China continues to pump the Brakes

11-Feb-2011 | Reggie | Asia Canadian Investing Commodities Real Estate

State capitalism in the People’s Republic of China means that what China wants for their economy they can get.  Right now they want to slow things down and keep inflation under control.  The latest policies instituted by the government are designed to do just that.

As China continues on its path of growth, millions of people are joining the ranks of middle class.  The country is rapidly moving towards all our urbanization as people flock away from villages and farms towards cities in search of higher paying construction, industrial, and technological jobs.  As billions of dollars get created and spread to the general Chinese population the inevitable surge in demand for consumer products and the new found ability to own property has resulted in sky rocketing prices.

In order to put a stop to these rapidly rising prices, China has been busy.  They have been busy mass producing housing to increase the supply of low-rent housing available, as well as adding new taxes and restrictions to curb the purchasing of properties by real estate speculators.  Interest rates of been increased again and again.  With these deterrents all in place, it shouldn’t be long before prices correct.

With the Chinese economy being largely state controlled, its hard to say what exactly the fallout of the decision will be.  If panic selling were to set it, it could certainly set forth a domino affect that would surely be felt here in North America.  However, the Chinese economy has been incredibly resilient when it comes to growth.  If the government wants more construction it will get it, and if the government wants to slow things down, it will eventually get that too.

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

No Comments

Real Estate Goes Down

18-Aug-2010 | Reggie | Economy Real Estate

For nearly the past 10 years, real estate has been a go to investment for many Canadians.  Many thought the stock market to be too volatile, unpredictable, and risky and opted to invest their savings into commercial real estate deals or 2nd homes to be rented out.  This worked out quite well for a few years as prices across Canada and especially in Alberta shot up as the economy boomed from the early 2000s up until the market crash of 2008.

 

For the past couple years investors in real estate have gotten a few buckets of ice water splashed on them.  With the economy cooling off for the time being, many real estate projects have been stopped dead in their tracks.  Where it was nearly impossible to find commercial real estate 3 years ago, now there are dozens of un-occupied buildings looking for tenants at reduced prices.

 

On Monday, the National Post reported that housing sales were down 30% in July from a year ago and prices were down nearly 7% from the month prior.

“With homes sales down 30%, that’s surprising. I was expecting a drop, but nothing that big. I think prices are next [to decline] although they are holding their own now,” Prof. Andrew said.

“Thank goodness rates are as low as they are. If we were seeing significant increases in interest rates, it would disastrous for real estate prices,” Prof. Andrew said.

The situation is far from dire, but goes to show that real estate isn’t all sunshine and lollipops.  Like all investments, real estate is dependent on the overall health and well-being of the economy as a whole.

 

For those who don’t have hundreds of thousands of dollars to invest in to 2nd homes or commercial projects, a great option can be Real Estate Investments Trusts or REITs.  REITS are publicly traded companies that own real estate.  Most own commercial properties which are then leased to tenants.  Rent then flows through back to the investor in the form of dividends.  There are many of these that allow investors to own a well diversified portfolio of properties while receiving regular and fairly substantial dividend.

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

No Comments

Competition Bureau takes a jab at Realtors

25-Mar-2010 | Reggie | Real Estate

Real Estate is huge business.  For most Canadians, buying a home is the first and biggest investment they will ever make.  When shopping for a home, most opt to use a realtor.  They do an excellent job of helping you find something that suits your individual needs, such as location, style, and price range.  They network well with each other using Multiple Listing Service (MLS) to let each other know what is for sale.  Unfortunately for buyers and sellers, realtors don’t want to give up access to their listing site, or how they charge for the use of it.  They want it to be exclusive to realtors (who often make commissions upwards of 5% – in Alberta, the average detached house is worth $343,000)

The good news is, the competition bureau sees a problem with this.  Not allowing individuals to post their own listing, or even licensed realtors to post the listing for a flat fee is completely backward to the way the rest of the world has been moving.  In the world of the stock market there has been a sharp turn towards the use of online brokerages where investors can make their own decisions for a fraction of the cost most licensed brokers.  You don’t get the advice you would from a broker, but you have the free choice to make the purchase.  In response to this, most full service brokerages have lowered their commissions and began to offer flat fee accounts that can save active investors a significant sum.

In response to the motioning made by the Competition Bureau, the Canadian Real Estate Assocition (CREA) has gone on the defensive.  The head of the CREA, Georges Pahud argues that realtors offer a valuable service (a point which is quite easy to accept), and that “You can’t get something for nothing… People need to be willing to pay a fair price for their choices and, in Canada, we are lucky because we have choices.”  I agreed with him until the last part about choice.  To me, choice would mean having the option to pay a realtor a flat fee, or being able to list the house yourself online.

I hope the Competition Bureau succeeds in their goal to open up the MLS service or atleast allow agents to charge a flat fee for its use.  Having true competition is a great way to get the best service.  It insures that the agent will go above and beyond what is expected to show the value that he or she charges for.

This blog has been prepared by the Retire First Team. The blog expresses the opinions of the writers and not necessarily those of Retire First Ltd. Statistic and factual data are from sources Retire First believes to be reliable but their accuracy can not be guaranteed. This blog is furnished on the basis and understanding that Retire First is under no liability whatsoever in respect thereof. It is for informational purposes only and is not be construed as an offer or solicitation for the sale or purchase of securities. Retire First Ltd. And its officers, directors, employees and their family may from time to time invest in the securities discussed in this blog. This blog is intended for individuals where Retire First Ltd is registered as a dealer in securities.

Retire First is a member of the Canadian Investors Protection Fund.

Commission, trailing commissions, management fees and expense all may be associated with mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. A recommendation of any of the mentioned investments would only be made after a personal review of individual portfolio. Third Party research has been used in formulating the writer's opinions.

1 Comment