Hot Property August 28, 2010

Hot Tip Of The Week

TIPS

US foreclosure tips:

US Foreclosures Highlights:

1. Bank owned properties are always preferable.

2. Check out the foreclosed property against other current listings in the immediate area.

3. Get a knowledgeable LOCAL realtor

4. Buy only in A and B areas ... forget 'needle ville'.

5. Short sales are a pain and almost never work for foreigners

6. Many developers are still defaulting or in trouble and will take deals. Check out the new deal versus the foreclosed deal.

7. Check that condo fees (HMA) are up to date

8. If it is not a cash sale ... anticipate a long wait for approval.

9. Find out what is included and also what is NOT included.

10. Your offer should include a clause a warranty by the bank that the property is in same conditions as viewed. down.

Most people think all real estate is good

Well it depends very much what kind of real estate you buy. BUT some in the hottest real estate markets of the 2000s have actually gone down in value.

Be very careful buying that Holiday condo or house:

The different ways of ownership in a resort:

1. The time share unit - why it is not real estate...

2. The Full personal use unit or Phase I

3. The Limited personal use - 28 days in winter - 28 days in summer

4. The quarter share unit

5. The Hotel unit - the worst kind.

Grow op - Indicators

Here are some indications that the property may be intended for use as a grow operation:

Cash Payments
Vague and or incomplete applications
No references or lack of identification
Utilities are registered under a different name
Cell phone number given as only means of contact
Shows little interest in layout or amenities or is willing to rent sight unseen
Shows special interest in electrical service

Building owners can take precautions to help protect themselves from potential grow operation tenants. These include:

Insist upon fully completed applications including legal names of all tenants. Do background checks, ask for references and check them diligently the best protection is preventions
Insist on annual lease agreements
Specify in the lease that no illegal use or sub-let is allowed
Specify permission in the lease for monthly inspection of the premises
Physically inspect the location monthly (interior and exterior)
Check with neighbours/other tenants about operations any unusual activity?
Report any suspect operations to Crime Stoppers or the local authorities

When inspecting the property, keep a look out for the following which can suggest that an illegal grow operation is present:

Windows are covered up
Bright light around windows at odd hours
Condensation apparent on windows
Ventilation equipment is seen or heard
Tenants operating or visiting at odd hours and only for short times
Evidence of planting materials or discarded planting material soil, planters, fertilizers etc.
Scraps of heavy black plastic evident or discarded
A strong skunk like or ammonia odour is present
Evidence of recent construction or alterations that you were not aware of or do not seem to serve a legitimate purpose Grow operations often construct in false ceilings or basements

Make your mortgage tax deductible

The Smith Manouvre

Much has been made of the Smith Maneuvre...making your home mortgage tax deductible. The big secret of getting one over on the taxman.

There are several versions of this, make sure you have qualified professionals helping you figure out your personal situation.

Basically, here is how it works.

Say you are a dentist...

1. You owe 500,000 on your house and your payments are $3,000 a month - it is not tax deductible

2. You also have $3000 a month in business expenses for wages, rent, hydro etc.

3. Your income is - say $5,000.

4. You now take the income from your dentist business and pay out of it the $3,000 mortgage payment.

5. You borrow $3,000 on your business credit line and pay your wages rent, hydro out of that.

Over time - say 2 - 7 years you have shifted your mortgage (which is not tax deductible) into a business expense (which is.)

For a lot of information on the deductible mortgage - including videos - go to David Ingram's www.centa.com

IMPORTANT

It works BUT you have to have very clear transparency Separate book keeping, bank accounts A clear trail of which money came from where and yes, you can make your home mortgage tax deductible

a) Numbers Vancouver

Prices higher year over year by 11% to 15% but well down over March 2010.

Volume down 38%, condo listings up by 65%.

Used homes prices were $999,500 in March and $930,000 in June down by -6.6%

Used condos sold for $427,500 in March and clocked in at $407,000 in June down by -5%

The total average price was $693,500 in March and $663,500 in June down by -6%

Active used condo listings are up by 64% (6,533 versus 3,961); Active used home listings up by 34%

We have been saying it since Februaryour markets are turning.

b)Population growth. A STATISTIC THAT NEEDS WATCHING!

1. Instead of fretting over monthly average real estate prices, sales volumes, or interest rates, watch population growth.

2. Where there is a growing population, there will be increased demand for housing in the form of both tenants and buyers.

3. Although population growth may not provide higher rents or higher prices, the increase in tenants and buyers will provide property investors with more security.

4. Alberta, BC and the Saskatchewan grew the most last year

5. Alberta however grew the smallest in the first quarter since 1996 (.35%).

6. BC lead all Province first quarter Three-quarters of the increase was from net international migration of 12,300, but it also ranked first in net interprovincial migrants for a third straight quarter, with 1,600.

Buying recreationally...

It is that time of year, where we are on an island, laying on the beach and turn to our wife and say: "Honey we should buy something here".

Most often it would be better to poke yourself with a sharp stick.

5 things to remember:

1. How long did it take you to get where you are?

a) 3 Ferries? 8 hour drive - you will never go there again It can take most of a day and three ferries to reach Gulf Islands such as Denman, Hornby or Galiano,Texada.

b) Keats Island or Gambier in Howe Sound in less than an hour from Vancouver.... but little car access. (Get most use) Bowen has good access but expensive - on the cusp of becoming one of the top recreational destinations anywhere near Vancouver.

2. If on an island:

a) how often does the a ferry go there

b) what are the amenities

c) what is the water situation

3. If your property lies inland on a 'walk-on only' ferry island, there are transportation considerations.

4. Islands like Saltspring and Pender in the Gulf with car-ferry service have always had better price appreciation.

5. There are currents, the weather, as well as open exposure to consider, if you have waterfront. West is best.

6. If buying an island resort

a) Watch out for hotel units and all fractional ownership (0n Pender there are dozens). Some NEVER make any money. Most are taxed commercially now.

b) common area costs

c) management

7. Best bet? Sunshine coast - easy access, lots of ferries, good values.

8. Finally...whatever you think...you will never make enough money renting it AND personal use...it is always one or the other.

Staging a condo or townhouse in the summer

How can you present an urban condo's balcony to its fullest potential without spending a fortune?

Key rules to staging involve the need to:

- unclutter

- clean everything

- depersonalize the space you are selling

- show off your property's outdoor spaces and maximize its value

Condo balconies:

Check out these ideas for a quick return on your investment:

* Clear off all items that are being stored on the balcony for lack of storage elsewhere. It's that word again - declutter. This means storage boxes, TOOLs, bicycles and recycling bins.

* Scrub all outdoor surfaces, railings, walls, and floor, until they shine. Placing a new outdoor mat outside the door will encourage buyers to actually step out and experience the outdoor space.

* Set up a table and chairs that is of an appropriate size for the space. A large patio can handle a table with an umbrella and four chairs, and a tiny balcony is the perfect spot for a delicate three-piece bistro set.

* Potted plants on a balcony bring a much needed touch of nature. key: a single plant will look lonely; too many will overwhelm the space

* Have a really small balcony? Narrow rectangular window boxes that hang from the railing are a perfect choice. Townhouses, the above ideas also apply for decks and patios, b

Here are some great tips:

* Make sure the lawn is mowed and neatly edged. Water and fertilize to keep it green and full. If the lawn seems to be a lost cause, remember that even an unhealthy lawn that is neatly manicured makes a good first impression.

* Add a layer of bark mulch to the flower beds. There is no easier way to freshen up the look of a yard, and help keep the weeds down in the short term.

* Makes sure all existing plants are healthy and neatly pruned. Pull out any that are dead or dying.

