LISTENING TO PUNDITS... CAN DRIVE YOU CRAZY

v Credit crunchv Wealth Taxv Bubblev Brexitv Trumpv Run away inflationv Rising US Dollar/falling Canadianv Rising/falling interest rates

Headlines

■Realtors are prowling like ' hungry tigers'

■Sales are off by 43%

■Vancouver's prices will not be seen again in this decade

■There is no financing for anyone!

When?■1974!

Average price?

■$54,000

■Bill Macintosh

Headlines

■The stock market crash today is the worst ever !

■Back to the Thirties?

■Is real estate next?

When?

■1987

■It was a terrible crash, but it recovered very quickly

■Real Estate actually benefitted as pension funds increased their percentage of real estate holdings

But what about the terrible stock market/currency/commodity/

financial/European/Asian/Canadian crises...?

■So what? ...we have been there before......and guess what?

■If you bought a home in the middle of every single crisis you did yourself and a family a FAVOUR!!! (Constantineau)

Forecasting is never easy….

ò…particularly when òit is about the future!

HELP FROM ECONOMISTS

�Economists know a hundredways to seduce a woman…

LAST YEAR WE SAID: IT IS A MAD WORLD…� Outcome in uncertain times? � The rich will continue to look to park

their money� The rich will continue to flee emerging

markets and collapsing currencies and are stampeding into

� Worldwide Real Estate (high end residential and commercial!) and other world-class cities – Vancouver, Toronto and Montreal.

� The rich will buy anything and pay any price for things of value….INFLATION ROLLS ROYCE

EUROPE• OUTCOME: Not as bad as it could have been but

proves

• People do not trust globalization

• Don’t trust massive migration

• Don’t trust the establishment

• Lots of Mini-Trumps

• MONEY WILL CONTINUE TO FLEE TO SAFETY –YES, TO CANADA

TOP CITIES IN THE WORLD FOR

FOREIGN INVESTORS (AFIRE)

2019 : TORONTONO. 8 IN THE

WORLD

Most staple and secure countries for Real Estate Investment: 1. US (#1 last

year)

2. Germany (#2 last year)

3. Canada (#5 last year)

4. Australia (#5 last year)

??? UK (#3 last year)

CHINA

• XI wants Taiwan and Hong Kong – renegade provinces

• 300,000 Canadian-Chinese live in Hong Kong

• 1/3rd will come back !!!

• Chinese passport holders also leave Hong Kong but stay in Singapore, Vietnam – Asia

TRADE

• Trade agreement will be done but maybe not til US election is closer – next Summer/fall?

• Still strong bonds with Canada

• Read OzBUzz re – China depreciating its currency –make up for Tariffs

BOOMERS

� dildo

ò Yuppies

ò Dinks

ò Dins

ò Veeps(cialis)

ò Mamisò (DILDO)

Real Estate Action Plan: Goal?

But also…We are becoming the

Millennial Generation

• Are more informed• Want quick answers • from their PROFESSIONALS• Want facts • Want interpretation• Need financing help from • parentsInformation from http://canadianmillennials.ca/

Millennials

The Future?

To forecast we have to set the baseline

òMacro Principles

òLocal principles

Basic Principles to studyMacro:Ø Inflation or deflation aheadØTiming (Burnaby home)

Ø TrendØ Cycles

Local:Ø Inward migration/job creationØ AffordabilityØ Demand and SupplyØ Interest rates / Taxes

ØYOU MAKE THE MOST MONEY ON THE DAY YOU BUY!!!

Let’s look at Basic Principles to study

Most important…

InflationorDeflation?

CURRENT HARD ASSET INFLATION WORLDWIDE IS STILL A FACT

Source: Roubini Global Economics

PRICES ARE STILL….

SYDNEY Auckland, Hobart, Panama city, Manila, Hong Kong -

Dubai Singapore Rome London

A condo I lived in in

Sydney a long time ago was 19,000 today it is 2 million (a

rebuilt). Lots of Chinese

everywhere...lots of talks

about foreign buyer taxes

Homeowner returns with 5 % down payment 2012Year Price Down payment Mortgage Owing (2012) Profit % increase

1970 $24,239 $1,212 $0 $1,098,788 90,659 %1975 $64,471 $3,234 $0 $1,096,777 33,913 %1980 $100,087 $5,005 $0 $1,094,996 21,878 %1985 $112,737 $5,637 $0 $1,094,036 19,408 %1990 $230,641 $11,532 $0 $1,088,047 9,438 %1995 $392,500 $19,625 $98,404 $981,971 5,003 %2000 $401,000 $20,005 $244,000 $836,000 4169 %2005 $610,000 $30,500 $456,618 $612,882 2009 %2010 $1,050,000 $52,500 $942,724 $104,776 199 %2012 $1,100,000 $55,000 $1,016,494 $196,300 356%2013 $1,212,800 $240,000 (20% $980,000 140%2017 $1,616,000 325,000 (20%) 1.300,000 ? ?1965 $13,500 $675 0 $1,099,325 162,863%

