Despite the recent run up in prices we’ve seen here in Vancouver over the past several years, which has misled many into thinking they can buy and flip in short periods of time for big profits, real estate should really be thought of as long term investment. And who better to take advice from than someone who’s been in the business for a very long time. Meet George W. Johnson, a 97-year old real estate agent who has been working in the Seattle market for over 74 years!
Johnson’s main piece of advice is “buy a house today if you can, but don’t sell one if you don’t have to”. Real estate is cyclical in its very nature, and Johnson has been witness to many of these booms throughout his 74 year career. The main lesson he says he’s learned though the ups and downs is that after every housing recession the market has “gone higher than the one before”. So the trick is to hold on and weather the storm. This reminds me of some advice I received from a mentor of mine when I was first starting out. He said ‘You’ll never lose money investing in real estate...as long as you’re never forced to sell’ (of course that is assuming you do all your diligence before buying).
Here’s a summary of Johnson’s 4 real-estate tips:
1) Beware of one-company towns: Cities dependent on a single company or industry are more vulnerable to jarring downturns if the economy goes south.
Luckily Vancouver has a well diversified economy fuelled by several different sectors.
2) Don't get greedy. Johnson blames "plain old greed" for the latest real-estate downturn in the US — people got caught up in the enthusiasm of the moment and banks egged them on with cheap loans.
This particular problem refers to what happened south of the border, and we can thank our conservative lending practices here in Canada for saving us from going down that path. However, greed has been a major factor in the Vancouver condo market. I have seen many condo owners/investors try to unsuccessfully sell their overpriced properties during the height of the market, and then get caught having to sell for much less when the market has cooled off.
3) Timing is everything. "In this market, any young person that hasn't bought a house ought to buy one," Johnson says. "A buyers market doesn't come along that often … you just can hardly help but make money on whatever you buy today at the prices they are." Johnson says rates are only going to go up over the long term, so borrowing will cost more.
Although I’d say our market here in Vancouver at the moment is more of a ‘balanced market’, and not quite a ‘buyer’s market’, this is a great time for first-time buyers to get into the market. With the record low interest rates we are currently seeing and softening prices, this may be one of the best opportunities for young people to get into the market we’ll see in a very long time.
4) If you don't have to sell, hang on. Johnson expects that in the US sellers will continue to suffer, at least for now. Buyers, on the other hand, "know it's a buyer’s market – they are going to come in with offers below what we've appraised it at just because they know a lot of people have to sell," he says.
Despite the continued housing-market struggles, Johnson is confident that the latest downtrend is largely over. "We are headed up," he says, "but like I said, I think it is going to be slow. It will take a year or two at least."
So what exactly is a condo?....that’s a question that comes up a lot. Condo ownership is fast becoming a popular choice for homeowners here in Vancouver, offering both affordability and lifestyle, yet it is still a concept that is often misunderstood. ‘What is the difference between a condo and an apartment?’ is another great question I often get asked. So I thought I’d put together a little overview to help you get a better understanding about condos and condo ownership here in Vancouver.
The word ‘Condominium’ (or ‘Condo’ for short) refers to a form of legal ownership, as opposed to the style of construction. This form of ownership can apply to high-rise and low-rise residential buildings, townhouses, individual houses, and even bare land. A condo, also commonly referred to as a ‘strata’ here in BC, refers to a special way of subdividing and owning portions of buildings and land. This concept allows multiple individuals to own separate parts of the same building (and/or sometimes land), while sharing common areas and expenses related to those common areas.
The part of the property which an individual owns separately is called a ‘strata lot’ (also referred to as the ‘strata unit’ or ‘condo’), and the remainder of the property is called the ‘common property’
The difference between a condo building and an apartment building is the form of ownership. An apartment building is usually owned by a landlord and the individual units are rented out to various tenants, whereas a condo building follows the form of ownership described above with multiple owners each owning their respective units and jointly owning the common property.
Housings starts were up in in August reflecting the strong demand from consumers we have seen over the past year. The Canada Mortgage and Housing Corporation (CMHC) recorded 1,488 housing starts in Metro Vancouver during August 2010, bringing the total number of Vancouver CMA housing starts to 9,493 for the year.
“Many centres across the Vancouver CMA have seen a rise in single detached housing starts in response to strong consumer demand for ground oriented housing. Not only are developers building in areas of raw land supply, but also there has been an increase in infill developments in areas such as Vancouver City, Burnaby and Richmond,” said Robyn Adamache, Senior Market Analyst for CMHC. “Multiple family units still dominate new home construction activity, making up more than two-thirds of all housing starts in the CMA,” noted Adamache.
Nationally, the seasonally adjusted annual rate of total housing starts dipped to 183,300 units in August. In British Columbia, August’s seasonally adjusted rate of urban housing starts moved higher to 25,400 units, from 20,100 units in July.
Conditions in the Greater Vancouver housing market continued to favour buyers in August. Since April, prices have edged down slightly as the number of sales and the number of properties coming on to the market have been declining.
Here are the stats for August 2010 according to the Real Estate Board of Greater Vancouver (REBGV)
RESIDENTIAL PROPERTY SALES - DOWN 36% from last year*
2,202 homes were sold in August 2010
*Although this represents a huge decrease from last year, August 2009, it’s important to keep in perspective that last August was the second highest selling August ever recorded, with 3,441 sales
NEW LISTINGS - DOWN 18% from last year
3,750 properties were newly listed in August 2010
Total active listings in Greater Vancouver currently sit at 15,421, a 6% decline from last month and a 29% increase from August 2009.
“We’re seeing moderate demand, low interest rates and a healthy but slowing stream of supply in our marketplace, all variables that favour those looking to purchase a home,” Jake Moldowan, REBGV president said. “The last few months have also shown some stability when it comes to price fluctuations in the region, which is a welcome trend after reaching record highs in April.”
HOUSING PRICE INDEX - UP 7% from last year
Since spring, housing prices have decreased about 3 % compared to the all-time high reached in April when the residential benchmark price was $593,419. Over the year, the MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver increased 7% to $576,597 in August 2010 from $539,600 in August 2009.
“Canada remains an attractive destination for foreign buyers, a fact that continues to affect activity in the Greater Vancouver housing market,” Moldowan said.
SALES OF DETACHED PROPERTIES - DOWN 35% from last year
893 detached homes sold in August 2010. Although this is a significant decrease compared to last year, this represents a 67% increase compared to sales in August 2008 where 535 units were sold.
SALES OF APARTMENT PROPERTIES - DOWN 36% from last year
1,464 apartment properties sold in August 2010. This is a 26% increase compared to sales in August 2008.
SALES OF ATTACHED PROPERTIES - DOWN 39% from last year
There were a total of 374 attached property sales in July 2010. This marks a 27% increase from August 2008 sales.