Extraordinary Gains Over 25 Year Period

Residential real estate values in major Canadian markets post extraordinary gains over 25-year period, says RE/MAX.

Residential housing values in virtually all major Canadian centres have posted significant gains since 1981, according to RE/MAX. Leading the charge is Barrie, Ontario with an exceptional 372 per cent increase in average price ($51,665 to $244,000) over the 25-year period.

Despite the cyclical nature of the business, an analysis of 17 housing markets across the country found that price appreciation topped 240 per cent in seven areas, including Barrie (372 per cent), St. Catharines (329 per cent), Hamilton-Burlington (325 per cent), Ottawa (297 per cent), Greater Toronto Area (290 per cent), Greater Vancouver Area and Halifax-Dartmouth (242 per cent increase). Victoria reported a 229 per cent increase, London experienced an upswing of 228 per cent, Calgary was up 227 per cent, and Kelowna rounded out the top 10 at 211 per cent.

“The results are nothing short of remarkable, given the economic volatility of the marketplace in the past 25-year period,” says Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada. “This is especially true in recent years when serious external factors such as 9/11, SARS, and an outbreak of forest fires barely registered on housing activity. Any one of these disasters would have had a significant impact on real estate markets in the 1980s.”
Nationally, average price appreciated 264 per cent in the 25-year period, rising from $76,021 to an estimated $277,000 in 2006. Although a number of factors contributed to the substantial upswing in values, perhaps the greatest influence was a 25 per cent increase in Canada’s population (which rose from 24,820,393 to a projected 31,021,251 in 2005).

“For most people, homeownership has been more of a necessity of life than an investment vehicle,” says Michael Polzler, Executive Vice President and Regional Director, RE/MAX Ontario-Atlantic Canada. “The percentage increases that have occurred across the country over the past 25 years show that real estate is also a solid investment.”

Thanks to economic diversity, today’s housing markets are more insulated than in the past. Alberta’s pro-business stance, for example, has served to attract major corporations to the province in recent years. Saskatchewan’s economic base has shifted from agriculture to natural resources virtually overnight. In Ottawa, an economy once solely dependent on the one major employer in the area, the evolution of high-tech has played a substantial role in the overall health of the residential real estate market.

2006 BC MLS® Sales Second Highest On Record

Vancouver, BC – January 18, 2007

British Columbia Real Estate Association (BCREA) figures indicate the residential sales volume on the Multiple Listing Service® (MLS®) in BC reached $37.8 billion in 2006, up 7 per cent from 2005. MLS® home sales declined 9 per cent to 96,695 units in 2006, from a record 106,290 unit sales in 2005. While BC home sales declined last year, 2006 posted the second-highest number of transactions ever recorded.

“Despite strong job growth, low unemployment and rising wages, homes sales slowed in the province during the second half of 2006,” said Cameron Muir, BCREA Chief Economist. “The housing market is adjusting to an affordability squeeze resulting from high home prices.” The average MLS® residential sales price in the province climbed 18 per cent to $390,760 in 2006, from $332,137 in 2005. Last month, the average MLS® residential sales price hit $401,078, up 13 per cent from December 2005.

“Fewer first-time buyers and investors, and a modest increase in number of listings, has trended the BC housing market toward balanced conditions,” added Muir. Sales to active listings in the province fell from 27 per cent in December 2005 to 17 per cent in December 2006, indicating a shift from a strong sellers’ market to the upper band of a balanced market.

“Market fundamentals are expected to remain strong through 2007,” noted Muir. “A robust provincial economy combined with forecasted interest rate stability will keep home sales above their long-term average.” BCREA forecasts 93,600 BC MLS® residential sales in 2007, down 3 per cent from 2006. “The erosion of affordability will slow this year,” added Muir. “The average home price in BC is forecast to climb 7 per cent to $419,000 in 2007.”

In December, MLS® residential sales volume in BC declined 13 per cent to $1.77 billion. MLS® home sales in the province fell to 4,402 units last month from 5,701 units in December 2005, a decline of 23 per cent. “Poor weather in BC’s major markets adversely impacted December’s sales activity,” noted Muir.

A study prepared by Clayton Research Associates Limited found the average BC home sold on the MLS® between 2002 and 2004 triggered nearly $28,000 in additional spending, including legal fees, moving expenses, furniture and appliance purchases and taxes. Using that figure, BC homes sold on the MLS® in 2006 generated more than $2.7 billion in additional spending. Source: BCREA

Commercial Real Estate

Residential buyers keep pressure on office space.
Downtown developers continue to focus on condo market.

Derrick Penner
Vancouver Sun
Friday, January 12, 2007

If the slowing U.S. housing markets spills over to Vancouver in the form of fewer American buyers for downtown condos, that could be still be a good thing.
Developers then might turn their attention to building offices again, Shawna Rogowski, senior research associate at the commercial realtor Colliers International said in her fourth-quarter office leasing report.

