Life and Real Estate

From heavily researched findings to light hearted musings it can be found in Life and Real Estate.

April 7, 2017

Market Report April 2017

Oh what I would give for a crystal ball this spring - for both the weather and the real estate market!

We are currently just a hair behind total number of sales compared to last year but we are way ahead in terms of price. The average sale price is up almost $2,000 from last month and up a whopping $73,000 from this time last year! We are also seeing an increase in the list to sell ratio with homes now selling at an average of 98.28% of list price compared to 96.24% last year. Average days on market has taken a dive to 45 days from 57 days this time last year. As well, active inventory is only 77% of what it was this time last year!

March 2017 vs March 2016

Prices are up 12% 
Inventory is down 23% 
Sales volume is on par

I believe the next three months will be very interesting to watch. Will this market maintain its sales momentum in the face of rising prices and a dwindling inventory? At what point will prices hit the ceiling? It all hinges on inventory. If we don't start seeing more listings soon (specifically single family detached) prices are going to keep going up while sales volume will likely match that of 2015. If we do start to get more listings than I suspect our sales volume will match that of 2016 and prices will remain steady. Of course this is just my best educated guess. If anyone tells you that they know for certain what will happen just walk away because they are lying to you.

Kind Regards, 
Scott Livingstone

Posted in Market Conditions
Feb. 17, 2017

Kelowna Mountain up for Sale

Do you remember Kelowna Mountain?  For those of you who are new to Kelowna it was an ambitious project started by Mark Consiglio that aimed at building a large recreation park above Kettle Valley.  The developer, Consiglio, claimed that Kelowna Mountian would boast a range of activities from skiing to mountain biking - and even a large suspension bridge.

The 320-acre property has since fallen into foreclosure and will be up for sale soon.  A 160-acre section of the property is already listed with the list price of $7,995,000. Consiglio is reported to owe $4 million on the property.

This is not the first time Consiglio has been in trouble with a bank.  He is reported to owe money on other development projects in the Okanagan and in Ucluelet. 

As it is a court ordered sale once a qualified buyer is found the sale will go before the courts for approval.  On that day, in court, any member of the public will be able to step forward and submit a sealed bid.  However, unlike a conventional real estate transaction, once a bid is accepted by the courts the deal is firm and binding.  There is no subject removal period and all due diligence must be done before hand.


It will be interesting to see what the next developer will try to bring to Kelowna Mountain.  There is no promise of what they will do but I do not expect a sprawling residential development.  The City of Kelowna is trying hard to create density near the downtown area and prevent the expanse of urban sprawl up into the hill side.  This is evident in the new RU7 zoning recently created by the city (RU7 allows upto 4 residences on a single parcel).

What do you hope to see done with Kelowna Mountain?  Leave your comments below!


Kind Regards,

Scott Livingstone 



Posted in In the News
Jan. 23, 2017

Why Realtors are Not Responsible for Rising Real Estate Prices

It was initially shocking the first time I encountered someone who placed the blame of the rising real estate market squarely on the shoulders of real estate agents.  After a few more such encounters I began to think about it and the more I thought about the more alarmed I became.  The reason for this unwarranted blame is the general lack of financial and economic education - as well as the strong human desire to find an immediate cause for one's problem and place blame.

The basic economics of real estate are like that of any other commodity which means supply and demand control everything - not real estate agents.  When supply goes down and demand goes up prices go up.

Supply: In Kelowna our supply is becoming limited by a number of factors.

1. Population growth exceeding the rate of development  

2. The local geography limits the available land for development

3. Zoning restrictions such as Agricultural Reserve Land further limit the available land for development 

Demand:  In Kelowna our demand is rising because...

1. Population growth means more people looking to buy

2. Low interest mortgages means that people are able to pay much more for a home

3. Influx of foreign buyers has also increased the overall demand for real estate 

Of course, the real concern here is that the general public is misinformed about basic finance and economics.  We live in a democracy and public approval has a big influence on the economic policies of our government.  If that influence is misguided and uneducated then we have a problem.  It is most certainly time for our government to start implementing financial and economic courses as part of the mandatory school curriculum.

Most recently we have an example of good economic policy followed by not-so-good policy.

The Good:

The new mortgage stress test that makes it more difficult to qualify for mortgages.  In effect this limits the amount of available capital for purchases real estate which reduces the overall demand.

The Not-So-Good:

The BC Home Owner Mortgage and Equity Partnership Program which aims to help first time home buyers with their down payment.  At a first glance it seems like a good idea - let's help people who are renting buy a house!  However, in the long run it will actually increase the price of real estate by increasing the demand.  Demand will go up from more available capital as well as more people now able to purchase.  As well, the money that the government is handing out is actually ending up in the pockets of developers and sellers - the first time home buyers are simply receiving more debt.  So, property prices will continue to rise and you will now have to take on more debt to afford a home.

