February 9, 2022
“The road to success is dotted with many tempting parking spaces.” –Will Rogers
Ozzie invites Ozbuzzers to a zoom evening “Forecast 2022”
On February 24, 2022…
But you must sign in at jcir.ca.
Why? Think about us sending all 26,000 of you a zoom invite!
Want to join? Please sign in at www.jcir.ca – click on ‘interested in zoom’, ‘newsletter’ or ‘buying’.
Once your email is in jcir.ca you will get a zoom invite by February 21, 2022
- THE HIGH IS IN PLACE?
- WHY SHOULD CHINA’S REAL ESTATE CRASH IMPACT US?
- BITCOIN CAN BE HACKED – BUT NOW BLACKROCK AND RUSSIA WANT IT
- HOUSING PRICES COULD FALL BY 20% AS PER OSFI
- RUNAWAY INFLATION? WE AE IN THE MIDDLE OF IT
- WHY THIS CRAZY MARKET? THE PERFECT STORM!
- WHY ARE HOUSE PRICES SOARING ALL OF A SUDDEN, THIS JANUARY? FOMO
- GREEDY REALTORS, DEVELOPERS, HOMEOWNERS ARE TO BLAME
- FOR GOODNESS SAKES, DON’T JUST TALK … DO IT!
- MAJOR CANADA REAL ESTATE MARKETS
- CANADA DOLLAR/US DOLLAR
- RECESSION AHEAD
- HUH? TORONTO IS MUCH MORE UNAFFORDABE THAN VANCOUVER?
- THE NUMBERS, THE NUMBERS – JANUARY 2022, 2021, 2020, 2019
- CASH FLOW IS BEING ATTACKED
- VANCOUVER, WESTSIDE, SURREY – HUGE SF HOME PRICE INCREASES
- BRAND NEW HOME $1.7 MILL, 2 BEDROOM SKI CONDO $325,000
- TRUDEAU WANTS NO FOREIGN BUYERS, FLIPPING TAX AND RENT-TO-OWN
Again, too many questions. But we did get a number of emails asking for the Q&A format to come back. Here goes:
Q: OZZIE, YOU MAINTAIN THE HIGH IS IN PLACE. DOES IT MEAN IT’S DOWN FROM HERE?
A: No one knows for sure. But FOMO will wane. Today, buyer fatigue, joined by rising rates – will converge to create a top. FOMO? Pending are…foreign buyer ban, rising rates, increase in DP. All this drives people INTO the market. See below.
Q: SUPERINTENDENT OF FINANCIAL SERVICES MADE A SCARY FORECAST. DO YOU AGREE?
A: Indeed, Peter Routledge the head of the Office of the Superintendent of Financial Institutions (OSFI), speaking on The Herle Burly podcast, said that: “some markets could see home prices fall by as much as 20 per cent if and when the Bank of Canada raises its benchmark overnight rate”. He also qualified his remarks. The last time institutions predicted a major collapse (CMHC) of 18% was in 2020. Heads of institution’s job is to be calm in the face of storms. So, they come up with scary words.
Understandable. However, that is why I worry that BOC and the FED, say they will raise rates but then will not raise rates and thus bring about continued runaway inflation. Runaway inflation in Real Estate? Yes, we are in the middle of one kind.
Q: GUY ASKS 2 QUESTIONS: WHY CHINA MATTERS? WHY THE CRAZY JANUARY?
- Why is China so relevant to you and the world? Why do we care whether their real estate market collapses?
- Why are house prices soaring all of a sudden, this January?
A: In absolute terms we don’t care, but we try to interpret what it may mean to our markets here.
It’s all part of the current perfect storm. As a reader you know that we predicted it since last summer. First, Canada is a desirable place for many people around the world. Then…
- The world is aflame with real measurable inflation (not just Turkey)
- It is also aflame with Covid (Germany had 150,00 new cases this week). People are confused, stocks are up and down, crypto up, then down. People are stuck in a quagmire of confusion and were in inaction.
