Posted on July 27, 2010 at 01:21:21 PM by Audrey

BCREA

Housing Market Favours Buyers

Vancouver, BC – July 15, 2010. The British Columbia Real Estate Association (BCREA) reports that Multiple Listing Service® (MLS®) residential sales in the province declined 23 per cent to 7,722 units in June compared to the same month last year. On a seasonally adjusted basis, MLS® residential unit sales in the province declined 5 per cent in June from May 2010. The average MLS® residential price climbed 8 per cent to $499,908 in June compared to the same month last year.

“Market conditions have shifted from balanced conditions at the start of the year to a buyers’ market this summer,” said Cameron Muir, BCREA Chief Economist. In June, there was 9.3 months of supply on the market given current sales activity, up from 5.6 months in January 2010. “Tighter credit conditions for homes with secondary suites and low equity home buyers have moderated consumer demand,” added Muir.

Year-to-date, BC residential sales dollar volume increased 31 per cent to $21.4 billion, compared to the same period last year. Residential unit sales rose 17 per cent to 42,343 year-to-date, while the average MLS® residential price climbed 13 per cent to $504,281 over the same period.

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Posted on July 12, 2010 at 03:38:09 PM by Audrey

Kamloops Daily News

They build them big these days, don't they? Houses, that is.

Just a few generations ago it seemed 1,000 square feet was all a family needed. Now, average seems more like 3,000 square feet and there's no end in sight.

Local bylaws currently state the footprint of a house cannot cover more than 40 per cent of the lot. That means on an average city lot, a two-storey house with a basement can easily hit 4,000 to 5,000 square feet, all floors in. A big city lot — a quarter-acre lot, for example — could legally support a 10,000-square-foot home.

These so-called "monster homes" are a growing concern for City planners who have long realized bigger houses usually draw more services and require more development infrastructure. Five toilets and showers in five bathrooms can draw a lot more water than two.

Randy Lambright said planners wanted development cost charges pegged to the size of houses for that reason. As it is now, developers pay the same no matter what size the house is. City council chose not to adopt the change, however, and the status quo remains.

But planners are looking at the current sizing bylaws, to see how best to manage the growth of monster houses, he said. The first step in the process will see his department clarify the maximum height bylaws so they are well understood.

That reflects the fact that big houses can have impact on their neighbours as well, by blocking views and changing the dynamics of the neighbourhood.

A recent dispute before City council highlights that fact, as neighbours in the Powers Addition complained about a "monster house" being built in their cluster of smaller homes.

There are many neighbourhoods where big homes overshadow smaller homes, said Lambright — Batchelor Heights being one of the most notable. There, newer large homes on the higher heights of land tower over their older neighbouring homes down below.

The differences in size are stark.

Lambright said dealing with the size of homes by way of changes to bylaws is a much trickier issue than restricting heights.

In some areas, larger homes fit in fine, he said. In some they do not. The ideal way to handle some of these issues would be with restrictive neighbourhood design guidelines, but municipalities are not allowed to impose such measures.

The issue is made more complex by the fact lot sizes vary by neighbourhood. In Valleyview, Brocklehurst and Westsyde, there are larger-than-normal lots, often mixed in with smaller ones.

In many cases, these larger lots predated amalgamation, when residents needed to maintain septic fields. To develop size regulations that would provide meaningful controls could literally require neighbourhood-by-neighbourhood control.

"It's very site specific. That's the challenge," he said. "It's going to require a little more work. Is 40 per cent (lot coverage) too much? In some instances it is not, but then in some instances it is."

Brian Hayashi, vice-president of the Canadian Home Builders Association in Kamloops, said the monster home trend might correct itself as construction costs increase and people become more environmentally conscious.

Hayashi said he's often wondered how much home a family needs. He grew up in a 1,000-square-foor house, as did so many of his generation.

"It's a bit of a mystery to me," he said. "Even at 3,000-square-feet, I wonder what people are doing with all the space?

"I personally have some reservation about why we are building such (monster) houses — I don't understand it. I think it's just a fashion trend."

He said more people are realizing performance of a home is more important than its size. Monster homes draw great amounts of energy to heat and cool. As energy efficiency gains importance in home design, people are once again realizing there is value in smaller buildings.

So who builds and buys monster homes?

Craig McIntyre, the president of the Kamloops and District Real Estate Association, said big houses are clearly market driven — builders are supplying what consumers want.

