August 2008 Articles
TD Economics Commentary August 11, 2008
The information contained in this report has been prepared for the information of our customers by TD Bank Financial Group. The
information has been drawn from sources believed to be reliable, but the accuracy or completeness of the information is not guaranteed,
nor in providing it does TD Bank Financial Group assume any responsibility or liability.
• Canadian housing starts drop by 14% in July
• Lead by a 28% dip in Ontario, mostly multiple
unit startsin Toronto
• Single unit starts continue their downward trek
MANY HAMMERS FELL SILENT IN JULY
Pascal Gauthier, Economist 416-944-5730
Canadian housing starts dipped in July to 186,500 units,
thereby recording a second consecutive monthly decline,
and the most significant since December 2007. The overall
level of new residential construction activity recorded
in July fell significantly short of expectations for a total of
210,000 starts. Alberta (+23%) and British Columbia (+5%)
managed to sidestep the national trend, but every other
province recorded significant reductions in housing starts.
Saskatchewan (-56%) led the way down percentage wise,
but it was Ontario’s 28% pullback in starts that weighed
the most on national figures.
As for the unit type composition of activity, the volatile
multiple unit segment took the largest hit, mostly in Ontario
as well. Meanwhile, urban single unit starts continue their
gradual downward trend across the country, posting a 7%
decline in July.
While the figures for July are disappointing, one should
not read too much into an oversized drop in multiple starts
in a single month. The month-to-month volatility in this
market segment is remarkably high on both the upside and
downside. The trend in single starts is usually more telling,
and it remains consistent with our theme for this sector of
the Canadian economy, which is that it should experience
a cooling after running too hot for too long. As such, urban
single-family starts continue their downward trend, which
started in mid-2004 – with only 69,800 units starts recorded
in July, their lowest level in ten years. A greater number of
existing homes for sale and the continued long-term shift
to smaller and relatively cheaper multiple-family units will
continue to put downward pressure on single family starts
over the next 12-18 months.
Turning to the multiple-family unit segment, the outlook
is more uncertain. As is typical, we could easily see a
bounce-back in August but the larger question is where
the trend will sit going forward. The July figures make it
likely that multiple starts peaked in the medium-term at
around 130,000 units in the first quarter of this year. However,
we do not see such a strong turning point as the July
data would suggest, particularly in Ontario where multiple
projects remain in the pipeline. The most likely scenario
for the remainder of this year is for continued gradual cooling
and levelling off in single starts. This should be accompanied
by a still high level of multiple starts, closer to levels
observed in 2005-07 than the spike seen in early 2008.
There will be a natural tendency to read too much into this
monthly decline and straight-line these figures forward to
conclude that construction is falling off the rails. We think
it important to caution observers against such a knee-jerk
reaction to this month’s CMHC report. Residential construction
is easing and should continue to do so, but at a
modest year-over-year rate of 3-5% contraction, not July’s
16%.
July-08 June-08
Canada, all areas 186.5 215.9
Canada, rural 25.1 26.4
Canada, urban centres** 161.4 189.5
Canada, singles** 69.8 74.7
Canada, multiples** 91.6 114.8
Atlantic region 8.8 11.9
Québec 43.9 46.5
Ontario 59.2 82.0
Prairie region 37.1 39.9
Alberta 29.0 23.6
Saskatchewan 4.7 10.8
Manitoba 3.4 5.5
British Columbia 37.3 35.6
*SAAR, Thous. Units; **Population of 10,000+
Source: Canadian Mortgage & Housing Corporation / Haver Analytics
CANADIAN HOUSING STARTS*
Month-over-month housing prices retreat from record highs
VANCOUVER, B.C. – Aug 5, 2008 – As property listings continue to outpace sales, Greater Vancouver
housing prices have drawn back, the last two months, from the record highs experienced in early 2008.
Since May 2008, housing prices, as calculated by the MLSLink Housing Price Index®, across each
residential category have declined. Detached properties in Greater Vancouver declined 2.3 per cent
through June and July 2008, while attached were down 1 per cent and apartment properties 2 per cent
over the same period.
The overall benchmark price for all residential properties in Greater Vancouver has declined 2.1 per
cent since the end of May 2008, from $568,411 to $556,605 in July 2008.
“We’re seeing more price reductions in properties listed on the market, which is having a levelling impact
on the housing price increases experienced at the end of last year and into the first quarter of 2008,”
said Real Estate Board of Greater Vancouver (REBGV) president, Dave Watt. “There was a slight decline
in the total active listings on the market in July compared to June, which is a welcomed departure
from recent trends.”
Residential property sales in Greater Vancouver declined 43.9 per cent in July 2008 to 2,174 from the
3,873 sales recorded in July 2007.
New listings for detached, attached and apartment properties increased 24 per cent to 6,104 in July
2008 compared to July 2007, when 4,924 new units were listed.
Sales of detached properties in July 2008 declined 44.2 per cent to 827 from the 1,483 units sold during
the same period in 20070. The benchmark price for detached properties is up 5.4 per cent from July
2007 to $753,165.
Sales of apartment properties declined 42.3 per cent last month to 966, compared to 1,674 sales in July
2007. The benchmark price of an apartment property increased 4.7 per cent from July 2007 to $381,687.
Attached property sales in July 2008 decreased 46.8 per cent to 381, compared with the 716 sales in
July 2007. The benchmark price of an attached unit increased 5.7 per cent between July 2007 and 2008
to $473,953.
July 2008 Articles
Market activity offers awaited relief for homebuyers
VANCOUVER, B.C. – July 3, 2008 –Increased property listings and moderating home prices have eased the Greater Vancouver housing market into a buyer’s phase. The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver declined 42.9 per cent in June 2008 to 2,425 from the 4,244 sales recorded in June 2007.
New listings for detached, attached and apartment properties increased 18.3 per cent to 6,546 in June 2008 compared to June 2007, when 5,533 new units were listed.
“Although housing prices, on a year-over-year comparison, continue to show single-digit percentage increases, we are beginning to see more price reductions in properties listed on the market today,” said REBGV president, Dave Watt. “Homes priced at a competitive level continue to sell quickly, but it is important for people to accurately identify their home’s value when putting it on the market.”
Sales of detached properties in June 2008 declined 43.4 per cent to 918 from the 1,623 units sold during the same period in 2007. The benchmark price, as calculated by the MLSLink Housing Price Index®, for detached properties rose 7 per cent from June 2007 to $765,654.
Sales of apartment properties declined 42.7 per cent last month to 1,057, compared to 1,846 sales in June 2007. The benchmark price of an apartment property increased 7.8 per cent from June 2007 to $388,722.
Attached property sales in June 2008 decreased 41.9 per cent to 450, compared with the 775 sales in June 2007. The benchmark price of an attached unit increased 7.6 per cent between June 2007 and 2008 to $476,585.
Bright spots in Greater Vancouver in June 2008 compared to June 2007:
Apartments:
New Westminster up 46.2 per cent (19 units sold from 13)
The Real Estate industry is a key economic driver in British Columbia. In 2007, 38,050 homes changed hands in the Board’s area generating $1.065 billion in spin-offs. Total dollar volume of residential sales set a new record at $22.25 billion and total dollar volume of all sales set a record at $22.77 billion. The Real Estate Board of Greater Vancouver is an association representing more than 9,600 REALTORS®. The Real Estate Board provides a variety of membership services, including the Multiple Listing Service®. For more information on real estate, statistics, and buying or selling a home, contact a local REALTOR® or visit www.realtylink.org.
A market shift = a shift in expectations (B.C. Real Estate Assoc)
Market conditions have shifted. After five years of blockbuster activity and double-digit price growth, market conditions have slowed, and now favour buyers in many areas of the province.
Residential sales have declined 22 per cent in the first six months of this year, while available resale inventory has grown by 54 per cent to 57,000 active listings in June. In the Greater Vancouver board area, where longer-term data is available, inventory is at the highest level since 1998.
Home price appreciation observed from 2004 to 2007 is less attainable in today’s market, and sellers’ expectations for such gains should be tempered. More generally, in a market favouring buyers, prices generally increase at or below the level of inflation. While the average residential home price in BC increased at a healthy 6 per cent per year since 1981, large gains are often followed by periods of price stagnation. Over-optimistic pricing by sellers will only inhibit the timely sale of properties, adding to inventory levels.
Buyers have more homes to choose from now than in previous years, resulting in greater freedom to compare the attributes and prices of similar properties in the market before making purchase decisions.
Despite current buyers' market conditions fuelled by housing affordability constraints and economic uncertainty, the economic and demographic backdrop in support of housing demand remains strong in BC. BC's unemployment rate remains near record lows, while the labour force participation rate hovers near historical highs. Meanwhile, the province remains a favoured destination for new migrants, reflected in the third-highest population growth among provinces during the first quarter of 2008. However, challenges continue in the forestry sector, and eroded consumer confidence may also be playing a role in a pull back of consumer spending.
July 10, 2008 The Department of Finance today announced that it would change some of the rules for high-ratio mortgages, and that “these requirements will apply to all government-backed mortgage insurance policies (whether issued by CMHC or private insurers) for high-ratio mortgages on residential properties with up to four units.”
Here are some highlights of the changes:
1. Maximum amortization reduced to 35 years for new government-backed mortgages.
2. Minimum 5% down payment for new government-backed mortgages. Borrowers may borrow their 5% down payment, but it will not be insured under the new guarantee framework.
3. New credit score floor of 620 for new government-backed mortgages. There will also be limited exceptions to this rule, recognizing that there are some borrowers with credit scores below 620 that otherwise represent a low credit risk.
4. Minimum loan documentation standards “to ensure that there is evidence of reasonableness of property value and of the borrower’s sources and level of income.” The Department of Finance’s announcements today did not elaborate on this point.
5. No government guarantee for high-ratio mortgages where no amortization is required in the first few years. This includes high-ratio mortgages that begin with “interest-only” payments and HELOCs.
6. Maximum of 45% on borrowers’ TDS ratio for new government-backed mortgages.
These changes are slated to take effect on October 15, 2008. Current 90-day pre-approvals would not be affected. Exceptions would be allowed after October 15th where they are needed to satisfy a binding purchase and sale, financing, or refinancing agreement entered into before October 15, 2008. Canadians who already hold mortgages will not be affected by these changes.
