Effective January 1, 2018, buyers of uninsured mortgages will be required to prove their finances based off the Bank of Canada's 5 year benchmark rate or reflective of their contract mortgage rate with and additional two percent points.  
 

 

Overview of Changes effective January 1, 2018

 
A new minimum qualifying rate (stress test) for uninsured mortgages will be set
 
The minimum qualifying rate for uninsured mortgages will be the greater of the five-year benchmark rate published by the BoC or the contractual mortgage rate +2%.
 
Lenders will be required to enhance their LTV measurement and limits to ensure risk responsiveness
 
Federally regulated financial institutions must establish and adhere to appropriate LTV ratio limits that are reflective of risk and updated as housing markets and the economic environment evolve.
 
Restrictions will be placed on certain lending arrangements that are designed, or appear designed to circumvent LTV limits
 
A federally regulated financial institution is prohibited from arranging with another lender: a mortgage, or a combination of a mortgage and other lending products, in any form that circumvents the institution's maximum LTV ratio or other limits in its residential mortgage underwriting policy, or any requirements established by law.
 
 
What does this mean to consumers?  Approx. 20% less qualifying power.  For example if you qualified for a mortgage of $500K previously you will now qualify for 100K less.
 
If you or anyone you know is thinking about buying or refinancing their existing mortgage to pay out debts, you may want to consider this prior to the new rules coming into effect Jan.1 /18.

Home buyer demand continues to differ based on housing type

Apartment and townhome activity is outpacing the detached home market across Metro Vancouver. This activity helped push total residential sales above the historical average in September.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in the region totalled 2,821 in September 2017, a 25.2 per cent increase from the 2,253 sales recorded in September 2016, and a 7.3 per cent decrease compared to August 2017 when 3,043 homes sold.

Last month’s sales were 13.1 per cent above the 10-year September sales average.

“Our detached homes market is balanced today, while apartment and townhome sales remain in sellers’ market territory,” Jill Oudil, REBGV president said. “If you’re looking to enter the market, as either a buyer or seller, it’s important to understand these trends and use this information to set realistic expectations.”

There were 5,375 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in September 2017. This represents a 12 per cent increase compared to the 4,799 homes listed in September 2016 and a 26.6 per cent increase compared to August 2017 when 4,245 homes were listed.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 9,466, a 1.2 per cent increase compared to September 2016 (9,354) and a 7.5 per cent increase compared to August 2017 (8,807).

“Detached homes made up 30 per cent of all sales in September and represented 62 per cent of all the homes listed for sale on the MLS®,” said Oudil. “This dynamic has slowed the pace of upward pressure that we’ve seen on detached home prices in our market over the last few years.”

For all property types, the sales-to-active listings ratio for September 2017 is 29.8 per cent. By property type, the ratio is 14.6 per cent for detached homes, 42.3 per cent for townhomes, and 60.4 per cent for apartments.

Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,037,300. This represents a 10.9 per cent increase over September 2016 and a 0.7 per cent increase compared to August 2017.

Sales of detached properties in September 2017 reached 852, a 27.9 per cent increase from the sales recorded in September 2016 (666), a decrease of 33 per cent from September 2015 (1,272), and a decrease of 32.9 per cent from September 2014 (1,270). The benchmark price for detached properties is $1,617,300. This represents a 2.9 per cent increase from September 2016 and a 0.1 per cent increase compared to August 2017.

Sales of apartment properties reached 1,451 in September 2017, a 19.1 per cent increase compared from the sales recorded in September 2016 (1,218), a 5.1 per cent decrease from September 2015 (1,529), and a 22.1 per cent increase from September 2014 (1,188). The benchmark price of an apartment property is $635,800. This represents a 21.7 per cent increase from September 2016 and a 1.4 per cent increase compared to August 2017.

Attached property sales in September 2017 totalled 518, a 40.4 per cent increase compared to the sales recorded in September 2016 (369), a 4.8 per cent decrease from September 2015 (544), and an 11.6 per cent increase from September 2014 (464). The benchmark price of an attached home is $786,600. This represents a 14.5 per cent increase from September 2016 and a 1.1 per cent increase compared to August 2017.


 

BC market sees sluggish end of summer stats

Prices may be recovering, but buyers in British Columbia just aren’t as enthusiastic as they once were.

“BC home sales in August remained unchanged from July, on a seasonally adjusted basis,” said Cameron Muir, BCREA Chief Economist. “Strong economic conditions are underpinning demand.

However, rising home prices combined with upward pressure on mortgage interest rates is expected to temper demand over the balance of the year.”

Unit sales are down year-to-date in 67% of British Columbia’s markets, according to the British Columbia Real Estate Association, with Vancouver seeing the most precipitous decline at -20.3% YTD.

Overall, the province has seen a total of 73,267 sales this year, down 15% YTD. 

The average price of a home in the province -- $706,839 -- is also down this year by 1.1% YTD.

Dollar volume is also down.

“Year-to-date, BC residential sales dollar volume was down 15.9% to $51.8 billion, when compared with the same period in 2016,” BCREA said in a release. “Residential unit sales declined 15.0 % to 73,267units, while the average MLS residential price was down 1.1%to $706,839.”

The silver lining, however, is that the average price is up in 11 of 12 of BC markets, with Vancouver experiencing the only drop in average price.

It should be noted that these declines could be the result of Vancouver’s foreign buyer tax, which was implemented in August of last year. That, and the market has obviously been impacted by last year’s federal mortgage rule changes as well.


 

Home sales expected to fall 5.3% in 2017, 10% in Ont. and B.C.: CREA

The Canadian Real Estate Association has downgraded its sales forecast this year as national home sales slipped 9.9 per cent in August compared with a year ago.

The association expects sales to decline by 5.3 per cent year-over-year to 506,900 changing hands this year, or 20,000 fewer than previously forecast in June.

It projects sales in British Columbia and Ontario to fall by about 10 per cent in 2017, compared to record highs set in 2016.

The association says sales in August were down in nearly two-thirds of all local markets, led by the Greater Toronto Area and nearby housing markets.

However, the average price for a home sold last month was $472,247, up 3.6 per cent compared to a year ago.
Excluding Greater Vancouver and Greater Toronto, the national average price was $373,859

The Canadian Press


 

Brace yourself for five years of glacial growth in Canada’s housing market

Single-family house prices may be overvalued by as much as 60 per cent in Toronto, but cooling measures may take a bigger bite out of markets away from the country’s largest metro area, says a new report.

Moody’s Analytics maintains the brakes are being put on the housing market across the country and Canadians need to prepare for “several years of retrenchment” with at most as 1.3 per cent annual price growth per year over the next half a decade.

“Exact turning points are difficult to predict, but the combination of restricted mortgage lending, taxes on foreign purchases in the largest metro areas, and the expectation of higher mortgage rates means that house prices are likely to experience a slowdown in the next few years, especially if speculative home purchases in Toronto and Vancouver are reduced or shut down,” writes Andres Carbacho-Burgos, in the eight page report, released Tuesday.

Meanwhile, ratings agency DBRS said in a report Tuesday that booming housing markets in British Columbia and Ontario boosted job growth over the past decade in sectors such as construction, home-related retail and real estate by 28 per cent — faster than other parts of Canada. DBRS said if house prices fall dramatically, other sectors of the economy should be able to absorb those jobs thanks to strong economic growth and steady population gains.

In the past two months, the Bank of Canada has raised the overnight lending rate 50 basis points, while the prime lending rate at most financial institutions has jumped from 2.7 per cent to 3.2 per cent. Long-term rates have also been trending upwards, and some suggest the central bank is not done and will raise rates another 25 basis points in October.

“Affordability as measured by the median dwelling price to median family income ratio is also close to a record low, so it is hard to see house prices maintaining the same momentum as before,” the Moody’s report states.

Consumers with insured loans backed by Ottawa have faced tougher lending restrictions for about the past year but the Office of the Superintendent of Financial Institutions is now looking into cracking down on non-insured mortgage loans, the portion of the market with 20 per cent or more equity in their own home.

Moody’s Analytics does say the effects of tougher lending standards, higher mortgage rates and policy interventions from provincial governments will make reactions uneven across the country.

“Greater Toronto is likely to maintain moderate house price growth, while the more policy-restricted market in Vancouver will lead to prices holding steady in coming years,” the report says.

Average sale prices in the Greater Toronto Area have dropped almost 25 per cent from April, according to the Toronto Real Estate Board’s last set of results for August. That slide coincides with provincial efforts to slow the housing market down, including a province-wide extension of rent control increases that are now tied to inflation and a 15 per cent tax aimed at foreign buyers.

“Although inflows of wealth and real estate speculation get most of the blame for increased overvaluation and reduced housing affordability in Toronto and Vancouver, excess demand is a more permanent culprit,” Moody’s said.

“Household formations in Toronto and Vancouver, as well as in Toronto’s satellite metro areas like Guelph and Oshawa, have exceeded the national rate of household formation for some years now, and residential construction in these two metro areas has failed to keep up.”

In the census metro area for Toronto, Moody’s said it can see average annualized price growth of 10.7 per cent from the third quarter of 2017 to second quarter of 2018. It sees an another 8.5 per cent of annualized growth from third quarter of 2018 to the second quarter of 2019.

The Vancouver census area picture is not as rosy with annualized price increase from the third quarter of 2017 to the second quarter of 2018 of only 1.1 per cent. The following year will see prices drop 1.7 per cent in the Vancouver area.

Moody’s composite house index says national prices will rise 6.8 per cent in 2017, but drop 0.1 per cent in 2018, rise one per cent in 2019 and then 1.3 per cent per year for 2020, 2021 and 2022.

The report suggests Toronto has not been left unscathed by regulatory and interest rate changes, but has withstood the moves better than the national market.

“The more restrictive environment means that prices will grow at a much smaller rate: A decline from 27 per cent growth in the second quarter to only 11 per cent in the subsequent year for Toronto is no slight accomplishment, and there will be significant slowdowns in the neighbouring metro areas as well,” says Moody’s.

“Outside of Ontario with its tight demographic situation and higher average median income, the combination of rising interest rates, more restrictive mortgage regulations, and increasing provincial restrictions such as the Vancouver transfer tax creates a bleak short-term outlook for
house prices.”


 

BoC is concerned about growing household indebtedness

When the Bank of Canada (BoC) raised its key overnight lending rate last Wednesday, the central bank took a moment to highlight its growing concern over the nation’s growing household debt. 

“Given elevated household indebtedness, close attention will be paid to the sensitivity of the economy to higher interest rates,” the central bank said in a news release.

Closer scrutiny is paid because each time the BoC raises rates, lenders immediately pass them on to borrowers, who hold products that are based on the prime rate, such as variable-rate mortgages and home equity lines of credit (HELOCs).

There’s been a rush in the number of Canadians who’ve tapped into HELOCs and borrowed against the equity in their homes in recent years, with ultra-low interest rates likely being a deciding factor.

The amount of money that Canadians have been borrowing against the equity in their homes has been surging since the beginning of 2016, and now there are approximately three million active HELOCs across Canada, with an average balance of about $70,000, according to the Financial Consumer Agency of Canada.

“It’s been fairly easy for consumers to justify this in their minds,” said Scott Hannah, the president and CEO of the Credit Counselling Society. “There really is very little motivation to save. It’d be easier to take out a HELOC.”

There are approximately three million active HELOCs across Canada, with an average balance of about $70,000, according to the Financial Consumer Agency of Canada.

Hannah says the responsible way of using a HELOC is to establish a spending limit and a repayment plan. However, the concern for some borrowers is that they risk getting into the habit of spending beyond their means.

Unlike mortgages, HELOC holders can pay little, if any principal, each month, and instead opt to make smaller interest-only payments. This means balances can build up rapidly.

“For a lot of consumers, when you have [a line of credit] and have access to it, it becomes really enticing to use,” Hannah said. “In many cases it's for expenses that they should be paying out of their paycheques as opposed to using debt for.”

That cycle can be even more difficult to break as interest rates go up and consumers need to set aside more of their income to service their debts.

According to a recent report by the Parliamentary Budget Officer (PBO), as the BoC raises interest rates to more historically normal levels (the PBO projects interest rates will rise to 3% by 2020), Canadians will have to pay more than ever to service their debt.

Canadians currently use 14.2% of their after-tax income to make principal-and-interest payments on their debts. The PBO forecasts that could eventually rise to 16.3%, passing the previous high of 14.9% in 2007.

“There comes a point that consumers cannot take it anymore and then they default on their debt and default on their mortgages and then you have a housing crash,” said economist Krishen Rangasamy, senior economist at National Bank Financial.

While interest rates are still low, Rangasamy says if the BoC is too aggressive with future rate hikes, borrowers could get into trouble if they continue to dip into the equity on their homes.

“You would ideally want Canadians to have a lot of equity in their homes, because it reduces odds that you actually default on your mortgage.”


 

BC home sales may change course 

BC home sales remained unchanged in August compared to July but with rising prices and increased mortgage interest rates, demand could weaken throughout the remainder of the year.

A total of 9,162 residential properties changed hands last month, up 2.4 per cent from the same period a year ago, according to the British Columbia Real Estate Association’s (BCREA)  August 2017 data release published today.

Although strong economic conditions are underpinning demand, affordability issue could alter market activity going forward.

“Some headwinds are going to be faced going forward as a result of home price appreciation and modestly increasing interest rates,” BCREA’s Chief Economist Cameron Muir tells BuzzBuzzNews.

Last week, the Bank of Canada hiked the overnight rate, which influences the mortgage market, by 25 basis points to one per cent — a move that could impact consumers’ decisions to enter the market.

Muir does note that BC home sales could have been stronger last month, but wildfires in the province caused “a drop-off in buying activity.”

Last month, the average price of a home in BC was $678,186, a 19 per cent increase from $596,281 in August 2016.

In August 2016, the BC government implemented a 15 per cent foreign-buyer tax for Greater Vancouver, which caused fewer foreign buyers to enter the market and more local homebuyers to observe from the sidelines.

Muir adds that a year ago a smaller proportion of single-detached homes, particularly in the higher-end market, sold in the province, which also pulled down the average August 2016 price level.

Home prices in BC’s priciest market, Greater Vancouver, hit $982,454 in August, up roughly 18 per cent from a year ago.

Sales were also up in the region, totalling at 3,097 units, a 21.3 per cent increase compared to 2,554 units in August 2016.

A boost in sales was met with a rise in Greater Vancouver’s supply last month.

The region had a total of 9,470 active listings in August, a 3 per cent increase from the same period last year.

Conversely, Kamloops saw a drop in active listings last month. In fact, it saw the biggest annual decline out of all boards included in BCREA’s data.

In August, a total of 1,278 units were active in Kamloops, representing a 25.2 per cent decrease from 1,708 units in August 2016.

“Kamloops market has been quite strong this year and certainly in solid seller’s market territory and rising prices have certainly been handed in this year in Kamloops,” says Muir.

Year-to-date, BC home sales dropped 15 per cent to 73,267 units in August compared to a year ago. Meantime, the year-to-date average price of a home was $706,839, down 1 per cent from August 2016’s year-to-date price.


 

Half of Canadians just $200 from insolvency

Rising household debt is leaving millions of Canadians just $200 dollars from insolvency.

That’s according to a survey by insolvency consultants at MNP which says that rising house prices, credit card debt and auto loans are all playing their part in the risk to household’s solvency.

As reported by HuffPost Canada, 52 per cent of respondents say that they have a maximum of $200 at the end of each month for bills, 10 per cent have less than $100.

MNP’s findings also reveal that 49 per cent of respondents regret the debt they have and 48 per cent are concerned about their debt levels.

“Many are in denial, believing they can manage their growing debts. Others don’t know where to go for help or are afraid to address their debts head on,” Lana Gilbertson, a Vancouver-based insolvency trustee with MNP told HuffPost Canada. 


 

VICTORIA (NEWS 1130) – As expected the provincial government has announced changes to the homeowner grant. The finance minister releasing details this morning, saying the threshold will increase to $1.6 million in a bid to help keep property taxes affordable.

“This is a 33 per cent increase over last year,” says Mike de Jong. “We are doing our part to help keep housing costs affordable for families. Local governments can also work to keep property taxes at a manageable level for residents by controlling their spending and reigning in the amount of revenue they need to operate.”

In a statement, the provincial government says it’s projected to spend $821 million on these grants in 2017-18, compared to about $809 million in 2016-17.

Victoria has also announced it’s going to reimburse cities for the full cost of the grant to ensure municipalities are not impacted. “The strength of the province’s economy and sound fiscal management have put us in a position to raise the threshold by such a large amount this year to help home owners.”

The government claims the basic grant can lower residential property taxes on an owner’s principal residence by up to $570, or if the home is located in a northern and rural area, up to $770. Another grant is being made available to home owners 65 and older, or those who qualify under the persons with disabilities category, or who are the surviving spouse of a veteran who received specific war-veteran allowances.

Not everyone is happy with today’s move. NDP Housing Critic David Eby notes the $570 grant amount will remain the same. “Nobody is really winning here.”

Eby doesn’t feel this will help people who have stretched their finances to afford a home, only to see their property value assessment rise beyond their means. “It’s especially harsh for people who bought a home in a far-flung suburb of Vancouver, who are commuting a long distance because that’s what they could afford.”

Eby would like to see a regional solution to address areas of BC with different housing challenges. “In Fort Saint John, property values have actually gone down but in areas like Tsawwassen people are seeing their properties increasing by 100 per cent.”

He’s not surprised by the threshold increase but is surprised at how long it took the government to announce the changes.

Home buyer competition keeps home sellers in the driver’s seat

Home buyer activity remains at near record levels across the Metro Vancouver housing market.

Residential property sales in Greater Vancouver totalled 2,519 in January 2016, an increase of 31.7 per cent from the 1,913 sales recorded in January 2015 and a 10.9 per cent decline compared to December 2015 when 2,827 home sales occurred.

Last month’s sales were 46 per cent above the 10-year sales average for the month and rank as the second highest January on record.

“Fundamental economics are driving today’s market. Home buyer demand is at near record heights and home seller supply is as low as we’ve seen in many years,” Darcy McLeod, REBGV president said.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,442 in January 2016. This represents a 6.2 per cent decline compared to the 4,737 units listed in January 2015 and a 119.8 per cent increase compared to December 2015 when 2,021 properties were listed.

“The MLS® is the most powerful real estate marketing system in the country. If you’re thinking of selling, it’s important to talk with your REALTOR® about putting your home on the MLS® system to ensure your property gets maximum exposure,” McLeod said.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 6,635, a 38.6 per cent decline compared to January 2015 (10,811) and a 10.1 per cent increase compared to December 2015 (6,024).

The sales-to-active listings ratio for January 2016 is 38 per cent. This is indicative of a seller’s market.

Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark, while home prices often experience upward pressure when it reaches the 20 to 22 per cent range in a particular community for a sustained period of time.

Sales of detached properties in January 2016 reached 1,047, an increase of 34.1 per cent from the 781 detached sales recorded in January 2015. The benchmark price for detached properties increased 27.9 per cent from January 2015 to $1,293,700.

Sales of apartment properties reached 1,096 in January 2016, an increase of 35.5 per cent compared to the 809 sales in January 2015.The benchmark price of an apartment property increased 19.4 per cent from January 2015 to $456,600.

Attached property sales in January 2016 totalled 376, an increase of 16.4 per cent compared to the 323 sales in January 2015. The benchmark price of an attached unit increased 16.4 per cent from January 2015 to $563,700.


 

Housing Affordability in British Columbia should be tackled with a new tax on vacant properties and those owned by those with “limited participation” in the Canadian economy. Real estate economists at the University of BC and Simon Fraser University, including Tsur Somerville, Thomas Davidoff, and Joshua Gottlieb are calling on the provincial government to introduce a BC Housing Affordability Fund.

It would mean a 1.5 per cent surcharge on properties left vacant or owned by those who are not Canadian taxpayers. Therefore, a $1 million home would be taxed at $15,000 with the money added to the fund, which is projected to raise $90 million a year. “The goal is to support those living in parts of the province that have seen skyrocketing real estate prices, while also making our local markets less attractive to investors who wish to avoid taxation or park cash,” said Davidoff.

Most homeowners and landlords would be exempt from the surcharge. As an incentive to move unoccupied suites into the rental market, the policy also allows for owners to receive exemptions for rental income they receive from non-family members reported to the Canada Revenue Agency.


Canadian Government Change to Minimum Down Payment on Insured Mortgages - December 11, 2015

Policy Change

The Canadian government announced today that it is increasing the minimum down payment on insured mortgages from 5 per cent to a two tiered system under which the minimum down payment on houses priced above $500,000 will remain at 5 per cent, but there will be an additional 10 per cent required on the portion of the house price above $500,000. 

As an example, for a house priced at $700,000, the minimum down payment for mortgage insurance purposes under the status quo would be $35,000. Under the new system, the minimum down payment would be 5 per cent x $500,000 + 10 per cent x ($700,000-$500,000) or $45,000. It is important to note that the homes priced at or above $1 million already require a minimum down payment of 20 per cent. 

The changes to minimum down payments will take effect on February 15, 2016 and apply to new mortgage loans where a mortgage insurance application is received on February 15, 2016 or later. 

Market Impact 

The increase in minimum down payments on homes above $500,000 is designed to target excess risk taking in Canada's most expensive housing markets. Most homes in BC are priced below $500,000 and therefore this change will have limited impact in much of the province. However, 35 per cent of homes sold in Metro-Vancouver are priced between $500,000 and $1 million and so this change could adversely affect or delay demand in those markets, particularly for first-time homebuyers. That said, given the incremental nature of the change, and since minimum down payments are less frequent at higher home prices, we expect the overall impact to be relatively minor.



Strong Housing Demand Expected Through 2016

The BCREA Economics Department forecasts that the number of homes changing hands on the Multiple Listing Service® will exceed 100,000 in 2015. That's the third strongest unit sales figure on record and marks the first time since 2007 that BC home sales will exceed the ten-year average.

While sales are expected to decrease somewhat in 2016, the forecast is still strong with an expectation of 93,700 homes. BCREA expects the average MLS® price to reach $626,100 in 2015 and $639,700 in 2016.

All of this bodes well for provincial government coffers. In his Second Quarterly Report in late November, Minister of Finance Mike de Jong reported that revenues from the Property Transfer Tax are expected to be nearly $1.3 billion in the current fiscal year—$350 million higher than the original budget figure in February.

BCREA has been following Minister de Jong's remarks about the PTT with interest, and looks forward to the 2016 provincial budget, which just might include good news for many homebuyers. The Association's concerns with the tax have been on record since 1987, and BCREA recently made the following recommendations:

  1. Increase the 1% PTT threshold from $200,000 to $525,000, with 2% applying to the remainder of the fair market value.
  2. Index the 1% PTT threshold of $525,000 using the MLS® Home Price Index, and make adjustments annually.

 "Copyright British Columbia Real Estate Association. Reprinted with permission."


 

Bank of Canada announces ratе


“In Canada, the dynamics of growth have been broadly in line with the Bank’s MPR outlook. The economy continues to undergo a complex and lengthy adjustment to the decline in Canada’s terms of trade,” the Bank said in a release. “This adjustment is being aided by the ongoing US recovery, a lower Canadian dollar and the Bank’s monetary policy easing this year. The resource sector is still contending with lower prices for commodities. In non-resource sectors, exports are picking up, particularly in exchange rate-sensitive categories.”

However, cuts in resource-sector spending  has impacted business investment, according to the central bank.

“The labour market has been resilient at the national level, although with significant job losses in resource-producing regions,” the Bank of Canada said. “The Bank expects GDP growth to moderate in the fourth quarter of 2015 before moving to a rate above potential in 2016.  While bond yields are slightly higher, financial conditions remain accommodative in Canada.”

The Bank believes inflation risks remain balance. Still, it has identified vulnerabilities in the housing sector.

Soft landing for the housing market, interest rate rises some way off


The Bank of Canada’s deputy governor Carolyn Wilkins believes the housing market and Canadians’ debt levels are still manageable.

In an interview with the Globe and Mail she said that, in line with the bank’s policy reiterated last month, “the housing market and household debt are going to evolve in a constructive way.”

Wilkins pointed to the improving Canadian economy, which she says continues to support the hot housing markets of Toronto and Vancouver, and will see household debt levels, including mortgages, begin to moderate.

The deputy governor said that it is likely to be mid-2017 before Canada’s output would reach full capacity; this should mean that interest rate rises are unlikely during 2016.


 

House-condo gap: will it become an impassable divide?
The Canadian Press

A dramatic shift is underway in Metro Vancouver's housing market as costly detached homes become a ``luxury product'' out of reach for many families, a new forecast reveals.

Central 1 Credit Union predicts that a widening price gap between apartment or condominium units and houses will be ``difficult if not impossible to bridge.''

``In previous years the housing ladder meant starting in a condo and transitioning to a detached home. That will no longer be the trend,'' said senior economist Bryan Yu in a release.

``For most families the housing ladder will lead from one multi-family unit to another.''

Across British Columbia, home prices and sales will continue to rise for the next two years, the report predicts. Average prices in the province will leap six per cent this year to $425,000, reaching $462,000 by 2017.

Median prices for detached Vancouver-area properties are set to shatter the $1-million mark, fuelled by a lack of land and relentless demand.

Yu said the dearth of supply of detached homes is likely to continue, underpinned by a land base that is hemmed in by the ocean, the coastal mountains, the U.S. border and an agricultural land reserve.

He noted that price momentum in Metro Vancouver has also spilled into the neighbouring Fraser Valley, anchored by Chilliwack and Abbotsford.

In contrast, the Alberta recession, a weak mining sector and few available homes will slow _ but not cap _ demand in B.C.'s Interior, northern B.C. and the Kootenays.

Dropping oil prices and energy sector layoffs have led to job cuts for some residents in the Interior and northern B.C. who commute to Alberta's oilsands for employment, Yu said.

``If the market isn't doing very well (in Alberta), you're going to see less of that spillover demand for vacation properties or secondary homes in these regions,'' he added in an interview.

But parts of the Okanagan Valley, including Kelowna, are seeing rebounding house prices after years of stagnation caused by an over-built market.

``It's taken a long time for them to get rid of the excess supply,'' he said. ``Now that we're seeing inventories fall off in these areas, we basically have much more balanced conditions.''

The financial institution also predicts low mortgage rates will keep sales sizzling. Yu anticipates five-year fixed term rates will remain essentially unchanged through 2016 and will increase marginally to only five per cent by the end of 2017.

Vancouver Island markets, especially Victoria, are also strong as the communities are poised to take advantage of the low Canadian dollar and as over-supply has been sold off, Yu said.

The forecast notes that B.C.'s economic growth is expected to remain among the highest in the country, which will drive gains in employment and personal income. But a mild slowdown in population growth is also expected, caused by weak trends in international immigration.

B.C.'s active housing market _ in particular construction, renovation and acquisition-related costs _ is expected to lift broader economic growth over the next two years.


 

What Happens to Your Credit Rating When You Miss a Mortgage Payment ?

Your mortgage payment doesn't always show up on your credit report, but  if you are late on multiple payments, it could affect the interest rate you're  offered from the bank when your mortgage comes up for renewal again.

 If you miss three consecutive payments or more in a row, it will lead to  foreclosure proceedings, which is when the bank or lender starts the  process of legally taking ownership of your property due to the lack of payments. Banks or lenders don't want to own your home, but if the lender isn't getting paid, it will try and sell the property in order to reduce its losses. Foreclosure shows up under the public record portion of your credit report.

You may assume that bankruptcy is the worst thing you can do for your credit; however, if you are applying for mortgage financing, going through a foreclosure is the absolute worst thing you can do for your credit. Bad credit can be rebuilt fairly quickly, but very few lenders will look at providing financing for you if you have a previous foreclosure showing up on your credit report, regardless how strong your current credit is.

If you find yourself in a situation where you may not be able to make your mortgage payments, contact your mortgage lender or mortgage agent to find out what can be done. The same thing is true with any creditor.

If you don't think you'll be able to make a payment to any one of your creditors, it is a good rule of thumb to contact them to see if something can be worked out, especially if you contact them before the due date.

I understand that despite your best efforts, an emergency may come up, preventing you from being able to make a payment. However, the banks still feel that it is your responsibility to keep track of your accounts and pay your bills on time. Get your head around this rule and you will have a great foundation to always have amazing credit.


 

Divorcing? Beware of Signing That Quit Claim Deed

Couples in the midst of a divorce are occupied with so many issues during the dissolution of their marital assets that they may not be aware of the consequences of every action taken, and how it can come back to bite them in the future.

Take for example, Quit Claim Deeds. If one spouse is keeping the house, or buying the other spouse out of their interest in the property, the common task is to have the spouse who is selling or forfeiting their interest sign a Quit Claim Deed. A Quit Claim Deed releases a party of all ownership interest in the real estate.

If you are the one releasing your interest in the home, you may think “Great. I’m off the property.”

Not necessarily true and here’s why.

If you are named as a borrower on the mortgage of that property, the Quit Claim Deed will not release your responsibility for the mortgage.

You will no longer own the property – but you are still obligated for the debt. Your lender does not care that you signed a Quit Claim Deed.

If your spouse (the one who keeps the home) does not make the payments, or allows the home to go into foreclosure, it will damage your credit history and credit score just like you still own it.

How Lawyers Try to Help

To protect the interest of the party who is quitclaiming their interest in a home, lawyers will often include language in the marital settlement agreement that states that the spouse keeping the house is now responsible for any debt or payments after the Quit Claim Deed is filed. That’s a nice arrangement between you and your ex, but again, the lender on your marital home never sees that agreement and because both spouses are still on the loan, the one who signed the Quit Claim is at significant risk. Here’s a few examples:

• When you go to buy your next home, the debt for the old one is still on your credit history. Added to the new loan you wish to obtain, your income to debt ratios may be too high. For some, this prevents them from buying again.

• If your ex misses a house payment, your credit score is negatively affected. Even one missed payment can drop your score.

• Say for example you got lucky and your ex spouse did make the payments, and the loan on your old house is in good standing. You may still need his or her involvement to secure your next loan. If you try to buy again, your new lender may ask you to prove that you were not responsible for the loan on your old house, and require you to obtain 12 months of cancelled loan payment checks from your ex. You may not want to leave yourself vulnerable to that situation.

• If your former spouse allows your former home to be foreclosed, you may be precluded from buying again for up to 7 years.

Other Options That May Work Better

The cleanest way to part company with no future obligation regarding your former home is, of course, to sell it. If that’s not possible, and you are compelled to sign away your ownership interest through a Quit Claim Deed, have language added to your settlement agreement that states that your ex-spouse will refinance the property, in his or her own name, within a short term, like three to six months. If your ex cannot qualify to own the home on his or her own, and you already know that, reconsider signing that Quit Claim Deed and sell the home. Otherwise, you will remain connected to your ex financially and be dependent on his or her actions to maintain your good credit and your financial future.


 

Metro Vancouver home sales hit record pace

June’s home sales in metro Vancouver were a record-breaker for the month and the second highest overall, according to the Real Estate Board of Greater Vancouver.

Residential property sales reached 4,375 on the MLS, a 28.4 per cent increase compared to June 2014 and an increase of 7.9 per cent compared to May’s sales.

The figure is also 29.1 per cent above the 10-year average for June and sets a new record for consecutive months of sales above 4,000 with each of the months from March doing so.

“Demand in our detached home market continues to drive activity across Metro Vancouver,” said Darcy McLeod, REBGV president. “There were more detached home sales in the region last month than we’ve seen during the month of June in more than 10 years.”

Prices were up by 10.3 per cent year over year to reach a benchmark $694,000.The benchmark price for a detached property in Metro Vancouver increased 14.8 per cent from June 2014 to $1,123,900.

"Conditions today are being driven by low interest rates, a declining supply of detached homes, a growing population, a provincial economy that's outperforming the rest of Canada, pent-up demand from previous years and, perhaps most importantly, the fact that we live in a highly desirable region," McLeod said.

New listings are up by 8.7 per cent from a year earlier with 5,803 added to the MLS in June 2015, although overall inventory has tightened by 23.9 per cent year over year and 1.3 per cent from May 2015. 


 

3 Important Things a Landlord Should Use During the Move-In Inspection

Having a system for moving tenants into your properties is critical to the success of your business. Most common disputes between tenants and landlords arise over expectations that were set before the tenant ever even moves into the property.

Most tenants meet their future landlords when they tour the property, pay the deposit and sign a lease.  However, some landlords don’t take the time to set expectations with regard to the condition of the property and what the disbursements from the security deposits will be at the end of the lease.  If you research disputes over security deposits, they are almost always fueled by a tenant. If a dispute arises, it is most frequently based on a tenant’s feeling that the landlord unfairly withheld monies from the security deposit when the renter moved out of the property. As a landlord, you may be completely justified in keeping the entire security deposit. Be sure that you set the expectation up front and that you have everything in writing.
Each landlord will have to decide what things are most important to them, but here are three important things that need to make the list.

First, carefully inspect the property with the tenant.  It is very important that you and your tenant are on the same page about the condition of the property when they move in.  Be as thorough as you can and document everything.  Normal wear and tear should be expected, but damage is another story. Don’t forget to include things like the condition of the lawn, gutters, mailboxes, fence and any exterior items like mailboxes, screen doors and landscape lights. Also have a checklist for everything inside from bathroom mirrors and vanities to the condition of the flooring…document the condition of everything.

Secondly, back up your documentation with photographs.  This will protect both you and your tenant.  It will provide proof of the condition of the property at move-in verses the condition of it when the tenant moves out. If there is a dispute, you have pictures to back up any deductions that you take from the security deposit.  By taking photos with the tenant there, you will reinforce the fact that you expect the tenant to take care of the property just like you do.

Lastly, make a cost replacement spreadsheet and give a copy to the tenant along with the lease.  Include a list of items that are typically fixed or replaced after tenants move out.  That way your tenants will know that if there is a hole in a wall, it will cost $50 of the security deposit to fix it.  It may take you a while to compile the list, but it will be time well spent.  If a tenant has a copy of the most commonly replaced items and the cost from the beginning, the deductions from a security deposit will not come as a surprise.

Save yourself the headache of disputes over trivial matters by having a standard system in place to utilize when renters move into your property.


 

BC Housing Demand Forecast to be Strongest Since 2007
BCREA 2015 Second Quarter Housing Forecast

Vancouver, BC – June 1, 2015. The British Columbia Real Estate Association (BCREA) released its 2015 Second Quarter Housing Forecast today.

“More robust economic growth, strong consumer confidence and rock-bottom mortgage interest rates are expected to push housing demand this year to its highest level since 2007,” said Cameron Muir, BCREA Chief Economist.  

Multiple Listing Service® (MLS®) residential sales in British Columbia are forecast to rise 2.4 per cent to 86,050 units this year and a further 3.9 per cent to 89,400 units in 2016. The ten-year average is 82,100 unit sales. A record 106,300 MLS® residential sales were recorded in 2005.  

The average MLS® residential sales price is forecast to rise 4.5 per cent to $594,000 this year, with most of the upward pressure being exhibited on the South Coast. Elevated consumer demand is expected to be partially offset by resale inventories and additions to the housing stock in 2016. As a result, the average MLS® residential sales price is forecast to increase by 2.4 per cent to $608,500 next year.


 

Average Vancouver home now 12.5 per cent more expensive


House prices in Vancouver have increased again with the average cost of a detached house rising 12.5 per cent in April to $1.08 million and the benchmark for a typical home now at $673,000.

The Real Estate Board of Greater Vancouver said Monday that a low level of listings has pushed prices higher; sales were up 37 per cent from April last year.

There are currently 12,436 listings on the MLS for Greater Vancouver, that’s 0.5 per cent lower than March and 19.8 per cent lower than April last year; new listings are 0.9 per cent lower than last year.

The rising costs are also spreading to previously ignored parts of the city leading to bidding wars. Even properties that are in need of renovation are exceeding their expected sales price.

Those looking for bargains are being forced to look further out of the city with Fraser Valley and Surrey among the suburbs getting increased attention.

With mortgage rates staying highly competitive and the spring season underway realtors are expecting to be busy…if the homes are available to sell!


Home buyer demand outpacing supply across the Metro Vancouver housing market

Strong home buyer demand coupled with below average home listing activity has created seller's market conditions within the Metro Vancouver* housing market.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Metro Vancouver reached 4,179 on the Multiple Listing Service® (MLS®) in April 2015. This represents a 37 per cent increase compared to the 3,050 sales recorded in April 2014, and a 2.9 per cent increase compared to the 4,060 sales in March 2015.

Last month’s sales were 29.3 per cent above the 10-year sales average for the month.

“The supply of homes for sale today in the region is not meeting the demand we're seeing from home buyers. This is putting upward pressure on prices, particularly in the detached home market," Darcy McLeod, REBGV president said.

New listings for detached, attached and apartment properties in Metro Vancouver totalled 5,897 in April. This represents a 0.9 per cent decrease compared to the 5,950 new listings reported in April 2014.

The total number of properties currently listed for sale on the region’s MLS® is 12,436, a 19.8 per cent decline compared to April 2014 and an increase of 0.5 per cent compared to March 2015.

“It’s a competitive and fast-moving market today that is tilted in favour of home sellers. To be competitive, it’s important to connect with a local REALTOR® who can help you develop a strategy to meet your home buying or selling needs,” McLeod said. 

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $673,000. This represents an 8.5 per cent increase compared to April 2014.

The sales-to-active-listings ratio in April was 33.6 per cent. This is the highest that this ratio has been in Metro Vancouver since June 2007.

Sales of detached properties in April 2015 reached 1,815, an increase of 35.9 per cent from the 1,336 detached sales recorded in April 2014, and a 70.6 per cent increase from the 1,064 units sold in April 2013. The benchmark price for a detached property in Metro Vancouver increased 12.5 per cent from April 2014 to $1,078,900.

Sales of apartment properties reached 1,579 in April 2015, an increase of 34.7 per cent compared to the 1,172 sales in April 2014, and an increase of 50.1 per cent compared to the 1,052 sales in April 2013. The benchmark price of an apartment property increased 4.4 per cent from April 2014 to $394,200.

Attached property sales in April 2015 totalled 785, an increase of 44.8 per cent compared to the 542 sales in April 2014, and a 53.6 per cent increase from the 511 attached properties sold in April 2013. The benchmark price of an attached unit increased 5.7 per cent between April 2014 and 2015 to $493,300.


 

Oversupply warning in  Vancouver condo market
Although deemed to be ‘low-risk’ in the CMHC’s latest assessment of the property market there is a warning over one sector of Toronto and Vancouver’s real estate. Capital Economic’s David Madani says that oversupply of condos in the two cities could reach dangerously high levels. He told CanadianBusiness.com that builders are giving incentives to buyers but they may not be enough of a draw for investors who may “move off to the sidelines” if prices stall. In the first quarter of this year there was a 42 per cent increase in new condo supply according to Urbanation and some experts are predicting a sharp drop in prices is demand does not match supply.

Not much chance of another cut in interest rates then Mr. Poloz?

Bank of Canada governor Stephen Poloz has given a strong hint that there will be no further interest rate cut in the near future. Speaking in New York Mr Poloz said that the January cut of 0.25 per cent seems to have done the job the bank wanted; insuring against the oil price slide. With oil prices holding more steadily for now it is looking unlikely that there will be a reduction from the 0.75 per cent current rate. The governor also said he expected a bounce back in the economy in the second quarter after a weak start to the year. 
 

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage


 

CMHC announces higher premiums for risky loans
The Canada Mortgage and Housing Corporation has announced that it is increasing premiums for high-risk mortgages. Buyers with less than a 10 per cent downpayment will pay approximately 15 per cent more for their mortgage loan insurance from June 1, 2015. The hike follows the agency’s review of its products as it looks to boost its capital reserves, but it says the increase will only add around $5 to a typical monthly mortgage payment. For that reason, it says, it is not expected to have a material impact on the housing market. For those borrowing less than 90 per cent of the home’s value there will be no change at all; the rate for borrowing 90.01 to 95 per cent will rise from 3.35 per cent to 3.85 per cent.


CMHC Hikes Premiums Again

If you plan to buy a home with less than 10% down and get CMHC insurance, get ready to pay another $450 per $100,000 of mortgage.

That’s what CMHC’s just-announced premium hike 

It’s the second time in about a year that CMHC has raised its fees on homeowners. The new premiums are a 14-15% increase over today, or 31% if you compare them to CMHC’s fees last year.

 

CMHC’s move targets only those putting down less than 10%, which amounts to 56.8% of CMHC-insured borrowers, as of CMHC’s latest reported quarter. The company says the decision is not because of an increase in borrower risk.

“For the average Canadian homebuyer who has less than a 10% down payment, the higher premium will result in an increase of approximately $5 to their monthly mortgage payment,” the agency said in its release today.

“CMHC completed a detailed review of its mortgage loan insurance premiums and examined the performance of the various sub-segments of its portfolio,” said SVP of Insurance Steven Mennill. “The premium increase for homebuyers with less than a 10% down payment reflects CMHC’s target capital requirements which were increased in mid-2014 (to 220% of the minimum OSFI requirements).”

We’ll probably know by next week if Genworth and Canada Guarantee follow CMHC’s lead. They did last time and there’s a fair chance they will again. A Genworth spokesperson said, “We are reviewing [CMHC’s announcement] and expect to release our official announcement early next week.”


 


Metro Vancouver home buyers out in force in March

Demand continued to rise across Metro Vancouver's housing market in March.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 4,060 on the Multiple Listing Service® (MLS®) in March 2015. This represents a 53.7 per cent increase compared to the 2,641 sales recorded in March 2014, and a 32.6 per cent increase compared to the 3,061 sales in February 2015.

Last month’s sales were 26.8 per cent above the 10-year sales average for the month.

"We're seeing strong competition amongst home buyers today. This is leading to more multiple offer situations and some upward pressure on home prices,” Darcy McLeod, REBGV president said. “For sellers, this means that it's taking less time, on average, for your home to sell if you have it priced correctly for today's market."
   
New listings for detached, attached and apartment properties in Metro Vancouver totalled 5,968 in March. This represents a 13 per cent increase compared to the 5,281 new listings reported in March 2014.
   
Last month’s new listing count was 4.7 per cent higher than the region’s 10-year new listing average for the month.
   
The total number of properties currently listed for sale on the REBGV MLS® is 12,376, a 14.5 per cent decline compared to March 2014 and a 4 per cent increase compared to February 2015.

“The number of homes for sale today is below what’s typical for this time of year,” McLeod said. “If you’ve been considering putting your property on the market, these market conditions indicate that now may be a good time to list.”

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $660,700. This represents a 7.2 per cent increase compared to March 2014.

The sales-to-active-listings ratio in March was 32.8 per cent. This is the highest that this ratio has been in Metro Vancouver since July 2007.

Sales of detached properties in March 2015 reached 1,711, an increase of 53.3 per cent from the 1,116 detached sales recorded in March 2014, and an 83.4 per cent increase from the 933 units sold in March 2013. The benchmark price for a detached property in Metro Vancouver increased 11.2 per cent from March 2014 to $1,052,800.

Sales of apartment properties reached 1,627 in March 2015, an increase of 47.1 per cent compared to the 1,106 sales in March 2014, and an increase of 65.7 per cent compared to the 982 sales in March 2013. The benchmark price of an apartment property increased 3.3 per cent from March 2014 to $390,200.

Attached property sales in March 2015 totalled 722, an increase of 72.3 per cent compared to the 419 sales in March 2014, and a 67.1 per cent increase from the 432 attached properties sold in March 2013. The benchmark price of an attached unit increased 4.9 per cent between March 2014 and 2015 to $484,900.


 

Vancouver sees sharp increase in March sales


Vancouver’s residential property marketwas busy in March with MLS sales up 32.6 per cent from February and 53.7 per cent from March last year. The total number of sales recorded was 4,060. Data from the Real Estate Board of Greater Vancouver also reveals that last month’s total sales figure was 26.8 per cent above the 10-year average. The board’s president Darcy McLeod says that there is strong competition with multiple offers, which is great news for sellers: “The number of homes for sale today is below what’s typical for this time of year. If you’ve been considering putting your property on the market, these market conditions indicate that now may be a good time to list.” That said, the number of listings was 13 per cent higher in March this year than the same month last year and new listings were up 4.7 per cent. All property types saw large increases in sales year-over-year: apartments up 47.1 per cent, detached homes up 53.3 per cent and attached properties up 72.3 per cent. McLeod added that buyers are acting fast: “For sellers, this means that it's taking less time, on average, for your home to sell if you have it priced correctly for today's market."


RBC CEO David McKay bullish on Canadian housing

Royal Bank of Canada’s chief executive officer delivered an upbeat view of the Canadian housing market to a New York audience, just a day after the International Monetary Fund expressed concerns about it.

David McKay believes consumer demand is roughly in line with supply, particularly after housing starts fell 16 per cent in February, rebutting concerns that sharply rising home prices have fed a speculative bubble that is in danger of bursting.

“We feel good about the Canadian housing market,” he said.

Mr. McKay said he expects economic growth of about 2.4 per cent this year, with lower energy costs and a cheaper dollar shifting economic activity to companies that export to the United States, providing a healthy backdrop to the housing market and driving overall domestic job creation.

He pointed out to his U.S. audience that multifamily residential housing – largely condominiums – are not financed without selling at least 70 to 80 per cent of the units prior to construction, preventing what he called the speculative build of excess supply.

As for single-family homes, he said there has been a shortage of new homes built in key markets such as Vancouver and Toronto, and new land is not being released into construction.

“A lot of the price inflation that you’re reading about in the Canadian housing market is largely driven by lack of supply in single-family homes, strong household formation, strong immigration numbers – so demand is still there,” Mr. McKay said.

The average price of a detached home in Toronto rose above $1-million in February for the first time, up 9 per cent from a year earlier, according to the Toronto Real Estate Board.

Mr. McKay’s remarks follow considerable unease among a number of other observers.

The IMF warned on Monday of Canada’s “overheated housing markets and high household debt,” and called for reforms to centralize oversight of the financial sector.

The Bank of Canada estimated late last year that house prices may be overvalued by as much as 30 per cent.

And McKinsey Global Institute found that the Canadian household debt-to-income ratio was the world’s second highest, next to Greece, between 2007 and mid-2014. It added that debt burdens are higher today that they were for U.S. consumers prior to the housing collapse there.

But Mr. McKay reminded his audience that, due to Canadian government guarantees on mortgage insurance, bank balance sheets are protected from property losses of less than 25 per cent.

For RBC’s uninsured mortgage portfolio, he said the average equity holding is 45 per cent, protecting the bank from a housing market that is showing no signs of stress.

However, Mr. McKay’s message wasn’t entirely free from concern about the future.

He singled out the threat from mobile payment systems offered by the likes of Apple Pay and Google Wallet, which can push traditional banks into a lower-profile relationship with customers.

“The last thing anybody wants is to have someone between you and your customer, and that’s what we now have in the payments space,” he said.

“We are on a collision course with the Googles and the Apples of the world,” he said. “Would you ever pick a fight with those types of companies? No, but we are on that course.”

Mr. McKay said RBC is helped by a long-standing relationship with customers and merchants based on trust and security – but the bank can’t be complacent.

“We can’t just sit back and do what we always did,” he said.


 

BC will be the economic star this year, says Conference Board
British Columbia is set to shine this year with economic growth higher than previously forecast. The Conference Board of Canada has upgraded its prediction for growth in the province to three per cent; last fall it suggested 2.6 per cent. The weaker loonie coupled with a stronger U.S. economy is driving the growth, says the board. The report predicts that the housing market in BC will remain strong, despite uncertainty over the potential liquefied natural gas industry. Prices for homes are likely to continue to edge higher along with activity in new and existing home sales. The Conference Board is predicting that most other housing markets will see slower growth this year. Its winter outlook for Canada as a while suggests growth of 1.9 per cent nationally, down from 2.4 per cent last year, mainly due to the impact of lower oil prices in some provinces. It expects the Bank of Canada to keep interest rates low through this year with any increase coming in 2016.


