Canadians are emerging from the recession confident that the value of their homes is rising and optimistic about their local housing markets. The Canadian mortgage market is rebounding and will surpass the $1 trillion mark in 2010, reports the Canadian Association of Accredited Mortgage Professionals (CAAMP) in the fifth edition of the Annual State of the Residential Mortgage Market.
Canadians are positive about house prices, and attitudes about whether this is a good time to buy a home have never been higher in the three years that CAAMP has surveyed on that question. The overwhelming majority of those surveyed (40%) expect house prices to go up, which is more than double the opinion of those surveyed in spring 2009 (18%).
In past surveys, negative house price sentiments were most evident in British Columbia, Alberta and Ontario, provinces that in retrospect were hardest hit by the economic downturn. On a 10-point scale (where 1 is very negative and 10 is very positive), attitudes in these provinces have sharply rebounded to 6.44 from 4.77 in fall 2008, 6.24 from 5.00, and 6.30 from 5.11, respectively, and are now in line with the 6.25 national average.
As interest rates remain low, it is not surprising that Canadians continue to be satisfied with their mortgages. Of those who renewed in the last year, 73% received lower rates than their original mortgage term.
Monday, December 7, 2009
Five tips for a quick home sale.
Positive signs are appearing that support a recovery in the Canadian real estate market. Residential sales activity via the Multiple Listing Service (MLS) of Canadian real estate boards numbered 42,288 units for October 2009, according to the Canadian Real Estate Association. This is up 41.5% compared to October 2008, when news of the global financial crisis hammered consumer confidence. New records for the month of October were reported in about one-fifth of local markets, including Toronto, Montreal and Ottawa.
Whether this road to recovery has been sparked by historically low interest rates never before seen by even your parents or grandparents, or optimism about Canada’s economic recovery, more people are thinking about moving.
So how do you ensure your house is not the one sitting on the market months after you have decided to sell? Following are five tips to help ensure you make a quick sale.
1. Work with a pro. To ensure a quick sale, you have to be sure your buyers can afford to pay what they offer. As an experienced real estate agent, I take precautions to make sure buyers are not overreaching their grasp. And based on my negotiating expertise, I can work with buyers and negotiate contracts that do not, as a rule, tend to fall through.
I also bear all the costs of advertising your home. This can seem minor at first, but newspaper ads and signage can quickly add up.
And, best of all, I work for you. It’s in my best interest to ensure your home sells fast and you’re pleased with the price you receive for your home.
2. Price accordingly. As your local real estate agent, I’m in the know when it comes to what’s selling in your marketplace. I have access to a database of statistics that enable me to help you set a price that will make your house attractive to buyers without undercutting your bottom line. After all, if your home stays on the market for an extended period of time, the process can become extremely hard on you and your family – especially if you have your eye on another home.
3. Set the stage. Aside from pricing your home accurately from the onset, the way your home is seen by potential buyers is the next most important aspect in ensuring a quick sale. Getting your house ready to sell can help you connect with buyers on an emotional level that enables them to picture themselves and their families living in your home.
With the popularity of home decorating and renovation programs on TV, people are more accustomed to looking at houses with an eye for design. But this doesn’t have to cost you a fortune. The most important first step is getting rid of clutter and personal items so potential buyers can picture themselves easily moving in their belongings. I can also suggest ways for you to rearrange your furniture to make your living space more appealing to potential buyers.
4. Go where the buyers are. If you want a quick sale at the best price, it only makes sense to compete on the biggest market – and there’s no question that the biggest market in Canada is the Multiple Listing Service, or MLS, which can only be accessed by real estate agents. A full 90% of all home sales go through the MLS.
Going it alone means relying on yourself and, while that may sound appealing to some, the numbers argue against it.
5. Create word of mouth. Finally, if you have a home that one of your friends or acquaintances has often admired, put the word out to your friends and ask them to spread the word. Doing so could help you avoid the stress of staging and hosting open houses, and get you the quick sale you’re seeking.
As always, if you have any questions or concerns about selling your home quickly and for the right price, I’m here to help!
Whether this road to recovery has been sparked by historically low interest rates never before seen by even your parents or grandparents, or optimism about Canada’s economic recovery, more people are thinking about moving.
So how do you ensure your house is not the one sitting on the market months after you have decided to sell? Following are five tips to help ensure you make a quick sale.
1. Work with a pro. To ensure a quick sale, you have to be sure your buyers can afford to pay what they offer. As an experienced real estate agent, I take precautions to make sure buyers are not overreaching their grasp. And based on my negotiating expertise, I can work with buyers and negotiate contracts that do not, as a rule, tend to fall through.
I also bear all the costs of advertising your home. This can seem minor at first, but newspaper ads and signage can quickly add up.
And, best of all, I work for you. It’s in my best interest to ensure your home sells fast and you’re pleased with the price you receive for your home.
2. Price accordingly. As your local real estate agent, I’m in the know when it comes to what’s selling in your marketplace. I have access to a database of statistics that enable me to help you set a price that will make your house attractive to buyers without undercutting your bottom line. After all, if your home stays on the market for an extended period of time, the process can become extremely hard on you and your family – especially if you have your eye on another home.
3. Set the stage. Aside from pricing your home accurately from the onset, the way your home is seen by potential buyers is the next most important aspect in ensuring a quick sale. Getting your house ready to sell can help you connect with buyers on an emotional level that enables them to picture themselves and their families living in your home.
With the popularity of home decorating and renovation programs on TV, people are more accustomed to looking at houses with an eye for design. But this doesn’t have to cost you a fortune. The most important first step is getting rid of clutter and personal items so potential buyers can picture themselves easily moving in their belongings. I can also suggest ways for you to rearrange your furniture to make your living space more appealing to potential buyers.
4. Go where the buyers are. If you want a quick sale at the best price, it only makes sense to compete on the biggest market – and there’s no question that the biggest market in Canada is the Multiple Listing Service, or MLS, which can only be accessed by real estate agents. A full 90% of all home sales go through the MLS.
Going it alone means relying on yourself and, while that may sound appealing to some, the numbers argue against it.
5. Create word of mouth. Finally, if you have a home that one of your friends or acquaintances has often admired, put the word out to your friends and ask them to spread the word. Doing so could help you avoid the stress of staging and hosting open houses, and get you the quick sale you’re seeking.
As always, if you have any questions or concerns about selling your home quickly and for the right price, I’m here to help!
October Home Sales Highest in Six Years
Vancouver, BC – November 17, 2009. The British Columbia Real Estate Association (BCREA) reports that Multiple Listing Service® (MLS®) residential sales in the province climbed 115 per cent to 8,624 units in October compared to the same month last year. Last month posted the highest number of MLS® residential sales for the month of October since 2003, when 8,682 units changed hands. The average MLS® residential sales price in the province climbed 17 per cent to $493,328 from $420,259 in October 2008.
“BC homes sales continued on an upward trend in October,” said Cameron Muir, BCREA Chief Economist. “Despite a lackluster economy, low mortgage interest rates have induced many potential buyers into the market. However, the recent phenomenal pace of home sales is expected to moderate in the coming months as pent-up demand dissipates and eroding affordability begins to impact the purchasing power of households.”
Year-to-date, MLS® residential sales dollar volume increased 14 per cent to $33.3 billion over the same period last year. A total of 72,146 units were sold in the first ten months of 2009, up 13 per cent from 2008, while the average MLS® price was up 1 per cent to $461,694.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
“BC homes sales continued on an upward trend in October,” said Cameron Muir, BCREA Chief Economist. “Despite a lackluster economy, low mortgage interest rates have induced many potential buyers into the market. However, the recent phenomenal pace of home sales is expected to moderate in the coming months as pent-up demand dissipates and eroding affordability begins to impact the purchasing power of households.”
Year-to-date, MLS® residential sales dollar volume increased 14 per cent to $33.3 billion over the same period last year. A total of 72,146 units were sold in the first ten months of 2009, up 13 per cent from 2008, while the average MLS® price was up 1 per cent to $461,694.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Market Strength Extends Through 2010
BCREA Fall 2009 Housing Forecast
Vancouver, BC – November 13, 2009. The British Columbia Real Estate Association (BCREA) released its Fall 2009 Housing Forecast today.
BC Multiple Listing Service® (MLS®) residential sales are estimated to increase 20 per cent to 82,900 units this year from 68,923 units in 2008. Residential sales in 2010 are forecast to increase a further 8 per cent to 89,600 units. The ten-year average is 82,800 units.
“A sharp rebound in consumer demand turned a potentially dismal year into a very strong year for home sales,” said Cameron Muir, BCREA Chief Economist. “Vancouver and Victoria, in particular, are posting near record unit sales this fall.”
BC interior housing markets are also experiencing robust consumer demand as low mortgage rates and stronger market confidence drive home sales higher.
The average annual MLS® residential price in the province is expected to post a new record this year, rising 2 per cent to $463,200 and is forecast to climb an additional 4 per cent to $482,800 in 2010.
“Recovery in the BC economy will unfold gradually next year,” added Muir. “With sales prices in some markets flirting with record highs, affordability constraints will limit home price inflation over the next year.”
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Vancouver, BC – November 13, 2009. The British Columbia Real Estate Association (BCREA) released its Fall 2009 Housing Forecast today.
BC Multiple Listing Service® (MLS®) residential sales are estimated to increase 20 per cent to 82,900 units this year from 68,923 units in 2008. Residential sales in 2010 are forecast to increase a further 8 per cent to 89,600 units. The ten-year average is 82,800 units.
“A sharp rebound in consumer demand turned a potentially dismal year into a very strong year for home sales,” said Cameron Muir, BCREA Chief Economist. “Vancouver and Victoria, in particular, are posting near record unit sales this fall.”
BC interior housing markets are also experiencing robust consumer demand as low mortgage rates and stronger market confidence drive home sales higher.
The average annual MLS® residential price in the province is expected to post a new record this year, rising 2 per cent to $463,200 and is forecast to climb an additional 4 per cent to $482,800 in 2010.
“Recovery in the BC economy will unfold gradually next year,” added Muir. “With sales prices in some markets flirting with record highs, affordability constraints will limit home price inflation over the next year.”
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Home Shopping in the Off-Season
If you’ve been thinking about buying a new home but don’t think that the cooler months make for an ideal time, you may actually benefit from changing your perspective. Though spring and summer are typically the most active real estate buying and selling seasons, house hunting in winter has its own benefits. Knowing what they are and how to use them to your advantage can put you on the path to home ownership sooner rather than later.
One of the best reasons to buy a house in winter is that there is less competition out there. Because many people believe that buying a home in cooler months is a bad idea, they stay home waiting for spring to come instead of house hunting. After all, moving at this time can be inconvenient and messy if you have to deal with inclement weather. Additionally, families will be less likely to move in the months of September through June if their children are in school.
It’s the perfect time to start looking for a home during months when there are fewer house hunters. With less buyers in the market, homes move more slowly and sellers are more willing to negotiate on their asking price. They often need to move from the property in the near future, and you can use that to your advantage to get a favorable deal on a house that may otherwise be out of your price range during the peak selling seasons.
Lenders also usually have fewer loans to process and less paperwork to deal with in the off-season. With lenders less hassled, you can expect a smoother mortgage approval process.
Touring a home during the winter allows you to see things that you may not have been exposed to if you had come in the summer months. For instance, drafts may be a sign that windows need replacing or that there are air leaks that may need to be sealed. If the house feels warm without the thermostat being set too high, it may be an indication that the home has good insulation.
If you decide to brave the cold and hunt for a home during winter, there are a few things you should keep in mind. First, don’t feel like you’re going to inconvenience someone by viewing their home during the holidays, evenings or weekends. Sellers want to sell just as much as buyers want to buy. Also, don’t be overcome by holiday decorations, which can make a house look cramped or have the opposite effect of making the house more emotionally appealing than it otherwise would be.
Just like any holiday shopping sale, knowledgeable shoppers know where to find great opportunities. The same holds true for real estate. There are still homes for sale in winter and bargains to be found, so don’t let the seasons rule your search for a home.
One of the best reasons to buy a house in winter is that there is less competition out there. Because many people believe that buying a home in cooler months is a bad idea, they stay home waiting for spring to come instead of house hunting. After all, moving at this time can be inconvenient and messy if you have to deal with inclement weather. Additionally, families will be less likely to move in the months of September through June if their children are in school.
It’s the perfect time to start looking for a home during months when there are fewer house hunters. With less buyers in the market, homes move more slowly and sellers are more willing to negotiate on their asking price. They often need to move from the property in the near future, and you can use that to your advantage to get a favorable deal on a house that may otherwise be out of your price range during the peak selling seasons.
Lenders also usually have fewer loans to process and less paperwork to deal with in the off-season. With lenders less hassled, you can expect a smoother mortgage approval process.
Touring a home during the winter allows you to see things that you may not have been exposed to if you had come in the summer months. For instance, drafts may be a sign that windows need replacing or that there are air leaks that may need to be sealed. If the house feels warm without the thermostat being set too high, it may be an indication that the home has good insulation.
If you decide to brave the cold and hunt for a home during winter, there are a few things you should keep in mind. First, don’t feel like you’re going to inconvenience someone by viewing their home during the holidays, evenings or weekends. Sellers want to sell just as much as buyers want to buy. Also, don’t be overcome by holiday decorations, which can make a house look cramped or have the opposite effect of making the house more emotionally appealing than it otherwise would be.
Just like any holiday shopping sale, knowledgeable shoppers know where to find great opportunities. The same holds true for real estate. There are still homes for sale in winter and bargains to be found, so don’t let the seasons rule your search for a home.
Choosing you Mortgage Amortization
Selecting the length of your mortgage amortization period – the number of years it will take you to become mortgage free – is an important decision that will affect how much interest you pay over the life of your mortgage.
While the lending industry’s benchmark amortization period is 25 years, and this is the standard that is used by lenders when discussing mortgage offers, and usually the basis for mortgage calculators and payment tables, shorter or longer timeframes are available – to a maximum of 35 years.
The main reason to opt for a shorter amortization period is that you will become mortgage-free sooner. And since you’re agreeing to pay off your mortgage in a shorter period of time, the interest you pay over the life of the mortgage is, therefore, greatly reduced.
A shorter amortization also affords you the luxury of building up equity in your home sooner. Equity is the difference between any outstanding mortgage on your home and its market value.
While it pays to opt for a shorter amortization period, other considerations must be made before selecting your amortization. Because you’re reducing the actual number of mortgage payments you make to pay off your mortgage, your regular payments will be higher. So if your income is irregular because you’re paid commission or if you’re buying a home for the first time and will be carrying a large mortgage, a shorter amortization period that increases your regular payment amount and ties up your cash flow may not be the best option for you.
The key is to select the amortization that best suits your unique requirements and ensures you have adequate cash flow. If you can comfortably afford the higher payments, are looking to save money on your mortgage or maybe you just don’t like the idea of carrying debt over a long period of time, opting for a shorter amortization period may be ideal for you.
Advantages of longer amortization
Choosing a longer amortization period also has its advantages. For instance, it can get you into your dream home sooner than if you choose a shorter period. When you apply for a mortgage,
lenders calculate the maximum regular payment you can afford. They then use this figure to determine the maximum mortgage amount they are willing to lend to you.
While a shorter amortization period results in higher regular payments, a longer amortization period reduces the amount of your regular principal and interest payment by spreading your payments out over a longer timeframe. As a result, you could qualify for a higher mortgage amount than you originally anticipated. Or you could qualify for your mortgage sooner than you had planned. Either way, you end up in your dream home sooner than you thought possible.
Again, this option is not for everyone. While a longer amortization period will appeal to many people because the regular mortgage payments can be comparable or even lower than paying rent, it does mean that you will pay more interest over the life of your mortgage.
Still, regardless of which amortization period you select when you originally apply for your mortgage, you do not have to stick with that period throughout the life of your mortgage. You can always choose to shorten your amortization and save on interest costs by making extra payments when you can or an annual lump-sum principal pre-payment. If making pre-payments (in the form of extra, larger or lump-sum payments) is an option you’d like to have, you should ensure the mortgage you end up with will not penalize you for making these types of payments.
It also makes good financial sense for you to re-evaluate your amortization strategy every time your mortgage comes up for renewal (at the end of each term of your mortgage, whether this is three, five, 10 years, etcetera). That way, as you advance in your career and earn a larger salary and/or commission or bonus, you can choose an accelerated payment option (making larger or more frequent payments) or simply increase the frequency of your regular payments (ie, paying your mortgage every week or two weeks as opposed to once per month). Both of these features will take years off your amortization period and save you a considerable amount of money on interest throughout the life of your mortgage.
While the lending industry’s benchmark amortization period is 25 years, and this is the standard that is used by lenders when discussing mortgage offers, and usually the basis for mortgage calculators and payment tables, shorter or longer timeframes are available – to a maximum of 35 years.
The main reason to opt for a shorter amortization period is that you will become mortgage-free sooner. And since you’re agreeing to pay off your mortgage in a shorter period of time, the interest you pay over the life of the mortgage is, therefore, greatly reduced.
A shorter amortization also affords you the luxury of building up equity in your home sooner. Equity is the difference between any outstanding mortgage on your home and its market value.
While it pays to opt for a shorter amortization period, other considerations must be made before selecting your amortization. Because you’re reducing the actual number of mortgage payments you make to pay off your mortgage, your regular payments will be higher. So if your income is irregular because you’re paid commission or if you’re buying a home for the first time and will be carrying a large mortgage, a shorter amortization period that increases your regular payment amount and ties up your cash flow may not be the best option for you.