- Then China clamps down on developers, developers go broke, the CP crashes stocks, forbids crypto. Some people lose their real estate investment, and they think, we should get our money out of China (middle East – you name it) to somewhere safe.
- While they are thinking that…Trudeau announces (Dec 29) that he will close the door to foreign buyers. The Chinese (and other foreigners) and their realtors read that. Now they are getting out of their inaction into frenzy. They are motivated to act as fast as possible (as in right now) for those two reasons then on top of that …FOMO.
- Canadian government also announces higher rates some time in the future,
- then RE Boards say there are no listings…FOMO
- …then the news shows that rents are soaring, and inflation is 7 percent, and you know it’s higher. FOMO.
Finally, CMHC states that it is analyzing raising the DP for investors and first timers and possibly shorten the amortization period… FOMO.
Now Canadians are joining the foreigners that are running away from their home country. They madly outbid each other. They dance the dance of the unmasked.
Outcome: FOMO! More pressure on existing markets.
Q: YOU WENT ON FACEBOOK SAYING THAT YOU WERE DISAPPOINTED IN OUR GOVERNMENT LEAVING RATES THE SAME. I DISAGREE. RAISE RATES WE COLLAPSE.
A: Yes, I said on Facebook and Twitter that I wished the Canadian government just had acted and raised the rate by that .25%. I still say:
Dear people in charge: I may not agree with what you want to do, but for goodness’ sake if you are going to do it, do it now!
Don’t wave the possibility … raise the rate now.
Close the foreign buyer door now (if that is your goal).
Change the down payment requirements now (if you are going to change it anyway).
By floating all these possibilities, people are getting frantic to act. FOMO reigns. Both by foreigners and locals…
Ergo: The perfect storm
C: I TOOK YOUR ACTION COURSE IN 2003. I flew in from Calgary. You told us that your Motto “COMMIT – PERFORM – MEASURE” then. At first, I thought, why did I fly here for that? I want real estate secrets. When I got back and read your fantastic Breakthrough Thinking System and understood the concept of really being committed to personal direct action and to measure my results on a regular pre-determined basis my life changed.
A: I live for comments like that. Thanks for sharing!
“People often say that motivation doesn’t last. Well, neither does bathing – that’s why we recommend it daily.” –Zig Ziglar
C: THANKS FOR THE MORTGAGE RATES, I DIDN’T GET 1.5%, BUT I LOCKED IN AT 2.93% FOR 5 YEARS…SUCH A LOAD OFF!
Q: THERE ARE TOO MANY NUMBERS. WHY THE WESTSIDE OF VANCOUVER?
A: These numbers are representative of a snapshot market area over 4 years. Any buyer or seller should study the last 4 years to understand pricing. As such these are vital to understand the environment we are in, and where it will go. The Westside represent highest market price (Dec $4.2 million)…but you are right – if we have the highest, we should balance it with the lowest. But who has the time? For January I just took the Westside out.
Q: YOU TALK ABOUT STOCK COLLAPSE? WHEN?
A: May 8 at 11 PM. Actually, as I pointed out in the last Ozbuzz (66), we already had a collapse. You may have read a headline that the Nasdaq is off by 12%. That may be so, but when you take a closer look – as in taking a few Mega stocks out, you see that 46% of Nasdaq stocks are down by more than 50% and a big percentage over 70% and even Cathy’s Ark funds are sinking more than 60% … what collapse are you waiting for?
Q: ALL INFLATION – RUNAWAY QUESTIONS – WHAT WILL HAPPEN?
I DIRECT YOU TO LAST 3 MONTHS ISSUES 64-66.
Q: I MISS YOUR CAMEMBERT JOKES. IS THE PRICE NOT GOING UP ANYMORE?
A: Ha-ha. I have had a number of people write on this. One said that I was wrong the prices on his camembert had not risen. He wrote back the next day as his wife pointed out the “same” camembert at the “same” price was now 150 grams lighter. The same is true for potato chips (smaller bags). More important rent is the same, but not the condo size. Look below.
