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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Source: Bruce Constantineau, Vancouver Sun

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

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

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

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

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

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

Source: Canadian Press

Not so fast. The purported collapse of Canada’s housing market does not appear to be in sight, and any correction down the road could likely be a mild one.

Recent data have defied warnings from market watchers of an impending plunge – caused mainly by the impact of tighter mortgage rules imposed by the federal government last summer to slow the race by consumers for record-low lending rates.

The latest figures show sales of existing homes strengthened for a second month in May, up by a seasonally adjusted 3.6 per cent, after declining 10 per cent between July and March.

The Canadian Real Estate Association, in a report Monday, also said home prices were up 3.7 per cent in May from the same month a year earlier, to a national average of $388,910.

For all of this year, CREA pegs the average price rise at 2.1 per cent, to $370,900, weaker but far removed from correction territory. And in 2014, the average value is expected to rise 1.8 per cent to $377,700, the Ottawa-based industry group said.

“Prices remain stable, perhaps maddeningly so for the legions of bubble mongers,” said Douglas Porter, chief economist at BMO Capital Markets.

Porter noted the May data show “housing remains on track for a fabled soft landing … making a mockery of talk of an imminent collapse.”

While CREA still anticipates sales to fall 2.5 per cent in total during 2013 compared to 2012 – to 443,400 units from 454,573 – home buying should rebound to 464,300 units in 2014, a jump of 4.7 per cent.

Last July, Finance Minister Jim Flaherty announced stricter mortgage lending rules, the fourth such move in four years. The changes included a shorter amortization period for mortgages insured by government-owned Canada Mortgage and Housing Corp. in an effort to limit lending to those least able to afford it.

Flaherty went even further, subsequently warning banks not to pursue “race-to-the-bottom” rates for mortgages that could further pile on household debt beyond already record-high levels and reignite those concerns over a possible housing bubble.

Much of his expressed concern was focused on condominium building in Toronto and Vancouver, which it was feared might result in a glut and possible crash in those markets.

“History tells us that the impact from changes to mortgage insurance rules tend to be temporary, lasting up to three quarters,” said Diana Petra-mala, at TD Economics.

Petramala agrees Canada’s housing market appears to be headed for a soft landing, “with sales and prices growing at more sustainable levels than had been the case through 2010 and 2011.”

The spark that helped ignite the housing frenzy initially came from policy-makers at the Bank of Canada. Led by then-governor Mark Carney, the bank slashed its trendsetting lending rate to 25 basis points in 2009 to spur spending by households and businesses coming out of the recession.

While that rate was subsequently raised to one per cent in September 2010, it has not been adjusted since. Many economists do not expect that to change until at least late 2014.

“As long as interest rates stay low, affordability will remain relatively high. We have many times changed the mortgage rules, and we were attacking the wrong source of the problem,” said Charles St-Arnaud, an economist at Nomura Global Economics in New York.

“The reason why the housing market was so strong was, basically, interest rates were so low. The issue was not the availability of credit, it was the price at which it was given,” he said.

“If you were to give the same availability but, let’s say, 200 basis points higher, I don’t think we would be here in terms of the housing market.”

Carney has also been adamant – along with Flaherty – that consumers need to tighten their belts, warning household debt posed the biggest threat to the Canadian economy.

That mantle of concern has been passed to Stephen Poloz, who on June 3 replaced Carney – soon to be the new Bank of England governor.

Source: Gordon Isfeld, Financial Post

Home sales increased in May for the first time since September 2011, the Real Estate Board of Greater Vancouver reported Tuesday.

The year-over-year increase is small at just one per cent, and the number of sales is still 19.4 per cent below the 10-year average, but sales jumped 9.7 per cent when compared to April, the board reported.

Even though historically (sales) are still low, they are still improved,” said Sandra Wyant, president of the Greater Vancouver board.

The number of listings is 18 per cent below the number of listings last year and the sales-to-listings ratio for May was 17 per cent, whereas in January it was just 12 per cent, Wyant said.

“We’ve seen some steadying trends over the last three months,” Wyant said. “The number of homes listed for sale has been keeping pace with the number of property sales, leading to a balanced sales-to-listings ratio. This is having a stabilizing influence on home price activity.”

Meanwhile, home sales in the Fraser Valley were the slowest they’ve been in May since 2001, the Fraser Valley Real Estate Board reported Tuesday.

