Desire trumps economic negativity

According to this article on househunting.ca, the Canadian desire to own a home was the key to the quick recovery in the real estate market.

“While low interest rates were a principal factor driving home-buying activity, no one can discount the value that Canadians place in owning a home,” says Polzler.

Because of the increase in first-timer interest, the real estate industry was able to shrug off initial forecasts of a totally bleak year.

By the time the year-end national tally is complete — something that should come in the next week or so — 465,000 homes will likely have changed hands in 2009 in Canada, a seven-per-cent increase over 2008, predicts a Re/Max report.

“Some of the greatest percentage gains were reported in Western Canadian markets in 2009, demonstrating the higher the peak, the lower the valley,” says Elton Ash, executive vice-president of Re/Max of Western Canada.

“That said, the recession barely registered on year-over-year activity in most major centres — and the economic fundamentals in place going forward ideally positions the 10 provinces and the sector overall for further growth.”

“While low interest rates were a principal factor driving home-buying activity, no one can discount the value that Canadians place in owning a home,” says Polzler.

Because of the increase in first-timer interest, the real estate industry was able to shrug off initial forecasts of a totally bleak year.

By the time the year-end national tally is complete — something that should come in the next week or so — 465,000 homes will likely have changed hands in 2009 in Canada, a seven-per-cent increase over 2008, predicts a Re/Max report.

“Some of the greatest percentage gains were reported in Western Canadian markets in 2009, demonstrating the higher the peak, the lower the valley,” says Elton Ash, executive vice-president of Re/Max of Western Canada.

“That said, the recession barely registered on year-over-year activity in most major centres — and the economic fundamentals in place going forward ideally positions the 10 provinces and the sector overall for further growth.”

The higher the peak, the lower the valley?

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Mansour al-Hallaj
10 years ago

@patriotz: "The kids think they're automatically going to be successful"

This is what eventually makes them successful. In thus thinking, they already _are_ more successful that those who visualise years of bleak, boring, pot- or alcohol-sugared wage slavery ahead.

Dave
10 years ago

@VRENGD: It seems you guys are all arguing the same point as me. We all agree that the Powell River is an extreme. I never said I would provide a listing of all the cap rates for Vancouver proper, so I am not sure why you expect me to. I can tell you that the bulk of real estate has higher than a 2% cap rate. I'm not sure why some of you have to be so obtuse on this point. Here is one such example: http://www.REALTOR.ca/propertyDetails.aspx?proper… If you rent this 1BR in Vancouver for $1,200 (less $150 maint), you would be just short of a 5% cap rate. http://vancouver.en.craigslist.ca/van/apa/1558719… If you put 25% down and locked into a 5 year fixed rate mortgage, you would be almost cash flow neutral on this deal. However, you are building equity with… Read more »

buff_butler
buff_butler
10 years ago

I suppose if you ignore realized gains on the investment. aka you allow net negative return on an investment then you can get some awsome cap rates but then that 10% they quote isn't the true cap rate because your not factoring in that element because it is infact integable and speculative however the propability of you recovering your full investment or even that cap rate is incredibly low. An analogy would be if i got my friend to rent out my condo for 5x the price and then tried to sell it for 2x the price because the cap rate is "above average." Then if somoeone bought your friend would move out. Obviously this is a bad investment and the cap rate isn't a true representation of the future. So yes. If you ignore investment research and take on… Read more »

C-Note
C-Note
10 years ago

Ok, Dave. Drachen laid out the 3 ground rules in #103 and VRENGD found an example of 2.4% following those rules. Please indicate ONE example that trumps VRENGD. Anything that sticks to those 2 simple rules. Doesn't have to be near your invalid extreme of 10%. I just want to see how high we can go and we can take it one step at a time. Let's stick to Best-Place-On-Earth(tm) examples here.

Drachen
Drachen
10 years ago

@Dave:

Oh my god Dave, are you really that thick? Yes it probably sits between those numbers but since one number isn't even relevant your 'input' to the discussion is completely useless.

You might as well make up a pretend house in Dave's Private Land of Unicorns and Sunshine that makes 100%, the value of the example would be the same and the lesson would be the same, since 2% is one extreme the average is probably higher. How much higher is not answered by your false and misleading example, nor does it help us come any closer to recognizing where the actual average cap rate is. As such (and as always) your input to the discussion is less than useless, you're simply a distraction for those trying to find answers.

VRENGD
VRENGD
10 years ago

Dave is a fool. 2-3% cap rate is normal in Vancouver. The place I rent has a cap rate of 2.4%. We are talking about VANCOUVER here not Powell river, for god's sake. Try to pay attention dave, its not difficult.

Dave, post a list of VANCOUVER properties that have a cap rate significantly higher than 2%. You have been asked you have not done it. Once again, you prefer to spout BS rather than evidence. But then what would you expect form a Bull if not Shit!

are you this annoying in real life?

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Arwen
Arwen
10 years ago

Drachen, 2.000000001% is "somewhere between" 2% and 10%. Without Dave actually bringing anything but his faith to the table, I'm going to assume that's what he's suggesting.

