Archive for July, 2008

Housing slowdown spreads across Canada

Tuesday, July 29th, 2008

Market is cooling from recent record-setting levels

Garry Marr

First it was Canada‘s top 25 markets that were feeling that pain from a slowdown in housing. Now it’s clear the malaise has hit the entire country.

Two weeks ago, statistics from the Canadian Real Estate Association showed the average sale price of a house in the country’s 25 largest markets was down 0.4 per cent last month from a year ago.

New statistics released Monday show housing across the country is now losing out to inflation. The average sale price of a home in Canada last month was $314,028, a tiny $35 increase from a year ago. For the first six months of the year, prices were up 3.6 per cent from a year ago.

“In essence, Canada‘s housing market has pulled back from the record-setting pace set in 2007, but in most provinces it continues at or near sales levels set in the years before that,” says Calvin Lindberg, president of CREA. “The increase in housing prices is also pulling back from the record-setting pace of last year, but we have yet to see any of the price contractions that have impacted the housing market in the United States.”

CREA said there is plenty of good news in the numbers. For the fifth straight year, more than a quarter of a million units were sold in Canada. However, sales over the first six months of the year are down 13.1 per cent from a year ago.

“Resale housing activity is cooling evenly in rural, suburban and urban markets,” said Greg Klump, chief economist with CREA.

He said rising fuel prices have not impacted the housing market. “There is no statistical evidence to date that shows increases in energy prices are prompting Canadians to relocate. Lifestyle factors remain the prevalent influence on homebuyer preferences.”

© The Vancouver Sun 2008


Technology overwhelming real life

Tuesday, July 29th, 2008

Time spent on the online universe in virtual engagement is supplanting human experience, author says

Misty Harris

Guitar solos have vanished from the concert scene at the same time millions of gamers are pretending to be a Guitar Hero.

Gym memberships are down while stores can’t keep the home exercise game Wii Fit in stock.

Precious hours of real life are being sacrificed to the online universe Second Life, and high-powered marketing campaigns this fall are planned to sell still more virtual fantasy trussed up as reality.

Forget concern over counterfeit goods such as watches and handbags. Increasingly, it’s organic human experience that’s being knocked off.

“People are just too overwhelmed by all the technologies that exist to be active participants in real life,” says Robert Lanham, who has written three books on the idiosyncrasies of contemporary human behaviour.

“When you’re microblogging on Tumblr and juggling Twitter, Facebook, and Myspace accounts, who’s got time for yoga classes or guitar lessons? Perfecting your Stratocaster licks playing Rock Band is simply less time-consuming than trying to become the next Jimi Hendrix or Eddie Van Halen.”

NPD Group reports Rock Band Special Edition Bundle for the Xbox 360 was Canada‘s No. 2-selling video game in February, followed by Guitar Hero 3: Legends of Rock. The titles’ successes are in stark contrast with a new report by Maclean’s magazine that, in using Top-40 music as a metric, declares “the guitar solo is dead.”

Hoping to capitalize on the yen for virtual engagement is Nintendo, which this holiday season will launch an air-guitar game for the symphony set. With Wii Music, users will have a choice of playing more than 60 instruments — among them, hand bells, the saxophone, violin, trumpet and piano — in a video game environment that reinvents band camp as a place where kids needn’t learn to read music, can’t make a mistake, and can practise as often or as little as they please.

Wii Music isn’t intended to replace the experiences you’d get by actually playing the real instruments,” says Matt Ryan, a spokesman for Nintendo Canada. “What [it] allows is for people to be able to feel what it would be like to strum a guitar or play a flute or saxophone or the drums.”

Although there’s evidence to suggest performance games are leading some people to take up an instrument, experts say they’re coming to the craft with severely distorted expectations.

“In a way, it’s comparing two very different things: one is a diversion, a game; the other is a curriculum of study, a demanding pursuit,” says Jeffrey McFadden, a classical guitarist and music professor at the University of Toronto.

