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While the stock market is looking less than rosy, Baby Boomers in Vancouver are sitting on the proverbial golden egg.

Average prices for single homes in Vancouver in 1980 was $100,000. The same homes now sell for around $1,000,000. That increase in value coupled with low low interest rates finance renovations that only improve the value even more.

They can use this money to renovate, invest in more real estate or help their own children enter a rather formidable real estate market. With the kids moved out baby boomers are also downsizing and moving to condos closer to luxury amenities and within walking distance to the waterfront.
There are some who speculated that the amount of baby boomers rushing to sell would ultimately reduce property values but that hasn't happened in the lower mainland. Despite population growth of *55% in BC, boomers have not negatively impacted the market. (*Source BC Statistics)

Last month, there was a reported increase of 67.1% of property sales over February 2009 and a 28.6% increase over January 2009 by the Real Estate Board of Greater Vancouver. Purchasers fueled by the Olympics and flocking from Mainland China may be the source of at least a good portion of this increase.

Downsizing has allowed boomers to liquidate some equity for retirement. For some, purchasing condos in the Fraser Valley can leave as much as $1 mill. as a nest egg for retirement.

But boomers aren't willing to give up the space to which they've been accustomed. They may not be willing to move into a 500 square foot home that new home owners are used to. Two bedrooms with ensuite and den with all amenities are usually a requirement. There is also the option of extending their original properties through renovation/remodeling to allow for rental space and retention of valuable property.

Source, The Vancouver Sun

March has seen an added 7004 listings to the Multiple Listing Service (MLS) in Greater Vancouver. That's up 60% from last year this time.

Average prices have also reached a high of $584,435 on all property types. This value is up 20% from last year and 3% above last year's peak.
 
Of course low interest rates have fueled our local market and the increase in prices always encourages people to sell - "We were expecting to see listings increase," Robyn Adamache, senior analyst with Canada Mortgage and Housing Corp., said in an interview.

"Certainly any time you see prices rising is generally when you see more listings coming on line."

The increase has exceeded expectations of the Canada Mortgage and Housing Corp.

The market is expected to be pretty well balanced with supply controlling the rising prices. Total inventory of unsold homes in Greater Vancouver is 13,538 in March closing in on the record of 20,000 available in fall 2008.

Alternatively, realtors posted sales of 3,137 in March - 39% above March/09. Detached homes were up the most in the Greater Vancouver region with 1,336 sales, a 49-per-cent increase from March a year ago, averaging $800,341. That average is up 23% from last year but down 0.6% from February/10.

Source - The Vancouver Sun

It's the end of an era and a mad rush of desperate homebuyers flooded banks and brokers looking for the last good deal. Major banks posted their increases of almost 11% to 5.85 per cent on 5 year posted rates.

The rate increase comes as no surprise as it's just been a matter of when and how much. With the stirrings of life in our national economy and major gains in the past few months in the real estate market - not just in Metro Vancouver but also BC as a whole.

“People know rates are going up,” LeMay said. “The Bank of Canada said its overnight rate is going up. People put it all into one basket and think everything is going up.”

Monday's increases are the end of this particular portion of the government's economic stimulus plan. The finance minister Jim Flaherty voiced concerns over overheated housing markets and Canada Governor Mark Carney's worry over our debt levels, rates were expected to rise to slow the economy.

"Joe Santos, president of the Mortgage Brokers Association calculated that a family with $100,000 in household income, assuming they can negotiate a reasonable discount to posted five-year rates, would see their purchasing power reduced by about $40,000.

Before the change, he said, that family could qualify for a $614,000, five-year mortgage with 35-year amortization and a discounted mortgage rate of 3.89 per cent.

Now, however, the same family would likely face a discounted rate of 4.49 per cent, which reduces the maximum mortgage they could qualify for to $574,000."

“It’s obviously going to make it more difficult for people to qualify for Vancouver and Lower Mainland purchases, because property values tend to be higher here than in the rest of Canada,” Santos said.

Added to that, changes to mortgage qualification rules will also affect variable rate mortgages. Prime for now is at 2.25% but after April 19 buyers with only 5% down must qualify for a mortgage with the five year posted rate in order to get a variable mortgage.

The trend is now moving back to a fixed mortgage rate. For the last couple of years with variable rates at an all time low as many as 40% of homebuyers chose the variable rate.

What we all need to remember however, is that although we're not getting rock bottom rates we are still in good shape compared to just a few years ago. "Kevin Lutz, B.C. regional mortgage manager for RBC, noted that posted five-year fixed rates were 7.19 per cent two years ago, and the prime rate was 5.25 per cent."

Source: The Vancouver Sun

"Metro Vancouver's cheap-mortgage-fuelled real estate market has overshot its previous peak for prices with indications it will keep going, albeit more slowly, before cooling with the rise in interest rates."

Average prices in February in Metro Vancouver excluding Surrey, Langley and White Rock are at $662,741. The previous peak in May 2008 was $624,639. The combination of warmer weather and the influx of visitors from all over the world has had some measurable impact on our local real estate market.

The Teranet-National Bank housing price index analyses on the repeat sales of homes shows a that the deflation during our recent recession had all but been regained by January. This trend while expected to continue will most likely go more slowly. They found January was the ninth month in a row in which the national price index increased.

"Even in Vancouver, we've gained back everything we lost," Simon Cote, an analyst at the National Bank of Canada said in an interview. "The pace might be slowing a bit, but they are still going up."

Metro Vancouver prices have seen the following trends:

      1. Reached recession low in May 2009, but rose 11.7% between May and Jan/2010
      2. Prices rose 0.9% between December and January, biggest gain amongst 6 major markets
      3. Increases in supply of both new construction and more resale homes available will tend to balance the market for the long term.

Increased mortgage rates will also contribute to this balance. Canada banks increased their posted 5 year rates by .6 of a percent on Monday/Tuesday to 5.85. "For a family with a household income of $70,000, Muir said, this week's bump in five-year rates for buyers seeking five-year terms reduces the final amount they can pay for a home by $35,000."

Source: The Vancouver Sun