Wednesday, March 9, 2011


Interest in buying a home has remained steady in B.C. with 29 per cent of residents indicating they are likely to buy a home in the next two years, on par with the national average and equal to last year, according to the 18th annual RBC Homeownership Study.

When asked to list their top worry when planning to purchase, over one-third (34per cent) of British Columbians are most concerned with home prices increasing, the most in Canada. Having a good down payment is the top worry for 20 per cent.

“B.C.’s housing market has experienced some volatility over the past few years so it makes sense that buyers are concerned about rising prices and having the proper down payment,” said Inde Sumal, regional vice president, residential mortgages, RBC. “When making the decision to purchase a home, seeking the advice of a qualified professional can help you decide on what type of mortgage, home and savings plan is right to meet your individual needs and ownership goals.”

While more homebuyers believe it makes sense to buy a home this year (54 per cent), rather than waiting until next year (46 per cent), the gap has narrowed from 2010 (68 per cent versus 32 per cent).

Homeowners in B.C. are slightly less optimistic than last year about the price of their home, as 67 per cent feel the value of their home has increased in the past two years and 16 per cent believe that the value of their home has decreased.

New homes are gaining in popularity, as 30 per cent plan to buy a new home rather than a resale, the highest in the country and eight points above the national average. Those intending to buy a home are also looking more long-term, with almost four-in-ten (79 per cent) planning to purchase in the next one to two years rather than right now. Almost half (48 per cent) of the province believes that it’s a buyers market, which is eight points above the national average.

British Columbians indicate they are looking buy the following types of homes according to the 18th Annual RBC Homeownership Poll:

• Detached house 54 per cent
• Condo/loft 17 per cent
• Semi detached house 11 per cent
• Townhouse 13 per cent

Royal Bank of Canada  March 9, 2011

Preparing Your Home for Sale

When getting your home ready to sell, you need to look at your house in a new way. Think of your house as a product about to go on the market where it is probably competing with brand new housing. It needs to show well – which means clutter-free and well kept.

Today’s homebuyers lead busy lives and may not be interested in taking on major repairs or improvements upon moving in. You need to make your house a “10”. This document will help you spot what is right and what is not so good about your "product". It will give you the opportunity to take corrective action to ensure your house looks fresh, clean and well maintained when the “For Sale” sign goes up.

Fix It First

If you need to make improvements to your home, do the work before it goes on the market. Potential buyers are not interested in hearing about your good intentions to look after defects before a transfer of ownership takes place. Even if fix-up work is underway, buyers may not be able to visualize what your home will look like when the work is finished. They will just remember it being in a state of disrepair.

Professional Inspection: Yes or No?

A serious buyer may want to have a professional home inspector check your house from top to bottom before making an offer. Even though this guide will help you identify problems on your own, the option of hiring a professional home inspector is open to you as well. If you can afford it, an inspection in advance of putting your home on the market is a good idea. It is your best way of finding and taking care of serious deficiencies before an inspector hired by a potential buyer discovers them.

BC Commercial Real Estate Market to Strengthen

Vancouver, BC – February 28, 2011. The BC commercial real estate market should continue to strengthen through 2011, according to the new Commercial Leading Indicator (CLI) index developed by the British Columbia Real Estate Association (BCREA). The BCREA CLI rose 2.3 per cent in the fourth quarter of 2010 to an index level of 110.5, marking seven straight quarters of improvement.

The CLI peaked at a level of 115.9 in the second quarter of 2007 before the onset of the financial crisis pushed it to a low of 100.1 in the first half of 2009. In 2010, the index posted a more material recovery, albeit from a relatively weak level, and is still 5.3 per cent below its peak.

“Economic indicators that tend to lead activity in the commercial real estate market have posted strong growth over several consecutive quarters,” said Brendon Ogmundson, BCREA Economist. “Based on these macro-level indicators, we would anticipate 2011 to be a strong year for the commercial sector.”

Copyright BCREA reprinted with permission

Economy Growing Faster than expected

OTTAWA — The Bank of Canada said Tuesday the economy is growing at a “slightly” faster pace than expected as signs emerge of a recovery in exports, but gave no hint it was ready to resume hiking interest rates.

As expected, the central bank kept its benchmark rate unchanged at 1%. And in a five-paragraph statement, it struck what analysts deemed a cautious tone in an effort to dampen enthusiasm after Statistics Canada reported the economy grew at a 3.3% annualized clip in the fourth quarter — or a full percentage point above the central bank’s forecast. This prompted yields to climb and the loonie to head upward on anticipation of earlier-than-expected rate increase.

The dollar lost ground following the rate announcement, trading in the US$1.0268 range as of 10:15 am ET, down from as high as US$1.0309 on Tuesday.

“There are no indications here that rate hikes are close,” said Michael Gregory, senior economist at BMO Capital Markets. “We judge that the bank is waiting for evidence that U.S. economic performance is strong and steady enough to ensure that Canadian exports will contribute to Canadian economic growth regardless of the level of the loonie.”

As it happened, a key gauge of U.S. manufacturing activity rose in February to its highest level since May 2004, data showed Tuesday.

The Bank of Canada said there are signs a transition is underway, from an economy powered mostly by consumers to business investment and exports.

“The recovery in Canada is proceeding slightly faster than expected,” the central bank, led by governor Mark Carney, said, “and there is more evidence of the anticipated rebalancing of demand.”

In its last rate decision on Jan. 18, the central bank said economic recovery in Canada was headed for a period of “more modest growth,” with 2.4% expansion expected in 2011. At the time, Mr. Carney said the country would be hard pressed to “fully benefit” from an upswing in U.S. prospects due to a lack of competitiveness. But the 2011 outlook is near the low end of expectations compared with private-sector economists, who upgraded their forecasts further after the release of fourth-quarter GDP data.

