Late wave of sales carries B.C. house markets higher

A strong wave of property sales through British Columbia's southern and coastal property markets in December helped lift the province to a strong finish in 2009, the B.C. Real Estate Association reported Tuesday.

And the sales boost should give markets enough momentum to push sales growth into the first part of 2010, or until rising prices again start pushing more buyers out of the market, according to association chief economist Cameron Muir.

The province saw 5,703 homes sold through the Multiple Listing Service in December, a 132-per-cent increase from the same month in 2008, the second highest number ever.

For the year, B.C. recorded 85,028 sales through MLS, a 23-per-cent increase from all of 2008 and the annualized average price of a home hit $465,725 in 2009, a two-per-cent increase from 2008.

"It's impossible to determine how much pent-up demand is left in the market," Muir said in an interview, "but certainly the trend of the last quarter of 2009 would be indicative of a fairly strong first quarter of 2010.

"Beyond that, sales will likely come down from their lofty heights."

Muir added that will be because most of the buyers, who were lured into house hunting in 2009 because of low mortgage rates and reduced prices, have likely already bought homes and the advantages of lower home prices and rock-bottom interest rates are expected to start slipping away as 2010 wears on.

Muir said 2009 started with home sales trending at a 25-year low as the financial crisis of the previous fall evolved into a full-blown recession.

Buyers, however, were drawn into the market as falling property prices and declining mortgage rates combined to create big reductions in the mortgage payments of homeowners.

Muir estimated that from peak prices in February of 2008, the monthly carrying cost of an average Metro Vancouver home declined some 27 per cent by March of 2009.

However, by December, Muir said monthly carrying costs on that average Metro home were only 15 per cent lower than the peak as the recovery of prices had eaten away much of the advantage.

"Benchmark prices are getting close to record levels, and as mortgage rates edge higher that's going to have an impact on affordability," Muir said.

A slowing of sales, he added, will slow down price growth compared with the dramatic rebound of 2009.

Carol Frketich, regional economist for Canada Mortgage and Housing Corp., said her forecast for increased home sales in 2010 will be tempered by the expectation of higher mortgage rates.

"Mortgage rates are forecast to remain fairly low and gradually increase in the last half of the year, depending on what's going on with the broader economy," Frketich said.

She added that there is an expectation that the economy will grow and new jobs will be created in 2010, though perhaps not as quickly as the housing market has recovered.

"The unemployment rate suggests there is still slack in the economy, so in terms of the outlook for income growth in 2010, [personal incomes] will likely grow as the economy improves, but maybe not to the extent home prices are expected to increase."

In December, most of the province's markets saw dramatic increases in sales compared with a year ago. Overall, however, the gains were greater in the Lower Mainland and Victoria than in the Okanagan or other interior communities.

While unit sales in the area covered by the Real Estate Board of Greater Vancouver were up 44 per cent over 2008, sales for the year were down 10 per cent in the B.C. Northern Real Estate Board's territory.

Victoria saw a 30 per cent increase in sales compared with 2008, but sales on the rest of Vancouver Island were up only seven per cent. And expressed as an annualized average, while B.C.'s average price was up 2.4 per cent as a whole, the Northern Lights Real Estate Board was the only one of B.C.'s 12 individual boards to see an increase in average price.

In the other 11 boards, 2009's annualized average prices were still anywhere from 0.2 per cent to seven per cent lower than 2008's averages.

NEW HOUSING PRICE INDEX
+0.4 Canada
0.0 Victoria
+0.3 Vancouver
+0.1 Edmonton
+0.4 Calgary
-0.2 Saskatoon
+0.1 Regina
+0.1 Winnipeg
-0.2 Hamilton
+0.5 Toronto and Oshawa
0.0 Ottawa-Gatineau
+0.4 Montreal
+0.9 Quebec
+0.1 Saint John, Fredericton and Moncton
0.0 Charlottetown
+0.3 Halifax
+0.7 St John's

SOURCE: Statistics Canada



(prepared by Derrick Penner/Vancouver Sun)