No portion of this text may be re-distributed without written permission

“You’re only here for a short time. Don’t hurry. Don’t worry. And be sure to smell the flowers along the way.” Walter Hagen

THIS WEEK IN FACTS BY E-MAIL: New condo market up 77% in sales – LNG – 200 million? – Smoking Kootenay deals – Trend is back to the big city.

  • You Gotta Love The Kootenays
  • The New Condo Market Is Performing Much Better
  • Urbanization Trends Persist In BC
  • LNG: Get Your Head Around $200 Billion
  • Average BC House Prices To Reach $552,300 In ’15
  • Private Insurers Restrict Second Home Buys
  • Michael Campbell Special Olympics Golf Tournament
  • Plots Of The Week

I N T E R N A T I O N A L: Manhattan Condo Prices Avg $1,760 PSF

After musing over Vancouver condo prices, which were at $489,400 on the West Side in April, it was interesting to look at another world class city which
truly has world class prices.

This is an indication that, in the top markets, the recession is definitely now in the rearview mirror. We touched on the explosive price growth in central
London last week. The same thing is being seen in New York City’s Manhattan.

The average sale price of a Manhattan condo in March was US$2.4 million, up 5% from a year earlier, and the average price per square foot is $1,760. The
average studio apartment sells for $1,109 per square foot, but the big demand is for three bedrooms, which average $2,194 per square foot and have seen the
fastest price increase – 14% in the past year, according to the Corcoran Report.

Major Point:
So you thought we were expensive?

You Gotta Love The Kootenays

As faithful readers know, I am a part-time resident and full-time fan of the Kootenays. The area of western B.C. offers a rare combination of outstanding
scenery, great golf and skiing – the best I believe in North America, interesting historical communities and is halfway between the two wealthiest urban
centres in Western Canada.

The fact that real estate prices remain a bargain with strong upside potential is the clincher.

This year the average detached house in the Kootenays is selling for around $278,900, compared to a province-wide average of $537,400, and you can easily
find condominiums for less than $175,000, even ones close to outstanding ski hills.

And real estate is picking up. MLS sales through the first quarter of this year in the Kootenays were up 36% compared to the first quarter of 2013, second only to the
south Okanagan. In all of last year, 2079 homes sold in the Kootenays and the BC Real Estate Association is forecasting around a 3% increase this year and
a 5.6% rise next year. The average detached house price is forecast to increase to $280,000 in 2015, with the average condo apartment price rising to
$185,000.

We think these projections are on the low side, because of a shift now being seen in the local market.

First, we are noticing more Alberta tags around Kimberley and other Kootenay towns, which we believe is a sign that buyers from Calgary,
less than a half-day drive, are coming back into the market.

  • For instance you can buy and up and down 10-year old ski hill duplex with 5 bedrooms, 4 baths, 4 hot tubs, double garage fully
    furnished in great shape with good rental income for $379,000 and a great older 5-bedroom home walking distance to the fine Trickle
    Creek golf course for $279,000. Also, there may be new lots coming up as low as $65,000 – if you start building this year.
  • Also building lot sales at Panorama Mountain Village, priced from $169,900, are seeing strong action this year. Phase 1 of the
    latest subdivision saw nearly all of the 21 lots sell out. The resort is also building a new guest lodge and a new $4-million clubhouse for the Greywolf
    golf course. Future plans include the construction of 750 new housing units with an estimated value at full build out of more than $350 million.
  • Improvements are also underway at the Fernie Alpine Resort, named the “best North American resort” at the 2012 World Snow Awards
    in London (and the “coolest town in North American” by Rolling Stone Magazine). The new Polar Peak lift was installed last season and its new
    zipline has become a local craze.

Major Point:
Listings are lower, volume is higher – a bottom maybe forming throughout the interior … still plenty of time, but sharpen your pencil.

The New Condo Market Is Performing Much Better

Fifth Avenue Real Estate Marketing Ltd.
published a fine report which showed that sales have increased sharply in new condos in the first quarter of 2014 versus the first quarter of 2013.

