Archive for October, 2014

Spending on renovations outpaces new home construction

Thursday, October 9th, 2014

Tara Perkins
Other

More money was spent renovating homes in Canada than building new ones during the 12 months to the end of June, according to data compiled by the Bank of Montreal.

“In the four quarters through [the second quarter], renovation activity outpaced investment in new residential construction $48.4-billion to $46.3-billion, as the latter has rolled over recently,” BMO economist Robert Kavcic pointed out in a recent research note. “Indeed, while new construction spending was down in recent quarters, renovation spending accelerated to a 6.9 per cent year-over-year clip in Q2.”

That fits recent findings from Canadian Imperial Bank of Commerce economist Benjamin Tal. He noticed that prices of higher-priced homes are rising faster than prices of lower-priced homes in cities such as Toronto, Ottawa, Calgary and Edmonton. That’s making it harder for homeowners to trade up to a bigger or better home. “Regardless of what your starting point is, and by how much your property has appreciated, the desired move up target is getting further and further out of reach,” Mr. Tal wrote in a research note last month.

So homeowners are increasingly choosing to renovate. “Over the past five years, spending on home renovations as a share of total residential investment averaged close to 46 per cent – by far the largest share on record,” Mr. Tal wrote.

The increasing inability to trade up is not the only factor that economists foresee weighing on the number of homes changing hands. “An aging population – the proportion of Canadians aged 65 and over is expected to climb from 15 per cent in 2013 to 23 per cent by 2030 – will reduce housing turnover, and the volume of listings and sales transactions,” Bank of Nova Scotia economist Adrienne Warren wrote in a research note Thursday. “The likelihood of moving in any given year declines progressively with age. Between 2006 and 2011, only 11 per cent of homeowners aged 65 and over changed residences, compared with 34 per cent of all other homeowners.”

With a larger elderly population staying put in their homes, and a rising proportion of homeowners unable to trade up, demand for renovation work could stay strong.

Ms. Warren estimates that annual growth in the number of Canadian households should remain relatively high around 180,000 to the end of the decade, before gradually declining to around 150,000 by 2030.

“By 2020, the bulk of the relatively large baby echo generation will have formed independent households, while the share of the population 75 and over begins to climb more rapidly,” she wrote. “This level of household formation is consistent with a sustainable annual pace of housing starts, including replacement demand, of around 155,000 in 2030, down from around 185,000 today.”

But Ms. Warren added that even with the slowdown in household formation, Canada’s total housing stock (both rental units and those for owner-occupiers) will have to expand by more than 2.5 million units between now and 2030 to meet the needs of the population.

So, while renovations will likely remain strong, new home construction will still be a force in the economy.

© Copyright 2014 The Globe and Mail Inc.

Anatomy of a deal: the sale of Vancouver’s Olympic Village

Thursday, October 9th, 2014

Tallying the winners and losers of Vancouver’s Olympic Village deal

Jen St. Denis and Frank O

China Just Overtook The US As The World’s Largest Economy

Wednesday, October 8th, 2014

Mike Bird
Other

Sorry, America. China just overtook the US to become the world’s largest economy, according to the International Monetary Fund.

Chris Giles at the Financial Times flagged up the change. He also alerted us in April that it was all about to happen

Basically, the method used by the IMF adjusts for purchasing power parity, explained here.

The simple logic is that prices aren’t the same in each country: A shirt will cost you less in Shanghai than in San Francisco, so it’s not entirely reasonable to compare countries without taking this into account. Though a typical person in China earns a lot less than the typical person in the US, simply converting a Chinese salary into dollars underestimates how much purchasing power that individual, and therefore that country, might have. The Economist’s Big Mac Index is a great example of these disparities.

So the IMF measures both GDP in market-exchange terms and in terms of purchasing power. On the purchasing-power basis, China is overtaking the US right about now and becoming the world’s biggest economy.

