Our Opinion

February 25, 2015


What Makes Buyers Tick?

 

When it comes time to sell your home, taking the time to understand why buyers make their decision to buy can put you one step ahead of your competition.

 

There are 2 fundamental parts to the buying process.  The scale starts at emotion and ends at justification.  Every Buyer makes buying decisions based on these 2 factors, or a combination of both, and when it comes to buying big ticket items like real estate, these factors are generally amplified.  

 

Buyers will tend to lean to one side of the scale or the other rather than in the middle depending on their personality. To one extreme, Buyer’s will make their decision based on a feeling. Often we will hear the words “it just feels right”. On the other end of the scale a Buyer will only make the decision to buy if their spread sheet says that they should.

 

Knowing how Buyers make these decisions is key to having the best possible outcome for a Seller. It is highly recommended that you measure each decision you make during the sales process against this scale. Will your home appeal to a Buyer’s emotions?  Can the price be justified in comparison to the competition? If you can accomplish both well, you will attract the greatest amount of potential Buyers to the table.

 



January 13, 2015


The Best Way to Get Your Home Evaluated.


What’s my home worth? This tends to be on most people’s mind if you own Real Estate. You may have a good idea based on your observations of the market but truth be told the only real way to know what something is worth is to sell it. The definition of market value is; ~The price range for an item within which both a buyer under no unreasonable duress will buy and a seller under no unreasonable duress will sell.~ I am not suggesting that you hang a for sale sign on your lawn and say to the market “tell me what it’s worth” it is a bit more scientific than that. We use an appraisal technique called a  Comparative Market Analysis.  The ‘CMA’, is an analysis and comparison of listed and sold properties comparable to your property that is conducted for the purpose of identifying its expected market value. So by looking at similar properties to yours that have recently sold we can come up with a probable outcome of what your property is worth today.

                                  

We have found that the best way for us to conduct an accurate evaluation on your home is to break the CMA into two steps.

 

Step 1 (The Tour)

Our first meeting will be at the property where you will take us on a tour of your home so that we familiarize ourselves with it and get to know each other. The goal of this meeting is to get to know the property and its condition so that we are making an accurate comparison to the recent sales. Apples to apples so to speak. We will discuss your willingness to make improvements that may increase the value and/or saleability of the property as well as your short and long term real estate goals. With all of this information in mind we can now go off and create the most accurate and comprehensive CMA on your home. This meeting usually takes about 15 to 30 minutes.

 

Step 2 (The CMA)

On our second visit we will have done all of our work and prepared a comprehensive CMA tailored to your specific home and real estate goals.

 

Goals of this Presentation

 

•                         Discuss and review your immediate and long term real estate goals.

•                         Review current market conditions and projected market trends.

•                         Review the 3 fundamentals of a successful sale.

•                         Establish your home’s unique features and benefits as well as its challenges.

•                         Discuss any improvements that may increase the value and/or saleability of the property.

•                         Establish who the target market is for the home.

•                         Review similar properties that are listed on the market and recently sold.

•                         Review and discuss a suggested list price range for your home.

•                         Establish a realistic price range that you can expect your home to sell within.

•                         Discuss price strategy options.

•                         Review all costs associated with the sale of the home.

•                         Review your home’s unique marketing plan.

•                         Discuss strategy and timing for putting your home on the market.

•                         Present our Service Guarantee.

 

Thanks for taking the time to read and fill in the market evaluation request form. We look forward to meeting with you.

 

Best regards,

Bret and Dana



November 25, 2014


Are you going to get a better deal?


It was a typical Saturday afternoon and I am hosting an open house. There is a knock at the door and in walks a couple. I greeted them with a welcoming hello and handed them a brochure on the property.  They spend quite some time looking around. We had the usual conversation about the market and I answered a few questions they had about the property. As there were making their way to the door the gentleman said “I have a question for you, I was told by a friend of mine that if I work directly with the listing realtor when I buy a property I can get a better deal than if I have my own realtor. How does that work?” It was a great question and one that I have heard before so I thought I would explore this with you so that you can make up your own mind as to what way you think is best.

 

First off, I will explain how this all works. We have a great document that is provided from our Real Estate Board call “Working with a Realtor”.   It is a few pages long so I will paraphrase it to make this a bit easier to read. Click here to see the full document.

 

There are 3 types of professional relationships a buyer can have with a realtor. Designated Agent, Limited Dual Agency and Customer Relationship.

 

A Designated Agent is a realtor that works for you and only you. They provide undivided loyalty to you by negotiating in your best interests and protecting your negotiating position at all times, disclosing to you all known facts which may affect or influence your decisions. Such as:

  • Building condition
  • Market value
  • Neighborhood information
  • Contracts

Limited Dual Agency occurs when the Designated Agent (the Realtor) represents both the buyer and seller in the same transaction. The realtor cannot be concerned exclusively with your interests in the transaction, since they are acting on behalf of the other party and must deal with both the buyer and seller impartially. The realtor must do the following;

  • Must not disclose what the buyer is willing to pay other than what is written in the offer, nor disclose what the seller is willing to accept other than what is contained in the listing;
  • Must not disclose the motivation of one Client to the other Client, unless one of the Clients has authorized such disclosure themselves;
  • Must disclose to the buyer any defects about the physical condition of the property that are known to the realtor.

