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U.S. Housing Market Shows No Relief.
 
The U.S. housing market recession continues in full swing, with home sales running at least 20% slower than a year earlier, prices posting significant yearover-year declines and the stock of homes for sale holding well above historical norms. Residential investment fell at a 24.6% annual rate in the first quarter after plummeting 25.2% in the fourth quarter of 2007 and subtracted a sizeable 1.1 percentage points from economic growth in the first quarter of 2008.
 
Foreclosures were up in April and delinquencies are continuing to rise. RBCs forecast assumes that the recession in this sector will continue through 2008. In 2009, the combination of lower interest rates and lower house prices is expected to reduce the inventory of homes for sale to more normal levels, which should put a floor beneath new home construction after three years of significant declines.
  

The Canadian Housing market is losing its edge but not headed for a crash.

 
Canada's resale housing market showed signs of slowing early in the second quarter with sales off 1% from the first quarter of 2008 following three consecutive quarterly declines. However, sales continue to run well above the average pace of the past 20 years. While strong demand boosted prices, with gains of at least 10% in the past six years, the pace slowed to 3.2% in April. In contrast, new listings picked up in the first quarter and this trend continued into April, with listings in the major markets up 17.7% compared to a year earlier. Slowing in the housing market was expected and, to some degree, desired because affordability had been increasingly strained through 2007, with most major markets seeing affordability deteriorate to its worst levels since the early 1990s.

 

On the supply side, the high level of demand continues to support construction activity with housing starts running at an historically fast rate. The structural backdrop to Canada's housing market remains solid, with very limited sub-prime mortgage activity, a relatively small speculative sector and no significant supply overhang despite robust construction activity.
 
Affordability is also forecast to improve this year, with the Bank of Canada having cut the overnight rate by 150 basis points since last December, mortgage rate spreads showing some signs of narrowing and the pace of house price gains slowing.
 
Exerpts from Royal Bank of Canada Economic & Financial Market Outlook, July 2008. To read the complete report, visit http://www.rbc.com/economics/market/pdf/fcst.pdf.
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BC will outperform most other provinces in economic and job growth during the next two years.
 
Existing home sales will decline slightly as mortgage carrying costs rise in response to higher home prices and mortgage rates. Income and population growth stemming from tight labour markets will put upward pressure on existing home sales, lessening the decline.
 

BC will outperform most other provinces in economic and job growth during the next two years. This relative strength will translate into a high level of existing home sales, housing starts and house

prices.

 
Move-up buyers and people downsizing their residences will keep the number of resale transactions above the ten-year average. Existing home sales will decline during the next two years in response to high home prices, a rise in mortgage rates in 2009, and slower job growth.
 

High home prices will result in more homes being listed for sale. This increase in supply will slow growth in the provincial average MLS® price from the double-digit pace of the past four years. Centres where the local economy is more diversified and homeownership demand remains strong will record double-digit price gains again in 2008.

 
Fewer homes will be started as tight resale market conditions ease and potential homebuyers are more able to satisfy their housing needs in established neighbourhoods. Single-detached home starts will trend lower, as builders balance the high cost of land and building materials with what price conscious homebuyers will pay. Multiple-unit starts will account for the lion’s share of new home construction. With demand shifting to denser housing forms, more than sixty per cent of starts will be in multiple-unit housing developments. The large number of projects already in the construction pipeline in Vancouver and Kelowna will ensure multiple-unit starts will be at high levels.
 
Mortgage rates are expected to trend marginally lower throughout 2008, but will be  within 25-50 basis points of their current levels. For 2009, posted mortgage rates will begin to drift up slightly as the year progresses. For 2008 and 2009, the one-year posted mortgage rate is forecast to be in the 6.50-7.50 per cent range, while three and five-year posted mortgage rates are forecast to be in the 6.75-7.50 per cent range.
 
Exerpts from CMHCs Housing Market Outlook - British Columbia Region Highlights - Second Quarter 2008. For complete report, visit http://www.cmhc-schl.gc.ca/odpub/esub/65442/65442_2008_Q02.pdf.

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"...there is no evidence that the Canadian market is facing the kind of turmoil that has disrupted the United States."
 
The federal government said Wednesday that it is tightening the rules relating to government-guaranteed mortgages, even though there is no evidence that the Canadian market is facing the kind of turmoil that has disrupted the United States.
 
