The Winter Olympics may be responsible for B.C.'s low house resales in February.

Photograph by: Jason Payne, PNG, Canwest News Service

Home resales in Canada fell in February for a second straight month, with the biggest drop recorded in Vancouver, although purchasers were still higher on the year, the Canadian Real Estate Association said Monday.

The February decline in Vancouver and other parts on British Columbia was offset by "an equally large gain" in Toronto, CREA said.

The industry group said 42,799 units sold on a seasonally adjusted basis in February, down 1.5 per cent from the previous month, reflecting how "national sales activity has slowed while new listings continue to rise, resulting in a more balanced national resale housing market."

Sales in British Columbia were down 13.3 per cent in February from a month earlier, while Ontario posted a 3.3 per cent gain. There were 600 fewer houses sold in Vancouver in February than in January, and sales in Toronto rose by 648 units.

Year-over-year, residential sales were up 44 per cent from 2009, with Ontario and Quebec setting records, but national gains in sales activity were smaller than in the previous three months.

"Since a year will soon have elapsed following the recessionary decline and subsequent rebound for the Canadian resale market, year-over-year comparisons are expected to continue shrinking," the report said.

Meanwhile, the average resale price of homes rose 18.2 per cent in February from a year earlier to $335,655, it said.

"The Olympic Winter Games may have impacted February sales activity in British Columbia, so activity for the province in March will be closely watched," said CREA president Dale Ripplinger.

"Activity is expected to remain elevated in Ontario and British Columbia over the first half of the year, with buyers looking to beat the introduction of the HST (harmonized sales tax, in July) and expected interest rate hikes."

Millan Mulraine, economics strategist at TD Securities, said the moderating trend seen in the first two months of 2010 will be "briefly reversed over the next two months as homebuyers affected by the recent changes in Canadian mortgage rules attempt to get ahead of the April deadline."

"After this, we should see the Canadian housing market move slowly back into a balanced-market position as higher mortgage rates and prices begin to temper demand."

In a separate report Monday, Ipsos Reid said a poll showed the number of first-time buyers in British Columbia is starting to decline as housing prices rise.

The poll found that 29 per cent of home purchasers during the first quarter of this year were first-time buyers, gradually trending down from 38 per cent at the same time in 2009, but still higher than in late 2008, when only 17 per cent were first-time buyers.

"Greater Vancouver, in particular, has seen a very rapid recovery in prices since the bottom of the market in the first quarter of 2009," said Hanson Lok, senior research manager for Ipsos Reid in Vancouver. "While low mortgage rates have kept monthly payments within reach for first-time buyers, escalating prices will push many potential first-time buyers back out."

The poll suggests 53 per cent of British Columbians feel it's a seller's market, up from 14 per cent a year ago, while 68 per cent say it's a good time to buy, a number that has fallen from a high of 76 per cent in September 2009.

The cost of owning a home increased slightly in the final quarter of 2009, with Vancouver remaining the least affordably city in the country, according to an RBC report released Monday.

"While home affordability deteriorated at the national level in the fourth quarter of 2009, the change was relatively modest overall," Robert Hogue, senior economist at RBC said in the release. "The effect of higher prices was largely mitigated by a small decline in mortgage rates and continued gains in household income."

The RBC Housing Affordability study measure represents the proportion of pre-tax household income needed to service the costs of owning a home; the higher the measure, the more difficult it is to afford a home. An affordability reading of 50 per cent means that home ownership costs, including mortgage payments, utilities and property taxes, take up 50 per cent of a typical household's monthly pre-tax income.

Nationally, the detached bungalow benchmark inched 0.3 per cent higher to 40.6 per cent. Vancouver was the least affordable at 69 per cent (up 1.4 percentage points), Toronto was at 49.1 per cent (up 0.1 percentage point). Calgary rated 37.1 per cent (up 0.1 percentage point) and Edmonton at 32.9 per cent (down 0.4 percentage points).

