City unveils plans for largest development in its history, a 2,600-unit community

Derrick Penner
Sun

With the unveiling of its biggest single development, the City of Richmond has begun what it hopes will be a re-orientation of its downtown out to the Fraser River waterfront.

On Tuesday, Aspac Developments Ltd. showed off its detailed plans for River Green, a 2,600-unit master-planned community, with its first phase of construction to start in September and the total build-out to take 10 to 15 years.

And Aspac plans to start selling that first phase, 458 luxury-oriented units in six buildings, this June, with completion expected some time in 2012.

Prices for the units, however, ranging in size from 700-square-foot single-bedroom apartments to 3,500-square-foot waterfront homes, were not unveiled at the media preview inside the project’s $9-million presentation centre.

“It was part of the original vision when we built the [Olympic] Oval and came up with the concept for it that we would have a vibrant new neighbourhood right on the waterfront,” Richmond Mayor Malcolm Brodie said in an interview.

Aspac, the developer that built a big chunk of Vancouver’s Coal Harbour, bought most of the 11.2-hectare River Green site adjacent to the Oval, for $141 million in 2007.

Some 7.4 hectares of the property is the remainder of what was once the 219-hectare Brighouse Estates property that Richmond bought for $1.45 million in 1962.

Brodie said that the city held ownership of the remaining land “for decades,” waiting for the right opportunity to shift downtown Richmond’s focus out towards the little-used waterfront.

“We knew being home to the signature venue for the [2010 Olympics] would provide us with unparalleled opportunities to promote our city,” Brodie said, adding that the Oval “could be a catalyst for achieving our vision for our city.”

Ted Townsend, Richmond’s director of communications, said that as development in this sector of Richmond proceeds, the city will develop the old CP Rail right of way as a main north-south connector road.

And with its green roofs, cascading rainwater-fed features and green spaces, the city expects River Green to be an anchor for a linear park being developed along Richmond’s Middle Arm dike.

“The entire riverfront will be redeveloped and rebuilt,” James Cheng, Aspac’s architect for the six-building Phase 1, said.

Cheng characterized River Green as Richmond’s “first real waterfront development.”

Cheng said the design of the site, adjacent to Vancouver International Airport’s flight paths, has paid careful attention to aircraft noise, employing an acoustic engineer to help determine which buildings will need the added soundproofing of extra insulation and specialized glazing.

To address flooding concerns, Cheng said, the level of the site has been raised so that underground-parking structures will be at the level of the river and will even help reinforce the Middle Arm dike.

Aspac has obtained its development permit for the site and Townsend said the developer is in the process of working through building permits with city officials.

River Green’s master plan, and details of its first phase, were unveiled on the same day investor advisers Edward Jones came out with a report cautioning that housing prices have risen much faster than wages and employment levels warrant.

However, George Wong, principal of Magnum Projects, Aspac’s marketer for the site, said Phase 1 will be aimed at “a more mature, more financially well-heeled crowd,” and he’s confident it will sell well, perhaps selling out its 458 units within 60 days.

Long-term mortgage rates took another tick up Monday, which, along with recent tightening of mortgage qualifying rules, are expected to squeeze first-time buyers, but Wong subscribes to the view those steps won’t seriously crimp the overall market.

“All statistics are pointing to the continuation of very healthy [sales] activity levels,” Wong said.

© Copyright (c) The Vancouver Sun

Bubble forming around easy credit and fast-rising prices, ‘bust’ not expected

John Morrissy
Province

Canada‘s housing market is beginning to show signs of being in a bubble, leading Edward Jones to caution Canadians about investing in housing and suggesting they prepare for the impact of a downturn on the broader economy.

Canada exhibits at least two of three characteristics common to asset bubbles, say the report’s authors, market strategist Kate Warne and financial services analyst Craig Fehr, primary among them prices that have risen too fast and credit that is easy to obtain.

“Canada’s housing market escaped the recent severe downturns in the U.S. and other countries. However, today’s conditions in Canada share some characteristics of those countries prior to their downturns, leading us to take a cautious stance on housing investments,” the financial-services firm said in its report.

“Our main concern is that prices have risen faster than economic fundamentals warrant and could decline, although we don’t expect a ‘housing bust.'”