Recommended books to improve your financial and economic literacy:

Economics in One Lesson

Rich Dad, Poor Dad

The Road to Serfdom


Kind Regards,

Scott Livingstone

Jan. 16, 2017

The Value of Home Renovations

Home renovations and sweat equity can be a difficult thing to value when comes to selling your home.  It is all too common to overestimate the value added by that new coat of paint, granite counter tops, or hardwood floors.  While many projects will certainly add value to your home it is seldom that you will see a 100% return on your investment.  

When doing home renovations it is important to consider why you are doing it.  If you are doing it simply because you plan to be in the home for many years to come, and you want the personal enjoyment that comes with the new renovations, then carry on and ignore this article.  However, if you are hoping to see some return on investment please know that you might not get it.

There are many things to consider when renovating your home.

1. How nice are the other homes on the block?  

If you renovate your home so that it is the nicest on the block you will likely see a smaller return on investment.  The reason is people looking for homes in that area will have an "area price" in mind and will not be willing to pay much over that.  The best scenario would be if your house was by far the worst on the block and you were able to renovate it to just above the local standard - this is what house flippers do.

2. What is the condition of your existing house?

Minor improvements on an already nice home are going to see the worst return on investment whereas sprucing up something that hasn't been touched since the late 70's will yield a much greater return.  It is simply because putting in new countertops will cost the same regardless of what counter tops were there before.  In some cases it might best to hold of on renovations for a few more years until the existing features are either worn out or severely outdated. 

3. Everyone has their own personal taste.

In some cases a prospective buyer might absolutely hate the color you chose for the tile in your newly renovated bathroom and will plan to replace it as soon as they move in.  In such a case the new tile does not represent added value but an additional cost.  There is no real hedge against this, save for sticking with fairly safe contemporary styles, and it is a something that every would be renovator must consider before spending their money.


For even more on home renovations and the potential return on investment check out this article.


Kind Regards,

Scott Livingstone 

Posted in Home Owners
Jan. 11, 2017

Tax Season - Yay!

The 2017 fiscal year has begun and with it the accounting for 2016 must now commence. If you have not already received a letter from BC Assessment you are certain to be receiving one soon and hopefully none of you will find the contents of that letter too surprising. Across BC there has been an overall increase of 25% to property values. While some areas have seen a greater increase than others, up to 50% in some areas of the lower mainland, the average is 25%. Viewed in this light it would appear that Kelowna got off easy with an average increase of only 13.18% in assessment value while market value has seen an actual increase of around 18%-22%.

It is important to note, as most of you may have noticed, that at no time this past year has someone from BC Assessment been to your home. With that in mind it is important to consider if you would like to appeal your current assessment. Appealing your assessment can have one of two effects:

1. The assessed value of your property will be LOWERED (along with your property taxes) 
2. The assessed value of your property will be RAISED (along with your property taxes)

So, before you decide to have your property reassessed please contact us and we will be happy to help you by conducting a detailed property analysis to determine the accuracy of the recent tax assessment (a complementary service, of course).

It is also worth considering if you plan to sell within the next year or two as an inflated tax assessment will allow you to justify a higher sale price. A buyer bringing an offer on your property will be fully aware of, and influenced by, the assessed value.

If you would like to compare your assessed value to that of your neighbours click here to search BC Assessment by address.

"... in this world nothing can be said to be certain, except death and taxes.” 
-Thomas Edison

I suppose that we should all settle for taxes and be thankful for it.

Kind Regards,

Scott Livingstone

Posted in Market Conditions
Jan. 3, 2017

Government Funded Loan for First Time Home Buyers - Swing and Miss!

Starting in January the BC Government will be introducing a first time homebuyer loan aimed at helping first time homebuyers with their down payment.  The loan will match a buyer's down payment up to a total of $37,500.  While this may be good news for a few first time home buyers it is most certainly going to come at a cost to everyone else. The BC Government estimates that it will disperse around $700 million in loans of the next 3 years.  As the loans are interest free for the first 5 years the Government is also looking at a cost of forgone interest and bad debts of around $150 million.  The loans will only be available to those few first time home buyers who are able to qualify for a CMHC insured mortgage under the new stress test rules which means this money is being allotted for a very specific group of people.

