Consumer Confidence and Real Estate Markets Are Looking Up

Hi All,

Another great article - this time from the Globe and Mail. With lowered prices, motivated sellers and record low interest rates it definitely is a Buyer's market - I am very excited to see optimism returning to the housing market as it really is a great opportunity for those who have been waiting to buy.

All the best,
N

Optimism returning to housing market, RBC survey finds
VIRGINIA GALT
Globe and Mail Update
March 4, 2009 at 4:04 PM EST

Confidence appears to be seeping back into the housing market, with young Canadians
the most optimistic that now is a good time to buy, according to the Royal Bank of Canada's annual homeownership survey.

Thirty-year-old David Morris, who owns a condominium in downtown Vancouver, is
among those actively planning to purchase a home. He's looking to sell his condo and
trade up to a house in Vancouver's trendy Kitsilano or North Shore districts – a move that
would have been out of his reach in the overheated real estate market of recent years.
Falling prices, low interest rates – and the fact that he is getting married at the end of this
year – have factored into Mr. Morris' decision to buy.

“We have made the decision to move forward. It's not a situation where we're going to
force it, but if we can find the right house for the right price, we have made the decision
to get serious about it,” said Mr. Morris, a commercial real estate broker.

“From a buyer's perspective, it's encouraging …Now is a good time to come in and find a
home that you love, that isn't going to break the bank.”

In a survey of 2,026 Canadian consumers, conducted in the second week of January, the
Royal Bank found that 65 per cent of respondents believe it is a buyers' market now.
Of those surveyed, 9 per cent said it is “very likely” they will purchase a home or
condominium in 2009 or 2010, and another 18 per cent rated the prospect of purchasing a
new home as “somewhat” likely.

“Additionally, almost half indicate it makes sense to buy a home now versus waiting until
next year.”

Young adults and renters are most likely to spark an upsurge in home sales, Royal Bank
said in releasing its survey results.

“In the under-35 group, 48 per cent said they plan to buy, which is up sharply from 36 per
cent last year. Renters also appear to be saying they are tired of paying someone else's
mortgage payment, with 38 per cent planning to become homeowners in the next two
years.”

Although this optimism is not reflected in the most recent sales statistics – the volume of
sales in the Toronto area, for instance, was down 47 per cent year-over-year in January –
Royal Bank predicts that lower prices will lure a growing percentage of Canadians back
into the housing market in the next two years.

Toronto real estate agent Geon van der Wyst noted that consumers do not always follow
through on their intentions – although it is encouraging that more Canadians appear to be
thinking about buying homes.

“Intention is the step prior to making an educated decision… and I'm sure a lot of those
people with intentions will move forward with purchases, it's just a matter of finding the
right time,” Mr. van der Wyst said.

Karen Leggett, the Royal Bank's head of home equity financing, said low mortgage rates
“and favourable housing prices are influencing home purchase intentions this year and
may be the reason why more Canadians are poised to purchase over the next two years.”
Ms. Leggett said the poll, conducted for the Royal Bank by Ipsos Reid, found that the
vast majority of Canadians believe that the purchase of a home is a good investment.
“The current economic environment does not appear to have dampened Canadians'
overall confidence in the housing market,” she said.

Mr. van der Wyst said there are good deals to be had, from the buyers' standpoint.
However, he added, many prospective buyers – particularly first-time buyers – are still
uncertain about the best time to plunge into the market.

“We tend to hand-hold these first time-buyers, nervous first-time buyers, especially
around here where they know the prices are starting to dip – and who knows where they
will continue to dip before the recovery starts?”

Mr. van der Wyst said that, especially in the current economic environment, he screens
prospective buyers carefully before taking them to look at properties. He noted that the
banks are also “pretty stringent” in qualifying consumers for mortgages.
“Interest rates are at historic lows and borrowing money is very, very affordable. If you
have steady employment and you have some financial responsibility along with a good
interest rate, now is a really, really good time to purchase a property,” said Mr. van der
Wyst, an agent with Royal LePage.

“At this time, employment stability is very important. It would be really unfortunate to
see someone lose their job just as they were about to close on a property,” he said.
A number of leading Canadian economists have observed that Canada's rising
unemployment rate has eroded consumer confidence, and other recent housing forecasts
have been less upbeat than the Royal Bank survey.

Canada Mortgage and Housing Corp. projects that, in spite of falling prices, the volume
of existing home sales is expected to drop by 14.6 per cent in 2009, and then rise by 9.3
per cent in 2010.

