While home sales have continued to trend below long-term averages this year, there are signs that the Greater Vancouver real estate market is building strength heading into the summer months.

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At this time last year, sales were cooling from the near-record activity in the previous spring. This year, we’ve seen a further slowing of home sales activity, with approximately 1,600 fewer sales as compared to this point in 2012. Last month, however, was our first year-over-year gain in sales in any month since September 2011.

Property listings are coming on the market at a slower pace than we saw last year. This is keeping supply in greater alignment with demand, which allows for stability in pricing and greater balance in the market overall.

Over the last three months, the sales-to-active listings ratio in Greater Vancouver has been at 15 per cent or higher. It currently sits at 17 per cent. Generally, analysts say that a balanced market occurs when the sales-to-active listings ratio sits between 10 and 20 per cent for an extended period of time.

This ratio hit 15 per cent in March, marking the first time it had been that high since May 2012. Between June 2012 and March 2013, the ratio sat in buyer’s market territory, reaching as low as eight per cent.

We’ve also seen good stability in the MLS® Home Price Index this year. The current benchmark price for a detached home in Greater Vancouver is $917,200, which is down a little over five per cent from May 2012, but is up just 0.3% from six months ago.

The benchmark price for townhomes in the region is $454,900, down 3.2 per cent from last May but up just 0.1% from six months ago.

The benchmark price for apartments in the region is $365,600, which is down 3.7 per cent from last May, but up just 0.2 per cent from six months ago.

It’s taking 52 days on average for members to sell a home listed on our MLS® system. This is nine days longer than the average in May of last year.

We can never know what tomorrow will bring, but what we’ve seen through the first half of the year suggests that our market is enjoying a spell of balance and stability as we move into the second half of the year.

© Real Estate Board of Greater Vancouver.

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Great location, unbelievable prices

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“Vancouver: Not as Expensive as You’d Think”?

It’s an unexpected title when we’ve been told time after time that Vancouver is one of the least affordable cities in the world for housing. Some economists and real estate watchers call our market a bubble.

So far, however, there’s no evidence of any price collapse. What keeps our so-called bubble from bursting?

In  this recent article in Vancouver Magazine, real estate writer Jim Sutherland points out that thriving industries including construction and lumber, a wealth of natural resources, and strong local businesses are keeping the economy buoyant and helping to maintain the real estate market.

But the X factor is immigration. He traces the strong historical correlation between the number of immigrants to our area and home sales and prices. As immigrant landings rise and fall, so does the real estate in the Lower Mainland.

So if Vancouver is way up there among the least-affordable cities in the world for housing, why do so many new Canadians come here and buy real estate? Sutherland’s simple answer is that “to immigrants from Asia, real estate in Vancouver doesn’t seem expensive at all. In fact, it’s pretty cheap.”

He quotes a survey that calculates housing affordability for the world’s largest cities in over 100 countries. It puts Vancouver at only the 125th least-affordable city in the world, on a par with Amsterdam, Stockholm and Barcelona.

Compared to major Chinese cities such as Beijing, Shanghai or Shenzhen, suddenly Vancouver isn’t so expensive at all. Major world cities such as “Moscow, London, Paris, or Tokyo are up to twice as expensive.” When immigrants from these countries arrive, they see a spectacular, liveable city with reasonable (to them) pricing and a great quality of life.

Nobody’s saying that $1 million for a Vancouver special on the east side is affordable, just that on the global scale of expensive housing, we’re in the middle of the pack, not out in the lead.

Read the full article: “Vancouver: Not As Expensive As You’d Think”

© 2013 Real Estate Weekly

Donald Horne
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Once again, the warning bell has been sounded on Toronto’s condo market – this time by the Bank of Canada

“If the upcoming supply of units is not absorbed by demand as they are completed over the next 12 to 30 months, the supply-demand discrepancy would become more apparent, increasing the risk of an abrupt correction in prices and residential construction activity,” states the report.

The warning is contained in the latest review of the country’s financial system by the Bank of Canada, as it singles out the Toronto condo market in particular as carrying a high level of unsold high-rise units in the pre-construction or under construction stages.

The report specifically fears a domino effect throughout the housing market unless the current glut of inventory in GTA condos is absorbed.

“Any correction in condominium prices could spread to other segments of the housing market as buyers and sellers adjust their expectations,” reads the report.

Worse, the Bank fears that such a ripple effect could hit loan portfolios overall.

“These adverse effects would weaken the credit quality of bank’s loan portfolios and could lead to tighter lending conditions for household and businesses,” warns the report. “This chain of events could then feed back to the housing market, causing the drop in house prices to overshoot.”

Despite the dire warnings, the Bank’s semi-annual analysis  — the first under its new governor –does state that the risks posed to the financial system have lessened, so long as borrowing costs remain at low levels. It also expects that the current correction in housing will continue to go smoothly, despite the current risks.

Copyright ©2009 KMI Pty Ltd

Vernon Clement Jones
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Canadian home sales fell 2.6 per cent in May from a year ago, a sign, says some, the market is headed for a landing without the thud many investors feared.

Until recently, mixed sales trends across the country taken together had resulted consistently in a stable national trend,” said Gregory Klump, CREA’s chief economist. “The difference in May was that sales improved in so many markets at the same time.”

According to its latest, the Canadian Real Estate Association (CREA) is pointing to national home sales  that rose 3.6 per cent from April to May.

That likely reflects the seasonal spring ramp-up, which also extended to the number of listing — up 1.9 per cent from April to May.

CREA suggests that data indicates the Canadian housing market remains firmly in balanced territory, although the average sale price also rose 3.7 per cent on a year-over-year basis in May.
Still, the price buoyancy, despite a slower market, continues to present cash flow challenges to investors looking to buy properties and access interest rates that continue to be near historic lows.

That trendline has likely helped to keep the average home price high as buyers still find a way to qualify for mortgages despite tighter mortgage rules.

Copyright ©2009 KMI Pty Ltd

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