In it’s third consecutive move this year, the Bank of Canada again raised its benchmark interest rate 25 basis points today bringing Canada’s Central Bank overnight lending rate to 1.0%.

Mark Carney raised the trend setting rate ¼ point from 0.75% to an even 1.0%. This follows similar ¼ point moves at the last two sessions when the Bank raised rates to .50% on June 1, 2010 and to .75% on July 20, 2010.

In its accompanying remarks, the Bank of Canada gave mixed signals about global economic recovery calling it “uneven” while projecting that the pace of economic recovery in Canada was “slightly softer in the second quarter than the Bank had expected.”

However going forward the Bank said, “Consumption growth is expected to remain solid and business investment to rise strongly” in Canada.

In its September 8, 2010 press release the Bank of Canada stated:

OTTAWA –The Bank of Canada today announced that it is raising its target for the overnight rate by one-quarter of one percentage point to 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

The global economic recovery is proceeding but remains uneven, balancing strong activity in emerging market economies with weak growth in some advanced economies. In the United States, the recovery in private demand is being held back by high unemployment and recent indicators suggest a more muted recovery in the near term.

Economic activity in Canada was slightly softer in the second quarter than the Bank had expected, although consumption and investment have evolved largely as anticipated. Going forward, consumption growth is expected to remain solid and business investment to rise strongly. Both are being supported by accommodative credit conditions, which have eased in recent weeks mainly owing to sharp declines in global bond yields.

The Bank now expects the economic recovery in Canada to be slightly more gradual than it had projected in its July Monetary Policy Report (MPR), largely reflecting a weaker profile for U.S. activity. Inflation in Canada has been broadly in line with the Bank’s expectations and its dynamics are essentially unchanged.

Against this backdrop, the Bank decided to increase its target for the overnight rate to 1 per cent. As a result of monetary policy measures taken since April, financial conditions in Canada have tightened modestly but remain exceptionally stimulative. This is consistent with achieving the 2 per cent inflation target in an environment of significant excess supply in Canada.

Any further reduction in monetary policy stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook.

The continued increases in rates over the past few months indicates that the Bank of Canada is confident that Canada’s economy will continue to rebound and no longer requires interest rates to be virtually zero to stimulate recovery.

There is a growing consensus with economists that the Bank will now pause at their next meeting on October 19, 2010 allowing Carney time to assess the durability of Canada’s economic rebound.

But some in the market are already looking at the next date with great uncertainty suggesting it was now more likely that rates would rise a fourth time at the next meeting in October.

“The overall impression I’m left with is they’re a little bit hawkish or bent on further rate hikes than I had been expecting,” said Doug Porter, Bank of Montreal’s BMO Capital Markets deputy chief economist. “The fact is that they’re just not fazed by the slowdown we’ve seen in the U.S. or Canada.”

Porter said he may reconsider his call that the central bank will pause on rate increases for the rest of the year.

When Mark Carney and the Bank of Canada raised the Canadian benchmark interest rate 25 basis points to 0.50% on June 1, 2010 it became the first of the G8 countries to raise Central Bank rates after the start of the current recession in 2008.

A further 25 basis point rate hike on July 20, 2010 brought the rate up to the current 0.75%.

Although the global economy grew over the past year to mid 2010, the recovery has been uneven with major advanced countries’ economies recording only moderate overall growth. However growth in both Asia and Latin America has been very strong. Central Banks around the world have responded to both internal and external factors in order to deal with the turmoil in the global economy as a result of the financial crisis and global recession that originated in the United States.

When the U.S. economy found its way into the current economic recession, the U.S. Federal Reserve responded with aggressive interest rate cuts down a historic low of 0.25% on December 16, 2008. Since that time, there has been no movement in U.S. rates as their economy continues to struggle with high unemployment and a continuing foreclosure crisis.

As we move into the third quarter of 2010, there is no indication that fiscal policy in the U.S. will move Ben Bernanke and the Fed away from a low interest rate policy until even modest tightening is implemented in late 2011 or 2012.

As we await yet another pending interest rate decision by Mark Carney on September 8, 2010, it will be interesting to see if the Bank of Canada will yet again raise rates in the face of the two previous moves that went unanswered by the Federal Reserve of our largest trading partner, the U.S.

What we in Canada are currently faced with is a Central Bank rate of 0.75%, which is one of the lowest in the world. In fact, if you look at the Central Bank rates of 28 of the combined G20 and OECD countries only Japan, Sweden, Switzerland, United Kingdom and the United States currently have lower rates.

G20 & OECD Central Bank Rates as of September 7, 2010

Although Canada and Australia were the only two countries from the major industrialized countries in the G20 to increase rates in 2010, the current 4.50% Central bank rate in Australia is far above the 0.75% currently in Canada.

The C.D. Howe Institute released a paper on September 2, 2010 in which their monetary policy council urged Mark Carney to raise the Bank of Canada’s overnight interest rate to 1.00% at its next announcement on September 8, 2010.

“Members who favoured more rapid increases in the overnight rate and higher targets in 12 months’ time tended to emphasize Canada’s position among countries less damaged by the crisis where returning policy rates to levels consistent with longer-term stability in inflation is more appropriate,” said the Toronto-based research institute’s report.

The council further urged the Bank of Canada to boost interest rates to 1.5 per cent by March 2011 and 2.25 per cent by September 2011.

Canadians are still enjoying historically low interest rates. As the effects of the current recession dissipate, these interest rates are sure to rise to much higher levels.

The Vancouver Real Estate Market continues to show resilience in the face of recent sluggish Canadian economic indicators and a US economy that continues to struggle.

A report released today by the Real Estate Board of Greater Vancouver (REBGV) showed that there were 2,202 overall residential property sales in Greater Vancouver for August 2010 which was a 2.4% decline from July 2010 figures.

While the August 2010 sales figures also represent a 36% decline from the 3,441 sales from a year ago in August of 2009, that was the second highest selling August ever recorded by the Real Estate Board of Greater Vancouver, therefore any comparisons should be viewed with that consideration. In a broader perspective, they also represented a 40.4% increase over the 1,568 residential sales from August 2008.

“We’re seeing moderate demand, low interest rates and a healthy but slowing stream of supply in our marketplace, all variables that favour those looking to purchase a home,” Jake Moldowan, REBGV president said.

Overall residential home prices for Greater Vancouver in August 2010 held fairly steady at $576, 597, which represented only a 0.083 % decrease from the $577,074 in July 2010 according to the REBGV Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver.

“The last few months have also shown some stability when it comes to price fluctuation in the region, which is a welcome trend after reaching record highs in April” said Moldowan.

The all time high residential benchmark price of $593,419 was reached in April 2010. Since that peak, prices have only decreased by 2.8%, while over the past 12 months prices have increased by 6.9% from $539,600 in August 2009.

In their September 2, 2010 news release, the Real Estate Board of Greater Vancouver stated:

Conditions in the Greater Vancouver housing market continued to favour buyers in August. Since April, prices have edged down slightly as the number of sales and the number of properties coming on to the market have been declining.

Sales of detached properties in August 2010 reached 893, a decrease of 34.7 per cent from the 1,367 detached sales recorded in August 2009 and a 66.9 per cent increase from the 535 units sold in August 2008. The benchmark price for detached properties increased 8.5 per cent from August 2009 to $795,076.

Sales of apartment properties reached 935 in August 2010, a decline of 36.1 per cent compared to the 1,464 sales in August 2009 and an increase of 26.4 per cent compared to the 740 sales in August 2008.The benchmark price of an apartment property increased 4.5 per cent from August 2009 to $385,968.

Attached property sales in August 2010 totalled 374, a decline of 38.7 per cent compared to the 610 sales in August 2009 and a 27.6 per cent increase from the 293 attached properties sold in August 2008. The benchmark price of an attached unit increased 6.6 per cent between August 2009 and 2010 to $489,511.

Canada remains an attractive destination for foreign buyers, “a fact that continues to affect activity in the Greater Vancouver housing market,” Moldowan said.

The overall Greater Vancouver Housing market is showing its resilience in August 2010 with only a 2.4% sales decrease and a 0.083 % (HPI) benchmark price decrease from July 2010 figures.

The largest open-air mall sale in Western Canada to-date in 2010 has just taken place. For a reported $91 million, Grosvenor Americas and its institutional investors sold the South Point Exchange shopping centre in Surrey, BC to a Canadian private investor on August 30, 2010.

The announcement came today in the form of a press release issued by Avison Young, Canada’s largest independently-owned commercial real estate services company. Both Avison Young Principals Bob Levine and Michael Gill, along with Randy Thomson of Sutton West Coast, acted on behalf of the buyer, but the terms of the sale were not disclosed.

What is known though is that the new owner plans to continue operating the property of the South Point Exchange “as a shopping centre in the foreseeable future,” according to Levine. The property is located at 3033-3191 152nd Street in Surrey, BC.

“While there have been larger sales of enclosed malls, this sale is the largest open-air mall retail investment transaction in Western Canada thus far in 2010,” said Levine. “The deal is significant because it marks the largest retail investment transaction with a private purchaser in more than a decade.”

Levine added that, “The size of this transaction represents the upper reaches of what most private investors can afford. Moreover, other large enclosed-mall sales in BC this year exceeding $50 million in value have been bought either by institutions or by public companies.”

The official press release by Avison Young states information concerning the construction, history, and further information regarding the South Point Exchange shopping centre:

The 267,000-square-foot grocery-anchored shopping centre in South Surrey encompasses a series of single- and multi-tenant buildings on a 22.46-acre lot, with one-half kilometre of frontage on Highway 99 (the primary north-south artery that runs between the city of Vancouver and the Canada-U.S. border).

Constructed in phases between 2000 and 2003, and expanded in 2007, South Point Exchange is anchored by Save-On-Foods, Canadian Tire and Staples. The fully-leased mall is also occupied by Winners/HomeSense, Cactus Club, HSBC and 26 other tenants.

“South Point Exchange has performed very well since we completed the final phase of the development in 2007. Given the long-term stability of the property’s cash flow, we felt that the timing was right to sell. We plan to reinvest the proceeds into growing our development and value-added investment activities,” said Andrew Galbraith, Chief Investment Officer of Grosvenor Americas.

“South Point Exchange is considered one of Metro Vancouver’s finest open-air malls with an optimal mix of national and regional tenants serving a highly affluent demographic area,” said Michael Gill. “This sale further underscores the demand for grocery-anchored shopping centres and the popularity of Surrey.”

