Archive for April, 2007

Minorities hit hard by rising costs of subprime loans

Thursday, April 26th, 2007

Sue Kirchhoff and Judy Keen
USA Today

In 2005, half of minorities purchased their homes with pricier, subprime loans, according to Federal Reserve data. Now delinquency rates are soaring in minority neighborhoods. (Here, an Atlanta foreclosure.)

CHICAGO — Charles Davis bought his home on the South Side of Chicago in 2003 using adjustable-rate, high-interest loans and betting an improving economy would help him handle rising payments ahead. Things didn’t go as planned.

Davis, 54, has struggled to stave off foreclosure on the brick ranch-style house where he lives with his wife, Valerie, and three teenage kids. He financed his home with a $200,000 mortgage at 8.5% interest, and a second $50,000 loan at nearly 12%. Those rates were fixed for only two years, and payments are escalating.

Davis went to his bankers to refinance. They said no. Over the past year or so, he talked to four or five companies and was turned away. His bank has him on a “forbearance” plan, which lowers his payments, but has also started foreclosure proceedings. If he misses a payment, he fears, he could lose his house.

“I got into a bad deal,” says Davis, an African-American, adding that no one told him about help for first-time home buyers or warned him about the risks of adjustable loans.

Across the nation, black and Hispanic borrowers helped fuel a multiyear housing boom, accounting for 49% of the increase in homeowners from 1995 to 2005, says Harvard’s Joint Center for Housing Studies. But Hispanics and African-Americans were far more likely to leverage the American dream with subprime loans — higher-cost products for buyers with impaired credit — that are now going bad at an alarming rate.

About 46% of Hispanics and 55% of blacks who took out purchase mortgages in 2005 got higher-cost loans, compared with about 17% of whites and Asians, according to Federal Reserve data. The South Side of Chicago, with a large concentration of minority borrowers, has a high concentration of subprime loans and the state’s highest foreclosure rate. In Boston, where defaults are rising — especially in minority areas — 73% of high-income black buyers (those making $92,000 to $152,000) and 70% of high-income Hispanics had subprime loans in 2005, compared with 17% of whites.

Concentrated foreclosures in minority neighborhoods could reduce property values. The NAACP, National Council of La Raza and other civil rights groups recently called for a six-month moratorium on subprime home foreclosures. Problems are centered on subprime borrowers who took out adjustable-rate mortgages, which are now resetting at higher rates, increasing the monthly payments.

One of those swept up in the subprime frenzy was Paris Alston, 35, of Boston, who moved from a homeless shelter to a steady job and hard-to-get federally subsidized housing. Last year, after seeing an ad targeted at first-time buyers, she jumped into a subprime adjustable-rate loan that started with a 9.95% interest rate that could jump to as much as 15.25%.

“I was getting older in my life, I wanted to have something for my kids,” says Alston, adding that the lender made the process easy — until it came time to sign the documents.

“They inflated everything. … My income was more than what I expected. When I asked to go over the loan application, they said, ‘You don’t need to. All you need to do is sign it,’ ” Alston says.

Instead of the $1,200 monthly payments she expected, Alston faced $3,000 in loan, tax and condo fee bills. That was not only more than her monthly income, it was more than she had paid for an entire year’s rent on her subsidized apartment. Alston lost her home. With the help of Boston non-profit ESAC, Alston recently moved into a rental apartment.

Targeting minority borrowers

There are many reasons minorities turn to subprime lenders. Firms have aggressively marketed their products to populations that have long been underserved by, and often don’t trust, traditional banks.

Recent immigrants lack credit histories, and 35% of Latino families don’t have checking accounts. Hispanic families are more apt to have undocumented income, leading them to lenders who make loans without income verification, according to the National Council of La Raza. Lower rates of minority homeownership mean less wealth to draw on.

Regulation has been spotty. Federal data on race or ethnicity and lending were recently expanded by regulators. But they don’t include credit scores, making it difficult to easily ferret out reasons for pricing disparities.

