Richmond Condo News

BC First time homebuyers not getting what they want

The Vancouver Sun reported on Wednesday, December 12, 2007:

British Columbians are making compromises and relying on financial help from families, but are still getting into the province's escalating property markets, according to a national real estate firm.

Century 21 Canada, on Tuesday, released results from a survey of its brokers on first-time buying.

The firm points to Statistics Canada numbers on home ownership, which show the rate at which people are buying their own property is growing faster than the population.

However, particularly in B.C.'s high-priced markets, the buyers aren't getting exactly the property they want where they want to live.

Century 21 Canada president Don Lawby, in an interview, said buying habits are changing because "that's just the reality of the marketplace today, for first-time buyers especially.

"They may have the great desire to have a wonderful lot and a detached home, but their financial wherewithall won't allow that."

Settling for locations that are less desired is something Christina Pughe, a mortgage-development manager at Vancity credit union is familiar with. Recent clients, a young couple, bought an apartment in Pitt Meadows when they really wanted to live in Richmond. "That's a long commute," she said.

Pughe added that a colleague worked with four clients who wanted to live in Vancouver, but bought in Surrey.

Click her to read the whole article.

After experiencing an exceptional year characterized by strong average house price appreciation and record breaking unit sales, the momentum from 2007 is anticipated to carry over and position Canada's real estate market for steady, yet moderate growth in 2008, according to the Royal LePage 2008 Market Survey Forecast released today.

Nationally, average house prices are forecast to rise by 3.5 per cent to $317,288 in 2008, while transactions are projected to fall slightly from this year's record high unit sales to 500,927 (-4.0 %) unit sales in 2008. Despite the year-over-year reduction in unit sales, the number of homes trading hands in 2008 is expected to remain higher than in all years prior to 2007.

"Canada's housing market in 2008 should continue to thrive on a balanced diet of strong economic fundamentals, including high levels of employment, resilient consumer confidence, modest levels of inflation and the relatively low cost of borrowing money," said Phil Soper, president and chief executive of Royal LePage Real Estate Services. "Canada is currently enjoying one of the longest housing market expansions in history; however, as we move into 2008 it is anticipated that slowly eroding affordability will cause demand to ease, allowing the market to move toward balanced conditions, with lower levels of price appreciation, and fewer homes trading hands."

Read here for the rest of the report...

BC Housing Market Rebound 

The Vancouver Sun reported on Dec 18, 2007:

A significant November rebound in Metro Vancouver housing re-sales helped push overall activity above 2006 levels, the Canadian Real Estate Association reported.

The association registered 2,952 sales through the Multiple Listing Service, a 22 per cent increase from the same month a year ago.

As of the end of November, Metro Vancouver saw 37,021 units change hands, which is 6.6 per cent more than the number of units that were sold up to the same point in 2006.

The average unit price topped $577,000 in November, up 11.2 per cent from the same month a year ago.

Nationally, 345,577 sales were cleared through MLS by the end of November smashing 2005's record of 336,646 real estate sales.

However, while a tax change in Toronto can help explain a late 2007 surge in sales, the factors pushing up Vancouver are less clear, according to Douglas Porter, deputy chief economist for BMO Capital Markets.

ward double-digit increases.” “‘That’s not a friendly combo for prices looking ahead,’ Porter wrote.”

Read more for the rest of the article...

 
Richmond real estate: Richmond Home with acreage

In a fast growing city like Richmond, acreage properties next to new housing developments are rarely available. The most valuable acreage properties are those serviced with municipal water, electricity, cable and telephone lines. If a house is not already built on an acreage property, or it's too old, a new house can be constructed on the property.

The attraction of an acreage property is in the extremely low property tax on the property if its primary “agricultural use” status is maintained. Almost all dwellings on acreage properties are built in the front of the properties with easy municipality road access. In addition to the front portion of the land being used to build a home, the large land parcel at the back portion of the land can be used by an owner for agriculture related hobby or business.

Many buyers built their luxurious mansions on acreage properties. When the homes are surrounded by neighbouring residential houses, such properties are like a private retreat in the country, yet just steps away from the city center and its amenities. Click here for info on an acreage home available for sale near Richmond, BC.

If you like to have an up-to-date list of houses on acreage close to Richmond, kindly contact James Wong at 604-721-4817.

Banks quietly cut mortgage discounts as profits decline in debt turmoil

Garry Marr, Financial Post Published: Tuesday, November 13, 2007

The credit crisis in financial markets is now starting to hit Canadian homeowners right where they live with higher mortgage rates.

In the past four weeks, all of the major banks have quietly moved to cut the discount they provide on mortgages because their profits have dwindled as their borrowing costs have gone up.

Canadians now negotiating a variable rate mortgage can get .60 percentage points off of prime. Less than a month ago they were getting .90 percentage points off. With prime at 6.25%, it means the difference between a mortgage rate of 5.65% versus 5.35% which could mean an additional $12,000 of interest on an average Canadian home over 25 years.

"The banks are going to make their profits somewhere and that's what they are doing," said Vince Gaetano, vice-president of Monster Mortgage, a mortgage brokerage firm.