THE NUMBERS -THE NUMBERS

Vancouver September 2019 September 2018 % September 2017

All Sales 2,344 1,601 +46% 2,835

Average Price 972,700 1,032,000 -06% 1,018,200Active Listings 13,317 13.800 -04% 10,145(Active listings also dropped from July 2019 (14,716)

All DetachedSales 755 512 +47% 865Average price SF 1,507,500 1,638,800 -08% 1,675,500(Sept 2016:1,829,000)Active listings SF 5,909 6,916 -14% 6,249

All condoSales 1,168 815 +43% 1,452Average price condo 673,200 677,200 -11% 672,800Active listings condo 5,182 4,835 +07% 2,596

EYEBROW RAISERS AT THE UPPER END ONLY

Vancouver West 3,117,100 4,466,700 OCTOBER 2017

West Vancouver 3,435,800 4,009,700 DECEMBER 2017

Vancouver East 1,437,400 1,823,600 DECEMBER 2017

Richmond 1,580.000 1,973,800 June 2016

Current Market (Scott Brown from 5th

Avenue)1. For starters the market improvement and stabilization in the resale market is occurring in the new market in these areas too.

2. Recovery overall is being driven by investor and end user demand in the more suburban markets in the Valley and Tri Cities.

3. Two of three top selling projects in the last 100 days were large wood frame projects in Central Surrey / North Delta (Scott and Nicholson and Fleetwood Village).

4. Product in all suburban markets priced appropriately and between $300,000 and $550,000 continues to absorb very quickly.

5. While condo product above $750,000 is moving slower there are first signs of improvement in the large townhome product niche. The primary detractor has been consumer concerns about what they could sell their current property for and how long it will take to sell.

Current market (condo)6. New affordable wood frame product in South Surrey. Product coming in 2020 should absorb well.

7. Continued redevelopment expected along the future Skytrain route down FRASER Highway.

Finally...the new step code / projected increases in concrete construction costs could drive minimum possible pricing for new high rises in these markets over $800 psf.

This will create further demand for more affordable wood frame options in close vicinity to High rise sites.

NOTE: Good for real estate prices

q The federal government’s plan to increase the number of immigrants entering Canada, most of whom settle in the big cities, including Toronto, Montreal and Vancouver. They expect 350,000 a year –

q Tens of thousands of immigrants entering Metro Vancouver more demand… (more than the 36,000 per year now!)

q Plus an estimated 140,000 students and temporary foreign workers in the region who are not included in population totals —

q More homes needed, fewer built – means higher prices

This Photo by Unknown Author is licensed under CC

�PSST: Canada ramping immigration to the 350,000 level, the government has recruited small towns to steer newcomers from the big cities.

They chose these: After applications they have chosen the following small towns.Here are the ones in western Canada:West Kootenay(Trail, Castlegar, Rossland, Nelson); alsoVernon BC;

Claresholm, AB;Brandon MB;Moose Jaw SK.

Planned: If an immigrant finds a job in any of these towns, Immigration Canada will assist with relocation starting in 2020.

�New immigration towns BUY IN THESE?�

IMMIGRATION!

Interest ratesLOCK IN !Bonds are changing

Low in place?

Now: No raises in 2019

Maybe down 1/4

Interest ratesCanada will not

lower - the US will!Result?

Higher loonie

GERMAN INVESTOR BUYS HYATT CENTERGERMAN REALTOR INVESTS ½ BILLION IN EDMONTON TOWER

�

� UNCERTAINTY WORLDWIDE means ...that Big currencies are fighting it out...This will continue!

� But:§ 1.Canada is now on the map for big

investors...substantially better fiscally, strong currency perception, stable economy –SAFE!

§ 2.Real Estate is also an option now for foreign investors. Chinese/German/Middle Easterninvestors in Alberta, BC and Toronto –Corporations and individuals

§ Middle Eastern German US big boys

OZZIE’S PREDICTIONS FOR 2020

Massive inward migration (over

60,000 in 2019) will continue to prop up

the market

Single-Family prices will at upper end will

come off 20%General decline is

over

Stress test will stay 1ST TIME BUYER LOAN IN

PLACE

Credit will become a major issue – Last year we called tightened

mortgage restrictions a possible ‘Black Swan’ –

boy, is it ever.

