Resale housing markets in Canada are headed for a “significant slowing” over the next year, the Royal Bank said Thursday.

Sales of existing homes will hit 451,200 units this year, less than one per cent above the 2010 figure of 447,000, and will be almost unchanged in 2012, the bank forecast. Sales of about 451,000 would be four per cent below the average during the past seven years, the bank said.

Meanwhile, the price for a detached bungalow will rise 4.4 per cent this year, and 0.4 per cent in 2012, the bank said. That follows an 8.4 per cent jump in 2010.

Forecast higher interest rates — “which will cool demand but not deep-freeze it” — are behind the slowing, the bank said. Real economic increases and population growth from immigration will offset the higher rates, ” leaving resales activity largely flat overall” in 2012.

The forecast noted that about half of the 7.5 per cent house price increase in the first half was based on vancouver alone. Excluding that city, the average nation price was up just 4.2 per cent, or just 1.2 per cent to 1.6 per cent, after inflation.

Next year, British Columbia will be the only province where prices will drop, the bank forecast. Alberta will see the strongest growth in the number of existing home sales this year and next. Sales in Quebec will decline “modestly” in both 2011 and 2012.

Source: CBC News

vancouver — Its quality of life is routinely ranked among the best in the world, but that’s only one reason vancouver real estate prices are red hot.

Wealthy Chinese anxious to raise their families in the West are bidding up the city’s limited number of properties in fashionable West vancouver, sending prices in the city soaring more than 50 percent in the past three years.

Last year, Canada issued 1,600 visas to Chinese investors looking to move to British Columbia.

Su Yi Bin, a trader by profession, is looking to buy a 450-square-meter (4,800-square-foot) house in the area for his family and ready to pay as much as $4.3 million Canadian ($4.5 million US).

Su splits his time between vancouver and Shanghai. While he’s in China, he wants his family to be comfortable while they adapt to their new country.

“For my child, growing up and going to school here will allow him to integrate fully into the world, into an international lifestyle,” he said.

“That’s just not possible in China.”

While prices in vancouver have risen 54 percent in the past three years, they jumped 13 percent last year alone.

vancouver real estate agent Clarence Debelle sees the Chinese influx in his business. In just five months, he has seen his Chinese clientele jump from two to 40 potential buyers.

“We do not have that many homes available for sale in West vancouver, and the Chinese buyers are buying an awful lot of them. So I feel the prices will continue to rise,” he said.

Faced with this market assault, Cam Good has opened two apartment showrooms similar to those in Hong Kong and Beijing.

He thinks he knows why Chinese are so keen to purchases properties in vancouver.

The Chinese authorities, he said, “are really worried by the real estate boom in China, so they restricted people” to buying no more than two properties.

Seventy square meters (750 square feet) for half a million dollars in vancouver might look expensive, even with with a view of the sea. But to be able to own property outright is not possible in China, he said, where houses are leased for a maximum of 70 years.

To close his real estate deals, Good’s firm, known as “The Key” company, straddles both east and west.

“We consult a fengshui master to make sure that the floor plans and the overall design of the building are appealing to Chinese people,” he said, referring to the ancient Chinese system of aesthetics used to lay out homes in the most auspicious way possible.

He’s certainly seeing results: of the first 40 sales in his apartment complex, half the purchasers were originally from China.

Local buyers, however, faced with the onslaught of Chinese money, are hurting. The cost of a mortgage, taxes and utilities for an average vancouver apartment now represent about 70 percent of the average annual salary.

Experts say rising house prices don’t necessarily mean the city is in the midst of a real estate bubble.

“I think there is very, very little chance that Canada will see what happened in the United States,” said Tsur Somerville, director of the urban economy and real estate center at the University of British Columbia.

Of course, he said, “vancouver is extremely expensive, but it has been that way for a very long time.”

But mortgages have also been better monitored in Canada than in the United States, he added.

According to one of Canada’s biggest real estate firms, Royal LePage, the housing market has peaked and should slow down in the second half of 2011 to an annual growth rate of some 7.7 percent.

As for Su and his wife, who have not yet decided which house to buy, one thing is sure: “If my wife and I find a house we like, we will buy it, and if the house holds its value, even better.”

