experts: real estate column Tuesday, January 29, 2002

Soaring Sales Have Realtors Smiling

Real Estate Sales roared throughout Canada (and yes, also the US) in 2001.

By Ozzie Jurock

No one went on holidays in December. Realtors are smiling. The grinch stayed away and Santa flew in with big commission cheques. Real estate sales roared throughout Canada (and yes, also the US) in 2001. The lowest percentage volume increase came in Edmonton, which still recorded a RECORD number of sales - at 13% higher. Sales volume throughout BC rocketed on average some 30% higher in most communities (except natural resource based ones).

Edmonton, Toronto and Calgary had their best years ever in terms of volume of sales, beating all previous highs. BC's volume was sharply higher percentage-wise, but still lagged behind the previous records set in 1992/93/94.

Prices were higher in Toronto (+4% to $251,500 on a y-t-d basis - up 7% December over December). Prices for Toronto were the best in 10 years (only the late eighties saw higher average prices - reaching $295,000 in 1989). They were higher in Edmonton (+ 7% to $150,200 for single family homes, up 5% overall), in Calgary (+ 3% to $182,100) and higher in Victoria (+3% to $253,400).

However, in BC, prices were all over the place. Vancouver Island, while up overall, saw December prices declines in Campbell River (-10% to $119,100), Nanaimo (-4% to $138,400 ) and Port Alberni (-22% to $72,750). Prices were up in the Fraser Valley for single family homes (+6% to $252,200), however down for apartments by 5% (from $104,000 to $98,700). Vancouver Island clocked in at 4% higher at $153,511 from $146,300. The Central Okanagan average price rose to $200,000 and its December sales increased by 75% (y-t-d increase: 13%).

In Vancouver total average prices were down by 2% to $285,900, however up by 2% for resale single family homes (from $360,200 to $369,300), 3% higher for attached house (to $233,900 from $225,100) and stood even for resale condos ($163,500 from $164,100). However a much better year and clearly laying a solid foundation for 2002.

A look at the last ten years shows that despite record volumes that beat all previous records in the rest of Canada, BC still languishes behind volume achieved in 1992-1994.

Y-T-D Sales
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 %
Toronto 41,700 38,900 44,237 39,300 55,779 59,000 55,344 58,950 58,343 67,712 +16%
Edmonton 12,800 11,500 9,800 8,900 11,600 13,016 13,726 13,594 14,189 16,079 +13%
Calgary 19,200 18,500 16,200 14,000 19,100 21,500 20,500 20,200 19,800 22,512 +13%
Vancouver 38,800 32,500 30,000 21,500 28,500 26,900 19,600 22,950 21,244 28,732 +35%
Fraser Valley 20,600 16,739 15,500 12,000 15,400 13,700 10,467 11,200 10,132 13,517 +34%
Van. Island -- 7,191 6,051 4,514 5,813 5,561 3,945 4,421 4,089 5,004 +22%
Victoria 8,700 7,600 6,200 5,500 6,600 6,277 5,303 5,391 5,029 6,542 +30%

MAJOR POINT

We like: low interest rates, combined with record low vacancy rate levels show returns on individual properties from 14% to 19%. We like the great deals available throughout the BC market place still. We predict the economy will do better than generally forecast.

We caution:

  1. a) Ontario's pre-sale condo market. We believe it will reverse in 2002.
    b) Ontario towns that depend on the auto industry will have a reversal of fortune also. Buy single family or townhouses in best areas.
  2. Alberta's high flyers worry us. We are also not keen on condo conversions and new high priced condos in Calgary and Edmonton. Buy single family or townhouses in best areas only.
  3. For BC we worry about the 'government reduction of workers by 30%' which will affect all towns dependent on government workers.
  4. Low interest rates have drawn buyers from the future into the last quarter. Problem:
    a) These buyers may not be there as we progress into 2002/2003
    b) Should rates rise - which we do not expect till later in the year - thousands of buyers will be caught going ' variable'

Overall however, with record low interest rates, record low vacancies, well selected and researched investment properties make good sense. Forget Location, Location, Location, TIMING IS IMPORTANT ... this applies to all of BC: If you are young (Under 60) and cocky: GO FOR THE BRASS RING: Build a great no money down portfolio in 2001. Great LOW prices, great SOLID rental market, EXCELLENT upside." In 2002 this is still possible. The average real estate investment cash flows like never before. Deals abound. Be creative, get that professional working for you ... and buy.

Principles remain however: No matter where and what you buy: YOU MAKE THE MOST MONEY IN REAL ESTATE ON THE DAY YOU BUY ... and this usually is in a low market ... Still buy cautiously - deal of a lifetime stuff.

Ozzie Jurock is the publisher of Jurock's Real Estate Insider an independent real estate advisory service. You can reach him at 604-683-1111 or e-mail ozzie@jurock.com




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