It’s that special time of year again, home shoppers have plenty to chose from and as a result are putting pressure on local home prices. Penticton however is a little piece of paradise holding its own as we crunch the local numbers.  HST is now in place and new construction starts are at an all time low. Historically July and August shows a slowdown in the real estate market compared the the previous few months. The British Columbia Real Estate Association’s June 2010 Housing Forecaststates “the average MLS residential price in the province is forecast to increase a further 6.2%  this year before remaining relatively unchanged.”  Their reasons: stronger economic and employment growth.

 According to the South Okanagan Real Estate Board for the month of May 2010 there were

• 155 new active listings (224 this time last year) Statistics released by Canadian Real Estate Association (CREA) show that homes sales activity and new listings in Canada declined in May right accross the board

• 89 units sold (85 last year)

• Homeowners will like this one……average sales price this year $344,894 compared to last years’  $318,301 this is an 8% increase over last year*

• Days on market has shortened to 88, when last year it was 111

*Although the average sales price is up, I feel that with the million dollar home market being hit the hardest these numbers are skewed by lack of activity in the higher end home markets.

According toOzzie Jurock “Seasonally adjusted home sales activity declined nationally by 9.5 per cent in May from the previous month. Activity declined in more than 70 per cent of local markets, the largest declines coming in Toronto, Vancouver and Ottawa. In a departure from the normal seasonal pattern, national activity levels in May were also down from April levels. This suggests that the combination of changes to mortgage regulations and rising mortgage rates pulled forward a number of sales into April that would have otherwise taken place at a later date.”

An interesting stat was talked about at this weeks staff meeting of Royal LePage REALTORS gathered at the yacht club. If not one more home was listed how many months of inventory would we have?                                      

Well that depends on which segment of the market you are analyzing….

The strongest sector of the market are single family homes priced between $200,000 and $300,000. With current inventory levels to date we have 7 months of inventory!!! First time buyers, the new first time home buyer, downsize-rs, and investors have been picking up homes in this price point. In fact I have sold several of these to very savvy buyers. Deal of the month was 799 Torontowhich I helped a reapeat client of mine obtain for a mere $200,000. I had one brand new construction 1/2 duplex sell just under the nasty HST deadline. Sold for $280,000 buyers paid the 5% GST and saved $12,000 by closing prior to July 1st.

The next sector being homes priced $300,000 to $400,000 there are 4.5 months of inventory.

$400,000 to $500,000 the inventory levels jump to 14 months supply.

$500,000-$600,000 a scary jump to just over 18 months of inventory.

As we jump in hundreds to the million dollar mark we are seeing a trend of  increasing inventory levels.

$600,000-$700,000 shows 19 months of inventory

$700,000-$800,000 a whopping 33 months of inventory.

$800,000-$900,000 shows 41 months of inventory

$900,000- a million 47 months of inventory

and 1 million to 1.5 million  57 months of inventory.

Million plus sector is primarily driven by the stock market, which is vitually dead unless very sharply priced. Where one could consider a $50,000 price reduction “measly.”

The Numbers – April 2010
The historically busy spring real estate market is in full swing. All activity (both on the buyer and seller sides) has picked up significantly in the Penticton’s real estate market. Despite supply outpacing increasing demand, we are also continuing to see across board price increases.

• There were 181 new listings in April 2010. 175 in April of 2009. March showed 193 new listings.
• Sales came in at 86 units sold where last year this month we had 76 units sold.
• sell/list ratio 48%
• average sales price $326,938
• sell price / list price 96%
• days on market averages 89 days last year average market time was 109 days

Buyers appeared to be hesitant. Prices generally continued in their upward trajectory, but with big jumps in inventory (new listings) and smaller increases in sales the upward pressure on prices eased.

According to the Financial Post, the government of Canada is going to make it just a little more difficult to qualify for a mortgage. Buyers are no doubtedly taking advantage of record low interest rates to acquire a home.

• It is going to be harder for first time buyers in the way of qualifying for government backed housing Insurance from either Canada Home Mortgage Insurance (CMHC) or private sector which is required if the downpayment is less than 20% of the purchase amount. What exactly does all that mean? It means the average income required to qualify for a home after April 18 2010 will be $5,000-$8,000 higher.

Not a first time buyer but planning to invest for your retirement portfolio? After April 18 2010 be prepared to put 20% down instead of the former 5% required before the deadline.

Why? The government is trying to protect Canadians from overextending themselves as interest rates climb from the presently historical lows.

Quick Reference on how this could affect you:

• Borrowers must qualify for a 5 year fixed rate term instead of the previosly accepted 3yr loan when calculating Gross Debt Service Ratio. Refinancing will be capped at 90% for government backed high-ratio mortgages

Full Article from Financial Post.

The Bank of Canada met this morning and has left rates unchanged. Much media anticipation was looking for Mr. Carney to follow Australia’s increase but has stated that different influences are present here in North America and we may not see any increases until 4th quarter of 2010 possibly. Great news!

Please find attached a TD overview of the meeting.

Fixed rates have increased to 4.18% – 4.39% on a 5 year fixed depending on the lender with some quick close discounts available. (subject to change)

approx $452/month over 35 years per $100,000 – OAC
approx $536/month over 35 years per $100,000 – OAC

Vancouver, BC – May 26, 2009. As part of its Spring 2009 Housing Forecast, the British Columbia Real Estate Association (BCREA) reported today that housing market conditions have improved more rapidly than expected. As a result, BCREA has revised its home price forecast upwards, reflecting greater price stability through the balance of the year. The average Multiple Listing Service® (MLS®) residential price in British Columbia is forecast to decline eight per cent to $420,600 in 2009, instead of 13 per cent originally forecasted at the beginning of the year.

“The majority of the decline in home prices has already occurred,” said Cameron Muir, BCREA Chief Economist. “Balanced markets are emerging in Victoria, Vancouver and the Fraser Valley. There’s now little downward pressure on home prices in these areas.”

Home sales in the province have climbed out of a trough, posting double-digit percentage gains for three consecutive months (seasonally adjusted).  

BC MLS® residential sales are forecast to decline 12 per cent to 60,755 units this year, as a result of a weak first quarter. However, stronger consumer demand is expected to continue for the balance of the year and through 2010. Residential sales in 2010 are forecast to climb 10 percent to 66,740 units.

Affordability reached a three-year high in April with lower home prices and record low interest rates reducing the carrying cost of the average priced home 24 per cent over the last year.

“A significant increase in affordability has brought many first-time buyers into the market,” added Muir. “First-time buyers were largely absent in the late fall and winter, making it more difficult for move-up buyers to sell their current homes. The chain of ownership is now being oiled.”  

Source: BCREA