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Warm weather helps homes sales bounce back in January

Christine Dugas
USA Today

WASHINGTON (Reuters) — Sales of new homes fell 16.6% in January and prices were little changed as the number of new homes on the market decreased slightly, according to a government report Wednesday showing more weakness in the unsteady housing sector.

The monthly decline was the sharpest in 13 years, since a 23.8% drop-off in January 1994.

New single-family home sales fell to an annualized rate of 937,000 units from an upwardly revised rate of 1.123 million units in December, the Commerce Department said.

Analysts polled by Reuters were expecting January sales to dip to 1.080 million from the previously reported rate of 1.120 million units in December.

In January, the median sales price of a new home rose $400 to $239,800 from $239,400 in December.

At the current sales pace, the supply of new homes available for sale rose to 6.8 months’ worth from the 5.7 months’ worth in December, which represents a 19.3% increase. There were a total of 536,000 new homes available for sale at the end of January, down 0.2% from December.

The Commerce Department’s data comes a day after a Realtor trade group reported a stronger-than-expected month of existing home sales. The sales pace of previously owned homes rose 3.0% in January, the biggest jump in two years, the National Association of Realtors said.

Home resales, which represent 85% of the housing market, climbed to a 6.46 million-unit annual rate.

Across the regions, the West saw the sharpest decline in new-home sales with a 37.4% drop. In the Northeast, new-home sales fell 18.7% while they decreased 8.1% in the Midwest and 9.7% in the South.

Warm weather helps homes sales bounce back in January

Home sales rebounded in January, reaching the highest level in seven months, the National Association of Realtors said Tuesday.

The warm winter weather helped boost sales, which rose 3%. And single-family homes showed the biggest sales increase, rising 3.5%. But existing condominiums and cooperative housing sales slipped 0.1%. Those sales are stagnant because many more condos and co-ops are available, the NAR says.

Despite the dramatic rise in home sales in January, no one should overreact to the gain, analysts say. “I’m trying to be careful because we could see the next month down a little,” says David Lereah, the NAR’s chief economist.

The reason: February winter storms disrupted much of the country, which could cause a near-term home sales dip.

While sales jumped in January, there was still a downturn in existing home prices. Last month, prices fell 3.1% from January 2006 to $210,600. And the price softness is expected to continue until spring, Lereah says.

“But that may not be that bad,” says Joel Naroff, chief economist of Naroff Economic Advisors. “The decline in prices is helping sales, but we still have too many homes for sale.”

The inventory of homes for sale rose 2.9% at the end of January to 3.55 million. That represents a 6.6-month supply. Still, that’s down from the 7.4 month peak in October.

Some owners may remove their homes from the market because of the additional decline in home prices, Naroff says. It also may spur more offers.

Across the USA, existing home sales in January improved the most in the West, while sales in the Northwest were unchanged.

And among states and cities, recent sales have varied. For example, in Florida, sales fell 27% in January. But Long Island, N.Y., Boston, Pittsburgh and most of New Jersey had solid gains in home sales.

Many experts hope that home sales will continue to improve.

“First-time home buyers are now in a position that they can take their time, and they’re being able to purchase homes,” says Bill Hanley, president of the New Jersey Association of Realtors. Instead of 10 buyers for every home, there are now 10 homes for every buyer, he says. At Hanley’s firm, Weichert Realtors in Metuchen N.J., January home sales more than doubled the sales in January a year ago.

Jim Jamieson
Province

The CMHC’s Robyn Adamache offers reassurance to prospective homeowners in Vancouver yesterday. Photograph by : Nick Procaylo, The Province

B.C. housing prices are headed for a soft landing, a market analyst told attendees at the B.C. Real Estate Convention yesterday.

But those forced by skyrocketing prices in recent years to watch from the sidelines may have to be willing to accept less in exchange for home ownership.

“It’s a relief that we’re not going to see 15 or 16 per cent [annual housing price] growth, but prices are still going to rise,” said Robyn Adamache, senior market analyst for Canada Mortgage and Housing Corp., following her address at the Vancouver Trade and Exhibition Centre.

“That’s why we’re seeing 80 per cent of our starts in the multiple unit area. People come here from other parts of Canada and they are astounded by the number of condos, but it’s a fact of life here.”

Recently, a major development was announced in Surrey’s Whalley area that offered entry level condos at $119,900 — although at a micro-size of 416 square feet.

With the average price of a single-detached home in Vancouver hitting $730,000 — as compared to $460,000 in Toronto and $350,000 in Calgary — according to CMHC, it’s no surprise that developers are building more condos with no sign of market overload.

Adamache said that at the end of December there were just 86 new, unsold units available in Greater Vancouver, most of which were in Surrey, Langley and Delta. There were fewer than a dozen in Vancouver and none downtown.

“If you wanted to move into a brand-new unit today, you’d be out of luck,” she said.

“You’d have to look at pre-sale.”

Adamache said historically low interest rates, record low unemployment and net in-migration will keep the real-estate market bubbling along.

She said the retail market in B.C. had record sales in 2005, with 106,000 units changing hands, but fell off last year by five per cent.

Both the Fraser Valley and Greater Vancouver were off 10 per cent last year.

“Slowing sales are mainly due to the fact that prices are getting to the point where people who are on the fringes of being able to afford to get into the market are having to wait,” she said.

