HOUSING I You can get a comfortable, but not luxurious, home

Bruce Constantineau
Sun

Home buyers who think $1 million can buy a great house almost anywhere in Greater Vancouver should think again because the price of entry into many exclusive neighbourhoods has passed the $1-million mark, according to Multiple Listing Service data.

The lowest price for a single-family home currently for sale in Vancouver‘s Quilchena district, for example, is a cool $1.2 million. Want to live in the upscale Braemar district of North Vancouver? The owner of the cheapest house for sale there wants $1,049,900.

Fifteen homes listed for sale in West Vancouver‘s Altamont district have asking prices that range from $1,695,000 to $6.9 million.

West Vancouver lives up to its reputation as having some of the priciest homes in Canada, with at least six neighbourhoods where no single-family home can be purchased for less than $1 million.

Vancouver realtor David Andrews said the $1-million price level makes sense in some markets and shouldn’t dazzle anyone any more than $100,000 homes impressed people 40 years ago.

“With today’s low interest rates, the cost to finance a $1-million house looks very much like the cost of a half-million-dollar house a dozen years ago,” he said.

West Vancouver realtor Malcolm Hasman said single-family houses are available in West Vancouver for less than $1 million but they’re not dream homes.

“If someone calls me up and tells me they want to spend $1 million for a beautiful home with a great view and a swimming pool, I tell them those houses no longer exist,” he said. “A million dollars used to get you a fabulous home with a view and a pool but that has gone the same way as 50-cent-a-gallon gas.”

Hasman said he and his associates used to think it was a great year if they could sell 120 West Vancouver houses priced above $1 million. Now they sell double that amount. Hasman sold 66 $1-million-plus properties in 2004 and has already sold 42 this year.

Vancouver realtor Manyee Lui said a family can still live in great comfort in a $1-million house on the west side of Vancouver but the property is not likely to have luxurious features like a swimming pool, tennis court or outstanding views.

“Actually, $1 million is not that high-end anymore,” she said. “It will get you a very good-size family home that will let you live comfortably, close to a good school. But it won’t be super luxurious.”

Andrews, who also does business in several U.S. real estate markets, said the general upswing in Vancouver house prices is supported by a strong economy and doubts the market will experience a significant correction any time soon.

“The Vancouver market is not a bubble like a lot of U.S. west coast markets because prices here have appreciated by less than 100 per cent in the past 10 years,” he said. “Some U.S. markets have gone up by 200 and 300 per cent during that same time.”

Hasman said a rise in interest rates wouldn’t kill the high end of the real estate market because many of his clients are out-of-country buyers with lots of equity so few of his deals are subject to financing.

“Nobody is bulletproof in any market if the global economy turns down,” he said. “But I think Vancouver is a beautiful, safe, attractive place to a lot of wealthy buyers and it would take something very dramatic to finish our market off.”

Credit Union Central of B.C. chief economist Helmut Pastrick said he doesn’t feel B.C. real estate prices in general have been artificially inflated so he doubts that values are due to plummet in any segment of the market.

“There’s not a significant amount of speculative buying and flipping [for a quick profit] going on now,” he said. “The last time we had a true price bubble was in 1981, when speculative activity was very significant. We also had a strong market in 1990, and spec activity then was more than twice as high as it is today.”

Canada Mortgage and Housing Corp. senior market analyst Cameron Muir agreed that market prices today are supported by solid economic fundamentals like job growth, inmigration and a growing economy.

“There are more active listings in the resale market than there was a year ago but they’re still low by historical standards,” he said. “The same thing is going on in the new home market — very low inventories and an industry that’s working pretty much at capacity right now.”

Muir noted that many buyers purchasing $1-million homes these days are move-up buyers taking advantage of the increasing equity they have built up in their current homes.

“They have an $850,000 home already and want to move up to the $1-million range so it’s not like they have to pay the whole whack.”

Eric Beauchesne
Sun

ASSETS I Rising home prices have continued to boost the overall wealth of Canadians this year, Statistics Canada said Friday.

Along with a drop in Canada‘s net foreign debts, that has boosted the country’s overall net worth to $4.3 trillion, or $134,400 per person, it said in its latest national balance sheet.

National net worth, which is the value of all of Canada‘s non-financial assets less what they owe foreigners, increased 2.3 per cent in the first quarter of this year from the final quarter of last year.

National wealth, which is the value of non-financial assets, such as land and buildings, rose 2.1 per cent, following a mere 0.1-per-cent increase in the final quarter of 2004.

