed.
Major Point: Sales were up (pandemic 278%!) LISTINGS are LOWER than and prices are higher than April and lower than all May months for 4 years.
Major Point: SF sales AND CONDO SALES were up 353% AND 369% (meaningless) BUT up also over 2018 AND 2019.
Prices up for SF? UP 34%!
Prices up for condos? UP 11%!
NOTE: Condo listings are well down by 16% in the Valley
BUYING A PRE-SALE THRU JCIR
Several comments and inquiries on the high rise building that will be – in part – marketed by Jurock Case Investment Realty (JCIR). Please note that there are.
a) no prices
b) no floorplans
c) no disclosure statements.
If you like, you just give JCIR “an expression of interest”. Once we have a disclosure statement and details, JCIR will inform you. Also, by entering your email, you will get an invite to any of JCIR zoom market information meetings.
You can get on our registration list here: www.jcir.ca. (Next zoom meeting on the real estate markets will be after June 15.)
LIVE LIFE LARGE
To be luckier
Is a choice.
I choose happiness.
I will grow into my future best.
I choose to grow into good fortune.
I choose passive income wealth.
I choose to be lucky.
I will grow into my future best self.
Look em’ up (and buy) all the “Grow into your future best” cards at: www.commitperformmeasure.com
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!
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