The headlining story on MSNBC right now is home sales rise a bit but prices fall sharply.
Michelle Meyer, an economist at Lehman Bros., said the rise in sales was partly a response to falling prices and a recent dip in mortgage rates
“The pickup in home sales reflects stabilization in demand and the first signs that the housing market is beginning to balance,” she said in a note to clients.
Economist Joel Naroff of Naroff Economic Advisors said the report “does not point to a major housing meltdown,” but he noted that there is a “huge” supply of unsold homes and condominiums on the market.
The number of homes on the market is up 34 percent from a year ago and represents a supply of more than seven months at current sales rates, compared with an average of just four or five months in the boom years of 1999 through 2005.
“The housing market is far from the bottom,” Naroff said in a research note. “Sellers will have to overcome their state of denial and start dropping prices even more to clear this market. And once that happens, we will then have to convince buyers that prices have stopped falling. We are a long way from that point.”
There are concerns at the federal level that if the housing slump across the USA continues or gets worse that it could cause bigger problems for the US economy that has already started to slow down. Its suprising that this is a problem across most of the country. What ever happened to the maxim “all real estate is local”?
There’s an article in the National Post today looking at what you get for the ‘average’ house price in various Canadian cities, mostly in comparison to Toronto. The typical Toronto house costs $356,423 while the average house in Vancouver costs $821,722. The article essentially claims that you get a lot more in Vancouver compared to Toronto for the ‘average’ price so the price difference is not as huge as it appears.
OK, maybe Vancouver is pricer than Toronto — or is it? Most bedroom communities are not taken into account in the average Vancouver house price. And if you’re willing to sacrifice a little neighbourhood safety and convenience, it is possible to find a nice starter house in the Vancouver core.
They go on to compare what you can get in Maple Ridge vs. what you can get in Markham:
B.C. commuters can find a lot more for their money. “Maple Ridge is a great bedroom community just east of Vancouver,” says Mr. Antalek. “It’s ideal for families, with great schools, parks and recreation areas. It’s also very safe.” That $356,423 will buy you a three- or four-bedroom, two-bathroom house on 65×130 feet of land — 25×20 feet more than a lot in Markham. It will have ample parking and most houses require minimal renovations. And the drive to downtown Vancouver will take 45 to 90 minutes, or 50 minutes by train.
Meanwhile in Newfoundland for the $356,423 that it would take to buy the average house in Toronto (or a little bit less than half the average house in Vancouver) you can get a 5,050-sq.-ft. beautifully renovated home in St. John’s on seven acres of land, but I bet its a lot trickier to get a decent supply of heroin.
The globe and mail article I linked to a few days ago about the housing affordability study has been reported on locally in a Vancouver Province article by Ashley Ford. Comparing these two articles is interesting in where they differ:
1) The G&M article doesn’t draw any conclusions about future activity, but the Province article reports that: “That trend is expected to ease in some parts of the country next year as prices start to level off and even decline, but not in B.C. or Alberta.” Interesting to note that prices in some categories have already started to level off or even decline here in Vancouver, so I’m not sure where ‘not in B.C. or Alberta’ comes from.
2) Where the G&M articles says “Renters were much more likely to fall into this category of people who struggle to afford housing” the article in the Province says “However, high prices notwithstanding, it suggests it is still better to own a home than rent.” No. It doesn’t. It suggests that owners tend to have more money than renters (obviously), NOT that it is better to own than rent even with current high prices, which is a dangerous view to take concerning affordability.
3) It is unfortunate that in the local article there is absolutely no info about affordability levels in Vancouver compared to the rest of Canada, just the same National stats from the Globe story. It would have been informative to include this information and would have given the story a local angle.
*subtly edited to make it look like I didn’t make the obvious mistake that VHB pointed out.
I see that they’ve started taking down the tarps and scaffolding on the 3400 block of west broadway. The owners and neighbors must be breathing a sigh of relief, I believe the whole south side of the street has been covered for more than a year. How long does the average leaky condo rainscreen repair take in Vancouver? It seems like a lot of buildings are covered for a extensive amount of time.
Have we made it through the majority of leaky condo repairs in Vancouver yet? It seems like the vast landscape of tarps have started to recede somewhat from the fairview and cambie neighborhoods.
On a side note: if you have pictures of tarp covered condo repairs in the lower mainland I’d love to see them*. Email them to me with the address and any other info you may have and I’ll post them. Ideally I’ll build up a searchable database of condo repair photos that may or may not be useful when condo-shopping in Vancouver.
*clearly I am a freak.
There’s a story in the Globe and Mail today about a study on affordability across canada. Apparently its expensive to live in the most expensive cities and 14% of Canadians spent 30% or more of their income on shelter. The 30% of income thing is a standard indicator of lack of affordability.
The concept of affordability has traditionally been based on a ratio of housing costs to total household income, Statscan said. A household paying 30 per cent or more of its pre-tax income for housing is considered to have affordability problem.
During Statscan’s survey period, 12 per cent of households spent between 30 per cent and 50 per cent of pre-tax income on housing. Two per cent spent 50 per cent or more to keep a roof above their heads.
Averaged across Canada, it was renters that were more inclined to have this affordability problem, so I’m guessing most other Canadian cities don’t have the situation we have in Vancouver where owners buying at current prices are subsidizing renters.
Renters were much more likely to fall into this category of people who struggle to afford housing, Statscan said. Thirty-one per cent of people who rented in 2004 spent 30 per cent or more of their budget on shelter, compared with 6 per cent of home owners.
â€œThese rental households consisted mostly of individuals living alone, those relying on government assistance, and those in low income,â€ Statscan said.
Not surprisingly, people who rented in Canada’s two most expensive cities, Toronto and Vancouver, incurred the highest cost in terms of rent.
The best line of the whole study is at the end:
Renters who earned less than $19,190 a year were 18 times more likely to be cost-burdened when it comes to housing than people in the top one-half of the income chain.
Yes, the startling fact: People with lower incomes have a more difficult time affording things. Thanks Statscan!