Edmonton Real Estate Investor: April 2007

The Edmonton Economic Development Corporation (EEDC) issued a news release that Edmonton received three "Cities of the Futures" Awards.

"Edmonton has the best economic potential of any large city (500,000 - 2 million population) in North America according to an independent index published by Foreign Direct Investment magazine (FDI).

This strong economic potential, combined with growing infrastructure, good human resources, cost effectiveness and a high standard of living has resulted in Edmonton also capturing the No. 4 spot on FDI’s list of top-10 North American large cities. Edmonton has the added distinction of being the only Canadian city to appear on the top-10 large cities list."

Click Here for Full Article

Awards, breaking records, leading the country economically, I hope this doesn't go to the city's head. If I knew anything about hockey this would be the perfect time to insert a hockey joke.

The EEDC has a lot of excellent information on Edmonton and its economic, well, development as the name implies. Take some time to look around the site it is user friendly and comprehensive.

Rob Carrick my new hero. His article is up there with my last post from economist Paul Krugman.

Click Here to read his outstanding though stock heavy article on why Alberta's boom will not go bust.

Alberta oilsands area is as rich as the middleast but with more diversity. In fact economists say that "diversity preferable to oil sheikdom"

"The oilsands are as if we had suddenly discovered a new major Middle Eastern oil producer, which... is not actually in the Middle East. It's a wonderful thing," Krugman told the luncheon audience.

However, he added, a diversified economy is much more preferable for Alberta's future development. "You do not want to become an oil sheikdom."

Krugman believes the current oil boom - unlike previous ones in the 1970s and 1980s - is sustainable. This time, the oil price surge is not due to production cutbacks or restrictions, he noted, but rather demand from countries such as China and India that is based on real needs."

The economy is sustainable and the economic fundamentals are very different from those in the early 1980s. Alberta's economy now is unbustable.

Alberta's boom and subsequent labour shortages are slowing down attempts to improve Edmonton's stressed infrastructure.

"Potholes half a metre across and 10-cm deep are a nuisance on any street, and when they started dotting a major Edmonton corridor driven by more than 120,000 vehicles a day, the city started to act"

Edmonton's road department secured funding to fix the stretch of Whitemud Dr., then put the project out for tender and waited.

For the first time in history, there wasn't a single bid, said Joe Kabarchuk, director of roadways construction: "We were shocked."

If you are a contractor or skilled labourer you are sorely needed out west. The money is there but there is no one to pay it to.

"......we're going to add about $3.6 billion in new projects on top of the record number of $170 billion that is already out there," said Bill Stewart, association vice-president.

"So we're going to have to get some people to build all these projects."
Edmonton Sun

Canadian national resale housing activity hit a record high in the first quarter.

"National resale housing activity reached the highest level of any quarter in the first quarter of 2007, with a seasonally adjusted total of 129,219 homes sold in Canada during the period, according to the Canadian Real Estate Association."

Guess who led the pack?

"New quarterly records for activity were set in Alberta, Saskatchewan, Manitoba, Quebec, New Brunswick, Prince Edward Island and Newfoundland and Labrador, while sales activity in Nova Scotia also reached its second-highest quarterly level."

I feel like I have been cutting and pasteing this entry every 3 months!
Click Here To Read More

I'm pretty benevolent about taxes. I think they are inescapable and thus should be borne as well as possible. Taxes rise on properties because property values rise.

"Homeowners will be hit with a property tax hike of nearly 7% this year, after the increase was approved yesterday by city council."

"That's huge, huge dollars," said Scott Hennig of the Canadian Taxpayers Federation."

Edmonton Sun

People tend to react to taxes negatively but I use them as a marker of how well I am doing financially. The more I am paying the more I must be earning/making. Don't get me wrong I don't love taxes but I understand their role in my financial house.

Like Kiyosaki says "Tax Avoidance not Tax Evasion". Pay your taxes smartly get the best accountant you can find who is suited to your individual needs. We have had 3 accountantss over the last 7 years as our company grew and changed focus.

Property values went up 52% last year, of course the government wants a piece of that!

Alberta Canada's economic wonderland is helping revitalize a dying Texas town. Alberta is a wonder province - look what it did to Saskatchewan real estate prices. Thank You Oilsands.

"The Lone Ranger rides again in Texas -- but this time with Alberta playing the hero in a real-life economic drama of rescuing jobs on the high northern plains of the Panhandle." Edmonton Journal

Found this article in the Edmonton Sun online. I have never seen this house but imagine living next door:

"One year ago, Capital Health declared the handyman's nightmare "unfit for human habitation."

