Bob Ransford
Sun

Should a longtime owner of an income-producing rental apartment sell and take advantage of high condo prices? Should a first-time buyer finally now plunge into what appears to be a market with no upward limit?

Are we moving from a seller’s market into one where the buyer will again have a bit of an advantage? Or, are we running out of developable land, only to see prices move to the next level?

The answer is yes. Well, the answer is also no. Better yet, there is no easy answer.

This is how I try to answer the same questions I am constantly asked by people who read this column and figure I have some special knowledge about where real estate trends are headed. The fact is, regardless of my knowledge of what is happening in the market today, my predictions for the future are based on informed guesses at best.

It is fun, once in a while, to think that there is some kind of crystal ball which I burnish with all of the market intelligence I can gather to conjure up a cloudy picture of the future. But, on the other hand, I really find that this kind of trivial treatment of real property — land that we settle and buildings in which we live — to be trivializing real estate to the point that it is becoming a commodity.

Real estate is more than a commodity. Think about it.

Buying a home is likely the biggest single financial transaction you will make in your life. Your home is probably your biggest equity investment and perhaps the investment with the promise of the most substantial gain over time.

For many, that gain also represents our retirement endowment.

Residences, whether single-family detached homes or apartments in multi-family buildings, represent the majority of the built form that defines our settlements — places we call communities.

There must be value, other than monetary value, attached to a home. There are the intrinsic values of comfort and of security — real and perceived. There is the value of prestige and image. There are inherent values, like family memories and that “sense of place” some find at the deepest level when they think about the place they call home.

How can these values be measured financially?

In a market as frenzied as the one we have been through in Vancouver lately, we tend to lose sight of these realities. We can get caught up in the numbers game.

Real estate has been selling so fast in this city lately that a few of the players out there have almost defined a new measure of success when it comes to pre-construction sales. First it was how many homes could be sold in a month. Then it was how many might sell on the project “launch day”. Now, it’s almost as though there is a rate of sales per hour.

If you are thinking about buying a home — maybe even your first home — forget about the numbers. Forget about getting into “the game” because it is not a game.

Think about how you might feel sitting in your new living room two years from now. Think about the kind of things that make you feel a part of the community. Consider how safe you might feel approaching your front door on arriving home late one night.

Think about reviewing your bank statement in January, after your monthly mortgage payment, with all of the bills from Christmas piled up beside you. Think about the equity you are building while no longer paying rent.

If you have a home to sell, think about the natural buyer for your home. Perhaps you have a second property that is an investment. It’s time to take advantage of your gain, but where do you start with finding a buyer who recognizes the real value of the home? Why not start with offering the property to your current renter? Bypass paying a realtor commission on the sale.

Then think about where you are going to reinvest.

There is a lot to think about when it comes to real estate, especially when that real estate is your home or someone’s home.

Perhaps it is time to start thinking about all of those things, avoiding the frenzy that has everyone else caught up in the numbers game.

Bob Ransford is a public affairs consultant with CounterPoint Communications Inc. He is a former real estate developer who specializes in urban land use issues.

© The Vancouver Sun 2007

Sun

A living room (above) at Crescent West at the University of B.C. Photograph by : Bill Keay, Vancouver Sun

Crescent West (model) at the University of B.C. Photograph by : Bill Keay, Vancouver Sun

Platinum Project director of marketing Lily Korstanje shows luxurious kitchen at Crescent West. Photograph by : Bill Keay, Vancouver Sun

Kitchens feature two-level dishwashers. Photograph by : Bill Keay, Vancouver Sun

Dining area provides an oasis of tranquility in a busy day. Photograph by : Bill Keay, Vancouver Sun

The ensuite master bathroom has double sinks on a floating underlit vanity, a soaker tub and a separate shower with rainshower fixture. Photograph by : Bill Keay, Vancouver Sun

Double sinks. Photograph by : Bill Keay, Vancouver Sun

Bathroom at Crescent West; project features granite or marble surfaces in the kitchen and bathrooms. Photograph by : Bill Keay, Vancouver Sun

Nestled into Pacific Spirit Park is a new neighbourhood a stone’s throw, but a world away, from the academic bustle of the University of B.C.

It’s called Wesbrook Place, and it will eventually be home to a projected 4,000 people in a variety of multi-family buildings.

And one of its premier properties is destined to be a 24-residence townhouse project called Crescent West.

It’s far from a starter-home development — pre-sale units range in price from $1.25 million to $1.45 million. But for those lofty prices, you get a lot — including a loft. Each unit has 2,400 square feet or more over four floors, with high-end finishings and top-of-the-line fixtures and appliances.

