At a July Annual Meeting, strata owners were astonished to discover their council had donated $500 of the strata’s money to a political party in the recent federal election. Not only were the owners outraged at the expense, but support of a specific party on their behalf usurped their democratic rights and freedoms. One owner was quoted as saying, “not only have you decided our minds for us, but if we chose not to support your decision by not paying our fees, you could lien or sell our homes, the final blow to democracy.” Even though the strata council have made compensation for the error of their ways, an atmosphere of distrust is now deeply felt among the owners.

Strata Law: Common expenses, which the strata collects funds for, are defined as related to the common property and common assets of the corporation or required to meet any other purpose or obligation of the strata corporation. Fundamental freedoms of the Charter of Rights, amongst others, are a freedom of conscience and religion, freedom of thought, belief, opinion and expression. The Strata must comply with every enactment of law.

Tips: Every decision a council makes has some risk associated with it, but deciding to spend money not authorized by the corporation, allowed by the Act, or without emergency cause is out-right dangerous. Donations to community organizations, social clubs, religious institutions, or political organizations to name a few, stretches the definition of common expenses. If the strata wishes to support a local organization, a fully debated and supported resolution at a general meeting would be wise, but there is no guarantee that owners’ rights would not be violated, the strata would be compliant with the Act, or that an owner(s) would challenge the decision.

Tony Gioventu is the executive director of the Condominium Home Owners Association (CHOA). Contact CHOA at 604-584-2462 or toll-free 1-877-353-2462, fax 604-515-9643 or e-mail [email protected]

© The Vancouver Province 2004

No matter what subject I write about, the questions I’ve received in the last two months are always the same: Is it a bubble? Is it over? Is it turning into a buyer’s market? Should I sell now and buy back when it crashes?

This week, in particular, I received a number of e-mails pointing to a 19-per-cent decline in the number of sales over July 2003. Is this the beginning of the downturn?

I guess I always have the same answer: It isn’t about the market; it is the deal you personally make, period.

Of course, people don’t want to hear that. It implies that you actually have to do some work, ask yourself some serious questions, such as: Do I want income? Do I want to earn a profit through a quick sale? Have I identified an area I actually want to own in? Do I know what exactly I want to own?

No, we want to know whether it is a good market, and then we feel better. Although I have yet to meet anyone who said: “I bought a lousy deal, but goody, I bought it in a good market.”

Of course, I don’t blame them, because to some extent they are right. I teach in my real-estate investment courses that it is timing — not location — that has made the biggest profit for the average person.

But it is timing plus understanding oneself that really matters. And that can be difficult. Who do you listen to for advice?

What I have learned over the last 37 years of buying and selling real estate is that at any time there are two prevailing camps debating questions about real-estate markets.

I have run a real-estate talk website, www.realestatetalks.

com, since 1995 where people from all over the world debate real-estate issues. And whether they are debating conditions in B.C. or in California, there are clearly two camps.

Some see every statistic as an opportunity to forecast hell, and some will always forecast nirvana.

And so, I have learned that there are the “yeah, butters” and there are the “pony seekers.” The latter refers to the old story where a mother saddled with twin boys that are total opposites — one the eternal optimist and the other always miserable — takes them to the psychiatrist, who comes up with an astounding solution.

On their birthday, he says, put the pessimist into a room full of new toys and give the little optimist a room full of horse manure. The mother does this and on the birthday peeks into the pessimist’s room. There he is, complaining: “I have so many toys I don’t know what to start with, and I bet they’ll break.”

In the little optimist’s room, there he is, with a shovel, flying thorough the horse manure, shovelling madly. The mother says, “Sweetheart, what are you doing?” The little optimist cries, “Mom, you can’t fool me; with this much horse manure, there just has to be a pony in here!”

I am always accused of looking for that pony, as far as investing in real estate is concerned, just as there are others forever looking for the negative side of things.

In today’s market, the “yeah, butters” point to higher interest rates, falling volume or some other negative statistic, and come up with a long-term conclusion that “all will be bad.” Instead, I look at the most under-reported inflation in history and conclude that hard-asset real estate will be much higher in the future.

(Consider: real estate in Britain is climbing by 20 per cent year over year; Vancouver‘s average single-family home is up 22 per cent to $521,782; Vancouver Island prices are 18 per cent higher; the price of oil has skyrocketed; lumber has almost doubled in a year; we’re in a construction boom and the Olympic building has not even started yet.)