* Plant summer annuals, focusing on the areas adjacent to the front walkway where they will be noticed. These are inexpensive plants, so where you use them, really pack them in. When you are selling, there is no time for them to grow and fill out the space.

* Place an attractive urn full of brightly coloured flowers on the front step to welcome potential buyers.

For the real estate investor 5 steps to have proper property management

Property management can make or break you. Property management is a business.

1. A good property manager. He must have a reviewable business plan. Ask your manager for his.

2. He has a written budget outline – income projection – timely collection of rent – expense control – establishing rental value – clean simple accounting – maintenance.

3. He also has to show you the operating procedure he employs for maintenance (ongoing action or re-action to problems as they occur only), repairs (ditto), safety and security issues (spelled out, how when who?) and insurance (enough, all eventualities covered, etc.)

4. You should also inspect the property with your manager together and meet the staff he employs (you may like him but shudder at the employees). What’s his regular (weekly, daily, monthly) inspection routine?

5. Understand the scope of his authority. Does he hire contractors to do the work? Does he advance funds? Does he use rental income to place ads or bill you? Does he make his own repairs? What is the track record? Who can you call to verify? Do this all up front. Have a written understanding of your relationship – small building or large – and you have a basis to measure actual performance against promised performance.

(Very) early numbers - can change with month end adjustments.

Vancouver	May 2010	May 2009	%
Used home sales	1,055	1,311	-19%
New home sales	169	190	-44%
Used condo sales	1,111	1,286	-13%
New condo sales	97	172	-43%
Active Listings	17,615	13,641	+29%

Prices are still up between 7% and 11% (but not the sharp 30% increases March over March).

THE TREND IS CLEAR ... MARKETS HAVE TURNED.

Buyer fatigue, interest rates higher, expensive.

1. The Fraser Valley Real Estate Board received 3,760 new listings in April an increase of 51.8 per cent. The new inventory increased the number of active listings to the second highest April on record, reaching 10,635, with only April 1995, at 11,891, offering more selection.

From 1995 to 1998 the average price declined by 16%. Not necessarily the same...but caution!

2. Rent to Own

There are a number of companies advertising 'rent-to-own'. These companies offer differing version of renting-to-own. There are also individual owners looking to sell via the rent to own method.

Generally, the tenant pays the regular rent on the property, but adds a small down payment and a somewhat higher rent. The owner grants him an option to buy the place at a fixed price, in say 3 years.

Why do it? Owner/Investor benefits:

- Best price in tough markets Youalso have more tenant/buyers who are willing to pay a premium because of the terms.

- Higher than normal rental income.

- Positive cash flow: It is one way to make a property have cash flow that otherwise would not.

- Non-refundable option or 'premium overage of rent' up front.

- Avoid a commission: Although there are ways to pay an innovative Realtor as well.

- Get a better quality tenant: Someone who wants to own, even if in the end he does not end up buying, will treat your place better.

- Less maintenance: Tenants that feel a 'pride of ownership' will pay on time, perform maintenance, and make improvements to your home. You could also write maintenance as a condition into the deal

Why do it? Tenant/Buyer Benefits:

- Grow equity. Sometimes a family cannot get together a down payment.

- Knowing what you will buy. Checking it out for say, 2 or 3 years, having the price fixed.

- Rent money is not wasted. Each month a portion of rent comes off of the sales price eventually.

- The full option deposit is not lost. This money will be 100% credited to either the D.P. or the sales price.

- Minimum cash out of pocket. With a lease purchase, there is only the first month's rent and an option deposit to pay; no down payment, no closing costs.a tidy profit.

Major Point: It is vital to have an ironclad contract. Insist on one. Pay for one. If the market rises fast, the owner WILL try to get out of the deal. I guarantee it! A LAWYER IS VITAL!!!! REGISTERING THE CONTRACT IS VITAL!

Finally ... here is a rent to own calculator (FREE) you can use to compare renting versus buying, etc.: canadamortgage.com/calculators/rentvsown.cgi.

MARKETS

In Canada a total of 233,402 new listings in first quarter, more than in any other first quarter period on record (100,000 in March alone).

1. PRICES (we touched on it briefly last week, see below).

In Vancouver and Fraser Valley and Calgary UP over April 2009 (between 8% and 25%).

In Vancouver and Fraser Valley and Calgary DOWN over March 2010 (between 2 and 3%).

2. Listings

In Vancouver and Fraser Valley and Calgary UP over April 2009 (between 8% and 25%).

NEW used condo listings up by 91% - ACTIVE condo listings up 38%.

3. Smaller towns are recovering but not booming ... just getting back to 2008 levels.

4. CMHC changed rules for investors for a reason ... worrying about the bubble?

Regina - very strong market

1. 387 sales were reported, an increase of 17% from 330 in 2009.

2. The monthly average sales price of $256,871 set a new high and was up 3% over the previous high of $248,234 recorded in 2009.

3. For the year-to-date there have been 1,185 homes sold, up 18% from 2009s 1,007 sales.

4. Homes sold in April were on the market for an average of 36 days before selling compared to 31 in March of 2010. (VERY GOOD!)

5. Homes sold at an average of 97.2% of asking price.

6. For all MLS® System geographic areas there were 1,336 active listings on the market at month end, including 783 in the city.

Saskatoon

1. Unit sales were up six per cent with 372 homes being purchased as compared to 352 homes purchased in April 2009.

2. Year to date numbers remain strong with 1,147 units being purchased as compared to 1,056 in 2009.

3. The average residential selling price was $299,214.00. That number is up nine per cent from April 2009 when the average $275,586.00.

4. The year to date average selling price stands at $287,722.00 - up five per cent from 2009.

Generally a good market ... I am concerned about a number of conversions in these markets here, but also Winnipeg.

(Last week we featured cheap ranches in Saskatchewan - see www.lanerealtycorp.com.)

1. Brief look at the brand new numbers:

The Brand new numbers tell a story we have been predicting.

Average prices in Vancouver are still higher over last year but declined from the March 2010 averages.

Average price is down from March's 693,500 to April's 674,410 from march -3%

Average used home price is down from 999,500 to 986,900 2%

Average used condo down from 427,500 to 417,800 2.5%

Also, active listings are up for the first time in over a year by 38%

Used condo listings are up by 91%

5 year mortgages window rate went to 6.25% - highest in 4 years

(Best rate still available at 4.6% - up from 3.6% when we said to lock in)

Markets are changing slowly but surely.

2. Tip

Not sure what to do about your mortgage?

Play with the numbers "as if".

Go to jurock.com

Click on this week's lowest mortgage rates.

Click on mortgage calculators and play with 7 calculators.

Mortgage - Borrowing Power - Calculate how much money you can borrow based on your financial circumstances

Mortgage - Extra Repayments - Calculate how much time and money you could save by making extra loan repayments

Mortgage - Loan Comparison - Compare any two loans to see if one will be cheaper over the life of the loan

Mortgage - Loan Repayments - Calculate how much your repayments would be for a specified loan amount

Mortgage - Lump Sum Repayments - Calculate how much time and money you could save by paying in a lump sum amount

Mortgage - Reverse Mortgage Calculator - See how much you could earn in reverse mortgage repayments and what happens to your home equity over time.

Mortgage - Split Loan Repayments - Calculate the payment effects of splitting your loan into fixed and variable interest portions

THEN DECIDE HOW MANY YEARS, WHAT RATE AND WHAT MORTGAGE FEATURES YOU NEED.

