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Vancouver real estate market report from Inman News Document Transcript

  • 1.    Vancouver Real Estate Market Report Market Profile: Vancouver Metro Area Monday, May 31, 2011     Vancouver Real Estate Market Report By Gilbert Mohtes-Chan, Matt Carter, Steve Bergsman This 20-page report highlights real estate market statistics and trends in the Vancouver, Canada, metro area, and includes commentary from real estate professionals. (Flickr image courtesy of Dekaritae.) INSIDE: Summary: Vancouver housing prices climb to global heights........................................................................ page 2 Market Data: Vancouver market statistics ......................................................................................................page 5 Q-and-A: Vancouver real estate professionals share their insight on market conditions, trends ................. page 6 News and Views: A collection of real estate news articles and columns focusing on Canadian markets .. page 11 ©2011, Inman Group, Inc. All rights reserved. All trademarks are the property of their respective companies. Inman News • 1100 Marina Village Parkway, Suite 102 • Alameda, CA 94501 Phone: 510.658.9252 • Fax: 510.658.9317 • www.inman.com THIS REPORT IS COPYRIGHTED. REPRODUCTION OR DISTRIBUTION  IS PROHIBITED.   1
  • 2.  Vancouver Real Estate Market ReportVancouver housing prices climb to global heightsBy Gilbert Mohtes-Chanr May 31, 2011Home prices in Greater Vancouver, Canada, continue to rise as the regions spring homebuying season got off to astrong start.Buyers flocked to the market during the first quarter, fueled by heavy sales volume in the Richmond andVancouver West areas. Although housing sales slowed in April, the benchmark housing price increased, topping$620,000.Recent changes in mortgages rules could make it even tougher for first-time homebuyers to enter the market,considered one of the priciest housing markets in the world.This report highlights real estate market statistics and trends in the Vancouver metro area and includes a chartwith detailed market data and commentary from local real estate professionals.OverviewGreater Vancouver housing sales cooled off in April after moving at a red-hot pace the previous two months.Canadas third-largest metropolitan area saw residential sales of single-family detached, attached andcondominium properties decline 21 percent to 3,225 year-over-year, according to the latest report from the RealEstate Board of Greater Vancouver. Sales were off 8.2 percent from March. The board attributed the April salesdecline to a slowdown in condo sales.The boards benchmark Housing Price Index for all residential properties rose to $622,991 in April, up 5 percentfrom $593,419. The benchmark represents the sales price of a typical property within the market and isconsidered a more accurate reflection of prices.A sales spurt of multimillion-dollar homes in some parts of Vancouver skewed the average sales price of a homenationally, pushing it up to $372,544 in April, according to the Canadian Real Estate Association.An influx of homebuyers from mainland China in the past six months has triggered a wave of seven-figure housingsales, especially in the Richmond and West Vancouver locales.The Canadian Real Estate Association reported the average sales price in April for a Vancouver residentialproperty at $815,252, easily outpacing the average sales price tracked for 15 other major Canadian cities.Neighboring Victoria ranked second nationally, at an average sales price of $508,005, followed by Toronto at$477,406. Vancouver real estate officials say Aprils residential sales reflect typical spring activity and indicate abetter balance between the supply of housing on the market and demand from homebuyers.In fact, sales were up 8.8 percent compared to the same period in 2009, and were unchanged from 2008.In contrast, the number of homes sold and added to the market moved at a near-record pace in February andMarch.Fewer new properties came onto the market in April than the year-ago period -- 5,847 compared with 7,648 inApril 2010, a 23.5 percent drop. New listings were down 14 percent from the previous month."We are sitting on a good, strong, stable market. The consumer out there is always more comfortable with anormal, stable market," said Rosario Setticasi, president of the Real Estate Board of Greater Vancouver. "Rightnow we are sitting at that edge. If sales pick up, its a sellers market again."Heres the April sales breakdown by housing type: 2
  • 3.  Vancouver Real Estate Market Report1,402 single-family detached homes, up 2.3 percent from a year ago; the benchmark price of $879,039 is up 7.4percent year-over-year.1,201 condos, down 21.3 percent from a year ago; the benchmark price of $409,242 is up 2.9 percent year-over-year.622 attached homes, up 1 percent from a year ago; the benchmark price of $514,670 is up 2.4 percent year-over-year.Unlike many of their counterparts in the U.S., Vancouver real estate professionals are seeing a steady housingmarket in a post-recession recovery. Because of tighter and more conservative lending practices by the nationsfinancial institutions, Canadas housing market isnt burdened by a glut of distressed properties as in the U.S."Our banking system tends to be a little more conservative in providing loans for homes. That (mortgage)meltdown did not have any affect in our banking industry." Setticasi said."Bank foreclosure properties are not spiking. Theres the usual amount of bank foreclosures that seem to berelated just to personal issues," said David Hutchinson, an agent at Century 21 In Town Realty in Vancouver."Foreclosures rarely are really good deals in Vancouver. There is a system in place to ensure market value of thesales price."In British Columbia, only 0.49 percent of all residential mortgages were at least three months in arrears inFebruary, according to the latest figures from the Canadian Bankers Association. Thats up slightly from 0.41percent during the same period a year ago, 0.27 percent in 2009, and 0.16 percent in 2008.Canadas economy sputtered in the second half of 2008, fell into a recession, and then began to rebound by theend of 2009. Last spring, the British Columbia Business Council predicted the province would become one of thecountrys growth leaders over the next couple of years.The councils British Columbia Economic Index continued to rise in the first quarter of 2011, signaling moderategrowth for the province."Our economy seems to be clicking pretty good out here," Setticasi said. "The West Coast is a desirable area."Desirability comes with a price, as Vancouver is one of the worlds least affordable housing markets.In a February Housing Trends and Affordability report, Royal Bank of Canada senior economist Robert Hoguewrote, "In our view, the areas poor affordability -- the RBC measures for Vancouver are still far above