Monday, August 25, 2014

Bank of Canada won’t follow Fed’s lead on interest rates, Poloz says

Bank of Canada Governor Stephen Poloz wants to make something perfectly clear: When the Federal Reserve starts raising interest rates, Canada’s central bank won’t necessarily follow immediately.
“The main thing people should understand is that our policy is quite capable of being fully independent, as it has been these past few years,” Mr. Poloz said in an interview at the annual gathering of central bankers and economists at Jackson Hole, Wyo., over the weekend.Mr. Poloz’s comments followed a speech by Janet Yellen, in which the Fed chair embraced the possibility that stronger economic growth could prompt the U.S. central bank to lift its benchmark lending rate sooner than expected. History shows interest-rate cycles in Canada and the United States are highly correlated. Many investors assume there is a “reaction function” in Canada to U.S. monetary policy: Where the Fed goes, the Bank of Canada must follow.
Mr. Poloz’s assertion that he will set his own path could inform speculation on Bay Street and Wall Street about when the Bank of Canada will adjust its interest-rate setting. Most analysts assume the next move will be an increase, and that higher borrowing costs will come in the summer of 2015. Current expectations are that the Fed will lift the federal funds rate from zero at roughly the same time, or a month or two earlier.
Mr. Poloz’s comments suggest the lag between the Fed’s first interest-rate increase since 2006 and the Bank of Canada’s shift higher could be longer than investors currently expect.
A broad rethink across financial markets about the linkage between Fed and Bank of Canada policy could put downward pressure on the Canadian dollar and various short-term interest rates. Even though any change at either central bank still is believed to be many months away, investors base immediate decisions on expectations of the future. If they sense the Bank of Canada could leave its benchmark rate lower for longer, they will adjust what they are willing to pay now for Canadian bonds, the currency and other assets tied to the interest rate.
Mr. Poloz refused to discuss his timetable for adjusting interest rates in explicit terms. “In the last several months we’ve gone to some lengths to pull ourselves out of a forward-guidance setting,” he said. “We are really careful not to translate our analysis into a path for the interest rate.”
Canada’s central bank long has insisted its policy decisions are not directly influenced by the Fed’s actions, but market participants have always been skeptical. Mr. Poloz’s predecessor, Mark Carney, conceded in 2010 that there “are limits to the divergence that there can be between Canada and the United States.” Mr. Poloz acknowledged that while “theoretically” the gap between Canadian and U.S. policy rates “could be anything,” the Bank of Canada “never will be 100 per cent independent” because the Canadian and U.S. economies are so closely intertwined.
While Mr. Poloz insisted he wasn’t making predictions, he offered several reasons to explain why he would feel no pressure to reflexively follow the Fed. For one, the Bank of Canada has a head start. “It’s worth reminding people that we are at 1 per cent,” Mr. Poloz said. “In this world, that’s a high number when everything is starting at zero.”
The Bank of Canada is seeking to return its benchmark interest rate to a setting that neither stokes inflation nor hurts the economy. Before the crisis, the “equilibrium rate” was understood to be about 4 per cent. The central bank now thinks scars from the crisis have lowered that rate. “When you think the equilibrium number is at some lower rate than in the past, which I do, but I don’t know yet what it might be, then at least we know that we are part way there already,” Mr. Poloz said.
The other factor is the relative strength of the two economies. The U.S. has considerable forward momentum, while Canada still is waiting on a revival in exports and business investment. Stronger demand in the U.S. should benefit Canada’s economy. Monetary policy in the two countries is so similar because of their close trade links: When the U.S. economy grows, Canada sells more exports, which boosts economic growth and puts upward pressure on inflation.
Canada’s loss of market share raises questions about whether stronger U.S. growth will boost Canada’s economy to the extent it has in the past. Mr. Poloz says he is counting on new exporters to replace those wiped out by the recession, creating an incentive to leave borrowing costs low to help those entrepreneurs get started. Canada’s job growth this year is almost entirely driven by part-time positions, while U.S. employers are adding jobs at one of the most impressive rates on record.
“The linkage between their recovery and ours is not mechanical … We still have question marks around ours,” Mr. Poloz said. “We ought to be able to strike a fully independent course determined by these other things quite independently of what theirs are.”