We at JREI have said for a year that the best buys might well be found in the new condo sector … and it looks like buyers thought so too. Of interest
to note is also the reference to Chinese buyers. Here goes:

First Quarter Performance in the New Home Market

High Rise
Low Rise
Townhouse
Totals
Total Q1 2014 Sales
1,608
789
807
3,204
Total Inventory
4,936
3,061
1,121
9,118
Standing Inventory
628
997
489
2,114
Total # of Projects
116
122
98
336

“The First Quarter of 2014 proved to be one of the strongest quarters in recent years for sales of all new multifamily product types across most of
Metropolitan Vancouver
Overall sales totals in the first three months of 2014 were 57 percent higher than the First Quarter of 2013.

While there remains a healthy supply of new condominiums and townhomes in most market areas, the higher absorptions experienced in the last quarter
reduced the total inventory of unsold homes by nine percent from the same period last year.

For the first time in several quarters, we can suggest there is a shortage of certain product types in select markets.

An example is the townhome sector of the
Tri-Cities
market where released inventory levels at the end of the First Quarter

of 2014 were 55 percent lower than at the same point last year and 67 percent lower than in the First Quarter of 2012. Meanwhile, in spite of steady
sales activity, other sectors of certain markets i.e.

concrete condominiums
in
Richmond
and
Burnaby, are expected to
remain well-supplied
for the foreseeable future.

The most notable increase in sales in the First Quarter occurred in the
concrete condominium
sector where absorptions were up 77 percent compared to the first three months of last year.

Chinese purchasers (both local and new immigrants) were once again the most prominent buyer group in the concrete condominium sectors of Metro
Vancouver’s more urban markets.

This group was the primary buyer of new concrete condominiums at the most successful concrete condominium project launches for the quarter (Burquitlam). They also continued to help drive sales at actively selling projects such as
Wall Centre Central Park
(Collingwood) and
University District
(Surrey City Centre).
Not surprising, new concrete condominium projects in Richmond also continued to attract primarily Chinese buyers.

Low rise condominium sales
were 34 percent higher in the First Quarter of 2014 compared to 2013. Some of the more successful projects launched in the quarter in this sector
include
Prodigy (UBC)
and
Canvas (Mount Pleasant).

In South of Fraser markets, downsizing empty nesters continue to be the prominent buyers of low rise condominiums. An example of a market catering to
this demographic is South Surrey/White Rock where 11 of the 13 actively selling condominium projects feature move-in ready product with suitable
options for downsizers. While larger homes are attracting this buyer, incentives and price reductions have been generally required to drive sales of
smaller two bedroom and some one bedroom and den product in Surrey and Langley.”

Major Point: JREI still hears about a lot of incentives granted to buyers in the Fraser Valley, but it looks like Vancouver first time buyers are
waking up. Chinese buyers (offshore) are hard to predict but we know that, in general, they like new products, even presale new product. For the savvy
shopper though there is still time to bargain. This is a very fine report and available here.

Urbanization Trends Persist In BC

All recreational areas of B.C. are experiencing an urbanization trend that is: more people are opting to move into the big cities!

B.C.’s four census metropolitan areas (CMAs)
contributed to nearly all of B.C.’s 0.9% population gain (38,670 persons) in 2013. Vancouver led the way with a 1.4% expansion marking a gain of about
34,625 persons.

Growth in the other metro markets was more subdued near 0.5%. Vancouver and Abbotsford-Mission relied heavily on international migration as a source of
growth, while Victoria and Kelowna leaned on resident inflows from other parts of the province.

Outside the metro areas, estimated population contracted in most regions. Relative declines were sharpest in Kootenay Boundary and Skeena-Queen Charlotte,
which contracted 2%. Interprovincial outflows were particularly strong from the Okanagan as economic weakness pushed some residents to find work elsewhere.

One of the few bright spots in the province was the Peace River district which expanded by 2% in 2013. The region, home to the natural gas and coal
sectors, attracts residents due to strong job growth.

Interestingly, population levels in Kitimat-Stikine contracted 0.2% in 2013 and are down 5% since 2005, despite a surge in economic activity.

Major Point:
And yes, BOM projects that 15% of all people in Canada over 65 will move to BC.

LNG: Get Your Head Around $200 Billion

We sat in for sessions at the LNG conference in Vancouver this week and saw the dollar signs flashing.

By 2020, B.C’s major liquefied natural gas plants would generate more than $200 billion in investment, according to an EY study released at the event.

That’s when many 20-year LNG contracts with large customers in Asia are up for renewal. It takes four or five years to build the pipelines and LNG plants,
and to date, none of the pipelines that will be needed to supply the LNG plants are under construction.

