“There is no art which government sooner learns of another than that of draining money from the pockets of the people.” –Adam Smith
PLEASE NOTE THAT THE NOVEMBER ‘OZBUZZ 76’ WAS ALSO A VIDEO (AT OZBUZZ.CA BLOGS). YOU CAN STILL WATCH IT HERE:
IN THIS ISSUE
- THE QUINTESSENTIAL SURVEY – RESULTS (This has been an enormous help. Thank you!)
- INFLATION/DEFLATION – World / Canada / US
- THE (CRASHING) NUMBERS, THE NUMBERS
- INTEREST HIGHER FIRST THAN FLAT BUT STAYING UP
- US DOLLAR
- CANADA DOLLAR
- THE ASTOUNDING NUMBERS
- THE UNWASHED WILL BE STUNNED
- WHY SIT ON SIDELINES WITH CASH
QUESTIONS, QUESTIONS (Housekeeping)
There were tons of questions. I will highlight the most often asked ones.
Q: So far 3 subscribers to the Landrush video series are wondering why access has expired.
A: As promised all 12 speaker presentations were available as of September 12. Ozzie updated October 4 and November 4. The website was to be close November 30. It was left open til December 10. It is now closed.
Thank you so much for your great response. First to answer the (sometimes cumbersome) questions and then second – the suggestions! The survey questions covered some 24 pages. Received were these and 184 pages of comments/advice/suggestions! Response rate was a sound 11%.
Very quick overviews QUESTION ANSWER
“Would you like OzBuzz in just video format as in Ozbuzz 76?”: Video 43% Text 57%
“How do you feel about the length of OzBuzz?”: Good amount 83%, short 5%, too long 12%
“How do you feel about the Q and A section?” Like it: 87%, Don’t like 3%, Don’t read it 10%
“Would you like Q and A section by zoom? Yes 32%. No 68%
“Do you listen to the new Oz Buzz Podcasts?” Yes 37%, No 63%
“Do you like Oz Buzz Podcasts interviewing people?” Yes 68%, No 32%
“Would you like Ozzie do podcasts opinion of himself?” Yes 57%, No 43%
(Question berated for lack of clarity)
“Do you watch Ozzie on Youtube.com/jurockvideo?” Yes 36%, No 64%
“Do you subscribe to Ozzie’s YouTube channel?” Yes 31%, No 69%
“How much of your online time do you spend listening to podcasts?” Less than 20%? 72%
“Would you like to have more or less podcasts by Ozzie?” More: 63%, Less 37%
“Do you listen to the Ozzie portion of the Moneytalks podcast every Saturday? Yes 55%, No 45%
( berated for poor wording “every”)
“How do you like Ozzie’s economic comments (interest rates, market outlook, etc.)?” Like: 99.4%
“Like Ozzie’s International comments (Europe, China and inward migration)?” Like; 93%
“Do you like toilets of the world?” Like 55%, Don’t Like 45%
“Do you like songs/TV of the month?” Like 40%, Don’t like 60%
“Do you like book of the month?” Like 67%, Don’t like: 33%
“Do you the quotes / jokes?” Like 81%, Don’t -19%
“Do you like the stupid things people say?” Like 70%, Don’t Like 30%
“Do you like the “revenge of the little man” section?” Like 70%, Don’t like 30%
“What type of information are you seeking from Oz Buzz?” Economy 67%, Real Estate 92%, Quirky opinions 47%.
Other free sites: Surprisingly, few are posting on high traffic realestatetalks.com (15%), Real Estate directory BCRED.caand askanexpert.ca (39% and 41%).
- The enormous response (largest ever for us) of suggestions really helped me clarify my thinking.
- Suggestions were positive, constructive, some funny and most very supportive. Some ideas will be implemented first issue in January, others later. Some things will be dropped.
- The many, many kudos and kind letters made me feel warm all over. Really.
INTERNATIONAL INFLUENCES ON CURRENT VALUES
Last month we showed the worldwide inflation basket by Professor Steven Hanke – showing much higher true real inflation rates in all but a few countries versus what they officially report. In other words – they lie! Says Hanke, for instance: Blomberg reported yesterday that inflation in Egypt hit 18.7 percent in November – a 5 year high. That is the official rate. Hanke: ITS WRONG! Today I measure inflation in Egypt at 67%/yr.
Our view: We have had and we will have inflation forever and will have it ongoing. Why? Governments love it, they can spend and spend and create money by devaluing our money. Another reason why governments love inflation Individual income tax revenue forecast to be record share of the US economy for the fiscal year ending Sept. 30. (Same thing applies to federal revenues in Canada). They pay back existing debt with devalued dollars. You and I suffer.
