Impending Canadian Housing Crash??

When you read this article that’s started to resurface, you might start to agree to the author’s viewpoint……but he makes a number of errors in reaching his conclusion. Have a read:

http://www.cbc.ca/news/business/housing-market-a-bubble-set-to-burst-hilliard-macbeth-says-1.2784511

Here is why I disagree:

Firstly, let me say that if you predict rain daily in summer at Death Valley, you will be wrong for a very long time. Eventually however, given enough time…..at some point you will finally be vindicated and be able to say "I told you so!" However it neither proves your position as an expert, nor does it prove any intelligence on your part. Predict a housing bubble month by month, year by year, and given enough time you will be proven right……but it could be a very long wait yet.

Here are my issues with the author:

1)      He’s writing a book about it. He needs to scare people into buying his book…..that’s like listening to someone selling Y2K survival kits writing a book about the doomsday of the pending Y2K: if you believe his article, you might buy what he’s selling.

2)      He’s talking about a hard landing where prices could drop 40-50%. In the Fraser Valley, our housing costs are about the same as our land costs…..meaning if values drop 40-50% all the value will be in the construction and $0 in the land. That will never happen in the near future, and I will stake my reputation on that! In fact, I don’t believe we will ever see a drop of 40% on average across Canada, not in the next 10-30 years. Every time we see a massive drop in markets, we learn from the occasion and put more controls in place. We don’t decrease regulation.

3)      Stricter lending rules have already been put in place by CMHC. We’ve seen mortgage amortizations drop from 35 years to 25 years, we’ve seen decreases in rental suite income qualifications, stricter regulation on down payment verification, more stringent requirements for self employed people, tougher qualifications on investors, and so on. This has already happened!

4)      Interest rates have already fluctuated between 2.5 and 4.5% during the past few years, and at no point did buyers cease to qualify or buy. In fact, research has shown the vast majority of home owners could easily afford an increase in excess of 6% interest rates after their 5 year terms renew.

5)      “People should look at housing as where they live….but certainly not expect any investment component.” History has long proven true that real estate provides a more solid, stable, and profitable investment than the stock markets. As John D Rockefeller said, “The major fortunes in America have been made in land.” Then there is my favorite: “Real estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.” –Franklin D. Roosevelt

My crystal ball is no better than Hilliard MacBeth’s, however I will add that his position at Richardson GMP is to manage assets primarily in the markets, so he has to be biased against people investing in real estate. I will say this: there don’t appear to be any economic influences on the horizon that will drastically cause a reversal in buyers ability or desire to purchase, and most of his reasons for believing in a crash do not stand up to scrutiny.

So I continue to be an optimist, and yes I’m buying more real estate today.

Jonathan Gelderman

Jonathan has been one of Western Canada’s top producing residential and investment sales agents for over a decade, and manages a multi million dollar real estate investor fund.

 

NO SIGN OF SLOWDOWN FOR FRASER VALLEY REAL ESTATE MARKET

SURREY, BC – Fraser Valley’s housing market remained in a seller’s market in October, fuelled by low interest rates and strong consumer demand, according to the Fraser Valley Real Estate Board.


There were 1,772 sales processed on the Multiple Listing Service® (MLS®) in October compared with 1,448 in 2014, an increase of 22 per cent. For the month, sales are on par with the previous high in October 2005; and historically, only surpassed by the markets of October 1992 and 1989.


Jorda Maisey, President of the Board, says she’s not surprised that October sales were near historic levels, “BC continues to be an economic growth leader in our country and we’re seeing the impact of that in our housing market.


“In the Fraser Valley, demand is strongest for ground-oriented homes. Single family homes and townhomes garnered 83 per cent of our residential market last month. The reasons are due to low interest rates, pent-up demand and most importantly, price. People can afford to own their own single family home in the Fraser Valley.”


The Board received 2,155 new listings last month, 10 per cent fewer listings compared to October of last year. The total active inventory for October was 6,535, down 26 per cent from last year’s 8,807 active listings.


Maisey says with the lack of listings, sellers have had the advantage, “In some of our areas, active inventory of single family detached is down a third to a half of what was available this time last year. The fewer homes available, the more in demand they become, which is why we have seen an impact on prices, most notably on single family detached homes.”


The MLS® Home Price Index benchmark price of a detached home in October was $649,200, an increase of 13.2 per cent compared to October of last year when it was $573,500. The MLS® HPI benchmark price of Fraser Valley townhouses increased 5.1 per cent going from $298,500 in October of last year to $313,700 last month. The benchmark price of apartments was $203,100, an increase of 5.5 per cent compared to $192,600 in October 2014.


Maisey adds, “Our inventory shortage of ground-oriented homes has had a positive spin-off on our condo market. We’ve advised many of our entry-level buyers to consider an apartment rather than a townhome because the selection is far superior and prices, on average, $100,000 less. Many buyers just aren’t aware of the new and resale options available to them.”

SELLER’S MARKET CONTINUES FOR SINGLE FAMILY DETACHED AND TOWNHOMES IN FRASER VALLEY

SURREY, BC – Property sales in the Fraser Valley remained strong in September, consistent with the near-record setting pace of the last six months.

