Tuesday, December 23, 2014

What can mortgage shoppers expect in 2015? Here are five predictions

1. More mortgage restrictions to come 
With Ottawa paring down its mortgage exposure, the Bank of Canada estimating up to 30 per cent overvaluation in Canada’s housing market,over-indebted consumers and average home prices incessantly breaking records, policy makers will restrict the mortgage market yet again. New limits on government-backed mortgage funding will make it more expensive for lenders to fund mortgages, or new underwriting rules will make it harder to qualify for a mortgage. Maybe both.2. Record discounts for variable mortgage rates 
Lenders’ funding costs should continue to improve for variable-rate mortgages in the next twelve months. As a result, we’ll see a small number of lenders and/or brokers advertising discounts better than prime minus one per cent before the end of 2015.
3. Brokers will break into three camps
Mortgage brokers will split into three camps in 2015: Full-service brokers who create detailed mortgage plans to support one’s financial goals, online mortgage brokers who provide less advice for a lower rate, and your run-of-the-mill everyday broker. That latter type will suffer job losses in 2015 as their rates and service offerings prove uncompetitive relative to other brokers, banks and credit unions.
4. A glut of private money Alternative mortgage lenders – such as mortgage investment corporations (MICs) – will grow flush with cash, as investors chase higher yields and as Ottawa’s stricter mortgage rules create opportunity for them. That abundance of capital will motivate sub-prime lenders to take more risk in search of higher returns. In turn, we’ll see some of them offer mortgages with only 10 or 15 per cent down, instead of the traditional 20 to 25 per cent equity The result: Credit-challenged consumers will have more lending options at lower interest rates.
5. Brokers will pitch you other stuff
Don’t be surprised if your mortgage broker offers you other financial products. Declining margins will motivate many brokers to diversify their revenue streams. They’ll take a page from banks’ playbooks and cross-sell you everything from GICs, to insurance, to credit cards, to RRSPs.
Robert McLister is a mortgage planner at intelliMortgage Inc. and founder ofRateSpy.com.

Monday, December 22, 2014

15 per cent house price drop possible, RBC chief says

Canadian housing prices could fall as much as 15 per cent should interest rates climb, which would be “healthy” for the country’s economy, Royal Bank of Canada Chief Executive Officer David McKay said.
“There could be some price correction, particularly in a rising rate environment,” McKay said Thursday in an interview at the bank’s Toronto headquarters. “I don’t see it to the extent that the Bank of Canada does, but I do think you could have a 10 to 15 per cent price correction.”
Canada’s central bank said Dec. 10 that housing prices are overvalued by as much as 30 per cent. Bank of Canada Governor Stephen Poloz warned this month that indebted households and high housing prices pose a risk to the financial system even as the country isn’t in a housing bubble.
Royal Bank and other large Canadian lenders have posted record profits in recent years as homeowners took advantage of the lowest mortgage rates in decades, fuelling housing prices and an expanding real estate market.
Bank of Canada’s policy interest rate has been at 1 per cent since September 2010. The central bank may start raising its overnight lending rate in the fourth quarter of 2015, according to a Bloomberg survey of economists.
“The catalyst is very low rates, ultra low rates, strong demand and lack of supply creation,” said McKay, who led the bank’s consumer-lending business before becoming CEO on Aug. 1. “Demand is there, supply’s not, and low interest rates stimulate price wars still.”
The borrowing has left Canadians with record levels of debt, prompting warnings from policy-makers and the central bank about overindebted consumers and elevated housing prices. Canada’s ratio of household debt to disposable income rose to a record between July and September.
“I do not believe it will end badly,” McKay said. “A slowing market is absolutely a healthy thing right now, so we’re not concerned.”

Thursday, December 18, 2014

Official letters confirm major tax increases in the offing for hundreds of businesses/ /Vancouver