I see the pony, while others “yeah, but” away at the statistics.

No matter who the debaters are, the real-estate market just is. It has its ups and its downs, and it will continue to have its ups and downs.

Nothing goes up or down in a straight line forever. But, if you want to create passive income through owning rental property, ask yourself the above questions, do some learning and growing, and go for it.

If you agree that we live in an inflationary world, then this great hard asset will continue to perform in Vancouver just as it has for 50 years regardless of this or that market condition. Just look around at your friends and neighbours and fellow workers, and look at those with real estate and those without. Who did better over the years?

I’ll say it again…. Keep looking for the pony.

Ozzie Jurock holds his monthly Real Estate Action Groups in Vancouver, BC and can be reached at 604-683-3870 or [email protected]

© The Vancouver Sun 2004

Over the last year, housing continued to be one of the faster-growing sectors of the economy, supported by high levels of new construction, renovation and existing home sales, according to the 2004 edition of the Canadian Housing Observer.

The second edition of the Observer, an annual review of the state of Canadian Housing, was released this week by Canada Mortgage and Housing Corporation. It found that while improvements in housing affordability have been recorded since the mid-1990s, 1.7 million households continue to have difficulty finding acceptable housing.

Other findings in the report include:

– Approximately two-thirds of all Canadian households are homeowners. Homeownership rates have been increasing in Canada in recent years, rising from 63.6 per cent to 65.8 per cent between 1996 and 2001.

– While Canadian homes are getting larger, the average number of people per household is getting progressively smaller, shrinking from 3.9 in 1961 to 2.6 in 2001. Yet, total residential energy use increased by 3.7 per cent between 1990 and 2001.

– Spending on residential investment and home repairs contributed $73.3 billion to the Canadian economy in 2002, with new construction and related costs accounting for almost half of this total.

– Existing home sales set a new record in 2003, as 439,000 dwellings were sold through the Canadian Real Estate Association’s Multiple Listing Service.

© The Vancouver Sun 2004

Sparked by continued demand for affordable accommodation, housing starts in Greater Vancouver increased to 2,288 units –or 52 per cent — in August, compared to the same month last year, according to figures released yesterday by the Canada Mortgage and Housing Corporation.

It was the fifth highest total on record in the region and was surpassed only by May’s total of 2,479 units, which was the third highest ever.

The record of 2,681 was registered in September 1989.

Multi-family dwelling starts accounted for most of the increase, rising 76 per cent with 1,767 units getting under way last month. The new data also showed that housing starts on a year-to-date basis were equally impressive.

Burnaby-New Westminster had the greatest activity, with a 218-per-cent increase in the January to August period, compared to the same period last year.

Also booming were Langley district (89 per cent) and the city of Vancouver (49 per cent).

“The region has a constrained land supply,” said Cameron Muir, CMHC’s market analyst for Greater Vancouver.

“That prompts a more intensive use of land. In the city of Vancouver you see this in high-rise condominiums. In the suburban areas, it takes the form of increased townhouse developments.”

Muir said that even with interest rates bumping up a quarter point earlier this week, historically low mortgage rates continue to attract buyers. But with prices for single-detached homes very high, condos and townhouses have become the popular choice.

To illustrate, he says the number of new condo apartments in Greater Vancouver that are currently vacant is less than 100, whereas in August 1999, there were 2,600.

Howard Steiss, vice-president marketing for developer Adera Group, said he’s seen hot markets like this before. “The construction starts didn’t match the demand when it came on and now the supply side is responding,” he said.

Nationally, the seasonally adjusted annual rate of housing starts was 241,500 in August, up from 218,600 in July.

Meanwhile, Statistics Canada said favourable markets and higher costs for materials and labour continued to push up prices for new houses in July.

They increased by six per cent compared with July 2003.

Prices in Victoria rose by 9.3 per cent, the largest 12-month increase.

© The Vancouver Province 2004

A condo building boom helped B.C. lead all regions of Canada in increases in the seasonally adjusted annual rate of urban housing starts in August, Canada Mortgage and Housing Corp. reported Thursday.

Urban housing starts rose 33.8 per cent in B.C. in August to a seasonally adjusted annual rate of 37,200, “due entirely to the rise in multiple starts,” CMHC said.

But the national rate for urban housing starts rose just 11.9 per cent (to 214,700 units) in August, a healthy increase but small enough to prompt analysts to suggest the rate may have peaked.

