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“Choosing to be positive and having a grateful attitude is going to determine how you’re going to live your life.” -Joel Osteen
THIS WEEK IN FACTS BY EMAIL: 20 US Beach markets; Europe elections mean more foreign money will come here; BC and Alta housing strong; NY magazine – Vancouver price shock; Best 3-yr
mortgage rate 1.99%
A discussion on European election and more money worldwide fleeing here, Saturday after 10 AM.
- US Housing Recovery Stumbles
- European Elections – Euroskeptics Win
- BC Housing Market Will Stay Strong
- Slumbering Victoria Awakens For Investors
- BC’s Affordable North
- Vancouver Prices Shock Even New Yorkers
- Mortgage Holders Are Blue Chip Borrowers
- Eyebrow Raiser: Soccer Star Home Rents For $15,000 Per Day
- JREI Forecast ‘Visible Inflation In 2014’
- The June 7 And June 8 Real Estate Expert Summit Conference
- Michael Campbell Special Olympics Golf Tournament Ozzie 5-some Is Sold Out
- Plots Of The Week
- Rate Wars Are Back
I N T E R N A T I O N A L: Top 20 US Beach Town Markets
California-based RealtyTrac has chosen the top 20 best beach towns in the U.S. based on four criteria:
- Average temperature,
- Per cent of sunny days,
- Per cent of days with good air quality, and
- Crime rates.
Four of the top 20 beach town housing markets were in Florida, led by
Hobe Sound, a town of less than 15,000 located in Martin County about halfway between West Palm Beach and Port St. Lucie.
Hobe Sound ranked No. 1 on the list thanks to its low median estimated market value of homes and condos: $191,189.
Other Florida beach towns in the top 20 were Naples at No. 2 and
at No. 5 – both in Southwest Florida – and
south of Miami at No. 20. Key Biscayne had a median property value of $922,002.
accounted for 11 of the top 20 beach-town housing markets, the most of any state, led by Waianae in Honolulu County on the island of Oahu.
Waianae has a relatively low median home value of $309,328, which helped it rank No. 3 among the top 20. Other Hawaii beach towns among
the top 20 were Wailuku at No. 4, Kahului at No. 7, Kihei at No. 9, and Lahaina at No.
12 – all on the island of Maui – and Ewa Beach at No. 8, Waipahu at No. 10, Honolulu
at No. 13, Pearl City at No. 14, Kaneohe at No. 15, and Kailua at No. 18 – all on the island of Oahu.
Five California beach towns
were in the top 20, led by Los Osos in San Luis Obispo County on the Central Coast of the state. Its $418,403 median home value was the lowest among all California beach towns on the list and ranked it No. 6 among the top 20.
Other California beach towns among the top 20 were Morro Bay at No. 11, also on the state’s Central Coast, along with the Southern
California towns of Dana Point at No. 16, Seal Beach at No. 17, and San Clemente at No. 19.
If it is just beach you want – particularly for retirement, check out some of these great values … under $200,000. Canada also has some fine beaches.
Don’t disregard river and lakefront either. There is lakefront throughout BC – for instance, that is available under $100,000 a lot. A riverfront beach lot
is available fully serviced in a gated community in Quesnel for under $50,000.
US Housing Recovery Stumbles
There is a problem (to watch for) with the upturn in the U.S. housing market: it is slow to get traction and more people are still renting than buying.
The US Commerce Department said this week that sales of new homes rose 6.4% in April compared to a year earlier, but that
followed two months where sales were down from 6.9% to 4.4% from the same period in 2013.
Sales of new homes are running at roughly half the rate of a healthy real estate market, the Commerce Department notes. (Healthy means to keep up with
New home sales have declined 4.2% over the past 12 months. The median sales price fell a slight 2.1% during April, to $275,800.
Buying has been slow across much of the country after climbing in the first half of 2013. Sales of existing homes over the past 12 months have dropped
6.8%. The median price for an existing home has risen 5.2%, however, to $201,700.