 

BC Home Sales Forecast to Rise Through 2016
BCREA 2015 First Quarter Housing Forecast Update

Vancouver, BC – February 11, 2015. The British Columbia Real Estate Association (BCREA) released its 2015 First Quarter Housing Forecast Update today.

"Stronger economic conditions both at home and abroad combined with favourable interest rates and population growth are expected to bolster housing demand over the next two years,” said Cameron Muir, BCREA Chief Economist. “After a year in which housing demand ratcheted higher across the province, the retrenchment of oil prices is expected to attenuate housing demand in some regions while bolstering it in others."

Multiple Listing Service® (MLS®) residential sales in British Columbia are forecast to rise 2.4 per cent to 86,050 units this year and a further 3.9 per cent to 89,400 units in 2016. The ten-year average is 82,100 unit sales. A record 106,300 MLS® residential sales were recorded in 2005.

The average MLS® residential sales price is forecast to rise 4.5 per cent to $594,000 this year, with most of the upward pressure being exhibited on the South Coast. Elevated consumer demand is expected to be partially offset by resale inventories and additions to the housing stock in 2016. As a result, the average MLS® residential sales price is forecast to increase by 2.4 per cent to $608,500 next year.


 

Rate cut talk gathers pace
More experts are joining the voices calling for a further cut in interest rates when the Bank of Canada announces its decision next month. The bank’s senior deputy governor Carolyn Wilkins said yesterday that “the economy still has room to grow” and that the bank’s monetary policy will “support the needed adjustments". She said that the economy needs to adjust to the lower oil prices and that the bank doesn’t want to do anything that could stifle that. The labour market is one of the main areas of concern, especially with lay-offs in the energy sector, along with output, and Wilkins said she believes that the gaps will close over time. She added that low and stable inflation will help boost investment and prompt the creation of more jobs. The Bank of Montreal’s senior economist Benjamin Reitzes said we should “look for another rate cut in March, and don’t count out further easing". The rate decision will be announced on March 4.


 

What's been happening with all the talk around interest rates?

Many consumers become confused with the words Bank of Canada dropped their key lending rate, and the banks are changing their rates. What is all this about? Well, here is a summary of what has occurred over the last couple of weeks.

On January 21, 2015 Bank of Canada announced it was lowering it's key lending rate by 0.25% bringing it to a record low 0.75%!! What we typically see is within a few days after an announcement like that from Bank of Canada the banking institutions also decrease their own Bank Prime Rates matching the decrease from Bank of Canada. It took a few days and many were left wondering when and if we would see the banks match the rate drop.

Finally, last week on January 26th we saw one by one, banks lowering their Prime rates but by 0.15%, not the full 0.25%. This took most of the banks Prime rates from 3.00% to 2.85%.

For all you variable rate holders, you should be receiving notification in the mail from your lenders that your rate will be decreasing shortly. Each lender operates a bit differently but they will notify you of the date of the change and if your payment is changing.

For lenders that don't change the payment, keeping them the same in a rate dropping environment works in your favor as more of your payment will go to principal. For anyone with a lender that changes your payment I would highly suggest contacting me and request keeping the payment the same so that you can take full benefit of this rate drop.

What about fixed rates? We have seen many drops in fixed rates too. If you've got a variable rate mortgage, need a new mortgage, are renewing, or want to consolidate debt at the lowest cost, this is great news!


 

Big bank makes bold rate prediction

One big bank has made a bold rate prediction for the near future but mortgage brokers aren’t biting.
 
TD Bank released its Economic Forecast Update Monday and in it forecasted another rate cut coming from the Bank of Canada in March.
 
“The Bank of Canada unexpectedly cut the overnight rate by 25 basis points in mid-January, on the negative impact of lower oil prices on inflation and the real economy. At that time, it also signaled that it saw most of the risks to inflation to be tilted to the downside,” the report states. “Given our weaker oil price, inflation, and output forecast relative to the Bank, it therefore holds that we expect some of those downside risks to be realized.
 
“As such, we forecast that the Bank of Canada will cut the overnight rate by an additional 25 basis points at its next fixed announcement date in March.”
 
A bold prediction, no doubt, but as one broker points out, the banks have been wrong before.
 
“I don’t know if it will happen; keep in mind that the banks have been making wild predictions for years,” Lior Hershkovitz of Mortgage Edge told REP sister site, MortgageBrokerNews.ca. “No one has a crystal ball and no one knows for sure.
 
“It’s certainly possible but for it to happen in March, the economy will need to take a negative turn; I don’t think they want to cut too soon and in my opinion March is too soon.”
 
And with the banks not budging their prime rates, one broker believes another BoC rate cut would be pointless.
 
“I think it will be a while before rates are cut again,” Sami Bin Saad of Invis says. “The point of reducing the interest rate is to support borrowing and if the banks aren’t biting at the first rate drop why would they bite at a second?”


 

Residential property sales in Greater Vancouver totalled 2,116 in December 2014, an increase of 8.3 per cent from the 1,953 sales recorded in December 2013 and a 15.9 per cent decline compared to November 2014 when 2,516 home sales occurred.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 1,888 in December 2014. This represents a 1.7 per cent increase compared to the 1,856 units listed in December 2013 and a 37.4 per cent decline compared to November 2014 when 3,016 properties were listed.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 10,320, a 10.7 per cent decline compared to December 2013 and a 17.8 per cent decrease compared to November 2014.

Sales of detached properties in December 2014 reached 833, an increase of 9.3 per cent from the 762 detached sales recorded in December 2013. The benchmark price for detached properties increased 8.1 per cent from December 2013 to $1,002,200.

Sales of apartment properties reached 912 in December 2014, an increase of 7.3 per cent compared to the 850 sales in December 2013.The benchmark price of an apartment property increased 3.5 per cent from December 2013 to $380,700.

Attached property sales in December 2014 totalled 371, an increase of 8.8 per cent compared to the 341 sales in December 2013. The benchmark price of an attached unit increased 4.5 per cent between December 2013 and 2014 to $476,800.


 

15 per cent house price drop possible, RBC chief says

Canadian housing prices could fall as much as 15 per cent should interest rates climb, which would be “healthy” for the country’s economy, Royal Bank of Canada Chief Executive Officer David McKay said.
“There could be some price correction, particularly in a rising rate environment,” McKay said Thursday in an interview at the bank’s Toronto headquarters. “I don’t see it to the extent that the Bank of Canada does, but I do think you could have a 10 to 15 per cent price correction.”
Canada’s central bank said Dec. 10 that housing prices are overvalued by as much as 30 per cent. Bank of Canada Governor Stephen Poloz warned this month that indebted households and high housing prices pose a risk to the financial system even as the country isn’t in a housing bubble.
Royal Bank and other large Canadian lenders have posted record profits in recent years as homeowners took advantage of the lowest mortgage rates in decades, fuelling housing prices and an expanding real estate market.
Bank of Canada’s policy interest rate has been at 1 per cent since September 2010. The central bank may start raising its overnight lending rate in the fourth quarter of 2015, according to a Bloomberg survey of economists.
“The catalyst is very low rates, ultra low rates, strong demand and lack of supply creation,” said McKay, who led the bank’s consumer-lending business before becoming CEO on Aug. 1. “Demand is there, supply’s not, and low interest rates stimulate price wars still.”
The borrowing has left Canadians with record levels of debt, prompting warnings from policy-makers and the central bank about overindebted consumers and elevated housing prices. Canada’s ratio of household debt to disposable income rose to a record between July and September.
“I do not believe it will end badly,” McKay said. “A slowing market is absolutely a healthy thing right now, so we’re not concerned.”

Metro Vancouver home sales above average in October
Home sales in the Metro Vancouver* housing market continue to outpace long-term averages for this time of year.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 3,057 on the Multiple Listing Service® (MLS®) in October 2014. This represents a 14.9 per cent increase compared to the 2,661 sales in October 2013, and a 4.6 per cent increase over the 2,922 sales in September 2014.

Last month’s sales were 16.6 per cent above the 10-year sales average for October.

“We’ve seen strong and consistent demand from home buyers in Metro Vancouver throughout this year. This has led to steady increases in home prices of between four and eight per cent depending on the property,” said REBGV president Ray Harris.

New listings for detached, attached and apartment properties in Metro Vancouver totalled 4,487 in October. This represents a four per cent increase compared to the 4,315 new listings in October 2013 and a 14.7 per cent decline from the 5,259 new listings in September.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 13,851, a 9.2 per cent decline compared to October 2013 and a 6.6 per cent decrease compared to September 2014.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $637,000. This represents a six per cent increase compared to October 2013.

“Detached homes continue to increase in price more than condominium and townhome properties. This is largely a function of supply and demand as the supply of condominium and townhome properties are more abundant than detached homes in our region,” Harris said.

Sales of detached properties in October 2014 reached 1,271, an increase of 19.1 per cent from the 1,067 detached sales recorded in October 2013, and a 60.9 per cent increase from the 790 units sold in October 2012. The benchmark price for detached properties increased 7.9 per cent from October 2013 to $995,100.

Sales of apartment properties reached 1,268 in October 2014, an increase of 15.5 per cent compared to the 1,098 sales in October 2013, and a 57.9 per cent increase compared to the 803 sales in October 2012. The benchmark price of an apartment property increased four per cent from October 2013 to $380,200.

Attached property sales in October 2014 totalled 518, a 4.4 per cent increase compared to the 496 sales in October 2013, and an 53.3 per cent increase over the 338 attached properties sold in October 2012. The benchmark price of an attached unit increased 4.7 per cent between October 2013 and 2014 to $479,500.


 

Poll finds support for taxing absentee property owners

 

Housing affordability is the most important issue for almost half of Vancouver residents, an Insights West poll concluded recently and was reported in The Vancouver Sun this week. This was the highest level of concern over housing reported in the entire Lower Mainland.

The housing “problem is not new to our city, but it certainly makes us a unique case in the country. People may still work in Vancouver, but high real estate prices have forced many of them to establish a home in adjacent cities. They may cast a ballot on Nov. 15, but will do so in a different municipality.

In the early stages of the city’s election campaign, two political parties — the Coalition of Progressive Electors and the Green Party of Vancouver — signalled their intention to deal with one of the lingering issues in the city: empty homes.

An empty house creates many problems. There is no one to rake leaves in the fall, leaving sidewalks untidy. The absence of inhabitants means fewer people are buying coffee or groceries, hurting local businesses.

The property tax is definitely present for homeowners who do not reside in Vancouver. But the reality is these people are not part of the daily life of the city. They are speculators more than members of the community.

Insights West asked Vancouverites this month about a recent debate over levying a tax on people who acquire properties in Vancouver but do not live in them. The idea was extremely popular, with 72 per cent of respondents calling it a “very good” or “good” proposal, and only 18 per cent deeming it “very bad” or “bad.”

Support for such a levy was high across genders (75 per cent for women, 70 per cent for men), all three age groups (from a low of 70 per cent among those aged 55 and over to a high of 76 per cent among those aged 18-34) and all three household incomes brackets (80 per cent in the lowest bracket, 66 per cent among those in households earning $100,000 or more a year).

While we may be unique in Canada, another world-class city is actively looking for ways to deal with empty homes.

New York City, governed by a Democrat for the first time since 1993, is considering a tax on non-resident owners. Mayor Bill de Blasio — elected on a promise to deal with what he calls the “inequality crisis” — is pondering the levy, which would be applied to anyone who spends less than half the year in the city and owns a property appraised at more than $5 million US.

The proposal is far from a done deal. It will require the backing from the two houses of the state legislature, as well as the signature of the governor, before becoming law. The main opponents so far, as expected, are developers and real estate lobbyists.

If discussions about a levy in Vancouver continue after Nov. 15, we can expect similar dissent from the industry. Insights West also found 73 per cent of Vancouverites agreed with the statement: “Developers and lobbyists have too much influence in my municipality.” This proportion is well above the Metro Vancouver average of 68 per cent, and a reminder of the way residents perceive the decision-making process at City Hall.

In the end, while a levy on absentee homeowners is decidedly popular, it will come down to reality and implementation. Just how big the absentee problem is, and what kind of measures should be taken to appease it, are matters that are still open for debate. But the data shows Vancouverites are not thrilled with the prospect of being surrounded by empty houses.

Mario Canseco is vice-president of Insights West’s public affairs division. He writes every second week in The Vancouver Sun’s business section.


 

Ancient property-transfer tax adds another burden for Vancouver buyers

 

For Vancouver home buyers who get the shivers at high prices for even run-down houses, there is also the haunting sight of a tax goblin.

The B.C. government’s property-transfer tax has become a growing burden for buyers in the Vancouver region’s housing market over the past 27 years. The province introduced the PTT as a way to generate revenue, especially targeting the upper crust of B.C. house purchasers.

But the province-wide formula for the tax hasn’t changed since 1987, when Vancouver-area homes were much cheaper. Today, on the purchase of a $5-million home, the buyer has to pay $98,000 for the PTT. On a $2-million home, the tax rings in at $38,000, and on a $1-million property, the extra outlay is $18,000.

The B.C. government collected $937-million in the 2013-14 fiscal year from the tax. Housing industry observers note that the province’s coffers get an added lift when wealthy buyers, including those offshore, acquire high-end homes.

The PTT formula works like this: On the initial $200,000 of the purchase price, the home buyer must fork over 1 per cent of that first tier and then pay a 2-per-cent tax rate on the amount above $200,000.

The Real Estate Board of Greater Vancouver estimates that 96 per cent of properties in the region sold for at least $200,000 last year. That contrasts sharply with 5 per cent of properties in 1987 that changed hands for $200,000 or higher.

Far from being a targeted tax on the wealthy, the PTT’s net captures the vast majority of buyers of detached homes, townhouses and condos in Greater Vancouver, the board argues.

In this past February’s provincial budget, the B.C. Liberal government announced an improved break for eligible first-time home buyers. Those who qualify could save up to $7,500 on buying their first house, as long as that property is acquired for $475,000 or less, up from the previous threshold of $425,000.

B.C. Finance Minister Mike de Jong tweaked one aspect of the broader tax system in February to make up for the revenue lost from giving tax relief to some first-time home buyers. The province decreased the threshold for phasing out the homeowner grant from $1.295-million to $1.1-million in a property’s assessed value, effective the 2014 tax year. In short, the change means that more homeowners will be paying higher municipal property taxes annually.

Despite the tax burden, housing demand remains robust in Vancouver, says Dan Scarrow, vice-president of corporate strategy at Macdonald Realty Group.

Mr. Scarrow doesn’t see a Vancouver housing bubble because many existing homeowners have lived in their abodes for at least 15 years, before the sharp run-up in prices. With small or non-existent mortgages, there isn’t financial pressure on those long-time homeowners to sell, and they can afford to hold out for higher offers when they do decide to move for whatever reason, he reckons.

“It comes down to huge demand globally and restricted supply locally,” Mr. Scarrow says.

The benchmark home price index last month hit a record $633,500 for detached homes, townhouses and condos sold in Greater Vancouver, which includes suburbs such as Richmond, Burnaby and Coquitlam. On Vancouver’s west side in September, the index hit a record of nearly $2.3-million for detached properties.

Having grown accustomed to a cash cow, the B.C. government isn’t about to dramatically revise the PTT formula any time soon. The province conservatively forecasts that revenue from the PTT will be $854-million in 2014-15. That would be down 9 per cent from the previous fiscal year but still more than double the revenue garnered in 2002-03. From the province’s viewpoint, the tried-and-true PTT isn’t a scary trick, but a valuable treat inside its revenue bag.


 

Home sales activity picks up the pace in September

 

Home buyers were active in Metro Vancouver last month, with home sales well exceeding the 10-year average for September.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 2,922 on the Multiple Listing Service® (MLS®) in September 2014. This represents a 17.7 per cent increase compared to the 2,483 sales in September 2013, and a 5.4 per cent increase over the 2,771 sales in August 2014.

Last month’s sales were 16.1 per cent above the 10-year sales average for the month and rank as the third highest selling September over that period.

“September was an active period for our housing market when we compare it against typical activity for the month,” Ray Harris, REBGV president said.

New listings for detached, attached and apartment properties in Metro Vancouver* totalled 5,259 in September. This represents a 4.6 per cent increase compared to the 5,030 new listings in September 2013 and a 33.5 per cent increase from the 3,940 new listings in August. Last month’s new listing total was 0.4 per cent above the region’s 10-year new listing average for the month.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 14,832, an 8 per cent decline compared to September 2013 and a 0.4 per cent increase compared to August 2014.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $633,500. This represents a 5.3 per cent increase compared to September 2013.

“Gains in home values are being led by the detached home market. Condominium and townhome properties are not experiencing the same pressure on prices at the moment,” Harris said.  “Individual trends can vary depending on different factors in different areas, so it’s important to do your homework and work with your REALTOR® when you’re looking to determine the market value of a home.”

Sales of detached properties in September 2014 reached 1,270, an increase of 24.1 per cent from the 1,023 detached sales recorded in September 2013, and a 113.8 per cent increase from the 594 units sold in September 2012. The benchmark price for detached properties increased 7.3 per cent from September 2013 to $990,300.

Sales of apartment properties reached 1,188 in September 2014, an increase of 16.7 per cent compared to the 1,018 sales in September 2013, and a 75.7 per cent increase compared to the 676 sales in September 2012. The benchmark price of an apartment property increased 3.3 per cent from September 2013 to $378,700.

Attached property sales in September 2014 totalled 464, a 5 per cent increase compared to the 442 sales in September 2013, and an 88.6 per cent increase over the 246 attached properties sold in September 2012. The benchmark price of an attached unit increased 4.2 per cent between September 2013 and 2014 to $477,700

Vancouver rental prices becoming more and more unaffordable

A Colliers International (Commercial Real Estate Broker) report released recently on valuations of multi-family properties across the country states: “Vancouver has tended to demonstrate the highest rental rates in most, if not all, unit categories of multi-family housing.”
This is doubtless attributable to the fact apartment buildings, on a per-suite basis, are more expensive in Vancouver than anywhere else in Canada.
Reports Colliers: “The highest price per door in Canada can be found in Vancouver with prices increased just under nine-per-cent  compared to  last year’s figure.”
Vancouver also has one of the tightest rental markets in Canada, with a vacancy rate of just 1.8 per cent.
For anyone hoping for some relief, Colliers warns: “The Metro Vancouver multi-family investment market will remain one of strong demand and very limited supply.”
B.C. rent controls permit annual increases totalling the inflation rate, plus two per cent, 3.8 per cent in 2013, 4.3 per cent in 2012.
 Now laneway houses renting for more than $2,000 a month, a basement suite renting for $2,100 a month, and one 500-square-foot apartment, “described as spacious,” renting for $1,500 a month.

Should you take a big mortgage?

According to the Canada Mortgage and Housing Corporation the average house price across Canada is expected to reach $396,000 in 2014 and $402,000 in 2015 . Since higher house prices mean larger mortgages, how can we determine just how much mortgage is too much of a risk?
The "cash flow" answer is that if you can't afford the monthly mortgage payment (and property taxes, and repairs and maintenance) your mortgage is too big. The "equity" answer is that if you have less than 10 per cent equity in your house, you are at higher risk of financial problems.
The statistics show:
More than nine in 10 insolvent homeowners had mortgage debt exceeding 80 per cent of the value of their home, which is  the traditional definition of a high risk mortgage. Worse, seven in 10 had less than 10 per cent equity and 64 per cent reported having no net realizable value in their home at all.
A homeowner who files bankruptcy typically has a mortgage equal to 95 per cent of the value of their house. If you hold a mortgage above 90% of the value of your home and you are at significant risk of filing for insolvency.
If you have a lot of equity in your house, you can weather a financial setback. 
Simple example: 
If you have a $200,000 house with a $125,000 mortgage and your income drops, you can decide to sell your house, pocket $75,000 (before selling costs), buy or rent a smaller home, and live on the difference until your financial situation improves.
If your $200,000 house has a mortgage of 90 per cent, or $180,000, you have no margin for error. You probably can't sell your house and generate enough money to pay off the mortgage and pay the penalty to break the mortgage, real estate commissions, legal fees, and other selling expenses. The solution is to turn to the use of credit cards and lines of credit to make over-extended mortgage payments and pay your living expenses. That is why, in addition to a high risk mortgage, insolvent homeowners end up owing on average $73,000 in other unsecured debts as well. It is this debt, on top of too much mortgage debt, that becomes the tipping point into insolvency.
These numbers put into question the conventional practice that Canadians can qualify for a high-ratio insured mortgage with as little down as 5 per cent. While Canada Mortgage and Housing Corporation has continued to tighten mortgage insurance guidelines, the question is are these changes enough? Neither has to date addressed issues like lowering the amortization period below 25 years or increasing the minimum deposit for high risk lenders.
 Canadian, with an average income, is significantly at risk if their mortgage surpasses the 90 per cent threshold. 
Individual homeownernshould  not  rely on the CMHC, or the  bank, to tell you what you can afford. There is no law that says you must borrow the maximum amount possible. Everyone should  purchase within their ability to service the mortgage. 

Broad-based consumer demand lifting BC housing markets

 

Multiple Listing Service® (MLS®) residential sales in British Columbia are forecast to increase 9.8 per cent to 80,100 units this year, after increasing 7.8 per cent to 72,936 units in 2013. This will be the first time in five years that annual MLS® residential sales will eclipse the 80,000 threshold, reaching the 15-year average. After a relatively weak first quarter, home sales rose sharply in the second quarter as record low mortgage interest rates and relatively stronger economic conditions helped invigorate consumer confidence.
chartRising consumer demand is broad-based across the province. While demand in the South Coast markets quickly bounced back after the recession, many Interior markets struggled to achieve even a modest level of home sales. That dynamic is now changing as some of the strongest gains in unit sales this year are expected in the Okanagan and the Kootenays.
Economic conditions in the province are on an upward trend. Retails sales are now rising at the pre-recession average; total net migration is rebounding and expected to climb by 14 per cent this year, while interest rates continue at rock bottom levels. In addition, stronger global economic growth both this year and next will lead to rising demand for BC exports. Exports to the US are already up more than 12 per cent this year. More robust economic growth is expected to turn around the anemic pace of job creation and further bolster overall housing demand. MLS® residential sales are forecast to increase a further 4 per cent to 83,300 units in 2015. For comparison, a record 106,300 MLS® residential sales were recorded in the province during 2005.
The housing stock is generally expanding alongside overall population and household growth. While imbalances exist in many localized markets, a rapid acceleration in residential construction activity appears to be unlikely through 2015. After increasing 1 per cent to 27,000 last year, housing starts are expected to increase 1.8 to 2 per cent both this year and next, with total housing starts cresting at 28,000 units in 2015.
Market conditions around the province are now on a much stronger footing than at the start of the year. Most BC real estate board areas are exhibiting balanced conditions, with Vancouver, the Fraser Valley and the Okanagan beginning to flirt with sellers’ market conditions. The average MLS® residential sales price is forecast to rise 5.6 per cent to $567,300 this year, on the strength of the detached market. Stronger demand for condominiums in 2015, combined with an edging up of interest rates is expected to keep the provincial average price statistic increasing in the 1 to 2 per cent range.

Tree issues stalling investor plans

Tree issues stalling investor plans

Fighting the City on building permits and other big issues is commonplace but more investors are finding their projects stalled by debates over…trees.

Municipal departments naturally want to protect the urban trees for aesthetic and conservation values but their system and lack of communication is what is irking many investors.

“The city is very strict on trees around private properties and have many stipulations on how to deal with their growth. I do not blame them as it makes the whole neighbourhood look more appealing,” says Sahil Jaggi, a Toronto-based investor that is currently undertaking a renovation project in North York.

“It is this issue that is delaying my project,” he says. “It’s just that we have to go through four or five departments to get a solution and there is no communication or coordination between each so we are getting moved around from one to another. It’s very time consuming and costly to me.”

Despite some trees being on privately held properties, many are protected and regulated under the provisions of municipal by-laws.

The private tree by-law protects all species of trees with a diameter of 30 centimetres (12 inches) or greater measured at 1.4 metres (4 ½ feet) above the ground. It applies to trees on all land use types including, single family residential.


Vancouver single-family detached homes hit record high prices

Greater Vancouver and Fraser Valley home buyers have pushed up prices for single-family detached houses to record highs.

The benchmark home price index hit $984,300 last month for detached properties sold in Greater Vancouver, up 6.6 per cent from August, 2013. In the Fraser Valley, which includes the sprawling and and less-expensive Vancouver suburb of Surrey, the detached price index climbed 3.4 per cent to $569,800 over the past year.

The record-high prices for detached houses will prompt more consumers, especially first-time home buyers, to shop for townhouses and condos, said Shaadi Faris, vice-president at Vancouver-based Intergulf Development Group.

Some baby boomers are selling their large detached homes and moving into condos while helping their children with down payments, fuelling the rally in housing prices in Greater Vancouver, Mr. Faris said in an interview Wednesday. “Locals have built up equity and are downsizing,” he said.

A variety of factors have led to property prices reaching new highs, including low interest rates, a stable economy and an influx of residents from other provinces and countries, real estate experts say.

Intergulf has been getting interest on its various projects primarily from prospective buyers who will live in their units. While there are many inquiries from long-time Vancouverites and people with recent ties to China, there are a small number of outright foreign investors, Mr. Faris added.

Intergulf began construction in early 2014 on its Empire at QE Park condo and townhouse project near Queen Elizabeth Park on Vancouver’s west side.

The index price for existing detached homes on Vancouver’s west side rose 9.7 per cent over the past year to $2,282,400, while increasing 10.3 per cent to $936,500 on the east side.

By contrast, the index price for condos on the west side reached $495,900 in August, up 5.7 per cent from the same month last year. Condo prices on the east side posted a 3.1-per-cent increase year-over-year to $313,400.

The Real Estate Board of Greater Vancouver said the region’s housing sales rose to 2,771 in August, up 10.2 per cent from a year earlier and 4.3 per cent higher than the 10-year average for the month.

“Activity this summer has been strong but not unusual for our region,” Greater Vancouver board president Ray Harris said in a statement.

In the Fraser Valley, townhouse prices nudged up 0.1 per cent to $298,500 over the past year, but condo prices fell 3.5 per cent to $196,700.

Fraser Valley board president Ray Werger said many first-time buyers in the suburbs are able to afford townhouses or smaller detached homes, including new developments in Cloverdale and Langley.


 

Housing market activity follows 10-year August averages
The Metro Vancouver housing market experienced steady home sale, listing, and pricing trends for the month of August.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 2,771 on the Multiple Listing Service® (MLS®) in August 2014. This represents a 10.2 per cent increase compared to the 2,514 sales recorded in August 2013, and a 9.5 per cent decline compared to the 3,061 sales in July 2014.

“Activity this summer has been strong but not unusual for our region,” Ray Harris, REBGV president said. “The volume of home sales has been higher than we’ve seen in the last three years, yet below the record-breaking levels of the past decade.”

Last month’s sales were 4.3 per cent above the 10-year sales average for August of 2,658.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver* is currently $631,600. This represents a 5 per cent increase compared to August 2013.

“Broadly speaking, home prices in the region are continuing to experience modest, incremental gains,” Harris said.

New listings for detached, attached and apartment properties in Metro Vancouver totalled 3,940 in August. This represents a 5.9 per cent decline compared to the 4,186 new listings in August 2013 and a 20 per cent decline from the 4,925 new listings in July. Last month’s new listing total was 8.4 per cent below the region’s 10-year new listing average for the month.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 14,768, a 7.9 per cent decline compared to August 2013 and a 5.4 per cent decrease compared to July 2014.

Sales of detached properties in August 2014 reached 1,158, an increase of 10.1 per cent from the 1,052 detached sales recorded in August 2013, and an 85.6 per cent increase from the 624 units sold in August 2012. The benchmark price for detached properties increased 6.6 per cent from August 2013 to $984,300.

Sales of apartment properties reached 1,126 in August 2014, an increase of 10.6 per cent compared to the 1,018 sales in August 2013, and a 55.3 per cent increase compared to the 725 sales in August 2012. The benchmark price of an apartment property increased 3.6 per cent from August 2013 to $379,200.

Attached property sales in August 2014 totalled 487, a 9.7 per cent increase compared to the 444 sales in August 2013, and a 62.3 per cent increase over the 300 attached properties sold in August 2012. The benchmark price of an attached unit increased 3.9 per cent between August 2013 and 2014 to $474,900.


 

Housing market 10% overvalued in Canada amid condo risks, data uncertainty: TD executive

Canada’s housing market is 10% overvalued, with the biggest risks in condominium overbuilding and uncertainty over how many investors are buying, but the risk of a U.S.-style collapse is low, a top executive at Canada’s second largest bank said on Monday.

Lisa Reikman, chief risk officer of Canadian banking at Toronto-Dominion Bank, said a spike in interest rates or unemployment could threaten Canada’s robust housing market, but the risk is fairly low.

Instead, TD Bank, one of the country’s top three mortgage lenders and a growing retail banking presence on the U.S. East Coast, is watching house appreciation and the growing supply of condominiums.

“The high-rise condo market is an area we’re certainly watching closely, and I think all of the other banks, as well and the regulator, (are watching),” Ms. Reikman said in an interview.

“Just by virtue of the fact there is a lot of new construction of high-rise condos, and there are some questions around … how many of those are being purchased by investors as opposed to people (who) are actually living in them as a primary residence,” she told Reuters.

Foreign investors have helped drive up Canadian real estate prices by parking their money in relatively cheap and plentiful real estate, but some fear that a sudden withdrawal of investors could leave a glut of condos and falling prices.

Ms. Reikman said the banks do not have much better data on  investors than anyone else does.

“The data on that is less than perfect, so we don’t have a perfect line of sight … we rely on the buyer to basically be upfront and let us know if they are buying it to own or if they are buying it as an investment property,” she said.
“You’ll find that that’s probably one area that all the banks will say is difficult to tell, as will the builders.”

While foreign observers, including the International Monetary Fund and the Organisation for Economic Co-operation and Development, have warned that Canada’s housing market is among the most overvalued in the world, the nation’s major banks have been more sanguine, saying there are structural reasons why the high prices are mores sustainable than they may appear.

“We think the (overvaluation) number might be — generally across the Canadian market — maybe about 10%, as opposed (to) the numbers we’ve seen from some of (those) external to Canada, anywhere between 30-to-60%,” she said.

The Canadian market cannot be compared to the U.S. sector before its collapse due to several factors: Canada’s requirement of insurance for mortgages with less than 80% loan-to-value; conservative underwriting standards; a tiny subprime market, and Canadian lenders typically keeping mortgage on their books, Ms. Reikman said.

“We look at all of those things and think there are some pretty fundamental reasons why the U.S.-style collapse can’t happen here or is highly unlikely to happen here,” she said.


 

Tracking foreign buyers in Canada’s housing boom: Can we do it? Should we even care?

A third of people buying homes in Canada may be foreigners, says one real estate company. A leading economist says the number isn’t even 5%. The country’s housing agency says it has no idea what the actual number is.

There is no definitive answer to the persistent question about how much of the current Canadian housing boom is being driven by overseas buyers — as some eyes focus sharply on Mainland China.

Even at Canada Mortgage and Housing Corp., the percentage of foreign ownership in the Canadian housing market is a deep mystery. CMHC avoided the issue entirely this month, when it released a massive survey of more than 42,000 Canadian condominium households in Vancouver and Toronto.

“At this point in time, it is still very difficult to identify [overseas investors] as part of the survey,” said Bruno Duhamel, manager of economic and housing analysis at CMHC. “We are exploring what type of method could be used.”

The real issue may be even if we can pinpoint the number of people from outside Canada buying residential property, should we care? Canada has no restrictions on foreign property ownership and the federal government said as recently as last year it has no plans to implement any restrictions.

“If we are talking about people with connections to another country, it’s meaningless. I’m surprised it’s only 33% if it’s just a connection,” says Benjamin Tal, deputy economist with CIBC, referring to a survey by Vancouver brokerage Macdonald Realty that found of its 531 single family sales in 2013, 178 or 33.5%, were to buyers from Mainland China.

The Macdonald Realty results were produced by someone going through the transactions and identifying names the the company identified as Chinese, meaning the buyers may very well have been established Canadian citizens.

Mr. Tal’s own analysis, which he based on the CMHC data, information obtained from developers and his own bank’s business, suggests foreign investment is less than 5% of the condominium market in Toronto and Vancouver.

“It’s a solid market,” said Mr. Tal about the overseas buyers. “We are talking about people who are putting down 45%-50%. They are not getting CMHC mortgage insurance [backed by the federal government].”

So why all the fear and loathing about overseas buyers?

“I think ‘foreign’ sounds risky,” said Mr. Tal. “You ask people about them and it’s like ‘they’re the bubble, there is going to be a crash when they leave’.”

But demand can fuel price increases. If you feel housing prices are rising too fast, a high percentage of overseas buyers driving the market may be a legitimate gripe, concedes the economist.

Brian Johnston, chief operating officer of home builder Mattamy Homes, says the so-called foreign buyer fear has always been overstated.  “A lot of the capital comes from overseas, but the buyers are residents. There is also the phenomenon whereby someone (generally from Asia) gets their Canadian passport and then returns to their country of origin to make the real money (and taxed at much lower rates). Meanwhile, they have bought real estate here.”


 

Canada house prices to climb further, crash fears rising

The risk of a property market crash in Canada has not ebbed, according to an increasing number of analysts polled by Reuters who said chances of a steep fall in prices have increased in the past year.

Still, the survey medians showed house prices will likely rise more than earlier expected at least until 2017, reflecting ongoing reluctance by forecasters, many of whom work for mortgage lenders, to predict negative returns on property.

This year Canadian home prices on average will appreciate by 5 per cent followed by a 2-per-cent rise in 2015 and then again in 2016 after doubling in value over the past decade.

But seven of 20 respondents in the poll conducted Aug 19-26 said the threat of a property market meltdown had intensified over the past year, especially in Toronto and Vancouver, up from five of 21 in the May poll.

“[The] risk has increased due to house price increases significantly exceeding income growth and the oversupply of condos in downtown Toronto,” said John Andrew, professor at Queen’s University.

Canadian households on average hold debt worth more than 1.5 times their income and when mortgage costs increase once the Bank of Canada begins raising benchmark interest rates, it will make that burden even heavier.

The BoC will probably raise rates in the third quarter of 2015, a Reuters poll showed on Tuesday. “Lower mortgage rates in the spring and summer have enticed more marginal home buyers who ultimately won’t be able to carry heavy debt load in the future when rates rise,” said David Madani, Canada economist at Capital Economics.

Still, the medians suggest prices will not decline nationally, at least not until 2017 – the end of the polling horizon. Even in Toronto and Vancouver, two of the country’s most expensive markets, prices are not expected to fall.

Many are of the view that prices will only cool, dodging a U.S.-style nosedive where property prices fell by more than a third, leaving millions of Americans in negative equity.

Thirteen of 20 participants said Canada’s housing boom is different from other real estate booms and is therefore unlikely to end in a crash.

“The risk of a crash is negligible, based on my expectation that any sustained increase in mortgage interest rates will be minimal – at most half a point by the end of 2015,” said Canadian housing economist Will Dunning.


 

Even condos becoming out of reach in Vancouver’s sky-high housing market

Condos have long been touted as the affordable housing option in Vancouver.

Not so much, anymore.

“New housing in the City of Vancouver, even new multi-family, will never be affordable for the majority of potential home buyers.”

That’s the assessment of housing market analyst Frank Schliewinsky, writing recently in his Vancouver Condo Report.

“That’s the reality of the Vancouver housing market and nothing much will change that in the foreseeable future,” says the owner of Strategics, a 33-year-old Vancouver company analyzing market risk for condo developers and investors.

Schliewinsky says, increasingly, even multi-unit dwellings are becoming unaffordable for most buyers.

According to Schliewinsky’s Condo Report last spring, buying a 1,087-square-foot, two-bedroom unit in a new highrise on Vancouver’s east side cost, on average, $705,456 — plus HST; on the west side, $768,483 for 942 square feet.

Of course, prices are lower for resale and low-rise wood-frame buildings, especially outside Vancouver.

Lately, in sharp contrast to soaring prices for detached homes, prices for standard condo units in Greater Vancouver in fact have moderated, according to RBC Economics Research.

Still, by the bank’s reckoning, it requires nearly 40 per cent of median pre-tax “household” income to buy a Vancouver-area condo, which includes mortgage payments, property taxes and utilities.

By contrast, in Canada’s largest city, Toronto, it takes 34.2 per cent of household income to purchase a standard condo. In Calgary, arguably Canada’s most economically robust city, 20.4 per cent of income.

Clearly, even condos — representing 33.5 per cent of Vancouver’s existing housing stock — aren’t a comprehensive answer to affordability in this city.

While prices may have moderated during the last three calendar quarters, the Greater Vancouver Real Estate Board notes the cost of a typical east-side condo has increased over the past five years by 21 per cent, about the same as on the city’s west side (Detached homes went up 50 to 60 per cent).

During that period, condo prices in the wider region increased by only 15 per cent.

Those wishing to live right in the city are showing determination in making their condo purchases — 1,172 units sold in April, representing an 11.4-per-cent increase over one year earlier.

Some team up to buy, or convince parents or relatives to help with a down payment.

And of course, older downsizers, with cash from a home sale, are able to afford the high condo prices.

The Greater Vancouver Real Estate Board reports the typical price buyers paid in April for a west side condo was just less than $500,000; $319,000 on the east side; $590,000 in West Vancouver. (The board’s numbers don’t differentiate between new or old units, concrete or wood-frame).

An Affordability Index for spring of 2014, sponsored by Urban Development Institute and Fortis BC, reveals fewer than a third of buyers in Vancouver in fact can afford to purchase a new concrete or wood-frame condominium at current prices.

And just 34.7 per cent can afford units in older concrete condominium buildings, while 41.4 per cent can afford to buy in older wood-frame structures.

Developers recognize, with detached housing in Vancouver growing so unaffordable, increasingly, families will look to condo housing. To respond, they’re building more three-bedroom units, which could carry heavier price tags.

Whatever happens on the pricing side, condos are bound to continue to play a role in housing Vancouver’s fast-growing population.

And developers know it. In 2012, 64 per cent of all housing starts in Vancouver were condominium developments, the highest such ratio in Canada.

Condos may be getting outrageously expensive. But hey, everything is relative.


 

Bank of Canada won’t follow Fed’s lead on interest rates, Poloz says

Bank of Canada Governor Stephen Poloz wants to make something perfectly clear: When the Federal Reserve starts raising interest rates, Canada’s central bank won’t necessarily follow immediately.
“The main thing people should understand is that our policy is quite capable of being fully independent, as it has been these past few years,” Mr. Poloz said in an interview at the annual gathering of central bankers and economists at Jackson Hole, Wyo., over the weekend.Mr. Poloz’s comments followed a speech by Janet Yellen, in which the Fed chair embraced the possibility that stronger economic growth could prompt the U.S. central bank to lift its benchmark lending rate sooner than expected. History shows interest-rate cycles in Canada and the United States are highly correlated. Many investors assume there is a “reaction function” in Canada to U.S. monetary policy: Where the Fed goes, the Bank of Canada must follow.
Mr. Poloz’s assertion that he will set his own path could inform speculation on Bay Street and Wall Street about when the Bank of Canada will adjust its interest-rate setting. Most analysts assume the next move will be an increase, and that higher borrowing costs will come in the summer of 2015. Current expectations are that the Fed will lift the federal funds rate from zero at roughly the same time, or a month or two earlier.
Mr. Poloz’s comments suggest the lag between the Fed’s first interest-rate increase since 2006 and the Bank of Canada’s shift higher could be longer than investors currently expect.
A broad rethink across financial markets about the linkage between Fed and Bank of Canada policy could put downward pressure on the Canadian dollar and various short-term interest rates. Even though any change at either central bank still is believed to be many months away, investors base immediate decisions on expectations of the future. If they sense the Bank of Canada could leave its benchmark rate lower for longer, they will adjust what they are willing to pay now for Canadian bonds, the currency and other assets tied to the interest rate.
Mr. Poloz refused to discuss his timetable for adjusting interest rates in explicit terms. “In the last several months we’ve gone to some lengths to pull ourselves out of a forward-guidance setting,” he said. “We are really careful not to translate our analysis into a path for the interest rate.”
Canada’s central bank long has insisted its policy decisions are not directly influenced by the Fed’s actions, but market participants have always been skeptical. Mr. Poloz’s predecessor, Mark Carney, conceded in 2010 that there “are limits to the divergence that there can be between Canada and the United States.” Mr. Poloz acknowledged that while “theoretically” the gap between Canadian and U.S. policy rates “could be anything,” the Bank of Canada “never will be 100 per cent independent” because the Canadian and U.S. economies are so closely intertwined.
While Mr. Poloz insisted he wasn’t making predictions, he offered several reasons to explain why he would feel no pressure to reflexively follow the Fed. For one, the Bank of Canada has a head start. “It’s worth reminding people that we are at 1 per cent,” Mr. Poloz said. “In this world, that’s a high number when everything is starting at zero.”
The Bank of Canada is seeking to return its benchmark interest rate to a setting that neither stokes inflation nor hurts the economy. Before the crisis, the “equilibrium rate” was understood to be about 4 per cent. The central bank now thinks scars from the crisis have lowered that rate. “When you think the equilibrium number is at some lower rate than in the past, which I do, but I don’t know yet what it might be, then at least we know that we are part way there already,” Mr. Poloz said.
The other factor is the relative strength of the two economies. The U.S. has considerable forward momentum, while Canada still is waiting on a revival in exports and business investment. Stronger demand in the U.S. should benefit Canada’s economy. Monetary policy in the two countries is so similar because of their close trade links: When the U.S. economy grows, Canada sells more exports, which boosts economic growth and puts upward pressure on inflation.
Canada’s loss of market share raises questions about whether stronger U.S. growth will boost Canada’s economy to the extent it has in the past. Mr. Poloz says he is counting on new exporters to replace those wiped out by the recession, creating an incentive to leave borrowing costs low to help those entrepreneurs get started. Canada’s job growth this year is almost entirely driven by part-time positions, while U.S. employers are adding jobs at one of the most impressive rates on record.
“The linkage between their recovery and ours is not mechanical … We still have question marks around ours,” Mr. Poloz said. “We ought to be able to strike a fully independent course determined by these other things quite independently of what theirs are.”

More investors turning to small property development

Limited supply and high prices in key markets is encouraging landlords to embrace the role of small property developer. But are the big profits worth the hard work?
An increasing number of investors are turning their attention to property development in a bid to maximize on the demand for single-family homes.
Speaking to CREW, investor Sahil Jaggi says buying an old building and undertaking a complete rehab is the only way he can get into desirable neighbourhoods at a good price, and opportunity to make a lot of cash.
While admitting that the work is a full-time job with the risk of unexpected costs popping up, Jaggi says joint-ventures are the best way to get into such projects.
“If you have a good plan, good location and a good project lined up you will always find investors,” he says. 
“If 20 to 30 per cent of the area is already developed, you know it’s headed towards something and there’s room for growth.”
Paul Shikanai, owner of Regency Property Management and Real Estate in Regina, advises investors to be financially creative when undertaking such projects and do not undertake any unnecessary costs.
“I’ve seen people put a lot of money into it and it’s hard to get that return,” he says. “You don’t need to put in a granite countertop. You don’t need a beautiful tile on the floor.”

 Townhomes an affordable alternative in Vancouver

 

More needed: Restricted zoning limits numbers built and they’re not always welcome

Can’t afford a single-family home in Vancouver, and not enamoured with condo living? There is another option, albeit a frustratingly elusive one: townhomes.

It’s a great option for people who want to be able to walk out their front door and be outside — as opposed to exiting via a corridor full of neighbouring units, an occasionally slow elevator and a lobby.

“For most people, it’s as close as you can get to having a home in the city,” says Vancouver realtor Bob Rennie.

Unfortunately, the stock of townhomes in Vancouver is lamentably modest, with the scarcity of new developments driving up prices.

Townhouses, says Rennie, are “probably the most undersupplied part of the housing market.”

He notes only 36 townhomes, part of three developments on the city’s east side, are expected to come on to the market in 2015.

Vancouver’s planning director Brian Jackson calls them “the missing piece in Vancouver’s housing continuum.” The focus, he notes, always has been on high and mid-rise development.

“It’s a huge issue,” says Anne McMullin, President and CEO of the Urban Development Institute. She says a new townhouse in Vancouver these days can run to $1.3 million, and more.

The root problem — restricted zoning.

No developer wanting to make money will build townhouses on property zoned for denser, more lucrative condo and apartment buildings.

So, new townhomes have to be built on land either already zoned for townhouses or for single-family occupancy.

Rennie says the city used to promote housing density only downtown “but now, we’re moving into single-family neighbourhoods.”

And townhouses are not always welcome.

Maureen Gulyas, a spokesman for the city, says municipal planners have “added policies to encourage this type of development in our community plans.”

Such plans for Marpole, however, initially got stymied by an angry community, with designated townhome development having to be scaled back, from 2,400 units to 800. Consultation with the community last fall yielded a long list of local concerns, outlined in a municipal report: “shadowing, loss of privacy for neighbouring single-family homes, increased traffic and crime”.

Residents also “were doubtful new housing forms proposed would be affordable,” and expressed concern buyers would allow the townhomes “to sit empty as investment properties”.

Jackson, who calls townhouse development “gentle densification,” says the city experienced less pushback from two other neighbourhoods where townhouse development is planned — on Nanaimo Street and along Kingsway. Townhouses also are being earmarked for streets near the Cambie Corridor. Many will be priced at less than $1 million, he says.

As encouragement, the city is offering townhouse developers density bonuses and an easing of provisions for their Community Amenity Contributions — money from developers directed to city coffers to provide community amenities like parks.

While townhouses give more choice to Vancouverites in a tough housing market, no one should think they’re the answer to the city’s affordability challenge — except perhaps for those priced out of a single-family home.

According to the UDI/FortisBC Housing Affordability Index, in the first quarter of 2013, 26.2 per cent of residents — based on incomes and interest rates — would have qualified for a townhouse mortgage. That dropped to just 18.5 per cent by the first quarter of 2014.

But with 5,000 new residents moving to Vancouver every year, housing options are needed.

And, says Rennie, if Vancouverites want their aging parents to be able to remain in the city, or their adult children to live nearby, new townhouses will be needed, offering their buyers greater space, privacy and outdoor space than they likely could get in a condo.


 

Canadian Housing Market To Cool Down In 2015 If Interest Rates Rise: RBC

RBC Economics says higher interest rates will put a strain on the Canadian housing market in 2015 and "substantially" moderate prices increases.

In its latest Canadian housing forecast, the bank (TSX:RY) says Canada's current historically low interest rates are not "sustainable" and it forecasts longer-term interest rates will rise by the end of the year in anticipation of a return to tightening mode by the Bank of Canada in 2015.

RBC says if current rates rise, it anticipates home resales to fall by 0.9 per cent to 463,100 units next year following an increase of 2.1 per cent to 467,200 units in 2014, while it sees home prices increasing just 1.1 per cent in 2015, compared with a jump of 4.3 per cent this year.

RBC describes those developments as a cooling not a crash in the housing market, which is supported by a variety of other factors, including steady immigration rates and good employment outlook.

The report said condo construction, particularly in the major cities, will be one of the main reasons the housing market will slow in 2015 as more units become available.

It cautioned that although there will be slowdown in 2015, the big impact on the Canadian housing market will be likely not be seen until 2016 once higher interest rates are "normalized."


 

Canadians' Household Debt Grows

Canadians increased their debt burdens by about six per cent over the past year, according to a new survey from BMO, but when it comes to owing money, different parts of the country are headed in different directions.

