Housing Sales Forecast Skyrockets

Good news home owners! More evidence of Canada’s continuing insulation from the housing troubles in the USA comes in today’s Times Colonist newspaper. Our booming economy, strong dollar, and exploding job market are all combining to propel our housing market to new highs, despite the challenges faced by our cousins to the south. – Tim Ayres

Anne Howland
CanWest News Service
Tuesday, August 21, 2007

OTTAWA — Exceptional strength in Canada’s resale housing market in the first six months of the year prompted the Canadian Real Estate Association yesterday to more than double its forecast for sales increases in 2007, the second time this year the association has revised its predictions upward. The news comes amid a growing crisis in the U.S. housing market, with prices falling and the number of defaults rising. The situation helped create the current meltdown of the U.S. subprime mortgage market, which made loans to high-risk people who are now unable to meet their financial commitments. The resulting investor unease spread from the subprime market to other areas of the American financial system and to markets worldwide, sending indexes on a freefall last week.

In Canada, national home sales are now forecast to rise by 8.1 per cent in 2007 to 523,100 units and set new annual records in most provinces, CREA said. In May, it had forecast a 2007 sales increase of 3.6 per cent, which was an update on its original 2007 forecast issued in February. At that time, CREA had predicted that sales activity this year would drop 1.6 per cent from 2006.

“The housing market has caught everyone by surprise,” said CREA chief economist Gregory Klump. “Everyone expected a gradual cooling in the second quarter, but [the market] heated up instead.

“We’ve changed our forecast to reflect reality,” Klump said, adding the market has now seen two consecutive record-breaking quarters. “Resale housing activity was a juggernaut in the second quarter of 2007.”

Next year, sales activity is forecast to edge slightly lower, but still reach the second highest annual level on record in almost all provinces. CREA had initially called for sales activity to cool 2.8 per cent in 2008, but is now calling for only a two-per-cent decline.

Prices are also forecast to set new records in every province this year and next, but price increases will be smaller in 2008, the association said. It is now looking for a 10.4-per-cent price increase for 2007, up from its previous forecast of 9.5 per cent. The price increase forecast of 5.5 per cent for 2008 has remained the same, Klump said.

The Canadian housing market has shrugged off the problems that have been experienced in the U.S., said Ann Bosley, CREA president.

© Times Colonist (Victoria) 2007

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July 2007 Sets Record For BC Home Sales

Vancouver, BC – August 16, 2007. British Columbia Real Estate Association (BCREA) reports that residential sales volume on the Multiple Listing Service® (MLS®) in BC climbed 44 per cent to $4.66 billion in July, compared to the same month last year. Residential unit sales increased 25 per cent to 10,447 units during the same period, a record number of July transactions. The average MLS® residential price hit $446,386, up 15.2 per cent from July 2006.

Bank Of Canada Likely To Cut Interest Rates

Central bank tries to stabilize markets

EDIT: FOR A MORE RECENT ARTICLE ON INTEREST RATES, CLICK HERE.

Failure of cash infusion to stop decline means bank will likely cut interest rates

Eric Beauchesne

CanWest News Service
Thursday, August 16, 2007

OTTAWA — The Bank of Canada, in a new bid to reassure panicky investors, yesterday accelerated its efforts to pump more money into domestic financial markets, which are being roiled by a deepening global credit crunch.

Its unprecedented move, however, did not prevent another steep drop in the Canadian dollar and stock market, both of which plunged further to their lowest levels in three months.

The bank announced it will temporarily accept some non-federal government securities as collateral for its one-day loans to financial institutions to ease the credit crunch in Canada. The public announcement came a day after some issuers of commercial paper were temporarily unable to raise funds to refinance billions of dollars in maturing issues.

The action is a “step in the right direction” but may not be enough for financial systems “under significant stress,” said Clement Gignac, chief economist at the National Bank of Canada, which in the wake of the credit crunch has boosted its odds of a U.S. recession to 50-50. The chances of a recession in Canada are no more than 30 per cent because of the country’s healthy public finances, stronger housing market and its status as a net exporter of natural resources, Gignac said.

Gignac said yesterday’s cash infusion increases the chances that the Bank of Canada will also have to cut interest rates rather than increase them further as it suggested it would next month. Central banks in Canada and the U.S. will have to change their focus from fighting inflation to stimulating their economies, he said.

