Dean Muscardin's Blog

December 2008 housing outlook by REMAX of Western Canada

12/3/2008

2008/12/03

Eva Blay
Point Blank Communications
Phone: (416) 781-3911

Marie Selby
RE/MAX of Western Canada
Phone: 250-860-3628

Threat of global recession to hinder home sales in major Canadian housing markets in 2008 and 2009, says RE/MAX

Recovery linked to economic stability next year

Kelowna, BC (December 3, 2008) -- Global economic uncertainty weighed heavily on residential real estate activity in most major Canadian centres during the latter half of 2008. Although the forecast for 2009 promises more of the same, most markets are expected to weather the storm, says RE/MAX.

The RE/MAX Housing Market Outlook for 2009 examined residential real estate trends in 22 markets across the country and found that average price held up remarkably well in 2008, despite 13 centres reporting double-digit declines in home sales. Solid gains earlier in the year likely served to prop-up housing values at year-end. The prognosis for housing activity in the first six to nine months of 2009 is somewhat static, given continued volatility in financial markets and the threat of recession, but as stability returns to the financial sector, housing markets are expected to recover.

Nationally, 440,000 homes are expected to change hands in 2008, down 15 per cent from record 2007 levels. Canadian housing values are expected to hover at $300,000, a nominal three per cent decline from last year’s historic peak. By year-end 2009, unit sales should match 2008 levels, while average price is forecast to fall another two per cent to $293,000.

“Canada’s real estate environment is considerably more complex than it has been in recent years,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “The landscape is definitely changing - with most markets shifting into either balanced or buyer’s territory. The shut out is over. Sellers no longer rule the roost. Opportunities exist for purchasers like never before, including lower interest rates, greater inventory levels, the luxury of time to make decisions, and the upper-hand at the negotiating table. Motivated vendors will need to take note of the new mindset and set their prices accordingly.”

Major markets are evenly split in terms of housing performance in 2009, with 11 centres forecast to match or exceed 2008 home sales and 11 expected to slide from 2008 levels. The highest percentage increase in unit sales is anticipated in Saskatoon, where the number of homes sold is forecast to climb three per cent in 2009. Housing values are expected to hold the line in 2009, with St. John’s, Montreal, Kingston, London, Winnipeg, Saskatoon, and Regina posting modest gains in average price in 2009.

“Housing market performance will clearly be contingent on economic performance at a local, provincial, and national level in 2009,” says Michael Polzler, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. “Issues affecting the overall economy are impacting housing markets across the country and the situation is not expected to be remedied until consumer confidence is restored. That said, we could see a bounce back as early as spring – if inventory levels remain stable, pent-up demand kicks into gear, and lower interest rates stimulate home-buying activity.”

Canadian sellers are slowly adjusting to new realities. For most markets, 2008 started in balanced territory and moved into buyer’s market conditions during the latter half of 2008. The year ahead will prove challenging, especially for vendors.

“While the economy will dictate real estate performance next year, it’s important to remember that demand still exists in the marketplace,” says Sylvain Dansereau, Executive Vice President, RE/MAX Quebec. “In the midst of stock market turmoil, sold signs continue to appear on lawns across the country. With affordable lending rates and increased selection, first-time and move-up buyers with good credit may choose to play their investment strategy safe and purchase a home. The comfort of a tangible investment like real estate goes a long way in tough times.”

RE/MAX is Canada's leading real estate organization with over 18,000 sales associates situated throughout its more than 670 independently owned and operated offices across the country. The RE/MAX franchise network, now in its 35th year, is a global real estate system operating in close to 70 countries. More than 7,000 independently owned offices engage more than 100,000 member sales associates who lead the industry in professional designations, experience and production while providing real estate services in residential, commercial, referral and asset management. For more information, visit: www.remax.ca.

Click Here for RE/MAX 2009 Outlook

Mr. Cam Good - GREAT ANSWERS TO FREQUENT QUESTIONS

8/27/2008

How is the Market? It's normalized. It's frankly healthier and more sustainable than it was.

What is the Market Going to Do? You'll see listings decrease and sales increase as people realize the bad news headlines they see are just sensational sound bites used to sell newspapers and TV commercials and in fact the sky is not falling. Prices in the Okanagan should rise 8% over the coming year.