Independent analyses and government investigations indicate that minority borrowers are steered to higher-cost loans even when they qualify for cheaper products. Countrywide (CFC) Home Loans settled a New York lawsuit over racial disparities in lending last year, compensating some Latino borrowers and setting up a $3 million education program.

Many subprime lenders, who operate through loosely regulated mortgage brokers, aren’t covered by federal banking laws that provide consumer protections and are designed to prevent discriminatory lending. The non-profit National Community Reinvestment Coalition, in a recent study of the 25 top U.S. metro areas, found fewer commercial bank branches in minority and working-class neighborhoods.

Doug Duncan, chief economist of the Mortgage Bankers Association, points out that voluntary data by lenders show many minority applicants who are turned down for loans are denied due to poor credit. Federal data also don’t take into account such things as collateral, property values and borrower debt-to-income ratio.

Duncan warns that efforts to tighten lending laws to protect borrowers, including minorities, could end up constricting credit and preventing people from refinancing. At a recent meeting, subprime lenders told the Mortgage Bankers Association they expect loan volume to fall 30% to 40% next year.

“This is before any regulatory action,” Duncan says. “This is the reason why we’re cautioning regulators and lenders to be very careful.”

In Denver, Gaby Sanchez, 33, found her lender through her Realtor and was given a high-cost loan she couldn’t afford when the interest rate reset.

“They said our credit wasn’t that great, so the loan we were given was two-year, interest-only. … To refinance we were going to go through them again,” Sanchez says. “We had the number; we kept trying and trying until we found out they were no longer in business.”

Sanchez tried other lenders who also offered high-rate loans, until she found non-profit group Del Norte Neighborhood Development Corp. The group helped her and her husband, Fabian Lopez, 36, get an affordable fixed-rate loan.

Another reason for the subprime surge: Lenders have been supported by politicians and community leaders eager to promote minority homeownership, which remains about 25 percentage points below that of white non-Hispanics.

“Access became such a buzzword that people forgot about basic lending practices,” says Keith Corbett, executive vice president of the Center for Responsible Lending. “You are really in debt servitude, having a loan with a loan-to-value ratio of 100% or greater.”

How to regulate

Trying to protect borrowers or neighborhoods targeted by high-cost lenders can be challenging.

Illinois last year created a program of mandatory financial counseling for borrowers taking out certain high-cost loans. It was implemented in 10 ZIP codes, focused on Chicago’s South Side. The program was a boon to John McKinley, 70. After fielding marketing calls from mortgage firms, McKinley decided to use a company promising a 30-year, fixed-rate product. Before closing, he met with a financial counselor at the Greater Southwest Development Corp. who discovered the rate was set for just 10 years, with rising interest and payments thereafter. He got out of the loan.

“I’m disgusted with all these people,” says McKinley, an African-American, of lenders he believes are trying to scam their clients.

“These lenders are thinking, ‘If you pay three or four payments then stop, we’ll repossess it,’ ” McKinley says, adding that the problem is fueled by willing borrowers, many with poor credit or low savings, who want a cheap deal.

From Sept 1, 2006, to Jan 19, 2007, a dozen federally certified counseling groups worked with 1,200 borrowers, most on loan refinances, not initial purchases. They found signs of fraud in about 9% of the cases. In about half, they said borrowers could not afford the home or were perilously close to not being able to afford the loan.

The state has proposed changes to the program, which was suspended after tension with community leaders who called it racist for singling out minority ZIP codes, privacy concerns and data showing a large drop in home sales in neighborhoods where it was in effect. The changes would widen the program to all of Cook County and change the focus to loan terms viewed as predatory, rather than borrowers’ credit history.

“On the southwest side … there’s more mortgage brokers than there are doctors and lawyers and grocery stores. It’s like the Las Vegas strip of mortgage brokers,” says Illinois Democratic state Sen. Martin Sandoval, who sponsored the law, though not with the idea of singling out minority borrowers.

