Money Tied Up That They Can’t Afford To Lose
The Vancouver Sun reports from Canada. “Buyers from mainland China and a dwindling supply of high-end detached homes are driving Vancouver’s luxury real estate market, with has seen an 80-per-cent increase this year compared to 2014 in the number of sales over $3 million. ‘Mainland China is churning out millionaires at quite a huge rate, and many of them like Vancouver,’ said Wayne Ryan, managing broker at RE/MAX Crest Realty Westside. ‘At this point, it’s all anecdotal, but the reality is we’re finding it’s between 70 and 75 per cent (of buyers.)’”
“More condo buyers are investors, too. ‘A lot of international investors will say, Vancouver’s a very safe market, so they’ll park their money here. That’s why you hear so much discussion about these apartments sitting vacant,’ Ryan said. ‘Because money isn’t an issue — it’s not as if they need to rent them on Airbnb.’”
The Globe and Mail. “Toronto’s condo sector is shaping up to have one of its strongest years on record, dispelling fears that Canada’s largest housing market is ripe for a correction. Builders sold nearly 11,000 condo units in the first half of 2015, the third-best year on record, according to research firm RealNet Canada Inc. Most of the sales activity has been among presales, thanks to 55 new projects that developers launched in the city this year.”
“But buyers have also been snapping up units in projects wrapping up construction, helping to absorb the large surge in completed but unsold units, which had soared to four times their historic norms at the start of the year. Of 453 condo projects in active development, at least 140 are offering some kind of incentive, said Phong Ngo, RealNet manager of new homes research. ‘We’ve been seeing more incentives than previously and things that we haven’t really seen in the past, like the rental guarantees and cash back,’ he said. ‘In the past, it was more on material things, like free appliances and upgraded countertops.’”
“Such tactics helped developers eat through their backlog of unsold inventory in existing projects in order to focus on launching new ones. Urbanation senior VP Shaun Hildebrand estimates the market could see another 14,000 to 16,000 condo units launched in the second half of the year, typically a quieter time for the market.”
The Montreal Gazette. “It’s more affordable to buy a house in Quebec than it has been in nearly a decade, according to an RBC report. ‘While Montreal’s pricing environment remained soft in the second quarter due to fairly loose supply-demand conditions in some market segments, material improvement in affordability in the past year helped re-energize resale activity in the area,’ said. ‘A high inventory of recently built, but still unoccupied condos continues to be a considerable issue for the market.’”
The Winnipeg Sun. “The affordability of bungalows and condos in Manitoba went up slightly in the second quarter of the year, according to RBC Economics. ‘A main challenge for the province continues to be the plentiful supply of homes available for sale — many of them condos — in the Winnipeg market, although the second quarter witnessed some improvement with new listings falling modestly,’ said Craig Wright, RBC’s chief economist, in a press release. ‘Some of the recent absorption issues in the condo market are a result of a wave of new multi-unit completions in Winnipeg last year.’”
The Star Phoenix. “Despite lower housing market activity in the past year, housing affordability actually decreased for single-detached homes in Saskatchewan in the second quarter, while improving slightly for condos, according to RBC. Condos have been in oversupply for a year to 18 months, especially in Regina, which has caused the affordability index there to improve to 24.5 per cent in the second quarter and slightly ahead of the 30-year average of 24.2 per cent.”
“‘On the supply side, there was a bit of an overshoot and the market is adjusting,’ said Robert Hogue, senior economist with RBC.”
The Calgary Herald. “The Calgary Real Estate Board said MLS sales totalled 1,643 in August, down 27 per cent from a year ago. The average MLS sale price in Calgary slid 1.9 per cent last month to $466,570, though the median price edged up 0.5 per cent to $422,500. ‘Thirteen months into the oil downturn combined with additional layoffs and political uncertainty will now push sellers to begin to adjust their prices downward if they wish to move their property,’ said Don Campbell, senior analyst with the Real Estate Investment Network.”
“New listings fell by 12.7 per cent in August to 2,733, while active listings were up 12.1 per cent to 5,146 at month’s end. The apartment (condo) sector was particularly hit hard in August with sales down nearly 39 per cent from a year ago. The average sale price dropped by 10.5 per cent.”
“Jyoti Gondek, director of the Westman Centre for Real Estate Studies at the University of Calgary’s Haskayne School of Business, said there is data to indicate homeowners won’t move unless they can get a job that offers similar or higher wage than what they have. ‘When you look at the impact of the labour market on housing it gets difficult for homeowners to pick up and leave and go elsewhere for a job if there isn’t one available,’ she said. ‘So we tend to see a lot of people who are in ownership situations try to ride their unemployment or they’ll go into a different field. They may accept something at a lower wage. They may even go part-time or try a business from home.”
“‘They’ll try a lot of different options because they’ve got money tied up in their home that they can’t afford to lose.’”
