Archive for September, 2010

Bank foresees short-term relief on home costs but expects them to rise again

Thursday, September 30th, 2010

Sunny Freeman
Other

The cost of owning a home in Canada continued to climb in the second quarter, but homeowners may soon experience some temporary relief as house prices and some mortgage rates subside, according to a report released Monday.

The RBC Economics Research report found home ownership costs continued to rise in the second quarter of 2010, eroding affordability in most markets.

“The recent decline in mortgage rates and increasing evidence that home prices have started to stabilize in many markets are anticipated to provide some respite from the deteriorating trend in affordability in the near term; however, this is expected to prove temporary,” RBC senior economist Robert Hogue wrote.

In the longer term, RBC said the trend of rising homeownership costs will return as the Bank of Canada continues hiking the key lending rate over the next year and a half, sending variable mortgage rates higher.

Variable mortgages rates go up and down with the rise and fall of commercial banks’ prime rate, which is closely aligned with the Bank of Canada’s policy. The central bank has raised its policy rate three times this year, and currently stands at 1.0 per cent, up from 0.25 per cent prior to June 1.

RBC compiles an “affordability” index that shows how much pre-tax income is required to pay for three major costs of home ownership: mortgage payments, property taxes and utilities.

The report issued Monday estimates that for the country as a whole, the cost of home ownership for a detached bungalow increased to 41.2 per cent of pre-tax income in the April-June period, up 2.3 percentage points from the first quarter.

However, RBC says there will be some short-term relief from rising household income, a trend toward falling long-term mortgage rates and the expectation that home prices should moderate slightly in the second half of 2010. **

But Laurie Campbell, executive director at Credit Canada says even if there is a brief period of relief before mortgage rates continue their upward trajectory, consumers should not rush to get into the market if it is not financially viable.

“People have become house poor trying to get into a market they may not be able to afford…. They are using other forms of credit to make ends meet and it could very well mean another bubble that could burst, considering that debt levels are at a record high,” Campbell said.

She noted that falling home prices mean owners must continue to make monthly mortgage payments based on the purchase price, even if the value of their investment falls.

Meanwhile, slumping sales will make it more difficult to unload a house that is no longer affordable, she added.

Home prices in the second quarter remained historically high but the number of transactions dropped as much as 25 per cent from the beginning of the year. Prices are beginning to moderate in line with declining demand in the market.

The six-month period starting last October was a period of exceptionally strong housing demand and rising prices in some markets, particularly in British Columbia and Ontario, were boosted by a number of factors, including higher interest rates, a new tax that was pending in those provinces and stricter mortgage qualifications, which took effect in the second quarter.

Consumers are also struggling with rising utility costs and property taxes, compounding the effect of higher mortgage costs.

Ontario residents will be hit with an additional $5 per month on their hydro bills by 2012 _ the latest in a series of incremental increases to taxpayers’ electricity rates.

And in New Brunswick, the province’s insurance advocate has warned home insurance costs are rapidly increasing and could become unaffordable for many people if nothing is done.

“You need so little down now to purchase a home. Does that mean that we could potentially see people selling their house for less than they owe?” Campbell asked.

However, Hogue said that despite some greater than usual stress on Canadian homeowners, and the likelihood that costs will rise again when interest rates inevitably peak higher, there is no immediate threat of a U.S.-style collapse.

The report found the costs of owning a home increased the most in Ontario and British Columbia, where consumers are most sensitive to mortgage rate changes because the high property values in those provinces amplify the impact of an increase in monthly mortgage changes.

Those provinces were also slapped with the new harmonized federal-provincial sales tax starting July 1 that now applies to real estate services and others associated with purchasing a home.

The report said home ownership costs in B.C. during the April to June quarter neared the all-time highs reached in 2008.

It found the price of an average two-storey home rose 10 per cent from the same quarter last year to $374,200, taking up about 48.9 per cent of income.

There were wide variations, however, depending on location.

In Toronto and Vancouver, home ownership took an even bigger bite of pretax income — 50.2 per cent and 74 per cent, respectively — while it was lower in Calgary at 39.2 per cent and Edmonton at 34.7 per cent.