Federal regulators have tightened lending standards. But the record is muddy regarding whether they have done enough to go after possible lending discrimination.

A Fed analysis of higher-cost loans, defined as those 3 percentage points above select Treasury bill rates, shows a good chunk — but not all the difference in lending among races and ethnic groups — can be explained by other factors, such as borrower income.

The Fed two years ago said its analysis of 2004 data indicated that 200 lenders might be making too many high-cost loans to minorities who might be able to qualify for better deals; 35 of those lenders are overseen by the central bank. The 2005 data raised red flags about 270 lenders, 45 under Fed oversight. It conducted follow-up examinations and has referred one lender to the Justice Department.

The Office of the Comptroller of the Currency, another bank regulator, based on an analysis of the 2004 data, did a number of targeted exams. But the OCC says the vast amount of day-to-day OCC supervision does not involve public enforcement actions, and it doesn’t keep data on enforcement actions based on the lending information.

“There’s a real lack of transparency,” says Marva Williams, senior vice president of the non-profit Woodstock Institute in Chicago and a member of the Fed’s community advisory panel. “It’s difficult or impossible to know which institutions have received complaints, the nature of those complaints and the status of any investigation.”

Looking to a tough future

Going forward, Congress is debating national standards for lending, while regulators and lenders are setting up multibillion-dollar programs to help people get out of bad loans. Robert Pulster, executive director of Boston’s ESAC, says recovery will be tough.

“These are poor communities. … (Homeowners) were borrowing money. They did everything they could to sustain them for as long as they could, so any resources they have are depleted,” Pulster says. “There’s no quick fix.”

Cafe makes coffee a serious business

Thursday, April 26th, 2007

But at the Wicked Cafe you’ll find a laid-back vibe for enjoying a cup made with top beans

Mia Stainsby
Sun

Manager Arthur Wynne serves a cappuccino. Photograph by : Ian Lindsay, Vancouver Sun

Wicked Cafe is a little off grid, just enough for False Creek condo dwellers to treat it like their private living room.

And if they like coffee — good coffee, that is — so much the better.

The place has been open for two years and owner, Brad Ford, takes coffee seriously. He took over the sole distribution of Intelligentsia Coffee when Caffe Artigiano changed hands last year; the coffee is from a single farm and he also buys top-of-the-crop auction lots (sort of like great vintage wines).

The corner cafe is turf for the laid back; it’s pumped with music (reggae, jazz, blues, funk, rock) and has a couple of sofas, mid-room, to plop back and read or chat with friends. You can order panini (made with bread from Mixx Bakery), muffins, croissants, scones or soup for sustenance and on weekends, you can try the sweet waffles with pearl sugar chunks that Ford went to Belgium to learn how to make.

There are four panini — smoked turkey on cranberry bread, spicy tuna, roasted veg, and spicy capicolla.

Manager Arthur Wynne is another coffee nutter. He passed the tough exams in Switzerland to qualify as a world barista judge and unless you’re ready for a verbal outpouring, don’t ask too many questions about coffee. He’s tutoring some of his customers on the subject of coffee — farming, elevation differences, varietals of coffee trees, roasting, aromas and flavours.

Wynne is the one blanketed in tattoos and has big holes in his ears.

“I had it done in Australia [he’s Australian]. It’s part of getting back to the lost art of body modification,” he says. “Tattooing, piercing, flesh tunnels, it’s a worldwide thing. I wear hardwood plugs with mother-of-pearl in my ear holes.”

I think I’ll pass. I have trouble enough inserting my pierced earrings with needle-thin prongs.

