Despite high prices, demand for housing is supported by a growing population

Emma Crawford Hampel
Van. Courier

Vancouver has the nation’s highest real estate prices but the city’s market is unlikely to see a correction, according to the Canada Mortgage and Housing Corporation (CMHC).

The risks of overvaluation, overbuilding, market overheating – defined as when demand rapidly outpaces supply – or house price acceleration are all low.

“Despite high Vancouver home prices, demand for housing across the price spectrum is supported by a growing population and growth in personal disposable income,” the agency said in a report. “First-time home buyers focus on lower-priced options in suburban locales.

“At the upper end of the price spectrum, high net worth residents, and those who have gained equity in their homes, are more likely to buy single-detached homes in central locations and luxury property.”

A limited supply of land for development also plays a factor in propping up home prices.

Across Canada, the report shows a mixed bag in terms of risk levels in the various housing market hot spots.

“Modest overvaluation based on national indicators reflects a variety of price conditions across the country with some centres showing more signs of overvaluation than others,” said Bob Duban, CMHC chief economist.

“Likewise, housing market risk factors such as overheating, acceleration in house prices and overbuilding also vary by CMA.”

Regina and Winnipeg are at a particularly high risk of correction. 

“In Regina, this reflects price acceleration, overvaluation and overbuilding, particularly of condominium apartments,” said the report, which also pointed to modest gains in personal disposable income and a record high inventory of completed and unsold units.

“In Winnipeg, risk of overvaluation and overbuilding are detected.”

Calgary is at an overall low risk of correction, but there is a chance of overvaluation relating to strong growth in house prices combined with only modest increases in personal disposable income.

“The economy is being impacted by lower oil prices and slower inflows of migrants that will likely contribute to an expected slowdown in the rate of price growth in 2015,” the report said.

Edmonton, Saskatoon, Ottawa, Halifax and St. John’s are unlikely to see price corrections.

Toronto and Montreal are at moderate risk. Toronto has seen consistent price growth and no match in the increase of disposable personal income, while Montreal has had fewer first-time buyers.

© 2015 Vancouver Courier

Jamie Henry
Other

A detached house in Vancouver has sold for $1.35 million despite being just 3.6 metres (12 feet) wide. The Point Grey split level residence was built in the late 1980s on a half-size lot. The four-levels totalling just 945 square feet comprises master bedroom, 1.5 bathrooms, kitchen, living room and den. There’s also a garage and landscaped outdoor space. So should we go back to the future and start building thin homes again to help tackle Vancouver’s affordability issues? CBC spoke to aptly-named realtor Ken Wyder who said that he’s never sold one but has been inside what he describes as “like a dollhouse”. Asked if he thought it could be an answer to affordability Mr Wyder said not; the thin houses may be narrow but they take up more space than a typical duplex or triplex he said; noting that extra space is taken up by the properties being detached.

Copyright © 2015 Key Media Pty Ltd

Jamie Henry
Other

The Bank of Canada’s governor has rejected the idea that there is a housing bubble in parts of the country. Stephen Poloz was appearing before a House of Commons finance committee on Tuesday to defend the central bank’s interest rate cut and give MPs an update on the economy. Mr Poloz last appeared before the committee in November but since then the bank has issued a statement suggesting that housing is overvalued by “between 10 and 30 per cent” and there was the surprise cut in interest rates in January. At the meeting yesterday the BoC chief said that housing is estimated to be around 20 per cent overvalued nationally. Deputy governor Carolyn Wilkins added that with the exception of Toronto and Vancouver signs of a soft landing are now being seen across Canada. Poloz dismissed the suggestion of a housing bubble when it was raised by Democrat MP Guy Caron. The governor said that there was “no excess” in the buying of property and that construction is roughly in line with demand.

Copyright © 2015 Key Media Pty Ltd

BCREA
Other

In a recent case, the plaintiff offered to purchase a property “subject to inspection.” A Property Disclosure Statement (PDS) accompanied the Contract of Purchase and Sale wherein the sellers had answered negatively to whether they were aware of any structural problems, moisture and/or water problems in the walls, basement or crawl space or damage from wind, fire or water.

