Alec Kinnear

I presented an article from Jamie Sarner today (Toronto), and I think Vancouver deserves its share of articles as well. Without further ado - Jay Banks and market results from Vancouver!

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“The MLS® HPI is a national collaboration intended to give the public a more reliable and comprehensive tool to understand home price trends across the country,” Rosario Setticasi, REBGV president, commented on the launch of the new MLS® Home Price Index (MLS® HPI) replacing the MLSLink Housing Price Index, which had been used by Greater Vancouver and Fraser Valley REALTORS® since the mid 1990s.

The MLS® HPI benchmark price for all residential properties in the Greater Vancouver Area has experienced a growth of 5.7 per cent over the last year, climbing up to $660,600 since January 2011, and a slight 0.1 decrease compared to the previous month. The benchmark price for all residential properties in the Lower Mainland is $593,300 — less than 5 per cent more than in January 2011.

Last month’s new listings count was by far the highest January total in Greater Vancouver history since 1995. New listings for detached, attached, and apartment properties amounted to 5,756 — reaching a 19.9 per cent growth compared to January 2011, when new listings reached 4,801. This represents a vast 253.3 per cent increase compared to December 2011, which recorded merely 1,629 sales.

Residential property sales reached 1,577 on the Multiple Listing Service®, falling 4.9 per cent behind December’s 1,658. This represents a 13.3 per cent downturn compared to January 2010 sales, which reached 1,819.

Detached property sales (659 units) experienced a 16.9 per cent decrease compared to January 2011 (793 units) and a 6.5 per cent decrease compared to January 2010 (705 units). The benchmark price increased 11.3 per cent from January 2011 to $1,034,700.

Apartment property sales (657) decreased 7.9 per cent compared to January 2011 (713) and 26.3 per cent compared to January 2010 (891). The benchmark price increased by 2.4 per cent from January 2011 to $371,500.

Attached property sales (261 units) experienced a 16.6 per cent decline compared to January 2011 (313 units), and a 20.2 per cent decrease compared to January 2010 (327 units). The benchmark price decreased by 0.5 per cent since January 2011 to $468,000.

Written by Jay Banks - Vancouver real estate

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Here's another article from Toronto realtor Jamie Sarner, today about the first month of 2012.

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Another month has passed and the Greater Toronto REALTORS® have released their housing market figures for January 2012. According to the report, there were 4,567 sales through the TorontoMLS® system in the first month of 2012. This represents an 8.8 per cent increase compared to January 2011, when the number of sales reached 4,199. Moreover, the steepest increase of sales was recorded in low-rise home types in the regions surrounding the City of Toronto.

“A favourable affordability picture bolstered by very low posted fixed mortgage rates has kept home buyers confident in their ability to achieve the Canadian goal of home ownership,” said Toronto Real Estate Board President Richard Silver. He adds that there’s huge diversity in the composition of buyers with strong interest in home types across the pricing spectrum.

The average selling price through the Toronto MLS® system for January 2012 recorded a 9 per cent year-over-year increase settling at $463,534.

Competition between buyers remains tight due to low inventory levels, resulting in robust annual rates of price growth over the last year. "Strong price growth is expected to attract more listings. A better supplied market should result in a slower rate of price growth, especially in the second half of 2012,” said Jason Mercer, the Toronto Real Estate Board’s Senior Manager of Market Analysis.

For more on Toronto luxury homes and real estate news, look up Jamie on the web.

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I would like to present an article from my long-term realtor colleague Jamie Sarner. In this article he tackles the questions of realtor's responsibility for the crisis, an interesting read, actually.

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There have been lots of discussions about the causes of the financial crisis, the most controversial economic topic of the last decade. One of the main aspects of the financial crisis is the housing bubble. The housing bubble in the U.S. developed alongside the stock bubble in the mid ’90s. Housing prices began to inflate and then popped in the second quarter of 2006. The burst of the U.S. housing market was followed by the outbreak of a global financial crisis on August 9, 2007.

Significant credit losses in highly rated RMBS and CMOs caused investors to lose confidence in the accuracy of credit ratings. Banks began to be uncertain about the credit risk in lending to other banks, and the performance of real estate loans rapidly became weaker. In many theories and speculations, real estate agents received much of the blame for playing an important part in causing the financial crisis. There’s no doubt that real estate agents were a part of the problem; however, they definitely weren’t themselves the cause.

WHAT CAUSED THE CRISIS?

A number of factors contributed to the housing market crash before the country went into recession. The unsustainable price hike was a result of easy access to loans for unqualified buyers and record-high levels of speculation. Banks and financial institutions were providing mortgages at five to ten times people’s annual incomes, which highly exceeded the safe value of three to four times. These institutions underestimated the importance of making an investigation before providing a mortgage. This resulted in an easy cashflow in the market that boosted housing prices.

After the first housing crashes in markets such as Florida, California, Nevada, and Arizona, the economy itself went into a recession. After falling into recession, the combination of ill-conceived loans and an increasing rate of unemployment made the high standing inventory of housing and an enormously high level of foreclosure activity unmanageable.

A well known real estate expert, Lewis M. Goodkin, says that it was obvious:

The long-extended weak economy and lender resistance to providing new home loans has precluded any real recovery. It is important to note that if it were not for the very high level of investors buying foreclosures, short sales and distressed merchandise and renting the homes/condominiums out, the problems would be even more severe than they are. Also, do not forget that we also had record high refinancing and home equity financing that placed many homeowners who had bought at the right price under water when they borrowed to the max and prices began to dive.