The Fraser Valley Real Estate Board processed 1,727 sales, an increase of 22 per cent compared to 1,419 sales during September of last year. Last month’s sales were on par with September 2005 and second to September’s all-time high for sales in 1992.

Jorda Maisey is the Board’s President. “Sales remain brisk depending on the property type and location. We’re continuing to see many family homes that are priced right receive multiple offers and sell in a matter of days. People actively looking for a home will already know that in some communities, selection is very tight.

“In Langley where I live and work, we have less than two months supply of single family homes and townhomes, which means buyers and their REALTORS® have to be informed, prepared and have a strategy.”

In September, the total number of active listings in the Fraser Valley was 7,122. This represents a 4 per cent decrease compared to August and a 22 per cent decrease compared to September of last year. For September, this is the lowest inventory levels have been since 2006.

Maisey says, “Where we have the best selection currently is within our Fraser Valley condo market. That market is currently in balanced conditions. In most communities, buyers have a healthy choice of both new and resale units and steady sales over the last few months have led to modest increases in prices, which is good news for sellers.”

The MLS® Home Price Index benchmark price of a detached home in September was $639,500, an increase of 12.2 per cent compared to September of last year when it was $569,800. The MLS® HPI benchmark price of Fraser Valley townhouses increased 3.1 per cent going from $299,600 in September of last year to $308,900 last month. The benchmark price of apartments was $197,500, an increase of 2.0 per cent compared to $193,600 in September 2014.

Maisey adds, “Our market this year has reflected consumers’ confidence in the economy and in the Fraser Valley. We have amongst the most affordable real estate in the Lower Mainland in some of the fastest-growing, dynamic communities in BC. It’s a smart place to invest.”

Grade 12 Graduates Eligible for $16,000 through RE/MAX Quest for Excellence Bursary Program

RE/MAX of Western Canada is committed to helping future community leaders by offering $16,000 in bursary funds through its annual Quest for Excellence Program. One recipient—in addition to his/her bursary—will receive a hot air balloon ride for two.

 

The Quest for Excellence Program recognizes the pursuits in leadership and community contributions of Western Canadian students. High school students graduating in 2016 from British Columbia, Alberta, Saskatchewan, Manitoba, Yukon and Northwest Territories are encouraged to write an essay to convey the contributions they have made to enrich the lives of others and their communities: Through leadership, motivation, volunteering and participation in charitable events or fundraising.

 

“Each year we are in awe of the passion and commitment these young adults display in giving back to their communities,” says Marie Sheppy, Manager, Corporate Affairs,RE/MAX of Western Canada. “We are inspired by their stories and are honoured to assist them in their future endeavours.”

 

Sixteen winners will be selected from entries received online at

remax.ca. Each winner will receive a $1,000 RE/MAX Quest for Excellence bursary. All 16 bursary recipients will be placed in a draw and one lucky student will also receive a hot air balloon ride for two from the closest major city. The application deadline is March 9, 2016. Award recipients will be notified in April 2016, with a formal presentation at the students’ commencement ceremonies.

 

“There are many young people in Western Canada who show leadership on a regular basis and maturity beyond their years,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western

Canada. “Their actions help make our communities better places to live. We’re proud to recognize those individuals.”

 

For more information, visit: www.remax.ca.

 

Marie Sheppy  I  RE/MAX of Western Canada (1998), LLC  I  250-860-3628

STRONG SALES ACTIVITY CONTINUES THROUGH AUGUST

SURREY, BC – In August, home sales in the Fraser Valley moderated in comparison to July’s record-setting pace, however, they remained elevated compared to historical norms for the month.

There was a total of 1,734 property sales processed in August, an increase of 33 per cent compared to 1,302 sales during August of last year and a decrease of 21 per cent compared to July’s 2,184 sales.

Jorda Maisey is the Board’s President. “High consumer confidence and low mortgage rates continue to drive the activity we’ve seen in our market this summer.

“Even with the holiday season, sales last month remained 25 per cent higher than the Board’s 10-year average for August. This year marks one of the busiest summer markets we’ve ever had in the Fraser Valley, second only to 2005.”

In August, the total number of active listings in the Fraser Valley decreased 4 per cent compared to July, dropping to 7,407 listings. This represents a 21 per cent decrease from last year’s 9,403 active listings. The MLS® received 2,457 new listings in August, an increase of 3 per cent compared to August of last year.

Maisey adds, “In our market, price is key. Demand remains strongest for single family detached homes and townhomes that are priced correctly. Sellers who hope to take advantage of the current market will find that neither buyers nor their lenders are prepared to over pay.

“We anticipate more inventory will be coming on stream come fall, and we advise our buyers who can wait, to wait.”

The MLS® Home Price Index benchmark price of a detached home in August was $629,400, an increase of 10.5 per cent compared to August of last year when it was $569,800. The MLS® HPI benchmark price of Fraser Valley townhouses increased 2.7 per cent going from $298,500 in August of last year to $306,700 last month. The benchmark price of apartments decreased year-over-year by 2.4 per cent, going from $196,700 in August of last year to $191,900 last month.

Maisey adds, “First time buyers and investors are noticing that of the three main property types, the best selection in the Fraser Valley is in the condo market. In August, we saw apartment sales pick up specifically in White Rock, Langley and North Surrey.”


Fraser Valley Real Estate Board - Statistics Package