Metro Vancouver’s housing starts are on the upswing, rising to 1,783 in September over 1,644 in the same month last year, with most activity in the multi-family category, according to Canada Mortgage and Housing Corp.

Year-to-date, the numbers were even stronger, with the multi-family sector seeing a 39-per-cent increase in starts from January to September compared to the same period in 2010.

The reason for the multifamily strength, according to CMHC’s senior market analyst for Metro Vancouver, Robyn Adamache, is two-fold: builders are increasingly confident taking on larger multi-family projects, and buyers are skeptical of higher-priced detached homes because they want to avoid the HST threshold of $525,000.

“On the single-family side, we’re seeing a decline this year,” Adamache said in an interview after the report was released Tuesday. “We think people interested in a single detached home are putting off the decision until the HST tax ramifications are sorted out.

“When the economic recovery was fragile, builders were more comfortable doing single-family starts rather than a large project. It was a more incremental way of getting out of the recession. Since the recovery has taken a better foothold, we’re seeing the multi-family side pick up again.”

Construction hot spots year-todate compared to 2010 included North Vancouver, Richmond and the Tri-Cities area.

According to CMHC, while the total number of starts in Metro Vancouver rose eight per cent from August to September to 1,783, they were up 19 per cent year-to-date from 11,137 to 13,260.

Year-to-date, multiples were in a much stronger category, rising 39 per cent from January to September to 10,516, from 7,541 in the same period in 2010.

Single-detached starts fell 24 per cent over the same period, from 3,596 to 2,744.

Adamache – who noted that apartment starts were concentrated in the cities of Vancouver and Richmond, while Surrey led the way in less dense housing types including singledetached and townhouse starts – said multi-unit construction has been trending higher since 2010 after declining sharply from 2008 to 2009.

She also said, “The City of Vancouver had the secondhighest number of single-family home starts in the region, most of which were replacement housing.”

Greater Vancouver Home Builders’ Association president and CEO Peter Simpson agreed in an interview that housing starts – particularly on the multi-family side – are looking up.

“In 2009, we ended the year with 8,339 [total] housing starts. Last year, it was improved to 15,217 for the entire year. This year, so far, we’re at 13,260. That’s not bad. The forecast for the year is about 16,300.”

However, Simpson said, the “fly in the ointment” is buyers avoiding higher-priced homes – particularly more expensive single-detached homes – until they get more clarity on the HST.

Simpson said builders would like the government to remove the provincial portion of the HST to a level that neutralizes the tax’s effect, or reduce the property-transfer tax on new homes to soften the HST’s effect.

Meanwhile, the Abbotsford census metropolitan area recorded 29 housing starts in September, down from the 43 starts recorded in the same month last year, the national housing agency said. So far this year, there were 362 housing starts compared with 351 in the same period last year.

In B.C., September’s seasonally adjusted annual rate of urbanhousing starts moved higher to 27,400 units from 23,100 units in the previous month.

The number of starts in B.C. urban areas increased to 2,399 in September from 2,305 in September 2010.

Source: Brian Morton, Vancouver Sun

The value of building permits issued in Metro Vancouver dropped 4.9 per cent from July to August to $494 million, and declined almost 10 per cent from $528 million in August 2010, Statistics Canada said Thursday.

The report on permit values, a key indicator of construction activity expected in coming months, also found that the numbers climbed across B.C. from July to August, but dropped year-over-year.

“There is some uncertainty in the marketplace regarding the HST transition rules,” Greater Vancouver Home Builders’ Association president and CEO Peter Simpson said, adding that he’d like the provincial government to help neutralize the tax because many buyers are forgoing purchases while it’s still in effect.

Despite that, Simpson said, housing starts are up this year, particularly in the multiple-family sector, a point borne out by StatsCan, which noted the largest increase in the value of building permits for multiple-family dwellings across Canada was in B.C.

StatsCan analyst Don Overton noted that the value of permits for multifamily construction across B.C. was $305 million in August, up 34.4 per cent from $227 million in July, but down 16 per cent from $362 million in August 2010.

