Oliver says there’s no housing bubble

by Jamie Henry | 29 Jan 2015

Some people will never be convinced but yesterday federal finance minster Joe Oliver again repeated the government’s opinion: “we don’t think there’s a bubble.” He said that the CMHC and the Organization for Economic Cooperation and Development agree. Oliver said that the government is monitoring the situation regarding the housing market and levels of personal debt, especially with interest rates trending lower, but they do not see a major concern currently and believe that people are not buying homes they can’t afford. The finance minister was also asked for his opinion of the banks reducing their lending rates by less than that of the central bank but he would only say that it is a “private sector decision.” 

News Release – Fraser Valley Real Estate Board – December 2, 2014

2014 trend towards increased sales and steady pricing continues into November

 SURREY, BC – The Fraser Valley Real Estate Board processed 1,136 sales on its Multiple Listing Service (MLS®) in November, an increase of 15 per cent compared to the 986 sales during the same month last year and 22 per cent lower than the 1,448 sales processed in October.

New listings in the Fraser Valley decreased by 2 per cent in November, going from 1,774 last year to 1,748 last month taking the number of active listings to 8,302, a decrease of 4 per cent compared to the 8,641 active listings in November of 2013.

“This is the time of year when families are settling in for winter and the holidays, so we expect to see a decrease in activity,” explains the Board’s president, REALTOR® Ray Werger. “After a busy fall with volumes reaching 5 – yearhighs, we’re winding down the year with sales on par with the ten year average, but about 8 per cent fewer new listings therefore home buyers will notice a shortage of inventory in certain price ranges.”

Pricing continues along the same trends as seen for most of 2014, with single family detached prices continuing to rise; townhouse prices remaining steady, and apartment prices decreasing. The MLS® Home Price Index (MLS® HPI) benchmark price of a detached home in November was $575,400 an increase of 4.6 per cent compared to

November 2013, when it was $550,300. The MLS® HPI benchmark price of townhouses increased 2.2 per cent from $292,400 in November 2013 to $298,900 last month. The benchmark price of apartments decreased year ‐over-year by 3.5 per cent, going from $196,200 in November of last year to $189,400 in November 2014.

 “Prices are a function of supply and demand which your REALTOR® will explain varies considerably from area toarea and within the different property typesas well as local amenities, transportation options and future community development, underscoring the importance of expert guidance when you’re looking to list or buy,”says Werger. “Overall, 2014 is shaping up to be a good year for Fraser Valley real estate,” continues Werger. “We hit a bit of a trough during the summer of last year, but since then sales have recovered and we’re tracking towards a 15 per cent increase in year ‐to‐date sales for 2014 compared to 2013 with prices remaining relatively stable.”

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The Fraser Valley Real Estate Board is an association of 2,751 real estate professionals who live and work in the BC communities of North Delta, Surrey, White Rock, Langley, Abbotsford, and Mission. The FVREB marked its 90 year anniversary in 2011.

News Release: November 4, 2014

INCREASED DEMAND FOR FRASER VALLEY TOWNHOUSES AND SINGLE FAMILY HOMES

(Surrey, BC) – The Fraser Valley Real Estate Board processed 1,448 sales on its Multiple Listing Service (MLS®) in October, an increase of 16 per cent compared to the 1,249 sales during the same month last year and 2 per cent more than in September.

Ray Werger, the Board’s president, says, “Sales overall continue to outperform last year and as we’ve seen for a number of months now are the best they’ve been in five years.

“Demand remains steady in our region for single family detached homes and townhomes. Last month, the market share of sales of single family homes increased by almost five per cent compared to last year; while the share of condo sales decreased by the same amount and we’re seeing that preference reflected in prices.” 

The MLS® Home Price Index (MLS® HPI) benchmark price of a detached home in October was $573,500 an increase of 4 per cent compared to October 2013, when it was $551,400.

The MLS® HPI benchmark price of townhouses increased 1 per cent from $295,500 in October 2013 to $298,500 last month. The benchmark price of apartments decreased year-over-year by 3.5 per cent, going from $199,500 in October of last year to $192,600 in October 2014.

