Archive for the ‘Canada real estate news’ Category

B.C. home sales to fall as interest rates rise, but prices will stay strong

Friday, March 9th, 2018

Real estate experts in British Columbia predict residential home sales will dip this year but remain well above the province’s 10-year average, although they warn rising interest rates could leave some B.C. households “vulnerable.”

The British Columbia Real Estate Association has released its 2018 first quarter housing forecast, showing residential sales are expected to fall 8.6 per cent to 94,855 units this year, with the decline continuing into 2019.

The projected skid follows the 7.5 per cent decrease recorded last year but the association says residential sales in B.C. are still well above the 10-year average of 84,800 units.

Strong employment growth, consumer confidence and more workers moving to B.C. are credited for the booming housing market over the last four years, including 2016, when a record 112,209 homes changed hands.

But the association predicts the pace of sales will cool due to several factors, including a five-year qualifying rate for a mortgage that is forecast to reach 5.70 per cent by the fourth quarter of 2019.

Chief economist Cameron Muir predicts higher interest rates, coupled with slower economic growth, will carry the moderating trend in home sales right through next year.

“More stringent mortgage qualifications and rising interest rates will further erode affordability and household purchasing power,” Muir says in a news release.

The association also notes the supply of homes for sale continues at, or near, decade lows in most B.C. regions but it says 60,000 new homes are now under construction, well above the 2008 high of 45,000 units.

“Slowing consumer demand combined with a surge in new home completions over the next several quarters will create more balance in the housing market and produce less upward pressure on home prices,” the association says in its release.

It estimates the average price for a home in B.C. is forecast to increase 6.0 per cent to $752,000 this year, and a further 4.0 per cent to $781,800 in 2019.

Source: The Canadian Press

“Big Six” banks have raised mortgage rates as Bank of Canada decision looms tomorrow

Tuesday, January 16th, 2018

The “Big Six” Canadian banks have now all hiked mortgage rates ahead of a Bank of Canada policy announcement on Wednesday.

Canadian Imperial Bank of Commerce, Royal Bank of Canada and Toronto-Dominion Bank raised mortgage rates last week, citing “recent activity by competitors” and “Bank of Canada rate changes” as some of the factors that go into an increase.

Bank of Nova Scotia has now hiked as well, increasing its posted five-year fixed-rate mortgage rate to 5.14 per cent from 4.99 per cent. The lender also boosted its one-year, two-year, three-year, four-year, seven-year, and 10-year fixed-rate mortgages by 20 basis points.

“Our number one focus is providing value for our customers — we manage our pricing very actively to do just that,” said Scotiabank spokesman Lukas Gerber on Monday in an email. “We use a variety of market benchmarks to set rates.”

Bank of Montreal has likewise lifted rates, raising its posted five-year, fixed-rate mortgage to 5.14 per cent from 4.99 per cent, as well as hiking its posted four-year fixed-rate 55 basis points  to 4.79 per cent, among other adjustments.

National Bank Financial analyst Gabriel Dechaine said last week in a note on the banks that approximately 80 per cent of outstanding mortgage debt is made up of fixed-rate loans, “of which we believe the majority has five-year terms.”

Montreal-based National Bank of Canada, the sixth-largest bank in the country, has also increased its posted five-year fixed rate mortgage by 15 basis points to 5.14 per cent and bumped its four-year fixed loan to 4.59 per cent from 3.89 per cent.

Laurentian Bank of Canada’s five-year fixed mortgage is also up  15 basis points to 5.14 per cent.

“These changes reflect an increase in the cost of funds and are in line with the rates offered by the market,” said Laurentian spokesperson Benjamin Cerantola in an email.

The Bank of Canada is set to make its next policy announcement on Wednesday, with the potential for an interest rate hike having increased in recent weeks thanks to strong economic data. Another rate hike could provide a boost to bank margins, according to National Bank Financial’s Dechaine.

“2017 provided not only surprise rate increases from the Bank of Canada, but a steady increase in the key five-year benchmark bond yield,” he wrote. “Both trends have contributed to an early turnaround in the trend of shrinking bank margins.”

Source: Geoff Zochodne, Financial Post/Postmedia

Hoping to buy a home in B.C.? Sorry, it’s not likely to get much cheaper

Tuesday, January 2nd, 2018

If your New Year’s dreams include buying a home in B.C., don’t expect it to get much easier in 2018, according to one expert.