The actions by the Bank of Canada, which matches those taken by the Fed last week, came as the Canadian dollar slipped below 93 cents US, down more than three cents from last month’s triple-decade high of over 96 cents US.

The loonie ended the day at 92.78 cents US, its lowest level since May, and down from 93.75 cents US Tuesday. Meanwhile, Bay Street’s benchmark stock market index plunged nearly 200 points, and Wall Street’s fell nearly 170 points.

“As part of its continuing provision of liquidity in support of the efficient functioning of financial markets, the Bank of Canada … is temporarily expanding the list of collateral eligible for use by market participants in special purchase and resale agreements,” the bank said in a statement.

The expanded list — which includes provincial and local government, and some corporate securities — will remain in effect until further notice, the bank said.

Late last week, the bank for the first time since the 2001 terrorist attack on the U.S. publicly reassured markets that it would provide enough liquidity to support financial markets through one-day purchases of securities from financial institutions, leaving them with extra cash for lending.

Yesterday, the bank injected $350 million into the financial system, about half the amount it pumped into the system at the start of the week and only a fraction of the roughly $1.6 billion it injected in each of the final two days of trading last week. The U.S. Fed, meanwhile, plowed $7 billion US into that country’s financial system to meet demands for cash by the U.S. financial system.

Finance Minister Jim Flaherty’s office did not respond yesterday to queries on the financial market crisis, but Prime Minister Stephen Harper, following this week’s cabinet shuffle, stressed that Canada is in good enough economic and financial shape to weather the current storm.

“Canada will not be immune to fluctuations in the international marketplace nor will individual firms be immune,” Harper said. “That said, we should be very clear the fundamentals of the Canadian economy are very strong as are the fundamentals of our banking and financial sector generally.”

Adding to the view that a rate hike in Canada next month is now off the table were Statistics Canada reports that Canadian factory shipments and new car sales weakened in June.

Manufacturing shipments tumbled in June, falling 1.8 per cent to $48.6 billion, the third straight drop and the steepest since January, Statistics Canada reported. Shipments during the first six months of the year were up just 0.1 from the same period last year.

The decline in shipments was led by autos.

“Soft conditions in the U.S. auto market are taking their toll,” said National Bank of Canada economist Marc Pinsonneault. “Looking ahead, and given our belief that U.S. consumption expenses will remain lackluster in the coming quarters, conditions should remain challenging for that industry.”

But Canadian auto sales are also weakening, according to separate Statistics Canada report.

During June, new auto sales also slipped 1.2 per cent in June to 143,900, the second straight monthly decline, although they remain at historically high levels, Statistics Canada said in a separate report.

Buyer Preferences Changing…

For 2015, it’s inside the house that counts

Homes to grow in luxury, not size, study predicts

BY NANCY TREJOS

The Washington Post

Tvice-president for research at the builders association. Another generation, those born from 1965 to 1977, are now in their prime home-buying years. And they’re just as demanding, Ahluwalia said. “They also want everything.”

In its Home of the Future study, to be published this month, the builders association predicts that the average size of a single-family house will be 2,300 to 2,500 square feet, about what it is now or even slightly smaller. High ceilings — about nine to 10 feet — will become the norm. So will 2 1/2 to 3 1/2 bathrooms, which is at least one more than the average house had in the 1970s.

In high-end houses, those with 4,000 or more square feet, dual master-bedroom suites will become even more popular than they are now and will include sitting rooms, bathrooms and walk-in closets.

In both upscale and average houses, the family room will get much larger, while the living room will continue to shrink — a testament to the popularity of casual entertaining.

“The formal living space isn’t as important,” said Andy Rosenthal, president of Rosenthal Homes in Potomac, Md. “As a baby boomer, when we grew up, we all had living rooms, but we weren’t allowed in there. Now we don’t want living rooms because we weren’t allowed in there anyway.”

Ahluwalia said that people will want their houses to be more open, airy and bright. They’ll ask for large kitchens with islands, fewer walls separating their dining rooms or family rooms, and recessed lighting. Plain white walls won’t do; bold colours will be in.

And owners will probably want things they don’t need.

“A lot of people don’t even use the fireplace, but they won’t buy a house without a fireplace,” Ahluwalia said.

