Oz Buzz

“Commercial real estate is melting down fast. Home values next.”

–Elon Musk

June 14, 2023





Much higher inflation is a fact. It is happening worldwide. Then Chairman Powell (June 14) says that the US is ‘in pause mode’ for now (at 5%), but that his committee members overwhelmingly ‘voted’ to have the rate possibly go from 5% to 5.5% by year end … or at least 2 more increases at .25%. Why? Because according to Powell the “risk of inflation is on the upside”.

We can see why the FED uses strong language if we look all over the world.

The ECB is rising rates, European inflation is much higher, in fact the world’s countries are seeing higher inflation then they admit to. However, Professor Hanke rates the actual inflation rates against the countries ‘stated rates’. (Much like shadowstats.com does.) As an example, he wrote on June 2: Ethiopia has risen to 64%/yr. – nearly 2 times the (phony) government reported rate! In light of this, look at his ‘bizarre facts’ board (Venezuela at 451%!)

So, do countries lie? You decide! Says shadowstats.comBroadly, the U.S. Economy is in a rapidly deepening and intensifying economic downturn, amidst still-surging inflation pressures and issues.” Its 1980 comparison chart shows – that if we still measured the same baskets, we are in 15% inflation. http://www.shadowstats.com/alternate_data/inflation-charts

Add to this: Economic growth around the world is stalling. So, why are major central banks scared? They are scared of the inflation that’s gripping the world.
Turkey and Argentina are outliers? A scary thought: No, they may be (could become) forerunners for a massive runaway inflation gripping the world.

NoteAustralia’s central bank on June 5 raised interest rates by a quarter-point to an 11-year high. Bank of England raised interest rates by a quarter of a percentage point May 11, Canada June 7. What does it mean? Larger markets will tighten more also! Like the US, Europe.

In the press conference:

  • 30 regional banks still on (death?) watch.
  • Significant higher refinancing costs – all of 2023,companies exposed to floating rates.
  • Weaker credit
  • United States economy slowing, but consumer spending resilient, labour market tight.
  • In Europe economy stalled, but core prices are rising. Interest rates higher.
  • Growth in China is expected to slow.
  • Canada:  Our 1st quarter was very strong, last month’s inflation was up. Demand side is hot on most things (consumption is up a whopping 5.7%), housing (all purchases and rents soaring). Consumers are buying…everything.

Major Point 1: Yet: Oz buzz thinks we are peaking! Financial conditions have tightened back to those seen before the bank failures in the United States and Switzerland. Savings (from Covid) are being used up; mortgage rates are heading higher again. (Today, in Canada the best Stress Test rate is 6.76%.) 

Major Point 2: In the meantime, and as we said last month: “…no one that pays rent (1 BR now at $2,700 in VC), 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.”


Elon Musk feels that working from home is a moral issue, not just a productivity issue. “90 percent of the population has to go to or be at work, but YOU (the laptop crowd) get to stay home. It’s not moral!,“ says Musk.

More importantly in an outspoken interview he rang the alarm on house prices and commercial real estate. Here’s why he’s worried about a property disaster: The root is that the Fed having raised interest rates from virtually zero to upwards of 5% since last Spring. (US).

Higher interest rates encourage saving overspending and make borrowing more costly, meaning bad news for asset prices and economic growth. They pull down real estate prices because they raise mortgage payments and financing costs, leaving less money to buy homes with, or invest in offices and restaurants. Result:

Also in his view:

  • The shift to remote working poses a threat to commercial real estate values.
  • Fewer commuters depress occupancy levels in office buildings, affect traffic for commercial sites such as shopping malls and entertainment venues, making them less profitable bets for investors.

A painful mix of downward pressure on asset prices, higher borrowing costs, and tighter lending by banks. Bad news for the commercial real estate industry, which is heavily reliant on debt financing from smaller lenders.

