Wednesday, July 30, 2008

Mortgage Rates from Invis

Terms-Posted Rates-Best Rates

6 MONTHS - 6.20% - 6.20%
1 YEAR - 6.95% - 5.05%
2 YEARS - 7.00% - 5.50%
3 YEARS - 7.00% - 5.50%
4 YEARS - 6.99% - 5.50%
5 YEARS - 7.15% - 5.64%
7 YEARS - 7.60% - 6.20%
10 YEARS - 7.95% - 6.25%

Friday, July 25, 2008

2008 Mid Year numbers resemble “Buyers Market”.

Midway through 2008, the year in real estate resembles a “buyers market”. A buyers market can be categorized as a real estate market where the inventory of available properties for sale surpasses the needs of the number of available buyers. Signs of a buyers market include an increase in the number of days it takes it takes to sell a property, a decrease in the average home price of real estate, and an increase in the overall inventory of available properties.

Kootenay Real Estate President Andrew Smith says “The real estate market in the Kootenay’s are generally in a “buyers market” state with inventories of active listings on the MLS® increasing 71% over active MLS® listings to the end of June 2007. The market situation that is out of sync with a “buyers market” is the total general average price per unit increase of 16%. Some markets are seeing a decline in average price per unit, but generally, values are holding and statistically are increasing in spite of high inventory levels and a decline in MLS® unit sales.”

MLS® Dollar Volume of all sales processed through the Kootenay Real Estate Board Year to Date to the end of June 2008 are sitting at $439,081,617, a decline of 24% over the same reporting period last year.

Kootenay Real Estate Board President Andrew Smith further says: “REALTORS® in the Kootenay’s expected that the real estate markets would slow in 2008 given the records set in 2007. 2008 is shaping up to be the year the markets take a rest from the unprecedented price gains of the last few years and in general, it’s healthy for markets to pause and cycle. The statistics are showing that even with the declines, values are staying strong. That should give consumers confidence we are not experiencing the same type of a decline as the US real estate market and that the value of their real estate is still strong.”

MLS® Unit Sales in June 2008 declined 37% from amounts reported in June 2007. MLS® Sales year to date to the end of June 2008 show a decline of 34% over MLS® sales to the end of June 2007.

The price of the average residential detached house sold on the Multiple Listing Service® in June 2008 rose by 7% to $334,303 compared to June of 2007. Year to Date comparisons to the end of June 2008 saw values increase to $321,419, an average increase of 15% over the same reporting period last year.

Kootenay Real Estate Board MLS® statistics for 2008 year to date show residential detached housing listings up 21% over the same period in 2007 with MLS® unit sales for detached residential housing showing a decline of 37% over amounts reported last year.

Overall, the number of MLS® listings in 2008 year to date to the end of June increased 27% over the same period in 2007, with overall MLS® unit sales down 34% over the same period in 2007.
When asked to comment on what residents of the Kootenays should expect for their real estate markets in for the remainder of 2008 President Andrew Smith had this to say:

“From an MLS® unit sales perspective we are seeing performance at about 2004 levels. The unexpected factor this year so far are the average price per MLS® unit sale increases. Not all ends of the market are seeing increases, but the common trend is that real estate continues to be an appreciating asset.”

KREB MEDIA RELEASE Nelson. BC July 11, 2008

Monday, July 21, 2008

New law requires real estate agents to verify ID of clients

New federal laws and regulations dealing with money laundering and anti-terrorist financing that went into effect June 23rd, 2008 will require real estate agents and brokers to collect and verify more personal information from buyers and sellers. Real estate agents must also now track the source of funds received during the course of a real estate transaction, such as the deposit.

These new regulations are part of federal legislation (Bill C-25) passed in 2007 that requires a number of industries, including real estate, to do more to help stop money laundering and terrorist financing. The regulations are enforced by the federal agency known as the Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC.

"Real estate agents have had legal obligations under the federal government's push to prevent criminal activity and terrorism since 2001, when Canada’s first comprehensive laws to combat money laundering and terrorist financing were introduced," says the President of The Canadian Real Estate Association, Calvin Lindberg. He is a REALTOR® in Vancouver.

“In the first phase of compliance, real estate agents were required to report only suspicious transactions, or transactions involving more than $10,000 in cash,” the CREA President explains. “Now, verified personal information must be kept of the buyer and seller for each and every real estate transaction in Canada. That personal information includes details such as occupation.”

Real estate agents are now required to ask for proof of the identity of all buyers or sellers involved in a Canadian real estate transaction. If the client is a corporation, that information must include corporate documentation, and the names of the corporation directors. They must also ascertain if a third party is involved in the transaction.

