John Mackie
The Vancouver Sun

Many people believe millennials continue to live at home so they can afford a party lifestyle.

But a new study by Vancity of millennials in Metro Vancouver pokes holes in the stereotype.

The study found that local millennials living at home spend less on alcohol and tobacco than people their age did 25 years ago.

And they aren’t blowing all their money — one-third of local millennials living at home are saving more than half of their earnings for their own place.

That said, 57 per cent of local 20-to-35-year-olds living at home say they can’t afford to pay rent.

“The affordability of housing is impacting them, so they’re staying at home longer,” said Vancity’s William Azaroff.

“(But) many are saving towards being able to move out, (saving for) a down payment or some kind of little nest egg to allow them to get into the rental market.”

Arrested Development: the Impact of Affordability on Millennial Living surveyed 407 parents and 409 millennials living at home in Metro Vancouver.

It found that 61 per cent of local millennials are still living at home, and that 23 per cent of the millennials between 25 and 35 have never had their own place.

This is higher than across Canada, and going up. In 2011 — the last year for national numbers — Statistics Canada found that 47 per cent of B.C. millennials between 25 and 29 were still living at home, compared to 42 per cent in the rest of the country.

It’s a far cry from 1981, when 27 per cent of people between 25 and 29 across Canada told Stats Can they were still living at home.

One of the big factors is the high cost of rent. Today’s millennials are spending 30 per cent of their earnings on rent, compared to 22 per cent for Gen-Xers in 1992.

“They actually spent more on shelter than any other age category, except people over 75,” said Azaroff.

Another problem is the high cost of transportation.

“We talk a lot about shelter, but it’s shelter and transportation together,” said Azaroff.

“If you have to move farther and farther out in order to afford something you spend more on transportation. So the second largest cost for Canadian millennials is transportation, at between 16 and 22 per cent of their household income.

“(If) you put those two things together, a pretty staggering amount of their income is spent on shelter and transportation.”

Twenty-five-year-old Becca Clarkson recently moved back in with her parents in Vancouver, partly to save money, partly because her parents have retired and are travelling.

She agrees that the stereotypes about her generation living large can be off-base.

“We’re not all staying in on Friday nights and Saturday nights and doing nothing,” she said.

“But the demographic that I hang out with are quite thrifty. (We don’t) go to clubs unless we have a free cover, and we’re not buying drinks at the bar, we’re generally pre-drinking or something like that.”

The UBC creative writing grad is paying the bills working in communications and freelancing. But finding a good job is tough.

“I’ve been looking for more writing jobs,” she said.

“I was just offered one where the salary was $25K, and they required a degree. So I would be paid minimum wage to do 48 hours of work a week. That’s not a living wage, I actually wouldn’t be able to live by myself.”

She knows, because she’s lived in some nasty rentals, including a basement suite she shared “with two other dudes and a lot of mice” and a two-bedroom on a truck route at Clark and Broadway that was so loud her roommate couldn’t sleep.

She’s determined to get her own one-bedroom condo with her boyfriend, so “I’m just saving like a crazy person.” But she finds Vancouver’s escalating housing prices “incredibly” intimidating.

“It feels like I can’t navigate it by myself, and that I need to hire a bunch of people to help me figure it out,” she said. “Which is another expense.”

© 2016 Postmedia Network Inc.

New report on Vancouver?s housing market ?bubble risk? being highest in the world further inflates sensationalism on local real estate

Joannah Connolly
REW

“Vancouver’s housing market most at risk of real estate bubble in the world,” announced numerous Canadian headlines this past week, in a story taken from the Global Real Estate Bubble Index report newly issued by Swiss bank UBS.

In fact, the bank’s report hit headlines across the globe, with almost every major city clamouring to announce its position on one of the the rankings produced – the “Risk of Real Estate Market Bubble.” (Which, of course, is exactly the attention-grabbing outcome that UBS was hoping for, hence the sensationalist nature of its report and its provocative use of words such as “vulnerable,” “risk” and “bubble.”)

