Tuesday, May 27, 2008

Private Client Services Gives Full Access to Greater Vancouver Real Estate Listings

Private Client Services is a real estate research tool that tells you whats happening in the Vancouver real estate market in real time. You set your own search criteria, click save and the system gives you full market information on that type of property.

Most importantly the system tells you how much properties sell for when they sell, so you are able to follow the market based on actual sales prices rather than listing prices. The system also gives you Vancouver real estate listings and sold prices 36-72 hours faster than any other online resource including MLS.ca and Realtylink.org.

Private Client Services has a mapping option utilising Google Earth that allows you to see satellite photos of the property as well as street maps of the surrounding area.

To get access to Private Client Services go to my personal website or my building specific websites and click on the Orange Box. If you have any problems or questions, please email me or call me at 604-763-3136.

Inflation set to rise in beginning in the next few years spurring rising interest rates

Hi All,

The good economic news cannot last forever. The article below discusses something I've been thinking about a lot lately - how high energy prices (over $150/barrel) could begin to push up inflation by making imports from low wage countries expensive. Increased inflation will force The Bank of Canada to raise rates, which would have a downward effect on the Vancouver Real Estate Market. That said, if you already own and have a large fixed rate mortgage at a good low rate, inflation will be good for you because it will erode the value of the mortgage and will your interest costs will remain the steady.

I'd love to your thoughts!

High energy costs will bring dramatic changes in trade: CIBC World Markets

Globe and Mail Update

OTTAWA — The rising price of oil is making international trade of heavy cargo prohibitively expensive, and acting as an incentive for importers to find products such as steel closer to home, new research by CIBC World Markets shows.

For heavy products, rising shipping costs are eroding the low-wage advantage of China over North America, say chief economist Jeff Rubin and senior economist Benjamin Tal.

If oil prices continue to rise, the soaring cost of global transport will act like a major tariff barrier and lead to a substantial slow down in international trade, they argue.

“Globalization is reversible,” they state.

These days, the cost of oil is the equivalent of imposing a tariff rate of about nine per cent on goods coming into the United States. At $150 a barrel, transport costs act like a tariff of 11 per cent. And at $200, all the trade liberalization efforts of the past 30 years are reversed, Mr. Rubin said.

Oil prices now account for about half of total freight costs, and for the past three years, for every $1 increase in world oil, there has been a corresponding one per cent increase in transport costs.

“Unless that container is chock full of diamonds, its shipping costs have suddenly inflated the cost of whatever is inside,” Mr. Rubin said. “And those inflated costs get passed onto the Consumer Price Index when you buy that good at your local retailer. As oil prices keep rising, pretty soon those transport costs start cancelling out the East Asian wage advantage.”

Persistently high oil prices will also cause many commuters to consider moving to the city, reversing the allure of the suburbs, he said. And it could also force a change in eating habits, as foreign food becomes too expensive to ship.

“It means forget about that 50-mile commute from Cooksville to Toronto, and also forget about that avocado salad in January.”

More fundamentally, the soaring oil price will prompt a major rethinking of how production is organized, Mr. Rubin argues, and could even lead to a revival of North American manufacturing.

Already, U.S. imports of Chinese steel are declining dramatically, while domestic production is rising at rates not seen for years, they say.

China's steel exports to the United States are falling at a 20-per-cent annual pace, while U.S. domestic production has risen by 10 per cent in the past year. That makes sense, the economists say, because Chinese steel producers need to import iron ore from the likes of Australia and Brazil, then turn it into steel and then pay huge and rising freight costs to send the hot-rolled steel to the United States.

Regional trade looks much cheaper in comparison, they say.

As oil prices continue to climb, shipments of furniture, footwear and machinery and equipment are likely to meet the same fate, the economists say.

“In a world of triple-digit oil prices, distance costs money,” they say in a paper released Tuesday. “And while trade liberalization and technology may have flattened the world, rising transport prices will once again make it rounder.”

At first glance, such developments may seem to favour a renaissance of the moribund steel mills and boarded up furniture plants of Canada. But high oil prices won't eliminate importers' search for cheap labour. Instead, they're eyeing Mexico.

“Instead of finding cheap labour half-way around the world, the key will be to find the cheapest labour force within reasonable shipping distance to your market,” CIBC says.

