No portion of this text may be re-distributed without written permission
“If I make money, I put it in real estate. I always did very well. Location, location, location.” -Ivana Trump
- Japan Sees Increasing Land Prices For The First Time In 15 Years: Inflation
- Ozzie Heads To Phoenix
- U.S. Foreclosures At Lowest Level In 7 Years – But Vacant Zombie Homes Still Abound
- Europe Is Just Entering 25 Years Of Stagnation
- Questions, Questions And Comments
- Another Opinion On The Weaker Loonie: It May Help Okanagan Real Estate
- Metro Vancouver At $24 Million An Acre
- Special New Condo Market Report: High-rise Sales Rising As Prices Are Falling
- Low Rise Sales Slump
- Townhouse Prices Flat
- Investors Note: Street Capital Sweetens Landlord Loans
- Snapshot: Tri-cities: Coquitlam, Port Moody And Poco
- Tech Note
- Late News
- Plots Of The Week
- Best Mortgages Rates
I N T E R N A T I O N A L: We Told You 2 Years Ago – London Will Boom: Inflation
Now New London Architecture says: “London is about to experience a residential building boom the like of which the capital hasn’t experienced in decades.” There are more than 230 new high-rise towers either under construction or in planning, 80% of which will be apartments! Even though in the North of England
there is a supply of older homes sitting empty – there is a national housing shortage. The Joseph Rowntree Foundation estimates that by 2022 there will be
a shortage of 1.1 million homes.
Thus, U.K. house prices hit a fresh record high in March, as buyers continued to outnumber sellers, while an ongoing lack of supply of new homes looks set
to push up prices further over the coming months. The recovery in the U.K.’s mortgage market–which was kick started by government programs–is now in full
swing and is adding to the upward pressure on house prices caused by a shortage of homes to meet a growing population.
Online estate agency Rightmove
said last Monday in a survey that compared with March 2013, prices were 6.8%, or around GBP 16,000 higher. The results of the survey are in line with news
from the Royal Institution of Chartered Surveyors last week that said house price inflation had eased, but that prices are expected to
keep on rising due to a chronic lack of new and old property for sale.
“With prices on the up and set to increase more, there is a greater sense of urgency among buyers, and as an increasing number of them are existing
home-owners, the supply of property for sale is starting to increase to meet growing buyer demand,”
said Rightmove’s director and housing market analyst Miles Shipside.
“The mass property market is starting to unlock after years of being handcuffed by fragile consumer confidence and a lack of low-deposit mortgages.”
Rightmove also reported a fresh record high average asking price for London property of GBP 552, 530 in March.
Of London’s four most expensive boroughs, Westminster, Kensington and Chelsea, Camden and Hammersmith and Fulham, where the average asking
price tops GBP 1 million. The strongest gains in March from February were reported in Haringey, Barnet and Hounslow.
While there are many reason for rising prices given, JREI says it is due to the continued relentless printing of money – that we see
inflation in house prices around the world. Period!
Japan Sees Increasing Land Prices For The First Time In 15 Years: Inflation
Since Japan’s Prime Minister threw in the towel last year and started its own Quantitative Easing, stock and bonds recovered and the economy as a whole has
more signs of life. Now land prices are reported sharply higher in most major Japanese cities …
Ditto – as above: While there are many reason for rising prices given, JREI says it is due to the continued relentless printing of money –
that we see inflation in house prices around the world. Period!
Ozzie Heads To Phoenix
In 2013 Ozzie helped market over 300 units in the Phoenix and Mesa areas as well as in Northern BC. So far in 2014, he was involved in a Joint Venture that
closed on a further 75 units. This week he is flying to Phoenix again to walk yet another 50-unit building that is under contract but awaits his
Ozzie believes in what he has preached for years: The US will recover and values grow where people go and people go where jobs grow.
U.S. Foreclosures At Lowest Level In 7 Years – But Vacant Zombie Homes Still Abound
California-based RealtyTrac reports that U.S. home foreclosures in February were down 10% from January, down 27% from February 2013 and “at the lowest monthly total since December 2006 – a more than seven-year low.”
