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$788,499 beats previous high by 2 per cent

Derrick Pener
Sun

Metro Vancouver house prices reached a new peak in January, while the overall pace of sales across the Lower Mainland eased off the torrid pace seen in December, according to reports from the region’s real estate boards.

In Metro Vancouver, the benchmark price for a single-family home, the average price for typical homes sold, hit $788,499, some 20 per cent above January a year ago, when prices were still falling during the economic downturn, and two per cent above the previous peak of $771,250 in May of 2008.

That new high, however, was driven mostly by the sales of higher-priced properties in specific municipalities, Robyn Adamache, a market analyst for Canada Mortgage and Housing Corp. said in an interview.

“Mostly, the areas above [the peak] are the west side of Vancouver, Burnaby, Richmond and the Tri Cities,” Adamache said.

In the rest of Metro Vancouver within the Real Estate Board of Greater Vancouver’s territory, house prices are still below their previous peaks.

While the bounce-back has been rapid, Tsur Somerville, a real estate expert at the University of British Columbia, said the new highs are less concerning given that mortgage rates remain at near record lows.

“That carrying cost and monthly mortgage payment is still down [from peak levels],” Somerville, director of the centre for urban economics and real estate at the Sauder School of Business at UBC said in an interview. “We’re not at the point where we’re freaking out again [about high prices], but it bears watching.”

Somerville added that with overall sales cooling a bit in January compared with last December’s high level, the rate of price growth is likely to slow as well.

Sales across the Lower Mainland in January eased off their December pace.

In Metro Vancouver realtors recorded 1,923 sales through the Multiple Listing Service in January, which was more than double the number of sales in the same month a year ago, but off almost 24 per cent from the pace of sales in the previous month.

In the Fraser Valley, realtors saw 981 sales through the Multiple Listing Service in January, off 22 per cent from December, but still more than double the number of sales from the same month a year ago when markets across the Lower Mainland had nearly ground to a halt.

“Sales are not declining,” Somerville added. “But we’re slowing the rate of [sales] growth to something that makes more sense.”

He said January’s sales, while below 2005 levels, the region’s peak year for transactions, the month was still on par with 2006 and 2007, which were busy years on the region’s historical scale.

Somerville guessed that some of this year’s reduction in sales may be Olympic-influenced. Condo owners who are renting their properties out for the Games are more reluctant to list them for sale until the event is over.

Jake Moldowan, president-elect of the Real Estate Board of Greater Vancouver, said January was still a busy month for realtors.

He added that a substantial rise in new listings in January was “refreshing for us, because we were getting short of product again.”

Homeowners put 5,147 properties on the market in January, which was 139 per cent more than were listed in December, and was 39 per cent higher than in January, 2009.

Sellers in the Fraser Valley listed 2,941 properties for sale in January, a near doubling from the number of new listings put up for sale in December.

© Copyright (c) The Vancouver Sun

John Morrissy
Sun

U.S. housing prices are headed for a double-dip decline that will hurt related equities which have already priced in a recovery in the sector, CIBC warns.

“Many companies will be affected,” said Benjamin Tal, senior economist of CIBC World Markets, who declined to mention specific names but argued that sectors from forestry to banking could be dragged into the downturn.

The reason, he said, is that any current stabilization in U.S. housing is more a function of a badly damaged market and the distorting affect of temporary tax incentives than evidence of a sustainable rebound.

“We anticipate further weakness ahead as supply continues to outpace demand, mortgage rates head higher and the government’s generous homebuyers’ tax credit finally expires,” Tal said.

The “shadow inventory” of housing is what worries Tal most, and has him calling for another decline in prices of five to 10 per cent over the next two years.

While conventional inventories are trending lower, there are close to two million mortgages that are more than 90 days delinquent, nearly half of which will end up in foreclosure.

Add another 2.3 million properties that are already in foreclosure to existing properties on the market, and you have inventory totalling more than eight million units, a record high 16 months of supply.

Even more staggering is the fact that 10 million households now find themselves in a “negative home equity” position of worse than minus 20 per cent.

In other words, many people’s homes are worth at least one-fifth less than they paid for them during the subprime-led housing bubble.

Considering the ease with which U.S. homeowners can walk away from their mortgages, “strategic defaults” — or failing to pay when one could — are a very real option, Tal said.

“In six months from now nobody will be asking what a strategic default is. Everyone will know.”

With 24 million Americans now out of work or underemployed, “it’s crazy to call for a recovery in the housing market in this kind of environment,” Tal said.

“Our advice would be to be defensive at the moment. I would definitely go with defensive big names that pay dividends.

“Anything that is related to the housing market directly or indirectly will disappoint in the second half of this year.”

© Copyright (c) The Vancouver Sun

Province

House prices in Greater Vancouver reached new highs last month even as the number of new listings soared.

The benchmark price for all classes of homes in the area climbed to $573,241 in January, 0.8 per cent higher than the market’s previous high point of $568,411 in May 2008, the Real Estate Board of Greater Vancouver said Tuesday.

Last month’s benchmark was 17.2 per cent higher than its level of $489,007 a year ago, the board said.

“Although home prices in the region have largely returned to their previous peaks, we still see a significant number of first-time and move-up buyers in the market, thanks to low interest rates and the diverse range of properties available today,” board president-elect Jake Moldowan said.

New listings for detached, attached and apartment properties in the area soared 139.1 per cent to 5,147 last month from 2,153 units in December 2009, the board said.

The Fraser Valley Real Estate Board also reported that new inventory more than doubled between January and December as new listings rose to 2,941 from 1,453 in December.

At $446,671, the benchmark price remains three-per-cent lower than it was in the spring of 2008, the board said.

Fraser Valley board president Paul Penner said some buyers will put their house-hunting on hold during the Olympics, creating a potential advantage for others.

© Copyright (c) The Province

Company struggles to keep project alive after disappointing bookings and rising expenses

Bruce Constantineau
Sun

Vancouver Sun Files / A plan calls for the Norwegian Star to be docked in North Vancouver and used as a hotel. Photograph by: Ian Smith, Vancouver Sun

A plan to berth an 1,100-room cruise ship in North Vancouver for use as a floating hotel during the Olympic Games appears dangerously close to sinking.

Newwest Special Projects — which has marketed the Norwegian Star to Games visitors for the past nine months — said in a statement over the weekend that sales have been disappointing while expenses have increased beyond expectations. It said it is negotiating with its partners to try to lower costs and keep the project alive.

Former Newwest Special Projects president Dennis Laliberte, who launched the project last year but resigned his position in August, said Monday he could not talk about the Olympic cruise ship project and referred inquiries to a company representative in Utah. “I’m not allowed to say anything about this project,” he said.

The possible cancellation of the Olympic floating hotel venture comes after Newwest twice slashed prices to try to boost sales. When it announced the project last May, the cost of a basic room was to be about $1,300 US a night but that was cut to $500 in October. The starting price was then lowered to $275 US a night last month, with the prospect of even lower prices as the Games neared.

Newwest paid more than $10 million to lease the cruise ship and had to spend a significant amount of money to renovate the Kinder Morgan industrial dock in North Vancouver for use as a temporary cruise ship terminal. The ship was to arrive in Vancouver on Feb. 10 and depart on March 2.

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