The key is to select the amortization that best suits your unique requirements and ensures you have adequate cash flow. If you can comfortably afford the higher payments, are looking to save money on your mortgage or maybe you just don’t like the idea of carrying debt over a long period of time, opting for a shorter amortization period may be ideal for you.
Advantages of longer amortization
Choosing a longer amortization period also has its advantages. For instance, it can get you into your dream home sooner than if you choose a shorter period. When you apply for a mortgage,
lenders calculate the maximum regular payment you can afford. They then use this figure to determine the maximum mortgage amount they are willing to lend to you.
While a shorter amortization period results in higher regular payments, a longer amortization period reduces the amount of your regular principal and interest payment by spreading your payments out over a longer timeframe. As a result, you could qualify for a higher mortgage amount than you originally anticipated. Or you could qualify for your mortgage sooner than you had planned. Either way, you end up in your dream home sooner than you thought possible.
Again, this option is not for everyone. While a longer amortization period will appeal to many people because the regular mortgage payments can be comparable or even lower than paying rent, it does mean that you will pay more interest over the life of your mortgage.
Still, regardless of which amortization period you select when you originally apply for your mortgage, you do not have to stick with that period throughout the life of your mortgage. You can always choose to shorten your amortization and save on interest costs by making extra payments when you can or an annual lump-sum principal pre-payment. If making pre-payments (in the form of extra, larger or lump-sum payments) is an option you’d like to have, you should ensure the mortgage you end up with will not penalize you for making these types of payments.
It also makes good financial sense for you to re-evaluate your amortization strategy every time your mortgage comes up for renewal (at the end of each term of your mortgage, whether this is three, five, 10 years, etcetera). That way, as you advance in your career and earn a larger salary and/or commission or bonus, you can choose an accelerated payment option (making larger or more frequent payments) or simply increase the frequency of your regular payments (ie, paying your mortgage every week or two weeks as opposed to once per month). Both of these features will take years off your amortization period and save you a considerable amount of money on interest throughout the life of your mortgage.
3rd quarter housing activity
National resale housing activity climbed to the highest level of any third quarter on record.
Actual (not seasonally adjusted) home sales via the Multiple Listing Service (MLS) Systems of Canadian real estate boards totaled 135,182 units in the third quarter of 2009, according to statistics released by the Canadian Real Estate Association (CREA). This is the highest level of activity on record for the period from July to September. The number of transactions was up 18% from the third quarter of last year, representing the biggest year-over-year increase since early 2002.
Seasonally adjusted national MLS home sales numbered 127,941 units in the third quarter, up 12% from the previous quarter. Building on two previous quarterly increases, seasonally adjusted MLS home sales activity now stands 48% above the low reached in the fourth quarter last year.
Low interest rates, rebounding consumer confidence and an improving overall sense of economic security continue to draw homebuyers to the housing market.
Actual (not seasonally adjusted) home sales via the Multiple Listing Service (MLS) Systems of Canadian real estate boards totaled 135,182 units in the third quarter of 2009, according to statistics released by the Canadian Real Estate Association (CREA). This is the highest level of activity on record for the period from July to September. The number of transactions was up 18% from the third quarter of last year, representing the biggest year-over-year increase since early 2002.
Seasonally adjusted national MLS home sales numbered 127,941 units in the third quarter, up 12% from the previous quarter. Building on two previous quarterly increases, seasonally adjusted MLS home sales activity now stands 48% above the low reached in the fourth quarter last year.
Low interest rates, rebounding consumer confidence and an improving overall sense of economic security continue to draw homebuyers to the housing market.
Housing Activity to Strengthen in 2010
Housing starts have started to recover and are expected to continue to improve in the second half of 2009. Starts are expected to reach 141,900 for the year and will increase to 164,900 for 2010, according to Canada Mortgage and Housing Corporation’s (CMHC) fourth quarter Housing Market Outlook, Canada Edition* report.
“We expect housing markets across Canada to strengthen leading into and over the course of 2010 as economic conditions improve”, said Bob Dugan, Chief Economist for CMHC.
“Demand for existing homes has rebounded since the beginning of the year. In addition, lower inventory levels characterize both the new and existing home markets. As a result, stronger housing demand will be reflected in higher levels of housing starts in 2010”, said Mr. Dugan.
The strong pace of MLS® 1 sales seen in the second and third quarters of this year reflects, in part, activity that was delayed in the previous two quarters and is not likely to be sustained. The level of sales is expected to move back closer in line with anticipated economic conditions. As a result, existing home sales, as measured by the Multiple Listing Service (MLS®), will reach 441,300 units in 2009 and increase to 445,150 units in 2010. The average MLS® price is expected to be $312,950 in 2009 and $324,500 in 2010.
As Canada's national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making vital decisions.
CMHC November 2, 2009
“We expect housing markets across Canada to strengthen leading into and over the course of 2010 as economic conditions improve”, said Bob Dugan, Chief Economist for CMHC.
“Demand for existing homes has rebounded since the beginning of the year. In addition, lower inventory levels characterize both the new and existing home markets. As a result, stronger housing demand will be reflected in higher levels of housing starts in 2010”, said Mr. Dugan.
The strong pace of MLS® 1 sales seen in the second and third quarters of this year reflects, in part, activity that was delayed in the previous two quarters and is not likely to be sustained. The level of sales is expected to move back closer in line with anticipated economic conditions. As a result, existing home sales, as measured by the Multiple Listing Service (MLS®), will reach 441,300 units in 2009 and increase to 445,150 units in 2010. The average MLS® price is expected to be $312,950 in 2009 and $324,500 in 2010.
As Canada's national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making vital decisions.
CMHC November 2, 2009
Canada's remarkable housing recovery
The signs of economic recovery seem to be everywhere these days. Consumer confidence is up. The governor of the Bank of Canada has all but declared the recession over, with the latest GDP figures suggest that the economy is growing again. The stock market has surged 50 per cent from its March low. Plenty of "green shoots" and all that.
A stunning recovery in the Canadian housing market also appears to be taking hold if anecdotal evidence and the statistics are to be believed. Sales are up by double digits in most major markets across the country (they've more than doubled in Vancouver). Average selling prices have rebounded from just the start of the year and are now at record levels in most provinces. Bidding wars have returned in Vancouver and Toronto.
That's a remarkable turnaround from the situation just eight months ago, when prices were down year-over-year in the more expensive markets and sales slumped more than a third from the previous year's levels. Many homeowners took their properties off the market to wait out the slump, which led to a dearth of listings and helped to stop the slide in prices.
Most economists see this quick bounce-back as surprising but healthy — further proof that Canada and the Canadian consumer weathered the global recession better than our American cousins. But a few observers remain wary of jumping on the housing bandwagon. They point to other statistics — like the country's rising deficit, rising unemployment, rising personal bankruptcy numbers, rising household debt levels, a hobbled manufacturing sector and mortgage rates that have nowhere to go but up.
They see all this as raw material for a looming drop in housing prices that could leave many recent homebuyers who've put five per cent down "under water" — in other words, owing more on their homes than the homes are worth. In some U.S. markets, more than half the homeowners who have mortgages have negative equity.
Former maverick MP, federal cabinet minister and personal finance author Garth Turner is one observer who's firmly in the "bubble" camp. His real estate blog — entitled "Greater Fool" — has been forecasting something approaching a housing meltdown for a while now.
Last winter, Turner predicted the real estate market would wither in the face of the recession. But it didn't — a fact he attributes to low interest rates that encouraged "massive borrowing by people I thought were already hideously indebted." He also blames the real estate industry for "irresponsibly telling people prices would rise forever and [that] they must buy now while rates were low."
To be sure, most analysts don't see the housing market as being in bubble territory. They argue that homes are much more affordable now than they were during the last major bubble in the late 1980s, when mortgage rates were above 10 per cent. But there's no denying that there's something of a frenzy in some markets these days.
Low rates + confidence = sales
There's widespread agreement that low mortgage rates are spurring the recent buying spree in housing. At the time of writing, a five-year fixed mortgage was available at most major financial institutions at a generational low of 4.19 per cent — even less at a few smaller lenders. That has prompted buyers who had headed to the sidelines late last year to flood back into the market.
Some times, that flood of buyers is directed at some of the same properties. "The max we've seen so far this year is 20 offers one evening on a semi-detached home," Toronto realtor Thomas Cook wrote in his blog in July.
Some observers also credit a couple of measures introduced in February's federal budget aimed at first-time buyers — a $750 tax credit and an extra $5,000 that buyers can take from their RRSPs for a down payment.
But low interest rates are still the biggest factor. Still, Gregory Klump, chief economist at the Canadian Real Estate Association, says mortgage rates alone weren't enough to push people from browsing to buying. People are now more confident their jobs are safe, he told CBC News. "Improved affordability combined with improved economic security — that's resulting in the drastic rebound in sales activity," he says.
The Bank of Canada has pledged to keep its key overnight lending rate at a rock-bottom 0.25 per cent until at least the middle of 2010, as long as inflation doesn't pick up. In the short term, there seems little likelihood of that.
Rate hikes to come eventually
But some economists are warning that the central bank may eventually be hiking rates big time. "The tightening will not likely begin before the third quarter of 2010," according to Sébastien Lavoie, an economist at Laurentian Bank Securities.
"That said, when the time does finally come, timid [quarter percentage point] increases will not be enough to 'normalize' rates," he wrote in early September. "The Bank [of Canada's] exceptionally low current policy rate implies that the tightening cycle will have to be quite aggressive." How aggressive? Lavoie forecasts "a succession of hike announcements" of a half, three-quarters and perhaps even a full percentage point at a time.
Increases that large could, of course, play havoc with the real estate market. Those who stretched to buy through a 35-year amortization could find themselves in big trouble when it comes time to renew if rates spike. Given that a recent survey from the Canadian Payroll Association found that 59 per cent of Canadians are living paycheque to paycheque, the prospect of a sharp jump in mortgage costs would hit some owners very hard.
"People need to be circumspect," CREA's Klump agrees. "They need to run through the scenarios. What if rates jump two per cent?"
Do the math
A quick look at the math shows what could happen if rates do jump substantially. Let's assume someone has bought a house for $320,000 — the average national MLS selling price in August. If they put five cent down, they'd face a mortgage of $304,000 plus mortgage loan insurance of $8,360 for a total financing requirement of $312,360.
With a five-year mortgage rate of 4.19 per cent amortized over 35 years, that yields monthly payments of $1,412 month. Jack the rate up to 8.0 per cent, and the monthly payment jumps more than $700 to $2,189.
Rising prices and rising mortgage rates will make it more difficult to carry that home purchase. "If prices continue to eclipse incomes [as they have for seven years], affordability could become an issue again for first-time buyers, especially when interest rates return to more normal levels beyond 2010," warns BMO economist Sal Guatieri.
A variable rate mortgage is now available for as little as prime plus 10 basis points (2.35 per cent) — a big improvement from the prime plus one per cent that was offered earlier this year. At MonsterMortgage.ca, vice-president Vince Gaetano tells CBC News the majority of clients at his firm are going variable, with about 35 per cent choosing a five-year fixed mortgage.
He notes that most bankers last year were predicting rates would jump — warnings that led many who had been enjoying variable rates as low as 1.45 per cent to lock in for five years at rates above five per cent. Needless to say, he doesn't think much of bank prognostications.
Will recovery stall?
While bidding wars have returned in a few markets, a better balance between supply and demand could be in store as more listings appear. Nationally, average selling prices in August were up 11.3 per cent from the previous year to $324,000. But realtors say that average is skewed upwards by more sales of expensive homes in the more expensive markets (for instance, Calgary saw one home sell for $10.3 million in August).
CREA says factoring out changes in sales activity results in a year-over-year weighted price increase of 7.1 per cent. The weighted August figure was actually down 0.8 per cent from July.
In the short term, most observers think the recovery in Canadian housing sales will continue as mortgage rates stay historically low and more listings appear. Longer term, there's more uncertainty. The real estate industry sees national sales rising 5.3 per cent in 2010 and average home prices rising modestly — up 2.1 per cent over 2009. CMHC predicts an average price increase of 1.6 per cent.
Others are more cautious. A recent survey by Royal LePage of more than 1,100 of its agents found only 61 per cent thought the housing market's current strength was sustainable. The biggest reason cited by the doubters was the expectation that mortgage rates will rise.
Real estate watchers are advising borrowers to be careful in the current low mortgage rate environment and add some wiggle room to their affordability calculations. Rates are bound to go up at some point — the only question is when and how fast.
September 21, 2009 Tom McFeat, CBC News
A stunning recovery in the Canadian housing market also appears to be taking hold if anecdotal evidence and the statistics are to be believed. Sales are up by double digits in most major markets across the country (they've more than doubled in Vancouver). Average selling prices have rebounded from just the start of the year and are now at record levels in most provinces. Bidding wars have returned in Vancouver and Toronto.
That's a remarkable turnaround from the situation just eight months ago, when prices were down year-over-year in the more expensive markets and sales slumped more than a third from the previous year's levels. Many homeowners took their properties off the market to wait out the slump, which led to a dearth of listings and helped to stop the slide in prices.
Most economists see this quick bounce-back as surprising but healthy — further proof that Canada and the Canadian consumer weathered the global recession better than our American cousins. But a few observers remain wary of jumping on the housing bandwagon. They point to other statistics — like the country's rising deficit, rising unemployment, rising personal bankruptcy numbers, rising household debt levels, a hobbled manufacturing sector and mortgage rates that have nowhere to go but up.
They see all this as raw material for a looming drop in housing prices that could leave many recent homebuyers who've put five per cent down "under water" — in other words, owing more on their homes than the homes are worth. In some U.S. markets, more than half the homeowners who have mortgages have negative equity.
Former maverick MP, federal cabinet minister and personal finance author Garth Turner is one observer who's firmly in the "bubble" camp. His real estate blog — entitled "Greater Fool" — has been forecasting something approaching a housing meltdown for a while now.
Last winter, Turner predicted the real estate market would wither in the face of the recession. But it didn't — a fact he attributes to low interest rates that encouraged "massive borrowing by people I thought were already hideously indebted." He also blames the real estate industry for "irresponsibly telling people prices would rise forever and [that] they must buy now while rates were low."
To be sure, most analysts don't see the housing market as being in bubble territory. They argue that homes are much more affordable now than they were during the last major bubble in the late 1980s, when mortgage rates were above 10 per cent. But there's no denying that there's something of a frenzy in some markets these days.
Low rates + confidence = sales
There's widespread agreement that low mortgage rates are spurring the recent buying spree in housing. At the time of writing, a five-year fixed mortgage was available at most major financial institutions at a generational low of 4.19 per cent — even less at a few smaller lenders. That has prompted buyers who had headed to the sidelines late last year to flood back into the market.
Some times, that flood of buyers is directed at some of the same properties. "The max we've seen so far this year is 20 offers one evening on a semi-detached home," Toronto realtor Thomas Cook wrote in his blog in July.
Some observers also credit a couple of measures introduced in February's federal budget aimed at first-time buyers — a $750 tax credit and an extra $5,000 that buyers can take from their RRSPs for a down payment.
But low interest rates are still the biggest factor. Still, Gregory Klump, chief economist at the Canadian Real Estate Association, says mortgage rates alone weren't enough to push people from browsing to buying. People are now more confident their jobs are safe, he told CBC News. "Improved affordability combined with improved economic security — that's resulting in the drastic rebound in sales activity," he says.
The Bank of Canada has pledged to keep its key overnight lending rate at a rock-bottom 0.25 per cent until at least the middle of 2010, as long as inflation doesn't pick up. In the short term, there seems little likelihood of that.
Rate hikes to come eventually
But some economists are warning that the central bank may eventually be hiking rates big time. "The tightening will not likely begin before the third quarter of 2010," according to Sébastien Lavoie, an economist at Laurentian Bank Securities.
"That said, when the time does finally come, timid [quarter percentage point] increases will not be enough to 'normalize' rates," he wrote in early September. "The Bank [of Canada's] exceptionally low current policy rate implies that the tightening cycle will have to be quite aggressive." How aggressive? Lavoie forecasts "a succession of hike announcements" of a half, three-quarters and perhaps even a full percentage point at a time.
Increases that large could, of course, play havoc with the real estate market. Those who stretched to buy through a 35-year amortization could find themselves in big trouble when it comes time to renew if rates spike. Given that a recent survey from the Canadian Payroll Association found that 59 per cent of Canadians are living paycheque to paycheque, the prospect of a sharp jump in mortgage costs would hit some owners very hard.
"People need to be circumspect," CREA's Klump agrees. "They need to run through the scenarios. What if rates jump two per cent?"
Do the math
A quick look at the math shows what could happen if rates do jump substantially. Let's assume someone has bought a house for $320,000 — the average national MLS selling price in August. If they put five cent down, they'd face a mortgage of $304,000 plus mortgage loan insurance of $8,360 for a total financing requirement of $312,360.
With a five-year mortgage rate of 4.19 per cent amortized over 35 years, that yields monthly payments of $1,412 month. Jack the rate up to 8.0 per cent, and the monthly payment jumps more than $700 to $2,189.
Rising prices and rising mortgage rates will make it more difficult to carry that home purchase. "If prices continue to eclipse incomes [as they have for seven years], affordability could become an issue again for first-time buyers, especially when interest rates return to more normal levels beyond 2010," warns BMO economist Sal Guatieri.
A variable rate mortgage is now available for as little as prime plus 10 basis points (2.35 per cent) — a big improvement from the prime plus one per cent that was offered earlier this year. At MonsterMortgage.ca, vice-president Vince Gaetano tells CBC News the majority of clients at his firm are going variable, with about 35 per cent choosing a five-year fixed mortgage.