Surrey is the second largest city in the province of British Columbia and has one of the fastest growing centres in Canada. According to Avison Young, retail property acquisitions and dispositions have driven the BC commercial real estate investment market to record sale transactions on a dollar volume in the first half of 2010.

The press release by Avison Young gives insight into the statistics behind the record sale transactions:

Office, industrial and retail investment sales in BC totalled $1.026 billion in the first half of 2010, up 43% from $715 million in the second half of 2009 and up 60% from $643 million in the first half of 2009. This was the first time in the province’s history that commercial real estate investment volume surpassed $1 billion in a six-month period. As a result, the year-end 2010 total is anticipated to surpass the year-end 2009 mark of $1.36 billion by a wide margin. (Avison Young tracks investment sales in BC greater than $5 million.)

Private investors accounted for 73% (33 of 45) of the first-half 2010 transactions and 53% ($540 million) of the total volume.

The retail sector also led sales activity, accounting for 69% ($711 million) of the total dollar volume in the first half of 2010, continuing a renaissance that began in mid-2009.

The real estate activity in BC is on a continuous positive jump in the commercial sector. The recent sale of the South Point Exchange is attributed to “strong underlying fundamentals, wide availability of capital, fewer credit restrictions, minimal debt loads, and investors rebalancing their portfolios as part of the normal business cycle,” according to Gill.

Levine believes that the continued rise in commercial real estate properties in BC will continue through 2010 and well into 2011.

“We expect deal activity will remain robust through 2010 with more retail assets offered for sale as sellers capitalize on peak pricing,” said Levine. “Buyers and sellers are showing more respect for each other’s pricing levels, and large amounts of cash and equity are in play compared to six to 12 months ago. With a lack of favourable investment opportunities elsewhere and buyers now more confident in the market, we expect to see further large retail property transactions take place in the second half of 2010 and into 2011.”

With a pending Bank of Canada interest rate decision looming on September 8, 2010, can Mark Carney and the Bank of Canada continue to go it alone against the backdrop of a struggling US economy and the US Federal Reserve’s low interest rate policy?

Mark Carney at age 45, the youngest central banker of all the G8 countries has already done so on two occasions. He also became the first central banker of all G8 countries to raise rates after the start of the current recession in 2008.

He raised Canadian interest rates by 25 basis points on June 1, 2010 and followed that up again with a further 25 basis point increase on July 20, 2010 bringing the Bank of Canada’s target overnight lending rate to it’s current 0.75%. The U.S. Fed matched neither increase.

In numerous speeches and policy meetings, Mark Carney has acknowledged that “the U.S. has been our largest trading partner” and that “one of the biggest determinants of growth in Canada is U.S. economic activity.”

In its most recent reporting period, Statistics Canada figures show that 76% of Canada’s goods exports are to the U.S. while 64% of our imports were from the U.S. This clearly shows that the U.S. is Canada’s most important trading partner.

So with such a strong connection to a struggling US economy can Mark Carney and the Bank of Canada go it alone?

Yes he can, according to commentary in a recent CIBC Economics report:

Can the Bank of Canada continue to go it alone? History says “yes,” particularly with a much narrower output gap than what the US faces.

Avery Shenfeld of CIBC Economics in late July said “Canada’s central bank is now two steps down the road to normalcy, having gingerly raised overnight interest rates, while deliberately talking down expectations of further hikes in order to keep other yields low for now.”

“Just as similar language after a June rate hike didn’t prevent a follow-up move in July, this month’s Bank of Canada statement would be consistent with further quarter-point steps in September and October added Shenfeld.”

In a CIBC report released today, Shenfeld reaffirmed his earlier September call but revised his outlook for October by saying, “Until this spring, with housing wealth rising and willing lenders, Canadians jumped at cheap interest rates to buy goods and houses, taking the savings rate back to near-historic lows.”

“Tighter rules on mortgage insurance, signs that house prices have topped out and a less rosy assessment about future job prospects seem to have lifted the savings rate in the second quarter, with room for more of the same.”

He went on to say, “Credit growth to the household sector is slowing. All the more reason why the Bank of Canada might be leery of adding to that worry list by continuing with rate hikes after September.”

The Teranet-National Bank Composite House Price Index is a fairly new house price index based on repeat sales of existing homes in six of Canada’s largest cities. In order to be included in the index, a home has to have been sold at least twice.

The six Canadian cities that the Teranet-National Bank index tracks for home price changes include Vancouver, Toronto, Ottawa, Montreal, Halifax, and Calgary.

The Teranet (Canadian 6 city) index was started on December 1, 2008 to pattern after the widely popular (US 20 city) Standard & Poor’s Case Shiller Home Price Index in the US.

The Teranet-National Bank Composite House Price Index does not follow the same model as the widely used and long established indexes from the Canadian Real Estate Association (CREA) or Canada Mortgage and Housing Corporation (CMHC) which use average home prices and are much broader based MLS statistics.

According to a Teranet press releases:

The state of the home resale market can be difficult to ascertain when using measures that are based on average home prices in different cities. The main drawback from such indices is that lower sales activity in higher priced segments can pull down the overall market residential average.

One way to circumvent this problem is to use a repeat sales index. In the U.S., such an index (the S&P Case Shiller) has become one of the most-watched measures for national home prices.

The Teranet–National Bank House Price Index™ is estimated by tracking ob­served or registered home prices over time using data collected from public land registries.

All dwellings that have been sold at least twice are considered in the calculation of the index. This is known as the repeat sales method; a complete description of the method is given at www.housepriceindex.ca

Market analysts say the Teranet report, lags the monthly existing home sales data as measured by the Multiple Listing Service (MLS) from the Canadian Real Estate Association (CREA) by at least four months.

“The weakness in MLS prices that began to occur in May could take until at least the September’s Teranet report for it to show up there, which we won’t receive until November,” Scotia Capital’s Derek Holt and Gorica Djeric said in a commentary.

“On balance, the MLS price figures are not perfect but are a much more timely gauge of house price activity than the Teranet measure, despite the latter’s methodological merits,” they wrote.

Two other points to consider with the Teranet Home Price Index is that it only measures price changes in repeat sales of single family homes not taking any new home sales into account and of the six cities included in the index, three of them are in Ontario and British Columbia. There is no representation from either Saskatchewan or Manitoba.

In what may seem like old news to most Canadians, new figures released on Wednesday indicate that Canadian resale home prices rose in June 2010 continuing a trend that resulted in the biggest monthly gain in 10 months.

The Teranet-National Bank Composite House Price Index showed overall Canadian resale home prices rose 1.5% in June 2010 from May 2010. This was the 14th straight month that the index showed an increase. This was also the longest such run since October 2006.

The Teranet index surveys six Canadian cities including Vancouver, Toronto, Ottawa, Montreal, Halifax, and Calgary. The index is estimated by tracking ob­served or registered home prices over time using data collected from public land registries. Only homes that have been sold at least twice are considered in the calculation of the index.

Overall Canadian home prices were up by 13.6% in June from a year earlier. The 12-month gain matched that of May. This was the third consecutive month of increases from the prior month in all six of the surveyed cities.

The percentage change of Canadian home prices on a year-to-year basis in the six cities surveyed by the index include:

Canadian Home Prices in June 2010 from June 2009

By order of greatest increase, Vancouver – 16.3% increase, Toronto – 16.2% increase, Ottawa – 12.0% increase, Montreal – 8.7% increase, Calgary – 8.3% increase, and Halifax – 7.1% increase.

The August 2010 Teranet monthly report stated that:

Since the resale market has been slackening across Canada – from April to July of this year, more existing homes came on the market than were sold – it is too early to conclude that the relatively vigorous prices rises of April, May and June launched a trend.

The prospect of harmonized sales taxes coming into effect July 1 in Ontario and B.C. may have stimulated sales in Vancouver, Toronto and Ottawa in the preceding months.

When commenting on the report, National Bank officials stated that these increases where about to stall.

“We do not believe that acceleration in the Teranet-National Bank index will be sustained,” said Marc Pinsonneault, economist with National Bank Financial.

“The number of existing homes sold has declined in each of the four months ending last July, and it did so to a proportionally larger extent than the number of new listings,” he said.

“At the national level, the market is now at the boundary between balanced conditions and conditions favourable to buyers. This heralds a deceleration in home price inflation, especially since a harmonized sales tax was introduced on July 1 in Ontario and BC.”

For the first time since Mark Carney and the Bank of Canada raised Canadian interest rates on July 20, bond traders are now betting that Canadian interest rates will remain unchanged when the BOC makes its interest rate announcement on September 8, 2010.

With bond yields moving inversely to prices, Canada’s 2-year bond yielded 1.245%, from 1.288% while the Canadian 10-year bond yield was 2.896%, from 2.924% on Friday, August 20, 2010.

According to Bank of Nova Scotia data from the overnight index swap market, probabilities show a 62% chance that the Bank of Canada will keep its rate unchanged at 0.75% on Sept 8. This is up from below 40% earlier this month.

Bank of Montreal data indicates a 60% chance of rates remaining unchanged from around 45% a week ago.

According to a Reuters article on August 23, 2010:

With further evidence last week that the domestic economy is losing steam, including soft inflation and leading indicator figures for July, most of Canada’s primary dealers on Friday called for a pause in the bank’s rate hike campaign in the fourth quarter, but stuck to forecasts for an increase at its next scheduled policy announcement on Sept. 8.

Market expectations of a September hike, however, as reflected in yields on overnight index swaps, have diminished to about 38 percent, as calculated by Reuters.

Eric Lascelles, chief Canada macro strategist at TD Securities in Toronto said, “The market is now gambling that a hike is less likely than a pause, that is a notable shift in the last couple of days.”

The overnight-indexed swaps market is considered one of the most reliable indicators of market sentiment on rate increases.

On Monday it was estimating a 40% probability that the bank will raise rates on Sept 8, that’s down from a 50% probability on Friday, and a near certainty last month.

With the recent weakness in the Canadian economy including soft inflation numbers and a declining dollar on a 5-week low, swap market sentiment and bond market expectations are now trending towards the BOC leaving rates unchanged on September 8.

In late July, forecasts from almost every major Canadian Bank indicated that the Bank of Canada would again raise Canadian interest rates at its next announcement date of September 8, 2010. The consensus was that the target overnight rate would increase by 25 basis points from its current .75% to 1.0%.