“The best guess for where prices are going to be a year from now is about where they are today,” said Tom Davidoff, associate professor at the University of B.C.’s Sauder School of Business

Davidoff says there are some changes coming that could slow things down — stricter mortgage regulations that take effect  Jan. 1, for one — but overall he predicts prices will keep climbing.

“Fifty years from now, I would be very surprised if Vancouver is anything other than an extremely, extremely difficult place to buy or to rent,” he said.

“You have to think supply is pretty constrained by geography. We can build more condos, but it’s hard to add land. We’re hemmed in by oceans and mountains and those are beautiful oceans and mountains, and rich people all over the world keep getting richer and a lot of them want to come to Canada.”

In the short run, though, Davidoff says there could be a some relief.

“There’s a lot of construction going on,” he said.

“Some people believe it’s international flippers buying these condos. They may not want to hold them once the building’s complete. If we see the flippers actually flip these new units before they’re completed, as they start to come online, that could create lower prices and lower rents as people move in.”

He argues that communities around the Lower Mainland need to maintain such construction in a variety of neighbourhoods.

“Adding more townhomes and apartments in neighbourhoods where there’s single family homes would really help in coming years,” he said.

He’d also like to see the province make more of an effort on tax reform.

​Although housing affordability was a key election issue, Premier John Horgan has admitted his new government hasn’t made much movement on this — yet.

But Horgan is promising there will be progress with the government’s budget in February.

Davidoff says the way people are taxed in B.C. needs to change if we want to become a more affordable place to live.

Property taxes are going up in Vancouver in 2018, but Davidoff says they’re still much too low.

“Our property tax rate is something like four-tenths, maybe three-tenths of a per cent in the City of Vancouver. It would not be uncommon to see one-and-a-half or even two per cent in other big North American cities,” he said.

Davidoff would like to see that reversed.

“Send the message — we want you to live and work here. So we’re going to have high property taxes, low income and sales taxes. Hopefully the NDP moves in that direction,” he said.

For any younger people considering trying to buy into the Vancouver market, Davidoff warns spending everything you have on a down payment for a highly leveraged asset is risky, but not crazy — especially if you’re very attached to the city.

“In the long run it’ll probably work out, it might even be a great idea in the short run, but there’s certainly a possibility that you’re going to feel very stupid if prices fall 20 per cent right after you’ve bought,” he said.

Still, he says, if you feel like your job prospects or quality of life might be better elsewhere, packing up might be the way to go.

“The option to leave is really an important option.”

Source: Stephanie Mercier, CBC News

Vancouver and Toronto house prices set for rise, says CIBC

Thursday, November 16th, 2017

The housing markets in Toronto and Vancouver could resume their previous upward trajectories amid conditions of tight supply and burgeoning demand, according to a new report from CIBC World Markets.

The Canadian housing market, in general, is in an important transition period — especially Vancouver and Toronto, economist Benjamin Tal said in the report, which was released Tuesday.

He said activity is likely to stabilize and perhaps soften in the coming quarters as markets adjust to recent and upcoming regulatory changes, including tougher rules for getting a mortgage.

“But when the fog clears it will become evident that the long-term trajectory of the market will show even tighter conditions,” Tal said. “The supply issues facing centres such as Toronto and Vancouver will worsen and demand is routinely understated.”

“Short of a significant change in housing policies and preferences, there is nothing in the pipeline to alleviate the pressure,’ he wrote.

As prices shot up dramatically in the Vancouver and Toronto areas, governments took steps to try to cool the markets.

Vancouver real estate

Vancouver saw the August 2016 introduction of a 15 per cent tax on purchases by foreign buyers. Tal pointed that following a period of adjustment, a recovery in the Vancouver market is now underway.

Toronto real estate

In Toronto, the market is already showing a rebound following a slowdown in the wake of the introduction of the Ontario government’s Fair Housing Plan. According to the Toronto Real Estate Board, 7,118 homes were sold in the area in October, up 12 per cent from September, but still down down 27 per cent from the same month last year.

In his report, Tal said the recently introduced tighter lending rules will only slow demand by five to seven per cent this year, owing to a combination of the “creative imagination” of borrowers, some exceptions to the rule and increased activity among alternative lenders.

