The number of home sales and the average price of a home are falling in B.C., but not all parts of the province are feeling the same pain.

On Monday, the British Columbia Real Estate Association released numbers for December and the year that showed a drop in the number of sales, sales dollar volume and the average residential price. But most of that drop occurred in Metro Vancouver, while some areas of the province saw growth.

“The provincial numbers have been dragged down by Vancouver and the Fraser Valley in 2012 to a large degree and by Victoria and the Island,” BCREA chief economist Cameron Muir said. “That belies the fact that we did see sales up in the North. The North has done quite well in this post-recession period — pricing is quite strong and sales activity hasn’t seen the kind of volatility that we’ve seen in other markets.”

Muir also cited the Okanagan as showing some growth in sales in 2012, after remaining quite flat after the recession ended.

“So there is some glimmer of light in the Okanagan, and the Kootenays, which are benefiting from improved economic conditions in Alberta,” Muir said.

For the province as a whole, the number of sales dropped 11.8 per cent in 2012 from 2011, while the total sales dollar volume fell 19.1 per cent and the average residential price was $514,836, down 8.3 per cent from the year before.

“A notable pullback in consumer demand in Vancouver and the Fraser Valley during 2012 was more than enough to offset increases in home sales in the Okanagan, Kootenays and B.C. Northern regions,” Muir said. “At least half of the eight-per-cent decline in the B.C. average home price was the result of fewer luxury homes selling in Vancouver and fewer overall Vancouver home sales relative to the rest of the province in 2012.”

In Metro Vancouver, the number of sales dropped 22.7 per cent in 2012 from 2011, while the total sales dollar volume fell 27.7 per cent and the average residential price was $730,063, down 6.4 per cent from the year before.

But as Muir mentioned, there were some areas showing growth, including Kelowna (Okanagan Mainline), where the number of sales grew 11.8 per cent in 2012 from 2011, the total sales dollar volume rose 11.2 per cent and the average residential price was $377,979, up 0.5 per cent from the year before.

Another area with positive numbers in all categories is northern B.C., where the number of sales rose 3.9 per cent in 2012 from 2011, while the total sales dollar volume rose 10.8 per cent and the average residential price was $233,544, up 6.6 per cent from the year before.

Kamloops and Kootenay also showed small growth in all three categories.

For the month of December 2012, sales dollar volume for the province was down 28.6 per cent compared to December 2011, while the number of units sold fell 26.4 per cent and the average price was down three per cent to $498,205.

Source: Tracy Sherlock, Vancouver Sun

Like many others, Toronto public relations manager Megan Vickell is sitting on the real estate sidelines dreaming of bargains to come.

The 28-year-old has never owned a property and is hoping to scoop up a discounted Toronto condo when prices fall off today’s frothy record highs.

You can’t blame her for wanting to wait. Research firm Urbanation Inc. says Toronto’s average condo prices climbed to as high as $407 per square foot in 2012, a sharp rise from the $229 per square foot fetched in the first quarter of 2003.

The picture is not much different nationally. The average sale price across the country was $364,260 over the first 11 months of 2012, according to the Canadian Real Estate Association. Compare that to beginning of this boom when the average sale price across the country was $158,303 in 1999.

But what if the crash never comes?

Urbanation says preliminary condo results for the fourth quarter show prices are down 0.8% in Toronto year over year and Canada-wide home prices were also down 0.8% in November from a year ago. But, so far, that’s about it.

The one thing missing from the market, for all those people looking for a crash, is a catalyst or an event that will force people to reduce their asking prices. Before this housing market burns up in flames, it needs some type of spark.

And, if you talk to some people, that key event — two that come to mind are a spike in interest rates or job losses — is not happening any time soon.

“Crashes don’t just happen in a vacuum, you need a trigger,” says Benjamin Tal, deputy chief economist with CIBC World Markets. “I can’t point to any crisis in the history of crashes that didn’t have a trigger.”

In the United States, the trigger proved to be a sub-prime market and the expiry of teaser rates that jumped as much as four percentage points on some mortgages. Overnight, people couldn’t afford their homes.

“If you have a gradual increase in the rates this doesn’t happen,” says the economist, who predicts a decline in prices but only in the 5% to 10% range. The real estate industry is on the same page, continually calling for a soft landing.

