Housing sales numbers in November indicate a fairly balanced market.  While activity on the buyer side has been fairly stable, with slight increases, we have seen the number of homes listed for sale decline each month since June (when we reached a peak).  The President of the Real Estate Board of Greater Vancouver has said that “home values have been relatively stable [as well] over the last five months, [especially] compared to the summer when we were seeing some downward pressure on prices.  It’s the homes priced accurately for today’s market that are receiving a lot of attention and selling right now.”

In November residential sales improved in Vancouver compared to the previous four months, with homes sales posted at slightly higher than the ten-year average for that month.  The increase in sales was 7.4% from October 2010, but is still sitting at an 18.6% decline from November 2009.  It seems as though the past few years have been all about fluctuations, as looking back further we can see that sales are up 187.1% from November 2008, down 13% from November 2007 and up 6.4% from November 2006.

Total listings for the region are currently at a 12.1% decline from last month, but have increased 12% from November 2009, and are balancing out quite nicely.

To hone in more specifically on the West Vancouver market we can see that residential home listings in November 2009 were 81 units, compared to 102 in October 2010 and 79 in November 2010.  Similarly, residential home sales in West Vancouver have gone from 71 units in November 2009, to 59 and 69 units in October and November 2010, respectively.

The figures for apartments in West Vancouver are as follows: Listings for November 2009 were 31, while they were at 14 and 28 in October and November this year; sales for November 2009 were 15, compared to 15 and 17 in October and November respectively.

In the past year we have also seen a 5% increase in the average benchmark price of a residential home in West Vancouver.  This compared to a three year change of 0.9% and a five year change of 28.3%.  The benchmark price is currently sitting at $1,420,220.

We have created a table below for comparables of the benchmark price among apartments, attached homes and detached homes in West Vancouver.  An additional table has been made to track listings and sales in West Vancouver over the past year.

COMPARING BENCHMARK PRICES IN WEST VANCOUVER
                                       Benchmark Price              One Year Change            Three Year Change           Five Year Change
Detached                          $1,420,220                                   5%                                         0.9%                                     28.3%
Attached                            $754,057                                     5.5%                                       7.1%                                     49.3%
Apartments                       $652,335                                      7.3%                                     -2.6%                                     45.0%

WEST VANCOUVER LISTINGS VERSUS SALES – YEAR to DATE
Month               Jan        Feb        Mar         Apr       May      Jun      Jul      Aug      Sep      Oct      Nov
Listings            142        110        179         195      226       143     103       99       124      102      79
Sales                 26          60          72           91        64         66        56       46        56         59      69

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COMPARING BENCHMARK PRICES IN WEST VANCOUVER
                                       Benchmark Price              One Year Change            Three Year Change           Five Year Change
Detached                          $1,420,220                                   5%                                         0.9%                                     28.3%
Attached                            $754,057                                     5.5%                                       7.1%                                     49.3%
Apartments                       $652,335                                      7.3%                                     -2.6%                                     45.0%

WEST VANCOUVER LISTINGS VERSUS SALES – YEAR to DATE
Month               Jan        Feb        Mar         Apr       May      Jun      Jul      Aug      Sep      Oct      Nov
Listings            142        110        179         195      226       143     103       99       124      102      79
Sales                 26          60          72           91        64         66        56       46        56         59      69

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Over the past four months, conditions in Greater Vancouver are indicating stability in the residential housing market.  While the statistics show that we are still sitting in a buyers market, homes priced properly are selling.  The Real Estate Board of Greater Vancouver has recently reported that since June, residential home prices have remained arguably unchanged, with a decrease of only 0.2%. 

But things are looking up.  Compared to September 2010, the number of residential sales went up 5.3% in October.  And going forward into the last two months of the year, the board says “buyer demand is in closer alignment with supply than we’ve seen for most of 2010.  Those buying today recognize that they still have a chance to enter the market with near-record low interest rates, while gradual reductions in inventory have eased downward pressure on prices.”