At the same time, Tal said that actual demand in the housing market is stronger than official estimates. He pointed out that Canada’s annual immigration quota is slated to rise from 250,000 to 300,000, and eventually 450,000. That comes amid a current tight land supply based on rules that don’t capture the changes in the market, he said.

Also, official estimates of household formation in the Greater Toronto Area tend be 10,000 below the mark if adjustments are not made for immigrants and non-permanent residents, who Tal said tend to be younger than the general adult population.

“Actual demand is much stronger than official numbers often used to determine the extent to which we overbuild relative to household formation,” Tal said.

Finally, the growing percentage of young adults living at home translates into pent-up demand of roughly 9,000 household, including about 6,500 in the Greater Toronto Area.

“That army of potential buyers can be seen as an insurance against long-lasting significant price decline,” said Tal.

Source: CBC News

Increase in new home prices reaches 7-year high in Metro Vancouver

Saturday, August 12th, 2017

Despite efforts by government and regulators to curb Metro Vancouver’s hot housing market, new home prices have continued to climb in the past year.

Recently released data from Statistics Canada shows the overall price of brand new houses and townhomes in the region has soared 6.2 per cent in the 12 months since June 2016.

“Last time [the new house price index] grew larger than 6.2 per cent was in June of 2010,” said analyst Rohit Verma, adding prices rose 6.7 per cent.

The agency has numbers dating back to 1981.

Verma says the information is gathered through a monthly survey of home builders and their contractors, excluding new condominiums.

Across the country in the month of June, Metro Vancouver saw the greatest gain at 1.5 per cent overall. Ottawa-Gatineau, Ont. followed at 0.9 per cent.

Verma says the main reason cited for the increase was “improving market conditions.”

It’s more evidence of the resiliency of the region’s real estate market, despite government efforts at all levels to temper prices.

Last August, the previous Liberal government introduced a 15 per cent tax on foreign home buyers in Metro Vancouver.

Two months later, mortgage rules were tightened across Canada.

Home buyers applying for mortgages with less than a 20 per cent downpayment had to undergo a “stress test” to determine if they could afford to pay back a loan if interest rates rose.

And rates did rise.

Last month, the Bank of Canada raised its key interest rate by 0.25 percentage points — the first time it had increased it since 2010.

All of that hasn’t stopped the market from climbing or put affordable homes within the reach of most people.

Sales in July were 0.7 per cent above the 10-year sales average for the month, according to the BC. Real Estate Association.

The Multiple Listing Service Home Price Index composite benchmark price for all residential properties in Metro Vancouver is $1,019,400 — an 8.7 per cent increase compared to July 2016.

Source: Lien Yeung, CBC News

Vancouver home prices may have finally shaken off foreign buyers’ tax

Thursday, June 15th, 2017

It’s taken nine months, but the Vancouver housing market may have finally shaken off the foreign buyers tax, data from a home price index suggested on Wednesday.

The Teranet-National Bank of Canada House Price Index showed that Vancouver home prices grew by 8.2 per cent year-over-year in May, and 1.46 per cent month-over-month.

At 252.30, the index reached its highest level since September 2016, which was one month after a 15 per cent property transfer tax on foreign buyers came into effect in Metro Vancouver.

The index has fluctuated since then, hitting as low as 242.64 in December.

Meanwhile, data provided by the Canadian Real Estate Association (CREA) showed the composite home price for Vancouver hitting $941,100 in April, the highest it’s ever been.

The composite had dropped from $933,100 in August 2016, when the tax first came into effect, to $896,000 in January, but now it appears to have recovered.

House prices largely remained unchanged in the eight months following the tax’s introduction, as noted in a chart released by BMO economist Douglas Porter on Tuesday — a marked contrast with growth of 20 per cent in the months before it came into effect.

But the ninth month appears to have bucked the trend.

At 8.2 per cent, Teranet said Vancouver house price growth was strong, but it was still below the national average.

Toronto’s housing market saw the strongest price growth, jumping 3.6 per cent month over month and setting a “record for any month,” Teranet said.

Home prices there jumped by 28.73 per cent year over year, a rate that also topped all other cities.

Toronto’s home price growth is expected to take a breather with the implementation of the Fair Housing Plan, which includes a 15 per cent tax on non-resident speculators in the Greater Golden Horseshoe area, which includes Toronto, Niagara and Peterborough.

Like in Vancouver, experts expect the effects of the plan to be short-lived.

