Buyers from China, Russia, the Middle East, India and the United States are expect to be among those looking for high-end homes in major Canadian cities during the fall, says leading agent Sotheby’s International Realty Canada.

Over the year to June, sales of luxury homes worth at least CAN $1-million have risen, according to the newly-published Top Tier Report.

Single family homes in the first half of 2013 compared with the same time last year, worth more than CAN $1-million have risen by 10% in Calgary, 6% in Montreal, 5% in Toronto and are down 2% in Vancouver. Most property sold was worth between CAN $1-4-million.

Sales of townhouses worth more than CAN $1-million were up 73% year-on-year in Calgary and 21% in Toronto, but were down 8% in both Vancouver and Montreal.

But year-on-year condo sales were down in all areas, falling 37% in Calgary, 20% in Vancouver and 19% in Toronto and Montreal.

Sotheby’s President and Chief Executive Ross McCredie says, “In examining the performance of the high-end market, we feel confident that Canada’s largest urban centres remain in exceptional positions heading into fall, with healthy market fundamentals from coast to coast.”

Despite the annual fall in condo sales, many overseas buyers are still actively looking to buy.

Elli Davis, a Sales Representative from Royal LePage, Toronto, says many foreigners buy condos for their children to live in while they attend school in Canada.

“I’m seeing a lot of foreign names on showings of all of my listings. More foreign names than not.”

Canadian buyers have lagged a little behind international demand, says the bi-annual report that is claimed to be the only Canadian study that compares data for residential properties with values over CAN $1-million.

“The performance of Canada’s high-end residential real estate market in the first half of 2013 reflected a year of recalibration and overall strength.

“While international demand for luxury real estate in the major urban centres of Vancouver, Calgary, Toronto and Montreal had been consistently strong leading into 2013, Canadian buyers had taken time to adjust to the precautionary lending controls implemented by the Bank of Canada in July 2012.

“By June 30, 2013, sales data for the first half of 2013 reflected positive momentum in key markets compared to the last half of 2012, with variations between condominiums, attached homes and single family homes, as well as between price segments above the $1-million mark.

Mr McCredie says investors of luxury home are unlikely to be put off by short-term market fluctuations. “They’re not first-time homebuyers. They’ve seen cycles before. Most of our clients remember what it was like in the early 80s and the early 90s, when you had major corrections, so they’re not going into these markets blindly.”

In Vancouver, sales are now picking up, the report claims. The city saw 1,239 sales of homes over CAN $1-million in the first six months of the year. “Buyers are beginning to gain more confidence when making big purchase decisions and those who initially put their decision to buy on hold are now coming back on the market.”

Calgary saw 388 sales over $1 million from 1 January to 30 June. “Calgary’s high-end residential real estate market continues to display strong market fundamentals, setting records in the first half of 2013 while experiencing both a steady rise in sales volume for homes over $1-million and a strong decline in days on market for key segments compared to 2012.”

Toronto got off to a faltering first three months, but recovered later and sales of prime homes reached 2,947.

The Montreal market is stable, but there were no sales of single family, attached and condominium properties over CAN $4-million within the first half of 2013, the report admits.

Source: OPP Connect

A Middle Eastern royal’s purchase in May of the penthouse suite and unit below it at Vancouver’s five-star Fairmont Pacific Rim hotel for $40 million was the most expensive condominium purchase in Canada.

The hotel is in Coal Harbor, a community in Vancouver West, one of Canada’s most expensive home-buying areas. The property is one block north of a street that residents in the 19th century called Blueblood Alley for its wealthy mansion-owners.

“Vancouver has been fuelled tremendously in the last couple of years by high-end wealthy Chinese and Hong Kong buyers,” Malcolm Hasman, the luxury real estate agent who brokered the sale of the Fairmont penthouse unit to the Middle Eastern client, said in a Sept. 16 phone interview. This year probably will be Hasman’s third-highest in sales, after 2012 and 2007, with more than $200 million in luxury real estate sold, he said.

“There’s more money around today than there’s ever been in the high-end market. And where’s it coming in from? The Middle East, China, Asia.”

