Vancouver Real Estate Market Information:
We have selected a few articles from newspapers and research conducted by credible independent organizations, including some governmental organizations such as the CMHC. Please click on the following headlines to navigate to the reports.
- Happy New Year and NEW 40 Year Mortgage
- Average Price of House will increase 4% per year or higher.
- Tax Rollover
- Is the market overvalued?
- Housing boom forecast to continue through 2007
- ECONOMIC BOOM! - Home price rise to exceed national average
- CMHC Positive on Resale Market Into 2006
- Nearly 350 Homes Selling In B.C. Every Day
- Bursting the Bubble Myth - CEO - RE/MAX International
- MARKET CAN'T BE BAD WHEN 333 HOMES SELL EVERY DAY
- CMHC: "2005 Economic Housing Outlook Positive for Housing."
- Income Tax Act changes eliminated
- Again - Headlines have changed but not the fundamentals
- Migration and the increase in house values for 2004
- Finding Downpayment Just Got Easier - CMHC
- VANCOUVER -- World's Most Liveable City - Vancouver Sun
- Home Starts to rise 15 percent
- Hardest to buy in B.C.
- 2010 Vancouver / Whistler will host 2010 Olympics
- The Real Bargain for Home Buyers (CMHC)
- Prices Expected to Increase
- The Overall Vancouver Real Estate Market
HAPPY NEW YEAR TO EVERYONE!
January 4th, 2007As 2007 starts, we look back in hindsight at the amazing achievements from each of our clients. It is time once again to thank each of you for all the ventures we have taken together.
Aside from that, it is also a time to reflect on the things that are around us that require very little money to enjoy day to day, things that money can’t buy. Take the time this New Year with your family and enjoy our Paradise, Vancouver. After all, living in Vancouver is being close to being in heaven on earth. The environment is majestic, the climate outstanding, the views spectacular. There is a very special flavour here. We wish you and your family a wonderful New Year in paradise!
Here is a quick note to let you know how we can help you or anyone you might refer to us.
When Edelisa and Fernando got transferred to Vancouver from Toronto, there were ecstatic. Then the bad news, after we had all the facts on the table, I had the unpleasant task of explaining to them that with the real estate prices in Vancouver, they had a long road ahead of them before they could afford the home that they wanted. As the facts started to sink in, I could notice that Edelisa was very, very disappointed…Imagine the look on their faces when I called the next day with an approval. With the introduction of a NEW 40 Year extended mortgage, they now qualified for the home of their dreams! Vancouver’s looking a lot better from their new living room window!
And what’s even more exciting is that their basement suite is bringing them $1400 in mortgage helper, so they are really only paying an extra $200 to OWN a home instead of RENTING! Way to go Edelisa and Fernando!Want to join their success? Call us today at 604-767-3703 to discuss how we can find creative solutions to meet your needs!
Best Regards, Richard Morrison.
Average House Price Will Increase 4% Per Year for the next 25 years.
TD Bank Financial Group- September 2006Home prices in Canada should rise 4% annually on average over the next 25 years, although that won’t hold for all houses in all markets, according to a TD Bank report.
“Our report confirms the old adage that real estate is all about location, location, location,’’ Craig Alexander, deputy chief economist of TD Bank Financial Group, said in a release. Victoria, Vancouver, Toronto and Montreal are the cities will see higher prices than 4%. Calgary and Edmonton should see “above average price gains in large part due to favourable economic prospects, stronger projected population growth and younger population than many other provinces. [Alexander also noted that] "over the long haul, property values in these urban centres should do well, but the average annual price increase should be at a mid-single digit rate.’’ The report said slowing population growth will be offset by rising home ownership rates, rising personal income, a lower long-term rate of unemployment and more modest construction of new homes. “Fears that baby boomers will severely depress housing markets as they sell their properties are overblown,’’ Alexander said.
Tax Rollover - a favourable break for the Investor
Ozzie Jurock
March 30, 2006.
...And More Could Join With Rollover Tax Measure
The newly elected Canadian government's election platform called for the elimination of capital gains tax for individuals who reinvest profits earned from selling real estate or financial investments within six months. The move would apply to physical and financial assets, potentially benefiting people who sell stocks and bonds, or properties such as cottages and family businesses.Currently, Canadians who have financial assets or property other than a principal residence must pay tax on the capital gains resulting from the sale of a financial asset or property.
According to the National Commercial Council (NCC) of The Canadian Real Estate Association, small-scale investors are often unable to "grow" their real estate investments because of the tax consequences when selling a small asset to buy a larger one.