So, Vancouver topped the bubble-risk chart, followed by London and Stockholm, with Singapore and Munich rounding out the top five and Hong Kong coming in sixth. (Fiendishly expensive New York, by the way, was considered by UBS to be “fairly valued.”)

Alarming news, isn’t it? That of all the places on the planet, our fair city is the most vulnerable to a house price crash. (Or, good news, perhaps – if you’re one of those pitchfork-wielding, angry folk clamouring for a return to 1980s house prices.)

But hold on a minute. Is UBS saying that Vancouver is most at risk of a house price crash happening soon, or most at risk of simply being vulnerable to a correction at any given time? Because that is not the same thing at all.

Indeed, the UBS report’s introduction is quick to point out, “Even in the cities with the clearest signs of a real estate bubble, it is not possible to predict exactly the timing and duration of a correction. The situation is nevertheless fragile for housing markets. A sharp increase in supply, higher interest rates or shifts in the international flow of capital could trigger a major price correction at any time.”

No kidding. Those Swiss bankers really know their stuff.

Of course those key factors could trigger a price correction, in any booming market, at any time. Expensive housing markets are always fragile, we all know that. But what’s relevant to local home buyers and sellers is, what’s the likelihood of any of those things actually happening in Vancouver any time soon?

Let’s look at those three factors, as they apply to Vancouver.

First, supply. We have a desperate shortage of new housing both for sale and to rent, despite the increase in building permit values and new housing investment – it’s still not catching up with demand. Cumbersome building permit processes, onerous development requirements and soaring land costs are all contributing to this. A sharp increase in supply, that flood of new housing to the market, just doesn’t seem on the cards.

Higher interest rates – absolutely, one of the major factors in high housing prices in the city today. But the federal government is keeping rates low, and is likely to continue to do so for a while, according to banks. Fixed mortgage rates might creep up gradually over the next few years, which could slow the rate of price growth. But unless rates suddenly jump up and leave millions unable to pay their mortgages or afford homes in the first place (which the feds simply won’t do), the market will likely absorb those changes naturally, as it has always done.

Shift in international demand – OK, here’s the big one for Vancouver, with the new foreign buyer tax in place, and seemingly effective in its early stages. Sales in August, and likely September, have slowed down for sure, especially at the high end of the market, leading to a drop in the average price of homes sold since the tax was launched. But experts suggest that’s more likely to be “policy shock” – buyers and sellers waiting to see what happens in the market – than it is a permanent state deliberately caused by the new tax. Historically, real estate markets tend to absorb major policy changes within six months, and then it simply becomes the new normal.

Vancouver won’t suddenly stop being one of the most desirable cities for real estate in the world. It won’t stop being breathtakingly beautiful, or offering an amazing lifestyle, or being geographically constrained. The transfer of the city’s wealth between generations – another major factor propping up the market – will go on and on. All those fundamentals aren’t going anywhere – bubble or no bubble.

Sure, there’s always a “risk” in any booming housing market at any time. And sure, real estate goes in cycles, so there will probably be a correction at some point. Maybe this year, maybe in five years, maybe 20.

The point is not to treat your own home, or your real estate needs, as part of a wider demand-and-supply-driven market – that way madness lies. The only thing that you, as a home buyer or owner, need to worry about is what you and your family need to live in, what you can comfortably afford with some wriggle room and a healthy amount of equity, and whether you’re happy to stay there a while.

As for that price crash? There’s no way of knowing for sure, and any of us could be wrong – but the perceived wisdom from all the intelligent sources that we’ve come across is that the most likely outcome is for Vancouver home prices to readjust after absorbing the foreign buyer tax, and continue to rise steadily.

And one final side note – in the other ranking in UBS’s report, that of house-price-to-average-income ratio, Vancouver came in seventh, despite being touted by other reports as second or third in the world for unaffordability under this measure. So go figure.

Really, the only bubble that should deflate is all the hot air about our housing market.

© 2016 Real Estate Weekly

Foreign investors to switch focus says RE/MAX

Steve Randall
Canadian Real Estate Wealth

Foreign investors, deterred from Vancouver’s residential property market by the 15 per cent tax, are likely to increasingly focus on commercial real estate.