The oceanfront apartment was also among about 131,324 house and condo transactions in the past three months, up 6.1% from the same period a year earlier and defying the predictions of the Toronto Real Estate Board and the Bank of Montreal that the market is cooling. Analysts and investors including Bank of Nova Scotia and Sun Life Financial Inc. now say it represents the excesses of a market that may be peaking.

“I’m not bullish on Canadian housing,” said Stephen Groff, who helps oversee $7 billion in assets at Cambridge Global Asset Management unit of CI Investments Inc., in a Sept. 13 interview. “It’s just people seeing rates starting to go up and they rush to get the deal done. It isn’t indicative of an improving market.”

The sales pop, driven by wealthy foreign investors and Canadians jumping into the market before expected mortgage rate increases, is at odds with Canada’s sluggish growth. Fuelled by consumers carrying record levels of personal debt and a high unemployment rate, there’s growing concern that the housing decline when it comes will be harder than the “soft landing” predicted by Bank of Canada Governor Stephen Poloz and Scotiabank Chief Executive Officer Richard Waugh.

Purchases of multimillion-dollar luxury properties on the west coast and condo units in Toronto’s 260 towers helped drive debt-to-household income to a record level in the second quarter. Mortgage borrowing rose 1.7% to $1.11 trillion, according to Statistics Canada, and debt such as mortgages and credit cards increased to 163.4% of disposable income, compared with a revised 162.1% in the prior three-month period. That’s among the highest in the world and compares with 91.9% in the U.S., down from a record 112.7% in 2009.

Home buying slowed last year after regulators tightened borrowing qualification standards. It has picked up again as consumers take advantage of historically low mortgage rates.

The government shortened amortizations in July 2012 to 25 years from 30 years as benchmark interest rates continue to be anchored at 1% in the longest pause since the 1950s. The Office of the Superintendent of Financial Institutions also introduced tougher standards for lenders.

The result of the efforts was short-lived. In August last year, home sales slipped 14% across the country led by Vancouver’s 31% dip, according to data from local real estate boards. The total values of August, 2012 purchases was 24% lower than this year’s $8.2 billion.

In comparison, Toronto residential real estate sales last month rose 21% from a year ago, according to the Toronto Real Estate Board, or TREB, and Vancouver existing home sales surged 53%, said that city’s board.

Source: Katia Dmitrieva, Bloomberg News

Sales of single-family homes over $1 million were up 65 per cent in the first half of 2013, up from the last half of 2012.

According to the report, Calgary was the only Canadian city to surpass Vancouver, with sales up 67 per cent in the same category, as reflected in the recent Top Tier Real Estate Report. Luxury condo sales over $1 million were up in Vancouver, Calgary and Toronto, compared to the last half of 2012, and spent fewer days on the market.

“We feel confident that Canada’s largest urban centres remain in exceptional positions heading into fall, with healthy market fundamentals from coast to coast,” says Ross McCredie, president and CEO of Sotheby’s International Realty Canada.

Foreign buyers make up approximately 40 per cent of luxury single-family home buyers in Vancouver, according to Sotheby’s International Realty Canada’s Top Tier Trends study (April 2013). This trend is expected to continue with China remaining the top market influencer, followed by Iran and the United States.

“A lot of people have this perception that people are getting off an Air China flight and are buying these million-dollar properties and that is an incredibly rare event. What you are seeing is second or third generation Chinese,” says McCredie. “That’s been a trend that has gone on for a long period of time and it’s going to continue in the Vancouver marketplace.”

Another trend that has continued in Vancouver is parents buying condos for their children. According to McCredie, the transfer of wealth between generations in Canada is unprecedented.

“For a young family trying to start out in Vancouver, there is almost no chance that they could do it on their own,” he says.

The report also attributes an uptake in sales to a steadied political and economic environment, following May’s provincial election. Many Sotheby’s clients were worried a change of government would not be positive for the province’s economy, he says.

While Vancouver’s high-end real estate is up in the first half of 2013 compared to the last half of 2012, condo sales 2013 were down by 20 per cent compared to the first half of 2012. McCredie attributes this to a couple of high-profile projects that were deeply discounted last year, spooking potential buyers. Talk of the real estate market being overheated didn’t alleviate buyers’ worries.