their long-run average -- will continue to weigh on local demand and cause a high degree of stress within the market."Compounding the affordability issue, Hogue said, is the cost of borrowing, which is expected to rise in the nexttwo years."With prices rising, there is always a concern about affordability," Setticasi said.Yet Vancouver and British Columbia, in general, remain attractive markets for Canadians looking for better jobprospects or a place to retire. Statistics show more Canadians are moving to the province than leaving, the BritishColumbia Business Council reports.Considered Canadas gateway to the Pacific, Vancouver increased its global visibility as host to the 2010 WinterOlympics. It has seen a recent wave of foreign investors, especially homebuyers from mainland China, who arepurchasing properties in areas such as Richmond and the west side of Vancouver.To seize this opportunity, some brokerages have formed Mandarin-speaking real restate teams."The Vancouver West detached home market is red-hot with mainland China foreign investment. Some homes(are selling at) a half-million dollars over asking price," Hutchinson said. 3
  • 4.  Vancouver Real Estate Market Report"The Vancouver West market is now pushing the same trend eastward to traditional blue-collar East Vancouver.Its now pushing these usually affordable, older-type homes into the $1 million range."Gilbert Mohtes-Chan is a freelance writer based in California. 4
  • 5.  Vancouver Real Estate Market ReportMarket DataVancouver Metro Area    Population (2010 estimate)  2,374,628 million  Population growth (2001‐10)  +19.5% Total closed sales (2010)  30,595 % change closed sales (2009‐10)  ‐14.2% % change closed sales (April 10‐April 11)  ‐8.2% Sales per person  1 sale per 78 people Benchmark sales price (April 2011)   $622,991 % change benchmark sales price (April 10‐April 11)+5%  % mortgages in arrears (British Columbia, Feb. 11)  0.49% % of sales distressed (March 2011)  +60% % household income needed to afford a house  77.8% % unemployment (April 11, 3‐month moving avg.)  11.8% Walk Score  72 Rent‐vs.‐ownership ratio (% households in 2006)  35%/65% Sources: Statistics Canada, British Columbia Ministry of Citizens Services, Real Estate Board of Greater Vancouver, Canadian Bankers Association, Walk Score and RBC Economics Research.  5
  • 6.  Vancouver Real Estate Market ReportQ-and-AInman News asked some area real estate professionals to share their insights on the latest real estate markettrends in the Vancouver, Canada, metro housing market.Q: What types of properties are selling fastest and slowest in your market area? Susan Keevil Agent Re/Max Select Properties In regard to the downtown attached markets, we continue to see high activity in the entry- level price points, with one-bedrooms in the $399,000 to $499,000 range moving well, especially in the core areas. Similarly, entry-level two-bedrooms in the $500,000 to $625,000 range continue to move atSusan Keevil a good pace. Westside neighborhoods with proximity to the downtown core have also seen transaction volume increases over the past few months.Renovations have been the flavor of the day on the Westside, with many owners opting for full upgrades in hope oftapping into the demographic of first-time buyers who seem to prefer "new and contemporary."Luxury properties continue to move at a more moderate rate, with a number of relatively recent projectcompletions. Westside detached homes continue to move at a great pace; the market has displayed resoundingstability over the past year or so with entry-level homes.Andrew PeckVice president and general managerRoyal Pacific RealtyThe Westside of Vancouver and West Vancouver are hot for single-family property purchases.Chinese immigrant buyers are driving this market. Since Jan. 1, for West Vancouver homespriced from $3 million to $10 million, there have been 74 sales, with the top price being $6.5million, whereas in the same period last year there were only 32 sales for that same fivemonths.Interestingly, the new-house market in the Vancouver Westside area is slow due toanticipation that there may be a tweaking of Harmonized Sales Tax (a combination of thefederal and provincial sales taxes) in the upcoming referendum. Also the buyers are Andrew Peckpurchasing older properties with the intent to have a custom home built for them at a laterdate, thus saving the HST on the land component. Scott Russell Managing broker Sutton Group Seafair Realty Richmond, Canada The fastest-selling properties in our market are single-family homes ... where the new buyer will be redeveloping in the near future to accommodate a new home.Scott Russell 6
  • 7.  Vancouver Real Estate Market ReportMatthew CollingeAgentRoyal LePage WestsideSingle-family homes are selling fast. This is being driven by in influx of buyers frommainland China who are looking for a safe place to invest in real estate. The condo market isslower. There is a ... growing supply of condos. They arent building any more single-familylots in the city of Vancouver. David Hutchinson Agent Century 21 In Town Realty Matthew Collinge I feel Vancouver is now going through its real estate renaissance. I have seen the dynamic changes that have taken place over the years: Expo 86, 2010 Winter Olympics, and the huge influx of foreign investment over the years from all over the world.David Hutchinson Dan Scarrow Vice president, corporate strategyMacdonald Realty GroupSingle-family homes in the city proper are the best-selling asset class. Apartments andtownhomes are still strong; however, the market is more "normal" and less "heated" thefurther outside of Vancouver you go.Q: Is anything changing about the demographics of buyers and sellers in your marketarea? Dan ScarrowKEEVIL: Vancouver has long been a very global market, with participants ranging all the way from mainlandChina and Hong Kong to the Middle Eastern areas, as well as Europe and the United States. Along with these veryworldly market actors we have the local Vancouverites, including many first-time buyers who quite often operateunder the dual-income models, who help fuel much of the entry-level condominium activity.Overall, the Vancouver markets have remained a steady mix of many people from many places; though we haveseen a bit of a tail-off in the luxury international "jet setter," markets with very-high-value properties often takinga bit longer to sell, with a slight downward pressure on prices.PECK: I have seen a very strong immigrant market from Asia and ASEAN member countries, particularly thosewhose economies are quite sound and where there might be political uncertainty. As the region comes out ofrecession, we see more employment, particularly of young new immigrants, and they are very keen to behomeowners quickly.Because of tightened mortgage entry standards, a lot of buyers were jumping early to get their mortgage qualifiedsooner and to hold rates. Most expect there to be some shift upward in the Bank of Canada prime rate -- slowly,over the balance of the year.This is also causing new buyers to be very conscious of rates. While most commissions we see being charged onpaper are quite typical, we do see a lot of discounting on closing deals, with rebates to both buyers and sellers.This is quite typical of new immigrants expectations in this marketplace.HUTCHINSON: Im seeing more first-time homebuyers purchasing homes with the help of their parents.SCARROW: Locals are being priced out of the single-family home market in Vancouver and are looking more atapartments and townhomes, as well as outlying suburban areas. 7