Much of the increase in construction has been in the apartment sector, a sign that builders expect fewer buyers and more renters. After
the housing bust in 2008, Americans are still coping with flat wages and job insecurity, making it hard to save for a down payment. The home ownership rate
was 64.8% at the start of this year, down from a peak of 69.2% during 2004, before the ‘Great Recession” began … but it is still 64.8%…and it will
continue to recover as more and more Americans discover it is cheaper to own than to rent!
After year over year price increases (22% in 2012 and 30% in 2013) it is no wonder that Phoenix (for instance) needs a breather. Las Vegas also soared from
a bottom price of $110,000 to over $180,000 in 17 months. This torrent pace can’t be sustained. On the new home front, the fact that the US is still not
back to building what it needs to sustain its growing population seems to us is a good sign. The pent-up demand will be fulfilled eventually. Hey, what
about our recommendation at Landrush 2013 to buy home builders, eh?
European Elections – Euroskeptics Win
For some time your faithful reporter has ventured to say that Europe’s euro is doomed to fail. You can’t have 28 nations with different school systems,
different political systems, different languages, etc. held together just with the currency.
Yet, the euro stayed high, Europe muddled through and we were surprised.
However last weekend’s European Parliament elections demonstrated the underlying problems that we identified 3 years ago. Now we have far
right wing members, (some) neo Nazis etc. elected to the parliament, and while the European parliament still has a majority of ‘sane people’ the real
problem has been demonstrated when you look at the individual countries. France, already an economic basket case … has with the victory of the
far-right National Front party
come out openly. It now leads the nationalist wave that has hit the continent at its most awful.
This party is anti-European, anti-immigration and committed to restoring the death penalty. It is also a party that wants to tear up the agreements on the
right of asylum, to reject the Schengen agreements on the free movement of people (no borders), and to close the borders. While this has been clear to us
for a while (debtors will always blame lenders), this puts a harsh spotlight on the health of the French society.
Europe and its euro was doomed to be operating under a distant, unworkable structure for a while. IT now seems doomed to austerity. The current mad French
president (although he only got 28% of the vote and is likely out in November) and his 28 tax increases in 18 months and the endless economic
crisis … will now be replaced by an even madder leadership.
France’s economy will remain mired in stagnation and the support of its people for the National Front shows that they do not care to pay back debts, be
European and they have cast – maybe the final – stone for the European Union. Of course France is not alone, Britain’s Prime Minister Cameron also
advocates leaving the union as are euroskeptics in Greece, Hungary, and Denmark.
What is our interest in this? More money will leave the euro and come for safe harbours (namely Canada) – read the article from the New Yorker. It is good
for the investor – not so good for the homeowner to be.
C A N A D A: BC Housing Market Will Stay Strong
British Columbia’s housing market will stay strong over the next year at least, according to Canada Mortgage and Housing Corp. (CMHC),
which is forecasting housing starts to total 27,800 homes this year and 27,900 in 2015. The only real change, according to CMHC, is that more new detached
houses will be built as the economy “gains traction.” Existing home sales through MLS are forecast to total 76,200 units in 2014 and
77,300 units in 2015. The average home price is forecast at $550,400 in 2014 and $552,300 in 2015.
None of this is news in the big picture, but when you focus in you see that different regions of the province are looking forward to much different housing
Metro Vancouver, led by the City of Vancouver,
will see accelerated housing demand, largely due to immigration and the continual urbanization which is seeing both young and older people moving from
smaller centres to the city.
Since 2011, Metro Vancouver has seen a population increase of 72,000 people, according to BC Stats numbers from January
2014. This year that will increase by a further 36,000: 34,000 from immigration and the rest mostly from BCers moving in from other parts of the province.