This policy also seems to contradict recent rules, such as the new stress test and the new foreign buyer tax, aimed at reducing the amount of capital available to the housing market.  The hope of reducing available capital for real estate is to slow, and hopefully stop, the rapid rise of housing prices.  Since most of this money will effectively be put into the hands of real estate developers and existing homeowners (the money will be lent to buyers who will in turn pay it to the seller) this policy actually furthers the consolidation of wealth by creating more debt for first time home buyers, contributing to the increase of housing prices, and putting taxpayer money into the hands of the already well off (current home owners and developers).

So, while a few first time home buyers, those with an already high income who have yet to save for a down payment, will benefit from this everyone else will have to pay for it with their taxes - including those who rent and do not have a high enough income to qualify for the loan.  Oh, and more money will end up in the hands of those who are selling or developing land (aka: the already well off).  


Who thinks that we would all be better off it that $700 million over three years was simply put into our schools?

Kind Regards,

Scott Livingstone

Posted in In the News
Dec. 11, 2016

The Importance of a Winter Sport

As business slows down for the holidays I have become aware of how thankful I am for winter sports.  The winter is dark, cold, and economic activity is sparse.  What better thing to do than to engage in some winter sports?  

I am constantly blown away that there are people who live in Canada who do not practice a winter sport.  Of course winter is horrible if you have nothing special to occupy your time with.  A good friend of mine spent years of her life, living in Edmonton, dreading winter throughout autumn and hating it when it had finally descended.  It was not until she started to ski and ice climb that she finally realized what a magical time of year it can be.  

We are so lucky to be living in a part of the world with such distinct seasons that we can experience a true winter!  Don't make the mistake of thinking that the ski hill is your only option.  Ice skating on a frozen pond is a truly Canadian thing that must be experienced by all that live here.  There is also sledding, snow mobiles, ice fishing, building forts and snowmen, cross country skiing, and snowshoeing; all things made possible by the magic of winter!

By the time January rolls around the festivities will have been dispensed with and without a winter sport getting through January and February can be a real challenge.  So, do yourself a favor and instead of fighting the snow and ice take advantage of it!

Posted in Musings
Nov. 29, 2016

Why Financial Literacy Needs to be Taught in Schools

A recent study, in Canada, suggests that University graduates raised in low income homes have roughly the same financial literacy as that of High School students raised in high income homes while University graduates raised in high income homes have a mucher higher financial literacy than other University graduates raised in low income homes. This effectively helps to further the financial class gap as the advantages of coming from a high income family go beyond simply having more wealth but also include more knowledge and experience in dealing with money. 

We live in a free market society where elections hinge on a given party's economic policy and where one's knowledge of finance could mean the difference between financial success or growing debt.  It is clear that finances are an integral part of our society that affect us in our day to day lives.  Why is it then that we are not taught about it in grade school?  Many young adults do not understand exactly what a mortgage is ,or how it works, or even how to file taxes.  If the government would like for us to file our taxes wouldn't it be nice if they taught us how to do it?  

Hopefully some change is forthcoming.  Financial literacy may be making its way into the mandatory curriculum for Ontario schools.  For more information please read this CBC article.  I would like to see these changes to basic education take place across the country as I believe they could help to elevate our citizens in not only their personal finances, but perhaps, even make them more informed voters.

I encourage anyone, no matter which province you are from, to sign the petition for adding financial literacy to curriculum in Ontario.  Maybe, if this gets enough attention and happens for Ontario schools it just might make its way out West to the rest of us. 

I am sure that many of us can think of a friend or relative who has received a financial windfall.  I am also sure that we have all seen that friend or relative, through lack of education, handel that windfall poorly and now have nothing left to show for it.  Just think if they had been properly educated and financially literate?  Perhaps they might now own their home or maybe they wouldn't be living paycheck to paycheck like they are now.  There is no denying the importance of financial literacy so if you failed to receive a financial education it is now up to you to educate yourself.  I would encourage you to start by picking up a book, there is no shortage of them, that focuses on the basics of finance.  As well, I will be covering many basic economic principles in my blog.  Yes, our school system has some shortcomings but in the modern era, with so much information at our fingertips, the responsibility of furthering education will ultimately fall to you. 

Posted in Musings
Nov. 21, 2016

Economics 101 - Money Vs. Capital

This is the second instalment in a series of lessons on basic economics and how they relate to the real estate market. Please click here to view all available lessons. 

Money and capital are two independent concepts that are often treated as interchangeable when they are not.  In essence capital is real wealth whereas money is simply a way of measuring wealth.


