“The first quarter of 2010 continued where 2009 left off, with more Canadians enthusiastically participating in a rejuvenated residential real estate market,” said Phil Soper, president and chief executive, Royal LePage Real Estate Services. “One of the earliest sectors of the economy to return to growth after the difficult recessionary period, the housing sector has been a prime beneficiary of low borrowing costs and improving consumer confidence.”

House prices were up across all key housing types surveyed by Royal LePage, with the average price of a detached bungalow in Canada rising almost 11 per cent to $329,209 in the first quarter year-over-year, while standard two-storey homes rose 10.3 per cent to $365,141 and standard condominiums increased 10.9 per cent to $228,963.

While some analysts have described house price increases over the past 12 months as a national housing boom, an analysis of Royal LePage data from Q1 2008 through Q1 2010 shows three different patterns of house price trends in Canada’s major cities:

* a rollercoaster effect in which prices dropped sharply then rose dramatically to levels that exceed pre-recessionary prices (Toronto, Vancouver and Victoria);
* non-stop growth markets, which were generally resilient through the downturn with incremental price appreciation over a two-year period (Halifax, Ottawa, Regina, Saint John, St.John’s and Winnipeg); and
* level markets, where house prices have remained relatively unchanged (Calgary, Edmonton, Moncton and Montreal).

“National averages from our first quarter report are not particularly useful in painting a picture of the country’s neighbourhood real estate stories. House sale data from the past two year period shows tremendous variances in terms of how different cities reacted to the recession,” Soper said. “In Vancouver and Toronto, for instance, the dramatic unit sales fluctuations exhibit a significant degree of market irrationality: inordinately fearful when faced with poorer markets; and overly enthusiastic when the tables turned. Montreal is an example of a city where the market has been much more stable and homeowners there seem quite happy with the relatively slow pace of change.”

“Even in our most frenzied pockets of market activity, the inevitable rise in interest rates coupled with home price appreciation will rein in demand as affordability erodes. Expect house prices to continue to rise, but the rate of appreciation should ebb steadily, month by month, throughout the remainder of the year, as balance returns to the industry,” concluded Soper.

Source: Royal LePage Real Estate Services

Royal LePage compared first-quarter house prices from 2008, 2009 and 2010 to show the variances in market trends across Canada. While cities such as Toronto and Vancouver rebounded dramatically from the price declines brought on by the recession in late 2008 and early 2009 – producing a rollercoaster effect – other markets such as Montreal have shown greater stability and steady year-over-year growth.

In addition to strong price appreciation in the first quarter of 2010, the volume of sales also increased year-over-year as pent-up demand from constrained supply of homes for sale in 2009, coupled with unseasonably warm weather, prompted a spike in home sales in the country’s largest housing markets from January through March.
Regional House Price Data

Royal LePage’s latest quarterly House Price Survey shows the strongest growth in year-over-year increases in Vancouver, where detached bungalows were up 21.8 per cent over 2009, to $906,045, standard two-storey houses rose 19.2 per cent to $987,500 and standard condominiums increased 15.7 per cent to $470,500. Because of strong demand, first quarter unit sales in Vancouver were nearly double those of last year. Victoria home prices also showed strong growth year-over-year, with detached bungalows up 12.9 per cent to $511,400.

In Ontario, home prices rose across all key housing types in all of the markets surveyed by Royal LePage, with detached bungalows and standard two-storey homes in Toronto seeing some of the largest gains. Greater Toronto home prices rose an average of 10 to 13.3 per cent year-over-year, with detached bungalows reaching an average price of $459,107 in the first quarter. Ottawa price appreciation ranged from 8 to 11.1 per cent year-over-year, with standard two-storey homes averaging $346,833 in the first quarter.

In Montreal, where average prices increased between 7.2 and 7.6 per cent year-over-year, a standard two-storey home was $355,109 in the first quarter of 2010. The real estate market has been extremely active on the Island of Montreal. Low inventory, combined with the presence of first time buyers and consumers’ desire to beat the expected interest rates hikes have contributed to an increase in average house prices for the first quarter of 2010.

In the Atlantic Provinces, house price appreciation was generally modest, with the exception of St. John’s, Newfoundland, which saw significant increases year-over-year as prices for the three key housing types rose between 17.6 to 18.4 per cent. The average price of a standard two-storey home in St. John’s increased to $313,775 in Q1 2010. Saint John, New Brunswick, also showed strong growth in detached homes, with bungalows up 16 per cent year-over-year to $233,775. Halifax also showed year-over-year price appreciation across all housing types, with standard two-storey houses up 6.8 per cent to $278,267.

Strong economic performance in Saskatchewan continued to bolster the housing market in Regina, where the average standard two-storey house increased 9 per cent to $267,000 in Q1 2010. The city’s limited supply of homes for sale – inventory is at 60 to 70 per cent of 2009 levels – is prompting multiple offers. Meanwhile, similar market dynamics in Saskatoon are putting upward pressure on prices, with standard condominiums seeing year-over-year price gains of 28.3 per cent, to $240,000. Prices for detached bungalows increased by 4.3 per cent in Regina and standard two-storey houses increased 9 per cent.