– – –

WICKED CAFE

1399 West Seventh Ave., 604-733-9425, wickedcafe.ca

© The Vancouver Sun 2007

Former Canucks score with talented chef

Thursday, April 26th, 2007

Sean Cousins butchers his meat, perfectly fillets his trout and creates a gorgeous venison dish with hat-trick skill

Mia Stainsby
Sun

Former Vancouver Canucks goalie Kirk McLean joins restaurant co-owner and chef Sean Cousins at bar at So.cial at Le Magasin in Gastown

It’s not just the kitchen at So.cial at Le Magasin that’s obsessed with everything local. One of the owners is a local hero.

Kirk McLean is the former goaltender who took the Vancouver Canucks agonizingly close to the Stanley Cup in 1994. Another owner, Bob McCammon, is a former Canucks head coach, which might explain Canucks’ alumni sightings in the restaurant. And that’s just about as far as I can go posing as a hockey know-it-all.

In some parallel universe way, restaurateurs suddenly decided “social” is a cool name. Notice Brown’s Social House on Fourth Avenue. The Habit restaurant owners on Main Street were on the brink of calling their next project social but are back to the drawing board on that.

So.cial (with a gap-tooth period in the middle) is no Shark Club or Malone’s sports bar — far from it, although the downstairs oyster bar has its obligatory TV screens. Co-owner and chef Sean Cousins does have his own kind of hat tricks, concurrently stick-handling fabulous food at Ocean 6 Seventeen, a jewel of a neighbourhood bistro off False Creek, and before that at Raincity Grill and C restaurant.

Before So.cial, the space was heritage tacky under Troll’s and Capri’s. But it wasn’t a Humpty-Dumpty fall that couldn’t be put back together again. The carpet’s been ripped out to expose mosaic tiles, the original tin ceilings are on proud display, and the 1911 building has reclaimed its natural beauty.

In the kitchen, Cousins lets his pampered ingredients do the talking. The menu isn’t written in purple prose; rather, it’s to the point, as in crab — Dungeness crab salad, creme fraiche, cucumber, mint. You see for yourself that he’s conducted the dance of flavours very well.

Part of his 20-hour days are thanks to his DIY take on cooking. He butchers his own meats, and in fact, will open a retail butcher shop across from the restaurant in about a month. “I get to create my own cuts,” he explains. He’s training his sous chefs on the art of charcuterie. I tried his charcuterie plate with a pate, pork rillet and a chicken ballotine. All nice, except I like a country-style coarser pate and his was super fine. He’s also in the process of starting a mini-farmer’s market in the skinny alley off Le Magasin.

His knife skills are evident in the trout dish, perfectly filleted and served with a warm octopus salad and tomato consomme vinaigrette. Cousins is in a surf-‘n-‘turf mood: salmon is served with maple seared pork belly (think bacon) and clam emulsion; pork is stuffed with Dungeness crab and blue cheese and served with apple puree.

The salmon was lovely but my mind rejected pork, crab and blue cheese in one dish. Venison with pureed and pumpkin-seed-and-parsley pesto is a gorgeous dish. A pork and duck confit is formed into a crabcake-like format and served with a stylized mushroom pot pie — delicious.

Overall, his dishes sing with deep and clear notes and you do pay accordingly. Appetizers are $10 to $26; mains are $22 to $29, and you must order side dishes separately. I wasn’t impressed with the Pods, Peas and Fave Beans side dish, which was drenched in butter, but the Kennebec Pomme Frites had me.

The wine list isn’t deep but includes some hard-to-buy B.C. products from Joie and Blue Mountain. A soon-to-be-hired sommelier will be ramping up the cellar. Markups tend to be a little higher than the usual doubling of price. It can all add up to a hefty bill if you’re not careful.

SO.CIAL AT LE MAGASIN

332 Water St., 604-669-4488. (socialatlemagasin.com) Open for lunch and dinner, 7 days a week and brunch on weekends.

Overall: 4

Food: 4

Ambience: 4

Service: 4

Price $$$

Restaurant visits are conducted anonymously and interviews are done by phone. Restaurants are rated out of five stars.