He notes that most bankers last year were predicting rates would jump — warnings that led many who had been enjoying variable rates as low as 1.45 per cent to lock in for five years at rates above five per cent. Needless to say, he doesn't think much of bank prognostications.
Will recovery stall?
While bidding wars have returned in a few markets, a better balance between supply and demand could be in store as more listings appear. Nationally, average selling prices in August were up 11.3 per cent from the previous year to $324,000. But realtors say that average is skewed upwards by more sales of expensive homes in the more expensive markets (for instance, Calgary saw one home sell for $10.3 million in August).
CREA says factoring out changes in sales activity results in a year-over-year weighted price increase of 7.1 per cent. The weighted August figure was actually down 0.8 per cent from July.
In the short term, most observers think the recovery in Canadian housing sales will continue as mortgage rates stay historically low and more listings appear. Longer term, there's more uncertainty. The real estate industry sees national sales rising 5.3 per cent in 2010 and average home prices rising modestly — up 2.1 per cent over 2009. CMHC predicts an average price increase of 1.6 per cent.
Others are more cautious. A recent survey by Royal LePage of more than 1,100 of its agents found only 61 per cent thought the housing market's current strength was sustainable. The biggest reason cited by the doubters was the expectation that mortgage rates will rise.
Real estate watchers are advising borrowers to be careful in the current low mortgage rate environment and add some wiggle room to their affordability calculations. Rates are bound to go up at some point — the only question is when and how fast.
September 21, 2009 Tom McFeat, CBC News
BC Housing Market Gains Momentum
Vancouver, BC – October 15, 2009. The British Columbia Real Estate Association (BCREA) reports that Multiple Listing Service® (MLS®) residential sales in the province climbed 68 per cent to 8,576 units in September compared to the same month last year. The average MLS® residential sales price in the province climbed 15 per cent to $474,169 from $412,149 in September 2008
“Upward momentum in consumer demand continued unabated in September,” said Cameron Muir, BCREA Chief Economist. “Low mortgage interest rates and renewed confidence in real estate assets has propelled BC home sales to a level not seen in two years.” September posted the highest number of BC MLS® residential sales for that month since September 2005, and the third highest ever recorded for the month of September.
“While Victoria and the Lower mainland are exhibiting strong sellers’ market conditions with rising prices, housing markets in the rest of the province are experiencing a more gradual recovery,” added Muir.
Year-to-date, MLS® residential sales dollar volume increased 6 per cent to $29 billion over the same period last year. A total of 63,521 units were sold in the first nine months of 2009, up 6 per cent from 2008, while the average MLS® price declined 1 per cent to $457,389.
“Upward momentum in consumer demand continued unabated in September,” said Cameron Muir, BCREA Chief Economist. “Low mortgage interest rates and renewed confidence in real estate assets has propelled BC home sales to a level not seen in two years.” September posted the highest number of BC MLS® residential sales for that month since September 2005, and the third highest ever recorded for the month of September.
“While Victoria and the Lower mainland are exhibiting strong sellers’ market conditions with rising prices, housing markets in the rest of the province are experiencing a more gradual recovery,” added Muir.
Year-to-date, MLS® residential sales dollar volume increased 6 per cent to $29 billion over the same period last year. A total of 63,521 units were sold in the first nine months of 2009, up 6 per cent from 2008, while the average MLS® price declined 1 per cent to $457,389.
MLS® home sales remain strong in August
National resale housing market sales activity remained up from year-ago levels in August 2009 for the third consecutive month, posting the largest year-over-year gain in more than two years.
According to statistics released by The Canadian Real Estate Association (CREA), a total of 42,483 homes traded hands via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards in August 2009. This represents an increase of 18.5 per cent from the same month last year, and the third consecutive year-over-year gain of more than 15 per cent. Sales were 6.6 per cent below the record for the month of August set in 2007.
On a seasonally adjusted basis, national MLS® home sales held steady. At 42,426 units, seasonally adjusted activity came to within six-tenths of one per cent of levels in the previous month. Seasonally adjusted activity in Alberta and Quebec declined, offsetting activity gains in British Columbia. Seasonally adjusted activity still remains 60.8 per cent above the decade-low in January.
“National sales activity in the third quarter is on track for a significant increase compared to the second quarter,” said CREA President Dale Ripplinger. “Low interest rates and affordability continue to attract homebuyers to the housing market. Consumer confidence continues to rise, which bodes well for activity in the coming months.”
Resale activity in August 2009 was up from year-ago levels in about approximately three-quarters of all local markets. Year-over-year gains in Vancouver (117 per cent), Toronto (27 per cent), Calgary (17 per cent) and Montreal (nine per cent) contributed most to the national increase in activity. Aggregate MLS® home sales activity for 25 major markets posted the third consecutive increase from year-ago levels of more than 20 per cent in August.
Demand continues to improve in Canada’s more expensive housing markets, drawing the national average price upward. The national MLS® residential average price rose 11.3 per cent from year-ago levels to $324,779. This is the highest national average price for the month of August.
The MLS® residential average price for the month of August set records in every province except Alberta. A sustained increase in sales activity, including a rebound in activity at the higher end of the price spectrum in some of Canada’s priciest markets, is skewing the national average price upward.
This price trend is similar but more muted for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average sale price in August 2009 was up 7.1 per cent year-over-year, but down eight-tenths of a per cent from the previous month.
The weighted average price increase for an aggregate of 25 major markets reveals a similarly muted trend compared to its unweighted counterpart. The major market weighted average price rose 5.3 per cent year-over-year in August 2009, compared to an increase of 11.8 per cent for the unweighted major market average price. The major market weighted average price compensates for changes in sales activity in major markets by taking into account the proportion of privately owned housing stock in each market in relation to the major market aggregate.
The number of new listings coming onto the MLS® market posted the eighth consecutive decline from year-ago levels. New residential listings were down 8.9 per cent year-over-year to 64,167 units, the lowest level for the month of August in five years.
Improved demand is combining with fewer new listings to draw down inventories on the housing market. There were 212,227 homes listed for sale on the MLS® Systems of real estate Boards in Canada at the end of August 2009, down 13.3 per cent from a year earlier. This is the fourth consecutive year-over-year decline in active listings.
Nationally, the number of months of inventory was up slightly to five months in August from 4.4 months in July, but still well below the recessionary peak of 12.8 months in January 2009. The number of months of inventory edged up in most major markets in August. The number of months of inventory is equal to the supply of active listings at the end of the month divided by the number of sales that month. It represents the number of months it would take to sell current inventories at the current rate of sales activity.
The seasonally adjusted dollar volume of all residential MLS® sales set a new record in August 2009, rising 1.5 per cent from the previous month to $14 billion. British Columbia contributed most to the increase, having posted the highest seasonally adjusted dollar volume on record for the province.
“The balance of sentiment making big-ticket purchases pushed into positive territory in August for the first time since early last year,” said Chief Economist Gregory Klump. “Recent cuts to mortgage interest rates will no doubt provide further support for this indicator, which is an important factor underlying the housing market.”
“Activity may be leveling out as we indicated in last month’s revised resale housing market forecast. Average prices dropped sharply over the second half of 2008 and have rebounded since then, so comparisons against year-ago levels are likely to show continued improvement over the rest of 2009.”
CREA September 15, 2009
“Copyright Canadian Real Estate Association. Reprinted with permission.”
According to statistics released by The Canadian Real Estate Association (CREA), a total of 42,483 homes traded hands via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards in August 2009. This represents an increase of 18.5 per cent from the same month last year, and the third consecutive year-over-year gain of more than 15 per cent. Sales were 6.6 per cent below the record for the month of August set in 2007.
On a seasonally adjusted basis, national MLS® home sales held steady. At 42,426 units, seasonally adjusted activity came to within six-tenths of one per cent of levels in the previous month. Seasonally adjusted activity in Alberta and Quebec declined, offsetting activity gains in British Columbia. Seasonally adjusted activity still remains 60.8 per cent above the decade-low in January.
“National sales activity in the third quarter is on track for a significant increase compared to the second quarter,” said CREA President Dale Ripplinger. “Low interest rates and affordability continue to attract homebuyers to the housing market. Consumer confidence continues to rise, which bodes well for activity in the coming months.”
Resale activity in August 2009 was up from year-ago levels in about approximately three-quarters of all local markets. Year-over-year gains in Vancouver (117 per cent), Toronto (27 per cent), Calgary (17 per cent) and Montreal (nine per cent) contributed most to the national increase in activity. Aggregate MLS® home sales activity for 25 major markets posted the third consecutive increase from year-ago levels of more than 20 per cent in August.
Demand continues to improve in Canada’s more expensive housing markets, drawing the national average price upward. The national MLS® residential average price rose 11.3 per cent from year-ago levels to $324,779. This is the highest national average price for the month of August.
The MLS® residential average price for the month of August set records in every province except Alberta. A sustained increase in sales activity, including a rebound in activity at the higher end of the price spectrum in some of Canada’s priciest markets, is skewing the national average price upward.
This price trend is similar but more muted for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average sale price in August 2009 was up 7.1 per cent year-over-year, but down eight-tenths of a per cent from the previous month.
The weighted average price increase for an aggregate of 25 major markets reveals a similarly muted trend compared to its unweighted counterpart. The major market weighted average price rose 5.3 per cent year-over-year in August 2009, compared to an increase of 11.8 per cent for the unweighted major market average price. The major market weighted average price compensates for changes in sales activity in major markets by taking into account the proportion of privately owned housing stock in each market in relation to the major market aggregate.
The number of new listings coming onto the MLS® market posted the eighth consecutive decline from year-ago levels. New residential listings were down 8.9 per cent year-over-year to 64,167 units, the lowest level for the month of August in five years.
Improved demand is combining with fewer new listings to draw down inventories on the housing market. There were 212,227 homes listed for sale on the MLS® Systems of real estate Boards in Canada at the end of August 2009, down 13.3 per cent from a year earlier. This is the fourth consecutive year-over-year decline in active listings.
Nationally, the number of months of inventory was up slightly to five months in August from 4.4 months in July, but still well below the recessionary peak of 12.8 months in January 2009. The number of months of inventory edged up in most major markets in August. The number of months of inventory is equal to the supply of active listings at the end of the month divided by the number of sales that month. It represents the number of months it would take to sell current inventories at the current rate of sales activity.
The seasonally adjusted dollar volume of all residential MLS® sales set a new record in August 2009, rising 1.5 per cent from the previous month to $14 billion. British Columbia contributed most to the increase, having posted the highest seasonally adjusted dollar volume on record for the province.
“The balance of sentiment making big-ticket purchases pushed into positive territory in August for the first time since early last year,” said Chief Economist Gregory Klump. “Recent cuts to mortgage interest rates will no doubt provide further support for this indicator, which is an important factor underlying the housing market.”
“Activity may be leveling out as we indicated in last month’s revised resale housing market forecast. Average prices dropped sharply over the second half of 2008 and have rebounded since then, so comparisons against year-ago levels are likely to show continued improvement over the rest of 2009.”
CREA September 15, 2009
“Copyright Canadian Real Estate Association. Reprinted with permission.”
August Home Sales Continue at Brisk Pace
The British Columbia Real Estate Association (BCREA) reports that Multiple Listing Service® (MLS®) residential sales in the province climbed 66 per cent to 8,565 units in August compared to the same month last year. The average MLS® residential sales price in the province climbed 12 per cent to $471,078 from $421,685 in August 2008.
“Homes sales continued at a rapid pace in August,” said Cameron Muir, BCREA Chief Economist. “Attractive home prices and low mortgage rates were key drivers in the market.”
The number of active residential listings declined 20 per cent over the past year, with August posting 26 per cent fewer active listings than the peak in December 2008 (seasonally adjusted). “Home prices edged higher in many markets over the summer months as declining inventories created competition among homebuyers for the best properties.”
Year-to-date, MLS® residential sales dollar volume declined 2 per cent to $25 billion over the same period last year. A total of 54,945 units were sold in the first eight months of 2009, up 1 per cent from 2008, while the average MLS® price declined 2 per cent to $454,769.
BCREA Vancouver, BC – September 11, 2009.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
“Homes sales continued at a rapid pace in August,” said Cameron Muir, BCREA Chief Economist. “Attractive home prices and low mortgage rates were key drivers in the market.”
The number of active residential listings declined 20 per cent over the past year, with August posting 26 per cent fewer active listings than the peak in December 2008 (seasonally adjusted). “Home prices edged higher in many markets over the summer months as declining inventories created competition among homebuyers for the best properties.”
Year-to-date, MLS® residential sales dollar volume declined 2 per cent to $25 billion over the same period last year. A total of 54,945 units were sold in the first eight months of 2009, up 1 per cent from 2008, while the average MLS® price declined 2 per cent to $454,769.
BCREA Vancouver, BC – September 11, 2009.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Housing Starts Increase in August
The seasonally adjusted annual rate of housing starts increased to 150,400 units in August from 134,200 units in July, according to Canada Mortgage and Housing Corporation (CMHC).
“Housing starts are trending higher, reflecting improvements in both the single and multiple segments,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “The improvement in housing starts is consistent with our expectation of a stronger second half for 2009.”
The seasonally adjusted annual rate of urban starts increased by 14.0 per cent to 131,800 units in August. Urban multiple starts increased by 23.8 per cent to 77,600 units, while urban single starts moved up 2.5 per cent to 54,200 units in August.
August’s seasonally adjusted annual rate of urban starts increased by 56.0 per cent in British Columbia, by 16.1 per cent in the Prairies, by 13.8 per cent in Ontario, by 9.6 per cent in Atlantic Canada, and by 2.5 per cent in Quebec.
Rural starts were estimated at a seasonally adjusted annual rate of 18,600 units in August2.
As Canada's national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making vital decisions.
CMHC September 9, 2009
“Housing starts are trending higher, reflecting improvements in both the single and multiple segments,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “The improvement in housing starts is consistent with our expectation of a stronger second half for 2009.”
The seasonally adjusted annual rate of urban starts increased by 14.0 per cent to 131,800 units in August. Urban multiple starts increased by 23.8 per cent to 77,600 units, while urban single starts moved up 2.5 per cent to 54,200 units in August.
August’s seasonally adjusted annual rate of urban starts increased by 56.0 per cent in British Columbia, by 16.1 per cent in the Prairies, by 13.8 per cent in Ontario, by 9.6 per cent in Atlantic Canada, and by 2.5 per cent in Quebec.
Rural starts were estimated at a seasonally adjusted annual rate of 18,600 units in August2.
As Canada's national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making vital decisions.
CMHC September 9, 2009
Housing Activity to Rebound in Second Half of 2009 and in 2010
Housing starts are expected to rebound in the second half of 2009 and will reach 141,900 for the year. Starts will increase to 150,300 for 2010, according to Canada Mortgage and Housing Corporation’s (CMHC) third quarter Housing Market Outlook, Canada Edition* report. The overall forecast totals for housing starts remain unchanged from the second quarter release.
"Economic uncertainty and lower levels of employment tempered new housing construction in the first half of this year", said Bob Dugan, Chief Economist for CMHC. "In the second half of 2009 and in 2010, we expect housing markets across Canada to strengthen."
Improving activity on the resale market and lower inventory levels in both the new and existing home markets are expected to prompt builders to increase residential construction.
Existing home sales, as measured by the Multiple Listing Service (MLS®)1, have rebounded strongly since January and will reach 420,700 units in 2009 and remain close to that level at 419,400 units in 2010. The average MLS® price is expected to moderate to $301,400 in 2009 and to increase to $306,300 in 2010.
As Canada's national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making vital decisions.
CMHC September 3, 2009
"Economic uncertainty and lower levels of employment tempered new housing construction in the first half of this year", said Bob Dugan, Chief Economist for CMHC. "In the second half of 2009 and in 2010, we expect housing markets across Canada to strengthen."
Improving activity on the resale market and lower inventory levels in both the new and existing home markets are expected to prompt builders to increase residential construction.
Existing home sales, as measured by the Multiple Listing Service (MLS®)1, have rebounded strongly since January and will reach 420,700 units in 2009 and remain close to that level at 419,400 units in 2010. The average MLS® price is expected to moderate to $301,400 in 2009 and to increase to $306,300 in 2010.
As Canada's national housing agency, CMHC draws on more than 60 years of experience to help Canadians access a variety of quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making vital decisions.
CMHC September 3, 2009
Tuesday, September 1, 2009
BC Home Sales Brightest Light in Economy
Vancouver, BC – August 27, 2009. The British Columbia Real Estate Association (BCREA) released its Forecast Update for the third quarter of 2009 today.
BC Multiple Listing Service® (MLS®) residential sales are forecast to climb 15 per cent from 68,923 units in 2008 to 79,400 units this year, just below the ten-year average of 82,800 units. Residential sales in 2010 are forecast to rise an additional 6 per cent to 84,200 units. For comparison, a record 106,310 units were sold in 2005.
“After 12 months of significant volatility in BC’s housing markets, greater stability is expected through 2010,” said Cameron Muir, BCREA Chief Economist. “Robust housing demand is a strong signal that the economy is coming out of the recession, with a recovery in the broader economy expected to develop over the next three quarters.”
“Home sales have doubled since January, with prices edging higher in Metro Vancouver and Victoria in recent months,” said Muir. The average annual MLS® residential price in the province is forecast to reach $451,200 in this year, down 1 per cent from a record $454,599 in 2008.