Musk’s worries that in the coming months (many) customers cancel their leases, decline to renew them – or go bankrupt. Also, he states: “… house prices are likely to decline as some Americans couldn’t afford to pay as much for homes due to higher mortgage costs.”

Major Point: Mr. Musk is not alone. Many economists worry that the vast amount of real estate debt expiring over the next five years, has homeowners facing a sharp rise in monthly payments once their fixed-rate mortgages end. This cannot be overestimated.

Then Kathy Wood from ARKK investments piped up June 10 that we are headed into a downright deflation second half of the year. YOU? Take your favorite forecaster … and pick up or down!

“The optimist proclaims that we live in the best of all possible worlds, and the pessimist fears this is true.” –James Branch Cabell



Twenty-four out of 28 economists forecast the bank not to raise rates. Well, the BOC confounded them and announced a .25% interest rate jump. The question is why? The bank had announced a pause to their rate hike policy for the previous two announcements. Why act counter?

Clearly, they do not like our economy to stay strong. (Yes, the bank wants unemployment higher, us having less money to spend and bring inflation down.)

But, we the people, are not listening: our labour force added 41,000 jobs in April, our inflation rate is up and our real estate sales are increasing. Prices? Well, they are rising on EVERYTHING!

No more pause. In fact, BOC says: further interest rate adjustments will be considered, as early as  July 12th, 2023.

Major Point: Read our expectations for Canada in the above ‘inflation item’.


Google CD Howe, READ AND WEEP!

Think-tank C.D. Howe Institute analyzed housing prices/construction costs: Conclusion? Excessive regulatory burden makes prices much higher than the cost of producing new dwellings. 

Well, we knew that already, but you need to read the full report to grasp the full extent.

Because measuring the Cost of Barriers to Land Access shows that the regulatory burden now makes up around 50 percent of the cost of housing in the Vancouver area and more than 20 percent in Toronto.

In eight Canadian urban areas – Vancouver, Abbotsford, Victoria, Kelowna, Regina, Calgary, Toronto, and Ottawa Gatineau – new homebuyers paid an average of an extra $230,000 on a new house because of limits on new building.

Vancouver’s cost of housing restrictions is by far the largest in Canada, resulting in a 50 per cent extra cost of $640,000 for the average new house, and are among the largest internationally as a share of market costs.

The report estimated that the price of single-family detached housing in Vancouver was $1.3 million more than the cost of producing the same house in a market without excessive regulatory barriers (over 10 years). In Toronto, the gap was $350,000. Stated differently, single-family detached housing prices in Vancouver were 60 per cent higher than the cost to build such homes. (Every house in Canada had $230,000 added just by not making appropriate land available. UNBELIEVABLE!)
Read it and weep.


…if they can’t get an extension on paying back Canada Emergency Business Account (CEBA) loans, CFIB said in a new report released June 7. The repayment deadline is set for Dec. 31, and business owners who miss will lose out on having a portion of their debt forgiven. The price of missing the end-of-year limit is steep, amounting to an extra bill of up to $20,000, plus an interest rate of five per cent on their balance.

Major Point: Pay it back! Don’t hope for forgiveness.


Variable rate borrowers will feel the pain first. According to Ratehub.ca’s mortgage payment calculator, a homeowner who put 10 per cent down on a $716,083 home, the average price in Canada in April, with a five-year variable rate of 5.55 per cent amortized over 25 years, will pay $98 more per month or $1,176 per year on their mortgage payments with the 25-basis-point rate increase. Canada lost 17,000 jobs in May, pushing the unemployment rate up to 5.2 per cent, according to a Statistics Canada report released Friday morning. 


Q: You keep touting inflation will be higher and real estate. Self-serving realtor.
: Not a realtor but am partner in a real estate company. The average house price in 1965 was $13,500. When I forecast ongoing higher asset price inflation in my 1998 book (based on government overprinting) the average price was $278,000. Now it is $2,200,000. Not in a straight line … but always, always relentlessly higher. Now you must add timing to that to get it right.