 

 

The Customer Relationship is where the buyer is not represented at all by a realtor. They represent themselves. In this situation, the realtor is not permitted to recommend or suggest a price, negotiate on your behalf, inform you of their client’s bottom line price. However, the REALTOR® can provide you with other services, such as:

  • Explaining real estate terms, practices and forms
  • Assist in screening or viewing properties
  • Prepare and present all offers and counter offers at your direction

 

Now back to the question. Can you save a few bucks by going directly to a realtor to buy? I would say that it’s possible but at what cost.

If you hire your own realtor you have the highest likelihood that you will not pay too much, have an expert negotiate in your best interests and have a clear line as to who is on your team.

 

If you opt for working with the listing realtor under a Dual Agency Relationship then you are being represented by a realtor that has to be impartial to both the buyer and seller and who I must point out will more than likely have a stronger relationship with the seller as they have only just met you.

 

For all of you gunslingers out there who feel that they know as much about real estate as a professional realtor the Customer Relationship will be the route to choose.  All I can say is buyer beware and best of luck.

 

Before I finish this up I will give you an interesting statistic. The majority of the complaints and lawsuits that come in against realtors are a direct result of the realtor representing both a buyer and a seller in a Dual Agency Relationship. It would seem that both buyers and sellers don’t feel that they are being represented properly under these circumstances. The trend for realtors these days is to make every effort to not represent anyone under dual agency. They are choosing to either have the buyer find their own representation or to work with the buyer under a customer relationship.

 

At the end of the day you as the buyer can decide the scenario that works best for you. Do you want to be fully represented, partially represented or not represented at all? The cost of each decision is difficult to put an exact number on but it is very clear that some choices are risker than others and when we are working in hundreds of thousands of dollars or even millions you should really give it some thought as to whether your decision will add up to perceived savings or actual savings.



September 24,2014


What gives Kitsilano its Vibe?


Location (location, location…)
There are not a lot of true beach communities within a five minute drive from downtown Vancouver (or a five minute drive from any city center anywhere in the world for that matter). Kits offers just that. In the summer, people from all around the city flock to the joys of the beach, swimming pool, cafes, etc. and infuse energy and a life-is-good vibe into the neighbourhood. As the summer fades, the locals quietly rejoice as they take back the jewels in their backyard and Kits once again finds its trendy and laid-back attitude.

History
Since the late 1960’s, Kits have put Vancouver on the world map, initially as the flower-power hub of Canada. The hippies found a heaven here where mother nature showed what Vancouver was, and is, all about; ocean, beach, mountain views, tree lined streets with heritage homes - a neighbourhood with character and soul (or good energy as they would have said…)
This Kits counter-culture fostered Greenpeace, probably one of the most famous movements to come out of Vancouver and an important contributor to the DNA of Kits today; the co-existence with the great outdoors, the praise of organic foods and a healthy lifestyle, and, not at least, the grassroots idea that real change comes from the individual fighting “the man” - an example being the recent successful overthrow of the city plans to carve a bicycle path through the Kits Beach area.
In recent history, the healthy lifestyle focus has produced the yoga powerhouse of Lululemon whose global head office welcomes visitors coming off the Burrard St. Bridge (and also produced Canada’s most expensive residential home owned by Lululemon founder Chip Wilson located on the “Golden Mile” of Point Grey Road in Kits).

Diversity
Given Kits top-notch location with easy access to the downtown core, yet offering some of the best outdoor scenery of Vancouver, it is not a surprise that real estate prices are among the most expensive in the country. But, as opposed to other upscale neighbourhoods on the Westside, Kits has maintained a very diverse mix of residents brings a genuine community feel. One of the reasons is that the real estate stock is mixed. The multi-million dollar home sits next to the $900/month rental condo building. The residents might have different financial profiles but because Kits attracts a lot of young families with kids, either as home owners or home renters, the streets are alive with street hockey, neighbour projects and familiar faces. Block parties are a big deal around here.

Location, history and diversity. A formula that is difficult to duplicate for any neighbourhood and the reason why Kitsilano is such a coveted and famous part of Vancouver.



July 30, 2014


Buy a Home vs. Rent & Invest

There was an interesting article recently in the Globe and Mail. What is the best financial decision - to buy or rent a home?


It used the following scenario; save up for five years for either a down payment on a home or take the money and invest in stocks and then continue to buy stocks every month as you save money being a tenant. The finer details can be found in the article itself (see link below), but the conclusion was that it is financially more prudent to rent than to buy. Yes. This might surprise quite a few, including us realtors who tend to rave about the financial benefits of owning your own home. So, are we all idiots having bought our home? Well, not so fast. Here’s why:

- Theory vs. reality. The assumption in the rent & invest scenario is that you take the money saved by renting and add that to the stock portfolio. Great in theory, but how many have the opportunity and discipline to do that? The vast majority of renters we come across do not put money aside every month based on theoretical savings compared to “if-I-owned-my-home”. Paying into your home is almost a forced savings plan that continuously builds your equity base and thereby improves your financial situation.

- Leverage. One of the financial advantages of owning your home is that it gives you access to equity and at the same time preserves the asset itself. An example; You buy a car with a line-of-credit on your home as opposed to selling stocks in the same amount (if you were renting). The long term appreciation on your home will continue to be on the full market value, not affected by the line-of-credit, or mortgage for that matter, but had you sold the same amount in stocks, the future dividends would have been negatively affected by the diminished stock portfolio.

- Feel good factor. It just feels better to sit in your own living room. It’s a very subjective and emotional factor, but based on the conversations we have with our clients contemplating to buy a home, its significance cannot be ignored.

