Not so. Over the past ten years, actually when I checked this out it was 1990 to 2000, the average return on a home was about 150 percent. The return on the S&P 500 was 1000 percent. Now which do you think is a better long term investment??
Even as recent as 2003, the S&P was at 800 and now its at 1500 (I'm rounding numbers up). A return of 87 percent over a 3 year span (end of 2003 it closed at 800, the end of 2006 it closed at 1500). How many homes do you know that almost doubled in price over three years??
In 1990, the DJIA was at 2500, today its at 12500. That's like buying a 250,000 dollar home then ten years later its worth 1.3 million dollars. Not real estate market on the planet is that robust.


What about renting the house out ...
wouldn't it then be an even better investment?

If you have 500,000 dollars and you invest it in a 10 percent bond for ten years, you'll earn 50,000 a year and at the end of the ten years you'll get your 500,000 dollars back. (I'm not using precise calculations)

If you buy a house for 500,000 dollars and then rent it out - you'd have to rent it for 50,000 dollars a year to match what you can earn on a bond. That's about 4,000 a month. I doubt you'd find anyone on the planet willing to rent a 500,000 house for 4,000 a month on a long term basis. Even beach houses only rent for maybe 8 months of the year.

What you could do is buy a bond and use the 50,000 coupon payments to live on. It'll also allow you to buy a 500,000 dollar house because the payments won't be 4,000 a month - they'll probably be about 2,000 (if you're getting a loan from a Bahamian bank) - the other 2,000 would be living expenses.

I'm not saying owning a house is a bad idea. But you have to get more information and weigh the alternatives. I guess most people don't have the tools to do this but I'd be careful getting advice from a loan officer who will always want you to buy.

What about the GATT?

Forget Mikki and his housing illusion. I want to talk about WTO and the GATT agreement!!!

YK -- The WTO file was given to Leslie Miller. Fred Mitchell and Leslie Miller were supposed to collaborate, and it hasn't happened.

Mikki: Housing is dropping. Here's a quote about housing from Thursdays Guardian:

Ever the swinging economic pendulum, indications are the housing market has already reached its apex of oscillation. In other words, the Bahamian economy is on the back-swing. Loans for new homes went on a steady slide through the first three quarters of 2006. Loans for existing homes are down from where they were this time last year.

Taken in concert with the International Monetary Fund's prediction of 2.7 per cent inflation, a low surplus of liquid assets in commercial banks and the nearly doubled price of oil, the dwindling housing market adds up.

YK -- The WTO file was given to Leslie Miller. Fred Mitchell and Leslie Miller were supposed to collaborate, and it hasn't happened.
Mikki: Housing is dropping. Here's a quote about housing from Thursdays Guardian:
Ever the swinging economic pendulum, indications are the housing market has already reached its apex of oscillation. In other words, the Bahamian economy is on the back-swing. Loans for new homes went on a steady slide through the first three quarters of 2006. Loans for existing homes are down from where they were this time last year.
Taken in concert with the International Monetary Fund's prediction of 2.7 per cent inflation, a low surplus of liquid assets in commercial banks and the nearly doubled price of oil, the dwindling housing market adds up.


Why no collaboration you assume?
With that why is Mikki thrashing my thread?
He should start his own housing thread....he will not let this one go.
:hammer:

Mikki: Housing is dropping. Here's a quote about housing from Thursdays Guardian:


Thanks for the quote. But I knew housing was going to go down in the Bahamas a long time ago. Waiting for it to be reported is too late. The efficient market theory does not hold if one has the tools necessary to forecast movements in asset prices.

YK2Bad:

I'm like a muslim, hi-jacking is my religion.

Why no collaboration you assume?



My guess is that there is a fundamental difference of opinion. Fred Mitchell wants WTO membership (and CSME) and Miller wants neither.


BTW -- I'm changing my mind on CSME from against to pro (sorta -- still collecting the facts). CARICOM and CSME are getting big breaks out of the EU and big bucks. And with the US in a war and their economy tanking, Europe is getting a stronger economy and throwing a lot more money around.

If you have 500,000 dollars and you invest it in a 10 percent bond for ten years, you'll earn 50,000 a year and at the end of the ten years you'll get your 500,000 dollars back. (I'm not using precise calculations)
If you buy a house for 500,000 dollars and then rent it out - you'd have to rent it for 50,000 dollars a year to match what you can earn on a bond. That's about 4,000 a month. I doubt you'd find anyone on the planet willing to rent a 500,000 house for 4,000 a month on a long term basis. Even beach houses only rent for maybe 8 months of the year.
What you could do is buy a bond and use the 50,000 coupon payments to live on. It'll also allow you to buy a 500,000 dollar house because the payments won't be 4,000 a month - they'll probably be about 2,000 (if you're getting a loan from a Bahamian bank) - the other 2,000 would be living expenses.
I'm not saying owning a house is a bad idea. But you have to get more information and weigh the alternatives. I guess most people don't have the tools to do this but I'd be careful getting advice from a loan officer who will always want you to buy.


I dont think "legally" though we as Bahamians are allowed to buy bonds, or any kind of investment outside of the Bahamas .. not saying that is right though ..

Also, a friend of mine bought a worn down house for I think like $90K, put around $20K in it, though he did most of the work himself, and is selling it for around $200K a couple years later .. its valued at around the price he is selling it for (prices i quoted might not be exact) but he is still making at least $100K on it, and he lived in it for those couple of years too :-)

How long did it take for him to fix the house?? Did he work while fixing the house??

