Mortgage rates in Canada are heading higher as fears of inflation resonate through the bond market while U.S. legislators move towards agreement on a $700-billion US bailout plan for Wall Street banks.
TD Canada Trust and Bank of Montreal said late Thursday they have raised mortgage rates by more than a third of a percentage point on three-, four- and five-year loans.
The changes reflect the rising cost of borrowing in the bond market, an inflation-sensitive financial marketplace where banks finance their mortgage lending.
Effective Friday, a five-year mortgage at both banks increases by .35 of a percentage point to 7.2 per cent, while a three-year closed term rises by the same amount to 7.05 per cent.
A one-year closed mortgage loan at TD Canada Trust falls by .3 of a percentage point to 6.35 per cent.
The changes suggest bond markets are worried about the future inflationary pressures from the proposed $700-billion U.S. government bailout of Wall Street banks, said TD Bank chief economist Don Drummond.
"We always did figure that adding $700 billion to the deficit of the United States would probably cause something like a 25 basis point [quarter point] increase in the longer-term interest rates and that seems to have already happened," said Drummond.
"[The bailout] does increase the risk to bonds. In just plain good old demand and supply that means there has to be an awful lot of bond issuance and there's a limited supply of people that want to buy them so it's natural that the price goes up," he added.
The interest rates on mortgages and other short-term borrowing are set based on the price of bonds. With lower demand for bonds and fears of inflation, rates have to rise to lure investors willing to part with their money.
Other interest rates in the economy — from consumer and car loans to mortgage rates tied to the prime rate — are affected by the Bank of Canada trend-setting rate, which is expected to fall or remain stable over the next few months at least.
On Thursday, U.S. congressional Republicans and Democrats reported agreement in principle on a bailout of the financial industry. They said they would present it to the Bush administration in hopes of a vote within days.
The bailout is expected to push up inflation and force the U.S. Federal Reserve Board to raise rates in the future.
Thursday's mortgage rate increases also come a day after the Merrill Lynch brokerage warned that Canadian households are so indebted that it's only a matter of time before the housing market turns down, as has already happened in the United States.
The Merrill Lynch Canada report by economists David Wolf and Carolyn Kwan acknowledged that the analysis is more pessimistic than the prevailing view. However, there are parallels with what happened in the United States in early-to-mid 2006 when housing prices started going down.
"There are parallels here and there is risk here that's perhaps not being properly acknowledged," said Wolf. "We may have started from a better place but Canadians are over time starting to borrow as much as Americans and the British."
© The Canadian Press, 2008
Friday, September 26, 2008
Thursday, September 18, 2008
Fewer Homes Being Added to the Market
Vancouver, BC – September 12, 2008. British Columbia Real Estate Association (BCREA) reports residential sales dollar volume on the Multiple Listing Service® (MLS®) in BC declined 49 per cent to $2.2 billion in August, compared to August 2007.
Residential unit sales were down 47 per cent to 5,175 units during the same period. The average MLS® residential price in the province was $421,685, down 4.1 per cent from August 2007.
“Fewer home sales and larger inventories have tilted most BC housing markets in favor of homebuyers,” said Cameron Muir, BCREA Chief Economist. “However, a significant decline in new listings last month may be a signal that potential home sellers are now taking a wait and see approach.”
New MLS® residential listings in August fell 22 per cent from July on a seasonally adjusted basis, the second largest month-over-month decline in 25 years.
Compared to July, nearly 2,000 fewer active MLS® residential listings were available in the province, a decline of 3 per cent. “Home seller fatigue is now a possibility, as slower demand and competition among sellers lessen the chance of a timely sale,” added Muir.
Year-to-date MLS® residential sales dollar volume in the province declined 22 per cent to $25.4 billion compared to the same period last year. Transactions declined 27 per cent to 54,635 units, while the average residential price increased 7 per cent to $465,132 over the same period.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Residential unit sales were down 47 per cent to 5,175 units during the same period. The average MLS® residential price in the province was $421,685, down 4.1 per cent from August 2007.
“Fewer home sales and larger inventories have tilted most BC housing markets in favor of homebuyers,” said Cameron Muir, BCREA Chief Economist. “However, a significant decline in new listings last month may be a signal that potential home sellers are now taking a wait and see approach.”
New MLS® residential listings in August fell 22 per cent from July on a seasonally adjusted basis, the second largest month-over-month decline in 25 years.