To owners of storefront businesses in older, ripe-for-redevelopment buildings in neighbourhoods throughout Vancouver — Mount Pleasant, Marpole, Fairview, Kerrisdale, Dunbar and more — warmest wishes for a happy Christmas.
You deserve a good season, and you’ll need it. Because odds are January won’t start well, at least, not when it comes to the “prosperous” part of the traditional new year’s greeting. You’re about to be hammered by the taxman.
Formal notices of new assessment values for properties in the city won’t be in the mail until the new year, but letters warning of extreme increases for land zoned for mixed commercial/residential use were sent recently to commercial property owners in several neighbourhoods. Most businesses don’t own their premises — they lease under terms that make them responsible for property taxes — and there is no way to know how many building owners have already shared these letters with their tenants. But the tenants will find out soon enough they will be kicked in the teeth when the 2015 property tax bills arrive next summer.
How hard a kick? This depends on both location and the zoning that applies. But the hundreds of letters sent to the owners of properties in more than a dozen commercial/residential neighbourhoods forecast land assessment increases ranging from a low of about 15 per cent in the King Edward area of Cambie and in some parts of Mount Pleasant, to a high of well over 30 per cent along other parts of Cambie and Mount Pleasant. Most other neighbourhood business districts are looking at increases in the 20- to 30-per-cent range.
These numbers foretell huge increases in most tenants’ property tax bills, although perhaps not quite so huge as appears at a glance.
Paul Sullivan of the consulting firm Burgess Cawley Sullivan notes the over-all value of Vancouver’s business property assessments, including the many companies that don’t have storefronts, is about 10 per cent. This is one of three factors that will determine the size of next summer’s property tax bills.
The level of city spending (likely to rise by a bit more than inflation, although this won’t be settled until spring) and the total number of businesses in the city (likely to be static, as it has been for years) also matter. But a big factor is how individual property values change in relation to the average. With this year’s average about 10 per cent, a 30-per-cent assessment increase translates into a 20-per-cent rise in 2015’s property tax bill.
Sullivan’s back-of-the-envelope calculation suggests an annual tax hike for a typical business in one of these hotspots to be about $16,000. For low-margin retailers, which many of these businesses are, this means they must sell an extra $320,000 worth of goods for the year — almost $1,000 a day — just to pay this increase.
The city’s only policy to mitigate this hotspot problem — land averaging — will delay some of this hit by spreading it over three years.
But averaging doesn’t fix anything — it merely means businesses are pushed to the wall slowly, rather than abruptly. And averaging — whether today’s three-year policy, or a five-year version the city is considering — ironically creates another major inequity.

Friday, December 12, 2014

Housing Market Ends Year in Balanced Conditions


Vancouver, BC – December 12, 2014. The British Columbia Real Estate Association (BCREA)
reports that a total of 5,972 residential unit sales were recorded by the Multiple Listing Service®
(MLS®) in November, up 8.8 per cent from November 2013. Total sales dollar volume was $3.4
illion, an increase of 12.1 per cent compared to a year ago. The average MLS® residential price
in the province rose to $574,694, up 3.1 per cent from the same month last year.

“BC home sales were robust in November,” said Cameron Muir, BCREA Chief Economist. “Improving economic conditions, strong consumer confidence and persistently low mortgage interest rates are providing a solid foundation for elevated consumer demand."
“Market conditions have improved province wide, with most regional markets now in the mid to high range of a balanced market,” added Muir.
Year-to-date, BC residential sales dollar volume was up 22.1 per cent to $44.8 billion, compared to the same period last year. Residential unit sales were up 15.3 per cent to 78,973 units, while the average MLS® residential price was up 6.0 per cent at $567,292.

