The British Columbia Real Estate Association (BCREA) reports that a total of 6,580 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in February, down 31.7 per cent from the same period last year. Total sales dollar volume was $4.53 billion, down 39.7 per cent from February 2016. The average MLS® residential price in the province was $688,117, an 11.7 per cent decrease from the same period last year.

“Consumer demand has returned to a more typical level over the first two months of the year,” says Cameron Muir, BCREA Chief Economist. “While the home sales have declined nearly 32 per cent from the extraordinary performance of a year ago, last month’s activity reflected the average for the month February since the year 2000.”

The average MLS® residential price for the province was down nearly 12 per cent from a record $779,419 in February 2016. However, this change is largely the result of a decline in the proportion of provincial sales originating from the Vancouver region. Last month, 37 per cent of BC home sales occurred in the Real Estate Board of Greater Vancouver’s area, compared to 44 per cent in February 2016.

Year-to-date, BC residential sales dollar volume was down 38.5 per cent to $7.3 billion, when compared with the same period in 2016. Residential unit sales declined 28.5 per cent to 11,067 units, while the average MLS® residential price was down 14.1 per cent to $660,943.

For detailed statistical information, contact your local real estate board. MLS® is a cooperative marketing system used only by Canada’s real estate boards to ensure maximum exposure of properties listed for sale.  

Potential Chinese property buyers dramatically shifted their inquiries from Vancouver to other major Canadian cities after a foreign-buyer tax was introduced in Vancouver this past summer, according to data from Chinese foreign-property portal Juwai.com.

Inquiries for Vancouver properties on Juwai – China’s largest international-property website – fell 81 per cent in July compared to the same month a year earlier, and 78 per cent in August, and continued lower through the remaining months in 2016.

At the same time, inquiries spiked in other Canadian cities, with Toronto climbing 62 per cent in August and 72 per cent in September, and continuing higher throughout 2016. The number of Calgary inquiries soared more than 1,000 per cent in August and 420 per cent in September, while Montreal saw a 152-per-cent spike in September as more Chinese buyers started looking beyond Vancouver and Toronto.

The data provide another indicator of the impact of a new 15-per-cent tax on foreign buyers purchasing property in Vancouver, which was announced last July and took effect in August and is credited as a factor in a slowdown in Vancouver sales. While data are not systematically collected on foreign buyers in other Canadian markets, the Juwai numbers suggest a rapid shift of focus among potential Chinese purchasers to other cities.

Brad Henderson, chief executive officer of Sotheby’s International Realty Canada, said he believes the increased inquiries haven’t translated into sales because property buyers often take months to make purchase decisions, but he anticipates growth in sales in 2017, and believes Chinese buyers will also return to Vancouver as they absorb the news of the tax.

“It may not necessarily have the same return as it did from an investment standpoint, but there are so many other reasons for people to want to consider Vancouver that it makes sense to us that we would see an increase in activity and actual sales in 2017 because a lot of dynamics that were at play in 2016 before the tax are still in play today,” he said.

Sotheby’s has partnered with Juwai to reach the Chinese market, and to compile data on Chinese inquiry trends.

Mr. Henderson said there is a perception that many Chinese buyers are speculating in Canadian real estate, but the survey suggests most buyers, or their university-aged children, will live in the homes they purchase.

Juwai surveyed its users about their reasons for looking at properties in Canada, finding the most cited reason for making purchases in Vancouver, Toronto and Montreal was to provide housing for high-school or university students who are being educated in Canada. The next most common reason for homes in Toronto and Montreal was “own use” by buyers looking for a second home in Canada.

Purchases as investments were the third most popular reason cited by potential Chinese buyers, followed by purchases for people planning to immigrate to Canada.

In Calgary, by contrast, “own use” was overwhelmingly the top reason for buyer interest, followed more distantly by investment, education and immigration.

The Juwai data also showed most potential Chinese buyers are not looking for luxury homes. The median price range of property inquiries in Vancouver in 2016 was $590,200 and in Toronto was just $458,928, both well below the average home sale price of $897,600 and $740,685 respectively in those two cities.

Mr. Henderson said the price-inquiry data support the survey findings that many potential Chinese buyers are looking for condos or smaller units for their children or as second homes, and are not primarily searching for larger family homes.

Vancouver’s new tax is not the only factor drawing more Chinese interest to cities like Calgary and Montreal, he added. While he expects Toronto’s market to continue to have stable interest from Chinese buyers, Mr. Henderson said some potential buyers are finding the city as unaffordable as many locals.