Think of this way: B.C. now has a population of 4.5 million. The population of the Asia Pacific is 4.9 billion. It will not take much of
an immigration surge to push the population of Metro Vancouver – the preferred destination of immigrants – a lot higher. (See the New Yorker
magazine comments below on what Vancouver is facing.)
There are two other areas of B.C., though, that will see high in-migration, though for different reasons and reflective of different demographics:
Slumbering Victoria Awakens For Investors
Four of the top 10 centres in BC for recent population growth are in the Victoria Capital Region: View Royal, which saw a 9% population growth from 2012 to
2013; Langford, with 4.2% growth; Sooke, with 2.4% growth; and Metchosin, at 2.3% more people.
And, while the Victoria-area housing market is traditionally referred to as “stable” sometimes even boring, we think it represents a strong investment buy
this year. The reasons? Prices are flat, the rental vacancy rate remains low and the job prospects are improving, as is the inflow in both young people and
The average MLS home price in Victoria is now around $488,000, which is well below the provincial average and $200,000 less than in Greater Vancouver.
Meanwhile, MLS housing sales are down from 9,100 in 2010 to less than 6,000 this year, which is below the 10-year average. At the same time, new housing
starts are forecast to drop 5% this year to just 1,600 units (and were down 25% in the first quarter compared to 2013). There are an estimated 500 new and
unsold condominiums and 69 new and unsold detached houses plugging the market.
The rental vacancy is around 2.8% and the average two-bedroom apartment rents for $1,070, just slightly below Vancouver.
The unemployment rate is 5.4% in Greater Victoria, with jobs being fueled by the large number of universities, the provincial government, an expanding
high-tech industry, and the expansion of the ship building industry following a a federal government contract signed last year. CMHC is forecasting that
6,100 people will migrate to the Greater Victoria area by the end of next year: this is equal to all the annual MLS sales and is about 4 times the total
number of annual housing starts.
Victoria, in other words, is a prime market to be making offers.
BC’s Affordable North
A Vancouver friend leaves this week for Prince Rupert: a key reason “We bought a house with an ocean view for $100,000 less than our Burnaby townhouse.” Both she and her husband have landed jobs in the northeast BC
city and, judging from recent reports, they are part of a migration pattern that will become more pronounced.
In a Housing Affordability Index released this week, the Northern BC Real Estate Board estimates that it takes 31.9% of
the average income to buy a house in the north, compared to 81.6% in Vancouver.
The average detached house price across the north is around $257,000, compared to $807,000 in Vancouver.
Significant shifts in affordability occurred in two Northern communities: Kitimat and Williams Lake. Average house prices increased more
than 30% in Kitimat, after a more than 20% increase in 2012. As a result, affordability worsened. The Affordability Index rose from 15.3% in 2011 to 21.5%
in 2013. In Williams Lake, an 8% decrease in house prices contributed to improved affordability. The index in that town decreased from
33.4% to 29.9%.
Kitimat remains affordable, despite the price hike, because average wages there are the highest of any northern community.
Kitimat remains affordable, despite the price hike, because average wages there are the highest of any northern community.
Vancouver Prices Shock Even New Yorkers
– AND MAGAZINE FINDS FOREIGN BUYERS ARE THE REASON
A recent article in the New Yorker magazine shows that others are also perplexed about Vancouver’s house prices. We have excerpted and edited the
The most expensive housing market in North America is not New York City or Orange County, California, but Vancouver, British Columbia, the article states.
“Now, Vancouver is a beautiful city but nothing about its economy explains why-in a city where the median income is only around seventy grand-single-family
houses now sell for close to a million dollars apiece and ordinary condos go for five or six hundred thousand dollars.”
“If you look at per-capita incomes, we look like Reno or Nashville,” said Andy Yan, an urban planner at the Vancouver-based firm Bing Thom Architects. “But our housing prices easily compete with San Francisco’s.”
Almost by chance, the articles, says, “Vancouver has found itself at the heart of one of the biggest trends of the past two decades – the rise of a truly global market in real estate.” (and JREI told you so).