Understand this: Inflation at 7 percent or 8% is current BUT also cumulative. Let’s say its 7 percent in 2020, 2021 and 2022 that means that prices would be now about 21 % higher than they were 3 years ago. Nothing is up only 7% from 3 years ago. So, even if inflation stays at 5% for next 5 years…prices will be at best another 25% higher.
Major Point: Fixing today’s prices on any solid hard asset should be considered.
Some real estate, once adjusted down by 20% – 40% will be the place to be for that cash we are holding – but only once we have clarity as to recession etc.
Amazon guy Jeff Bezos warns a recession is looming – and Americans should ‘prepare for the worst.’ He is not the only one. Michael Burry and dozens of others are in the same camp. No one truly knows. That is why sitting on sidelines with a little cash is a good thing! The market is not going to run away…Not in stocks…not in commodities…not in real estate.
On December 10 China re-opened Beijing (covid) and nationally announced a plan of opening its overall economy. No more imprisoning and over-testing, but massive injecting the vulnerable. We already did that here! China rethinks its ‘no tolerance policy’ for covid.
Also of interest: China’s most popular internet search engine experienced a 28-times surge in residents looking up the terms “conditions to immigrate to Canada” during the populous country’s severe COVID-19 pandemic lockdowns. However , most Chinese wanted to escape the harsh lockdown…and may rethink leaving China now.
Some reports say that Chinese people are leaving in droves to other countries. They are coming to Canada. However, fact is: … three years ago, 55 jumbo jets from China were touching down at Vancouver International Airport every week. In October there were only eight flights a week from the People’s Republic. So, don’t hold your breath. Most immigrants are already here, having been offered a resident visa to extend the one that they are here on. China will recover relatively faster if truly reopened…helping out commodity prices – if!
British grocery inflation hit 14.7% in October, another new record. At this rate UK consumers face a huge jump in their annual grocery bill. Prices were rising fastest in products such as margarine, milk, and dog food.
Europe (Study last month’s Europe inflation chart from Steve Hanke). Truly astounding!
Overall, in serious trouble. Euro area annual inflation is expected to be 10.0 % in November 2022, down from 10.6 % in October 2022. The scary English banking crisis still reverberates through all markets. Germany’s 70-year high inflation rate is down a tad in November but still over 10%. It is nationalizing its largest gas company amidst its inflation soaring. Does not look good.
Inflation will likely also be a tad higher when reported next week. Will persist longer than projected. The new reality: Recession (yet), why maximum employment, lowest unemployment, soaring wages? All at the same time, we reported last month. However, huge layoffs in tech sector. Interest rate target over 5% (Mortgages 8%?). The money that has been printed will not be easily come off balance sheets.
Ozbuzz sees inflation for November reported higher by a tad or so…and ending the year -as we forecast – at 7+ percent and staying over 5% all of 2023 – longer. Health care and food and gas and rent are well over 12%! Not the reported general CPI at 7% or so. What matters in your pocketbook is in double digits!
We have had and we will have inflation forever (no other way to pay back the enormous debts) and will have it ongoing…resulting in ever higher real estate prices, but not this year! Stink bids and deal of a lifetime only!
Major Point: The goal was and is: All banks increase rates fast to a new high, then start the slowdown of the increase , and then stay at a new high for 12-24 months. They are getting closer to achieving this goal.
As we said in our last video: The BOC flinched and we thought it would likely only go up another .5% in December. It did that last week. Inflation higher still than expected. Remember pivot does not mean, rates come down. The new prime rate of 6.45% means stress test at 7%. We expect rates to stay at least at this level for 2023.
Canada and the USA rate increases are peaking and then will stay likely at the new level for the entire year of 2023. It’s not a pivot. They will not go down but likely in Canada stop increases now (or only .25% early in the year). In the US, the final target seems to be 5% or 5.25 %. And then staying there! That would mean it has to see several smaller increases (.25%)
Mortgage rates are coming down temporarily! Remember long term bonds determine long term mortgage rates. Phoenix down to 6% rom 7% last week.
Mortgage lender risk:
The risk has been moved from CMHC to private lenders. If you invested and are concerned, sell, or redeem your loans/investments to private banks, MICs, funds, REITs. As we warned about last month, many of them are halting redemptions. The latest one? Powerhouse Blackrock halted redemptions on one of its funds. We have everyone flush with cash, so people have taken higher risks. Don’t! Again, more and more funds stop redemption. (Liquidity may become the real issue.)
