Colin Breadner's Prince George Real Estate Blog

Housing Starts Still Slow

2009-07-10T10:16:00.004-07:00

Housing Starts Still Slow
By 250 News

Thursday, July 09, 2009

Victoria, B.C. - Canada Mortgage and Housing Corporation says housing starts are still down in the Prince George area, but there was some slight improvement in activity last month.

CMHC Market Analyst Paul Fabri says while there were still fewer starts recorded in June compared with the same month in 2008, the activity was an improvement over May.

There were 9 single detached home starts last month compared to 13 in June, 2008 which is a drop of nearly 31%. The number of multiple family starts was down by 39% last month.

Fabri says year-to-date figures show that single detached starts are down by nearly 69%. He says slower employment growth and competition from the well-supplied existing home market are the main reasons for a decline in new housing starts in the city.

As for the increased activity in June, Fabri says this is typically the time of year when new housing starts get underway.

Housing Starts Still Slow

2009-07-10T10:16:00.003-07:00

Housing Starts Still Slow

2009-07-10T10:16:00.002-07:00

Housing Starts Still Slow
By 250 News

Thursday, July 09, 2009 10:44 AM

Victoria, B.C. - Canada Mortgage and Housing Corporation says housing starts are still down in the Prince George area, but there was some slight improvement in activity last month.

CMHC Market Analyst Paul Fabri says while there were still fewer starts recorded in June compared with the same month in 2008, the activity was an improvement over May.

There were 9 single detached home starts last month compared to 13 in June, 2008 which is a drop of nearly 31%. The number of multiple family starts was down by 39% last month.

Fabri says year-to-date figures show that single detached starts are down by nearly 69%. He says slower employment growth and competition from the well-supplied existing home market are the main reasons for a decline in new housing starts in the city.

As for the increased activity in June, Fabri says this is typically the time of year when new housing starts get underway.

Housing Starts Still Slow

2009-07-10T10:16:00.001-07:00

Housing Starts Still Slow

2009-07-10T10:16:00.000-07:00

Now is The Time To Buy House Says Survey

2009-06-11T11:39:00.001-07:00

Now is The Time To Buy House Says Survey
By 250 News

Tuesday, June 09, 2009 10:24 AM

Prince George, B.C.- The latest survey by Canada Mortgage and Housing Canada Mortgage and Housing indicates nearly 90% of home buyers across the country believe buying a home is a good long term investment and nearly 70% think now is a good time to buy a home in their community.

Here are some other highlights:

•86 per cent are of the view the level of total housing and other monthly payments should generally not exceed 40 per cent of gross household income
•75 per cent of purchasers have a goal to be mortgage free sooner than their original amortization.
•20 per cent of recent purchasers report having made a lump sum payment to their mortgage.
•77 per cent of recent mortgage purchasers expressing satisfaction with the service received from their lender or broker.
CMHC surveyed more than 2,500 recent mortgage consumers online, from mid-March to mid-April 2009.
This is the 10th year for this survey.

Real Estate Forecast for Improved Sales Late 2009

2009-05-27T07:34:00.001-07:00

Real Estate Forecast for Improved Sales Late 2009
By 250 News

Tuesday, May 26, 2009 10:50 AM

Prince George, B.C. - Residential sales through the BC Northern Real Estate Board (BCNREB) area are expected to stabilize in 2009, albeit at a lower level than experienced in 2007. BCREA forecasts 2,950 MLS® residential sales in the region this year, down 27 per cent from 2008. However, home sales are expected to improve in the latter part of the year as the economy shows signs of stability, consumer confidence improves and enhanced affordability draws buyers back to the market. At the beginning of April, the carrying cost of the average priced home was 18 per cent less than a year ago.

MLS® residential sales are expected to rebound 9 per cent to 3,200 units in 2010. However, activity will likely reflect levels experienced in the 2001-2002 period. The current buyers’ market is expected to move closer to balance conditions this year, easing any downward pressure on prices. BCNREB’s average MLS® residential price is forecast to decline 9 per cent to $197,000 this year. However, most of the reduction in home prices has already occurred.

The ongoing global recession will continue to be a challenge for northern economies. While the US housing market has shown some signs of stabilization, the current glut of vacant homes will hold-back demand for new construction. Housing starts fell to an annualized rate of 485,000 in April, the lowest on record and 48 per cent below last year. This pull-back in demand has resulted in large declines in sawn lumber production in BC, sawmill closures, and curtailments over the last couple of years. A significant rebound in US housing markets is unlikely to occur before 2010. Meanwhile, the recession has also pushed demand and prices lower for a number of energy and mining related commodities produced in the region impacting local economic prospects.

The Prince George economy has increasingly diversified in recent years, enabling it to better withstand the volatility of commodity markets.

Affordability Drives Home Sales Higher

2009-04-17T16:39:00.000-07:00

Affordability Drives Home Sales Higher
By 250 News

Wednesday, April 15, 2009 08:40 AM

Prince George, B.C. - The British Columbia Real Estate Association (BCREA) reports residential sales dollar volume on the Multiple Listing Service® (MLS®) in BC declined 35 per cent to $2.3 billion in March, compared to the same month last year. Residential unit sales declined 25 per cent to 5,464 units during the same period. The average MLS® residential price in the province was $424,122 in March, down 12 per cent from March 2008.
“While fewer MLS® residential sales were recorded last month compared to March 2008, home sales actually climbed 24 per cent from February to March on a seasonally adjusted basis, the second consecutive month of gains,” said Cameron Muir, BCREA Chief Economist.

A significant increase in affordability helped fuel housing demand last month. “Reduced mortgage interest rates have effectively doubled the impact of lower home prices on affordability,” added Muir. While the average sales price in BC declined 12 per cent from a year ago, the monthly payment on the average priced home was 24 per cent lower. “Housing is now more affordable than at any time in the last three years,” noted Muir.

Housing Starts Down in First Quarter

2009-04-14T08:02:00.001-07:00

Housing Starts Down in First Quarter
By 250 News

Wednesday, April 08, 2009 04:00 PM

Prince George, B.C. - Housing starts were not only down in Prince George in the first quarter of 2009, they slowed right across the province.

From January to March in Prince George, only eight single detached homes were started in the first three months of the year. Last year, during the same period, 28 homes started. That makes for a decrease of 71.4%
Provincially, there were 2,517 homes started in the first quarter, just a fraction of the 8,532 that were started during the same period in 2008.

“Developers and homebuilders in BC are starting fewer new homes in response to a well supplied resale market and weaker housing demand” says Carol Frketich, CMHC BC Regional Economist.

CMHC predicts housing starts will decline in 2009 as the economy and job growth slow and an abundant supply of existing homes for sale reduces demand for new housing.

Housing Starts Down Again

2009-03-10T10:10:00.000-07:00

Housing Starts Down Again
By 250 News

Monday, March 09, 2009 01:32 PM

Prince George, B.C.- Housing starts in the province are showing a decline. The latest information from Canada Mortgage and housing shows a 60% dip in starts in Prince George in February. While the number may seem alarming, the report quickly points out the numbers were not high to begin with. There were just 5 starts in February of last year, compared to 2 last month.