Home resales in Canada fell in February for a second straight month, with the biggest drop recorded in Vancouver, although purchases were still up significantly from a year ago, the Canadian Real Estate Association said Monday.

The February decline in Vancouver and other parts of B.C. was offset by "an equally large gain" in Toronto, CREA said.

The industry group said 42,799 units sold on a seasonally adjusted basis in February, down 1.5 per cent from the previous month, reflecting how "national sales activity has slowed while new listings continue to rise, resulting in a more balanced national resale housing market."

Sales in B.C. were down 13.3 per cent in February from a month earlier, while Ontario posted a 3.3-per-cent gain. There were 600 fewer houses sold in Vancouver in February than in January, a figure that was likely a reflection of a slowdown in activity due to the Winter Olympics.

Year-over-year, residential sales were up 44 per cent from 2009, with Ontario and Quebec setting new records, but national gains in sales activity were smaller than in the previous three months.

"Since a year will soon have elapsed following the recessionary decline and subsequent rebound for the Canadian resale market, year-over-year comparisons are expected to continue shrinking," the report said.

Meanwhile, the average resale price of homes rose 18.2 per cent in February from a year earlier to $335,655, it said.

"The Olympic Winter Games may have impacted February sales activity in British Columbia, so activity for the province in March will be closely watched," said CREA president Dale Ripplinger.

"Activity is expected to remain elevated in Ontario and British Columbia over the first half of the year, with buyers looking to beat the introduction of the HST [harmonized sales tax in July] and expected interest rate hikes."

Millan Mulraine, economics strategist at TD Securities, said the moderating trend seen in the first two months of 2010 will be "briefly reversed over the next two months as homebuyers affected by the recent changes in Canadian mortgage rules attempt to get ahead of the April deadline."

"After this, we should see the Canadian housing market move slowly back into a balanced-market position as higher mortgage rates and prices begin to temper demand."

In a separate report Monday, Ipsos Reid said a poll showed the number of first-time buyers in B.C. is beginning to decline as housing prices rise.

The poll found that 29 per cent of home purchasers during the first quarter of this year were first-time buyers, gradually trending down from 38 per cent at the same time in 2009, but still higher than in late 2008 when only 17 per cent were first-time buyers.

"Greater Vancouver in particular has seen a very rapid recovery in prices since the bottom of the market in the first quarter of 2009," said Hanson Lok, senior research manager for Ipsos Reid in Vancouver. "While low mortgage rates have kept monthly payments within reach for first-time buyers and kept them in the market, escalating prices will push many potential first-time buyers back out."

The poll suggests 53 per cent of British Columbians feel it's a seller's market, up from 14 per cent a year ago, while 68 per cent say it's a good time to buy, a number that has fallen from a high of 76 per cent in September of 2009.

Home building moved into a higher gear in Metro Vancouver last month as the number of houses started surged to 1,402 units, twice the number posted a year earlier, Canada Mortgage and Housing Corp. said Monday. Starts in the first two months of the year were 77-per-cent higher than in the same period last year.

But the federal housing agency cautioned against getting too excited by February's homebuilding exuberance.

"The first few months of 2009 saw some of the lowest levels of homebuilding on record, so year-over-year comparisons are large," CMHC said.

"Home starts this year are forecast to be higher than 2009 but below the five-year average."

A few large multi-unit residential projects in Vancouver provided the biggest boost to February's starts, CMHC said.

Nationally, home building rose by a more-than-expected 6.1 per cent to 196,700 units in February, CMHC said.

That was up from 185,400 units in January and above economists' forecasts of 190,000 units for February.

"The gain in February housing starts was concentrated in the multiple starts segment, particularly in Toronto," said CMHC's chief economist Bob Dugan.

Urban housing starts were up nine per cent from January to 179,100 units on a seasonally adjusted basis, with multiple units rising 19.1 per cent to 89,900 and single starts increasing 0.5 per cent to 89,200 units.

