Jurock: ‘Make sure you want what you own’

Cecil posted a link to this video in the prior thread and I thought it was worth posting on its own – David Ingram & Ozzie Jurock discuss the real estate market. Ozzie say’s he wouldn’t buy a pre-sale in vacouver even if his ‘life depended on it’, calling the Vancouver market pure speculation, and suggests some better options for investment include Kamloops & Prince George.

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Freako
Freako
13 years ago

""I don't want to be too sophisticated here, but '07 is going to suck,all 12 months of the calendar year," Tomnitz said. "People tend to be more candid when they are subject to onerous Reg FD rules.

Akhen
Akhen
13 years ago

Dingus, I applaud you for your prudent and wise exercise of restraint. I'm a father of 2 and hoping for a third. They're what it's all about. Been through financial strain and thank God that it didn't get to the point of marriage and family breakdown.Cheers mate!Ahkenaten

dingus
dingus
13 years ago

fatherof2:Did the same myself last year (and I'm also a father of 2). Character house that had had no work for 20 years. Bad foundation, bad roof, bad electrical, bad plumbing, beaten floors on and on and on. Mortgage to choke a goat and then 100k at least on top to fix it up. Didn't sleep for the entire period we had the accepted offer. Ran the numbers a thousand times. Every time we did the math, it came up "house poor forever". Forget it. Now we remain "renter rich", spend far less than we earn and sleep juuuuust fine. Perhaps one day there will be something that's affordable. Perhaps not. I don't care. But I am astounded at what people are paying. It makes no sense. But that's their problem. And their choice. I've made mine. My advice is… Read more »

licketyclit
licketyclit
13 years ago

marshall,Some of those people who are surprised that things were getting difficult in the US may have just fallen off a turnip truck, but I think they're posting on Ozzie's forum.It's rather sad when stupidity reaches the point where it gets mistaken for sarcasm.

bearette
bearette
13 years ago

Here's one for the record books. Did anyone else catch the blurb in the Friday Globe's real estate section baout recent sales? It profiled a shack in Point Grey selling for $3.5 million. The kicker? It was a meth lab! The stinger? It was bought in 2005 for $2.5 mill and only $10,000 was spent cleaning up the toxic waste before it was flipped! I mean I know most of it is land value but please … a $3.5 million crack shack? Oh, the insanity!

Akhen
Akhen
13 years ago

Naaah, Marshall . . .Real estate prices always goes UP!Those guys in the US just cooks the books. Just as they do the science books . . . the earth is really flat, ya'know.Ahkenaten

Marshall
Marshall
13 years ago

I don't understand how Vancouver can possibly isolate itself from such negative sentiment and turmoil. Most people are oblivious to anything that's happening outside their own concerns. I've talked to a few people in just the last couple of weeks who were quite surprised to hear that things were getting difficult in the US. They're going to be even more surprised when they find out that prices really can drop 20% or more.

rentah
rentah
13 years ago

I rent a house in Vancouver where the multiple is 396.Pretty outrageous, eh?Another way of looking at this: there is absolutely no way that the rental market could tolerate a 50% (let alone 100% or 200% or 300%) increase.These metrics are so out of whack that they have to revert.It's going to be quite the ride.

Sum Gai
Sum Gai
13 years ago

I'm renting in Calgary now, and my rent is $1500 on a place that would sell for $400k. The ratio here is 266…My mistake. That price was 2 months ago! There is an identical unit now listed for 435k, which makes that ratio 290. Almost 3X higher than Jurock's guidline! But of course if you don't buy know you will be kicking yourself in 5 years, right Ozzie? ;^)

squidly66
squidly66
13 years ago

check out albertabubble.blogspot.comreal estate fraud you should post it here it is probably happening here check yesterdays subjects

manafromheaven
manafromheaven
13 years ago

Like machoslob,I'm hearing more doubt about the upside of this market than irrational exubrance from potential suckers who cannot see beyond our little corner of the world. What happened to all the talk about a soft landing in the US? Negative economic stats, collapse of the subprime lending sector, sudden recession fears, and jittery stock markets have obviously struck new bolts of fear into the US housing market. This will take some time to show up in the numbers, but it will make last summers slide pale in comparison.I don't understand how Vancouver can possibly isolate itself from such negative sentiment and turmoil.

Sum Gai
Sum Gai
13 years ago

Anyone catch Ozzie's investment property rule of thumb? "If you buy a place for 100K, it should rent for $1,000/mo". Anyone know of ANYTHING these days with a price to rent ratio of 100? The condo I sold downtown last year for $406k, would rent for at most $1700. The P/R ratio would be 238.I'm renting in Calgary now, and my rent is $1500 on a place that would sell for $400k. The ratio here is 266…As far as Kamloops being a good place, I found a house for rent in the Dufferin area for $1100.http://vancouver.craigslist.org/apa/284491286.htmlThe cheapest house for sale in this area is $290k for a P/R of 263!

Akhen
Akhen
13 years ago

It’s absolutely insane. People are lining up to buy condos in Vancouver even now. Little do they realize the true implications of why developers are increasing the required down-payment and “projected” (more like guessed) time for completion.Every downturn, many that bought units in uncompleted units walk away if the drop in value is more than their deposit. If the developer is smaller, they go bankrupt. Other developers try to sue, but try suing one to two hundred people per building . . . and worse, if the developer has more than 1 “sold” but uncompleted buildings. When things start to turn, the foreign flighty money will exit at the drop of a hat. When I was in Singapore about a month ago, the news was that about 70 billion of Middle Eastern money has moved from the US to the… Read more »

Fatherof2
Fatherof2
13 years ago

Just a personal antidote. Not sure if I am the norm or the exeption. I recently pulled out of buying a house in the last minute because I would have been spending about 60% of my after tax income on supporting a house that needed a lot of renovations. The bank would have leant me enough money to suck up almost 80% of my after tax income. The thought of being this house poor scared me. I think that I made a wise choice and so do my friends. However, I am scared to think about the other people who right now are not making wise choices. On the other hand, mabeye that house that I did not buy goes up by %5 a year from here on in and I really made a bad choice.