To quantify these points, MLS listings in West Vancouver for October 2010 were reported at 102 detached homes; detached sales for October were 59.  This compared to the spread of 124 listings in September 2010, to 56 sales.  We can really see the gap starting to close.

To gain insight into the longer term implications, we are still seeing total residential sales down 39.6% from October 2009.  More specifically in West Vancouver, October 2009 saw 141 residential detached homes listed and 84 sold, compared to 102 listed and 59 sold this October. 

We can also report that apartment listings in West Vancouver during October 2009 were 34 compared to 39 in September 2010 and 14 this October, while sales compared at 19 in 2009 to 16 and 15 for September and October 2010 respectively.  So while there is room for improvement, we can definitely see that the market is moving in a good direction.

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Since August, home sales and prices in Greater Vancouver have been quite consistent with activity levels reported in the previous two months.  Between August and September prices have gone up 0.1%, while total home sales in Greater Vancouver have increased by 0.8%, both numbers supporting consistent market trends.  Long term, however, home sales are still at a 37.6 % decline from September 2009.  The Real Estate Board of Greater Vancouver reports that in the last three months they have seen fewer properties coming on the market, which combined with low interest rates is likely having the effect of less downward pressure on home prices.  Having said that, at this point in time prices have fallen 2.7% since the all-time high we saw in April 2010. 

In keeping with the trend of consistency, total active listings as reported by the Real Estate Board have remained basically unchanged since August.  To gain perspective, we look back further and see that active listings have declined 12.3% in the last three months and 22% since last September.  In terms of new listings posted, this September has 17.6% fewer new listings than September 2009.  To quantify this with numbers, in West Vancouver, specifically in September 2009, there were 169 active listings and 66 sales for detached homes; last month West Vancouver totalled 124 active listings and 56 sales.

But there is good news looking forward.  On average in September it took three days less to sell a home than it did in August, which is the first month-over-month decline we have seen since April.  The average is currently sitting at 56 days to sell a home.

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Conditions in the Greater Vancouver market are continuing to favour buyers.  The Real Estate Board of Greater Vancouver has recorded prices that have slowly dropped since April as the number of sales and the numbers of properties coming on the market have been declining.

To take a look at the big picture, the Real Estate Board of Greater Vancouver has provided statistics on residential sales over the past five years.  Though we can see that sales have increased 40.4% over August 2008, the over all trend in sales is in decline.  Compared to August 2007 sales are down 34.9%, while going back as far as August 2006 shows a drop today of 26.6%.

To quantify these points, MLS listings in West Vancouver for July and August 2010 were reported at 103 and 99 detached homes respectively; while detached sales for July were 56 and only 46 in August.

Yet despite the drop in sales, new listings are coming out steadily and are up 29% from August 2009.  With moderate demand levels and low interest rates, our market place is favoring those looking to buy.  New listings are starting to slow down, but overall the supply in the market is still outweighing the demand. 

In terms of pricing, detached homes in West Vancouver specifically have seen a one year change in the benchmark price of 5.0%, and the apartment benchmark price in West Vancouver has increased 13.9% in the same amount of time.  However, since the spring, house prices have decreased 2.8%, moving away from the all time high we hit in April and reports show that house prices are starting to stabilize. 

As a result of the changes in the Vancouver market over the last couple of months, we are seeing our city emerge as an attractive destination for foreign buyers, and activity in West Vancouver this past month has been particularly active with foreign investment.

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The HST implemented in July 2010 has left many people wondering what implications this will have on the purchase and sale of their homes, and the entire real estate transaction.

When a purchase is made of property, including land, or a service that has been subject to GST in the past, that transaction will now be subject to HST.  The tax will apply to purchases, leases and other acquisitions of property and services made in BC.  It will be set at 12%, combining the 5% federal tax and 7% provincial tax. 

The general rule in regard to housing is that purchasers will be required to pay HST on new homes, if both ownership and possession of the home is transferred after June 2010.  The term new housing refers to both newly constructed homes and substantially renovated homes. 