Major Point: A capital gains roll over provision would encourage more investors to get into the residential rental investment sector. It is a good time to be looking for that ideal property before the rush really gets underway.
Housing boom forecast to continue through 2007
Demand will be brisk despite higher interest rates, CUC predicts.
November 24th, 2005 - BY DERRICK PENNER, VANCOUVER SUNSouthwestern British Columbia's housing boom should echo on into 2006 and 2007, the Credit Union Central B.C. is predicting, although at somewhat lower volumes than 2004 and 2005. Credit Union Central is predicting that although mortgage interest rates are expected to rise by more than a full percentage point over its forecast period, and housing sales and new-home starts will both rise, demand will still be brisk enough to push up selling prices. Credit Union Central economist Dave Hodben said real estate markets will probably see single-digit increases in sales and starts, not the double-digit increases people have experienced over the past couple of years.
"[But markets] are going to remain at high levels and expand even more," he said. Credit Union Central predicts that unit sales across the region will increase an average of about six per cent over 2006 and 2007 to 66,850 transactions in 2006 and as many as 71,000 in 2008. It forecasts that housing starts will rise an average of two per cent per year in 2006 and 2007, compared with an average 23 per cent per year between 2002 and 2004. That will put starts at 21,900 for 2006 and 23,150 for 2007.
However, because housing demand is expected to keep on rising as well, Credit Union Central is predicting that house prices will rise at a compounded nine per cent through 2007. Hodben said rising mortgage interest rates, spurred by expected increases in the Bank of Canada's key overnight lending rate, will only be in the order of about one percentage point over 2006 with the possibility of rate decreases after that. "That does slightly dampen housing demand at the margin," Hodben said. "A few first-time buyers will not be able to get in, or buy as much housing as they want.
" However, Hodben said the expected employment and income growth will help prop up a strong domestic economy, which will "dominate the negative impact of rate increases on the housing market." He added that a big part of the demand for housing seems to be coming from buyers who are "not particularly interest-rate sensitive." Those are buyers who are using home equity to "move up" or cashing out home equity by "moving down."
ECONOMIC BOOM!
Home price rise to exceed national average
VANCOUVER SUN, November 10, 2006, by Derrick Penner.
A major real estate company is predicting that housing prices in major British Columbia markets will continue to increase at a higher rate than the national average. The prediction, released Tuesday by Re/Max, matches similar forecasts by Canada Mortgage and Housing Corp. and Credit Union Central B.C. chief economist Helmut Pastrick. Re/Max’s outlook found that “the vast majority of major Canadian markets surveyed are expecting modest price appreciation ranging from two to five per cent.”
“The only exceptions are Vancouver, Kelowna and Calgary,” the report said, where the firm expects prices to rise in the range of 10 per cent. Victoria home prices are also expected to appreciate five per cent. For Greater Vancouver, Re/Max’s estimate is for the average price for a home to reach $462,000 in 2006. In Kelowna, the projected 10-per-centgain translates to an average selling price of $284,500. In Victoria, where there is expected to be some easing of price pressures, the estimated fiveper- cent increase should still see average p r i ce s re a c h u p to $395,000, the company said. Arlene Butler, general manager of Re/Max Select Properties in Vancouver, who surveyed Greater Vancouver agents for the report, said job growth, strong spending on infrastructure for projects such as the 2010 Winter Olympics, port expansion and continued low interest rates, have helped fuel demand.
Butler added that for the first time, Re/Max offices across the Greater Vancouver region reported a lack of listings “across the board.” “People ask, ‘Why are people paying these prices? Where is it coming from,’ ” she said. “I think its a fact that demand will remain strong, supply will remain scarce, and that pushes prices up.” Butler added that Re/Max expects sales across the Lower Mainland to remain stable at 41,000 transactions in 2006 — the same number expected this year. However, that will be due to lack of supply. Tsur Somerville, director of the centre for urban economics and real estate at UBC’s Sauder School of Business, said the fundamentals behind Greater Vancouver’s price increases leave room for further gains. However, he added that the market conditions do not preclude a flattening or downturn in sales, but it would take a significant, unforeseen negative event, such as a flu pandemic or a significant downturn in the U.S. economy to do it.Interest rates, which could edge up through 2006 as the Bank of Canada is expected to increase its key overnight rate to four per cent, could help stall price increases, though not necessarily put a dent in the market. “It doesn’t mean you can’t buy a house. It means [the rate increase] is going to shut off your ability to have price increases,” Somerville said.Wayne Schrader, owner of Re/Max Camosun realty in Victoria said limited supply has been a key factor in pushing up prices in that city. “There’s only so much product here; it’s very beautiful,” Schrader said. “There’s only so much waterfront; it’s very expensive. It’s a limited supply that drives the price up.” Schrader added that Victoria’s real estate prices have gone up about 50 per cent in the last five years.
