Archive for September, 2009

Tax harmonization a blow to builders and customers, but especially our children

Saturday, September 26th, 2009

‘Sharply higher taxes’ on new-home purchase, renovations inevitable, builders’ study says

Peter Simpson
Sun

The older I get the more concerned I am about the home ownership prospects of younger people.

My vexation over the proposed harmonization of the federal and provincial sales taxes contributed to this furrowed-brow disquietude, but a recent move to new office space really got me thinking.

In the course of packing I took down from my office wall a framed poster, from the 1980s. On the poster is a photo accompanied by a simple question. The photo shows two young children; the reads, ”Where will your childrenlive?”

The poster was designed to focus attention on the need for government to mitigate the growing tax burden on home buyers, as well as counter the not-in-my-backyard mindset of folks who resist any attempt to provide affordable-homeownership opportunities in their neighbourhoods.

A few years after that thought-provoking message was introduced, the federal government rolled out a brand new tax — the goods and services tax, the GST.

Today, buyers of a $450,000 new home pay $22,500 in GST, regardless if they are cash-strapped first-timers or seniors.

Those two poster kids today are in their mid-20s, perhaps one or both considering taking that first step onto the property ladder. Maybe they are married with children of their own. Who knows.

Which brings me to fresh evidence that the application of HST on new homes is also wrong-headed.

The Canadian Home Builders’ Association of B.C. asked Toronto-based Altus Group Economic Consulting to provide a detailed analysis of the HST’s impacts on B.C.’s new-homes sector.

The independent research firm also examined the impact on home renovation, but I will get to that in a future column. Suffice it to say, HST will fuel an already burgeoning underground economy.

Peter Norman, a noted economist and Altus principal, said the main finding of his report is that HST will not be tax neutral. We have, time and time again, ever since the HST announcement was made in mid-July, asked the premier and finance minister to ensure HST is tax neutral on new homes. In other words, buyers of new homes should not pay any more tax under HST than they currently do.

“Harmonization will introduce sharply higher taxes on new housing and renovation investment, which will have far-reaching negative economic and equity implications for B.C.,” said Norman.

Following are the main Altus bullets on HST’s impact on new housing investment:

– Harmonization will reduce new housing demand and thus the volume of new housing activity, which will be deleterious to economic activity and employment growth in B.C.

– Some 57 per cent of owners of newly built homes in B.C. own homes valued at more than $400,000 (the HST exemption limit). Therefore, the vast majority of potential new-home buyers will be subject to sharp tax increases once the new tax is implemented.

– B.C. has a wide housing-price distribution, with large variations in median price by area within the province. The sharp tax increases on homes priced above $400,000 will introduce significant regional disparities. Generally, denser areas like Vancouver will shoulder the majority of the new tax burden. This new tax will effectively be a tax on density – running contrary to provincial efforts to promote more compact patterns of development.

– The median house price in B.C. is $437,575. A significant proportion of new-home buyers in the province will not qualify for a full rebate under the proposed HST.

– In B.C., about 60 per cent of owners of newly built homes valued at more than $400,000 have total household incomes below $100,000. These households can be considered middle class. The new HST burden will be disproportionately borne by the middle class.

– The additional tax on new homes through the proposed HST will further stress middle-income, middle-class families who have already been battered by the rising cost of living and effects of the economic slowdown.

Based on the 2006 census findings for the number of newly built, owner-occupied homes in B.C. by value, Norman believes the introduction of HST would generate some $165 million in additional revenues for the provincial government from new homes alone (based on 2009 dollar values).

“This number is expected to increase dramatically to $298 million in 2019, due to the effects of normal housing-price appreciation. In the absence of a formula to index the threshold values for the HST rebates, the tax burden on B.C.’s middle class will rise dramatically over time,” said Norman.

The HST exemption threshold should be raised to at least $600,000 from $400,000 to reflect the high cost of housing in parts of B.C. relative to other jurisdictions. And while the number crunchers are at it, they might want to take a look at removing from new-home sales the property transfer tax.

So, where will your children live?

Peter Simpson is the chief executive officer of the Greater Vancouver Home Builders’ Association.

