News Articles for August 2010

Lower Mainland sales plummet, buyers, sellers reach standoff

Yvonne Viel had hoped to get in the low $700,000s for her south Vancouver home.

But in a July where home sales plummeted by almost half from last summer's red-hot market, she was happy for a quick sale of her home at $675,000.

Pricing was key to the sale, which occurred within days of the home going on the market, she said. She said her realtor convinced her to list at $699,000, which brought three offers, including the one she accepted.

"I did the right thing for my situation," Viel, a single 50-year-old in the personal management field, said in an interview.

In Metro Vancouver, excluding Surrey, 2,255 sales were registered through the Multiple Listing Service, a 45-per-cent decline from July 2009 and the third-lowest July in a decade.

In the Fraser Valley, July MLS sales were off 47 per cent with 1,101 transactions and the slowest July in a decade, according to real estate board president Deanna Horn.

The benchmark price for detached homes, an average for typical homes sold, dipped a negligible 0.2 per cent to $793,193 in the area of Metro Vancouver covered by the Real Estate Board of Greater Vancouver.

Read the full article here.

B.C. natural gas drillers should see modest recovery in 2010

VANCOUVER — Natural gas exploration activity will improve 22 per cent this year in British Columbia compared to 2009, an industry group predicts.

The Petroleum Services Industry of Canada said in a third-quarter forecast that well completions across the country in 2010 will increase 35 per cent compared to 2009 — but remain nearly 50 per cent below record activity levels earlier in the decade.

Nationally, PSAC predicts 11,250 wells will be drilled by the end of this year compared to 8,350 in 2009.

PSAC expects B.C. will see 700 wells drilled, a 22-per-cent increase compared to 2009, by year's end. That's still well below a peak of 1,100 in 2006.

The industry group is basing its predictions on an average North American gas price of $4.50 Cdn and an oil price of $78.50 US — and said those comparatively low valuations will continue to forestall a robust recovery of the industry.

"While there is optimism that the global economy is recovering, uncertainty continues to hang in the air as negative economic indicators in the U.S. and abroad persist," PSAC said in a news release issued Tuesday.

Read the full article here.

HST cooling housing market: Realtors

TORONTO -- Almost half of its real estate agents say the main reason for the cooling housing market is the harmonized sales tax, according to a survey from Royal LePage Real Estate Services.

The company conducted an online-only poll of its realtors at the end of July — almost a month after the HST went into affect in British Columbia and Ontario — and found that 43.9% of the 769 respondents in those provinces blamed the new tax for the downturn. The HST was considered a bigger threat than rising interest rates despite two recent quarter point hikes from the Bank of Canada.

The Canadian Real Estate Association said last month that sales in the second quarter of the year were down 13.3% from the first quarter, on a seasonally adjusted basis. June sales dropped 8.2% from May.

Price increases are also being affected with demand withering. CREA said the national average sales price rose just 4.9% from a year ago to $342,662 in June.

"We wanted to understand the impact HST has had since it was introduced, and what we found is that there is a need to better educate home buyers and sellers to ensure they understand when the HST is applicable," said Phil Soper, chief executive of Royal LePage. "According to our realtors who work in B.C. and Ontario communities every day, misconceptions about the HST are having an effect on the market in both provinces."

Read the full article here.

June good for building permits in B.C.

A small surge in residential building-permit applications in June pushed British Columbia to the second-highest month this year for stated building intentions.

Builders took out $612.2 million worth of building permits for new homes in June.

Add $248 million in nonresidential permits and the $860.2-million total made it the best month for the province since February, when builders took out $876.5 million in permits.

Keith Sashaw, president of the Vancouver Regional Construction Association, said the numbers were encouraging, but cautioned that the construction sector may see numbers ease in the coming months.

Read the full article here.

Construction begins on High Street, Abbotsford

Abbotsford Mayor George Peary's shovel took a bite of the earth Thursday, beginning construction of the $170-million High Street shopping centre project, an initiative that will take advantage of Abbotsford's new revitalization tax exemption (RTE).

Developer Shape Properties will be able to use the RTE, a five-year break on general municipal property taxes. The RTE program, passed by Abbotsford council on June 28, allows commercial developers a 100-per-cent exemption for the first year of the project, an 80-per-cent discount the following year, with the discount reduced by 20 per cent each year until the full tax is paid in year six.

In order to qualify, the urban development must be at least $10 million in scope, provide two per cent of space for public amenities and have 70 per cent of retail parking spaces underground. School and utilities taxes are paid in full annually.

Shape Properties president John Horton said the tax break helps, although it wasn't the deal-maker.

Read the full article here.

