Vacancy Rate Rises Slightly in Kamloops in 2010 Compared to 2009

This article, written by Jeremy Deutsch of Kamloops This Week appeared in the Wednesday, December 15th, 2010 newspaper and online.

For Rent Sign Kamloops Real EstateAfter years of slim pickings for rental accommodations, the vacancy rate in Kamloops has finally risen to a healthier level. According to new figures from the Canadian Mortgage and Housing Corporation, the apartment vacancy rate in the city during October increased to 2.6 per cent, up from 1.5 per cent the previous year.

Two years ago, finding a place to rent was a far more daunting task as the vacancy rate plunged to just 0.4 per cent. Paul Fabri, a market analyst with the CMHC, suggested there are a couple of factors for the increase, including a jump in the number of renters turning into homeowners in the past 18 months. He said people have been drawn to ownership by low interest rates and dropping prices in the real-estate market.

Fabri also noted an increase in the number of investor-owned condos and secondary suites in town. However, the vacancy rate in Kamloops still remains one of the lowest in the province, with communities like Prince George, Kelowna and Nanaimo all above the three per cent mark.

According to the CHMC’s numbers, there’s more than just a river that separates the north and south shores. The biggest increase in available units came on the North Shore, as the vacancy rate rose to 3.9 per cent from 1.9 per cent the previous year. The vacancy rate on the South Shore sits at 1.5 per cent. Fabri said greater employment opportunities are drawing people to the South Shore.

The CMHC only surveys purpose-built rental accommodations — such as apartment buildings — and not suites or condos rented out by owners.

Though it may be easier to find a place to live in Kamloops, it won’t necessarily be any cheaper. The average rent in the Tournament Capital has remained steady at $742, down slightly from $747 the previous year.

It would be no surprise a greater demand for units on the South Shore comes with a higher cost of rent. The average rent is $784, compared to $694 on the North Shore.

The CMHC is predicting vacancy rates to remain steady in the short term, but creep lower in the coming years as the province’s economy rebounds from the recession.

B.C. Housing Market Recovers from Summer Doldrums: BCREA November 2010

The British Columbia Real Estate Association (BCREA) reports that Multiple Listing Service® (MLS®) residential sales in the province climbed 20 per cent in November from October 2010, on a seasonally adjusted basis. Compared to November of last year, MLS® residential unit sales were down 21 per cent to 5,647 units. The average MLS® residential price rose 9 per cent to $523,394 in November compared to the same month last year.

BC MLS Residential Sales To November 2010

Click to enlarge

“Improved economic conditions and low mortgage interest rates have contributed to a 46 per cent increase in home sales since July,” said Cameron Muir, BCREA Chief Economist. Employment in BC eclipsed the July 2008 record by 2,600 jobs last month, while the unemployment rate dipped to 6.9 per cent, the lowest recorded since January 2009.

“The inventory of homes for sale has trended lower since last spring, improving market conditions in many areas of the province,” added Muir. Vancouver and Victoria climbed back into balanced market conditions in last month.

Year-to-date, BC residential sales dollar volume declined 4 per cent $35.5 billion, compared to the same period last year. Residential unit sales declined 11 per cent to 70,382 year-to-date, while the average MLS® residential price climbed 9 per cent to $504,042 over the same period.

Click on the images below to enlarge.

November 2010 Residential Average Price Active Listings, Sales to active listings data by bc board copy

November 2010 BC Residential MLS

November 2010 Year to date Residential MLS

 

Canadian Interest Rate Rise Effects May Be Sharp: Bank of Canada

This article appeared on the CBC News website on December 13, 2010.

Bank of Canada Kamloops Real Estate Mortgage Interest RatesBank of Canada governor Mark Carney repeated warnings Monday to Canadian households and businesses: don’t be caught off guard by current low interest rates and that repercussions from a hike could be swift.

In a speech to the Economic Club of Canada in Toronto, Carney said efforts by various governments to stimulate the economic recovery are keeping borrowing rates low. But when rates do begin to rise again, Carney said, the repercussions may be swift and fierce and have the potential to catch many with debt loads they can no longer afford.

