Recent news that Toronto has caught up to Vancouver with single detached homes averaging more than $1 million raises an interesting question as to why these two cities have such high housing prices relative to the rest of Canada.

High housing prices are surely affected by low mortgage rates, but this is true for all housing markets in Canada. Yet, the most expensive housing markets experience price acceleration that is faster than other cities. According to the Canadian Real Estate Association, for the period March 2013 to March 2014, average house prices have risen 7.3 and 5.6 per cent respectively in Toronto and Vancouver, which is more than the 4.9 and 1.5 per cent in Calgary and Edmonton respectively.

It is all about demand and supply. If demand rises faster than supply, housing prices increase, as in many western provinces and Ontario metropolitan cities. If demand is less than supply, housing prices will fall, as in the case of Quebec City and Halifax.

Demand for housing depends on population growth, demographics and investors looking for property investments in Canada.

Calgary (4.3 per cent) and Edmonton (3.8 per cent) have one of the fastest population growth rates among metropolitan areas in the country. Toronto and Vancouver are less at 1.5 and 1.4 per cent respectively, which is more typical for Canada as a whole.

Those cities, with younger populations becoming homeowners for the first time, will also push up demand — Calgary and Edmonton have the youngest populations in Canada. Marriage breakdowns also increase the demand for housing. So will investors who buy houses to rent out, hoping to cash in on higher prices in the future. Rental vacancy rates in 2013 are least in Calgary at one per cent. Vacancy rates are below two per cent in Toronto, Vancouver and Edmonton.

Yet, Toronto and Vancouver prices continue to rise faster than Edmonton and Calgary. Why is that so, since demand factors suggest that prices should be booming most in Calgary? To answer this question, one needs to look at supply conditions for home building.

The cost of new homes will drive up housing prices since new supply will not be forthcoming unless prices are sufficient to cover costs. The 2009-12 Canada Mortgage and Housing Corp. new housing price index has risen fastest in Toronto, while Vancouver’s, Calgary’s and Edmonton’s has been more muted, although Calgary’s new housing prices have risen sharply recently at 4.9 per cent.

An important factor influencing the cost of new homes are land prices, since building costs per square metre don’t differ as much across cities. Toronto and Vancouver have quite high land prices, which is why detached homes are so expensive there.

Land prices are heavily influenced by zoning and urban growth policies. A recently released paper by Calgary’s School of Public Policy provides a comparison of policies adopted in Calgary and Edmonton with those of Vancouver and Toronto. While the authors, Zack Taylor, Marcia Burchfield and Anna Kramer, do not examine the impact of urban growth policies on housing affordability, their analysis provides some important food for thought for urban planning in the future.

In the past two decades, Vancouver has followed intensification strategies, requiring new housing to be built on an existing area of land and greater transit use. Toronto has also pursued intensification in recent years, although some suburban expansion has continued. In contrast, Edmonton has followed an expansionist strategy, although with some densification in the past decade. Calgary’s urban growth has been expansionist, similar to Edmonton, although it has adopted an intensification strategy since 2009.

An intensification strategy provides a number of benefits to communities by making more efficient use of land. The inner city is less hollowed out since the population cannot move further from the centre. Density increases to accommodate new demand and growing cities develop new business centres, not just those at the core. Greater use of transit helps reduce environmental costs related to pollution.

As desirable as it is for urban planning to prevent urban sprawl, intensification has consequences that should not be ignored. Calgary’s younger and migrant families prefer houses with land that are typically more affordable in the suburbs. Without expansion, housing which is desired by new owners will become less accessible, driving up prices for detached homes, like has happened in Toronto and Vancouver in the past decade.

After all, if more people are added to the same available land, it is bound to push up land costs for housing. Only if the city releases existing land in its boundaries for housing development will it be possible to bring on enough supply to keep housing prices sufficiently low. Otherwise, higher housing prices per square metre will force people to live in smaller houses to maintain affordability, or move to surrounding areas beyond the urban border where housing is cheaper.

