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| The 12-month gain of the composite index in June was 4.5%, barely more than the 4.4% of April and May. It may seem surprising that 12-month inflation has not been accelerating in step with the recent pace of monthly increases. The reason is that in May and June 2010 the composite index was gaining more than 1% monthly. In June the largest 12-month rise was 7.2% in Vancouver, followed by 5.9% in Montreal, 4.6% in Ottawa, 4.4% in Halifax and 4.2% in Toronto. Vancouver stands out with three consecutive months of accelerating 12-month inflation. Though Montreal's 12-month inflation was the second highest of the six markets, it decelerated in June for a third straight month. Twelve-month inflation decelerated for a sixth consecutive month in Halifax. Calgary prices were down 2.7% from a year earlier, for a ninth consecutive month of 12-month deflation. In July, according to seasonally adjusted data from the Canadian Real Estate Association, market conditions were balanced in the country as a whole while appearing tight in Toronto. Teranet – National Bank House Price Index™ The historical data of the Teranet – National Bank House Price Index™ is available at www.housepriceindex.ca.
The Teranet–National Bank House Price Index™ is an independently developed representation of average home price changes in six metropolitan areas: Ottawa, Toronto, Calgary, Vancouver, Montreal and Halifax. The national composite index is the weighted average of the six metropolitan areas. The weights are based on aggregate value of dwellings as retrieved from the 2006 Statistics Canada Census. According to that census1, the aggregate value of occupied dwellings in the metropolitan areas covered by the indices was $1.168 trillion, or 53% of the Canadian aggregate value of $2.207 trillion. All indices have a base value of 100 in June 2005. For example, an index value of 130 means that home prices have increased 30% since June 2005.
1 Value of Dwelling for the Owner-occupied Non-farm, Non-reserve Private Dwellings of Canada. |
Wednesday, August 31, 2011
Teranet Index - June 2011
Monday, August 29, 2011
Landcor Q2 2011 Report
Here is a link to the Q2 2011 Landcor Report. https://www.landcor.com/market/reports/Q2_2011_Residential_Sales_Summary.pdf
Some highlights:
"In Q2/2011 overall residential sales in BC were up an impressive 49.7 percent over the previous quarter, from 19,152 sales to 28,668 sales. However, on a year-over-year basis, total sales are off by almost 19 percent compared to the 35,253 homes changing hands in Q2/2011. Total value shows the same pattern: up an impressive 64.5 percent to $16.03 billion in Q2/2011 but off by 3.5 percent compared to Q2/2010 that saw $16.61 billion in product sales.
Translation: homes are getting more expensive - median prices are rising, and yet fewer homes are selling as the desire for homeownership bangs heads with affordability."
. . . . .
"In overheated Metro Vancouver, contrary as always, year-over-year sales are down by more than 10 percent but values of all product types continue to climb. Meanwhile, Q2 2011 month-over-month figures keep on trucking. Whether or not there’s a cliff ahead is, as always, the subject of much debate.
Outside of Metro Vancouver, the figures are far more volatile.
Up the Fraser Valley, recent sales and values are going up, but put against the post-HST trough, the activity is muted, off by more than 25 percent. On a year-over-year basis however, prices are near stagnant, which bodes well for would-be new homebuyers.
On Vancouver Island, the Capital Regional District is holding firm, whereas the rest of the Island is still coming out of the trough. The second quarter looks good compared to first quarter and yet, y-o-y, the Island is in the red across the board, save only for attached product.
In the Okanagan, Q2 2011 sales and value are up from the first quarter, but once again, year-over-year, not good. SFD and attached are holding somewhat steady but condo is not.
Up in the BC North/Northwest, the same pattern. Y-o-y sales and values have declined but there’s a disconnect; SFD and attached have fared poorly yearover-year and quarterly but condo product is holding strong. However, up here, with a mere 1,793 titles spread over the huge area, condos are as rare as
nuns wearing bikinis in winter."
Some highlights:
"In Q2/2011 overall residential sales in BC were up an impressive 49.7 percent over the previous quarter, from 19,152 sales to 28,668 sales. However, on a year-over-year basis, total sales are off by almost 19 percent compared to the 35,253 homes changing hands in Q2/2011. Total value shows the same pattern: up an impressive 64.5 percent to $16.03 billion in Q2/2011 but off by 3.5 percent compared to Q2/2010 that saw $16.61 billion in product sales.
Translation: homes are getting more expensive - median prices are rising, and yet fewer homes are selling as the desire for homeownership bangs heads with affordability."
. . . . .
"In overheated Metro Vancouver, contrary as always, year-over-year sales are down by more than 10 percent but values of all product types continue to climb. Meanwhile, Q2 2011 month-over-month figures keep on trucking. Whether or not there’s a cliff ahead is, as always, the subject of much debate.
Outside of Metro Vancouver, the figures are far more volatile.
