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.

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%! http://www.
bankofcanada.ca/rates/interest-rates/canadian-interest-rates/?page_moved=1 …

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

Date	V122521
2012-01	5.29
2012-02	5.24
2012-03	5.24
2012-04	5.44
2012-05	5.34
2012-06	5.24
2012-07	5.24
2012-08	5.24
2012-09	5.24
2012-10	5.24
2012-11	5.24
2012-12	5.24
2013-01	5.24
2013-02	5.24
2013-03	5.14
2013-04	5.14
2013-05	5.14
2013-06	5.14
2013-07	5.14
2013-08	5.34

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
07/2012	0.6

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.

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…

2.  Your meagre home equity is your savings plan.

3. …which is completely decimated when you take it out as HELOC to pay for your roof repair

4. You always do a double-take when you see rich-looking Asians walking past your still-unsold house.

5. …but usually they're just on their way to a yard sale or food bank.

6. Passive aggressive notes from ghosts of grow-ops past litter your "mortgage helper" suite

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???”

8. One look at your account and the banker just humors you for a couple minutes before shuffling you out.

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...”

10. RRSP? TFSA?? 

11. Oh? Another one of my friends just left Vancouver. That’s. Just. Fantastic.

12. Your Tenant: "My landlord lives in the basement"

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"

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

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.”

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2013/08/higher-rates-dont-mean-panic.html