Sunday, August 24, 2014

More investors turning to small property development

Limited supply and high prices in key markets is encouraging landlords to embrace the role of small property developer. But are the big profits worth the hard work?
An increasing number of investors are turning their attention to property development in a bid to maximize on the demand for single-family homes.
Speaking to CREW, investor Sahil Jaggi says buying an old building and undertaking a complete rehab is the only way he can get into desirable neighbourhoods at a good price, and opportunity to make a lot of cash.
While admitting that the work is a full-time job with the risk of unexpected costs popping up, Jaggi says joint-ventures are the best way to get into such projects.
“If you have a good plan, good location and a good project lined up you will always find investors,” he says. 
“If 20 to 30 per cent of the area is already developed, you know it’s headed towards something and there’s room for growth.”
Paul Shikanai, owner of Regency Property Management and Real Estate in Regina, advises investors to be financially creative when undertaking such projects and do not undertake any unnecessary costs.
“I’ve seen people put a lot of money into it and it’s hard to get that return,” he says. “You don’t need to put in a granite countertop. You don’t need a beautiful tile on the floor.”

Friday, August 22, 2014

Townhomes an affordable alternative in Vancouver More needed: Restricted zoning limits numbers built and they’re not always welcome


Can’t afford a single-family home in Vancouver, and not enamoured with condo living? There is another option, albeit a frustratingly elusive one: townhomes.
It’s a great option for people who want to be able to walk out their front door and be outside — as opposed to exiting via a corridor full of neighbouring units, an occasionally slow elevator and a lobby.
“For most people, it’s as close as you can get to having a home in the city,” says Vancouver realtor Bob Rennie.
Unfortunately, the stock of townhomes in Vancouver is lamentably modest, with the scarcity of new developments driving up prices.
Townhouses, says Rennie, are “probably the most undersupplied part of the housing market.”
He notes only 36 townhomes, part of three developments on the city’s east side, are expected to come on to the market in 2015.
Vancouver’s planning director Brian Jackson calls them “the missing piece in Vancouver’s housing continuum.” The focus, he notes, always has been on high and mid-rise development.
“It’s a huge issue,” says Anne McMullin, President and CEO of the Urban Development Institute. She says a new townhouse in Vancouver these days can run to $1.3 million, and more.
The root problem — restricted zoning.
No developer wanting to make money will build townhouses on property zoned for denser, more lucrative condo and apartment buildings.
So, new townhomes have to be built on land either already zoned for townhouses or for single-family occupancy.
Rennie says the city used to promote housing density only downtown “but now, we’re moving into single-family neighbourhoods.”
And townhouses are not always welcome.
Maureen Gulyas, a spokesman for the city, says municipal planners have “added policies to encourage this type of development in our community plans.”
Such plans for Marpole, however, initially got stymied by an angry community, with designated townhome development having to be scaled back, from 2,400 units to 800. Consultation with the community last fall yielded a long list of local concerns, outlined in a municipal report: “shadowing, loss of privacy for neighbouring single-family homes, increased traffic and crime”.
Residents also “were doubtful new housing forms proposed would be affordable,” and expressed concern buyers would allow the townhomes “to sit empty as investment properties”.
Jackson, who calls townhouse development “gentle densification,” says the city experienced less pushback from two other neighbourhoods where townhouse development is planned — on Nanaimo Street and along Kingsway. Townhouses also are being earmarked for streets near the Cambie Corridor. Many will be priced at less than $1 million, he says.
As encouragement, the city is offering townhouse developers density bonuses and an easing of provisions for their Community Amenity Contributions — money from developers directed to city coffers to provide community amenities like parks.
While townhouses give more choice to Vancouverites in a tough housing market, no one should think they’re the answer to the city’s affordability challenge — except perhaps for those priced out of a single-family home.
According to the UDI/FortisBC Housing Affordability Index, in the first quarter of 2013, 26.2 per cent of residents — based on incomes and interest rates — would have qualified for a townhouse mortgage. That dropped to just 18.5 per cent by the first quarter of 2014.
But with 5,000 new residents moving to Vancouver every year, housing options are needed.
And, says Rennie, if Vancouverites want their aging parents to be able to remain in the city, or their adult children to live nearby, new townhouses will be needed, offering their buyers greater space, privacy and outdoor space than they likely could get in a condo.