Q: Can’t believe that Britain allows 100% mortgages again?
A: Well, it is 3 mortgage companies in Britain not Britain itself. I guess they have so much money to lend and this is their way to get it out. Still…astounding!

Q: Questions on US DOLLAR and Canadian dollars keep piling in. 
A: I think I have said all I can in the last 3 issues. Clearly the Canada dollar will rise and fall a) with the price of oil (forecast oil consumption to fall up to 50%) and the US interest rates. As US rates rise, Can $ falls. 

Q: Huge response (weeping) to Frank O’Brien’s “the problem is Government”. (Oz Buzz 83)
A: Well, when you read the CD Howe Study weep more. 

Q/C: Enjoyed your ROTLM. I live in Sacramento. We see more and more people taking action. So far and no more. You might enjoy a new shopping site called Public Square.  A conservative marketplace. 300,000 new people joined week of June 1. Family values are promoted. Go to Publicsq.com (I’m not recommending, just sharing).

“You only live once, but if you do it right, once is enough.” –Mae West


Revisit: WHAT IS OZZIE’S ROTLM? It’s ‘Revenge Of The Little Man’. It’s 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”)

‘REVENGE OF THE LITTLE MAN’ email. Too many to quote. (There is a ‘YouTube channel’ Opp). Too many people with an agenda. This is a real estate newsletter

Enough about Bud Light, Target, Disney, Netflix. Google it, there is tons on it.

Fact is that Ozzie’s opposition to self checkouts, ‘case files’, call centers etc. has likely little effectha-ha. But I still feel better exercising my ROTLM.
Although, when I stopped briefly for buying small food items at Safeway (Westend), the guy smiled and packed the bag! Could they be reading Ozbuzz? Haha, likely just a (desirable and commendable) all around nice guy. ROTLMers march on.

Much more important is this question (ASKED 9 TIMES):

Q.: What is ESG? And who insists on it?
A: ESG stands for environmental, social and governance. These are called pillars in ESG frameworks and represent the 3 main areas that companies are expected to report in. The goal of ESG is to capture all the non-financial risks and opportunities inherent to a company’s day to day activities.
Opponents say ESG investments allocate money based on political agendas, such as a drive against climate change, rather than on earning the best returns for savers. They say ESG is just the latest example of the world trying to get “woke. “Proponents believe that by buying company stocks that have a high ESG rating they help the world.

Q: Is there an ESG rating and does it help shareholders.
A: Yes, there are rating services such as Bloomberg, Fitch ratings or Moody’s. Yes, it could help stock buyers identify how a company rates on ESG issues. More importantly it may impact not only buyers but lenders (get better financing), employees, etc. I think that ‘woke’ or not, companies are striving for a good ESG rating. In my view it is also a reason why major corporations make seemingly idiotic decisions. There cannot be another reason. In the drive to get better ratings (better interest rates etc.) they try to please a small minority and manage to offend regular customers. 

It becomes a question for companies: Who is your client? What is the purpose of your company? Who is it run for? SHAREHOLDERS OR STAKEHOLDERS?

Q: You quote the book Location, Location, Location. Where can I buy it?
A: It was printed in 1998. It is out of print, but I can send you relevant sections. BUT NOTE: The whole point of the book is, that it is NOT location, location you need to know about. But inflation and timing. That’s why it is called  “FORGET ABOUT LOCATION, LOCATION, LOCATION.”


Watch out for new ‘email hack’ purportedly coming from your friend. The likely headline: “Favour to Ask”. It is coming from someone who hacked your friend’s email. The closer your friend is to you the more likely YOU are to do what they as you to do:

“Are you a member of Amazon.”

“Do you remember Lisa.”

Major Point: If it seems strange – it likely is fake! A quick phone call to the sender to check…don’t answer email, don’t click on anything in ANY EMAIL you get right now. It’s ‘hacker season.’

