April 27, 2012, REW.ca

In the Greater Vancouver real estate market, the condo is the first step on the equity ladder for most buyers. The current benchmark price is $375,100,  just over one-third of the price of a detached house. And depending on size and location, there are plenty at lower prices.

But that's still a lot of money, so buyers want to be blown away. For developers, the design and feature options they offer can be the difference between instant sellout and the dreaded "unsold inventory." 

These are the hot button features for condos that sold in the last half of 2011. They either sold much faster than average or fetched a higher-than-average asking price according to the Condominium Market Opportunities Report (CMOP), prepared by industry consultants Strategics and MPC Intelligence. Clean and sleek was definitely the preferred look.

High-rise condo buyers salivated over these features:

• Laminate hardwood kitchen flooring
• Viking and Liebherr kitchen appliances
• Quartz kitchen countertops
• Vinyl bathroom flooring
• Glass door bathroom cabinets
• Quartz bathroom countertops.

Low-rise buyers went for these features in a big way:

• Engineered hardwood kitchen flooring
• Stainless steel kitchen appliances
• Bosch , Samsung or Fisher Paykel kitchen appliances
• Glass door kitchen cabinets
• Quartz bathroom countertops
• Glass door bathroom cabinets

Meanwhile, the 2012 TD Canada Trust Condo Poll interviewed people who have recently bought or intend to buy a condo. Vancouver respondents were almost unanimous about the major elements that help them decide to buy a condo they'd looked at:

• Low condo fees (97%)
• Good building security (96%)
• Attractive interior design (95%)
• Energy-efficient building features (93%)
• A balcony (92%)

The TD study found differences between men's and women's condo-shopping preferences. More men than women want a newly constructed condo. Women are more likely than men to look for environmentally friendly features and a balcony.

Single women a force in the condo market

An earlier TD study estimated that single women make up 30 per cent of first-time home buyers, and they overwhelmingly choose condominiums.

According to Mark Belling, of Surrey-based Fifth Avenue Marketing, "Single women are now a power in the local condominium market. They easily outnumber single men." He adds, "Young women seem to become financially mature earlier, with the ability to save for a down payment."

Witness the new HGTV show, Buy Herself, with Realtor Sandra Rinomato guiding single women to a home purchase. Rinomato says that making a smart investment is the primary driver. Women say to her, "Well, you know it's time for me to buy a condo as an investment that I can make money off of, that I can also live in, that I can nest in… I can paint it and decorate it to my taste…  Why not do it?"

Safety, a balcony and entertaining space are important to women, she says. Condos offer greater security, which is a top concern among women living alone. A balcony gives them safe, private outdoor space for chilling out. And a party room or rooftop deck lets them entertain more people if they have a matchbox-sized living space.

Developers are listening. An example is the Meccanica project in False Creek South. Hani Lammam, VP of development for Cressey, talked about it with Business in Vancouver's Strategic Marketing columnist, Judy Bishop.

'Meccanica incorporated feedback from women about design, floor plan and exteriors,' said Lammam. 'We've placed major emphasis on qualities women value.'

The result was functional layouts and stylish design features including polished floors, high-gloss cabinets, closet space, spa bathrooms and high ceilings. And overwhelming response from women.

Location still rules

Location is paramount. A year ago, it was the usual to see lineups of prospective buyers when new projects went on sale. Now, that only happens when the condos are smack up against a transit line and a neighbourhood loaded with amenities. 

An estimated 7,800 new condo units in high rises are expected to become available this year. Prices of both new and MLS® condos are not expected to return to their mid-2011 anytime soon. In a stagnant market, condos with the right mix of design and features, price and location will  find owners.

Source: Rew.ca

Source REW.ca

REW.ca, April 9, 2012

Just relax. Vancouver real estate bubble fears are overblown, and the numbers don't bear them out.

Two top economists told REW.ca the same thing about where the Lower Mainland and Vancouver real estate market is going, and neither of them foresees the kind of sudden, extreme correction many people are worried about (or hoping for).

