Derrick Penner
Sun

British Columbians have largely resigned themselves to the reality of declining real estate prices, according to two new polls.

And while they have come to grips with the idea that they are on the downslope of provincial real estate markets, that appears to be the pressure release many prospective buyers have been looking for.

Ipsos Reid, in a report to be released today, found that 57 per cent of British Columbians expect home prices to decline in 2009 by varying amounts depending on the region.

In Vancouver, the survey found an anticipated drop of 6.7 per cent. In the Fraser Valley, respondents’ expectations were for an 8.1-per-cent decline.

And on Tuesday, the Canadian Association of Accredited Mortgage Professionals (CAAMP) released the results of a survey showing 48 per cent of British Columbians expected further declines in prices.

But the dropping prices look like relief to some buyers, according to the Ipsos Reid survey, which found six out of 10 respondents thought now is a good time to buy.

“A lot of people have been expecting the bubble to burst,” Hanson Lok, Ipsos Reid’s senior research manager in B.C.

Now, with prices falling, projections for them to continue coming down and a glut of homes on the market, buyers who are in the market feel better about the strength of their negotiating position.

However, while more people feel they are in a better position to buy now than they were a year ago, Lok said the current world financial roller coaster needs to sort itself out before many of them do buy.

“So a lot of people, while they feel prices are more advantageous for buyers, are going to hold out before they consider buying,” Lok said.

He added that they will also wait to find the bottom of the market, because “prices are much more advantageous, and if they wait a little bit longer, they’re going to get better.”

Ipsos Reid surveyed more than 1,600 British Columbians for its poll, with a margin of error of 2.4 percentage points, 19 times out of 20. CAAMP commissioned Maritz Research to canvas 2,000 responses from across the country.

Lok said the difference in sample sizes from B.C. likely explains some of the differences in responses around expectations for price declines, and that the results are likely not that far apart.

The CAAMP survey also found that some 35 per cent of B.C. respondents said they believed it is a good time to buy a home, compared with 33 per cent who believed it wasn’t a good time (the balance of respondents were neutral).

Nationally, 38 per cent of respondents said now is a good time to buy versus 32 per cent who did not.

And on balance, the CAAMP survey found people weren’t stressed about their mortgages, despite the declining prices, with 84 per cent of respondents reporting they are satisfied with their mortgages.

Murphy said he believes that relates to mortgage rates and the state of the general economy.

While both unemployment and interest rates are higher than they were a year ago, Murphy said they both remain at relatively low levels on a historical basis.

“In a broad sense, it really comes down to where people’s personal situations are,” he added. “If they feel their job is pretty solid and things are good on that front, and their [mortgage] rates are low, then they’re in a fairly good position.”

The CAAMP survey also found that Canadians borrowed more against the equity in their homes this year — 22 per cent compared with 17 per cent in 2007.

They also borrowed more, $41,000 in 2008, up 20 per cent from the previous year.

© The Vancouver Sun 2008

 

Most B.C. residents braced for a fall, but some still think they’ll climb

Province

B.C. residents have Canada‘s bleakest expectations about the outlook for house prices, a new survey says.

Forty-eight per cent of those surveyed in B.C. believe house prices will fall in the next year — more than three times the 14 per cent that expect them to climb, the Canadian Association of Accredited Mortgage Professionals said yesterday.

The next most negative province is Alberta, where 40 per cent anticipate weaker prices, the association said.

“Westerners, who have endured particularly hot housing markets, are the most negative,” the association said.

Nationally, 35 per cent of Canadians believe home prices will fall in the next year — more than double the proportion of a year ago, the survey said.

Still, a rating that indicates B.C. residents’ optimism about whether now is a good time to buy a house has risen, the survey said.

“The average rating in British Columbia recovered from prior below-average ratings and is now at the national average,” the association said.

Nationally, 38 per cent of Canadians still think that now is a good time to buy a house, the online survey of 2,000 Canadians found. Thirty-two per cent believe it is a bad time.

“Residential mortgage consumers remain remarkably positive as they weather the financial storm,” the association said.

Meanwhile, only 0.28 per cent of mortgages are in arrears, a proportion that is not only low but also steady, it said. And an overwhelming 84 per cent of homeowners are satisfied with their mortgages.