“But while the satisfaction you get from playing an instrument is certainly in line with the effort it takes to learn, the satisfaction of being a good Guitar Hero player would be fleeting and shallow … It’s like the price of admission is higher for a more profound experience.”

Given the choice of feeling like a rock god or a moderately accomplished individual, it’s easy to see how tempting the former can be.

Sony hopes to leverage that sentiment with PlayStation Home, which starting this fall will allow people to reinvent their lives in a simulated universe. Whether it’s designing a dream apartment, going to a virtual movie theatre with someone who’s thousands of kilometres away, or creating a virtual self with the body of Zeus, Home life will be whatever players make it.

“People see your character as you, so it allows you to be someone that you’re not,” says Matt Levitan, marketing manager for PlayStation Canada. “That kind of freedom is a lot of fun for people.”

Eventually, Home — a free download for PS3 owners — will allow people to attend real concerts without ever entering a stadium, play golf without setting foot on the green, and shoot hoops without breaking out the muscle cream.

“It’s more than just communication,” says Levitan. “It’s your life experiences online.”

But however convenient or ego-stoking these hi-tech encounters, cultural commentator Lanham says they’ll never be as fulfilling or as sexy as the real thing. “Saying, ‘Dude, my virtual band totally rocks … we’re playing a gig in my living room tonight’ is never going to have the same allure as securing a real gig in an actual rock band,” says Lanham. “And it’s unlikely the words ‘he’s such a romantic text-messager, his SMS skills made my knees buckle’ have ever been uttered, or sent via SMS for that matter.”

© The Vancouver Sun 2008


No end in sight for U.S. housing-market freefall

Tuesday, July 29th, 2008

IMF urges ‘clear, permanent solution’

Lesley Wroughton, Reuters

WASHINGTON — The bottom of the U.S. housing downturn is not yet visible, while rising inflation is making it tougher to set monetary policy to keep the lid on prices without imperilling financial stability, the International Monetary Fund said yesterday.

“With delinquencies and foreclosures rising sharply and house prices continuing to fall, a bottom for the housing market is not yet visible and the credit deterioration is spreading to even prime mortgage loans,” said Jaime Caruana, director of the IMF’s monetary and capital-markets department.

“We consider this market is still at the centre of this turmoil and some of the valuations still depend on where this housing market finds a bottom,” he said.

Still, Caruana said falling house prices may make homes more affordable, which could eventually stabilize the U.S. housing market.

The IMF said global financial markets were still under immense pressure, with U.S. bank losses from the subprime mortgage crisis exceeding the amount of capital they are able to raise and lending conditions tightening even more.

“Global financial markets continue to be fragile and indicators of systemic risk remain elevated,” the IMF said in an update of its semiannual Global Financial Stability report.

“With inflation risks on the rise, the scope for monetary policy to be supportive of financial stability has become more constrained,” it added.

The IMF, which estimated in April that losses in U.S. assets due to the fallout from the subprime crisis could reach $1 trillion, said it had no reason to adjust that figure.

The IMF called for “a clear and permanent solution” to deal with problems and oversight lapses at U.S. mortgage lenders and financiers, including Fannie Mae and Freddie Mac .

It said house prices were also softening in other advanced markets including Spain, Ireland and Britain and there were rising concerns over future loan losses in the mortgage, construction and commercial property areas.

Jan Brockmeijer, deputy division chief, said it was tougher to evaluate the exposure of European banks to the crisis in U.S. subprime mortgages — extended to borrowers with poor or spotty credit histories, many of whom became delinquent on loan payments — because they are slower to disclose losses than their U.S. counterparts.

“Their disclosures are less rapid so information for 2008 is more patchy and less clear to make categoric judgment on that, but as the crisis is unfolding and becoming broader, the impact will be felt more elsewhere,” Brockmeijer said.

