Vancouver Real Estate Market: What’s up

Recently, we could witness one of the Canadian records regarding long and fast market growth. The record breaker was nobody else than the Vancouver BC housing market, which managed to keep its growth for almost seven years in a row. Prices of homes grew to an almost double level between 2001 and 2007, whereas inflation didn’t get over 14%. Of course, affordability of houses in Vancouver, especially for first time buyers, was seriously affected by this combination of factors.

After the US real estate market got into problems, its Vancouver relative still worked fine for some time and managed to grow until the beginning of 2008. Anyhow, the market slowed down since it’s been influenced by the pressure of affordability demand, and the market freeze stayed on for a few months. At first, the average price stabilized, but later declined, and under the influence of the global economic crisis in the autumn 2008, the real estate market of Vancouver got into record-low values in January and February 2009. People were generally worried of the deep and long taking real estate crisis as the one in the USA.

If you believe the same, look at the statistics around – February 2009 was the month of rebound, not the beginning of stagnation! Since then, all real estate key indicators in Vancouver BC show positive trend. If we look at the sales numbers, we can see that the numbers in June 2009 reached almost 6 times higher than the level from February and almost twice higher than the results from summer 2008. The percent change in June 2009 was 75.6% compared to June 2008. The average prices were decreasing till December 2008. Then the price level remained about the same until March, when it started to increase again and keeps going up steadily until now. June prices already arrived to the level of October 2008.

Is this surprising? Not so much, if you look at the data carefully. Look at the new listings change graph. The rapid inflow of new houses on the market stopped many months ago in October 2008, after this month the overall inflow was falling.

It’s because one obvious advantage residential real estate can boast – people simply have to stay somewhere. We can stay without cars, hairdressers, or holidays, but we definitely need some shelter. Even though the demand may drop, it is unlikely for it to reach zero level, even for a short period of time. There are some guideliness that the supply side should follow. Real estate items often represent the most costly part of your personal property. You can hold it and refuse selling during the period of decreasing prices, on the other hand such approach stimulates new housing starts. Finally, buyers and sellers have to reach some point of consensus and the earlier they do, the better for both.

So what are the underlying reasons behind Canadian market’s quick recovery, regarding that the US market is still struggling with the crisis? Canada managed to prevent the most painful event – wave of foreclosures. Compared to the financial health of institutions and individual home owners in the USA, the Canadian ones are doing much better. We don’t have to be richer but for sure we have better predispositions to cope if any immediate financial trouble is to come. The most affected financial sector in USA was the subprime mortgages, which are much less often used in Canada. Now our economic fundamentals could be doing better of course, but they are still quite stable.

So what next development can we predict for the real estate market in Vancouver?  Sales and average prices are likely to increase steadily during the few following months. Nevertheless, the situation will calm down after reaching the pre-burst level, due to overall economic slowdown. Next year the interest rates should still be low and prices still under the recent peak, which will make houses very affordable and thus a wonderful opportunity especially for first time buyers!

Real Property Reports

We received a letter from one of the lawyers that we work with that had some great info on Real Property Reports, and thought that it would be good to post this here for all to see.

——————————————————-

Whenever a property is bought or sold a Real Property Report (RPR) can be one of the most important components of the transaction. An RPR is a legal survey of the property, done by any Alberta land surveyor, showing its size and relation to the properties around it including neighboring properties, sidewalks and streets and other structures. The RPR also contains a survey of any permanent structures on (or sometimes near) the property, such as buildings, decks, fences, sidewalks, patios, garages, etc. The purpose of the RPR is to show compliance of the property and its buildings with the appropriate municipal bylaws. The RPR is usually a large piece of paper with two stamps affixed showing compliance, one in red (surveyor stamp) and one in blue (municipal stamp of compliance for The City of Calgary as an example). A RPR in Calgary typically cost more than $550.00.

A RPR does not have to be done every time a sale or purchase is made. If a property has an existing RPR showing compliance it may be acceptable if two conditions are met: that no structures have been substantially modified (added or removed) and second, that the bylaws pertaining to the property have not changed. A common scenario is that an RPR will exist for a property but the owners have since added a deck or a fence or some other structure. This would usually necessitate a new or updated RPR. Occasionally, bylaws will change and this may affect the status of an RPR. For example, bylaws concerning window wells and their distance from the property line have recently changed in Calgary creating noncompliance for some properties.