Finance Minister Jim Flaherty said he talks with bankers about loan default rates, and “there is reason for concern,” but not “extreme concern.” The government has no plans to take immediate action, he added

Flaherty pointed out that the government has twice tightened mortgage rules, in 2008 and early 2010, and will do so again if it becomes necessary. But he said the government has to balance the availability of credit, and the impact on employment in the housing sector if rule tightening led to a construction slowdown.

Carney’s warning came the same day Statistics Canada released data showing the ratio of Canadian household debt to disposable income rose to a record high in the three months ending in September. “Cheap money is not a long-term growth strategy,” he warned. “Experience suggests that prolonged periods of unusually low rates can cloud assessments of financial risks.”

Hike Expected May 31

Flaherty said Canadians should assume rates will rise, “and they should be cautious.” The Bank of Canada will set interest rates based on inflation, not on whether a large swath of Canadians have taken on too much debt, Carney added. He suggested the bank may raise interest rates even in a low-inflation environment to discourage risky borrowing. “While the bar for further changes remains high,” he said, “the bank has the responsibility to draw the appropriate lessons from the experience of others who, in an environment of price stability, reaped financial disaster.”

On Dec. 9, the Bank of Canada warned that the risks of another recession are growing, given Europe’s debt crisis, widening gaps between exports and imports among countries, and that Canadians, with their high levels of debt, may not be prepared for it.

Japan’s lost decade

Twice in the speech, he raised the spectre of Japan’s lost decade and even the Great Depression, suggesting some of the problems faced today are as formidable. “The crisis is not over, but has merely entered a new phase,” he said. “In a world awash with debt, repairing the balance sheets of banks, households and countries will take years.” “As a consequence,” he said, “the pace, pattern and viability of global economic growth is changing, and Canada must adapt.”

Carney said with currency tensions rising, there is a concern about protectionist measures as occurred during the Great Depression because of the “death grip” of the U.S. dollar as the world’s preferred currency for foreign exchange reserves. “Over a dozen countries are now accumulating reserves at double-digit annual rates,” he pointed out, “and countries representing over 40 per cent of the U.S.-dollar trade weight are now managing their currencies,” or subtly manipulating them.

The global adjustment means Canadian exports will remain weak, he said, urging firms to improve their competitiveness to meet the challenge.

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Kamloops City New Building Permits on Pace to Eclipse $200 Million Mark for 2010

This article appeared in the New Home Buyers Guide of the Kamloops This Week on Friday, December 10, 2010.

Two years after the economic meltdown, it appears the recession that followed never really hit Kamloops City Hall’s building department. As the end of the year approaches, the city has handed out $187 million worth of building permits and could top the $200-million mark for just the second time.

“It looks like we went through the year and the year previous without even hitting the recession,” said David Trawin, the city’s director of development and engineering. The city had originally estimated between $120 and $140 million worth of building permits to be taken out in 2010. Last month, the city topped the $160 million in permits it handed out in 2009.

Trawin said the city could eclipse the $200-million mark by the end of the year, but that will mean a batch of projects the city was counting on for next year to keep the numbers level will make it in for December.

He predicted permit numbers will drop in 2011 to a more average year, which is roughly between $120 million and $140 million in value. The numbers at city hall continued to climb after a steady month of November. The number of single-family permits issued last month did dip to 14 from 24 in November 2009.

However, the overall construction value for the month hit $12 million, a couple million more than the $10 million the previous year. The city also issued $6 million in commercial-building permits for the month. The number of residential permits — which includes single-family and multi-family units for 2010 — has nearly doubled, to 647 from 416 in 2009.

The city has only topped $200 million in permits once — in 2008. In that year, the city doled out $207 million worth of permits, which was a record.

Before the beginning of summer, the city handed out $222.5 million in permits for 883 dwelling units in a 12-month period. That proved to be a record. The unexpected construction frenzy has also been good to the city’s coffers.

Trawin noted the city’s building-permit department will finish 2010 with an operating surplus of more than $1 million.

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