Threshold being raised to $850,000 effective April 1, 2012
The Honourable Kevin Falcon, Minister of Finance held a press conference today in Victoria to announce transition rules for the harmonized sales tax and the affect it will have on the home building industry. Effective April 1, 2012 the threshold for new housing rebates will be increased from $525,000 to $850,000, including secondary homes.
"We are elated the Provincial Ministry of Finance and the Federal Finance Department asked for our input and that our provincial government listened to the lobbying efforts of CHBA BC," said CEO, M.J. Whitemarsh. "We had the confidence the Government would take our concerns to heart and implement the best solution for our industry, the news today was worth the wait and is even better than we could have anticipated."
Since the referendum results to rescind the tax, the Canadian Home Builders' Association of BC (CHBA BC) has worked diligently providing information from members to the government requesting the implementation of the transition rules be done as simply and quickly as possible to prevent any further stalling of the residential housing industry.
"The out-of-box forward thinking from the Government has created a stable situation for all CHBA BC members who build secondary homes," Whitemarsh said. "Houses purchased as of April 1st will ultimately be receiving a $42,500 discount, now that the threshold has been raised."
Releasing the transition rules on housing early was a wise and bold move on government's part, one that is mutually beneficial. CHBA BC lobbied for a tax rebate to be created for consumers on new home purchases and renovations, so the industry could move forward and gain momentum once again.
"Raising the threshold is a brilliant decision that is fair and equitable, a huge benefit to all consumers that will spur the market," said Doug Wittal, President of CHBA BC. "Including the second home market outside the GVRD and CRD will create a huge boom, creating jobs and pushing the industry forward in very innovative ways."
B.C. property assessments skyrocket but appeals drop off
VANCOUVER — Despite skyrocketing and sometimes uneven property assessments that will mean property tax increases for some homeowners, appeals are down in key areas compared to this time last year, according to BC Assessment.
With 10 days to go before the Jan. 31 deadline, appeals have fallen 15 per cent in the Vancouver-Sea to Sky region and 18 per cent in the Richmond-Delta region, two areas that saw assessments in some areas jump by as much as one-third, said Grant McDonald, deputy assessor for BC Assessment’s Vancouver Sea to Sky region.
The average assessment increase in Vancouver was 16.4, 15.9 in West Vancouver and 16.5 in Richmond.
Some assessments went up much more than the average increase, such as a two-storey house built in 1972 on a 60-by-120-foot lot on Riverdale Avenue in the Thompson area of Richmond that went up $300,000 from $780,200 last year to $1,083,500 this year, said Richmond realtor Shafik Ladha.
McDonald gave an example of a house on the west side of Vancouver on a 50-foot lot that went from $1,189,000 last year to $1,645,000 this year, an increase of $456,000. Both of these examples are up 38 per cent, more than double the average increase in their cities.
People who saw their property go up more than the average will likely see a bigger-than-usual increase in their tax bill, although the amount of that increase will depend on the assessed value of their home and how much the city’s budget is increased.
Vancouver Councillor Raymond Louie, who chairs the city’s finance and services committee, said it’s not automatic that the city will get more money when people’s property assessments go up.
“When your property value goes up, the city takes that assessed value and divides that into what it takes to run our city,” Louie said. “The amount it takes to run our city generally stays about the same. The city does not get additional revenue just because your property value goes up.”
Former Vancouver city councillor Gordon Price said it’s fair that taxes are linked to a property’s assessed value, but that it’s important to remember there isn’t a one-to-one relationship between property assessments going up and property taxes going up.
“Whatever your percentage increase is above the average, you can expect that you will be paying a greater percentage of the city’s property tax,” said Price, who is director of the City Program at SFU. “It would be very difficult to come up with anything else that would be more fair.”
In Vancouver, assessed values are averaged over three years to mitigate the effect of large single-year value increases, Louie said. He and Price also noted that property taxes do not all go to the city, a portion goes to school taxes, TransLink and other levies.
This year certain neighbourhoods went up more than others, something McDonald said is simply based on what actual sales reveal. Both Vancouver realtor Tom Gradecak and Ladha said good schools made a big difference in an area’s popularity.
Sometimes that will mean that houses on one side of the street sell for much more than those on the other side, if the school boundary is drawn down the middle, Gradecak said.
Gradecak said assessments are traditionally lower than market value, but that they’re moving closer.
“Some of the assessments are now quite close to the market value, but most are still a little bit low,” Gradecak said. “If it’s an older home, some of the assessments can be fairly close [to market value] because they’re looking mostly at the land value. For the newer homes, the assessments could be a bit low because they don’t always take into account all of the improvements.”
Assessments are a snapshot of market value on July 1 of the previous year. By the time homeowners receive them in early January, they are already six months out of date.
