Saturday 31 August 2013

August Vancouver Sales Stats (preview)

End of August
2013 vs 2012 vs 2011
Sales: 2530 vs 1649(+53%**) vs 2378 (+6%)
Lists: 4100 vs 4044 (+1.4%)
Ratio: 62% vs 41%

Est. Month-end Inventory: 16250 vs 17567(-7.5%)
Est. MOI: 6.4 vs 10.7 (Aug/12) vs 5.6 (July/13)

As expected, Sales increased vs 2012, but still fell just below 10 year August Sales Average.

________________________________________________________________
- looks like 2013′s trough MOI was probably reached on July: 5.6

Historical Trough MOI:
2013-07?: 5.6 (balanced market)
2012-03: 5.3 (balanced/seller’s market)
2011-03: 3.2 (seller’s market)
2010-03: 4.3 (seller’s market)
2009-07: 3.0 (seller’s market)
2008-02: 4.3 (seller’s market)
2007-05: 2.9 (seller’s market)
2006-05: 2.3 (seller’s market)
2005-06: 2.4 (seller’s market)

So this year, the best month for sellers was likely July. At MOI of 5.6, it still fell somewhat in “seller-side of balanced market” territory – which quickly edged back to “buyer-side of balanced market” by Aug/13.

With the low rate-holds gradually expire in September, we can expect sales to decline, with the MOI returning to firm “buyer’s market” territory (>>7) in the next couple months.


**With regards to “Sales 53% higher than last year”, don’t forget that in 2012, mortgage tightening rules were announced on June 20 and implemented on July 9, causing buyers to rush their purchases (pulled forward demand) in June/July. However, “demand” dried up by August, causing a -31% YoY sales decline in Aug/12 vs Aug/11, and a -33% YoY sales decline Sep/12 vs Sep/11.

This year, the trigger that draws demand forward was rising fixed rates, and that gradually took place starting Jun/13. Unlike the mortgage tightening last year, which took place with 19 days of advance warning, this year the buyers have 2-3 months of rate-hold to complete their purchase before facing a higher rate.

It can be expected that similar “Demand drying up” situation will occur this year, with the timing being mid-September to October.

Friday 30 August 2013

Late entry: BoC Qualifying Rate is now 5.34% (Up from 5.14%)

After RBC bumped Posted 5Y Rate last week, BoC just raised mortgage Qualifying Rate on Aug 28 from 5.14% to 5.34%!


This is the first increase in Qualifying Rate in more than 500 days (since April 2012). 
Will affect 1/2/3/4yr Fixed + Variable + HELOC applications

DateV122521
2012-015.29
2012-025.24
2012-035.24
2012-045.44
2012-055.34
2012-065.24
2012-075.24
2012-085.24
2012-095.24
2012-105.24
2012-115.24
2012-125.24
2013-015.24
2013-025.24
2013-035.14
2013-045.14
2013-055.14
2013-065.14
2013-075.14
2013-085.34

Just some Stats & News

Greater Vancouver HPI benchmark price has already had 12 consecutive months of YoY price decline (Since July 2012).

GV HPI YoY %
07/2013-2.3
06/2013-3
05/2013-4.3
04/2013-3.9
03/2013-3.9
02/2013-2.8
01/2013-2.8
12/2012-2.3
11/2012-1.7
10/2012-0.8
09/2012-0.8
08/2012-0.5
07/20120.6

July vs Jan Greater Vancouver HPI Benchmark Price % Change
2013:+2.3% 
2012:+1.8% 
2011:+4.6% 
2010:+0.7% 
2009:+8.1% 
2008:+1.4% 
2007:+7.5%
2006:+11% 
2005:+12% 
2004:+6.9%

Tax auditors target condo sellers in hunt for ‘flippers’
www.thestar.com/busine...ppers.html

Aug 29 2013
They’re looking primarily for people who bought condos before they were built, intending to flip them for a profit as soon as the project is complete.

A Toronto tax lawyer is warning realtors — and people who’ve bought and sold new condos over the past seven years — that they could become unwitting victims of what he calls “abusive audit practices” by the Canada Revenue Agency.

Tax auditors have been targeting the once red-hot Toronto and Vancouver real estate markets, looking primarily for people who bought condos before they were built, intending to flip them for a profit as soon as the project is complete.

Some folks have received tax bills on the full gains. About 250 buyers in Toronto and Vancouver have been asked to refund GST and HST rebates on homes that auditors have deemed aren’t being used as primary residences.

Even some with no history of buying and selling multiple properties are being treated as if they are flippers and slapped with tax bills on 100 per cent of the gains, plus 50 per penalties, said Kitchener tax lawyer James Rhodes.