“In that type of world, look for Mexico's maquiladora plants to get another chance at bat when it comes to supplying the North American market. In a world where oil will soon cost over $200 per barrel, Mexico's proximity to the rest of North America gives its costs a huge advantage.”

While high oil prices will require major reorganization of global supply chains, the bigger danger comes in the form of inflationary pressure, Mr. Rubin warns.

“If you're a steel buyer, your costs are going up regardless of whether you are sourcing it from China or Pittsburgh,” he says, saying the same dynamic applies to Hamilton.

Soon, the United Steelworkers of America will want a piece of that higher price, and wages that have been kept flat for years because of labour competition from Asia will begin to rise.

He doesn't necessarily see a return to the double-digit inflation of the early 1980s, but figures the central banks in the United States and eventually Canada will have to begin raising rates dramatically in order to confront inflation running at around 3.5 or 4 per cent annual pace. Canada's target is two per cent a year.

Friday, May 16, 2008

A High Canadian Dollar Means Low Inflation Paving the Way for Low Interest Rates - Great for Vancouver Real Estate

I know alot of people are feeling the pinch of higher fuel prices, but a high oil price is very good for Western Canada and Vancouver Real Estate in particular.

The Canadian Dollar has been pushed up by high energy prices as the US dollar has sunk because of the Sub-Prime Crisis and their high current account deficit. Canada is the number one exporter of energy to the US and 80%+ of Canada's imports come from the US.

High energy prices push up the Canadian Dollar which makes US imports cheaper which then pushes down inflation in Canada. With low inflation, the Bank of Canada can reduce interest rates thus making Real Estate in Vancouver less expensive for Buyers and giving them an incentive to purchase more Vancouver Real Estate.

I'd love to hear your comments!

Loonie holds above par with greenback

Globe and Mail Update

A strong Canadian loonie was over par with the United States dollar Friday morning, up to $100.34 (U.S.) in early trading, fuelled primarily by high oil prices and generally positive Canadian economic news.

The Canadian dollar opened at 99.92 cents, after briefly nudging above parity overnight, and quickly regained its ground.

“Probably this latest move is just on the back of oil prices moving higher again,” said Camilla Sutton, a currency strategist with Scotia Capital Inc.

As well, she said, “most of the data, with the exception of manufacturing shipments, has been somewhat positive for Canada.”

However, Ms. Sutton did not foresee any major spikes in the near term. The Canadian dollar last traded above par with the U.S. dollar on March 19, when it swung from a low of 98.34 to a high of 101.21 in highly volatile market activity.

“The general sentiment is that we are in this broader range on either side of parity, and we haven't really seen a catalyst yet to break us out,” Ms. Sutton said.

“All in all, we are hovering around parity, but it certainly seems like the Canadian dollar wants to be a little bit stronger than the current levels.”

Still, she added, the “broader six-month range of the Canadian dollar is still very much intact, either side of parity.”

David Watt, a senior currency strategist with RBC Capital Markets, said the Canadian dollar is finally reflecting high oil prices, and a recognition that oil prices are not just moving up because the U.S. dollar is weak.

There is evidence that demand for oil “is still strong enough, despite what is going on with the U.S. dollar,” said Mr. Watt.

Meantime, the U.S. dollar fell against most major currencies Friday.

The euro bought $1.5476, up from the $1.5454 it bought late Thursday in New York.

The British pound bought $1.9479, up from the $1.9451 it bought late Thursday, while the dollar also fell against the Japanese yen, buying 104.75 yen, compared with the 105.26 yen it bought late in New York.

“The dollar is looking slightly weaker on the back of yesterday's manufacturing data but there hasn't been too significant a slump in the greenback so far,” said James Hughes, an analyst at CMC Markets in London.

Thursday, May 15, 2008

The Froth is Off, But Vancouver's Real Estate Market is Still Goo

Hi All,

I have been noticing a change in my business. The mix of clients is shifting and the number of sellers I am working with has increased substantially. There are still buyers, but compared to this time last year, there are significantly less.

Its not a correction in the market, but a gradual shift away from a total sellers market, which is good for buyers and not a problem for sellers who are willing to take efforts to make their home look good and price it according to market conditions.

This article summarises nicely what I have been experiencing.

I'd love to hear your thoughts.