Compared to July, nearly 2,000 fewer active MLS® residential listings were available in the province, a decline of 3 per cent. “Home seller fatigue is now a possibility, as slower demand and competition among sellers lessen the chance of a timely sale,” added Muir.
Year-to-date MLS® residential sales dollar volume in the province declined 22 per cent to $25.4 billion compared to the same period last year. Transactions declined 27 per cent to 54,635 units, while the average residential price increased 7 per cent to $465,132 over the same period.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
MORTGAGE RATES STEADY INTO 2009
Posted Canadian mortgage rates moved up in mid-June and July before settling lower in August. Borrowing costs on one-, three- and five-year fixed-rate mortgages fell during the second week of August by 30 basis point (bps) compared to a week earlier. This decline brought the average one- and five-year rates down to 6.7 and 6.9 per cent in August, 30 bps below the same month in 2007
BCREA forecasts mortgage rates to remain near current levels, albeit with a slight upward trend through to the end of 2008 into 2009.
In a move widely expected by economists, the Bank of Canada (BoC) held its trend-setting interest rate at 3 per cent on September 3. This move came despite the recent slide in prices for commodities such as crude oil, a weak US economy and the continued slowdown in the Canadian economy that calmed inflationary pressures and fuelled speculation that rates may be cut. Financial markets had priced in the potential that the BoC would cut rates by 25 bps leading into the decision.
BCREA expects the BoC will keep its trendsetting trend setting overnight rate unchanged at 3 per cent through 2008 and into 2009 given BoC’s statement that the “target for the overnight rate remains appropriately accommodative.” BCREA expects an interest rate hike in the second half of 2009 in response to signs of a recovery in the US economy and higher US interest rates. The expectations of a future rate increase should provide upward pressure on Canadian mortgage rates as 2008 progresses.
However, BCREA anticipates improved credit market conditions to offset some of this increase. Tighter credit conditions have been the norm since August 2007 when the credit crunch drove up the cost of funds, including monies used to fund part of the mortgage loan market. This resulted in higher mortgage rates than would otherwise have been expected, given the historic relationships
between mortgage rates and yields on financial instruments with similar maturities. A recovery in the US economy will likely coincide with an improvement in credit market conditions, resulting in lower risk premiums which should partly offset the impact of higher interest rate expectations in Canada.
Inflation Risk Tempered by Crude Price
The accelerating pace of inflation is likely to slow in the coming months as energy prices moderate. Recently, higher inflation has been a concern as July’s total inflation breached 3 per cent for the second consecutive month and remained well above the BoC’s target band of 1 to 3 per cent. Despite a low core inflation rate, which excludes the most volatile items and is a good indicator of underlying inflation, the high headline rate fuelled speculation that rates could rise to stem inflationary pressures.
Rapid increases in energy prices have been the main contributor to higher inflation levels. The energy component of consumer price inflation increased by 21.1 per cent in July from a year earlier. Excluding energy, inflation amounted to only 1.6 per cent. However, after reaching $145 per barrel on July 14, the spot price of crude oil has tumbled 25 per cent to $109 at the beginning of September (Fig. 3). Crude futures for October delivery, the best indicator of future crude
price, has fallen below $105. This is well below the BoC’s projection of $140 assumed in its July Monetary Policy Update, and provides a cushion against upward inflation risk and interest rate hikes.
However, several factors may offset downward inflation pressure. The BoC noted volatility in commodity prices and global inflation in its September 3 communiqué. Additionally, while high crude prices have con contributed to a stronger Canadian dollar, a significant drop in the price of crude may have the opposite effect, resulting in higher import prices and inflation pressures.
The Canadian dollar continues to be historically high, but its value compared to the US dollar has declined nearly 6 per cent since July.
Economy Remains Soft in Q2
Canada’s economy remained sluggish in the second quarter, expanding at an annualized rate of 0.3 per cent. This followed a first quarter decline of 0.8 per cent. A relatively high Canadian dollar and softer US and global demand has resulted in a slowdown in export activity. However, domestic demand has remained strong despite a moderate slowdown in the second quarter. Overall activity was deemed by the BoC to be near production capacity, reflecting solid economic conditions in Canada.