Dave
10 years ago

@Drachen:

Blaaa, blaaa, blaaa professor….

You need to start using that noggin a bit more. The point was to show an orange, not an apple. I have made this point three times already and it keeps going over your head.

Once again, a 2% cap rate is the extreme as is 10%. A penthouse in Shangra La gets you a 2% cap rate. A wood frame rental building in Powell River gets you 10%. Most of the real estate in Vancouver sits somewhere in between those two extremes.

This isn't difficult. Try to keep up.

Drachen
Drachen
10 years ago

@Dave: No, no you didn't give the other extreme, you went entirely outside of the lower mainland which is not 'extreme' it's out of bounds. It's also a multi-unit which is not what people here are talking about so it's out on two counts. Patriotz's example counts because it is on target for what this blog is about, unless you can find a comparable unit to COMPARE you're talking apples and oranges and, as always, you LOSE. For all the comparative value you might as well start looking in Bangladesh. 1) If you can't find anything in the GVRD to present your case then you don't HAVE a case. 2) If you can't find a single unit to compare to single units then you don't have a case. Sometimes I think Dave is trying to be some kind of quizmaster,… Read more »

Dave
10 years ago

@buff_butler:

My point is that a 2% cap rate, as suggested by Patriotz, is not the norm. He gave one extreme and I gave another. The real cap rate is somewhere in between.

Starving Artist
10 years ago

Wow, the tone has sure changed on the comments section of CBC sites et cetera.

Speculation is all about perception, and oh boy, it's not looking so hot right now. Maybe this thing is going to go down faster than I thought. Especially when the Fed MBS purchace program ends and FHA tightens up. Don't underestimate our ties to the US.

buff_butler
buff_butler
10 years ago

@Dave: dude… Dave if you do research into the city its in economic decline… It had a paper mill thats been constantly laying off people and most importantly a contracting population and income! Its best diversification has been "tourism."

I'm kind of confused on how this makes your point. The dividends were great on Lehman Brothers 2 months before KO too….

Calling Strataman
Calling Strataman
10 years ago

Calling Strataman – brand new Ventana had a pipe burst on the 9th floor that flooded 3-4 units per floor on floors below as reported in RET. A new highrise in Burnaby had units flooded recently. How bad is the piping system of new buildings? Any advice or info appreciated. Also is it normal to repipe the whole building after only 16 years?

logic
logic
10 years ago

Do you think buyer will take that place in his suite case and fly somewhere else?

————–

WTF? Seriously, are you on crack right now?

Bdk toll
Bdk toll
10 years ago

@bestplaceonmeth: First of all games must go on secondly,Do you think buyer will take that place in his suite case and fly somewhere else? Place is place after all it will remain part of whereever it is.

Why someone will buy that place?

Clue:for investment purpose, so once exit will make entrance for next till than it is Olympics all the way.

bestplaceonmeth
bestplaceonmeth
10 years ago

No snow on Cypress.

Whistler to be sold during the men's downhill on Feb 19.

VANOC crapping their pants.

Hey, that reminds me of a song…..

PANTS ON THE GROUND,

PANTS ON THE GROUND,

LOOKING LIKE A FOOL WITH YOUR PANTS ON THE GROUND…

Bdk toll
Bdk toll
10 years ago

@Dave: And@Dave:

Dave,

Not like this and that losers never come to know that they are at it for countinue ride so just to be straight go get a drilling machine with built in sockets for data inputs.Remember Dec 2008 buyers in market and trolls on the petrols include Jesse,son of Portland lost data mystary and lord of phoenix arizona add him in the jerks exclusively.

jesse
10 years ago

@Dave: "there is a reason why some properties sell for a 2% cap rate"

There are reasons why properties sell for 2% cap rates because they sell, by definition. Whether or not there are valid reasons is another story and we'll find out for sure in 5-10 years.

squidly77
squidly77
10 years ago
Dave
10 years ago

@jesse:

And that's my point. Likewise to your example, there is a reason why some properties sell for a 2% cap rate. Powell River sells for a 10% rate for a reason as well. I am just showing the other extreme. Normal is somewhere in between.

Dave
10 years ago

@patriotz:

Jackass, you're the dummy who made a claim that 2% was normal. I am just showing how biased your post is. Get the point yet?

Dave
10 years ago

@Drachen:

Dummy… read my post.

patriotz
10 years ago

@Dave:

:

10% Cap Rate.

http://looplink.loopnet.com/16….._Vancouver

That's a multi-unit rental, jackass (not to mention being in Powell River). We are talking about the inflated prices (i.e. low yields) on individually titled properties and you know it. I have explicitly said on this board that owners of multi-unit rentals expected an 8% cap rate. They are business people, not cowboys.

patriotz
10 years ago

@jesse:

OK you've eliminated Harcourt (Churchill is a public school of course).

Hint to answer: one of this Premier's key cabinet ministers also went to private school, but on the other side of the city.