Ozzie Jurock
Sun

The new consumer is you and I. How everyone can be motivated is what has to be analyzed. Because that analysis is what will tell us how the new consumer is likely to act and react in any given situation.

And the analysis is difficult because the ‘talk people talk’ is different from the ‘walk people walk’. Buyers are liars. We say one thing and then go out and do the opposite. If you take a poll, people will tell you that they want service and human interaction in the satisfaction of their consumer needs. Then they blithely drive by the local, and friendly, corner store to the ‘big box superstore’ with the canyon of goods piled up to the ceiling.

They load up with a 27-year supply of pink toilet paper (it was such a deal), haul it out to their hulking off-road vehicle which costs more than a Cadillac but will never see a mud splatter in its life. Then they celebrate the $5 they saved on the toilet paper with a $6 expenditure for a no-fat double latte with an almond biscotti (in other words, coffee and a cookie).

The new consumer will fight to save, drive for miles, circle parking lots. Discounts are king. But he will also splurge $50 for a bottle of wine of ‘fine vintage, with superb aroma tickling the palate’. There are lessons here for all businesses not just real estate. We all have changed. We kill to save on high volume everyday items (even if we must buy in bulk and go out of our way to get it) but we will spend big-time for something we perceive as unique, special and ‘with it’.

If you had polled or surveyed these people to discern their intended consuming patterns, they would have drawn you a much different picture. What they say and what they do is very, very different. So you have to be careful when you’re evaluating the prognostications of the demographers and the economists. That doesn’t mean that you ignore them but you have to separate the myth from the reality.

One thing is for sure; we are different from what we were. The ‘pre’, ‘post’, and ‘current’ Baby Boomers want a certain type of home and a certain lifestyle and the degree to which you can accurately read these trends will be the degree to which you will or will not prosper in your real estate investments.

Retirees today have a dual pension, have more savings and will spend more. They want security without it being a ghetto and a workbench in the garage.

Re-creaters who think they want to rough it want to ‘see the cows but not smell them’ will pay a fortune for any waterfront while shouting ‘where is my sushi?‘.

There is the investor buying for cash flow who will buy 10 ‘normal’ units for $80,000 each and have a tenant pay off the mortgage to get (eventually) to that state of nirvana : “Ever increasing passive income”.

He or she focuses only on increasing the monthly cash coming in.

And then there is the consumer that needs new, ultra modern and will spend $800,000 – 800 sq foot suite on a stylish ‘with it’ renovated suite in a downtown high-rise.

This consumer knows the new trends…gone are bidets and granite countertops to be replaced with four jet showers and concrete (yes) countertops. It is a ‘custom showering experience allowing each user to select the perfectly individualized combination of water location, water temperature, music, ambient lighting, chromatherapy, and steam to provide a unique sensory showering experience.’

Smart technology in the kitchen, terra cotta floors, the TV embedded into the refrigerator (LG), bar-code reading self-programming microwaves ‘remote command centres‘ for your networked kitchen equipment including touchless kitchen faucet with tri-point sensing technology to turn itself and the two-tiered dishwasher on and off. Frontloading designer washing machines and dryers. Structured wiring and hidden ‘in every room’ stereo systems with iPod stations are complementing indirect ambient floor lighting and wide planked hardwood floors.

The new consumer is concerned with living longer and healthier. A whole new philosophy of physical behavior is developing. We cram ourselves with oat bran, we devour lettuce and spinach by the bale, and we torture ourselves with jogging and calisthenics and other assorted masochisms. Some of us do it for an improved quality of life; most of us do it in a misguided and vain attempt to slow down the clock and the calendar.

In real estate investment, what we really need – in concert with exercising our bodies – is to exercise our minds and direct our thinking to understanding ourselves. Do we want cash flow and a tenant to pay off our mortgage? Do we wish to insulate ourselves against inevitable downturns in any market and buy the low priced small town condo or do we want to flip that luxury condo (getting ever more difficult this year)?

Do some work, some planning it and you will create the resilience, the self-reliance and the security that you are looking for which few financial planners can give you. In the words of Dr. Tomorrow: “In the past we were a nation of have and have-nots, in the future we’ll be a nation of know and know-nots.” Get onto the ‘know’ side of things. Life is a wonderful journey. A journey. You don’t arrive somewhere and stay there. Make it an ongoing journey of personal growth of mind as well as body and no matter where the world goes you will be safe.

Before you invest in property, invest in yourself. Time, thought, and taking action all help to create opportunity. Inertia, mental sloth, and the unwillingness to roll up your mental sleeves and do your own research keep you insulated from opportunity. When you do take action you will be much more likely to avoid mistakes and encounter fewer problems.

