Balanced housing market conditions throughout Metro Vancouver and the Fraser Valley – with sales representing at least 15 per cent of listings – should ensure stable house prices for at least the next year, according to an article in today’s Vancouver Sun by Bruce Constantineau.

That was the consensus among real estate representatives Thursday after a Conference Board of Canada report revealed home sales rose in 24 of 28 Canadian markets between April and May this year.

Metro Vancouver sales on the Multiple Listing Service rose by nearly 10 per cent to 2,882 while Fraser Valley sales rose by one per cent to 1,379.

Sales in both jurisdictions fell from the same month last year and are well down from historical highs but the Conference Board noted the average selling price of a Metro Vancouver residential property rose by 4.8 per cent in the past year to $744,712. The average Fraser Valley price rose by two per cent to $486,072.

“Values might be up a little bit in some markets but for the most part, things are pretty steady and not going in a big direction either way,” Fraser Valley Real Estate Board president Ron Todson said in an interview.

“There’s no obvious reason to expect a quick jolt either way.”

He said balanced market conditions exist when sales represent anywhere from 15 to 25 per cent of total listings and that’s the situation in the Fraser Valley, with the sales-to-listings ratio ranging from 15 per cent in North Surrey to 25 per cent in Cloverdale.

Average MLS selling prices can be deceiving because the sale of a few high-priced luxury properties can skew the overall average price.

Real estate boards like to use “benchmark” prices to determine price trends and the benchmark price for a detached single-family home in the Fraser Valley was $549,200 in May – a 0.2-per-cent increase over the May 2012 price.

The composite benchmark price for all Metro Vancouver residential properties was $598,400 in May – a 4.3-percent drop from May 2012 but 1.8 per cent higher than January 2013.

The Metro Vancouver market switched from a buyers’ market to a balanced market in March, when the sales-to-listings ratio rose from 14 per cent to 15 per cent, where it still stands, said Real Estate Board of Greater Vancouver president-elect Ray Harris.

“Historically, we’re in some of the slowest times we’ve had over the past five to 10 years but the buyers’ market that existed for a couple of years has transitioned to a more balanced market with more stability,” he said.

Re/Max Westcoast manager Richard Laurendeau said Metro Vancouver sellers generally get about 95 or 96 per cent of their asking price now but it usually takes a few days longer for homes to sell. He said it took an average of 54 days to sell a home last month, compared with 45 days in May 2012.

RESALE HOME VALUES IN MAY, WITH YEARLY CHANGE

Vancouver:       $744,712; up 4.8%

Fraser Valley:  $486,072; up 2%

Victoria:           $469,343; down 4.6%

Calgary:            $426,155; up 3.3%

Winnipeg:        $259,523; up 1.6%

Toronto:           $515,294; up 3.4%

Montreal:         $319,486; up 2.4%

Source: Conference Board of Canada

Top 50 most expensive cities worldwide for international assignees

Tokyo, the long-standing costliest place in the world to be an expat, has finally been overtaken by Oslo, due in part to the strength of the Krone and the huge revenues the country brings in from its rich oil reserves.

These were among the findings of the latest cost of living research by ECA International, the world’s leader in providing solutions for the management of international assignments. The survey takes into account inflation, exchange rates, goods that expats typically buy and rental expenses to work out an average cost of living.

At the top of the global list, Oslo is followed by the Angolan capital of Luanda, where the goods and services commonly purchased by expatriates are difficult to access and command a premium. Stavanger (Norway), Juba (South Sudan) and Moscow (Russia) are also now more expensive than Tokyo. These cities make up the top 5 most expensive locations for expatriates globally.

“Tokyo has always been an expensive place for global companies to send staff, and, despite its five-place fall since last year, that remains the case,” said Anna Michielsen, ECA’s General Manager, Australia, New Zealand & Pacific. “The significant depreciation of the Yen against other major currencies in recent months is the primary reason for this drop. It means that for many companies, the cost of maintaining their assignees’ purchasing power while posted there has fallen. But it’s important not to exaggerate the position – Tokyo is still the world’s sixth most expensive city, and the most expensive in Asia.”

Sydney remains the most expensive Australian location surveyed. It is the 17th most costly location for expatriate globally followed by Canberra (23rd), Perth (27th), Melbourne (28th), Adelaide (30th), Darwin (34th) and Brisbane (35th).

Within Europe, the Norwegian capital is followed by Stavanger (3rd globally) and Moscow (5th). The Russian Rouble has weakened between surveys against major currencies but the cost of goods and services in ECA’s basket in Moscow has nevertheless increased more than 10% again this year.