“Housing starts are up 21 per cent this year [January to August] this year compared to last year [from 9,493 in 10 to 11,477 in 2011],” Simpson said of the Metro Vancouver region.

“Multiple housing is up 44 per cent over the same period.”

While the value of all building permits in Metro Vancouver dropped, the numbers climbed in B.C. by 3.4 per cent.

The value of building permits in August of this year reached $843 million across the province, up from $815 million in July. However, it was down 3.6 per cent from August 2010.

The non-residential sector across B.C. showed more strength year-overyear, rising 20.5 per cent from the previous year to $270 million, although the value of permits dropped 14 per cent from July to August.

For the residential sector provincewide, permits rose 14.3 per cent from July to August to $573 million, but fell 11.9 per cent from August 2010.

The Abbotsford-Mission census metropolitan area saw the value of permits increasing by 29.8 per cent from July to August, while the year-overyear increase was 139.8 per cent.

However, those percentage increases occurred in a far smaller market, with the value of permits just $18.5 million.

Philip Hochstein, president of the Independent Contractors and Businesses Association, said while the value of permits may have dropped, the number of projects hasn’t.

“Despite [the report], there’s a sense that it’s a little busier than last year, although there’s growing uncertainty in the marketplace.”

Meanwhile, Overton said the value of permits for B.C.’s non-residential industrial construction rose about 24 per cent in August from July.

Keith Sashaw, president of the Vancouver Regional Construction Association, which is primarily involved in non-residential construction, agreed that his sector is doing better these days.

“After October 2008, building starts plummeted. But over the last year, we’ve seen a resurgence of activity. Year to date, from January to August compared to 2010, non-residential permits are 23 per cent higher.”

Source: Brian Morton, Vancouver Sun

The Vancouver housing market is attracting unusually strong demand but Canada as a whole does not face a housing bubble that requires government action, Finance Minister Jim Flaherty said on Wednesday.

Flaherty and Bank of Canada Governor Mark Carney have paid close attention to Vancouver housing prices, and they have warned Canadians not to take on so much debt that they will not be able to service it when interest rates rise.

Asked at a news conference in New York what it would take for Canada to act again to cool the market, he said: “It will take clear evidence of a bubble in the housing market in Canada, which we have not seen.”

Given low interest rates, the level of housing demand in Canada is not surprising, Flaherty said. But he added: “We have seen in the past year some softening in the Canadian housing market, in part due to the tightening of the insured mortgage market rules that we did earlier this year… That’s an appropriate result from that tightening.”

The International Monetary Fund said in a report on Wednesday that private credit remains strong in Canada and that the government might need to consider further measures to prevent households from taking on too much debt.

“Developments on the housing front require increased vigilance, and consideration may need to be given to additional prudential measures to prevent a further buildup in household debt,” the lender said in its Western Hemisphere outlook.

A survey released on Wednesday by Canada’s leading real estate broker  showed the average price of detached one- and two-story homes in Vancouver has risen by about 17 percent in the past year to more than C$1 million ($960,000) — about three times the national average.

Home resale prices for Canada as a whole have risen between 5.7 percent and 7.8 percent over the past year, the report said.

Asked what would constitute evidence of a bubble, Flaherty said: “If we saw dramatic surges in prices in some part of the country. There’s some demand in Vancouver in particular, particularly from the Asian people coming to Canada who are investing in real estate. So there’s some demand there that is unusual in terms of the entire country, but overall across the country there’s been some moderation, which is good.”

The government has tightened mortgage rules three times since 2008, most recently in January.

Source: John McCrank, IBTimes

OTTAWA — Canada’s housing market “remains a notable out-performer” in comparison to other countries, where renewed doubts about the strength of the global economy are weakening an already fragile real-estate scene, says a report released Tuesday.

The Bank of Nova Scotia said in an assessment of the global housing market that high unemployment, concerns over the financial health of some European governments, signs the global economic recovery is slowing down and recent stock-market volatility are burdening residential real-estate markets around the world.

