Andrew Holenchuk's (holenchuk) Blog

Does the USA Housing market need a shot of Viagra?

Andrew Holenchuk (Remax Camosun - Victoria) — Sun, 29 Oct 2006 18:07:14 -0800

Are you experiencing an up or down market? Our market seems to be more balanced in our market area. I have spoke with a few realtors and brokers in the states and this wasn't the case. Record drop for U.S. home pricesSales of existing homes fall for sixth straight month Wednesday, October 25, 2006U.S. home prices posted their biggest drop on record in September while sales fell for the sixth month in a row, a real estate group said today.The U.S. National Association of Realtors said sales of existing homes fell to an annual pace of 6.18 million last month from 6.3 million in August, marking the sixth straight monthly decline in sales.Economists had forecast a rate of 6.25 million in the most recent period.The median price of a home sold in September fell 2.2% to US$220,000 from US$225,000 a year ago. It was the biggest year-over-year drop since the record 2.1% decline recorded in November 1990, when the U.S. was in recession.The group’s August sales report was the first in 11 years to show a year-over-year decline in the price of a typical home.The median is the point at which half the homes sold cost more and half less.One bright spot for the housing sector in the report was a decline in the number of homes on the market, which fell 2.4% to 3.75 million in September, giving the market a 7.3 month supply of homes at the current sales pace.The U.S real estate market and home building have cooled significantly since hitting records in 2005. It is also one of the key causes of a slowdown in the broader economy cited by the Federal Reserve at its last two meetings as part of its decision not to raise interest rates. The central bank’s latest decision on rates and view of the economy is due later today. Have a good one!Andrew

Canada's major markets are becoming more balanced

Andrew Holenchuk (Remax Camosun - Victoria) — Thu, 19 Oct 2006 10:45:19 -0700

Solid third quarter for MLS® home salesCanada’s major markets are becoming more balancedExisting home sales activity in Canada’s major markets remained solid in the third quarter of 2006, according to statistics released by The Canadian Real Estate Association. The housing market continues to become more balanced, which is resulting in smaller price increases. Year-to-date sales activity remains slightly ahead of levels recorded for the first nine months of last year, and is on track to set a new annual record in 2006.Seasonally adjusted home sales activity via the Multiple Listing Service ® (MLS ®) in Canada’s major markets totaled 82,119 units in the third quarter of 2006 – down 2.5 per cent compared to the second quarter. The quarterly decline in sales activity was biggest in Vancouver, Calgary and Toronto, but was partially offset by a quarterly increase in transactions in Edmonton, Hamilton and a number of other major markets. Sales activity in Edmonton and Thunder Bay reached the highest level of any quarter on record. Actual (unadjusted) sales activity in the third quarter of 2006 eased by 6.2 per cent compared to the third quarter of last year. Transactions for the year-to-date in September were 0.7 per cent ahead of levels recorded for the same period last year. New sales records for the year-to-date in September were set in a number of major markets, including Calgary, Edmonton, Saskatoon, Winnipeg, Ottawa and Montreal. On a seasonally adjusted monthly basis, some 27,220 homes traded hands via the MLS ® in September – just 1.6 per cent fewer than for the previous month. Sales reached the highest monthly level on record in Edmonton. Seasonally adjusted MLS ® residential new listings in Canada’s major markets numbered 143,760 units in the third quarter – an increase of 3.8 per cent compared to the previous quarter. This was also the highest level in more than 15 years, and the second highest level for any quarter on record. New listings reached the highest level of any quarter on record in Calgary and Edmonton, and the second highest level on record in Toronto and Montreal. New listings continued to rise in September, posting gains compared to each of the two previous months. The quarterly decline in sales combined with an increase in new listings caused the resale housing market to become more balanced than in any other quarter in the past 5.5 years. The MLS ® residential average price in Canada’s major markets was $294,245 in the third quarter 2006 – up 10.1 per cent from levels recorded for the same quarter one year ago. Average price surpassed all previous quarterly records in many major markets, including Vancouver, Calgary, Edmonton, Saskatoon, London, Kitchener, St. Catharines and Sudbury. “Canada’s housing market continues to head for a soft landing,” said CREA Chief Economist Gregory Klump. “With the housing market becoming more balanced, price gains are slowing down in a number of major markets. CREA’s October 2006 forecast indicates those trends will continue over the rest of the year and in 2007.” “Solid market fundamentals remain in place, including h igh levels of employment, upbeat consumer confidence and rising incomes ,” said CREA President Alan Tennant, FRI. “Consumers should consult with their REALTOR® to gain a full understanding of local market conditions.” MLS ® Major Market Residential Summary: Third Quarter 2006

(Seasonally Adjusted Data)		(Unadjusted Data)
Third Quarter 2006	Second Quarter 2006	% change		Third Quarter 2006	Third Quarter 2005	%change
Dollar Volume ($ millions)	24,249.2	24,295.3	-2.7		23,811.5	23,059.7	3.3
Unit Sales	82,119	84,258	-2.5		80,924	86,299	-6.2
Average Price ($)		294,245	267,207	10.1
New Listings	143,760	138,519	3.8		146,017	138,120	5.7