  • 8.  Vancouver Real Estate Market ReportQ: What are recent trends with prices, sales and inventory?KEEVIL: Downtown attached condominium and townhouse sales continued to be a strong point for theVancouver market. Entry-level activity has been especially busy (in) ... the False Creek North corridor andYaletown proper areas. We have, however, seen a bit of a peak in a recovery wave we have been riding for thegreater part of the past year.Westside detached homes have continued to demonstrate stability, with much of the product still moving in goodtime, and quite close to asking prices.PECK: Prices will continue to rise over the balance of this year, but not nearly as rapidly as they did in those firstthree months. We havent seen too much movement upwards in condo prices, particularly in the high end, butnew condo projects continue to have a speculative market for people who purchase with the intent to eventuallyflip for a small profit. We are also seeing a large number of sales (more than 50 percent in the key market areas)selling for more than the asking price.The other thing we have seen this year is the number of days on the market is very short for preferred areas. Goodlocations have only been on the market for mere days, whereas last year we would see properties on the market for30 to 90 days for the same area. This might modify as the spring market settles down with more listings.HUTCHINSON: Theres a marginal higher inventory of homes for sale, but prices are not declining. Richmond,which is a predominately Asian community where street signs are in Chinese and English, has skyrocketed 20percent in price over the last year.SCARROW: Prices have increased significantly in the past year, predominantly for single-family homes in themore tony neighborhoods of Vancouver. Some areas have experienced price gains in excess of 30 percent in thepast 12 months. Sales have remained brisk for the past couple of years, consistently beating the 10-year average,while inventory is low.Q: What worries you most about the current state of the market, and what represents a sign of optimism andopportunity for the real estate market?KEEVIL: As far as the central Vancouver West real estate markets are concerned (including downtown and theWestside neighborhoods), there should be room for optimism grounded in stability. We have been riding the post-recession wave for the greater part of 12 months,And though it may "crest" to a degree, we feel confident in the markets sustainability and insulation frompotential shocks. Alongside a strong contingent of global investors and part-time residents, we see a strong pushfrom our local buyers and sellers, with first-timers fueling much of the entry-level condo market, new familiesmoving up to starter homes, and empty nesters downsizing -- plus, just about everything in the middle.Healthy banking conditions and mortgage considerations make for predominantly stable and solid ownership,with minimal risk of foreclosure or short-sale activity in our core markets.RUSSELL: Affordability is always a concern in a rising market. With interest rates trending upward, it will onlyprovide more pressure on first-time buyers.PECK: Affordability and government intervention to try to quiet a market (particularly in mortgage markets) tendto have a short-term flurry effect, which drives prices up further. I also think that governments are not payingattention to the fact that we are overly taxed in the real estate sector.COLLINGE: My biggest concern is the high prices and affordability for the average Vancouver homebuyer. Thispast month has shown a calming of the Vancouver real estate market, and it is approaching a more balancedmarket. 8
  • 9.  Vancouver Real Estate Market ReportSCARROW: Prices have been increasing at an unsustainable rate for the past 12 months, while local buyers arebeing priced out of the market. Chinese immigration has always played a large role in the health of the Vancouverreal estate market and this trend is expected to continue for the foreseeable future.Q: Where are sellers moving to, and where are the buyers moving from in your market area? Does thisrepresent a change?KEEVIL: Our markets tend to act in tandem much of the time with the interactivity between the downtownattached and Westside attached markets also influencing the detached markets as families move from condos inYaletown to starter homes in Cambie or Mount Pleasant.We continue to see the influence of the global actor, with many potential buyers still coming from areas likemainland China and the Middle East. Recent developments in the Fairview and Cambie areas, including the newCanada Line, have assisted in linking many areas of Vancouver and have drawn buyers to new developments andolder condominiums in these areas due to the ease of travel around the city.RUSSELL: Many sellers are downsizing or leaving the city as they are taking advantage of lower prices insurrounding communities. This is probably pretty typical of a sellers market.PECK: Local sellers are seeing the opportunity to cash out of single-family properties and move to a condolifestyle, particularly in the high-end downtown core. Also, some are sitting on cash, waiting for what somespeculate (will be) a course correction. However, that may not be proven in the long run.An informal survey of the Okanagan retirement areas of Kelowna and Penticton has not seen a flood of Vancouverbuyers who are seeking a retirement home. I dont expect too many buyers coming from other areas of Canada orthe United States. The Asian market will remain the strong market influence.HUTCHINSON: Sellers are moving to the suburbs, where they can get more bang for their buck. For example, acouple just sold their house in Vancouver West Kitsilano, and bought another house in Vancouver East; and couldput $500,000 cash in their pocket. Also, with SkyTrain, some young couples starting new families are movingfrom downtown along to the SkyTrain line to New Westminster and Surrey, making a lateral move cash-wise, butinto larger homes.SCARROW: Locals are looking to downsize, switch asset classes, or move to other, cheaper areas of the province.A recent Macdonald Realty study found that Chinese buyers purchased 78 percent of homes priced over $2million. And while $2 million