Besides that, life as a tenant comes with the uncertainty of not knowing how long you can stay in your rental home. Your landlord is in control and most likely cares more about the profitability of his or her income property than your peace of mind. So, in relation to the comparison of buying vs. renting a home, this might help to explain why people become homeowners despite the financial conclusions in the mentioned article.

 

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/renters-make-for-wealthier-investors/article17834799/



March 26, 2014


The New Reality of Buying a Strata Property in Vancouver


The reality of buying real estate in Vancouver has changed over the past couple of years. The perception in Vancouver for the past 10 or so years has been that you are going to make money on anything to do with real estate, whether pre-sale or resale.

In most cities in the world, people haven’t been “trading up” every few years. Historically purchasers would buy a property and keep it long term. In Vancouver, that changed when real estate started to appreciate rapidly and our city saw an abundance of smaller homes become available (bachelor pads and one bedrooms), with the big push for densification.

It used to be that you would make money on real estate twofold. Not only were you reducing your debt by paying down your mortgage, but you were also seeing a substantial increase in the value of your property.

These days, some sellers can’t quite wrap their head around that what they paid for their property two years ago, is what they are selling it for now. In fact, with transaction and moving costs, they aren’t recognizing the profits that they have grown accustomed to.

If you are looking at purchasing a strata property now, your goal should be to hold onto it for 3 to 5 years, more if possible. If this is the difference between stretching yourself a bit now in order to acquire a home that will suit your needs for a longer period of time, it can mean the difference between realizing a profit or not.

Buying a strata property now is still a winning proposition in terms of building your equity by paying down your mortgage.

Just remember to think long term. Gone are the days of the fast flip for profit.



February 25, 2014


Will You be Using a Realtor to Buy or Sell Real Estate in 10 Years?

 

Realtors have the key. The key belongs to a little club called the Multiple Listing Service or more commonly referred to as the MLS. This coveted database of valuable information has grown over the years to the point that the information and services of its members is the only good market data option for the public when it comes to buying and selling real estate.  As we all know, when one entity controls a whole industry, we like to call it a monopoly.

The public has long been concerned about this monopoly and the government has started to listen. The Competition Bureau showed up at the door of the real estate industry and asked that the club be more inclusive. The real estate industry put up a valiant fight at the gates but ultimately through negotiations they had to open up the doors and start to share.

What does this mean for Realtors in the years to come now that they are not the gatekeepers of all of the information and the public has inexpensive, easy access to the same information? The bottom line is that things are going to change.

The real estate industry will change much in the way that many industries have changed in the last 15 years with the advent of easily accessible information and technology. We will start to see a polarization of the real estate industry. On one end, the market will be filled with real estate firms that will provide real estate services a la carte. The consumer will be able to choose the products and services they want and nothing more. For example, if you want to sell your home, you can pay a fee to list it on the MLS, another fee for professional pictures and another fee if you want a realtor to negotiate the contract and so on.  The benefit to the consumer is that they have the choice to pay for services that they see value in and opt out of services that they don’t.

On the other side, you will see real estate firms enter the market place that will provide industry leading services implemented by the most productive, knowledgeable and experienced professionals in the industry. The key here is the realtors ability to add knowledge to the, easy available, market information. What does the specific data mean? The benefit to the consumer on this side of the equation will be that they are working with a real estate consultant that will, through his or her knowledge and experience, be able to provide a service that will produce the best possible outcome. The consumer will pay for the best and get the best. Over time, these firms will hopefully earn the respect that is so lacking in the perception of the real estate industry today.

It is inevitable that with this polarization of the industry, the service providers that try to appeal to everyone, will not have a place. It has happened time and time again with industries.  If you try to appeal to everyone, you will appeal to no one.  Consumers of real estate services will need to choose between an elite group of knowledgeable, experienced professionals that can provide the highest level of service, or a firm that provides real estate service a la carte.




December 18, 2013


Vancouver Real Estate: The 5 Most Important Events in 2013


 1.New Mortgage Rules

Since 2008, the federal government has made several changes to the rules for mortgages insured through the Canada Mortgage and Housing Corporation (CMHC) and other private sector mortgage insurance providers - this was also the case in 2013. Let’s sum up the biggest changes over the last five years. These rules affect home buyers with less than a 20 per cent down payment:

 

  • The maximum amortization period has been reduced to 25 years from 40 years. Home buyers must have a down payment of at least five per cent of the home purchase price where previously no down payment was required. For non-owner occupied properties, a minimum down payment of at least 20 per cent is now mandatory.
  • Canadians can now borrow to a maximum of 80 per cent of the value of their homes when refinancing, a drop from 95 per cent.
  • Limiting the maximum gross debt service (GDS) ratio to 39 per cent and the maximum total debt service (TDS) ratio to 44 per cent. These two important   ratios are used when calculating a person’s ability to pay down debt. GDS is the share of a borrower’s gross household income needed to pay for home-related expenses, such as mortgage payments, property taxes and heating expenses. TDS is the share of a borrower’s gross income needed to pay for all debts, including those relating to home ownership.
  • Government-backed mortgage insurance is now available only for homes with a purchase price of less than $1 million. Borrowers buying homes at or above this amount will need a down payment of at least 20 per cent if their financing is from a federally-regulated financial institution.