Singles In Suburbia: A New Wave

More than a decade ago the book Boom Bust and Echo forecast that suburban houses would become an anchor on the market by 2010 because aging boomers would all downsize and move out. Well, guess again. The suburbs are still strong and, if a new survey is an indication, it is young singles that are the new suburban wave of buyers.

In April Coldwell Banker Real Estate conducted a national online survey of more than 1,000 U.S. single homeowners and found that the majority of single homeowners (52%) chose suburbia over urban areas. Over half (53%) of single homeowners purchased a home simply because it was more cost effective than renting in their area.

The desire for independence played a role for 35%.

- Finding good deals is important, but so are modern amenities and outside space, the survey found. In fact, having a yard and outside space were rated as the most desirable features in a home over lesser considerations like space for entertaining.

- 68% of single homeowners purchased a home that was below their price range, rather than the most expensive home they could afford.

- Of the 13% of single homeowners who own their home jointly with another person, almost half had bought with their parents.

Major Point: With better Internet access for working from home, better cars to commute in and upgrades to the transit system (from Canada Line to new bridges) and much lower prices - you can buy a detached house in Langley for the price of a one-bedroom condo in Yaletown - we believe the singles to suburbia wave will increase. Follow the Starbucks and the fitness franchises for the action.

THE 64 MILLION DOLLAR QUESTION: We are in a Prime minus/plus % mortgage, do we lock in now or not?

Argument for locking in:

- If you are somebody that worries in general, about all sorts of things, worrying about rising interest rates might be something you should alleviate by locking into a 50 year record low five year rate.

- If at 3.75% your mortgage payment is just barely manageable, but still tolerable you might want to lock in and hedge against an (unexpected) 3 percent rise in Prime that takes you to 5.25% +/- .75%

- If your mortgage payment at 3.75% represents a significant part of your take home pay, again you may want to bite the bullet now and hedge against even higher rates.

- If you are in a Prime + mortgage you should be taking action either way, either by locking in as the spread is quite small, or if you are committed to variable by trading in for a new variable as the discounts are now at Prime -.50% (1.75% today)

- You have multiple mortgages floating with Prime, perhaps time to consider mitigating your exposure somewhat. (You should already have addressed that though as you are clearly a savvy investor if you have multiple mortgages, and you are aware of the radical changes coming Sunday at 9pm that impact Real Estate investors more than anybody.)

Argument against locking in:

- Despite steep increases in fixed rates, which are driven by the bond market, Prime (driven by the Bank of Canada) is not expected to move very far very fast. With a projected rate of 3.00% by years end. (Again if you are in a Prime+ mortgage this is not good for you, correct that situation now.)

- With the pressure to maintain a low CDN $ the Bank of Canada is no position to dramatically increase Prime rate at this time.

- If you are in a strong earnings to mortgage payment situation, do yourself a favour and start making the five year fixed rate payment on your variable rate mortgage. This cushions you from rate increases, and it sends you far ahead of the fixed rate folks while you enjoy a potentially slow steady rise from 2.25% +/-.

- Over the past 40 years it has never been the right day to lock into a 5 year fixed. The Variable has always prevailed. Is today the first day in 40 years that it goes the other way?

Hopefully this did not leave you more confused about what to do than before you started reading.

If so you know where to reach me. Dustan Woodhouse 604.351.1253

Talk about affordability!!!

Single Family

Vancouver $999,500 average

Calgary $471,500

Edmonton $388,500!!!

Condo

Vancouver $430,000

Calgary $296,600

Edmonton $252,000

Edmonton is VERY affordable ... PLUS offers investors and owners up to $24,000 in a grant to build or upgrade basement suites.

1. Mortgages are rising...Biggest weekly jump since 1996 to window rate 5.95% at big banks (still can get 4% haggle hard).

2. FOR RENTAL PROPERTY - THERE IS AN HST REBATE

An HST rebate is available for rental investment property called the "GST/HST New Residential Rental Property Rebate." You qualify if you can prove you have a minimum 1 year lease, the unit must be brand new and self-contained (and of course prove that you paid the HST).

The rebate is virtually identical to the New Housing Rebate.

It works out to a 71.43% rebate of the provincial portion of the HST and 36% of the federal HST portion.

I believe the maximum rebate is $26,250. See www.cra-arc.gc.ca/E/pub/gp/rc4231/

Those are the rules now. But be cautioned as the rules continue to be refined and could change.

3. Vancouver hotter than a fire cracker ... Average (total) price rose from $532,167 to $693,527 = UP 30%!!!

Average condo price rose from $354,605 to $432,754 = up 22%.

Sales rose by 38% from 2,274 to 3,146.

4. Calgary sales up by 28% and average single family home price up 12% ( 471,269 from 420,354)

I am telling people to be very careful however. I think a good first half...then sideways to down...

I am doing the 2010 Edmonton New Home and Condo Expo next weekend... April 9, 10: 40 builders displaying properties in over 100 communities in Alberta.

CMHC changes lending policy

On April 19, 2010 the government, CMHC and the other insurers will make changes to its lending policies designed to make speculation harder.

It will also affect how the bank assesses a house with a basement suite and the income thereof.

We could discuss that briefly and advise people to check into this now to redo their financing. After April 19 they may not be able to:

Bluntly put, the changes will sideline some investors and home owners wanting a mortgage helper suite:

- Investors will require 20% down to qualify for mortgage insurance, compared to 5% down today.

- The ‘80% offset method’ will disappear, replaced by what is called a “50% add to income method.” This will have a considerable effect. For example, if your rental income is $1,000, today lenders will approve loans if 80% of the income covers all the expenses. Under the new rules, 50% of the rental income is applied to your total income, but when this is tallied to your debt service ratio, it really relates to $200 per month of counted income. Green used a real life example for a first-time investor trying to purchase a Burnaby detached house with a basement suite rented at $800 per month. Under the current 80% offset rule, he would qualify for a $550,000 mortgage. After April 19 he would qualify for only a $430,000 mortgage!!!

- Some investors with multiple rental properties that are barely cash flowing may find that they cannot even refinance under the new rules, Green warned.

- “Stated income” for self-employed persons will disappear for those seeking CMHC insured mortgages. Also, if you have been self-employed for three years or more, you have to show that you are making a profit.

Refinance now if you need to.

1. Penticton offers a 5 year tax holiday on renovating a motel/hotel

If you are thinking of getting into the Okanagan motel market this year, Penticton is offering a five-year tax holiday to those who spruce up their units or build something new. It is part of an incentive program out to meet competition from other Okanagan towns hungry for investment.

Here is the deal: Anyone who builds a new hotel or does at least $100,000 in renovations or additions to an existing hotel or motel by Dec. 31, 2010, is eligible for: 100% municipal tax relief for five years; 50% reduction in building permit fees; 50% reduction in development cost charges (DCCs) payable on the project. The ability to defer DCC payments to a later stage in the project. Penticton is also offering similar incentive to any industrial developers or manufacturers. You can check out the incentives at www.imaginepenticton.ca.

2. Warren Buffet calls low in US housing market...crisis over by 2011 Buffet: "for every seller or lender hurt by this there will be a buyer who benefits." "...demand for affordable homes will catch up with the excessive supply that has decimated prices over the last three years."

Time to look at US again?

- Las Vegas turning into seller's market

- Phoenix foreclosures take up to 3 months to get approved by the bank (so many sales)

- Canadian dollar near par

ONE DEVELOPER SOLD 7 LUXURY SUITES FOR $46.76 MILLION ($31 MILLION FROM OLYMPIC ATTENDEES)

Between the Opening Ceremonies on Feb. 12 and the Closing Ceremonies on Feb. 28, Aspac Developments sold seven suites at its luxury towers at UBC (The Wesbrook) and Coal Harbour (Three Harbour Green) for a total of $46.76 million. Three of those suites, including Three Harbour Green's $22.3 million-penthouse, were sold to visitors specifically in town for the 2010 Winter Games.