There seems to be two groups interested in big homes — those who have large extended families living with them and those with none.

Some families have more than one generation living under the same roof, so they build homes with more space. The other class of big-home builders are, ironically, the empty nesters, who find they have the money and desire to build their dream homes. These are people who might have raised their families in smaller homes and now want more.

"They have the money to do this, they have the money to spend. It appears they want to do it," he said.

So they build them. Big. Then they discover they have to live in them, maintain them, heat them, cool them and keep them clean. And they discover another reality — big homes are a lot of work. So they sell them and seek out something smaller.

McIntyre said he expects the trend could well return to smaller more livable homes, especially as "green" values take root.

As well, he expects the issue will appear more frequently before City councils as people oppose the emergence of monsters in their midst.

"If taxpayers don't like it, they can lobby council," he said.

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Posted on July 12, 2010 at 03:34:09 PM by Audrey

Kamloops Daily News

When it comes to the HST and real estate, consumer uncertainty reigns supreme.

But the much-despised tax will likely not impact the real estate market much, despite the widely held perception on the part of consumers that the HST is pure evil.

During a market analysis session at the Kamloops head offices of the Bank of Montreal Tuesday, BMO economist Michael Gregory said the HST, set to come into effect July 1 in both B.C. and Ontario, has already had some impact on real estate markets.

In both provinces, the looming implementation of the combined provincial and federal sales taxes has pushed buyers into the market earlier than they might otherwise have jumped in.

As a result, the spring selling season has ranged from warmer than usual in Kamloops to downright overheated in major markets such as Toronto and Vancouver.

But Gregory said the beat-the-HST rushes will soon end and a lull will follow. That downturn will continue through the rest of the year, he added.

That doesn’t mean the HST is an overall drag on real estate, he said. The tax has simply shifted buyers to the early part of the year. Once the numbers are crunched at year’s end, the impact will flatten out.

The HST will be felt most on new homes, which will be subject to the full HST, and existing homes above $525,000. Pre-existing homes below that level will not be subject to the tax.

Perceptions of the HST aside, the fact is Canada’s economic foundation is strong, said Gregory. The economy and job creation are on the rise in all parts of Canada.

Those factors ultimately have more impact on housing sales than the HST will ever have. If the financial fundamentals stay strong, so will markets.

It may take six months for people who have shied away from buying now because of the HST to get back into the market, but they will return, Gregory predicted.

“It’s only a matter of time,” he said. “It could be enough to postpone their desire until they have a little extra savings.”

Dick Pemberton, president of the Kamloops and District Real Estate Association, agrees. He said the Kamloops market is strong, despite the potential for a short-term HST lull, and he does not expect the HST will matter much in the end.

There are other more pressing factors that will affect the market before the HST, he said, including the potential for increased mortgage rates in the coming months.

Higher borrowing costs affect affordability, he noted.

The HST will see consumers charged more for all the professional services around the house-sale process — everything from legal fees to realtor commissions.

Will the HST force people to pay more for those services? Not necessarily, Pemberton said. He expects it’s likely consumers will be able to negotiate new deals with the professionals they deal with to compensate, at least in part, for the added cost of the tax on services.

Pemberton said of all the taxes the real estate market contends with, the HST means nothing compared to the impact of B.C.’s property transfer tax, which has been in place since 1988, when it was introduced by Socred Premier Bill Vander Zalm.

The transfer tax thresholds remain at the same levels they were in 1988, Pemberton said. Then, it was seen as a luxury tax. Today, due to the rise in property values, the tax affects more than 88 per cent of home sales in B.C.

The tax badly needs an overhaul, Pemberton said. Raising the threshold levels from the current $200,000 ceiling to $525,000 would immediately benefit consumers and make housing more affordable.

“Any tax that erodes affordability is a concern,” Pemberton said.

Darryl Caunt, president of the Kamloops chapter of the Canadian Home Builders Association, said many builders are not yet certain how the HST will impact them.

“We are still seeking some clarity,” he said. “The HST — it’s a risk. The HST will affect us, because it (affects) the affordability of the product. It’s a cost to the consumer.”

Of more concern than the HST is the level of inventory in Kamloops, he said. Typically the Kamloops market has shown it can absorb no more than about 120 new homes a year.

The city has already seen that many housing starts this year, raising the spectre of a competitive new home market as the year winds down.

