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http://rem.ax/1NbrACN

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to Moxie’s!

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MARKET MOMENTUM CONTINUES FOR FRASER VALLEY REAL ESTATE

SURREY, BC – Homebuyers showed no signs of slowing down last month as Fraser Valley REALTORS® experienced their second busiest November on record.

The Fraser Valley Real Estate Board processed 1,766 property sales on the Multiple Listing Service® (MLS®) in November compared with 1,136 in 2014, an increase of 55 per cent. The previous high of 2,154 sales was set in November, 1989.

Jorda Maisey, President of the Board, says, “November is not normally this busy. We’ve experienced our usual, seasonal dip in the number of new listings, but we’re just not seeing a decline in the demand.

“If you’ve been thinking about selling your home to capitalize on any equity you’ve acquired, now is a very good time.”

The Board received 1,854 new listings last month, 14 per cent fewer than were received in October and 6 per cent more than were received during November of last year. Last month’s total inventory in the Fraser Valley was 5,761 active listings; 31 per cent less than were available during November 2014.

Maisey says, “Our housing inventory overall hasn’t been this low since spring of 2006, however it’s important to emphasize that conditions vary depending on property type. Ground‐oriented homes are the highest in demand currently with about one out of every two active listings selling. For apartments, one in five is selling, so condo shoppers will find more selection and have greater negotiating power on price when it comes time to buy.”

The MLS® Home Price Index benchmark price of a detached home in November was $659,700, an increase of 14.7 per cent compared to November of last year when it was $575,400. The MLS® HPI benchmark price of Fraser Valley townhouses increased 6.7 per cent going from $298,900 in November of last year to $318,800 last month. The benchmark price of apartments was $207,100, an increase of 9.3 per cent compared to $189,400 in November 2014.

Maisey adds, “We understand that it is challenging buying a home in a market this competitive and that’s why we’re here, to help our buyers develop a successful strategy to secure the best home for them at a price they can afford.”

Bank of Canada rate update

From BCREA Economist Cameron Muir:

Bank of Canada Interest Rate Decision - December 2, 2015

The Bank of Canada announced this morning that it is maintaining its target for the overnight rate at 0.5 per cent. In the press release accompanying the decision, the Bank noted that inflation is in line with its outlook with total CPI inflation near the bottom of the Bank's 1 to 3 per cent target range while core inflation remains close to 2 per cent.  On growth, the Bank cited ongoing and complex adjustments in the Canadian economy to low commodity prices, but expects growth to move above potential (usually estimated to be about 2 per cent) in 2016. 
 
Absent a substantial recovery in global commodity prices, the Canadian economy will more than likely grow near its long-term trend rate over the next two years. That rate of growth will keep inflation relatively anchored at or below its 2 per cent target.  A baseline scenario of economic growth above 2 per cent, paired with low inflation and steady job growth should keep the Bank of Canada sidelined over the medium run. However, several quarters of steady growth following the oil price shock of late 2014 may convince policymakers that the economy is no longer in need of the monetary stimulus injected into the economy via two rate cuts in early 2015. If so, the Bank may shift back to a tightening bias with a potential rate increase late next year or in early 2017.

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.