© The Vancouver Sun 2007

Rental apartments expensive to build, don’t provide good return, realtors told

Thursday, April 26th, 2007

Real estate forum examines dilemma as city debates future of rental accommodation

Derrick Penner
Sun

It is a Vancouver conundrum: Real estate investors will pay fat prices to buy rental property, but won’t pay to build it.

Greater Vancouver land prices are too high, construction costs too onerous, and despite astronomically high prices, rents are still too low to justify an investment in new supply, an industry forum heard Wednesday.

Vancouver city council is debating a moratorium on demolition of existing apartments to preserve units that are left.

Concert Properties CEO David Podmore told one session at the annual Vancouver Real Estate Forum that developers are finding it easier to build purpose-built rentals elsewhere. His firm is a partner with the Ontario public-sector pension OMERS in a $650 million apartment project.

In downtown Toronto, Podmore said, developers can buy land for $30 to $35 per buildable square foot, build apartments for $150 to $155 per square foot, and charge monthly rents of $2.10 to $2.25 per square foot, which earns a six-per-cent return.

In Vancouver, a developer would have to pay more than $100 per square foot for land and $250 to $260 per square foot to build, yet could only charge $2 per square foot for rent for the same building.

Greater Vancouver monthly rents would have to climb to the $3-per-square-foot range to justify new development, according to John Purcell, senior vice-president and portfolio at Bentall Investment Management.

“[Vancouver] is poised for rent growth, but not nearly enough to justify new development on an economic basis.”

Still, buyers are scrambling to buy existing Vancouver properties, even though they earn returns of five per cent at the high end to 2.75 per cent at the low end, David Goodman, of MacDonald Commercial Real Estate Services, said.

Goodman added that buyers these days are typically large, such as Toronto-based TransGlobe Property Management, or real estate income trusts such as Boardwalk and Mainstreet.

Goodman added that many buyers accept such low rates of return because they are counting on significant rent increases when units change tenants.

He noted Vancouver rents have increased 21 per cent over the last decade. The prices to buy suites, however, have doubled over the same period.

“In our view rents are moving in a catch-up mode,” Goodman said, and are due to increase 10 per cent, on tenant turnover, over the next 12 to 18 months.

However, government intervention will needed to encourage construction of new rentals.

© The Vancouver Sun 2007

 

Fractional ownership resort units & Strata Hotel get tax break

Thursday, April 26th, 2007

Strata hotel units get new assessment rules

Carla Wilson
Sun

VICTORIA — The gates are opening for millions of dollars worth of ski hill and resort development as B.C. is changing assessment rules for fractional ownership of strata hotel units.

Such vacation units are normally purchased by individuals for part-time use and rented out as hotel rooms at other times. They are being built around B.C.

But inequities in the assessment system can mean that similar units are put into different assessment classifications, and thus are subject to vastly different property tax bills.

Even if a unit has both residential as well as hotel use, many are listed in the commercial tax category, and municipal commercial tax rates can be three to four times higher than residential rates.

As a result, many projects have been put on hold as buyers shied away. Legislation introduced this week would create a more uniform system for these units, and encourage resort growth and tourism for the province. It could potentially lead to the construction of 148,000 new units.

High construction cost is a key factor in hotels being built under shared-ownership systems. When one Bear Mountain resort unit saw its taxes soar to $15,200 in 2005 from $3,800, a successful appeal was launched. But many other B.C. strata hotel owners were stuck with high taxes.

Phil Laseur, Bear Mountain vice-president of corporate and legal affairs, called the changes a step in the right direction. “We did see potential buyers who were concerned about this issue,” he said.

Brian Morrison, controller for Tigh-Na-Mara Seaside Spa Resort and Conference Centre at Parksville, said, “The intent was never not to pay taxes, it was a question of fairness.”

B.C. has about 18,000 strata hotel units categorized as residential and about 5,000 units as commercial, according to the assessment system. The new rules would come into effect in 2008.