One reason appeals are down may be the amount of information now available online. Assessed values are all online (http://evaluebc.bcassessment.ca/) and people can compare homes by address and by comparable sales.
Fewer than two per cent of homeowners usually appeal an assessment in any given year, McDonald said.
People who want to ask questions about their assessment, or the appeal process, can call BC Assessment at the number listed on their assessment.
“We’ve got a team of professional appraisers you can call and they will know your neighbourhood, they may even know your house, but they can certainly call it up on the computer, and talk to you about the specifics of your property,” McDonald said.
“If at the end of that process [you are not satisfied], there is the last resort of filing an appeal.”
Balanced real estate market prevailed through much of 2011
REBGV Stats December 2011
The 2011 Greater Vancouver housing market began with heightened demand in regional hot spots and concluded with greater balance between seller supply and buyer demand.
The Real Estate Board of Greater Vancouver (REBGV) reports that total sales of detached, attached and apartment properties in 2011 reached 32,390, a 5.9 per cent increase from the 30,595 sales recorded in 2010, and a 9.2 per cent decrease from the 35,669 residential sales in 2009. Last year’s home sale total was 6.3 per cent below the ten-year average for annual Multiple Listing Service® (MLS®) sales in the region.
The number of residential properties listed for sale on the MLS® in Greater Vancouver increased 2.7 per cent in 2011 to 59,549 compared to the 58,009 properties listed in 2010. Looking back further, last year’s total represents a 12.8 per cent increase compared to the 52,869 residential properties listed in 2009. Last year’s listing total was 11.1 per cent above the ten-year average for annual Multiple Listing Service® (MLS®) property listings in the region.
“It was a relatively balanced year for the real estate market in Greater Vancouver with listing totals slightly above historical norms and sale numbers slightly below,” Rosario Setticasi, REBGV president said.
Residential property sales in Greater Vancouver totalled 1,658 in December 2011, a decrease of 12.7 per cent from the 1,899 sales recorded in December 2010 and a 29.7 per cent decline compared to November 2011 when 2,360 home sales occurred.
More broadly, last month’s residential sales represent a 34.1 per cent decrease over the 2,515 residential sales in December 2009, a 79.4 per cent increase compared to December 2008’s 924 sales, and a 12.6 per cent decrease compared to the 1,897 sales in December 2007.
The overall residential benchmark price, as calculated by the MLSLink Housing Price Index®, for Greater Vancouver increased 7.6 per cent to $621,674 between Decembers 2010 and 2011. However, prices have decreased 1.5 per cent since hitting a peak of $630,921 in June 2011.
“Our market remained in a balanced state for most of the year, although higher levels of demand for detached properties in the region’s largest communities caused prices in certain areas to rise higher than others,” Setticasi said. “For example, the benchmark price of a single-family detached home experienced double-digit increases in nine areas within the region over the last 12 months.”
New listings for detached, attached and apartment properties in Greater Vancouver totalled 1,629 in December 2011. This represents a 4.1 per cent decline compared to the 1,699 units listed in December 2010 and a 49.4 per cent decline compared to November 2011 when 3,222 properties were listed.
Sales of detached properties in December 2011 reached 630, a decrease of 18.1 per cent from the 769 detached sales recorded in December 2010, and a 30.2 per cent decrease from the 902 units sold in December 2009. The benchmark price for detached properties increased 11.2 per cent from December 2010 to $887,471.
Sales of apartment properties reached 774 in December 2011, a decline of 4.6 per cent compared to the 811 sales in December 2010, and a decrease of 32.9 per cent compared to the 1,154 sales in December 2009.The benchmark price of an apartment property increased 3.7 per cent from December 2010 to $401,396.
Attached property sales in December 2011 totalled 254, a decline of 20.4 per cent compared to the 319 sales in December 2010, and a 44.7 per cent decrease from the 459 attached properties sold in December 2009. The benchmark price of an attached unit increased 4.2 per cent between December 2010 and 2011 to $511,499.
The B.C. government has raised the threshold for homeowner property grant to $1.285 million to accommodate rising property values.
The news comes as hundreds of thousands of annual property assessments are being prepared for B.C. property owners by the government. Last year, the threshold was $1.15 million. The grant effectively reduces the property tax paid by most B.C. homeowners by up to $1,045.
Every year the province adjusts the grant to ensure 95.5 per cent of homeowners receive the full amount of the grant. Those with homes above the threshold may still be eligible for part of the grant.
"The homeowner grant provides a maximum reduction in residential property taxes on principal residences of $570 in the Capital, Greater Vancouver and Fraser Valley regional districts and $770 elsewhere in the province," said a statement issued by the government on Tuesday.
"An additional grant of $275 is available to those who are age 65 or over, permanently disabled or a veteran of certain wars,."
