“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens” -John Maynard Keynes

  • How Canadians Pick Markets In The US
  • The Chinese Are Buying – Everywhere
  • More Proof Of Money Printing Settling Into Hard Assets – Everywhere…
  • The Numbers, The Numbers – Suburbia – Vancouver
  • The Numbers, The Numbers – Fraser Valley
  • The Numbers, The Numbers – The North – BC Northern Real Estate Board
  • Best Mortgage Deals

INTERNATIONAL: IT’S A REAL BIG DEAL

Last week my wife Jo and I and our friends Pat and Gerry Reinders had the privilege of meeting the esteemed Gordon Campbell, Canada’s High Commissioner to the United Kingdom. Clearly the highlight of our stay in London we came away deeply
impressed with Gordon’s sure knowledge of Britain, his understanding and caring of world affairs and his action oriented personality. (But then he has
always been action oriented).

But having a slight ‘real estate bend’ (ahem) I was also impressed with his ‘really big real estate deal’, when under his
direction Canada’s property at One Grosvenor Square in London, England’s Mayfair District, was sold this March to the Lodha Group for … are you sitting down? … 306 million pounds, equivalent to C$564.5 today. The sale helped consolidate the Canadian high commission’s
diplomatic activities in the United Kingdom at Canada House on Trafalgar Square in central London. Canada House will be renovated – also under his
direction – and connected to the adjacent building at 2-4 Cockspur Street.

Apart from creating huge savings in operating costs (two addresses, two buildings etc.) For the first time in 50 years all Canada’s High Commission
operations will be under one roof. Campbell is also doing everything he can to make sure the renovation uses Canadian materials, Canadian finishes and
furnishings.

“We will use only Canadian materials, as in fine Canadian wood floors will tie the buildings together compliment the heritage marble that was there
when the place was first bought in the 1920s.”

Although as we sat in the fabulous ‘oval room’ of the current (now sold) residence, which was a former US embassy, we eyed the 1920s style furnishings with
adoring glances. But it makes a lot more sense to have Canadiana in Canada House. Further, Gordon told us
“The new Canada House will have a room for each province celebrating its unique features (like roughrider green chairs for the Saskatchewan board
room).

“That probably will be most interesting to Canadian visitors as well as the foreign dignitaries coming through the doors.”

Well, a real BIG REAL ESTATE DEAL in London for Canada
… and we have the REAL DEAL in our High Commissioner … a man with passion and caring

How Canadians Pick Markets In The US

(An excerpt from an interview by
GlobeSt.com
with
Mark Stapp, executive director of the Master of Real Estate Development program at the W. P. Carey School of Business at Arizona State University.)

GlobeSt.com: Are there certain geographic areas that are a stronger focus for Canadian investors? How are Canadian investors picking their markets?

Stapp: Strong areas are the Southeast and Southwest, especially Arizona. In particular, Palm Springs, southern California, Florida, and Arizona are very popular.

GlobeSt.com: What trend lines are you seeing among Canadian investors?

Stapp: I see more of the same. I don’t see any big shifts in the short term unless the dollar strengthens considerably compared to the loonie and our
prices increase substantially.

GlobeSt.com: Is there any downside to the rush from Canadian investors? Is it creating more competition for US-based buyers? Are we getting too
dependent on foreign capital?

Stapp: All investors have helped to stabilize our property markets. Now, they also create competition for US homebuyers and have caused
prices to escalate fast in some markets. In the commercial segment, they have been opportunity buyers.

GlobeSt.com: How long do you expect this interest from Canadians to last? Is this just a blip on the radar screen or a longer-term strategy?

Stapp: This is a long-term trend that has existed for a long time. Given our proximity, ease of travel and close cultural connections,
it’s going to continue.

Major Point:
We, at JREI have made the same point (or points) since 2010. One of the most asked questions remains is: “Ozzie, is there still time? Is it too late?” The answer of course is yes and no (didn’t you just know it?). If you expect prices to be the same
as – ay 2011 … well, they have risen by 30% t0 50% since then. But they have risen from a very low base. Today’s deals are still plentiful … as
long as you do your research, hire real local professionals, understand the vital urgency of good property management and pick your suburbs wisely. Finally
ask yourself: What is my ‘why’? What is my goal and why do I want to do it? Cash flow? Quick profit?
Without an answer to the ‘why’ do it want to go to the US (or elsewhere) you will likely be disappointed.

