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Vancouver home prices expected to jump 7.2 per cent in 2010

Realty firm Royal LePage has come out of the gate in 2010 with the prediction Metro Vancouver's home prices will inflate another 7.2 per cent this year, as long as the expected mid-year rise in mortgage rates isn't a dramatic spike.
Royal LePage, in its forecast released Thursday, said that based on the momentum of the sales surge during the last half of 2009, and with mortgage interest rates continuing at near record lows, the first half of 2010 should remain strong.

"The stimulus effect of low borrowing costs has contributed to a sharp rise in demand that has driven activity levels to new highs," Royal LePage CEO Phil Soper said in a news release.

For Metro Vancouver, that should mean upward pressure on prices, along with a modest increase in sales compared with 2009, a year that saw sales and prices come back at double-digit increases from the downturn-year of 2008.
Chris Simmons, owner of Royal LePage Westside in Vancouver, said in an interview that the firm based its expectations for price increases on how prices performed over the last quarter of 2009.

"[We saw] stronger prices in the last quarter of 2009, and we take a look at that, try to temper the prices and come up with our best guess as to where prices will be for the full year of 2010," Simmons said.

"I think that seven-per-cent price increase over the full year, [compared with] the full year of 2009 is a pretty reasonable expectation."

However, what actually happens will depend on how banks respond in the second half of the year as the Bank of Canada is free from its commitment to hold its key overnight lending rate at a record low 0.25 per cent until June 2010.

Simmons noted that the average price of a Metro Vancouver home, across all property types, averaged over the full year, hit $592,000 in 2009, which was only $1,000 off the peak-price year of 2008.
The return of higher prices was counted as the biggest risk to the housing market, if rates were to take a substantial rise, in a forecast by Cameron Muir, chief economist for the B.C. Real Estate Association.

Canada Mortgage and Housing Corp. analyst Robyn Adamache said her forecast is that mortgage rates could ease upward a manageable 0.5 to 0.75 of a percentage point by the end of 2010. "I think if we have stability in the economy and interest rates don't go up dramatically, I think our forecast will ring true," Simmons said.

Canada's hot housing market to continue through mid-2010

OTTAWA — Canada has moved back into a seller's market and will remain "unusually strong" through the first half of 2010 as economic conditions improve and low interest rates spur demand, according to Royal LePage's Market Survey Forecast and House Price Survey released Thursday.
"The Canadian real estate market enters 2010 with considerable momentum from an unusually strong finish to the previous year," Phil Soper, president and chief executive of Royal LePage Real Estate Services, wrote in a statement. "The stimulus effect of low borrowing costs has contributed to a sharp rise in demand that has driven activity levels to new highs. This demand, coupled with a typical seasonal undersupply of homes for sale, should cause home prices to continue to appreciate significantly during the early months of the year."

The report comes hard on the heels of several others that show the market continuing to gather steam.

In early December, the Canadian Real Estate Association said sales of existing homes surged 73 per cent year over year in November, and that the average sale price has soared 19 per cent. On Wednesday, reports showed Toronto home sales shot up 115 per cent in December and that prices had gained 14 per cent year over year. More of the same is ahead, other reports have stated.
But Soper said the market's apparent froth should ease in the second half of 2010 as supply of listed homes increases and higher interest rates temper rising home prices.

After falling in late 2008 and early 2009, house prices in Canada appreciated in late 2009. In the last quarter of 2009, the average price of detached bungalows rose six per cent to $315,055 compared to the same quarter in 2008. The price of standard two-storey homes rose 5.2 per cent to $353,026, and the price of a standard condominium rose 6.4 per cent to $205,756.
The survey, which includes information on seven types of housing in more than 250 Canadian neighbourhoods, also suggested regions that saw the biggest declines during the recession are now showing marked gains, including Toronto and Vancouver.

A report released Wednesday by the Toronto Real Estate Board (TREB) showed existing home sales there rose 115 per cent in December compared to the same month a year earlier.

"Granted, last December was the absolute low for sales activity in the city this cycle," wrote Robert Kavcic in a note about the board's report.
"(There is) too much cheap money chasing too few goods."

Higher home sales, smaller inventories posted in Vancouver for October

Lower Mainland home sales continued riding high in October, with prices continuing to rise, according to reports from the region’s major real estate boards Tuesday.

In Metro Vancouver, covered by the Real Estate Board of Vancouver, realtors recorded 3,704 sales through the Multiple Listing Service, up 172 per cent from the doldrums of October 2008 and 22 per cent above sales levels in October 2007.

