Archive for July, 2013

Will single-family homes always be in demand?

Wednesday, July 31st, 2013

It’s a question that can create severe anxiety disorder among baby boomers: Who will buy their single-family homes when they decide to downsize into smaller units?

Pessimists feel baby boomers could soon flood the market with detached homes as health and financial issues force them to sell, creating an oversupply situation that forces prices down.

But a Conference Board of Canada report Monday said new young families and increased levels of international immigration should boost the demand for single-family homes in the future, at least partly offsetting any increase in the supply of baby boomers’ homes for sale.

Conference Board economist Julie Ades feels the relative supply of single-family homes will drop in the future as construction levels decline and some detached homes are converted into semi-detached units.

“The market will gradually adjust on the demand side and the supply side,” she said in an interview. “That will help balance the market and we will likely see a mitigation of the negative impact on the price of single-detached dwellings.”

The average Multiple Listing Service selling price for a single-family home in Greater Vancouver has skyrocketed in the past 30 years – from $130,000 in 1983 to $1.1 million last month.

Baby boomers hoping to cash in on increased home values by selling and downsizing shouldn’t be too concerned about a possible surge in the number of aging people chasing the same strategy at the same time, according to Real Estate Board of Greater Vancouver president-elect Ray Harris.

“If a flood of homes did come on the market, I think the situation would correct itself very quickly,” he said. “Prices might drop but people who don’t have to sell would take their homes off the market, so it becomes a self-controlling mechanism.”

Harris said health issues are the biggest reason owners decide to sell their single-family homes.

“Going from a home with two levels to a home with just one level is very common because of mobility issues (among older people),” he said. “Some owners just can’t maintain a big home because maybe their partner has passed on or had to move into a long-term care home.”

Abbotsford resident Marlene Nunn said health and financial issues were the biggest factors in the decision by her and her husband, Herb, to sell their Maple Ridge house this year and buy an Abbotsford condo.

They sold their 1,700-square-foot rancher for $446,000 and bought a 1,200-square-foot condo for $261,000.

Herb Nunn developed a heart issue that made it hard to keep up with the maintenance work required on the house and cashing in the equity was “absolutely” another reason to make the move, Marlene Nunn said.

“It wasn’t an easy decision and it took a while for us to come to this conclusion but it was just the right thing for us to do,” she said.

Port Moody realtor Derek Love doesn’t expect to see a glut of baby boomer homes for sale any time soon.

“More than half the people in my neighbourhood are over 65 and most of them want to stay in their homes for as long as possible,” he said. “I’m still selling single-family homes in the $2-million range to people in their 50s whose kids have moved out.”

Love said many potential clients in their 60s have told him they would sell their suburban homes and move to a downtown Vancouver condo if those condo prices weren’t so high. But those dream condos are unaffordable, so they have decided to keep their homes.

Love feels condo prices could be under more pressure than single-family home prices in the future because so many new units are being built and many older buildings will need a lot of capital investment for maintenance purposes.

About 60 per cent of Canadians now live in single-family homes but the Conference Board report notes the prevalence of people living in detached homes declines after the age of 55.

According to 2011 census data, 67 per cent of Canadians aged 50 to 54 lived in a detached house but the proportion dropped to 59 per cent for those between the ages of 75 and 79.

The report also said smaller multi-family units will account for a growing share of future residential demand in Canada because of affordability issues and demographic trends.

The proportion of one-person Canadian households rose from 25.7 per cent in 2001 to 27.6 per cent in 2011, due to factors such as a rising divorce rate, fewer marriages and common-law relationships and the aging population.

Source: Bruce Constantineau

How overvalued is Canada’s real estate market?

Tuesday, July 30th, 2013

Ever since the US real estate crash in 2008, there’s been discussion about whether Canada will have a similar experience. We weathered the recession, but rising real estate prices have put Canada’s housing market on the list of one of the most overvalued markets in the world, according a recent Organisation for Economic Co-operation and Development report.

The housing market is expected to correct itself and real estate prices will drop, but it’s a question of when that will happen and whether it will be a soft landing or a hard crash.

The OECD uses two measurements to determine whether a housing market is overvalued or undervalued: The price-to-rent ratio, which measures how profitable it is to own a house, and the price-to-income ratio, which measures how affordable it is to own a house. If the ratios are above the long-term average, it means that the housing market is overvalued. Read on to find out which countries have the most overvalued housing markets and where Canada stands.