The move to sharply reduce discounts is not just limited to variable rate mortgages. The banks have also cut how much they are willing to lop off longer term mortgages, including the five-year closed mortgage which remains the most popular product in Canada.

Mr. Gaetano said rising rates in the mortgage market can be traced back to the crisis in the asset-backed commercial paper market where investors have ended up being stuck with $40-billion worth of paper they cannot redeem. Since the crisis, the yield on ABCP has risen from about 4.30% to 5.20% because of the increased risk, said Mr. Gaetano.

All short-term debt has been affected, including the banker's acceptance rate, which is based on what financial institutions charge each other for short-term loans. The BA rate is set in the market and has been rising.

"What the crisis has done is it has significantly reduced the spread between prime and the BA rate," said Joan Dal Bianco, vice-president of real estate secured lending with TD Canada Trust.

Ms. Dal Bianco said the spread between BA rate and prime had been about 165 basis points for half a decade and it has since shrunk to about half that. "We are all in the same boat in terms of the margin shrinkage," she said.

The lowering of the discount has nothing to do with any lack of confidence in residential mortgage debt, it is simply a question of the banks maintaining their profitability. Most estimates place the default ratio for Canadian residential mortgages at under .1%.

The BA rate started going up in August but the increase was not borne by consumers until around the second week of October. "We decided to move in October. Nobody wanted to pass it on to the consumer but by October we really had to," said Ms. Dal Bianco.

The decision means the average Canadian homeowner with a 25% down payment on a $308,543 home -- the average sale price over the first nine months of the year -- now faces a monthly payment of $1,432.76 based on a 5.65% rate. Before the ABCP crisis, that consumer would have received a 5.35% rate and been paying $1,392.35 monthly.

There's no break if you lock in your rate either. The spread between the banks' borrowing costs on a five-year mortgage and what they loan that money out for has also shrink. "It is sustained squeezing of the margins," said Ms. Dal Bianco.

The gap between the bank's borrowing costs and the rate it loans money to consumers on a five-year term is about 180 basis points. Two months ago it was about 140 basis points.

"Lenders need to figure out a way to keep their profitability up. Everybody feels good because they are getting a discount on the posted rate but they should look at how much their discount is these days," said one mortgage insurer. "This isn't an anti-bank story. Their cookie jars are a little emptier these days and they have to make it up."

An article collection by Richmond Sutton Realtor, James Wong:

Prices sometimes fall into substantial troughs, expert says

Derrick Penner, Vancouver Sun, Published: Thursday, December 07, 2006

In a sea of buoyant sentiment about Greater Vancouver's rising real estate prices, a pair of Canaccord Capital Corp. investment advisers are cautioning their clients not to get too high on the gains they've seen.

It is not like Mark Hewett and Erik Dekker are doomsayers. B.C.'s economy has a lot of positives, Hewett said in an interview.

However, a Canaccord researcher sent some Vancouver price data to U.S. financial analyst Dennis Gartman, and Gartman -- who Hewett said knows the city well -- included a technical analysis of the price graph in one of his recent newsletters.

Mark Hewett added he doesn't believe Vancouver's real estate market will experience anything like the technology-sector meltdown of 2000.

Hewett and Dekker included Gartman's findings in one of the research notes they send to clients, a copy of which wound up in the hands of The Vancouver Sun.

Gartman's assessment is that Vancouver real estate prices have been on a run, reaching "levels that we think suggestive of one of Vancouver's rather regular and seemingly inevitable breaks."

Canada Mortgage and Housing Corp. forecast a seven-per-cent price increase for Vancouver, and the Credit Union Central B.C. estimated a six-per-cent rise for 2007.

And Vancouver-based experts say Gartman is drawing conclusions from looking at price alone.

Gartman, however, noted that the line of Vancouver's real estate never goes straight up. It moves in waves reaching peaks, then falling into sometimes substantial troughs. For instance:

- In the dark days of 1981-82, the fall from peak to trough was 40 per cent, and it took seven years to climb out.

- Prices peaked again in 1990, then fell 20 per cent before recovering in 1992.

- The next peak in 1995 ended with a long bear market with no new highs until 2003.

By Gartman's estimate, in the current cycle a Vancouver detached house rose from $340,000 at the last trough in the winter of 1998-99, reaching nearly $800,000 this year.

"If the peak was made earlier this year, and if history is any guide to us," and Vancouver prices decline by the average of the last three cycles, Gartman said it could take 25 to 30 months to go down the trough, and 65 to 70 months to see a new peak.

Based on past experience, Gartman added that the drop could be in the order of 28 per cent, taking that $800,000 house down to $575,000.

What will really happen? Hewett said the downside perhaps won't be as drastic as Gartman suggests, and noted that Gartman didn't crunch Vancouver's economic fundamentals.

Hewett said no one really knows if the market turn will be two months, one year or five years from now.

Just that "based on past cycles, prices will retreat at some point," Hewett said.

For anyone who thinks it's different this time and the market will go up forever, Hewett adds, "It's never different. We've seen it too many times before."

Hewett and Dekker's advice to clients is, if they're selling, consider doing it soon and at a "fair market price." If they're buying, wait a few months to gauge the trend.