Despite falls in prices and the Swiss Franc weakening against other major currencies over the past year, Swiss locations remain among the top ten most expensive locations for expatriates in the world.

Despite dropping down the ranking, Caracas, ranked 33rd globally, remains the most expensive location in the Americas for international assignees. Manhattan and Vancouver follow, ranking 43rd and 51st respectively.

Indian locations continue to be among the region’s cheapest in terms of cost of living for international assignees. New Delhi, ranked 200th globally is followed by Mumbai (215th). Karachi, ranked 256th globally, is the least expensive Asian location for expatriates.

Source: ECA International. For the full summary, please see World’s most expensive expat cities.

Not so fast. The purported collapse of Canada’s housing market does not appear to be in sight, and any correction down the road could likely be a mild one.

Recent data have defied warnings from market watchers of an impending plunge – caused mainly by the impact of tighter mortgage rules imposed by the federal government last summer to slow the race by consumers for record-low lending rates.

The latest figures show sales of existing homes strengthened for a second month in May, up by a seasonally adjusted 3.6 per cent, after declining 10 per cent between July and March.

The Canadian Real Estate Association, in a report Monday, also said home prices were up 3.7 per cent in May from the same month a year earlier, to a national average of $388,910.

For all of this year, CREA pegs the average price rise at 2.1 per cent, to $370,900, weaker but far removed from correction territory. And in 2014, the average value is expected to rise 1.8 per cent to $377,700, the Ottawa-based industry group said.

“Prices remain stable, perhaps maddeningly so for the legions of bubble mongers,” said Douglas Porter, chief economist at BMO Capital Markets.

Porter noted the May data show “housing remains on track for a fabled soft landing … making a mockery of talk of an imminent collapse.”

While CREA still anticipates sales to fall 2.5 per cent in total during 2013 compared to 2012 – to 443,400 units from 454,573 – home buying should rebound to 464,300 units in 2014, a jump of 4.7 per cent.

Last July, Finance Minister Jim Flaherty announced stricter mortgage lending rules, the fourth such move in four years. The changes included a shorter amortization period for mortgages insured by government-owned Canada Mortgage and Housing Corp. in an effort to limit lending to those least able to afford it.

Flaherty went even further, subsequently warning banks not to pursue “race-to-the-bottom” rates for mortgages that could further pile on household debt beyond already record-high levels and reignite those concerns over a possible housing bubble.

Much of his expressed concern was focused on condominium building in Toronto and Vancouver, which it was feared might result in a glut and possible crash in those markets.

“History tells us that the impact from changes to mortgage insurance rules tend to be temporary, lasting up to three quarters,” said Diana Petra-mala, at TD Economics.

Petramala agrees Canada’s housing market appears to be headed for a soft landing, “with sales and prices growing at more sustainable levels than had been the case through 2010 and 2011.”

The spark that helped ignite the housing frenzy initially came from policy-makers at the Bank of Canada. Led by then-governor Mark Carney, the bank slashed its trendsetting lending rate to 25 basis points in 2009 to spur spending by households and businesses coming out of the recession.

While that rate was subsequently raised to one per cent in September 2010, it has not been adjusted since. Many economists do not expect that to change until at least late 2014.

“As long as interest rates stay low, affordability will remain relatively high. We have many times changed the mortgage rules, and we were attacking the wrong source of the problem,” said Charles St-Arnaud, an economist at Nomura Global Economics in New York.

“The reason why the housing market was so strong was, basically, interest rates were so low. The issue was not the availability of credit, it was the price at which it was given,” he said.

“If you were to give the same availability but, let’s say, 200 basis points higher, I don’t think we would be here in terms of the housing market.”

Carney has also been adamant – along with Flaherty – that consumers need to tighten their belts, warning household debt posed the biggest threat to the Canadian economy.

That mantle of concern has been passed to Stephen Poloz, who on June 3 replaced Carney – soon to be the new Bank of England governor.

Source: Gordon Isfeld, Financial Post

Worldwide residential property prices have risen 6.6% in the year to March, the highest rate for three years, says a new survey.

Hong Kong led the way in the Knight Frank Global House Price Index, with prices rising 28% year-on-year – but it looks set to be knocked-off the top spot in future.

Prices in Beijing and Shanghai, China, rose 23.8% in the last year and 21.1% in Dubai, according to the Knight Frank figures.

This was before the recent government housing market cooling measures took effect and separate data for April and May shows price declines in Hong Kong and falling growth in China, as OPP Connect has reported.

