More balanced market conditions have emerged, effectively ending the stronghold that buyers had on the market over the past six to eight months. Canada’s largest markets, Toronto and Vancouver, led the charge-with June sales among the highest in history for both local real estate boards. Close to 11,000 properties changed hands in Toronto, up 27% over one year ago, setting a new record for sales in the month of June. The figure was just slightly off the all-time peak of 11,146 units. Residential sales in Greater Vancouver increased 75.6% over one year ago, to 4,259 units, just short of the record breaking 4,333 sales, which occurred in June 2005. Overall, major markets began to recover in March, posting escalating sales in April, May and June. The impetus is expected to continue throughout the remainder of 2009, with most centres now forecasting year-end sales on par or ahead of 2008 levels.

“While sales are the leading indicator, there are other clear signals that recovery is indeed underway,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “Renewed consumer confidence, albeit cautious, has been key, supported by improved economic news. In addition, we’ve seen sale price-to-list price ratios climb across the country, rising as high as 105% in some communities. Vendor incentives have also come off the table, both for resale and new housing stock.”

The recent surge in resale activity can be attributed to three key factors-pent-up demand, low interest rates, and greater affordability. The combination-in conjunction with declining inventory levels-has created heated market conditions in hot pocket neighbourhoods, prompting a resurgence in multiple offers in June. Average prices are holding steady or climbing, days on market are down, and inventory levels continue to tighten, especially at entry-level price points.

“The strength of the market, amid the most significant global recession in recent history once again underscores its relevance to the nation’s economic engine,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “Canadians believe in homeownership — a fact best illustrated by the purchasers who ventured forward in recent months and snapped up some of the best real estate deals this market has seen in years. Those who chose to sit it out on the sidelines are now facing a market in transition, characterized by the threat of rising interest rates, low inventory levels, and upward pressure on housing values.”

Although the current pace may be unsustainable, all markers point to greater stability in the market, leading to healthier activity in the long run, with inventory levels a key variable influencing pent-up demand.

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Market by market overview:

Greater Vancouver Area

Growing consumer confidence levels have prompted a serious upswing in home buying activity in the Greater Vancouver Area, with sales in June (4,259) the second highest on record for the local real estate board. From White Rock to Vancouver, radiating out to the Fraser Valley, bidding wars are breaking out on well-priced product. In Kitsilano, an estimated 50% of housing is selling in multiple offers. Low interest rates and increased affordability – average price is still significantly lower than one year ago – have served to stimulate market activity. Inventory levels have been on the decline in recent months, placing greater upward pressure on values. First-time buyers are driving freehold hous ing sales at the $600,000 price point, while those looking at more affordable alternatives are considering condominiums starting at substantially less. Balanced market conditions prevail overall. Pent-up demand has also been building, with local purchasers and international investors both active in the market. The upcoming Olympics, and the completion of the much anticipated Canada Line this Fall are expected to further bolster the cautious optimism characteristic of the Greater Vancouver market at present. Home buying activity, as a result, is forecast to continue at a healthy pace for the remainder of the year, with year-end sales slightly ahead of 2008 levels.

Calgary

Balanced conditions have returned to Calgary’s resale housing market. Strengthening momentum – residential sales at over 3,000 units were up in double-digit territory in June -has already begun to place upward pressure on prices in the entry level. With increasing competition among first-time buyers, the supply of starter homes is tightening. Buyers who moved in spite of doom and gloom forecasts in the Fall, Winter, and early Spring realized considerable savings, while those who hesitated are discovering it has cost them. Multiple offers are re-emerging in a few choice neighbourhoods on well-priced product, although there are still a few good deals to be had in the mid-range. Prices on the whole, however, are stabilizing. Signs of a transitionally stronger market include rising sales-to-new listings ratios, shorter days on market, and fewer incentives from vendors/builders. Activity is expected to remain better than average this summer, as those who paused over the past six months dive back in before interest rates rise. Momentum will continue to build into the fall, with overall 2009 sales edging slightly ahead of 2008 levels by year-end.