The new rules, set to take effect Oct. 15, are a "responsible and measured approach … to reduce the risk of a U.S.-style housing bubble developing in Canada," the Department of Finance said in a news release. However, it also said that Canadian creditors' "prudent and cautious approach" to mortgage lending, as well as sound supervision, have "allowed Canada to maintain strong and secure housing and mortgage markets."
 
The government said the measures will apply to new, government-backed, insured mortgages. "Canadians who already hold mortgages will not be affected," it said. The changes include:
  • Cutting the maximum amortization period to 35 years from 40.
  • Requiring a minimum down payment of five per cent, whereas loans for 100 per cent of the price are possible now.
  • Establishing a requirement for a consistent minimum credit score.
  • Introducing new loan-documentation standards.
The government acknowledged that the proportion of bank mortgages in arrears is stable at 0.27 per cent, "near the lowest levels experienced since 1990 and well below the highs of 0.65 per cent experienced in each of 1992 and 1997." And housing prices don't show evidence of speculation, the Finance Department said, because they are "in line with economic factors such as low interest rates, rising incomes and a growing population."
 

Mortgage insurance protects lenders when a borrower defaults by making up any shortfall needed to repay the loan if the sale of the property doesn't cover the debt. Federally regulated lenders must have mortgage insurance on loans where the buyer's down payment is less than 20 per cent of the price. The Canada Mortgage and Housing Corp. (CMHC), a Crown corporation, as well as private insurers provide mortgage insurance. The government backs CMHC and also private mortgage insurers so the private insurers can compete with CMHC.

 
Just over a year ago, Parliament passed a bill changing mortgage insurance to make home buying easier, and in 2006, CMHC eased the insurance rules.
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If the fluctuation of a variable becomes too much, there's also usually the option to lock in at any time.
 
Homeowners looking to renew their mortgages should resist the urge to lock in to a fixed-term mortgage in the face of rising rates if they can stomach the more nerve-wracking ride of a variable mortgage, experts say.
 
The prospect of a mortgage that rises and falls with prime rate changes may cause some unease, especially following the recent announcement by the Bank of Canada not to cut interest rates and the subsequent hike in mortgage rates by several of the country's biggest banks. But experts say variable rates may still be worth the trouble because they will save more in the long run. Many people who opt for fixed mortgages do so for the security of knowing what their payments will be every month, and may be spread too thin financially to afford much more. But variable mortgages often offer more flexibility, and have more pre-payment options for those wishing to pay their mortgages off faster.
 
"If it becomes important to pay off the mortgage faster, they can lose a little bit of those pre-payment options if they do fix in for a longer period of time," said Mark Olkowski, regional manager at Invis, one of Canada's largest mortgage brokers, noting that a fixed mortgage may allow for a 15 per cent pre-payment option, while variables are usually around 20 per cent or higher. If the fluctuation of a variable becomes too much, there's also usually the option to lock in at any time.
 
"Studies have shown that in general, the variable rate will cost you less, but there may be times, if rates go up fairly quickly for example, that you're going to be kicking yourself for not having locked-in," said Adrian Mastracci, president of KCM Wealth Management in Vancouver.
 
Mastracci suggests assessing the risk of your budget and income to help you decide which kind of mortgage to pick. Most economists are expecting prime to go up over the next 12 to 18 months, but some warn against basing too much of your decision on where interest rates may go in the future. Peter Veselinovich, vice-president of banking and mortgage operations at Investors Group, says individuals have to think of mortgages in broader terms than just a focus on where rates are at on any given day. Above all, Mastracci said, borrowers should focus on getting a mortgage that can be paid off as quickly as possible.
 
Courtesy of The Real Estate Weekly, THE source for Real Estate information, with 16 publications delivered to over 500,000 homes and Real Estate offices throughout the Lower Mainland each week.
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The federal government has introduced several new regulations for Realtors that go into effect Monday, June 23rd, to help detect and deter money laundering and the financing of terrorist activities. It is also to facilitate investigations and prosecutions of money laundering and terrorist activity financing offences.
 
How does this affect you? You will now be asked to produce government issued documentation, such as a drivers license or passport, to verify your identity for most real estate transactions. The information will be recorded and kept on file. All information recorded is held in strict confidence.
 
 
Among other things, real estate agents are now required to:
  • Collect personal information on all parties with a financial connection to a real estate deal;
  • Verify this information with proof of identity
  • Maintain these records for seven years
Failure to comply with the record keeping or client identification requirements can lead to criminal charges against Realtors and their brokerages. Conviction of failure to retain records could lead to up to five years imprisonment, to a fine of $500,000, or both. Alternatively, effective December 30, 2008, failure to keep records or identify clients can lead to an administrative monetary penalty.
 