I know people who will spend more time analyzing the fine print on a can of tomato juice than they do reading the fine print on an investment prospectus or examining a house before they buy it.

Successful real estate investing is like anything else. It requires personal work, imagination and individual enterprise. But you’ve got to do the important work yourself. Read that last sentence about a hundred times. There is no substitute or way around it. I do not know of any successful investor in real estate (other than the homeowner, happily and unwittingly riding up the escalator of inflation) who hasn’t learned the ins and outs of the business, who doesn’t actively and consistently scour the market place, make offers, and when they are accepted, personally does the due diligence.

– – –

Ozzie Jurock

President of Jurock Publishing Ltd.

web: www.reag.ca

email: [email protected]

© The Vancouver Sun 2008

Residential sales drop slightly

Sun

An influx of new listings entered the Greater Vancouver housing market in April 2008, while residential sales reduced slightly compared to the same period a year ago.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver totalled 3,218 in April 2008, a decline of five per cent from the 3,387 sales recorded in April 2007, and a 3.8 per cent drop from the 3,345 sales in April 2006.

New listings for detached, attached and apartment properties increased 25.6 per cent to 7,010 in April 2008 compared to April 2007, when 5,580 new units were listed.

“Residential sales continue to be strong, but there is a lot more choice on the market today. This is good news for a market that has been defined by record-breaking activity for most of this decade,” said REBGV president, Dave Watt.

“Despite this seeming re-balance between sales and listings, it took, on average, six fewer days to sell a home in Greater Vancouver compared to the previous year, with a days on market average of 33 in April this year,” said Watt.

Sales of detached properties declined 7.8 per cent to 1,293 from the 1,403 detached sales recorded during the same period in 2007. The benchmark price, as calculated by the MLSLink Housing Price Index®, for detached properties rose 11 per cent from April 2007 to $771,321. Sales of apartment properties in April 2008 declined 2.4 per cent to 1,317, compared to 1,350 sales in April 2007. The benchmark price of an apartment property increased 9.6 per cent from April 2007 to $389,070. Attached property sales in April 2008 are down 4.1 per cent to 608, compared with the 634 sales in April 2007. The benchmark price of an attached unit increased 10.5 per cent between April 2007 and 2008 to $477,900.

Bright spots in Greater Vancouver in April 2008 compared to April 2007:

ATTACHED:

SQUAMISH up 84.6 per cent (24 units sold from 13)

VANCOUVER EAST up 50 per cent (51 units sold from 34)

SUNSHINE COAST up 157.1 per cent (18 units sold from 7)

APARTMENTS:

MAPLE RIDGE/PITT MEADOWS up 32.3 per cent (41 units sold from 31)

NEW WESTMINSTER up 33.8 per cent (95 units sold up from 71)

PORT MOODY/BELCARRA up 23.7 per cent (47 units sold up from 38)

RICHMOND up 7.8 per cent (179 units sold from 166)

The Real Estate industry is a key economic driver in British Columbia. In 2007, 38,050 homes changed hands in the Board’s area generating $1.065 billion in spin-offs. Total dollar volume of residential sales set a new record at $22.25 billion and total dollar volume of all sales set a record at $22.77 billion. The Real Estate Board of Greater Vancouver is an association representing more than 9,500 REALTORS®. The Real Estate Board provides a variety of membership services, including the Multiple Listing Service®. For more information on real estate, statistics, and buying or selling a home, contact a local REALTOR® or visit www.realtylink.org.

© The Vancouver Sun 2008

But only as an investment rather than a primary residence, TD Canada Trust says

Bruce Constantineau
Sun

More than half of Vancouver residents surveyed would buy a condo as an investment rather than as a primary residence — the highest level in Canada, according to a TD Canada Trust online survey.

The survey found that 52 per cent of Vancouverites would make a condo investment, compared with 38 per cent of 1,200 residents polled in six Canadian urban centres — Vancouver, Calgary, Toronto, Ottawa, Montreal and Halifax.

Vancouver residents are also the most likely among urban Canadians to pay between $400,000 and $600,000 for a two-bedroom condo — with 24 per cent saying they would pay that much, compared with just 13 per cent of urban Canadians in general.

The survey found that 48 per cent of Vancouver residents are willing to raise a family in a condo, up from 34 per cent who said they would consider it last year.

Condos are increasingly becoming urban Canadians’ residences of choice, as the lure of low maintenance and affordability boosts the number of potential buyers.

Forty-eight per cent of city-dwelling Canadians said they would consider buying a condominium as their primary residence, up significantly from the 39 per cent recorded a year ago.

