The slowdown in Vancouver’s real estate market is one factor leading the Canadian Real Estate Association to cut its sales forecast for this year and next on Monday.

Vancouver’s sales numbers dropped 27.6 per cent — the second biggest drop in the country behind Halifax — in November 2012, compared to the same month last year, after tighter lending rules that came into force this summer. The average price is down 6.3 per cent for the same period to $682,215, while the MLS home price index is down 1.7 per cent from a year ago. The average price reflects the mix of sales, while the HPI reflects price changes for typical homes.

While BMO deputy chief economist Doug Porter said most cities across Canada would see a soft landing for their real estate markets, he called Vancouver a “rather obvious exception.”

“I don’t know that I’d call it a hard landing in Vancouver, but it’s definitely a bumpier landing than most cities in Canada are going through right now,” Porter said.

Meanwhile, it appears people thinking of selling their homes may be holding off, especially in Metro Vancouver, as the region saw the largest drop in the country for new listings.

New supply reached its lowest level in more than two years, CREA said.

“That may help avert a harder landing for prices because sellers do have the leeway to back off,” Porter said. “Fundamentally, I think that’s one of the reasons why the Canadian housing market is likely not going to have a hard landing because you’re not going to have a lot of motivated sellers — people aren’t going to be forced into it by rising interest rates or declining employment so they can take their time and wait for the market to stabilize.”

Source: Tracy Sherlock and Craig Wong, Vancouver Sun

The total value of homes sold in B.C. dropped by nearly one-quarter in November, with declines in Vancouver and the Fraser Valley leading the slide.

The dollar volume of homes sold through the Multiple Listing Service in B.C. declined 24.6 per cent to $2.3 billion in November compared to the same month last year, the B.C. Real Estate Association reported Thursday.

Cameron Muir, BCREA’s chief economist, said that tighter mortgage rules introduced this summer had squeezed some buyers out of the market, but he expects sales to go up in 2013.

“When I suggest that we’re going to see an increase in sales levels next year, it doesn’t mean we’re going to return to the heady days before the recession. But the longer we see sales levels fall below the long-term average, the more likely we’re going to see pent-up demand (grow) in the marketplace, which may contribute to increased sales activity in 2013,” Muir said.

The number of units sold this November was down 17 per cent in the province from November 2011 to 4,680, while the average price was down 9.1 per cent to $480,891.

In 2011, there were large numbers of single family luxury homes sold, which elevated the average, Muir said. This year, a more typical mix of homes is being sold, so the average is lower. But prices are also coming down.

“There has been some modest downward pressure on prices in Vancouver, particularly in the single detached market on the west side, for example,” Muir said. “For the first six months of this year, the west side of Vancouver is down 9.7 per cent on the home price index. West Vancouver is down nine per cent and Richmond is down 6.2 per cent.

“We’ve seen those markets floating a little bit back down to Earth, and they’re having an impact on the aggregate numbers for the region.”

In Metro Vancouver, the dollar volume of sales fell 32 per cent from $1.74 billion to $1.18 billion, while in the Fraser Valley total sales fell 25 per cent from $498 million to $371 million.

“More promising numbers are coming from … the area around Kelowna — they’re up 13 per cent in unit sales,” Muir said. “And B.C. Northern has been incredibly stable in this post-recession period. That’s likely the result of much more diversification of the economy in Prince George, for example, and relatively buoyant demand for commodities. Unemployment did not skyrocket there in the recession — it’s very resilient in B.C. Northern this time around.”

While sales in the Okanagan are up for the year so far, Muir said that region has not seen the same rebound Vancouver prices did from the recession.

“Prices in that region have come off in the past three years, but not as much as people might have expected them to, given that inventory levels have been extremely high relative to sales for about three years now,” Muir said.

For the year to date, across B.C. sales dollar volume was down 18.7 per cent, while the number of units sold was down 11 per cent, and the average price dropped 8.6 per cent to $515, 611.

