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“Men in general are quick to believe what they wish to be true.” -Julius Caesar

  • Questionable Findings
  • Investing In Winnipeg Apartments
  • Buy Port Moody’s Heritage Heart
  • Vancouver Apartment Market Tracking Lower
  • Learn To Live With The $1M Bungalow
  • Manitoba Sells Property Registry To Teranet
  • Questions, Questions/Comments
  • Late News
  • Best Mortgages Rates

C A N A D A: The Numbers, The Numbers – Fraser Valley

1,259 sales represent an increase of 12 per cent compared to the 1,128 sales during March of last year. Sales were noticeably higher in North Delta, Mission and Langley compared to last year.

The fine Fraser Valley Real Estate Board reported that the most popular price range for single family detached homes in the Fraser Valley last month was
between $500,000 and $600,000.

The benchmark price of a typical detached home was $563,400, an increase of 3.5 per cent
compared to $544,300 during the same month last year.

For townhouses, the benchmark price in March was $297,100, a decrease of 0.4 per cent compared to $298,200 in
March 2013 and the benchmark price of apartments was $195,400, a decrease of 4.3 per cent compared to
$204,200 in March 2013.

Active listings
in March stood at 8,763 – 8 per cent less than were available during March 2013.

Major Point:
No question March 2014 sales were better than March 2013 by 12% but – like in Vancouver – comparing sales against March 2011 we still see a 31% decline! Listings are fewer – that’s good. Prices, however, are still lower for both condos and single family homes. Overall, Realtors
are reporting that well-priced homes sell fast, condos sales are still very slow and townhouses sell poorly. Just like Vancouver single-family homes
outperform condos in all areas.

QUESTIONABLE FINDINGS:

WHAT? ST. ALBERT A “BETTER PLACE TO LIVE” THAN VICTORIA? VANCOUVER IS “MORE RESILIENT” THAN NYC?

St. Albert,
Alberta has some of the highest housing prices in Alberta. At an average of $470,000 it is $100,000 ahead of Edmonton. The average household income is
$128,270 and the unemployment rate is only 4.3%. But, for an average of 28 days every year, the temperature is minus 28 celsius. It is a
city of pricey suburbs and malls and is flat as a pancake.

And MoneySense magazine has just named it best place to live in all of Canada. What?

The same ranking, released last week, placed the suburban industrial centre of Strathcona Park, Alberta, in third place and lovely Victoria way down at 76 out of 201, just ahead of Hamilton. (Vancouver came in at 39, squeezed between Brossard, Quebec
and Camrose, Alberta.)

Read the rankings and you have to wonder if the editors at MoneySense have ever visited any of these cities? We can partly see Calgary taking second spot, but Port Alberni with the most affordable homes on Vancouver Island and some of the greatest
fishing in the world ranked dead last at 201 as the worst place in the country to live.

Remind us to ignore these rankings in future.

Perhaps even more galling was a report out of this week’s Urban Land Institute conference, which runs until Friday in downtown Vancouver.

There, a Grosvenor study stated that Vancouver was the second most resilient city in the world, beaten out only by Toronto.

Resilient? We could call Toronto and Vancouver a lot of things, but resilient is not one of them.

Turns out Grosvenor translates resilient into having a “green” political agenda, not the ability to persevere when things get rough.
Toronto is barely surviving Rob Ford and a bad winter. Vancouver is still getting over the Stanley Cup riot and fretting about bike lanes.

Major Point:
Both cities handily beat out much tougher towns, such as London, Berlin and New York City, which we suggest could teach other cities – and
Grosvenor – what being resilient really means.

CLOSEUP: Investing In Winnipeg Apartments

This week we got our hands on a “clients eyes only” critique on the Winnipeg real estate market from one of the biggest property companies
Manitoba’s capital city. The apartment market is particularly interesting.

Winnipeg’s apartment landlords have been largely ignoring the provincially regulated rent guidelines of 1% per year. In the past year,
average rents have increased 6.4% (a two bedroom now rents for $969). The reason is thatrenovated apartments and new apartments are exempt from the rent guidelines. “Rental incomes can increase significantly after rehabilitation” the report notes.

The vacancy rate, however is inching up, rising to 2.5%, which (still low) is the highest of any major city in Western Canada. Apartment buildings are
about the least expensive. The average price per door is $82,118, or $110 per square foot. This is up from a year earlier, when the
average was $100 psf.

A total of 21 apartment buildings sold last year and nearly all were bought by local investors. None were sold to REITs or institutional
groups.

