Facts By Email

  • QUESTIONS, QUESTIONS
  • STOCK MARKET EFFECT ON REAL ESTATE
  • MEXICO INVESTMENT REVISITED
  • BUYING WITHOUT SUBJECTS BUT STILL MUST SELL HOUSE?
  • RBC SAYS: NO HOUSING REVERSAL … EVEN ALTA WILL LOOK GOOD IN 2016
  • GIFT YOUR DOWN PAYMENT
  • HOT PROPERTIES
  • BEST RATES

 

Questions, Questions

Reader Comments/Questions:

Re: last week item on texting – a few people commented – good idea. I want an update on when the INSIDER is uploaded and the HOTLINE updated.

So, remember, if you get a text, we think that you want it. If not, please let us know. If you like to get a text whenever the hotline is updated and Jurock’s Real Estate Insider Facts are uploaded, just call 604-683-3222.

If not, please let us know.

So texts will start next week – no more than 2 texts per week.

Q: We have not received the Facts by Email for last 2 weeks. What happened?

A: Please call our office, if you have not received it. All subscriber newsletters are checked carefully and we employ a mailing house. We can even tell whether a mail out has been received. Well, sometimes our subscribers computer thinks our newsletter is spam … Please review your setting and take us out of your spam box (we have recommendations on how … on your password protected website). Also, PLEASE note: AT THE SAME TIME YOUR FACTS BY EMAIL IS MAILED OUT IT IS ALSO UPLOADED TO YOUR WEBSITE! Every issue is ALWAYS AVAILABLE FOR YOU TO REVIEW AND RESEARCH. Also, you can research the Insider Facts by Email online right back to 1996.

We received over 20 comments on the Harry Dent piece last week:

Comments:

Negative sample: “It would be nice if in future when you publish such one-sided negative comments made by a super-bear you also balance it in the same newsletter with positive comments made by a super-bull.”

Positive sample: “While he is wrong, it is good to give your head a shake once in a while. Thanks”

A: Our job is to keep you informed on “all things real estate’. Give you all the known facts so that you can make your own decisions. The fact that Harry is negative by itself is not worrisome … It is that he is not alone … This week, Citigroup became the latest in a long line of organizations, including Bank of America Merrill Lynch and the IMF, to express alarm. Canada’s housing market, it warned, is at risk of a “sharp and disorderly decline in home prices” that would harm the broader economy.

Major Point: On the same day RBC came out with their view that Canada’s real estate market is sound and NOT in a bubble territory. In fact RBC says this week that the number of resales in the country would jump by five per cent this year to 505,400 this year but drop by 0.7 per cent next year to 501,800. It expects the national average price to rise by 4.6 per cent this year to $392,600 and by 3.2 per cent in 2016 to $405,100.

A number of emails following last Thursday/Friday worldwide stock crash. Most are wondering whether there is a correlation.

Q: Are there statistics on whether a real estate crash follows a stock market crash?

A: There are statistics but they are not conclusive. However, almost every stock market crash in the last 30 years was followed by a total recovery of the stock market within 3 years. As far as real estate goes … it does get affected by economic downturns which often follow crashes. First it is outsiders that sell for their own reasons. When the financial crisis hit in 2008/2009 a lot of US investors repatriated funds back to the US by selling real estate in Whistler. Later owners with 2 homes were starting to think about selling their holiday residence. Thus all of BC saw reversals in price following the economic crunch 2008/2009. It was only the Lower Mainland that recovered quickly. The Island, the Interior, the Sunshine coast are just this year recovering. It will be interesting to see what stocks do on Monday. An outright crash on Monday would not be something we would NOT like to see.

Q: Ozzie aren’t you the one that talks about inflation returning and with it real estate values?

A: Indeed. And we have seen spectacular increases in Vancouver and most major cities in the world during the last 3 years. I also like to quote Milton Friedman (for 15 years) who stated that: “Inflation is primarily a monetary phenomenon”. But I also said that every year in our opening issue that trend, cycles and timing are also vital for us as investors. Yes, we went from $16,500 in 1969 to $1,100,000 for an average house in Vancouver today. But not in a straight line … in between we had reversals of between 6% and 17% from time to time and even 40% as well. So long term … yes, short term … watch it!

Q: My parents listed their home in the hope that it would sell fast. They also bought another house with no subjects. Their realtor told them the house would sell fast and that they had to have no subjects or they would not get the new house. They need the money by the end of this month – is there a source of bridge financing?

A: I hear it all the time and that worries me. At every mini-peak of a good market (and yes we have been there before) a kind of frenzy takes place. There is ‘hard money bridge’ financing, likely expensive, if you do not qualify at your bank. Do not buy without subjects if you have not sold your house and need the money from the sale to close on the new home.

Another lady contacted me on Facebook this week … same question: she listed her house – was assured it would sell quickly and bought another house in a suburb, has to close at the end of the month, but has not sold her house. Even if she finds someone to lend her the money … she then will have to carry two mortgage payments … possible disaster.

If you do not get the house you want without having to take that risk … say to yourself: “So what? Next!” Wait till you have a deal on your house and then buy.

 

So How Much Is The Stock Market Down Now? How Much Is Real Estate Up?

The TSX is down some 8.4 per cent over the past year, but Scotiabank’s managing director for portfolio strategy, Vincent Delisle, says that number is a “mirage.” Things are worse than that.

The bearish market has been distorted by one sector whose stocks have been soaring: health care. Those stocks have pushed up the TSX’s “trade-weighted” average, which measures the value of the market by averaging the value of all trades.