In the last five years, the MLS® HPI benchmark price of a detached home in the Fraser Valley has increased by 16.6 per cent. For townhouses, the price is flat having increased by 0.5 per cent and for apartments; the price has decreased by 6 per cent.

Werger adds, “With the influx of new developments and a steady supply of resale units, we’ve never had a better selection of condos than we do right now at prices the lowest they’ve been in years. For those that say housing isn’t affordable in Metro Vancouver, you need to check out the opportunities currently for condo buyers in the Valley.”   

In October, new listings in the Fraser Valley increased by 3 per cent, going from 2,336 last year to 2,395 last month taking the number of active listings to 8,807, a decrease of 3 per cent compared to the 9,047 active listings in October of 2013. “Inventory is edging down, which is typical for this time of year,” says Werger. “The result is we’re seeing good quality homes that are priced right moving quickly.”

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The Fraser Valley Real Estate Board is an association of 2,738 real estate professionals who live and work in the BC communities of North Delta, Surrey, White Rock, Langley, Abbotsford, and Mission. The FVREB marked its 90-year anniversary in 2011.

Full package: http://www.fvreb.bc.ca/statistics/Package%20201410.pdf

Broker: Variable will continue to trump fixed.

by Jamie Henry | 30 Oct 2014

The message from several brokers is that variable rates still reign supreme, following a story about one financial professional’s personal mortgage blunder.

“From what I analyze daily, low rates will be with us for a long time,” Brian Lambert of Real Mortgage Associates wrote on MortgageBrokerNews.ca. “Even if they rise, it would be only marginally as governments would have to allow time to see what effects that would cause any economy.”

The comment was in response to a story about a financial planner who switched his mortgage from a variable to a fixed rate.

Ted Rechtshaffen — president of TriDelta Financial — speaking to the Financial Post, admitted that in 2009 he switched his variable rate mortgage to a fixed, after heeding warnings that variable rates would be on the rise. And that the move was a mistake.

“I was wrong. I had a variable rate mortgage and in 2009 I pulled the plug and went fixed,” Rechtshaffen, financial planner and president of TriDelta Financial told the Post. “I did mess up, but my question was what benefit do I get locking-in versus going variable?”

It seems brokers will be advising their clients to avoid the same mistake – despite any posturing from the big banks.

“As mortgage professionals we listen to a lot of noise coming from the media and big banks. You really need to read between the lines,” Lambert wrote. “Big banks agenda is to scare clients into locking in to a fixed rate, this secures their profit over a fixed term. The media just churns the message as it makes for news.”

• CREA Reports Housing Sales “Ease Back” in September

Oct 20, 2014

The Canadian Real Estate Association (CREA) reported last week that Canadian existing home sales declined on a month-over-month basis in September for the first time since January. Volumes were down 1.4% from August’s figures but, on a year-over-year basis, September saw sales which were 10.6% above levels seen in September, …

The Canadian Real Estate Association (CREA) reported last week that Canadian existing home sales declined on a month-over-month basis in September for the first time since January. Volumes were down 1.4% from August’s figures but, on a year-over-year basis, September saw sales which were 10.6% above levels seen in September, 2013. On a year-to-date basis, through the first nine months of 2014, national sales volumes are about 5% higher than at the same point last year.

The national association of realtors says that inventories of listings of affordable homes are scarce in some markets while in others, sellers are holding firm on prices. CREA Chief Economist Gregory Klump commented that “momentum going into the fourth quarter is showing tentative signs of waning”. Low borrowing rates have been driving the market this year and Klump suggests that they will continue to do so, particularly in the country’s hottest markets.

New listings were down 1.6% from August and the national sales-to-new-listings ratio continues to creep upward, ending the month at 55.7% (August’s reading was 55.6%). A reading between 40% and 60% is considered to be “balanced”. Inventory levels (expressed as the time required for all listed homes to sell at the current sales rate) did rise slightly – to 5.9 months from 5.8 months in August. The inventory level held steady at 6 months through May, June and July.