Source: Jesse Ferreras, Global News

After a lull, Vancouver housing prices are set for a rebound

Tuesday, April 18th, 2017

Prices of detached homes in Vancouver may have hit bottom in the first quarter of this year, but are poised for a rebound this spring as sales activity surges across the region, according to a Royal LePage survey.

The Royal LePage quarterly house price survey, released Tuesday, shows home prices in the Greater Vancouver region dropped 1.9 per cent in the quarter ended March 31 compared with the last quarter of 2016, driven by a decline in prices of detached homes. Two-storey houses were down 3.1 per cent in the quarter while bungalow prices fell 1 per cent.

The Vancouver market began softening last spring and the market cooled even more after the B.C. government imposed a 15-per-cent tax on foreign buyers in August. But sales activity has grown so far in each month of 2017, suggesting the market for detached homes in Vancouver could rebound even sooner than people expected, said Royal LePage chief executive officer Phil Soper.

Mr. Soper said the number of units sold in Greater Vancouver climbed more than 48 per cent in March compared with February this year, which is much stronger than seasonal norms. He predicts the slowdown caused by the introduction of the foreign-buyer’s tax could lead to “market whiplash” this summer as pent-up demand is unleashed in coming weeks, sending prices sharply higher again.

“Frankly, I thought the correction would be deeper and longer, but that unit-sales number says to me that there’s still a lot of demand in the region and people may not sit on the sidelines for as long as we thought they would,” he said in an interview.

On a national basis, home prices are a tale of two cities, with Vancouver slumping while the Toronto region sees soaring prices, marking the first period in years in which Vancouver and Toronto’s housing markets have headed in opposite directions.

The combination has driven the average price of a home in Canada up 12.6 per cent in the first quarter of 2017, compared with the same time last year. The average home sold for $574,575, according to sales data from 53 of Canada’s largest real estate markets.

Removing the hot Ontario market from the calculation shows a more modest national price increase of just 6.4 per cent in the first quarter this year.

Mr. Soper said growth in the rest of Canada outside of Vancouver and Southern Ontario is strong but sustainable, and higher prices in cities in Alberta and Quebec are particularly welcome news.

“Generally it is shaping up to be the best and healthiest year we’ve seen in Canadian real estate probably since before the global financial crisis,” he said.

Prices soared not only in the Greater Toronto Area, but also in other cities across Southern Ontario. Prices climbed 12.4 per cent in London, 9.9 per cent in Kingston and 8.5 per cent Windsor, all of which are two hours or farther from Toronto.

Mr. Soper said the growth well beyond the Toronto region is being fuelled by Ontario’s strong economic performance, with the province now leading Canada in economic growth.

Closer to Toronto, the city with the greatest year-over-year price gain was Richmond Hill, north of Toronto, where prices climbed by 31.5 per cent in the first quarter this year compared with the first quarter of 2016. Oshawa, which is east of Toronto, saw prices rise 28.2 per cent in the first quarter compared with the same period last year.

The price growth in suburban cities is being fuelled by single-family home buyers, who have concluded they can get more “bang for your buck” outside of central Toronto, Mr. Soper said.

He added he sees no sign that Toronto’s market is cooling yet, but believes a slowdown is coming soon as prices move too far out of balance.

“There is so much momentum in the market that it will carry through the spring market at full steam,” he said. “The earliest I believe we’ll see a slowdown in the GTA market will be this summer or fall. Save a really heavy-handed move by regulators, I don’t see anything slowing this market this spring.”

Source: Janet McFarland, The Globe and Mail

Latest numbers show Metro Vancouver housing market is actually strengthening

Tuesday, April 4th, 2017

Strong demand alongside a shortage of residential property has led to a 30.8 per cent year-over-year decline in sales in Metro Vancouver.

However, the latest numbers released Tuesday by the Real Estate Board of Greater Vancouver showed the housing market is actually strengthening even though sales are off 2016 highs.

The 3,579 March sales marked a 47.6 per cent increase over February’s totals. The region saw a record-breaking 5,173 sales in March 2016.

“While demand in March was below the record high of last year, we saw demand increase month-to-month for condos and townhomes,” Jill Oudil, the Board’s president said. “Sellers still seem reluctant to put their homes on the market, making for stiff competition among home buyers.”

New detached, attached and apartment property listings hit an eight-year low for March. Listings totalled 4,762 last month, down 29.9 per cent from 2016.