Average prices in Winnipeg jumped between 9.6 and 11.9 per cent year-over-year, with detached bungalows reaching $259,313 in the first quarter. Price appreciation is being driven by limited inventory and active first time buyers taking advantage of low interest rates.

Housing markets in Alberta continued to recover in the first quarter of this year. Although still averaging lower than pre-recession prices, all housing types in Calgary saw year-over-year price increases ranging from 7 per cent to 10.6 per cent. In Edmonton, home prices remained flat or increased year-over-year, with standard two-storey homes experiencing the largest increases at 5.2 per cent.
About the Royal LePage House Price Survey

The Royal LePage House Price Survey is the largest, most comprehensive study of its kind in Canada, with information on seven types of housing in over 250 neighbourhoods from coast to coast. This release references an abbreviated version of the survey, which highlights house price trends for the three most common types of housing in Canada in 80 communities across the country. A complete database of past and present surveys is available on the Royal LePage Web site at www.royallepage.ca. Current figures will be updated following the complete tabulation of the data for the first quarter. A printable version of the first quarter 2010 survey will be available online on May 7th, 2010. Housing values in the Royal LePage House Price Survey are Royal LePage opinions of fair market value in each location, based on local data and market knowledge provided by Royal LePage residential real estate experts. Historical data is available for some areas back to the early 1970s.

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At my real estate seminars I am often asked by my students what area of the business they should study first. With so much to learn and so many different niches it can sometimes seem overwhelming for many new investors. I see a lot of investors flounder the first couple years because they don’t know where to spend their time. I started buying rental properties and quickly learned this was not the niche to begin with. Likewise, I spent a lot of time studying areas of the business which were meant for year three and four of my development. I strongly urge my students and most investors to start out wholesaling and rehabbing until you build up significant capital reserves. However, whatever your niche of choice is you must understand and spend significant time studying how to find deals. In fact, FINDING DEALS SIGNIFICANTLY BELOW MARKET VALUE is your number one job. In order to do this you must begin to think of yourself as a marketer first and real estate investor second. So congratulations you are NOW A MASTER MARKETER not a real estate investor.

Real Estate Investing Basics Tip #1 – The Best Investors Understand Marketing

Marketing is the first area of the business you should study as a beginning real estate investor. Marketing is what makes the phone ring and generates leads. Leads are the lifeblood of your business. They are the oxygen your business breaths. The more leads you have the more money you will make. If you don’t have leads, then you won’t buy any properties. If you don’t buy any properties then you can’t make any money. If you can’t make any money then you can’t build a business. As a result you should spend the majority of your time figuring out how to get your phone to ring with motivated sellers. (The same thing can be said for dating!)

Successful marketing is an art, and those who understand marketing set themselves apart from other investors. There must be a mindset shift as an investor. You are not in the business of flipping homes. You are in the business of generating leads from people who want to sell their home under market value. If you can do this you will control the market and you will figure out the rest of the business very quickly. If you have a potential $80,000.00 dollar pay day on the other end of the phone believe me you learn quickly. (Ask me how I know this!)

There are many different forms of marketing you can utilize to get your phone ringing. Direct mail, billboards, TV, cold calling, and networking are all marketing strategies you can use to find deals. The key is to narrow down your market and find your target, develop a compelling message with an irresistible offer, and consistently touch these people with multiple marketing mediums. Then you will want to develop marketing systems so you can repeat this process over and over again.

Real Estate Investing Basics Tip #2 – Wholesale Properties to Build Your Cash Cushion

Once you find the deal now you have to find someone who is willing to buy the deal from you at a higher price. This is where wholesaling comes into play. Wholesaling is the business of finding bargains and selling the deals to bargain hunters at a higher price. You are not adding value to the property. Wholesaling properties should be essential part of every real estate investors business. It is a way to generate income with little to no risk. Many times, you never take ownership of the property – you simply are the transaction coordinator. In essence, you are bringing a buyer and a seller together. Through your marketing efforts, you locate deals and then you assign them to other investors that you locate through your various forms of marketing. If your marketing machine is in motion, you should have no problem finding buyers. Successful marketing and networking in the real estate community will enable you to find wholesale buyers.

Real Estate Investing Basics Tip #3 – Rehabbing for Large Profits

Rehabbing is when you redevelop the property yourself instead of wholesaling the property to someone else. This is where the larger profits lie. The reason is you will be selling the property to a retail buyer who will be willing to pay full market value for the property as opposed to a another investor who is looking for a discount.

Rehabbing is an entire business in itself and there is a lot you need to learn about this niche. It is important if you choose to include rehabbing in your business that you spend time educating yourself first. Learning pricing of labor and materials as well as whom are the qualified contractors in your area is essential to rehabbing properties.

Being able to add value to properties through renovations is a not only very profitable, but also very rewarding. You are providing a great service, not only to the city in which you do business, but also to the end buyer of your newly remodeled home. When you become experienced at rehabbing you will have the confidence to be able to take on projects that many people would never even consider. This separates you from the other investors and creates more opportunities for you in that real estate market.

At the same time, bond yields taken as a composite, showed only around 5% returns. Better yields were riskier, while safer bonds returned lower yields.

During the same time period, real estate investors were realizing much more attractive returns due to the multiple income streams from real estate investment: