THE GOOD, THE BAD AND THE UGLY
- The bottom is building in residential real estate right across the USA and CANADA.
- Industrial real estate doing well.
- In Canada no more interest rate increases.
- Inflation sees a minor downward adjustment.
- Wages are rising.
- Britain opens door to massive real estate collapse. Others follow?
- Government in urgent need of money sock it to the homeowner and buyer
- Commercial and office markets in big trouble
- Bankruptcies are coming enmasse (retail, commercial, mortgage, individuals)
- Recession is coming.
- Some cities in US are crashing in real estate – murders/theft/woke city hall.
- Debt ceiling negotiations will be fixed, but at what cost!
- Europe limiting cash purchases to EU 1,000. US banks must keep track of all transactions over $600 – Heading to cashless society.
- RENTS: 1-Bedroom in Vancouver $2,700. 2-Bedroom 3,090. Toronto not far behind.
- Canada: Attack on free expression (Bill C-10, C-18, and others) US: Cancel culture.
- Crime, murder, retail theft, no consequences
- Walmart / Home Depot/ 50 national stores closing locations – Some US cities become crime ridden hell holes (Canada not that far behind)
- Retail theft spreading faster than Covid.
- San Francisco/Chicago/ others impossible to live in
- Developers are leaving half finished projects and walking from Millions of dollars invested.
- Deletion of hundreds of thousands of jobs – too fast. (First checkout workers, then all office jobs, then all mid level jobs)
- Funds starving for liquidity will go down together with its investors.
- Liquidity crisis as regional banks keep crashing.
UNTIL THE FOG CLEARS – OVERALL CASH IS NOT TRASH.
THE WORLD, OUR WORLD, ECONOMY, INFLATION, RECESSION
History repeats? We had hoped NOT … BUT HERE GOES BRITAIN!
Brits are being offered no-deposit 100% mortgage loans for the first time since 2008 (A SCARY DATE!). Renters in the U.K. will be able to borrow up to 100% of the value of a property without a guarantor or deposit in a new mortgage plan. The new mortgage product, aimed at first-time buyers who are currently renting, has a fixed rate of 5.49% for five years, over a maximum term of 35 years.
Major Point: The new Skipton deal is widely reported to be the first time a mortgage lender has offered 100% mortgage products since 2008, when some building societie offered rates of up to 125%. Many of the products were then pulled from the market as the country fell into financial crisis.
EUROPE INFLATION CONTINUES
The Bank of England raised interest rates by a quarter of a percentage point May 11 and said the UK economy would dodge a recession as energy prices fall. The decision to impose a 12th consecutive hike takes the main borrowing rate to 4.5%, the highest since October 2008. It comes a week after the US Federal Reserve and the European Central Bank also raised rates by a quarter-point.
According to Eurostat’s harmonized index of consumer prices (HICP) inflation rate of the European Union (EU), the UK’s 10.1% is higher than the bloc’s average of 8.3%. The EU countries performing worst are Hungary at 25.6%, Latvia at 17.2%, and Czechia at 16.5%. (Apr 23, 2023.)
Major Point: Not much change – except CPI and PPI rates went higher as predicted. People are leaving in droves … anything to get out of Germany, England, and the Middle East. Where they go to (Canada, Singapore, Australia) will dramatically change those local conditions. Soaring rents, soaring prices. Foreigners bring money, locals go more broke.
US INFLATION, INTEREST RATES, DOLLAR, BANK DEFAULTS
More banks crashed, more will. More funds stopped redemptions; some went down.
After all the bank defaults so far, we have a new one (May 11), PacWest Bancorp. Its deposits fell 9.5% last week while PacWest shares dropped 22%. This continuing overhang does not bode well for confidence or for the economy in general and liquidity (rates versus inflation).
Inflation? The producer price index (wholesale prices), increased just 0.2% in April. The CPI data showed inflation rose 4.9% year-over-year. Maybe time for bell ringing? NOT! It’s a minute decline. Better are the initial jobless claims numbers (up 22,000 to May 6 to 264,000), the highest reading since Oct. 30, 2021. Not good when you are out of a job, but an easing labour market is good for possible rate increase halts.
