Thursday, July 31, 2014

Vancouver’s high house costs heat up rental market

VANCOUVER — A spate of new, relatively affordable rentals in Vancouver is doing little to ease the vacancy rate in one of Canada’s meanest residential markets.
In its latest forecast, Canada Mortgage and Housing projected Greater Vancouver’s vacancy rate for purpose-built rental apartments will be 1.9 per cent this year, tightening to 1.8 per cent next.
Only Calgary and Edmonton have tighter rental markets.
A healthy market has a vacancy rate between three and five per cent.
In Vancouver, rental availability is particularly crucial because ownership costs are so wild.
The city recognizes this, moving earlier this month to create a Vancouver Affordable Housing Agency, geared to increasing rental options for middle-income families. Specifically, the agency will oversee provision of 2,500 “affordable” rental units by 2021.
Back in 2012, Vancouver announced policies to incentivize new-rental construction, awarding density bonuses and waiving development-related charges. The city also sanctioned suites as tiny as 320 square feet.
City planners say, by 2021, 16,000 new rental units will be needed, of which 5,000 will come from purpose-built market rental units. A recent report to council states the city is nearly 60 per cent there.
“With a growing population, limited increases in income and limited new purpose-built rental housing in recent decades,” declared the policy, “the need for suitable housing choices for low and moderate-income households has grown dramatically.”
Indeed, more than half of Vancouverites are renters — unusually high for Canadian cities. They earn median incomes of $34,000, compared to homeowner incomes of $66,000.
Yearly rent increases are limited to two per cent plus inflation. Average rent in Vancouver is roughly $1,100. Condo rental rates are higher.
Renters are so numerous because renting is much cheaper than buying. Vancouver also sees a steady influx of newcomers who initially prefer renting.
Another factor: Young wannabe buyers take longer than elsewhere to save a down payment; many rent while saving.
While rental unit numbers lately have been increasing at a good clip across Greater Vancouver, an expanding population means the market has remained tight.
The impact of the new units, says CMHC, “will likely be negligible.”
Vancouver, providing nearly half of all rental units in the Lower Mainland, is home to an estimated 110,000 units in purpose-built rental buildings. Another 51,224 condo suites — 26.3 per cent — are tenanted.
City Hall reports 63 new rental buildings are being developed and another 20 are being considered, with city planners encouraging developers to build family-friendly two- and three-bedroom units.
The new rentals may not significantly ease the region’s vacancy rate but are affecting the rental market.
According to The Goodman Report, a newsletter on multi-family investment property, the new supply is leaving some units empty in the newer buildings.
That’s because rents are lower in buildings constructed before 2000, which don’t offer the amenities of the newer buildings, like in-suite laundry facilities. Also, there’s more competition out there from an increased number of condo suites being let.
The new competition is lowering prices for condo suite rentals, says the report, pointing out the usual rent premium over traditional apartment units — 32 per cent — has dropped to 23 per cent.
The latest issue of the Goodman report cites a need to replace Vancouver’s “aging, increasingly inefficient rental stock.”
It says the average age of Vancouver’s purpose-built apartment buildings is 58, nearing their 60-year lifespan; and 95 per cent are pre-1974.
The city’s incentives for new rental development are “still not quite adequate,” says realtor Mark Goodman, criticizing Vancouver’s seven-year-old policy of effectively barring demolition of apartment buildings

Five-year mortgages holding firm, but just wait

Five-year fixed mortgage rates tend to roughly track the yields on five-year government of Canada bonds, because those influence the cost of the funds that the banks obtain to lend out. Yields on five-year government of Canada bonds have fallen. They ended last year at 1.95 per cent, and this week were below 1.50 per cent.
“If you went back to the start of the year, there was an absolute consensus that bond yields were going to head higher,” explains Toronto-Dominion Bank chief economist Craig Alexander. “Not dramatically, but there was an absolute consensus that bond yields would be increasing through the course of 2014. So, one of the big surprises this year has been the drop in bond yields.”
Canadian bond yields tend to mirror those in the U.S. because the market views the securities as alternatives to one another.
“One of the things that happened at the start of this year was, initially, there were some concerns about emerging markets and the angst over the slowdown in China,” Mr. Alexander adds. “But then we started to get very weak economic data out of the United States, and there was news that the U.S. economy outright contracted, and you saw broad-based scaling back of expectations about global growth. So, while some of the fears about emerging markets diminished, it happened at the same time that people found something new to worry about.”
So, a more negative outlook for economic growth in the U.S. and elsewhere turned into good news for Canadian home buyers.
But Mr. Alexander thinks the U.S. economy is on pace to grow faster than most other advanced countries in the second half of this year. “As a consequence, I think that the rally in bonds that we’ve had since the start of the year is likely to be reversed, from an economic fundamentals point of view it’s only a matter of time. The thing that economists are notoriously bad at is timing.”
In other words, economists are still expecting five-year fixed mortgage rates to creep up, they just don’t know exactly when. Mr. Alexander now expects five-year bond yields to creep back up to about 1.95 – where they were at the end of 2013 – by the end of this year. He then sees them rising by about 90 basis points next year, largely during the second half of the year.

