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Anticipated hike of two per cent in line with inflation, experts say

 

After surprising growth in 2011, Greater Vancouver real estate prices will rise just two per cent in 2012, Canada

Mortgage and Housing is forecasting.

 

In 2011, CHMC predicted price growth of just three per cent, tempered by an expectation of higher interest rates,

but interest rates stayed low and prices ultimately jumped 16 to 17 per cent.

 

In 2012, the market will stabilize and show modest growth in line with inflation, said Robyn Adamache, senior

market analyst with CMHC in Vancouver.

 

"I'd say it's a pretty stable market out there. We're not expecting to see a lot of change going forward," Adamache

said Thursday in an interview. "We have seen the market moving to more balanced conditions over the past five

or six months, and that's expected to continue."

 

She said job growth and migration, including people from within Canada and immigrants, are the factors

driving the housing market, and they should continue.

 

"So far, for the first 11 months of 2011, we've seen about 30,000 additional jobs created in the Metro Vancouver

area," Adamache said. "We're forecasting that we'll see 35,000 to 40,000 people moving here each year, going

forward."

 

Not all municipalities saw this kind of growth in housing prices in 2011; the west side of Vancouver and

Richmond led the way with 20-per-cent or higher increases for single family homes, while other municipalities

and multi-family homes saw lower growth.

 

For the five years leading up to 2010, the compound annual growth rate in Greater Vancouver for all types of

homes was 10 per cent, while the 20-year average was six per cent, Adamache said.

 

In some areas, such as Maple Ridge, prices of condominiums have not recovered to prerecession prices,

Adamache said.

 

The average price of a home in Greater Vancouver, including single-family and multi-family homes, for 2011

up to Nov. 30 was $796,000. CMHC is calling for that average to rise to just over $800,000 by the end of 2012.

 

For November only, the monthly average was down slightly to $736,000, and Adamache said that trend might

continue into the first half of 2012.

 

"I think we will see prices staying fairly flat until later in 2012," Adamache said.

 

Across the country, prices were 5.8 per cent higher in 2010, to an average $339,042.

 

Forty-eight per cent of households in Vancouver own their own homes, while nationally the average is

68 per cent.

 

In Greater Vancouver, housing starts will see growth of about five per cent in 2012, compared to 12 to 15

percent in 2011, and the number of houses sold will also increase about nine per cent over 2011,

Adamache said.

 

Meanwhile, CMHC released its 2011 Canadian Housing Observer on Thursday, showing that Canadians owed

more than a trillion dollars on their mortgages as of March, which when added to other household debt is a

"serious issue."

 

The CMHC reported that housing-related spending of about $330 billion a year in 2010 has risen by

67 per cent since 2001 and now comprises 20.3 per cent of Canada's gross domestic product in 2010 -

which underlines the importance of that debt load, and what might happen to the economy if for any reason

Canadians crack under its burden.

 

CMHC figures show that mortgages made up about 68 per cent of total household debt in 2010 - up from

63 per cent in 1971 but down from the peak of 75 per cent in 1993. Consumer credit, which makes up the

other 32 percent, has been growing faster than mortgage debt over the past two decades, it says.

 

A breakdown of these numbers for B.C. was not available; however, the report shows that B.C. has a high

percentage of mortgage-free homeowners at 47 per cent, a number second only to Cape Breton.

 

"The major risk in the mortgage market is impairment in a household's ability to pay, often due to job loss.

Recession or other adverse economic scenarios, such as rising interest rates, could certainly pose a challenge

for some Canadian households," the report states.

 

Canadians' debt levels have been growing fairly steadily since the 1960s, the report notes, but adds that

a number of more recent factors have allowed debt to grow to its current record level, including low interest rates,

rising household incomes and financial product innovations, which have allowed Canadians to make lower

payments on higher debt loads.

 

While about 6.5 per cent of Canadian households are financially vulnerable according to Bank of Canada

guidelines, the CMHC says continued employment growth, increasing net worth of households and a growing

population are all positive factors for housing demand.

 

tsherlock@vancouversun.com

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A vast majority of Canadians are anticipating positive things in 2012, a new survey suggests.

 

A poll done for Postmedia News and Global Television by Ipsos Reid and released Monday had 88 percent of respondents saying they felt the year will be good for themselves and their families.

 

A day earlier, data from the same poll showed 74 per cent of respondents judged 2011 to be a good year.