Edmonton

The residential resale market is springing back to life in Edmonton, with sales setting a new record for the month (June) and the third best month for unit sales in MLS history. While activity has been steadily improving in the second quarter, the heated momentum has yet to put any serious pressure on average price, which, although rebounding, remains down year-over-year. The market has shifted, moving from buyer’s territory to more balanced conditions, prompted by the recent flurry in home buying and the slow return to more traditional inventory levels. Stability will characterize Edmonton’s housing sector going forward, with low interest rates, rising consumer confidence levels and affordability the impetus behind healthy demand. The frenzied climate of previous upswings will be conspicuously absent. While multiple offers have re-emerged – particularly in the $300,000 to $450,000 price point – they will continue to be the exception rather than the rule, driving sales price close to, but not typically over, asking price. Demand is expected to remain strong in the months ahead, bolstered by looming interest rate hikes and glimmers of positive news on the economic horizon, as consumers regain a cautious optimism.

Regina

Positive economic performance continues to bolster home buying activity in Regina. Despite a 10% decline in year-to-date sales (1,778 vs. 1,977 units) from levels reported January to June 2008, the gap is narrowing as purchasers move to take advantage of low interest rates and greater affordability. Sales in May and June were up in double-digit territory over one year ago and momentum is building. First-time buyers remain the most active segment of the market, sparking sales under $275,000. Inventory levels have been responsible for the steady upward pressure on housing values in the lower-end of the market. Limited supply of starter product in Regina has most properties in good condition, in desirable communities, moving quickly – some in multiple offers. The top-end of the market has also seen some bounce back, with sales between $400,000 and $450,000 up about 25% over one year ago.

Condominium sales, however, have softened year-over-year, with an oversupply of product currently listed for sale. Although conditions currently favour the buyer, the market is transitioning. More balanced conditions are expected to emerge in the months ahead. Given a continuation of current economic fundamentals, the number of homes sold in Regina by year-end is expected to match 2008 levels.

Greater Toronto Area

Pent-up demand for residential housing continues to fuel home buying activity across the Greater Toronto Area. The number of homes sold in June – at 10,955 — came close to the historic record of 11,146 units set in May 2007, while pressure on average price is sending housing values higher than one year ago. Although balanced market conditions prevail, there are those communities that have clearly transitioned into sellers markets. Inventory is key, with the number of properties currently listed for sale down approximately 30% from 2008 levels. Over the past six weeks, momentum has been building, with demand strongest for homes priced between $300,000 and $600,000. Multiple offers are once again commonplace, especially in the city’s coveted hot pocket neighbourhoods. Affordability – in terms of low interest rates and housing values – has been the impetus for first-time buyers. Luxury home sales have also experienced solid demand in recent months, with 291 homes changing hands over the $1 million price point in June – a new record. The threat of higher interest rates and home prices are expected to stimulate a flurry of home-buying activity in the months ahead. By year-end, sales are forecast to exceed 2008 levels.

Ottawa

Solid economic fundamentals in the nation’s capital continue to prop up housing activity. Year-to-date sales for January to June are slightly ahead of 2008 levels, with the number of properties sold in June (1,895) up 12.5% over one year ago – the third consecutive record setting month. Pent-up demand has been a major factor, with purchasers who put their home buying decisions on hold during the late fall and early winter now entering the market en masse. As a result, the balanced market that prevailed in recent months is now shifting in favour of the seller. Multiple offers are occurring on desirable properties in virtually every price range. Inventory levels, which peaked in April, are now falling. With less product on the market, certain segments are experiencing serious shortages-in fact, single family homes priced between $275,000 to $375,000 are few and far between. In the past four to six weeks, the upper-end has also started to rebound as all segments of the market work in tandem. While the threat of an upcoming election will have some impact on the market, healthy sales activity is expected to continue throughout the remainder of the year, with sales ahead of 2008 levels.

Halifax-Dartmouth

Improved purchasing power, combined with the threat of rising interest rates, effectively spurred fence-sitters back into the resale housing market in June, halting the trend of double-digit declines in sales. The number of homes sold was up five% to 805 units in June 2009, compared to one year ago.

