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.”
Tuesday, September 1, 2009
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.”
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