Among the 29 reasons cited for the condemnation: no siding, no furnace, no running water, no stove, an exposed attic, a basketball-sized hole in the roof, cracks in the foundation, water infiltration with resulting mould in the basement, and human feces in the backyard due to an unflushable toilet.

"Once they couldn't use the toilet anymore, they were dumping (fecal matter) out in the backyard," environmental health officer Chris Rolfe told the Sun last summer. Edmonton Sun

Here we go stability without stifling the market. One year's notice for a condo conversion is a little long if you are an investor looking to do flip out condos you will have to budget for that year. This will definitely help slow down the market.

"The Alberta government is changing some of the rules governing rent hikes, but won't go as far as implementing rent control, Housing Minister Ray Danyluk announced Tuesday.

Under changes to be introduced in the legislature, landlords will only be allowed to increase rents only once a year instead of twice.

And landlords wanting to kick a tenant out to do major renovations or convert a rental to a condominium will have to give at least one year's notice and won't be allowed to increase the rent during that time.

Even though there is no cap on what the rent increase can be, Danyluk said he isn't worried that renters will get gouged.

"I don't believe that it's going to jack up the price, but it gives some stability for the renter to know that he does have stability for an extended period of time."

By 2010, the provincial government will also introduce a province-wide program to help landlords and tenants resolve disputes outside court, Danyluk said." CBC News

"Every renter in Alberta is in danger of being gouged because of the Conservatives' refusal to protect them from huge rent increases," Martin told a news conference. "This government has chosen to listen to the interests of the big landlords and real estate investment trusts like Boardwalk rather than those of ordinary Albertans,..." NDP MLA Ray Martin Edmonton Sun Opinion Kerry Diotte

I'm just not feeling it. Of course the newspapers are on and on about the evil "Big Landlords" who are raising rents $500 a month, twice a year. What about the last 3 or 4 years when rents were next to static with little or no rental increases? The rents are finally catching up to the market, a market that did a 52% increase last year and 16% so far in 2007. Many properties still carry negative cashflow.

The Alberta Affordable Housing Task Force decided to not enforce rent control because in the end it doesn't work. It stifles new building and in the long run reduces rental units available.

"However, Mike Chopowick, of the Federation of Rental-Housing Providers of Ontario, said rent increases are often the result of costs, like utility or maintenance costs, that "are beyond the control of landlords."

Rent controls for Alberta, he said, "are certainly ill-advised at this time. It looks like a knee-jerk reaction."

Sorry I am a little late on this one. The federal government passed a bill to lower the mortgage downpayment requirement to 20%.
"The new legislation within Bill C-37 affects all mortgages or loans on residential property and requires that borrowers carry mortgage default insurance when the loan-to-value exceeds 80 per cent. The previous 75 per cent maximum loan-to-value had been in place for 40 years."Source RBC

This will really help people in overpriced markets. Take Vancouver where housing affordability for a two story home is at 73.5% of local median household income that 5% will make a difference in the outrageous amount new home buyers must save to get into the housing market. No wonder the cottage industry over there is grow- ops in the basement. How else could anyone afford a house?

Yesterday was my day off so my husband and I went for a bike ride to see a Surrealism exhibit at the Tochigi Prefectural Museum. I remembered I don't like surrealism except for Salvador Dali.

On the way there we stopped at an open house by one of the largest home builders in Japan. Seikusui House (pronounced "sexy house"). So for a 1290sqft house we were looking at $400,000, granted it was near the university. This is a suburban area where the houses are jam packed; I mean the neighbour coughs and you hear it. This price is reasonable because it includes the land and it is in a semi-rural part of japan. By semi-rural I mean 1 hour by bullet train to Tokyo.

So when I think of homes in Canada or America with gorgeous lawns, big backyards and big square footage for the same price it is a real reality check. I know, I know I am generalizing.

One nice point is Seikusui house gave us a present just for looking at their homes. We got some kitchen and bathroom wet naps and a dishcloth. Nice!

Ron Hutchinson, executive VP of the Edmonton Real Estate Board, is demanding an apology from Mayor Stephen Mandel. Hutchinson wrote a letter to the Mayor expressing his disappointment in what he feels is a personal attack on Realtors by Mayor Stephen Mandel.

"He defends the board's stance as "an opinion on the tax issue, not a personal attack on Mayor Mandel......"