In its September 3 communiqué, the BoC found that its current trend-setting interest rate was “appropriately accommodative.” The BoC expects total and core inflation will still converge to its target of 2 per cent by the second half of 2009. Given that the downside risks outlined in its Monetary Policy Update were realized, and the BoC still left rates unchanged, BCREA expects no
change in the rate until mid-2009 when economic growth is expected to improve. However, future rate increases should be offset in part by lower risk premiums, yielding stable mortgage rates for consumers.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
BCREA forecasts mortgage rates to remain near current levels, albeit with a slight upward trend through to the end of 2008 into 2009.
In a move widely expected by economists, the Bank of Canada (BoC) held its trend-setting interest rate at 3 per cent on September 3. This move came despite the recent slide in prices for commodities such as crude oil, a weak US economy and the continued slowdown in the Canadian economy that calmed inflationary pressures and fuelled speculation that rates may be cut. Financial markets had priced in the potential that the BoC would cut rates by 25 bps leading into the decision.
BCREA expects the BoC will keep its trendsetting trend setting overnight rate unchanged at 3 per cent through 2008 and into 2009 given BoC’s statement that the “target for the overnight rate remains appropriately accommodative.” BCREA expects an interest rate hike in the second half of 2009 in response to signs of a recovery in the US economy and higher US interest rates. The expectations of a future rate increase should provide upward pressure on Canadian mortgage rates as 2008 progresses.
However, BCREA anticipates improved credit market conditions to offset some of this increase. Tighter credit conditions have been the norm since August 2007 when the credit crunch drove up the cost of funds, including monies used to fund part of the mortgage loan market. This resulted in higher mortgage rates than would otherwise have been expected, given the historic relationships
between mortgage rates and yields on financial instruments with similar maturities. A recovery in the US economy will likely coincide with an improvement in credit market conditions, resulting in lower risk premiums which should partly offset the impact of higher interest rate expectations in Canada.
Inflation Risk Tempered by Crude Price
The accelerating pace of inflation is likely to slow in the coming months as energy prices moderate. Recently, higher inflation has been a concern as July’s total inflation breached 3 per cent for the second consecutive month and remained well above the BoC’s target band of 1 to 3 per cent. Despite a low core inflation rate, which excludes the most volatile items and is a good indicator of underlying inflation, the high headline rate fuelled speculation that rates could rise to stem inflationary pressures.
Rapid increases in energy prices have been the main contributor to higher inflation levels. The energy component of consumer price inflation increased by 21.1 per cent in July from a year earlier. Excluding energy, inflation amounted to only 1.6 per cent. However, after reaching $145 per barrel on July 14, the spot price of crude oil has tumbled 25 per cent to $109 at the beginning of September (Fig. 3). Crude futures for October delivery, the best indicator of future crude
price, has fallen below $105. This is well below the BoC’s projection of $140 assumed in its July Monetary Policy Update, and provides a cushion against upward inflation risk and interest rate hikes.
However, several factors may offset downward inflation pressure. The BoC noted volatility in commodity prices and global inflation in its September 3 communiqué. Additionally, while high crude prices have con contributed to a stronger Canadian dollar, a significant drop in the price of crude may have the opposite effect, resulting in higher import prices and inflation pressures.
The Canadian dollar continues to be historically high, but its value compared to the US dollar has declined nearly 6 per cent since July.
Economy Remains Soft in Q2
Canada’s economy remained sluggish in the second quarter, expanding at an annualized rate of 0.3 per cent. This followed a first quarter decline of 0.8 per cent. A relatively high Canadian dollar and softer US and global demand has resulted in a slowdown in export activity. However, domestic demand has remained strong despite a moderate slowdown in the second quarter. Overall activity was deemed by the BoC to be near production capacity, reflecting solid economic conditions in Canada.
In its September 3 communiqué, the BoC found that its current trend-setting interest rate was “appropriately accommodative.” The BoC expects total and core inflation will still converge to its target of 2 per cent by the second half of 2009. Given that the downside risks outlined in its Monetary Policy Update were realized, and the BoC still left rates unchanged, BCREA expects no
change in the rate until mid-2009 when economic growth is expected to improve. However, future rate increases should be offset in part by lower risk premiums, yielding stable mortgage rates for consumers.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
MLS® Home Sales Generate $2 Billion in GDP and 28,800 Jobs
Vancouver, BC – September 2, 2008. British Columbia Real Estate Association (BCREA) released today a report on the economic impact of Multiple Listing Service® (MLS®) residential sales to the provincial economy in 2007. A typical MLS® residential sale generated nearly $42,000 in economic output, $20,000 in Gross Domestic Product (GDP) and $13,000 in household income. Tax revenues to federal, provincial and municipal governments exceeded $9,800. A typical MLS® residential sale also generated 0.28 full time equivalent jobs (FTE).