Canada’s most expensive housing market not headed for crash, says credit agency DBRS

A leading credit rating agency says Canada’s most expensive housing market may not be all that affordable for the average family, but despite that no major correction is coming Vancouver’s way.
DBRS  looked at 39 markets in Canada, the United States and Australia, releasing its focus feature on Vancouver Wednesday.
“Based on historical data, the Vancouver market does not appear to be significantly overheated,” said DBRS, in the report. “Therefore, a correction of any magnitude may not be justified given the strong fundamentals in the market.”This month the real estate board of Greater Vancouver said June competition among homebuyers was as strong as it had been since  2011.
Property sales in the region were up 28.9% in June from a year ago while the average sale price of detached home reached $1,200,539.
DBRS acknowledged there are affordability issues and said home prices continue to rise faster than disposable income, “threatening the affordability of housing for many Canadian families” in the market.
DBRS says given the stable economy and the low interest rate environment that could persist for the foreseeable future, it’s hard to envision a correction.
“It is difficult to foresee catalyst that could create a significant price correction in the Vancouver housing market over the medium term,” said DBRS.
In its study, DBRS noted from 1994-1998, Vancouver did have a correction and prices dropped 9% from peak to trough. From 2008-2013, prices increased 1.7% annually through this post recession period. It is over the last year that prices have rebounded with a 9% gain, said DBRS.
The ratings agency also stressed Vancouver has natural barriers that limit development in the city and controlled supply.
At the same time, DBRS says the quality of living in Vancouver is not a factor to be ignored in continued long-term demand.
“Vancouver’s status as one of the Canadian cities with the highest quality of living helps ensure continual population growth, says DBRS. “The city’s diversity and year-round mild weather help attract immigrants, thus keeping demand for housing high.
The agency offered shorter comment on other Canadian cities.
In Calgary, it says a well-paid work force has kept the housing market strong as the city has avoided a worldwide economic recession with its oil and gas economy. DBRS said continued development of new home supply has keep prices stable and it expects more of the same even if the Alberta economy slows down.
In Montreal, DBRS noted its housing price index saw declines from 1990-99 but is up 150% since then. “Housing prices haven’t been strongly impacted by the financial crisis and exhibit a stable, upward trend,” the agency said.
In Toronto, DBRS say restrictions on development allowing it to “expand up but not out” have helped maintain upward pressure on prices.

BCREA ECONOMICS NOW Canadian Monthly GDP (May) - July 31, 2014

The Canadian economy grew 0.4 per cent in May, a fifth consecutive monthly increase. Contributions to growth at the industry level were broad based, with notable increases in real estate, wholesale and retail trade, manufacturing, and professional services.

Based on two months of second quarter GDP data, we would estimate that the Canadian economy grew a modest 2.2 per cent from April to June.  Today's strong release, along with yesterday's impressive US GDP print, will likely dampen any market expectations of future potential Bank of Canada easing which could  exert upward pressure on Canadian bond yields. 

Broad-Based Demand Lifting BC Housing Markets BCREA 2014 Third Quarter Housing Forecast Update

Vancouver, BC – July 31, 2014. The British Columbia Real Estate Association (BCREA) released its 2014 Third Quarter Housing Forecast Update today.
"Stronger than expected consumer demand in the third quarter triggered an upward revision in the housing forecast,” said Cameron Muir, BCREA Chief Economist. “Rising consumer demand is now broad-based across the province, with some of the largest year-over-year gains occurring in the Okanagan and the Kootenay regions."
BC Multiple Listing Service® (MLS®) residential sales are forecast to increase 9.8 per cent to 80,100 units this year, before rising a further 4 per cent to 83,300 units in 2015. The previous forecast was for 76,700 and 81,800 unit sales respectively in 2014 and 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 5.6 per cent to a record $567,300 this year and a further 1.4 per cent to $575,400 in 2015. “Since the housing stock is generally expanding at the same pace as population and household growth, rapid escalation of home prices is not expected over the next two years,” added Muir. BC housing starts are forecast to edge up 2 per cent to 27,600 units this year and a further 1.8 per cent to 28,100 units in 2015.