represents a luxury home in most other jurisdictions, it is the benchmark price foran average home on the Westside of Vancouver.Q: How have you changed your business to mirror the market and to capitalize on market trends?KEEVIL: The Internet continues to offer a progressive and constantly changing marketing landscape withlimitless potential for lead generation, client maintenance, and social media. Still, we remain committed to ourclients and referral system, with many of our new listings and buyers coming from recommendations from pastclients, friends and family.The Internet continues to develop and be an important tool for us as well, though we do still participate in sometargeted paper marketing and ad campaigns aimed at augmenting our other marketing types.RUSSELL: Our marketing plan is traditional real estate: Build strong relationships, encourage sellers to list atrealistic levels, and have a healthy communication plan with your clients.PECK: We have had to hire significantly more support staff to keep up with the increased number of transactions.We have seen a surge in the number of new Realtors joining the profession as well, and they are younger thanbefore -- particularly those from Asian countries. Brokerage models have not adapted too much to changingdemographics, meaning that large brokerages with several hundred agents remain core to the business. 9
  • 10.  Vancouver Real Estate Market ReportWhile sales prices might be skyrocketing, commissions have not kept similar pace. Those new entrants are willingto do more work for less money in order to get a foothold into the market. The conventional paper mail-outthrough the local postal service is now being superseded by social media and Internet advertising.This represents less cost, but is a more time-consuming approach to marketing; which, naturally has an increasedlabor cost. So, there is a trade-off there.SCARROW: Many companies now have an "Asian" strategy to try to capitalize on this market. These brokerageshave hired Mandarin-speaking agents and staff to meet this growing demand.Q: What are some overall economic trends you are seeing in your market area that will guide the real estatemarket?KEEVIL: Vancouver remains a unique market due to the international variables that see a large amount of foreigncapital flowing both into and out of the city; as such, the core Vancouver West markets tend to be a bit moresensitive to fluctuations in global economics. Anything from commodity prices to currency exchange rates canhave an immediate or delayed impact on real estate activity in the city.The stability of the Canadian banking system, election of a new Conservative majority government, andprogressively strong commodity valuations will all assist in making Vancouver a desirable area in which to ownreal estate assets, and assist in spreading the perception that Canada as a whole is better equipped, from afinancial standpoint, to deal with possible shocks and economic downturns in the future.PECK: British Columbia has come through the recession relatively unscathed. However, the shining market isreally in the Vancouver metro area rather than in other areas that have been traditionally more resourcedependent on export to the United States and other places.We dont expect any significant changes in the mortgage rates, which remain a good sign. However there remainsconcern that if buyers are overextended and once rates finally do shift upward, that some will feel shrinkingdisposable income once their mortgage debt is serviced. With rising energy prices in the region (second-highestgas prices in the country) consumers will continue to seek housing closer into the central core, which will trendprices upward.SCARROW: Canada remains a strong personal and investment destination for overseas buyers. The immigrationconsultants I work with believe that Canada is now the No. 1 desired destination for Chinese immigrants, ahead ofthe U.S. and Australia, with Vancouver absorbing the most investment-category immigrants. These factors willensure that the Vancouver real estate market will remain buoyant in the near term and midterm.Gilbert Mohtes-Chan is a freelance writer in California. 10
  • 11.  Vancouver Real Estate Market ReportNews and Views  Regulators lawsuit seeks real estate VOWsToronto Real Estate Board says its moving to implement rule changeBy Matt Carter May 27, 2011 (Flickr image courtesy of Abel Cheung.) Canadian regulators have sued the Toronto Real Estate Board (TREB), saying its denying agents the ability to share in-depth listing information with consumers through password-protected Virtual Office Websites, or VOWs. TREB -- which with 31,000 members is the largest real estate board in North America -- says its working to implement rules governing VOWs by the end of August, and that the suit by Canadas Competition Bureau amounts to little more than political grandstanding. Technology-based U.S. brokerages like ZipRealty and Redfin employ VOWs to provide consumers with access to deeper listings data, rivaling what brokers and agents see when they log in to their multiple listing service (MLS).VOW sites let consumers see previous listing and sale prices, historical prices for comparable properties in thearea, and the amount of time a property has been on the market, for example.While agents who belong to TREB can provide detailed MLS listings information to customers by hand, mail, faxor email, "there are currently no VOWs operating in the Toronto real estate market that enable customers tosearch a full inventory of listings," the Competition Bureau said in announcing the suit.In its complaint, the Competition Bureau said real estate boards and associations in other Canadian jurisdictions,such as Nova Scotia, allow members to provide Internet-based services.VOW brokerages "have lower operating costs and are able to offer markedly reduced commission rates orsignificant rebates to their customers, a practice denied to would-be innovative brokers" in the greater Torontoarea, the complaint said.In 2007, the Competition Bureau alleged in its complaint, TREB went to court to enforce its right to terminate aprospective VOW operators access to the MLS."TREB has cultivated a reputation for shutting down any broker who develops an innovative service that isprohibited by the TREB MLS restrictions, including VOWs," the complaint states. The board "has created a hostileenvironment for VOWs" in the Greater Toronto area, "resulting in a chilling effect on any broker who wouldotherwise wish to invest the time and money (including legal fees) necessary to begin operating a VOW."TREB President William E. Johnston said the board sees allowing VOWs "as a reasonable thing to do," and begana process for implementing the necessary changes to MLS policies in July. 11