“Home prices will likely continue to increase until we see more housing supply coming on to the market,” Oudil said.


Vancouver has the least number of affordable homes in Canada

Friday, March 31st, 2017

The slowdown of Vancouver home sales has helped affordability a bit, but we’re still the country’s costliest market by far.

Royal Bank research shows “Housing affordability improved in the Vancouver area for the first time in almost three years” during the fourth quarter of 2016. It says the slowdown in home resales that began last spring had a “cooling effect” on prices for single-detached homes by late in the year. The bank’s economists say the affordability of houses improved the most since the first quarter of 2009 when Canada was in a recession due to the financial crisis.

Nonetheless, RBC says it takes 84.8 per cent of the median household income to pay the costs of owning the average detached bungalow in Vancouver.

Condos are a different story, with RBC saying “No such affordability relief took place.” Its measure of condo affordability worsened slightly for the seventh quarter in a row. Condos costs are at 46.1 per cent of household income.

RBC also says there are signs that “affordability stress” is spreading to regions near Vancouver and Toronto, including Victoria which the bank says “has experienced booming demand in the past year which has propelled prices significantly higher,” pushing its afforability measure “well above its long-term average.”

Source: Richard Dettman, News 1130

Vancouver home price gains still among world’s highest despite slowdown

Friday, January 6th, 2017

Metro Vancouver’s residential real estate story was a tale of two halves in 2016.

There were scorching sales leading into summer, a cooling off, and then a marked retreat after the province imposed a 15 per cent foreign buyers tax in August.

Many big-picture pundits say it will take another six months or more to fairly assess the impact of the tax. Others point to falling sales, and in some cases prices, as a small number of deals eke on.

Despite this, in 2016, Vancouver residential prices moved up 18 per cent, according to the Real Estate Board of Greater Vancouver’s composite benchmark price report released on Wednesday. Most of the gains were notched in the first half of the year, with the index moving back 2.2 per cent in the second half, according to the board’s report.

The number of sales — including detached houses, condos and townhomes — came in as the third-highest on record for Vancouver in 2016, falling 5.6 per cent from a record year in 2015.

Digging into the latest report, there are early signs of a bounce if you look at median prices. With so few listings, and as such, sales, some prefer to use this gauge, which means the “in the middle price” where half the homes sold went for above this mark and half for below as opposed to taking the average of only a handful of sales, where the result could be easily skewed by one very expensive or slumped sale.

For example, the median price for detached homes is steadying because it has been sitting in the $1.275 million to $1.3 million range for the last four months. Meanwhile, the median price for town homes, at $659,000, is now nearly at its June peak median price of $666,000. Condo median prices show an even stronger stride, hitting a new high of $495,000.

To put the slowdown into perspective, consider Knight Frank’s latest Prime Global Cities Index, which tracks the prices of the top five per cent of homes in metro areas of 35 cities around the world. Vancouver outstripped all other contenders in 2015 and in September 2016 it was still at the top, posting a 32 per cent change year-on-year.

Knight Frank’s Global Residential Cities Index — which more widely tracks “city house prices” in 150 locations — showed Vancouver was the highest ranking city outside of mainland China.

“Urbanization and rising household wealth are behind the surge in Chinese prices,” wrote Knight Frank researcher Kate Everett-Allen. “Vancouver, a longtime front-runner, slid down the rankings this quarter, from fifth to ninth position. This shift is not as a result of slowing prices, annual growth is much the same as in June, close to 24%, but due to the phenomenal ascent of the Chinese cities which have supplanted it.”

Overall, house prices increased in more than 75 per cent of the 150 cities surveyed, year-on-year, but only in 13 of them did the increase in prices exceed 20 per cent. Victoria, B.C. just missed being one of those cities on the list, coming in 15th on the list with an 18 per cent gain.

It’s an “interesting report. I really like the global comparison that it facilitates,” said Andrey Pavlov, who specializes in real estate finance at Simon Fraser University’s Beedie School of Business. However, he cautioned that: “First, the data is as of end of September, 2016. This was still very close to the peak, which occurred around June or July. Second, the report uses year-over-year increases, and all of the Vancouver increases occurred earlier in 2016, and some in 2015. With this in mind, the report captures historical trends, but does not really address the recent developments in our market.”

Source: Joanne Lee-Young at Postmedia

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