© Copyright (c) The Vancouver Sun

Subdivision demonstrates Cressey difference

Saturday, September 26th, 2009

Homogeneity trumped in Summerfield, Surrey, by roofline, cladding and colour variety

Michael Sasges
Sun

Photograph by: Ian Smith, Vancouver Sun, Vancouver Sun

Photograph by: Ian Smith, Vancouver Sun, Vancouver Sun

Photograph by: Ian Smith, Vancouver Sun, Vancouver Sun

Photograph by: Ian Smith, Vancouver Sun, Vancouver Sun

Photograph by: Ian Smith, Vancouver Sun, Vancouver Sun

Photograph by: Ian Smith, Vancouver Sun, Vancouver Sun

Photograph by: Ian Smith, Vancouver Sun, Vancouver Sun

Photograph by: Ian Smith, Vancouver Sun, Vancouver Sun

Photograph by: Ian Smith, Vancouver Sun, Vancouver Sun

Photograph by: Ian Smith, Vancouver Sun, Vancouver Sun

Photograph by: Ian Smith, Vancouver Sun, Vancouver Sun

At Summerfield, the Cressey development company is doing both the unexpected – building a detached-home community – and the expected – re-imagining the “Levittown” detached-home model to eliminate the homogeneity, the monotony even, of suburban residency.

In recent years, when a Cressey new-home project was profiled in Westcoast Homes, the homes were inevitably attached homes, apartments or townhouses, highrise, midrise, lowrise: Olive, Duke and Mantra on Vancouver’s west side; Elan and Donovan in downtown Vancouver; 360 in Burnaby; Lotus and Mandalay in Richmond.

They also inevitably demonstrated innovations: geothermal heating and cooling, for example; a better-than-industry-standard new-home warranty; a collaboration with Future Shop that facilitated buyers’ realization of their dream audio and visual wants.

It was, accordingly, a surprise to hear from Cressey that its first new-home project in metropolitan Vancouver in almost two years was a detached-home project, but no surprise to hear from the manager responsible for Summerfield, David Evans, that no two adjacent homes are alike.

Cladding and colour-scheme variety is one contributor to the achievement.

Roofline variety is another. Some homes are front gabled; others, side gabled. Those that are neither are

under hipped roofs. Dormers, front and side, declare upper-storey living space and add exterior interest. All roofs are dramatically pitched.

Equal in importance to what’s going on at the top of the residences is what’s not going on at the base. There are no front-of-home garage doors, no front-lawn driveways.

Households will park their vehicles in detached garages located at the rear of their properties and accessible from rear lanes.

Apartments located above the garages on the perimeter properties are a twist typical of a Cressey development.

”We wanted to create an environment that, as soon as you arrived, you could go ‘ah-ah,’ you don’t have to go inside a home to be excited, you don’t even have to leave the car to be excited,” says the organizer of the Summerfield sales and marketing campaign, Cameron McNeill of MAC Marketing Solutions.

“We wanted people in love before they went through a door,” Evans recalls of the project-planning exercises internally. ”We’ll do all the right things inside.

But we wanted to absolutely nail the outside, so that when you drive up, the streetscape was paramount.”

So who has been driving up? And have they been buying?

The second question first: Cressey and MAC, with little more than word-of-mouth publicity, sold the first 20 homes for which they had occupancy permits.

Now, the first question.

Summerfield prospects and buyers are mostly local or locally knowledgeable. If not south Surrey or White Rock residents themselves, they know people who are, friends and family.

They are mostly younger households, with children. They are mostly two-income households, their incomes generated south of the river, the Fraser.

Older households have also been attracted to the new-home community because it offers them an ownership model they understand, fee simple, without ownership obligations they understand all too well: the Summerfield properties are small-lot properties, 30 feet wide and 90 feet to 120 feet deep.

Whoever they may be and will be, Summerfield households will reside in a new-home community that is doubly blessed by location. The location is rural, at the end of country roads. But important regional arterials, Highway 15 to the east and Highway 99 to the west, are mere minutes away.

– – –

PARTNERS IN WATER, SEWER

At Summerfield, to ‘do all the right things inside’ first meant doing all the right things outside. Surrey city hall developed ‘an entirely new water-servicing strategy’ and ‘an entirely new sanitary servicing strategy,’ in the words of a staff report to council recommending amendments to the ‘Neighbourhood Concept Plan’ for the Douglas – as in border crossing — neighbourhood in which Summerfield is located.