For many people, saving money and repaying debt have become bigger priorities than making major purchases, such as homes, the report said.

“We expect global housing demand to remain moribund until the global economic recovery gets back on a firmer footing and some financial market stability returns,” said Adrienne Warren, senior economist with Scotia Economics.

Canada is one of just three of the nine developed countries assessed that saw year-to-year price growth, adjusted for inflation, in its housing market in this year’s second quarter. There was five per cent price growth, on average, in the April-to-June period.

“Ultra-low interest rates will continue to support affordability in the face of record high prices,” Warren said of Canada. “Nonetheless, heightened economic uncertainty, combined with recent signs of a loss of momentum in Canada’s jobs market, could keep some potential buyers on the sidelines for the time being.

“On balance, we anticipate a modest slowdown in the volume of sales transactions heading into year end, alongside relatively flat prices.”

Source: Derek Abma, Financial Post

VANCOUVER – It wasn’t that long ago we were calling the former Olympic Athletes Village a ghost town, but now the tumbleweeds are giving way to the shuffling feet of even more homebuyers as another batch of condos is going on the block today.

Eighty-four homes in the Shoreline building are being launched to realtors. The east-facing units, with views of the newly renovated BC Place and Downtown Vancouver, range in price from $500,000 all the way to $2 million.

Condo marketer Bob Rennie says the entire project is now 60 per cent sold. “Out of the 737 condominiums, we’re sitting at 427 sold.”

He’s impressed by the brisk pace of sales. “We’ve sold 159 homes in 156 days, so just over one a day. So we’re really happy that the public is accepting the product. I think for the 640,000 citizens of Vancouver the Village has finally stabilized.”

Rennie adds including rentals and non-market housing, the former Athletes Village is now 73 per cent occupied

Source: John Ackermann, News1130

B.C.’s real estate market may be slowing down, but there is no sign Vancouver’s sky high prices are caught up in a bubble that is about to burst, according to a new report

The Central 1 Credit Union report, which was issued on Thursday, forecasts the B.C. market will slow this year and total sales will drop slightly from 2010, but prices will continue to rise an estimated 6.8 per cent next year.

According to the report’s author economist Brian Yu, low interest rates that show no sign of rising quickly and the limited supply of land will keep values rising – all familiar arguments.

But Yu says there is another important reason to believe prices in Vancouver are unlikely to collapse. Market speculation —commonly known as flipping — currently accounts for only about two or three per cent of the market.

Yu says that is a normal level, which shows most people are living in the homes they buy.

“Our research shows few signs that speculators are overly active in the Vancouver market, which means we are unlikely to see a speculation-induced bust,” he said.

“Even if the economy slows and employment slows, we expect to see individuals hold on to their homes, rather than sell them in a weaker market,” he said.

Prices may be way up for detached homes in Richmond, Vancouver and Burnaby, but Yu insists there hasn’t been a price surge across the region and concerns about a possible dramatic price drop in Vancouver are overblown.

“Price jumps that have received media attention have been in localized areas and we have not seen a region-wide price surge,” he said.

Market balanced says national report

That’s backed up the Canadian Real Estate Association’s report that found a record 70 per cent of all local markets across the country are considered to be in balance.

Vancouver and Toronto’s share of provincial and national sales activity reached “unusually elevated” levels earlier this year, but has since pulled back into normal seasonal variations, the group said.

However, some observers said the market is eventually headed for a drop.

Fannie Fong of TD Economics said a peak-to-trough drop of roughly 10 per cent for both home sales and prices is expected, though that change isn’t expected until the Bank of Canada begins hiking interest rates in earnest in early 2013.

Just two months ago BMO Capital Markets raised the spectre of a Vancouver price correction but with a caveat: as long as immigrants with money continue coming to Vancouver, and interest rates stay low, prices in will stay high, said the BMO report.

Source: CBC News

While residential sales across the province remained stable in August as low mortgage rates were balanced by high numbers of active listings, average prices dropped in the Okanagan and most other interior regions in the past year while rising sharply in Metro Vancouver and the Fraser Valley.