Canadian Housing Market To Cool Down In 2015 If Interest Rates Rise: RBC

RBC Economics says higher interest rates will put a strain on the Canadian housing market in 2015 and "substantially" moderate prices increases.
In its latest Canadian housing forecast, the bank (TSX:RY) says Canada's current historically low interest rates are not "sustainable" and it forecasts longer-term interest rates will rise by the end of the year in anticipation of a return to tightening mode by the Bank of Canada in 2015.
RBC says if current rates rise, it anticipates home resales to fall by 0.9 per cent to 463,100 units next year following an increase of 2.1 per cent to 467,200 units in 2014, while it sees home prices increasing just 1.1 per cent in 2015, compared with a jump of 4.3 per cent this year.
RBC describes those developments as a cooling not a crash in the housing market, which is supported by a variety of other factors, including steady immigration rates and good employment outlook.
The report said condo construction, particularly in the major cities, will be one of the main reasons the housing market will slow in 2015 as more units become available.
It cautioned that although there will be slowdown in 2015, the big impact on the Canadian housing market will be likely not be seen until 2016 once higher interest rates are "normalized."

Friday, August 15, 2014

Low mortgage rates showing signs of turning around housing market

Forecasters are hiking their expectations for Canada’s housing market amid signs low mortgage rates are energizing sales, construction and prices.The revised predictions come at a time when many economists thought that the growth in the market would be stalling. But now many experts believe the recent strength is more than simply compensation for a slow winter, although most still think the market will lose some steam eventually.
Canada Mortgage and Housing Corp. said Wednesday it expects the average price of houses sold over the Multiple Listing Service (MLS) to rise 4.5 per cent this year to $399,800. Less than three months ago, CMHC was expecting a 3.5-per-cent gain this year to $396,000, and back in June, 2013, it forecast that the average sales price this year would be just $377,300.
Its new outlook came as the latest Teranet-National Bank house-price index reading suggested that prices rose 1.1 per cent in July from June. That marked the first time in five months that prices rose by more than the historical average for that month, and the eighth month in a row that prices rose.
“Mortgage rates have hit new lows since March adding fuel to housing demand,” Toronto-Dominion Bank economic analyst Admir Kolaj wrote in a research report. “Over the medium term, we are still of the view that the housing market is bound to see a soft landing on the back of gradually rising interest rates and a moderate employment picture. In addition, there are a record number of new homes under construction, which once completed will increase supply and help alleviate some of the price pressures.”
Indeed, CMHC said it now expects that roughly 184,800 new homes will begin construction this year, up from its May forecast of 181,100.
“Recent trends have shown an increase in housing starts, which is broadly supported by demographic fundamentals,” CMHC chief economist Bob Dugan stated in a press release. “However, our latest forecast calls for starts to edge lower as builders are expected to reduce inventories instead of focusing on new construction.”
CMHC also said that it expects that about 463,600 homes will change hands over MLS this year, up from its May forecast of 457,900.
While it’s widely feared that too many condos are being built in Toronto, the city’s condo market is so far holding up better than expected.
The Conference Board of Canada on Wednesday boosted its forecast for condo resales and prices in Toronto. It now anticipates that 20,083 condos will sell over MLS in the city this year (a year ago, the Conference Board expected that number to be 19,080) at a median price of $316,744 (it previously expected that to be $310,242).
The Conference Board also raised its forecasts for resale condo prices in Calgary, Edmonton, Vancouver and Victoria, but ratcheted down its expectations slightly for condos prices in Quebec City, Montreal and Ottawa.