BMO forecasted a 25 basis point increase by the Bank of Canada in September to 1.0%, while CIBC also pegged a rate rise to 1.0% in September and then a further rise to 1.25% in October. RBC was consistent with its forecast of 1.0% in September with a further predicted rise to 1.25% by the end of the year. Scotia Bank and TD Bank joined the others forecasting a 1.0% BOC rate for September.

On August 4, 2010 BMO released a rates scenario report that stated:

We look for the rate hike pattern to be one of fits and starts, consistent with the Bank’s intent to weigh each individual move carefully yet still ensuring rates rise gradually over time. After another 25-bp rate hike on September 8th, we look for the Bank to pause through the turn of the year as U.S. economic and deflation risks mount. Once the Fed starts tightening, which would be a signal to the Bank that U.S. risks have receded sufficiently, Canadian rate hikes should become more consistent.

As August progressed statistics started to come in that revealed slowing Canadian growth figures, a declining Canadian real estate sector and a U.S. economy clearly struggling with further economic weakness. However, even this did not deter the Banks forecasts.

On August 20 Statistics Canada released figures showing that Canadian consumer prices rose 0.6% in July, raising the inflation rate to 1.8% from just 1.0% in June. The introduction of a new HST tax in BC and Ontario was the dominant factor, driving prices up roughly 0.7% in the month, so the prices actually look to have dipped if you factor out the HST influence.

The core inflation rate, which excludes indirect taxes like the HST, actually declined to 1.6% in July from the 1.7% figure in June.

Scotia Bank responded to the new inflation data on August 20, 2010 stating that:

Core inflation is soft, but not terribly out of line with the BoC’s expectations so far. The BoC has signaled that they expect soft inflation readings through the Fall owing to the net effect of the HST, tax credits, incidence effects, and other factors influencing core before the effects wash out a year from now and bring readings back to the BoC’s 2% inflation target.

Nothing in the July CPI report changes that bias — in fact, if anything, softer than expected near-term CPI points to a weaker base effect off of which to perhaps post a stronger gain a year from now.

That still gives us reason to expect the BoC to hike on September 8th in keeping with a year-ahead look on inflation and in keeping with likely healthy prints for retail sales next week and monthly GDP at month-end.

Assistant chief economist at RBC, Dawn Desjardins said in a note also published on August 20, 2010 that the Bank of Canada will continue to gradually push interest rates up from emergency lows, and we should “look for another 25 basis point increase,” on Sept 8, 2010.

“Uncertainty about the momentum in the global, and in particular, the U.S., economy may see the Bank pause in its rate hike cycle at one of the upcoming meetings and we are forecasting increases at two of the three remaining meetings this year,” added Desjardins.

Clearly the Banks are holding firm to their forecasts of a 25 basis point rate increase by Mark Carney and the Bank of Canada on September 8.

The Bank of Canada has three remaining scheduled interest rate announcement dates for 2010. They include the upcoming September 8, 2010 date, which is followed by October 19, 2010 and December 7, 2010.

A recent survey indicates that British Columbians appreciate the value of a green home or condo. The survey found that 76% of the British Columbia residents are willing to pay more for a house or condo that includes environmentally friendly features.

They also appreciate the added features of a green home such as reducing their environmental impact, lowering energy bills and the health benefits according to a TD Canada Trust Green Home Poll.

Saving money is a priority for BC residents according to the survey. Of the British Columbians who are willing to pay a premium on environmentally friendly homes:

• 79% say that cost savings on energy bills is a main motivation (compared to 77% nationally).

Of the BC home owners who are willing to pay more for environmentally friendly homes:

• 51% appreciate the added feature of reducing their environmental impact.
• 48% appreciate the added health benefits.

“This is the third year that Canadians have told us that they will pay more for a home with environmentally friendly features and, as more and more homes are being built with green features included, the housing industry is making it easier for home buyers to find environmentally friendly options,” says Chris Wisniewski, AVP, Real Estate Secured Lending, TD Canada Trust.

Environmentally friendly renovations and home upgrades are also popular with British Columbia residents.

• 23% of home owners in the province have done a green home renovation or are planning to do one in the future.
• 32% would like to carry out a green home renovation but don’t know where to start.

British Columbia home owners are the most likely in the country to be participating in an energy savings program such as British Columbia’s Live Smart or the Federal Government’s ecoENERGY program. These Government programs offer grants for residential energy saving improvements.

• 80% of respondents are currently participating in an energy saving program (versus 11% nationally).
• 68% are interested in participating (versus 66% nationally).
• Over 75% of respondents say they are more likely to make energy efficient upgrades if they benefit from tax credits.
• 63% of British Columbians are likely to consider an environmental assessment prior to home renovations.

“Environmentally friendly choices can benefit the health of our families – including our financial health – and it can be easy to take advantage of them,” says Wisniewski.

British Columbia residents are trying to live a greener life at home by making conscious efforts with the purchase and use of household products and maintenance options.

• 94% of BC residents are most likely to choose greener home maintenance options.
• 64% of BC residents are most likely to dispose of chemical products at the appropriate disposal centre.
• 58% of BC residents are most likely to use green household cleaners.
• 57% of BC residents are most likely to buy household care products in bulk/concentrated versions to reduce packaging purchased.
• 61% of BC residents are most likely to replace existing fixtures, such as replacing regular light bulbs with CFL light bulbs.
• 42% of BC residents are most likely to replace or upgrade the windows in their home.
• 41% of BC residents are most likely to apply weather-stripping and caulking to stop drafts.
• 39% of BC residents are most likely to change lighting fixtures to accommodate low wattage lighting.
• 38% of BC residents are most likely to replace kitchen appliances with energy-efficient models.

The survey also found that British Columbians are more than four times likelier to be participating in an energy saving programs than Atlantic Canadians (18% versus 4%) and nearly twice more likely than Quebecers to compost (44% versus 23%).

The US economy has recently stumbled with worsening job losses. Today the US labor department released figures in Washington, which indicates that the seasonally adjusted rate of initial jobless claims in the U.S. rose to 484,000 in the week ending August 7, 2010, the highest level in almost 6-months.

Although initially decreasing steadily since the end of 2009, claims have now risen in three of the past four weeks and are close to their high point for the year of 490,000, reached in late January 2010.

The new data reinforces a bleak picture for the US economy, coming soon after last Friday’s Government July jobs report that showed the US economy lost 131,000 jobs last month, and the unemployment rate was at 9.5%.

An article today from the Associated Press stated:

The government’s July jobs report, released Friday, showed that the economy lost a net total of 131,000 jobs last month. Excluding the impact of the elimination of 143,000 temporary census jobs, the economy added a meager 12,000 positions, as layoffs by state and local governments almost canceled out weak hiring by businesses.

Thursday’s report on jobless claims indicates that trend may not change soon. Claims fell steadily last year from their peak of 651,000, reached in March 2009. But they have mostly leveled out this year at or above 450,000. In a healthy economy with rapid hiring, claims usually drop below 400,000.

The rise in claims is a sign that private employers may be ramping up layoffs, which declined as recently as June, according to a separate government report released Wednesday.

States with the largest increases in claims two weeks ago cited rising layoffs in the construction and manufacturing industries. The state data lags the national report by one week.

Claims could also be rising because of large job cuts by state and local governments, which are struggling with unprecedented budget gaps. State and local governments cut 48,000 jobs in July, the most in a year.

The U.S. Labor Department report “represents a very adverse turn in the labor market, threatening income growth and consumer spending,” Pierre Ellis, an economist at Decision Economics, wrote in a note to clients.

Even the lowest mortgage rates in decades are a gloomy sign for the economy. Average rates on 30-year fixed mortgages fell to 4.44 percent, Freddie Mac said Thursday. While that’s good for people looking to refinance or buy a home, low rates haven’t been enough to energize a struggling housing market.

In a report on Aug 6, 2010, Dr. Sherry Cooper, Ph.D. – Executive Vice President, Chief Economist of BMO said that U.S. “housing and spending were crushed by the credit crisis, which began in the inflated housing sector while interest rates were still relatively low. The job losses have been cyclical, to be sure, but there is a large component of structural job loss as well, and these jobs will not be coming back.”

“Since the start of this year alone, state and local governments have reduced their workforces by 169,000, or nearly 1%. Further layoffs can be expected, even with the $26 billion in extra state aid passed by the Senate yesterday.”

“The situation is truly dire, with a record number of Americans receiving food stamp benefits. The Senate voted earlier this month to cut $12 billion from the food stamp budget in order to help fund the $26 billion package to help states avoid teacher layoffs,” added Cooper.

“It’s just one more indication the U.S. economy is slowing dramatically,” said Nariman Behravesh, chief economist at Lexington’s IHS Global Insight. “We don’t think we’re in a double-dip (recession) situation, but we do think we’re seeing very weak growth and any progress on reducing unemployment will be glacial.”

The U.S. July job gains were far below the 200,000 it takes for the unemployment rate just to hold steady and keep pace with the growing work force.

“If we don’t see significant job growth by the end of the year, the US economy could be in serious trouble,” said Bill Cheney, chief economist at John Hancock Financial Services in Boston.

Residential home sales in BC declined by 19% in July 2010 from June 2010 on a seasonally adjusted basis according to the latest Multiple Listing Service (MLS) figures released today by British Columbia Real Estate Association (BCREA).

Residential sales in July 2010 for the province were 42% lower than July 2009 figures, which was one of the highest selling July’s ever recorded by many of BC’s real estate boards including the Real Estate Board of Greater Vancouver (REBGV) and the Fraser Valley Real Estate Board (FVREB).

Prices in July 2010 continued to climb with the average MLS residential price increasing by 6% to $491,832 compared to July 2009.

“A relatively large number of homes for sale have created the most favourable supply conditions for home buyers in more than a year,” said Cameron Muir, BCREA Chief Economist.

MLS active residential listings were 21 per cent higher in July than at the start of the year on a seasonally adjusted basis. However, with newly listed MLS residential units now declining, tighter market conditions may emerge this fall.

On a year-to-date basis, BC residential sales dollar volume rose by 16% to $24.2 billion, unit sales increased by 4% to 48,127 and the overall average MLS price increased by 13% to $504,281 over the same time period last year.

BC real estate association data from the two largest individual boards indicated that residential average MLS prices in Greater Vancouver rose by 12.6% to $657,815 in July 2010 from the July 2009 figure of $584,105. Prices in the Fraser Valley rose by 8% to $459,361 in July 2010 from $425,479 in July 2009.