The statement “did not indicate any significant shift in sentiment regarding Canada's economic outlook,” said Dawn Desjardins, assistant chief economist at Royal Bank of Canada.

“The fact that the economy showed stronger than expected momentum in the second half of 2010 did not seem to impress policymakers.”

The central bank said domestic demand continues to expand although household spending is “moving” in line with growth in disposable income; business investment continues to “expand rapidly” as companies take advantage of low interest rates and the need to boost competitiveness; and an anticipated comeback by the trade-oriented sector appears to be unfolding.

“There is early evidence of a recovery in net exports, supported by stronger U.S. activity and global demand for commodities,” it said, although warning: “The export sector continues to face considerable challenges from the cumulative effects of the persistent strength in the Canadian dollar and Canada’s poor relative productivity performance.”

Prior to the rate statement’s release, the Canadian dollar touched another 40-month high, as the loonie hit US$1.0309, up from Monday’s close in the US$1.029 range. The Canadian currency shot upward after the release of the GDP data, on the anticipation the Bank of Canada may begin raising rates earlier than previously believed.

Traders have priced in 100% odds of a rate hike in July, once the U.S. Federal Reserve completes its US$600-billion asset-purchase plan. But some analysts say the GDP report tilts the balance back in favour of an interest rate increase in May.

The Canadian dollar rise is powered by the country’s relatively sterling fiscal fundamentals, economic prospects, and a rise in commodity prices -- highlighted by oil prices cracking the US$100 a barrel level last week on concern about Libya.

In the rate statement, the central bank said robust demand from emerging economies is driving the strength in commodity prices, “which could be further reinforced temporarily by supply shocks arising from recent geopolitical events.” That was the only reference to the potential risks posed by a growing wave of protests across north Africa and the Middle East.

Global inflation pressures are rising due to higher energy and food costs. But in Canada, the central bank said inflation is in line with its expectations – the core rate, which strips out volatile-priced items, stood at 1.4% in January – and pricing pressures remain subdued, reflecting “considerable slack” in the economy.

Paul Vieira, Financial Post · Tuesday, Mar. 1, 2011

Home Price Index Moving Up

The Canadian Resale market swung upwards in December, according to the latest release of the Teranet-National Bank Composite House Price Index- which indicated increases in five of the six markets surveyed.

The index indicates that prices were up 0.3% in December from November, as well as having gone up 4.1% from the same time the year before.

Looking at specific regions, there was a 0.1% increase in Calgary- which signalled the first gain out of the last five months. In Vancouver and Montreal both, the rise was 0.5%. Toronto rose 0.2%. Halifax was a much larger 3.6%- which did not impact the overall index as much as one might think. On the other side of the spectrum, Ottawa declined by 0.4%- which is the fourth consecutive decline.

Looking year-over-year, this was the “sixth month in a row of deceleration”- with the only exception being Halifax, where they accelerated by 8.5%.

The report says,” Data for January from the Canadian Real Estate Association show generally balanced conditions in major urban markets. Toronto and Vancouver could even be considered rather tight markets. The federal minister of finance announced January 17 that the maximum amortization period for an insured mortgage will be reduced to 30 years from 35 years effective March 18. This prospect could influence the resale market between now and the effective date.” Thursday, 24 February 2011

Home Ownership More Affordable: RBC

Home affordability continued to improve for Canadians in the last quarter, according to the Housing Trends and Affordability report released by RBC Economics Research. Slight rises in home price appreciation, coupled with a modest dip in five-year mortgage rates are the most likely factors.

"Some of the stress that had been building in the housing market between 2009 and the first half of 2010 has been relieved, but tensions persist overall and the recent improvement in affordability is likely to be short-lived," said Robert Hogue, senior economist, RBC, speaking with PropertyWire.Ca. "We expect that the Bank of Canada will resume its rate hike campaign this spring and with borrowing costs set to climb further in the next two years, housing affordability will erode across the country. That said, we don't expect this to derail the housing market because of rising household income and job creation from the sustained economic recovery."

Says Hogue, there are additional elements leading to an expectation of balance. “There is also expected balance between supply and demand. Prices will also likely stay flat, with small increases. In that context- the market is calm and moving sideways in the likely outcome. There is no real rush to buy, and no rush to sell.”

“Across the country, markets by and large are in balanced range.”

Price appreciation has fallen back to more manageable levels, in the face of this new balance in the market. The expectation is that price appreciation will continue, but a much slower, and more sustainable pace than had been seen in recent years.

"We expect affordability measures will rise gradually in the next three years or so while monetary policy is readjusted, but will land softly thereafter once interest rates stabilize at higher levels," added Hogue. "This pattern would be consistent with moderate yet sustained stress on Canada's housing market. Overall, the era of rapid home price appreciation of the past 10 years has likely run its course and we believe that Canada has entered a period of very modest increases."

Looking at different housing types across the country, the detached bungalow benchmark measure fell back slightly to 39.9 %; Standard condominium measure fell to 27.6 %; the standard two-storey home fell to 46. %.

Most provinces reported forward movement in terms of affordability- most notably in Alberta. Decreases continued in Alberta- this time declining by “1.0 to 2.4 percentage points.” This builds on top of consistent declines since 2007. The combination of lower interest rates, and steadily decreasing home prices, have both contributed to the increase in affordability.

According to the report, the days for this may be numbered in Alberta,” The significant improvement in affordability is near the end of its line, however, as demand has shown more vigour in recent months - alongside a provincial economy that is gaining more traction - and the market has become better balanced. RBC expects that this will stem price declines this year, thereby removing a potential offset to the negative effect of projected rise in interest rates on affordability.” Friday, 25 February 2011