The Department of Finance stated that “today's announcement marks a responsible and measured approach by the government to ensure Canada's housing market remains strong and to reduce the risk of a U.S.-style housing bubble developing in Canada.” It also noted that mortgage arrears in Canada have remained low in recent years.
Here is the link to the Department of Finance announcement: http://news.gc.ca/web/view/en/index.jsp?articleid=4097
June 2008 Articles
TD Economics Commentary June 10, 2008
www.td.com/economics
• Bank of Canada does not cut rates
• Overnight rate held at 3.00%
• Central bank expresses concern over inflation risks
BANK OF CANADA CATCHES MARKETS OFF GUARD BY
LEAVING RATES UNCHANGED
The Bank of Canada proved today that it has a mind of its own. Although financial market participants unanimously expected a quarter point cut in the overnight rate, the Bank
decided not to comply. The overnight rate was left unchanged at 3.00%. In addition, there is no longer a reference in the communication of ‘“further monetary stimulus”,
which was instead replaced with the view that “the current stance of monetary policy is appropriately accommodative”. In other words, the central bank is officially onhold with interest rates. Economic conditions would need to deteriorate beyond their expectation or inflation would need to heat up in order to prompt a monetary response. The decision to leave rates unchanged was embedded in the belief that economic developments are unfolding
broadly in line with their expectations set out in the April Monetary Policy Report (MPR). However, there has been one new development since then. The central bank joined
the chorus of international voices by expressing slightly more concern over inflation prospects by noting that “the balance of risks to the Bank’s April projection for inflation
in Canada has shifted slightly to the upside”. Higher-than expected commodity prices and global growth are to credit for this statement.
The view of higher inflation risks may seem at odds given the recent weak performance of the economy, which Beata Caranci Director of Economic Forecastingcontracted by an annualized 0.3% in the first quarter, well below their expectations for a 1.0% gain. This should automatically result in a greater build-up of economic slack than the Bank had assumed in the April MPR. However, the Bank also indicated in this morning’s communication that there is a risk that potential economic growth will be weaker then they initially believed. If potential growth turns out to be indeed lower, then it is possible to have slower
economic growth without economic slack building beyond their current expectations. Thus, slower growth would not necessarily dampen inflation.
The Bank of Canada ended their communication to markets by noting that they will continue to monitor the upside and downside risks to inflation. From our perspective, the upside risks to inflation come from two sources: a waning dampening influence on prices from a high Canadian
dollar and/or a broad pass-through of energy costs to consumer prices. The downside risks to inflation are that the Bank is being overly optimistic on Canada’s economic growth prospects. We believe there is particular merit to the latter. According to the April MPR, the central bank
believes economic growth will strengthen to a 2.4% pace in 2009, and a further 3.3% pace in 2010. However, we believe real GDP growth is more likely to top only 1.8% in
2009, and this should help keep inflation at bay beyond the Bank’s expectation.
Growing supply helps stabilize market conditions
VANCOUVER, B.C. – June 3, 2008 – The Greater Vancouver housing market continued its re-balance between sales and listings last month. The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver declined 30.7 per cent in May 2008 to 3,002 from the 4,331 sales recorded in May 2007.
New listings for detached, attached and apartment properties increased 20.2 per cent to 7,390 in May 2008 compared to May 2007, when 6,149 new units were listed.
"With more property listings and a decline in the number of sales, prices are not increasing as rapidly, now down to single digits overall, which is good news from an affordability standpoint," said REBGV president, Dave Watt. "The housing market is at a balanced state, sellers have more competiﾭtion and buyers have more selection to choose from."
Sales of detached properties in May 2008 declined 33.4 per cent to 1,203 from the 1,805 sales recorded during the same period in 2007. The benchmark price, as calculated by the MLSLink Housing Price Index®, for detached properties rose 8.4 per cent from May 2007 to $771,250.
Sales of apartment properties declined 30.5 per cent last month to 1,244, compared to 1,789 sales in May 2007. The benchmark price of an apartment property increased 8.7 per cent from May 2007 to $389,668.
Attached property sales in May 2008 decreased 24.7 per cent to 555, compared with the 737 sales in May 2007. The benchmark price of an attached unit increased 9 per cent between May 2007 and 2008 to $478,931.
Bright spots in Greater Vancouver in May 2008 compared to May 2007:
Attached: Coquitlam.............................................up 45.2 per cent (45 units sold from 31)
Apartments: New Westminster...............................up 13.6 per cent (100 units sold from 88)
May 2008 Articles
BC Housing Markets Shifting In Favour Of Buyers
BC home sales are retreating from historically high levels. Most housing markets in the province are exhibiting balance between demand and supply while active listing are up 24 per cent. The market is shifting in favour of buyers who now have more time to investigate properties thoroughly and so much to choose from.
Vancouver, BC – May 6, 2008. BC home sales are retreating from historically high levels, according to the British Columbia Real Estate Association’s (BCREA) spring Housing Forecast. The report analyzes the British Columbia economy and housing markets, including detailed forecasts by home type of the province’s 12 real estate board areas.
“Some weakness on the export side of the economy and eroding affordability will have an impact on housing demand over the next two years,” said Cameron Muir, BCREA Chief Economist. Residential sales on the Multiple Listing Service® (MLS®) are expected to decline 9 per cent to 93,800 units in the province in 2008, and a further 2 per cent to 92,000 units in 2009.
“Most housing markets in the province are exhibiting balance between demand and supply,” added Muir. Home sales were down 14 per cent in the first quarter of 2008, while active listings were up 24 per cent. “More balance between demand and supply means less upward pressure on home prices. It also reduces the chance of multiple bids on the same home, giving homebuyers more time to investigate properties thoroughly before purchasing.” The average MLS® residential price in the province climbed 12 per cent to $438,975 in 2007. This year, the average MLS® residential price is forecast to increase 9 per cent to $479,000, and a more modest 4 per cent to $499,000 in 2009.
“While a weak US economy is negatively impacting the forest industry and tourism, the BC economy is forecast to grow 2.5 per cent this year and 2.7 per cent in 2009, a higher rate of growth than most other provinces. Consumer spending, employment growth and net migration in the province are expected to remain robust and will continue to underpin housing demand through 2009,” noted Muir.
Opportunity Knocks For Fraser Vally Property Hunters
Surrey, BC - May 2, 2008, An increase in choice continues to be the real estate story in the Fraser Valley, with the Fraser Valley Real Estate Board receiving a record number of new listings on the Multiple Listing Service (MLS®) in April.
The Fraser Valley Real Estate Board received 4,458 new listings last month compared to 2,922 new listings received during April of last year, an increase of 53 per cent. That swell of new inventory took the number of active listings to almost-record highs, reaching 11,111, an increase of 43 per cent compared to the 7,764 listings available during April 2007.
Even with the surge in listings, April sales remained strong at 1,787 total units sold, on par with the 1,781 sales sold in April of 2007.
Kelvin Neufeld, the president of the Board says the last time Fraser Valley buyers had so much to choose from, was in the spring of 1994. “What’s different today is the variety of properties available within every Fraser Valley community.
“Abbotsford condos were a rarity 14 years ago and so were one acre parcels of land in South Surrey. The volume of development right now in all property types across the Valley is opening up so many opportunities for buyers.”
The price of a single-family house in the Fraser Valley averaged $547,590, representing a 4.7 per cent increase from April 2007. Townhomes went for an average $344,659 in April, an increase of 7.5 per cent compared to the same month last year when they averaged $320,702.
Average apartment prices in the Valley continued to rise in the double digits increasing by 10.3 per cent compared to last year. They averaged $213,901 in April 2007, compared to $235,840 last month.
MLS® housing market more balanced in the first quarter
OTTAWA – April 29th, 2008 – National MLS® resale housing activity declined in the first quarter of 2008 compared to the previous quarter while new listings reached their highest quarterly level ever, according to statistics released by The Canadian Real Estate Association (CREA). The result was the most balanced resale housing market of any quarter in the past nine years.
Seasonally adjusted national MLS® sales activity declined 6.8 per cent to 117,051 units in the first quarter of 2008 compared to the fourth highest level on record, reached the previous quarter. It was the third consecutive quarterly decline since activity peaked in the second quarter last year.
Much of the decline in activity resulted from fewer transactions in Toronto during February and March. Sales activity in Toronto accounts for almost one fifth of all existing home sales in Canada. Fewer sales in British Columbia were also responsible for a significant share of the national decline in the first quarter.
Regional variations in the trend for sales activity persist. Seasonally adjusted sales activity set a new quarterly record in Saskatchewan, and quarterly transactions reached their second highest level ever in Newfoundland & Labrador.
Some 38,128 properties traded hands via the MLS® on a seasonally adjusted basis in March 2008, down just 0.4 per cent from levels recorded in February.
The number of MLS® residential new listings reached the highest quarterly level ever in the first quarter. A seasonally adjusted total of 223,405 homes were listed on the MLS® systems of local real estate boards in the first three months of 2008, a 5.5 per cent increase over the fourth quarter last year.
New listings surged on a quarter-over-quarter basis in Alberta and British Columbia, reaching new heights in both provinces. The rise in new listings in these provinces more than offset a quarterly decline in newly listings in Toronto.
The quarterly jump in MLS® residential new listings and the decline in sales activity made the national resale housing market more balanced in the first quarter of 2008 than during any other quarter in nine years. The MLS® housing market became more balanced in every province except Saskatchewan. The market in Alberta remains the most balanced in the country, while sellers' markets persist in Saskatchewan and Manitoba.
The national MLS® residential average price climbed 6.4 per cent year-over-year to $312,583 in the first quarter 2008. This is the smallest year-over-year price increase since the fourth quarter of 2001, reflecting a more balanced market.
Price gains did not become more modest in all provinces. In Manitoba and Newfoundland & Labrador, MLS® residential average price posted the biggest year-over-year increase ever in the first quarter of 2008.
In March, the MLS ® residential average price was $314,279. That‘s a 4.8 per cent increase year-over-year – the smallest increase since October 2001.
Seasonally adjusted MLS® residential dollar volume was valued at $37 billion in the first quarter of 2008, down 7.7 per cent from the previous quarter. Dollar volume reached its highest level on record in Saskatchewan, Manitoba and Prince Edward Island, and posted its second highest level in Newfoundland & Labrador.