Is this a Buyer's Market? It feels like it right now because inventory has shot up and buyers have so many great choices. As inventories come down you'll see a strong balanced market.

Could What Happened in the USA Happen Here? ABSOLUTELY IMPOSSIBLE. The American sub prime disaster HAD to happen. It was George Soro that said "the economy is global, yet the US continues to act in isolation." When we talk about a buying frenzy in BC, we are talking about buyers with pre-approved rate frozen mortgages for 24, 30 and 36 month delivery. This mortgage product was not available in America. BC buyers have 10, 15, 20 and 25% deposits.America is in a credit crunch. You NOW require a job and a down payment to buy a home. Before, you didn't. You could purchase with no decs and no docs. A 10 year old could buy. What will turn America around? Confidence.

Could What Happened in Alberta Happen Here? ABSOLUTELY! It already is! Look to Alberta, to be a leading indicator of what can happen here. Prices went up an average of 36% in 2006. Albertans spent 2007 deciding that they would like to cash out at the top. Listings through the roof. Days on market way up. Headlines: "The Sky is Falling!" Absorptions remained the constant. Abundant listings, bad news headlines and fear paralyzed the market. The paralysis is lifting now. There were never any economic reasons for the cooling.

Mr. Cam Good - FACTS

8/27/2008

People crave normality.
Prices have gone up and up and up. Then the USA crashed. Then Alberta "crashed". People worry it will happen here, grow naturally skeptical about our market and decide to sell. Listings go up. Days on market go up.
Investors have changed. Gone are the pure flippers and active are people looking to hold and rent while enjoying assignment privileges as just one of their options.
We're in a very natural period of insecurity and questioning created and fostered by headlines and conversations over dining tables and at cocktail parties. Headlines are sensational sound bites taken in complete isolation. When you read the story it often does not support the headline.
There are no macroeconomic forces causing a downturn in the real estate market.
Immigration and BC economy are strong.
Borrowing costs will stay put for the near future. Cuts may come later this year.
Kelowna is a world-class resort city. There are millions and millions of people in Canada alone that would love to live here. Don't take what you have for granted.
The worm has turned in Calgary. Listings have decreased three months in a row and MAC has sold more homes in the past two months than they did in the previous six.
MAC is consistently doing deals but realtor participation has dropped from 76% to less than 10% over the past few months. At one site in Calgary we have done 30 deals in the past 60 days but not one of those buyers were brought in by a realtor whereas a few months ago 76% of buyers were represented by realtors! The market confidence problem exists more in realtors than even the public.
The condo living model works. MLS data shows that condos compared to single family are becoming increasingly popular. Buyers are choosing greener options, ecodensity and ease of living.
The results of a $5 Billion marketing branding program that is the Olympic Games will blow us away. We're not ready for the wave that's going to hit us. Think of the guaranteed increases in tourism FOREVER.
Premier Gordon Campbell announced $14 Billion on infrastructure and transportation spending after 2010.

Decade in Review report

2/21/2008

Here is RE/MAX's Decade in Review report. See how much your home area has changed in value over 10 years ago.

http://www.remax-western.ca/resources/Decade-in-Review(1997-2007).pdf

Call Dean with any questions.

First Time Home Buyers PTT limit raised

2/20/2008

First Time Home Buyers' Program - Thresholds

Effective February 20, 2008, the fair market value threshold for eligible residential property under the First Time Home Buyers' Program is increased. The new threshold is $425,000 which is increased from $375,000. A proportional exemption is provided for eligible residences that have a fair market value of up to $25,000 above the new threshold.

First Time Home Buyers' Program - Elimination of Financing Requirements

Effective February 20, 2008, the financing requirements to qualify for the First Time Home Buyers’ (FTHB) Program are eliminated. This means that if a property is purchased on, or after, February 20, 2008, the purchaser is no longer required to meet any financing requirements to qualify for the FTHB program.

If a property is purchased before February 20, 2008, the purchaser must meet the financing requirements that were in place when he or she purchased the property. However, effective February 20, 2008, all purchasers (including persons who purchased their property before February 20, 2008) are free to pay down any amount owing on their mortgage and remain eligible for the exemption. For more information, please see Bulletin PTT 004, First Time Home Buyers’ Program.