Ontario recorded a 28.6-per-cent gain in February, while Atlantic Canada rose 14.3 per cent, the Prairie region increased 10.8 per cent and B.C. was up eight per cent.

Quebec saw housing starts fall 14.1 per cent. Housing starts in rural areas totalled 17,600

units in February, down from 21,100 the previous month.

Ian Pollick, economics strategist at TD Securities, said February's gain shows "the new-homes market is slowly coming back to life and may finally be benefiting from the resurgence in overall housing market activity."

"However, we caution that the pace of advance will likely be hard-pressed to eke out similar gains later in the year, mainly as a result of enthusiastic buyers attempting to close transactions ahead of the regulatory [new mortgage rules] and [harmonized sales] tax changes coming into effect mid-2010," he said.

"As such, this report likely overstates the true strength of the recovery in new residential housing, though it is safe to say that housing still remains a bright spot in Canadian economic activity."

February housing starts in Vancouver continued to bounce back from lows reached in 2009, with the number of new units breaking ground doubling last year's tally, according to the Canada Mortgage and Housing Corporation on Monday.

"Of course, last February in 2009, we were still in the darkest point before anything

started turning around. So you have to keep in mind that when you see that increase, it's back up from there," said CMHC senior market analyst Robyn Adamache. "But we are back up to a decent level of housing starts."

The CMHC pinned the February boost in the Vancouver area specifically to a few large-scale multiple-unit residential projects, plus continued strength in the number of new, single-detached residential homes. As well, more than 800 apartment homes were started.

"The important thing about what's going on is that we are seeing a level of absorption with sales of new units," said Adamache. "Builders see that not only the resale market is back, but now there are [sales] in new units. It's giving them the confidence to start new

projects."

Elsewhere in B.C., the Abbotsford area saw 37 new home starts compared to 28 a year ago. The province as a whole recorded an eight-per-cent gain in home starts compared to a national average of 6.1 per cent.

Ontario recorded a 28-percent gain in February, while Atlantic Canada rose 14.3 per cent and the Prairie region increased 10.8 per cent.

Homebuilders in B.C. and Ontario are racing to put supply on the market before the harmonized sales tax kicks in on July 1, said economist Pascal Gauthier of TDEconomics.

Added pressure is coming from buyers concerned about tighter qualifying standards on mortgages, which take effect April 19, and higher borrowing costs expected in the second

half of the year.

But February's housing starts show that supply is finally firming up at the same time that demand is poised to ease, Gauthier said.

"Come the second half and into 2011, it's likely to be a friendlier environment for buyers," he said.

With new-home supply rising and resale listings following suit, "price growth is going to soften up a bit," Gauthier said.

"If you're a buyer, you should exercise patience and look at the fundamentals.

"The five-year rate isn't going to shoot up 100 basis points overnight."

Nationally, new home construction has now roared back 76 per cent from the recession-level cyclical low, said BMO Capital Markets economist Robert Kavcic.

Few expect the current level of housing starts to be maintained.

"In the second half of the year, we should observe a level of activity near the demographic needs of roughly 165,000," said National Bank economist Matthieu Arseneau.

VANCOUVER SUN

Sentiment among would-be homebuyers continues to improve in B.C., according to an annual RBC home ownership study released on Monday.

The study reported that 36 per cent of B.C. residents in a recent survey conducted by Ipsos Reid said they are likely to purchase a home in the next two years, up from 26 per cent last year.

B.C. residents outpaced respondents elsewhere in the country with plans to put down the largest average down payment

-- $92,676 -- citing good prices and low interest rates as motivators.

"What we are seeing in B.C. is cautious optimism, tempered by a healthy dose of reality," said Kevin Lutz, regional manager at RBC.

Tsur Somerville, a real estate expert at the University of B.C., welcomed the news, but added: "I tend to view 'Are you planning to buy something?' as not the most useful kind of information because, 'Am I planning to do something?' depends on what happens.