Source: Laurent Vu, The AFP

* Resales in June rise 2.6 pct from May to 37,578

* Most markets rise but Toronto and vancouver cool

* National average price rises 8.7 pct to C$372,700

Sales of existing homes in Canada rose 2.6 percent in June from May with increases in most

markets across the country except for high-priced vancouver and

Toronto, the Canadian real estate Association (CREA) said on

Friday.

It said 37,578 homes were sold in June, up 10.8 percent

from the same month in 2010, when sales were in a mini-slump.

Sales in vancouver fell 1.7 percent in the month, while

Toronto dipped 0.4 percent. CREA said the national housing

market remains well balanced and said fundamentals point to

healthy home sales activity and prices going into the second

half of 2011.

CREA chief economist Gregory Klump said that recent Bank of

Canada surveys showing upbeat business sentiment and hiring

intentions, and signs that the central bank is in no rush to

raise interest rates bode well for home sales activity, .

“The Canadian housing sector remains on a solid footing,”

he said.

Earlier this week, Toronto-Dominion Bank economists said

the market, which some feared had been overheating, is poised

to cool down with sales and prices expected to fall by 15.2

percent and 10.2 percent, respectively, over the next two

years.

A slower pace of sales is already evident. In the second

quarter overall, national sales fell 4.7 percent from the first

quarter, partly because of a rush to buy in the first quarter

ahead of tougher mortgage rules implemented in the spring, CREA

said. Higher mortgage rates in April and May also pushed some

homebuyers to the sidelines in those two months.

“Stricter mortgage rules and declining affordability appear

to be taking at least some momentum out of prices, a trend that

could continue if the Bank of Canada resumes its (monetary

policy) tightening campaign in the fall,” said Robert Kavcic,

an economist at BMO Capital Markets.

CREA said the national average price in June was up 8.7

percent from a year earlier at C$372,700 ($388,229), but that

the extent of the increase was skewed because of sales of

expensive homes in certain vancouver neighborhoods.

CREA said vancouver’s impact on the national price was

waning, but that price increases in other markets have kept the

national average price aloft.

The number of new listings rose 1.8 percent in June from

May.

Source: Reuters.com (reported by Ka Yan Ng; edited by Peter Galloway)

While new data suggests that Asian foreign investment is not behind inflated home prices in vancouver, a new report from CIBC World Markets Inc. Thursday argues that flaws in the numbers means foreign activity may actually be grossly underestimated.

Benjamin Tal, deputy chief economist with CIBC, obtained sales data from Landcor Data Corp. that showed only 10% of foreign transactions in vancouver over the past five years were actually worth more than $1-million, and the average price was just under $600,000.

Mr. Tal said there are reasons why the data, which also shows only 2.6% of overall sales in vancouver over the past five years involved foreign cash, does not actually match up with the Asian foreign investment theory.

“There are many reasons to believe that a significant portion of what is perceived to be buying by offshore investors is, in fact, driven by Chinese immigrants that are integrated into the community but still maintain strong links to Mainland China, with many residing and working in China while their family establishes roots in B.C.,” he said.

The key flaw in Landcor’s data is that it is based on where property tax assessments are mailed, which would exclude offshore buying on behalf of children or local proxies. This means what little data there is on foreign activity may be seriously underreported.

So there is some truth to the working theory that foreign investors, particularly those from Mainland China, are looking for places to park their cash and have settled on vancouver, which boasts a sizeable Asian community and a stable economic climate.

“Many, including Bank of Canada Governor Mark Carney, point the finger at foreign — mainly Asian wealth — as the main driver here,” Mr. Tal said.

That said, the true reason for why vancouver home prices jumped 25.7% year-over-year in May alone is likely more complex than any single theory.

The key then, is when the housing market will correct, and what that correction will look like.

“In Canada, a sharp and brisk tightening cycle is unlikely,” he said. This is because two triggers for a price crash, quick increases in interest rates and a high-risk mortgage market sensitive to changes, are not in play.

In particular, the weakest segment of the mortgage industry, households with both low equity positions and high debt-service ratios, accounts for only 4.6% of the total.