A torrent of capital from wealthy people in emerging markets-from China, above all, but also from Latin America, Russia, and the Middle East-has flowed
into the real-estate markets of big cities in other countries, driving up prices and causing a luxury-construction boom. A recent report bySotheby’s International Realty Canada examined more than 1,200 luxury-home sales in Vancouver in the first half of 2013 and found that foreign buyers accounted for nearly half of sales.
Economists Joseph Gyourko, Christopher Mayer, and Todd Sinai have developed a theory about what they
call “superstar cities.” Looking at data from 1950 to 2000, they found a small number of cities where housing prices rose steeply, and
concluded that high earners tended to cluster together over time, with the result that rich cities tend to get richer.
Vancouver isn’t an obvious superstar. It’s not home to a major industry and it doesn’t have the cultural cachet of Paris or Milan. Instead, Vancouver’s
appeal consists of comfort and security, making it what Andy Yan calls a “hedge city.” “What hedge cities offer is social and political
stability, and, in the case of Vancouver, it also offers long-term protection against climate change,” he said. “There are now rich people around the world
who are looking for places where they can park some of their cash and feel safe about it.”
Vancouver, which has a large Chinese population, easy access to the Pacific Rim, and nice weather, has become a magnet for Chinese investors looking for
insurance against uncertainty. A Conference Board of Canada report found that Vancouver’s real-estate market is tightly connected to what happens in the Chinese economy.
The globalization of real estate upends some of our basic assumptions about housing prices. We expect them to reflect local fundamentals-above all, how
much people earn. In a truly global market, that may not be the case. If there are enough rich people in China who want property in Vancouver, prices can
float out of reach of the people who actually live and work there. So just because prices look out of whack doesn’t necessarily mean there’s a bubble.
Instead, wealthy foreigners are rationally overpaying, in order to protect themselves against risk at home. And the possibility of losing
a little money if prices subside won’t deter them. Yan says, “If the choice is between losing 10% to 20% in Vancouver versus potentially losing 100% in
Beijing or Tehran, then people are still going to be buying in Vancouver.”
The challenge for Vancouver and cities like it is that foreign investment isn’t an unalloyed good. The tendency of foreign buyers not to inhabit investment
properties raises the spectre of what Yan has called “zombie neighborhoods.” A recent study he did found that a quarter of the condos in Coal Harbour were
vacant on census day.
It might make more sense if the Vancouvers of the world simply charged foreign buyers a premium for the privilege of owning there.
“We’re one of the places where people seem to want to park their cash, and there aren’t that many of those places,” Yan says. “So let’s raise the
We believe and have forecasted since February 2013 that, soon, the federal government will bring in new rules regarding foreign real estate ownership. It
will likely be some form of taxation or restriction (as in Australia) … as well the high net-worth investor program will be re-launched albeit it at a
much higher entry point and more money left over for the government (charged by the lawyers and middle men that take most of the interest free money coming
in). Note: It will do little or nothing to stop foreign investors.
Mortgage Holders Are Blue Chip Borrowers
BMO Capital Markets
put out a recent report from John Reucassel, which notes that since 1979, loan losses on uninsured mortgages have averaged a paltry 2-3 basis points.” That’s just $20-30 per $100,000 of mortgages.
Even during the 1990 recession, uninsured mortgage losses topped out at 6 bps. (The peak was in the early 80s when credit losses hit 12 basis points.)
You’d expect insured mortgages to be more risky, but from a loss standpoint, CMHC’s losses have averaged a very reasonable 9 bps over time. In the big
scheme of things, 9 bps is small potatoes. Remember that CMHC charges borrowers up to 275 basis points (of their principal) on a typical insured mortgage.
