So, you think the house market is Hot? Have you tried….
Both communities continue to show strong upward pressure in terms of sales volumes and price. For March alone, the average price on 84 sales was up 18% to $465,892. Campbell River was very similar with a 19% increase to $399,456.
The vacancy rate in the rental market is at a record low level. This is pushing rents up and is forcing more buyers into the market. In some cases, it is cheaper to own than it is to rent.
The price of residential investment properties is determined by two factors; net income, and a multiplier, called the Capitalization Rate or ‘Cap Rate’. Understanding the upward pressure on rents, which most often reflects higher net incomes, is straight forward. The issue of Capitalization rates is somewhat counter intuitive; the lower the Cap Rate, the higher the value or price of the investment. The low interest rate environment has been pushing Cap Rates down for some time. We believe that this trend of low, and lower interest rates will continue.
Investors stand to benefit from rising rents and lower Cap Rates. Another bonus is that developers may be coaxed back onto the scene.
A word from the land of rice and curry……
Some readers may be aware of my involvement with India which started as a supporter of a small children’s home about ten years ago. Strong friendships have developed over the past decade. Together with my family our desire to help the poor in India has re-focused to healthcare. To this end, we traveled to India in February to launch Mummy’s Village, Spreading Health in India. We are very excited about this model which was developed by some English friends with great success in Cameroon. To learn more or to follow our progress check out MummysVillage.com