"The Olympics were instrumental in putting our properties, especially our Three Harbour Green tower next to the International Broadcast Centre, on the world stage," says George Wong, principal of Magnum Projects (Marketers for Aspac).

"The weather really showcased Vancouver's natural beauty and the Games brought an international flair and level of excitement to our city that, coupled with everything else we have to offer, made Vancouver extremely attractive. Add to that the affordability of luxury real estate here, compared to other world cities, and Three Harbour Green's downtown waterfront location was an irresistible choice for our buyers." To interview George Wong, obtain images, or arrange tours of the Penthouse in One Harbour Green, please contact Greg Descantes at 604-646-3564 or greg@pacegroup.com.

2. BMO Cuts 5 Year Rate To 3.75%

February strong numbers: Highest national house price ever

Vancouver 2010 2009 %

Average used home price: $946,000 $739,000 +28%!!!!!!!!!! (sales up 71%)

Average used condo price: $420,000 $339,000 +24% (sales up 65%)

Listings down: 11,362 14,543 -21%

National prices

Average coast to coast: $328,500 $274,700 +17%

B) Other CMHC changes pending for investors

INVESTORS MAY POSSIBLY ONLY BE ABLE TO USE 50% OF THE RENTAL INCOME TO QUALIFY FOR FINANCING (INSTEAD OF 80%).

If you wish to buy rental property do it before April 19…easier to finance.

C) Hot trend - houses with suites

Colwell Bankers Real Estate LLC survey found that 37% of U.S. realtors reported an increase in people looking to buy a house with a suite. In Canada more and more are looking for in law accommodation – lane houses etc.

1. NEW MORTGAGE RULES

As of April 19, 2010 all borrowers (of government-backed insured mortgages) must meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term;

- The maximum amount one can withdraw in refinancing their mortgage will be reduced to 90% from the current 95% of the value of one's home;

- Non-owner occupied properties will require a minimum down payment of 20%.

2. BEST RATES ... NOT BANK WINDOW RATES ... GET THE BEST RATE 5 year rate. Bank window 5.25% ... BEST available as of yesterday 3.68%.

3. Sample

300,000 at 5.25% = $1,800 per month

300,000 at 3.68% = $1,530 per month

300,000 at 7.00% = $2,120 per month

(WHERE TO FIND BEST RATES AND MORTGAGE CALCULATORS? JUROCK.COM)

4. Long or short?In this environment go LONG ... don’t gamble. (Try and tie your rate renewal to an US election year.)

5. Co-Signer or a Guarantor

Many parents and other relatives are being asked to back the mortgages of first-time buyers. There is a big difference between being a guarantor and a co-signer.

A co-signer is basically a co-owner - he is registered on the title and is equally accountable for payments.

A guarantor, on the other hand, personally guarantees payments will be made if the original applicant defaults, he has no claim to the property because he is not on title.

Major Point: You may also consider - when co-signing for children, to keep a property in a family trust for them for a few years until the 'age of sanity' - particularly when you put up all or most pf the money! You will keep control and if things derail, well, you still own the property.

OLYMPIC IMPACT ON REAL ESTATE VALUES

Our quick look around the world found in a nutshell: That as far as real estate going up in value along with the Olympics ... it was best to buy on the rumour (the announcement of being in the running), than on the news.

Jones Lang LaSalle study showed that the Olympics may aid real estate values in developing cities, but have little to no effect on developed metropolitan areas.

But Barcelona, Athens and Sydney all saw a significant upgrading of their urban infrastructure and this city rejuvenation WAS likely to encourage higher house prices.

Olympic Cities Around the World

1988 Calgary, Canada; (prices sideways)

1992 Barcelona, Spain (up sharply, +131%)

1996 Atlanta, Georgia (house prices went down)

2000 Sydney, Australia (sideways - down)

2002 Salt Lake City, USA (house prices collapsed)

Suddenly Farmland Is In Global Demand

Governments and private companies buying up millions of acres of farmland in other countries to create massive remote farms.

China has quietly bought 3.2 million hectares (7.4 million) acres of farmland, mostly in Africa.

Saudi Arabia has set up the Saudi Company for Agricultural Investment and Animal Production and spent $800 million on overseas farms in 2009 and is looking for more in Africa Argentina, Australia and Eastern Europe.

Japan is also buying huge swaths of farmland in both Africa and South America.

Data collected by the US-based International Food Policy Research Institute shows that, in 2008, governments bought nearly 8 million acres of farmland in foreign countries.

During the first half of last year, such purchases had topped 7 million acres, an area bigger than Belgium.

The data exclude private sector deals totaling nearly 9 million acres over the last three years, including South Korea-based Daewoo's bid for more than 2 million acres arable land in Madagascar. Hyundai recently took control of some 300,000 acres of farmland for beef production in Russia.

Why should you care?

Because Saskatchewan farmland is still cheap and it is expected to be soon be on the radar of international investors. Farmland in Saskatchewan sells for about $350-$600 per acre.

Ontario, farmland is about $7,000 for an acre and it would be hard to find farmland in B.C.'s Fraser Valley or Okanagan Valley at less than $20,000 an acre.

Hot property: I have several acreages like: For listings (how about 960 acres for $390,000?) of Saskatchewan farmland, see Lane Realty Ltd at www.lanerealty.com.

Saskatchewan has 65 million acres of farmland, representing 45% of all the arable land in Canada. When foreign buyers look for farms in Canada, Saskatchewan's wheat fields and potential beef ranges will likely be the main target. Since 2003, the province has lifted restrictions on residents from other provinces or countries from owning farmland in Saskatchewan. So, even if you do not live in the province you can buy a farmland here. You can also invest in Saskatchewan farmland without getting your hands dirty. One option is to buy farmland and rent it back to farmers (rents run to about $50 per acre). Or you can invest in syndicates that already have control of thousands of acres.

One of these is One Earth Farm, which partners include Cape Fund, a private investment firm headed by former Prime Minister Paul Martin. One Earth has locked up about 100,000 acres of First Nation farmland in Saskatchewan and Alberta and plans to have 200,000 acres this year. In December, One Earth Farms Corp. sold 15 million common shares at $1 per share in a private placement offering. (Sprott Resource Corp. a Toronto investment company has a 66.67 percent ownership stake in One Earth.)

Another investment option is Calgary-based Agcapita Farmland Investment Partnership. Agcapita buys farmland and then rents the land back to producers, with a longer term plan of selling for a capital gain. Agcapita claims to have the only RRSP-eligible farmland fund in the country. The minimum investment is $10,000. The company claims assets of $100 million (www.farmlandinvestmentpartnership.com).

Major Point: You can also buy farmland yourself, and then rent it back, in some cases to the farmers who currently own the land, For listings (how about 960 acres for $390,000?) of Saskatchewan farmland, see Lane Realty Ltd at www.lanerealty.com.

The Vancouver Real Estate Market is still soaring

Vancouver	Jan 2010	Jan 2009	%
Units Sold	1,927	763	+152%
Average Price	638,100	537,300	+18%
Active Listings	10,217	13,966	-26%
Apt. Prices Used	415,200	345,000	+20%

Kelowna and Vancouver Island ...still lagging behind....prices and volume.

Vancouver Least Affordable? Gimme A Break!

According to a widely-quoted study, Vancouver is the least affordable city in the world. (Download the study at www.fcpp.org/publication.php/3153)

We say "gimme a break."

