Anna Asi, M.A.

Vancouver Real Estate Market Update - April 2012

Local homes sales are in a balanced state despite the lowest April sales numbers since 2001, according to a report by the Real Estate Board of Greater Vancouver.

“Although April sales were below what’s typical for the month, we continue to see, with a sales-to-active listing ratio of nearly 17 per cent, a balanced relationship between buyer demand and seller supply in our marketplace,” Eugen Klein, REBGV president said in a statement.

“Recent activity has had a stabilizing effect on home prices at the regional level, although pricing can vary depending on area and property type.”

According to the monthly report, homes sales and listings have maintained a consistent pace in recent months, contributing to the balanced conditions.

However, the report noted that Metro Vancouver sales totalled 2,799 in April 2012, a 13.2-per-cent decline compared to the 3,225 sales in April 2011 and a decline of 2.6 per cent compared to the 2,874 sales in March 2012.

April sales were the lowest total for the month in the region since 2001 and 16.9 per cent below the 10-year April sales average of 3,369, the board said in a release.

Full Report:

Cat: Vancouver Real Estate

Vancouver home prices fall for fifth consecutive month

OTTAWA — Homes prices edged down 0.2 per cent in February from the month before but were still 6.1 per cent higher than a year ago, according to a well-watched housing index.

The month-over-month decline was the third such retreat in the past four months for the Teranet-National Bank National Composite House Price Index, released Wednesday, which measures price changes for repeat sales of single-family homes.

In January, prices rose 0.1 per cent.

Teranet's report showed prices falling from the previous month in six of the 11 metropolitan markets surveyed.

In Canada's two hottest real-estate markets, prices in Vancouver fell 0.3 per cent, the fifth consecutive decline, while prices in Toronto rose by just 0.1 per cent. On a yearly basis, however, Toronto prices were 10 per cent higher.

Nationally, prices were 6.1 per cent higher than a year ago. In January, prices were 6.5 per cent higher.

The data is likely to show up on the radar of Bank of Canada governor Mark Carney, who has repeatedly warned that Canadians are piling on too much debt as they buy homes whose prices keep rising.

At a House of Commons finance committee meeting Tuesday, Carney warned that house prices in relation to income levels are now running 35 per cent above historical norms.

Last week, the Canadian Real Estate Association reported that seasonally adjusted sales in March rose 1.6 per cent from year-earlier levels, although the national average home price declined 0.5 per cent to to $369,677.

"It is a fact that according to CREA (the Canadian Real Estate Association) data for March, five of the 11 markets covered were rather favourable to sellers (Toronto, Hamilton, Winnipeg, Halifax and Quebec City). Overall, the Canadian market is nevertheless balanced," said National Bank senior economist Marc Pinsonneault.

Metropolitan area % change m/m / % change y/y

Calgary / -0.6 % / +1.3 %

Edmonton / -1.0 % / +1.1 %

Halifax / +0.4 % / +2.3 %

Hamilton / -0.8 % / +7.5 %

Montreal / +0.2 % / +4.4 %

Ottawa / -0.4 % / +4.6 %

Quebec / +1.6 % / +5.6 %

Toronto / 0.1 % / +10.0 %

Vancouver / -0.3 % / +6.2 %

Victoria / -1.1 % / -1.7 %

Winnipeg / +0.2 % / +8.2 %

National Composite / -0.2 % / +6.1 %

Source: Teranet-National Bank National Composite House Price Index

Cat: Vancouver Real Estate

Metro Vancouver housing market remains balanced despite sharp sales drop: report

Local homes sales are in a balanced state despite the lowest April sales numbers since 2001, according to a report by the Real Estate Board of Greater Vancouver.

“Although April sales were below what’s typical for the month, we continue to see, with a sales-to-active listing ratio of nearly 17 per cent, a balanced relationship between buyer demand and seller supply in our marketplace,” Eugen Klein, REBGV president said in a statement.

“Recent activity has had a stabilizing effect on home prices at the regional level, although pricing can vary depending on area and property type.”

According to the monthly report, homes sales and listings have maintained a consistent pace in recent months, contributing to the balanced conditions.

However, the report noted that Metro Vancouver sales totalled 2,799 in April 2012, a 13.2-per-cent decline compared to the 3,225 sales in April 2011 and a decline of 2.6 per cent compared to the 2,874 sales in March 2012.