Thursday, August 14, 2014

Home Buying Heats Up Over the Summer Months

Vancouver, BC – August 14, 2014.  The British Columbia Real Estate Association (BCREA) reports that a total of 8,493 residential sales were recorded by the Multiple Listing Service® (MLS®) in July, up 11 per cent from July 2013. Total sales dollar volume was $4.65 billion, an increase of 13.8 per cent compared to a year ago. The average MLS® residential price in the province rose to $547,926, up 2.5 per cent from the same month last year.

“Strong consumer confidence continues to drive a summer rally of home sales,” said Cameron Muir, BCREA Chief Economist. “While sales were up in all but one BC real estate board area, the Okanagan has posted a meteoric rise in consumer demand, with the most home sales on record for the month of July.”
“Overall market conditions remain in relative balance in BC,” added Muir, “however, relatively fewer homes for sale have created sellers’ market conditions in some communities."
Year-to-date, BC residential sales dollar volume was up 24.5 per cent to $28.5 billion, compared to the same period last year. Residential unit sales were up 17.2 per cent to 50,376 units, while the average MLS® residential price was up 6.2 per cent at $565,031.

Tuesday, August 12, 2014

How parents can help their adult children buy a house

Where there’s a will, there’s a way for parents to help their adult children buy a house.
That’s will as in last will and testament. In the kind of extremely expensive real estate market we have in many cities, maybe what your adult children need is a sweetheart deal from Mom and Dad. Maybe pass the house down in your will, or sell it at a bargain price to a son or daughter.Graham Williams, partner at the accounting firm Stern Cohen, doesn’t think much of this latter idea. “We can’t remember a case where we recommended a client sell their home to their adult children,” he wrote in e-mail. “We hate to disappoint the many millennials out there who are currently priced out of the housing market, but from an accountant’s perspective it might not be a financially sound solution.”
One of Mr. Williams’s objections is that you’re wasting the biggest opportunity of your lifetime to make a big investing gain tax-free. A house, as long as it’s a principal residence, can be sold without having to pay tax. This is an especially important detail if your home has doubled or tripled in value in the decades you’ve owned it.
Another objection from Mr. Williams is that parents often need to maximize the proceeds from selling their home in order to downsize to a condo and perhaps have some money left over. One further objection is the family dissension that can be created when parents offer a sweetheart deal on the family home to one child and not others.
But, if you were so inclined, is it possible to help an adult child deke around high house prices by selling her the family home at a below-market price? Mr. Williams said the answer is yes, while offering up an alternative: Sell the house on the open market, downsize and then use some of the leftover money (if any) as a gift to the children. “There’s no gifting tax in Canada, so you can give cash to your kids – as much as you want,” he said in an interview.
Alternatively, if you do help your kids with a down payment for a house, consider designating the money as an interest-free mortgage that must be repaid when the home is sold (you can always forgive the loan if you want). Mr. Williams suggests consulting a family lawyer on this. The goal is that your gift won’t be considered matrimonial property if your adult child divorces his or her spouse.
This measure also gives parents some control if their adult kids unwisely sell their house to move up to something more expensive. “Basically, it means that if they sell the house, your kids have to pay you back the money you gave them,” Mr. Williams said.
Another thought: Pass your house down to your adult children in your will. Mr. Williams said a house would be considered as sold at fair market value on the death of the owner if willed to children directly or as beneficiaries of the estate. Even so, a home that is a principal residence would be exempt from tax in this situation.
Probate fees – they’re charged by provincial governments and cover the cost of validating a will – are likely to be triggered when including a home in a will, said Lucinda Main, a trust and estate lawyer with Beard Winter LLP. Probate fees are nominal in some provinces, but Ms. Main said in Ontario they would amount to $7,000 on a $500,000 house.
This explains probate-avoidance manoeuvres such as adding an adult child’s name on the title of a home. Ms. Main said an arrangement called joint ownership with right of survivorship is commonly used with spouses so that if one partner dies, the house automatically transfers to the other without probate. In turn, the surviving spouse might put her daughter jointly on title. The goal: A seamless transfer of the house to the daughter on the parent’s death, with no probate fees charged on the value of the house.
Ms. Main said she’s not a huge fan of parents and adult children owning a home jointly because of the potential complications. If parents want to sell or mortgage the house, they need the consent of their children. Also, the house could get caught in bankruptcy proceedings or a marriage breakup involving the children.
Adding one child on the title of your house presents fairness issues as well, Ms. Main said. “If you have one child on the title of a property, how do you deal with the other children? Do you try and equalize things in the will?”
Finding a way to transfer a house from parents to adult children is tricky for sure. But then, so is affording a home in today’s extremely expensive market.

