In my working day, some of my most rewarding and interesting time is spent answering questions from real-estate investors and would-be investors.

There’s not much I haven’t heard before the inevitable “what do you think?”

There is, of course, one big constant, question: when will the market crash? I invariably reply, “Feb. 28, 2005, 3 p.m. precisely” . . . I mean, what an imponderable.

There are questions that I can attempt a reply. “Is there a ‘bubble’?” (I don’t see one, but I am seeing some very poor “fad” deals).

“Where is inflation going?” (Higher!).

“Isn’t mortgage debt too high?” (Yes, but only because we increased the national percentage of homeownership seven per cent).

“Are people still able to pay their mortgage?” (Yes, because of lower interest rates debt/payment ratios are the same as in 1993).

“Which market is good to invest in?” (The one in which you negotiated the best deal for yourself.)

“Is it over?” (No, it is never over!)

I am convinced the reasons for all the questions are clear: The world is an ever more confusing place. Every year it seems to get a little nuttier.

Consumer debt seems to be soaring, stock markets crash and recover and even real estate investments, seemingly the only safe haven, now begin to worry the “yeah, but-ters“- again. I mean . . . could it continue, would it not collapse this time?

Of course, a careful study of economics usually reveals that the best time to buy anything is last year. And while funny, that is really where I would like to direct your attention. The past.

The average price for a single family home in Vancouver was $13,500 in 1961; $48,000 in ’74; $120,000 in ’82; $180,000 in ’88; and $250,000 in ’92. It is $475,000 today.

In other words, a five-per-cent down payment ($655) in 1961 would generate $474,355 in proceeds, on the sale of that average home. Tax free!

These price increases have occurred around the world — or, in those parts of our world, in which people want to live! (You can still buy a $1 lot in Shell Lake, Sask. And I am certain that there are some choice cheap plots in Siberia too.) But where people want to live and play, real estate values have soared. Soared? Soared!

But only in relation to our ever inflating dollars. The availability of money, the ease with which we can get it is the determining factor … and will be so in the future.

It is just harder to imagine today’s dollars (which seem so real to us) depreciating as much. But imagine if you were back in 1961 in your $13,500 home … could you have imagined a doubling in price … ? Or a 10 fold? A 20 fold? But this is precisely what happened.

Actually, you don’t have to go back that far. Close your eyes and imagine it’s the year 2000. Could you, then, imagining condo prices in Yaletown rising from $100,000 to $190,000 in two years Or the average single-family home in in North Vancouver rising from $320,000 to $460,000?

So, don’t worry, be happy, prices will rise . . . as long as there is excess creation of money and easy access to it.

And is there excess money? Yes! The U.S. created one trillion more dollars last year and prices for hard assets are soaring worldwide. In the U.K., for example, nine homes a day – a day! – sell over there for more than #1 million pounds, The London Telegraph report.

Will it continue forever? Of course not. No market ever goes up in a straight line forever.

That is why the individual investor should be concerned always with the immediate transaction that’s on the table, understand his or her motives and have an exit strategy.

So, what does worry me? Higher interest rates are one worry, although less so now that the Alan (Easy Money) Greenspan has had his chairmanship of the U.S. Federal Reserve extended.

Downtown condo-conversions worry me. Time shares, leased land, people who don’t do their research worry me.

But I am not worried about the astute investor looking to buy, with little to put down, in a good town — Abbotsford and Langley, Cloverdale and Chilliwack, Nanaimo and Cumberland, Parksville and Chemainus – towns which attract people . . . or tenants who pay off the mortgages over time.

There is nothing like creating unearned passive income. Nothing. It creates a self- actualized life.

As I wrote here a few months ago . . . if you can find five condos in B.C. and Alberta . . . that are selling without a down-payment requirement or with a small requirement . . . and you can . . . just five condos that pay you $800 in rent each month . . . you can own them in 18 to 20 years . . . .and with that $4,000 per month income you can pay off a million dollars.

And guess what, it matters not whether values went up or down.

Plan for unearned, passive income in your real-estate investments. Pursuit of that kind of income forces you to make the right decisions.

And don’t worry. The only statement I have consistently heard every year for 35 years: I wish I bought five years ago.

© The Vancouver Sun 2004