April sales were the lowest total for the month in the region since 2001 and 16.9 per cent below the 10-year April sales average of 3,369, the board said in a release.

New listings for detached, attached and apartment properties totalled 6,056 in April, a 3.6-per-cent increase compared to both March 2012 when 5,843 homes were listed and April 2011 when 5,847 homes were listed for sale.

Last month’s new listing total was 6.7 per cent above the 10-year average for listings in Greater Vancouver for April, the release said.

At 16,538, the total number of homes listed for sale increased 8.5 per cent in April compared to last month and 16 per cent above this time last year.

The benchmark price for all residential properties stood at $683,800, up 3.7 per cent compared to April 2011 and an increase of 2.8 per cent over the last three months.

Sales of detached properties in April 2012 reached 1,126, a decline of 19.7 per cent from the 1,402 detached sales recorded in April 2011, although the benchmark price for detached properties increased 6.3 per cent from April 2011 to $1,064,800.

The highest benchmark price in April for a detached home was Vancouver West at $2.27 million, followed by West Vancouver at $1.98 million.

The benchmark price of an apartment increased 1.1 per cent from April 2011 to $375,900, while the price of a townhome increased 1.7 per cent between April 2011 and 2012 to $487,300.

Meanwhile, the Fraser Valley's housing market also showed a drop in sales year-over-year, although not as sharp as in Metro Vancouver.

According to the Fraser Valley Real Estate Board, there were 1,435 sales processed in April, down five per cent from April 2011, but up slightly from 1,412 sales in March.

In April, the board added seven per cent more new listings compared to one year ago, up to 3,134 from 2,918 last year. That pushed the number of properties for sale to 10,312, the highest level since July 2010.

“To put it in perspective, in the last decade, April 2012 ranked second lowest for sales during that month, while new listings came in at the third highest, meaning it’s a good time to be shopping for a home in the Fraser Valley because selection has only been this extensive twice,” said board president Scott Olson in a statement.

According to the report, the benchmark price for a detached home in the Fraser Valley rose 5.3 per cent in the year, from $547,800 in April 2011 to $576,600 last month.

In April, the price of a townhouse was $318,400, up 1.9 per cent year-over-year, while the price of an apartment increased 0.8 per cent over the same period to $205,800.

General price declines in B.C. make province 'nation's new weak spot,' according to report

Canada's housing market is not a bubble, it's a balloon. And unlike the catastrophic decline the U.S. housing market experienced in 2008, the market in Canada will deflate slowly rather than pop, according to a report by BMO Capital Markets.

The sole possible exception is Vancouver, where the number of unoccupied condominiums is high due to building the Olympic Village, economists Sherry Cooper and Sal Guatieri wrote in "Will Canada's Housing Boom Forge On, Fizzle Out, or Flame Out?"

But generally, the report says that despite rising household debt, low interest rates and rising home prices, it is unlikely that a sudden correction will take place.

"The main take-away is that the national housing market appears some-what pricey, but is far removed from bubble territory," the report stated.

It compares average resale prices with median family incomes and finds the ratio is 4.9 nationally, compared to 3.2 a decade ago.

In Vancouver, though, where house prices have gone up 159 per cent in the last 10 years - compared to 104 per cent nationally - the ratio of price to income is 10, nearly double what it was a decade ago, the report said. Victoria is also high, at 5.7, but not as high as Toronto, which has a price to income ratio of 6.7.

Montreal has also seen prices rise dramatically - by 153 per cent - and its price-to-income ratio double, but that ratio remains low at 4.5.

Despite rising home prices in most of Canada's major cities, the growth doesn't seem to be excessive, the report said. But elevated valuations could lead to trouble in the event of a shock.

For example, if interest rates were to spike by about four percentage points, the affordability of homes would quickly drop throughout the country. A severe recession would also affect affordability.

But the chance of either of those events happening is unlikely, the report authors stated. Also, except for a few markets, the national housing boom has already cooled.

And British Columbia is now "the nation's new weak spot, with prices generally declining," the report said.

Some of that decline reflects fewer sales of high-end homes.

"[But] some real underlying softness is at play, and will likely continue until valuations improve," the report stated.