"Resale housing activity is trending lower in the four most active provinces," said CREA Chief Economist Gregory Klump. "Housing markets are becoming more balanced and price gains are becoming more modest as a result. This trend is forecast to continue, as rising mortgage carrying costs and property taxes erode affordability," he added.
"The credit crunch has had limited impact on Canadian mortgage lending to date. Resale housing activity will continue to be supported by rising after-tax incomes, high employment, and declining interest rates," said Klump.
"It is also important to remember that 2007 was another record year for MLS® residential property sales in Canada," notes CREA President Cal Lindberg. "Any comparisons with last year means comparing with a record year. What the statistics indicate is that the residential housing market is easing back towards more historically typical levels."
Gregory Klump, Chief Economist
Understanding The Sub Prime Mortgage Market Crisis
Despite the fact that the U.S. sub prime mortgage market has gained much media attention, only some of us know what is this means while many are worried about it's affect on our market. In this article we shed some light on this issue and it's effects on the Canadian market.
What is a sub prime mortgage?
A sub prime mortgage is a loan that is risky in nature. If the borrower has poor credit or a low income, then he/she would not typically qualify for a mortgage. This is why sub prime mortgage was created. Sub-prime mortgages are mortgage loans to borrowers who have bad credit history. While the terms and conditions of sub-prime mortgages can vary, an introductory two-year term interest rate before resetting to a much higher interest rate, which is the combination of the index rate plus a margin is always offered.
If the borrower in subsequent years couldn't meet their financial obligations, the higher property prices would largely insulate or negate losses for the lender. The lenders usually offload these sub prime mortgages to institutions who would package them as mortgage backed bonds. The high returns offered by these bonds make them very attractive for investment funds as there is always an incredible amount of money flowing into them largely from Canada, Europe, and Asia.
Many consider this a profitable business like brokers who sell the bonds and the debt rating agencies who receive substantial fees for making the bonds appear to be solid investments.
The market crisis!
The countdown began on June 2004, when the Federal Reserve (the central bank in the US) began a cycle of interest rate hikes that raised the cost of borrowing from the lowest levels registered since the 1950s. It increased the interest rates seventeen times and paused only in June 2006 when the borrowing cost touched 5.25 percent.
The US housing market began sliding in August 2005 and that continued through 2006 when building rates and housing prices tumbled.
The high spending of the American government on the war in Iraq and many other factors played major role in the shrinking of the U.S. economy and affected the employments rate. This combined with the high interest rates and low home values have left many of those borrowers unable to meet their mortgage obligations an led to a crisis in the sub prime mortgage market.
By the end of 2007, the number of foreclosures went up 93 percent comparing to 2006. Some lenders have been forced out of business because of the unconquerable losses.
What affect will this have on Canada?
Canadian sub-prime mortgages represent less than 5 per cent of mortgage origination’s, and less than one in four of them have more risky variable rates. While US home prices are falling on average, home prices in Canada continue to rise. The economic fundamentals in Canada remain strong. Lenders here in Canada may tighten up lending practices globally which would not be immune to the Canadian marketplace. Also, if the US is heading into a recession, it may have an impact on the Canadian economy.
Are there similar risks to the market in Canada?
In Canada, a prime mortgage is known as a conventional mortgage. A home-buyer with a down payment less than 20 percent (high ratio mortgage) needs to secure mortgage insurance like the kind provided by Canada Mortgage and Housing Corporation (CMHC). Conventional and high ratio mortgages in Canada and the United States use similar underwriting practices.
There are some key differences between the sub prime markets in Canada and the United States. In Canada, there is less emphasis on gaining market share for the risky sub prime mortgage business. In the U.S., clearly the war for the sub prime mortgages, may have been a reason for some careless and reckless loan granting.
Also, the lending practice in Canada is not to use option adjustable rate mortgages for the sub prime borrower. This usually reduces the risk with any loan. The Canadian housing market has been less speculative than the U.S. market. A strong job market and lower interest rates will help sustain the Canadian real estate market.
Furthermore, mortgage interest is tax deductible on an American principle residence. This is another significant reason why Americans are encouraged and motivated to buy a home (sometimes prematurely). The U.S. housing affordability is at its worst level in two decades. In Canada, affordability is still very much present as the overall real estate picture is better than the 1989 period when there was a significant spike in prices. Currently, the U.S. household debt is a staggering 25 percent higher per capita than that of the Canadian household.
The real estate market in Canada has been going strong for 9 years. It is difficult to predict when the market will show signs of a slowdown. Given the demand for real estate in our current market, the low unemployment figures and the availability of affordable housing, the market will continue to flourish despite the struggles of our southern neighbour.
April 2008 Articles
Rising housing values and lack of inventory
challenge first-time buyers, says RE/MAX
“Homeownership continues to be primary objective”
While higher housing values and tight inventory levels have hampered home-buying activity so far this year, longer amortization periods and alternative housing types have offset the impact on most major markets across the country, according to a report released today by RE/MAX.
Despite a higher degree of frustration in the marketplace than in previous years, the RE/MAX Affordability Report found that first-time buyers, in particular, remain steadfast in their determination to purchase a home. In fact, entry-level purchasers are adjusting their expectations by sacrificing size, location, and even long-term financial freedom, to overcome challenges such as rising prices and serious supply issues. Innovative financing has become key to homeownership in today’s environment – with longer amortization periods gaining favour in 62 per cent of the major centres surveyed. Low or no down payments were popular with first-time buyers in 38 per cent of markets.
First-time purchasers continue to play a pivotal role at both a local and national level. The impact they have on the housing market is significant, as they are the impetus for sales in the mid-to-upper price ranges. As long as this segment of the market remains healthy, the real estate outlook will continue to be favourable.
Inventory levels, however, remain one of the foremost concerns facing purchasers across the country. A shortage of available entry-level product was identified as a major obstacle impeding buyer intentions in three-quarters of markets surveyed in the report, including St. John’s, Moncton, Fredericton, Halifax-Dartmouth, Ottawa, Greater Toronto Area, Hamilton-Burlington, Niagara Falls, Winnipeg, Regina, Saskatoon, Greater Vancouver, Victoria and Kelowna.
Doom and gloom reports coming from south of the border have yet to hinder overall momentum. First-time buyers are still leading the charge, taking advantage of every resource available to achieve homeownership. They’re determined to get into the market sooner rather than later. If suburban locations, smaller condominiums and town homes, or a little sweat equity is what it takes to get into the market, these purchasers are game.
Although average price is the barometer for housing values in most major centres, first-time buyers looking to achieve homeownership consider starting prices a more meaningful gauge of affordability. Starting prices can be substantially lower than the market average. For example, average price has surpassed the $600,000 benchmark in Greater Vancouver, while the starting price for a detached home can hover as low as $237,500 in the peripheral areas.
The best value for the dollar continues to be found in the suburbs. For those unwilling to sacrifice on location, small condominium units in new developments and condominium conversions of rental buildings offer up the next best alternative. Condominium conversions in some of the country’s major centres can be picked up as low as $150,000 to $175,000.
RE/MAX of Western Canada (1998) Inc. Affordability report, issued April 22, 2008.
Housing options broaden for buyers in February
VANCOUVER, B.C. -- March 4, 2008 - The Real Estate Board of Greater Vancouver (REBGV) reports that residential attached, detached and apartment property sales totalled 2,676 in February 2008, a decline of 6.4 per cent from the 2,859 residential sales recorded in February 2007, and a decline of 9 per cent compared to the 2, 941 sales in February 2006.
New listings for detached, attached and apartment properties rose 26.2 per cent to 5,260 in February 2008 compared with February 2007, which had 4,167 units listed. New listings this February rose 21.2 per cent over new listings figures from February 2006.
"We continue to see the market rebalance, particularly with detached properties, where listings climb and sales either hold or decline slightly," says REBGV president Brian Naphtali. "This shift increases buyer options and allows people more time to make decisions when purchasing a home."
Sales of detached properties declined 11.2 per cent to 995 from the 1,121 detached sales totalled over the same period in 2007. The benchmark price, as calculated by the MLSLink Housing Price Index®, for detached properties rose 14.1 per cent from February 2007 to $761,342.
Sales of apartment properties in February 2008 declined 5.7 per cent to 1,197, compared to 1,269 sales in February 2007. The benchmark price of an apartment property increased 12.9 per cent from February 2007 to $387,032.
Attached property sales in February 2008 increased 3.2 per cent to 484, compared with the 469 sales in February 2007. The benchmark price of an attached unit increased 12.7 per cent between February 2007 and 2008 to $472,147.
Bright spots in Greater Vancouver in February 2008 compared to February 2007: Detached:
West Vancouver/Howe Sound up 16.7 per cent (56 units sold up from 48)
Whistler/Pemberton up 100 per cent (10 units sold up from 5)
Port Moody/Belcarra up 22.7 per cent (27 units sold up from 22)
Attached:
New Westminster up 216.7 per cent (19 units sold up from 6)
Port Coquitlam up 68.4 per cent (32 units sold up from 19)
Apartments:
Burnaby up 9.5 per cent (150 units sold up from 137)
Whistler/Pemberton up 62.5 per cent (13 units sold up from 8)
Port Moody/Belcarra up 27.6 per cent (37 units sold up from 29)
The Real Estate industry is a key economic driver in British Columbia. In 2007, 38,050 homes changed hands in the Board's area generating $1.065 billion in spin-offs. Total dollar volume of residential sales set a new record at $22.25 billion and total dollar volume of all sales set a record at $22.77 billion. The Real Estate Board of Greater Vancouver is an association representing more than 9,500 REALTORS®. The Real Estate Board provides a variety of membership services, including the Multiple Listing Service®. For more information on real estate, statistics, and buying or selling a home, contact a local REALTOR® or visit www.realtylink.org.
*In August 2004, the Greater Vancouver and Fraser Valley boards upgraded our existing MLS systems to a common system called MLSLink. MLSLink® HPI is the latest version of the Board’s Housing Price Index (HPI) and is designed to accommodate the MLS upgrade and improve the legacy HPI product. For more information on real estate, statistics, and buying or selling a home, visit www.realtylink.org.