The bigger picture shows the decline so far this year is nearly 73 % as there had been 22 single family homes started in the first two months of 2008, compared to just 6 in January and February of this year.

“February 2008 was an unusually strong month for housing starts, which makes the year over year decline more noticeable” said Richard Sam, Market Analyst with CMHC. “However, low starts data for the first two months of 2009 are an indication that developers are pulling back until some of the supply of new and resale homes on the market are absorbed. In turn, home buyers will benefit from current buyer’s conditions that exist in the resale market. CMHC is forecasting that housing starts will decline by more than one-third in 2009” added Sam.

Provincial home starts declined to 12,300 units, seasonally adjusted at annual rates(SAAR) from 14,100 units in January 2009.

At the national level, housing starts moved lower in February to 134,600 units (SAAR) from 153,500 units (SAAR) in January.

Mortgage Matters: Variable or fixed and why?

2009-03-05T08:46:00.000-08:00

Mortgage Matters: Variable or fixed and why?
By Bob Quinlan

Thursday, March 05, 2009 03:56 AM

By Bob Quinlan
As of Tuesday, March 3rd, 2009, the Bank of Canada has once again made a massive reduction to its overnight lending rate (0.5%). Many of the banks/lenders have in turn passed that reduction on by reducing their prime rate by the same amount to 2.50%. The question is more relevant: should I go fixed or variable?

In making your decision, there are a number of things you should consider:
Do you have the mindset to let your rate float with the market?
Are you concerned about the negative possibilities of prime increasing and your mortgage being caught in higher rates before you have the chance to lock in and save?

Before making your decision you should also consider a couple of things:

The main reason you would choose a variable rate is because you will be saving a lot now on a 5-year term while fixed rates are falling and you lock in later at a fixed rate that is lower than today. e.g. prime + .80% = 3.3% vs. 5-year fixed @ 4.29% ($165/month on a balance of $200,000)
Prime rate is not going to skyrocket over night. In fact most predictions are that prime will remain where it is at the highest for the rest of 2009. In the meantime, fixed rates should remain the same at worst or even fall. The economy has to improve for rates to start to rise. In other words, the demand for borrowing has to increase and by that I mean “qualified borrowers”. “Qualified” is defined by the market terms and I discuss that at great length in my previous comments.

Bob Quinlan is a Mortgage Broker with Mortgage Alliance Prince George, you can reach him by email :bob@pgmortgages.ca or by calling the office at 250-564-9161

· Even if borrowing rates were to start to rise, you as a borrower would not be able to avoid the warnings in the news. It’s kind of like when you buy a new vehicle. Once you start driving it on the road you notice all the other vehicles like yours. If you put your house up for sale you suddenly notice all the signs of other homes for sale and the advertising offering the same. When anyone is in a variable rate mortgage they are keenly aware of all the stories in the media not to mention the comments from their friends and colleagues who are interested in the same.

The important decision is to choose a lender that offers you the option to make that decision to lock at no charge and on the same day. Choose a representative who will be able to keep you informed of the current rates and your options. Someone who is available to make it happened without delay. Also, when you are looking at variable rates, take a look at that lenders fixed rates and how they compare to those of the competitors. The main reason you would choose a variable rate is because you are going to lock in somewhere down the road. These low rates are not going to remain over the entire 5-year term of your mortgage. Some lenders may offer attractive variable rate options only to have limited fixed rate choices when you go to lock in.

Also consider the future options such as Portability, Assumability, pre-payment options, etc. Each factor may have a bearing on who you place your mortgage with. Remember the actual description of the mortgage transaction: The borrower is the mortgagor. That means that the borrower provides a mortgage to the lender as security in return for the funds that the mortgagee (lender) offers. This is a mutually beneficial transaction that provides requirements for both parties to live up to.

Most people who are not comfortable with variable rate choices are not familiar with the details. Before choosing, make sure you clearly understand the benefits of either choice. A 30-minute meeting with your representative can easily save you as much as $1,000. Is that worth your time?

Mortgage Matters: Should I wait or should I do it now?

2009-03-02T08:16:00.000-08:00

Mortgage Matters: Should I wait or should I do it now?
By Bob Quinlan

Monday, March 02, 2009 03:56 AM

by Bob Quinlan

A lot of people are wondering if they should wait to buy, re-finance, consolidate, etc., or whether they should act now.

One undeniable fact is, property values are falling and will continue to fall for the next while. If you are thinking of buying and you aren’t fussy about the property you are going to purchase then waiting might be a consideration. But then, if you aren’t fussy about the property why are you considering buying anyway? So then, this message is primarily for those who are serious.

The greatest frustration I am hearing from people is due to the change in how the lenders are looking at their applications. I thought I covered this in my last few articles.

The lending guidelines are decidedly different depending on whether we are in an increasing or decreasing market. Since we are in a decreasing market, the lenders are going to not only look at your credit history and your job tenure, they will also be looking hard at your prospects of continued income.

Your ability to keep on making the payments. What happens if your job is terminated, you are laid off or if your hours are simply cut? What if you are self-employed or commission, performance paid? What are the projections for your industry? Do you have any savings to make the payments if the worst happens? Nobody doubts your integrity. At the time of signing the mortgage documents, we all get full points for making a sincere commitment to make all agreed payments. Just like everything else, we make plans and then life happens.

This is why the lenders have to come up with guidelines to protect their investors and shareholders. Remember, when a property goes into foreclosure…everyone loses, not just the borrower.

What I am trying to say is, today we know what the guidelines are. Tomorrow they could change…for everyone. The chances are in this economic climate they will get tougher and it will be more difficult to borrow. So, if you are thinking seriously about buying and you have found a home that you and your family will be very happy in for years to come, what are you waiting for? Make sure you check out your options thoroughly before you decide to walk away. Tomorrow, that opportunity may not be there.

The same principals apply for re-financing to consolidate your debts or even just to better your rate and reduce your payments and interest expense. If your application is dependent on the value of your property or maybe the type of property, that value may be reduced later and you may not qualify. This also could have a double whammy as I have talked to a number of people who have been surprised to find that the interest rates on their unsecured lines of credit have been increased without notice. Check the fine print of your agreement. Your bank may have the option to raise your rate if they think your situation to be a risk. Uncertain times translate into higher rates on unsecured (more risky) loans. Waiting may cost you on both ends.

All this talk about tough times and tightening economies don’t simply mean lower prices due to lower demand. They also mean all businesses have to make sure they make enough profit to stay in business. That means on both ends…revenues and costs. This also pertains to people who make sure they doing the same with their incomes and expenses. Those who do will be able to relatively sail through these times to come. This is a great country we live in but we are not “entitled” to all the luxuries the advertisers tempt us with and the media leads us to believe are ours to take. However, we do have the means to earn them.

The tools are all there for everyone, no matter your situation. I counsel people every day on how to make plans to improve their lives. Those who chose to make a consistent, concerted effort are successful. Those who don’t are the ones we hear whining “poor me”.