Q: OZZIE, HOW ABOUT RENTS? THERE IS NO WAY WE CAN AFFORD TO PAY THE CONTINUED INCREASES.
A: I assume you mean existing buildings. Rent increases are fixed at 1.5% in BC this year. The question is one of raising rents between tenancies. (One tenant leaves. The new tenant pays the new market rent which is higher. Victoria is pondering a rent fixed to the unit!).
At a recent UDI conference, the panelists discussed the rent per square foot in the LM. $3.00 dollars a foot in Coquitlam and $4.50 in Vancouver! After discussing that some new condos want even $5.25 a foot the answer was debated. What is it? Well, the sq feet have to be lower (as in less camembert). So, you will pay the same rent (feeling good) for a MUCH smaller unit.
Q: ISN’T IT REALLY THE GREEDY REALTORS, DEVELOPERS AND UNREASONABLE HOMEOWNERS THAT ARE RESPONSIBLE FOR THE HIGH PRICES?
A: Of course, we must have someone to blame. Listening to the UBC professor trying to bring in wealth tax on homeowners (only), it is us homeowners that are to blame.
I am not blaming developers, or camembert growers. We are in the unreported inflation I have been on about for years, brought about by the reckless creation of money. Costs are soaring (used car average prices in the US are up 35%), so if I want to keep customers, I must try to keep prices down. Ok, I will, but I give you less product.
“A government which robs Peter to pay Paul can always count on Paul’s support.” –George Bernard Shaw
Q: I MISS YOUR ‘REVENGE OF THE LITTLE MAN”
A: It’s coming back next month
Q: WHERE WOULD I FIND THE BACKUP TO “WHEN BIG BOYS RUN – GO HIDE!” WATCH WHAT THEY DO, NOT WHAT THEY SAY. ELON MUSK, BILL GATES, BIG BILLIONAIRES (MUSK, ZUCKERBERG, BEZOS SOLD SOME 69 BILLION EVEN MICHAEL BURRY REPORTEDLY SOLD 94% OF ALL OF HIS HOLDINGS. “
A: Here you go. You also could just google their headlines.
Q: I HAVE BEEN TRYING TO HAVE A PERSONAL CONVERSATION. YOUR OFFICE ALWAYS SAYS YOU ARE BOOKED. Q: I RUN A SMALL INVESTOR GROUP; WOULD YOU SPEAK TO US? Q: I ONLY WANT TO RUN SOMETHING BY YOU, 5 MINUTES.
A: I always try to speak free to Rotary clubs. They suffered thru my speeches when I started out. I speak to people all the time. Booking can be done here. http://ozziejurock.com/speaker/
Q: TONS OF DEBATE, QUESTIONS, AND COMMENTS ON INTEREST RATES IN GENERAL, HOBBY HORSES IN PARTICULAR.
A: We have beaten that horse to death.
Q: BITCOIN QUESTIONS ABOUND
A: What a month! Down to $42,000 then down to $32,000 now back up over $44,000. Staggering ( I mean STAGGERING!) losses, by people that could least afford them. Some people don’t like BUFFET and his partner calling Bitcoin a turd. OK, keep playing. But if it’s secure leverage you want, there is none better than real estate.
Good news for crypto: Mega asset manager Blackrock plans to offer crypto trading, Russia announced that it is set to recognize crypto as a currency and I phone may let you use crypto for merchant payments. Also, some 5.4 billion in stolen crypto was recovered. Stolen crypto? Yes, it can be hacked and stolen.
Q: US DOLLAR. MOST ANALYSTS QUOTE THE US DOLLAR AS GOING DOWN AND THE CANADIAN HIGHER. YOU DO THE OPPOSITE AND THE DIFFERENCE IS SO SMALL WHAT DOES IT MATTER?
