Foreign ownership in American real estate sits at about eight per cent – but that percentage is worth $82 billion US, says the National Association of Realtors.

Homes in many parts of the United States are now worth what they were nearly 10 years ago in 2002, says a report from the association – and it’s this decline that is attracting foreigners, mostly Canadian homebuyers, to snap up a seasonal home at dirt-cheap prices.

From a seller standpoint, the market is “pretty bleak,” says Tom Burk, an associate broker with Sotheby’s Realty International who has a long career of selling real estate on both sides of the 49th parallel. “Given all the bad economic news in Europe and the near political paralysis in the U.S., markets there are struggling to show any kind of consumer confidence.”

In cities where investor interest is high “like Phoenix, Palm Springs or Las Vegas, there is optimism – but in most cities, it’s pretty bleak,” says Burk.

A survey by U.S.-based Credit Sesame of where foreigners are buying, what they are purchasing and how much they are paying shows that the largest group comes from Canada, with Asians and Europeans second and third.

Arizona is the fourth most popular destination for these buyers, trailing Florida, Texas and California.

The largest percentage are buying detached single-family homes for use as a primary residence – and they are paying less than $100,000 each.

Recent reports have claimed that Canadians are the top-ranked outof-state buyers of homes in Arizona, which is still under siege by the flagging economy.

The average Arizona home now sells for about half of what it would have five years ago, says the Federal Housing Finance Agency in the U.S.

The price dropped another 4.6 per cent from the first to second quarter of this year – driving the decline to nearly 15 per cent compared to the same period last year.

The housing market likely won’t turn around until the fundamentals improve, said Marshall Vest, an economist at the Eller College of Management at the University of Arizona in an interview with the Arizona Republic.

But that won’t start until the excess of available homes is absorbed, he said.

“We have enough vacant houses in Arizona to accommodate an entire decade worth of population growth – and that’s if the population were growing,” said Vest.

The recession has changed the way people look at real estate, says Burk.

“It has affected people’s ideas about timing, but it has not affected the basic belief that buying a home and raising a family in that home is fundamental to American values, in many cases,” he says.

Burk’s views are shared by Frank Anton, CEO of the national research firm of Hanley Wood in the U.S.

“We thought people would be soured after watching home values fall, but instead we found the typical American still places high value on home ownership,” says Anton. “We found this holds across all demographic groups and across the country, even in hard-hit places like Arizona and Nevada.”

Credit Suisse Group surveys real estate professionals in several cities in the United States on a monthly basis.

The global financial services company uses 50 as the benchmark for each of nine questions. Above 50 indicates a positive trend, while below 50 means a negative one.

For Phoenix, the report says home prices held steady for October (50 points versus 40 in September), listings remained high (76 points), and buyer traffic inched up to 40 points.

Down the road in Tucson, buyer traffic jumped to 43 points from 27, while prices totalled 43 points (an improvement from 27).

“The economy is poor and unemployment is too high. Nobody wants to buy in this type of environment,” says one realtor.

Las Vegas is also being hit hard by the continuing economic chaos.

“Traffic remains steady on interest from deal-seeking buyers,” says the Credit Suisse report.

But prices remained under pressure with an index of 44, down from a previous 48, while listings were high at an index of 59.

“Low prices and interest rates continue to spur inquiries and activity,” says a Vegas realtor in the survey. “Cash buyers are really driving sales.”

In San Diego, buyer traffic remained very weak with an index of 15, while house prices sat at 25.

“The constant negative news is affecting buyers’ confidence and there is a lot of uncertainty about a potential double-dip (a return of inflation),” says a realtor.

Meanwhile, traffic levels in the San Antonio, Texas, market left a lot to be desired – falling to an index of 14 – while the price index sat at 36.

“Many sellers would like to take advantage of the low interest rates, but we need the buyers to feel confident to keep the ball rolling,” says one real estate professional.

In Miami, Fla., things were looking up, with traffic improving to an index of 39 while priced edged up to 48.

“Cash buyers, both domestic and foreign, are controlling the market,” says a realtor in the Miami area.

Meanwhile, Portland, Ore., which sees buyers from B.C., has seen a strong jump in traffic – almost doubling to an index rating of 25, while prices held steady at 19 points.

Traffic is on the increase, says Debbie Tebbs, broker/ owner of Cascade Sotheby’s International Realty.

“They are doing so because they believe we are at the bottom,” she says.

“There has been a price correction of up to 60 per cent in some areas.”

Source: Marty Hope, Calgary Herald

The Canadian housing market is at risk of a price correction and remains the chief domestic vulnerability to the country’s economy in the new year, according to two new reports.

They warn of an overvaluation of Canadian housing by 10% to 15%, aggravated by rising levels of household debt.
Entering a year laden with potential global economic shocks, Canadian authorities need to beware of housing risk as the chief domestic risk, the International Monetary Fund warned.

