News Release: June 3, 2014

MARKET STRENGTH SOLIDIFIES IN THE FRASER VALLEY  

(Surrey, BC) – May’s property sales in the Fraser Valley reached the highest they’ve been in seven years with the Fraser Valley Real Estate Board posting 1,633 sales on its Multiple Listing Service (MLS®), an increase of 18 per cent compared to May 2013 and 11 per cent more than in April. 

Previous record-setting Mays were in the mid-2000s during the market peak, with last month’s sales coming in just below the 10-year average.

Ray Werger, President of the Board, says, “For the second month in a row, we’re experiencing healthy sales volumes with the most popular choice being single family detached homes followed by townhouses. For single family homes, that market is at the upper-end of a balanced market with certain areas in a sellers’ market where over 30 per cent of available inventory is selling.”

Werger adds that the market for apartments has not picked up to the same degree. “We’ve seen an improvement in condo sales in specific areas, however in many communities the market continues to favour buyers due to inventory levels that remain elevated and buyer preference for homes that offer more space and amenities.

“Last month in the Fraser Valley, 60 per cent of our residential sales were single family detached homes and we’re starting to see that preference reflected in prices. Prices are up three per cent over the past year, even higher in the most sought-after communities and most of that increase has taken place in the last six months.”

The benchmark price as determined by the MLS® Home Price Index (MLS® HPI) of a single family detached home in Fraser Valley increased 3.1 per cent in one year. It went from $549,200 in May 2013 to $566,400 last month.  

In May, the benchmark price of a Fraser Valley townhouse was $297,300, a decrease of 0.2 per cent compared to $298,000 in May 2013. The benchmark price of an apartment decreased by 2.6 per cent year-over-year; going from $203,400 in May of last year to $198,100 in May 2014. 

In May, the Board received 3,218 new listings, an increase of 2 per cent compared to April and 1 per cent more than were received during the same month last year. The new inventory took the number of active listings in Fraser Valley to 9,870, a decrease of 7 per cent compared to the volume available in May 2013.

Werger says, “Our home supply is the best it’s been since last fall, with the highest demand for priced-right, quality properties. If your home fits that description, anticipate a lot of interest.”

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The Fraser Valley Real Estate Board is an association of 2,795 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%20201405.pdf

It’s Friday and since we heard Bank of Canada Governor Stephen Poloz mention that it’s unlikely rates are increasing any time soon (article below) it’s a good day to talk variable rate mortgages. Yes, not everyone can qualify at the BOC 4.99% rate and some clients prefer fixed rates  – but there are still lots out there who prefer this option (roughly 35% of the market)

Perks of Variable Rate Mortgages:

•  Lower payments
•  Paying down principle faster
•  Lower penalty if the mortgage is broken (3 months interest)
•  Can convert to a fixed rate mortgage at any time without penalty

We have some great options for those Variable Rate Clients – 4yr at P-55% // 5yr at P-50% and our Lendwise 5yr at P-55% with stricter underwriting guidelines.

IMPORTANT REMINDER — May 1st is the deadline for when the new insurance premiums go into effect.  Which means the deals need to be underwritten and sent to CMHC/GW by Wednesday April 30th at 9pm Pacific Time.  Thanks, Cindy and Amanda

Canadians still prefer fixed rates

by Jamie Henry | 21 Apr 2014

Brokers may be touting the advantages of variable-rate mortgages but more and more Canadians believe fixed-rate options are preferable in the current environment.

“Even though we’ve had a relatively stable rate environment for a number of years, Canadians are being prudent when it comes to mortgage planning and are factoring in the possibility of higher rates in the near future,” Barry Gollom, vice-president, secured lending and product olicy at CIBC said in an official relase. “With fixed rates near historic lows, Canadians see an opportunity to lock in for a number of years in order to reduce the risk of expected higher interest costs.”

CIBC conducted a Nielsen Consumer Insights survey of 1,005 Canadians between February 6-10. The survey found that 48 per cent of Canadians would choose a fixed rate mortgage if they had to make the decision today, compared to 31 per cent who would choose variable. 19 per cent were undecided.

“For those that have recently taken out a mortgage, and may have additional expenses or hold other debt, the predictability of a fixed mortgage rate may be more appealing,” Gollom said.  “However those who have paid off a sizeable portion of their mortgage are likely less sensitive to rate changes.”

The survey also found that 47 per cent of Canadians believe rates will increase in the next 12 months, up from 38 per cent from last year.

“The poll also revealed that younger Canadians were even more likely to choose a fixed mortgage, with 56 per cent of Canadians aged 25-34 saying they would lock in to a fixed rate today, a number that has been steadily increasing over the last four years,” the release states. “In contrast, more established homeowners (aged 45-54) were among those less likely to lean towards a fixed rate (43 percent).”
 

Broker debate: reverse mortgages

by Jamie Henry | 01 Apr 2014

They are becoming more popular but brokers are divided on whether reverse mortgages are the best option for aging clients looking to take advantage of equity in their homes.

