“Those who do not remember the past are condemned to repeat it.” -George Santayana
- BC Real Estate Association Reports Surging Home Sales
- The Numbers, The Numbers – Toronto
- The Numbers, The Numbers – Calgary
- The Numbers, The Numbers – Whistler
- Code Red
- Hot Property
- Best Mortgage Rates
I N T E R N A T I O N A L: Interest Rates
According to Bloomberg News, Charles Plosser of the Federal Reserve stated, “The data keeps telling us we ought to be raising rates, if we
wait too long we could find ourselves raising rates faster and higher than we want to.”
U.S unemployment is down to 6.1% which is at its lowest level since the summer of 2008. Housing starts across the US have are exceeding
the expectations of many economists. This encouraging news is causing speculation that the US Federal Reserve will be forced to raise interest rates faster
than anticipated to ensure inflation does not become a concern.
C A N A D A: BC Real Estate Association Reports Surging Home Sales
According to BCREA
some 8,989 residential sales in June represented a strong 25% increase from June 2013. The average price in the province also rose to $556,977, up by 4.5.
The largest Home sales climbed 46 per cent in the South Okanagan and nearly 30 per cent in the Okanagan Mainline Real
Estate Board area. In addition, home sales rose 36 per cent in the Kootenays and 33 per cent in Chilliwack compared to the same month last
A strong month for all of BC as well as a very strong first half of the year. Dollar volume was up nearly 27 per cent to $23.8 billion, sales were up 18.5
per cent to 41,883 units, and the average price was up 7 per cent at $568,499.
The Numbers, The Numbers – Toronto
Sales were up by 15 per cent year over year to 10,180 transactions. The average selling price for June stood at $568,953, representing an increase of 7.4
per cent compared to June 2013. The strongest price increase for the GTA as a whole
was for semi-detached houses, with the average price up by 9.7 per cent year over year. Price growth for condominium apartments was also
strong at 6.8 per cent. The Toronto Real Estate Board (TREB) says: “Despite higher inventory
levels, the condominium apartment market segment has benefitted from enough buyer interest to result in above inflation price growth.”
Indeed … Particularly if you see inflation at only 2%!
Prices solidly higher year over year and also on a year to date basis. However, the average price of $569,000 in June was lower than that achieved in April
(578,000) and in May (585,000).
Please note that while we do not compare east to west in Toronto (as in Vancouver) the TREB compares area codes. It shows its average
detached home price s $642,000 in AC 905 but its 416 AC reports an average of $921,100. (As in Vancouver: East: $728,000. West: $1,185,000 – not as far
apart as you might have thought.) The condo sector also clocks in at $309,700 and $390,500 respectively.
The Numbers, The Numbers – Calgary
Sales are up by double-digit rates in June compared to the same time last year. The fine Calgary Real Estate Board points to the floods last year as the
“The historic floods of 2013 forced residents and business owners from their homes and places of work. It’s not surprising that many Calgarians were
not focused on purchasing or listing their home at that time.”
Whatever the reason sales clocked in at 2,670 units this June, which was 18 per cent above the 10-year average. Total sales for the first half of 2014
increased to 13,929 from 12,257 in 2013. Active listings totaled 4,726 units compared to 4,584 in June 2013. Single-family benchmark prices totaled $509,700 in June, a one per cent increase over the previous month, and a 10.9 per cent increase
over June 2013.
for June totaled 1,769 units, which outpaced the 10-year average by 10 per cent.
Condominium apartment sales
for the first half of 2014, totaled 2,494 units, compared with 2,027 during the same period a year prior.
Condo benchmark prices
totaled $299,700 in June, a new high in the condominium apartment sector and 13.5 per cent increase over the previous year.
An exciting month for Calgary, beating its 10 year average number of sales for June, adding 5% to its average price and adding a whopping 16% to its
average and benchmark condo prices! Well, we expected that when we made Calgary our No. 1 city for the investor last January (cash flow plus capital gain).
Nice to see it come to fruition. Realtors tell us of a strong market continuing in July.
