“The four most beautiful words in the our common language: I told you so” -Gore Vidal
THIS WEEK IN FACTS BY EMAIL:
- QUESTIONS ON – CHINESE CRIMINALS BUYING VANCOUVER REAL ESTATE – WHY NOT STOCKS?
- DO DEPRECIATION REPORTS EVEN MATTER?
- WHERE THE BEST NEW CONDO DEALS MAY BE FOUND
- THE CHEAPEST DETACHED HOUSES IN VANCOUVER – RIGHT NOW
- CO-OP HOUSING SUBSIDIES END AND SOME BUILDINGS ARE IN PRIME AREAS … HMMM?
- SELLING A HOUSE? PRAY A LAND BANKER SHOWS UP
- MORTGAGE WARS: BRING IT ON AND THEN LOCK IN
- SPOTLIGHT: RICHMOND – BEST AREAS TO BUY IN – NEW CONDOS FROM $245,000
Q: THE PROVINCE reported last week that
Chinese police agents have been conducting secret operations in Canada seeking to “repatriate” suspects and money laundered in real estate. What do you
think of that?
Yes, I saw the article. One of the reasons would be that we do not have an extradition treaty with China.
The Province also reported that there are a number of offshore shell companies linked to addresses in Vancouver, West Vancouver and Richmond, with
connections to Mainland China. I doubt however that Vancouver’s high-end real estate market is driven by criminals, rather as we have reported and
predicted since 2010 that we have a mass influx of Mainland Chinese investors for no other reason that China allowed its citizens to travel to Canada at
that time. It is logical to want to be in a city with as much Chinese influence as Vancouver (400,000 Asians live here). However, they do not drive prices
up everywhere … note the item on condo towers below.
What blows me away is that CMHC claims that there is a minute percentage of our market going to the offshore investor (3%). Colliers’ Spark Report states that Chinese capital (outflow) hit a record of $18 billion in 2014, and the amount flowing to Canada and
specifically Vancouver is rising. We agree and have talked about it for 5 years.
Why are you always knocking the stock market? People have made a lot of money in the last few years and the bull is still roaring?
I don’t think I am knocking stocks. I just tell you up front I have a strong Real Estate bias. I like having control over my investment. I have no such
control over stocks, gold or some-such. These wild swings seem to me all program trading (up 300 points, down 200 – all in 2 days) and the average investor
does not participate in it.
told me years ago: “God speaks to all Money Fund managers first, then she speaks to you second.”
This time of year when people get their RRSP statements, I get a slew of “stock market refugees” wanting to hire me for advice on how to get some balance
(and cash flow) in real estate. Stocks work for you? Good. I love everybody making money. Just not my game.
Eyebrow Raiser: Poloz
The spotlight-seeking Poloz said in London this week that he “does not like surprises”. Really? You could not have surprised the financial community more
last month than he did! He now says that the interest rate decline has “bought us a little more time” and rates would likely not be reduced further until
later. Really? More time before what?
While he won’t bring in the regulations, he and the Finance minister will be pressuring CMHC and banks to make dramatic cuts to home buyer
qualifications. Look at mortgage wars below.
Spotlight: Richmond The Best Deals May Be Closest To Home
Richmond, the Island City by Nature, is so much more than a world class airport and great restaurants. Richmond is BEAUTIFUL. It is a recreational paradise
with over 40 kilometres of well-maintained trails and over 90 parks. It has culture too, with an immigrant population of 60% that is the highest in
Richmond has over 1000 new jobs coming alone at the new luxury outlet mall opening this spring near YVR.
Single family houses were hot! Many multiple offers in the market under $1M.
- The most popular areas with limited listings are:
Westwind (Steveston and No. 2 Road) 100% sold,
Steveston Village (Near the Steveston Pier) 100% sold,
Quilchena (Granville and No. 1Rd) 46.15% sold,
Woodwards area (Francis and No. 2) 41.67% sold.
Overall Richmond market is at a 28% sales ratio and it is a Sellers’ market.
With limited supply on the market houses under $900K the sales ratio were 84.21% which represents 57 homes on the market and 48 sold.
Houses listed between $900 to $1M were 50% sold. (50 on market and 25 sold.)
Above $2.75M has less activity.
Condo and TH:
Condos and town homes are steady. There are a few large developments in the central, north and east of Richmond.
- The popular areas with fewer listings are:
Westwind (Steveston and No. 2 Road) 66.67% sold,
Terra Nova ( Westminster and No. 1 Road) 50% sold,
Ironwood (Steveston and No. 5 Road) 38.46% sold,
even McLennan North (Granville and No. 4 Road) 27.50% sold which represents 120 units on the market and 33 sold.
Overall the Richmond market is at 19% sales ratio average and it is a balanced market.
The price range of $600K – $700K has the highest percentage on sales ratio (190 in inventory and 52 sold.)
Few transactions above $800K.
Talking with the ace Realtor RE/Max Team of Marc Jurock (yes, we are related) and his wife Fion Yung. (email@example.com). It was great to see the sparkle and enthusiasm in their eyes when they discussed their
favorite place: Richmond.