What has people like Ms. Vickell excited and looking for a major decline in prices is the massive drop off in sales activity in some major markets. Nationally, sales were down almost 12% in November from a year ago. Vancouver remains the leading example where sales were down 22.7% in 2012 from a year earlier.

So you’re sitting on the sidelines, not buying at what many consider ridiculously high prices — the product of a 14-year boom that has only seen one mild pullback during the recession in 2008. But what if sellers simply refuse to lower their price, something that has happened so far in the markets where sales are drying up very fast. What’s next?

“I think stagnation is a good word for what will happen, it’s what we saw in the market from 1992 to 1997,” says Mr. Tal.

The CREA stats show the market nationally — albeit real estate can be a very regional story — did not move all that much in the 1990s before it took off in 1999. There were some corrections in the 5% range on a yearly basis but average prices from a bottoming out of $142,091 in 1990 had climbed to $154,768 by 1997 — an 8% increase that is paltry by today’s standards for such a long period.

“We are going to see a correction and the question is ‘what will emerge from that,’” said Mr. Tal. “The scenario is the market will not be strong, it will be stagnant.”

In this scenario, instead of people of people selling in a panic, they pull their homes off the market, waiting for a better day, refusing to sell at distressed prices. New listings and active listings will start to shrink.

“In the U.S., you had to sell your house because you were delinquent. If you tell me tomorrow the unemployment rate [in Canada] will jump to 12%, we will have a crisis,” said Mr. Tal.

Don Lawby, chief executive of the Century 21 Canada, and a charter member of the club that doesn’t see home prices dropping anytime soon, can’t see any desperation from sellers.

“The economy continues to be okay, people have jobs, interest rates are low,” said Mr. Lawby. “Historically, anytime when prices dropped it was tied to high unemployment and interest rates. It’s not the case today, people are not forced to sell, they are staying with their price.”

Still, Ms. Vickell’s patience may pay off. Even Mr. Lawby concedes that the condo sector may be hit. Developers who already have buildings under construction may be forced to scale down projects or lower prices on unsold units.

“They are going to be throwing in packages to sell,” says Mr. Lawby. “But the average homeowner, without an economic event, they have no need to sell.”

David Madani, Canada economist with Capital Economics, takes a more extreme view, predicting a price-drop of 25% in the next year or two across the country. Rapidly flagging sales are a sure sign his prediction will come to fruition, he says.

“We have to tell our clients ‘you don’t necessarily need a trigger.’ You reach a threshold point where people get afraid, where valuations have lost touch with fundamentals,” he says, adding there is a standoff between buyers and sellers before any crash. “Sellers eventually realize the market has shifted beneath them and they capitulate and drop their asking price.”

But Mr. Madani’s calls for a crash are being largely drowned out by the real estate industry’s steady calls for a soft landing.

Gregory Klump, chief economist with CREA, says history supports the notion that some sort of major event is needed to create a housing market collapse.

“In the late 1980s, it was a case of a spike in interest rates, in late 2008 and early 2009 it was a massive layoff,” said Mr. Klump. “You need a massive and extended economic shock and none of that is in the forecast.”

In the interim, people waiting for a decline a major decline in price will have to keep waiting, says Mr. Klump. Only time will tell if it ever materializes.

Source: Garry Marr, Financial Post

Vancouver’s house prices could fall a further five per cent before 2013 is over, a panel of real estate experts said Tuesday.

The BMO panel, led by Sal Guatieri, senior economist, BMO Capital Markets, said tougher mortgage rules and the suspension of the federal immigrant investor program could be factors in the slowdown in Vancouver.

“Nowhere is the housing market weaker than in British Columbia, where resales are down 17 per cent year to November and are well below the past decade norm,” Guatieri said. “Vancouver’s resales have plunged 31 per cent in the year to December and benchmark prices are down just over three per cent since the spring.”

He said the mortgage changes, limiting the life of a mortgage to 25 years from 30 and prohibiting mortgage insurance on homes more expensive than $1 million, will hit pricier markets the hardest. With housing prices estimated at 10-times family incomes, Guatieri said, “that puts Vancouver in the upper echelon of over-valued housing markets, not just in Canada, but across the world.”

He said many would-be house buyers are opting to buy condos, rent or move to other cities because of the high prices.

“What has supported Vancouver’s housing market, at least in the past five years, is not income, it’s wealth. A lot of that is foreign wealth, although we can’t quantify that.

Many buyers don’t even need a mortgage because they have the cash and they can buy a house outright,” Guatieri said.