The MLS Home Price Index, which adjusts for the mix of properties sold to provide valid comparisons between periods, was up 5.28% from a year ago. For two-story homes, it rose 6.52%, townhouses were up 5.51%, bungalows 5.07% and the index for apartments (condominiums) rose by 3.05%. The index reading for the big three markets was strong: Calgary advanced 10.11%, Toronto 7.82% and Vancouver’s index rose 5.26%. The average sale price of a Canadian home in September was $408,795, which represents a 5.9% increase from September, 2013. Excluding the two most expensive markets of Vancouver and Toronto, the average price of a home in Canada in September was $325,406. 

For Immediate Release: October 2, 2014

 Strong summer for Fraser Valley real estate carries through to September

 SURREY, BC – The Fraser Valley Real Estate Board processed 1,419 sales on its Multiple Listing Service (MLS®) in September, an increase of 25 per cent compared to the 1,131 sales during the same month last year, and an increase of 9 per cent compared to sales in August.

Ray Werger, the Board’s president, says, “Similar to this past summer, this is the busiest September we’ve hadsince 2009 with sales of all property types combined out performing the 10‐year average by 13 per cent.

“Residentially, the single family detached home remains the preferred property type. From North Delta to Mission,sales increased in every Fraser Valley community compared to last year with the price range of $400,000 to $699,999 garnering almost sixty per cent of our total detached market.”

New listing activity was also steady in September with the Board’s MLS® receiving 2,758 new listings, an increase of16 per cent compared to last year, taking the total number of active listings by month end to 9,156, a decrease of 7 per cent compared to September 2013.

Werger adds, “An important factor underlying the housing market is consumer confidence and in our region that confidence has been bolstered by the stability of home prices. Since March, the benchmark price of our three main residential property types combined has remained flat, increasing by only 0.6 per cent.

“Long ‐term, the value of single family detached homes has increased at a faster pace than it has for attached properties, particularly in areas such as Surrey, White Rock, Langley and Abbotsford where we’ve seen many new townhome and condo developments. The supply of new inventory has affected the price of resale product.”

The MLS® Home Price Index (MLS® HPI) benchmark price of a detached home in September was $569,800; anincrease of 3.1 per cent compared to September 2013, when it was $552,900. In the last six months, thebenchmark price of a detached home has increased by 1.1 per cent.

In September, the MLS® HPI benchmark price of Fraser Valley townhouses was $299,600; an increase of 1.1 per cent compared to $296,200 in September of last year, and in the last six months has increased by 0.8 per cent. The benchmark price of apartments decreased yearover‐year by 4.7 per cent, going from $203,100 in September 2013 to $193,600 last month, and has decreased by 0.9 per cent in the last six months.

Canada house prices to climb further, crash fears rising …

Anu Bararia Reuters – Published Thursday, Aug. 28 2014, 5:08 PM EDT  

The risk of a property market crash in Canada has not ebbed, according to an increasing number of analysts polled by Reuters who said chances of a steep fall in prices have increased in the past year.

Still, the survey medians showed house prices will likely rise more than earlier expected at least until 2017, reflecting ongoing reluctance by forecasters, many of whom work for mortgage lenders, to predict negative returns on property.

 This year Canadian home prices on average will appreciate by 5 per cent followed by a 2-per-cent rise in 2015 and then again in 2016 after doubling in value over the past decade.

But seven of 20 respondents in the poll conducted Aug 19-26 said the threat of a property market meltdown had intensified over the past year, especially in Toronto and Vancouver, up from five of 21 in the May poll.

“[The] risk has increased due to house price increases significantly exceeding income growth and the oversupply of condos in downtown Toronto,” said John Andrew, professor at Queen’s University.

Canadian households on average hold debt worth more than 1.5 times their income and when mortgage costs increase once the Bank of Canada begins raising benchmark interest rates, it will make that burden even heavier.

The BoC will probably raise rates in the third quarter of 2015, a Reuters poll showed on Tuesday. “Lower mortgage rates in the spring and summer have enticed more marginal home buyers who ultimately won’t be able to carry heavy debt load in the future when rates rise,” said David Madani, Canada economist at Capital Economics.

Still, the medians suggest prices will not decline nationally, at least not until 2017 – the end of the polling horizon. Even in Toronto and Vancouver, two of the country’s most expensive markets, prices are not expected to fall. Many are of the view that prices will only cool, dodging a U.S.-style nosedive where property prices fell by more than a third, leaving millions of Americans in negative equity.