For more information, visit the federal government's webpage regarding FINTRAC, The Financial Transactions and Reports Analysis Centre of Canada, at http://www.fintrac-canafe.gc.ca/fintrac-canafe/1-eng.asp.
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Many Realtors use telephones and door-knocking to find new business. We like to personally talk to people who may be selling or buying a home. After all, building a relationship with you and offering good customer service is how we do business. Being personable saves on the constant stream of impersonal and unaddressed flyers, postcards and form letters, not to mention a tree or two.
 
If you are like me, I dislike getting telephone calls and faxes that try to sell me something I didnt ask for and dont want. It can be intrusive, especially when its at an inconvenient time or its an aggressive sales pitch and a simple No thank you doesnt do the trick.
 
When I call or knock to see if youre selling your home, am I trying to sell you something you dont want? Lets face it, if youre not selling your home, thats the end of it. If you are considering selling and need the services of a Realtor, then I can offer that service to you. Its something you do want.
 
A Canadian DO NOT CALL List (DNC) will be implemented in September, 2008. Bell Canada has been awarded a 5 year contract to establish and maintain the list. Once launched, consumers will be able to register their cellular, fax, and landline numbers to reduce the number of telemarketing calls they receive for a 3 year renewable period.
 
If you receive a telemarketing call after sign-up, a complaint can be submitted to Bell Canada within 2 weeks. Telemarketers will face potential fines up to $1500 per call for individuals, such as Realtors, and $15,000 for companies, such as long distance sellers. Some groups will be exempt from being banned. Calls from political parties, registered charities, pollsters and newspapers will still be permitted.
 
The only exemptions for Realtors will be if a personal or existing business relationship is in place. An existing business relationship is defined as being formed by a voluntary two-way communication between the consumer and the Realtor. It exists when:
 
a) the purchase of services or the purchase, lease or rental of products, has occurred within the previous 18 months;
 
b) An inquiry or application has been made within the previous 6 months; or
 
c) A written contract has been entered into within the previous 18 months, (or a letter of permission has been signed).
 
As yet, its unknown how telemarketers will be able to access the list or what subscription fees will be charged. More information may be available at www.bell.ca/donotcall.
 
This will have a huge impact on Realtors and how they find new customers. Youll likely see more of us at your door or find more admail in your mailbox. I invite your comments.
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Growing Supply Helps Stabilize Market Conditions
From the Real Estate Board of Greater Vancouver.
 
VANCOUVER, B.C. – June 3, 2008
 
The Greater Vancouver housing market continued its re-balance between sales and listings last month. The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver declined 30.7 per cent in May 2008 to 3,002 from the 4,331 sales recorded in May 2007.

 

New listings for detached, attached and apartment properties increased 20.2 per cent to 7,390 in May 2008 compared to May 2007, when 6,149 new units were listed. New listings for detached, attached and apartment properties increased 20.2 per cent to 7,390 in May 2008 compared to May 2007, when 6,149 new units were listed.


“With more property listings and a decline in the number of sales, prices are not increasing as rapidly, now down to single digits overall, which is good news from an affordability standpoint,” said REBGV president, Dave Watt.  “The housing market is at a balanced state, sellers have more competition and buyers have more selection to choose from."
 
Sales of detached properties in May 2008 declined 33.4 per cent to 1,203 from the 1,805 sales recorded during the same period in 2007. The benchmark price, as calculated by the MLSLink Housing Price Index®, for detached properties rose 8.4 per cent from May 2007 to $771,250.
 
Sales of apartment properties declined 30.5 per cent last month to 1,244, compared to 1,789 sales in May 2007. The benchmark price of an apartment property increased 8.7 per cent from May 2007 to $389,668.

 

Attached property sales in May 2008 decreased 24.7 per cent to 555, compared with the 737 sales in May 2007. The benchmark price of an attached unit increased 9 per cent between May 2007 and 2008 to $478,931.

 

Bright spots in Greater Vancouver in May 2008 compared to May 2007:

 
Attached:

Coquitlam                                           up 45.2 per cent (45 units sold from 31)

Apartments:

New Westminster                               up 13.6 per cent (100 units sold from 88)

 

The Real Estate industry is a key economic driver in British Columbia. In 2007, 38,050 homes changed hands in the Board's area generating $1.065 billion in spin-offs. Total dollar volume of residential sales set a new record at $22.25 billion and total dollar volume of all sales set a record at $22.77 billion.
 
