Are you anxious about the real estate market in 2019? Co-founder & Principal of Domus Homes Richard Wittstock isn’t and chances are he knows more than you. Richard joins Adam & Matt to discuss his fascinating 30-odd-year trajectory through the Vancouver real estate market, cutting his teeth during the deep recession of the 1990s and riding out the bear and the bull markets ever since. And he is excited to buy this year! Get Richard’s take on the current state of market and where it’s heading, his purposeful approach to buying and developing land, and the best advice he ever received as a novice investor. We have wanted to talk to Richard for a long time and this conversation was worth the wait.
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Richard is the Principal & Co-Founder of Domus Homes, a developer in greater Vancouver. He was born and raised in the lower mainland, grew up in Ladner, South Delta. He is a Dad and spends a lot of his free time coaching soccer and spending time with his wife and kids. He graduated from the Sauder School of Business in 1992 and has been involved in the real estate industry ever since.
About Domus Homes:
Richard started Domus homes with his two partners, Talal Yassin and Riad Yassin. Together they have decades of experience in the real estate industry. Domus approaches development a little bit differently than many developers. They try to make sure all projects are a win for the community as well as profitable for the Company. Recently, they have made an effort to include open court yard and large walkways with hopes that this will encourage a community feel and combat social isolation. They call this pro-social design, similar to active design that is promoted by the City of Vancouver. Generally, they seek to have a mix of housing that supports affordability and families. Superior urban design and a superior product are things the Company strives for.
On how he got his start in real estate:
Richard’s father was a bricklayer and realtor who worked with the Block Bros. in the mid 1960’s. From an early age, Richard was interested in buildings and thought he would like to be an architect. After enrolling in business school, he decided to pursue a career in development. He credits his father, some amazing professors and other mentors throughout this career for great advice and guidance. He made it his job to learn all about developments, new developments, feasibility studies in the 1990’s. He worked for an established development company during his formative years and eventually chose to go out on his own and forge his own path.
What was the feeling of the real estate market in the 1990’s:
There was a huge recession in the early 1990’s that was difficult on everyone. Things didn’t start to turn until 2000 or 2001, which is when Richard decided to go out on his own. He credits cutting his teeth in a down market as teaching him a lot about real estate and market cycles. This allowed him to hone his skills and provided valuable work experience.
His thoughts on the current economic climate:
He feels the macro climate is uncertain from a global context. He feels that Vancouver is somewhat insulated from the rest of the world. We are coming to the end of the current market tightening cycle and interest rates are poised to be reduced. He doesn’t have a crystal ball, but he feels that uncertainty in the world will force the Canadian central bank to hold off on any further interest rate increases in order to support the economy. He feels things are challenging in China, the USA and Europe which will inevitably affect interest rates in Canada.
On when he decided to go out on his own:
Richard was working in a major corporate development job in 2010 and decided to forge his own way and start something new. He started with a small duplex’s in Kitsilano. He was also involved in the Trapp & Holbrook project in downtown New Westminster. Soon after this project, Domus homes was formed. Domus works well because the 3 partners all have complimentary skill sets in development, capital raising and construction.
On why you like Real Estate:
Richard likes everything about buildings. Real Estate provides a constant opportunity to learn. He learns something every day, even 25 years in. When you are building a major development, there is finance, marketing, approvals, HR, engineering, design, literally everything. If someone wants to get into the development business, you can always find a niche that you would be good at.
On how developers impact peoples lived experience through building design:
Buildings will be around for 60 years and need to be designed to meet people’s needs. Richard feels that he needs to be able to see the finished product and still be proud of it 10, 20 years later. We have to build a dense environment in Vancouver for future housing needs, so the density needs to be done well. This includes a building that contributes to the street, with a high level of amenities.
Challenges facing Vancouver:
A recent challenge is to get buildings approved in municipalities. With a strong economy, like we do in Vancovuer, the market needs to be able to respond. If developers are waiting 2-3 years to get started on a project, prices will enviably increase while the supply is not available when the market needs it.
On where he sees the market right now:
Looking forward to 2019, Richard is bullish on the market. Domus will be looking to aggressively make acquisitions. Domus is looking to refill their pipeline. The local economy is still strong, driven by strong job growth and strong immigration. This signals to him that the market will continue to be strong with massive demand for housing. The housing market is still undersupplied, so additional supply is needed. The current market is similar to 2012/2013 in Vancouver. With the population continuing to grow, people need to live somewhere, which will propel the market forward. Interest rates will moderate a bit and he feels we have had a strong start to the year. Even if sales were soft, at the worst, we would be in a balanced market. He doesn’t think there will be any upcoming forces to push the market down, as some are predicting.
On areas he is excited about in greater Vancouver:
People want to live in every corner of the lower mainland now, so that is not the issue. Domus is focused on areas that they feel they can get projects approved quickly and efficiently. New Westminster is one of these areas. Some other areas of the city are not as inviting to development even though there is a demand to live there.
What is the attraction of purpose built rental for Domus:
Domus takes a long term view of their success. A portfolio of income properties is a great way to do this. This allows diversification and a way to smooth out any lumps in the for-sale market. This keeps them busy and able to be a long-term owner in this market. Generally, rental is more challenging to be approved in most municipalities for some reason, taking 2-3 years for approval in most areas.
On his personal real estate portfolio:
Richard was focused on his personal portfolio a lot more in the past before he started Domus. He knew he would need to accumulate some properties so that he could leverage his later developments. He bought his first condo in 1995 and a couple of more in 1999. His original goal was a small 10 unit apartment building on South Granville, but he was able to accumulate the same number of units over a longer time frame. He retains a unit or two in each development. Now that he has a family, he doesn’t have the time to manage all of his units, so he has sold some recently.
Advice for people buying in today’s market:
The best advice that Richard ever received was buy as much real estate as you can afford as soon as you can and get yourself into the market. You should also look at the rental income, cap rates and other factors, but generally over the long term, buying into the market as early as possible is great advice.
- Favourite neighbourhood in Vancouver: Kitsilano, but close 2nd is Mount Pleasant; honorable mention to New Westminster
- Favourite bar or restaurant: Tie between La Quercia and Savio Volpe; honorable mention to El Santo in New Westminster
- First place he brings someone from out of town: Stanley Park Sea Wall or Grosse Mountain
- West-side mansion or downtown penthouse: Downtown penthouse
- Something he’s purchased in the past year under $500 that’s changed his life: Sous Vide Machine (unbelievable steaks, chicken, eggs)
To find out more about Richard Wittstock and Domus Homes, visit http://www.domushomes.ca/