USA Today

NEW YORK (AP) — U.S. home prices fell 3.2% in the second quarter, the steepest rate of decline since Standard & Poor’s began its nationwide housing index in 1987, the group said Tuesday.

The decline in home prices around the nation shows no evidence of a market recovery anytime soon, one of the architects of the index said.

MacroMarkets Chief Economist Robert Shiller said the declining residential real estate market “shows no signs of slowing down.”

The report came a day after the National Association of Realtors said sales of existing homes dropped for a fifth straight month in July while the number of unsold homes shot up to a record level.

The S&P/Case-Schiller quarterly index tracks price trends among existing single-family homes across the nation compared with a year earlier .

A separate index that covers 20 U.S. cities fell 3.5% in June from a year earlier. A 10-city index fell 4.1% from a year earlier.

Housing is among the economic indicators closely watched by Federal Reserve policymakers.

After five years of rapidly rising home prices, the market stalled last year, with prices holding steady or falling as sales slowed. Since then, lenders have made it more difficult for some people to get mortgages by tightening standards just as foreclosures rise and some who borrowed at adjustable rates facing higher payments they can’t meet.

Problems have spread from those with poor credit repayment histories to more creditworthy borrowers.

The Fed has taken a number of steps aimed at stabilizing the situation, and market watchers look further for a possible cut in the federal funds rate, which is the rate commercial banks charge each other for short-term loans. That rate has been kept steady at 5.25% for more than a year.

The Fed has its next regularly scheduled meeting on Sept. 18.

Fifteen of the cities surveyed for S&P’s 20-city index showed a year-over-year decline in prices in June.

Prices in Boston dropped in June at a slower rate than they did in May, continuing a trend that started at the beginning of the year. In April 2006, Boston was the first metropolitan area to show a year-over-year decline, so any turnaround there could be an early sign of recovery.

S&P said it needed more data to determine whether Boston would be the first area to improve.

Detroit led the cities with the biggest price declines, with an 11% drop from June of last year. Other cities with falling prices included Tampa, San Diego and Washington, D.C., which all recorded drops of at least 7%.

Seattle and Charlotte, were on the small list of cities that saw prices rise in the same period. Seattle prices rose 8% in June while Charlotte saw a 6.8% increase.

Forbes’ formula deals us in for dubious honour

Ashley Ford
Province

We all know real estate in Greater Vancouver is in nosebleed territory — but globally overpriced?

According to a somewhat complex formula arrived at by Forbes magazine, Vancouver allegedly has the sixth most overpriced real-estate market in the world.

Monaco, the Mediterranean haunt of the rich and plastically-improved, tops the list of the globe’s most overpriced real estate followed by Rome.

The rankings were compiled by calculating an effective annualized rate of return on a property based on annual cash flows derived from renting and adjusted for capital gains tax, transaction fees, operating costs and maintenance, appreciation and inflation.

“We then flipped the return rate to resemble the more familiar price-to-earnings measure,” says the Forbes report.

That left the champion Monaco with a P/E ratio of 74.07.

The next nine are Rome (50.51), Paris (37.45), Madrid (30.30), Los Angeles (26.88), Vancouver (26.81), Vienna (25.77), Auckland (25.64), Zurich (25.19) and Oslo (23.45).

The study looked at 50 financial capitals in every continent, except Antarctica, of course. For the most part this meant one city from each country but for countries like India, China, the U.S., Australia, Canada and Switzerland where there were multiple, distinct financial centres, several cities were measured.

If you are thoroughly lost by now, Forbes offers a somewhat simpler way of absorbing their numbers.

“Think about each market like you would a stock: The higher the price-to-earnings figure, the more you have to pay to get one dollar of return,” it says.

The valuations were based on data from GlobalPropertyGuide.com, an international real-estate research firm. For each market, it assumed no debt financing, a constant cost of capital, a 10-year hold of the property and a non-primary residence.

© The Vancouver Province 2007

 

Portland considers policy proposals to cut fossil fuel use

Stephen Beaven, The Oregonian
Sun

Imagine, for a moment, telling the family that wants to buy your house about the leaky windows and wheezing furnace. What if you had to add insulation before putting your home on the market? And how about the possibility of shelling out more money for gasoline and parking?

These are among the proposals being kicked around at Portland City Hall to fulfill a resolution passed in March that calls for the city to dramatically cut its oil and natural gas consumption in the next 20 years.

And Mayor Tom Potter has pumped up the volume on the national stage, joining high-profile mayors including Chicago‘s Richard Daley and New York‘s Michael Bloomberg as urban environmental ambassadors.

Potter’s recent efforts are part of a marketing strategy to promote a city that considers itself a leader in sustainable development. This year, he’s pushed federal funding for light rail and the streetcar, testified before a U.S. House committee on global warming and attended a mayor’s conference to talk about energy issues. He’s lobbied legislators in Salem on biodiesel and a statewide renewable fuels standard. And in November, he’s scheduled to go to Chicago for a green building conference.

Potter, who drives a Prius, has been supportive of environmental issues. The city’s efforts are important for business, as well as the environment, Potter said through a spokeswoman last week while he was on vacation. Portland developers are working on green buildings in Los Angeles, Baltimore and Denver and local green building consultants can’t hire enough people to keep up with all the work, the mayor added.