Average home prices are forecast to fall 5.2 per cent to $287,900 in 2009. Next year,
prices are expected to remain flat, according to the federal housing agency's forecast.
Ms. Leggett said Royal Bank is not forecasting “a huge housing rebound, by any stretch,”
but there are reasons for cautious optimism that the market will start to recover later this
year and next year.

Following the overheated market and bidding wars of the past few years, housing is once
again becoming more affordable and there are good buying opportunities for consumers
“who have good solid certitude around their job prospects and have the financial picture
to be able to get into the market,” Ms. Leggett said.

“Buying intentions are one thing. Whether they translate into actual purchases, obviously
time will tell,” she said. “But, anecdotally, we are hearing that there is heightened activity
…and interest in the marketplace overall.”

Canadian Interest Rates at All Time Low

Hi Everyone,

Here's an article that may interest you. Interest rates are at an all time low - an absolutely perfect time to talk to your mortgage broker and get locked in to a great rate.

With any luck, these extreme measures are going to lend a hand getting the Canadian Real Estate markets back on track. Most people do believe we are at the bottom of the market now - meaning, in all honesty, this could be the best time to buy.

All the best,
Neacol

Bank of Canada cuts interest rate to lowest ever

Updated: Tue Mar. 03 2009 11:59:44

CTV.ca News Staff

Bank of Canada governor Mark Carney cut the interest rate Tuesday to 0.5 per cent, the lowest ever, in yet another attempt to stimulate the sluggish economy.

The rate cut, the seventh in the last year, was widely expected by economists.

"Consistent with returning total (consumer price index) inflation to 2 per cent, the target for the overnight rate can be expected to remain at this level or lower at least until there are clear signs that excess supply in the economy is being taken up," Carney said in a statement.

The move comes a day after Statistics Canada released dismal numbers that prove Canada is in a deep recession.

The Statistics Canada report indicated that Canada's economy shrank by 3.4 per cent in the last quarter of 2008.

That is the biggest decline since the recession of 1991 and sparked a significant drop in the markets on Monday. Toronto's S&P/TSX composite index fell 435.51 points, or 5.36 per cent, to 7,687.51, its lowest point since 2003.

Ignatieff asks PM to define position on economy

The precise state of the Canadian economy continues to be a topic of debate in the House of Commons.

On Tuesday afternoon, Liberal Leader Michael Ignatieff asked the prime minister to define exactly what the Canadian economy is going through.

"Canadians deserve a clear message from their prime minister about this economic crisis," Ignatieff said.

"Sometimes he says we're in a recession, sometimes it's a depression, in September it wasn't even going to happen at all. This weekend on CNN, the prime minister called it a 'cyclical downturn, but nothing that requires government intervention.'"

In response, Prime Minister Stephen Harper said his quotes regarding government intervention had been taken out of context by the Liberal leader.

"If the honourable member will look closely at the transcript of that interview, he will see that I was speaking specifically of the mortgage sector," Harper said.

When pressed by Ignatieff to define the challenges facing the economy as a recession, depression or cyclical downturn, the prime minister said "the economic plan of the minister of finance has spoken very clearly about the government's views on this and our action plan to deal with it."

Rate cut impact may take time

While rate cuts are designed to have a stimulative effect on the economy, most experts believe the cut will have a minimal impact.

The central bank has cut its rate from 4.5 per cent 15 months ago to 0.5 per cent, to little effect.

Peter Drake of Fidelity Investments said after the announcement that it could take anywhere from 12 to 18 months for interest rate cuts to take effect, which means today's announcement won't provide immediate relief.

Drake said that a cut to the main interest rate will hopefully ripple through the spectrum of interest rates and therefore stimulate the economy.

"The idea is that it will influence other rates, the rates at which banks lend to people and to commercial customers and indeed to each other," Drake said during an interview on CTV Newsnet.

After Carney's announcement, Canada's major banks -- Royal Bank, Bank of Montreal and CIBC -- said they would cut their prime rates in step with the central bank.

In his statement, Carney also seemed to back away from his January economic outlook report, which suggested that Canada's economy would begin to recover in late 2009.

He had predicted that the economy would start growing by an annualized two per cent in the third quarter of 2009 and record an average growth of 3.8 per cent in 2010.

On Tuesday, Carney acknowledged that economies around the world are performing more poorly than anticipated, and said the Canadian economy will likely decline more sharply in early 2009 than previously predicted.

Carney now suggests the recession could last until 2010.

