Mortgage rates are at record lows. Five year fixed is as low as 1.5% (HSBC) and my guess is, that with a good down payment and a good credit rating, it would be easy to borrow even as much as $1,000,000 (previously an unheard of amount for ‘worker-bees’) from the Big three for under 2%. In whacked-theory, one can borrow their way to millionaire status. (Well, I guess it is not all-that-whacked a theory since the Grifting Trumps have ‘borrowed’ and defaulted their way to billionaire status.)
The economy is on the ropes in some ways (hospitality, travel, retail) but, in others, it has never been better (delivery services, post, net-based businesses) The US economy ‘grew’ by 38% on an annualized basis in the 3rd quarter (admittedly, it was down 33% in the second quarter so, overall, it is stable at about a 4% annualized growth). But what a wild swing! Housing prices in most of Canada’s markets are past the balloon stage and now into a new un-reality stage.
And that is showing up rurally, too. I.e. Rents in Nelson for a modest 2-bedroom home are $2500 (that is relevant because $2500 a month pays off a purchase price of approximately $750,000 which means some little rented bungalow in Nelson might fetch $750K on the market). And that madness is playing out in all the small desirable towns especially on Vancouver Island. Commercial sites in Victoria are setting new records (altho those sites are generally multiple family residential sites). Put more bluntly, we have a lopsided economy and that makes for very weird analysis and crazy projections.
Our national unemployment rate is still averaging around 6% and even touched 13% for awhile. Covid is raging all over the place. The government is spending like a drunken sailor and, of course, the country’s debt has never been greater. And yet…the Canadian loony is up a bit against the US dollar which is oddly (to me) also considered strong.
The inflation rate is projected to be modest at 1.5% (approx) but real life suggests more like 5% (lately even more). If one adds in the housing index (which they do not always do) and it is higher.
Carnival Cruiselines just launched the biggest cruise ship ever and Boeing has re-debuted their new no-crash 737 max. Duh…….??? Is anyone traveling still?
And on and on and on and on……..I won’t bore you anymore than usual with any more facts….the point is: all the ‘indicators’ are acting counter-intuitively and contrary to previous economic times. The ‘message’ is mixed and, for dummies like me, confusing. I DO NOT GET IT.
Shouldn’t gold have gone through the roof? Shouldn’t real estate be stable at best and, commercial values (retail space) fall? Shouldn’t the Canadian dollar also be falling against say the Euro or even the US dollar? Shouldn’t the price of fuel drop? Why are luxury yachts and boats so expensive (yachts have always been the canary in the economic coal-mine)? Why is the US stock market up? Is it simply the low cost of borrowing? Is it a not-as-yet-recognized new stay-at-home economy driving all this? How come Ali-Express is 3 – 6 months behind in shipping? Have people abandoned previous financial goals and, if they can, they are simply ‘getting out’ to small towns?
Maybe the biggest question I have is why is Netflix so boring lately?
Our Off the Grid Home 
Total agreement.
It makes no sense when so many people are out of work (Covid related?) and the potential for business failures( covid related?) are looming.
Airlines, Cruise Lines, Hotels, restaurants, are all in the Covid crapper and may not see solvency for several years.
Govt spending in 2020 is ten times the worst deficit year we have ever had and Covid repercussions aint over yet.
What will they do in 2021? Spend MORE than they spent in 2020?
Billions in CERB money seems to be sitting in bank accounts so…..was it really really really needed by ALL the people that received It?
I’m thinkin’ no.
Our economy is dangerously dependent on real estate….and if that bubble pops…..oh my.
Lets see what happens first.
The Bond markets stop buying Canadian Govt Bonds. The Canadian Govt (Lib or Con) is forced to make brutal, deep cuts to everything to show the international markets we are serious about our fiscal solvency….or else, unemployment gets worse before it gets better, poverty, crime, overdoses, etc etc etc all follow.
Taxes, user fees, licensing, etc etc etc going uppa uppa uppa. Count on it.
Cuts to staff in govt depts, and agencies to stop the financial bleeding.