The IMF said emerging markets were weathering the financial and credit-market turmoil, but investors were closely watching some countries’ policies to combat rising inflation.

Caruana said it was important that emerging markets properly deal with inflation.

“If they don’t do it promptly they will have to do it later, and perhaps more intensely later, but also we think that financial markets will discriminate among those countries that do not take the proper measures,” he said.

“If inflationary expectations become entrenched, not only might sharper tightening of monetary conditions be necessary, but financial markets and flows may also be sensitive to situations in which policies are perceived to be “behind the curve,” he added.

Caruana said financial market disruptions still need to be dealt with on a case-by-case basis and there was no iron-clad rule book on how they should be handled amid a wider global economic slowdown.

The report called for prompt and transparent government responses to relieve uncertainties in global markets.

© The Vancouver Province 2008


Vancouver bargain for investors

Tuesday, July 29th, 2008

Our top cities friendly places for business


Tax-friendly climate is just one of the benefits of doing business in Vancouver. Photograph by : Jon Murray, The Province

OTTAWA Canada and its major cities are relatively tax-friendly places for business, according to a global survey by an international accounting firm.

Canada has the third-lowest tax cost for businesses among 10 countries, KPMG said in the firm’s latest guide to international business costs released yesterday.

Among the 35 major cities with populations of more than two million, Vancouver had the fourth-lowest overall tax burden, Montreal sixth and Toronto seventh.

Vancouver‘s ranking in the top four international cities highlights one of the many benefits of doing business in B.C.,” said Tony Swiderski, head of KPMG’s Vancouver-based international tax practice.

“Recently announced cuts to the provincial corporate-tax rate should further enhance Vancouver‘s appeal.”

The national findings fly in the face of common complaints by business that Canada has an uncompetitive tax system.

Even KPMG, in a report last month, warned that Canada will need to cut taxes even more to lure new foreign investment.

Canada has done well in reducing its federal corporate-tax rates,” said Greg Wiebe, KPMG’s Canadian managing partner for tax.

“If the provinces follow the federal lead and reduce their rates as well, Canada‘s advantage will be enhanced.”

The report compares total tax costs using a score for location expressed as a percentage of total taxes paid by firms in the U.S.

As such, a lower score is better as it means lower tax costs for businesses.

Vancouver with a score of 75.2, compares favourably with Seattle, its closest U.S. counterpart, which scored at 107.1.

The overall report assesses the general tax competitiveness of 102 cities in 10 countries, focusing on the 35 major centres, comparing their business-tax burdens, including income tax, capital tax, sales tax, property tax, local business taxes and statutory labour costs, such as employment insurance.

Among countries, Mexico and the Netherlands came in first and second, followed in order by Canada, Australia, the U.S., Britain, Japan, Germany, Italy and France. The three most tax friendly cities were located in Puerto Rico and Mexico.

Among other Canadian cities, Chilliwack scored 74 and Edmonton 63.6 and Calgary 69.3.

Separately, a survey of corporate executives ranked Canada as the fifth-best country outside the U.S. for business investment. The survey by Development Counsellors International ranked China first, India, second, Mexico third and the United Kingdom fourth.

© The Vancouver Province 2008


Mortgage crisis building in Canada too many housing starts means crunch may come soon

Monday, July 28th, 2008

Ray Turchansky

Adrian Mastracci, president of CKM Wealth Management in Vancouver, offers a number of sound tips to help homebuyers. Photograph by : Jason Payne, The Province

Lost amid concern over United States government agencies moving in to support mortgage lenders Freddie Mac and Fannie Mae plus IndyMac Bankcorp, was a warning that Canada could soon face its own mortgage crisis.

Peter Hall, vice-president and chief economist with Export Development Canada, said in a report that in addition to U.S. housing woes, housing starts were down 56 per cent year-over-year during May in the United Kingdom, 18 per cent during the first quarter of the year in Spain and 17 per cent year-over-year in May in France.