In Hong Kong, condominium prices in the bargain-priced New Territories average $1,100 per square foot, and they average $3,000 per square foot in prestigious Peak neighbourhoods. Condo prices are also around US$1,200 per square foot in central Paris or New York, or about 40% higher than the Vancouver average.

In a global survey last fall Coldwell Bankers noted that, while Vancouver had the highest price in Canada for an executive house (4- bedroom, two-storey) at US$1.2 million, it paled next to Singapore at US$1.90 million; La Jolla, California at US$2.13 million, or even Milan, Italy, at $1.64 million.

Major Point: Vancouver does have high house prices, but for good reason. Hemmed in by mountains, water, the U.S. border and the ALR, it has a shortage of land and a growing population. We believe Vancouver can still represent a great real estate buy for the long term - if well researched. Prices here - like elsewhere - will be higher, likely much higher, in 10 years.

1. ASSESSMENTS

Everyone in BC has been sent their assessments, now check out value and whether you agree with them! Go to bcassessment.bc.ca ... click on 'compare sold properties'.

THEN IF YOU WANT TO ... DISPUTE THEM ... BUT ONLY TIL JANUARY 31, 2010. AFTER THAT YOU ARE STUCK!

Evaluate your home (and your neighbour's home) FREE!!!

2. MORTGAGES

A) Credit line or Mortgage? Credit line shows on your credit report…mortgage does not! Often people take out credit lines not realizing that almost all banks report credit lines to your credit bureau... Mortgages do not show up on your credit report.

So if you had a house of $600,000 ... and you owed say $200,000 the bank will give you a credit line of $400,000...and that's what your credit report will show ... $400,000 - a $400,000 debt. If you took out a $400,000 mortgage it would NOT show...

B) Interest rates rising? Time to evaluate all your mortgages NOW!

Commercial, Self employed, Investment mortgages still very tough to get.

To do:

1. Make yourself look as good as you can -Employment letter-credit rating.

2. Get a mortgage specialist. Not all mortgage brokers are the same. Commercial mortgages are a science to itself. The broker could be key.

3. If you have rental properties, make sure you understand that every bank may have different rules now some will accept only 50% of rental income, but some still use 100%...find out who is best for you

4. Make a mortgage binder get your appraisals, your tenant rental agreements, income statement, get it all ready before you go for the mortgage

5. Still Haggle hard!:

6. Posted 5 year rate 5.25%...haggle hard...you should only pay 3.69%!!!

7. Posted 1 year rate 4.50%...haggle hard...you should only pay 2.51%!!!

1. The amazing year of 2009

Toronto Prices 418,500 361,400 +14%

Edmonton 318,500 319,000 +-00%

Calgary 415,000 388,700 +06%

Vancouver 620,700 509,500 +18%

Victoria 617,900 548,000 +11%

B) Year to date sales Volumes soaring

Toronto sales 14 % higher

Edmonton sales 11% higher

Calgary sales 5% higher

Vancouver sales 39% higher (253% in Nov - over Nov)

C) LISTINGS ACROSS THE BOARD SHARPLY LOWER BETWEEN 20% TO 45%

However, many smaller centres DID NOT PARTICIPATE IN TURNAROUND.

2. REASONS

a) low, low interest rates..... a $500,000 mortgage at prime is $2,100 per month

b) Unemployment not really a factor in major cities ... (built in 4.5% - rest UI in hard hit smaller communities)

c) First time buyers were not in the stock market last year

3. SURPRISES

a) the fast turnaround of confidence ... never before this fast!

b) The turnaround is Canada-wide ... including the tough Toronto market.

The brand new CMHC vacancy rate report

Of utmost importance to the investor. Every vacancy rate in Canada's cities is featured for 1, 2 and 3 bedroom units and townhouses. Every monthly rental fee (on average) that a tenant must pay for each unit in each town. You can download it here.

Mortgages

Sample $400,000 MORTGAGE (AVERAGE FOR VANCOUVER)

1. CURRENTLY

($400,000 AT PRIME VARIABLE 2.25% = $1,744 PER MONTH)

$400,000 AT 5 YEAR TERM at 4% = $2,111 PER MONTH

2. RATES RISE by

$400,000 AT 5 YEAR TERM at 5% = $2,338 per month ($227 more)

$400,000 at 5 year term at 6% = $2,577 per month ($466 more)

$400,000 at 5 year term at 8% = $3,090 per month ($949 more)

$400,000 at 5 year term at 10% = $3.634 per month ($1,523 more)

1991 the 5 year term was 13.5%

$400,000 at 5 year term 13.5% = $4,662 per month

At $400,000 mortgage every 1% increase adds approx. $ 250 per month

You can work out your own mortgage at Jurock.com under mortgage calculators.

Real Estate Action Book

My brand new book came out on Friday:

REAL ESTATE ACTION: 55 ACTION TAKERS SHARE THEIR SECRETS

Michael Campbell - foreword.

From Cameron McNeill (he of Mcbulk fame) on how to sell development to Shell Busey - How to renovate.

From Scott Ullrich (one of canada's largest Property Management cos) to leading appraisers, home inspectors, investors, realtors.

Every aspect of buying real estate in Canada is covered.

Go to www.realestateactionbook.com....Order now shipping is free til December 17

HOW TO BUY IN A RESORT...

First, remember the principle that a chairlift and a parking lot is NOT a resort.

Second, watch for the news: "Actual (not potential) Money being invested ... i.e. new high-speed chairs added ...

Third: Look for the "two legs" - summer and winter uses. What of golf courses, lakes and other recreation than just skiing?

Fourth, when buying new, check out the developer: what has he built before? Can you talk to someone who has bought from him? How strong is his financing?

Fifth - buy personal USE (Phase I). NOT Phase II. Phase II condos (28 days in winter and 28 days in summer use) at Whistler are at the same price now than they were in 2002.

Sixth: Hotel-type units are not real estate. They are a business first and the onerous restrictions of some hotel investments CAN (and have) killed investments.

Seventh: Time share is a holiday. A 200 sutie building needs 10,000 buyers!!!

Eighth: Buy an old unit in town, rather than the flashy new unit on the mountain. The new ones will lift the price of the used ones.

Early Numbers - Vancouver Rocks

The final numbers will not be out until Tuesday, but early numbers indicate a very strong October for Vancouver.

Detached used Home sales up 156% over last October

Detached used home price up 9% from $811,000 to $885,000

Condo used sales up 116% over last October!

Condo prices up 11% from $382,400 to $426,000!

MORE STRIKING: Last February the used condo price was $337,800!

That means that the condo price went up in 8 months by $88,200! or up 21%!!!

Assessments

Assessments have been frozen for 2 years as of July 2007. In many outlying areas assessments are now higher than market value.

You can check your assessment ANYWHERE IN BC at www.bcassessment.bc.ca CHECK IT NOW. Many assessments are now OVER market value.

Get ready to dispute in January if you feel that is the case with your properties.

Then - importantly - as of January 1, 2010 till March 16, 2010 this website will allow you not only to search assessments but will display ALL sales on and around your street, allowing you to take a quick assessment of your property.

Mortgage rates rose this week...

1. Still only by .35%

The 5 year POSTED rate is now 5.8% - the best rate you can get is still only 3.8%!!! HUGE difference

2. You do not know the future. Don't get caught. The debacle in the states was precipitated by people not locking in a rate. Sleep well at nite - if you plan to stay in your home lock in the rate for 5 year rate at 3.8% (for every $100,000 payment is still only $510).

