Tuesday, 22 May 2018

20 years in the rear-view mirror..................from Rico

Investments as good as Gold?
The last several decades have been 'interesting' financially, to say the least, and they provide some perspective for today.
- Especially when we see how US home prices are UP +53% since 2009. So real estate is a good investment, right?
- But what we're not told is that the Dollar has lost 80% of its value vs. Gold since 2000. But dollar-priced assets are better to own than Gold?
[Think in terms of the stellar 'performance' of the Zimbabwe and Venezuelan stock markets at the same time their currencies collapsed. Are stocks, gold, and real estate going UP in value OR is the purchasing power of currencies dropping?]
 
Taxes. Inflation. Debt.
Now, in the context of individuals being squeezed by taxes-inflation-debt, and given that rent is becoming more expensive as their relative purchasing power declines, I'd pay some attention to the Canadian real estate market.
 
Supply and demand...and the ability to pay.
What has happened in Canada can happen in the US...and Japan, Italy, and well - globally [think: massive global debt to GDP]. What cannot be paid back, will not be paid back.
 
Toronto 2017. When rents fall, home prices fall. This is what happened to property values last year as rents dropped:
- detached homes -38.4%
- semi-detached homes -29.5%
- townhouses -22.1%
- condos - 26.0%



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