    2. Depreciation Reports
    2013 was the year that we saw the introduction of depreciation reports. Every strata in BC with more than five units, had to decide to have a report done that combines a comprehensive building assessment with a 30-year capital plan. In other words, a great document for owners and potential buyers who want to assess the health of a building, its mechanical systems and the expected life span and maintenance costs. For buyers, this will be one of the most important documents to read before deciding to purchase. It’s important to note that a strata can, with 75% majority, vote to reject or defer the initiation of such a depreciation report. In our experience so far, many strata’s seem to have taken this route. There can be good reasons to defer, e.g. the building is relatively new, still within its 2/5/10 warranty plan, etc. - and not so good reasons like kicking the can down the road fearing that substantial building renovations are needed in a foreseeable future.
    For now the launch of the depreciation report is in the early phase but we believe it will gradually be adopted by all strata’s in BC, at the very least because the banks and insurance companies most likely will decide to demand a depreciation report before they will provide funding and insurance. It will be a much welcomed piece of documentation.

    3. Market Finding its Balance
    After more than a decade of a mostly rising and turbulent market, the last 12 months was characterized by a remarkably balanced market (defined as a sales-to-active-listings ratio between 10% and 20%). Realistic sellers and prudent buyers were finding each other on an even playing field. All indications show that this trend will not continue in the year(s) to come.

    4. Continued Movement to Multi-Dwellings
    Over the recent decades new real estate construction has significantly moved towards multi-family developments. For instance, in 1991 51% of all new construction was condos and townhomes, this year it was 79%. The transition continues and is gaining momentum. The rationale is both that land is limited but certainly also because of housing costs in Vancouver, which pushes the demand into the condo/townhouse segment. A trend we expect to see continue in a foreseeable future.

    5. A Buyer’s Market for Condos, but Continued Demand for Single Family Homes
    Because, as mentioned above, new construction is dominated by multi-dwelling developments, the supply is ample (for example in the South-East corner of False Creek) and thousands of new units will hit the market in the near future. The impact is that the buyer’s market for condos we’ve seen recently will continue as long as supply outnumbers the demand and puts a pressure on prices in this segment.
    It’s a different story when it comes to single family homes. This is not where the high-volume supply and sales are but it’s where buyers are able, willing and ready to act. It’s also a market where the demand is fuelled by local savings and overseas equity and as long as the local market maintains its footing and these specific overseas national economies are stable and growing, we will continue to see a steady stream of buyers coming into this top-of-the-pyramid single family home market.



November 19, 2013


New Form B regulations.... a GREAT benefit for strata purchasers!

 

With the advent of Depreciation Reports, along came a requirement for Strata Corporations to provide confirmation details regarding identification of correct storage locker and parking stall designations: their numbers/location, and whether they are Common Property (CP), Limited Common Property (LCP), or on some sort of sub-lease (increasingly common with newer buildings).  Issues relating to storage and parking are probably the most common problems we deal with as realtors, and this added transparency and ease-of-diligence enables us to much better protect our clients' interests in these matters.  We at RRG are very well-informed regarding these new regulations as well as the impact of Depreciation Reports, so don't hesitate to contact us if you have more questions.


October 30, 2013


Should buyers work under contract with their agent? Yes! Do they? Read on…


We support buyers’ agents’ contracts- however, our industry is only slowly adopting this practice,  and many buyers still work under a verbal ‘handshake’, or a set of presumed expectations.  As they do for sellers, contracts greatly protect the buyer’s best interests, and clarify exactly what a buyer should expect from their representative.  They also clarify and control the fees, ensuring the agent’s compensation is set out clearly. This provides transparency between the buyer and the professionals being paid via the sale proceeds that are ultimately paid by them.  The buyer can control and/or negotiate how, and how much, their agent is getting paid, instead of letting the seller and selling agent influence or control this. There is a commitment and engagement benefit that is mutual between client and agent as well.  We recommend working under contract, but being very careful choosing your agent.  Interview a few, and choose based on both professional qualifications and personal ‘fit’.  Read on for further explanation…

 

Buying a home is a major undertaking, and some of your money will go into a realtor’s pocket.  In just about any other professional services industry, you would directly pay the professional providing you with services, particularly if any sort of ‘representation’ is involved.  You would expect to understand, be comfortable with, and perhaps even negotiate, the fees and how they are paid to the professional providing you with services and/or representation.  The compensation model in our industry is NOT like this, at least for buyers. Some context is needed here: as in any professional services market, there's a pretty clear 'typical' range for fees. Currently, the seller's agent and the seller negotiate a fee in a listing contract, with a portion of that fee (approximately 47%) being designated, within the listing contract, to be offered to an agent that represents the buyer.  This portion is then posted on the 'realtor only' side of MLS for all agents representing buyers to see when selecting properties for their clients to view.  So, when a selling agent offers a reduced buyer's agent commission or a bonus on a buyer's agent commission, there is an opportunity for bias based on compensation that is not in a buyer’s best interest.  The commission being paid to the buyer's agent is disclosed to the buyer at some point in the process... but it can easily be glossed over as just another initial in a myriad of contract-related documents.  It is not uncommon for a buyer to be unaware of how, or how much, their representation got paid.
Why and how the industry developed this process of agents who are representing buyers having their fees defined or greatly influenced by the seller and agent of the seller is beside the point here. In any mediation or negotiation of any legal or financial importance, why on earth would one want the other side controlling or influencing how their own representation was compensated?


Buyers should directly negotiate and control how, and how much, their agent gets paid, and this should be discussed at the beginning of the relationship.  Agents should be completely comfortable demonstrating their value. The home buying process should ideally begin with a fair and contractual expectation of fees for services and services for fees... just as with any other professional service... just as the seller of the eventual home purchased will have done!

 




September 30,2013


De-Spinning the hype...media's presentation of the numbers.