The Chinese Are Buying – Everywhere

Travelling thru Europe as I am this summer, one topic dominates the conversation at every one of our dinners. “Are there any Chinese buyers in your neighbourhood”? The answer is invariably yes … whether we talk about Canada, the US, France, Italy
England and -yes- Germany.

The U.S. housing recovery is clearly still led (at the upper end of
the market) by Chinese buyers. In fact, according to the National Association of Realtors (NAR) Chinese buying was up more than 70% to $22 billion – nearly 1 in 4 dollars of all foreign purchases!

Of course we Canadians are actually No. 1 in terms of total homes bought (according to NAR), but the Chinese investors buy much more expensive homes: An average price of $591,000. Also more than three-quarters of their
purchases were all-cash buys.

Where do they buy?

California
is the biggest market for the Chinese, accounting for a third of their purchases.

Washington State,
(our new recommendation for 2014) however, is coming up quickly, accounting for 9% of buys.

It’s followed by New York, Pennsylvania and Texas.

Why are they buying?

Only 39% of Chinese buyers said they intended to use their purchases as their main home.

  • Some may buy Condos for their Children attending U.S. Colleges.
  • Others are buying cheap homes In Distressed Economic Pockets, Like Detroit, And Renting Them Out.
  • Still Others Use The Homes As Vacation Properties A Couple Of Weeks A Year And Rent Them Out The Rest Of The Time.

In addition to the Tide of Chinese and the Canadians, those from Mexico, India and the United Kingdom are also becoming a lot more visible.

Major Point:
We at JREI have been telling you about these buyers creating new trends since 2010. 1. The trend of the rich fleeing for safety from
everywhere to where they perceive safety – often from their own governments.2. The creation of 2 markets in most major cities where the foreign investors
play. The super-rich driving the upper end beyond the norm and all the rest of us. This is most worrisome for most governments … also
for

2 reasons: 1. they do not want to admit that inflation in hard assets is a reality and the money printing the culprit; 2. that all bubbles are followed
by busts … ALWAYS!

More Proof Of Money Printing Settling Into Hard Assets – Everywhere…

In the same vein as above … The New York Times reports this week that hard asset prices are rising everywhere. Again we at JREI have told you so. In fact the New York Times headline is around the world prices for assets soar! The article states that in Spain
investors are so eager to buy the governments bones that they accepted the lowest interest rates since 1789. In New York the Art Deco office tower at one
Wall Street sold in May for 585,000,003 months after the going wisdom in the real estate industry was that it would sell for about 466 million. In France
the cable television company numerical was easily able to borrow $11 billion the largest junk-bond deal on record despite the risks associated. The article
then continues with “Welcome to the everything own – and, quite possibly, the everything bubble”. Further: “Around the world nearly every asset class is expensive by historical standards – stocks and bonds, emerging markets, urban office towers and Iowa farmland – you name it you name it.”

Well, dear reader, we have been reporting the phenomena of printing money and its likely outcome for some time. However when that fact makes the New York Times front page we start to worry a little. Most booms have a nasty habit of being followed by busts! NOTE:
Next week we will analyze the fine new book called “Code Red” in which the author – agreeing with us – separates fact from fiction where
the printing of money and resulting inflation is concerned. More importantly … HOW TO PROTECT YOURSELF.

C A N A D A: The Numbers, The Numbers – Suburbia – Vancouver

As we said last week … another good month as compared to 2013. A quick look at some suburbs and how they performed over the last 4 years, shows still a
bit of a mixed bag. Sales in Coquitlam lag still by some 20% behind 2011, prices are up 4%. The East Side showed a spectacular sales increase over last
year, but measured against 2011 sales are up by only 8%. Even West Vancouver still sold 28% fewer properties in June than in June 2011.

Major Point:
A good summer – still investors must dog into the numbers to see whether they really are as good as they seem.

The Numbers, The Numbers – Fraser Valley

1,668 sales in June represented an increase of 26 per cent compared to the 1,327 sales in June of last year but last month’s sales finished 7 per cent
below the 10-year average for June. The previous best June 2010.