 

Western Canadians have seen their debts skyrocket over the past year, BMO says, with Alberta taking the lead. The average houshold debt there soared 40 per cent, to $124,838. It's the highest debt burden of any region in Canada.

 

British Columbians’ average household debt jumped 26 per cent, to $99,834, from $79,089.

 

Much of the growth in home prices and sales in recent months has been concentrated in three markets -- Calgary, Toronto and Vancouver.


Those rapidly growing home sales numbers also help to explain why a larger number of Canadians hold mortgage debt today than last year.

The number of households with mortgage debt grew by 13 per cent in the past year, BMO’s survey found, to 43 per cent of all households.


 


Home buyers continue to slightly outpace sellers, but not by much

The Greater Vancouver housing market continues to see slightly elevated demand from home buyers, steady levels of supply from home sellers and incremental gains in home values depending on the area and property type.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 3,061 on the Multiple Listing Service® (MLS®) in July 2014. This represents a 3.9 per cent increase compared to the 2,946 sales recorded in July 2013, and a 10.1 per cent decline compared to the 3,406 sales in June 2014.

"This is the fourth consecutive month that the Greater Vancouver market has exceeded 3,000 sales,” Darcy McLeod, REBGV president-elect said. “Prior to this, our market had not surpassed the 3,000 sale mark since June of 2011.”

Last month’s sales were 3.8 per cent above the 10-year sales average for July of 2,948.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver* is currently $628,600. This represents a 4.4 per cent increase compared to July 2013.

“Today’s activity continues to put Metro Vancouver in the upper reaches of a balanced real estate market,” McLeod said.

The sales-to-active-listings ratio currently sits at 19.6 per cent in Metro Vancouver. This ratio has ranged between 18 and 20 per cent over the last four months.

New listings for detached, attached and apartment properties in Metro Vancouver totalled 4,925 in July. This represents a 1.5 per cent increase compared to the 4,854 new listings in July 2013 and a 7.8 per cent decline from the 5,339 new listings in June.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 15,617, a six per cent decline compared to July 2013 and a 2.5 per cent decrease compared to June 2014. 

Sales of detached properties in July 2014 reached 1,322, an increase of 5.8 per cent from the 1,249 detached sales recorded in July 2013, and a 68 per cent increase from the 787 units sold in July 2012. The benchmark price for detached properties increased 6.5 per cent from July 2013 to $980,500.

Sales of apartment properties reached 1,212 in July 2014, an increase of 0.2 per cent compared to the 1,210 sales in July 2013, and a 30.7 per cent increase compared to the 927 sales in July 2012. The benchmark price of an apartment property increased 2.2 per cent from July 2013 to $376,500.

Attached property sales in July 2014 totalled 527, an 8.2 per cent increase compared to the 487 sales in July 2013, and a 37.2 per cent increase over the 384 attached properties sold in July 2012. The benchmark price of an attached unit increased 3.4 per cent between July 2013 and 2014 to $472,400.

Canada’s most expensive housing market not headed for crash, says credit agency DBRS

A leading credit rating agency says Canada’s most expensive housing market may not be all that affordable for the average family, but despite that no major correction is coming Vancouver’s way.
DBRS  looked at 39 markets in Canada, the United States and Australia, releasing its focus feature on Vancouver Wednesday.
“Based on historical data, the Vancouver market does not appear to be significantly overheated,” said DBRS, in the report. “Therefore, a correction of any magnitude may not be justified given the strong fundamentals in the market.”This month the real estate board of Greater Vancouver said June competition among homebuyers was as strong as it had been since  2011.
Property sales in the region were up 28.9% in June from a year ago while the average sale price of detached home reached $1,200,539.
DBRS acknowledged there are affordability issues and said home prices continue to rise faster than disposable income, “threatening the affordability of housing for many Canadian families” in the market.
DBRS says given the stable economy and the low interest rate environment that could persist for the foreseeable future, it’s hard to envision a correction.
“It is difficult to foresee catalyst that could create a significant price correction in the Vancouver housing market over the medium term,” said DBRS.
In its study, DBRS noted from 1994-1998, Vancouver did have a correction and prices dropped 9% from peak to trough. From 2008-2013, prices increased 1.7% annually through this post recession period. It is over the last year that prices have rebounded with a 9% gain, said DBRS.
The ratings agency also stressed Vancouver has natural barriers that limit development in the city and controlled supply.
At the same time, DBRS says the quality of living in Vancouver is not a factor to be ignored in continued long-term demand.
“Vancouver’s status as one of the Canadian cities with the highest quality of living helps ensure continual population growth, says DBRS. “The city’s diversity and year-round mild weather help attract immigrants, thus keeping demand for housing high.
The agency offered shorter comment on other Canadian cities.
In Calgary, it says a well-paid work force has kept the housing market strong as the city has avoided a worldwide economic recession with its oil and gas economy. DBRS said continued development of new home supply has keep prices stable and it expects more of the same even if the Alberta economy slows down.
In Montreal, DBRS noted its housing price index saw declines from 1990-99 but is up 150% since then. “Housing prices haven’t been strongly impacted by the financial crisis and exhibit a stable, upward trend,” the agency said.
In Toronto, DBRS say restrictions on development allowing it to “expand up but not out” have helped maintain upward pressure on prices.

Five-year mortgages holding firm, but just wait

Five-year fixed mortgage rates tend to roughly track the yields on five-year government of Canada bonds, because those influence the cost of the funds that the banks obtain to lend out. Yields on five-year government of Canada bonds have fallen. They ended last year at 1.95 per cent, and this week were below 1.50 per cent.
“If you went back to the start of the year, there was an absolute consensus that bond yields were going to head higher,” explains Toronto-Dominion Bank chief economist Craig Alexander. “Not dramatically, but there was an absolute consensus that bond yields would be increasing through the course of 2014. So, one of the big surprises this year has been the drop in bond yields.”
Canadian bond yields tend to mirror those in the U.S. because the market views the securities as alternatives to one another.
“One of the things that happened at the start of this year was, initially, there were some concerns about emerging markets and the angst over the slowdown in China,” Mr. Alexander adds. “But then we started to get very weak economic data out of the United States, and there was news that the U.S. economy outright contracted, and you saw broad-based scaling back of expectations about global growth. So, while some of the fears about emerging markets diminished, it happened at the same time that people found something new to worry about.”
So, a more negative outlook for economic growth in the U.S. and elsewhere turned into good news for Canadian home buyers.
But Mr. Alexander thinks the U.S. economy is on pace to grow faster than most other advanced countries in the second half of this year. “As a consequence, I think that the rally in bonds that we’ve had since the start of the year is likely to be reversed, from an economic fundamentals point of view it’s only a matter of time. The thing that economists are notoriously bad at is timing.”
In other words, economists are still expecting five-year fixed mortgage rates to creep up, they just don’t know exactly when. Mr. Alexander now expects five-year bond yields to creep back up to about 1.95 – where they were at the end of 2013 – by the end of this year. He then sees them rising by about 90 basis points next year, largely during the second half of the year.

Broad-Based Demand Lifting BC Housing Markets BCREA 2014 Third Quarter Housing Forecast Update

Vancouver, BC – July 31, 2014. The British Columbia Real Estate Association (BCREA) released its 2014 Third Quarter Housing Forecast Update today.
"Stronger than expected consumer demand in the third quarter triggered an upward revision in the housing forecast,” said Cameron Muir, BCREA Chief Economist. “Rising consumer demand is now broad-based across the province, with some of the largest year-over-year gains occurring in the Okanagan and the Kootenay regions."
BC Multiple Listing Service® (MLS®) residential sales are forecast to increase 9.8 per cent to 80,100 units this year, before rising a further 4 per cent to 83,300 units in 2015. The previous forecast was for 76,700 and 81,800 unit sales respectively in 2014 and 2015. The 15-year average is 80,400 unit sales and a record 106,300 MLS® residential sales were recorded in 2005.  
The average MLS® residential price for the province is forecast to increase 5.6 per cent to a record $567,300 this year and a further 1.4 per cent to $575,400 in 2015. “Since the housing stock is generally expanding at the same pace as population and household growth, rapid escalation of home prices is not expected over the next two years,” added Muir. BC housing starts are forecast to edge up 2 per cent to 27,600 units this year and a further 1.8 per cent to 28,100 units in 2015.

Vancouver’s high house costs heat up rental market

VANCOUVER — A spate of new, relatively affordable rentals in Vancouver is doing little to ease the vacancy rate in one of Canada’s meanest residential markets.
In its latest forecast, Canada Mortgage and Housing projected Greater Vancouver’s vacancy rate for purpose-built rental apartments will be 1.9 per cent this year, tightening to 1.8 per cent next.
Only Calgary and Edmonton have tighter rental markets.
A healthy market has a vacancy rate between three and five per cent.
In Vancouver, rental availability is particularly crucial because ownership costs are so wild.
The city recognizes this, moving earlier this month to create a Vancouver Affordable Housing Agency, geared to increasing rental options for middle-income families. Specifically, the agency will oversee provision of 2,500 “affordable” rental units by 2021.
Back in 2012, Vancouver announced policies to incentivize new-rental construction, awarding density bonuses and waiving development-related charges. The city also sanctioned suites as tiny as 320 square feet.
City planners say, by 2021, 16,000 new rental units will be needed, of which 5,000 will come from purpose-built market rental units. A recent report to council states the city is nearly 60 per cent there.
“With a growing population, limited increases in income and limited new purpose-built rental housing in recent decades,” declared the policy, “the need for suitable housing choices for low and moderate-income households has grown dramatically.”
Indeed, more than half of Vancouverites are renters — unusually high for Canadian cities. They earn median incomes of $34,000, compared to homeowner incomes of $66,000.
Yearly rent increases are limited to two per cent plus inflation. Average rent in Vancouver is roughly $1,100. Condo rental rates are higher.
Renters are so numerous because renting is much cheaper than buying. Vancouver also sees a steady influx of newcomers who initially prefer renting.
Another factor: Young wannabe buyers take longer than elsewhere to save a down payment; many rent while saving.
While rental unit numbers lately have been increasing at a good clip across Greater Vancouver, an expanding population means the market has remained tight.
The impact of the new units, says CMHC, “will likely be negligible.”
Vancouver, providing nearly half of all rental units in the Lower Mainland, is home to an estimated 110,000 units in purpose-built rental buildings. Another 51,224 condo suites — 26.3 per cent — are tenanted.
City Hall reports 63 new rental buildings are being developed and another 20 are being considered, with city planners encouraging developers to build family-friendly two- and three-bedroom units.
The new rentals may not significantly ease the region’s vacancy rate but are affecting the rental market.
According to The Goodman Report, a newsletter on multi-family investment property, the new supply is leaving some units empty in the newer buildings.
That’s because rents are lower in buildings constructed before 2000, which don’t offer the amenities of the newer buildings, like in-suite laundry facilities. Also, there’s more competition out there from an increased number of condo suites being let.
The new competition is lowering prices for condo suite rentals, says the report, pointing out the usual rent premium over traditional apartment units — 32 per cent — has dropped to 23 per cent.
The latest issue of the Goodman report cites a need to replace Vancouver’s “aging, increasingly inefficient rental stock.”
It says the average age of Vancouver’s purpose-built apartment buildings is 58, nearing their 60-year lifespan; and 95 per cent are pre-1974.
The city’s incentives for new rental development are “still not quite adequate,” says realtor Mark Goodman, criticizing Vancouver’s seven-year-old policy of effectively barring demolition of apartment buildings

How a homebuyers’ ‘bellwether’ is buoying optimism in Canada’s housing market

Genworth MI Canada Inc. and Home Capital Group Inc. reported profits that beat analysts’ estimates as low interest rates drive demand for Canadian homes.
Canada’s residential housing market has drawn concern from regulators and economists who say it may be 20% overvalued and that consumers are taking on too much debt. The low losses at Genworth show Canadians aren’t having trouble paying off their mortgage debt, while the increased origination highlights strong demand.
Home Capital, the country’s largest alternative mortgage provider, also beat analysts’ earnings estimates and increased its dividend to 18 cents a share. First National Financial Corp., the largest non-bank mortgage lender and underwriter, increased originations 12% over last year to $4.7 billion.
Genworth’s profit excluding some items was $1.04 a share, the Oakville, Ontario-based company said, beating the 93-cent average estimate of nine analysts surveyed by Bloomberg. Loan losses declined to 12%, a record low. Genworth forecast that loss ratio will rise to a range of 15% to 25% for the year.
Stable Market
“The housing markets are performing well,” Genworth Chief Executive Officer Brian Hurley said in an analyst conference call. “The interest rate environment is stable and looks to stay that way for a while.”Bank of Montreal analyst Tom MacKinnon raised his rating on Genworth to an outperform from market perform after the results were announced.
Genworth Chief Operating Officer Stuart Levings cited Vancouver and Toronto as cities that are facing affordability pressure. Toronto’s home prices soared more than 76% in the last 10 years and Vancouver prices rallied 4.4% in June over the previous year to $800,689.
“The Canadian consumer has been able to service their debt,” LeBlanc said. “Even though debt levels in Canada are increasing, we’re seeing really low defaults. You’re not seeing strain there.”
Genworth rose 0.9% to C$39.60 at 10:34 a.m. in Toronto. First National fell 1.8% to C$23.42. Toronto- based Home Capital climbed 0.9% to C$51.93, after earlier reaching a record high.

More appetite for condo units, poll indicates

Condo investors worried about the future pool of buyers may take heart from a new poll suggesting that Vancouverites are willing to take the plunge…and soon.
While most home-buyers would prefer to get their hands on a detached home, rising prices and limited supply are pushing their dreams out of reach.
However, that is good news for some investors as a majority of potential buyers say they would turn to the condo market for their future residential needs.
According to a recent survey almost 30 per cent of Vancouver  buyers say they would consider condos. 
Almost 60 per cent of the 1,080 surveyed who are likely to purchase a home in the next two years say they would look for a detached house. 
And despite all of the doom and gloom in the market, a majority of the survey respondents believe conditions are currently favourable to buy property, while most believe the overall state of the province’s economy is good.
However, not everyone is as positive. One in five believe the province’s real estate market is weaker compared to one year ago.
Interestingly, more Vancouverites  rank long-term investment value as they motivation for buying, followed by affordability/availability with 26 per cent driven by the desire to own their own home.

Bank of Canada Interest Rate Announcement - July 16, 2014

The Bank of Canada announced this morning it was once again holding its target for the overnight rate at 1 per cent.  In the statement accompanying its decision, the Bank highlighted that while total CPI inflation has risen close to its 2 per cent target in recent months, the rise is due to temporary effects of higher energy prices and exchange rate pass-through from a lower loonie.  The Bank also noted that slower than expected global economic growth has trimmed the Bank's Canadian economic outlook for the next two years. This means the Canadian economy will be delayed in reaching full capacity, now expected in 2016 rather than 2015.

In spite of low inflation and disappointing growth, the Bank of Canada remains wary of easing monetary policy further at risk of upending the delicate balance of over-indebted Canadian households.  Interestingly, the Bank explicitly stated that it remains neutral with respect to both the timing and direction of the next change in interest rates, which leaves the door open for a rate cut should incoming data warrant it. 
 That said, we still expect that the next move for the Bank to be in the direction of higher rates. In particular, recent momentum in consumer prices, if sustained, may push the Bank to act sooner rather than later though very likely not until early to mid-2015.

Bank of Canada to hold rates steady, tone down inflation concern: Reuters poll

"It will be necessary to acknowledge the above-forecast core CPI (consumer price index) trend, but Governor Poloz will do so as dovishly as possible in order to avoid sparking concerns about earlier rate hikes that might send the Canadian dollar stronger," said Avery Shenfeld, chief economist at CIBC World Markets.
Data last month showed the inflation rate rose to a 27-month high in May at 2.3 percent, stronger than expected and higher than the Bank of Canada's 2 percent inflation target. The increase caught the market by surprise and has been a major driver of the currency's rally.
More than half the economists polled said the stronger Canadian dollar, currently trading near a six-month high at $1.067 to the greenback, or 93.72 U.S. cents, will not trouble Poloz enough for him to voice it.
"The loonie is not at a critical level ... for the BoC to intervene directly in the markets or to 'talk down' the loonie," said Sebastien Lavoie, economist at Laurentian Bank Securities.
The central bank is hoping to see exports emerge as a greater driver of economic growth, replacing a boom in housing and consumer debt.
"The Bank of Canada is undoubtedly concerned about all of the above, but it has made no secret that it is hoping for a pick up in exports and business investment to provide more robust and reliable support for growth," said Mark Hopkins at Moody's Analytics.
"Raising interest rates prematurely would undermine that goal by discouraging borrowing and driving up the value of the loonie."

(Polling and additional reporting by Anu Bararia; Editing by Jeffrey Hodgson and Meredith Mazzilli)

Buyers camp out for 3 days for sold-out Brentwood mega project

Buyers camp out for 3 days for sold-out Brentwood mega project

Despite recent predictions about the inevitable burst of the Greater Vancouver real-estate bubble, buyers last week were camped out three days before Saturday’s presale of a new Burnaby mega-project.
“We expected that people would be camped out on Friday — we weren’t expecting them on the Wednesday before,” says Macartney Greenfield, Rennie Marketing System’s project manager. Brentwood is a 28-acre master-planned community that combines shopping in 350 stores, dining, entertainment and residences in an open-air high street and one-acre public plaza connected to transit.
Of 288 units available in the first tower of the Brentwood development at Lougheed and Willingdon — with occupancy slated for winter 2017 — all were sold on Saturday. Three penthouse units were not yet released, but likely will be in the fall when units for a second 63-storey tower will be made available.
“I think it has a lot to do with the revitalization of Brentwood as a neighbourhood,” says Greenfield. One-bedroom units were offered at $299,000, two-bedrooms at $355,000, and a handful of three-bedroom units were sold starting at $928,000. The condo units start on the 33rd floor, with rental units below.
“The buyers have lived in this neighbourhood,” says Greenfield. “We definitely saw a lot of people buying for their children, and some are just downsizing. There was a lot of local interest.”
TORONTO - Canada's housing market will continue to stay hot for the rest of the year, with home prices expected to rise on low interest rates and increased demand, says a report by TD Economics.
The bank upgraded its forecast for the real estate sector Thursday, predicting that home prices will gain an average of five to six per cent by the end of 2014.
"More strength may be bubbling under the surface," said TD economist Diana Petramala, author of the report.
In February, the bank had expected Canadian home sales to flatten out, and called the market overvalued by about 10 per cent. It did not give an estimate on how much it thought prices would rise or drop. That earlier forecast was based on the belief that mortgage rates would creep up in the spring, but rates still sit near record lows and continue to prop up demand.
Low interest rates have helped with the affordability of condos, where prices are at their "most favourable." First-time buyers who may have been pushed out of the market earlier may also be returning back due to the rates, which have in part driven the demand for single-family homes.
In May, the national average resale home price grew 7.1 per cent year over year — surpassing its 10-year average growth rate.
But looking past the short- to medium-term forecasts, Petramala said the Canadian real estate market is still expected to cool when interest rates rise and the number of available homes increase.
Those factors should be enough to "tip the market" back into one that favours buyers.
"Softer housing demand, combined with rising listings, will likely push the Canadian housing market towards a buyer’s market over the next year and a half," said Petramala. "As home buyers have more choice, they will also have more bargaining power and price pressure will ease. These features would be consistent with the makings of a soft landing in Canada’s housing market."
The report said the "soft landing" has already come to certain regions, like areas east of Toronto, while expensive cities "with more froth" like Toronto, Vancouver and Victoria will soon be seeing more weakness.
The Real Estate Board of Greater Vancouver reported Thursday that home sales rose 28.9 per cent to 3,406 in June. The total compared with 2,642 sales recorded in June 2013 on the Multiple Listing Service. Last month's sales were 0.6 per cent above the 10-year sales average for June.
Meanwhile, the TD report said home prices in Edmonton and Calgary were expected to post the biggest growth rate over the next two years, as those cities continue to see population and employment gains.
TD also noted that it expects condo prices to fall by about two per cent next year, as an estimated 135,000 units currently under construction become available. This in turn will help boost the rental vacancy rates, keep rents flat, and make buying condos for investment purchases less attractive.
It'll also make single-family homes — which are priced on average about $200,000 more than a condo — less viable for those looking to upgrade.
"As such, move-up buyers who would like to upgrade their condos to a single-family home may find it difficult," said Petramala, noting that prices for single-family homes have rose an estimated eight per cent this year, and were expected to go up by another two per cent in 2015.

Buyer demand increases while home prices edge up

The Greater Vancouver housing market enters the summer season with home buyer activity on the rise.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 3,406 on the Multiple Listing Service® (MLS®) in June 2014. This represents a 28.9 per cent increase compared to the 2,642 sales recorded in June 2013, and a 3.7 per cent increase compared to the 3,286 sales in May 2014.
Last month’s sales were 0.6 per cent above the 10-year sales average for June of 3,386.
“Competition amongst home buyers today is as strong as it’s been in the region since 2011,” Ray Harris, REBGV president said.
The sales-to-active-listings ratio currently sits at 21.3 per cent in Greater Vancouver, which is the highest this measure has been since June 2011.
“Over the last three years, we’ve seen changes in demand yet home prices at the regional level have remained relative stability,” Harris said. “While these numbers provide high level trends, it’s important to know that changes in prices always vary depending on neighbourhood and property type. Consult your local REALTOR® for information on trends in your area of choice.”
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $628,200. This represents a 4.4 per cent increase compared to June 2013.
New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,339 in June. This represents a 9.5 per cent increase compared to the 4,874 new listings in June 2013 and a 10.1 per cent decline from the 5,936 new listings in May. Last month’s new listing count was 2.6 per cent below the region’s 10-year new listing average for the month.
The total number of properties currently listed for sale on the MLS® system in Greater Vancouver is 16,011, a 7.4 per cent decline compared to June 2013 and a 0.4 per cent decrease compared to May 2014.
Sales of detached properties in June 2014 reached 1,462, an increase of 32.7 per cent from the 1,102 detached sales recorded in June 2013, and a 58.7 per cent increase from the 921 units sold in June 2012. The benchmark price for detached properties increased 6.2 per cent from June 2013 to $976,700.
Sales of apartment properties reached 1,308 in June 2014, an increase of 22.5 per cent compared to the 1,068 sales in June 2013, and a 27.5 per cent increase compared to the 1,026 sales in June 2012. The benchmark price of an apartment property increased 2.4 per cent from June 2013 to $378,000.
Attached property sales in June 2014 totalled 636, a 34.7 per cent increase compared to the 472 sales in June 2013, and a 53.3 per cent increase over the 415 attached properties sold in June 2012. The benchmark price of an attached unit increased 3.1 per cent between June 2013 and 2014 to $471,200.

CMHC Mortgage insurance ends for homes priced $1 million or more

If a home buyer has less than a 20 per cent downpayment, they’re required to buy mortgage loan insurance byCanada’s Bank Act (sec. 418).
A home buyer with more than a 20 per cent downpayment is not required to buy mortgage loan insurance. Yet lenders may ask them to buy this insurance anyway as a condition of approving a mortgage.
As of July 31, 2014, Canada Mortgage and Housing Corporation (CMHC), Canada’s largest provider of mortgage insurance, will stop providing mortgage insurance for homes that cost $1 million or more, no matter what the size of the downpayment.
In the REBGV area, 5,377 homes sold for $1 million or more in 2013. Will CMHC’s actions affect home buyers?
“We don’t anticipate any changes,” said Samantha Gale, CEO of the Mortgage Brokers Association of BC. “This is because Genworth and Canada Guaranty, companies which also provide mortgage loan insurance, will continue to provide this insurance.”
Vancity, one of Metro Vancouver’s largest mortgage lenders, doesn’t expect any changes in lending practices or loan volumes resulting from CMHC’s changes.
“Vancity very rarely requires CMHC insurance on mortgages where there is a downpayment of at least 20 per cent,” said Ryan McKinley, senior mortgage development manager at Vancity.

New Strata Property Act Amendments - Vancouver.

On April 9, 2014, the BC government approved changes to the Strata Property Act intended to make it easier for strata councils to carry out their duties and to support strata corporations to maintain their buildings. The amendments, part of the Natural Gas Development Statutes Amendment Act (Bill 12) are now in effect, and include the following:
Section 35 is amended to clarify that storage locker allocations are required records and that strata corporations must prepare a list of the storage locker number(s), identifying their ownership by, or designation to, a strata lot. As this information had to be disclosed on Form B under section 59, it was by implication a required record.
  • amendmentsSection 89 is amended to allow the purchaser/owner to whom title to a strata lot is conveyed by the owner developer to apply for an order for removal of a claim of lien.
  • Section 92 is amended to clarify that strata councils are allowed to pay for depreciation reports out of the operating fund of a strata corporation.
  • Section 96 is amended to require a majority vote, rather than the previously required ¾ majority, for certain expenditures from the contingency reserve fund. These include paying for a depreciation report or for repairs or maintenance to common property recommended in the most recent depreciation report. Other expenditures from the contingency fund would continue to require a ¾ majority vote.
  • Section 109 is amended to clarify who is responsible for paying a special levy when the levy is payable in more than one installment and the strata lot changes hands.

Homeowners happy, confident about purchase

Homeowners are “happy with the decision to buy their home,” feel confident they can weather a downturn in the housing market and they consider mortgage debt to be “good debt.” Their attitudes are the same whether they live in Toronto, Calgary or Vancouver where prices continue to rise, or in areas where home prices are stabilizing, says a new consumer survey report by the Canadian Association of Accredited Mortgage Professionals (CAAMP).
“From the consumer perspective we have a picture of a very confident, healthy mortgage market,” says Jim Murphy, president and CEO of CAAMP. “Key to the current stability in the mortgage market is the fact that Canadians continue to pay down their mortgage debt faster than they are required and they continue to take out five-year, fixed-rate mortgages. Canadians who renew their mortgages are seeing their interest costs reduced, which is boosting their personal financial circumstances and this will continue to be a positive force during the coming year.”
The survey says:
* 55 per cent of homes purchased in 2013 were bought by first-time buyers.
* Most Canadians say they have no regrets taking on the size of mortgage they did and that real estate is a good long-term investment.
* 66 per cent agree in some degree that mortgages are a form of “good debt”.
* House prices in Toronto, Calgary and Vancouver have increased by a year-over-year rate of 8.2 per cent, compared to just 2.9 per cent in the rest of Canada.
* More than 80 per cent of homeowners in Canada have 25 per cent or more equity in their homes.
* The average mortgage interest rate is 3.24 per cent, a drop from the average of 3.5 per cent found in the fall 2013 survey.
Canadians are reducing their mortgages by negotiating lower interest rates, making lump sum pre-payments and repaying their mortgages at, on average, two-thirds of their contracted amortization periods, says the report.
“Across Canada the housing market is slowing and has been on a downward swing since the mortgage policy change in 2012,” says Will Dunning, CAAMP’s chief economist. “While the national market may look healthy, activity in the Greater Toronto Area (including Hamilton), the Greater Vancouver Regional District and the Calgary area is skewing the numbers high. In the rest of Canada sales activity has weakened and house prices are flat and even falling in some communities. Housing has played a key role in driving economic growth and job creation in Canada. But looking ahead, decreased starts and slower price growth will throw off the balance between the housing market and the overall economy.”
The report urges policy makers not to confuse rising home prices in the Toronto area and Vancouver, where urban land shortages are driving prices, and the Calgary area, which currently benefits from strong job creation, with the slowdown that is evident in other communities across the country.

CMHC decision to disclose more mortgage data wins applause

The decision by Canada’s largest mortgage default insurer to provide more information about its portfolio is welcome news in the industry.
Canada Mortgage and Housing Corporation, a Crown corporation that controls a majority of the market, for the first the time released a supplemental section on its quarterly results which lays out significantly more detailed information about its loans.
“The supplement provides meaningful insight into CMHC’s mortgage insurance operations and will provide market participants with data that will allow them to better analyze our activities in the Canadian housing market,” CMHC said in a release on Friday.
Rob McLister, editor of Canadian Mortgage Trends, said the data indicates, for example, that almost two-thirds of typically insured homeowners have a downpayment of less than 10%.
(Those are the numbers for transactional volumes which don’t include portfolio-insured borrowers or borrowers purchasing five or more unit properties.)
“Someone with only 5% down would be left with 88% loan to value after five years of regular mortgage payments,” Mr. McLister said. “With a correction over 10%, many 5%-downers would be left underwater. In other words, it would be difficult or impossible for many to sell their home and generate enough equity to pay off their mortgage, cover expenses and move.”
The changes in the CMHC’s disclosure come after some economists had demanded CMHC share more of its information about the market. Among them was CIBC deputy chief economist Benjamin Tal who published a report suggesting that the lack of market information makes its harder to get an accurate picture of the stability of the market.
“CMHC is in the position to provide important information to the market,” he said in an interview Friday, welcoming the new disclosure.
CMHC has been overhauling its board with a more Bay Street flavor, adding former Wall Street CEO Robert Kelly as its new chairman. One of the first major acts of the new management was to increase fees, something it said was needed to improve capital targets and reduce taxpayer exposure to the market.
Finn Poschmann, vice-president of the C.D. Howe Institute, noted CMHC only started producing quarterly reports in the spring of 2011 and that has already had a positive impact on quantity and quality of information.
“The reports have become incrementally clearer and more complete, and are beginning to look more like a meaningful report from a financial institution,” said Mr. Poschmann.
He noted the results released Friday show that the average credit score of newly originated loans is “nudging” up which means the loan quality is getting better.
“The lenders are reporting delinquency rates that are hugely down from the financial crisis period,” said Mr. Poschmann.
The housing agency said its profit for the first quarter was $406-million, up 7% from a year ago. Its insurance-in-force dropped $2-billion from the fourth quarter to $555-billion.
“The increase in net income is mainly attributable to higher earnings from investments and lower insurance claims expenses, both a result of improved economic conditions,” said CMHC.
CMHC said said the average credit score in its portfolio was 743 in the first quarter while average gross debt service was 26.2% — both signs CMHC says of the strong ability of homeowners to manage debt.
Overall arrears were 0.35% of all mortgages as of March 31, 2014.

Housing market 10% overvalued in Canada amid condo risks, data uncertainty: TD executive

TORONTO — Canada’s housing market is 10% overvalued, with the biggest risks in condominium overbuilding and uncertainty over how many investors are buying, but the risk of a U.S.-style collapse is low, a top executive at Canada’s second largest bank said on Monday.
Lisa Reikman, chief risk officer of Canadian banking at Toronto-Dominion Bank, said a spike in interest rates or unemployment could threaten Canada’s robust housing market, but the risk is fairly low.
Instead, TD Bank, one of the country’s top three mortgage lenders and a growing retail banking presence on the U.S. East Coast, is watching house appreciation and the growing supply of condominiums.
“The high-rise condo market is an area we’re certainly watching closely, and I think all of the other banks, as well and the regulator, (are watching),” Ms. Reikman said in an interview.
“Just by virtue of the fact there is a lot of new construction of high-rise condos, and there are some questions around … how many of those are being purchased by investors as opposed to people (who) are actually living in them as a primary residence,” she told Reuters.
Foreign investors have helped drive up Canadian real estate prices by parking their money in relatively cheap and plentiful real estate, but some fear that a sudden withdrawal of investors could leave a glut of condos and falling prices.
Ms. Reikman said the banks do not have much better data on  investors than anyone else does.
“The data on that is less than perfect, so we don’t have a perfect line of sight … we rely on the buyer to basically be upfront and let us know if they are buying it to own or if they are buying it as an investment property,” she said.
“You’ll find that that’s probably one area that all the banks will say is difficult to tell, as will the builders.”
While foreign observers, including the International Monetary Fund and the Organisation for Economic Co-operation and Development, have warned that Canada’s housing market is among the most overvalued in the world, the nation’s major banks have been more sanguine, saying there are structural reasons why the high prices are mores sustainable than they may appear.
“We think the (overvaluation) number might be — generally across the Canadian market — maybe about 10%, as opposed (to) the numbers we’ve seen from some of (those) external to Canada, anywhere between 30-to-60%,” she said.
The Canadian market cannot be compared to the U.S. sector before its collapse due to several factors: Canada’s requirement of insurance for mortgages with less than 80% loan-to-value; conservative underwriting standards; a tiny subprime market, and Canadian lenders typically keeping mortgage on their books, Ms. Reikman said.
“We look at all of those things and think there are some pretty fundamental reasons why the U.S.-style collapse can’t happen here or is highly unlikely to happen here,” she said.

Can’t make a mortgage payment? Don’t panic, but don’t ignore it either

t’s the last thing you want to do when you can’t make your mortgage or loan payment but it’s a common response for many Canadians — stick your head in the sand and ignore it.

Vancouver realtors say there hasn’t been this much home buyer demand in three years

Vancouver sales jumped 14% last month compared to a year ago but still remain 6.5% below the 10-year sales average for the month of May
“I think it’s a normal tendency of everybody to kind of ignore trouble if they can,” says Ray Leclair, vice-president, public affairs at the Lawyers’ Professional Indemnity Company.
A survey from LawPRO this week found 61% of Canadian adults do not know what options are available to them if they can’t pay, often landing themselves in a situation that could leave them in the bad books with their bank and at the mercy of creditors.
“I know when I was in practice, and I was in practice 25 years, when the clients came to see me we were months down that road,” says Mr. Leclair. “There were a number of issues to be dealt with at that point.”
Clients would usually show up at his door “when their back is against the wall” and a power of sale has already been started by the financial institution.
If you are in arrears — generally described as having missed three monthly payments — the bank can initiate a power of sale against you and put your property on the market. If your home sells for less than your loan, you’re still on the hook for any debt outstanding plus legal fees for 20 years.
“Banks get upset when you ignore them,” said Mr. Leclair, noting financial institutions are less likely to renegotiate your payment terms at this point.
Younger Canadians, those who are 18-34 and likely to be first-time buyers, seem to have the least understanding of what to do during a cash crunch as 74% said they had no idea what their options were if they couldn’t make a payment.
The survey was conducted from April 30 to May 1, 2014, online with 1,510 randomly selected Canadian adults. The margin of error was plus or minus 2.5 percentage points, 19 times out of 20.
Mr. Leclair says foreclosure, a court sponsored process, is something banks will try in a rising market like today because they can take your property and profit. You might have a $100,000 mortgage and they sell it for $150,000. Other creditors might also have to compete for that money, but chances are the excess won’t end up in your hands.
They take ownership of the asset and likely sell it, it’s their decision. In that situation, Mr. Leclair says, the debtor wants to stop that process. “But in that situation you have no response [to the bank] because you have not made the payments.”
If you get ahead of the foreclosure process, you can say “I’m okay with the sale but want a court sanctioned sale instead of foreclosure and you get more of say in what happens next.
Laura Parsons, Calgary area manager for mortgage specialists with Bank of Montreal, notes the issue of not paying is pretty rare. Canada Mortgage and Housing Corp. said last month only 0.35% of its portfolio is in arrears and BMO’s numbers are even lower.
But she says the issue does come up where people don’t pay and the last thing the bank wants to do is take their home. Most banks have provisions for scenarios where you might get into trouble.
Traditionally, BMO lets you skip a payment but it also has a provision to allow you to take a leave from your mortgage because of a change in circumstances.
“You can take that leave, say someone has a baby or someone gets cancer or something like that,” said Ms. Parsons, the key is you have to have enough equity in your home. Your mortgage cannot end up being larger than the original loan approval.
“We don’t want their house, we don’t want people in that situation. The sooner they know they are going to get in that situation, they should get into the bank,” she says.

Bank of Canada Interest Rate Announcement - June 4, 2014

The Bank of Canada announced this morning that it is maintaining its target for the overnight rate at 1 per cent.  In its accompanying statement, the Bank noted that total CPI inflation has reached its 2 per cent target sooner than the Bank had forecast due to higher energy prices and a lower Canadian dollar. On economic growth, the Bank expects an improvement in exports in the second half of the year as well as strengthening business investment and a soft landing in the housing market. The Bank judges that the balance of risk in the Canadian economy is weighted modestly to downside risk to inflation.
Inflation in Canada has started to move materially higher in recent months, driven by a substantial increase in energy costs.  At the same time, the Canadian economy has posted disappointing growth due to slowing household spending and a drag on exports from weakness in the United States.  However, as the Bank noted in its statement, there are good reasons to believe that both of these trends will prove temporary.  Much of first quarter economic weakness was due to unusually severe winter weather which kept consumers at home and construction projects delayed.  As the weather warms up, we anticipate a rebound in growth in the second quarter. As for inflation, the impact of higher energy prices on headline CPI should fade in coming months and the Bank has already suggested it will look past the transitory increase in inflation. However, there does seem to be some underlying momentum in core CPI, which if sustained will be much harder for the Bank to ignore. For now, we anticipate the Bank will remain in neutral, leaving rates unchanged until 2015.

Home buyer demand increases across Greater Vancouver housing market/ May 2014

An increase in home buyer demand put Greater Vancouver in the upper reaches of a balanced real estate market in May.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 3,286 on the Multiple Listing Service® (MLS®) in May 2014. This represents a 14 per cent increase compared to the 2,882 sales recorded in May 2013, and a 7.7 per cent increase compared to the 3,050 sales in April 2014.

Last month’s sales were 6.5 per cent below the 10-year sales average for May of 3,514.

The sales-to-active-listings ratio currently sits at 20.4 per cent in Greater Vancouver, which is the first time that this measure has been above 20 per cent since June 2011.

“Our MLS® statistics tell us that there’s more home buyer demand today than at any point over the last three years,” Ray Harris, REBGV president said. “With sales surpassing the 3,000 mark in May and our sales-to-active-listing ratio exceeding 20 per cent, this is the most active marketplace we’ve seen since the spring of 2011,”

New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,936 in May. This represents a 5 per cent increase compared to the 5,656 new listings in May 2013 and a 0.2 per cent decline from the 5,950 new listings in April. Last month’s new listing count was 2 per cent below the region’s 10-year new listing average for the month.

The total number of properties currently listed for sale on the MLS® system in Greater Vancouver is 16,072, a 6.7 per cent decline compared to May 2013 and a 3.6 per cent increase compared to April 2014.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $624,000. This represents a 4.3 per cent increase compared to May 2013.

“Home prices have experienced consistent yet modest increases in our region since the beginning of 2013,” Harris said.

Sales of detached properties in May 2014 reached 1,453, an increase of 19.9 per cent from the 1,212 detached sales recorded in May 2013, and a 23.1 per cent increase from the 1,180 units sold in May 2012. The benchmark price for detached properties increased 5.4 per cent from May 2013 to $966,500.

Sales of apartment properties reached 1,286 in May 2014, an increase of 13.2 per cent compared to the 1,136 sales in May 2013, and an 11.2 per cent increase compared to the 1,156 sales in May 2012. The benchmark price of an apartment property increased 3.2 per cent from May 2013 to $377,500.

Attached property sales in May 2014 totalled 547, a 2.4 per cent increase compared to the 534 sales in May 2013, and a 5.8 per cent increase over the 517 attached properties sold in May 2012. The benchmark price of an attached unit increased 3.1 per cent between May 2013 and 2014 to $469,100. 


 

Hey Vancouver, there are affordable homes – 20 minutes away

The tiny old city of New Westminster just might be the answer to the high price of Vancouver real estate.
Last year, Rick Vugteeven and his wife, Lana, were renting a Kitsilano apartment when they decided to go shopping for a house. After quickly discovering that Vancouver house prices were impossible, they decided to look in New Westminster, only a 20 minute SkyTrain or car ride away, if the traffic is kind.
Because it’s a historic city, the oldest in B.C., it’s got neighbourhoods that are packed with sleepy tree-lined streets and houses that ooze charm – Queen’s Park being the most famous among them. But it’s also one of the most walkable cities in the province, unlike surrounding suburbs, which were built for cars.
“We wanted to stay in an area that was very walkable, and had a sense of history and character,” says Mr. Vugteeven.
Last fall, he and his wife purchased a 1,900-square-foot character house in good condition for $583,000, on a lot that is 55 by 100 feet. The asking price was $585,000. It needs a new furnace and some of the windows need to be replaced, but otherwise it’s a solid and charming house.
The house, built in 1926, is in a part of New Westminster called Brow of the Hill, which is a mix of old fixer-uppers and rental buildings, with a commercial area nearby. It is, like other parts of the city, an area in transition, changing from a rundown and depressed neighbourhood to a place where young families want to fix up their houses and raise their kids. It’s also a short walk to the SkyTrain station, which is another major draw. New Westminster has five rapid transit stations.
“The only reason the price is what it is, is that it’s in an area mixed with apartments, and historically, is on the wrong side of the tracks. But many of the older houses have now been restored, and there are still plenty awaiting restoration,” says Mr. Vugteeven, who is 31, and works at home, for a Boston-based start-up.
“I’d imagine that much of the change is due to the relative affordability of homes here, compared to Vancouver.”
He is one of a growing group of former Vancouver residents who’ve been drawn to the city that sits on the north bank of the Fraser River, across the river from Surrey, sandwiched between Burnaby and Coquitlam.
“The fact is, New West has character and the surrounding areas don’t,” says real estate agent James Garbutt. Mr. Garbutt is also owner of the Steel & Oak Brewing company, which will open in five weeks in New Westminster. It is a joint venture with business partner Jorden Foss. Both men are typical of the urban-dwelling young person drawn to the city to lay down some roots.
Mr. Foss recently tweeted: “A guy is pushing a fixie up 3rd. With a baby on the back. That’s dedication to a lifestyle. #New West: where hipsters go to have kids.”
With a population of 70,000 and a land area of only 15.6 square kilometres, it’s not just a hilly city, but also a dense city – with a rapidly growing condo market of about 20,000 units and a couple more thousand on their way, according to Mr. Garbutt. But the housing stock, at around 8,000 to 9,000 houses is fixed, which means house prices will go up with demand.
“Eventually, all those condo people are going to want to live in houses,” he says.
Mr. Garbutt was raised in Burnaby and lives with his wife and kids in a 120-year-old fixer-upper in Queens Park.
“It seems like 75 per cent of the traffic at my open houses is Vancouver people. This year it’s stood out that Vancouver people are moving to New West. We are more on the map than before, that’s for sure. We’re getting more attention than we ever have before.”
Landcor Data Corp., which happens to be based in New Westminster, provided The Globe and Mail with all the sales for detached homes in the city for the past year. The median price was $650,000. The lowest priced house was for $179,906 and the highest was for $1.7-million. Of 254 sales, only eight of them were for more than $1-million.
In Vancouver, the median price of a detached house is $1.29-million, according to Landcor.

CMHC Rule Changes for Second Homes

Effective May 30,2014 CMHC rule changes for second homes take effect.  CMHC introduced the second home product in 2005 to offer borrowers more financing options when purchasing an owner-occupied second home located anywhere in Canada.  The recent changes will limit the availability of homeowner mortgage loan insurance to only one property (1-4) units per borrower or co-borrower at any given time.
Therefore any homeowners wishing to purchase a second property and require mortgage loan insurance will be unable to do so unless they refinance their existing home into a conventional mortgage.
These changes will not impact the number of rental properties currently owned with previous mortgage loan insurance in place through CMHC.

Real estate near Vancouver’s new transit line is on track for a boom

As the date for the Evergreen Line launch grows nearer, Coquitlam and Port Moody are increasingly becoming affordable and convenient home buying options for Vancouver buyers.

The new rapid transit line, which will link to the SkyTrain at Lougheed station, will take Port Moody and Coquitlam commuters to downtown Vancouver in less than an hour. It will also link the region with Simon Fraser University.

 

“Coquitlam condo product is selling less per square foot than it is in Surrey,” says Urban Analytics’ Michael Ferreira. “That’s one of the better places to buy right now.”

But while a lot of buyers hope to see their property investments increase once it’s launched in 2016, there’s debate as to whether a transit line actually translates into dollars. Condos around proposed stations in Coquitlam have mostly flat-lined over the past five years, according to Landcor Data Corp., which tracks the B.C. real estate market. Houses, on the other hand, have gone up. In 2009, the average sale price for a condo in Coquitlam around Burquitlam station, for example, was $211,970. In 2013, the average sale price was $255,815. In 2009, a single-family detached house in the area averaged $720,000 while this year it has averaged $963,000, according to Landcor.

Real estate analyst Richard Wozny, of Site Economics, says that, based on dozens of studies, there’s a hard and fast rule. For existing buildings, such as condo towers in the area, the price will go up about 5 per cent when a rapid transit station enters the picture. For a single-family home that needs to be rezoned, the price will double. For a vacant lot that’s already zoned for multiple families, the price increases about 25 per cent.

“There are tons of existing condo units and they will pour them on like crazy,” says Mr. Wozny. “Brentwood has 10,000 new condo units coming — that’s expressed intention to build. Surrey is going to get 16 stations and offer the same thing. Try to make money in that market as an end user. The supply is overwhelming you.”

Mr. Ferreira says with houses, it’s difficult to differentiate increases that are a result of the transit line and what’s happening in the market in general.

“It’s largely dependent on what the market conditions are around that time,” he says. “If they are strong, demand for housing is strong and prices are typically on the rise, which corrals people towards higher density neighbourhoods and rapid transit lines, that kind of thing.

“I think what you’ll see with the Evergreen Line is not much happening until it’s actually finished. It’s been delayed and talked about for so long that it will just take some time to for people to realize that it’s actually up and running.”

Mr. Ferreira agrees that condo owners could expect to see increases of around 5 per cent. Not that 5 per cent is a bad thing, adds Mr. Wozny. “That’s $25,000 on a $500,000 investment, and that’s a lot, in my opinion.”

Software developer Joe Parkinson lives in a two-level, 1,100-square-foot condo near Coquitlam Centre, overlooking an Evergreen station under construction. He purchased his condo three years ago, after he decided he wanted a better lifestyle than he had in downtown Vancouver. Now he pays $160 per month in condo fees instead of the $400 he was paying downtown. And he is living in a condo that would cost three times the amount in Vancouver. He paid about $450,000 for his Coquitlam condo.

“I was renting a shoebox in Vancouver,” he says. “It would be $2.5-million for this condo. And I can take the West Coast Express 30 minutes to work in Gastown.”

Mr. Parkinson wasn’t influenced by the Evergreen Line when he purchased his condo, and he’s not convinced it will go up in price when the line is finished.

“It didn’t influence my decision, but I think it’s influencing everybody else’s decision,” says Mr. Parkinson. “The detached housing in Coquitlam has done quite well, and it’s nowhere near the line. But for condos, it’s apples and oranges. It’s much different than in the city, where almost everything moves.”

Marketing director Jo Faloona purchased her two-level, 1,100-square-foot Port Moody townhouse for $245,000. Her home is just a five minute walk from the Inlet Centre station.

“Most people in my complex believe that their values are going to go up when SkyTrain comes. We are living in a spot where it’s perfect for young families.

“It’s a house and most of what is coming is condo living, and there are people who don’t want to go into a tower. There will be fewer and fewer walk-ups and that will be beneficial to us. I’m in the sweet spot – close enough to have the convenience of it, and just far enough away to not have anybody walking through my property to get to it.”

Bosa Properties is one of the early developers to build towers around the Coquitlam Evergreen Line. It has sold 70 per cent of one tower at itsUptown project, with construction set to start June 1. The 450 condo project, located a half block from the Evergreen station, includes a new Safeway store. Bosa has plans for two more towers for the area still in the approvals stage. Because the Evergreen Line will connect to Simon Fraser University on the east side, by a five-minute bus ride, he says he’s been getting a lot of interest from parents of university age children.

“We’ve been involved in that property for years, prior to the Evergreen being confirmed there,” says senior vice-president Daryl Simpson. “We would have been involved either way, line or not. But it’s unlikely we would be involved this soon, at this level, without the Evergreen Line happening.”