There are a number of regulations concerning the location of structures on a property in relation to the property line, for example, with the City of Calgary, the foundation wall of the sides of a house must be 1.2 metres or more from the side yard property line. These regulations can be quite detailed, for example, the City of Calgary in most cases does not permit eaves or eaves-troughs to extend onto the neighbor’s or the city’s land. It is quite common, especially on irregularly shaped lots, that fences will not be properly placed in relation to the property line. If a structure does not comply with the property line and encroaches onto the city property or onto a neighbor’s land, an encroachment agreement can be applied for. Depending upon the situation, a fee is paid to the City of Calgary (typically from $50.00-$525.00) and an Encroachment Agreement is made (or Relaxation Permit granted). An Encroachment Agreement is registered with Alberta land titles and applies for the lifetime of the particular structure in question (the structure cannot be rebuilt or replaced in the future). In some cases, the City of Calgary may not agree to an encroachment and may insist that the structure in question be made to comply. This may involve modification or removal of the structure and this can be a costly proposition.

Sellers of properties usually are required to initial a clause stating that the property is free of encroachments or that appropriate Encroachment Agreements are in place. A current RPR can protect sellers from future legal liabilities that may arise if encroachment issues are subsequently revealed. Buyers need to be aware of any potential encroachment issues as if they agree to buy property that is not in compliance they may inherit these issues and become legally and financially responsible to correct any encroachment issues. In terms of removal of a deck or sidewalk or driveway this can be expensive. Such issues may also arise when a bank considers a mortgage or a mortgage renewal for a property.

Other compliance issues may relate to satisfying the City of Calgary’s Land Use Bylaw (LUB). This document regulates and controls the use and development of all land and buildings within the municipal boundaries. It defines the range of uses considered appropriate for any particular site and sets out basic rules for site and building design.

Normally, certificates of compliance will be required when buying or selling property in order to show that the property and structures meet municipal bylaws. A certificate of compliance is obtained from the City of Calgary (cost is presently $93.00). This is not a requirement of the city but is a requirement on a Residential Real Estate Purchase Contract you will sign with your realtor. If an existing structure does not meet regulations the compliance certificate will be refused along with directions to be followed to correct the situation.

Title insurance is also an option with closing your real estate purchase or sale, in addition to or in lieu of a RPR. Cases are individual and you should get legal advice prior to finalizing to ensure your interests are properly protected.

Thank you again for considering us!

Sincerely,

Sandra Tillier

Calgary is Still Growing

Despite the economy slowing and jobs disappearing, Calgary continued to lure thousands of people from other parts of the country last year, according to the latest civic census.

And the numbers indicate the city seems poised to better weather the latest market roller-coaster than downturns in the 1980s and 1990s, some analysts say, pointing out the 2009 net migration of 12,563 people is higher than the year before.

“It’s something to counter the perceptions of doom and gloom present in the economy,” said Harry Hiller, director of the Alberta in-migration study at the University of Calgary. “It’s the opposite.”

Mayor Dave Bronconnier called the numbers impressive, saying they buck trends across the country.

“It speaks to the resiliency of this economy, it speaks to Calgary as a place where people want to move to, want to start businesses, start a family,” he said.

Read the full article here.

Click on the image below to see what communities are growing and which ones are shrinking…

IT’S A MATTER OF INTERPRETATION

It is known that many tax appeals get won by the taxpayer in the Supreme Court of Canada.  This is because majority of the judgments rendered by CRA and the courts comes down to the interpretation of the sections of the Income Tax Act. 

When interpreting the Income Tax Act, it is wise to use precedent setting cases. These are court cases where a ruling has already been given in a specific area of Income Tax Act.  Precedent Setting Cases help judges determine future cases dealing in the same are of the Law or Act. 

Oil Sands Less Dirty Than Thought

CALGARY — The Alberta government shot back at international oil sands critics Thursday, releasing two reports that argue crude produced from the sticky sands in the northern part of the province is not as devastating to the environment as previously believed.

