experts: real estate column Thursday, March 14, 2002

Hold the 'yeah, but' negativity and get on board

Is the boom over?

By Ozzie Jurock

This article appeared in The Vancouver Sun on March 9, 2002

Is the boom over?

Right here last summer and specifically again on November 19, 2001 we said to you: "Don't just think about investing - do it" and gave you the reasons why. Some of you thought about it, some mulled it over ... most of you did nothing.

We hold investor seminars every 6 months. We feature great deals every time, yet less than 5% of any room will actually act.

Everyone nods and understands, few will do it. Why? Because success in real estate investing is unnatural - achieved by the minority of people. We say in our mentor club "Understanding is not learning." Having understood something doesn’t mean we will actually do it.

But there is something else at work here. It is the herd instinct. For some reason, we must believe that we have a ‘good market’. And what is a good market? The perception of a good market is when 6 buyers wrestle each other to the ground and one of them emerges victoriously having paid $50,000 more than asking price. In reality, who cares whether the market is good or bad? You should care whether the deal you have is good or bad. And good and bad deals come in ALL markets.

All last year we told people: "invest $10 a month get my independent little Fax." Few did. Must have been the expense. Yet, each week, we featured great deals - super nothing down transactions, auctions, suites downtown under $100,000, suites in the Valley at under $40,000. We also had the best reasons: "The rest of Canada is scorching ahead, the US real estate market is resilient, low interest rates, low vacancies, BC has a great future." Again people were not motivated. There are simply too many ‘yeah butters’ around. You know, you go into a room and say: "Nice day. These people yell: "Yeah, but tomorrow it’ll rain ... The yeah butters - I hear them again already ... Yeah but, prices are up substantially, the economy will go down, the unemployment rate ... yeah but , yeah but yeah but. Well, yes condo prices in February in the Lower Mainland were higher ... much higher:

Condo Prices
Feb/01 Feb/02 %
North Delta $53,000 $78,500 +48%
Surrey 87,300 102,300 +17%
White Rock 143,000 134,000 -06%
Langley 93,600 108,800 +15%
Abbotsford 70,000 90,900 +30%
Vancouver 159,164 172,000 +08%

Volume was higher too. Much higher - in fact countrywide sales of real estate clocked in much higher this first two months than last year’s January and February. The last quarter (post Sept. 11) was the best ever recorded. And yeah-butters notwithstanding it ain’t over yet either. However, now it is important not to get carried away.

So, get your investment strategy down. Do you want a portfolio in 10 years creating unearned income? Do you look for a quick turnover, do you want cash flow (yes, most of the above condos still cash flow at over 12%, some at over 18%). Are you a tenant that realizes buying is cheaper (yes!). Get your objectives in order and don’t get swept up with the ‘herd’.

Sit down with your professional realtor, make sure he or she understands what you wish to achieve ... but the time to low ball offers (which we recommended last year) is over. You must simply look at the marketplace, understand it (do some work surprise!), and then act. If you don’t, you and your objectives will dance off into a bog. Yes, prices are still good, interest rates are still low (for now) - it is still time to buy. Most of you won’t.

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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