Average Metro Vancouver residential price soars 26 per cent in a year to $832,000, but increase is misleading, economist says!

By Brian Morton, Vancouver Sun June 16, 2011

Home sales in B.C. edged down one per cent to 7,857 units in May compared to the same month last year, according to a B.C. Real Estate Association survey released Wednesday.

The report also said that the average price of a home climbed 20 per cent to $596,872 last month compared to May 2010.

However, BCREA’s chief economist said the soaring price shouldn’t be taken too seriously, because the provincial numbers were skewed by sales of expensive homes in Metro Vancouver’s priciest neighbourhoods.

“With the average price, you need to take it with a grain of salt,” Cameron Muir said. “The reality is that the average price does not indicate where the market is going. It [Vancouver housing] is skewing the average price higher than market conditions suggest.”

Muir said that a more precise indication of the overall market is the benchmark price -only tallied in Metro Vancouver and the Fraser Valley -which measures the price of a typical home in the area.

“The average price is up 26 per cent in [Metro] Vancouver [to $832,000], but the benchmark price has only gone up about six per cent year-overyear.”

Muir said that in Metro Vancouver, there has been a higher proportion of pricier single detached home sales this year than a year ago, especially in the priciest markets -Vancouver’s west side, Richmond and West Vancouver.

Of B.C.’s overall drop in sales, Muir said that tighter mortgage rules, tepid employment growth and advance buying during the first quarter kept B.C. home sales on a lower note in May. “However, recent downward pressure on mortgage interest rates is expected to provide some incentive to consumers over the summer months.”

Year-to-date, the BCREA survey said, B.C. residential sales dollar volume increased 15 per cent to $20.1 billion, compared to the same five-month period last year. Sales dropped one per cent to 34,191 units over the same period.

While the report noted a 25.7-per-cent price increase year-over-year from $662,000 to $832,000 in Metro Vancouver, that wasn’t the same elsewhere in the province.

The south Okanagan saw the average price drop 5.9 per cent in May compared to May 2010, from $352,000 to $331,000, while Kootenay saw the average price drop 4.6 per cent, from $263,000 to $251,000.

However, the Fraser Valley recorded a 15.1-per-cent average price increase in the year, from $458,000 to $527,000.

Nationally, home sales fell in May by 0.6 per cent from the previous month, but were up 2.7 per cent on the year, the Canadian Real Estate Association said.

Sales fell to 36,410 units on a seasonally adjusted basis, from 36,621 units in April, the Ottawa-based group said in a statement Wednesday. Sales during the month were down 0.7 per cent in dollar terms and up 12 per cent from May last year.

The average sale price was up 8.6 per cent from a year earlier, with CREA saying the number was heavily skewed by the more affluent markets in Vancouver and Toronto.

Without Vancouver, the yearover-year increase would only be 5.6 per cent, according to CREA.

The Real Estate Board of Greater Vancouver and the Fraser Valley Real Estate Board reported earlier this month that, in typical springtime fashion, sales are on the upswing in Metro Vancouver and the Fraser Valley.

The REBGV noted that home sales reached 3,377 in May, a seven-per-cent increase over the 3,156 sales in May 2010. As well, the benchmark price for all properties increased 6.2 per cent to $627,568 in May 2011 from $590,662 in May 2010.

The Fraser Valley Real Estate Board processed 1,608 property sales in May, a nine-percent increase over May 2010, while noting the benchmark price for detached homes rose 2.8 per cent year-over-year to $529,810.

Meanwhile, 56 per cent of first-time homebuyers in B.C. are looking for a home with a rental unit, according to the 2011 TD Canada Trust First Time Homebuyers Report.

By Contributed – Kelowna Capital News
Published: June 06, 2011 2:00 PM
Updated: June 06, 2011 2:55 PM

A new report by the Chartered Accountants of B.C. indicates that 2010 showed signs of economic recovery.

The BC Check-Up, Regional Edition shows that employment numbers in the Thompson-Okanagan Development Region increased, and the unemployment rate declined. Business incorporations rebounded and the number of business establishments continued to increase. However, for a second consecutive year capital investment declined.

“The numbers for 2010 are cautiously optimistic,” said Jeff Omland, CA, partner with Omland Heal Chartered Accountants in Penticton. “Following the losses sustained in 2009, last year was marked by job growth and a decline in unemployment, particularly among young workers. The number of business establishments increased for the eighth consecutive year, and business incorporations jumped, rising by 8.5 per cent.”