McCredie is confident that sales will continue to grow this year and says that there isn’t anything worrying the real estate industry at this point in time. In fact, he believes that Canada has one of the healthiest real estate markets in the world.

“When you look at the Canadian real estate fundamentals it’s one of the healthiest real estate markets in the world,” he said. “All Canadian cities are growing and we have very low vacancy rates in almost all of our cities. So when you have all those different dynamics, it speaks to a healthy market.”

Source: Nicole Clark, BC Business

Home sales in two of Canada’s largest cities continued their surge in August from a year earlier.

Sales in Toronto, the largest market, rose 21% from August last year to 7,569 units, the Toronto Real Estate Board said in a statement Thursday, with average prices gaining 5.4%. Vancouver existing home sales rose 52%, that city’s real estate board said Wednesday.

Housing-market data are showing few signs of a hard landing after warnings from economists and policy makers that a bubble may have been forming. Buyers have adjusted to tighter mortgage rules imposed last year, according to Diane Usher, president of the Toronto realtor group.

“Many households have accounted for the added costs brought on by stricter mortgage lending guidelines and have reactivated their search for a home,” User said in today’s statement.

Other regions and cities recording double-digit sales gains in August include Victoria and the Fraser Valley areas of British Columbia, and Calgary.

The average price of a home sold in Toronto was $503,094 in August, the Toronto realtors group said Thursday.

There are signs the country’s housing market may be losing some steam. Existing home sales recorded their smallest monthly gain in five months in July, the Canadian real estate association said Aug. 15. Banks including Royal Bank and Toronto-Dominion, the two largest lenders, also have raised mortgage rates in recent weeks to reflect higher yields in the bond market.

The Canadian Real Estate Association publishes aggregated national data around the middle of each month.

Source: Theophilos Argitis, Bloomberg News

Greater Vancouver home sales roared ahead 52 per cent last month, raising the prospect of a new phase of stability in Canada’s most expensive housing market.

The number of properties sold on the Multiple Listing Service reached 2,514 in August, up from 1,689 sales in the same month a year earlier, the Real Estate Board of Greater Vancouver said Wednesday. The increased activity marks the fourth consecutive month that Greater Vancouver has experienced a year-over-year gain in monthly sales, following a 19-month slump in volume.

The rebound is a sign that fears of a possible housing market crash in the Vancouver region appear overblown.

Greater Vancouver’s housing market is gradually on the mend after the 19-month decline in year-over-year resale volume from October, 2011, to April, 2013, said Tsur Somerville, a professor at the University of British Columbia’s Sauder School of Business.

Some buyers in August signed up in advance for mortgages before rates crept up, but interest rates remain relatively low, Prof. Somerville said. “Trying to time the market is really hard,” he said. “I’m not expecting any kind of raging growth market in Vancouver housing. We’re in an environment of a perception of more hikes in interest rates coming and the economy isn’t that strong.”

The benchmark MLS price index in Greater Vancouver for single-family detached homes, condos and townhouses was $601,500 in August, down 1.3 per cent from the same month in 2012. Since January, however, the price index has risen 2.3 per cent.

Dustin Strong, 34, a territory manager in Vancouver for a food distributor, is looking to buy a home with his girlfriend, Sarah. “We’re patiently waiting and watching,” he said. “Prices have been overheated, and you weren’t getting good value for the money. But I don’t think a crash would be a good thing because that would have catastrophic consequences for the economy.”

Mr. Strong said he is being realistic about what is attainable, so a townhouse is on the shopping list. Greater Vancouver’s price index, which strips out the most expensive properties, was $923,700 for a single-family detached home in August, compared with $457,000 for a townhouse and $366,100 for a condo.

“It’s a constant analysis for me,” Mr. Strong said, adding that it would be ideal to have a minimum down payment of 10 to 20 per cent of the purchase price.

While buyers rushed back into Greater Vancouver’s housing market, the increased sales came after a weak period in the summer of 2012. In July last year, the federal government reduced the maximum period on government-backed mortgages to 25 years from 30 years. Real estate experts say the change, which knocked some first-time buyers out of the market, contributed to the slowdown in housing sales in Vancouver in August of 2012.

