1. Mortgage interest rates

Low interest rates allow a greater proportion of renters to become homeowners, which in turn can lead to an increase in home sales and therefore push prices higher. That said they don’t significantly increase mortgage costs (on a $100K mortgage a quarter % increase in rates only increases the payments by about $14).

2. Net Wealth Effect Increase in Disposable Incomes

This is one of the most important indicators. If a town’s average disposable income is increasing faster than the national average real estate prices are poised to do the same thing. Key Indicators: a) increased average income; b) decreasing income tax rates; c) increasing retail sales. Be wary of towns where demand is driving values upward while the average income is remaining flat. Go to www.rbc.com, then to economics to find the housing affordability index. As a rule of thumb a well-balanced market for investors is a market that has a housing affordability index of about 33%.

3. Increased Job Growth and In-Migration

It pays to read the newspaper regularly in the towns you invest in. Be on the lookout for announcements of new jobs, major expansions, or new employers moving in. Find areas where the population is growing faster than the provincial average and gaining a good reputation. Also look for Immigration- people from other countries moving into the area, and Intra-migration- people moving from other parts of Canada into the area.

4. The Real Estate Doppler Effect

It is often much more profitable to invest in areas surrounding the boom than to buy property in the heart of it. Use this factor to identify areas that are poised for a strong increase in demands. Smaller cities, outside of areas that get the effect, usually take 6 months to catch up. Look for towns where redevelopment is occurring. Older untouched neighborhoods in these areas can sometimes be hidden gems that aren’t immediately affected by a boom.

5. Local, Regional and Provincial Political Climate

Business friendly politicians generally equal real estate friendly investment areas. Look for regions where development is wanted, not shunned. Look for areas with forward-looking economic development offices where they sell the area to potential employers. Progressive towns attract business while other towns lose it.

6. Critical Infrastructure expansion

Here’s another reason why reading local newspapers in areas that you pan to invest in will pay off for you big time. Look for planes, trains, highways, sewers, land annexation or expansion plans. But remember… DON’T BUY UNTIL YOU SEE SMOKE! Never buy based on rumors alone. Trains and rapid transport are huge (i.e.: towers that spring up at subway stops). Buy within 800 meters of the station, or exit/entrance etc.

6b. Increased cost of labor and materials

This occurs in areas of high in-migration and infrastructure expansion, labor and material costs will increase dramatically. Look for regions where there is a marked increase in these costs as a sign of future value increases. The value increases occur around six months after the cost of new building increases.

7. Areas of gentrification and renewal

If chosen correctly this consistently provides the biggest bang for investment dollars. This is best defined as areas that are moving up from one economic class to the next, often described as “tough, yet funky”. In these areas, you’ll witness a mix of run down to well-kept, recently fixed up properties. Often you’ll see these areas mentioned in the news. Every city and most towns have areas like this. The local perception is the hardest to change, so often locals miss the opportunity. Insight: Look for Doppler Effect gentrification areas. Never be first into an area you believe is going to be in transition. Renewal areas take more due diligence but are worth the effort.

THE ACTIVE FACTORS

These Factors we can influence. Each affects the overall value of a property.

8. Maximizing value and zoning opportunities

Sophisticated investors look first at properties physical attributes, and then they examine how they may be able to change the property to optimize profit way beyond just renovations. IE: an old hotel that is converted into loft apartments, taking a single family home and converting it to a duplex. You need to know zoning bylaws and tenant regulations to make the transition successful. A small percentage of properties will have this potential, but make sure you have the required finances and expertise before taking this on, or find a partner.

9. Buy wholesale; sell retail

You can buy properties at wholesale any day of the week in any town across the country. There are companies whose sole business is buying properties this way. I.E. Buying an apartment building and turning the apartments into condos in an area where condos sell for 80K, and you can buy the building and do the conversions for an average of 50K. Development of raw land also falls under this. Another way is to buy properties that are going to foreclosure. In Canada, accessing these properties is tougher than in other countries. In the US, it is very easy. The best market is the pre-foreclosure market where you proactively advertise to buy such properties.

10. Stand out from the crowd

Quality marketing is a real estate investor’s best kept secret. You must be proficient to get above market rents and values for your properties. I.E. Two similar houses where one is properly marketed can easily sell for 5-10% more than the other can. Matching your message to your prospective target is critical.