Borrowers expect changes in their local housing markets, yet remain confident in a stable Canadian mortgage system, said Jim Murphy, association president, noting that it anticipated mortgage credit growth would slow, but remain relatively strong.

The survey was conducted during a month in which home sales plunged 14 per cent to a six-year low and during which prices tumbled 10 per cent from a year earlier.

Despite that sharp fall in home sales and prices, the mortgage association said that the Canadian housing market has avoided the price and sales meltdown in the U.S. housing market and that the Canadian mortgage market is supported by low and steady interest rates, better underwriting processes, different products and normal resale activity levels.

“Canada is a financially conservative country where consumers are able to meet the terms of their mortgages and buying decisions are based on affordability,” said association chief economist Will Dunning. “This contributes to a solid real-estate market that will not experience the same drop-off we see south of the border.”

© The Vancouver Province 2008

Pieta Woolley
Other

A major Gastown developer wanted the controversial seven-storey condominium-and-retail complex planned for 58 West Hastings Street to be much taller.

In a May 2 e-mail, Jon Stovell, the general manager of Reliance Holdings, wrote to city planner Alison Higginson arguing that the 70-foot-tall project should include a 300-foot-tall tower—one that could contain 30 storeys.

“We strongly support the neighbourhood improvement brought about by such projects,” Stovell wrote in the e-mail, obtained by the Straight through a freedom of information request to city hall.

Stovell sits on the City of Vancouver development permit board’s advisory panel.

His e-mail continued:

Our only disappointment is with height and form.

The height should be much more varied across the site and there should be a tower component of 300 feet.

This would create some identity and architectural strength in the street and [architect] Peter Busby could make it fit very well with the existing fabric.

The design proposed looks like it has been designed to simply not offend an established bias towards follow form massing in this area.

The area would benefit greatly from some additional signature developments like Woodwards.

Reliance Holdings has developed several buildings in the area, including the live-work studios at 33 Water Street, 55 Water Street, 1701 Powell Street, and 321 Railway Street.

Concord Pacific, which is developing the site at 58 West Hastings, could have increased the height of the building to 100 feet if it included nonmarket housing, according to the minutes of the development permit board meeting on June 23. Concord did not include nonmarket housing in its proposal.

Also at the June 23 meeting, 29 Downtown Eastside advocates blasted the proposal for 58 West Hastings on such grounds as the creeping gentrification along Hastings. Among them were the Carnegie Community Action Project’s Jean Swanson; Streams of Justice’s Dave Diewert; artist Ned Jacobs; and organizer Harsha Walia.

The minutes record that some concerns included that there’s a “Huge homeless problem and building condos is taking up land that could be used for social housing”, that “rental space is becoming unaffordable in the DTES”, and that they “don’t want to be overwhelmed by condos as it will change the historical character of the area”.

The minutes also note that “provision of non-market housing is not a requirement under the zoning”, and that “the project will contain market housing within a small unit configuration for somewhat more affordable housing units.”

© 2012 Vancouver Free Press

Alan Zibel
USA Today

WASHINGTON — Home prices fell in a record four out of five cities in the third quarter as low-cost foreclosures flooded the market and the decline spread through the country.

Of 152 metropolitan areas in the National Association of Realtors survey, 120 posted declines in median home sale prices vs. a year ago. Sales volume fell almost 8% in the quarter compared with the period a year ago.

Sales of foreclosures and other distressed properties comprised about 40% of transactions in the quarter, bringing the median sale price down 9% from a year ago, to $200,500.

Sales fell in all but four states in the Realtors’ report: Nevada, California, Arizona and Virginia, where buyers have been able to snap up foreclosed homes at a bargain.

“A very large proportion of distressed home sales are taking place at discounted prices compared to more normal conditions a year ago,” Charles McMillan, the Realtors group’s president, said.

That’s especially true in places like Sacramento and Riverside, Calif., where prices were down 37% and 39%, respectively, from last year. The two California cities had the largest annual price declines in the report.

A nasty brew of strict lending standards, falling home values and a tough economy is filtering through the housing market. By the end of the year, foreclosure listing service RealtyTrac expects more than a million bank-owned properties to have piled up on the market, representing about a third of all properties for sale.

Many economists believe the economy has fallen into a recession that could be the worst downturn in more than two decades. As layoffs accelerate, that’s likely to put further downward pressure on housing prices.