OnTheIsle
OnTheIsle
13 years ago

oooops……cut off the best line :"I don't want to be too sophisticated here, but '07 is going to suck,all 12 months of the calendar year," Tomnitz said.

OnTheIsle
OnTheIsle
13 years ago

Here's some more happy news:Executive for nation's largest homebuilder offers bleak forecastThe Associated PressUpdated: 4:29 p.m. PT March 7, 2007NEW YORK – The chief executive of the nation's largest homebuilder byvolume said Wednesday that 2007 would "suck" for his company, providingthe clearest signal yet that a recovery in the battered sector isfarther off than many thought.Speaking at an investor conference in New York, D.R. Horton CEO DonaldJ. Tomnitz said he expects to get more pricing power in 2008 but notbefore home prices continue their decline this year as builders try tosell the glut of houses currently on the market.

TheVanMan
TheVanMan
13 years ago

In all bubbles there is a commonality, that when prices accelerate, it causes prices to accelerate more.Actually, when prices accelerate, it causes inventory to accumulate more (mostly hidden — aka pre sales in BC and now land in Alberta) where then prices stabilize a bit or drop. Prices will resume their upwards momentum when the perception of inventory had sold out. In this case, all the pre-sale land in Alberta for new projects had since sold off or the Woodward project. Ozzie Jurock's mentioning Craig's list is a very good example. There, you can monitor the insane bidding and exchanging of excess inventory. This is a classic bubble case scenario. We had just such a case with the dot.com bomb. People just forget about it.And to littlemanrenter..You mentioned from the last post about knowing when the top is which is… Read more »

jer537369
jer537369
13 years ago

Even though I am a confirmed bear I too have a little bit of respect for Ozzie. Some of what he says makes sense. However, I have to disagree with his estimate of investment opportunities in the farther regions of BC. I have lived all over this province for the last 40 years and can tell you from experience that when there is a downturn the Lower Mainland might suffer but the Prince Georges and Kimberlies and Nanaimos of BC are exponentially worse off, for longer.But in my opinion this idea of looking farther afield for working RE investment is just another symptom of the underlying reason for having to look further afield in the first place. That reason is that real estate is in the grip of an honest to god psychological mania. We are so earnestly trying to… Read more »

patiently waiting
patiently waiting
13 years ago

No, the frigged buyer of the last couple years is praying that prices continue to go up. They need more equity to borrow against in order to buy the instant noodles.

duck
duck
13 years ago

most existing homeowners are starting to have mixed feelings about the crazy prices.I wonder how many existing homeowners fell victim to low interest home equity loans and — having spent the money — are now having "mixed feelings" about what they did.

patiently waiting
patiently waiting
13 years ago

The most disgusting moment for me was when an East Van yuppy couple starting show false sympathy for me because I didn't buy three years ago. I enjoyed the look of discomfort on their faces when I reminded them of the 80s crash. Needless to say, I didn't rent their crappy basement apartment.Truth is, most existing homeowners are starting to have mixed feelings about the crazy prices. Whether its true or not, higher real estate values are being associated with higher property taxes. Its also harder to move-up now. Not mention older homeowners watching the struggles of their children or grandchildren.

Akhen
Akhen
13 years ago

Hmmm…what will restore balance.In my opinion, this is all psychological. I can almost feel the sentiment change the day the liberal government was elected. There was this sense of growth in the air. The reason for the cause of the sentiment change is not important . . . people in BC was ready for the return of the economy as it had been down for so long.The same will be of this cycle. What will prompt the top or bottom? Well, again that is not important, the most important is that it will happen . . . time and time again . . . no one knows when, but all knows it will. NEVER fight the business cycle . . . you will lose every time. Just be ready!Again, that’s been my experience!Ahkenaten

satv
satv
13 years ago

VHB REPLACEMENTYou mean David Ingram & Ozzie Jurock trying to replace VHB.Should have learned a lesson, this time prediction work in favour does not work against. 264 home sold in 2 days of brand new project.$ 28 billions of equity is on stake on new homes.People's from usa and immigration migration with in state jump on to invest in vancouver real estate.I can say poor are getting rich now because most buyer who stands in long Q's are poor.This is infact first time when comon people are getting rich and Banks are nail biting.investor in share market are yelling hey that's not up thats bubble.That's my opinion does not mean to hurt anybody

van-realestate-crash
van-realestate-crash
13 years ago

What will restore balance again? Interest rates, not much room there,Wages up? Not likely, when the construction boom is over, even the government workers will be asked to give some of their gains back.Prices will have to tumble, big time

machoslob
machoslob
13 years ago

Not sure why we need knock ourselves out by trying to come up with the right handle for our and other peoples motives. I've always considered myself an investor, but I've never come across an investment that does not have some element of speculation.As for being irritated by "jack..s bulls", I must be hanging with a differnt crowd than littlemanrenter. The buzz that I'm hearing is mostly in agreement that we have reached irrational price levels and that the downside far outweighs the upside. I'l be ready to laod up after the crash, and hope my exuberance is not resented by those unfotunate homeless folks who feel that they have missed the boat. You will get your chance too.