Economy Politic Finance Quadrant

There are 2 BIG main external factors affecting our investment decisions

• Economy
• Politic

When the time is really bad (economy downturn and politically unstable), its best to park your money under something that is really stable, ie Gold. Which is by definition usable anywhere you go in anytime.

When its good time, invest direct to the stock market would yield very good return.

When the economy is not so good in a strong country, the government bonds or related money market would be able to yield higher return than just gold.

However, the most dispute solution in good economy unstable country is investment in property. This is mainly due to easier rental and higher chance of capital gain.

By simply moving money around depends on the political and economy situation, one was able to achieve more than 12% compound return for the past 20 years. That is equivalent to a 10X return.

But by no mean this is easily done. Some of the concerns include;

• how would one know exactly when economy/politic turns good/bad ?
• is Gold the ONLY option ?
• property may not easily liquidated
• how to choose which property or stock market ?

. . . which can be explored further.

Bit and bobs..

To muddy this housing market even more, we have two pieces of news pulling things in the opposite direction.

First banks are cutting their mortgages rates a tiny bit . This is due to the huge rally in bonds which is unprecedented. No one is quite sure why this is happening. It could be due to the imminent resurgence of that whole recession-debt-default-thang which makes government bonds look more attractive, especially if we starts getting a little deflation in the air too.

Here is the US thirty bond yield- ours follows the US pretty closely.

Big drop in Housing sales and the average price across Canada. Just shows how correlated the country is and this is not just a local event. We are in a national housing bubble.

BTW- found a good source of info for current selling price per square foot for condos for Vancouver areas, broken down by size, area etc.

I'm back

Went for a nice trip around recreational property land. The Gulf Islands and Sunshine Coast..looking for deals. Well we are a long way from getting deals as of yet.

Met a few Real Estate Brokers and saw some properties. Even stuff that has been on the market for a year or more without a sniff from a buyer are stubbornly over-priced.

On Saltspring Island, they are sitting on (7 x 4 months) 0f supply = 28 Months. Total inventory/YTD sales. They had a front page article on how the market had changed and sellers need to wake up to this. Despite this prices are inching down v-e-r-y slowly.

The same in the Sunshine coast.

The Real Estate Brokers all admitted things were slow. ('Dead' one of them said)

However they were all certain there would be no significant drop and one suggested that I not bid any less than 10% under listing to be sure I get the property.

Huh!?

No one else is interested but I should still pay 90% of the asking price, on something that the listing agent and seller have probably over-priced by 20% expecting the market to keep going up..

I mention to some that I was looking as assessed as a starting price. This drew some laughs..surely I must know that assessed and market are two separate things...

I then mentioned that:

1) The assessed value is decided by a fairly uninterested party. In fact they will likely err to the up-side, since the higher the assessed the more taxes that are assessed.

2) I had done my home-work and showed up with info on several recent sales which went at the assessed value.

Everyone can have an opinion..but when you back up your opinion with facts it is harder to refute it.

Recreational property has not rebounded as much as Vancouver. The further from the centre, the weaker the bounce back. I think we are in a full-out buyer's market. That is the only way you can describe any market that has over TWO YEARS of inventory. However there is a LOT of denial out there and buyers may find sellers need some more time to come to terms with the new realities.

In fact there are now some listings UNDER assessed on the Sunshine Coast.

................................

As many of you know, I have a special distaste for Conrad Black. He basically threw his Canadian citizenship away. Then he gets convicted for multiple cases of fraud and one of obstruction of justice, and is being sued for unpaid taxes by the IRS.

He then pays enough lawyers to get him out of jail on bail pending an appeal and now he is suing his former Hollinger colleagues in Canada who accused him of looting the company. He is suing in Canada because we have stricter libel laws. Nice to see Canada has something he wants.

Ah will the machinations of the naughty rich never end..

What did Bob Rae say about Black.."that most symbolic representative of bloated capitalism at its worst"

HEY CONRAD if you ever read this post surfing google for mentions of your name..make sure you listen to Todd Butler's song, which is just about you:

Words

Music - click on 'Conrad' if it takes you to another song first.

A Winner, and A Bathroom Reveal

Let's start off by announcing our winner of the $60 giveaway to CSNStores.com.....Drum Roll Please......

The Winner was #4-Mandy!!! 

Yay for Mandy!

I have sent a CSNStores.com representative your email address,so be on the lookout for you winnings!!