'Prices are up and rising', 'market up 40%', etc., etc. We've always said and believe it's still very relevant to opine about today, that Vancouver's market is at least somewhat 'hype' driven.  We are addicted to real estate or at least our real estate headlines and it's fair to conclude that the media knows it.  The presentation of statistical numbers by the media and even by our own industry publications (BCREA, REBGV market updates) is, by and large, accurate of course.  However, the interpretation of these numbers and often how these numbers should be 'framed' in context is often left up to the reader.  The obvious conclusion to some of these headlines, excerpts, soundbites, etc., can influence broad general impressions of market direction if not examined in more detail and then placed within context.  When this happens a whole market can be influenced.  When considering multi-hundreds of thousands dollar decisions, or even when loosely evaluating the value or direction of value of one's own largest asset, it's important to 'de-spin' the hype.  

For example, when it's represented that the market is 'up 40% since last year', is this price... or activity?  And if it's activity (number of sales), ok, it's up 40% since last year, but what was happening the year before and more historically?  If activity is up overall by 40%, yet this is in comparison to a very, very big dip in activity one year ago (as is the case currently vs. October of 2012), how 'up' is it in comparison to say, the 10yr activity average?  If it is just barely up relative to the 10yr average, is it objectively accurate to lead with 'market is up 40%'?  So the 'de-spin' could reasonably be that the market has barely recovered.  

Another example is the offering of the simple average price over any given larger area; this is very easily and dangerously spun.  If there is a dramatic spike in the demand for multi-million dollar homes, this will drive the average up dramatically... and the reverse will be true if this demand then suddenly disappears.  Within this 'overall' or 'regional' statistical summary, all sorts of very relevant market segments can be misrepresented.  For example, recently when there was a spike in Westside detached home prices that drove up the overall average, there was a concurrently happening significant drop in some segments of the condo market (which is more relevant to more people).  When as a result the headlines are blaring 'average price is up',  this can pre-dispose buyers and sellers within alternately performing market segments to optimistic or pessimistic conclusions regarding values or prices, which can then lead to inaccurate expectations, concussions and buying and selling strategies or decisions.  

So, what's happening with the median? What's the HPI (Home Price Index, a formula that much more accurately depicts the swing of the average price) doing?  What's specifically happening with 2 bedrooms in Kits?  Or 1 bedrooms downtown? How about townhomes and 1/2 duplexes?  What's the trend of activity within price bands for a specific type of product?  Are higher end products actually selling for their asking prices?  If there's lots of sales happening within a segment, is there even more inventory coming on, or is the current inventory clearly about to dry up?  For example, 1 bedrooms in Kits and Fairview are hurting, with good inventory, few sales and decreasing prices, yet 2 bedrooms are stable, and townhomes and 1/2 duplexes are stable and rising a bit.  Houses up to the $2,000,000 mark or moving quickly, but activity and prices have recently dropped for homes above this barrier.

So, and we're dating ourselves here, 'don't believe the hype'.... or at least, take it with a grain of salt and always dig deeper if any conclusions the media influences you towards might have ANY effect on a potential decision.  We at RRG all love our numbers and are always available to provide an accurate overview of any niche in the market.



July 15, 2013


Will the rise in interest rates affect property values?


This really depends on what type of property and price range is being focused on, as well as how dramatically or why the rates rise.  In general, a rise in rates will affect those segments of the market that tend to be more leveraged.  Investor class product and first time buyer product will certainly be affected, as well as more moderately priced homes in most segments other than expensive detached homes.  IE, those segments wherein buyers typically have large amounts of capital and/or income are far less affected.  Generally speaking in today's heavily government-influenced rate environment, the raising of rates would indicate an increased general confidence in the economy, which in turn creates a bit more confidence in home values, so these two factors can somewhat mitigate each other and cause values to stay stable or slowly appreciating, despite moderate rate increases.  However, if rates were to increase drastically and/or suddenly, and not in some sort of lock-step with local economic conditions and market confidence, this would certainly negatively affect affordability and therefore prices.  So to nutshell, volatile increases bad, steady/slow increases not so bad.  And keep buying stock in crystal balls!



June 10, 2013


Fraudulent Realtor news segments on CTV's 'Steele On Your Side' that recently aired... Eric's thoughts......


There is, truly, a great deal of professionalism and 'client-first' practitioners in my industry.  This person is, however, a blunt and obvious example of an opposite element that smears us all at times like this (see below for link to CTV article).

The conditions that created the opportunity this individual acted on are a perfect symptom of one of the industry's biggest challenges. His actions are fraudulent, and opinions expressed in the public domain to date opining that the consequences do not fit the action are completely understandable, and totally valid, in my own opinion.

The conditions I refer to have to do with the long-standing, contractually-based process for how agent's representing buyers are typically paid.  Some context is needed here: as in any professional services market, there's a pretty clear 'typical' range for fees. Currently, the seller's agent and the seller negotiate a fee in a listing contract, with a portion of that fee (approximately 46%) being designated, within the listing contract, to be offered to an agent that represents the buyer.  This portion is then posted on the 'realtor only' side of MLS for all agents representing buyers to see when selecting properties for their clients to view.  So, when a selling agent offers a reduced buyer's agent commission or a bonus on a buyer's agent commission, agents with little or no moral/ethical compass can avoid or promote said listing as it suits their best interests.  The commission being paid to the buyer's agent is disclosed to the buyer at some point in the process... but it can easily be glossed over as just another initial in a myriad of contract-related documents.  It is not uncommon for a buyer to be unaware of how, or how much, their representation got paid.
Why and how the industry developed this obtuse, but ingrained, process of agents who are representing buyers having their fees defined or greatly influenced by the seller and agent of the seller is confounding, and besides the point here. In any mediation or negotiation of any legal or financial importance, why on earth would one want the other side controlling or influencing how their own representation was compensated?
Buyers should directly negotiate and control how, and how much, their agent gets paid, and this should be discussed at the beginning of the relationship.  Agents should be completely comfortable demonstrating their value. The home buying process should begin with a fair and contractual expectation of fees for services and services for fees... just as with any other professional service... just as the seller of the eventual home purchased will have done!

