The figures for August are in: Sales top $2 billion, again

Wyng Chow
Sun

Defying the traditional summer doldrums, residential property sales in B.C. totalled more than $2.2 billion in August, topping the once-elusive $2-billion mark for the sixth consecutive month.

Multiple Listing Service figures released Tuesday show 8,402 homes sold throughout the province last month — compared with 6,562 units in August 2002 — with the total dollar volume representing a 44.6-per-cent year-over-year increase.

“Consumers clearly believe this is the time to get into the [housing] market, and low interest rates are helping them do that,” said David Herman, president of the B.C. Real Estate Association.

In Greater Vancouver, housing sales hit $1.147 billion in August, up 48 per cent from $772 million the previous year as a total of 3,413 units changed hands, up from 2,558 units, a 33-per-cent improvement.

Provincial hot spots last month included Powell River, where sales volume jumped 82 per cent to $6.9 million, up from $3.8 million; along with Chilliwack, which recorded $38.7 million worth of sales, up 56 per cent from $24.8 million.

In the six Fraser Valley communities, August home sales climbed 53 per cent to $415 million, up from $271 million.

On Vancouver Island, excluding Victoria, August MLS sales totalled $141.3 million, up 45.5 per cent from $97.1 million the previous year.

“[Province-wide] monthly sales rarely reach the $2-billion mark,” noted Herman, whose association represents 12 real estate boards and more than 12,000 realtors around B.C.

“In fact, before this year, it had only happened four times: twice in 1994 and twice in 2002. Sales have surpassed $2 billion every month [in 2003] since March, even during the summer when the market is usually slower.”

The BCREA said although economic conditions varied around the province, 11 of the 12 member real estate boards reported year-over-year improvements in both dollar volume and unit sales last month over August 2002.

The lone exception was the Kootenay area, where sales slipped 0.3 per cent to $31.54 million from $31.64 million.

Real estate experts cite a combination of record-low mortgage rates, rising consumer confidence, anticipated job growth and excitement over the 2010 Olympics for the unprecedented demand for housing.

In Chilliwack, veteran realtor Jim Adam said his market is being fuelled by a growing number of people moving out from Vancouver, Surrey and Langley because of superior housing value for the dollar.

“For the price of a one-bedroom condo in downtown Vancouver, you can buy a three-bedroom, 1,900-square-foot house on a 46-by-95-foot lot for $225,000 in Chilliwack,” said Adam, of Sutton ShowPlace.

“Everybody should be moving to Chilliwack — we’ll throw in the extra bedrooms.”

Powell River Re/Max realtor David Harper said his community is attracting retirees from Vancouver, Alberta and parts of the U.S.

“It’s been one of better markets in many years,” Harper said of this summer’s boom. “People like the safety of the Powell River area, along with the climate, good fishing and low-key lifestyle.

“Our prices are still cheap compared to the rest of B.C. You can buy a two-bedroom bungalow for $40,000, or a waterfront home from $300,000 to $500,000.”

Meanwhile, in White Rock, where the average price for a detached home in August was $466,600, realtor Roslyn Millard said all housing types are in demand.

“Everything is selling, from $120,000 condos to homes priced over $1 million,” said Millard, proprietress of her independent company, Roslyn & Associates Realty.

“Most of the lower-end stuff is sold out. It’s been a great year, one of the best markets White Rock has enjoyed in quite some time.”

© Copyright  2003 Vancouver Sun

For sale: a not-quite-completed 2,400-square-foot house on a 33-foot view lot on West 15th. Price: Just over $1 million.

Maurice Bridge
Sun

CREDIT: Glenn Baglo, Vancouver Sun Built on spec, the modestly sized house is one of four Point Grey-Dunbar homes on 33-foot lots listed at $1 million-plus.

This is the view from 3611 West 15th Ave. It adds about $100,000 to the value of the home, the sales agent says.

There’s still something about a million bucks that gets everyone’s attention.

And when it’s the price of a modestly sized house on the smallest of standard Vancouver city building lots . . . are you listening now?

West-side homebuilder Graham Street is nearing the end of his work on the house he’s been building for the past six months at 3611 W. 15th Avenue. There’s still a couple of weeks’ worth of interior finishing to be done, but the shape of the home is easily apparent: a bright and airy three-bedroom, with plenty of heritage touches inside and out, as well as high-quality modern features like a top-of-the-line kitchen and geothermal heating which doubles as air conditioning in hot weather.

It’s as large as the zoning bylaws allow — 2,407 square feet, most of it divided between the main and upper floors, with only a small amount of space allowed in the basement.

There’s also an unobstructed vista of the North Shore mountains, Burrard Inlet and the downtown peninsula which one would be tempted to call a million-dollar view, but that wouldn’t be accurate.

“$100,000,” says real-estate agent Peter Clayton-Carroll, evaluating it in the same matter-of-fact manner he uses to describes the house’s other major features. “What’s Vancouver? Vancouver‘s a view.”

