Tuesday, September 30, 2014

BCREA ECONOMICS NOW Canadian Monthly GDP (July) - September 30, 2014

Growth in Canadian economy was essentially flat in July following six consecutive monthly increases. Contributions to growth at the industry level were made from manufacturing, government, and construction while notable declines were recorded in mining and oil and gas extraction.

Based on the first month of GDP data for the third quarter, we would estimate that the Canadian economy grew a modest 2 to 2.5 per cent from July to September. That would mark a significant slowdown from the second quarter mark of 3.2 per cent and provides cover for the Bank of Canada to keep rates unchanged for quite some time.
“Copyright British Columbia Real Estate Association. Reprinted with permission.” 

Monday, September 29, 2014

Vancouver rental prices becoming more and more unaffordable

A Colliers International (Commercial Real Estate Broker) report released recently on valuations of multi-family properties across the country states: “Vancouver has tended to demonstrate the highest rental rates in most, if not all, unit categories of multi-family housing.”
This is doubtless attributable to the fact apartment buildings, on a per-suite basis, are more expensive in Vancouver than anywhere else in Canada.
Reports Colliers: “The highest price per door in Canada can be found in Vancouver with prices increased just under nine-per-cent  compared to  last year’s figure.”
Vancouver also has one of the tightest rental markets in Canada, with a vacancy rate of just 1.8 per cent.
For anyone hoping for some relief, Colliers warns: “The Metro Vancouver multi-family investment market will remain one of strong demand and very limited supply.”
B.C. rent controls permit annual increases totalling the inflation rate, plus two per cent, 3.8 per cent in 2013, 4.3 per cent in 2012.
 Now laneway houses renting for more than $2,000 a month, a basement suite renting for $2,100 a month, and one 500-square-foot apartment, “described as spacious,” renting for $1,500 a month.

Tuesday, September 23, 2014

No fear of housing bubble: CMHC

Prices of some Canadian homes are certainly too high, but there is no immediate catastrophe looming for the country’s housing market, the head of Canada Mortgage and Housing Corp. suggested in a speech Friday.
Evan Siddall, who has been the CEO of CMHC since January, was speaking at a conference in Montreal held by the Global Risk Institute.Here are the key points that Canadian homeowners and financial players should take away from his remarks:
1. CMHC isn’t “overly” worried about a housing bubble right now – but that comes with two caveats.
CMHC has a tool, which it calls the Housing Price Analysis and Assessment framework, that it uses to gauge the housing market. The framework takes into account (a) overheating of demand in the market, (b) acceleration in prices, (c) overvaluation in prices, and (d) overbuilding. (CMHC intends to make the framework publicly available at some point.) At the moment, the framework shows that “despite some overvaluation, there are no immediate problematic housing market conditions at the national level,” Mr. Siddall said. “Our educated opinion is that growth in house prices in Canada will moderate,” he added.One caveat, however, is that CMHC’s assessment is based on what it knows, and Mr. Siddall is the first to admit that some important pieces of information are missing. To deal with that problem, CMHC has created a “data gaps” working group.
The second caveat, Mr. Siddall pointed out, is that the framework is “based on the assumption that the world of the future will unfold like the world of the past … (and it) cannot capture market conditions that may unfold differently.”
2. CMHC is still looking at having banks shoulder more of the risk from mortgage defaults.
Mr. Siddall reiterated his views on this subject. He told the Globe and Mail’s editorial board in June that a deductible for mortgage insurance is a “pretty good idea.” The mortgage insurance that CMHC and its two competitors sell repays banks when consumers default on their mortgages. At the moment it makes the banks whole. The OECD has called for changes to the system to ensure that lenders take on more of the risk. In other countries with mortgage insurance, the product tends to only cover 10 to 30 per cent of the losses. In his speech, Mr. Siddall said that CMHC is evaluating “risk-sharing with lenders to further confront moral hazard” and is advising the government about its thoughts.
3. CMHC is considering what it could do to take some steam out of the market if house price growth remains strong or picks up.
CMHC would likely advise Ottawa about actions it believes would be wise, rather than taking action itself, and the ultimate decision would be up to the Finance Minister. Any moves could be similar to the mortgage insurance rule changes the government has imposed four times since 2008 to tighten the market. (The most recent changes, in July 2012, included cutting the maximum amortization on insured mortgages to 25 years from 30.) However, Mr. Siddall said further moves would only be necessary, in his opinion, if CMHC is wrong about house prices. (See #1 above: He expects prices to moderate, not rise).
4. CMHC may start to publish the results of its stress tests.
Financial institutions go through numerous stress tests, often at the request of regulators, to see what would happen to their portfolios in various hypothetical situations.
“We are actively considering the merits of publishing our stress testing results to gain insights from others and better inform Canadians about CMHC,” Mr. Siddall said. “For now, I am pleased to report that our stress testing confirms that CMHC would survive a 2008-2009 U.S.-type housing and financial crisis, if that were to occur in Canada. Further, our analysis suggests that we have sufficient capital to withstand a severe and prolonged economic recession.”

