Sun

With multi-family unit starts in Metro Vancouver rising by 129 per cent in February compared to the same month last year, consumer confidence in condo buying has clearly not been dented despite a small yet high-profile number of condo towers going into receivership along with prices reaching $1,000 per square foot in Coal Harbour.

With one in four homebuyers opting to purchase a new build, the number of enquiries for the condo pre-sales, assignments and resales listed on the independent web site, www.AssignmentsCanada.ca, are increasing, founder Nicola Way says.

An average 1-bedroom pre-sale condo in Yaletown in 2005, from the web site’s statistics, was selling for around $275,000. Now, it is nearly impossible to find one under $400,000 – a 45-per-cent increase. On the world map, however, downtown Vancouver and high profile recreational developments in popular areas of B.C. (such as Victoria‘s Bear Mountain Golf Resort $450,000 and Revelstoke Mountain Resort mid-$400,000s) still compare favourably. Similar pre-sale condos in Sydney cost $475,000 and in San Francisco, $535,000.

As the median price of new condo developments in Vancouver continues to rise, it is obvious that the market is hungry for more affordable homes in emerging neighbourhoods.

In the Gastown and Crosstown areas where you can get much more bang for your buck, statistics show that consumer confidence is still strong. Last year, The Salient Group sold out their Paris Block and Garage developments in one evening with 1-bedroom units in Paris Block costing from the high $200,000s. The second phase, although priced higher, is still anticipated to be below the current average new condo price in Vancouver.

Is there a fail-safe strategy for buying a condo? The short answer is no, but the old adage of location, location, location goes a long way to assisting the purchaser when deciding between the overwhelming number of developments. Look at the current transit system and what is planned for the future. Consider the local amenities – schools, grocery stores, community centres. The main reason that buyers are attracted to downtown condo life still withstands – living with all the conveniences that the city offers on your doorstep; plus, in the case of new builds, the ability to own something brand new which involves innovative use of space, modern energy efficiency, and the ability to personalize the unit through choices of options and upgrades.

Take into account the facilities that the development provides – fitness centres, spas and swimming pools are popular as it is much more convenient to take the elevator a few floors than walk Vancouver‘s rainy streets to the local gym. Is your building pet-friendly? Increasing numbers of pet owners in Vancouver ensure that more and more developments are accepting four-legged friends. Research the interior aesthetics. Many developments include either black or white appliances and carpeted interiors but by paying extra to upgrade to stainless steel and hardwood flooring may be money well spent as trends dictate that this is the preferred choice. If you are really canny at the pre-sale launch, many developers are open to negotiating a decorating fee. So keen are they to sell a set number of pre-sales in order to obtain financing that such improvements can be incorporated into the purchase price.

Remember that square footage is decreasing as price points continue to rise and unit mix is now more important than ever when marketing a development. Having the right mix of desired features in a building, is an all-important key to ensuring your purchase is a successful one.

Nicola Way is the Owner of AssignmentsCanada.ca, an independent, Vancouver-based web site which lists Realtors’ assignment, pre-sale and resale properties since 2004.

© The Vancouver Sun 2008

Prices will still rise over next five years, but not as fast, report suggests

Gordon Hamilton
Sun

Metro Vancouver condominium prices are forecast to climb over five per cent this year and average 3.5 per cent a year for the next four years, according to a report released Wednesday by the Conference Board of Canada and Genworth Financial Canada.

A strong B.C. economy, an aging population and continued immigration are cited as factors in keeping prices high, according to the report. The average condo is expected to increase in price by 3.5 per cent a year out to 2012.

The report forecasts an average price increase in 2008 of 5.7 per cent, slowing to 2.4 per cent in 2009. Over the last three years prices jumped 15.4 per cent annually, pushing the average Metro Vancouver condo to $328,000. By 2012, the average price is expected to be $389,000, according to the report.

