Residential property sales in Canada fell 4.5% from December last year to January 2012, the biggest monthly fall since July 2010, the latest figures from the Canadian Real Estate Association (CREA) show.

It was also the first monthly fall since August 2011. The monthly decline reversed a string of monthly increases over the closing months of last year, and returned national activity to where it stood at the end of the third quarter of 2011.

Last year was also muted in terms of price increases, with the national average home price up less than 2% year on year in January, one of the smallest increases of the last 12 months.

The actual (not seasonally adjusted) national average price for homes sold in January 2012 was $348,178, representing an increase of 1.2% from its year ago level. This ranks among the smallest increases since late 2010.

On a seasonally adjusted basis, the national average home price rose 1.6% on a month on month basis, marking a rebound from a decline of similar magnitude in December.

“The national housing market is stabilizing and remains well balanced. That said, forecasts for economic and job growth going forward vary widely for different parts of the country, suggesting a possible continuation of a softening trend in some markets, as well as the potential that demand will pick up based on strong fundamentals in others,” said Gary Morse, CREA’s president.

Activity was down in over half of all local markets in January from the previous month. Led by declines in Greater Toronto and Montreal, demand also softened in a number of other major urban centres including the Fraser Valley, Calgary, Edmonton, Winnipeg, Ottawa, and the Greater Vancouver housing market.

Actual (not seasonally adjusted) national sales activity was up 4% from year ago levels in January, the smallest year on year increase since last May. As was the case in a number of months last year, actual sales in January 2012 stood close to the five and 10 year average for the month.

The number of newly listed homes edged down 1.4% on a month on month basis in January following a 2.9% increase in December. The monthly decline in new supply reflects a drop in new listings in a number of Canada’s largest urban centres, which offset a jump in new listings in Vancouver, CREA said.

Sales fell in January shifting the national market back towards the mid point of balanced territory and reversing the recent trend which had seen the market becoming tighter over the final four months of 2011. The national sales-to-new listings ratio, a measure of market balance, stood at 53.8% in January, down from 55.5% in December and 55.4% in November.

Based on a sales-to-new listings ratio of between 40 to 60%, some 60% of local markets were balanced in January. Compared to December, there were fewer buyers’ and sellers’ markets, and a greater number of balanced markets.

The number of months of inventory stood at six months at the end of January on a national basis, up from 5.7 months in December 2011 and returning it to where it stood in October 2011. The number of months of inventory represents the number of months it would take to sell current inventories at the current rate of sales activity, and is another measure of the balance between housing supply and demand.

“Year on year comparisons in the national average price are expected to become volatile and may turn negative, reflecting average price developments in the first half of 2011 in Vancouver,” said Gregory Klump, CREA’s chief economist.

“At that time, high-end home sales in Vancouver’s priciest neighbourhoods surged to all-time record levels, which skewed the national average price upward considerably. A replay of this phenomenon is not expected this year,” he explained.

“As a result, comparisons for national average price to year ago levels over the coming months will reflect an upwardly skewed base effect. For this reason, year-on-year comparisons should be kept in perspective. Developments in the MLS® HPI will provide important guidance on price trends, since it is not affected by the problem of compositional shifts in the mix of sales activity,” he added.

Source: PropertyWire

Zurich has topped Tokyo to become the world’s most expensive city, as surging currencies push up the cost of living in countries like Switzerland and Australia, a survey showed on Tuesday.

Vancouver overtook U.S. cities to become the most expensive in North America, ranked 37th in the world. Los Angeles was the most expensive U.S. city – equal 42nd with Shanghai – while New York came in 47th.

The Swiss Franc’s allure as a safe haven for investors moving their funds out of Euro zone nations propelled Zurich to the top spot from fifth last year, while Geneva came in third.

Five Australian cities made it into the top 20, led by Sydney and Melbourne in seventh and eighth places, according to The Worldwide Cost of Living survey, carried out by the Economist Intelligence Unit.

“Exchange rates have been the greatest influence for the Australian cost of living, with the Australian dollar seeing its value to the U.S. dollar double in a decade,” said survey editor Jon Copestake in a statement.