We’ve just gone past that crossover on the chart below, according to the IMF. By the end of 2014, China will make up 16.48% of the world’s purchasing-power adjusted GDP (or $17.632 trillion), and the US will make up just 16.28% (or $17.416 trillion):

Building permits decline in August; reversing the trend

Wednesday, October 8th, 2014

Jamie Henry
Other

Following three months of double-digit increases in the number of building permits issues by municipalities across Canada there was a drop in August. According to the latest data release from Statistics Canada the decline was mainly the result of lower construction intentions for non-residential buildings in Quebec and residential buildings in Ontario. After five consecutive monthly advances, the total value of permits in the residential sector declined 15.9 per cent in August to $4.2 billion. The largest decreases were registered in Ontario, followed by British Columbia and the Atlantic provinces. Gains were recorded in four provinces, led by Alberta. Building permits for multi-family dwellings decreased 28.6 per cent in August to $1.8 billion, following a 42.8 per cent increase in July. Decreases were reported in six provinces, led by Ontario, with British Columbia a distant second. Alberta and Saskatchewan registered the largest increases. Multi-family dwellings saw the biggest downturn, dipping 28.6 per cent after an increase of more than 40 per cent in July. In the non-residential sector, the total value of building permits decreased 40.6 per cent to $2.5 billion in August, following four consecutive monthly gains. Lower construction intentions were posted in seven provinces, with Quebec contributing most to the national decline.
 
Canada may need to take measures to slow housing market says IMF

The International Monetary Fund says that Canada may need to put tougher lending rules in place to slow down the housing market. In its economic outlook report issued in Washington yesterday the IMF says the housing market is 10 per cent above “fundamental values”. The report also sees more balanced economic growth in 2015 with exports boosted by a weaker Canadian dollar. Read the full story.
 
Homebuyers’ desires
Energy efficiency and cleanliness are among the most important factors for Canada’s homebuyers. That’s according to the Home Critics Survey published by realtors Century 21. The poll also found that 40 per cent of buyers are looking for a property that fits with a lifestyle change, with millennials more concerned about how much space they are buying and baby boomers more interested about how the space is used and the neighbourhood the property is in.  Sixty per cent of respondents say they would be put off a property if it wasn’t clean; double the number who would walk away due to water damage. 

Copyright © 2014 Key Media Pty Ltd

New home construction in Canada held relatively steady in September

Wednesday, October 8th, 2014

BCREA ECONOMICS NOW
Other

New home construction in Canada held relatively steady in September, rising a slight 0.5 per cent to 197,343 units at a seasonally adjusted annual rate (SAAR). The six-month trend in Canadian housing starts of 197,747 units SAAR sits slightly in excess of Canadian household growth.

Housing starts in BC urban centers moderated from a high mark in August, falling 19 per cent to 27,570 units SAAR in September. On a year-over-year basis, housing starts were down 7 per cent compared to September 2013. Single-detached starts, were up 14 per cent while multiple units were down 14 per cent compared to this time last year. Year-to-date, total BC housing starts are 6 per cent higher than 2013.

Looking at census metropolitan areas (CMA) in BC, total starts in the Vancouver CMA fell 5 per cent in September as an 11 per cent decline in multiple starts offset a 16 per cent rise in singles. Year-to-date, Vancouver housing starts are up 5 per cent. In the Victoria CMA, new home construction fell 32 per cent year-over-year due to low levels of construction in the multiples sector. Year-to-date, housing starts in Victoria are down 19 per cent. New home construction in the Kelowna CMA continued its robust pace in September, rising 46 per cent year-over-year. Year-to-date, housing starts in the Kelowna CMA are up 45 per cent . Housing starts in the Abbotsford-Mission CMA tumbled 62 per cent on a year-over-year basis due to the relative absence of new multiple unit developments in September. Year-to-date, new home construction in the Abbotsford-Mission CMA is down 29 per cent.

Lead-Generation Tactics

Tuesday, October 7th, 2014

Of these 28 lead-generation tactics, each can be effective on its own – but when intelligently used together can be very beneficial

Kevin Lynch
Other

In the course of my work as a real estate skills trainer, I have identified 28 proactive lead-generation tactics that are both direct and indirect strategies. Any one can be effective on its own – but when they are intelligently used together, the benefits can be massive. You can use these tactics to not only capture more listing and buyer leads but also to improve your positioning and brand.

