Much debate results from a lack of data on how the underground economy and other factors influence housing prices

Don Cayo
Sun

Criminals are people, too. As are immigrants, old folks and any other demographic group you can name.

And, yes, these folks all do their bit to drive up the cost of housing in Metro Vancouver.

Because the fact is, the more of us there are, no matter who or how we make our money, the more demand for homes. This, coupled with a housing supply that’s limited and skewed by our dramatic but difficult geography, pushes prices sky-high.

But do some of us drive up prices more than others?

Looking at a few specific neighbourhoods, the answer may very well be yes. But region-wide, not so much.

Vancouver‘s successive waves of wealthy immigrants, for example, no doubt bid up prices of upscale homes in the parts of the city that these newcomers see as choice.

Of course, the same could be said of poorer newcomers, who drive up the rents in basement apartments. After all, if they didn’t come here, or if they had more money, half our mortgage-helper suites would be empty and competition for tenants would drive prices down.

Beyond these obvious observations, however, the analysis gets complicated. There’s lots of speculation, but no data, on how much money organized (or, for that matter, unorganized) crime injects into the economy, how much spending power immigrants bring with them, or if or how much property flippers influence prices.

B.C.’s underground economy (shady cheats as well as gangland thugs) is likely north of 15 per cent of gross domestic product. This works out to more than — maybe a lot more than — $25 billion.

“Ultimately each drug dealer, each gangster, has to buy a Louis Vuitton bag for his girlfriend,” says Andy Yan, a planner and researcher at Bing Thom Architects. “The minute this happens, the grey economy hits the real economy.”

That’s a lot of money, “and no doubt it plays a role,” says Jock Finlayson of B.C. Business Council. “But is it an underlying explanation for the price of housing? I don’t think so.”

My colleague Kim Bolan specializes in crime, not real estate, but she agrees.

Bolan tells me top echelon gangs do invest in real estate and legitimate companies, but “if I think about all the gangsters arrested over the last two years, few had houses. Those who did usually just had one.”

Not surprising, perhaps, given that real estate deals attract the attention of the anti-money-laundering FINTRAC system, whereas luxury car purchases and pricey condo rents do not.

But, as with the unknowable amounts in savings and offshore earnings that immigrants bring into B.C., proceeds of crime clearly put a lot of money into circulation. And that can’t help but bolster demand beyond the limits suggested by the region’s fairly modest level of officially reported income.

Housing supply, apart from the geographical constraints dealt with in Saturday’s column, is further restricted by the generous amount of land set aside for parks and other public places, as well as the Agricultural Land Reserve, which becomes an ever-greater factor as housing sprawls farther into the suburbs.

Supply is further choked by the tendency, supported by tax breaks from every level of government, for senior couples or individuals to stay as long as they can in the large homes where they raised families.

Tsur Somerville, an economist who specializes in real estate at UBC’s Sauder School of Business, notes that it’s hard to say if this will be a bigger or a smaller market factor in the future. On one hand, there’s a growing tendency for seniors to sell their big homes and invest the money in condos, which may cost as much but which occupy a lot less land. On the other hand, every year there are more and more seniors, and they’re living longer.

Real estate consultant Paul Sullivan of Burgess Cawley Sullivan and Associates notes that even when seniors do sell out, and even when these homes are modest, they often aren’t an option for most young buyers, especially in upscale areas.

“Where the one-level, 1,200-square-foot bungalow used to sell for $400,000,” he says, “it’s been pushed to $800,000, $1 million or $1.2 million as a development site.

“A developer can build a new home for $500,000 or $600,000 and sell it for $1.8 million. So if you want an entry-level home, you’re competing with a developer who wants to buy the same house and tear it down.”

© Copyright (c) The Vancouver Sun

Stephanie Armour
USA Today

WASHINGTON — Nearly half of homeowners who enrolled in the Obama administration’s program to get lower mortgage payments found themselves canceled out by July.