  • 12.  Vancouver Real Estate Market ReportTREBs board of directors has signed off on the concept, and an MLS committee is drafting proposed rules,Johnston said. Under TREBs bylaws, the proposed rules would be subject to member comment for 60 days beforethe board of directors votes on them in August.Johnston said the rules will be similar to those adopted by the National Association of Realtors in 2008 to settle alawsuit filed by the U.S. Department of Justice.The settlement gave brokers and agents who belong to NAR-affiliated MLSs the right to operate VOW sites, andmany non-Realtor-affiliated MLSs also offer such capabilities."Its heading in a good place -- as a board were fully in favor of VOWs, we just want to make sure its doneproperly," with consumer protection in mind, Johnston said.Canada has "very strong privacy laws and laws around identification of financial transactions," said TREB boardmember Richard Silver."We have been using the NAR VOW policy as a model and are on track moving forward but sadly, not fast enoughfor the Competition Commissioner," Silver said, referring to the Competition Bureaus head, Melanie Aitken. "Asyou know, member organizations don’t have the flexibility the corporations may have."A spokesman for the Competition Bureau said regulators have been in discussions with TREB since early this year,with the goal of achieving a "mutually agreeable voluntary resolution."Eventually, the spokesman said, "it became clear to us that (TREB) was not willing to make substantive changes to(its) practices" to address the bureaus claims that the boards policies amounted to anticompetitive restrictions.Johnston called that assertion "totally ridiculous," saying TREB was engaged in good faith discussions when theCompetition Bureau filed a "headline grabbing" lawsuit with Canadas Competition Tribunal, an administrativecourt that decides disputes over issues ranging from mergers to restrictive trade practices.Asked whether other Canadian real estate boards restrict members from operating VOW sites, the CompetitionBureau spokesman said it took action against TREB after receiving complaints about that boards practices."Should any other real estate board be engaging in similar activity, wed like to know about it," the spokesmansaid.The Competition Bureau and the Canadian Real Estate Association last year entered into a consent agreement thatended a 3 1/2-year battle over rules that the bureau alleged were aimed at restricting competition from flat-fee,limited-service brokerages. 12
  • 13.  Vancouver Real Estate Market ReportNorth Americas newest real estate renaissanceNatural resources fuel housing, population boom in North Dakota,SaskatchewanBy Steve Bergsman March 11, 2011Six years ago, my wife and I took a car ride through the center of Saskatchewan, Canada, spending a few days inthe capital city of Regina and the small, isolated town of Moose Jaw. We preferred Moose Jaw.At least Moose Jaw had some quirky things going for it, such as an underground town trail. Regina seemed beat-up and despondent. I guess I arrived two years too early, because around 2007 the province of Saskatchewancaught economic fire, uplifting its two biggest cities: Saskatoon and Regina.When the U.S. and Eastern Canada began slipping into recession and residential real estate values collapsed likedeflated balloons, home prices skyrocketed in Saskatoon and Regina and investors partied like it was 1999 in aMiami Beach condo. They are still partying today, but more moderately."In Regina, three-bedroom houses that sold for about $110,000 in 2006 saw prices climb to $270,000 beforeleveling off," reported Rod Spence of Century 21 Conexus Realty Ltd. in Regina.Things were even better in Saskatoon, where the $160,000 average home price in 2007 vaulted to $300,000 bythe spring of 2010, said Norm Fisher with Royal LePage Saskatoon Real Estate. Prices have leveled off there, too,with average homes prices now fluctuating between $275,000 and $300,000.The person who clued me into the Saskatchewan renaissance was Bill Madder, executive vice president for theAssociation of Saskatchewan Realtors. "Saskatchewan used to be known for cheap houses and not many people,"he said.For the past decade, Id been visiting Canada at least twice every year and that was my impression as well. Next toNewfoundland, Saskatchewan was the most disparaged province in the country. Ask about Saskatchewan and thefirst thing someone would do is repeat the painful canard that the province is so flat you can watch your dog runaway -- for days.Realtors and homebuyers suffered. "The way it used to be in Regina was you would buy a house for $150,000 andfive years later it was worth $150,000," Spence joked, but the comment had a strong grain of truth to it.What changed for Saskatchewan were two things: one temporal and the other of more sustenance.As in the U.S., home prices were quickly escalating in most major Canadian cities since the mid-1990s so investorslooking around for cheaper playing fields discovered Saskatchewan, which had completely missed the residentialrun-up. Investment dollars poured in."In 2007, we had 4,000 transactions -- that was a 33 percent increase over the year before," Spence said aboutRegina. (In 2010, 3,500 homes were sold through November.) In Saskatoon, during that wacky 2007, home pricesjumped 20 percent. (Prices are still rising but at a much more moderate rate, said Madder, probably at a 4 percentto 5 percent pace in 2011.)As prices escalated, pure investment interest in residential housing waned, which is OK because sustainableinvestment capital has taken its place.Although mostly known for its agriculture, Saskatchewan has blossomed because demand for its natural resourcesskyrocketed, attracting billions of dollars in investment and immigration from other provinces. Saskatchewanboasts 51 percent of the worlds deposits of potash, which is used in fertilizers. 13
  • 14.  Vancouver Real Estate Market ReportLess known is the fact that Saskatchewan is Canadas second-largest producer of oil behind Alberta. However,much of Albertas oil comes from tar sands; in Saskatchewan you can get the product the old way, by pumping itout of the ground.With the development of natural resources came jobs and people to fill those jobs. "We have been running about60,000 new immigrants a year across the province over the last couple of years," said Fisher. Most of those folksettle in or near Saskatoon or Regina.Saskatoons population has grown 10 percent since the start of 2007 and today is around 225,000 people, slightlymore than Regina, which has a population of about 210,000. The latter city boasts one of the lowest vacancy ratesin the country, under 1 percent for rental housing.Both cities are playing catch-up. According to the Canada Mortgage and Housing Corp., during the first 11 monthsof 2010, 650 single-family houses were built in Regina, up from 569 units the year before. In Saskatoon, 1,522detached single-family units were built over the same time period, up from 1,004 units in 2009.Apparently, Saskatchewans good