The following are the first nine in my collection of 28 lead-generation tactics.

1. Circle of Influence

The reason this is the first on your list is because it’s the most obvious. It’s also one of the most underused assets Realtors have: your circle of influence (friends, family, network, sports teams, etc) are people that already know and feel comfortable with you. This is where the smart agents go to first. If you are starting out, it’s the quickest way to get sales. Don’t make the mistake of overlooking those closest to you.

2. Expired Listings

These people have already indicated they want to move and are therefore prime prospects. The key to expired listings is either being very early and closing before everyone else calls or being a little late and coming from a different angle, followed by a consistent follow-up system. I have tested and had success with both. Make sure you have well rehearsed and thought-out scripts (if you need some you can always reach out to me).

3. Private Home Sellers

These are clients that most agents shy away from after a couple attempts and when they realize it is rare to get a warm and fuzzy reception. Many private home sellers want to avoid paying commission, don’t like agents, think they are smarter or better, don’t trust agents and/or could have many other reasons why they don’t want to list with an agent.

From my experience, the biggest objection is about the commission. Make sure you speak to how you can actually help them increase their net profits along with their actual likelihood of selling. One thing they don’t usually know is the statistics showing a high percentage of all the court cases and people being sued in real estate come through the private sales sector – even though they represent a tiny fraction of actual sales in the market.

4. Just Sold Homes and Properties

You can take advantage of recently sold homes by calling an area around a home that has just sold or that you have just personally sold. In general, three more properties will come up for sale within roughly 100 homes around a sale. That means more business for you, should you create a systematic process for calling.

5. Just Listed Homes

When you list a home or there is a new listing in an area you want to sell in and generate business in, you can call about the home down the street from theirs. People are usually interested or at least curious about what other homes are being sold for. This can be a very easy in.

6. Past Clients

These are people that have already done business with you. If you did a good job, they are people that will likely work with you again. The key value here is to stay in touch in a meaningful and consistent manner so you can generate good referrals from their friends and family connections. When you get their referrals, treat them like gold. And find great ways to say thank you.

7. Allied Resources

This is powerful way to capture a massive flow of incoming referrals. Find reputable service providers that can help your clients and structure an agreement with them where you will send them business and they, in return, must send you at least one or two referrals from their clients and network every month.

8. Geographic Farm Area

People who hear about this strategy think it has to be expensive. They are wrong. There are two basic farm strategies. The first is what I call 101 Farming and it’s where you simply send out at least 12 newsletters to your target geographical area every year. The second is more time consuming and entails you connecting with your community through every means you can imagine. Good farming can help you capture anywhere from 25 per cent to 60 per cent of the market share.

9. Door to Door

If you shine at face-to-face meetings, this can be a great way to build your database and generate new business. However, don’t be fooled into thinking that having a friendly conversation alone is valuable. Focus must be on creating rapport with the prospect and then learning about the opportunity by asking questions. Your focus should be on finding an immediate business opportunity, adding them to your database and getting their email and cell phone numbers, and finally, getting additional potential business through their network and referrals.

10.  Builders

Builders can be an amazing way to generate more sales. Just one good builder relationship could generate a massive level of sales and new listings. Learn your numbers for land and building costs and then when, you can speak their language and understand what represents good value, you will be able to have conversations that matter. Next, learn what they want and help them find it. The more work you can eliminate for them the better.

11.  Client Parties

Events for clients give you a way to say thank you and generate more repeat business along with referrals. Spoil your clients, treat them right, give them what they want and referral business will fall on your lap. At your parties, make sure you have an invitation arrangement where your connections are also given the option to help you expand your network into their own. Be creative.

12.  Networking

If done right, networking can be a powerful business development tool. It can also be a big time eater. For instance, just joining a group of people networking to do business is fine, but if there is no pre-determined strategy to help you get more referrals then you need to create one. Whenever you are working with other business professionals, see how you add value to their business first. Only then should you table what you want.

13.  Social Functions and Community Events

Community events are a good way to get out there at a very low cost. You can basically piggy back on other business and people’s events and quickly go where your target audience is already going to be. If you connect with the event coordinators with some ideas that will make the event ‘even better’ they make be willing to promote you, showcase you, let you market and engage their audience. What could you do that would blow them away?