“Prices are rising, so if you can get into the market, clearly in the Vancouver market, which is one of the best in the country, then you are going to get some return in terms of building your equity.” said Jim Murphy, president of the Canadian Association of Accredited Mortgage Professionals, which promotes affordable home ownership.

“Prices are not expected to increase as much as they did in 2007 on a go-forward basis, but they are still expected to increase.”

On the downside, the report notes that condo affordability is declining. Price increases and mortgage rate hikes in 2007 pushed monthly principal and interest charges on the average condominium to $2,125, the highest on record. Murphy said mortgage rates have slipped in recent weeks, moderating the impact on buyers for 2008.

The report examined condominium trends in Canada‘s eight largest metropolitan areas: Toronto, Montreal, Quebec City, Ottawa, Calgary, Edmonton, Vancouver and Victoria.

Overall, it stated, demographics and affordability, the key underpinnings of condominium demand, remain favourable. Further, the report forecasts large drops in new condominium starts in most major markets, including Metro Vancouver and Victoria.

Canada Mortgage and Housing Corp. data reflects a similar moderate growth pattern, according to the agency’s senior market analyst for Vancouver.

“Condo prices will continue to grow, but not as steeply over what we have seen in the past,” said senior analyst Robyn Adamache.

She said CMHC data shows prices are expected to climb eight per cent this year and five per cent in 2009. There is no sign of a price correction on the horizon, she said. CMHC does not forecast beyond 2009.

“Of the leading indicators for a price correction that we look at, so far, none of them have come to pass,” she said.

Demand is still greater than supply, she said, citing historical data from prices and the ratio of sales to new listings.

“When this ratio falls below 45 per cent, that is in the past when we have seen price corrections. We are still well above 65 per cent now. So there is still quite a ways to go.”

© The Vancouver Sun 2008

B.C. Housing
Sun

On Tuesday, the province will increase the Rental Assistance Program’s maximum monthly assistance benefits, introduce a $50 minimum monthly benefit and increase the rent ceiling used to calculate the amount of assistance a family will receive.

How old and new ceilings compare by region and family size:

Family of up to three: Metro Vancouver Other areas of B.C.

New $975 $900

Old $825 $700

Family of four or more:

New $1,100 $940

Old $875 $730

© The Vancouver Sun 2008

Other

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VINNEE TONG
Other

NEW YORK — Home prices in many U.S. cities continued to plunge by record amounts in January as sellers cut their asking bids and rising foreclosures took their toll, new data showed Tuesday.

While the spring selling season usually gives the market a bounce, some analysts say any notable improvement may not come until well into the summer. U.S. home prices fell 10.7 per cent in January, and the Standard & Poor’s/Case-Shiller home price index of 20 cities saw the steepest decline in the index’s two-decade history.

Worst-hit were Las Vegas and Miami, both reporting 19.3 per cent drops, as the regions are still paying the price for rampant speculation and overbuilding during the boom years. Those cities and 14 others, including Phoenix, San Diego, and Detroit, posted record lows.

“I wouldn’t be looking for a pattern of improvement until April, May or June,” said Brian Bethune, Global Insight’s chief U.S. economist.

Only Charlotte, N.C., squeaked by as a gainer in the Case-Shiller index, with a 1.8 per cent rise in January compared to a year earlier.

“We are still selling here in Charlotte,” said Dianne McKnight, a broker associate at Re/Max Executive Realty in the city. “If a property is priced right, it sells in a day and you have multiple offers. There are plenty of buyers out there kicking around.”

But the overall downbeat figures come on the heels of data released Monday showing that the median price of existing homes being sold in February fell in the largest year-over-year drop since at least 1999.

“Home prices continue to fall, decelerate and reach record lows across the nation,” said David Blitzer, index committee chairman at S&P. “No markets seem to be completely immune from the housing crisis.”

Mr. Blitzer said all 20 cities S&P tracks have seen falling prices for five consecutive months when compared to the prior month. What’s more, the declines are growing in severity, with 13 of the 20 cities reporting their biggest single monthly decline in January.