While accelerating housing prices have not yet occurred in Calgary, which faced an economic recession in 2009, housing affordability may become an issue if insufficient new housing is being built. This could lead to increased demand for low cost housing, which could be partly relieved by relaxing regulations such as those with respect to secondary suites.

Calgary’s policy regime is not built in stone since it is so different from the past. If housing becomes much less affordable in the future, the voters may demand from its mayor and council a new approach that provides better balance between intensification and expansion.

Source: Jack Mintz, Calgary Herald

There are two main options when buying a home: Either you buy new – a completely new build – or you buy used.

If you’re buying a new home, make sure you check out the builder, their track record and speak to people who have bought their home from the same builder.

Were they happy with their new home? Did they have any problems within the first year? Second year? What types of problems were they? Did they require major fixes, like a leaking basement, a problem with the HVAC or electrical issues? How helpful was the builder when it came to fixing the problem?

Just because a house is new doesn’t mean it won’t have issues. I’ve seen brand new homes, not even five years old, with major fixes that nearly bankrupt the homeowner. A new home shouldn’t have major problems, but too many times it does.

If you’re looking at used homes, be careful with ones that were flipped. These homes are especially a problem because they are deliberately made to look good, but aren’t necessarily built or renovated to be good. They take advantage of homebuyers’ lack of knowledge when it comes to picking out shoddy workmanship.

Looks are deceiving. A home that’s been flipped banks on it.

I don’t like flips because most of them are done with one purpose: To make a profit. In most cases, the homeowners don’t care about quality because they won’t be living there. Their top priority is to sell fast to save on mortgage payments. And once it’s sold, any problems in the home become the responsibility of the new owners.

How do you know if it’s a flip? There are some warning signs, but again, it comes down to doing your homework. Most people think you need to be a pro to pick out the warning signs, but a lot of it is just common sense.

For example, if the homeowner tells you that they just finished renovating the kitchen and bathroom, how much do you want to bet that they had enough money to do both renovations right?

A standard kitchen renovation done properly will cost at least $30,000. A bathroom reno can cost close to $20,000. If the only reason for renovating was to sell, I would be cautious on how the work was done. Good work takes time, and it isn’t cheap. Ask the homeowner details about the reno, such as how long it took to find the right contractor, set up the job, choose materials and for the work to be done. If all it took was a few weeks, I would be cautious.

If a home looks like it’s been renovated, do a search for any permits on work completed. If changes were made to the plumbing, electrical or structure, permits needed to be pulled.

Also look for cheap materials, such as MDF for cabinetry or laminate flooring. Keep an eye out for bad trim and sloppy paint jobs — these are red flags for quick and cheap renos. When the trim is off or doesn’t line up, you can bet that the workmanship isn’t top quality. If they fumbled on the finishes, they probably cut corners on the stuff they know most buyers will not see — the stuff behind walls and below flooring.

If windows were replaced, check to make sure that they are at least Energy Star rated. If the home has bad windows, you will pay for them for years in extra energy costs. And the cost of replacing them will run you at least $10,000. So if they need replacing, as a buyer, you need to know.

One last thing home buyers can look into is getting a home-history report on a property. Some home inspectors even include this service as part of their basic home inspection. A home-history report uses municipal, provincial and federal data to gather the most up-to-date property information. It’s an extra tool that helps protect a home buyer, so you know exactly what you’re walking into.

A home-history report can tell you the home’s previous sales price, sale dates, building permit information, information on structure or any previous insurance claims related to the property. You should know if a home you’re looking at had major water damage, flooding, a fire or damage from a natural disaster. Some home-history reports can even tell you if a house was ever used for illicit purposes, like a grow-op or meth lab.

The more information you have on a property, the better. You will know if the electrical or plumbing needs to be looked at by a professional to make sure it’s safe, or if the structure of the home has been modified or undermined. It puts you in a better position to buy the right home and buy it smart.