“While investment in new residential construction slowed, the gain in value of residential real estate was supported by firmer housing prices,” it said, noting that the increase in the value of residential real estate accounted for about 40 per cent of the increase in national wealth.

Meanwhile, Canadians’ net indebtedness to non-residents declined in the first quarter — the second straight quarterly decline, it noted. Canadian assets abroad grew, helped by the depreciation of the Canadian dollar against the U.S. dollar, while Canadian liabilities to non-residents grew more modestly.

While Canadian households were spending more than they earn, resulting in the first negative savings rate in decades, their net worth continued to rise, albeit at a slower pace than in the fourth quarter.

Gains in the value of residential real estate and of stocks contributed most to the increase in the net worth of households, which were only partly offset by the increase in their liabilities, it noted.

“With sustained low interest rates, the growth in total household debt continued to outpace the growth in personal disposable income,” Statistics Canada said.

As a result, the level of debt rose to 107.3 per cent of income, up from 105.8 in the final quarter of last year.

“However, the ratio of household debt to net worth slid to 17.9 per cent in the quarter, as growth in net worth exceeded growth in debt.

Corporate balance sheets also strengthened in the quarter.

“Since 2000, corporations have generated more funds from internal operations in most quarters than they required to finance their non-financial capital acquisitions,” it noted. “As a result of this profit-driven string of surpluses, the corporate sector has been a net lender to the rest of the economy and has also used these funds to restructure their balance sheets, largely through paying down debt.”

© The Vancouver Sun 2005

A qualified inspector can find a structural flaw that might translate into huge repairs down the road

Joanne Hatherly
Sun

To inspect or not to inspect? It shouldn’t be a question.

Here’s some advice for buyers bypassing home inspections: Don’t be a fool.

Making an offer conditional on home inspection is one of the best tools buyers can employ to safeguard their real estate investment dollars.

But first you must inspect the inspector’s credentials.

Look for a home inspector who is registered with the Canadian Association of Home and Property Inspectors. You don’t want to rely on someone who has the savvy to put out a business card and not much else when it comes to advice on a home purchase.

CAHPI inspectors must pass written exams and conform to industry standards of practice. Your inspector should have insurance against errors or omissions. A properly qualified professional is unlikely to make serious errors, but it’s better to have insurance against an expensive mistake.

Or you can go the extra mile and hire a professional engineer to assess your home structurally. Years ago, we had a home inspected by professional engineer at a cost that was about 2.5 times higher than a regular home inspector. It turned out to be money well spent. He pointed out a structural flaw that would in time translate into repair bills that might have outstripped the purchase price of the home. When we asked him if we should buy the house, his response was: How much do you want this house? If you love it and can’t see living anywhere else, buy it, but with your eyes open. We passed on the house. Remember, the ultimate decision and price tag for repairs will rest with you.

A home inspection report is not a to-do list for the seller. According to HouseMaster Inspectors, people often ask inspectors “who should make the repairs,” and “should I buy this house?” The role of the home inspector is to provide their opinion of the home’s condition at the time of inspection. Buyers should look to their real estate professionals and lawyers to answer other questions.

Remember that a home inspection is not a pass/fail test, but an opportunity for the prospective buyer to learn what they’re getting into on their investment. Some buyers are willing to invest in a sizable renovation; others may only be looking for a home that they will occupy for only a few years and may want a trouble-free house.

Remember that a home inspection may reduce the risk in buying a home, but it cannot entirely eliminate it.

Ignore the inspector’s advice at your own peril. A house’s defects can only worsen as they deteriorate through usage and age. Address outstanding concerns as soon as possible.

Your real estate agent or mortgage adviser can usually recommend three home inspectors in your area, or you can find one through the Canadian Association of Home and Property Inspectors on the web at www.cahpi.ca.

© The Vancouver Sun 2005

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Tara Perkins
Sun

Canada’s housing boom has turned real estate into juicy bits of conversation around the summer barbecue — but many homeowners are asking whether a price bubble is about to burst.

“It’s a hot topic all across the country,” says Dianne Usher, area manager of Royal LePage in Toronto. “In the last three years, there’s been significant increases in both unit sales and in prices.”

The average price of new homes rose 5.1 per cent in Canada between the first quarter of 2004 and the same period this year.

Usher said she’s telling homeowners the good times are likely to keep rolling along.