“In practical terms, what I want to do is help Portland continue to become the place others turn to for green ideas and green business partners,” he said. “It’s an important business cluster, one that provides expertise for the rest of the country and good family jobs here.”

The resolution passed by commissioners required the city to adopt a goal of slashing oil and gas consumption in half by 2030 to head off potential oil shortages. It followed six

months of work by a city-appointed task force and is nonbinding.

Now city officials, from the bureaus to the commissioners’ offices, are working to identify ways to cut fossil fuel use throughout Portland.

If all goes as planned, the ideas will be winnowed to concrete policy proposals and presented to city commissioners by early next year, said Jim Middaugh, chief of staff for Commissioner Erik Sten.

Middaugh cautioned that not everything under discussion will become part of the city code.

“All this stuff is in the brainstorm phase,” he said.

City officials are looking at the major sectors that produce greenhouse gasses, Middaugh said, including garbage, transportation, construction and commercial and residential buildings.

They’re also studying what other cities around the world have done to limit emissions.

For instance, there was a discussion among local, state and federal officials about charging a “congestion fee” to drive in certain parts of the city, much like a program that started in London in 2003. But, for a variety of reasons, that proposal never got legs.

There’s also been talk of adopting energy-efficiency standards for houses put up for sale, similar to those in the Bay Area.

One would require sellers to add insulation, seal air leaks or upgrade furnaces before selling their homes, according to Michael Armstrong of the city’s office of sustainable development.

Another might require sellers to divulge a home’s energy performance as part of the sale.

The city also wants to create a market for products, such as insulation, that reduce greenhouse gases so it can attract the businesses that make them, Middaugh said.

But it’s not clear yet if the city will create new regulatory requirements or provide incentives to reward good environmental behaviour.

For instance, Middaugh said, if builders meet certain energy-efficiency standards, the city might then allow for the construction of a bigger building.

There are already indications of support for higher fees and taxes to curb emissions, according to a poll conducted for Commissioner Sam Adams’ office.

But Jim Chapman, president of Legend Homes, said energy efficiency is already a priority for new home builders. He questioned the need for new regulatory requirements, on top of the state building code.

“I think that’s happening on its own,” Chapman said, “with the code and the response the industry has had … to market pressures for green building and energy efficiency.”

 

© The Vancouver Sun 2007

 

‘We’re going to take the U.S. program and make it Canadian,’ green council head says

Kathryn Young
Sun

The Canada Green Building Council will introduce a rigorous new home certification program a year ahead of schedule by piggybacking on a U.S. pilot project instead of conducting one of its own.

Some Canadian homebuilders were so eager for the LEED (Leadership in Energy and Environmental Design) for Homes program that they joined the American project, said Derek Satnik, chairman of the council subcommittee dealing with the issue.

“The biggest concern we have is that there is so much interest that if we don’t move quickly, we’ll fall behind the industry,” said Satnik, managing partner of Mindscape Innovations, a consulting firm for energy-efficient buildings. “The demand is already there.”

Developed in the U.S., the LEED program has come to Canada in stages, with commercial, institutional, industrial and multi-unit residential certification now in place. With increasing concern over environmental issues, there’s been growing demand for the individual homes component, which has been tested in the U.S. for two years and is due to be formally launched in November, said council vice-chairman Andrew Pride, also vice-president of energy management for Minto Homes.

“We’re going to take the U.S. program and make it Canadian,” he said.

The U.S. expected 50 builders and 300 homes to be certified under the pilot project, but ended up with about 400 builders and 6,000 homes, Pride said.

“Rather than trying to market LEED for Homes and create demand for it, they’ve been trying to manage the demand and grow fast enough to meet it,” Satnik said. “There’s been no lack of interest. We’re already seeing the same in Canada.”

LEED buildings go beyond energy efficiency to award points for water management, construction waste management, enviro-friendly materials, indoor air quality and sustainable building sites. There are four levels of certification: certified, silver, gold and platinum.

The first Canadian LEED single-family home, built by Reid’s Heritage Homes in Guelph, Ont., received platinum certification this summer through the U.S. pilot project. It registered 91.5 on the zero-to-100 energy efficiency scale.

“We’re seriously looking at, within a year, developing a process where we can actually do LEED certification on every single-detached home,” said Andrew Oding, Reid’s manager of product development. “It will be feasible. It’s not pie in the sky.”

LEED for Homes appeals to retired engineer Peter Nelson, who is planning a home near Perth, Ont. with solar thermal panels for hot water, photovoltaic panels for electricity generation, geothermal heat, insulated-concrete form foundation and walls, rainwater collection, and native plants in the landscaping. He’s studied the American LEED requirements and believes they’re doable, although he’ll wait to see how expensive certification is before going that route.

“I certainly want the house to have some certifiable measurement, so anyone who wants to buy it in the future sees what they’re getting,” Nelson said. “Every house should be built this way and will need to be in the not-too-distant future. And what the heck — it’s a challenge.”