“But that supply of people is diminishing, especially as prices have continued to go up.

Unless people continue to flood into Vancouver — foreign residents with a lot of money — that market looks very ripe for a meaningful correction — not a material one — of at least five per cent or so for the next year.”

Source: Tracy Sherlock, Vancouver Sun

Single-family homes have been the winners over the long-term while apartments have been struggling, an analysis of Metro Vancouver real estate statistics released last week shows.

B.C. Assessment released 2013 assessments on Wednesday, while the region’s real estate boards released December and year-end information on Thursday.

“The resource that is scarce is land,” said Tsur Somerville, director of the centre for urban economics and real estate, Sauder School of Business at the University of B.C. “You can always build more condominiums, but if you want a backyard, there’s a limited space.”

He said that isn’t likely to change soon, despite the large cohort of baby boomers who could choose to downsize in the near future.

“Most people stay in their houses longer than you expect,” Somerville said. “They want space for the grandkids.”

Cameron Muir, B.C. Real Estate Association chief economist, said 80 per cent of the housing starts in Metro Vancouver are now for multi-family homes, so the stock of single-family homes is becoming a smaller and smaller portion of the market, thus earning an increasing premium.

“Since the end of 2009, the apartment and townhouse market has been essentially flat in terms of pricing,” Muir said. “Real elevation has come in the single-detached side.”

Over the past five years, single-family homes were the big winners, particularly in Burnaby, Vancouver and Richmond, where the five-year gains are still more than 20 per cent.

However, this year, for the first time in many years, a number of homeowners in some areas of B.C. will see a drop in their property assessments. In tony areas like Whistler and Vancouver’s west side, assessments fell, while more affordable areas like Surrey or the Tri-Cities, held their own.

On Thursday, the Greater Vancouver and Fraser Valley real estate boards’ reports showed that both buyers and sellers are both holding off, waiting to see which direction prices will head. Both sales numbers and properties for sale are down, the numbers show.

The real estate boards’ reports provide information on the benchmark price of homes in each Lower Mainland community, and price performance in both the short and long term. Benchmark prices are the estimated sale of a typical property within a market. The data is divided into 85 categories, including 30 areas divided into single-family homes, apartments and townhouses. Some communities do not have housing in all three categories.

For example, comparing the benchmark price in December 2012 to December 2011, apartments in Whistler, South Surrey/White Rock and townhouses in North Surrey all saw their benchmark prices drop more than nine per cent. But not all apartments and townhouses were on the wrong side of the real estate equation: the biggest growth in benchmark prices was in townhouses in Whistler and Squamish and apartments in Pitt Meadows and North Surrey. For single-family homes, the benchmark price has not moved up or down by more than 6.5 per cent in any region, the data shows.

For more immediate trends, an analysis of the one-month change in benchmark price shows a drop of about four per cent in the benchmark prices of townhouses in South Surrey/White Rock and North Surrey and houses on the Sunshine Coast between November 2012 and December 2012. At the other end of the spectrum, there was an uptick of 5.8 per cent in the benchmark price of an apartment in North Burnaby between November and December, and one of 3.7 per cent on the benchmark price of an apartment in Pitt Meadows.

Year-over-year, 30 categories showed gains in benchmark price, while 58 categories showed losses. The five-year change, which compares benchmark prices from January 1, 2008, before the housing crash in the U.S., is negative in 43 categories. Those include apartments in 24 of 30 areas, townhouses in 12 of 30 areas and single-family homes in seven of 30 areas. The slide ranges from 39.1 per cent over five years for an apartment in Whistler to 0.5 per cent for an apartment in Tsawwassen.

Apartments in the city of Vancouver, in Burnaby South and in Ladner were the only dwellings to show gains in benchmark prices over the past five years, while townhouses showed gains in most areas over that period.

Source: Tracy Sherlock, Vancouver Sun

This year, for the first time in many years, a number of homeowners in some areas of B.C. will see a drop in their property assessment, B.C. Assessment said Wednesday.

The most significant decreases will be seen in Whistler, Pemberton, on the Sunshine Coast and on Bowen Island, said Jason Grant, B.C. Assessment Authority assessor for the Vancouver Sea to Sky region.

