I had a great talk with David Ebner of the Globe and Mail on the Downtown Vancouver Real Estate Market and here’s what he had to say. I’d love to hear your thoughts!
Housing sales bounce back nationwide
Dave Ebner and Susan Krashinsky
Vancouver and Toronto — From Wednesday’s Globe and Mail Last updated on Wednesday, Jul. 15, 2009 09:27AM EDT
Mike Stewart has never been busier. After a brutally slow winter, the real estate agent has signed a string of deals and in May had his best-ever month, notching 10 sales in downtown Vancouver, adding another seven in June.
The renewal of good fortunes for Mr. Stewart is seen across Canada and is the best signal yet that the country’s real estate market is well on its way to recovery.
Amid the month-to-month torrent of real estate statistics, economists pegged particular significance on new numbers because they reveal widespread strength at strong prices and showed mounting momentum over a three-month span, carried by what had been the weakest region – the West.
It’s a radically stark contrast with the United States, where prices – after three long years – are still falling, down a third from their bubble peak.
In Canada, buyers are back, sales are surging, and prices are edging up.
“People thought the world was coming to an end,” said Mr. Stewart, a top-selling agent at his Century 21 office near False Creek in downtown Vancouver. “Now, the fiscal stimulus and ultralow interest rates have supercharged real estate.”
Almost 150,000 sales of existing houses and condominiums were tallied in the April-May-June period, according to Canadian Real Estate Association data published Tuesday. It was the fourth-best quarter ever since CREA began recording the sales data in 1994, the industry marketing group said.
In frigid January, by comparison, barely 16,000 houses were sold.
The “Phoenix-like rise” of real estate sales is the “most astonishing economic development of 2009,” economists at BMO Nesbitt Burns declared. And even though there are asterisks – the job market remains weak – Canada appears to have skirted “the clutches of a lengthy, painful downturn.”
Economists and brokers such as Mr. Stewart credit the low interest rates and, in hot markets such as Vancouver, somewhat lower house prices. Another key factor is pent-up demand from buyers who icily avoided major purchases during what seemed like an unfolding economic apocalypse in the fall and winter.
Nationally, for the April-June period, sales were up 1.4 per cent from a year ago. It was the first quarter that marked a year-over-year advance since late 2007, and the period strengthened as the spring warmed. In June, sales were up 22.8 per cent nationally – and prices climbed 4 per cent. In Toronto, the sales jump was 27.4 per cent, with prices up 2 per cent.
In fact, the average price of a home in Canada has never been higher. At $318,700, the figure is slightly higher than the record set a year ago, pushed up by the flurry of sales in expensive big-city markets.
Other positives behind the scenes include Canadian workers who are more confident in their jobs, even as unemployment continues to rise towards 9 per cent, and Canadian banks able and willing to lend.
“We can quibble about how strong and early the recovery will be, but the worst is over,” said Michael Gregory, a senior economist at BMO Nesbitt Burns.
Recovery is widely predicted to be erratic. The pace of new home construction, which is choppy and hard to predict, is a prime example. The latest annualized level, reported last week, showed a surprising good news 8-per-cent jump to 140,700 houses and condos in June, up from 130,300 in May.
In March, the figure was 154,700. While far below the 200,000-pace recorded through most of the decade before the bust, new home building appears to be stabilizing.
Another good sign for construction, released last week by Statistics Canada, is that the value of building permits issued in May topped $5-billion, the first time since last October, led by plans for public infrastructure such as schools and hospitals.
For existing homes and condos, Vancouver especially has seen a rush back to the market to buy, anecdotes of which have been a staple of conversations in the Olympics city this spring.
A year ago, with prices at a peak and interest rates several percentage points higher, sales of homes in Canada’s most expensive real estate market were stagnant. Now, with the price of an average home in Greater Vancouver down about 6 per cent, more than 4,300 homes were sold in June, a jump of almost 75 per cent from last year and by far the biggest sales gain recorded across Canada.
“It’s two extremes,” said economist Bryan Yu at the British Columbia Real Estate Association. “We’re seeing a lot of first-time buyers. Low mortgage rates and lower prices have pulled a lot of people back into the market.”
Beyond Vancouver, other once hyper-hot markets saw prices fall and sales turn around. Calgary posted the same 27.4 per cent gain in sales that Toronto saw as prices in the country’s energy capital fell 6.3 per cent. In Saskatoon, prices were down 10.8 per cent as the number of sales climbed 37.7 per cent.
Sales of existing houses are predicted to stay steady, rather than keep surging, a new-found balance between boom and bust.
“Sales activity is not going to return to very low levels,” said Gregory Klump, economist at the Canadian Real Estate Association.
“By and large, sales activity will remain strong. I just don’t anticipate that these increases are going to play out month over month over the rest of the year the way they have in the last few.”
Mr. Stewart, who specializes in downtown Vancouver properties, sees tempering, too. Interest rates have risen slightly, and as August arrives, people will be “more interested in the beach than condos.”
And then there are the Winter Olympics. Mr. Stewart doesn’t see any specific boom-bust connected with the games but predicts that next March and April will be busy months, after Vancouver’s core is effectively shut down in February. He plans to take his family to Thailand, renting out his home for the Games.