"We continue to see challenging economic times around the world. By maintaining the homeowner grant, we continue to help families with the costs of owning their homes," said Finance Minister Kevin Falcon in the statement.
The grant is only available to Canadian citizens and to landed immigrants who normally reside in B.C.
REGIONAL HOUSING MARKETS: A YEAR IN REVIEW AND A LOOK AHEAD
Gradual unwinding of the over-valuation in house prices across the country
Highlights
As the year draws to a close, we conclude that the Canadian housing market put forth a respectable showing. Annual price gains are estimated at 7.5% in 2011 and sales’ growth ought to come in positive as well, but at a much more modest pace of 2.2%.
Behind the headline figure, we have seen gains in prices and sales activity decelerate in recent months. Some of the underlying factors include tighter insured mortgage financing rules and weakened confidence related to the stability of the economic recovery. Helping cushion the impact of these negative forces has been the persistence of low mortgage rates.
We believe that the average Canadian home price is over-valued by roughly 10%. Metrics like price to income, price to rent, and affordability all support this conclusion. We expect that the price excess will gradually unwind over the next two years in light of a softening in employment conditions in 2012 followed by higher interest rates in 2013.
In contrast to the resale market, starts continue to come in well above expectations. The strength witnessed over the last few years has been driven exclusively by the multi-residential category. Consistent with weaker resale markets, we expect new starts to trend toward 170,000-180,000 units in the 2012-13 period.
In addition to our national perspective, we provide an in-depth forecast of twelve major markets. While no urban center will be immune to the macroeconomic and interest rate headwinds, Calgary and Edmonton are likely to do better than the rest. By contrast, a larger-than-average price and sales correction looks to be in store for both Toronto and Vancouver.
Homebuyers came out in the early part of 2011 to take advantage of record-low interest rates and to beat out changes to new insured mortgage financing rules. With Canadians bringing forward their purchases and national job gains tapering off since the autumn, the past few months have recorded more modest price and sales gains. In all, 2011 put forth a very respectable showing with price appreciation clocking in at an estimated 7.5% and sales growth also positive, but at a more modest 2.2%. At around 190,000 units, housing starts also continued to come in above long-run averages.
Looking ahead, we anticipate a tug-of-war action to take hold in the Canadian real estate market. At one of the rope is the magnetism of low interest rates; at the other end are subdued prospects for economic, income and employment growth. Ultimately, we expect the economic side of the equation to win out over the near-term. In particular, the first half of 2012 is likely to be characterized by ongoing confidence-sapping events in Europe, global financial turbulence and slowing world economic growth.
While housing activity is expected to do somewhat better in the second half of the year, as external clouds start to dissipate, rising Canadian interest rates in 2013 should erect the next road block in the way of housing markets. Overall, we expect sales to record annual average declines of 2.4% and 3.5% in 2012 and 2013, respectively. Prices are poised to suffer a similar fate – annual average declines of 1.9% in 2012 and 3.6% in 2013. Starts should dip to an average 170,000 to 180,000 units in 2012-13. Collectively, these adjustments will gradually erase the over-valuation in the marketplace.
While no urban center will be immune from economic volatility and higher prevailing interest rates, some regions are expected to do better than others over the next two years. Among the twelve major markets profiled in this report, Calgary and Edmonton ought to lead the pack. Solid economic fundamentals and the absence of a recent run-up in prices support our call. Toronto and Vancouver do not appear to be as lucky – we have them experiencing a greater-than-average correction in both sales and prices over the next two years.
Canada’s housing market defies the odds in 2011
In 2011, the national housing market turned in a respectable performance despite some notable hurdles. In the spring, the federal government responded to growing signs of excessive household indebtedness by announcing a further tightening in the rules surrounding insured mortgages.
In order to beat this announced change, we suspect that many homebuyers brought forward their purchases earlier in the year. In the summer, a combination of concerns about European sovereign debt, a U.S. government credit rating downgrade and worries about the global recovery led to increased uncertainty. Businesses have responded by reducing hiring in Canada since the autumn. Yet, home sales are headed for their seventh gain in ten years; prices are on tap to see their ninth gain in ten years. Still, a closer look at the data shows that activity in most of Canada’s major markets has moved past its peak and has since landed softly.
Average residential prices have also been skewed by outsized strength in Vancouver and to a lesser extent, Toronto. If we were to exclude these two major markets, the price and resale activity gains would be much more muted than the headline number would suggest.
In the new home market, starts have fallen from their peak levels of 229,000 recorded in 2007. But at an estimated 192,000 new starts in 2011, readings continue to remain well above demographic fundamentals, which we calculate to be 180,000 units. Similar to the resale side of the story, the national numbers have been skewed disproportionately by strong performances in large urban markets, notably Toronto. If we were to exclude Toronto from the national tally, total starts would have declined significantly in 2011.