"I am a lot more interested in what happens in the economy than how many people are thinking about doing something."

"What it does do, [however], is track how people are perceiving the market, and it sounds like people are moving from, 'It's overpriced and the world is going to collapse,' to 'Oh, interest rates are very good and the world is not going to collapse.'

"It's another form of describing conditions that we already know from sales and price movements and what is going on with interest rates," said Somerville, who is director of the centre for urban economics and real estate at UBC's Sauder School of Business.

"I think if the Bank of Canada raises interest rates a whole bunch, then this survey becomes rather worthless," he cautioned.

According to the poll, respondents across the country who said they are "very likely" to purchase a home in the next two years rose to 10 per cent from seven per cent two years ago.

Respondents aged 18 to 24 were particularly enthusiastic, with those saying they were very likely to buy almost doubling to 15 per cent from eight per cent in 2009.

After the record-low interest rates, increased supply and stable prices seen at the end of 2008 and in the beginning of 2009, the real estate market in Canada has been strong during the past 12 months. The average resale home in Canada reached $337,410 in December 2009 -- up 19 per cent from a year earlier --and sales were up 72 per cent, according to Canada Mortgage and Housing Corporation.

The poll of 2,047 Canadian adults was conducted online by Ipsos Reid between Jan. 8 to 13, 2010 and is considered accurate to within 2.2 percentage points, 19 times out of 20.

With a file from Julie Fortier,

i have a buddy who figures he made about $100,000 in the housing market in the past two to three years.

that's not a bad take, but i question whether he really made that much money. no, i don't believe he's lying about what he paid for his house or what he sold it for. i just think he forgot to include a few factors -- the transaction costs associated with his move.

luckily, he's smart enough not to live in toronto, the only jurisdiction in Canada with two land transfer taxes -- one going to the municipality and the other to the province. But even without those extra charges, once you factor in real estate commissions, legal fees and other closing costs, as much as $35,000 of his profit will have been eaten away. so that leaves $65,000, you say. not really.

he made a decision to downsize. he bought his home for about $400,000 and realized about a 25% return in a very short period of time. impressive. But he also sold a previous home. if that first home was worth about $300,000 when he moved, based on a 25% increase in price, he still would be up $75,000 if he had just stayed put. the way i figure it, all this moving has cost him roughly $10,000. of course, there are other reasons for a move, such as a changing family situation, that cannot be helped and you have to bite the bullet.

But continuously selling and buying homes can lead to destruction of wealth over your lifetime.

on average, Canadians move about 4.5 to 5.5 times in their lifetime, according to the Canadian association of accredited Mortgage Professionals.

all that moving could easily wipe out $150,000 in extra costs.

so why do it? "it really depends on what you are accomplishing by the move," says Don lawby, chief executive of Century 21 Canada, pointing out if your company moves you far enough you can write off any costs they don't cover.

"sometimes, you move because of circumstances of life. a child may come along that you didn't plan on. somebody might die. You could have a health problem. there could be a divorce."

Yes, there are ways to make money by moving constantly, such as putting so-called "sweat" equity into a house, improving its value. i wish i were a fix-it guy. since there are no capital gains on a principal residence, this might be the only legal way to make money in this country without paying tax.

" You can make money [buying and selling houses] if you have lots of knowledge, but the average person doesn't. You can't pay the regular rate for a plumber, regular rate for an electrician and make money," says Mr. lawby.

Derek holt, an economist with the Bank of nova scotia, says if real estate commissions come down it would make moving more palatable. he estimates if the Canadian real Estate association's lock on home listings is broken, consumers would see a drop of about $15,000 in costs on each transaction.

the Competition Bureau has lodged a complaint with the Competition tribunal about CrEa's practices. no date has been set for the hearing as of yet.

"[Former U.s. Federal reserve chairman] alan Greenspan once made the comment that the costs of moving absorb 8% of your home equity and that's not far off the Canadian experience. it might be higher," says Mr. holt. "You don't want to do that too many times or you could blow a quarter or a third of your equity."