Source: Tracy Sherlock, Vancouver Sun

The housing market continues to cool off in the Lower Mainland, as the number of home sales dropped to 10-year lows in the Vancouver area and average sale prices dipped across the region.

Year-over-year sales decreased nearly 29 per cent, from 2,360 home sales in November 2011 to 1,686 last month, according to the Greater Vancouver Real Estate Board’s monthly report. The 28.6-per-cent decline includes detached and attached homes, as well as condominiums.

Sellers are now more likely to remove their homes from the market than drop their asking price, and buyers are expecting even lower prices, said board president Eugen Klein, leading to a stalemate.

“There’s a tug of war happening between buyers and sellers.”

November typically marks a slowdown in new listings and homeowners prefer to move in the spring, he said. But both sales and new listings are below the 10-year November averages of 2,420 and 2,758, respectively.

The benchmark price for a home in Greater Vancouver — which includes the Sunshine Coast, Bowen Island and Whistler — also fell to $596,900, a 4.5-per-cent drop since this year’s peak of $625,100 in May, and down 1.7 per cent compared to last November.

Those numbers represent a moderation of the formerly overheated housing market in Vancouver, but not a full-on correction to record-setting home prices in recent years, Klein said. The days of $100,000 monthly price increases in Richmond or the west end or West Vancouver might be over, but “after all of that, where a $400,000 house became a $900,000 house, we’re seeing a price adjustment of just over six per cent. We’re not going back to the (original) level.”

Of the nearly 15,000 homes for sale in the region, almost half were listed at less than $600,000. Last month, 273 of 1,686 home sales last month went for more than $1 million.

Klein pointed to the introduction by Finance Minister Jim Flaherty of new mortgage rules this summer as part of the reason for the slowdown: lenders can now only provide home equity loans of up to 80 per cent of the home value, down from 85 per cent, and a reduced amortization period from 30 to 25 years, which increases monthly mortgage payments.

The Fraser Valley Real Estate Board, which includes Surrey, also reported a 19-per-cent year-over-year decline in home sales.

Board president Scott Olson agreed home buyers are adjusting their price range. But he pointed out that some areas outside Vancouver — such as Abbotsford, Delta, central Surrey and Cloverdale — have seen the benchmark price for a detached home go up.

The region’s “bread-and-butter buyers” — young families buying homes in the $400,000 range — are still in the market.

“We could argue we’re actually saying thank you to Minister Flaherty for his rule changes,” Olson said. “We’re seeing a net migration in from people closer to the city because we’re more affordable.”

However, the average price has decreased 6.6 per cent since last year — from $473,550 to $442,200 — and the number of new listings on the board’s Multiple Listing Service has dropped 11 per cent compared to November 2011 and 32 per cent compared to last month, which the report described as the “slowest new listings in a decade.”

The benchmark price for a townhouse in the Fraser Valley dropped 1.5 per cent to $298,900, while the same for apartments increased 2.6 per cent to $202,800.

On average, it takes 59 days to sell a home in the area, up five days from November 2011. Townhouses were on the market 70 days and apartments 74 days, according to the real estate board.

Source: Zoe McKnight, Vancouver Sun

The number of sales may be down in multi-family developments, but buyers are still keen on new homes in highrises near transit lines, Colliers International’s most recent residential real estate report for Metro Vancouver found.

Three developments in particular — Station Square and Solo District, both in Burnaby, and MC2 in Vancouver — were bright spots in the report, which said that overall multi-family sales were down 15 per cent in the third quarter of 2012, to 1,899.

“This is the second consecutive quarter in which sales volumes have decreased. However, despite all the crash talk, the sales volume posted this quarter and year to date is evidence of sustained demand for new multi-family homes in the Metropolitan Vancouver market,” said Scott Brown, senior vice-president, Colliers Residential group.