Using these indicators, OECD countries can be roughly placed into five categories:

1. Where houses appear broadly correctly valued. This category includes the Unites States, where prices have started rising again after a substantial correction; Italy, where prices are falling rapidly; Austria, where prices are rising; and Iceland, Korea and Luxembourg where prices are roughly flat.

2. Where houses appear undervalued and prices are still falling. This category includes European countries hit hard by the crisis – Greece, Ireland, Portugal, Slovenia, Slovakia and the Czech Republic – but also Japan.

3. Where houses appear undervalued but prices are rising. This category includes only Germany and Switzerland, two European countries where strong growth in household disposable income and favourable financing conditions have boosted prices (despite macro-prudential measures in Switzerland).

4. Where houses appear overvalued but prices are falling. This category is the largest as it includes many European countries where the post-crisis housing market correction is still ongoing, most notably Spain, but also the United Kingdom, Belgium, Denmark, Finland, the Netherlands and one non-European country, Australia. While price corrections in these countries are necessary, they are also concerning as they weaken households’ financial health and potentially fragilize banking sectors.

5. Where houses appear overvalued but prices are still rising. This is the case in Canada, Norway, New Zealand and, to a lesser extent, Sweden. Economies in this category are most vulnerable to the risk of a price correction – especially if borrowing costs were to rise or income growth were to slow.

Source: OECD and Josephine Lim, MSN Money

What is the average price of a home in Vancouver?

Tuesday, July 23rd, 2013

The average price of a home in Vancouver has gone up, as the Metro Vancouver and Fraser Valley resale housing markets recorded some gains last month.

That’s according to a Conference Board of Canada report on Tuesday that revealed home sales rose in 21 of 28 Canadian markets between May and June this year.

Although the average selling price of a residential property dipped in the Fraser Valley, it continued on a steady climb in Vancouver.

Year over year, the selling price in Metro Vancouver went up more than eight per cent to $750,778, while it rose 0.9 per cent from May to June.

In the Fraser Valley, the price fell by 0.2 to $486,657, reversing a slight increase the month previous.

The board attributed the jump in Vancouver’s real estate prices to the large number of pricey detached homes changing hands. However, because a few luxury homes can skew the overall average price, realtors often look to the composite benchmark.

The MLS composite benchmark price for all residential properties in Metro Vancouver is $601,900, an increase of 2.3 per cent since January.

The number of Metro Vancouver sales on the Multiple Listing Service rose by more than six per cent to 28,380, while Fraser Valley sales rose by nearly seven per cent to 12,708.

Sales in Metro Vancouver were up 12 per cent over the same month last year, while they fell by eight per cent in the Fraser Valley.

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, according to Real Estate Board of Greater Vancouver president-elect Ray Harris.

Source: Tiffany Crawford, Vancouver Sun

Sales of Canadian homes continue to climb for fourth consecutive month

Wednesday, July 17th, 2013

Home buyers extended a trend of increasing sales into its fourth consecutive month, according to the Canadian Real Estate Association as mortgage rates also crept up last month.

However, economists suggested Monday the higher rates could help cool the market through the second half of the year.

“Interestingly, the recent move up in five-year fixed rates might have actually stoked sales activity in June, with buyers making their move before their lower rate contracts expired,” said Robert Kavcic, a senior economist at the Bank of Montreal.

“If so, that could set the stage for another cooling off period this summer.”

CREA reported home sales through its Multiple Listings Service were down 0.6 per cent from June 2012, but up 3.3 per cent from May.

Canada’s big banks have been raising rates for fixed mortgages in recent weeks as rates in the bond market have also climbed.

TD Bank economist Diana Petramala said she expects sales to slow down during the summer and fall, but noted they should remain at healthy levels.

“Conditions for housing demand are actually still quite good in most major markets, including good employment markets and decent affordability, with the exception of maybe Toronto and Vancouver,” Petramala said.

“Demographics are still quite supportive of sales roughly around the level that they currently are. So more of a stabilization going forward.”

Despite the drop in sales from June 2012, the national average sale price last month was up 4.8 per cent from a year ago, rising to $386,585.

CREA’s house price index, which adjusts for the difference in different property categories, was up 0.12 per cent from May and up 2.27 from a year ago.

The association said home sales improved in two-thirds of the markets it tracks compared with May with the biggest gains in Victoria, Vancouver, the Fraser Valley, Edmonton, Saskatoon, Winnipeg and Montreal.

When compared with a year ago, Toronto and Montreal were lower, while Vancouver, Calgary, and Edmonton were up compared with last June.