Up the Fraser Valley, recent sales and values are going up, but put against the post-HST trough, the activity is muted, off by more than 25 percent. On a year-over-year basis however, prices are near stagnant, which bodes well for would-be new homebuyers.
On Vancouver Island, the Capital Regional District is holding firm, whereas the rest of the Island is still coming out of the trough. The second quarter looks good compared to first quarter and yet, y-o-y, the Island is in the red across the board, save only for attached product.
In the Okanagan, Q2 2011 sales and value are up from the first quarter, but once again, year-over-year, not good. SFD and attached are holding somewhat steady but condo is not.
Up in the BC North/Northwest, the same pattern. Y-o-y sales and values have declined but there’s a disconnect; SFD and attached have fared poorly yearover-year and quarterly but condo product is holding strong. However, up here, with a mere 1,793 titles spread over the huge area, condos are as rare as
nuns wearing bikinis in winter."
Wednesday, August 24, 2011
2011 TD Canada Trust Repeat Home Buyers Report
http://cnwtelbec.com/en/releases/archive/August2011/23/c5497.html
- 2011 TD Canada Trust Repeat Home Buyers Report finds three-quarters of repeat home buyers move earlier than they originally intended -
(VANCOUVER, Aug. 23, 2011) - Nearly six-in-ten B.C. repeat buyers are moving on to larger or more luxurious homes - and they're moving sooner than expected. In fact, the TD Canada Trust Repeat Home Buyers Report, which surveyed Canadians who recently bought or intend to buy a home that is not their first, found that three-in-four British Columbians are moving earlier than planned. More than half (51%) had no intention of moving but now find themselves on the house-hunt again and 22% thought they would move again but not this soon. Not ones to settle, B.C. residents are experienced movers; they are the most likely in the country to have owned more than four homes in their lifetime (39% versus 29% nationally).
"Our research indicates that British Columbians aren't staying in one home too long," says Barry Rathburn, Manager, Residential Mortgages, TD Canada Trust. "There are costs associated with a move, so I'd recommend that people explore all of their options before making the decision to change homes. It might be more affordable to renovate and make your current home work for you."
The top features British Columbians felt they compromised on when they purchased their previous home that they are not willing to budge on this time is the number of bedrooms (34%). Other compromises that they won't make again include price (30%), features of the home (30%), layout of the home (28%) and number of bathrooms (26%).
"If you are dissatisfied with something like the layout or features of your home, a renovation can be a convenient option to save the hassle and expense of moving. A Home Equity Line of Credit will allow you to use the equity you've built in your home to finance the renovation. Further, if you do ultimately decide to sell, the renovation could increase your resale value," says Rathburn.
British Columbians are among the least likely to have considered a Home Equity Line of Credit (HELOC) (37% versus 50% nationally). Of those who would consider this financing option, nearly half (47%) say they would use it for the purposes of a renovation, but nearly as many (44%) would like to have it simply as a cushion. Thirty-nine percent would use the line of credit to invest.
Timing is everything: Canadians think it's a good time to buy - and to sell
B.C. buyers are the most likely in the country to say investment opportunities (26% versus 21% nationally) and market conditions (28% versus 21% nationally) played a factor in their decision to buy another home. This is a significant increase over 2010 when 21% said investment opportunities affected their decision to buy and 15% said market conditions. The large majority (81%) plan to sell their current home and four-in-five expect to sell at or above asking price (70% versus 62% in 2010).
Among those who have purchased a second home and do not plan to sell their previous home, more B.C. buyers this year said they will keep the first home as a rental property (54% versus 48% in 2010). They are also more likely this year to say the new home they're buying will be a vacation home (15% versus 10%) or that that a family member will be moving into their previous home (15% versus 3%). Three in ten buyers say they will stay in their current home and the new home they buy will be a rental property.
"Buyers should keep in mind that if they are expecting to sell above asking price, it's likely they will need to also buy at above asking price," says Rathburn. "A home is, obviously, a very big purchase - especially if you will not be selling your previous home to put towards the cost. A mortgage expert at your bank can walk you through your financing options and show you strategies and products that may save you money and provide flexibility over the course of your mortgage."
Decisions, decisions! B.C. sellers know they have options but they haven't thought about them
The TD Canada Trust Repeat Home Buyers Report showed that 61% of B.C.'s repeat buyers have a mortgage on the home they are moving from and 60% will take out a mortgage on their new home.
In 2010, nearly one-in-five (18%) British Columbians who planned to sell their home didn't know they had options when it came to their mortgage. This year, that number decreased to 14%. Still, although they are aware of their options, nearly half (46%) haven't considered what they will do with their mortgage. Thirty-eight percent of sellers say they will bring their mortgage with them. Only 2% say they will use it as a selling feature.
"It's just as important to consider your mortgage options as a seller as when you are buying. You may be overlooking your mortgage as an important selling feature of your home or you may be able to save money by keeping your low rate and bringing your mortgage terms with you. Talk to an expert to find out what option might work for you," says Rathburn.