THE NUMBERS, THE NUMBERS – EDMONTON
Sales were up almost ten percent as compared to the same mid-year point in 2013. According to the REALTORS Association of Edmonton there were 11,595
sales compared to 10,556 sold by June 30, 2013. Prices also rose year-over-year; the value of sold property increased 15.3% from $3.6 billion to $4.2
“The average price has been fairly stable this year with relatively small market fluctuations from month-to-month,”
said REALTORS Association President Greg Steele.
“When compared to last year at the same time however, average prices are up and we have established new peak prices for single-family detached homes
for the past five months.”
In June, the average price for a SFD home was $435,534, which is down marginally from the new historic peak set in May of $438,506. Condominium average prices were up 0.6% from May at $254,182 but did not hit the June 2013 peak of $258,383.
Overall, YTD sales were up 9.8%. The increased sales put downward pressure on the inventory, resulting in a month end inventory of 5,704 available homes
(4.7 months of available inventory at current sales levels).
The average days-on-market was just 41 days in June and the YTD average of 45 days, compared to 47 last June. The sales-to-listing ratio was 66%: slower
than the 72% last June.
Behind what we anticipated for Edmonton for the first half of the year. While volume and sales were higher, the average condo price is actually lower in
June. It is more like – steady as she goes. Still good cash flow properties abound and with sales under a month on average … a stronger market is very
much likely for the fall.
The Numbers, The Numbers – Whistler
Mike Wintemute from Sothebys
reports that sales and listing statistics for the first half of 2014 show a significant increase in dollar volume and unit
sales compared to the same period last year. At the same time there has been a significant decrease in active listings which is resulting in higher sales prices.
Dollar volume was up considerably in June of this year and up approximately 17% year over year. Perhaps now is the time
where buyers who have been sitting on the fence realize that inventory is dropping and prices have stabilized.
Both February and June experienced a strong sales spike and year over year unit sales increased by approximately 21% which follows the increase in dollar volume for this time period.
This active listing graph tells the overall story of how inventory has been dropping for
the past five years. Lower active listings and rising sales volume have a habit of resulting in higher prices. Still
Whistler, like all resorts need careful evaluation of a) the resorts standing (Whistler is battling with its regulations on
phase I and phase II condos and b) what exactly kind of product are you buying. Best? Full time personal
use (phase I). No-nos? Quarter share, time share, hotel type units
1. Port Coquitlam,
Handyman’s Special, Restoration “Fire Sale.” BC Assessment for land value only is: $389,000. City Building Inspector has approved that house can be
restored, with drawings and permit applications. Price: $419,000;
2. Pitt Meadows, 790 Sq. Ft 1 bed + den 1 Bath condo. Currently rented
for $1025. Price: $199,000;
3. Pitt Meadows, 970 Sq. ft. 1 bed + Den 1 bath condo, currently rented for $1075 Expenses: Tax – $2008, Strata –
$185. Price: $219,000;
4. Fort St. John, commercial lot for sale $39k below assessed value. Rental income potential.
Anyone could be
featured here. ALL can featured their deals on the password protected website and also place their preferred contact info there. There are no guarantees or
warranties here. Please review the disclaimer on your deal section.
BEST MORTGAGE RATES:
Having a tough time getting financing? Try commercial!
“As lenders have tightened up in the residential financing playing field, commercial financing has become more of an attractive option for many
says Kyle Green of Mortgage Alliance (778-373-5441, firstname.lastname@example.org).
“Many individuals are finding that they can’t get financing with their bank or others, mainly due to a low income. It is a natural transgression to go
from residential into commercial because of some important differences between the qualifications.”
is primarily based of total debt servicing, or “TDS”. Lenders bring into account personal incomes, add in rental incomes (or at least a portion of
it … often 50%) and include all liabilities. For those with low incomes but high net worth it can be difficult to obtain residential financing.
Commercial financing, for better or for worse, relies
primarily on the property itself. If the property covers itself on a Debt Coverage Ratio (DCR) of about 1.25 or greater you
can often get financing, even if your personal income is low. Many
and “professional landlords” (those who have built a reasonable portfolio and are living off of that income) tend to start looking at commercial eventually as the lenders begin
to turn away their residential business.
Most lenders consider 4 units and below residential and 5+ units to be commercial.”
If you are a new subscriber you might wish to look over the first Facts by Email issue that we published this year –
which was our Outlook 2014 Issue (I know, I know – 52 pages – brrr). But, attached to that issue we published an excerpt from our very first Newsletter
that we first published in 1993. (Yep!)