The survey of 130 cities worldwide compares more than 400 individual prices across 160 products, including food, clothing, transport, rents and private schools.

Asian cities moved up the ranking, with Singapore gaining one place to 9th spot and Seoul climbing nine places to 27th.

Asia was also home to some of the cheapest cities. Three of the four cheapest were in the Indian subcontinent: New Delhi and Mumbai in India, and Karachi in Pakistan, which was the cheapest of cities surveyed.

Source: The Vancouver Sun

Vancouver Sun February 13th, 2012

6629 Laurel St., Vancouver

Type: 4-bedroom, 2-bathroom detached
Size: 2,700 sq. ft.
B.C. Assessment, 2012: $2,083,700
Listed for: $2,200,000
Sold for: $2,100,000
Sold on: Jan. 5
Days on market: 0
Listing agent: Daphne McFarland at Hugh & McKinnon Realty
Buyer’s agent: Charan Kamal Pannu at SRS Westside Realty

The big sell: The seller of this two-level rancher bought it in 1953 — the year it was built – and resided in it for the next 59 years. It is not uncommon to have original-owner homes of this age in Vancouver, but in these real-estate obsessed times, it is becoming less so. As the description on the MLS listing sheet states, this is a solid home, but the main value is in the large level lot. That land measures 54 by 144 feet and if redeveloped, could hold a property larger than the current residence. Adding to the attraction was the light-filled west-facing fenced back yard, the Oakridge neighbourhood, and the convenience of a location that’s near Oakridge shopping centre, Langara College, Churchill secondary and Jamieson elementary schools, and the Canada Line. All of this produced an accepted offer the day the property went on the market.

89 -9229 University Cres., Burnaby

Type: 3-bedroom, 2-bathroom townhouse
Size: 1,163 sq. ft.
B.C. Assessment, 2012: $392,000
Listed for: $449,000
Sold for: $438,000
Sold on: Jan. 12
Days on market: 58
Listing agent: Robert Crowe at RE/MAX Real Estate Services
Buyer’s agent: Robert Crowe and Ali Nimji at RE/MAX Real Estate Services

The big sell: SFU’s UniverCity development is a sustainable community that has evolved into a family-friendly complex high up on the campus grounds on Burnaby Mountain. Serenity was built by Polygon in 2006 and consists of 132 townhomes surrounded by forest walks, hiking and bike trails. One block away is the new University Highlands elementary school, and a new child care centre will be opening soon. This three-bedroom, two-level corner unit home enjoys an abundance of natural light and a large patio and garden area surrounded by thick conifers. The interior features a mix of flooring with wall-to-wall carpet, laminate hardwood and tiling. The kitchen has plenty of cupboard and counter space, birch-coloured cabinetry, a double sink, stainless-steel appliances, and a subway-tiled backsplash. An electric fireplace warms the living room and an oversized shower adds a spa-like quality to the ensuite bathroom. The home has designer colours throughout.

106-1040 West 8th Ave., Vancouver

Type: 1-bedroom, 1-bathroom apartment
Size: 692 sq. ft.
B.C. Assessment, 2012: $340,000
Listed for: $369,900
Sold for: $362,500
Sold on: Jan. 12
Days on market: 85
Listing agent: Paul Bale at Sutton Group – West Coast Realty
Buyer’s agent: George Winkler at Amex Broadway West Realty

The big sell: This home is just north of Broadway on the Fairview slopes, with Granville Island, the seawall, parks, shopping, and transportation minutes away. The ground-floor unit has a well-designed floor plan and a front door that opens to a 16-by-16-foot living room. That room has bright, arched windows that provide plenty of views of a partly covered garden patio. The home has a gas fireplace, in-suite laundry and storage areas, a 16-by-9-foot bedroom, and a secure underground parking stall. This is one of 28 units in the four-storey development, which was built in 1986 with the homes positioned around a central courtyard. The apartments have been rainscreened and are pet- and rental-friendly.

© Copyright (c) The Vancouver Sun

While Canada’s banks are tightening lending standards in a move to avoid a U.S.-style housing correction, experts say Vancouver’s robust housing market is not expected to face a severe price correction.