“I can understand why many homeowners would be attracted to this type of finance as it’s a fixed rate compared to a HELOC, and it’s a way of getting cash quickly if you are going through a financial patch, but it’s not ideal, especially if you want to sell in the future,” Marc Abramovitz from Northwood Mortgage and founder of ilovemymortgage.ca said. “There are a lot of other options available and homeowners really need to do a lot of due diligence and get independent advice before signing up for this.”

With house prices out of reach and desperate to get their hands on hard cash quickly, many homeowners are expected to use reverse mortgages to help their offspring buy their first property.

And while reverse mortgages have been available since the introduction of the Canadian Home Income Plan in the mid-1980s, very few financial lenders have openly offered the product. However, with an aging population and dependent children needing help with down payments, there has been a report of rising interest in this financial method.

“I am seeing a lot more use and interest in reverse mortgages, especially for those who are in difficult situations,” Abramovitz said. “For example, one my clients had no mortgage on her home, and needed cash to reinvest back in her house. Her only other was to sell the property so a reverse mortgage was the best solution.”

For his part, Terry Kilakos of North East Mortgages believes reverse mortgages can be beneficial for older clients who require money and have paid already paid off their homes.

“I think it’s a good tool to have to offer older clients; I don’t compare them to HELOCs; they’re a different tool altogether,” Kilakos said. “People also have the option of taking the reverse mortgage in either a lump sum payment or (staggered) payments.”

These staggered payments can be treated like a paycheque in the event that a pension is not providing enough income.

Lenders rarely give reverse mortgages to borrowers younger than 62 years-old while the loan-to-value ratio can be as low as 25 per cent after accounting for closing fees. The mortgage can be paid off from the proceeds of the home’s sale, or by the estate in the event of a client’s passing.
 

Rate hike expected to affect affordability in many markets

by Jamie Henry | 25 Feb 2014

In its latest housing affordability report, the Royal Bank of Canada predicts interest rates will soon rise; putting housing affordability in many markets across the country in jeopardy. Should brokers expect an influx of business in the short-term?

“RBC anticipates that as longer-term interest rates begin to moderately rise, the costs of owning a home at market value will gradually outpace (growth) household incomes by late-2014, leading to strained affordability in several markets across Canada, much like the trend in Toronto,” RBC chief economist Craig Wright said in the report.

Brokers may not despair just yet, however, with homebuyers looking to take advantage of current low rates before the inevitable hikes. The report was published on the heels of a number of brokers and one credit union posting sub-three per cent five year fixed rates; marking record lows for the past six months.

Still, the Royal Bank predicts the overnight rate will remain at its long-standing one per cent for the rest of the year.

“While we expect the Bank of Canada to leave its overnight rate unchanged in 2014, we forecast an upward drift in bond yields-the main driver of fixed mortgage rates-ahead of what is likely to be a gradual pace of policy tightening by both the Fed and the Bank of Canada,” Wright said.

If the forecast proves correct, it will mark the greatest change in affordability since 2010.

“The relative strength in income gains in Canada offset the minor increase in homeownership costs in the final months of 2013, meaning that homes were more affordable for those looking to buy,” Craig Wright, senior vice-president and chief economist said in the report. “When you look at Canada’s year-on-year affordability trend, 2013 was little changed from 2012, and even from 2011 or 2010, for that matter.

“That being said, this stationary trend also means that a divergence still exists – owning a detached home at market value is more of a stretch for homebuyers than owning a condo.”
 

Fixed rates to remain low until 2015 spike

• by MBN | 10 Feb 2014
  
  The Canadian Mortgage and Housing Corporation is forecasting fixed-interest rates increases in 2014, though brokers can breathe a sigh of relief as rates are still expected to remain historically low.

  “According to CMHC’s base case scenario for 2014, the average for the one-year posted mortgage rate is forecast to be within 3.0 per cent to 3.50 per cent, while the average for the five-year posted mortgage rate is anticipated to be within 5.25 per cent to 5.75 per cent,” CMHC states in its first quarter 2014 housing outlook.

  And while interest rates are expected to eventually climb, the crown corporation believes low rates will allow the housing market to continue to thrive.

  “Consistent with a somewhat higher economic growth prospect, interest rates are forecast to register gradual and modest increases by the end of the forecast horizon, ultimately leading to a slight increase in mortgage rates,” the report states. “Nevertheless, this interest rate outlook will continue to support housing market activity over the forecast horizon, as mortgage rates will remain low by historical standards.”

  However, next year will see a slight spike in interest rates, with 2015’s average five-year fixed rate expected to hover between five and six per cent.

  “For 2015, the average for the one-year posted mortgage rate is expected to rise and be in the 3.75 per cent to 4.25 per cent range,” the report states. “While the average for the five-year posted mortgage rate is forecast to within 5.50 per cent to 6.25 per cent.”
   

The high-end luxury market in Canada continues to defy the critics, according to new figures.