Wednesday, July 30, 2014


On the heels of a 2.1 per cent contraction to start the year, the US economy expanded at a robust 4 per cent annual rate in the second quarter. Growth was driven by stronger consumption spending as well as a large contribution from inventory accumulation, the latter of which is more volatile and less likely be sustained next quarter.  It is worth noting that this is a preliminary first estimate of US GDP and is therefore subject to, potentially significant, revisions.

A strong US economy is a key component of the Bank of Canada's outlook for growth this year and next and if the United States economy is truly on an upswing, Canadian exports and business investment should benefit. However,expectations of faster economic growth may also put upward pressure on bond yields and therefore mortgage rates.

Tuesday, July 29, 2014

Vancouver House tower makes enemies before it's built by targeting Asian buyers


Vancouver House tower makes enemies before it's built by targeting Asian buyers

Rendering of Westbank Projects Corporation's Vancouver House. Vancouver Houses most distinctive feature is the 52-storey curving and cantilevered residential tower by the Howe Street on ramp to the Granville Street Bridge.

Photograph by: Submitted

With its twisted sculptural design, the “iconic” $500-million Vancouver House is being marketed across Asia as a symbol of Vancouver’s future.
The 52-storey Westbank project alongside the north end of Granville Bridge is slated to open in 2018 and is being aggressively marketed in Asia, with up to half of the owners expected to buy from outside Canada.
According to the South China Morning Post, two sales offices were opened in Hong Kong in June.
Sales agents then visited China’s largest cities in search of buyers. And in July, Vancouver House units were marketed in Singapore. According to Singapore publications, Vancouver House condos were reserved for overseas buyers.
This week, Singapore-based website Property Guru reported there was an “overwhelming response” to the launch of Vancouver House, one of “Canada’s iconic buildings.”
“Vancouver House ... saw more than 30 units transacted — far more than expected,” according to Property Guru.
“The response surprised us and surprised the developer,” an “excited” Singapore agent was quoted telling Property Guru, which reported a second “showcase” event was planned this week in Singapore. In mid-July The Business Times reported that of “388 units in the 52-storey tower, 30 units are reserved for the Singapore market, said Westbank’s marketing director Michael Braun.”
Westbank spokeswoman Jill Killeen said an initial September date to start selling to locals had been brought forward after Westbank received its disclosure statement last Thursday, ”making it legal to sell.”
“Our tracking indicates that more than 50 per cent of buyers will come from the Vancouver marketplace,” Killeen said in a prepared statement. Sales for local buyers will begin this week. Killeen said Westbank had been marketing to locals through print and television and had hosted an arts event under the bridge to generate interest.
In a story featuring an interview with Vancouver House developer Ian Gillespie, the South China Morning Post noted the building will have an “asset management” program for absentee owners, with staff periodically turning on taps and appliances in unoccupied units.
Gillespie said Vancouver House will be the most expensive building ever in Vancouver and units will be for art-collector-like buyers looking for “live-in sculpture.”
Vancouver House’s star architect, Bjarke Ingels, suggests the building — which will include revitalizing the space under the Granville Bridge at the 1400-block of Howe Street — is symbolic of “a giant curtain, at the moment of being pulled back to reveal the world to Vancouver and Vancouver to the world.”
Before the project was approved by Vancouver council some residents complained that Ingels’ tower design, rising from a thin triangular wedge and torquing into a top-heavy structure with zigzagged Lego-like units stacked high over the bridge, will be “unsettling,” “overzealous” and “an architectural eyesore.”
If the rumbling debate over foreign ownership in Vancouver and complaints such as one submitted by a Province reader are an indication, then density and design won’t be the only concerns raised in council for future developments. Locals may question where buyers are expected to come from, and whether they will live here.
“It’s shocking that this building, which has been marketed to us as the iconic Vancouver House, gets sold two months in advance to Asia,” a reader told The Province, in reaction to reports from Singapore. “I wouldn’t call that iconic, I’d call it insulting.”
UBC real estate expert Tsur Somerville said he is not sure if Vancouver’s current housing market demands that projects like Vancouver House be marketed mostly to overseas buyers.
Somerville said in his view, the important question for Vancouver’s future is not where buyers are from, but how they use their new homes.
“I’m not ready to say we are becoming like some ghost city in Outer Mongolia,” he said. “The question is, do you become like the Aspens or Whistlers of the world, where the people that work there don’t live there?”

