Oz Buzz #90 – YEAR-END THOUGHTS

December 20, 2023

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Ozzie interviews author and developer RICKTORIA

No 1 Realtor in Fraser Valley talks Surrey: Multiple offers?!

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Topics: On Airbnb, On SRT, On upsizing retirees, on UHT, on interest rates, on markets ahead
On November markets, On Edmonton, Surrey, Victora, Vancouver Island, On interest rates… 

AGENDA

• WHAT A YEAR! YEAR-END THOUGHTS
  THE FED PIVOTS – OR DID IT?
• WHAT? SURREY BUYERS REACT TO FED WITH MULTIPLE OFFERS
• FORECASTS AND PREDICTIONS
• TO DO – OPPORTUNITIES 2024
• WARS ON EVERYTHING.
• INWARD MIGRATION WILL SAVE OUR MARKETS?
• INTEREST RATES.
• THE NUMBERS, THE NUMBERS – TORONTO- CALGARY- EDMONTON-VANCOUVER
• RECESSION? IF SO, WHEN?

YEAR-END THOUGHTS

Well, last week of 2023. Seems like we said this before: “The end of this incredible fast moving/eyebrow raising real estate year” – well, it draws near again and our e-mail servers sigh with relief. What an incredible real estate year. Volumes of sales crashed across the country, listings soared, but prices (mostly) held in there. More on the numbers in next issue … when year-end reports are in. But it was not just the real estate markets, government blunders, mad new taxes, and the like … stock markets had its most astounding November – with unbelievable volatility seemingly the norm.

So, we shut down the workshop for a couple of weeks, sent the hardworking elves’ home for the holidays and settled back with a large ‘Beautiful’ (Half Cognac and Half Grand Marnier). Why is it called Beautiful? Have 3 and you will feel beautiful!

As always, we pondered a truism: If the year has been tough, bid it adieu and prepare for the next with optimism and courage. Count your blessings, count the loved ones around you and be glad for the ones remaining – family, friends, heirs, and hairs alike. … Sorry, blame the ‘Beautiful’… never mind… If the year has been good, be thankful but not complacent. Too much success arrived at too easily tends to make one soft and slow moving. (Yes, yes, too many special ‘Beautifuls’ does the same, but we all need our small vices.) 

Still the big question: What will 2024 bring?

Well, the year 2024 needs YOU to take a hard look at your business and your personal life to see whether you are part of the new world – fast paced, high technology, pounding changes called AI. Used to be that change was predictable and you had time to adjust. Today? Not so! Change is accelerating exponentially. New scary words? Learning Curve!

AI computers, biotechnology and nanotech are self-accelerating. They grow because they grow. The products of their own processes enable them to develop even more rapidly. New computer chips using AI are immediately put to use developing the next AI generation of more powerful ones creating an inexorable acceleration. The same dynamic drives biotech and nanotech–even more so because all these technologies tend to accelerate one another. AI computers are rapidly mapping the DNA in the human genome, and now DNA is being explored as a medium for computation. When nanobots are finally perfected, you can be sure that one of the first things they will do is make new and better nanobots.

Nanobots? G-Nome? Virtual Reality? Augmented Reality? AI? AGI? AQ*I? Huh? Well, maybe we do not need to adjust to everything new at once. Maybe we can improve on what we have…or go fishing.

We quoted the effervescent Mike Vance who wrote “Think out of the box” at every one of our Outlook/Landrush conferences in the last 30 years! Yes! 30 years!!!

…. and told you the story of how by making a small change (i.e., turning a straight shower curtain rod into a curved one) you can often re-arrange the old in a new (and profitable) way. 

In 2024 ask yourself, what new thing must I learn/create or what of my ‘old ways’ can I re-arrange into the new? It may be just a minor change that will pay big rewards – a tweaking, a fine tuning…but you need to plan for yourself and your business. Let us face it:

Whatever 2024 holds in store, everything that happened before will pale with the wonders of the future. Be part of it. The New Year approaches and anything can happen. So, make it happen.

From all of us here at Jurock’s Real Estate Insider and OzBuzz (ozbuzz.ca) we wish you a significant, challenging, exciting, reflective, creative, passionate, committed, successful and above all healthy year of wonder and personal growth.