 

http://bc.ctvnews.ca/realtor-admits-to-altering-condo-sale-documents-1.1295741




May 15, 2013

 

Pundits be darned, it's the Libs again!  What does last night's election mean for Vancouver's housing market...?  Our opinion....


Had the pollsters been correct and we awoke today with a majority NDP government, we believe we would likely have seen a lot of tentativeness and perhaps a further softening as BC's biggest city waited months or longer to gain, or lose, confidence in the NDP's handling of the economy.  History has simply so stigmatized this party's ability to effectively handle our economy that it would take months for confidence to build more broadly, and this would almost certainly have a dampening effect on sales activity. 

The electorate's surprising, but emphatic, choice for a renewed and even stronger Liberal mandate points to what will likely be a slight uptick in buyer confidence and activity, though impact will be minimal.  Employees or prospective employees of industry and big business will certainly become more active and confident in making buying/move-up decisions.  

However, overall economic conditions and factors affecting real estate remain unpredictable going forward, and stagnant to very mildly optimistic at the moment.  



April 24, 2013


Why Rely On Your Local Realtor When Purchasing a Property In Another City, Province and Country.

 

Most home buyers ask their friends or family to recommend a trusted real estate agent to help them purchase a home. But what do you do when you are moving to another city and you do not have a trusted network to rely on? Rely on your local realtor to find a reputable real estate professional to help with the purchase. 

 

As real estate professionals, we have an extensive network of other agents in other cities, provinces and countries. We have attended seminars, workshops and networking events where we align ourselves with other professionals. Even if you are moving somewhere that your local agent doesn’t have an existing contact, we know what to look for, and the questions to ask realtors to ensure that you are in good hands on your home search.

 

Our goal is to empower you the tools to make a decision that’s right for you. Next time you or a friend is moving out of the city, rely on your current network to help you with that transition.

 


March 18, 2013


Where is the next up-and-coming neighbourhood?

 

 

When considering purchasing a home today for good value, with long term appreciation, we believe that the tri-cities could be a great place to call home, specifically Port Moody. Port Moody is a great city of 34,000. It is located an easy 40 minute drive from both downtown Vancouver and the US border, and just steps from seaside parks, mountain trails and lakes.

What makes Port Moody attractive to purchase today is that the prices are very affordable for both attached and detached properties compared to Greater Vancouver. Below are some examples of affordability in Port Moody compared to Greater Vancouver:

  • Single Family Detached is up 5.4% since 2008, compared to 15.1% for Greater Vancouver.
  • Townhouses are down -2.8% since 2008, compared to Greater Vancouver being up 3.6%.
  • Apartments are down -8.1% since 2008, compared to Greater Vancouver being down -3.0%

Beyond Port Moody offering great value, the announcement that the Evergreen is going to extend its services into the area for 2016 makes this place a great prospect for appreciation. The sky train is going to link Burnaby, Port Moody and Coquitlam with an 11-kilometre advanced light rapid transit line between Lougheed Town Centre in Burnaby and Douglas College in Coquitlam. As a result, many people will be considering Port Moody to call home as it offers a great lifestyle and an easy commute to Downtown Vancouver.



 

February 17, 2013

 

Is the market picking up?

 

 

 

This question gets asked often, and two factors must be addressed when answering it; sales activity, and the direction of prices in relation to this activity.  

 

In 2012, buyers mostly sat on the sidelines for the latter two-thirds of the year, waiting for sellers to lower their prices.  Sellers didn't budge much and stayed patient, and buyers did not often try to write lower offers and negotiate.  As a result, activity dropped dramatically, but prices did not drop (in most segments), at least not nearly as much as such a drop in activity would indicate.  For example, the REBGV recorded the slowest September (total number of sales) in 28 years!!

 

Currently, the market has largely acknowledged that buyers are in the driver's seat, and will likely remain so for a while.  What we are finally seeing in the market place is that buyers are now writing offers, and not being shy with their offer prices.  Some sellers are lowering their asking prices as well.  Since last spring, prices have generally come down slowly but steadily by about 10% to 15% in some segments.  Currently, buyers seem tired of waiting, with many feeling that this is either as good as it gets, or close enough to it to 'pull the trigger'.  People always need to move, and what is now pent-up inventory is bound to come on the market as we get into spring, with buyers waiting for it.  We feel activity will most likely pick up, and if sellers are willing to negotiate or price themselves within range of current sales, then prices will level off, as demand and supply will balance out.  This is the forecast of most experts, and we tend to agree, based on our 'on the street' observations and gut feelings.  It's not likely that we'll see an increase in price in any segments, and if so, it will be minor.  However, if sellers hold out or buyers demand discounts that are too much, than inventory will increase, activity will decrease, and we may be headed for more of a dramatic drop later in the year. 

 

So, is the market picking up? Activity and number of sales, yes. Prices; it's just too early to say, ask us again after Easter

 

January 25,  2013

 

Vancouver - the world’s second-least affordable real estate city. Or is it?...