The subsequent inspection did not reveal any significant problems and the subjects were removed. Prior to completion, however, the buyer was advised by a third party that the house had been previously inspected pursuant to an insurance claim and that some of the wall framing was found to contain mould and rot. The contractors had draped the affected area in clear plastic with a sign indicating that mould was present. The contractors were never called back to complete the repairs. The sellers indicated at trial that they had repaired the problem themselves.

Prior to closing, the buyer, through his agent, sought to undertake a more extensive examination of the affected area which was denied. The sellers also refused to consider holding back some of the purchase price pending a resolution of the matter. Instead, the sellers’ lawyer advised the buyer that he would, at a minimum, forfeit his deposit unless he completed. Faced with this prospect, the buyer completed the purchase and gave notice that the sellers would be held responsible for any undisclosed damages.

Upon purchasing the property, the buyer discovered significant rot and mould in two places, including the area discovered by the previous inspection. Repairs totalled $140,000 for which the sellers were found to be liable.

The court acknowledged the doctrine of caveat emptor (or buyer beware) as it applies to the purchase of real property. In general, the onus is on the buyer to inspect and discover patent defects; defects which could be discovered upon a reasonable inspection by a qualified person. A seller is not liable for damages arising from patent defects.

However, caveat emptor is not a defence in all cases. A seller is required to disclose latent defects; defects which could not be discovered upon a reasonable inspection by a qualified person, of which they were or should have been aware or where they were reckless as to whether such a problem existed.

In this case, the court concluded that the problems were not patent defects, as they were not discovered upon a reasonable inspection by a qualified person. As latent defects, the sellers were required to disclose them if the sellers knew, ought to have known or were reckless as to their existence. The court concluded that the repairs done by the sellers were insufficient and that they knew or were reckless as to the existence of the ongoing problem.

With respect to the representations made in the PDS, the court recognized the danger in a buyer placing too much reliance on the PDS. The broad nature of the questions may not reveal a seller’s past history with the property in a case where the seller believes a problem has been rectified or was a one of a kind incident. Disclosure statements are designed to be the start – not the end – of the buyer’s investigation. The court found that the representations in the PDS can provide some recourse to the buyer where it can be shown that the statement was made falsely or recklessly.

Given the sellers’ knowledge of the problem, the court found that their negative answers on the PDS amounted to fraudulent misrepresentations which assisted the buyer in recovering from the sellers.

While the doctrine of caveat emptor still imposes a high onus on the buyer to discover problems in a property they are acquiring, there may still be recourse against a seller who fraudulently conceals or recklessly disregards latent defects.

BCREA

Other

Buyer’s remorse is an emotional response that many homebuyers experience during the course of a real estate transaction. The response can take various forms such as feelings of regret, fear, depression or anxiety. Many doubtful questions may arise: Did I buy the right house? What if I lose my job? What if home prices drop? Did I overpay? Is this really the neighbourhood I want to live in? Can I really afford the mortgage payments?

There are hundreds of questions that will run through your mind during the period leading up to closing: the day you actually become owner of the home. Most of the questions will be simple ones that are easily answered, but sometimes doubts creep in, making you uncertain if you want to proceed with the purchase.

When you decide to buy a new home, you’re forced to step outside your current comfort zone and confront the unknown. Your mind may try to compensate psychologically for feelings of uncertainty by mentally undoing the event. In other words, you may try to talk yourself out of buying your dream home. Add feelings of uncertainty to the fear of making a long-term commitment, and it’s easy to understand why homebuyers can suffer from bouts of anxiety.

Here are some tips that can help you battle home buyer’s remorse:

1. Prepare yourself The best way to cope with buyer’s remorse, and minimize its destructiveness, is to make sure that you are well informed. You should find out as much as you can about the home buying process, local home prices and home mortgages.

It’s a good idea to study a sample purchase agreement before you buy. Read the contract carefully to make sure that you understand it, and that it says what you think it should. If you have any questions about the purchase agreement, talk to your agent, or real estate attorney.