"The effects of the recent aggressive monetary and fiscal policy actions in Canada and other major economies will begin to be felt in the second half of this year and will build through 2010," Carney said. "Once the global financial system stabilizes and global growth recovers, the underlying strength of the Canadian economy and financial sector should ensure a more rapid recovery in Canada than in most other industrialized economies."

Carney also said it is possible that the Bank may provide additional stimulus, if necessary, by purchasing credit and other assets.

However, the Bank will not offer details on such plans until its April Monetary Policy Report.

With files from The Canadian Press

Canadian Consumer Confidence Back at August Levels

Hello All,

In my last post I mentioned that the Salt Spring real estate market had finally felt the pinch last Fall, but that it seemed things were starting to turn around. Well today a new report came out that shows it's not just the Island - Canadians in general are getting their consumer confidence back.

The article is attached below - and I hope you find it as interesting and hopeful as I did.

Cheers - N

Consumer confidence revives to best level since August: Harris-Decima

February, 23, 2009 - 09:46 am THE CANADIAN PRESS

OTTAWA - Canadian consumer confidence has revived since December to highest level since August, according to a Harris-Decima poll.

The survey of 2,000 people between Feb. 5 and Feb. 15 found 27 per cent predicting they'll be better off a year from now, against 13 per cent who expect to be worse off in early 2010.

This was an improvement from the previous tally in December, when only 20 per cent expected to be better off and 18 per cent had a pessimistic one-year outlook.

The proportion saying now is a good time for a major purchase rose to 41 per cent this month from 35 per cent in December.

"Some Canadians appear to be seeing light at the end of the economic tunnel," commented Harris-Decima senior vice-president Jeff Walker.

"The roller-coaster ride may not be over yet, but the data suggests many feel that we have hit bottom, and will gradually move upward from here."

The poll was released on the same day that Statistics Canada reported December retail sales sagged 5.4 per cent in the steepest monthly tumble in over 15 years. However, most of the decline was caused by skidding car sales and lower gasoline prices, and excluding the automotive sector retail sales were down 1.8 per cent.

The Harris-Decima poll, which claims a 95 per cent likelihood of accuracy within 2.2 percentage points, indicates that while Canadians are feeling more positive about the economy, U.S. consumer confidence has inched up only slightly.

Among Canadians, 59 per cent still foresee bad times for the economy in the coming year, but this was down from 64 per cent in December.

"Restored consumer confidence is an important factor in any potential economic recovery," observed Debbie Ammeter, a vice-president at mutual fund operator Investors Group.

"It is interesting to note that Canadians seem to recognize that things could be difficult for most of this year but yet there appears to be more who believe that they will be better off a year from now."

How Canada and Salt Spring Are Surviving the Chaos

Hello All,

I can't believe it's been so long since I last posted. I started out being very occupied with work, and then in September my daughter (and first child) was born, so I've been taking it a little easy as you can imagine.

For the past six months I've been taking a back seat to my business partner/father, who's been making sure our clients were taken care of. I've now returned to full time on the back end of things (my father is still taking care of the showings) and raring to go.

And just in time too.

Salt Spring finally felt the pinch of the global economic crisis this past Fall. Sales have been down and most folks trying to sell have had their plans frustrated. Some Realtors who have been in the business over here for years said it is the worst they had ever seen the market. Not a bad time to be on maternity leave, I have to say.

But with Spring on the horizon, things at least seem to be picking up. Sales are still low and sporadic, but the interest has come back. We have fielded more emails and phone calls in the past month than we did all Fall and there is a lot of speculation that the Island will be one of the first markets to bounce back.

We still have the best climate in Canada, staggeringly low crime rates, the infrastructure of a much larger community, gorgeous surroundings and convenient access to the outside world. The island is well suited for retirees and young families alike - not to mention the vacation home aspect of the market. Furthermore, Canada is looking like it'll be one of the countries to come out on top of this economic crisis, and frankly BC is one of the provinces in the best shape.

I think we're all looking forward to a bright and sunny Spring after this particularly uncertain Winter, and, as usual, it appears we'll have a lovely one here on the Island.

The following article about the status of Canada in this economic downturn came out this week, and may be of interest to you.

All the best - N

NEWSWEEK - Published Feb 16, 2009, by Fareed Zakaria

Worthwhile Canadian Initiative-Canadian banks are typically leveraged at 18 to 1-compared with U.S. banks at 26 to 1.