BCREA ECONOMICS NOW Canadian Retail Sales - September 23, 2014

Canadian retail sales declined 0.1 per cent in July following six consecutive monthly increases. Sales were lower in 5 of 11 retail sub-sectors.  In inflation-adjusted terms, retail sales were flat.  

In BC, retail sales fell 0.4 per cent on a monthly basis, but were 6.4 per cent higher compared to one year ago. Through the first seven months of the year, retail sales in BC are up a robust 5.7 per cent.  At that pace, retail sales on on pace for their fastest growth since 2007. 
“Copyright British Columbia Real Estate Association. Reprinted with permission.” 

Friday, September 19, 2014

BCREA ECONOMICS NOW Canadian Consumer Price Inflation - September 19, 2014

Canadian consumer prices rose 2.1 per cent in the 12 months to August, matching the rate of inflation in July. The Bank of Canada's core measure of inflation, which excludes volatile prices such as energy and food products, ticked 0.4 points higher to 2.1 per cent. Consumer prices in BC rose 1.4 per cent.

While CPI inflation has been trending close to the Bank of Canada's 2 per cent target, the jump in core inflation pushed that measure above 2 per cent for the first time since 2012. That surge in core inflation will likely put some pressure on long-term interest rates, particularly if it proves to be more than a transitory blip in prices. 
“Copyright British Columbia Real Estate Association. Reprinted with permission.” 

Why the Bank of Canada will keep interest rates low

On September 3, the Bank of Canada announced that it was holding its trend-setting overnight lending rate at one per cent. The overnight rate has not moved in four years. It’s likely that it will remain where it is for some time yet. Why?
  1. Inflation is on target – Inflation recently increased and is tracking close to the Bank’s two per cent target. However, the Bank believes the increase reflects temporary factors and cited evidence in support of this in its policy rate announcement. As a result, it does not see interest rate hikes as being necessary to rein it in. Instead, the Bank thinks inflation will keep itself in check as temporary factors dissipate.
  2. Uncertainty remains high – While the U.S. economic recovery appears to be back on track after a dismal first quarter, European economic growth has faltered due in part to its trade sanctions with Russia. This means low interest rates are still needed to support Canadian economic growth while question marks loom about the outlook for global economic growth, demand for Canadian exports, and Canadian economic growth.
  3. Canadian exports need help from the currency exchange rate – The Bank rate announcement noted that “Canadian exports surged in the second quarter.” The reasons cited were strengthening U.S. investment and “the past depreciation of the Canadian dollar.” Hiking interest rates too soon would result in a stronger loonie and dampened Canadian exports. The Bank is counting on stronger exports to lift business investment and economic growth.
  4. Higher exports have not yet translated into stronger investment or hiring – The Bank was pleased to see the pickup in exports but noted, “While an increasing number of export sectors appear to be turning the corner toward recovery, this pickup will need to be sustained before it will translate into higher business investment and hiring.” As such, interest rates will need to remain stimulative in order to entice firms into increased investment and hiring even if exports remain strong.
With these reasons in mind, interest rates are unlikely to rise in the near future.
One notable change in language in the September 3 announcement was the removal of any references to a soft landing in the housing market. The Bank said that the housing market has in fact remained stronger than previously anticipated and that risks associated with household imbalances have “not diminished.”
That said, it is possible that stronger U.S. growth, a surge in exports, and the current strength of the housing market could all reflect a rebound from weak performances this past winter, which was unusually harsh.
As such, the Bank said that it remains “neutral with respect to the next change of its policy rate,” and will wait for new information as regards their outlook and assessment of risks to economic growth and inflation.
As of September 3, the advertised five-year lending rate stood at 4.79 per cent, unchanged from the previous Bank rate announcement on July 16, and down 0.55 percentage points from the same time one year ago.
The next interest rate announcement will be on October 22 and will be accompanied by an update to the Monetary Policy Report which contains the Bank’s outlook for the economy and inflation, risks to its economic projections, and an update to its estimate for potential Canadian economic growth.
Source: Canadian Real Estate Association

