House it Going in the Real Estate Market?
So this is the kind of house you can expect to buy in Vancouver today for about $1.19 million.
To put this into context, the same $1.19 million could be used instead to create a dividend growth portfolio that would generate $40,000 each year of tax advantaged income for a lifetime. 🙂 Have homeowners completely lost their noodles in this city?
The economy has stagnated. The U.S. stock market is down about 10% over the last 12 month period. The TSX in Canada has seen worse, falling by 20% since this time last year. Canada lost more jobs than it gained last month, pushing the unemployment rate up to 7.2%. Low oil and commodities prices is costing us a lot of jobs not just in this country but also in emerging markets that export metals and other resources. Negative interest rates are as common as the flu. Asia’s growth is slowing down. U.S. Treasury yields have fallen from 2.0%+ to just 1.6% over the last 6 months. And as Lenore Hawkins, chief economist at Meritas Advisors, says, the slowdown of growth in “global trades is at levels we haven’t seen since around 1958.” It’s almost like the entire world is in recession.
But despite all the negative news and market volatility out there, local real estate as a whole has remained stubbornly bullish for the last 4 decades.
What the wise man usually does in the beginning, the fool does in the end. But due to market inefficiency and human nature there’s now an adage which assumes that even if we are fools to overpay for a piece of property, some greater fool will eventually come by and pay more for it, lol. But this risky game of hot potato probably won’t end well. Nobody wants to be the last fool. But at some point in the future prices will correct and someone is going to lose a lot of equity in their home. I just hope it won’t be me.
Disclosure: I own Vancouver real estate. 😛
Random Useless Fact:
Arnold Schwarzenegger was caught touching himself in public 😆