There are many reasons for the price divergence in the two regions, including less migration to the Okanagan, fewer sales of recreational properties and a higher number of active listings there that quell upward pressure on prices, says BCREA senior economist Cameron Muir.

But Muir also noted in an interview that average prices in Metro Vancouver have been “skewed” for some time by the high number of sales of expensive single-detached homes in pricier neighbourhoods, although that’s changing.

“When we look at the Okanagan and the Kootenays, migration to the region is down. More importantly, purchases of recreational properties has not come back to the level we saw before the recession. And the Okanagan and Kootenays are still oversupplied markets.”

While the Metro Vancouver market remains strong, Muir said prices are starting to pull back as the proportion of single detached home sales in tonier neighbourhoods returns to historic norms.

He said that B.C. homes sales edged up one per cent in August compared to July on a seasonally adjusted basis and that low mortgage rates continued to underpin housing demand throughout the province in August.

He said that total active listings in the province remained elevated in August, as “most regional markets exhibited buyers’ market conditions, meaning little upward pressure on home prices.”

According to the BCREA survey, the average price in B.C. rose 10.7 per cent in August compared to August 2010 to $540,000 from $488,000.

However, price changes fluctuated sharply by region, with the Fraser Valley showing the sharpest increase of 19.7 per cent over the year, from $424,000 to $508,000.

Metro Vancouver prices rose 14.4 per cent from $681,000 to $779,000, while Victoria prices rose 13.7 per cent from $472,000 to $537,000. The rest of Vancouver Island showed a slight price drop.

However, Powell River showed the sharpest drop – 12.7 per cent, from $297,000 to $260,000 – while the Okanagan Mainline recorded a 0.3-per-cent drop in prices from $384,000 to $383,000 and the South Okanagan dropped 7.2 per cent from $331,000 to $307,000.

Year-to-date, it was more of the same, with B.C. recording a 14.7-per-cent price increase in the first eight months compared to the same period in 2010, Metro Vancouver recording a 19.2-per cent hike over that period and the Fraser Valley seeing a 12.6-per-cent increase.

However, the Okanagan Mainline saw a 2.5-per-cent decline in the six-month period and the South Okanagan recorded a 5.4-per-cent drop in prices.

Powell River saw an eight-per-cent drop in the six months, while Victoria recorded a 0.5-per-cent decline in the average price.

The Kootenay region recorded a 4.4-per-cent increase in August compared to August 2010, from $274,000 to $286,000, although the average price fell 3.5 per cent year-to-date.

The BCREA also said that the number of residential units sold in August compared to August 2010 rose 16.4 per cent, from 5,590 to 6,504.

To date, B.C. home sales have totalled $31.7 billion this year, up 17.7 per cent from 2010.

Source: Brian Morton

A new study suggests Metro Vancouver apartment rental buildings are increasingly a hot item for investors despite rising vacancy rates.

“Demand for multi-family residential rental properties remains insatiable for a number of fundamental reasons,” Michael Keenan, managing director of Avison Young, Metro Vancouver, said Monday in reference to his commercial real estate services company’s Summer/Fall 2011 B.C. Multi-Family Investment Report.

“Apartment buildings are a low-risk investment, offer secure income streams and are the most easily financed commercial real estate commodity of all, thanks to rates guaranteed by the Canada Mortgage and Housing Corporation.”

Keenan also said rental apartment buildings continue to rise in value as investors seek safe havens for their capital.

Other factors influencing demand, the report said, include low investment risk and the opportunity for tenant turnover to increase rental rates and improve yields.

According to the semi-annual report, which tracked investment deals valued at more than $5 million, in the first half of 2011 total multi-family rental building sales amounted to $238 million – a 125-per-cent increase over the second half of 2010 ($106 million) and a 51-per-cent jump over the first half of 2010 ($158 million).

The report said institutional and overseas buyers look to B.C. for opportunities, but that investments in the suburbs are drawing buyers out of Vancouver as the supply of large, institutional-grade apartment buildings available for sale within city limits shrinks.

Seven of the large institutional-grade transactions were in Vancouver, three in New Westminster, two each in Coquitlam, Burnaby, the North Shore and Surrey, and one each in Surrey, Richmond, Abbotsford and Chilliwack.

The three largest acquisitions in the first half of 2011 were the $44-million purchase of Ocean Residences in Richmond, the $24.5-million purchase of Bonsor Apartments in Burnaby, and the $23.75-million purchase of Marine Garden Village in Vancouver.

The report noted that the movement of renters to home ownership continued into 2011, and that apartment buildings faced increased competition from the secondary rental market, including suites in homes and investor-owned condos available for rent.

Asked why rising vacancy rates — up to 2.8 per cent in April from 2.2 per cent in April 2011 — aren’t hindering investment, Keenan said that apartment vacancy has always been low in Metro Vancouver and “the slight upward spike currently being experienced is temporary and not worthy of great concern.”

Keenan also said that “vacancies can usually be easily filled at a low cost, unlike virtually any other type of commercial real estate. When a new tenant occupies a suite, the rent can be set at what the market will bear. Rent controls simply limit how much of an increase the landlord can charge on an annual basis.”

However, Marg Gordon, CEO of the BC Apartment Owners and Managers Association, said building owners and landlords face escalating costs.

“The challenges right now in a nutshell are controlled revenues and uncontrolled costs.”

Gordon said that although the HST is on the way out, it will still increase costs by between 1.5 and three per cent until the tax is gone.

She said that the rise in the allowable rent increase in 2012 to 4.3 per cent from 2.3 per cent this year is good news, but just covers rising maintenance and operating costs.

“Then we’re faced in Vancouver with the problem of aging buildings. The average [age] is 57 or 58 years old. They all need renovating, upgrading and improvements.”

Source: Brian Morton, Vancouver Sun

Led by “sky-high” prices in Vancouver, housing in Canada has become less affordable for a second quarter running.

The latest Housing Trends and Affordability report released yesterday by RBC Economics Research once again singled out the British Columbia city as the least affordable in the country.

“Vancouver’s housing market is without a doubt the most stressed in Canada and is facing the highest risk of a downturn,” said Craig Wright, senior vice-president and chief economist with RBC.

[However, please note that there are specific areas, namely Vancouver, West Vancouver and Richmond, where high sales prices have accelerated the overall figures].

The report found most housing markets in the country are still reasonably affordable or merely slightly unaffordable with the costs of homeownership hovering around historical norms.

Country-wide, the percentage of household income required to own the benchmark detached bungalow used in the report increased 1.7 percentage points to 43.3%. The higher the reading on the the affordability measure, the more it costs to own a home based on going market values.

For a condo, it went up 0.8 percentage points to 29.2% and for a two-storey home, it increased 1.8 percentage points to 49.3%.

The report notes that since the beginning of the year, increases in housing costs in the Greater Vancouver Area have directly accounted for up to one-third of the nationwide changes.

Other markets such as Montreal, Ottawa and Toronto also became less affordable in the quarter. The benchmark measure for a detached bungalow increased in all three cities, with Toronto’s bump of 2 percentage points pushing it over the halfway mark to 51.9%.

Montreal was up 1.4 percentage points to 42.6% and Ottawa was up 1.3 percentage points to 41.2%.

The measure also increased in Calgary and Edmonton, which were both up 0.6 percentage points to 37.1% and 33.8% respectively.

In contrast to these increases, the costs of owning a detached bungalow in [the city of] Vancouver shot up 10.4 percentage points to reach the 92.5% level.

The silver lining, Mr. Wright suggests, is that due to recent stress in global financial markets, an interest rate hike at the federal level is no longer expected until the middle of 2012, according to RBC’s projections.

“Housing affordability in Canada may not deteriorate as quickly or by as much as we previously expected,” Mr. Wright said.

However, he said the future for housing prices remains uncertain, as the delay in the interest rate increase could prompt buyers to remain active for longer, extending the current upward momentum in prices.

Source: Christine Dobby, Financial Post