IN THIS WEEK’S FACTS BY EMAIL:

  • HOT PROPERTIES – PRESALE IN THE INTERIOR – $270,000 –
    MAKE MONEY WHILE YOU WAIT FOR COMPLETION
  • HERE THEY COME – B.C. IMMIGRATION, INTERPROVINCIAL ARRIVALS SURGE
  • BEST SHORT TERM: THE ISLAND AND OKANAGAN
  • BEST LONG TERM: KOOTENAYS AND THE NORTHEAST B.C.
  • SOME SURPRISES IN RECREATIONAL INVESTMENT REPORT
  • PRICE FATIGUE FORCES METRO VANCOUVER SALES DOWN
  • RENTING THE FUTURE FOR MILLIONS OF AMERICANS
  • SENIORS PAY HIGHER RENT THAN MILLENNIALS

 

Here They Come: B.C. Immigration, Interprovincial Arrivals Surge…

…in the first quarter of this year. The provincial population has swelled to 4.72 million people, Statistics Canada confirms, and the in-flow from other provinces is expected to increase from 17,000 in 2015 to up to 25,000 this year. That is 2,000 more people every month.

More people are moving to B.C. from other provinces than immigrants.

While the net gain from international immigration tripled in the first quarter of this year from a year earlier and landed immigrants were at the highest level since the 1990s, just 14,676 immigrants arrived in B.C. in 2015, the lowest level since 1991.

Major Point: Knock out 3,000 or so Syrian refugees and net immigration levels are well below historic highs. BUT! Break it down and B.C. has gained 48,450 persons over the past 12 months and is on track to repeat that over the next year, but it is other Canadians that are leading the wave, drawn to B.C. because it has the strongest economy and the highest job growth in the country.

See below: Small town BC with jobs will really benefit! As will smaller Lower Mainland markets that are still affordable to the ‘other province pocket books’! Where? Surrey, Maple Ridge in the Lower Mainland. The Kootenays (proximity to Alberta) and the Okanagan. (See below)

 

The Best Short Term Plays

What does it mean? It translates into higher demand for housing, both rental and buying, and it has already transcended into two outlier markets that offer the best potential payoff this year for investors: Vancouver Island and the central Okanagan, due to the increase in those moving from other provinces.

Unlike immigrants who overwhelmingly prefer Metro Vancouver, interprovincial migrants are often seeking more affordable housing than what can be found in the Lower Mainland, jobs in the resource sector or are retirees. And, while no one wants to talk about it, there is a white flight taking place in B.C. as Caucasian residents of Metro Vancouver migrate away from a region where they are increasingly becoming a minority.

This is seen in the robust in-migration and housing demand in Victoria, Nanaimo and Kelowna, all partly being fueled by those moving from the Lower Mainland.

Victoria has seen a spike in newcomers over the past two years, and it is nearly all from either other provinces or from within B.C. The result has been a 13% spike in home sales so far this year and a projected 15% increase in detached house prices to $702,000 for 2016. Housing starts in Greater Victoria jumped 52.7% in 2015 and are expected to rise another 8% this year, to 2,185 units. However, the inventory of new and unsold homes has plunged to around 200 units. Nanaimo is seeing a similar market, with rising sales and prices, a tight inventory and low rental vacancy rates. These are both good markets to place investment money over the next two months to capture appreciation and rental income into 2017.

The Central Okanagan – home of Kelowna – has seen a 10% sales increase in MLS sales this year and average detached prices are up 9% to $445,000 (but are closer to $550,000 in Kelowna). Much of this can be traced to the influx of people from both the Lower Mainland and other parts of Canada. In the first quarter of this year, 12.8% of central Okanagan homebuyers were from the Lower Mainland or Vancouver Island, and 12.6% were from other parts of B.C. (5.8%) or other provinces. Only 3.4% were foreign buyers, according to stats compiled by the Okanagan Mainline Real Estate Board. This means that more than 25% of buyers are those moving in from other provinces or Metro Vancouver, a trend we believe will accelerate.

Major Point: Okanagan prices are still rising and the demand for homes will increase because of a lack of inventory. Kelowna is the best bet for rental income this year and next.

 

Best Long Term Plays

It is fairly easy to pick the short-term front-runners in B.C.’s white-hot real estate market, but there are two sleeper markets right now with both low residential prices and startling potential.

These are northeast B.C., especially the biggest city of Fort St. John, and the Kootenays.

Fort St. John and its neighbouring Dawson Creek were suffering, real estate-wise. MLS sales in Fort St. John fell sharply in the first quarter of this year compared to 2015. But, for long-term investors, the time could be ripe. This region could change overnight and will inevitably because of demand for oil and gas.