RealtyTrac also included updated information on the number of owner-vacated properties in the foreclosure process. As of the first quarter of 2014, a total
of 152,033 U.S. properties in the foreclosure process (excluding bank-owned properties) had been vacated by the distressed homeowner, representing 21% of
all properties in the foreclosure process.
These owner-vacated foreclosures — sometimes called zombie foreclosures — had been in the foreclosure process an average of 1,031 days.
According to RealtyTrac vice-president Daren Blomquist, these zombie homes represent the biggest threat to the housing market because many of the vacant
homes are falling apart and have been on the market for years.
“One in every five homes in the foreclosure process nationwide has been vacated by the distressed homeowner, but it is closer to one in three
foreclosures in some cities,”
States with the most owner-vacated foreclosures last month were Florida with 54,908 (36% of the national total), Illinois
(15,512), New York (10,880), New Jersey (8,595), and Ohio (7,780), RealtyTrac reports.
Surprised not to see Las Vegas in the report. Our Landrush speaker Manny Cordova reported some 58,000 vacant homes there.
Europe Is Just Entering 25 Years Of Stagnation
That is according to the illustrious financier GEORGE SOROS:
“The European Union is not a nation. It’s an incomplete association of nations and it may not survive 25 years of stagnation. You have to go further
with the integration. You have to solve the banking problem, because Europe is lagging behind the rest of the world in sorting out its banks.”
He argued that the Euro crisis has transformed what was meant to be a voluntary association of equal sovereign states that sacrificed part of their
sovereignty for the common good into something radically different. It is now a relationship between creditors and debtors, where the debtors have
difficulty in paying and servicing their debt and that puts the creditors in charge.
While we disagree with him when he argues that Germany should do more (we wrote 2 years ago that the creditors will be blamed when Governments like France
go broke and can’t pay. France now raised its various taxes 78 times and has not balanced its budgets in 15 years! Still no relief, it will default and
blame? Germany.) We agree with Soros that it is not sustainable. We remain amazed at the strength of the euro, but would not want to hold any assets in it.
C A N A D A: Questions, Questions And Comments
Quite a bit of response to last week’s story on possible taxation for Laneway housing. One subscriber said:
“There is really little benefit … cost range from $350,000 to $500,000 and if you rent it out you may lose up to 25% of your capital gain
exemption. Unless you rent it to family. Big buck to pay for family!”
15 year subscriber and Ace Realtor Marty Douglas writes: “On page 8-9 of the above you feature Nanaimo and in your Major Point you bring in the ferry
protest. (By the way, I think you meant to refer to Gabriola Island, rather than the mythical Garibaldi Island featured in several of William Deverell’s
mystery novels. Highly recommended by the way! Ed. note: Yes, indeed, blush). While every potential buyer of island property, whether it be for
a permanent or just vacation residence, should consider the cost of ferry transportation, compared to the significant cultural adjustment of living on an
island, ferry cost and frequency is usually down the list of priorities. I am frequently amused by Lower mainland commuters who think nothing of 60 – 120
minutes a day as a cost of living in the suburbs, but who faint at the thought of a two sailing wait or horrors, getting stranded on Vancouver Island, let
alone one of the many smaller gulf islands. The dearth of sales is not limited to Gabriola. In looking over VIREB’s sales reports for seven islands from Alert Bay in the north, south to Quadra, Cortez, Denman, Hornby, Lasqueti and Gabriola, there were a total of 5 sales, three on the
largest island Quadra, one on its neighbour Cortez and one on Denman. The majority of the sales were land only. The market on the islands has been
generally flat for a lot longer than the ferry service cuts have been in play. While the cuts certainly won’t help, in my opinion, the high value of the
Canadian dollar has had a greater impact, blocking US buyers while luring Canadian buyers south, rather than to our gulf islands. The ferry cuts to
Gabriola in particular have raised the old question of a bridge service once again. (A friend of mine and former Gabriola resident now in Nanaimo says a
couple of big trees falling over onto Mudge Island would span the gap to Vancouver Island.) If you look at
you can’t help but wonder why it hasn’t been done.