Metrics point to over-valuation embedded in home prices today
As we recast our focus on where the housing market is headed, there has been considerable attention given to the extent of over-valuation in Canadian home prices. There is no definitive measure that one can point to quantify the degree of excess (with absolute certainty) imbedded in average residential prices in Canada today. Each measure carries with it some underlying concern about the conclusions that can be made. For example, if we use the average price-torrent ratio as a benchmark, it would tell us that homes are over-inflated by as much as 75% relative to the long-run average. However, the ratio inherently ignores the impact of changing mortgage rates, the presence of provincial rent control measures, and a potential divergence in quality between owned and rental accommodation.
Taking a look at just real home prices would lead to a conclusion that houses are priced more than 60% higher than the long-run average. Still, historical prices do not factor in key structural changes over time, such as lower trend mortgage rates, longer amortization periods, rising land values, transit development nearby, improved home quality and rising incomes. The price-to-income measure attempts to take income movements into consideration, but still does not capture some of the other factors previously presented. Based on this measure, prices are 44% over-valued. A more defensible measure assumes that total housing costs relative to income eventually revert back to a long term average. If we use this measure and assume a return to more normal levels of interest rates, the degree of overvaluation would be around 10-15%. Given the behavior of sales and price trends in recent years – one that does not share bubble-like characteristics such as those in the U.S. pre-2007 – we are comfortable with this estimate of national price over-valuation.
Less supportive factors on tap for housing
When we look ahead to our 2012-13 forecast period, we see that the headwinds facing both supply and demand will increase in intensity. In turn, we anticipate resale price froth to gradually evaporate leaving the market in a more balanced position relative to where it stands today. More specifically, we expect both sales and prices to record annual average declines in both 2012 and 2013, with the latter year expected to record the brunt of the hit. Several factors support our forecasts, which we briefly delve into next.
Modest economic, income and employment growth over short-term
Real GDP growth in Canada is estimated at a solid 2.4% in 2011. However, storm clouds will increasingly hang over our small open economy during the first half of 2012. Much of the risk surrounds the European sovereign debt crisis and the failure of politicians to take decisive action so far to pour water over the flame. The base case scenario embedded in our forecast includes a recession within Europe, coming to a climax in early 2012 when borrowing pressures and requirements will be heightened. Financial market volatility and a global economic slowdown will likely play out as a result. In this context and given our export-based economy, real GDP growth is projected to slow to a minimal 1% on average during the first half of 2012. With these headline numbers, the national unemployment rate is expected to increase from 7.3% to 7.7% by the middle of next year.
National employment growth is also poised to be sub-1.0%, on a quarterly basis, during the first half of the year, while gains in after-tax incomes will be significantly restrained.
Prices and sales tend to be negatively correlated with financial market volatility and job and economic uncertainty – a house is too big an asset for most families to jump into when job security is in question and financial portfolios are vulnerable to sizeable swings in total value. As a consequence, resale prices and sales are expected to decline during the first half of 2012, before the turbulence eases in the months thereafter. In our forecast, we make the explicit assumption that – faced with a mounting crisis – leaders in Europe ultimately take bold action to address the situation, thus delivering benefits to financial markets and economies around the world. As such, Canada’s economy and job market is likely to regain traction in the second half of 2012 and into 2013, with real GDP growth rebounding to above 2.0%.
At the regional level, we believe the resource-based provinces of Alberta, Saskatchewan and Newfoundland and Labrador will continue to carry the best economic prospects over the 2012-13 period. The manufacturing-heavy regions of Ontario, Québec and Manitoba are expected to come in close to the national average. Last but not least, the Maritime provinces should see sub-par numbers over the next two years, with Nova Scotia being the as shipbuilding work gets underway.
Historically normal activity keeps the Greater Vancouver housing market in a balanced state
The Greater Vancouver housing market saw relatively typical home sale and listing activity in November.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales of detached, attached and apartment properties on the region’s Multiple Listing Service® (MLS®) reached 2,360 in November. This represents a 5.9 per cent decline compared to the 2,509 sales in November 2010 and a 1.9 per cent increase compared to the 2,317 sales recorded in October 2011.
Looking back further, last month’s residential sales total is 5.8 per cent below the ten-year average for sales in November.
“The pace of home listings entering the market eased slightly in November, compared to recent months, while sale levels remained fairly normal for this time of year,” Rosario Setticasi, REBGV president said. “November activity helped put our market firmly in balanced territory.”
New listings for detached, attached and apartment properties in Greater Vancouver totaled 3,222 in November. This represents a 26.3 per cent decline compared to the 4,374 new listings reported in October 2011, but a 6.3 per cent increase compared to November 2010 when 3,030 properties were listed for sale on the MLS®.
Looking back further, last month’s new listing total is 2.1 per cent above the ten-year average for November.