The number of newly-listed homes was down 0.5 per cent on a month-over-month basis in June.

Economists have suggested changes to rules for mortgage lenders and borrowers announced about a year ago have been a major factor behind a slowdown in Canadian residential real estate sales starting last August and continuing into early 2013.

CREA president Laura Leyser said “Whether those sale gains reflect temporary factors or a fundamental improvement after a slow start to the year really depends on where you are.”

The association said some 240,068 homes have sold in Canada through its MLS system so far this year, down 6.9 per cent from the first half of 2012.

Source: Alexandra Posadzki, Canadian Press

Canadian home sales fall from a year ago but prices climb

Monday, July 15th, 2013

The Canadian Real Estate Association says home sales in June were down from a year ago but up from the previous month.

The association says sales last month were down 0.6% from a year ago, but up 3.3% when compared with May.

Looking at the city-by-city picture, when compared with a year ago, home sales in Toronto and Montreal were lower, while Vancouver, Calgary, and Edmonton were up compared with last June.

Despite the overall drop in sales from June 2012, the national average sale price last month was up 4.8% from a year ago.

The number of newly listed homes were down 0.5% on a month-over-month basis in June.

The association says some 240,068 homes have sold in Canada through its MLS system so far this year, down 6.9% from the first half of 2012.

Source: Canadian Press

Greater Vancouver housing market is back on track

Tuesday, July 9th, 2013

Greater Vancouver’s housing market is showing early signs of a revival in sales, an uptick that bodes well for the bellwether market and the rest of the country.

In June, sales surged 11.9 per cent in Greater Vancouver compared with June, 2012, for single-family detached homes, condos and townhouses – the biggest percentage jump in two years. In May, residential sales volume climbed a mere 1 per cent in Greater Vancouver, following a 19-month stretch of year-over-year declines in the number of properties sold.

The Vancouver, Victoria and Calgary markets all displayed strength in June sales.

Total June sales reported by the Calgary Real Estate Board increased 5.5 per cent year-over-year while overall sales in Greater Victoria rose 6.6 per cent.

Calgary “somehow managed to post yet another gain last month, despite the incredible disruption of the flood,” BMO Nesbitt Burns Inc. chief economist Douglas Porter said in a research note Wednesday. “More telling, Vancouver popped 11.9 per cent above (admittedly soft) year-ago levels in June.”

Last month, 2,642 Greater Vancouver properties changed hands on the Multiple Listing Service, compared with 2,362 sales in June of 2012.

“If these results are at all indicative, it looks like Canadian home sales remained surprisingly resilient again in June,” Mr. Porter said, adding that the housing market’s tentative recovery now faces another test owing to longer-term mortgage rates edging up in recent weeks.

Still, the Real Estate Board of Greater Vancouver noted that last month’s sales of single-family detached homes, condos and townhouses were 22.2-per-cent below the 10-year average for June. Also, June’s sales were down 8.3 per cent from May’s 2,882 homes that were sold on the MLS.

While the Vancouver area’s residential housing prices slipped 3 per cent in June, Mr. Porter thinks the worst may be over for the local market. The benchmark index price, which strips out the most expensive properties, was $601,900 in June for resale single-family detached homes, condos and townhouses. That is a decrease of $18,700 from $620,600 in the same month of 2012.

Index prices in June climbed 2.3 per cent from January’s $588,100.

In the Fraser Valley, which includes the sprawling and less-expensive Vancouver suburb of Surrey, benchmark June prices for existing single-family detached homes, condos and townhouses slipped 0.6 per cent to $428,400. Sales volume in the Fraser Valley decreased 9.3 per cent in June to 1,327, underscoring the cautionary view from housing experts who say a broad-based recovery in sales will take time.

A measurement closely watched by the real estate industry, known as the sales-to-active-listings ratio, registered 15.3 per cent in Greater Vancouver last month. B.C. real estate agents consider it a balanced market when the ratio ranges from 15 to 20 per cent. It is deemed a buyer’s market below 15 per cent and a seller’s market above 20 per cent in the Vancouver region.

A balanced market means that key housing indicators such as prices are stable, with more buyers and sellers able to reach deals than a year earlier, said Greater Vancouver board president Sandra Wyant.

In two key neighbourhoods, index prices for single-family detached homes dropped year-over-year but perked up on a six-month basis. On Vancouver’s west side, the benchmark price of $2.07-million for a detached house was down 6.1 per cent from June of 2012, but up 3.3 per cent from December’s figure. On Vancouver’s east side, detached homes had a June benchmark price of $845,900, down 2.2 per cent year-over-year but up 2 per cent over a six-month period.