Monday, 23 December 2013 02:50

Written by  Grainne Burns

Investors should calm down and carry on in 2014. That is the word from Scotiabank who are playing down the so-called risks that may affect market conditions next year.

The big risks – high household debt, affordability issues and muted wage growth – should not pose a serious threat to the Canadian housing market in 2014, despite what the naysayers say.
That is according to the new Global Real Estate Trends report by Scotiabank Economics. They say that improving global growth, attractive borrowing costs and population growth in key demographic segments should be enough to support housing demand next year.

The rental market will also remain strong in 2014 thanks to the “widening cost premium between owning over renting” in major centres. However, they do warn that vacancy rates “could edge up next year alongside an increase in supply from recently completed investor-owned units.”

Alberta, in particular, is tipped to outperform national housing markets.

Scotiabank is also expecting a moderately lower level of resale transactions next year with home prices also remaining relatively flat. “Downside price risk is greater in the more amply supplies high-rise segment than for single-family homes,” the report says. Investor interest in renovation projects may also wane in 2014 as more people focus on their spending and general pricing environment.

Published in News

Brokers beware of young buyers driving Audis

by Justin da Rosa | 06 Jan 2014

Finance Minister Jim Flaherty said on CTV’s Question Period Sunday that he is monitoring the state of the housing market and is willing to intervene in the mortgage default insurance industry again if the need is felt.

“I talk to people in the condo business and I talk to people about houses and I keep track and we’ve tightened the rules four times on mortgage insurance and if we have to tighten them again, we will,” Flaherty said. “We have to be vigilant because that market is really important for jobs in Canada.”

However, in a bit of good news for brokers who fear the government setting up further roadblocks between their clients and potential mortgage approvals, the minister also intimated that he believes the past rule tampering has helped the market achieve a soft landing.

“What we’ve been trying to manage, to the extent that governments can manage, the housing market is a soft landing that, that gradual reduction,” Flaherty said. “We’ve seen that; we’ve seen some softening in the housing market, including the condo market.”

Concerning personal debt, Flaherty indicated a similarly improving outlook.

“When you look at the debt to net-worth: As long as the housing market remains relatively strong we don’t really have a debt issue,” the minister said. “I worried about it when it came to housing, certainly, because some of the house builders and condo builders were telling me about young people graduating and buying way more house than they needed and driving up in and Audi and all that general stuff … so that worried me but, as I say, that market is calming somewhat.

“So I’m less concerned than I was.”

And homebuyers may continue to be driven to buy now rather than later, with Flaherty admitting there will be “pressure” for the central bank to raise interest rates.

“The OECD and the IMF have both said to Canada we ought to let our interest rates go up a little bit,” Flaherty said. “So there will be some pressure there to let that happen.”

News Release: January 3, 2014

FRASER VALLEY’S HOUSING MARKET QUIET, YET STABLE IN 2013

(Surrey, BC) – Neither predictions of a huge crash or notable recovery came to pass in 2013 as Fraser Valley’s real estate market stayed slow and steady, similar to 2012’s market.

Fraser Valley’s total sales volume last year was 13,663 a decrease of 1.5 per cent compared to 13,878 in 2012. Over the course of the year, Fraser Valley REALTORS® listed 29,338 properties on the Multiple Listing Service® (MLS®), a 5.4 per cent decrease compared to 2012’s 31,009 listings. The number of active listings at year’s end finished at 7,541, 5 per cent higher compared to 7,187 active listings in December 2012. 

Ron Todson, President of the Fraser Valley Board, says, “It wasn’t the best of years, nor was it the worst. Generally speaking, 2013 overall was quiet. Earlier in the year, our market felt the impact of the tighter mortgage regulations, rebounded some in the summer and then flattened again come fall.

“The positive for both buyers and sellers has been the stability in home prices. Although our sales last year were amongst the lowest they’ve been in last decade, we didn’t see significant price declines because our inventory also remained lower. When both buyers and sellers take a breather it has a balancing effect on the market where neither has the upper hand.”  

In December, the benchmark price of a detached home in the Fraser Valley was $549,500, an increase of 1.9 per cent compared to $539,000 in December 2012 and a decrease of -0.1 per cent compared to November.

For townhouses, the benchmark price in December was $293,300, a decrease of 1.0 per cent compared to the same month last year when it was $296,400 and up 0.3 per cent compared to November. The benchmark price of apartments in December was $192,600, a decrease of 3.7 per cent compared to December 2012 when it was $200,100 and a decrease of 1.8 per cent compared to November.

Annual average prices year over year show detached homes up 3 per cent – $615,852 in 2013 compared to $597,608 in 2012. Townhome average prices decreased by 0.7 per cent, going from $340,253 in 2012 to $337,811 in 2013 and the average price of apartments decreased by 0.4 per cent going from $220,033 in 2012 to $219,196 in 2013.

For the month of December, property sales were down compared to November, as is the seasonal norm – 890 compared to 986; however, they were a 34 per cent improvement over the 664 sales in December 2012.

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The Fraser Valley Real Estate Board is an association of 2,769 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%20201312.pdf