Is the market overvalued?
Reprinted with permission of CMHC, Dec 2005.
Growth in real MLS® home prices in British Columbia averaged 4.8 per cent between 2000 and 2004, while real after-tax income increased at an average annual rate of 1.9 per cent. While inflation-adjusted prices are rising faster than inflation-adjusted after-tax incomes, the disparity during the current up-cycle is small compared to past upswings.During the 1986 to 1989 housing expansion, real MLS® prices grew at a 13.5 per cent annual rate compared to a 0.6 per cent annual increase in real after-tax income. In 1990, real house prices fell by 1.3 per cent, a modest correction. The real price growth of the current up-cycle is more in line with real income growth than experienced in the past.
While house prices are rising in British Columbia, this indicator suggests there is no real estate bubble.
Reprinted with permission of CMHC. Source: Housing Market Outlook, Fourth Quarter 2005 Edition, page 8. The electronic edition of this and other CMHC Market reports are available for free on CMHC’s website at: www.cmhc.ca.
CMHC Positive on Resale Market Into 2006
Ozzie Jurock, Sept 23rd, 2005Multiple Listing Service re-sales will remain near record levels in 2005 at an estimated 455,900 units, according to the third quarter Housing Market Outlook report from CMHC. A rise in new listings will help keep MLS sales strong in 2006 at 433,700 units, nevertheless they will decline by 4.9 per cent compared to 2005, CMHC forecasts.
The steady price increases of the past three years and the expected rise in mortgage rates will cause housing demand to ease gradually. Strong sales in 2005 will continue to foster a sellers' market. As a result, the rate of increase in existing home prices will moderate only slightly to 9 per cent. However, in 2006, the existing home market is expected to become more balanced, causing price growth to slow to 4.9 per cent.
British Columbia's growing economy, coupled with strong employment gains, and high levels of consumer confidence will contribute to an above average level of new home construction this year. B.C. housing starts will increase to 33,600 units in 2005, CMHC forecasts
Major Point: When international investors come to take a look at Vancouver, they become in awe at how cheap we still are compared to the rest of the world.... Next year, expect a stable and well balanced market - perfect for cash flow!
Nearly 350 Homes Selling In B.C. Every Day
Ozzie Jurock, Sept 23rd, 2005
Housing sales across British Columbia are now topping almost 350 per day as the total sales volume has crested over $3 billion a month for six straight months, reports the B.C. Real Estate Association.In August alone 10,410 homes, worth more than $3.48 billion, were sold in the province, a 60 per cent increase in dollar volume and a 36 per cent hike in the number of units sold during the same time last year.
August sales were strong in every corner of the province with all 12 real estate boards reporting double-digit percentage increases in dollar volume sales.
Major Point: Ahem ... We told you so
Bursting the bubble myth
By Bruce Benham, Chief Operating Officer of RE/MAX International, Inc.
July 29, 2005We’re all aware of the dramatic headlines proclaiming the inevitable “housing bubble” that will reportedly cripple the real estate industry, and the entire U.S. economy, when it eventually bursts.
But you know better. And I hope your clients do too.
The alleged bubble, rooted in fears created during the dot-com aftermath of the early 2000s, is a media-manufactured myth. It’s based on the projected collapse of a national housing market that simply doesn’t exist.It’s a misnomer. Period.
My position matches that of U.S. Treasury Secretary John Snow, who offered his in an interview on Bloomberg Radio April 26th.
“I don’t think the evidence suggests there is a national housing bubble at all,” Snow said. “Housing prices are high in some markets but those markets are supported by underlying demand and supply considerations. It’s really a misnomer, I think, to talk about bubbles in the sense that you get a stock market bubble or a bubble in the commodity markets.” Part of the bubble premise is that prices have escalated to a point where homeownership is unreachable for most families. But that’s clearly not the case; people are buying and selling homes at an unprecedented pace. According to the National Association of Realtors®, March 2005 generated the third-highest seasonally adjusted annual rate of existing home sales in history. The only two months topping March’s rate of 6.89 million homes were June 2004 (7.02 million) and November 2004 (6.98 million).
Home sales remain strong despite changes in price.