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Posted on May 19, 2010 at 10:21:31 AM by Audrey

The Globe and Mail

House prices will increase this year and next despite the challenges posed by higher mortgage rates, Canada Mortgage and Housing Corp. said Wednesday.

An “improved balance between demand and supply” will stabilize prices through the rest of this year, it said in its second quarter Housing Market Outlook. Prices will “rise modestly” in 2011, it said.

The agency, which insures almost $500-million of Canadian mortgages, said the average cost for a home by the end of 2011 should be $350,000. That would be a gain of 1.4 per cent over April’s record high of $344,968.

Forecasting higher prices next year puts it at odds with both the Canadian Real Estate Association and Toronto-Dominion Bank, which are calling for prices to drop by 1.5 per cent and 2.7 per cent respectively in 2011.

“It all comes down to the economy and what we’ve seen so far this year is a strong end to 2009 and through 2010 we’ve seen some effects from various fiscal measures,” said senior economist Bill Clark. “There was a big April gain in employment, and as the economy gets moving again people become more interested in housing.”

While prices have rebounded strongly from the recession, economists have warned that higher mortgage rates and tougher qualification guidelines could price would-be homeowners out of the market in the second half of this year.

While prices were up some 12 per cent year-over-year in April, the number of listings increased by 100,000 units and helped temper the frantic market. Sales slipped 2.6 per cent, the third time in four months they declined. CMHC attributed much of the sales activity in the first half of the year to pent-up demand, as buyers returned to the market after sitting out during the recession.

“Once this demand is exhausted, and as mortgage rates gradually rise, the pace of activity in the resale market will ease,” said CMHC economist Bob Dugan.

CMHC forecast that between 484,000 to 513,300 houses will sell in 2010, and then slide back slightly in 2011 to between 443,500 to 504,900.

The agency also said that after building 149,081 units in 2009, builders should construct between 166,900 to 199,600 units in 2010. In 2011, it said housing starts would hit between 148,600 to 208,800 units.

“Canadian housing markets have recovered from the low levels posted in early 2009,” said Mr. Dugan.. “Moving forward, housing starts will moderate as activity becomes more in-line with long term demographic fundamentals.”

It has been difficult to accurately make forecasts on the housing market through the recession, however. Its forecast for 2009 housing starts was off by 19.4 per cent. The agency was only off by 1.5 per cent the prior year, and its goal is to always be within 10 per cent of the actual figures.

“For the first time in several years, our forecast accuracy was not within the 10 per cent range because of volatile market conditions,” it said.

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Posted on May 11, 2010 at 10:29:00 AM by Audrey

Kamloops Daily News

The real estate industry is facing an uphill battle trying to convince cash-strapped senior governments of tax reforms to make homes more affordable.

Executive members of real estate associations — including Dick Pemberton and Brian Ledoux from Kamloops — met recently with political representatives in Victoria and Ottawa.

They made a case in Victoria for either eliminating the property transfer tax (PTT) or having it indexed for inflation.

B.C.’s PTT is the highest in Canada. The tax was introduced in 1988 as a luxury tax under then-premier Bill Vander Zalm yet it was never indexed, said Dick Pemberton, president of Kamloops and District Real Estate Association.

Since then rising values have thrown its original structure out of balance, creating a significant barrier to affordability.

“We’re hoping for incremental change, but it won’t be quick,” Pemberton said.

The PTT has always been levied on a two-tiered basis, with one percent charged on the first $200,000 of market value and two per cent charged on the balance of the purchase price. In 1988, only five per cent of the homes sold were in the higher-tax category. Now that figure stands at 88 per cent of homes sold.

The B.C. Real Estate Association is also asking that the HST rebate threshold of $525,000 be indexed for inflation.

In Ottawa Pemberton and his counterparts from across the country sought to have the amount first-time buyers are permitted to withdraw from their RRSPs indexed to inflation.

They also asked federal representatives again to allow deferral of the capital gains tax when a property is sold and the proceeds are reinvested within one year. As it stands, the tax is a disincentive to reinvestment, the realtors argued.

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Posted on May 11, 2010 at 10:28:00 AM by Audrey

Kamloops Daily News

New home construction in Kamloops rebounded during the first quarter of 2010, a strong indicator the recession is history.

Housing starts have risen 88 per cent over this same period, consistent with upswings reported in Kelowna and Penticton. In April alone there were 26 new-home starts in the city compared to 18 last April.

“Keep in mind you’re comparing it to very low levels last year,” said Paul Fabri, CMHC market analyst.