Tsur Somerville, director for the Centre for Urban Economics and Real Estate at the Sauder School of Business at UBC, said BMO's report is one of many predicting slight drops or slight increases in the housing market rather than a major correction.

"The kinds of things you need to get major corrections, like oversupply or radical change in the financing environment, just aren't there," Somerville said.

And just because the overall market will be flat, it doesn't mean that certain portions of it - such as areas that have had higher run-ups in prices over the past few years - aren't in for a correction, he said.

Helmut Pastrick, chief economist with Central 1 Credit Union, believes that while there may be a soft landing at some point in the future, it won't be in 2012.

"The market is holding up generally well and it looks like 2012 is going to be fairly similar to 2011 in terms of overall unit sales," Pastrick said. "Housing prices will go up by some amount, sales will also increase by a small amount."

And while the economy isn't booming, it is growing, interest rates are low and there is job growth, he said.

"So the conditions to me aren't ripe for a correction."

Meanwhile, Bloomberg reported that Canada's banking regulator fears that Canadian lenders are loosening standards on mortgages that are similar to U.S. subprime loans, posing an "emerging risk" to financial institutions.

Banks and other lenders are becoming "increasingly liberal" with mort-gages and home-equity credit lines that don't require individuals to prove their income, according to documents obtained by Bloomberg under freedom of information law request from the Office of the Superintendent of Financial Institutions.

"Non-income qualified" lending has been added to a list of issues to be considered by OSFI's "emerging-risk committee," Bloomberg reported the documents showing.

Pastrick disputes this finding.

"We're not subprime, not by a long shot," he said.

Lenders in Canada have "credible lending criteria and standards." And while lenders will lower rates to grab market share "credit isn't easy like it was in the U.S.," he said.

Somerville believes the problem is with home equity lines of credit which have become more popular over the year and don't always require income verification.

Not only are lines of credit given out without the same level of super-vision or the same standard of care that is applied to mortgages, they are also junior in seniority to mortgages, Somerville said.

With a file from Bloomberg

© Copyright (c) Postmedia News

Picture by: All rights reserved by JOHN CORVERA

Banks lower 5-year mortgage rate to record low

Cat: Canada Mortgage Rates

TD Financial Group's chief economist on New Low Mortgage Rates

Canada's big banks offered homebuyers a big fat incentive last week when, led by the Bank of Montreal, most dropped their five-year fixed mortgage rates to an unheard of 2.99 per cent. Like the failing Detroit auto industry of the early 2000s, with its zero per cent financing, no-money-down offers, Canada's banks appear willing to sacrifice some profit to keep the mortgage market booming. They're still making money—and certainly won't go bankrupt like two of the Big Three automakers did—but there is a similar whiff of desperation here at a time when the housing market appears to be cooling. Even in once hot markets like Calgary, prices have flattened.

These ultra low rates are bad news for Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney, who've been warning Canadians for years to stop taking on record debt loads in this era of easy money. BMO's rate does come with a few catches, like a maximum 25-year payment period. But that doesn't mean buyers won't find themselves in trouble five years from now if rates rise.

Maybe the bigger concern is what happens if the housing market really does head south, and what that means for the Canadian economy. Over the past decade, construction was the second-fastest growing industry, creating one million jobs. It now accounts for an incredible one-tenth of Canada's GDP. Rising house prices have also made Canadians feel richer and insulated from economic troubles. As the U.S. showed, when housing is stripped from the equation, things can quickly go from bad to worse. Record-low mortgage rates might help keep the economy chugging along, but let's just hope we're not now running on fumes.

Cat: Canada Mortgage Rates

RBC Global Asset Management on lower 5-year mortgage rate to record low

Cat: Canada Mortgage Rates

Rock-bottom mortgage rates in Canada

Some fixed mortgage rates have dropped to their lowest rates in Canadian history.

Cat: Vancouver Mortgage Rates

B.C. Assessment 2012

B.C. Assessment released its data on the value of homes in the province on Tuesday. While some regions saw values skyrocket, others dropped. Take a look to see how your property's value (and your taxes) will jump this year.