March 2008 Articles
A Tale of Two Budgets
In February 2008, both the provincial and the federal governments introduced annual budgets. Here is a summary of what the budgets contained for property buyers, owners and REALTORS®.
First-time buyers
For the third consecutive budget, the BC government has increased the Property Transfer Tax (PTT) first-time buyer exemption price threshold.
First-time buyers can now buy a home priced up to $425,000 and not pay the PTT. The previous ceiling was $375,000. Buyers of homes priced up to $450,000 can claim a proportional exemption.
First-time buyers can now pay down their mortgages by any amount in the first year of ownership without being disqualified from the exemption. Gone are the PTT financing rules that required buyers to have at least a 70 per cent mortgage and registered financing to qualify for the exemption.
Home owners
The budget provides, over four years, more than $1 billion to encourage energy efficiency, including:
$60 million for energy audits and conservation retrofit incentives to help home owners decrease home energy costs;
a Provincial Sales Tax (PST) exemption for retrofits and energy-efficient appliances; and
tax reductions on hybrid, alternative and/or conventional fuel vehicles.
As announced January 11, 2008, the threshold for the phase-out of the Home Owner Grant increased to $1,050,000 of assessed value from $950,000, ensuring that more than 95 per cent of home owners remain eligible for the full grant.
For properties valued above $1,050,000, the grant is reduced by $5 for every $1,000 of assessed value in excess of the threshold. The basic grant is eliminated for properties valued at $1,164,000+ and for recipients of the additional grant, available to seniors, veterans and disabled persons, and eliminated for properties valued at $1,219,000+.
The Federal Budget
Highlights include:
A Tax-Free Saving Account (TFSA) that lets Canadians age 18+ contribute up to $5,000 a year starting in 2009. Contributions are not tax-deductible; income earned is not taxable.
$110 million to the Mental Health Commission of Canada to support homelessness projects. Vancouver, Winnipeg, Toronto, Montreal and Moncton will share this amount.
$250 million over five years to the automotive sector to develop fuel-efficient vehicles. To help fund this initiative, the government cancelled its rebate program that offered $2,000 to buyers of energy-efficient vehicles.
$500 million in support of capital investments to improve public transit.
Making permanent the Gas Tax Fund, worth $2 billion in 2009/10, permanent, so municipalities can better plan and finance long-term infrastructure needs.
Establishing a Crown corporation, PPP Canada Inc., to support public-private partnerships.
February 2008 Articles
Residential real estate markets across Canada post solid gains over past decade, says RE/MAX
Pent-up demand, population growth, tight inventory levels, and the longest economic expansion since World War II collectively fueled one of the best decades on record for residential real estate in Canada, according to a report released by RE/MAX.
RE/MAX Decade in Review 1997 - 2007 found that major housing centres across the country experienced strong consecutive growth between 1997 and 2007. Average price spiraled upward while unit sales climbed in tandem as more and more Canadians bought into homeownership. Nationally, average price almost doubled in the 10-year period, rising from $154,606 in 1997 to $307,265 in 2007, for a 7.1 per cent annually compounded rate of return. Home sales across the country increased just over 57 per cent from 331,092 units in 1997 to more than half a million sales last year. Edmonton led the country in terms of percentage increase in average price. The city saw a 203 per cent upswing in housing values - or an 11.7 per cent increase annually - with average price rising from $111,587 a decade ago to $338,636 in 2007. Prince Edward Island experienced the highest percentage increase in unit sales, with the number of homes sold up 119 per cent in the 10-year period.
Immigration and in-migration have played a serious role in jumpstarting residential housing markets, particularly in British Columbia, Alberta, and to some extent, Saskatchewan over the past decade. At first, there was an influx of American buyers, especially in Canada’s coastal regions and recreational hot spots, as our southern neighbours took advantage of the almighty US greenback. Then the European and Middle Eastern purchasers flooded the market, buying up real estate considered ‘cheap’ by international standards. In recent years, there have been a growing number of purchasers from Mainland China. From a global perspective, there’s no question that Canadian real estate brings good value to the table.
Percetage increases in home sales varied across the country, with Prince Edward Island experiencing the greatest upswing over the past decade, followed by St. John’s at 106 per cent, Kelowna at 84 per cent, and Saint John at 77 per cent. Most markets (12 of the 19 surveyed) reported increases between 40 and 60 per cent. Average price has also seen substantial escalation over the 10-year period, with posted gains ranging from a low of 54.4 per cent in London-St.Thomas to a high of 203 per cent in Edmonton. Appreciation in Western Canadian markets surpassed all others between 1997 and 2007, with Calgary ranking second in terms of price appreciation at 189 per cent, Kelowna at 179 per cent, Saskatoon at 137 per cent, Winnipeg at 118 per cent, Victoria at 114 per cent and Greater Vancouver at 99 per cent.
In 2006, homeownership rates in the country were the highest on record at 68.4 per cent. Population growth has contributed to heated market conditions – especially in Calgary (+31.4 per cent), Edmonton (+20 per cent), Toronto (+20 per cent), and Vancouver (+15 per cent) where percentage increases have hovered in the double-digit range. Overall, Canada’s population rose to almost 33 million in the 2006 census, up approximately 10 per cent from 1996 figures.
The non-cyclical nature of the decade comes as some surprise. Never before have we seen such a continuous run up in Canadian real estate. Clearly, strength in all markets has been directly linked to solid growth in local, provincial and national economies. Low interest rates, job security, and consumer confidence have all served to further bolster home-buying activity across the nation.
Robust economic performance in Western Canada has also drawn job seekers from across the country, looking to capitalize on employment opportunities.
As demand for housing increased across the country, the supply of homes listed for sale began to contract. Multiple offers were commonplace in many areas, some with sales-to-listings ratios as tight as 80 to 90 per cent. Nationally, 1997 marked the first year since 1988 that the sales-to-listings ratio hit 50 per cent. The sales-to-listings ratio would remain above 60 per cent from 2001 onward – rising to as high as 68 per cent in 2002.
The decade was not without its obstacles – the high-tech meltdown, a US recession, 9/11, SARS, Mad Cow, a blackout that affected the entire Northeastern seaboard, natural disasters such as ice storms, hurricanes, and forest fires and more recently, the credit crunch south of the border. Given the continuation of sound economic fundamentals, it’s expected that residential real estate markets across the country will continue to experience healthy activity, albeit at a more moderate pace.
### RE/MAX of Western Canada (1998) Inc. Decade in Review issued February 21, 2008.
Trouble ahead?
Will the US economy impact our real estate market?
The downturn in the US economy has some Metro Vancouver home owners and home buyers worried and asking, “Could it happen here?”
The US situation
Right now in the US, a combination of a housing slowdown and a credit crisis are heightening recession fears and slowing the economy. As a result, the economic downturn is becoming one of the most severe in decades.
It all began in 2003 when home prices were rising at a rate of more than 10 per cent per year, the economy was growing at a good pace, employment was high and the future looked rosy for Americans. Home buyers who couldn’t afford high prices in urban centres such as San Francisco looked to other suburbs like Stockton, California, now known as the foreclosure capital of North America with 1.4 billion in bad mortgage loans. In Stockton 4,200 homes are in default or foreclosure and it’s far from over.
Depending on the mortgage lender, a home buyer with poor or no credit history could get financing to buy a home. Typically lenders offered “teaser rates” as low as two or three per cent, typically for two to three years, for 100 per cent or even more of the purchase price. These became known as sub-prime mortgage loans.
Often the lender sold these mortgages to investors or investment firms, who re-packaged and resold them.
With strong demand for homes, prices rose to record highs. This resulted in declining affordability. For the first time in decades, this led to slowing demand and, in turn, decreasing prices.
By 2005, home owners with sub-prime mortgages began to see their mortgage rates adjusted to as high as 10 or 11 per cent.
Home price: $450,000
Mortgage loan: $450,000 (25-year amortization)
Teaser rate for first two years: 3% Rate after two years: 11%
Monthly payment: $2,134 Payment jumps to: $4,411
The ripple effect had begun. As arrears, delinquencies and foreclosures rose, prices further declined. Home owners saw the value of their homes decrease while they scrambled to pay their sky-high payments.
Some buyers chose or were forced to walk away. Lenders foreclosed, depressing prices and delaying the housing recovery. California, Florida and Nevada were hardest hit and housing starts declined in some areas to the lowest in 27 years. In turn, the stock markets dropped.
Measures for recovery
To counter the housing correction, on January 21, 2008, the US Federal Reserve implemented the largest bank rate cut in decades – three-quarters of a percentage point and on January 30, 2008 they cut the rate a further half a per cent.
As well, on January 29, 2008 the US introduced a House Bill, an economic stimulus legislation to jump start the housing market. If passed, interest rates will be temporarily frozen for troubled homeowners or will help them refinance. This will allow an estimated 200,000 homeowners to refinance and potentially keep their homes. It is expected to create half a million jobs by the end of 2008.
Could this happen here?
No. As opposed to the lax lending and easy financing practices of the US, Canada’s mortgage lending standards and practices, are rigorous and don’t encompass sub-prime loans or loans for more than the amount of the home value.
What is the impact on our real estate market?
The weak US housing market directly impacts demand for our forest products. Canfor has shut down a mill in Fort Nelson and laid off 500 workers.
“The longer US housing starts remain at current low levels, the more likelihood that troubles in the BC forest sector will trickle down to the BC consumer,” says BC Real Estate Association Chief Economist, Cameron Muir. “The forest industry is a large component of our economy and includes a broad range of workers and professions from forest workers to truck drivers to accountants.”
Overall, Muir is optimistic, explaining that the health of the housing market has a great deal to do with the confidence of those who live, work and raise families in our communities. “We have high employment and rising wages and the economy is growing. Barring any unexpected shocks, home sales should remain strong in 2008.”
January articles
2007 residential housing sales rank second all-time
VANCOUVER, B.C. -- January 3, 2008 - Residential housing sales for 2007 are the second highest ever recorded by the Real Estate Board of Greater Vancouver (REBGV). The REBGV reports that residential attached, detached and apartment property sales totalled 38,050 between January 1 and December 31, 2007. This marks a 7.2 per cent increase from 2006 and a 6.1 per cent decrease from 2005, the record-setting year with 40,530 sales.
