Market conditions have shifted. After five years of blockbuster activity and double-digit price growth, market conditions have slowed, and now favour buyers in many areas of the province.
Residential sales have declined 22 per cent in the first six months of this year, while available resale inventory has grown by 54 per cent to 57,000 active listings in June. In the Greater Vancouver board area, where longer-term data is available, inventory is at the highest level since 1998.
Home price appreciation observed from 2004 to 2007 is less attainable in today’s market, and sellers’ expectations for such gains should be tempered. More generally, in a market favouring buyers, prices generally increase at or below the level of inflation. While the average residential home price in BC increased at a healthy 6 per cent per year since 1981, large gains are often followed by periods of price stagnation. Over-optimistic pricing by sellers will only inhibit the timely sale of properties, adding to inventory levels.
Buyers have more homes to choose from now than in previous years, resulting in greater freedom to compare the attributes and prices of similar properties in the market before making purchase decisions.
Despite current buyers' market conditions fuelled by housing affordability constraints and economic uncertainty, the economic and demographic backdrop in support of housing demand remains strong in BC. BC's unemployment rate remains near record lows, while the labour force participation rate hovers near historical highs. Meanwhile, the province remains a favoured destination for new migrants, reflected in the third-highest population growth among provinces during the first quarter of 2008. However, challenges continue in the forestry sector, and eroded consumer confidence may also be playing a role in a pull back of consumer spending.
Copyright British Columbia Real Estate Association. Reprinted with permission. BCREA makes no guarantees as to the accuracy or completeness of this information.
Thursday, July 17, 2008
Monday, July 14, 2008
Ottawa Tightens Mortgage Rules
Wednesday, July 9th, 2008 CBC News
The federal government said Wednesday that it is tightening the rules relating to government- guaranteed mortgages, even though there is no evidence that the Canadian market is facing the kind of turmoil that has disrupted the United States.
The new rules, set to take effect Oct. 15, are a "responsible and measured approach … to reduce the risk of a U.S.-style housing bubble developing in Canada," the Department of Finance said in a news release.
However, it also said that Canadian creditors' "prudent and cautious approach" to mortgage lending, as well as sound supervision, have "allowed Canada to maintain strong and secure housing and mortgage markets."
The government said the measures will apply to new, government-backed, insured mortgages. "Canadians who already hold mortgages will not be affected," it said.
The changes include:
Cutting the maximum amortization period to 35 years from 40.
Requiring a minimum down payment of five per cent, whereas loans for 100 per cent of the price are possible now.
Establishing a requirement for a consistent minimum credit score.
Introducing new loan-documentation standards.
The government acknowledged that the proportion of bank mortgages in arrears is stable at 0.27 per cent, "near the lowest levels experienced since 1990 and well below the highs of 0.65 per cent experienced in each of 1992 and 1997."
And housing prices don't show evidence of speculation, the Finance Department said, because they are "in line with economic factors such as low interest rates, rising incomes and a growing population."
Mortgage insurance protects lenders when a borrower defaults by making up any shortfall needed to repay the loan if the sale of the property doesn't cover the debt.
Federally regulated lenders must have mortgage insurance on loans where the buyer's down payment is less than 20 per cent of the price.
The Canada Mortgage and Housing Corp. (CMHC), a Crown corporation, as well as private insurers provide mortgage insurance. The government backs CMHC and also private mortgage insurers so the private insurers can compete with CMHC.
Just over a year ago, Parliament passed a bill changing mortgage insurance to make home buying easier, and in 2006, CMHC eased the insurance rules.
The federal government said Wednesday that it is tightening the rules relating to government- guaranteed mortgages, even though there is no evidence that the Canadian market is facing the kind of turmoil that has disrupted the United States.
The new rules, set to take effect Oct. 15, are a "responsible and measured approach … to reduce the risk of a U.S.-style housing bubble developing in Canada," the Department of Finance said in a news release.
However, it also said that Canadian creditors' "prudent and cautious approach" to mortgage lending, as well as sound supervision, have "allowed Canada to maintain strong and secure housing and mortgage markets."
The government said the measures will apply to new, government-backed, insured mortgages. "Canadians who already hold mortgages will not be affected," it said.
The changes include:
Cutting the maximum amortization period to 35 years from 40.
Requiring a minimum down payment of five per cent, whereas loans for 100 per cent of the price are possible now.
Establishing a requirement for a consistent minimum credit score.
Introducing new loan-documentation standards.