This also applies if a buyer or seller involved in a transaction is not represented by a real estate agent, but the other individual involved is represented. Those buying or selling privately will be asked by the agent representing the other party involved in the transaction to provide proof of identity as well, and that record must be kept by the real estate agent involved in the transaction.

Also under the new FINTRAC regulations, real estate agents dealing with clients they never meet must also verify personal information. The broker office involved can do this with a service agreement with an agent or mandatary in the area where the client is located. That agent or mandatary must then meet the client, verify the identification of the client, and provide the information to the broker office actually handling the real estate transaction.

“There are buyers, sellers or investors from other countries who rely on expertise here rather than visiting the property themselves,” the CREA President explains. “They must now meet with an official agent of the Canadian broker, and provide proof of identity. This agreement will add to the business costs of the Canadian broker.”

In addition to verification of personal information, real estate agents must also complete a report on the receipt of all funds received during the real estate transaction, not just those of $10,000 or more.

In order to comply with these new federal regulations, real estate agents are required to keep this identification and receipt of funds information on file for five years and provide it to FINTRAC if requested. It is the individual broker office that will be responsible for the safe keeping of the information, and the brokerage that will have to respond to any FINTRAC information request.

There were 559,325 transactions reported through the Multiple Listing Service® operated by local real estate Boards and Associations in 2007.

The Canadian Real Estate Association (CREA) is one of Canada’s largest single industry trade associations, representing more than 96,000 REALTORS® working through more than 90 real estate Boards and Associations. CREA’s primary mission is to represent members at the federal level, and to defend the public’s right to own and enjoy property.

Bob Linney, CREA Communications Director

Fewer Sales and Large Inventory Cool Housing Market

British Columbia Real Estate Association (BCREA) reports residential sales dollar volume on the Multiple Listing Service® (MLS®) in BC declined 34 per cent to $3.31 billion in June, compared to June 2007. Residential unit sales fell 36 per cent to 7,133 units during the same period. The average MLS® residential price in the province was $463,458, up 4 per cent from June 2007.

"Weaker consumer confidence and eroded affordability are slowing home sales in the province," said Cameron Muir, BCREA Chief Economist.

Seasonally adjusted MLS® residential unit sales in June were near 2002 levels. During the first half of the year, BC MLS® residential sales were down 22 per cent to 42,907 units, when compared to the same period last year. The average residential price rose 9.6 per cent to $473,536 over the same period.

"The combination of a larger inventory of homes for sale and fewer home sales have tilted most BC markets in favour of homebuyers," added Muir. "This means little upward pressure on home prices in many markets." Victoria was in balanced conditions, while Northern Lights remained a sellers’ market in June. "Despite a dip in home sales, inventories could soon edge lower as home sellers adjust their asking prices to reflect market conditions."

“Copyright British Columbia Real Estate Association. Reprinted with permission.” Vancouver, BC – July 16, 2008

Friday, July 18, 2008

Make a few extra $ by recycling your old fridge

Refrigerators are one of the highest energy users in residential homes, and cost British Columbian residents up to $100 a year to operate. If all second operating fridges in BC were recycled, enough electricity would be saved to power the BC legislature for 159 years.

Since 2002, more than 175,000 fridges have been picked up and recycled by BC Hydro Power Smart’s Refrigerator Buy-Back Program. This program provides the resources to safely recycle the ozone-depleting refrigerant and metal in fridges by using environmentally sound methods—and BC Hydro pays $30 per fridge.

If all fridges that have been picked up by BC Hydro since 2002 were laid down head to toe they would cover a distance of over 320 kilometres (based on the average fridge being 182.88 cm high). They would cover the highway distance from Burnaby to Manning Park.

British Columbians can arrange for the free pick-up of a second operating household fridge by calling 604.881.4357 or 866.516.4357 for residents outside the Lower Mainland.

To learn more about ways to conserve energy in everyday life, as well as BC Hydro’s Power Smart residential programs such as mail-in rebates, ENERGY STAR® windows, PST exemptions and Power Smart New Homes, visit

“Copyright British Columbia Real Estate Association. Reprinted with permission.”

A market shift = a shift in expectations

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.

“Copyright British Columbia Real Estate Association. Reprinted with permission.”

Monday, July 14, 2008

New Mortgage Market Regulations Coming

On July 9, the Government of Canada announced that mortgage market regulations would tighten later this year to ensure a healthy housing market and reduce the risk of a US-style housing bubble from developing in Canada. Effective October 15, 2008, government-backed mortgage insurance will only be available on mortgages with an amortization period up to 35 years; currently, the maximum amortization period is 40 years.