“Market conditions vary depending on the region of the province,” added Muir. “While the Metro Vancouver and Victoria markets have rebounded sharply, interior markets are demonstrating a more gradual trend toward balance between supply and demand.”
BC housing starts are forecast to increase 25 per cent 18,500 units next year after a dismal 2009. Housing starts are forecast to decline 57 per cent to 14,800 units this year, the lowest level of activity since 2000.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
BC Multiple Listing Service® (MLS®) residential sales are forecast to climb 15 per cent from 68,923 units in 2008 to 79,400 units this year, just below the ten-year average of 82,800 units. Residential sales in 2010 are forecast to rise an additional 6 per cent to 84,200 units. For comparison, a record 106,310 units were sold in 2005.
“After 12 months of significant volatility in BC’s housing markets, greater stability is expected through 2010,” said Cameron Muir, BCREA Chief Economist. “Robust housing demand is a strong signal that the economy is coming out of the recession, with a recovery in the broader economy expected to develop over the next three quarters.”
“Home sales have doubled since January, with prices edging higher in Metro Vancouver and Victoria in recent months,” said Muir. The average annual MLS® residential price in the province is forecast to reach $451,200 in this year, down 1 per cent from a record $454,599 in 2008.
“Market conditions vary depending on the region of the province,” added Muir. “While the Metro Vancouver and Victoria markets have rebounded sharply, interior markets are demonstrating a more gradual trend toward balance between supply and demand.”
BC housing starts are forecast to increase 25 per cent 18,500 units next year after a dismal 2009. Housing starts are forecast to decline 57 per cent to 14,800 units this year, the lowest level of activity since 2000.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
MLS® home sales forecast revised
OTTAWA – August 27, 2009 – MLS® home sales were much stronger than expected in the second quarter of 2009, with activity having climbed throughout the quarter and into July. The remarkable recovery of resale housing has prompted a change to the MLS® home sales forecast issued by The Canadian Real Estate Association for 2009 and 2010.
The speed and magnitude of the rebound in sales activity to date has lifted CREA’s national forecast for the number of transactions to 432,600 units. This represents an annual decline in activity of 0.4 per cent compared to levels set in 2008, and is a significant upward revision from the previously forecast decline of 14.7 per cent in CREA’s forecast issued last May.
“Sales activity started off the third quarter on a strong footing,” said CREA President Dale Ripplinger. “The difference in the resale housing market now, compared to the beginning of the year, is night and day, and nowhere is this more evident than in the West.”
British Columbia and Ontario are now forecast to post annual increases in activity this year, reflecting weak demand last year and a subsequent rebound. Forecast declines in annual activity were trimmed significantly in Alberta, Saskatchewan, and Quebec, and were also shaved for New Brunswick and Nova Scotia.
National MLS® home sales activity is forecast to rise 5.3 per cent to 455,400 units in 2010. This is a smaller rise in activity than previously forecast. “Low interest rates are boosting sales by returning homebuyers to the market who moved to the sidelines late last year, and shifting ” said Chief Economist Gregory Klump. “Buyers are also shifting purchase decisions forward as they take advantage of attractive interest rates now before financing costs increase.”
New listings have been edging down from record levels, with many sellers taking their home off the market pending an improvement in housing market conditions. Average price increases in the second half of 2009 are likely result in a mild rebound in listings in 2010.
The national MLS® average home price is forecast to edge up 1.5 per cent in 2009, as the strong rebound in sales activity, not price, in some of Canada’s most expensive markets continues to skew the national, and some provincial, average prices upward. Alberta is the only province with a forecast decline in average price in 2009 (-4.4 per cent). Average prices are forecast to rise in all other provinces except British Columbia, where average price in 2009 is forecast to remain stable. CREA’s previous forecast predicted a decline in the national average price of 5.2 per cent in 2009.
Average prices are forecast to stabilize over the rest of 2009 and into 2010, but weak results in the first quarter of 2009 will result in a lower annual average price this year compared to 2010. The national average price is forecast to be up 2.1 per cent on a year-over-year basis in 2010.
The price trend is similar but less dramatic for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average price is forecast to climb 1.4 per cent in 2009, with a further 1.7 per cent rise in 2010. CREA previously forecast that the weighted national average price for MLS® homes sales would hold steady from 2009 to 2010.
“The speed with which the Canadian resale housing market has rebounded is unprecedented,” said Klump. “The economic recovery is expected to be slow and protracted, so the dramatic swings in activity seen in late 2008 and this year are unlikely to be repeated in 2010.”
“Copyright Canadian Real Estate Association. Reprinted with permission.”
The speed and magnitude of the rebound in sales activity to date has lifted CREA’s national forecast for the number of transactions to 432,600 units. This represents an annual decline in activity of 0.4 per cent compared to levels set in 2008, and is a significant upward revision from the previously forecast decline of 14.7 per cent in CREA’s forecast issued last May.
“Sales activity started off the third quarter on a strong footing,” said CREA President Dale Ripplinger. “The difference in the resale housing market now, compared to the beginning of the year, is night and day, and nowhere is this more evident than in the West.”
British Columbia and Ontario are now forecast to post annual increases in activity this year, reflecting weak demand last year and a subsequent rebound. Forecast declines in annual activity were trimmed significantly in Alberta, Saskatchewan, and Quebec, and were also shaved for New Brunswick and Nova Scotia.
National MLS® home sales activity is forecast to rise 5.3 per cent to 455,400 units in 2010. This is a smaller rise in activity than previously forecast. “Low interest rates are boosting sales by returning homebuyers to the market who moved to the sidelines late last year, and shifting ” said Chief Economist Gregory Klump. “Buyers are also shifting purchase decisions forward as they take advantage of attractive interest rates now before financing costs increase.”
New listings have been edging down from record levels, with many sellers taking their home off the market pending an improvement in housing market conditions. Average price increases in the second half of 2009 are likely result in a mild rebound in listings in 2010.
The national MLS® average home price is forecast to edge up 1.5 per cent in 2009, as the strong rebound in sales activity, not price, in some of Canada’s most expensive markets continues to skew the national, and some provincial, average prices upward. Alberta is the only province with a forecast decline in average price in 2009 (-4.4 per cent). Average prices are forecast to rise in all other provinces except British Columbia, where average price in 2009 is forecast to remain stable. CREA’s previous forecast predicted a decline in the national average price of 5.2 per cent in 2009.
Average prices are forecast to stabilize over the rest of 2009 and into 2010, but weak results in the first quarter of 2009 will result in a lower annual average price this year compared to 2010. The national average price is forecast to be up 2.1 per cent on a year-over-year basis in 2010.
The price trend is similar but less dramatic for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average price is forecast to climb 1.4 per cent in 2009, with a further 1.7 per cent rise in 2010. CREA previously forecast that the weighted national average price for MLS® homes sales would hold steady from 2009 to 2010.
“The speed with which the Canadian resale housing market has rebounded is unprecedented,” said Klump. “The economic recovery is expected to be slow and protracted, so the dramatic swings in activity seen in late 2008 and this year are unlikely to be repeated in 2010.”
“Copyright Canadian Real Estate Association. Reprinted with permission.”
New Site for Consumers and REALTORS® to Voice Concern About HST
Vancouver, BC – August 24, 2009. The British Columbia Real Estate Association (BCREA) today launched a new section of its website to provide the public and REALTORS® with information about the impact of the proposed Harmonized Sales Tax (HST) and an opportunity to voice their concerns about the tax. This new resource, which can be found at www.bcrea.bc.ca/hst/hstaction.htm, encourages concerned citizens and REALTORS® to proactively communicate their dissatisfaction with the HST by sending letters to their local MLAs, Premier Gordon Campbell, Minister of Finance Colin Hansen and Carole James, Leader of the Official Opposition.
“Housing is an essential basic need and a significant part of the BC economy,” said BCREA president John Tillie. “We hope the public will join with REALTORS® across the province to express their concern by writing to the government. The HST is unfair to homebuyers and sellers, and the government must take action to minimize the impact of this unfair tax on consumers.”
On July 1, 2010 the proposed HST will significantly increase the cost of buying and selling all property, particularly newly-built homes. With almost 60 per cent of a BC family’s household income required to cover home ownership costs, BCREA is concerned that homebuyers will bear most of the burden associated with the HST resulting in a negative effect on BC’s housing affordability.
BCREA is calling on the provincial government to exempt real estate related services, and to increase the rebate threshold on new housing to at least $500,000, with the threshold indexed for inflation and adjusted annually. The government should also amend the flat rebate of $20,000 to a fixed percentage rebate of four per cent for new homes over the rebate threshold and introduce a three-year phase-out of the Property Transfer Tax to restore fairness for homebuyers.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
“Housing is an essential basic need and a significant part of the BC economy,” said BCREA president John Tillie. “We hope the public will join with REALTORS® across the province to express their concern by writing to the government. The HST is unfair to homebuyers and sellers, and the government must take action to minimize the impact of this unfair tax on consumers.”
On July 1, 2010 the proposed HST will significantly increase the cost of buying and selling all property, particularly newly-built homes. With almost 60 per cent of a BC family’s household income required to cover home ownership costs, BCREA is concerned that homebuyers will bear most of the burden associated with the HST resulting in a negative effect on BC’s housing affordability.
BCREA is calling on the provincial government to exempt real estate related services, and to increase the rebate threshold on new housing to at least $500,000, with the threshold indexed for inflation and adjusted annually. The government should also amend the flat rebate of $20,000 to a fixed percentage rebate of four per cent for new homes over the rebate threshold and introduce a three-year phase-out of the Property Transfer Tax to restore fairness for homebuyers.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
BC Housing Market Exhibits Balanced Conditions - Regional Differences Persist
Vancouver, BC – August 14, 2009. The British Columbia Real Estate Association (BCREA) reports that Multiple Listing Service® (MLS®) residential sales in the province climbed 53 per cent to 10,051 units in July 2009 compared to the same month last year. After six consecutive months of rising home sales and declining inventories, the province moved into balanced conditions in July, the first time since April 2008.
“Record home sales in Metro Vancouver and Victoria propelled the province into balanced conditions last month,” said Cameron Muir, BCREA Chief Economist. “While conditions in many interior markets are getting much better, their reliance on the struggling resource sector and a recent spate of forest fires have contributed to a more gradual pace of improvement.”
Year-to-date, MLS® residential sales dollar volume declined 10 per cent to $21 billion over the same period last year. A total of 46,380 units were sold in the first seven months of 2009, down 6 per cent from 2008, while the average MLS® price declined 4 per cent to $451,758.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
“Record home sales in Metro Vancouver and Victoria propelled the province into balanced conditions last month,” said Cameron Muir, BCREA Chief Economist. “While conditions in many interior markets are getting much better, their reliance on the struggling resource sector and a recent spate of forest fires have contributed to a more gradual pace of improvement.”
Year-to-date, MLS® residential sales dollar volume declined 10 per cent to $21 billion over the same period last year. A total of 46,380 units were sold in the first seven months of 2009, down 6 per cent from 2008, while the average MLS® price declined 4 per cent to $451,758.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Best July on record for MLS® home sales
National resale housing market activity continued climbing in July 2009, with sales posting the largest year-over-year gain in two years. It was also the first time on record that sales activity topped 50,000 units for the month of July in any year on record.
According to statistics released by The Canadian Real Estate Association (CREA), a total of 50,270 homes traded hands via the Multiple Listing Service® (MLS®) of Canadian real estate boards in July 2009. This is up 18.2 per cent from the same month last year, and stands 3.9 per cent above the previous record for the month of July set back in 2007.
On a seasonally adjusted basis, national MLS® home sales posted a sixth consecutive month-over-month increase in July, climbing 2.5 per cent from June to reach 42,539 units. Seasonally adjusted activity now stands 61.2 per cent above the decade-low in January, and just 1.4 per cent below the all-time peak May 2007.
“Sales activity started off the third quarter on a strong footing,” said CREA President Dale Ripplinger. “The difference in the resale housing market now, compared to the beginning of the year, is night and day, and nowhere is this more evident than in the West. Homebuyers recognize that interest rates and prices have bottomed out, and are taking advantage of excellent affordability before prices and interest rates move higher.”
Resale activity in July 2009 was up from the same month last year in about 60 per cent of local markets. Year-over-year gains in Toronto (28 per cent), Vancouver (90 per cent), Montreal (19 per cent), Calgary (22 per cent) and Edmonton (28 per cent) contributed most to the national increase in activity.
Demand is rebounding sharply in some of Canada’s priciest housing markets, which continues to skew the national average price upward. The national MLS® residential average price rose 7.6 per cent from one year ago to $326,832. Only seven local markets posted new average price records in July. The strong rebound in sales activity, not price, in some of Canada’s most expensive markets is skewing the national average price upward, just as a sharp decline in activity in these markets skewed the average lower in late 2008.
The price trend is similar but more muted for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average sale price was up 4.6 per cent year-over-year in July 2009.
The weighted average price increase for an aggregate of 25 major markets reveals a similarly muted trend compared to its unweighted counterpart. The major market weighted average price rose 2.8 per cent year-over-year in July 2009, compared to an increase of 8.3 per cent for the unweighted major market average price. The major market weighted average price compensates for changes in sales activity in major markets by taking into account the proportion of privately owned housing stock in each market in relation to the major market aggregate.
The supply of homes coming onto the MLS® market remained down from year-ago levels. Down 13 per cent from year-ago levels to 73,444 units, this represents the seventh year-over-year decline in as many months in the number of new listings.
Rebounding demand combined with fewer new listings is beginning to draw down the overall supply of homes on the market. There were 219,982 homes listed for sale on the MLS® systems of real estate boards in Canada at the end of July 2009, down 12.4 per cent from July 2008. It is the third consecutive year-over-year decline in active listings, and the largest in more than six years.
The number of months of inventory is equal to the supply of active listings at the end of the month divided by the number of sales that month. It represents the number of months it would take to sell current inventories at the current rate of sales activity. Nationally, there were 4.4 months of inventory in July. This is up slightly from June, but remains one of the lowest figures over the past two years, and well below the recessionary peak of 12.8 months in January 2009.
The seasonally adjusted dollar volume of all residential MLS® sales set a new record in July 2009, climbing 5.5 per cent from the previous month to reach $13.8 billion.
“Home sales through the MLS® systems in July provide clear evidence that sentiment about making major purchases continues to improve,” said Chief Economist Gregory Klump. “Activity may level out over the rest of the year as home prices and mortgage lending interest rates creep higher.”
“The number of new listings coming onto the market is down from last year and the rebound in sales activity is paring inventories, so the number months of inventory is on the wane,” said Klump. “These trends are supporting average prices. Average prices dropped sharply over the second half of 2008 but have rebounded since then, so average prices are expected to continue climbing over the rest of the year.”
“Copyright Canadian Real Estate Association. Reprinted with permission.”
According to statistics released by The Canadian Real Estate Association (CREA), a total of 50,270 homes traded hands via the Multiple Listing Service® (MLS®) of Canadian real estate boards in July 2009. This is up 18.2 per cent from the same month last year, and stands 3.9 per cent above the previous record for the month of July set back in 2007.
On a seasonally adjusted basis, national MLS® home sales posted a sixth consecutive month-over-month increase in July, climbing 2.5 per cent from June to reach 42,539 units. Seasonally adjusted activity now stands 61.2 per cent above the decade-low in January, and just 1.4 per cent below the all-time peak May 2007.
“Sales activity started off the third quarter on a strong footing,” said CREA President Dale Ripplinger. “The difference in the resale housing market now, compared to the beginning of the year, is night and day, and nowhere is this more evident than in the West. Homebuyers recognize that interest rates and prices have bottomed out, and are taking advantage of excellent affordability before prices and interest rates move higher.”
Resale activity in July 2009 was up from the same month last year in about 60 per cent of local markets. Year-over-year gains in Toronto (28 per cent), Vancouver (90 per cent), Montreal (19 per cent), Calgary (22 per cent) and Edmonton (28 per cent) contributed most to the national increase in activity.
Demand is rebounding sharply in some of Canada’s priciest housing markets, which continues to skew the national average price upward. The national MLS® residential average price rose 7.6 per cent from one year ago to $326,832. Only seven local markets posted new average price records in July. The strong rebound in sales activity, not price, in some of Canada’s most expensive markets is skewing the national average price upward, just as a sharp decline in activity in these markets skewed the average lower in late 2008.
The price trend is similar but more muted for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average sale price was up 4.6 per cent year-over-year in July 2009.
The weighted average price increase for an aggregate of 25 major markets reveals a similarly muted trend compared to its unweighted counterpart. The major market weighted average price rose 2.8 per cent year-over-year in July 2009, compared to an increase of 8.3 per cent for the unweighted major market average price. The major market weighted average price compensates for changes in sales activity in major markets by taking into account the proportion of privately owned housing stock in each market in relation to the major market aggregate.
The supply of homes coming onto the MLS® market remained down from year-ago levels. Down 13 per cent from year-ago levels to 73,444 units, this represents the seventh year-over-year decline in as many months in the number of new listings.
Rebounding demand combined with fewer new listings is beginning to draw down the overall supply of homes on the market. There were 219,982 homes listed for sale on the MLS® systems of real estate boards in Canada at the end of July 2009, down 12.4 per cent from July 2008. It is the third consecutive year-over-year decline in active listings, and the largest in more than six years.
The number of months of inventory is equal to the supply of active listings at the end of the month divided by the number of sales that month. It represents the number of months it would take to sell current inventories at the current rate of sales activity. Nationally, there were 4.4 months of inventory in July. This is up slightly from June, but remains one of the lowest figures over the past two years, and well below the recessionary peak of 12.8 months in January 2009.