 

The annual survey about global home affordability is out (click here) and as usual it has created a lot of attention and discussion in our fair city. This year, Vancouver is the second-least affordable city to buy a home based on average home price compared to average household income. No doubt, buying a home in the most desired neighborhoods of Vancouver is expensive - and for good reasons, we might add. Premium products command premium price points, and on the lists of best places to live in the world, Vancouver ranks in the very top (for instance quality of living; click here or global reputation; click here).

But more importantly, the ranking is based on income, not wealth. Vancouver has may attractions, however high income jobs is not one of them. Top paying jobs are not in abundance here. Rather, it’s a place that attracts and retains people with wealth, either from other provinces or countries, or saved up in local real estate over the last few decades, or inheritance, etc. People who seek world-class quality of life - and that’s the demand that supports and justifies Vancouver’s expensive real estate market. It will never, and arguably should never, be an inexpensive place to buy a home.

That’s why this heavily quoted annual survey is somewhat misleading when it comes to Vancouver; the key parameter is income. If the survey focused on wealth, the affordability of homes in Vancouver would be a different story.

 

December 18, 2012


8 major changes that impacted Vancouver Real Estate 2012.

 

1. Mortgage rule changes. Mr. Flaherty and the federal government introduce a further stiffening of amortization, qualification, and refinancing rules, in particular for insured mortgages (less than 20% down). General consensus from experts is that this has at least somewhat contributed to the current slowdown in the national market and significantly so in Vancouver and Toronto.

2. Low rates. How long will the rates stay low? Economic conditions south of the border and abroad continue to influence and solidify predictions that current ultra-low borrowing costs will continue for at least a year or two more. A concern here is that despite the borrowing rule changes, buyers will continue budgeting based on today’s rates rather than average historical rates that are bound to return at some point in the next few years.

3. Volume down.  In Vancouver in particular, the slowdown in number of sales has been dramatic, 30% in many niches.

4. Prices down....? Despite the huge drop in volume, prices have not dropped as much as would be expected. Sellers appear confident that demand will return. However, some niches have dropped 10-15% at this point, there’s cracks in a few other niches, and who knows what 2013 will produce.

5. Sellers to Buyers market. Buyers have been waiting a loooong time for the shoe to be on the other foot and after sitting back for much of 2013 and hoping for a larger collapse in the market, seem to be feeling like some of the modest price corrections they’ve seen are now good  enough to start to feel opportunistic.  This is likely to result in a renewal of activity in the spring but at a more modest level than before the correction and with conservative pricing.

6.Depreciation Report program for strata.  This is a big one. By introducing new budgeting regulations that will coerce most, and eventually likely all, stratas to run their building finances and maintenance programs in a far more businesslike, transparent and pro-active manner, the government has taken a big step in better protecting strata home owners. Frankly, it’s about time.

7. Foreign buyers.  Currently, there’s less of these, particularly from mainland China. However, where they come from is changing, as international attraction to Canada’s financial and asset security continues to grow.

8. Immigration rules. A slight stiffening of language proficiency rules, a streamlining and re-focussing of skilled immigrant rules, and a tightening of purchasing/ownership rules will demand more of a commitment from foreign purchasers of Canadian property. This will have some sort of impact, but opinions are widely varied on what this will be.



November 30, 2012

 

Depreciation Reports - Are they a good thing?

 

As realtors who have a general, genuine concern in the financial well-being of our ‘condo’ clients and their homes, we are very ‘pro’ depreciation report. The following is a short, basic breakdown of what these new Strata Act regulations are, and our opinion of why they’re a ‘good thing’.

 

The general reason that these regulations and modifications to the Strata Act have been created and introduced is to standardize how stratas budget, and pay for, long term inevitable expenses such as roofs, plumbing, envelope repairs, etc., etc..  The tool for making this happen is the ‘Depreciation Report’, a standardized report to be created every 3 years by a qualified 3rd party individual or company. Primary functions of the report; establishing asset inventories and depreciation costs, cash flow modeling 30 years forward, record-keeping regarding storage lockers and parking.  These are all issues that for decades and to this day have been the cause of endless conflicts and problems for stratas and their members/owners.

 

The Strata Act currently mandates that stratas maintain a minimum standard contingency fund (equal to 25% of total annual expenses), and perform some generally loose standardized budgeting in regards to utilities, insurances, ongoing service costs, etc.. However, a more and more glaring weakness  has been exposed regarding there being minimal-to-no set standards in regards to dealing with long term capital costs. So, stratas would generally elect to budget in one of two ways;  either by having higher fees and building a very large contingency fund, accessing this fund when issues would arise and thereby limiting the risks for ‘surprise’ levies or assessments, or by having lower fees and a minimal contingency, and levying/assessing as needed.  When larger expenses eventually arose, stratas with large contingency balances would possibly fight over how to spend the funds; however, stratas with minimal contingencies would almost ALWAYS  have a major conflict on their hands as to how to raise the funds.  As the planning and budgeting decisions would often be made by the council members with minimal active participation from other owners in the strata, when an issue would finally arise that demanded serious financial participation from all owners, accusations of mismanagement and incompetence would often fly in one direction, with accusations of apathy and wilful blindness often flying in the other.  Out of the ever-increasing number of arbitrations and legal battles was born the necessity for  improved ‘legislative stewardship’ of strata corporations.  Hence, we are now entering the era of the ‘Depreciation Report’.