Even so, the Kamloops market weathered the recession better than other Interior centres, he noted.

“The low point last year wasn’t as low as Kamloops has recorded in past new-housing downturns,” he said. “Kamloops did weather it better than most, especially Kelowna.”

Kamloops wasn’t oversupplied with new construction of apartment/condominiums in the same way Kelowna was with its recreational and second-home market. That sector is more vulnerable than others to economic shifts.

There were 211 housing starts, including single-family and multiple-family homes, in Kamloops in the first quarter of the year compared to 112 in the first quarter of 2009.

Nationally, April housing starts edged up to 201,700 units, seasonally adjusted at annual rates (SAAR), from 199,200 units in March. In urban B.C., the seasonally adjusted annual rate of housing starts rose to 25,600 units (SAAR) in April from (22,000) units SAAR the previous month.

Several factors are helping to invigorate the new-homes market overall, he noted. Interest rates remain relatively low, despite the recent increase, and construction costs are lower now than at any time in the last five years. That’s due to a correction in the market as a result of the downturn.

There is an anticipatory factor helping to drive the current pace as well, Fabri said.

“I think some people are building now in anticipation of higher interest rates later this year, and the same goes for the HST.”

Some local builders are hurrying to get their products on the market before the HST takes effect July 1, said Dick Pemberton, president of Kamloops and District Real Estate Association. However, most properties in Kamloops will be priced below the $525,000 threshold for rebates, he noted.

Sales were down marginally in April but have increased 33 per cent overall since last year.

“Our agents are pretty busy right now,” he said.

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Posted on April 13, 2010 at 10:19:00 AM by Audrey

The Kamloops Daily News

The Kamloops housing market rebounded strongly from last year’s recession, recording almost double the number of housing starts from the first quarter of 2009.

Canada Mortgage and Housing Corp. reported Monday work began on 33 single-family houses and 101 multi-family units in March. That boosted the total for the year in both categories to 185.

CMHC analyst Paul Fabri said new home buyers are taking advantage of low interest rates and lower construction costs.

The number of single-family homes under construction in Kamloops jumped from 13 in the first quarter of 2009 to 74 in the same period this year.

Kamloops recorded the lowest level of construction increase compared to Penticton, Kelowna and Vernon

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Posted on April 06, 2010 at 01:24:00 PM by Audrey

The Vancouver Sun

Buying a house in the hot housing markets of Vancouver, Toronto and other major cities in recent years has been a possible dream for some first-time homebuyers only because many of those houses had suites they could rent out.

But new rules coming into effect April 19 will all but wipe out that advantage in the eyes of banks handing out mortgages.

"It makes it much more difficult for people with rental properties to qualify for their own mortgage on their personal residence," said Vancouver mortgage specialist Patrick Mulhern.

The new regulations are designed to prevent speculation in the market, said Jack Aubrey, of the Canada Mortgage and Housing Corporation.

But Vancouver mortgage agent Mike Averbach said the new rules will do little to prevent investors from gambling in the housing market.

"They haven't decreased risk," he said. "They're just not allowing you to use the income."

Currently, landlords can use 80 per cent of their rental income to offset monthly mortgage payments. That means, if they receive $1,000 per month in rental income, they can use $800 to offset a $1,200 mortgage payment, leaving only $400 to be debt financed.

But under the new rule, only 50 per cent of a landlord's rental income will be used. Even then, that money will not be used to offset their monthly mortgage payment. It will be added to their total income, forcing them to qualify for the entire monthly mortgage.

For instance, a person earning $100,000 per year in regular income plus $12,000 per year in rental income will have a total income of $106,000 with which to qualify for a mortgage on their own home.

Rental income is essential for many of his clients, Averbach said.

In cities like Vancouver, where the average home price in February was more than $662,000, rental offset is the only way many people can qualify for a mortgage and the new rules will keep many of his clients in condos rather than houses, he said.

"Putting a renter in your basement is not speculative, it's reality," he said. "It helps you pay your mortgage."

The rule changes also make it more difficult for people to buy a property separate property to use as a revenue generator.

CMHC will no longer offer high-ratio financing on rental property not lived in by the owner. That means someone looking to buy a house as a rental investment will have to come up with a 20-per-cent down payment on the property, as opposed to five per cent before the rules changed.

The changes haven't worried groups advocating for tenants.

