Canadian Funding Corp. Reviews CMHC Statistics

Remax release – Pent-up demand for residential housing has bolstered sales in Canada’s major markets – a clear signal that the housing sector has shifted into recovery mode, says RE/MAX.

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

If you place a good portion of your assets into real estate today, you won’t have to worry about tomorrow.

By Ozzie Jurock

Received tons of email … Not all favorable. Some people wish to bet me money – some a case of beer, that real estate is going to go down … just wait and see. Likely they are all the people who never bought anything. If you go to http://www.realestatetalks.com/ you can see some 16,000 people arguing for more than 14 years the ups and downs of Vancouver real estate. It is always the same guys and gals that argue collapse and (yep) often the same that argue that eventually we will always be higher (because of monetary expansion creating it).

So, take it easy. If you had listened to the experts who were dispensing the best advice available 20 years ago and locked yourself and your wealth into a plan which guaranteed to remit the then prevailing ‘safe amount’ of an income stream of $500 per month (a lot back then – pocket-change today) for the rest of your life, imagine the desperate poverty that you would retire to today. Stone soup would be a luxury.

Yes, we need more money now but who knows what this money will be worth tomorrow. Yes, we need more income, but who can possibly know the state of the world three months from now … much less 20 years from now? Nobody knows for sure the ‘what and where’ of interest rates and inflation rates and the value of money. It’s just not possible.

What we do know is that the safety that was inherent in the projected big income of 20 years ago is a pitiful joke today.

Yep, forecasting is never easy – particularly when it’s about the future. Crystal balls crack, vaunted talk-show soothsayers wither and drop off the television scene and the books that were treasure maps wind up in the remainder bin at the bookstore. In the last three decades stock markets have surged up and crashed down. Certain mutual funds that looked like they were blue chips sprang leaks and sank while others soared like rockets only to burn out and fall back down.

Through all of this the average folk watched their savings chewed away by insidious inflation.

However, in all the turmoil of this sound and fury, one asset has weathered the changes. Three decades ago, had you bought good quality real estate you would not be concerned about your future today. That real estate would have kept up with inflation, remained secure in value, and steadily appreciated. Sure, there would have been some temporary dips. There has to be because real estate is cyclical in nature. But one thing is certain – over the years, the base values have been steadily increasing. Back to that purchase 30 years ago – today it would be paid off and clear title – which means either a mortgage-free home (no more monthly ‘rent’ payments to the bank) and/or a steady rental income courtesy of your tenants.

Put into perspective, if you place a good portion of your assets into real estate today, you won’t have to worry about tomorrow. It doesn’t matter how wild or turbulent the economy or the marketplace. It’s like riding a horse with one spur – if half the horse goes, the other half has to go along with it. No matter how deep or tempestuous the water, you’re going to be floating on top of it.

Let’s review something all of us already know. The Chinese have used real estate holdings for wealth creation for 2,000 years. All huge fortunes were either started or extended with real estate. Home ownership (the most common form of real estate holding) has been the single largest factor in the accumulation of wealth for the average North American, firstly because of straight appreciation due to inflation, secondly, due to the leverage involved and thirdly real estate has a use and therefore always a value.

This basic principle of appreciation holds true for pretty well any healthy major urban center. Let’s take Vancouver, B.C. for an example.

In 1960 the average Vancouver home sold for $13,105. Thirty-eight years later in 1998 the average sale price was some $310,000. Almost a 2,300 per cent return. But in March 2008 the average sale price was $895,000. Almost a 6,830 per cent return. That’s on the price. Play with the return on down payment of $655 and you get tens of thousands per cent returns
If this kind of appreciation is going to continue, you have to be on the conveyor belt. If you’re not, you’re going to be left so far behind that it will be financially disastrous. And here we’re only talking from the perspective of a place to live. This isn’t even addressing the investment aspect of those monies outside the family home.

When you combine appreciation with leverage, you unlock the great secret of achieving the optimum result with real estate investment. And as you can see from the foregoing numbers, the ‘lever’ can lift you up or the ‘appreciation’, if you’re on the wrong side, can crush you down.
When your gain is measured on the capital invested, not the actual price of the property, some really astounding results come into focus. But the game is not as simple as it used to be. The goal posts move. The only constant is that everything is always changing. The secret of surviving and prospering is the ability to adapt to the changes.