Monday, August 11, 2014

BCREA ECONOMICS NOW Canadian Housing Starts - August 11, 2014

Canadian housing starts rose about 1 per cent to 200,098 units at a seasonally adjusted annual rate (SAAR) in July.  The six-month trend in Canadian new home construction also increased to just under 190,000 units SAAR. 
New home construction in BC urban centers slipped 3.7 per cent on a monthly basis to 25,633 units SAAR. On a year-over-year basis, housing starts were down 16 per cent compared to June 2013. Single-detached starts, which continue to recover from a down year in 2013, were up 21 per cent while multiple units were down 28 per cent. 
Looking at census metropolitan areas (CMA) in BC, total starts in the Vancouver CMA were down 20 per cent year-over-year in June, the second consecutive month of double-digit year-over-year decline. Single starts in Vancouver were up 25 per cent, while multiple starts fell 29 per cent. In the Victoria CMA, a large year-over-year decline in multiple starts offset a strong month for single starts. As a result, total starts in the Victoria CMA fell 29 per cent compared to July 2013. New home construction in the Kelowna CMA slowed modestly following several strong months. A drop in both single and multiple unit starts led to an overall decline in total starts of 8 per cent. Housing starts in the Abbotsford-Mission CMA jumped 81 per cent year-over-year due to to a rebound in multiple unit starts and strong single starts.
“Copyright British Columbia Real Estate Association. Reprinted with permission.” 

Friday, August 8, 2014

BCREA ECONOMICS NOW Canadian Employment - August 8, 2014

Canadian employment was unchanged in July, though the underlying details betray some weakness in the labour market. Full-time employment declined by almost 60,000 jobs and total hours worked, which is closely associated with economic growth, was unchanged.  However, the national unemployment rate ticked 0.1 points lower to 7.0 per cent as the number of people actively seeking work declined.

The BC economy shed 5,300 hundred jobs in July, though all in part-time work. Part-time employment declined 13,700 in July, offsetting a gain of 8,400 jobs in full-time employment. The provincial unemployment rate fell 0.1 points to 6.1 per cent as the drop in people looking for work outpaced job losses in the month. The level of employment in BC is up just 0.5 per cent year-to-date in 2014.
“Copyright British Columbia Real Estate Association. Reprinted with permission.” 

Thursday, August 7, 2014

BCREA ECONOMICS NOW Canadian Building Permits - August 7, 2014

Growth in Canadian building permits remained strong in June, rising 13.5 per cent from May.  The increase was primarily the result of an uptick in permit activity in Quebec and Alberta. 

New building permits in BC posted a modest decline, falling 6.2 per cent from May and 6.4 per cent year-over-year. The dollar value of residential permits fell 14.5 per cent on a monthly basis and 9.5 per cent year-over year. On a unit basis, permits fell 16 per cent compared to May, largely due to a decline in Vancouver multiple unit permits. Non-residential permits were up 12.1 per cent from April and were unchanged year-over-year. 

Building permit activity was mixed in BC's four census metropolitan areas (CMA). Permits in the Abbotsford-Mission CMA rebounded from a soft May, rising 102 per cent on a monthly basis and 49 per cent year-over-year.  Construction intentions in the Kelowna CMA rose 19.2 cent from May and were 50.2 per cent higher year-over-year. In the Victoria CMA, permit activity decreased sharply from a very strong May, falling 31.8 per cent on a monthly basis and 13.4 year-over-year. Finally, in the Vancouver CMA, permits  fell 17.8 per cent on a monthly basis and were 22.3 per cent lower year-over-year.
“Copyright British Columbia Real Estate Association. Reprinted with permission.” 