“We still have more buyers than sellers in most parts of the country,” David Lereah, NAR’s chief economist, said in late April. “There is a strong demand for housing from a growing population.”
Second home flurry
Demand is fueled by many factors, including a constant influx of immigrant families as well as affluent baby boomers purchasing second homes as they approach retirement. NAR’s 2005 “Profile of Second-Home Buyers” reported that second homes accounted for 38 per cent of the existing housing stock and 36 per cent of all homes purchased in 2004. What’s more, many in this massive group of 75 million people have the wealth – much of it generated through the appreciation of the long held homes in which they raised their families – to help their children enter the housing market.
These purchases are financed by mortgage rates that may seem high compared to a year ago, but remain extremely attractive by the standards of past decades. While bubble theorists point to the Federal Reserve’s 2004 benchmark rate increases as a sign of hard times to come, you’d sound fairly ridiculous explaining the dangers of a six per cent rate to a time-traveling homeowner from the early 1980s who paid 16 per cent on his or her mortgage. According to Freddie Mac chief economist, Frank Nothaft, only one in seven current mortgages carries a rate above seven per cent, so even if fairly significant hikes emerge down the road, the current lending climate continues to be a boom, and not a strain, for today’s homeowners.
It’s no secret that prices in many markets have grown quite high. And those markets may soften as local supply catches up with demand. But is that the same as a “housing bubble”? To me, the word “bubble” goes far beyond reality, evoking thoughts of the Nasdaq stock exchange losing 60 per cent of its value. Does anyone really think housing – in any market – is going to lose 60 per cent of its value?
A local issue
The prices in one state, of course, are not tied to those in others. Real estate remains a local concern, with activity and price fluctuations driven much more by variances in demand than on what’s happening in a faraway state or a non-existent “national market.” It’s our job to educate clients that despite what they read and hear about skyrocketing prices in California or Florida, their situation ultimately boils down to the prices of homes bought and sold in their own neighbourhood.
The media focus on the extremes. The bubbleologists’ favourite example is San Francisco, where the 2004 median price climbed above $629,000. But while many other cities have experienced similar multiyear climbs, the median price in most remains under $200,000.
Do higher-than-before values put homeowners in peril? If they’ve taken a prudent buy-and-hold approach and lived in their homes for any length of time, probably not. Even if their local market softens, most homeowners still benefit greatly from their decision to buy, despite any price-related anxiety they felt when they made their purchase.
Current conditions simply underscore the fact that buying a home remains one of the smartest, surest things a family can do to enhance its present and secure its future.
And that, in the face of all the media’s bubble-based hand wringing, is what we can, and should, point out to our clients, colleagues and friends.
MARKET CAN'T BE BAD WHEN 333 HOMES SELL EVERY DAY
Ozzie Jurock, May 19th, 2005.
With all the talk of bubbles it is clear that confident British Columbia consumers aren't worried about a deflation in the housing market. Nor should they be. The latest evidence is the MLS sales figures for April that show 10,364 homes sold last month across the province and the latest forecast from CMHC which sees housing prices tracking higher, a lot higher - into 2006. In April, MLS sales across B.C. topped $3.3 billion for the second month in a row, reports the British Columbia Real Estate Association (BCREA). And this doesn't include April figures from the Northern Lights Real Estate Board. (In March NLREB posted 412 MLS residential sales.)The April BCREA figures represent a 12% increase in dollar volume and a 1% rise in unit sales, compared to April 2004.
For the first four months of 2005, B.C.-wide sales are keeping up with last year's record pace. Year to date, sales reached 32,396 units, worth $10.23 billion, a 7.20% improvement in dollar volume and a 2.99% decline in unit sales over the first four months of 2004.
"It's very rare for more than 10,000 homes to sell in one month," says BCREA President Dave Barclay. "In fact, it only happened three times in 2004, which is the most active year on record." All of the 12 BC real estate boards reported increases in dollar volume sales over April 2004, with six boards noting higher unit sales. "Strong economic conditions are fueling the market and low mortgage rates are keeping affordability within reach," says Barclay. "These factors will keep the market affordable and strong."
CMHC: "2005 Economic Housing Outlook Positive for Housing."
January, 2005The current trends fueling BC’s economy will keep the housing market robust, according to the experts at Canada Mortgage and Housing Corporation’s (CMHC) tenth annual Housing Outlook Conference.
In her presentation, CMHC BC Regional Economist Carol Frketich said the BC housing market will remain strong.She predicted that, in 2005, housing demand will be fueled by the employment growth in 2004. “Housing demand typically lags employment growth,” she explained. “So, if you look at 2003, it was a good year in terms of employment gains, and there was very strong housing demand the following year.” CMHC forecasts 2004 job growth to be 2.2 per cent, only slightly lower than 2.5 per cent in 2003.