Source: Mike Holmes, Postmedia News

Signs of weakness are lurking below the surface in Vancouver’s surging housing market, as new home prices dropped by the most in Canada over the past year.

According to data released yesterday by Statistics Canada, new home prices dropped 1.1 per cent year-over-year in Vancouver.

That was the biggest drop among major Canadian cities. Across the country prices were up 1.6 per cent, with Calgary leading the way with a 7.5 per cent year-over-year gain.

For Vancouver, it was the third straight year of decline in the New Housing Price Index. In the same time period, Toronto has shown strong gains, slowly catching up to Vancouver in the million-dollar-home benchmark club.

Meanwhile though, for those buying and selling in Vancouver’s existing home market, it’s still a story of rocketing real estate. The single-family home index was up 6.6 per cent year-over-year in April for Vancouver’s west side, at a stunning $2.2 million. Vancouver’s east side was up 8.8 per cent for the same benchmark year-over-year, to $901,000 for a single-family detached home.

Regardless, in the big picture the number of Canadians able to buy into a Vancouver housing market that has basically skyrocketed for 15 years, is steadily shrinking.

Since the global credit crisis of 2008, the Canada Mortgage and Housing Corp. has taken baby steps to reduce its massive mortgage insurance balance sheet. The CMHC continues to tighten its mortgage rules, in line with concerns of former Canadian Finance Minister Jim Flaherty. However, for those who qualify for mortgages financing remains cheap, with interest rates at historic lows.

Source: Sam Cooper, The Province

A measurement closely watched by the real estate industry, known as the sales-to-active-listings ratio, hit 19.7 per cent in Greater Vancouver last month – the highest since June, 2011. The ratio was 15.7 per cent in April, 2013.

B.C. real estate agents consider it a balanced market when the ratio ranges from 15 per cent 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 area.

The Real Estate Board of Greater Vancouver reported Friday that residential housing sales climbed to 3,050 in April, up 16.1 per cent from 2,627 resale properties that changed hands a year earlier.

The benchmark home index price rose 3.6 per cent year-over-year to $619,000 in April for single family-detached homes, condos and townhouses that sold on the Multiple Listing Service.

There were a total of 15,515 active listings last month, down 7.3 per cent from a year earlier.

For existing single-family detached homes that sold on the MLS in April, the index price jumped 6.6 per cent year-over-year to $2,201,600 on Vancouver’s West Side, while rising 8.8 per cent to $901,200 on the East Side.

While activity has been picking up, sales in April were 5.2 per cent below the 10-year average for the month, board president Ray Harris said.

Developers are watching the property data closely.

Will Lin, president of Rize Alliance Properties Ltd., said the buzz about offshore buyers engaging in speculation has subsided for good reason.

“Contrary to what some developers like to believe, it is difficult to get offshore buyers to purchase Vancouver real estate when there is no real linkage for these buyers to Vancouver. They are buying for a good reason, occupying it for themselves or use it as a vacation home or have relatives that are going to come here and using it,” Mr. Lin said in a recent interview.

He added that given the high prices in the region, it is difficult for speculators to make fast money.

“This market is not conducive to that kind of quick flipping. Every real estate transaction has certain costs like legal fees,” Mr. Lin said. Then there is British Columbia’s property transfer tax. Using the home index price for Vancouver’s West Side of $2,201,600, a purchaser who pays that amount for the house would have to fork over $42,032 alone in the property transfer tax. If that purchaser later sells, there is the real estate commission to pay, not to mention various fees related to selling.

“A quick flip within a year or two is not going to let you make too much money,” Mr. Lin said.

In the Fraser Valley, there were 1,470 sales in April, up 7.6 per cent from 1,366 in the same month of 2013.

The overall April benchmark index price in the Fraser Valley, which includes the sprawling and less-expensive Vancouver suburb of Surrey, climbed 1.5 per cent to $433,100 for residential properties.