A regulatory regime that has had some of its excesses pruned out will help prevent that from happening, and keeps the country from qualifying for the third condition necessary for a bubble — lax regulations.

However, average home prices have soared 19.3 per cent in 2009 to $337,410 and now stand at five times the average after-tax income, instead of the long-term 3.7 times.

By some estimates, this makes Canadian homes overvalued by anywhere from 10 per cent to 15 per cent, the report said. Edward Jones did not offer an estimate on how much prices could decline.

At the same time, consumer debt has correspondingly risen to record levels — 142.6 per cent of disposable income at the end of 2009, with mortgages accounting for 93 per cent of that.

All of which spells trouble for the economy, says Edward Jones. As rates rise, consumer spending will fall.

Today’s larger number of variable-rate mortgage holders will find bigger portions of their already limited disposable income going toward home costs.

Overall economic growth will suffer as a result.

Meanwhile, mortgage delinquencies will rise along with rates, as they have begun to do recently.

On Tuesday, CIBC, Desjardins and Scotiabank all followed higher rates set Monday by Royal Bank and TD Bank.

If delinquencies were to rise from the current 0.5 per cent to two per cent, and those delinquencies were to default, they could add 47,000 homes, or 30 per cent of 2009 housing starts — to the housing supply.

Warne said the possibility of a housing downturn suggests equity investors should keep no more than 16 per cent of their portfolios in financial service stocks.

© Copyright (c) The Province

Stephanie Armour
USA Today

A key home price index fell in February in a sign the housing recovery is not yet on stable footing.

The Standard & Poor’s/Case Shiller Index of 20 metro areas dropped 0.9% from January on a non-seasonally-adjusted basis, according to a report Tuesday.

But on an annual basis, home prices showed their first gain in more than three years: The 20-city composite index grew 0.6% from the same time last year and a 10-city composite index was up 1.4% from February 2009.

Separately, Americans’ confidence in the economy rose in April to the highest level since September 2008, reports Tuesday said.

On a monthly basis, home prices in 19 of the 20 metro areas declined in February over January, and economists warn prices may drop further in coming months.

“We do have lower prices in the second half of the year, but pretty flat for the year (as a total),” says Stuart Hoffman, chief economist at PNC Financial Services Group. “Do I think there will be some big drop off in prices? I think there will be a bit of a modest dropoff in prices.”

Fourteen of the metro areas and both composites have now fallen for at least four consecutive months. In addition, prices in February reached recent new lows for six cities —— Charlotte, Las Vegas, New York, Portland, Seattle and Tampa.

Some economists say the price drops may be part of a normal seasonal decline.

“Prices may wobble down in the wintertime,” says Mark Fleming, chief economist with First American CoreLogic. “They rebound in spring and summer when home buying resumes. It’s two steps forward and one step back.”

As of February, average home prices are at similar levels to where they were in late summer/early autumn of 2003. From their peak in June/July of 2006 through the trough in April 2009, the 10-city composite is down 33.5% and the 20-city composite is down 32.6%.

San Diego was the only market that continued to show improvement in home prices from January to February. All other metros and the two composites declined from their January levels, with 12 of the metro areas falling at least 1.0% during the month.

Several factors are adding to downward price pressures, including slowing home sales in the winter and a growing inventory of homes for sale, Fleming says.

“There are elevated levels of inventory and they have lept up over the winter because of the pace of sales,” he says.

Total housing inventory at the end of March rose 1.5% to 3.58 million existing homes available for sale, which represents an 8-month supply at the current sales pace, down from an 8.5-month supply in February.

On confidence, the Conference Board said that its Consumer Confidence index increased to 57.9, from a revised 52.3 in March. The April reading is the highest since September 2008’s 61.4. That was when the financial crisis intensified with the collapse of Lehman Brothers, sending confidence into freefall the following month. Economists surveyed by Thomson Reuters were expecting a reading of 53.5.

The index, which measures how shoppers feel about business conditions, the job market and the next six months, has been recovering fitfully since hitting an all-time low of 25.3 in February 2009.

April’s reading is still far from what’s considered healthy. A reading above 90 indicates the economy is on solid footing; above 100 signals strong growth. Still, the monthly survey of consumers showed that consumers’ current and short-term concerns about jobs and the overall economy are easing.