Thirteen of 20 participants said Canada’s housing boom is different from other real estate booms and is therefore unlikely to end in a crash.

“The risk of a crash is negligible, based on my expectation that any sustained increase in mortgage interest rates will be minimal – at most half a point by the end of 2015,” said Canadian housing economist Will Dunning.

CMHC crunches condo ownership breakdown

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by Justin da Rosa | 12 Aug 2014

Brokers and industry professionals have often wondered what percentage of condos in Canada’s two biggest markets are owned by investors and the data has finally been compiled.

“As information on condominium investment is rather limited at this time, CMHC has gathered new data on a segment of domestic condominium investment activity in Toronto and Vancouver,” Bob Dugan, chief economist at CMHC’s Market Analysis Centre said in an official release. “While the results are not representative of other markets or all types of investors, the survey helps to shed some light on the profile and purchasing motivations of a segment of condominium investors in Toronto and Vancouver.”

According to CMHC, 82.9 per cent of condominium owners reside in their unit while 17.1 per cent are owned by condo investors.

The survey also found that “about half” of condo investors in Toronto and Vancouver currently rent out their last purchased unit.

However, one glaring omission from the survey are foreign investors, as it only included condo owners who reside inside their CMAs.

“CMHC continues to explore opportunities to enhance the availability of information on foreign and corporate investment activities in the housing market,” Dugan said.

The survey also found that:

• 58.4% expect to keep their last purchased unit for more than 5 years;
• 17.9 % for 2 to 5 years;
• 7.6% for less than two years, and 16.1% did not know or answer;
• 11.9% of respondents said they bought their last secondary condominium unit with the intention of reselling it for a profit within a year of purchase.

News Release: July 3, 2014

STRONGEST JUNE IN FOUR YEARS FOR FRASER VALLEY REAL ESTATE MARKET  

(Surrey, BC) – The Fraser Valley Real Estate Board’s Multiple Listing Service® (MLS®) processed 1,668 sales in June, an increase of 26 per cent compared to the 1,327 sales in June of last year and 2 per cent higher than sales in May. In terms of historical comparison, last month’s sales finished 7 per cent below the 10-year average for June with the previous best June occurring in 2010.  

Ray Werger, President of the Board, says, “Recent news reports indicate that consumer optimism about real estate is at its highest level in a number of years and we’re experiencing that at the ground level.

“Over the last three months, we’ve seen a surge in demand specifically for single family homes and townhomes in most of our communities. Our number one buyer is families with children and they’re taking advantage of ultra-low interest rates combined with more affordable, stable prices in the Fraser Valley.” 

In June, the benchmark price, as determined by the MLS® Home Price Index (MLS® HPI), of a ‘typical’ residential home – detached, townhouse and apartment combined – was 1.3 per cent higher than June of last year. For the single family detached home, the HPI benchmark price in June was $568,600, an increase of 3 per cent compared to June 2013 when it was $552,200. This is a record high benchmark price for detached homes since the MLS® HPI began in January 2005.  

The HPI benchmark price of Fraser Valley townhouses decreased by 0.3 per cent; going from $298,700 in June 2013 to $297,800 in June 2014. The benchmark price of apartments was $197,000 last month, a decrease of 2.7 per cent compared to $202,500 in June of last year.

Werger adds, “We’re essentially seeing two markets right now, so it’s important to get advice dependent on what you’re listing or buying. Competitively priced, mid-range single family homes are being snapped up quickly, on average in a little over a month, whereas condos and higher-end, executive homes in our region are taking as long as three months on average to sell. Talk to your REALTOR® to find out where you fit.”

The Board’s MLS® received 13 per cent more new listings in June, 2,974 compared to the 2,625 new listings received during June of last year. The month finished with 9,853 active listings, a decrease of 6 per cent compared to the 10,515 active listings available during June of last year.

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The Fraser Valley Real Estate Board is an association of 2,780 real estate professionals who live and work in the BC communities of North Delta, Surrey, White Rock, Langley, Abbotsford, and Mission.  The FVREB marked its 90-year anniversary in 2011.

Full package:

http://www.fvreb.bc.ca/statistics/Package%20201406.pdf