The report notes that dodging the rental rate guidelines plays into investment strategies: “Apartment capitalization rates are stabilizing due to a combination of higher average rental rates and increasing property values. Going-in capitalization rates in 2014 will likely range between 5.0% and 6.0% for stabilized properties

(i.e. new or substantially renovated properties with rents “at the new market level”) with most pre-renovated or conversion assets continuing to trade
on a cost per unit or square foot basis where capitalization rates can easily still fall below 5.0%.”

Major Point: Manitoba is introducing new rules to tighten up its Residential Tenancies Act. Bill 40 would change requirements for
above-rent guideline increases and limit the size of increases due to renovations. (Some tenants complain that even minor renovations resulted in higher
rents.) The Bill hasn’t been passed yet.

Buy Port Moody’s Heritage Heart

Imperial Oil
is trying to sell the old Ioco Townsite, the heritage heart of the suburban city of Port Moody. Imperial, which built the
place, is looking to sell a giant chunk of land in the area, including the town. (Meanwhile, Port Moody’s heritage commission is proposing the old townsite
be turned into a tourist attraction!)

Imperial Oil has confirmed it has received letters of interest from property developers for the entire site.

The property is made up of 232 acres of undeveloped land, including 150 acres in the Village of Anmore and another 82 acres in Port Moody.

Major Point: Michael Geller,
a planning and development consultant to Devon Estates, the real estate arm of Imperial Oil, said the oil company is still in discussion
with a number of potential purchasers regarding the sale. Geller said Imperial Oil was hoping to have a deal in place by the end of 2013, but that timeline
has passed – so you still have a chance to buy it.

Vancouver Apartment Market Tracking Lower

As we reported earlier, the biggest sale of apartment buildings in Metro Vancouver will be Calgary-based Boardwalk REIT unloading a
three-building portfolio, which could happen soon.

But generally, the apartment market in Metro Vancouver is tracking down and we suspect it is due to price resistance. It is becoming hard to find assets
with a cap rate above 3% and price per door below $150,000. Last year 33 apartment buildings sold, down from 43 a year earlier. The average price paid in
2013 was $11.8 million per building. The outlook is for slightly higher vacancies rates this year. CMHC is forecasting an increase to 2.2%.

Major Point: As we pointed out many times before … cap rates are calculated by excluding depreciation, mortgage payments and capital expenditures. Well, if you
have a 3% cap rate and an old building (old buildings need paint, replacement for stoves, fridges and a hundred other capital expenditures) you will likely
have a negative return. That’s why the apartment block market is slower.

Learn To Live With The $1M Bungalow

Vancouver bungalows saw the largest year-over-year price increase in the first quarter, climbing 4.8% to $1,062,318. The average price for
standard two-story homes saw an increase of 2.9% to $1,148,473 while standard condominiums rose 0.3% to $482,800.

Chris Simmons, broker and owner, Royal LePage Vancouver West Side & City Centre, said, “In terms of unit sales, January and the beginning of February were slow, but more and more life came into the market in the end of February and through
March.”

We expect Vancouver sales to further strengthen in the months ahead: in other words get used to the idea of paying more than $1 million for a city
bungalow.

Royal Lepage also looked at other cities in their first-quarter house price survey. Here is what they found:

The Halifax housing market continued to experience steady price growth this quarter, despite relatively flat unit sales and inventory
levels. Standard two-storey homes had the average price rising by 1.9% year-over-year to $325,933. Standard condominiums also posted modest gains, edging
up 1.4% to $218,950. Prices for detached bungalows prices remained essentially flat, increasing by only 0.3% to $295,500.

In Montreal, detached homes also posted healthy increases with the average price for standard two-storey homes increasing 3.6%
year-over-year to $406,179, while detached bungalows increased 3.3% to $294,557. Prices for standard condominiums remained relatively flat, decreasing 0.1%
to $239,561.

In Ottawa, the average price for detached bungalows increased 2.2% year-over-year to $395,667 and standard two-storey homes increased 2.0%
to $398,500. Condominium prices dropped 1.4% to $258,500.

Toronto
bungalows and standard two-storey homes both saw robust year-over-year price appreciation, rising 4.1% to $589,250 and 6.8% to $716,698, respectively.
Standard condominiums posted a more modest increase of 1.5% to an average price of $364,979.

In Winnipeg, the average price for standard two-storey homes and standard condominiums saw significant growth with a 5.1% increase to
$325,072 and 5.3% increase to $203,118 respectively. Meanwhile detached bungalows increased by a modest 1.2% year-over-year to $306,507.