Forty-eight percent of the 1.3 million homeowners who began three-month trial modifications through the Making Home Affordable Program (HAMP) have been canceled out, the Treasury Department said Friday. About 41% had been canceled out as of June.

Treasury says 434,716 homeowners made it through the trial periods through June and have been accepted into the permanent program that lowers mortgage payments for at least five years. That number is an 11% increase from a month earlier.

A total of 616,839 homeowners who enrolled in HAMP for three-month trial periods were told that they did not qualify for longer-term modifications. That is up 18% from the previous month.

The median saving for borrowers in permanent modifications is $513.09 per month, or 36% of the median payment before modification.

The HAMP program lets borrowers who are struggling to make mortgage payments enroll through their mortgage servicer in programs that reduce mortgage payments through lower interest rates, extending the term of the loan, or reductions in principal.

Borrowers generally must go through a three-month trial period before being accepted into the permanent modification program, and most were allowed to begin the trial before providing documentation of income or other verification.

Cancellations are growing because of insufficient documentation from borrowers, missed payments, or because borrowers are found to earn too much to qualify, according to Treasury.

Treasury officials still say the program is helping stem the tide of foreclosures.

“The latest report on HAMP shows the program continued to help responsible homeowners,” says Herb Allison, Assistant Secretary of the Treasury for Financial Stability. “We continue to see more HAMP trial modifications convert to (permanent) modifications.”

Many borrowers have complained that program is a bureaucratic nightmare. They say banks lose their documents and then claim borrowers did not send back the necessary paperwork.

The banking industry says borrowers weren’t sending back their paperwork. They also have accused the Obama administration early on of pressuring them to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out.

Obama officials say they didn’t pressure banks. They have defended the program, saying lenders are making more significant cuts to borrowers’ monthly payments than before the program was launched. And some of the largest mortgage companies in the program have offered alternative programs to those who fell out.

Copyright 2010 The Associated Press. All rights reserved

Homes that rise above the rest

Province

THE FACTS

Shaughnessy on Lions Park WHAT: 167 residences, 26-storey building

WHERE: Port Coquitlam

DEVELOPER: Onni Group of Companies

SIZE: 1 bed, 580 sq. ft-735 sq. ft; 2 bed, 830 sq. ft-1,150 sq. ft. PRICE: From $244,900

OPEN: Sales centre: 2950 Glen Drive, Coquitlam; hours, noon -6 p.m., Sat -Thu

Oasis WHAT: 225 residences, 37-storey building

WHERE: Coquitlam

DEVELOPER: Onni Group of Companies

SIZE: 1 bed, 520 sq. ft; 2 bed, 850 sq. ft -915 sq. ft.

PRICE: From $222,900

OPEN: Sales centre: 2950 Glen Drive, Coquitlam; hours, noon -6 p.m., Sat -Thu

The Onni Group of Companies is injecting residential highrises in Port Coquitlam and Coquitlam, and it’s breaking ground in more ways than one.

Each of the towers is a standout — literally. The 26-storey Shaughnessy on Lions Park will be the first highrise in Port Coquitlam’s history, while Onni’s Oasis, at 37 storeys, will be the tallest highrise in Coquitlam.

The organizer of the Shaughnessy sales and marketing campaign, Cam Good of TheKey. com, thinks that the suburban-urban divide is disappearing as downtowns, or town centres, develop in Lower Mainland municipalities outside Vancouver.

“The idea of where is ‘cool’ is shifting,” Good says. “The suburbs have centres with their own restaurants, shops and events.”

The Shaughnessy homes, Good reports, are appealing to a wide range of buyers. About one-third of the homes have been sold, by an equal mix of first-time home-buyers, downsizers and would-be landlords.

“There’s a group of young people who went to high school in this community and they want to stay here, but if they’re going to do that, they want to live in the coolest building,” Good explains. “The investors believe this is going to be the rental hot spot of PoCo. The only other competition is $800 basement suites.”

While the Shaughnessy is a first for Port Coquitlam, Onni’s Oasis project is entering a crowded market in Coquitlam. A myriad of projects are in the process of breaking ground in the immediate area around the Coquitlam Centre shopping mall.