He said demand in the resale market is softer than demand for presales because presales tend to attract investors, particularly if they are near transit and will be attractive to renters.

“The ones that are selling the fastest are on transit and appealing to investors,” Brown said. “The buyers are a little bit more concerned about the immediate, short-term future, but there still is demand there and their belief in the long-term fundamentals of the Vancouver market is why they’re investing in these properties.”

Station Square is a five-tower development in Burnaby near Metrotown that will be ready for occupation in 2015. Units were priced from $280,000 for a studio apartment up to $1.35 million for a penthouse suite.

The first building of 269 units is mostly sold out, after about three months of a soft opening and a public opening Oct. 20, said Greg Zayadi, director of sales and marketing for Anthem Properties, which is a partner of the Beedie Group on Station Square.

“The location is key,” Zayadi said, adding that buyers want to be close to SkyTrain and Metrotown. He said most of the buyers are what he calls “family investors”: people who are buying with the plan that someone in their family will eventually live in the suite. He said 40 per cent of buyers at Station Square already have an address in Burnaby, while 30 to 35 per cent have an address in Vancouver.

Although they have addresses in the Lower Mainland, those might be homes of relatives, Zayadi said.

“Approximately 70 per cent of highrise sales occurred at developments targeting the Chinese buyer. While it is evident that the Chinese buyer is not as active as in recent years, this purchaser group does continue to be the primary buyer in Vancouver and Burnaby,” the Colliers report states.

Realtor Sunny Lee, who sold seven units in Station Square, said most of the people he sold to were investors, and that some were buying for their children. He said he believes Station Square sold so well because it is very close to SkyTrain, but not so close that the noise is a factor.

He said this year he has sold more pre-sale new homes than re-sale homes, which is unusual for him.

“Buyers are concerned about the current market, but they still believe in the future,” Lee said, adding that people are looking for a good investment in this low-interest rate environment. “They want to put their money somewhere.”

He said buyers of pre-sales usually put between five and 10 per cent down when they sign the contract, then another five to 10 per cent about six months later, with the remainder due when they move in.

The Colliers report also mentioned Appia’s Solo District development in Brentwood as selling well.

Looking ahead, in the fourth quarter of 2012 two projects are expected to keep sales flowing: Mosaic’s Elizabeth, near Queen Elizabeth Park, and Intracorp’s MC2.

MC2 is a two-tower development on Marine Drive and Cambie Street in Vancouver, directly across the street from the Canada Line. There are 443 homes in 26-storey and 32-storey towers, with prices for one-bedroom suites starting at $259,000 and two-bedroom suites at $421,500. The project opened for sale Oct. 27 and since then has sold 347 homes, said Linda Chu, director of marketing for Rennie Marketing Systems, which is selling the project.

Brown said people downsizing from single-family homes are also driving multi-family sales. He said developers are starting to build larger multi-family units — bigger than 1,000 square feet — to appeal specifically to downsizers rather than investors.

The Colliers report calls for annual sales volumes of 10,500 multi-family units in 2012, with a similar amount projected for 2013.

Canada Mortgage and Housing Corp. says housing starts in Metro Vancouver are forecast to remain flat in 2013.

Although the 2012 sales numbers of multi-family units are down more than 10 per cent from 2011, 2012 stands to be the second-best year for multi-family sales since 2007, the Colliers report said.

“2011 was an outstanding year. 2012 is a very good year,” Brown said. “We think 2013 will be about the same.”

Source: Tracy Sherlock, Vancouver Sun

This home in Kings Landing is as close to the water’s edge as you can get. Exceptional 3-bedroom, 4-bathroom suite with a one-of-a-kind combination. 2-car private garage and SouthWest exposure!! The property has one of the best floorplans to be found anywhere. Kings Landing is recognized as one of the most sought-after addresses in downtown Vancouver.