Personally. I’m sitting, saving, waiting and watching….for the ridiculously priced real estate shoe ( and whatever else) to drop……
Then I’ll buy.
Unless , of course the Liberals follow through with their ramped up Immigration plan and 400,000 chinese / canadian dual citizens flock in from Hong Kong in 2021.
There will be such a shortage of rental and condo and single family space……you wont be able to rent an outhouse in Atlin.
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I’ve used an outhouse in Atlin. At the time, it was invaluable. Today? Not so much. The RE bubble is, apparently, only hitting the ‘charming’ group of small towns. Ladysmith, Qualicum Beach, Nelson, Comox…that kind of thing. But it is hitting and it is a bubble based entirely on low interest rates. Maybe a few read OTG imperatives that suggested they get out, GET OUT NOW! But I do not know.
The RE bubble has even shown up in Alberta (Canmore, Banf, etc) – same reasons, whatever they are. Does it mean that rental apts in Toronto are emptying?
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Hah!
I used an outhouse in Canmore in 1980 …..when it was a whistle stop on the rail line and a defunct coal mine…..now?
Millionaire foo foo chalets built right up to the gates of Banff……
If only I knew then what I know now.
That being said.
The only thing that helped BC avoid a recession was the out of control real estate money laundering and a gullible public that jumped on board……
This time?
I’m thinking CERB and job loss has a lot of people very very nervous.
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The Libs were neck deep in that casino-laundering crap. But does anyone know that? God, the ‘fiscal-focused’ parties are always the ones that are defrauding the system and getting the cash-in-paper-bags. What an obvious crime that all is.
I used to race motocross professionally. Atlin hosted a huge cross-country enduro. Racers camped out near the course. Food was not always good. Hundreds of people. Outhouses were a blessing day one, unpleasant for a day or so and then, well, the sewers of Bangladesh come to mind by the end of the weekend. It was enough to put one off motorcycle racing.
“Be the change you wanna see.” That sentiment is being touted quite a bit these days and that means (for me) even more community participation. We do good out here and we can do better. And we don’t need too much in the way of ‘government’. .
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“Outhouses were a blessing day one, unpleasant for a day or so and then, well, the sewers of Bangladesh come to mind by the end of the weekend. ”
++++
Your comment reminded me of a “road trip” i did in 1985 to Mexico.
Drove from Vancouver to Tijuana in 24 hours.
Dead tired…… decided to stay the night in ……Tijuana.
But first we wanted a beer, in a bar….in Tijuana…..
Walked into the bar.
First thing we noticed ( other than the fact that we were the ONLY gringos in the bar) was
a) the stench of piss.
b) the floor was dirt.
c) everyone was staring at us.
Weird but whatever.
We went to the bar and ordered some beer.
The elderly prostitutes’ were immediately trying to get us to “go up stairs”.
“Nope. Just wanna beer, muchas gracias senora.”
Some of the guys standing at the bar were very drunk and looking like they were gearing up for a fight with us. Eight against two….but they were short.
Great.
Thats when I noticed WHY the place stunk of piss.
Barfly guy standing at the bar holding his beer……whips “it” out and urinates against the bar….the urine coursed down the side of the bar onto the dirt floor where it tracked along a tiny dirt trench that ran to a hole in the outside wall.
Gravity’s urinal……
My revulsion was only surpassed by my thought…. “So THIS is how Roman soldiers annoyed the conquered populace into armed rebellion!”
We finished our beer and left.
Drove another 50 miles outside of Tijuana and slept on the beach.
Nice.
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Oh, man…..do NOT get me going on ‘bathroom’ stories in Mexico. Holeeeee….the only time in my life I lost 25 pounds in ten days…….Monty had his revenge and I personally defiled the equivalent of a province in Mexico. And that was only ONE such story…
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Oddly.
Every time I was in Mexico.
When friends were dropping left and right to the dreaded “Montezuma’s”…. old “iron guts” Noncon pulled through without a “scat”ch…. 🙂
My medical theory?
I think the alcohol consumption killed everything else in my intestines…….