Barbara Yaffe: Demand grows for larger, family-size condo units downtown

A push is on to build larger condo units in Vancouver, as young families increasingly opt for a type of housing that is at once more affordable and cosmopolitan.
In recognition of the growing trend, developers are starting to build a greater number of three-bedroom units, once as rare as hen’s teeth.
Condos with three bedrooms “are relatively unheard of in multi-unit residential projects,” says Sasha Faris, marketing director at Intergulf Development Group in Vancouver. But no longer.
Faris points to a new condo and townhouse project called The Empire on Cambie St., overlooking Queen Elizabeth Park. Of 166 units, 22 are three-bedroom units.
The developer did not anticipate the demand for the big suites and so, The Empire’s floor plans had to be modified, with several one-bedroom units combined to create 12 of the larger units.
The larger units are being sought both by well-off boomers entering retirement and young families snubbing suburbia.
The Downtown Vancouver Business Improvement Association reports the number of families with children living in the city’s core has more than doubled between 2001 and 2011.
Singles continue to form a majority of those living on the downtown peninsula, but 4,545 families with children now account for 36 per cent of all residents.
Alysa Kanani, speaking for Boffo Developments, says a growing number of families are turning their backs on homes with large backyards, or nearby cul de sacs ideal for street hockey, in favour of “a walkable, accessible urban lifestyle.”
She reports Boffo’s Artemisia at Helmcken and Davie, features units, some with three bedrooms, of 1,500 to 2,000 square feet.
One family of five, says Kanani, recently purchased a large penthouse suite, “not wanting to concede to the suburbs.”
All downtown schools are now full and a new International Village elementary school is being built, to open in a year or so.
City hall is taking note. Representive Tobin Postma reports the Vision Vancouver council directed staff in December to “assess the demand for family housing and explore ways to encourage the development of more, and more affordable, three-bedroom units.” And the city recently created a municipal Affordable Housing Agency.
City policy for neighbourhood community plans has lately required a minimum of 25 per cent of private market units be developed as two and three-bedroom units.
Postma notes a large percentage of “family units,” with three bedrooms, has been incorporated into an expansive new development around Oakridge Mall.
Families in European cities have long been living in condo-type developments. But in North America, condos have been viewed mainly as a housing option for singles or young couples, a stepping stone to buying a home.
Accordingly, most units were built small, targeted to singles, renters and flippers. In recent years, the average size of units has been increasingly smaller with the popularity of the micro suite.
That was bound to change as population density increased. Toronto is now experiencing a similar dilemma, a shortage of condos suited to families as its version of Manhattanization occurs.
Motivation to reside in a condo rather than a house may have much less to do with proximity to a Starbucks than to the imperative of finding affordable housing.
According to the Real Estate Board of Greater Vancouver, the benchmark price for a detached home on the west side of the city last spring was $2.2 million, and $918,900 on the east side.
West side condo units typically cost $493,700, and average $320,300 on the east side.
Expect to see more children around, pushing all those elevator buttons.

Wednesday, August 6, 2014

Canadians' Household Debt Grows

Canadians increased their debt burdens by about six per cent over the past year, according to a new survey from BMO, but when it comes to owing money, different parts of the country are headed in different directions.

Western Canadians have seen their debts skyrocket over the past year, BMO says, with Alberta taking the lead. The average houshold debt there soared 40 per cent, to $124,838. It's the highest debt burden of any region in Canada.

British Columbians’ average household debt jumped 26 per cent, to $99,834, from $79,089.

Much of the growth in home prices and sales in recent months has been concentrated in three markets -- Calgary, Toronto and Vancouver.

Those rapidly growing home sales numbers also help to explain why a larger number of Canadians hold mortgage debt today than last year.
The number of households with mortgage debt grew by 13 per cent in the past year, BMO’s survey found, to 43 per cent of all households.

Tuesday, August 5, 2014

Home buyers continue to slightly outpace sellers, but not by much

The Greater Vancouver housing market continues to see slightly elevated demand from home buyers, steady levels of supply from home sellers and incremental gains in home values depending on the area and property type.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 3,061 on the Multiple Listing Service® (MLS®) in July 2014. This represents a 3.9 per cent increase compared to the 2,946 sales recorded in July 2013, and a 10.1 per cent decline compared to the 3,406 sales in June 2014.