Mandel is getting a lot of heat from his new property transfer tax and when asked if the tax would hurt housing affordability he replied,

"I don't see them discounting their commissions."

Ouch! That especially smarts because Travis Holowach's comfree.com, the do it yourself home sales site, is taking more and more house sales away from board realtors.

Just stay home and buy the DVD.

The mayors of both Edmonton and Calgary, the Alberta Urban Municipalites Association and the Alberta Association of Municipal Districts and Counties have put forth a report with a list of new and unusual taxes.

"Not only have the big city mayors dreamed up a horde of new taxes - including their own oil and gas royalties (they call it "raising the necessary revenues from resource utilizers") - they want the Tories to set up "formalized regional agencies," that will have the power to "address cost and revenue sharing issues."

"Already on the list is a concert and hockey ticket tax, a hotel tax, a vehicle registration surcharge, jacked up development levies and charging resource firms "economic rent."....."
Neil Waugh Edmonton Sun

The thing that makes Alberta special is that it is doesn't follow other provinces. Low taxes, leaders who fostered entrepreneurism and not following the rest of Canada is what has made the province the world model it is today. Now is not the time to change that.

Alberta is expected to reveal it's biggest budget ever, $33 Billion over three years, which will be dedicated to the provinces infrastructure.

"The money will build and fix roads and schools and finance construction projects in Alberta, which has seen 100,000 newcomers arrive in the last year to join a roaring economy driven by soaring prices for oil and gas." Oilweek

With the province bursting at it's seams and more and more newcomers expected and desperately needed to fill the labour requirements of the oil sands, it seems a prudent action.

EDMONTON Real Estate Board is rallying against a proposed property-transfer tax. EREB has concerns that the new tax will reduce affordability by increasing the cost of an average Edmonton house by $4,000.

The Minister’s Council on Municipal Sustainability, released a report last month which recommended that the province authorize municipalities to collect six new or expanded taxes and levies including a property-transfer tax. This proposed property transfer tax is still in discussions so the tax rate has not been decided.

Carolyn Pratt of EREB has anticipated the tax at 1%.

“This is a home-buying tax,” EREB president Carolyn Pratt said today in a news release. “It is patently unfair to ask home buyers to pay for municipal services which would benefit the entire city.”

Mayor Stephen Mandel, a member of the Minister’s Council, said he would support such a tax for Edmonton.
“We’re trying to find ways to take pressure off the property-tax payer...”

Economist Mel McMillan said such a tax may not affect prices as it would be the seller responsibility.

“Normally, prices are negotiated to the maximum that the buyer is willing to pay.”

"The next 20 years will not look like the past 20 years in terms of growth," "Don't get trapped into where we are now, but look forward to the key drivers of trade," "There will be recovery and the response from trade will come quickly." Chris Holling, executive managing director, global trade and transportation advisory services, IHS Global Insight.

To all the people who are affected by the Virginia Tech incident. Please know our Best Wishes and Deepest Sympathy are with you.

Royal Lepage Real Estate Services released a poll today indicating that more and more women are buying and repairing their own homes. Some 30% of single never married women and 45% of divorced, seperated or widowed women are homeowners.

More younger women plan to buy their own homes rather than rent. They aren't waiting for Mr. Right to buy a home with. They also say they would forego a large wedding reception to have a bigger downpayment to put on their first home.

The poll gives regional information for Edmonton:

"Edmonton has experienced an increase in women buying real estate on their
own over the past five years and a steady rise is anticipated to continue.
Women are entering the housing market for several reasons and with different
needs: first-time homebuyers are typically 25 to 35 years old, well educated,
and are looking for a condominium or townhouse that offers security and a
maintenance-free lifestyle. Popular areas for this cohort include the District
of Oliver, Riverdale and Rossdale - attracting buyers in the price range of
$285,000 and up. Professional women looking to trade up or divorced women
entering the market have equity from their previous home. This group tends to
favour single-family dwellings in an established area such as Laurier Heights,
Stratchcona or Parkview, or conversely look to some of the brand new areas
such as Gloustenbury or MacEwan. Buyers aged 50-plus typically spend in the
range of $250,000 to $450,000."

For more specific regions Click Here

In the east the housing prices may be leveling off but in the west there is a whole different market.

"CIBC senior economist Benjamin Tal said the gap between the west and the rest of Canada is so pronounced that there really is no such thing as a national housing market.