Sydney’s median house price has increased by 5% to $544,000 Condos show a 3.5% increase to $382,000. Melbourne increased 4.5%

New Zealand sales are 28% higher and August prices are up to $346,750 compared with $330,000 in August 2008

Pending home sales have increased for seven straight months, the longest in the series of the index which began in 2001, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in August, 12.4 percent above August 2008

Existing-home sales – including single-family, townhomes, condominiums and co-ops –are 3.4 percent above the 4.93 million-unit level in August 2008. In the previous four months, sales have risen a total of 15.2 percent.

England – The Guardian (Nationwide)

House prices rose for the fifth month in a row in September and are now back to the same level as this time last year, figures released by the Nationwide building society showed today.

Building society says average cost of a home increased 1.6% to £160,224 last month, while the three-month figure rose by 3.3%

House prices rose for a fourth month running in August as demand for properties continued to outweigh supply, the UK's largest building society said today.

Nationwide's latest snapshot of the housing market showed the average cost of a home The society said prices were now 3.2% higher than at the beginning of the year, The three-month trend, price rises from 2.7% in July to 3.3% in August.

This is the highest level of three-monthly growth since February 2007.

Austria Price change for period ending Q1 2009 +4.36% Switzerland Price change for period ending Q2 2009 +4.11% Italy Price change for period ending Q2 2009 +3.05% NorwayPrice change for period ending Q2 2009 +1.52% Germany Price change for period ending Q2 2009 +1.21%

Market good everywhere...even Calgary prices have started to rise again.

VANCOUVER

September Vancouver numbers rock

September 2009 over September 2008 was outstanding:

Used Condo Sales up 118%

Used SF homes up 154%

Used condo prices up 9% (from $361,500 to $397,600)

Used SF home prices up 11% (from $768,400 to $854,700)

Active listings down 36% (from 19,852 to 121,596)

CALGARY

Used Condo Sales up 25%

Used SF homes up 9%

Used condo prices up 1% (from 397,000 to 290,253 )

Used SF home prices up 3% (from 444,000 to 459,085 ) first price increases

Listings down 30%

Tip for a builder/developer:

Create Some Differentiators for Your Project and Units - you don't want to be seen as just a commodity project, one that is virtually indistinguishable from many others.

Ideally you want to differentiate your project and provide some memory points to make it stand out to prospects that are looking. It could be the exterior design or colour. It could be some interesting new hi-tech features or unexpected amenities. In your units you should strive to do something similar. Unusual finishes or fixtures. A new style of appliance. Pendant lighting or an unexpected sliding door or glass wall in the storage area.

If you can make people remember what you have, particularly if they can't get the same things somewhere else, you will generally sell better and make more profit.

The Fallacies Of Averages

When we listen to the average prices is can be very confusing E.G.: Vancouver was quoted on Friday as having an average price of $607,000 in August What that means is the average price of all single family homes, all townhouses AND all condos from Mission to Lion's Bay. (Pretty meaningless)

What really should be quoted is the breakdown by property class:

New single home price average... $1,120,000

Used single home price average.. $ 865,400

New condo price $ 443,600

Used condo price $ 386,410

However, now we still only know what the average price for a house or condo is between Lion's Bay and Mission!!!

Even more interesting would be:

Average used home price on West Side: $1,750,000 (up 9%)

Average used home price Coquitlam $ 469,000 (up 1%)

Major Point: As a buyer check out the area you wish to buy in...averages vary wildy depending on suburb and property class

The HOT PROPERTY deals from last week sold out... Legacy at Mara Lake, 12 of 14 sold Port Side luxury condominium complex in Sicamous, sold out all the units, Discounts: up to 50%.

RESIDENTIAL HOT ... COMMERCIAL NOT

1. Calgary? Vacancy rate threatens to soar to as high as 16% by 2010, as new towers come onstream. The downtown vacancy rate is now 7.8%, the highest in four years, and there is so much sublease space on the market that it exceeds the amount of head lease space, according to a survey by Avison Young.

2. Vancouver, there is now nearly one million square feet of vacant sublease space, half of it downtown, and the office vacancy rate is flirting with 10%, the highest since 2005.

The office space glut is being seen right across Canada, and is a prime reason why the commercial loan sector is tanking. Expect to see some loans called on commercial developments this year and into 2010 - and more trouble in securing loans for commercial real estate ventures.

Data from CB Richard Ellis indicates commercial real estate transactions fell by more than half in the first half of 2009 compared with last year.

BEWARE: SOPHISTICATED SCAMMERS ARE USING CRAIGSLIST

Fraudsters operating at Craigslist SCAM BOTH OWNERS AND RENTERS

OWNERS: To get a lot of details of the property (which they then advertise for rent on Craigslist) they pretend to be an offshore prospective tenant.

Example: Guy who claimed to be a Doctor from Russia but who currently resides in the UK. Provided a bunch of info: his address in Moscow, and address in UK, his Bank account, his occupation and professional background, his references in UK and even in Canada (Toronto), pictures of his family and himself, with a copy of his foreign passport.

Tenant Scammer pretends to be owner - runs ads, provides false information to tenants. Ask tenant to make a deposit and for some personal information to be sent via email. Keys to the home, would be sent as they sent the info and money. When renting homes, especially, it is a good idea to pay a visit to the offered space. This enables you to verify independently whether the offers are genuine or not.

Solution: Don’t deal with offshore tenants. Don’t put exact address and detail information in ad. Correspondence with prospects are often done entirely via emails. The scams have their origins usually in Nigeria. Contact number posted in the ad carrying the Nigerian country code.

Apart from poaching the deposit, fraudsters also use information given away by victims to steal their money. If you handover your bank account info, they are capable of transferring money from this account into one of theirs. If you divulge your driving license or social security information, they use these to open credit accounts against your name and make purchases against the same. Ditto for credit card details.

A good rule against falling prey to scams at on-line auction sites is to only deal with local buyers and sellers.

Markets are hot from Toronto to Vancouver

Not just good ... but best ever!

July best July EVER in Vancouver, Fraser Valley, Victoria!

Interesting enough:

There are multiple offers in Aukland, NZ.

Las Vegas listings are down to a 3.5 months supply (almost turning into a sellers market). London has a strong month.

It is almost as buyers - expecting higher prices - with all that money printing going on - and are shrugging off bad news.

Consider NOT paying off the mortgage

If you are 65 - of no great means - consider NOT paying off the mortgage.

The average mortgage now is $400,000. If you have a 25 year amortization you pay $2,340 per month and pay off very little.

Get a credit line at 1% over prime ... interest only = pay only $1,080 per month = have a better sunset life!!!

Let your heirs worry about the mortgage ... they are getting a great house anyway!!!

Co-ops are a different kind of ownership

1. There are 2 kinds of such co-op apartment buildings. Profit and non-profit.

2. The non-profit buildings are mostly government sponsored (through loans), have income restrictions and are meant to be given back at no profit.

3. The 'profit' ones are different. Actually, this style of ownership - while not popular in Vancouver is very much in vogue elsewhere. Most of New York is owned as a co-operative.

4. The residents of a cooperative do not actually buy their individual apartments. Rather, they buy the shares in the apartment corporation allocated to a particular apartment. Ownership entitles purchasers to a proprietary lease.

5. As with condominium ownership, maintenance and repairs are paid for through the collection of monthly fees. The purchaser of a co-op apartment gets a loan to buy the shares allocated to the apartment, pledging the shares of stock and proprietary lease as security. Generally a 'Co-operative' forms a company - owns the land as a company under company's act then gives shares in the company and lease to you.