“Shock the system with a 300-basis point rate hike and that number would rise to a still-tempered 6.5%,” Mr. Tal said. “Historically, even in that group the default rate has been well below 1%. Short of a huge macro shock, there does not appear to be the risk of large scale forced selling that would typically be the trigger for a precipitous plunge in the national average house price.”
Source: financialpost.com

vancouver’s real estate market pulled back slightly in June, but the number of listings spiked as homeowners looked to sell into a hot market.

The real estate Board of Greater vancouver said sales fell 3.4 per cent in June compared with May, though they were 9.8 per cent higher than a year ago. New listings were 9.8 per cent higher than the 10-year average for the month, and 3.4 per cent higher than in May.

The MLSLink housing price index benchmark price stood at $630,921 in June, up 8.7 per cent from June 2010. The index measures items such as lot size, age and the number of rooms to create a composite “typical” house that can be used for comparison purposes.

The average sale price for June – which can be skewed by expensive listings – will be released by the Canadian real estate Association on June 15 along with its national sales summary. In May, the average was $824,268.

The average has been pushed higher by only a few neighbourhoods, said real estate board president Rosario Setticasi.

“The largest price increases continue to be in the detached home market on the west side of vancouver and in West vancouver,” he said. “Since the end of May, the benchmark price of a detached home rose more than $147,000 on the west side of vancouver and over $80,000 in West vancouver. Detached home prices in richmond, however, levelled off slightly, declining $25,000 in June.”

The city’s housing market is being closely watched, with some fearing that prices are bound to fall as interest rates move higher and buyers dry up.

BMO Nesbitt burns recently said vancouver appears primed for a correction, with the average house now costing “an astounding” 11.2 times a family’s average income – more than double the national average.

Source: Steve Ladurantaye- real estate Reporter, The Globe and Mail

METRO vancouver — If there’s one word that describes Metro vancouver and the vancouver-east-fraser-homes/” >fraser Valley’s current housing market, it’s balanced.

“Right now we’re at 22 per cent [sales-to-listings ratio], which means 22 per cent of the homes for sale are selling,” real estate Board of vancouver president Rosario Setticasi said in an interview Tuesday. “So, it’s balanced at the upper end and favours sellers, just barely.”

Setticasi noted that sales are below the 10-year average and home listings above what’s typical for June, and that means a closer alignment between supply and demand in the marketplace.

He said the sales-to-listings ratio is falling — and with it, upward pressure on prices.

“We were at 26 to 29 per cent when the market was really moving [and] last month it was at 24 per cent, so it’s dropped a bit. If it drops further it will be more to the buyers’ advantage because there’s more listings, and vendors are competing for buyers.”

In the vancouver-east-fraser-homes/” >fraser Valley, the percentage of properties sold compared to those available for purchase — 1,588 sales out of 9,758 listings in June — was constant over the past three months at 16 per cent, also reflecting balanced conditions more in favour of the buyer, the vancouver-east-fraser-homes/” >fraser Valley real estate Board said.

“When supply and demand remain as consistent as they have since April, it indicates a stable market,” board president Sukh Sidhu said, adding that the numbers vary in each community.

Tsur Somerville, director, centre for urban economics and real estate, Sauder School of Business at the University of B.C., said in an interview that he senses a slight “step back” in sales following sharp increases earlier in the year.

As well, he said, sellers are responding to the higher prices through increased listings.

“If listings are growing faster than sales, it’s a lower sales-to-listings ration, which is more favourable to buyers,” he added.

The REBGV reported that sales of detached, attached and apartment properties reached 3,262 in June, a 9.8-per-cent increase compared to the 2,972 sales in June 2010 but a 3.4-per-cent decline compared to the 3,377 sales in May 2011.

New listings totalled 5,793 in June, a 4.5-per-cent increase compared to June 2010 and 9.8 per cent higher than the 10-year average for June, while residential sales were 7.3 per cent below the ten-year average for sales in June.

The benchmark price for all residential properties (the price of a typical home) in Metro vancouver increased 8.7 per cent to $630,921 in June 2011 from $580,237 in June 2010, with the largest price increases on the west side of vancouver and West vancouver.

“Since the end of May, the benchmark price of a detached home rose more than $147,000 on the west side of vancouver and over $80,000 in West vancouver,” Setticasi said. “Detached home prices in richmond, however, levelled off slightly, declining $25,000 in June.”