Additionally, government-backed insurance will be limited to mortgages with a loan-to-value ratio up to 95 per cent, down from the current 100 per cent. Other regulatory changes include the establishment of a credit score floor, loan documentation to ensure there is reasonableness of property value, borrower's sources and level of income. Mortgage insurance on high-ratio mortgages that don’t require amortization in the first few years from the government guarantee (i.e., interest only products) won’t be backed, and a maximum of 45 per cent on a borrowers' total debt service ratio will be set.

The new regulations apply only to new mortgage originations, while existing originations will be unaffected. The lag period prior to the regulatory change will allow existing mortgage pre-approvals to be used or expire. All mortgage insurance companies will be affected by this regulatory change.

As Canada Mortgage and Housing Corporation (CMHC) is a Crown corporation, the government is ultimately responsible for CMHC's obligations, including mortgage insurance claims. Hence, CMHC will no longer offer 40-year amortization and 100 per cent loan-to-value ratio mortgage insurance products, given the new regulations. In addition, the government also backs private insurers' obligations to lenders in the event of default, provided the business is eligible to the guarantee, but claims are subject to a 10 per cent deductible of the original principal amount of the loan agreement. Private insurers include firms such as Genworth, United Guarantee and PMI.

Private insurers are still free to insure 40-year amortization and 100 per cent loan-to-value mortgage products, but the lack of government backing will lead to sizeable increase in risk. This may mean the elimination of these products after October 15, or a higher insurance cost for the borrower.

“Copyright British Columbia Real Estate Association. Reprinted with permission.”

Kootenay Housing Market at a Glance

Housing Starts Remain High in June Despite Decrease

The seasonally adjusted annual rate1 of housing starts was 217,800 units in June, down from 227,700 units in May, according to Canada Mortgage and Housing Corporation (CMHC).

“Despite the decrease in June, total housing starts remain at high levels.” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “This is mostly due to the multiple segment which has been continuously above the 100,000 unit threshold since the beginning of the year.”

The seasonally adjusted annual rate of urban starts moved down by 5.0 per cent in June compared to May. Both urban multiples and singles decreased, with a decline of 3.0 per cent for multiples to 114,700 units, and a 7.8 per cent drop for singles to 74,600 units.

The seasonally adjusted annual rate of urban starts went down in all regions of Canada, except Ontario, where housing starts increased by 10.8 per cent to 77,900 in June. Urban starts declined to 8,500 units in Atlantic Canada, 40,300 units in Quebec, 31,200 units in the Prairies, and 31,400 units in British Columbia. Both single and multiple urban starts decreased in all regions in June, with the exception of multiple starts in Ontario which increased by 30 per cent.

Rural starts were estimated at a seasonally adjusted annual rate of 28,500 units in June2.

For the first half of 2008, actual starts in rural and urban areas combined were up an estimated 1.5 per cent compared to the same period last year. Year-to-date actual starts in urban areas have increased by an estimated 6.1 per cent over the same period in 2007. Actual urban single starts for the first six months of this year were 13.1 per cent lower than they were a year earlier, while multiple starts were up by 23.1 per cent over the same period.

1. All starts figures in this release, other than actual starts, are seasonally adjusted annual rates (SAAR) — that is, monthly figures adjusted to remove normal seasonal variation and multiplied by 12 to reflect annual levels.

2. CMHC estimates the level of rural starts for each of the three months of the quarter, at the beginning of each quarter. During the last month of the quarter, CMHC conducts the survey in rural areas and revises the estimate.

CMHC Ottawa July 9, 2008

Monday, July 7, 2008

Current Market Conditions

When asked these days "What is the market doing?" My response is "resting." Although organizations like CMHC are still calling for positive gains this year, prices have been at a stand still since the end of last year.

Buyer's are approaching the market cautiously with a "Let's just wait and see" attitude. The spring of 2008 was certainly slow and it has only been over the past few weeks that we are seeing any sign of fair weather real estate rush.

According to KREB year-to-date sales statistics to June 1st, our average sales price of a single family home in Nelson was up from $311,930 in June of 07 to $361,405 in June of 08 however the total number of sales was down from 89 to 63 and dollar volume was down from $24,762,800 to $20,342,825.

In Nelson Rural the average home prices have increased from $345,980 to $401,278 but total sales have also dropped from 97 to 76.

In Kaslo the price of a single family home increased on average from $218,500 to $315,000 but sales have dropped from 20 to 8.

And in Salmo we have had the average home sale increase from $195,785 to $261,740 but again total sales have dropped from 9 to 5.

So what does this all mean. It shows that we have a much more balanced market that requires Sellers to be more accurate when pricing a home to sell. The market is no longer racing to catch up with overpriced properties. For buyers they now have more product to be able to compare a property to and they have the time to make better informed decisions. It is still a great market for Selling and Buying but conditions have definitely changed from a year ago.

Let me know if you would like a copy of my sales state comparison.

Source KREB YTD Stats to May 2008