Oasis also will be a bold vertical statement in the commercial hub of the city. The fourth floor common area includes a huge outdoor swimming pool and hot tub, a play area for children, and for golf enthusiasts, a putting green.

Radanka Trubka, one of two in-house interior designers for Onni, used the same design schemes for both Oasis and the Shaughnessy.

“We retained full-sized appliances because many of the buyers are coming from a single family home, and that’s what they’re used to,” she says.

In the kitchen, visual interest is added instead by stacking small rectangular tiles in a dense grouping; in the bathroom, large format rectangular tiles are placed on the vertical plane rather than the more common horizontal.

The kitchen reflects what many consumers now demand in highrise living, with industrial, restaurant-style sinks, under cabinet lighting, and soft close drawers.

Since they’re being marketed out of the same sales centre, Oasis and the Shaughnessy could even be considered competition for each other, but Good doesn’t see it that way.

“Coquitlam is more of a proven entity for this style of living,” he says. “If you have a little more of an appetite for risk, you’re heading to Port Coquitlam.”

© Copyright (c) The Province

Nanaimo waterfront lures Vancouver buyers

Chantal Eustace
Sun

Pacifica

Project location: Nanaimo

Project size: 18 storeys, 169 townhouses and apartments

Prices: from $450,000

Contact: Glynis Hayes, Coast Realty, 1-888-716-7001 (toll free) or [email protected]

Developer: The Cape Group: Ralph Schwartzman, Bill Wright and Edward Calb and Reisa Schwartzman.

Developer/owner: Nanaimo Harbour Front Development Corporation

Web: pacificananaimo. ca

Occupancy: immediate

—

When Dwayne Yaretz needs a break from the business of life in Vancouver, he hops on a seaplane to relax in his apartment at Pacifica on the Nanaimo waterfront. “Literally, you hop on your ‘private plane’ — almost -and it drives you to your doorstep, and that’s it,” says Yaretz, of the 20-minute Harbour Air trip from Vancouver’s downtown to Nanaimo.

Yaretz, who counts his Yaletown home as his primary residence, is just one of a number of local harbour-hoppers to purchase in Pacifica, says Glynis Hayes, of Coast Realty Group.

Of the development’s buyers, she says, about 20 per cent are from Vancouver. Another 20 per cent are from other major centres like Calgary, Edmonton, Toronto and Victoria. The remaining 60 per cent are Vancouver Islanders, she says.

The appeal of lower prices and waterfront living is a powerful lure for out-of-town home shoppers, she says, standing on one of the apartment’s patios surrounded by breathtaking ocean views.

“They say ‘wow’,” she says, of home shoppers’ reactions to Pacifica‘s prices. “Then they settle down and they just get taken in by the views.”

On one side, Pacifica faces the mariner’s hub of the Nanaimo Harbour, a colourful mix of marine traffic ranging from water taxis to floatplanes. You can also see Protection Island, home to the floating Dinghy Dock Pub, and Newcastle Island, a protected marine park accessible by ferry.

The other side of Pacifica, once the site of the old Malaspina Hotel, looks out to businesses on Front Street.

Hayes points to a floatplane dock visible below, adding the nearby option of air travel is an added bonus for commuter buyers.

(Sales incentive alert: The developer is offering buyers a year of free commutes with returns once per week with Harbour Air.)

More and more people are commuting by floatplane, says Randy Wright of Harbour Air/ West Coast Air.

“We estimate about 400 commuters a day,” says Wright, adding this is about double what it was five years ago.

“I’d say it’s a growing trend.”

He thinks this has a lot to do with Vancouver Island’s more affordable real estate combined with the ease and speed of commuting by floatplane. Not all commuters fly.

Pacifica buyer Stan Carter and his wife of 60 years, Florence, take the ferry every week and a half or so to spend time at their 940-square foot Pacifica apartment. The couple spends about 50 per cent of their time in Nanaimo and 50 per cent in their Vancouver home, he says.