Cameron Muir (left) is the Chief Economist of the BC Real Estate Association, and the familiar face delivering BCREA's video outlook every month. Warren Jestin (right) is Chief Economist at Scotiabank, where he studies Canadian and global economic issues. Both will be speaking at the Vancouver Real Estate Forum on Wednesday, April 11 at the Vancouver Convention Centre West.

 Muir describes the real estate market as "a constellation of factors that interplay with one another," but he says the age-old demand and supply ratio is the most telling. In real estate that's sales-to-listings, and he says that ratio is currently in balanced territory: in between 15 and 20 per cent. With unit sales below the 10-year average across the region, expect "moderate-average typical demand scenario."

Demand -- distinct market segments

When it comes to demand, Warren Jestin says there are two distinct market segments. The high end, driven by wealthy families, produces eye-popping numbers like the benchmark price of $2,250,100 for single detached houses in Vancouver West.

As Cameron Muir points out, luxury home sales appreciate much faster during good times. Those extremes put upward pressure on average prices by skewing the whole regional price picture, as we saw last year.

(The new MLS® Home Price Index and benchmark prices give a truer picture of typical home prices and trends for each market area, as they're less affected by a few ultra-high-end sales. For instance, the average March price for a detached house in Greater Vancouver was $1,155,521, while the benchmark price was $1,056,400 -- almost a full $100,000 apart.)

The other market segment -- let's call it The Rest of Us -- will buy homes when there's optimism about job security and continued income. That's a much larger market segment.

Strong economic fundamentals for BC

BC is doing well on the job front, says Jestin. Our province has outperformed the national average fairly consistently, and he believes that over the next year BC will outperform Central Canada and the Maritimes and see  employment growth.

In Asia, 20 million new homes are being built, fueling a 2.25 - 2.5 per cent growth in demand for construction-grade lumber. And Asia has a net demand for other resources, including natural gas and oil. BC's position as a gateway to those developing markets will require new infrastructure, creating jobs and economic activity. 

These strong economic fundamentals result in confidence that will drive consumer spending on the biggest item on the household balance sheet: the home.

Interest rates -- low and stable

But how affordable is that home? Greater Vancouver has the highest benchmark prices in Canada and the Fraser Valley is in third place behind Toronto. We've seen numerous affordability studies warning about the high ratio of home price to income.

Muir says those studies leave out one factor in the calculation: interest rates. We're at lifetime lows -- the bottom of a 25-year decline in interest rates -- which means you can borrow more for the same payments.

Neither economist sees interest rates rising sharply. It's true they have nowhere to go but up, but it would take a worldwide economic shock to drive rates steeply upwards, so low interest rates should continue to buoy the market for at least a year.

Jestin sees three- and five-year mortgage rates going up about 0.5 per cent over this year, and a year from now the beginning of a rise in short-term interest rates, which will affect variable mortgages.

He says, "In the purchase decision, that reality has to be there. Now is the time to temper enthusiasm, but not panic.

Multifamily construction takes over

Even with low mortgage rates, single-family detached houses are out of reach for most first-time buyers, particularly in Metro Vancouver. Muir expects to see detached-house prices continue to increase for two reasons: there's no place to build more of them because of our geography, and they're becoming a smaller and smaller proportion of our housing stock. Most of the new ones being built are replacing houses that were torn down.

Construction is moving to condos and away from single-family detached. In fact, condo construction is outpacing household formation in Greater Vancouver, and the growth of condo prices has flattened, with a possible drop in prices predicted.

Now, condos are fulfilling a new role, says Jestin. First-time buyers are starting in condos/townhouses as "the starter house" becomes too expensive to contemplate.

Condos are also becoming the source of rental properties. Investors see them as a good opportunity for cashflow because the rental market is so tight.

No bubble

"Prices are nuts!" "Nobody can afford to get into the market!" "It's all gotta collapse sometime... "

We Lower Mainland locals talk about our real estate market obsessively, and try to make sense of it from anecdotal evidence and a tsunami of unrelated statistics. 