Despite the expense, Mr. holt said the no. 1 concern for most Canadians when they are moving is whether they can afford the carrying costs on their new home. in his own life, Mr. holt said he's trying to limit how many moves he makes.

"We moved three years ago and my next move is going to be feet first out the door," said Mr. holt. that's one move somebody else will be paying for.

DUSTY WALLET: always try to negotiate the commission rate with your real estate agent. if a buyer and seller are close to agreeing on a price, there is nothing that says the agents can't dip into their commission to bring the two par ties closer toge ther and close a deal. DW is also curious to know if consumers have found it easier to negotiate a lower commission now that the Competition Bureau has the real estate industry in its sights.

gmarr@nationalpost.com

"The outlook for housing starts in B.C. is similar to the national trend in terms of the forecast increase of housing construction," Carol Frketich, CMHC's regional economist for B.C., said in an interview.

"The difference is, we'll see a stronger rebound in housing starts. For B.C., we're forecasting a 37-per-cent increase. Nationally, it's about a 15-percent increase."

According to the report, the forecast for B.C. is for 22,050 starts this year, with a range between 20,200 and 24,500, and 26,200 starts in 2011.

That's up from 16,077 starts in 2009, but still below the 10-year average.

"B. C. saw a sharper downturn and we'll see a rebound of similar magnitude," Frketich said.

The demand for new home construction will benefit from an improved economy and labour market and lower interest rates, she said.

Nationally, rising housing starts are expected to put a lid on home prices this year after their 19-per-cent surge in 2009, CMHC said.

Canada-wide, between 152,000 and 189,300 housing starts are expected in 2010, up from 149,081 units last year.

Describing the current state of affairs as a sellers' market, CMHC said the relative lack of new listings for existing homes has pushed some of the demand into the new home market, which helps explain the forecast for higher housing starts activity in 2010.

But it added that it expects prices to remain stable in 2010 around the Multiple Listing Service average reached in January this year of $328,537, as the new housing stock brings balance back to the market.

As well, tighter requirements for mortgage lending recently imposed by Ottawa as fears of a housing bubble mounted "will help moderate housing activity as some potential buyers will have to save a larger down payment or consider a less expensive home," CMHC chief economist Bob Dugan said.

CMHC said the strong pace of existing sales over the last three quarters of 2009, a carry-over from the two previous quarters, will not be sustained as pent-up demand is exhausted and financing costs rise later in 2010.

It forecasts existing home sales will be in a range of 455,350 to 509,900 units in 2010.

In 2011, housing starts will total 156,400 to 205,600 units and prices will rise again modestly, with prices up modestly, the report said.

bmorton@vancouversun.com with a file from the Financial Post

Housing starts will rise in 2010, putting a lid on home prices this year following their 19-percent surge in 2009, the Canada Mortgage and Housing Corp. said Tuesday.

Between 152,000 to 189,300 housing starts are expected in 2010, up from 149,081 units last year, the national housing agency said.

Describing the current state of affairs as a sellers' market, CMHC said the relative lack of new listings for existing homes has pushed some of the demand into the new home market, "which helps explain the forecast for higher housing starts activity in 2010," CMHC said.

But it added that it expects prices to remain stable in 2010 around the Multiple Listing Service average reached in January this year of $328,537, as the new housing stock brings balance back to the market.

As well, tighter requirements for mortgage lending recently imposed by Ottawa as fears of a housing bubble mounted "will help moderate housing activity as some potential buyers will have to save a larger down payment or consider a less expensive home," said CMHC chief economist Bob Dugan.

CMHC said the strong pace of existing sales over the last three quarters of 2009, a carry-over from the two previous quarters, will not be sustained as pent-up demand is exhausted and financing costs rise later in 2010.

It forecasts existing home sales will be in a range of 455,350 to 509,900 units in 2010.