FORECASTS AND PREDICTIONS – Ozzie Opinions

Key: Stock markets
Sharpest increases and (you knew it) – fast paced decreases. No peace!
Markets will be driven by (machine) scenario analysis.
War of the machines. Stock volatility is mostly due to machine trading.
Volatility machines don’t react to economy just algorithms.
Trend following models distort and destroy markets.
Be careful. Machines took markets higher and machines took them lower – more of that in 2024.
FEDs continuing Quantitative tightening will take money out of the market – dangerous.
Trillions of dollars per year needed in corporate and government refinancing.
Lots of leverage needed to refinance. 
In 2018 we warned: Watch companies that have a lot of debt. Came true…still true.
Revisit my piece on QT and QE. QT is taking $50 billion or so a month out of the market now.
Retiring $50 billion a month creates illiquidity. There could be a liquidity crisis.

Key: The FED pivot. Why?
That is the real question to which none of us have the answer.

Well first of it was not a pivot…yet. Canada stayed put on its overnight rate and the US Chair surprised by staying put also. The big question is… Why? What are they scared of? (England followed suit.) Ask and ponder:

• Did inflation go down too fast? (Although Core didn’t – still over 4%)
• Did the 10-year bond collapse scare (soaring to 5% and now down to 3.91% in 10 days)?
• Is the economy shrinking more than expected faster?
• Is the dollar weakness a sign? If so, for what?
• Is the soaring gold price telling a story on US dollar?
• Gold soars, oil declines, huh?
• Was QT stopped? Heck no…in fact it is accelerating.

Mr. Powell also indicated a 3 times reduction in rates…stock markets and talking heads see as much as 6 declines. Huh?

Our BOC Finance chief says (obviously worried): “Just because the US reduces rates, does not mean we have to follow!”

Benjamin Tal, David Rosenberg, Doug Porter (BOM), TD Bank see rate cuts as early as March/April. This will have no real effect (as in helping) but it may have a clear psychological effect … just as strong. Before you make a move – analyze what you are seeing.

Key: Inflation/deflation
Our call with a recession possible in the first quarter still stands. Even if it is a mild recession, we note that the US and Canadian consumer is drowning in debt, major corporations are laying off 10s of thousands of employees, $154 billion of mortgages need renewing (plus $350 billion in 2025) … well, it’s simply premature to rejoice over the rates staying put. We will have a problem year!

Also what are we celebrating – lower rates by .75% by end of 2024. What major difference does that make to those in trouble?
In our view, hard asset inflation will still be an issue. The mickey mouse CPI inflation report, does not reflect the fact that inflation at the consumer level is still increasing. Inflation is not beaten if we add in rents, house prices, loan interests, food, taxes etc., etc.
If – as per Milton Friedman – inflation is primarily a monetary phenomenon – as we believe we need to note:

• Relentless demand  of treasuries selling
• Relentless overspending and thus printing of money

We reported that usdebtclock.org in 2021 (April) stood at $29.9 trillion, today it stands at $33.9 trillion. Huh? Unbelievable.

Revisit our stance on Hard Asset inflation (always depends on money creation) and likely settling into even higher real estate prices (not in 2024) by 2025 or later.

Understand that commodities inflate or deflate independently from hard asset inflation and could deflate at the same time as hard assets inflate. Review Oz Buzz where we point out hard asset inflation versus economic (commodities) inflation.

We are not our of the woods… (reread Oz Buzz 89)
In fact, announcing rate cuts with stocks at all-time high means only one thing (or 3).
1. FED is scared of something it is not telling
2. Massive interest rate payments now soaking up more than all military spending in the  US and most of all GST rake-ins in Canada
3. Economy much worse shape than reported.
4. De-globalization crashing supply change, shipping
5. Retail is suffering, mortgage renewals are scary
6. Wars are an outlier…needing untold billions (at lower rates?)

We predicted in 2019 on the same topic.

Key: Loans and rates. Result is unpredictable. Volatility is here to stay,

Likely more illiquidity. Mortgage rates higher and harder to get. If only we had listened.

In late 2023 it STILL is UNREDICTABLE.

KEY: REAL ESTATE
War on real estate markets by Government will continue. The blame game is on. Who is to blame: Developers, builders, simple homeowners. With all levels of government wringing their (greedy) hands. (Maybe re-read Atlas Shrugged.)

2024 will see higher vacant home tax, higher school tax, higher property tax, higher carbon taxes (figure it out and weep!), higher rent, higher speculation tax extended province wide, higher Canadian Pension Plan premiums, higher car insurance rates, a new healthcare tax and higher interest renewal payments. Oh, and higher credit card rates. Higher shopping prices from self service checkout stealing on all consumers. ROTLM is winning! Just had to get that in, ha-ha!

Our very fabric of the benefit of Canadian suburb ownership (allowing 6 plexes next door in your cul-de-sac, 20 story high-rises on your bus stop) under attack.