The condo has superb quality throughout the suite and the complex itself. With arguably the best private facilities of any condo residence building downtown. This gorgeous suite has a very elegant flow and feel. No stark cold lines here. Lots of crown and base moldings with waterfall granite detailing on all the counters.

3 bedrooms, 4 bathrooms including a steam shower in the luxurious ensuite. Double dishwashers, 6-burner Viking stove, Sub-Zero fridge, wine fridge: A really elegant home feeling in a very hip location.

Directly on Vancouver’s famous Sea Wall with parks on both sides. Only a few minutes’ walk to Yaletown, the marinas and Granville Island’s aqua bus.

$3,298,000 through realtor Mark Raymond at RE/MAX Select Properties.

For further information, please click Kings Landing home for sale in downtown Vancouver.

The article below by Scott Simpson appeared in yesterday’s Vancouver Sun regarding the reasons behind Metro Vancouver’s home sales drop.

Personally, I don’t agree with Andrey Pavlov, a professor of finance at SFU, who is quoted as saying that real estate prices in Metro Vancouver are comparable to New York City. According to StreetEasy, current median prices for condos in downtown New York, ie. Manhattan, are US $639,500 (Cdn $624,000) for studios, US $885,000 (Cdn $864,000) for 1 beds, and US 1.75-million (Cdn 1.708-million) for 2 beds.

That’s way more than the cost of similar sized apartments in Vancouver.

Every time there’s an increase or decrease in listings, sales, or prices, it makes news. Real estate has always been a cyclical game. Prices will never keep on increasing, there will be corrections along the way, but in Vancouver, barring any natural catastrophe, if you buy a home now, it should be worth more in 10, 20, 30 years time.

Vancouver is a city with limits. Ocean, mountains and the ALR limit the amount of available land. With increasing demand and a finite amount of land, real estate prices will naturally rise over time. It’s supply and demand 101, and real estate is a commodity in demand.

Anyway – here’s the article:

It’s down, but not out.

To one expert observer, last month’s 32-per-cent drop in year-over-year home sales in Metro Vancouver looks more like a cyclical trend than a harbinger of a bursting bubble in the Metro Vancouver housing market.

Data released this week by the Real Estate Board of Greater Vancouver indicated that sales volumes fell significantly in September compared to the same month in 2011 – 1,516 properties last month compared to 2,246 in September 2011.

Prices haven’t followed the sales volume trend. The real estate board reported that the composite benchmark price fell 0.8 per cent compared to September 2011, and is down 2.3 per cent in the last three months.

Tsur Somerville, who holds the Real Estate Foundation of BC Professorship in Real Estate Finance at the University of B.C., says the trends fall within the normal cycle.

The Metro market isn’t as popular as it was a year ago when the 2010 Winter Olympic spotlight was still warm.

“Sales started being lower year-on-year last November. I want to see whether that (trend) accelerates or not before I start saying that things are much worse than we were thinking about,” Somerville said in an interview.

“People aren’t standing in line overnight at every condo centre, and it’s not a sure thing. There are (housing construction) projects that are struggling and there are projects that are doing well. It doesn’t look exuberant but it looks pretty normal.”

Stats from the real estate board indicate that it’s taking a few days longer to sell a house, compared to last year.

Average time on the market for a house sold in September 2012 was 53 days, compared to 52 in September 2011.

Houses sold in August 2012 after an average 57 days compared to 48 days a year earlier.

Andrey Pavlov, a professor of finance at Simon Fraser University, has a different take on the sales trend.

He thinks Metro Vancouver single-family home sales prices are substantially lower than what the real estate board’s benchmark number indicates.

“The indices are down only slightly, but this is misleading,” Pavlov said in an email. “In an up market everything sells, good and bad. In a down market, only the best properties sell. So it takes a while for transaction-based indices to reflect the true decline in prices.

“My casual observation of single-family homes (land value only) in Kits(ilano) suggests 10 to 15 per cent declines already, with a lot more likely to come.