Sales were down 15 per cent compared with sales in May last year, but up one per cent from this April.

The number of properties for sale was also the highest it’s been this year, but slightly lower than the number for sale last year.

Ron Todson, president of the Fraser Valley board, called it a “transitioning market.”

“Sales are about 20-per-cent lower than normal for this time of year, while the number of new listings coming on stream is right on average,” Todson said.

The composite benchmark price in May for detached homes in Greater Vancouver dropped 5.2 per cent from May 2012 to $917,200, while the benchmark price of an apartment dropped 3.7 per cent to $365,600 and for a townhome fell 3.2 per cent to $454,900, the board reported.

Despite the low numbers of sales, prices are stable in the Fraser Valley, Todson said.

The benchmark price of a single family detached home in the Fraser Valley was $549,200 in May, an increase of 0.2 per cent from the same month last year. The benchmark price of a townhouse is $298,000, down 2.9 per cent year-over-year, while the benchmark price of an apartment was virtually unchanged at $203,400, the Fraser Valley board reported.

Source: Tracy Sherlock, Vancouver Sun

The high costs of development could be helping to drive up housing prices in the city of Vancouver, figures provided to The Vancouver Sun by the Urban Development Institute show.

Various city development fees, community amenity charges and sustainability requirements add tens of thousands of dollars to the cost of building a condominium unit in the city of Vancouver. Vancouver charges far more than Burnaby and Surrey, the figures show.

Sky-high land costs and slightly higher construction charges also add to the cost of development in Vancouver compared to other parts of Metro.

“The significant cost premiums of building new homes in Vancouver, compared to Surrey, leads to two observable results,” said Anne McMullin, president and CEO of the Urban Development Institute. “Either the increased costs will inevitably be passed on to homebuyers or the viability of building new market housing will be suppressed. Regardless, the end game is a more unaffordable and less socially sustainable city.”

She says the most obvious way to address affordability is to look at the costs and supply of housing.

“Costs affect supply — if it’s too expensive to build, you’re going to limit the supply. But we still have the demand. There’s always going to be a demand — there are buyers who can afford it.”

But Brian Jackson, the City of Vancouver’s general manager of planning, says market demand drives the price of housing much more than the costs of development.

“If we took $1,000 off the cost of the CACs or we took $1,000 off the cost of the DCLs,” Jackson said, referring to two types of city development fees, “is the developer going to take $1,000 off the cost of selling the house? I don’t think they would – they’re going to get the highest price that they could.”

Nonetheless, he acknowledges developers take a lot of risks when they build in Vancouver.

“I think it’s a tough game out there, especially when the market is becoming soft like it is now,” Jackson said.

It may be a risky game for developers, but the figures provided to The Vancouver Sun still show developers making a sizable profit: even with the higher development costs in Vancouver the expected profit is $80,694 per unit, in Burnaby $54,652 and in Surrey $34,668.

Source: Tracy Sherlock, Vancouver Sun

Real estate has been slumping in the Lower Mainland, with sales volumes off by a third from long-term averages and prices down about five per cent from their peak.

Central 1 Credit Union is predicting a slow, weak recovery for real estate in British Columbia, saying it expects a flat market for both unit sales and prices for the next few years.

In its annual forecast released last week, the credit union predicts home sales in the province will gather a bit of strength this fall and hold steady for the rest of the year.

“The year-long correction in home sales is likely to bottom out in the first quarter of 2013, and we’ll see a slow recovery through the rest of the year. But the gains will be modest,” said Bryan Yu, an economist with the credit union.

Yu said there is always a market for homes that are priced well or have a special selling point.

“There’s always going to be some properties that sell quickly, if they’re priced well, or under-priced, perhaps,” Yu said. “But we’re not seeing that reflection in the over-all market that it’s anywhere near a strong market. Listings are high, overall sales levels are low and the reality is the price trends have been negative over the past couple of quarters.”

Yu said it is normal for the real estate market to become busier in the spring.

135 single-family homes have sold on the west side of Vancouver this March, which should result in 160 sales once the month is done; in March 2012, there were 152 sales.

Last year hit a 12-year low in sales, with only 64,400 sold (compared with 76,817 in 2011), and Yu anticipates there will be slightly fewer homes sold this year.