Sales volume last month was still 4.6 per cent below the 10-year average for August.

Board president Sandra Wyant said this summer’s housing market has been much more hectic than it was in 2012, but she doesn’t expect a return to widespread bidding wars. “Buyers and sellers need to recognize that this is an increase in sales. Some buyers might be getting apprehensive that prices are about to surge, but this is a balanced market with stable prices,” Ms. Wyant said.

A measurement closely watched by the real estate industry, known as the sales-to-active-listings ratio, registered 15.7 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. There were a total of 16,027 active listings last month, down 8.8 per cent from a year earlier.

In the B.C. Fraser Valley, 1,258 residential properties sold in August, up 17 per cent from same month in 2012. The MLS home price index dipped 0.6 per cent year-over-year in the Fraser Valley, which includes the sprawling and less-expensive Vancouver suburb of Surrey.

Source: Brent Jang, Globe and Mail

The short answer is ‘not yet’.

Just announced today is that the Bank of Canada is holding its main interest rate at one per cent, where it has been since September 2010.

Economists widely expect the central bank to hold its trendsetting rate steady well into next year, so Wednesday’s announcement came as no surprise.

“The bank did precisely what was expected of them today: nothing,” BMO Capital Markets chief economist Doug Porter said in a note to investors.

“If anything, the tone of the statement was slightly more dovish, noting the more moderate global backdrop, less certainty on the output gap and still relatively relaxed on the household debt front.

“The bottom line is that we are still looking at a very long period of inactivity by the bank, and may well be talking about four years of unchanged rates a year from now.”

That wait-and-see approach would appear to suit Bank of Canada governor Stephen Poloz just fine. He has been on the job since early June and shows no sign of breaking from the monetary policies of his predecessor, Mark Carney, who took up a new post this summer as head of the Bank of England.

“Add it all up and this is a central bank that believes that growth will pick up in 2014 and that will eventually require higher rates, but which is happy to sit on the sidelines and wait for substantial proof such an acceleration is underway before raising rates,” CIBC World Markets economist Avery Shenfeld said in an investors’ note.

“We still look for the first hike in early 2015, with some risk of a move late in 2014 if there are upside surprises to our forecast.”

In the explanatory note to Wednesday’s announcement, the Bank of Canada said it intends no changes as long as considerable slack remains in the economy, inflation remains muted and household finances continue to improve.

Sluggish exports and business investment have slowed the country’s economic growth, the bank said.

“Uncertain global economic conditions appear to be delaying the anticipated rotation of demand in Canada towards exports and investment.”

To underscore that point, new figures Wednesday from Statistics Canada showed the country’s exports fell to $39.2 billion in July, down 0.6 per cent from the month before.

At the same time, imports grew slightly, to push the country’s merchandise trade deficit with the world to $931 million in July from $460 million in June.

Meanwhile, the Bank of Canada noted the housing sector has been slightly stronger than anticipated, while household credit has continued to slow and mortgage interest rates are higher, the bank added, all of which point to “a continued constructive evolution of household imbalances.”

The bank also said the global economy has less momentum than anticipated.

“In Europe, there are early signs of a recovery and Japan’s situation remains promising,” it said.

“In a number of emerging market economies, financial volatility has increased, adding uncertainty to growth prospects, although China continues to grow at a solid pace.”

While commodity prices have been relatively stable, the bank says geopolitical tensions — which presumably include the bloody conflict in Syria and the continued unrest in Egypt — are raising the global price of oil.

The bank took a slightly dimmer view than it has previously of short-term economic growth in the United States, said RBC assistant chief economist Dawn Desjardins.

“While today’s statement incorporated a slightly less optimistic view of the near-term outlook for U.S. growth and acknowledged that in turn, a firming in Canadian export and business investment was evolving slower than projected, the main thresholds required for the bank to start to reduce the amount of stimulus remained intact,” she wrote in an investors’ note.

The bank’s next rate announcement is scheduled for Oct. 23.

Source: Steve Rennie, The Canadian Press

Each decade has had its share of questionable home design, from the extensive wood panelling and Harvest Gold appliances of the 1970s to the next decade’s overuse of glass blocks, vertical blinds and country-style decor.

