According to condo king Bob Rennie there's no bubble to be seen in Vancouver...
Yesterday, Bob Rennie of Rennie Marketing Systems gave his annual key note speaker address to the members of Vancouverâ€™s Urban Development Institute â€“ a non-profit association of the development industry with over 600 corporate members involved in all facets of land development and planning including: developers, property managers, financial lenders, lawyers, engineers, planners, architects, appraisers, real estate professionals, local governments and government agencies. The theme of Mr Rennieâ€™s talk was the ever-present spectre of a looming real estate bubble in our city. A specialist in marketing pre-sale condos, he denied that there is a bubble.
(the following is an article written by Brian Morton for todayâ€™s Vancouver Sun)
Bubble? What bubble?
Thatâ€™s Vancouver condo marketing guru Bob Rennieâ€™s take on concerns that the regionâ€™s real estate market is headed for a meltdown because of sky-high prices.
â€śItâ€™s not a bubble,â€ť said Rennie, director of Rennie Marketing Systems, in an interview following his keynote address to the Urban Development Institute Thursday.
â€śWith the 80 per cent of the [condo] market that traded in [Metro] Vancouver last year, you only needed a household income of $52,800 to purchase. Thatâ€™s not a bubble story.â€ť
Rennie, who spoke to a full house about the state of the Vancouver property market, said aging baby boomers with billions of dollars in equity will become a much greater force in the condo market as they increasingly downsize from expensive single-detached homes, and put money aside for their children.
He also noted that the number of people between 55 and 64 will increase 38 per cent between 2009 and 2018, those between 65 and 74 will increase 56 per cent, while those between 35 and 54 will only increase by 4.6 per cent.
Because of that, he said, developers should shift their thinking into providing more larger one-bedroom condos to accommodate the downsizing boomers.
â€śI believe the leaner, meaner baby boomer is the game changer,â€ť said Rennie. â€śBaby boomers are sitting on $88 billion in equity in Greater Vancouver and theyâ€™re looking at their retirement years. That equity will be freed up over the next 15 years [and] when they sell their home, theyâ€™ll buy down and help their kids.â€ť
Rennie said there were about 19,000 condo sales in Metro Vancouver in 2011, and that while the average price for 80 per cent of those condos was $315,000, the overall average price was $427,000, which required an income of $66,000 to finance.
Rennie noted that proximity to transit is paramount for todayâ€™s homebuyer.
â€śIn the â€™70s and â€™80s it was location, location, location. In the â€™90s through mid-â€™2000s, it was timing, timing, timing. And from here forward, itâ€™s transit, transit, transit.â€ť
He also said that planning should be conducted more on a regional basis in order to make homes more affordable.
Meanwhile, Tsur Somerville, director, centre for urban economics and real estate, Sauder School of Business at the University of B.C., said he also doesnâ€™t believe thereâ€™s a real estate bubble in Metro Vancouver, largely because thereâ€™s not an explosion in housing starts â€“ typical for real estate bubbles.
Somerville said that while the affordability numbers have been skewed by the higher end parts of the market â€“ â€śthere were double-digit increases in Richmond, Vancouver, Burnaby and West Vancouver, with single-digit increases everywhere elseâ€ť â€” the region is still very expensive compared to other cities in Canada.
â€śCompared to other cities, that income [$52,800] gets you a house. Here, it gets you a condo. That means weâ€™re expensive, but thatâ€™s the reality of what we are.
â€śItâ€™s still an expensive place to live, but itâ€™s not unaffordable. Youâ€™ll end up smaller and further away from the core.â€ť