OTTAWA– March 2nd, 2010 – As was widely expected, the Bank of Canada held its benchmark overnight lending rate steady at 0.25 per cent at its setting on March 2, 2010. The trend-setting Bank rate, which is set 0.25 percentage points above the overnight lending rate, remains at 0.5 per cent.

The Bank acknowledged that economic growth and inflation have recently picked up by more than it previously expected. In its most recent Monetary Policy Report published in January 2010, the Bank predicted that the Canadian economy would grow by 3.3 per cent and that core inflation would be running at 1.6 per cent in the fourth quarter of 2009.  In actuality, the Canadian economy expanded by five per cent on an annualized basis, and the core rate of inflation hit two per cent year-over-year in December 2009.

The Bank recognized that the “ongoing global economic recovery is being driven largely by strong domestic demand growth in many emerging-market economies and supported in advanced economies by exceptional monetary and fiscal stimulus, as well as extraordinary measures taken to support financial systems.” 

However, financial markets will focus attention on the change in language compared to the Bank’s recession-era announcements. In its March 2nd announcement, the Bank indicated that “the main macroeconomic risks to the inflation projection are roughly balanced.”  This marks the first time in over a year in which it judges that the risks to inflation were tilted to the downside.

The Bank also restated its commitment to keep its trend-setting overnight lending rate on hold until the second half of 2010, conditional on the outlook for inflation.

“Financial markets, however, will look past the Bank’s conditional commitment and increase bets that the Bank will move to raise rates before then,” said CREA’s Chief Economist Gregory Klump. “This will result in upward pressure on the Canada-U.S. currency exchange rate, thereby making the Bank’s assertion ‘that the persistent strength of the Canadian dollar and the low absolute level of U.S. demand [will] continue to act as significant drags on economic activity in Canada’ something of a self-fulfilling prophecy.”

“Interest rates will rise, but increases will be small and spread out over time. The Bank expects economic growth to rely on domestic demand once temporary government stimulus spending measures expire. Raising interest rates too soon and by too much runs the risk of choking economic growth,” added Mr. Klump.

As of March 2nd, the advertised five-year conventional mortgage rate stood at 5.39 per cent. This is down 0.4 per cent from one year earlier, and stands 0.1 per cent below where it stood when the Bank made its previous interest rate announcement on January 19, 2010.

Improving credit market conditions have enabled lenders to reintroduce discounts off posted mortgage interest rates. Discounts of about one percentage point can be negotiated, depending on lender-client relationship.

http://creastats.crea.ca/natl/interest_rate_trends.htm

(CREA 03/02/2010)

MARKET TRENDS REPORT 2010

Kelowna, BC (February 24, 2010) – Lack of inventory will be the greatest challenge facing housing markets across the country this Spring, according to a report released today by RE/MAX.

year, is a global real estate system operating in more than 70 countries. Over 6,700 independently-owned offices engage nearly 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.

Sales are up to 55% Sold with 6 more under contract with deals pending, once conditons on these 6 are through we will have 73% Sold. We have had a few more starts in the Meadows with Pete Semon starting construction of a 1368 sq.ft. rancher listed at $329,000 at 304 Forester Ave and Macintosh Homes nearing lock up of a 2009 sq.ft. bi-level home at $419,900 at 320 Forester Ave. With only 9 lots left all of which are on the cul-de-sac’s it’s a great time to think of that lot for your future home.

The British Columbia Real Estate Association and its members are concerned that home buyers and sellers, particularly buyers of new homes, will bear most of the burden associated with the proposed Harmonized Sales Tax (HST).

The cost of real estate transactions will increase on July 1, 2010 with the introduction of the new HST. The people of BC will be particularly affected since our province has some of the highest priced real estate in the country. Approximately 40% of all real estate transactions in BC involve sales priced over $400,000, the original threshold for an HST rebate.

On November 18, 2009 the provincial government announced the HST transitional rules on housing which includes a threshold increase from $400,000 to $525,000, moving the threshold to above the median new home price in the province. According to the government news release announcing the transitional rules, the limit was increased due to feedback from consumers and the industry. To read the news release and backgrounder click here.

For more information and to see the Residential Housing New Housing Rebates and Transitional Rules for BC click here.

The effect of the HST will also be to introduce a new tax on most services provided by GST/HST registrants in BC. As such, service-providers like REALTORS®, home inspectors, and appraisers will be required by government to collect and remit 12% HST on their fees.

The bottom line is that the proposed HST will increase the cost of buying and selling all property and it will have a much greater impact on the purchase of newly-built homes. Almost 60 per cent of the average family’s household income is required to cover home ownership costs. If the HST is implemented as planned, they’ll be paying even more.