"The continued strength of the real estate market is a reflection of the economic vitality seen throughout the province. With overall wages on the rise and unemployment in decline, buyers and sellers are left with a healthy and strong climate in which to operate," says REBGV president Brian Naphtali.
Sales of apartment properties in 2007 increased 9.1 per cent to 16,456, compared with 15,088 sales in 2006, according to data from the Multiple Listings Service® (MLS®). Sales of attached units climbed 7.7 per cent to 6,799, compared with 6,310 sales in 2006. Detached property sales increased 4.9 per cent in 2007 to 14,795, compared with sales of 14,108 in 2006.
Overall, new listings for detached, attached and apartment properties increased 4 per cent in 2007 to 54,945 units, compared to the 52,818 listed in 2006.
The aggregate residential sales in December 2007 climbed to 1,897, a 12.5 per cent increase over the 1,686 December sales in 2006. These numbers are in contrast to each of the first five years of the decade where December sales exceeded 2,000.
Sales of apartment properties in December 2007 rose 21.6 per cent to 901, compared to 741 sales in December 2006. The benchmark price, as calculated by the MLSLink Housing Price Index®, of an apartment property increased 14.4 per cent from December 2006 to $377,579.
Attached property sales in December 2007 rose 1.6 per cent to 317, compared with 312 sales in December 2006. The benchmark price of an attached unit increased 11.4 per cent from December 2006 to $456,941
December's sales for detached properties increased 7.3 per cent to 679 in 2007, up from the 633 detached units sold in the same period of 2006. The December benchmark price for detached properties increased 13.5 per cent from December 2006 to $730,399.
Bright spots in Greater Vancouver in December 2007 compared to December 2006: Detached:
Richmond up 57.4 per cent (107 units sold up from 68)
Sunshine Coast up 51.9 per cent (41 units sold up from 27)
Attached:
Burnaby up 61.1 per cent (58 units sold up from 36)
Apartments:
Burnaby up 17.5 per cent (114 units sold up from 97)
North Vancouver up 50 per cent (66 units sold up from 44)
Port Moody/Belcarra up 91.7 per cent (23 units sold up from 12)
Vancouver East up 72.6 per cent (107 units sold up from 62)
The Real Estate industry is a key economic driver in British Columbia. In 2006, dollar volume sales of homes in Greater Vancouver set a new record at more than $18.2 billion. Based on this figure, Greater Vancouver home sales in 2006 generated over $922 million in spin-offs. The Real Estate Board of Greater Vancouver is an association representing more than 9,500 REALTORS® The Real Estate Board provides a variety of membership services, including the Multiple Listing Service®. For more information on real estate, statistics, and buying or selling a home, contact a local REALTOR® or visit www.realtylink.org.
*In August 2004, the Greater Vancouver and Fraser Valley boards upgraded our existing MLS systems to a common system called MLSLink. MLSLink® HPI is the latest version of the Board’s Housing Price Index (HPI) and is designed to accommodate the MLS upgrade and improve the legacy HPI product. For more information on real estate, statistics, and buying or selling a home, visit www.realtylink.org.
December articles & newsletter
This autumn, when a downtown Vancouver condominium was listed for $18.2 million, it caught the attention of The New York Times.
In a feature on Vancouver real estate, Vancouver was described as an appealing multicultural city with a cosmopolitan feel, a vibrant urban lifestyle and a temperate climate, surrounded by mountains and water.
With this level of international exposure, can we expect prices to go up?
In the Real Estate Board area, our market has been on an upswing since 2002. Annual growth in sales has run about 5.5 per cent and home prices have increased about 14 per cent per year.
Will this market continue?
To find out, we asked BC Real Estate Association Chief Economist Cameron Muir.
Muir explains that the fundamentals are in place for the market to continue.
“The Lower Mainland’s economy is expanding at 3.5 per cent per year. There is a record low unemployment rate of 4.1 per cent and a tight labour market (more jobs than employees) which puts upward pressure on wages and salaries.”
Muir notes that despite eroding affordability, there is a wide mix of home types available.
A look at listings indicates that in October there were 250 condominiums in the Real Estate Board area priced less than $200,000. If we go up to $250,000, there were 672 condominiums and 44 townhomes. If a potential buyer had $300,000 to spend they could have chosen from 1,250 condominiums and 147 townhomes Board-wide.
“By year end 2007, 60 per cent of home sales in the Greater Vancouver area will be either attached units or apartments, and 77 per cent of housing starts are expected to be multi-family,” say Muir. “Vancouver will also continue to be at the forefront of high density residential development.”
Where is the market headed?
Muir forecasts that MLS® home sales in the Board area will increase five per cent to 38,100 units in 2007, from 35,507 units in 2006.
A lack of affordability will continue to be a barrier for some home buyers and will have an impact on consumer demand in 2008, leading to a decline in homes sales of 36,100 units. Home prices will also climb less rapidly.
If we build it, will they come?
Muir forecasts that housing starts will decrease about three per cent overall in 2007, to 18,100 from 18,705 in 2006, a reflection of the Vancouver civic strike which halted construction and inspection permits.
Starts will again rise in 2008 to 18,300 units with multi-family construction leading the way.
Muir cautions that while affordability is deteriorating, market conditions continue to be favourable.
“Population in the region is forecast to increase five per cent between now and 2010. Employment and salaries are on the rise. Mortgage rates will remain low. This is all good news.”
November articles & newsletter
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Condominiums achieve unprecedented favour among Canadian homebuyers
Double-digit sales gains reported in most major markets in 2007
After more than three decades of slow but steady growth, the condominium concept has finally clicked with Canadian homeowners. The lifestyle has proven to be a solid investment in housing markets across the country, chalking up some of the most impressive gains in residential real estate in 2007, according to the RE/MAX Condominium Report.
Their universal appeal is substantiated, with every market reporting increased momentum in condominium sales volume over 2006 levels. In fact, 80 per cent of markets surveyed reported double-digit gains in sales year-over-year, with 53 per cent reporting increases over 20 per cent. The greatest growth was experienced in Canada’s small to mid-sized markets. Leading the country, in terms of percentage increase in sales so far this year, are Kitchener-Waterloo (+59%), Regina (+57%), St. John’s (+54%), and Saskatoon (+33%).
The white picket fence, sprawling green lawn and tidy urban bungalow has become an unattainable ideal for many first-time buyers—especially in the West. By necessity, condominiums have become the only practical means to homeownership for a growing segment of the population. Today’s entry-level purchasers aspire to manageable mortgage payments, sunset city views, and the non-stop action and amenities of central core living, all packed into 600 to 800 sq. ft. The momentum of the market in recent decades has redefined the home buying process.
While price appreciation on freehold properties, in particular, was the primary factor in the upswing, the strong desire among baby boomers to lead an active, carefree lifestyle has also driven the concept to unprecedented popularity. The RE/MAX Condominium Report identified Greater Vancouver as the strongest market in the country – where close to 60 per cent of all residential sales now involve a condominium. Condominium presence is also on the rise in centres such as Toronto, Edmonton, Calgary, Regina, Ottawa, and Hamilton-Burlington, where condos now represent 20 to 30 per cent of all MLS sales.
Deteriorating affordability levels in major Canadian centres have lead to the resurrection of the condominium lifestyle in recent years. Condominiums are clearly the answer to the skyrocketing cost of land and shelter that has all but eradicated the dream of homeownership for many first-time buyers.
Condominium values were also up from coast-to-coast in 2007, with all major markets reporting an increase in average price. Thirty-three per cent of cities surveyed reported double-digit price appreciation. The most dramatic hikes were seen in Western Canada’s red-hot housing markets, led by Saskatoon (+24%), Calgary (+22%), Edmonton (+19%), Kelowna (+16 % for town homes, +12% for apartments), Vancouver (+14 % for town homes, +11% for apartments), and Victoria (+9% for town homes, +12% for apartments).
At the top end of the market, condominium ownership has been equated with lifestyle. Throughout 2007, aging baby boomers fuelled demand for luxury condominium units. Upper-end activity was reported to be on the rise in all markets examined, with the greatest appreciation occurring in Edmonton (+154 %), Greater Toronto (+98 %), Victoria (+85 %), Winnipeg (+58%), Vancouver (+49%) and Kitchener-Waterloo (+39%). The maintenance-free factor, the ability to travel and to enjoy the best the city has to offer—from restaurants to recreation—were citied in overall condominium appeal.
In years past, there seemed to be a ceiling in terms of what buyers were willing to pay for this type of product. Widespread acceptance has seen that philosophy tossed out the window. In the upper-end especially, buyers have demonstrated a willingness to set new benchmarks, and in some cases, are spending more than what a detached home might cost. Multiple offers, once unheard of, have become a reality in some centres.
New benchmarks for the most expensive apartment-style condominium units ever sold through MLS have been reported in several cities in 2007, including Vancouver ($18 million), Calgary ($3.7 million), Edmonton ($2.3 million), Winnipeg ($1.25 million), and Kitchener-Waterloo ($670,000).
Given solid demand through all price ranges, it comes as no surprise that investors have been very active in the majority of markets surveyed, hoping to snap up a piece of the pie while demand remains at peak levels. Yet, with a growing number looking for a quick return on investment, swelling inventory levels have become a serious concern in several markets, most notably in Calgary and Edmonton, and to a much lesser extent, Kelowna.
The impact of speculation, especially in Canada’s largest condominium markets, have yet to be determined, but concerns for the future are relevant. In downtown Vancouver, an estimated 50 per cent of sales activity is attributed to investors, whereas as much as 60-85 per cent of new condominiums sales in Toronto’s downtown core reportedly involved investors in 2007. This is a major factor that could influence prices in years to come.
For now, a number of market fundamentals point to increased growth in sales, prices and demand well into 2008. These include vibrant economies, Canada’s aging population, rising prices, and higher levels of immigration, to name a few.
Housing Outlook? It's The Economy, Stupid! By Ozzie Jurock
The bulls were roaring at the CMHC Housing Outlook Conference in Vancouver this month, perhaps surprising to anyone who has noticed the higher listings and slower sales now being seen in most of the province (other than Vancouver). Yet, the CMHC analysts and invited speakers made a telling argument that B.C.'s housing market will still be doing fine this time next year. It's all because of a roaring economy with no real pitfalls in sight.