Find out what your options are, hang on to what you have. Make the best of your opportunities. Believe me there are many, you just have to look for them.

Bob Quinlan is a Mortgage Broker with Mortgage Alliance Prince George, you can reach him by email :bob@pgmortgages.ca or by calling the office at 250-564-9161

Near- and medium-term confidence improves from December lows

2009-02-25T15:43:00.001-08:00

Near- and medium-term confidence improves from December lows

Monday, February 23, 2009

Investors Group Inc. and Harris/Decima’s overall index of consumer confidence in the economy rose to 67.0, the highest the index has been since August 2008, in the period from December to February. In the U.S., the index did not see the same bounce as in Canada, inching only slightly upward to 61.2.

The most significant jump in optimism was on the question of how Canadians felt they’d be doing financially a year from now. Twice as many people feel they’ll be better off than worse off (27% to 13%). This is an improvement from December results when 20% felt they’d be better off, while 18% felt they’d be worse off.

Canadians are also more amenable to making a major purchase. In December, 35% thought it was a good time to make a major purchase, while 50% thought it was a bad time. Today, opinion is virtually even, with 41% feeling now is a good time to make a major purchase and 43% feeling it is a bad time to do so.

Pessimism about the economic outlook for the coming year decreased slightly. While a majority, 59%, still foresee bad times for the economy in the coming year, this was down from the 64% who answered in-kind in the December survey. Ten per cent see good times ahead for the economy in the next 12 months.

The number of Canadians who say they are worse off today than they were last year remained relatively steady at 27%, down a point from the December survey. Once again, most people, 57%, are far more likely to say they are doing about the same financially as they were last year. Thirteen per cent feel they are better off financially compared with a year ago, which is relatively unchanged since December.

“Some Canadians appear to be seeing light at the end of the economic tunnel, as both the one-year and five-year outlook results have improved this quarter,” says Harris/Decima senior vice president Jeff Walker. “The roller-coaster ride may not be over yet, but the data suggests many feel that we have hit bottom, and will gradually move upward from here”.

“Restored consumer confidence is an important factor in any potential economic recovery,” adds Debbie Ammeter, vice president of advanced financial planning at Investors Group. “It is interesting to note that Canadians seem to recognize that things could be difficult for most of this year, but yet, there appears to be more who believe that they will be better off a year from now.”

Each week, Harris/Decima interviews just more than 1,000 Canadians. These results were gathered from Feb. 5 through Feb. 15 for a sample of just more than 2,000 respondents. The poll’s margin of error is 2.2%, 19 times out of 20.

5 C's of Borrowing

2009-02-22T10:18:00.000-08:00

5 C's of Borrowing
By Bob Quinlan

Saturday, February 21, 2009 04:00 AM

by Bob Quinlan

A big part of the impending “doom and gloom” of the feared collapse of our economy has come from the lending policies, the performance of borrowers and the adjustments being made to lending policies of today and the future. When you are looking to borrow you need to consider that the economic climate will dictate how a lender will look at a deal. How the lender will come to the decision to approve a deal was a lot different in 2007 as to what it is in 2009. I would like to offer you who are reading this the basics of lending/borrowing along with some personal comments that help you decide: if you are going to apply for credit and what you should consider.
Firstly, lenders are in business to make (not lose) money. Consequently when a bank lends money it wants to ensure that it will get paid back. (the same as a borrower expects to come out of the end of a transaction with more than they went in with). To maximize the possibility of being paid back, the bank wants to make sure that there is sufficient assurance that a person can and will pay back a loan. The lender must consider the 5 "C's" of Credit each time it makes a loan.

Character
Is the general impression you make on the potential lender. The lender will form a subjective opinion as to whether or not you are sufficiently trustworthy to repay the loan. Your educational background and experience in your field of work will be included. The length of time at your current employment and your current residence will be considered. The longer you have been at both, the higher you will score on the character scale. In 2007 there was little concern that your future might be in jeopardy. In 2009 every source of income is scrutinized as whether it is feasible that it will continue.

Collateral
Is the extra security the lender has to cover the loan. In real estate transactions this generally means the property. If for some reason, you cannot repay the mortgage, the bank wants to know that the real estate the mortgage was taken out for is good and marketable real estate. A current real estate appraisal will determine the value for the property in today's market. Some lenders will limit themselves to the type of property they are going to accept. Rural properties have less interested buyers than urban properties. In the case of a foreclosure the lender doesn’t get the property. They have to apply to the courts to have them placed back on the market for resale to repay the loan. This takes time and money. Lenders will charge for the risk accordingly.

Capital
Is the money you personally have invested in the purchase, otherwise known as your down payment. The more of your own money you invest as a down payment, the more likely that you will do all you can to maintain your payment obligations. This fact was evident during the recession of the 90s where a large number of the power of sale properties, were at one time, purchased with small down payments. Capital is also reflected by your ability and willingness to save money and accumulate assets. The higher your net worth, the more you have as a cushion for repayment in the event you run into a financial set-back. Saved or earned capital is more highly regarded than “gifted”.

Credit
Is the evaluation of your habits in performing credit obligations. The information about your credit history is stored at the "credit bureau" and indicates how well you paid your bills over the last 6 years. All major credit cards, auto loans, leases etc. are reported to the credit bureau. A lender will evaluate your ability to maintain your obligations and try and determine how well you live within your means. Some individuals make the mistake of not paying the minimum monthly obligations on loans and credit cards with the expectation of making a larger payment the following month. These missed payments appear on their credit report branding them as chronic "late-payers" for the next 6 years.

Capacity
To repay the loan is probably the most critical of the five factors. The lender will want to know exactly how you intend to repay the loan. The lender will consider your income as it relates to the loan that you are applying for. Does the monthly carrying costs of the loan represent less than or equal to 32% of your total monthly income? If it is, the probability of you successfully repaying the loan is fairly high. When you include your personal debts, loans, cards, etc., a lender will likely not approve your total debt load of higher than 40% of your total monthly income. Prospective lenders will also want to know about any other sources of income you may have to repay the loan, if your steady income stream is interrupted. What savings can you fall back on? What property do you have that you could sell to cover payments?

The biggest factor that people are having the most difficult time with today is: These principles above change complete depending on what the future economy is predicted to do. For the past six years we have had a rising economy. Increasing property values. Little fear of people losing their jobs. Even if they do, the value of their property has risen so they can sell and get out of trouble. Now we are in the midst of a declining economy. It is expected that in the near future many jobs will be eliminated. House sales will fall along with the value of homes. Anyone who has a home that they purchased recently and lost a job had better have 10 – 20% equity or they won’t be able to sell. Without extra funds to pay the mortgage, foreclosure is probable.

Banks get their money from interest earned on repaid loans. They lose on foreclosures. The income they earn is used to pay investors who deposit their savings in the bank. They can only do that if they earn a profit. Do you having any savings in the bank? Would you keep it there if you thought your bank was losing money?