“Adverse macroeconomic shocks, such as a faltering global environment and declining commodity prices, could result in significant job losses, tighter lending standards, and declines in house prices, triggering a protracted period of weak private consumption as households reduce their debt,” the IMF said in its annual report on the Canadian economy.

Should the European sovereign debt crisis destabilize the global economy, triggering in Canada a 15% decline in house prices, combined with a severe downturn in construction activity “could result in a GDP decline of some 2.5% over a period of two years relative to the baseline,” the report said.

TD Economics also warns of a possible housing correction bringing prices more in line with fundamentals next year and into 2013.

Deciding the fate of the housing market will be the opposing forces of rock-bottom interest rates and economic weakness, TD economist Sonya Gulati said in a report.

“Looking ahead, we anticipate a tug-of-war action to take hold in the Canadian real estate market. At one end of the rope is the magnetism of low interest rates; at the other are subdued prospects for economic, income and employment growth.

“Ultimately, we expect the economic side of the equation to win out over the near-term,” she said.

That would mean a soft first half of the year largely as a result of external economic tensions. Even if those headwinds subside in the latter half of 2012, rising interest rates will restore the pressure on housing prices.

On average, and with great regional variation, Canadian housing prices could fall by 1.9% next year and 3.6% in 2013, Ms. Gulati said. Home sales could suffer comparable declines, while average starts should fall to 170,000 to 180,000 annually over the next two years.

“Collectively, these adjustments will gradually erase the over-valuation in the marketplace,” Ms. Gulati said.

The pace of adjustment could become decidedly less gradual if Europe fails to contain financial contagion. And if households continue to take on debt, the eventual deleveraging effect could be more pronounced.

With income growth lagging borrowing, household debt has risen to a record 150% of disposable income, a burden the Bank of Canada said represents the greatest domestic threat to economic stability.

While low interest rates continue to encourage borrowing growth, the IMF lent its support to the central bank’s accommodative rate policy.

“Should the recovery be accompanied by further sustained increases in mortgage debt as a share of disposable income spurred by low interest rates, a tightening of macroprudential policies by the government may be needed,” it said.

Source: Tim Shufelt, Financial Post

Vancouver Sun December 10th, 2011

4096 Napier St., Burnaby

Type: 5-bedroom, 5-bathroom detached
Size: 3,400 sq. ft.
B.C. Assessment, 2011: $715,000
Listed for: $999,900
Sold for: $990,000
Sold on: Oct. 26
Days on market: 9
Listing agent: John Conte at Sutton Centre Realty
Buyers agent: Cathy Chin at RE/MAX Central

The big sell: There is a strong European influence to this home in Burnaby’s Willingdon Heights neighbourhood: It was originally a custom construction by a German builder in 1978 before undergoing renovation by an Italian contractor some years later. Each of the three floors has eight-foot ceilings, and there are draught-preventing double-paned vinyl windows throughout the property, as well as distinctive tile flooring. The home’s features include a steam shower off the master bedroom, a sunken family room with a floor-to-ceiling Squamish stone fireplace, stainless steel appliances and undermount sinks. As well, there’s a 24-by-23-foot southern-exposed concrete deck with sweeping city views, a solar-powered remote-controlled gate that opens to a paved parking area and double-car garage, and pressure-treated cedar gambrel siding. The property sits on a 37-by-122-foot lot and according to agent John Conte, the 3,400-square-foot house is larger than what would be permitted with current bylaws.

1115 Cloverley St., North Vancouver

Type: 4-bedroom, 2-bathroom detached
Size: 2,421 sq. ft.
B.C. Assessment, 2011: $647,000
Listed for: $699,000
Sold for: $732,000
Sold on: Nov. 14
Days on market: 7
Listing agent: Helen Grant at RE/MAX Crest Realty
Buyers agent: Sarina Lui at Angell Hasman & Assoc. Realty

The big sell: Listing agent Helen Grant reports that she had 70 people through her first – and only — open house, with offers presented the following evening. The result? An unconditional offer of $33,000 over the asking price. Two of the major attractions of this rancher must be the views that encompass Vancouver’s harbour and Ironworkers Memorial Bridge, and the location in the family-friendly Calverhall area, which enjoys trails and proximity to Brooksbank elementary, Sutherland secondary, and the Park and Tilford Shopping Centre. The 1955 home has hardwood floors, two wood-burning fireplaces, and a new fenced front yard and paved driveway. The convenience factor includes a sundeck off the kitchen, three good-sized bedrooms on the main floor and a one-bedroom guest suite or mortgage-helper on the lower level. As well, there’s a 26-by-12-foot family/recreation room, a den, a 19-by-5-foot laundry room, ample storage, and a 7,000-square-foot lot.