Thursday, September 18, 2014


US housing starts fell 14 per cent in August to a seasonally adjusted annual rate (SAAR) of 956,000.  For the first 8 months of the year, US new home construction has averaged 976,000 units (SAAR), an increase of 8.1 per cent over 2013. However, housing starts remain well below the 1 million mark most economists expected new home construction to exceed in 2014.

 New home construction in the United States has been somewhat slower than expected in 2014, which has meant slower growth in exports of BC wood products.  While the turnaround in the US housing market has been frustratingly slow, it will be a key source of economic growth for BC in years to come as our forestry sector recovers and eventually thrives.
“Copyright British Columbia Real Estate Association. Reprinted with permission.” 

Wednesday, September 17, 2014

Should you take a big mortgage?

According to the Canada Mortgage and Housing Corporation the average house price across Canada is expected to reach $396,000 in 2014 and $402,000 in 2015 . Since higher house prices mean larger mortgages, how can we determine just how much mortgage is too much of a risk?
The "cash flow" answer is that if you can't afford the monthly mortgage payment (and property taxes, and repairs and maintenance) your mortgage is too big. The "equity" answer is that if you have less than 10 per cent equity in your house, you are at higher risk of financial problems.
The statistics show:
More than nine in 10 insolvent homeowners had mortgage debt exceeding 80 per cent of the value of their home, which is  the traditional definition of a high risk mortgage. Worse, seven in 10 had less than 10 per cent equity and 64 per cent reported having no net realizable value in their home at all.
A homeowner who files bankruptcy typically has a mortgage equal to 95 per cent of the value of their house. If you hold a mortgage above 90% of the value of your home and you are at significant risk of filing for insolvency.
If you have a lot of equity in your house, you can weather a financial setback. 
Simple example: 
If you have a $200,000 house with a $125,000 mortgage and your income drops, you can decide to sell your house, pocket $75,000 (before selling costs), buy or rent a smaller home, and live on the difference until your financial situation improves.
If your $200,000 house has a mortgage of 90 per cent, or $180,000, you have no margin for error. You probably can't sell your house and generate enough money to pay off the mortgage and pay the penalty to break the mortgage, real estate commissions, legal fees, and other selling expenses. The solution is to turn to the use of credit cards and lines of credit to make over-extended mortgage payments and pay your living expenses. That is why, in addition to a high risk mortgage, insolvent homeowners end up owing on average $73,000 in other unsecured debts as well. It is this debt, on top of too much mortgage debt, that becomes the tipping point into insolvency.
These numbers put into question the conventional practice that Canadians can qualify for a high-ratio insured mortgage with as little down as 5 per cent. While Canada Mortgage and Housing Corporation has continued to tighten mortgage insurance guidelines, the question is are these changes enough? Neither has to date addressed issues like lowering the amortization period below 25 years or increasing the minimum deposit for high risk lenders.
 Canadian, with an average income, is significantly at risk if their mortgage surpasses the 90 per cent threshold. 
Individual homeownernshould  not  rely on the CMHC, or the  bank, to tell you what you can afford. There is no law that says you must borrow the maximum amount possible. Everyone should  purchase within their ability to service the mortgage. 

Tuesday, September 16, 2014


Canadian Manufacturing Sales - September 16, 2014
Canadian manufacturing sales increased 2.5 per cent in July to $53.7 billion, surpassing the previous record monthly dollar volume set in July 2008.  Sales were higher in 16 of 21 manufacturing sub-sectors.

In BC, manufacturing sales were up 0.2 cent on a monthly basis, and were 10.4 per cent higher year-over-year.   Through the first seven months of the year, manufacturing sales are 6.3 per cent higher than last year. The durable goods sector, which includes wood products, mineral products and machinery and equipment manufacturing, has bounced back from a slow start, growing 2.8 per cent year-to-date
. Non-durable goods like paper, clothing, and food manufacturing, have posted 10.6 per cent growth compared to 2013. 

The manufacturing sector is one of the largest employers in British Columbia. Growth in sales should help drive employment and household income gains in markets with a large manufacturing base, which in turn will ensure a strong local housing markets.
 “Copyright British Columbia Real Estate Association. Reprinted with permission.”

Friday, September 12, 2014

No Vacation for Home Buyers in August

Vancouver, BC – September 12, 2014.  The British Columbia Real Estate Association (BCREA) reports that a total of 7,341 residential sales were recorded by the Multiple Listing Service® (MLS®) in August, up 7 per cent from August 2013. Total sales dollar volume was $4.1 billion, an increase of 12.4 per cent compared to a year ago. The average MLS® residential price in the province rose to $560,318, up 5 per cent from the same month last year.

“Consumer demand remained relatively robust in August,” said Cameron Muir, BCREA Chief Economist. “The Okanagan and Chilliwack board areas posted the strongest year-over-year gain of 22 to 25 per cent in unit sales, while Victoria and Vancouver increased around 10 per cent respectively.” Home sales last month were the highest for the month of August since 2009.
“Low mortgage rates, increased net-migration and improving economic conditions continue to underpin housing demand in the province,” added Muir.
Year-to-date, BC residential sales dollar volume was up 22.8 per cent to $28.5 billion, compared to the same period last year. Residential unit sales were up 15.8 per cent to 57,715 units, while the average MLS® residential price was up 6.1 per cent at $564,466.

Tuesday, September 9, 2014

Canadian Housing Starts - September 9, 2014

The pace of new home construction in Canada slowed in August, falling 3.7 per cent to 192,368 units at a seasonally adjusted annual rate (SAAR).  The six-month trend in Canadian housing starts sits at 189,837 units SAAR. 

Housing starts in BC urban centers jumped 31 per cent in August on a monthly basis to 33,631 units SAAR.  On a year-over-year basis, housing starts were up 31 per cent compared to August 2013. Single-detached starts were up 6 per cent while multiple units were up 43 per cent compared to this time last year. Year-to-date, total BC housing starts are 8 per cent higher than 2013. 

Looking at census metropolitan areas (CMA) in BC, total starts in the Vancouver CMA were up sharply following consecutive double digit declines in June and July. Vancouver starts rose 50 per cent from August 2013, led by a 67 per cent increase in multiple starts. Year-to-date, Vancouver housing starts are up 6 per cent. In the Victoria CMA, new home construction tumbled 52 per cent year-over-year. Year-to-date, housing starts in Victoria are down 15 per cent. New home construction in the Kelowna CMA pick-up once again in August, rising 46 per cent year-over-year on balanced growth between single and multiple starts. Year-to-date, housing starts in the Kelowna CMA are up 45 per cent . Housing starts in the Abbotsford-Mission CMA showed significant strength for the second straight month, more than doubling the pace set last August.  However, year-to-date, new home construction in the Abbotsford-Mission CMA is down 20 per cent.