Gas prices have risen by 100% (hardly a note about this in the general media). The big boys are taking notice:

This year, Calgary-based ARC Resources announced that northeast BC has untapped oil fields that stretch for 100 km and could hold as much as 9.7 billion barrels of oil, most of it in the Tower region about 40 km from Fort St. John. The fields could ultimately prove to be as prolific as the best oil plays in Alberta and Saskatchewan, analysts say. If oil prices were back in the $80 plus-per-barrel range, there would already be a stampede into northeastern BC.

Also, this fall the federal government will announce its decision on the $36 billion Petronas LNG export terminal on the northwest coast, a decision that was supposed to be made on March 22. If approved, and we believe it will be, the impact on northeast BC will be profound, because this is where all the natural gas drilling takes place, plus work on the pipelines needed to get the gas to the western terminals. If Petronas is greenlighted, a new Shell LNG terminal could be close behind.

Fort St. John already has the $9 billion Site C dam project pumping jobs and money into the local economy and it will benefit the fastest and the biggest from a positive LNG decision and oil exploration and extraction. Right now you can buy rentable detached older houses (MLS R2068763) for $269,900; and two-bedroom older townhouses (MLS: R2055346) for less than $200,000. Brand new properties are coming available in the presale area too. Our FBE hot property deal right now: pre-sale of a two-bedroom, two-bath condo, completing this November. Three available. Price for each is $270,000 with 1.49% financing. (See below)

If you did buy this year in Fort St. John, your kids and grandkids will likely be talking about what a genius you were decades from now.

Kootenays: The Kootenay housing market may be at the bottom right now, the only region in B.C., which saw housing sales, prices, and starts fall last year, and with only a modest forecast for this year. Much of the angst relates to the oil price downturn, since Alberta buyers were once so active, especially in the east Kootenays.

We believe the Kootenays represent a long-horizon play with little downside and strong potential. The area has many great small towns, some of the best skiing, lakefront and golf in Canada, if not North America, and cost of entry that makes investment easy. Retirees can buy detached houses for less than $270,000, condo apartments for less than $150,000 and still be within a day’s drive of either Calgary or Vancouver.

And the Kootenay economy is recovering. There is $3.6 billion in major projects under construction in the region and another $2.3 billion in the planning stages, including three new mines. We believe oil prices and the Alberta economy will see a recovery over the next five years and the Kootenays will grow along with it.

Major Point: Cash flow is easy to find and with all that interprovincial inward migration with smaller pocket books a lot of the small towns appear to be the winners.

 

Some Surprises In Recreational Property Report

South Okanagan waterfront at a median price of $382,283 (based on sales from May 2015 to April 2016) is the biggest surprise in the annual Re/Max Recreational Property Report released this week. This price compares to $689,000 for waterfront in Sylvan Lake, Alberta; $1.5 million for oceanfront in Tofino on the west coast of Vancouver Island; and $953,000 on Salt Spring Island, B.C. Also surprisingly low in price is the Comox Valley, where Re/Max reports waterfront prices at $385,000 in its survey.

Major Point: And where is the least expensive waterfront in Canada? That would be Newfoundland-Labrador’s east coast; and Prince Edward Island, which this year tightened the regulations on non-resident ownership of waterfront. The median price for a waterfront cottage this year is Newfoundland is $163,000. In Prince Edward Island it is $199,800, Re/Max reports.

 

Whalley Seriously Kicks Butt

Surrey’s historic (yes!) Whalley area represents one of the great pre-sale condo investment opportunities. At the centre of the fastest-growing municipality in B.C., investors can lock up pre-sale condos for far less than $300,000 in projects like the Venue, which is preselling right now (almost sold out) and completes in mid-2018. (A Tien Sher development, Venue is a five-minute walk to the Gateway SkyTrain station, big recreation centres. The SFU campus, Surrey City Hall and civic library are also very close.) Historic Whalley has an image problem, but an influx of young professionals and other homebuyers from Metro Vancouver is taming that and, we believe, creating a new buzz for the area.

Recently, the Surrey Now newspaper printed a list of the 10 reasons why Whalley seriously kicks butt, penned by someone who recently moved into the neighbourhood.

Here are the top five:

  • I can afford to own my own beautiful condo with private secure parking next to the SkyTrain for less than I would pay for rent in Vancouver.
  • I can pump weights, do cardio, swim, or ice skate at the centrally located North Surrey Recreation Centre.
  • I am blessed with three SkyTrain stations in downtown Surrey.
  • I can take a friend for coffee at the Central City Mall and meet friends from SFU.
  • I can walk to Surrey Memorial Hospital.

Major Point: Go to city hall in Surrey and see all the new developments coming on stream. I have had the privilege of being a judge at the Fraser Valley Real Estate Board (Commercial division) Commercial Building Awards for 5 years. In that capacity I have walked some 200 plus new developments and I remain impressed by the quality of the buildings, the greening and the innovative planning. Remember when Yaletown was a dump and Mount Pleasant worse? Remember when I asked you to invest there 15 years ago?