“MLS® residential sales provide a significant contribution to BC economy,” said Cameron Muir, BCREA chief economist. Every 100 transactions in 2007 generated nearly $4.2 million in economic output and $2 million in GDP.
“While a single home sale has a relatively small impact, the cumulative effect of thousands of transactions is noteworthy,” added Muir. The province recorded 102,892 MLS® residential sales last year, contributing $4.3 billion to economic output and $2 billion to provincial GDP.
Home sales also create employment. For every 100 MLS® residential sales, 28 full-time equivalent (FTE) jobs were generated in 2007. This means 28,800 FTE jobs were needed to service the total number of MLS® residential sales last year.
100 typical MLS® residential transactions added nearly $1.3 million to household income. Total MLS® residential sales in 2007 contributed to more than $1.3 billion in BC household income.
Residential transactions generate significant tax revenue. Every 100 MLS® residential sales in 2007 accounted for nearly $300,000 in federal taxes, $660,000 in provincial taxes and $32,000 in municipal taxes. Total MLS® residential sales in 2007 generated approximately $300 million in federal taxes, $680 million in provincial taxes and $33 million in municipal taxes. In total, MLS® residential transactions contributed more than $1 billion to government coffers.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
“MLS® residential sales provide a significant contribution to BC economy,” said Cameron Muir, BCREA chief economist. Every 100 transactions in 2007 generated nearly $4.2 million in economic output and $2 million in GDP.
“While a single home sale has a relatively small impact, the cumulative effect of thousands of transactions is noteworthy,” added Muir. The province recorded 102,892 MLS® residential sales last year, contributing $4.3 billion to economic output and $2 billion to provincial GDP.
Home sales also create employment. For every 100 MLS® residential sales, 28 full-time equivalent (FTE) jobs were generated in 2007. This means 28,800 FTE jobs were needed to service the total number of MLS® residential sales last year.
100 typical MLS® residential transactions added nearly $1.3 million to household income. Total MLS® residential sales in 2007 contributed to more than $1.3 billion in BC household income.
Residential transactions generate significant tax revenue. Every 100 MLS® residential sales in 2007 accounted for nearly $300,000 in federal taxes, $660,000 in provincial taxes and $32,000 in municipal taxes. Total MLS® residential sales in 2007 generated approximately $300 million in federal taxes, $680 million in provincial taxes and $33 million in municipal taxes. In total, MLS® residential transactions contributed more than $1 billion to government coffers.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”
Housing Starts Up in August
OTTAWA, September 9, 2008 — The seasonally adjusted annual rate1 of housing starts was 211,000 units in August, up from 186,500 units in July, according to Canada Mortgage and Housing Corporation (CMHC).
“After a brief pause in July, the volatile multiple segment bounced back to a level of activity that is more consistent with our forecast for this year,” said Bob Dugan, Chief Economist at CMHC's Market Analysis Centre. “Most of the volatility in housing starts over the last three months reflected swings in multiple starts in Ontario.”
The seasonally adjusted annual rate of urban starts rose 15.2 per cent in August compared to July. Both urban multiples and singles moved higher, with an increase of 25.2 per cent for multiples to 114,700 units, and a 2.0 per cent increase for singles to 71,200 units.
The seasonally adjusted annual rate of urban starts was down in every region except Ontario where housing starts jumped 81.0 per cent to 86,500. Urban starts sagged 22.5 per cent to 23,700 units in the Prairies and dropped 11.5 in Atlantic Canada. Smaller declines of 8.7 per cent and 8.2 per cent were recorded in Quebec (37,600 units) and British Columbia (30,400 units) respectively.
Rural starts were estimated at a seasonally adjusted annual rate of 25,100 units in August2.
For the first eight months of 2008, actual starts in rural and urban areas combined were down an estimated 4.3 per cent compared to the same period last year. Year-to-date actual starts in urban areas have increased by an estimated 1.0 per cent over the same period in 2007. Actual urban single starts for the January to August period of this year were 16.8 per cent lower than they were a year earlier, while urban multiple starts were up by 17.6 per cent over the same period.