In 2011, housing starts will total 156,400 to 205,600 units and prices will rise again modestly, it said.

When veteran interior designer Robert Ledingham embarks on a project, he takes his inspiration not only from within the space of a building's walls, but also from what's beyond them.

Ledingham, who has provided interior-design services to local homeowners and builders and developers for four decades -- work that has generated more than 26 awards -- looks for much of that inspiration from nature: water, mountains and the flora and fauna of B.C.

"There is definitely a difference between the East Coast look and the West Coast," says Ledingham.

"In the West, people's homes reflect the indoor/outdoor relationships."

Easterners, he says, prefer a more formal living space than people on the West Coast.

"There's an organic look to home decor here ... people tend to decorate their homes casually elegant, so that it's a home where they feel they can put their feet up," says Ledingham, who owns Ledingham Design Consultants and has seen his work featured in many architectural design magazines and books, including Spectacular Homes of Western Canada.

It was Ledingham Sheila Tripp and her husband turned to when they returned to B.C. after a four-year California sojourn and decided their home on the West Vancouver waterfront was looking tired and dated.

"We rented out our home while living in California and when we returned, we realized our 20-year-old house really needed freshening up," says Tripp, who had seen Ledingham's work in a number of home and garden journals. She gave him a call, and the two met the next day.

"After a few meetings, he gave us suggestions and incorporated our vision into some designs."

Tripp loved many of the designer's suggestions, but there were some she rejected.

"Bob didn't pressure us to go with an idea we didn't like; instead, he had alternatives he presented to us," she says.

The interior designer -- the first Canadian to receive the International Interior Design Association Leadership Award, as a 2006 story on an honorary doctorate granted by his alma mater, the University of Manitoba, reports -- takes the necessary time to get to know prospective clients so that his recommendations will reflect their personalities, lifestyles, and wants and needs.

And he derives pleasure from helping clients like Tripp and her husband bring their vision to life.

"Mother Nature provided the Tripps with a stunning palette. I helped to bring that into their home," he says.

"There were many existing pieces of furniture, but soft furnishings had to be added to the living room and den," says Ledingham. "A variety of architectural modifications were suggested, as well as redesigning the outdated fireplace facades. A kitchen renovation was already in progress when we took the project on."

When asked if he's ever had to walk away from a project, he laughs and nods. He likens the relationship between an interior designer and client to that of a married couple: "it's very close and personal and often lasts for more than a year.

"When conflict arises, sometimes you both have to throw up your hands and say the best thing is to part ways," he says, noting that delays can be stressful, yet are unfortunately often unavoidable. "However, most interior designers try very hard to work through problems, but sometimes personalities conflict and it's best not to prolong it."

At Country Furniture, interior decorator Marlene Seguin of Vancouver is also in the business of helping people beautify their homes. "I like to help customers take their house and create a home," says Seguin.

She's often asked by clients to work alongside a contractor to help with layout. She may be called upon to do something as simple as accessorizing a room -- to decide what to place on a table or countertop -- or to design a room around an anchor piece.

"For example, a client had an antique sideboard inherited from their grandmother and they didn't know what furniture would look good with it," she says.

She says interior decorators and designers can offer clients a "new set of impartial eyes."

"When you walk into your house day in and day out, sometimes you can't see anything other than what you have, you can't picture any other way for the room or rooms to look," Seguin says. "I can help give a fresh perspective to a client's space and create ones that reflect the homeowner's personality.

"A home should almost scream who the person is who lives there."

With new mortgage rules, a new harmonized sales tax in some provinces and the possibility of higher interest rates set to kick in this summer, home buyers are on a tear that is likely to keep markets busy leading to this summer, according to the Re/Max Market Trends Report 2010 released Wednesday.

The report, which examined real estate trends in 16 markets across the country, found that unusually strong activity in January -- traditionally one of the quietest months of the year -- has led to a sharp decline in active listings in 81 per cent of markets surveyed. Too many buyers and not enough homes will probably be the problem, according to the report.