Major Point: Again, the bigger question: Will we muddle through? Our answer remains, yes, we always have and we always will. But it isn’t over yet.
What about Canada’s banks? Not as good as we were!
- Barclays Bank PLC analyst John Aiken downgraded Royal Bank of Canada, Bank of Nova Scotia and Toronto-Dominion Bank on May 9, causing the S&P/TSX financials index to drop by one per cent.
- Canaccord Genuity Group Inc. analyst Scott Chan said in a May 9 note that Canadian banks are insulated from the U.S. fallout.
- You? Get the joy of deciding yourself.
LAYOFFS CONTINUE IN THE US
Mass layoffs have continued to take their toll across all industries in 2023, with the number of job cuts in tech up to 38,487 from one year ago and workforce reductions by finance companies up 419%, CNBC reports. At the same time, the number of job openings fell to a two-year low of 9.6 million in March, a sign that the tightest labor market in decades is loosening. Here is the list of recent company layoffs.
Major Point: Layoffs continue but overall employment is still strong. But these are lagging indicators. Stay on the sidelines till the fog of confusion clears. Ugly is still to come.
Repeat: We speculated last month: “Higher rates mean money from around the world will flee into the US dollar – safety and better return. Rather than staying in their own countries…Thus, yes…US dollar increases and other countries CURRENCIES decrease.” The ‘fleeing for safety‘ statement is still valid… But we also said: “No one knows. The outcome is NOT certain.” We said last month: “India is trading in Rupee WITH 18 NATIONS!” But today NOTE: India and Russia have suspended efforts to trade in rupees. Moscow will not keep rupees. This could be a major setback for Indian importers. Not as easy as it looks.
INFLATION CANADA INTEREST RATES
The official annual inflation rate in Canada fell to 4.3% in March of 2023, the lowest since August 2021, dropping from 5.2% in the previous month amid falling energy costs.
Why is it reported lower?
- Transportation (0.3% vs 3.1% in February),
- Lower gasoline prices (-13.8%)
- Higher mortgage rates (26.4% vs 23.9%)
Major Point: However, no one that pays rent (2 BR now at $3,000 in TO), no one that gets a mortgage, no one that buys a house, no one that goes shopping for food…NO ONE believes that 4.3% rate. Go to shadowstats.com for what the rate would be if we still counted the same things in our CPI basket.
Consumer and business insolvencies jumped 28 per cent in March from the month before, reaching their highest level since February 2020, the start of the pandemic, as more Canadians struggle with record levels of household debt, inflation, and higher interest rates.
Major Point: Rising prices of food/rents/ transportation all play a role.
Our view to change some dollars (If you were a holder of US dollars and waiting for the right time to repatriate) was to take careful action when the dollar hit 72/73 cents. The Canadian hit 75.15 cents today. And no, I don’t know the future. At best a lucky guess.
Investors note: 1 Bedroom in Vancouver $2,700. 2 Bedroom $3,090. Toronto not far behind.
Governments say we have a problem with unaffordable housing. After a thorough study of the problem Frank O’Brien, award winning Chief Editor of the Western Investor told a spellbound audience at the Real Estate Action Group this week: We have found the problem! It is government.
Here are recent cost increases residential developers are dealing with:
- On April 19, the Metro Vancouver Regional District board of directors, approved a motion to make real estate developers pay for 99% of the cost for water and sewage upgrades across the district. Currently, developers pay 83% for sewage upgrades and 50% for water infrastructure, so this is a big increase, especially since three large water-treatment projects are currently underway, totalling well over $10 billion.
- Led by an 83% increase in Maple Ridge, a 47% increase in Richmond and a 33% hike in Coquitlam, suburban municipalities across the region are raising development cost charges on new residential construction going into next year.
- On May 1, the B.C. Step Code building code for new residential construction was legislated across the province. This ‘green’ building code, most rigid in Canada, will outlaw natural gas in new buildings and add thousand, even tens of thousands of dollars, to the cost of new homes, especially detached houses, and high-rise concrete condos.
- Changes to B.C. contaminated land regulations, just coming in, will add an extra $80,000 to $100,000 in testing alone, and add delays, to new strata projects before construction even starts.
