OTTAWA — Canada’s housing market “remains a notable out-performer” in comparison to other countries, especially in vancouver homes, where renewed doubts about the strength of the global economy are weakening an already fragile real-estate scene, says a report released Tuesday.

The Bank of Nova Scotia said in an assessment of the global housing market that high unemployment, concerns over the financial health of some European governments, signs the global economic recovery is slowing down and recent stock-market volatility are burdening residential real-estate markets around the world.

For many people, saving money and repaying debt have become bigger priorities than making major purchases, such as homes, the report said.

“We expect global housing demand to remain moribund until the global economic recovery gets back on a firmer footing and some financial market stability returns,” said Adrienne Warren, senior economist with Scotia Economics.

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vancouver  - It wasn’t that long ago we were calling the former Olympic Athletes Village a ghost town, but now the tumbleweeds are giving way to the shuffling feet of even more homebuyers as another batch of condos is going on the block today.

Eighty-four homes in the Shoreline building are being launched to realtors.  The east-facing units, with views of the newly renovated BC Place and Downtown vancouver, range in price from $500,000 all the way to $2 million.

condo marketer Bob Rennie says the entire project is now 60 per cent sold.  “Out of the 737 condominiums, we’re sitting at 427 sold.”

He’s impressed by the brisk pace of sales.  “We’ve sold 159 homes in 156 days, so just over one a day.  So we’re really happy that the public is accepting the product.  I think for the 640,000 citizens of vancouver the Village has finally stabilized.”

Rennie adds including rentals and non-market housing, the former Athletes Village is now 73 per cent occupied

Source: John Ackermann, News1130

B.C.’s real estate market may be slowing down, but there is no sign vancouver’s sky high prices are caught up in a bubble that is about to burst, according to a new report

The Central 1 Credit Union report, which was issued on Thursday, forecasts the B.C. market will slow this year and total sales will drop slightly from 2010, but prices will continue to rise an estimated 6.8 per cent next year.

According to the report’s author economist Brian Yu, low interest rates that show no sign of rising quickly and the limited supply of land will keep values rising – all familiar arguments.

But Yu says there is another important reason to believe prices in vancouver are unlikely to collapse. Market speculation —commonly known as flipping — currently accounts for only about two or three per cent of the market.

Yu says that is a normal level, which shows most people are living in the homes they buy.

“Our research shows few signs that speculators are overly active in the vancouver homes market, which means we are unlikely to see a speculation-induced bust,” he said.

“Even if the economy slows and employment slows, we expect to see individuals hold on to their homes, rather than sell them in a weaker market,” he said.

Prices may be way up for detached homes in Richmond, vancouver and Burnaby, but Yu insists there hasn’t been a 500 real estate price surge across the region and concerns about a possible dramatic price drop in vancouver are overblown.

“Price jumps that have received media attention have been in localized areas and we have not seen a region-wide price surge,” he said.

Market balanced says national report

That’s backed up the Canadian real estate Association’s report that found a record 70 per cent of all local real estate markets across the country are considered to be in balance.

vancouver and Toronto’s share of provincial and national sales activity reached “unusually elevated” levels earlier this year, but has since pulled back into normal seasonal variations, the group said.

However, some observers said the market is eventually headed for a drop.

Fannie Fong of TD Economics said a peak-to-trough drop of roughly 10 per cent for both home sales and prices is expected, though that change isn’t expected until the Bank of Canada begins hiking interest rates in earnest in early 2013.

Just two months ago BMO Capital Markets raised the spectre of a vancouver price correction but with a caveat: as long as immigrants with money continue coming to vancouver, and interest rates stay low, prices in will stay high, said the BMO report.

Source: CBC News

Southwestern B.C. and the rest of the province increasingly have little in common when it comes to year-over-year home price changes, according to the latest numbers from the B.C. real estate Association.

While residential sales across the province remained stable in August as low mortgage rates were balanced by high numbers of active listings, average prices dropped in the Okanagan and most other interior regions in the past year while rising sharply in Metro vancouver and the vancouver-east-fraser-homes/” >fraser Valley.