Friday, September 5, 2014

Broad-based consumer demand lifting BC housing markets

Multiple Listing Service® (MLS®) residential sales in British Columbia are forecast to increase 9.8 per cent to 80,100 units this year, after increasing 7.8 per cent to 72,936 units in 2013. This will be the first time in five years that annual MLS® residential sales will eclipse the 80,000 threshold, reaching the 15-year average. After a relatively weak first quarter, home sales rose sharply in the second quarter as record low mortgage interest rates and relatively stronger economic conditions helped invigorate consumer confidence.
chartRising consumer demand is broad-based across the province. While demand in the South Coast markets quickly bounced back after the recession, many Interior markets struggled to achieve even a modest level of home sales. That dynamic is now changing as some of the strongest gains in unit sales this year are expected in the Okanagan and the Kootenays.
Economic conditions in the province are on an upward trend. Retails sales are now rising at the pre-recession average; total net migration is rebounding and expected to climb by 14 per cent this year, while interest rates continue at rock bottom levels. In addition, stronger global economic growth both this year and next will lead to rising demand for BC exports. Exports to the US are already up more than 12 per cent this year. More robust economic growth is expected to turn around the anemic pace of job creation and further bolster overall housing demand. MLS® residential sales are forecast to increase a further 4 per cent to 83,300 units in 2015. For comparison, a record 106,300 MLS® residential sales were recorded in the province during 2005.
The housing stock is generally expanding alongside overall population and household growth. While imbalances exist in many localized markets, a rapid acceleration in residential construction activity appears to be unlikely through 2015. After increasing 1 per cent to 27,000 last year, housing starts are expected to increase 1.8 to 2 per cent both this year and next, with total housing starts cresting at 28,000 units in 2015.
Market conditions around the province are now on a much stronger footing than at the start of the year. Most BC real estate board areas are exhibiting balanced conditions, with Vancouver, the Fraser Valley and the Okanagan beginning to flirt with sellers’ market conditions. The average MLS® residential sales price is forecast to rise 5.6 per cent to $567,300 this year, on the strength of the detached market. Stronger demand for condominiums in 2015, combined with an edging up of interest rates is expected to keep the provincial average price statistic increasing in the 1 to 2 per cent range.

Canadian and US Employment - September 5, 2014

Canadian employment declined by 11,000 jobs in August. Both  full-time and part-time employment were down while total hours worked, which is closely associated with economic growth, was unchanged.  The national unemployment rate remained at 7 per cent.

The BC economy eked out a modest 1,800 hundred jobs in August, however those gains were all in part-time work. Full-time employment declined by 14,400. In spite of slightly higher employment, the provincial unemployment rate ticked 0.2 points higher to 6.1 per cent as the number of people looking for work expanded by 8,200. Year-to-date, employment in BC is up just 0.5 per cent.

In the United States, payrolls were up 142,000, well off of market expectations and below 2014 trend growth over 215,000 jobs per month.  The US unemployment rate fell to 6.1 per cent. 
“Copyright British Columbia Real Estate Association. Reprinted with permission.” 

Thursday, September 4, 2014

Tree issues stalling investor plans

Tree issues stalling investor plans
Fighting the City on building permits and other big issues is commonplace but more investors are finding their projects stalled by debates over…trees.
Municipal departments naturally want to protect the urban trees for aesthetic and conservation values but their system and lack of communication is what is irking many investors.
“The city is very strict on trees around private properties and have many stipulations on how to deal with their growth. I do not blame them as it makes the whole neighbourhood look more appealing,” says Sahil Jaggi, a Toronto-based investor that is currently undertaking a renovation project in North York.
“It is this issue that is delaying my project,” he says. “It’s just that we have to go through four or five departments to get a solution and there is no communication or coordination between each so we are getting moved around from one to another. It’s very time consuming and costly to me.”
Despite some trees being on privately held properties, many are protected and regulated under the provisions of municipal by-laws.
The private tree by-law protects all species of trees with a diameter of 30 centimetres (12 inches) or greater measured at 1.4 metres (4 ½ feet) above the ground. It applies to trees on all land use types including, single family residential.

Vancouver single-family detached homes hit record high prices

Greater Vancouver and Fraser Valley home buyers have pushed up prices for single-family detached houses to record highs.
The benchmark home price index hit $984,300 last month for detached properties sold in Greater Vancouver, up 6.6 per cent from August, 2013. In the Fraser Valley, which includes the sprawling and and less-expensive Vancouver suburb of Surrey, the detached price index climbed 3.4 per cent to $569,800 over the past year.
The record-high prices for detached houses will prompt more consumers, especially first-time home buyers, to shop for townhouses and condos, said Shaadi Faris, vice-president at Vancouver-based Intergulf Development Group.
Some baby boomers are selling their large detached homes and moving into condos while helping their children with down payments, fuelling the rally in housing prices in Greater Vancouver, Mr. Faris said in an interview Wednesday. “Locals have built up equity and are downsizing,” he said.
A variety of factors have led to property prices reaching new highs, including low interest rates, a stable economy and an influx of residents from other provinces and countries, real estate experts say.
Intergulf has been getting interest on its various projects primarily from prospective buyers who will live in their units. While there are many inquiries from long-time Vancouverites and people with recent ties to China, there are a small number of outright foreign investors, Mr. Faris added.
Intergulf began construction in early 2014 on its Empire at QE Park condo and townhouse project near Queen Elizabeth Park on Vancouver’s west side.
The index price for existing detached homes on Vancouver’s west side rose 9.7 per cent over the past year to $2,282,400, while increasing 10.3 per cent to $936,500 on the east side.
By contrast, the index price for condos on the west side reached $495,900 in August, up 5.7 per cent from the same month last year. Condo prices on the east side posted a 3.1-per-cent increase year-over-year to $313,400.
The Real Estate Board of Greater Vancouver said the region’s housing sales rose to 2,771 in August, up 10.2 per cent from a year earlier and 4.3 per cent higher than the 10-year average for the month.
“Activity this summer has been strong but not unusual for our region,” Greater Vancouver board president Ray Harris said in a statement.
In the Fraser Valley, townhouse prices nudged up 0.1 per cent to $298,500 over the past year, but condo prices fell 3.5 per cent to $196,700.
Fraser Valley board president Ray Werger said many first-time buyers in the suburbs are able to afford townhouses or smaller detached homes, including new developments in Cloverdale and Langley.

