No Comments

FORECAST: Real Estate – A Case of the ‘Yeah But’s’ Again – Ozzie Jurock

Ozzie Jurock Market Predictions

It is wildly unpopular to be positive in British Columbia these days. We are down, we feel down, we want to be down and down we are. Particularly in the real estate market, we like to wallow in our self-imposed misery. No matter what the positive news, no matter what the uplifting statement, it is always countered with a frown followed by a seemingly knowledgeable: Yeah, but … (Put in your favourite: NDP, Taxes, housing crash).

I find this amazing. In 1960, the average Vancouver home sold for $13,105. Thirty-eight years later (1998), the average sale price stood at $346,540. Assuming long-ago you had plunked down ten per cent or $1,310 as down payment and hung in there; you would now be gloating over a 26,455-per-cent return on that original down payment. And you have a roof over your noggin to boot. Amazing! Today that average SF house is $1,800,000! Exercise in fantasy but if this lift kept right on trucking for the next 25 years, by the year 2023 that $13,000 home will be commanding over $6 million dollars. And you will still have a roof over your gray hairs.

But at various times in our history, the Yeah, buts scare people out of their wits. In 2003, 2008, 2011 and now 2019 they are out. The naysayers with fur.

We are told that real estate’s day is gone; that this is a New World and that this or that factor will sink real estate investment. Of course, the Chinese have disproved that theory for 2,000 years; the Europeans and North Americans have founded their empires on real estate. In fact, ownership of even the humblest real estate has been the greatest wealth builder bar none for the average person. It has made the average North American wealthier than his counterpart in any other part of the world. In fact, it is the defining difference between rich and poor nations. But no matter to the naysayer this time it is somehow different.

Ok, what about now in 2019? The US tried QT … for 5 months resulting in a stock market crash. QE is back in Europe – will come back in US. All hard assets will be higher. But a new world is upon us … learn to love it … get involved … buy hard new hard assets. So many new opportunities.

Our future is shifting – learn about this. It’s here already…

• Cashless society,
• Paperless world,
• 4-day work week,
• Driverless cars,
• Everything online – everything next day delivery,
• Virtual and augmented reality,
• 3D printing houses (your widgets?) just starting,
• Be positive: The whole world wants to live here. YOU already do!
• Foreigners will keep coming … Canada is rated No. 3 for safety

Buy: Your own office/industrial/retail store. Always!
Buy: Strata office/strata warehouse
Buy: Inner city warehouses (next day delivery needs close-by storage)
Buy: Your house/your condo – haggle hard.

Yes, 50 developments have been put on hold. Great! That adds value to existing unsold inventory.

Understand you make the most money on the day you buy! That is when people run scared. Make stink bids. Buy that deal of a lifetime.

Buy cash flow, you can still buy hundreds of cashflow houses condos under $100,000: E.g. in May 2019: Kimberley Ski condo on the hill, fully furnished $79,500.

Luxury condos and house prices coming down … make stink bids.

Rent a luxury condo, buy a rental property where your money cashflows.

Ok, don’t buy: Timeshare, quarter share, Phase 2 condos, Hotel condos, ski resorts without golf.

A new phenomena: Lifelong tenants – rental buildings will do well.

Study, work, make offers, get the deal of a lifetime. Subscribe to the FREE Oz Buzz … live your life LARGE.

Forget the ‘Yeah buts’. We are thriving in BC. We have consumers that consume. We are in a cycle of growth. This week we had a record in job growth – 8 times the number for April expected. We need more labour. We have huge net foreign immigration (yes, still). We have a desirable high-tech industry, a roaring movie industry, exports and construction all combined to create a diverse and roaring economy. Our GDP expansion is best in Canada together with the lowest unemployment rate. We have the best stores in the world on Alberni St. The world is coming to BC. And not just the high end world: 70 per cent of Canadians over 60 want to retire in BC.