Thursday, December 11, 2014

B.C. new home buyers feel weight of heavy rebar tariff

The cost of a trade dispute between steel producers in Central Canada and their offshore competitors is being felt by new home buyers in Metro Vancouver’s already super-heated condominium market.
Neil Chrystal, president and CEO of Polygon Homes, only learned about the international scrap over alleged dumping of reinforcing steel rods – known as rebar – when he saw a significant spike in construction material costs about two months ago. He discovered that an interim duty has been applied to Canadian imports of steel rebar from China, South Korea and Turkey. U.S. rebar imports are not targeted in this trade dispute.The result is that each of Polygon’s newest two-bedroom condo units selling now in Burnaby and Richmond cost at least $5,000 more. Those kinds of cost increases are being felt across the province’s construction industry.
“I think buyers are already stretching to get into their first home and when you add a cost like this, it’s one more roadblock in the way of home ownership,” Mr. Chrystal said in an interview Monday. “This is one more needless tax on first-time home buyers.”
And, if a trade tribunal in Ottawa rules in favour of the country’s steel producers – primarily in Ontario and Quebec – the cost of construction will jump even higher in B.C. early next year. The industry says those three countries are dumping their product in Canada at a discount. The B.C. government is applying for an exemption, saying it will be the hardest hit by the duty because it relies almost entirely on imports from the U.S. and Asia.
B.C. Premier Christy Clark raised the matter on Monday in a meeting with Ontario Premier Kathleen Wynne. Ontario government sources said the two did not reach any accord, and the Canadian International Trade Tribunal hearing is set to convene on Dec. 15.
In an editorial board meeting earlier in the day with The Globe and Mail, Ms. Clark said the rebar duty is one of the top trade irritants between the two provinces right now.
“I understand Ontario has some issues, but we cannot allow them to affect British Columbia, because Ontario cannot supply British Columbia. So raising the price in Ontario for Canada is only going to mean that we buy more expensive rebar from the United States,” she said Monday.
“It poses a real economic threat in British Columbia,” Ms. Clark added. “On the one hand, there’s no benefit for Ontario. On the other, I would argue it creates a problem for Ontario and all of the rest of Canada that depends on a successful British Columbia economy to contribute to Confederation.”
The B.C. government, prodded by its construction industry, has raised the alarm in Ottawa about what it says are the unintended consequences of the rebar tariff. The province fears that the rising costs could drive away investment just as a series of major projects, particularly around liquefied natural gas, are approaching final investment decisions.
Those fears are already being realized in the residential construction sector. Polygon is now selling two-bedroom condo homes in Burnaby starting at $460,000 – units that were built after the cost of rebar imports jumped due to the interim duty. The Independent Contractors and Business Association of B.C. (ICBA) estimates that if the full duty sought by Canadian steel producers is imposed – a decision is expected in January – the cost of a two-bedroom condo unit could rise by $10,000.
That is especially bad news for new home buyers in Vancouver, where housing prices are headed for a record high this year in what is already considered Canada’s most expensive property market.
“It feels like Western Canada – B.C., anyway – is getting screwed by Central Canada,” said Philip Hochstein, president of the ICBA.
Reinforcing steel is a major component in concrete construction, but B.C. has no rebar production. The ICBA estimates that 60 per cent of the rebar used in B.C. comes from the U.S., where prices are still significantly cheaper than Canadian rebar due to high transportation costs.

Fitch warns of “unsustainable” levels of household debt including mortgages


Credit rating agency Fitch has warned that Canada’s banks are at risk due to “unsustainable” levels of consumer debt. Although the firm says that the banks have good earnings and balance sheets it’s outlook for next year comes with caution due to the expected rise in interest rates and the effect that will have on consumers’ ability to service debts although banks will be largely protected from defaults on home loans due to CMHC cover. Fitch says that there is overvaluation in housing in Vancouver and Greater Toronto in particular and this sentiment was shared in a report by Moody’s. Fitch also issued warnings about the housing market back in June saying that it estimated a 20 per cent overvaluation. 

Good News for Stratas: Civil Resolution Tribunal Update

It's been under development for some time, and now the Civil Resolution Tribunal (CRT) is really starting to take shape. The CRT is a long-awaited voluntary mechanism to resolve many strata and small claims disputes.
The CRT is scheduled to launch in 2015, and will be available 24/7 online. High-level descriptions of the process and the tools that will be available are offered on the new CRT website, which debuted in November: www.civilresolutionbc.ca.
Shannon Salter was appointed as Chair of the CRT earlier this year. She is specifically qualified for this position, with her experience as a commissioner of the Financial Institutions Commission, vice president of the British Columbia Council of Administrative Tribunals and vice chair of the Workers' Compensation Appeal Tribunal.
While the CRT will be able to handle many strata disputes, matters that affect land or that deal with significant issues in a strata complex will be outside of the CRT's mandate. The Civil Resolution Tribunal will be able to address disputes such as:
  • non-payment of monthly strata fees or fines,
  • unfair actions by the strata corporation or by people owning more than half of the strata lots in a complex,
  • unfair, arbitrary or non-enforcement of strata bylaws (such as noise, pets, parking, rentals),
  • issues of financial responsibility for repairs and the choice of bids for services,
  • irregularities in the conduct of meetings, voting, minutes or other matters,
  • interpretation of the legislation, regulations or bylaws, and
  • issues regarding the common property.
BCREA has supported alternative dispute resolution since 2010, and congratulated the provincial government in 2012 when the legislation was passed. The Association believes the CRT will provide strata owners and renters with an affordable way to settle disagreements and help improve compliance with the Strata Property Act.

Monday, December 8, 2014

BCREA ECONOMICS NOW
Canadian Housing Starts - December 8, 2014
New home construction in Canada rose 6.6 per cent in November to 195,620 units at a seasonally adjusted annual rate (SAAR).  The six-month trend in Canadian housing starts of 195,792 units SAAR was relatively unchanged and sits slightly in excess of Canadian household growth. 

Housing starts in BC urban centers increased 26.7 per cent on a monthly basis to 29,565 units SAAR.  On a year-over-year basis, housing starts were 10 per cent higher compared to November 2013. Single-detached starts were up 11 per cent while multiple units were up 10 per cent compared to this time last year. Year-to-date, total BC housing starts are 6 per cent higher than 2013. 