Pava Leyrer, president of Heritage National Mortgage in Detroit, said the tightening of loan standards has compounded the problems of too much inventory, foreclosures and worries over the economy.

“It’s just a spiral that will end up taking this year to get out of,” Ms. Leyrer said.

She said it would take until the spring of 2009 before they started to see the market in Michigan improve.

While the vast majority of homes in the U.S. are not in danger of foreclosure, the housing slump has raised concerns about a recession and has had ripple effects across the economy as consumers spend less in other areas and banks tighten lending requirements.

Consumer confidence sank to a five-year low in March as tight credit markets, rising prices and worsening job prospects deepened worries that the economy has fallen into recession. The Fed has aggressively slashed interest rates to spur growth and free up the credit markets.

A narrower survey, released separately Tuesday by the Federal Housing Enterprise Oversight said home prices fell 3 per cent in January from the same month last year, and dipped 1.1 per cent from December. The declines were sharpest in New England.

The monthly OFHEO index is down 4.1 per cent since its peak last April. The index is calculated using mortgages of $417,000 or less that are bought or backed by government-sponsored mortgage companies Fannie Mae or Freddie Mac. Legislation enacted in February temporarily raised the limit to as much as $729,750 in high-cost areas.

Many sellers in some parts of the country seem to be cutting prices more aggressively. While sales of existing homes notched a surprise increase in February after falling for six straight months, the median price fell, according to data Monday from the National Association of Realtors.

The trade group said sales rose 2.9 per cent last month to a seasonally adjusted annual rate of 5.03 million units — the biggest increase in a year. But the median existing sales price in February fell to $195,900, the largest year-over-year drop on records that go back to 1999.

© The Globe and Mail

Markets seize on positive news but analysts warn recession woes not over

Eric Beauchesne
Sun

A for sale sign sits in front of a home in Cleveland, Ohio, in late January. Analysts say that while the U.S. housing market may be slowly recovering the country is still facing economic troubles.

OTTAWA – A one-month rebound in the U.S. housing market doesn’t a recovery make, analysts warned Monday.

But don’t tell that to investors who sent North American stock markets soaring in the wake of evidence suggesting that the bottom of the U.S. housing market recession may finally be in sight, and that U.S. financial markets may not be in as bad shape as feared.

JP Morgan Chase and Co’s upping its bid for Bear Stearns fivefold to $10 US from $2 US a share, plus an unexpected rebound in U.S. home sales last month more than offset widening acceptance that the U.S. is now in recession. The latest acknowledgement was by Deutsche Bank AG, which said the U.S. economy slipped into a recession in the first three months of the year and will remain in one through the second quarter.

The stock market rally, however, reflected optimism that the U.S. recession may not be as deep or as protracted as feared which also fed into gains in the Canadian dollar, which rose just over one-half cent to 98.24 cents US.

The benchmark TSX index closed up nearly 250 points, led by gains in the banks, while Wall Streets’ blue-chip Dow ended the day up almost 200 points.

“Spurred on by improved affordability, U.S. existing home sales unexpectedly rose for the first time in seven months in February, up 2.9,” noted BMO Capital Markets economist Sal Guatieri.

The rebound was widespread, including both single-detached units and the more volatile condos — and in three of the four major regions — while there was also a reduction in new listings of detached homes, he observed.

“While the reduction in inventories is encouraging, one upside surprise in the housing market data isn’t proof of stabilization,” he added, noting that the level of unsold homes on the market remains at historically high levels, and that the focus will now be on other U.S. housing market reports today and Wednesday.

Still, some analysts said the report at least suggests the bottom of the sinking housing market may be in sight.

“Overall, the mix of available sales, price, starts and construction figures may finally be showing the long-awaited bottoming of sales volume that should allow some price stabilization by next year,” said Mike Englund, economist with online think-tank Action Economics.