Bob Quinlan is a Mortgage Broker with Mortgage Alliance Prince George, you can reach him by email :bob@pgmortgages.ca or by calling the office at 250-564-9161

CMHC Predicts Slowdown in P.G. Housing Market

2009-02-20T09:27:00.000-08:00

By 250 News

Friday, February 20, 2009 03:52 AM

Prince George, B.C.- Canada Mortgage and Housing has released its forecast for housing in B.C. and the forecast is for reduced housing starts, lower prices and a higher vacancy rate for rentals.
For Prince George, the report predicts there will be a 25% drop in new construction starts this year, however, that will decrease to a 12% decline in 2010.
For re-sales, the forecast for Prince George shows a decline of 16.5% in sales this year, and a further 7.7% drop in 2010. Prince George is the only B.C. city surveyed that is expected to see a decline in sales in 2010. Kamloops, Nanaimo, Abbotsford, Kelowna, Vancouver and Victoria are all predicted as seeing increased sales next year, with Kelowna at the top of the chart with a 16% hike.
As for price, the average price of a re-sale in Prince George is predicted to slip to $227,000 this year (down 5.5%), and to dip another 2.2% in 2010 to $222,000 in 2010.
As for vacancy rates, CMHC predicts the vacancy rate in Prince George will grow from the 2008 rate of 3.9% to 4.9% and the average rent for a one bedroom unit will increase to $625 from the current $598.

Major Drop in 2009 Assessment Appeals

2009-02-20T09:23:00.000-08:00

By 250 News

Friday, February 20, 2009 04:10 AM

Prince George, B.C. - BC Assessment has recorded significant decreases in both public inquiries and property appeal statistics in response to the 2009 assessment roll.

At the Prince George office, there have been just over 1,600 inquiries, that's a 38 % drop over last year. The number of letters of appeal so far is 505, down 53% from 2008, and the number of property appeals filed is down 45% at 560.

Only the office in Surry/White Rock saw an increase in the number of review files with 1,670, an increase of 39.5%

Province wide, the taxable value of the 2009 assessment roll is $953 billion, an increase of $13 billion or 1.41 per cent over the 2008 assessment roll.

30,613 public inquiries were received province wide at 18 BC Assessment area offices, a reduction of 37 per cent over last year's total of 48,373. The majority of customer inquiries are received by phone (24,851) followed by email, in-person, fax and regular mail.
7,764 letters requesting assessment reviews by the Property Assessment Review Panel were received. This is a reduction of 57 per cent over last year's total of 18,241 letters requesting reviews.
These requests contained a total of 18,978 individual property appeals, a reduction of 35 per cent over last year's total of 28,966 individual property appeals. The number of individual appeals is much higher than the number of letters requesting reviews because many letters ask for a review of the assessments of several properties.
Last fall, the B.C. government passed the Economic Incentive and Stabilization Statutes Amendment Act in order to provide stability for property owners concerned about property values during an economic downturn.
This legislation required 2009 assessments to reflect the value of a property as of either July 1, 2007 or July 1, 2008, whichever date provided a lower value.

Housing Starts Down In January

2009-02-10T07:59:00.001-08:00

Housing Starts Down In January
By 250 News

Monday, February 09, 2009 09:45 AM

Prince George, B.C.- Housing starts in Prince George area were down 76% in January over the same month a year ago.

In Prince George there had been 17 single family home starts in January last year, compared to just 4 last month.

Canada Mortgage and Housing Corporation says the National seasonally adjusted annual rate of housing starts declined to 153,500 units in January from 172,200 units in December of 2008.

“To a certain extent, the decline in housing starts coincides with recent developments in the existing home market. Reduced sales and increased listings in the existing home market have led to reduced spillover demand in the new home market,” said Bob Dugan, Chief Economist.

Across the country, the seasonally adjusted annual rate of urban starts decreased 15.6 per cent to 126,700 units in January. Urban multiple starts decreased 12.2 per cent to 76,700 units, while urban single starts fell 20.2 per cent to 50,000 units in January.

January’s seasonally adjusted annual rate of urban starts moderated in all of Canada’s five regions. Urban starts declined 29.1 per cent in British Columbia, 8.6 per cent in Atlantic Canada, 1.4 per cent in Quebec, 14.6 per cent in Ontario and 30.3 per cent in the Prairies.

year. Actual starts in urban areas have decreased by an estimated 40.4 per cent compared to the same month in 2008. Actual urban single starts for 2009 are 44.2 per cent lower than they were a year earlier while urban multiple starts are down 38.1 per cent.

Year of the Deals

2009-01-16T14:34:00.000-08:00

Year of the Deals
Outlook 2009: Bold buyers will find "screaming deals" as B.C. housing prices crater over the next year
Frank O'Brien
Western Investor

December, 2008

With housing sales plunging across British Columbia - descending 43 per cent so far from a year earlier and still accelerating - and landmark condominium projects collapsing under debt, 2009 is expected to see the bottom of the most spectacular real estate collapse in 20 years.

For those with cash and confidence, however, the next year - starting right now - represents a golden opportunity to purchase prime properties at bargain prices, some experts say.

"I just bought an entire subdivision in Fort St. James," said Rudy Nielsen, the province's single largest land speculator. Nielsen, president of Niho Land & Cattle Company, is confident the economy of northern B.C. will recover and, meantime, he says, the prices are too good to pass up.

Nielsen, however, advised urban investors to "pull back right now. I wouldn't advise buying until at least February 2009 when we will know how this financial mess is sorting out." Nielsen said it is time for smaller investors to "build a fort, protect what you have and look carefully" for the right property at the right price.

That is also the basic measure from B.C.'s top real estate analysts, all of who see 2009 as a crater year for the housing market - and the start of long climb back to recovery in 2010 or 2011.

"For 2009, the average [B.C house] price is forecast to decline nine per cent to $413,000," said Cameron Muir, chief economist for the B.C. Real Estate Association. "Downward pressure on home prices is expected to ease by the second quarter of 2009."

Some areas of the province which have seen double-digit annual price increases since 2007 will see similar price declines next year, Muir suggests. Values it the Okanagan, for instance will drop by 10 per cent it 2009, dipping to $370,000 in the Kelowna area and to $302,000 in the South Okanagan.

The only area in the province expected to see a price rise next year, the BCREA believes, is the Northern Lights area - Dawson Creek and environs - with a modest three per cent increase to an average detached house price of $199,500.

At the recent B.C. Housing Outlook 2009 conference, Robyn Adamache market analyst for Canada Mortgage and Housing Corp. (CMHC) said Metro Vancouver detached house prices will take the worst hit in 2009, falling an average of 10 per cent to $720,000, while average condominium prices will fall eight per cent to $338,000. The bright light she said, are townhomes where prices will only see a moderate drop of two percent to $497,000.

Realtors on the street, however, say many vendors have already cut asking prices by more than 10 per cent, and some believe prices will keep trending down in 2009.

Agent Brent Roberts said one luxury Yaletown condo was put on the market in November for $770,000, a cool $250,000 below what it would have sold for a year ago. "Some vendors just want out of the market," Roberts said. "There are some screaming deals out there right now."