A report from RE/MAX reveals that the Vancouver commercial sector is outperforming most other Canadian markets, driven by interest from local investors. But foreign investors are expected to follow.

“Over the next several months, we may start to see more interest from foreign investors. As a result of the recent foreign buyer tax on residential properties, buyers who are interested in investing in Greater Vancouver may start to shift their focus to commercial properties,” said Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada.

The commercial sector in Vancouver’s Lower Mainland grew 94 per cent in dollar value terms in the first half of 2016 compared with the same period of 2015.

It’s not the same elsewhere though.

Calgary saw a 12 per cent year-over-year decline in sales of commercial real estate in the first half of 2016 with offices showing a 25 per cent slump. Edmonton shows an 8 per cent decline in commercial sales with land sales falling 40 per cent.

“There continues to be demand for good quality product in the Calgary and Edmonton markets, though a full recovery is not expected until oil prices rebound,” said Ash. “For investors, there will likely be some good opportunities coming on to the market later this year and next year as owners start to sell off assets.”

Saskatoon and Regina remain strong in the commercial sector with particular interest from REITs. Winnipeg demand is outpacing supply and is expected to stay strong into 2017.

Copyright © 2016 Key Media Pty Ltd

Kelly Sinoski
The Province

Metro Vancouver house prices will more than double over the next 25 years, as supply continues to be tight and more people move to the region, a senior B.C. economist predicts.

Helmut Pastrick, chief economist with Central 1 Credit Union, said Metro’s housing market has taken a hit with the recent 15-per-cent foreign buyers’ tax, but demand for property will likely rise in the long term because there is little room to expand in geographically constrained Metro and a million more people are expected to move here by 2041.

This demand will likely worsen affordability and force more young people to rent for longer, he added, as incomes won’t rise at the same pace. Metro Vancouver home prices have ballooned in recent years: Just recently, a “student” flipped a Point Grey property for a $1.6-million profit within a year.

“We just have a shortage of land,” Pastrick told delegates at the annual Union of B.C. Municipalities convention Tuesday. “As long as we have ongoing growth, we will see increased demand for housing. I think it will be a national and global development as well.”

Pastrick maintains such cycles aren’t new, noting there have been constant rises and dips in B.C.’s housing market, with a series of recessions since 1957 in which prices dropped between 10 per cent and 35 per cent.

Pastrick said he couldn’t predict when the next recession will strike, but wouldn’t be surprised if, in the meantime, the provincial government considers other measures to cool the market. This could include requiring higher down payments for first-time homebuyers or a gradual increase in interest and mortgage rates.

“This cycle will come to an end, but affordability will worsen,” he said. “Someone once said ‘they don’t make land anymore.’ We will see more renters than we do today, largely because of the unaffordability.”

Paul Kershaw, associate professor at UBC’s School of Population and Public Health, said interest rates should be increased. They are helping to fuel the sluggish economy, he said, but the availability of cheap cash is driving up housing prices across B.C.

He and UBC’s Thomas Davidoff have a more controversial suggestion to cool the market: increase taxes for older homeowners — most likely seniors — who have paid off their homes and accumulated wealth in those properties.

The idea concerns North Saanich Mayor Alice Finall, who said many of her residents are already “house poor” and “a higher tax may make it impossible for them to stay in their home.”

Kershaw acknowledged such a tax may be unpopular, but said people over 55 can defer taxes until they sell.

Meanwhile, it would take the average young person in Metro Vancouver 15 years to save enough for a down payment, and that would likely only be enough for a condo.

“High house prices are crushing the young demographic’s dreams in this province,” he said.

He also suggested the province should cut income taxes, provide more rental accommodation and reduce the cost of child care, parental leave and transit so that young families aren’t having to take out a second mortgage to care for their children.