On a year-to-date basis, Greater Vancouver residential sales dollar volume rose by 17.9%, while the Fraser Valley rose by 20.6% over the same time period last year.

For July 2010, the seasonally adjusted annual rate of national housing starts in Canada was 189,200 units, which was a decline of 1.6% from the revised figure of 192,300 units in June 2010, continuing a cooling trend over the past seven months according to a Canada Mortgage and Housing Corporation (CMHC) report released today.

“Housing starts moved lower in July, largely due to a decrease in urban single starts and a reduction in rural starts,” Bob Dugan, chief economist at CMHC’s Market Analysis Centre, said Tuesday.

The good news though is that the number of housing starts in July was ahead of what analysts projected, which was 185,000; however, it was still the third month in a row that saw declines. It’s a common theme for the summer months though, low level of homebuilding, and July was no exception with the month being the lowest since the start of 2010.

According to the CMHC, the seasonally adjusted annual rate of urban starts rose by 1.9% to 169,300 units. High-rise condos rose as well with 101,400 units, which was a 13.4% rise.

Urban starts fell by 14.8% in British Columbia, Ontario went down 2.6% while Quebec went down by just 0.4%. The Atlantic region and Prairies both saw increases, with 37.7% and 14.4% respectfully.

Single-family residential building in cities dropped by 11.3% to 67,900, but multiple starts on buildings such as apartments went up to 101,400 units, a 13.4% increase.

“Canadian home sales have softened significantly so far this year, and that should translate into a slower rate of housing starts in the second half of 2010. We’re already seeing a marked correction in single-unit activity,” said Robert Kavcic, economist at BMO Capital Markets.

Forecasting British Columbia’s real estate market sales has always been a difficult proposition.

The British Columbia Real Estate Association (BCREA), Canada Mortgage and Housing Corporation (CMHC) and the Canadian Real Estate Association (CREA) are three of the main sources for periodical Canadian housing forecasts. Other sources include Canada’s major Banks, large national real estate companies and other independent bodies.

There is no crystal ball to rely on. Economists use a dose of trend analysis and fine tune that with probability and statistical information to come up with what amounts to a best guess.

Forecasting on the upside is a much easier proposition, as no one will blame you if things turn out better than expected. Downside forecasting is however a totally different game.

Forecasting on the downside is much riskier because an association or agency does not want to create the market, just report on it. Market sentiment must be taken into consideration, therefore a common trait of downside forecasting is, the revision.

Revisions to forecasts are commonly used to reflect changing market conditions and new information as it becomes available.

This year the British Columbia real estate market has had a number of issues to contend with that further complicated the process. Canadian mortgage rules were changed on April 19, 2010, a new 12% HST combined tax was introduced on July 1, 2010 and the Bank of Canada raised interest rates on June 1 and July 20 for the first time since July 10, 2007.

So you can see that forecasting in this environment is akin to running through a minefield while trying to hit a moving target.

Since the beginning of the year, MLS sales forecasts for 2010 and 2011 in British Columbia have been revised downward on several occasions by the BCREA, CMHC and CREA.

Here are the details from the beginning of 2010 to the most recent forecasts available as of our publishing date:

On July 30, 2010, the British Columbia Real Estate Association (BCREA) released its Housing Forecast Update for the third quarter of 2010 stating that the BC housing markets are returning to typical post-recession demand patterns.

In it, they forecast that Multiple Listing Service (MLS) sales for BC are expected to decline by 7.0% to 79,500 units from the 85,028 units in 2009.

“A larger inventory of homes for sale has created the most favorable conditions for home buyers in more than a year,” said Cameron Muir, BCREA Chief Economist.

“However, the buyers’ market is expected to be short-lived as total active listings peaked in May and are beginning to wane, with more balanced conditions set to emerge in the fall.”

“Housing demand has fallen back to earth from its break-neck pace at the end of 2009 and is expected to more closely match overall economic performance over the next 18 months,” added Muir.

The overall average MLS residential price for British Columbia is forecast to climb 5.8% to $492,800 in 2010 from the $465,725 figure of 2009.

Muir went on to say, “The volatility in consumer demand characteristic of the past 24 months is expected to give way to more gradual improvement through 2011.”

The BCREA forecasts that overall BC residential sales will also increase to 83,400 units in 2011 from the 79,500 in 2010 and that average prices will remain almost unchanged at $489,500 in 2011 from $492,800 in 2010.

The association indicated that a slower than expected normalization of interest rates will temper erosion of affordability as economic output posts more moderate growth for the balance of this year and through 2011.

After a sharp pullback in new home construction last year, home builders are gradually increasing production to meet demand.

BC led the country in population growth over the last three quarters and with inventory of complete and unoccupied units expected to decline, builders are adjusting production to match supply with household formation.

Forecasting is like trying to hit a moving target. In each of the 1st, 2nd and 3rd quarter forecasts, the BCREA has consistently revised their quarterly sales forecasts downward throughout 2010.

“The moving target analogy is bang on,” said Vancouver mortgage broker Mark Fidgett. “In fact, I had that exact same conversation with a client today. I agree, sales will decline, but personally, I don’t see prices going up, if anything they will remain unchanged.”

“Having said that, I understand we’re experiencing a fair bit of new Chinese buyer activity,” added Fidgett. Mortgage rates on five year terms are also dropping below 4%, Fidgett explained, “lower rates won’t significantly impact affordability.”

However, Fidgett believes that the influx of “new Chinese buyer activity may be short lived as China is seeing it’s own real estate bubble as a result of massive state stimulus programs.”

When generalizing the market, Fidgett says that people (buyers) “have a tendency to see an action as more appropriate when others are doing it” and so these “people feel they will make fewer mistakes by acting in accord with social evidence and the social evidence right now is one of buyer’s retreating.”

Every month the Real Estate Board of Greater Vancouver (REBGV) releases a monthly update on the real estate market activities of the Greater Vancouver area that includes a variety of sales and pricing figures from statistics compiled via sales through the (MLS) Multiple Listing Service.

The REBGV includes the communities and geographical areas of Burnaby, Coquitlam, Delta-South, Islands-Gulf, Maple Ridge/Pitt Meadows, New Westminster, North Vancouver, Port Coquitlam, Port Moody/Belcarra, Richmond, Squamish, Sunshine Coast, Vancouver East, Vancouver West, West Vancouver/Howe Sound, Whistler and Pemberton.

The statistics and sales figures provided allow industry professionals as well as existing and potential customers the opportunity to gauge the housing market through it’s current and past sales and pricing activity.

With the current housing market becoming less active as evidenced by the recently released July 2010 sales figures, we though it might be interesting to see what the total sales figures were on a month to month basis since the start of 2010 for detached, attached and apartment properties in Greater Vancouver as provided by the REBGV.

Total Greater Vancouver Residential Property Sales:

January 2010:
1,923 sales a 23.5% decline from 2,515 sales in December 2009

February 2010:
- 2,473 sales a 28.6% increase over 1,923 sales in January 2010.

March 2010:
- 3,137 sales a 26.8% increase over 2,473 sales in February 2010

April 2010:
- 3,512 sales a 12% increase over 3,137 sales in March 2010

May 2010:
- 3,156 sales a 10.1% decline from 3,512 sales in April 2010.

June 2010:
- 2,972 sales a 5.8% decline from 3,156 sales in May 2010.

July 2010:
- 2,255 sales a 24.1% decline from 2,972 sales in June 2010.

Although market fluctuations are nothing new, 2010 has provided several issues, which the Greater Vancouver housing market did not have to contend with in 2009, including revised Canadian mortgage rules on April 19, 2010, introduction of the new 12% HST tax in BC on July 1, 2010 and a Bank of Canada rate increase on June 1, 2010 and July 20, 2010.

The current market is poised to provide substantial points of entry going forward for both new buyers and investors alike. Vancouver continues to be one of the most sought after real estate markets in Canada.

Real estate sales figures from British Columbia and Ontario have shown marked declines since the introduction of the HST in both provinces on July 1, 2010.

A recent survey conducted by Royal LePage Real Estate Services poled 765 realtors online at the end of July 2010 and found that 44% of those poled in BC and Ontario said that the introduction of the HST is having the greatest effect on the cooling residential real estate market in those provinces.

Coincidentally, just 28.4% of those poled cited rising interest rates as having the greatest effect. In all, more than 86% of respondents said the HST is affecting their business somewhat.

Confusion over the HST remains prominent more than one month after its introduction. Almost 44% of the respondents said that home buyers and sellers had some awareness about how the HST applies to a home sale transaction, while 24% had a low level of awareness.

“We wanted to understand the impact HST has had since it was introduced, and what we found is that there is a need to better educate home buyers and sellers to ensure they understand when the HST is applicable,” said Phil Soper, chief executive of Royal LePage. “According to our realtors who work in BC and Ontario communities every day, misconceptions about the HST are having an effect on the market in both provinces.”

The HST applies to the purchase price of a newly built home, and fees for services and commissions associated with any real estate transaction, but it does not apply to the purchase price of resale homes.  Resale homes comprise the bulk of transactions in the Canadian housing market, and the majority of agents surveyed by Royal LePage indicated that new home sales account for less than 10 per cent of their business.

“While we predicted that the prospect of rising interest rates would put a damper on the housing market, our agents are finding that the HST is actually having the greater impact on buyer behaviour, at least in the short-term” said Soper.

Results from the Royal LePage Real Estate Advisor Survey, conducted online at the end of July 2010, can be found below.

Survey Results:

What impact has the introduction of the HST had on the real estate market in your region?

Significant impact: 36.5 per cent (279 responses)
Some impact: 49.7 per cent (380 responses)
No impact: 5.2 per cent (40 responses)
Don’t know: 8.6 per cent (66 responses)

In your opinion, what factor has had a greater impact on the housing market’s recent activity?

HST: 43.9 per cent (336 responses)
Rising interest rates: 28.4 per cent (217 responses)
Other: 27.7 percent (212 responses)

Based on your recent interactions with home buyers/sellers, please describe the level of awareness about the impact of HST on real estate transactions?

High level of awareness: 31.4 per cent (240 responses)
Some awareness: 43.9 per cent (336 responses)
Low awareness: 24.1 per cent (184 responses)
Don’t know: 0.7 per cent (5 responses)

In the past three months, how often have new or prospective clients (home buyers or sellers) asked you questions about the HST and how it applies to a real estate transaction?

