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

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RE/MAX, in the company’s latest outlook on the real estate market, states that “Moderation – not correction – is on tap for Canadian housing markets in 2013”.

According to a report released today by RE/MAX, Canadian real estate markets demonstrated remarkable resilience in 2012, with home sales up or on par in 65 per cent of major centres — despite considerable headwinds in terms of tighter financing and economic uncertainty abroad. The trend is expected to continue, with home-buying activity propped-up by low interest rates and an improved economic picture in 2013.

The RE/MAX Housing Market Outlook 2013 examined trends and developments in 26 major markets across the country. The report found that the number of homes sold is expected to match or exceed 2011 levels in 65 per cent of markets (17/26) in 2012, led by strong activity in Western Canada, including Calgary (up 13.5 per cent) and Regina (eight per cent). Eighty-one per cent (21/26) of markets are set to experience average price increases by year-end 2012, with Regina the country’s frontrunner at eight per cent, followed by Hamilton-Burlington, Greater Toronto, and Fredericton at seven per cent and Saskatoon at 6.5 per cent. The forecast for 2013 shows the upward trend moderating, but values still ahead of 2012 levels in 85 per cent (22/26) of centres. Stability is forecast to characterize Canadian real estate in the new year, with sales above or on par with 2012 levels in 81 per cent (21/26) of markets.

Nationally, an estimated 454,000 homes will change hands in 2012, falling one per cent short of the 2011 level of 456,749. Canadian home sales are expected to almost mirror the 2012 performance next year, holding steady at 454,000 units. The average price of a Canadian home is expected to remain stable at $364,000 in 2012 — on par with the figure reported in 2011. Values are expected to appreciate nominally in 2013, rising to $366,500, one per cent above year-end 2012 levels.

The report found that low interest rates were a major impetus in 2012, fuelling sales of homes across the board. Tight inventory levels also factored into the equation early in the year, causing a flurry of activity in many centres. By mid-year, however, the third round of CMHC mortgage tightening had a noticeable impact on housing markets, pushing homeownership beyond the grasp of many first-time buyers.

The RE/MAX Housing Market Outlook Report also identified several regional disparities. Most notable was the pull back in sales activity in Greater Vancouver. A banner 2011 year and a slowdown in investor activity contributed to the trend in 2012. Yet, moderation was more widespread in the east, with half of Ontario and Atlantic Canada markets (8/16) reporting 2012 sales off the 2011 pace. Strength was evident throughout Saskatchewan, Alberta, and Nova Scotia, where exceptionally sound economic fundamentals drove demand. The Prairies also stood out in price appreciation, along with the Atlantic Provinces in 2012, and a repeat is on tap for next year. In 2013, Vancouver will rebound to post the strongest sales gain, while the Quebec markets post the sharpest decrease.

While first-time buyers will continue to have a significant presence in the overall marketplace, they are expected to take a back seat in 2013 in Canada’s largest markets, with move-up buyers the new engine driving home-buying activity. The greatest advance in home sales is expected in Vancouver (12 per cent), Calgary (10 per cent), Halifax(five per cent), Kingston (4.5 per cent) and Saint John (four per cent). The strongest upward momentum in average price in 2013 is forecast for St. John’s (six per cent), Regina (five per cent), Kingston (4.5 per cent), and Halifax (four per cent), followed by Fredericton and Winnipeg at three per cent. More balanced market conditions are expected in 2013 throughout the majority of markets, with supply meeting demand.

Immigration and population growth will continue to support housing demand moving forward. The Canadian government’s commitment to immigration will hold steady, with the country set to welcome as many as 265,000 immigrants in 2013. The greater focus on economic immigrants is already leading to quicker household formation and homeownership than in years past. These two factors will also support the burgeoning condominium segment — along with Canada’s aging population — while the desire for tangible assets props up the upper-end.

Source: Net News Ledger

Canadian housing prices will fall 10% over the next several years and homebuilding will slow sharply in 2013, but the country’s recent property boom is not expected to end in a US-style collapse, according to a Reuters poll.

The survey of 20 forecasters published today showed the majority believe the Canadian government has done enough to rein in runaway prices, preventing the type of crash that has devastated the US market for years.

“This isn’t a sharp correction, this isn’t a US-style correction, it’s just simply an unwinding of the excess valuation that was created by artificially low interest rates for a long period of time,” said Craig Alexander, chief economist at Toronto-Dominion Bank.

“I would emphasize that while a 10% correction sounds scary, in actual fact, this would be a healthy outcome.”

US house prices crashed as a mortgage crisis unraveled in 2008, triggering a financial crisis and leaving a trail of foreclosures, negative equity and financial hardship for millions of people. Housing prices in the US have only begun to rise again this year.

On a national basis, Canadian house prices are expected to drop 10% over the next several years, and housing starts will fall more than 17% to 184,000 units by mid-2013, according to median results of the poll, which was conducted over the last week.

