Facts By Email

SUBSCRIBER SURVEY?
IT IS FINISHED BUT THE SUMMARY IS TOO LONG TO ADD HERE.
WE WILL DO A SEPARATE INSIDER EMAIL END OF THIS WEEK.
THANKS FOR ALL YOUR INPUT – WE WILL IMPLEMENT A LOT OF THE SUGGESTED CHANGES.

IN THIS WEEK’S FACTS BY EMAIL:

  • TITLE SEARCH SHOW FEWER VANCOUVER FLIPS THAN YOU MAY THINK
  • SPOTLIGHT ON ALBERTA
  • MAINSTREET BACK ON ACQUISITION HUNT
  • FORT MAC RECOVERY: MIXED MESSAGE IN OILPATCH CITY
  • CALGARY HAS MORE VACANT HOMES THAN VANCOUVER
  • DUBLIN MAY EMERGE AS SURPRISE BREXIT WINNER
  • MARK YOUR CALENDAR- JUROCK REAL ESTATE OUTLOOK 2017 ON SEPTEMBER 24, 2016 IN VANCOUVER.

 

• International •

 

Dublin Emerges As Surprise Brexit Winner

While we believe the aftermath of Britain’s surprise vote to exit the European Union will strengthen foreign real estate investment in Canada, especially Toronto and Vancouver, there is another city that could benefit directly from Brexit.

That is Dublin, Ireland, which is being touted as emerging as a U.K. financial centre. Ireland is the only U.K country still in the EU (though Northern Ireland is not). An Irish Times survey of relocation experts and major London financial houses showed that Dublin ranked well ahead of other European options vying to attract major financial institutions from London, which currently rules the banking world.
According to the study which ranked the cities out of a possible score of 60,

Dublin scored 50 points, behind only Frankfurt and Amsterdam.

Aside from banking, Dublin is expected to attract other U.K businesses that want to continue to export into the EU under existing agreements.

This bodes well for Dublin house prices. Detached house prices in Dublin, in Canadian dollars, range from $400,000 to $725,000, depending on the area. (South Dublin County is the most expensive.)

The 2008 crash, however, resulted in few new homes being built and Dublin is now facing a shortage due to an influx of new residents. The rental vacancy rate in Dublin has fallen and average rents have increased 8.3% in the city centre, to the Canadian equivalent of $2,023 per month, according to official data. (There is Canadian connection: Canadian Apartment Property REIT, through its subsidiary Irish Rental Properties REIT, is a major Dublin landlord, with 17 properties.)

Major Point: The Brexit effect is not all positive for Dublin, since trade and jobs connected with Britain and Northern Ireland have been disrupted. But the scrappy little city of 1.2 million could emerge, long-term, as a Brexit winner.

 

• Western Canada •

 

Spotlight Alberta: Mainstreet Back On Acquisition Hunt

Calgary-based Mainstreet Equities, one of the largest landlords in Alberta and B.C. is back on the acquisition hunt after snapping up apartment buildings in Surrey and Abbotsford last year. Mainstreet feels that this is a prime time to be buying rental apartment buildings and it especially likes the currently depressed Alberta market. Mainstreet has been right before, so it is interesting to hear why the company founder, Bob Dhillon, says it is time to start buying existing, mid-market, rental buildings.

According to Dhillon, Alberta is still seeing a strong in-migration of about 36,000 people this year with a forecast of 37,000 next year. (Which we at JREI cannot confirm.) The price of oil has recovered 57% from its February lows; developers have put a hold on building new rental units because of the downturn in the provincial economy; and lending rates remain at historic lows with little chance of an increase. (He notes that Mainstreet recently refinanced properties with a $17.5 million, 10-year CMHC-insured mortgage at 2.26%.)

“We see significant potential for future acquisitions in the province,” he said.

