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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

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May 2019 – Real Estate Statistics

Vancouver Real Estate Statistics March 2019

May sees modest increase in home sales while housing supply reaches five-year high

Monthly Metro Vancouver1 home sales eclipsed 2,000 for the first time this year in May, although home buyer demand remains below historical averages.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 2,638 in May 2019, a 6.9 per cent decrease from the 2,833 sales recorded in May 2018, and a 44.2 per cent increase from the 1,829 homes sold in April 2019.

Last month’s sales were 22.9 per cent below the 10-year May sales average and was the lowest total for the month since 2000.

“High home prices and mortgage qualification issues caused by the federal government’s B20 stress test remain significant factors behind the reduced demand that the market is experiencing today,” Ashley Smith, REBGV president said.

There were 5,861 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver last month. This represents an 8.1 per cent decrease compared to the 6,375 homes listed in May 2018 and a 2.1 per cent increase compared to April 2019 when 5,742 homes were listed.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 14,685, a 30 per cent increase compared to May 2018 (11,292) and a 2.3 per cent increase compared to April 2019 (14,357). This is the highest number of homes listed for sale since September 2014 (14,832).

“Whether you’re a buyer looking to make an offer or a seller looking to list your home, getting your pricing right is the key in today’s market,” Smith said. “To be competitive, it’s important to work with your local REALTOR® to assess and understand the latest trends in your neighbourhood and property type of choice.”

For all property types, the sales-to-active listings ratio for May 2019 is 18 per cent. By property type, the ratio is 14.2 per cent for detached homes, 20 per cent for townhomes, and 21.2 per cent for apartments.

Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

The MLS® Home Price Index2 composite benchmark price for all residential homes in Metro Vancouver is currently $1,006,400. This represents an 8.9 per cent decrease over May 2018, a 3.4 per cent decrease over the past six months, and a 0.4 per cent decrease compared to April 2019.

Sales of detached homes in May 2019 reached 913, a 1.4 per cent decrease from the 926 detached sales recorded in May 2018. The benchmark price for a detached home in the region is $1,421,900. This represents an 11.5 per cent decrease from May 2018, a 5.4 per cent decrease over the past six months, and a 0.5 per cent decrease compared to April 2019.

Sales of apartment homes reached 1,246 in May 2019, a 12.9 per cent decrease compared to the 1,431 sales in May 2018. The benchmark price of an apartment property is $664,200. This represents a 7.3 per cent decrease from May 2018, a two per cent decrease over the past six months, and a 0.5 per cent decrease compared to April 2019.

Attached home sales in May 2019 totalled 479, a 0.6 per cent increase compared to the 476 sales in May 2018. The benchmark price of an attached unit is $779,400. This represents a 7.6 per cent decrease from May 2018, a 3.5 per cent decrease over the past six months, and a 0.6 per cent increase compared to April 2019.

Download the May 2019 stats package.

Editor’s Notes

1. Areas covered by the Real Estate Board of Greater Vancouver include: Burnaby, Coquitlam, Maple Ridge, New Westminster, North Vancouver, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, South Delta, Squamish, Sunshine Coast, Vancouver, West Vancouver, and Whistler.

2. MLS® Home Price Index 2019 update

In line with best statistical practices, the national MLS® Home Price Index (MLS® HPI) underwent an annual review in May.

MLS® HPI coverage was extended in neighbourhoods where sales volumes increased enough to support benchmark price tracking and was discontinued for neighbourhoods where sales became too sparse to support benchmark price calculations. REBGV also updated sub-areas in Vancouver, North Vancouver, and Ladner to better reflect changes in these communities over time.

To ensure MLS® HPI coverage is comparable, historical aggregate and composite data was recalculated to reflect these updates to the model.

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Vancouver Real Estate Statistics – October 2018

Home listings at four-year October high as sales remain below typical levels

Home sale activity across Metro Vancouver* remained below long-term historical averages in October.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,966 in October 2018, a 34.9 per cent decrease from the 3,022 sales recorded in October 2017, and a 23.3 per cent increase compared to September 2018 when 1,595 homes sold.

