B. Mann Consulting

I am new to the internet and I did a search in the search engines on a "real estate blog" and I found your web blog. Let me introduce myself, I am a Halifax Real Estate Agent in Nova Scotia, Canada and I was told that blogs were discussions on specific topics which made me interested in searching for a real estate blog. It seemed like an interesting way to see what trends and technology are happening in the real estate market in other parts of the world besides Halifax. I am considering a blog for myself if I can understand the technology of operating a blog and from what I see I am somewhat hesitant right now even though it was interesting reading.

Respectfully yours
James B. ,

[ Thanks. This spam is excellent. ]

May 29th 2003, The Economist

Your home may be worth less than you think

STILL smarting from losses on equities and a shrivelling private pension? Wait until you see what happens to the value of your house. Far too many people have decided in recent years that, in these uncertain times, the safest investment is bricks and mortar. Real house prices in many places have been rising at their fastest-ever rate. Can this go on?

The answer, as our survey in this week's issue argues, is clearly no. But will house prices flatten or will they crash? The fate of the world economy could hinge on the answer. Since the stockmarket slump, rising property prices have been a crucial prop for many economies. If house prices were now to go into reverse, this could have far graver consequences than did the fall in stockmarkets. Households have more money tied up in property than in shares, and they tend to borrow more. Falls in GDP after previous housing busts have been larger than after stockmarket crashes.

Most analysts still argue that a sharp fall in house prices is unlikely. They claim that low interest rates mean that people can afford to pay more for a home. But real interest rates are not low. If nominal interest rates are low mainly because inflation is low, wages will also grow more slowly, so future mortgage-interest payments will be a bigger burden than in the past.

A second argument deployed by house-price bulls is that previous busts have been triggered by higher interest rates. With inflation so low, interest rates are unlikely to go up now. In the near future, this argument may be right. But both Japan and Germany, where house prices have fallen steadily over the past decade, show that low interest rates are no protection against a decline in house prices. A third popular argument for why house prices can keep rising focuses on supply constraints. Yet this argument too is flawed. Hong Kong is shorter of land than anywhere in the world; yet property prices there have fallen by two-thirds in the past five years.

Bogus arguments puffing house prices higher have led investors mistakenly to ignore more traditional gauges of value. Yet just as share prices cannot for long outpace the growth of profits, so house prices cannot long rise faster than incomes. Looking at ratios of house prices to both rents and average wages, our survey finds that houses are significantly overvalued in 13 countries. The ratios are near all-time highs in America, Australia, Britain, Ireland, the Netherlands and Spain.

None of this means that house prices are sure to collapse; they could just stagnate. But there are reasons to expect prices to fall in nominal terms. In the past, high inflation has allowed overvalued assets to adjust without the need for a big drop in prices. In a world of near-zero inflation, nominal prices are more likely to need to fall. A second reason why a decline in nominal house prices is likely is the growth of the

With recent coverage of the US government allowing commercial ventures to take high-res pictures of the planet from space, I recall one discussing how pictures of the South-Pacific had come across large islands never charted before - sounds like the perfect opportunity for paradise.

I've had a long fascination with surviving on one's own off the land, and the ideal place to do that. Naturally, lots of people think of the South Pacific because of the history of story about being deserted on an island there, surviving on one's own, etc. Christopher Robinson, The Con-Tiki expedition, Fatu-Hiva, and all the other tales of captains, storms, etc. Tom Hanks did a movie about the very same thing, though their coverage of how he survived was really pathetic. Discovery Channel had a show last year of a man who asked to be abandoned to do a show on how to survive in the wilderness, and what it takes. He lived off leaches and snails.

But when it comes to islands in the south pacific, not only can you not buy any of them, but the biggest issue down there is disease, infection and parasites. Fatu-Hiva is a mind-opening read on widlderness survival in a tropical island. It was inhabited by locals, but this Thor Heyerdal (I think that was his name, not too sure about Tor or Thor) and his young wife went off to the island to love by themselves. And sure, they got on just fine, with some help from the natives and the abundance of the island, but after a very short time, within one year, they went crazy with the lack of selection of food. Further, their medical supplies were limited, and although fortunate not to fall victim to parasites, the village faced elephantiasis, tapeworm, and other nasties. Infected cuts, common on the sharp rocks along some of the shoreline, composed of volcanic rock, could be deadly.

So while it might be nice, I would also look for alternatives. I'd consider BC a superb place to escape and live on your own off the land, and we have resources better than any other to do it - the history of native peoples and their crafts. Shoot, they developed advanced societies, let alone survived contentedly, having sophisticated mastery over a variety of arts. You face the same risks here, but you are on a continent, not isolated in the middle of an ocean. Further, once civilization does stabilize, as it inevitably does, your advanced education can be used to re-educate the peoples and build a broader civilization once again, and snap up all the real estate while doing so. ;)

Are we going to discuss saving the world on this blog?