Mainstreet concentrates on building with average rents of $1,000 a month and Dhillon believes there will be higher demand for these lower-cost rentals during the current period of higher unemployment as people hesitate from buying a home. As well, he notes, real estate prices in both Alberta and Saskatchewan have fallen, labour costs are lower, making it easier for Mainstreet to hire mid-level managers and renovation crews, and the cost of heating fuel – a major expense for landlords – are lower due to the collapse in oil and gas prices. According to Dhillon, Mainstreet has an acquisition war chest of up to $600 million, based on a leverage level of 75%.

So far this year, Mainstreet has bought 50 rental units in total in Abbotsford (30), Calgary (1) and Saskatoon (19), paying an average of $123,000 per door.

Major Point: The performance of Mainstreet’s portfolio shows the deep divide between the Lower Mainland and the Prairie markets. In both Abbotsford and Surrey, Mainstreet’s vacancy rate is less than 1%, while it is 12% in Calgary, 13.5% in Edmonton and 15.7% in Saskatoon. 

 

Alberta Public Service Leads Hiring

If you are wondering why Edmonton’s housing market has remained so stable (see last week’s Facts by Email), relative to the rest of Alberta, a clue is in government hiring since the NDP government was elected. According to Statistics Canada, Alberta public service jobs increased 6% in the past year, while the private sector shed 5% of its workforce. As a result, Edmonton’s unemployment rate has remained unchanged at 7% while Calgary’s jobless rate increased to 8.1%, the same as in Montreal.

Major Point: We hear that immigration is negative not positive (as above) and with the downturn of the economy, jobs are lost. In May, Alberta’s private sector lost 24,000 jobs. The jobless is likely even worse than what is being reported, because Statistics Canada was unable to survey households in the Fort McMurray area due to the wildfire evacuation.

 

Fort Mac Recovery: Mixed Message In Oil-Patch City

It is sad to say, but rebuilding fire-ravaged Fort McMurray is a bright spot in Alberta’s economic outlook. A report from ATB Financial, the provincially owned lender, said the Alberta economy will fall 1.9% this year. It says the Fort McMurray, Alta., wildfires will stall economic growth, but rebuilding the oil-patch city will help boost the numbers in 2017 to a positive 2%.

Much of the Fort Mac rebuilding will involve replacing about 2,000 homes. “Expect increased construction activity in the new home market and declining vacancy rates in Fort McMurray’s rental market over the near to medium term,” according to a report from Canada Mortgage and Housing Corp.

CMHC says it’s too soon to tell how home prices will be affected, but we don’t think they will rise much and could even fall unless the price of oil rallies dramatically.

Major Point: During construction, the city is expected to experience a short-term rental boom as both home owners and construction workers look for places to live.

“Vacancy rates in the purpose built rental markets in Fort McMurray are expected to decline rapidly from the vacancy rate of 29% in October 2015,” CMHC said. “This will help stabilize rents, which have been declining.”

 

Calgary Has More Vacant Homes Than Vancouver

Calgary’s 2016 civic census revealed that while the city’s population increased slightly to more than 1.2 million in April, more than 20,800 homes were empty in April, a 67% spike over last year’s levels, which brought the vacancy rate to 4%, the highest level since 2004.

A city hall analysis shows there are more vacant units in 2016 than in any of the past 16 years. (Imagine if they had a vacant home tax!?!)

The number of vacant houses is double that of Vancouver, where the city estimates 10,000 homes are empty, most of them condominiums, amidst calls for a tax on vacant homes to force owners to rent them.

In Vancouver, most of the vacancies are said to be linked to real estate speculation in a city where house prices have spiked 30% in the past year. It is a different situation in Calgary, where the average home price in June was down 3.4% from a year ago and the rental vacancy rate is rising.

Nearly 1,800 housing units in central Calgary, 10% of the total were vacant in April, more than double last year’s volumes, the census figures show. Another 1,750 units were under construction downtown, many of them rental properties.

Across Calgary, there were nearly 9,000 vacant apartments, with a vacancy rate of more than 8%. The results are roughly in line with forecasts by Canadian Mortgage and Housing Corp., which predicted that 7% of rental apartments would be vacant by this fall.

The Calgary Residential Rental Association says rent rates are falling sharply, with some owners of higher-end rental cutting rents by up to 30% according to Calgary Herald.