Cracks appear in the real estate market

Globe and Mail Update

The Canadian housing boom is ending, but there is no “major correction” in the cards – and buyers are unlikely to see anything near the bargain-basement prices that currently characterize the United States housing market, the Bank of Nova Scotia said Thursday.

“After many false calls, there is now convincing evidence that Canada's housing market has come off the boil,” the Bank of Nova Scotia in a report on real estate trends.

Canada Mortgage and Housing Corp., in its second-quarter outlook, reported Thursday that new home construction will begin to slow in 2008, “but remain high by historical standards.”

Both Scotiabank and CMHC said the Canadian housing market is fundamentally strong.

However, higher mortgage carrying costs “will be a catalyst for the decrease in residential construction to 214,650 units in 2008, from 228,343 in 2007,” CMHC said in its second quarter housing market outlook.

Bob Dugan, CMHC's chief economist, added that most of the pent-up demand that built up during the 1990s “had now been fulfilled and residential construction activity will gradually move in line with Canadian demographic fundamentals.

“These factors will continue to exert downward pressure on housing starts, which will decline to 199,900 units in 2009,” Mr. Dugan said.

Scotiabank, looking at the resale market, reported that home resales – having fallen for four consecutive months – are running about 15 per cent below last summer's historic peak.

“Average annual home price appreciation has eased back into the mid single digits, as overall market conditions come into better balance,” according to the Scotiabank report.

“Adjusted for inflation, the average resale home price in Canada registered its first quarterly decline in seven years in the first quarter of 2008,” the bank said.

However, senior Scotiabank economist Adrienne Warren said in an interview that the softening market is due to a “cyclical slowdown,” and the Canadian housing market is “fundamentally stronger than the situation we're seeing in the U.S.”

The cooling could bring eventually price relief to buyers, she said.

“The market is becoming better balanced, so there will be more homes listed, which takes a little bit of pressure off prices,” Ms. Warren said.

“But it will take some time, and a number of years of fairly soft prices, in order to bring affordability back to the levels” that are typically seen at the beginning of an upward cycle, she said.

CMHC forecast that existing home sales, as measured by Multiple Listing Service, will fall by 8.5 per cent in 2008 to 475,900 units, and the trend will continue in 2009, with a decrease to 465,000 units.

“Despite a slowdown in MLS(R) sales, demand remains strong by historical standards,” CMHC wrote. Average resale prices will increase by 5.1 per cent to $323,000 in 2008, and by 3.3 per cent, to $333,500 in 2009, CMHC projected.

In line with the CMHC report, Scotiabank noted that “cracks are appearing on the new home front as well.

“While housing starts in early 2008 are essentially tracking last year's elevated levels, demand for new residential building permits has fallen sharply. Price increases for new homes are moderating, while inventories of unsold new homes are trending higher.”

Ms. Warren said she expects overall sales volumes in 2008 to be about 15 per cent below last year's record levels, and home prices to increase on average by about five per cent.

“Price gains should slow further in 2009 with the return of a balanced market for the first time in a decade. Meanwhile, housing starts are projected to gradually moderate, returning toward underlying annual household formation levels of around 180,000 by the end of the decade, from the current 225,000 unit range,” Ms. Warren said.

The report also notes that the cooling in overall activity is most pronounced in many of Canada's hottest urban housing markets in recent years, including Calgary and Edmonton.

“Both centres have officially moved into buyers' territory as soaring prices weaken demand and fuel new listings. More generally, however, economic conditions continue to favour the resource-rich markets in the West over manufacturing-dominated centres in Central Canada. Regina and Saskatoon are currently in the strongest sellers' position nationally, supported by good affordability, rising population inflows and tight supply,” according to the report.

However, risk of a major correction is low, Ms. Warren said.

“Home prices in Canada are not substantially overvalued. Our long-term housing price model puts average home prices in 2007 at about eight per cent above their long-term trend, compared with a premium of 12 per cent and 18 per cent, respectively, at the 1976 and 1989 housing cycle peaks. Recent International Monetary Fund (IMF) estimates placed Canada at the bottom rungs of international home price overvaluation.”

Scotiabank also said in its report that Canada's real estate market is not overbuilt.

“While inventories of unsold homes are trending higher, the number of unabsorbed units, including condominiums, remains well below prior cyclical peaks in most major centres. Tighter lending guidelines and high construction costs have likely contributed to a more cautious approach among builders.

Overall mortgage quality is still sound, Scotiabank said.