Looking at census metropolitan areas (CMA) in BC, total starts in the Vancouver CMA bounced back from a large decline in October, rising 10 per cent year-over-year on broad strength in both single detached and multiple starts. Year-to-date, Vancouver housing starts are up 3 per cent. In the Victoria CMA, new home construction fell 15 per cent year-over-year due to weaker starts of both single detached and multiple units. Year-to-date, housing starts in Victoria are down 16 per cent. Total housing starts in the Kelowna CMA were up 45 per cent year-over-year in November due to a large increase in starts of multiple units.  Year-to-date, housing starts in the Kelowna CMA are up 34 per cent . Housing starts in the Abbotsford-Mission CMA posted another steep decline in November, down 44 per cent year-over-year.  Year-to-date, new home construction in the Abbotsford-Mission CMA is down 28 per cent.

Tuesday, November 25, 2014

BCREA ECONOMICS NOW
Canadian Retail Sales - November 25, 2014
Canadian retail sales rose 0.8 per cent in September, propelled by higher motor vehicle sales. Excluding motor vehicles, retail sales were essentially flat.  Sales were higher in 5 of 11 retail sub-sectors.   In BC, retail sales were up 0.5 per cent on a monthly basis, and were 5.7 per cent higher compared to one year ago. Through the first nine months of the year, retail sales in BC are up a robust 5.7 per cent, which if sustained would mark the fastest rate of sales growth since 2007. 

With the release of September retail sales data we have a fairly complete picture of growth for the third quarter. Our tracking estimate puts Canadian real GDP growth for the third quarter at a healthy 2.2 per cent, though a deceleration from 3.1 per cent in the second quarter. Growth in the BC economy is currently tracking at 2.3 per cent through September.

Friday, November 21, 2014

BCREA ECONOMICS NOW
Canadian Consumer Price Inflation - November 21, 2014
Canadian consumer prices rose 2.4 per cent in the 12 months to October, an acceleration of 0.4 points from September. The Bank of Canada's core measure of inflation, which excludes the most volatile prices such as energy and food products, was also higher, rising 0.2 points to  2.3 per cent. Consumer prices in BC rose actually fell on a month-over-month basis, but were up a modest 1.1 per cent year-over-year.

The relatively sharp uptick in both headline CPI and core inflation in October could spark some concern that the Bank of Canada will act sooner than later on interest rates to tame consumer prices. While strong economic growth and a lower dollar are exerting pressure on consumer prices, inflation remains within the Bank's 2 to 3 per cent control range and we therefore expect the Bank to remain on hold until at least mid-2015, 

Wednesday, November 19, 2014

BCREA ECONOMICS NOW
US Housing Starts - November 19, 2014
Housing starts in the United States fell 2.8 per cent in October to a seasonally adjusted annual rate (SAAR) of 1.009 million units. However, that level was 7.8 per cent higher than October 2013. After a somewhat slow start, new home construction in the US has been trending higher for much of the second half of 2014. Housing starts have registered a more than 1 million unit SAAR pace for 2 consecutive months and in 3 of the past four months. Overall, housing starts are 9.6 per cent higher year-to-date. 

 The recovery in the US housing market has been the primary driver of  BC's resurgent forest products industry. Moreover, a healthy residential construction industry in the US is helping put the overall US economy on stronger footing.  Moreover, robust growth in the US over the past two quarters has helped lift BC exports in 2014 in spite of flagging performance in the global economy. 

Tuesday, November 18, 2014

Housing Demand Ratchets Higher in British Columbia
BCREA 2014 Fourth Quarter Housing Forecast
Vancouver, BC – November 18, 2014. The British Columbia Real Estate Association (BCREA) released its 2014 Fourth Quarter Housing Forecast today.
"Consumer demand has ratcheted up this year and is expected to remain at a more elevated level through 2015,” said Cameron Muir, BCREA Chief Economist. “While historically low mortgage rates support demand, the housing market is also being underpinned by a more robust economy and associated job growth, strong net migration and consumer confidence."
BC Multiple Listing Service® (MLS®) residential sales are forecast to increase 15.1 per cent to 83,900 units this year. Stronger economic conditions are expected to be somewhat offset by higher interest rates later next year, and keep home sales from advancing much further. As a result, MLS® residential sales are forecast to edge up a further 1.2 per cent to 84,900 units in 2015. The 15-year average is 80,400 unit sales and a record 106,300 MLS® residential sales were recorded in 2005.  
The average MLS® residential price for the province is forecast to increase 6 per cent to a record $569,800 this year and a further 1.2 per cent to $574,300 in 2015. “New construction activity is generally keeping pace with population and household growth, keeping supply in line with consumer demand,” added Muir. BC housing starts are forecast to increase 4.6 per cent to 28,300 units this year and a further 1.4 per cent to 28,700 units in 2015.