Says Marc: “We live, love and work in Richmond and a lot of our clients have settled here”. He adds:
“A lot of things are happening – building continues all over Richmond at a rapid pace with new developments popping up all over. Around the Olympic
oval, the Oval Village is taking shape with 11 new developments that are completing over the next couple of years that will total approximately 5700
units as well as lots of new retail coming online soon too. Some are calling it the new Coal Harbour or Yaletown.”
has the master planned Parc Riveria. Also in Richmond North the new International Trade Centre at Versante which will be
comprised of 2 office towers and a boutique hotel is also on its way. One office tower is sold out already.
Richmond, as part of the Quintet development project will soon have a new university in the heart of the City, as well as
retail and office space, including condominium towers and the City Centre Community Centre.
Richmond continues to grow. It’s time to discover Richmond, indeed, it is time to get excited about Richmond!
Major Point: Look at Marc and Fion best deals this week under ‘Hot Property’
Do Depreciation Reports Even Matter?
B.C’s once-feared condominium depreciation reports are turning out to be a toothless tiger as far as affecting the resale condo market. When they rolled
out two years ago the government claimed they would be mandatory for all Stratas and would act as a guide to buyers and owners about future expenses.
However, only Strata Corporations with “5 units or greater” are required to comply with the depreciation report legislation. Therefore,
bare land, duplex, triplex and fourplex strata corporations are completely exempt. Approximately 13,500 B.C. Stratas would fall under the guidelines.
But B.C. has zero standards for who is doing the reports; the government is not keeping track of which Strata Corporations have one; lenders are ignoring the issue; and buyers and realtors never seem to ask for them, even though they
are included as a check-off box in the MLS property disclosure form.
These are the conclusions we reached after two days of talking to condo owners, sellers and appraisers. As near as we can figure – and there are no solid
figures – only 30% of the Strata Corporations have completed a depreciation report (though the take-up is said to be
higher on Vancouver Island and in the Vancouver high-rise condo sector.) Strata Corps can vote, with a 75% majority, to not do a depreciation report.
are also covered by the depreciation legislation, but take-up in that sector is near zero.
So do you need a depreciation report? Most Stratas appear to think not.
First of all, they are fairly expensive, running from a few thousand dollars to above the $10,000 range if an engineering firm is doing them. Strata Corps,
however, can have the reports done themselves, which makes one question what they are worth.
A depreciation report is just another tool, and a questionable one, for those buying a resale condominium. A buyer or investor must do his or her own due
diligence. Look at the building, read all the boring Strata minutes, check on how much is in the contingency reserve fund (the average is less than 30% of
projected expenses); and, if in doubt, call in your own inspector to check the main components, such as roofs and foundations.
Where The New Condo Deals May Be Found
We took a reverse look at the new condo market in Metro Vancouver, which we believe, in certain markets, is ripe for low-ball offers right
now, most notably in North Surrey and Burnaby (high rises) South Surrey/White Rock (low-rise) andLangley (townhouses). (One Surrey high-rise condo developer is already offering dollar-a-day mortgage payments for the first year.)
First of all, investors have to look at condos as rental income producers. If the exit strategy is buy-and-flip, you’re out of luck or super patient.
Note: The typical condo price outside of the Vancouver has barely moved in the past three years.
In Surrey and Langley, as examples, average (not benchmark) MLS condo apartment prices are from 9% to 10% lower now than
a year ago).
We also believe the rental market is becoming stronger in Metro Vancouver, due to high home prices and the continual influx of people,
both immigrants and from other provinces (and after comparing our winter with “back east” the latter influx will likely accelerate).
We don’t include the Westside of Vancouver for, though there are 997 new and unsold high-rise condos on the market, it is tough for the
typical investors to achieve cash flow with prices from $700-$905 per square foot.
So where could stink bids be possibly accepted (or perhaps even welcomed)?
Burnaby-New West high rises: There are approximately 970 new and unsold concrete condos on the market. In New West, two new high-rise towers – River Sky and The Sapperton at the Brewery – have just started marketing. Asking prices for existing new inventory starts at the $470 per
square foot range, which is lower than the MLS high-rise market ($505 per square foot).
Maple Ridge low-rise: There are about 215 new and unsold low-rise condos in this small market and one project (Parc Vue) had such
low sales the developer converted the 68 unsold units to rentals in December. Asking prices for new low-rise are $215-$235 per square foot, which is lower
than the local MLS for resale units, at $240 per square foot. The rental vacancy rate is below 2%.
Surrey Central high-rise: A rush of new launches (Evolve; 3 Civic Plaza) has driven the inventory of new and unsold high-rise condos to nearly1,000 units. In the last quarter of 2014 there were just 214 sales and 70% of these were in one building ( Park Avenue West). New high-rise condo prices are asking in the $440 to $480 per square foot range, but this is skewed because of the
launch of micro-suites (316 square foot studios at the 406-unit Evolve start at $93,900).
In the resale high-rise market (which are fairly new condos), 75% of high-rise concrete units are selling for less than $269,000.