CMHC September 9, 2008
“After a brief pause in July, the volatile multiple segment bounced back to a level of activity that is more consistent with our forecast for this year,” said Bob Dugan, Chief Economist at CMHC's Market Analysis Centre. “Most of the volatility in housing starts over the last three months reflected swings in multiple starts in Ontario.”
The seasonally adjusted annual rate of urban starts rose 15.2 per cent in August compared to July. Both urban multiples and singles moved higher, with an increase of 25.2 per cent for multiples to 114,700 units, and a 2.0 per cent increase for singles to 71,200 units.
The seasonally adjusted annual rate of urban starts was down in every region except Ontario where housing starts jumped 81.0 per cent to 86,500. Urban starts sagged 22.5 per cent to 23,700 units in the Prairies and dropped 11.5 in Atlantic Canada. Smaller declines of 8.7 per cent and 8.2 per cent were recorded in Quebec (37,600 units) and British Columbia (30,400 units) respectively.
Rural starts were estimated at a seasonally adjusted annual rate of 25,100 units in August2.
For the first eight months of 2008, actual starts in rural and urban areas combined were down an estimated 4.3 per cent compared to the same period last year. Year-to-date actual starts in urban areas have increased by an estimated 1.0 per cent over the same period in 2007. Actual urban single starts for the January to August period of this year were 16.8 per cent lower than they were a year earlier, while urban multiple starts were up by 17.6 per cent over the same period.
CMHC September 9, 2008
Friday, August 29, 2008
New MLS® residential listing levels reach new heights in July
The number of new listings of homes for sale on the Multiple Listing Service® (MLS®) of all real estate Boards in Canada set a new record in July 2008, according to MLS® statistics released by The Canadian Real Estate Association (CREA).
New MLS® residential listings numbered 80,147 units in July 2008, up 1.4 per cent from the previous month and 0.5 per cent above the previous record set in May 2008. This is the first time in any month that new listings surpassed eighty thousand units.
The number of new listings scaled to new heights in Ontario and Quebec, and in Manitoba climbed to their second-highest level since the beginning of the new millennium. This more than offset a monthly decline in the number of new listings in Alberta, where levels continue retreating from the peak reached in March.
Seasonally adjusted national sales activity in July 2008 was stable compared to the previous month. It has been holding steady since posting a 6.0 per cent month-over-month decline in February. Monthly activity rose in Alberta, Nova Scotia and Prince Edward Island for the second time in as many months. Activity also rose on a month-over-month basis in Newfoundland & Labrador. The monthly increase in activity in these provinces was offset by a monthly decline in activity in British Columbia, Ontario, and Quebec.
Sales activity set a new monthly record in Manitoba, and in Newfoundland & Labrador. It also climbed to its highest point on record for the year-to-date in these provinces.
Resale housing market balance is represented by sales as a percentage of new listings. The continuing rise in the number of new listings is resulting in a considerably more balanced resale housing market this year than buyers faced last year. This trend is most apparent in British Columbia and Saskatchewan, which remained the most balanced provincial markets in July. The market is showing signs of stabilizing in Alberta, where new listings have declined and market balance has tightened in each of the months from April to July 2008.
The national MLS® residential average price eased by 2.4 per cent year-over-year in July 2008, compared to the average price decline of 3.6 per cent in the major markets in Canada reported by CREA earlier this month. The MLS® price decline reflects softening average prices in Alberta and an increase in the province’s share of national sales activity compared to year-ago levels. By contrast, residential average price climbed to its highest level for the month of July in all other provinces except British Columbia, and its highest level ever in Newfoundland & Labrador. Average price for the year to date (as of July 2008) is 2.7 percent above where it stood over the same period last year.
Seasonally adjusted dollar volume for MLS® sales totaled $11.8 billion in July 2008, climbing to the highest level ever in Manitoba and Nova Scotia. It also reached the highest level on record for the month of July in Quebec, New Brunswick, and Newfoundland & Labrador. Volume for the year to date in July also achieved the second highest level on record, down 16.6 per cent from the peak last year.
"To keep things in perspective, 2007 was a record year for MLS® sales in Canada," says the President of The Canadian Real Estate Association, Calvin Lindberg. "The fact that sales volume continue at levels so close to that record year indicates what a dynamic and active real estate market there is in many regions of the country."
"The other factor is that the more listings there are on the market, the bigger the impact on the average price," the CREA President adds. "It means a market when buyers have more options, and sellers must be realistic in their pricing expectations. A REALTOR® has expertise and marketing resources to help both."