Canada’s banks are in talks with the federal government about ways to curb mortgage lending in response to a “genuine concern” about the country’s housing boom and rising consumer debt levels, said TD Bank chief executive officer Edmund Clark.

“Household debt numbers are coming up to U.S. levels, so that is causing us a concern,” said Clark.

The banks have responded by restricting some lending and raising prices on higher-risk borrowers.

TD Bank joined Royal Bank of Canada this week in ending a promotional 2.99 per cent four-year mortgage rate, three weeks before it was set to expire.

Although the Vancouver housing market may be out of equilibrium, a significant correction is not expected, said Tsur Somerville, director at the University of B.C. Centre for Urban Economics and Real Estate at the Sauder School of Business.

“I think there’s some concern that prices don’t get so far out of whack that there’s a substantial correction,” Somerville said. “All you have to do is look around and you’ll see that if [a substantial correction] does happen, that would be a real big problem. So let’s not let the housing market be driven by a wave of cheap and easy-to-access money.”

The Bank of Canada is trying to reduce the exposure to mortgage debt and put the brakes on the housing market without using “really, really big hammers,” like raising interest rates, Somervilles said.

“The government has already taken steps to control mortgage lending through its regulations and I think there’s a wariness about tightening those too much, so they’re encouraging the banks to look at their mortgage book more closely.”

However, an expectation that mortgage rates will stay low is taking the sizzle out of Vancouver’s housing prices, Reuters reported.

“Since October, it was like someone turned off the tap. It became absolutely dead,” said longtime realtor Pam Allen.

At the same time, Chinese investors, who have long helped to underpin the city’s red-hot market, are holding back because property market curbs back home means they have less cash available.

But with immigrants still streaming in from China and elsewhere, and the city frequently rated one of the most livable on the planet, most experts see prices fizzling rather than imploding with a bang.

Vancouver price rises peaked at a stunning 19.8 per cent in 2006, dipped in 2009, and came roaring back with double-digit growth in both 2010 and 2011.

A house bought for $500,000 in 2001 would have fetched about $1.2 million a decade later, based on average price changes.

But the latest month-to-month figures show Vancouver prices fell in five of seven months from last June to December, including drops of more than 5 per cent in November and December.

Source: Bloomberg News with files from Reuters and Tracy Sherlock, Vancouver Sun

In few corners of the world would a car park squeezed between two arms of an elevated highway be seen as prime real estate. In Toronto, however, a 75-storey condominium is planned for such an awkward site, near the waterfront. The car park next door will become a pair of 70-storey towers too. In total, 173 sky-scrapers are being built in Toronto, the most in North America. New York is second with 96.

When the United States saw a vast housing bubble inflate and burst during the 2000s, many Canadians felt smug about the purported prudence of their financial and property markets. During the crash, Canadian house prices fell by just 8%, compared with more than 30% in America. They hit new record highs by 2010. “Canada was not a part of the problem,” Stephen Harper, the prime minister, boasted in 2010.

Today the consensus is growing on Bay Street, Toronto’s answer to Wall Street, that Mr Harper may have to eat his words. In response to America’s slow economic recovery and uncertainty in Europe, the Bank of Canada has kept interest rates at record lows. Five-year fixed-rate mortgages now charge interest of just 2.99%. In response, Canadians have sought ever-bigger loans for ever-costlier homes. The country’s house prices have doubled since 2002.

Speculators are pouring into the property markets in Toronto and Vancouver. “We have foreign investors who are purchasing two, three, four, five properties,” says Michael Thompson, who heads Toronto’s economic-development committee. Last month a modest Toronto home put on the market for C$380,000 ($381,500) sold for C$570,000, following a bidding war among 31 prospective buyers. According to Demographia, a consultancy, Vancouver’s ratio of home prices to incomes is the highest in the English-speaking world.