“Once you take the west out of the picture you see the levelling off in prices,” said Mr. Tal.

Click Here For Full Article

Edmonton once again leads in residential sales for Canada West. March was a record breaking month.

"The biggest percentage gains continued to be primarily in western cities. Edmonton's year-over-year price appreciation of 47.8 per cent leads all cities. Saskatoon's price gain of 28.2 per cent and Calgary's 27.6 per cent rounded out the top three."CBC.ca

The great thing about Edmonton is that prices will continue to rise due to the labour needs (among other things) of the oilsands - more people coming to look for a limited supply of housing. Edmonton also has an undervalued residential market. It may slow down this year but that only gives us a breather to get more great properties for our investors.

Don R. Campbell the best selling Canadian real estate novelist, analyst and instructor has labeled the Kingston-Waterloo-Camberidge area of Ontario as "the economic Alberta of Ontario".

His research is based on 13 key factors:

"He looks at whether the average income and population are increasing faster than the provincial average, if there's more than one major employer, and if major transportation improvements are in the works. The $400 million-plus Red Hill Valley Parkway in Hamilton that's due for completion this year fits with that criteria, he said."

"Transportation drives future value more than just about any other factor," Campbell said. "Distance isn't the issue, it's time. No one says I'm 12 kilometres from Toronto, they say I'm 30 minutes from Toronto. It's about shrinking the commute." Full Article

If you are interested in investing out East then look to this area but remember Alberta is still leading the country.

EREB the Edmonton Real Estate Board puts out quarterly and monthly statistics for the Edmonton. You can get this information from the website directly. The is a lot of data there that is useful for example the quarterly stats has average residential selling prices dating back to 1967.

It is funny that old school refers to rap and rap refers to talking and talking refers to word of mouth. For me old school is Run DMC and Beastie Boys - generation gap? W.O.M is a three letter acrynom for the oldest form of marketing, ever. Like when Thag told Urg that the hunting was really good upstream rather than in the plains or vice versa.

Do you remember when people told you about how good the bread was at Johnny's Bakery or how Tom down at the garage gives free tune ups if you fill up on a Sunday? I do. However I also know that print, t.v, radio and internet kinda blew the focus off of WOM marketing for a while. Contrary to the compounding of the Double Mint twins, why only tell two friends when you can broadcast to millions via radio or T.V or 100's of millions online.

Of course blogging is excellent and links make or break a website, but what about a handwritten letter to 10 customers to say Thank You? Spike Jones suggests this in his blog entry "Word Of Mouth Training Wheels"

In Japan we send out cards or gifts at the beginning of every season to say Thanks to our customers, and that we want their business this coming spring too.

Retro? Maybe. Effective? Definitely.

The cherry blossoms have finally fallen off the trees. I personally find this time a little sad. I know I know, fresh start, spring has begun etc...

Really, though, when they are in full bloom it reminds me of an Akira Kurosawa film I saw when I was 17. I believe it was Dreams. There was one scene it was fantastic with all these beautiful kimono clad women walking under beautiful mankai (full bloom) cherry trees. Leaves fluttering down like pink snow.

Anybody in business needs to do marketing and if you are online you need to learn about web marketing. I have signed up for an excellent marketing newsletter Marketing Profs. It really has a lot of good web marketing info, research and ideas. I can always find some good nugget improve my blog or website.

My cat just brought home a skink and in my attempt to save it I let it loose in the house. It is under the fridge, any suggestions? At least it is still alive though. I don`t mind picking them up if they aren`t mangled.

Internationally Canadian starter homes are a bargain compared to other major city centers. Edmonton fares well at $322 per square foot, about the 10th ranked.

"..But not only do first-time homebuyers who work in the downtown business districts of Canada’s largest cities generally pay less per square foot for their homes, they also tend to enjoy shorter daily commutes than their peers in cities around the world.."For The Full List

Edmonton residential prices have increased 16.5% since January. Unbelievable. As usual no signs of slowing down. The city is still affordable, prices are still rising and it is still no.1

“Edmonton is still affordable compared to Vancouver, which has an average of $590,000,” said Pratt. “(Edmonton is) certainly not in that range yet.”
She said she expects the increases to continue, especially through the busiest months of real estate, which are April, May, June and July. The market will then likely stabilize for the remainder of the year, she said. Carolyn Pratt, president of the Edmonton Real Estate Board (EREB.)read full article

Edmonton the oil rich capital is shrugging it`s cowboy image, unless of course you are thinking of Broke Back Mountain (which was actually filmed in Alberta). I was recently reading a travel article The Out Traveler: Canada's Top 5 gay cities and Edmonton ranks number 4.

