experts: real estate column Wednesday, July 25, 2001

I Want to Buy A Condo But Where Do I Go?

If you follow some basic principles, and you are not drawn to get to the Cariboo where the deer and the Germans roam, downtown may well be the best place for you to look

By Ozzie Jurock

This is an expanded version of the article which appeared in The Vancouver Sun on July 28, 2001

A city needs to have vision: Knowing where to place the bricks (and bucks) depends on an intangible: nurturing brains and luring in the bodies.

A developer needs to plan: Knowing what kind of bricks (and how many bucks) and that depends on a specific: What kind of building are the brains attracted to?

To expand a home into an investment - a buyer needs to know where the brains, bodies and bucks are going to keep growing. If seed pearls are to grow, they must also be nurtured in the right waters. And Vancouver has many an Oyster bed to harvest.

Vancouver's condo market took it on the chin, in the last few years - spooking buyers. Yet, of the 13,145 units sold in the first half of 2001 some 46% were condos, some 54% or 7,126 units were detached homes. In stark contract to Calgary and Edmonton, where condo buyers represent only some 19% and 22%. Clearly, the YUPPIES (Young urban pros) and the DINKS (dual income no kids) and the DINS (dual income no sex) crowd in Vancouver likes the condo lifestyle. The brand new OPAL (Older person active lifestyle) is also in there swinging; reversing the ' trend for the out-of-town- with the trend to down-aging into roller blades and treadmill.

While statistics show that in the past the single family home outperformed (in terms of price appreciation) the condo, that trend may well change in the future. The demand in the city for condos will remain strong:

Here's why:

  • People want to live near their work.
  • Vancouver has the worst transit system in North America.
  • There is no inventory overhang in the market.
  • A very tight rental market
  • Vancouver has one of the greatest city centres anywhere.
  • Fabulous setting - beach, views, parks
  • Ambiance - café's, sidewalks, nightlife - action.
  • Investors all over the world are focused on Vancouver
  • American buyers feel safe in our city
In fact one could argue that the resale condo market is at a record low price point, where one could not buy the land under the building for the sale prices achieved.

In the last two months we've seen 1 bedroom units sell for as low as $95,000 in Yaletown and bring rents of $1,100 - clearly an investors dream.

And many of the new buildings offer substantial value - in a (hopefully) leak-free environment - when compared to other city centres in canada and elsewhere.

We like Coal Harbour where a number of projects are under development. There is a powerful demand for upscale condos on the water. Some units ARE selling for $450 - $500 per sq. foot.

We like all of West Vancouver (nothing much new coming on). Buildings such as the Edgewater which sold out immediately despite the average price of $1.6 M, and is now drawing resale prices of over $3.0 M!)

We like anything west of Denman as well as south Granville, both areas that have a lot to offer the urban dweller and really have no new land available.

We like all of downtown, which we consider substantially undervalued. We like Yaletown and the overall ambiance of restaurants, shopping nightlife and a high tech work environment.

Developers for the most part are moving away from building smaller units but the demand for them is still there. As a result we should see steady price increases for this market segment.

So, if you follow some basic principles, and you are not drawn to get to the Cariboo where the deer and the Germans roam, downtown may well be the best place for you to grow your pearls.

Things to Remember:

  1. Buy the best property you can afford because it will be the easiest to sell when you need to.
  2. Look at least at 20 condos before you buy, both new and used.
  3. Make offers. You make the most money on the day you buy
  4. Look at the new trend of zoning that allows working out of a residence. (Such as the Shaw building at the foot of Burrard and others)
  5. Remember the basics: Don't buy over the noisy garage, under the health club. Buy 2 baths, analyze the common areas costs (what's included), how realistic are they, will they rise?
  6. Who built it? What is the reputation of the builder?
  7. What is the foreign-investor component of the building or the pre-sale mix? Too much off-shore can sometimes signal a risk.
  8. Higher may not always better. Once you get beyond a certain height, the views are pretty much the same - yet prices are much higher. Of course if you can afford the penthouse go for it!
  9. And, you've heard it before - if the building is used - get a copy of the strata's contingency fund and financials. Have there been any strange and unusual expenses? Is the contingency (rainy day) fund adequate?
  10. And get a copy of the minutes of strata council for the last six months. If there's any 'dirty laundry' or duking it out, they'll be aired at those meetings. Papers in hand, talk to an existing owner, the building manager and/or the strata-council president. They'll tell you what's wrong and what's right.
  11. Get a professional Realtor that practices his/her profession and not on you.
To buy real estate in Vancouver right now, means you are buying into a fine oyster bed ... But you still need to look for those pearls.

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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