According to the report, the region’s economy gained 9,200 new jobs. The region’s service sector added 8,200 jobs, or 89 per cent of total employment growth, with eight out of eleven service industries reporting job gains. The information, culture and recreation industry grew by 2,800 jobs, trade added 3,700 jobs, transportation and warehousing grew by 2,200 jobs, and education increased by 1,300 new jobs.

A large increase in residential building permits accounted for job growth in professional, scientific and technical services and finance, insurance, real estate and leasing.

Although the region’s goods-producing sector reported an overall net job gain of 1,000 jobs, losses were sustained by the agriculture and construction industries, which lost a combined total of 3,100 jobs.

The unemployment rate in the Thompson-Okanagan declined from 9.4 per cent to 8 per cent. The youth unemployment rate shrank 2.5 percentage points to 10.6 per cent, and was lower than the provincial average of 11.3 per cent.

The BC Check-Up found that 202 new business incorporations were established in 2010, and business growth was due entirely to a surge in self-employment. The increase in self-employment made up for losses in both small and medium-size businesses.

For the ninth consecutive year corporate bankruptcies declined. This positive, enduring trend suggests that both entrepreneurs and investors in the region were cautious and resilient enough to weather the previous year’s economic challenges.

On a less positive note, capital investment and development in the region declined for the second consecutive year. New project proposals dropped from 34 in 2009 to 15 in 2010, and the total value of projects declined, from $2.8 billion to $1.4 billion. New projects starting construction in 2010 were also down, from 23 projects worth $1.7 billion in 2009, to 12 valued at $0.8 billion.

“The region’s economic recovery has been, and will continue to be, dependent on the strength of our service-producing sector,” continued Omland. “As activity in other industries and sectors begins to improve, we are sure to see further employment growth and economic recovery in the year to come.”

The Thompson-Okanagan Development Region comprises five Regional Districts, the Okanagan-Similkameen, Thompson-Nicola, Central Okanagan, North Okanagan and Columbia-Shuswap, and accounts for about twelve per cent of the provincial population.

The BC Check-Up, Regional Edition looks at each region as a place to work, invest, and live. The report is available online at: www.bccheckup.com.

By Alison Appelbe, Postmedia News May 20, 2011

If you’re on the lookout for a bargain property, the Okanagan may be your best bet.

But be quick. Because the real-estate scene in this hugely varied destination — from Shuswap Lake in the north, through the major ski resorts and urban Kelowna, to the lakefronts and vineyards of the Central Okanagan and south to desert-dry Osoyoos — is on the mend.

While the Okanagan remains, for the moment, a buyer’s market, the prices for every type of property are creeping back up and the inventory is dissipating.

At the same time, the market is maturing — or changing. Rather than solely eyeing short-term vacations, some condo-purchasers have retirement in mind. Extended families are pooling their resources for, maybe, a ski chalet. Increasingly, purchasers are Western Canadians, rather than Americans and other outsiders.

The Okanagan was badly hit by the 2008 recession, and by the summer of 2009, prices were in free fall. Recreational and regular properties were discounted by 30 per cent and more, foreclosures were not uncommon, and some construction came to a halt.

Today, says Gary August, longtime realtor and co-owner of Coldwell Banker Horizon Realty in Kelowna, the market is improving.

Comparing the first four months of 2008 with the first four months of this year, prices are down 21 per cent for condos; between seven and 8.5 per cent for single-family and town houses; and by 14.5 per cent for lakeside homes costing $2 million or more.

According to statistics from August, that puts the median price for a condo today at $213,000, a town house at $330,000, a single-family house at $461,000, and a luxury lakeshore home at $2,025,000 (the latter, a 2010 figure, given a dearth of sales so far this year). In short, says August: “Our market is better than it was two years ago, but down from the peak of 2008.”

Steve Ladurantaye

Globe and Mail Update

Canadians are putting a larger portion of their earnings toward their homes, the Royal Bank of Canada said Friday, and interest rate increases are likely to put further pressure on homeowners in the coming months.

The problem is especially pronounced in Vancouver, where the bank estimated families must now dedicate 72 per cent of their household income to pay the mortgage, property taxes and utilities on a bungalow. That’s much higher than Toronto, where it would take 47.5 per cent.

The bank’s quarterly survey found affordability slipped in the first quarter of the year across the country, as higher prices in most markets meant buyers had to dedicate a larger share of their household budget to housing costs.