Hall noted that housing starts in Canada are “soaring on the strength of the domestic economy and a huge dollop of very well-timed fiscal stimulus,” and that a continuing excess of housing starts over requirements means “Canada’s turn may come soon” for a housing crisis.

The report came in the wake of the Canadian government’s attempt to avoid a housing crisis by no longer insuring mortgages with more than 35-year amortization periods and less than five-per-cent down payments as of Oct. 15.

Homebuyers with less than a 20-per-cent down payment are required to have their mortgage insured through the Canada Mortgage and Housing Corporation — a Crown corporation — or a handful of private firms that have entered the mortgage-insurance market.

In 2006, the government extended the maximum amortization period from 25 to 40 years, adding hundreds of thousands of dollars in interest costs. Last year, 37 per cent of mortgages taken out were for longer than 25 years.

Soon after the Canadian changes were announced, the United States Federal Reserve Board tightened up its mortgage-lending policies. As of Oct. 1, the Fed will require lenders to verify a borrower’s income in determining repayment ability, to take a lender’s ability to repay a loan from income into consideration, to establish escrow accounts for property taxes and homeowners insurance in certain cases, and basically to advertise rates and payments with clear notice if a rate isn’t fixed.

One reason why U.S. lenders were willing to give mortgages to people with an unproven ability to make payments was that the lenders were able to package the loans with others and sell them to other institutions. Had the lenders been forced to hold the debt themselves, which is somewhat the case in Canada, lending would have been less reckless.

Rather than abating, the U.S. housing problem grows worse by the day, with foreclosures expected to flood the market with homes for sale early in 2009.

Things have deteriorated so badly in the U.S. that the Treasury Department will extend credit if needed to prop up Freddie Mac and Fannie Mae, two government-sponsored enterprises that hold nearly half of all American mortgages.

The GSEs each include a debt component and an equity component, with the latter falling in value as investors sold off shares due to concern over rising mortgage defaults.

Famed U.S. commodities investor Jim Rogers called the Treasury plan an “unmitigated disaster.” Mortgage lenders are “basically insolvent,” and taxpayers will be left footing the bill, according to Rogers.

At the same time, U.S. government agencies stepped in to take over IndyMac Bankcorp, after helping to bail out Bear Stearns. That leaves about 90 financial institutions — out of about 7,500 — set to go under.

Meanwhile, portfolio manager Adrian Mastracci of Vancouver-based CKM Wealth Management offers sound tips for homebuyers:

– Consider a condominium or townhouse as a starter home.

– Remember that in addition to the purchase price of a home, you may have legal and realtor costs, expenses for moving, renovations, furniture, repairs, maintenance, property taxes, insurance and utilities.

– Save 20 per cent for a down payment to reduce extra fees, consider taking money from your registered retirement savings plan through the Home Buyers Plan, and forego making non-registered investments because you would need an 8.9-per-cent return to do better than paying down a 5.75-per-cent mortgage if you’re in the 35-per-cent tax bracket.

© The Vancouver Province 2008


Buying a Foreclosure in the US, not as easy as you think

Monday, July 28th, 2008

Ozzie Jurrock

Download Document

Buying a Foreclosure in the US, not as easy as you think

Monday, July 28th, 2008

Ozzie Jurrock

Download Document

Get it in writing — no exceptions!

Sunday, July 27th, 2008

Verbal agreements can leave a strata in tough spot

Tony Gioventu

Dear Condo Smarts: Our strata recently replaced the roofing system on our building. The special levy that was approved was for the amount of $175,000 to cover the total cost of the project. We have just discovered the actual amount of the project was $261,000, a cost overrun of $86,000.

This amount was paid out of our reserve funds and leaves us with barely $1,000 for emergencies. Council claims the bid was only a verbal quote and once the project started, additional damage was discovered. When council received the invoice, the contractor pointed out it was only a quote and there was nothing in writing.

So are we stuck with these cost overruns? Doesn’t the council have to come back to the owners before paying the additional costs?