“This should reinforce a diminished downdraft in construction activity through the remainder of the year, and smaller associated subtractions from GDP growth following the hefty GDP hit projected for the current quarter.”

However, recession fears continued to weigh on oil and gold prices, both of which lost more ground following last week’s steep retreat.

TD Bank reported that last week its commodity index fell 4.5 per cent, the steepest one-week retreat since last August which was also broad based with prices for all 18 commodities losing ground.

And analysts who haven’t yet declared the U.S. is in recession, agree it’s beginning to look like one.

“The evidence is building that the U.S. is in recession,” said RBC Harbour Group’s John Johnston. “In spite of this the downturn still looks to be a relatively mild one, likely between eight and 10 months long … .”

Rather than spiralling into recession, it appears to be “sliding, maybe even meandering into a contraction,” Johnston said. “Downside risks persist, but … concerted policy actions suggest that major downside risks are extremely limited.”

“Most importantly, central bankers have added lots of liquidity to the system and now the Fed has cut the real Fed funds rate to zero, a level of rates that has always triggered equity market and economic recoveries in the past,” he said. “All of this points to a new bull market in equities getting started by summer.”

© The Vancouver Sun 2008

Housing market upturn does not a recovery make, analysts warn

Eric Beauchesne
Province

Existing home sales unexpectedly rose in the U.S., the result of improved affordability. Photograph by : Reuters File Photo

OTTAWA — A one-month rebound in the U.S. housing market doesn’t a recovery make, analysts warned yesterday.

But don’t tell that to investors who sent North American stock markets soaring in the wake of evidence suggesting that the bottom of the U.S. housing market recession may finally be in sight, and that U.S. financial markets may not be in as bad shape as feared.

JP Morgan Chase and Co.’s upping its bid for Bear Stearns fivefold to $10 US from $2 a share, plus an unexpected rebound in U.S. home sales last month more than offset widening acceptance that the U.S. is now in recession.

The latest acknowledgement was by Deutsche Bank AG, which said the U.S. economy slipped into a recession in the first three months of the year and will remain in one through the second quarter.

The stock-market rally, however, reflected optimism that the U.S. recession may not be as deep or as protracted as feared, which also fed into gains in the Canadian dollar, which rose just over one-half cent to 98.24 cents US.

The benchmark TSX index closed up nearly 250 points, led by gains in the banks, while Wall Streets’ blue-chip Dow ended the day up almost 200 points.

“Spurred on by improved affordability, U.S. existing home sales unexpectedly rose for the first time in seven months in February, up 2.9 per cent,” noted BMO Capital Markets economist Sal Guatieri.

The rebound was widespread, including both single-detached units and the more volatile condos — and in three of the four major regions — while there was also a reduction in new listings of detached homes, he observed.

“While the reduction in inventories is encouraging, one upside surprise in the housing market data isn’t proof of stabilization,” he added, noting that the level of unsold homes on the market remains at historically high levels, and that the focus will now be on other U.S. housing market reports today and Wednesday.

Still, some analysts said the report at least suggests the bottom of the sinking housing market is in sight.

“Overall, the mix of available sales, price, starts, and construction figures may finally be showing the long-awaited bottoming of sales volume that should allow some price stabilization by next year,” said Mike Englund, economist with think-tank Action Economics.

“This should reinforce a diminished downdraft in construction activity through the remainder of the year, and smaller associated subtractions from GDP growth following the hefty GDP hit projected for the current quarter.”

However, recession fears continued to weigh on oil and gold prices, both of which lost more ground following last week’s steep retreat.

TD Bank reported that last week its commodity index fell 4.5 per cent, the steepest one-week retreat since last August which was also broad based with prices for all 18 commodities losing ground.

And analysts who haven’t yet declared the U.S. is in recession, agree it’s beginning to look like the downturn looks to be a relatively mild one, likely between eight and 10 months long.

© The Vancouver Province 2008