Mortgage financer Freddie Mac said last week that rising unemployment, tight credit and deteriorating economic conditions “contributed to a substantial increase in the number of delinquent loans,” including loans to borrowers with strong credit.

Freddie Mac has 28,000 foreclosed properties on its books, while its sister company, Fannie Mae has 67,500.

On Tuesday, Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, said “it is essential” to use some of the money in the government’s $700 billion financial rescue program to stem the tide of foreclosures.

Biggest median price losses and gains

Metro area	Q3 2007 median price	Q3 2008 median price	Change
Riverside-San Bernardino-Ontario, CA	$375,100	$227,200	-39.40%
San Diego-Carlsbad-San Marcos, CA	$589,300	$377,300	-36.00%
Los Angeles-Long Beach-Santa Ana, CA	$602,900	$391,400	-35.10%
CapeCoral-Fort Myers, FL	$236,700	$163,300	-31.00%
Las Vegas-Paradise, NV	$295,500	$211,600	-28.40%
Anaheim-Santa Ana, CA (Orange Co.)	$714,200	$517,300	-27.60%
Phoenix-Mesa-Scottsdale, AZ	$255,500	$185,100	-27.60%
San Francisco-Oakland-Fremont, CA	$824,200	$615,700	-25.30%
Washington-Arlington-Alexandria, DC-VA-MD	$438,000	$332,700	-24.00%
San Jose–Sunnyvale–Santa Clara, CA	$850,000	$650,000	-23.50%
Lansing-E. Lansing, MI	$133,700	$102,600	-23.30%
Tampa-St.Petersburg-Clearwater, FL	$218,300	$173,400	-20.60%
Palm Bay-Melbourne-Titusville, FL	$182,400	$145,300	-20.30%
Reno-Sparks, NV	$317,300	$253,400	-20.10%
Orlando, FL	$266,800	$213,400	-20.00%
Tucson, AZ	$244,800	$199,300	-18.60%
Sarasota-Bradenton-Venice, FL	$287,400	$237,400	-17.40%
Miami-Fort Lauderdale-Miami Beach, FL	$346,300	$287,800	-16.90%
Deltona-Daytona Beach-Ormond Beach, FL	$195,000	$162,300	-16.80%
Metro area	Q3 2007 median price	Q3 2008 median price	Change
Elmira, NY	$93,300	$105,000	12.50%
Decatur, IL	$85,900	$93,400	8.70%
Bloomington-Normal, IL	$155,800	$168,400	8.10%
Wichita, KS	$118,800	$125,300	5.50%
Tulsa, OK	$133,000	$139,800	5.10%
Amarillo, TX	$123,100	$128,300	4.20%
Trenton-Ewing, NJ	$328,600	$342,500	4.20%
New Orleans-Metairie-Kenner, LA	$160,200	$166,800	4.10%
Charleston, WV	$123,400	$127,700	3.50%
Buffalo-Niagara Falls, NY	$110,900	$114,200	3.00%
Houston-Baytown-Sugar Land, TX	$155,800	$160,200	2.80%
Champaign-Urbana, IL	$142,600	$146,400	2.70%
Syracuse, NY	$124,900	$127,300	1.90%
Mobile, AL	$136,300	$138,700	1.80%
Farmington, NM	$190,400	$193,600	1.70%
Oklahoma City, OK	$130,000	$132,100	1.60%
Austin-Round Rock, TX	$188,200	$190,900	1.40%
Des Moines, IA	$153,900	$155,400	1.00%
Columbia, MO	$149,900	$151,300	0.90%
Lincoln, NE	$138,800	$140,100	0.90%
Source: National Association of Realtors

Copyright 2008 The Associated Press

YWCA Vancouver partners with Province to help low-income families

Province

Download Document

Further sales declines expected in months ahead

Eric Beauchesne
Province

OTTAWA — The Canadian economy has taken a sudden turn for the worse, with the housing boom finally turning to bust as sales of existing homes plunged 14 per cent to a six-year low during October, the steepest monthly drop in 14 years, and prices fell 10 per cent from a year earlier.

The fall in sales from September left them down more than 25 per cent from a year earlier, the Canadian Real Estate Association reported Friday.

In B.C., the year-over-year residential sales dollar volume fell 54 per cent in October. The average house price in the province sank 6.5 per cent to $420,259 from a year earlier, the association said.