— JB, Nanaimo

Dear JB: No matter what the agreement — whether it’s a major contract or an owner agreeing to cut the lawns for your strata at $10 per hour — put it in writing.

Allyson Baker, a lawyer with Clark Wilson LLP in Vancouver, has some helpful tips and advice that every consumer should consider.

“A verbal agreement is a contract. However, important issues and conditions that protect consumers are frequently not negotiated. It is also much more difficult to enforce the agreement when the standards of performance and the scope of work are not written. The result is the consumer cannot manage expectations if you don’t have a written record.

“Establishing the insurance expectations, Worksafe obligations, warranties, timing of payment, work schedules and site restoration conditions are all critical parts of a written agreement. If the strata corporation ends up in court over a dispute, what the parties agreed to is much more difficult to establish without a written agreement.”

In the situation of this strata, they should have considered seeking the approval of the owners for the additional costs. The owners may have chosen a special levy, use of reserve funds, or even the option to dispute the matter in the courts before paying the additional costs.

At this point the contract is fully paid. The strata can’t hold back any funds to dispute and the council has paid an unauthorized expense.

Before anyone enters into an agreement for service, construction, buying or selling a home or other products, get the agreement in writing and get legal advice.

If a contractor/supplier or agent is unwilling to enter into a written agreement, move on to someone who is.

Tony Gioventu is executive director of the Condominium Home Owners Association (CHOA): [email protected]

© The Vancouver Province 2008


City landscape’s fascinating, rapid transformation tracked with Sky Shots

Saturday, July 26th, 2008


The changing shape of the downtown skyline is evident in this aerial image. In the foreground are the first few finished floors of The Erickson on False Creek, marking one of the last pieces of the puzzle in the redevelopment of the Expo 86 lands. A recent survey found 5,500 families now live on the north shore of False Creek. The most arrestint sight, though, is that of the work-in-progress Shangri-la Hotel tower soaring far above all other structures. The 61-storey skyscraper is to open in January 2009. – PHOTO BY MARK VAN MANEN / VANCOUVER SUN. TAKEN JULY 7 FROM THE GLOBAL TELEVISION HELICOPTER.

Whether you drive down Cambie Street, take a stroll along the east end of False Creek, or travel up to Whistler, it’s fascinating to see how much the Lower Mainland is changing.

Projects such as the Canada Line, Olympic Village and the Sea to Sky Highway upgrades are compelling from the ground, but to really grasp the city’s transformation as a whole, you have to see it from the air.

That’s why The Vancouver Sun is launching Sky Shots, a six-week series of full-page aerial views. A new photo — shot by Sun photographer Mark van Manen — will run every Saturday to give you a rare and breathtaking glimpse of the West Coast’s beautiful and dynamic landscape.

“There’s just so much going on in Vancouver right now,” said Vancouver Sun deputy managing editor Stewart Muir.

“The pace and direction of change in Vancouver is interesting and there’s something about an aerial perspective.”

Muir said those two factors prompted The Sun to take advantage of its ability “to give readers a sense of the place they live in in a way they don’t ordinarily get.”

The paper will also be printing high-resolution glossy poster versions of the images for purchase by readers.

The series will kick off this Saturday with a view of downtown Vancouver from the south. It shows the city centre’s skyline in a fresh new way.

The following week, the Golden Ears Bridge and the surrounding landscape will be featured.

999 Seymour condo project in downtown Vancouver

Saturday, July 26th, 2008



The 999 Seymour condo project in downtown Vancouver may not be built yet, but that doesn’t mean you can’t take a peek at the building — inside and out.

Thanks to modern technology, the Townline Homes’ project can be viewed online through digitally rendered animations.

The four “flythroughs” allow viewers to see the architecture, the location, the building’s “living green wall”, and the seamless transitions from indoor to outdoor space. The animations can be viewed on the project’s features page at on the Internet.