As Carol Frketich, the B.C. regional economist for CMHC, pointed out, about 33,000 people, net, are moving into the province every year; the dollar is the strongest in 50 years; and the unemployment rate is at 40-year low. As well "recent financial market turmoil in the United States will keep interest rates relatively flat in Canada despite upward inflationary pressures."
CMHC is forecasting that the average house price in B.C. will rise 6% next year to $464,500; that the average house price in Metro Vancouver will increase 9.1% to $623,000; though MLS sales will dip by 6.7% in 2008 across BC, and will decline a modest 2.9% in Metro Vancouver. Other FORECAST highlights from the Outlook Conference:
The one-year mortgage rate will level at 7.3% in 2008.
8% of Metro Vancouver residents plan to buy a home in the next two years - and 35% of these will be first time buyers.
Half of the 15,000 new condos under construction in Metro Vancouver are pre-sold.
There were only 153 new and vacant condos in Metro Vancouver, as of September 2007, and only 7 in downtown Vancouver.
The Metro Vancouver apartment rental vacancy rate will rise modestly to 1% in 2008.
Kelowna is the fastest growing centre in B.C., followed by Chilliwack, Parksville, and Courtenay.
BC is Canada's most urban province, with 84% living in urban areas.
October articles & newsletter
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/http://urservices.cjb.net/Client_newsletters/McGauran, Dale & Gump, Tyler/FTN_8223_McGauran_Dale_&_Gump_Tyler_200711.pdf
RE/MAX Housing Market 2008 Report, 10/17/07 - RE/MAX of Western Canada (1998) Inc.
Slow and steady growth forecast for residential real estate in major Canadian markets in 2008, says RE/MAX - Canadian home sales to top 500,000 in 2007
After posting extraordinary gainsin 2007, housing market performance will moderate in most major Canadian centres in 2008, according to a report released today by RE/MAX.
The RE/MAX Housing Market Outlook 2008 examined residential real estate trends in 18 markets across the country. The report found that while economic prospects will continue to improve next year, few major markets are expected to exceed record sales levels set in 2007. Winnipeg, Hamilton-Burlington, Kitchener-Waterloo, London-St. Thomas, Ottawa, Sudbury, Saint John, Halifax-Dartmouth, and St. John’s are all predicted to buck the trend in 2008, with appreciation ranging from one to seven per cent. Average price is forecast to increase in 78 per cent of markets surveyed next year, with the lowest price increase expected in Edmonton and the highest in St. John’s.
Nationally, the number of homes sold is expected to break through the half-million threshold in 2007, climbing 13 per cent to an estimated 545,400 units, up from 483,770 units one year ago. Average price is projected to appreciate nine per cent to $303,000, up about $25,000 over 2006 levels. In 2008, home sales are expected to retreat to 500,000 units while Canadian housing values are forecast to continue their ascent, rising six per cent to $321,000.
Clearly, economic prosperity has translated into increased housing sales and upward pressure on prices across the board. The country’s economic engine fired on all cylinders throughout the year, despite dire conditions south of the border. As in 2007, inventory will be the major wildcard next year—the ultimate variable most expected to influence housing market conditions and performance. A return to tight market conditions could mean all bets are off as buyers are forced to compete, creating increased market pressure.
Major market frontrunners for price appreciation in 2008 include St. John’s (12 per cent), Regina and Kelowna – Central Okanagan (nine per cent), Hamilton-Burlington and Saint John (eight per cent) and Greater Vancouver (seven per cent). Leading the country in sales growth next year will be Kitchener-Waterloo (seven per cent), followed by Hamilton-Burlington, London-St. Thomas, Sudbury and Halifax-Dartmouth, each forecasting a five per cent gain.
Higher mortgage rates and increased inventory levels failed to materialize in most major centres, making 2007 a record year for real estate activity in Canada. By year-end, housing values across the country are expected to shatter existing records. Serious double-digit increases in average price are forecasted for Saskatoon (49), Edmonton (31.5), Regina (21), Calgary (20), Sudbury (20), Kelowna (19.5) Saint John (17), St. John’s (12), and Greater Vancouver (10).
Saskatchewan dominated real estate news in 2007, reporting some of the highest percentage increases in unit sales. The number of homes sold in Regina by year-end is expected to top 35 per cent, bringing sales to an estimated 4,000 units. Neighbouring Saskatoon is forecast to climb 28 per cent to 4,400 units in 2007. Other centres expected to post double-digit gains in activity include Saint John (19 per cent) Kitchener-Waterloo (13 per cent), Halifax-Dartmouth (12 per cent), St. John’s (11 per cent), and Toronto (10 per cent).
Western markets were first out of the gate in 2007, but those in the East followed suit. By year-end, some of the most impressive gains in home sales will be realized in Ontario and Atlantic Canada. Solid economic fundamentals, including billions of dollars in capital projects, a positive unemployment outlook, and solid consumer confidence levels will propel markets forward. A slow and steady growth trajectory, minus the peaks and valleys experienced in 2007, is forecast for next year.
BC Homes Sales to Surpass 100,000
BC MLS® home sales are forecast to break the 100,000 unit mark for only the second time in history. BCREA forecasts that BC MLS® residential sales will hit 101,000 units this year, up 4 per cent from 2006.
The BCREA Housing Forecast is a semi-annual publication produced in the spring and fall of each year. The report contains forecasts and analysis of the BC economy and housing markets, including detailed forecasts by home type of the province’s 12 real estate board areas.
September articles & newsletter
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Here is an interesting article written by Kathie Scott of Dominion Lending.
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Bank of Canada Holds Steady - B of C decided to leave their overnight interest rate alone for the time being to give the Canadian economy time to digest the credit crunch and housing market turmoil south of the border. The following is an edit of recent reflections from Michael Levy, my favourite economist, which hopefully gives you an idea of why our Prime rate remains unchanged today, how the sub-prime problem to the south continues to affect us and what could happen at the B of C's next two meetings, scheduled for October 16 and December 4. Some weeks ago Bank of Canada Governor David Dodge made it perfectly clear that he was set to raise rates when the next 'Bank' day came around, today, September 5th. As the situation in the U.S. continued to unfold detrimentally and all Central Banks grew uneasy, the question became whether Dodge would be forced into a position to at best keep rates steady, or at worst, shift to the opposite and lower rates this fall. Dodge made the decision to keep rates steady and our Prime Business rate remains 6.25%. The major factor affecting Dodge's decision is inflation and the credit "tightening". The economy in Canada keeps out-performing Bank of Canada estimates, driving capacity and thus labour costs higher and stoking the coals of inflation. Our GDP (Gross Domestic Product) last Friday was reported at 3.4%, well above the 2.8% expected by the Bank in their last report. With inflation slowing nowhere but in the U.S., (and even then has not gone on what would be best described as a deflationary scenario), the lack of liquidity in the system is making it a necessity that the Banks now take this different point of view. Tight credit means that the economy and particularly the consumer will be forced to cut back spending. Let's take a look at how credit is "tightening" and what that means: By now everyone is familiar with what sub-prime lending is and how it's devastating the real estate market in the United States. What many are unaware of is that the number of sub-prime loans up for renewal in the next 15 months is over 2 million, with the numbers only peaking next February and March. This changes everything and dramatically too, perhaps the worst is yet to come! What was thought to be a $1 billion problem that would work its way through the gigantic multi-trillion dollar U.S. economy with merely a blip, (Ben Bernanke), has turned into a world wide credit confidence crisis. Not only are sub-prime loans in the U.S. being affected, but mortgage loans in general, even higher quality ones, are now questionable on renewal as lenders cannot sell these loans without question as they once could, as the institutional buyers have now dried up. Now for the fallout: What we saw with GM is just the beginning for Canada, albeit we will not suffer anywhere to the same degree as the U.S., who could fall into what could be a bone-rattling recession sometime very late this year or early next. However, our real estate market will be affected and no part of Canada will come away unscathed. Those housing markets that went up the fastest will see the most volatile declines. There are already some small cracks in the property market in Calgary, the nation's leader in real estate growth in the past few years. Other parts of Canada will soon be in the midst of a real estate correction that, at least in part, will have been set off by the credit crunch that was spawned by the U.S. housing market. Automobiles and other high-ticket items that require financing will not be as easily available at such inviting terms as credit markets tighten up and the '$0 down and 5-years 0% interest" loans will go by the wayside, except for the most overqualified buyer who probably doesn't need the loan. Mortgages will certainly still be available for new loans, but lenders will be a lot more careful and will need to meet a much more stringent down payment and payback schedule than they or their clients have been used to. This will ultimately weed out some buyers and start to put more inventory on the market, again putting pressure on prices. Major corporations will have to tighten up their borrowing and offers that go to the investment markets will have to be a lot tighter with greater guarantees in order to attract buyers for major financing or mergers and acquisitions. This will include not only some marginal borrowers, but AAA Canadian companies as well. Credit card companies will become a lot less lax on their repayment schedules and will start to weed out marginal clients as card defaults escalate. In a word, credit will become much 'tighter'. Our exports to the U.S., which are affected already, will become much more widely pressured, especially if the U.S. goes into recession. Our suffering manufacturing and export industry, which has taken a terrible hit because of the increasing value of our dollar, will now face less willing buyers as U.S. consumers button up their pocketbooks. But the major hit could come from the waning consumer confidence that is now starting to spread throughout not only the U.S., but also into Canada. The consumer is the key in all of this. When the homeowner starts to lose wealth, even on paper, in what is arguably every family's largest asset (their home), then plain and simple: that same consumer stops spending. This has already hit the home renovation industry as giants such as Home Depot start to feel the earnings pinch. This is a situation that has been affecting that industry for over a year now with warning of future earnings problems down the road. With higher mortgage payments bleeding this same consumer, high energy prices tapping their wallets on an ongoing basis, and unwilling lenders drying up by the day, the consumer will withdraw from what has been a twenty year buying binge in fairly short order. Will it be doom and gloom in Canada? No, especially with our backstop of commodity and natural resource exports still going full tilt to Asia, Europe and in some cases the U.S. Will it put a crimp in what has been a great run since 2002 and make most of us take a step back from what may have been the greatest spending spree in history? You bet!