“In stark contrast to last year, where (more than) 25-per-cent increases weren’t unusual, most residential homeowners (in Vancouver Sea to Sky) will open their assessment this year and say, ‘I’m within about five per cent … of where I was last year,’” said Grant McDonald, deputy assessor for B.C. Assessment’s Vancouver Sea to Sky region.

“Looking at the city of Vancouver, if you drew a graph for a 10-year period from 2002 to 2012, it pretty much is a very steep curve in terms of value increases, with a blip in 2008 when values appeared to be falling a bit. Now it has sort of flattened off; the market is taking a bit of a breather.”

Last year, homeowners in some areas of Vancouver, West Vancouver, Richmond and Burnaby saw their assessments rise as much as 30 per cent, while some areas, such as Squamish, Whistler and Pemberton saw decreases of 10 to 15 per cent.

“Some of the markets that saw some pretty good run ups in prices in 2011, saw a kind of floating back to earth in 2012,” said Cameron Muir, B.C. Real Estate Association chief economist. “For example, we’ve seen the single-family, detached-home market on the west side of Vancouver show more softness after a relatively strong 2011.”

Property assessments for a given year reflect market value as of July 1 the previous year. B.C. Assessment does not provide averages, but it did provide some specific “representative examples” of properties and how much their values changed this year.

A 50-foot, single family lot on Vancouver’s west side that was assessed at $1,645,400 in 2012 is assessed at $1,622,900 for 2013, a drop of 1.3 per cent. A single-family home on a 33-foot lot on the west side of Vancouver is assessed at $1,256,200, a drop of 5.8 per cent compared to a 2012 assessment of $1,329,600.

On the city’s east side, a 33-foot single-family lot assessed at $1,031,300 last year is assessed at $1,081,700 this year, an increase of 4.9 per cent.

In Whistler, a single-family dwelling in Alpine Meadows that was assessed at $2,252,000 last year is assessed at $2,145,000 this year, a drop of 4.8 per cent. In Whistler Village, a two-bedroom apartment that was assessed at $491,000 last year is assessed at $429,000 this year, a drop of 12.6 per cent.

On Bowen Island, a non-waterfront single-family home that was assessed at $530,000 last year was assessed at $454,000 this year, a drop of 14.3 per cent. A waterfront home there dropped to $1.3 million from $1.7 million, a drop of 23.5 per cent.

Muir said both of those areas are dependent on recreational buyers, and that the strong Canadian dollar and concerns about the U.S. and global economy are affecting that market.

“When we look at recreation properties, as well as luxury properties, (they) tend to be much more volatile in pricing,” Muir said. “When times are very good, prices tend to climb much more rapidly than your typical home. At the same time when we see some weakness, they’re likely to decline more rapidly as well.”

In other areas of Metro Vancouver, some properties saw increases up to 10 per cent, while some areas saw drops of up to five per cent from last year.

For example, a single-family house in the Thompson area of Richmond that saw a 30-per-cent increase last year to $1,677,000, is this year assessed at $1,642,000, a drop of two per cent.

Two years ago, Richmond saw some properties increase as much as 17 per cent, while many West Vancouver and Vancouver homeowners saw jumps in assessment of 12 or 13 per cent. Whistler prices were down two per cent at that time.

B.C. Assessment does provide percentage changes in the total value of properties in a region, but this amount is not an average change that homeowners will see on their assessments because it includes new construction and other non-market factors such as renovations and rezonings. Nonetheless, it is an indication of the general direction property assessments are moving in a given area.

For 2013, the total property roll for Vancouver increased 2.08 per cent, in Delta it rose 3.55 per cent, in Surrey it rose 5.15 per cent and in West Vancouver it rose 8.8 per cent. The total property roll in Whistler fell 3.81 per cent, on Bowen Island it fell 6.9 per cent and in Pemberton it fell 4.31 per cent.

Across the province, the total number of properties on the 2013 roll is 1,935,426, a 0.92-per-cent increase from 2012. The total value of real estate on the 2013 roll is $1,129,026,081,413, a 2.3-per-cent increase from 2012, B.C. Assessment said.

A drop in a property’s value does not necessarily translate into a drop in property taxes, which would only differ from a city’s budgeted increase if a particular property has gone up or down in value more than the average for other properties in the same community.

Property assessments for 2013 reflect market value as of July 1, 2012. Since that time, sales in Metro Vancouver have slowed and some prices have dropped.

“In markets that have declined in value since the summer of 2012, the 2013 property assessment may be higher than current sales or listing prices,” said Zina Weston, deputy assessor.