Island living – not for the faint of heart. All the best, Marty
Thanks for sharing!
QUESTION: Is the ship for workers in Kitimat good for Kitimat real estate or bad?
Excellent question! It is true that some 600 hundred construction workers for Rio Tinto will live on board of a cruise ferry revamped into
a floating luxury hotel -the Silja Festival, a Baltic ferry made over as the Delta Spirit Lodge – will spend at least a
year docked outside Kitimat. The RioTinto project is expected to ($3.3 billion smelter-upgrade project) wrap up in 2015. On the plus side
it shows that work is happening in Kitimat. On the downside – investors beware– those are 600 of your condos that could have been
rented from YOU! It also shows that the a lot of the work in Kitimat maybe temporary for a few years, whereas in Ft.St. John and Dawson Creek it may last
as long as the gas flows.
QUESTION: The Canadian dollar keeps sinking. Did you not forecast a higher Canadian Dollar?
True, we did. Based on the fact that the world is fleeing a lot of its currencies looking for safety, our strength of the banking system and being now an
additional reserve currency, we thought it would be higher. What we did not bank on was that the Canadian Government is so worried about our future that it
devalues (debases) our Canadian Dollar to stay competitive. You cannot fight the government. But the lower currency does not help anyone in the long run.
In the short term yes, but long term JREI thinks it is the wrong move. All that will be achieved is that we will work less hard, produce
products that are not quite the best and rely more on the Currency decline to bail us out. Our further decline has also been aggravated by the Quebec
election coverage, which talks splitting from Canada. Maybe we should give them the right to vote and go…
Another Opinion On The Weaker Loonie: It May Help Okanagan Real Estate
File this one under realtor optimism if you like but it does make sense, according to Bill Hubbard, broker/owner of Century-21 Executives Realty Ltd in Vernon. Hubbard explains:
“The currency gurus of Canada now say that the Canadian dollar will hover around 90 Cents for a while. But how does that affect us real estate owners and
investors in the Okanagan Shuswap housing market? Many homeowners wonder if this will affect the value of their home. There are 2 industries that are
always close to the top of the Gross Domestic Property (GDP) list in British Columbia. They are the lumber industry and the tourist industry. The lumber
Industry, of which we have a number of mills in the Okanagan Shuswap, exports a great deal of their product to the United States. Every time our dollar
goes down a penny our lumber looks more attractive to the Americans. If our lumber Industry does better our economy usually does better. How about our
travel industry? A lower dollar will certainly make it less expensive for our neighbours to the south to come up and enjoy the Okanagan Shuswap sunshine
this summer and spend some of those wonderful high valued green backs in our stores and on our vacation properties.”
(Ozzie’s) Major Point:
Of course it hurts every consumer as everything we import costs more.
Metro Vancouver At $24 Million An Acre
Sales of land for higher density residential accounted for nearly a third of all commercial real estate sales in Metro Vancouver last year. When land sales
for commercial and industrial development are added, total land sales hit $2.5 billion in 2013, half of all the commercial real estate transactions in the
region, reports RealNet Canada Ltd.
With the help of RealNet researcher Paul Richter we took a look at some of the record-breaking land sales. These values indicate that
prices for all types of real estate property will continue to rise.
Here are 5 examples of the jaw dropping prices paid for land in recent months:
- $12.5 million for 0.067 acre on Cambie Street. This price, paid for a lot on Cambie Street and 59th Avenue in January of this
year, translates to nearly $24 million an acre. The site, bought by a numbered company, currently houses a 6-unit apartment building, a duplex and a
Chinese restaurant. It is, however, close to the Canada Line. The sale price works out to $425 per square foot.
- $9.5 million for 2.7 acres in Burquitlam area of Coquitlam, close to the planned Burquitlam Evergreen transit station. The price
works out to $3.51 million per acre, or $95,175 per suite for the 98 condos and 107 townhomes planned for the site. The same buyer, Intracorp, had earlier
bought 5.3 acres in the same area, paying a total of $19.5 million for that parcel, or $3.6 million per acre.