It’s targeted at well-heeled buyers “who don’t want to compromise on size,” says Lily Korstanje, marketing director for the Platinum Project Management Group (a division of Macdonald Realty), which is selling Crescent West.

She expects many of the buyers will be UBC faculty members and residents of large houses on Vancouver’s west side who are looking for a more hassle-free lifestyle. “It’s not downsizing, it’s upsizing the quality of life,” Korstanje says.

Each of the five floor plans includes four bedrooms and three-and-a-half bathrooms, with a top-floor loft area that can be used as a media room, playroom or a fifth bedroom. The bottom level, which is about four feet below grade, can be easily turned into a self-contained bachelor suite, with its own full bath and patio, or it can be used as a guest or nanny suite.

Crescent West is a strata-titled property, so chores such as landscaping, exterior maintenance, security and garbage disposal will be taken care of by a management firm. For this, residents will pay a maintenance fee currently set at $300 a month. The property is on a 99-year-lease, which is included in the purchase price.

Although the neighbourhood, running off Wesbrook Mall on the south side of 16th Avenue, is now mostly a construction zone, it will eventually include a “village square” with a Save-On-Foods grocery store and a post office, medical centre, restaurant and brew pub. There are also plans for a community centre, school and parks.

The idea is to create a self-contained community that respects its natural surroundings, Korstanje says.

“I think this whole neighbourhood is about the ecological way of living within Pacific Spirit Park — people don’t necessarily have to drive to work or drive to school, and they can walk to shopping,” she says.

“I think the whole idea of this neighbourhood is to keep it low-density, very quiet, very family-oriented and keeping up the green surroundings.”

Crescent West will do that by building its units in clusters around a central courtyard, highlighted by ponds and streams running from one end to the other. The developers, the Redekop Group, will keep as many existing trees as possible, and the property will abut one of the five parks planned for the neighbourhood.

The complex is also green inside, in accordance with the Residential Environment Assessment Program (REAP), overseen by UBC’s sustainability office with an eye to promoting environmentally sensitive housing. So the developers have included such eco-friendly features as materials with a high recycled content, as well as dual-flush toilets, LED lights, low-VOC paint and energy-efficient appliances.

For many potential buyers, green features like these “are very high on their list,” Korstanje says.

But Crescent West residents won’t have to skimp on luxury to be kind to the environment. Kitchens will include high-end Fisher & Paykel appliances, including a professional five-burner gas range and a bottom-freezer refrigerator. Another innovative feature is a double-drawer dishwasher, which saves water and energy compared to full-sized dishwashers that are often run half-full.

Also luxurious are the finishings, with hardwood standard in the main-floor living area, granite or marble surfaces in the kitchen and bathrooms, Italian porcelain tiles and mosaic marble backsplashes.

Buyers have a choice of two finishing packages: a neutral one called Merbau, and a more contemporary one called Walnut. But both are “elegant, timeless and traditional” rather than trendy, Korstanje says.

“We’re really trying to blend in with nature by using a lot of stone and materials that respect the natural environment,” she adds.

The ensuite master bathroom has double sinks on a floating underlit vanity, a soaker tub and a separate shower with rainshower fixture. The two other bedrooms on that floor share a full bathroom.

The main floor and bedroom level both have nine-foot ceilings, “which create a much loftier feel,” says Korstanje. The top-level loft, which has two decks, is almost as high at eight-foot-eight, and the bottom level has eight-foot ceilings.

Adding to the sense of space is the fact that the units are 20 feet wide and 50 feet deep. “They are not long and narrow, they are wide and boxy, so light comes through them,” she says.

Each unit has a fully enclosed two-car garage in the underground parking lot below the suites, for added security and storage.

Despite all Crescent West’s features and amenities, some prospective buyers may be leery of buying any type of pre-sale unit, given the recent well-publicized problems at the Riverbend development in Coquitlam. There, the developer cancelled all buyers’ pre-sale contracts, citing cost overruns, and tried to re-sell the homes at current market prices. But Korstanje tried to allay those potential fears by pointing to the reputation of the developer, the Redekop Group, which has been in business for more than 35 years. Its track record includes The Zone and Affinity condo projects in Vancouver’s Cambie/Broadway corridor and the New Mark development in Chilliwack.

“If a developer is well-established, their reputation is worth a lot to them,” she says. “It is always a choice to say ‘I’ll give back your deposit and you can buy it back from me at a higher price’ [but] we tend to work with developers who are very proud and will come through with their commitments.”

She also said the fact that Redekop is both the developer and the builder of the project is a major plus in terms of keeping the project on time and on budget. Because the work is done in-house rather than by outside trades, “there is way more control and accountability.”

“For the consumer, that is a very positive thing,” Korstanje adds. “Should there be any qualms about the final product, the developer can’t say ‘it’s the builder,’ so there is accountability.”