Saturday, July 26, 2014

A picture tells a thousand words … not all of them complimentary

We know how a great photograph can make a difference to the interest in a property. Sometimes a clever camera angle or just the right light can spark interest in even the less desirable building. On the other hand, occasionally realtors will just show it like it is however bad it may be. A blog called Terrible Real Estate Agent Photos highlights the appalling condition of some homes that get listed. The site has thousands of visitors a day and features photos from all over the world; perhaps it should serve as a training aid for realtors?

Wednesday, July 23, 2014

Downtown Vancouver residential boom creates need for services

VANCOUVER — One of Vancouver’s fastest-changing neighbourhoods is facing a dearth of services and amenities amid a boom of residential tower construction, say residents, developers and other stakeholders in the city’s Downtown South.
The roughly six-block section of Downtown South wedged between Howe and Seymour streets near the Granville Street Bridge has arguably undergone one of the city’s most dramatic transformations. There are roughly eight recently completed or proposed residential buildings that will both alter the skyline and draw in thousands of new residents.
Among the new buildings will be Westbank’s 52-storey Vancouver House, with its 407 condominiums and 95 rental apartments. The new tower is under pre-construction and due for completion in 2018.
Mike Orchison and Lilian Yan moved into the recently completed Maddox Downtown at Drake and Howe streets in April with their 12-year-old son. They had been living in Yaletown, but made the slight shift west after they found a two-bedroom, two-bathroom unit in the development by Cressey.
The couple said they were attracted to the neighbourhood because condo prices were a little lower than in Yaletown and there were several new buildings to choose from. They quickly discovered, however, that the area lacks shopping, dining and service options.
“Now that we’re living there we’re really starting to feel that there is something missing as far as the downtown lifestyle that we can enjoy with a family,” Orchison said in an interview.
In Yaletown, almost all of the restaurants were family friendly, he said. “And Granville South, well, it’s [only] the Subway [restaurant] that allows kids. Most of them are just bars and they’re not kid friendly.”
Yan and Orchison said this particular pocket of Downtown South could also use a new grocery store, more family friendly entertainment and new shopping options.
“Grocery wise, in Yaletown there is an Urban Fare that was one block away from us,” Yan said. “In south Granville there is no real grocery store, except for a corner store. That’s a bit of an inconvenience.”
Charles Gauthier, President and CEO of the Downtown Business Improvement Association said the association raised that same issue with city officials just weeks ago. He said the experiment of including small commercial spaces in the podiums of residential towers in the area has failed to generate a diverse set of amenities for what is quickly becoming a very densely populated corner of the city.
“We think that [the city’s] policy of trying to encourage that kind of retail, or commercial activations, at the base level of residences along Howe and Seymour may not have been the most successful strategy,” Gauthier said, adding that the solution may be found in turning the south end of Granville into more of a traditional shopping district with larger commercial spaces.
He said the area needs more day-to-day amenities and services. “It could be a dry-cleaner, it could be a hairdresser, the barber shop, that kind of thing.”
The boom in residential development in the area has created an “instant consumer base,” he said, adding that wise business operators would be looking now for space in the area.
Most of the new residents in Downtown South are young people, he added. “When we had that planning meeting with the city a couple of weeks ago they identified that it’s a 20-to-39-year-old demographic, rather than a much older demographic that you see in the West End.”

BCREA ECONOMICS NOW Canadian Retail Sales - July 23, 2014

Canadian retail sales rose 0.7 per cent in May with sales higher in 7 of 11 retail sub-sectors.  In inflation-adjusted terms, retail sales rose 0.4 per cent.  Given today's data, second quarter Canadian real GDP growth is tracking at 2.2 per cent on an annualized basis.

Retail sales in BC edged lower by 0.1 per cent following two months of strong growth. However, on a year-over-year basis, retail sales were 6.4 per cent higher than May 2013.  Through the first five months of the year, retail sales in BC are up a robust 5.3 per cent.

