PETER SIMPSON
Sun

Buyers should remember they are purchasing a home, not a commodity stock

For every challenge there is an opportunity. If a vacation is in your plans, or you are considering purchasing a vehicle or home, there are some sweet deals out there.

Because constant news of a topsy– turvy economy has caused fearful consumers to rein in their purse strings, many retailers have responded with a range of sales incentives.

Tour companies and airlines offer tantalizing prices on vacations to Sunbelt destinations.

Cars and trucks rolling out of dealerships aren’t causing any traffic jams these days. In addition to slashing prices on every new vehicle, a dealer is offering airfare and a three- night stay at a Cancun resort. Another is tempting buyers with a free Xbox 360, whatever the heck that is.

Others entice buyers with cash, free gasoline or zero per- cent financing. If free- for- life tires, brake pads and batteries turn your motor, a dealer is offering that exact combination, although the newspaper ad doesn’t specify if the generous offer refers to the life of the vehicle or the buyer.

So, it makes perfect sense that home builders are also playing the incentives game as they try to get a leg up on their competition, particularly if they hold standing inventory that is heavily financed.

During the worst of the moribund U. S . housing market , builders were offering incentives such as free Mercedes sedans and backyard swimming pools.

Not here. Yes, there were one or two fringe developers giving away free cars with each condo purchased, but meaningful incentives, such as legitimate price reductions — some $ 100,000 and more on larger single- detached homes — are hugely beneficial to cash- strapped home buyers.

Recently, I have noticed other advertised enticements, such as two- year prepaid monthly condo maintenance fees, and premium upgrade features included as standard in all homes. Here’s a very interesting one. A prominent builder of single- detached homes is offering a peace-of-mind  guarantee. The ad reads, we are “so confident in our current pricing, that we guarantee if the price you pay today is actually lower in one year, we’ll pay you the difference in cash.”

Now that’s a confidence-builder. This incentive is an answer to those people who fear home prices will drop further for a while longer and have decided to delay their purchases until prices start rising.

First- time buyer’s chance

Just when might that be, pray tell? Noted analysts, just six months ago, were dancing on the don’t-worry-be-happy bandwagon. A couple of those same guys now believe the world is nearing its end, and have assumed the fetal position in some dark, clammy corner.

Look, here’s the thing. This return to a balanced market allows first- time home buyers to finally climb onto that elusive first rung of the homeownership ladder. Those young folks can take their time to assess their situations, then commit to a home that both serves their needs and meets their budget.

If you are selling a home, then moving up in the Metro Vancouver area, the sales and purchase prices will be relative. Typically, when one value dips, they both dip; when one rises, they both rise.

And if you bought a home during the past, say, six months, and you are fretting that the home might have since lost some of its value, don’t let this consume you. As I have said and written many times, your investment is in a home, for your family, not in some short- term commodity stock. Real estate values always come back, and then some.

I am not advocating that everyone should rush out right now and buy a home just because there are great deals to be had, but if a new home is in your plans, now might just be your time.

On my office windowsill is a photo of a codger who appears to be well over 90 years young. The caption reads, “ this is the young man who waited for real estate values to come down.”

Now, if you are quite satisfied with your existing home because of its proximity to things you value — family, health care, shopping, spectacular views, whatever — but you are seriously considering renovating to more closely match your home to changing lifestyle needs, I have another deal for you.

Renovation seminar

The Greater Vancouver Home Builders’ Association renovation council — in partnership with B. C. Hydro, Canada Mortgage & Housing Corp. and Terasen Gas — is presenting a consumer renovation seminar on Tuesday evening at the Croatian Cultural Centre, Vancouver.

Homeowners will be guided through the renovation process, including design and planning, legal considerations, selecting a renovator, municipal permits, and living through a renovation.

Presenters include award winning renovation contractors, interior designer, construction lawyer, energy- conservation expert and senior municipal building officials.

Renovation is a hot trend — $ 7 billion this year in B. C. — so there is ample opportunity for fly-by night operators to take advantage of homeowners. Dealing in the cash- only underground economy, rather than working with a professional renovator, exposes homeowners to legal complications and penalties from municipal bylaw officials, provincial safety authorities and federal tax collectors.

Seminar attendees will also learn about RenoMark, a new program GVHBA has introduced in Metro Vancouver to provide greater confidence to homeowners when hiring renovation contractors. To be accepted into the program, contractors are obliged to abide by a 10- condition code of conduct. Visit www. gvhba. org for details on RenoMark.

Pre- registration

Pre- registration to this popular seminar is essential. Call 604- 5885036, leave your name, phone number and the number of people attending, then consider yourself registered. Although attendance is free, please bring along a non- perishable food item for the Greater Vancouver Food Bank Society.

The seminar is a great way for homeowners to learn how to differentiate the pros from the schmoes.