Some of these serve as powerful buyer-repellant; others just ding the price, as people figure in the cost of covering up, ripping out or otherwise correcting these home fashion faux pas.

Shag carpeting

This deep-pile carpeting, named for its shaggy texture, was popular in the 1970s in a bright array of colours, including ‘Apache Flame’ and ‘Arroyo Gold.’

Sure, it was kid-friendly, but it trapped dirt and got matted easily, requiring the regular use of a shag rake to keep it from looking like a dog with mange.

While shag area rugs are now making a minor comeback with hipsters, agents say most buyers recoil at the old wall-to-wall stuff.

Popcorn ceilings

This ceiling treatment was popular between the 1950s and 1980s and was designed to reduce noise and hide imperfections. But this spray-on stucco has become the pariah of interior finishes, spawning a ‘cottage cheese’ removal industry. Agents and designers alike say they have seen far too much of this messy stuff.

What’s worse is that the earliest versions of this finish often contained asbestos fibres, so homeowners should get it tested before they try to scrape it off.

Colourful sinks and toilets

Real-estate agent Michelle Fitzgerald of Century 21 Affiliated in Beloit, Wis., has seen toilets in blue, green and pink. She says tubs are easier to hide from sellers, behind a shower curtain.

But the toilet and sink are front and centre.

‘It brings down the price they are going to offer, because they know they are going to have to fix it,’ Fitzgerald says.

Wood panelling

Big in the 1970s, this homey treatment is best left to vacation cabins, say designers and real-estate agents.

Installed on walls to convey a warm feeling — often paired with the aforementioned shag carpeting — buyers these days consider it dark and hard to deal with.

Mirrors everywhere!

Yes, mirrors do make a room look larger. But when glued across large expanses, they’re downright tacky.

Agents and designers often find themselves ripping out mirrored closet doors, backsplashes and — yuck — bedroom ceilings. We don’t have to tell you why that’s seedy, do we? Think rent-by-the-hour hotel rooms.

Source: Melinda Fulmer, MSN Real Estate

How many times have you driven by “that” house, and wondered what’s inside? Find out on Saturday, September 14, when some of Vancouver’s most creative homeowners, architects and designers are opening their doors to you as part of the 2013 Vancouver Modern Home Tour!

What’s a MODERN home? We’ve scoured the area and had creative homeowners, designers, architects and builders submit some of the most interesting Vancouver residences. We’ve curated them to ensure a well-balanced tour featuring the most cutting-edge contemporary design that takes advantage of the stunning landscape.

Purchase advance tickets for $30 to get into all of the homes on the tour. Advance tickets are on sale until 8:00 pm on Friday, September 13. Day of event tickets will be available at any of the tour properties beginning at 11:00 am on September 14 for $40 each. Advance tickets may be picked up at specified will call locations (3 of the homes on the tour) beginning at 11:00 am on September 14.

Here’s a list of the participating homes.

Those looking to gain a foothold in Metro Vancouver’s already pricey housing market are facing another hurdle as key financial institutions across the country move to hike mortgage rates.

On Thursday, five-year fixed mortgage rates edged near the four-per-cent range at many financial institutions after hovering near the three-per-cent mark for months. RBC posted its five-year rate at 3.89 per cent, while BMO and Scotiabank offered 3.79 per cent and CIBC 3.69 per cent.

And prospective home buyers likely won’t be able to wait the trend out this time around, analysts said. According to Benjamin Tal, deputy chief economist at CIBC world markets, the increases are a sign of things to come.

“Interest rates are rising for a reason,” he said, attributing the changes to an increasingly healthy U.S. economy, which analysts believe will benefit Canada as well.

“The unemployment rate will go down, the wages will rise — you know, the positive impact of good economic news — and that will allow people to be able to tolerate this increase in interest rates to a bigger extent,” he said.

Limits on mortgages secured by the Canadian Mortgage and Housing Corporation may also be playing a role.

Increased rates due to a rebounding U.S. economy are good news in the long term, but in the short term may mean more belt-tightening for those looking to buy a home or who have already leveraged themselves to the hilt to finance an existing mortgage, Tal said.