RATE WARS ARE BACK
“Not long after
infamous 2.99% rate special (which was pulled shortly after its introduction) and
employee pricing 2.99% 5yr and 2.79% 4yr terms,
came out with the lower advertised rate ever by one of the big 5: 2.97% 5yr fixed. Of course,
Scotia just had to one-up BMO
by a measly .02%, but shortly after TD reduced to 2.99% for their 5yr term and 2.77% for their 4 year term as well,”
says Kyle Green of Mortgage Alliance (778-373-5441, email@example.com). ”
May 29, 2014
Mortgage Alliance Rates
Although many non-bank lenders accessible only via brokers have had rates below 3% for a while now, it can often be hamstringed by more restrictive product
offerings, or simply more restrictions on who can qualify for those sub 3% mortgages. Shorter rate hold terms, less than 20% down payment, owner occupied
income qualified generally get the best rates while other who don’t fit this box would have been finding slightly less competitive rates offered. 5 year
bonds (which fixed rate mortgages are highly correlated with) have slipped from highs of over 2.2% last September to 1.5% today, closer to
the low. Thus the lower rates.
Eyebrow Raiser: Soccer Star Home Rents For $15,000 Per Day
Brazilian soccer midfielder Ronaldinho is putting his Rio de Janeiro mansion on the rental market during the last half of the World Cup.
The five-bedroom house is available for the first 15 days of July for a $15,522 a day.
Ronaldinho currently lives in Belo Horizonte, where he plays for that city’s team Atletico Mineiro.
The World Cup is being held in Brazil from June 12-July 13, with the opening game in Sao Paulo and the last one in Rio.
Of course, Germany will win, which is our second eyebrow raiser for this week.
JREI Forecast ‘Visible Inflation In 2014’
In our Outlook conferences for the last 3 years we forecast that in 2014 we would see inflation become more and more visible in our daily lives and
particularly in hard assets. We also thought we would see more strikes as people realize that all costs are rising except their wages. So look around
… this week several strikes and others announced … also prices for beef up 16%, pork up 18%, limes up 50% and the whole food chain is up 450% in 4
years. Just watch for bananas, you will not be able to afford them any more in future! And – oh – you ain’t seen nothing yet!
Plots of the week
Will be discussed on hotline
THE JUNE 7 AND JUNE 8 REAL ESTATE EXPERT SUMMIT CONFERENCE
Attached to this Facts by Email is an outline of this exciting conference. REAL EXPERTS? YES!
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 firstname.lastname@example.org.
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.
THE JUNE 7 AND JUNE 8 REAL ESTATE EXPERT SUMMIT CONFERENCE
Dear Jurock’s Real Estate Insider subscriber
“Have you heard about the Real Estate Expert Summit coming up on June 7th and 8th in Vancouver?
This Weekend is designed for Real Estate investors who want to take their skills to the next level.
Learn a system to get focused.
Learn a system to recognize and capture great deals!
In addition to myself and Ralph Case, 11 hand selected real estate EXPERTS will teach YOU specific property strategies. Experts? Yes, among others, 1
manages a 1.8 Billion fund, another is a Georgie Award winning builder
And others have bought over 2,000 condos in the last 5 years.
You will learn state of the art property investment systems,
new ideas to finance property, to renovate property,
to buy in the U.S.A.,
and to structure Joint Ventures,
as well as how to deal with Realtors,
mortgage brokers, joint venture partners,
Real Estate lawyers, accountants – everything.
There are also 3 panel interviews with successful local investors.
Get the systems in place that you need to find deals, analyze deals,
and manage properties effectively and successfully.
Learn and network with other successful Real Estate investors!
“The next Real Estate Expert Summit is
June 7th and 8th at the Empire Landmark Hotel, Vancouver
The “Expert Summit” is a full weekend of presentations from successful investors and experts
on leading edge Real Estate investment techniques.
No Gurus selling CDs and courses,
this event is targeted to Real Estate investors that want to take their knowledge and results to the next level.
Full two day weekend for $197. For more info go to www.RealEstateExpertSummit.com
The price will go up on Monday