In the Fraser Valley, Roberts said, detached houses are on the market at $350,000, in neighourhoods where vacant building lots were selling for $400,000 this spring.

Adamache, however, said the fundamentals of a strong economy and in-migration will keep a floor under Vancouver's housing values in 2009. She notes that 34,000 people, net, will move into Metro Vancouver next year, while the unemployment rate is one of the lowest of all major cities and will remain in the five per cent range through 2009. Still, she said, "In 2009, Metro Vancouver will see the firsts decline in average prices in 20 years."

Helmut Pastrick, chief economist for the Central 1 Credit Union in B.C., who was bullish on the housing market just months ago, is now the first to label the downturn a "housing recession." Pastrick doesn't expect to see recovery in sales or prices until 2010.

Instead, he expects housing starts across the province to plunge to 23,500 units next year, down from more than 37,000 in 2008, before crawling back to just 26,000 in the Olympic year.

"A poor economic outlook for 2009 and tight credit conditions extending into next year will keep housing sales on a downward trajectory for several more months," Pastrick said. "Housing sales will decline by a further 17 per cent in 2009, following a projected 30 per cent fall this year. An easing in the credit crisis, lower mortgage rates, and an improved economy will see housing sales turning upward in 2010."

Pastrick is also bearish on residential prices, calling for a 13 per cent drop from the peak values seen in March of 2008 into 2009, and a further five per cent downturn in 2010.

"A turning point in the price downtrend is expected in 2010," he said, but he provided no hope for quick rebound.

CONDO MARKET
Investors own about 23 per cent of all the new condominiums across Metro Vancouver, according to CMHC surveys, which makes this sector the most vulnerable to price corrections.

Jennifer Podmore Russell, managing partner in market analyst MPC Intelligence, says sales of new downtown Vancouver condominiums have dropped 45 per percent this year as compared to the first three quarters of 2007, and she sees no increase in sales next year. Podmore told the Ozzie Jurock Housing Outlook conference in October that the speculative buzz is gone from the condo market, replaced by a rush of investors, some holding multiple presale units, all trying to hit the sell button at the same time. Podmore, however, sees as many opportunities as challenges in Vancouver's downtown market.

For buyers, she said, sharp shoppers can find exceptional value. She pointed to one new downtown tower, where seven one-bedroom suites are being resold. A look at the near-identical apartments showed that the asking prices ranged from a low of $409,900 to a high of $455,000. She noted that "price point is now everything" as the owner-occupier or long-term investor replaces the flippers who once accounted for nearly half of downtown condominium sales.

There are 4,178 new condominiums under construction downtown, all set to arrive on the market by 2010 or 2011. Podmore notes that, as these units get pre-sold prior to construction, even at a slower pace than in the past, there won't be much more in the pipeline. Some towers that had been planned are now on hold, she noted. Within two years, she said, there could actually be a shortage of new apartment property in the downtown area, just as Vancouver hits the international radar as the site of the Olympics.

The volatility of the condo market is seen in the number of high profile projects that have either stopped or have developers scrambling to find fresh financing in the midst of a global credit crunch.

As of press time, the deathwatch included the giant five tower Infinity project in Surrey, the upscale Ritz Carlton condo hotel tower, and Jameson House, both in downtown Vancouver, Pinnacle International's waterfront development in North Vancouver, and the $1 billion Olympic Village/Millennium Waters project on false Creek, where the City of Vancouver has already provided a $100 million loan.

If you want a deal on a new condo, the next few months may be the time to get it, according to real estate consultant Ozzie Jurock. He notes that developers now meet regularly with nervous lenders worried about presales, and developers are much more likely to negotiate on price or upgrades to get sales on the books.

The incentives in the condo market are already coming and should get even more generous next year. At least two condo projects in Vancouver are now offering a free car with any purchase, and others are offering low, mortgage interest rates and cash back to buyers.

According to CMHC, there are at least 800 new and unsold condominiums across Metro Vancouver, a near nine-fold increase from a year ago, and the glut will increase in 2009 as thousands of new strata units hit the market.

Vancouver Island
The B.C. Real Estate Association forecasts that detached housing prices will fall seven per cent on Vancouver Island next year to $308,000, and will drop six per cent in Victoria, to $455,000, as sales in both markets decline.

Island realtors report that a surge in listings could drive prices even lower into next year, as the sales-to-listing ratio has fallen in most up Island markets to the 36 per cent level, down from 70 per cent earlier this year.

"There are 120 condo apartments for sale in Nanaimo, about double the level of a year earlier, and sales are down to about 20 a month. We will be seeing some desperate sellers over the next while," said Randy Forbes, manager of the Coast Realty office.

CMHC is relatively bullish on Victoria, forecasting that the average price of a resale house will drop 6.2 per cent next year, but that new home prices will remain unchanged.

Ozzie Jurock says: "We'll be fine in 2009"

Real Estate consultant Ozzie Jurock: "The best deals come in down markets." Jurock sees average metro Vancouver house prices falling a further 10 per cent in 2009.
Ozzie Jurock, British Columbia's best known real estate consultant and investor, has seen housing and financial crashes before and he is confident B.C. will ride out the current downturn with ease.

In 1992, Jurock notes, some 787 U.S. banks had collapsed amidst the savings and loan crisis. At the time, Jurock was buying real estate and urging his clients to do the same.

"It was an easy call to make," Jurock said. "Just as easy a call to make for real estate values now, because the fact is that values grow where people go ... and people want to live and play here in Western Canada."

"In today's gloomy environment we must remember that urban real estate always has a use and thus always has a strong asset value.

"We like all urban real estate in Western Canada from Edmonton to Vancouver and most everything in between. No matter the short-term gyrations, urban properties have been a spectacular investment. Downtown used condos on Howe Street rose from $95,000 in 2001 to $350,000 in 2008. The average house price climbed from $16,000 to $700,000 in Vancouver over the last 40 years.

"But we did not get there in a straight line," he said.

In Western Canada for 2009, Jurock said he is only concerned about Saskatchewan, "where volumes are slowing, inventory is soaring and prices are bound to reverse sharply."

"On average for 2009 we look for prices to firm in Edmonton and go down in Calgary by a further eight per cent, and Vancouver by 10 per cent."

He cautions that overbuilt condo areas - he singled out downtown Calgary and Vancouver and the Okanagan - will see sharper price decline.

"Recreational areas will not escape as they always follow - down or up - markets in the major cities. Previous downturns have lasted from one to three years and seen an average of some 17 per cent decline from top to bottom. I would not be surprised to see that this time also."

However, Jurock recommends buying waterfront. He notes that there are now 67 waterfront homes for sale on the Sunshine Coast, up tenfold from a year ago.

From an investor's perspective, Jurock said, "we like cash-flowing properties anywhere there is a good employment base, low vacancies, capital investment and a good price-to-rent ratio."

His picks for such markets include Edmonton, the Kootenays and a number of smaller centres in Alberta and B.C.