Last month’s sales were 26.8 per cent below the 10-year October sales average.

“The supply of homes for sale today is beginning to return to levels that we haven’t seen in our market in about four years,” Phil Moore, REBGV president said. “For home buyers, this means you have more selection to choose from. For sellers, it means your home may face more competition, from other listings, in the marketplace.”

There were 4,873 detached, attached and apartment homes newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in October 2018. This represents a 7.4 per cent increase compared to the 4,539 homes listed in October 2017 and a 7.7 per cent decrease compared to September 2018 when 5,279 homes were listed.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 12,984, a 42.1 per cent increase compared to October 2017 (9,137) and a 0.8 per cent decrease compared to September 2018 (13,084).

For all property types, the sales-to-active listings ratio for October 2018 is 15.1 per cent. By property type, the ratio is 10.3 per cent for detached homes, 17.3 per cent for townhomes, and 20.6 per cent for condominiums.

Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

“Home prices have edged down between three and five per cent, depending on housing type, in our region since June,” said Moore. “This is providing a little relief for those looking to buy compared to the all-time highs we’ve experienced over the last year.”

The MLS® Home Price Index composite benchmark price for all residential homes in Metro Vancouver is currently $1,062,100. This represents a one per cent increase over October 2017 and a 3.3 per cent decrease over the last three months.

Sales of detached homes in October 2018 reached 637, a 32.2 per cent decrease from the 940 detached sales recorded in October 2017. The benchmark price for detached properties is $1,524,000. This represents a 5.1 per cent decrease from October 2017 and a 3.9 per cent decrease over the last three months.

Sales of apartments reached 985 in October 2018, a 35.7 per cent decrease compared to the 1,532 sales in October 2017. The benchmark price of an apartment property is $683,500. This represents a 5.8 per cent increase from October 2017 and a 3.1 per cent decrease over the last three months.

Attached homes sales in October 2018 totalled 344, a 37.5 per cent decrease compared to the 550 sales in October 2017. The benchmark price of an attached home is $829,200. This represents a 4.4 per cent increase from October 2017 and a 2.8 per cent decrease over the last three months.

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July 2015 Vancouver Real Estate Statistics

Summer heat doesn’t slow home buyer activity

Metro Vancouver home sales were more than a third above the 10-year average in July, while the number of homes listed for sale continues to trend below recent years.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Metro Vancouver* reached 3,978 on the Multiple Listing Service® (MLS®) in July 2015. This represents a 30 per cent increase compared to the 3,061 sales recorded in July 2014, and a decrease of 9.1 per cent compared to the 4,375 sales in June 2015.

Last month’s sales were 33.5 per cent above the 10-year sales average for the month.

“Today’s activity continues to benefit sellers as home buyers compete for the homes available for sale,” Darcy McLeod, REBGV president said.

New listings for detached, attached and apartment properties in Metro Vancouver totalled 5,112 in July. This represents a 3.8 per cent increase compared to the 4,925 new listings reported in July 2014.

The total number of properties currently listed for sale on the region’s MLS® is 11,505, a 26.3 per cent decline compared to July 2014 and a 5.5 per cent decline compared to June 2015.

“Much of today’s activity can be traced to strong consumer confidence, low interest rates, and a reduced supply of homes for sale.” McLeod said. “We have about 5,000 to 6,000 fewer homes for sale today than we’ve seen at this time of year over the last five to six years,”

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $700,500. This represents an 11.2 per cent increase compared to July 2014.

With the sales-to-active-listings ratio at 34.6 per cent, the region remains in seller’s market territory.

“Although there aren’t as many homes for sale today compared to recent years, home buyers continue to have a range of housing options, at different price points, to choose from across Metro Vancouver,” McLeod said. “The diversity of housing options is part of what’s driving today’s demand.”

Sales of detached properties in July 2015 reached 1,559, an increase of 17.9 per cent from the 1,322 detached sales recorded in July 2014, and a 24.8 per cent increase from the 1,249 units sold in July 2013. The benchmark price for a detached property in Metro Vancouver increased 16.2 per cent from July 2014 to $1,141,800.