Vancouver's downtown peninsula looks like a forest of construction cranes, but only one tops an office structure, the Bentall 5 building at Burrard and West Pender.
"Cranes mean nothing to us downtown any more," Rogowski lamented.

Rogowski said in her report that overall office vacancy ticked upward marginally in the fourth quarter to 5.8 per cent from 5.7 per cent in the third quarter. However, that 0.1 per cent is the equivalent of only 64,000 square feet of space.

And Rogowski added that leasing activity slowed down in the fourth quarter simply because there is less space to rent and fewer options for potential tenants.

"We'd love to see new office buildings downtown," Rogowski said.
The next office development after Bentall 5, however, will be a component of the Jameson House mixed-use tower on West Hastings Street, but that isn't scheduled to be complete until 2009.
"As of now there are no new developments," Rogowski said, "so we're looking past 2010 for new office development."

In downtown Vancouver, office vacancy ratcheted down further to 3.8 per cent in the fourth quarter from four per cent in the third quarter.

New tenants are coming downtown, Rogowski said, but not big tenants. She added that downtown's existing big tenants are looking to expand and Colliers says she advises them to take more space than they need now to accommodate future growth.

Among the suburbs, Burnaby saw its office vacancy rate drop to 4.4 per cent from 4.6 per cent in the third quarter and the North Shore's fell to 4.6 per cent from six per cent.

New Westminster also saw more leasing with its vacancy rate slipping to 16.2 per cent from 17.4 per cent in the previous quarter.

Rogowski said Richmond saw the biggest increase in vacancy, hitting 14.5 per cent in the fourth quarter from 11.8 per cent in the third quarter, for a couple of reasons. Sprint Canada and Raytheon Canada moved out of their Richmond offices, and Worksafe BC consolidated its operations causing the organization to vacate 35,000 square feet of its space on Granville Avenue.
Downtown office vacancy that keeps being squeezed is evidence yet again that Vancouver could use a big new office building or two.

Q4 Q3

Total 3.8% 4%

AAA class 2.4% 4%
A class 3.9% 4%
B class 2.3% 2.6%
C class 7.3% 7.3%

© The Vancouver Sun 2007

Another Big Year For Greater Vancouver Housing Sales

VANCOUVER, B.C. January 4, 2007 - Two thousand and six was another busy year for the real estate market in Greater Vancouver. The Real Estate Board of Greater Vancouver (REBGV) reports that there were 35,506 sales of detached, attached and apartment properties in 2006, a decrease of 12.4 per cent in comparison to the record-breaking 40,530 units sold in 2005, and a 2.1 per cent decrease compared to 2004's 36,258 sales.

"Year after year, Vancouver continues to be ranked as one of the best cities in the world to live in and that status is reflected in purchases and sales of some of the most valuable real estate in the country," says REBGV president Rick Valouche. "We've seen year-end sales surpass 30,000 units for five consecutive years now, a first in our Board's history.

"Although we're seeing lower sales than last year, it's important to note that the record-breaking sales pace of 2005 continued well into the first five months of 2006. Sales activity has been quieter since June, which is not a surprise considering we were breaking sales records on a monthly basis for well-over a year. We're still seeing rising prices, though this is now happening at a slower pace," Valouche says.

According to Multiple Listings Service® (MLS®) data for the period between January 1 and December 31, 2006, sales of apartment properties decreased 11.6 per cent to 15,088 sales, compared to 17,061 sales in 2005. Sales of attached properties decreased 7.3 per cent to 6,310 units sold, compared to 6,804 units in 2005. Sales of detached properties totaled 14,108 in 2006, a decrease of 15.3 per cent compared to 16,665 sales in 2005.

Overall housing sales for December 2006 decreased 27.7 per cent to 1,686 units in comparison to 2,332 in December 2005. Sales of apartment properties decreased 28.3 per cent to 741 sales in December 2006 compared to 1,033 sales in December 2005. The benchmark price of an apartment property in Greater Vancouver, calculated by the MLSLink® Housing Price Index, is $329,906, up 17 per cent from one year ago.

Sales of attached properties decreased 28.8 per cent in December 2006 to 312 units sold, compared to 438 units in December 2004. The benchmark price of an attached unit is $410,234, up 16.6 per cent from December 2005.

Sales of detached properties decreased 26.5 per cent from one year ago, at 633 in December 2006 compared to 861 sales in December 2005. The benchmark price of a detached home increased to $643,790, up 13.5 per cent from 2005.

Do you have questions about the local market? If so, please feel welcome to call me for a no-obligation discussion on where our locla market is headed. Call Dan McCarthy today at 604-649-1541.