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ALWAYS CONSULT YOUR INVESTMENT PROFESSIONAL BEFORE MAKING ANY INVESTMENT DECISION

November 20, 2018 | Busts

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

If you flog houses for a living, you pray potential buyers will think only about two things. One a little: sales. One a lot – prices. This is how the fiction of a rising or stable market can be maintained, even in the face of facts. You know, just like Baghdad Bob during the Gulf War. Or David Lereah, the realtor ‘chief economist’ who predicted a US  housing boom just before a total bust. Or, of course, real estate boards in Toronto or Vancouver.

For example, when sales of houses in Vancouver plunged 34% last month and listings swelled 42%, this was the public message:

“The supply of homes for sale today is beginning to return to levels that we haven’t seen in our market in about four years,” Phil Moore, REBGV president said. “For home buyers, this means you have more selection to choose from.”

Hey, sounds good. Let’s buy!

However the real story of what’s going on comes from the actual behavior of sellers. As supply overwhelms demand not only are sales declining relative to total inventory, but vendors are forced to reset expectations as buyers retreat from a wall of fear. In one word it means this: relistings.

To date the big real estate boards continue to blind buyers to price reductions. In some place you will see DOM (days on market) showing how long a property has sat at its current price. But rarely is CDOM (cumulative days on market) visible. In other words, most buyers have no idea if a property has been reduced, how often, when or by how much unless an agent is working for them, pulling data. It’s planned obfuscation. It’s like Baghdad Bob who declared of the enemy, while his regime was being pulverized by the Yanks, “Our initial assessment is that they will all die.”

So here is a picture of what’s actually going on. The site ‘myrealtycheck.ca’ tracks relistings in YVR, of which there have been a fat 2,285 so far in November. The red arrows are price reductions. The blue ones (if you can find any) are price increases.

 

This is how a bull housing market dies – by a thousand cuts as retreating buyers force sellers to reprice their product. You can see why the real estate establishment would rather have folks concentrate on sticky prices (the average is still extreme) and ‘increased choice’, rather than the downward momentum clearly at play.

Just to reinforce the trends, here is a summary of the price cuts/hike in urban Metro Vancouver. If you like falling knives, this is your moment.

 

A year ago this pathetic blog told you to sell your Bitcoins, cut up the crypto-buying credit cards of your moister children then tune out the blatherings about it being ‘different this time’ and that an asset backed by faery poop could be worth a fortune. And here we are. It’s all going down.

Bitcoin, the digital nothingness Ponzi scheme, has lost a third of its value in a week. From closing in on $20,000 a unit a year ago it is $4,000 and change as I write this. Panic selling has set in. There is no bottom except, maybe, zero. Seven hundred billion, pissed away.

This is worse that the collapse of gold and silver decades ago. It beats the 80% plunge in technology stocks after the dot-com mania. It’s far steeper than the slide in equities during the credit crisis. And it’s made all the worse for two big reasons: (a) billions in Bitcoins were purchased through dodgy exchanges by young gullibles who put them on plastic with 19% owning on unpaid balances and (b) there’s nothing here. Nada. No hunks of metal. No operating companies. No real estate or hard assets of any kind. No cash flow. On interest or dividends. No distributions. No power to tax. And mounting evidence the insane escalation during 2017 was the result (at least in part) of rank market manipulation.

 

That’s what authorities think. Last week the American SEC announced penalties against two crypto outfits. The US Justice department is investigating trading fraud. The European Central Bank (ECB) calls Bitcoin “the evil spawn of the financial crisis. The Bank for International Settlements has said cryptos are “in a nutshell, a bubble, a Ponzi scheme and an environmental disaster.”

There should be no surprise here. Blockchain technology is a breakthrough, and already being incorporated into systems and processes globally. But using is to cook up a ‘currency’ in a process that consumes enough electricity to light up a country, is inherently unstable, subject to theft, hacks and fraud, is regulated by nobody and can never be a medium of exchange, therefore buying nothing, is beyond stupid.

Thank God we now have vaping and legal weed. Way more productive.

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November 20th, 2018

Posted In: The Greater Fool

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