Wednesday, September 3, 2014

Housing market 10% overvalued in Canada amid condo risks, data uncertainty: TD executive

Canada’s housing market is 10% overvalued, with the biggest risks in condominium overbuilding and uncertainty over how many investors are buying, but the risk of a U.S.-style collapse is low, a top executive at Canada’s second largest bank said on Monday.
Lisa Reikman, chief risk officer of Canadian banking at Toronto-Dominion Bank, said a spike in interest rates or unemployment could threaten Canada’s robust housing market, but the risk is fairly low.
Instead, TD Bank, one of the country’s top three mortgage lenders and a growing retail banking presence on the U.S. East Coast, is watching house appreciation and the growing supply of condominiums.
“The high-rise condo market is an area we’re certainly watching closely, and I think all of the other banks, as well and the regulator, (are watching),” Ms. Reikman said in an interview.
“Just by virtue of the fact there is a lot of new construction of high-rise condos, and there are some questions around … how many of those are being purchased by investors as opposed to people (who) are actually living in them as a primary residence,” she told Reuters.
Foreign investors have helped drive up Canadian real estate prices by parking their money in relatively cheap and plentiful real estate, but some fear that a sudden withdrawal of investors could leave a glut of condos and falling prices.
Ms. Reikman said the banks do not have much better data on  investors than anyone else does.
“The data on that is less than perfect, so we don’t have a perfect line of sight … we rely on the buyer to basically be upfront and let us know if they are buying it to own or if they are buying it as an investment property,” she said.
“You’ll find that that’s probably one area that all the banks will say is difficult to tell, as will the builders.”
While foreign observers, including the International Monetary Fund and the Organisation for Economic Co-operation and Development, have warned that Canada’s housing market is among the most overvalued in the world, the nation’s major banks have been more sanguine, saying there are structural reasons why the high prices are mores sustainable than they may appear.
“We think the (overvaluation) number might be — generally across the Canadian market — maybe about 10%, as opposed (to) the numbers we’ve seen from some of (those) external to Canada, anywhere between 30-to-60%,” she said.
The Canadian market cannot be compared to the U.S. sector before its collapse due to several factors: Canada’s requirement of insurance for mortgages with less than 80% loan-to-value; conservative underwriting standards; a tiny subprime market, and Canadian lenders typically keeping mortgage on their books, Ms. Reikman said.
“We look at all of those things and think there are some pretty fundamental reasons why the U.S.-style collapse can’t happen here or is highly unlikely to happen here,” she said.

Housing market activity follows 10-year August averages

The Metro Vancouver housing market experienced steady home sale, listing, and pricing trends for the month of August.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 2,771 on the Multiple Listing Service® (MLS®) in August 2014. This represents a 10.2 per cent increase compared to the 2,514 sales recorded in August 2013, and a 9.5 per cent decline compared to the 3,061 sales in July 2014.

“Activity this summer has been strong but not unusual for our region,” Ray Harris, REBGV president said. “The volume of home sales has been higher than we’ve seen in the last three years, yet below the record-breaking levels of the past decade.”

Last month’s sales were 4.3 per cent above the 10-year sales average for August of 2,658.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver* is currently $631,600. This represents a 5 per cent increase compared to August 2013.