The Real Estate Board of Greater Vancouver is an association representing more than 9,500 REALTORS®. The Real Estate Board provides a variety of membership services, including the Multiple Listing Service®.
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MLS® sales in Metro Vancouver will come down off the near-record high reached in 2007, but stay well above the ten-year average of 31,000. Strong homebuyer demand, fuelled by job growth and a steady flow of people moving to the region will keep sales brisk. However, waning consumer confidence and high mortgage carrying costs will constrain home sales. MLS® sales will dip eight per cent to 36,000 units in 2008, and a further three per cent in 2009 as mortgage rates start to creep up.

The main factors tempering homebuyer demand will be high home prices and softening consumer sentiment. With the average resale home price in Metro

Vancouver at more than $600,000 and still rising, some potential buyers will opt to delay their purchase. Some low equity and first time home buyers could find it difficult to negotiate a mortgage with achievable monthly carrying costs, in spite of low mortgage rates. First time homebuyers are an important source of homeownership demand, particularly for apartment condominium units, making up more than one-third of people who bought a home in Metro Vancouver over the past year. The housing market collapse in some parts of the US has added uncertainty in consumers’ minds. This unease, combined with slowing economic growth in Central Canada and layoffs in the BC forest industry have contributed to lower levels of consumer confidence. Combined with mortgage rates above year-ago levels, these factors led to a decline in home sales in the first quarter of 2008 and will keep sales flat in the near term.


The supply of resale homes on the market will grow as homeowners look to capitalize on the home equity build-up resulting from four straight years of double-digit home price increases. The decision to sell may take on added urgency in light of the housing market downturn in the US. In the first quarter of 2008, the average number of active MLS® listings for sale in Metro Vancouver increased nine per cent compared to the same period last year, with the supply of apartment condominiums for sale increasing more than other home types. At the end of the first quarter there was a five month supply of homes on the market, up from four months one year ago. This level of supply is still shy of the seven to eight months supply that has characterized balanced market conditions historically in Metro Vancouver. Look for this trend of increasing listings to continue through the remainder of this year and into next.

The combination of moderating sales and more homes on the market will bring demand and supply conditions closer to balance and slow home price growth. Moderating sales and more homes on the market will mean fewer multiple-offers per property and more choice for homebuyers. Homes will take longer to sell as the market cools from the red hot pace of the past few years, and reflect a more normal pace. Home price growth will slow into the single digit range this year, with eight per cent appreciation in values forecast, and a further five per cent growth expected in 2009.



This is an article from CMHC's Housing Market Outlook - Vancouver and Abbotsford CMAs Second Quarter 2008. To read this report in its entirety, go to http://www.cmhc-schl.gc.ca/odpub/esub/64363/64363_2008_B01.pdf

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If you're looking for current real estate news, look no further than my website!
 
Visit the link Hot Off the Press! on www.lynhart.ca and find the most recent newspaper articles from The Vancouver Province, The Vancouver Sun and The Globe and Mail to read about the real estate market, renovating tips and even decorating ideas!
 
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by Kevin Diakiw - Surrey North Delta Leader - May 07, 2008

A real estate frenzy continues in North Surrey, where $23 million worth of apartments sold in less than four hours over the weekend. Almost 10,000 people registered for the third phase of Quattro, a residential apartment project near 108 Avenue and King George Highway. The 109 available suites sold in less than four hours.


“The energy for the sale was fantastic. The suites sold as quickly as we could offer them,” said Bill Morrison, partner of PilotHouse Real Estate Marketing, who has orchestrated all of the Quattro sales. “At least half the buyers intend to live in the suites they purchased, so it’s apparent people want to be a part of the new downtown area in Surrey with its close proximity to SkyTrain and other amenities.”


Saturday’s sell-out was the third wave of brisk buying at the development. Building one in Quattro sold out in February 2007 in four hours. Less than a month – and 7,500 registrants – later, building two sold out in an unprecedented 67 minutes. The first building is expected to be finished for occupancy this fall. Construction of the second building is well underway.

Quattro is a six-phase development located on 10 acres of property at the corner of 108 Avenue and East Whalley Ring Road in North Surrey. Suites in the third phase began at $139,900, and range from 407 to 1,215 square feet.