 

In our opinion, Depreciation Reports and their legislated nature are a good thing. Transparency will be greatly increased for buyers and lenders reviewing documents and financials, many sources of confusion and conflict within stratas will be eliminated, and accountability between owners and their councils will be increased. Yes, fees will generally rise for most stratas that do not have this type of budgeting in place already (many new stratas already have ‘capital plan’ budgeting in place). However, if one were to, based on typical current strata financial practices, amortize (for example) 30 years of fees and special assessments back down to a monthly fee, one would quite likely find this monthly amount to be considerably higher. While many owners may prefer to have lower payments and pay for projects ‘as they happen’, the more practical (and certainly more ‘peaceful’) route is to diligently budget long-term.

 

The adaption will be somewhat painful as BC stratas phase these reports in, but as a frame of reference, strata fees here in general are considerably lower than in many other provinces where such budgeting is already in place (EG, Toronto has much higher fees on average).  In our minds however, this is a new reality that will benefit all owners of strata titled properties in the long run.

 

As always, we welcome your questions and feedback!

 


October 26, 2012



From Happy Hour to Hangover to Recovery?

Past, Present and Future of Vancouver Real Estate.


The past ten years…

 

Vancouver was undervalued at the turn of the century, so strong market appreciation in ’03 and ‘04 was simply expected and overdue.  But what started as a typical market upswing was then vastly accelerated by a perfect storm of less-than-sound fundamentals.  Easy credit combined with loose lending rules created a pervading sense of false affordability, speculation ran rampant, many high-net worth individuals from oversees bought here, the Olympics further fuelled the speculative activity…. and up and up we went.  Being such a desirable city that is very attractive to higher income earners and high net worth individuals, and having reached a certain density level, more ocean-locked western neighborhoods developed a  more supply-demand market dynamic, forever separating themselves in terms of average price-points from more eastern neighborhoods that continue to have a more  straight-forward affordability-index market dynamic.  With the government having effectively curtailed easy credit, overseas buyers somewhat on the retreat, and the optimism/speculation balloon finally deflating, a ‘new normal’ is on the way, with the adjustment happening right, right now.

 

Currently…

 

Where’s the bottom?  Who knows.  With net migration steady at positive 40,000 per year, billions of dollars of capital projects underway and on the way, stable or slowly improving employment levels, and a reasonably steady, healthy economy, it’s pretty safe to say that more positive demand will return in the not-too-distant future.  Well-priced mid-range product is starting to be absorbed, and as sellers of other available product reluctantly adapt to what today’s buyer is willing to pay, activity levels should move into balanced territory.

 

The next ten years…

 

Going forward as this new market cycle begins, in most areas of Metro Vancouver, people will make buying and selling decisions based much less on speculation, and much more on sound, traditional factors.  Properties bought as personal homes will once again primarily be seen as housing expense spent as wisely as possible, rather than speculative investments that happen to provide shelter; plus, this new, more educated and prudent generation of buyers will be more likely to budget with contingencies for increasing mortgage rates.  Properties bought solely as investments will be purchased more so with a long-term hold mentality than with a ‘flip’ mentality.

 

The western neighborhoods will need to be evaluated on a different type of affordability scale than less dense, less geographically constricted areas, as a higher and higher percentage of these neighborhoods are populated with high income, high net worth households; hopefully this differentiation is made more clearly in the media, as lumping all areas together and coming up with statistical averages, while it sells many newspapers, can be misleading to the public.  In general, sound economic fundamentals, consistent population growth, and growing international appeal will allow Vancouver, for many years to come, to continually and successfully demand a premium for its real estate… currently, that premium is being challenged.  Although some of the more broadly desirable, mid-range sub-markets are showing signs of levelling off, we are most likely going to see a bit more of an adjustment in most areas and market niches (particularly high-end/luxury segments), followed by at least a few years of a steady, moderately active market with a fairly conservative rate of appreciation.  

 

After that, who knows… much depends on the governments elected in upcoming local and US elections, broader economic factors including those that will eventually impact interest rates, etc., etc..  Vancouver has somewhat come of age in the last 10 years, and has entered a new era in its history; we are at the end of a rather vigorous first market cycle of this era, and it will likely take a few more cycles before the ‘new normal’ takes on a more predictable shape.

 

In a nutshell, we feel the last and next ten years can be summed up as follows; the party may be over, but the hangover is well under-way, and a healthy new normal is hopefully about to emerge.  Either way, we live in one of the best cities in the world, and real estate will always be desirable here.

 

 

September 18, 2012


Spun stats and dramatic headlines; our perspective on the market.


“Rent, rent, rent!!!” – “Real estate a terrible investment” – etc, etc… One must keep in mind the context and source of all the recent headlines and statistics. Are we in a downwards market correction? Absolutely! Do dramatic headlines and spun statistics sell papers and attract attention? Absolutely! Our own interpretation of the statistics, when applied to our ‘feel on the street’, historical market patterns, and our own experience, is that we’re in for perhaps another 10% drop in prices. There ARE buyers out there, and they ARE willing to pay a premium to live in Vancouver; but that premium is still a bit too high, and buyers know they’re in the driver’s seat. We see attractively priced good product getting snapped up, and we’ve even seen the odd competing offer situation for very sharply priced listings. With the rates almost certainly staying low for a few years, good employment and economic figures, and strong net in-migration, inventory will certainly get absorbed; but only when prices come more in line with historic, traditional affordability factors. Our observation is that sellers reluctantly finally seem to be adjusting at this point; prices will drop a bit more dramatically this fall, and SHOULD level off in the spring. It’s not a bubble bursting; it’s more of a dissipation of over-confidence.