"The trend for new listings generally reflects recent price trends," said CREA Chief Economist Gregory Klump. "While still elevated, new listings in Alberta are easing and market balance is stabilizing now that prices there have softened. Similar trends are expected to play out in other western provinces where prices posted sharp gains last year," he said.
“Copyright British Columbia Real Estate Association. Reprinted with permission.” August 29, 2008
New MLS® residential listings numbered 80,147 units in July 2008, up 1.4 per cent from the previous month and 0.5 per cent above the previous record set in May 2008. This is the first time in any month that new listings surpassed eighty thousand units.
The number of new listings scaled to new heights in Ontario and Quebec, and in Manitoba climbed to their second-highest level since the beginning of the new millennium. This more than offset a monthly decline in the number of new listings in Alberta, where levels continue retreating from the peak reached in March.
Seasonally adjusted national sales activity in July 2008 was stable compared to the previous month. It has been holding steady since posting a 6.0 per cent month-over-month decline in February. Monthly activity rose in Alberta, Nova Scotia and Prince Edward Island for the second time in as many months. Activity also rose on a month-over-month basis in Newfoundland & Labrador. The monthly increase in activity in these provinces was offset by a monthly decline in activity in British Columbia, Ontario, and Quebec.
Sales activity set a new monthly record in Manitoba, and in Newfoundland & Labrador. It also climbed to its highest point on record for the year-to-date in these provinces.
Resale housing market balance is represented by sales as a percentage of new listings. The continuing rise in the number of new listings is resulting in a considerably more balanced resale housing market this year than buyers faced last year. This trend is most apparent in British Columbia and Saskatchewan, which remained the most balanced provincial markets in July. The market is showing signs of stabilizing in Alberta, where new listings have declined and market balance has tightened in each of the months from April to July 2008.
The national MLS® residential average price eased by 2.4 per cent year-over-year in July 2008, compared to the average price decline of 3.6 per cent in the major markets in Canada reported by CREA earlier this month. The MLS® price decline reflects softening average prices in Alberta and an increase in the province’s share of national sales activity compared to year-ago levels. By contrast, residential average price climbed to its highest level for the month of July in all other provinces except British Columbia, and its highest level ever in Newfoundland & Labrador. Average price for the year to date (as of July 2008) is 2.7 percent above where it stood over the same period last year.
Seasonally adjusted dollar volume for MLS® sales totaled $11.8 billion in July 2008, climbing to the highest level ever in Manitoba and Nova Scotia. It also reached the highest level on record for the month of July in Quebec, New Brunswick, and Newfoundland & Labrador. Volume for the year to date in July also achieved the second highest level on record, down 16.6 per cent from the peak last year.
"To keep things in perspective, 2007 was a record year for MLS® sales in Canada," says the President of The Canadian Real Estate Association, Calvin Lindberg. "The fact that sales volume continue at levels so close to that record year indicates what a dynamic and active real estate market there is in many regions of the country."
"The other factor is that the more listings there are on the market, the bigger the impact on the average price," the CREA President adds. "It means a market when buyers have more options, and sellers must be realistic in their pricing expectations. A REALTOR® has expertise and marketing resources to help both."
"The trend for new listings generally reflects recent price trends," said CREA Chief Economist Gregory Klump. "While still elevated, new listings in Alberta are easing and market balance is stabilizing now that prices there have softened. Similar trends are expected to play out in other western provinces where prices posted sharp gains last year," he said.
“Copyright British Columbia Real Estate Association. Reprinted with permission.” August 29, 2008
Monday, August 18, 2008
An Excellent Time to Buy or Sell
By incorporating the right strategy this is still an excellent time to buy or sell a home. I make this statement despite the fact that recent stats are definitely showing that the market has slowed. After all the Kootenay Real Estate Board has just reported a 69% increase in current inventory. The result of a 33.8% slow down in sales and and a 24.8% increase in the number of listings.
But the future is not as bleak as it appears. Our adjusting real estate market is not a disaster. This correction is needed to help create a healthier, balanced market.
For Sellers current market conditions simply means that they must price their home right. Sellers must accept that their house will not sell for as much as it would have last year and that to influence a quick sale, the really anxious seller may even have to further reduce the price. Properties are now taking longer to sell. Pricing a property correctly is still the best way to reduce the stress of selling.