GREEN WINDOWS

One of Summerfield sales representative Jacquie Darmanin’s responsibilities is introducing show-home visitors to the homes’ BuiltGreen certification. The gas fireplace over her right shoulder is ignited electronically, eliminating the always burning, and energy-wasting, pilot light. The niche above the fireplace can accommodate a 46-inch-wide TV. All the windows are double glazed; low-E rated; argon filled, and Energy Star certified. To say a window is a low-E window is to say its surface is a low-emittance surface from which only low levels of radiant energy are emitted. (Wikipedia, the new must-have for any show-home visitor!) The installation of casings, trim and baseboards milled from recycled wood also contributed to the Built Green certification. The Built Green program was developed by industry and government to demonstrate environmental stewardship. Energy Star is an American government program that promotes energy efficient products and practices.

2 MORE DOWN FOR $28,500

Three bedrooms (and two bathrooms) up is the Summerfield standard.

For $28,500 more, the Cressey development company will finish the basement, creating a five-bed, 3 1/2 bath, home. (A powder room on the main floor is standard.) The original ‘Neighbourhood Concept Plan’ for the Surrey neighbourhood in which Summerfield is located prohibited basements. The purpose of the prohibition? It was ‘a means of keeping services shallower in some of the areas that have challenging topographic conditions,’ a staff report to council said. Cressey and other developers persuaded city hall that the basement ban would more likely than not inhibit development.

© Copyright (c) The Vancouver Sun

Skype calling gets easier and easier

Saturday, September 26th, 2009

Gillian Shaw
Sun

AiGuru SV1 videophone, Asus

ThinkPad X200 Tablet with Multi-Touch Screen, Lenovo

PC TrickleSaver, Tricklestar

1. AiGuru SV1 videophone, Asus, $300

For Skype talkers, a Skype-certified stand-alone videophone, billed as a world’s first. No computer, no additional hardware or software, just plug in and dial. It has a seven-inch (17.8-cm) 800-by-480 pixels LCD screen, with a built-in camera and speaker and microphone. Works on 802.11b/g WiFi, or plug in an Ethernet cable. A battery in case the power goes out gives a talk time of 20 minutes, and standby of 30 minutes. In Canada, the new videophone is slated to be available through www.ncix.com and www.canadacomputers.com. For more, check the Asus website at www.asus.com.

2. Skype for iPhone, Skype, free

While we’re on the topic of low-cost/no-cost long-distance calls, there is good news for Canadians who can now get the Skype application on their iPhones. (There was a workaround that let you pick it up from the U.S. offering, but strictly speaking, here in Canada, we weren’t allowed to download that Skype for our iPhones.) While this is old news for callers in other parts of the world, for Canadians this means free Skype-to-Skype calls on your iPhone — when you’re on Wi-Fi — to other Skype users in the world. You can also call landline or mobile phones and pay Skype rates. Call forwarding, voicemail retrieval, and low-cost SMS messaging are some of the other perks, plus you can see when your Skype pals are online and ready to chat or instant message. The application is free, check Skype rates for your calling needs. www.itunes.com/appstore.

3. ThinkPad X200 Tablet with Multi-Touch Screen, Lenovo, from $2,059

Touch is taking over from typing for a lot of computing tasks, and Lenovo’s latest offerings in multi-touch screen technology — the ThinkPad X200 Table and its sibling the T400 laptop. The X200 also has a useful option for workers who need to use their tablets outside — a super-bright outdoor screen. Plus, for mobile workers, the optional eight-cell battery offers up to 10 hours on a charge, depending on your use. www.lenovo.com.

4. PC TrickleSaver, Tricklestar, $25 US

Trickle, trickle little star, how I wonder how much power is being wasted with my PC. Tricklestar has come up with a little accessory that helps cut down on power that trickles out through the peripherals you have connected to your PC or Mac while the computer is shut down. The device senses when your computer is off and switches off all the peripherals. When you turn it on, it switches them back on. A tiny green step. www.tricklestar.com.

© Copyright (c) The Vancouver Sun

July’s dip in retail sales will not derail economic recovery

Saturday, September 26th, 2009

There is little statistical evidence yet of a double-dip recession and the overall trend in retail sales remains positive despite the setback

Harvey Enchin
Sun

The Canadian economy hit a pothole on the road to recovery this week as retail sales took an unexpected turn for the worse in July.