If you may need the money…study your situation. What is your fund invested in? Investors did not bargain to lose money in a pension fund. Did not bargain for their fund to invest hundreds of millions in FTX and other crypto.
I.e., the Ontario teachers fund is supposed to be in secure investments! Aren’t pension funds supposed to invest for safety first? Well, NOT! Ontario teachers fund losses stagger. Apparently invested hundreds of millions in FTX
Major Point: So, as we have been saying all year: Cash is not trash -and it now earns at least 3-5%.
If you are in cash. Stay there for a while longer. We are inflation babies. Cash burns a hole in our consciousness. Not this time, before you jump back onto the train, make sure it is really leaving the station.
Major Point: For what to wait? What could happen? If the heavyweight forecasters are worried…we should be too: Ballistic missiles, atomic missile accident, war dragging on, layoffs spilling over into general economy, liquidity crisis of major proportions? Derivatives black Swan (like England). You’ll look pretty good sitting on the sidelines. Keep looking at “deals of a lifetime.’ Be ready when clarity emerges. And it will. Then pounce!
HOW LONG A MORTGAGE TERM?
Most asked question this week: “How long a period should I go fix my mortgage”
We teach that investors should hold a rate term for the length of time they want to keep the property. For homeowners…much varied advice. If you believe that rates will regain a lower equilibrium in 2 years or so…consider this:
Usually when there is an American election year the rates come down. So, one consideration… fix it for 2 years or with a longer horizon – 6 years.
OVERALL EFFECT OF RATES ON THE ECONOMY
Even though they tightened into an inverted yield curve, they will likely stay there for at least all of 2023. This will make the cost of (all) capital more expensive…forcing decline in values. So, no V-shape recovery, rather a slow flat economy in 2023. RE sideways to down after the sharp declines so far this year. All coming official media reports on declines will stun the unwashed. They will start to compare this Jan/Feb to last Jan Feb…and the numbers will be down, down, down. You dear reader have READ THIS HERE since last February.
Negotiation starts/or stop the war in Ukraine could avoid a major recession in Europe.
We have predicted higher US dollar prices for 4 years. The new year holds dramatic possibilities – both up or down. However, it will remain the reserve currency for the world. Bond rates are dropping. This means that the bond market is expecting a recession. US Dollar higher will be higher if rate hikes continue, war continues and oil rises. But it also will remain the world reserve currencies anyhow.
Currencies are crashing around the world. Friends returning from Argentina say that with 68% official inflation nothing is understandable. Charge your credit card and be charged when converted twice of what you thought you paid. The only sure thing in these countries? US dollar cash.
Tug of war remains – by how much will the reserve tighten. As above…Fed goes high and is holding. Fed will be pausing but not cutting.
Outcome? Last decade – low inflation! New decade – uncertainty of rates – continuous higher inflation. Fed target of 2 % by 2025 will not be achieved! Result – still in doubt – no certainty anywhere.
Still travels up and down with its commodity sector and in particular oil. It is possible that we see a further decline. David Rosenberg predicted a 71-cent dollar 2 years ago.
Both currencies: Canada is lucky that its largest trading partner is the US. Our Canada dollar has dropped from 84 cents to now just over 73 cents. It has bounced off this level a few times. The future? It depends (You knew it!) Canada benefits. In the eyes of foreigners, we have safe banks, a safe legal system. That is what matters. They wish to park their money. The loonie travels with oil, but if you are needing and waiting for new lows – we may be close to one. Bringing back some of your US dollar holdings to Canadian – the 71-73 cent level may be a good bet. A safe idea. No one knows for sure … a bottom for the Canada loonie. It remains your call.
Foreign Buyer Law – A Solid Mess
Supposedly applies to all foreigners. No residential buying for 2 years for foreign buyers. UNBELIEVABLY still no details. Threatening realtors with a $10,000 fine, if they do not comply. How can they when they are not told what the law is! I.e., at Whistler and other resorts…are they exempt?
MAJOR POINT: BANKRUPTCY HAPPENS SLOWLY AND THEN FAST.
WE WILL COME THROUGH IT BUT … IT IS STILL A VERY FRAGILE WORLD.
MAJOR POINT: THE HIGHER THE INTEREST RATE THAT IS OFFERED YOU AS AN INVESTMENT THE DOUBLE AND TRIPLE THE RISK!
