How many months in a row do we call the market ‘crazy’ before crazy is just the new normal?
How many years in a row do we call interest rates ‘too low’ before low is just the new normal?
So what does normal look like this month? Record setting on the sales front of course.
- Detached 1M – 1.25M zone – 267 homes sold of 300 listed across primary markets. An 88% sales ratio.
- Detached 800K – 1.5M in North Van saw 110 sold out of 112
- Detached at any price in Tsawwassen saw 50 sold out of 59
- Detached from 400K to 1.5M in New West saw 46 sold out of 57
Port Moody remained strong as well, but the more interesting stats were detached homes in Pitt Meadows, Port Coquitlam, and Coquitlam where certain price bands saw more sales recorded than actual listings posted.
- Coquitlam for instance – 800K – 1M saw 85 sales out of 60 listings?!?!
Conclusion: if you live in Coquitlam, be careful, your home might be sold without even being listed. Which actually just occurred with our own residence. A knock on the door, some negotiating, and now our family joins you in this madness of searching for a new home, but that is a story for another day.
I offer links below to market related stories, with a few comments based on my own experience.
How Hot was June?
“It’s the first time since The Real Estate Board of Greater Vancouver began collecting data that the region has posted more than 4,000 home sales for four consecutive months. – See more at: http://www.vancourier.com/news/june-home-sales-break-metro-vancouver-records-1.1989082#sthash.XY99bqD1.dpuf
As I have touched on before – a story of limited supply and strong demand. It is as simple as that.
Placing bets against Vancouver Real Estate?
The trend is your friend, but some US Stock Market whizzes disagree and are making bets against the CDN Real Estate market. They are in my opinion somewhat ill- informed on the quality of the typical CDN mortgage holder.
The list of ways we are not like our neighbours to the south is a long one:
- CDN underwriting standards are as stringent as they get globally.
- The three mortgage insurers are well capitalised (CMHC 17B in cash)
- The three mortgage insurers are backed by the Federal Government.
- A larger percentage of Mortgages in Canada are insured than most people realise
- 50% of CDN’s have no mortgage and thus little exposure to interest rates or swings in Value
- A two-four is a flat of 24 beverages, a ‘case’ is 12 bottles.
The list goes on.
What about that interest rate move?
We all know by now that the Bank of Canada cut Prime 0.25%, and once again the lenders kept a piece for themselves by only passing on a 0.15% drop to variable rate mortgage holders. The variable remains, as it has for decades, a wonderful place to be.
Whether there will be any impact on fixed rates remains to be seen, and longer term fixed rates are predicated on the Bond Market, not so much on the Bank of Canada’s moves.
Here is a question:
When rates return upward will the lenders match the Bank of Canada increases, or will they recall these partial drops and apply commensurate partial hikes?
- Jan 21,2015 Bank of Canada cuts Prime by 0.25%, lenders follow with 0.15% reduction
- July 15, 2015 Bank of Canada cuts Prime by 0.25%, lenders follow with 0.15% reduction.
0.50% drop in the Bank of Canada rate.
0.30% drop passed on to borrowers.
So when rates hike do come, which will likely be some time away, what will happen.
Keeping in mind that the more time that passes the foggier our memories will be on this topic. Real estate in our brain being occupied instead with sports scores, celebrity scandals, and the day to day minutiae of life.
When the hikes do come, logic would suggest;
Bank of Canada increases by 0.25%, lenders increase by only 0.15% (to match July 15, 2015 move)
Bank of Canada increases by 0.25%, lenders increase by only 0.15% (to match the Jan 21, 2015 move)
Will logic rule the day?
Or will opportunism combined with short memories and our general expectation of getting shortchanged win out?
Will that 0.30% we are already missing be a buffer against future increases?
Time will tell.
I for one will be paying close attention when the time comes, which as I say is likely a long time from now.
In the meantime make the most of the hot weather, and what you can of the hot market!