Negatives:

Financing...

a) Most banks will not finance them. You may have to use a credit union.

b) Since you have no title per se - you need 35%-50% down. They may charge 1% or 1,5% more interest.

c) They are about 25% to 35% cheaper in value

d) They have use restrictions often: 1. No pets, 2. No rentals, 3. No children.

e) Some also have: 1. Right of first refusal of corporation, 2. Formula to determine fair market value. Worse, the co-op board has the right to reject your prospective buyer.

Positives:

1. They are a lot cheaper.

2. Some buyer may actually like these restrictions.

3. They can be in very nice neighbourhoods - Westside - Westend.

Major Point: JREI does not like them as investments. However, in some circumstances for an older buyer w/o much funds and looking for lifestyle - it may work. And then any real estate is better than no real estate.

VANCOUVER: Early July numbers show sale up 44% - listings down 34% - Prices up 1% over last year (first time we are up in prices overall).

- Calgary, Edmonton, Toronto, Vancouver all up, up, up.

- Canada up. The Canadian Real Estate Association reported that Re-sales soared at a record pace in the second quarter, surging by 31.5% from the first quarter

- New Zealand's up - Real estate agents report multiple offers on properties and contested auctions. House sellers are getting 'mojo' back. Listings are in short supply.

- Phoenix inventory down from 65,000 listings to 31,000

- Las Vegas inventory is down to 12,652, which is a 3.4 months supply (3 months supply is considered a hot market).

CAP RATES RISE IN US

Single Family homes

* Las Vegas – average price $121,000 = cap rate 10%

* Saint Louis $71,000 = cap rate 9.64%

* Phoenix = cap rate 9.37%

20 US markets cap rates are over 7.5%

Limited Partnerships

Limited Partnerships - be careful when infesting in them:

Several Limited Partnerships (LPs) and real estate funds have gone bad in the last 3 months - noteably in Alberta.

The latest debacle is Calgary's CONCRETE EQUITIES ... where shareholders have not seen financial statement for 3 years.

LP's get a bad name because some of their deals go bad, or Managers/General partners are taking advantage of their position.

But often some of these investments would still go sour - no matter what the structure was. Even a well designed and well created vehicle such as a trust, or a corporation could go bad - if they bought the wrong thing, paid too much, construction costs were too high ... or simple bad managers.

An LP is just a legal structure, and it can be a very efficient structure. The deal itself may be poor. Or the manager is not competent.

Major Point:

-If you are investing in any vehicle where you do not have control (like owning your own unit) you MUST check out the managers/general partners of the venture.

-What is their track record, their history?

-What is your protection when things go bad?

-What is the exit strategy?

-What exactly are they putting your money into?

Foreclosures

Foreclosures - while still at a very low percentage - have increased. Some foreclosure lawyers are run off their feet.

Quick procedure:

Look at property first

Have your financing in place

Make your offer to the bank or law firm that has the power of sale.

...BUT NOTE

If you make an offer on a foreclosure ... that offer will be on display until the court date ... On court date there may be several other bidders for the property.

So never make you best offer ... have another offer ready - always make the offer $250 better than.

If there are many bidders - do not get carried away ... have a number in your mind you will not go above.

Get more income from your rental ... or from your home

If you own a unit in downtown...For the upper end :

1. Rent to the movie set (Hollywood north) I know of one 800 sq ft apartment that rents at 3,900 per month (BUT exquisitely furnished)

2. Film companies comb local registers and scout neighbourhoods looking for just the right place to serve as a backdrop for their movie. You can register your home with the local film liaison office. One acquaintance made over $1,000 a day renting his upscale property to a U.S. film company

3. You can raise extra money by renting it out furnished (apartments/homes)

In general get more income if:

1. If you are renting a suite (or a fourplex i.e.) think about changing the monthly payments into weekly or bi-weekly payments add $25

2. And what about that garage you don’t use? You could always rent it as a parking spot, but you could also clean it out and rent it to someone who desperately needs storage space or a place to work on a hobby such as restoring old cars.

3. For those with a now empty in-law suite, why not consider renting out the kitchen to a catering company or other food prep organization?

4. You also could rent a basement room as a photography darkroom or a soundproof garage to local musicians for practices.

5. Don’t overlook the garden. You can grow vegetables, flowers, even turf, on the back 40 and sell the results online or through local landscapers. ...or rent the whole garden to an apartment dweller.

6. Then there are the home-based businesses: bed & breakfasts (particularly in demand in tourist areas); baby sitting services or daycare; pet boarding; esthetics; music lessons and tutoring; antiques (great if you have an old barn or large shed on your property)… the list could go on and on.

7. Landlords can also increase income by charging for extra services. Computeres, TVs and VCRs for $10 - $25 per month.

8. Empty nesters, could rent a room or basement suite to students.

Most Undervalued Real Estate In The U.S.

A new study from the international consulting group IHS Global Insight (www.globalinsight.com) has identified dozens of undervalued U.S, metropolitan markets - where household incomes, employment, population density and other factors - could support higher housing prices, but just aren't doing it at the moment. Some of the most undervalued markets as of the first quarter of 2009, according to the new study, are formerly high-flying boom-era cities. They include:

- Vero Beach, Florida, where prices are now 42.5% below the underlying economics.

- Reno, Nevada is rated 26% undervalued based on its underlying economic fundamentals. Today's median is $179,000 compared with $324,500 three years ago

- San Francisco is undervalued by 25%, according to Global Insight researchers. Back in 2006, the median house price in San Francisco topped $811,000. Today it's $578,000.

High on Global Insight's list are two big markets that in recent years missed the wild appreciation of the boom, and have only experienced modest price deflation: Houston, which is 36.9% undervalued - and Dallas, where median prices are about 32% below what the market fundamentals could actually support, according to IHS.

Major Point: Affordability is at a record high in dozens of markets in the US, because of the price declines and lower rates.

1. We said last week: "LOCK IN THAT 3.5% 5 YEAR TERM! BOND RATES ARE RISING..."

This week 5 year term rates jumped more than 1%!

The best 5 year rate right now is 4.49% and the National bank just raised their's today to 4.99%

‘Emergency rates for emergency times’ was the quote I recall hearing, Looks like emergency times are ending in the eyes of the bond market.

2. CMHC fine Spring Rental Market survey (reporting on rental purpose buildings NOT individual investment condos) showed that the average apartment vacancy rate in urban British Columbia rose to 2.3% from 1.1% in April 2008. Even with that increase, vacancy rates were among the lowest in Canada.

3. 10 HOTTEST BC NEIGHBOURHOODS ACCORDING TO C-21

1. Langley - The hottest neighbourhood in the Lower Mainland is in the Township of Langley. Prices were $490,354 in April 2009, an increase of 112.2% from $437,041 since April 2008.

2 Richmond - The second hottest neighbourhood in t $448,469 in April 2009, an increase of 16.29% from $375,396 since March 2009 and an increase of 3.43% from $433,605 since April 2008.

3. Vancouver - Coal Harbour

4. Vancouver - Kitsilano

5. Port Moody

6. Burnaby - Deer Lake

7. Vancouver - south of False Creek

8. Abbotsford

9. Mission

10. Port Coquitlam

www.century21.ca/media

Early Vancouver numbers...show a very strong May

Active listings: 15% fewer new condo listings on market

New listings 40% lower

Sales only 5% lower over last year...(Last October sales were down 55%)

Numbers are surprisingly strong...

LOCK IN THAT 3.5% 5 YEAR TERM! BOND RATES ARE RISING....

Credit Unions are increasing their rates on credit lines

1. Credit Unions are increasing their rates on credit lines 1% to 2% - even on old existing credit lines.

They are telling their clients...Take it or leave it...Pay it or we are cancelling your line.