Sales of apartment properties reached 1,729 in July 2015, an increase of 42.7 per cent compared to the 1,212 sales in July 2014, and an increase of 42.9 per cent compared to the 1,210 sales in July 2013. The benchmark price of an apartment property increased 5.9 per cent from July 2014 to $400,900.

Attached property sales in July 2015 totalled 690, an increase of 30.9 per cent compared to the 527 sales in July 2014, and a 41.7 per cent increase from the 487 attached properties sold in July 2013. The benchmark price of an attached unit increased 7.8 per cent between July 2014 and 2015 to $511,500.

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Vancouver Real Estate Market Statistics – June 2015

Metro Vancouver home sales set record pace in June

Last month was the highest selling June, and the second highest overall monthly total, on record for the Real Estate Board of Greater Vancouver (REBGV).

The REBGV reports that residential property sales in Metro Vancouver* reached 4,375 on the Multiple Listing Service® (MLS®) in June 2015. This represents a 28.4 per cent increase compared to the 3,406 sales recorded in June 2014, and an increase of 7.9 per cent compared to the 4,056 sales in May 2015.

Last month’s sales were 29.1 per cent above the 10-year sales average for the month. It’s the fourth straight month with over 4,000 sales, which is a first in the REBGV’s history. The previous highest number of residential home sales was 4,434, recorded in May 2005.

“Demand in our detached home market continues to drive activity across Metro Vancouver,” Darcy McLeod, REBGV president said. “There were more detached home sales in the region last month than we’ve seen during the month of June in more than 10 years.”

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $694,000. This represents a 10.3 per cent increase compared to June 2014.

“Housing market activity comes in cycles; we’re in an up cycle right now that looks similar to the mid-2000s,” McLeod said. “It would be easy to point to one factor that’s causing this cycle, but the truth is that it’s a number of different factors.

“Conditions today are being driven by low interest rates, a declining supply of detached homes, a growing population, a provincial economy that’s outperforming the rest of Canada, pent-up demand from previous years and, perhaps most importantly, the fact that we live in a highly desirable region,” McLeod said.

New listings for detached, attached and apartment properties in Metro Vancouver totalled 5,803 in June. This represents an 8.7 per cent increase compared to the 5,339 new listings reported in June 2014.

“We’re seeing a steady stream of new listings entering the market, but the overall number of homes for sale is not keeping up with buyer demand,” McLeod said.

The total number of properties currently listed for sale on the region’s MLS® is 12,181, a 23.9 per cent decline compared to June 2014 and a 1.3 per cent decline compared to May 2015. This is the lowest active listing total for June since 2006.

The sales-to-active-listings ratio in June was 35.9 per cent. This is the highest that this ratio has been in Metro Vancouver since June 2006. A seller’s market typically occurs when this ratio exceeds 20 per cent for a sustained period of time.

“The competition in today’s market means that buyers have less time to make decisions,” McLeod said. “Given this, it’s important to work with your REALTOR® to gain insight into the local market, to get quick access to new MLS® listings, to develop a buying strategy that meets your needs and risk appetite, and to receive other services and protections that come from having professional representation.”

Sales of detached properties in June 2015 reached 1,920, an increase of 31.3 per cent from the 1,462 detached sales recorded in June 2014, and a 74.2 per cent increase from the 1,102 units sold in June 2013. The benchmark price for a detached property in Metro Vancouver increased 14.8 per cent from June 2014 to $1,123,900.

Sales of apartment properties reached 1,774 in June 2015, an increase of 35.6 per cent compared to the 1,308 sales in June 2014, and an increase of 66.1 per cent compared to the 1,068 sales in June 2013. The benchmark price of an apartment property increased 5.3 per cent from June 2014 to $400,200.