Average price gains for the province will exceed inflation, but 2005 will see more of a balance between supply and demand, she said. Interest rates will continue to stimulate housing, but not as much as the past two years. BC will be the only province in Canada to see continued growth in housing starts in 2005, estimating 32,400 units will be built, a 2.2 per cent increase over the 2004 forecast.This combination of [1] low interest rates, [2] an improving overall economy, [3] employment growth and [4] high levels of resale activity point to further growth in the housing sector in 2005.” In Greater Vancouver, CMHC senior market analyst Cameron Muir said resales will wane slightly, as pent-up demand is slowing, but migration, jobs and demographics will drive market sustainability.
Average price growth in 2005 will be half of what we see in 2004.
“The investor and first-time buyer groups will not be as strong going into
the future,” Muir said, encouraging developers/Realtors to focus on the fundamentals of migration, and a demographic shift in
buyers from first-timers to baby boomers, who have benefited from a large equity build up in the last several years. Nearly 400 attended the conference, held on November 4 in Vancouver.
Click here for full PDF report from CMHC
Income Tax Act changes eliminated
Finance Minister says new proposals at later date
February 23, 2005.
The federal budget tabled February 23 rd 2005 announced that proposed policy changes to the Income Tax Act that would have had a major negative impact on real estate investment have been eliminated. The proposals would have eliminated the ability of investors to deduct interest and other expenses.In presentations to the Finance Minister and the Finance Committee, CREA and PAC Reps had warned the proposals would have far-reaching and unintended consequences for real estate investment.
“An extended period of public consultation on the proposals ended in August 2004,” the federal budget documents note. “Many commentators expressed concerns with the proposals structure: in particular, that the codification of an objective “reasonable expectation of profit” test might inadvertently limit the deductibility of a wide variety of ordinary commercial expenses.”
The budget says that the Finance Department will release an alternative proposal for comment “at an early opportunity”.
“This will be combined with a Canada Revenue Agency publication that addresses in the context of that alternative proposal, certain administrative questions relating to deductibility,” the document states.
The announcement that the proposed changes to the Income Tax Act have been dropped shows the effectiveness of the national CREA PAC Network, says CREA CEO Pierre Beauchamp. “This issue was first raised by tax lawyer Jack Millar at PAC Days 2004. PAC Reps, Boards and Associations all worked together to deliver the message to MPs and the Finance Minister that the proposals were unfair, and would have a negative impact on commercial real estate investment in Canada,” Beauchamp said. (CREA 23/02/2005)
AGAIN - HEADLINES HAVE CHANGED NOT THE FUNDAMENTALS
Ozzie Jurock, September 30th, 2004.
" As we predicted here a few months ago, the headlines regarding real estate sales in B.C., especially Greater Vancouver, have changed. It is only natural. Housing sales in all three of the biggest real estate markets in the province have been tracking lower month-over-month since April but until July, sales were still above the same month a year earlier, which forms the base of most Board and media reports on the market. As a result, while June sales were still being touted as "booming", they were actually on an accelerating downward trend.With the delay of the August MLS sales reports for Greater Vancouver and the Fraser Valley, which as we forecast showed the second consecutive month of lower year-over-year sales (down 15% in the Fraser Valley from August, down 24% in Greater Vancouver and down 7% in Victoria), the general public is now just aware of the market correction. Listings of residential property for sale are also rising, up 8% year-to-date in the Fraser Valley and up 11% for the same period in Greater Vancouver. Watch for the "bubble has burst" headline coming to a newspaper near you.
For the record, MLS residential sales in August were also lower in Chilliwack, down 15%, but were higher in all areas outside of the 604 exchange except Victoria.
Yet while the message has changed, the fundamentals haven't. British Columbia is at the start of the best economic performance in over a decade (BC FIRING ON ALL CYLINDERS). People are still moving into the province, employment is rising and the forestry, mining and oil and gas sectors are posting the best growth numbers in over a decade. Even tourism is up.
Now is the time to be getting ahead of the market. Now is the time to be scouting out those best buys. And they are out there."
Migration and the increase in house values for 2004
Ozzie Jurock, April 3rd, 2004
According to Statistics Canada net migration from other provinces [to BC] reached 1,600 people, following a net increase of 2,600 in the third quarter of last year.Much of the population flow is from Ontario and it appears to continue. Credit Union Central of B.C. forecasts that net inter-provincial migration to B.C. will increase this year and a net increase of 7,300 is expected in 2005.