Friday, November 14, 2014

Metro Vancouver home sales above average in October 2014


Home sales in the Metro Vancouver* housing market continue to outpace long-term averages for this time of year.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 3,057 on the Multiple Listing Service® (MLS®) in October 2014. This represents a 14.9 per cent increase compared to the 2,661 sales in October 2013, and a 4.6 per cent increase over the 2,922 sales in September 2014.

Last month’s sales were 16.6 per cent above the 10-year sales average for October.
“We’ve seen strong and consistent demand from home buyers in Metro Vancouver throughout this year. This has led to steady increases in home prices of between four and eight per cent depending on the property,” said REBGV president Ray Harris.
New listings for detached, attached and apartment properties in Metro Vancouver totalled 4,487 in October. This represents a four per cent increase compared to the 4,315 new listings in October 2013 and a 14.7 per cent decline from the 5,259 new listings in September.
The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 13,851, a 9.2 per cent decline compared to October 2013 and a 6.6 per cent decrease compared to September 2014.
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $637,000. This represents a six per cent increase compared to October 2013.
“Detached homes continue to increase in price more than condominium and townhome properties. This is largely a function of supply and demand as the supply of condominium and townhome properties are more abundant than detached homes in our region,” Harris said.
Sales of detached properties in October 2014 reached 1,271, an increase of 19.1 per cent from the 1,067 detached sales recorded in October 2013, and a 60.9 per cent increase from the 790 units sold in October 2012. The benchmark price for detached properties increased 7.9 per cent from October 2013 to $995,100.
Sales of apartment properties reached 1,268 in October 2014, an increase of 15.5 per cent compared to the 1,098 sales in October 2013, and a 57.9 per cent increase compared to the 803 sales in October 2012. The benchmark price of an apartment property increased four per cent from October 2013 to $380,200.
Attached property sales in October 2014 totalled 518, a 4.4 per cent increase compared to the 496 sales in October 2013, and an 53.3 per cent increase over the 338 attached properties sold in October 2012. The benchmark price of an attached unit increased 4.7 per cent between October 2013 and 2014 to $479,500.
BCREA ECONOMICS NOW
Canadian Manufacturing Sales - November 14, 2014
Canadian manufacturing sales rebounded from a poor showing in August, rising 2.1 per cent in September to $53 billion. The increase in sales was the eighth gain in the past nine months and was primarily the result of higher sales of transportation equipment. 

In BC, where manufacturing employs over 160,000 people,  manufacturing sales were up 1.9 cent on a monthly basis, and were 9 per cent higher year-over-year.  Through the first nine months of the year, manufacturing sales are close to 7 per cent higher than last year. 
 “Copyright British Columbia Real Estate Association. Reprinted with permission.”

Tuesday, November 11, 2014

BCREA ECONOMICS NOW Canadian Housing Starts - November 10, 2014


New home construction in Canada slowed in October, falling 7 per cent to 183,604 units at a seasonally adjusted annual rate (SAAR).  The six-month trend in Canadian housing starts of 195,707 units SAAR sits slightly in excess of Canadian household growth. 

Housing starts in BC urban centers also declined in October, by 15.5 per cent to 27,570 units SAAR.  On a year-over-year basis, housing starts were down 3 per cent compared to October 2013. Single-detached starts,  were up 13 per cent while multiple units were down 11 per cent compared to this time last year. Year-to-date, total BC housing starts are 5 per cent higher than 2013. 

Looking at census metropolitan areas (CMA) in BC, total starts in the Vancouver CMA fell 20 per cent year-over-year in October as a 27 per cent decline in multiple starts offset a 2 per cent rise in singles. Year-to-date, Vancouver housing starts are up 3 per cent. In the Victoria CMA, new home construction rose 18 per cent year-over-year, with single detached starts leading the way, rising 26 per cent. Year-to-date, housing starts in Victoria are down 17 per cent. Total housing starts in the Kelowna CMA declined 34 per cent year-over-year in October on weaker construction of both single and multiple units.  Year-to-date, housing starts in the Kelowna CMA are up 31 per cent . Housing starts in the Abbotsford-Mission CMA rebounded from a steep decline in September to post a 60 per cent year-over-year gain in October.  Year-to-date, new home construction in the Abbotsford-Mission CMA is down 26 per cent.

