Always Follow The Money

It seems that we’ve come to live in a world in which the general public expect and assume without really knowing or understanding. A world dominated by top level corporations making closed-door deals with unnamed men and businesses. We watch the news and in one segment see the world’s markets crashing, and in the next, see Apple (AAPL) has made $13.1 billion in profit. It’s as if our incredulity is a key factor in big business getting bigger, while we stay the same (or shrink). There are a lot of reasons why it has come to be this way, but the biggest (IMO), would be the fact that we do what we’re told. We go to work, we pay taxes, we take a holiday once a year and we treat ourselves to the occasional goodie that we can’t really afford.

In Vancouver, the biggest financial stressor of them all is real estate. Whether you own, rent or dream; the fact is that rising prices put pressure on us all. The news won’t stop talking about it, and dinner parties revolve around the matter. For me, if there is a topic so widely discussed and argued from both sides of the fence for such a long period of time – it can only mean one thing. Either there is no ‘right’ answer, or nobody has bothered to find out. For we Canadians, it’s the latter, as proven over and over by our zealously lack-luster Minister of Finance. Not only do we in Canada not know how many of our homes are sold to offshore buyers, but we don’t keep track of many of the key factors that seem to be playing ping-pong with property prices.

We all know the anecdotes about the influence that Asian money has on Canadian real estate, but what good is that when hard facts are absent. Yes, China’s economic performance affects us, but by how much, and what are the cycles? This is the type of information that we need in order for policy makers to put useful policy in place. Without this, we’re letting the speculative nature of real estate investment determine the outcome, and it’s driving us all insane. Now don’t think this is all targeted at China. As recently stated in the Globe and Mail, “In Toronto, Russian and Iranian buyers, flush with cash, are snapping up condos. In Vancouver, Chinese investors are buying luxury apartments. In the Maritimes, wealthy Americans and Europeans are acquiring coastal vacation property.” It seems to me like a foolish move to not know the source of your success. Especially when that source has the possibility of also being your demise.

So what can you do? When it comes to the topic of finances, I always look to the Chinese for advice. They’ve managed to do in 10 years what the rest of the world did in 50. They make money, manage money and invest money like no other. And what is the key behind their success, you might ask? They follow the money, and I’m talking BIG money. The Chinese government is one of the largest overseas investors in the world and it is the source of inspiration for the majority of Chinese investors. The Chinese government invested in overseas resources and mining, and that year, hundreds of millionaires in China started popping up doing the same. The Chinese government threw money (using SOE’s) into overseas real estate developments and infrastructure, and even here in Vancouver, we felt the impact. This was followed by a huge influx of money being brought over by individuals looking to ‘develop’ here as well.

So I guess the point to all of this preamble is that, until the Canadian government gets their act together and starts keeping track of stats that really matter, you should do what the Chinese do. And right now, that means planting your property foot in the sweet soil of the Albertan prairies.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>