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Re boring Netflix, are you using Kanopy.
this streaming platform via your library system is remarkably easy to use, with a fabulous range of material
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Will try it. Thanks.
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HAPPY NEW YEAR!
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Back at ya, NonCon…and the same to all seven readers. I hope we all do well in 2021.
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Dave what do you make of the value BITCOINS’ rise in the last year of 300%? Will it become a fiat currency?
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Cryptocurrencies ARE fiat currencies….pure and simple. Some Japanese guy developed blockchain software and technologies to protect the integrity of a fantasy currency. No value. Not even fantasy value. Only security for a ‘number’. That is bitcoin. You buy an ‘encrypted’ coin and it cannot be hacked , stolen or counterfeited. Super secure but no inherent value. Whoopdeedoo. It’s a bubble currency based on the faith of blockchain technology AND it flies under the tax radar. Faith based. Pure fiat.
Ask about ‘art’ someday….Picasso isn’t worth $100m to anyone except a money launderer. Classic art was the first ‘underground currency’. Now we have crypto. Criminals now have another medium of exchange that avoids bank detection.
To be fair ALL currencies are fiat now…..a government prints on paper and calls it money. And we put our faith in it. It represents nothing but a weak, fragile government promise. But we use it because everyone else does. It is convenient. But it ain’t real. Real Estate is real. Everything else is ‘agreement’. Everything else is fiat.
Precious metals are historically real but, damn, lithium is now a precious metal. Who knows where gold and silver rank now? Only land can’t be replaced, duplicated, counterfeited. Only land, food, air, water and flesh are really real…the rest is agreement. The rest is fantasy. The rest is fiat.
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First of all, happy new Year to all of you! I think I’ll wait a few years before buying OTG property.prices are sky high and a bubble is in the make. Also here in Europe people are getting out of the cities and buying rural properties. But not all of those people have it in them to live rural, let alone OTG. So my guess is that in a few years, these properties will be up for sale again, and then real bargains can be made. I already see it now in some properties that are up fo sale, the new owners bought a ruin ans tried to do some renovation, only to find out the work is huge, costs are high, so they put it up for sale again. So my time will come, but at a lower price then the current rates
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I’m in the same situation.
Watching and waiting for prices to drop.
I may buy in the next year if I see something good or early ’22.
I’m just curious Dave. Waht sort of property taxes does an OTG’r pay?
And have they gone up in the past few years?
Bankrupt, spendthift govts are looking for easy targets these days……
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Taxes out here are low and high. Low dollar amounts but high for what you get – which is basically nothing (and that was our choice). Six partners own 86 acres. Our total amount is around $3000 (my share is $600 like a few others – who have homes – and the balance pay about $400). We have a two-room, 12 student school which is the best K-7 school I have ever seen. We figured, if we appealed the assessment, we would win but what? Maybe down a $1000.00 at most? Or $150 each? Not worth the hassle. Plus our elected rep is really good and always supports us. We have a post office (ten feet by ten feet) and the gummint owns the community docks. Essentially that’s it but we are also blessed with the Coast Guard which is well regarded and their cousin, the Dept of Fisheries which is NOT. Of course, taxes go to other things like hospitals and police and fire but none of that is within 20 or more miles of us (partly by sea) so we tend to disregard them until we need the hospital and then, well, we try to avoid it as much as we can. Taxes on unimproved bare land is usually pretty low.
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Happy New Year to you, too, Wim.
I kind of implied that rural land is getting more expensive and it is in small towns that are well-placed, have attractions or are near large construction sites. But bare, unimproved land well off-the-grid is still cheap. We just had two young couples buy and within weeks, they will move out here and, in doing so, will join at least three other young couples that moved here this year. That’s five couples spread over 250 square miles. It is not overcrowded but the ‘next generation’ is starting to show up.
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Glad to hear that young couples are moving in, that will give a nice impulse to the community! It’s good to hear that still young people realise what is really important, and chose at a young ago to step out of the rat race! Let’s hope 2021 brings some nice things and that we are allowed to travel again, I crave to visit Canada again….and especially the Discovery Islands!
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