"A fresh crop of smoke-free gay and lesbian bars and clubs teems with life in the burgeoning gay village of Jasper Avenue, a two-block area with half a dozen gay businesses. Staff shirts in Prism proclaim good girls go to heaven; bad girls go to Prism, although as it's the only girl bar in town, it seems all girls go to Prism."

Edmonton is a young and bourgeoning city that is slowly changing its image, where Calgary was always seen as hipper, cooler and white collar, Edmonton is constantly diversifying and reinventing itself.

"Let the herds kick up a ruckus about Calgary; bold, assured Edmonton gallops way ahead, leaving the rest of Alberta in the dust."

When I was a crazy teenager I used to tell my cousin all the stuff I would get up to. She would hold up a fork close to her eye and peer at me to see, "How you would look behind bars".

I can pretty much guarantee that no one looks good behind bars so take heed.
Mortgage fraud is rampant. Don`t lie on your mortgage application.

The banks don`t care who told you it was okay to write what. Just tell the truth. It is a crime and if you get caught there will be a lot of grief especially if you are the strawbuyer (basically the person who submits the false loan application) If your investment partner says it is okay to do something that you feel is not up and up re-evaluate your relationship and seek independant legal advice.

Read How Police Are Cracking Down On Fraud And How YOU Can Avoid Being A Victim

I want to talk about a movie I saw last night. Probably everyone in the Western Hemisphere has seen it already but I am in Japan that means we are just getting "The Departed".

Have you seen Invincible? A Walt Disney football success flick starring Mark Wahlberg or as anyone in my generation knows him Marky Mark. Basically anything with Marky Mark and/or football is a sure rental for me.

The movie is based is the true story of Philidelphia native Vincent Papale. In the 1970 the 30 year old bartender entered the open tryouts the Philidelhia Eagles had, and made the team. He then went on to play 3 seasons with the Eagles and make some pretty amazing plays.

This isn`t a movie blog so I will get to the point. All these sports success movies are generally the same.

Fx(succes movie) = Some girl/guy + incredible odds + laser beam focus
__________________________________________________ = Success
(n)2 (n =challenges)

I had to take calculus twice in college so that may be gibberish. There you have it, the formula for success. All success. Forget the lottery, forget rich old husbands/wives, forget overnight millions THIS IS IT.

A regular person works hard has some mishaps, some setbacks and just keeps on trucking with laser beam focus. I recommend this movie to anyone, anywhere trying to do something out of the ordinary or big with their life. It is inspiring. Plus Marky Mark wears football pants....teehee

Unlike B.C and Ontario there are no government enforced rent increased guidelines in Alberta. Landlords are free to raise their rents as much as they like every six months. These rent hikes are important to make the property investment work, of course most landlords work with integrity and raise rents in reasonable increments.

"....a young family facing a total rent increase of $375. They faced a hike in December and one that's coming in June. They'll wind up paying $1,175 for their north-end condo, a full 50% of their take-home pay." Kerry Diotte

However, after a 52% increase in real estate prices last year, the rents MUST increase, sometimes drastically, to make investment properties work. It is next to impossible to find a property that will give you positive cash flow, but most investors are aware that Edmonton is a capital gains market.

For Example:

"Realtor Stan Gallant tells of a recent example where a six-suite apartment unit in the Ritchie neighbourhood recently sold for $775,000. Rents currently bring in $46,000 annually.

But the new owner must pay out $50,000 per year on a mortgage, $3,500 in taxes and utilities and $8,000 in maintenance costs.

In order to get a small return on his investment the new owner is being forced to increase total annual rents to $77,000." Kerry Diotte Edmonton Sun

Once you factor in mortgage, insurance, taxes, repair and maintanence and all the other expenses a good investor takes into account you are left with massive negative cash flow. Money flowing out of your pocket and into a crocodile property.

I don't want old ladies and young families out on the street. I also don't want to ask my investors for $400 a month negative cash flow to cover the solid investments we go into.

The Edmonton Real Estate Board released their findings for the first quarter of 2007. The price of single family dwellings increased 6% in MARCH.

“It is clear that housing prices have not yet peaked in the Edmonton area,” said Carolyn Pratt, president of the EREB. “The spring season is always very active for REALTORS® and we do not anticipate that the pace of price increases will slow until early summer.”