The legendary editor of The New Republic, Michael Kinsley, once held a "Boring Headline Contest" and decided that the winner was "Worthwhile Canadian Initiative." Twenty-two years later, the magazine was rescued from its economic troubles by a Canadian media company, which should have taught us Americans to be a bit more humble. Now there is even more striking evidence of Canada's virtues. Guess which country, alone in the industrialized world, has not faced a single bank failure, calls for bailouts or government intervention in the financial or mortgage sectors. Yup, it's Canada. In 2008, the World Economic Forum ranked Canada's banking system the healthiest in the world. America's ranked 40th, Britain's 44th.

Canada has done more than survive this financial crisis. The country is positively thriving in it. Canadian banks are well capitalized and poised to take advantage of opportunities that American and European banks cannot seize. The Toronto Dominion Bank, for example, was the 15th-largest bank in North America one year ago. Now it is the fifth-largest. It hasn't grown in size; the others have all shrunk.

So what accounts for the genius of the Canadians? Common sense. Over the past 15 years, as the United States and Europe loosened regulations on their financial industries, the Canadians refused to follow suit, seeing the old rules as useful shock absorbers. Canadian banks are typically leveraged at 18 to 1-compared with U.S. banks at 26 to 1 and European banks at a frightening 61 to 1. Partly this reflects Canada's more risk-averse business culture, but it is also a product of old-fashioned rules on banking.

Canada has also been shielded from the worst aspects of this crisis because its housing prices have not fluctuated as wildly as those in the United States. Home prices are down 25 percent in the United States, but only half as much in Canada. Why? Well, the Canadian tax code does not provide the massive incentive for overconsumption that the U.S. code does: interest on your mortgage isn't deductible up north. In addition, home loans in the United States are "non-recourse," which basically means that if you go belly up on a bad mortgage, it's mostly the bank's problem. In Canada, it's yours. Ah, but you've heard American politicians wax eloquent on the need for these expensive programs-interest deductibility alone costs the federal government $100 billion a year-because they allow the average Joe to fulfill the American Dream of owning a home. Sixty-eight percent of Americans own their own homes. And the rate of Canadian homeownership? It's 68.4 percent.

Canada has been remarkably responsible over the past decade or so. It has had 12 years of budget surpluses, and can now spend money to fuel a recovery from a strong position. The government has restructured the national pension system, placing it on a firm fiscal footing, unlike our own insolvent Social Security. Its health-care system is cheaper than America's by far (accounting for 9.7 percent of GDP, versus 15.2 percent here), and yet does better on all major indexes. Life expectancy in Canada is 81 years, versus 78 in the United States; "healthy life expectancy" is 72 years, versus 69. American car companies have moved so many jobs to Canada to take advantage of lower health-care costs that since 2004, Ontario and not Michigan has been North America's largest car-producing region.

I could go on. The U.S. currently has a brain-dead immigration system. We issue a small number of work visas and green cards, turning away from our shores thousands of talented students who want to stay and work here. Canada, by contrast, has no limit on the number of skilled migrants who can move to the country. They can apply on their own for a Canadian Skilled Worker Visa, which allows them to become perfectly legal "permanent residents" in Canada-no need for a sponsoring employer, or even a job. Visas are awarded based on education level, work experience, age and language abilities. If a prospective immigrant earns 67 points out of 100 total (holding a Ph.D. is worth 25 points, for instance), he or she can become a full-time, legal resident of Canada.

Companies are noticing. In 2007 Microsoft, frustrated by its inability to hire foreign graduate students in the United States, decided to open a research center in Vancouver. The company's announcement noted that it would staff the center with "highly skilled people affected by immigration issues in the U.S." So the brightest Chinese and Indian software engineers are attracted to the United States, trained by American universities, then thrown out of the country and picked up by Canada-where most of them will work, innovate and pay taxes for the rest of their lives.

If President Obama is looking for smart government, there is much he, and all of us, could learn from our quiet-OK, sometimes boring-neighbor to the north. Meanwhile, in the councils of the financial world, Canada is pushing for new rules for financial institutions that would reflect its approach. This strikes me as, well, a worthwhile Canadian initiative.

The Official Community Plan Strikes Again

Hi Everyone,

For those of you who have been following my blog for awhile, you'll remember my call out last October for folks to take a close look at the proposed changes to our Official Community Plan. Many people did sit up and take notice, and thankfully we were able to stop many harmful additions and changes from being included in the draft.