House prices have already begun to cool in some areas but nationally remain 23% higher than their trough in March 2009, according to a Canadian Real Estate Association index.

Respondents in the Reuters poll said house prices will rise 2.0% in 2012 and fall 0.1% in 2013, according to the median of 18 forecasts, putting most of the losses at least two years away.

Median forecasts had Toronto prices rising 5.1% in 2012 and falling 1.3% in 2013. But respondents saw an eventual 5% fall from current levels. Vancouver prices were forecast to fall 2.7% in 2012 and 3.8% in 2013, with an eventual decline of 12.5%.

As sales decline and prices fall, homebuilders will ratchet back on construction starts, the poll showed.

Housing starts, which notched a seasonally-adjusted annual rate of 222,945 units in the third quarter, will decline to 200,500 in the fourth quarter, 186,900 in the first quarter of 2013, and 184,000 in the second quarter of next year, predicts the poll.

Twenty forecasters were polled on Canadas housing market. Here are the results

CANADIAN HOUSE PRICES
A rise of 0.1% in 2012 was the median from 14 forecasts
A rise of 0.1% in 2013 was the median from 12 forecasts

TORONTO HOUSE PRICES
A rise of 0.3% in 2012 was the median from 6 forecasts
A fall of 2.0% in 2013 was the median from 5 forecasts

VANCOUVER HOUSE PRICES
A fall of 3.0% in 2012 was the median from 6 forecasts
A fall of 4.8% in 2013 was the median from 5 forecasts

2a. If you think Canadian house prices will fall, how much (in percentage terms), will they drop from here?

5.0% was the median from 9 forecasts. Forecasts ranged from 0.0% to 25.0%.

2b. When will they stabilize?

1 said Q1 2012 1 said Q2- Q3 2012
1 said Q4 2013 1 said Q1 2014
1 said Q1 2015 2 said 2015

3. On a scale of 1 to 10, where 1 is extremely undervalued, 5 is fairly valued and 10 is extremely overvalued, what best describes the current average level of Canadian house prices relative to fundamentals?

7 was the median from 14 forecasts. Forecasts ranged from scale of 5 to 8

4. Do you think the Canadian government will tighten mortgage rules within the next 12 months in an attempt to cool the housing market?

10 said yes
4 said no

Source: Andrea Hopkins, Reuters

Calgary and Edmonton are now the top cities for real estate investment, according to a new report from PwC and the Urban Land Institute, which says the two Alberta cities have displaced Toronto and Vancouver for 2013.

Investors will favour apartment and office buildings next year while developers will focus on the retail market but overall the report says mediocre will be the new measure of what defines a good market.

The report, which reflects the views of over 900 individuals throughout Canada, the United States and Latin America, says “compared to everyone else Canada will do very well” which seems to be the theme across the country.

“The Canadian real estate community understands real estate fundamentals and knows how to react to fluctuations in monetary policy and capital markets. Canada’s real estate industry continues to operate well despite uncertainties in domestic and global economies,” said Lori-Ann Beausoleil, PwC Canada’s real estate leader.

Suggestions that emerged from those who participated in the survey:

• Core real estate in major markets should be held, which for institutions means a place to keep their money in “income-producing trophy properties” across all property classes.

• Green offices are something major tenants want and they are willing to move from older buildings if they can get an advantage form a new one.

• Land bank out west because the escalating inflow of workers will continue unless there is reversal in energy and commodity markets.

• Infill sites represent intensification opportunities, especially ones located near mass transit.

• There are still opportunities for home builders to construct large layouts which is an under served market, as soaring condo prices and “unfriendly units” create an opening for that segment.

• If luxury condos dip, buy. Increased urbanization will continue and upscale space and the best downtown locations will reclaim any lost value quickly.

Calgary got the top spot in the survey as rents are rising in the oilpatch and acquiring real estate is becoming more difficult. The report predicts more of the same in 2013 with a focus on demand for office and industrial space.

John O’Bryan, chairman of CBRE Canada, who spoke about the Canadian commercial market at conference to discuss the report, says the employment numbers just lean towards the west. “Anywhere that has any resource base is doing exceptionally well,” he said.

Mr. O’Bryan said 2012 might be called the year of the real estate investment, highlighted by Dundee REIT’s $1.266-billion purchase of Scotia Plaza in Toronto with partner H&R REIT which occurred right under the nose of the pension funds.

“It’s almost the perfect environment for them,” said Mr. O’Bryan, about REITs. “Take office buildings, two thirds of all of the transactions have been REITs. Conditions can’t be any better. They’ve got the balanced sheets, they’re proven in the capital markets.”

Source: Garry Marr, Financial Post

The Greater Vancouver housing market saw a slight increase in the number of home sales, a slight reduction in the number of listings, and a slight decrease in home prices in October compared to the summer months. With those changes, the sales-to-active-listings ratio increased to 11 per cent in October from 8 per cent in September.