*******

And now for the reveal of my latest makeover. We live in a new house, and we have slowly been making it a home. It has taken me longer than I had expected to be able to pick out the right colors, and figure out what design style to work with in this house. In the last house we used dark colors, and it was nice and cozy. This house is much larger and wide open. I wanted to go for the more beachy, cooler colors, so that it would keep the appearance of being wide open. But I did want one room that was dark, and that was my half bath. It's a big change and was almost frightening. I went to Lowes to get some paint. I had every intention of trying out Olympic paint because it has been advertised at $17 a gallon. Much better than the $30-something for Valspar. So anyway, I picked out my color, headed to the paint counter and realized there was some oops paint. There was a gallon for $5 that was extremely close to what I had picked out, so I dumped the paint chip and grabbed that $5 gallon...SCORE!! 

Here is the before:

and another angle:

Very Contractor-y blendy....does that make any sense???

Anyway, here are some After pics:

Without the flash...

With the flash...

Because there aren't any windows near by, there wasn't any natural light to help with the picture taking:(

A picture I picked up from Hobbly Lobbly for $5

The face plate for the light switch and the towel ring also came from H.L. All 50% off:o) The towel will be replaced with something much prettier, but will have to do for now.

I love old books....these came from the hubs' family farm.

I have a plan for the hooks on the bottom of this shelf. Hoping to work on that sometime this week...might be a tutorial in the making:o)

Really needing this verse here lately:o)

So here's the before again:

After

 Not bad for $5, eh? Got another makeover up my sleeve...it involves bead board...that's all I'm sayin'. Have a great Monday!!!

OK last post for a while, and it is on the OK

I am heading out of town for a week in a couple of days. So unless anything remarkable comes up, this will be it until the following week-end.

Got the Okanagan numbers, and the MOI are reaching eye-popping levels.

I knew I was in for interesting numbers when the titles of the three press releases were:

Summer Heat Cools Buyers’ Market in the North Okanagan

Summer Slows Buyers’ Market in the Central Okanagan

Home Buyers Take Summer Off in the Shuswap

29.6 MOI in the Shuswap/Revelstoke Area

23 MOI in the Central OK area (Kelowna etc)

26.8 MOI in the North Okanagan area

No real price comparisons I can find in the reports. They just report total dollar sales, which are of course down.

In any case we are deep into bear country here. I don't think I have ever seen MOIs that high in recent history in BC.

F_V_R_E_B

Ok a quick peek at the Fraser Valley numbers

Some pretty graphs in there

We are down 1% or so from June 2009.

However the Fraser Valley didn't rebound as high as VREB in 2009. In fact HPI and Average look to have just matched the previous high with a steep valley in between in 2008.

We are now sitting at 9.8 MOI in the Fraser Valley.

BTW- I have noticed how visits to this blog pick up when there is price falters. In April I was down to under 150 visits a day - now we are back over 250/day and rising. Guess I wont shut her down just yet :)

Numbers are out

Here

Lots of stats for the numbers nerds to play around with.

HPI down 2.8% from peak. (Hey the peak is behind us)

Sales down almost 50% from 2009- we already knew that.

MOI for JULY was 7.2

Some HPI comparisons Between June 2010 and July 2010.

Detached July: $793,193 June: $795,025
Condo: July: $387,879 June: $391,528
Attached: July $490,995 June: $492,861.

All DOWN

The importance of timing in the housing market is demonstrated in the line below:

Residential Greater Vancouver $577,074

1 year change = 9.1% 3 YEAR CHANGE =9.1% 5 Year change = 46.0%

Buying a year ago gave you as much appreciation as buying three years ago. that's what a steep drop does for you.

And several areas like West Vancouver which saw nutty pricing a few years ago are still down in price from 3 years ago (with lots of price recent price reductions to still factor in)

We are down anything from 3-6% from the peak a few months ago depending on whether you follow average or HPI.

Neither are ground breaking. However a few points here:

1) It shows that hosuing falls , DESPITE all the pundits and experts.

2) This is exactly what we want...a slow decline.We want a market which allows buyers and sellers to transact based on supply and demand.

NOT for the Government to change the rules and pull the carpet from under the buyers, as soon as they have an upper hand (after years of being in the loser camp).

That is EXACTLY what they did in 2008.

If we had a falling-off-the-cliff event in housing - you can bet that Flaherty and Campbell and their gnomes would be hard at work trying to throw our money at sellers.

SLOW AND STEADY WINS THE RACE...