Pieces of paper printed by a governing body.  While money is affected by supply and demand -  if you print a whole bunch of money the supply will increase which will decrease the value of money (known as inflation) - it is not capital because it has no intrinsic value or use.  If a country devoted all of its production to printing piles of money its only real capital would be the machinery and resources used in the production of the money.  Money, by itself, can not increase employment or standard of living as it can not feed you, clothe you, shelter you, or entertain you.

This also means that the purchasing power of money is not fixed and future money is typically worth less than present money.  In this way inflation favors debtors and not lenders.   


Anything of value that is not money can be thought of as capital.  For example, every item in your home can be thought of as capital.  While most of it is worth little to nothing - 2nd hand cloths, old books, old furniture - some of it has value - the house, the land, your car.  Most of these items will depreciate in value from either obsolescence or wear and tear and will be worth substantially less than the original purchase price.  However, a few of these items may appreciate in value - a classic car, an original work of art, land value - from either a decrease in the supply (they don't make '69 Mustangs anymore), an increase in demand (population growth in a given neighbourhood/city), or a combination of the two (classic road bicycles have grown in popularity with "hipsters"and are no longer produced).  

Another example, which has become increasingly valuable in today's economy, is intellectual property and digital rights.  These are the rights of use to ideas, franchises, apps and websites.  The value of this less tangible capital is based less on supply (the supply of an idea or app is infinite) and more on demand, popularity, overall use, and market share.

Pop Quiz:


Q: Who is worth more?  Person A with $25,000 sitting in an RBC savings account getting 0.5% interest or Person B with $0.00 in their savings account who put $25,000 down on a $450,000 investment property where the rent is covering the mortgage?   

A: The forecasted rate of inflation for 2017 is 2% meaning that Person A, while gaining money (.05%), is actually losing capital as the real value of their money decreases.  Person B has not only been adding to the equity of their initial down payment, solely from rental income, but the value of their property is likely to have gone up, at the very least, proportional to the rate of inflation.  It is also likely that they are getting an extra couple hundred dollars a month from the rent after mortgage payments.  Person B has increased their money and their capital.  Person B may be in debt but their debt is for money and not capital so while the value of their property (capital) increases the value of their debt (money) will decrease.


"If you owe the bank $100 that is your problem.  If you owe the bank $100 million that's the bank's problem" 

-J. Paul Getty 

Posted in Economics 101
Nov. 15, 2016

Economics 101 - Supply and Demand

This is the first instalment in what will become a series of lessons on basic economics and how they relate to the real estate market.  Please click here to view all available lessons.

Supply and demand is the most basic concept of economics underlying every free market economic theory - and even many non-free market theories.  It will help to think of demand as "purchasing power" or the total amount of capital available for a given product.  With the current low interest rates for mortgages there has been an increase in the available capital for real estate increasing the purchasing power, the demand, of the consumer.  This is important to note because the demand for real estate can increase without an increase in population, or an increase in the actual demand of more individuals requiring housing.  An increase in available capital, in this case from low mortgage rates, can effectively increase the demand, and the price, of housing simply by increasing the purchasing power of the consumer.    

Supply is essentially the rate of production of a given product.  In real estate supply is produced, like any other industry, chiefly by new production.  Yes people do sell their homes and move, but that family will simply occupy a new home, and while they may have added to the supply of town A they have reduced the supply of town B resulting in a net zero gain - the exception being an estate sale from a death.  So, from a macro point of view the only way for the supply of real estate to increase is for new construction to take place.  On a micro scale, viewing only one area, supply can be increased if an industry collapses and the population of the area drops - an old mining town now turned ghost town.

It is often said, even quoted on the front page of my website, that land is finite in its supply.  If that is true then how can more supply be created?  New supply of land can be created by the instalment of infrastructure and the creation of industry.  Before the Connector Hwy was built, linking Kelowna with Vancouver, the land in Kelowna was worth very little and was minimally developed - low supply and low demand.  After the Connector was built the demand for real estate went up prompting new construction which increased the supply.  Currently, in Kelowna, the city is trying to approve a new zone, RU7, which will allow up to 4 residencies on a given parcel of land.  If this new zoning becomes a reality developers will be able to build more on existing properties increasing the supply of real estate without using more land.  So while the surface of the earth may be finite we are still along way off from reaching any real practical limitations in our ability to increase the supply of real estate.

There are of course more complications involved than considered in this brief exposition but they would go beyond the scope of this lesson.  The most important thing to take away from this lesson are:

1. Supply of real estate is fluid and not fixed.

2. Demand is a combination of actual demand (number of houses needed) and purchasing power.

3. I did not mention this above but in real estate supply tends to lag behind demand by a couple a years creating peaks and valleys in the real estate market. 



Scott Livingstone

Posted in Economics 101