They were drawn to the development for many reasons, says Carter, including the building’s location on the waterfront — within walking distance to amenities like a park, shops and restaurants.

“We just love it. We spend as much time as we possibly can there,” says Carter. “It’s just a little piece of heaven.”

Vancouver designer Cliff Ford says he was impressed with the views he faced while decorating the 1,000 square foot patio of one of the show suites.

“The view is ridiculous,” says Ford, who lives in Vancouver, sitting on a large, white bed he had set up in a corner of the patio. “There’s nothing like it on the planet.”

Behind the bed to one side is the ocean, the quaint cityscape also visible below. Instead of traffic noises, sea gulls squawk. At noon we hear the boom of the Sunday cannon.

Inspired by the space and sweeping views, Ford says, he worked to showcase how the area could be used for what he describes as “gracious living.” He created pockets for a dining area, a bar, comfortable lounging spots and yes — a bed for sleeping under the stars.

Inside Pacifica, buyers can take in the views through thermal, low-e glazed windows.

Standard amenities in all the homes include things like granite countertops in the kitchen and bathrooms as well as cook-friendly comforts, like Frigidaire Gallery Series appliances.

Underfoot, buyers find laminate wood floors throughout. Some of the units have carpeting in the master bedrooms.

Master bedrooms also come with generous, walk-in closets — a luxury for Vancouver shoppers, tight on space — and modern ensuite bathrooms with plenty of smart storage.

Hayes walks us through one of the penthouses, just released for sale this month.

With its 14-foot high ceilings in the living facing floor-to-ceiling windows and jaw-dropper ocean views, the 1,200 square foot space is unique. “It has the ‘wow’,” Hayes says, smiling. “Everyone who comes through the door says that.”

Hayes adds, the $750,000 price tag is a fraction of what a view like this might cost in Vancouver. “It’s the most beautiful view in the world.”

But Nanaimo-living is more than just good views and clean smelling air. Hayes, who moved to Nanaimo from Toronto in 2001, says the smaller Vancouver Island city offers people a nice lifestyle too.

“I think the number 1 would be that it’s easier,” Hayes says. “You get up in the morning, you don’t have to worry about traffic. It’s just a different frame of mind.”

As for Yaretz, he says, he’s considering buying a scooter for when he spends time in Nanaimo.

You don’t need a car, he says, especially since the seaplane parks him right at his front door.

“It’s almost like pulling into your own private garage,” he says, chucking. “It just doesn’t get a lot better.”

© Copyright (c) The Vancouver Sun

The late Art Cowie championed a three-residence addition to a well-travelled intersection

Claudia Kwan
Sun

For all that they are new, the three homes commanding the prominent Vancouver intersection of 33rd and Cambie have quite a past, a multi-decade history of individual eagerness and institutional reluctance.

The late Art Cowie started building them more than 40 years ago, when life abroad introduced him to the “fee-simple” townhouse or rowhouse. The fee simple rowhouse is an attached residence, but with detached-residency rights.

No strata council can approve or reject proposals for changes from the owner of the fee-simple rowhouse, such as using a new exterior paint that is different from the paint on the other properties, for example. That’s because there is no strata council.

No strata council can impose charges on the owner of a fee-simple rowhouse to pay for maintenance of common property, either. There is no common property.

Neighbours have to do what neighbours have always done, consult each other and work out agreements on change, or not.

Vancouver city hall doesn’t like the fee-simple rowhouse, and has a legal opinion that favours its disfavour.

“The problem here is that party wall agreements die with individual owners,” says Suzanne Anton, a Vancouver city councillor and lawyer.

Any agreements between two owners on how to settle issues to do with the party wall end once an owner sells his or her property, and must be renegotiated between the new owner and the neighbour.

“It’s not good public policy to build a legal entity with an uncertain legal future. The City of Vancouver believes it’s better to have a legally binding structure.”

The city’s legal department believes the province should amend the Land Titles Act to allow party wall agreements to be permanently attached to a property; the province doesn’t agree this is necessary.