Thursday 29 August 2013

12 Signs You Are a Home-Owner in Vancouver

1. It’s the first of the month and you have just enough Pre-tax cash in your account to cover mortgage payment…
oprah
2.  Your meagre home equity is your savings plan.
savings plan
3. …which is completely decimated when you take it out as HELOC to pay for your roof repair
living room
4. You always do a double-take when you see rich-looking Asians walking past your still-unsold house.
double take
5. …but usually they're just on their way to a yard sale or food bank.
dumpster-diving
6. Passive aggressive notes from ghosts of grow-ops past litter your "mortgage helper" suite
spit in it
7. You needed to convince your friends to chip in into your down-payment. “Jane? The bank won't lend me enough money even after I borrowed thousands from Bank of Mom&Dad, can you PLEEEEEASE help???”
phone call
8. One look at your account and the banker just humors you for a couple minutes before shuffling you out.
will mcavoy
9. That career as a star (House) Flipper is still in the cards. “Hey, it could totally still happen! I'll just stay in my million-dollar crack shack for a couple more years...”
rob ford10. RRSP? TFSA?? 
beyonce
11. Oh? Another one of my friends just left Vancouver. That’s. Just. Fantastic.
cat
12. Your Tenant: "My landlord lives in the basement"
the simpsons race car bed
Photos and Gifs: tumblr.com, threadbombing.com, msn.com, pawesome.net, uproxx.com.

This is a parody in response to buzzbuzzhome's "12 signs you’re definitely still a renter"

Saturday 24 August 2013

BMO Advises Potential T.O. Condo Buyers to Rent?!

Is this in-line with BMO mortgage advisers' recommendations? ; )

BMO Capital Markets Economics Senior Economist Mr. Sal Guatieri:
Aug 23, 2013
"For people looking for a place to live, unless you believe prices can keep pace with inflation in
coming years—a dubious prospect given the oncoming supply—you are probably
better off renting"
http://www.bmonesbittburns.com/economics/focus/recent/130823doc.pdf

Thursday 22 August 2013

RBC's "qualifying rate" for now is still 5.14%

Below is the reply from a RBC Mortgage Advisor re: which rate they use as qualifying rate:

============================

FOR HOMELINE PLAN APPLICATION WE ARE 
STILL USING 5.14% TO QUALIFY CLIENT 
TRYING TO CONTROL TDS AT 40ISH%

THIS QUALIFYING RATE GETS UPDATE
EACH DAY BUT NOT NECESSARLY EQUALS
TO THE 5YR FIX POST RATE. 

============================

FOR CONVENTIONAL MTG APPLICATION, 
IF THE RATE PROPOSED ON APPLICATION IS 
1/2/3/4 FIX RATES, RBC IS USING 5.14% TO 
QUALIFY THE CLIENT. YET, FOR 5+YR FIX 
RATE APPLICATIONS WE CAN USE THE ACTUAL 
RATE OFFERED TO THE CLIENTS. 

=============================


SO, IF YOU TRY TO MAX OUT YOUR BORROWING
POWER, YOU SHOULD GO FOR 5YR FIX W/ 
MAX 30 YR AMT'N. 

==============================


INSU OR CONVENTIONAL DEAL DOESN'T MAKE A DIFFERENCE.

Is Bank of Canada Qualifying Rate heading up?

To follow up on my post yesterday on RBC raising 5-year Posted Rate:

Here's an article by CMT:

"August 21, 2013
“If a few more banks follow RBC’s lead, the benchmark qualifying rate will rise accordingly. That would mark the first increase in the benchmark rate in more than 500 days (since April 2012).
A higher benchmark rate makes it tougher to qualify for a variable, HELOC or 1- to 4-year fixed term.”

Wednesday 21 August 2013

RBC hiked 5 year Special AND Posted rates (Qualifying rate?)

1. Special Offer Rates*

Four-year closed3.59 per cent(increased by 0.20 per cent)
Five-year closed3.89 per cent(increased by 0.20 per cent)
Seven-year closed4.19 per cent(increased by 0.20 per cent)
Ten-year closed4.59 per cent(increased by 0.30 per cent)

2. Fixed Rate Posted Rates

Three-year closed3.95 per cent(increased by 0.20 per cent)
Four-year closed4.74 per cent(increased by 0.20 per cent)
Five-year closed5.34 per cent(increased by 0.20 per cent)

LINK

5 year posted rates = Qualifying rate.
The question is, is Qualifying rate set by Bank of Canada's 5y posted rates, or individual banks' 5y posted rates.
Can impact both fixed and variable rate borrowers.

Friday 16 August 2013

"Don't time the market" ?

With regards to “Don’t time the market”, I think this “truism” applies more toward the type of investment that allows buying in small quantities over time (dollar cost averaging), i.e. stocks.

In RE however, when pumpers say “Don’t time the market,” it’s akin to your stock broker telling you “anytime is a good time to borrow 5x your annual pre-tax income to invest in a single stock (something like Rona), with a P/E ratio of 40, negative outlook, and $40,000 commission to sell.

Unless you have the means to purchase a few properties every year for the next 10-20 years, you can’t “dollar cost average” property investment (unless you’re looking at REIT, but that’s stocks). 