Capital gain exemption under attack. If you have accumulated capital gain in your residence – do not: Build a Laneway home, a 4-plex etc…, etc. or lose the tax-free exemption – or some of it.

Sales will continue to find a new (bottom) level, listings continue to increase … prices vary by product (condo better) and by area. We like Surrey for investors or downtown.

ODDITIES? OUTLIERS?

1. Real Estate ace Brent Roberts tells of a soaring buyer demand the weeks following the FED possible Pivot announcements. Up to 5 multiple offer deals in the week before Christmas. Never underestimate market psychology (although too early to tell).
2. 430,635 immigrants arriving in third quarter! Huh?

This is a 1.1 per cent boost to the population – highest quarterly growth rate since the second quarter of 1957. 

• more than one million people were added during the first nine months of 2023, which is higher than any other full-year period since 1867.

But, if true. If half of them settle in TO and Vancouver and only 10% have DP money … that’s 100,000 deals pending.

KEY: CURRENCIES 
Canadian dollar – we forecasted last February to convert at 72 cents. This week it hit 75 cents. CAD – Short term higher – long term lower. 
US dollar – higher again. Still reserve currency

BIGGEST FEAR?
As we mentioned above: Quantitative (QE) easing has become now Quantitative tightening (QT). It is for real. In two of our conferences last year I talked about the QT effect (outcome unknown but scary). QT is big news that is not talked about. 

In my view, sugar rush of cheap money is over and not coming back anytime soon.

KEY: TAXES
2024 will see higher property taxes, higher carbon taxes, higher rent, higher Canadian Pension Plan premiums, higher car insurance rates, a new speculation tax for real estate, a new healthcare tax and higher interest payments. The bottom line – governments are making sure you have less money. We said 5 years ago: You will be taxed on things you didn’t know you had!

KEY: BEST NEWS FOR BC
New immigration numbers are astounding. BC gets most of them.

KEY: WORLD
Wars in Israel and Ukraine
More countries are defaulting on their debts. Ghana, Zambia, and Sri Lanka have defaulted and Ethiopia and Yemen (6 others) expect to default in the New Year
Wars possibly dragging the rest of the world in

Inside our own Canadian house:
War on the middle class
War on hardworking people 
War in Universities on Western ideas
War on the backbone of Western civilization
(Buy Douglas Murray newest book: The Age of Unreason – War on the West)
War on productive people like honour students
War on achievements
War on Christians, Jews
War thru identity politics
Etcetera, etcetera

However on the bright side:
Backlash building against WOKE.
Backlash against BLM
Backlash against far-left wing (defund police, criminals going free etc.)
Backlash from the ROTLM worldwide (I.e. Bud light)
We need to wake up: If you value your values… stand up, fight!

TO DO:

• Get some cash: Re-read our market-related cash and our age-related cash advice.
• Watch whether buyers are coming back with the psychological FOMO!
• Dispute your tax assessment. Go to BC assessment site (good site) and check out your recent sales/prices comparison that is used to get your money.
• Read everything! Watch everything! If Banks were scared it means that people may rush back into hard assets FOMO. Say close to your area, your realtor, your deal of a lifetime.

BEST OPPORTUNITIES:

• Still good calls:
  Buy real estate for movie production.

Buy storage for Amazon (storage, returns etc.) One of our subs changed his convenience store to be a center for Amazon.
Buy work/live places – convert to storage – as more and more online shopping needs to be somewhere.

• Rent luxury – buy cash flow:

Rent where you want to live, buy commercial real estate for investment?

• Check out assignments (CL and KJJI) – buy someone else’s fear – cheap. But check out builder first and only deal of a lifetime.
• Check unreserved auctions, Alberta, or USA.
• Buy COMMERCIAL! Industrial – less hustle! No foreign buyers tax! Easier to make rules … no bad legislation pending!
• Buy small town cash flow (no foreign tax). Price and rent ratios turning optimal in Alberta and small-town BC. Calgary and Edmonton are cheap.

SSSH! DID YOU KNOW ABOUT WHISPER MORTGAGES?

Long term rates, as we have discussed many times are directly related to the bond market. That’s why US 30-year mortgage rates hit 8% (briefly), when 10-year US treasuries hit 5%. With the signaled stop in rates, there is this whisper: It is getting competitive among  lenders… If you are an ace credit risk (you are not such an ace, if you just had your TV repossessed) you can get rates maybe .5 – .9 percent lower! Need ace mortgage broker (call me for one in your area) or ace realtor!

RBC actually cut posted rates. If others follow … whisper rates may, I said MAY crack the 5% into 4 something!

