Update on the Canada and Vancouver Real Estate Market: BoC Rate Decision, Bank Prime Rates, Mortgage Lending, Home Prices, Property Assessment Freeze

Canada Greater Vancouver Housing Starts Continue to Plunge

According to both Metro Vancouver News and 24 Hours Vancouver, the Greater Vancouver housing starts in most municipalities continue to plunge to record low levels admist the global economic problems and real estate sales declines. From MetroNews Vancouver: Groundbreaking housing starts falls for 6th straight months in Greater Vancouver to only 134,600, which represents a drop of 12.3%! Canadian housing starts fell by a greater than expected 12.3 per cent in February 2009, marking a sixth straight month decline in housing starts in Canada (consecutive months) and the lowest level since June of 2000, as domestic economy strugges through a major downturn. Groundbreakings on new homes dropped to a seasonally adjusted annualized rate of 134,600 units last month from 153,500 in January 2009 with declines seen in the single and multiple dwelling Canadian real estate sectors, Canada Mortgage and Housing Corp said yesterday. The number of starts in February 2009 in Canada was below analyst forecasts fro 145,000 starts. But there was a silver lining in the weak numbers of the plunge in Canadian housing starts this month. While it suggests that builders are responding to weaker demand, which could have a short term negative effect on economic activity, it also indicates there may not be a severe oversupply of homes throughout Canada. Economists continue to describe the Canadian housing downturn as only a correction that will last the better part of 2009, and many experts expect the real estate markets in Canada to make a recovery in 2010 according to Reuters. Construction of urban single family homes in Canada real estate markets fell 11 per cent to 44,500 units, while multiple dwellings, like condos and townhome communities, dropped 17.5 per cent to 63,300 units throughout Canada, representing a huge plunge in Canadian housing starts for the sixth consecutive month. According to 24Hours Vancouver: Housing starts throughout the Lwoer Mainland plunged in February compared to a year ago, new stats from the Canada Mortgage and Housing Corporation suggests. There were only 701 homes started in the Greater Vancouver real estate area last month, compared to 2,446 in February 2008, representing a whopping 71 per cent drop in Vancouver housing starts this February 2009. CMHC analysts are calling it a moderation in the Greater Vancouver real estate market. “New home construction slowing to more sustainable levels,” CMHC said in a news release regarding the sudden drop in housing starts in the Vancouver property market. It’s a trend seen in most areas of the country. Overall, Canadian urban centres saw an average drop of 60 per cent in housing starts last month compared to 2008 (a year earlier). But it’s also a change that’s hitting cities in the wallet just as property tax season comes around and finance officials struggle to balance their books and finances. In the City of Vancouver, revenue for building permits related to all forms of construction real estate has continued to fall as well. In January 2009, the value of building permits issued was 29 per cent lower than December 2008 (just a month earlier), and more than half the value of January 2008 (a year earlier), according to city officials. That represents a difference of $46 million on a total budget of roughly $900 million. By Irwin L of 24 Hours Vancouver.

Rate Decision by Canadian Banks Angers Some Home Owners

Canadians are speaking out against a decision by the big six banks not to fully match a big interest rate cut by the Bank of Canada, as indicated in MetroNews Vancouver. A spokes person says the Consumers’ Association of Canada has received “hundreds of calls” from “outraged” Canadians across the country since the chartered banks decided to lower their prime rates by only 50 basis points. The central bank of Canada had earlier cut its trend-setting rate by 75 basis points. Consumers appear upset that the banks are blunting the impact of the Bank of Canada’s monetary policy, and that they are doing so at a time when they are tapping taxpayer-funded programs to bolster lending. Among those intiatives, Finance Minister Jim Flaherty has tripled Ottawa’s mortgage purchase program to $75 billion and backstopped more than $200 billion in interbank loans. In a statement, Flaherty’s spokesperson noted the objective of both the mortgage purchase program and the lenders assurance facility is to “further improve credit availability and affordability,” for soncumser and businesses.

Is Now the Right Time to Buy Your First Vancouver Home?