The total number of properties currently listed for sale on the Greater Vancouver MLS® sits at 14,090, a decline of 9 per cent compared to October 2011 but an increase of 13 per cent when compared to this time last year.
The MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver over the last 12 months has increased 7.2 per cent to $622,087 in November 2011 from $580,080 in November 2010.
Since reaching a peak in June of $630,921, the benchmark price for all residential properties in the region has declined 1.4 per cent.
Sales of detached properties on the MLS® in November 2011 reached 916, a decrease of 12.8 per cent from the 1,050 detached sales recorded in November 2010, and a 21.3 per cent decrease from the 1,164 units sold in November 2009. The benchmark price for detached properties increased 11.4 per cent from November 2010 to $890,204.
Sales of apartment properties reached 1,000 in November 2011, a 4.9 per cent decrease compared to the 1,052 sales in November 2010, and a decrease of 28.4 per cent compared to the 1,396 sales in November 2009. The benchmark price of an apartment property increased 2.7 per cent from November 2010 to $399,686.
Attached property sales in November 2011 totaled 444, a 9.1 per cent increase compared to the 407 sales in November 2010, and a 15.1 per cent decrease from the 523 attached properties sold in November 2009. The benchmark price of an attached unit increased 4.5 per cent between November 2010 and 2011 to $510,960.
Resale housing market shows further improvement in January
(CREA Monthly Report)
National resale housing activity climbed further in January 2011, according to statistics released today by The Canadian Real Estate Association (CREA). Seasonally adjusted national home sales activity rose 4.5 per cent in January 2011 compared to the previous month, reaching the highest level since April 2010. Led by Vancouver and Toronto, seasonally adjusted sales activity posted monthly gains in more than half of all local Canadian markets in January. National sales activity has improved steadily since last summer, and now stands almost 25 per cent above the low point reached in July 2010.
After months of sluggish sales, condos are finally selling at Vancouver's former Olympic athletes' village, with more than half of the re-marketed and re-priced units selling over the opening weekend.
Out of 230 units available for sale at the newly christened Village on False Creek, 128 have sold since Friday. Before it was placed in receivership in November, only 36 condos had sold since the development hit the market in May, despite strong presales of 223 units in 2008.
Marketer Bob Rennie told reporters that the Village has now lost its "ghost town" image.
"The clouds are rolling away," he said. "I think what we brand our company is ‘Ghostbusters.'"
Twenty units priced at more than $1 million sold this weekend, with the most expensive selling for almost $3 million and the cheapest for $329,900. The average selling price was $778,800.
Buyers have seven days to rescind their offers if they change their minds -- Rennie estimates that between four and 10 per cent of buyers typically rescind their offers.
All of the units sold over the weekend went for the asking price. Since Ernst & Young took over as receiver for the development, Rennie and his marketing team have sliced prices drastically, cutting them by an average of 30 per cent.
Rennie credited that move for the heavy sales over the opening weekend.
"I've never had a proximity problem or a product problem, but we did have a pricing problem," he said.
Another 244 waterfront units in the development have been held back from the market -- half were meant to be offered for rent, and the rest would go up for sale at a later date. But Rennie said Tuesday that he would like to hold the rental units so that they can be sold as well.
The marketer was hopeful about what the upswing in sales will mean for the $740-million debt on the development owed to the city.
"Between Bob being happier or the taxpayer, the taxpayer has to feel good that things are moving along properly," Rennie said, referring to himself in the third person.
"We're cautiously optimistic that we have stabilized the asset for the taxpayer."
Real estate experts have estimated that the city stands to lose between $150 million and $170 million on the development.
Price of units lower, but still no bargain, expert says
Even at reduced prices, it's unlikely taxpayers will fully recoup $740 million invested in project, according to UBC professor
The new prices for condos in the taxpayer-owned Olympic village are more in line with the rest of the real-estate market, but they're still no bargain.
That's the analysis of a realestate expert and a business professor who say it will still take years to fill out the Southeast False Creek project.
And even then, it's unlikely that taxpayers will fully recoup the $740 million they invested in the project through construction financing and land sales.
On Thursday, condo marketer Bob Rennie set the stage for the sale of 230 units in five buildings starting today.
He laid out for reporters and fellow real-estate agents an average price reduction of 30 per cent for the units, which make up about half of the 474 unsold units in the village.
Some units, principally the more expensive ones, have been reduced by as much as 50 per cent, while price cuts on smaller lower-priced units are closer to five and 10 per cent.
But Scott Brown, the vicepresident of residential marketing for Colliers International in Vancouver, said those cuts may not be enough.
"It's definitely come down from where it was, which tells you how far out of reality the prices were. They were really out of whack," he said. "I don't know if they have come down far enough to drive any really serious volume."