One component of the overall index, which assesses how consumers feel now about the economy, rose to 28.6 in April from 25.2 in March. The other component, which measures shoppers’ outlook over the next six months, climbed to 77.4 from 70.4.

“Looking ahead, continued job growth will be key in sustaining positive momentum,” said Lynn Franco, director for The Conference Board Consumer Research Center.

Economists believe confidence will remain relatively weak for at least another year because companies haven’t begun to dramatically ramp up hiring.

Metro area	Index Feb. 2010	Change from Jan.	Change from Feb. 2009
Atlanta	105.66	-1.3%	-0.9%
Boston	151.44	-1.0%	1.8%
Charlotte	116.09	-1.0%	-2.5%
Chicago	122.57	-2.0%	-3.0%
Cleveland	100.93	-2.1%	3.2%
Dallas	115.24	-1.8%	2.6%
Denver	124.54	-0.8%	3.6%
Detroit	70.5	-1.8%	-5.4%
Las Vegas	103.4	-0.4%	-14.6%
Los Angeles	171.82	-0.7%	5.3%
Miami	147.52	-0.5%	-4.4%
Minneapolis	119.91	-2.2%	3.0%
New York	170.46	-0.4%	-4.1%
Phoenix	110.11	-1.5%	-1.6%
Portland	143.69	-2.4%	-4.8%
San Diego	157.92	0.6%	7.6%
San Francisco	134.67	-0.7%	11.9%
Seattle	143.56	-1.1%	-5.6%
Tampa	136.54	-1.2%	-6.0%
Washington	176.49	-0.5%	5.0%
Composite-20	144.03	-0.9%	0.6%
Source: Standard & Poors and Fiserv

Contributing: Associated Press

Garry Marr
Sun

A new survey says more than four out of five home buyers feel comfortable with their debt but another hike in interest rates might get Canadians squirming next time they’re polled.

Canada and Mortgage and Housing Corp. surveyed 2,503 recent mortgage consumers between Feb. 11 and Feb. 28 and found 81 per cent were comfortable with their current debt levels. However, the survey was done before three successive hikes in interest rates that have seen the five-year fixed-rate closed mortgage climb from 5.25 per cent to 6.25 per cent in less than a month.

“Rates were low throughout most of the time [of the survey]],” said Pierre Serre, CMHC vice-president, insurance product and business development, adding it was unclear whether the 81 per cent figure might fall because of the hike.

Based on an average Canadian home sale price of $340,920 in March and a five-per-cent down payment, the minimum allowed, mortgage payments for a five-year fixed rate product have climbed almost 10 per cent.

As it has throughout this rate hike cycle, Royal Bank got the ball rolling Monday by adding another 15 basis points to its fixed rate product. Toronto-Dominion Bank was next, with most of banks expected to follow shortly.

The hike means that a typical Canadian homeowner with a 25-year amortization on that $340,920 home and five per cent down is now paying $2,120.54 per month in mortgage costs, up sharply from the $1,930.03 it cost before the latest hike in rates. The same mortgage based on the current prime rate of 2.25 per cent would cost only $1,410.84 to carry. Still, many economists predict the Bank of Canada will begins raising its rates as early as June, which will lift the prime rate.

The survey also found home buyers are relatively cautious when taking out their mortgages. Only 20 per cent of the market took out mortgages based on amortizations of longer than 25 years. CMHC also said 68 per cent of consumers plan to pay off their mortgage sooner than current amortizations.

“In talking to some lenders I’ve heard of lots of people who get extended amortizations but accelerate their payments,” said Serre.

Michael Polzler, executive vice-president of Re/Max Ontario-Atlantic Canada, didn’t think the latest hike in rates would do anything to slow the market.

“It’s still minor. Interest rates overall, as far as I’m concerned, are still at historic lows,” he said. “Are they climbing up? Yes. It’s time to consider locking in. Are they going to skyrocket? I don’t think so.”

© Copyright (c) The Vancouver Sun

Planned community includes 2,600 units on 11 hectares on the waterfront

Jack Keating
Province

A massive 2,600-unit waterfront development on an 11-hectare site next to the Richmond Olympic Oval will be officially unveiled by the developers today.

