February 4, 2014

Adjusting To The New Reality Of The Market

The Globe and Mail reports from Canada. “Last year marked a return of confidence to Vancouver’s real estate market, with a 14-per-cent increase in sales over the year before, according to the Real Estate Board of Greater Vancouver. Slower activity in the higher end of the market shows that buyers aren’t willing to throw money at just anything – as they seemed to be doing in the boom times of 2007 – but prices are also staying firm. In West Vancouver, a 10-year-old, five-bedroom house that had been on the market since February at $4.2-million, recently sold for $3.55-million.”

“‘For 2014 we feel good. We feel better than we did in 2013. The idea of a bubble and soft landing and all that is behind us,’ said Bosa Properties VP Daryl Simpson.”

The Leader Post. “Luxury house sales have nearly quadrupled in Regina since 2009 - up 288 per cent, according to the Re/Max Upper End Report. Rob Nisbett, an agent with Re/Max in Regina, noted the city lagged behind for years in real estate generally compared to other major cities. People were reluctant to buy upper-end homes for fear they wouldn’t get their money out of them. ‘Where is it going to end? Well, it’s not going to end for quite a while,’ he said. ‘We’re still behind the average price and what goes on in other major cities.’”

The Ottawa Citizen. “There’s light at the end of the tunnel for the housing market in Ottawa as new home sales begin to recover from a two-year slump and both new and resale prices see a modest increase over last year, according to Patrick Meeds of PMA Brethour Realty Group. Overall, new home sales last year were 20 per cent below the 10-year average. This may be due to first-time home buyers having a harder time breaking into the market, says Meeds. The tightening of the mortgage rules in the last couple years means up to 20 per cent of the people who would have qualified for a mortgage in 2010 would not today. ‘Right now we have to figure out a way to get them in (the market),’ he said.”

The Ottawa Business Journal. “Condominium prices dropped 1.2 per cent year-over-year in the capital in the fourth quarter of 2013, according to Royal LePage, providing further evidence of a slowdown in demand for the units in Ottawa. The drop in average condo prices – which fell to $260,500 – was largely the result of the influx of new condominium offerings coming onto the market, the report’s authors said.”

“‘We have a small supply overflow in the Ottawa condo market with an approximate 20 per cent increase in inventory this year, but there is sufficient demand for these new units,’ said John Rogan, a broker/manager with Royal LePage, in a statement.”

“‘Talk of a ’soft landing’ for Canada’s real estate market in the new year is misguided,’ said CEO Phil Soper. ‘We expect no landing, no slowdown, and no correction in the near-term. Conditions are ripe for as strong a market as we saw in the post-recessionary rebound of the last decade.’”

The Canadian Press. “Canadian home prices are likely about 10 per cent overvalued given the expectations for rising interest rates, TD Bank said in a report. However, the bank also noted that the overvaluation in markets such as Toronto, Vancouver, Montreal and Ottawa is likely more significant than in others across the country. TD economist Diana Petramala noted that Montreal, Quebec City and Ottawa have been flooded with an overhang of inventory of unsold condos. ‘Home prices have weakened in the second half of 2013 as a result and we expect that softness to persist in 2014,’ Petramala said. ‘Toronto is poised to follow their lead, as the number of new condos scheduled to be completed in 2014 and 2015 is elevated relative to history.’”

The Montreal Gazette. “I hate to speak ill of my own neighbourhood, but I think it’s pretty evident that the downtown condo market is going through a bit of a price correction. Last year, condo prices tumbled further in Montreal’s downtown Ville Marie district than anywhere else on the island, new data from the Quebec Federation of Real Estate Boards show. Last year, the price of a median condo declined six per cent on an annual basis to $305,000.”

“Federation economist Paul Cardinal doesn’t like to talk about corrections: ‘we’re adjusting to the new reality of the market.’”

“But real estate brokers tell me their clients are simply not getting the same prices that their homes might have fetched in 2011, or early 2012. What’s most worrisome for me is that active listings for downtown condos are up 41% in 2013, compared to a year earlier. Even the price of once hot plexes is down a bit. Royal LePage broker Raymond Singh has heard of one investor who is trying to sell a handful of plexes in Ville Marie. They are renovated and are listed at market value, but he has not yet attracted a buyer.”

In Greater Montreal, homeowners now trying to sell can console themselves if they bought a decade ago. Prices have more than doubled since 2001. But if you bought two years ago, prepare to wait, or take a hit.”

From CTV News. “According to seasonally adjusted data from the Canadian Real Estate Association, the average price of a home in Halifax is $273,792. That number jumps to $541,637 in Toronto and a whopping $825,635 in Vancouver. Kerry and Jordan Titchener are expecting their first child in April and are already pre-approved for a mortgage. But after three months of searching for a new home, they’re not convinced buying is the answer anymore.”

“‘We want to just rent again because seeing what we’re going to have to pay for management fees, strata fees, property taxes. We just feel why put that stress on our relationship,’ said Jordan Titchener.”

“A recent RBC affordability study found that if couples, like Kerry and Jordan, want to purchase a detached bungalow in Vancouver, they’d need to spend 91 per cent of their disposable income on housing.”

Bits Bucket for February 4, 2014

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