List ranked in order from largest hike to biggest drop in values:

1. Vancouver - Up 16.42%

2. Richmond-Delta - Up 12.83%

3. North Fraser (Burnaby, Coquitlam, etc.) - Up 8.45%

4. Surrey-White Rock - Up 7.83%

5. Peace River - Up 7.44%

6. North Shore-Squamish Valley - Up 6.48%

7. Northwest B.C. (Prince Rupert, Terrace, Kitimat) - Up 4.74%

8. Prince George - Up 2.36%

9. Fraser Valley - Up 1.67%

10. Nelson/Trail - Up 1.08%

11. Cariboo - Up 0.32%

12. Central Vancouver Island (Nanaimo) - Down 0.06%

13. Kamloops - Down 0.19%

14. Capital (Greater Victoria) - Down 0.23%

15. Courtenay - Down 0.72%

16. Penticton - Down 1.2%

17. East Kootenay - Down 1.71%

18. Kelowna - Down 1.81%

19. Vernon - Down 3.1%

Cat: BC Real Estate

Homeowner grant threshold raised to $1.285M

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.

Cat: Vancouver Real Estate

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.

Below is the full report:

Cat: Canada Real Estate

Greater Vancouver home sales trend toward buyers’ market over summer

VANCOUVER, BC – August marked the third consecutive month that home sale activity in Greater Vancouver was below the 10-year average for the month. In contrast, home listing activity in the region has exceeded the 10-year norm every month since the beginning of the year.

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 2,378 in August. This total represents an eight per cent increase compared to the 2,202 sales in August 2010, but also ranks as the third lowest total for August in the last 10 years.

“MLS® statistics continue to indicate that we’re in a balanced market,” Rosario Setticasi, REBGV president said. “However, with a sales-to-actives listings ratio of 15 per cent, Greater Vancouver is in the lower end of a balanced market and has been trending toward a buyers’ market over the past three months.”

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,685 in August. This represents a 24.9 per cent increase compared to August 2010 when 3,750 properties were listed for sale on the MLS® and an eight per cent decline compared to the 5,097 new listings reported in July 2011. Last month’s new listing total was the highest volume recorded for August in 16 years.

At 15,437, the total number of residential property listings on the MLS® increased 1.4 per cent in August compared to July 2011 and rose 0.1 per cent 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 8.5 per cent to $625,578 in August 2011 from $576,597 in August 2010.

“Year over year, prices are up. However, in the detached home category, benchmark prices have come down slightly in each of the past two months,” Setticasi said. “It’s important for people entering the market to understand that activity can differ significantly depending on the area and property type.”

Sales of detached properties on the MLS® in August 2011 reached 1,020, an increase of 14.2 per cent from the 893 detached sales recorded in August 2010, and a 25.4 per cent decrease from the 1,367 units sold in August 2009. The benchmark price for detached properties increased 11.7 per cent from August 2010 to $888,243.

Sales of apartment properties reached 955 in August 2011, a 2.1 per cent increase compared to the 935 sales in August 2010, and a decrease of 34.8 per cent compared to the 1,464 sales in August 2009. The benchmark price of an apartment property increased 5.6 per cent from August 2010 to $407,457.

Attached property sales in August 2011 totalled 403, a 7.8 per cent increase compared to the 374 sales in August 2010, and a 33.9 per cent decrease from the 610 attached properties sold in August 2009. The benchmark price of an attached unit increased 4.5 per cent between August 2010 and 2011 to $511,433.

Cat: Vancouver Real Estate

Canadian Mortgage rates on the rise

OTTAWA — CIBC and Bank of Montreal announced Tuesday that they will be raising their mortgage rates.

CIBC raised the rates on fixed-rate mortgages, following other major Canadian banks that did so Monday.

CIBC raised rates on closed mortgages by 0.10 to 0.15 percentage points, with the popular five-year closed option rising 0.15 per cent to 5.54 per cent, in line with the new rates announced by Royal Bank, TD Canada Trust and Laurentian Bank on Monday.

CIBC's new rates become effective Wednesday.

BMO Bank of Montreal also announced its changes in residential mortgage rates, effective Wednesday.

A five-year fixed rate closed is going up to 5.54%, a 0.15% increase.

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Cat: Canada Real Estate

First-time buyers in major Canadian markets move to get in ahead of higher interest rates, says RE/MAX

BC (April 5, 2011) -- Driven by the threat of higher interest rates down the road, first-time buyers are contributing to strong upward momentum in residential housing markets across the country, according to a report released today by RE/MAX.