The seasonally adjusted dollar volume of all residential MLS® sales set a new record in July 2009, climbing 5.5 per cent from the previous month to reach $13.8 billion.
“Home sales through the MLS® systems in July provide clear evidence that sentiment about making major purchases continues to improve,” said Chief Economist Gregory Klump. “Activity may level out over the rest of the year as home prices and mortgage lending interest rates creep higher.”
“The number of new listings coming onto the market is down from last year and the rebound in sales activity is paring inventories, so the number months of inventory is on the wane,” said Klump. “These trends are supporting average prices. Average prices dropped sharply over the second half of 2008 but have rebounded since then, so average prices are expected to continue climbing over the rest of the year.”
“Copyright Canadian Real Estate Association. Reprinted with permission.”
Bank of Canada holds interest rates steady
The Bank of Canada held its benchmark overnight lending rate steady at 0.25 per cent at its setting on July 21st, 2009. The trend-setting Bank rate, which is set 0.25 percentage points above the overnight lending rate, remains at 0.5 per cent.
The Bank said it expects Canada’s economy will contract 2.3 per cent this year, which is significantly better than the forecast it issued in April, which called for a three per cent decline. The forecast also calls for growth of three per cent in 2010, up from 2.5 per cent in April.
The Bank cited the recent strength in domestic demand, the result of “a bringing forward of household expenditures,” as the main reason for the rosier projection.
“The Bank has acknowledged that pent-up demand from late last year and earlier this year, combined with low mortgage rates, has resulted in a stronger than expected recovery in the housing market,” said CREA Chief Economist Gregory Klump. “The strength in the housing sector was cited as the reason for the upward revision to the economic forecast, outweighing the moderating effect of a high Canadian dollar.”
Domestic demand is being spurred by stimulative monetary and fiscal policies, improved financial conditions, firmer commodity prices, and a rebound in consumer and business confidence. “However,” the Bank said, “the higher Canadian dollar, as well as ongoing restructuring in key industrial sectors, is significantly moderating the pace of overall growth.” The Bank had warned at its previous meeting in June that the persistence of a high Canadian dollar would be the main downside risk to growth.
The Bank noted that many countries are now seeing economic activity begin to expand in response to monetary and fiscal policy measures, but went on to call the recovery “nascent”. The Bank noted the importance of keeping this stimulus in place, saying, “effective and resolute policy implementation remains critical to sustained global growth.”
The Bank indicated that inflation outlook is still unfolding as it predicted in the April Monetary Policy Report. At that time, it forecast that inflation would to climb back to the two per cent midpoint of its target range between one and three per cent in the third quarter of 2011.
The Bank also reiterated its pledge to hold interest rates at current levels until the end of the second quarter of 2010, conditional on its inflation outlook. As such, these sections are likely to be unchanged when the Bank releases its July Monetary Policy Report on Thursday July 23rd.
In April, and again in June, the Bank assessed the overall risks to its inflation projection as tilted slightly to the downside. It reiterated this assessment in its interest rate announcement on July 21st.
The Bank’s Monetary Policy Report published on April 23rd included information about additional monetary policy tools it may use to further inject liquidity into the financial system in its ongoing attack against the continuing credit crunch. In its statement, the Bank again said that it “retains considerable flexibility in the conduct of monetary policy at low interest rates,” making it likely that this framework will appear again in the July Monetary Policy Report.
As of July 21st, the advertised five-year conventional mortgage rate stood at 5.85 per cent. This is down 1.3 per cent from one year earlier, but has risen 0.4 per cent from where it stood when the Bank made its previous interest rate announcement on June 4th.
Improving credit market conditions have enabled lenders to reintroduce discounts off posted mortgage interest rates. Discounts of up to a percentage point can be negotiated, depending on lender-client relationship.
(CREA 07/21/2009)“Copyright Canadian Real Estate Association. Reprinted with permission.”
The Bank said it expects Canada’s economy will contract 2.3 per cent this year, which is significantly better than the forecast it issued in April, which called for a three per cent decline. The forecast also calls for growth of three per cent in 2010, up from 2.5 per cent in April.
The Bank cited the recent strength in domestic demand, the result of “a bringing forward of household expenditures,” as the main reason for the rosier projection.
“The Bank has acknowledged that pent-up demand from late last year and earlier this year, combined with low mortgage rates, has resulted in a stronger than expected recovery in the housing market,” said CREA Chief Economist Gregory Klump. “The strength in the housing sector was cited as the reason for the upward revision to the economic forecast, outweighing the moderating effect of a high Canadian dollar.”
Domestic demand is being spurred by stimulative monetary and fiscal policies, improved financial conditions, firmer commodity prices, and a rebound in consumer and business confidence. “However,” the Bank said, “the higher Canadian dollar, as well as ongoing restructuring in key industrial sectors, is significantly moderating the pace of overall growth.” The Bank had warned at its previous meeting in June that the persistence of a high Canadian dollar would be the main downside risk to growth.
The Bank noted that many countries are now seeing economic activity begin to expand in response to monetary and fiscal policy measures, but went on to call the recovery “nascent”. The Bank noted the importance of keeping this stimulus in place, saying, “effective and resolute policy implementation remains critical to sustained global growth.”
The Bank indicated that inflation outlook is still unfolding as it predicted in the April Monetary Policy Report. At that time, it forecast that inflation would to climb back to the two per cent midpoint of its target range between one and three per cent in the third quarter of 2011.
The Bank also reiterated its pledge to hold interest rates at current levels until the end of the second quarter of 2010, conditional on its inflation outlook. As such, these sections are likely to be unchanged when the Bank releases its July Monetary Policy Report on Thursday July 23rd.
In April, and again in June, the Bank assessed the overall risks to its inflation projection as tilted slightly to the downside. It reiterated this assessment in its interest rate announcement on July 21st.
The Bank’s Monetary Policy Report published on April 23rd included information about additional monetary policy tools it may use to further inject liquidity into the financial system in its ongoing attack against the continuing credit crunch. In its statement, the Bank again said that it “retains considerable flexibility in the conduct of monetary policy at low interest rates,” making it likely that this framework will appear again in the July Monetary Policy Report.
As of July 21st, the advertised five-year conventional mortgage rate stood at 5.85 per cent. This is down 1.3 per cent from one year earlier, but has risen 0.4 per cent from where it stood when the Bank made its previous interest rate announcement on June 4th.
Improving credit market conditions have enabled lenders to reintroduce discounts off posted mortgage interest rates. Discounts of up to a percentage point can be negotiated, depending on lender-client relationship.
(CREA 07/21/2009)“Copyright Canadian Real Estate Association. Reprinted with permission.”
The Meaning of REALTOR® (and MLS®)
You’ll see the terms REALTOR® and MLS® system used frequently in this column, as well as out in the world of real estate advertising. The terms are now ubiquitous enough that most people have at least a basic idea of what they think those terms represent. But you might be surprised to know that both of them are registered trademarks owned by the Canadian Real Estate Association (CREA), and used under license by real estate boards and associations across Canada.
The term REALTOR® is not synonymous with “real estate agent” or “broker”. The trademark REALTOR® identifies only those real estate professionals who are members of the Canadian Real Estate Association and, as such, subscribe to a high standard of professional service and a strict Code of Ethics. Every member of a Real Estate Board is also a member of CREA, and therefore we are permitted to use the term REALTOR® to describe themselves as members of CREA. All REALTORS® across Canada, are governed by the REALTOR® Code of Ethics, which states that REALTORS® are committed to:
- Professional competent service
- Absolute honesty and integrity in business dealings
- Co-operation with and fairness to all
- Personal accountability through compliance with CREA’s Standards of Business Practice
To meet their obligations, REALTORS® pledge to observe the spirit of the Code in all of their activities and conduct their business in accordance with the Standards of Business Practice and the Golden Rule – do unto others as you would have them do unto you.
Now let’s talk about the term MLS®. It’s not a noun, or a thing, but an adjective that refers to a standard of service – the MLS® Services – that are provided by CREA members. Local real estate boards or associations license the term MLS® from CREA to use to describe their co-operative selling systems, referred to as MLS® systems. An MLS® system includes an inventory of listings of participating REALTORS® and ensures a certain level of accuracy of information, professionalism and co-operating amongst REALTORS® to effect the purchase and sale of real estate. The Board ensures that level of accuracy and professionalism by enforcing a set of Board-specific MLS® Rules and Regulations that apply to all members’ listings.
Only a real estate professional who is also a REALTOR® can list properties on his or her Board’s local MLS® system. When your home is listed on the MLS® system, all REALTORS® can view it, creating a much wider pool of potential buyers than a sign on your lawn would offer. If you’re looking for a new home, working with a REALTOR® gains you access to all the properties listed on the MLS® system. He or she can set up a custom search that e-mails you details of properties that meet your criteria. It’s a service that only a REALTOR® can offer you.
REALTORS® are proud of the professional real estate services they provide and the Code of Ethics they adhere to.
“Copyright Canadian Real Estate Association. Reprinted with permission.”
The term REALTOR® is not synonymous with “real estate agent” or “broker”. The trademark REALTOR® identifies only those real estate professionals who are members of the Canadian Real Estate Association and, as such, subscribe to a high standard of professional service and a strict Code of Ethics. Every member of a Real Estate Board is also a member of CREA, and therefore we are permitted to use the term REALTOR® to describe themselves as members of CREA. All REALTORS® across Canada, are governed by the REALTOR® Code of Ethics, which states that REALTORS® are committed to:
- Professional competent service
- Absolute honesty and integrity in business dealings
- Co-operation with and fairness to all
- Personal accountability through compliance with CREA’s Standards of Business Practice
To meet their obligations, REALTORS® pledge to observe the spirit of the Code in all of their activities and conduct their business in accordance with the Standards of Business Practice and the Golden Rule – do unto others as you would have them do unto you.
Now let’s talk about the term MLS®. It’s not a noun, or a thing, but an adjective that refers to a standard of service – the MLS® Services – that are provided by CREA members. Local real estate boards or associations license the term MLS® from CREA to use to describe their co-operative selling systems, referred to as MLS® systems. An MLS® system includes an inventory of listings of participating REALTORS® and ensures a certain level of accuracy of information, professionalism and co-operating amongst REALTORS® to effect the purchase and sale of real estate. The Board ensures that level of accuracy and professionalism by enforcing a set of Board-specific MLS® Rules and Regulations that apply to all members’ listings.
Only a real estate professional who is also a REALTOR® can list properties on his or her Board’s local MLS® system. When your home is listed on the MLS® system, all REALTORS® can view it, creating a much wider pool of potential buyers than a sign on your lawn would offer. If you’re looking for a new home, working with a REALTOR® gains you access to all the properties listed on the MLS® system. He or she can set up a custom search that e-mails you details of properties that meet your criteria. It’s a service that only a REALTOR® can offer you.
REALTORS® are proud of the professional real estate services they provide and the Code of Ethics they adhere to.
“Copyright Canadian Real Estate Association. Reprinted with permission.”
BC Survey Suggests Real Estate Purchase Confidence Improving
Vancouver, BC – July 15, 2009. A new survey of BC homeowners and renters on housing affordability and green housing issues suggests consumer confidence concerning real estate purchases may be improving.
Sponsored by the British Columbia Real Estate Association (BCREA), the May 2009 Mustel Group survey tracked several key measures asked in a January 2009 BCREA survey, including top affordability barriers and how provincial taxes impact BC homebuyers. It also uncovered new primary data on buyer intentions and energy-efficiency practices at home.
Findings revealed that four-in-ten British Columbians plan or hope to purchase homes or properties within the next five years, with about half of these potential buyers expecting to do so in the next two years. A higher proportion plan to purchase in Metro Vancouver (46 per cent) than elsewhere (35 per cent), which may indicate that consumer confidence is now higher in the urban area. In the January 2009 survey, findings did not vary by region.
“We’ve had five consecutive months of increasing home sales, which may suggest that the optimism uncovered in this survey is being reflected in provincial home sales,” explains BCREA president John Tillie. “The May 2009 survey also revealed that people’s perception of the barriers to home ownership have also changed, which is good news for homebuyers, sellers and renters.”
Although affordability continues to be the key barrier to purchase, along with concerns about job security, lowering market values and general concerns about the economy, a slightly higher proportion of BC residents in the May 2009 measure indicated they did not have any purchase barriers at all. There was also a decrease in the number of people concerned about depreciating property values and less mention of general financial barriers.
The survey findings also revealed that making smart green choices at home is still top of mind for most British Columbians. When asked if they were more likely, less likely or about as likely to make green improvements to their homes compared to this time in 2008, one out of every two BC residents answered that they were more likely now to green their home than they were approximately one year ago.
“It’s important to remember that all of us can take part in reducing household greenhouse gas emissions by improving the overall energy efficiency of our homes,” says Tillie. “Green choices are smart choices, and they help improve the Quality of Life in our communities.” Survey findings suggest the majority of British Columbians (65 per cent) would be willing to pay more for an energy efficient home.
“Because this survey immediately followed the provincial election, we also asked British Columbians whether they were happy with the attention paid to housing issues during the campaign,” says Tillie. “Only one in four were satisfied, which is something BCREA plans to address looking toward the next provincial election in 2013.”
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Sponsored by the British Columbia Real Estate Association (BCREA), the May 2009 Mustel Group survey tracked several key measures asked in a January 2009 BCREA survey, including top affordability barriers and how provincial taxes impact BC homebuyers. It also uncovered new primary data on buyer intentions and energy-efficiency practices at home.
Findings revealed that four-in-ten British Columbians plan or hope to purchase homes or properties within the next five years, with about half of these potential buyers expecting to do so in the next two years. A higher proportion plan to purchase in Metro Vancouver (46 per cent) than elsewhere (35 per cent), which may indicate that consumer confidence is now higher in the urban area. In the January 2009 survey, findings did not vary by region.
“We’ve had five consecutive months of increasing home sales, which may suggest that the optimism uncovered in this survey is being reflected in provincial home sales,” explains BCREA president John Tillie. “The May 2009 survey also revealed that people’s perception of the barriers to home ownership have also changed, which is good news for homebuyers, sellers and renters.”
Although affordability continues to be the key barrier to purchase, along with concerns about job security, lowering market values and general concerns about the economy, a slightly higher proportion of BC residents in the May 2009 measure indicated they did not have any purchase barriers at all. There was also a decrease in the number of people concerned about depreciating property values and less mention of general financial barriers.
The survey findings also revealed that making smart green choices at home is still top of mind for most British Columbians. When asked if they were more likely, less likely or about as likely to make green improvements to their homes compared to this time in 2008, one out of every two BC residents answered that they were more likely now to green their home than they were approximately one year ago.
“It’s important to remember that all of us can take part in reducing household greenhouse gas emissions by improving the overall energy efficiency of our homes,” says Tillie. “Green choices are smart choices, and they help improve the Quality of Life in our communities.” Survey findings suggest the majority of British Columbians (65 per cent) would be willing to pay more for an energy efficient home.
“Because this survey immediately followed the provincial election, we also asked British Columbians whether they were happy with the attention paid to housing issues during the campaign,” says Tillie. “Only one in four were satisfied, which is something BCREA plans to address looking toward the next provincial election in 2013.”
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
MLS® home sales rebound in the second quarter
OTTAWA – July 14th, 2009 – National resale housing market activity bounced back strongly in the second quarter of 2009 above levels reported for the same period last year. Demand continues to rebound sharply in some of the most expensive markets in the country, skewing the national average price upward.
According to statistics released by The Canadian Real Estate Association (CREA), actual (not seasonally adjusted) home sales, via the Multiple Listing Service® (MLS®) of Canadian real estate boards, totaled 147,351 units in the second quarter of 2009 – the fourth strongest quarterly sales figure ever. Up 1.4 per cent from the second quarter of 2008, this marks the first year-over-year increase in quarterly activity since the fourth quarter of 2007.
On a seasonally adjusted basis, national MLS® home sales numbered 114,173 units in the second quarter, jumping up a record 31.5 per cent from the first quarter of 2009.
“Potential buyers who moved to the sidelines late last year when economic uncertainty peaked are returning to the housing market now that the worst of the recession may be behind us,” said Dale Ripplinger, President of The Canadian Real Estate Association.
Seasonally adjusted resale activity in the second quarter was up from the previous quarter in about 85 per cent of local markets. Quarterly activity increases in Toronto (45 per cent), Vancouver (77 per cent), Montreal (33 per cent), Calgary (66 per cent) and Edmonton (39 per cent) contributed most to the national increase in activity.
Strong upward momentum for monthly sales activity was sustained throughout the second quarter. June marked the fifth consecutive month in which activity was up from month-ago levels. Some 41,304 homes traded hands via the MLS® of real estate boards in Canada on a seasonally adjusted basis in June 2009. This is up 8.7 per cent from May and represents the first time since January 2008 that monthly activity topped 40,000 units.
Actual (not seasonally adjusted) MLS® home sales climbed 17.9 per cent year-over-year to 54,616 units in June 2009. This is on par with the record for the month of June set in 2007 and is the fourth highest level for activity in any month on record.
The national MLS® residential average sale price reached the highest quarterly level ever in the second quarter of 2009. At $318,696, the average sale price was up half a percent from the previous record set in the second quarter of 2008.
The national average home price also scaled new heights on a monthly basis, climbing 3.6 per cent year-overyear to $326,613 in June 2009. However, only 13 local markets posted new average price records in June, less than a handful of which are among the most active or expensive. The strong rebound in sales activity, not price, in Canada’s most expensive markets is skewing average prices upward nationally and in some provinces, just as a sharp decline in activity in these markets skewed the average lower in late 2008.
