Looking for direction

[TroyK]

Hello, I am from Kelowna BC and am new to investing in real estate but did take the plunge last Aug./07. Purchasing a property across the street that has a two bedroom suite up and a two bedroom suite down(unfortunately before I found and read Real Estate Investing in Canada). We have since rent both suites out for what we believe was the going rent for similar suites. We are however in a negative cashflow($300/mnth). Which before reading Don Campbell`s book I didn`t think was a bad thing because I though I was just putting money into my investment which in the long run was going to give me a good return for the amount I had to invest each month.
So my question is, I am torn because I believe Kelowna`s market and economy still has room to grow and I think could do well in a few years, or does it make more sense to sell and invest in Alberta. It just seems like a big jump going from across the street to another province...to be honest, it scares the heck out of me. I don`t want my fears holding me back though, just want to make a good solid decision on fundementals not emotions. As well does anyone have any views on were they see Kelowna going and is it time to get out. I look forward to your responses, thank you for your time.
Troy.

 

[RebeccaBryan]

Troy,

I don`t study the Kelowna market, but I know REIN does. I am an NE Edmonton investor because REIN pointed me in that direction. Since you are an action taker it would be invaluable to join REIN, as they are constantly reasearching the markets in those areas.

Hey, there`s a REIN Quickstart coming to Vancouver on Feb 16 and 17. I`d advise you to go to it if it`s not already sold out. They always sell out early and have a waiting list. I`m sure you will find out answers to your above questions and much more!

 

[hazed]

Hi Troy,
You`ve come to the right place! There are lots of experienced, knowledgeable investors here and lots of advice and opinions. They will help find a solution! Having said that,there are also a small group of REIN members right here in Kelowna that would welcome you to come to our informal gatherings. Some of us will also be attending Quickstart in Vancouver in a couple of weeks, and it`s a great place to start, network and get acquainted. You can contact me at [email protected] if you want to be included in our local coffee chats. Hazel

 

[DennisEpp]

In response to your question, I have pasted quite a lengthy answer, gives you some definative insight to make a proper decision to your personal situation/ hope it helps..Dennis Epp
Edmonton residential real estate future is solid
Edmonton, January 9, 2008: The Canadian housing market in 2007 set a number of MLS® sales records, and the re-sale housing market is expected to remain at near record sales levels in 2008, according to The Canadian Real Estate Association.

Annual residential MLS® sales activity totaled 520,747 units in 2007, up 7.6 per cent from 2006 levels. This was the largest annual sales growth since 2002, and the first time transactions via the MLS® systems of real estate boards in Canada have surpassed 500,000 units sold in one year.

“The results in 2007 show the strength and the affordability of the Canadian residential market,” says CREA President Ann Bosley. “The statistics again show just how different the housing markets are in Canada and the United States. Canadian REALTORS® know that Canadian mortgage lenders correctly see that home prices will continue rising. We know there is still strong competition for mortgage business in Canada.”

The REALTORS® Association of Edmonton president Marc Perras echoes the national association’s confidence. “Residential sales through the MLS® have set records at over 20,000 units per year in the past two years. Local REALTORS® expect that sales will remain strong even as prices increase slowly through the year.”

Three key economic ingredients will keep Canada’s housing market on a different track from the United States. One is consumer confidence, the second is employment, and third is affordable interest rates. The Bank of Canada cut interest rates on January 22nd because of weaker prospects for Canadian economic growth in 2008. “Those lower interest rates will also help temper the erosion in housing affordability due to additional home price increases,” Bosley added. The Bank of Canada is expected to cut its trend-setting rate again in March.

Despite the weaker prospects for Canadian economic growth in 2008, the Conference Board of Canada anticipates that Edmonton’s growth rate will be higher than the national average at four percent. Low unemployment and the availability of local jobs will promote in-migration and create a housing demand that will offset the rising prices.

CREA’s Chief Economist Gregory Klump says that the Canadian housing market in 2008 will pull back from the breakneck pace set in 2007, but this is still forecast to be the second-busiest year on record in almost all provinces, with residential unit sales reaching an estimated 512,705 units.

According to CREA’s Chief Economist, a larger supply of listings will be one of the balancing influences in 2008. New listings are forecast to rise in all provinces except Alberta, where they’re expected to retreat after spiking in late 2007. There were over 7,000 homes (including condos and townhouses) available on the Edmonton-based MLS® on December 31, 2007.

