MLS sales for Greater Vancouver hit 3,137 in March, almost 39 per cent above March 2009 levels.
VANCOUVER — A jump in new property listings in March should help keep the pressure off home prices in Lower Mainland markets that, over the last year, have been fuelled by generationally low mortgage rates, one economist said Tuesday.
Listings added to the Multiple Listing Service (MLS) in March jumped 60 per cent to hit 7,004 compared with the same month a year ago in the region of Metro Vancouver covered by the Real Estate Board of Greater Vancouver, the board reported Tuesday.
March was the same month the benchmark price, an average for typical homes sold, reached a new all-time high of $584,435 across all property types, which was up 20 per cent from a year ago and almost three per cent above the previous peak in May 2008.
“We were expecting to see listings increase,” Robyn Adamache, senior analyst with Canada Mortgage and Housing Corp. said in an interview. “Certainly any time you see prices rising is generally when see more listings coming on line.”
Adamache added that March’s spike in new listings came perhaps sooner and was bigger than expected, but in general she expects the Greater Vancouver market to float along in conditions that are balanced between buyers and sellers as it has for three months now.
“As we continue to see more listings continue to come on line, that will have a mitigating impact on how quickly prices are rising,” she said.
Adamache said that the total inventory of unsold homes in Greater Vancouver, at 13,538, while up from February, is still not close to the record of almost 20,000 homes set in the fall of 2008.
In the meantime, sales remained at high levels in the Greater Vancouver region with realtors recording 3,137 MLS sales in March, almost 39 per cent above March 2009 levels.
Board president Jake Moldowan said Greater Vancouver’s March listings were the most in the past 10 months, “which translates into more options and variety” for buyers in what is usually a busy spring season.
Sales of detached homes were up the most in the Greater Vancouver region with 1,336 sales, a 49-per-cent increase from March a year ago, but price increases sort of stalled out in March.
The benchmark for a detached houses hit $800,341 in March, up 23 per cent from the same month a year ago but down .6 per cent from the $800,796 benchmark seen in February.
In the Fraser Valley, market conditions in March remained more in favour of sellers with strong sales, but a surge of new listings bringing the region’s inventory of unsold homes to near peak levels.
Fraser Valley realtors saw 1,565 sales cleared through the Multiple Listing Service in March, up 30 per cent from February and some 56 per cent above last March’s market, which was still in slow recovery from the economic downturn.
“March sales volumes can fluctuate as much as the weather,” Deanna Horn, president of the Fraser Valley board said in a news release. “This year’s reached the mid-point between the highs and lows seen over the last decade.”
“However, available listings were near the peak, meaning buyers had lots to choose from and were clearly taking advantage of great buying opportunities.”
The Fraser Valley board also saw 3,395 new listings put onto MLS in March bringing total inventory to 9,828 unsold homes, which is close to available inventory in the same month a year ago.
Horn added that prices in the Fraser Valley are “closing in on the record highs “ last seen in the spring of 2008.
The benchmark price, an average for typical homes sold, for detached houses in the Fraser Valley hit $514,787 in March, up 12 per cent from the same month a year ago.
Royal, TD raise mortgage rates
in sign era of historically low rates ending
By The Canadian Press
TORONTO - Two of Canada's biggest banks are increasing some of their residential mortgage rates effective Tuesday in the latest sign that the era of historically low rates could soon come to an end.
The changes affect closed mortgages with terms of three, four and five years at RBC Royal Bank (TSX:RY) and TD Canada Trust (TSX:TD). Rates for mid-term mortgages like these tend to reflect the banks' borrowing costs on bond markets.
The biggest increase announced Monday affects five-year mortgages. Both banks are hiking their posted rate by six-tenths of a per cent to 5.85 per cent from 5.25 per cent.
A homeowner taking on a mortgage of $250,000 at the new rate of 5.85 per cent over a 25-year amortization period would pay $1,577 per month. Prior to Tuesday's hike, that mortgage would have cost $1489 a month, or $88 less.
The Bank of Canada is expected to begin raising lending rates this summer as it moves to fight growing inflationary pressures in the economy. The bank has kept its key overnight rate at a historic low of 0.25 per cent for more than a year to help stimulate the economy.
CIBC (TSX:CM) chief economist Avery Shenfeld said the central bank begins to step on the brake when it sees overheating in the economy, and economic growth in the first quarter has outperformed the central bank's forecast.
CIBC has lifted its own growth outlook for the first quarter of the year to over five per cent, due to strong indicators of recovery.
"The only reason the market is building in expectations for rate hikes is because it's seeing the economy as better able to withstand them," he said.
"Once the Bank of Canada starts pushing up short-term interests rates, and even in anticipation of that, it tends to spill out across the rest of the curve."
Mortgage rates hikes are a trend consumers should expect to continue, Shenfeld added.
He predicts the Bank of Canada will gradually raise key lending rates this summer, resulting in an increase of 0.75 per cent to one per cent by the end of the third quarter.
That would raise the average prime rate at the banks from 2.25 per cent to three per cent, which could tack on three-quarters of a per cent to the rates of homeowners with floating mortgage rates, Shenfeld said.
"Consumers are forewarned that when they look at borrowing today they have to factor in potentially higher costs," he said.
"Consumers have to be aware in taking on debt at historically low interest rates that down the road they will be higher and have to leave room for their ability to pay those higher rates."
When the Bank of Canada lifts rates, part of its intention is to take the fire out of the most interest sensitive segments of the economy, including the housing market, which has seen a particularly strong recovery, Shenfeld said.
The hot housing market is being driven, in part, by an influx of consumers willing to pay a premium for home ownership before interest rates rise.
Shenfeld said the rate increase could help dampen the house price inflation seen over the past several months.
And he added that the outperformance of the economy in the first half of the year will be countered by a slowdown in the second half.
"Not only do we expect weaker growth in the key US export market by then, but Canadian consumers may also be more temperate in the wake of a debt financed binge."
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.
The inventory of unsold homes also shrank in the Fraser Valley, declining almost 23 per cent from record levels a year ago to 9,510 active listings in July.