Once the line is up and running, Mr. Simpson says he can see the surrounding single-family homes rezoned for higher density. “Certainly the prospect of a single-family land assembly will increase as property values go up.”

As for crime, he says that the Evergreen won’t suffer from the poor public image that made it undesirable to live close to a SkyTrain station in the early days.

“In the last decade, that certainly was true, where you wanted to be two or three blocks away. That has changed. There have been a number of very popular, successful urban mixed-use projects that are literally right on top of the station or in the same block. And that market has placed a premium on those. It’s really inverted. Now, generally speaking, the closer you are the better.

“There is a critical mass of ridership that creates a certain comfort level and security and peace of mind at the station that wasn’t there before. I also think we’ve learned a lot since development of those old stations. The new ones are far more open, transparent, brighter, less confined. They just feel more welcoming and as a result don’t attract that same element that you’re talking about.”

That would apply to condos more than houses, however. Houses that are close to the line could potentially decrease in value, due to noise and traffic. But if you’re within walking distance, that’s a good thing.

“If you can walk from your home to the station, that determines the price of your house,” says Landcor’s Rudy Nielsen. “It’s based on walking not driving – about 15 minutes at most would be a comfortable distance.”


 

Record Low Mortgage Rates Push Home Sales Higher

Vancouver, BC – May 13, 2014.  The British Columbia Real Estate Association (BCREA) reports that a total of 7,730 residential sales were recorded by the Multiple Listing Service® (MLS®) in April, up 12 per cent from April 2013. Total sales dollar volume was $4.3 billion, an increase of 19 per cent compared to a year ago. The average MLS® residential price in the province rose to $561,613, up 6.3 per cent from the same month last year.

"BC home sales trended higher in April as the typically robust spring market unfolds,” said Cameron Muir, BCREA Chief Economist. “Rising consumer demand coupled with fewer homes for sale has most BC housing markets now exhibiting balanced conditions, where neither buyers nor sellers have any particular advantage."
"Housing affordability improved last month as intensifying completion for new business by financial institutions pushed the posted five-year fixed mortgage rate to a record low of 4.79 per cent” added Muir.
During the first four months of the year, BC residential sales dollar volume was nearly 28 per cent to $13.9 billion, compared to the same period last year. Residential unit sales were up 18 per cent to 24,165 units, while the average MLS® residential price was up 8.3 per cent at $573,965.

Canadian Employment - May 9, 2014


Canadian employment declined by 29,000 jobs in April and the national unemployment rate remained unchanged at 6.9 per cent. Since the beginning of 2014, the Canadian economy has added an average of 9,100 jobs per month.

After gaining an impressive 18,300 jobs in March, the BC economy shed 3,700 jobs in April. The provincial unemployment rate remained at an over 5-year low of 5.8 per cent. Total employment in the province is up 0.5 per cent in 2014 following a 0.2 per cent decline in 2013. 

Canadian Building Permits - May 7, 2014


Canadian building permits declined 3 per cent in March, following an 11.3 per cent decline in February.  Lower construction intentions in the non-residential sector overwhelmed smaller gains in residential permitting activity. 

Construction intentions in BC rose 9.4 per cent month-over-month and 16.5 per cent year-over-year in March. The dollar value of residential permits rose 12.1 per cent on a monthly basis and 8.9 per cent year-over-year while non-residential permits were up 4.5 per cent over February and 34.2 per cent year-over-year. In unit terms, residential permits rose from 1,511 total units in February to 2,305 in March due to a jump in permits for apartment units. 
 

Building permit activity was up in three of BC's four census metropolitan areas (CMA) in March. In the Abbotsford-Mission CMA, permits more than doubled on a monthly basis and were up 91.8 per cent year-over-year.  Construction intentions in the Victoria CMA also more than doubled from February and were up 29.3 per cent year-over-year. In the Kelowna CMA, permits increased 8.4 per cent on a monthly basis and but were down 7.6 per cent from March 2013.  Finally, in the Vancouver CMA, permits fell 3.1 per cent from February but rose 14.4 per cent year-over-year. 

Canadian Housing Starts - May 8, 2014


Canadian housing starts jumped 24 per cent in April to 194,809 units at a seasonally adjusted annual rate (SAAR).  The six-month trend in Canadian new home construction is more or less stable at 183,000 units SAAR. That level of construction is in-line with Canadian household growth. 

New home construction in BC urban centers dipped slightly in April, falling 5 per cent to 24,976 units SAAR. On a year-over-year basis, housing starts were up 9 per cent compared to April 2013. Single-detached starts rose 34 per cent while multiple units were down 1 per cent. 


Looking at census metropolitan areas (CMA) in BC, total starts in the Vancouver CMA were down 2 per cent year-over-year in April. The decline was led by a 6 per cent decrease in multiple units while single-detached units rose 12 per cent. In the Victoria CMA, total starts fell 46 per cent compared with April 2013 due to a steep decline in multiple units starts. New home construction in the Kelowna CMA continued to enjoy solid growth in April, rising 13 per cent due to a 27 per cent rise in multiple starts. Housing starts in the Abbotsford-Mission CMA were up considerably from very weak construction levels in April 2013. Total starts rose to 103 units from just 12 in the previous April. 

Housing market in Greater Vancouver/ April 2014

Spring buyers and sellers emerge in the Greater Vancouver housing market

Home buyers and sellers became more active in the Greater Vancouver housing market in April.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 3,050 on the Multiple Listing Service® (MLS®) in April 2014. This represents a 16.1 per cent increase compared to the 2,627 sales recorded in April 2013, and a 15.5 per cent increase compared to the 2,641 sales in March 2014.
Last month’s sales were 5.2 per cent below the 10-year sales average for April of 3,217.
The sales-to-active-listings ratio currently sits at 19.7 per cent in Greater Vancouver, which is the highest this measure has been since June 2011.
“We saw steady increases in home seller and buyer activity in April, which is typically the case in the spring months,” Ray Harris, REBGV president said. “People often look to buy or sell their home this time of year as the school year draws to a close and the summer holiday season is still a few months away,” Harris said.
New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,950 in April. This represents a 1.3 per cent increase compared to the 5,876 new listings in April 2013 and a 12.7 per cent increase from the 5,281 new listings in March. Last month’s new listing count was 1.2 per cent higher than the region’s 10-year new listing average for the month.
The total number of properties currently listed for sale on the MLS® system in Greater Vancouver is 15,515, a 7.3 per cent decline compared to April 2013 and a 7.2 per cent increase compared to March 2014.
“Home prices in the region continue to show steady, yet modest, increases when compared to last year,” Harris said.
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $619,000. This represents a 3.6 per cent increase compared to April 2013.
Sales of detached properties in April 2014 reached 1,336, an increase of 25.6 per cent from the 1,064 detached sales recorded in April 2013, and an 18.7 per cent increase from the 1,126 units sold in April 2012. The benchmark price for detached properties increased 4.7 per cent from April 2013 to $956,700
Sales of apartment properties reached 1,172 in April 2014, an increase of 11.4 per cent compared to the 1,052 sales in April 2013, and a 1.5 per cent decline compared to the 1,190 sales in April 2012. The benchmark price of an apartment property increased 2.6 per cent from April 2013 to $375,500.
Attached property sales in April 2014 totalled 542, a 6.1 per cent increase compared to the 511 sales in April 2013, and a 12.2 per cent increase over the 483 attached properties sold in April 2012. The benchmark price of an attached unit increased two per cent between April 2013 and 2014 to $464,400.

Best Cities To Invest In Real Estate? Those Would Be Toronto, Vancouver, Calgary

Canadian cities top the world for the real estate markets that make the best bet for long-term investment, according to a study from U.K. property developer Grosvenor — but they may not be such a great investment in the short term.

Toronto, Vancouver and Calgary took the top three spots, respectively, on the survey that aims to measure which real estate markets are the most resilient, and therefore make the best long-term investment.

"Canada, as a whole, is doing exceptionally well in developing resiliency,” Richard Barkham, group research director at Grosvenor, said in a statement.

“The top three most-resilient cities in Grosvenor's Resiliency index are Toronto, Vancouver and Calgary. For investors in property and real estate, it makes Canada a very sound long-term investment."

Barkham singled out Toronto for praise, saying the city’s long-term commitment to developing and upgrading infrastructure placed it at the top of the rankings.

The three top-ranking cities were the only Canadian ones surveyed in the study. Chicago came in fourth place.

To determine a real estate market's long-term strength, the study looked at “environmental and social vulnerability and adaptive capacity,” covering areas such as infrastructure, environment and climate.


 

Canadian Average Home Prices Up 6% Year-Over-Year in March - CREA

TORONTO--The average price of a Canadian resale home rose 6% in March from last year, a decline from the more torrid pace seen over the last several months, as the pricey Vancouver market's share of national sales declined, the Canadian Real Estate Association said.
The average national price for resale houses reached 401,419 Canadian dollars ($365,125), according to monthly sales data from the national umbrella group for Canadian realtors. In recent months the average price had been up 8%-10% year-over-year.
The MLS Home Price Index, which is weighted to offset the effect of changes in the mix of sales activity, rose 5.19% on a year-over-year basis in March, up slightly from the 5.05% gain recorded in February.
"Year-over-year price growth picked up among all property types tracked by the index," CREA said.
Sales rose by 1% from February to March on a seasonally adjusted basis, building on the monthly gain of 0.6% in the previous month, but leaving activity closer to the low reached in January 2014 than to the most recent peak reached in August 2013, it said.
"Sales rose in more than half of all local housing markets in March, led by gains in a number of large urban markets in British Columbia, Alberta, and Ontario," CREA said.
"While activity in BC's Lower Mainland posted a monthly decline, sales there remained well above year-ago levels," it said.
"Sales in many housing markets continue to recover from winter's deep freeze," said CREA President Beth Crosbie said in the release.
The slowing in sales in West Coast housing markets reflects the fact that national and local housing trends can diverge, she said.
The number of newly listed homes edged up 0.5% nationwide from February to March, while the Canadian housing market remains in balanced territory overall, CREA said.

Coquitlam opposed to plan for power lines

Citing issues around “construction fatigue,” a loss in property values and the increased chance of localized electrical shocks, Coquitlam council voiced its opposition Monday to any new overhead power lines in residential areas of the city.  
The move comes as BC Hydro prepares to upgrade its grid to increase capacity across Metro Vancouver.
Three different choices have been presented to Coquitlam in order to meet that demand, though both staff and council oppose any option that includes the addition of new overhead lines.
“We think there are numerous concerns with additional overhead transmission lines,” said Dana Soong, Coquitlam’s manager of utility programs. “There [are] potential health issues related to electric and magnetic fields from the power lines.”
Slated for completion in 2018, the three options feature different alignments along hydro rights-of-way and through existing road corridors spanning Coquitlam, Anmore, Belcarra, Burnaby and Vancouver. At least two of those options are situated in the Lansdowne area, near portions of Scott Creek and the Coquitlam Crunch trail. There are fears in that area over the increased likelihood of induction shocks if the power grid is expanded.
“If you walk there on a rainy day and the grass is wet, walking through the grass you’ll get zapped,” said Coun. Mae Reid. “Your ankles feel like they’re being bitten by a bunch of little ants.”
Homes on the east side of that right-of-way have a 50-metre tree buffer separating them from the lines, though some of those trees would be removed. City staff said that removal would damage the riparian zone next to Scott Creek and nearby parks.
As for the potential loss in property values, Soong pointed to a similar situation that played out in Tsawwassen in 2008. He said resident opposition was widespread to BC Hydro buying 104 homes, then attempting to re-sell them for $70,000 under market value. By contrast, the proposed Tri-Cities line would be longer and affect more homes in Coquitlam, according to Soong.
Council agreed to write a letter voicing concerns to Energy and Mines Minister Bill Bennett. BC Hydro hopes to have a lead alternative identified in the next few months, with a public consultation to follow in the fall. From there, an application to the BC Utilities Commission to construct the project will likely be filed in 2015


 

Bank of Canada Interest Rate Announcement - April 16, 2014

 

The Bank of Canada announced this morning that it is maintaining its target for the overnight rate at 1 per cent. The Bank's target rate has now remain unchanged for 29 consecutive meetings. In its accompanying statement, the Bank noted that inflation in Canada remains low and is expected to remain below the Bank's 2 per cent inflation target this year due to slack in the economy and heightened retail competition. The Bank left is forecast for Canadian economic growth unchanged at 2.5 per cent this year and next, citing a strengthening global economy and ramped up business investment. The Bank also noted that recent developments are in line with the its expectations of a soft landing in the housing market, though elevated household debt remains a risk should economic conditions deteriorate. 

While some expected a slightly more dovish note from the Bank given continued muted inflation and a slight rise in the dollar, the Bank remains decidedly neutral. An expected second half rebound in growth and firming inflation means that the next move for interest rates is likely higher, but the timing of that move remains uncertain. Our view remains that the overnight rate will stay at its current level until at least early 2015. 


 

Canadian Manufacturing Sales - April 15, 2014

Canadian manufacturing sales increased for the second consecutive month in February, rising 1.4 per cent.  At $51.2 billion, February's manufacturing sales were the highest since July of 2008.  

In BC, manufacturing sales fell 3 per cent on a monthly basis, but were 3.4 per cent higher than February 2013.  The durable goods sector, which includes wood products, mineral products and machinery and equipment manufacturing, posted a 4.4 per cent monthly decrease. Non-durable goods like paper, clothing, and food manufacturing, declined 1.5 per cent.  The manufacturing sector employs approximately 170 thousand people in British Columbia, or roughly 7.5 per cent of the BC workforce.  Therefore, growth in manufacturing output should help spur job growth which would support the BC housing market, particularly in regions with a high concentration of manufacturing activity. 


 

TransLink Evergreen Line to increase Coquitlam housing prices: forecast


 

A national real estate firm forecasts the rate of housing prices will speed up in Coquitlam with improvements to transit and road networks in the eastern part of Metro Vancouver.

Royal LePage advisor David Reimers credits the Evergreen Line and the Port Mann-Highway 1 improvement project for the expected increase in prices.

The appreciation, he speculated, is primarily going to affect detached single-family homes that are already in short supply.

“It all boils down to supply and demand,” he said.

Reimers said the average price difference between a home in Vancouver and one in Coquiltam is about $160,000, but that gap is expected to close quickly as demand for the latter picks up.

“In time, as more people realize the benefit of the Evergreen Line and Highway 1, I expect the prices to start normalizing.”

According to an RBC poll released Thursday, “home buying intentions” are also up in B.C. this year compared to the last.

The poll found 22% of respondents were seeking to buy a home in 2014, a modest increase from 20% the year before.

The survey was conducted from Feb. 4 to 14 this year among 2,591 Canadians with a margin of error of plus-or-minus 2%.


 

 

Buyers were on the hunt for houses in March

 

Sales of detached homes outpaced condos and townhomes throughout the region

Buyers were on the hunt for houses in March
 

March home sales showed an improvement from a year ago, but transactions continued to trend below their 10-year average, according to reports.

Buyers favoured houses in the suburbs and condos in pricier urban communities in March, according to sales results released Wednesday for the Lower Mainland’s main property markets.

March sales showed an improvement from a year ago, but transactions continued to trend below their 10-year average, according to the reports.

“There has been a consistent balance between homeseller supply and homebuyer demand in our marketplace over the last year,” said Ray Harris, the newly installed president of the Real Estate Board of Greater Vancouver, in a news release.

Realtors saw 2,641 sales through the Multiple Listing Service in Metro Vancouver (excluding Surrey), an increase of 13 per cent from the same month a year ago, with house sales outpacing other property types in Richmond, Port Coquitlam, North Vancouver and Maple Ridge/Pitt Meadows.

However, the total remained 17 per cent below the 10-year average for March sales, the REBGV said.

Detached-home sales across the region totalled 1,116, up 20 per cent compared with a year ago, with the benchmark price, an average for typical homes sold, at $945,400, up 4.2 per cent from March 2013.

Condo sales totalled 1,106 in March, an increase of 13 per cent from a year ago. Within the region, condo sales outpaced detached homes on the west side of Vancouver, in Burnaby and in New Westminster.

Townhomes sales declined in Metro Vancouver, down three per cent compared with a year ago to 432 in March, at a benchmark price of $460,100, up 1.3 per cent from a year ago.

The proportion of house sales also increased in the Fraser Valley (including Surrey) according to Ray Werger, new president of the Fraser Valley Real Estate Board.

Valley realtors saw 1,259 total sales cleared through MLS in March, up 12 per cent from the same month a year ago and detached homes made up 58 per cent of the number, compared with 55 per cent a year ago.

“Our main buyers are families looking for the best value possible by taking advantage of continuing low interest rates and stable home prices,” Werger said in a news release.

The benchmark price for detached homes in March was $563,400, up 3.5 per cent from a year ago, on 651 sales, according to the board’s report.

However, the benchmark prices on other property types fell — 0.4 per cent on townhouses year-over-year to $297,100, and 4.3 per cent on condos to $195,400.


 



Canadian Housing Starts - April 8, 2014

Canadian housing starts tumbled close to 18 per cent in March to 156,823 units at a seasonally adjusted annual rate (SAAR).  The trend in Canadian new home construction moved lower as well, to 184,476 units SAAR. That level of construction is in-line with demographic demand. The majority of the decline in housing starts occurred in Ontario and Quebec.

New home construction in BC urban centers rose 20 cent in March to 26,276 units SAAR. On a year-over-year basis, housing starts were up 6 per cent compared to March 2013. Single-family starts rose 35 per cent while multiple units were down 1 per cent. 


Looking at census metropolitan areas (CMA) in BC, total starts in the Vancouver CMA were up 2 per cent year-over-year in March, led by a 30 per cent increase in single-family units. In the Victoria CMA, total starts fell 4 per cent over March 2013. It was another solid month for new home construction in the Kelowna CMA, where starts more than doubled year-over-year on robust gains in both single and multiple unit starts.  Housing starts in the Abbotsford-Mission CMA were sharply lower on a year-over-year basis for the second consecutive month. 


 

Keeping your good credit good!

There are several things you can do to ensure your credit remains in good standing. Following are five steps you can follow:

1) Pay down credit cards. The number one way to increase your credit score is to pay down your credit cards so they’re below 70% of your limits. Revolving credit like credit cards seems to have a more significant impact on credit scores than car loans, lines of credit, and so on.
2) Limit the use of credit cards. Racking up a large amount and then paying it off in monthly instalments can hurt your credit score. If there’s a balance at the end of the month, this affects your score – credit formulas don’t take into account the fact that you may have paid the balance off the next month.
3) Check credit limits. If your lender is slower at reporting monthly transactions, this can have a significant impact on how other lenders view your file. Ensure everything’s up to date as old bills that have been paid can come back to haunt you. Some financial institutions don’t even report your maximum limits. As such, the credit bureau is left to only use the balance that’s on hand. The problem is, if you consistently charge the same amount each month – say $1,000 to $1,500 – it may appear to the credit-scoring agencies that you’re regularly maxing out your cards. The best bet is to pay your balances down or off before your statement periods close.
4) Keep old cards. Older credit is better credit. If you stop using older credit cards, the issuers may stop updating your accounts. As such, the cards can lose their weight in the credit formula and, therefore, may not be as valuable – even though you have had the cards for a long time. Use these cards periodically and then pay them off.
5) Don’t let mistakes build up. Always dispute any mistakes or situations that may harm your score. If, for instance, a cell phone bill is incorrect and the company will not amend it, you can dispute this by making the credit bureau aware of the situation.


 

Hazards involved in selling home on your own

 

Real estate: Vendors may set price too high or too low, both of which can have an impact on the results

 
Hazards involved in selling home on your own
 

U.S. National Association of Realtors and Canadian Real Estate Association say between 10 and 13 per cent of sales are by the homeowner.

Given Vancouver’s sky-high home prices, it’s no wonder some people may consider the for-sale-by-owner route as a way to save money on real estate commissions.

According to statistics from the U.S. National Association of Realtors and the Canadian Real Estate Association, somewhere between 10 and 13 per cent of all sales appear to be by the homeowner.

But before you run out and stick a sign on your front lawn, you might want to consider cautions from people like Colette Gerber, a westside Vancouver realtor and director on the Real Estate Board of Greater Vancouver. Gerber cites one statistic from the U.S. National Association of Realtors that might make some owners think twice about FSBO.

“People who sell their home by owner tend to underprice by as much as 28 per cent of what they actually could get using a realtor,” she said. That means that even though they save on the real estate commission — usually seven per cent on the first $100,000 and 2.5 per cent on the balance — they may have effectively lost thousands of dollars because they priced their home too low.

Part of the reason for that difference in sale prices is that realtors have access to an enormous amount of data not available to the average homeowner, allowing for a more accurate appraisal of the value of the home.

“How much research does the homeowner do?” Gerber asks. “Perhaps they do a bit of research or maybe they don’t do any research, but just look at the house next door (and decide) it sold for x so maybe mine should sell for x. But they don’t do the amount of research that is required to maximize the sale.”

There can also be a less common danger with a homeowner setting too high a price, she said. “People who are looking to purchase a home want value, and when they look at a for sale by owner, they figure they are going to get a deal. So if the FSBO has overpriced his house, there is no deal to be had and the property will sit and sit and sit. It’s unlikely (a potential buyer) will even try to enter into negotiations.”

Another explanation for the difference in sale price may be the exposure a home receives in the marketplace. Statistics show that yard signs are the most common way owners advertise their home for sale (48 per cent of all FSBO sales, according to 2012 numbers cited by the U.S. National Association of Realtors). Realtors typically use a variety of means, including the Internet, newspapers, word of mouth and the Multiple Listing Service (MLS), which exposes the property to more than 4,000 agents in Metro Vancouver alone, Gerber said.

Finally, many owners who try to sell their own homes make the mistake of dramatically under-estimating the time it takes and the many things that a realtor does to complete the sale. That includes holding open houses, overseeing home inspections, filling out disclosure statements and even transferring title to the house.


 

Mortgage before May:

Rising insurance premiums bump up costs

If you’re in the market for a mortgage, and have less than 20% downpayment, then you might want to get that mortgage before May.

For the first time in more than a decade, Canada Mortgage and Housing Corporation (CMHC) is raising premiums for insuring mortgages on Canadian homes: an average 15%. Private insurer Genworth followed suit with a matching increase. Canadian homebuyers are required to have mortgage insurance if they have less than 20% equity in their homes.

How does it hit your wallet? A first-time homebuyer with a $248,000 mortgage and a 5% downpayment will pay an extra $5 per month in insurance premiums. If you are self-employed, a larger fee may apply. 

The change will come into effect on May 1st. Homebuyers will be able to access the current lower rates if they have bought a home and are approved before the May 1 deadline, even if they have a later closing date.


 

Home sale and listing activity continue to chart a steady path for the region’s housing market

March home sales in Greater Vancouver outpaced last year’s total yet lagged the region’s historical average for the month.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 2,641 on the Multiple Listing Service® (MLS®) in March 2014. This represents a 12.5 per cent increase compared to the 2,347 sales recorded in March 2013, and a 4.4 per cent increase compared to the 2,530 sales in February 2014.

Last month’s sales were 17.2 per cent below the 10-year sales average for March of 3,190.

The sales-to-active-listings ratio currently sits at 18.2 per cent in Greater Vancouver, which is unchanged from last month.

“We continue to see steady and stable market conditions across the Greater Vancouver housing market,” said Ray Harris, REBGV president. “There has been a consistent balance between home seller supply and home buyer demand in our marketplace over the last year.” 

New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,281 in March. This represents a 9.1 per cent increase compared to the 4,839 new listings in March 2013 and a 12.4 per cent increase from the 4,700 new listings in February. Last month’s new listing count was 5.9 per cent below the region’s 10-year new listing average for the month.

The total number of properties currently listed for sale on the Greater Vancouver MLS® is 14,472, a 6.4 per cent decline compared to March 2013 and a 7.9 per cent increase compared to February 2014.

“Home prices in the region have experienced incremental gains in most areas and property types over the last 12 months,” Harris said. “It’s important to remember that this is a diverse marketplace and trends will vary depending on area and property type.”

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $615,200. This represents a 3.7 per cent increase compared to March 2013.

Sales of detached properties in March 2014 reached 1,116, an increase of 19.6 per cent from the 933 detached sales recorded in March 2013, and a 5.7 per cent decrease from the 1,183 units sold in March 2012. The benchmark price for detached properties increased 4.2 per cent from March 2013 to $945,400.

Sales of apartment properties reached 1,106 in March 2014, an increase of 12.6 per cent compared to the 982 sales in March 2013, and a 7.1 per cent decline compared to the 1,191 sales in March 2012. The benchmark price of an apartment property increased 3.8 per cent from March 2013 to $375,800.

Attached property sales in March 2014 totalled 419, a 3 per cent decline compared to the 432 sales in March 2013, and a 16.2 per cent decline from the 500 attached properties sold in March 2012. The benchmark price of an attached unit increased 1.3 per cent between March 2013 and 2014 to $460,100. 


 

Canadian Monthly GDP Growth (January 2014) - March 31, 2014

The Canadian economy grew 0.5 per cent in January, bouncing back from a largely weather induced dip in output in December. At the industry level, growth was led by rising output in the manufacturing industry as well as lesser contributions from mining, oil and gas, and construction.  Economic growth was expected to slow in the first quarter of 2014, and with today's release, our quarterly tracking estimate is indicating that real GDP will slow to about 2 per cent from 2.9 per cent in the previous quarter. The stronger than expected start to the year has sent Canadian bond yields modestly higher, though not enough to put any pressure on mortgage rates. 


Condo investors, get your legal paperwork in shape before selling up or you could face the wrath of the taxman.

The Canada Revenue Agency (CRA) is reportedly cracking down on condo flippers, with hundreds of owners under audit and receiving penalties.

The CRA have undertaken a special ‘condo project’ to investigate sales transactions. Since last April, this project has led to almost 600 income tax audits with almost half of that number receiving penalties.

Speaking to CREW, Mark Weisleder, lawyer and real estate lecturer, says this has become a serious issue of late. “If you buy a new condo from a builder and flip it shortly after closing, firstly you may have to repay the HST rebate portion of the purchase price because you did not move in or rent it out,” he says. “This can be close to $30,000 in some cases. In addition, if you sell shortly after closing, CRA considers this business income and not a capital gain, so you will be expected to pay tax on the full amount of any profit made."

A number of factors are analysed by the CRA before applying a penalty, including the number and frequency of transaction and taxpayer’s circumstances and stated motivation to sell.

Weisleder advises condo owners to be "properly prepared" before arguing position with the CRA.

"The person must be able to demonstrate through appropriate documentation that they intended to move into the unit on closing in order to claim the HST rebate and to try and have the property classified as capital and not inventory or business income."


 

British Columbia is forecast to have the biggest jump in housing resale activity in 2014 in Canada, according to the Canadian Real Estate Association (CREA).

 

 

The CREA expects B.C. to see an increase in resale activity of 8.3% year-over-year – well above the anticipated national growth of 1.3%. While this means the province will be the biggest contributor to the expected growth across the country, the association said this is due to having had particularly slow sales in 2013, mostly in the early part of the year.

The opposite holds true for Canada as a whole, with 2014 starting out with low levels of growth compared with previous years. This is due to the particularly strong activity in the summer and fall of 2013.

“I expect fixed mortgage rates will edge marginally higher in the second half of 2014 as evidence confirms an anticipated pick-up in economic growth,” said CREA chief economist Gregory Klump.

“Marginally higher mortgage rates are likely to counterbalance the lift provided by stronger economic and continuing job growth, and restrain the momentum for sales activity.”

National sales are expected to climb to 463,700 units this year, and a further 1.2% in 2015 to 469,400 units.

The national average home price across the country is expected to rise by 3.8% in 2014, with similar gains in B.C.


 

February Home Sales Edge Lower

Vancouver, BC – March 14, 2014.  The British Columbia Real Estate Association (BCREA) reports that a total of 5,578 residential sales were recorded by the Multiple Listing Service® (MLS®) in February, up 24.9 per cent from February 2013. Total sales dollar volume was $3.4 billion, an increase of 43.1 per cent compared to a year ago. The average MLS® residential price in the province rose to $611,688, up 15.4 per cent from the same period last year.

"Consumer demand was much stronger in February compared to a year ago, but edged lower compared to January,” said Cameron Muir, BCREA Chief Economist. “Weak employment growth in 2013 has limited home sales so far this year to long-term average levels."

"Record low mortgage interest rates and population growth continue to underpin the housing market and most regions of the province are at or near balanced market conditions,” added Muir.

Year-to-date, BC residential sales dollar volume was up 10.1 per cent to $36.7 billion, compared to the same period last year. Residential unit sales were up 6 per cent to 68,510 units, while the average MLS® residential price was up 3.8 per cent at $535,411.


 

New B.C. strata rules mean simple majority can approve repairs
 

Owners of condos and apartments will more easily be able to vote for major repairs to their buildings under changes to strata legislation introduced by the B.C. government Feb. 26.

The new strata rules will allow condo associations to vote to spend contingency funds for fixes recommended in depreciation reports using a simple majority, and not three-quarters of membership, said Rich Coleman, the minister responsible for housing.

That will make it easier for condo boards to pass major repairs, rather than get tied up in votes where holdouts can delay work for years and cause costs to rise, said Coleman.

The changes would also clarify that strata councils can use operating money to pay for depreciation reports, which are required by the province.

The law will also be changed to make it easier to determine who is responsible for paying liens or other legal problems assigned to a unit when it is sold to a new buyer.

Condo boards will also be required to keep better records that link storage lockers to particular units.

All of the changes were asked for by strata associations and help clarify the rules, said Coleman.

“It makes it easier for them to operate strata councils,” he said. “There’s a lot of volunteers out there and to carry out their responsibilities we need to make it easier and better understood.”

 VANCOUVER SUN FEBRUARY 26, 2014


 

CMHC to Increase Mortgage Insurance Premiums

OTTAWA, February 28, 2014 — Following the annual review of its insurance products and capital requirements, CMHC will increase its mortgage loan insurance premiums for homeowner and 1 – 4 unit rental properties effective May 1, 2014.

The increase applies to mortgage loan insurance premiums for owner occupied, self-employed and 1-to-4 unit rental properties, including low-ratio refinance premiums. This does not apply to mortgages currently insured by CMHC.

CMHC’s capital management framework is consistent with international practices and Canadian guidelines for mortgage insurers. Increased capital targets are consistent with Canadian and international industry trends and makes the financial system more stable and resilient.

“The higher premiums reflect CMHC’s higher capital targets” said Steven Mennill, CMHC’s Vice-President, Insurance Operations. “CMHC’s capital holdings reduce Canadian taxpayers’ exposure to the housing market and contribute to the long term stability of the financial system.”

For the average Canadian homebuyer requiring CMHC insured financing, the higher premium will result in an increase of approximately $5 to their monthly mortgage payment. This is not expected to have a material impact on the housing market.

Effective May 1st, CMHC Purchase (owner occupied 1 – 4 unit) mortgage insurance premiums will increase by approximately 15%, on average, for all loan-to-value ranges.

Loan-to-Value Ratio Standard Premium (Current) Standard Premium (Effective May 1st, 2014)
Up to and including 65% 0.50% 0.60%
Up to and including 75% 0.65% 0.75%
Up to and including 80% 1.00% 1.25%
Up to and including 85% 1.75% 1.80%
Up to and including 90% 2.00% 2.40%
Up to and including 95% 2.75% 3.15%
90.01% to 95% – Non-Traditional Down Payment 2.90% 3.35%
CMHC reviews its premiums on an annual basis and, going forward, plans to announce decisions on premiums in the first quarter of each year. The homeowner premium increase follows changes CMHC made to its portfolio insurance product earlier this year.

As Canada’s national housing agency, CMHC draws on more than 65 years of experience to help Canadians access a variety of quality, environmentally sustainable, and affordable housing solutions that will continue to create vibrant and healthy communities and cities across the country.


 

Canadian Building Permits - March 6, 2014

Canadian building permits rose 8.5 per cent in January to a total of $7 billion. The increase was led by higher residential construction intentions, which offset a decline in the non-residential sector. 

Construction intentions in BC recovered from a weak December, jumping 32 per cent month-over-month and 21 per cent year-over-year in January. Residential permits rose 29.6 per cent on a monthly basis and 19.2 per cent year-over year while non-residential permits were up 43.2 per cent over December and 26.2 per cent year-over-year.
 

Building permit activity was up in all of BC's four major census metropolitan areas (CMA) in January. In the Abbotsford-Mission CMA, permits increased 63.9 per cent on a monthly basis and 34.5 per cent year-over-year.  Construction intentions in the Victoria CMA more than doubled from December lows and were up 16.3 per cent year-over-year. In the Kelowna CMA, permits increased 12 per cent from December and were 68.2 per cent higher than January 2013.  Finally, in the Vancouver CMA  a sharp increase in building permits erased last months decline, as construction intentions rose 30.5 per cent cent month-over-month and 19.8 per cent year-over-year. 


 

Bank of Canada Interest Rate Announcement - March 5, 2014

The Bank of Canada announced this morning that it is maintaining its target for the overnight rate at 1 per cent. In its accompanying statement, the Bank noted that the economy is preceding largely on the path the Bank projected in its January Monetary Policy Report. While inflation and growth were slightly higher than expected in the fourth quarter of 2013, the Bank expects slack in the economy to keep inflation below the Bank's 2 per cent target this year. The Bank does not view the risks associated with elevated household imbalances as materially changed and judges the current stance of monetary policy, with the overnight rate at 1 per cent, as appropriate. 

Speculation of an impending rate cut by the Bank of Canada has receded in recent weeks following a modest acceleration of inflation and stronger than expected economic growth. The uptick in inflation and growth is in part due to a sharply lower Canadian dollar and, while not explicitly targeting a lower value of the loonie, policymakers at the Bank have welcomed the decline in the dollar. A depreciation in the currency tends to be inflationary and impacts consumer prices in fairly short order while traditional monetary policy, through adjusting the overnight interest rate, impacts inflation only with a significant lag of 12 to 18 months.  With the lower loonie helping to pull inflation higher, we expect the Bank will likely maintain its target rate at 1 per cent until 2015 when economic conditions may require a gradual increase in the overnight rate.



Home sales and listings continue to follow historical averages

In the first two months of 2014, the Greater Vancouver housing market has maintained the steady pace set throughout 2013.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 2,530 on the Multiple Listing Service® (MLS®) in February 2014. This represents a 40.8 per cent increase compared to the 1,797 sales recorded in February 2013, and a 43.8 per cent increase compared to the 1,760 sales in January 2014.

Last month’s sales total mirrors the 10-year sales average for February of 2,547, with just 17 sales separating the two figures.

The sales-to-active-listings ratio currently sits at 18.9 per cent in Greater Vancouver, a 4.9 per cent increase from last month.

“Home buyer demand picked up in February, which is consistent with typical seasonal patterns in our housing market,” said Sandra Wyant, REBGV president.  “We typically see home buyers become more active in and around the spring months.”

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,700 in February. This represents a 2.8 per cent decline compared to the 4,833 new listings reported in February 2013 and a 12.1 per cent decline from the 5,345 new listings in January. Last month’s new listing count was 0.5 per cent below the region’s 10-year new listing average for the month.

The total number of properties currently listed for sale on the Greater Vancouver MLS® is 13,412, a 9.3 per cent decline compared to February 2013 and a 6.4 per cent increase compared to January 2014.

“With the market continuing to perform at a steady, balanced pace, it’s important for home sellers to ensure their homes are priced correctly for today’s conditions,” Wyant said.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $609,100. This represents a 3.2 per cent increase compared to February 2013.

Sales of detached properties in February 2014 reached 1,032, an increase of 46.6 per cent from the 704 detached sales recorded in February 2013, and a 6.3 per cent decrease from the 1,101 units sold in February 2012. The benchmark price for detached properties increased 3.5 per cent from February 2013 to $932,900.

Sales of apartment properties reached 1,032 in February 2014, an increase of 35.8 per cent compared to the 760 sales in February 2013, and a 1.2 per cent increase compared to the 1,020 sales in February 2012. The benchmark price of an apartment property increased 3.6 per cent from February 2013 to $373,300.

Attached property sales in February 2014 totalled 466, an increase of 39.9 per cent compared to the 333 sales in February 2013, and a 9.9 per cent increase from the 424 attached properties sold in February 2012. The benchmark price of an attached unit increased 0.6 per cent between February 2013 and 2014 to $458,300. 


 

Government reduces tax burden on first-time buyers

First-time home buyers received welcome news in today’s provincial budget. Any REALTORS® currently working with first-time buyers will want to share this news with them as soon as possible.

The government has announced, effective February 19, 2014, under the Property Transfer Tax (PTT) First-Time Home Buyers’ Exemption program, qualifying first-time buyers can buy a home worth up to $475,000. The previous threshold was $425,000.

The partial exemption continues and will apply to homes valued between $475,000 and $500,000.

With this change, the government estimates 1,700 additional first-time buyers will annually be eligible to save up to $7,500 in PTT when they buy their home.

The government estimates this measure will cost $8 million in lost tax revenue each year.

The Real Estate Board, together with BC Real Estate Association, has actively lobbied to make home ownership more affordable for first-time home buyers. This increase in the threshold clearly signals our efforts have paid off as in past years.

In 2008, as a result of industry lobbying, the provincial government increased the threshold to $425,000 from $375,000. 

In 2005, the government increased the threshold to $325,000 from $275,000.

The PTT is calculated at a rate of one per cent on the first $200,000 and two per cent on the remaining value of the purchase price.


 

Cancellation of the Canadian Investor Immigrant Program - February 13, 2014

In its recently tabled budget, the Federal Government effectively cancelled a program, the Canadian Immigrant Investor Program (IIP), which afforded wealthy prospective immigrants access to fast-tracked immigration.  The program, which began in 1995, allowed immigrants with $1.6 million or more in assets (the amount was increased from $800,000 in 2010) to make an interest free loan to the Canadian government of $800,000 for a period of 5 years in return for Canadian citizenship. At the end of the five-year term, the principal of the loan was returned.  

The IIP was a popular avenue for those with significant wealth to immigrate to Canada. An average of 7,100 people entered through the program each year from 1995 to 2012. Traditionally British Columbia has been a popular final destination, with an average of 3,300 immigrants locating in BC since the program’s inception. That number peaked from 2008 to 2010 at approximately 5,650 but slowed to just 2,600 in 2012 as new applications were halted while the Federal Government determined the future of the IIP.

It is important to note that these numbers include all members of the household, and so to get a more accurate estimate of the number of new household formations, it is common to divide the total number by the average immigrant household size.   Therefore, we estimate that an average of 1,200 households per year located in BC through the IIP from 1995 to 2012, with that number climbing to 2,100 during the peak years of 2008 to 2010 and falling off to 1,430 in 2011 and just 979 in 2012. Data available for 2013 indicates a similar number of immigrants through the IIP as in 2012.

The impact of the IIP on the economy and the housing market of British Columbia as a whole is relatively insignificant.  At its peak, immigration through the IIP represented only 13 per cent of total immigration to BC, and most years it has been less than 10 per cent. That said, the impact of 1,200 to 2,100 new millionaire households settling each year in select Vancouver neighborhoods has likely been a factor in rising single-family home prices in those areas, though far from the most important factor.  If there is any impact from the Government’s decision, we anticipate it will be contained to the very high-end of the real estate market. Notably, we have not observed an uptick in inventories in those areas most impacted by the IIP, even as immigration through the program has dropped by half.


 

Will foreign investors leave Vancouver

Will foreign investors leave Vancouver

The federal government may just has answered the prayers of many B.C. residents and their real estate professionals with its move to put the kibosh on a controversial program tying immigration to investment.

Still, Vancouver real estate agents say property prices could take a serious hit after Canada eliminates a program allowing wealthy immigrants to bypass the visa process.

Originally launched in 1986, the Immigrant Investor Program offered visas to foreign investors with a net worth of at least $1.6 million who were willing to lend $800,000 to the Canadian government for investment across Canada for a term of five years.

However, the program was temporarily halted in 2012. This was due to a huge backlog of applications from wealthy investors from mainland China hoping to immigrate to B.C. and actively invest in its real estate. Now, the federal government announced it will scrap the incentive outright, eliminating 59,000 applications backlogged worldwide.

Losing the foreign investors could potentially be damaging to B.C.'s real estate markets, particularly Vancouver, which is often reliant on interest from foreign buyers. This, in turn, could also be damaging to Vancouver's economy.

"When you suddenly stave off the intake of literally hundreds of millionaires in the Vancouver property market, prices can only go one way and that's down," immigration lawyer Richard Kurland told CBC News.

But the move is just as likely to help the market as hurt it, say Canadian property investors and homebuyers long concerned that wealthy foreign buyers have inadvertantly driven up prices, particularly on B.C.'s Lower Mainland and in Toronto.


 

Steady trends continue in the Greater Vancouver housing market

The first month of 2014 saw home sale and listing totals outpace historical averages in the Greater Vancouver housing market.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 1,760 on the Multiple Listing Service® (MLS®) in January 2014. This represents a 30.3 per cent increase compared to the 1,351 sales recorded in January 2013, and a 9.9 per cent decline compared to the 1,953 sales in December 2013.

Last month’s sales were 7.2 per cent above the 10-year sales average for the month.

“The Greater Vancouver housing market has been in a balanced market for nearly a year. This has meant steady home sale and listing activity accompanied by stable home prices,” Sandra Wyant, REBGV president said.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,345 in January. This represents a 4.2 per cent increase compared to the 5,128 new listings reported in January 2013.

Last month’s new listing count was 17.7 per cent higher than the region’s 10-year new listing average for the month.

The total number of properties currently listed for sale on the Greater Vancouver MLS® is 12,602, a 4.9 per cent decline compared to January 2013 and a nine per cent increase compared to December 2013.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $606,800. This represents a 3.2 per cent increase compared to January 2013.

With the sales-to-active-listings ratio at 14 per cent, the region remains in balanced market territory.

“If you’re looking to sell your home in a balanced market, it’s critical that your list price is reflective of current market conditions,” Wyant said.

Sales of detached properties in January 2014 reached 728, an increase of 34.3 per cent from the 542 detached sales recorded in January 2013, and a 10.5 per cent increase from the 659 units sold in January 2012. The benchmark price for a detached property in Greater Vancouver increased 3.2 per cent from January 2013 to $929,700.

Sales of apartment properties reached 753 in January 2014, an increase of 30.7 per cent compared to the 576 sales in January 2013, and an increase of 14.6 per cent compared to the 657 sales in January 2012. The benchmark price of an apartment property increased 3.7 per cent from January 2013 to $371,500.

Attached property sales in January 2014 totalled 279, an increase of 19.7 per cent compared to the 233 sales in January 2013, and a 6.9 per cent increase from the 261 attached properties sold in January 2012. The benchmark price of an attached unit increased 1.7 per cent between January 2013 and 2014 to $457,700. 


 

Bank of Canada Sees Evidence of Soft Landing in Housing Market

Thu, 01/23/2014 - 15:45

The Bank of Canada announced on January 22nd 2014 that it was keeping its trend-setting overnight lending rate at 1 per cent, where it has been held since September 2010.

Since the Bank’s last announcement in early December, inflation in Canada has moved even further below the Bank’s 2 per cent target. Moreover, the Bank indicated it is now expected to remain lower for even longer and not return to target for “about two years.”

The rising risk of lower inflation has been a theme since last fall. Since then, the Bank’s warnings about how rates will eventually rise have given way to a more neutral stance on where interest rates are headed next.

Low and still falling inflation could be used to justify an interest rate cut, but the Bank remains concerned about high household indebtedness and the potential for lower interest rates to fuel further debt accumulation.

In its previous Bank rate announcement in December 2013, the Bank said it expected a soft landing for the Canadian housing market. Its announcement in January said that recent housing market developments confirm that the anticipated soft landing is under way.

Given the currently high level of household indebtedness and low inflation, the Bank still sees current interest rates as being at appropriate levels. Its next decision will hinge on economic trends over the next few months, particularly for inflation.

As of January 22nd, 2014, the advertised five-year lending rate stood at 5.34 per cent, unchanged from the previous Bank rate announcement on December 4th, 2013.


 

5 things to know about interest rates right now

With banks cutting mortgage rates again and the Bank of Canada walking a fine line between curbing household borrowing while fighting low inflation, much is being made of borrowing rates and where they may be headed. Below are five questions that try to make sense of the noise:

Why are interest rates in focus at the moment?

 

Borrowing rates are garnering a lot of attention right now because there’s much uncertainty about everything from the housing market to what direction the Canadian economy is headed in. Big banks have begun lower mortgage rates again as sales activity has slowed and competition for fewer borrowers has picked up.

The Bank of Canada meanwhile ismaintaining its trend-setting benchmark interest rate at 1.0 per cent. That rate is what influences lending rates among the banks and there has been speculationthat the BoC could actually cut rates in a bid to juice a sluggish economy. But with Canadian households already highly indebted, officials are hesitant to create more borrowing room.

How does the Bank of Canada rate affect borrowing rates from the bank?

Lenders set their prime rates, or the minimum interest they charge their customers, based off the BoC’s key rate. “The big banks peg their prime rate against that rate, and that prime rate is the best rate a bank will lend their best customers,” says Kelvin Mangaroo of ratesupermarket.ca, a site that tracks consumer borrowing rates.

With the BoC rate at 1.0 per cent, the private lenders’ prime rate is sitting at 3.0 per cent. These rates are extraordinarily low by historical standards, after central banks slashed benchmark interest rates to near zero during the global downturn to help get credit flowing again.

One unintended consequence of the present ultra-low interest rate environment for economies like Canada’s, which is thought to have a sturdier financial system compared to others, has been a household borrowing boom that’s found an outlet in a now very pricey real estate market financed generously with debt.

If excessive borrowing is a concern, why doesn’t the BoC raise its rate?

With current rates so low, a hike of even a modest amount – say half a percentage point, or 0.5 per cent – would jack mortgage and other loan payments by a significant degree, experts say.

A rise of 0.7 per cent on a loan carrying an interest rate of 3.5 per cent, for example, would mean a hike of 20 percent on your monthly interest payment. Could you afford that? Without scaling back other spending? The one-third of Canadian mortgage holders who have variable rate mortgages would immediately feel the pinch.

Why are banks cutting their mortgage rates?

You may have noticed that the big banks, led first by Royal Bank of Canada but quickly matched by Scotia, BMO and today, TD, are once again cutting their fixed five-year rates on home loans. Mangaroo says that because their own funding rates have fallen in recent weeks they can afford to pass those lower rates onto Joe Homebuyer. The banks are also fighting with themselves and cut-rate broker lenders over a shrinking pool of borrowers as consumers hit their limit on how much they can borrow, experts say.

While the Bank of Canada overnight rate doesn’t directly influence mortgage rates, a cut today would have put even more indirect downward pressure on home lending rates. Policy-makers have expressed ongoing concern about the effect higher rates will have on homebuyers who have taken on huge mortgages at extraordinarily low lending rates.

Will interest rates rise or fall this year?

It’s looking increasingly like interest rates won’t be heading higher anytime soon, according to experts. “From a consumer perspective, it looks like low interest rates are going to be here to stay for the next little while,” Mangaroo said.

“We remain comfortable with our forecast for interest rate hikes to be a long way off on the horizon, likely in the second half of 2015,” economists at TD Bank said Wednesday.

Whether they fall further will depend on the performance of the economy. A weakening economic picture could prompt the Bank of Canada to actually cut its rate to below 1 per cent again, but it also risks continuing a borrowing spree households can likely ill afford, experts say.


 

Hong Kong, Vancouver Least Affordable Home Markets: Survey

Hong Kong, Vancouver and Honolulu have the least affordable housing markets across nine nations in the Demographia International Housing Affordability survey.

