Sun

The residential housing market in B.C. lost some steam in the first quarter of 2008, the B.C. Real Estate Association reports.

The over-all sales dollar volume on B.C.’s Multiple Listing Service dipped 1.8 per cent to $8.9 billion in the first quarter from the same 2007 quarter. The number of residential sales declined 13.5 per cent to 18,635.

However, the average residential price was up: It reached $478,423, 13.5 per cent higher than in the first quarter of last year.

“Despite weakness in the forest sector, economic fundamentals in the province remain strong and continue to underpin housing demand,” reports BCREA chief economist Cameron Muir.

COUNTRY SINGER HOPES TO MAKE QUICK PROFIT ON HOUSE SALE

Country music legend Kenny Chesney had barely signed the paperwork for his new home in Malibu before he returned the property to the market – for almost $600,000 more than he’d paid.

In February, Chesney bought the home for $7.4 million, and has now re-listed it at $7.95 million.

Chesney, a three-time Academy of Country Music entertainer of the year, decided to sell the home because of his busy touring schedule, says listing agent Kathleen Doyle. “He realized he’s just too busy to be spending much time here.”

HOT PROPERTY STILL A HOT TOPIC IN SOUTHERN CALIFORNIA

Almost a quarter-century ago, Los Angeles Times writer Ruth Ryon stumbled upon the realization that her readers shared one of her passions. She knew that, like her, they wanted a glimpse into the homes — and the lifestyles — of Hollywood‘s celebrities.

With that in mind, Ryon created Hot Property, a feature that kicked off on Nov. 25, 1984 with an item about Johnny Carson buying a home in Malibu for $9.5 million. Today, Hot Property remains a fixture on the front of the newspaper’s real estate section.

Ryon, who has looked at the real estate of some of California‘s biggest movers and shakers has now decided to step back from Hollywood‘s hot properties. The feature will continue, reports The Times, but without Ruth Ryon, whose last instalment appeared earlier this month.

HELPFUL HINTS TO REDUCE RISK OF FALLING ON STAIRS

When seniors fall on stairs, the consequences can be severe. But a few simple household adjustments can reduce the risk of falls considerably.

A fact sheet prepared by Canada Mortgage and Housing Corp. provides numerous helpful suggestions:

– Avoid visually distracting patterns on the tread that can make it difficult to distinguish one step from another.

– If you’re renovating or building new stairs, allow for ample treads and gentle risers, and make sure all the steps are of a uniform size and height.

– Handrails are strongly recommended.

For more information, visit www.cmhc.ca on the Internet.

© The Vancouver Sun 2008

 

Growing sector still tiny in big picture

Province

OTTAWA — Online sales continued to grow at double-digit rates in 2007, yet after six years of such expansion the sector still represents only a small part of Canada‘s economy, Statistics Canada reported yesterday.

Internet sales — including not only retailers but all enterprises in the private and public sectors — grew to an estimated $62.7 billion in 2007, up 26 per cent over the year before. The private sector constituted the largest part of that, with sales of $58.2 billion — a 25-per-cent hike over 2006.

Nevertheless, Statistics Canada said “e-commerce still represents a relatively small fraction of total economic activity. In 2007, online sales of private-sector firms accounted for just under two per cent of total operating revenue.”

Five years ago, it accounted for one per cent of operating revenue.

In the private sector, business-to-business sales made up 62 per cent of online sales, down from 68 per cent in 2006.

Statistics Canada‘s report also shows Canadian enterprises are more inclined to be consumers than creators of online commerce.

Forty-eight per cent of private-sector firms were reported to be purchasers of goods and services online versus only eight per cent that were sellers.

Seventy-seven per cent of private sector firms used wireless communications in 2007, up from 51 per cent seven years ago. But while 87 per cent of firms used the Internet in 2007, only 41 per cent reported having a website.

© The Vancouver Province 2008

 

Aquilini Investment Group says there’s no market for its proposed 23-storey building

Frances Bula
Sun

One of two planned office towers for downtown Vancouver is on indefinite hold because the developer says there’s no market for it, a troubling sign for the city’s commercial future.