MLS® home sales rebound in the second quarter. The price trend is similar but less dramatic for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average sale price was up 1.7 per cent year-over-year in June 2009 – less than half of the percentage increase in the unweighted national average price.
The supply of homes coming onto the MLS® market continued retreating in second quarter. Seasonally adjusted MLS® residential new listings were down 16.9 per cent from the previous quarter to 197,049 units, the lowest level since the fourth quarter of 2005.
Nationally, the number of months of inventory was 4.2 months in June 2009. This is the lowest level since August 2007, and well down from the recessionary peak of 12.8 months in January 2009. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity.
The residential dollar volume for MLS® sales jumped 40.6 per cent on a seasonally adjusted quarter-over-quarter basis in the second quarter of 2009, to reach $34.8 billion.
“Low interest rates have improved the affordability of homeownership, as have price adjustments in housing markets that previously experienced rapid price increases,” said CREA Chief Economist Gregory Klump. “Housing markets where negotiations recently favoured the buyer have become more balanced and the stage is being set for modest price appreciation as inventories are drawn down by sales.”
“Sales momentum remains strong going into the second half of 2009,” said CREA President Dale Ripplinger. “Chances are good that the number of transactions in the second half of 2009 will surpass levels in the first half of the year.”
“Copyright Canadian Real Estate Association. Reprinted with permission.”
According to statistics released by The Canadian Real Estate Association (CREA), actual (not seasonally adjusted) home sales, via the Multiple Listing Service® (MLS®) of Canadian real estate boards, totaled 147,351 units in the second quarter of 2009 – the fourth strongest quarterly sales figure ever. Up 1.4 per cent from the second quarter of 2008, this marks the first year-over-year increase in quarterly activity since the fourth quarter of 2007.
On a seasonally adjusted basis, national MLS® home sales numbered 114,173 units in the second quarter, jumping up a record 31.5 per cent from the first quarter of 2009.
“Potential buyers who moved to the sidelines late last year when economic uncertainty peaked are returning to the housing market now that the worst of the recession may be behind us,” said Dale Ripplinger, President of The Canadian Real Estate Association.
Seasonally adjusted resale activity in the second quarter was up from the previous quarter in about 85 per cent of local markets. Quarterly activity increases in Toronto (45 per cent), Vancouver (77 per cent), Montreal (33 per cent), Calgary (66 per cent) and Edmonton (39 per cent) contributed most to the national increase in activity.
Strong upward momentum for monthly sales activity was sustained throughout the second quarter. June marked the fifth consecutive month in which activity was up from month-ago levels. Some 41,304 homes traded hands via the MLS® of real estate boards in Canada on a seasonally adjusted basis in June 2009. This is up 8.7 per cent from May and represents the first time since January 2008 that monthly activity topped 40,000 units.
Actual (not seasonally adjusted) MLS® home sales climbed 17.9 per cent year-over-year to 54,616 units in June 2009. This is on par with the record for the month of June set in 2007 and is the fourth highest level for activity in any month on record.
The national MLS® residential average sale price reached the highest quarterly level ever in the second quarter of 2009. At $318,696, the average sale price was up half a percent from the previous record set in the second quarter of 2008.
The national average home price also scaled new heights on a monthly basis, climbing 3.6 per cent year-overyear to $326,613 in June 2009. However, only 13 local markets posted new average price records in June, less than a handful of which are among the most active or expensive. The strong rebound in sales activity, not price, in Canada’s most expensive markets is skewing average prices upward nationally and in some provinces, just as a sharp decline in activity in these markets skewed the average lower in late 2008.
MLS® home sales rebound in the second quarter. The price trend is similar but less dramatic for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average sale price was up 1.7 per cent year-over-year in June 2009 – less than half of the percentage increase in the unweighted national average price.
The supply of homes coming onto the MLS® market continued retreating in second quarter. Seasonally adjusted MLS® residential new listings were down 16.9 per cent from the previous quarter to 197,049 units, the lowest level since the fourth quarter of 2005.
Nationally, the number of months of inventory was 4.2 months in June 2009. This is the lowest level since August 2007, and well down from the recessionary peak of 12.8 months in January 2009. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity.
The residential dollar volume for MLS® sales jumped 40.6 per cent on a seasonally adjusted quarter-over-quarter basis in the second quarter of 2009, to reach $34.8 billion.
“Low interest rates have improved the affordability of homeownership, as have price adjustments in housing markets that previously experienced rapid price increases,” said CREA Chief Economist Gregory Klump. “Housing markets where negotiations recently favoured the buyer have become more balanced and the stage is being set for modest price appreciation as inventories are drawn down by sales.”
“Sales momentum remains strong going into the second half of 2009,” said CREA President Dale Ripplinger. “Chances are good that the number of transactions in the second half of 2009 will surpass levels in the first half of the year.”
“Copyright Canadian Real Estate Association. Reprinted with permission.”
Monday, July 13, 2009
Housing Starts Increase in June
The seasonally adjusted annual rate of housing starts increased to 140,700 units in June from 130,300 units in May, according to Canada Mortgage and Housing Corporation (CMHC).
“The increase in housing starts in June is broadly based, encompassing both the singles and multiples segments,” said Bob Dugan, Chief Economist at CMHC. “In addition, Western Canada experienced an increase this month.”
Housing starts are expected to improve throughout 2009 and over the next several years to gradually become more closely aligned to demographic demand, which is currently estimated at about 175,000 units per year.
The seasonally adjusted annual rate of urban starts increased 9.5 per cent to 120,100 units in June. Urban multiple starts increased 11.3 per cent to 67,000 units, while urban single starts also moved up by 7.3 per cent to 53,100 units in June.
June’s seasonally adjusted annual rate of urban starts increased 59.4 per cent in the Prairies, 25 per cent in British Columbia, and 3.1 per cent in Ontario. Urban starts declined 6.3 per cent in Quebec, and 3.9 per cent in Atlantic Canada.
Rural starts were estimated at a seasonally adjusted annual rate of 20,600 units in June.
CMHC
“The increase in housing starts in June is broadly based, encompassing both the singles and multiples segments,” said Bob Dugan, Chief Economist at CMHC. “In addition, Western Canada experienced an increase this month.”
Housing starts are expected to improve throughout 2009 and over the next several years to gradually become more closely aligned to demographic demand, which is currently estimated at about 175,000 units per year.
The seasonally adjusted annual rate of urban starts increased 9.5 per cent to 120,100 units in June. Urban multiple starts increased 11.3 per cent to 67,000 units, while urban single starts also moved up by 7.3 per cent to 53,100 units in June.
June’s seasonally adjusted annual rate of urban starts increased 59.4 per cent in the Prairies, 25 per cent in British Columbia, and 3.1 per cent in Ontario. Urban starts declined 6.3 per cent in Quebec, and 3.9 per cent in Atlantic Canada.
Rural starts were estimated at a seasonally adjusted annual rate of 20,600 units in June.
CMHC
Home Sales Climb for Fifth Consecutive Month
The British Columbia Real Estate Association (BCREA) reports that Multiple Listing Service® (MLS®) residential sales in the province rose 40 per cent to 9,970 units in June 2009 compared to the same month last year. Activity in the month of June marked the fifth consecutive month of rising sales and the highest level of activity since January 2008, on a seasonally adjusted basis.
“Housing markets around BC continued to post higher sales in June, fuelled by attractive mortgage rates and lower prices,” said Bryan Yu, BCREA Economist. “The larger urban regions of Greater Vancouver and Victoria exhibited balanced market conditions in June, while others have recorded improved market stability. Stronger demand and a decline in home listings are stabilizing home prices in many BC markets.”
Year-to-date, MLS® residential sales dollar volume was down 20 per cent to $16.3 billion over the same period last year. A total of 36,329 units were sold in the first six months of 2009, down 15 per cent from 2008, while the average MLS® price declined 5 per cent to $448,381.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
“Housing markets around BC continued to post higher sales in June, fuelled by attractive mortgage rates and lower prices,” said Bryan Yu, BCREA Economist. “The larger urban regions of Greater Vancouver and Victoria exhibited balanced market conditions in June, while others have recorded improved market stability. Stronger demand and a decline in home listings are stabilizing home prices in many BC markets.”
Year-to-date, MLS® residential sales dollar volume was down 20 per cent to $16.3 billion over the same period last year. A total of 36,329 units were sold in the first six months of 2009, down 15 per cent from 2008, while the average MLS® price declined 5 per cent to $448,381.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Friday, July 3, 2009
Green is Good for Property Specialists
What does the word “greenhouse” mean to you? Traditionally, it meant a building made of glass, where plants are cultivated. More recently the terms “green” and “house” have congered up very different meanings—that of a home that uses sustainable building materials and energy efficient design. And now for realtors and other property industry professionals, the growing green housing movement is significantly changing how property is marketed and managed.
People are recognizing that a green building is efficient, and efficiency has real economic, as well as social and environmental value. Organizations in the UK, the US and Australia have agreed to cooperate and develop common metrics for measuring CO2 emissions. These leading green building ratings are now available internationally for measuring the environmental sustainability of new and existing homes and buildings.
Here in Canada, the movement towards going green is growing exponentially, especially in British Columbia and the Atlantic provinces. Recent findings show that about one out of three BC residents has already taken steps to make their homes more environmentally friendly (Source: BCREA, January 2009).
Unfortunately there is little consistency or standardization amongst the various degrees of ‘greenness” within a market. Some type of consistency will make it easier for property developers and building owners to monitor the energy performance of their buildings. But when it comes to individual homeowners—that is not so easy.
Consumers looking to purchase eco-friendly homes have limited options to obtain detailed information on the green aspects of a home, often relying on the information provided by the current homeowner which may or may not be accurate.
And while green is good for consumers and for our planet, industry professionals benefit as well. Right now, brokers knowledgeable in green practices can really distinguish themselves from their competitors. It won’t be long, however, before the basics of green brokerage will be considered minimum training for the profession. CREA promotes creative and innovative broker training programs, like those of NAR and the Associação dos Profissionais e Empresas de Mediação Imobiliária de Portugal (APEMIP) , by sharing best practices among its member Associations.
"Copyright Canadian Real Estate Association. Reprinted with permission.”
People are recognizing that a green building is efficient, and efficiency has real economic, as well as social and environmental value. Organizations in the UK, the US and Australia have agreed to cooperate and develop common metrics for measuring CO2 emissions. These leading green building ratings are now available internationally for measuring the environmental sustainability of new and existing homes and buildings.
Here in Canada, the movement towards going green is growing exponentially, especially in British Columbia and the Atlantic provinces. Recent findings show that about one out of three BC residents has already taken steps to make their homes more environmentally friendly (Source: BCREA, January 2009).
Unfortunately there is little consistency or standardization amongst the various degrees of ‘greenness” within a market. Some type of consistency will make it easier for property developers and building owners to monitor the energy performance of their buildings. But when it comes to individual homeowners—that is not so easy.
Consumers looking to purchase eco-friendly homes have limited options to obtain detailed information on the green aspects of a home, often relying on the information provided by the current homeowner which may or may not be accurate.
And while green is good for consumers and for our planet, industry professionals benefit as well. Right now, brokers knowledgeable in green practices can really distinguish themselves from their competitors. It won’t be long, however, before the basics of green brokerage will be considered minimum training for the profession. CREA promotes creative and innovative broker training programs, like those of NAR and the Associação dos Profissionais e Empresas de Mediação Imobiliária de Portugal (APEMIP) , by sharing best practices among its member Associations.
"Copyright Canadian Real Estate Association. Reprinted with permission.”
Thursday, June 25, 2009
What is a home sale worth to the economy?
Each time a home changes hands in British Columbia, the transaction generates significant spin-offs, creates jobs and wealth and helps keep our communities growing.
Exactly how much economic activity does a home sale generate? It depends on how it is measured.
A new report from the Canadian Real Estate Association (CREA) and Altus Group, Economic Impacts of MLS® Home Sales and Purchases in Canada and the Provinces 2006-2008 (April 2009), finds that in BC, a residential home sale transaction generates $60,200 in economic spin-offs and 0.42 jobs.
When multiplied by the 24,626 homes that changed hands in the Real Estate Board of Greater Vancouver (REBGV) area in 2008, total spin-offs amount to $1.48 billion and 10,343 jobs.
A September 2008 report from BC Real Estate Association, Multiple Listing Service® Residential Sales, finds that each residential sale in BC generates about $42,000 in spending and about 0.28 jobs. This amounts to $1.03 billion in economic activity and 6,895 jobs in the REBGV area in 2008.
What accounts for this difference?
“BCREA research focuses on the Gross Domestic Product (GDP) impacts the year of purchase, which in our study was 2007,” explains BC Real Estate Association Chief Economist Cameron Muir. “Whereas the CREA/Altus Group research focuses on GDP impacts during the first, second and third years after a home buyer purchases a home, which was 2006-2008.”
If we think about what home buyers might buy in the second year of owning their home, the amounts certainly do add up. Renovation expenses alone could be a large cost, as could new appliances or even new drapes or window coverings. And in the third year of owning their home, home buyers might landscape or get new drain tiles or gutters, all of which add to the spin-offs of the original purchase.
Thus, both studies are accurate. Each covers a different time period, which i"
"Wednesday, June 24, 2009 Vancouver Real Estate Board
Exactly how much economic activity does a home sale generate? It depends on how it is measured.
A new report from the Canadian Real Estate Association (CREA) and Altus Group, Economic Impacts of MLS® Home Sales and Purchases in Canada and the Provinces 2006-2008 (April 2009), finds that in BC, a residential home sale transaction generates $60,200 in economic spin-offs and 0.42 jobs.
When multiplied by the 24,626 homes that changed hands in the Real Estate Board of Greater Vancouver (REBGV) area in 2008, total spin-offs amount to $1.48 billion and 10,343 jobs.
A September 2008 report from BC Real Estate Association, Multiple Listing Service® Residential Sales, finds that each residential sale in BC generates about $42,000 in spending and about 0.28 jobs. This amounts to $1.03 billion in economic activity and 6,895 jobs in the REBGV area in 2008.
What accounts for this difference?
“BCREA research focuses on the Gross Domestic Product (GDP) impacts the year of purchase, which in our study was 2007,” explains BC Real Estate Association Chief Economist Cameron Muir. “Whereas the CREA/Altus Group research focuses on GDP impacts during the first, second and third years after a home buyer purchases a home, which was 2006-2008.”
If we think about what home buyers might buy in the second year of owning their home, the amounts certainly do add up. Renovation expenses alone could be a large cost, as could new appliances or even new drapes or window coverings. And in the third year of owning their home, home buyers might landscape or get new drain tiles or gutters, all of which add to the spin-offs of the original purchase.
Thus, both studies are accurate. Each covers a different time period, which i"
"Wednesday, June 24, 2009 Vancouver Real Estate Board
Mortgage Update
Where Do We Go After Hitting Bottom?
Consider it one of the few positives floating in a sea of negatives during the current recession. In a period beset by job losses, drops in home prices and lower consumer confidence, mortgage borrowing costs have dropped precipitously for buyers and owners. This has
fueled a modest uptick in home ownership demand from early year lows and provided opportunity for some current owners to refinance at lower rates.
Since the end of April, posted mortgage rates have settled at decades low levels- precluding any discounts often offered by lenders to clients with preferred credit histories. The one-year borrowing cost on a fixed term mortgage fell to 3.9 per cent at the end of April, marking a 170 basis points (bps) decline since the end of 2008 (Fig.1). The five-year fixed term mortgage rate fell to 5.25 per cent, down from 6.5 per cent during the same period. These rock-bottom mortgage rates should move up in the quarters ahead—particularly for longer fixed term mortgages.
Existing households and new buyers with variable rate mortgages should see their borrowing rate remain flat until the second quarter of 2010. BCREA forecasts a 0.75 percentage point increase through 2010 as prime rates rise to meet changes in the Bank of Canada’s
(BoC) target overnight rate. The BoC kept its target for the overnight rate at 0.25 per cent on June 4 after lowering it by a cumulative 425 basis points (bps) since December 2007 in a bid to spur economic activity during a deepening recession. The BoC stated that the target overnight rate would likely stay at this level until the end of the second quarter in 2010, conditional on its inflation outlook. BCREA forecasts a cumulative rate increase of 75 bps by the end of 2010 as economic prospects improve and global interest rates rise from record lows.
Fixed term mortgage rates, which move closely with bond yields and deposit rates of similar maturity are expected to edge up this year and next but remain near record lows by historical standards. Longer-term bond yields have risen quickly since the first quarter of 2009 despite low short-term rates, suggesting that the market expects higher inflation and interest rates in late 2010. However, BCREA forecasts a more modest rise in fixed term mortgage rates over the next two years as higher inflation expectations are tempered
by a slower than expected economic recovery, an elevated Canadian dollar and weaker labour market.
Is Higher Inflation on the Table?
Rising Government of Canada bond yields in recent months has reflected a move away from safe-havens and back into equities and renewed expectations that significant inflationary pressure may be waiting in the wings (Fig. 2). This has led to increased upward pressure on medium-term lending rates given that funds for these products are largely raised in bond markets and from deposits of similar maturity. While spreads between 10- and 2- year bonds are at the widest margin since early 2002 suggesting higher medium-term interest rates in the future, a number of economic factors suggest moderate inflationary pressure and point to a gradual increase in administered lending rates.