"This is the fourth consecutive month that the Greater Vancouver market has exceeded 3,000 sales,” Darcy McLeod, REBGV president-elect said. “Prior to this, our market had not surpassed the 3,000 sale mark since June of 2011.”

Last month’s sales were 3.8 per cent above the 10-year sales average for July of 2,948.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver* is currently $628,600. This represents a 4.4 per cent increase compared to July 2013.

“Today’s activity continues to put Metro Vancouver in the upper reaches of a balanced real estate market,” McLeod said.

The sales-to-active-listings ratio currently sits at 19.6 per cent in Metro Vancouver. This ratio has ranged between 18 and 20 per cent over the last four months.

New listings for detached, attached and apartment properties in Metro Vancouver totalled 4,925 in July. This represents a 1.5 per cent increase compared to the 4,854 new listings in July 2013 and a 7.8 per cent decline from the 5,339 new listings in June.

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 15,617, a six per cent decline compared to July 2013 and a 2.5 per cent decrease compared to June 2014. 

Sales of detached properties in July 2014 reached 1,322, an increase of 5.8 per cent from the 1,249 detached sales recorded in July 2013, and a 68 per cent increase from the 787 units sold in July 2012. The benchmark price for detached properties increased 6.5 per cent from July 2013 to $980,500.

Sales of apartment properties reached 1,212 in July 2014, an increase of 0.2 per cent compared to the 1,210 sales in July 2013, and a 30.7 per cent increase compared to the 927 sales in July 2012. The benchmark price of an apartment property increased 2.2 per cent from July 2013 to $376,500.

Attached property sales in July 2014 totalled 527, an 8.2 per cent increase compared to the 487 sales in July 2013, and a 37.2 per cent increase over the 384 attached properties sold in July 2012. The benchmark price of an attached unit increased 3.4 per cent between July 2013 and 2014 to $472,400.

Friday, August 1, 2014

How a homebuyers’ ‘bellwether’ is buoying optimism in Canada’s housing market

Genworth MI Canada Inc. and Home Capital Group Inc. reported profits that beat analysts’ estimates as low interest rates drive demand for Canadian homes.
Canada’s residential housing market has drawn concern from regulators and economists who say it may be 20% overvalued and that consumers are taking on too much debt. The low losses at Genworth show Canadians aren’t having trouble paying off their mortgage debt, while the increased origination highlights strong demand.
Home Capital, the country’s largest alternative mortgage provider, also beat analysts’ earnings estimates and increased its dividend to 18 cents a share. First National Financial Corp., the largest non-bank mortgage lender and underwriter, increased originations 12% over last year to $4.7 billion.
Genworth’s profit excluding some items was $1.04 a share, the Oakville, Ontario-based company said, beating the 93-cent average estimate of nine analysts surveyed by Bloomberg. Loan losses declined to 12%, a record low. Genworth forecast that loss ratio will rise to a range of 15% to 25% for the year.
Stable Market
“The housing markets are performing well,” Genworth Chief Executive Officer Brian Hurley said in an analyst conference call. “The interest rate environment is stable and looks to stay that way for a while.”Bank of Montreal analyst Tom MacKinnon raised his rating on Genworth to an outperform from market perform after the results were announced.
Genworth Chief Operating Officer Stuart Levings cited Vancouver and Toronto as cities that are facing affordability pressure. Toronto’s home prices soared more than 76% in the last 10 years and Vancouver prices rallied 4.4% in June over the previous year to $800,689.
“The Canadian consumer has been able to service their debt,” LeBlanc said. “Even though debt levels in Canada are increasing, we’re seeing really low defaults. You’re not seeing strain there.”
Genworth rose 0.9% to C$39.60 at 10:34 a.m. in Toronto. First National fell 1.8% to C$23.42. Toronto- based Home Capital climbed 0.9% to C$51.93, after earlier reaching a record high.