Friday, November 7, 2014

BCREA ECONOMICS NOW
Canadian and US Employment - November 7, 2014
October was another big month for job growth as the Canadian economy added 43,000 jobs. The national unemployment rate dropped 0.3 points to 6.5 per cent, the lowest rate since November 2008. Total hours worked, which is closely associated with economic growth, rose 0.4 per cent.

In BC, employment grew by 4,600 jobs in October. Full-time employment expanded by 6,600 jobs while part-time employment fell by 2,000. The provincial unemployment rate remained unchanged at 6.1 per cent. Year-to-date, total employment in BC is up just 0.7 per cent.

The US economy added 214,000 jobs in October while estimates of previous months job growth was revised higher by 30,000 jobs. Over the past 3 month, US payroll growth has averaged a healthy 233,000 jobs.  The US unemployment rate fell to 5.8 per cent, the lowest level since July 2008. 

Thursday, November 6, 2014

BCREA ECONOMICS NOW
Canadian Building Permits - November 6, 2014
The value of Canadian building permits increased 12.7 per cent in September, rebounding from a steep decline in the previous month. 

Building permits also rebounded in BC, rising 9.8 per cent on a monthly basis and 3.8 per cent year-over-year to $879.4 million. Both non-residential and residential permits were higher in September, but growth was primarily the result of a 12.1 per cent increase in residential permits.


Construction intentions were mixed in BC's four census metropolitan areas (CMA). Permits in the Abbotsford-Mission CMA posted a second consecutive month of steep declines, falling 45.7 per cent on a monthly basis, and 37.4 per cent compared to September 2013.  Construction intentions in the Kelowna CMA were also lower, with permits dipping 14.1 per cent from August, but were 12.5 per cent higher year-over-year.  In the Victoria CMA, permit activity increased 15.8 per cent on a monthly basis and was up 24.9 per cent year-over-year. In the Vancouver CMA, permits were up 8.5per cent on a monthly basis and were 1 per cent higher year-over-year.

Tuesday, November 4, 2014

Metro Vancouver home sales above average in October

Home sales in the Metro Vancouver* housing market continue to outpace long-term averages for this time of year.


The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 3,057 on the Multiple Listing Service® (MLS®) in October 2014. This represents a 14.9 per cent increase compared to the 2,661 sales in October 2013, and a 4.6 per cent increase over the 2,922 sales in September 2014.
 
Last month’s sales were 16.6 per cent above the 10-year sales average for October.

“We’ve seen strong and consistent demand from home buyers in Metro Vancouver throughout this year. This has led to steady increases in home prices of between four and eight per cent depending on the property,” said REBGV president Ray Harris.

New listings for detached, attached and apartment properties in Metro Vancouver totalled 4,487 in October. This represents a four per cent increase compared to the 4,315 new listings in October 2013 and a 14.7 per cent decline from the 5,259 new listings in September.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 13,851, a 9.2 per cent decline compared to October 2013 and a 6.6 per cent decrease compared to September 2014.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $637,000. This represents a six per cent increase compared to October 2013.

“Detached homes continue to increase in price more than condominium and townhome properties. This is largely a function of supply and demand as the supply of condominium and townhome properties are more abundant than detached homes in our region,” Harris said. 

Sales of detached properties in October 2014 reached 1,271, an increase of 19.1 per cent from the 1,067 detached sales recorded in October 2013, and a 60.9 per cent increase from the 790 units sold in October 2012. The benchmark price for detached properties increased 7.9 per cent from October 2013 to $995,100.

Sales of apartment properties reached 1,268 in October 2014, an increase of 15.5 per cent compared to the 1,098 sales in October 2013, and a 57.9 per cent increase compared to the 803 sales in October 2012. The benchmark price of an apartment property increased four per cent from October 2013 to $380,200.

Attached property sales in October 2014 totalled 518, a 4.4 per cent increase compared to the 496 sales in October 2013, and an 53.3 per cent increase over the 338 attached properties sold in October 2012. The benchmark price of an attached unit increased 4.7 per cent between October 2013 and 2014 to $479,500.

Friday, October 31, 2014

BCREA ECONOMICS NOW Canadian Monthly GDP (August) - October 31, 2014

Halloween brought a ghastly GDP report for August. The Canadian economy contracted 0.1 per cent in August following an  essentially flat July. Declines at the industry level were led by manufacturing, and oil and gas extraction.