David Negrin of Aquilini Investment Group said the company had planned to build a 23-storey tower on land it owns near GM Place. But he said commercial brokers weren’t able to find any tenants willing to pay the $40-45 a square foot the company needed to make the project — which had been planned as a cutting-edge carbon-neutral building designed by well-known architect Peter Busby — work financially.

Negrin acknowledged that businesses might be willing to pay the higher prices right in the central business district, but not for something on the edge of the peninsula like the GM Place site.

“Once you’re outside of that downtown core, people will say, ‘If we’re paying this much here, we might as well go to the suburbs.'”

The brokers might have been able to find customers willing to pay the $30-32 a square foot that is the going price in suburban locations, said Negrin, but that amount wouldn’t even have covered construction costs for the tower. That’s in spite of the fact the company already owned the land and wouldn’t have had to provide parking, since parking is available around GM Place.

Negrin said the company also offered to build boxes in GM Place that corporate clients could have as part of their lease, but even that wasn’t enough of an enticement.

He said the company got only one nibble, a small law firm that indicated some interest but never actually came through.

Negrin said that means if the city wants to create commercial space to ensure that the downtown continues to have space for jobs and not just condos, city planners will have to allow buildings that are a mix of condos and offices. That way, the profit from the condos can help subsidize offices and allow them to be rented at rates that businesses are willing to pay.

“If you had residential, then you could sell the office for $30 to $32 and then you attract the businesses back in from Richmond and Burnaby,” said Negrin.

He said construction costs currently are running at almost $300 a square foot.

For the past two years, city planners and others have been debating the whole issue of how the downtown is developing. Critics have said that condos are squeezing out commercial building in the downtown and turning the entire peninsula into a resort where people live and entertain themselves, but don’t work. City planners have undertaken a massive study of where people work in the city and imposed a moratorium on condo building in certain parts of the downtown, in an effort to preserve job space for the future.

The downtown hasn’t had a new office-only tower built since 2003.

The only other office tower currently being planned is a new Bentall tower on Thurlow Street, although other inquiries have been made at Vancouver city hall.

© The Vancouver Sun 2008

 

Stephanie Armour
USA Today

Home sellers, brace for some grim news. The spring home-buying season now underway is widely expected to be the worst since the 1980s.

Many would-be buyers lack strong enough credit to get a mortgage. Home values are sinking. And in front yards around the country, “For Sale” signs are as ubiquitous as garden weeds.

The median price of an existing home in March was 7.7% less than it was a year ago, the National Association of Realtors reported this week. “Sellers are having to capitulate,” says Mark Zandi, chief economist for Moody’s Economy.com. “If you’re a seller, it is the worst season since the early 1980s.”

Yet, what’s bad for sellers is good for buyers — at least those blessed with excellent credit and enough money for a sizable down payment. They can enjoy lots of homes to choose among, time to browse, and typically, the advantage in negotiations.

Still, whether buyer or seller, anyone engaged in the home-buying process now could probably use a little guidance.

HOME SELLERS: Be realistic

This month, Rosemary Johnson is taking a gamble. She and her husband, Robert, 59, own a two-bedroom cabin in Lake Tahoe, Calif., nestled in the pine trees by a golf course. But they’ve now moved to Los Angeles and no longer need their former home. Despite some trepidations about the floundering housing market, they’ve decided to sell their cabin.

“It’s a scary market,” says Johnson, 63, an artist whose husband is a builder. “We knew we had to price it very rationally. We had to be realistic, and we’re just hoping to break even.” Having listed their home at $649,000, the Johnsons spent time sprucing up the yard before putting the cabin on the market. Now, they’re hoping for the best.

Taking a realistic view of the market and pricing a home competitively are wise strategies these days. Keep in mind that buyers will typically wield the advantage, so expect to be flexible or even to lower the home price as necessary.

What sellers should consider doing:

• Make a stellar presentation. Be sure the house is in near-pristine condition. Looks matter. Fix peeling paint. Make any needed repairs. Consider spending on amenities that attract buyers, such as newer appliances.

“In order to sell quickly for a good price, homes must be in better condition than the competition and be staged to look appealing from every angle,” says Cleve Gaddis, a co-broker/owner of Re/MAX Around Atlanta. “The days of selling by just putting a sign in the yard and listing in the (multiple listing service) are over.”