Tuesday, July 22, 2014

Investors should not be lured by flipping promises, Realtors warn

With limited supply of single-family homes in key markets, more investors are flirting with the idea of flipping to capture growing demand. But it’s not for everyone, as one Realtor warns.
As more landlords seek out properties for flipping opportunities, property experts are warning  that it is not a strategy that everyone should be embracing.
“People just like the idea of making quick money,” Realtor Angie Lakostik, who has several property flipping clients, tells CREW. “Real estate in Toronto is so strong, it’s blooming. So when you flip, you can sell it in six months or one year for more money.”
But not everyone is suited to a flip, she says, and not every flip will make an exorbitant amount of money.  “Of course, it depends how much you put into it,” Lakostik says. “Be careful and do your research. Don’t overpay for the house.”
Indeed, the best flips stem from the steals – the homes purchased for a bargain. “Make sure that you get a good price so that when you flip it, you can get your money out of it,” she says.
After the purchase price of the house, flippers should be wary of the cost of renovations. Lakostik says the key is balancing cost with quality. “Hire someone you know and trust, a good contractor,” she says. “Sometimes people don’t know what they’re doing and they hire a big company, which costs them more.”
Better yet are the handy flippers who can do a large portion of the renovations themselves, saving on both the time it takes to do the flip and the amount of money that the flip costs. “The best flippers are the people who can do the job themselves,” she says. “They know how to do it and they only need to hire a few people.”

Monday, July 21, 2014

Fewer Canadians paying down their mortgages
A new CIBC poll finds there has been a significant decrease in the number of Canadians using the low interest rates to pay down their mortgages faster.  While over half of Canadians with mortgages (55 per cent) are taking one or more actions to pay their mortgages down sooner, a similar poll last year had the figure at 68 per cent. However, while the numbers increasing payment value or frequency has dropped, there is an increase in the numbers making a lump-sum repayment. The new report also says that Canadians are expecting to 58 years old before they are mortgage-free.  So, if we’re not paying down out home loans, where is any spare money going? The report has shown a large increase in spending on home renovations (up 30 per cent) and vacations (up 20 per cent). "A mortgage is the largest debt most Canadians will take on in their lifetime, and being mortgage-free is an important goal for many," says Barry Gollom, Vice President, Secured Lending and Product Policy, CIBC.  "With current low interest rates, this may be an opportune time to make progress against your mortgage - even a few small changes can make a big difference in the length of time it takes to pay off your mortgage and the amount you pay in interest charges."

Friday, July 18, 2014

With Household Debt Near Record Highs, BoC Mulls Major Interest Rate Policy Change

Bank of Canada governor Stephen Poloz says low interest rates may become the “new normal” as Canadians have taken on so much debt that any rate spike could send shockwaves through the economy.
The head of the central bank told CBC’s The Current on Thursday that his team is researching a “neutral interest rate” policy, which typically means that policymakers neither stimulate nor restrain economic growth.
Such a policy would mark a departure from how the bank has done things for the past several decades.
“The new normal, as we see it, is probably one in which the interest rate … is probably going to be lower than what we thought in the past,” he said on Thursday’s show.
“So much debt has been taken on during the course of this downturn that every uptick in interest rates that we get, whether it’s two years from now or what have you, is going to hit the cash flow of ordinary people bigger than in the past.”
The bank announced Wednesday it is keeping the overnight loan rate at one per cent, where it has been since September 2010, after raising it gradually from a low of 0.25 per cent in the wake of the 2008-2009 downturn.
The low rate environment has encouraged many Canadians to pack on debt while borrowing continues to be cheap. The country’s average debt-to-income ratio now hovers around 163 per cent, meaning Canadians owe an average of $1.63 for every dollar they earn.

Thursday, July 17, 2014

US Housing Starts - July 17, 2014

US housing starts fell 9.3 per cent in June to a seasonally adjusted annual rate (SAAR) of 893,000, but were up 7.5 per cent over June 2013.  For the first six months of the year, US new home construction has averaged 954,000 units (SAAR), an increase of 5.3 per cent over 2013.

 Severe winter weather slowed new home construction to start the year, in turn halting the flow of BC wood products south. As US housing starts recover, we anticipate a further boost in BC's forestry sector which associated gains in employment in household incomes. 

Wednesday, July 16, 2014

More appetite for condo units, poll indicates

Condo investors worried about the future pool of buyers may take heart from a new poll suggesting that Vancouverites are willing to take the plunge…and soon.
While most home-buyers would prefer to get their hands on a detached home, rising prices and limited supply are pushing their dreams out of reach.
However, that is good news for some investors as a majority of potential buyers say they would turn to the condo market for their future residential needs.
According to a recent survey almost 30 per cent of Vancouver  buyers say they would consider condos. 
Almost 60 per cent of the 1,080 surveyed who are likely to purchase a home in the next two years say they would look for a detached house. 
And despite all of the doom and gloom in the market, a majority of the survey respondents believe conditions are currently favourable to buy property, while most believe the overall state of the province’s economy is good.
However, not everyone is as positive. One in five believe the province’s real estate market is weaker compared to one year ago.
Interestingly, more Vancouverites  rank long-term investment value as they motivation for buying, followed by affordability/availability with 26 per cent driven by the desire to own their own home.