Economists had forecast a third consecutive rise in retail sales in July over June, with most estimates in the range of 0.5 to 0.7 per cent, and were taken by surprise when Statistics Canada reported a decline of 0.6 per cent to $34.2 billion. Retail sales have gone up in five of the first seven months of 2009.

Unable to find a better explanation for their miscue, economists blamed unusually cool summer weather for drops in beer, food and clothing sales. But that analysis is suspect given that sales in British Columbia, which enjoyed a warm and dry summer, saw sales drop by 0.8 per cent, compared with Ontario’s 0.3-per-cent dip.

In fact, consumers in the West, which outperformed the rest of the country during the boom, have been hit hardest in the recession.

Retail sales are down by 7.8 per cent from a year ago in B.C., and by 9.2 per cent in Alberta. Ontario and Quebec have seen declines of five per cent and 2.2 per cent respectively.

While lower prices at gas stations drove the decline, sales slumped in five of eight retail sectors and in every province.

It’s not a temporary blip, Allan Leighton, president of Loblaw Cos. Ltd., told a retail investor conference on Tuesday (and cited in a Toronto newspaper).

People have learned to live with less, he said, perhaps permanently.

That sobering view suggests that a consumer-led recovery could be in jeopardy.

It seems likely that spending will remain subdued as long as the unemployment rate stays at or above recent levels of 8.7 per cent nationally and 7.8 per cent in B.C.

However, that might be putting more weight on retail sales than is warranted.

Gross domestic product, the measure most commonly used to quantify changes in the economy, is calculated on a value-added basis.

Since much of what Canadian consumers buy is imported, the real impact of retail sales on GDP is not as significant as it might appear.

If a Canadian buys a car manufactured in the United States from a Canadian dealer, the values ascribed to GDP would be largely limited to those related to components made in Canada, plus the dealer’s margin and employees’ wages — not the entire cost of the vehicle.

Personal expenditure in Canada represents roughly 55 per cent the economy, that is, of GDP.

In 2008, in current dollars, personal expenditure was $891.2 billion out of a total GDP of $1.6 trillion.

Net out imports, however, and the percentage from retail sales drops to single digits because imports don’t generate value-added.

This is one reason governments are keen to encourage resource industries such as mining, forestry and oil and gas.

Virtually all of their production is value-added, which is reflected in their contribution to GDP.

That’s not to say consumer spending is not important. It is.

Consumer demand spurs other sectors of the economy, adding momentum to the recovery.

Indeed, domestic spending may play a more crucial role in the current recovery than in the past due to an absence of strong U.S. demand for Canadian exports. Nevertheless, the small decline in retail sales last month, or even another next month, probably won’t derail the economy.

After all, the trend remains positive with retail sales up more than four per cent since the beginning of the year even factoring in July’s decline, according to a report by BMO Capital Markets.

There is little statistical evidence so far to indicate a dreaded double-dip recession is in the cards.

With much of the federal government’s $48 billion in stimulus spending yet to hit the street, there is reason to be optimistic — if not cheerful — about the prospects for recovery.

© Copyright (c) The Vancouver Sun

Housing, park considered for Fantasy Garden site

Saturday, September 26th, 2009

Richmond property once owned by former premier Bill Vander Zalm now the subject of rezoning application

Larry Pynn
Sun

Fantasy Garden World, the Richmond theme park once owned by former premier Bill Vander Zalm and now fallen into disrepair, could soon be redeveloped.

Rick Ilich’s Townline Homes has received the unanimous support of Richmond’s planning committee for first reading of a request to rezone the site, at No. 5 Road and Steveston Highway, from botanical garden and service station to comprehensive development.

The 8.5-hectare site would be developed for multiple uses, including 550 housing units.

More than half the site is agricultural land and would be developed as a public botanical park and urban gardens.

The potential also exists for a boutique grocery store, a pharmacy, medical/dental offices, one or two restaurants, and one coffee shop.

An estimated 25 to 50 affordable units would be included, along with a child-care facility.

Vander Zalm paid $1.7 million in 1984 for the property and sold it for $16 million in 1991 to billionaire Tan Yu’s Asiaworld (Canada) Development Corp. The family of the late Tan Yu put the property up for sale in 2007.