Despite the increased momentum, buyers remain firmly in the driver’s seat, benefiting from increased inventory and negotiating muscle, as motivated vendors adjust pricing to position their homes more competitively. Although sales remain down year-over-year, the gap is narrowing. Affordability and the stability of Halifax-Dartmouth’s relocation market continue to prop up activity, and first-time buyers remain the driving force. Opportunity exists for purchasers in the mid-to-upper price ranges, where demand and conditions have generally been softer. Consumer confid ence is strengthening once again. With the upswing expected to extend into the fall, more balanced market conditions are forecast to emerge, and Halifax-Dartmouth may once again find itself a market in transition.

St. John’s

Strong consumer confidence, buoyed by a vibrant local economy and a healthy employment picture, has kept St. John’s real estate engine moving at a steady clip. With billions of dollars in capital works projects planned or underway, in-migration remains positive and demand for resale housing continues to be solid. Improving inventory levels have shifted the market slightly into buyers territory, giving purchasers the necessary traction to make their moves. The threat of interest rate hikes has further stimulated home buying activity, pushing fence-sitters off the sidelines and into action. Residential sales in June 2009 (354 units) are slightly ahead of June 2008 (351 units) figures. The year-to-date average price recorded a 24% increase to $211,221, compared to $170,500 for the same time period last year, bolstered by greater momentum in the mid-range. Corporate transfers have been a significant stimulus. Entry-level homes, priced between $100,000 and $200,000, are being snapped up at an unprecedented pace given the sharp upswing in pricing. Listing inventory levels are higher and the upper-end continues to move well, supported by the relocation market. Inventory will be a key factor influencing St. John’s housing sector in the months ahead. The pace is expected to continue, with sales rounding out the year at or ahead of 2007 levels, but below record numbers reported in 2008.

http://www.chineseinvancouver.ca/2009/07/buyers-market-is-gone-study/

brought to you by Moishe Alexander, CFC canadian funding corp CEO

A great resource for real estate investors performing their due-diligence, the info is laid out well, and in a glance you can wrap your head around the key information.

The #1 recommended community to locate your business is the Edmonton International Region – being the area around the airport (Leduc & Nisku are the hubs). The rest of the top ten includes Edmonton, Strathcona County, Camrose, Airdrie, Calgary, Lethbridge, Lloydminster, Red Deer and Strathmore.

One item to note, is that the pricing for serviced industrial land is consistently on the low side. For example, serviced industrial land in Strathcona County for $300,000 per acre? $500,000 would be a safer “average”.

Real estate investors take note: this type of information shows trends for yesterday & today, but does not forecast tomorrow. A decision by city council, or the unexpected fall of a commodity price can quickly change the tides for a community. If you are not an informed citizen of the community you are investing in, there is no substitute for an unbiased, on-the-ground local expert to give you an inside scoop, and assist in taking a calculated risk to capture the biggest upside tomorrow.

Well done, Alberta Venture, a useful tool which I think many will utilize.

http://www.albertaventure.com/?p=3293

The gap between the proportion of renters and owners intending to purchase a home in 2008 has narrowed compared to intentions reported in 2007. The majority of purchase intenders (53 per cent) are renter households compared to 60 per cent in 2007. In Montreal, close to two-thirds of households intending to purchase a home currently rent, while in Vancouver only 44 per cent of purchase intenders are renter households.

In five of the ten markets surveyed, households were asked more detailed questions regarding their purchasing intentions. Thus, the remainder of purchase intention results cover only the five centres listed: Halifax, Montréal,  Toronto, Calgary, and Vancouver.

A larger share of households intend to buy single-detached homes and the majority intend to purchase a larger residence Among households who intend to buy a home in 2008, the largest share plan to buy a single-detached home (55 per cent). Also, a majority of intenders (67 per cent) plan to buy an existing home.

Just over a quarter of households who intend to purchase a home plan to purchase a condominium unit. Of those who intend to purchase a condominium, the majority are between the ages of 18 and 24 years. Vancouver has the largest proportion of condominium purchase intenders at 41 per cent this year.