The same goes for garages, which will probably get much larger, especially in pricier homes. “Even people who don’t have three cars want to have a three-car garage,” he said.

Technology will become a more integral part of the house, the study found. Universal design, a concept that makes homes accessible to everyone regardless of age or disabilities, will also find a place in new-home construction.

One national trend experts expect is more luxurious outdoor spaces. The association’s study predicts that outdoor kitchens complete with sinks, refrigerators and cooking islands will become more popular in upscale homes.

The survey also found that “green” methods will become more widespread. The builders association predicts that the home of the future will have water conservation devices and energy-efficient appliances, among other features.

Interest Rates may decrease; at least hold.

Why might the recent turmoil in the financial markets be good for home owners and buyers? See below:

From http://lfpress.ca/newsstand/Business/2007/08/11/4409763-sun.html

TORONTO — The global financial turmoil that has rocked world financial markets may have a bright side for Canadians — it could end up keeping interest rates lower despite rising inflation, economists say.

With stocks under siege and the world’s central banks trying to calm markets down and prevent a global credit crunch caused in part by a battered U.S. housing sector, economists say the Bank of Canada will likely hesitate to raise borrowing costs in such a volatile environment.

“If anything, the turmoil might actually, possibly, lead to lower interest rates than would have otherwise been the case,” Doug Porter, a senior economist with BMO Capital Markets, said yesterday.

“I’m not saying the Bank of Canada is necessarily going to go and cut interest rates, but they’re potentially less willing to rise interest rates amid this volatility.”

Like many economists, those at BMO had been expecting the Bank of Canada to raise rates in September to dampen inflationary pressures, possibly again in October and then in early 2008.

That would have raised borrowing costs in Canada by three quarters of a point, hiking payments for homeowners renewing mortgages, and consumers and businesses looking to borrow money.

“That series of potential rate increases is being put at least in some question because the bank may not be all that enthusiastic about raising interest rates when the financial markets are going through so much trauma,” Porter said.

That may only be short term, says David Wolf, an economist with Merrill Lynch Canada. Markets expect Bank of Canada governor David Dodge to keep rates on hold next month, but inflationary pressures are still building in the hot Canadian economy.

If you’re looking to find your perfect place and lock in at a good rate, contact Tim Ayres at 642-6361 and let’s get started!

Victoria Real Estate Board Unveils New Web Page

I am pleased to announce the launch of the newly revamped VREB website, VREB www.vreb.org.

The new site offers easier access to key information and guides on buying, selling, leasing, MLS® statistics, commercial real estate and community involvement.

Also: Open house information for all open houses being held on the upcoming weekend. Open house listings include helpful Google mapping of properties for easy reference.

I hope you will enjoy the site and will recommend it to your friends and acquiantances as a valuable resource in your search for Victoria and Sooke Real Estate.

–Tim Ayres

July MLS® Statistics – Victoria, BC

Summer Market Sizzles

August 1, 2007

Sales of homes and other properties in the Greater Victoria area continued to show exceptional strength last month reaching the highest level for the month of July in over 15 years. There were 922 sales through the Victoria Real Estate Board’s Multiple Listing Service® (MLS®) in July, up over 36 per cent from the 677 sales in the same month a year ago. There were 949 sales in June of this year. Meantime, 27 sales of over $1 million helped push the average price of single family homes sold in July to another record high of $574,753; the median price was considerably lower at $515,000; the six-month average was $560,393.Victoria Real Estate Board President, Bev McIvor, says the continued strength of the market is remarkable, “Despite the significant increases in prices that we have seen in recent years, the total number of sales shows that demand remains very strong. The number of sales so far this year is running over 11 per cent higher than in the first seven months of last year while the six month average price for single family homes has risen over seven per cent since the beginning of the year.”The average price for all condominiums sold in July was $306,668; the average for the last six months was $311,568. The median was again lower at $268,000. The average price for townhomes last month was $402,558; the average for the last six months was $397,434. The median was $379,900.MLS® sales last month included 499 single family homes, 241 condominiums, 106 townhomes and 22 manufactured homes.

There were 3,402, properties listed for sale on the MLS® system at the end of last month, up from the 3,318 properties in the same month a year ago.

Summary Report

Courtesy Victoria Real Estate Board