 

Price Fatigue Forces Metro Vancouver Sales Down

The federal and provincial governments are threatening to make moves to address runaway housing prices in Metro Vancouver. This is a sure sign that the peak is here (any legislation always comes in long after it is needed). The other sign, as we noted two weeks ago, is that sales in the most expensive markets, like Richmond and Vancouver, are already tracking down. The downturn is becoming broader and, despite the spin that it is due to a lack of inventory, the real reason maybe price fatigue. Simply put, there is a lack of buyers willing to pay $2 million to $3 million for a house. Realtors are reporting slower traffic at open houses and less multiple bids (likely because properties are fully priced at list.)

Across all of the Lower Mainland, May MLS sales were down 6.1% from a month earlier, with some market posting even sharper drop offs. In North Vancouver, for instance, May detached sales were 140 units, the second lowest level this year and down from 167 sales in April. The benchmark price for a North Vancouver detached house is up 16% in the past three months to $1.6 million. On the West Side of Vancouver, detached sales were down 24% in May from a year earlier, and at 172 sales, at the lowest monthly level this year. The benchmark price of West Side house is up 14.5% in the past three months, to $3.4 million. These stats are more telling, because May is traditionally one of the strongest months for sales.

Major Point: While we generally slow into the summer, we did not do that in 2015. Thus – we think, the correction in the Metro Vancouver housing market has already begun. We do not see a crash – high in-migration and low interest rates provide a backstop – but a leveling off of both sales and price increases for the rest of the year in the detached market. We believe the condo market will remain robust.

 

Renting The Future For Millions Of Americans

The U.S. homeownership rate has fallen to 63.7% as part of an unprecedented 10-year downward trend and does not show strong signs of quick recovery, according to a study by Harvard University. The reasons include stagnant incomes, tight credit and a reluctance of millennials to buy homes. In comparison, the study finds, there is an equally long surge in rental housing demand, with increases across all age groups, income levels, and household types. With vacancy rates down sharply and rents climbing, multifamily construction is booming across the country.

A study conducted by New York University shows the number of renters in 11 major U.S. Metropolitan areas increased by 22 million people as of 2014. At the same time, the number of affordable rental units fell.

Major Point: Investigate investing in U.S. rentals in fast-growing, tech-oriented cities, such as Seattle, Phoenix and San Diego. You can still buy first class rental units for less than US$200,000 and vacancy rates are tight. With nearly 40% of Americans now renting, the U.S. multi-family market represents one of the biggest landlord markets in the world. Our marketing company just looked at a development in Arcadia (Phoenix) where suites (literally downtown) go for under $100,000.

 

Seniors Pay Higher Rent Than Millennials

Canadian seniors checking into retirement residences are paying much higher rent than that found in the general rental market. The average rent for bachelor units in seniors’ residences (where at least one meal is included in the rent) rose 5% in 2015 over 2014, from $2,107 to $2,210 per month, which is nearly three times higher than in the conventional rental market.

The increase in the number of senior residents (4.5%) over the year outpaced the increase in the number of available spaces (3.6%), leading to a decrease in the vacancy rate and upward pressure on rent, reports Canada Mortgage and Housing Corp.

Major Point: We advised you – dear investor reader – that going into business with anything ‘senior’ is a good move. While vacancy rates for seniors housing are higher than in the mainstream rentals, at 4.2% in B.C. and 7.9% in Alberta – the upside is substantial … and growing. (The national average is 7.4%, twice as high as the official apartment rental vacancy rate.)

 

Hot Property

  1. Surrey, 3 bedroom, 2 full bath 2 level townhome with 4 parking – 1 covered and 3 open on the driveway. Fully fenced backyard looks onto Greenery. Large bedrooms with private master balcony. END UNIT!  RENTALS ALLOWED. Coming on the market next week $219,900
  2. Ft. St. John, brand new – completing Nov 30, 2016- 2 bedrooms, 2 bath, five appliances, hardwood floors. $9500 price reduction, plus 3-year financing at 1.49% (Could be $170 per month positive cash flow) Price $270,000

Please note: Remember to check your password protected website at Jurock.com. Subscribers continuously post – what they perceive as – good deals. Anyone that has a good deal, can be featured here. There is no fee. However, WE RESERVE THE RIGHT to accept or not to accept a specific deal. What makes it a deal? We look for: Low down payments, special discount, owner carries mortgage, etc. Also note…we do not vet the deal, we just think it may be of interest. You MUST do your own due diligence. Please get contact info from your password protected website or e-mail Max at max@jurock.com … and read the disclaimer!

 

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To subscribe to Jurock’s Facts by Email 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.