The majority of households who intend to purchase a home plan to purchase a larger home (57 per cent) compared to their current residence, 20 per cent of households intend to purchase a smaller home, and 20 per cent intend to purchase a similar sized home compared to their current residence.

Across the five centres surveyed, 40 per cent of purchasers who bought a primary residence in 2007 were between 18 and 34 years of age with 23 per cent falling between the ages of 18 and 24 (up from 18 per cent in 2006) and 17 per cent between the ages of 25 and 34 (up from 15 per cent in 2006).

According to Moishe Alexander, more than 40 per cent of households who purchased a residence in 2007, were first time buyers, the same proportion as 2006.

For those who previously owned a home, the majority of households (74 per cent) purchased a home worth more than their previous residence while 13 per cent purchased a lower priced home. As well, the majority (62 per cent) of those who previously owned a home upgraded to a larger home compared to their previous one while 20 per cent downsized.

This move-up corresponds with the large proportion of households (33 per cent) who stated that they needed a larger residence as their main motivation for moving. A smaller proportion of respondents in 2007 (16 per cent) compared to 2006 (24 per cent) wanted a change from renting and to have an opportunity to build some equity.

Household Purchasers in 2007 – Seven Percent of Households Purchased a Home in 2007

Across the ten major centres surveyed seven per cent of all households in those centres indicated they bought a home last year, up from 6 per cent reported in 2006. The largest share of homebuyers was in Edmonton, Calgary, and St. John’s where 10 per cent of households purchased a primary residence in 2007. On the other hand, five per cent of households in Montréal bought a primary residence last year, an increase from four per cent in 2006.

In five of the ten markets surveyed, households were asked further questions regarding home purchases last year.

Thus, the remainder of household purchaser results cover only the five centres listed: Halifax, Montréal, Toronto, Calgary, and Vancouver.

The majority of homebuyers opted for existing homes

Seven out of ten households that bought a home in 2007 opted for an existing home. On the other hand, 27 per cent of respondents purchased a newly built home, an increase from 23 per cent of respondents in 2006. More than half the households purchased a single-detached residence in 2007. The remaining homebuyers were split equally between purchasing semi-detached, row/townhouse, and apartment dwellings in 2007.

Condominiums are a popular choice amongst households between the ages of 55 and 64 years

The condominium lifestyle remains a popular choice amongst home purchasers, especially with households between 55 and 64 years of age. Over a quarter of respondents surveyed bought a condominium last year. The majority of home purchasers between the age of 55 to 64 bought a condominium last year. The share of households aged 65 and older that purchased a condo fell from 60 per cent in 2006 to 38 per cent in 2007.

Across the five centres, the largest share of households purchasing a condominium, was in Vancouver at 46 per cent.

Only 12 per cent of households in Halifax purchased a condominium last year.

Equity from sale of a home and savings were main source of down payment

As for how households paid for their new home last year, 40 per cent used the equity from their present/previous residence as their main source of down payment, while 30 per cent used some form of savings (this excludes RRSP and investments).

Across the ten markets surveyed, close to half of all homeowners reported having an intention to undertake home renovations valued at $1,000 or more in 2008. The share of households that intend to renovate in 2008 is greater than the share of households that undertook renovations of $1,000 or more in 2007 (31 per cent1).

The share of households that intend to renovate in 2008 is highest in Winnipeg and St. John’s at 50 and 48 per cent, respectively. Québec had the lowest share of households that intend to renovate in 2008 at 35 per cent.

In five of the ten markets surveyed, households were asked more detailed questions about their intended renovations. Thus, the analysis of the survey results for renovation intentions focus on these five centres: Halifax, Montréal, Toronto, Calgary, and Vancouver.

Moishe Alexander says: A renovation intender is defined as a household that either commenced a renovation in 2008 or that intends to begin a renovation in 2008 and plans on spending more than $1,000 on the renovation.

Of those households who intend to renovate in 2008, more than half (55 per cent) had very high confidence that they would be renovating this year. Out of these households with high or very high probability of renovating this year, 2 out of 5 households intend to do some form of maintenance and repairs, while more than three quarters will undertake alterations and improvements, similar proportions to actual renovations completed in 2007.