Vander Zalm resigned as premier in 1991 after four and a half years in office when a provincial conflict-of-interest report found he had mixed private business with his public office in the sale of the gardens.

He was charged with criminal breach of trust but found not guilty in B.C. Supreme Court in 1992.

The court ruled that while Vander Zalm had put himself in a conflict of interest, he was not a criminal.

Richmond‘s planning committee has asked staff to see if the castle on the property, a replica of British-born Capt. George Vancouver’s ancestral home in Coevorden in the northeastern Netherlands, which was donated by the Dutch for Expo 86, could be spared during the redevelopment.

Vander Zalm bought the castle and had it barged in 1987 to Fantasy Garden World.

Neither Vander Zalm nor Ilich could be reached Friday.

© Copyright (c) The Vancouver Sun

Bricks & Mortar Report 2009

Saturday, September 26th, 2009

Other

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Canadian housing markets buck recession

Saturday, September 26th, 2009

Other

With the worst of the recession over, residential real estate markets in major Canadian centres are poised for growth in the final quarter of 2009, according to a report released today by RE/MAX.

 

The RE/MAX Bricks and Mortar Report found the bounce back that began in early Spring has made this recession one of the shortest on record.  Low interest rates, pent-up demand, and improved affordability levels have all played a role in the recovery now well-underway.  Percentage increases in unit sales from January to August 2009 were led by Vancouver, (up a substantial 14 per cent to 23,158), Victoria (up 7.4 per cent to 5,266), Edmonton (up 6.2 per cent to 13,691), Regina (up five per cent to 2,597), Ottawa (up 2.4 per cent to 10,830) and Toronto (up 1.8 per cent to 58,421).  Housing values are already ahead of record-breaking 2008 levels in seven of the 11 markets surveyed, including Newfoundland-Labrador (18.1 per cent year to $203,584), Regina (6.4 per cent to $244,088), Halifax-Dartmouth (3.5 per cent to $239,633), Winnipeg (3.5 per cent to $207,006), Ottawa (3.3 per cent to $301,684), and Toronto (up 0.3 per cent to $385,978).  Nationally, average price hovers at $312,585, up 0.5 per cent over one year ago.

 

The strength of the residential housing sector cross-country has taken many economists and housing analysts by surprise once again.  In terms of its impact on the resale market, by historical standards, this recession was one of the mildest.  The resilience of bricks and mortar has been demonstrated time and again.  While there may still be some challenges down the road, the worst is definitely behind us in the housing industry.

 

The recovery of Canada’s resale housing markets speaks to the tremendous value Canadians place on the importance of owning a home.  The number of Canadians overall who own a home has increased since 1981 from 62.1 per cent to 68.4 per cent, with some markets posting even higher homeownership rates — Calgary (74.1), St. John’s (71.5), and Regina (70.1).  Significant gains have also been made over the same period in markets such as Ottawa, where levels rose from 51.4 per cent to 66.7 per cent, and Toronto, where levels rose from 57.3 to 67.6 per cent.

 

Public sentiment can perhaps best be illustrated by a recent Angus Reid Omnibus Survey* that asked the question “In which do you feel more comfortable investing your money?  The stock market or real estate.”  Out of 1,000 respondents from coast-to-coast, 77 per cent chose real estate. The results of the RE/MAX Bricks and Mortar Report are clearly representative of this national dynamic at work.

 

Markets are heating up across the country as purchasers take advantage of affordable prices and rock bottom interest rates.  Those who missed the boat in years past have found that sitting on the sidelines can be a costly move.  Prices are on the upswing and inventory levels are tightening, so the push toward homeownership is expected to continue throughout the Fall and possibly into early 2010.

 

Over the past thirty years, the Canadian residential real estate market has experienced three major downturns – 1981, 1989, and 2008.  While there have also been regional fluctuations throughout the years, return on investment over this period has been substantial, with Vancouver, Victoria, Toronto, Regina and Ottawa leading the country in terms of price appreciation.

 


                                                           

 

The overall stability of real estate as an investment has also played a role. Markets like Halifax-Dartmouth, Regina, Ottawa, Winnipeg and London have provided steady returns (especially in recent years), with minimal fluctuation.