Other fee-simple townhome projects have been built in Burnaby, Coquitlam, and Langley over the past three decades without significant legal disputes arising over the party wall.

Until such a change goes through, Anton says it is unlikely city hall will permit other fee-simple rowhouses to proceed in Vancouver.

Art Cowie thought the fee-simple rowhouse would appeal to households who want the convenience of a multi-residence property -safety, proximity to the urban lifestyle -but who don’t want their autonomy limited.

Initial construction costs are higher because each home requires its own hookups for water and sewer access, but supporters say the price tag is offset by the absence of maintenance fees.

The Cowie rowhouses are not true rowhouses. City hall insisted on the installation of two walls between each residence, separated by a one-inch gap. Builder MYK Construction, a codeveloper, estimates that move added $250,000 in costs, factoring in additional concrete and steel stabilization measures required to deal with increased weight.

From 1970 to 1993, Art Cowie served the public, on park board, on city council and, eventually, in the provincial legislature.

He gave up his seat in the Legislature in 1993 to allow now-Premier Gordon Campbell to run. He never gave up on bringing progressive housing ideas to the attention of the public and policy-makers.

In the new millennium, Cowie began a protracted battle to bring fee-simple rowhouses to the City of Vancouver. It’s a battle that continues, even though he died last year at the age of 75 from respiratory failure, after a short battle with ALS.

He and his wife Cathy were originally supposed to move into one of the three rowhouses, but it now feels too big: she’s now put it on the market for $1.988 million. The two other rowhouses are also being sold for comparable prices.

Cathy Cowie smiles when she recounts why her husband was so persistent about fee-simple housing. “Art was very innovative … before his time, really,” she says.

In addition to being a test case for fee-simple housing, Cowie decided to add one bedroom units above the garages for the rowhouses, meaning there are now six homes on the 80 x 125 lot, instead of just one single family home. The combination of fee-simple and the laneway homes is believed to be a first in Canada. Cowie was intent on adding housing density to the Cambie corridor to allow more people to live in the city.

“Art said ‘we need this in Vancouver, Vancouver needs this. Everybody is doing the same thing, we need innovative approaches to housing’.”

Situated across from Queen Elizabeth Park, the flatroofed homes are clad in brick and grey siding. They are quite contemporary looking compared to their neighbours.

The Cowies‘ townhouse is the first of the three to be completed. A small front yard adds some greenery to Cambie Street before visitors walk in the living room. A spacious hallway brings you to an expansive kitchen with microwave and oven inset into the wall, and cabinets that take full advantage of the high ceilings.

If you backtrack slightly, you’ll have no trouble spotting the three-storey staircase that leads you to the other floors. A shaft of light streams down from the skylight overhead, making the flat metal railing and glass safety barrier sparkle in the sunshine. The staircase space is big enough to allow installation of an elevator as occupants age.

The master bedroom, two guest bedrooms, and a laundry room are on the second floor. More light spills through windows in the hallway; the triple-paned glass is surprisingly effective at screening out traffic noise.

A large open room on the third floor could be used as a gym, home theatre, or entertainment space with a wet bar. It’s situated immediately beside the rooftop deck.

A fresh air-heat exchange system allows for an up to 30 per cent reduction in energy costs, and the home is pre-wired for solar panels.

All too often, occupants of secondary suites are treated like second-class citizens, with low ceilings and poor lighting.

That is decidedly not the case here. The studio suite above the detached garage feels much bigger than it actually is, thanks to the 11-foot ceilings and liberal use of standard and transom windows. A lofted area above a linen closet adds lots of storage, and could eventually be converted into a sleeping nook, while a neatly planned kitchen includes a tiny dishwasher. The bathroom is huge for a home this size, and noise from the garage is minimal, thanks to a unique roll up door.

Cathy Cowie rejects the idea that Art Cowie didn’t live to see his dream come true.

“He got to see the project approved, and construction start,” she says. “He had a vision that so many neighbourhoods could be improved with this, and this is the start.”

© Copyright (c) The Vancouver Sun