- Residential land prices – and the cost per buildable foot – are soaring right across the Lower Mainland. Recently, residential sites in North Burnaby and Surrey Central sold for more than $25 million per acre; a 1.3-acre land assembly in Coquitlam sold in March for $24.5 million; and Vancouver is seeing residential development land trading at $90 million per acre.
Says O’Brien: “Buy the land, get it ready for development, but don’t put a shovel in the ground!”
EMPTY HOME TAX (VANCOUVER)
The city is re-assessing the empty home tax. In fact, it should be re-assessing a variety of very difficult to understand regulations. We hear:
- Vancouver woman charged empty home tax on vacant lot. Owner waiting for rezoning 3 lots (for some 10 years) is now charged $50,000 a year for 2019 and 2020.
Vancouver’s own famed architect Michael Geller tells the city:
There is a lack of coordination between EHT Office and Planning. Homeowners are being charged the tax for not getting approvals by a certain date even though the delay was caused by the planning department due to Covid, short staffing, etc. Now there’s a need for the city to make this EHT program fairer and more equitable. And avoid the unintended consequences. Geller:
- It’s wrong to tax people because they’ve been waiting for permits.
- It’s wrong to tax someone who wanted to build rental suites but was being told by staff to wait for zoning changes.
- It’s counter-productive to force Americans, Albertans, and people from around the province to sell their condos and start renting units since they can keep rental units vacant 6 or 8 months a year!
For his excellent treatise go here: Vancouver City Council considers changes to the Empty Home Tax (EHT)
Comments: Lots of comments again on “the great reset”, “cash”, “Florida”, “US dollar”. ‘Unacceptable toilets of the world’, and a veritable flood of “ROTLM”.
WHAT IS OZZIE’S ROTLM? It’s ‘Revenge Of The Little Man’. Its when we as individuals get hosed/rooked/mistreated/annoyed and feel ‘trained like monkeys’ by a big corporation…and we seem quite helpless. So, we take the revenge that a ‘little man’ can: We stop shopping there, get gas elsewhere, write letters and don’t spend any dollars in companies that annoy us. (Comes from the German “Rache des kleinen Mannes”)
ROTLM – A HUGE RESPONSE TO OUR ‘REVENGE OF THE LITTLE MAN’ COLUMN. While there are a few SUBSCRIBERS that like self checkouts, an extraordinary response on ‘don’t like it’. Also, the item on becoming a ‘case’ a ‘computer file’ generated much passion. I COULD START A WEBPAGE!
There was a lengthy answer that took on the “trained like a monkey” item – in great detail. Indeed, there are a hundred areas where we ‘who are being trained’ hardly notice it. There was also a hilarious self check out Walmart picture on Facebook with 21 people standing in line at self checkout. I said years ago, to keep jobs open we will go to a 4-day week then after a few years we get into a 3-day week. Etc. BUT… now we are sledgehammered into the new age instantly.
Here is a Walmart self checkout group = ha-ha, I’m not alone.
And then there came Bud light!
It started as a US ROTLM and then snowballed into all of the LM creating a boycott.
Revenge? Boycott Bud — apology or not – is the message. This is a watershed moment; we need to make this one stick…say the LMs. Taking down a big corporation is one of the few places could never win – until now! If Bud is forced into big losses, a very strong message will be sent to all of the other zombie corporations that they will not get away with deadbeat policies.
“In California, they don’t throw their garbage away – they turn it into TV shows.” –Woody Allen.
Another ROTLM: Woody Allen’s quip is particularly true at Disney and Netflix.
Disney literally destroyed the Marvel franchise and massacred Star Wars spinoffs – all in an effort to race swapping fictional characters.
Netflix makes historical British queens (as well as Anne Boleyn) and Egypt’s Cleopatra black (claiming it is a documentary) turning historical figures.
For what its worth subscribers also write about Nike, Bud Light and Tampax going to Transgender ads. Anyone that argues that we are not being trained by large corporations, woke institutions, universities and the far left simply does not watch the news. Only the monkeys are fighting back. The question is ROTLM working?
Well, Nike has had seemingly massive opposition to the football players’ knee. And the ludicrous Dylan Mulvaney sports bra but has not seen a fallout. Nike stock holds. ROTLM no impact yet. Anthropologie ad showing man to advertise women’s clothing raised the hackles of thousands of women but didn’t affect the stock.