Final Major Mortgage Point: In this environment the MOST IMPORTANT THING TO DO is hiring quality PROFESSIONALS. Not all mortgage brokers or realtors are the same. For a professional recommendation send me a note.

PS: My dear subscribers: 
READ THIS: Love your participation: Lots of questions on EV comments, solar panels comments, Weimar republic seminars. Also lots of comments on youtube.com/jurockvideo.

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CANADA NUMBERS

TORONTO

• Active listings: UP 41%, new listings up 17%
• Sales Down – 6% – 9% over November 2022.
• Sales Down 27% over the high.
• Price: Up/down over last November – a tad
• Price: Well down over March/April 2022 (-18% in SF in 416 area code)

Major Point: Received a number of messages about YouTube featuring a lot of ‘experts’ talking about a Toronto ‘total collapse’. Actually, YouTube is not featuring anything or anyone, rather individuals share their opinion on YouTube. Yes, two major developments have defaulted and others are pulling back. Same in Vancouver, but Toronto remains Canada’s financial center and many developments will finish just fine, new developments will offer a better deal to buyers (as in Vancouver).

EDMONTON

• Total sales are higher in November 2023 to 1,637, an increase of 28% over Nov 2022.
• For November, detached sales are up 22% from the previous year.
• Condominium sales saw numbers increase 55%
• New residential listings amounted to 2,126, which is 21% lower than October 2023. Overall inventory in the GEA showed decreases of 15% from November of last year.

CALGARY

• Sales: Up 6% – 25% (condos)
• Active listings: Down 9% in houses – 00% in condos
• Prices: UP 13% (To $700,000) – SF, Condos up 8% to $ 320,000

BRITISH COLUMBIA 

The British Columbia Real Estate Association reports 4,630 residential unit, an increase of 2.2 per cent from November 2022. The average price in BC was $964,246 up 6.6 per cent compared to November 2022.

Source: BCREA 
Major Point: Area by area sales are reported down and up. Overall not bad measured against November 2022. But well down over the PREVIOUS YEARS (SEE BELOW).

SNAPSHOT NOVEMBER  2023 VANCOUVER AND FRASER VALLEY
We told you last year that, as we compare ourselves in 2023 to the same months in 2022, we will look great! The market collapsed last year – now it has recovered? Yes – somewhat.

VANCOUVER 
While SF sales are a tad better, they are still below 32% of the 10-year average for November. In fact in November 2023 we sold 523 SF homes. In 2021 we sold 988, in 2020-1,069 and even in 2019 pre covid we sold 831 – 55% more units.
Vancouver SF and condominium new listings are up 8%.

FRASER VALLEY – SF Sales are up a tad over 2022. Still we are  a third of the number of sales of 2020 as well as still 40% lower than 2019.
New listings are up 29% in condos; also up 18% in SF homes. 

Prices hanging in there compared to 2022. 

Vancouver and Fraser Valley

VANCOUVER 
While SF sales are a tad better, they are still below 32% of the 10-year average for November. In fact in November 2023 we sold 523 SF homes. In 2021 we sold 988, in 2020-1,069 and 2019 pre covid we sold 831.
Vancouver SF and condominium new listings are up 8%.

Here is a 5-year NOVEMBER  2023 over NOVEMBER  2022/2021/2020/2019 comparison.

VANCOUVER – Single Family

Major Point:
Vancouver priced best NOVEMBER  in last 4 years!
But still behind highest monthly prices achieved in last 5 years (see summary above).

FRASER VALLEY 

Major Point: Fraser Valley – SF Sales are up a tad over 2022. Still we are  a third of sale of 2020 AND still 40% lower than 2019.
New listings – are up 29% in condos; also up 18% in SF homes. 

MAJOR, MAJOR POINT:

NOTE: Now we see market sales and prices reverting to ‘sideways’ and ‘lower.’ Rates are being held in Canada and the US (see above). It will bring some buyers into the market…but economic numbers (mortgage renewals, record personal debt, etc … will keep most back.) …But watch for psychological market shifts…

LIVE LIFE LARGE

Message for 2024 
Like attracts like
Smile and the world smiles back
Happy people attract happy people
Birds of a feather flock together
What goes around comes around
Our intentions must be clear
Or we attract confusion

The universe wants clarity
I have clear intentions
I draw people with harmonious intent
I will repel what is not in harmony
I will define what I want every day
I will draw to me those people
Who will enhance me
I will have joyous interaction

I will grow into my future best

Look up all of Ozzie Jurock’s “Grow into your future best” cards at: www.commitperformmeasure.com

(You’ll get Oz Buzz 2 weeks before it’s posted online)