Condominium and strata property law in British Columbia can be complex. If you're ready to buy, be sure you know what you're getting into. Have a professional realtor advise you, regardless of whether the homes are new or re-sale.
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Prices Hold, but More Owners Want to Sell

by Jeff Nagel - Peace Arch News - May 08, 2008

A U.S.-style real estate meltdown shows little sign of coming here. House prices have kept climbing in much of the Lower Mainland in 2008 so far, market statistics released to the end of April show.

The benchmark detached house in Metro Vancouver climbed 5.6 per cent in price in the first four months of the year to $771,321. Townhouse prices are up on average 4.5 per cent year-to-date in Metro Vancouver to $477,900, and condo prices are up 2.9 per cent to $390,000.

Equivalent figures for the Fraser Valley Real Estate Board show the average detached home sold for $547,600 in April, up 1.8 per cent from December. Fraser Valley townhouses went up 1.7 per cent on average to $344,600 and condos there are up nearly three per cent to $235,800.

But there is evidence the market is softening. April sales are down from this time last year in Metro Vancouver and both realtor groups are reporting a major surge of new listings from owners who now want to sell their property. Fraser Valley realtors reported the jump has pushed active listings to near-record levels. The groups called it a rebalancing of demand that had heavily favoured sellers over buyers.

“There is a lot more choice on the market today,” said David Watt, president of the Real Estate Board of Greater Vancouver. Other observers say fear of a major drop is a likely factor behind the increased listings.

“We’re coming off four straight years of double-digit home price increases,” Canada Mortgage and Housing Corp. analyst Robyn Adamache noted. “I think people are partly taking into account what’s happening in the U.S. and getting worried, but also just wanting to get their homes on the market to take advantage of some of the equity gains they’ve seen.”

Vancouver’s job and population growth trends and geography, however, make a major collapse here unlikely, she said. CMHC forecasts a residential real estate price gain of eight per cent this year and five per cent in 2009. Adamache said the proportion of homes bought and resold within 12 months – a good measure of flipping – has been trending down since mid-2007. The realtor board stats show that while prices in most areas are still up strongly from one year ago, several cities have seen recent prices either plateau or even dip slightly from December to April.


Among the areas where prices dipped in April were detached houses in New Westminster and Pitt Meadows, townhouses in Coquitlam and North Vancouver and condos in North Vancouver and Vancouver’s west side. (In each case, April’s benchmark price was down from the three-month average, signaling the latest home sales went for less.)


In the Fraser Valley, the average sale price for White Rock houses dropped 3.9 per cent in the past month and Abbotsford townhouses were down 8.5 per cent. In contrast, some of the biggest recent gains have come in Port Moody after the province announced that city would be on the route of the planned Evergreen Line SkyTrain extension. The benchmark detached house price in Port Moody soared to $813,900 in April – up 31 per cent from $620,000 in December.
 

If you're thinking of selling, be prepared to have your home on the market longer now that there's more choice for buyers. Location, size, and condition all play an important part in selling your home. Improving your home's curb appeal and a well researched list price will help you sell faster.
 
I can give you sound advice based on the current market. Call me for a consultation to list your home today!
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According to the BC Real Estate Association, after six years of elevated sales levels and rapidly rising home prices, the Vancouver housing market is expected to be more balanced over the next 24 months.
 
Home sales are trending lower and are forecast to decline 8 per cent to 35,900 units in 2008. Eroding affordability has been somewhat offset by a diverse housing stock and the popularity of 40-year amortized mortgages. However, some would-be homebuyers are being squeezed out of the market by high prices. In addition, investor activity is waning in light of more gradual appreciation of home prices and uncertainty around the impact of a weak US economy and its housing recession. Vancouver will remain a bright light of North American housing markets, despite reduced unit sales.
 
Average residential prices are forecast to increase 9 per cent to $621,000 this year, and a further 5 per cent to $651,000 in 2009. Less upward pressure on prices is the result of fewer home sales and an inventory that is 17 per cent higher in the first quarter compared to the previous year. This is good news for homebuyers who have had to compete in recent years for a limited number of homes for sale. Housing starts in the Vancouver CMA climbed 11 per cent to 20,736 units last year.
 
Low new home inventories are a signal for home builders. Yet, in addition to capacity constraints, builders are facing higher financing costs resulting from tightening credit. This causes them to pay increasing attention to market segmentation and depth of demand. While housing starts were up 19 per cent in the first quarter, they are forecast to remain near 2007 levels this year, albeit declining by 1 per cent to 20,500 units.
 
To read the BCREA Housing Forecast publication in its entirety, go to http://www.bcrea.bc.ca/economics/forecasts/2008-05Forecast.pdf
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