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.”

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.”

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.”

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.”

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.”

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