11. Renovations and sweat equity

Areas in transition are great sources for homes that need improvements. Look for well-built but neglected homes. Keep the work simple and in line with what a renter or owner is looking for. Improvements can also be landscaping and exterior work.

12. Speculation, jumping the gun on a wish & a prayer!

Speculators forget about economic fundamentals, and neglect doing homework once again, proves emotions lead to bad decisions, and is the downfall of most real estate investors.

Match potential investment areas against the 12 components. In today’s market you are looking for at least 7 of the 12 components to be in-line before purchasing.

Other Possible Due Diligence Steps

* Pick up the local newspapers
* Drop by the public library
* Pay attention to business moves
* Study housing prices
* Look at vacancies
* Visit the local Chamber of Commerce
* Visit local business owners

-- Heather

Statistics Canada released detailed analysis of data from the 2006 Census on earnings and income on May 1st. Here is a summary of some of the key findings:

Little change in earnings during past quarter century

Median earnings of Canadians employed on a full-time basis for a full year changed little during the past quarter century, edging up from $41,348 in 1980 to $41,401 in 2005 (in 2005 constant dollars).
Earnings of full-time full-year earners rose for those at the top of the earnings distribution, stagnated for those in the middle and declined for those at the bottom.
For the purpose of this analysis, full-time full-year earners were divided into five groups based on their employment income levels, each group representing one-fifth, or 20%, of the total number of workers.
Between 1980 and 2005, median earnings among the top 20% of full-time full-year earners increased by 16.4%. In contrast, median earnings among those in the bottom one-fifth of the distribution fell 20.6%. Median earnings among those in the middle 20% stagnated, increasing by only 0.1%.
The more rapid growth at the top of the earnings distribution has led to an increase in the proportion of high earners over the past quarter century.
In 1980, 3.4% of full-time full-year earners received $100,000 or more (in 2005 constant dollars). By 2005, this proportion had almost doubled to 6.5%. As a result, more than half a million individuals earned $100,000 or more in 2005.
During this 25-year period, recent immigrants lost ground relative to their Canadian-born counterparts.
In 1980, recent immigrant men who had some employment income earned 85 cents for each dollar received by Canadian-born men. By 2005, the ratio had dropped to 63 cents. The corresponding numbers for recent immigrant women were 85 cents and 56 cents, respectively.
Earning disparities between recent immigrants and Canadian-born workers increased not only during the two previous decades, but also between 2000 and 2005.

Family earnings: Working couples with children had highest median earnings of all family types

Between 1980 and 2005, median earnings of economic families in which at least one partner, or the parent, was aged between 15 and 64 years increased by 9.3% to $63,715. Earning increases were greater for families than for individuals, mainly due to the increasing participation of female partners in the labour market.
Working couples with children had the highest median earnings of all family types in 2005, an estimated $75,997, up 20.6% from 1980. For lone-parent families headed by women, median earnings rose 10.9% to $30,958. Their male counterparts had median earnings of $47,943, a drop of 8.5% since 1980.

Incomes of families: Couples with children on top rung of income ladder

Couples with children, once the dominant type of economic family, no longer make up the majority of families. In 1981, couples with children accounted for 56.3% of all families with two or more people; by 2006, this proportion had declined to 46.2%.
In contrast, couples with no children accounted for 30.3% of the total in 1981; by 2006, their proportion had increased to 37.0%.
Although their share has declined, couples with children still have a higher median income than any other type of economic family. In 2005, their median income amounted to $82,943, up 21.6% from 1980, mostly due to the increase in the number of dual-earner families.
The median income for couples without children at home was $59,834, up 14.6% from 1980.
It is also possible to examine families in terms of age structure. Of the 3,252,990 couples without children at home in Canada, 24.8% were senior couples; that is, both partners were aged 65 and over. The median income of these senior couples was $45,674 in 2005, up 55.8% from 1980.
In 2006, the number of lone-parent families headed by women surpassed the 1-million mark, hitting 1,037,425. The 2006 Census also showed that 248,900 lone-parent families were headed by men, more than double the number in 1981.
Census data showed that the income gap between these two types of families narrowed slightly during the past 25 years.
The median income for lone-parent families headed by women in 2005 amounted to $36,765, still the lowest of all the major economic family types. However, this was 26.4% higher than it was in 1980. In contrast, the median income for lone-parent families headed by men declined 4.1% during this 25-year period, to $51,974.