Misconeptions about HST slowing home sales: Poll

Royal LePage Real Estate Services says almost half of its agents believe the main reason for the cooling housing market is a public misconception about how the harmonized sales tax affects home sales.

The company conducted an online-only poll of its realtors at the end of July -- almost a month after the HST went into effect in British Columbia and Ontario -- and found that 43.9 per cent of the 769 respondents in those provinces blamed the new tax for the downturn. The HST was considered a bigger threat than rising interest rates despite two recent quarter-point hikes, Royal LePage said.

Even before the HST was introduced in B.C. and Ontario, sales in the second quarter of this year were down 13.3 per cent from the first quarter, on a seasonally adjusted basis, according to the Canadian Real Estate Association. June sales dropped 8.2 per cent from May.

CREA said the national average sales price rose just 4.9 per cent from a year ago to $342,662 in June.

"We wanted to understand the impact HST has had since it was introduced, and what we found is that there is a need to better educate home buyers and sellers to ensure they understand when the HST is applicable," said Phil Soper, chief executive of Royal LePage. "According to our realtors who work in B.C. and Ontario communities every day, misconceptions about the HST are having an effect on the market in both provinces."

Read the full article here.

TREB: Save HST with resale housing

As of July 1, the harmonized sales tax (HST) came into effect and Ontario consumers will be hard-pressed to avoid this so called "tax on everything." While that less than flattering nick name for the HST may be pretty close to the truth, it's not completely accurate, especially when it comes to real estate, where the HST applies differently depending on the type of real estate, whether it is re-sale housing, newly constructed housing or business properties.

Anyone who has ever purchased a home or has considered purchasing a home knows that budgeting for taxes is an important part of determining what they can afford. Whether it is the on-going property tax, or the upfront land transfer tax, the cost of taxes on housing can add up.

With that in mind, one of the most important things to know about the HST is that, fortunately, it will not increase the tax burden on homebuyers who purchase re-sale housing. That's because re-sale housing, which was never subject to provincial sales tax (PST) or the federal goods and services tax, will continue to be exempt from both taxes once they are combined under the HST.

The same is not true for newly constructed homes, which will be hit with additional tax under the HST. Newly constructed housing has always been subject to the GST, meaning thousands of dollars of tax for homebuyers choosing this option. Now, with the HST, new housing will also be subject to PST, meaning thousands of dollars in added costs for new homebuyers

Read the full article here.

Laneway housing takes off in Vancouver, but is a tougher sell in other Metro cities

There was no way Allan Bernardo could afford to buy his own home in his east Vancouver neighbourhood. But thanks to the city's laneway housing policy, he's going to have his own "Fonzie suite" in the family's backyard.

The new bachelor pad, which is under construction, is one of 111 laneway projects — the initial quota for the city's pilot project — being built across Vancouver, while another 45 applications are in the pipeline.

The applications have been coming in at such a steady pace that staff will provide a review of the project to council on Oct. 19.

"It's popular with the market that we expected. … These are regular lot owners and citizens, not developers," city planning director Brent Toderian said.

Laneway housing, also known as coach houses, granny flats or garden homes, are popping up across Metro Vancouver as cities aim to densify their single-family neighbourhoods to provide affordable housing for a growing population.

Surrey and Langley Township have allowed the small one-and-a-half or two-storey units in certain areas of their municipalities for years, while North Vancouver City, Maple Ridge and Coquitlam have recently approved policies for the units in their communities.

Read the full article here.

Canadian housing starts fall in July; B.C. numbers down sharply

OTTAWA — The annual rate of housing starts in Canada fell 1.6 per cent in July to a seasonally adjusted 189,200 units from an upwardly revised 192,300 units in June, Canada Mortgage and Housing Corp. said Tuesday.

"Housing starts moved lower in July, largely due to a decrease in urban single starts and a reduction in rural starts," Bob Dugan, chief economist at CMHC's market analysis centre said in the report. "Multiple starts partially offset this moderation."

The number of starts is higher than the 185,000 economists polled by Bloomberg had called for.

David Tulk, senior macro strategist at TD Securities, said, "The decline in total starts can be traced to a resumption in the decline of single-unit starts, which fell by 11.4 per cent. By comparison, the always-volatile multiples component rebounded by 13.4 per cent following a revised 5.1 per cent decline in June. Regionally, starts were weaker in British Columbia (-14.8 per cent), Ontario (-2.6 per cent), and Quebec (-0.4 per cent) while the Atlantic Canada (+37.7 per cent) and the Prairie Region (+14.4 per cent) both posted outsized gains."

Meanwhile, in a separate report, new home prices in Canada rose 0.1 per cent in June following a 0.3 per cent increase in May, Statistics Canada reported Tuesday.

