GET READY FOR THE EXTRAORDINARY 2017 LAND RUSH EVENT – MARCH 4, 2017
Get ready for what will be the blow-out real estate event of the year:
Land Rush 2017, held all day March 4 in Vancouver.
While the Springboard will get you started on taking action and achieving real estate success this year, Land Rush will deliver information that could serve you for a lifetime.
I am not kidding.
Land Rush 2017 is shaping up to be the one of the most important real estate events of all time, certainly in the volatile Vancouver market.
We have drawn together 12 expert speakers, including, ahem, Ozzie Jurock, and they will tell, in detail, where to make money this year (also where not to lose it!) and for the long term. Land Rush dissects local conditions, and Canadian and U.S. real estate markets to answer all the question investors need to know.
Some exhibit booth space is still available and ticket sales are already pointing to another full house event.
“Happiness is having a large, loving, caring, close-knit family in another city.” — George Burns
IN THIS WEEK’S FACTS BY EMAIL:
- CHINA BUYERS SUDDENLY SHORT OF FUNDS – VANCOUVER DEALS GOING SIDEWAYS, INSIDERS SAY
- CHILLIWACK: PROVING PENTURBIA CAN WORK
- GET VANCOUVER PERMITS IN BY MAY OR PAY
- STRATA WINDUP PAYOFFS DISAPPOINTING
- 5,500 PEOPLE A MONTH MOVING INTO B.C.
- THREE REASONS TO CONSIDER THE TRI-CITIES
- METRO SALES SLUMP? IT’S THE PRICES, STUPID
- INVESTORS RUSHING TO LAND RUSH
- TOOL BOX: CHANGE THOSE HOSES
Q: I understand that Jim Dines changed his view of a depression ahead. Did he talk about that at the conference?
A: To get his total view of the world it would be best to subscribe to his newsletter. He did say that the commodity bear market was over, that the down cycle in commodities (2011-2016) was vicious. He also was waiting for a major bull market in commodities – likely gold. He also felt that silver at $17 an ounce was the single most underpriced metal in the world. He looks for a resurgence in uranium as power plants are needed as well as a major currency upheaval. Finally, he was bullish on pot.
• Canada •
China Buyers Suddenly Short Of Funds
Vancouver deals going sideways, insiders say
Rumours are floating around Vancouver that some large China-backed real estate plays are going sideways because of strict new China currency regulations that came in at the end of 2016 and were tightened further in January.
A Vancouver Chinese-Canadian real estate broker, who has sold more than $18 million in city property to Chinese investors in the past year, and asked to remain anonymous, said the market is shifting. “Some key Chinese-based players in Metro Vancouver [are] not waiving their conditions on transactions due to lack of investor funding. For one particular group, I have heard this occurred more than one handful of times.”
“I personally haven’t experienced these challenges myself in my own deals. [But] I will likely be more cognizant (sic) on my larger transactions ($15M upwards) but I don’t see any issues whatsoever with the deals I do below $5M because at this level the deals can be all cash.”
Another agent pointed to an East Vancouver residential land banking deal by a Chinese investor who is now bailing out of a planned condo development because she can’t get funding out of China or borrow it here.
The trouble is not only being seen in Vancouver. Global property firm Jones Lang LaSalle (JLL) head of research in China, Joe Zhou, has warned of a “big drop” in Chinese offshore property investments this year amid concerns over stricter and more lengthy review procedures by China authorities to ease pressure on a depreciating yuan.
Per JLL, outbound real estate investment from China jumped 53% to US$33 billion in 2016 as a result of the acquisition of assets around the globe by Chinese institutions including insurers, sovereign wealth funds and developers.
But – as we have pointed out since December – the party may be cooling.
We reported to you that the People’s Bank of China and the State Administration of Foreign Exchange (SAFE) began to intervene in the market to curb capital outflows. In January, it was ruled that all buyers of foreign exchange must now sign a pledge that they won’t use their $50,000 quotas for offshore property investment. Violators will be added to a government watch list, denied access to foreign currency for three years and subjected to money-laundering investigations, SAFE said in a statement.