Sales of detached homes in June 2011 reached 1,471, an increase of 29.1 per cent from the 1,139 detached sales recorded in June 2010, while the benchmark price for detached properties increased 13.4 per cent from June 2010 to $901,680.

The benchmark price for a detached home on the west side of vancouver was $2,068,000 in June and in West vancouver, $1,793,000.

The vancouver-east-fraser-homes/” >fraser Valley board said it received 2,762 new listings in June, a decrease of 12 per cent compared to the 3,153 new listings in June 2010. Total sales declined about one per cent since May, and 12.5 per cent since June 2010.

In June, the benchmark price for vancouver-east-fraser-homes/” >fraser Valley detached homes was $528,060, an increase of 1.9 per cent compared to $518,355 in June 2010 and a slight drop from May.

Meanwhile, detached single family home sales on vancouver Island north of Victoria are holding steady, with a one-per-cent decline in June compared to June 2010 and a 1.45 per cent decrease from May.

The vancouver Island real estate Board said in a survey that the average price of a detached home was $343,422 in June, down one per cent from $345,269 in June 2010 and down 3.6 per cent from $356,403 in May.

In Victoria, a total of 618 homes were sold in June, up from 572 sales in May and close to the 625 sales in June of last year.

The average price for single-family homes sold in Greater Victoria in June was $629,292, with 23 single family home sales of over $1 million. The average price in June 2010 was $649,280.

Source: BRIAN MORTON, vancouver SUN

Several of Canada’s big banks announced increases in their residential mortgage rates effective Tuesday.

Royal Bank, TD Bank and Laurentian Bank all raised the posted rate for a five-year fixed-rate mortgage by 0.15 percentage points to 5.54 per cent.

Royal Bank raised its special offer rate for a five-year mortgage by 0.15 percentage points to 4.39 per cent, while TD and Laurentian raised their special offer rates for a five-year fixed-rate mortgage by 0.15 percentage points to 4.29 per cent.

Most other special and fixed rates at the banks were also going up between 0.10 and 0.15 percentage points.

Fixed-rate mortgage rates are affected by the cost of borrowing in the bond market, where banks finance their home loan lending.

Source: The Canadian Press

B.C. home prices will rise an average 13 per cent to $571,000 this year before edging back 2.5 per cent to $557,000 in 2012, the B.C. real estate Association said in its second quarter housing forecast released Thursday.

The BCREA also predicted a moderate increase in housing sales this year and next.

However, the 13-per-cent increase in housing costs this year is misleading, according to BCREA chief economist Cameron Muir.

“The average price in the province is being skewed very high because of a higher proportion of single-detached homes selling in the pricier markets of vancouver,” Muir said in an interview. “This is at a time when sales are a bit below the 10-year average. My expectation is for quite flat prices going forward.”

Muir said that the average price in the Greater vancouver area rose 26 per cent in May compared to May 2010, but that the benchmark price – the price of a typical home in the region – rose only about five per cent over the same period.

“This is a recent phenomenon,” Muir said of the discrepancy between the two price measurements. “The average price used to track the benchmark price pretty well.”

According to the report, after declining 12 per cent in 2010, residential unit sales through the multiple listing service are forecast to rise five per cent in B.C. to 78,200 units in 2011 and a further three per cent to 80,700 units in 2012.

However, the report also said that home sales will remain below their 10-year average of 87,600 units both this year and next.

“Home sales will post some modest gains over the next two years,” Muir said. “However, positive housing fundamentals like job growth, rising wages and an expanding population base will be somewhat offset by higher borrowing costs over the next eighteen months.”

He said a record 106,300 residential sales were recorded in 2005.

For Greater vancouver, the report noted that sales — after declining 14 per cent to 31,144 units in 2010 — are forecast to rise 8.5 per cent to 33,800 units this year.

It said that total housing starts in vancouver are forecast to increase 6.5 per cent to 16,200 units in 2011 and another two per cent to 16,550 in 2012.

The average price in the vancouver area is forecast to rise 17.6 per cent in 2011 to $795,000 and then drop three per cent in 2012 to $770,000.

Muir noted that the average price in the south Okanagan is forecast to drop five per cent in 2011 to $304,000, the same percentage drop as the Kootenay region, where the average price is forecast to drop to $260,000.

Source: Brian Morton, vancouver Sun