Reasons for that interest vary widely across the country, as do the prices buyers are willing to pay.

“While affordability is still the main driver for many first-timers, the condo market today offers so many options and amenities — including highly energy-efficient buildings — that it is commanding the attention of a much wider range of potential buyers,” said TD Canada Trust representative Joan Dal Bianco.

Less maintenance than a house was a key factor for 34 per cent of respondents, while 23 per cent said a cheaper price would be their main reason to make such a purchase.

Energy efficiency is also a growing attraction for condo buyers, 96 per cent of whom said it would be a top amenity they seek, equalled in popularity by only good building security.

Low condo fees were another top priority for 94 per cent of those polled. Almost half of respondents said they were willing to pay no more than $400 a month in fees, while 36 per cent said they would pay no more than $200.

Nationally, 52 per cent said they want to spend less than $400,000 to buy a two-bedroom condo, and 28 per cent said they want to spend less than $200,000.

All of which reveals a large gap between people’s expectations and the prices they’ll encounter when they go shopping.

“There are still locations where you can a $150,000 condo,” Dal Bianco contends, while adding such properties may be older buildings that lack amenities.

She concedes that “in the large major cities, in particular Calgary, Toronto and Vancouver chances of finding something under $200,000 are probably pretty slim.”

The online survey was conducted by Angus Reid Strategies between March 20 and March 25 and the national sample is considered accurate to within 2.9 percentage points, 19 times out of 20. The Vancouver sample is considered accurate to within 6.9 percentage points.

© The Vancouver Sun 2008

John Morrissy
Province

OTTAWA — Condos are increasingly becoming urban Canadians’ residence of choice, as the lure of low maintenance and affordability boosts the number of potential buyers, says TD Canada Trust.

Forty-eight per cent of city-dwelling Canadians said they would consider buying a condominium as their primary residence, up significantly from the 39 per cent recorded just a year ago, Canada Trust said is its condo poll survey of 1,200 online interviews.

“While affordability is still the main driver for many first-timers, the condo market offers so many options and amenities — including highly energy-efficient buildings — that it is commanding the attention of a much wider range of potential buyers,” says Joan Dal Bianco of Canada Trust’s real-estate division.

Less maintenance than a house was a key factor for 34 per cent of respondents, while 23 per cent said affordability is the main reason.

Energy efficiency is also a growing attraction for buyers, 96 per cent of whom said it would be a top factor, equalled in popularity only by good building security.

Low condo fees were another top priority for 94 per cent of those polled. Almost half of respondents said they were willing to pay no more than $400 a month in fees and 36 per cent said they would pay no more than $200.

Nationally, 52 per cent said they want to spend less than $400,000 to buy a two-bedroom condo, and 28 per cent said they want to spend less than $200,000.

All of which reveals a large gap between people’s expectations and the prices they’ll encounter when they go shopping.

“There are still places where you can a $150,000 condo,” Dal Bianco said, adding that “in the large major cities, in particular Calgary, Toronto and Vancouver, chances of finding something under $200,000 are pretty slim.”

A new condo is not top of mind for those polled. Fully 45 per cent said “new” was the least-important factor.

© The Vancouver Province 2008

USA Today

WASHINGTON (Reuters) — Pending sales of previously owned homes fell 1% a new low in March, as expected, signaling the housing slump has yet to bottom out even as the spring sell season gets underway.

The National Association of Realtors’ seasonally adjusted index of pending sales for existing homes fell to 83.0 from a downwardly revised February reading of 83.8, the index’s previous low. The index was 20.1% lower than March 2007, when the index stood at 103.9 in March 2007.

A reading of 100 is equal to the average level of sales activity in 2001, when the index started.

Economists were expecting the decline in these contracts, which are a good barometer of future home sales.

NAR forecast that existing home sales to edge up to an annual pace of 5.82 million in the fourth quarter from 4.95 million in the first quarter. For the year, the group estimates sales will total 5.39 million and then increase 6.1% in 2009 to 5.72 million.

It also expects median price to decline 2.4% in 2008 to $213,700 before gaining 4.1% to $222,6000 next year.

Falling home prices and a tight credit environment have pummeled the housing market and sent potential buyers to the sidelines to wait out the slump. So far, there’s been no evidence that the traditionally strong spring selling season is jump-starting any sales activity.

The trade group predicts that existing home sales activity and the economy will pick up in the second half of the year as larger home loans backed by the Federal Housing Administration become more widely available. The FHA recently raised the mortgage limits for loans it guarantees.

“Things are beginning to improve, but the availability of affordable mortgages is uneven around the country and sometimes within metropolitan areas,” said NAR chief economist Lawrence Yun.