Its hard to believe that Bahamians can't buy into the US bond market, you'd have to go through an intermediary which may cost you, of course. I think its difficult since the broker fees are usually fixed regardless if you buy a 10,000 bond or a 10,000,000 bond. Obviously the return on a 10,000,000 bond would justify the broker fees, but not a 10,000 bond. I think most Bahamians operate in the 10,000 range. But that's where investment groups and mutual funds come in.

How long did it take for him to fix the house?? Did he work while fixing the house??
Its hard to believe that Bahamians can't buy into the US bond market, you'd have to go through an intermediary which may cost you, of course. I think its difficult since the broker fees are usually fixed regardless if you buy a 10,000 bond or a 10,000,000 bond. Obviously the return on a 10,000,000 bond would justify the broker fees, but not a 10,000 bond. I think most Bahamians operate in the 10,000 range. But that's where investment groups and mutual funds come in.


You are allowed to buy into the US capital markets at a limit of $100,000 -- but get this -- you paid a load - a 12.5% surcharge going in (paid to the Central Bank to get you the money to buy it) and you pay another 12.5% going out. This means that you have to make 25% just to break even. Recently the NIB was just buying Bahamian Gov't bonds and the yield is poor so the legislation was amended. They can go out to the US capital markets, but only to $25 million, which is a pittance for them.

What the people have been saying here is true -- real estate is the only viable investment. Those BDR or Bahamian Despository receipts are a shell game -- a corporate finance methodology that gives Bahamians no real equity stake or voting shares.

How long did it take for him to fix the house?? Did he work while fixing the house??
Its hard to believe that Bahamians can't buy into the US bond market, you'd have to go through an intermediary which may cost you, of course. I think its difficult since the broker fees are usually fixed regardless if you buy a 10,000 bond or a 10,000,000 bond. Obviously the return on a 10,000,000 bond would justify the broker fees, but not a 10,000 bond. I think most Bahamians operate in the 10,000 range. But that's where investment groups and mutual funds come in.

Yeah he fixed the house in his spare time, hes in the business anyway, AC, Roofing, etc, got all the tools for his own business. He wasnt fixing it all the time, just did something then took a while before he did something else .. from what I saw anyway. Actually him and his sister lived there, they bought it together, so they have to split the end result. I may be wrong on the sales price though, it could be alot more .. its in Sans Soucci .. I just remember it being alot. I'll get the exact prices tonight and post back.

Sounds like yall are getting e'ffed!!!

I'm certain hundreds of american corporations and individuals have offshore accounts in the Bahamas, whether its for investment, netting or pooling - all tax free and virtually risk free.

I mean, I know the Bahamas doesn't have the economic/policital might to strong-arm users of its tax-free banking services. But this sounds like an honest-to-goodness financial raping. That's billions of dollars Bahamians could be earning.

Sounds like yall are getting e'ffed!!!
I'm certain hundreds of american corporations and individuals have offshore accounts in the Bahamas, whether its for investment, netting or pooling - all tax free and virtually risk free.
I mean, I know the Bahamas doesn't have the economic/policital might to strong-arm users of its tax-free banking services. But this sounds like an honest-to-goodness financial raping. That's billions of dollars Bahamians could be earning.


Tell me about it, I know id invest in a couple companies right now in Canada and the US if I could, and a couple elsewhere .. well actually there are ways around it, but technically I think it is against the law .. :-(

Tell me about it, I know id invest in a couple companies right now in Canada and the US if I could, and a couple elsewhere .. well actually there are ways around it, but technically I think it is against the law .. :-(


Yes, technically it is illegal to invest abroad without Central Bank approval and subsequent payment of exhorbitant forex fees. This is thanks to the Exchange Controls Regime.

However, the government and Central Bank have realised that exchange controls are counter-productive to the country's continued development (although it has served us well over the years) and have begun to take steps to dismantle the system. Hence the ease of using your Bahamian issued bank card and credit card abroad, raising the limit on the amount of foreign currency one can buy without needing Central Bank approval ($10,000 for private citizens and $15,000 for businesses), and the lowering of the cost to purchase foreign currency for overseas investment (15% I think).

They seem to be taking a slow, systematic approach so as to better monitor and gauge its effects and minimise any negative fallout resulting thereof. Hopefully, one day exchange controls will be a thing of the past.

http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm
Well if you look at the chartered members of the GATT/WTO, the Bahamas is not on there.
I wonder why?
Brain drain come straight to mind, but.... anyways.
Seriously now, everyone else is signing on...why shouldn't we?
Seems to be the popular trend for the most part, in terms of International of Trade agreements. Why is the Bahamas on the last place list, with regards to the GATT/WTO?
Not saying that is a bad thing, but hey, it is obvious.
Anyone has any idea as to why...aside from Gilbert Morris. (just in case he is out there watching)
:)
Not quite sure if this should be in the Economic or Political section, but I put it where I think it has more relevance. Our signing on, is political first and then economic second. If you want to talk about the Bahamian position, in world economy as it stands now with no GATT/WTO, we can but I think it would a fairly biased debate. For the mere reason that we would now know, unless we try.
:)


Signing on to the WTO is not an easy, simple task. It requires much negotiations. There is no one set, blanket agreement that all sign onto. Countries must individually negotiate and set their own terms and conditions for entry. As it relates to the Bahamas, a few issues were raised and have yet to be resolved.

Among which would be the status of Freeport (I think this system would be contrary to WTO rules), we would have to change our tax system, and we'd have to probably allow access to certain sectors that are now reserved for Bahamians such as wholesale, retail, and inter-island transport. I'm sure you would agree that none of these is easy to do away with.

Of course each country negotiates according to its needs, so the government would have to be very careful so as to negotiate in the best interest of Bahamians.