“We’ve seen quite a decline in the number of sales; so far for 2012 it’s down about 30 per cent, but the actual values haven’t really come off. In Vancouver, things are still selling for higher than we had on the assessment roll last year,” McDonald said.

People who feel that their property assessment does not reflect the home’s property value as of July 1, 2012, should contact the B.C. Assessment office for their area. Appeals will be accepted until January 31.

“It is a quieter year and I suspect that will be reflected in the number of inquiries we get,” McDonald said. “It will be interesting to watch the next few months to see what happens.”

One assessed value that is contentious is that of the Horseshoe Bay ferry terminal; a recent decision by the Property Assessment Appeal Board slashed its value to just $20 from $47.7 million, meaning the District of West Vancouver will lose about $250,000 in property tax revenue. The District of West Vancouver plans to fight the assessment, which could have ramifications for other ferry terminals, in court.

The province increased the threshold for the Home Owners Grant for property taxes by $10,000 to $1.295 million to keep pace with rising property value assessments, Finance Minister Michael de Jong announced Wednesday.

Assessments will be arriving in the mail in the next few days and are available online at http://evaluebc.bcassessment.ca.

Source: Tracy Sherlock, Vancouver Sun

The slowdown in Vancouver’s real estate market is one factor leading the Canadian Real Estate Association to cut its sales forecast for this year and next on Monday.

Vancouver’s sales numbers dropped 27.6 per cent — the second biggest drop in the country behind Halifax — in November 2012, compared to the same month last year, after tighter lending rules that came into force this summer. The average price is down 6.3 per cent for the same period to $682,215, while the MLS home price index is down 1.7 per cent from a year ago. The average price reflects the mix of sales, while the HPI reflects price changes for typical homes.

While BMO deputy chief economist Doug Porter said most cities across Canada would see a soft landing for their real estate markets, he called Vancouver a “rather obvious exception.”

“I don’t know that I’d call it a hard landing in Vancouver, but it’s definitely a bumpier landing than most cities in Canada are going through right now,” Porter said.

Meanwhile, it appears people thinking of selling their homes may be holding off, especially in Metro Vancouver, as the region saw the largest drop in the country for new listings.

New supply reached its lowest level in more than two years, CREA said.

“That may help avert a harder landing for prices because sellers do have the leeway to back off,” Porter said. “Fundamentally, I think that’s one of the reasons why the Canadian housing market is likely not going to have a hard landing because you’re not going to have a lot of motivated sellers — people aren’t going to be forced into it by rising interest rates or declining employment so they can take their time and wait for the market to stabilize.”

Source: Tracy Sherlock and Craig Wong, Vancouver Sun

Lower home sales in November have prompted the Canadian Real Estate Association to cut the sales forecast it released in September for this year and next.

The association said today that sales over the Multiple Listing Service fell 1.7 per cent from October to November, with activity last month coming in 11.9-per-cent lower than last November.When it released its forecast in September the market was just showing the first signs of a slowdown, but it now expects the decrease in demand to persist, it added.

“Lower than projected third quarter sales have downgraded the prospects for activity this year in almost every province,” the association, which represents realtors across the country, said as it updates its projections. It also suggested that the continued slowing is the direct result of Ottawa’s decision to tighten mortgage rules this summer.

“Interest rates have remained low and the economic backdrop has remained supportive for housing activity, so that should leave little doubt that recent changes to mortgage regulations are responsible for having cooled activity,” said CREA’s chief economist Gregory Klump.

The slowdown is beginning to show up in prices, which have lost their momentum. The national average price of houses that sold in November came in 0.8 per cent lower than a year ago. The MLS Home Price Index, which seeks to account for changes in the type of houses sold, rose by 3.5 per cent, its smallest increase since May 2011.

CREA now expects resales of existing homes across the country to come in at 456,300 units this year, down 0.5 per cent from last year and nearly one per cent below the ten-year average.

In September the association said it expected resales to rise by 1.9 per cent this year to 466,900 units, a figure that it had already revised down.

There are regional variations to the trend. Alberta is expected to see a 13.1-per-cent rise in sales this year, while British Columbia will see a 10.7 per cent decline.

CREA now expects next year’s sales over the MLS system to come in at 447,400 units, down 2 per cent from this year. In September it estimated that that number would be 457,800 units – again, a figure that it had already revised downwards.