Source: Brent Jang, Globe and Mail

Las Vegas, Detroit and Los Angeles are the top three city targets for Canadian home hunters, with Florida dominating the rest of the 2013 list of online searches on the realtor.com website

The United States city in most demand from Canadian homebuyers is Las Vegas, Nevada, according to Realtor.com website data.

In 2013, Canadians carried out more online searches for the property in the international gambling city than anywhere else, states the newly-published research from the National Association of Realtors (NAR).

The second most popular destination was Detroit, Michigan, and third was Los Angeles, California, the City Search Index (CSI) shows.

The other cities ranked among the top 8, in order of preference, are Fort Lauderdale, Miami, and Orlando, in Florida, along with Chicago, Illinois, and Naples, Florida.

The figures largely mirror the NAR’s March 2013 2013 Profile of International Home Buying Activity report, which showed the top five destinations were Las Vegas, Fort Lauderdale, Orlando, Detroit, and Naples.

The index is based on a count of actual house searches by potential buyers throughout the year as measured by traffic on Realtor.com, NAR’s official property listing website.

* Air Canada has just introduced a new daily flights, starting today (Monday 28 April) from Vancouver, British Columbia, to Las Vegas. The Air Canada rouge branded flight is one of five new routes announced from Vancouver International Airport (YVR).

Air Canada is also flying to Los Angeles, California, four times daily from 1 May, Anchorage, Alaska, daily from 16 May, San Francisco, California, four times daily from 1 July and Phoenix, Arizona, daily from 17 December.

Craig Richmond, President & CEO, Vancouver Airport Authority, says, “With Air Canada rouge now touching down in Vancouver, travellers will have more selection to our popular US destinations – including the addition of their service to Phoenix.”

Source: Adrian Bishop, Editor, OPP Connect

For many years, the Canadian and U.S. housing markets tracked each other fairly closely, but that hasn’t been the case since the U.S. housing bubble burst in the middle years of the last decade.

According to an analysis from BMO chief economist Doug Porter, the difference between the two housing markets has never been greater, with average resale prices in Canada now 66 per cent higher than resale prices in the U.S.

The strength of Canadian home prices has surprised even optimistic observers. The latest data from the country’s real estate boards indicates resale prices (not including new builds) jumped six per cent in the past year, and the average price of an existing home in Canada has now pushed past $400,000.

That compares to an average price of around $250,000 in the U.S.

Comparisons like this are never as telling as they seem, because of differences in how average prices are measured, and because average prices say little about which way a housing market is headed.

And then of course there is the fluctuating exchange rate, but Porter notes that even after adjusting the numbers for exchange rate changes, Canada’s housing market is still about 50 per cent more expensive than the U.S.

“The main takeaway is that, contrary to all expectations, the Canadian housing market has just kept on rolling in 2014 even as the U.S. housing market has paused for breath (after a steep climb out of the dungeon),” Porter wrote in a client note last week.

But will it keep on rolling? The seemingly endless debate continues between those forecasting a Canadian housing bubble burst and those saying the market is healthy.

Yet with recent weakness in housing starts and building permits, some economists — such as BMO’s Sal Guatieri — have started to warn that a housing market correction could cause a recession.

Guatieri noted in a report earlier this month that Canada has become more reliant on real estate-related jobs than it has been in the past, making the economy more vulnerable to a correction.

But overall, the bank sees the odds of a serious housing market bust-out as being low.

All the same, a significant number of international investors have gone bearish on Canada’s housing market, predicting double-digit price collapses. Pimco, the trillion-dollar hedge fund run by billionaire Bill Gross, recently predicted a 30-per-cent collapse in house prices in Canada over the next few years, starting this year.

If Pimco’s prediction were right on the money, and nothing changed in the U.S. market, Canadian average resale prices would still be about a third higher in Canada than in the U.S. — even after the price crash.

Source: Daniel Tencer, Huffington Post Canada

Vancouver has been ranked the second most expensive housing market in the world in a report on international housing costs, second only to Hong Kong.

