I’m finally back on the bandwagon! Here’s a Song of the Week for the first time in far too long.

For any readers outside of Canada, the National Film Board makes these little vignettes which I remember as a child playing on CBC. This was always one of my favorites. Have a great weekend!

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The RE/MAX 2011 Housing Outlook is just out, and there’s some interesting ideas in there. Not everyone agrees (including the Edmonton Real Estate Board, whose 2011 Forecast comes out next month, watch for the live blog).

Rather than just write a bunch of blog posts, I’m creating a resources section. There’s already a page there for the RE/MAX 2011 forecast, and others will follow as I get them. Now, just cause everyone loves a good graph or two, here are a couple of them.

You can see the data for all 26 Canadian Cities here.

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Inspired by this weeks’s entertainment, I got thinking about the commonalities of real estate, economics and investment blogs, whatever their slant.

I think there’s a lot we can agree on.

Your house is not a damn ATM

If you put a HELOC (home equity line of credit) on your home, be damn careful what you use it for. Spending it on consumer goods, excessive renovations and entertainment are right out (forget about the 52″ plasma). Reasonable renovations and smart, careful investments can count, but you need to be cautious and a HELOC should never be your sole source of investment funds (see the next point).

Canadians need to save more

Our national savings rate went from better than 10% of after tax income in the early 90′s to only a few percent. We’re not as bad as our friends down south, but this is going to be a potential long term problem for many Canadians as we get older.

Live within your means

This shouldn’t surprise anyone, but it’s not quotes often enough. David Chilton, author of the Wealthy Barber, probably the best book on financial planning for retirement ever written, lives in a house of less than 1,000 sq ft (see the great interview on CBC’s The Hour here). I drive a used VW, live in an older townhouse and don’t really carry any consumer debt. I don’t really see that changing too much, except sizing up as my family grows.

Give money away

No one ever went broke by donating money to charity and it’s an important habit to get into particularly when you don’t have any money. 10% is a great goal, and you should also donate your time. If you want to make sure you’re hitting your 10% goal, try adding up your volunteer time at minimum wage or $10/hr and see what that does. Giving your time and talents to those who need your help when you barely have anything to give teaches us about what’s possible (and trust in God, but that’s another post).

Diversification can be a good safety net

There’s no doubt that your asset mix should reflect your goals and the time in your life. When you’re young (like me) and have few obligations, but high earning potential, you can handle more risk. When you’re getting to be 50-60 you should be looking for some more stable, fixed income assets with a lower risk profile. You should use the advice of a good financial planner. One big caveat on diversification though – as Warren Buffett says, “Wide diversification is only required when investors do not understand what they are doing.” Invest in what you know, and if you’re really serious about investing and building a business, keep to what you know. This leads us to:

Diversification is for the weak

Warren Buffett doesn’t buy tech companies because he doesn’t understand them. I avoid complex market plays (shorts, etc) because I’m not as familiar with them. I buy stocks I know and trust like Coca Cola, Cogent (makes some great fingerprinting hardware) but the majority of my active investing goes into real estate. I gained a lot of knowledge by osmosis, working on a team managing other people’s properties and because I made a point of learning as much as I could. The 3 years since I bought my first property have also been full of some great lessons.
If you really understand tech stocks, or mining, or real estate, put your money there. The nice thing about real estate is everyone has at least a little familiarity with it and we’re all capable of learning. What each person needs to decide (with some help) is what mix of diversification vs. single minded focus is right for them.

Look Behind the Curtain

There’s a lot of sources for information and opinion. You should do a lot of research on your own, and also pay for other people’s analysis. I trust REIN’s analysis more because they don’t sell real estate. Same deal with the IMF; they couldn’t care less if you or I buy another piece of real estate. I also listen to sources like RBC for their housing affordability index. Sure, they sell mortgages, and more activity in the housing sector is good for them. I think Garth Turner buries his good points in a lot of rhetoric intended to sell more books. Does it make their opinion worthless? No, you just take it with a grain of salt.

There’s a lot we can agree on, and a lot more that bloggers, professionals and friends can be doing to help people out.

Photo credit: Stuseeger

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As many expected, the Bank of Canada raised rates 0.25%, making the overnight rate 1%. Most banks followed suit, making the prime rate 3%.

Here’s the high points from the press release (via Canadian Mortgage Trends)

“…Consumption growth is expected to remain solid and business investment to rise strongly.”

“The Bank now expects the economic recovery in Canada to be slightly more gradual than it had projected…”

“…Financial conditions in Canada have tightened modestly but remain exceptionally stimulative.”

“Any further reduction in monetary policy stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook.”

I posted a quick survey the day before the announcement, and here’s what people thought would happen.

It’s a difference of $13 on every $100,000 of mortgage, which is chump change. These are some screaming low rates, and there’s been talk about how the global economy will be growing at a little bit slower pace moving forwards, which also means we’re not as likely to see double-digit interest rates in the near future.

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I know we’re cutting it a little close with this one, but when the Bank of Canada releases the new overnight rate tomorrow morning, do you think it’s going to go up or down? I’ll share the responses tomorrow after the announcement.

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Here’s some links to help your Friday (or Saturday) go a little faster. I’m going to try and post things like this a little more regular, so please leave a comment and let me know if there’s types of links, news, topics or questions you’d like to see more of!