Bankers are becoming alarmed. Mark Carney, the governor of the central bank, has been warning for years that Canadians are consuming beyond their means. The bosses of banks with big mortgage businesses, including CIBC, Royal Bank of Canada and the Bank of Montreal, have all said the housing market is at or near its peak. Canada’s ratio of household debt to disposable income has risen by 40% in the past decade, recently surpassing America’s (see chart). And its ratio of house prices to income is now 30% above its historical average—less than, say, Ireland’s excesses (which reached 70%), but high enough to expect a drop. A recent report from Bank of America said Canada was “showing many of the signs of a classic bubble”.

The consequences of such a bubble bursting are hard to predict. On the one hand, high demand for Canada’s commodity exports could cushion the blow from a housing bust. And since banks have recourse to all of a borrower’s assets, and Canadian lending standards are stricter than America’s were, a decline in house prices would probably not wreck the banks as it did in the United States.

However, the Canadian economy is still dependent on the consumer. Fears about the global economy have slowed business investment, and all levels of government are bent on austerity. The Conservative government’s next budget is expected to put forward a plan to close the federal deficit, now 2% of GDP, by 2015—modest austerity compared to Europe’s, but still a drag on the economy. Few new jobs are being created. Assuming there is no setback in Europe’s debt crunch, slowdown in America or drop in commodity prices, GDP is forecast to grow by a meagre 2% this year. If consumers start feeling less well off, Canada could slip back into recession.

The inevitable landing will probably be soft. Increases in house prices and sales volumes are slowing, and the 2015 Pan American Games in Toronto should prop up builders. “The national housing market is more like a balloon than a bubble,” says a report by the Bank of Montreal. “While bubbles always burst, a balloon often deflates slowly in the absence of a ‘pin’.”

Moreover, the government is trying to cool the market. The banking regulator is increasing its scrutiny of housing in response to concerns about speculators. The Canada Mortgage and Housing Corporation, a government mortgage-insurance agency, says it will have to start reducing its new coverage because of legal limits. And the finance ministry has cut the maximum term of publicly insured mortgages from 35 years to 30. Some bank managers are calling for it to be reduced to 25, the historical norm. Canada’s reputation for financial sobriety is not entirely unwarranted.

However, the state has refused to use its most powerful tool. To protect business investment, the central bank has made clear that it plans to keep interest rates low. As long as money stays cheap, the balloon could get bigger—perhaps big enough to become a fully fledged bubble after all.

Source: The Economist

More homes are selling in Nanaimo, and at a higher price than this time a year ago.

A total of 62 units sold in the city last month, a 13% increase from a year ago, with the average selling price up 6% to $360,799, according to the latest sales summary from Vancouver Island Real Estate Board.

As the largest city in the region, which spans Vancouver Island north of the Malahat, Nanaimo outperformed the regional average in January, based on VIREB sales data.

On average, properties sold for 3% more region-wide in January than in the same period in 2010, while unit sales rose 5%.

The average prices paid for homes that sold last month was 93% of list price, down 1% from a year ago.

“There’s activity in the market,” said VIREB past-president Jim Stewart.

“There’s not urgency. People seem to really want to look at things.”

All but one of six VIREB zones saw year-over-year selling price increases last month.

The increase ranged from 2% in Campbell River to 9% in Cowichan Valley.

Comox Valley and Port-Alberni both saw 4% changes from 2011.

The single price drop happened in Parksville-Qualicum Beach, down 12% to $341,696.

The supply of single-family homes rose 6% from a year ago, to 640 units in the VIREB region last month.

Days to sell increased 2%, with the average home staying on the market 89 days.

Condominiums are taking longer to sell, especially apartment condos.

Townhouse condos are fetching 96% of list price after an average listing period of 102 days, while patio condos are taking 151 days to sell, also at 96% of list price.

On average, apartment condos sitting on the market 191 days before closing, with the average unit fetching just 89% of list price.

More of the same is in store for the year ahead.

“While the market is not going to be sexy this year, it’s performance looks pretty average,” said Cameron Muir, the B.C. Real Estate Association’s chief economist.

Source: Darrell Bellaart, Nanaimo Daily News

The Bank of Montreal poured cold water on the idea Canada’s housing market could be headed for a crash, suggesting that prices are only “moderately high across the country.”