“We expect that the Bank of Canada will soon resume its campaign to normalize its interest rate policy, which will adversely impact housing affordability in Canada,” said Robert Hogue, senior economist at RBC. “Continued growth in household incomes, however, will likely soften the blow.”

The bank’s Housing Affordability survey measures the amount of pre-tax household income needed to pay for a certain type of home. During the first quarter, all three housing types tracked became less affordable. The percentage for each category is how much of a family’s income it takes to pay for housing costs, including mortgage payments, utilities and property taxes.

The detached bungalow benchmark rose by 0.7 per cent of a percentage point to 40.5 per cent of pre-tax income, while a two storey home increased by 0.2 to 46.2 per cent and a condo gained 0.2 to 27.2 per cent of pre-tax income.

“Interest rates will likely soon start to rise again, leading to a period of steady increases in homeownership costs. This, in turn, will contribute to a flattening in Canadian housing demand going forward,” said Mr. Hogue in a statement. “We could experience some turbulence this spring and summer, given that new tighter mortgage lending rules in March and April likely shifted home buying activity to earlier in the year.”

The report broke down affordability in major centres, saying that Vancouver’s “significant gains in property values drove the already elevated cost of homeownership even higher.” Toronto, meanwhile, saw “somewhat tense market conditions” make homes less affordable.

“Despite the latest erosion in affordability, provincial levels generally continue to stand near their long-term averages, suggesting that owning a home remains affordable or, at worst, slightly unaffordable across Canada – with Vancouver being a notable exception,” said Mr. Hogue.

The affordability readings on a standard bungalow in Canada major cities were: Vancouver 72.1 per cent (up 3.4 percentage points from the last quarter), Toronto 47.5 per cent (up 0.8 of a percentage point), Montreal 43.1 per cent (up 2.0 percentage points), Ottawa 39.0 per cent (up 0.4 of a percentage point), Calgary 35.9 per cent (up 0.9 of a percentage point) and Edmonton 31.5 per cent (up 0.5 of a percentage point).

STEVE LADURANTAYE
Globe and Mail Update
Published Monday, May. 09, 2011 10:42AM EDT
Last updated Wednesday, May. 11, 2011 1:51PM EDT

The Canadian Real Estate Association has gone back to the drawing board again, saying the number of multimillion-dollar Vancouver deals have “surged unexpectedly” as it raised its forecast for the year.

The national trade association said the average national resale price will gain four per cent by the end of the year because of high prices in Vancouver. In its last forecast – made in early February – CREA said the price would advance 1.3 per cent.

Prices in Vancouver have gained almost 30 per cent in the last year, causing concern among many in the industry who are concerned about the sustainability of such gains. Douglas Porter, deputy chief economist at BMO Nesbitt Burns, said while sales have softened across the country the risk of a sharp correction is “highly concentrated in geographical terms.”

He said while sales have softened across the country, the risk of a sharp correction is “highly concentrated in geographical terms.”

In March, CREA said the national average resale price was an all-time high of $366,000. But if Vancouver is stripped from the figure, the average price would be $327,000. Twenty two of the 25 cities surveyed posted price gains in March, with Calgary, Edmonton and Victoria the only exceptions.

CREA also added that sales would also be stronger than it expected in 2011, although still slower than 2010. It expects 441,000 sales will take place, down 1.3 per cent from a year ago. It previously suggested a decline of 1.6 per cent.

Forecasting has proven difficult for the association – in November it said sales would fall by 9 per cent. In the same forecast, it said the national average price would pull back slightly in 2011.

Private sector forecasts are also varied – Capital Economics has suggested prices could fall as much as 25 per cent over the next several years, while the major banks expect prices to moderate as higher interest rates keep people out of the market.

CREA president Gary Morse said mortgage rates “remain very attractive and are keeping financing within reach for many homebuyers.

Those rates are expected to climb, however, and while inexpensive borrowing has helped many homeowners stay current on their payments there are signs that they are under increasing stress. In Alberta, for example, the number of people three months or more late on their mortgages is double the national average at 0.87 per cent.

The rising rate of delinquency comes as economists warn that Canadians are under rising pressure when it comes to servicing debts. As interest rates move higher in the coming months, many could find it even harder to make their monthly payments.

In a statement Monday, CREA’s chief economist Gregory Klump said even if rates increase they will be “within short reach of current levels.”

“Continuing job growth will underpin housing demand, keeping the housing market in balance and stabilizing home prices.”

http://www.theglobeandmail.com/report-on-business/economy/housing/crea-hikes-forecast-for-home-prices/article2015068/