The worst of the current recession may have already passed. While the economy contracted sharply by 5.4 per cent in the first quarter, the weakest performance since 1991, the bulk of the declines occurred from November to January at the height of the global economic
crisis (Fig. 3). Since this time, commodity and financial market conditions have improved, while consumer and business confidence have partly rebounded.
Nonetheless, there remains considerable excess capacity in the economy which will dampen some of the impacts that a modest recovery phase will have on inflationary expectations and future interest rates. While the rate of employment declines have stabilized from
January highs, the economy continues to shed workers The national unemployment rate climbed to 8.4 per cent in May, the highest since June 1998. Continued job losses and downward pressure on incomes will factor into lower domestic spending while forcing retailers
to offer further discounts to consumers.
Meanwhile, Canadian exporters continue to be dragged down by a global contraction in demand– particularly from the US. The recent appreciation of the Canadian dollar, reflecting US dollar weakness and a rebound in commodity prices, will make Canadian exporters less
competitive on the global market, while lowering the cost of importing goods to Canada.
Inflation in Canada is expected to remain relatively low, albeit still higher than current levels and result in a modest increase in medium term interest rates.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Consider it one of the few positives floating in a sea of negatives during the current recession. In a period beset by job losses, drops in home prices and lower consumer confidence, mortgage borrowing costs have dropped precipitously for buyers and owners. This has
fueled a modest uptick in home ownership demand from early year lows and provided opportunity for some current owners to refinance at lower rates.
Since the end of April, posted mortgage rates have settled at decades low levels- precluding any discounts often offered by lenders to clients with preferred credit histories. The one-year borrowing cost on a fixed term mortgage fell to 3.9 per cent at the end of April, marking a 170 basis points (bps) decline since the end of 2008 (Fig.1). The five-year fixed term mortgage rate fell to 5.25 per cent, down from 6.5 per cent during the same period. These rock-bottom mortgage rates should move up in the quarters ahead—particularly for longer fixed term mortgages.
Existing households and new buyers with variable rate mortgages should see their borrowing rate remain flat until the second quarter of 2010. BCREA forecasts a 0.75 percentage point increase through 2010 as prime rates rise to meet changes in the Bank of Canada’s
(BoC) target overnight rate. The BoC kept its target for the overnight rate at 0.25 per cent on June 4 after lowering it by a cumulative 425 basis points (bps) since December 2007 in a bid to spur economic activity during a deepening recession. The BoC stated that the target overnight rate would likely stay at this level until the end of the second quarter in 2010, conditional on its inflation outlook. BCREA forecasts a cumulative rate increase of 75 bps by the end of 2010 as economic prospects improve and global interest rates rise from record lows.
Fixed term mortgage rates, which move closely with bond yields and deposit rates of similar maturity are expected to edge up this year and next but remain near record lows by historical standards. Longer-term bond yields have risen quickly since the first quarter of 2009 despite low short-term rates, suggesting that the market expects higher inflation and interest rates in late 2010. However, BCREA forecasts a more modest rise in fixed term mortgage rates over the next two years as higher inflation expectations are tempered
by a slower than expected economic recovery, an elevated Canadian dollar and weaker labour market.
Is Higher Inflation on the Table?
Rising Government of Canada bond yields in recent months has reflected a move away from safe-havens and back into equities and renewed expectations that significant inflationary pressure may be waiting in the wings (Fig. 2). This has led to increased upward pressure on medium-term lending rates given that funds for these products are largely raised in bond markets and from deposits of similar maturity. While spreads between 10- and 2- year bonds are at the widest margin since early 2002 suggesting higher medium-term interest rates in the future, a number of economic factors suggest moderate inflationary pressure and point to a gradual increase in administered lending rates.
The worst of the current recession may have already passed. While the economy contracted sharply by 5.4 per cent in the first quarter, the weakest performance since 1991, the bulk of the declines occurred from November to January at the height of the global economic
crisis (Fig. 3). Since this time, commodity and financial market conditions have improved, while consumer and business confidence have partly rebounded.
Nonetheless, there remains considerable excess capacity in the economy which will dampen some of the impacts that a modest recovery phase will have on inflationary expectations and future interest rates. While the rate of employment declines have stabilized from
January highs, the economy continues to shed workers The national unemployment rate climbed to 8.4 per cent in May, the highest since June 1998. Continued job losses and downward pressure on incomes will factor into lower domestic spending while forcing retailers
to offer further discounts to consumers.
Meanwhile, Canadian exporters continue to be dragged down by a global contraction in demand– particularly from the US. The recent appreciation of the Canadian dollar, reflecting US dollar weakness and a rebound in commodity prices, will make Canadian exporters less
competitive on the global market, while lowering the cost of importing goods to Canada.
Inflation in Canada is expected to remain relatively low, albeit still higher than current levels and result in a modest increase in medium term interest rates.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Wednesday, June 3, 2009
Increased Demand Steadies Housing Market in Greater Vancouver
VANCOUVER, BC - A continued increase in buyer activity over the last four months has resulted in increased home sales and lessened the downward pressure on housing prices in Greater Vancouver.
The Real Estate Board of Greater Vancouver (REBGV) reports that the number of residential property sales in Greater Vancouver totalled 3,524 in May 2009, an increase of 17.4 per cent from the 3,002 sales recorded in May 2008, and an increase of 18.9 per cent compared to last month.
Since the beginning of the year, the MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver has increased 4.5 per cent to $506,201 from $484,211. However, home prices compared to May 2008 levels are down 10.9 per cent.
“The increased level of buyer activity over the last few months has had a stabilizing effect on home prices across our region,” Scott Russell, REBGV president said. “MLS® data continues to show a trend toward a balanced market in the region.”
New listings for detached, attached and apartment properties declined in Greater Vancouver, down 36 per cent to 4,733 in May 2009 compared to May 2008, when 7,390 new units were listed. At 13,641, the total number of property listings on the Multiple Listing Service® declined 4.7 per cent compared to last month and 16 per cent compared to May 2008.
Sales of detached properties increased 16.5 per cent to 1,402 from the 1,203 detached sales recorded during the same period in 2008. The HPI benchmark price for detached properties declined 11.8 per cent from May 2008 to $680,320.
Sales of apartment properties in May 2009 increased 17.2 per cent to 1,458, compared to 1,244 sales in May 2008. The benchmark price of an apartment property declined 10.2 per cent from May 2008 to $349,987.
Attached property sales in May 2009 are up 19.6 per cent to 664, compared with the 555 sales in May 2008. The benchmark price of an attached unit decreased 9 per cent between May 2008 and 2009 to $435,848.
Real Estate Board of Greater Vancouver
The Real Estate Board of Greater Vancouver (REBGV) reports that the number of residential property sales in Greater Vancouver totalled 3,524 in May 2009, an increase of 17.4 per cent from the 3,002 sales recorded in May 2008, and an increase of 18.9 per cent compared to last month.
Since the beginning of the year, the MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver has increased 4.5 per cent to $506,201 from $484,211. However, home prices compared to May 2008 levels are down 10.9 per cent.
“The increased level of buyer activity over the last few months has had a stabilizing effect on home prices across our region,” Scott Russell, REBGV president said. “MLS® data continues to show a trend toward a balanced market in the region.”
New listings for detached, attached and apartment properties declined in Greater Vancouver, down 36 per cent to 4,733 in May 2009 compared to May 2008, when 7,390 new units were listed. At 13,641, the total number of property listings on the Multiple Listing Service® declined 4.7 per cent compared to last month and 16 per cent compared to May 2008.
Sales of detached properties increased 16.5 per cent to 1,402 from the 1,203 detached sales recorded during the same period in 2008. The HPI benchmark price for detached properties declined 11.8 per cent from May 2008 to $680,320.
Sales of apartment properties in May 2009 increased 17.2 per cent to 1,458, compared to 1,244 sales in May 2008. The benchmark price of an apartment property declined 10.2 per cent from May 2008 to $349,987.
Attached property sales in May 2009 are up 19.6 per cent to 664, compared with the 555 sales in May 2008. The benchmark price of an attached unit decreased 9 per cent between May 2008 and 2009 to $435,848.
Real Estate Board of Greater Vancouver
Friday, May 29, 2009
BC Housing Market Stabilizing
As part of its Spring 2009 Housing Forecast, the British Columbia Real Estate Association (BCREA) reported today that housing market conditions have improved more rapidly than expected. As a result, BCREA has revised its home price forecast upwards, reflecting greater price stability through the balance of the year. The average Multiple Listing Service® (MLS®) residential price in British Columbia is forecast to decline eight per cent to $420,600 in 2009, instead of 13 per cent originally forecast at the beginning of the year.
“The majority of the decline in home prices has already occurred,” said Cameron Muir, BCREA Chief Economist. “Balanced markets are emerging in Victoria, Vancouver and the Fraser Valley. There’s now little downward pressure on home prices in these areas.”
Home sales in the province have climbed out of a trough, posting double-digit percentage gains for three consecutive months (seasonally adjusted).
BC MLS® residential sales are forecast to decline 12 per cent to 60,755 units this year, as a result of a weak first quarter. However, stronger consumer demand is expected to continue for the balance of the year and through 2010. Residential sales in 2010 are forecast to climb 10 percent to 66,740 units.
Affordability reached a three-year high in April with lower home prices and record low interest rates reducing the carrying cost of the average priced home 24 per cent over the last year.
“A significant increase in affordability has brought many first-time buyers into the market,” added Muir. “First-time buyers were largely absent in the late fall and winter, making it more difficult for move-up buyers to sell their current homes. The chain of ownership is now being oiled.”
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
“The majority of the decline in home prices has already occurred,” said Cameron Muir, BCREA Chief Economist. “Balanced markets are emerging in Victoria, Vancouver and the Fraser Valley. There’s now little downward pressure on home prices in these areas.”
Home sales in the province have climbed out of a trough, posting double-digit percentage gains for three consecutive months (seasonally adjusted).
BC MLS® residential sales are forecast to decline 12 per cent to 60,755 units this year, as a result of a weak first quarter. However, stronger consumer demand is expected to continue for the balance of the year and through 2010. Residential sales in 2010 are forecast to climb 10 percent to 66,740 units.
Affordability reached a three-year high in April with lower home prices and record low interest rates reducing the carrying cost of the average priced home 24 per cent over the last year.
“A significant increase in affordability has brought many first-time buyers into the market,” added Muir. “First-time buyers were largely absent in the late fall and winter, making it more difficult for move-up buyers to sell their current homes. The chain of ownership is now being oiled.”
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Monday, May 25, 2009
Housing Market Balancing Out
The British Columbia Real Estate Association (BCREA) reports that April was the third consecutive month of increasing home sales in the province, on a seasonally adjusted basis. Consumer demand was bolstered by lower home prices and record low mortgage interest rates. Housing affordability hit a three-year high at the beginning of the month.
“Downward pressure on home prices has eased considerably,” said Cameron Muir, BCREA Chief Economist. “An increase in consumer demand combined with fewer homes for sale has trended the market near balanced conditions.” The number of homes for sale through the Multiple Listing Service (MLS®) fell to a twelve-month low in April, on a seasonally adjusted basis.
MLS® residential sales dollar volume in BC declined 25 per cent to $3.1 billion in April, compared to the same month last year. Residential unit sales declined 20 per cent to 6,918 units during the same period. The average MLS® residential price in the province was $449,372 in April, down 6 per cent from April 2008. Year-to-date, MLS® residential sales dollar volume was down 41 per cent to $7.8 billion over the same period last year. A total of 18,089 units were sold in the first four months, down 35 per cent from 2008, while the average MLS® price declined 9 per cent to $433,246.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
“Downward pressure on home prices has eased considerably,” said Cameron Muir, BCREA Chief Economist. “An increase in consumer demand combined with fewer homes for sale has trended the market near balanced conditions.” The number of homes for sale through the Multiple Listing Service (MLS®) fell to a twelve-month low in April, on a seasonally adjusted basis.
MLS® residential sales dollar volume in BC declined 25 per cent to $3.1 billion in April, compared to the same month last year. Residential unit sales declined 20 per cent to 6,918 units during the same period. The average MLS® residential price in the province was $449,372 in April, down 6 per cent from April 2008. Year-to-date, MLS® residential sales dollar volume was down 41 per cent to $7.8 billion over the same period last year. A total of 18,089 units were sold in the first four months, down 35 per cent from 2008, while the average MLS® price declined 9 per cent to $433,246.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Affordability Drives Home Sales Higher
British Columbia Real Estate Association (BCREA) reports residential sales dollar volume on the Multiple Listing Service® (MLS®) in BC declined 35 per cent to $2.3 billion in March, compared to the same month last year. Residential unit sales declined 25 per cent to 5,464 units during the same period. The average MLS® residential price in the province was $424,122 in March, down 12 per cent from March 2008.
“While fewer MLS® residential sales were recorded last month compared to March 2008, home sales actually climbed 24 per cent from February to March on a seasonally adjusted basis, the second consecutive month of gains,” said Cameron Muir, BCREA Chief Economist.
A significant increase in affordability helped fuel housing demand last month. “Reduced mortgage interest rates have effectively doubled the impact of lower home prices on affordability,” added Muir. While the average sales price in BC declined 12 per cent from a year ago, the monthly payment on the average priced home was 24 per cent lower. “Housing is now more affordable than at any time in the last three years,” noted Muir.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
“While fewer MLS® residential sales were recorded last month compared to March 2008, home sales actually climbed 24 per cent from February to March on a seasonally adjusted basis, the second consecutive month of gains,” said Cameron Muir, BCREA Chief Economist.
A significant increase in affordability helped fuel housing demand last month. “Reduced mortgage interest rates have effectively doubled the impact of lower home prices on affordability,” added Muir. While the average sales price in BC declined 12 per cent from a year ago, the monthly payment on the average priced home was 24 per cent lower. “Housing is now more affordable than at any time in the last three years,” noted Muir.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
MLS Home Sales Forcast Revised
A Spring housing market that was more active than anticipated has prompted a change to the MLS® home sales forecast issued by The Canadian Real Estate Association for the rest of 2009, and for 2010.
National home sales activity is forecast to be down 14.7 per cent to 370,500 units in 2009. This is slightly less than the reduction in activity predicted in CREA’s forecast issued last February.
The forecast decline in annual activity was trimmed to reflect a stronger than expected rebound in activity in British Columbia and Ontario in the first quarter of 2009. Forecast declines in annual activity were reduced for these provinces. They were also shaved for Manitoba, Quebec, New Brunswick, and Prince Edward Island to reflect stabilizing trends in sales activity in these provinces.
National MLS® home sales activity is forecast to rebound by 7.2 per cent to 397,000 units in 2010. This is a slightly weaker rebound than predicted in CREA’s previous forecast. The revision reflects recently downgraded forecasts for economic growth next year. The rebound in activity in 2010 is forecast to be biggest in British Columbia and Alberta.
New listings on MLS® systems in British Columbia, Alberta and Ontario are forecast to continue easing following the peak reached last year. New listings are also expected to shrink in Saskatchewan, Quebec, New Brunswick, and Nova Scotia. Fewer new listings will further stabilize the resale housing market as sales activity draws down inventories.
The national MLS® average home price is forecast to decrease 5.2 per cent in 2009, led by average price declines in British Columbia and Alberta. By contrast, the average home price is forecast to rise in Manitoba (4.3 per cent), Price Edward Island (4.2 per cent) and Newfoundland & Labrador (10.9 per cent). CREA’s previous forecast predicted a decline in the national average price of eight per cent in 2009.
The price trend is similar but less dramatic for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average price is forecast to decline 3.6 per cent in 2009, and hold steady in 2010. CREA’s previous forecast predicted the weighted national average price for MLS® homes sales would decline by 6.4 per cent.
“Monthly resale housing activity improved as the first quarter progressed, entering the second quarter on a rising trend and closing in on levels last seen before it fell sharply late last year,” said CREA Chief Economist Gregory Klump. “It will take time for housing inventories to be drawn down enough to put new home construction on a stronger footing, but the balance between resale housing supply and demand is improving in a number of major markets. The national average price has begun to rebound from the recent low reached in January, and is forecast to begin rising modestly above year-ago levels in the fourth quarter of 2009.”
“Copyright Canadian Real Estate Association. Reprinted with permission.”
National home sales activity is forecast to be down 14.7 per cent to 370,500 units in 2009. This is slightly less than the reduction in activity predicted in CREA’s forecast issued last February.
The forecast decline in annual activity was trimmed to reflect a stronger than expected rebound in activity in British Columbia and Ontario in the first quarter of 2009. Forecast declines in annual activity were reduced for these provinces. They were also shaved for Manitoba, Quebec, New Brunswick, and Prince Edward Island to reflect stabilizing trends in sales activity in these provinces.
National MLS® home sales activity is forecast to rebound by 7.2 per cent to 397,000 units in 2010. This is a slightly weaker rebound than predicted in CREA’s previous forecast. The revision reflects recently downgraded forecasts for economic growth next year. The rebound in activity in 2010 is forecast to be biggest in British Columbia and Alberta.
New listings on MLS® systems in British Columbia, Alberta and Ontario are forecast to continue easing following the peak reached last year. New listings are also expected to shrink in Saskatchewan, Quebec, New Brunswick, and Nova Scotia. Fewer new listings will further stabilize the resale housing market as sales activity draws down inventories.
The national MLS® average home price is forecast to decrease 5.2 per cent in 2009, led by average price declines in British Columbia and Alberta. By contrast, the average home price is forecast to rise in Manitoba (4.3 per cent), Price Edward Island (4.2 per cent) and Newfoundland & Labrador (10.9 per cent). CREA’s previous forecast predicted a decline in the national average price of eight per cent in 2009.