 

* The Angus Reid Omnibus Survey was conducted on September 15, 2009 and yields a margin of error of +3.1 per cent, 19 times out of 20.

###

 


Homeownership Rates

Canada and Major Centres

 

1981

2006

Canada

62.1

68.4

 

 

 

Metropolitan Areas*

 

 

St. John’s

69.5

71.5

Halifax

55.6

64.0

Ottawa

51.4

66.7

Toronto

57.3

67.6

London

58.0

65.9

Winnipeg

59.1

67.2

Regina

65.4

70.1

Calgary

58.4

74.1

Edmonton

57.9

69.2

Vancouver

58.5

65.1

Victoria

59.8

64.7

 

 

 

Source: Canada Mortgage and Housing Corporation (May 2008)

*Homeownership rates based on 1986 boundaries for the Census Metropolitan Area (CMA)

 

Top Performing Markets by Price Appreciation

 

1980

YTD 2009

 % Increase

Market

Avg. $

Avg. $

1980 – 2009

Greater Vancouver

$100,065

$574,061

473.7%

Victoria

$85,066

$466,611

448.5%

Greater  Toronto

$75,694

$385,978

409.9%

Regina

$48,628

$244,088

402.0%

Ottawa

$63,177

$301,684

377.5%

Halifax-Dartmouth

$53,161

$239,633

350.8%

Winnipeg

$50,491

$207,006

310.0%

Calgary

$93,977

$380,489

304.9%

London – St. Thomas

$55,210

$213,683

287.0%

Newfoundland & Labrador

$52,768

$203,584

285.8%

Edmonton

$84,623

$319,939

278.1%

 

 

 

 

Canada

$67,024

$312,585

366.4%

Source: Canadian Real Estate Association (CREA), RE/MAX

1022 Seymour – U.S. Olympic committee members head for high-class digs

Friday, September 25th, 2009

Officials to occupy three floors of upscale extended-stay apartments at the Level building

Bruce Constantineau
Sun

USA House will be located on Seymour Street in Vancouver for the 2010 Winter Olympic Games.

The U.S. Olympic Committee will take over the first three floors of a new upscale extended-stay apartment building on Seymour Street to use as its USA House Olympic headquarters during the 2010 Games.

The organization will occupy about 30,000 square feet of the Level building at 1022 Seymour for working and hospitality purposes during the Games.

Chris Evans, executive vice-president of building owner Onni Group, confirmed Thursday the USOC will take over space in Level starting in January.

“I can confirm they are taking the commercial portion of the building for the Olympic period,” he said.

A USOC official confirmed the lease, but would not confirm the exact address of the building involved.

The building opened this summer with 187 fully furnished suites available for rental periods of a month or longer.

The suites cater to business travellers, with amenities like Wi-Fi, cable TV, fully equipped kitchens, air conditioning and in-suite laundry facilities.

The suites are available for monthly rates ranging from about $3,000 to $4,500, but Evans said those rates will rise to between $8,000 and $15,000 a month during the Olympics.

Many potential clients have expressed a strong interest in staying in the building during the Olympics, he said, adding he expects it will be filled with people staying for two months or longer over the Games period.

“If we were just [leasing] them for a month during the Games, we’d be full already three times over,” he said.

“But it makes more sense for us to not just do one-month stays for February 2010. Lots of groups have business needs for longer than that.”

© Copyright (c) The Vancouver Sun

New-home sales rise 0.7% in August

Friday, September 25th, 2009

Alan Zibel
USA Today

WASHINGTON — New U.S. home sales posted a tepid 0.7% increase last month, missing Wall Street expectations and providing more evidence that the housing market recovery remains tentative.

The Commerce Department said Friday sales inched up to a seasonally adjusted annual rate of 429,000 from a downwardly revised 426,000 in July. Economists surveyed by Thomson Reuters had expected a pace of 440,000.

While it was the fifth straight increase and the strongest report in 11 months, sales were 4.3% lower than the same month last year. Sales have risen 30% from the bottom in January, but are off about 70% from the peak of four years ago.

The report was the second straight disappointing sign for the U.S. housing market, which is struggling to emerge from the most severe bust in generations. On Thursday, the National Association of Realtors said sales of previously occupied homes dipped 2.7% last month.