2. Choose the right agent In order to make sure that the purchase transaction goes smoothly it is important that you choose the right agent to represent your interests. The right agent will be someone whose experience, knowledge and personality is trustworthy and will allow you to feel comfortable with the whole transaction. Try to find an agent that is familiar and knowledgeable about the neighbourhood and community that you plan to move into.
3. Make sure the property meets your needs Get out that list of wants and needs you made back when you first started the home shopping process. Does the home you selected include the important features that you want? Provided that you saw a number of homes and thoroughly evaluated what each home had to offer, it’s likely that house you’re about to buy is the best choice for you.
4. Is the price right? Feeling certain about the price you are paying for a home is one of the most important factors that can reduce uncertainty and increase your comfort level. If your agent didn’t prepare a comparative market analysis for you on the home you are buying, have him or her prepare one for you now.
5. Consider the resale value As you look at houses in a particular area, think about what all of the houses have in common. Most neighbourhoods are usually built at the same time by the same construction company and will have similar floor plans and similar amenities (excluding possible owner upgrades). Before you consider buying the house with the most upgrades, consider whether or not you want to tackle a remodel. Don’t just consider the cost of the remodel, but also think about the amount of time and headache you can handle. No remodel goes smoothly! If a house with a newer kitchen cost $20,000 more than a house with an older kitchen, and you do not have the time to renovate, it may be still worth buying the house with the new kitchen.
6. Ask questions No one knows the home better than the seller of the property. If you can find out the seller’s motivation for selling you might be able to negotiate a better deal on the house. Try to find out the last time service was performed on the roof, furnace, plumbing and water heating system. Asking the right questions upfront can end up saving you a lot of money in the long run.
7. Get a home inspection Save yourself a lot of time in future litigation and renovation by bringing in a licensed, professional home inspector to inspect the home before you buy. If any major problems are found, it will steer you away from a bad decision and/or it will help you negotiate a better price at the negotiating table.
8. Review your finances You may want to review your finances to confirm that you can afford to make the purchase. Your feelings of remorse are probably unfounded, so the more rational things you can do to put your decision into the proper perspective, the better.
9. Discuss your concerns with your agent Your agent has seen plenty of cases of home buyer’s remorse and he or she can help put your fears and doubts into perspective.

Remorse is a common feeling during the home buying process. Following the above tips will help you make an educated decision and reduce any remorse you may have.

Copyright © 2012 Canada Realty News™

Vancouver’s loss is hotspot’s gain

Jennifer Paterson
Other

As the lofty house prices in the Vancouver become more unattainable, B.C.-based investors should look to the Fraser Valley for investment opportunities, say experts.

“It’s a very, very strong buyers’ market right now,” said Randy Dyck, an investor and real estate agent at Eximus.

The demand is highest for two property types in the Fraser Valley: single-family detached homes and townhomes. In February, MLS recorded an increase of 43 per cent over January’s sales and a rise of 21 per cent year-over-year, showing that demand is outpacing supply.

“Generally, we’re finding for all property types if they’re priced right there is a buyer,” added Ray Werger, president of the Fraser Valley Real Estate Board. “However, demand for single-family detached homes and townhomes is the most consistent.”

“Inventory levels are coming down which is putting some upward pressure on prices, especially in the single-family detached market throughout the Greater Vancouver and Fraser Valley areas,” added Dyck.

Some 1,337 sales were on the MLS in February, compared to 1,102 sales in February of last year. 

New listings in February 2014 totaled 2,610, which added up to 7,864 active listings, up from January’s 7,307 but a decrease of four per cent compared to February 2014’s 8,210 active listings.

Dyck said the appetite for Fraser Valley properties as investment vehicles remain high. “Cash-flow positive investments had been a challenge, but that’s changing now.”

Copyright © 2015 Key Media Pty Ltd

Olivia D’Orazio
Other

Looking at historical sales data, The Red Pin has determined Friday, May 1 to be the best day to sell a house.  

That first day of May – which is just a week and a half away – could net you a higher selling price for your clients, whose home could also spend fewer days on market and possibly attract a bidding war.  

“Year after year, May has blown away sales expectations,” said Rokham Fard, co-founder & CMO of Toronto’s new-wave brokerage, The Red Pin. “With the year’s sales so far, we’re expecting the market to explode over the next few weeks. “If you’re planning to sell your home and see optimal return on your investment, you have just under two weeks to get it to market.”  

The online brokerage said homes over the last five years have typically sold for $18,650 more in May, compared to the average for the rest of the calendar year.  