The reports, commissioned by the Alberta Energy Research Institute, show direct greenhouse gas emissions from Alberta’s oil sands are on average about 10% higher than emissions from other sources of crude refined in the United States. Other studies have put this number closer to 40%.

However, one of the new studies also shows crude from Canada’s oil sands produces roughly 45% more greenhouse gas emissions when compared with Saudi conventional crude oil.

“[Oil sands crude] is not terrible relative to the main crudes that do go to U.S. refineries,” said Eddy Isaacs, AERI’s executive director.

Read the full article here.

What Killed Detroit? Was it the Automobile?

Detroit was the Silicon Valley of the 1920s — the booming home of a glamorous new industry, a place where huge fortunes were conjured in years, sometimes months. But while the creators of the computer industry have as yet bequeathed very little to the built environment, the automobile industry piled up around it an astounding American city, in astoundingly little time.

The Detroit of 1910 was a thriving Midwestern milling and shipping entrepot, a bigger Minneapolis. The Detroit of 1930 had rebuilt itself as a grand metropolis of skyscrapers, mansions, movie palaces and frame cottages spreading northward beyond the line of sight, exceeding Philadelphia and St. Louis, rivaling Chicago and New York. I had a chance to tour central Detroit recently, my first visit to the downtown core in many, many years.

Some of the old visual magnificence remains, has even been improved. The Guardian tower displays again the blazing colors of its vaulted atrium, long covered up by dry wall. The marble adorning the Fisher building still glows. The Renaissance Center, once as walled and moated against the city as a medieval castle, has lowered its defenses, especially on the side facing the Detroit River. But for the most part, all is decay. Whole towers stand empty, waiting to join the long line of grand structures that have either been abandoned to pillage and ruin, like Detroit’s once magnificent neoclassical skyscraper of a train station, or else pulled down entirely, like the downtown Dayton Hudson department store, once the largest enclosed shopping space in the United States.

read full article here

Alberta – Affordability Is Restored

The affordability in Alberta has restored itself, and the market is filled with multiple offers.  Over the past couple weeks, we have been involved with a number of multiple offers.  Right now is a great time to be selling your home.  We listed 6 places just over 1 week ago and 3 of them are now conditionally sold.  If you are selling your home, you need to be priced well and show well.  These are the biggest factors in making a quick and profitable sale in this marketplace.

Here is what RBC had to say about the Alberta and Calgary market.  Here you can see the Full Report.

Alberta — Affordability Restored

Declining mortgage rates and sinking home prices throughout 2008 and early 2009 worked their magic towards restoring homeownership affordability in Alberta. Following record quarterly declines in the first quarter of this year – ranging from 3.3 to 6.1 percentage points – RBC’s affordability measures for the province were broadly back to their long-term averages.  This has sparked renewed interest from buyers, who have made a welcome return to the market recently.  Sales of existing homes have rebounded smartly this spring from their lowest point at the turn of the year since 1996.  Market conditions have tightened as a result of the effect of
stronger buying interest and more restraint on the part of sellers.  With less supply hitting the market — housing starts have been at a 14-year low since the start of this year — and an economic backdrop that is expected to show increasing signs of recovery, Alberta’s housing market is likely at the point of turning the corner.

Calgary — Recovery in the Making

Calgary is another battleground of the housing downturn that is showing signs of turning the corner.  While its economic backdrop, too, remains tenuous – Calgary’s unemployment rate surged to a 12-year high this spring – the market is benefitting from a huge drop in the cost of homeownership since the middle of 2007.  The combination of lower mortgage rates and home prices has driven down RBC’s affordability measures for the city by 7.6 (condominiums) to 11.9 percentage points (two-storey homes) in the last year alone (ended in the first quarter), which brought levels below long-term averages for most housing types.  Greater affordability contributed to a sharp upswing in sales of existing homes during the spring after collapsing to 14-year lows earlier in the winter.  Although encouraging, renewed activity is still shy of where it was before the housing boom began and has yet to stem the decline in prices.  However, the recent sharp rise in the sales-to-new listings ratio suggests that such a development might not be very far off into the future.

« Previous Page