The benchmark price, the average price for a typical home sold, hit $749,808 in October, which was almost eight-per-cent higher than the same month a year ago, though not quite up to the pre-correction peak.
In the Fraser Valley, including Surrey, realtors saw 1,704 sales through the Multiple Listing Service in October, a 122-per-cent increase from the same month a year ago.

The benchmark price for detached homes was $491,128 in October, 0.4-per-cent higher than the benchmark of October 2008.
“I still think low mortgage rates are the key to this that has really been driving [sales] activity,” Scott Russell, president of the Real Estate Board of Greater Vancouver, said in an interview.

Russell said he has heard anecdotal evidence that foreign investors are once again playing a larger role, but it is rising confidence among local buyers, coupled with low mortgage rates, that has driven sales and prices.
Inventories have shrunk in a relative sense. In Metro Vancouver, the number of new listings in October was higher than the same month a year ago. But the total number of active listings in inventory in October shrank by four per cent compared with September and by 37 per cent compared with the same month a year ago.

In the Fraser Valley, October’s new listings increased seven per cent compared with September, but overall inventory shrank to 8,807 units compared with 11,715 in the same month a year ago.
Russell said realtors in his board area don’t expect the unseasonably high level of sales to continue through November and December, when markets traditionally experience a seasonal slowdown.
However, Robyn Adamache, a market analyst with Canada Mortgage and Housing Corp. said she is forecasting that Metro Vancouver sales will remain relatively robust until the middle of 2010, depending on what happens to mortgage rates.
“I think we are going to see some increase in mortgage rates as the economy improves, which is a bit of a two-sided thing,” Adamache said in an interview.
“It’s a good sign that the economy is improving if [banks] start raising rates a bit, but on the other hand, that will have an impact on what happens in the real estate market.”

Adamache is not expecting a dramatic increase in mortgage rates. Her forecast is for the five-year-posted mortgage rate to climb to an average of 5.75 per cent over 2010 from 5.55 per cent over 2009.
Another factor will be rising prices. Adamache said many of the enthusiastic first-time buyers who were motivated by the combination of lower prices and record low interest rates have bought homes.
Now, “prices are rising, and a lot of those people have done their thing already.”

Tsur Somerville, director of the centre for urban economics and real estate, in the Sauder School of Business at the University of B.C., said there are already some slight signs that the frenzy of sales is beginning to slow.
Somerville said the pace of sales in October, compared with the pre-correction years of 2007 and 2006, slowed somewhat from September.
And the rate of month-to-month price growth in October from September was the lowest it had been since May.
“I’d say it does suggest things have taken a little bit of step back from where we were in September.”

Somerville said the rapid rebound in the Lower Mainland’s real estate markets may be a sign that the economic recession in the region was not as severe as in other regions.

The high level of sales is the result of putting “the low interest rate environment and renewed optimism on a base of a not particularly severe recession in terms of employment [losses].

Record-low interest prices, homebuyer tax incentives and lower housing prices are spurring a revitalized demand, a Scotia Economics report released Thursday says, but there are still obstacles to a more solid recovery.

VANCOUVER — Rising sales and limited listings have returned Canada to a “seller’s market,” with total B.C. home sales this year up nearly seven per cent compared to 2008, according to a Global Real Estate Trends report released Thursday by Scotia Economics.

“In terms of trends, sales in B.C. have been picking up since January,” Adrienne Warren, senior economist at Scotia Economics, said in an interview. “And it’s been increasing steadily since. For prices the low point was in April.”
The report concluded that home sales in 2009 in B.C., compiled to the end of August on a seasonally adjusted annual rate, rose to 73,211 units sold compared to 68,923 in 2008.

However, the average price of a home sold in B.C. is slightly down to $433,017 compared to $454,599 last year.

In Vancouver, home sales are up to 31,151 compared to 25,149 sold in 2008, while the average price for a sold home in Vancouver has fallen to $531,790 in 2009 from $593,767 in 2008.

Across Canada, the report noted that new home construction has also turned up, with the largest improvement in the four western provinces, with new home prices increasing in July for the first time since last September.
Warren said prices may be down in B.C., but that’s not unexpected because they dropped sharply in 2008 and are just now recovering.
“In B.C. and Vancouver, prices over the last several months have seen bigger increases than the national average trend. Overall, the B.C. economy is probably holding up a little better than what we’re seeing nationally.”
Warren also said that much of the sales pickup reflects people jumping back into the market. “A lot of people held back. That [market] could be satisfied by the end of the year.”

Warren predicted that B.C. and Vancouver should see modestly higher or sustained prices in 2010 if there’s a gradual prolonged recovery. She said resale markets should become more balanced next year as pent-up demand from depressed levels wanes and the number of listings increase. “It’s a healthy level [of sales], not a boom level, but we’re not looking for a big fallback in sales.”