“We have a wide variety of reasons why the market is strong, and those reasons aren’t changing,” she said. “We’ve got no indication that interest rates are going to go up, that immigration is going to stop, that migration is going to change, that the economy is vulnerable.”

Benjamin Tal, senior economist at CIBC World Markets, says there are a few key indicators that people can keep their eyes on to forecast a slowdown in the housing market.

A major increase in interest rates would lead to a slowing, Tal said. “It has to be a significant one and it has to be very rapid.”

For example, a rise of 300 to 400 basis points — three to four percentage points — within six months to a year would trigger difficulty in the housing market, Tal said.

“There’s nothing that indicates that in the short term there’s going to be any dramatic change,” said Colum Bastable, CEO of Royal LePage Commercial. “So interest rates could go up even a full 100 basis points or more and not significantly affect the housing market.”

Another sign to look for is a rise in inventory, or the amount of houses for sale that are not being sold. Vacancy rates and new listings on the Multiple Listing Service are the numbers to watch.

“Inventory is starting to rise a little bit, but is still extremely slow,” Tal said.

A third sign is the amount of speculation in the market, marked by people buying houses to “flip” with a quick resale rather than to live in. In the housing bubble of 1989 — which ended with a crash — there was a significant amount, Tal said, with 25 to 30 per cent of home sales being speculative.

The estimate now is less than five per cent.

One indicator to ignore is the employment level, Tal said. “When you see the job level going down, that will be too late.”

“We are likely going to see the housing market cool off over the last year or two,” said Scotiabank economist Adrienne Warren. “We tend to watch construction activity and it appears to have already peaked in the last year.”

Tal said it’s “reasonable to assume that we’re levelling off. We’re starting to see some slowing.”

Housing starts fell five per cent last month. On a year-over-year basis, MLS activity, or house resales, have fallen. And house prices are increasing at a slower rate.

In addition, “there are signs that houses are sitting longer before they’re being sold, which is always a sign that the housing market is levelling off,” Tal said.

Both economists don’t foresee a crash in the current housing market.

“Between 1992 and 1997, nothing happened in the real estate market. It was dead,” Tal said. “So a lot of what we’re doing now is basically catching up.”

He noted that even those who aren’t invested in real estate would be wise to keep an eye on the sector, which is a key driver of the broader economy and jobs.

“You really don’t need a crash in the housing market to slow the economy, all you need is a levelling-off in housing prices to have a notable impact on the Canadian economy in general,” Tal said.

“The housing market has been a major driver of employment, growth, consumption. You look at retail sales today, it is very, very strong. Part of it is because if you buy a house, you also have to buy furniture.”

© The Vancouver Sun 2005

Burnaby company wants to develop one of the last remaining strips of riverfront

Fiona Anderson
Sun

A Burnaby-based company known for its industrial developments wants to turn one of the last strips of river front in Coquitlam into a self-contained village of 3,700 residences, a variety of stores and restaurants, a community centre and a public pier.

The Beedie Group has asked the City of Coquitlam to allow it to turn an 82.4-acre-parcel along the Fraser River into “the Village at Fraser Mills,” a multi-use development including townhouses, apartment buildings up to 22 storeys high, 190,000 square feet of restaurants and shops and 100,000 square feet of offices. Also included are 7,500 square feet of community space, including an open-air theatre and a community centre.

The proposed village site, where King Edward Street meets the Fraser River, is the former site of Interfor’s Fraser Mills sawmill, which the Beedie Group bought for $12.75 million last December.

President Ryan Beedie said that the easy route would have been to develop the land as “just another industrial park.” But after walking through the site, he thought that Coquitlam residents should be given a chance to have access to the water.

“What I found frustrating is that you’ve got this beautiful waterfront and our clients in many cases have the backs of their warehouses facing the river and the offices face the street,” Beedie said in an interview. “Here’s waterfront and there’s such a limited supply of it and there’s some loading doors facing it,” Beedie said.

“It seems like such a waste.”

So he approached the city to see if they would consider allowing a multi-use development instead. And the city was receptive, Beedie said. On Monday, city council asked the group to hold an open-house and carry out public consultations to determine how Coquitlam residents felt about the project.

“This is a unique opportunity to create a phenomenal community for people to live in for decades to come,” Beedie said. “There is a unique opportunity for all of Coquitlam to benefit from this development.”

The development is still in a preliminary stage, Beedie Group development manager Dave Gormley said. After the initial public consultation to be held June 28, the group will meet one-on-one with different community groups. After that, if the city is still willing to consider making the necessary changes to its official community plan, Beedie Group representatives will meet with various government officials. If all goes well, development could start next summer.