Some operators were pulling units out of rental pools to avoid commercial rates — raising the spectre of 6,000 rooms being unavailable for the 2010 Winter Olympics in Whistler, said Frank Bourree, tourism consultant with Chemistry Consulting Group.

A long list of ski hill and resort development projects around B.C. that were either proposed or under construction were affected by the assessment process, Bourree said Wednesday. “People wouldn’t buy into it if they had to face some of the tax consequences. [The new legislation] is a really great move.”

Depending on the unit, the change could mean a difference of up to $20,000 in taxes, he said.

Under the new system, assessments will reflect how the units are actually used. Units already in the residential classification will not be affected.

Rick Thorpe, the minister of small business and revenue, said, “Today, a majority of new tourism and resort properties are stratas, and providing certainty on how they are assessed will support growth in our all-season resort capacity and our goal to double tourism by 2015.”

Peter Gibson, president of Mount Washington Resort and chairman of the B.C. and Yukon region for the Canada West Ski Areas Association, said a standard assessment formula will be brought in for ski hills.

He hopes the new system will encourage sales of available fractions at its Bear Lodge project, as well as lead to future hotel development.

© The Vancouver Sun 2007

 

Dine in serene splendour like patriarchs of India’s history

Thursday, April 26th, 2007

The Emperor’s old clothes

Mark Laba
Province

Santosh Minhas (left) and Song Sirikul with the tandoori chicken, naan bread and chicken kebabs at Akbar’s Own. Photograph by : Nick Procaylo, The Province

AKBAR’S OWN

Where: 1905 West Broadway, Vancouver

Payment/reservations: Major credit cards, 604-736-8180

Drinks: Fully licensed

Hours: Mon.-Sat. lunch, 11:30 a.m.-2 p.m.; dinner, 5 p.m.-10 p.m., closed Sun.

– – –

Those Mughal emperors really knew how to live. I mean, after all their warring and conquests, palace building and art collecting they truly worked up an appetite befitting empire building and liked to sit down to a great feast.

And, boy, did they know how to dress up a prawn. This crustacean never had it so good until it met up with these patriarchs of India’s history and donned various curried accoutrements as beguiling and intoxicating as a jewelled sari twinkling beneath a setting sun on a prime piece of Goa beachfront.

There’s no place in this city that reproduces this food so consistently as the long-admired Akbar’s Own, named for the famed Mughal ruler. Peaches and I stepped into this serene setting to find just the faintest wisps of sitar music drifting through the room and the kind of muted quiet in which you can hear your bald spot widening. There’s a casual elegance that permeates the place, from the ornately carved wooden chairs to the wall art to the banquette-seating upholstery.

We began our journey through the world of Kashmiri and Mughlai dishes with an order of vegetable ($4) and an order of shrimp pakoras ($8). Served with mint chutney, truly a delightful way to awaken the tastebuds from their meditative slumber and give them the old heave-ho into the rites of spring. The shrimp are especially tasty, anointed with ginger, garlic and sesame seeds before their plunge into the deep-fryer.

Next up: butter chicken because, although an old standby in East Indian restaurants, a lot of places mess it up, the flavour getting sucked down into some murky miasma and the poultry just a sad rendition of a once happy and sprightly chicken with its whole future before it. Not so here. Tender chicken in a creamy tomato-tinged gravy with butter and cream and no oily-surface slick.

Along with this we had the Prawn Masala ($15) and Alu Gobi ($9), two more popular requests for many folks and here they’re done up wonderfully with subtle spicing and moderate heat.

In fact, the sari-wrapped servers never ask how you like your dishes spiced so you take what you get but everything tends towards the moderate. To scoop the stuff up we tried the sesame-seeded moti naan ($2.50).

In the end, I never did taste the Kashmiri dishes because the sauce is studded with grated apples and raisins and I don’t like cooked fruit. It might throw doubt upon my abilities as a food reviewer but, hey, I’ve eaten pig’s ears, snails and tofu baloney, so I figure I can be cut a little slack.