To your surprise you may find that what was applicable (and worrisome) more than 21 years ago still may be applicable today. The countries of the world are
involved in a ‘beggar thy neighbor’ policy of reducing the value of their currencies to help exports, and are in a mad dash to print more
and more money. The outcome will be more tariffs, closing of borders and outright currency wars.
Since 1993 and particularly since 1998 I was of the view that the printing of money always resulted in higher inflation of hard assets. Since my favorite
hard asset is real estate – that was of particular importance to me. So, if you go to your password protected website you will find at least 40 or 50
articles on inflation versus deflation that we published there since the beginning.
The proof is of course in the pudding. While we did not get to higher and higher prices in a straight line … the average price in 1993 stood at
$200,000 and is today over $1.1 million. Clearly – in our view there is a direct and almost precise correlation to the excess creation of money and rising
real estate prices.
Governments in a desperate attempt to fool us (well?) create an official inflation number of (under) 2% and tell us not to worry. The managed to achieve
that (core inflation) number only, once they took out food, gas, oil, house prices – in fact anything that you and I need to live.
In the meantime hard assets are soaring, the average consumer is broke because of higher and higher prices … all … because we live in the world’s most unreported inflation of all times.
Travelling through Europe, I see pressures on all money systems everywhere. Not just the teachers in BC were striking. In Barcelona cab drivers are on
strike, Marseille closed its port because of the dock workers refuse to go to work. Government workers in Britain are on strike closing schools and
services. Germany and Britain brought in a minimum wage laws – the US is working on one. Reality is costs are rising everywhere, about everything and the
average consumer simply can’t make ends meet.
To keep the printing of money going, governments creates lower and lower interest rates offering zero percent interest rates to savers (Swiss and Danish
banks and all German Credit unions are now offering negative interest rates to saver (minus!).
John Mauldin in his new book “Code Red”
agrees with us and takes it further: ”
In the bizarre world we now inhabit, central banks and governments try to induce consumers to spend to help the economy while they take money away from
savers who would like to be able to profitably invest … Savers and investors in the developed world are becoming the guinea pigs in an
unprecedented monetary experiment.”
He calls Chairman Bernanke the Colonel Jessup (Jack Nicholson), who in the film “A few good men’ subjects his
men to an extreme approach to discipline by ordering a Code Red. Colonel Jessup explains in the film why his extraordinary approach of
calling the “Code Red” is necessary for the defense of the nation.
Bernanke (and the bankers of the world), says Mauldin, has called a Code Red on savers for the ‘greater good of the nation’.
In this wide ranging book he foresees currency wars and is predicting that Japan ” will unleash the most significant say significant currency war the world has ever seen.” As well as the resulting massive
inflation he also expects new tariffs imposed in imports [just as in 1993] by all nations – as those that get hurt by other countries devaluations try to
protect themselves. If the Fed ever tightens (and it will) he says: “expect blow ups and bankruptcies the world over.” He quotes Warren Buffett as saying that the ‘ … ending of QE will be the shot heard around the world.’
The book features charts and tables of deep interest if you believe that excess money creation has a direct and measurable direct correlation to the
world’s real estate, stock markets and other bubbles. Mauldin says that ‘almost all bubbles look alike’ and goes on to prove it.
He claims that central banks are trying to make stock prices and house prices go up. They would like to see them go up moderately, but instead we’re seeing
bubbles in various asset classes like corporate bonds farmland and other emerging markets. His book outlines the direct connection of printing money to
inflation. His stance is one we wholeheartedly agree with.
Some things that he predicts are happening now: US is imposing tariffs on India and China (This week) likely to follow
soon on other nations. The Canadian government trying to keep the dollar down as much as possible and other countries following suit. However, while in
Mauldin’s view the only outcome always was/is inflation he allows that we are in unchartered waters and that we as individuals need to protect ourselves in
this unprecedented time of history.
While his “protect yourself” suggestion do not include much real I would urge you to take the time to read this fine book. It is indeed a crazy
world … and to take some money off the table may be the prudent thing to do … at least until the muddy (unchartered) waters have cleared a little.
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.