Many questions – I am asked frequently: 57.1 per cent (437 responses)
Some questions – I am asked occasionally: 28.8 per cent (220 responses)
Few questions – I have been asked only a few times: 11.9 per cent (91 responses
?No questions: 2.2 per cent (17 responses)

What percentage of your business is new home sales (as opposed to resale)?

None: 30.7 per cent (235 responses)
Less than 10 per cent of business: 53.9 per cent (412 responses)
11-25 per cent of business: 10.5 per cent (80 responses)
26-50 per cent of business: 2.9 per cent (22 responses)
51-75 per cent of business: 0.9 per cent (7 responses)
76-100 per cent of business: 1.2 per cent (9 responses)

Although the HST introduction certainly is a contributing factor to slowing July 2010 sales in BC, it is still too early to determine the full impact of the HST since it was introduced.

Vancouver mortgage broker, Scott Dawson said, “There has been a number of changes that have affected the real estate market. April 19th of this year there was changes to Canadian mortgage rules, add to that the HST on July 1st and it makes for a lot of confusion in the market for buyers and the stats show that effect in my opinion.”

As the summer weather continues to heat up in Vancouver, homebuyers and sellers became less active in the Greater Vancouver real estate market.

Sales were down 24.1% in July 2010 from the previous month and down 45.2% from the same month last year. However, July 2009 was the highest selling July ever recorded by the Real Estate Board of Greater Vancouver, therefore any comparisons to that month’s sales should be viewed with moderation.

A number of combined external factors have also come into play this year. These have had a direct impact on the Greater Vancouver housing market starting in the 2nd quarter of 2010, which the market did not have to contend with in 2009.

In their August 4, 2010 news release, the Real Estate Board of Greater Vancouver stated that:

Home sales activity in Greater Vancouver was quieter last month than most Julys over the past decade, with residential sales, prices, and the number of homes listed for sale trending downward in recent months.

The Real Estate Board of Greater Vancouver (REBGV) reports that the number of residential property sales in Greater Vancouver totaled 2,255 in July 2010. This represents a 45.2 per cent decline from the 4,114 sales in July 2009, the highest selling July ever recorded, and a 24.1 per cent decline compared to June 2010.

Looking back further, last month’s residential sales represent a 3.7 per cent increase over the 2,174 residential sales in July 2008, a 41.8 per cent decline compared to July 2007’s 3,873 sales, and a 17.5 per cent decline compared to July 2006’s 2,732 sales.

“With the pace of home sales and listings easing off in our market, we’ve begun to see a levelling of home prices from the record highs seen in the spring, creating greater affordability,” Jake Moldowan, REBGV president said. “Activity in today’s marketplace is clearly trending in favour of buyers.”

The number of properties listed for sale on the market has been trending downward since spring, with 4,138 new listings in July compared to April’s peak of 7,648. New listings for detached, attached and apartment properties in Greater Vancouver on the Multiple Listing Service® (MLS®) declined 17.9 per cent in July 2010 compared to July 2009, when 5,041 properties were listed for sale.

At 16,431, the total number of property listings on the MLS® in July declined 6.5 per cent compared to last month and increased 33 per cent compared to July 2009.

“It’s currently taking home sellers who work with a REALTOR®, on average, 45 days to sell their property, which is a historically healthy timeframe for people on both sides of a transaction,” Moldowan said.

Since spring, housing prices have decreased 2.8 per cent compared to the all-time high reached in April when the residential benchmark price was $593,419. Over the last 12 months, the MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver increased 9.1 per cent to $577,074 in July 2010 from $528,821 in July 2009.

Sales of detached properties in July 2010 reached 908, a decrease of 43.7 per cent from the 1,614 detached sales recorded in July 2009 and a 9.8 per cent increase from the 827 units sold in July 2008. The benchmark price for detached properties increased 11.5 per cent from July 2009 to $793,193.

Sales of apartment properties reached 979 in July 2010, a decline of 42.7 per cent compared to the 1,708 sales in July 2009 and an increase of 1.3 per cent compared to the 966 sales in July 2008.The benchmark price of an apartment property increased 6.2 per cent from July 2009 to $387,879.

Attached property sales in July 2010 totalled 368, a decline of 53.5 per cent compared to the 792 sales in July 2009 and a 3.4 per cent decline from the 381 attached properties sold in July 2008. The benchmark price of an attached unit increased 8.6 per cent between July 2009 and 2010 to $490,995.

The Canadian real estate market was hitting on all cylinders in the early part of 2010. Canada’s economy charged ahead at a pace not seen since 1999 by recording an impressive 6.1% GDP growth in the first quarter of 2010 and the housing market had a big role to play in that.

On April 19, 2010, the Canadian Department of Finance introduced what they described as “measured steps to support the long term stability of Canada’s housing market.” These steps effectively changed the underwriting guidelines for mortgages insured by CMHC, the Canadian Mortgage and Housing Corporation.

These rules made it much more restrictive and harder for many Canadian’s to buy into the housing market. In some high priced areas such as Vancouver and Toronto, it effectively knocked them out of the market entirely.

In our May 18, 2010 story “Vancouver Housing Market Records 12% Sales Increase in April,” we wrote:

Although, new Canadian mortgage rules that were introduced on April 19, 2010 may have a negative impact on the high flying sales figures in Greater Vancouver, I anticipate that the current trends will carry over into May 2010 as buyers attempt to beat the impending 12% HST tax arriving in British Columbia on July 1, 2010.

The implementation of the New 12% HST tax in British Columbia on July 1, 2010 also colluded to distort the BC real estate market leading up to the date of its introduction. Many sales were accelerated to avoid the new tax, resulting in negative consequences for July sales across BC.

July 1, 2010 was the start of the first month with the new 12% HST tax in place and it is only 2 months and 12 days since the April 19, 2010 introduction of Canada’s new mortgage rules.

In our July 9, 2010 story “Vancouver New Home Prices Almost Double National Average in May 2010,” we had the following excerpt for CMHC:

The provincial sales tax on building materials in Ontario and in British Columbia is embedded in the contractor’s selling prices of new houses. With the introduction of the HST in these two provinces, this provincial sales tax will be eliminated and replaced by the HST. As value added taxes are conceptually excluded from the index, this change may cause negative monthly variations in the index for some metropolitan regions in Ontario and British Columbia during the implementation period of the tax.

The CMHC recognized that the New 12% HST tax would have some negative monthly variations in its index after its implementation on July 1, 2010 the same can also be said for any home sales index or figures in BC.

As for the status of the Greater Vancouver real estate market in July 2010, one figure that has not been widely reported can best be used to put that into perspective.

The total year-to-date sales for the Greater Vancouver market including detached, attached, and apartment properties from January 2010 to July 2010 saw 19,428 sales, a slight increase over the 19,367 sales that occurred over the same period in 2009.

According to the year to date figures, the Greater Vancouver real estate market can be viewed as being on a similar overall pace to 2009. The current market fluctuations are a natural response to changing market conditions.

Vancouver mortgage broker, Mark Fidgett said, “Simply put, buyers have retreated and those that remain lack confidence. Also playing a role is the Bank of Canada 25 basis point rate increase on June 1, 2010, the first increase since July 10, 2007 followed by a further 25 basis point increase on July 20, 2010.”

“The stats do not tell the whole story,” said Vancouver mortgage broker Robert Mogensen. “The sales are down, that is true, but the overheated market in the last few years has not been a normal one. There are still sales occurring. People are buying, selling and negotiating the best deals from both sides of the process.”

“Anecdotally there are still some areas that are hot and people are willing to do what it takes to get into certain areas,” added Mogensen. “I had a couple last week that where out bid on a single family home near Main and 17th Avenue, even though their bid was $100,000 over asking. My gut feel is that once we are out of the dog days of summer, September will bring back the buyers and things will definitely pick up.”

The Fraser Valley Real Estate Board (FVREB), which serves the British Columbia communities of North Delta, Surrey, White Rock, Langley, Abbotsford and Mission, released its July 2010 sales figures today.

They show that the FVREB processed 1,101 sales through the MLS system in July 2010, down 39.3% from the 1,815 sales recorded in June 2010. Prior to this sales increased by 23% going from 1,477 sales in May 2010 to the 1,815 sales in June 2010.

This also represented a 47.3% decrease over the same month last year in July 2009, which coincidentally achieved the distinction of having the highest sales ever recorded by the FVREB for any month of July with 2,089 sales.

“Last year, we experienced the busiest July in our history and this year it was the quietest in a decade,” says FVREB President, Deanna Horn.

“Although the real estate market typically slows in the summer months, we didn’t anticipate this level of change.”

“We attribute it to a combination of factors, the beautiful weather, interest rates edging up and reaction to the Harmonized Sales Tax in BC – although the HST does not apply to resale housing, not everyone knows that,” explained Horn.

Overall year to date sales for all property types in July were 11% higher with 9,887 sales in 2010 compared to 8,910 sales in 2009.

New listings in July were 2,355, down by 25.3% from 3,153 in June 2010. Total active inventory also declined by 2.3% from 11,110 active listing in June 2010 to 10,852 in July 2010.

While the market is showing clear signs of slowing, average prices for detached residential properties actually rose 9.8% in July 2010 to $566,597 from $515,818 in July 2009 and 0.4% from $564,390 from June 2010 figures.

Average prices for all property types in July 2010 rose 6.2% to $448,672 up from $422,638 in July 2009 but were slightly down by 2.5% from $459,969 in June 2010.

“The plus side of this market is highly favourable conditions for buyers – potentially the best they will be this year due to the significant volume of listings currently, which is already showing signs of decreasing,” said Horn.

Vancouver mortgage broker Scott Dawson says that, “July 2009 was a record setting month mostly spurred by historically low interest rates.”

“Interest rates did increase slightly over the past few months and along with the uncertainty of the HST, could have been a contributing factor to a quiet July this year,” added Dawson. “The good news is we have seen interest rates return to close to their all time lows so I anticipate a busier fall market.”

Property sales in July 2010 within the Greater Victoria area have returned “to the kind of normal level seen in the late 1990s,” read the official news release issued by the Victoria Real Estate Board (VREB) today. Overall though, prices have slightly declined in comparison to June 2010.

Through the Multiple Listing Service (MLS), a total of 527 homes and other properties were sold in July, which is down from the 625 sales that occurred in June, the prior month. Comparing 2010 to 2009, there were 933 sales in July last year.

“Last month’s sales reflect a return to these historically average levels compared to the significantly higher levels seen between 2001 and 2007 when we had a very active market,” mentioned Randi Masters in the news release, who is the President of the Victoria Real Estate Board.