• From Lovely Listing – NFSWednesday: taking racecar beds to a whole nother level
  The shock absorbers make it perfect for people living in earthquake-prone areas, and the ridiculousness makes certain you’ll never take yourself too seriously.
• Stephen Gordons’ Worthwhile Canadian Initiative – On Canada’s exit strategy
  Our exit strategy appears to be to let the fiscal stimulus package expire in 2011Q1 as planned, and to let monetary policy take up the responsibility of providing whatever remains in the way of counter-cyclical policy. From where I sit, that looks to be the sensible path.
• Mike’s Calgary Real Estate Review – New Zoning Restrictions On Secondary Suites
  Council has erased zoning restrictions on secondary suites for thousands of suburban Calgary houses, a unanimous decision at least one alderman acknowledges he made without understanding the changes he was approving.
• From Canadian Mortgage Trends – Variables Win Long Term But…
  Long story short, variables are still a great bet for many. But, if you:
  • Have a tight budget
  • Are nervous that prime rate could exceed analyst rate estimates in 18-24 months
  • Find an amazing deal on a 5-year fixed
• Mike Sachoff on WebProNews – ApartmentGuide Adds Search Tab To Its Facebook Page
  “A significant portion of ApartmentGuide.com users are between the ages of 18-35, aligning nicely with Facebook’s demographics,” said Arlene Mayfield, president, Apartment Guide. “Further, Facebook had over 150 million U.S. users in July 2010 with that number expected to grow considerably.”
  More sites need to do this. Facebook is huge in Canada.
• Ryan Moeller on Bigger Pockets – 10 Ways to Mitigate Risk and Control the Outcome in Real Estate Investing
  Savvy real estate investors research and use information to make good informed business decisions. By doing this, you can mitigate risk and control the outcome.
• Sara and Sheldon’s Edmonton Real Estate Blog – 1000 Things we Love About Edmonton
  I’m a sucker for lists and Edmonton related stuff, and I love the stuff they write. This one looks to be awesome!
• From Canadian Capitalist – This and That: Napkin drawings, Role of luck and more…
  Check out the first link he has, some great napkin drawings from the NYT.

Photo Credit

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There’s been a lot in the news the last few months about how Canada’s gone from a nation of savers to a nation of spenders. While it’s true that we’ve gone from saving ~15% of our income to ~1%, there’s some scarier stats out there. We’re in serious danger of outliving our savings, getting useless biased advice,  and seeing retired people recycling bottles for extra cash. At 28 years old, I’m a little scared.

Few people have any sort of idea how they’ll save for retirement and even fewer actually are taking action.

Only 32% of Canadians have a plan for retirement, which means of my almost 700 friends on Facebook, 450 of them haven’t the foggiest clue how they’ll retire.

I’ve got news for you: CPP and your work pension plan aren’t going to cut it.

It’s no secret that real estate is  a big part of the retirement plan Megan and I have created and are executing. The worst case scenario when I buy a $200,000 townhouse is that in 20 years the tenants have paid of the mortgage and I’ll have (at least) a $200,000 asset.

Stay tuned this week and I’ll tell you how I turn my $200,000 forced savings plan into a $400,000 retirement find.

Photo Credit: Proimos

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I wanted to post this sooner, but NBC is stupid and removed the original video which managed several million views in just a few days. It’s really worth going to YouTube and watching it in HD.

Enjoy your weekend, and feel proud to be Canadian. I’m planning on writing offers on some properties this coming week, and I’ll be at REIN’s ACRE weekend in Edmonton on March 12-14th. If you see me come say hi.

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In the spirit of things Canadian, I bring you a creative interpretation of the Tragically Hip’s New Orleans is Sinking – the Killer Whale Tank Live version. Awesome song.

Enjoy your weekend! Go Canada!

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North America is home to a generation of people who have never experienced a recession in their adult lifetime. They’re between 20 and 30, much like myself.

I remember when I was very young, my dad being laid off from construction during the recession which hit in 1984. He’s mentioned it before, but he was unemployed for the better part of 2 years. I’ve had long conversations with him and my grandfather about what it was like to live, work and buy real estate through the cycles of boom, bust and recession.

What occurs to me when I meet young people interested in real estate and business in general is there’s a feeling of invincibility. I noticed it when I was still in Canada, but after spending a fruitless four months trying to find a job in Ireland, I have a new appreciation for the situation.

There’s a number of people who I’ve talked to about the economy who (in a typically Irish fashion, but that’s another topic) are both fairly realistic and nearly without hope. As one landlord said to me:

We (Ireland) gorged like pigs at the trough and now we’re paying the price for it…It’s going to be a decade before things get back to something like normal.”

I also met with several people involved with real estate, investing and the financial services industry. One head of an Irish investment fund, which is more active in the UK and Germany than Ireland described the government as bankrupt. Really, it’s not that far from the truth. It’s a financial situation similar to the US, but with fewer options for creating revenue.

I met young people, lawyers, engineers, scientists, business men and women, many with Masters’ degrees, all looking for work. Easily half of the young professionals I spoke with were actively researching work options in Canada, the US or Australia. It’s just shocking how many people, highly qualified, are totally out of work. It’s just strange to me how many tradespeople are out of work, when I think of the severe shortages we saw in Alberta.

The current Irish government just released a budget that makes some significant cuts, but doesn’t seem to create enough growth or movement to help bring the economy forwards. Their property bailout, NAMA (the National Asset Management Act) will be buying assets at 10-20% above current market value and will either be a great success if it stays the course, or be a huge waste of money and warp the property market for years to come. It’s also the only choice, even if it’s not perfect.

What several people have said is this is a more severe problem than any post-WWII recession in Ireland. I think that combined with the economic changes of the 21st Century and membership in the EU, this time will come to be as significant as the Great Famine or the Revolution of 1912.

It’s been an interesting time to be in Ireland, and it’s given me a lot more perspective on economies and the future.

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