Regionally, the share of households planning on undertaking maintenance and repairs was the highest in Halifax (48 per cent), while the share for alterations and improvements in Calgary was the highest at 85 per cent.

Only 13 per cent of households who intend to renovate felt that there was a low chance that they would start the work in 2008.

Homeowner households across the ten major centres surveyed spent an average of $12,800 on renovations in 2007, an increase of over $1,000 compared to the average spent in 2006. The highest average amount spent on renovations was Calgary at $15,600, an increase of $3,000 compared to 2006. The average amount spent of renovations was the lowest in Winnipeg at $7,900, down from an average of $9,100 in 2006.

A total of $19.7 billion was spent on renovations last year across the ten major centres, up from the estimated $17.3 billion in 2006. The largest share came from Toronto where close to $7.1 billion was spent in 2007. More than $3.6 billion was spent on renovations in Montréal.

People living in older homes tend to spend more on renovations. In 2007, an average of more than $17,000 was spent on renovations in homes built before 1920, while homeowners in homes built between 1971 and 1980 spent on average about $10,500.

Close to half of homeowner households spent as planned on renovations

Close to half (46 per cent) of renovating households reported that the cost of their renovation project was as budgeted. On the other hand, more than a third (38 per cent) of households went over budget.

Savings were the main form of payment by homeowner households for their renovations

Across the 10 centres surveyed, three quarters of households who undertook renovations in 2007 paid for the work from savings, a similar share to 2006, while 20 per cent used credit cards or a line of credit. Of the households that paid for the renovations from savings, on average, $11,900 was spent on the renovation, while those that used a credit card or a line of credit spent, on average, $13,500.

Maintenance and repairs are defined as any work made to keep a property in good working condition or maintain its appearance, while alterations and improvements are defined as any work made to increase the enjoyment, value or useful life of the property.

Among homeowner households that renovated in 2007, three quarters did some form of alteration and improvement to their home, while 42 per cent did maintenance and repairs. Eighteen per cent of households who renovated in 2007 completed both maintenance and repairs and alterations and improvements to their home.

Across the ten major centres, the incidence of alterations and improvements was highest in Calgary and Edmonton with more than 80 per cent of renovators in 2007. On the other hand, Québec and Montréal had the lowest share of renovating homeowner households that undertook alterations and improvements. As for maintenance and repairs, Québec and Montréal had the highest incidence of this type of renovation (48 and 45 per cent, respectively) while Edmonton had the lowest share.

In the ten major Canadian cities surveyed, 37 per cent of homeowner households renovated their primary residence in 2007. This was down slightly from 39 per cent in 2006. The share of  households who renovated last year was the largest in Winnipeg (44 per cent), Halifax (43 per cent), St. John’s (42 per cent), and Ottawa (40 per cent), while Calgary and Quebec (35 per cent) had the lowest share of households undertaking renovations in 2007.

Thirty-one per cent of homeowner households who undertook renovations remodelled a room, making this the most popular type of renovation completed in 2007. Painting/wallpapering and installing hard surface flooring/wall-to-wall carpeting followed with 27 and 26 per cent of households last year undertaking this type of  renovation, respectively.

Thirty-seven per cent of households in ten Canadian markets renovated their home in 2007.

According to CMHC’s Renovation and Home Purchase Survey, an estimated 1.5 million households in ten of Canada’s major centres indicated they had completed some form of renovation in 2007. This represents 37 per cent of homeowner households across the ten major centres, down slightly from 39 per cent in 2006.

The share of homeowner households who renovated last year was the highest in Winnipeg (44 per cent), Halifax (43 per cent), and St. John’s (42 per cent), while Calgary and Quebec had the lowest share with 35 per cent.

The share of households that intended to renovate in 2007 (46 per cent) was higher than the share of households who undertook renovations of $1,000 or more in 2007 (31 per cent)2.

In last year’s survey, households in Vancouver, Calgary, Toronto, Montréal, and Halifax indicated that they expected to spend, an average of $11,200 on renovations in 2007, where in fact, they spent an average of $13,200.