The annual Demographia survey looked at 360 housing markets and divided median housing prices against median gross household incomes. Houses in Hong Kong cost 15 times local median incomes, while houses in Vancouver cost 10 times median incomes.

All of Canada’s major metropolitan centers fared badly in the report, ranked as extremely unaffordable with Vancouver the most costly.

According to Tsur Somerville, director of the University of British Columbia Center for Urban Economics and Real Estate, the reason for Vancouver’s skyrocketing housing prices is simple — demand is larger than supply.

“Vancouver is a lovely place with limited land and people from all over the world want to live here,” he told Xinhua. “If you have an attractive area, naturally you’ll get people willing to pay a higher price to live there, willing to pay higher rents to live there and relative to their incomes, and you’re going to get an affordability challenge.”

Local realtors are predicting the days of purchasing a detached house for Cdn $600,000 (US $543,500) are now over in Vancouver. Earlier this month, a three-bedroom, two-bathroom house on the east side of the city marked as the cheapest on the market was sold for Cdn $643,000 (US $582,500).

Somerville also pointed out that immigration to Vancouver, Canada’s Asian gateway, stands at about 30,000 people per year and the resulting demand for housing will likely keep prices high.

“But I think as long as we’re getting an inflow of about 30,000 to 35,000 people a year, coming to Vancouver as part of coming to Canada, that’s going to be able to support the house prices.”

His view was echoed by Ross McCredie, director and CEO of Canada’s Sotheby’s International Realty. Since the flare up of the international financial crisis in 2008, housing prices in Vancouver have remained high compared to other large cities around North America.

He attributes house price stability in this market to the steady inflow of immigrants and investors not common to many other major cities around the continent.

“But certainly the foreign buyers are also an important part of this market and if we didn’t have those foreign buyers our market would have been in significant trouble through 2008,” McCredie told Xinhua.

He noted Vancouver is one of the most diverse and cosmopolitan cities in Canada with a good location and environment, which means that people will keep coming and will continue to buy-up the limited housing stock.

“Part of the problem with having a beautiful city, and a gateway, is that you have significant amount of demand from people who want to live here.”

Source: Fu Peng, Xinhua

Prices for all housing types are still on the rise in Vancouver, according to the Royal LePage House Price Survey which was released last week.

The report said year-over-year price increases were seen across all housing types in the city in 2014’s first quarter. Detached bungalows saw the biggest jump, with a 4.8% increase to $1,062,318. Standard two-storey homes increased 2.9% to $1,148,473 and standard condos grew 0.3% to $482,000

“The Vancouver real estate market was steady but balanced when compared to the same period of last year,” said Bill Binnie, broker and owner of Royal LePage North Shore.

“There is a healthy dose of momentum in the market right now, in large part because of the year-over-year increase in unit sales.”

Inventories for detached homes in Vancouver have been low lately, said Chris Simmons, owner and broker of Royal LePage Vancouver West Side and City Centre, meaning properties that are put on the market don’t stay there for very long.

“Builders are focused on developing multi-unit properties like condos, so inventory in that category remains fairly good,” Simmons said.

“On the other hand, there is a perpetual shortage of single-family homes, which is driving up prices for this property type.”

Simmons said the first quarter is consistent with how the January-to-March period usually plays out.

“In terms of unit sales, January and the beginning of February were slow, but more and more life came into the market in the end of February and through March.”

Prices also rose across Canada as a whole, with the average two-story home costing 5.4% more than one year prior, at $428,943. Detached bungalows grew 4.4% to $380,765 and standard condos increased 2.5% to $252,174.

Source: Emma Crawford Hampel, Business in Vancouver

The weather forecast for this weekend is sun, sun, sun (well, in Vancouver at any rate!). With the garden slowly waking up, our thoughts turn to creating beautiful outdoor spaces to enjoy for the next few months (until the rains come again).