The price trend is similar but less dramatic for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average price is forecast to decline 3.6 per cent in 2009, and hold steady in 2010. CREA’s previous forecast predicted the weighted national average price for MLS® homes sales would decline by 6.4 per cent.
“Monthly resale housing activity improved as the first quarter progressed, entering the second quarter on a rising trend and closing in on levels last seen before it fell sharply late last year,” said CREA Chief Economist Gregory Klump. “It will take time for housing inventories to be drawn down enough to put new home construction on a stronger footing, but the balance between resale housing supply and demand is improving in a number of major markets. The national average price has begun to rebound from the recent low reached in January, and is forecast to begin rising modestly above year-ago levels in the fourth quarter of 2009.”
“Copyright Canadian Real Estate Association. Reprinted with permission.”
Resale Housing Market Continues to Recover in April
MLS® home sales activity increased for the third time in as many months in April 2009, according to statistics released by The Canadian Real Estate Association (CREA). The national average price also rose in April, to within short reach of the record levels reached one year ago.
Seasonally adjusted national home sales activity climbed 11.2 per cent in April 2009 compared to the previous month. This is the largest month-to-month increase in activity in more than five years. MLS® home sales activity reached its highest level in seven months, with 34,838 units trading hands nationally via the MLS® in April on a seasonally adjusted basis.
The increase in April builds on gains of 10.3 per cent in February and 7.7 per cent in March. Seasonally adjusted activity now stands 32 per cent above the lowest level in a decade that was recorded in January 2009.
Seasonally adjusted sales were up from March levels in 70 per cent of local markets, with gains in Toronto (10 per cent), Vancouver (30 per cent), Montreal (15 per cent), and Calgary (31 per cent) contributing most to the overall increase in monthly activity.
Actual (not seasonally adjusted) MLS® home sales totaled 43,473 units in April 2009, down 11.8 per cent from the same month one year ago. Year-over-year declines have been shrinking since dropping a record 42.2 per cent in November 2008.
“REALTORS® know that several factors have led to this market situation,” says Regina Broker Dale Ripplinger, President of The Canadian Real Estate Association. “First, price adjustments in some markets have helped affordability. Second, lenders do have money for people and properties that qualify, although some are being more stringent. The third factor involves consumer confidence, which has risen in the housing market through the Spring.”
The last factor, CREA’s President adds, is that sellers have realized that realistic pricing is key, and that is very much driven by local factors. “Homes are only worth what a buyer is willing to pay.”
The national MLS® residential average sale price in April ($306,366) stands 3.2 per cent below April 2008, when it reached its pre-recession peak. The MLS® residential average price broke all previous monthly records in Saskatchewan, Manitoba, Quebec, and Nova Scotia.
The supply of homes coming onto the MLS® market continued trending downward in April. Seasonally adjusted MLS® residential new listings edged lower by 1.8 per cent from the previous month to 66,843 units, the lowest level since June 2006. Seasonally adjusted new residential listings in April were 16.4 per cent below the peak reached in May 2008.
With sales activity rising strongly and new listings trending downward, the balance between supply and demand is firming up in British Columbia, Alberta, Ontario, and Quebec. As a result, in April 2009 national sales as a percentage of new listings reached the highest point since February 2008.
The residential dollar volume for MLS® sales climbed 12.3 per cent from the previous month to reach $10.2 billion. This is the biggest increase since December 2001, and first time since September 2008 that dollar volume surpassed $10 billion.
“If the trend for MLS® sales activity over the past few months persists, the number of transactions in May could surpass the pre-recession levels of September 2008,” said CREA Chief Economist Gregory Klump. “In the recessions of the early 1980s and 1990s, sales activity bottomed out before the job market or even the economy did. Improved affordability may result in Canadian existing home sales leading the economic recovery this year.”
“Copyright Canadian Real Estate Association. Reprinted with permission.”
Seasonally adjusted national home sales activity climbed 11.2 per cent in April 2009 compared to the previous month. This is the largest month-to-month increase in activity in more than five years. MLS® home sales activity reached its highest level in seven months, with 34,838 units trading hands nationally via the MLS® in April on a seasonally adjusted basis.
The increase in April builds on gains of 10.3 per cent in February and 7.7 per cent in March. Seasonally adjusted activity now stands 32 per cent above the lowest level in a decade that was recorded in January 2009.
Seasonally adjusted sales were up from March levels in 70 per cent of local markets, with gains in Toronto (10 per cent), Vancouver (30 per cent), Montreal (15 per cent), and Calgary (31 per cent) contributing most to the overall increase in monthly activity.
Actual (not seasonally adjusted) MLS® home sales totaled 43,473 units in April 2009, down 11.8 per cent from the same month one year ago. Year-over-year declines have been shrinking since dropping a record 42.2 per cent in November 2008.
“REALTORS® know that several factors have led to this market situation,” says Regina Broker Dale Ripplinger, President of The Canadian Real Estate Association. “First, price adjustments in some markets have helped affordability. Second, lenders do have money for people and properties that qualify, although some are being more stringent. The third factor involves consumer confidence, which has risen in the housing market through the Spring.”
The last factor, CREA’s President adds, is that sellers have realized that realistic pricing is key, and that is very much driven by local factors. “Homes are only worth what a buyer is willing to pay.”
The national MLS® residential average sale price in April ($306,366) stands 3.2 per cent below April 2008, when it reached its pre-recession peak. The MLS® residential average price broke all previous monthly records in Saskatchewan, Manitoba, Quebec, and Nova Scotia.
The supply of homes coming onto the MLS® market continued trending downward in April. Seasonally adjusted MLS® residential new listings edged lower by 1.8 per cent from the previous month to 66,843 units, the lowest level since June 2006. Seasonally adjusted new residential listings in April were 16.4 per cent below the peak reached in May 2008.
With sales activity rising strongly and new listings trending downward, the balance between supply and demand is firming up in British Columbia, Alberta, Ontario, and Quebec. As a result, in April 2009 national sales as a percentage of new listings reached the highest point since February 2008.
The residential dollar volume for MLS® sales climbed 12.3 per cent from the previous month to reach $10.2 billion. This is the biggest increase since December 2001, and first time since September 2008 that dollar volume surpassed $10 billion.
“If the trend for MLS® sales activity over the past few months persists, the number of transactions in May could surpass the pre-recession levels of September 2008,” said CREA Chief Economist Gregory Klump. “In the recessions of the early 1980s and 1990s, sales activity bottomed out before the job market or even the economy did. Improved affordability may result in Canadian existing home sales leading the economic recovery this year.”
“Copyright Canadian Real Estate Association. Reprinted with permission.”
Housing Activity Will Moderate in 2009, Improve in 2010
Housing starts are expected to decline to 141,900 for 2009, but increase to 150,300 for 2010, according to Canada Mortgage and Housing Corporation’s (CMHC) second quarter Housing Market Outlook, Canada Edition* report.
“The decline in housing starts in 2009 can be attributed to several factors, including the current economic climate, increased competition from the existing home market, and the impact of strong house price growth between 2002 and 2007” said Bob Dugan, Chief Economist for CMHC. “However, housing market activity will begin to strengthen in 2010 as the Canadian economy recovers, bringing housing starts more in line with demographic fundamentals over the forecast period”.
Existing home sales, as measured by the Multiple Listing Service (MLS®)1, are expected to decline to 357,800 units in 2009 from 433,990 in 2008, but increase to 386,100 units in 2010. The average MLS® price is also expected to decrease to $283,100 in 2009 and to stabilize in 2010.
CMHC, Ottawa
“The decline in housing starts in 2009 can be attributed to several factors, including the current economic climate, increased competition from the existing home market, and the impact of strong house price growth between 2002 and 2007” said Bob Dugan, Chief Economist for CMHC. “However, housing market activity will begin to strengthen in 2010 as the Canadian economy recovers, bringing housing starts more in line with demographic fundamentals over the forecast period”.
Existing home sales, as measured by the Multiple Listing Service (MLS®)1, are expected to decline to 357,800 units in 2009 from 433,990 in 2008, but increase to 386,100 units in 2010. The average MLS® price is also expected to decrease to $283,100 in 2009 and to stabilize in 2010.
CMHC, Ottawa
Monday, April 13, 2009
MORTGAGE RATES TO NEAR-RECORD LOWS
First-quarter Canadian mortgage rates continued to decline in 2009 to the benefit of consumers. The posted one-year borrowing cost on a fixed term mortgage fell to 5.00 per cent at the end of February, marking a 195 basis points (bps) decline since July 2008. The five-year fixed term mortgage rate fell to 5.79 per cent in February, down 141 bps from October 2008 (Fig.1). BCREA forecasts near-record low mortgage rates in the next four quarters, as weak economic conditions and low inflation contribute to lower interest rates in Canada.
On March 3, the Bank of Canada (BoC) cut its target for its key overnight interest rate by 50 bps to 0.5 per cent as the global economy worsened and domestic demand pulled back. On a cumulative basis, the target overnight rate has been cut by 400 bps since December 2007. Despite the current low level, futures markets are pricing in a further 25 bps cut. The BoC noted in its March 3 communiqué that “the overnight rate can be expected to remain at this level or lower at least until there are clear signs that excess supply in the economy is being taken up.” Given the continued deterioration in global economic conditions, particularly in the US, BCREA expects the BoC to lower the overnight rate to a floor of 0.25 per cent on April 21.
A decline in short-term interest rates and minimal risk of inflation in the near future should set the stage for further downward pressure on mortgage rates. Variable mortgage rates, which generally move in lock-step with the prime and hence the overnight rate, should reach a bottom after the BoC’s next interest rate announcement on April 21, notwithstanding rate discounts or premiums offered by financial institutions.
Fixed term mortgage rates, which are closely related to bond yields and deposit rates of similar maturity, should decline as the inflationary risks associated with higher potential interest rates in the future subside with the weakened economy. Meanwhile, tight credit market conditions are expected to improve, albeit slowly, lowering the cost of mortgage market funds raised in capital markets. The potential for an improvement in economic conditions in 2010 will lead to modest growth in interest and mortgage rates during the second half of 2010.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
On March 3, the Bank of Canada (BoC) cut its target for its key overnight interest rate by 50 bps to 0.5 per cent as the global economy worsened and domestic demand pulled back. On a cumulative basis, the target overnight rate has been cut by 400 bps since December 2007. Despite the current low level, futures markets are pricing in a further 25 bps cut. The BoC noted in its March 3 communiqué that “the overnight rate can be expected to remain at this level or lower at least until there are clear signs that excess supply in the economy is being taken up.” Given the continued deterioration in global economic conditions, particularly in the US, BCREA expects the BoC to lower the overnight rate to a floor of 0.25 per cent on April 21.
A decline in short-term interest rates and minimal risk of inflation in the near future should set the stage for further downward pressure on mortgage rates. Variable mortgage rates, which generally move in lock-step with the prime and hence the overnight rate, should reach a bottom after the BoC’s next interest rate announcement on April 21, notwithstanding rate discounts or premiums offered by financial institutions.
Fixed term mortgage rates, which are closely related to bond yields and deposit rates of similar maturity, should decline as the inflationary risks associated with higher potential interest rates in the future subside with the weakened economy. Meanwhile, tight credit market conditions are expected to improve, albeit slowly, lowering the cost of mortgage market funds raised in capital markets. The potential for an improvement in economic conditions in 2010 will lead to modest growth in interest and mortgage rates during the second half of 2010.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Global Economy Retrenches
The global economic outlook has deteriorated rapidly during the last two quarters. The ongoing financial crisis has bled into the real economy as declines in asset values have cut into household wealth, yielding lower consumer demand. Consumers and businesses have also cut back or postponed expenditures and production amid the economic uncertainty, lowering consumption
and capital expenditures.
These worsening conditions led the International Monetary Fund to lower its global growth forecast in late January to 0.5 per cent for 2009, with a 3 per cent rebound in 2010. In a more recent release, The World Bank forecasted a contraction in the global economy for 2009. Both 2009 forecasts underscore the severity of the current situation, which would mark the worst
global performance since World War II.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
and capital expenditures.
These worsening conditions led the International Monetary Fund to lower its global growth forecast in late January to 0.5 per cent for 2009, with a 3 per cent rebound in 2010. In a more recent release, The World Bank forecasted a contraction in the global economy for 2009. Both 2009 forecasts underscore the severity of the current situation, which would mark the worst
global performance since World War II.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Canada Caught in the Undertow
As a small open economy, Canada is not immune to the global recession. The deep contraction in US economic activity has been particularly challenging for Canada, given the countries’ trade ties. US auto sales dropped to an annualized rate of 9.1 million units in February, marking a 40 per cent year-over-year decline and the lowest activity on record. This contributed to declines of 30 per cent in the vehicle manufacturing components of Canada’s GDP in Q4 2008. Meanwhile, the US housing market has yet to turn the corner. New home starts have tumbled to historical lows while home prices continue to trend lower, suggesting further challenges for Canada’s wood products sector. A global pull-back in economic activity has also lowered the demand and price of a number of other Canadian export commodities, including those in the metals, minerals and energy sectors.
While the retrenchment in export activity has dominated headlines, domestic demand has also weakened. Personal spending fell for the first time since 1995 in Q4 2008, reflecting lower consumer confidence and less robust labour market conditions. Investment has also slowed in plant and equipment, and residential structures. The latter reflects less new home construction, renovations, and real estate transfers.
As a result, Canada’s GDP contracted at an annualized rate of 3.4 per cent in Q4 2008, the weakest quarterly performance since 1991 (Fig.2). That said, this decline paled in comparison to those recorded in regions such as the US, Euro Area and Japan.
A weaker Canadian dollar has and will result in higher import prices. Even so, a contracting economy with excess capacity will continue to exert downward pressure on inflation (Fig.3). This will provide the Bank of Canada room to further cut its policy interest rate to spur economic activity. Expectations of lower inflation and future interest rates will push interest rates lower on longer-term products, such as mortgages.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
While the retrenchment in export activity has dominated headlines, domestic demand has also weakened. Personal spending fell for the first time since 1995 in Q4 2008, reflecting lower consumer confidence and less robust labour market conditions. Investment has also slowed in plant and equipment, and residential structures. The latter reflects less new home construction, renovations, and real estate transfers.
As a result, Canada’s GDP contracted at an annualized rate of 3.4 per cent in Q4 2008, the weakest quarterly performance since 1991 (Fig.2). That said, this decline paled in comparison to those recorded in regions such as the US, Euro Area and Japan.
A weaker Canadian dollar has and will result in higher import prices. Even so, a contracting economy with excess capacity will continue to exert downward pressure on inflation (Fig.3). This will provide the Bank of Canada room to further cut its policy interest rate to spur economic activity. Expectations of lower inflation and future interest rates will push interest rates lower on longer-term products, such as mortgages.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
New Survey on Affordability and Green Housing Reveals BC Trends
Vancouver, BC – April 7, 2009. A survey of homeowners and renters across British Columbia suggests that, when it comes to housing, affordability concerns and making smart green choices are top of mind for most BC residents.
Sponsored by the British Columbia Real Estate Association (BCREA), the January 2009 Mustel Group survey examines the top affordability barriers in the province and how provincial taxes and homeowner assistance programs impact BC buyers.
A total of 38 per cent of British Columbians plan or hope to purchase a property within the next five years, with about half of these potential buyers expecting to do so in the next two years.
“Following the May 12 election, quick actions by the newly elected provincial government on key issues of interest to the real estate sector may assist these buyers in their home buying decisions, while also potentially empowering those who are currently unable to purchase a home,” says BCREA President Scott Veitch.
Survey findings indicate that availability of affordable properties is the key barrier in a home purchasing decision. Other major financial barriers include employment security, ability to qualify for a mortgage and the provincial Property Transfer Tax.
“We’ve never reached out to the public quite like this before,” notes Veitch. “This survey helped create a clearer picture of the key issues facing homeowners, renters, buyers and sellers in this province. When the new government is formed, the information in this survey will help uask for changes that make home ownership
The survey findings also provide information on the green choices BC residents are making at home and the data suggests that about three out of every four British Columbians have already taken steps to make their homes more environmentally friendly.
Water conservation, home energy assessments and general awareness of federal and provincial green programs are also addressed by the findings.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Sponsored by the British Columbia Real Estate Association (BCREA), the January 2009 Mustel Group survey examines the top affordability barriers in the province and how provincial taxes and homeowner assistance programs impact BC buyers.
A total of 38 per cent of British Columbians plan or hope to purchase a property within the next five years, with about half of these potential buyers expecting to do so in the next two years.
“Following the May 12 election, quick actions by the newly elected provincial government on key issues of interest to the real estate sector may assist these buyers in their home buying decisions, while also potentially empowering those who are currently unable to purchase a home,” says BCREA President Scott Veitch.
Survey findings indicate that availability of affordable properties is the key barrier in a home purchasing decision. Other major financial barriers include employment security, ability to qualify for a mortgage and the provincial Property Transfer Tax.
“We’ve never reached out to the public quite like this before,” notes Veitch. “This survey helped create a clearer picture of the key issues facing homeowners, renters, buyers and sellers in this province. When the new government is formed, the information in this survey will help uask for changes that make home ownership
The survey findings also provide information on the green choices BC residents are making at home and the data suggests that about three out of every four British Columbians have already taken steps to make their homes more environmentally friendly.
Water conservation, home energy assessments and general awareness of federal and provincial green programs are also addressed by the findings.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
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