“It starts to fill out the vision we have for the waterfront and for the area around the oval and our city centre.”
— — Mayor Mayor Malcolm Malcolm Brodie Brodie

Aspac Developments of Vancouver said the project “will be the largest and most upscale master-planned community ever built in Richmond, with more than three million square feet of residential and commercial property.”

Richmond Mayor Malcolm Brodie will be on hand for this morning’s official launch of the project by Aspac and its marketing partner, Magnum Projects.

“I think it’s a terrific project for Richmond,” said Brodie Monday. “And it starts to fill out the vision we have for the waterfront and for the area around the oval and our city centre.”

Brodie said today ’s announcement will be for the first phase of the project that will include six residential buildings and 458 units.

“This phase is 100-per-cent residential in six buildings with a maximum height of 14 storeys,” said the mayor.

Brodie said the city’s vision when it agreed to build the Richmond Olympic Oval was to create a “vibrant and dynamic neighbourhood” around the oval. “And we wanted to extend our city centre and also have the connections right to the riverfront.”

Critics say environmental concerns, including flooding and earthquake protection, will have to be addressed.

“The environment is always a concern,” said Brodie. “And either those concerns have been addressed or they will be addressed.”

Brodie said Aspac is “taking a very sustainable approach to the neighbourhood. And it will be a green development.”

The project is expected to take 10 to 15 years to finish.

metro vancouver: Buyers from Mainland China driving region

Grant Ellis
Province

Royal Bank of Canada is leading the charge to higher mortgage rates, boosting the cost to new home buyers for the third time in less than a month.

The country’s biggest bank said Monday it is lifting the rate on most mortgages by 15 basis points.

After hikes of 60 basis points and 25 basis points, respectively, Monday’s hike brings the rate on Royal’s five-year closed fixed-rate mortgage to 6.25 per cent.

TD Canada Trust wasn’t far behind, raising rates Monday afternoon on some mortgages between 15 and 25 basis points. The rate for its five-year closed, fixed-rate mortgage is now 6.25 per cent as well.

When Royal hiked rates in late March and earlier this month, the other big banks followed suit soon after.

The banks say they are raising mortgage rates because their own cost of funding is going up ahead of expected rate increases from the Bank of Canada and U.S. Federal Reserve this summer.

Homebuyers are facing higher costs on other fronts as well, with more stringent mortgage-lending rules that took effect April 19 and the looming introduction of the harmonized sales tax in Ontario and B.C.

Many homebuyers are expected to try to rush to make their purchases ahead of the changes to keep their costs down.

Canada‘s real-estate market has been booming since the economy emerged from recession last year as consumers take advantage of some of the cheapest mortgage rates in decades.

© Copyright (c) The Province

Stephanie Armour
USA Today

As a Realtor, Lacy Williams gives presentations to first-time home buyers about what to expect when buying a home.

She often finds she must start at the beginning, helping novice buyers decide whether it makes more financial sense to rent or buy. Then she gets down to the nuts and bolts: how to get a loan, pick a Realtor and look for a home.

“I tell people there are no stupid questions. Ask anything you don’t understand,” says Williams, with Joyner Fine Properties in Richmond, Va. “One of the biggest mistakes they make is they go to an open house and wind up buying from the listing agent. The listing agent represents the seller. They need a Realtor who represents them.”

With the spring buying season in full swing, first-time home buyers are driving much of the current sales activity –– lured in part by low prices, interest rates around 5%, and a federal tax credit of up to $8,000 for those who can sign a contract by April 30 and close by June 30.

But it can be a confusing process, even for veteran buyers. Here are five tasks that Realtors, brokers and other housing experts say first-time home buyers should know how to do before getting into the market:

•Get financials in order. Buyers should check their credit score, taxes, 401(k)s and other aspects of their financial situation to determine the maximum they’re comfortable affording for their monthly mortgage, utilities, maintenance, taxes and insurance.

“If your credit score is a mess, clean it up before applying for a mortgage,” says Ed Mermelstein, a New York-based real estate lawyer and developer. “A bad credit score may not just affect your rates, but may prevent you from getting a mortgage.”