“Expect the housing boom to cool rather than crash,” BMO’s chief economist Sherry Cooper and senior economist Sal Guatieri said in a report published Monday.

“While the housing boom is unlikely to continue unless mortgage rates drop much further, neither is it likely to bust.”

The bank says home values are indeed rising at a faster pace than they used to, but the signs are pointing to a soft landing where prices stabilize — not a hard correction where prices drop quickly by 20 per cent or more.

“In our view, the national housing market is more like a balloon than a bubble,” the bank said. “While bubbles always burst, a balloon often deflates slowly in the absence of a pin.”

But demographic factors, consistently low interest rates, low construction costs and an influx of foreign buyers make it likely that no such pin will materialize for the foreseeable future, the bank said.

Average prices have grown more than twice as fast as family incomes since 2001, but BMO’s report argues there’s no reason to panic yet.

Nationally, home prices are 4.9 times higher than the average household income. A decade ago, that ratio was at 3.2.

Some cities are hotter than others. Vancouver’s home prices ratio currently sits at 10 times higher than average household income, Toronto’s is at 6.7, Montreal’s is at 4.5 while Halifax is at 3.8. Those are all on the high side, but if the market cools, that will allow incomes to catch up and move the price-to-income ratio lower, the bank argues.

The latest data from the Canadian Real Estate Association shows the national average price was $347,801 in December, a 0.9 per cent increase over the previous 12 months. That was the lowest level of growth since October 2010 and well below inflation, a possible sign that the market is already cooling.

The bank does note, however, three risks to the outlook. A sudden hike in interest rates, a widespread Canadian recession, or an economic slowdown in Asia reducing the number of foreign buyers would all take the air out of Canada’s housing market.

“But barring one of these triggers, however, a dramatic correction is unlikely,” the bank said.

Apparently the only way isn’t always up.

Canadian house prices dropped in November for the first time in nearly a year, according to the monthly Teranet-National Bank house price index released Wednesday.

The 0.2 per cent drop followed two months of flat prices, and was the first decline in the index since a “brief correction during the three months ending November 2010,” said National Bank senior economist Marc Pinsonneault.

The national composite index, which tracks registered prices of homes sold at least twice, shows prices fell in eight of the 11 metropolitan markets tracked — one more than in October.

“Calgary and Victoria stood out with declines of 1.6 per cent and 0.9 per cent respectively,” said Pinsonneault, noting the declines were much smaller in the other six markets, though declines in Toronto, Hamilton and Winnipeg “are noteworthy in that these three markets are considered tight.”

December data released by the Canadian Real Estate Association suggested most real estate markets in the country are balanced, with the exception of those three cities, and Victoria, which is considered to be a buyer’s market.

November’s prices were higher than October’s in Edmonton (0.1 per cent), Montreal (0.4 per cent) and Halifax (0.5 per cent).

Year over year, the composite index has gained 7.1 per cent, up slightly from 7.0 per cent the previous month because of a bigger drop in prices between October and November in 2010.

“Since prices began rising again in December 2010, the recent acceleration trend in 12-month changes could come to an end with next month’s report on December 2011 prices,” Pinsonneault said.

Source: Postmedia News

November housing prices (% change m/m | % change y/y):

Calgary -1.6 | 0.5

Edmonton 0.1 | 1.0

Halifax 0.5 | 2.8

Hamilton -0.3 | 4.4

Montreal 0.4 | 7.2

Ottawa -0.2 | 4.2

Quebec -0.2 | 6.0

Toronto -0.2 | 10.8

Vancouver -0.2 | 9.1

Victoria -0.9 | -0.3

Winnipeg -0.1 | 7.5

National Composite -0.2 | 7.1

Source: Teranet-National Bank

Edmonton enjoys the most affordable housing of Canada’s six major metropolitan regions, according to a study released Monday.

The International Housing Affordability Survey looks at housing in cities in the United States, the United Kingdom, Canada, Australia, Ireland, and New Zealand along with Hong Kong. It found that among Canadian cities with populations above one million, Edmonton has the most affordable housing.