The report said that despite the rise in new construction, the inventory of unsold new homes across the country appears to have peaked, having edged down for a third consecutive month in August. It noted that there is some sign that pent-up demand is being satisfied, with existing home sales across the country also edging down marginally in August, after six months of steady growth.

Tsur Somerville, director, centre for urban economics and real estate at the Sauder School of Business at the University of B.C., said in an interview that he’s not surprised by the report’s findings.
“You’ve got record sales numbers, but not a large number of new listings coming in,” said Somerville. “That’s tightened things up. If the listings were higher, you’d have less price pressure.”

Somerville said he believes sales volumes will weaken a bit this fall, because the economic conditions are not conducive to high sales.
Somerville said he’s also heard anecdotally that many buyers are now jumping into the market because they got very good pre-approved fixed mortgages in the late spring and are purchasing homes while those deals are still in effect. “The sense is that those kinds of deals aren’t [now] entirely available.”

Globally, the report notes that real estate markets are showing tentative but growing signs of stabilization, with firmer pricing evidence of growing confidence in the sustainability of the global economic recovery.
Warren said prices have increased in Canada, Australia and the United States,” but are falling in other markets, including the U.K., France and Spain, but at a slowing rate.

The report suggested that inflationary pressures will not be a factor for some time, keeping short-term interest rates at low levels.

Lower Mainland real estate markets race to record July home sales
By Derrick Penner, Vancouver Sun, August 5, 2009

Both Metro Vancouver and Fraser Valley real estate boards reported record home sales for the month of July.

VANCOUVER — Home sales in the Lower Mainland burst out of their long slump in July as first-time homebuyers, lured by lower prices and rock-bottom interest rates, flooded into the market.

Both Metro Vancouver and Fraser Valley real estate boards reported record home sales for the month of July.

Metro realtors racked up 4,114 sales through the Multiple Listing Service in July, the Real Estate Board of Greater Vancouver said Wednesday. That’s an 89-per-cent increase from July 2008, when sales were just headed into the doldrums.

The price of the typical single-family home in Metro hit $711,702 in July, down 5.5 per cent from the same month last year but 10-per-cent higher than at the beginning of this year.

It was a similar story in the Fraser Valley, where the real estate board saw 2,089 MLS sales in July, a 62-per-cent increase from the 1,284 sold in July 2008, and a little higher than the previous record of 2,051 in July 2005.
The price of a typical detached home in the Valley reached $477,420 in July, down almost six per cent from a year ago, but up almost four per cent over the last three months.

Paul Penner, president of the Fraser Valley board, said 37 per cent of buyers in the July market were first-timers, compared with 33 per cent in June.
“That volume creates a significant ripple effect as the sellers of those homes move up,” Penner said in a news release.
Jake Moldown, president-elect of the Vancouver real estate board, concurred.

He said first-time buyers who entered the market during the boom a couple of years ago now feel comfortable moving up the property ladder.
“They understand what a mortgage is and they’re comfortable with their payments, and now they’re looking to step up,” Moldown said.
Vanessa Brown, a library technician at Langara College, is one of those buyers.

She traded a one-bedroom condo at 56th Avenue and Fraser Street in Vancouver, which she bought five years ago for $123,500 and recently sold for $196,000, for a $365,000 two-bedroom unit at Seventh Avenue and Main Street.

“I figured when the market dipped a bit, even though I would be sacrificing a bit of money on the sale of my apartment, I would have more to gain as I moved up the market,” she said.

Moldown said the strength of sales in recent months has been surprising, but he believes the overall market is stabilizing.

Tsur Somerville, a real estate expert in the Sauder School of Business at the University of B.C., said there are signs of more stability in the overall economy, but it is difficult to see the pace of sales continuing at peak levels.
“This is a very, very high level, and [long-term mortgage] interest rates have already started creeping up,” Somerville said.

“It’s a wonderful, positive statement about people’s outlook for where things are going,” he said, “but it’s hard to put together the set of circumstances where sales of this level are sustainable and persistent.”
However, Somerville said there are few signs that the market will collapse again “without some substantial shift in [mortgage] rates.”
B.C.’s employment picture, especially in Vancouver, has shown signs of stabilizing with the addition of more full-time jobs in recent months after a period of losses, said Carol Frketich, regional economist for Canada Mortgage and Housing Corp..

The big question is whether high sales levels are sustainable, Frketich said. “That’s yet to be seen until we see that labour market more solid.”
Frketich it’s now a seller’s market in some areas, with inventories falling as sales rise.

In Vancouver, the number of active listings is down 34 per cent from the same month a year ago, and now stands at 12,482 units.
Sellers put 5,041 new listings on the market in July, a 17-per-cent decline from July 2008.