The median home price in Hong Kong rose to 14.9 times gross annual median household income from 13.5 times last year, according to the 10th annual report by the Belleville, Illinois-based consulting company. Homes in Vancouver cost 10.3 times income and 9.4 times in Honolulu. Australia and New Zealand were the most unaffordable countries after Hong Kong, with home prices at 5.5 times gross income.

The survey examined housing prices in 360 metropolitan markets in Australia, Canada, Hong Kong, Ireland, Japan, New Zealand, Singapore, the U.K. and the U.S. A reading of 5.1 or more is “severely unaffordable,” while below 3 is affordable.

Surging home prices across Hong Kong, Australia and Canada have raised concerns about bubbles in markets that top the Demographia survey. Hong Kong home prices have more than doubled since the beginning of 2009, driven by demand from mainland China and mortgage rates at record lows. In Australia, historically low central bank rates pushed home prices in the nation’s major cities 9.8 percent higher in 2013, and Canadian property prices are forecast to continue climbing this year.

“Land use regulations and the availability of trunk infrastructure heavily constrain the supply of developable land,” Alain Bertaud, senior research scholar at the Stern School of Business at New York University, wrote in the introduction to the report. “If planners abandoned abstracts and unmeasurable objectives like smart growth, livability and sustainability to focus on what really matters -- mobility and affordability -- we could see a rapidly improving situation in many cities.”

Ireland was the most affordable country for housing, with homes costing 2.8 times incomes. Rockford, Illinois, was the most affordable city across all markets, and Pittsburgh was the most affordable in cities with populations of more than 1 million, the survey showed. Except for the U.S., no country had cities with more than 1 million people where the median home price was less than three times income, according to the report.


Sleepy White Rock, B.C. catches the developer’s eye

This sleepy 20,000-person enclave south of Vancouver that began life as a resort area for city folk is becoming a real estate hot spot.

While change comes slowly to this community of mainly elderly retirees, you know something is afoot when the CBC’s Kevin O’Leary pronounces it the next big thing. And just at the moment when its brave new experiment in urban-style densification – seemingly at odds with its largely small town feel – is bearing fruit.

In the new “uptown centre” area – a two block radius north of the beach, Miramar Village – two 21- and 19-storey towers by Bosa that achieved rezoning approval in 2008 and were completed in 2010 – was followed by the Avra (Greek for “sea breeze”) – an Epta Properties 17-storey tower that was finished last April.

A handful of similar projects are in the works, including the Saltaire – its first phase, a five-storey wood-framed building, to be followed by a tower.

While this kind of densification may seem mild by Vancouver standards, in White Rock it caused quite a stir, with vociferous community opposition to the first tower, since quelled by amenity contributions and somewhat stringent aesthetic guidelines. In addition to landscaping around towers, the dominant theme of the moment is a sort of benign “West Coast contemporary.”

But with White Rock’s traditionally quirky architecture – partly a result of a federal mandarin who planned the town a century ago regardless of its steep topography, plopping down “Elgin” and “Oxford” streets on practically vertical slopes – one can understand the community’s fears about creeping gentrification. Still, the signs were there – really as soon as the Hells Angels clubhouse relocated to Langley more than a decade ago.

At present, the beachfront area still looks like a scene from Robin Williams’s Popeye (actually shot in Malta), and has, in fact, been a cinematic stand-in for a number of Mediterranean locales. But fears that its eccentric mix of art deco, beach shacks and California-inspired architecture along Marine Drive might get bulldozed are soothed by the fact that because the lots are so narrow and shallow, it’s more cost effective for owners to keep running the plethora of fish-and-chip shops and eateries than build new condos.

But with the average 500-square-foot beach shack on an 1,800-square-foot lot going for $599,000 (basically lot value) and a controversial new condo development just west of restaurant row, some long-time residents are concerned.

“The trick” of balancing new development while keeping White Rock’s character intact, says Mayor Wayne Baldwin, “is to rein in multi-family dwellings and protect the single-family areas.” At the same time, he sees the necessity of more development as land values soar and the population increases. The community plan envisions a build out of up to a population of 30,000 by the year 2030, with a 70/30 split, respectively, between multi-family and single-family units, whose current ratio is closer to 50/50.

“We’re running out of land,” says Mayor Baldwin, “so we have to build up.”

While areas such as Five Corners – just south of City Hall – saw late 1980s mixed-use development successfully maintained by an active retail sector, it’s now the new “uptown centre” area that will bear the brunt of a more intensive densification.

Meanwhile, the market seems to support the push to densify, with Avra 80 per cent sold, says developer Chris Tsakumis of Epta Properties, and 60 per cent of the Sausalito development near the beach already snatched up.

There are many young families here, Mr. Tsakumis says. “White Rock isn’t just about retirees and lottery-home winners. It’s a real, developing community.”

But the main drivers, he says, are “early empty nesters and Chinese buyers.”

Indeed, the rush to buy property in White Rock and neighbouring South Surrey, says local Sutton Group Realtor Jin Ye, is on par with Richmond’s popularity in the late nineties. Mayor Baldwin recalls daily helicopter flights during the past year – Asian buyers circling potential properties. But since White Rock only offers five square kilometres of land, many Asian buyers are choosing neighbouring South Surrey.

The area appeals to them, says Mr. Ye, for many reasons – including the sunny, mild climate (it rains less than in Vancouver), proximity to the airport and the fact that many properties are almost a third of the price of West Side Vancouver real estate. But also primary is the proximity of many excellent schools, including ones with the IB (international baccalaureate) and French immersion programs.

While many of Mr. Ye’s clients who bought in the Avra, for instance, are offshore investors, the majority have their families reside in White Rock, while they work in China.

“This is a good place to spend money, not to make it,” observes the Beijing-born Realtor, who has sold many properties in the $5-million range to Chinese buyers over the past few years. And, in a way, there is a strange kind of continuity to this phenomenon, as White Rock was originally a vacation spot where families would spend summers, while breadwinners would work in Vancouver and visit on weekends.

Mr. Ye points out a White Rock waterfront lot with a tear down that is currently listed for $2-million more than it sold for two years ago. New homes with a decidedly modernist bent are going up every month in tony West White Rock, with the likes of a new Olson Kundig house in concrete, glass and stone a sobering contrast to some of the more colourful 1970s and 1980s residences. Clearly, this is a sought after area.

But it’s nearby Elgin and Chantrelle Heights in South Surrey that have become de facto Chinese communities. Here, large acreages with colonial gates – once home to self-styled suburban-landed gentry – now house families from Shanghai and Beijing. On 28th street, points out Mr. Ye, during a particularly frenzied month of sales when Realtors’ signs dotted most of the landscape, someone put a sold sign on the street sign itself. Real estate installation art or local protest? Hard to know.

As I contemplate the surrounding gigantus that is South Surrey, some 20 times its size and three times its population, I wonder, where will Kevin O’Leary build his house?


 

Buyers to jump on student changes

Investors were gifted a huge potential pool of renters yesterday thanks to Ottawa’s big plans for the student market.

The student renal market could explode in the coming years following Ottawa's plans to double the number of international students in Canada by 2022.

International Trade Minister Ed Fast said the government will target students from developing markets, primarily China, India, Brazil, Mexico, North Africa and the Middle East.

Canada hosted more than 265,000 students in 2012, up 94 per cent since 2001. The goal is to attract 450,000 across all of the major schools in the country.

Speaking to CREW, Tim Collins from Student Rental Investing, says this is the perfect opportunity for investors to get a slice of the lucrative market. “It will be a gradual increase (of students arriving) and supplement what is a steady market. The student rental business can be more hands on than other types of investing so people should go into it with their eyes open, and get educated on what to expect.”

While most of the major universities that typically attract international students are located in urban centres – such as Toronto and Montreal– Collins says investors could still acquire a suitable property in other regions, including London and Hamilton for around the $350,000 mark.

According to Study Canada, the online resource for international students, the monthly cost for shared accommodation ranges from $250 to $700 per month, and from $400 to $1,500 per month for a suite or apartment.

“International students typically want rooms in houses that are fully furnished with as much as possible provided. They, in my experience, make fantastic students as they're there to work and be successful,” says Collins.


 

How Long do Hot Water Tanks Last?

Water Tank Solid State Inspections

Hot water tanks are still the most common method of providing domestic hot water for showers and washing however hot water tanks have the shortest service life of the major mechanical systems of the home. I’m often asked by clients some common questions about hot water tanks.

 

Why Do Hot Water Tanks Have Such Short Lives?

The primary failure method for hot water tanks is to spring a leak and this leak is typically caused by erosion of the inner pressure tank. Essentially, oxygen molecules in the water supply will cause the metal in the tank to rust. The reason hot water tanks have shorter lives than other water/metal mechanical systems however has to do with some additional unique characteristics of a hot water tank. 

 

The speed at which metal will ‘rust’ will speed up when there is a fresh source of oxygen, chemical reaction catalysts (like natural salts and minerals) and even heat and pressure can speed up the process. As hot water tanks have a constant supply of fresh oxygenated water, and generate heat under supply water pressure, rust is inevitable. The real wild card however in how long a hot water tank will last is based on the mineral content of the supply water to the home. This mineral content can speed up rusting in the tank censurably and is highly variable in different communities.

 

How Long Does a Hot Water Tank Last?

Predicting the failure of mechanical equipment is a statistical experiment. On the short end, tanks have been known to fail in as little as 8 years, and in some cases, I’ve seen original hot water tanks in 20-25 year old homes. The industry ‘average’ for hot water tank life is usually considered about 10-12 years.

 

When Should I Replace My Hot Water Tank?

This question is all about managing risk. If you absolutely cannot risk a water leak from a hot water tank, you should be pretty safe replacing it every 8 years (by pretty safe, that still means a small risk of premature failure). As a home inspector, I start to warn people of probable failure when the tank is about 10 years old and recommend replacement on all tanks over 12 years of age.

 

Another part of the risk to manage is what happens if there is a leak. In many house basement mechanical rooms, there is a drain a few feet away ready to collect water from a potential leak. In these houses, there is less risk of damages from a leak. However if you live on the 4th floor of a wood frame condo and there is no drain around your hot water tank, repairs to the building below you could be very expensive in the event of a leak.

 

How Can I Tell the Age of my Hot Water Tank?

This is one of the most frustrating parts of my job as for some reason the labelling requirements for hot water tanks don’t include an obvious date code. Every manufacture uses a different combinations of letters and numbers (usually in the serial numbers) to determine the month/year or week/year of manufacture. Fortunately, most of these codes can be looked up by inspectors or home owners on the internet but for some brands such as Sears Kenmore units (which are made by other factories), the code system can be nearly impossible to determine. With experience however, home inspectors can observe other components like gas valves, installation methods, and temperature pressure valves to get a closer idea of the date of the unit.

 

Do Tankless Hot Water Heaters Last Longer?

Tankless hot water heaters still have metal, oxygenated water, oxidization catalysts, heat, and pressure and are also slowly working their way to failure. There has not been a good history of these units to predict life spans however most home owners are being cautioned to consider the same 10-12 year life spans.

 

Final Thoughts

While hot water tanks have a short life compared to most other mechanical systems, they are much less expensive than most mechanical systems. Installation costs can vary as different municipalities may have different permit and code needs but it is often comparable to the price of a ‘good’ dishwasher.

 

If you are unsure about the age or condition of your hot water tank, call your local home inspector, service technician, or a competent handyman to help you know if your tank is safe and solid.


 

CREA to remove Quebec listings from out-of-province brokers

 

CREA says that it will start removing Quebec listings from out-of-province brokers from Realtor.ca. In a letter sent to boards last week, CREA president Laura Leyser said, “After several calls, emails and letters to the OACIQ about the status of out-of-province listings, CREA recently received a response from the provincial regulator. Given this new development, CREA will remove the offending listings this month. We caution that the OACIQ has not provided blanket guidance to CREA that covers all potential future listings, however, we hope it will continue to work with us in a spirit of co-operation.”

The issue of listings from out-of-province brokers was one of many reasons why the real estate boards in Montreal, Quebec City and other smaller centres opted to leave CREA at the end of 2013.

“CREA has always been willing to act,” Randall McCauley, vice-president of government and public relations for CREA, told the Montreal Gazette. “But real estate is governed by province. CREA is not a law-enforcement body. CREA cannot remove a listing by a member unless the province shows it is inconsistent with its laws.”

CREA has also decided to wait until January 28 before it removes the listings of those who have dropped out of the national association.


 

BCREA ECONOMICS NOW

Canadian and US Employment - January 10, 2014

The Canadian economy finished the year on a weak note with total employment falling by 46,000 jobs in December. Those job losses pushed the Canadian unemployment higher by 0.3 points to 7.2 per cent. For all of 2013, employment growth averaged a mediocre 8,500 jobs per month and total employment expanded 1.3 per cent over 2012. Weak job growth and very low inflation in the Canadian economy should further erode any remaining rate-tightening bias at the Bank of Canada. 

In BC, employment growth finished the year on a more positive note, with 12,500 new jobs. Unfortunately, job gains were isolated to part-time work and the province continued to lose full-time jobs. The provincial unemployment rate fell 0.1 points to 6.6 per cent. Total employment finished 2013 down 0.2 per cent from 2012.

In the United States, jobs gains missed markedly to the downside, posting just 74,000 new jobs versus expectations of 200,000. Despite weak job growth in December, the US unemployment rate fell to a five-year low of 6.7 per cent as a result of fewer people actively looking for work. However, monthly non-farm payrolls have averaged a relatively robust 174,000 jobs over the past three months which may provide a better guide to the underlying trend in unemployment.


 

Sellers to benefit in strong spring housing market: report 

Real estate agency Royal LePage is expecting Canada’s housing market to shift in favour of sellers in the first half of this year, and is forecasting a strong spring.

The agency, which represents more than 15,000 Canadian real estate agents and is part of Brookfield Real Estate Services Inc., is also predicting that house prices will maintain their momentum.

“We predict continued upward pressure on home prices as we move towards the all-important spring market,” Royal LePage CEO Phil Soper stated in a press release.

“In addition to normal demand, housing prices in Canada this year will be influenced by buyers who put off purchase plans in the very soft spring of 2013. Talk of a ‘soft landing’ for Canada’s real estate market in the new year is misguided. We expect no landing, no slowdown, and no correction in the near-term. Conditions are ripe for as strong a market as we saw in the post-recessionary rebound of the last decade.”

Canada’s housing market never officially tipped into buyer’s market territory during the correction that ensued beginning in the summer of 2012, but it was fairly close, hovering on the edge between a balanced market and a buyer’s market as determined by the ratio between sales and new listings, Mr. Soper said in an interview. During the latter half of last year sales volumes increased faster than new listings, and the market remained in balanced territory but tipped towards becoming a seller’s market.

“This is the most optimistic view of the housing market since the recession, that’s in half a decade,” he said.

Many economists have been surprised by the buoyancy of home prices in the wake of the lengthy sales slump that persisted in the market from the summer of 2012 to this past spring.

Economists both in Canada and abroad are keeping a close eye on Canadian home prices as they debate just how overvalued the market is. While many Canadian economists estimate that home prices here are in the neighbourhood of 10 to 20 per cent too high, economists at Deutsche Bank recently said they believe prices are 60 per cent too high.

The Calgary Real Estate Board recently said that the benchmark price of a single family home in the Calgary area is now $472,200, up 8.6 per cent from a year earlier. The benchmark in Vancouver is $603,400, up 2.1 per cent from a year earlier despite that city registering the steepest market correction in the past two years.

The average price of homes that sold over the Multiple Listing Service in the Toronto area last month was $520,398, up by 8.9 per cent from the average selling price in December, 2012. The average selling price in Toronto for all of 2013 was $523,036, up 5.2 per cent from the average in 2012.

The Canadian Real Estate Association (CREA), which represents the bulk of real estate agents in Canada, said in December that it is now expecting the average price of homes sold over the Multiple Listing Service to have risen by 5.2 per cent in 2013, to $382,200 (the final numbers will come out later this month). Heading into 2013 it had been expecting the average price to rise by just 0.3 per cent.

CREA is now expecting average prices to rise by 2.3 per cent this year, while Royal LePage is calling for a 3.7 per cent increase.

Royal LePage says that, based on a survey it conducts, the average price of a standard two-storey home rose 3.6 per cent in the fourth quarter of 2013 to $418,282, the average price of a detached bungalow rose 3.8 per cent to $380,710, and the average price of a standard condominium rose 1.2 per cent to $246,530.

The numbers vary widely across the country, for instance Royal LePage says condo prices in Calgary rose 7 per cent while those in Montreal fell by 0.4 per cent.

A number of economists expected that the large number of condos coming on stream in major cities would take more of a bite out of home price momentum than it has so far.

Canada Mortgage and Housing Corp. said Thursday that the number of new homes that began construction in December was 189,672 on a seasonally-adjusted and annualized basis, down from 197,797 in November. Starts of urban projects with multiple units, namely condos, fell by 4.1 per cent to 108,910 units, while starts of single-detached homes in urban areas fell by 6.7 per cent to 59,304 units.

Starts rose in British Columbia and Quebec, but fell in the Prairies, Atlantic Canada and Ontario.

Housing starts have proven difficult to forecast for a couple of years now, and CMHC has been warning that they will be volatile from month to month because many markets are being largely driven by the multiples, or condo, segment. This month’s showing was largely in line with the consensus forecast among economists.

“Starts are well below their 2012 peaks, but have trended somewhat higher from the lows set early last year,” Scotiabank’s economists noted Thursday.

While construction has cooled from its blistering pace in 2012, many economists say we are still building more homes than demographic fundamentals would suggest we need right now.

Toronto-Dominion Bank’s economics department has estimated that the fundamentals call for about 175,000 new homes a year. “A softening over the longer term will be necessary as the Canadian new housing market is overbuilt in many large urban centres,” it said in a research note in December.

Housing starts in the full fourth quarter of 2013 were up four per cent from the third quarter, which suggests housing could have been a modest contributor to economic growth for Canada towards the end of the year, economists at Scotiabank said.


 

BCREA ECONOMICS NOW

Canadian and US Employment - January 10, 2014

The Canadian economy finished the year on a weak note with total employment falling by 46,000 jobs in December. Those job losses pushed the Canadian unemployment higher by 0.3 points to 7.2 per cent. For all of 2013, employment growth averaged a mediocre 8,500 jobs per month and total employment expanded 1.3 per cent over 2012. Weak job growth and very low inflation in the Canadian economy should further erode any remaining rate-tightening bias at the Bank of Canada. 

In BC, employment growth finished the year on a more positive note, with 12,500 new jobs. Unfortunately, job gains were isolated to part-time work and the province continued to lose full-time jobs. The provincial unemployment rate fell 0.1 points to 6.6 per cent. Total employment finished 2013 down 0.2 per cent from 2012.

In the United States, jobs gains missed markedly to the downside, posting just 74,000 new jobs versus expectations of 200,000. Despite weak job growth in December, the US unemployment rate fell to a five-year low of 6.7 per cent as a result of fewer people actively looking for work. However, monthly non-farm payrolls have averaged a relatively robust 174,000 jobs over the past three months which may provide a better guide to the underlying trend in unemployment.


 

Metro Vancouver housing market expected to remain stable

 

Wild price swings are a thing of the past, economists say


The years of wild swings in Lower Mainland's real estate markets should be behind the region in 2014 as 2013's rebound in sales settles down into relatively stable conditions, according to local economists.

In Metro Vancouver, the communities covered by the Real Estate Board of Greater Vancouver saw 28,524 sales through the realtorcontrolled Multiple Listing Service in 2013, which was a 14-per-cent gain on 25,032 sales in 2012.

"Home sales quietly improved last year compared to 2012," said Sandra Wyant, president of the Real Estate Board of Greater Vancouver, "although the volume of activity didn't compare to some of the record-breaking years" of the past decade."

The total ranked 2013 as the third-lowest year for sales over the last decade.

"After a really poor start to (2013), as we go into this year I expect to see a little more stability," said Bryan Yu, an economist for Central 1 Credit Union. "You're not going to see the volatility we saw last year, though there will be a slight drop off in momentum into the first quarter (of 2014)."

Central 1's forecast is for Metro Vancouver's property sales to increase by six per cent in 2014, mortgage rates to increase but remain relatively low and employment growth to continue in pace with a stronger economy that will be influenced by improving conditions in the United States.

"There's no real catalyst in terms of (spurring) a big pickup in activity," Yu said, "I expect to see a relatively stable real estate market - but again, a balanced market."

Yu doesn't expect big moves in property prices for 2014, either up or down.

Vancouver's benchmark prices - average prices for typical homes sold - held relatively steady over 2013 with the benchmark for detached homes reaching $927,000 in December, a 2.5-percent increase from 2012; the townhouse benchmark hitting $456,100, up 1.2 per cent from a year ago; and the condominium benchmark hitting $367,800, a two-per-cent increase from a year ago.

For 2014, Central 1 Credit Union's forecast is for prices to edge up about 1.5 per cent.

Shifts in 2014 real estate prices will also be influenced by the types of properties people are buying, with lower-priced townhouses and condominiums expected to make up a bigger share of the market, according to Lance Jakubec, a senior market analyst for Canada Mortgage and Housing Corp.

"The market share of multiples tends to ebb and flow," Jakubec said. "(Sales) were growing on the singles side (in 2013), but I think there will be a modest shift back to the multiple side."

Affordability will be a factor in the shift. The rebound in 2013 did elevate single-family pricing, and analysts, including Yu, expect affordability to be one of the constraints on Lower Mainland real estate markets.

Jakubec added that the number of new townhouses and condominiums that developers are building versus single-family homes will also dictate part of that movement.

While Jakubec does not make forecasts for individual communities within the region, he added that it will be interesting to watch how markets along the Evergreen Line rapid transit corridor perform over 2014.

Jakubec said population growth appears to be growing by similar jumps between Vancouver, Surrey and the Tri-Cities communities of Coquitlam, Port Coquitlam and Port Moody.

"If you happen to have a job that takes you across the Metro area, you sense that just from the cranes and activity that are spread out," he said.

In the Fraser Valley, realtors closed out 2013 with 13,663 MLS sales, 1.5 per cent lower than the 13,878 transactions recorded in 2012, despite a mid-year rebound in sales.

Valley prices in December remained stable compared with a year ago, with the benchmark price coming in at $549,500, up 1.9 per cent from December 2012. The benchmark for typical condos was $192,600, down 3.7 per cent from the same month a year ago.

"Generally speaking, 2013 overall was quiet," said Ron Todson, president of the Fraser Valley Real Estate Board. "Earlier in the year, our market felt the impact of the tighter mortgage regulations, rebounded some in the summer and then flattened again come fall."

The net result was a balanced market between buyers and sellers.




Metro Vancouver housing market characterized by modest home sale and price increases in 2013

The Greater Vancouver housing market maintained a consistent balance between demand and supply throughout 2013.

The Real Estate Board of Greater Vancouver (REBGV) reports that total sales of detached, attached and apartment properties in 2013 reached 28,524, a 14 per cent increase from the 25,032 sales recorded in 2012, and an 11.9 per cent decrease from the 32,390 residential sales in 2011.

“Home sales quietly improved last year compared to 2012, although the volume of activity didn’t compare to some of the record-breaking years we experienced over the last decade,” Sandra Wyant, REBGV president said.

Last year’s home sale total ranks as the third lowest annual total for the region in the last ten years, according to the region’s Multiple Listing Service® (MLS®).

The number of residential properties listed for sale on the MLS® in Metro Vancouver declined 6.2 per cent in 2013 to 54,742 compared to the 58,379 properties listed in 2012. Looking back further, last year’s total represents an 8.1 per cent decline compared to the 59,539 residential properties listed for sale in 2011. Last year’s listing count is on par with the 10 year average.

“It was a year of stability for the Greater Vancouver housing market,” Wyant, said. “Balanced conditions allowed home prices in the region to remain steady, with just a modest increase over the last 12 months.”

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $603,400. This represents a 2.1 per cent increase compared to December 2012.

December summary

Residential property sales in Greater Vancouver totalled 1,953 in December 2013, an increase of 71 per cent from the 1,142 sales recorded in December 2012 and a 15.9 per cent decline compared to November 2013 when 2,321 home sales occurred.

December sales were 8.1 per cent above the 10-year December sales average of 1,807.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 1,856 in December 2013. This represents a 34.5 per cent increase compared to the 1,380 units listed in December 2012 and a 42.8 per cent decline compared to November 2013 when 3,245 properties were listed.

Sales of detached properties in December 2013 reached 762, an increase of 79.3 per cent from the 425 detached sales recorded in December 2012, and a 21 per cent increase from the 630 units sold in December 2011. The benchmark price for detached properties increased 2.5 per cent from December 2012 to $927,000.

Sales of apartment properties reached 850 in December 2013, an increase of 68.7 per cent compared to the 504 sales in December 2012, and an increase of 9.8 per cent compared to the 774 sales in December 2011.The benchmark price of an apartment property increased 1.8 per cent from December 2012 to $367,800.

Attached property sales in December 2013 totalled 341, an increase of 60.1 per cent compared to the 213 sales in December 2012, and a 34.3 per cent increase from the 254 attached properties sold in December 2011. The benchmark price of an attached unit increased 1.2 per cent between December 2012 and 2013 to $456,100. 


 

Fraser Valley's housing market quiet, yet stable in 2013

January, 03 2014 10:24:36 am, by FVREB 
Categories: Statistics

SURREY, BC – Neither predictions of a huge crash or notable recovery came to pass in 2013 as Fraser Valley’s real estate market stayed slow and steady, similar to 2012’s market.

Fraser Valley’s total sales volume last year was 13,663 a decrease of 1.5 per cent compared to 13,878 in 2012. Over the course of the year, Fraser Valley REALTORS® listed 29,338 properties on the Multiple Listing Service® (MLS®), a 5.4 per cent decrease compared to 2012’s 31,009 listings. The number of active listings at year’s end finished at 7,541, 5 per cent higher compared to 7,187 active listings in December 2012.

Ron Todson, President of the Fraser Valley Board, says, “It wasn’t the best of years, nor was it the worst. Generally speaking, 2013 overall was quiet. Earlier in the year, our market felt the impact of the tighter mortgage regulations, rebounded some in the summer and then flattened again come fall.

“The positive for both buyers and sellers has been the stability in home prices. Although our sales last year were amongst the lowest they’ve been in last decade, we didn’t see significant price declines because our inventory also remained lower. When both buyers and sellers take a breather it has a balancing effect on the market where neither has the upper hand.”

In December, the benchmark price of a detached home in the Fraser Valley was $549,500, an increase of 1.9 per cent compared to $539,000 in December 2012 and a decrease of -0.1 per cent compared to November.

For townhouses, the benchmark price in December was $293,300, a decrease of 1.0 per cent compared to the same month last year when it was $296,400 and up 0.3 per cent compared to November. The benchmark price of apartments in December was $192,600, a decrease of 3.7 per cent compared to December 2012 when it was $200,100 and a decrease of 1.8 per cent compared to November.

Annual average prices year over year show detached homes up 3 per cent – $615,852 in 2013 compared to $597,608 in 2012. Townhome average prices decreased by 0.7 per cent, going from $340,253 in 2012 to $337,811 in 2013 and the average price of apartments decreased by 0.4 per cent going from $220,033 in 2012 to $219,196 in 2013.

For the month of December, property sales were down compared to November, as is the seasonal norm – 890 compared to 986; however, they were a 34 per cent improvement over the 664 sales in December 2012.


 

Investors should calm down and carry on in 2014. That is the word from Scotiabank who are playing down the so-called risks that may affect market conditions next year.

The big risks – high household debt, affordability issues and muted wage growth – should not pose a serious threat to the Canadian housing market in 2014, despite what the naysayers say.
That is according to the new Global Real Estate Trends report by Scotiabank Economics. They say that improving global growth, attractive borrowing costs and population growth in key demographic segments should be enough to support housing demand next year.

The rental market will also remain strong in 2014 thanks to the “widening cost premium between owning over renting” in major centres. However, they do warn that vacancy rates “could edge up next year alongside an increase in supply from recently completed investor-owned units."

Alberta, in particular, is tipped to outperform national housing markets.

Scotiabank is also expecting a moderately lower level of resale transactions next year with home prices also remaining relatively flat. “Downside price risk is greater in the more amply supplies high-rise segment than for single-family homes,” the report says. Investor interest in renovation projects may also wane in 2014 as more people focus on their spending and general pricing environment.


 

Good news for landlords. Buying and servicing a home in Canada is increasing, and that obstacle may prove enough for buyers to hold off from entering the market for now.

Good news for landlords. Buying and servicing a home in Canada is increasing, and that obstacle may prove enough for buyers to hold off from entering the market for now.

According to the new RBC report on affordability, it is estimated that a household has to devote over 40 per cent of its pre-tax income to service the cost of owning a bungalow at current market values.  While the cost of servicing a condo increased marginally, it still accounts for almost 30 per cent of pre-tax income.

While the Bank of Canada says they will raise interest rates gently upwards in 2015, many first-time buyers are still paralyzed by fear of a major hike and affected by negative media coverage surrounding the country’s economy.

“Going forward, affordability could become a deterrent for homebuyers in this country if it were to deteriorate much further due to, for example, a surge in interest rates,” says the report.

Affordability is a problem across all Canada’s markets, says RBC, with most of the deterioration occurring in single-family home categories.  Vancouver and Toronto were naturally the worst for affordability, while Alberta and the Atlantic region “still looked reasonably attractive for the most part in the third quarter.”

“We expect home resales to stabilize near the current not-too-hot and not-too-cold levels, although some further modest pullback may occur in the near term,” says RBC.


 

Furnace Energy Efficiency - It Is Not That Simple…


What is Really Efficient?

A new high-efficiency gas furnace ideally turns 95% of the energy it consumes into usable home heating energy while a 20-year old mid-efficiency furnace is more likely about 80% efficient. So that means for every $100 spend on natural gas this winter, you would $15 more worth of energy from the high efficiency furnace. Sounds great, until you start to look at the total environmental and business case for updating your furnace:

13-093.17_Indv-wpage_tilesLRG_LM

Source: fortisbc.com/NaturalGas/Homes

  1. Life Cycle Savings - Fortis BC says the average home in the lower mainland would spend $565 on natural gas for heating with a mid-efficiency furnace, or $480 per year for high efficiency. That would be a savings of only $85 per year. With an expected service life of 20 years, you stand to save $1,700 in the life of the equipment. How much does a high-efficiency furnace cost? About $3,500. There is really no life cycle cost benefit in our climate to replace an operating furnace.
  2. Installation Errors - In order to get that 95% efficiency rating, the installer (and/or builder) have to have a ‘perfect’ installation. When retro-fitting a new furnace, there will never be a perfect installation. For example, omitting a fresh air intake (common when the furnace room is central in the home) from the high efficiency furnace may drop the efficiency rating by 5-10%. Now the ‘high efficiency’ furnace is only operating at 85-90% efficiency (or a $566-1133 life cycle savings).  
  •  Just remember !  the least expensive furnace to operate is the one you own today

Empty condo/selling your apartment

 

If you decided to move out before selling your condo, make sure you have additional insurance coverage.  Most insurance companies consider a home is vacant once it’s been unoccupied for 30 days, and typically the regular insurance policy is void if there’s a claim after that time.

The Insurance Bureau of Canada says that the first step is to ask your insurance company for a “Vacancy Clause Rider.” This will come at an extra cost because if no one is home to catch damage when it occurs, problems can multiply. In a condominium building, damage in one unit can spread to several other units. If it’s determined that you are responsible, you are liable for the costs to fix the other units.

So that’s one more thing to do before selling your condo. An insurance broker will beyour new best friend.


 

Landlords are trying anything and everything to prevent getting ‘caught’ with rogue tenants. But is it enough?

While the pool of renters is getting bigger thanks to the tighter mortgage rules, so is the number of ‘rogue’ tenants leaving landlords out of pocket.
There are reportedly 4.5 million rental units in Canada, with annual rental income now valued at $63 billion. It’s a big money business but some landlords are having to fight hard to get their cash. In 2012 alone, there were over 70,000 Landlord Tenant Tribunal hearings in Toronto in 2012.

“There are many hard luck and horror stories with tenants. Without a form of protection, there is no such thing as guaranteed rental income,” says Steven Solomon, president of the new industry player, RentShield Protection Canada Corporation. 
He says Canadian landlords are following in the footsteps of their U.K. counterparts and taking preventative measures to protect themselves against loss of rental income.

“Over 60 per cent of landlords in the U.K. now have rental guarantees in place, with a similar high rate in Europe,” he says. “Many investors, particularly mom and pop landlords, depend on the monthly cash-flow and cannot afford to lose out on one or two months of rental income.”

Solomon says their new product – the Landlord Rental Guarantee program – is a direct response to investor needs. “If a renter does not pay, we do. It’s as simple as that. We also secure collections and evictions for delinquent tenants while our resource center offers warranty programs for appliances and has links to specialized insurance brokers.”

The estimated cost associated with the eviction of a defaulting tenant based on $15,000 annual rent can range anywhere from $2,500 to as much as $6,000 depending on the time taken to secure the eviction.


 

Balanced conditions continue in the Greater Vancouver housing market

Home buyer and seller activity continues to mirror historical averages in the Greater Vancouver housing market. These trends have helped keep the region in a balanced state for the last nine months.

The Real Estate Board of Greater Vancouver reports that residential property sales in Greater Vancouver reached 2,661 on the Multiple Listing Service® (MLS®) in October 2013. This is a 37.8 per cent increase compared to the 1,931 sales recorded in October 2012, and a 7.2 per cent increase from the 2,483 sales recorded in September 2013.

New listings for attached, detached and apartment properties in Greater Vancouver totaled 4,315 in October 2013. This represents a 0.2 per cent decline from the 4,323 new listings reported in October 2012, and a decrease of 14.2 per cent compared to the 5,030 new listings reported in September of this year.

Last month’s sales were 2.8 per cent above the 10-year sales average for the month, while new listings for the month were 1.9 per cent below the 10-year average.

“We continue to see fairly typical activity when it comes to monthly home sale and listing totals,” Sandra Wyant, REBGV president said. “Today’s activity is helping to keep us in balanced market territory, which means that prices tend to experience minimal fluctuation.”

The total number of properties currently listed for sale on the MLS® in Greater Vancouver is 15,257, a decline of 12.2 per cent compared to this time last year, and a decline of 5.3 per cent compared to September 2013.

The sales-to-active-listings ratio is currently at 17.4 per cent in Greater Vancouver.

The MLS® Home Price Index composite benchmark price for all residential properties in Greater Vancouver is $600,700. This represents a 0.5 per cent decline compared to this time last year.

Sales of detached properties reached 1,067 in October 2013, an increase of 35.1 per cent from the 790 detached sales recorded in October 2012 and a 9.5 per cent increase from the 974 units sold in October 2011. The benchmark price for detached properties decreased 0.5 per cent from October 2012 to $922,600.

Sales of apartment properties reached 1,098 in October 2013, an increase of 36.7 per cent compared to the 803 apartment sales recorded in October 2012, and an increase of 14.6 per cent compared to the 958 sales in October 2011. The benchmark price of an apartment property decreased 0.9 per cent from October 2012 to $365,600.

Attached property sales totaled 496, an increase of 46.7 per cent compared to the 338 attached property sales recorded in 2012 and a 29.8 per cent increase compared to the 382 attached property sales recorded in October 2011. The benchmark price of an attached property is $458,000, which is virtually unchanged from October 2012. 


 

BCREA 2013 Fourth Quarter Housing Forecast:
Housing market rebound to extend into 2014

BC Multiple Listing Service® (MLS®) residential sales are forecast to increase 6 per cent to 71,700 units this year, before increasing a further 6.3 per cent to 76,200 units in 2014.

The five-year average is 74,600 unit sales, while the ten-year average is 86,800 unit sales. A record 106,300 MLS® residential sales were recorded in 2005.

“Consumer demand has bounced back after waning for most of 2012,” said Cameron Muir, BCREA Chief Economist. “With higher interest rates on the horizon, many potential homebuyers are choosing to lock in a mortgage sooner rather than later. However, rather than signaling a return to frenetic home buying activity and accelerating markets, consumer demand is simply transitioning back to its long term average.”

The average MLS® residential price forecast for the province has been revised upward from a 3.3 to a 4.3 per cent increase to $537,100 this year, as a result of stronger than expected market conditions in Vancouver. The average MLS® residential price in BC is forecast to increase a further 2.1 per cent to $548,200 in 2014.

 

 

graph


 

Bank of Canada Interest Rate Decision - October 23, 2013

The Bank of Canada left its target for the overnight rate unchanged at 1 per cent this morning. In its accompanying statement, the Bank highlighted that uncertain global and domestic conditions are delaying a forecast pick-up in exports and business investment, leaving the level of economic activity lower than what the Bank had been expecting. The Bank is forecasting growth of 1.6 per cent in 2013, and has trimmed its outlook on growth in 2014 from 2.6 per cent to 2.3 per cent.  Interestingly, the Bank also noted that persistently below target inflation are of increasing importance, normally an argument for a cut in the overnight rate. However, the risk of exacerbating already elevated household debt is weighing heavily on the Bank's interest rate decisions. 

Low inflation, higher long-term interest rates and the Bank's downward revisions to its economic forecast virtually rule out any movement in the overnight rate in the short term. Like the Bank, we anticipate a rebound in economic growth in 2014 that will bump inflation back onto a path back to its 2 per cent target by 2015. Rising inflation  will likely necessitate a tightening of interest rates, but not until late next year at the earliest.


 

Barbara Yaffe: Time to reform B.C.’s Property Transfer Tax

 

Homebuyers and realtors hate it. Economists disparage it. And nearly everyone agrees it’s time for an overhaul


VANCOUVER — Homebuyers and realtors hate it. Economists disparage it. And nearly everyone agrees, it is time to overhaul B.C.’s Property Transfer Tax.

The 26-year-old levy makes the excruciating task of purchasing a B.C. property all the more difficult, and is an excellent example of how politicians have persisted with policies that ignore Vancouver’s affordability crisis.

The PTT takes one per cent of the first $200,000 of a property’s selling price, and two per cent on the balance.

First-time buyers of properties selling for $425,000 or less are exempt.

Thus, a typical west side Vancouver detached home — now averaging more than $2 million — requires the purchaser to fork over nearly $40,000 in PTT.

And despite the fact that B.C. has the highest home prices in Canada, the province perversely imposes one of the most onerous such taxes in Canada.

Only Toronto has a worse situation, with buyers paying a separate municipal and provincial Land Transfer Tax. Alberta and Saskatchewan are the only provinces without this type of levy.

The Real Estate Board of Greater Vancouver points out that B.C.’s tax, introduced in 1987, “is structured to reflect home prices in the 1980s, not the prices homebuyers pay today.”

It argues the two-per-cent part of the levy should apply only on property above a threshold of $525,000 in the province, and $600,00 in Greater Vancouver. Moreover, it wants the threshold to be adjusted annually.

B.C.’s growing PTT revenue haul lends weight to the board’s perspective.

In the 1980s and 1990s, B.C. netted $200 million to $300 million a year in PTT. More recently, the take has soared to between $850 million and $1 billion — because the average Vancouver-area home price since 1987 has soared 500 per cent. (PTT revenue last year was $757 million due to a soft market.)

Last January, Finance Minister Mike de Jong stated: “We are interested in looking closely at the thresholds, given real estate prices in B.C.”

Eight months later, he’s non-commital: “In preparation for next year’s budget, we will review the provincial taxes and consider any possible changes during this process.”

A May Ipsos Reid poll sponsored by the real estate board revealed 58 per cent of respondents oppose the PTT.

But B.C. hasn’t faced the sort of backlash it did on the HST because the PTT restricts its bite to property purchasers — 150,000 to 200,000 people a year.

Vancouver realtor Doron Grill recently commented on the real estate board’s Facebook site: “The Vancouver market has been butchered by offshore buyers, making it close to impossible for a local to even get into the market ...

“The province needs revenue, so I think the offshore buyers should pay, and pay dearly, to invest their money here.”

In other words, a higher PTT for offshore buyers, a lower one for locals — although this could raise legal issues.

Politicians insist the province, struggling to balance its budget, cannot do without this revenue stream.

But economists say the tax discourages the buying and selling of property, a wealth-generating activity that should be encouraged.

Each property sale generates some $60,000 in expenditures — fees for lawyers, building inspectors, surveyors, appraisers and realtors, plus the cost of appliances, furniture, renovations and repairs.

The B.C. Taxpayers Association opposes the tax because it raises revenue “on the backs of families struggling to buy homes ... and on businesses trying to expand.”

Christy Clark’s government wants to make life more affordable for ordinary B.C. families. Reducing the PTT would be a good start.

It is worth remembering, most homebuyers aren’t wealthy — they are just trying to get by in a city where real estate has become mercilessly unaffordable.


 


No Bank of Canada rate hike till 2016?

In the span of a week, two banks have pushed back their forecasts of a Bank of Canada rate hike to 2016.

The latest one comes from Joshua Dennerlein, economist with the Bank of America Merrill Lynch. Mr. Dennerlein said he now predicts the Bank of Canada will hike its benchmark rate sometime in the first half of 2016, more than a year later from his earlier forecast of a hike in the fourth quarter of 2014.

“We continue to doubt the BoC view that the return to export led growth is right around the corner,” he said. “With domestic sources of growth tapped out, we expect only a limited acceleration in Canada’s growth rate over the next several years.”

Most economists at the moment forecast a late 2014 or early 2015 rate hike, but 2016 is becoming an increasingly discussed target year.

Last week, economists at Scotiabank pushed back their own target to 2016, saying a recent speech by senior deputy governor Tiff Macklem hinted the central bank was disappointed with recent economic trends.

“The Bank of Canada probably now envisages spare capacity remaining into 2016,” Scotiabank said last week, referring to Canada’s actual economic capacity versus the level of production being seen right now.

“Against the conventional thinking that the Bank of Canada would want to hike before spare capacity closes, we continue to think that very easy money will be required even as spare capacity shuts,” Scotiabank added.

Mr. Dennerlein cited that data as well in pushing back his hike forecast. He also downgraded his outlook for Canadian economic growth in 2014, saying he now sees growth of 1.8% versus his earlier 2.2% call.

“We see little upside to the main driver of Canada’s economy – the consumer,” he said. “High household leverage, a low savings rate, and slowing income growth are a recipe for soft consumer spending.”

Mr. Dennerlein said that his previous forecast had assumed a pickup in economic growth in the second half of 2014, but that he no longer sees that occurring.  He also doesn’t expect the output gap to close in Canada until late 2016, keeping downward pressure on inflation.

“The bottom line is that the Bank of Canada is  a long way off from increasing its monetary policy rate,” he said.


Sale and listing activity continues to follow historical averages

Home buyer and seller activity in the Greater Vancouver housing market continues to far outpace 2012, yet is in line with the region’s 10-year averages.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 2,483 on the Multiple Listing Service® (MLS®) in September 2013. This represents a 63.8 per cent increase compared to the 1,516 sales recorded in September 2012, and a 1.2 per cent decline compared to the 2,514 sales in August 2013.

Last month’s sales were 1 per cent below the 10-year sales average for the month, while new listings for the month were 3.5 per cent below the 10-year average.

“While sales are up considerably from last year, it’s important to note that September 2012 sales were among the lowest we’ve seen in nearly three decades,” Sandra Wyant, REBGV said. “Home sale and listing activity this September were in line with the 10-year average for the month.”

New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,030 in September. This represents a 5.5 per cent decline compared to the 5,321 new listings reported in September 2012 and a 20.2 per cent increase compared to the 4,186 new listings in August of this year.

The total number of properties currently listed for sale on the MLS® in Greater Vancouver is 16,115, a 12.2 per cent decrease compared to September 2012 and a 0.5 per cent increase compared to August 2013.

The sales-to-active-listings ratio currently sits at 15.4 per cent in Greater Vancouver.

“It’s important to remember that stronger sales activity does not necessarily equate to rising home prices. In fact, home prices have not fluctuated much in our market this year,” Wyant said.

The MLS® Home Price Index composite benchmark price for all residential properties in Greater Vancouver is currently $601,900. This represents a decline of 0.7 per cent compared to this time last year and an increase of 2.3 per cent compared to January 2013.

Sales of detached properties reached 1,023 in September 2013, an increase of 72.2 per cent from the 594 detached sales recorded in September 2012, and a 6.9 per cent increase from the 957 units sold in September 2011. The benchmark price for detached properties decreased 1.4 per cent from September 2012 to $922,600.

Sales of apartment properties reached 1,018 in September 2013, an increase of 50.6 per cent compared to the 676 sales in September 2012, and an increase of 10.4 per cent compared to the 922 sales in September 2011. The benchmark price of an apartment property decreased 0.5 per cent from September 2012 to $366,600

Attached property sales in September 2013 totalled 442, an increase of 79.7 per cent compared to the 246 sales in September 2012, and a 20.4 per cent increase from the 367 attached properties sold in September 2011. The benchmark price of an attached unit is currently $458,300, which is unchanged from September 2012.



Green Real Estate: Indoor air quality

 

As temperatures drop and the autumn leaves begin to blanket the earth we collectively embark on our migration to the warmth, comfort and protection of our indoor spaces.

According to Health Canada, we spend about 90 per cent of our time indoors at home, at work or in recreational settings such as shopping malls, restaurants and gyms. We often talk about outdoor air quality and pollution but what do we know about indoor air quality?

Given that fall is the prime time for sealing up our homes in an effort to make them more energy efficient, a look at the health of our indoor air is fitting.

Mould lives in damp environments. It might look like a stain and appear in different colours. Sometimes, though, mould is not apparent and instead there is a musty smell. High concentrations of mould spores inside your house can lead to adverse health effects such as coughing, wheezing and shortness of breath.

If the amount of mould isn’t too large, consider fixing the problem yourself. Health Canada recommends using water and dish detergent. Bleach isn’t necessary. Once that’s done, you’ll need to address the cause. There are other ways to prevent mould growth such as ensuring that your clothes dryer hose is properly vented outdoors or by repairing basement, roof and pipe leaks immediately.

Radon, which is a radioactive gas created in nature, is often found in basements and crawl spaces, where there is poor ventilation. These locations also tend to be closer to the source of radon, which is created by decaying uranium found in soil, rock and water. Radon can enter a house through cracks in the foundation or gaps around pipes. Because radon is invisible, odourless and has no taste, the only way to know for sure if you have it is to do a DIY test or call in a professional.

Formaldehyde is a colourless gas that at high levels emits a sharp smell and irritates eyes, nose and throat and can worsen asthma in children. Low levels of this gas are extremely common indoors. Formaldehyde comes from cigarette smoke, fireplaces and wood-burning stoves; paper products such as wallpaper and cardboard; paints, adhesives and floor finishes and pressed wood products used in home construction projects, furniture and cabinets.

The best way to control formaldehyde in your home is by not smoking indoors, ensuring your fireplace and woodstove are in good working order and by letting products containing formaldehyde air out before bringing them into your home.

Carbon monoxide is odourless, tasteless and colourless. Encountering low levels over long periods of time can be dangerous, but high levels can lead to death. Low-level exposure might feel like the flu. More extreme exposure can result in chest pain, confused thinking and dizziness. It’s essential that you keep fuel-burning mechanisms and appliances well vented.

It’s important to maintain your fuel-burning devices, never idle vehicles in your garage and don’t smoke indoors. Invest in a carbon monoxide detector.

The following are other general ways to bump up your indoor air quality, according to Health Canada:

* Keep adequate ventilation, especially in rooms with excess water such as bathrooms.

* Monitor and control humidity levels.

* Fix leaks and cracks in walls, floors, roofs and basements.

* Immediately clean any mould found growing in your home.

* Keep your home clean by dusting and vacuuming regularly.