Windsor was the most affordable market of any size, while Vancouver was by far the priciest market in the country. In fact, Vancouver outranked every city in the survey except Hong Kong, topping markets like New York City, San Francisco, Sydney and London, England.

Conducted by the public policy website Demographia and based on data from the third quarter of 2011, the study ranks cities by their “median multiple” — the median house price in an area divided by gross median household income. The survey labels any median multiple score over 3.0 as “unaffordable,” and a score above 5.0 as “severely unaffordable.”

Of the six biggest markets in Canada, Edmonton, Calgary and Ottawa-Gatineau earned the designation “moderately unaffordable,” and housing markets in Vancouver, Montreal, and Toronto scored as “severely unaffordable.”

The study, co-authored by American public policy consultant Wendell Cox and Kiwi real estate developer Hugh Pavletich, describes a sharp decrease in housing affordability over the last decade in the markets surveyed. It argues that median multiple scores should lie between two and three, but restrictive land-use regulations boost the price of housing, particularly in the U.K., New Zealand and Australia. The report classed all five of Australia’s major metropolitan areas as “severely unaffordable.”

Cox and Pavletich specially denounce urban growth boundaries, which restrict the amount of land available for new housing development in places like Auckland, New Zealand and Portland, Ore. The authors advocate repealing such legislation where it exists to restore housing affordability.

Cities in America, where the housing market plummeted in 2008, earned the most affordable scores. Detroit led all major cities with a score of 1.4, followed by Atlanta at 1.9 and then cities like Las Vegas, Cleveland and Phoenix.

Hong Kong, at 12.6, scored highest, followed by Vancouver at 10.6 and Sydney at 9.2. Melbourne, which scored 8.4, and the British district of Plymouth & Devon, at seven, rounded out the five least-affordable major markets surveyed.

Source: Lewis Kelly, Edmonton Journal

Housing prices slumped in the second half of 2011, but real estate markets in the Lower Mainland ended up for the year overall.

Of course, Vancouver’s real estate market played a significant role.

The gain was bigger in the western half of the region, with the Real Estate Board of Greater Vancouver reporting detached house prices typically rose 11.2 per cent for the year to $887,000.

Of interest is that the hottest gain was a 34 per cent jump in Port Moody home prices, where the Evergreen Line is now assured to pass through after funding for the SkyTrain extension was secured in recent months.

House prices on the west side of Vancouver also gained 20 per cent, while the east side, West Vancouver, North Vancouver, Burnaby and South Delta all saw benchmark house prices gain 13 to 16 per cent.

Attached homes and condos gained more modestly, up roughly four per cent on average.

The Fraser Valley Real Estate Board (FVREB), which covers Surrey, White Rock and North Delta, reported benchmark house prices gained 3.3 per cent in 2011 to $523,000.

Townhouses and condos dipped, however, declining 2.1 per cent (to $315,000) and 1.2 per cent (to $237,000) respectively.

“One trend from 2011 that is clear was the preference for single family homes,” FVREB president Sukh Sidhu said. “For the most part in our region, both sales and prices of townhomes and condos either stayed on par with 2010 or decreased.”

The hottest area was White Rock and South Surrey, where sales were strong and prices of benchmark detached houses climbed 10.8 per cent to $818,000.

The most expensive cities in which to buy property across the Lower Mainland remained the west side of Vancouver with benchmark detached houses nearing the $2 million level, West Vancouver houses at nearly $1.7 million and Richmond, at $1.07 million.

Benchmark houses can still be found for under $600,000 in areas like Maple Ridge, Pitt Meadows, North Delta, Surrey, Port Coquitlam and Langley in Metro Vancouver. In the Fraser Valley, equivalent prices are $424,000 in Abbotsford and $344,000 in Mission.

The Greater Vancouver statistics show the average residential property bought five years ago has gained almost 30 per cent since then.

Detached houses performed slightly better (up 38 per cent) than condos or townhouses (both up just over 20 per cent) over the five years.

Median prices of detached houses in the Fraser Valley are up 26 per cent over five years.

Source: Jeff Nagel, Surrey North Delta Leader