Davidoff, meanwhile, said the province should go beyond Vancouver’s vacancy tax and insist that all B.C. homes that are not used as a primary residence face a higher tax. Politicians also have to get tougher with zoning practices, he added, noting that they hold public hearings for one-off rezonings and end up bowing to residents who want to keep luxury single-family homes in places like Vancouver’s west side, which results in renovictions in other places where there is weaker opposition, such as Vancouver’s east side.

Davidoff added the province should also dictate to municipalities how many apartments, townhouses and single-family houses they need, so municipalities can set “targets” for themselves, as well as tell developers what to build.

“Over time, this challenge isn’t going to go away, it’s going to be exacerbated.”

© 2016 Postmedia Network Inc.

One big bank predicts rate hold until 2019

Justin da Rosa
Canadian Real Estate Wealth

TD Bank forecasts the Bank of Canada overnight target rate will remain unchanged until 2019.

In its latest long-term economic forecast, the big bank predicts the Bank of Canada will hold its target at 0.5% until sometime in 2019, when it will be hiked to 1%. That will eventually give way to another interest rate increase in 2020, according to TD, when it will settle in at 1.25% to close out the year.

“Slower trend economic growth will also restrain the level of interest rates. With excess capacity expected to be absorbed slowly over the next several years, the Bank of Canada is likely to leave rates at their current 1.00% level until early 2019,” TD said in its forecast. “Even as rates move higher, they are likely to rise to just 1.25% by the end of the forecast horizon in 2020.”

Variable mortgage rates are closely tied to the overnight rate; fixed mortgage rates, on the other hand, are impacted by bond yields.

TD Predicts the five-year government bond yield will steadily increase starting next year. The five year yield closed out 2015 at 0.73% and it is expected to end 2016 at 0.7%. However, it will eventually see slight upticks each year.

The bank forecasts the five-year bond yield percentage will be 0.95% at the end of 2017, 1.30% at the end of 2018, 1.55% in 2019, and 1.80% in 2020.

Rates are dependent on a number of economic factors. This year, the economy is expected to grow by a mere 1.1% this year. However, it is expected to grow to 1.8% next year, driven, in large part, by rebuilding efforts due to the Alberta wildfires this year.

Copyright © 2016 Key Media Pty Ltd

The Swiss bank UBS assessed Vancouver as High Risk

Steve Randall
REP

Last year, Vancouver was “overvalued”; in 2016 it is the most at risk of a housing bubble. That’s the assessment of the Swiss bank UBS which has considered the risk in 18 major cities and puts Vancouver above the 2015 leader London, UK.

“Over the last two years, the housing market has gone into overdrive due to strong demand for local properties among foreign investors and a loose monetary policy. Currently, house prices in Vancouver seem clearly out of step with economic fundamentals and are in bubble risk territory,” the report warns.

The lender says that low interest rates along with foreign investors have contributed to the rise in Vancouver’s housing market. Other cities deemed to be in the bubble zone include Stockholm, Sydney, Munich and Hong Kong. 

San Francisco is the only other North American city to be a potential problem but it is overvalued rather than a bubble-risk. New York is deemed to be balanced while Chicago is undervalued.

Copyright © 2016 Key Media Pty Ltd

No idea which apps are worth downloading and which are a waste of space? Real estate technology expert Darci LaRocque knows the best ones for agents

Darci LaRocque
The Vancouver Sun

Are you sometimes confused which apps or software to use or download that will actually help your business? Say goodbye to that dilemma! I’ve broken down the top apps or software I would recommend for REALTORS® who want to be game-changers in this world of awesome technology. (This article is also a webinar, so if you want to watch this and other free webinars click here.)