14.  Booth at Events

This is similar to #13, but it may be in a more formal format. Any time you are in front of your audience, you need to have your value proposition, your elevator pitch and some great take-away material or ideas that will keep you in their minds and make them want to work with you. 

15.  Teaching and Speaking Opportunities

It is very powerful to entertain or engage a captive audience from a perceived recommendation. You look like an authority, expert or specialist in the prospect’s eyes and that is always a powerful position to come from.

16.  Listing Tools

Listing tools are things that expand your marketing reach and attraction from your listings.  They should be solutions that create traffic and more importantly new leads from people looking to buy and sell. These tools should also allow you to measure the interest level, number of visitors and the sources they are visiting from all while strengthening your brand.

Some tools could be text response systems, voice response systems, SEO for listings, IDX listing systems, online marketing platforms (for Google adwords, Yahoo adwords, Facebook adwords, social media like Twitter, Google+, picture and social websites, etc.). 

17.  Signage and Sign Riders

Signs are all too often not used to full capacity. Most are traditional, boring statements like Just Listed, SOLD and otherwise low-impact and low-interest messages. You can make signs work much harder for you to generate new business.

Suggestions for using signs to generate leads include posting your specialization and value to the prospect, such as “Upper Lonsdale Expert.”

Even better, send your prospects to a website landing page or phone number that gives a valuable free service such as:

  • “Find Out What Your Home Is Worth at LonsdaleHomeValues.com”
  • “FREE Over The Phone Home Valuation”
  • “VIP Buyer Priority Access: View this and other homes first at PriorityHomeAccess.com” or
  • “Toll-Free Voice Message at 1-888-275-8888 for complete property details”.

18. Phone-In Voice-Activated Lead Capture Systems

These tools can be very powerful systems because they  fly under the radar.  People are not really thinking if their phone numbers are being tracked or not.  That’s why if the property, sign or advertisements are interesting, they will call to hear the details about the property.  When that happens, you can call from a ‘helpful’ position asking if they need any more help.  There are some amazing scripts and sample marketing that go hand in hand with this system.  

If you use the system as intended and as directed it will likely be a very valuable tool.

© 2014 Real Estate Weekly

The value of Canadian building permits fell 27.3 per cent in August

Tuesday, October 7th, 2014

BCREA ECONOMICS NOW
Other

The value of Canadian building permits fell 27.3 per cent in August. Prior to Augusts’s decline, building permits had posted double-digit increases for three straight months. Lower construction intentions were primarily the result of declines in Quebec and Ontario.

New building permits in BC tumbled almost 28 per cent on a monthly basis and 11.1 per cent year-over-year. Both non-residential and residential permits were lower in August. On a unit basis, permits fell 22.6 per cent but were above the monthly average for 2014. The outsized monthly decline in August reflects a moderation of activity following robust construction intentions in July.

Building permit activity was mixed in BC’s four census metropolitan areas (CMA). Permits in the Abbotsford-Mission CMA fell 30.3 per cent on a monthly basis, but were 33.8 per cent higher than August 2013. Construction intentions in the Kelowna CMA jumped 38 per cent from July but were 37.2 per cent below August 2013 levels. In the Victoria CMA, permit activity increased 3.1 per cent on a monthly basis and was up 6.2 per cent year-over-year. Finally, in the Vancouver CMA, permits were down 32.9 per cent on a monthly basis and were 16.9 per cent lower year-over-year.

Eight Steps to Closing the Purchase of Your New Home

Tuesday, October 7th, 2014

Once you’ve found your new home, then comes the seemingly tricky bit of lawyers, notaries, searches and contracts. Richard Bell of Bell Alliance explains that it’s really quite simple

Richard Bell B.A. LL.B
Other

So, working with your Realtor, you have found your new home and, with assistance of your mortgage professional, you have arranged for a mortgage. What’s next?

It’s time to hire a lawyer or notary public to help with the legal process to finalize the purchase of the home.