“It should be good news for consumers that prices will slow going forward. For those already in the market, fear not. Your equity is still going to keep increasing.”

Adamache said the CMHC forecasts the average five-year fixed mortgage rate will drop 25 to 75 basis points in 2007, with a slight up-tick of 25 to 50 basis points in 2008. Looking out to 2012, rates are forecast to stay flat, below seven per cent.

Adamache also predicted moderation in the new-home construction market in B.C. after a six-year run-up to a high last year of more than 36,000 new units.

“We expect the resale market to slow,” she said. “And builders are facing construction-cost increases of one to two per cent per month, a shortage of skilled trades and land availability.”

© The Vancouver Province 2007

USA Today

WASHINGTON (AP) — Sales of existing homes rose in January by the largest amount in two years, raising hopes that the worst of the severe slump in housing may be coming to an end. Median home prices, however, fell for a sixth straight month.

The National Association of Realtors reported Tuesday that sales of previously owned homes rose 3% last month from December to a 6.46 million-unit annual rate. It was the biggest one-month increase since a 3.3% increase in January 2005, a time when housing was roaring toward the peak of its five-year boom.

The median price of an existing home sold in January dropped to $210,600, a decline of 3.1% from a year ago. It marked the sixth straight month that the median price has been down compared with a year ago. The January decline was the third-biggest drop in history.

Analysts said that the decline in home prices was actually an encouraging sign that home sellers are starting to adjust their asking-price down and this should help speed the correction in housing.

“For the last several months I have been hemming and hawing on whether we have reached bottom,” said David Lereah, chief economist for the Realtors. He said that the January report was an encouraging sign that the bottom for sales activity was reached last September with sales expected to stabilize this year.

Lereah stopped short of saying the housing contraction had reached its bottom last year, but he noted that inventory levels are near a balance.

“It appears the country as a whole is getting close to balance,” he said. “We will slowly and sluggishly get our way out of this contraction.”

But he cautioned that the warm weather in December boosted home closing in January, the activity that is tracked in the Realtors report. He said there could be a bit of a payback in coming months.

The inventory of homes for sale rose 2.9% to 3.549 million units, representing 6.6 months’ supply at the current sales pace.

By region of the country, sales rose the most in the West, 5.6%, followed by gains of 4.8% in the Midwest and 2% in the South. Sales in the Northeast were unchanged.

Analysis says figure in B.C. budget won’t help much to end homelessness

Frances Bula
Sun

VANCOUVER – The province’s so-called housing budget has so little money for actual housing that Vancouver will be lucky to get half the units it needs to meet its target for cutting homelessness by 2010, says an internal memo from the city’s housing director.

And those potential 200 units a year will only be possible if the city gets additional money from B.C. Housing, Vancouver Coastal Health and whatever proposal Ken Dobell, the premier’s ex-adviser, comes up with for the city, Housing Centre head Cameron Gray advises city councillors and staff.

As well, Gray notes in his three-page analysis of last week’s provincial budget, the city should be getting the money now to build the targeted 1,000 units so they’re ready in time for the Olympics.

It is “disappointing and perplexing” that the province chose to park $250 million in a housing fund, Gray wrote, instead of building the 1,000 units needed right away.

“[The] $250 million would pay for 1,000 units of affordable housing, enough to build out all 12 of the sites the city has purchased and set aside for affordable housing,” says his memo.

“All three levels of government committed to making the 2010 Winter Games socially sustainable and inclusive. The appropriate endowment would be 1,000 units.”

That sober second look prompted Vancouver Mayor Sam Sullivan to call both the premier and Housing Minister Rich Coleman on Friday to ask when Vancouver will get the help it needs for its homelessness crisis.

Sullivan, after meeting with Coleman Sunday afternoon, said he remains confident that the province will ultimately come through with innovative solutions to providing housing in Vancouver.

In an interview, Coleman also insisted that there is much more to come in terms of new housing.

He said there will be much more news in the next 60 days, but he can’t give any details yet.

Coleman agreed that the $38-million figure that the budget claimed would provide “an estimated 600 beds in shelters, transitional housing and permanent housing,” isn’t nearly enough money to do that.

But, he said, it is seed money that his ministry can use as a lever to get money from other sources.

As well, his ministry has been given a chunk of unallocated cash that he will also be able to use as a lever to get other money.

“The city need not worry. We think we can leverage a lot.”

Sullivan said he now understands that the lack of clarity about what housing money the city will actually get was due to political pressures and the need to keep information confidential.

The result last week was that councillors ended up mistakenly claiming that the budget would allow the city to move ahead immediately and aggressively.

Sullivan himself issued a press release Tuesday saying the budget included “one of the largest investments in social housing in history.”

He also said the budget “offers hope that we can begin development as soon as possible on the 12 sites the city has purchased and earmarked for social housing.”

Gray’s analysis of the budget numbers said the city would be lucky if it can develop two or three sites a year.

That’s if the province commits to money beyond this year for developing housing, which it hasn’t.

“A long-term commitment of stable funding and programs that address the full continuum of need is lacking.”

The budget was touted as committing $2 billion to a housing legacy.

But Gray notes only one-quarter of that will actually go toward affordable housing; the rest is tax cuts. And, of the remaining $500 million, only $139 million is dedicated to new construction.

As a rule of thumb, it costs about $200,000 to build a one-person social-housing unit.

© The Vancouver Sun 2007

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