According to Your Money section in Vancouver 24 Hours newspaper: Today’s economy has many people wondering if now is the right time to buy their first Vancouver home. With a moderate real estate market, interest rates at all-time lows and incentives for first time homebuyers announced in January’s Federal Budget, some think that now is a good time to make home ownership dreams into reality in the Greater Vancouver real estate market. Almost four of every ten Canadian or 38 per cent believe now is a good time to purchase an 32 per cent think it is a bad time, so it’s basically split in the middle, according to a report released recently by the Canadian Association of Accredited Mortgage Professionals. “Residential mortgage consumers remain remarkably positive as they weather the financial storm,” the association says. The Conference Board of Canada also found that consumer confidence in the country rebounded slightly in January 2009 from a twenty seven year lo in December 2007. The organization says the number of people considering making a big purchase such a car or new home rose to 28.5 per cent from 26.7 per cent. An online survey conducted by CAAMP also reveals Canadians expect housing prices to fall: 35 per cent, more than twice as mnay as last fall.

Most Experts and Canadian Home Buyers Expect Stability in the Housing Prices for 2009

According to the front page Real Estate Weekly newspaper, 65 per cent of all Canadians expect home prices to increase or stay stable over the next year, according to a report from the Canadian Association of Accredited Mortgage Professionals (CAAMP). Many of the people’s attitudes are very positive even in the face of tough economic times and recession in the North American markets. Attitudes towards local conditions have shifted only slightly with 38 per cent of Canadians believing now is a goot time to purchase and 32 per cent believing it is a bad time. Mortgage arrears remain very low in Canada home market and steady at 0.28 per cent and 84 per cent of home owners are satisfied with their current home mortgages. The information was gathered by Maritz from an online survey of over 2,000 Canadians in mid October 2008. In addition to this report, some Canadians do expect housing prices to fall: 35 per cent, more than twice as many as last fall, now believe prices will drop; half o those survedyed gave a neutral answer while the number who thought prices would go up fell from 40% to 20%. In BC, hardest hit by the recent drop in property prices, 48% of those surveyed said they expect prices to fall, far above the national Canadian average.

Canada Housing Sales to Stay Stalled

According to MetroNews Vancouver, the first half of 2009 to be somewhat static according to a recent report. Canada’s real estate market is expected to be “somewhat static” for at least the next six months as the economic downturn makes potential buyers extra cautious, while the average house price is expected to fall, according to a report released yesterday. The Re/Max Housing Market Outlook, which tracks 22 real estate markets across the country, says it expects 440,000 homes to change hands in 2008, down 15 per cent from 2007. It predicted the same number of sales for next year, but the first six to nine months of 2009 will be under pressure from volatility in financial markets and the threat of recession. Housing markets across Canada real estate should recover as stability returns to the financial sector the Re/Max report said. If consumer confidence is restored and overall economic activity picks up, so should the housing market and a bounce back could occur “as early as spring.” Eleven major real estate markets in Canada are expected to match or exceed 2008 home sales next year. Report highlights: A buyers market emerged in the latter half of 2008. Housing values are expected to slip three per cent to an average of $300,000. Unit sales should match 2008 levels by year end 2009, but the average price is forecast to fall another two per cent to $293,000.

Vancouver House Prices to Fall 18% in 2009

The latest forecast for housing prices in Greater Vancouver calls for the bottom in 2010. By Jeff N. for the Black Press. House prices in B.C. are in for a two year slide that won’t bottom until 2010, predicts a leading economist. Helmut Pastrick of Central 1 Credit Union says the B.C. and Greater Vancouver housing market is heading into recession on the heels fo the global impact of the credit crisis. He projects median B.C. hose prices will fall 13 per cent in 2009 and drop another 5 per cent in 2010 before reaching a turnaround point. “A poor economic outlook for 2009 and tight credit conditions extending into next year will keep housing sales on a downward trajectory for several more months,” Pastrick said. Housing sales in Greater Vancouver real estate market, already down 30 per cent this year, will drop another 17 per cent in 2009, he said. Pastrick also projects a 37 per cent plunge in new construction next year as a result of a poor sales climate and tight credit environment. House starts should make a modest recovery in 2010, he added.