In addition to selecting an appropriate asking price, the condition of the property is key to achieving the quickest sale for the highest price and most favorable terms. Staging is now more critical then in previous years when a house in any condition would sell quickly just because there was nothing else available. Today sellers need to remove clutter and make repairs. A well maintained and well presented home will out sell the properties where work has been deferred. The balance of power has levelled but sellers still maintain control of the condition and price of a property.
For buyers the new market conditions provides them with the time that they need to make an informed decision. I never enjoyed having to say to a buyer, "if you like this house you will need to act quickly, by tomorrow it will likely be sold." But that was the reality of the 2005-2007 Nelson, BC real estate market.
The reality for buyers in 2008 is no pressure to compete, an increase in supply and time to consider a purchase rationally. Now is the time for buyers to seriously consider purchasing a home.
But the future is not as bleak as it appears. Our adjusting real estate market is not a disaster. This correction is needed to help create a healthier, balanced market.
For Sellers current market conditions simply means that they must price their home right. Sellers must accept that their house will not sell for as much as it would have last year and that to influence a quick sale, the really anxious seller may even have to further reduce the price. Properties are now taking longer to sell. Pricing a property correctly is still the best way to reduce the stress of selling.
In addition to selecting an appropriate asking price, the condition of the property is key to achieving the quickest sale for the highest price and most favorable terms. Staging is now more critical then in previous years when a house in any condition would sell quickly just because there was nothing else available. Today sellers need to remove clutter and make repairs. A well maintained and well presented home will out sell the properties where work has been deferred. The balance of power has levelled but sellers still maintain control of the condition and price of a property.
For buyers the new market conditions provides them with the time that they need to make an informed decision. I never enjoyed having to say to a buyer, "if you like this house you will need to act quickly, by tomorrow it will likely be sold." But that was the reality of the 2005-2007 Nelson, BC real estate market.
The reality for buyers in 2008 is no pressure to compete, an increase in supply and time to consider a purchase rationally. Now is the time for buyers to seriously consider purchasing a home.
Kootenay Real Estate Board Stats July 2008
Sales were down 31% over last year, Year to Date overall sales are down 33.8%.
Listing numbers in July were up 17% over last year, Year to Date listing numbers are up 24.8%.
Listing Inventory is up 69% over last year at the end of July.
Listing numbers in July were up 17% over last year, Year to Date listing numbers are up 24.8%.
Listing Inventory is up 69% over last year at the end of July.
Swollen Inventories Favour Homebuyers
British Columbia Real Estate Association (BCREA) reports residential sales dollar volume on the Multiple Listing Service® (MLS®) in BC declined 38 per cent to $2.9 billion in July, compared to July 2007. Residential unit sales fell 37 per cent to 6,541 units during the same period. The average MLS® residential price in the province was $444,358, down 0.5 per cent from July 2007. “Home sales have slowed to a level not seen since the beginning of the decade,” said Cameron Muir, BCREA Chief Economist. “BC households are now cautious about making major purchases in light of uncertainty around fuel prices and other inflationary pressures.”
“The slowdown in housing demand has swollen the inventory of homes for sale, putting downward pressure on home prices in some markets,” added Muir. A total of 60,008 homes were for sale on the MLS® in July, an increase of 63 per cent from the previous year. “While this inventory is expected to decline in the coming months, most BC regions will remain in buyers’ market territory for the remainder of 2008.”
Year-to-date MLS® residential sales dollar volume in the province declined 18 per cent to $23.2 billion compared to the same period last year. Sales transactions fell 24 per cent to 49,448 units, while the average residential price increased 8.2 per cent to $469,676 over the same period.
“Copyright British Columbia Real Estate Association. Reprinted with permission.” August 15, 2008
“The slowdown in housing demand has swollen the inventory of homes for sale, putting downward pressure on home prices in some markets,” added Muir. A total of 60,008 homes were for sale on the MLS® in July, an increase of 63 per cent from the previous year. “While this inventory is expected to decline in the coming months, most BC regions will remain in buyers’ market territory for the remainder of 2008.”
Year-to-date MLS® residential sales dollar volume in the province declined 18 per cent to $23.2 billion compared to the same period last year. Sales transactions fell 24 per cent to 49,448 units, while the average residential price increased 8.2 per cent to $469,676 over the same period.
“Copyright British Columbia Real Estate Association. Reprinted with permission.” August 15, 2008
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