* Keep the door between your garage and home closed.

* Do not store paints, solvents or varnishes inside your home.

* Coat or seal furnishings made from particle-board or medium-density fibreboard.

Learning about the condition of the air inside your home might just be the perfect winter project. There are plenty of great online sources from which to obtain more information. For starters, try Health Canada, www.lung.ca and Canada Mortgage and Housing Corp.


 

Canadian Consumer Price Inflation - September 20, 2013

Canadian inflation registered 1.1 per cent in the twelve months to August, a slight deceleration from July's rate of 1.3 per cent. Core inflation, which strips out the most volatile components of the CPI, such as food and energy prices, increased 1.3 per cent in August. Consumer prices in BC actually fell 0.1 per cent in the 12 months to August largely as a result of the elimination of the HST. 

Given that inflation continues to run well below the Bank of Canada's 2 per cent target, we expect very little urgency from the Bank of Canada in raising interest rates. Our expectation remains that the Bank will begin withdrawing monetary stimulus in late 2014 or early 2015. 



Vancouver condo buyers take a second look

Derek Hynes was thinking like a lot of Vancouverites when he purchased his one-bedroom condo in one of Surrey’s new towers. He thought its value would rise each year, enough to make the purchase an investment in his future. He’d build equity until he had enough to purchase a bigger place, maybe even the down payment on a house.

The expectation that every home should build equity is a hangover from the pre-2008 years, when it seemed that real estate had nowhere to go but up, up, up. Average income earners were purchasing presale units and flipping them by the time they were completed, pocketing $50,000 or so in the process. Those days are long over. A shift is underway. As many condo owners who purchased five years ago and are trying to sell today can attest, the equity simply did not materialize. They are often breaking even, or selling for slightly more or less. Today, a condo in Vancouver is no longer viewed as a winning investment, so much as affordable housing and forced savings plan.

And if you consider that mortgage payments are still higher than those in Toronto, condos aren’t even that affordable. A recently released real estate report on Canadian cities says: “Despite the 2012 drop in Vancouver’s median condominium price and a further decline expected in 2013, the area’s affordability is forecast to remain the weakest by far among this report’s eight cities, both this year and throughout the forecast.”

The report, released by the Conference Board of Canada and Genworth Canada, also says that interest and principal payments on the median condo in Vancouver last year were a full 20 per cent more than payments in Toronto. For that reason, Mr. Hynes, who’s become a father since he purchased his 620 sq. ft. condo, will rent out his condo and use the money to rent another place, in an area with better value. Mr. Hynes paid $182,000 for his condo, which was $7,000 below the asking price. He was thinking of selling the unit until he saw that his neighbour on the same floor, with the same suite, has just listed for $179,000.

“I thought it would at least keep its value, so I’m surprised,” Mr. Hynes says. “If it had kept its value, I definitely would have sold right now.”

He says his work colleagues, friends and relatives are facing the same situation. His cousin just sold her condo after renting it out for five years, and she lost money on it.

“It was for the exact same reason I’m losing out,” Mr. Hynes says. “Because there are so many condos in the area.”

There are too many new condos. Since the economic slump of 2009, condo starts have been on the rise, and above the 20-year average ratio of starts-to-population growth. Developments were going up almost as if it were 2007 again.

“This left the inventory of completed but unsold apartment condominiums very high by the past decade’s standards,” says the Genworth/Conference Board of Canada report, which provided those numbers.

With the slump in prices, sales have recently picked up. The benchmark price of an apartment decreased 1.1 per cent from August, 2012, to $366,100 in August this year, according to the Real Estate Board of Greater Vancouver. Sales last month went up 40 per cent over August, 2012.

“Even though the real estate market is booming, the prices mostly remain the same,” says Vadim Marusin, who’s the founder of Estateblock.com, a new real estate search engine that maps the Multiple Listing Service listings and uses colour coding to provide data on education, minority group visibility, education level, income levels, crime, violent crime, schools, daycares, transit and climate in neighbourhoods throughout the Lower Mainland. Want to live among people with a high percentage of university degrees? He’s got the map that will show you. Such neighbourhood profiling might sound cold, but it makes sense in a city that’s more often treated as a land bank than a community.

“If we are talking about Metro Vancouver, the hottest areas are Richmond downtown, Vancouver downtown, and Vancouver west, mostly large low-rises,” Mr. Marusin says.

Urban Analytics’ Michael Ferreira tracks the market on a quarterly basis, and he sees a condo glut that’s softening prices.

“We’ve seen the unsold inventory of product under construction increase steadily over the last year,” he said, seated in a coffee shop with several cranes working in the distance. “Not to the point of concern for oversupply, but certainly to the point where buyer urgency is not as great.”

Because buyers know there is another building coming up, they aren’t pressured to buy, adds Urban Analytics’ analyst Jon Bennest.

“In some markets where there’s a lot of supply and not as much demand, it’s hard to say that we’ll see a price increase. In others where there is less supply and consistent demand, we do see those areas increasing. So it’s very specific to the submarket,” says Mr. Bennest.

“Areas we see flatlining or stabilizing would be Langley and Cloverdale, for example, where you have quite a bit of supply in that market. There is a continual supply base that will make it hard for prices to come up.”

Long-time commercial development analyst Richard Wozny of Site Economics, says that condo equity growth may remain a slow hill to climb.

“After six years of low interest rates and high population growth, the annual value increase was still far less than 1 per cent,” he says. “Owners require rising prices to offset costs associated with mortgage payments, interest rates, property taxes, monthly operating fees, the lack of liquidity, possible vacancy and building depreciation. However, more than 340,000 new condo units – 10,000 per year – are being planned in the Metro Growth strategy.

“Massive new supply, coupled with higher interest rates should continue to keep average condo prices from rising faster than inflation.”

With the city population steadily growing by about 37,000 people a year, the condo will remain the only affordable housing option for a lot of people. And the people with real equity – foreign investors and local boomers – will continue to look to them for investment.

“A lot of people have built equity over time, and have more buying power, and that is what allows our market somehow to keep going, despite the prices,” says Mr. Ferreira.

With condo starts expected to stay low in comparison to the previous decade, and demand expected to rise, condo inventories should become more sustainable, the Conference Board of Canada report says. With the drop in listings and a sales increase in the forecast, prices should slightly rise between 2014 and 2017.

Mr. Hynes says he’ll hang onto his condo long enough to see that happen.

“I’m in a situation where I cannot afford to sell it, so I’m going to be renting it out, probably next month.

“For me, it feels as if I am moving backward in life, but I have no choice, because I need to move on because I have a family now. I am going to move out and go rent a basement suite in Coquitlam.

“I know a lot of people can’t afford their mortgages because there are tons of cheap basement suites in Coquitlam.”


 

The summer housing market remains active in Greater Vancouver

August activity in the Greater Vancouver housing market finished well above last year’s pace and slightly below the 10-year average for the month.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 2,514 on the Multiple Listing Service® (MLS®) in August 2013. This represents a 52.5 per cent increase compared to the 1,649 sales recorded in August 2012, and a 14.7 per cent decline compared to the 2,946 sales in July 2013.

Last month’s sales were 4.6 per cent below the 10-year sales average for the month.

“We’ve seen a healthy amount of demand in the marketplace this summer compared to the number of homes listed for sale,” Sandra Wyant, REBGV president said. “The market today is much stronger than we saw last year and is consistent with our long-term averages for this time of year.”

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,186 in August. This represents a 3.5 per cent increase compared to the 4,044 new listings reported in August 2012 and a 13.8 per cent decline from the 4,854 new listings in July of this year.

The total number of properties currently listed for sale on the MLS® in Greater Vancouver is 16,027, which is an 8.8 per cent decrease compared to August 2012 and a 3.6 per cent decline from July 2013.

The sales-to-active-listings ratio currently sits at 15.7 per cent in Greater Vancouver. This ratio remains consistent with balanced market conditions.

“People entering the market should not confuse stronger sales activity with rising prices. Home prices have been quite stable and consistent for much of this year,” Wyant said.

The MLS® Home Price Index composite benchmark price for all residential properties in Greater Vancouver is currently $601,500. This represents a 1.3 per cent decline compared to August 2012 and an increase of 2.3 per cent since the beginning of 2013.

Sales of detached properties reached 1,052 in August 2013, an increase of 69 per cent from the 624 detached sales recorded in August 2012, and a 3.1 per cent increase from the 1,020 units sold in August 2011. The benchmark price for detached properties decreased 2 per cent from August 2012 to $923,700.

Sales of apartment properties reached 1,018 in August 2013, an increase of 40.4 per cent compared to the 725 sales in August 2012, and an increase of 6.6 per cent compared to the 955 sales in August 2011. The benchmark price of an apartment property decreased 1.1 per cent from August 2012 to $366,100.

Attached property sales in August 2013 totalled 444, an increase of 48 per cent compared to the 300 sales in August 2012, and a 10.2 per cent increase from the 403 attached properties sold in August 2011. The benchmark price of an attached unit decreased 1.1 per cent between August 2012 and 2013 to $457,000.



Another bank, monolines hike rate

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Following BMO’s lead – which raised its fixed rates on Tuesday – both RBC and a number of monolines have raised their rates. And another big bank is expected to announce their increase very soon.

“The monolines have raised their rates almost across the board,” Steve Harrison of Dominion Lending Centres Mortgage Village told MortgageBrokerNews.ca. “TD is raising them tomorrow, they’ve held off for a few days.”

On Wednesday RBC announced they have raised their five-year, fixed-rate to 3.89 per cent – an increase of 20 basis points.

“This is the beginning of a test for the mortgage market,” sayid Benjamin Tal, deputy chief economist at CIBC World Markets Inc. via the Globe and Mail. “It’s a test of how Canadians are able to tolerate higher interest rates.”

For the time being, though, certain monolines are still offering very competitive rates, which may prompt brokers to lock clients in as soon as possible.

“There are still a couple monolines that are below the big bank rates. You can still get 3.19 per cent, 3.29 per cent and hold them for 90 days,” Harrison said.

Brokers may start suggested variable rates, as they have so far held steady.

“The variable rates are still great right now,” Harrison said. “It’s hard to say if they will go up; they’re hard to predict.”


 

RBC: Yes, slower market still ahead

RBC: Yes, slower market still ahead

Make no mistake about it. Canada's real estate market is set to take a powder this year and next, according to a new economic forecast -- July's impressive spike in activity notwithstanding.

"Given the lower levels of activity in the early months of 2013," reads the monthly housing report from RBC, released Thursday, "we expect home resales to show a small decline of about 2 per cent for the entire year."

Things won't improve next year, either, according to the report, suggesting higher interest rates expected in the bottom half of 2014 will exert downward pressure on the market and "keep annual resales relatively flat (-0.6 per cent)."

That picture isn't quite as rosy as the one many other analysts are painting given the near-10 per cent rise in home sales for July, relative to the year-ago period. The average Canadian home price also shot up 8.4 per cent from the same troubled month last year when Ottawa tightened up mortgage rules.

Still the slower market now being predicted by the country's largest bank is likely to benefit property investors on the hunt for new acquisitions as competition from other buyers falls.

But the RBC forecast assumes the Bank of Canada will move to raise interest rates in the near- to mid-term. That remains a big if given a sluggish economy and real uncertainty about whether the stimulus of rock-bottom rates can, in fact, be removed this year, or even next.


 

Appraisals—a Key Home Renovation Tool

Renovation and home appraisal

You probably know that a home appraisal is a wise investment when you’re buying, but did you know that an appraisal can help you when you’re renovating?

Over the past several years, the home renovation industry has experienced phenomenal growth. More and more home owners are choosing to renovate instead of taking on all the costs of buying up or downsizing. As a direct result, some lenders are ordering appraisal assignments that reflect two values: “as is” and “as if the renovations are completed.” If you’re planning major renovations you should familiarize yourself with this process.

There may be several instances where an “as is” and “as if completed” appraisal would be required.

Home owners may wish to order an appraisal to determine the best course of action. They’re faced with questions like:

  • How much do I spend on my renovations?
  • What will be the return on my investment?
  • How can I get maximum return on my renovation dollars?

Lenders sometimes order appraisals for financing purposes. They have questions such as:

  • What is the purpose of your renovation?
  • Are you renovating to increase the equity in your property?

qualified real estate appraiser can help answer these questions. The appraiser makes an initial inspection of the property and provides a detailed appraisal report which includes the pre-renovation or “as is” value and the post-renovation or “as if completed” value.

Sometimes a lender will request a cost-to-complete estimate or a proposed budget for the renovation project on a specific property. This information assists the appraiser when determining the two separate values. It is good practice to back up and support any cost estimates, whether they are provided by the homeowner or a contractor.

If a follow-up report is required once the work is done, the appriaser states what is seen in a post-renovation inspection, including all updates. This report would include the “as is” or “as if completed” where the appraised value appears. It would not comment on building code compliance or quality of construction unless the appraiser has specific expertise.

Renovations are expensive and disruptive. If you’re considering a big reno, you can use the services of anaccredited appraiser to provide an opinion of value, and that will tell you—and your lender—if the renovation is worth your while.


 

Downhill slide: Whistler real estate worst performing in region

Whistler real estate prices are on a downhill slide with the resort notching the steepest year-over-year price decline in the Metro Vancouver Sea to Sky region as well as in the past five years.

 

 

The benchmark price for a Whistler home fell 8% in the past year, 9.5% in the past three years and 21.5% in the past five years, according to Real Estate Board of Greater Vancouver (REBGV) statistics.

 

 

Condos have fared the worst, suffering 12.7%, 33.9% and 41.2% price declines in the past 12, 36 and 60 months, respectively.

 

 

REBGV statistics come from the Multiple Listing Service (MLS), which is accessible to realtors across the region.

 

 

“Whistler is one of the best places to buy,” Landcor Data Corp. CEO Rudy Nielsen told Business in Vancouver. “The market is definitely down, but you’re never going to replace Whistler as one of the best places in the world for skiing and recreational use.”

 

 

He believes key factors in the resort’s decline include:

 

 

•global economic uncertainty;

 

 

•a comparatively high Canadian dollar; and

 

 

•tightened lending requirements for buying secondary homes.

 

 

His company is completing a report showing that real-estate prices at other B.C. resorts have also softened.

 

 

However, a turnaround could be in sight. Re/Max Sea to Sky Real Estate Whistler agent Ann Chiasson told BIV last week that she recently sold a home for $10 million. Even though the home was formerly listed at $15.7 million, it’s the most expensive Whistler home sale since 2009, she said.

 

 

Whistler Real Estate Co. president Pat Kelly similarly believes the market is stabilizing.

 

 

His statistics, based on the larger Whistler Listings Service (WLS), show the average home sale so far this year is $1,479,323, or 7.1% less than the $1,593,000 in 2012.

 

 

“The condo market has taken the biggest drop, and this is almost solely attributable to the condo-hotel market, which represents about 10% of the total number of transactions in the marketplace,” Kelly said.

 

 

“Phase 2” properties are one quirk of Whistler real estate. Buyers of these properties get condominiums that are managed by companies such as the Four Seasons Hotels and Resorts. Phase 2 properties have a covenant and operate in a rental pool system that limits owners to spending a maximum of 56 days in their properties each year.

 

 

The properties are desirable because they tend to be close to the village and ski hills. Realtors, however, argue they are qualitatively a different real-estate class than properties in which the owner can live year-round.

 

 

Chiasson said another factor that skews Whistler real-estate price trends is the small total number of sales. High condominium sales or low single-family home (SFH) sales can magnify and distort trends, she said.

 

 

SFH in Whistler have been the best-performing real-estate class, rising 6.2% in value in the past year and 1% in the past three years. SFH home prices fell 11.3% in the past five years, according to MLS statistics.


July home sale activity increases in Greater Vancouver

Sunny weather did not slow the pace of home sale activity in July. Last month was the highest selling month of the year in Greater Vancouver and the highest selling July since 2009.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 2,946 on the Multiple Listing Service® (MLS®) in July 2013. This represents a 40.4 per cent increase compared to the 2,098 sales recorded in July 2012, and an 11.5 per cent increase compared to the 2,642 sales in June 2013.

Last month’s sales were 0.1 per cent above the 10-year sales average for the month.

“Demand has strengthened in our market in the last few months, which can, in part, be attributed to pent-up demand from the slowdown in sales activity we saw at the end of last year,” Sandra Wyant, REBGV president said. 

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,854 in July. This represents a 1.1 per cent increase compared to the 4,802 new listings reported in July 2012 and a 0.4 per cent decline from the 4,874 new listings in June of this year.

The total number of properties currently listed for sale on the MLS® in Greater Vancouver is 16,618, which is an 8.1 per cent decrease compared to July 2012 and a 3.9 per cent decline from June 2013.

The sales-to-active-listings ratio rose two and-a-half percentage points between June and July to 17.7 per cent in Greater Vancouver. This is the highest this ratio has been in Greater Vancouver since April 2012.

The MLS® Home Price Index composite benchmark price for all residential properties in Greater Vancouver is currently $601,900. This represents a decline of 2.3 per cent compared to this time last year and an increase of 2.3 per cent over the last six months.

“Home prices continue to experience considerable stability with minimal fluctuation throughout much of this year,” Wyant said. “This stability in price brings greater certainty to the home buying and selling process.”

Sales of detached properties reached 1,249 in July 2013, an increase of 59 per cent from the 787 detached sales recorded in July 2012, and a 13.7 per cent increase from the 1,099 units sold in July 2011. The benchmark price for detached properties decreased 3.1 per cent from July 2012 to $920,500.

Sales of apartment properties reached 1,210 in July 2013, an increase of 31 per cent compared to the 927 sales in July 2012, and an increase of 16.3 per cent compared to the 1,040 sales in July 2011. The benchmark price of an apartment property decreased 1.6 per cent from July 2012 to $368,300.

Attached property sales in July 2013 totalled 487, an increase of 27 per cent compared to the 384 sales in July 2012, and a 12.7 per cent increase from the 432 attached properties sold in July 2011. The benchmark price of an attached unit decreased 2.6 per cent between July 2012 and 2013 to $456,700. 



Grow Op Concerns

 
Grow Op Home Inspection Cover

 

 According to some reports, 1 in every 140 houses in Canada has been used in a marijuana grow operation of some sort. As it is widely reported that marijuana is the largest cash crop in BC and we are, unfortunately, a leader in grow ops in North America, this number could even be higher in some of our municipalities.

 

What type of Houses do Grow Ops Operate in?

First, it is rare for a grow op to be in a condo or townhouse complex. Grow operators want as much privacy as possible so they typically look for houses that have some degree of privacy from the street and neighbours. They also often have an attached garage which allows them to move equipment, plants, people, and supplies from vehicles behind closed doors. Because grow ops can be destructive to houses, grow operators typically rent properties which unfortunately can leave an unwitting landlord with a big problem to fix when the grow operators move on.

 

What are the clues a house is a grow op?

We already discussed a lot of secretive action by the operators. They may come and go at unusual hours. Garbage is erratic or non existent and does not correlate with normal domestic resident cycles. Windows are often blacked out to conceal lights on all possible hours. High levels of condensation often will gather on the windows. The mail slot on the home may be closed shut. Fences may be improved and dogs or signs indicating guard dogs may be added. 

 

Never approach a home that you are suspicious may be a grow operation. These homes are often run by organized criminals who are very protective of their crops and people who may try and steal the crops from them. If you are suspicious of a possible grow operation, always contact the authorities to handle the situation.

 

What are the implications of a former Grow Op house?

Just because a house was used for a grow op does not mean that the house has any lasting damage. However, all to often, houses can be left with major problems. 

- Structural supports can be cut by grow operators who are trying to run ventilation, plumbing, and wires. Often the quick fix repairs that may be done will conceal these missing supports.

- Electrical systems can be significantly compromised. Electricity is often stolen by tapping the wires before the meter. Then, household wiring will be tapped and relocated as needed for the grow op. Once covered up, a home owner may not know the wiring has been mangled.

- A large amount of water is needed to grow these plants. Water lines are spliced, added, and relocated to bring water to each grow room. Also, there are often a large number of water spills which can damage structure.

- Chimneys, furnace exhaust lines, and roof vents may be repurposed to exhaust hot, humid air from the home. Hidden damage to these systems may allow toxic fumes to re-enter a former grow op home and be a life safety hazard

- Humidity and moisture from the grow operation can cause large amounts of mould growth in the home. Mould can cause problems with structure if it is severe enough and can also be a health hazard, particularly for people with low immune systems (including young children).

 

 

What Should I do if the House May Have Been a Grow Op?

If you are in the process of buying the house and think it could be a grow op, you should start with your realtor and the sellers disclosure on the house. Also, always have a house inspection done on any house you are considering buying and let your inspector know of your concerns so they can help show you where trouble spots may be. Make sure your inspector is trained to investigate for Grow Ops.

 


 

Balanced conditions provide a stable backdrop for today’s home buyers and sellers

The Greater Vancouver housing market continues to maintain a relative balance between the number of homes for sale and the number of people looking to purchase a home in the region today.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 2,642 on the Multiple Listing Service® (MLS®) in June 2013. This represents an 11.9 per cent increase compared to the 2,362 sales recorded in June 2012, and an 8.3 per cent decline compared to the 2,882 sales in May 2013.

Last month’s sales were 22.2 per cent below the 10-year sales average for the month, while new listings for the month were 11.5 percent below the 10-year average.

“As the term suggests, a balanced market means that many of the key housing market indicators, such as price, are stable and conditions therefore don’t tilt in favour of buyers or sellers,” Sandra Wyant, REBGV president said. “If you plan to enter the market today, identify your needs, consult your REALTOR® and work to build a ‘win-win’ scenario with the people on the other side of the sale.”

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,874 in June. This represents a 13.2 per cent decline compared to the 5,617 new listings reported in June 2012 and a 13.8 per cent decline from the 5,656 new listings in May of this year.

The total number of properties currently listed for sale on the MLS® in Greater Vancouver is 17,289, a 6 per cent decrease compared to June 2012 and a 0.4 per cent increase compared to May 2013.

The sales-to-active-listings ratio currently sits at 15 per cent in Greater Vancouver. This is the fourth straight month that this ratio has been at or above 15 per cent.

The MLS® Home Price Index composite benchmark price for all residential properties in Greater Vancouver is currently $601,900. This represents a decline of three per cent compared to this time last year and an increase of 2.3 per cent compared to January 2013.

Sales of detached properties reached 1,102 in June 2013, an increase of 19.7 per cent from the 921 detached sales recorded in June 2012, and a 25.1 per cent decrease from the 1,471 units sold in June 2011. The benchmark price for detached properties decreased 4.3 per cent from June 2012 to $919,900.

Sales of apartment properties reached 1,068 in June 2013, an increase of 4.1 per cent compared to the 1,026 sales in June 2012, and a decrease of 15.6 per cent compared to the 1,266 sales in June 2011. The benchmark price of an apartment property decreased 1.9 per cent from June 2012 to $369,100.

Attached property sales in June 2013 totalled 472, an increase of 13.7 per cent compared to the 415 sales in June 2012, and a 10.1 per cent decrease from the 525 attached properties sold in June 2011. The benchmark price of an attached unit decreased 2.4 per cent between June 2012 and 2013 to $457,000. 



Real estate market building strength through the first half of 2013

While home sales have continued to trend below long-term averages this year, there are signs that the Greater Vancouver real estate market is building strength heading into the summer months.

imageAt this time last year, sales were cooling from the near-record activity in the previous spring. This year, we’ve seen a further slowing of home sales activity, with approximately 1,600 fewer sales as compared to this point in 2012. Last month, however, was our first year-over-year gain in sales in any month since September 2011.

Property listings are coming on the market at a slower pace than we saw last year. This is keeping supply in greater alignment with demand, which allows for stability in pricing and greater balance in the market overall.

It’s taking 52 days on average for members to sell a home listed on our MLS® system. This is nine days longer than the average in May of last year.

Over the last three months, the sales-to-active listings ratio in Greater Vancouver has been at 15 per cent or higher. It currently sits at 17 per cent. Generally, analysts say that a balanced market occurs when the sales-to-active listings ratio sits between 10 and 20 per cent for an extended period of time.

This ratio hit 15 per cent in March, marking the first time it had been that high since May 2012. Between June 2012 and March 2013, the ratio sat in buyer’s market territory, reaching as low as eight per cent.

We’ve also seen good stability in the MLS® Home Price Index this year. The current benchmark price for a detached home in Greater Vancouver is $917,200, which is down a little over five per cent from May 2012, but is up just 0.3% from six months ago.

The benchmark price for townhomes in the region is $454,900, down 3.2 per cent from last May but up just 0.1% from six months ago.

The benchmark price for apartments in the region is $365,600, which is down 3.7 per cent from last May, but up just 0.2 per cent from six months ago.

It’s taking 52 days on average for members to sell a home listed on our MLS® system. This is nine days longer than the average in May of last year.

We can never know what tomorrow will bring, but what we’ve seen through the first half of the year suggests that our market is enjoying a spell of balance and stability as we move into the second half of the year.


 

Don Cayo: Forget the gloom and doom — Vancouver’s house prices won’t tank

 

House prices in Canada are poised to edge up, not plunge down, according to a new analysis from the Conference Board of Canada.

 
 
 
 
 
 
Don Cayo: Forget the gloom and doom — Vancouver’s house prices won’t tank
 

Conference Board of Canada is bullish on domestic real estate.

Photograph by: Jason Payne , PNG

Don’t worry about alarmist economists — those at the Organization for Economic Cooperation and Development, for example, or Nobel Prize-winner Paul Krugman — who are predicting a real estate crash.

Because house prices in Canada are poised to edge up, not plunge down, according to a new analysis from the Conference Board of Canada. And Vancouver — despite having the highest real estate prices in the country, and despite being the target of incessant warnings from worrywarts who see a bubble poised to pop — will turn out to be one of the most resilient markets of all.

Vancouver’s steady population growth, in particular its unusually high percentage of foreign-born residents, is the basis of this confidence, said Mario Lefebvre, the director of the board’s Centre for Municipal Studies, in an analysis released on Thursday.

“The foreign-born population can significantly alter the landscape of a country’s housing market,” Lefebvre wrote. “In many instances, immigrants arrive in a new country with some pre-established wealth. If a specific market welcomes a relatively large share of wealthy immigrants, their arrival creates a new source of demand that not only stimulates demand for housing, but can also raise house prices significantly without any changes to personal disposable income per capita.”

This is true not only in our market, but also in another seven of the 27 countries that the OECD identified, using two different measures, as having housing stock that is over-valued by 20 per cent or more. (The others with demographics similar to ours are Belgium, Norway, New Zealand, France, Austria, Sweden and the United Kingdom.)

On the other hand, Krugman’s gloomy view, outlined this week in a New York Times opinion piece, echoes former Bank of Canada governor Mark Carney and others who worry that Canadians are too deeply indebted and over-leveraged to a dangerous degree.

The OECD concluded earlier this month that, nationally, Canada’s housing market is over-valued as much as 30 per cent, based on the ratio of house prices to disposable income, and up to 60 per cent if the comparison is to the historical value of rent. And it is a safe bet, I think, that Vancouver’s numbers would look even worse.

Consider how the prices of existing homes have increased here compared to other parts of Canada. Prices rose by an average of 5.2 per cent a year between 1981 and 2012 in the country as a whole, or 1.3 percentage points a year faster than average incomes. In Vancouver, however, the price increase was 6.4 per cent a year, and the income increase was just 3.5 per cent — 0.4 per cent less than in the country as a whole. As a result, the gap here was 2.9 percentage points — more than double the average for the rest of Canada.

Yet, in an interview after his analysis was released, Lefebvre was upbeat about Vancouver real estate prospects.

“You’ve seen some declines (in house prices),” he acknowledged. “But that seems to be slowly, slowly ending. You’re actually bottoming out.”

And he expanded on the reasons he thinks an upward trend will continue. It’s not just the steady influx of foreign money, he said, but population growth from any source at all — which could be good news for smaller B.C. cities like Victoria or Kelowna that remain a popular destination for retirees.

“As long as you have population growth,” he said, “people will need housing.”

For as far as Lefebvre can see into the future, he is confident Vancouver will continue to have population growth. And this region will continue to lead the way in attracting a steadily-expanding proportion of foreign-born residents, many of them arriving with quite a lot of money.

The bottom line: Most parts of Canada will see, very soon, a modest upward trend in housing prices, and those that don’t are unlikely to see anything worse than a small decline. Meanwhile, Vancouver is high on his list of the least likely places to see any problem at all.

dcayo@vancouversun.com




Major residential development launches in North Vancouver

 


 

Denna Homes yesterday announced plans for a three-tower residential development that would be the first of many new residential developments in the District of North Vancouver.

 

 

Its project is slated to be in the district's Lower Lynn Town Centre neighbourhood, which is one of four village centres that council identified in the district's official community plan when it was adopted in 2011.

The other village centres are set to be:

  • Lynn Valley Town Centre;
  • Lower Capilano-Marine Drive Village Centre; and
  • Maplewood Village Centre.

Denna plans to open a sales centre June 8 and launch sales for 200 units in the 24-storey first tower. Denna plans to give away a 201st unit in a draw to a lucky winner who visits the sales centre.

So far, more than 5,000 people have registered to potentially buy units, and some units have already been sold to friends and insiders.

Sales will determine when tower construction begins.

Industry insiders believe it is inevitable that there will be a dramatic change in the way people live in West and North Vancouver because of:

  • a disproportionally high percentage of old housing stock;
  • a rapid evolution toward smaller households; and
  • existing housing types and forms that do not meet the social or economic needs of residents.

"There's an underlying faultline of change that we're just starting to see," British Pacific Properties president John Conicella told Business in Vancouver last month.

"It's going to feel a lot like growth but it's not. It's change," he said.


Invasive Root Systems

Trees are the foundation of our northern landscapes; every effective landscape invariably utilizes one or more of them to bring depth, stability and a vertical dimension to the composition. But trees can't just be planted anywhere in the landscape, and one of the primary reasons is that their roots don't always play nicely with other below-ground or surface elements. In fact, over time, aggressive root systems can cause serious damage to landscape structures and utilities, most importantly our homes, and the problem can be extremely difficult and expensive to correct.

The best solution to problems with tree roots is prevention and understanding - this is one common affliction of homeowners that is 100% avoidable. So whether you're doing up a new landscape, renovating a tired one, or just adding one or two trees to an existing landscape, a little knowledge now could save you a ton of heartache down the road. And since Northscaping is in the knowledge business for northern homeowners and gardeners, and you're a northern homeowner, you owe it to yourself to read on!

Anatomy Of Destruction

It goes without saying that roots are a critical component of a tree's anatomy. They absorb moisture from the ground and transport it along with nutrients from the soil up to the growing above-ground parts of the tree. They also secure the tree to the earth, anchoring it against the forces of driving winds and rains. Given these two primary purposes, it should come as no surprise that root systems grow deep and wide, to tap reserves of moisture and solidly affix the tree in place.

While all trees certainly have roots, different species have different natures of root systems, depending on their cultural preferences and evolutionary adaptation. Some trees, like oaks, have lengthy taproots that drill deep into the ground, with less extensive lateral roots. Others have very shallow roots that extend great distances from the trees. Some, like pine trees, have fine and shallow root systems optimized for growing in rocky and sandy soils.

And some of the "heavy feeders" have extensive root systems that extend both deep and wide, with enormous roots that grow to become the diameter of large branches. These are generally the plants that are the most damaging to our homes and gardens if improperly sited. But from where do these roots get their "strength"? After all, doesn't it take great strength to buckle concrete and crack drainage tiles?

Surprisingly, while relatively slow-growing, the plant tissues in the roots can build up incredible pressure as they grow. The cells that comprise these tissues wedge themselves between anchor points and exert pressure as new cells are added. As well, the changing moisture levels in the water-conducting roots cause them to expand and contract, often at different rates than the surrounding soil and features. And finally ground frost plays havoc on the earth in winter, resulting in the shifting and movement of the soil. Because they are solidly anchored, tree roots do not shift to the same extent, and the resulting pressure can be incredible.

Then there's the obvious fact that roots exist to gather moisture and feed it up to the above-ground parts of the tree. As such, they are highly effective at sucking the moisture out of large swaths of earth. This can create a virtual drought underneath a tree, which is further exacerbated by the canopy of leaves which acts almost like an umbrella. The resulting perpetual drought makes it extremely difficult to grow other plants in these "rain-shadows" around mature trees. And if the trees are shallow-rooted, the tangled mass of roots can eventually choke out the weaker plants.

Tree Roots Around The Home

Trees and houses were never really meant to be in close proximity to one another for a multitude of reasons. Trees can break in a windstorm and fall on a house, and the leaves fall into the gutters and clog them. But far and away the greatest risk to a house is the damage that tree roots can inflict.

Invasive tree roots can cause serious damage to the foundations of homes. As the roots increase in diameter, they wedge themselves between the basement wall and the surrounding soil, creating more pressure with each passing year. The pressure they can exert, especially in conjunction with the expansion and contraction of frost heave, can actually crack basement walls. And removal is not always an easy solution; the decaying roots eventually become conduits for water and frost and lose their structural integrity, increasing rather than decreasing the stresses on the foundation.

Home foundations and basements are designed to guide any water that does not drain away from the house down the walls and into a drainage system underneath the basement floor, which eventually collects in the sump pit for periodic removal. Without this system, basements would flood with regularity. But invasive roots will also grow down and along basement walls, eventually reaching these drainage systems and clogging them. Many basement drainage problems in older homes are a result of mature tree roots having all but disabled the in-built mechanisms that should have kept them dry.

Tree roots can be damaging to homes even if they're planted a distance away from the house. If planted near buried utility lines such as electricity and gas, they can eventually create additional stresses that these were not meant to handle. If trees with aggressive roots are planted above water and sewer lines, the roots can exert enormous stresses as they wrap around them, eventually cracking or crushing them. They then continue to grow into these cracks, and it's not uncommon to find tree roots completely obstructing a sewer line to a home!

As many unfortunate homeowners discover, invasive tree roots can also cause phenomenal damage to driveways, sidewalks and patios. The majority of these landscape structures simply sit atop the surface of the earth, perhaps with some drainage elements underneath if they were properly designed. But they were never intended to tolerate the enormous forces of growing tree roots, which can ultimately shift, lift or crack entire pads of concrete. Many a sidewalk has been lost to an aggressive root system from a nearby tree.

Tree Species With Invasive Roots

Different trees have different types of root systems. A few are relatively fine and compact, but by and large the majority will have root systems which extend down and outwards in balance with the top growth of the tree. For most trees, the roots extend outwards just a little further than the canopy of the tree (identifiable by the shadow that the canopy would create on the ground below if the sun were directly overhead), and to a depth similar to the height of the tree. Of course this is only a rule of thumb, as every tree is different.

But some species of trees go well beyond these typical ranges, and these are the ones that merit special attention from northern homeowners and gardeners. Often these trees are the real "survivors", ones that have adapted vigorous root systems to buffer them against prolonged periods of drought or windy exposures on the tops of hills or open plains. The aggressiveness of their root systems serves them well in their native environment, but can become a nuisance in a controlled urban landscape.

Here are a few common northern trees with particularly invasive or aggressive root systems;

  • Poplars, Cottonwoods and Aspens (Populus spp.) - nearly all species and varieties - enormous and wide-spreading root systems that desperately seek out moisture, one of the worst to plant near homes or gardens
  • Willows (Salix spp.) - any of the tree species - extensive root systems anchor willows in their native wet environments and run deep looking for moisture, another to keep far away from homes
  • American Elm (Ulmus americana) - a favorite urban tree, but one with deep roots that commonly clog drains and sewer lines; keep well away from anything related to water
  • Silver Maple (Acer saccharinum) - shallow and dense roots, plant well away from homes and forget about planting any gardens nearby!

Generally speaking, larger shade trees, either in terms of height or spread or both, will have wider-reaching roots than their smaller ornamental counterparts. As well, deciduous trees tend to have more extensive root systems than evergreens and conifers, which tend to have shallower root systems.

      


Fewer commercial property sales in first quarter 2013

The first quarter of 2013 saw a reduction in the total dollar value and quantity of commercial real estate sales in the Lower Mainland compared to recent years, according to data from Commercial Edge, a commercial real estate system operated by the Real Estate Board of Greater Vancouver (REBGV).

The total dollar value of commercial sales in the region was $886 million in the first quarter (Q1) of 2013, a 40 per cent decline from Q1 2012 and the lowest dollar value for Q1 since 2009.

There were 384 commercial real estate sales in the Lower Mainland in Q1 2013, according to Commercial Edge. This is a 20 per cent decline compared to the 480 sales recorded in Q1 2012, a 12.3 per cent decline from the 438 sales recorded in Q1 2011, and a 4.5 per cent decline from the 402 sales recorded over the same period in 2010.

“Commercial real estate activity eased in the Lower Mainland in first three months of the year. This comes on the heels of a strong post-recession commercial market over the past few years,” Sandra Wyant, REBGV president said. “Reductions in the total dollar value of land and office and retail properties were the key drivers behind this quarter’s declines compared to recent years.”

The Commercial Edge system includes all commercial real estate transactions in the Lower Mainland, excluding Pitt Meadows and Chilliwack, that have been registered with the Land Title and Survey Authority (LTSA) of British Columbia since 2009.

Q1 2013 activity by category:

Land: There were 91 commercial land sales registered with LTSA in the Lower Mainland in Q1 2013, down 42.4 per cent from the 158 land sales in Q1 2012. The dollar value of land sales in Q1 2013 was $322 million, down 43.5 per cent from $569 million in Q1 2012.

Office and Retail: There were 159 office and retail sales in the Lower Mainland in Q1 2013, a 6.5 per cent decline from the 170 office and retail sales in Q1 2012. The dollar value of office and retail sales in Q1 2013 was $253 million, a 58 per cent decrease from $602 million in Q1 2012.

Industrial: There were 109 industrial land sales in the Lower Mainland in Q1 2013, down 14.2 per cent from the 127 industrial land sales in Q1 2012. The dollar value of industrial sales in Q1 2013 was $211 million, a 12.1 per cent increase from $188 million in Q1 2012.

Multi-Family: There were 25 multi-family sales in the Lower Mainland in Q1 2013, which is unchanged from the 25 sales in Q1 2012. The dollar value of multi-family sales in Q1 2013 was $99 million, a 15 per cent decline from $116 million in Q1 2012.



Spring months bring balance to Greater Vancouver housing market

While the number of home sales in Greater Vancouver continued to trend below the 10-year average in May, the balance of sales and listings meant continued market stability this spring.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 2,882 on the Multiple Listing Service® (MLS®) in May 2013. This represents a one per cent increase compared to the 2,853 sales recorded in May 2012, and a 9.7 per cent increase compared to the 2,627 sales in April 2013.

Last month’s sales were 19.4 per cent below the 10-year sales average for the month, while new listings for the month were 7.4 percent below the 10-year average.

“We’ve seen some steadying trends over the last three months,” Sandra Wyant, REBGV president said. “The number of homes listed for sale has been keeping pace with the number of property sales, leading to a balanced sales-to-listings ratio. This is having a stabilizing influence on home price activity.”

New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,656 in May. This represents an 18.3 per cent decline compared to the 6,927 new listings reported in May 2012 and a 3.7 per cent decline from the 5,876 new listings in April of this year.

The total number of properties currently listed for sale on the MLS® in Greater Vancouver is 17,222, a 3.4 per cent decrease compared to May 2012 and a 2.9 per cent increase compared to April 2013.

The sales-to-active-listings ratio currently sits at 17 per cent in Greater Vancouver. This is the third straight month that this ratio has been above 15 per cent. Previous to this, May 2012 was the last time this ratio was above 15 per cent.

The MLS® Home Price Index composite benchmark price for all residential properties in Greater Vancouver is currently $598,400. This represents a decline of 4.3 per cent compared to this time last year and an increase of 1.8 per cent compared to January 2013.

Sales of detached properties reached 1,212 in May 2013, an increase of 2.7 per cent from the 1,180 detached sales recorded in May 2012, and a 22.8 per cent decrease from the 1,570 units sold in May 2011. The benchmark price for detached properties decreased 5.2 per cent from May 2012 to $917,200.

Sales of apartment properties reached 1,136 in May 2013, a decline of 1.7 per cent compared to the 1,156 sales in May 2012, and a decrease of 7.5 per cent compared to the 1,228 sales in May 2011. The benchmark price of an apartment property decreased 3.7 per cent from May 2012 to $365,600.

Attached property sales in May 2013 totalled 534, an increase of 3.3 per cent compared to the 517 sales in May 2012, and a 7.8 per cent decrease from the 579 attached properties sold in May 2011. The benchmark price of an attached unit decreased 3.2 per cent between May 2012 and 2013 to $454,900.



Bank of Canada maintains course for rates

Wed, 05/29/2013 - 17:10

In its April announcement, the Bank recognized the persistent economic weakness and cut its forecast for Canadian economic growth to 1.5 per cent in 2013. Although recent economic news suggests that growth in the first quarter came in stronger than expected, the Bank nonetheless expects annual economic growth this year to remain in line with its forecast.

Similarly, total CPI inflation was slightly weaker than projected in the Bank’s April MPR, but the Bank still expects inflation to reach its 2 per cent target in mid-2015.

“The Bank recognizes that growth in household debt is moderating,” said Gregory Klump, CREA’s Chief Economist. “It’s a constructive development and yet another reason for the Bank of Canada to keep interest rates on hold.”

“The bottom line is that inflation remains moribund and the Canadian economy is still in low gear, so there is no reason for the Bank to start raising interest rates any time soon,” said Klump. “Additionally, the Bank of Canada knows that a sudden shift in direction for interest rate policy would spook financial markets and gives the Bank another reason to keep interest rates on hold once incoming Bank of Canada Governor Stephen Poloz takes the helm.”

As of May 29th, 2013, the advertised five-year lending rate stood at 5.14 per cent, unchanged from the previous Bank rate announcement on April 17th.

(CREA 05/29/2013)


 

What is CMHC Mortgage Loan Insurance?

Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price. Mortgage loan insurance helps protect lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment of 5% — with interest rates comparable to those with a 20% down payment.

To obtain mortgage loan insurance, lenders pay an insurance premium. Typically, your lender will pass this cost on to you. The premium payable is based on a percentage of the home’s purchase price that is financed by a mortgage. The premium can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments.

Mortgage loan insurance is not to be confused with mortgage life insurance which guarantees that your remaining mortgage at the time of your death will not be a burden to your estate.


Strata Depreciation Reports

We have all heard horror stores about condo buyers who only just take possession of their new condo to find out the strata needs to collect a special assessment to repair or replace a major building system. In some cases, the seller of the condo had prior knowledge these expenses were coming and 'jumped ship' before the special assessments were levied. In other cases, it is just bad timing for the buyer.

 

In order to provide better information about upcoming costs to both strata councils and potential condo buyers, the Government of BC is requiring stratas produce a new document available for potential buyers called a Depreciation Report.

 

What is a Depreciation Report?

A Depreciation Report is a strata document that combines an on-site survey of the buildings, equipment, and property of the strata with a schedule of life cycles and expected replacement costs. A good depreciation report will articulate when strata owners can expect to repair or replace common property and how much this will cost in the future. By having these future costs regularly published (they must be updated every 3 years), strata councils can work with owners to prepare for future expenses and buyers of condo's will have additional visibility of upcoming costs.

 

Do all Stratas Need to Have a Depreciation Report?

Most stratas will need a depreciation report. There are only 3 reasons why a strata may not have a report available:

  1. New Strata - New stratas have until 6 months after their second AGM to have a completed depreciation report. This means the first depreciation of a new strata may not be available before the building is 3 years old.
  2. Small Strata - Stratas of four or fewer lots are exempt from producing these reports for cost savings.
  3. 3/4 Vote Exemption - Stratas can elect NOT to produce a depreciation report by a 3/4 vote of the owners. This vote needs to be renewed annually. Stratas that elect not to produce a report may save a few thousand dollars once every 3 years on the report, however, the lack of this report will make the strata less desirable to purchase for buyers who may question why a report is not produced

The addition of Depreciation Reports to the Condo market are a big win for condo buyers as they should help eliminate expensive surprises with the building common property. Combined with an independent condo inspection, condo buyers will have more knowledge than ever before that their unit and building are safe and solid.



Balconies over Finished Spaces


New Water Proofing Deck Materials Emerge

In the late 1980's, some new waterproofing materials started to emerge in the form of both roll-on and vinyl roll materials.  For building designers, these materials seemed to answer a need for a 100% waterproof balcony floor over finished spaces and a new design trend of integrating balconies into the home structure emerged.

 

Design Issues with Balconies over Living Spaces

The choice to place large and sometimes multiple balconies over finished spaces in houses and condo developments started to show problems for many reasons:

  1. Waterproofing - Waterproofing is simple in concept but very difficult to achieve (for cheap) in large scale balcony applications. Building materials settle, expand and contract at different rates and temperatures which puts a lot of stresses on the waterproof system. Any leaks in the waterproof surface that develop transpose into damage to both the finished areas below and possible rot damages in the structure between the balcony and the finished area of the home.
  2. Mechanical Damage - Vinyl flooring material was a revolution for balconies as it was flexible, lightweight, easy to install, and as a finished plastic sheet, it is 100% waterproof. That is, it is 100% waterproof if there are no holes in it. Unfortunately, a soft and thin plastic is easy to damage during installation or when occupants move belongings on it. Once there is a scratch or hole in the surface, it is no longer waterproof leading to damages below.
  3. Railings - One of the biggest weak spots for waterproofing is at the connection of the guard rails to the floor surface. The guardrails were commonly attached to the top of the surface putting holes into the top surface of the material in the process. A proper installer would have then put caulking around the holes created. Unfortunately, caulking and vinyl floors expand and age at different rates meaning the caulking, without diligent maintenance of the owner, often fails at this point prematurely.
  4. Drainage and Slope - Proper drainage of a balcony floor is needed for both occupant comfort (nobody likes walking in puddles) and it also reduces the risk of standing water penetrating the smallest holes in the water tight system. Drainage can be achieved by a proper slope to the outside edge of the home, or through internal drains in the deck. While both systems can work, drains in the bottom of the deck create a hole in the water proof surface that needs to function correctly. Expansion and contraction of different building materials plus premature failure of caulking materials can lead to early failure at this weak point.
  5. Sun Damage - We all hear about the damaging effect of UV rays on our skin from the sun but these same UV rays constantly are attacking the outside of our homes too. Roofing materials like clay and concrete outlast asphalt and wood largely as they can take the beating from UV rays for many more years. Vinyl floors on balconies are essentially acting as roofing materials in addition to balcony flooring. Again, this thin, soft, plastic material cannot stand up to large amounts of UV rays and we see this material breaking down, cracking, and losing its water tight surface in as little as 5-8 years in some conditions.
  6. Vapour Barrier - Water vapour is constantly trying to diffuse itself in the atmosphere and it is constantly moving from points of higher to lower moisture levels. Warm moist air in our homes makes its way into all the vapour permeable areas of our structure including to some degree the wood joists, studs, insulation, and drywall between balcony floors and ceilings below. When we apply a vinyl surface to a balcony and paint the interior ceiling below with a common latex paint, we are essentially placing two vapour barriers on either side of the structure trapping vapour inside. This vapour may then condensate in cool weather creating water and rot damages or may remain as a vapour attacking the materials until it finds a way to escape. Common vapour damages from integrated balconies often present themselves as peeling paint on the interior surfaces, mold growth on the interior surfaces, and condensation in windows on nearby walls.

 

What Can a Home Owner Do About Integrated Balconies?

Structurally, there is not much a home owner can do to easily remove a troublesome balcony. The best practices for these deck systems seems to be a diligent maintenance and material replacement strategy. Newer vinyl materials are stronger today and able to absorb more UV rays and may last longer than previous materials. Homeowners can also protect themselves by annually maintaining caulking and fixing and trouble spots. If vapour damages are a concern, painting the underside of the balcony area with a vapour permeable paint can help reduce damages.