“New mortgage rules and troubles in China certainly play their role. But more importantly, the Vancouver market has been substantially over-valued relative to other North American markets for a while now.”

Pavlov said real estate prices in Metro Vancouver are now higher than San Francisco — the most robust regional economy in the world thanks to Silicon Valley — and are “just about comparable to New York City.”

In spite of that, rents are half as high, and incomes for the same occupation are only a half to two-thirds as high. On top of that, the ability of U.S. taxpayers to deduct mortgage interest expense means its “far more expensive to own property in Canada relative to the U.S.”

“So there is no long-term reason for price-to-rent ratio in Vancouver to be higher than that of other highly desirable markets,” Pavlov wrote.

He also pointed to “competition among cities for people and investments” as an adverse factor for Vancouver.

Real estate marketer Cam Good noted that Metro has fewer offshore investors and immigrants looking to get into the market compared to a year ago — and he believes that’s having an overall effect on sales and prices.

“The fact is that the shine has gone off Canada a little bit since we closed our investor immigration program,” Good said. “We are seeing through our business in Hong Kong and the U.S. more demand for the U.S.

He said the U.S. investor immigration program, called EB-5, is considered a better option for wealthy immigrants.

“The easiest way for Chinese to immigrate into Canada was by depositing $800,000 with our governments for five-and-a-half years. They can’t do that any more.

“We’re still, luckily, experiencing the follow-through on prior commitments — kids coming to school, other family members already here. But in terms of the new people coming over, there is definitely less.”

Nonetheless, he said some Metro markets are still strong. He pointed to Coquitlam, along the Evergreen Line light-rail transit corridor, as an area that’s attracting interest.

Vancouver’s red hot housing market has taken on a distinctive fall chill, which has many would be buyers and sellers sitting on the fence right now.

Christine Jassen and her partner are looking to cash in on their biggest asset by selling their 52-year-old ranch home on Vancouver’s tony west side for just over $1.9 million.

“I’m in my 50s; it would be wonderful to have an account full of a few hundred thousand dollars, absolutely.”

But while last year this home would have likely seen multiple offers, it’s now been on the market for 130 days with no takers. It’s even had a price reduction.

Realtor Lorne Goldman, who specializes in real estate on Vancouver’s west side, says he’s seen the price of some listings drop by 10 per cent recently.

“I think buyers are hoping ‘the bubble’s going to burst, the bubble’s going to burst,” but you know, people have so much equity in their houses, it’s gone up so much, nobody’s really forced to sell,” he told CTV’s Steele on Your Side.

But there are also lots of ‘house rich, cash poor’ residents in Metro Vancouver whose yearly property taxes have soared beyond their ability to pay – seniors on a fixed income who bought properties years ago before the prices skyrocketed.

Blair Mantin, bankruptcy trustee at Sands & Associates, says seniors are the fastest growing segment of people he sees who are in financial trouble.

He calls them the grandpa debtor: “We deal with people when they’re in a situation where they can no longer pay their bills and need to take some steps, whether that’s a payment plan, or to sign themselves into bankruptcy,” Mantin said.

Seniors are less likely to be able to pay off debt because they can’t count on their income going up.

“Once they’re on a fixed income it’s pretty tough to chisel away when you’re only able to make the minimum payments,” he said.

Many homeowners in high-end neighbourhoods are looking for relief.

This year, 31,291 B.C. residents over the age of 55 have registered to defer their property taxes. Of those cash-strapped homeowners, 3,000 are in the city of Vancouver.

Source: Darcy Wintonyk and Lynda Steele, CTV British Columbia

This is one of the finest properties on Keats Island – an Irreplaceable Opportunity.

Expansive water views South to Strait of Georgia, North to Howe Sound; this ten-acre property is privately situated on the third highest point of the island. Remote and romantic but with easy year-round access. You’ll never want to leave.