Oh, my BC. My Love. Our BC has a majestic environment, outstanding climate and spectacular vistas. There is a very crisp quality in BC. Call it the fine mountain air or ocean spray, balmy sunsets, or clear blue skies that stretch to the horizon. Part of it is that special flavour of the West – an entrepreneurial, innovative flavour, a generosity of spirit, and open arms, an embracing of life in the outdoors and life where the individual can grow to his or her own future best. People from all parts of the world come here, bringing their individuality, charm, wisdom and business acumen.

To work here is a privilege. To live here is a true blessing. To study here is a benefit. To worship here is a natural. To love and hold here – this is paradise.

Credit Union Central says: Prices will double in 20 years.

By – Ozzie Jurock

No Comments

Vancouver House Pricing Collapse in 2013?

As 2013 is nearly upon us, we are left to reflect on the previous 12 months of property prices, stories and news headlines. While there can be no debate that the last quarter of 2012 was much slower in terms of number of sales when compared to the first half of the year, we are left to predict what is coming in the next 12 months.

From the last few sales we have completed, we have noticed that many buyers are prepared to wait until they can secure a great deal, in addition sellers are prepared to wait, with some taking their homes off the market, rather than accept a reduced price.

If we look at the 10 year average for the number of sales in Metro Vancouver, typically 88,000 units change hands every year. If we extend that to a 15 year average, then numbers fall slightly to 79,000 per year. So far in 2012 we have seen around 64,000 sales, which could increase to a total of 68,000 by the end of the year.

In addition to the the number of sales being lower, we are seeing a decline in the number of new listings coming online.

“That’s consistent with sellers saying, ‘It’s not a good time to sell, I’m not selling if I don’t have to,’” said Tsur Somerville, director of the centre for urban economics and real estate, Sauder School of Business at the University of B.C.

Somerville describes the current market at “tentative” and cites concerns about the global economy as one possible cause:

“My general sense is that it’s hard to see where a market turnaround is going to come from in the short run until there is more confidence and clarity about the American economy,” Somerville said. “Even without the fiscal cliff, the American recovery is very slow. Given the state of things in Europe and China, you’re not looking at any dramatic economic growth that’s going to pull the Canadian economy along. Part of the story is for the housing market to pick up, there has to be more juice to the economy.”

Prospective buyers who are expecting huge market declines, might be disappointed. In order for prices to drop sharply we would need a larger economic even to take place, such as severe overbuilding of homes, as was seen in Spain in the past few years. Or some financial disruption, or a sharp movement with regards to interest rates.

With the limited supply of land here in Great Vancouver, the prospect of overbuilding is difficult. Somerville does cite a slight increase in condo starts, but cautions that they are nowhere near the levels we saw at the peak. He also mentions the yield curve for interest rates is very flat, so we are not expecting a sharp rise in rates.

Chief economist for the BC Real Estate Association, Cameron Muir was also weighing in on the current market, he believes that if buyers are waiting for prices to crash, they maybe waiting for quite some time.

“Three years ago we saw the largest financial crisis since the Great Depression and an ensuing global recession. If that’s wasn’t enough to trigger a correction in an asset bubble, I don’t know what is,” Muir said.

He mentions the price declines that some pundits are calling for – those of 25-40% and suggests that in order to see a price decline such as this, we would need to see a household disaster writ large, such as that seen in the US.

In the early 1980’s we did see a sharp decline in house prices, but this was a result of interest rates being raised sharply – around 10 percentage points within a year.

“In 1982, the five-year posted mortgage rate was, I believe, 21.5 per cent at its peak. You can imagine what that does to a housing market,” Muir said. “Housing prices fell dramatically — they fell 40 per cent in some markets.

While he does agree that the fiscal cliff would shave most of the growth off the Canadian economy, but remain confident that lawmakers in the US will come to an agreement and find a compromise in order for the US to avoid being thrown into recession.

Muir predicts an increased level of homebuying activity in 2013 from that of the last few months, a level that is more reflective of overall economic conditions.

Overall home sales are expected to trend toward their long-term averages,” Muir said, adding that pent-up demand could contributed to increased sales activity in 2013