Property Assessment Freeze in Vancouver Real Estate Prices Expected – With Some Exceptions

According to Real Estate Weekly, the B.C. government is freezing 2009 property tax assessment to help ailing home owners who have felt the economic times and freeze in lending/financing for their homes. According to REW, the BC government will freeze all tax assessments for 2009 at the July 2007 levels (with some exceptions) because the July 2008 would misinterpret the value of their homes through 2009. July 2008 as many home owners know was the peak fo the real estate market here in British Columbia and Vancouver and would have been much higher than the market value through 2009 if the values were used in the 2009 tax assessments. Some of the exceptions include: new homes built on what were building lots, substantial renovations that add value to a property in addition to fires and other accidents causing damage will not have the same benefit and will be valued at the July 2008 market value. Please watch for www.bcassessment.ca for more information about this. Meanwhile, the national Canadian real estate states are lowest since 2002. The number of homes sold through the Canadian Multiple Listing Service plunged 14 per cent last on the weakest level since July 2002, according to the Canadian Real Estate Association since Friday. The statistics reflect tighter money and the erosion of Canadian’s sense of wealth because of continued stock market declines, CREA suggests. Changes in federal mortgage rules that shortened loan periods and made it more difficult for people with little down payment to finance a home, also had an impact on sales.

Mortgage Changes in Canada Will Have Little Effect

Another article according to the Real Estate Weekly suggests that the tightening of the Canadian mortgage bank lending rules will have little impact on homebuyer choices. With the abolishment of the 0% down mortgage and the decrease from a maximum 40 year amortization to 35 year amortization, these won’t make it more difficult for home buyers to get an affordable mortgage for their new home. The difference is so little monthly and over time that it won’t have a big impact on people’s decisions to buy or wait. Canadians regularly exercise their options to pay down their mortgage debt sooner as well according to REW. In fact most Canadian home owners repay their mortgage in 15 to 20 years or in far less time than the amortization periods affected by these new criteria. While the changes won’t deny many people the chance to own a home, they will help ensure our housing market stays strong.

New Canadian Homes Prices, Starts Defy Experts

According to REW, the price of new homes in Canada actually increased by 2.1 per cent in September 2008 on a year over year basis, slightly ahead of economist’s expectations, Stats Canada reported. The 12 month increase for Vancouver was 1.4 per cent and in Victoria, contractors’ selling prices increased 0.2 per cent year over year. Most analysts had called for a two per cent decline in new homes prices and much slower starts. Canada Mortgage and Housing Corp. however, reports that housing starts remained relatively strong, declining by just 3.1 per cent to 211,800 units in October from 218.600 in September.

Real Estate Investment – Thinking Long Term for your home

Cited by many as a somewhat non-intuitive benefit of this year’s market change is a growing return to the concept that your own home should be somewhere you live, an investment in real estate to be held for the long term rather than analyzed minute by minute against market fluctuations like stocks or bonds. After all, in the grand scheme of things, if you’ve found the perfct home – one you love, you can afford, and that meets all your criteria – history suggest the Chinese proverb that says “the best time to buy real estate was five years ago, but the next best time to buy real estate is today” remains valid advice for home buyers today. This is a great article written by S. Boyce for the New Home Buyer Guide of Greater Vancouver on the market outlook in Greater Vancouver for the upcoming year. Return to Village Living is another concept that home buyers have been embracing this year in 2008. Across all municipalities of the Lower Mainland, 2008 saw the new home real estate market in Vancouver change to be driven in large park by the multi-family sector. As the lock-and-go lifestyle becomes more about choice than nccessity, homebuyers in Lower Mainland of all generations are opting to let others take care of the daily hassle of maintenance. Amenities figure strong among these choices. Spa style clubhouses with state of the art fitness centre, even demonstration kitchens and multimedia rooma are showing in increasing frequency in new home construction in the Greater Vancouver real estate market these days. Some properties in Vancouver property market are even including on site temperature controlled wine lockers. WE also saw a strong leaning toward lifestyle centres like South Surrey’s Morgan Crossing and Garrison Crossing in Chilliwack real estate market. These multi phase property developments celebrate intergenerational living communities and the idea you can live, work and play in a neighbourhood where everything is within walking distance. Shopping and services rub shoulders with different types of housing. Recreational facilities are just down the road and services from laundry or doctors offices to banking and pet sitting just round the corner.