MLS ® Major Market Residential Summary: September 2006

(Seasonally Adjusted Data)		(Unadjusted Data)
September 2006	August 2006	% change		September 2006	September 2005	%change
Dollar Volume ($ millions)	8,006.8	8,106.3	2.4		7,590.7	7,609.1	-0.2
Unit Sales	27,220	27,649	-1.6		25,659	28,028	-8.5
Average Price ($)		295,830	271,482	9.0
New Listings	48,945	47,275	3.5		52,638	49,795	5.7

50 Year Amortizations .... What do you think of this?

Andrew Holenchuk (Remax Camosun - Victoria) — Wed, 18 Oct 2006 19:38:57 -0700

New mortgage insurer enters Canadian marketAIG CEO suggests 50-year mortgages on the wayAIG United Guaranty became the third company to provide mortgage insurance in Canada in mid-October. Canada Mortgage and Housing Corp. currently handles 70 per cent of the mortgage insurance market in Canada, while private insurer Genworth Financial Canada covers the remaining 30 per cent. Two additional companies are expected to enter the market in 2007. “We have seen significant activity in the Canadian mortgage insurance industry over the past six months in anticipation of increased competition,” said AIG United Guaranty President and CEO Andy Charles. Included in AIG United Guaranty's current product offering is insurance for no down payment mortgages, and a “more affordable” insurance product for borrowers whose credit scores have been affected by adverse conditions. Investors with a 10 per cent down payment will be able to get insurance on rental properties of one to four units. The company is also offering products with 30, 35 and 40-year amortization periods, as well as identity theft insurance coverage. Charles predicted in an interview that 50-year amortization periods for mortgages would be offered in the Canadian marketplace. He added that AIG United Guaranty has no immediate plans to insure mortgages amortized over 50 years.A recent report by CIBC World Markets shows that Canada's sub-prime mortgage sector increased by 50 per cent during the first half of 2006, and grew by almost five times the rate of traditional lending. CREA cautions that the report did not provide the actual number of sub-prime mortgages used to generate the statistics.Sub-prime or "non-conforming" mortgages are often assumed to be inherently riskier than more traditional forms of borrowing. Lenders provide home loans to new immigrants who don't have a Canadian credit history, mortgages for the self-employed who can't easily prove their income, or loans for people who have a bad credit rating. Borrowers are often offered longer repayment periods or lower down payment options, and pay higher rates of interest.

Bank of Canada holds central rate steady

Andrew Holenchuk (Remax Camosun - Victoria) — Wed, 18 Oct 2006 19:28:24 -0700

Bank of Canada holds central rate steadyInterest rates on hold indefinitelyThe Bank of Canada held its benchmark overnight lending rate steady at 4.25 per cent on October 17th. The trend-setting Bank rate, which is set 0.25 percentage points above the overnight lending rate, remains at 4.5 per cent. CREA expects interest rates to remain on hold over the rest of the year. The rate was raised seven times by 0.25 per cent from September 2005 until it was put on hold in July 2006. “The current level of the target for the overnight rate is judged at this time to be consistent with achieving the inflation target over the medium term,” said the Bank in its October statement. This is the same statement the Bank made in both July and September. The Bank again revised its forecast for economic growth downward. The statement regarding the most recent decision to hold interest rates steady acknowledged that economic growth in the second and third quarters of 2006 has been weaker than expected – largely because of weaker exports. Assessing current interest rate levels, the Bank says it “judges that the Canadian economy continues to operate just above its production capacity.” Upward pressure on inflation normally eases when current economic growth comes in weaker than previous Bank of Canada forecasts, and below what the Bank considers to be its full potential. In the October statement, the Bank lowered the forecast for economic growth for this year and for 2007. It also lowered the bar for potential economic growth. With a lower forecast for potential output, the Bank was able to lower its projection for economic growth and still characterize the economy as operating close to its productive capacity. The Bank currently estimates that the Canadian economy is in a position of slight excess demand, which will gradually be eroded as economic growth slows through the end of 2007. “The bottom line is that the Bank sees interest rates as not too high, not too low, but just right,” said CREA Chief Economist Gregory Klump. Looking ahead, the Bank repeated its assessment of risks to the outlook for inflation that it published in September. “The main upside risk relates to the momentum in household spending and housing prices. The main downside risk is that the U.S. economy could slow more sharply than expected, leading to lower Canadian exports.” In the Bank's view, those risks have increased but remain “roughly balanced”. “If the Canadian economy remains consistent with the Bank of Canada's forecast, interest rates will remain on hold indefinitely,” said Klump. “Inflation is in sync with the Bank's expectations. This could change during the period leading up to its next meeting in December, when it again sets its trend-setting overnight lending rate.” “Economic growth is being supported by continuing strength in domestic demand, while being undercut by weakness in net trade. Slowing U.S. economic growth will likely tip the balance, and translate into a cut in interest rates of 0.5 per cent in the first half of next year,” Klump noted. Bonds respond to expectations about inflation and economic growth, and mortgage rates track bond yields. “The bond market already priced in a downshift in economic growth due to weakening Canadian exports to the U.S,” said Klump. “That caused the five year conventional mortgage to peak in August. Recent economic reports suggest that the bond market may have gotten ahead of itself in pricing in interest rate cuts next year. The five year conventional mortgage rate may rebound slightly in October or November, but remain below seven per cent over the rest of this year.” When the bank rate was hiked on October 17th, the advertised conventional five-year conventional mortgage rate stood at 6.6 per cent – down 35 basis points compared to mid-August. (One basis point equals one one-hundredth of a percentage point). Competition among mortgage lenders remains stiff, which continues to help many borrowers negotiate discounts of one per cent or more off advertised rates. “An increase in new listings and recent home price increases are expected to continue to prompt some homebuyers to take more time to shop before buying and gradually cool sales activity over the rest of the year and in 2007, but not by much,” Klump added. Record level sales activity in the first nine months of 2006 is expected to help lift MLS® residential transactions to their sixth annual record in 2006, while additional price increases are forecast to push the MLS® residential average price to the highest level on record. (CREA 17/10/2006)

