Category: B.C. Real Estate News

By Raphael Alexander, Vancouver Sun

I wrote in early January about the “bubble” economy in British Columbia, which, despite the Olympics-related building, still resulted in a massive collapse in the construction industry in tandem with the recession. Construction jobs contracted by 11.9 per cent in the province in 2009, as we were one of the last districts in Canada to feel the effects of the global economic meltdown.

Although January construction numbers are up to 198,600 jobs, it is below the 202,100 jobs from a year ago, and a far cry from the 220,800 jobs during the boom.

The good news is that new construction is on the rise in the province, with the seasonally adjusted annual rate of housing starts reaching 186,300 units in January, a 5.8-per-cent increase from December.

That’s much better than the 149,081 housing units to begin 2009, but the construction starts have progressed steadily until now, according to the Canada Mortgage and Housing Corp. It’s even better than the figure that economists from financial institutions had been predicting.

In cities, housing starts are up 4.4 per cent, and within those numbers the increase of multiple urban starts [like condos] also increased by 5.7 per cent. All of those numbers show a recovery from the recession, with confidence in the housing market improving, and home sales rising again.

But the victory may be short-lived, with experts predicting the bubble will pop when the harmonized sales tax kicks in on July 1.

Home buyers will likely advance their demand for houses before the HST is implemented, meaning fewer purchases in late 2010 and early 2011.

This is forecast by the Canadian Real Estate Association itself, which says that not only the 12-per-cent HST, but also higher interest rates, which must inevitably rise after historically prolonged lows, will push real estate down in 2011.

B.C.’s housing resale market is forecast to jump 19.8 per cent for 2010, with average home prices going up by 4.2 per cent to $485,500. But the bulk of those sales will be before the HST and the Bank of Canada interest rate revisions.

Interest rate increases are likely to further dampen the housing market in 2011, with an expected decline of 7.1 per cent in the number of units sold. B.C.’s market is forecast to see the largest decline of 12.9 per cent to 88,800 units sold in 2011.

Even though the market is expected to fall in 2011, the prices of homes in B.C. are expected to decline only 1.8 per cent, meaning that investors will still be making a profit with the dip. That means there’s no relief for homebuyers who were hoping the astronomical prices of an average home in Vancouver would go down.

The median sale value of a home in Vancouver in 2009 was $540,900, while median household income was $58,200. According to The Demographia International report which calculates home affordability in an index that divides the price of a home by household income, Vancouver is the most expensive city among 272 metropolitan markets in Canada, the U.S., the U.K., Australia, New Zealand and Ireland.

The “Median Multiple” gives Vancouver an index of 9.3 in affordability, much higher, for instance, than Kamloops, where the median family income is $67,434 while the price of a home is $257,242, giving a Median Multiple of 3.8.

 

From the Vancouver Sun.

The mortgage-rate fuelled bounce back of British Columbia real estate in 2009 has probably used up most of the market’s growth for 2010 and 2011, according to a new estimate from the B.C. Real Estate Association.

Association chief economist Cameron Muir is forecasting province-wide sales in 2010 to increase only three per cent above the hot 2009 results to 90,100 sales in 2010, then slip back three per cent to 87,500 units in 2011.

The provincial average price, Muir is forecasting, will advance five per cent to $490,900 in 2010 then eke out just one-per-cent growth to $494,800 in 2011.

Muir characterized his forecast as 2009 ending with a “gold medal finish, [which] will give way to a silver medal performance in 2010.”

“Affordability is the biggest factor over the longer term,” Muir added in an interview, “because home prices in markets such as Victoria and Vancouver are trending on record levels, and mortgage rates are likely to edge higher at the end of this year and through 2011.

“That’s going to increase the carrying cost of housing, and by extension, overall housing demand.”

Home carrying costs, the monthly mortgage payment, taxes and other fees, saw a dramatic trim during the downturn that lasted through the last half of 2008 and first part of 2009, but Muir noted that that advantage is rapidly disappearing.

In his forecast, Muir estimates that the markets that roared back the most in 2009 — Metro Vancouver, the Fraser Valley and Victoria — will be among those with the most muted results in 2010 and 2011.

Some great news! Interest rates are definitely helping. What do you think will happen when interest rates inevitably go up?

VANCOUVER — B.C. home sales in November climbed 165 per cent over the same month last year to 7,182 units, the B.C. Real Estate Association (BCREA) reported Wednesday.

The month reflected the highest number of residential sales for November since 2005, when 7,721 units changed hands.

“Since the beginning of the year, we’ve seen a dramatic rebound in sales in the province, led by Greater Vancouver, Victoria and the Fraser Valley,” BCREA chief economist Cameron Muir said in an interview.

“It’s been driven by first-time buyers getting into the market due to increased affordability and low mortgage rates. A lot of it is because of the pent-up demand that welled up last fall and winter.”

Muir said the elevated sales level in November was largely regional.

“There’s a dichotomy in the province, [with] significant regional differences. There was a very strong seller’s market on the coast, with upward pressure on prices. But in the Okanagan and the Kootenays, the market is now just trending towards balanced conditions, meaning stabilized prices.

“Prices today [in Greater Vancouver, Victoria and the Fraser Valley] are beginning to scratch record levels, but certainly not elsewhere in the province.”

Muir also said that despite the high sales numbers, the BCREA expects consumer demand to moderate in the new year as pent-up demand is largely expended and higher costs erode affordability.

“Going forward, sales levels [in Greater Vancouver, Victoria and the Fraser Valley] will come off their lofty heights as pent-up demand is drawn down. In 2010, sales will more closely reflect the moderate recovery.”

According to a BCREA news release, the year-to-date MLS residential sales dollar volume increased 21 per cent to $36.8 billion over the same period last year. A total of 79,325 units were sold in the first eleven months of 2009, up 19 per cent from 2008, while the average price increased two per cent to $463,555.

Greater Vancouver saw a 252-per-cent increase in the number of units sold compared to November 2008, from 889 to 3,133; the Fraser Valley a 192-per-cent increase, from 483 to 1,409; the Okanagan Mainline a 104-per-cent increase, from 219 to 447; and Victoria a 165-per-cent increase, from 2,707 to 7,182.