A: I am not a currency analyst. I talk about the exchange rates only as a higher US dollar will attract more investment from the US and a higher Canadian dollar will increase demand for Canadians to go down south.
Does not matter? I made the forecasts last summer.
But the US dollar is down from 83.5 cents
The worst exchange rate in 2021 was: $1.2038 CAD on 02 Jun 2021.
On Feb 8, 2022 it is $1.2705.
I rest my case. Remember, you get to play with your own money, so you make your own decisions.
Q: CANADIAN DOLLAR
A: Same as last month. We see the Canadian dollar still tied mainly to oil and commodities. As oil will fall (after the winter) we see the Canadian dollar come down. A lot of other commodities (like lumber down 50%) are heading lower when rates go up. A recession looms.
CANADA REAL ESTATE
Note: Trudeau wants (Dec 19):
- A temporary ban on non-recreational residential sales to foreign buyers.
- An anti-flipping tax
- Wants to develop rent-to-own projects
Until we know the exact details, we can’t comment. But it is these “float the issues” news that create the FOMO in people and drive markets higher.
- Developers/builders note: We have elections August to November! Not much will get approved during that time.
- Inflation is here to stay – but a recession is ahead.
- Recession 70 percent likely.
- Inflation higher long term.
- Real Estate markets will be peaking after the 4th rate increase.
- Bitcoin – you decide.
- Interest rates – higher.
- Rules will change; If you are an investor – buy now. Your DP requirement may increase and your amortization decrease. Cash flow is being attacked.
- Values have gone up, maybe a good time to refinance and get a HELOC to re-invest into something else.
CREA reported that sales in the second half of 2021 were still the second-highest level on record for the month. 666,995 residential properties traded hands in 2021. This was a new record surpassing the previous annual record set in 2020 by more than 20% and standing 30% above the average of the last 10 years.
“There are currently fewer properties listed for sale in Canada than at any point on record,” said Shaun Cathcart, CREA’s Senior Economist. “So unfortunately, the housing affordability problem facing the country is likely to get worse before it gets better. Policymakers are starting to say the right things, but now they have to act to change this course we’re on. An aggressive national push to build more homes is what will address the issue, but it will probably have to be a greater amount of building than anything we’ve ever undertaken. A touch over the status quo won’t cut it.” (ED NOTE. YES!!!)
There were just 1.6 months of inventory on a national basis at the end of December 2021 — the lowest level ever recorded. The long-term average for this measure is a little more than 5 months. Year-over-year price growth has crept back above 25% in B.C. Year-over-year price gains are still in the mid-to-high single digits in Alberta and Saskatchewan, while gains are running at about 12% in Manitoba. Ontario saw year-over-year price growth remain above 30% in December. Greater Montreal’s year-over-year price growth remains at a little over 20%.
The actual (not seasonally adjusted) national average home price was $713,500 in December 2021, up 17.7% from the same month last year.
RBC says that Toronto is much more unaffordable than Vancouver! RBC data shows the GTA price hit $1.260 million last month compared with Metro Vancouver’s benchmark of $1.255 million. That $1.255 figure is still a record high for the region.
“Accompanied by an expected material increase in housing completions, we believe this will gradually ease the extreme imbalance in the market and in time moderate the pace of price appreciation.”
Major Point: What drivel. Read the CREA guy.
BC IS HOT
Not just the residential markets, but industrial is on fire, new corporations pouring into BC. Movie industry, Amazon, Netflix, Disney, and dozens of others and then guess what? Even mining is back. Last year, exploration spending in B.C. hit $660 million – a record. Bruce Ralston, minister of Energy, Mines and Low Carbon Innovation forecast that production from B.C. mines in 2021 would be $12.6 billion. Why is mining interesting again? Climate change!
Even environmentalists realize that if we want to change from fossils to electricity and other forms of energy we need copper, nickel, lithium, and rare earths. Maybe finally we get something out of the ground that is real, rather than printing air.