Knight Frank’s Residential Research specialist Kate Everett-Allen says, “Property prices in all world regions, except Europe, increased in the year to March, with the Middle East performing best, rising by 10.6% on average.”

The Knight Frank Global House Price Index rose by 2% in the first quarter and China’s prices rose the most over the three months, by 10.7%.

For the third quarter running, Greece saw the largest annual fall in mainstream prices, declining 11.8%.

It was followed by Hungary, down 9%, and the Netherlands, down 8.3%, in the bottom three rankings this quarter. The Dutch fall was driven down by rising household debt and growing unemployment.

Prices in Ireland fell again, but the 3% decline was much less than previous double-digit losses.

The only countries outside Europe that saw falls were Japan (-2.9% year-on-year) and South Korea (-2.2% year on year.)

Columbia, up 16.6% on year, Brazil and Taiwan, up 12.2%, Turkey, up 11.5%, South Africa, up 11.3% Indonesia, up 11.2% and America, up 10.2% – its best annual performance since 2006 – made up the rest of the top 10 performers.

Thirty five of the 55 housing markets in Knight Frank’s Global House Price Index saw price rises in the year to March. The index now stands 14.7% above its recessional low in the first three months of 2009.

Among the improvers was the UK’s property market, where prices rose by 0.2% in the year to March and are 8.9% above their 2009 low.

South Africa was among the best performers, seeing an increase of 11.3%, boosted by increasingly wealthy middle class who are tapping into the rising confidence of the wider African continent and are keen to get on the property ladder.

Source: OPP Connect

If you’re a young twentysomething first-time homebuyer looking to get on the property ladder in Metro Vancouver, where should you start looking for a home that you can afford?

I recently came across this article by Michael Ferreira of Urban Analytics which could help to point you in the right direction.

Generation Y has many advantages over others, but when it comes to buying a first home it appears the “good old days” truly did belong to baby boomers.

Today’s twentysomethings are not only having trouble earning meaningful pay cheques to put toward a mortgage, but the Canadian government has made it even tougher by tightening lending rules to keep a leash on the housing market. Combine this with a decade-long rise in house prices across Canada, it’s no surprise Gen Y is feeling down about buying their first home.

While it’s a discouraging time for young people with a dream of owning their first home, it’s not impossible for Gen Y to buy. At Vancouver-based Urban Analytics, we’ve watched the evolving first-time homebuyer market for years and can offer some advice to young people – Metro Vancouver in particular – who are contemplating buying their first home.

Tip #1 – Consider “best buy” locations (not the electronics store)
By “best buy” we mean the five areas in Metro Vancouver with the largest selection of new condos and townhomes. These include: Richmond, Coquitlam, Southeast False Creek, Surrey Central, and neighbourhoods south of the Fraser. In fact, Richmond is now the most competitive new condominium market in the region as developers have become increasingly aggressive in their fight for market share. Six major new condo projects totaling more than 1,000 units have launched in Richmond in the past two months alone. Another five condo projects are potentially launching in the next few months. Now may be the time to invest in Richmond.

Tip #2 – Think like Donald Trump: Negotiate
When it comes to buying a new condo unit from a plan, don’t be afraid to ask for a discount or for an upgrade feature to be included. Your real estate agent can also do this for you – just let them know what you want. Some developers are more willing to negotiate than others, depending on their sales targets or those of their lender, so it never hurts to make a pitch.

More and more developers are offering incentives these days. Some include: Bohème on East Hastings where buyers of units more than $330,000 receive either a new Fiat car or $15,000 in cash; at The Rolston in downtown Vancouver, renters who buy in the building receive $1,000 off their mortgage payments for three years, or $500 off for six years; at the Wall Centre Central Park in Burnaby, buyers receive a 3.2-per-cent credit off purchase price. These incentives result in significant savings.

Tip #3 – Tis’ the Season? Or is it?
Spring typically brings with it a sense of renewal, which seems to get more people thinking of buying a new home, is a traditionally strong home-buying season. That means more competition for properties, and less incentive from sellers to offer discounts. Unless your timing is tight, consider buying during traditionally slower times of the year such as mid-summer when there are fewer buyers, and sellers and developers may be more willing to negotiate.

Tip #4 – Become a Landlord
Buying a house doesn’t have to mean carrying the entire mortgage on your own. A lot of first-time homebuyers purchase properties with two or more bedrooms or units, and rent out the extras to roommates or tenants. Becoming a landlord isn’t for everyone, but if you’re up for a little extra work, and some company, it could make the difference between changing your status from renter to buyer.