- Joined
- May 14, 2015
- Messages
- 52
Where can I get information in what state are we in real estate life cycle in Canada and USA? Also is it possible to have this information for a given province or city?
Current state in real estate life cycle
- Thread starter Ahilan Thurairajah
- Start date
- Joined
- Aug 30, 2007
- Messages
- 13,881
Your question is far too broad. It is like asking "What shall I pay for a new car?".
Please define asset type (single family house, townhouse, condo, apartment buildings, industrial warehouse, retail, office building, mobile home park, ..) far narrower, as well as city and state/province.
Alberta is different than Ontario, and even Calgary is different than Edmonton, and GTA condos are different than single family houses inside or outside the green belt.
Please define asset type (single family house, townhouse, condo, apartment buildings, industrial warehouse, retail, office building, mobile home park, ..) far narrower, as well as city and state/province.
Alberta is different than Ontario, and even Calgary is different than Edmonton, and GTA condos are different than single family houses inside or outside the green belt.
- Joined
- May 14, 2015
- Messages
- 52
Currently I am interested in
1. Single family detached houses in:
Perfferlaw, ON
Oshawa, ON
Markham, ON
Waterloo, ON
Brampton, ON
2. Two or three Bedroom apartments in:
Scarborough, ON
Brampton, ON
If there is a website in which I could lookup for various asset types, that would be great.
1. Single family detached houses in:
Perfferlaw, ON
Oshawa, ON
Markham, ON
Waterloo, ON
Brampton, ON
2. Two or three Bedroom apartments in:
Scarborough, ON
Brampton, ON
If there is a website in which I could lookup for various asset types, that would be great.
- Joined
- Dec 14, 2013
- Messages
- 980
Additionally to the points Thomas has made, ensure that you are examining the "real estate life cycle" observe the differences in the rental and retail real estate markets. In Edmonton especially, there is a noted difference to the construction that is underway in these similar asset classes. Resale value of a SFH rental will pretty much just be the market value (based on comps) less some amount because it has been lived in by renters who usually don't take as good of care of it as the average home owner. (Yes, I take good care of my rentals). Even with a suited home, it has a pretty flat additional market value. Usually just the comparable market price of the home + ~$30 k for legal suite or + $15 - 20 k for non-conforming suite.
For an overview of these cities and to get a sense of the real estate cycle, probably start by talking to investors in the areas. Pretty much any time you want detailed information you need to go out and create your own primary data....inventory the recent sales, attributes, and selling price. Compare to what is available on market. Research the building permits (new houses available for retail should be 12 months out). Check out the land developers for number of new lots underway. Many land developers post the number of serviced lots available. If not, drive through the neighborhood with the stage maps. If the developer doesn't provide the stage maps, read through the city council minutes and print off the maps provided in the NSP (neighborhood structure plan). Calculate the months of supply of vacant, serviced lots. Along with the NSP, you will want to compare that with the city's NSP and approved infrastructure developments - just the broad strokes of the zoning changes will give you some idea on how the city hopes to develop as a community.
The importance of primary data is often ignored by REIN but it is ultimately the most critical part of your due diligence. All of these CMHC and Conference Board reports are great but they are already 1 - 3 months old at publication. I'm not talking about timing the market here either. Primary data will provide you with a much more qualified assessment of the current status of the market. This means creating a database (even in Excel) and tracking data over time.
Obviously this is far too much work to do on 7 different communities, so narrow down the list to one and really understand the real estate cycle in that market. Real estate is a very illiquid and variable asset. There are likely great opportunities in all of those markets for the right investor.
For an overview of these cities and to get a sense of the real estate cycle, probably start by talking to investors in the areas. Pretty much any time you want detailed information you need to go out and create your own primary data....inventory the recent sales, attributes, and selling price. Compare to what is available on market. Research the building permits (new houses available for retail should be 12 months out). Check out the land developers for number of new lots underway. Many land developers post the number of serviced lots available. If not, drive through the neighborhood with the stage maps. If the developer doesn't provide the stage maps, read through the city council minutes and print off the maps provided in the NSP (neighborhood structure plan). Calculate the months of supply of vacant, serviced lots. Along with the NSP, you will want to compare that with the city's NSP and approved infrastructure developments - just the broad strokes of the zoning changes will give you some idea on how the city hopes to develop as a community.
The importance of primary data is often ignored by REIN but it is ultimately the most critical part of your due diligence. All of these CMHC and Conference Board reports are great but they are already 1 - 3 months old at publication. I'm not talking about timing the market here either. Primary data will provide you with a much more qualified assessment of the current status of the market. This means creating a database (even in Excel) and tracking data over time.
Obviously this is far too much work to do on 7 different communities, so narrow down the list to one and really understand the real estate cycle in that market. Real estate is a very illiquid and variable asset. There are likely great opportunities in all of those markets for the right investor.