Bank of Canada Interest Rate Announcement - July 16, 2014

The Bank of Canada announced this morning it was once again holding its target for the overnight rate at 1 per cent.  In the statement accompanying its decision, the Bank highlighted that while total CPI inflation has risen close to its 2 per cent target in recent months, the rise is due to temporary effects of higher energy prices and exchange rate pass-through from a lower loonie.  The Bank also noted that slower than expected global economic growth has trimmed the Bank's Canadian economic outlook for the next two years. This means the Canadian economy will be delayed in reaching full capacity, now expected in 2016 rather than 2015.

In spite of low inflation and disappointing growth, the Bank of Canada remains wary of easing monetary policy further at risk of upending the delicate balance of over-indebted Canadian households.  Interestingly, the Bank explicitly stated that it remains neutral with respect to both the timing and direction of the next change in interest rates, which leaves the door open for a rate cut should incoming data warrant it. 
 That said, we still expect that the next move for the Bank to be in the direction of higher rates. In particular, recent momentum in consumer prices, if sustained, may push the Bank to act sooner rather than later though very likely not until early to mid-2015.

Friday, July 11, 2014

Bank of Canada to hold rates steady, tone down inflation concern: Reuters poll

"It will be necessary to acknowledge the above-forecast core CPI (consumer price index) trend, but Governor Poloz will do so as dovishly as possible in order to avoid sparking concerns about earlier rate hikes that might send the Canadian dollar stronger," said Avery Shenfeld, chief economist at CIBC World Markets.
Data last month showed the inflation rate rose to a 27-month high in May at 2.3 percent, stronger than expected and higher than the Bank of Canada's 2 percent inflation target. The increase caught the market by surprise and has been a major driver of the currency's rally.
More than half the economists polled said the stronger Canadian dollar, currently trading near a six-month high at $1.067 to the greenback, or 93.72 U.S. cents, will not trouble Poloz enough for him to voice it.
"The loonie is not at a critical level ... for the BoC to intervene directly in the markets or to 'talk down' the loonie," said Sebastien Lavoie, economist at Laurentian Bank Securities.
The central bank is hoping to see exports emerge as a greater driver of economic growth, replacing a boom in housing and consumer debt.
"The Bank of Canada is undoubtedly concerned about all of the above, but it has made no secret that it is hoping for a pick up in exports and business investment to provide more robust and reliable support for growth," said Mark Hopkins at Moody's Analytics.
"Raising interest rates prematurely would undermine that goal by discouraging borrowing and driving up the value of the loonie."

(Polling and additional reporting by Anu Bararia; Editing by Jeffrey Hodgson and Meredith Mazzilli)

Canadian Employment - July 11, 2014

Canadian employment was little changed in June, declining by 9,400 from May. The national unemployment rate rose 0.1 points to 7.1 per cent.  Of some concern, employment has risen by just 0.4 per cent over the past 12 months, the lowest year-over-year growth since February 2010.

The BC economy broke a string of two consecutive months of job losses, adding 6,700 jobs in June. However, the provincial unemployment rate rose 0.1 points higher to 6.2 per cent as the rise in people looking for work outpaced employment gains. The level of employment in BC is up just 0.4 per cent year-to-date in 2014, though we anticipate a pick-up in job growth in the second half of the year.

Wednesday, July 9, 2014

Canadian Housing Starts - July 9, 2014

Canadian housing starts rose just over half of one per cent in June to 198,185 units at a seasonally adjusted annual rate (SAAR).  The six-month trend in Canadian new home construction sits at 185,000 units SAAR. That level of construction is approximately in-line with Canadian household growth.

New home construction in BC urban centers dipped slightly in June, falling 5 per cent on a monthly basis to 26,675 units SAAR. On a year-over-year basis, housing starts were down 9 per cent compared to June 2013. Single-detached starts were up 17 per cent while multiple units were down 18 per cent. For the first six months of the year, total housing starts in BC were higher by 9 per cent compared to 2013. 

