At the launch of a new guide to buying real estate, the experts weigh in on what to do, and not do
Do you want to know Vancouver’s next real estate hot spot? Are you wondering what might become the next Main Street, Strathcona, or Commercial Drive?
It’s in the downtown eastside, around Main and Hastings — an area where it’s not uncommon to see someone’s hubcaps being carried off in a shopping cart.
“To me, the great next neighbourhood is near Main and Hastings, and down Main Street, going south,” says Michael Goldberg, professor emeritus for the Sauder School of Business at University of B.C. “Watch. Within the next five years there’s going to be a huge outcry about gentrification and displacement. People have no idea how close that is to things that have already been developed.
“There’s stuff there that’s pretty cheap. If you ever walk on Hastings Street, it’s not dangerous. It’s just depressing. It’s sad to see people shooting up, but I’ve never been physically accosted,” he said in an interview at a launch party this week at Inform Interiors.
Mr. Goldberg, who is now a consultant, was the academic on hand to help launch a booklet called Show and Tell: Unlocking the Secrets of New Home Buying. Mr. Goldberg wrote the section on how to choose a neighbourhood — but you won't find his views about the Downtown Eastside in the booklet. He saved his most frank opinions for the party.
Mr. Goldberg was one of several panelists that discussed Vancouver real estate in a question-and-answer session hosted by media personality Fred Lee.
The booklet was put together by developers Intracorp, who brought together realtors, architects, designers and legal and banking consultants, to hand out tips to buyers on how to navigate property buying in these more cautious times.
The brief reality check that was the economic downturn of 2008 to 2009 sobered up buyers and developers, and the hangover effect was a theme at the party. The buying frenzy is long over. Buyers are more educated, says Intracorp western region president Don Forsgren. Gone are the days when everybody thought easy money was to be made off real estate.
“People saw other people do it, and they said, ‘oh I have a friend who bought a condo and sold it and made $50,000. I want to do that too.’ Nobody wanted to miss out. There’s more restraint on the market than there used to be. People are taking more time and seeing that it doesn’t work out always according to plan.”
In the current climate, it’s almost hard to imagine the halcyon days when a buyer would dare to put down 5 per cent on a condo, watch the equity grow and flip it. Too many purchasers and developers got burnt in the downswing. Today, a developer like Intracorp, as well as the banks, want to see about 25 per cent down payment on a presale.
“I don’t see people buying it to flip it as much,” says Sue Rutledge, vice-president of Intracorp sales. “We’re back to the true investor, where they’re buying for the long-term and they will rent it out.”
One of the biggest problems used to be that novice buyers assumed the condo unit they purchased would look like the developer showroom, which often had extras not included in the price, said Ms. Rutledge. Those days are over, too. Buyers know to ask questions and seek legal advice before signing a contract.
There was the suggestion that new is better than used housing, which you would expect from a developer-sponsored how-to guide. But because the contributors were not all company spokespeople, there was a lot of frank, non-marketer talk at the party. And Mr. Forsgren said he did want to offer an educational guide, which is why he brought in outside contributors.
For example, the forthright Mr. Goldberg advised in the interview that it’s not an ideal time to buy — advice you’d seldom get from anyone inside the industry. He scoffed at the Vancouver mentality that to be outside the market is to live in exile for a lifetime. He questioned our understanding of property cycles. He criticized the city for not allowing for more densification in the way of high-rises, which would boost inventory and lower prices. He even expounded upon the virtues of renting.
“What we never look at – and real estate is famous for this – you can go look at a newspaper any day of the week and there’ll be a seminar on how to get rich quick with real estate.
“Well, it’s simple,” said Mr. Goldberg. “Borrow until you’re maxed out and put as little equity down as you can. If the market goes up, you get rich. If the market goes the other way, you’re wiped out.
“So the only way you can get rich is by taking excessive risk. People don’t talk about risk. We have got to teach people about risk and then they can make an informed choice.”
Show and Tell: Unlocking the Secrets of New Home Buying is available free of charge at Intracorp's website, www.intracorp.ca.
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