The weak housing report was released Friday afternoon as North American stock markets were retreating, and oil prices and the Canadian dollar falling, in the wake of worse-than-expected economic news out the U.S. of a sharp retreat in consumer spending there last month, and overshadowed surprisingly strong economic reports on Canadian factory shipments and auto sales.

“Many homebuyers across Canada battened down the hatches in October as they were concerned with dire headlines about stock market volatility and a global economic downturn,” said Gregory Klump, chief economist at the Canadian Real Estate Association.

“The breadth and depth of the drop in . . . activity suggests a major downshift in consumer psychology,” he said, adding that has moved many people to the sidelines until the economy starts to improve.

The federal government’s tightening up of the mortgage eligibility rules, aimed ironically at avoiding a U.S.-style housing bust, likely also had an impact, he added.

“Elimination of mortgage default insurance availability for purchases with less than a five per cent down payment and for amortizations beyond 35 years also likely played a lesser role in the decline in sales activity,” he said.

“These figures on the surface would suggest the bust has begun,” said BMO Capital Markets economist Douglas Porter, adding that while the sharp drop may overstate the current weakness in the Canadian housing market, Canadians should expect even further declines in sales and prices in the months and year ahead.

National sales were down 27 per cent from year-ago levels.

Even before the release of the home-sales report, North American stock markets were posting triple-digit retreats after the U.S. reported that retail sales last month fell 2.8 per cent, the steepest drop in 11 years, which followed a 1.3 per cent drop in September.

“The drop was much worse than the 2.1-per-cent decline expected by the markets, and was the fourth consecutive monthly drop in this indicator,” said TD Securities analyst Millan Mulraine, noting that sales there were also down 4.1 per cent from a year earlier, the worst performance on records dating back 40 years.

© The Vancouver Province 2008

$180-million downtown Vancouver tower featured conveyor belt to park resident’s vehicles

Susan Lazaruk
Province

A splashy jewel of a downtown condo development — which included plans for a parking lot in which residents’ cars would be whisked away on a conveyor belt — has been put on hold after a bank pulled funding, the latest in a growing list of failed residential projects.

The sales presentation for Jameson House, a 37-storey tower on West Hastings Street near Hornby, was closed and dark yesterday, a regular sales day.

At the site, a crane sat idle and there was no activity in the partially completed seven-storey-deep hole at the $180-million project that was scheduled to be finished by spring 2010.

Developer Tony Pappajohn of Jameson Developments Corp. confirmed in media reports a major unidentified Canadian bank had withdrawn its loan, despite pre-sales of 105 of the 144 upscale suites ranging from $500,000 to more than $5 million.

He couldn’t be reached for comment yesterday.

At an average price of $3 million for each suite, buyers had committed over $300 million in total sales and had put down secured deposits of 15 to 25 per cent.

The project was being marketed by Vancouver condo king Bob Rennie. He didn’t return a message yesterday.

The development also included several floors of office space, a majority of which was spoken for, and retail on the ground floor.

“This is not a surprising development in this economic climate,” said Peter Simpson of the B.C. Home Builders Association.

“When the banks look at its economics and if its economics don’t work, they won’t advance the money.”

He said banks are being “very vigilant” these days.

“He may have done nothing wrong, but he got caught up in the global economic restructuring,” he said.

“The banks aren’t willing to take risk.”

Jameson Developments is looking for another investor or to sell the project.

The space-age-looking tower with rounded corners, designed by famed London architects Foster and Partners, was described as minimalist and “sexy” by Rennie two years ago.

The kitchens were to include countertop islands that could be hydraulically raised and lowered and the suites were to have in-floor radiant heating throughout.

They were to include membership in the exclusive Terminal City Club across the street and the robotic parking lot.

Jameson House is one of several condo projects suspended or halted, including:

– Onni Group’s the Whittaker in New Westminster and its proposed V6A development in Vancouver‘s Chinatown.

– Two Surrey residential towers, Infinity and Sky Towers.

– Lucaya, a $30-million condo development in Kelowna, and Capella, a $1.4-billion luxury project on Vancouver Island.

– Millennium’s $400-million Evelyn towers near Park Royal mall in West Vancouver.

– The $500-million-plus downtown Vancouver Ritz-Carlton hotel-condo project has also been put on hold.