Brown said Colliers' market research has shown that threequarters of sales in the area have been for units priced at $650 to $750 per square foot.
But most of the new prices in the Olympic village are still higher than that.
Brown cited a 1,445-squarefoot two-bedroom unit now offered at $1.3 million. At nearly $900 per square foot, "that's not a deal," he said. "Those prices are not low enough yet where people will say, 'This is such a deal I've got to buy it now.'" Tsur Somerville, a professor at the University of B.C.'s Sauder School of Business, said he thinks Rennie's overall repricing strategy will eventually drive enough sales for the city to recover the remaining $570 million it loaned for construction.
But he's doubtful there's enough residual value left to also cover the outstanding $170 million owed on the city's sale of the land to the project's original owners, Millennium Developments.
"I think it is reasonable to say that it is highly unlikely that the taxpayers of Vancouver will see the full value of the lands the city contributed to the project," he said.
Somerville said the prices are competitive with other built projects in the city but not for those being sold on the basis of pre-sales, where buyers put down a small deposit and have longer to pay. By Thursday, a dozen people had camped outside the sales office, waiting for today's opening sale.
Rennie said the lineup was encouraging and he expects to see a crush of potential buyers on the weekend. However, the lineup pales in comparison to the interest in other condo developments in Metro Vancouver.
On Saturday, Bosa Properties will open its sales centre for its 45-storey 202-unit Sovereign tower in Burnaby's Metrotown.
Earlier this week, more than 400 people lined up and 2,600 signed on to a company website.
The company sent people home after giving them numbers reserving their place in line, said Bosa vice-president Daryl Simpson. He projected that up to 70 per cent of the units, priced at $650 a square foot or less, will be sold by the end of the weekend. Rennie told reporters that demand in the Olympic village can't be compared to pre-sales at other developments, noting he'd sold all but 11 of 540 pre-sale units in Wall Centre False Creek behind the village.
Pre-sale buyers put down 10 to 20 per cent and have up to three years to pay. But with built stock such as the Olympic village, buyers have to complete their sales in 60 or 90 days. For that reason, Rennie expects upwards of 70 per cent of buyers in the village will be people wanting to live there or buying for their family. There is little true investor demand for the units, he said. Brown said he thinks Rennie's prices may only translate into four to eight sales per month. "I don't think necessarily they will do 20 or 30 transactions a month and shoot the lights out."
Canadian sales of existing homes rose 4.5% in January, hitting their highest level since April last year, as buyers rushed to beat tighter mortgage regulations set to come into effect next month, according to Canadian Real Estate Association figures.
Vancouver and Toronto led the growth, with half of all local markets reporting seasonally adjusted gains in the month, CREA said. Sales activity improved over the second half of last year and is now 25% above its low in July, it said.
"We anticipated the recent announcement of tighter mortgage regulations, which will come into effect this March, would pull forward sales activity into the first quarter of 2011, particularly in some of Canada's more expensive housing markets," said Gregory Klump, CREA's chief economist. "The sharp rise in sales activity in Toronto following the announcement provides early evidence confirming this," said Klump.
CREA warned the government not to take any further action until the longer-term impact of the most recent changes is fully known.
Ottawa announced in January that it would tighten mortgage-lending rules for the second time in a year to stop borrowers taking on more debt than they can afford. The government is reducing the maximum amortization period on mortgages backed by government insurance to 30 years, from 35 years, which makes monthly payments higher.
The tightening is expected to primarily hit first-time homebuyers, or those with less available for a down payment.
BMO mortgage expert Laura Parsons said the changes are a good thing.
“People are like deer in the headlights when these things happen, but they need to be properly informed,” she said. “This is a good thing, it saves them money.”
Reducing the amortization period by five years to 30 years would save about $53,000 in interest payments over the life of the mortgage, she said.
Actual new listings through the MLS System posted their biggest month-over-month increase since 2007 in January, with more than double the listings from the previous month, CREA said.
As sales activity and new supply have risen in tandem, the national market remains balanced, CREA said. The national sale-to-new listings ratio stood at 55.7% in January, little changed from the previous two months.
Parsons said BMO expects the market to remain balanced throughout 2011.
“According to our survey, 61% of homeowners are confident their homes will hold their current values throughout the year,” she said.
The national average price was little changed from the previous three months at $343,675, an increase of 4.5% from January last year, CREA said.
The January year-over-year gain was distorted by a jump in the number of multi-million dollar homes sold in a couple of areas in Greater Vancouver, it said.
Realtor Bob Rennie dodged questions Thursday morning about whether taxpayers would even come close to breaking even on the Olympic Village development.
Hosting a media launch about sales that start Friday at what’s now branded The Village on False Creek, he said Rennie Marketing Systems was working to stabilize the city’s asset and to maximize revenue.
Rennie said he sees the downtown condo market stabilizing and the real estate market reviving from its recent slump.