As the U.S. starts to lower interest rates and with the announcement that President George Bush is stepping into the fray to help distressed home owners, it is evident that this problem is far more wide-ranging and threatening than first thought. Canada will get caught in the fallout. But, if the U.S. cuts rate later this month, especially if it is more than the expected 0.25%, then the Bank of Canada will be forced to follow suit in October at their next meeting. To ignore a significant U.S. rate cut in light of reasonable economic growth in Canada could be just the catalyst that would be needed to start the Canadian dollar back towards par once again against a much weaker U.S. unit. The following excerpts are from an article that I found on Bloomberg.com about commercial real estate in the U.S. and thought it an interesting aside to the residential side of this situation...as far as I know; Canadian commercial property isn't feeling this pain yet. "People aren't willing to do deals right now," said Howard Michaels, the New York-based chairman of Carlton Advisory Services Inc., which has arranged financing for real estate purchases including the Lipstick Building in midtown Manhattan. "The expectation is that prices will come down." Investors in July bought the fewest commercial properties since August 2006 and apartment building acquisitions were down 50 percent from June. Archstone-Smith Trust in August postponed its $13.5 billion sale until October. Mission West Properties Inc., the owner of commercial buildings in Silicon Valley, said on Aug. 13 that the company's $1.8 billion sale may fail after a bank withdrew funding. "There are so many deals falling apart," said David Lichtenstein, chief executive officer of Lakewood, New Jersey- based Lightstone Group, an owner of more than 20,000 apartments and 30 million square feet of office and retail space. "People who can get out are getting out." Average prices for commercial properties might drop 5 percent to 15 percent in the next two years depending on the type of property and its quality and location, said Matthew Ostrower, an industry analyst at New York-based Morgan Stanley, the second-largest U.S. securities firm by market value. Michael Knott, a senior analyst at Green Street Advisors Inc., a real estate research firm in Newport Beach, California, estimates commercial prices may fall about 10 percent in the next 12 to 18 months and up to 15 percent in the office market during that period. Commercial mortgage rates have climbed as defaults rose in the sub-prime part of the residential real estate market. The increase has halted a rally that lifted prices for office buildings, apartments and hotels to records this year. Regency Centers Corp. lost an equity partner in May for the $80 million purchase of four shopping centers in Florida because financing costs exceeded the projected cash flow, said CEO Martin "Hap" Stein in an interview. "You've got a lot of fear in the system from the capital markets and as far as the pricing of credit, it was greed six months ago and it's fear today" said Stein. Tighter credi t standards at banks has given an advantage to investors with ample cash. All-cash buyers might include insurance companies and pension funds. The private equity firms used to be the winners, but now lower leveraged and all-cash buyers are more competitive. Even so, sellers are pulling properties from the market - no one wants to sell in this environment, because they won't get their price. U.S. could be on brink of recession, which should be no surprise after reading the above...Although recessionary talk is premature right now, there are some pretty heavy hitters in the U.S. and globally who are now getting on the bandwagon early and declaring the awful thought that a general U.S. economic slowdown may be on its way but none are pushing the panic button just yet. According to a recent article at bloomberg.com: "While there is no basis for predicting a recession right now, the risks have surely gone up,'' says former Treasury Secretary Lawrence Summers, now a professor at Harvard University in Cambridge, Massachusetts. "The combination of softness in the housing sector, contractions in credit, increased uncertainty and volatility, and losses in wealth make the chances significantly greater now.'' In Jackson Hole WY on Friday Ben Bernanke, the Federal Reserve Chairman warned, "downside risks to growth have increased appreciably." He says that The Fed "continues to monitor the situation and will act as needed to limit the adverse effects on the broader economy that may arise from the disruptions in financial markets." As a follower of economic commentators, the words to which most notice should be paid, that were reported in every major U.S. daily on the weekend, were those of Martin Feldstein. Mr. Feldstein is the President of the National Bureau of Economic Research and the unofficial arbiter of when recessions begin and end, who said even as Fed officials were in the room at the Wyoming conference that, "I think there's a significant risk of recession now. The consumer will be spending less. The most recent consumer confidence numbers are down. That's going to be reinforced by everything happening in the housing market.'' The Economist, arguably one of the most respected names in economic publishing issued a report from their "Intelligence Unit" that breaks down the current credit crunch in percentages. Looking at the U.S. and then the domino effect world wide they come out with a 60-30-10 formula in a very detailed and ominous 41 page report. It breaks down as a 60% chance that the major damage will be done in the U.S. itself and all will unfold as Ben Bernanke first forecast with the results being a U.S. slowdown that the economy will pull out of with some damage. The fallout would be contained into the next several months as the sub-prime and credit problems make their way through the U.S. system with a return to some semblance of normality later next year. The 30% probability, and this is the crux of the report, is that the U.S. will in fact go into recession as consumer confidence wanes and the credit crunch continues to expand. This scenario would throw not only the U.S. into recession but will have shock waves world wide. The report attributes the fallout of this scenario to the massive effect that the world's largest economy has in negative spill-over to the rest of the world. The 10% is all out economic meltdown which sees the rest of the world follow the U.S. into recession with a global slowdown which could last some years, and do permanent damage to some third world and emerging economies and leave scars on many first world economies for many years to come. It is interesting to note that The Economist spends most of the research piece on scenario number two: the 30% probability. Well, not the cheeriest of reports, I know, but I've never liked nasty surprises and its best to pull the head out of the sand now rather than later, don't you think? Kathie |
August articles & newsletter
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July housing sales approach record as summer market begins to boil.
Vancouver, B.C. August 2, 2007 – The Real Estate Board of Greater Vancouver (REBGV) reports that total residential sales
reached 3,873 units in July 2007, a thermometer-breaking 41.8 per cent increase when compared to 2,732 sales in July 2006 and an increase of 5.0 per cent when compared to 3,687 sales in July 2005.
This figure represents the second highest number of sales during the month of July in the Board’s history. The highest number of sales for that month was recorded in June 2003, when 4,023 sales were reported.
“At the beginning of the year, most experts predicted a slower market than what we’ve experienced for the past five years in the Greater Vancouver area,” says REBGV president Brian Naphtali. “To date, REALTORS® are reporting the exact opposite as the housing market continues to exceed market forecasts.”
During this period, new listings for detached, attached and apartment properties increased by 12.7 per cent to 4,924 units
compared to the 4,370 units listed in July 2006. The total number of active listings increased by 7.6 per cent to 11,215 units when compared to July 2006’s 10,424 units.
“We saw a lot of movement this July in the sales of detached and apartment properties in almost every area of our Board. Some of this movement could be the result of the recent increase in interest rates as consumers who are locked into mortgages at a good rate move up in the market,” explains Naphtali. “With the average amount of days a property stays on the market holding steady at a brisk 38 days, consumers should contact their REALTOR® to find out how this will affect the sale or purchase of a home.”
According to Multiple Listings Service® (MLS®) data, sales of apartment properties increased by 40.9 per cent to 1,674
sales in June 2007 compared to 1,188 sales in June 2006. The benchmark price of an apartment property in Greater Vancouver, calculated by the MLSLink® Housing Price Index, is $364,510, up 10.8 per cent from one year ago.
Sales of attached properties increased by 39.6 per cent in July 2007 to 716 sales, compared to 513 sales in July 2006. The benchmark price of an attached unit is $448,383, up 10.8 per cent from a year ago.
Sales of detached properties increased by 43.8 per cent in July 2007 to 1,483 sales, compared to 1,031 sales in July2006. The benchmark price of a detached unit is $714,810, up 10.9 per cent from last year.
Bright spots in Greater Vancouver in July 2007 compared to July 2006:
DETACHED:
Richmond up 80.4%..........................175 units sold, up from 97)
West Van/Howe Sound up 88.6%....... (83 units sold, up from 44)
Vancouver East up 72.0%...............(227 units sold, up from 132)
Sunshine Coast up 70.2%...................(80 units sold, up from 47)
Port Coquitlam up 55.0%...................(62 units sold, up from 40)
Burnaby up 47.2%............................(131 units sold, up from 89)
ATTACHED:
Port Moody/Belcarra up 158.8%........ (44 units sold, up from 17)
Port Coquitlam up 125.0%.................(45 units sold, up from 20)
Burnaby up 68.2%........................... (106 units sold, up from 63)
North Vancouver up 39.4%.................(46 units sold, up from 33)
Whistler/Pemberton up 340.0%........... (22 units sold, up from 5)
APARTMENTS:
Port Moody/Belcarra up 152.9%.........(43 units sold, up from 17)
New Wesminster up 69.0%................ (98 units sold, up from 58)
Port Coquitlam up 60.6%...................(53 units sold, up from 33)
Burnaby up 43.6%......................... (237 units sold, up from 165)
Richmond up 52.6%...................... (203 units sold, up from 133)
Vancouver West up 27.9%..............(578 units sold, up from 452)
July articles
B.C. Economy Among Best In Canada
British Columbia's economy should still see expected growth of about 3.25% in 2007 and 2008, compared to 2.8% annually for all of Canada, according to a provincial economic outlook released this week by RBC. "B.C. has enough diversified sources of strength to keep growth humming along this year but the shine on the province's economy has become somewhat duller," said Craig Wright, vice-president and chief economist, RBC. "Of particular concern is the forestry sector which is experiencing a cooling trend in response to weaker U.S. housing markets. Average house price gains are still running at a respectable 10 per cent, but this is half the pace at which gains were noted a year ago." On a positive note, RBC said natural gas production in the northeast is running higher than a year ago and consumer spending continues at a healthy pace due to strong labour markets. In addition, fiscal surpluses still portray healthy g! overnment
finances and the unemployment rate could fall to record lows.
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June articles and newsletter
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Market report for June 2007
Well, the bond market is continuing its selling streak and increasing yields in the process which puts real pressure on the fixed rates. With a 5-year fixed coming in as high as 5.94%, this is the highest we've seen fixed rates in 5 years and more. Below is an explanation of what's happening taken from Custom House's Michael Levy's newsletter out today...
So, all indications are that the Bank of Canada is going to raise Prime a quarter point on July 10th which will keep the Canadian dollar high, along with our fixed interest rates.