BCREA forecasts transition year for BC housing market

 

Consumer demand in the province’s largest market trended at a cyclical low during the first quarter. Tighter mortgage credit regulation introduced last summer had the predictable impact of squeezing some first-time and early move-up buyers out of the market. In addition, economic expansion slowed over the last few quarters, pulling back job growth and consumer confidence. In BCREA’s view, 2013 is going to be a transition year both in the economy and the housing market as the present weakness gives way to stronger economic growth at home and abroad over the second half of this year and into 2014.

In addition, after nine months of anemic unit sales, pent-up demand is likely latent in the market. MLS® residential sales are forecast to increase 4.5 per cent to 26,600 units in 2013, and rise by 10.5 per cent to 29,400 units in 2014. Market conditions in Vancouver improved over the first quarter, with the ratio of sales-to-active listings trending from 9.7 per cent in January to 14.4 per cent in March. In addition, new residential listings were down 13 per cent during the first quarter compared to the same period last year.

Balanced conditions, in spite of a cyclical low demand, is strong evidence that Vancouver households are in relatively strong financial shape and that many potential home sellers have been taking a wait-and-see approach alongside homebuyers. The average MLS® residential price is forecast to remain virtually unchanged through 2014.

New home construction in the Vancouver Census Metropolitan Area (CMA) increased 6.6 per cent in 2012 to 19,027 total units, the highest level of building activity since 2008. With consumer demand not rising to meet the supply, some imbalance between supply and demand has led to growing inventories of complete and unoccupied units. An elevated inventory of new homes, combined with tempered consumer demand, will likely lead to some projects being pushed back. As a result, BCREA forecasts a decline of 7.3 per cent in multiple starts to 14,500 units this year, with single family units rising modestly to 3,600 units.

 

 


 

West Vancouver considers allowing coach houses

 

Concept could allow a ‘gentler form of densification,’ planner says

West Vancouver is exploring whether to allow coach houses on single family lots to improve housing affordability and to increase the variety of housing available.

Stephen Mikicich, a West Vancouver community planner, said this “gentler form of densification” could add options to an area that has many single family homes and a few apartments, but very little in between.

Coach houses are smaller houses that share a common property with a main house on a single-family lot. Sometimes they are accessed via a laneway — in Vancouver, for example — but they can also be accessed via a common driveway or be built on top of a garage.

“We have a community that is aging, that needs different housing options. We have younger families who are having difficulty establishing themselves or remaining in West Vancouver because of the cost of housing,” Mikicich said. “At the same time, it’s a community that highly values the established character of its neighbourhoods.”

West Vancouver residents’ median age was 50 in 2011, compared to 40 in Metro Vancouver, and one-quarter of residents were age 65 or older in 2011, compared to 13 per cent in Metro Vancouver, a discussion paper on coach houses prepared by West Vancouver states.

“We’ve had ongoing community interest in the concept of coach houses — older people wanting to remain in their community, when a multi-level house no longer works, but if they could build a single-level house in their backyard and rent out their house or have their kids live in it, it may work,” Mikicich said.

“We legalized secondary suites a couple of years ago, but not everyone wants to have a suite in the house and it’s difficult to add one later.”

While many Lower Mainland cities now allow these types of houses, most communities allow them as rentals only. Mikicich said the discussion in West Vancouver will include whether they should do the same, or allow strata titles to be created.

On Wednesday evening, a panel was scheduled to discuss the idea, including Jake Fry, owner of Smallworks, which builds laneway and coach houses, and other interested individuals.

Fry said allowing infill housing would be a way to “mitigate the monster home” and encourage more families in neighbourhoods that are today full of single-family homes occupied by a lone senior citizen.

“There are no new people — the single-family model is extremely difficult for people to get in. I think it’s one way to make home ownership possible for people,” Fry said. “You may have more roofs per acre, but they’re going to be smaller roofs. They’ll probably even have less square footage per city lot, but there’s going to be more families and you’ll see the ... communities become much more dynamic.”


Lying on your insurance policy leads to trouble

Forty-one per cent of homeowners incorrectly believe that if a contractor is hurt on their property, they will not be liable. But that’s not true: you could be liable for their medical bills, lost wages or damages for pain and suffering. That’s why it’s important to ensure that the contractor provides documentation of their current insurance policy and an updated workers’ compensation clearance certificate.

“While speaking to your insurer should be on your pre-renovation to-do list, it’s never too late to make the call, assuming nothing’s been destroyed and you’re not trying to make a claim,” Mr. Minor said.

Pete Karageorgos, manager of consumer and industry relations at the Insurance Bureau of Canada, agrees and says the sooner you disclose the improvements, the better. Doing so will help you get the right amount and type of coverage.

“People aren’t aware that in many cases, doing renovations to their home would require an update to their policy,” Mr. Karageorgos said. “If the home isn’t insured to value, you may not have enough coverage and you won’t be completely protected.”

Existing homeowners aren’t the only ones making home-related blunders: 60% of Canadian homeowners in another poll admitted they’ve made at least one mistake when they bought a home.

According to the RBC Home Ownership Poll, purchasing a property that requires significant renovations (15%), not having a bigger down payment (14%) and skipping a home inspection (13%) are the top three mistakes.

Younger homeowners were more likely than the average Canadian to list not having a bigger down payment and to not consider future family and space needs.


Updating your home means updating your insurance policy

When you add an extension to your home, install new security devices or replace your weathered roof, your insurance policy may also need a makeover.

A new TD Insurance poll suggests that the majority of Canadian homeowners don’t disclose home improvements their insurer, even though it could mean a reduction in your premium. It could also leave you underinsured or not insured at all if it invalidates your existing policy.

“People buy insurance to have a safety net in case they ever need to make a claim,” Dave Minor, vice-president of insurance distribution at TD Insurance, said. “Once you make the claim, you don’t want any disappointing surprises. So before you pick up a hammer or hire a contractor, contact your insurance provider.”

The poll released this week suggested 6% of the 2,748 adults checked their policy to ensure their home was covered during the renovations and just 16% contacted their insurer to see if their existing policy needed to be revised. Nearly one-quarter of respondents weren’t aware that electrical upgrades could decrease their premiums while more than half didn’t know that installing granite countertops could have the opposite effect.

If you’re spending a significant amount of money on anything that may impact the value of your home, it’s likely the insurer wants to know about it. So, no, you won’t have to disclose that you’re changing your wallpaper or replacing your old carpet.

Since the likelihood that a claim will be made increases during the construction process, the pre-renovation policy often doesn’t insure some damages relating to it. These losses can include: basement flooding caused by the contractor breaking a water main, theft or vandalism to the property that took place while you weren’t living there (vacating the property for more than 30 days requires a policy update), or a broken glass window resulting from poorly operated machinery.


Spring delivers greater balance to Greater Vancouver housing market

A closer relationship between home buyer demand and the supply of homes for sale has been having a stabilizing impact on home prices in the Greater Vancouver housing market over the last three months. 

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 2,627 on the Multiple Listing Service® (MLS®) in April 2013. This represents a 6.1 per cent decrease compared to the 2,799 sales recorded in April 2012, and an 11.9 per cent increase compared to the 2,347 sales in March 2013.

Last month’s sales equate to the lowest April total in the region since 2001 and 20.9 per cent below the 10-year sales average for the month.

“While the number of home sales remains below average, properties that are priced right are selling and we’re seeing greater balance between buyer demand and the number of homes listed for sale. This is having a steadying influence on home prices in the region,” says Sandra Wyant, REBGV president.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,876 in April. This represents a three per cent decline compared to the 6,056 new listings reported in April 2012 and a 21.4 per cent increase from the 4,839 new listings in March of this year. Last month’s new listing count was 0.4 per cent above the region’s 10-year new listing average for the month.

The total number of properties listed for sale on the MLS® in Greater Vancouver is 16,730, a 1.2 per cent increase compared to April 2012 and an 8.2 per cent increase compared to March 2013. 

The sales-to-active-listings ratio currently sits at 15.7 per cent in Greater Vancouver. This is the second consecutive month that this ratio has been above 15 per cent. Previous to this, May 2012 was the last time this ratio was above 15 per cent.

“There have been modest increases in home prices across the region over the last three months. This comes on the heels of home price declines of approximately five to six per cent in Greater Vancouver during the last half of 2012,” Wyant said.

The MLS® Home Price Index composite benchmark price for all residential properties in Greater Vancouver is currently  $597,300. This represents a decline of 3.9 per cent compared to this time last year and an increase of 1.6 per cent compared to January 2013.

Sales of detached properties reached 1,064 in April 2013, a decrease of 5.5 per cent from the 1,126 detached sales recorded in April 2012, and a 24.1 per cent decrease from the 1,402 units sold in April 2011. The benchmark price for detached properties decreased 5.2 per cent from April 2012 to $914,000. Since January the benchmark price of a detached home has increased 1.4 per cent.

Sales of apartment properties reached 1,052 in April 2013, a decline of 11.6 per cent compared to the 1,190 sales in April 2012, and a decrease of 12.4 per cent compared to the 1,201 sales in April 2011. The benchmark price of an apartment property decreased 2.6 per cent from April 2012 to $365,900. Since January the benchmark price of an apartment home has increased 2.1 per cent.

Attached property sales in April 2013 totalled 511, an increase of 5.8 per cent compared to the 483 sales in April 2012, and a 17.8 per cent decrease from the 622 attached properties sold in April 2011. The benchmark price of an attached unit decreased 3.5 per cent between April 2012 and 2013 to $455,200. Since January the benchmark price of an attached home has increased 1.2 per cent.


 

Majority of British Columbians believe Property Transfer Tax needs adjustment

VANCOUVER, BC – May 1, 2013 – In a recent Ipsos Reid opinion poll, 58 per cent of respondents agreed that the Property Transfer Tax (PTT) places an unfair tax burden on home buyers relative to other segments of the population. Twenty nine per cent disagreed, and 13 per cent had no opinion on the issue. 

The poll also found that 51 per cent of respondents believe the provincial government should adjust the way the PTT is calculated to reflect price changes in the housing market over time. Of the 854 respondents, 26 per cent did not believe the PTT should be adjusted to reflect inflationary trends in the housing market and 23 per cent had no opinion.

Ipsos Reid conducted the poll on behalf of the Real Estate Board of Greater Vancouver (REBGV).  It was conducted online with 854 adult British Columbians responding between April 19 and 24, 2013.

“While the PTT is not top of mind in most people’s daily lives, when the time comes to purchase a home this tax becomes a significant burden for home buyers in BC to shoulder,” says Sandra Wyant, REBGV president.

The province introduced the tax 26 years ago. It was structured to add 1 per cent on the first $200,000 of the purchase price, and 2 per cent on the balance. The government of the day touted the PTT as a wealth tax, as just 5 per cent of homes in Greater Vancouver in 1987 sold for $200,000 or more. Today, the reverse holds true, with 96 per cent of homes in Greater Vancouver selling for more than $200,000. However, the tax’s structure hasn’t changed in nearly three decades.

“The PTT is structured to reflect home prices in the 1980s, not the prices home buyers pay today,” Wyant says. “The fact that it hasn’t been adjusted in 26 years is simply not fair to home buyers and the candidates in this year’s election should address this issue,” Wyant said. 

 

The REBGV is asking candidates if they would support increasing the one per cent threshold to $525,000 from $200,000. This would mean that on a $600,000 home, the PTT would be $6,750, instead of $10,000, saving home buyers $3,250. 

The PTT generated $780 million for the provincial government in 2012. This money goes into general revenue to fund public services. It’s paid each time a property changes hands in the development process. When a developer buys raw land, the developer pays the PTT. When a builder buys lots from the developer, the builder pays the PTT. When a home buyer buys a home from the builder, the home buyer pays the PTT. Each time that home is sold, the buyer pays PTT.


A look at locking in on super-long mortgages

RBC has 25-year term at 8.75 per cent

VANCOUVER (NEWS1130) – When you’re making a decision on whether to lock in your mortgage, it’s about balancing the risks and the security.

But with some of the extreme long-term mortgages now being offered, that security comes at a very large cost.

Most homeowners choose a five-year term fixed-rate mortgage and there are some attractive 10-year fixed rate products now available, but RBC is taking it to the extreme, offering the option of locking in at 8.75 per cent on a 25-year term. That is nearly triple a good five-year fixed rate right now.

“It’s not the first time a 25-year term has been offered in Canada. In the late 90s, a couple of lenders were offering it, but there was a very limited demand,” says Jared Dreyer, president of Dreyer Group Mortgages-Verico and head of the Mortgage Brokers Association of BC.

“I think we’ll see the same thing with the RBC offering, just because of the way they’ve priced the interest rate on it at 8.75 per cent. It’s extremely high, relatively speaking, compared to what the current interest rates are on a 10-year term or a five-year term,” he tells News1130.

Current fixed rates rates are as low as 2.89 per cent on five-year terms and as low as 3.79 per cent on 10-year terms.

“The biggest thing is, on a normal $350,000 mortgage on a 25-year term at 8.75 per cent rate, you have a payment of $2,700. Roughly $2,300 of that is going to directly toward interest costs,” explains Dreyer.

“If you took a five-year term, you’re actually almost at a 50/50 split right off the start, so almost 50 per cent of every payment is going toward principal.”


 

Generation Y facing several obstacles when buying a home

Among the issues: the ability to save for a down payment, high housing prices and low salaries

VANCOUVER (NEWS1130) – It’s no surprise first-time homebuyers today are running into way more obstacles than their babyboomer counterparts.

The other complaints coming from Generation Y include housing prices are too high, especially here in BC and people say they’re not making enough.

Peggy Barnett with TD says nearly half of all young renters think the cost of owning will only go up in the future.

“To buy a home in your home price bracket would cost you, let’s say, $1,600 a month, take that $600 and put it aside every month and allow that to become you savings for your downpayment.”

She suggests setting up automatic transfers into a tax free savings account.

“People are living at home longer, as we know, and they’re saving money that way. If you’re renting, and if you’re trying to save money while you’re renting, I guess the best advice I could give is to put yourself in that ownership position.”

First time buyers can also consider Ottawa’s Home Buyers Plan, which lets you borrow up to $25,000 from your RSP for a downpayment.


 

IS REAL ESTATE A GOOD INVESTMENT?

 

Are you thinking of buying a property to rent out to others? Perhaps even to your own adult children, to help them get a start on life? Before you decide, do your research. There’s a lot more to rental properties than buying a building and hanging out the “Vacancy” sign.



First of all, there's a wide range of choices when you're looking for income properties. For example, you can buy:



  • Single family homes or multi-family ones
  • Commercial or industrial buildings that can be rented to business people.



You can spend less than $100,000, or invest millions of dollars. The question is, will it be worth it?



Is a rental property a good investment?



This can vary, depending on a number of factors. For example:



  • How will you finance your purchase? It may make sense to buy your house with no money down. But taking on a huge amount of debt for the sake of rental income may lead to financial disaster.
  • How much income can this property generate? What are rents like in the same area? Vacancy rates? Local market conditions determine the rents you are able to charge. Look for a place where the rental income covers the cost of buying the property and paying for it.
  • How much will it cost to maintain this property? You can buy a building that needs a lot of work, or one that is newly renovated and will need minimal repairs. You can buy a property that you can manage on your own, without extra help. Or, for larger properties, you can hire an onsite superintendent or a property management company.



What are the advantages of a rental property investment?



  1. You can deduct certain expenses from your income – reducing the taxes you owe. The list includes: - Mortgage interest - Property taxes - Insurance - Maintenance/upgrades - Property management - Utility bills (if you include them in the rent).
  2. Losses from your rental property can turn into tax relief. If your expenses exceed your rental income, you can subtract that loss from any other sources of income you have. This could reduce your total tax bill.
  3. You will get regular monthly income. Most other investments that offer interest or dividends pay out only once or twice a year. As long as your tenants pay on time, you know exactly what income you will have and when you will receive it.
  4. Property values will likely be more stable than the stock market. With stocks, you can buy and sell shares very easily and quickly. So, share prices can fluctuate very wildly. It is not unusual for the share price of a company to change as much as 5 per cent in just one day.



Property owners, on the other hand, tend to view real estate as a longer term investment. It takes longer to buy and sell. Even when market conditions change, you don’t see the overnight market crashes and massive sell outs that you sometimes see in the stock market.



What are the drawbacks of a rental property investment?



  1. You may have to deal with problem tenants. Working with non-paying tenants can be challenging and stressful if cash flow is tight. Of course, you can try to screen your tenants. But it’s not always easy to tell who may one day fall behind on paying rent, damage property or cause other problems.
  2. It may be hard to sell your property later. Real estate is not a liquid investment. That means it can take time to sell, depending on market conditions. It can also be costly to sell due to real estate and legal fees.
  3. It can be hard to finance your purchase. Under Canada’s new mortgage rules, your down payment must equal at least 20 per cent when you buy a second property. You may also need a mortgage. And, you will have high monthly expenses to cover when you own a building. Of course, you hope the income you receive from your tenants will cover this.
  4. Being a landlord is not for everyone. Rental units need repair – sometimes on an emergency basis. You might find it difficult to keep up. Or, you simply would not want the hassle of dealing with tenants. ou could hire a property manager. But this will reduce your income from the property.



Remember: Buying a rental property is an investment.

It’s vital to do your research before you commit your dollars. 


Types of Ownership

Apartments & Townhouses  

WHETHER YOU BY AN APARTMENT, TOWNHOUSE OR 1/2 DUPLEX THERE ARE FUNDAMENTAL DIFFERENCES BETWEEN THE FOLLOWING TYPES OF OWNERSHIP.


A. Strata Lot 

An individual purchaser of a strata lot will receive a fee simple estate in his/her particular unit and also a proportional share in the common property.


B. Co-Operattitve Ownership 

Normally what occures is that a company is incorporated and it, in turn, buys a building.  A buyer in a co-operative corporation becomes a shareholder of the company which owns the building.  In typical cases, the shares entitle the buyer to a  long-term lease on a particular unit.


C. Leasehold Ownerhsip 

Leases are normally held with  First Nations People or by the City, at some time in the future the lease will expire.  While a term such as 99 years may not dramatically affect those that buy when the building is first offered to the market, as the term dwindles, the value of an interest will lessen.  You will never own the land.


D. Undivided Interest

Registered title to the land and building is separated into fractional interests.  The size of each interest is determined by the square footage of the apartment.  A Buyer’s interest has two components - a "land interest" and a "contractual" interest.  The "contractual" interest is a contract among all persons who are registered owners of the "land" interests.  The registered "land" interest and the contract with the other co-owners define the "bundle" of benefits and obligations which buyers acquire when they purchase an interest.


E. Life Lease 

This lease is a type of ownerhsip for seniors.  The typical arrangement involves a non-profit service club (i.e. Legion) or church sponsoring the construction of an apartment-style building that will be eventually leased to person 55 years or older.  From the sponsor, who acts as landlord, tenants (owners) meeting the age requirement purchase the right to live in a unit until they terminate the lease or die.

At that time, they or their estates are entitled to refunds of some or all of the original purchase price, or the opportunity to share in any increase in price depending upon the terms of their leases.  The rationale for not sharing in an increase in price is that the tenenats paid below market prices for their unit due to the sponors’s donation of land or other resources.

TAKE NOTE:  Buyers who think they are getting a "deal" when they purchase a co-op, leasehold or undivided interest should investigate further.  While you may be able to purchase one of these types of ownership at a far cheaper price than a strata titled property, especially on a square footage basis, thte "bundle of rights" you are aquiring is FAR LESS.

Depending on your area, you my have a great deal of difficulty selling one of these types of properties in the future, especially in a buyer’s market.  Further, some financial institutions will not finance loans on co-ops, fractional interest holdings or life leases.  These types of ownership are cheaper for a reason - they are usually less desirable and few buyers want them.


 

Beware of the Inflatable Agent

A real estate agent that inflates a list price beyond reality just to get the listing is deceptive and may be harmful to the sale of your house. The deceptive practice of inflating the list price is effective because the client wants to hear that their house is worth a high price. Bad agents are more than eager to feed into this delusion. Good agents base their suggested list prices on real conditions so they will be lower than an inflated price. If you want to get the most for your house, and everybody does, you’d naturally pick the real estate agent with the inflated price. Now you’re falling victim to the Inflatable Agent’s trap.
I see this sort of thing happening all the time. If all of the real estate agents were honest with their recommended pricing, the list prices should be very similar. Never use price as a factor for choosing an agent. Here’s why it will work against you.

It Doesn’t Take Talent to be an Inflatable Real Estate Agent

A real estate agent that inflates a suggested list price solely to win the listing is basically lying to you. Real estate agents that have to lie to win favor, usually lie more than once. What else did they lie to you about during their presentation? Good Realtors give truthful facts, even when the facts may not be attractive. They know you need to know the facts to effectively sell your house. The bad agent knows that too, but they don’t care because they are only looking out for their personal interests.

Chasing the Market

The first month of the listing is usually when the house receives the most attention. If your house is priced too high initially then it will not receive the attention that it could receive if it were priced right. Waiting a month to drop the price to a more reasonable price is too late. You’ve already blown it. It’s too late because your listing is getting stale. Even worse, in a competitive market prices may be dropping so your reduced price may be overpriced for the current market. The process repeats and the price drops further keeping the house on the market longer. In most cases, if it’s priced right, it will sell for more than if it’s priced wrong, even if the wrong price is higher.

Increased Time on Market

Your house becomes less attractive to home buyers each passing day it stays on the market. That’s why it’s important to be competitive from day one. Past a certain amount of time your house becomes stale and it will remain stale until the next price drop.

Significant Price Drop

I’ve mentioned price drops three times already. If the agent lets you chase the market with small price reductions, the only way to catch up is a big price drop. By significantly dropping the price you attract the attention of the bargain shoppers. Bargain shoppers never pay retail so expect to get an offer for a “lowball” offer.

Sometimes Less is More

In most cases, inflating a list price and gradually reducing it over time results in a lower sales price than the other agent’s lower suggested list prices. It also means a longer time on market. In this case, lower price means more money, especially in a competitive buyer’s market.


Buying a Strata Property


When buying a strata take the time to understand the basics and the rules governing the many aspects of strata properties.

This article focuses on what to look for to ensure you are buying a solid strata, including the Strata Property Disclosure Statment, the maintenance program, the contingency fund, the warranty program, and more.

Review strata council minutes

Look at minutes for the past 12 months or more, along with by-laws, financial statements, Annual General Meeting minutes, and engineering reports that may have been completed. Look for past problems, previous repairs, special assessments, and upcoming expenditures.

Ensure a maintenance program

Talk to the strata property manager to determine whether the building has a solid preventative maintenance program in place.

Check the contingency fund

Since a portion of strata owners’ monthly maintenance fees must go into a 'contingency fund' to pay for extraordinary repairs, such as a new roof or exterior painting, it pays to know if the contingency fund is large enough to cover any upcoming expenses.

Review the Strata Property Condition Disclosure Statement

Sellers are strongly encouraged to complete this disclosure statement. It is a checklist about the property's condition. Buyers should carefully review it for any defects or potential problems. The statement can be legally incorporated into the Contract for Purchase and Sale.

Investigate the warranty program and builder’s background

Regardless ofwhether the condo is new or resale, your REALTOR® can find out what type of warranty the building carries, noting the limits and duration of coverage. They may also be able to help you obtain background information about the builder/developer of the project.

Hire a professional home inspector

Make sure the home inspector has proper accreditation and carries errors and omissions insurance. Have them inspect the condition of the suite, common areas, and the overall building structure.

Many REALTORS® specialize in condominium sales.             


What to Look For When Buying a home

 

Your home isn’t just a place to live. It is also probably the biggest and most important investment you will
ever make.
To help you protect that investment and find a safe, comfortable place for your family to call home, Canada
Mortgage and Housing Corporation (CMHC) offers the following list of some of the things you should look
at before you buy a home, to make sure you won’t end up having to pay for a lot of expensive repairs:

 

■ Brickwork and chimney pointing—look at the brickwork on the outside of the chimney. If it is
chipping, crumbling or, turning to powder, or if the mortar is starting to fall apart, it could be very
expensive to have it repaired.

 

■ Decks and porches—look for signs of rotting wood, even under a fresh coat of paint. Soft spots or
places where the wood is splintered could be a sign of more widespread damage.

 

■ Electrical system—if you are buying an older home, find out if the electrical panel has been upgraded.
If the service says 200 amps, it is an upgrade. A 60 or 100 amp panel has probably not been upgraded,
and may not be enough to meet the electricity needs of your family.

 

■ Floors—what shape are the floors in? If the floors are hardwood, do they need to be sanded and
refinished? Refinishing isn’t very expensive, but it is easier if done before you move in, while the rooms
are still empty.

 

■ Heating—find out how old the furnace is, and what kind of energy is used to heat the home. Natural gas
is generally the least expensive option, but it is not available everywhere. Oil and electricity are common
sources of energy in Canada but are more expensive, especially for a house with baseboard heaters.

 

■ Insulation—insulation keeps your house warm in the winter and cool in the summer. If the house has
older plaster walls, it probably has little or no insulation. Hiring an insulation contractor to blow extra
insulation behind the walls can be expensive, but it will save you money on your heating bills in the long run.

 

 

■ Parking—find out where you can park and how many parking spaces come with the house. Many older
houses in large cities, such as Montréal and Toronto, do not have a garage or driveway. If the house
does not have a driveway, can you get a parking permit from the city to park on the street? If not, do
municipal regulations allow you to build a driveway or parking spot?

 

■ Plumbing—the plumbing system should be copper pipes with copper soldering, or PVC piping. Lead
pipes mean that the plumbing is old and will need to be upgraded in the future.


Top 4 Real Estate Nightmares To Avoid

Whether you’re flipping a home or investing in a rental, there are processes you need to go through to ensure that you’re getting a good deal. Even when things appear great on the surface, there are often hidden issues that could really turn into a money pit. By knowing and understanding these potential nightmares, you can learn to avoid them.

1. Hidden Problems with the Home
Not too long ago, a couple purchased a beautiful home that, on the surface, appeared to be well taken care of and healthy. However, they soon discovered that the wood between the window panes was rotten, which led to a larger discovery of a termite problem.

In addition, asbestos was present on the siding, which made it extremely difficult to get the windows replaced. Overall, the repair cost was several thousand dollars. Always have a home inspected, look it over yourself, and get an inspection contingency in your contract so that if issues are found, you can back out of the deal if you want.

2. Financial Problems

Some banks will expect you to jump through hoops to get the funding you need for a home. Even if your documentation shows that you can afford the payments and you’ve gone through the particular bank before, problems and delays shouldn’t surprise you. “Some bank managers act like you’re taking the money right out of their own pocket,” says Ryan Wright of DoHardMoney.com “Finding easier financial solutions with better terms is essential when purchasing real estate.”

3. Squatters
Wait. Is this really a problem? Actually, yes; the incidences of homes being taken over by squatters are growing. One man began repairing his rental home when the tenant moved out, only to find that an entire family had moved in overnight. The family claimed they’d paid money to someone claiming to be the landlord. The result: the courts required the homeowner to go to court to legally evict the squatters, and wouldn’t allow him to turn off any utilities while the squatters were present in the home.

4. Surprises at Closing
When you’ve gotten your finances together to purchase a home and you think you’ve paid everything you need to, nothing is worse than being surprised at closing. If you find that suddenly your interest rate is higher than it should have been or the closing costs are not what you expected, go through the numbers with your agent. Make sure they’re correct and you’re not being taken advantage of.

When you are able to anticipate these types of problems, you can often head them off before they become real issues. By being a wise investor, you can prevent yourself from being taken advantage of or having to deal with these real estate nightmares.


How to hire the "right" contructor


1. Don't give in to sales pressure. If a contractor shows up to your door offering services, ask to take his business card or flyer. Don't let a person pressure you into signing up. Tell him you'll contact him after consulting with your spouse or partner.

2. Be picky and have lots of options. Seek at least three bids from prospective contractors based on the same specifications, materials and labour needed to complete the project. Homeowners should discuss bids in detail with each contractor and ask questions about variations in pricing. The lowest-priced contractor may not be the best.

3. Make sure they are insured. Consumers should ask whether the company is insured with WorkSafe BC against claims covering workers' compensation, property damage and personal liability in case of accidents. Consumers should obtain the name of the insurance carrier and call to verify coverage.

4. Know your responsibilities. The homeowner is responsible for ensuring all contracted work conforms to zoning bylaws and ensuring prompt payment according to the requirements of the law. The contractor is responsible for identifying necessary permits and ensuring all legal requirements are satisfied; removal of construction debris when the job is finished; warranties on all contractor-supplied work and materials for a period of at least one year.

5. Get everything in writing. Read and understand the contract before signing. Get all verbal promises in writing. Include start and completion dates in the contract. Homeowners must hold back 10% of the contract price until 55 days after the general contract is substantially completed, abandoned, or otherwise ended to ensure that all subcontracted companies are paid. This way, if there are liens from workers who did not get paid from the original contractor, the holdback may be used to help pay these liens.

Source: Better Business Bureau, Canada Mortgage and Housing Corporation Five tips for choosing a home renovation contractor


Home sale activity improves but remains below historical averages

Lower levels of both supply and demand in recent months are holding home prices in check in the Greater Vancouver housing market.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 2,347 on the Multiple Listing Service® (MLS®) in March 2013. This represents an 18.3 per cent decrease compared to the 2,874 sales recorded in March 2012, and a 30.6 per cent increase compared to the 1,797 sales in February 2013.

Last month’s sales were the second lowest March total in the region since 2001 and 30.2 per cent below the 10-year sales average for the month.

“While home sales were below what’s typical for March, we are seeing more balance between the number of sales and listings on the market in the last two months, which is having a stabilizing impact on home prices,” Sandra Wyant, REBGV president said.

The sales-to-active-listings ratio currently sits at 15.2 per cent in Greater Vancouver, a three per cent increase from last month. This is the first time this ratio has been above 15 per cent since May 2012.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,839 in March. This represents a 17.2 per cent decline compared to the 5,843 new listings reported in March 2012 and a 0.1 per cent increase from the 4,833 new listings in February of this year. Last month’s new listing count was 14.4 per cent below the region’s 10-year new listing average for the month.

The total number of properties currently listed for sale on the MLS® in Greater Vancouver is 15,460, a 1.5 per cent increase compared to March 2012 and a 4.5 per cent increase compared to February 2013.

The MLS® Home Price Index composite benchmark price for all residential properties in Greater Vancouver is currently $593,100. This represents a decline of 3.9 per cent compared to this time last year and an increase of 0.9 per cent compared to January 2013.

Sales of detached properties reached 933 in March 2013, a decrease of 21.1 per cent from the 1,183 detached sales recorded in March 2012, and a 48 per cent decrease from the 1,795 units sold in March 2011. The benchmark price for detached properties decreased 5 per cent from March 2012 to $906,900.

Sales of apartment properties reached 982 in March 2013, a decline of 17.5 per cent compared to the 1,191 sales in March 2012, and a decrease of 39.5 per cent compared to the 1,622 sales in March 2011. The benchmark price of an apartment property decreased 3.3 per cent from March 2012 to $362,100.

Attached property sales in March 2013 totalled 432, a decline of 13.6 per cent compared to the 500 sales in March 2012, and a 34.8 per cent decrease from the 663 attached properties sold in March 2011. The benchmark price of an attached unit decreased 2.5 per cent between March 2012 and 2013 to $454,300.

April 1 marked the return of the GST and PST tax structure in the province. From a real estate perspective, it’s important to remember that: 
   • sales tax on a new home is reduced to 5 per cent GST plus 2 per cent BC Transition Tax (total 7 per cent) from 12 per cent under the HST; and 
   • tax on real estate commissions has been reduced to 5 per cent from 12 per cent under the HST.

These reduced tax rates apply to transactions payable on or after April 1.


 

Credit union predicts housing sales will pick up in B.C. but at a snail's pace


The Central 1 Credit Union is predicting that the British Columbia housing market slump will pick up later this year but economists caution not to expect a swift recovery.

In its annual forecast released Wednesday, the credit union predicts home sales in the province will gather a bit of strength this fall and hold steady for the rest of the year, but notes a return to better days will be slow and weak.

"The year-long correction in home sales is likely to bottom out in the first quarter of 2013 and we'll see a slow recovery through the rest of the year. But the gains will be modest," said Bryan Yu, an economist with the credit union.

Last year saw a 12-year low in sales, with only 64,400 sold (compared with 76,817 in 2011,) and Yu anticipates there will be slightly fewer homes sold this year.

He said the resale housing market is hampered by sluggish employment and population growth as well as tighter mortgage requirements that have pushed some first-time buyers out of the market.

Following last year's four per cent decline, the credit union expects the province's median annual price to slip five per cent in 2013 to about $363,000, a level last seen in 2009.

In Greater Vancouver, annual resale activity is forecast to decline about four per cent this year to 31,500 homes.

The median price will dip six per cent to $474,000 but is expected to rise by the end of 2013, according to the forecast.

The report also says house sales in the Okanagan, Kootenay and Vancouver Island are expected to rise but for now remain near recessionary levels because of weak demand and excess inventory.

Yu predicts stronger economic conditions should increase housing starts by 2014, after they declined late last year because of falling prices and excess supply.

However, the uptrend will be tempered as interest rates are expected to rise from record lows, he said.


 



Downtown Vancouver condos left empty by foreign owners

 

Nearly a quarter of all condos in some parts of downtown Vancouver area are empty or occupied only part of the year by non-residents, according to data from the 2011 census data.

In Coal Harbour, about one in four condos are “non-resident occupied”, said Andy Yan, a senior researcher with BTAworks, the research division of Bing Thom Architects.

Yan has been trying to quantify the impact of foreign investment on real estate in Vancouver for years. But the data doesn't allow him to separate units occupied by foreigners from those sitting empty.

"We live in a globalized capital market and we need to adapt to that new realty and ensure that those that want to live here, can grow here."

Yan was speaking at a SFU Woodward's talk about "foreign investment in Vancouver real estate" on Wednesday night.

Experts say the city benefits from the property taxes paid by condo owners, whether they live here or not.

"They pay lots of money in taxes and use very few city services,” said Tsur Somerville, an associate professor at the UBC Centre for Urban Economics and Real Estate.

But there is a downside to having so many vacant units.

“From a city revenue standpoint these units are wonderful. On the other hand, most of us don't want to live in a ghost town,” Somerville added.

The high vacancy rate means less business for neighbourhood shops and and restaurants in Coal Harbour. While some local businesses struggle to stay afloat, others say they do well, even without year-round residents.

"They spend more money when they're here than some people who live here all the time would spend in a year," said Douglas Lloyd Somerville of Lloyd Bruce Home Collections, a high-end furniture store.

Nonetheless, Yan said some Vancouver neighbourhoods may appear to be very dense, but actually are not.

“Hopefully, this will be part of a larger discussion about housing affordability and economic and physical development” in Vancouver, he said in a statement.


Bank of Canada signals rates to remain on hold

 

The Bank of Canada announced on January 23rd, 2013 that it is keeping its key policy interest rate at 1 per cent, where it has been held for more than two years. In providing guidance on where interest rates are heading, the Bank said interest rate hikes are “less imminent than previously anticipated.”

The Bank acknowledged that Canadian economic growth slowed more abruptly in the second half of 2012 than it had previously anticipated. It also recognized a marked deceleration in the growth of household debt, moderation in the housing sector, and softer than expected inflation.

The Bank now expects inflation to return to its 2 per cent target sometime in the second half of 2014. That represents a significant weakening in the Bank’s outlook for inflation; in October, the Bank expected inflation to return to target by the end of 2013. Consumer Price Inflation rose by 0.8 per cent in November 2012.

The Bank said it still expects the Canadian economy to gain strength this year, but it lowered its forecast for economic growth to just 2 per cent in 2013. By contrast, its growth forecast for 2014 was raised to 2.7 per cent versus its previous forecast reading of 2.4 per cent contained in its previous Monetary Policy Report (MPR) published in October 2012.

The bottom line is that economic growth is expected to remain modest but positive, consistent with low inflation and low interest rates. At the same time, growth in household debt burdens, which the Bank has repeatedly flagged as a major risk in this low interest rate environment, is showing positive signs of topping out as housing market activity continues to stabilize at a more sustainable levels. Combined with extremely well anchored expectations for inflation, that means the Bank is in no hurry to raise interest rates anytime soon, with the first such move in that direction unlikely to be for at least another year.

As of March 6, 2013, the advertised five-year lending rate stood at 5.24 per cent. It has been unchanged at this level since the beginning of June 2012.

 

(CREA 03/06/2013)


Little chance of correction in Vancouver real estate market

VANCOUVER, BC, Mar. 18, 2013/ Troy Media/ – Will the Vancouver housing market crash? Should I be waiting for a major drop in prices before buying a home in Vancouver? Should I sell my Vancouver home, rent for a while and then be able to buy an equivalent home for a lot less money? The answer to all of them is a resounding NO.

First let me clarify that I am using ‘Vancouver’ as the greater Vancouver area, sometimes referred to as Metro. Second, a crash is a large and sudden price decline where prices do not recover to previous levels in the short to medium term. Housing prices did crash in the 1980’s but a major difference is that at that time many homes had been bought by speculators on very small margins and interest rates soared well into double digit levels.

Now, very few homes are held on spec and any anticipated increase in interest rates is expected to be very modest. Mortgage rates may even go down. Canadian banks make a significant share of their profits from mortgage lending and it is a low risk part of their business since their prudent lending standards reduce the chance of default. Also, many mortgages are guaranteed by the Canadian Mortgage and Housing Corporation (CMHC). In fact, looking to maintain or increase the bank’s mortgage business, the Bank of Montreal has recently reduced its five year fixed mortgage lending rate from 3.09 per cent to 2.99 per cent making house buying a tad more affordable.

The cost of housing in Vancouver is not likely to change dramatically for the foreseeable future. It may soften a bit or it may even rise a bit. The MLS home price index in the Greater Vancouver area actually rose 0.4 per cent from January to February this year. Prices are about 3 per cent lower than they were six months or a year ago, but are 4 per cent higher than they were three years ago. Prices for detached homes have been the softest, while apartments and townhouses have seen much less change, reflecting the trend to condos as a more affordable form of housing.

February sales in Greater Vancouver and the Fraser Valley are still below trend, but are higher than they were in January and attendance at open houses has been rising. The housing industry has been expressing optimism about housing sales and prices, with a 43 per cent increase in single family starts over the past year. Starts of multiple units have fallen in that time, but this is attributed to banks demanding higher levels of pre-sales before offering financing. Anne McMullin, CEO of the Urban Development Institute, expects this to delay but not reduce the overall level of starts.

There are two groups which would benefit from declining home prices. First are people in the Vancouver area who do not own real estate and whose income level does not enable them to afford the size and location of home to which they aspire. Many have adjusted by seeking a smaller home and/or one in a less costly neighbourhood. But some cannot afford even that.

A second group are the retirement age baby boomers across Canada who hope to spend their golden years in this small corner of Canada where you don’t have to shovel snow. They are frustrated because a home anywhere else in Canada buys much less home in and around Vancouver. They are also one of the main reasons why a housing crash will not occur. Any drop in prices will lead to retirees entering the Vancouver housing market, putting a floor under prices.

Those in the international community do not seem to mind our house price levels. When looked at in a global context, home prices in Vancouver are not unreasonable. Ask anyone from London or Hong Kong. And people from around the world see not only good value in our real estate, but also an open society, a pleasant climate and a stable political environment.

Finally, the majority of people in greater Vancouver already own real estate, benefit from current housing values and would be hurt by a crash or any serious drop. They do not want to see the value of their biggest asset decline. Home equity often forms a large part of retirement savings and people count on it in their financial planning.

So, if you want some Vancouver real estate should you buy now even if you pay a little more and get a little less than you had hoped? Probably. And should you sell your Vancouver real estate in the hope of buying it back later for less? Definitely, not.


Bosa Properties breaks ground on 30-storey Coquitlam condo project



 

Bosa Properties is not letting sluggish sales across Metro Vancouver deter its plans to break ground on new condominium projects.

 

 

The company will today break ground on its 30-storey, 193-unit Evergreen condominium project in Coquitlam.

Sales launched last June and 116 units have been sold.

“We at Bosa Properties are very confident in the current and long-term state of this market and are pushing ahead with our Evergreen tower as a result,” said Bosa CEO Colin Bosa.

“While some may point to slower sales data from the past few months as a cause for concern, we take a contrarian view.”

Bosa said few condominium projects have recently broken ground that will be complete in two to three years.

“We look forward to that time and see appreciation in value,” he said of his project, which is near a station on the future Evergreen SkyTrain line.

Evergreen is the final tower in Bosa’s masterplanned Westwood Village project, which is next to Coquitlam city hall at Glen Drive and Pinetree Way.

“Downtown Coquitlam is a new emerging town centre within the Lower Mainland and a new focal point for transit-oriented development,” he said.

Bosa is also building four other towers and mixed-use projects in Burnaby, New Westminster, Victoria and Vancouver.


Commercial real estate sales in the Lower Mainland exceed $5 billion in 2012

The dollar value from commercial real estate transactions in the Lower Mainland eclipsed the $5 billion mark in 2012. This is the first time the region’s commercial real estate market has reached this mark since 2009, according to data from Commercial Edge—a commercial real estate system operated by the Real Estate Board of Greater Vancouver (REBGV).

Last year’s $5.21 billion total represents an 11.2 per cent increase from 2011 when the year’s dollar value was $4.686 billion, a 12 per cent increase from 2010’s total of $4.655 billion, and a 62.1 per cent increase of 2009 when the annual dollar value total was $3.215 billion.

The Commercial EDGE system includes all commercial real estate transactions in the Lower Mainland, excluding Pitt Meadows and Chilliwack, that have been registered with the Land Title and Survey Authority of British Columbia since 2009.

There were 1,875 commercial real estate sales in the Lower Mainland in 2012, according to Commercial EDGE. This is 2.6 per cent below the 1,926 sales recorded in 2011, 9.6 per cent above the 1,710 sales recorded in 2010 and an increase of 46 per cent from the 1,287 sales recorded in 2009.

“The strength of last year’s commercial real estate market can be attributed in part to an upswing in raw land sales in the region,” Eugen Klein, REBGV president said. “With this inaugural release of the quarterly Commercial EDGE report, we hope to help inform the public on trends occurring in our commercial real estate market.”

2012 activity by category:

Land: There were 599 commercial land sales in the Lower Mainland in 2012, up 15 per cent from the 521 land sales in 2011. The dollar value of last year’s land sales was $2.051 billion, a 9.7 per cent increase from $1.870 billion in 2011.

Office and Retail: There were 655 office and retail sales in the Lower Mainland in 2012, down 13.5 per cent from the 757 office and retail sales in 2011. The dollar value of last year’s office and retail sales was $1.813 billion, an increase of 18 per cent from 1.536 billion in 2011.

Industrial: There were 519 industrial land sales in the Lower Mainland in 2012, down 2.4 per cent from the 532 industrial land sales in 2011. The dollar value of last year’s industrial sales was $803 million, a 2.3 per cent increase from $785 million in 2011.

Multi-Family: There were 102 multi-family sales in the Lower Mainland in 2012, which is down 12 per cent from the 116 sales in 2011. The dollar value of last year’s multi-family sales was $544 million, a 10 per cent increase from $494 million in 2011.


 

Home sales continue at below average pace

Home sale activity has trended below historical averages for a full year in the Greater Vancouver housing market.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 1,797 on the Multiple Listing Service® (MLS®) in February 2013. This represents a 29.4 per cent decrease compared to the 2,545 sales recorded in February 2012, and a 33 per cent increase compared to the 1,351 sales in January 2012.

Last month’s sales were the second lowest February total in the region since 2001 and 30.9 per cent below the 10-year sales average for the month.

“Sales in February followed recent trends and were below seasonal averages, though our members tell us they saw more traffic at open houses last month compared to the previous six to eight months, said Eugen Klein, REBGV president.

The sales-to-active-listings ratio currently sits at 12.2 per cent in Greater Vancouver, a two per cent increase from last month. This is the first time this ratio has been above 11 per cent since June 2012.

“With a two-point increase in our sales to active listings ratio and a reduction in the average number of days it’s taking to sell a home, February showed some subtle indications of a changing sentiment in the marketplace compared to recent months,” Klein said.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,833 in February. This represents a 13 per cent decline compared to the 5,552 new listings reported in February 2012 and a 5.8 per cent decline from the 5,128 new listings in January. Last month’s new listing count was 4 per cent higher than the region’s 10-year new listing average for the month.

The total number of properties currently listed for sale on the Greater Vancouver MLS® is 14,789, a 5.2 per cent increase compared to February 2012 and an 11.6 per cent increase compared to January 2013.

Since reaching a peak in May of $625,100, the MLS® Home Price Index composite benchmark price for all residential properties in Greater Vancouver has declined 5.6 per cent to $590,400. This represents a 3.3 per cent decline compared to this time last year.

Sales of detached properties in February 2013 reached 704, a decrease of 36.1 per cent from the 1,101 detached sales recorded in February 2012, and a 49.8 per cent decrease from the 1,402 units sold in February 2011. The benchmark price for detached properties decreased 4.5 per cent from February 2012 to $901,500. Since reaching a peak in May 2012, the benchmark price of a detached property has declined 6.8 per cent.

Sales of apartment properties reached 760 in February 2013, a decline of 25.5 per cent compared to the 1,020 sales in February 2012, and a decrease of 37 per cent compared to the 1,206 sales in February 2011. The benchmark price of an apartment property decreased 3 per cent from February 2012 to $360,400. Since reaching a peak in May 2012, the benchmark price of an apartment property has declined 5.1 per cent.

Attached property sales in February 2013 totalled 333, a decline of 21.5 per cent compared to the 424 sales in February 2012, and a 31.9 per cent decrease from the 489 attached properties sold in February 2011. The benchmark price of an attached unit decreased 0.7 per cent between February 2012 and 2013 to $455,500. Since reaching a peak in April 2012, the benchmark price of an attached property has declined 6.5 per cent.


 

Whistler real estate: a bargain?

Could it be that Whistler has become more than a ski and party destination, and is now a place to hang your hat year round?

While the drive time has shortened with the improved highway, the drop-off in property prices also makes Whistler a draw.

Years ago, Whistler was the playground for west-side skiers who kept a second home there for winter weekends. Now, the ski resort town’s realtors are hoping that with easier access and some additional draws – such as developer-philanthropist Michael Audain’s up-and-coming art museum – Lower Mainland residents will start to view Whistler as an extension of Vancouver.

People already commute between Vancouver and Squamish, either solo or in van pools. Whistler as a commuter town is the natural next step. Whistler real estate prices are better than prices in the Lower Mainland, which, despite doom-and-gloom forecasts, have held steady compared with the rest of the country. The benchmark price for all Vancouver properties last year was $590,800, according to a new report by the Real Estate Association of Greater Vancouver. Whistler, by comparison, had a benchmark of $457,500.

“Whistler is good value right now,” says Pat Kelly, president of Whistler Real Estate Co. Mr. Kelly has been a Whistler realtor for 30 years. “It’s the reverse of Vancouver. And in light of some of the new developments, it’s not only a good investment from a buyer’s point of view, but it’s also reasonable to live here full time. The new highway changed the drive.

“You can get pretty good housing for $1-million or less that’s only a relaxing one-hour, 20-minute drive away.”

If Whistler is a relatively good deal these days, it’s in large part because it’s been dependent on the U.S. economy. Many of the Americans who once fuelled the condo-hotel market in Whistler have pulled out, what with the financial crisis and the rise of the Canadian dollar. Now that the average American is in penny-pinching mode, the luxury of having an occasional vacation getaway that they own outright simply doesn’t make sense. As well, the American who purchased a decade ago will do well on the sale of their property now, even if the price has fallen 20 per cent.