Note that the decline in prices we have been reporting since February now slowly appears in the “Media Numbers” – year over year. Thus, the average price of Vancouver’s SF is shown (see below) to be 9% lower than last November (Measured against last March it is actually 14%). Condominiums are still shown as being 3% higher BUT IN FACT ARE 11% LOWER since the spring!) This is now going to change EVERY MONTH as year over year numbers compare December 2021 and January/February 2022 (which you dear Reader have been reading here for 6 months!) Watch the media report 15% – 30% declines in Vancouver and Toronto / elsewhere NEXT 6 WEEKS.
The crowd WILL BE running away, you dear savvy investor are keeping your eyes peeled…and are making stink bids.
Major Point: Easy to see your SPECIFIC area and its relative performance measured against last year.
The British Columbia Real Estate Association (BCREA) reports a total of 4,512 residential unit sales in November 2022, a decrease of 51 per cent from November 2021 and about 30 per cent below a historical average November. (!!) The average MLS® residential price in BC was $906,785 an 8.6 per cent decrease from $992,245 recorded in November 2021. Total sales dollar volume was $4.1 billion, a 55 per cent decline from the same time last year.
The y-o-y numbers speak for themselves (Great graphs at BCREA!):
LOWER MAINLAND INVESTORS Note:
- The high in the average price came mostly in Feb (Ma/Apr) 2022 (2022!)’.
- Prices are quoted in some media as being UP and that is correct if you measure prices of today against prices of NOVEMBER 2021.
But the decline started THIS February as we told you in our February:
‘THE HIGH IS IN PLACE’ headline,
- The prices over last NOVEMBER in Vancouver are -09% in SF and plus 3% in condominiums. But a drop of 14% and 9% respectively since April (see below).
Major Point: While year over year prices are up a tad the price declines THIS year are continuing in all sub-areas every month and that for 6 months!
For the ‘real market conditions’ we show the last 6 months (first). For ‘additional review’– as usual (and as we have since 1997) – we report the NOVEMBER over NOVEMBER results for 4 years further below.
- Here we are looking at a 4-year NOVEMBER over NOVEMBER comparison.
- Remember to take the 2020 comparisons with a grain of COVID salt!
SF: REBGV reported SF sales declined a further 50% over NOVEMBER 2021. The average price achieved in April of $2,312,000 is down by $326,100 – or 14%!
CONDO: REBGV reports condominium sales are down 54% over NOVEMBER 2021 sales. The condominium average price is down by 9% from April.
- Then note the 4-year comparisons —High in everything for the last 4 years was March 2021.
- Major Point: Study the above at the opening comparison of the ‘high in sales’ (usually FEB/March ) and the high in Vancouver prices (usually February 2022) and note the sharp declines in all sales and continued declines in all prices.
FRASER VALLEY (not complete yet)
SF home sales continued their sharp downturn (-61%). Prices are much lower. Active SF listings (+53%!) and condominium listings (+74%!) CONTINUE much HIGHER in the last 2 months. Condominium sales cracked as well, down 56%.
Sales down in SF by 61% condominiums by 56%. The numbers tell the story. Look at intro to the numbers and the comparison of February 2022 to NOVEMBER 2022, a 31% decline in single family home prices, 16% down in condominiums.
IN 2023 GET OFF THE DUNG HEAP OF RELENTLESS CONFORMITY!
MICHAEL CAMPBELL AND OZZIE JUROCK VIDEO
- No new office supply
- Change from office use to rental uses
- Shift from California and New York
- Mass timber technology can build buildings 10- 15 storeys high
Environment more friendly than steel
- AUTOMATION (THE FUTURE IS HERE NOW)
Favorite female singer and their best songs
J.FLA (cover Linkin Park – Let mercy come and wash away‘What I have done’)
Dolores O’Riordan (Linkin Park – Zombie)
Dido (I won’t raise a white Flag)
Alizee – J’en Ai Marre
Lorena Kirchhoffer Ohne Dich (Cover Rammstein)
Evanescence – Bring Me To Life
Janis Joplin – Get it while you can
Tove Lo – Habits (Stay High)
Röyksopp – What Else Is There?
Natalie Imbruglia – Torn
Fiamma Izzo – La Boheme: “Si, mi chiamano Mimi” (with “Che gelida manina”)
Renee Fleming – “O mio babbino caro”
Lucy Thomas – I Will Always Love You –
Nightwish – Sleeping sun (cover by Natalia Tsarikova)
Ofra Haza – You
Ozzie’ golden oldie favorite (male) to dance to?
Trinidadian-German Eurodance artist Haddaway (What is love) (Now the shuffle dance favourite) Favorite dance cover
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