“The continuation of moderate economic, job, and income growth will temper the impact of recent mortgage rule changes, which are not expected to dampen activity much more than has already been felt until interest rates are expected to begin rising in late 2013,” the association stated in its new forecast.

It now expects the national average home price will rise by 0.3 per cent for all of 2012 to $363,900. Most provinces should see higher increases than that, but a decline in sales of more expensive homes in British Columbia and Ontario is weighing on the average, it said.

CREA also said Monday that the number of newly listed homes in Canada fell 0.9 per cent in November from October, with Greater Vancouver posting the largest decline.

“With sales and new listings moving in the same direction and by similar magnitudes, the national sales-to-new listings ratio was little changed at 50.3 per cent in November compared to 50.7 per cent in October,” it added. “Based on a sales-to-new listings ratio of between 40 to 60 per cent, three out of every five local markets were in balanced market territory in November.”

Sales have now contracted in eight of the last 11 months, and the decrease compared to last November is “hefty,” Toronto-Dominion Bank senior economist Sonya Gulati said in a note.

The slowdown in both prices and sales is most noticeable in Toronto, Montreal and Vancouver, she added, saying those cities “are more vulnerable to experience a greater-than-average housing adjustment.”

Nationwide, TD expects market conditions to stabilize early next year “as tighter mortgage rules loosen their grip on market trends and low interest rates lure homeowners back into the market,” the note said.

Source: Tara Perkins, The Globe and Mail

The total value of homes sold in B.C. dropped by nearly one-quarter in November, with declines in Vancouver and the Fraser Valley leading the slide.

The dollar volume of homes sold through the Multiple Listing Service in B.C. declined 24.6 per cent to $2.3 billion in November compared to the same month last year, the B.C. Real Estate Association reported Thursday.

Cameron Muir, BCREA’s chief economist, said that tighter mortgage rules introduced this summer had squeezed some buyers out of the market, but he expects sales to go up in 2013.

“When I suggest that we’re going to see an increase in sales levels next year, it doesn’t mean we’re going to return to the heady days before the recession. But the longer we see sales levels fall below the long-term average, the more likely we’re going to see pent-up demand (grow) in the marketplace, which may contribute to increased sales activity in 2013,” Muir said.

The number of units sold this November was down 17 per cent in the province from November 2011 to 4,680, while the average price was down 9.1 per cent to $480,891.

In 2011, there were large numbers of single family luxury homes sold, which elevated the average, Muir said. This year, a more typical mix of homes is being sold, so the average is lower. But prices are also coming down.

“There has been some modest downward pressure on prices in Vancouver, particularly in the single detached market on the west side, for example,” Muir said. “For the first six months of this year, the west side of Vancouver is down 9.7 per cent on the home price index. West Vancouver is down nine per cent and Richmond is down 6.2 per cent.

“We’ve seen those markets floating a little bit back down to Earth, and they’re having an impact on the aggregate numbers for the region.”

In Metro Vancouver, the dollar volume of sales fell 32 per cent from $1.74 billion to $1.18 billion, while in the Fraser Valley total sales fell 25 per cent from $498 million to $371 million.

“More promising numbers are coming from … the area around Kelowna — they’re up 13 per cent in unit sales,” Muir said. “And B.C. Northern has been incredibly stable in this post-recession period. That’s likely the result of much more diversification of the economy in Prince George, for example, and relatively buoyant demand for commodities. Unemployment did not skyrocket there in the recession — it’s very resilient in B.C. Northern this time around.”

While sales in the Okanagan are up for the year so far, Muir said that region has not seen the same rebound Vancouver prices did from the recession.

“Prices in that region have come off in the past three years, but not as much as people might have expected them to, given that inventory levels have been extremely high relative to sales for about three years now,” Muir said.

For the year to date, across B.C. sales dollar volume was down 18.7 per cent, while the number of units sold was down 11 per cent, and the average price dropped 8.6 per cent to $515, 611.

Source: Tracy Sherlock, Vancouver Sun

Canada’s cooling housing market has made a soft landing with steady sales and pricing through the fall, reveals a real estate trends report from Scotiabank which anticipates a gradual decrease rather than a U.S.-style housing market crash.

“Canada’s national housing market is shifting toward a more sustainable path, though significant differences in regional conditions continue,” Adrienne Warren, Scotiabank’s senior economist, said in the report.