Instead of aiming to sell approximately 480 unsold units like he did last May after the 2010 Winter Games ended and the property was returned to developer Millennium Water and the city, Rennie aims to sell 230 condos in two areas of the village. Of the 737 condos at the village, 263 have sold, most of them in 2007. Friday’s launch is the third time the units have gone on sale.
Receiver Ernst and Young has contracted with a company to rent approximately 114 units to get the “ghost town” populated fast. Those units don’t include the 119 rental units purpose-built by the developer or the city’s 252 market rental, co-op and below-market rental units in the village.
Rennie blamed slow sales after the Games on bad timing due to a sluggish economy.
“I do not believe we ever had a product problem,” Rennie said. “What I do have is a pricing problem, and that pricing problem on May 15 was compounded by the fact that there was 480 units for sale and people didn’t see any sense of urgency and everybody just moved to the sidelines and folded their arms.”
He’s confident the prices are appropriate now. He said market testing done before the latest sales launch attracted 31 offers in 10 days. They included 12 for units that cost more than $900,000, 11 offers for units priced from $600,000 to $900,000 and eight offers for units under $600,000.
Seven chairs sat outside the sales centre at 5 p.m. on Wednesday. Fourteen chairs labelled with people’s names were positioned outside the sales centre just before 11 a.m. Thursday morning. The sales centre was to open at noon Thursday with sales to begin Friday. Rennie said he was giving a tour to 1,058 realtors through the site yesterday starting at 2 p.m.
Prices for the unsold units have been reduced an average of 30 per cent from May 2010 rates. Rennie said rates on the lower priced units weren’t reduced much—a studio now goes for $349,500 to $354,900—but prices on larger units that were priced at $1.5 million saw greater reductions.
He aims to sell 60 units in 60 days.
He noted the receiver for the village, Ernst and Young, has been tackling building deficiencies and that regular new home warranties protect owners.
Only a bank and a private liquor store operate at the village. Rennie said London Drugs is eying population numbers, negotiations are underway with an unnamed grocery store—previously the grocery seller was meant to be Urban Fare—and a consultant has been hired to focus on leasing the other commercial spaces.
The city is owed $740 million for the development.
Olympic village condo prices to be slashed by an average of one-third
Condo prices at the troubled Olympic village project will be reduced by an average of 30 per cent from May 2010 levels, according to Ernst & Young, the project's receiver. The following is a look at how much Olympic Village units are going for on the market.
More Canadians were on move in 2010 and they were mostly headed West
TORONTO - A new report from the TD Bank suggests that Canadians are taking the phrase "Go West, young man" seriously.
More Canadians were on the move last year as a percentage of the population than any year since 1998, the bank says.
And most were headed West to take advantage of better job prospects and higher standards of living.
The analysis shows 337,000 Canadians migrated within the country's border's last year, 45,000 more than in 2009. The level represents about one per cent of the total population, the highest since 1998.
Except for New Brunswick, only Saskatchewan, Alberta and British Columbia experienced a net inflow of people last year.
And the report predicts that westward bound migration will continue over the next two years, although not up to the levels seen during the resource boom prior to the recession.
In relative terms, Manitoba and Prince Edward Island are losing the most people. Ontario and Quebec will continue to keep shedding numbers, but by a tiny fraction relative to their populations, the bank said.
Real estate market calm expected to follow hectic 2010 in Metro Vancouver
Home sales forecast to increase modestly across B.C. as prices stabilize
VANCOUVER - If there's one sentence to sum up B.C.'s real estate picture in 2011, it's probably "Let's take a breather."
While Metro Vancouver prices rose fairly sharply over the past year, the same wasn't true in the Interior and other parts of the province where prices were flat and sales stalled.
A combination of low interest rates, relatively stable prices throughout the province and a gradually improving economy helped by the 2010 Winter Olympics brought buyers -- especially first-time buyers -- back into the market after a recessionary slump.
Those conditions are expected to continue in 2011, although interest rates are predicted to gradually rise.
That may keep a lid on housing prices, which are also expected to rise a bit, although less than in 2010.
However, there will be no repeat of 2010's price bump.
"When you look at 2010, we saw fewer sales than 2009 [across B.C.]," Cameron Muir, chief economist for the B.C. Real Estate Association, said in an interview. "Since [July], we've seen a modest increase in consumer demand."
Muir said he expects the province will see that continue into 2011, although the sales numbers aren't expected to post any records or rise above the 10-year average.
"I'd expect housing sales to be around 80,000 to 82,000 units in 2011. We're likely to see a six-to seven-per-cent increase in housing sales this year compared to last year."
Muir said job growth and rising incomes will underpin demand, although higher interest rates in the second half of the year will partly offset the benefits of more economic activity.