But that measure favours larger companies. If you look simply at all stock prices and average those – an “equal weight average” – the TSX is down 21 per cent over the past year, and down 9.2 per cent since the start of this year, Delisle said in an analysis published Wednesday.

Major Point: At the same time real estate values nationally have soared on average by as much as 10% … and most of us had leverage buying real estate with only 20% down. The increases in value – our returns – on our down payments are spectacular!!!

 

Mexico – Yes or No?

A few inquiries/on Mexico. Said one that his relatives have not lost money and are not seeing corruption. They are enjoying their investment. Of course, I am glad that some people are doing well with their investments.

But we still recommend that you stay in jurisdictions where you understand the legal system. Mexico runs on a Napoleonic system, that is fraught with danger, delays, and a hundred people holding their hand out along the transaction way.

Is all real estate bad in Mexico? No, but you must understand the differences in the legal system and the operating system (thru notaries, with Mexican partners etc.). No principle of ‘Indefeasible title’ here.

And then there are 486,000 items when you google “Fraudulent real estate in Mexico”.

So first, if you want more info … here is a good outline explaining the ‘system’: Look at this site on what is involved… This site has a detailed information about property law in Mexico, taxes, accounting etc.

Then these are easily found sites on fraudulent real estate in Mexico
Mexico Time Share Fraud
Mexico Timeshare FRAUD: August 1, 2015
Charges in Real Estate Fraud
Citi Says Signs of Mexico Fraud Weren’t Escalated
Real Estate fraud in Rocky Point, Mexico
Citigroup Takes $400 Million Hit, Alleging Fraud in Mexico

Major Point: We maintain … go on a holiday, rent a fine villa for a few weeks every year…invest your money in the USA or Canada. You will be happier.

 

Another Mortgage Twist – The Gifting Of The Down Payment?

Dustan Woodhouse, Ace Broker with Dominion Lending (catch him at dustan@ourmortgageexpert.com) talks about an interesting move regarding rental property financing:

“For those looking to purchase rental properties the minimum down payment has historically been at 20% for some time, and so it remains. In years gone by this down payment money had to be proven to have originated from the buyers own resources, it could not be gifted.

In the case of an owner occupied purchase the down payment can be (and often is) gifted from a directly related family member.

The big news from one of our key lenders at the start of July was an announcement that they would now allow gifted down payment (only from a related family member) to be applied to rental property purchases as well.

The credit score is a key focus with applicants scoring 740 and higher eligible for 80% financing on investment properties with no mortgage insurance premium, no fees, and no higher than market rates.

For those with a credit score below 740 the down payment must be increased to 25% in order to avoid the mortgage insurance premium, although if the client opts to pay the mortgage insurance premium then 80% financing is possible.

The 740 credit score relates only to the down payment amount, even for clients with a score under 740 the gifted option remains available.

This is a program designed to enable the smaller investor to pool resources with other family members and get into the Real Estate market. It opens the door of opportunity for many who have otherwise been locked out of buying additional properties.”

 

Alta Rebound

RBC Economics likes Canada’s real estate market. And it also thinks that Alberta’s resale housing market will rebound in 2016.

The bank’s senior economist, Robert Hogue, sees sales fall by 18% cent this year from 2014 to 59,000 transactions – the largest drop in the country.

But he then expects Alberta the biggest year-over-year hike in sales in 2016 of 7.1 per cent to 63,200 units.

He even sees prices go up on average by 2%. He is bearish however on new home construction calling for an annual decline of 12 per cent in 2015 to 35,700 units followed by another 15.1 per cent decrease in 2016 to 30,300 units.

Major Point: Even our own major banks can’t agree on what will happen.

Just stay vigilant.

 

Best Mortgage Rates This Week

Dow Jones down 3%, fixed rates may follow. With the Dow Jones dropping again, this time by 3% on Aug 21st, bond yields in Canada nearly hit their lows of January, reaching close to .6% for 5 year bonds. With rates dropping this much over a short period of time, it is unlikely banks will pass on the rate savings to customers just yet, but if interest rates stay low for an extended period of time we may finally see major banks come below the 2.69% 5yr fixed they have been hovering around for quite some time.

Some lenders are still offering rates as low as 2.49% for 5yr fixed rates, but must fit very specific criteria and sometimes have pre-payment restrictions or large penalties. “For very specific files 2.49% may apply with most of the bells and whistles you can get on a traditional mortgage,” says Kyle Green of Mortgage Alliance (778-373-5441, Kyle@GreenMortgageTeam.ca). “If bonds stay this low, we should see about a .1% decrease with major lenders.”

Mortgage
Alliance

Posted
Rates

1 yr
2.29%
3.50%
2 yr
2.09%
3.35%
3 yr
2.24%
3.79%
4 yr
2.49%
4.09%
5 yr
2.49%
4.64%
7 yr
3.29%
6.35%
10 yr
3.79%
6.75%

August 22, 2015

 

Hot Properties

1. Guildford, foreclosure – 2 bedroom 1 bath with 900 sq. ft. in Surrey, Guildford, walking distance to library, Gym, bus and Guildford Mall. Rental ok as it is still under the Rental Restriction limit. Price: $138,800;

2. Windsor, Ont., renovated 3 bedroom in sought after neighbourhood. Great tenants paying $800/ month + utilities. Updates include: roof, paint, ceramic tiles, kitchen cabinets, windows, and laminate flooring. Price: $92,500.

Remember, it has to pass the smell test! Is it a superior deal? (Low DP, Owner carries, well priced, well located, lease to own etc.) Can be submitted to be featured here – FREE. Contact info will only be displayed on your password protected website (to stop you from getting bothered by non-members).