Markets experiencing the tightest inventory levels include Toronto (down 41 per cent), Kitchener-Waterloo (down 33 per cent), Ottawa (down 30 per cent), Victoria (down 30 per cent) and Metro Vancouver (down 27 per cent), which also had some of the highest year-over-year sales gains.

The highest year-over-year sales gains were reported in Metro Vancouver (152 per cent), Kelowna (121 per cent), Greater Toronto (87 per cent), Victoria (69 per cent), Hamilton-Burlington (58 per cent), London-St. Thomas (55 per cent) and Calgary (47 per cent), the report said.

However, those figures for Metro Vancouver represented a slowing in sales in January when compared to the overheated final quarter of 2009, Cameron Muir, chief economist for the B.C. Real Estate Association, said in an interview.

"If you look at the sales-to-active-listings ratio, which is the measure of hotness or coolness of the market, we saw that come down in January," Muir said.

Metro Vancouver's ratio of sales listings hit 26 per cent in January, meaning that sales for the month were the equivalent of 26 per cent of the total inventory available, which is almost within balanced market conditions, according to Canada Mortgage and Housing Corp. definitions.

During the last three months of 2009, sales equalled 31 to 33 per cent of homes available in inventory, which was seller's-market territory.

Muir said the last time Metro Vancouver's sales-to-active-listings ratio was as high as it was in the fourth quarter of 2009 was midway through 2006. January's year-over-year decrease in active listings was compared to a month that had a high number of houses on the market.

"But last month we saw sales edge lower, we see active listings edge a bit higher and new listings are fairly healthy in the marketplace," he said.

Western Canada dominated the list of centres with the greatest increases in price, with Victoria home prices jumping 25.5 per cent in January compared with the same month a year before. Kelowna jumped 22 per cent and Greater Vancouver rose 19.5 per cent. St. John's saw an increase of 23 per cent and Toronto rose 19 per cent.

depenner@vancouversun.com

British Columbia's commercial real estate market is starting to look more like a seller's market moving through 2010, with more capital available for investors, and investors willing to accept lower returns, according to one commercial realtor.

Avison Young this week released its 2009 year-end results, which saw commercial real estate transactions gather steam in the latter half of the year, particularly among retail offerings.

Avison Young counted 16 retail-property sales worth more than $5 million in the second half of 2009. The largest were the sale of Surrey's Grandview Corners for $182 million to RioCan REIT and the Canada Pension Plan, and the sale of a half-interest in Nanaimo's Woodgrove Centre for $103 million.

"I think it's going to be a very active market [in 2010]," said Bob Levine, a principal in Avison Young's Vancouver office.

"There's lots of [investment] money looking, and probably more vendors out there than there have been for a couple of years, because the perception is that [capitalization] rates are reasonably low."

A lower capitalization rate means that buyers are willing to pay higher prices and accept a lower rate of return. Capitalization rates at the start of 2010 are almost as low as they were at their lowest point in early 2008, Levine said.

Levine said the return of institutional and investment-trust capital to the market has helped drive demand for investment real estate.

The recovery of stock markets has bolstered the stock holdings of institutional investors, giving them more leeway to consider real estate investments, Levine said. Likewise, he added, real estate investment trusts have been able to raise new pools of capital.

Levine said banks have even been more willing to extend commercial mortgages, albeit with substantial down payment requirements. "I would say private capital has always been [in the market], but the institutional capital and public capital has come available because of the rebound in the stock market," he said.

Levine said he is untroubled by the shrinking capitalization rates, particularly in Vancouver, because there is still relatively little supply of unleashed commercial properties available for buyers to purchase.

In total, for sales of commercial property worth more than $5 million, Avison Young counted $1.36 billion worth of sales in B.C. in 2009, up from $1.27 billion in 2008.

depenner@vancouversun.com