“The challenge for the Canadian housing market will be the extent to which employment and consumer confidence may be affected by a slowdown in the U.S. economy,” Ann Bosley adds. “Slower job growth, not massive layoffs, is forecast for Canada in 2008,”

CREA’s Chief Economist Gregory Klump adds. “Consumer confidence may be sideswiped by stock market volatility, and reports that chances of a U.S. economic recession will put the brakes on the Canadian economy. With slower job growth, a low unemployment rate and the absence of widespread layoffs, consumer confidence will bounce back. The domestic economy and the housing market will weather the sub-prime fallout with the help of lower interest rates”.

2007 Housing Year a Roller-Coaster

Edmonton, January 3, 2007: In the beginning of 2007 housing prices continued to climb just like the year before but by mid-year the market had turned and prices cooled as the housing inventory quadrupled. Year end figures released by the REALTORS® Association of Edmonton reveal the largest swings ever experienced in the local market. Despite the roller-coaster-like rises and falls, the market still ended up 12% ahead of last year’s prices.
“REALTORS® were assisting sellers to handle multiple offers and unbelievable short sales periods for the first half of the year,” said Carolyn Pratt, President of the REALTORS® Association. “The summer it was a buyers market with ten homes available for every buyer.” The sudden changes in market conditions made both buyers and sellers anxious and increased their dependence on solid market advice from their REALTOR®. “Now the market seems to have stabilized and returned to what we call normal,” said Pratt.

PRICES

Single family dwellings listed on the Multiple Listing Service® which sold on January 1 for $341,933 on average* were priced at $382,022 at the end of December. Although 11.7% higher than a year ago the December prices were off 11.5% from the peak prices in May. December prices were 1.5% higher than November 2007.

Condominiums on MLS® sold on average for $253,270 in December after starting the year at $227,428. They peaked in July at $271,908. Condo prices were also up 11.4% over the year and up 0.4% from last month. Duplex/rowhouse prices jumped 4.0% from $295,178 last December to $306,967 in December 2007. Duplex/rowhouse prices peaked in October at $367.964.
Despite price decreases in the last few months, year-over-year prices were up. The average residential sales price (which includes all types of residential property) was up 1.5% from last month at $329,705 and up 12.1% when compared to last December prices.

SALES

“The rapidly increases in housing costs forced more first-time buyers to consider the lower priced condominiums,” said Pratt. “As a result there has been a continuous increase in condominium sales in the past five years.” Total condo sales of 7,157 units in 2007 were up 6% from 2006 when 6,761 units were sold.

At the same time Single Family Dwelling sales on 2007 dropped back to 11,765 units sold. Sales of SFDS were higher in each of the past three years. SFDs now represent 69% of total residential sales as compared to 27% (up from 23% last year) for condos.

Total sales (including residential, commercial and rural sales) through the MLS® in 2008 were 23,333 units with a value of over $8.2 billion (up from $6.6 billion in 2006).

In December the residential sales to listing ratio was 62% with 1,388 listings and 857 sales. For the year there were 41,030 residential listings with 20,544 sales for a S/L ratio of just 50%. The average days-on-market at the end of December was 56 days with 7,094 residential units in inventory in the wider Edmonton market.

Despite the wildly dynamic nature of the market in the past 24 months, the number of REALTORS® (i.e. members of the Association) increased through the year from 3,104 to 3,241 which indicates some optimism in the market potential.

Remainder of Press Releases By the Edmonton Real Estate Board available at www.EREB.com

 

[LongWayFromHome]

I`ve bought over 80 properties since mid-2003. I believe new investors should focus on creating a portfolio of lower-priced properties with reasonable cashflow rather than one or two more-expensive properties with large negative cashflows. Building a portfolio can be done gradually over many years. There are pros and cons of course to both so-called "growth investing" and "cashflow investing", however the cashflow approach can achieve more diversity, flexibility and (much to my surprise/delight) my experience has been excellent growth. So, in my portfolio, I buy one "Kelowna" syle property (growth) for every 4 or more "cashflow" properties.

 

[kwither]

I have many postive cash flow properties in Kelowna and know the rental market very well. I can advise you on current rental rates. You may be able to change this into a positive cash flow property in the near future.

With virtually no vacancies in Kelowna we are able to continually increase our rents. CMHC is predicting double digit growth in prices again this year for Kelowna.

Another factor in Kelowna`s future is the extension of the runway by year end. Direct flights from Europe will start and once more Europeans find our relatively cheap, by their standards, housing then many will buy which will add competition for the many moving here from the lower mainland and Alberta.

Regards,
Ken Wither
250 878 3360