“Canada does not have ultra-low teaser rate mortgages that have contributed heavily to U.S. defaults as they reset. Adjustable-rate mortgages, sub-prime lending, borrowing against home equity, and insured investor mortgages all account for a much smaller share of the Canadian mortgage market than in the United States,” the report said.

At the end of the day, we predict a soft landing for the Canadian housing market, with somewhat lower sales and construction, and a period of relatively flat inflation-adjusted home prices,” added Ms. Warren. “While underlying domestic housing fundamentals remain healthy, a major risk to the outlook would be a deeper and more protracted downturn in the U.S. economy, with more serious repercussions for domestic output, employment and income growth.”

Tuesday, May 13, 2008

The Standard Deposit Amount for Vancouver Residential Real Estate Purchases

When one purchases property in Vancouver a 5% Deposit is required either upon acceptance or within 24 hours of the final subject removal date. This Deposit is "Goodwill" money that is held in the Buyers Agent's trust account until the Completion Date when the Buyer takes ownership and the Seller gets their money.

If the Buyer does not complete on the property on the Completion Date the Seller may keep the Buyers 5% deposit and sell the property to another party. If the Seller does not complete on the Completion Date the buyer can get their deposit back and be free of any obligation to complete on the property.

The 5% deposit is designed to protect Sellers from frivolous or unreliable Buyers. The 5% deposit also protects Buyers from unreliable or frivolous sellers not completing, because having the deposit paid is one of requirements if the Buyer wants to bring legal action against the Seller to force them to Complete.

If you are thinking of buying property in Vancouver, be prepared to pay a 5% deposit within a week of having a SUBJECT FREE accepted offer.

If you have any questions on this post please contact me at any time.

Monday, May 12, 2008

Vancouver Property Prices Still Rising!

Hi All,

I have been speaking to alot of people concerned that the real estate market in Vancouver has hit the peak and that the end is nigh. This is not the case.

For quite a while I have been saying that growth in prices will slowly decline, but there will not be a sharp correction. Vancouver's economy and real estate market is benefiting from low inflation, high demand for our natural resources in Asia, and falling interest rates designed to benefit Central Canada's ailing manufacturing sector.

I'd love to hear your thoughts!

New home prices show signs market is cooling

Globe and Mail Update

Ottawa — Prices for new homes in Canada rose 0.2 per cent in March from a month earlier, and 6.1 per cent over the past year, Statistics Canada says.

The month-over-month increase was exactly as economists had predicted.

And the 6.1 per cent year-over-year increase, slightly slower than the 6.2 per cent rise noted in February, also vindicated expectations that housing prices in Canada are no longer rising quickly.

“This deceleration continues a downward trend that started in September, 2006, due mainly to the softening market in Alberta,” Statscan said.

The hottest market in the country, for the 11th straight month, was Saskatoon, where prices for new homes have soared 46.2 per cent from a year ago. That's down from the record-setting 58.3 per cent seen in February.

On the month, Saskatoon prices rose 2.1 per cent.

Regina's new homes rose 27.8 per cent from a year ago, and 1.7 per cent between February and March.

“Saskatchewan is breaking away [from trends in other provinces] as its natural resource sector grows substantially larger and the province increases its efforts to attract migrants to the region to help alleviate the labour shortages,” economists at Bank of Nova Scotia explain.

Builders in Saskatoon, Regina and Winnipeg – where prices rose 15.0 per cent from a year ago – said they raised their prices because of higher material and labour costs, and also because of a strong market and high demand for new homes.

Nova Scotia also saw large price increases in March, with Halifax registering a 12.8 per cent increase from a year ago, because of a strengthening economy, rising costs and healthy demand.

Not so in other markets. Edmonton and Calgary are experiencing slower market conditions, and builders in those cities said they were lowering their prices to stimulate sales. Edmonton new housing prices fell for the third consecutive month, declining 1.1 per cent between February and March.

In Vancouver, prices rose 6.1 per cent from a year ago, while Victoria saw a 1.2 per cent rise year over year.

In Windsor, Ont., where the deterioration of manufacturing has hit hard, home prices dropped 0.6 per cent from a year ago. Generally, prices in Ontario and Quebec were not rising as fast as the national average.

New housing prices are an important contributor to Canada's consumer price index, and a deceleration of the new housing price index will help keep inflation low in Canada, economists say.