Last week, the council invited Canadian homebuilders registered with the American pilot project to use their experience to help write the Canadian standards for LEED for Homes, expected to be formally launched here next June, said Pride.

The council also wants input from builders involved in other energy-efficiency programs such as Energy Star in Ontario and Saskatchewan, Built Green in Alberta and B.C., Novoclimat in Quebec, Yukon GreenHome, Power Smart in Manitoba and B.C., plus the national R-2000 program. The 12 builders now constructing net-zero-energy demonstration homes across Canada could also provide valuable information, said Pride.

“The whole idea of LEED is not to push away all the other rating systems, it’s really to gather them all together and say ‘Let’s put this under one hat,’ ” said Pride. Together they will determine what changes or additions are needed to make an Energy Star or Built Green home certifiable under LEED.

Built Green, which has certified about 4,800 homes in Alberta and B.C. since it began in Calgary in 2003, is on the committee to help develop the Canadian standards, said Built Green president David Bengert.

“We ultimately have the same goals,” he said. “We’re supportive of any program whose goal is to improve energy efficiency and environmental impact.”

Builders are attracted to LEED because it has integrity, is industry-driven rather than by government, and offers a lot of technical support, Oding said. After they’ve gone through the process once, builders find it’s not as daunting as they expected. “It’s all about building a better house,” he said. “I think it’s going to be a success.”

© The Vancouver Sun 2007

 

As we look to the future of our region, we ought to cut the rhetoric and take an honest look at what we most cherish

Bob Ransford
Sun

Quality of life. That’s what it is all about. When Vancouverites express their concerns about the impacts of new development or about how change might threaten their neighbourhoods, they are simply expressing fears about perceived threats to their quality of life.

It’s no surprise we are so protective of our quality of life. Let’s face it: we have a quality of life worth protecting.

After visiting four major U.S. metropolitan centres since the beginning of July, I have returned home with a certain renewed sense of awe about the kind of urban lifestyle we enjoy.

Our setting plays a big role in the kind of urban quality of life we enjoy. Our little temperate corner of North America is spared the hurricanes, tornadoes, thunderstorms, long frigid winters and sweltering, humid summers that afflict a lot of other North American cities. The esthetic beauty of our natural setting is a formidable backdrop for man’s urban creations.

We have also managed to create and maintain a relatively good quality of life in our urban metropolitan region by avoiding a number of mistakes made elsewhere. We don’t have a concrete labyrinth of freeways bisecting our city. For the most part, we’ve avoided segregating different people in neighbourhoods — except for the results of disastrous social engineering that have created a village of misery in the Downtown Eastside. We’ve done a pretty good job of protecting our air and water quality, so far. We’ve also kept sprawl at bay — but only just — with the Agricultural Land Reserve serving double duty as an urban growth boundary.

So, when we look at the future of our metropolitan region, we need to first clearly cut through all the rhetoric, catchphrases and buzzwords and look at what people cherish the most and are willing to fight hardest to protect.

Forget words or catchphrases like “sustainability”, “ecological footprint”, “affordability” and the like. It really is about quality of life. It is about maintaining our quality of life today and ensuring that future generations will be able to enjoy the same quality of life without making sacrifices greater than those we are willing to make today.

That’s the bottom line that politicians and policy-makers need to focus on when they are listening to a fearful public.

At the same time, when we speak about our concerns, desires, fears and ideas about our homes, neighbourhoods and our region, we need to be honest about what we are trying to protect.

There is little to be gained by erecting scarecrows or by elevating basic fears to hysterical rhetoric.

Perhaps a good place to begin adopting a realistic approach to a dialogue about our urban future is with Vancouver‘s debate about EcoDensity.

Once again, putting aside the catchy brand name, EcoDensity is all about protecting the quality of life Vancouverites enjoy, especially those who live in the city’s first-ring suburban neighbourhoods.

The phrase EcoDensity immediately engenders fear among many. Ironically, the main thrust of the EcoDensity initiative is aimed at addressing the same issues that create that fear.

EcoDensity is about protecting our urban quality of life by embracing a development pattern that is less reliant on the automobile and that makes walking and cycling easier for people and justifies greater investment in costly transit infrastructure.

It is about not only calming local traffic, but reducing automobile traffic overall as part of reducing our impact on the environment.

EcoDensity is about creating more complete communities by having more affordable and diverse housing within walking distance of shops and services, parks and amenities.

It isn’t about creating expensive high-density enclaves, but rounding out existing, primarily single-family neighbourhoods with a range of housing choices.

EcoDensity is about providing the kinds of infrastructure that makes neighbourhoods livable — like more parks and local amenities and civic utility infrastructure that is greener and has a reduced impact on the environment.

If we were to list all the things people cherish in Vancouver and all their fears about what future change might bring, then match that with a second list of the outcomes Vancouver’s innovative EcoDensity initiative is attempting to achieve, the matches would be impressive.

Rather than elevating our fears to a level of hysteria about EcoDensity, we should be calling on city officials to roll out the details of the EcoDensity initiative even faster so that the fears can be alleviated. After all, we need to protect our quality of life.

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. E-mail: [email protected]

© The Vancouver Sun 2007