"From a home purchase perspective there will be some great deals in new construction [in 2009]," he added.

Jurock believes we are in the midst of the most unreported inflation of all times, "because we print more money than ever. All that extra cash created out of thin air will continue to compete with the money you and I make and drive hard asset prices, like real estate, eventually higher again."

"Don't worry," Jurock said. "The best deals come in down markets. On the way up, risk increases every day. On the way down, it decreases every day."

His final advice: work with a sharp realtor, do your research and make an offer.

Real Estate Sales Slide in '08

2009-01-08T08:38:00.001-08:00

Real Estate Sales Slide in '08
By 250 News

Wednesday, January 07, 2009 12:09 PM

Prince George, B.C.- The BC Northern Real Estate Board has released its review of 2008. The year ended up down from ’07.There were 4,755 property sales worth $980.98 million in 2008, down from the last year’s 6,639 properties worth $1.233 billion and 2006’s record of 7,045 worth $1.08 billion.

President Willy Berger comments “Considering that we came from two banner years(2006 and 2007), and compared to many other markets, the year 2008 in the BC NorthernReal Estate Board was still reasonable.”

BC Real Estate Association Chief Economist Cameron Muir in the December issue of The Bulletin states: “Financial hardship is typically caused by job loss and/or an onerous jump in interest rates. By comparison, the unemployment rate in BC remains low – only
half what it was ten years ago. Mortgage interest rates are also low from a historical perspective and are expected to stay near their current level at least through 2009.”

Here are the details on the regions:
Fraser Fort George Region
City of Prince George 1270 properties worth $272.61 million sold in 2008, down from 1824 properties worth $474.7 million in 2007. At year end there were 582 properties of all types available through MLS® in the City, compared to 490 at the end of
2007.(2007 numbers appear in brackets)
In the area west of the bypass half of the 272 (348) single family homes that sold, soldfor less than $213,000 ($223,000). As well, 18 apartment units (21), 5 half duplexes (6)and 34 townhomes (66) changed hands. As of December 31 there were 69 single family
homes listed through MLS® in the area, compared to 70 at this time last year.
East of the bypass, 19 apartment units (40), 16 half duplexes (31) and 33 townhomes (50) sold. The 160 single family homes (243) sold had a median value (half sold for less) of $179,000 ($174,000). At the end of December there were 54 single family homes
available for sale through MLS® compared with 51 at the end of 2007.
In the northern part of the city 6 townhomes (7), 22 homes on acreage (23), 33 manufactured homes in parks (43) and an additional 44 on land (90) sold in 2008. Of the 168 single family homes (201) that sold, half sold for less than $270,000 ($262,000). At
year end there were 72 single family homes available through MLS® in the area, compared to 44 the previous year.
In the southwest sector 2 apartment units (1), 8 half duplexes (17), 14 townhomes (22), 12 manufactured homes in parks (28) and 4 on land (5) changed hands last year. Half of the 245 single family homes (274) that sold, sold for less than $275,000 ($286,000). At
the end of December there were 81 single family homes listed on MLS® in the area, upfrom 57 at the end of 2007.

Mortgage Matters: More Risk Tolerance

2008-12-31T10:35:00.001-08:00

Mortgage Matters: More Risk Tolerance
By Bob Quinlan

Wednesday, December 31, 2008 03:49 AM

Now how much risk tolerance do you have as a borrower?

I have heard many people tell me: “why does the bank think I can’t afford this?

Answer: Because the bank wants to make sure you are not exceeding your level of “risk tolerance.”

The guidelines and limits they use to try and approve a loan for are not just because they want to make money from your loan. The only make money as long as you can repay the loan.

Those of you who read my last entry (December 11th) should have been able to understand that mortgages are designed to be a “win/win” situation. If you succeed in making your required mortgage payments, you not only own your own home but you also gain from the market appreciation. Historical data will show that over the past 50 years the average real estate market decline has lasted less than eight months, while the average increase has lasted more than 42 months. Add to that the average decline has been less than 15% while the average increase has been more than 70%. There will always be ups and downs. The key is to be able to survive the downs so you can benefit from the ups.

Everyone needs a home to live in. Therefore residential real estate values are the life blood of our economy. The trick is to be able to weather the storms. Go ahead and buy at the peak of a market. As long as you can get to through the tough times you will be able to coast in the better times. That is why we all need to determine our level of “risk tolerance”.

Many people I talk to have come from the school their parents and grandparents were raised in. “Pay off your house and you will be safe. You will always own your home and no one will be able to take it away from you.” That’s fine as long as you don’t have any other debt. Credit cards, lines of credit, vehicle loans, student loans, etc. Prior to 1970 credit card debt was virtually non-existent. Then CHARGEX came along. That was changed to VISA and MASTERCARD and American Express was added. Instant gratification. You can have what you want now and pay for it later. The expansion of credit allowed the economy to grow and flourish. Goods were traded on the promise of payment tomorrow. Businesses grew and with that the promise of more jobs turned into higher incomes, the assurance that mortgages could be paid, demand for better housing and the rise in property values.

Of course, what comes with that is the inevitability that some people will exceed their “risk tolerance level” and default on their debts. Their desire to own a home and all that goes with it overshadowed their ability to make the payments. That usually happens when the market goes into a decline and as I explained earlier the value of their home is less than what they owe. Foreclosure and bankruptcy.

The evolution of credit over the last 40 years has changed the way we should be thinking about the ownerships of our homes. For the most part, we need debt to grow financially. We just have to choose the proper type of debt that enhances us and doesn’t drag us down. We need to be able to manage our expectations and ultimately the level of our debt (our risk tolerance). Are you managing your debt or is your debt running you?

Our parents and grandparents never had the extra debt other than the mortgage on their home and maybe the loan on their vehicle. These were secured by the lenders who could seize those assets if the loan wasn’t paid and they were able to get all or most of their money back. That process of seizure was swift and heavily in the favour of the creditor (bank) so the fear of losing your home was great. If your home was paid for (clear title) then since you probably didn’t have any other debt, your home was secure.

Now fast forward to 2008. Let’s say you have your home paid for and you are keeping it that way because you learned from what your parents taught you. However, you have a couple of credit cards, a line of credit and vehicle loans that you are paying on. Say you fall behind and can’t keep up the payments. Do you really think having your house paid for is going to save it? When push comes to shove what do you think your creditors are going to do? Force you to mortgage or sell your home maybe? Your credit is now shaky from the late payments so what are the chances of getting a mortgage on your home at a reasonable rate? That leaves a “high risk” lender (because you have become a “high risk” borrower) at an outrageous rate that isn’t much better than the payments you haven’t been able to keep up in the first place. It’s easy to say one shouldn’t have gotten into the debt in the first place, but sometimes life just isn’t that easy. Stuff happens. Maybe you should have considered a more manageable payment to cover all the debt with a mortgage on your home.

This is why using your home is the safest form of debt. The security is highest so the interest rate is the lowest. The life of the security is long term therefore the payments can be spread over a longer term (up to 35 years in most cases) and are more manageable. Over time your house value should always increase therefore as long as you are making your payments, your equity (cash value) will continue to grow (tax free).