“Broadly speaking, home prices in the region are continuing to experience modest, incremental gains,” Harris said.

New listings for detached, attached and apartment properties in Metro Vancouver totalled 3,940 in August. This represents a 5.9 per cent decline compared to the 4,186 new listings in August 2013 and a 20 per cent decline from the 4,925 new listings in July. Last month’s new listing total was 8.4 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 Metro Vancouver is 14,768, a 7.9 per cent decline compared to August 2013 and a 5.4 per cent decrease compared to July 2014.

Sales of detached properties in August 2014 reached 1,158, an increase of 10.1 per cent from the 1,052 detached sales recorded in August 2013, and an 85.6 per cent increase from the 624 units sold in August 2012. The benchmark price for detached properties increased 6.6 per cent from August 2013 to $984,300.

Sales of apartment properties reached 1,126 in August 2014, an increase of 10.6 per cent compared to the 1,018 sales in August 2013, and a 55.3 per cent increase compared to the 725 sales in August 2012. The benchmark price of an apartment property increased 3.6 per cent from August 2013 to $379,200.

Attached property sales in August 2014 totalled 487, a 9.7 per cent increase compared to the 444 sales in August 2013, and a 62.3 per cent increase over the 300 attached properties sold in August 2012. The benchmark price of an attached unit increased 3.9 per cent between August 2013 and 2014 to $474,900.

Bank of Canada Interest Rate Announcement - September 3, 2014

The Bank of Canada once again opted to leave its target for the overnight rate unchanged at 1 per cent. In the statement accompanying today's announcement, the Bank noted that though inflation is close to its 2 per cent target, the recent pick-up in inflation was largely due to temporary factors as the Bank anticipated. In spite of stronger global and domestic economic growth last quarter, the Bank still expects excess capacity in the economy to be absorbed over the next 2 years and judges risks to its outlook to be balanced between higher inflation and still elevated household debt. Therefore, the Bank remains neutral with respect to timing and direction of its next change to the policy rate. 

As the Bank noted, economic growth exceeded expectations in the second quarter. However, the economy looks far more pedestrian if averaged over the entire first half of 2014.  Employment growth has been uneven and the Canadian unemployment rate remains stubbornly high. Therefore, the Bank is unlikely to be moved from its current stance after just one strong quarter of economic growth. We expect that the Bank will continue to take a cautious approach to monetary policy until it sees concrete signs that the economy is growing above trend. That means at least one more quarter of solid GDP growth paired with more steady employment gains, as well as similarly strong data in the United States. While the Bank left the door open to lower interest rates given its "neutral" stance, we still anticipate that the next move for interest rates will be upward, though not until 2015. 