It also said that, since properties typically sell in 21 days during the spring season, listing at the start of May should give agents the best chances for a speedy sale. Plus, sellers can often choose from a larger pool of buyers in the springtime, many of whom begin their searches on Fridays in anticipation of weekend showings and open houses.

Copyright © 2015 Key Media Pty Ltd 

Olivia D’Orazio
Other

The growth that markets like Toronto and Vancouver are experiencing is – by most accounts – unsustainable, but should sales reps in those cities prepare for a crash?

“It’s a fair question, and ‘No’ is the answer I’d give you,” says Phil Soper, president and CEO of Royal LePage and Brookfield Real Estate. “The likelihood of an increase in interest rates of anything other than a very minor nature, call it a quarter of a point or something, is very low right now.”

Soper says the only thing that could realistically cause problems for the markets in Canada’s largest cities is a steep interest rate hike. Last year, a rate hike seemed likely as the closely tied American economy continued its rapid expansion, adding some three million jobs in 2014.

“Even though we have independent monetary policy between Canada and the United States, there is a strong correlation between interest rates policy between the two countries, and if their interest rates started to rise, I am convinced ours would have too,” Soper says. “But, and here’s the good news in this, in the first quarter of 2015, the pace of expansion in the U.S. slowed down considerably.”

That slowdown, Soper says, took the threat of inflation off the table. The Bank of Canada went on to lower rates even further earlier this year – dropping the benchmark to three-quarters of a per cent. Earlier this month, the central bank decided to hold its overnight rate there, citing the “front-loaded” impact of lower oil values and an economy that “stalled” in the first quarter of 2015. It did say, however, the economy is recovering as it had expected.

“So with interest rates low, I don’t see a correction in Vancouver and Toronto,” Soper says. “I just don’t see it in the cards.”

Copyright © 2015 Key Media Pty Ltd 

Bruce Keith
Other

Often the seller refuses to reduce their price, even though no buyer has shown significant interest. Now what to do? Your next strategy should be to ask some tough questions. Here are four good ones to consider:

• “Why do you suppose none of the 13 showings we have had in the last two weeks have generated a decent offer?”
• Or, “What happens if your home does not sell?”
• Or, “The market is reducing your price whether you agree to it or not… just so I understand, how long are you prepared to wait?”
• Or, “Where do you suppose the market is going in the next three to six months… up or down?”

As you know, the real issue here is their motivation. If you do not get the right answers, you really have to question whether or not they want to sell in a reasonable period of time. Maybe you need to give the listing back to them. Be direct and honest – it’s your job to have the courage to tell the seller exactly what they need to know. You’re not in the business of collecting listings; you’re in the business of collecting “solds”. No excuses.

Showing subtle confidence

Great salespeople have special ways of saying things. One of those techniques is to include assumptive phrases in your day-to-day conversations with your customers. This will make your conversations significantly more compelling. The resulting benefit is your customers will find the buying exercise more pleasant and more efficient. To be a great salesperson, it is important that you master this skill of being naturally assumptive.

Here are some terrific assumptive phrases for you to use with your clients:

1. “As your Realtor… (I will be taking care of all aspects of the transaction.)”
2. “When we get together… (you can expect me to be fully prepared.)”
3. “When you list with me… (you will start to see the differences in what I do.)”
4. “After you sign the contract… (my team/company/office will look after all the details until the deal closes.)”
5. “Because I will communicate with you weekly…(you will always know exactly what’s going on.)”

Your clients want to deal with someone who is confident. Include these in your repertoire and your customers will start to see how confident you are. What will be obvious is the value you bring to the table. Isn’t that what they’re looking for? Be assumptive. No excuses.

© 2015 REM Real Estate Magazine

Jamie Henry
Other

A new report from Re/Max shows that first-quarter home prices in Toronto and Vancouver increased sharply.

In Vancouver, a seven per cent rise in prices in a year means an average sale price of $874,869, while in Toronto there has been an eight per cent increase to an average of $594,827.

The higher prices have also benefitted nearby areas as workers opt to live a bit further out to get more for their money.

For instance, sales in Victoria, B.C. have soared by 23 per cent in the past year with average selling prices up two per cent to $569,070, while Hamilton-Burlington has seen a rise of eight per cent to $443,706.

The report also shows that there are more single buyers of homes nationwide. 

Copyright © 2015 Key Media Pty Ltd