The government acknowledged that the proportion of bank mortgages in arrears is stable at 0.27 per cent, "near the lowest levels experienced since 1990 and well below the highs of 0.65 per cent experienced in each of 1992 and 1997."
And housing prices don't show evidence of speculation, the Finance Department said, because they are "in line with economic factors such as low interest rates, rising incomes and a growing population."
Mortgage insurance protects lenders when a borrower defaults by making up any shortfall needed to repay the loan if the sale of the property doesn't cover the debt.
Federally regulated lenders must have mortgage insurance on loans where the buyer's down payment is less than 20 per cent of the price.
The Canada Mortgage and Housing Corp. (CMHC), a Crown corporation, as well as private insurers provide mortgage insurance. The government backs CMHC and also private mortgage insurers so the private insurers can compete with CMHC.
Just over a year ago, Parliament passed a bill changing mortgage insurance to make home buying easier, and in 2006, CMHC eased the insurance rules.
Thursday, July 3, 2008
Housing Market Update
The latest US Unemployment rate held steady last month at 5.50%, however; year to date they have lost 438,000 jobs. Their Housing Crisis is not over and you can expect more gloomy news over the next few months.
Canada had some good news in April, reporting modest Economic growth. This gives us some hope that Canada will avoid a Recession. In Europe, the Central Bank recently increased interest rates by a quarter point to ensure their Inflation stays in control.
The Western provinces of Canada have much different economies than in the Eastern provinces, and at this point in time are in a good position to weather the surrounding economic storms quite nicely. That should translate to our housing markets in the West staying stronger than in the East, as our unemployment levels remain at extremely low levels, thus bolstering consumer confidence.
In the June 27, 2008 Real Estate Weekly for Mission, it was noted that the Canada Mortgage and Housing Corporation said that the seasonally adjusted annual rate of housing starts rose 3.5 per cent to 221,300 units in May from 213,900 in April. It attributed the increase to a rise in single-family home starts, which in April had reached their lowest level since May 2001. BMO economist, Doug Porter, was quoted to have said "It just shows that things are not deteriorating rapidly and continue to not disappoint: The Canadian housing market, after all, is still holding up relatively well." But he also noted that he believes there will be some slowdown in activity later this year.
The CMHC is forecasting around 214,000 to 215,000 home starts for 2008, as rising incomes, low unemployment and low mortgage rates boost home ownership. This number is slightly down from 2007, but still strong by historical standards. Economist Pascal Gauthier notes anything above 200,000 is fairly robust. "There's nothing that suggests construction activity is going to come off the tracks," Gauthier said. "It is really just a gradual cooling."
If you are considering a Real Estate move this year, I would be happy to offer a second opinion about your decision, with relation to what the market is currently doing. Feel free to give me a call or drop me an e-mail at the contact information noted on this page.
Best regards, Cyndi Polovina
Canada had some good news in April, reporting modest Economic growth. This gives us some hope that Canada will avoid a Recession. In Europe, the Central Bank recently increased interest rates by a quarter point to ensure their Inflation stays in control.
The Western provinces of Canada have much different economies than in the Eastern provinces, and at this point in time are in a good position to weather the surrounding economic storms quite nicely. That should translate to our housing markets in the West staying stronger than in the East, as our unemployment levels remain at extremely low levels, thus bolstering consumer confidence.
In the June 27, 2008 Real Estate Weekly for Mission, it was noted that the Canada Mortgage and Housing Corporation said that the seasonally adjusted annual rate of housing starts rose 3.5 per cent to 221,300 units in May from 213,900 in April. It attributed the increase to a rise in single-family home starts, which in April had reached their lowest level since May 2001. BMO economist, Doug Porter, was quoted to have said "It just shows that things are not deteriorating rapidly and continue to not disappoint: The Canadian housing market, after all, is still holding up relatively well." But he also noted that he believes there will be some slowdown in activity later this year.
The CMHC is forecasting around 214,000 to 215,000 home starts for 2008, as rising incomes, low unemployment and low mortgage rates boost home ownership. This number is slightly down from 2007, but still strong by historical standards. Economist Pascal Gauthier notes anything above 200,000 is fairly robust. "There's nothing that suggests construction activity is going to come off the tracks," Gauthier said. "It is really just a gradual cooling."
If you are considering a Real Estate move this year, I would be happy to offer a second opinion about your decision, with relation to what the market is currently doing. Feel free to give me a call or drop me an e-mail at the contact information noted on this page.
Best regards, Cyndi Polovina
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