fortune has spilled south of the border into North Dakota. The Wall StreetJournal, with a headline screaming, "Resource-Rich States Surge," reported, "The states that weathered therecession best were the energy-rich states of North Dakota and Alaska."I gave a call to Dan Deutsch of www.fargohomes.com to see what was happening in North Dakotas largest city."Our economy is good; unemployment is close to 3 percent; the state budget is in the black; we have fewforeclosures; and homes on the market close in three months," he said.The median home price in Fargo stands at $160,000, about where it was last year, and very close to peak, saidDeutsch. While appreciation isnt great, the good news for Fargo homeowners is the last time the market saw asignificant downturn in residential values was back in the 1970s.From 1990-2000, the city of Fargo grew just over 20 percent, to about 91,000 people. In the past decade, Fargogrew another 10 percent to about 100,000. (The metro area counts about 200,000 people.)According to Deutsch, business has been good, as he closed an average two home sales a month in 2010. "Loansare easy to get here," he said. "The banks arent afraid to lend money."For a long time, North Dakota, like Saskatchewan, had not been on anyones radar as place to find work and live,but the northern Midwest states and provinces are finally having their day in the economic sunshine.Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "After the Fall:Opportunities and Strategies for Real Estate Investing in the Coming Decade," has been ranked as a top-sellingreal estate investment book for the Amazon Kindle e-reader. 14
  • 15.  Vancouver Real Estate Market ReportReal estate tales from the borderlandsSizing up capital cities along U.S.-Canada boundaryBy Steve Bergsman Nov. 29, 2010About two months ago, I took a look at how the housing markets in two of North Americas capital cities --Washington, D.C., and Ottawa, Canada -- fared in the recent downturn.As it turned out, both markets saw some slight downturn, but with a stable employment base of federal workersand government lobbyists, the cities came through the global recession without the bruising real estate marketmaladies experienced in other major cities.That got me thinking about state and provincial capital cities, so I abstractly chose a region in North Americaalong the Canada/U.S. border to take a peek at municipalities where smaller but equally prevalent governmentbureaucracies were a key factor in the local economies.My region of choice was northern New England and the province of Quebec, which borders my three states offocus: Vermont, New Hampshire and Maine.It was interesting to throw the province of Quebecs capital city, Quebec City, into the mix because of the fourlocations it is really the only one of significant size with a population of almost 500,000 (the metro population ismore than 700,000).In comparison, the three northern New England capital cities are tiny. The largest is Concord, N.H., at 43,000people, and then we get to two of this countrys smallest capital burghs: Augusta, Maine, at 19,000 people; andMontpelier, Vt., at 7,800.While the three U.S. capital cities experienced minor economic tremors from the global recession, Quebec Cityprobably did as well, if not better, than most major metropolitan areas in North America. Of course, these are allolder cities where the local housing markets saw modest gains during the boom times and didnt really expect toomuch disappointment in the bust.As a provincial capital city, Quebec City is extremely dependent on its government bureaucracy, which accountsfor 30 percent of jobs. Toss in a big, still-expanding insurance industry presence and thats about 50 percent of alljobs.There is also a growing manufacturing sector. Earlier this year, Quebec City boasted the lowest unemploymentrate in Canada, at below 4 percent.After extrapolating that cursory employment information, you might hazard a guess that the housing market inQuebec City rests on very stable ground. And you would be right."The market is strong today, and prices continue to rise," reported Jeannette Casavant, an independent real estateagent in the city.However, the one sign of weakness in the market is that it is taking longer to sell a house today. "Before, if a housewas on sale you would immediately have three offers at the same time. Now, it sells within 60 days. There are stilla lot of buyers out there," said Casavant.Going back a decade, Canada suffered an economic slowdown and housing prices weakened across the country,including in Quebec City. So back in 2002, if you were lucky you might have a found a two-bedroom condominiumin a great Old Town location for $200,000. Today, if it went on the market it would sell for $500,000."Prices have appreciated quite a bit lately and that means we have gained back what we lost 10 years ago,"Casavant said. "Prices will continue to rise." 15
  • 16.  Vancouver Real Estate Market ReportIn 2008, the unemployment rate in New Hampshire was a mere 4.3 percent. A year later, unemployment spikedupward to 7.2 percent, the states highest rate in 17 years.That wasnt felt too severely in Merrimack County, where the capital city of Concord can be found."It always seems as if the state has a lot of job openings," said Karen Hatch, regional development manager forThe Bean Group in Bedford, N.H."If you are looking for employment, go to the state site -- there are always listings for jobs," she said. "I haventheard the state was laying off; it seems as if we are not at capacity for jobs."As for the housing market in Merrimack, the downturn has been very mild."In 2009, the average selling price in Merrimack County was $206,000; it was $201,066 in 2010," Hatchreported. "As for the average amount on time on market before a house sells, its averaging 146 days this year,about the same as the year before."Things are looking even better in Kennebec County, Maine, home to the capital city of Augusta and a populationbase of 117,000 folks.The median sale price of a home from January 2010 to July 2010 was up 2 percent over the same period the yearbefore, noted Anne-Marie Haywood, regional development manager for The Bean Group, in Portsmouth, N.H."The number of units sold from January 2010 to July 2010 hit 560 -- thats up from 507 units, again for the sameperiod of time in 2009."Both the private and public sectors cut jobs in Kennebec County, said Haywood. She suspects the salubriousnumbers in the first part of 2010 had something to do with the tax incentive. It will take a few more months, post-ending of the tax credits, to see if the local market has indeed held strong.One troubling sign for Kennebec County and the surrounding region: After government, the biggest industry istourism, and visitation numbers are down.The one regional capital city where the housing market noticeably softened was Montpelier, Vt., which is thesmallest capital city in the country. The shire is located in Washington County, home to 58,000 very independentcitizens."Our major industries are government, government-associated industries and insurance," said Tim Heney, aprincipal with Heney Realtors in Montpelier. All that couldnt bolster the housing market.Average home prices peaked in 2006 at $242,600 and then fell to $188,100 in 2009. Back in 2006, homes soldbriskly with an average time on market of about 40 days. Today, it takes 120 to 140 days to sell a home.The numbers look worse than they are, said Heney, because what has been selling has been lower-end homes."Montpelier is very stable," he stressed. "People are buying homes -- there are just not as many buyers as wewould like."More than 200 years ago, the English kicked the French out of North America. Today, the economy in the formercolony of New France outpaces neighboring New England. Revenge is sweet, even if it is a bit late.Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "After the Fall:Opportunities and Strategies for Real Estate Investing in the Coming Decade," has been ranked as a top-sellingreal estate investment book for the Amazon Kindle e-reader. 16
  • 17.  Vancouver Real Estate Market ReportCashing in on capital city real estateInvestment qualities that make these areas good buysBy Steve Bergsman Aug. 20, 2010 (The Parliament House in Ottawa, Canada. Flickr image courtesy of spettacolopuro.) Anyone lucky enough to be living in or near the national capitals in the U.S. or Canada over the last four years lived through something few other homeowners in those countries experienced: home-price stability. Sure, in certain sections of city metros surrounding national capitals, home values softened, but for the most part homeowners saw little price deflation. Thats because capital cities boast a very stable workforce of government bureaucrats and a panoply of private-sector consultants, lobbyists and contractors that feed the federal bureaucracies. In addition, in recent years, a number of companies have shifted majoroperations to capital city areas just to be closer to their government paymasters."The largest movement of people occurs with the shadow government, which relates to government contractors,"said Pauline Thompson, president and founder of Tysons Realty Inc., in the Washington, D.C., suburb of TysonsCorner, Va."Northrop Grumman, Hilton and Volkswagen International have moved headquarters or key operations to theD.C. area. And there are so many computer companies coming here because they are getting huge contracts. Thecomputer firms are looking to hire thousands of employees."She added, "We are still in a war so military contractors are being awarded billions of dollar in contracts, and theybring in 200 to 400 subcontractors. They all need a place to live."The salubrious capital city home markets occupied my attention because in early summer I had the opportunity tovisit Ottawa, Canadas lovely, but often overlooked, capital.Americans who travel often to Canada end up having favorite places -- usually its Vancouver, Toronto or OldQuebec. Those with a yearning for the great outdoors go to the Canadian Rockies.No one ever chooses Ottawa, the countrys capital. Its a prejudice probably felt more strongly among Canadians,themselves. In the U.S., almost all Americans will at some point in their lives make the hegira to Washington, D.C.Canadians fly over Ottawa on their way to somewhere else.However, ask Ottawans where they prefer to live, and nine out of 10 would choose their home city, which mixescultured urbanity with an accessibility to the great outdoors. It also has good politics.The Ottawa housing market resembles, but not too closely, that of Washington, D.C.The global recession also hit Canada, but Ottawa suffered less than other big Canadian cities. In Ottawa, six of 10workers are employed by the federal government, education (four universities) and health care.Changes in administrations generally cause minor housing-market tremors. In Ottawa, incoming politicians rent.In Washington, D.C., the Republicans of the Bush administration were buyers of homes, but the Democratsarriving with the Obama administration have been renters. 17
  • 18.  Vancouver Real Estate Market ReportThe population of District of Columbia proper stands at about 600,000, with the metro area at 5.3 million. Thepopulation of Ottawa city now totals 900,000, but the metro is much smaller than D.C. at 1.4 million.The average cost of a home in the Washington, D.C., metro is around $500,000, Thompson said. In Ottawa, theaverage home is $333,000, reported Chris Rhodes of Coldwell Banker Rhodes in that city.Although, Rhodes adds, the "average" home price is misleading. Unlike Washington, D.C., Ottawa is notsurrounded by vast suburbs but by a large rural area where homes are much cheaper. The city of Ottawa boasts agood population density and, as Rhodes points out, finding a home in the $333,000 range is "a challenge."At the high end, homes are still cheaper in Ottawa.The most prominent high-end neighborhood in Ottawa is called Rockcliffe Park, which can be found about twomiles from the center of the city."The leader of the opposition has a house here, as does the prime minister and the governor general," Rhodessaid. "Its a very pretty area and not a lot of homes under $1 million. Many homes fall into the $3 million to $4million range, although one recently sold for $8 million."That home had some history, as Princess Juliana of The Netherlands lived there during World War II. Recentowners acquired the neighboring property, so the grounds now total more than an acre, part of which sits on asmall lake. No politicians were involved in this purchase. The past owner was in high tech, as is the new owner."Rockcliffe now represents just one-third of the high-end transactions in the city, as million-dollar home sales areoccurring in different areas," Rhodes said. "The other sales have occurred along the waterfront of the Ottawa andRideau rivers and in a nice (actually, one of the hippest core city locations) neighborhood called The Glebe."Ottawas original condo market began developing back in the 1970s and then fizzled out until around 2000, whenanother huge spurt of construction created mid-rise condo developments in or near the downtown. Althoughsome high-end condo sales have been near the seven-figure mark, this is a market that is unstable, Rhodes said, asabout 50 percent of recent sales have been to investors, not end-users.Of course, both the Washington, D.C., and Ottawa metros have lower-end neighborhoods. Ottawa was built on thebanks of the Ottawa River and once you cross the bridge to the other side, you enter French-speaking Quebec,where the population is generally poorer.In the D.C. area, Thompson reported many foreclosures in markets like Woodbridge, Manassas and Sterling inVirginia, and Gaithersburg in Maryland, where there was a higher proportion of subprime loans.I asked Rhodes how he, personally, was doing, and he lit up.Back in 2005, he sold 25 homes. In 2009, which was a low point for U.S. home sales, he sold 35 homes. This year,he thinks he will hit the same high-water mark. Last year, his high-priced deal was a $950,000 home.This year, he has a listing on a $975,000 property in another higher-end neighborhood on the west side of Ottawa.By the time you read this column, that home could already be sold, as homes are selling briskly, often turning overwithin 40 days of listing."We have been blessed," said Rhodes. "We have a low unemployment rate here; prices have been climbingsteadily; and from a Canadian standpoint, we are reasonably priced."Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "After the Fall:Opportunities and Strategies for Real Estate Investing in the Coming Decade," has been ranked as a top-sellingreal estate investment book for the Amazon Kindle e-reader. 18