• Develop a marketing plan. Figure out how best to display and advertise a home for sale by targeting potential buyers who might be interested. This might include posting the home on websites, sending out mailings to neighbors, holding several open houses and analyzing comparable home sales in the area in the past six months.

• Price realistically. Nothing’s more essential at a time when buyers expect prices to fall further and are typically in no hurry to close a deal than to price your home realistically. Don’t expect to make much of a profit, if any. And try to hit on a price slightly lower than the competition. Lawrence Yun, chief economist with NAR, says prices could fall an additional 10% in some markets. Websites such as ZipRealty.com and Zillow.com allow sellers to get a rough idea of what their home is worth by browsing the estimated values of comparable area homes.

“All sellers today are selling their homes for less than they did a year ago,” says Kim Stimpson, owner and broker of Assist-2-Sell, a discount Realty brokerage group in Boise.

• Offer inducements. Tempt buyers by dangling inducements, such as partial or full seller financing, suggests Pat Lashinsky, CEO of ZipRealty. Be mindful that you’re competing for a smaller pool of potential buyers than in years past. Just 13% of respondents say they plan to buy a home within 12 months, according to an April survey of 1,938 participants by Frank N. Magid Associates, a media-oriented research and consulting firm based in Marion, Iowa. An additional 21% said they were unsure.

And sellers who are refusing to cut their listing price, betting they’ll be able to sell their home once prices bounce back, should keep in mind that few analysts expect a broad recovery anytime soon.

“It’s not going to be a great spring this year,” says Orawin Velz of the Mortgage Bankers Association.

HOME BUYERS: Do homework

For many would-be buyers, the question is whether now is the time to dive in. Should they wait and buy at even lower prices? In the view of many experts, if a buyer finds an ideal home, with an affordable price and mortgage, there’s no reason to wait.

“For buyers, now is a good opportunity to find a good deal and negotiate with sellers,” says Lashinsky of ZipRealty. “There’re a lot of choices out there. Inventory levels are going up, and home sellers are giving deals.”

Today’s housing market is radically different, of course, from the one that raged during the housing boom that crested in 2005. Back then, some buyers could purchase a home, then turn around and sell it within weeks, pocketing a profit. Now, with the real estate slump widely expected to persist, prices in many areas are likely to fall further. Today’s buyers should expect to hold onto any home they buy for at least a few years before selling.

What buyers should know:

• Negotiate. Sellers, by necessity, have become more flexible about pricing. In some cases, buyers can insist on — and receive — perks or discounts such as seller financing and home warranties.

Carlos Arcos and his partner are in the process of buying a three-story townhouse in Houston for which they were able to negotiate the price. During their search, they found eager sellers throwing in flat-screen TVs and free window treatments.

“While looking for a new home, many builders were throwing out some great deals to buy new construction,” says Arcos, 40, who works in advertising and whose partner, Norman Schack, 45, is a music instructor. “However, my partner and I decided to go with an older home, only 5 years old. Since we were dealing with sellers directly, I think we got a good price.”

• Educate yourself. Thoroughly research prices in the area before making an offer. As home prices fall nationally, some cities are seeing sharper-than-average drops. In other areas, prices remain flat. Some metro areas, such as Charlotte, have actually seen some prices increase.

“We hear about the large price drops in California, Florida,” says Leslie Sellers, vice president of The Appraisal Institute. “But it’s important to remember that those are the areas that were increasing at the same rates in the upward direction in the past few years. More areas of the country are at a more stable pace, and those have not dropped at those dramatic paces.”

Anyone considering buying a home in foreclosure or at auction should do plenty of research. Even then, the process can be difficult and risky. Auctions of homes, for example, often give buyers no chance to do any pre-inspection.

• Obtain financing ahead of time. Many private banks have sharply tightened lending standards, requiring heftier down payments and sterling credit scores. Even though buyers now have more choices, some desirable homes do receive multiple offers. Some buyers could easily lose out if they’re not prepared.

Those who might face the toughest time, Velz says, are those seeking homes in the upper brackets. Banks burned by the rising number of defaults remain leery of offering “jumbo” loans — those that exceed $417,000 (or, temporarily, up to $729,750 in some high-cost areas).