Source: Brent Jang, Globe and Mail

What is currently happening to the Metro Vancouver housing market?

Friday, July 5th, 2013

What do you have when house values dip slightly and sales remain below historical averages?

You have “balanced” market conditions, according to the Fraser Valley and Greater Vancouver real estate boards.

The boards reported Wednesday that Multiple Listing Service sales in June declined from May levels and sales for the first half of 2013 have fallen significantly below last year’s activity.

Greater Vancouver MLS sales during the first six months of this year fell 9.1 per cent from last year to 13,646 while Fraser Valley sales dropped 15.7 per cent to 6,714.

Greater Vancouver sales dropped to 2,642 last month from 2,882 in May while Fraser Valley sales dipped to 1,327 in June from 1,379 in May.

“We’d be concerned if we had a lot of new listings coming onto the market but that isn’t happening,” Real Estate Board of Greater Vancouver president-elect Ray Harris said in an interview. “As long as the number of buyers and sellers remains fairly constant, we don’t really have any fear and conditions should remain balanced.”

The total number of Greater Vancouver MLS listings has fallen six per cent in the past year to 17,289. Fraser Valley listings have declined one per cent in the past year to 10,515.

The benchmark price for all Greater Vancouver residential properties sits at $601,900 — a three-per-cent decline from a year ago but a 2.3-per-cent increase from January.

The benchmark price for a Fraser Valley single family home has risen 0.2 per cent in the past year to $552,200 but the benchmark price for townhouses in the region has fallen 2.1 per cent in the past 12 months to $298,700.

There are a few local “bright spots” in the market that are performing well in spite of mediocre conditions elsewhere, said Fraser Valley board president Ron Todson.

He said Langley has a sales-to-listings ratio of 26 per cent, which approaches sellers’ market conditions.

Realtors say balanced market conditions exist when the sales-to-listings ratio ranges from 15 to 25 per cent. Anything below 15 per cent is considered a buyers’ market.

“Things can vary significantly from one local market to another as different factors come together,” Todson said. “I know of some Walnut Grove properties (in Langley) that are selling after being on the market for just five days.”

He said Langley, in particular, is benefiting from the new Port Mann Bridge and better bus service that has improved the commute to Vancouver.

Harris noted single-family home sales in Richmond rose to 115 from 76 a year ago while single-family sales on the west side of Vancouver jumped to 146 from 102 in June of 2012.

He said both sales totals remain below historical averages but are improving as the sales-to-listings ratio — which dipped below 14 per cent in Greater Vancouver early this year – remains steady at 15 per cent.

“We saw price declines in the second half of last year but have gained a lot of that back this year,” Harris said.

Source: Bruce Constantineau, Vancouver Sun

Vancouver home sales in June up almost 12 per cent from 2012

Wednesday, July 3rd, 2013

Home sales in the Vancouver area were up 11.9 per cent in June compared with a year ago, according to the latest MLS figures.

The Real Estate Board of Greater Vancouver says there were 2,642 homes sold through its Multiple Listing Service last month, up from 2,362 sales in June 2012, but down from the 2,882 sales in May 2013.

New listings in Greater Vancouver totalled 4,874 in June, down 13.2 per cent from the 5,617 new listings reported a year ago and down 13.8 per cent from the 5,656 new listings in May of this year.

The board said the June sales were 22.2 per cent below the 10-year average for the month, while new listings for the month were 11.5 per cent below the 10-year average.

The total number of properties listed for sale on the MLS system in Greater Vancouver was 17,289, down six per cent from a year ago and up 0.4 per cent compared with May 2013.

The MLS Home Price Index composite benchmark price for Greater Vancouver was $601,900, down three per cent compared with a year ago.

Source: Canadian Press

Latest condo design has a swimming pool in every balcony

Tuesday, July 2nd, 2013

The Aquaria Grande is an incredible project by Hong Kong-based architect James Law. Located in Mumbai, India, the homes are equipped with one of the most stunning architectural feats which have transformed standard balconies into swimming pools.

The residential location consists of two 37 story towers which were designed by Wadhwa Group. They boast modern and unique architectural design with several high-end amenities.

With over 200 apartments, each unit features three-sided natural light which also allows for cross-ventilation. There is an indoor club house that includes a gym and sauna, three levels of vehicle parking space, and a sustainable podium garden. Making eco-friendliness a priority of the towers’ modern design, the structures include energy efficient glass facades to reduce energy consumption.

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