Looking at census metropolitan areas (CMA) in BC, total starts in the Vancouver CMA were down 19 per cent year-over-year in June. The decline was the result of a 26 per cent year-over-year drop in multiple units while single-detached units rose 16 per cent. Total starts in the Vancouver CMA were up 5 per cent over 2013 in the first half of the year. In the Victoria CMA, total starts increased 68 per cent year-over-year as multiple unit starts more than doubled June 2013 levels. For the first half of 2014, total starts in the Victoria CMA are up 3 per cent. New home construction in the Kelowna CMA continues to show strength, more than doubling year-over-year in June due to strong gains in multiple unit starts. For the first six months of 2014, Kelowna CMA starts are up 64 per cent. Housing starts in the Abbotsford-Mission CMA dropped sharply in June due to relative inactivity in the multiple unit sector. Total starts in the Abbotsford-Mission CMA are down 36 per cent in the first six months of 2014.

Monday, July 7, 2014

Buyers camp out for 3 days for sold-out Brentwood mega project

Buyers camp out for 3 days for sold-out Brentwood mega project

Despite recent predictions about the inevitable burst of the Greater Vancouver real-estate bubble, buyers last week were camped out three days before Saturday’s presale of a new Burnaby mega-project.
“We expected that people would be camped out on Friday — we weren’t expecting them on the Wednesday before,” says Macartney Greenfield, Rennie Marketing System’s project manager. Brentwood is a 28-acre master-planned community that combines shopping in 350 stores, dining, entertainment and residences in an open-air high street and one-acre public plaza connected to transit.
Of 288 units available in the first tower of the Brentwood development at Lougheed and Willingdon — with occupancy slated for winter 2017 — all were sold on Saturday. Three penthouse units were not yet released, but likely will be in the fall when units for a second 63-storey tower will be made available.
“I think it has a lot to do with the revitalization of Brentwood as a neighbourhood,” says Greenfield. One-bedroom units were offered at $299,000, two-bedrooms at $355,000, and a handful of three-bedroom units were sold starting at $928,000. The condo units start on the 33rd floor, with rental units below.
“The buyers have lived in this neighbourhood,” says Greenfield. “We definitely saw a lot of people buying for their children, and some are just downsizing. There was a lot of local interest.”

Canadian Building Permits - July 7, 2014

Canadian building permits posted strong growth in May, rising 13.8 per cent from April.  The increase was the result of higher construction intentions for BC multi-family units as well as commercial buildings in Manitoba and Ontario. 

New building permits in BC rebounded from large declines in April, jumping 30.7 per cent month-over-month and 7.7 per cent year-over-year in May. The dollar value of residential permits rose 29.1 per cent on a monthly basis and 2.5 per cent year-over year while non-residential permits were up 34.2 per cent from April and 20.9  per cent year-over-year. 

Building permit activity was mixed in BC's four census metropolitan areas (CMA). Permits in the Abbotsford-Mission CMA fell 47.5 per cent from April and were 47.9 per cent lower compared to May 2013.  Similarly, construction intentions in the Kelowna CMA fell 20.4 per cent from April but were 5.5 per cent higher year-over-year. In the Victoria CMA, permits increased 74.3 per cent on a monthly basis and more than doubled year-over-year. Finally, in the Vancouver CMA, permits  bounced back from declines in April, jumping 59.4 per cent on a monthly basis and were 6.5 per cent higher year-over-year.