- $31.5 million for 4.62 acres on Beta Avenue in the Brentwood area of Burnaby. Thind Properties bought for this parcel, which
includes some older office and retail buildings. It is designated for medium or high-density residential. The total price represents a price per square
foot of site area of $157, or $6.8 million per acre.
- $110.5 million for 12.5 acres on Lougheed Highway at Gilmore in Burnaby’s Brentwood area. Onni Developments bought this parcel on
Dec. 30, 2013. The deal pencils out to nearly $9 million per acre, or $203 per square foot. The land is designated for about 4 million square feet in
mixed-use high density residential and retail space.
- $166 million for 2.94 acres. This is what was paid for the old Canada Post site on West Georgia Street in downtown Vancouver. Word
is the buyer, the BC Investment Management Corporation, plans to demolish the 60-year old post office. The price works out to $1,277 per square foot for
the site. According to RealNet, the buyer intends to construct a mixed-use project of residential and commercial space, in about three and half years. We
wonder what the land will be worth by then.
Special New Condo Market Report: High-rise Sales Rising As Prices Are Falling
Courtesy: Frank Schliewinsky of Strategics, New Condo market updates (email@example.com)
Sales of newly built high-rise condominiums were close to 6,600 units across Metro Vancouver in 2013, up from 4,400 in 2011 and putting a lie to forecasts
of a huge glut forming in the market. About 20% of all sales were in three Vancouver projects by Wall Financial, Concord Pacific and Polygon.
The bad news, for developers at least, is that prices for high-rise condos have continued to track downwards for the past three years, due to two
reasons: more high-rise construction in the suburbs and smaller unit sizes.
The average selling price at the end of 2013 was $585,000, down from $610,000 at the most recent peak in mid-2011. The average price per square foot though
has remained fairly constant at close to $600. Since 2011, the average size of a high-rise condo unit has shrunk from 880 square feet to 840 square feet.
In downtown Vancouver, the average new high-rise condo sells for $845,000.
The comer is North Surrey’s Guildford area, where just over 1,000 new high-rise condos came to the market in 2013. Here the average price is $304,000, or $458 per square. At the
end of 2013, 53% of these units had sold, mostly to investors and immigrant buyers after an average of eight months of marketing.
Low Rise Sales Slump
Chinese buyers and investors prefer new high-rise concrete condos over wood frame low-rise condos and the results are being seen. Since 2011, sales of low-rise condos have fallen from 3,340 units to 2,300 in 2013.
Persistent high inventory of unsold units and flat sales have meant fewer new low-rise products. Only 5 projects with a total of 332 units started
marketing in 2013 and most were in Cloverdale, South Surrey and Fort Langley, though North Vancouver saw five new projects start last
year. However, the price of low-rise units has increased from $328,000 in 2011 to $340,000 in 2013, and the average price per square foot has increased
from $404 to $418.
Townhouse Prices Flat
The average asking price for a new townhouse has barely budged since 2011, when it was $428,000 or $287 per square foot. At the end of
2013, it was $442,000, or $294 per square foot. But there are pockets of strong sales. Polygon sold 80% of a 46-unit Delta project in just
four months last year and the one townhouse project that started last year in East Vancouver sold out in 6 months. In Surrey’s Newton
area, however, six projects started marketing a total of 184 townhomes last year: after eight months, only 36% of the units have sold.
In the Valley, make those offers. We think the valley will recover eventually. 1000 people a month move to Surrey … that will result in better prices, once
current inventories come down.
bEST MORTGAGES RATES:
“With mortgage regulations tighter than they have been in years, we have had more high net worth clients coming to us after their bank told them they could
no longer help them due to the number of properties owned,”
Kyle Green of Mortgage Alliance
“Many lenders now are unable to make exceptions to their stringent rental property guidelines, causing further shifts away from relationship banking into
more of transactional style banking. No matter your relationship with your banker, if your request doesn’t “fit the box”. I
have become increasingly difficult – especially when seeking help to build a real estate portfolio. If you have run into a wall with your bank, you may fit
another bank’s box, so don’t give up – talk to a mortgage broker who specializes in finding another lender who will be a good fit for your goals.
