Buyer activity brings greater stability to the housing market

Posted: May 4, 2009

VANCOUVER, B.C. – May 4, 2009 – With more buyers and fewer homes for sale in recent months, the Greater Vancouver housing market has entered a more moderate and balanced state.

For the sixth consecutive month, new listings for detached, attached and apartment properties declined in Greater Vancouver, down 33.7 per cent to 4,649 in April 2009 compared to April 2008, when 7,010 new units were listed. The total number of property listings on the Multiple Listing Service® (MLS®), while slightly down compared to last month, remains unchanged compared to the same period in 2008.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver totalled 2,963 in April 2009, a decline of eight per cent from the 3,218 sales recorded in April 2008, and an increase of 31 per cent compared to last month.

“We’re seeing greater balance in the housing market, as evidenced by a strong sales to active listings ratio of over 19 per cent,” Scott Russell, REBGV president said. “The result is a relatively stable market in which homes are being realistically priced.

“The bridge between buyer demand and housing supply is continuing to narrow, which, as we see, helps bring stability to home prices,” he said. “The trends in our housing market over the last couple of months offer a much more comfortable, historically normal set of conditions.”

Sales of detached properties declined eight per cent to 1,190 from the 1,293 detached sales recorded during the same period in 2008. The benchmark price, as calculated by the MLSLink Housing Price Index®, for detached properties declined 12.2 per cent from April 2008 to $675,268.

Sales of apartment properties in April 2009 declined 10.5 per cent to 1,179, compared to 1,317 sales in April 2008. The benchmark price of an apartment property declined 12.6 per cent from April 2008 to $340,203.

Attached property sales in April 2009 are down 2.3 per cent to 594, compared with the 608 sales in April 2008. The benchmark price of an attached unit decreased 9.7 per cent between April 2008 and 2009 to $431,759.

Posted: April 27, 2009

(Chart data courtesy of the Bank of Canada)

5-Year Posted Fixed Rates Drop RBC, BMO, and TD have all dropped their posted 5-year fixed rates to 5.25%. RBC and BMO also lowered their advertised 5-year fixed “special offer” rates to 3.95%. (Usually, with a bit of negotiation, you can save a bit more.) In the broker channel, 5-year fixed mortgages currently range from 3.59% for a no-frills mortgage to 3.89% for a full-featured mortgage with 120-day rate hold—with several options in between. The above rates apply to well qualified borrowers with approved credit.

Buying opportunity 2009 - Trends show a month to month decline!
Real Estate Board of Greater Vancouver

Posted: April 4, 2009

The Real Estate Board of Greater Vancouver (REBGV) reports that the end of the record breaking 7 year real estate market cycle brought improved affordability to the marketplace. Rising prices had seen benchmark prices escalate from $357,770 for a single family detached home in December 2001 to $648,421 by December 2008.

REBGV reports that residential property sales in Greater Vancouver totaled 24,626 in 2008, a decline of 35.3 per cent from the 38,050 sales in 2007.

New listings for detached, attached and apartment properties increased 13.9 per cent to 62,561 in 2008 compared to 2007, when 54,945 new units were listed.

Trends in the later half of 2008 showed a consistent month-over-month decrease in residential housing prices ..." REBGV President Dave Watt said. ..." December statistics show a third consecutive month of a decrease in active property listings in Greater Vancouver. That means supply is coming down. Last month was also the first time in 27 years that Greater Vancouver home sales for December were higher than November."

Watt further stated that "for buyers, lower prices haven't been a concern as much as the perception that prices are falling. It's difficult to identify the 'bottom' of the market. The reality is that people tend to buy when prices are going up, not when they're going down."

Our Insert: We know from past that the risk is always lower in a downwards market. In fact, risk always increases in an upward real estate market and always lessens in a downward market.

As Warren Buffet would say, “I would rather be approximately right, than precisely wrong.” This simply means that its rather difficult to find a bottom of a market. What we always advise our clients is that they are buying a deal, not the market. As real estate investors, when you purchase a deal, you must follow the principles of positive cash flow, low vacancy rates and a reasonable price.
In essence, as investors, match these criteria together, and you will wake up 20-25 years later with a stream of rental income far greater than any RRSPs could ever provide for you.

Be Approximately Right rather than precisely wrong.

Between these 20-25 years, the markets will go up and they will go down. However, the important thing is that your tenants are paying for your investment. It is also important to note is that after every crisis, there has been a recovery: Black Monday 1987, The Asian financial crisis 1997, The Russian Financial crisis 1998, 911, and many more.

These crisis have always occurred throughout many centuries but a snapshot of real estate values in Greater Vancouver through 1977-2009 would reveal that had you bought at the time of any crisis during 1987, 1997, 1998, or September 11, 2001, you would have been far ahead, because long term, you would have made tremendous gains. Even if the market hadn’t moved upwards, your tenants would have been providing you with retirement income for years to come!

The number 1 consideration as a long term investor of real estate or ANY hard asset is Inflation. With the billions of dollars of money literally being printed to bail economies out, we will go through a period of inflation in the near future. Remember that stimulus packages lag about 1 year until they take effect.

Inflation lags even a little longer. Warren Buffet has mentioned that inflation will be the number 1 consequence of the actions we are taking today (bailouts and stimulus packages). Hard assets rise in periods of inflation as there is more money in circulation.

Therefore, in a nutshell, we are advising our clients that we would rather be approximately right than precisely wrong.