3240 143A St., Surrey

Type: 6-bedroom, 5-bathroom detached
Size: 5,100 sq. ft.
B.C. Assessment, 2011: $1.244 million
Listed for: $1.499 million
Sold for: $1.46 million
Sold on: Oct. 30
Days on market: 89
Listing agent: Mike Grahame at Home life Benchmark Realty
Buyers agent: John Grauer at Macdonald Realty Westmar

The big sell: Property experts always say location is key, and the builders of this 2004 home in South Surrey’s Elgin Estates must have had that in mind as they took advantage of a cul-de-sac location, a sunny south exposure, and a private fenced back yard adjacent to a greenbelt. This custom-built three-level home has a soaring entryway, and an open design that allows for plenty of natural light. There is wide-plank flooring throughout the main and upper floors, extensive use of crown moulding and window casings, and a spacious kitchen with granite countertops and bespoke cabinetry. The master bedroom is 20 by 14 feet with a spa-like ensuite, and views of the landscaped garden. The second bedroom also has an ensuite and all four upstairs bedrooms have walk-in closets. The property has a full basement that contains two further bedrooms, a rec room and a wet bar.

© Copyright (c) The Vancouver Sun

Multi-family housing starts were up in Greater Vancouver in November over last year, while single family starts were down, Canada Mortgage and Housing Corp. reported Thursday.

“We have seen a reduction in single-family housing starts so far this year, and sort of a resurgence in the multi-family sector,” said Robyn Adamache, CMHC’s senior market analyst. “We’re starting to see some of the larger condo projects starting again, but we’re nowhere near the levels we were in our peak year, 2007.”

Nationally, housing starts declined to 16,615 from 17,637, with B.C. one of only two regions showing an overall increase from 1,609 to 2,241. Urban Quebec also showed a small increase.

Adamache said immigration drives demand in British Columbia and job growth in Vancouver has kept demand for new homes up.

“I think part of what’s going on is we do have a fairly balanced resale housing marking out there, so there is fairly steady demand,” Adamache said. “Part of what’s driving this is ongoing population growth, or people moving here from other countries. In Vancouver, we get 35,000 or 40,000 people moving here every year.”

There were 1,686 housing starts in November in the Vancouver CMA, up from 918 in November 2010. Single-family starts were at 281 for November, down 10 per cent from 2010. Multi-family starts, which include semi-detached, townhouses and apartments, were at 1,405 for November, up a whopping 130 per cent from November 2010.

The year-to-date figures show an overall increase in the Lower Mainland of 23 per cent for 2011 so far over 2010; broken down, there was a 21-per-cent decrease in single-family starts, and a 44-per-cent increase in multi-family starts. This year-to-date shows a total of 13,295 multi-family housing starts, compared to 16,525 in 2007 when housing starts peaked.

The drop in single-family starts could be related to the referendum defeat of the harmonized sales tax, which applies to new homes and which the provincial government said will be phased out by March 2013. Multi-family developments would not be affected in the same way because of the time it takes to build them and because many condos and townhouses would be below the $525,000 threshold for HST.

Richmond and North Vancouver were hot spots for growth, each showing an 89-per-cent increase in housing starts for year-to-date over last year. North Vancouver had 920 housing starts this year so far compared to 486 at this point last year, while Richmond had 2,355 starts compared to 1,248 at the same point last year. The vast majority of those units were multi-family developments.

“Richmond is a big recipient of people moving here from other countries, so that could be driving the demand,” Adamache said.

Because there was a significant slowdown in housing starts in 2009, and because it takes at least two years to complete a multi-family development, there will not be a lot of completed condos flooding the market in the near future, Adamache said.

Source: Tracy Sherlock, Vancouver Sun

Metro Vancouver home sales in November were down compared to a year ago, but up slightly from October, according to a report released by the Real Estate Board of Greater Vancouver Friday.

“The pace of home listings entering the market eased slightly in November, compared to recent months, while sale levels remained fairly normal for this time of year,” REBGV president Rosario Setticasi said in a statement. “November activity helped put our market firmly in balanced territory.”

According to the report, sales totalled 2,360 in November, a 5.9-per-cent decline compared to the 2,509 sales in November 2010 and a 1.9-per-cent increase compared to the 2,317 sales in October 2011.

Last month’s total is also 5.8 per cent below the 10-year average for November sales.

The total number of properties currently listed for sale currently sits at 14,090, a drop of nine per cent compared to October 2011 but an increase of 13 per cent when compared to this time last year.

As well, the benchmark price for all residential properties increased 7.2 per cent to $622,087 in November from $580,080 in November 2010.

Since reaching a peak in June of $630,921, the price has declined 1.4 per cent.

Meanwhile, November sales in the Fraser Valley are up slightly compared to the same month last year and didn’t experience the usual month-over-month seasonal decline.

The Fraser Valley Real Estate Board reported that it processed 1,120 sales in November, an increase of three per cent compared to the 1,084 sales during the same month last year and a decrease of two per cent compared to 1,139 sales in October.

In the last decade, sales decreased on average nine per cent from October to November.

In November, the benchmark price of a detached home in the Fraser Valley was $532,086, an increase of 5.4 per cent compared to $504,848 in November 2010 and an increase of 0.3 per cent compared to October.

Source: Brian Morton, Vancouver Sun