The forecasts for migration from other provinces must be added to the increase in international migration. Last year B.C saw a net increase of 29,600 people from other countries, up from 28,800 a year earlier and forecast to rise again this year.
MAJOR POINT: The inflow will accelerate as B.C. continues to attract immigrants, workers, investors and retirees. Also, more and more construction trades will be needed as we gear up for Olympic construction and government projects next year. Real Estate values grow where people want to go. Vancouver is the number 1 city in the world. This may put further pressure on real estate prices. NOW is the time to get ahead of the wave. Shop carefully and buy this year.
Finding Down Payments Just Got a Lot Easier
OTTAWA, February 23, 2004
Home buyers, will have greater choice in what they can use for a down payment, thanks to new options announced today by Canada Mortgage and Housing Corporation (CMHC).Borrowers are normally required to have a minimum five per cent down payment from their own resources to purchase a home. However, CMHC has expanded eligible down payment sources to enable many Canadians to realize their homeownership dream sooner than what would otherwise be possible.
Under this new product, effective March 1, the down payment can come from any source such as, lender incentives and borrowed funds. However, borrowers will still have to prove their ability to meet their debt requirements in order to qualify for mortgage insurance.
Under the new product, lenders will be able to offer Canadians a variety of mortgage product offerings including mortgages with terms as low as six months and fixed, adjustable and capped interest rate loans.
CMHC, Canada's leading innovator in providing housing finance solutions, continues to provide Canadians with greater access to affordable housing finance.
For further information please call: 1-800-668-2642
VANCOUVER -- World's Most Liveable City
Monday February 9, 2004-Vancouver Sun
Vancouver has been rated the best City to live in (along with Melbourne and Vienna….) out of 130 cities surveyed worldwide. No British cities appeared in the top 20.
The Economist Group, an International Business and World affairs analyst organization, part of the Economist Magazine Group, conducted the 2003 hardship rating, which examines living conditions for British expatriates in 130 cities around the World.
The rating is determined by measuring 12 factors grouped into categories of health, safety, culture and environment and infrastructure.
Canada fared well overall with Vancouver, Montreal and Toronto making it into the top 15 on the list.
Vancouver is no stranger to the tops of rating and survey lists. Last February it was named the place most people would like to move to if they were leaving their current home.
Mayor Campbell says “Vancouver is an easy city to get around due to the Skytrain, and the 2010 Winter Olympics is already creating new jobs and increasing tourism.”
In 2000 and 2001, according to another independent survey by Willam H. Mercer Company, a human resource consultancy, Vancouver was ranked the most liveable city in the World according to quality-of-life factors, such as environment, recreation, transportation and politics.
Larisa Machinskaia moved here 5 years ago from Russia and when asked what she liked about Vancouver, their initial response was just a good laugh. “We like everything, the weather, the nature, the ocean, the friendly people”.
Lars Cywinski, 30, arrived from Germany 5 years ago and says “ there’s a relaxed attitude. In Vancouver, people aren’t really in a hurry”.
Home Starts to rise 15 percent
Demand for more housing puts latest forecast for 2003 at 15,200 startsVancouver Sun, Wyng Chou
November 20 , 2003
Driven by seemingly insatiable demand, new home construction in Greater Vancouver will rise 15 per cent this year, compared to only 6.57 per cent across the country, according to the latest predictions by Canada Mortgage and Housing Corp.
The federal agency's 2003 forecast of 15,200 total housing starts for the Vancouver region follows on the heels of a 22-per-cent improvement in 2002 (13,197 units) over 10,862 units in 2001.
For 2004, CMHC forecasts a further improvement here of four per cent, bucking a national trend calling for a decline of 6.6 per cent in new starts among other major Canadian markets.
In terms of property values, the average price of a new detached house in Greater Vancouver -- already the highest in Canada -- is projected to hit $500,000 this year, up seven per cent from 2002. Another four-per-cent climb to $520,000 is expected for 2004.
"The so-called housing bubble in Vancouver is clearly a myth," said CMHC senior market analyst Cameron Muir.
"Low inventories in the new and resale markets, combined with local economic conditions, have many people looking to Vancouver as the best residential market in Canada in which to invest."
In October, 1,981 new housing units were started in the Lower Mainland, up 116 per cent from the same month in 2002. Last month's total starts were the second highest ever recorded for October, surpassed only by the 2,194 units in October 1980. Multiple starts (townhomes and condominiums) soared 283 per cent last month to 1,553 units, compared to 406 units the previous October, while single-detached starts dipped 17 per cent to 421 units from 513 units.
