Monday, January 23, 2012

British Columbia's Affordability Crisis

There is an interesting story in today's Vancouver Sun with this headline "Vancouver displaces Sydney as second-most expensive housing market on well-known survey" an article written by Hu-YongYu and Bloomberg.  If there is something that Canadians want it is, at some point, to be able to buy a home. Sadly, it is looking like that option may be slipping out of the grasp of more and more British Columbians.

The 54 page report that the Vancouver Sun authors are referring to is the "8th Annual Demographia International Housing Affordability Survey 2012" by Wendell Cox and (Demographia) and Hugh Pavletich (Performanace Urban Planning).  This group has been looking at affordability issues in English speaking countries for some time and have built up a fine reputation.

What is alarming in the report is that they have identified 6 severely unaffordable cities in Canada and the top 4 are in British Columbia.  Severely unaffordable being defined as cities where a family median income multiplier of 5.1, or more, is required to acquire median priced housing.  Now, I believe this "median priced housing" includes everything from apartments, townhouses, houses to homes on acreage. 

Vancouver's median priced property in the third quarter the report states was $678,500.

When I looked, at single family detached house sales in Vancouver during the year 2011, I found an average sale price of $1,640,000.  I add this note to clarify and show that if you are thinking about buying a house, on its own lot, in Vancouver the problem is really a lot worse than illustrated.

Vancouver wasn't the only bad news. The top 6 "severely unaffordable" cities in Canada are:

                       City                                         Median Multiplier 5.1 and over
      • Vancouver                           10.6
      • Abbotsford                            7.0
      • Victoria                                 6.6
      • Kelowna                               6.6
      • Toronto                                 5.6
      • Montreal                               5.1
Wow!  British Columbia likes to lead the way in Canada but I, like many parents, prefer to hope that my children, someday, will have an opportunity to buy real estate property without bankrupting their future.  Clearly, this report is showing a significant problem with affordability in British Columbia.
What is the culprit?  According to Cox and Pavletich "the record shows that smart growth (urban consolidation and compact city policies) is incompatible with housing affordability."  Locally, that would mean zoning practises, ALR reserves and other forms of artificial boundaries imposed on development by government.

It is important to note that the report does not factor in the availability and cost of money.  Perhaps Canada has benefited more than other nations with our stable banking system and competitive rates?  As of this date a 5 year term, 25 year amortization mortgage could be obtained at the discounted rate of 3.09%.  There may be other elements at play as well, such as, size, quality and age of the housing stock. 

What about Chilliwack, BC? How does it compare? In 2011, the average sale price of residential property, (houses, apartments, townhouses etc.), sold for $301,000. Quite a ways from the lofty prices of Vancouver and even those in Abbotsford, but, I suspect, Chilliwack, Agassiz & Harrison Hot Springs would still be rated as "moderately unaffordable" even if they remains the most affordable housing options in the Fraser Valley.

Imagine living here....


Stephen Mullock RI
is an award winning full-time real estate agent with 30 years of experience and hundreds of sales. Thinking of buying or selling real estate in the Fraser Cheam communities of Chilliwack, Agassiz or Harrison Hot Springs? Contact Steve (click here) Royal LePage Wheeler Cheam Realty for experience, local knowledge and friendly service you’ll be happy you did.

Monday, January 16, 2012

What happened to our Fraser Valley Mortgage Rates?

Brad Currie RI, is a mortgage broker (Versa Mortgages),  a professional member of the Real Estate Institute of British Columbia and a long time pal of mine.  Last week, he sent me a very short and concise review of the type of mortgage market we experienced in 2011 and what to expect in 2012.  If you are planning to purchase a new home or refinance in the Fraser Valley this is important information to understand.

Brad Currie RI reports:

The year started off with Prime Rate at 3.00% and ended the same. The Bank of Canada did not change the Prime Rate at all in 2011. The last change in the Prime was in August 2010. 

What did change in the area of variable rate mortgages was the discount lenders were offering for those arranging an adjustable rate mortgage. In January 2011, a typical discount off prime was 80 basis points This past September, when both the U.S. Federal Reserve and Bank of Canada announced they see no reason to increase interest rates for at least 2 years, the Chartered Banks lead the way by slowly and methodically reducing the discounts to only 10 basis points. Other lenders have followed as well.

Therefore, in January this past year, if you arranged a variable rate mortgage your rate was 2.20%. Today, the rate would be 2.90%

This had lead to the increased popularity for a 5 year fixed rate mortgage. In January 2011 a typical 5 year rate was 3.79%. Today is is 3.49% with a number of lenders offering promotional rates of 3.19% to 3.29% for fast closing transactions.

What does 2012 have in store for interest rates?

It would appear at this time, our low interest rate environment will continue. The present economic problems in Europe are being sited as a reason our rates will remain low. Economic activity in China is also slowing. Until there are some consistent positive economic signs, we can expect rates to remain stable going forward.



Stephen Mullock RI is an award winning full-time real estate agent with 30 years of experience and hundreds of sales. Thinking of buying or selling real estate in the Fraser Cheam communities of Chilliwack, Agassiz or Harrison Hot Springs? Contact Steve (click here) of Royal LePage Wheeler Cheam Realty for experience, local knowledge and friendly service you’ll be happy you did.

Thursday, January 12, 2012

There Once Was A Forest Here


There Once Was a Forest Here © Stephen Mullock

Driving through the Chilliwack eastern farmland is usually a restful and thoughtful time, but, as darkness approaches and shadows lengthen even the familiar can suddenly transform. 

Yesterday, I found this somewhat battered birch growing up through a cedar stump.  Long ago, before the birch tree took up residence, this was a towering evergreen a part of a forest like that on the hillside beyond.  Cedar and Douglas Fir trees once filled the Fraser Valley floor and what a different world that must have been.  Settlers arrived in the 1860s and the transformation of the fertile valley floor from forest to farm began.  Only the odd, old, stump like this one remains to remind us of that former time. 

The shape and the shadow of the tree creates an almost "Tim Burton" like figure, with upraised arms a head in the middle and long a skirt, the light illuminating the shape from behind creates a haunting image even in daylight. 

The Chilliwack Fraser Cheam area is full of spectacular scenery changing with the sun, cloud, shadows and light - a rich pageant of sights enriching the lives of its people.

Imagine living here....

Stephen Mullock RI is an award winning full-time real estate agent with 30 years of experience and hundreds of sales. Thinking of buying or selling real estate in the Fraser Cheam communities of Chilliwack, Agassiz or Harrison Hot Springs? Contact Steve (click here) of Royal LePage Wheeler Cheam Realty for experience, local knowledge and friendly service you’ll be happy you did.