Hotson Bakker Boniface Haden are the architects behind the design of the Village of Fraser Mills. They have been involved in a number of high-profile developments, including Granville Island, Lonsdale Quay in North Vancouver and southeast False Creek.

Konni Bernaschek, president of the Coquitlam Heritage Society, one of the groups that will take part in the consultation process, thinks the proposal is an excellent idea, especially since the plan includes a museum to commemorate the Fraser Mills sawmill.

“That sawmill was really the seed that started Maillardville that later on became Coquitlam,” Bernaschek said in an interview. “It was at one time the largest sawmill in the British Empire and it attracted a lot of qualified workers and started our community.”

The Heritage Society has several artifacts and over 700 photographs of the old sawmill that it would be happy to house in the new museum.

The main concern being raised by some councillors, according to Coquitlam Now, is that the project would remove light-industrial land from the tax base.

© The Vancouver Sun 2005

Units from $180,000 to $900,000 snapped up in preview sales

Fiona Anderson
Sun

Following what is rapidly becoming a trend in the local condo market, the tallest residential development in Burnaby is almost completely sold out after just two days of preview selling.

Sales in the Centrepoint at Metrotown building took place during the last weekend in May, but were not announced by developer Intracorp until Wednesday. Prices ranged from $180,000 for a one-bedroom unit to $900,000 for the penthouse.

The last five remaining residential units in the 32-storey, 226-unit building are now open for sale to the public, Don Forsgren, Intracorp’s senior vice-president said.

Forsgren was surprised at how quickly the units sold because the project is not typical of what is offered in Burnaby in terms of the finishings and designs.

“It’s quite contemporary, it’s quite urban,” Forsgren said. “It was very attractive for people that were seeking an urban lifestyle without moving to downtown Vancouver.”

Seventy-five per cent of the buyers were from Burnaby, Forsgren said.

“With Vancouver prices, it offers more affordability, and the SkyTrain location was a factor for [buyers],” Forsgren said.

Centrepoint is part of a 385,000 square-foot project connected to the Metrotown shopping mall and includes 75,000 square feet of office space and 65,000 square feet of retail joined by bridges. Best Buy Canada, whose U.S. parent owns Future Shop, has already signed on to be the anchor tenant of the entire second floor of retail space, Forsgren said.

The retailer is offering to help design the entertainment or computer centre for buyers of units in the building. It is also giving the first 100 purchasers an average $2,500 credit toward Best Buy purchases.

This latest rush to buy is further proof that the real estate market is “out of equilibrium,” Tsur Somerville, director of the UBC Centre for Urban Economics and Real Estate, said in an interview.

“Condo developments selling out in one or two days is not a market equilibrium,” Somerville said.

A condo normally is what is called a “search” purchase, Somerville said. People who are buying it as a residence need to take the time to look at other properties. In that case, you don’t get sell-outs in one or two days.

What is happening, Somerville said, is that people are snapping up the condominiums for investments, and they are essentially saying “it doesn’t matter what it’s like, it’s a property and I can afford it.”

This cannot continue indefinitely, he said.

“It has to end, because all housing booms end,” Somerville said. “But when it [will] end, who knows?”

The longest boom Vancouver has seen in recent years lasted from 1985 to 1990, Somerville said. After that, prices, adjusted for inflation, went down briefly before climbing again.

“The problem I have is a lot of people go out and say all the fundamentals are really strong so it is not going to turn down, [or] if anything it will flatten,” Somerville said. “But things [do] turn down.”

And the current economic growth does not justify housing prices rising 10 per cent a year, Somerville said.

The remaining five units in Centrepoint are all high-floor three-bedroom homes selling in the low $500,000s.

The residential units are scheduled to be completed in the spring of 2007 with the commercial component being completed by the end of 2006.

© The Vancouver Sun 2005

Sun

B.C.’s hot housing market hit yet another record in May with more homes sold than in any month on record — 11,093 houses for a total of $3.68 billion. That’s a 27-per-cent increase in dollar value over May a year ago, and an 11-per-cent rise in units, according to the B.C. Real Estate Association. Here are the MLS figures for May compared to the same month last year:

Greater Vancouver +28%

Victoria +37%

Okanagan +22%

South Okanagan +62%

Fraser Valley +20%

Vancouver Island +10%

Source: B.C. Real Estate Association, Vancouver Sun

© The Vancouver Sun 2005