The bottom line is:

1. If you have debt you will have to repay it.
2. Manage it so it can be repaid at the lowest cost (interest rate).
3. Protect yourself from setbacks (loss of income) by having the lowest payments available if needed. (make sure you have the option to accelerate your payments without penalty).

Once again, thank you for taking the time to read my comments. I hope they helped. And I would like to wish everyone a happy, healthy and prosperous 2009.

Bob Quinlan is a Mortgage Broker with Mortgage Alliance Prince George, you can reach him by email :bob@pgmortgages.ca or by calling the office at 250-564-9161

November Sales Drop for the BC Northern Real Estate Board.

2008-12-15T09:41:00.000-08:00

Saturday, December 13, 2008 05:14 AM

Prince George, B.C.- The BC Northern real estate Board which includes Prince George, reports that year to date sales of residential units are down 25% compared to January to November of last year.The B.C. Northern Board also indicates the average price of a home is up 10.5% as of the end of November, compared to the same eleven months in 2007.

Provincially, the story is a little different as residential sales were down 62 per cent to 2,707 units during the January to November period. The average MLS® residential price in the province was $395,687, down 12.5 per cent from November 2007.

"The average sale price of a home in the province hit a 26-month low in November," said Cameron Muir, BCREA Chief Economist. "The irony of markets is that there’s no shortage of buyers when prices are near a peak and a scarcity of buyers when prices are near a trough." Home prices were 8 per cent lower in November 2008—nine months after the peak—than they were nine months prior to the peak.

ReMax says house prices to fall

2008-12-04T09:40:00.000-08:00

By Brenda Bouw - THE CANADIAN PRESS

VANCOUVER — Housing prices will fall about five per cent across Canada by the end of 2009 as the slumping economy takes a bite out of consumer confidence, says the ReMax realtor company.

The biggest drops are expected to come in major cities in British Columbia, where prices have run up the most across Canada in recent years, and in parts of southwestern Ontario hit with automotive and manufacturing job losses.

Some economists believe the predictions are too conservative, estimating housing prices to fall by closer to 10 per cent across Canada next year alone, led by big drops in B.C. and Saskatchewan.

In a report released Wednesday, ReMax said Canada’s average house price has retreated from 2007’s record high and will fall three per cent this year to $300,000 and another two per cent next year to $293,000. National prices peaked in 2007 at an average of $307,265.

About 440,000 homes are expected to change hands across Canada in 2008, a drop of 15 per cent compared to 520,747 last year. ReMax predicts 2009 sales to be flat.

“The reason for that is purely consumer confidence, it’s shaken terribly right now,” said Elton Ash, a ReMax regional vice-president located in Western Canada.

“There are a lot of questions over job prospects right now.”

The three per cent overall drop in prices predicted for 2008 comes despite gains in 22 major centres across Canada, with the exception of Calgary and Edmonton, where prices are expected to fall one per cent.

Ash said the national drop is driven by smaller centres, such as forestry, oil and gas, mining and manufacturing towns hard hit by a downturn in the economy that has resulted in layoffs and stalled project development.

In 2009, the largest drops are expected in both Victoria and Kelowna, B.C., where prices are predicted to fall 10 per cent in 2009 to an average of $440,000 and $378,000 respectively.

Prices in Vancouver, Canada’s most expensive housing market, are predicted to slump seven per cent to an average of $545,000 next year. They are expected to peak in 2008 at $585,000, a two per cent increase from last year. Home prices in Vancouver have fallen 12.8 per cent in Vancouver between May and November this year, after climbing more than 50 per cent since 2004.

“B.C. had the biggest runup in prices nationally in recent years,” Ash said. “When you have that happen there is going to be a greater down cycle.”

The Kitchener-Waterloo, Ont. region is predicted to see house prices drop seven per cent in 2009, to an average of $250,000, followed by a four-per-cent drop in the nearby Hamilton-Burlington, Ont. region, to $268,000. Both areas are impacted by a downturn in the automotive and manufacturing sectors, which have laid off thousands of employees in recent months.

The Greater Toronto area, which includes manufacturing and the struggling financial services sector, is predicted to see a drop in house prices of two per cent to $376,000 next year. In 2008, Toronto house prices are expected to climb two per cent to an average of $384,000, which is a 22 per cent increase since 2004.

House prices in St. John’s, N.L. are expected to jump 12 per cent in 2009, which ReMax says is due to the “(Newfoundland Premier Danny) Williams effect on the overall economy.” That follows an expected 21 per cent price increase in 2008.

In Regina, prices are estimated to rise nine per cent next year, while cities such as Ottawa, Edmonton, Calgary, Sudbury and Halifax are predicted to see prices remain flat next year.

Benjamin Tal, an economist at CIBC World Markets, said he sees house prices dropping by about 10 per cent across Canada over the next 12 months.

He predicts the resource rich provinces of B.C. and Saskatchewan will lead the fall with price drops of 15-to-20 per cent next year in part due to the drop in commodity prices, a reversal that is already playing out in oil towns such as Calgary and Edmonton.

“It’s not pretty, but it’s not a crisis,” said Tal.

“This is recessionary fall in the housing market, this is not a subprime housing meltdown.”

Adrienne Warren, a senior economist at Scotiabank, predicts national house prices to drop by five to 10 per cent in 2009.

“The big risk to the Canadian housing market right now is a more significant recession and more significant job losses as opposed to mortgage-specific related problems we are seeing in the U.S.,” Warren said.

“The price declines are driven by more supply and fewer buyers.”

The U.S. housing market crashed last year as a result of reckless lending practices that covered about one-third of mortgages. They eventually defaulted, which led to the toppling of the housing market and several financial institutions who backed the risky investments.

Merrill Lynch said recently that it believes Canada’s housing market is following the same troubled path that eventually led the US. market into a major downturn, but with a two-year lag. It said Canadian households are so deeply in debt that a “tipping point“ is approaching for the overall real estate market.

Many economists, as well as the Canadian real estate industry, disagree the market here will be as bad as in the United States, where prices have fallen 20 per cent since the peak in mid-2006, and are expected to fall another five per cent next year.

It its outlook released this week, the Canadian Association of Accredited Mortgage Professionals predicts mortgage approval activity (including new mortgages, transfers and refinancings) to fall nearly 12 per cent to $193 billion in 2008, compared to $218 billion in 2007.

Approvals are forecast to fall another 10 per cent to $174 billion in 2009 and another 1.6 per cent in 2010 to $171 billion. That follows a growth rate of about 11.5 per cent annually for the three years ended August 2008.

Home Sales Decline

2008-11-14T10:32:00.001-08:00

Friday, November 14, 2008 09:06 AM

Prince George, B.C.- The BC Real Estate Association says the global financial crisis has hit the real estate market in this province. Sales value declined 54 per cent to $1.69 billion in October, compared to October 2007. Residential unit sales were down 51 per cent to 4,018 units during the same period. The average MLS® residential price in the province was $420,259, down 6.5 per cent from October 2007.