But I will return to try the Fish Mumtaz with a hot-and-sweet sauce spiked with capsicum or the Lamb Badhshhahi ($12.50) that I want to order just to attempt the pronunciation. Truly a majestic feast and, though I may not be an emperor, I am descended from borscht-belt royalty — if you count my Uncle Al in a pink leisure suit doing his Jerry Lewis imitation at bar mitzvahs.

THE BOTTOM LINE

An old caravan route of flavour as consistent as the desert sands.

Grade: Food: A-; Service: A; Atmosphere: B+

© The Vancouver Province 2007

 

Developer says condo’s design aims to live up to iconic location

Wednesday, April 25th, 2007

Other

Atelier on Robson will rise on one of the last remaining residential sites on Robson Street,the buzz of urban Vancouver outside and a cool,contemporary calmness inside.

Architecturally,it’s going to be very strong and fitting of an iconic location,” says developer Henry Man.

The building will stand kitty-corner to another Vancouver icon,the Vancouver Public Library with its Roman Colosseum reference. Depending on the position of the suites, there will be views of the NorthShore mountains, Coal Harbour, BurrardInlet, Stanley Park and Mount Baker.

“During the 2010 Olympics,residents have a view from the observation deck, of Library Square where Olympic festivities will be taking place,” Man says.

Atelier, designed by IBI/HB HancockBruckner, riffs on the circular curves ofthe Vancouver Public Library and the Westin Grand Hotel which mimics the curves of a piano. “The look and feel willbe contemporary and high-end. The podium level will be 50 feet high with the clean look of glass and not a lot of framing. We’ve pulled the tower back from the podium for a feeling of space around the building.”

Amenities will include a gardening deck and restricted elevator access where residents can only go to their own floor.

Plunging U.S. home sales dash hopes of rebound

Wednesday, April 25th, 2007

CONSUMER SPENDING: Foreclosure surge alarms Congress

Agence France-Presse
Province

‘For Sale’ is sign of times in Centreville, Va., yesterday as March home sales plummeted to dash hopes of U.S. markets rebounding any time soon. — AFP

WASHINGTON — U.S. home sales plummeted dramatically last month, marking the biggest monthly fall in over 18 years and dashing hopes the market was poised to rebound, new industry figures showed yesterday.

The National Association of Realtors said existing U.S. home sales sank a heavy 8.4 per cent to an annualized pace of 6.12 million units in March, well below most forecasts that had predicted sales of 6.45 million units.

U.S. apartment and home sales had been expected to drop in March, but the decline was much worse than anticipated and some analysts said it would ratchet up pressure on the Federal Reserve to cut interest rates.

“Ugly is the simplest word for this report,” said Joel Naroff of Naroff Economic Advisors, who advises financial firms on economic matters.

The drop in homes sales was the largest since January 1989 when sales dived 12.6 per cent, and sales are now at their lowest ebb since June 2003.

NAR’s chief economist David Lereah said the market had been buffeted by cold weather and worries about spiking home foreclosures. “For the last couple months we’ve been expecting a weather ‘hit’ on home sales finalized in March,” Lereah said.

“We also may be seeing some losses as a result of the subprime fallout,” he said, referring to mortgage loans granted to home buyers with patchy credit records.

The sharp decline in sales, which affected most regions, came after sales had risen for three straight months, raising hopes that the market downturn was bottoming out.

But the March figures destroyed such hopes and Naroff said fresh drops could still occur. “How much lower the housing market can go is unclear, but it is not likely that we have seen the bottom.”

Sal Guatieri, an economist at BMO Capital Markets, said: “The key risk remains that further declines in home prices will eventually undermine consumer spending, tipping the economy downwards.”

Concern about the housing downturn, which started last year following multiple years of redhot growth spurred in part by a speculative binge in some cities, is troubling Congress.