Based on the first two months of GDP data for the third quarter, we would estimate that the Canadian economy grew a modest 2 per cent from July to September. That would mark a significant slowdown from second quarter growth of 3.2 per cent and provides additional cover for the Bank of Canada to keep rates unchanged for a considerable amount of time. “Copyright British Columbia Real Estate Association. Reprinted with permission.” 

Thursday, October 30, 2014

BCREA ECONOMICS NOW US Economic Growth (Q3) - October 30, 2014

US real GDP grew at a very healthy 3.5 per cent annual rate in the third quarter, following even more robust growth of 4.6 per cent in the second quarter.  Growth was led higher by strong consumer spending, exports, fixed investment and government spending.

Growth in the US economy has been sharply higher over the past six months, averaging over 4 per cent at an annual rate.  While inflation remains muted, the US labour market is picking-up and  job growth has been trending higher. The US Federal Reserve announced the end of its quantitative easing program yesterday, and while it noted that interest rates would not rise for a considerable time, a continuation of strong growth likely means the Fed will act on rates as early as mid-2015. If so, long-term rates in both the US and Canada should rise from current lows, bringing mortgage rates with them. “Copyright British Columbia Real Estate Association. Reprinted with permission.”

Tuesday, October 28, 2014

Ancient property-transfer tax adds another burden for Vancouver buyers

For Vancouver home buyers who get the shivers at high prices for even run-down houses, there is also the haunting sight of a tax goblin.
The B.C. government’s property-transfer tax has become a growing burden for buyers in the Vancouver region’s housing market over the past 27 years. The province introduced the PTT as a way to generate revenue, especially targeting the upper crust of B.C. house purchasers.
But the province-wide formula for the tax hasn’t changed since 1987, when Vancouver-area homes were much cheaper. Today, on the purchase of a $5-million home, the buyer has to pay $98,000 for the PTT. On a $2-million home, the tax rings in at $38,000, and on a $1-million property, the extra outlay is $18,000.
The B.C. government collected $937-million in the 2013-14 fiscal year from the tax. Housing industry observers note that the province’s coffers get an added lift when wealthy buyers, including those offshore, acquire high-end homes.
The PTT formula works like this: On the initial $200,000 of the purchase price, the home buyer must fork over 1 per cent of that first tier and then pay a 2-per-cent tax rate on the amount above $200,000.
The Real Estate Board of Greater Vancouver estimates that 96 per cent of properties in the region sold for at least $200,000 last year. That contrasts sharply with 5 per cent of properties in 1987 that changed hands for $200,000 or higher.
Far from being a targeted tax on the wealthy, the PTT’s net captures the vast majority of buyers of detached homes, townhouses and condos in Greater Vancouver, the board argues.
In this past February’s provincial budget, the B.C. Liberal government announced an improved break for eligible first-time home buyers. Those who qualify could save up to $7,500 on buying their first house, as long as that property is acquired for $475,000 or less, up from the previous threshold of $425,000.
B.C. Finance Minister Mike de Jong tweaked one aspect of the broader tax system in February to make up for the revenue lost from giving tax relief to some first-time home buyers. The province decreased the threshold for phasing out the homeowner grant from $1.295-million to $1.1-million in a property’s assessed value, effective the 2014 tax year. In short, the change means that more homeowners will be paying higher municipal property taxes annually.
Despite the tax burden, housing demand remains robust in Vancouver, says Dan Scarrow, vice-president of corporate strategy at Macdonald Realty Group.
Mr. Scarrow doesn’t see a Vancouver housing bubble because many existing homeowners have lived in their abodes for at least 15 years, before the sharp run-up in prices. With small or non-existent mortgages, there isn’t financial pressure on those long-time homeowners to sell, and they can afford to hold out for higher offers when they do decide to move for whatever reason, he reckons.
“It comes down to huge demand globally and restricted supply locally,” Mr. Scarrow says.
The benchmark home price index last month hit a record $633,500 for detached homes, townhouses and condos sold in Greater Vancouver, which includes suburbs such as Richmond, Burnaby and Coquitlam. On Vancouver’s west side in September, the index hit a record of nearly $2.3-million for detached properties.
Having grown accustomed to a cash cow, the B.C. government isn’t about to dramatically revise the PTT formula any time soon. The province conservatively forecasts that revenue from the PTT will be $854-million in 2014-15. That would be down 9 per cent from the previous fiscal year but still more than double the revenue garnered in 2002-03. From the province’s viewpoint, the tried-and-true PTT isn’t a scary trick, but a valuable treat inside its revenue bag.