The Real Estate Board of Greater Vancouver (REBGV) reported 1,931 residential property sales of detached, attached and apartment properties on the region’s Multiple Listing Service® (MLS®) in October, a 16.7 per cent decline compared to the 2,317 sales in October 2011 and a 27.4 per cent increase compared to the 1,516 home sales in September 2012.

October sales were 28.5 per cent below the 10-year October sales average of 2,700.

“Buyer demand increased slightly in October compared to the previous few months,” Sandra Wyant, REBGV president-elect said. “Overall conditions in today’s market remain in favour of buyers, with low interest rates, more choice, and less time pressure in terms of decision-making. This translates into a calmer atmosphere for those looking to buy a home and it places more onus on sellers to ensure their homes are priced to compete in today’s marketplace.”

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,323 in October. This represents a 1.2 per cent decline compared to October 2011 when 4,374 properties were listed for sale on the MLS® and an 18.8 per cent decline compared to the 5,321 new listings in September 2012.

At 17,370, the total number of residential property listings on the MLS® increased 12 per cent from this time last year and declined 5.3 per cent compared to September 2012.

Since reaching a peak of $625,100 in May, the MLS Home Price Index® (MLS HPI®) composite benchmark price for all residential properties in Greater Vancouver declined 3.4 per cent to $603,800 in October. This represents a 0.8 per cent decline compared to last year.

“There’ve been modest price changes since they peaked in the spring. The largest reductions have occurred in the areas and property types that experienced the biggest price increases over the last few years,” Wyant said.

Since hitting a record high in April, the benchmark price of a detached home on the Westside of Vancouver has declined 8.6 per cent while detached homes in Richmond and West Vancouver have seen declines of 6 per cent over the same time period.

Sales of detached properties in Greater Vancouver reached 790 in October, a decrease of 18.9 per cent from the 974 detached sales recorded in October 2011, and a 19.1 per cent decrease from the 976 units sold in October 2010. Since reaching a peak in May, the benchmark price for a detached property in Greater Vancouver has declined 4.1 per cent to $927,500.

Sales of apartment properties reached 803 in October 2012, a 16.2 per cent decrease compared to the 958 sales in October 2011, and a decrease of 18.4 per cent compared to the 984 sales in October 2010. Since reaching a peak in May, the benchmark price for an apartment property in Greater Vancouver has declined 2.9 per cent to $368,800.

Attached property sales in October 2012 totalled 338, an 11.5 per cent decrease compared to the 382 sales in October 2011, and a 10.3 per cent decrease from the 377 attached properties sold in October 2010. Since reaching a peak in April, the benchmark price for an attached property in Greater Vancouver has declined 2.9 per cent to $457,700.

Source: Real Estate Board of Greater Vancouver

Toronto’s condo market is taking it on the chin, though that compares to a strong 2011.

Condominium sales in Canada’s biggest city plunged 30 per cent in the third quarter from the second, leading developers to delay launching projects, Urbanation Inc. said today.

Sales of new condos fell to 3,317 in the latest quarter, the research firm said. In the first nine months of the year, sales slipped to 14,156, and are on track to close out the year with a 35-per-cent decline from last year’s record level of 28,190.

“With slowing sales and a record level of unsold inventory in the market in the second quarter, condominium developers reacted quickly by delaying their project launches, especially in the ‘416’ area,” said executive vice-president Ben Myers, referring to one of the area codes used in the Toronto area, the other being further from the city core.

“Just five projects launched in Toronto in Q3-2012, as developers choose to review their pricing assumptions and unit mix.”

Resales also sank in the third quarter, by 32 per cent to 3,413 from 5,050 in the second quarter.

“The change in the mortgage insurance rules may have forced many buyers to settle for smaller units then they had previously desired,” Mr. Myers said, referring to the latest round of restrictions from Finance Minister Jim Flaherty that took effect in July.

“The number of resale transactions for units priced over $400,000 fell 40 per cent compared to last quarter, while there was a 38-per-cent quarterly drop in units traded over 1,000 square feet.”

Slowing sales in the city, where observers, including the finance minister, feared a condo bubble, are taking their toll on projects.

“The number of unit completions in 2012 are well below our forecasts, as construction delays have pushed back occupancy on a number of projects,” said Mr. Myers.

“The average project that completed construction in 2012 took 3.85 years from sales launch to occupancy. Compare that to 2003, when they average took just 2.68 years for a similarly sized project (205 units vs. 197 units).”

Unsold inventory in the city had reached a record 18,123 in the second quarter, but that has since slipped to 17,182.

And, noted Urbanation, starts have eclipsed completions for the eighth quarter in row, leaving a record 207 projects, with more than 56,300 units, under construction.

“The 28,000-plus completions next year could add as many as 14,000 new condominium rental units to the Toronto [census metropolitan area] via private landlords, which would represent a whopping 25-per-cent increase in condominium rentals in the metropolitan area,” it added.

Source: Michael Babad, Globe and Mail