The RE/MAX First-Time Buyers Report, highlighting trends and developments in nineteen major Canadian centres, found that low interest rates and balanced market conditions have provided significant impetus in 2011, particularly at lower price points. Just over 30 per cent of markets are reporting sales in excess of 2010 levels as a result, while almost 70 per cent have experienced an upswing in average price. Leading the country in terms of percentage increases in the number of homes sold are Western Canadian markets, including Saskatoon (up close to 15 per cent), Greater Vancouver (up close to 12 per cent), and Winnipeg (up just over 11 per cent). With an average price hike of close to 20 per cent year-to-date (February), Greater Vancouver continues to show unprecedented strength, followed by Hamilton-Burlington (eight per cent), Quebec City (seven per cent), Winnipeg (close to seven per cent), Greater Toronto (five per cent), and Greater Montreal (five per cent). 

“With the Canadian economy on firmer footing overall, residential real estate is well-positioned moving into the traditionally busy spring market,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “Consumer confidence is climbing in conjunction with economic performance, and concerns over a secondary recession fade with each passing day. The mood is cautiously optimistic as first-time buyers enter the market.”

Inventory levels, while tight in several larger centres, are more balanced overall, giving first-time buyers a good selection of housing product from which to choose. Not surprisingly, condominium apartments and town homes have become the first step for many entry-level purchasers, especially in Greater Vancouver, Victoria, Kelowna, Edmonton, Calgary, London-St. Thomas, Hamilton-Burlington, Greater Toronto, the Island of Montreal, and Halifax-Dartmouth where average prices have risen unabated in recent years.

“Despite homeownership rates approaching 70 per cent, there is clearly room for growth as entry-level buyers make their moves from coast-to-coast, undeterred by higher housing values and changes to lending criteria” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “Many purchasers intent on realizing homeownership are scaling back on expectations or are willing to sacrifice location, quality and/or size to make their dream a reality – not unlike generations before them.”

Changes to recent financing criteria have not created the anticipated run up in activity in most markets. From a financial standpoint, most rookie home buyers remain quite prudent. Those making the leap are not doing it lightly, buying within their means. While this most recent round of policy tightening will likely have a negligible effect on demand, the message is getting across. 

Affordability remains a growing concern in most markets, and—aside from first-time purchasers—no one is more in tune with that than housing planners and developers. In fact, the growing demand for reasonably-priced product is creating a shift in the country’s housing mix. That trend is expected to gain traction in coming years, as builders look to create greater options for those seeking to realize homeownership.    In recent years, builders have helped ease the move to homeownership by concentrating on intensification—condominium buildings with smaller suites and small-lot subdivisions offering detached, compact homes at a fraction of the cost of a traditional single-family home.   On the flip side, the affordability factor is also breathing new life into tired older neighborhoods, and that, in turn, is contributing to rising values. 

As prices escalate, first-time buyers are indeed spending more—some out of necessity, but others are simply in a position to do so. Unlike in years past—a greater percentage of today’s first-time buyer pool is comprised of dual-income, college or university-educated couples with solid earnings. They’re spending close to average price or slightly more to secure—in most cases—a better location or a home that will grow with them.   Yet, the fact remains that those on a tighter budget can get in for considerably less, with reasonable choices in every major market across the country.   While some may feel discouraged by eroding affordability levels, the underlying confidence in the concept of homeownership is rising.

“While market conditions are one thing that influences first-time buyers, few things trump the fundamental belief in homeownership,” says Sylvain Dansereau, Executive Vice President, RE/MAX of Quebec. “Today’s entry-level buyers are steadfast in their mindset. They know they have to live somewhere, but they simply don’t want to pay someone else’s mortgage. Savvy or practical, they remain a driving force. The bottom line is that the demand for entry-level product will remain steady. The role of starter homes in the marketplace is becoming ever more vital.”

Cat: Vancouver Real Estate

Canadian Lenders Increase Mortgage Rates

As Government bond yields rise, some banks are again raising Canada Mortgage Rates. Indications are that this action relates to concerns regarding inflation and increasing confidence in a global economic recovery.