Source: British Columbia Real Estate Association

Vancouver, BC – February 11, 2010. The British Columbia Real Estate Association (BCREA) reports that Multiple Listing Service® (MLS®) residential sales in the province climbed 118 per cent to 4,619 units in January compared to the same month last year. On a seasonally adjusted basis, MLS® residential sales in the province declined 16 per cent last month compared to December 2009.  

“Home sales in the province eased in January as a result of waning pent-up demand and eroded affordability,” said Cameron Muir, BCREA Chief Economist. “While low mortgage interest rates will continue to entice many home buyers through the spring market, consumer demand is expected to moderate from its frenetic year-end pace.”

The BC residential sales dollar volume increased 160 per cent to $2.27 billion in January compared to the same period last year. The average MLS® residential price climbed 19 per cent to $491,571 over the same period.

“Upward pressure on home prices, particularly in Victoria, Vancouver and the Fraser Valley, is beginning to slow as fewer home sales and a larger inventory reduce the chance of multiple offers,” added Muir.

The Meadows is on the move, with over 50% SOLD! This new subdivision on the east side of Comox is taking shape with some wonderful homes under construction and built. We have a number of builders creating homes with MacIntosh Homes,  James Lyle, Paul Hackert , Pete Semon and Protec  all playing a part in working with the developer Comox Lands. Together they are creating a subdivision that has character and goes the extra step to ensure the quality of homes being buit meets the expectations of today’s buyers.

According to The Canadian Real Estate Association, sales activity reached the highest level ever for the month of October.

Residential sales activity via the Multiple Listing Service® (MLS®) of Canadian real estate boards numbered 42,288 units. This is up 41.5 per cent compared to October 2008, when news of the global financial crisis hammered consumer confidence. New records for the month were reported in about one-fifth of local markets, including Toronto, Montreal, and Ottawa.

Seasonally adjusted national MLS® home sales totalled 45,818 units in October 2009. This is two per cent higher than the previous record set in May 2007, and 74 per cent above the recent low in January, when activity fell to the lowest level in a decade. New monthly records for activity were set in British Columbia, Ontario, and Quebec, which reflect record level activity in Greater Vancouver, Toronto, Ottawa, Montreal and Quebec City.

Since the beginning of 2009, some 401,124 homes have traded hands via the MLS® System. This is 1.6 per cent above the same period last year, but below levels for this period in each of the previous three years.

“Low interest rates and upbeat consumer confidence continue to release the pent-up demand that built late last year and earlier this year,” said CREA President Dale Ripplinger.  “The release of that pent-up demand has boosted national sales activity to new heights and is drawing down inventories.”

The national MLS® residential average price also reached new heights in October 2009. At $341,079, the average sale price was up 20.7 per cent from the same month last year. The increase reflects the high degree to which the national average price was skewed downward last year by a significant decline in activity in Canada’s priciest markets, and then upward by the rebound in activity.

 The price trend is similar but less dramatic for the national MLS® weighted average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. It set a record in October, rising 14 per cent on a year-over-year basis. October also saw the MLS® residential average price in Canada’s major markets improve. At $373,095, the average sale price was up 22.1 per cent from the same month last year. As with the national counterpart, the price trend is similar but less dramatic for the major market MLS® weighted average price which rose 12 per cent on a year-over-year basis in October. Seasonally adjusted new listings coming onto the MLS® Systems of real estate boards across Canada inched up on a month-over-month basis in October to 65,148 units. New listings peaked in May 2008 and declined sharply until March 2009.  Since April 2009, new listings have held to within a range of 66,500 units, plus or minus 1,800 units. The sharp rise in resale housing demand has increasingly shrunk inventories. There were 194,994 homes listed for sale on the MLS® Systems of real estate boards in Canada at the end of October 2009.  This is 20.8 per cent below the peak reached in October of last year, and the sixth month in a row in which inventories are down from year-ago levels. 

Nationally, there were 4.1 months of inventory in October 2009 on a seasonally adjusted basis, the lowest level in more than two years. The actual (not seasonally adjusted) number of months of inventory in October 2009 stood at 4.6 months, which is down slightly from the previous month (4.9 months), and among the lowest of levels this year.  The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity. 

“New listings are still expected to rise in the coming months in response to headline average price increases,” said CREA Chief Economist Gregory Klump.  “New supply dropped dramatically in December last year and earlier this year in response to a difficult pricing environment. Sellers who moved to the sidelines should be drawn back to the market as prices rise further over the rest of the year and in early 2010.”