I am headed to several Real Estate Conferences in the near future to share my message that Kamloops streets are paved in gold(you just need to bend over to pick it up).
The most common question I get is “can you tell me about the coming boom in Kamloops?” This is probably because I have it screen printed on all the shirts I wear 🙂
I bring attention to “the boom” because, unfortunately, appreciation is the profit center of real estate that gets the most attention. – Although my recent purchase July 2014 produces cashflow of $667/mo on a $67,000 investment(Deal of the Week), and 12% ROI on cashflow alone is nothing to sneeze at!
Since this entire website is about economic fundamentals that are leading to an increase in property values, I will condense ALL the content on this subject to the most compelling points:
1. Real estate cycles are predictable.
Because of this, I know Kamloops is in the Recovery Phase. “Secrets of the Canadian Real Estate Cycle” is a good read to learn for yourself how to predict the Boom, Slump and Recovery. Identifying where a town is in the cycle involves analyzing media headlines and key drivers, while ignoring market influencers. I won’t get into this in detail here, but in future posts I will outline why Kamloops is in the Recovery.
2. Real Estate value increases are preceded by clear indicators.
Nothing sums these up better than REIN’s GDP graph:
Kamloops is sitting at the “decreased vacancy” and “increased rents” points on this graph.(I just had a turnover in a 2 bedroom basement unit and increased rents from $925 to $1200 – in November!)
Also of note is Kamloops’ score on the REIN Property Goldmine Scorecard. Here is the one I completed for my last purchase downtown Kamloops.
Read about these Economic Influencers at the Report on Kamloops for Real Estate Investors available for download at InvestKamloops.com
3. Population growth and property value correlation
Here is a local example of the GDP graph in action.
Kamloops Population Growth – Stats Can Census Data
Kamloops Prices from 2000-2014 – BCREA
GDP graph, updated overlay of home prices and population growth
Here is a table to make the overlay information more legible.
As population has been growing, there have been massive increases in property values. As population growth(estimates) have slowed, housing price growth also has slowed. However, I believe the population at the 2016 census will be far greater than the estimates from Stats BC. I say that because my rents and demand for rentals has skyrocketed in the past 2 years, and new tenants are rarely relocating from another part of Kamloops. So why have house prices not climbed high yet?
A: There is a pent up demand for housing being created thank to a Market Influencer: tougher mortgage qualification. First time homeowners are forced to save a bigger downpayment to avoid 25yr amortizations, or must earn more to service the debt.
Kamloops remains a Buyer’s Market – for now. Rents are high but houses still cheap, so taking action now results in massive cashflow! 12% cash-on-cash ROI is achievable!
Besides all the economic data that supports a real estate boom coming soon to Kamloops, locals I have met have anecdotal evidence: the trend for prices in Kamloops appears to be 7 years of flat prices, followed by a sharp rise in a short time. One person blames the geography: since the only suitable building lots are to tear down existing homes or build on the hillsides, new home construction in Kamloops is expensive. Builders wait until there is a sharp demand to ensure they can make a profit. This graph sums up this idea and appears to support the trend:
Until next time,