“As a foreign buyer … you’re not present in the marketplace, and it’s a little harder if there’s a multiple-offer situation for you to be completely familiar with what you might have to do,” he said. “There’s a certain exhaustion that comes with being in multiple offers and losing on a number of occasion, so that causes people to look outside of the centre.”

Janet McFarland: Globe & Mail

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The group that represents mortgage brokers across Canada was in Ottawa on Tuesday to urge parliamentarians to tinker with their recent rule changes, and hit the brakes on any new ones.

Mortgage Professionals Canada, who represents more than 11,000 mortgage brokers, urged lawmakers to rethink rule changes introduced last October aimed at reining in consumers who may be taking on too much debt to buy a home. Among the major changes was the implementation of a "stress test" whereby borrowers would be judged on their ability to pay their mortgage assuming that rates were much higher than they are right now.

The yardstick for that test is what's known as the Bank of Canada's qualifying rate — the average of the posted rates at Canada's Big 5 banks — which is currently 4.64 per cent.

While it's easy to get a mortgage rate below three per cent at the moment, the new "stress test" means that borrowers have their finances gauged against a much higher bar, in case real rates inch up. The aim was to clamp down on speculation and high debt, but the result has been to reduce purchasing power for new borrowers, MPC says.

A homeowner making $80,000 a year would likely qualify for a 2.5 per cent mortgage and allow them to buy a $400,000 home, CEO Paul Taylor said. But with the higher stress test level, they'd only qualify for a home worth about $320,000 — a reduction of about 20 per cent, he said. 

Other changes to limit portfolio reinsurance have disproportionately hurt smaller lenders, which helps the big banks. And setting the stress test level based on posted rates at big banks allows them to set their own competitive advantage, Taylor said at a parliamentary committee last month.

"These are costs that will be passed on to consumers," he said.

Instead of setting the stress test based on a level the big banks can skew to their advantage, "set the stress test based on a market rate," MPC said, or have the Bank of Canada set a rate that is independent of the average of the banks posted rates.

Worse still, Taylor said Tuesday, is that the new rules have done nothing to cool the housing markets in hot places like Toronto and Vancouver, while harming the market elsewhere. "By virtue of making it harder to get on the property ladder, there's an oversupply in some markets," Taylor said.

Meanwhile, "Toronto and Vancouver have supply issues," he said, "so they're almost isolated because people will pay whatever is required to get into the market."

Other markets are being hurt by tougher rules, and that's playing out in sales and prices. While the winter months are typically a time of seasonal slowdown for home sales, MPC says new mortgage originations are down by about 20 per cent since the new rules kicked in.

"So let's slow down and hit pause," MPC chair Mark Kerzner said.

He said the group isn't necessarily asking Ottawa to overturn the new rules, but at least consider tinkering with them and certainly avoid bringing in any new ones.

"Take 12 to 18 months to assess the impact of changes already made," Kerzner said.

Budget time

The push comes as Ottawa is set to unveil an annual budget that may well contain new measures to rein in house prices. While the most recent figures suggest prices are indeed flattening nationally, they were still up by 15 per cent in Vancouver and by 22 per cent in Toronto in the year up to January.

While Ottawa considers what to include in the budget, the mortgage group is urging them to not take any drastic and unnecessary action because of isolated pockets of danger.

The new rules "disproportionately affect competitive positions of small and mid-sized lenders," Kerzner said. "There's a real and growing sentiment that activity in Toronto and Vancouver is negatively impacting those in the rest of the country."

 From the CBC on MSN Money

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The BCREA Commercial Leading Indicator (CLI) increased for the fourth consecutive quarter, rising 1.5 index points from the third to fourth quarter. The index now sits at 123.9, a 5 per cent increase from a year ago, and about a 1.2 per cent gain on a quarterly basis.

“The CLI was propelled higher by strong fourth quarter growth in the BC economy,” says BCREA Economist Brendon Ogmundson. “The strength of the underlying BC economy, particularly relative to the rest of Canada, makes BC a very attractive destination for commercial investment.”

Five straight quarters of rising BC manufacturing sales and a second consecutive year of more than 6 per cent growth in retail sales has driven the CLI to new heights this year. The underlying CLI trend, which smooths often noisy economic data, continues to push higher due to several quarters of strong economic statistics. That uptrend signals further growth in investment, leasing and other commercial real estate activity over the next two to four quarters.