The 1980s were very forgiving for the amateur. Benign with a capital ‘B’. That ‘B’ could also represent ‘Bucks’ and ‘Brainless’. Back then if you had a few dollars you could buy any piece of real estate, anywhere, and you would make money. Even if you could barely hear thunder and see lightning, it was almost impossible to make a big enough mistake. If you paid too much, it only meant that you had bought a little too soon. The clock and the calendar made you into a financial wizard. Thanks to inflation, prices soon caught up to you and bailed you out.
Still, there were lots of people in the early 1980s who managed to lose all their money in real estate. Those were the people who put their money into the wrong syndications, limited partnerships or real estate investment trusts. But we’ll talk more about that later. In the late eighties fortunes were made.

But after the 1980s the real estate world became less forgiving. For some investors the times were downright terrifying. All of a sudden there was the sudden change. Markets fluctuated area by area both as to volume of sales and prices. Different real estate categories rose or fell without any apparent linkage to each other. You could see in one market area the average single-family detached home rise in value by 40 per cent while in the exact same market area downtown condos slumped in value by 12 to 20 per cent (Vancouver 1990-1995).

The people who tried to play by the old rules found themselves playing someone else’s game. And most of the time they were handed their heads. Was it possible to avoid the dangers and yet at the same time prosper with the good stuff) Yes it was, but you had to put aside location, location, location, and instead you had to read the trends, position yourself as to the timing and then implement some new techniques.

To be successful real estate investors we must understand ourselves. That means we have to understand our investment objectives in relation to the risks we are willing and able to tolerate. But having done that we then must understand that aspect of ‘ourselves’ that is part of the New Consumer.

http://londonontariorealestatediagnosis.blogspot.com/2008/05/ozzie-jurock-why-i-will-always-buy-real.html

Recommended by Moishe Alexander, CFC CEO

(VERNON, BRITISH COLUMBIA, CANADA) — The Rise announced June 1 that Land Launch Project Marketing has been selected to market the existing real estate inventory in its established neighborhoods. Land Launch was the first to bring liquidation style selling to the Okanagan with its recent sale for the Kelowna Mountain project.

As a result of the worldwide recession, liquidation real estate sales are a growing trend as several successful blowout sales have been conducted in Vancouver this year.  One such sale for the Omni Development Group sold more than 350 condos in eight weeks. Liquidation sales work when a developer has large inventories and can justify large discounts.

Land Launch moves to The Rise after four record sales years at Predator Ridge where most recently they sold out two phases of the Osprey Green town home project in 2008. Land Launch has selected to work with The Rise because the resort development has the type of product that is selling today: liquidation priced property.

“We have received more interest for our Kelowna liquidation sale than we have for all other campaigns this year,” says Greg Lowe, president of Land Launch Project Marketing. “In three weeks, we have had $10 million in sales. We are at The Rise to achieve the same level of success.”

In October 2008, The Rise, a 735-acre development with master plan approval for 1,200 units, was listed for sale with Marshall MacLeod of CB Richard Ellis in Vancouver.  In December 2008, The Rise was awarded protection from its lenders and creditors by the Supreme Court of B.C. using the Companies Creditors Arrangement Act for a period of nine months. The developer is currently operating the resort and the completed golf course while it works through its financial difficulties.

“Today’s real estate buyer is savvy and demands deeply discounted pricing,” says Lowe, “With the financial situation the developer is in at The Rise, now is the time for great deals. A new owner, with an improved capital structure, is not likely to be as motivated to offer large discounts.”

Marshall MacLeod, of CB Richard Ellis, reports that, “we have a number of qualified buyers seriously considering the opportunity to acquire The Rise.”  He further indicates that he expects to have a contract in place soon.

The resort’s $14-million Fred Couples Signature Golf Course has been open for the season since April and it is generating rave reviews. Recently, Score Golf magazine named The Golf Club at The Rise a nominee for its 2009 Best New Golf Course in Canada Award. The resort offers $105 million in amenities and infrastructure, including a beach club on Lake Okanagan. Though plans for a winery are currently on hold, the resort has 17 acres of vineyard with Gewurztraminer, Pinot Noir and Riesling vines.  The first harvest last year produced a quality of grape that has created rave reviews from the winemaker.

With over $310 million of recreation property sold since 2002 in the Okanagan, California and Washington, Land Launch attributes its success to knowing what the market wants.

It is currently devising a liquidation sale for The Rise that will be launched in early June 2009.

http://www.realestatechannel.com/featured-columnists/jack-nicklaus-golf-club-at-the-rise-fred-couples-predator-ridge-las-campanas-hokulia-superstition-mountain-mountain-spirit-resort-spa-899.php