Investors Note: Street Capital Sweetens Landlord Loans
Financing a rental property has become tougher and tougher in recent years. So any time a new rental lender comes along it’s a positive for investors. The
latest option comes from Street Capital, one of Canada’s largest non-bank lenders. Its new “Small Rental Program” launched this week.
The best part:
It comes with no rate surcharges and no insurance premiums up to 75% loan to value.
Here are more of its key features and guidelines, as reported Monday in canadianmortgagetrends.com
Term: 5-year fixed (other terms may eventually be rolled out)
- Max. Loan-to-Value:
- Max. Debt ratio:
40% TDS (no GDS requirement applies)
- Property types:
Marketable 1-4 unit properties in urban areas (including condos)
- Maximum amortization:
30 years (with no rate surcharge at 75% LTV
- Down Payment:
Must come from one’s own resources (It may be borrowed from a secure line of credit, but it cannot be gifted)
- Proof of Rent:
Street allows market rent letters on exception for purchases where there is no history of rental income. Otherwise T1 tax returns, lease
agreements, or bank statements showing 12 months of rent are expected
- Rental Treatment:
50% of the gross rent may be added to income when calculating the borrower’s debt ratios
- Insurance Premiums:
No insurance premiums apply up to 75% LTV (Between 75.01 and 80% LTV the premium is 2.50%)
- Minimum Credit Score:
Snapshot: Tri-cities: Coquitlam, Port Moody And Poco
where a huge new project in Maillardville and the Evergreen Line will roam. Port Moody and Poco where dozens of new
highrises offer great value. In our Outlook 2014 Issue (your first issue of 2014 on your password-protected website) I explained why we
like the Tri-Cities. (My old hunting grounds as a branch manager for A.E. Lepage.) No bridges, lots of great vistas and now with the Evergreen line being
stomped out of the ground … upwards and onwards. You can still buy 4,000 sq. foot mansions on the Westwood plateau for under $900,000
and as you can see in this week’s Plot of the week … A 3 bedroom townhouse, 3 baths, end unit with a double garage for $345,000. In the last 30 days, Barrie Vattoy, (604-939-1950) Ace Realtor writes that
In Coquitlam there were
363 Listings, 137 Price Reductions and 211 Sales
Port Moody there were:
117 Listings, 31 Price Reductions and 64 Sales
Port Coquitlam there were:
165 Listings, 53 Price Reductions, 119 Sales.
A very active market indeed. Make sure your Realtor sends you all price reductions DAILY and go look at all those in your preferred area. Yes, all Realtors
can set up their computer so you get it automatically.
PLOTS OF THE WEEK:
1. Port Coquitlam
3 bedroom, 3 baths, END UNIT with DOUBLE GARAGE. Price: $345,000;
2. Maple Ridge and Chilliwack 2 turnkey rent to own deals with tenants
3. Port McNeill Would you buy an apartment building at $33,870 per door? Price: $1,117,741.00. (May be purchased with 2581
Kingcome Place (31 suites) for a total 64 suites offering economies of scale. This property has 33 suites and was built in 1979.)
Look these deals up on your password protected website for contact info. Forgot password? Call Max at 604-683-3222 and he’ll give it to/set you up. If you
have something that you think is a good deal, please send it. There is no charge to have your property (or one that you legally represent) featured here.
This cool Vancouver interactive map shows growth for Vancouver since 1984 in a time lapse Photography.
Open it, use the slider to include Richmond/other suburbs and press play. It’s neat! Go to Google Earthengine
Scotiabank announced today, that will eliminate all currently published specials and issue a new 4 year special at 2.94%.
- OZZIE on a 60 second video…
To subscribe to Jurock’s Facts by Fax ($147 p.a.) call 1-800-691-1183 or 604-683-1111 or fax 604-683-1707.
While the above information is compiled from sources believed to be reliable, its accuracy cannot be guaranteed
Any type of investing carries inherent risks; as such, JREI cannot assume responsibility for any subscriber’s actions.