There are many reasons for the price divergence in the two regions, including less migration to the Okanagan, fewer sales of recreational properties and a higher number of active listings there that quell upward pressure on prices, says BCREA senior economist Cameron Muir.

But Muir also noted in an interview that average prices in Metro vancouver have been “skewed” for some time by the high number of sales of expensive single-detached homes in pricier neighbourhoods, although that’s changing.

“When we look at the Okanagan and the Kootenays, migration to the region is down. More importantly, purchases of recreational properties has not come back to the level we saw before the recession. And the Okanagan and Kootenays are still oversupplied markets.”

While the Metro vancouver market remains strong, Muir said prices are starting to pull back as the proportion of single detached home sales in tonier neighbourhoods returns to historic norms.

He said that B.C. homes sales edged up one per cent in August compared to July on a seasonally adjusted basis and that low mortgage rates continued to underpin housing demand throughout the province in August.

He said that total active listings in the province remained elevated in August, as “most regional markets exhibited buyers’ market conditions, meaning little upward pressure on home prices.”

According to the BCREA survey, the average price in B.C. rose 10.7 per cent in August compared to August 2010 to $540,000 from $488,000.

However, price changes fluctuated sharply by region, with the vancouver-east-fraser-homes/” >fraser Valley showing the sharpest increase of 19.7 per cent over the year, from $424,000 to $508,000.

Metro vancouver prices rose 14.4 per cent from $681,000 to $779,000, while Victoria prices rose 13.7 per cent from $472,000 to $537,000. The rest of vancouver Island showed a slight price drop.

However, Powell River showed the sharpest drop – 12.7 per cent, from $297,000 to $260,000 – while the Okanagan Mainline recorded a 0.3-per-cent drop in prices from $384,000 to $383,000 and the South Okanagan dropped 7.2 per cent from $331,000 to $307,000.

Year-to-date, it was more of the same, with B.C. recording a 14.7-per-cent price increase in the first eight months compared to the same period in 2010, Metro vancouver recording a 19.2-per cent hike over that period and the vancouver-east-fraser-homes/” >fraser Valley seeing a 12.6-per-cent increase.

However, the Okanagan Mainline saw a 2.5-per-cent decline in the six-month period and the South Okanagan recorded a 5.4-per-cent drop in prices.

Powell River saw an eight-per-cent drop in the six months, while Victoria recorded a 0.5-per-cent decline in the average price.

The Kootenay region recorded a 4.4-per-cent increase in August compared to August 2010, from $274,000 to $286,000, although the average price fell 3.5 per cent year-to-date.

The BCREA also said that the number of residential units sold in August compared to August 2010 rose 16.4 per cent, from 5,590 to 6,504.

To date, B.C. home sales have totalled $31.7 billion this year, up 17.7 per cent from 2010.

Source: Brian Morton

A new study suggests Metro vancouver apartment rental buildings are increasingly a hot item for investors despite rising vacancy rates.

“Demand for multi-family residential rental properties remains insatiable for a number of fundamental reasons,” Michael Keenan, managing director of Avison Young, Metro vancouver, said Monday in reference to his commercial real estate services company’s Summer/Fall 2011 B.C. Multi-Family Investment Report.

“Apartment buildings are a low-risk investment, offer secure income streams and are the most easily financed commercial real estate commodity of all, thanks to rates guaranteed by the Canada Mortgage and Housing Corporation.”

Keenan also said rental apartment buildings continue to rise in value as investors seek safe havens for their capital.

Other factors influencing demand, the report said, include low investment risk and the opportunity for tenant turnover to increase rental rates and improve yields.

According to the semi-annual report, which tracked investment deals valued at more than $5 million, in the first half of 2011 total multi-family rental building sales amounted to $238 million – a 125-per-cent increase over the second half of 2010 ($106 million) and a 51-per-cent jump over the first half of 2010 ($158 million).

The report said institutional and overseas buyers look to B.C. for opportunities, but that investments in the suburbs are drawing buyers out of vancouver as the supply of large, institutional-grade apartment buildings available for sale within city limits shrinks.