Referral Network amongst Realtors

Andrew Holenchuk (Remax Camosun - Victoria) — Wed, 18 Oct 2006 06:36:29 -0700

A bulk of our business is from referral sources. I would like to find out if there is any realtors and brokers that would like to work together when referring opportunities present itself. We are experiencing a lot of new purchases in the Victoria MArket from non Victoria residents. People from across Canada, USA and other parts of the world are looking at Victoria as a prime real estate market. Let me know if this would interest you.

Victoria Realtors Applaud New Housing Strategy - October 2006

Andrew Holenchuk (Remax Camosun - Victoria) — Wed, 18 Oct 2006 06:28:13 -0700

VICTORIA AREA REALTORS® APPLAUD NEW STRATEGY FOR HOUSING News Release - October 2006Victoria area REALTORS® are applauding the new strategy for housing unveiled today by provincial housing minister Rich Coleman. "The strategy helps those people most in need and will likely have a minimal impact on the private sector housing market,"said Scott Kendrew, president of the Victoria Real Estate Board.Kendrew was one of a number of invited guests at today's news conference where Minister Coleman announced the new $63 million housing package of rent supplements, new supportive housing for the Premier’s Homeless Initiative and new assisted living units under the Independent Living BC program for seniors."This strategy fits nicely with our own ‘Quality of Life’ program at the Victoria Real Estate Board that puts a priority on supporting housing opportunities for all in our community," said Kendrew."We’ve been on the public record supporting the idea of rent supplements since Jeff Bray first raised the suggestion in the legislature in the Spring of 2005," Kendrew added. "We’ve also publicly called for all provincial housing programs to be under one minister and continued to push for more solutions to the issue of housing affordability on Southern Vancouver Island. "What’s missing from the actual strategy outline this morning," said Kendrew, "is more detail on what the government has in mind to encourage legalization of more secondary suites and construction of rental units in our low vacancy rate communities. We’ve talked to the minister about these topics and sense he’ll have more to say in the months to come." Kendrew noted that the province will need the cooperation of both the federal government and local governments if the housing challenges facing the Victoria area are to be seriously addressed.

Victoria Real Estate Market - October 2006

Andrew Holenchuk (Remax Camosun - Victoria) — Tue, 17 Oct 2006 04:21:31 -0700

Move Toward More Balanced Market Continues October 2, 2006 The Victoria area real estate market continued the move toward a more balanced market last month with more properties becoming available for sale, prices remaining strong and sales moderating slightly. The number of homes and other properties listed through the Victoria Real Estate Board's Multiple Listing Service® (MLS®) increased to 3,449 last month - up from 3,345 in August and up 42% compared to September of last year. There were 593 sales in September, down from 694 sales in August. There were 714 sales in September of last year. Victoria Real Estate Board President, Scott Kendrew, says the market conditions now offer greater choice for buyers. "With more properties available for sale, buyers can take more time to find something that suits their needs and budget. The market remains very healthy with prices remaining strong in all major housing types." Kendrew noted over 30 percent of all single family home sales last month selling for under $400,000 and over 43 percent of all condominiums selling for under $240,000. The average price for single family homes in Greater Victoria last month was $545,172; the average for the last six-months was $521,937. The median was lower at $471,000. The average price for all condominiums sold in September was $291,798; the average for the last six months was $287,359. The median was again lower at $259,500. The average price for townhomes last month was $360,171; the average for the last six months was $360,583. The median was $344,000. MLS® sales last month included 303 single family homes, 177 condominiums, 51 townhomes and 19 manufactured homesFor more information please contact Andrew Holenchuk at http://www.andrewholenchuk.com/