Quotations by Don R. Campbell

When you take the last 20-plus years and graph both the housing market percentage increase and the underlying Bank of Canada rate, you can see that interest rates play quite a minor role. Investors who buy and hold real estate will benefit from interest rate increases because more people will stick with renting rather than buying, thus pushing vacancy rates down and rents up. [2013] - Don R. Campbell

If demand puts upward pressure on housing prices without a corresponding increase in average income, this strong increase is likely not sustainable. [2013] - Don R. Campbell

The Royal Bank of Canada produces a quarterly report on housing affordability (www.rbc.com/economics). A well-balanced market for investors has a Housing Affordability Index of 33 per cent. Sophisticated investors look for cities and towns in the 25 to 29 range. Towns and cities above 39 per cent are most likely going to under-perform over the long term as they are overpriced relative to the ability for the citizens to afford it. [2013] - Don R. Campbell

The real estate Doppler Effect occurs when one city or town's economic windfall (e.g., a new manufacturing factory or plans to increase production and employee numbers) impacts nearby cities or towns. Homebuyers and investors can also take advantage of the micro-Doppler Effect. It occurs in areas that surround economically-strong communities and in neighbourhoods near those being revitalized thanks to a new development (e.g., a new post-secondary campus or a healthcare facility). [2013] - Don R. Campbell

Homes located within 800 meters of public transit stations will appreciate 12-15% more quickly than their market peers. Conversely, values decline more slowly if markets drop. [2013] - Don R. Campbell

10 Fundamentals of Real Estate Investing: 1. Mortgage interest rates. 2. The net wealth effect. 3. Increased job growth and in-migration. 4. The real estate Doppler effect. 5. Local, regional and provincial political climate. 6. Critical infrastructure expansion. 7. Areas in transition. 8. Creating highest and best use. 9. Buy wholesale sell retail: stratification. 10. Quality marketing. [2013] - Don R. Campbell

Here are some of the main players you'll need on your bench: real estate agents, mortgage brokers and bankers, property managers, inspectors/appraisers, bookkeeper, professional advisors (lawyers, accountants), other successful investors, joint-venture partners and life partners. [2013] - Don R. Campbell

Mortgage fraud is complicated. At its most basic level, it involves individuals signing false mortgage documents (like one that says you plan to live in a property even though you do not plan to make it your residence). [2013] - Don R. Campbell

50:50 Partnership: A joint-venture partner puts up the capital for the down payment. The partners share ownership, with the real estate expert doing all of the work associated with finding, managing and eventually selling the property. Profits are shared 50-50 after the initial down payment is returned to the co-venturer. [2013] - Don R. Campbell

Analyze your properties with an interest rate that's 1 per cent higher than today's rate.  [2013] - Don R. Campbell

The money global investors (including Canadians) are putting into Canadian real estate, especially in major centres like Toronto and Vancouver, can definitely skew the market. The sophisticated investor avoids overheated markets--and follows job and population growth instead. Overheated markets eventually cool down. Seasoned investors watch for the strategic advantages offered by cooling markets (think: motivated vendors and dropping prices). [2013] - Don R. Campbell

Historically speaking, real estate price bubbles have occurred when countries have deregulated their finance industry in conjunction with having a favourable tax environment for real estate investment. The bubble ends when a significant correction in real estate values occurs. [2011] - Don R. Campbell

While the duration of a complete real estate cycle has not proved to be consistent, it has typically lasted anywhere from seven to eighteen years. The longevity of each real estate cycle obviously varies depending on the state of the key drivers for each country. Smaller economies can experience faster cycles. [2011] - Don R. Campbell

To obtain more accurate information on real estate value trends, we suggest using one of two methods. 1. Indexes: the S&P/Case-Shiller Home Price Indices used in the United States are considered by many economists to be the most accurate way to represent a market's overall real estate value. Teranet, in alliance with the National Bank of Canada, created an index that dates back to 1999 for the metropolitan areas of Vancouver, Calgary, Toronto, Ottawa, Montreal and Halifax. 2. Moving Average: Using the average Multiple Listing Service (MLS) prices reported monthly, economists calculate and trend the 12-month moving average. [2011] - Don R. Campbell

Real Estate Key Drivers - Demographic Drivers (net migration, employment levels, the number of first-time homebuyers, vacancy rates of rental real estate and the scale of housing construction), Financial Drivers (rental levels, return on investment, income levels, rental affordability, real estate affordability, financing availability and real estate values), Emotional Drivers (the average days it takes to sell real estate, the number of listings of real estate for sale, sales levels and revitalization - upgrading of amenities, facilities and/or real estate). These three categories of key drivers collectively create momentum that affects the progression of the real estate cycle as it passes through one phase and on to the next. [2011] - Don R. Campbell

Regardless of where you begin, the real estate cycle always progresses in the same way. That is, a slump always follows a boom, a boom always follows a recovery, and a recovery is always sandwiched between the slump that comes before it and the boom that follows. Each of these phases include a beginning, middle and end stage. [2011] - Don R. Campbell

The classic market influencers are: interest rates (the cost of financing a purchase), ease of borrowing (the availability of financing), confidence in real estate as an investment vehicle, inflation, legislative amendments (taxation and/or local authority), foreign investors in local real estate, investment alternatives [2011] - Don R. Campbell

If interest rates increase during the boom phase of the real estate cycle, it is likely that the boom phase is nearing its end. Alternatively, if interest rates decrease during the boom phase of the real estate cycle, the common perception is that the boom will most likely last for quite some time. Strategic investors will be more interested in watching the key drivers when interest rates change. Interest rates alone do not impact housing prices in isolation. An increase or decrease in interest rates would impact value only if other key drivers that impact supply and demand were also in play. [2011] - Don R. Campbell

The boom phase is the most exciting phase of the real estate cycle for inexperienced real estate investors. It is less exciting for strategic investors, who will capitalize on the momentum of the boom, with its higher values and rents, but who also know that the late slump and early recovery phase offer better opportunities in terms of new investment purchases. The longer and stronger the boom, the greater the likelihood of a more severe downturn during the inevitable slump. [2011] - Don R. Campbell

The severity of the slump will depend on the primary factors underpinning it, which typically fall into the following two categories: 1. Overbuilding - due to too much construction. 2. Overpricing - where real estate becomes unaffordable for too many people. Slumps typically initiated by overbuilding are less severe than slumps initiated by overpricing. Slumps led by both overbuilding and overpricing are particularly severe. As a slump phase begins, real estate affordability is adversely affected by tightening credit and prices rising to unrealistic levels. Ironically real estate values continue to increase initially, albeit more slowly than in the preceding boom. Here, rents decrease and vacancy rates increase, clearly at odds with values that continue to rise. [2011] - Don R. Campbell