Jeordie Dent, of the Federation of Metro Tenants' Association in Toronto, where vacancy and availability rates have dropped over the last year, said he doesn't see a negative impact on renters.

Instead, he said his group welcomes the changes.

Dent said too many people become landlords without the financial or intellectual wherewithal to properly manage their properties.

"Anything that strengthens mortgage rules, from our perspective, is a good thing."

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Posted on March 30, 2010 at 01:57:33 PM by Audrey

CTV News Staff

Two more of Canada's big banks have raised their mortgage rates, with industry watchers saying this is likely just the beginning of a cycle of rate hikes that could see the cost of financing a home rise by 1.5 per cent within the next year.

CIBC and National Bank announced Tuesday they are raising rates on their closed mortgages with terms of three, four and five years, as of Wednesday. This follows similar moves Monday by three other banks -- RBC Royal Bank, Laurentian Bank, and TD Canada Trust. Those rate hikes took effect today.

All four banks are hiking their posted rate on five-year terms by six-tenths of a per cent to 5.85 per cent from 5.25 per cent.

That means a homeowner taking on or renewing a mortgage of $250,000 at the new posted 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 $1,489 a month -- $88 less.

Rates on three- and four-year fixed-rate mortgages also rose by between 20 and 40 basis points, depending on the bank.

Rates for shorter-term mortgages tend to reflect the banks' borrowing costs on bond markets, explains Business News Network's Mark Bunting. He notes that the banks – and everyone else – are expecting the Bank of Canada to raise interest rates this summer and that will affect bonds.

"In anticipation of that, we're seeing bond yields rise, government bond yields are moving higher, and mortgage rates are largely pegged to bond yields," he explained to CTV News Channel Monday night.

"The big banks fund their operations by selling their own bonds, and investors are demanding a higher payment for those bonds. So it's getting more costly for banks to fund their operation, so of course, they pass those higher costs on to consumers."

Kelvin Mangaroo, the founder of RateSupermarket.ca, a website that lets consumers compare mortgage rates, notes that for now, variable mortgage rates haven't budged.

"Fixed rates and variable rates are influenced by different factors," he pointed out to Canada AM Tuesday.

While fixed rates are influenced by government bond yields, variable rates are influenced by the Bank of Canada's overnight lending rate. Assuming the inflation rate stays steady over the coming months, the anticipated Bank of Canada lending rate hikes are still a few months off, Mangaroo said.

"If economic conditions stay as they are, variable rates could stay pretty steady until the summer," he said.

Still, that will change soon enough, since the long period of historically low home-borrowing costs that Canadian homeowners have enjoyed for years is likely coming to an end.

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. But with indications that the economy is steaming ahead again, the bank needs to keep inflation in check with higher interest rates.

BNN's Michael Kane says while the mortgage rate increases this week will be small, rates will almost surely continue to rise over the next few months.

"The latest guess I have from one economist I spoke to was that once the Bank of Canada starts raising the benchmark lending rate, about a year from now, we could be 1.5 per cent higher than we are right now," he predicted to Canada AM Tuesday.

The rate hikes should help dampen the hot housing market seen over the past several months.

But Gregory Klump, chief economist at the Canadian Real Estate Association, says even though mortgage rates are rising, they are still relatively low in the greater historical context.

"Even with interest rates expected to rise over the second half of this year, it's going to be a while before mortgage rates are basically neutral. Even with interest rates rising they're still going to be stimulative; just not as much," he told The Canadian Press.

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Posted on March 18, 2010 at 03:52:39 PM by Audrey

CREA

February Home Sales Strong Despite Olympic Fervor

Vancouver, BC – March 11, 2010. The British Columbia Real Estate Association (BCREA) reports that Multiple Listing Service® (MLS®) residential sales in the province climbed 63 per cent to 5,955 units in February compared to the same month last year. On a seasonally adjusted basis, MLS® residential unit sales in the province declined 13 per cent compared to January 2010.

“Home sales continued to moderate in February after the record pace of the fourth quarter.” said Cameron Muir, BCREA Chief Economist. “However, February’s performance was better than expected considering many households were preoccupied with Olympic gold.”

The BC residential sales dollar volume increased 91 per cent to $2.96 billion in February compared to the same period last year. The average MLS® residential price climbed 17 per cent to $497,807 over the same period.

“Low mortgage interest rates are continuing to underpin consumer demand and fuel first-time homebuyer activity,” added Muir. “Improving economic conditions are expected to bolster consumer confidence over the coming months.”

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