U.S. lawmakers are voicing alarm about surging home foreclosures, over 500,000 mortgages were in foreclosure at the end of the fourth-quarter 2006, and are debating ways to boost policing of mortgage lending.

Lawmakers worry that rising foreclosures could worsen the already year-long housing slump and derail the world’s biggest economy.

Atelier – New curves on Robson

Wednesday, April 25th, 2007

Retail, office space in addition to 202 condo units

Ashley Ford
Province

An artist imagines how Atelier will look in the fall of 2009

Published: Wednesday, April 25, 2007

Fashionable Robson Street will get some more curves in the shape of a new, semi-circular tower at the corner of Robson and Homer.

The 29-storey, $140-million Atelier on Robson project is being developed by Magellen Developments (20/20) Inc. and complements the circular design of the public library across the street.

It also incorporates a retail-and-office component in addition to its 202 condo units.

With office space already at a premium in downtown, putting such space into future developments will likely become the trend for developers, Magellen president Henry Man said yesterday .

“I think we will see more developments with an office component and it appeals to many clients who want office space downtown but not in an all-office highrise,” he said.

“It appeals to a lot of professional and smaller companies such as engineers and architects. This way of providing new office space is good.”

Atelier will have 27,000 square feet of high-ceiling office space with its own separate entrance from the residential portion of the building.

Man says the IBI-HB Martin Bruckner Architects-designed tower will occupy one of the last prime sites downtown.

“We wanted to create a distinctive building that reflects the other buildings in the area. It is one of the last pure sites downtown,” he said.

“To give a greater sense of space we have set the building back on the site and the residential component starts at [15 metres] above the street level,” Man said.

He hopes construction will begin this August, with completion set for the fall of 2009.

Atelier on Robson is an upscale development aimed at trade-up buyers, retirees and investors, Man said.

A one-bedroom unit, including a parking spot, will be priced at $338,000. All units will have top-quality kitchens, appliances and fittings. Units will average 830 square feet.

A further potential bonus is Atelier sits on the same block as city-owned land that is earmarked for a downtown park.

© The Vancouver Province 2007

Homebuyers get down payment break

Tuesday, April 24th, 2007

Change lets borrowers get conventional financing with just 20% down

Sun

Ottawa is reducing the cost of buying a home by raising the threshold for compulsory mortgage insurance.

An amendment to the Bank Act allows borrowers to receive conventional financing with a 20-per-cent down payment.

Previously homebuyers were required to make a down payment of at least 25 per cent to avoid the added expense of mortgage insurance.

The change in law means savings of $2,500 for a borrower with a $250,000 mortgage representing up to 80 per cent of the home’s value, said Rob Regan-Pollock of mortgage brokers Invis in Vancouver.

“We believe that a great number of home buyers will benefit from this change,” Cid Palacio, Bank of Montreal vice-president, said in a release.

“We see a number of customers scrambling to meet the 25-per-cent down payment in order to avoid paying the insurance premium.”

Regan-Pollock said the change harmonizes Canadian regulations with those in the U.S. where the cut off for conventional mortgages has long been 80 per cent.

In addition to insurance savings, the change will make it easier to obtain a bigger mortgage.

“This will have a big impact on our lenders in providing more flexible guidelines for financing up to 80 per cent,” Regan-Pollock said. “In the past lenders were required to follow more stringent guidelines set by high-ratio mortgage insurers for financing above 75 per cent.”

High-ratio mortgage insurance will still be required for mortgages greater than 80 per cent of the home’s value.

Those borrowing 80 to 85 per cent of the purchase price pay a premium of 1.75 per cent of the amount borrowed, rising to 2.0 per cent on 85-90 per cent, 2.75 per cent on 90-95 per cent, 2.9 per cent if they are borrowing with a five-per-cent down payment, and 3.1 per cent if they have no down payment.

While the insurance premium is a one-time charge, it is typically added to the mortgage amount and subject to compounding interest.

© The Vancouver Sun 2007