Further, outbound investments valued at US$1 million or more are now subject to a rigid review process with few of them getting clearance from the regulators, according to a Bloomberg report. Bloomberg said reports from the U.K. and the U.S. show some China-based buyers are backing out of expensive real estate deals.
In London, Chinese citizens who clamored to purchase flats at the city’s tallest apartment tower, the Spire, three months ago, are now struggling to transfer their down payments. Less than 70% of clients who signed purchase contracts last year have made their initial payments, with the rest now facing “problems,” a press official at Greenland Holdings Corp., the project’s Shanghai-based developer, said on Jan. 12. Stride condos start at around CAN $850,000.
In Silicon Valley, Keller Williams Realty says inquiries from China have slumped since the start of the year. And in Sydney, developers are facing “big problems” as Chinese buyers pull back, according to consultancy firm Basis Point. “Everything changed’’ as it became more difficult to send money offshore, Coco Tan, a broker associate at Keller Williams in Cupertino, California, told Bloomberg last week.
Major Point: Offshore investors have found ways before to get around currency controls, but the latest regulations may prove too tough for some. Take care out there if you are in the midst of a major deal, especially development land or pre-sale agreements, with China-based investors. The Metro Vancouver foreign-buyer tax has already cooled the residential market, but the currency controls could hit commercial deals as well.
• British Columbia •
The British Columbia Real Estate Association (BCREA) forecast sales to decline 14.1 per cent to 96,345 units this year, after reaching a record 112,209 units in 2016. Tougher federal government mortgage qualification rules and the foreign buyer tax in Vancouver, is expected to limit consumer demand over the next two years. However, housing demand is expected to remain well above the ten-year average of 84,700 unit sales.
As JREI pointed out a few weeks ago, BCREA notes that net migration to the province exceeded 50,000 individuals during the first three quarters of 2016, This is about 5,500 people every month; the highest level since 2008 and a 50 per cent increase from 2015.
The average MLS house price in BC will fall 5% this year to $657,000, compared to 2016; MLS sales will fall 14.1% to 96,345 units and housing starts will be down 17.1% to 34,700. The biggest drop in sales (down 16.5%) and prices (down 7.4%) are forecast for Greater Vancouver, followed by the Fraser Valley. The biggest price composite home increase is expected this year in Chilliwack, up 4.5% to $416,000; and Vancouver Island, with a 3.3% increase to $599,000.
Major Point: Interesting that BCREA sees the average price fall by 7%, when it already is down by 19% year over year.
Chilliwack: Proving Penturbia Can Work
Remember Penturbia – the 80’s idyllic suburban construct that an appreciation of country values can be blended with urban incomes? Well, aside from some pricey Disney-like Florida suburbs, the concept has had mixed success.
But in B.C., Chilliwack in the eastern Fraser Valley may be proving that Penturbia can be a real estate reality.
As the rest of the Lower Mainland saw housing sales and prices slide over the past few six months, Chilliwack has posted sales increases and seen a dramatic jump in values. It is all tied to Chilliwack’s ability to plan for and attract big public and private sector employers who can deliver big-city wages in a town with low housing prices.
Since 2004, through smart civic planning and incentives, Chilliwack has landed facilities for the Canada Border Services Agency, the Canadian Police College, the RCMP Pacific Region Training Centre as well as a satellite campus for the University of the Fraser Valley. Private sector employers Convergys and trailer-maker Tycrop Manufacturing now also have a major footprint in the city. This month, Molson Coors will break ground on its new brewery on a 36-acre site just off Highway 1 in Chilliwack. The new beer plant will employ 200 union-wage workers, many of them relocating from Molson Coors’ Vancouver brewery site on Burrard Street that was sold in 2015 for $185 million to a developer.
Chilliwack provides job-generating industrial developers with a five-year property tax break.
The result has been a steady stream of people moving into Chilliwack from the western Lower Mainland, local real estate agents say. Chilliwack’s average detached house price is around $550,000, compared with $2 million in Vancouver. Its composite home price is $432,000, compared to $858,000 in Metro Vancouver and $626,00 in the Fraser Valley.
