Tuesday, March 29, 2011

Economic, Rate and Vancouver Housing Highlights

Economic, Rate and Vancouver Housing Highlights

Good Afternoon Everyone,

The cost of borrowing is going to decrease again as the major banks announced yesterday they are planning to drop their rates 20 bps depending on the product. Look for these rate adjustments coming soon.

Yesterday at the Mortgage Brokers Association Conference of BC, I had the privileged of once again listening to Benjamin Tal, CIBC Senior Economist.

Some highlights were:

The Asian investor buying in Canada is a sustainable market due to the large Chinese population and the enormous amount of wealth.

Japan’s earthquake, coupled with Europe’s debt loads namely Spain, Ireland, Portugal, Greece, crisis in Egypt and Libya, will more than likely hold interest rates in check for the coming year.

Benjamin sees no housing bubble in Vancouver. To have a housing bubble requires two main components that Canada does not have. Huge increases in mortgage rates which is not forecasted by any economists and secondly a sub prime mortgage market of bad quality loans.

The US is continuing to improve with US companies doing well with exports to emerging markets.

He also sees the era of leverage is over and the coming era will see a more conservative approach of investments and savings that will bring about a more stable economy.

Here for interest, are the 12 most overpriced real estate markets in the world according to The Economist.

1. Sydney, Australia
2. Hong Kong
3. France
4. Spain
5. Sweden
6. Great Britain
7. Belgium
8. Netherlands
9. New Zealand
10. Ireland
11. Singapore
12. Denmark

VANCOUVER PRESS — A three-year housing forecast says Metro Vancouver and northern B.C. will stay hot, while the Okanagan and Kootenays will be weaker.
Central 1 Credit Union's B.C.. Housing Forecast 2011-2013, which was released Wednesday, concluded that the median price of a home in B.C. will rise three per cent and set a new record of $402,000 in 2011, largely because of the higher price levels in Metro Vancouver, while home sales across the province will rise about seven per cent in the year.

The median price is expected to rise another one per cent in 2012 and another four per cent in 2013, on higher demand.

B.C.’s annual median transaction price rose to a record high of $392,025 in 2010, a six-per-cent increase from 2009.

A median price is the price in the middle of all prices ranging from lowest to highest.
Total home sales will rise this year to 95,500 units, rebounding from a 10.5-per-cent drop in 2010 as both resale and new home sales will increase, the forecast said, adding that sales will increase another two per cent in 2012 and a healthy 15 per cent in 2013.

"Even after those gains, sales will be below the levels we saw from 2002 to 2007," Central 1 economist Bryan Yu said. "Low, but rising, interest rates and tighter mortgage insurance rules will restrict sales for the next few years."
Yu said that this year, sales will have been stronger in the first few months as buyers move to beat the tougher mortgage insurance rules that take effect on March 18.
"Metro Vancouver will observe the strongest uptick in early-year activity, given the higher proportion of local buyers and higher prices in those areas," added Yu.
According to a release, although home sales will be strongest in Metro Vancouver area and Northern B.C. during the three-year forecast period, it will weaken in the latter part of 2011.

“While activity is likely to retrench in the second quarter, continued in-migration and labour market gains will continue to provide support to price levels,” the report said of Metro Vancouver. “Price levels are expected to remain flat in 2012, before rising six per cent in 2012.”

As well, the report noted, the economy in the north will continue to benefit from strong commodity markets and trade-related activity, which will keep housing activity on an upward trend through the forecast horizon.

However, the report also said that the weak links in B.C.’s housing market will remain areas with a high exposure to external recreational and retiree buyer demand. Housing markets in the Okanagan, the Kootenays and parts of Vancouver Island will continue to see weaker demand conditions in 2011 as mortgage rates rise and buyers remain hesitant to make discretionary and luxury purchases.
“With demand and supply conditions already favourable to buyers at the current time, a downward trend in price levels is expected to persist into 2011,” the report said of the two regions, which have seen significant declines in recreational purchasers, especially those from Alberta, with many buyers seeking cheaper properties in the U.S.

“The median annual price in the Thompson-Okanagan is forecast to decline six per cent, while Kootenays prices are forecast to decline five per cent.

”Despite that, the report said these markets will observe significant rebounds in 2012 and 2013 as buyers take advantage of lower prices and retiree and recreational demand strengthens on improved economic conditions. Following flat activity in 2011, housing sales in the Thompson-Okanagan region are forecast to rise eight per cent in 2012 while the Kootenays will see 10 per cent growth. Both markets are forecast to record more than 20-per-cent gains in sales in 2013. The Vancouver Sun

Jared Dreyer
Your Mortgage Professional
604 649-5991

About Dreyer Group Smiles

Dreyer Group Smiles is a program dedicated to giving to facilities that provide safe and transitional housing to children and youth in the Fraser Valley of British Columbia. By providing funds to these programs, Dreyer Group will make a meaningful difference to kids who otherwise may not have a roof over their heads, or hope for a bright future.
Dreyer Group hopes to expand this effort through their clients and business partners. In addition, they plan to raise additional funds through annual events and corporate fundraising initiatives. Dreyer Group is working closely with the Salvation Army to allocate these funds to the children and shelters.

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Jared has built his business based on a passion and commitment for delivering exceptional client service. He has provided superior financing solutions to thousands of happy clients over the past 18 years.

As a Government Relations Committee Member of the Canadian Association of Accredited Mortgage Professionals (CAAMP), Board Member and Director of the Mortgage Broker Association of BC (MBABC) for the past 2 years, Chairing the Education and Public Relations Committee, Board Member of the VERICO National Advisory Council and Director of the Mortgage Brokers Institute of BC (MBIBC), Jared works diligently to accomplish positive change within the mortgage industry.

Jared also sits on the Board of the White Rock South Surrey Chamber of Commerce and is a member of the Vancouver Board of Trade.

A strong believer in community, Jared has been very active in setting up business partnership programs for local business as well as giving initiatives to children’s’ charities locally and throughout the Fraser Valley and Metro Vancouver.

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