experts: real estate column Sunday, April 19, 2009

West still 'paradise'

Best Deals Come In Down Markets

By Ozzie Jurock

Some 1,500 San Diego realtors were looking expectantly at what this Canadian was going to tell them.

After all, it was 1992, the real estate market was down 35 per cent since 1989 and the outlook was dire with no hope in sight.

Some 787 U. S. banks had collapsed in the preceding three years and the "resolution trust" (in other words, "bad bank") was busy disposing the "non-core" (read: "toxic") assets of banks.

I had, on behalf of my company, purchased a real estate company from the trust - a non-core asset - and we were meeting for the first time.

I told them that they lived in a part of the world that everyone was striving to be in, that it would always recover and that if they sold any property, the buyer would kiss them on their cheeks a few years from now.

It was an easy call to make. Just as easy a call to make for real estate values now, because the fact is that values grow where people want to go - and people want to live and play here in Western Canada.

In today's gloomy environment, we must remember that urban real estate always has a use and thus always has an asset value.

People live in it, play in it, use it for business or grow their tomatoes on it.

We like all urban real estate in Western Canada from Edmonton to Vancouver and most everything in between.

No matter the short term gyrations, urban apartment properties have been a spectacular investment.

Downtown used condos on Howe Street in Vancouver rose from $95,000 in 2001 to $350,000 in 2008.

Office space and industrial properties have often outperformed the businesses they housed in the same time.

The average house price climbed from $16,000 to $700,000 in Vancouver over the last 40 years.

But we did not get there in a straight line. Real estate is local in nature (how we feel about our future) as well as cyclical - and the up cycle quit in Edmonton and Calgary a year ago and in Vancouver last spring.

We are also very concerned with Saskatchewan, where volumes are slowing, inventory is soaring and prices are bound to reverse sharply.

On average for 2009, we look for prices to perhaps slip some more in Edmonton (volume of sales is firming already) and go down in Calgary further by five per cent and Vancouver by 10 per cent.

However, we do not live in an "average" world.

Some prices will go down more - overbuilt condo areas, or like most downtown cores - or other oversupplied areas like the Okanagan.

Recreation property areas will not escape, either, as they always follow - down or up - markets in the major cities.

Previous downturns have lasted from one to three years and seen an average of some 17 per cent decline from top to bottom.

The years 1981 to 1985 were not average - the downturn lasted longer and was deeper. I would not be surprised to see that this time also.

From an investor's perspective, we like cash-flowing properties anywhere - where there is a good employment base, low vacancies, capital investment and a good price-to-rent ratio.

We see that developing in Edmonton and many small towns throughout Alberta.

We see that still in the Kootenays and many places throughout B. C. as well.

From a home purchase perspective, there will be some great deals in new construction and a fine time "sussing" out opportunities.

The key is that you shop wisely, get a professional Realtor, research, overcome your fear and make offers.

Buy waterfront - and if you can't, buy semi-waterfront; if you can't buy great view; if not. then peek-a-boo view.

But buy "use" to you or your family - buy your own business space - and don't worry.The best deals come in down markets.

In addition, remember that on the way up, the risk increases everyday and on the way down it decreases every day.

For 40 years, prices have soared because we lived through the most unreported inflation of all times because we printed more money than ever.

Today, we are doing it even more so.

All that extra cash created out of thin air will continue to compete with the money you and I make and drive hard asset prices -eventually higher again -after we clear out the messes and excesses, just like we did in 1992, (or like 2001, 1998, 1987, 1981 1974).

Think about -why worry? Our West has a majestic environment. outstanding climate and spectacular vistas.

There is a very crisp quality in the West, Call it the fine mountain air or ocean spray, balmy sunsets, or clear blue Prairie skies that stretch to the horizon.

Part of it is that special flavour of the West - an entrepreneurial, innovative flavour, a generosity of spirit, and open arms, an embracing of life in the outdoors and life where the individual can grow to his or her own future best.

People from all parts of the world come here, bringing their individuality, charm, wisdom and business acumen.

They become Canadianized and when they do we're the greater for it.

The experience of "the West is best" holds and transforms us and brings about this curious blend of work and play, outdoors and indoors, East meets West

To work here is a privilege. To live here is a true blessing.

To study here is a benefit. To worship here is a natural.

To love and hold here - this is paradise.

Ozzie Jurock has written a new book Real Estate in Canada, that can be ordered at his website Jurock.com.

He is also planning to speak in Edmonton on April 4 to 5 at the Greater Edmonton''s First Annual Condo Expo at the Mayfield Inn. Admission is free (visit the website at www.edmontoncondoexpo.com)

"Ozzie is one of the wisest money men says Mark Victor Hansen, co-author of Chicken Soup for the Soul. " I love listening to and reading him, and so will you. Drink deeply of his wisdom, insights, advice, and you will permanently prosper."

Ozzie Jurock is a Vancouver-based real estate expert and motivational speaker who is the publisher of Jurock's Real Estate Insider at www.jurock.com. He teaches real estate investment courses in Alberta and B.C. at www.reag.ca. Canadian journalist Peter Newman, in his book the Titans, called him a real estate guru. Donald Trump features him in his latest book, Trump: The Best Real Estate Advice I Ever Received. You can reach Jurock at 604-683-1111, or e-mail him at oz@jurock.com

Published in the Calgary Herald, March 14, 2009




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