In this Morning's Financial Post, Stephen Roach, chief economist at Morgan Stanley, says that the current scenario relating to interest rates and the markets is perfectly normal. Mr. Roach calls this a "normalization saga," as we are now in the second part of a three-act play in reaction to the busting of the dotcom bubble in 2000. Not that again!
When taking an overview of his pronouncements, they do make sense, and may give us some indication where we are heading in the weeks and months to come.
Following the dotcom melt-down, the central banks (particularly the
Roach says we are now, in fact, in act two, where interest rates are on the rise and we finally see some normalization of the yield curve. With the longer-term rates in the
An inverted yield curve, if it stays around long enough, could lead to a recession. And if this current inverted yield curve carried on much longer or got any worse (shorter term rates continuing to go higher where long term rates stayed the same or fell off), then the economic consequences in the
If interest rates continue to go higher, then the investor starts to get a pretty stark choice of where he or she wants to put their money.
Interest rates over the short term that continue to go higher could drain billions from the stock markets, as investors pull back from higher risk investments (stock market) and return to the absolute safety of government-backed interest rate instruments.
The whole scenario is now based on inflation, as discussed in last week's Monthly Mortgage Matters. If inflation does take a firmer grip, then the central banks, by their own admission, would have to continue the rate increases until they felt inflation was under control.
According to Mr. Roach, the higher rates could eat significantly into corporate profits and put even more pressure on the equity markets and send investors to bonds or the like.
Now for act three, that Mr. Roach feels confident will be played out entirely by inflation. If by raising rates in the short term, inflation is brought under control and the west continues with the advantage of buying cheap goods from Chinese and Indian production to keep prices down, then things should return to normal.
What does that mean to
Taken from Kathy Scott, Dominion Lending
Market report for May 2007Vancouver, B.C. May 2, 2007 -The Real Estate Board of Greater Vancouver (REBGV) reports that total residential sales for detached, attached and apartment properties reached 3,387 units in April 2007, an increase of 1.3 per cent when compared to the 3,345 units sold in April 2006 and a decrease of 16.2 per cent when compared to the 4,043 sales in April 2005.
New listings for detached, attached and apartment properties increased by 25.3 per cent to 5,580 units compared to the 4,452 units listed in April 2006. The total number of active listings increased by 25.8 per cent to 11,347 units when compared to April 2006's 9,022 units.
"So far, the constants our market has experienced over the past five years are holding strong in 2007. We're still in one of the best markets real estate has ever had in Greater Vancouver. Sales are higher than historical norms and homes are selling very quickly, usually with multiple-offers," says REBGV president Brian Naphtali. "Last month, the average days a property spent on market dropped again, down to 39 days, compared to 43 days in March, 49 days in February, and 56 days in January.
"There were a couple of surprises in April's market, particularly in attached housing sales throughout Greater Vancouver. Consumers buying townhomes in Richmond and Burnaby are clearly finding great value for their dollar as sales activity in those two cities came within a few units of breaking records," explains Naphtali. "We also saw a significant increase in both new listings and active listings inventory. To get a better idea of what sort of properties are now available in your community, set up a meeting with your local REALTOR®."
According to Multiple Listings Service® (MLS®) data, sales of apartment properties decreased by 1.2 per cent to 1,350 sales in April 2007 compared to 1,366 sales in April 2006. The benchmark price of an apartment property in Greater Vancouver, calculated by the MLSLink® Housing Price Index, is $355,108, up 14.7 per cent from one year ago.
Sales of attached properties increased by 17.6 per cent in April 2007 to 634 sales, compared to 539 sales in April 2006. The benchmark price of an attached unit is $432,490, up 13.8 per cent from a year ago.
Sales of detached properties decreased by 2.6 per cent in April 2007 to 1,403 sales, compared to 1,440 sales in April 2006. The benchmark price of a detached unit is $695,069, up 11.9 per cent from last year.
(content from realtylink.ca)
April Articles and Newsletter
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Crime Kept Vancouver From Ranking As Number One City In The World
Jurock.com-April 4/07
Vancouver is the best city in North America and its quality of life is the third best in the world, behind only Zurich and Geneva, says a new global survey published Monday. Calgary, however, is ranked as the healthiest city on the planet. The survey by Mercer Human Resource Consulting ranked 215 cities around the world based on 39 quality of life determinants including social, economic, environmental and personal safety factors. Danielle Bushen, a principal at Mercer Human Resource Consulting, said Vancouver's weak spot was crime.
"Crime rates in North America tend to be slightly higher than in Europe in general and this holds true when you compare locations like Zurich and Geneva to Vancouver," Bushen said. Mercer gave Vancouver a score of 107.7 in its annual ranking of quality of life, tied with Vienna for third place and behind Zurich with 108.1 and Geneva at 108. (Cities are ranked against New York as the base city which was given a base score of 100.) Other Canadian cities included in the survey were Toronto at 15th, Ottawa at 18th, Montreal at 22nd and Calgary at 24th. All the Canadian cities in the survey also appeared in the top 25 ranking for health and sanitation with Calgary ranking as the top city in the world followed by Ottawa in fourth, Montreal and Vancouver tied for 10th and Toronto ranked 21st. The five Canadian cities included in the survey all ranked higher than any of the U.S. cities surveyed.
March Newsletter
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February Articles and Newsletter
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What’s ahead for the next two years
Realtorlink Newsletter-February 23, 2007
In Greater Vancouver and in BC, a big question continues to be what the real estate market will do in the next year or two. For big questions, we need big answers. So we asked the experts.
Cameron Muir, Chief Economist, BC Real Estate Association
Economy underpins market
The BC economy will continue its strong pace into 2008. Employment growth will be bolstered by investment in non-residential construction, while increased purchases of machinery and equipment signals business confidence and future productivity gains. Consumer spending, underpinned by wage growth and low unemployment, is on track to equal last year’s strong performance.
Interest rates are facing downward pressure, but expect both the Bank Rate and fixed mortgage rates to remain flat this year. Bond yields will edge up in 2008, impacting fixed mortgage rates, and further eroding housing affordability.
Home sales in BC are forecast to dip another two per cent in 2007. While the robust provincial economy continues to stimulate housing demand, affordability constraints will keep some would-be home buyers on the sidelines. As a result, home prices will rise more moderately this year, five-eight per cent on average, but still several times the rate of inflation.
Andrew Ramlo, Director, Urban Futures
Calmer waters
Over the coming two years the real estate market in the Lower Mainland should be characterized by much calmer waters. Relatively constant lending rates and modest growth in population and household incomes will temper the winds blowing across the region’s real estate market.
While not the stormy pace of the past few years, moderate winds will still push market growth over the coming years, as two years hence takes us into the starting gate for the 2010 Olympic and Paralympic Games.
With an estimated economic impact of almost five billion dollars and upwards of 37,000 jobs by 2010, hosting the Games will certainly have implications for the region’s housing markets. However, while the size of the Lower Mainland’s economy and population (1.4 million jobs and 2.5 million residents) will see to it that the impact of the Games is relatively modest region-wide, stronger winds may prevail in some smaller communities along the Sea to Sky corridor.
For more information on the impact of the Olympics on housing markets in the Lower Mainland see www.urbanfutures.com.
Helmut Pastrick, Chief Economist, Credit Union Central of BC
Soft Landing
Here’s what I see for the next two years. Demand will remain favourable as a result of stronger income growth, good interest rates and higher in-migration. But affordability will worsen throughout Greater Vancouver for low-equity buyers. I don’t foresee the Finance Minister eliminating the property transfer tax or even tinkering with it much to help them.
We can expect to see a gradual market adjustment process including a shift away from the tight seller’s market of the past few years. Sales are down from last year’s highs and the rate of price increase is slowing. More supply is also coming on to the market.
The 18-month slide in unit sales from the July 2005 peak marks an important cyclical development. Without a substantial improvement in demand and significantly lower mortgage rates, July 2005 could well mark the long-awaited top of the sales cycle.
January Articles and Newsletter
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YEAR OF DEVELOPMENT GIVING WAY TO YEAR OF TRANSORMATION
Vancouver Sun - Bob Ransford - Sat. Dec. 30, 2006
Nearly every statistic points to 2006 as a landmark year for new-home construction and sales in the Lower Mainland.
Prices rose to stratospheric levels for most forms of housing. Construction-cost increases, however, matched selling-price increases.
Labour shortages signalled a record level of construction activity, with institutional mega-projects competing with residential construction for skilled trades people.
The pace of sales rivalled, or beat, record years for both new-home product and for re-sale product. The value of new building permits issued topped previous records. New neighbourhoods emerged and old ones were re-born.
If it looks to you like urban re-development in Vancouver's downtown and growth in the surrounding suburbs has radically changed the region, just take a look at things a year from now.
You might have thought that 2006 was a landmark year for real estate development, but it is the upcoming year that will be the one of real transformation in terms of the look and the livability of Vancouver -- the period of visible change.
Many newsworthy achievements in real estate development over the past year were centred on large-project launches, massive pre-construction sales campaigns, construction groundbreakings, project approvals. They were the mere smoke signals of the change yet to come.
The construction cranes dotting the skyline are like giant pushpins on a huge map of Greater Vancouver, marking the spots where new development is about to change entire blocks and begin reshaping whole neighbourhoods.
Some projects are far enough along that they are already visible form-makers for the kind of change that is rapidly moving from Vancouver's downtown out through the first-ring suburban areas into the distant suburbs.
For already visible signs of transformation in these suburban areas, one only needs to look at Kingsway and Knight Street, the upper-reaches of False Creek south around Cambie and Eighth Avenue, the quiet reshaping of the South Granville neighbourhood, 10th Avenue in West Point Grey, Coquitlam town centre, Richmond's town centre, the top of Burnaby Mountain, the campus at UBC and a few other neighbourhoods where change is underway.
Wait, though, for the construction to come out of the ground on projects like the Woodward's block in the downtown eastside, the Olympic Village on the south shore of False Creek, the explosion of mid-rise towers in downtown Richmond and further densification around most SkyTrain stations in Burnaby, stretching all the way out to Coquitlam. These areas will be reshaped over the next year by projects already approved and largely sold to new-home buyers or pre-leased to retail operators.
The next year will also be a year during which final touches will be put on the detailed plans that will launch the reshaping of the southeast corner of Vancouve