Masters believes that sales will pick up again in 2011 when the economy stabilizes, making room for a balanced market in Victoria over the coming months. Right now, with the rise of properties for sale, the trend in recent months has been that of a buyer’s market where “buyers are in less of a hurry,” says Masters.

As a result, Masters added that “it’s important for sellers to consult with their realtor in order to price their home realistically in order to attract qualified buyers.”

Last month, the number of properties that were available declined to 4,477, but was still 23% higher than the 3,632 properties that were on the market in July 2009.

For July 2010, MLS sales included 299 single family homes, 136 condominiums, 44 townhomes, and 18 manufactured homes. For single-family homes sold in Greater Victoria, the average price was $615,004, which was down from $649,280 in June. Condominiums averaged $322,905 in July, down from $331,131 in June. Townhomes sold for an average of $420,578, again down from $429,549 in June.

A weaker than expected spring buying session in four of Canada’s most crucial provincial housing markets has resulted in the Canadian Real Estate Association lowering its home sales expectations for 2010 today.

It now expects national sales of 459,600 units this year. This represents a decline of 1.2% from 2009 figures and a revision from previous expectations of a 5.5% rise.

With new listings shrinking and fewer buyers entering the market, home prices are now forecast to increase by 3.5% in 2010 to reach a Canadian national average price of $331,600 from $321,942 with increases expected in all provinces. This is much higher than the previous 1.6% forecast figure.

Georges Pahud, CREA President stated that, “While the jump in national sales activity earlier this year likely borrowed from the future, local markets trends are not necessarily in sync with national trends.”

“Slowing first-time home buying activity means lower- and mid-priced homes are making a smaller contribution to the average price calculation, causing the average price to be skewed upward as a result,” said Gregory Klump, CREA Chief Economist.

“It also means pricing momentum will lose steam due to rising competition among current homeowners looking to trade up.”

“The hangover from accelerated home purchases earlier this year is expected to persist over the rest of the year, but positive economic and job market trends bode well for home price stability,” added Klump.

CREA also expects that Canadian interest rates will continue to rise slowly and at a measured pace keeping homebuyers in a cautious mood and resulting in easing sales activity over the second half of 2010. However, inventories are unlikely to pile up the way they did during the recession.

Additional expected interest rate increases will keep homebuyers in a cautious mood, with sales activity expected to continue easing over the second half of the year as a result.

“Transitory factors that resulted in big swings in housing supply and demand may now be largely in the rearview mirror, so while resale housing activity is expected to ease, the pace of declines should begin to slow.”

“Homebuyers will no doubt welcome a more relaxed housing market in places where there was a shortage of supply earlier in the year,“ added Klump.

For 2011, CREA expects slower economic growth and consumer spending to result in a 7.3% decline in home sales activity with modest average price gains to continue in most provinces. Overall national average prices are expected to ease off by only 0.9% to $328,600 in 2011.

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Only two days after raising its benchmark overnight lending rate by 25 basis points to 0.75%, the Bank of Canada released its latest Monetary Policy Report today indicating that Canadian economic growth declined sharply in the second quarter.

In an outlook that stresses continued and growing risks in Europe and a struggling U.S. economy, the Bank of Canada said that Canada’s economy is slowing much faster than expected.

The bank now says that this year’s second quarter growth will be less than half what it was in the first quarter and slow to 2.8% in the third quarter, down from the record setting pace of 6.1% recorded in the first quarter of this year due to lower household spending and a marked decline in the Canadian real estate market.

Overall Canadian gross domestic product (GDP) growth has been revised downward to 3.5% in 2010, with further slowing to 2.9% in 2011 and 2.2% in 2012.

According to the report, the European debt crisis will have a direct negative impact on Canada’s gross domestic product (GDP) by -0.1% this year, -0.3% in 2011 and -0.2% in 2012.

The bank report also indicates that the United States is not recovering as strongly as anticipated, resulting in reduced growth figures for the U.S. economy.

Withdrawal of fiscal stimulus in the U.S. “will have a dampening effect on U.S. growth,” the bank’s outlook said. “The growth of consumption is projected to be modest as households strive to rebuild savings, while the recovery in residential investment is expected to be restrained.”

The Bank of Canada is now anticipated that the U.S. economy would expand just 2.9% in 2010 and 3.0% in 2011. This is below the current U.S. Federal Reserve’s own expectations of of 3.0% to 3.5% in in 2010, and 3.5% to 4.2% in 2011.

Canadians woke up to a second consecutive interest rate hike by the Bank of Canada. This mirrors the .25% rise from the last Bank of Canada rate decision on June 1, 2010. Prior to that, the last time the Bank of Canada raised its benchmark rate was on July 10, 2007 when it was increased a quarter of a percentage point to 4.50%.

In its accompanying remarks, the Bank of Canada gave mixed signals about global economic growth and scaled back it’s projections on the pace of economic recovery in Canada.

In its July 20, 2010 press release the Bank of Canada stated:

OTTAWA – The Bank of Canada today announced that it is raising its target for the overnight rate by one-quarter of one percentage point to 3/4 per cent. The Bank Rate is correspondingly 1 per cent and the deposit rate is 1/2 per cent.

The global economic recovery is proceeding but is not yet self-sustaining. Greater emphasis on balance sheet repair by households, banks, and governments in a number of advanced economies is expected to temper the pace of global growth relative to the Bank’s outlook in its April Monetary Policy Report (MPR). While the policy response to the European sovereign debt crisis has reduced the risk of an adverse outcome and increased the prospect of sustainable long term growth, it is expected to slow the global recovery over the projection horizon. In the United States, private demand is picking up but remains uneven.

Economic activity in Canada is unfolding largely as expected, led by government and consumer spending. Housing activity is declining markedly from high levels, consistent with the Bank’s view that policy stimulus resulted in household expenditures being brought forward into late 2009 and early 2010. While employment growth has resumed, business investment appears to be held back by global uncertainties and has yet to recover from its sharp contraction during the recession.

The Bank expects the economic recovery in Canada to be more gradual than it had projected in its April MPR, with growth of 3.5 per cent in 2010, 2.9 per cent in 2011, and 2.2 per cent in 2012. This revision reflects a slightly weaker profile for global economic growth and more modest consumption growth in Canada. The Bank anticipates that business investment and net exports will make a relatively larger contribution to growth.

Inflation in Canada has been broadly in line with the Bank’s April projection. While the Bank now expects the economy to return to full capacity at the end of 2011, two quarters later than had been anticipated in April, the underlying dynamics for inflation are little changed. Both total CPI and core inflation are expected to remain near 2 per cent throughout the projection period. The Bank will look through the transitory effects on inflation of changes to provincial indirect taxes.

Reflecting all of these factors, the Bank has decided to raise the target for the overnight rate to 3/4 per cent. This decision leaves considerable monetary stimulus in place, consistent with achieving the 2 per cent inflation target in light of the significant excess supply in Canada, the strength of domestic spending, and the uneven global recovery.

Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments.

The Bank of Canada statement took note of the European sovereign debt crisis by stating that it “has reduced the risk of an adverse outcome and increased the prospect of sustainable long term growth, it is expected to slow the global recovery over the projection horizon.”

The central Bank’s only comment regarding the US was, “In the United States, private demand is picking up but remains uneven.”

The Bank also addressed the Canadian housing market which helped drive Canada’s economic recovery in the first half of this year stating that, “Housing activity is declining markedly from high levels.”  It’s broader view of the Canadian economy going forward is that it expects economic recovery in Canada to be “more gradual than it had projected” in its April MPR.

“The bank of Canada is in a very tight spot lately. The rest of the world, particularly the USA, is struggling with recent hints of a double dip recession. In Canada however we continue to see good jobs data, sales data and the signs of recovery are becoming consistent,” said Robert Mogensen of Vancouver Mortgage Corp.

“I believe that this last increase will be it for the next several months as the BOC plays it’s own game of wait and see with the rest of the world.”

“Will it be necessary to further increase prime to cool our growth? I am betting not likely, the rest of the world will take care of that for us,” added Mogensen.

“They’re likely basing their decision purely on what’s happening locally with little fear of further fallout from Europe’s debt crisis or further issues in the US,” said Vancouver mortgage broker, Mark Fidgett.

“Time shall tell whether this is a positive move. It will however likely make first time buyers even more uncertain,” added Fidgett.

Residential home sales in BC fell by 5% in June from May 2010 on a seasonally adjusted basis according to the latest Multiple Listing Service (MLS) figures released by the British Columbia Real Estate Association (BCREA) on July 15, 2010.

When compared to the same month last year, province wide sales declined to 7,722 units in June 2010 representing a 23% decline over June 2009.

However, British Columbia’s average MLS residential prices actually climbed by 8% to $499,908 in June 2010 from the same month last year.

According to the press release:

Year-to-date, BC residential sales dollar volume increased 31 per cent to $21.4 billion, compared to the same period last year. Residential unit sales rose 17 per cent to 42,343 year-to-date, while the average MLS® residential price climbed 13 per cent to $504,281 over the same period.

“Market conditions have shifted from balanced conditions at the start of the year to a buyers’ market this summer,” said Cameron Muir, BCREA Chief Economist. In June, there was 9.3 months of supply on the market given current sales activity, up from 5.6 months in January 2010.

“Tighter credit conditions for homes with secondary suites and low equity home buyers have moderated consumer demand,” added Muir.

“Since 1986, Vancouver has had a steady stream of population growth for a variety of reasons and at times the market has reached a frenzied pace not previously experienced in this city,” said Robert Mogensen of Vancouver Mortgage Corp.

The period we are now entering is actually a more “normal” pace as opposed to a “bursting bubble.”

“Sales are still occurring, prices are holding steady, and the market is performing at a much more comfortable pace for both buyers and sellers,” added Mogensen.

The Canadian Real Estate Association (CREA) released figures on July 15, 2010 that show seasonally adjusted home sales activity via the Multiple Listing Service (MLS) systems of Canadian real estate boards declined in almost 70% of local markets in June 2010 from the previous month.

Home sales activity was down 8.2% in June from the previous month, however the national average price of homes sold via MLS actually rose by 4.9 % on a year-over-year basis in June.

National sales activity on a actual (not seasonally adjusted basis) was down 19.7% in June 2010 from June 2009.