Builders continue to make severe cuts in prices to attract buyers. The median sales price of $195,200 was off 11.7% from $221,000 a year earlier, and 9.5% below July’s level of $215,600. That was the largest monthly drop on records dating to 1963.

There were 262,000 new homes for sale at the end of August, down more than 3% from July and the lowest in nearly 17 years. At the current sales pace, that represents 7.3 months of supply — the smallest amount since early 2007. The decline means builders have scaled back construction to the point where supply and demand are coming into balance.

Buyers, meanwhile, are rushing to take advantage of a federal tax credit that covers 10% of the home price, or up to $8,000 for first-time owners. Home sales must be completed by the end of November for buyers to qualify. Builders and real estate agents are pressing Congress for that credit to be extended.

Sales varied dramatically around the country. The best performance was in the West, where sales rose more than 12%, and the worst was in the Northeast, where sales sank more than 16%. They were unchanged in the South, and down nearly 6% in the Midwest.

Meanwhile, major builder KB Home posted a smaller third-quarter loss of $66 million on Friday as it reduced costs and said new home orders increased. Still, the results missed analysts’ expectations.

Copyright 2009 The Associated Press. All rights reserved

Taking the chill of the cold room out of the rest of the house

Friday, September 25th, 2009

The better the insulation in your basement, the more problems an uninsulated cold room will cause unless you separate it properly

MIKE HOLMES
Sun

If you absolutely have to have a cold room, then you must make sure you have an insulated door between it and the rest of the basement. Treat the cold room as if it is actually outside your house. THE HOLMES GROUP

Most older homes have a cold room or root cellar in the basement — usually you’ll find it under the front porch. These basement rooms were designed for storing food and preserves, so they’re not insulated. Often they have a vent to the outside to allow cool air in and ventilate the space.

Cold rooms provide an energy efficient way to preserve food. It’s a lot cheaper than running a fridge, right?

Since it’s part of your basement, the cold room will have a concrete floor, and the walls will be unfinished. Concrete is porous, and allows moisture and air to move through it easily. That makes the cold room humid. These conditions — humid and cool — are great for potatoes, but not for humans who want to live in the space.

Generally speaking, basements weren’t designed to be living spaces. They were designed to house utilities like your furnace, hot water heater, washer and dryer, and maybe some storage.

But, more recently, homeowners want to maximize their living space, so they are finishing the basement, maybe adding a media room or play space for the kids. But what about that cold room? What are you supposed to do about it? Do you want to still use it — either to store food or maybe as a wine cellar?

In my experience, when people try to finish the basement they almost always do it wrong — especially when it comes to the cold room. And that leads to condensation and mould problems and poor indoor air quality within a few short months.

In order to properly finish your basement, you need to make sure you insulate it and stop all air movement between the “conditioned” (heated and insulated) zone and the “unconditioned” zone. If 90 per cent of your basement is finished, but you’ve left one small cold room undone, you’ve basically wasted your time.

Air will move between the rest of the basement and the cold room; condensation will form; you’ll probably have a door to the cold room that will be closed cutting off any chance for the condensation to dry; and in my world, condensation leads to mould.

With new construction techniques and materials, finished basements are highly insulated. And, the better the insulation, the bigger the problems a cold room will cause. It’s just not worth it in my book.

If you absolutely have to have a cold room for storing food or wine, then you must make sure you have an insulated door between the cold room and the rest of the basement.

You need to have weatherstripping under that door. You need to make sure the dividing walls of the cold room are well insulated, and there is vapour barrier-tuck-taped at every seam — on the warm side of the insulation. Treat the cold room as an exterior space — as if it is actually outside your house.

You also need to insulate the ceiling of the cold room, with vapour barrier, to help avoid heat transfer and keep the temperature in the room above consistent. You shouldn’t insulate the exterior walls of the cold room — you want the air in there to be cool and moist. But you’ll still need to have air circulation in a cold room/wine cellar, so make sure it’s vented to the outside. And in extreme temperatures you’ll want to be able to adjust the airflow.

For my money, the best way to deal with a cold room if you are finishing your basement is to get rid of it. Make it part of the ‘conditioned’ part of the house.

That means properly closing off the venting to the cold room, insulating the foundation walls, minimizing air movement and eliminating the condensation problem.