A report Wednesday on mortgages showed that applications rose last week as interest rates again slipped below 6%.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended May 2 rose 15.6% to 655.4.

The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 2.6% to 650.8.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.91% from 6.01%.

The MBA’s seasonally adjusted purchase index rose 12.1% to 381.3. The group’s seasonally adjusted index of refinancing applications was up 19.3% to 2,273.8.

B.C. home sales forecast to decline

Sun

B.C. home sales are forecast to decline almost 10 per cent this year, and decline a further two per cent in 2009, according to the British Columbia Real Estate Association’s spring housing forecast.

“Some weakness on the export side of the economy and eroding affordability will have an impact on housing demand over the next two years,” BCREA chief economist Cameron Muir said in a news release issued Tuesday.

BCREA reported that B.C. home sales were down 14 per cent in the first quarter of 2008, while active listings were up 24 per cent.

“More balance between demand and supply means less upward pressure on home prices. It also reduces the chance of multiple bids on the same home, giving homebuyers more time to investigate properties thoroughly before purchasing,” Muir said in the release.

The average Multiple Listing Service price in the province climbed 12 per cent, to $438,975, in 2007.

This year, BCREA forecasts an increase of nine per cent, to $479,000, with a more modest four-per-cent rise, to $499,000, expected in 2009.

The volume of home sales is expected to ease right across Canaeda, the Canadian Real Estate Association said Tuesday.

The CREA report said Canada-wide home sales are predicted to decline 11.5 per cent to 460,900 units in 2008. CREA anticipates a further four-per-cent fall in the volume of sales in 2009.

“Rising prices are continuing to erode affordability and for that reason sales activity is forecast to decline,” said CREA chief economist Gregory Klump.

© The Vancouver Sun 2008

But spending on residential permits up over this time last year

Sun

Construction intentions in British Columbia declined over the first-quarter of 2008 with builders taking out $230 million less in building permits, a drop of more than 17 per cent, than they did in the same period last year, Statistics Canada reported Tuesday.

Permits taken out in March were slightly ahead of February, but total B.C. permits of $2.7 billion over the first quarter represented an almost eight-per-cent drop from the first quarter of 2007.

Philip Hochstein, president of the Independent Contractors and Business Association, said there are definitely signs that the industry is slowing down. Contractors are seeing more bidders for each job and subcontractors are starting to hunt around for work.

“Those are early warning signs that something is changing,” Hochstein added, though no one in the industry is sure if the decline being experienced is a gentle tail off from frantic activity to a more normal volume, or something steeper.

“Our crystal balls are still a little cloudy in that area,” Hochstein said.

However, the drop off has not been unexpected, according to Keith Sashaw, president of the Vancouver Regional Construction Association.

“We have been expecting a cooling in construction activity from the record levels of last summer when the industry was operating at unprecedented highs,” Sashaw said, but the underlying fundamentals for construction remain strong.

He added that relief from the “frenetic pace” has been welcome.

B.C.’s decline in permits was entirely on the non-residential side of construction, where the $630.8 million in permits issued in the first quarter was 36 per cent lower than the first quarter of 2007.

Residential spending, on the other hand, was up almost seven per cent to almost $2.1 billion compared with the same quarter a year ago.

Among metropolitan regions, Victoria experienced the biggest percentage drop with the near $201 million in permits representing a 31-per-cent decline from the first quarter a year ago.

In Vancouver, permit activity dropped 17 per cent to $1.34 billion.

Across Canada, the value of building permits in Canada fell unexpectedly in March — led by a big decline in Alberta — due to rising costs and weakening demand, Statistics Canada said.

And it was the fourth month in the last five that permit values decreased, with both residential and non-residential sectors declining in March.

Permit values dropped 4.5 per cent to $5.6 billion in March, as a 32.9 per cent plunge in Alberta pulled the rest of the country into negative territory. Ontario, meanwhile, led all other provinces in building activity, posting a 7.3 per cent rise to $2.1 billion.

Without Alberta in the mix, Statistics Canada said, the value of building permits would have increased by 5.1 per cent. In Alberta, March permits slipped below $1 billion for the first time in the last 13 months.

Most economists had expected a 1.2 per cent rise in the value of building permits nationally in March.

In February, permits values rose by a revised 0.8 per cent.

“Overall, the performance in the Canadian major markets were mixed with Calgary, Montreal and Edmonton declining, while Vancouver and Toronto posted gains on the month,” said Millan Mulraine, economics strategist at TD Securities.

“However, despite the overall softness in this report, the Canadian housing market remains in reasonable shape, though housing activity is expected to moderate in 2008.”

© The Vancouver Sun 2008