Seven of the large institutional-grade transactions were in vancouver, three in New Westminster, two each in coquitlam, Burnaby, the North Shore and Surrey, and one each in Surrey, richmond, Abbotsford and Chilliwack.

The three largest acquisitions in the first half of 2011 were the $44-million purchase of Ocean Residences in richmond, the $24.5-million purchase of Bonsor Apartments in Burnaby, and the $23.75-million purchase of Marine Garden Village in vancouver.

The report noted that the movement of renters to home ownership continued into 2011, and that apartment buildings faced increased competition from the secondary rental market, including suites in homes and investor-owned condos available for rent.

Asked why rising vacancy rates — up to 2.8 per cent in April from 2.2 per cent in April 2011 — aren’t hindering investment, Keenan said that apartment vacancy has always been low in Metro vancouver and “the slight upward spike currently being experienced is temporary and not worthy of great concern.”

Keenan also said that “vacancies can usually be easily filled at a low cost, unlike virtually any other type of commercial real estate. When a new tenant occupies a suite, the rent can be set at what the market will bear. Rent controls simply limit how much of an increase the landlord can charge on an annual basis.”

However, Marg Gordon, CEO of the BC Apartment Owners and Managers Association, said building owners and landlords face escalating costs.

“The challenges right now in a nutshell are controlled revenues and uncontrolled costs.”

Gordon said that although the HST is on the way out, it will still increase costs by between 1.5 and three per cent until the tax is gone.

She said that the rise in the allowable rent increase in 2012 to 4.3 per cent from 2.3 per cent this year is good news, but just covers rising maintenance and operating costs.

“Then we’re faced in vancouver with the problem of aging buildings. The average [age] is 57 or 58 years old. They all need renovating, upgrading and improvements.”

Source: Brian Morton, vancouver Sun

Led by “sky-high” prices in vancouver, housing in Canada has become less affordable for a second quarter running.

The latest Housing Trends and Affordability report released yesterday by RBC Economics Research once again singled out the British Columbia city as the least affordable in the country.

“vancouver’s housing market is without a doubt the most stressed in Canada and is facing the highest risk of a downturn,” said Craig Wright, senior vice-president and chief economist with RBC.

[However, please note that there are specific areas, namely vancouver, West vancouver and richmond, where high sales prices have accelerated the overall figures].

The report found most housing markets in the country are still reasonably affordable or merely slightly unaffordable with the costs of homeownership hovering around historical norms.

Country-wide, the percentage of household income required to own the benchmark detached bungalow used in the report increased 1.7 percentage points to 43.3%. The higher the reading on the the affordability measure, the more it costs to own a home based on going market values.

For a condo, it went up 0.8 percentage points to 29.2% and for a two-storey home, it increased 1.8 percentage points to 49.3%.

The report notes that since the beginning of the year, increases in housing costs in the Greater vancouver Area have directly accounted for up to one-third of the nationwide changes.

Other markets such as Montreal, Ottawa and Toronto also became less affordable in the quarter. The benchmark measure for a detached bungalow increased in all three cities, with Toronto’s bump of 2 percentage points pushing it over the halfway mark to 51.9%.

Montreal was up 1.4 percentage points to 42.6% and Ottawa was up 1.3 percentage points to 41.2%.

The measure also increased in Calgary and Edmonton, which were both up 0.6 percentage points to 37.1% and 33.8% respectively.

In contrast to these increases, the costs of owning a detached bungalow in [the city of] vancouver shot up 10.4 percentage points to reach the 92.5% level.

The silver lining, Mr. Wright suggests, is that due to recent stress in global financial markets, an interest rate hike at the federal level is no longer expected until the middle of 2012, according to RBC’s projections.

“Housing affordability in Canada may not deteriorate as quickly or by as much as we previously expected,” Mr. Wright said.

However, he said the future for housing prices remains uncertain, as the delay in the interest rate increase could prompt buyers to remain active for longer, extending the current upward momentum in prices.

Source: Christine Dobby, Financial Post