Read the full article here.

Homeowners sell, start renting instead

As interest rates rise, more people are selling their properties - and diving into rentals, driving up rents as well Bidding wars have moved from the bungalow to the two-bedroom rental apartment.

Many homeowners who cashed out at the peak of the market are putting their money in the bank rather than investing in a new house. And as a slew of new renters look for temporary homes, they are driving up prices and engaging in bidding wars to ensure they snap up properties that are comparable to the properties they left behind.

With the real estate market cooling and the cost of mortgages expected to climb, they are sitting on their cash and hoping prices will drop before they wade back into the world of home ownership.

"There is angst among buyers who would rather rent and wait a while before jumping back in," said Cary Chapnick, president of Hive Realty Corp. in Toronto. "And then they get out there, and find that the good properties are receiving multiple offers. It's quite a shift."


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Home sales tumble in B.C.'s biggest markets

A year ago, B.C.'s real estate markets were rising to a peak in sales. In July, they dramatically fell off it.

Sharp drops in sales in B.C.'s biggest markets led the province to a 42-percent decline in July sales through the Multiple Listing Service compared with the same month a year ago, the B.C. Real Estate Association reported Thursday.

"What we've seen is that the province was buoyed up by Vancouver, Victoria and to some extent the Fraser Valley earlier in the year as those markets were very strong indeed," Cameron Muir, the association's chief economist, said in an interview.

"Now of course, those markets have shifted back toward being more in favour of buyers, so they've brought the entire province into that category."

Muir said a considerable part of 2009's real estate rebound represented "advance buying" by consumers who expected to buy in future years, but were drawn in by lower prices and record-low mortgage rates.

Now, tighter lending requirements for first-time buyers, higher prices and the expectation that mortgage rates will rise are dampening demand.

Read the full article here.

The new Musqueam economy: Real estate

On the north bank of the Fraser River, a building crane symbolizes the big plans that are unfolding on Musqueam land.

The Musqueam is the only native band within Vancouver, but the scope of their real estate holdings goes well beyond city limits. The band has decided the time is right to realize the potential development of their properties and become a major real estate player.

For a group with a population of about 1,200, it's a vast undertaking.

"We need to get out in the business world, and do things – I've said that for years and years," says Musqueam Chief Ernie Campbell, standing on the building site for a new cultural pavilion. "What we need to strive for is self-sufficiency, and no more [of] what I call government handouts."

Howie Charters is the Colliers International managing director who's been put in charge of launching the real estate projects that will enable the band to run like a full-fledged business.

"When I tell my friends what these guys are up to, their jaws drop. They say, 'You've got to be kidding,' " Mr. Charters says.

Read the full article here.

Why not commute by water in Metro Vancouver?

VANCOUVER — The inlets and rivers slicing through our city create a traffic nightmare on land — a series of more or less chronic bottlenecks that lengthen commutes and shorten tempers.

Our communities and our neighbourhoods are, indeed, divided by our waterways.

But what if Metro Vancouver began using water to unify, not amplify, its divisions? Could we go beyond the SeaBus and take a page from places like Sydney, Australia, or Hong Kong, where ferries play a much greater role in moving citizens around?

The possibilities for greatly expanded water transit here seem almost endless. The experts — at least those TransLink has consulted — are wary (for some good, although not insurmountable, reasons). And the region's track record of experiments to date is mixed.

The best success story, and it is dramatic, is the SeaBus. Since 1977, it has built a customer volume of nearly six million a year. Revenue from its 543 passengers per hour substantially exceeds its operating cost of about $900 an hour. And, I would argue, it was the driving force behind development of the charming high-density residential and commercial area around North Van's Lonsdale Quay, as well as a big contributor to the growth and character of downtown Vancouver.

Read the full article here.

Housing market feels impact of HST introduction

TORONTO -- The new harmonized sales tax introduced in British Columbia and Ontario last month had an immediate impact on the housing market, according to the Canadian Real Estate Association.

The Ottawa-based group, which represents 100 boards across the country, said July sales plunged 6.8% on a seasonally adjusted basis from a month ago, a decline "almost entirely the result of fewer sales in British Columbia and Ontario."

The slowdown had been expected as consumers rushed to buy homes ahead of the July 1 implementation in those provinces. The HST only applies to services used in purchasing and selling an existing home, such as real estate commission, and not the actual sale price.

In British Columbia sales dropped 14.1% from a month ago on a seasonally adjusted basis and Ontario the decline was 8%. The two provinces accounted for 85% of the the change in national activity.

"The soft sales figures we're seeing right now can be attributed in part to accelerated home purchases earlier in the year," said Georges Pahud, CREA president.

Read the full article here.