Sources of income: Employment earnings account for four-fifths of income

For economic families as a whole, employment earnings represented the lion's share of income. Of every $100 of income received in 2005, employment earnings accounted for $78. Still, this was down from a quarter century earlier, when earnings accounted for almost $84.
In addition, government transfer payments, such as Old Age Security (OAS), Employment Insurance benefits, Child Benefits, and Goods and Services Tax credits, contributed $9.90 of every $100.00 in income in 2005.
Investment income represented $4.20 of every $100.00, while retirement income sources such as private pensions accounted for $5.90, more than double the level of only $2.30 in 1980.
This gain in the share of retirement income can be attributed to both an aging population, and increases in the average amount per recipient.

After-tax income: First-time data from the census

For the first time, the census collected information on the after-tax income of Canadians, that is, total income from all sources minus income tax. After-tax income depicts in a better fashion what families have available to spend.
The median after-tax income of all economic families in 2005 was $57,178, compared with the total or pre-tax median income of $66,343.
The after-tax income gap between different types of families is smaller than the total income gap because after-tax income reflects the fact that people with higher incomes generally have a higher tax rate. For example, on an after-tax basis, lone-parent families headed by women had a median after tax income that was 49.1% of that received by couples with children, compared with 44.3% based on pre-tax income.
Also for the first time, the census can calculate low-income rates based on after-tax income.
Census data showed that 11.4% of the total population, an estimated 3,484,625 people, lived in low income in 2005 using after-tax income.
Of these people, an estimated 879,955 young people aged 17 years and under were living in low-income families in 2005.
Low-income rates are highest among children and young people. In 2005, 14.5% of all children aged 5 and under were part of a low-income family. The rate dropped to 13.0% for children aged 6 to 14, and to 11.4% for teens aged 15 to 17.

EVENT ONE - Sub Area 3C

This event will give the public an opportunity to view and comment on proposed changes to the Official Development Plan for SEFC Sub-Area 3C. The draft amendments would increase the area’s maximum allowed heights, amend the optimum heights, and change the total allowed floor area.

Thursday, May 22 from 4:00pm – 7:00pm
TELUS World of Science Boardroom
1455 Quebec Street, Vancouver

For more information,
please visit http://vancouver.ca/sefc
or email kyra.lubell@vancouver.ca

============================================

EVENT TWO – Olympic Village Plaza

There are two opportunities to view and comment on the draft conceptual design for the Plaza in Area 2A of SEFC.

Saturday, May 24 from noon – 3:00pm
False Creek Community Centre, Lind Hall
Granville Island at 1318 Cartwright Street

Monday, May 26 from 4:00pm – 7:00pm
Vancouver Public Library, Promenade
Central Branch, 350 West Georgia Street

For more information,
please visit http://vancouver.ca/olympicvillage
or email robin.petri@vancouver.ca

With all the foreclosures going on down in Florida and many other states this is probably a question that many Canadians will find interesting.

As stated on the CRA's "Home Buyers' Plan (HBP)" web-page:
The Home Buyers' Plan (HBP) is a program that allows you to withdraw up to $20,000 from your registered retirement savings plan (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability.

The key words in the above statement are: qualifying home. What is a qualifying home within the meaning of the HBP?

On the same web-site, the answer provided is:
"For the purposes of the Home Buyers' Plan, a qualifying home is a housing unit located in Canada."

Not being satisfied with this answer I did some more research on the Internet (inconclusive) and spoke briefly on the phone with David Ingram, a renowned International Income Tax expert.

To my question "What are the tax implications if I want to use my RRSP to buy a home in the United States" David's answer was that "there is no short answer" and that it depended on the individual's situation and in particular what is the person's status in the United States ("are you a citizen or do you have a visa?" were his exact words). My answer was "I am a Canadian citizen no I do not have a US visa" and to that David responded "then you can not have a primary residence in the States. You may own 100 properties there if you like but you can not live there on a permanent basis. This is a US regulation."

David is an extremely busy man and he charges $450 per hour for his consultations and he was unable to spend any more time with me, however the fact that he asked about details of my situation lead me to believe that there might be a way around the above limitations.

Can anyone shed more light on this subject?