Major Point: We have discussed several times that we like Alberta – but not yet – for us as investors. We think prices will adjust downwards further. Still, if you work and live there, may be a good time to upgrade.

 

• British Columbia •

 

Title Search Shows Few Vancouver Flips

Some have suggested that the sudden cooling of Vancouver’s housing market from May to June of this year – on the East Side of detached sales plunged 25% month-to-month and house sales on the West Side dropped 20% to the lowest monthly level for the year – was due to a provincial ban on “shadow flipping.” The ban, introduced in May, required that vendors had to be notified of an assignment sale of their property and that the original owners had to receive any proceeds from the sale.

One West Side realtor told us “the phones stopped ringing” when the new rules were announced.

We are not convinced.

We recently received a B.C. Assessment report on title transfers of Vancouver detached houses that tracked properties that were bought and then sold, some for multiple times, from January 2014 to June of 2016. (The data excluded houses that were demolished and a new home built on the lot – it looked only at existing houses that were traded.)

The data reveals that, as a percentage of sales, few houses were flipped! During the 18-month period, the data shows that 5.9% of the 6,459 detached sales in Vancouver were bought and then resold. In all, 390 houses were sold twice and 19 were flipped three times.

We find it a wonder that there were not more flips, considering the price appreciation. For example, the median price of a detached house in June of 2014 in East Vancouver was $968,000. In June of this year it was $1.63 million. On the Westside, the median price increased by $1.3 million in the same period, to $3.6 million.

The highest percentage of flips was in Renfrew Heights in East Vancouver, where 10.3% of all the houses sold were resold within 18 months.

NOTE:

  1. The highest number of flips was in Dunbar on the Westside, where 41 houses were bought and then resold within 18 months and three houses were bought and sold three times.
  2. In all, 7.42% of Dunbar house sales were resold at least twice in the study period. Such investors may have grossed a lot of money: the typical Dunbar detached house price has increased 40% in the past year, to $3.29 million, or an average lift of $1.3 million.
  3. Hastings East was also popular, with 30 houses flipped, representing 8.5% of all detached sales.

Major Point: Something to remember is that the new B.C. rules are only for licensed real estate agents (!), so multiple private assignment flips may have gone unreported and would not be captured by BC Assessments. Still, the date indicates that flipping of houses in Vancouver does not appear to be as widespread as most suspect.

 

HOT PROPERTY

  1. Least expensive house in Oak Bay! The next cheapest home in Oak Bay costs over $250,000 more! ($869,900), three bedrooms, one bathroom, built in 1911, 3,564 sq. foot lot
    Price: $590,000;
  2. LEAST EXPENSIVE RENT-ABLE CONDO in SIDNEY – $284,900
    Sidney: 1 bedroom, 1 bathroom, 660 square feet, no rent restrictions, southwest exposure, built in 2009.
    Very close to the Resthaven waterfront park and marinas, $265/mo strata fee;
  3. Kimberley, Brand new ski hill home, 100 yards from quad chair. Price: $389,000.

Look up deals on your password protected website.

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, and owner carries mortgage, etc. Also note…we do not vet any 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!

 

REAL ESTATE OUTLOOK 2017

MARK YOUR CALENDAR – JUROCK REAL ESTATE OUTLOOK 2017 ON SEPTEMBER 24, 2016 IN VANCOUVER.

Our 24th annual Outlook could be the most important ever. Twelve expert speakers will tell where the opportunities – and the dangers – lie in Canada and the United States in the year ahead.

For early bird tickets (your guests only $30), special seating and more information, click onto www.reoutlook.ca

Remember: Subscriber discount for becoming a sponsor with display table booth.

 

WONDERING ABOUT THE HOTLINE?

Hotline Text Alert System and Hotline Code Changed

To get on the Hotline Text Alert System and receive a text update when the Hotline is ready, please text ‘Jurock‘ to the number ‘393939‘ and you will be added to the system. You will receive no more then one text a week.

The Hotline Code has also been changed. Our new Hotline access code is 8080. The Hotline phone number is still 778-328-8887.

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.