  • 19.  Vancouver Real Estate Market ReportWestmount: Canadas Beverly Hills?Montreal borough has celebs, multimillion-dollar homesBy Steve Bergsman April 14, 2011 (Homes in Westmount, a Montreal borough. Flickr image courtesy of Peter Blanchard.) This past winter, my wife and I were taking a tour of Montreal when our guide mentioned that Westmount, the area of the city we had just passed, was probably the only place in Canada where homes hadnt lost value during the global recession of the past four years. My attention, which had been waning, suddenly perked up and I asked the guide to give my wife and me a quick swing through the area. My guide, a lovely, informative Montreal native, Annique Dufour, was absolutely right on about all things Montreal -- except for Westmount homes not losing value -- but she is forgiven since Westmounts recession barely lasted 12 months and the homes lost value in the single digits, at most. Westmount, which is really a borough of Montreal, experienced a drop in prices of 5 percent from 2009-10, notes Marie-Yvonne Paint, a brokerwith Royal LePage Heritage in Montreal. "2009 was the year of the global economic crisis, and people stoppedbuying because they were waiting to see what would happen. They were holding back, but by 2010 Canadas andMontreals economy appeared to be fine and everyone came back to the market."The years 2002-09 were excellent years for Westmount, and 2009 weakened only because of the economic crisis,Paint adds. "By 2010, sales were flying. There was such a demand for Westmount homes that the number ofhomes sold in 2010 increased by more than 17 percent."Paint, who specializes in high-end properties, does about 80 percent of her business in Westmount because "thisis where we have the most expensive homes."In 2010, Paint boasted an extraordinary year, personally selling over $100 million in properties. Shes hoping themarket stays hot, hot, hot through 2011, although realistically she doesnt think it can maintain that kind ofmomentum.Westmount begins (or ends, depending on your perspective) near the crest of Mount Royal, the iconic mountainpark at the center of Montreal. Most of the expensive homes, with values in the multimillion-dollar range, areclose to the higher elevations because of the extraordinary views of the St. Lawrence River in the distance.As the neighborhood eases into the flatlands, it becomes more urban looking and instead of large single-familydwellings there are more duplexes, triplexes, condos and apartments.Dufours parents lived closer to the heart of Westmount, while she and her daughter lived in an apartmentbuilding where the land eases into the city proper.The homes attract a lot of attention because of prices, but its the urban part of Westmount that has been veryactive lately because properties are cheaper and demand has been strong -- especially from young professionalslooking for a more citified experience, i.e., walking distance to shops, services and restaurants. 19
  • 20.  Vancouver Real Estate Market ReportWestmount has all types of properties, and some of those in the flats, although somewhat standard, have seen verystrong prices, observes Thomas Castle, also a Royal LePage broker. He recently sold half a duplex for $250,000.Homes closer to the flatlands can still be found in the $600,000 to $700,000 price range, but they need a lot ofwork, and have little land and no garage, Paint says. Also, condominiums in Westmount are selling very well, atabout $700 to $800 a square foot."Right now in Westmount, theres a feeling that there should be more product on the market, but what is presentlyon the market is being looked at and purchased," Castle says. "Real estate prices are the result of the balancebetween supply and demand, and in Westmount the demand is stronger than the supply."During the intense growth years of Montreals history, between the 1850s and 1930s, most of the English-speaking, wealthy families of the city lived closer downtown, in an area called the Golden Square Mile.Then, by the turn of the 20th century, the adult children of the wealthy began settling in Westmount, which wason the west side of Mount Royal. The wealthy French-speaking families preferred the east side of Mount Royal, inan area that is called Outremount. To some extent, that language divide still exists today.Outremount home prices can challenge those in Westmount, although on a general level Westmount remains thepriciest neighborhood. Still, Paints most expensive deal in 2010 was an Outremount home that sold for $5.3million to a couple from Paris.That house totaled 8,000 square feet and rested on a 20,000-square-foot plot of land. Paints other big deals,homes that sold above $2 million, were in Westmount.The highest-priced home Paint sold in Westmount fetched $3.5 million -- that home has 4,500 square feet,nestled on 11,000 square feet of land. "This home sits on the top of the mountain with an incredible view of theriver and the city," she says.Generally, you have good company in Westmount. Former motion picture actress Norma Shearer and singerLeonard Cohen were born in this neighborhood. Today, you can find a smattering of Montreal Canadian hockeyplayers, former Prime Minister Brian Mulroney, Quebec Premier Jean Charest, racing driver Jacques Villeneuve,and fashion magnate Lawrence Stroll (Michael Kors).As its own borough, Westmount has a few other desirable advantages, says Dufour."My parents moved to Westmount because as its own municipality (borough) you pay a little more in taxes, butthe services are phenomenal," she says. "We get six months of winter, and even in a huge snowfall the streets areplowed within 36 hours, whereas the rest of Montreal can take upward of two weeks."Steve Bergsman is a freelance writer in Arizona and author of several books. His latest book, "After the Fall:Opportunities and Strategies for Real Estate Investing in the Coming Decade," has been ranked as a top-sellingreal estate investment book for the Amazon Kindle e-reader. 20