It is also important to know that the HST may now affect costs you encounter throughout the real estate transaction.  Though resale of homes will not be subject to HST, services used in the process of any sale will likely incur the tax.  This includes services like inspections, legal fees, commissions and other closing costs.

In the past, in the housing industry, individuals have been eligible to receive a GST/HST new housing rebate, which is a rebate of the GST (federal tax) on new housing.  With the implementation of the HST this rebate will still be available in BC.  This rebate is generally available to an individual if they build or substantially renovate their home for use as a primary residence, for themselves or their family.  In addition, the market value of the home must be less than $450,000 in order to receive the rebate.

Along the same lines, the British Columbia new housing rebate is available for eligible individuals, and grants a rebate on the PST (provincial tax) of a new home.  This rebate will be available under the following circumstances:

1)    The individual is entitled to receive the GST/HST new housing rebate
or
2)    The individual would have been entitled to the GST/HST new housing rebate if the market value of their home has been less than $450,000.

Upon these qualifications being met, the BC new housing rebate will be 71.43% of the provincial part of the HST  (7%) that was paid to build or renovate the individual’s home.  A maximum rebate amount has been set at $26,250 if HST was paid on the purchase of land, and a maximum of $17,588 if HST was not paid on the purchase of land.  This rebate will be available, up to the maximum amounts, regardless of the purchase price, so long as all other conditions are met, and can be received even if the individual is not eligible for the GST rebate.

To apply for these rebates the purchaser must complete at provincial rebate schedule, as well as a GST/HST new housing rebate application.  Both forms must be completed, even if the individual is only eligible for one rebate.  These forms are available on the CRA website at www.cra.gc.ca/gsthstpub

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A brief overview of the HST can conclude that where we used to pay GST, we now pay HST.  With a tax rate now set at 12%, a combination of 5% GST and 7% PST, families may wonder how this will affect day-to-day living and at this time of year, how will it affect getting their children back to school.

We have provided you with a snapshot and some examples of where you should expect to find HST, and also those expenses that will be exempt.  For more information please follow this link http://hst.blog.gov.bc.ca/wp-content/uploads/2010/05/GST_PST_HST_List_v04.pdf to find a comprehensive list of products and services and the effect of the HST on each one. 

On items like junk food, meals out (restaurants) and haircuts HST will be charged.  But there is a silver lining in that 80% of goods and services are exempt, the following brief list is products and services that are EXEMPT from the HST:

• Basic groceries
• Most medical/all prescription
• Child care
• Rent and insurance
• Resale of housing
• Fuel for vehicles
• Books
• Heating and electricity for the home
• New clothing and footwear
• New vehicles
• Furniture and electronics

As you go back to school shopping with your kids you will find that purchases of clothing and footwear will be unchanged.  At the till you will be given an instant provincial rebate on the purchases.  The same is true for books; however, school supply shopping will result in a variety of items that are subject to HST.  When making lunch basics like bread, milk, eggs, fruit, vegetables and meat are exempt, which means healthy meals and snacks for your kids will be HST free.

If you are interested to learn more about the HST, the government of Canada website is very informative and can be found at http://www.cra-arc.gc.ca/

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MARKET CONDITIONS

The first two quarters of 2010 showed impressive growth, with 6.1% in the first quarter, and second quarter growth estimated between 3-4%.  However, we can expect to see a significant slow down as there are high levels of uncertainty and pessimism in financial markets due to fiscal crisis in many European countries.  In fact we have already seen retail sales fall considerably, and mortgage rates that were climbing earlier this year are starting to fall again.  Yet, there is speculation that the Bank of Canada (BOC) will attempt to bring low interest rates back to normal levels; in fact, the British Columbia Real Estate Association expects that by the end of 2010 the BOC will bring the overnight rate to between 1 and 1.25%.  The result will be an increased prime rate and a higher cost of borrowing for variable rate mortgages, and though we may see fixed rate mortgages varying in the short-run, with uncertainty in the financial markets, they will likely resume their upward trend by year-end.

