Sliding prices mixed with low interest rates offset impact of sluggish economy

Derrick Penner
Sun

Lower Mainland real estate markets saw big gains in June sales, with the Metro Vancouver real estate board posting its second busiest and the Fraser Valley its fourth-most-active June on record.

A combination of the slide in real estate prices last year and current low interest rates offset the negative influences of higher unemployment and a contracting economy, Carol Frketich, regional economist for Canada Mortgage and Housing Corp., said in an interview.

The Metro Vancouver area covered by the Real Estate Board of Greater Vancouver recorded 4,259 sales through the Multiple Listing Service in June, a 76-per-cent increase from the same month a year ago.

The inventory of unsold homes in the board’s area declined 27 per cent to 13,252 compared with the same month a year ago. The benchmark price for a typical detached home was $701,384 in June, still down 8.4 per cent from the same month a year ago.

The benchmark price is a calculation based on the features of homes most typically sold in that category.

In the Fraser Valley, realtors racked up 1,982 sales during the month, a 40-per-cent increase from the same month a year ago, the Fraser Valley Real Estate Board reported Friday.

The benchmark price of a typical detached home was $471,788, down eight per cent from June 2008. However, it was up 1.3 per cent from May when the benchmark was $465,939.

“The resale market signals that buyers are returning to the market,” Frketich said. “Prices are stabilizing and on the supply side, [the number of] listings is moving lower. So we’re seeing the adjustments we would expect to see.”

The total number of sales for the year to date was still down, owing to the dismally slow months of January and February, but has been trending higher over the past five months, Frketich said.

“Keeping in mind that last year June was a couple of months into the [market] slowdown,” she said, “we would expect to see an improvement [in sales] compared to the second half of last year.”

However, how lasting the boom in sales will be depends on how well the overall economy performs, according to housing economist Tsur Somerville, director of the centre for urban economics and real estate at the Sauder School of Business at the University of B.C.

“Real estate tends to be a leading [economic] indicator,” Somerville said. “It’s not that you need to have employment numbers recover for real estate to recover.”

However, June’s boom in sales was stronger than he would expect given the state of B.C.’s labour market and of the global economy.

“Obviously, first and foremost, [the rise in sales] is about mortgage rates,” he said. “From a housing perspective, if the economy is not recovering, there really can’t be a substantive recovery in your housing market,” Somerville said.

In the meantime, buyers with means are being drawn into the market.

In previous months, the strengthening of sales was seen at the entry level with first-time buyers, but Paul Penner, president of the Fraser Valley Real Estate Board, said valley realtors are now seeing stronger sales at the higher end of the market. “Still, a lot of it is driven by interest rates and affordability,” Penner said in an interview.

Though the economy might still be in recession, Penner said there are buyers who have jobs who “still have someplace to go every Monday morning and still have their paycheques every second Friday, so they’re not as frightened by some of the negative projections.”

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76-per-cent jump over a year ago attributed to lower prices, low mortgage rates

Sun

METRO VANCOUVER — Greater Vancouver realtors had their second busiest June on record this year as buyers jumped at lower property prices and near record low mortgage rates, the Real Estate Board of Greater Vancouver reported Friday.

Board realtors recorded 4,259 sales through the Multiple Listing Service in June, a 76-per-cent increase from the same month a year ago.

The inventory of unsold homes in the board’s area declined 27 per cent to 13,252, compared with the same month a year ago.

“Many people who were reluctant to purchase a home last fall and earlier this year are returning to the market because they see conditions that appeal to their personal and financial needs,” board president Scott Russell said in a news release. “However, the current marketplace is such that buyers are more inclined to walk if they don’t like the terms of an offer.”

The benchmark price for a typical detached home was $701,384 in June, still down 8.4 per cent from the same month a year ago.

The benchmark price is a calculation based on the features of homes most typically sold in that category.

Fraser Valley realtors recorded their fourth busiest June on record racking up 1,982 sales during the month, a 40-per-cent increase from the same month a year ago, the Fraser Valley Real Estate Board reported Friday.

Buyers taking advantage of lower prices helps to partly explain the surge. The benchmark price of a typical detached home was $471,788, which is still down eight per cent from June 2008.

That price, however, is up 1.3 per cent from May when the benchmark was $465,939.

“We’re essentially seeing two markets right now,” Paul Penner, president of the Fraser Valley Real Estate Board said in a news release.

“Sellers have the advantage when it comes to more affordable homes, but buyers hold more sway with higher-end properties.”

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Derrick Penner
Sun

Real estate sales on Vancouver Island in June bounced back from the lower levels of 2008, although prices remain below those achieved a year ago, the Vancouver Island Real Estate Board reported Thursday.

Island communities outside Victoria saw sales of 523 detached homes recorded through the Multiple Listing Service in June, a 20-per-cent increase from the same month a year ago.

Average prices have risen from lows in recent months, but remain below the peaks seen in 2008.

The board saw an average price of $329,412 for a detached home in June, 10 per cent less than the $366,607 of June 2008.

Board president Ray Francis said he was “encouraged by the fact that we are experiencing the start of a recovery sooner than expected.”

Prices, Francis said, are stabilizing as sales have picked up in all its communities and the number of active listings continued to decline.

“The market has become more balanced with favourable interest rates for the buyers and lower inventory with increased sales activity for the sellers,” he added.

Of the six regions that make up the Vancouver Island board, Nanaimo saw the biggest increase in sales. It saw 161 homes sold, a 45-per-cent increase from a year ago. The average price of $336,920 was still nine-per-cent lower than the same month a year ago.

Campbell River saw the smallest increase in sales, with a seven-per-cent increase from June 2008.

Campbell River‘s average price of $265,856 was 20-per-cent below the average price in June 2008.

ISLAND SALES

Home sales and prices in selected Vancouver Island areas last month followed by a comparison to a year earlier in brackets:

– Comox Valley: 102 sales (+15%) $340,036 average price (-10%)

– Cowichan Valley: 93 sales (+8%) $366,748 average price (-12%)

– Parksville/Qualicum: 64 sales (+8%)

$393,958 average price (+1%)

– Port Alberni/West: 40 sales (+8%) $190,554 average price (-22%)

Source:Vancouver Island Real Estate Board

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