Residential sales in October were the lowest they've been since December of 2000. The BC Real Estate Association says home sales are unlikely to fall much further.

Some Good News

2008-11-03T12:52:00.000-08:00

•Oct 7 2008 IMF predicts Canada will lead the G7 countries in growth at 1.2% in 2009.

•Canada has 18 domestic banks, the US has 8000,

•Oct 9 2008 Prestigious World Economic Forum declares Canada has the soundest banking system in the world out of 134 countries, US ranked 44th.

•There are an estimated 2 million lakes in Canada covering approximately 7.6% of Canada's land area. Canada has more fresh water lake area than any other country in the world.

•Canada has 1/3 the world’s potash production, and more than 50% of the world’s potash reserves; both are greater than any other nation.

•30-9-08 BC’s Employment rate is 95.4%, text book perfect!

•30-9-08 BC’s Consumer Price Index is 1.9%

•Residential building permits in BC for 2002 were $2.8 billion, and finished 2007 at $8.6 billion, a 271% increase, and 2002 was a great year!

•BC Commercial building permits in 2002 were $1.1 billion and for 2007 $2.6 billion

•YVR Airport Authority generated a profit of 21% in 2007 and its airport is ranked as one of the best airports in the world.

•YVR Airport Services now provides services in airports in 7 countries handling over 49 million passengers annually, and generates a double digit profit.

•US home existing home sales rose 1.4% in September v September 07, the first time since November 95 year over year sales for a month showed an increase

•GE costs will drop 28% in 2009, yielding its most significant competitive pricing advantage ever

•OPEC decided to cut production by 2%, the largest single decline in over 8 years, 8 years ago was when the healthy economic conditions began

•RBC Wealth Management analysis of North American stock market history

•12 bear markets 1956-2000, average duration 13 months, median 9 months, average decline 28% ,median decline 22%

•9 reasons Canadian banks will come out ahead:
1.By law shares of large, publicly traded banks and insurance companies must be “widely held” which in effect prevents domestic mergers or foreign take-over’s unless supported by the federal finance minster;
2.Canadian banks were the 1st in the world to adopt new risk-management rules under Base1 and 11 capital framework
3.Canadian Bank Act requires mortgage default insurance on loans there equity is less than 20%
4.Canadian mortgage payments in arrears in July 2008 were running at historic lows…less than 1/3 of 1%....about 1/6 of what the US experienced in the depths of its 1990’s housing slump
5.Canadian banks approvals of “non prime” mortgages runs at about 5% v the US at 23% inn 2008
6.In Canada the Office of Superintendant of Financial Institutions oversees both commercial and investment banking, in the US only commercial banking has been regulated to the same degree
7.No US bank has branches in all 50 states v all 5 major Canadian banks have branches in all 10 provinces thereby diversifying the risk geographically
8.Canadian Office of Superintendant of Financial Institutions requires chartered banks maintain a minimum Tier 1 capital ratio of 7%, in the US the minimum is 6%;
9.In the latest quarter, the actual rate Tier 1 capital ratio for Canadian banks was 9.8%...63% above the required minimum

•The loony’s tumble in last week of October served up a 15% advantage for Americans buying Canadian real estate.

•The loony’s gain of 3.67 cents against the U.S. dollar October 30 was the largest one-day gain in the era of floating exchange rates.

•Average home sale prices in 2002 were $250,000 and $453,000 in 2008, a mere 81% increase. Even with a BCREA forecast of $413,000 in 2009, the appreciation since 2002 would be just 65% over 7 years.

•On Tuesday October 28, for the 1st time in 5 weeks the stock markets in Europe, the Americas, and Asia were flat versus consistently heading down at different velocities.

•On Wednesday October 29 stock markets on all 3 continents moved up marginally.

•On Thursday October 31 on all 3 continents stock markets flattened, indicating a more rational step by step trend to recovery.

•Thursday October 31, the price of oil is approximately 58% of its peak price of $147/bbl in June.

•In Canada 77,000 agents sold $30 billion worth of real estate during the height of the previous boom, in 1987, compared with 95,000 agents selling $160 billion today.

•In BC in 2008 it is estimated real estate industry fees and commissions earned will exceed 3 billion….3 billion…. dollars.

•Consumers in BC today have real estate needs, jobs to pay for their mortgages, and financing available; they just need some confidence. It’s our job to deliver that confidence.

•BC now has the lowest provincial personal tax rate of any province in Canada. Provincial corporate tax rates are 1/3 less today than in 2001.

•Provincial government investment in education has grown 30% in the past 7 years, and investment in health care has risen 60% in the same period.

•Today BC has 33000 more university seats than in 2001.

•In 2001 major construction projects inventory in the province was 46 billion dollars, for 19 consecutive quarters that number has increased, today the number is over 100 billion dollars, adjusted for this month’s economic downturn.

•Out of all Canadian provinces, BC is least dependant on the US market.

•Mining drilling rights sold in BC this year in the first 6 months of 2008 doubled the previous ANNUAL record.

•Technology employment in BC is growing faster than in any other sector in the province.

•The largest television audience in history, 3 billion people will watch the Vancouver Whistler Winter Olympics in 2010.

•A new RBC study conducted during the market turmoil in October finds Canadians overall have intentions to purchase a home in the next two years remain steady at 22 per cent and have not changed since January 2008. As well, renovation intentions are slightly higher than last year – up four percentage points

•70 per cent of respondents are planning to renovate or make home improvements in the next two years.

•“Be fearful when others are greedy, and greedy when others are fearful”….Warren Buffet’s principal investment strategy.

•Warren Buffet with a net worth of $52 billion today gave away $46 billion between 2002 and 2006

•Warren Buffet committed $8 billion to investments in US companies in 2008 to October 15th.

•The return of following Buffet’s investment strategy for the 31 years ending 2007 is 25% per annum. On a single day in early October he made $843,000,000 appreciation on his most recent stock investments; and his core investment timeline is “I buy for the long term”. Warren Buffet is 78 years old!

•“Buy real estate and wait, don’t wait and buy real estate”

If not now, when?
If not you, who?

House Price in P.G. Expected to Drop 7 percent in '09

2008-10-30T08:15:00.000-07:00

House Price in P.G. Expected to Drop 7 percent in '09
By 250 News

Thursday, October 30, 2008 03:59 AM

Prince George, B.C.- The BC Real Estate Association is predicting a slide of MLS home sales of 22% for Prince George, and 28% this year throughout the province. The average price for a home in Prince George is expected to be 7% lower in 2009.

The BCREA says reduced consumer confidence is one of the reasons, brought on by the sharp increase in fuel prices and the situation has been compounded by the global economic crisis.

The Association predicts slower growth in B.C., slipping from 3.1% in 2007 to 1.4% this year but there may be some gains in the last half of 2009, enough to boost growth to 1.6%

The BCREA says the forest sector will continue to be weak until the US housing market improves. The value of solid wood product exports was down 30 per cent year-to-date through August. A recovery is not expected until late 2009 at the earliest.