Here’s a great article that I found on GalTime.com by Kathy Woodard, Home Decor Stylist, who shares tips on designing a warm and welcoming outdoor patio space as inviting as any interior room.

Patios allow you to enjoy the outdoors in comfort, and outdoor living has never been more a part of our everyday living. Even if your budget is tight and your space small, you can carve out a little oasis to whisk you away from the hustle of daily life for you and your loved ones.

The first step in creating a stylish patio or outdoor room is to locate the right place for it. If you have a built-in covered porch or patio, you have a natural area. However, sometimes it’s nice to create a space farther away from buildings and the commotion of others, so feel free to look for unused spots under a tree in the garden or in a private side yard to create an unattached patio.

Once you have your chosen spot for your sanctuary, you need only follow a few easy steps to create a patio “room” that anyone would enjoy relaxing in after a long day.

Step One: Give Your Patio Room Floors, Walls and Ceilings

No, I’m not talking hiring a contractor here; there are easy ways to add the sense of boundaries and privacy without spending big bucks. Use inexpensive fabric panels or hanging planters to create a private wall on a porch, or trellising, evergreens in planters or hedging out in the garden. Trees, vine covered arbors, or the brilliant blue sky all make an excellent ceiling. Flooring can consist of grass, gravel, paving or decking. My favorite technique to dress up a plain concrete floor is to paint on a faux area rug. Clean the concrete first, paint and stencil your rug using masking tape and house paint, then seal with an exterior grade polyurethane.

Step Two: Add Furniture and Accessories

Even a simple chair tucked in a quiet corner can make your oasis special. Consider resin or aluminum furniture to keep costs down. Plastic or resin chairs can be spray painted with specialty paints to give them a more upscale look. Add a table for those glasses of lemonade! Don’t be afraid to bring traditional decorating items into your rooms. Pillows, throws and candles all make charming and useful additions, and add comfort to your space. If your room is open to the elements, you can either purchase weather resistant fabrics, or bring your fabric items indoors during bad weather. Remember you are in an outdoor room, so decorate with nature. Planters of flowers, garden signs, and even old tools, birdhouses and watering cans are at home in an outdoor room.

Step Three: Light Up the Night Sky

To make your special spot really magical, add lighting to create a nighttime glow. Strings of inexpensive white holiday lights can be wrapped around tree branches or decking, tiki torches and candles add a festive flair, and solar lights can accent the pathway or steps.

A report released today by Grosvenor’s research team suggests that Canadian cities are the best bet for long-term real estate investment, with Toronto, Vancouver and Calgary taking the first, second and third spots respectively. The research ranks 50 of the world’s top cities according to their resilience: a product of their environmental and social vulnerability and adaptive capacity, which covers community, infrastructure, resources, environmental and climatic factors.

“Toronto is no stranger to the importance of resiliency, having endured natural disasters such as the 1998 ice storm and even Hurricane Hazel, in 1954,” said Richard Barkham, Grosvenor’s Group Research Director. “The investment of city leaders in infrastructure and its commitment to upgrading it over the decades has put Toronto at the top of Grosvenor’s list of the world’s most resilient cities.”

“Canada, as a whole, is doing exceptionally well in developing resiliency. The top three most resilient cities in Grosvenor’s Resiliency index are Toronto, Vancouver and Calgary. For investors in property and real estate, it makes Canada a very sound long-term investment.”

Key findings from the research are:

* The most resilient cities are in Canada, with Toronto, Vancouver and Calgary taking the top three spots respectively.

* American cities are relatively vulnerable, but their capacity to adapt makes them fairly resilient. The lowest ranked cities are also those with the highest population forecast figures.

* The middle group of cities, ranked 11 to 30, are fairly close to the top 10 in their scores so must be considered resilient. Most European cities fall into this group. London is ranked 18th.

* The weakest 20 cities are in emerging markets and are considerably weaker than the top 30. Eight of these are in the so called BRIC countries. So far, blistering economic growth has not fed through into the quality and long term resilience of these cities.

Source: Marketwired