"Multiple starts in Vancouver are exceeding expectations," Muir noted. "Low mortgage rates, increasing job growth and strong consumer confidence continue to drive significant demand for housing." He said consumers will see continued strength in new multiple home construction, particularly in the City of Vancouver, as many developers scramble to beat the doubling of development cost levies scheduled for February 2004.
Despite an ongoing building boom, local developers are barely able to keep up with demand. In October, traditionally a slow month, residential property sales sizzled, resulting in the highest number of housing transactions ever recorded on the Multiple Listing Service for that month. The 3,765 sales of detached houses, townhomes and condominiums far surpassed the previous October record of 3,441 units that changed hands in 1992 during the peak of Asian immigration. Condos remained the hottest ticket, with 1,689 units sold last month, a whopping 63-per-cent increase from 1,036 sales in October 2002. CMHC forecasts new condo starts in Greater Vancouver to climb 17 per cent this year, following a 12-per-cent gain over 2002.
"Low inventory levels have condominium builders competing for a limited number of development sites, thereby increasing the cost of land and the overall cost of new units," Muir said.
"Five years ago, there were more than 2,600 newly-completed and unsold apartment condominiums in [Greater] Vancouver. In September of this year, there were just 144 units in this category, with just a handful of units available in the downtown core."
CMHC noted strong demand has depleted inventories in many areas and across most product types.
"Active listings are at their lowest levels in more than a decade. With a significant amount of the new housing under construction already pre-sold, further pressure on MLS inventory levels is expected well into the new year. "With the best properties selling at or near asking prices and within a shorter period of time, home prices still have considerable upward momentum." Nationally, CMHC expects housing starts to total 218,500 units this year, the highest annual figure since 215,382 units in 1989.
Hardest to buy in B.C.
First-time buyers lower expectations as province ranks costliest in nation.The Province, Adrienne Tanner
November 18, 2003
Wendy Hansen longed for a garden and her husband Glenn Jorgensen always wanted a dog.But until recently, the Ladner couple could not afford to buy a house.
"It was out of the question," said Hansen, 39, an office administrator. So like many people struggling to buy a home in Canada's least affordable housing market, the couple started off with a condominium.
After six years of saving, Hansen and Jorgensen were finally able last week to sell their Steveston apartment and buy their first house.
"It needs major repairs, but it was low enough priced that we're going to be able to afford the repairs over time," Hansen said.
British Columbia's real- estate market is the least affordable in Canada.
Its top ranking position was cemented last quarter as soaring house prices and slightly higher interest rates pushed B.C.'s housing affordability index rating from 41.2 per cent to 42.2 per cent. That means the average household in B.C. would have to spend 42 per cent of its pre-tax income to own a home, according to an RBC Financial Group study.
In Vancouver, where the average house price is $321,000, the index was higher.
There, home ownership costs, including mortgage payments, taxes and utilities, would eat up 45.3 per cent of the average family income. "One of the reasons why this index is so high for Vancouver, relative to other places is there is a . . . shortage of single detached bungalows. There's not a lot of land," says Carl Gomez, a RBC economist.
Toronto's affordability index is lower at 38 per cent due to slightly lower average housing prices ($302,000) and higher average family incomes ($60,000 as compared to $50,000 in Vancouver.) Most banks will not approve a gross debt-service level of more than 33 per cent, which means in B.C. a house is out of reach for most first-time buyers, says Gomez. "Looking at these numbers, first-time buyers will probably have to look at something like a one-bedroom condo."
That is the reality for Jacqueline Connor, 37, who recently bought the Richmond condo previously owned by Hansen and Jorgensen. "I wanted to get into the market. But I can't afford a house." Connor was living in Vancouver's West End and had no plans to leave. But recently she felt the neighbourhood was starting to slide.
"I have been looking to move because I just don't feel safe any more. I feel unsafe going into my underground parking in the morning when I'm going to work."
Despite the high prices, real estate sales are brisk, says Andrew Peck of Royal Pacific Realty Group and first vice-president of the Greater Vancouver Real Estate Board. People find a way to buy, he said. Some wait to buy their first home. Others have family members able to help with down payments.