You have to do your homework and time your “single largest leveraged purchase in your life”.

Wednesday 14 August 2013

5 year fixed rates now up almost 1% since the March/April 2013

Current 5y Fixed rates:
BMO:3.59%, TD/RBC: 3.69%.

Back in Apr/13
BMO: 2.69%, TD/RBC: 2.79%

Almost a full percentage point increase in 3-4 months.
We can expect:
- some people with rate-holds (60-120 days) will pull the trigger before they expire.
- more people will go with variable rates, currently at P-0% (big banks)
- however, CMHC MBS rationing will affect rates of both fixed & variable mortgages. I would not be surprised if the P-0% becomes P+?%

Tuesday 13 August 2013

August 1-13 Stats


1.
Aug 1-13: 2013 vs 2012:
Sales: +42%
New List: +13%
Inventory: -6%
2.
Aug 1-13 Inventory growth:
2012: 18708->18788 (+0.4%)
2013: 17441->17621 (+1.0%)
Inventory increasing at higher rate than last year
3.
New Listings YoY change
Aug: +13% (vs ’12)
Jul: +11%
Jun: -13%
May: -18%
Interesting to see New Listings picking up pace.
It could mean a few things
A. Sellers trying to catch the end of RE boom.
B. According to some realtors, the main demographic driving Vancouver-proper sales lately are existing home-owners taking advantage of low rate-holds to trade up/down. In order to buy, they have to list first.
If I have to bet, I’ll bet
- Sales noticeably drop off by mid/late September
- Peak inventory occurs in September/October this year.

Monday 12 August 2013

After decades of stoking mortgages, Ottawa in a mess of its own making

Required reading!

http://www.theglobeandmail.com/report-on-business/economy/housing/after-decades-of-stoking-mortgages-ottawa-in-a-mess-of-its-own-making/article13705668/

"It’s getting hard to keep track of how many times the federal government has tried to lasso the galloping housing market.
The latest is a move by Canada Mortgage and Housing Corp., a federal Crown corporation, to limit the guarantees it offers banks on their mortgage-backed securities."
"The federal government has had a major role in stoking the rapid expansion of mortgage credit in Canada. Now, as the long credit-fuelled rush into real estate appears to be stalling, taxpayers could be stuck with a large and unexpected bill.
Three-quarters of all Canadian mortgages are insured by the federal government, up from only 30 per cent in 1988. Ottawa guarantees a total of $900-billion worth of mortgage insurance."
...

Sunday 11 August 2013

CIBC Chief Economist Benjamin Tal: "If I were a speculator, I wouldn't be buying"

With home boom winding down, is housing market on death watch?
http://www.ottawacitizen.com/business/real-estate/With+home+boom+inning+even+good+news+portend/8775198/story.html

Benjamin Tal, CIBC's housing expert and deputy chief economist, wouldn't go as far as Madani in predicting a price correction of as much as 25 per cent, but he agrees the time has come for caution.
"If I was a speculator, I would not be buying," he says. "The days of flipping houses and speculating on increasing prices are clearly coming to a close. We are in the ninth inning of this boom."
"The ride must end, agrees Tal, the only issue being is will it crash or simply coast."


Builders bet housing boom ending as residential land investment falls

Developers in three of Canada’s largest markets dramatically ratcheted down their land purchases in the first half of this year.
The decision to cut back the purchase of residential land may be one of the best indicators yet that the housing industry doesn’t see a lot of room for growth in the coming years.
RealNet Canada Inc. said residential land investment in Toronto fell 51% in the first six months of the year compared to the same period in 2012. Sales in Greater Vancouver fell 30% and Calgary 52% for the same period.
“Yes, 100%,” they are looking into the future, said Richard Vilner, research manager with GTA Commercial Real Estate at RealNet. “The slowdown began to happen in mid-2012. There was a big time slow down versus those robust two years pre-slowdown. The cranes you are seeing now are for residential land deals that closed a couple of years ago.”

Tuesday 6 August 2013

"CMHC moves to take steam out of housing market"

www.theglobeandmail.co...e13607534/

“Given the differentials in funding costs via NHA MBS or unsecured long-term funding, I could see [an additional] 20 to 65 basis points in the cost of funding mortgages for the larger banks,” he said. “All else equal, we could see mortgage rates start to move up in unison.”

加拿大按揭及楼房CMHC,因应突然增加的需求,推出限制措施
GF:
固定利率将继续上升, 
政府这政策将造成5年固定利率在短期内上升 0.15%-0.65%

我们可以预测会继续有一些锁定利率的买家急着入市,
而这回光反照般的 成交量上升现象,在9月会随着锁定利率的过期 而急转直下

- We can expect to see continued demand that's "pulled forward" due to people with mortgage pre-approvals hurry into purchasing properties before the rate-holds expire.  We have already witnessed some of this effect in July, I expect sales to continue to be relatively strong until September, while taking a turn for the worse in the last quarter of 2013.