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The Three Little Pigs and Real Estate Investing

Market Updates | August 5, 2020

The Three Little Pigs is a favourite fairy tale amongst many about three pigs and their real estate woes and successes. As the familiar story goes, the three pigs each decide to build a home for themselves as a means of protection from the Big Bad Wolf who lives in the woods nearby. Transport from fairy tale land to reality… As real estate investors, we also have many “wolves” living in the woods that we need to be aware of, plan for, and build protection against. These “wolves” could be things like interest rates, job loss, poor GDP, lack of immigration, government policies, rental restrictions and policy changes, strata insurance premiums, taxes, and other unforeseen “wolves” like COVID-19.    

Each of the pigs in our fairy tale has a different idea of design and materials, as well as a difference in experience. When constructing their homes, each pig applies their best ideas and practices to ensure their safety against the Big Bad Wolf. The first pig can be presumed to be the least experienced of the three as he constructs his house out of straw. The second pig seems to have a bit more experience seeing as his choice of building materials are sticks. But the third pig shows that he is the most knowledgeable and experienced as he builds his house out of bricks. 

All three of the pigs are excited to build their dream homes and each pig is convinced that they are building the absolute best house for themselves. As an investor-minded realtor, I meet newbie investors that have great enthusiasm and intentions to build a fantastic portfolio. However, with little experience or knowledge, they often have their dreams crushed by poor investing decisions, much like the first and second pig from our fairy tale. But not is all doom and gloom; I also meet super wise and experienced investors that have created generational wealth over decades of investing. 

The way in which each pig constructs their home can provide us with a valuable lesson with investing. The first pig uses straw to build his house. The straw material makes for a quick and easy build, allowing the pig to move into his home before the two other pigs and live the good life, or so it appears. The second pig uses sticks to build his home—a stronger building material than straw. Construction takes a bit more time than the first pig, and the cost for materials is also more expensive. The third pig considers all the factors and takes great pride in constructing a home that can weather any kind of storm. He is aware that the cost will be higher and the construction time will be longer than the other two pigs, but he is committed to building the best home possible. 

We all know how the rest of the fairy tale goes… The Big Bad Wolf comes and blows down the houses of the pigs who built their homes out of straw and sticks. But when the Big Bad Wolf gets to the third pig’s house that is made out of bricks, the Big Bad Wolf cannot blow it down. 

I am sure that many of you can identify as one of these little pigs in your own personal experiences. I have related to these pigs many times throughout my life. There have been times when I have been the first pig; hurrying to accomplish, build, buy, or invest without first gathering the facts. The result? Not being fully prepared and getting devoured by the “wolves.” But I have also been the third pig when I have planned and strategized for the possibility of the “wolves” knocking on my door trying to get in. In those times, I have been able to withstand the “wolves.” 

So as investors, which pig do we need to be? We need to be the third pig; the one who plans accordingly to weather any real estate storm. Like the third pig, we need to be aware of the costs and time it takes to build a solid, secure, and impenetrable portfolio. In doing so, it can benefit one’s family and future generations.   

If you are new to investing, or you are buying your first, second, or forever home, seek out, research, and find a wealth builder/realtor that can help you build a home out of “brick.” This wealth builder/realtor will understand the drivers and the influencers of the market. The realtor should be hyper-local on all things in regards to the market: job growth, inventory numbers, sales volume, city or municipal zoning and growth initiatives, as well as local, provincial, federal policies and/or changes that may be implemented in the future. 

In the end, the happy ending goes to the third pig who studied, strived for, and built the best house possible. If you want to be like that pig and achieve your happy ending, reach out to me. Together, we can build a portfolio that cannot be blown down by the Big Bad Wolf.  

The July market throughout the Vancouver and Fraser Valley area was very strong. The pent-up demand from buyers and sellers being put on COVID pause throughout the spring months of March, April, and May, pushed our spring market into the summer months. Also, the incredible low-interest rates being offered by the big five Canadian banks with 5-year money in the 2% range. Then factor in the low inventory for many of the areas and a Sellers’ market is created! The property type to see the most significant change in the STR numbers (Sell Through Rate) month over month was single-family detached homes. The trend continues as homeowners are looking for more personal space or MPS. This trend of MPS, I believe will continue until a vaccine is developed and proven to be safe, this may take years, not months like many of us are hoping for. The STR numbers for townhomes continue to be strong with a solid Sellers’ market, while condos across the region seem to be holding their STR pattern from the month of June. 

Review the monthly stats and please reach out to our team if you have any questions regarding the market or stats.  Like the third pig who studied, strived for, and built the best house possible. The eXimus Real Estate Team want to help you achieve great things through real estate investing. Together, we can build a portfolio that cannot be blown down by the Big Bad Wolf. 

Click Below To See The Fraser Valley Stats:

Fraser Valley STR Stats

Click Below To See The Vancouver Stats:

Vancouver STR Stats

STR (Sell Through Rate) Formula = Sales ÷ Active Listings + Failed Listings + Sales

 

Randy Dyck
Personal Real Estate Corporation
604-807-4366 or randy@eximus.com