You have the following advantages on your side right now:

1. It is a buyers market

2. We have RECORD low interest rates

3. Sellers are fearful and are rolling out the red carpetsThis means that you have a great advantage.

4. We can still get financing. Canadian Banks are the safest and as a result we can still acquire great mortgages and lock them in!

5. If you are a foreign investor, our Canadian Dollar has depreciated quite substantially, which for you is a great advantage.

Interest rate cut good news for home buyers, association says
CBC News

Posted: March 4, 2009

The Bank of Canada's decision to cut interest rates Tuesday is unlikely to trigger a flurry of home buying in Vancouver, although more potential buyers will be looking, the B.C. Real Estate Association says.

Cameron Muir, chief economist of the B.C. Real Estate Association, predicts the Bank of Canada will keep cutting interest rates in the months ahead.The association's chief economist, Cameron Muir, said he predicts the bank will keep cutting interest rates in the months ahead to further stimulate the economy."We will see that five-year posted rate start to edge down as worries around the financial markets here in Canada start, too," Muir said Tuesday."Anyone that is either purchasing a home now and taking out a mortgage or renewing their mortgage coming up in the next few months, it's probably good news for them to see a downward pressure on interest rates here in Canada," he said.

Alicia Pinksen and Chris Urgl said they had been looking for a place to rent in Vancouver, but the interest rate cut has changed their plans.Chris Urgl and Alicia Pinksen say lowered bank rates are encouraging them to look at buying a home in Vancouver rather than rent."We are looking to get into the market within the next year or so," Pinksen told CBC News. "It [the interest cut] sort of encourages us to get in a little bit faster."

Michelle Byman, a Vancouver mortgage broker, said rates as low as 4.65 per cent are available, and the savings can add up."The difference in the drop of half a point over let's say in a $100,000 mortgage, is about approximately $40 a month in interest saved — over the long term, several thousand dollars," she said.

Economic conditions create buying opportunities!
By Grant Marshall

Posted: January 9, 2009

One more year has ended. With the beginning of 2009 we can reflect back on 2008 and the year that was (at least as far as real estate goes). According to the REBGV, the record-breaking seven year upward swing of our real estate cycle ended last year. A detached home rose from $357,770 in December 2001 to $648,421 in December 2008.

Sales fell 35.3% in 2008 compared to 2007 (24,626 vs 38,050). At the same time, listings increased 13.9% from 54,945 up to 62,561.

“Trends in the latter half of 2008 showed a consistent month-over-month decrease in residential housing prices, a departure from the rising home prices and record-breaking sales that were experienced in Greater Vancouver for much of this decade,” said REBGV president, Dave Watt.

“It’s also important to note that our December statistics show a third consecutive month of a decrease in active property listings in Greater Vancouver. That means supply is coming down,” Watt said. “Last month was also the first time in 27 years that Greater Vancouver homes sales for December were higher than November.”

Benchmark prices fell 10.9% from December 2007 to December 2008. Those prices have fallen 14.8% since May 2008 in Greater Vancouver to $484,211 from $568,411.

“For buyers, lower prices haven’t been a concern as much as the perception that prices are falling. It’s difficult to identify the ‘bottom’ of the market. The reality is that people tend to buy when prices are going up, not when they’re going down,” Watt said.

Now, looking specifically at what is happening in the City of Vancouver we are generally following the Greater Vancouver trend. However, I find it interesting to note that prices in Vancouver West appear to be a little more stable than those in Vancouver East. You can see in the chart below that prices actually rose in Vancouver West month-to-month while they fell across the board in Vancouver East.

I think we had a lot of bargain hunters out this past month. People were taking advantage of falling interest rates, a lack of competition as well as desperate sellers. The result, as Dave Watt mentioned, was that for the first time in 27 years sales in December were higher than November.

It shall be interesting to see how the market begins the New Year. We’ve seen a sharp decline in the number of active listings. Will January bring a big increase? Will buyers continue to eagerly pick up bargains in the Vancouver real estate market?

Vancouver MLS Real Estate Statistics - December 2008

Posted: December 12, 2008

The US-led recession is generating a number of buying opportunities for people interested in real estate on the Sunshine Coast.As a local realtor, I am witnessing the lowest house prices experienced in the area since 2005, and would like to share my view on why now is a great time to buy property.In a recent statement from the Real Estate Board of Greater Vancouver (REBGV) it was reported that residential benchmark prices in the greater Vancouver area have declined by 8.8 per cent between May and October 2008. Dave Watt, REBGV president, says the current home prices are not keeping pace with the positive economic conditions in B.C., and represents buying opportunities.

“Today’s housing market is characterized by moderating home prices and wide selection. It’s definitely a buyers market,” says Watt.

The lower prices make buying a home on the Sunshine Coast a sound investment for anyone willing to own a home for several years while the economy recovers. For sellers that plan to buy another home, the lower prices throughout the market should account for any loss they concur on their home. For most sellers, the 8.8 per cent decline is minimal compared to the substantial gains all buyers have experienced in the past years.For instance, in Gibsons, the average housing price nearly doubled between 2001 and 2008 with price increases of more than 90 per cent. Once the economy recovers, the housing prices will jump on the Sunshine Coast. That’s because the area is and will remain, a coveted real-estate gem. The serene communities are situated in one of the most beautiful locations in the world, with a year-round mild climate and close proximity to Vancouver.

Investor and philanthropist Frank Gluster recently told the Globe and Mail that in every crisis, there is an opportunity. His advice is to stay focused and not succumb to fear.