KREB AGM – Key Points from the BCREA Economist
Yesterday; I attended our board’s AGM and thought I’d share a few key points from the BC Real Estate Association’s economists’ presentation.
· Overall; the market saw a slight rebound in 2009
· The Kootenay region still favours the buyers; however we are moving towards balanced conditions, settling around the 2003 levels. We are expecting a better year; however it will be a stable, grinding growth.
· The Demand Factors:
o Economy: is on the rise
o Mortgage Financing: tighter controls in the near future could have a negative effect
o Population: is on the rise
· The global economy is recovering. The fiscal stimulus (like decreased interest rates) is working.
· Canada has had an increase in the demand for natural resources.
· The BIG risk is still the US consumers. The US accounts for 80% of Canada’s exports, 65% of British Columbia’s.
o This will be the biggest drag in the recovery
· BC Forecast: pretty flat, dragging along… slow gradual growth. However, over the past year business confidence in BC has improved.
· We have doubled our unemployment rate from 2007 (4%) to 8% in 2010.
· Tourism and Forestry is low with its lowest unemployment rate mid 2009. It is getting better.
· KEY CONCERN: mortgage financing market to tighten
o Short term interest rate to normalize
o Long term interest rates rise modestly as economic recovery slows
o Tightening of mortgage insurance rules to have material impact on demand.
§ April 19th: must qualify for the 5yr rate regardless of what rate you are going to have
· Overall; even if interest rates increase; the Kootenay region is still affordable.
· ALBERTA
o The drop in the market caused by nonlocal and Alberta buyers is 70%
o The low interest rates have increased local buyers
o Unemployment rates increased; however the Oil Industry is now picking up.
· FINAL THOUGHTS
o Recent market strength fuelled by local buyers due to increased affordability and pent-up demand
o Slow economic recovery expected
o Non local demand will slowly improve
o Prices to remain firm on attractive mortgage rates, population growth and lack of new home construction,
· THOUGHTS ON HST
o He didn’t seem to think that it will have that much of an effect on the local market.
o HST is applicable on new home sales above $525,000, and closing costs.
o The BAD thing is that it is not currently indexed to inflation.
Charlotte and Vivian will be attending the HST seminar next Wednesday March 24, 2010… Stay tuned for more!