- Joined
- Aug 30, 2007
- Messages
- 13,881
From a real estate cycle-point-of-view, it is summer in almost all of Canada, i.e. past spring but not fall or winter. Fallish colours (orange) observed in Alberta, though !
Spring in NE BC (Fort St John / Dawson Creek / Price Rupert / Kitimat) if LNG projects go through. Very risky markets but potentially profitable.
Spring in NE BC (Fort St John / Dawson Creek / Price Rupert / Kitimat) if LNG projects go through. Very risky markets but potentially profitable.
- Joined
- May 14, 2015
- Messages
- 52
I am following book by Don R. Campbell named “Secrets of the Canadian Real Estate Cycle”. It would be great if we could come up with the database that keep tracks of the state in real estate cycle for various cities and asset types.
If you do your own research for an area that you are interested in, your opinion could be bias towards a decision you have made. By having the opinion of multiple strategic investors we could come up with an objective opinion.
If you do your own research for an area that you are interested in, your opinion could be bias towards a decision you have made. By having the opinion of multiple strategic investors we could come up with an objective opinion.
- Joined
- Apr 19, 2012
- Messages
- 45
Thomas, would you suggest getting in early into the NE BC area? Or waiting for the projects to begin such as REIN suggests? I live in Scarborough Ontario (East Toronto) and I see many projects being cancelled, undecided, or pushed back (TTC Shepherd LRT etc.)
- Joined
- Aug 30, 2007
- Messages
- 13,881
NE BC has potential upside, but is higher risk, that is for sure. Some LNG will likely go ahead, but when and at what pacing is unclear. I am not a NE BC expert, as I find the region too small and far too remote, with crappy weather, with waning LNG prospects due to dropping prices and high costs and loads of opposition from natives and environmentalists. Also unclear are pipelines. But, it may take off like Ft. McMurray did in the early 1990's. So, some investment is likely warranted as part of your overall portfolio.
I have not invested there and do not intend to. But your risk profile might be different. I prefer larger centers and their periphery. I do not need homeruns, or go bust. But I understand that some folks invest that way.
I have not invested there and do not intend to. But your risk profile might be different. I prefer larger centers and their periphery. I do not need homeruns, or go bust. But I understand that some folks invest that way.
Last edited:
- Joined
- May 14, 2015
- Messages
- 52
I would wait till they actually dig the ground before investing in any area that has potential infrastructure expansion plans.
In 2006 I invested in an area based on 404 highway expansion plans. Till now 404 has not been extended to that area and probably for next 10 years it will not. These high budget government plans could easily be derailed for other priorities. Also at times they are very slow to implement.
So better wait till they actually start implementing it.
In 2006 I invested in an area based on 404 highway expansion plans. Till now 404 has not been extended to that area and probably for next 10 years it will not. These high budget government plans could easily be derailed for other priorities. Also at times they are very slow to implement.
So better wait till they actually start implementing it.
- Joined
- Dec 14, 2013
- Messages
- 980
Interesting idea. A lot of infrastructure involved in that idea.
The market you are looking at should be relative to the amount you have to invest as well. If you just have funds for one house and that will be pushing to your financial limits you will almost always do better buying close to home and managing and repairing the home yourself. Lots of shoddy PM companies. Good ones charge 15% + of gross income after you add up all the little charges. And that is before repair management.
Don't discount RRSPs or GICs or stocks just because they aren't pumped up in this forum. The value strategy is really simple:
1. buy and create a development profit (market value - liquidation cost - total cost of house with improvements)
2. get as much of your money out as early as possible (always positive cash flow)
3. sell or hold - doesn't make a difference now
Do the work yourself. A SFH yields only 3 - 6%. (NOI / property value) in Edmonton. Don't believe the big PM's claiming they do so much more. I've checked their websites, they aren't getting more than that.
- Joined
- May 14, 2015
- Messages
- 52
Currently my investment properties are closer to home in Markham, Ontario.
But currently I do not find it very favorable to invest more on rental properties close to my home. This state would eventually change.
So I am looking for various other cities that are close enough for me to manage it with positive cash flow. Knowing the current state in real estate life cycle on those cities would help narrow down.
But currently I do not find it very favorable to invest more on rental properties close to my home. This state would eventually change.
So I am looking for various other cities that are close enough for me to manage it with positive cash flow. Knowing the current state in real estate life cycle on those cities would help narrow down.
- Joined
- Aug 30, 2007
- Messages
- 13,881
Why would it change ?
Cash-flow is a function of leverage and asset type. Mobile home parks, retail shopping centers in suburbs, small office buildings or industrial warehouses all cash-flow far better with a 75% mortgage if full. Even a house in the Bridle Path with no mortgage would likely cash-flow.
There are quite a few cities in Canada, even more in the US or worldwide. How far away do you want to go ? I hear Syrian and Lybian beach front properties have much upside. Greece might go on sale in July in Drachma. Loads of opportunities there. Also in China, India or even N-Korea.