Poll finds support for taxing absentee property owners



Housing affordability is the most important issue for almost half of Vancouver residents, an Insights West poll concluded recently and was reported in The Vancouver Sun this week. This was the highest level of concern over housing reported in the entire Lower Mainland.
The housing “problem is not new to our city, but it certainly makes us a unique case in the country. People may still work in Vancouver, but high real estate prices have forced many of them to establish a home in adjacent cities. They may cast a ballot on Nov. 15, but will do so in a different municipality.
In the early stages of the city’s election campaign, two political parties — the Coalition of Progressive Electors and the Green Party of Vancouver — signalled their intention to deal with one of the lingering issues in the city: empty homes.
An empty house creates many problems. There is no one to rake leaves in the fall, leaving sidewalks untidy. The absence of inhabitants means fewer people are buying coffee or groceries, hurting local businesses.
The property tax is definitely present for homeowners who do not reside in Vancouver. But the reality is these people are not part of the daily life of the city. They are speculators more than members of the community.
Insights West asked Vancouverites this month about a recent debate over levying a tax on people who acquire properties in Vancouver but do not live in them. The idea was extremely popular, with 72 per cent of respondents calling it a “very good” or “good” proposal, and only 18 per cent deeming it “very bad” or “bad.”
Support for such a levy was high across genders (75 per cent for women, 70 per cent for men), all three age groups (from a low of 70 per cent among those aged 55 and over to a high of 76 per cent among those aged 18-34) and all three household incomes brackets (80 per cent in the lowest bracket, 66 per cent among those in households earning $100,000 or more a year).
While we may be unique in Canada, another world-class city is actively looking for ways to deal with empty homes.
New York City, governed by a Democrat for the first time since 1993, is considering a tax on non-resident owners. Mayor Bill de Blasio — elected on a promise to deal with what he calls the “inequality crisis” — is pondering the levy, which would be applied to anyone who spends less than half the year in the city and owns a property appraised at more than $5 million US.
The proposal is far from a done deal. It will require the backing from the two houses of the state legislature, as well as the signature of the governor, before becoming law. The main opponents so far, as expected, are developers and real estate lobbyists.
If discussions about a levy in Vancouver continue after Nov. 15, we can expect similar dissent from the industry. Insights West also found 73 per cent of Vancouverites agreed with the statement: “Developers and lobbyists have too much influence in my municipality.” This proportion is well above the Metro Vancouver average of 68 per cent, and a reminder of the way residents perceive the decision-making process at City Hall.
In the end, while a levy on absentee homeowners is decidedly popular, it will come down to reality and implementation. Just how big the absentee problem is, and what kind of measures should be taken to appease it, are matters that are still open for debate. But the data shows Vancouverites are not thrilled with the prospect of being surrounded by empty houses.
Mario Canseco is vice-president of Insights West’s public affairs division. He writes every second week in The Vancouver Sun’s business section.

Wednesday, October 22, 2014

BCREA ECONOMICS NOW Bank of Canada Interest Rate Decision - October 22, 2014


The Bank of Canada once again chose to maintain it's target for the overnight rate at 1 per cent this morning. In the statement accompanying the decision, the Bank noted that core inflation, which excludes volatile prices such as energy and food, has risen more rapidly than expected due to unexpected sector-specific factors while CPI inflation has evolved largely as expected.

While the Bank’s preferred measure of core inflation has trended above its 2 per cent target in recent  months, financial market volatility and fresh concerns over stagnant European economic growth provide some cover to maintain the status quo. Our forecast for the Canadian economy matches that of the Bank for economic growth to average 2.5 per cent for the second half of 2014 and for all of 2015. That rate of growth should eliminate much of the estimated slack in the Canadian economy by the middle of 2016. That forecast, and traditional lags in how monetary policy impacts inflation, suggests the Bank will embark on tightening monetary policy sometime toward the end of next year.
“Copyright British Columbia Real Estate Association. Reprinted with permission.”

Friday, October 17, 2014

BCREA ECONOMICS NOW Canadian Consumer Price Inflation - October 17 ,2014


Canadian consumer prices rose 2 per cent in the 12 months to September, a modest 0.1 point decline from August. The Bank of Canada's core measure of inflation, which excludes volatile prices such as energy and food products, registered 2.1 per cent. Consumer prices in BC rose 1.2 per cent.

CPI inflation continues to trend near the Bank of Canada's 2 per cent target, but should moderate substantially in coming months due to collapsing energy prices. Although core inflation is slightly above the Bank of Canada's target, we do not expect the Bank to alter its course unless inflation moves outside of its 1-3 per per cent control range. 
 “Copyright British Columbia Real Estate Association. Reprinted with permission.”