So it's educational to hear from two professionals whose job it is to make sense of statistics and put them in context.

Our market is definitely changing, with multifamily housing growing fast. Our prices are definitely out there, but because of strong demand in particular areas, not rampant speculation. Activity is definitely slower, but in the last couple of years we've seen "a profound run-up."

Warren Jestin admits there's a risk for slower growth and higher interest rates, but doesn't believe there's a bubble about to burst because he doesn't forsee job destruction (as happened in the US housing crisis).

Cameron Muir says, "Prices are very sticky on the way down. If there are no big macro-economic shocks, we're not going to see dramatic changes." 

The state of the local real estate market is the subject of the Vancouver Real Estate Forum on Wednesday, April 11 at the Vancouver Convention Centre West. Warren Jestin will be giving the keynote address and Cameron Muir will be on the panel for "Residential Market: Is this Market Sustainable?"

Source: REW.ca

Tuesday, April 3, 2012

VANCOUVER, BC - Home sales in March trended below the 10-year average in Greater Vancouver while home listing activity outpaced what’s typical for the month.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver reached 2,874 on the Multiple Listing Service® (MLS®) in March 2012. This represents a 12.9 per cent increase compared to the 2,545 sales recorded in February 2012, a decline of 29.6 per cent compared to the 4,080 sales in March 2011 and an 8.4 per cent decline compared to the 3,137 home sales in March 2010.

March sales in Greater Vancouver were the second lowest total for the month in the region since 2002 and were 16.8 per cent below the 10-year sales average for the month.

“Home sellers have been more active than buyers the first few months of the year, but we continue to see a relative balance in the total supply of homes for sale and current demand in the marketplace,” Eugen Klein, REBGV president said.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,843 in March 2012. This represents a 5.2 per cent increase compared to February when 5,552 homes were listed and a 14 per cent decline compared to March 2011 when 6,797 homes were listed for sale on the region’s MLS®.

Last month’s new listing total was 4.5 per cent above the 10-year average for listings in Greater Vancouver for March.
At 15,236, the total number of residential property listings on the MLS® increased 8.4 per cent in March compared to last month and increased 16 per cent from this time last year.

“The total number of properties for sale in Greater Vancouver has increased each month since December, which means there’s more selection to choose from as we enter what’s traditionally the busiest season of the year in our market,” Klein said.

The MLS® HPI benchmark price for all residential properties in Greater Vancouver currently sits at $679,000, up 5.3 per cent compared to March 2011 and an increase of 1.1 per cent compared to February 2012. The benchmark price for all residential properties in the Lower Mainland is $607,700, an increase of 4.8 per cent compared to March 2011.

Sales of detached properties on the MLS® in March 2012 reached 1,183, a decline of 34.1 per cent from the 1,795 detached sales recorded in March 2011, and an 11.5 per cent decrease from the 1,336 units sold in March 2010. The benchmark price for detached properties increased 9.2 per cent from March 2011 to $1,056,400.

Sales of apartment properties reached 1,191 in March 2012, a decline of 26.6 per cent compared to the 1,622 sales in March 2011, and a decrease of 4.9 per cent compared to the 1,252 sales in March 2010.The benchmark price of an apartment property increased 2.2 per cent from March 2011 to $375,100.

Townhome property sales in March 2012 totalled 500, a decline of 24.6 per cent compared to the 663 sales in March 2011, and an 8.9 per cent decrease from the 549 townhome properties sold in March 2010. The benchmark price of a townhome unit increased 0.9 per cent between March 2011 and 2012 to $480,900.

The Real Estate Board of Greater Vancouver is an association representing more than 11,000 REALTORS®. The Real Estate Board provides a variety of membership services, including the Multiple Listing Service®. For more information on real estate, statistics and buying or selling a home, contact a local REALTOR® or visit www.rebgv.org.

For more information contact:
Craig Munn
Assistant Manager, Communication
Real Estate Board of Greater Vancouver
604.730.3146
cmunn@rebgv.org