Ozzie’s opposition to self checkouts … has had absolutely no effect … ha. But we ROTLMers march on.
And with the Bud Light debacle there is hope. A huge win for ROTLM… a total revolt by its customers.
Want to complain to Anheuser-Busch? Nope … they cut all communication off!
The President of the European Central Bank (Christine Legarde!) has said today that you will not be able to spend over €1,000 in cash in Europe. (She said it!) If you do, you will face time in prison! This is the EU’s first method of pushing everyone into using CBDC’s (Central Banking Digital Currencies). Could massively affect the Gold & Silver Market! Yes, they want a cashless society. They want every transaction tracked … thru digital money!
Q: You keep saying you told us to lock in mortgages years ago. Maybe in your speeches but not in Ozbuzz.
A: In countless publications I always maintained that a) know yourself and your objectives, b) lock in your mortgage to the term and length that you want to keep the property. Clearly, if I want to flip – I go short, if I want to invest and keep the property for 5 years I go long. I should also say that for many years I was lambasted by mortgage brokers who maintained that going short and/or variable would be better. And they were often right, but not since January 2022.
This is Ozbuzz 68 published March 10, 2022 – look at last sentence: “GENERAL: …….If you are an investor, take a good hard look at your portfolio. Sell your losers (subsidizing rental income) keep the cash flow (it will be harder to come by in the future). As an owner, understand your blessing of low rates – maybe look at your HELOC convert it to a long-term mortgage.”
Q: I sent you a request to add my name to Ozbuzz, but I’m not added.
A: We do not add anybody’s email to our database. Even if they ask for it. To keep our subscriber bases clean we ask all subscribers to sign in with their email at www.ozbuzz.ca.
Once an issue is written, logged-in subscribers get it first. All blogs are then 10 days or so later put on the website… at ozbuzz.ca. You can review 4 years of issues there as well as listen to our Ozcasts.
Q: You are sending too may ads.
A: Not true. I resent that. We never have accepted paid advertising in Ozbuzz. The only ‘advertising’ we do is for our own events: Like our mega Landrush Conference(next one September) or RE outlook or Ozzie’s videos.
INTERNETTERS: WATCH OUT
More and more junk Facebook requests. People that have died, their accounts hacked and then try and become your friends (even though it’s a hacked account). Don’t accept friend requests without checking them. It’s a nuisance but I had (staff) clear out 72 ‘doubles’ that had been accepted. We found out only because I knew them to be already a ‘friend’ or ‘follower’.
NOTE: It’s tax time, you will get hammered with email and texts saying you have a refund. That’s spam and garbage.
Ransomware. People reporting threats on (your) kids, on publishing risky photos going on porn site visits to your friends etc.
Major Point: I think that collectively we need to insist that government funds an organized continuous effort to take these people down. In this age of technology, we must not tolerate – often organized crime – hackers to win.
Q: Hooked on Oz buzz, I looked up and listen to your songs. Like you said, the best song, gorgeous lady. Alizee sings “Jen Ai Marre” so great! I speak French. Is that where you get your love for bubble baths? (A lengthy friendly letter in which he goes on to say: “OMG – Lohengrin and Tannhauser)
A: Ha-ha. Yes, she sings: “I’m fed up”. (I) …enjoy life… In my bubble bath… I have no problems, I’m lazy. No discomfort, I’m lazy. In the water I bathe, that’s the important. Comfortable, in tune with the times. I have soft skin…In my bubble bath, I bubble in the shade…I’m tired of those who cry…Who lament and fixate…” . Bubble bathers of the world – unite!
Original version: https://www.youtube.com/watch?v=pqTcHtSSfUE
TOILETS OF THE WORLD
(Real Madrid Fan toilets – don’t miss a second of the game)
Ok, other side of the world. Shanghai toilets offer Wi-Fi and TV.
THE NUMBERS, THE NUMBERS
CANADA REAL ESTATE – MUCH BETTER!
Following last month’s Oz buzz report on increasing sales it now looks like activity has picked up in most markets. Prices have stabilized and multiple offers are back (on well priced homes). RBC Economics says that we “turned the corner in April.”