"There will be a much more gradual increase in consumer demand and less volatility. There will be more stable market conditions this year."
Robyn Adamache, senior market analyst for Metro Vancouver with Canada Mortgage and Housing Corp., said in an interview that she doesn't see any huge changes this year over 2010.
"We're expecting a slight increase in sales, about five to six per cent, for 2011.
"For 2010, we were around 31,000 sales.
"For 2011, we're expecting 33,000 sales."
However, Adamache said Metro Vancouver should see much less price growth in 2011.
"In 2010, we saw a 14-percent increase in prices.
"We're calling for a three-percent increase in 2011."
Adamache said she expects that mortgage rates will creep up later in 2011, although not dramatically. "So, that will put a bit of a damper on sales."
Tsur Somerville, director of the centre for urban economics and real estate at the University of B.C.'s Sauder School of Business, said he doesn't like forecasting the future, but nevertheless believes that 2011's real estate picture will be largely determined by the speed of the recovery and the Bank of Canada's action on interest rates -- and how that reflects on mortgage rates.
Ron Antalek, a realtor with ReMax Ridge Meadows Realty, said in an interview that he's seeing an uptick in buyers who believe interest rates are heading north.
He believes there will be a modest increase in both pricing and demand this year.
"The vast majority of buyers are convinced that prices won't decline and that interest rates will rise.
"So, they feel their investment is safe.
"Sales are picking up." Mike McDougall recently took possession of a new detached home in Maple Ridge after moving to B.C. from Alberta.
"Hopefully, it was a good time to purchase," McDougall said in an interview.
"From what I hear, it was. I think there's still potential for rates to go up."
McDougall, who moved into his new home on Jan. 12 with his wife and two small children, said he was also comfortable with the price he paid.
A prominent Chinese-Canadian fears his ethnic community is being unfairly tarnished by the protest of Asian condominium owners against a proposed hospice at the University of B.C.
“People are afraid that the entire Chinese community is being painted as uncaring and afraid of a facility that would provide good for the entire community,” said Tung Chan, former CEO of the Vancouver-based immigrant services group Success.
Dozens of Asian residents in an upscale condominium highrise on the UBC campus are protesting a proposal to build a hospice next door, near Thunderbird Stadium.
The ethnic Chinese homeowners have complained that proximity to death brings bad luck in their cultural tradition. They also fear the hospice could lower their property values.
Chan’s comments were echoed on Sunday by several Asian UBC residents interviewed by The Vancouver Sun on the campus.
Most did not want to be named, for fear of causing friction among neighbours, but most agreed the controversy is painting the entire ethnic community in a bad light.
Stanley Hee said the condominium residents opposing the hospice are a relatively small group. “We don’t have this strong feeling about that,” Hee said. “They say there are some cultural differences, but I don’t think so. That’s not a good reason [not to build the hospice]; I don’t agree with that.”
Like Chan, Hee and the other residents said they feel the objections are a classic not-in-my-backyard response, similar to the response to proposed recovery houses or homeless shelters in other neighbourhoods.
Some of those surveyed said they felt there were better — more peaceful and scenic — locations for the hospice, but were not opposed to its being on campus.
Chan said many Chinese-Canadians are worried the hospice protest will convince people that Asian immigrants are unwilling to accept the values of their adopted country.
“They fear that people would then say: ‘If that is what Chinese-Canadians believe, then they don’t fit into this society.’
“And that’s a shame.”
Chan said news reports about the “culture clash” behind the protest has “brought out negative comments towards our entire group.
“Whereas the protest only involves a small group of people and is based on Nimbyism. The Chinese community is much more diverse than that, and many Chinese are very supportive of hospice facilities.”
Chan believes the protest is more about economics than culture. “People take whatever excuse they can dream up and say that they don’t want it to be in their backyard.
“If it’s in someone else’s backyard, then it’s fine.”
Chan rejected the notion that being close to dying people is taboo in Chinese culture.
He said Success facilitates visits by volunteers to hospices. “We teach people how to deal with dying people in a more sensitive way.”
The hospice, proposed by the Order of St. John and the UBC faculty of medicine, would be a 15-bed palliative care facility operated by Vancouver Coastal Health.
The site near Thunderbird Stadium was selected after a four-year process — and is considered the best of 12 possible sites on campus because of the need to link with the UBC faculty of medicine for academic and research purposes.
“The integrated research component and the proximity to the UBC faculty of medicine provide a rare service to improving health services to the most vulnerable,” said Order of St. John spokesman Peter Hebb.
There is no other hospice on Vancouver’s west side that is physically separate from a hospital, he added.
Hebb declined to discuss the protest by condo owners.
Joe Stott, director of campus and community planning at UBC, said a plan to bring the hospice proposal to the UBC board of governors in February has been postponed due to a request from the University Neighbourhood Association, for more consultation.
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