However, no final investment decisions have been made, and the industry is still waiting for details on the implementation of a new two-tiered LNG tax.

Meanwhile, Australia has three LNG plants already in operation, seven under construction, and a new Exxon Mobil LNG plant in Papua New Guinea
loaded its first tanker – destined for Japan – just last week.

Also last week, China signed a $400 billion LNG deal with Russia.

Of the 14 LNG projects proposed in B.C., eight have received export licenses.

Pacific Northwest LNG

– an $11 billion LNG plant proposed for Prince Rupert by Malaysia’s Petronas, and the Shell-led LNG Canada project in Kitimat – are
considered frontrunners of the larger scale proposals.

“China is clearly a longer-term market, with even greater potential than the two countries [Japan and Korea] put together, simply because of the size
of China,”


Asia Pacific Foundation

CEO Yuen Pau Woo, told the LNG conference.

Should three major LNG projects get built, it will result in $190 billion to $280 billion investment in B.C., said Barry Munro, EY’s
Canadian oil and gas leader. Based on three major LNG projects, Munro said EY calculates the

natural gas drilling

alone would be worth $140 to $200 billion.

Three LNG terminals would cost $30 to $50 billion, and two pipelines would cost $10 to $15 billion. Another $10 to $15 billion would be spent on related
infrastructure.

Major Point:
Should B.C. miss the boat on near-term contracts in Korea and Japan, there are always longer-term markets B.C. LNG producers can go after. However, we at JREI predict … time is of the essence. If we do not act now … we WILL be left behind.

Average BC House Prices To Reach $552,300 In ’15

CMHC
released its BC housing forecast Wednesday, saying that average house prices will increase to $552,300 by 2015, up just 0.3% from this year.

Of the seven urban markets studied, the biggest MLS increases into 2015 are expected in Prince George, up 4.1% to $280,000; andKelowna, up 2% to $413,000. As a comparison, Vancouver prices are forecast to increase just 0.8% to $793,000; and Victoria will see a 0.7% increase to $492,000 next year.

Major Point:
If correct, this would indicate a flat-lining of prices after an uptick in 2014. For example, Nanaimo prices, which are expected to
increase 6% this year, are forecast to rise just 0.6% by 2015. We at JREI are predicting a flat market in 2014 also for most market in BC.

Private Insurers Restrict Second Home Buys

Private mortgage insurers Genworth and Canada Guarantee have followed CMHC’s lead, partly, and are restricting insured
mortgages on secondary homes.

Genworth announced that it is reducing the maximum number of allowable units under its Vacation/Second Home program from two units to one unit.

Fortunately for self-employed borrowers, it has left its stated income product alone, saying that, “Upon review of the current Business
for Self Program, we will not be making any amendments to current product guidelines.”

The company also clarified that: “There will be no amendment to the maximum number of Genworth-insured properties per borrower.” CMHC said last week that
it would “limit the availability of homeowner mortgage loan insurance to only one property (1-4 units) per borrower/co-borrower at any given time.”

Like Genworth, Canada Guaranty will limit its second home program to one unit, effective May 30.

PLOTS OF THE WEEK:

1. Kimberley,
5-bedroom house in great shape, $279,000;

2. Victoria, Full Up/Down Duplex on the Oak Bay border $625,000;

3. Victoria,
Least expensive home in the core of Victoria (with minimum 4 bedrooms)
$319,000 in Esquimalt;

4. Victoria, least expensive RENTABLE two bedroom condo in Greater Victoria,
$158,000, 795 sq. ft., bought for $175,000 in 2009.

Details on your own website. There is no charge to be featured here and absolutely no
warranties given either. You have to check it up yourself.

 

Michael Campbell Special Olympics golf tournament -OZZIE 5-SOME IS SOLD OUT.

If you have an interest we would be happy to start a second 5-some … just email.

On June 17th at the Northview Golf club, Michael Campbell hosts his annual Goldcorp Special Olympics golf tournament. There are two golf
courses … low handicappers and duffers (like me). The cause is outstanding (raising funds for Special Olympics), It is a fabulous day, rub shoulders
with celebrities, play golf, and have fun. Tickets are $500. If you like to join call me at 604-683-1111 or email at ozjurock@gmail.com.

 

To subscribe to Jurock’s Facts by Fax ($177 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.