The 2,600-square-foot house is built to the highest quality and newly updated with close to $250,000 spent on interior renovations by an award-winning design team.

High-end finishes and appliances (Hansgrohe, Liebherr integrated fridge/wine cooler, Electrolux ovens), custom-designed kitchen cabinetry and numerous built-ins.

Approx 1,200 sq.ft. of panoramic decks. 30 mins by boat from Horseshoe Bay. 1 mile by water from Gibsons.

For further information, please see Keats Island real estate for sale.

The average price of homes sold in B.C. is forecast to fall 7.8 per cent this year, but that doesn’t mean the price of a typical home will drop, the B.C. Real Estate Association’s chief economist Cameron Muir said Thursday.

The average Multiple Listings Service price is down and will continue to fall because fewer single-family homes in tony neighbourhoods are selling, while more less-expensive homes are selling, Muir said, adding that there has been a noticeable lull in demand for single-family homes in Vancouver since January of this year.

As well as calling for a drop in average prices, the BCREA’s third-quarter housing forecast calls for a drop of four per cent in the number of homes sold in B.C. this year offset by an increase of 7.5 per cent next year.

“MLS residential prices are expected to remain relatively stable this year and through 2013, with changes in average price statistics largely the result of a differing mix of home types sold and shifting regional demand patterns,” Muir said, adding that the lull in demand is likely caused by some advance buying in 2011, poor job growth in 2011 and tighter mortgage regulations brought in by the government earlier this summer.

The average MLS residential price in B.C. is forecast to drop 7.8 per cent to $517,500 this year, and remain relatively unchanged at $519,000 in 2013.

Source: Tracy Sherlock, Vancouver Sun

The City of Vancouver issued $1.1 billion in building permits during the first six months of 2012, a 40-per-cent increase over 2011 and the first time in five years that construction has topped the billion-dollar figure for the first half of the year.

“This adds to overall economic growth; it means more construction jobs and related spinoff jobs,” said Helmut Pastrick, chief economist at Central 1 Credit Union.

Pastrick said the B.C. economy as a whole has not been performing as well in 2012 as it did in 2011 and the spike in construction activity the Vancouver building permit values represents, will provide a welcome boost to the economy.

“It’s certainly a positive boost, Construction is one of the few sectors that is contributing to the economy in a positive way,” he said.

The city said in a news release Thursday that residential, commercial, and industrial construction has gone through a “major rebound,” marking the first time since the 2008 recession that values have surpassed the billion-dollar mark.

According to the city, construction activity added 6,000 new direct and spinoff jobs in Vancouver during the six-month period.

Mayor Gregor Robertson said it is the first time construction values have exceeded pre-recession levels.

The last time more than a billion dollars in permits was issued was the first half of 2007, when the figure hit $1.58 billion.

Adrien Byrne, communications manager for the Urban Development Institute said the spike in permits show that the construction sector in Vancouver is healthy. It should translate into better prices for condominium units.

“Basically, there is a lot of supply coming on in the market. It shows a healthy market,” he said.

Byrne said the UDI is working closely with the city to reduce red-tape and planning hurdles.

“But that’s not the only thing. The market is getting progressively more affordable, which is making some projects a lot more viable than they might have been in the past. And that is supporting growth and development.”

“Developers are sharpening their pencils to be more competitive than the developer across the street. And the winner out of this is the consumer and the homebuyer.”

Key developments that contributed to the 2012 increase include a 22-storey residential building at 999 Seymour valued at $24.2 million and the 36-storey MNP Tower at 1021 West Hastings valued at $75 million.

“These numbers reflect the importance to the economy and to job creation that the development industry has. What we need is for these kind of numbers to continue,” Byrne said.

Commercial and industrial construction have also rebounded. During the first six months of the year, permits were issued for more than one million square feet of non-residential space, up dramatically from the 160,000 square feet that was permitted during the first six months of 2011.

Source: Gordon Hamilton, Vancouver Sun