It is wildly unpopular to be positive in B.C. these days. When we are down, we feel down, we want to be down and down we are. Particularly in the real estate market, we like to wallow in our self-imposed misery. No matter what the positive news, no matter what the uplifting statement, it is always countered with a frown followed by a seemingly knowledgeable: "Yeah, but.. this time the real estate market will never recover."
I find this amazing. In 1960, the average Vancouver, home sold for $13,105. Thirty-eight years later, the Real Estate Board of Vancouver reported the average sale price as *$346,540 (September '98, single famiily home). Assuming that in 1960 you had plunked down 10 per cent or $1,310 as down payment and hung in there, you would now be gloating over a 26,555 per-cent retum on that original down payment. And you'd haye a roof over your noggin to boot. Amazing.
Exercise in fantasy, but if this "lift" kept right on trucking for the next 25 years, by the year 2023 that $13,000 home would be commanding $7,119,420. And "antique you" will still have a roof over your gray hairs.
But at various times in our history, the "yeah, buts" scare people out of their chairs. They are told that real estate's day is gone, that this is a New World and that this or that factor will sink real estate investment. Of course, the Chinese have disproved that theory for 2,000 years; the Europeans and North Americans have founded their empires on real estate. In fact, ownership of even the humblest real estate has been the greatest wealth builder - bar none - for the average person.
Home ownership in North America makes the average person wealthier than his or her counterpart in any other part of the world. In fact, it is the defining difference between rich and poor. But no matter... to the naysayer this time it is somehow different.
Today, for some inexplicable reason it is all right for investors to be exhorted to invest for the long term when it comes to highly speculative mutual funds, to "stay the course" even while they suffer outlandish losses in their portfolios. It is all right for gurus to tell the hardworking, saving couple to mortgage their cleartitle home to the hilt and put the cash into mutual funds. Yet a variety of those mutual funds have collapsed up to 90 per cent in value several times in the last 30 years, something you never see in real estate.
I can't recall any time where I have seen comparable losses in real estate in such a short time. Most losses in real estate come from foolish investments following the wrong trend, listening to a guru, getting swept up in an emotional "pre-sell" binge or being forced to sell at a particular time.
Are there no problems on the housing? Of course there are. I am bullish but not foolish.
The world has changed; the '90s are a frightening place... but so were the '80s, the '70s and the '60s. In 1959, not one house sold in Burnaby. In 1969 I couldn't give away brand new $19 900 full basement homes.
In 1974 the U.S. stock market crashed by 40 per cent and gloom descended on Vancouver's housing market. Headlines read "Realtors are prowling like hungry tigers," "Real estate prices will never recover again."
In 1981 and 1982 real estate values did crash sharply over a period of 18 months. Five-year mortgage terms were written at 16.5 per cent. In fact, all of the '80s saw five-year mortgage terms at an average interst rate of 12.45 per cent - and never less than 10.75 per cent. In 1988 the end of the real estate world was predicted following the 1987 crash.
Had you listened to all the doom and gloom of 1961,1974 and much of the '80s and not bought al house you would have done a serious disservice to yourself and your family. Of course, this is a new world. You- have to apply some new principles. Get some unbiased advice, listen to where the "yeah, buts" come from, make some intelligent decisions. Discard some of the old standbys. Note that in the new millennium you will make the most money on the day you buy, not when you sell. And forget about location, location, location. Trend and time identifiers will rule.
I have had the privilege to lead big real estate companies, make speeches and write a real estate newsletter during my 29 years in this business and I know this: There are no good or bad markets, only good and bad deals.
I have seen the absolute worst deals in the so-called very best markets (i.e. some condo hotels in Vancouver and at Whistler in the early '80s as well as the early '90s) and I have seen the very best deals in poor markets. I have listened to the gloom and seen the boom.
Every year for 30 years somebody tells me that there are too many realtors in the business, that no one can afford to buy any more and then they say, "I wish I had bought 10 years ago .... "
Don't become involved in the gloom. Even with modest population increase. predictions we will add 1.3 million more people to the existing 1.8 million in the Lower Mainland by the year 2020. Prices rise on properties in places where people want to live and not in Porcupine Plains, Saskatchewan, where you can buy a building lot for a buck. People will
want to live here in beautiful British Columbia.
Real estate shopped wisely, purchased with good sense and good unbiased, independent advice will outperform most other Investments you will make in your life. It always has and it always will.
Article written by Ozzie Jurock on Oct 6, 1998 for Business in Vancouver.