“The Americans were a real driver of real estate transactions here in Whistler, but they have gone from being buyers to sellers, and in some cases, I don’t think they have tried to hold on for the top price,” says Mr. Kelly. “If they wanted to sell, they sold.

“There are almost 5,000 units in that condo-hotel style in the Whistler area, and there probably aren’t as many buyers for that today as there are for lifestyle product,” he says, referring to homes to be lived in, as opposed to investment properties.

“Our buyer now comes mostly from the Lower Mainland, and that unit was aimed at somebody, for instance, from Toronto, flying in for a week. You just don’t do as many transactions in that category. And combined with performance problems due to the financial crisis, lack of discretionary income, and lack of credit – you can’t borrow on those units as easily – it has all led to that market being hit.”

He estimates that more than 80 per cent of all homes in Whistler are less than $1-million. The market dropped around mid-2009, and mostly stayed down throughout 2011 and 2012.

Landcor Data Corp. data shows the current median price of a Whistler condo at around $358,500, at the same level as 2001 prices. Overall, volume of sales has plummeted in the last couple of years, with a minor spike in 2010, during the Olympics.

Landcor president Rudy Nielsen, the largest owner of recreational property in B.C., believes Whistler will hold its own in terms of desirable property. If he were to purchase in the next few months, he’d choose Whistler over the Lower Mainland, he says.

He thinks the improved highway and the faster commute may even be responsible for slowing the recreational property market in Whistler.

“I think that might have some of the effect on why houses haven’t been selling like in the past, because people know they don’t need a second house. They can drive there for the day.”


Under-insured house can spell ruin

 

You’ve purchased the coveted house, you’ve converted the old cellar into a basement suite and maybe even gone the extra mile with radiant-heat floors in the bathroom and a gas fireplace in the living room.

After a thorough search for the perfect tenant or tenants, you sign the lease, collect the damage deposit and sit back and start collecting the monthly rent that will go toward paying down your mortgage. But hang on – what about obtaining documentation that your tenants have paid for their own property insurance? If you’re like most homeowner-landlords, you probably haven’t gone to the bother.

Don Campbell, president of the Real Estate Investment Network (REIN), usually gets asked to forecast housing markets. However, that shouldn’t be a homeowner’s most pressing worry, he says.

“Due to the large number of people who are buying investment properties, or renting out their basement suites, a lot of untrained landlords are hitting the market and the biggest risk they are putting themselves in has nothing to do with which direction the average selling price is going. It is having the completely wrong property insurance,” says Mr. Campbell.

“I know people who have gone into seriously deep financial trouble by not having the right coverage. And I don’t sell insurance. I don’t care if they buy it. But it’s my job to educate.”

Last year Aviva Canada insurance company released statistics that show water damage is the leading home insurance claim, partly due to the high number of basements that are being finished to make livable. Nationwide, B.C. had the highest increase in average claim cost due to water damage, at 205 per cent. I’m guessing that increase reflects the fact that almost every homeowner in Vancouver depends on the income from a basement suite to get by. For Vancouverites, basement dwelling is a fact of life. We even forget that’s not the case for every city.

A friend from Portland once said to me, rather smugly, “You know, we don’t have people living in our basements.”

I guess we’re not so much like Portland, then.

A flooded basement in today’s Vancouver is more than the minor headache it was back when we used basements only for storage and laundry. Now, it can be a major headache as well as a major insurance claim.

Mr. Campbell wants consumers to pay close attention to something as boring as house insurance to mitigate risk, to protect their biggest lifetime purchase. He takes a hard-line approach and wishes other homeowners would follow suit.

Mr. Campbell is to property investment what Deepak Chopra is to personal development. To his 2,700 REIN members, he’s guiding the way through all the talk and theorizing about property markets and when is or isn’t a good time to invest. He isn’t a realtor, economist, developer or builder. He is a researcher, author, speaker and investor.

REIN members will show up en masse in a town or suburb somewhere in Canada and investigate the current and future infrastructure, the economic forecast, the potential for job growth, government policies, travel time to urban areas, and population forecast, to help determine whether it’s an investment-worthy area.

Mr. Campbell has released top 10 lists on investment worthy cities and written books on Canada’s real estate cycle, and he’s a go-to guy for television interviews on the topic. And with 170 tenants of his own, he knows a thing or two about being a landlord. And an under-insured house is the kind of risk that can put a homeowner into financial ruin.

“I like to mitigate risks wherever possible. I don’t give [tenants] the keys until I have proof of insurance.”

The other mandatory action homeowners must take – and often don’t – is informing their insurance provider that they’ve got a basement suite. Mr. Campbell advises that you not communicate this important detail by phone. Ensure that you have a written record of it, and that you receive acknowledgement. You don’t want the insurance company claiming that it never knew about your rental suite should you need to make a claim.

Chris Westrop, Park Insurance’s Commercial Department Manager, concurs that communication is vital.

“Definitely it’s important to let your insurance company know everything that’s going on. Renting a secondary suite is considered a material change in risk, and it does have the potential to void your insurance policy,” he says.

A void insurance policy would be a nightmare scenario. Any reduction in coverage simply because you failed to inform the insurance company of your suite is a nightmare scenario. At minimum, should your basement suite be flooded and the tenant has to temporarily move out, you wouldn’t be covered for the monthly rental. To protect yourself, purchase rental replacement insurance, which is extra coverage to make up for the lost rent. It makes sense if you depend on that rental income to cover your mortgage and, as I mentioned, nearly every Vancouver homeowner with a rental suite depends on that income for his mortgage.

While tenant insurance is mostly to protect the tenant’s own property against theft or damage, it also protects the homeowner, says Mr. Westrop.

“It involves the homeowner from a liability point of view. If someone is visiting your tenant in your suite, and trips over an electrical cord and is injured, for example, there is the possibility of a lawsuit. Typically, lawyers will take a shotgun approach and if the tenant doesn’t have insurance, chances are he won’t have any money either, so they will quite likely name the landlord in the suit as well.”

And make sure your policy covers the cost of rebuilding the entire house if it burns down. You want the words “guaranteed replacement cost,” says Mr. Westrop. If your policy says it will cover only the cost of rebuilding for a specified amount, such as $300,000, you could be required to pay out thousands of extra dollars.


Real estate affordability improves, but B.C. still most expensive province to own a home


British Columbia’s housing affordability saw noticeable improvements in the fourth quarter of 2012, but it remains the priciest province in which to own a home, the latest Housing Trends and Affordability Report released today by RBC Economics Research shows.

“Affordability improvements across most housing types in the fourth quarter were welcome news to prospective buyers in British Columbia,” said Craig Wright, senior vice-president and chief economist, RBC. “Still, the market has a long way to go before affordability reaches less stressful levels.”

In Metro Vancouver, home resales fell 23 per cent in 2012 to the lowest level in 12 years, excluding the recession of 2008, RBC said. While the RBC report says poor affordability is a key factor behind the 11.9-per-cent drop in home resales in the province in 2012 compared to 2011, other databases offer a more nuanced picture of housing affordability in Metro Vancouver.

The Vancouver Sun introduced the UDI/FortisBC Housing Affordability Index earlier this month to provide a more contextual and in-depth look at housing affordability across Metro Vancouver.

This index found that outside of the city of Vancouver — notably in suburbs like Surrey and Maple Ridge — the housing market remains affordable to people earning average incomes.

The significant differences between the RBC Housing Affordability Measures and The Vancouver Sun UDI/FortisBC Housing Affordability Index is that RBC expresses the percentage of an average income that is required to service the debt on a home and does not separate out the different areas of Metro Vancouver, while the UDI/Fortis Index looks at the percentage of households in a given region that can afford to buy a home in that specific region, using no more than 32 per cent of their income.

“The UDI/FortisBC Housing Affordability Index powered by Urban Analytics provides a better representation of what you can afford to buy and where in Metro Vancouver, because we looked at the different geographic regions separately,” said Michael Ferreira, principal at Urban Analytics, a company that provides research and advisory services for the new home industry.

RBC’s housing affordability measures track the proportion of pre-tax household income needed to service the costs of owning a home at market values — it puts the cost of owning in B.C. at 66.4 per cent of median household incomes for a detached bungalow, 72.7 per cent for a two-storey home and 33.4 per cent for condominiums. These were all down from the previous quarter, except for the two-storey home category, which went up 0.4 per cent after a 3.2 per cent drop last quarter, as prices declined between 0.8 and four per cent across the region.

For Vancouver, the RBC data shows a detached bungalow costs 82.2 per cent of median income, including mortgage payments, utilities and property taxes.

The UDI/FortisBC Housing Affordability Index breaks Metro Vancouver into three areas: the city of Vancouver, Inner Metro (West Vancouver, North Vancouver, Burnaby, New Westminster, Richmond, South Delta, Coquitlam, Port Moody, Port Coquitlam) and Outer Metro (Surrey, Langley, North Delta, White Rock, Pitt Meadows and Maple Ridge).

Splitting the region into three areas means the numbers are not skewed so heavily by the priciest markets like the west side of Vancouver, Ferreira said.

The index shows that the majority of households in outer Metro can afford the payments on all types of homes, both new and resale. It found that as many as 82.9 per cent of households in outer Metro could make the payments on a resale wood-frame condo, while 80.4 per cent could afford a resale concrete condo.

For inner Metro, the index found that while 64.5 per cent of working households can afford a resale wood-frame condo, just 51.7 per cent of working households can afford a new concrete condo and less than 40.9 per cent of households could afford a single-family home.

In Vancouver proper, the UDI/FortisBC Affordability Index shows that housing is affordable for a far smaller percentage of the population — fewer than 32 per cent of households can afford payments on a single-family home, a new or resale townhouse or a new concrete condominium



The 2% BC Transition Tax on new homes is coming April 1, 2013


It is a new tax that comes into effect on April 1, 2013. It will apply to the sale of new residential homes that are 10% or more complete as of April 1, 2013. The 2% BC Transition Tax will end on March 31, 2015.

The 2% BC Transition Tax applies to the full price of a new home, which is 10% of more complete, where ownership or possession is on or after April 1, 2013, but before April 1, 2015. The 5% GST also applies to the full price of a new home, where ownership or possession is on or after April 1, 2013.

With the end of the HST and the return to the PST/GST system, the BC government chose to introduce the 2% BC Transition Tax as a way, in their words, “to ensure the equitable application of tax for purchasers of new residential homes currently under the HST system” and after April 1, 2013 when the province returns to GST on new residential homes. The government also wishes to replace some of the revenue lost through the return to the PST.

BC’s portion of the HST will no longer apply to newly built homes where construction begins on or after April 1, 2013. Builders will once again pay 7% PST on their building materials (construction inputs). The provincial government asserts that on average, about 2% of the home’s final price is embedded PST that builders pay on their building materials.

The Transition Tax rebate for builders (sellers) recognizes that the builder will not be able to claim input tax credits on the PST paid on building materials acquired after March 31, 2013. The rebate is available where both of the following conditions are met:

  • The 2% BC Transition Tax applies to the sale of new housing; and

  • Construction or substantial renovation is at least 10%, but not more than 90%, complete before April 1, 2013.

The Transition Tax rebate for sellers of new housing will be calculated on the degree of completion of the housing as of April 1, 2013:

graph

The 2% BC Transition Tax does NOT apply to:

  • the sale of vacant land, whether the GST would apply or not;

  • the sale of new commercial units; or

  • REALTOR® commissions.

 

Inner Metro: Coach houses above garages are great mortgage helpers

While coach houses are well-known in Vancouver, a new project in Coquitlam is the first of its kind in that community. At Morningstar’s Somerton 34-home development, 21 of the houses come with a one-bedroom coach house above the garage.

Apparently, it’s a popular idea. More than half of the houses with coach homes have sold out, said Deborah Calahan, vice-president of sales and marketing for Morningstar Homes. The 13 homes without a coach house are built to accommodate a legal basement suite; sales of those homes have just begun.

The UDI/Fortis Housing Affordability Index for B.C. shows that less than 40.9 per cent of working households in inner Metro — which includes Coquitlam, West Vancouver, North Vancouver, Burnaby, New Westminster, Richmond/Delta, Port Moody and Port Coquitlam — earn the $94,002 or more necessary to qualify for the $2,507-a-month mortgage payment required for the average new single-family home in the area, with a median price of about $850,000. Those figures are for re-sale homes; there is not enough data to calculate an accurate median price for new single-family homes.

Despite being new homes, prices at Somerton are lower than the median price for re-sale homes; they range from $649,900 to $809,900. The houses are just over 3,000 square feet each, including the basement which can be purchased finished or unfinished, while the coach houses are about 500 square feet.

As a single-family home development, Somerton has not attracted many first-time buyers. Instead, it’s people looking to either move up, or move laterally into a new home that are choosing to buy at Somerton, Calahan said.

“Usually, in order to buy a single-family home in the Lower Mainland, you need to have already been a homeowner, unless your parents are helping you out,” Calahan said. “Generally, we don’t see that first-time homebuyer.”

Somerton is on Roxton Avenue in Coquitlam, in a residential are near Leigh elementary school and Coast Meridian Road. The community is expecting SkyTrain’s Evergreen Line to be ready for commuters in 2016.

“There has been amazing growth here over the past five years,” Calahan said.

Calahan said buyers have come from all over Metro, including the Tri-Cities area, Burnaby and North Vancouver. She said the Somerton project has not seen a lot of offshore buyers. Many of the buyers are not planning to rent out the coach house — instead they intend to have their aging parent or university-age child live in the separate accommodation, Calahan said. It also makes a good nanny suite or in-home office, she said.

If a buyer did choose to rent out the coach house, Calahan conservatively estimated they could get about $800 to $1,000 a month to help out with their mortgage. She said two-bedroom suites nearby are renting for between $1,000 and $1,200, while the coach houses are new and feel like a home unto themselves.

“These coach houses are like none other. They’ve got vaulted ceilings, picture windows and even a window seat in the bedroom,” Calahan said. “It’s like a mini-home and it’s amazing.”

The coach houses have private patios, a parking space and in-suite laundry.

An extra $1,000 per month in income could mean the ability to borrow and repay as much as $200,000 more on a mortgage. To buy a home in Somerton for $725,000, with $1,000 a month rent from the coach house, a family would need about $145,000 down payment and an additional annual income of about $86,680 before the additional rent to qualify and repay a mortgage of $580,000.

“If you run the numbers of a price of owning a home with renting out (a coach house), it becomes quite practical for a lot of people,” Calahan said.

She said the city of Coquitlam approved this project as a bit of a test to see how coach houses could work in the community, but that it is possible there could be more in the future.

As the coach houses are built above the garages, the size of the yard does not change, Calahan said.




Outer Metro: Surrey City Centre sparks growth

 

The neighbourhood is blessed with SkyTrain stations and housing affordable for most people

One of the most affordable areas to live in Metro Vancouver is Surrey City Centre, a community that is experiencing significant growth and revitalization.

Surrey’s downtown core has been home to SkyTrain since 1994, but it’s only in recent years that it has seen the massive development and growth that has become familiar in other areas near SkyTrain.

One of those developments is Verve, by Porte Development Corp., a three-building, 198-unit project at 13931 Fraser Highway that is designed to be “affordable.”

The UDI/Fortis Housing Affordability Index shows that 63.3 per cent of working households in Outer Metro earn the $46,384 minimum necessary to qualify for the $1,237 a month mortgage payment needed for the average new wood-frame condo in the area.

Jeanette Chaput, director of sales and marketing at Porte Development Corp., said Verve was designed for people to buy and live in.

“We wanted it to be an end-user building; we didn’t want to cater to the investors,” Chaput said. “We wanted a building that felt like a community. The site is a six-minute walk from King George (SkyTrain) station and we find being close to rapid transit is really important in terms of affordability.”

The first building in the development is more than half sold. Many were bought by first-time buyers who work in the area.

“We are getting a lot of people buying who work at Surrey Memorial Hospital — nurses — because it’s walking distance and people are buying for that convenience,” Chaput said. “We’ve also had a couple buyers (who work at) RCMP headquarters.”

The area’s growth includes upgrades to Surrey Memorial Hospital, a new B.C. RCMP headquarters, a new Surrey city hall and an expansion at Simon Fraser University, among other developments.

“Whether you’re buying for yourself or for an investment, there is so much happening in this area that you know that you’re investing in a solid location,” Chaput said, adding that there is a lot of residential growth as well, including concrete buildings with commercial retail space on the ground floor.

A junior one-bedroom condo in a four-storey wood-frame building at Verve starts at $167,900. That requires a down payment of $8,395 and mortgage payments of about $750 a month. Junior one-bedroom suites do not have a window in the bedroom and are about 541 square feet.

“It’s not a studio — it’s a one-bedroom. The finishes are great — laminate flooring throughout the home, quartz countertops, appliances including a washer and dryer, and one parking stall is included,” Chaput said. “The amenities are great. We have a gym and there will be an on-site caretaker once all three buildings are done.”

The monthly payment is comparable to renting, even when strata fees are factored in, Chaput said.

“If you were to rent something new, realistically it would be around $1,000 to $1,100 a month for a one-bedroom,” Chaput said, adding that the strata fees on a one-bedroom home would be $139 a month.

There is also a guest suite and a lounge for parties, and units available range from the junior one-bedroom up to a three-bedroom townhouse, Chaput said.

“Our homes are quite spacious compared to the competition. We really wanted to create an affordable project,” Chaput said. “We didn’t want people to sacrifice — we want them to be homeowners in a livable space where they would be happy with it.”

She said that for a limited time, the developer is offering first-time homebuyers the option of financing the down payment over time between now and completion.

“It’s a great opportunity for first-time buyers to get into the market because they can with five per cent down at pre-completion prices and be a homeowner,” Chaput said.

The first building at Verve will be ready for people to move in June 2014, and the second building will go on sale this spring, Chaput said.




Metro Vancouver can be affordable

The Metro Vancouver housing market is as popular a conversation topic as the Canucks. While the Canucks’ talk centres around which goaltender should be traded, discussions about the housing market range from the validity of a listing price of a neighbour’s home to market bears who insist from thousands of miles away that a meltdown is inevitable.

I thought it might be helpful to offer some perspective based on our observations of the Metro Vancouver housing market. But just who am I, and what qualifies me to offer this perspective? Briefly, I have been a part of Metro Vancouver’s new home market for over 20 years — much of that as a principal of Urban Analytics Inc., an independently owned firm that has been providing research and advisory services to developers, lenders and other industry stakeholders for the past 15 years. Our firm offers impartial analysis of the market, and we’ll share that information with Vancouver Sun readers.

Now let’s talk a little about affordability. Is Metro Vancouver housing affordable? The knee-jerk response is ‘No!’ As the Urban Analytics powered UDI/FortisBC New Home Affordability Index introduced in today’s Vancouver Sun illustrates, new homes are not affordable for many households in some parts of Metro Vancouver, which is not a good thing. But the index also suggests new homes are affordable for the majority of households in other parts of the region, which is a good thing. Unlike other affordability indexes that suggest we shouldn’t even have an active residential real-estate market here considering households would require upwards of 70 per cent of their income to service a typical mortgage, the UDI/FortisBC index considers the home price variances in different parts of the region to illustrate where housing is more affordable for more households.

It has been frequently suggested (mostly by economists and analysts who typically consider only macro-economic house price data such as average sale prices for an entire region, which may be skewed by data from a small area, such as the west side of Vancouver that Metro Vancouver’s home prices remain in bubble territory. Our research suggests this is not the case in the new home sector throughout much of Metro Vancouver. Let’s look at an example of what it would cost to service a mortgage for a new townhome in the Fraser Valley today versus 2007.

As the following highlighted area illustrates, today’s lower interest rates have made it more affordable to service a mortgage on a new home today than at the previous peak of the market in 2007.

Typical two-bedroom, two-bathroom townhome in Surrey’s Clayton neighbourhood:

Size (sqft) Price Dwnpmt (10%) Mtg. Rate (5-yr. posted) Amort Period Monthly Mtg. Pmt

2007: 1138, $277,900, $27,790, 6.45%, 25 years, $1,701

2013: 1155, $269,900, $26,990, 5.24%, 25 years, $1,475

But lower borrowing costs aren’t the only contributor to cheaper servicing costs; lower home prices in some sub-markets of Metro Vancouver have also contributed to the increased affordability. We could make this same comparison for new condominium or townhome product in a number of different areas including North Vancouver, the Tri-Cities, Langley and South Surrey, and the results would be similar.

Speaking of lower home prices, while new home price indexes and MLS Benchmark Prices continue to indicate home prices in our region have dropped only marginally over the past year, our research indicates that when current incentives offered at many new home projects in the region are considered along with the current record low borrowing costs, new home ownership is arguably more affordable today than it has been for much of the past 10 years.

The laws of supply and demand are hard at work in Metro Vancouver’s new home market.

Buyers shopping for a new apartment or townhome in an area with abundant unsold inventory will find they are in the driver’s seat, and that for the first time in recent memory, developers are offering significant price-reducing incentives and in some cases willing to negotiate sale prices.

The bottom line is, for those waiting for ‘The Big Crash of 2013’ as a national magazine’s front cover wrote recently, you’ll be waiting for a long time. But if you’re OK taking advantage of more of a fender bender in the market, now is as good a time as any to jump in. And as we know, it takes a lot less time to clear a fender bender than a serious crash.

Michael Ferreira is a Principal of Urban Analytics Inc., Metro Vancouver’s leading new home research and advisory firm, and the publisher of The New Home Source, a quarterly publication that provides detail and analysis on all active and planned new multi-family projects throughout Metro Vancouver.




New rental units are on the rise in Vancouver

 

City approves 1,021 such developments for construction, up from zero in 2009

 After a decade of slow or no growth and a vacancy rate below one per cent, the housing market may finally be easing up for renters, who make up more than half the population of Vancouver.

New numbers from the city of Vancouver show 1,021 rental units were approved for development in 2012, more than three times that of 2010 and 2011, when an average of 328 units were approved. No new rental units were approved in 2008 or 2009.

Last year, 614 rental apartments at 800 Griffiths Way, near Rogers Arena, were approved by council, making it the second-largest rental housing development in Vancouver history, according to the city.

At 1401 Comox St., 186 units were approved last summer. After construction is complete in 2014, the building — which will take on a new address of 1061 Broughton St. — will be the first rental unit built in the west end in more than a decade.

Laneway housing and secondary suites make up the rest of the new rental units. There were 350 permits issued for laneway housing, which are small, detached homes built where a garage would normally be in areas zoned for single family homes. That’s nearly twice the average from 2009 to 2011, when 146 were built.

From 2009 to 2011, an average of 394 permits for secondary suites were issued. Last year, 442 were approved.

Across Metro Vancouver, only 600 purpose-built rental units are created each year, less than 10 per cent of the demand which reaches 6,500 per year, according to data from the region’s Rental Housing Supply Coalition.

In Vancouver’s west end, 80 per cent of all residents are renters, according to a submission presented to city council last June by the rezoning applicants, Westbank Projects Corp. and Petersen Investment Group, during public hearings on the 1401 Comox development.

According to the city, the proposed rent for a one-bedroom in that location is $1,340 and $1,890 for a two-bedroom. According to the city, that’s 10 per cent less than the going rate for a condo rental in a similar tower in the Burrard-Peninsula corridor, but 14 per cent higher than the West End or downtown in general.

Renters typically earn between $21,500 and $86,500 a year and many cannot afford to buy homes in Vancouver, city documents show. The median income for renters is $34,000, which is roughly half the median homeowner income of $66,000.

The provincewide vacancy rate was 3.4 per cent in 2012. In some Vancouver areas, such South Granville, the vacancy rate is estimated to be as low as 0.7 per cent.

“Without continued construction of new rental housing, Vancouverites will be forced to live farther away from where they work, or leave the city altogether,” Mayor Gregor Robertson said in a statement.

“We can’t have that. A lack of affordable housing is bad for the livability of our neighbourhoods, increases commute times, and puts a strain on our local economy.”

But one expert questioned the wisdom of the city’s rental housing policy, which provides incentives for rental-only developments, such as waiving the development cost levy on new projects.

“There are two issues here: the slowdown in the for-sale market has made rental look more attractive,” said Tsur Somerville, a University of B.C. professor who teaches in the Sauder School of Business and studies real estate markets.

“Then you have this other thing, where the city essentially has a policy that requires developers to either put in rental housing or contribute to a kitty, so yes, that generates more rental housing,” he said. But, he noted, the increased costs for developers would be downloaded onto consumers. “I’m not sure making condos more expensive is necessarily the best way to increase rental housing.”

“For me, the market will continue to provide rental units in one form or another without having to intervene. And the city wants permanent units, affixed in a permanent place. Which is a very government way of approaching things,” he said, adding that 2008, the base year of the city’s reporting, marked the beginning of the worldwide financial crisis and real estate market downturn.




A drop in multi-family construction in January drove down housing starts by 20 per cent in Metro Vancouver compared to last January, a report from Canada Mortgage and Housing Corporation shows.

“The trend has been moderating since about October and that is a similar pattern in B.C. and nationally,” said Carol Frketich, CMHC's British Columbia regional economist. “The level of activity on an annual basis is a little bit higher in January than December. If we break that down into single-detached home starts and multi-family, there was a pick up in single-detached home starts in January.”

Scott Brown, senior vice-president, residential marketing and sales services at Colliers International, said multi-family starts should gather steam in the next couple of months, based on recent pre-sales.

“Data we have gathered with our research partners Urban Analytics indicates fourth-quarter new multi-family sales decreased six per cent compared to the same period last year. Steady sales brought over-all 2012 sales nearly in-line with the total posted in ‘hot’ 2011,” Brown said in an email. “So demand for multi-family sales remains. Demand drives pre-sales which in turn drives starts.”

Brown said there tends to be a time lag between pre-sales and starts.

“(That lag means) a number of recent sales have yet to be counted as starts,” Brown said. “In fact, a number of recent highrise sales success stories will contribute about 700 to 1,000 new starts by spring.”

The January numbers are a little bit weaker than CMHC’s forecast for the year, but in the last two months the trend has been stable, Frketich said.

Total housing starts in Metro Vancouver in January were 1,250, including 320 single-detached and 930 multiple-family starts. In January 2012, there were 1,554 housing starts, including 269 single-detached and 1,285 multiple-family starts.

Provincial numbers for B.C. followed a similar pattern to those for Metro Vancouver, with starts up slightly from December and down from last January.

Nationally, housing starts slipped 24 per cent in January, year over year. There were 9,904 starts last month, compared with 13,038 in January 2012, CMHC said.

With a file from The Canadian Press


 

You as the home owner can play an important part in the timely sale of your property. When you take the following steps, you'll make your sale a profitable one.

1. Make the Most of that First Impression
A well-manicured lawn, neatly trimmed shrubs and a clutter-free porch welcome prospects. So does a freshly painted - or at least freshly scrubbed - front door. If it's autumn, rake the leaves. If it's winter, shovel the walkways. The fewer obstacles between prospects and the true appeal of your home, the better.

2. Invest a Few Hours for Future Dividends
Here's your chance to clean up in real estate. Clean up the living room, the bathroom, the kitchen. If your woodwork is scuffed or the paint is fading, consider some minor redecoration. Fresh wallpaper adds charm and value to your property. If you're worried about time, hire professional cleaners or painters to get your house ready. Remember, prospects would rather see how great your home really looks than hear how great it could look "with a little work."

3. Check Faucets and Bulbs
Dripping water rattles the nerves, discolors sinks, and suggests faulty or worn-out plumbing. Burned out bulbs or faulty wiring leave prospects in the dark. Don't let little problems detract from what's right with your home.

4. Don't Shut Out a Sale
If cabinets or closet doors stick in your home, you can be sure they will also stick in a prospect's mind. Don't try to explain away sticky situations when you can easily plane them away. A little effort on your part can smooth the way toward a closing.

5. Think Safety
Home owners learn to live with all kinds of self-set booby traps: roller skates on the stairs, festooned extension cords, slippery throw rugs and low hanging overhead lights. Make your residence as non-perilous as possible for uninitiated visitors.

6. Make Room for Space
Remember, potential buyers are looking for more than just comfortable living space. They're looking for storage space, too. Make sure your attic and basement are clean and free of unnecessary items.

7. Consider Your Closets
The better organized a closet, the larger it appears. Now's the time to box up those unwanted clothes and donate them to charity.

8. Make Your Bathroom Sparkle
Bathrooms sell homes, so let them shine. Check and repair damaged or unsightly caulking in the tubs and showers. For added allure, display your best towels, mats, and shower curtains.

9. Create Dream Bedrooms
Wake up prospects to the cosy comforts of your bedrooms. For a spacious look, get rid of excess furniture. Colourful bedspreads and fresh curtains are a must.

10.Open up in the Daytime
Let the sun shine in! Pull back your curtains and drapes so prospects can see how bright and cheery your home is.

11.Lighten up at Night
Turn on the excitement by turning on all your lights - both inside and outside - when showing your home in the evening. Lights add color and warmth, and make prospects feel welcome.

12.Avoid Crowd Scenes
Potential buyers often feel like intruders when they enter a home filled with people. Rather than giving your house the attention it deserves, they're likely to hurry through. Keep the company present to a minimum.

13.Watch Your Pets
Dogs and cats are great companions, but not when you're showing your home. Pets have a talent for getting underfoot. So do everybody a favor: Keep Kitty and Spot outside, or at least out of the way.

14.Think Volume
Rock-and-roll will never die. But it might kill a real estate transaction. When it's time to show your home, it's time to turn down the stereo or TV.

15.Keep a Low Profile
Nobody knows your home as well as you do but the Real Estate Professional accompanying the buyers know what they need and what they want. If you absolutely need to stay home for a showing, do your best to stay in the background.

16.Don't Turn Your Home into a Second-Hand Store
When prospects come to view your home, don't distract them with offers to sell those furnishings you no longer need. Whether it's the kitchen table, bar stools or a lamp.


 

Should you buy or sell in today's market?


It’s the first choice you have to make when you decide to move and one that just might define the state of the housing market.

Do you start the process by selling or buying? Buy something and the clock starts ticking on selling your current home because you likely need that money to close the house you just purchased. In markets where sales are plummeting that could be a scary proposition.

Bad neighbours can make it hard to sell your home

Bad neighbours are not just annoying, they can also cut into your property value by as much as 10%, says a leading U.S. appraisal group.

 

So you sell first. But what do you do if you can’t find something you like in the neighbourhood you want. Remember, your kids need to go to that local school and be in the district. Are you prepared to rent for awhile?

People in the industry say the tradition historically has been to sell your home and then start shopping for the new one. But in this housing market, with multiple offers the norm and time on the market dropping in many cities, the process reversed and people starting buying, knowing their home would sell with ease.

Could the tide be turning in another sign of a slowdown for housing?

There are drawbacks to both selling first or buying first but the decision is very much based on your view of the market.

Contractor Paul Donadio, own of Terracon Inc., is facing that decision and the 37-year-old married Toronto homeowner has some trepidation about the market in Canada’s largest city.

“I’m going to sell my house first,” says Mr. Donadio. “What if I don’t hit my numbers? I could be stuck with two houses and how do you pay for it all?

One option is to demand a closing date on your purchase a little further out, increasing your odds of selling. At the end of the day, you might need an escape clause and Mr. Donadio has one in his income property he’s prepared to move into should he have trouble buying. Renting is an option, but that market can be tight too.
“You have to live somewhere,” says Mr. Donadio. “You don’t want to end up buying the wrong house. I want to buy a house that I can fix up. Selling is more stressful than buying.”

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His real estate agent David Batori says he’s telling his clients to sell first because he believes more listings will come to market in the spring. But he points out that, for a young family, selling first comes with the risk of not finding something in the right neighborhood.

“If you are too picky, you’re in trouble,” said Mr. Batori, who adds if you can carry two properties you should buy the home that is perfect for you with that long closing date.

You are going to need a lot of capital to pull that off because bridge financing at the banks is difficult to obtain without a buyer commitment for your existing home. The banks will provide bridge financing about two percentage points above prime if the closing date for the sale of your home comes after your purchase date, but you have to have a committed buyer.

Ultimately, if you buy first you can reduce the price of the home you are selling to move it.

Forget about trying to walk away from your purchase though, you’ve made a commitment to buy and left a deposit. “You can’t just walk away, you’ll be sued, you are in breach of contract,” says Mr. Batori, adding he has only seen someone try to walk away because of a death.

You can try to buy a home with a condition that says the purchase is subject to the sale of your existing home but you are going up against people with no conditions.

“Sellers will laugh at you, “ says Mr. Batori, adding before anybody agrees to that type of offer they’ll have an escape clause in case a firm bid comes in. That clause might give you a right of first refusal but you’ll have to come back with a clean offer with no conditions.

Farhaneh Haque, director of mortgage advice and real estate-secured lending at Toronto-Dominion Bank, cautions against buying without having a firm seller for your existing home.

“You can have the equity for two properties but you also need to have the income to carry both properties,” said Ms. Haque, adding the bank probably won’t extend credit to you for two homes without a high enough income. “It would put you in a situation that is uncomfortable and maybe not even affordable. Do you want to sell a property because you are desperate?”

Doug Porter, chief economist at BMO Capital Markets, said any shift in the trend to buy or sell first will depend on the city because some cities are still sellers’ markets.

“In a sellers’ market you can [buy first],” said Mr. Porter. “In most major cities, we are shifting. Personally, I would sell first.”

Ultimately, it comes down to your view of the market. You want to buy first, you have to be pretty confident you can sell. Are you?



January home sales remain quiet

 

VANCOUVER, B.C. – February 4, 2013 – Home buyer demand remains below historical
averages in the Greater Vancouver housing market. This has led some home sellers to remove
their homes from the market in recent months.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in
Greater Vancouver reached 1,351 on the Multiple Listing Service® (MLS®) in January 2013.
This represents a 14.3 per cent decrease compared to the 1,577 sales recorded in January 2012,
and an 18.3 per cent increase compared to the 1,142 sales in December 2012.
Last month’s sales were the second lowest January total in the region since 2001 and 18.7 per
cent below the 10-year sales average for the month.
“Home sale activity has been below historical averages in Greater Vancouver for about seven
months. This has caused a gradual decline in home prices of about 6 per cent since reaching a
peak last spring,” Klein said.
Since reaching a peak in May of $625,100, the MLS® Home Price Index composite benchmark
price for all residential properties in Greater Vancouver has declined 5.9 per cent to $588,100.
This represents a 2.8 per cent decline compared to this time last year.
“It appears many home sellers are opting to remove their homes from the market rather than
settle for a price they don’t want,” Eugen Klein, REBGV president said.
New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,128
in January. This represents a 10.9 per cent decline compared to the 5,756 new listings reported in
January 2012. Last month’s new listing count was 18.9 per cent higher than the region’s 10-year
new listing average for the month.
The total number of properties currently listed for sale on the Greater Vancouver MLS® is
13,246, a 5.6 per cent increase compared to January 2012 and a 4.5 per cent decline compared to
December 2012. This is the fourth consecutive month that overall home listings have declined in
the region.
“When a home seller isn’t receiving the kind of offers they want, there comes a point when they
decide to either lower the price or remove the home from the market. Right now, it seems many
home sellers are opting for the latter,” Klein said.With the sales-to-active-listings ratio at 10.2 per cent, the region remains in buyers’ market
territory. Since June, this ratio has ranged between 8 and 11 per cent.
Sales of detached properties in January 2013 reached 542, a decrease of 17.8 per cent from the
659 detached sales recorded in January 2012, and a 31.7 per cent decrease from the 793 units
sold in January 2011. The benchmark price for detached properties decreased 3.1 per cent from
January 2012 to $901,000. Since reaching a peak in May 2012, the benchmark price of a
detached property has declined 6.9 per cent.
Sales of apartment properties reached 576 in January 2013, a decline of 12.3 per cent compared
to the 657 sales in January 2012, and a decrease of 19.2 per cent compared to the 713 sales in
January 2011. The benchmark price of an apartment property decreased 2.9 per cent from
January 2012 to $358,400. Since reaching a peak in May 2012, the benchmark price of an
apartment property has declined 5.6 per cent.
Attached property sales in January 2013 totalled 233, a decline of 10.7 per cent compared to the
261 sales in January 2012, and a 25.6 per cent decrease from the 313 attached properties sold in
January 2011. The benchmark price of an attached unit decreased 1.7 per cent between January
2012 and 2013 to $449,900. Since reaching a peak in April 2012, the benchmark price of an
attached property has declined 7.7 per cent.

B.C. real estate market pauses to ‘catch its breath’

Assessed values for high-end homes and recreational properties have declined in pockets of the Vancouver region, but new data shows that the B.C. housing market has avoided a widespread downturn.

Most B.C. homeowners, who have watched their property values steadily rise over the past dozen years, will see little change when they receive their assessment notices in the mail this month, according to BC Assessment. The provincial Crown corporation estimates values on behalf of B.C. municipalities, which in turn use the data to determine tax rolls.

On Bowen Island, however, a typical single-family detached home on the waterfront had an assessment of $1.3-million last July 1, down 23 per cent from the previous evaluation on July 1, 2011.

Grant McDonald, deputy assessor for the Vancouver Sea to Sky region at BC Assessment, said Wednesday that housing markets also softened in parts of the Sunshine Coast, Pemberton and Whistler, with certain assessed values slipping in the range of 2 per cent to 13 per cent.

On Vancouver’s coveted west side, the year-over-year valuation fell 5.5 per cent on a representative single-family home on a 10-metre (33-foot) wide lot last July 1. Since then, the district’s home prices have continued to slide, hurt by Ottawa’s moves to tighten rules for mortgage borrowing, effective last July 9.

Some industry experts say the single-family detached index price in key neighbourhoods of Vancouver’s west side will be down roughly 8 per cent to $2-million when new statistics for December are released Thursday.

Amid some pockets of decline, many B.C. markets experienced increases in assessed values in the range of 1.5 per cent to 5 per cent.

“When you crunch the numbers, the majority of homeowners will be within 5 per cent of the prior assessment roll. The market is catching its breath,” Mr. McDonald said. “Sharp drops were perhaps reflective of overly exuberant and particularly aggressive listings. People are being more realistic about what the market actually will bear now.”

Cameron Muir, chief economist at the B.C. Real Estate Association, said that as house prices eased in 2012, some prospective buyers opted to stay on the sidelines, especially in Greater Vancouver and the Fraser Valley.

“While we have seen prices come off in some neighbourhoods, we have also seen a pullback in the number of new listings being added. Many potential home sellers are not putting their homes on the market. That tends to have a balancing effect on the overall marketplace,” Mr. Muir said.

Some Vancouver-area markets sagged, such as Richmond’s Thompson district, where statistics show the trend down 2 per cent for a single-family home’s assessment last July 1. But BC Assessment’s values rose elsewhere, including in parts of Surrey, White Rock, Burnaby and New Westminster.

The odds of deeply discounted Vancouver house prices in 2013 are slim, Mr. Muir said, adding that local real estate markets might even strengthen slightly over the next 12 months. “Some home buyers are sitting on the fence and I think many of them will come back into the market in 2013 when they realize they aren’t going to buy a home in Vancouver for 50 cents on the dollar,” he said.

Mr. Muir said positives include forecasts for solid population growth and the continuation of interest rates near historic lows this year.

BC Assessment pointed out that the total assessment roll for City of Vancouver residential properties, including new construction, climbed 2 per cent last July 1, compared with the same date in 2011.

CREA Updates Resale Housing Forecast

Mon, 12/17/2012 - 09:00

 

OTTAWA –December 17, 2012 – The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards and Associations in 2012 and 2013.

When CREA’s resale housing forecast was published in September, activity showed the first signs of slowing in the wake of new mortgage lending regulations. Demand has remained at lower levels, and this trend is expected to persist through the end of the year. Lower than projected third quarter sales have downgraded the prospects for activity this year in almost every province.

National resale housing activity is now projected to reach 456,300 units in 2012. This represents a 0.5 per cent decline from 458,412 sales in 2011, and stands 0.9 per cent below the 10-year average (2002 – 2011)

Alberta is still expected to post the biggest annual increase this year (+13.1%), offsetting most of the projected decline in British Columbia (-10.7%).

Sales activity is expected to be less volatile next year than it was in 2012. In 2013, CREA forecasts that national sales activity will recede by two per cent to 447,400 units. This is a slightly lower level of activity than previously forecast, reflecting the ongoing impact of new mortgage rules into next year. The continuation of moderate economic, job, and income growth will temper the impact of recent mortgage rule changes, which are not expected to dampen activity much more than has already been felt until interest rates are expected to begin rising in late 2013.

“All real estate is local, so housing market prospects can and do differ among regions and communities,” said Wayne Moen, CREA President. “For that reason, buyers and sellers should talk to their REALTOR® about the housing market outlook where they live or would like to live.”

“Annual sales in 2012 reflect a stronger profile prior to recent mortgage rule changes followed by weaker activity following their implementation,” said Gregory Klump, CREA’s Chief Economist. “By contrast, forecast sales in 2013 reflect an improvement from levels this summer in the immediate wake of mortgage rule changes. Even so, sales in most provinces next year are expected to remain down from levels posted prior to the most recent changes to mortgage regulations,” said Klump.

chart(E)Despite the small downward revisions to the forecast for national sales in 2012 and 2013, activity is still expected to remain within short reach of the 10-year average (2002 – 2011).

National sales activity over the first five years of the past decade compared to the most recent five years represent two very different periods. Most of the national average price growth in the 2002-2007 period was realized amid sustained sellers’ market conditions in most large urban housing markets. Most provincial housing markets are currently balanced, and are expected to remain or return to balanced market territory for 2013.

The national average home price is projected to rise by 0.3 per cent to $363,900 in 2012, with gains in excess of that in most provinces. The smaller gain in average price nationally as compared to most provinces largely reflects a decline in sales activity among more expensive housing markets compared to 2011, particularly in British Columbia and more recently in Ontario.

The national average price is forecast to edge up another three tenths of one per cent to $365,100 in 2013, with British Columbia, Ontario, and New Brunswick registering small price declines and modest average price gains in line with or below inflation in other provinces.

Table 1Table 2* Provincial weighted average price for Quebec; does not affect unweighted national average price calculations. Information on Quebec's weighted average price calculation can be found at: http://www.fciq.ca/immobilier-statistiques-definitions.php

1 The sales territory covered by the Saskatoon Region Association of REALTORS® has been expanded. Data revisions were possible back to January 2011. Part of the 2011 annual percentage increase in sales reflects that change.

2 Effective January 1, 2012, the Prince Edward Island Real Estate Association began reporting sales at the point when non-title conditions had been satisfied in the Agreement of Purchase & Sale. Previously, sales were reported at the point of closing. As such, data before and after January 1, 2012 are not directly comparable.

About The Canadian Real Estate Association

The Canadian Real Estate Association (CREA) is one of Canada's largest single-industry trade associations, representing more than 100,000 real estate Brokers/agents and salespeople working through more than 100 real estate Boards and Associations.

 

Canadian home sales remain at lower levels in November

Mon, 12/17/2012 - 09:00

 

Ottawa, ON, December 17, 2012 - According to statistics released today by The Canadian Real Estate Association (CREA), national home sales activity edged back down in November 2012 on a month-over-month basis, returning to where it stood in August. Demand geared down in August in the wake of tighter mortgage lending rules, and has since been running about eight per cent below levels in the first half of the year.

Highlights:

  • Home sales down 1.7% from October to November.
  • Actual (not seasonally adjusted) activity down 11.9% from November 2011.
  • Number of newly listed homes down 0.9% from October to November.
  • Housing market remains firmly in balanced territory.
  • National average price for home sales down 0.8% on a year-over-year basis in November.
  • MLS® HPI up 3.5% in November, marking its smallest gain since May 2011.

chart of interest (E)The number of home sales processed through the MLS® Systems of real estate Boards and Associations in Canada edged down 1.7 per cent on a month-over-month basis in November 2012. The decline returned activity to where it stood in August following the most recent tightening of mortgage regulations. (Chart 1)

Although down slightly on a national basis, activity picked up in roughly two of every five local markets in November including Vancouver Island, Victoria, Chilliwack, Kitchener-Waterloo, and Guelph. Greater Toronto, Greater Montreal, and Greater Vancouver contributed most to the small decline at the national level.

Actual (not seasonally adjusted) activity came in 11.9 per cent below November 2011 levels. Sales were down on a year-over-year basis in three of every four of all local markets in November, including most large urban centres. Calgary stood out as an exception, with activity up 10.6 per cent from a year ago.

“National sales activity has remained fairly steady at lower levels since mortgage rules were changed earlier this year, but that stability masks some real differences in trends among local housing markets,” said CREA President Wayne Moen. “As always, all real estate is local, so buyers and sellers should talk to their REALTOR® to understand how the housing market is shaping up where they live or might like to.”

“National sales activity lacks the momentum it had a year ago,” said Gregory Klump, CREA’s Chief Economist. “Interest rates have remained low and the economic backdrop has remained supportive for housing activity, so that should leave little doubt that recent changes to mortgage regulations are responsible for having cooled activity.”

A total of 432,861 homes have traded hands over Canadian MLS® Systems so far this year, down 0.2 per cent from levels reported over the first eleven months of 2011, and 0.8 per cent below the 10 year average for the period.

The number of newly listed homes fell 0.9 per cent month-over-month in November. Greater Vancouver posted the largest decline, with new supply there having fallen to its lowest level in more than two years.

With sales and new listings moving in the same direction and by similar magnitudes, the national sales-to-new listings ratio was little changed at 50.3 per cent in November compared to 50.7 per cent in October. Based on a sales-to-new listings ratio of between 40 to 60 per cent, three out of every five local markets were in balanced market territory in November.

The number of months of inventory is another important measure of balance between housing supply and demand. It represents the number of months it would take to sell current inventories at the current rate of sales activity, and it too was little changed in November.

Nationally, there were 6.6 months of inventory at the end of November 2012 compared to 6.5 months at the end of October.

The actual (not seasonally adjusted) national average price for homes sold in November 2012 was $356,687. This represents a decline of 0.8 per cent from November 2011.

The national average price continues to be influenced by compositional factors, most notably fewer sales in Greater Vancouver and Greater Toronto. Excluding these two markets from the national average price calculation yields a year-over-year increase of 3.2 per cent. This reflects year-over-year average sale price increases in two-thirds of all local markets in November 2012.

Unlike average price, the MLS® Home Price Index (MLS® HPI) is not affected by changes in the mix of sales, so it provides the best gauge of Canadian home price trends.

chart of interest (E3)The Aggregate Composite MLS® HPI rose 3.5 per cent on a year-over-year basis in November. This was the seventh time in as many months that the year-over-year gain shrank, and marks the slowest rate of increase since May 2011. (Chart 2)

Year-over-year price gains decelerated for all Benchmark property types with the exception of the townhouse/row segment. Year-over-year growth remained strongest for one-storey single family home prices (+4.9 per cent) and two-storey single family homes (+4.2 per cent). Prices for townhouse and apartment units continue to post more modest gains, rising 1.8 per cent and 1.3 per cent respectively.

The MLS® HPI rose fastest in Regina (+11.6% year-over-year), although the increase was diminished compared to an increase of 13 per cent reported in October. MLS® HPI growth also moderated in Greater Toronto (+4.6% year-over-year) and in the Fraser Valley (+1.3% year-over-year).

By contrast, the MLS® HPI saw year-on-year growth accelerate in Calgary (+7.1%) and Greater Montreal (+1.9%). In Greater Vancouver, the MLS® HPI posted a 1.7 per cent year-over-year decline in November.

 

Анна Фадина
Cell:778-991-1429
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Team 3000 Realty: #305 9940 Lougheed Hwy Bby
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