Here are the eight steps you will need to go through.

Step 1: Retain the services of a lawyer or notary. Ask your other professional advisors for a referral or family and friends that have gone through the process. Make sure you are hiring someone with experience in real estate closings. Most closings go smoothly but if something unexpected happens you want to make sure your lawyer or notary public has the necessary expertise. You should contact your lawyer or notary as early as possible in the process.

Step 2: Your lawyer or notary will need to gather information from you, including how you wish to hold title to the property. If you are buying with your spouse or partner, most couples hold title as “joint tenants,” which means that the couple jointly owns 100 per cent. Upon the death of one owner the property automatically passes to the survivor outside of their will. The other way to hold title to property is as “tenants-in-common” which means each owner owns a fixed percentage, which could be 50-50, 70-30 or any combination. Upon the death of one owner, the owner’s interest passes under their will.

Step 3: Your lawyer or notary conducts a title search and obtains tax information and any additional information necessary to prepare the statement of adjustments. This is a balance sheet of the transaction showing the total funds required to complete after accounting for the deposit and mortgage proceeds. And there may be adjustments for taxes, strata fees or rental income.

Step 4: Your lawyer or notary prepares closing documents including title transfer, mortgage, property transfer tax forms and statement of adjustments. Your lawyer or notary will forward the seller’s closing documents to the seller’s lawyer or notary for execution.

Step 5: One to three days before closing is when you usually meet with your lawyer or notary to sign documents and deliver the balance of the down payment or equity.

Step 6: Your lawyer or notary registers the transfer and mortgage documents, arranges for the seller’s lawyer or notary to pick up funds and notifies you that the purchase has completed.

Step 7: You receive the keys for your new home. Normally you receive the house keys directly from your realtor on the possession date as set out in the contract of purchase and sale.

Step 8: Move in and enjoy your new home – congratulations!

© 2014 Real Estate Weekly

Vancouver, BC Post Building Permit Declines: StatCan

Tuesday, October 7th, 2014

After driving Canada’s record-high building permit values in July, Vancouver and BC’s residential construction permits plummet in August

Joannah Connolly
Other

Following huge gains in the value of residential building permits issued in July, Vancouver and BC posted much lower figures in August 2014, according to Statistics Canada figures released October 7.

The figures would be expected to decline in the slow summer month of August, but Vancouver’s building permits also took a significant year-over-year drop.

Residential building permits in the Vancouver Census Metropolitan Area (CMA) were valued at $483.5 million in August, down 32.9 per cent compared with July 2014 and down 16.9 per cent compared with August 2013. Vancouver CMA posted the third-largest monthly decline, after Montréal and Toronto.

Statistics Canada attributed Vancouver CMA’s drop in part to “lower construction intentions for multi-family dwellings.”

Across the province as a whole, the declines were less marked. BC’s August residential permits of $598.9 million were down 20.7 per cent month over month and down 0.9 year over year. However, BC did post the second-largest monthly drop, after Ontario.

Nationwide, after five consecutive monthly increases, the total value of residential permits fell 15.9 per cent month over month to $4.15 billion. However, it increased year over year by 4.27 per cent.

Broken down by property type, the biggest national month-over-month drop was in multi-family dwellings, which decreased 28.6 per cent in August to $1.8 billion.

Statistics Canada said that BC posted Canada’s second-largest gain in single-family dwelling building permits, suggesting that BC’s overall decline was driven, like Vancouver’s, by falling multi-family building permits.

© 2014 Real Estate Weekly

The US economy added 248,000 jobs in September

Friday, October 3rd, 2014

Other

The US economy added 248,000 jobs in September while previous months job growth was revised higher by 69,000 jobs. Over the past 3 month, US payroll growth has averaged 223,000 jobs. The US unemployment rate fell to 5.9 per cent, the lowest reading in six years.

While inflation remains muted and considerable slack remains in other measures of employment, today’s overwhelmingly positive jobs report should add further fuel to the case for the US Federal Reserve to move interest rates higher in 2015. Moreover, if job growth continues at the current pace, long-term interest rates in both the US and Canada may begin to rise in anticipation of tighter monetary policy.