Real Estate sales in the province are forecast to decline 17 per cent from a record high 2021 to 103,250 units this year. (Ed. Note: In January SF homes are already down much more than that … but not condos). In 2023 MLS® residential sales are forecast to fall an additional 12 per cent to 90,200 units. “We expected home sales in 2022 do moderate from the frenetic pace of 2021,” said BCREA Chief Economist Brendon Ogmundson. “However, sales activity will remain high by historical standards.”
We are entering 2022 with the lowest level of active listings on record and significant demand-side momentum. That means strong sales should persist through the first few months of the year and supply will remain severely limited.
As a result, home prices are expected to rise by 8.5 per cent in 2022 with much of that gain happening in the first half of the year. With sales activity normalizing in 2023 and inventories rebuilding, market conditions around the province should improve and price growth is anticipated to slow to 2.7 per cent.
Vancouver Major Point:
SF sales down 16% – Condo sales up 11%
SF Price up 27% – Condo prices up 16%
SF AL down 21% – Condo AL down 43%
SF sales are down over 2021 but still second best in 10 years, same for Condo sales.
Note: New Condo listings sharply higher over December’s 1,060!
Fraser Valley – SF
Fraser Valley Major Point:
SF sales down 29% – Condo sales up 13%
SF Price up 38% – Condo prices up 34%
SF AL down 31% – Condo AL down 69%
MAJOR, MAJOR POINT: The market remains very tight. As a seller get the highest quality realtor, one that understands this mad, mad market. Multiple offers prevail in all markets. Some unbelievable.
The ‘Jurock Case Investment Realty (JCIR)’ recommendation to buy Surrey and Whalley and the whole market for years … has paid off beyond belief for the ‘ACTION INVESTOR’. If you like more info go to www.jcir.ca (join our zoom on February 24).
Too early to bring the feature back, but I noted these examples of what is available in different markets. You’ve got to look for them but here goes:
- BRAND NEW HOUSE FOR $1.7 MILLION!
Right now you can buy a lot in one of the last master-planned communities on the exclusive West (sunny) side of Bowen. 1/2-acre Lot $699,000, 2,000 sq. ft. House @ 400/psf is $800,000 (Secondary suites allowed), $1.7m for a new house. Nothing new under 2.5 these days. Easily commute to downtown by car or boat (60% of the island does already). Freehold Lots, Paved Roads, Underground Services (think UBC and not old YVR), TransLink service to the property. Ultra High-Speed internet (rare on Bowen and was expensive to get).
- SKI RESORT CONDO – RIGHT ON THE QUAD CHAIR
2 BR – 2 Baths – 980 sq. ft., year-round pool, hot tub, fully furnished. $325,000. (Put $25,000 down – pay $1,250 per month). Cheaper than rent. 20 minutes to international Airport….5 golf courses. Where? Kimberley.
Ozzie’s other websites for you to play in: FREE
- Ozzie, Michael Campbell, Michael Levy and Victor Adair and guests are now on podcasts every week: https://omny.fm/shows/money-talks-with-michael-campbell
- PLUS: Victor Adair’s fantastic blog at http://www.VictorAdair.ca. So far, it’s still free. I never talk US dollar, interest rates etc. without checking his latest -every Friday- blog first.
- If you are in building, selling, marketing, developing, lawyering, etc. list yourself in the free BC real estate directory: www.bcred.ca
- Questions to Ozzie and experts: www.askanexpert.ca
- Set up your own “talk” at www.realestatetalks.com Ozzie’s 23-year-old bulletin board for you to play in.
- Want to see all Ozzie blogs and all Ozzie podcasts? Go here: www.ozbuzz.ca.
- Who the heck is Ozzie? Go to www.ozziejurock.com
- Ozzie on YouTube? www.youtube.com/jurockvideo
Your thoughts – AS ALWAYS – are most welcome. WRITE QUESTIONS HERE: INFO@JUROCK.COM
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!!!Think about this !!!
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