Without it, this house would be somewhere in the $900,000 range occupied by most new west-side homes. But with it, the asking price is $1,075,00, making it one of four million-dollar-plus homes on 33-foot lots in Dunbar and Point Grey currently in the database of the Multiple Listings Service.

Clayton-Carroll, who’s been selling real estate in this area since 1990, says this year is the first time he’s seen prices for new homes on 33-foot lots hit the million-dollar mark. He and his wife Susan Clayton-Carroll of ReMax Crest Realty (Westside) have the listing, and he’s had 10 to 15 calls in the past few weeks.

“It’s quite active,” he says. “There are a lot of people looking, a lot of money out there.”

He thinks it may not sell until it’s completed, when prospective buyers can see everything in its final form rather than imagining it from the unfinished outlines. But Street is used to people popping up unannounced while he and his trades are working.

“I’ve had people come when Peter’s not here, a couple from Richmond, empty-nesters. There was a young couple came by, I think he was a hockey player, great big strapping guy, looking for a brand-new house,” he says, sounding only mildly incredulous.

“I’ve had phone calls from people in the area who have existing homes,” adds Clayton-Carroll, “but they might not have as good a view and they want to move into something new.”

Street and Clayton-Carroll betray no sign of being impressed by the price tag on the property. For them, it’s simply a matter of adding up all the numbers and setting a price they believe the market will bear.

It’s a careful process, based on long knowledge of house building and house buyers. Street also does custom home building, but this one is a spec project, with his money on the line.

Last November, he bought the lot on the southwest corner of 15th Avenue and Alma Street. He describes the old house which sat on it as a rat haven, and says the neighbours were glad to see it demolished, which it was shortly after he got possession of the property on March 1.

The lot, with a frontage of 61 feet, was divided into a 33-footer and a 28-footer, and work got under way quickly. The house on the 28-foot lot to the east is also nearly finished. It’s much like its million-dollar neighbour in design and finish, but the bylaws that limit square footage dictate that it be four feet narrower. It’s listed for $898,000.

Standing in what will soon be a tastefully appointed living room, Street and Clayton-Carroll look at some new MLS sheets, including one for another new house on a 33-foot lot in the area, priced just below this one. It’s not a view property, although it promises a view from a rooftop deck.

“People will say, oh, you’re too low, but if the house moves, that’s good for us,” says Street. “You go on to the next thing.

“You don’t want to give it away, but if you price it right, it will sell. I want to get them sold, I want to move on to the next one.”

He lives in Dunbar, and has been doing this since 1981. The first house he built on a 33-foot lot was a spec job at 32nd and Dunbar, and he sold it for $592,000. He’s never seen prices sag on his 33-foot projects, and while he says his quality of workmanship has never changed, the cost of quality has.

“The quality of items going into a house has increased, people demand a little more in a house now. The new thing is the biggest stainless-steel appliances, high-quality appliances, security systems, sound systems, adding a lot more mouldings, things you maybe wouldn’t have done as much of [in the past.]

“The cost to build a house is definitely higher and the shortage of manpower to build these houses . . . . Personally, I’ve had a lot of my trades for many years, so it hasn’t affected me as much, but the prices have crept up, too.

“There’s more demand; the guys are trying to get a little more money, so that pushes up your labour up on the house a bit more.”

These days, he says, good construction adds up to about $150 a square foot.

So who can afford it?

“You get two incomes with people drawing $200,000, they can afford to buy a house like this,” he says.

“You’re dealing with professional couples, somebody who’s established,” adds Clayton-Carroll.

The on-line MLS listings include a mortgage calculator, and for this property, with 10 per cent down and a 5.9-per-cent mortgage on a three-year term, it says the buyer would need an annual household income of $234,577 to cover monthly payments of $6,255.

But by established, Clayton-Carroll means someone who already has a substantial stake to put down, possibly the profit from a previous real-estate holding. If the down payment jumps to $500,000, which is close to lot value in the area for a 33-foot property with a teardown house, the monthly payment falls to $3,645, requiring annual household income of $136,679.

For all Street’s experience, however, he won’t predict where the market will go next.

“I can’t maybe see, you know, going to $1.5 million for a house like this. It may happen, I don’t have a crystal ball, but as long as the B.C. economy stays steady, the interest rates are the major key to anything.

“If it goes to five or six per cent, it’s still not bad, but if it starts going to 10 or 12 per cent, you’ll see the housing market take a tumble. You’d be very careful what you’d buy and what you’d build if interest rates were at 10 or 12 per cent.”

© Copyright 2003 Vancouver Sun

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Michael Kane
Sun

Ottawa is easing restrictions for cash-strapped home buyers in a move expected to fuel continuing strength in housing markets across the country.

Canada Mortgage and Housing Corp. confirmed Monday that there will no longer be price ceilings on homes that can be bought for just five per cent down.