According to the press release:

Actual sales activity in the second quarter stood 2.8 per cent below levels reported in the second quarter of 2009. For the year-to-date, transactions are up 13.6 per cent compared to the first-six months of last year. This gap is expected to shrink as the year progresses, since activity trended upward over the second half of last year and is forecast to continue easing over the second half of 2010.

The number of newly listed homes on Canadian MLS® Systems in June 2010 declined by 6.8 per cent from the previous month, following a monthly decline of 4.8 per cent in May. A declining trend in new listings will help maintain the balance between supply and demand, and temper home price volatility.

Sales activity has cooled throughout the year as buyers had to deal with continued speculation of possible Canadian interest rate hikes and tightening mortgage regulations. This resulted in a widespread 13.3% decline in sales activity in the second quarter from the near record setting first quarter levels. Only a dozen or so smaller markets avoided this trend.

“The housing market is becoming more challenging for sellers,” said CREA President Georges Pahud. “Buyers are in less of a hurry, so sellers should consult with their local REALTOR® on how to best price and present their home to attract purchase offers.”

“National home sales activity is easing due to fewer and more cautious first-time home buyers,” said Chief Economist Gregory Klump. “With interest rates on the rise, housing affordability and home sales activity are expected to continue to erode over the second half of 2010. While the pricing environment is becoming more challenging, a recovering economy and job market will provide support for housing activity and prices.”

When asked about national sales being down and prices up, Vancouver mortgage broker Mark Fidgett said, “Obviously if you think of it in terms of supply and demand, it doesn’t make a whole lot of sense, assuming supply is strong. But when you add a flustered and slightly panicked buyer to the mix, then it may sound more reasonable.”

“Let’s face it,” Fidgett remarked. “If you’re a buyer who’s trying to beat the HST in BC or Ontario, beat any possible rate hikes, and take advantage of any previous rate holds, then it makes a bit more sense.”

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According to the Vancouver Island Real Estate Board (VIREB), sales are beginning to settle down in Vancouver Island’s real estate market. This data comes from a June 2010 sales summary.

Homes sales across the entire VIREB dropped in June by 20%, with 415 units sold. In comparing June 2009 to this year, that’s 105 less units sold, as 520 were sold last year.

For single-family homes, the average price in the month of June was $362,018, which is down from $388,407 just a month prior in May. However, the average price for June is in fact 7% higher than June 2009’s average.

The market is “returning to a balanced state,” said Jim Stewart, President-elect of the Vancouver Island Real Estate Board.

For the city of Nanaimo, single-family homes sold dropped by 28%, compared to June 2009. However, Stewart relays some optimism in saying that Nanaimo has “been very active” from January to May of this year.

“Beacuse of high demand, the product was selling very quickly, putting upward pressure on prices.”

This led to people feeling rushed into buying homes, Steward theorized, because they didn’t know when other homes were going to be available on the market.

In 2010 thus far, sales “started out strong as the market began to recover from the recession” that has been ongoing since 2008, but finally we’re beginning to see the market “level out going into the second half of the year,” he said.

“Due to supply and demand, what this means to sellers is proper pricing is essential and buyers have more to choose from,” which effectively creates a buyer’s market.

“With the market leveling off somewhat, now we have a market where potential buyers have a day or two to reflect on their choices before making a purchase,” Steward remarked.

Jim Stewart believes that the sales figures for June ring a bell to bring balance to the market; however, he does not believe the market is going to change too drastically.

The Canadian economy posted significant jobs growth in June 2010, stunning many economists and sending the Canadian dollar up on world markets.

In what some are calling a stunning jobs growth number, Statistics Canada figures released on Friday indicate that Canada added 93,000 jobs in June 2010. Those economists that were speculating that Canada was in for a double-dip recession had to dramatically revise those expectations when these figures blew away the consensus forecast by over six times the expected 15,000 figure.

With the loonie surging against the US Greenback and this latest jobs report, some economists are now saying that an interest rate hike by the Bank of Canada later this month is almost a certainty.

In response to the July 9, 2010 Statistics Canada job figures, Gorica Djeric of Scotia Capital said that, “It’s hard to imagine how the BoC has any choice but to hike on July 20th with solid numbers like this that quintupled consensus and quadrupled our call. Since last July, Canada has heaped on 403,000 jobs and that exceeds even our optimistic forecast for job growth in Canada that we put out in January. This will be a source of support to consumer spending for some time yet such that the recent month’s retail sales report was an aberration on trend.”

Benjamin Reitzes of BMO Nesbitt Burns stated that, “There’s no arguing with this strong report. The jobs picture clearly shows that the Canadian recovery hasn’t stalled yet, despite signs of slowing momentum in the U.S. and other economies. This strong report solidifies our call for the Bank of Canada to raise rates 25 bps on July 20.”

Dawn Desjardins, the assistant chief economist at the Royal Bank of Canada stated that, “This report put the icing on the cake for the labour market in the second quarter which saw 226,000 jobs created in the three month period.”

“The accelerating pace of quarterly increases in jobs created is consistent with the economy maintaining its solid upward momentum. The unemployment rate is now well off its recent high of 8.7 per cent and we look for it to drift to 7 per cent by the end of next year. The rate is, however, likely to remain above its pre-recession low as workers, who became discouraged during the economic downturn, return to the labour force,” Desjardins added.

“With Canada’s recovery firmly rooted, the need for an extraordinarily low overnight rate is quickly diminishing and we expect the Bank to gradually and steadily reduce the amount of policy accommodation unless another flare-up in global financial markets damages confidence and threatens the economy’s growth momentum.”

While the strong jobs growth numbers are indeed good news, they are tempered by recent Canadian economic indicators that are not so favorable. In the first half of 2010, Canada’s economy was fueled by strong growth from housing and construction, both of which are now cooling.

Canada unexpectedly delivered surprising job growth numbers exceeding analysts expectations by six times the expected 15,000 or fewer jobs forecast.

According to a July 9, 2010 report from Statistics Canada, June 2010 figures showed an overall increase of 93,000 jobs in Canada, pushing the unemployment rate down 0.2% to 7.9%. This marks the first time that the rate was below 8%, since January 2009.

Statistics Canada Unemployment Rate to June 2010

These healthy job growth figures also mean that since July 2009, Canada has managed to replace nearly all of the 417,000 jobs lost during the current recession. Canada is the first of the Group of Seven countries to do so.

Canada’s employment figures have now returned to October 2008 levels, when the global crisis began.

According to the Statistics Canada Report:

Employment has been on an upward trend since July 2009, increasing by 403,000 (+2.4%). These gains offset nearly all the employment losses observed during the labour market downturn which began in the fall of 2008. The June unemployment rate, however, remained well above the October 2008 rate of 6.2%, due to a large increase in the number of people in the labour force over this period.

June’s employment increases were evenly split between full-time and part-time. Since July 2009, most of the employment gains have been in full-time work, up 355,000 or 2.6%, while part-time rose by 1.5%.

Notable employment increases in June were in service industries including retail and wholesale trade; business, building and other support services; health care and social assistance; and other services such as automotive repair and personal care services.

In June, there were continued gains in the number of private sector employees. The number of self-employed workers also increased, while there was little change among public sector employees.

Although the 93,000 jobs figure is impressive, almost all of these gains came from a 60,000 increase in Ontario and a 30,000 increase in Quebec. The rest of Canada was virtually unchanged with Newfoundland and Labrador and New Brunswick actually suffering job losses.

With the majority of the job growth coming from the manufacturing central heartland of Canada in the provinces of Ontario and Quebec, you might be surprised that those two provinces actually continued to suffer job losses in their manufacturing sector.

Overall Canadian manufacturing jobs fell by 14,000 in June, a decline of -11.9% (-235,000 jobs) from the pre-recession October 2008 level. The trend to a service sector economy accelerated in June.

Statistics Canada Employment Index by Industry to June 2010

Job losses outpaced job growth in British Columbia causing the unemployment rate to increase from 7.5% in May to 7.8% in June 2010. A similar story took place in Alberta with a 6.6% unemployment rate in May, rising to 6.7% in June 2010. Saskatchewan faired the worst with a increase to 5.5% in June from its low unemployment rate of 5.0% in May 2010.

In the past year, Canadian service sector job growth has more than doubled that of the goods-producing sector. Going forward, this transition offers a less stable and much more reactive employment structure allowing employers much more flexibility in adding and shedding jobs as they are required.

Job growth can be seen as a lagging market indicator. With almost all Canadian economic indicators trending downwards in the past month, the June jobs report may mark an end of a strong run that began last July. Leading economic indicators now suggest that the economic momentum is starting to cool.

British Columbia Housing starts rose 6.3% in June 2010 according to the seasonally adjusted annual rate of urban starts in figures released by the Canada Mortgage and Housing Corporation (CMHC) today.

This 6.3% increase represented 23,600 housing starts in June 2010, up from the 22,200 figure of May 2010.

Actual figures of British Columbia housing starts in June 2010 were 2096 units. This represent a 97.3% increase over the 1062 units from June 2009 and a 8.8% increase from the 1,926 units from May 2010.

The continued upward trend in British columbia housing starts has already surpassed previous CMHC predictions from their second quarter 2010 Canadian Housing Market Outlook report which had a forecast of 22,900 units.

According to CMHC, “Housing starts in British Columbia will trend higher during the next three years from the below-average levels of this year and next. Builders will increase housing starts beginning in 2010 in response to growing housing demand generated by a stronger economy and increasing employment. The province’s unemployment rate will remain lower than the Canadian average. These tighter labour market conditions will draw migrants to the province and generate demand for both rental and ownership housing. Starts will climb from 22,900 homes in 2010 to more than 30,000 homes by 2013, a level more in line with the rate of household formation.”

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According to figures released today from the Canada Mortgage and Housing Corporation (CMHC), the seasonally adjusted annual rate of national housing starts in Canada was 189,300 units in June 2010, representing a -3.1% decline from May 2010 figures of 195,300 units.

“Housing starts decreased during June, largely due to the multiple starts segment in Ontario. The single starts segment was largely unchanged Canada-wide.” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “After a robust start to 2010, we expect the pace of housing start activity to moderate and total 182,000 units by year-end.”

Seasonally adjusted annual rate estimates of housing start activity were also revised up by CMHC for April 2010 and May 2010. This resulted in a month-over-month gain of 3.7% in April of 205,900 units and a 5.1% decline in May to 195,300 units.

