March 2005

For current info on Vancouver/B.C./Canada statistics, demographics, employment rates, types of canadian businesses, immigration stats, etc., please visit StatsCan website below:

In 1998 I ran a headline "No Way Garth" telling our subscribers not to listen to gurus that made us feel like yokels if we paid off our homes - nay, if we did not put a maximum mortgage on the house and put it into the stock market. Turner even said that: " ... traditional real estate - multi bedroom (Is there any other kind?) real estate has a dim future and if you own some you should sell it, or borrow against the equity and invest in financial assets like stocks and mutual funds ... " I (through the Real Estate Institute) also tried to get our own estimable master demographer David Baxter on the same panel with Dr. Foot, from "Boom Bust and Echo" - another anti-real estate writer. But Foot declined. Well, Baxter in a fine speech this week told a 'breathlessly attentive audience' (if you are not, you get lost in the numbers), why Turner and Foot not only were wrong but WILL REMAIN wrong.

Yes, there is a future in the real estate ownership and investment rental market.

Baxter projects 1,096,000 million more people (a 47% increase in population) in the next 27 years. 582,300 more households will be formed, which will require an additional 379,700 ground-oriented and 207,000 apartment units. That would mean a 75% in ground-oriented unit increase and an 83% in apartment owner occupancy ... not too many ground-oriented rentals. A further 60% increase in apartment rental (based on historical data, he sees a possible shift there as more tenants will buy their property).

Additionally, there will be some 626,406 dwelling units owned by people who do not own real estate today. (They are still playing with play stations ... and we are talking about 25-year olds/ live at homes here.) By 2031, in the Lower Mainland some 1,215,352 people will change their places of residence - in Baxter's view - a very conservative assumption.

Outlook:
1. Real estate in metropolitan areas anywhere in Canada will be a good investment.
2. There will be 1.2 million transactions even if there is no growth. Big turnover of side-ways buying.
3. New generation of retirees - the two-pension income in households have more money to spend than ever before. They are not downsizing - rather they are buying across, same value, different lifestyle.
4. All major urban (URBAN!) markets will do well. Urban real estate will almost always have a use and hence a positive asset value.
5. Younger population will grow at a rate of 14 -16 %. There will be a 200% growth in the 65 plus group
6. Strong growth ... also from people coming in from outside
7. With every passing year we are less likely to live in a senior facility. We like to stay independent, are healthier and more fit and live longer (JREI has argued this for years).
8. Great future for real estate in the Lower Mainland.
9. Risks:
a. Unless there are outside factors such as rent control market (If you can't make a profit, there will be no building, no upgrading and values will drop, such as in Vancouver's downtown eastside. We want to preserve heritage, be environmentally friendly, provide cheap low-cost housing and create a sustainable community of drug users - and make money of it ... impossible. Like saying you want to lose weight, and then doing no exercise and eating like a horse.)
b. If taxes, interest rates raise disproportionate to income. Required yield or risk goes up faster than incomes NOI or GDS - However the real estate risk is not NORTEL - it does not go to '0'

A great presentation. David Baxter has been a guest speaker at 6 JREI 'Land Rush' conferences. His outlook has always been pro real estate - but with solid reasons ... and his forecasts have an uncanny knack of having been correct.

By Ozzie Jurock

---2004 UPDATE---

More people are finally coming to BC than fleeing it, a sign that times may be changing for the better in the province. In the third quarter last year, BC enjoyed a net inflow of 2614 residents from other provinces, according to BC Stats. This marked the first time in 6 years that the province gained - rather than lost - people through inter-provincial migration. Baxter says factors for the turnaround include improved stability and job growth.

In the past year, sectors that have enjoyed job growth include services, finance, insurance and real estate, professional, scientific and technological and public administration. Baxter also noted that the province has become a more business friendly, lower tax jurisdiction. The trend is expected to continue but still falls short of BC's record inflow of 40,000 in 1992.

Groups coming to BC include young people heading to the Lower Mainland for lifestyle and employment reasons. Retired people and those nearing retirement have also headed here.

Bexter said that the figures don't reflect the impact of the 2010 Winter Olympics. Population effects of the games won't likely be felt until 2 or 3 years from now, when construction kicks into gear in preparation for the event.

BC also had a net inflow of 5,992 international immigrants in the third quarter of 2003. During the quarter, BC claimed 28% of all entrepeneur immigrants and nearly 40% of investor immigrants who came to Canada.