Even stink bids may smell great in those lonely new condo show suites:
South Surrey/White Rock low-rise and townhomes: There are a lot of unsold low-rise condos in this market: 403 at last count; along with about 200 new
townhomes. (Three new townhome projects have just launched: Grandview Heights; Prima and Sakura.) Low-rise condo prices start at $350 per
square foot, which is only slighter higher than the $350 psf average of local low-rise condos on MLS. New townhomes are priced from $250-$300 per square
foot: the average MLS for townhomes is $265 psf. (and they take on average 878 days to sell.)There may be a chance to get a low-ball low-rise or townhome
offer accepted in what we believe is a market with great potential for investors.
Langley/Cloverdale low-rise market: Seven new low-rise condo projects have hit the market here since October of last year, but only 79 units sold in the last quarter of
2014 (and 40% of these were in one project: Quadra’s fine Yorkson Creek). There are now 17 new low-rise projects marketing in this area.
New low-rise prices are in the $290-$325 psf range, slightly higher than the $267 psf average in the MLS market. A typical two-bedroom, low-rise MLS condo
is priced at $272,400 and on the market for 63 days.
Major Point: Lenders will be looking carefully at presales in these markets, which puts pressure on the new condo sales teams. Be
kind. Make them an offer they can’t refuse. Remember, figure everything at 20% down payments and work the best mortgage deal and any developer “deal
sweeteners” you can find.
The Cheapest Detached Houses In Greater Vancouver Right Now
We don’t know if these are real deals, but the following are the cheapest freehold detached houses in Greater Vancouver listed this week.
311 Loring St. Coquitlam:
Details: Convenient location, close to Lougheed Mall. Home is in rough condition, no heat, not hooked up to gas. Nice level building lot, 5,300 sq. ft.
1028 Third Avenue
Price: $535,500 Details: Great opportunity to build a new house in a prime location in New Westminster.
1736 East 34th, Vancouver
Details: Laundry Room at Ground for owner, huge space for storage, garage, Back lane access, Mountain View, Roof is 6 years old, nearly new hot water tank
Co-op Housing Subsidies End In 2020: And Some Buildings Are In Prime Areas. Hmmmmm…
Just throwing this out there. Federal government (Canada Mortgage and Housing Corp) funding for most B.C. housing co-ops ends in 2020 (some a few
years later, some this year). The concept arose back in the 1970s with 35-year CMHC financing which was meant to keep housing costs low. Residents buy a
share in the co-op but the building is owned by the Co-op Society.
The question now is what happens to the roughly 330 co-ops in B.C., some of which are on prime sites, such as in Vancouver’s Kerrisdale, West End and
neighbourhoods? As one co-op tenant noted, by definition, co-op residents don’t have the funds to purchase the buildings and most won’t be able to handle market rents.
We have been trying to find out what the exit strategy is but the co-ops we talked to seem to believe that last-minute miracle funding will come through
from Ottawa or Victoria to keep the status quo. We doubt it.
Selling A House? Pray A Land Banker Shows Up
You see the signs around Vancouver and as far out as Coquitlam: four to six houses all in row, all assembled by a land banker counting on getting rezoning to higher density. If you are a house owner
looking to sell, these speculators – and let’s not kid ourselves, most are Asian investors – are your best friend. We compared assessed values of Vancouver
houses before and after the lots were banked. Values, on average, double. For instance, one lot on Granville Street in Vancouver was assessed in July 2014
at $1.78 million and the house beside it at $1.78 million. Now part of a six-lot assembly, they are valued at $3.58 million each.
But you have to hold property in the right location (and incidentally often in areas that would devalue a typical family house): on a high traffic
location, close to Sky Train station; and in an area where the Official Community Plan is urging higher density (even if zoning on the particular land has
not been done).
Mortgage Wars: Bring It On And Then Lock In
The Bank of Montreal slashed its rate on a five-year fixed mortgage to 2.79% from 2.99% on Monday – but wait there even
lower rates. We know a homeowner who renewed a $300,000 mortgage for 2.2% at five years (variable) this week and mortgage brokers can match that rate.
The question is how low can rates go?
The answer is don’t wait to find out. Lock in long and lock in now. And if you are buying, buying now, note: The federal government is
scurrying to find a way to cool the market but it can’t raise rates due to fears of the blow to manufacturing.
So they will move to make it harder to qualify. Much harder. Think minimum 20% down payments. Think capping mortgages at 3 times income levels.
Plots of the week:
1. Richmond: 2-bedroom courtyard home. 9′ ceiling and open design. Excellent amenities including over 4,000′ of riverfront walking dyke trail, 5 acres of park space. Sales office open Sat/Sun from 12-5pm or by appointment. Price: $289,900
2. Richmond: Same complex – 1 bedroom $249,500;
3. Maple Ridge: 3 bedroom, 3438 sq. ft. home 3442 finished, 996 unfinished, 9546 lot. Priced $359,900.
Anyone can be here there is no fee. They just look
interesting to us … but you must check them out yourself. Contact info is on your password protected Insider website at Jurock.com/insider.
BOOK OF THE WEEK:
“What, When, Where, and How to Buy Real Estate in Canada” by Ozzie Jurock