With this recent decline in consumer spending, the federal government has implemented an infrastructure stimulus plan in hopes to support growth in the coming months, with impacts expected to peak in the third quarter.  Heading into 2011, however, we may see a drag on growth as the stimulus is withdrawn.  The slowdown may also be intensified by the weak US and global economic growth, and higher dollar that resulted from a rise in interest rates relative to the US.

LET’S LOOK AT HOUSING

Year to date BC residential sales dollar volume has increased by 16% to $24.2 billion, compared to the same period last year.  According to the British Columbia Real Estate Association (BCREA) the average price of a home listed on MLS has gone up by 13% during that time.  Astonishingly, if we break it down by area we can see that the one-year change in home prices in West Vancouver alone is 12%, while we have seen an increase of 29.3% in the past five years. 

With prices rising so quickly, we are now seeing a larger inventory of homes on the market and the supply conditions are more favorable for buyers than at anytime in the past year.  Active residential listings are 21% higher in July than at the start of the year.  An important implication?  Average time on market for homes is changing, and it is now taking an average of 45 days for sellers who work with Realtors to sell their property.  Though longer than what we have seen in recent times, this is a historically healthy timeframe for everyone involved in the transaction.

Yet despite the increase in active listings, home sales activity in Greater Vancouver last month was quieter than any July over the past decade.  In fact, BCREA reported that MLS residential sales in Vancouver declined 45.2% from the same time last year, and in the last month alone residential unit sales have declined 19%.  In West Vancouver June 2010 saw 66 residential sales, while July reports 56; in contrast 77 residential sales were reported in July 2009.  Given the number of listings to sales, we can quantify the decline in sales this year; in July 2009 67% of detached homes listed on MLS were sold while July 2010 reports only 54% of listed detached homes sold.  In the short term, BCREA expects to see sales continue to fall in the near future but we can look forward to seeing home sales rise toward the end of 2010 and through 2011.

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Month               Jan        Feb        Mar         Apr       May      Jun      Jul
Listings            142        110        179         195      226       143     103
Sales                 26          60          72           91        64         66        56

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Metro Vancouver house prices, led by West Vancouver real estate, continue to contribute to increases in indices including the Statistics Canada new housing price index. Nonetheless, an increase in the number of properties available has relieved some of the pressure on the market giving home buyers added leverage in current transactions.

The Real Estate Board of Greater Vancouver sales figures for June show a 4.4% increase in the benchmark price for a detached home in West Vancouver. Detached sales in North Vancouver experienced a 2.4% increase in the benchmark price. These more modest increases indicate a greater balance in the market.

This is good news for anyone looking at West Vancouver homes for sale. Factors including the imminent implementation of the Harmonized Sales Tax and inadequate inventories have tilted the playing field in favour of sellers over the past number of months. Analysts suggest that the current increase in the number and range of properties for sale will result in little upward pressure on prices throughout the balance of the year and a period of relative stability.

At the same time, interest rates continue to hover near record lows, an added benefit West Vancouver realtors are able to present to their clients. The five year fixed rate is currently between 3.99% and 4.19% and a closed variable rate is available between 2.05% and 2.15% depending on whether the term is 3 or 5 years.

Taken together, these factors make this an excellent time to consider buying property in West Vancouver or elsewhere on the north shore. Higher inventories provide a broad selection of homes in all categories and the intensity of market activity is lower than has recently been the case.

West Vancouver is one of the region’s most desirable areas, from its natural assets to its amenities. The current market climate gives buyers looking to enter the West Vancouver real estate market distinct advantages over previous conditions.

Brock is a top Real Estate Agent at Prudential Sussex Realty – West Vancouver, British Columbia’s leading residential real estate company.

Contact:
Brock Smeaton
604.925.2911 o
604.619.9131 c
brock@brocksmeaton.com

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