Tuesday, September 2, 2014

Breathing easy when it comes to asbestos Be cautious or leave work to the pros

Renovations can be stressful for a homeowner, especially when dealing with an older home where asbestos may be hiding under old flooring or around heating ducts.
Before Madeleine Bragg and her husband bought their 1940s home in Fernie, B.C., they had it inspected for asbestos, which was commonly mined and used for its high tolerance to heat. Roof tiles and insulation were tested and the conclusion was their new home was free of asbestos.
Unfortunately it wasn't until they began renovating and were ripping up the old linoleum flooring in the kitchen that they discovered their home did, in fact, have asbestos.
Pulling up the flooring revealed a second layer of linoleum that had a paper lining containing asbestos.
"I was six months pregnant. I was flipping out," says Bragg. "I thought it was so awful and if I had known asbestos was in the house we wouldn't have bought it, or would have paid significantly less for it."
The couple looked into removing the asbestos themselves, but when they realized the costs of the disposal bags and having to ship it out of town to be properly discarded, they opted to have professionals do the job for them.
Mid-construction, the Braggs had to leave their home to be bagged and correctly treated before work could resume.
Summer Green, owner of RemovAll Remediation Services in Victoria, says it is possible for homeowners to do a smaller job themselves if they follow proper guidelines, such as those from WorkSafeBC.
"If it was my daughter, and her husband wanted to deal with asbestos on his own, I would say wet it down, follow the approved guidelines and they would probably be OK," says Green.
Many of the guidelines in place for abatement and removal are meant to protect construction workers and contractors who may come into contact with asbestos on a regular basis, but homeowners should be cautious and informed when removing asbestos.
According to Green, any home built before the 1990s could contain asbestos in the insulation and drywall and around boilers and pipes.
"Older houses are often heated by boilers and hot water registers," she says. "Those pipes were covered in asbestos, often 80 to 90 per cent asbestos. With forced air heating they used duct tape, but at that time it was asbestos tape. Any white tape you see on your ducts contains asbestos and they don't even bother testing it."
Many homeowners are unaware they have asbestos in their house until they become involved in a home renovation project where testing is required for work permits.
Green says it is possible for people to have lived in a house containing asbestos for many years without any health problems because issues arise only when asbestos fibres are released into the air.
"You can go up in an attic and breathe in fibreglass insulation and it can get in your lungs and it can cause problems, but with fibreglass insulation the fibres are straight fibres," says Green. "But with an asbestos fibre, no matter how small you make it or break it down, they are constantly splitting and have a barb on them."
Fibreglass fibres can be coughed out of someone's lungs, but with asbestos, Green says, fibres hook into the walls of your lungs and you can't get them out.
According to the Government of Canada, potential health problems from asbestos exposure include asbestosis (scarring of the lungs which makes it hard to breathe), mesothelioma (a cancer of the lining of the chest or abdominal cavity) and lung cancer.
The cost of removing asbestos has begun to affect not only the way homeowners proceed with renovations, but it can also affect the cost of purchasing and insuring a home.
"In real estate, inspectors are noticing asbestos in the insulation on the forced air ducts or pipes and homeowners have to deal with it before a house is sold," says Green.
"Mortgage companies are saying they won't finance until the asbestos is gone and insurance companies may not insure without a clearance letter

Tracking foreign buyers in Canada’s housing boom: Can we do it? Should we even care?

A third of people buying homes in Canada may be foreigners, says one real estate company. A leading economist says the number isn’t even 5%. The country’s housing agency says it has no idea what the actual number is.
There is no definitive answer to the persistent question about how much of the current Canadian housing boom is being driven by overseas buyers — as some eyes focus sharply on Mainland China.
Even at Canada Mortgage and Housing Corp., the percentage of foreign ownership in the Canadian housing market is a deep mystery. CMHC avoided the issue entirely this month, when it released a massive survey of more than 42,000 Canadian condominium households in Vancouver and Toronto.
“At this point in time, it is still very difficult to identify [overseas investors] as part of the survey,” said Bruno Duhamel, manager of economic and housing analysis at CMHC. “We are exploring what type of method could be used.”
The real issue may be even if we can pinpoint the number of people from outside Canada buying residential property, should we care? Canada has no restrictions on foreign property ownership and the federal government said as recently as last year it has no plans to implement any restrictions.
“If we are talking about people with connections to another country, it’s meaningless. I’m surprised it’s only 33% if it’s just a connection,” says Benjamin Tal, deputy economist with CIBC, referring to a survey by Vancouver brokerage Macdonald Realty that found of its 531 single family sales in 2013, 178 or 33.5%, were to buyers from Mainland China.
The Macdonald Realty results were produced by someone going through the transactions and identifying names the the company identified as Chinese, meaning the buyers may very well have been established Canadian citizens.
Mr. Tal’s own analysis, which he based on the CMHC data, information obtained from developers and his own bank’s business, suggests foreign investment is less than 5% of the condominium market in Toronto and Vancouver.
“It’s a solid market,” said Mr. Tal about the overseas buyers. “We are talking about people who are putting down 45%-50%. They are not getting CMHC mortgage insurance [backed by the federal government].”
So why all the fear and loathing about overseas buyers?
“I think ‘foreign’ sounds risky,” said Mr. Tal. “You ask people about them and it’s like ‘they’re the bubble, there is going to be a crash when they leave’.”
But demand can fuel price increases. If you feel housing prices are rising too fast, a high percentage of overseas buyers driving the market may be a legitimate gripe, concedes the economist.
Brian Johnston, chief operating officer of home builder Mattamy Homes, says the so-called foreign buyer fear has always been overstated.  “A lot of the capital comes from overseas, but the buyers are residents. There is also the phenomenon whereby someone (generally from Asia) gets their Canadian passport and then returns to their country of origin to make the real money (and taxed at much lower rates). Meanwhile, they have bought real estate here.”