“The worst market now is the jumbo market,” Velz says. “It’s basically shut down right now.“

Paying two mortgages for CLOSING THE DEAL short period of time makes sense to many

BEV CLINE
Sun

For eight days this spring, Duncan Fremlin will be the proud owner of two homes in downtown Toronto. An empty nester, Fremlin and his partner Karen Laing are in the midst of downsizing, moving from a three-floor, four-bedroom place whose top floor gets “visited once a week for cleaning” to a more modest twostorey home just blocks away.

The couple want to spruce up their new home prior to moving, and as a result, they are joining the thousands of Canadians who choose to finance two homes at the same time.

Fremlin, a broker with Re/Max Hallmark Realty Ltd. in Toronto, estimates that close to 90 per cent of his clients opt for at least a few “moving days” between packing up and unpacking at their new digs. He says this is very different from when he started in the real estate business 21 years ago. In those days, Fremlin says, it was “taken for granted that you closed the deal on your old home and your new one on the same day.”

Interests rates were high at the time — approaching 14 to 15 per cent — so “very few people wanted to carry two mortgages at the same time, even for a couple of days. And lines of credit were quite hard to obtain.”

Times have changed. “Today we have low interest rates. There’s a shift in mindset on the part of the public towards a less stressful moving experience. In addition, lenders have been quite creative in creating new products.”

As a result, fewer people “are scrambling to get the legal paperwork done, hand over keys, and cart their belongings out of, and into, two homes all in a single day.”

This has necessitated alternate ways of thinking about financing.

People who are “buying up”, or purchasing a more expensive property than they currently own, generally will require bridge financing.

Many people think the term refers to having two mortgages simultaneously. But the meaning “as the banks use it, is that you own a property with a mortgage that you are living in. You buy a new property before you close your sale of the old one, and therefore, require a bridge loan,” says Lois Volk, a mortgage consultant with Invis in Toronto.

It works like this: You have a mortgage on your existing property, the lender sets up a new mortgage on the property you are buying, and the lender gives you a loan “because of course you don’t yet have the equity from the first property to finance the purchase of the second one,” says Volk.

People who are downsizing and will not require a mortgage on the new property, on the other hand, might find lenders reluctant to provide a bridge loan. Subject to qualification, however, consumers can put a line of credit on both properties. Often the property being sold has little or no financing on it, and a line of credit can often be obtained for up to 80 per cent of the value of the property, says Volk. The line of credit should be set up before the sale of the property.

One scenario might be that your existing home is worth $600,000 and you are purchasing a home worth $400,000. Your existing property has little or no mortgage and you will not need a mortgage after the sale of your home. Then you would arrange a line of credit on your existing property for up to 80 per cent or $480,000 and the line of credit on your new property if necessary, and the buyer will have enough to close on the new property.

Martin Crutsinger
USA Today

WASHINGTON — Sales of new homes plunged in March to the lowest level in 16 1/2 years as housing slumped further at the start of the spring sales season. The median price of a new home in March compared with a year ago fell by the largest amount in nearly four decades.

The Commerce Department reported Thursday that sales of new homes dropped 8.5% last month to a seasonally adjusted annual rate of 526,000 units, slowest sales pace since October 1991. That follows a downwardly revised 575,000 rate in February.

Economists polled by Reuters had forecast March sales to slow to a 580,000 annual pace from the previously reported 590,000 reading the month before.

The March median sale price for a new home was 13.3% below March 2007 and, at $227,600, was down 6.8% from the month before. The Commerce Department said the year-on-year percentage decline was the largest since a 14.6% drop in July 1970.

The dismal news on new-home sales followed earlier reports showing that sales of existing homes fell 2% in March. Housing, which boomed for five years, has been in a prolonged slump the past two years with sales and home prices falling most sharply in areas of the country that boomed the most.

For March, sales were down in all regions of the country, dropping most in the Northeast, a decline of 19.4%. Sales fell 12.9% in the West, 12.5% in the Midwest and 4.6% in the South.

The inventory of unsold homes dipped 1.1% to 468,000 which, at the current level of sales, would take 11 months to clear, up from February’s 10.2 months’ supply.