“There is no precedent for what’s happening today,” said Simpson.

But he said banks are continuing to lend money to clients with a long history with them. He added that the West Coast is better positioned to rebound than other areas.

© The Vancouver Province 2008

Duncan Hood
Other

Real estate agents like to tell you that what matters is location, location, location. They’re partly right. But what also matters is timing, timing, timing. Every city moves to its own economic rhythms. Smart real estate investing is a matter of knowing when to jump into the market and when to stay out.

How do you know when the time is ripe? Rather than relying upon gut feel, we decided to take a more scientific approach to the question. We compiled data on the 35 major markets tracked by Canada Mortgage and Housing Corp. We analyzed each market in three different ways — by Value, by Momentum, and by Economic Strength. We assigned each market a letter grade in each of the three categories, then combined all that info into one overall grade. We awarded an A to the top 20% of cities. Average prospects had to make do with a B, while lacklustre prospects were handed a C or worse.

Many individual factors went into each grade. To calculate Value, for instance, we began by comparing average rents to average home prices, since we figured that the most basic indicator of a home’s value is how much rent it can put in your pocket. High rents indicate that, if you were hit by a financial crisis, you could rent out your home for a reasonable sum. Even if you never plan to rent out your home that is still a comforting thought.

To help us gain an even better sense of a city’s Value, we looked at local wages and figured out the number of years of average household income that it would take to purchase the typical local home. We downgraded communities where local residents couldn’t afford to buy homes easily; we gave highest marks to cities where they could. Our reasoning was that places where homes are affordable are places where real estate prices are solidly rooted in economic fundamentals and are therefore unlikely to plunge. The differences between communities can be huge. In Regina, a typical family needs two-and-a-half years of income to buy a home; in Vancouver, a typical family needs nearly eight years of income. Talking strictly in terms of bang for buck, Regina is a much better place to buy.

But, of course, Value isn’t everything. Some cities have enjoyed surging real estate markets for reasons that have little to do with local rents or typical wages. Some of these red-hot markets are cities that have lured outsiders with their natural beauty (think Vancouver); others are communities that have enjoyed bonanzas because of skyrocketing oil prices (that’s you, Calgary).

To give these cities their due we rated each of our 35 cities on Momentum, a measure of how hot each market is. To gauge Momentum, we looked at home sales in comparison to new real estate listings — a high number of sales-to-listings indicate that homes are selling relatively quickly and market momentum is therefore high. We also looked at how much home prices in each city have gone up over the last year and over the last four years. To top things off, we considered how much rents have gone up over the past four years, since rapidly rising rents indicate a community with pent-up demand for housing. If you’ve been following the real estate news, it probably won’t surprise you to learn that the runaway winners in our Momentum survey are Regina and Saskatoon.

The problem is that the same forces that conspire to drive up prices in a city can also turn in the opposite direction. To avoid being taken in by cities with weakening economies, we devoted our final grade to Economic Strength. We looked at how fast each community grew between 2001 and 2006 (the most recent year for which figures are available). We also factored in unemployment rates (based on 2007 data) and discretionary income levels, as well as a forecast from Canada Mortgage and Housing for unemployment in each city in 2008. The Economic Strength grades that resulted from all this number crunching held some surprises: it turns out that mighty Toronto and bustling Calgary have weaker economic outlooks than Fredericton and Barrie, Ont.

Finally, we rolled our grades for Value, Momentum and Economic Outlook into one overall grade for each community. We had no runaway winners, but we did find seven cities that deserve an A-. They’re a diverse lot. At the top are three Prairie cities — Regina, Saskatoon and Winnipeg — with relatively low home prices, strong momentum and good economic prospects. Just behind is Barrie, where home prices are higher and momentum is weaker, but the economic outlook is outstanding. By comparison, Sudbury, another mid-sized Ontario city, offers better home prices and stronger momentum, but dimmer economic prospects. Finally, Fredericton and Moncton demonstrate that New Brunswick has a lot to offer bargain hunters, especially as the province’s economy shows signs of life.

Our analysis suggests you can find decent prospects in each part of Canada. We caution you, though, to use our results with care. Nobody can gauge what a city’s economy will be like in 10 years. Our research, though, can help you analyze each city’s current strengths. And that’s a good starting point for any investor.

Three Prairie cities top our list of best places to buy now