Perhaps better now to lock in at 3.5% for 5 years...

2. Sales Are Soaring In The US - In Some Areas

The National Association of Realtors (NAR) reports that the areas with the biggest price declines also had the largest sales gains.

The largest sales gain came in Nevada, up 117%, followed by California which rose 81%, Arizona, up 50%, and Florida with a 25% increase.

Some areas also report price gains.

The largest single-family home price increase in the first quarter was in the Cumberland area of Maryland and West Virginia, where the median price of $114,900 rose 21% from a year ago.

Next was the Davenport-Moline-Rock Island area of Iowa and Illinois at $100,300, up 14% from the first quarter of 2008, followed by Columbia, Mo., where the median price increased 6% to $152,600.

Major Point: No, we are not out of the woods yet, but the $8,000 tax credit for first time buyers lured some 494,000 new first timers into the market, mortgage refinancing is at recod levels. Currently the US is experiencing household formations of 1.8 million annually. In 2009 only 500,000 new home starts are projected. Something will have to give.

Early Vancouver numbers...show a very strong April...

Active listings: 31% fewer new condo listings on market.

Overall listings even with last year (in October listings were 90% higher than the year before).

New listings 33% lower.

Sales only 9% lower over last year...(Last October sales were down 55%).

There is money for businesses out there.

For example, the Business Development Bank (BDC):

“The common perception is still, that our bank is a lender of last resort. That is simply no longer true.”

The Bank is in ‘business development’ and will definitely look at all business loan applications.

For us commercial investors it is of interest to note that the bank is also in the commercial (commercial only) lending business.

To note:

You may get a higher percentage of financing. You may get up to a 125% advance on equipment purchase. Complementing your existing credit line for boosting inventory etc. is possible. Business transition lending…

Major Point: Check it out. Mr. Klarisch can be reached at Edward.klarisch@bdc.ca

Mortgages...

A) Mortgages...

1. The Central Banker signalled that things are a lot worse...and announced freezing the overnite rate until 2nd quarter next year.

2. Easy to go variable now...since you have assurance for a year...

3. Refinancing at 3% is now (at least a 14 months) option...not to worry

4. Best 5-year mortgage now is 3.60!!!!!!! 7 year at 4.9%

5. Commercial lending is getting tougher and tougher... though!

B) Flint, Michigan has decided to bulldoze empty houses and even relocate some people that live in them to a new downtown area.

Instead of waiting for houses to become abandoned and then pulling them down, local leaders are talking about demolishing entire blocks and even whole neighborhoods.

The population would be condensed into a few viable areas. So would stores and services.

A city built to manufacture cars would be returned in large measure to the forest primeval.

(Flint has experienced a shrinking of population from 200,000 to 100,000.)

Mortgage Insurance and In-migration

1. Genworth Tightens Up On Mortgage Insurance

There are a number of changes:

Of special interest: - Imposing new credit score minimums for high-rise (4+ floors) condominiums of: 700 (for 90.01-95% LTV applications) --- 660 (for 85.01-90% LTV applications) - Genworth did not previously have credit score minimums specific to high-rise condos.

Major Point: What is Genworth expecting?

2. BC gained AN ASTOUNDING 73,733 newcomers, net, last year

Alone in the fourth quarter of last year, 17,916 people moved in - and this was during the eye of the economic storm. Currently, about 88% of new arrivals are from other countries, with the remaining 12% from other provinces.

Major Point: All these people need a place to live, 74,000 people represent likely 37,000 families ... that either need to rent or buy!

Edmonton's First Annual Condo Expo

Next weekend I am in Edmonton at the Condo Expo

April 4 and April 5 at 1:30 at the Maifair Inn Trade center

www.edmontoncondoexpo.com

Attendance is free...

New World of Advertising

1. WE ALL KNOW ABOUT THE NEW WORLD OF ADVERTISING ON...

craigslist.com

kijiji.ca

But what about the TWEETS?

How to sell real estate on social networks...

www.twitter.com

www.facebook.com

www.linkedin.com

2. Important news ... There is a new sausage museum in Berlin ... www.echoworld.com/B05/B0507/B0507Wurst.htm

Biggest seller in the world...not bratwurst but curry sausage...

Subleases

Vancouver 800,000 square feet - of mostly prime sublease space
Calgary 500,000 square feet

Major companies have cut back their office requirements. THERE MAY BE A DEAL THERE ... The prices on subleases are often from 25% to 30% below the general market value,

BUT be careful! :

1. You have to take what is left on the original lease. There may only be a few months, or a couple of years, left on the original lease.

2. There will be no option to extend the lease, since this was written by the original tenant who now wants out of the deal.

3. The landlord will still expect to get the original lease amount. If the original tenant does not pay ... you will have to.

4. There are no upgrade incentives, which means the landlord won't help with changing the office layout. You have to take the layout as it is, or pay for the changes.

Major Point: Deal with a reputable commercial agent, preferably someone who has been around the business a long time. They will know the advantages and pitfalls of each sublease space agreements.

Marijuana growing...

14,000 homes in Lower Mainland apparently grow pot.

If you are an owner...with your tenant growing the weed...your property will be destroyed.

Here are ten tips to be safe:

Here are some indications that the property may be intended for use as a grow operation:

Cash Payments
Vague and or incomplete applications
No references or lack of identification
Utilities are registered under a different name
Cell phone number given as only means of contact
Shows little interest in layout or amenities or is willing to rent sight unseen
Shows special interest in electrical service

Building owners can take precautions to help protect themselves from potential grow operation tenants. These include:

Insist upon fully completed applications including legal names of all tenants. Do background checks, ask for references and check them diligently – the best protection is preventions
Specify permission in the lease for monthly inspection of the premises
Physically inspect the location monthly (interior and exterior)
Check with neighbours/other tenants about operations – any unusual activity?
Report any suspect operations to Crime Stoppers or the local authorities

Home Reno Tax Credits

It isn't just you as an owner that can get the credit. Your strata corporation can do repairs to their common area.

Owners that are sharing the common property and share the repair costs to it, will qualify for the credit. Eligibility is family-based. The Strata Corporation would make the repairs (fences, decks, hallway carpets, furnaces, boilers etc.) and issue a receipt for owners. Make sure the Strata Corporation has exceptionally good records and keeps all receipts.

Low, low mortgage rates...

5 year rate - 4.02% (some as low as 3.85%!)

1 year - 3.25%

See all rates

The Western Canada Condo scene...

New condos bulk sales...are they for real...?

What about Vancouver...less inventory? Calgary Edmonton...lots of inventory...

Where are the condo deals going to be?

Haggle hard...get 25% off...

Also...some single family home builders are slashing prices.

Use BC Assessment Authority to evaluate your home

Note: the ability to search for sold properties is only available from 01 January to 16 March each year.

Go to: bcassessment.bc.ca and click on "compare all assessments on line"

BC Assessments market evaluation

Search by property address or by Assessment Roll Number or by Plan # (useful if you live in a strata).

Buying in USA

Financing is getting better for Canadians.
Try the local banks in the area...

Sales are rising...in distressed sale areas...some up by 40%

Things to remember:

Get the property inspected.
Shorter sales take a long time and there is no guarantee.
You must do a tax return.
You can't do any work on your properties.
Check out scam artists selling you foreclosure lists.

Previous Tips of the Week:

11/15/08

Hot Deals in Arizona

11/8/08

Vancouver Numbers

10/11/08

And The Mortgage Plot Thickens...

10/4/08

Some U.S. Thoughts

9/27/08

A sign of a very sharply reducing market

9/6/08