According to the CMHC report:

All starts figures in this release, other than actual starts, are seasonally adjusted annual rates (SAAR) — that is, monthly figures adjusted to remove normal seasonal variation and multiplied by 12 to reflect annual levels. By removing seasonal ups and downs, seasonal adjustment makes it possible to highlight the fundamental trends of a series. Reporting monthly figures at annual rates indicates the annual level of starts that would be obtained if the monthly pace was maintained for 12 months. This facilitates comparison of the current pace of activity to annual forecasts as well as to historical annual levels.

The revision reflects new survey data collected for centres with a population of 10,000 to 49,999. CMHC estimates the level of starts in those centres at the beginning of each month. During the last month of the quarter, CMHC conducts the survey in these centres and revises the estimates. Revisions also stem from seasonal adjustment factors which are revised as new data are collected.

CMHC estimates the level of starts in centres with a population of less than 10,000 for each of the three months of the quarter, at the beginning of each quarter. During the last month of the quarter, CMHC conducts the survey in these centres and revises the estimate.

According to Statistics Canada, Vancouver new home prices rose by almost double the national average in May 2010 on a year-over-year basis.

According to the New Housing Price Index released by Statistics Canada yesterday, Vancouver prices increased by 5.8% from May 2009 to May 2010, and a monthly increase of 0.2% from April 2010.

This was well above the overall Canadian annual figure of 2.9% and almost identical to the national 0.3% monthly figure which had identical increases in March and April.

Nationally new house prices rose the most between April and May in Regina (+3.4%), Toronto (+0.7%) and Oshawa (+.07%). Builders in Regina reported that higher material and higher labour costs as well as increased land development resulted in price increases. Strong market conditions were highlighted as the reason in Toronto and Oshawa.

Of the 21 metropolitan areas surveyed three registered 12-month declines in the Statistics Canada new housing price index for May, including Victoria (-3.9%), Charlottetown (-1.6%) and Edmonton (-0.1%).

The New Housing Price Index (NHPI) measures changes over time in the selling prices of new residential houses agreed upon between the contractor and the buyer at the time of the signing of the contract. It is designed to measure the changes in the selling prices of new houses where detailed specifications pertaining to each house remain the same between two consecutive periods. The prices collected from builders and included in the index are market selling prices less value added taxes, such as the Federal Goods and Services Tax (GST) or the Harmonized Sales Tax (HST).

The provincial sales tax on building materials in Ontario and in British Columbia is embedded in the contractor’s selling prices of new houses. With the introduction of the HST in these two provinces, this provincial sales tax will be eliminated and replaced by the HST. As value added taxes are conceptually excluded from the index, this change may cause negative monthly variations in the index for some metropolitan regions in Ontario and British Columbia during the implementation period of the tax.

The Vancouver area saw a housing sales drop of 5.8% in June 2010 compared to May 2010, according to the Real Estate Board of Greater Vancouver.

For June 2010, there were 2,972 sales, representing roughly a 30% decline against last years June 2009’s 4,259 sales figures. However this was a 22.6% increase over the 2,525 sales recorded in June 2008. The figure from last year was actually the second highest selling June on record.

Jake Moldowan, President of Greater Vancouver’s Real Estate Board, says that the “number of new listings coming on the market is not as dramatic” as three months prior to June 2010, but “demand remains at a healthy level for this traditionally quieter time of the year,” as the summer of 2010 has been hampered by the HST.

A total of 5,544 new listings of detached, attached, and apartments properties were added to the MLS system in June 2010. This was a 21% decline compared to May 2010, which saw 7,014 listings and a 3.2% increase over June 2009, which saw 5,372 listings added.

Moldowan added that, “there has been less upward pressure on prices in our market the last few months, which has allowed prices to ease back from the record high numbers seen in April,” following the Olympics.

With the trend of high sales over the last few months following the Vancouver 2010 Olympics, it seemed natural for June to be another high month. However, with any hot market, there comes a cooling off period and that time has now approached.

A Real Estate Board of Great Vancouver July 6, 2010 press release further states that:

Over the last 12 months, the overall MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver increased 11.8 per cent to $580,237 from $518,855 in June 2009.

Sales of detached properties in June 2010 reached 1,139, a decrease of 31.7 per cent from the 1,667 detached sales recorded in June 2009 and a 24.1 per cent increase from the 918 units sold in June 2008. The benchmark price for detached properties increased 13.4 per cent from June 2009 to $795,025.

Sales of apartment properties reached 1,258 in June 2010, a decline of 29.7 per cent compared to the 1,790 sales in June 2009 and an increase of 19 per cent compared to the 1,057 sales in June 2008.The benchmark price of an apartment property increased 9.7 per cent from June 2009 to $391,528.

Attached property sales in June 2010 totalled 575, a decline of 28.3 per cent compared to the 802 sales in June 2009 and a 27.8 per cent increase from the 450 attached properties sold in June 2008. The benchmark price of an attached unit increased 11.6 per cent between June 2009 and 2010 to $492,861.

One of the factors the housing market had to contend with in June this year, was the fear and confusion over the new HST tax that was coming to British Columbia on July 1, 2010. This no doubt led to some people either accelerating or putting off their buying or selling decisions.

Now that the HST has officially been implemented, BC residents are beginning to learn the impact and effect of the HST. For an exclusive BuyRIC.com list of what goods and services apply under the new HST tax, click here.

On Vancouver Island, Comox Valley home sales are always in the news, whether the market is up or down. But who are the people buying property in the area? Are a majority of them from Alberta buying properties for future investment or are they active retirees, or is that just all a myth?

Any possible myths though can now be realized to be true or false as the Vancouver Island Real Estate Board did a survey on the hundreds of people who bought homes in the Valley last year so we now know for sure. The published results, give a detailed picture of where the buyers came from, as well as illustrating what they were really looking for.

Indeed about 16% of Comox Valley buyers were from Alberta. A figure of 4% was attributed to Saskatchewan and Manitoba, which means one in every five buyers came directly from the Prairies. The biggest group of buyers, 36% of the total, was already living in the Comox Valley and was simply moving within the area.

A further 18% came from elsewhere on Vancouver Island, including Victoria. People coming from the BC mainland of Vancouver, were attributed for a total of 14%.

It should be noted though that those who were already living in the Valley for less than a year, were living in interim accommodation while they searched for their ideal property. And despite last year’s general economic downturn, the mild winters, recreational opportunities, and easy transport links continue to be big draws.

The survey also found that just over 9% of the buyers came from afield in Canada, mainly Ontario, as more than two-thirds of the buyers were either local or from some place else in British Columbia. Nearly 3% was attributed to elsewhere in the world.

Of all the purchasers, around 96% bought principal homes rather than investment homes for the future or for renting out. Around 38% of the buyers said they were acquiring homes in Comox Valley to settle down in this region for their senior years.

The most common price band for a local home in 2009 was $300,000-$350,000. But more than half of all buyers paid somewhere between $200,000 and $350,000.

A single-family home with three bedrooms and two bathrooms was the typical property purchased. They are usually clad with vinyl siding, have double garages and are supplemented with the beautiful mountain views of the valley.

In 2009, first-time buyers accounted for only 13% of the home sales – a lower figure than the Vancouver Island average of 19%. That somewhat depressed figure was most likely influenced by higher local home prices, which made it more difficult for young people to get into the market.

However some of the people surveyed managed to buy properties – usually small mobile homes – for under $50,000. This was in contrast to others that paid over $1 million for their high-end homes. This demonstrates the price and property diversity that the Comox Valley continues to offer.

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With the current turmoil in the US and Canadian stock markets, investors appear to be shell shocked by wave after wave of bad news, driving stock markets lower and investors to the exits.

European stock markets are being roiled by the stiff austerity measures being put into place across the EU to stem the fallout from the recent Greek debt crisis, which saw Greece get a EU and IMF bailout package worth up to $110 Billion Euro ($145 Billion USD). This now appears to be the first round in an ongoing dilemma of stemming a sovereign debt crisis across Europe.

Canadian markets have not been immune from this turmoil. Yesterday, the Toronto Stock Exchange (TSX) closed at its lowest level of the year, down 104 points to close at 11,093. This now marks a 9.97% decline from its 12-month high of 12,321.

According to a July 5, 2010 Globe and Mail article:

The losing day continues a downdraft on the market that last week took the index down more than 4 per cent as investors fretted over the possibility that a slowing in China’s torrid pace of growth may dampen the demand for commodities, the health of the European banking system, and the flagging pace of employment growth in the U.S.

Canadian stocks normally take most of the cue for their direction from developments in the U.S., where most markets were closed for the Independence Day holiday. Analysts say investors consequently shouldn’t read too much meaning into the action in Toronto, given the absence of many U.S. players.

The US stock market is often seen as the “Driver of the Global Economy,” while the US consumer was seen as its “Engine of Growth.” The US stock market and the Dow Jones Industrial Average (commonly referred to as the DOW) has always been seen as the bellwether indicator and measure of economic prosperity. It is the market that most people think of when you hear the word “Stocks.”

Although the US stock market was closed yesterday in consideration of the July 4 holiday falling on a Sunday, the Dow Jones Industrial Average continues to be under heavy downward pressure and at its last close on July 1, 2010 at 9,732, it is currently sitting at approximately 31% below it 2007 peak and all time high of 14,164.

In the past, we have all heard the mantra of “Buy and Hold” when it came to the stock market. Well, it is interesting to note that as an investment vehicle this strategy would have given you a net loss of –(5.1)% on a 5-year basis with the US Dow Jones Industrial Average between it’s close of 10,274 on June 30, 2005 and it’s 9,774 close on June 30, 2010.

So how does that compare to the real estate market performance of Vancouver, British Columbia, Canada as an investment?

Well, yesterday the Real Estate Board of Greater Vancouver (REBGV) released its statistical figures to the end of June 2010 giving us a clear view of how Vancouver real estate compares to the DOW as an investment over the past 5 years.

With an average +77.7% price increase for residential detached properties, Vancouver West leads the Greater Vancouver area on a percentage basis over a 5-year term. Even on a 1-year term, a real estate investment in this category over the past year would have achieved an average 20.3% increase in Vancouver West.

It seems that the “Buy and Hold” strategy that has worked so well in the Vancouver Real Estate Market will continue to have a bright future. With an average immigration of 50,000 people a year, British Columbia’s population is expected to swell from 4.5 million people in 2009 to between 5.8 to 7.1 million by 2036.

From an investment point of view there really is no doubt that Vancouver real estate has easily surpassed the performance of the US Stock Market DOW index over the past 5 years.