CANADIAN INDUSTRIAL VACANCY RATES RECORD

LOW.

YOU NEED WAREHOUSE FOR ONLINE SHOPPERS

TO GET THEIR STUFF STORED AND DELIVERED

Rising rents.

Good for investors

Demand surpasses SUPPLY

.

. COMMERCIAL

OVERNIGHT DELIVERIES

FIND LOCATION IN URBAN CENTERS

Rising rents.

Must be property located warehouses in inner city delivering to consumers

�Retail Properties�

– the most unpredictable market-- retail vacancy remains in flux

-- failure of some big chains-- big box chains closing underperforming locations

� -- ongoing e-commerce revolution

This Photo by Unknown Author is licensed under CC BY-SA

CONFERENCE BOARD OF CANADA

HEADWINDS (2.6% VS 3%)VANCOUVER IS PWC’S TOP MARKET FOR REAL ESTATE PROSPECTS IN CANADA WITH ROBUST PERFORMANCE IN THE OFFICE AND INDUSTRIAL SECTORS OF THE MARKET—

VANCOUVER’S RESIDENTIAL MARKET, TOO, HAS CONSIDERABLE UPSIDE, AND WHILE THE MARKET RECENTLY APPEARED LANGUID, A CORRECTION WAS INEVITABLE BECAUSE OF OVERHEATING CONDITIONS.

WITH STRONG POPULATION GROWTH AND ECONOMY, VANCOUVER WILL REMAIN ATTRACTIVE.

!

This Photo by Unknown Author is licensed under CC BY-SA

RENNIE REVIEW:

BEST ECONOMIC FUNDAMENTALS IN ALL OF CANADA, SIGNS ARE POINTING TO A REBOUNDING HOUSING MARKET IN GREATER VANCOUVER.

WOOD FRAME PRE-SALE PROJECTS IN GREATER VANCOUVER THAT HAVE LAUNCHED IN 2019 (THROUGH MARCH) HAVE SOLD AT AN AVERAGE PPSF OF $559, 14% BELOW THE 2018 YEAR-END AVERAGE OF $650.

!

MONEYMAKING TRENDS

MONEYMAKING TRENDS

The real estate to house the booming movie industry in Vancouver

Buy/Develop/Renovate real estate to house students or open a school

Have too much cash? Buy Land – Land sales will boom

The environmental business is a trend

.Make stink bids…learn: SO WHAT NEXT!

MONEYMAKING TRENDS

Lifetime tenant shift – buy rental purpose buildings

Buy warehouses – inner city space for on- line shoppers –next day delivery

WATCH OUT…

Millennials are ok to rent a car and a bike

Millennials will rather rent than move to suburbs

Trend is – back into town

.Make stink bids…learn: SO WHAT NEXT!

ASTOUNDING PREDICTIONS: v Trump will win

v Inflation will be visibly returning in 2018

v Foreign money will keep coming

v Credit will be tougher to get

v People are moving back in the city

v Poloz to blame for house prices

THE FUTURE

• BEST PLACE TO BE?

WELL SELECTED --- WELL RESEARCHED --- WELL PRICED

CASH FLOW REAL ESTATE

This Photo by Unknown Author is licensed under CC BY-SA

qBRITISH COLUMBIA ROCKS!!!

q Consumers are the big drivers in BC. Residential is a small driver in GDPq .q Solid growth cycle. Consumer demand has a lot of momentum still.

q Still lots of job growth happening.

q Employers still scrounging for labour

q Population growth 1.4%

q Non-permanent employment big

qBRITISH COLUMBIA ROCKS!!!q B.C. has grown into something separate over the past 16 years since the NDP was last in power

qHigh tech, the movie industry, exports and construction have all helped create a diverse and roaring economy.

qForecast GDP expansion of 3.5% [in 2019].qThis is the strongest GDP growth in all of Canada, combined with

the qLowest unemployment rate and highest job growth in the country.

qNet international immigration to B.C. will continue at 60,000 and be clicking at more than 75,000 per year to 2020,.

q70 Percent of Canadians want to retire to BC

.

The best market...

..is between your ears!

DO SOMETHING!!!...and have fun doing it!

Whatever you do...

�Do some musical directing

Get up happy!

�Have a bubble bath!!!

LIVE A SELF-ACTUALIZED LIFE!

Have a bubble bath

Live a self-actualized life!

■ Take a ballroom dancing class

■ Sign up for Yoga

Do something different...

�Also ..�In Surrey

�Extremely cool�Active…�Good-looking�People…

TREE of LIFE

■ Markets have come and gone a 1000 years…

■ but you and I only have one life to live…

■ Let’s live it LARGE!