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1. Real business should look like one. Is everything syncing with everything? Do you have an email domain that looks neat and professional, like [email protected]? If not, then Google Apps for Business should do the trick. Your business is based on trust and respect through communication. Initial communication should always be at your side and not left updated somewhere else– send emails from your own domain, manage your calendar, and your very important list of contacts with everything working seamlessly and syncing seamlessly. You are falling behind if you’re not yet using this. Seriously! Do yourself a favour and check it out.
2. Sign your documents anywhere. One important aspect of running your business is your ability to do things at the shortest possible time from virtually anywhere. You certainly don’t want to miss an opportunity just because you need to go back to your office to get something signed – has that ever happened? I have to say that signing documents in 2016 has never been this easy! I’d recommend using Docusign – it has an app available across iOS and Android platforms so you can sign documents from all your devices in no time, and it lets you go paperless as well. The other option is Authentisign. Check either one out – but do it!
3. Connect, reconnect and build relationships. As you know, the best way to get clients in the real estate industry is through referrals. And what better way to get referrals? You got it right – from your previous clients. So yes, for one, it’s important to always set your best foot forward when dealing with every client. And the other thing is for you to have to constantly remind them who helped them out in the past. Keep in touch with your past clients by using a CRM (Customer Relationship Management) and set up drip campaigns that work! We’ve been using Realty Juggler for years and the interface is pretty straightforward with very great support! Get three months free from me here and if you like it they will give you two more months!
4. Increase your success rate with open houses. I know how stressful open houses can be, but with technology paving the way to eliminate roadblocks, you should never feel that way again. OpenHome Pro is an app you can download to minimize your efforts during open houses but still end up triumphant. The technology is very smart you can download your lead information quicker than ever and access it anywhere! It even does a background search of your visitors as soon as you log their information on the system. It’s so cool and handy you’re sure to be one step ahead of the game.
5. Save, access and share files anywhere in the world. Cloud storage is becoming the way of life. Imagine saving thousands of your files and having the peace of mind and security that you always have a backup of everything you need. As they say, there’s nowhere else to go but up – and yes, everything now goes up to the Cloud. I’d recommend Google Drive especially if you have signed up for Google Apps for Business as it comes for free with it. Microsoft OneDrive and Dropboxdo the same thing, so they’re worth checking too.

These are just a few of the apps and software I have tested and used. If you’d like to get your hands on everything I recommend, feel free to visit my Resources page – www.DarciTalks.com/Resources.

© 2016 Real Estate Weekly 

Juwai releases ?Overseas Knowledge of Chinese Buyers? survey results

Juwai
other

Not enough, apparently, if one were to judge based on the recent findings from our latest Juwai ‘Overseas Knowledge of Chinese Buyers’ survey questionnaire.

Conducted with 1,402 real estate professionals from 63 countries between July and September 2016, we discovered that more than half (52%) of international property professionals marketing to Chinese buyers don’t actually know the market very well.

Key findings at a glance:

#1 Many international agents already working with Chinese buyers do have some basic knowledge of the country.

They can identify the Chinese flag (84% did so correctly) and the president’s face (75% did so), and they know that the US is the most popular country for Chinese buyers (67% were correct).

#2 There is still much room for improvement.

Nearly 10% of respondents believe that the current leader of China is either Kim Jong-un – who is actually the current dictator of North Korea – or Mao Zedong, the founder of the People’s Republic of China, who actually died 40 years ago in 1976.

#3 At a country specific level…

…54% of US respondents don’t know how much Chinese spent on US real estate, while 73% of Australian respondents don’t know the amount spent in Australian real estate.

#4 International agents are also generally unsure about facts in China that affect the international real estate purchases of mainland Chinese.

For example, they don’t know the average apartment cost in Beijing (78% got it wrong), nor that only 5% of Chinese have a passport (82% got it wrong).

#5 The outlook looks good

More than half of international agents (55%) know that WeChat is the main mode of communication for Chinese. However, that still means that 45% of agents don’t know enough about the Chinese buyers whom they work with to use those buyers’ favourite method of communicating.
 

Conclusion:

With the overall correct response rate of the survey at only 48%, it can be seen that international agents still have plenty to learn about Chinese buyers.

Considering the China market is still burgeoning and showing no signs of waning, lacking an in-depth knowledge and understanding of the Chinese market is definitely hurting your chances of better success with Chinese buyers.

Which are the top 5 most-knowledgeable countries, as well as the 5 least-knowledgeable countries about Chinese buyers, though? Find out in the full report available here.

2016 © Juwai.