Also – as we said last month – tons of fake Facebook Accounts are appearing. Look carefully before you let anyone into your friends circle. 8 people reported to our last month’s post of finding fake accounts. (Dead people, or little used accounts etc. doubles)

I repeat last month’ 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.


Just what I needed. According to a Bloomberg report, the Apple AR Glasses will bring information from your phone to your face. Specifically, the eyewear “are expected to synchronize with a wearer’s iPhone to display things such as texts, emails, maps, and games over the user’s field of vision.” $3,500 ?! Arrrgh… 

8 years ago, I wrote about ‘augmented reality’. Now Apple releases a $3,500 gadget featuring it. A great toy. It took a looong time to get to this stage.

Spoiler alert: Reminds me a little about the 3D-TV. That other sure winner, which became a dramatic non-event bust.

Google Dorsey: VR will turn us into WALL-E blobs who ‘drink food out of straws’, warns Twitter founder.

Major Point: Disney is involved? That’s it – it’ll fail!



NOTE: As we said last month: The numbers will continue to get ‘better’ as we compare today’s decline in sales, to the declining numbers of last year!


MARKET IS HOT? We may see strengthening, but we are actually buying less real estate: Bloomberg: Canadians’ mortgage borrowing hit the lowest level since 2003 amid higher interest rates in the first three months of the year, according to national balance sheet data released Wednesday by Statistics Canada. That’s the smallest increase in two decades.”


More than half of GTA condo investors are losing money on properties. Research from the CIBC and Urbanation company found that now the majority of investors find that rent generated by newly completed units was lower than mortgage costs, condo fees and property taxes. This marks a meaningful shift that may potentially signal that a change in investor behaviour is on the horizon,” said CIBC’s Benjamin Tal. Further, they say they expect the shift toward negative cash flow to worsen in the years ahead as increasingly expensive new condos presold to investors in the past few years reach completion. Tal: If investors become unwilling to buy into presales, new condo demand will shrink along with new construction, deliveries, and ultimately rental supply!


Like Vancouver sales are UP 25% over May 2022. Prices a tad down. 2%. Down 8% from its 2022 high. NOTE: ACTIVE LISTINGS ARE DOWN 23%.

Major Point: Nationally prices are up about 3-4% May over February. Multiple offers in the lower price ranges.


The British Columbia Real Estate Association (BCREA) reports a total of 9,191 residential unit sales in May 2023, up 10% from May 2022. Average price clocked in at  $1.02 million up 3%. Total dollar volume was $9.4 billion, up 13.2%

Great local Stats from BCREA – The numbers tell the local story.

Vancouver and Fraser Valley


Comparing the highs of 2022 to May 2023 still show substantial declines, but May over May (which is the best comparison) looks much better. But while sales over 2022 are up 31%, they are down still sharply over May 2021.

NOTE: CHANGE: We left out May 2020 because of covid. So, we put 2019 instead!

Here we are looking at a 4-year MAY 2023 over MAY 2022/2021/2019 comparison.
Still remember: COVID!

  • New listings are still way down 10%.
  • Markets are more active overall…
  • Major Point: SF Sales are up 31% over 2022. Still 37% lower than 2021. 
    Active listings – are down 16% in condos; surprisingly down 20% in SF homes.

The Vancouver and Fraser Valley Real Estate Boards have the BEST current statistics.

Get your professional realtor give you the numbers for the sub-area that YOU are interested in.


  • Markets in the valley are more active overall…
  • Major Point: SF Sales are up 38% over 2022. Still 50% lower than 2021.
    New listings – are down only 6% in condos; surprisingly up 4% in SF homes.

As we said last month: We have started bottom building. Not there yet … but as we said last monthInvestors … WAKE UP!

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!


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.


You can watch all videos and podcasts on my YouTube channel at https://www.youtube.com/jurockvideo. It is a great way to check on what I said 10 years ago.

Moneytalks Podcast

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 (See Victor Adair’s Trading Desk notes! https://victoradair.ca/)


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