From Tuesday, the Toronto-Dominion Bank and the Canadian Imperial Bank of Commerce raised their mortgage rates by 0.35 of a percentage point. This followed a statement, indicating that the greatest increases would be for loans with period terms of five to ten years.

The Royal Bank of Canada also increased its Canada Mortgage Rates by 0.35 of a percentage point, on loans over five and ten year terms. The rate for its seven-year mortgage term rose by 0.15 of a percentage point.

Five year Canadian Government bond yields, have risen sharply recently, leaping 24 basis points during last week. It is usual practice for Canada Mortgage Rates to follow these bonds closely. One of the most popular loan types with Canadian homeowners is the five year closed mortgage. This will not escape the new Canada Mortgage Rates and will rise to 5.69%.

Increased rates will apply to loans with terms of one, three and four years, rising by 0.2 of a percentage point. However, a two-year loan term will increase by 0.3 of a percentage point.

Reported possible causes for the increase in Canada Mortgage Rates, include the following observation. When traders move their investment activity from the considered safety of bonds, to equities carrying a greater risk factor, then fixed mortgage rates, which are highly influenced by the bond market.

Cat: Vancouver Real Estate

TD, National join big Canadian banks lowering their fixed mortgage rates

TORONTO - Three more Canadian lenders say they will lower some of their fixed rate mortgages as nervous investors move to bonds, causing a drop in long-term interest rates.

TD Bank (TSX:TD), National Bank (TSX:NA) and Desjardins Group said Wednesday that their fixed five-year closed rates will drop 0.1 of a point to 5.34 per cent, effective Thursday.

The move follows similar announcements from Royal Bank of Canada (TSX:RY) and Bank of Montreal (TSX:BMO) on Tuesday.

Four-year rates will fall 0.15 percentage points to 4.99 per cent across the board.

Seven-year rates will move 0.2 percentage points lower to 6.14 at TD and to 6.4 per cent at Desjardins and the others, but will be unchanged at National, whose 10-year closed rate will fall 25 basis points to 6.4 per cent.

Fixed mortgage rates, which are closely tied to bond markets, tend to fall when traders shift investment activity from riskier equity assets toward bonds, which are considered safer.

Investors have been jittery over fears that a potential nuclear disaster in Japan could severely derail the global economic recovery.

In February, many of Canada's big banks moved to raise their fixed mortgage rates as investors grew more confident about investing in equity markets and the global economy appeared stronger.

By The Canadian Press

January 2011 CMHC Housing Market Report

OTTAWA, February 8, 2011 — The seasonally adjusted annual rate¹ of housing starts was 170,400 units in January, according to Canada Mortgage and Housing Corporation (CMHC). This is up from 169,000 units in December 2010. According to final figures, actual housing starts for 2010 totalled 189,930 units, with activity moderating towards demographic fundamentals by the final quarter of 2010.

“Housing starts moved slightly higher in January because of an increase in rural starts,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “Single-detached and multiple starts showed a moderate decline.”

The seasonally adjusted annual rate of urban starts decreased by 1.7 per cent to 146,900 units in January. Urban multiple starts moderated by 1.5 per cent in January to 82,900 units, while single urban starts moved lower by 2.0 per cent to 64,000 units.

January’s seasonally adjusted annual rate of urban starts decreased by 19.0 per cent in the Prairie Region, by 7.9 per cent in British Columbia, and by 1.0 per cent in Québec. Urban starts increased by 13.3 per cent in Atlantic Canada and by 10.3 per cent in Ontario.

Rural starts² were estimated at a seasonally adjusted annual rate of 23,500 units in January.

As Canada's national housing agency, CMHC draws on 65 years of experience to help Canadians access a variety of high quality, environmentally sustainable and affordable homes. CMHC also provides reliable, impartial and up-to-date housing market reports, analysis and knowledge to support and assist consumers and the housing industry in making informed decisions.

New Mortgage Rules

Effective March 18, 2011, it will become harder to buy a new home or consolidate debt into your mortgage.

That’s due to three new changes announced today by Finance Minister Jim Flaherty:

• A 30-year maximum amortization on insured mortgages over 80% LTV
• An 85% LTV limit on insured refinances
• Elimination of government insurance on secured lines of credit (aka., HELOCs)

Flaherty says these regulations are meant to “(encourage) hard-working Canadian families to save by investing in their homes and future.”