Saturday, July 5, 2014

Canadian Home Prices Will Rise Another 5-6% In Next 6 Months: TD

TORONTO - Canada's housing market will continue to stay hot for the rest of the year, with home prices expected to rise on low interest rates and increased demand, says a report by TD Economics.
The bank upgraded its forecast for the real estate sector Thursday, predicting that home prices will gain an average of five to six per cent by the end of 2014.
"More strength may be bubbling under the surface," said TD economist Diana Petramala, author of the report.
In February, the bank had expected Canadian home sales to flatten out, and called the market overvalued by about 10 per cent. It did not give an estimate on how much it thought prices would rise or drop. That earlier forecast was based on the belief that mortgage rates would creep up in the spring, but rates still sit near record lows and continue to prop up demand.
Low interest rates have helped with the affordability of condos, where prices are at their "most favourable." First-time buyers who may have been pushed out of the market earlier may also be returning back due to the rates, which have in part driven the demand for single-family homes.
In May, the national average resale home price grew 7.1 per cent year over year — surpassing its 10-year average growth rate.
But looking past the short- to medium-term forecasts, Petramala said the Canadian real estate market is still expected to cool when interest rates rise and the number of available homes increase.
Those factors should be enough to "tip the market" back into one that favours buyers.
"Softer housing demand, combined with rising listings, will likely push the Canadian housing market towards a buyer’s market over the next year and a half," said Petramala. "As home buyers have more choice, they will also have more bargaining power and price pressure will ease. These features would be consistent with the makings of a soft landing in Canada’s housing market."
The report said the "soft landing" has already come to certain regions, like areas east of Toronto, while expensive cities "with more froth" like Toronto, Vancouver and Victoria will soon be seeing more weakness.
The Real Estate Board of Greater Vancouver reported Thursday that home sales rose 28.9 per cent to 3,406 in June. The total compared with 2,642 sales recorded in June 2013 on the Multiple Listing Service. Last month's sales were 0.6 per cent above the 10-year sales average for June.
Meanwhile, the TD report said home prices in Edmonton and Calgary were expected to post the biggest growth rate over the next two years, as those cities continue to see population and employment gains.
TD also noted that it expects condo prices to fall by about two per cent next year, as an estimated 135,000 units currently under construction become available. This in turn will help boost the rental vacancy rates, keep rents flat, and make buying condos for investment purchases less attractive.
It'll also make single-family homes — which are priced on average about $200,000 more than a condo — less viable for those looking to upgrade.
"As such, move-up buyers who would like to upgrade their condos to a single-family home may find it difficult," said Petramala, noting that prices for single-family homes have rose an estimated eight per cent this year, and were expected to go up by another two per cent in 2015.

Thursday, July 3, 2014

Buyer demand increases while home prices edge up

The Greater Vancouver housing market enters the summer season with home buyer activity on the rise.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 3,406 on the Multiple Listing Service® (MLS®) in June 2014. This represents a 28.9 per cent increase compared to the 2,642 sales recorded in June 2013, and a 3.7 per cent increase compared to the 3,286 sales in May 2014.
Last month’s sales were 0.6 per cent above the 10-year sales average for June of 3,386.
“Competition amongst home buyers today is as strong as it’s been in the region since 2011,” Ray Harris, REBGV president said.
The sales-to-active-listings ratio currently sits at 21.3 per cent in Greater Vancouver, which is the highest this measure has been since June 2011.
“Over the last three years, we’ve seen changes in demand yet home prices at the regional level have remained relative stability,” Harris said. “While these numbers provide high level trends, it’s important to know that changes in prices always vary depending on neighbourhood and property type. Consult your local REALTOR® for information on trends in your area of choice.”
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $628,200. This represents a 4.4 per cent increase compared to June 2013.
New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,339 in June. This represents a 9.5 per cent increase compared to the 4,874 new listings in June 2013 and a 10.1 per cent decline from the 5,936 new listings in May. Last month’s new listing count was 2.6 per cent below the region’s 10-year new listing average for the month.
The total number of properties currently listed for sale on the MLS® system in Greater Vancouver is 16,011, a 7.4 per cent decline compared to June 2013 and a 0.4 per cent decrease compared to May 2014.
Sales of detached properties in June 2014 reached 1,462, an increase of 32.7 per cent from the 1,102 detached sales recorded in June 2013, and a 58.7 per cent increase from the 921 units sold in June 2012. The benchmark price for detached properties increased 6.2 per cent from June 2013 to $976,700.
Sales of apartment properties reached 1,308 in June 2014, an increase of 22.5 per cent compared to the 1,068 sales in June 2013, and a 27.5 per cent increase compared to the 1,026 sales in June 2012. The benchmark price of an apartment property increased 2.4 per cent from June 2013 to $378,000.
Attached property sales in June 2014 totalled 636, a 34.7 per cent increase compared to the 472 sales in June 2013, and a 53.3 per cent increase over the 415 attached properties sold in June 2012. The benchmark price of an attached unit increased 3.1 per cent between June 2013 and 2014 to $471,200.

BCREA ECONOMICS NOW US Employment - July 3, 2014

The US economy added a robust 288,000 jobs in June,  while employment growth in April and May were revised higher by 29,000 jobs. The US unemployment rate fell 0.2 points to 6.1 per cent.  

In spite of a disastrous first quarter of economic growth, the US economy is clearly improving. Over the past three months, US job growth has averaged 272,000 jobs per month and the unemployment rate has fallen to its lowest level since September of 2008. We expect US economic growth to pick up considerably for the remainder of 2014, which should provide a significant boost to the BC economy and keep consumer demand in BC housing markets healthy.