The British Columbia Real Estate Association (BCREA) is the professional association for more than 20,000 REALTORS® in BC, focusing on provincial issues that impact real estate. Working with the province’s 11 real estate boards, BCREA provides continuing professional education, advocacy, economic research and standard forms to help REALTORS® provide value for their clients.

The Bank of Canada announced on March 1^st, 2017 it was keeping its trend-setting target overnight lending rate at 0.5 percent.

It said recent data confirm that the Canadian economy is on track for better growth, as predicted in its January Monetary Policy Report (MPR).

The Canadian economy is forecast to grow by 2.1% in 2017 and 2018, helped along in 2017 by Government spending. The Bank also anticipates, as it has for some time, that exports and business investment will gain better traction in 2018.

However, that outlook would be severely downgraded should U.S. trade policy become more restrictive under the Trump administration. It is one of a number of factors the Bank refers to as “significant uncertainties” as regards Canada’s economic outlook.

Additionally, while inflation began 2017 above the Bank’s 2% target, it was pushed higher in part by carbon pricing that came into effect on New Year’s day in Alberta and Ontario. Looking past temporary factors, other gauges for inflation continue to suggest there is still considerable slack in the Canadian economy.

While employment has risen, modest growth for wages and hours worked also point to persistent Canadian economic slack.

Taken together, the balance of economic factors strongly suggests the Bank is in no hurry to raise its trend-setting overnight lending rate. Nonetheless, higher bond yields in Canada and recent regulatory increases in capital requirements for lenders mean Canadian homebuyers may see mortgage rates rise modestly this year.

As of March 1^st, 2017, the advertised five-year lending rate stood at 4.64 per cent, unchanged from both the previous Bank rate announcement on January 18^th and from one year ago.

The next interest rate announcement and MPR, which will update the Bank economic forecast, will be on April 12^th, 2017.

Reluctance amongst Metro Vancouver* home sellers is impacting sale and price activity throughout the region’s housing market.

Residential home sales in the region totalled 2,425 in February 2017. This is a 41.9 per cent decrease from the record 4,172 homes sold in February 2016 and an increase of 59.2 per cent compared to January 2017 when 1,523 homes sold.

Last month’s sales were 7.7 per cent below the 10-year February sales average.

“February home sales were well below the record-breaking activity from one year ago and in line with our long-term historical average for the month,” Dan Morrison, Real Estate Board of Greater Vancouver (REBGV) president said. “Limited supply and snowy weather were two factors hampering this activity.”

New listings for detached, attached and apartment properties in Metro Vancouver totalled 3,666 in February 2017. This represents a 36.9 per cent decrease compared to the 5,812 units listed in February 2016 and an 11.4 per cent decrease compared to January 2017 when 4,140 properties were listed.

This is the lowest number of new listings registered in February since 2003.

The total number of properties currently listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver is 7,594, a four per cent increase compared to February 2016 (7,299) and a 4.9 per cent increase compared to January 2017 (7,238).

The region’s sales-to-active listings ratio for February 2017 is 31.9 per cent, a 10-point increase from January. Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

“While home sales are not happening at the pace we experienced last year, home seller supply is still struggling to keep up with today’s demand. This is why we’ve seen little downward pressure on home prices, particularly in the condominium and townhome markets,” Morrison said.

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $906,700. This represents a 2.8 per cent decrease over the past six months and a 1.2 per cent increase compared to January 2017.

Sales of detached properties in February 2017 reached 745, a decrease of 58.1 per cent from the 1,778 detached sales recorded in February 2016. The benchmark price for detached properties is $1,474,200. This represents a 6.5 per cent decrease over the past six months and is unchanged compared to January 2017.

Sales of apartment properties reached 1,275 in February 2017, a decrease of 28.8 per cent compared to the 1,790 sales in February 2016.The benchmark price of an apartment property is $526,300. This represents a 2.3 per cent increase over the past six months and a 2.7 per cent increase compared to January 2017.

Attached property sales in February 2017 totalled 404, a decrease of 33.1 per cent compared to the 604 sales in February 2016. The benchmark price of an attached unit is $675,500. This represents a 0.3 per cent decrease over the past six months and a 1.3 per cent increase compared to January 2017.

*Editor’s Note: Areas covered by the Real Estate Board of Greater Vancouver include: Whistler, Sunshine Coast, Squamish, West Vancouver, North Vancouver, Vancouver, Burnaby, New Westminster, Richmond, Port Moody, Port Coquitlam, Coquitlam, Pitt Meadows, Maple Ridge, and South Delta.