Well, I'm afraid it's time to take another look. There are a couple more items proposed that could potentially harm our community - including one that could restrict more than half of the island from even being allowed to mow their lawns. Unfortunately the majority of the population has not been informed as to what the ramifications of these changes could be, and the Island's Trust appears to be trying to pass the recommendations through to law before we get a chance to figure it out. Sound extreme? Check out www.islandstrust.com for details on the issues, and what you can do to help.

As always, feel free to contact me if you have any questions.

All the best,
N

Salt Spring Market Holds Value

Hi Everyone,

Sorry for the delay in getting out my next post - things have been busy here on the island.

Here's an article from today's Times Colonist that might interest any of you concerned about property values falling. As you'll see, Salt Spring is one of only a few markets in North America that has held firm and is continuing to do well.

I hope you find it interesting,
All the best,
Neacol

Saltspring properties hold their value

But most recreational listings in Canada have returned to a more balanced state

Carla Wilson

Times Colonist; With files from Canwest News Service

Wednesday, June 11, 2008

Canada's recreational properties are returning to more balanced market conditions as more listings are coming on the market but Saltspring Island properties are holding tight to their value.

That's because demand has increased for B.C.'s Gulf Island properties where the Islands Trust rules have capped growth, said Li Read, of Re/Max Realty of Saltspring Island. "It's a limited inventory."

Fly over the Gulf Islands to see "an awful lot of green," Read said yesterday. "The Trust has done a wonderful, wonderful thing."

A new Re/Max report released yesterday said that nationally, it found a "substantial increase" in the supply of recreational properties listed for sale, as 91 per cent of the areas it surveys were moving from being sellers' markets to something more favourable to buyers.

Exceptions were Saltspring Island, two markets in Saskatchewan, and Newfoundland's east coast, the report said.

Saltspring Island sales are down slightly from last year but the average price has held steady since 2005, the report said.

Most homes sold so far this year were between $600,000 to $900,000. The company cited a starting price of $1.3 million for a three-bedroom waterfront house,

Read said that the advent of the Internet, "opened a global market because it erased geography," Read said. Canadian buyers are often from Alberta or Ontario, while international buyers may be from the U.S. or Europe.

Saltspring is the Gulf Island where property owners can live year-round if they wish because its amenities make is a stand-alone community, she said. Rather than get-away cottages, properties are typically second homes for buyers looking three to five years in the future.

This region's climate and terrific sailing among the Islands attracts buyers, Read said.

Outside of Saltspring, there are more affordable properties for sale in B.C. Re/Max regional executive vice-president Elton Ash said the demand for B.C.'s waterfront recreational properties remains strong, but prices have stabilized, leading to fewer multiple offers pushing up prices.

Bargain U.S. real estate has reduced the number of buyers looking at Canadian recreational properties, he said. "We see U.S. owners of Canadian properties putting them up for sale now so they can take their profits and reinvest them in the U.S Sunbelt."

Across the country, affordability, rising energy prices and Canada's faltering economy have dampened demand, Re/Max said.

As a result, "sixty seven per cent of markets reported softening in the number of sales year-to-date," Re/Max said, blaming part of that on tough winter conditions earlier this year.

"Over the last decade or so we have seen across-the-board double-digit price increases for recreational properties," said Re/Max spokesperson Christine Martysiewicz, crediting the prosperity of the baby boomers and the longest period of expansion since the Second World War for that boom.

"The recreational market continues to experience solid demand -- a trend that is expected to continue throughout 2008, said Michael Polzler, executive vice-president and for Re/Max Ontario-Atlantic Canada.

The trend hasn't dented property values in Tofino, where the starting price for a three-bedroom winterized recreation property is a cool $2 million, the highest price in Canada.

Nor has it depressed values for Sylvan Lake north of Calgary, where prices have climbed to $1.25 million in 2008 from $1 million in 2007 for a similar three-bedroom affair.

Alberta's oil-fuelled prosperity has in fact helped drive up property values in British Columbia, Atlantic Canada and some parts of Ontario, according to the Re/Max report.

Creek House Realty is now Pemberton Holmes!

Hello all,

This week, Creek House Realty is changing over to become the newest branch of Pemberton Holmes.

This change is effective as of this morning, and we are all delighted to become a part of such an upstanding, family and community oriented company.

Come help us celebrate and learn more about Pemberton Holmes on Saturday, May 3rd from 12 to 2. We'll be unveiling our new sign, and there will be goodies and live music and balloons for all the kids. It's also market day here in Ganges, so there will be lots to do!

Have fun,
Neacol