About the 2011 TD Canada Trust Repeat Home Buyers Report
Results for this study were collected through a custom online survey conducted by Environics Research Group. A total of 1,025 completed surveys, including 131 in B.C., were collected between June 16-28, 2011 of people who have either purchased a home that was not their first home within the past 24 months, or intend to purchase a home that is not their first home within the next 24 months.
About TD Canada Trust
TD Canada Trust offers personal and business banking to more than 11.5 million customers. We provide a wide range of products and services from chequing and savings accounts, to credit cards, mortgages and business banking, to credit protection and travel medical insurance, as well as advice on managing everyday finances. TD Canada Trust makes banking comfortable with award-winning service and convenience through 24/7 mobile, internet, telephone and ATM banking, as well as in over 1,100 branches - most open 8 'til late and many now open Sunday. For more information, please visit: www.tdcanadatrust.com. TD Canada Trust is the Canadian retail bank of TD Bank Group, the sixth largest bank in North America.
- Fewer BCers have HELOCs than national average.
- 70% expect list or overlist sales price. (The actual overlist is probably less than 20%.)
- About 60% repeat buyers are buying larger or more luxurious homes.
- 80% of buyers sell their existing property.
- 39% have owned at least 4 homes in their lifetimes, well above the national average.
- 73% are moving before they thought they would, meaning transaction costs are occurring more frequently than anticipated and highlighting that our lives rarely work to plan.
Interesting stuff.
Monday, August 22, 2011
The private investment gambit
Finance Minister Jim Flaherty and Bank of Canada Governor Mark Carney gave public testimony to the House of Commons Finance committee on Canada's fiscal health. I am following these statements as it provides some indication on the methods the government will use to attempt to elicit economic growth in a low interest rate environment.
Scott Brison had some pointed questions for Carney, summarized by the CBC reporter through her live feed:
Carney noted austerity measures contributing to problems in Europe, Brison says, so will that happen here and what should we do? Carney says reducing spending is entirely appropriate. the private sector will need to sustain investment. we need to grow productivity. investment is strategic for governments to decide, carney says, sidestepping the question of where the government should invest.
This is the interesting situation Canada is in, in a nutshell. There is chronic high unemployment and a dearth of spending, in part due to reduced government spending -- austerity -- and reduced house price appreciation and tightened credit conditions due to high debt loads of households. Households are overextended and only servicing their debts by way of low interest rates. Meanwhile the private sector is "sitting" on cash and not investing for whatever reasons.
Public sector austerity coupled with a dearth of private consumption and investment is deflationary, as European countries are discovering. Carney is arguing Canada is different because the private sector can absorb decreases in public and household sector spending if given the right incentives to spend; if that fails to materialize the best alternative is would be increased government spending.
What does this say about future interest rates? I think the key statistic to watch is the unemployment rate dropping towards "full capacity", and we should be under no illusions that this may be several years away.
Saturday, August 13, 2011
Greater Vancouver Market Snapshot July 2011
Below are updated sales, inventory and months of inventory graphs for Greater Vancouver to July 2011.
Commentary: July 2011 has produced more tepid sales numbers, though inventory remains muted compared to previous weak years. Why is this? Hard to know for sure but given the price gains of late, there is a supposed "out" for some home owners by refinancing, through banks or through their internal accounts, using newly-appraised values as justification. No doubt many, if not most, investors are "in it for the long run". Below is the predictor of price gains, based on half-over-half price change to months of inventory correlation:
Wednesday, August 10, 2011
Lower Mortgage Rates a-Brewing
In case you don't know, the 5-year government bond rate is positively correlated to the 5 year fixed mortgage rate. It is entirely possible people will be able to get a 5 year fixed closed mortgage for close to 3% in the not-so-distant future. That isn't free money, but it's getting pretty darn close, for 5 years, anyways.
Tuesday, August 09, 2011
It's getting lonely at the top
Harken back to the last report by Demographia on median price to median income ratios of English-Speaking cities (and Hong Kong). A reminder about the ratios of the top 10 cities:
Hong Kong 11.4
Sydney 9.6
Vancouver 9.5
Melbourne 9.0
Plymouth&Devon 7.5
San Francisco 7.2
London 7.2
Adelaide 7.1
San Jose 6.7
Brisbane 6.6
Since then Australia has hit a bit of a snag, the snag being prices aren't going up any more. In Vancouver... well the benchmark is up 13% and incomes are basically flat. So we can extrapolate plausible Demographia data for 2011 assuming no price changes going forward, assuming 2% median wage growth (I kept HK the same due to lack of data):
Hong Kong 11.4
Vancouver 10.5
Sydney 9.4
Melbourne 8.8
Plymouth&Devon 7.4
San Francisco 7.1
London 7.1
Adelaide 7.0
San Jose 6.6
Brisbane 6.5
If Vancouver usurps Hong Kong at the top of the survey that will be something, and it's no longer out of the realm of possibility if wage growth in Hong Kong is high...
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