REALTORS AND THE CRISIS

We have already mentioned how easy access to loans for unqualified buyers affected the overall market situation. This is the part for which real estate agents receive most of the blame, since they knew that their home buyers could get a loan that they wouldn’t be able to pay. Mr. Dworkin and other experts point out that this was also true of homebuilders and of course mortgage brokers and their sources of financing.

Real estate agents played only one part of the whole story. However, it’s unacceptable to excuse their conduct by saying that they weren’t the only ones. A huge number of new home buyers were encouraged to buy more expensive houses than they could afford. We should also keep in mind that the economists in the National Association of REALTORS and the National Association of Home Builders failed to release any preventive warnings.

Overall, the crucial mistake of the smartest financial figures around the world was supporting the falling market with immense mortgage packaging flow. Neither realtors nor homebuilders nor mortgage brokers were motivated to caution buyers on the risk. “They drank the same cool-aid as the rest of the players but in reality were the first people that buyers work with and thus were in the best position to curtail the abuse," explains Goodkin.

IS THERE A RISK OF A HOUSING BUBBLE IN CANADA?

The possibility that a similar scenario could happen in Canada is higher than we think. Canada relies on a more conservative attitude among realtors, builders, and lenders. who are more cautious when qualifying buyers, trying to limit speculation and to be realistic about supply and demand.

To evade a similar catastrophe, we should continue in the cautious approach and perhaps introduce heavy penalties for those that misrepresent purchasers in the process. Furthermore, people should be more realistic and aware of their possibilities. Prevention and early response are the key if we want to avoid a housing bubble.

For more on Toronto luxury homes, visit my site.

Today I would like to present another article from one of my favourite Toronto realtors Heather Hadden. She has written an interesting post about house flipping, so here it is.

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House flipping is the perfect investment with the potential for high profits. But like every high-profit investment, it involves high risks. “The masses believe in the dream that’s been promised to them, that they will be making a fortune in the next six months,” says Manuel Iraola, president of Miami-based Homekeys.net, an online real estate company for MSN Real Estate. “They don’t have the basic know-how. If it were as easy as they make it seem, 286 million people would be flipping real estate.”

Flipping used to be a popular real estate strategy before the U.S. housing collapse, and now, after the crisis and with a recovering housing market, it is coming back into fashion.

House flipping is a type of real estate investment strategy in which an investor purchases a house with the goal of reselling it for a profit. Investors can renovate the house and increase its value. Many flipped houses are bought in foreclosure or in estate or similar sales at a bargain, with the intention to quickly sell the house at market price or the best price they can bring from the property without making any special investment.

If everything goes well, an investor can make a substantial amount of money in a very short time. James R. Hagerty describes Jon Mirmelli’s investment: He learned late in the morning that a never-occupied custom house on the northern fringes of this Phoenix suburb was going up for auction in the same day. He won the home for $486,300, and one week later, he sold it to a migrant for $690,000 (141 per cent). It seems to be easy: wait for a really cheap house, buy it, find a buyer, and gain a remarkable profit. And if you are lucky, yes, it is easy. However, flippers can’t rely on luck — they have to know.

What a flipper needs:

1. Money

This includes the property acquisition cost, property holding costs such as taxes and utilities, renovation costs, and capital gains taxes. The profit doesn’t come from the difference between the purchasing and selling price. There are more costs that have to be added to the equation. The flipper has to be sure that he will have enough money to cover all the costs and to sell the home at a higher price than the sum of his costs.

2. Time

It could just as easily take months to find a buyer as it could take a week. Before selling, the flipper needs to schedule inspections to make sure the property complies with applicable building codes. If it doesn’t, she will have to spend more money and more time, and she still won’t know whether it’s worth the effort. A more ordinary job probably couldn’t bring in as much money, but the risk wouldn’t be involved.

3. Skills

When a flipper decides to renovate the house, he should do so by himself as much as he can. If he can’t repair the roof, he has to pay a professional to do it, and each job contracted out increases his costs.

4. Knowledge

Buying and selling require a lot of documentation. If a flipper wants to get a high profit, she has to know the neighbourhood of the house to predict the selling price, the legal and economic background, and housing demand in the country and area. Otherwise, she could find herself trapped with a home she doesn’t want, unable to sell it without losses.

If you decide to try your hand at flipping houses, remember that as with any other business, flipping requires a lot of knowledge, good research before taking action, and patience. Sometimes even a low profit is better than losses, and sometimes it is worth waiting for a better offer. Don’t decide in a hurry, but don’t hesitate too much.

So where can you find the ideal compromise in house-flipping? Do your research, because only a wealth of information and lots of practice can give you the right answer.

Here are simple statistics about GTA housing market - January 2012, from Toronto realtor Elli Davis.

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Greater Toronto Area housing statistics for the month of January have been published. If you are wondering whether the first month of 2012 was as successful as a great part of 2011, here is the answer: last month, Greater Toronto REALTORS® reported 4,567 sales through the Toronto MLS® system — an increase of 8.8 per cent from the 4,199 homes sold in January 2011!

Just as expected, the average price for a home rose significantly over the year, up 8.9 per cent from the $425,762 recorded in the first month of 2011 to the $463,534 seen last month. Similarly, the number of new listings went up by a very nice 8 per cent, from 8,937 to 9,655. On the other hand, active listings saw a year-to-year decline, falling by 8 per cent from 12,107 in January 2011 to 11,009 last month.

Simply put, 2012 has begun just as successfully as 2011 had finished. The positive housing trend in the GTA seems to be continuing, so let us hope that it will go on for many, many months

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