Crescent West has been on the market since mid-June, and about 40 per cent of its units are already sold.

It’s due to be completed in the fall of 2008, says Korstanje. “I think this is well worth the wait.”

CRESCENT WEST

Location: University of B.C. endowment lands

Project size: 24 townhouses

Residence size: 2,429 to 2,638 sq. ft.

Prices: $1.25 million to $1.45 million

Sales centre address: 3468 Wesbrook Mall

Telephone: 604-215-9378

Website: www.crescentwest.com

Developer: The Redekop Group Wesbrook Place (South Campus Townhouses) Ltd.

Architect: Gomberoff Bell Lyon Architects Group Inc.

Interior design: Creative DesignWorks Inc.

Landscape design: Senga Landscape Architects

Tentative occupancy: Fall 2008

Westcoast Homes

© The Vancouver Sun 2007

Critical labour shortage must be addressed, lobbyist says

Bruce Constantineau
Sun

Construction cranes at work in downtown Vancouver on Thursday – DON MacKINNIN/BLOOMBERG NEWS

The value of B.C. building permits soared in May, setting the stage for a continued red-hot construction market to satisfy investors’ building plans.

Statistics Canada reported Thursday that $1.3 billion worth of residential and non-residential permits were issued in B.C. in May, a 34.8-per-cent increase over April. The total value of B.C. permits issued during the first five months of this year shot up 20.9 per cent to $5.3 billion.

“We’re surprised at the continued strength of the residential market,” Vancouver Regional Construction Association president Keith Sashaw said in an interview. “We thought we might see a decline in the residential sector this year but there’s still a lot of strength out there.”

StatsCan said the value of B.C. residential permits in May rose by 30.9 per cent to $905.3 million while the value of non-residential permits increased by 44.4 per cent to $411.6 million.

Greater Vancouver permits were more skewed towards residential projects, with residential permit values climbing 54.9 per cent to $584.5 million and non-residential permits increasing by 6.8 per cent to $218.6 million.

Sashaw said there appears to be a slight drop in institutional and government building plans as Olympics-related projects make their way through the system.

“But everything still points to some very strong underlying economic potential here in B.C.,” he said. “We’re very upbeat about the prospects for construction and we see projects coming onstream for some time to come.”

StatsCan said B.C. and Alberta led a national surge in building permit activity, with the value of permits across Canada reaching an all-time high of $6.8 billion in May. The Calgary and Vancouver metropolitan areas were responsible for nearly 75 per cent of the gain.

Independent Contractors and Businesses Association president Philip Hochstein said the numbers show that more needs to be done to address a critical construction industry labour shortage. He said the federal government should reform immigration policy to allow more skilled foreign workers into Canada.

“Unless they undertake serious reforms to radically speed up the immigration process for skilled workers we desperately need, their inaction threatens to derail the best economic climate Canada has ever seen,” he said.

A Royal LePage report Thursday said strong consumer confidence will continue to push Greater Vancouver house prices higher this year, with the average house price expected to increase 12 per cent to $571,000 by the end of 2007.

Royal LePage broker Bill Binnie said Greater Vancouver house prices and sales rose strongly during the second quarter as an increasing supply of homes for sale failed to meet buyer demand.

The report said the value of a standard detached Vancouver bungalow has increased by 11.3 per cent in the past year to $788,000.

The surging building permits activity, meanwhile, is not likely to carry much weight in the Bank of Canada’s interest rate decision next Tuesday. Most economists continue to predict the bank will raise its key rate by 25 basis points to 4.50 percent.

“The permits data will have no direct impact on the bank’s monetary policy decision next week, but the positive surprise in this report supports the case for a rate hike,” Royal Bank of Canada said in a note.

A separate release showed that purchasing activity rose more than expected in June, and at a faster pace than in the previous month.

The Ivey Purchasing Managers Index index rose to 67.4 in June from 62.7 in May. The index measures month to month changes in dollars of purchases as indicated by a panel of purchasing managers from across Canada.

A reading of 50.0 indicates that activity remained flat from the preceding month, while a higher reading indicates an increase and a lower reading reflects a slowing or decrease.

© The Vancouver Sun 2007

Province

OTTAWA — Canadians’ seemingly endless appetite for buying and selling houses will continue the resale market’s “astounding momentum” from the second quarter through the end of 2007, says a report released yesterday.

The second quarter ended strongly, the report from Royal LePage Real Estate Services said.

The national average house price is expected to increase by 9.5 per cent, passing the $300,000 mark for the first time, to $303,300.

All regions are expected to enjoy the same growth conditions with average house prices hitting double-digit gains in Edmonton, Calgary, Winnipeg and Regina, according to the report.