Regina’s
price for both detached bungalows and standard two-storey homes were relatively flat year-over-year, increasing by 0.2% to $330,000 and 0.3% to $379,000,
respectively. Standard condominium prices saw moderate growth, rising by 3.6% to $216,000.

In Calgary, the average price for a standard two-storey home surged by 7.5% to $472,644. During the same period the average price for
detached bungalows jumped by 6.3% to $480,222 and standard condominiums increased by 5.3% to $274,700.

Significant price growth across all Edmonton housing types drove more consumers to the condominium market in the first quarter. Prices of
standard condominiums led the market, climbing by 6.9% year-over-year to $224,250. Standard two-storey homes posted an impressive 5.5% increase in average
unit price to $371,000 while detached bungalows appreciated by 5.3% to $341,651.

Victoria
saw the average bungalow price rise 3.6% to $487,000, the two-storey house rise 3.4% to $491,000 and the typical condo price increase 9.3% to $282,000.

Major Point:
For the price of a two-storey house in Vancouver you could buy a detached bungalow in any four other cities in Canada, except Toronto. The price of a
Vancouver bungalow equates to buying three or four condos in nearly any city of your choice. Or 4 bungalows in Phoenix.

Manitoba Sells Property Registry To Teranet

The Province of Manitoba has transferred its property register to Teranet Manitoba LP, under a 30-year agreement.

The Property Register (TPR) Land Title and Personal Property registries and TPR staff have been transferred to Teranet Manitoba but continue to be
headquartered in Winnipeg.

Teranet Manitoba has paid the province $75 million upfront and will pay royalties starting at an estimated $11 million per year and growing to an estimated
$24 million annually at the end of the term.

Teranet Manitoba has committed to making significant investments to make property searches and registrations available through a more convenient, faster
and secure online system, said Teranet president and CEO Elgin Farewell. “Customers should experience a seamless transition,”
according to Teranet, which has provided land registration and writ services on behalf of the Government of Ontario for the past two decades.

The province will continue to provide Manitobans with a guarantee of title. Data including land surveys and property titles will remain solely owned by the Government of Manitoba.

Major Point:
Interesting. JREI will check into what this really means. The whole Land Title system in the hands of a private company. We’ll get back to
you.

Questions, Questions/Comments

Comment:
Ozzie, 4 years ago I switched from residential real estate investment to business and industrial strata, which you recommended for years. Your piece on
North Van commercial Strata reminded me where I got the idea. All my holdings are smashingly higher! Thanks.

A: Blush … thanks!

Q: What do you think of the comments by Jim Rogers last week? Scary stuff?!

A: I think you are referring to the story featured on moneytalks.net in which the well-known investor forecasts total collapse. He said, “Investors should
take every precaution right now to protect their money from a major market disaster that will destroy the economy and impoverish millions
of Americans.” He goes on to forecast “a massive collapse of the dollar which will cause interest rates to soar to record levels.” He
warned investors should stay clear of the dollar and other fiat currencies. “For the first time in recorded history we have all major banks and central governments around the world printing huge amounts of money,” Rogers
said.

Well, since we are always very concerned about a possible rise in interest rates, we read the story too (go to moneytalks.net).
He says nothing different than what we have reported for years … The overprinting of money. He just comes to a different conclusion. We believe inflation in hard assets will be the outcome … he sees a collapse and deflation. Only time will tell.

We are seeing inflation everywhere. Beef this week hit a 27-year high in price … food in general is up 400% in the last 3 years and real estate values
(in the major cities of the world) are rising.

BUT … we are not in the stock market ourselves but noting Mr. Rogers warning and oil analyst Josef Schachter’s prediction for $80 oil in May is
coming … SELLING IN MAY AND GOING AWAY … may be good advice not just for Mr. Roger’s reason … but taking some chips off the
table for the summer and take a breather.

BEST MORTGAGES RATES:

EYEBROW RAISER

WEEKLY THOUGHTS

Late News

  1. 1. LNG: Australia is moving (faster?) on to become the world’s largest LNG liquid gas exporter by 2018. The reason – less aboriginal
    opposition, less government red tape. (Report on Business – Globe and Mail)
  2. 2. MULTIPLE OFFERS? We get some – spotty – reports of some multiple offers – North Shore and Westside.
  3. 3. REST OF BC – prices are still well down and well behind the highs achieved in 2007-2010 – more next week.

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