Peter Simpson is the chief executive officer of the Greater Vancouver Home Builders’ Association. Email peter@ gvhba. org

Financial projections for Westin Grand Hotel were overly optimistic and negligently prepared, judge rules

Neal Hall
Sun

A 1999 photo shows Westin Grand Hotel developers Scott Cressey and John Evans. Photograph by : Glenn Baglo, Vancouver Sun files

VANCOUVER – The developers of the Westin Grand Hotel have been found liable to pay compensation to investors as a result of false financial projections that were overly optimistic, a judge has ruled.

The 1996 financial projections for the hotel, which opened in 1999 on the northwest corner of Robson and Homer, were not reasonable and were negligently prepared, B.C. Supreme Court Justice John Truscott found in a ruling released this week.

The judge found the developers and their directors liable to pay compensation to investors for making a material false statement under Section 59 of the Real Estate Act.

The financial statements projected occupancy rates for the hotel would be 72 per cent, at an average room rate of $167, during the hotel’s first year of operation. They said it would reach 80 per cent occupancy by 2003, when average room rates would climb to about $200 a night.

The 207-room hotel, jointly developed by Trilogy and Cressey Development, sold out every strata unit offered — a total of $42 million, at an average price of $225,000 — in less than a week.

“This hotel has never performed anywhere near what had been projected as reasonable,” said Brad Dixon, the lawyer representing half the plaintiffs, who are unit owners collectively known as Strata Plan LMS 3851.

“The false comparisons were based on the hotel outperforming its competitors,” he said.

Some investors were from Asia but most were local people investing for retirement income, Dixon said.

Still to be proven in court during the next phase of civil trial is whether the investors relied upon the unreasonable financial projections to purchase strata units, the lawyer said.

The next phase of the trial may be delayed because the defendants plan to appeal the liability ruling, Dixon added.

The court found liability against the defendants Homer Street Development Limited Partnership (formerly Cressey Homer Limited Partnership), Trilogy Robson Development Limited Partnership and 455322 British Columbia Ltd., carrying on business as The Grand Development Partnership, Cressey Development Corporation, and 511953 British Columbia Ltd., formerly Trilogy Pacific Enterprises Corporation.

The directors — Norman Cressey, Joan Cressey, Scott Cressey, John Evans, Jonathon Wener and Douglas Pascal — also were found liable.

The judge found the unreasonable occupancy projections were done by MM&R Valuation Services, Inc., doing business as HVS Hospitality Valuation Services Canada.

“The defendant HVS owed the plaintiffs a duty of care in preparing its opinions and the standard of care was that of reasonable care and skill of a hotel valuator,” the judge said in a written judgment. “The projected occupancy rates for the Westin Grand Hotel for the period 1999-2003 were unreasonable and … were negligently formulated by HVS.”

The judgment is available online at: http://www.courts.gov.bc.ca/Jdb-txt/SC/08/15/2008BCSC1564.htm

© The Vancouver Sun 2008

End of boom isn’t a bust

Eric Beauchesne
Province

OTTAWA — Canada‘s housing boom has ended, but the shift to a buyer’s market is no reason for alarm, according to an analysis by one major bank yesterday.

Another big bank contended that even the recent 10-per-cent fall in Canadian housing prices is significantly overstated.

“We argue against taking an overly alarmist view to domestic housing prospects,” said Adrienne Warren, economist and real-estate market specialist at Scotiabank.

“This is not a U.S.-style bust caused by overbuilding, speculative buying and imprudent lending, but rather a cyclical slowdown accompanied by a valuation adjustment in several large centres where booming demand conditions and temporary supply constraints led to an overshooting in prices.”

In a separate analysis, TD Bank calculated that home prices last month were down only 4.6 per cent from a year earlier, less than half the 10.9 per cent reported by the Canadian Real Estate Association.

“As suspected, the difference arises predominantly because of large double-digit drops in sales in some of Canada‘s most expensive markets in British Columbia, which our index controls for,” TD said, noting that B.C. sales were down 50 per cent from a year earlier. “Since average prices in B.C. are the highest in the nation, the drop in sales tends to overstate the extent of price declines.”

Survey results by polling firm Ipsos Reid, also released yesterday, suggest sales in B.C. will be falling further. Nearly 80 per cent of British Columbians surveyed said it’s not a good time to sell a home. Nearly six in 10 also expected housing prices to be lower in a year’s time — by an average of 6.7 per cent in their communities.

Meanwhile, Scotiabank in its report conceded that Canada‘s longest housing boom of the post-war period has come to an end.

While the reversal has been most pronounced in the previously hottest markets of Western Canada, including Calgary, Edmonton and Vancouver, conditions in virtually all regions are tilting back in favour of buyers for the first time in years, it said.

Canadian home prices will likely fall further in light of the expected weakness in employment and in the economy, but much less than they have in the U.S. The report projected national average prices will fall up to 15 per cent from their late-2007 peak.

Much of the decline will occur in Canada‘s three western-most provinces and will leave intact most of the significant price appreciation of recent years, it said.

© The Vancouver Province 2008