“We continue to expect areas of aggressive price appreciation in the West and modest, mid-single digit price increases in Central and Atlantic Canada,” said Royal LePage CEO Phil Soper.

“The most profound story in Canadian real estate today is the extraordinary interest that people across our country continue to have in buying and selling homes.”

© The Vancouver Province 2007

Two Western cities responsible for nearly 75% of overall gain

Province

Construction work continues on a commercial site in downtown Vancouver yesterday as Statistics Canada reported that the number of building permits issued rose 21 per cent in May to a record, at a pace almost four times faster than economists forecast. — BLOOMBERG

OTTAWA — Construction sites in Western Canada will hum this summer as the value of building permits, a leading indicator for construction activity, surged to its highest monthly level in May, Statistics Canada said yesterday.

Municipalities issued $6.8 billion worth of permits, up 21.4 per cent from April and 8.5 per cent higher than the previous peak reached in October 2006, far outstripping analysts’ expectations of about six per cent for May. But more than 15 per cent of the total value in May came from only 15 large projects, the agency added.

The Calgary and Vancouver metropolitan areas were responsible for nearly 75 per cent of the overall gain (in dollars) in May. Excluding these two areas, the total value of permits would have increased by only seven per cent instead of 21.4 per cent, the report said.

Gains in these two metropolitan areas pushed the total value of permits in Alberta and B.C. to record highs, Statistics Canada said, noting that there was also strong growth in Manitoba, Saskatchewan and New Brunswick, thanks largely to construction intentions in the non-residential sector.

Non-residential permits surpassed the $3-billion mark for the first time due to a big increase in commercial projects. Contractors took out a record $3.1 billion in permits for proposed construction projects, up 55.7 per cent from April. This level was 18.5-per-cent higher than the previous record of $2.6 billion set in January, the report showed.

On the residential side, municipalities issued $3.7 billion in permits, a 2.4-per-cent increase from April. The value of single-family permits increased, while multi-family permits slipped marginally.

© The Vancouver Province 2007

Many investors buy numerous units within the same development all for the purpose of re-selling before completion but the practice is not without risks.

Sun

Buying and selling property that has yet to be built, can be a lucrative if risky proposition.

The art of buying and selling a condo before it is even built – otherwise known as ‘flipping’ or assignments – has rocketed in recent years, particularly in Vancouver and the Lower Mainland.

Where such sales were unheard of a few years ago and were limited to a few Realtors in the know, the huge hike in apartment developments has spawned a new breed of investor looking to snap up a pre-sale from developers and then flip it before the completion date.

Responding to a significant rise in the phenomenon called ‘assignment sales’, www.AssignmentsCanada.ca, was established in 2004 to advertise an increasing number of assignment listings.

An assignment sale goes like this: Unlike a regular apartment purchase where the physical property is bought at the time of sale, the seller (‘assignor’) transfers to the buyer (‘assignee’) the obligations and contractual rights to the apartment before the completion of the building. Upon completion, the assignee gains the title deeds from the building’s developer. And in times of a rising property market, it is often possible to achieve a significant profit even before a brick has been laid, through an assignment sale.

“There’s a definite niche for these types of sales – and buyers who have missed out on pre-sales need a forum where they can search for property assignment sales in the building or areas of their choice,” says Nicola Way, founder of AssignmentsCanada.ca.

“Indeed I started the company because I missed out on buying a condo in a desirable tower and could not find anywhere to look for a possible assignment sale. With cranes dominating our city skyline and demand continuing to outstrip supply, an assignment purchase may be the only way to get your hands on a hot property in a sought-after area.”

Key considerations in the success of an assignment sale are location, accessibility, amenities and the opportunity to own a brand-new apartment.

Indeed there are buyers who often purchase numerous units within the same development all for the purpose of assigning.

The practice is not without risks: There is no guarantee that as the building nears completion, the price of the property will have increased.

Also, there is no guarantee either that the building will have ‘sold out’ before completion, thus making it harder to sell an assignment sale as it is virtually impossible to compete with a unit still available at a pre-sale price.

There is also the issue of potential buyers needing to find the necessary funds upfront as payment for the contract transfer. These include the replacement of the deposit that the original purchaser paid to the developer (typically 25 per cent of the purchase price) plus the ‘lift’ or profit in the price from original purchase price to new assignment price.

Initially, many Realtors were reluctant to represent assignments as, for the most part, developers did not allow such listings on MLS.ca – which has always been Realtors’ main advertising vehicle. But with the advent of specialist sites such as AssignmentsCanada.ca, Realtors are now equipping themselves with knowledge of assignment transactions.

© The Vancouver Sun 2007