In January, Chilliwack posted 88 detached house sales. The City of Vancouver had 89. Chilliwack also had the highest home price increase in the province, up 38% from a year earlier.
In January, Chilliwack posted $78.6 million in sales: 57% were detached houses, 23% townhouses and 9% apartments.
Of the 182 sales in January, the highest number (39) sold were in the $400,000 to $499,999 range, followed by 29 sales in the $350,000 to $399,999 range. There were 17 sales over the $700,000 level, and only three over $1 million, said the Chilliwack and District Real Estate Board.
Major Point: Chilliwack’s success is showing some strain due to a shortage of homes for sale. Multiple bids are being seen, agents say, though the bidding is not going crazy, about $2,000 to $5,000 over ask for detached houses.
• Vancouver •
Urgent Toolbox: Get Vancouver Permits In By May Or Pay
If you are a developer going for a rezoning application or building permit in the City of Vancouver, get all the paperwork finalized before May or you could be paying a lot more and facing expensive delays.
That is because, effective May 1, Vancouver brings in its latest green lunacy, the Near Zero Rezoning Bylaw.
A City statement explains the Bylaw requires:
- Near Zero Emissions Buildings
Projects shall be designed to meet Passive House requirements and apply for certification, or to an alternate near zero emissions building standard, such as the International Living Building Institute’s Net Zero Energy Building Certification, as deemed suitable by the Director of Sustainability.
- Low Emissions Green Buildings
(1) LEED Gold – Building Design and Construction
All projects – with the exception of residential buildings – shall register with the Canadian Green Building Council (CaGBC) and be designed to achieve LEED Gold certification for Building Design + Construction (BD+C), or an alternate holistic green building rating system. A residential building is defined as a building in which at least 50% of the gross floor area is residential space. Where a project has multiple buildings, each building shall be evaluated separately.
In a presentation, this week at Buildex in Vancouver, professional engineer Rod Yeoh, a principal with DIALOG – which has designed many LEED buildings – said a lot of developers do not realize the extent of the new Vancouver bylaw.
Yeoh estimated the new Zero Emission rules could add from 15% to 20% to the cost of construction. (We would estimate much higher.) He also cautioned of lengthy delays: for instance, the Bylaw requires Passive House certification but there are only 3 Passive House registered consultants in Canada and only two in B.C. It will also be a problem accessing building materials: for example, only one manufacturer in B.C. makes the high-performance, triple-paned windows the new Bylaw will require. The City plans to phase in the stringent Passive House regulations but will immediately implement them on all city social housing projects, which will add to already steep costs for these “low-cost” units.
Major Point: Don’t panic, yet. Vancouver’s new Zero Emission Bylaw regulations are so complicated, confusing and potentially costly that the City will likely delay implementation. But there is something we should all consider. The Bylaw aims at reducing green gas emissions to zero, but Canada currently produces only 1.6% of global GHC emissions and Vancouver’s contribution is virtually invisible on a global scale. In other words, Vancouver already has near net zero effect on the world’s greenhouse gas emissions.
Strata Windup Payoffs Disappointing
Some owners of older, repair-needing strata buildings are looking at using B.C.’s Bill 40, that came in last July, to disband the strata and sell the entire building for development. (Bill 40 reduces to 80% from 100% the threshold needed for a strata corporation to vote to dissolve. Courts still need to approve any vote that is not unanimous.)
There are about 24 pending applications and votes going on. Most of these owners see dollars dancing in their heads, but judging from the projects that are close to closing, the big payoff is not coming. The buildings are being sold for the land lift, but the condo owners are not getting much more than local sale prices.
In Coquitlam, a 58-unit townhouse complex near the exclusive Vancouver Golf Club was sold by the strata owners to Anthem Property Group for $32 million. (It is still awaiting a decision from BC Supreme Court.)