Housing demand is expected to be soft which could lower sales and home prices, especially in buyers’ markets such as Vancouver or where there is over supply such as the condominium market in Toronto, it added.

“However, with the Canadian economy continuing to post healthy job growth, and sellers proving responsive to the underlying shift in market conditions, a sharp decline in prices nationally is unlikely.”

Nationally, sales in October were down about 10% from strong spring levels, but only slightly below the average pace of the past decade. Home sales in Alberta and Saskatchewan have increased this year, supported by stronger economic and labour market performance; in contrast in B.C., which faces the greatest housing affordability challenges, sales have dropped about 10% this year, the report said.

Another report released Monday by the Canada Mortgage and Housing Corp. said Canadian housing starts fell last month for both single-and multi-family homes, particularly in Ontario and British Columbia. The seasonally adjusted annualized rate of housing starts was 196,125 units in November, down from 203,487 in October and well below the high above 250,000 hit early in the year.

Canada’s housing market has been slowing since the spring after years of red-hot growth that sparked debate about a bubble. The market boomed as historically-low interest rates fuelled purchases, driving up prices and adding to household debt. The high and rising home prices combined with the tightening of mortgage insurance rules in recent years have made houses less affordable, notably for first-time buyers.

Source: Melissa Leong, Financial Post

The housing market continues to cool off in the Lower Mainland, as the number of home sales dropped to 10-year lows in the Vancouver area and average sale prices dipped across the region.

Year-over-year sales decreased nearly 29 per cent, from 2,360 home sales in November 2011 to 1,686 last month, according to the Greater Vancouver Real Estate Board’s monthly report. The 28.6-per-cent decline includes detached and attached homes, as well as condominiums.

Sellers are now more likely to remove their homes from the market than drop their asking price, and buyers are expecting even lower prices, said board president Eugen Klein, leading to a stalemate.

“There’s a tug of war happening between buyers and sellers.”

November typically marks a slowdown in new listings and homeowners prefer to move in the spring, he said. But both sales and new listings are below the 10-year November averages of 2,420 and 2,758, respectively.

The benchmark price for a home in Greater Vancouver — which includes the Sunshine Coast, Bowen Island and Whistler — also fell to $596,900, a 4.5-per-cent drop since this year’s peak of $625,100 in May, and down 1.7 per cent compared to last November.

Those numbers represent a moderation of the formerly overheated housing market in Vancouver, but not a full-on correction to record-setting home prices in recent years, Klein said. The days of $100,000 monthly price increases in Richmond or the west end or West Vancouver might be over, but “after all of that, where a $400,000 house became a $900,000 house, we’re seeing a price adjustment of just over six per cent. We’re not going back to the (original) level.”

Of the nearly 15,000 homes for sale in the region, almost half were listed at less than $600,000. Last month, 273 of 1,686 home sales last month went for more than $1 million.

Klein pointed to the introduction by Finance Minister Jim Flaherty of new mortgage rules this summer as part of the reason for the slowdown: lenders can now only provide home equity loans of up to 80 per cent of the home value, down from 85 per cent, and a reduced amortization period from 30 to 25 years, which increases monthly mortgage payments.

The Fraser Valley Real Estate Board, which includes Surrey, also reported a 19-per-cent year-over-year decline in home sales.

Board president Scott Olson agreed home buyers are adjusting their price range. But he pointed out that some areas outside Vancouver — such as Abbotsford, Delta, central Surrey and Cloverdale — have seen the benchmark price for a detached home go up.

The region’s “bread-and-butter buyers” — young families buying homes in the $400,000 range — are still in the market.

“We could argue we’re actually saying thank you to Minister Flaherty for his rule changes,” Olson said. “We’re seeing a net migration in from people closer to the city because we’re more affordable.”

However, the average price has decreased 6.6 per cent since last year — from $473,550 to $442,200 — and the number of new listings on the board’s Multiple Listing Service has dropped 11 per cent compared to November 2011 and 32 per cent compared to last month, which the report described as the “slowest new listings in a decade.”

The benchmark price for a townhouse in the Fraser Valley dropped 1.5 per cent to $298,900, while the same for apartments increased 2.6 per cent to $202,800.

On average, it takes 59 days to sell a home in the area, up five days from November 2011. Townhouses were on the market 70 days and apartments 74 days, according to the real estate board.

Source: Zoe McKnight, Vancouver Sun