In June, the benchmark price, as determined by the MLS Home Price Index (MLS HPI), of a ‘typical’ residential home – detached, townhouse and
apartment combined – was (only) 1.3 per cent higher than June of last year.

For the single family detached home, the HPI benchmark price in June was $568,600, an increase of 3 per cent compared to
June 2013 when it was $552,200. This is a record high benchmark price for detached homes since the MLS HPI began in January 2005.

The HPI benchmark price of Fraser Valley townhouses decreased by 0.3 per cent; going from $298,700 in June 2013 to
$297,800 in June 2014. The benchmark price of apartments was $197,000 last month, a decrease of 2.7 per cent compared to $202,500 in June of last year.

The month finished with 9,853 active listings, a decrease of 6 per cent compared to the 10,515 active listings available during June of last year.

Major Point:
Sales solidly up, prices up a tad and listings down. A lift off the bottom. However the Valley is a wide and varied place: Abbotsford saw
a 2% detached and condo price increase; Mission a 4% detached but an 18% condo price increase. White Rock saw its
detached properties rise by 6% but experienced a 7% decline over the average price achieved in May 2014. Langley saw detached prices rise
by 2% and condo prices fall by the same percentage … and so it went. We have a sideways … .market.

 

The Numbers, The Numbers – The North – BC Northern Real Estate Board

The BC Northern Real Estate Board (BCNREB) saw 2637 Properties head to the lawyer’s desk. This was up from the 2363 sales
reported In the First Half Of 2013. The Value of These Properties was $672 Million Compared With $579.9 Million in 2013. At the end of June There were 4663
active listings down From 4830 At the Same Time Last Year.

So, sales up 25%, volume up and listings lower … a good foundation for continued increases.

The North And Northwest Regions Of BCNREB Continue To Be The Most Active With Both Sales And The Average Price Of Homes Rising
Significantly Year Over Year.

The Central Regions of The Board Continue To Show Steady Growth In Average Prices And Number Of Sales.

The Southern Region sees the Number of Sales on the Rise after a Short Period of Price Correction.

By Region – Cariboo Region:

100 Mile House:
156 Properties sold this year. This compares with 149 Properties in the same period in 2013. Half Of The 51 Homes That Sold So Far This Year, Sold For
$235,000 Or Less. Also, on Average, It Took 172 Days For These Homes To Sell. Also Reported Sold Were 25 Parcels Of Vacant Land, 41 Homes On Acreage and 10
Recreational Properties. There were 864 Properties active listings at the end of June.

Williams Lake:
179 properties have sold so far this year, compared to 167 properties by June 30, 2013. Of the 65 single family homes sold this year, half sold for less
than $245,000 and these homes took, on average, 62 days to sell. At the end of June there were 437 active listings.

Quesnel:
125 sales so far this year, compared to 121 sales in the first six months of 2013. Of the 57 single family homes sold between January and June, half sold
for less than $225,000; these homes took, on average, 106 days to sell. As of June 30th there were 301 active listings.

Northwest Region

Prince Rupert: 197 properties sold so far this year, compared to 153 properties in the first half of 2013. The median price of the 141 single family homes that sold was
$205,000. On average, it took these homes 84 days to sell. As of June 30th there were 167 properties active listings.

Terrace: 201 properties sold in the first six months of 2014, compared to 180 properties in the same period last year. Half of the 99 single family homes that
sold, sold for less than $289,900. On average, it took these homes 31 days to sell. At the end of June there were 177 properties active listings.

Kitimat: 94 properties have sold in the first six months of 2014, compared to 124 properties at this time last year. Half of the 49 single family homes sold so
far this year, sold for less than $321,000 and, on average it took these homes 22 days to sell. At the end of June there were 78 properties active
listings.

Bulkley Nechako Region

Houston: 16 properties have changed hands so far this year, compared to 27 properties in 2013. As of June 30th there were 76 active listings for sale.

Smithers: 134 sales in the first six months of 2014, compared to 124 sales at this time last year. Half of the 59 single family homes sold so far this year, sold
for less than $255,000 and took, on average, 62 days to sell. As of June 30th there were 278 properties of all types available through MLS® in the
Smithers area.