Royal Bank assistant chief economist Derek Holt forecast housing starts to cool off by the end of next year. “The ability of the housing sector to contribute to overall economic growth will have turned the corner and actually we’re looking at it becoming a drag at that point,” Holt said.

“It’s still very strong, very high and elevated levels of activity, and blows away most of the years in which we had relatively depressed house construction numbers in the 1990s.” Holt attributed the decline to an exhaustion of pent-up demand, the effect of high house prices and increasing mortgage rates.

The Crown corporation said the increase nationally was, as in B.C., mainly due to the high level of starts of buildings such as condominiums, which increased 35.9 per cent to 114,600 in August, while individual home starts fell 6.9 per cent to 100,100 on a seasonally adjusted annual basis.

“High activity in the resale market also confirms that demand for home ownership remains strong while creating spill-over demand in the new-home market,” said Bob Dugan, chief economist at CMHC’s market analysis centre.

© The Vancouver Sun 2004

CREDIT: Ward Perrin, Vancouver Sun Full-steam ahead: Barry Cavanagh installs a window at the Polygon development at 33rd Avenue and Arbutus.

The value of residential building permits issued in Greater Vancouver dropped more than 50 per cent in July after soaring to unprecedented levels in June.

Industry observers said the decline was largely the result of developers fast-tracking applications to beat a Vancouver-wide development cost levy that took effect July 1. Some developers also sought early approvals to take advantage of summer building conditions.

“The housing market is still in good shape,” said Helmut Pastrick, chief economist for B.C. Credit Union Central.

“A drop in building permits was expected in July, once we saw the sharp, sharp run-up in June. We expect multi-unit residential permits will also be on the weak side in August, but again that’s a reflection of a very strong June.”

Across Canada, the value of both residential and non-residential building permits issued in July fell 11.4 per cent to $4.8 billion, from a record $5.4 billion set in June, Statistics Canada reported Tuesday. However, July was still the second-highest month on record.

“The largest decline was in British Columbia, down 41.5 per cent to a still healthy $474 million,” StatsCan said in its monthly survey of building permits, released Tuesday.

“This followed a record high in the residential sector in June, which was spurred by permits for multi-family dwellings.”

StatsCan said the national housing market remained exceptionally strong, staying above the $3-billion mark in July — the third highest monthly total on record.

“Very advantageous mortgage rates, the positive employment situation and an increase in disposable income helped fuel the feverish demand for new dwellings,” the agency said in a news release.

In the non-residential sector, after two monthly gains, the industrial component fell 1.6 per cent to $301 million, but remained higher than the monthly average this year.

StatsCan blamed the slide on lower demand in British Columbia‘s mining and agricultural building category, but, in a telephone interview from Ottawa, statistician Etienne Saint-Pierre cautioned: “The figures for mining and agriculture are very, very volatile, so it is not surprising to see big changes from month to month.”

He noted that B.C. shows the country’s strongest gain in non-residential construction so far this year, up 10 per cent to $1.2 billion.

In the Lower Mainland, total building permits were down 69.7 per cent in Abbotsford and down 50.6 per cent in Vancouver compared to June.

Victoria was down 23.6 per cent.

Peter Simpson, president of the Greater Vancouver Home Builders’ Association, said the July drop was expected because of the Vancouver development fee deadline and because many developers fast-track permits to take advantage of dry, warm weather for construction.

Leading B.C. developers were also unperturbed by the numbers.

“We are very active in the market right now and we have been very busy for the past two years,” said Neil Chrystal, president of Polygon Homes Ltd. “We think B.C. has so much going for it, with a sound economy, low interest rates and positive in-migration.”

Dave Podmore, president of Concert Properties, said the market remains very strong and Concert has still to apply for permits for three projects in very advanced design stages.

While sales traditionally slow during the summer vacation season, Tracie McTavish, director of sales with Concord Pacific, said construction continues “full steam ahead.”

McTavish added: “If there is a strain in our little world it is probably the fact that we can’t get our buildings out fast enough to meet the demand, which is a good problem for us.”

[email protected]

Permits plunge:

The value of building permits in July fell 11.4 per cent nationally to $4.8 billion from the record $5.4 billion set in June.

In B.C., building permits fell 40.3 per cent to $639.4 million.

Abbotsford

$9.4 million *

-69.7% **

Vancouver

$386.9 million

-50.6%

Victoria

$41.1 million

-23.6%

B.C.

$639.4 million

-40.3%

* Value of July building permits

** Percentage change, June to July

© The Vancouver Sun 2004