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Vancouver Highlights

Comments: 0November 3rd, 2009 by admin

Posted by Moishe Alexander

Home sales will continue at a brisk pace through the remainder of this year and into 2010. More sales combined with fewer active listings will push the average MLS® home price higher in 2010.

Home starts will pick up over the next 15 months, but remain below levels recorded in recent years. The upturn in the resale market will contribute to an increase in home starts as builders see demand returning to the market. New and resale home inventories are being absorbed, providing an incentive to start new residential projects.

Steady population growth through migration, an improving job market and low mortgage rates will provide support for homeownership demand through 2010.

Housing market conditions in Greater Vancouver1 will favour home sellers into the first half of next year. The recovery of home sales that began during the spring and summer months will continue into 2010. Home sales ramped up during the past few months due to lower home prices and low mortgage rates. These two factorscombined with increasing real wages, have meant improved affordability for home buyers. While home prices are rising, continued low mortgage rates into mid 2010 will keep home buyers active. Home sales in the first few months of 2010 may be below average, as transportation route changes associated with the Olympic Games hamper mobility.

The number of active resale listings will be near the five-year average level next year. After peaking in fall 2008, active listings have trended lower. While the flow of new listings entering the market has been increasing, high sales levels have kept the total stock of active listings dwindling in recent months. The recent upturn in home prices may draw more sellers to the marketincreasing the supply of homes for sale. Look for more balanced market conditions to prevail in the second half of 2010.
Home prices in most Vancouver

municipalities will continue to trend up in 2010, but at a modest pace of two to four per cent. Home prices hit their lowest point in March of 2009, having fallen 17 per cent from their peak level. In just six months, thaverage price in Greater Vancouver saapproximately two per cent below thpeak value. However, the recovery in home prices has been uneven across the region. While prices in the City of Vancouver have already surpassed the previous peak, prices in other centres remain well below peak levels(see figure 2). These centres with prices still below peak, will see prices trending up over the next 15 months, as buyers take advantage of lower prices and favourable mortgage interest rates.

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Posted in CMHC, Canada

Changing Times for the Victoria Housing Market

Comments: 0November 3rd, 2009 by admin

Posted by Moishe Alexander

The Capital Region will experiences increases in existing home sales, and significant residential construction in 2010. Employment growth, continued migration, and low mortgage rates will contribute to the stabilization of Greater Victoria housing demand. After a slow 2008 and first quarter of 2009, lower home prices and low mortgage interest rates contributed to a significant rebound in resales in mid-2009. Expect both resales and average home prices to experience small increases in 2010.

Housing starts will bounce up in 2010, following two years of reduced levels of residential construction activity. The mid-2009 surge in resale activity combined with less supply (fewer homes under construction, and fewer existing and new homes for sale) will boost the number of new homes breaking ground in Greater Victoria next year.

Modest growth in existing home sales is projected for 2010, following a slight rebound in 2009. The growth will result from a stabilizing economy and continued sales by those looking to take advantage of low interest rates and ample, but shrinking supply. The recent up tick in resale prices (after bottoming out in the first quarter of 2009) combined with the anticipation of higher mortgage rates next year have led some potential home buyers to believe that Victoria-area homes will become more expensive. The favourable buying conditions will elevate sales through the remainder of 2009 and into 2010.

After six years of above average resale activity across the Capital region, a significant lull in existing home sales was observed in 2008 and through the first quarter of 2009. Since then, resale conditions have rebounded strongly due to relatively low mortgage rates and a downward adjustment in resale prices observed between the first quarter of 2008 and 2009.

The improved affordability that has been observed across Greater Victoria is evidenced by the reduced average mortgage payment that is required to purchase a home. In inflation- adjusted terms, the monthly payment associated with purchasing a single- detached home in Victoria declined 17 per cent between the peak of unaffordability (Q2 2008) and the August 2009 level.2

Affordability became a major issue for potential homebuyers during the extended upswing in resale prices that took place between 2001 and 2008. Over this period, the average resale home price in Greater Victoria increased at an average rate of 12 per cent per year. The recent improvements in affordability have been a breath of fresh air for those who previously could not afford home ownership, or were waiting for a more opportune time to enter the home ownership market.

A return to more balanced resale market conditions will occur in 2010, as both resale demand and supply stabilize. The strong demand recorded this summer has reduced the number of active MLS® listings considerably since reaching a peak last fall. As resale market demand stabilizes in 2010, so too will the supply of existing homes in Greater Victoria.

The fluctuations in existing home sales observed over the past two years have impacted average resale prices across the Capital region. After an extended period of steady and significant price gains, the average resale price declined 12 per cent from peak to trough in response to weak resale demand. Since bottoming out, the average Greater Victoria resale price has been edging up and currently sits three per cent below the peak level. With resale market conditions stabilizing, this will translate into minor price appreciation next year.

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Posted in British Columbia, CMHC, Canada

Protecting Investments from Inflation

Comments: 0July 17th, 2009 by admin

Vince writes,

My problem is as follows: I am an immigrant who has been in Canada for 6-7yrs and have no RRSP room to speak of, and can only count on a small CPP. All my savings and investments are in a non-registered account.

How do I protect myself against inflation? Do I buy short term bonds (XSB), real return bonds, or do I stay with common shares?

My allocation if I include property is about 60/40 FI/Equities.

Inflation is certainly a hot topic for many investors since every pundit in the media has an opinion of where inflation will appear and to what degree of severity with hyperinflation being a term that’s been thrown around far too loosely as governments attempt to stimulate economies.

Any conservative investor, regardless of risk or investment style, needs to concern themselves with inflation in all market conditions because inflation affects the real value of your investments. If your investment portfolio returned 4% after costs last year and the inflation rate was 2% your real return for the portfolio was only 2%. What an investor wants to do is achieve returns in their portfolio that outpace inflation over the long-term and provide them with equal or greater purchasing power in the future.

Investing for inflation is really not much different than wanting a raise each year that matches your increases in the cost of living. Essentially your portfolio should be giving you a raise each year in your income to offset the increasing prices of goods and services you use.

To answer Vince’s answer directly it’s not whether he should invest in only short-term bonds, real return bonds or common shares but how much of each to hold over the long-term.

Short-term bonds provide decent inflation protection at the expense of a much lower yield than a longer yielding bonds because you’re not taking on the same interest rate risk. Real return bonds maintain your investment from inflation and you only need to buy a weighting large enough for your desired allocation. Common shares, specifically ones that pay dividends, offer an investor a few advantages in terms of protecting against inflation. Companies that own/operate inflation sensitive assets such as real estate, commodities and infrastructure tend to fare better in valuation terms than other companies. Some dividends stocks pay a dividend and increase that dividend on a yearly basis above the annual rate of inflation then have already achieved your desired goal if the dividend continues to be paid regardless of the effect on share prices. Because dividends, for Canadians, are eligible for the Dividend Tax Credit in a non-registered portfolio the taxation of dividends is less than that of gains from interest (bonds & GIC’s) or from capital gains.

http://www.nurseb911.com/2009/07/protecting-investments-from-inflation.html

reviewed by Moishe Alexander, CFC canadian funding corp CEO

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Posted in Alberta, British Columbia, CMHC, Housing Market, Manitoba, Newfoundland, Ontario, Quebec, Rental Market, Uncategorized

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