You want to invest in the spring ie before full potential is realized. Canada has much potential, even Alberta, but only until 2100 as oil is verboten after that according to Angela Merkel, Obama and Stephen Harper.
Those cities in the spring do not exist in Canada, except perhaps in NE BC if the LNG boom takes off (a big if but a decent enough chance).
- Joined
- Aug 30, 2007
- Messages
- 13,881
Re being early in the cycle in NE BC: http://www.vancouversun.com/busines...ct+northwest+halted+again/11122645/story.html
Being too early comes with risk ..
Being too early comes with risk ..
Hello Ahilan, can we have a chat offline about the current state of the cycle in Markham and Richmond Hill, ON? I am wondering where we are in the cycle Don 's book taled about. If you have done some research, can you share your learnings? please let me know your contacts if it is okay. Thanks. Yoon
I would look at NE BC if the Site C dam actually begins construction. Living in BC and following the LNG process and listening to people I respect in the LNG industry, I am not very confident the plans will actualize. I hope I am wrong, but I would be very cautious.
- Joined
- Nov 15, 2010
- Messages
- 1,503
Each region has its own position in the cycle. The first step for you is to read the full Secrets of the Canadian Real Estate Cycle book so you grasp the whole premise of “The Cycle” Then I suggest that you download the REINScore Report for your target city (if it is completed) OR if it is not, download the Top 10 Towns Report for your province to get a feel for where your target region sits. I trust that gets you moving in the correct direction and helps you determine not only the Cycle concept but also how you can determine where your target region sits.
- Joined
- Dec 14, 2013
- Messages
- 980
Proxy's for the real estate cycle:
When it first came out, the REIN report was providing great monthly overview of the Goldmine Scorecard for various areas. Looks like they have moved away from this in recent issues...but if you check out their archive you can get an idea of the Goldcard system.
REIN report: http://www.reincanada.com/aboutus/media-news/magazine-subscription/rein-real-estate-report/
It's a good starting point.
CMHC Portal: https://www03.cmhc-schl.gc.ca/hmiportal/en/#Profile/1/1/Canada
CMHC Portal is great housing information and allows you to select various different areas of the country and slice that for purpose built rentals vs. condos vs. multi-family vs retail. It is a great resource.
If you want the best information when it comes out, I highly suggest signing up on Twitter. It is the best content curation platform I know of. Some excellent companies / researchers to follow:
@FraserInstitute , @WEF, @CBRE, @RENXca, @StatCan_eng, @OECD_Stat
I would highly recommend following any municipal and provincial government Twitter feeds and city planner organizations. This is the cutting edge of what is actually happening and where the city's political interests lie. It also keeps you in the know of upcoming political events and developments.
In my opinion, if you read the articles you see on Twitter and combine that with the REIN report you will have a pretty solid idea of different "cycles" in different areas....but the more you hammer it down, the more you will end up seeing cycles within cities and neighborhoods. For example, in Edmonton, city council extended their social housing moratorium on four neighborhoods so that homeless and at risk individuals are not overly concentrated in one area of the city. They want families and home buyers to diversify in an area. (Source: http://edmontonjournal.com/news/local-news/communities-demand-extension-to-moratorium)
As Don often notes, beware of "averages"...a city's average does not represent a neighborhood. Good luck!
When it first came out, the REIN report was providing great monthly overview of the Goldmine Scorecard for various areas. Looks like they have moved away from this in recent issues...but if you check out their archive you can get an idea of the Goldcard system.
REIN report: http://www.reincanada.com/aboutus/media-news/magazine-subscription/rein-real-estate-report/
It's a good starting point.
CMHC Portal: https://www03.cmhc-schl.gc.ca/hmiportal/en/#Profile/1/1/Canada
CMHC Portal is great housing information and allows you to select various different areas of the country and slice that for purpose built rentals vs. condos vs. multi-family vs retail. It is a great resource.
If you want the best information when it comes out, I highly suggest signing up on Twitter. It is the best content curation platform I know of. Some excellent companies / researchers to follow:
@FraserInstitute , @WEF, @CBRE, @RENXca, @StatCan_eng, @OECD_Stat
I would highly recommend following any municipal and provincial government Twitter feeds and city planner organizations. This is the cutting edge of what is actually happening and where the city's political interests lie. It also keeps you in the know of upcoming political events and developments.
In my opinion, if you read the articles you see on Twitter and combine that with the REIN report you will have a pretty solid idea of different "cycles" in different areas....but the more you hammer it down, the more you will end up seeing cycles within cities and neighborhoods. For example, in Edmonton, city council extended their social housing moratorium on four neighborhoods so that homeless and at risk individuals are not overly concentrated in one area of the city. They want families and home buyers to diversify in an area. (Source: http://edmontonjournal.com/news/local-news/communities-demand-extension-to-moratorium)
As Don often notes, beware of "averages"...a city's average does not represent a neighborhood. Good luck!