That means buyers in the Greater Vancouver area will no longer be restricted to homes worth $300,000 or less if they require high-ratio mortgage insurance from CMHC or GE Capital.

If the buyers earn enough to service the mortgage — and with today’s low mortgage rates, some do — they can buy more expensive homes with as little as five per cent down.

Ottawa‘s move is in response to rising housing prices and consumer concerns about unequal treatment under price ceilings which vary across the country according to local market conditions, said Cameron Muir, senior housing analyst at CMHC in Vancouver.

“It makes things much easier for buyers who may have been looking at a home a little bit over the ceiling,” he said.

“It means more of a level playing field across the country and it is also a response to our being able to monitor risk more effectively.”

CMHC now relies on a computer system to assess risk for each individual mortgage application.

Further evidence that housing demand continues to exceed supply came Monday with StatsCan figures showing that July registered the third-straight monthly gain in residential building permits.

Also fuelling housing markets is last week’s cut in the Bank of Canada lending rate, which has lowered the cost of variable mortgages pegged to the prime rate.

Economists say there could be more cuts in the coming months before rates start to rise again, probably in the latter half of 2004, and that’s likely to encourage more borrowing despite debt-to-income ratios at a record high of 103 per cent and talk of a debt timebomb set to explode if interest rates were to move up sharply.

“I would not be surprised if the debt-to-income ratio reaches 110 per cent six months from now, but the good news is that we don’t think interest rates will rise any time soon,” Benjamin Tal, senior economist at CIBC, said Monday.

“Debt-to-income is a misleading ratio because the debt-to-asset ratio is not rising, and one of the main reasons for that is the appreciation in house prices.

“That is something that is crucial. If you had a crash in the housing market then you definitely have a problem, but we don’t see that happening.”

Toronto-based Tal believes the housing market is peaking and set to stabilize.

“We won’t see any more double-digit gains, but we will stay where we are now,” he said. “It won’t crash.”

Helmut Pastrick, chief economist for the Credit Union Central of B.C., said new housing supply is beginning to increase but the supply of resale homes is down five per cent year to date.

“Market conditions here are the tightest they have been since this housing expansion began back in mid-2000,” he said. “Supply shortages and record low interest rates will continue to drive this market.”

Pastrick anticipates at least one more quarter-point rate cut by the Bank of Canada, possibly two, and expects mortgage rates to remain in their current range until 2005 or 2006.

Tal thinks the central bank will cut at least one more time, but at the minimum they will keep interest rates where they are until late 2004, which means consumers will be able to continue to borrow without too much fear.

He said rate increases down the road should not be an issue if they are gradual and in line with economic activity and employment.

Muir said low inventory levels and the absence of rampant speculation indicate that a housing bubble is unlikely.

“The renters are buying and young people are moving out of their parents’ homes and buying, so what you have is pent up demand out there,” he said.

“I think it has been unleashed by this affordability issue — you have low mortgage rates and a good outlook in terms of consumer confidence and that’s really pushing the market.”

© Copyright 2003 Vancouver Sun

Jim Jamieson
Province

Powered by British Columbia and Quebec, Canadian municipalities issued a record number of building permits in July for both residential and non-residential construction projects, according to a report released Statistics Canada yesterday.

B.C. experienced a monthly increase of 16.2 per cent (to $401 million), while Quebec led the country with 35.1 per cent (to $626 million).

Vancouver was one of the leaders among metropolitan areas, where a buoyant demand for residential permits fuelled a 25.6-per-cent increase to $336 million, largely due to multi-family issues. Montreal was the national leader in monthly gains, with a 27.9-per-cent gain to $497 million.

“We’re seeing a lot of activity out there — high- and low-rise condo, single family homes — all of our builders are busy in all sectors,” said Peter Simpson, chief operating officer of the Greater Vancouver Home Builders Association. “We don’t see any slowdown in this.

“We believe it will continue through 2004.”

StatsCan said approved permits worth $4.53 billion, up 3.3 per cent from June and just shy of the monthly record of $4.59 billion in January were issued.

The torrid pace of permits set a new record for the first seven months of the year. Between January and July, builders took out permits worth $29.5 billion, 9.0 per cent higher than the same period last year.

Fuelled by very low mortgage rates, a favourable job market and income growth, these gains are expected to keep the building sector humming for months.

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© Copyright  2003 The Province

Canadian Press
Sun

OTTAWA (CP) – Financing rates at half-century lows continued to keep the housing industry humming in August, Canada Mortgage and Housing Corp. reported Tuesday.

The seasonally adjusted annual rate of housing starts increased by over 10,000 to almost 224,000 last month.

CMHC said starts so far this year have exceeded 2002 levels by 4.7 per cent.

Urban multiple starts were up 16.2 per cent from July.

But single-family housing starts suffered last month, down 4.3 per cent, largely because of the power grid failure in Ontario.

© Copyright  2003 The Canadian Press

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