Toronto and Vancouver are very strong and surprisingly Calgary ranks solid residentially as its Benchmark price hit a record.
Major Point: Things are better, investors are sharpening their pencils … but remember last April (2022) was the high of all market in Canada and then turned – as in down. Homeowners? Buy, you stay there for a while anyhow. Investors? Wait and see, cash in hand – don’t pounce just yet.
Toronto houses are selling over asking price… We call it multiple offers; they call it overbidding. In fact, digital real estate platform Wahi says that in April, 57 per cent of neighbourhoods across the GTA were in ‘overbidding’ territory. (The platform compares the differences between list and sold prices for all homes.)
Wahi saw that April had 168 overbidding neighbourhoods last month out of a total of 294.
Oz buzz has had 17 requests since January to include ‘more Toronto’ Well, Toronto is big. Here are the fine Toronto Real Estate Board stats. The board separates SF and condos, townhouses and semi detached in both the 416 and 905 area codes.
Sales are down 5% over APRIL 2022.
Official price declines are in the minus 8% range. That is if you measure April 2022 ($1,948,000) versus April 2023 ($1,787,000): SF – 8.3%, Semis – 9.8%.
However, if you measure the Toronto market’s monthly high (Feb 2022) versus April 2023 it shows that the drop is much steeper:
NOTE: The numbers will continue to get ‘better’ as we compare today’s decline in sales, to the declining numbers of last year!
Major Point: Nationally prices are up about 1-2% April over February.
Benchmark price – hit all time high. Also, Calgary is UP over last year – a tad – but up.
SF Active listings down across the board! From Toronto to Vancouver. A good sign.
Toronto – 21%,
Vancouver down 18%
BCREA says: Average home prices, while still down year-over-year, are rising on a monthly basis in most markets. The average price in BC has now risen for three consecutive months and is up over 9 per cent since the start of 2023.
Year-to-date, BC residential sales dollar volume was down 44.1 per cent to $21.4 billion, compared with the same period in 2022. Residential unit sales were down 37.1 per cent to 22,417 units, while the average MLS® residential price was down 11.2 per cent to $954,984.
Stats from BCREA – The numbers tell the local story.
VANCOUVER Below: Here we are looking at a 4-year APRIL 2023 over APRIL 2022/2021/2020 comparison. Still: Remember to take the 2020 comparisons with a grain of COVID salt!
- Major Point: Note the downturn from the high month(s) in the opening.
Active listings – are down 6% in condos; surprisingly down 18% in SF homes.
- New listings are still way down in Vancouver overall.
- Markets are more active overall…but then it’s spring!
The Vancouver and Fraser Valley Real Estate Boards have the BEST current statistics. Get your professional realtor give you the numbers for the area that YOU are interested in.
SF Prices are still 20% lower than Feb 2022 high, 13% lower over APRIL 2022.
The numbers tell the story. Things are looking better. Sales are still down but active listings sharply lower! Price declines shrinking. We have started bottom building. Not there yet…but as we said last month: Investors…WAKE UP!
OVERALL MARKETS ARE REMARKBLY STRONG
The Presale market had a spectacular weekend/month: Pete Ryznar (Ryznar media) says:
- Sequoia sold 147 units at their grand opening over the weekend out of 386.
- Lucent has sold 90 in 30 days – they are over 200 sold, out of 404.
- Foxridge sold 4 – $1.5 m homes in Langley over the weekend.
MAJOR, MAJOR POINT: (Repeated from last month) Ozbuzz investors:
You faithfully read the Ozbuzz, sold your losers last year, got some ‘market cash’ and some ‘age-related cash’ (What is it? Look it up in Ozbuzz 78/80
). And now you are getting ready to pounce. This is slowly becoming YOUR market!
- We separate SF and Condo numbers we do not bundle TH, SF, and condos together and we benchmark nothing. (Except a Calgary outlier this month).
We get you to take a look at what the highest price that was achieved in 2022 versus the April 2023 price. Sales and prices separated by condos and single family.
- Then we also give you 4 years of “April” to get an idea how this April stacks up against those last 4 years.
- Finally note that from hereon in, all numbers will look better! Why will we look better…well, we will be measuring monthly declining sales of 2022 against declined sales 2023 and they will all look much better every month.