Fraud is on the rise and yes it could happen to you. The Alberta police force gave some tips on how to avoid internet fraud.

They are as follows:

* Be cautious when you go on the Internet - if an offer sounds too good to be true it probably is.
* Keep your online bank password secret and change it often.
* Look for the 'lock' icon in your browser. This means that you are conducting a secure transaction.
* Be wary of e-mails requesting your personal information.
* Use good anti-virus, anti-spyware and anti-spam software. Use a firewall.
* Read the privacy policy of web sites you visit to see what kind of information they collect about you.

Since the real estate market is so hot right now, mortgage fraud is also on the rise;

"Many Alberta residents have been lured by promises of big returns and have become victims of mortgage fraud. Many bought properties that had overinflated values as a result of a series of fraudulent transactions, which resulted in victims facing huge financial losses and compromised credit ratings."read article

Here are some ways to protect yourself against mortgage fraud:

* Contact your local real estate board to ensure your representative is a licensed real estate agent.
* Ask for a comparative market analysis of the property.
* Ask for a copy of the land title.
* Insist on a home inspection of any property you are planning to purchase.
* When you make a deposit, ensure your money is protected by being held in trust.

In all cases just do your due diligence. Our company offers referrals from past clients, insists our partners get independant legal advice and operates with a high level of transparency in our business dealings. As REIN members we sign a pledge to never operate in the "GREY AREA" that boils down to working with integrity.

Apparently there are a lot of shy millionaires in Edmonton. Edmonton - long known as the blue collar city is catching up to Calgary's white collar wealth.

"Compared to Calgary, Edmonton's wealth seems to be quiet and not as ostentatious," said Jon Hall, Edmonton Real Estate Board spokesman. "In Calgary, I would suspect people are buying homes a little more aggressively and they're more outgoing with their show of wealth." What`s a Million?

So far this year nine $1 million dollar homes have sold in Edmonton, not far off from the 2006 total of 17 $1 million dollar homes. That's not hard to believe with the 52% increase we saw last year and the 10% the city has done in the last three months.

I guess the people in Edmonton read "The Millionaire Next Door" or my earlier entry

Many people don`t want to JV partner when investing in real estate. That is okay, if they are willing to put in the time and work in finding properties and building a trustworthy team to represent you in the real estate world.

If you are one of those people take a look at our Real Estate Investing Tools page. There is an excellent range of books, courses and home-study programs that will start you on your path to wealth.

They are all part of the REIN investment course that was produced by Canada`s Number 1 Bestselling writer Don R. Campbell.

It`s over! It`s over! I hear this all the time... Is Edmonton`s run over? NO. Canadian Business Magazine agrees with me. They published an article today that quite clearly states the Edmonton is NUMBER 1 in Canada and it`s not just because of the oil.

"HOT: Edmonton
With a one-year average price increase of 10%, the oil city is Canada's only major market that has a trifecta of strong demand, tight supply and affordability. And it's not only because of the oil and gas boom." Canadian Business Magazine

Trifecta, I have always associated that with the dark side but let me reassure there is nothing evil about the profits our partner are seeing in this incredible market. Since the beginning of 2007 Edmonton prices have increased 105, a pretty good return for 3 months.

I read "So You Want To Be A Millionaire" by Liz Pulliam Weston a few months ago and I really liked it. Everyones idea of what a millionaire is and what millionaires really are like is completely different. As "The Millionaire Next Door" showed millionaires are not flash, they aren't extravagent, they don't wear gold and diamond encrusted rolexes.

"Most of the millionaire households that they profiled did not have the extravagant lifestyles that most people would assume. This finding is backed up by surveys indicating how little these millionaire households have spent on such things as cars, watches, suits, and other luxury products/services. Most importantly, the book gives a list of reasons for why these people managed to accumulate so much wealth (the top one being that "They live below their means"). The authors make a distinction between the 'Balance Sheet Affluent' (those with actual wealth, or high net-worth) and the 'Income Affluent' (those with a high income, but little actual wealth, or low net-worth)." Wikipedia

They are the people in economy class, the ones who compare price tags at the grocery store and they do drive domestic cars. Conspicous consumption just brings unwanted attention to them and in our world that could be dangerous.

I know you are thinking well what about celebrities? Have you ever noticed that many of them end up close to bankrupt at least once? They may be talented by they aren't neccessarily financial geniuses. The long lasting wealth that some celebrities display comes from hiring people to set them on track.