The deal, if approved, works out to about $551,000 per suite but it is hardly a windfall. The benchmark MLS price of Coquitlam townhouse in January was $504,000, but larger townhouses next to a golf course should sell for more.
In North Vancouver, CBRE brokered the sale of a 114-unit townhouse complex in the Mt. Seymour area in January. That 6.5-acre site was sold to a developer for $51 million, or an average of $447,368 for each of the 44-year old townhouses. However, the benchmark price for a North Vancouver District condo in January was $831,000 and even condo apartments sell for a benchmark of $448,000. Not much a land lift for the owners who have worked years to pull the sale off.
Major Point: Strata windups are complicated procedures that require court approval if there is not a unanimous vote, despite Bill 40. They can be time-consuming and can pit neighbours against each other. If you are a condo owner considering this route, make sure that the money at the end will be worth it.
Three Reasons To Consider Tri-Cities
Aside from the arrival of the Evergreen rapid transit line in December (which coincided with a big housing sales slump in the region), the Tri-Cities of the Lower Mainland – Coquitlam, Port Coquitlam and Port Moody – may be prime for investors this year.
- Coquitlam is now the third-fastest growing municipality in B.C., behind only Langley and Surrey and it has most of the new Evergreen Line stations.
- Port Coquitlam is moving to allow up to three residences (a coach house plus secondary rental suites) on detached housing lots.
- Port Moody has two massive residential/retail developments in play, including a giant waterfront project on the Inlet. This should drive up prices for detached housing lots as the zoning goes through.
Major Point: A fourth reason: The detached housing market has died in the TriCities. There were only 60 detached sales in January (and 180 new listings) and 46 sales in December (compared to an average of 220 per month last spring), down 64% from a year earlier. The average price in Coquitlam has dropped by 25% since last April, at just over $1 million. We have a feeling that some low-ball bids would be accepted by house owners and that an investment in the Tri-Cities this year could pay off in the long-term. Note: 53 detached houses were newly listed in the Tri-Cities in January at $1 million or less.
Metro House Sales Slump? It’s All About The Price!
We are getting a bit tired of the pundits and politicians whining about the reason for the detached housing sales slump in Metro Vancouver. It is not about a foreign-buyer tax. It is not about a poor economy. It is not a seasonal thing or a pullback of millennials out of home buying. It’s all about price!
The East Side of Vancouver is an example of an area that saw a sudden and surprising surge in house prices last year. Sales of detached houses here are divided at the million-dollar mark. New listings below that price are seeing a 100% sales-to-new-listing ratio. Above that price, the same ratio falls to around 17%. The same thing is being seen in every suburban market.
Major Point: The Metro Vancouver detached housing market will recover only when vendors bite the bullet and cut asking prices. But that is going to take months to sink in.
INVESTORS RUSHING TO LAND RUSH 2017
Early ticket sales are signaling another sold out house for the real estate event of the year: the Jurock Land Rush 2017, held all day March 4 in Vancouver. Land Rush is shaping up to be the one of the most important real estate events of all time, certainly in the volatile Vancouver market.
We have drawn together 12 expert speakers, including Ozzie Jurock, and they will tell, in detail, where to make money this year and for the long term. Land Rush explains and forecasts local conditions plus Canadian and U.S. real estate markets to answer all the question investors need to know. Such as where to buy and where not to buy. Some exhibit booth space is still available – a chance to get your property and services in front of the most sophisticated and active real estate investors in Canada. Land Rush can’t be missed. For complete information and registrations, phone 604-683-1111 or visit landrushcanada.com
TOOLBOX: Check Those Hoses
Often landlords praise their old washing machines. They – after 15 years of operation – are better than the new, more finicky ones. We hear however, that the old machines came with rubber hoses and fittings to wall outlets. If yours is old and even if working fine CHANGE THE RUBBER FITTINGS into plastic ones. They can break and create floods!
Also, if you buy an old apartment building and you see many hot water tanks with silver paper wrapped around (or any other wrapping) get rid of them NOW. Replacing a hot water tank is cheap (they can even be rented), but fixing a flood is not!
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.