“I think given the fact that we’ve borrowed so much over the past five, six years, as a society we’ve become extremely sensitive to higher interest rates. And it’s starting — we are already starting to see people thinking twice about buying that second TV.”

The increases may also lead prospective homebuyers to think twice about getting on the property ladder in the Vancouver market, said mortgage broker Jessi Johnson,

“It definitely will affect people’s ability to qualify (for a mortgage),” he said, noting those who do will likely wind up with less money to play with and may look to other cities, such as Surrey.

For those who are already operating on razor-thin margins, Johnson advised planning ahead for what increasing rates may mean for their financial situation when their mortgage is due for renewal.

“People need to jump on an online calculator and ask ‘what does this do for my monthly cash flow?’” he said. While many people sign up for the maximum mortgage they can get, Johnson said, that’s not always a good idea because they don’t often stop to think about the possibility that rates can rise, sometimes substantially.

“The biggest issue is people get maxed out.”

But Geoff Lee, another mortgage broker in Vancouver, said he doesn’t think homeowners — or prospective ones — should panic just yet.

He’s not convinced the hikes are an indication of a steady upward trend.

“It’s like a gas war — as soon as one lender is gonna knock it back down, then you’re going to see people follow,” he said. “There’s really no reason why the fixed rates should be increasing, other than (the banks are) trying to make some money in an environment where they haven’t made much money at all.”

Compared to historic interest rates, which decades ago were commonly in the double digits, a four per cent borrowing rate is nothing to get excited about for some economists.

“There’s no question some buyers on the margins will be squeezed out,” said Cameron Muir, chief economist with the B.C. Real Estate Board, but in general, rate increases of less than one per cent won’t have a measurable impact on Vancouver’s housing market.

He added Lower Mainland housing sales have rebounded in the last six months from last year, where they hit lows not seen since the late 1990s. That trend was influenced partly by the reduction in mortgage amortization periods from 30 to 25 years introduced last year.

Muir’s latest housing forecast, released Thursday, predicts increasing rates may mean growth in sales will slow, but overall the upward trend will continue. There may even be a spike in the short term as buyers already approved for mortgages at a lower rate scramble to get in the market.

But given the economic indications, people should approach the market cautiously, particularly of they are already dealing with consumer debt, said the Credit Counselling Society’s Scott Hannah.

The increased rates may inspire people in precarious financial situations to hold off on purchasing a home, he said. But for those already in the market and “living on the edge of their paycheques,” the increases will necessitate a retooling of the household budget in order to stave off consumer debt.

Hannah advises homeowners in tight financial situations to adjust their spending habits so that they can meet mortgage payments and avoid relying on unsecured debt, like credit, to meet other expenses, such as car payments.

Better to let go of the car altogether than go into consumer debt and risk losing a house, which in the long-term will earn equity, he said.

“The worst thing you can do when the rates go up quicker than the housing market cools off is now be in a position where you have to sell your home,” Hannah said. “You’re going to lose money.”

Source: Jessica Barrett, Vancouver Sun

With property prices on the up in Vancouver, the time when we were wowed by news of million-dollar homes is long gone. However, this Shaughnessy home has just hit the market for $35 million – a figure that does set it apart from the rest.

Listed by Victor Kwan of RE/MAX Select Properties and Amy Lau of Selmak Realty, here is the MLS description (in case you’re tempted …).

A rare opportunity to own both sides of this award winning “Heritage A” Mansion located in 1st Shaughnessy. This exquisite luxurious estate was the home of the former Lt. Governor (Eric Hamber). These two units have never been on the market at the same time. Current owner has connected both for easy access. Units can easily converted back to two independent units (#1 – 4686 sq.ft. /#2 – 7530 sq.ft. combined total of 12,216 sq.ft.). This beautifully restored heritage residence includes formal rooms, 2 wine cellars, oak floors, stained glass windows, gourmet kitchen, oak panelled elevator and art deco parkade. Combined number of 9 bedrooms, 13 bathrooms, 3 kitchens. The secured underground parking spaces makes it easy to just lock and leave the estate.