Yu said the resale housing market is hampered by sluggish employment and population growth as well as tighter mortgage requirements that have pushed some first-time buyers out of the market.

Following 2012’s four-per-cent decline, the credit union expects the province’s median annual price to slip five per cent in 2013 to about $363,000, a level last seen in 2009.

In Greater Vancouver, annual resale activity is forecast to decline about four per cent this year to 31,500 homes. The median price will dip six per cent to $474,000 but is expected to rise by the end of 2013, according to the forecast.

The report also says house sales in the Okanagan, Kootenay and Vancouver Island are expected to rise but for now remain near recessionary levels because of weak demand and excess inventory.

The forecast calls for an uptick of 13 per cent in unit sales in 2014 and a further eight per cent in 2015 as the economy improves and consumer confidence grows. Yu expects prices to remain flat through 2015.

Source: Tracy Sherlock/Tiffany Crawford Vancouver Sun

The slowdown in the Metro Vancouver real estate market continued in February, with sales nearly one-third below the 10-year average, the Real Estate Board of Greater Vancouver reported Monday.

Home sales in the region have been trending below historical averages for a full year now and February 2013 had the second-lowest number of sales in any February since 2001, the REBGV said. “Sales in February followed recent trends and were below seasonal averages, though our members tell us they saw more traffic at open houses last month compared to the previous six to eight months, said Eugen Klein, REBGV president.

The perception that housing is overvalued may be a factor slowing sales. Rating agency Fitch Ratings says Canadian home prices are overvalued by about 20 per cent, while prices in B.C. are overvalued by 26 per cent.

The Fitch report released Monday states that the agency does not expect prices to fall by those amounts, but rather that “if growth halted tomorrow and prices began to drop, Fitch expects that it would take several years for home prices to revert to their sustainable values. This depends on a number of factors such as government support and credit availability. With this time frame, the observed nominal decline in prices could be as low as 10 per cent.”

The report describes B.C. as being highly desirable to residents because of its climate and coastline, and benefiting from restricted land supply.

“More recently, prices have been supported by an influx of foreign buyers, particularly from Asia, who have viewed the Canadian housing market as a safe haven for investment, increasing the speculative value of these properties without altering the traditional market dynamics.”

Meanwhile, BMO lowered its five-year low-rate fixed mortgage to 2.99 per cent from 3.09 per cent to drum up business.

While sales numbers for February are down significantly from last year at this time in both Metro Vancouver and the Fraser Valley, prices are not moving much.

In Metro Vancouver, the home price index composite benchmark price is down 5.6 per cent to $590,400 from its peak in May, 2012 of $625,100 and the composite benchmark price in the Fraser Valley was $422,700 up slightly from last year at this time.

In Metro Vancouver, 1,797 properties sold in February 2013, compared to 1,351 in January and 2,545 in February 2012. In the Fraser Valley, 913 homes sold in February, compared to 617 in January and 1,269 in February 2012.

Both boards reported that realtors have said more people are visiting open houses than in recent months.

“We’re seeing signals that the standoff between buyers and sellers over the last six months is coming to an end,” said Ron Todson, president of the FVREB, which includes North Delta, Surrey, White Rock, Langley, Abbotsford and Mission. “Business has picked up in the last month with increased traffic at open houses, sellers quicker to accept offers and homes selling on average two weeks faster than they did in January.”

Klein said the REBGV does a survey of its members monthly and in February, for the first time in eight months, two-thirds of realtors reported more traffic at open houses.

Todson said different areas of the Fraser Valley were showing much different activity, with condos in Abbotsford and Central Surrey and townhome sales in North and Central Surrey and Cloverdale proving popular.

“One commonality among these areas and property types is greater affordability. What’s not doing well generally anywhere in the Fraser Valley is sales of higher-end homes unless they are priced competitively,” Todson said.

In Metro Vancouver, proximity to transit is driving sales, Klein said, noting that sales of properties near the Canada Line and the planned Evergreen Line are seeing an uptick in both development activity and home sales.

“You’re also seeing buyers going there to buy homes because those are the most affordable and have the best opportunity for appreciation and they can buy more for their buck,” Klein said. “If you bought a home near Southwest Marine (and Cambie Street) before 2012, your commute to downtown Vancouver would have been 45 minutes in rush hour. Today, it’s a different equation.”

Source: Tracy Sherlock, Vancouver Sun

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