Monday, December 6, 2010

Residential investors will find balance in 2011

Below is a recent report by FRANK O'BRIEN, Western Investor:

When the Onni Group unveiled its Ora condominium tower in Richmond September 29 for local realtors, the entire 68 homes sold out in less than a week at more than $510 per square foot.

It was a hopeful harbinger for a Metro Vancouver housing market that is moving cautiously into the second year since a global recession slapped sales down 40 per cent and put a stop to double-digit price increases.

As 2010 ended, multiple listing sales through the Real Estate Board of Greater Vancouver were still down 36 per cent from 2009 and average prices had not moved in nearly six months. Condominium sales, which now dominate the market, were off by 38 per cent and the average price was nearly unchanged from a year earlier.

Still, there is now a palatable buzz of optimism in the air, as developers and analysts figure that 2011 will begin the turnaround in B.C.'s housing market, despite the harmonized sales tax, stricter regulations on mortgage lending and buyers still spooked by a sluggish economy.

Read the full report here.

The influence of Asian buyers was quoted in the article:

"Asian buyers are active in Richmond, parts of Coquitlam and on the west side of Vancouver, where Canada Mortgage and Housing Corp.(CMHC) estimates that more than 60 per cent of the $1.5 million-plus homes are sold to Chinese buyers".
Sales activities for prime building lots are still very high as can be seen in a recent listing at #3556 W. 34th Avenue in the Dunbar area of Vancouver west. The listing agent mentioned that he was expecting 7 offers to be presented 4 days after it was posted on the mls system.

You can view homes for sale in Vancouver West using the link here.

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Tuesday, October 26, 2010

The House Party Is Over?

Below are passages from The Globe and Mail reported by STEVE LADURANTAYE on Oct 22, 2010.

The long shadow over Canada's housing market

"A a period of stagnation or slowly falling prices, coupled with weak home sales and waning construction activity, would cut off one of the engines that drove impressive economic growth and job creation in the years before the 2008 financial crisis".
"Market forecasters are near-unanimous in the belief that prices will fall in the coming years, though few foresee the sort of rapid declines that savaged the American market. The stateside disaster was largely fuelled by loans made to people who weren't creditworthy. Canada's problem is different – easy credit is luring people into buying houses they may not be able to afford when rates rise to more historically normal levels. That's why economists and market watchers foresee a drawn-out retraction of the market that will gradually erode prices, rather than a crash".
"And while supply and demand are keeping prices firm, few expect that to last over the next two years. CIBC World Markets has suggested prices could fall as much as 10 per cent in the next two years, as has TD Bank".
Read the full story here.

Sunday, October 3, 2010

MLS real estate deal 'may force out agents'

Fears for real estate sector already hit by declining sales

The Canadian Real Estate Association (CREA) has reached an agreement in principle with the Commissioner of Competition regarding the application before the Competition Tribunal, subject to the approval of CREA’s member boards at a Special General Meeting in St. John’s, Newfoundland on October 24, 2010.

If passed, the 10-year agreement would allow sellers to hire agents to put for-sale properties on the Multiple Listing Service for a fee and if they wish, the sellers could carry out the remainder of the sales process themselves.

Tsur Somerville, associate professor with the University of B.C.'s Centre for Urban Economics and Real Estate, said the agreement would create a legally binding document between the Canadian Real Estate Association and the Competition Bureau.

Somerville expects competition to give consumers more choice and, to some extent, more control.

Discount commission agents already exist, long before the Competitive Bureau take up the case against the real estate board. The freedom of choice over the level of service and commission are already in place in B.C. for a number of years, the agreement would be unlikely to affect this province's real estate market.

Real estate commissions currently ranges from 1% to 4% for the service of a full service agent. There could be new entrants that simply provide the paperwork function of the listing service. Home sellers who opt to pay for the listing service only will not have any agent representation for selling the home.

This then means that home buyers will have to pay their own realtor's commission if they want to buy a property that only pays for the listing service only. As a result, most buyers would prefer to look at property being marketed under the traditional model with sellers paying the commission.

Mistakes in the real estate business could be "hugely costly". There are many issues when not handled properly, could result in expensive letigation and costs. Beside such services as open houses, websites, checking municipal permits, a full service agent provides professional guidance and representation on proper property disclosure, oil tanks, permits, title searches, negotiating contracts and more.

Views about the impact of the Competition Bureau agreement vary. Some industry observers maintain that, because B.C. already permits alternative sales models, it is not going to have as dramatic an impact as many consumer advocates would have liked.