Attached property sales in June 2015 totalled 681, an increase of 7.1 per cent compared to the 636 sales in June 2014, and a 44.3 per cent increase from the 472 attached properties sold in June 2013. The benchmark price of an attached unit increased 7.1 per cent between June 2014 and 2015 to $506,900.

*Editor’s Note:  Areas covered by Real Estate Board of Greater Vancouver include: Whistler, Sunshine Coast, Squamish, West Vancouver, North Vancouver, Vancouver, Burnaby, New Westminster, Richmond, Port Moody, Port Coquitlam, Coquitlam, New Westminster, Pitt Meadows, Maple Ridge, and South Delta.

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Foreign Investment in Vancouver Real Estate

We recently touched on the issue of Foreign Ownership of Vancouver Real Estate be highlighting a study undertaken by Andy Yan a renowned Senior Urban Planner with Bing Thom Architects here.

A newly released report by Sotheby’s International Realty has revealed that foreign ownership of the luxury single family real estate market in Vancouver is currently sitting at 40%.

Their report entitled ‘Top Teir Trends Report’ surveyed Sotheby’s own real estate agents to find out who was purchasing the luxury homes in Vancouver, Toronto and Montreal. They deduced that most come from China, but recently there has been a surge in buyers from Iran and the United States.

The report also dialed in on those purchaser’s preferences. They defined a luxury home in Vancouver as follows:

  • Greater than 3,500 sq ft
  • Pricing starting at $2.8m

They also noted that some areas in Vancouver vary in terms of minimum price used in the study, however more information can be seen below in the graphic:

Sotherbys Top Tier Trends Report Vancouver Luxury Real Estate

Full report can be read here.

As always, feel free to give me a call to discuss this data and how it impacts you. Adam Chahl +1 778 385 6141.

 

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Vancouver Housing Bubble & Chinese Investors

I came across a chart recently published by Bloomberg. It overlaid the average Vancouver house price with China’s GDP. Lets take a look:

Vancouver House Prices and China GDPInteresting correlation isn’t it… Bloomberg are suggesting that what is occurring in China, have as much effect on our Vancouver house prices, as domestic economic policy. The graph establishes a direct correlation between China’s GDP and Vancouver House Prices. If this trend is set to continue, then apparently Vancouver’s real estate prices are soon set to rise.

However, as we know correlation does not imply causation, and we know that Vancouver’s unique housing market has many other influencing factors, but if this comparison has any bearing, then the Chinese buyers that have been waiting in the shadows will be back sooner rather than later.

Over the last 12 months, we have seen a definite reduction of the number of Chinese looking to purchase Real Estate here in Vancouver, and this has compounded to an already weakening market. The reason for this is restrictions that the Chinese government has pout in place to cool their overheating property market. In 2009 policy was introduced to help regular citizens own their own home, so if a purchaser had a 30% downpayment, they were able to purchase their primary residence. However, if they wanted to purchase a second property, for investment, for example, a 60% downpayment was required. Not surprisingly, as a result property prices in major cities dropped considerably. In Beijing, this decline was between 30-40%.

As a result, Chinese investors had much less cash available to invest in properties in China and abroad.

Historically we see Chinese New Year as a time when investors make a trip to Vancouver and often seek to purchase units here. Last year, that activity was noticeably absent.

If we examine the impact that the Chinese housing market has on GDP, we can attribute 11% directly to the real estate industry, if we include spin off industries like furniture and appliances, then we are looking at around 22-25% of GDP. If we see the government of China relax their intervention on the real estate market, then we will see assets becoming more liquid as investors move back into the market place, and as a result we will see them return to Vancouver to find a place to park their cash.

We see that the Chinese policy has impacted investors cash flow in the short term, we also see that the attitude towards Vancouver Real Estate has not changed, and in the long term, investors are remaining very bullish with regards to the Vancouver Market.

With the new leadership in China, we may well see a relaxation of these policies, and a renewed interest and availability of Real Estate investing in China and therefore allowing Chinese to purchase real estate here in Vancouver.

Give me a call today to discuss this, and lets put a plan in place for you to reach your real estate goals: Adam Chahl +1 778 385 6141