 

John Wright, senior vicepresident of public affairs for Ipsos Reid, said the positive views people had for both 2012 and 2011 are indicative of Canadians' appreciation of their lives compared to those who live elsewhere.

 

"Canadians are optimistic about the economy, about their country, about their place in the world," he said. "They have seen political turmoil and difficult times south of the border and around the world."

 

The survey showed 14 per cent of the people polled who didn't have a good experience in 2011 were optimistic about 2012. Wright said many of these people might be expecting better employment prospects this year, anticipating better returns on their investments or simply looking forward to more positive developments in their personal lives. Among those polled who thought 2012 would be kind to them, 26 per cent said it would be "very good" and 62 per cent said it would be "somewhat good."

 

Looking at the 12 per cent who were downbeat about 2012, three per cent said it would be a "very bad" year and nine per cent said it would be "somewhat bad."

 

Respondents in the Atlantic provinces were most optimistic about 2012, with 98 per cent of them predicting a good 2012. Elsewhere, 87 per cent of British Columbia residents were expecting a good year, along with 89 per cent of those polled in Alberta, 88 per cent of respondents in Manitoba and Saskatchewan combined, 87 per cent of Ontario residents and 88 per cent of those polled in Quebec.

 

Those making more money were more likely to have a positive outlook. Among respondents making $60,000 a year or more, 93 per cent said 2012 would be good, compared to 86 per cent of those making between $30,000 and $60,000, and 82 per cent of people making less than $30,000.

 

Among the sexes, 91 per cent of women said 2012 would be a good year, and 85 per cent of men felt this way.

 

Among people with children, 93 per cent thought 2012 would be good compared to 87 per cent of those without children.

 

The results were based on a polling done from Dec. 14-19 with 1,021 adults from an online panel. Ipsos Reid said an unweighted random sample of this size would accurately represent the population within 3.1 percentage points, 19 times in 20.

 

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2011 real estate market showcases regional variation

 

January, 04 2012 12:48:16 pm, by FVREB 
 

Overall, Fraser Valley’s real estate market in 2011 was below the 10-year average in property sales and

above average in the number of new listings received, however, according to the president of the Fraser

Valley Real Estate Board, results varied widely depending on the community and property type.  

 

Sukh Sidhu observes, “I can’t remember a year that illustrates better how local real estate is and the

importance of talking to your REALTOR® before making a decision to buy or sell.  For example, in my

community of Abbotsford, sales of single family homes dropped by almost 7 per cent compared to 2010,

pushing prices down slightly, while in South Surrey/White Rock sales increased year over year by 45

percent resulting in double-digit price increases.”

 

The Board’s Multiple Listing Service® processed 15,529 sales in 2011 compared to 14,891 the previous

year, an increase of 4 per cent, while the number of new listings remained about the same – 31,592 in

2011 compared to 31,437 in 2010. Over the year, the number of active listings for buyers to choose from

dropped by 9 per cent going from 8,139 properties in December 2010 to 7,399 in December 2011.

 

Although 2011 ranks the third slowest year for sales in Fraser Valley since 2002, it was only 10 percent

less than the 10-year average of 17,210 sales. The volume of new listings received in 2011 was

6 percent more than the 10-year average of 29,867 new listings, placing last year third in ranking since

2002.

 

Sidhu adds, “One trend from 2011 that is clear was the preference for single family homes. For the most

part in our region, both sales and prices of townhomes and condos either stayed on par with 2010 or

decreased.”  In December, the benchmark price of a detached home in the Fraser Valley was $522,998,

an increase of 3.3 per cent compared to $506,145 in December 2010 and a decrease of 1.7 percent

compared to November.

 

For townhouses, the benchmark price in December was $315,330, a decrease of 2.1 per cent compared

to the same month last year when it was $322,054 and down 3.8 per cent compared to November. The

benchmark price of apartments in December was $237,285, a decrease of 1.2 per cent compared to

December 2010 and a decrease of 0.5 per cent compared to November.

 

Average prices year over year show detached homes up 9.1 per cent – $610,269 in 2011 compared to

$559,456 in 2010. The average price of townhomes increased by 2.6 per cent, going from $336,484 in

2010 to $345,138 in 2011 and the average price of apartments increased by 0.9 per cent going from

$223,910 in 2010 to $225,976 in 2011.  

 

Click here to view the full report at http://www.fvreb.bc.ca/blog/index.php/2012/01/04/2011-real-

estate-market-showcases-regional-variation

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