New rules that require a minimum down payment of only five per cent have helped, says John McLennan, a realtor with Remax in Vancouver. Clayton Rocko, 29, and his partner were forced to move when their landlord took advantage of the hot real- estate market and sold. "It was a little push into the deep end," Rocko says, describing their decision to buy. They opted for a new house and a moderate commute. They recently bought their first home in Port Coquitlam, a do-able drive to their workplaces in North Vancouver and south Burnaby. "We were having a hard time finding a home in our price range. We had to really look at dollars and cents," Rocko said. The couple opted for a new home with a basement suite. Rocko was looking ahead, to a time when interest rates could rise.
"Having the rental income is a safety net of sorts."
2010 Vancouver / Whistler will host 2010 Olympics
British Columbia Real Estate Association (BCREA)
July, 2003The following is BCREA’s reaction to the July 2, 2003 announcement of Vancouver/Whistler’s successful 2010 Olympic bid:
BCREA hopes the 2010 Olympics will be the spark that re-ignites the entire province's economy, including the interior and the north.
In the short term, the excitement in the air today could spur activity in BC's real estate market. The market is already performing extremely well - residential real estate sales through the Multiple Listing Service® have topped $2 billion for the past three months and 2002 sales set a provincial record at more than $19 billion.
The fiscal stimulus and economic growth that economists are now predicting for the province should contribute to the real estate market staying strong as it is dependent on a healthy economy. Predicted increases in jobs, construction, spending and tourism are all positive indicators.-
The Olympics are six and a half years down the road, and long term, accurate predictions on property values, for example, are impossible to make. Anecdotal evidence from Calgary and Salt Lake City show that those cities are still seeing economic benefits from their Olympic exposure and BC will certainly leave a lasting impression on investors and tourists.
The enhanced worldwide exposure of the beauty of BC real estate should be very good news for property owners across the province.
The Real Bargain for Home Buyers
Canada Housing and Mortgage Corp (CMHC).
October, 2003
Carmen Muir, Senior Market Analyst.
Today, buying a home in BC is the most affordable it has been in years. And homes are selling. MLS sales in the province during 2003 are forecast to reach more than 86,000 units, just short of an all time record. Growth in BC home sales this year will outpace every other province for the third consecutive year running. However, all this buying activity has put pressure on new and resale housing inventory.
Low mortgage rates and strong consumer demand among renters has unleashed a sizeable contingent of first time buyers. Adding to this mix are investors eager for tangible investments and positive cash flows and others buying second homes as recreation property.
To meet the demand, homebuilders are ramping up production. Housing starts in the province are expected to climb 12% this year, on the heels of a 25% increase last year. But the inventory of new homes is still low in most areas, discounting any fear of oversupply in a down market. In fact, while more than 17,000 new homes are under construction across the province, most of them have already been pre-sold. The market is particularly tight in Vancouver's downtown core, where only a handful of new condos are complete and unsold.Strong demand inevitably leads to rising home prices. This year the average sale price of a home in BC will climb to $255,000.
Vancouver and Victoria have the dubious distinction of the most expensive home prices in Canada, but while home prices are rising, they are not growing at a rate characteristic of an overheated market. The average home price in Great Vancouver is expected to rise 7% in 2003, far less than the price run ups of 20-30% during the late 1980s.
Recent job growth, increasing wages, and a diminishing exodus of households to other provinces are good news for housing in BC. The provincial economy is now in the early period of growth phase.
Mortgage rates are expected to remain low for another year, and below historical averages through the medium term. Look for low rates and a growing economy to produce strong demand for housing over the next few years.
Prices Expected to Increase
RBC Financial Group
May, 2003
"The shortage of affordable rental housing may be another reason to expect house-price multiples to rise and this is likely the case in markets like Toronto and Vancouver.
The same rationale applies where there are outright shortages of desirable land that can be developed at a reasonable cost, such as Vancouver.
Also, as city populations expand and urban sprawl takes over, higher P/Es for housing that is closer to prime working areas may be viewed as worth it in relation to transportation and other costs. Demographic inflows concentrated on Toronto, Vancouver, Calgary and Montreal are another reason to expect multiples to be higher today than in earlier periods of less pronounced immigration."
The Overall Vancouver Real Estate Market
Historically, the Vancouver real estate has been one of the only investment vehicles that has kept pace with or exceeded inflation. Through the ages, Vancouver real estate investing has been one of the most dependable and secure strategies for creating and preserving wealth. If you've owned your home in the Vancouver Real Estate Market for the last 10 to 15 years you should already know this.
Vancouver Real Estate Graph: Below you can see the long-term growth of the Vancouver Real Estate Market. However, our strategies also include fast flippers and foreclosures - short term strategies for the Vancouver Real Estate Market.