Burns Lake: In the first six months of 2014, 36 properties were reported sold compared to 31 properties worth $3.7 million in the same time period last year. At the
end of June there were 132 active listings.

Vanderhoof: 62 sales in the first six months of the year, compared to 42 sales to June 30th of 2013. As of June 30th there were 159 properties active listings.

Fort St. James: 18 properties have sold so far this year, compared with 10 properties in the first six months of 2013 At the end of June there were 66 active listings.

Northern Region

Fort St. John: 497 sales in the first half of 2014, compared to 383 properties in the first six months of 2013. The 201 single family homes which sold so far this year
had a median selling price of $392,500 and it took, on average, 37 days for these homes to sell. As of June 30th there were 373 properties active listings.

Fort Nelson: 28 properties have sold since January 1st, compared to 38 properties in the same period last year. Half of the 10 single family homes sold since January,
sold for less than $285,000. These homes took, on average, 118 days to sell. At the end of June there were 113 properties active listings

Fraser Fort George Region

Mackenzie:
39 properties were reported sold, compared to 46 properties to June 30th, 2013. Half of the 33 single family homes sold so far this year, sold for less
than $154,000 and took, on average, 88 days to sell. As of June 30th there were 87 properties active listings.

Prince George:
695 properties have changed hands so far this year, compared with 636 properties in the first six months of last year. In the western part of the City, the median price of the 137 single family sales was $240,000. In the area east of the Bypass,
89 of the single family homes that sold had a median price of $205,000. In the northern part of the City 107 single family homes sold with
a median price of $295,000. The 117 single family homes that sold in the southwest section of the City had a median sale price of
$330,000. At the end of June there were 860 properties active listings.

Average Selling Price (Year to Date) MLS Reported Sales –

Community

June 30, 2012 Units June 30, 2013 Units June 30, 2014 Units

100 Mile House 244,377 47 245,404 42 250,900 51

Williams Lake 244,903 62 247,213 60 261,552 65

Quesnel 193,954 67 217,000 53 222,761 57

Prince Rupert 193,223 65 193,756 114 206,496 141

Houston 142,993 16 169,166 12 149,150 10

Smithers 262,827 74 250,257 58 251,475 59

Burns Lake 143,337 19 153,392 14 114,066 12

Vanderhoof 210,580 30 219,023 21 204,048 27

Fort St. James 243,600 5 168,666 6 152,725 8

Fort St. John 348,683 193 377,702 187 400,875 201

Fort Nelson 329,594 19 337,500 12 314,275 10

Mackenzie 134,004 51 148,558 33 163,313 33

Prince George 247,435 448 259,103 451 275,353 459

Terrace 211,733 93 235,000 104 294,651 99

Kitimat 176,012 92 222,766 71 320,131 49

Source: Residential Detached House prices: BC NORTHERN REAL ESTATE BOARD

Major Point:
It is clear that not all communities participated in the upswing this last 2 years that was found in Ft. St. John (+13%), Terrace (+28%), or the astounding
Kitimat (+45%) . But Prince George’s 10% and Prince Rupert’s 8% increases represent a clear lift of the bottom.

BEST MORTGAGE DEALS

Mortgages – deals? 2 year fixed terms get VERY competitive.

“Most recently most of our clients have been taking variable terms if they are looking for the lowest possible rate, although with some slightly higher
risk associated with it,”

says Kyle Green of Mortgage Alliance (778-373-5441, kgreen@mortgagealliance.com).

“Most economists have been predicting that the prime rate is likely to stay flat at 3% for about 2 more years, making a variable rate of 2.5% (Prime
-.5%) or better very attractive in the short term. This may all change with one major bank lowering their 2 year fixed term to an astonishing 2.34%.
This is the first time an advertised short term rate of 1-3 years has been below the variable rate in a few years’ time.

“That said, a short term rate isn’t for everybody. Many borrowers feel much more comfortable with a longer term of 5 years which is offered in the 2.89%
– 3.09% range with most lenders (2.89% products often have much more stringent requirements or higher pre-payment costs). If you are someone who feels
comfortable ‘going short’ however, this 2 year rate may be a great fit.”

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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.