Hewett added he doesn't believe Vancouver's real estate market will experience anything like the technology-sector meltdown of 2000. Still, he advises clients "it's good to be cautious. As in any sector, you don't want to over leverage yourself."

Cameron Muir, chief economist with the B.C. Real Estate Association, said Gartman's observation ignores the prevailing economic conditions that brought about past "price breaks," such as the crushing interest rates of the early 1980s, or the economic stagnation that B.C. experienced in the late 1990s.

"[That] history repeats itself certainly is a truism," Muir said. "But all the circumstances of history have to repeat."

Muir added the current market cycle is closer to the end than the beginning, but current economic conditions are different than at the peaks of previous cycles: Interest rates are low and not likely to rise to levels that would shock the market, and the economy is still expanding.

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Bad credit mortgage

Subprime mortgages are home loans provided to borrowers who do not qualify for the best market interest rates because of their deficient credit history. These loans may include loans on certain types of investment properties and certain types of self-employed borrowers.

As a subprime loan is risky, it carries a higher interest rate than prime mortgage loans. The interest rates for such loans are normally 1.0% to 2% higher than the rates from the banks. Subprime mortgages are risky for both lenders and borrowers due to the combination of high interest rates, poor credit history, and weak borrowers' financial situations.

Subprime borrowers

Subprime offers an opportunity for borrowers with a less than ideal credit record to gain access to purchase homes. Subprime lending to poor credit borrowers has enable many home buyers to buy their homes. Many would have missed the opportunity to buy their homes at lower prices while trying to rebuild their credit. The decision is either to go with a subprime loan at higher interest rates or delaying for too long that house prices are out of reach.

Most home owners after a period of one or two years of maintaining a good payment record, they can be approved and switch their mortgages to other prime lenders at obtain prime interest rates and gain credibility to move onto mainstream prime rates financing.

For more information on how to be approved for a home mortgage in the Greater Vancouver and Fraser Valley, kindly call James Wong at 604-721-4817 or click on this link Vancouver Home Mortgage.

JUST RELEASED - 4 December 2007

OTTAWA – The Bank of Canada today announced that it is lowering its target for the overnight rate by one-quarter of one percentage point to 4 1/4 per cent. The operating band for the overnight rate is correspondingly lowered, and the Bank Rate is now 4 1/2 per cent.    Prime drop to follow:  6.00%

Since the October Monetary Policy Report (MPR), there have been a number of economic and financial developments that have a bearing on the prospects for output and inflation in Canada.

Consistent with the outlook in the MPR, the global economic expansion has remained robust and commodity prices have continued to be strong. The Canadian economy has been growing broadly in line with the Bank's expectations, reflecting in large part underlying strength in domestic demand. However, both total CPI inflation and core inflation in October, at 2.4 per cent and 1.8 per cent respectively, were below the Bank's expectations, reflecting increased competitive pressures related to the level of the Canadian dollar. The Bank now expects inflation over the next several months to be lower than was projected in the MPR. In the context of exceptional volatility in global financial markets, the Canadian dollar spiked well above parity with the U.S. dollar in November, but it has recently traded closer to the 98-cent-U.S. level assumed in the October MPR.

Overall, the Canadian economy continues to operate above its production capacity. Given the strength of domestic demand and weak productivity growth, there continue to be upside risks to the Bank's inflation projection.

However, other developments since October suggest that the downside risks to the Bank's inflation projection have increased. Global financial market difficulties related to the valuation of structured products and anticipated losses on U.S. sub-prime mortgages have worsened since mid-October, and are expected to persist for a longer period of time. In these circumstances, bank funding costs have increased globally and in Canada, and credit conditions have tightened further. There is an increased risk to the prospects for demand for Canadian exports as the outlook for the U.S. economy, and in particular the U.S. housing sector, has weakened.

All these factors considered, the Bank judges that there has been a shift to the downside in the balance of risks around its October projection for inflation through 2009. In light of this shift, the Bank has decided to lower the target for the overnight rate. At its next interest rate decision in January, the Bank will assess all economic and financial developments and the balance of risks. A full projection for the economy and inflation will be published in the Monetary Policy Report Update on 24 January 2008.

Information note: The Bank of Canada's next scheduled date for announcing the overnight rate target is 22 January 2008.

Are you planning to buy a home in Richmond, BC?

Real estate and home ownership is a proven asset that appreciates in value over time. It is a good hedge against modern day inflation which rises 3%-5% a year. Home owners fare better than those who do not own their homes.

If you know what you want to buy, we can help you to identify the property, negotiate the price and assist you in closing the deal. We strive to make your buying experience more pleasant and less stressful. There are compelling reasons why home buyers should have their Buying Agents to represent them. The loyalty and best interest of a home buyer can only be provided by his Buyer Agent.

If you are a first time home buyer, check out if you are qualified to withdraw your RRSP savings as down payment under the “home buyer’s plan”. In addition, you should find out for sure you are exempted from paying the British Columbia “property transfer tax”.

Here is a short video clip on some featured Richmond townhouses:

If you are interested to look for any of the above townhouses, you can contact James Wong at 604-721-4817.