Buyers should also get preapproved by a broker or lender — that means they get an agreement by a bank to lend the buyer up to a specific amount for a home, and it tells sellers that financing is already lined up.

That’s different than a letter of prequalification, which states that a buyer’s financial information and credit look good. A prequalification does not guarantee a loan. Some websites, such as myhome.bankofamerica.com and trulia.com/guides/home_buying, aim to help buyers getting into the market.

•Find a Realtor and start looking. To find a good Realtor, talk to friends, neighbors and co-workers. Referrals can be the best way to select someone. Make sure your choice has experience with the neighborhood and is a good negotiator.

The wrong agent can lead to frustrations. Marc Kruskol, 52, closed on his new home in January after going through about five Realtors.

“I don’t have patience for Realtors who are lazy or don’t do their job,” says Kruskol, who bought a five-bedroom home in Palmdale, Calif., with a pool and three-car garage for $200,000. He got a 30-year, fixed-rate mortgage with a 4.99% interest rate.

Diann Patton, a consumer real estate specialist with Coldwell Banker Real Estate, suggests interviewing Realtors for the job. “This person is going to become your best friend for the next 30, 60, 120 days,” she says.

Before buyers start looking, Patton suggests they make a pro-and-con list of things they must have in a house and prioritize what’s most important. Think about lifestyle needs such as location and proximity to shopping and churches.

“Try not to treat your home like you’re living in the stock market,” she says. “It’s a lifestyle, not about flipping. Don’t try to time the market. We never know if it’s going to go up or down.”

•Investigate the reputations of builders, condos. Buyers who are purchasing a new home should check out the reputation of the builder by getting information from the Better Business Bureau.

And, when buying a condo, first-time buyers should check out the financial health of the condo or homeowner association. In the past, this was rarely a problem because for the most part owners paid their monthly maintenance assessments and the associations were well-funded, says Robert White, managing director of KW Property Management and Consulting, a property-management firm in Miami.

But now some have cut services, and some are going without insurance, and dues-paying owners are subsidizing those who aren’t paying.

“When they buy into a homeowner or condo association, the association may be having financial difficulties,” White says. “A first-time owner could buy into the association, and the association could budget more expenses to the units that are paying, subsidizing the units that aren’t paying. Ask the management company for a copy of the financial statements.”

•Make an offer and apply for a mortgage. There are myriad tips on making that final offer. While every local market is different, most economists say buyers are generally in the driver’s seat today. Fifty-three percent of homeowners believe a seller’s market is still two or more years away, according to a survey of 2,003 adults between March 30 and April 2 by American Express.

This market is very local. Homes in Chicago are getting multiple offers and going for more than 10% over the asking price, for example, while those in Fort Lauderdale are selling for 20% less than list price, according to ZipRealty.

Have enough cash for a down payment, which can be a minimum of 10%, and extra funds for closing costs, including appraisal costs and move-in deposit. Make sure any new additions or construction to an existing home have been properly filed with the city and approved. Be aware that appraisers will likely under-appraise than over-appraise, Mermelstein says.

“Definitely do an inspection. A lot of homes are sold ‘as is’ now, but you can get a credit (from the seller) if there is something big,” says Cindy Royall Libonati, in Woodland Hills, Calif., a Realtor with Ewing & Associates Sotheby‘s International Realty.

To help determine an offering price, check closing costs of comparable homes on websites such as Propertyshark.com and Zillow.com.

•Prepare for closing. At closing, first-time buyers get the keys to their new home. But there’s a lot to prepare first. They’ll have to get certified funds to cover closing costs and down payments (a settlement statement provided a day or two before closing will tell the buyer how much is needed). Homeowners insurance policies must be secured prior to closing as well. A closing cost estimate is provided after the application for the home loan spelling out what funds will be needed at closing.

Many Realtors suggest buyers have a financing contingency that will let them out of their contract without penalty if they don’t get their loan. Buyers should also have a contingency that the home appraise for at least the selling price.

“First-time homeowners don’t know you have to have a cashier’s check, not a check,” says Pat Lashinsky, CEO of ZipRealty, adding that they can be surprised by all the costs. “They can be like ‘Whoa, what’s all this’ if they’re not expecting it.”