Kitsilano flair at Surrey’s SUN at 72

Monday, September 27th, 2010

Other

VALUE BY DESIGN: Solterra is offering a limited time promotion so hurry in so you also get the best selection and pricing available. The SUN at 72 presentation centre and two designer display homes are now open noon to 5 p.m. daily (except Fridays) on 72nd Ave. at 194th St. in Surrey. For information call 604.575.8806 or visit sun72.ca. Photos: Solterra

With contemporary design that pops and value that is outstanding, SUN at 72, Solterra Group of Companies’ new townhome community in Surrey, brings innovation and affordability to the market. “At Solterra, we simply don’t build cookie cutter homes,” says Laura Rizzo, Solterra’s Vice President of Marketing. “Every one of our projects is unique because we never replicate another community or building. For SUN at 72, we wanted fresher, more-contemporary homes that have a distinct Kitsilano twist both inside and out.” For Fraser Valley home buyers, it is the upscale design by Rositch Hempel Architects that will be the wow factor. For Vancouver buyers, it is the price that will floor them. Townhomes at SUN at 72 start at $293,800, or about half the price of a much smaller new home in Yaletown. The SUN at 72 exteriors feature dramatic roof overhangs with cedar soffit accents and oversized windows surrounded by Hardie-plank siding and rich stone insets, all built with rainscreen wall technology. All homes boast spacious decks and their own private yards, with either a tandem or double-car garage. The inspired interiors feature wide-plank laminate flooring throughout the main level with premium cut-pile carpeting in bedrooms. All homes have handset entry tile floors, nine-foot ceilings, fireplaces, windows on all sides, and a choice of two colour schemes: Earth or Water. In the gourmet kitchen of the Earth scheme, this translates into earthy, traditional white shaker cabinets or in the Water scheme, contemporary flat panel laminate cabinets. Kitchen counters are thick, polished stone quartz, with over-counter stainless steel sink, and fully equipped with a stylish stainless steel GE appliance package. Bathrooms are delightful with Kohler fixtures, Yates collection accessories and handset glazed porcelain tiles. Spacious ensuites feature his-and-her sinks and a beautiful tiled backsplash. Some ensuites have walk-in showers and deep soaker bathtubs. And there is still time to add numerous upgrades. SUN at 72 is future-proof, with Cat-5 smart wiring high-speed data, Shaw cable connectors for Internet and cable, and telephone and cable outlets in every bedroom. Solterra’s details, like extra-quiet party walls, hard-wired smoke and CO2 detectors and heavy-duty gutters are standard. Also standard is 2-5-10 third party new home warranty, including 10 years on structural. SUN at 72 is outstanding new home value. See for yourself. Solterra is offering a limited time promotion! So, hurry in to find out how you can save, while still getting the best selection and pricing available. The SUN at 72 showroom is open noon to 5 p.m. daily, except Fridays, at 19477, 72nd Avenue, Surrey. Phone 604-575-8806 for complete information and private tours.

Copyright Real Estate Weekly

Flickr’s 5 Billionth Photo

Monday, September 20th, 2010

Woodward’s Building, Vancouver

Aaron Yeo
Other

Woodward's Building Vancouver - photo by Aaron Yeo

http://www.flickr.com/photos/yeoaaron/5000000000/

Marpole rezoning plan tops unprecedented heights

Wednesday, September 15th, 2010

Proposal includes 24-storey tower

Cheryl Rossi
Van. Courier

The building proposal includes a 24-storey rental tower. Photograph by: submitted, for Vancouver Courier

A key property in Marpole on Granville near West 70th Avenue could undergo a radical transformation under a proposed rezoning that would bring increased density and unprecedented building heights to the gateway neighbourhood.

Henriquez Partners Architects has applied to the city on behalf of developer Westbank Projects to rezone the property, home to a Safeway store, under the city’s Short Term Incentives for Rental, or STIR, program.

The proposal would see the Safeway store rebuilt closer to Granville, a 24-storey rental tower, a 14-storey tower of condominiums and a nine-storey slab building of townhouses at street level with condominium units above.

Marpole at present is a mixture of older apartment buildings, few higher than three stories, and single family homes.

The city will host the first public meeting about the planned development at Marpole Place Sept. 20.

Gudrun Langolf, president of the Marpole-Oakridge Area Council Society, which runs Marpole Place, said she has heard concerns from residents.

“The folks that have stopped me to talk to me about it, my neighbours, are unanimous that it’s far too high and too dense and that the STIR program is not helping,” Langolf said.

“The concerns range from what on Earth is going to happen to my liquor store to why on Earth isn’t there an area plan that’s up to date and takes into account what to do with the growth,” Langolf added.

Like the STIR projects in the West End, the proposal has residents, including Vancouver’s former assistant director of planning, Trish French, calling on the city to develop a comprehensive area plan with the community before any significant redevelopment is approved.

Brent Toderian, director of planning for the city, said staff will report to council this fall whether Grandview-Woodland, the West End/downtown or Marpole should undergo area planning next.

The STIR program, running until December 2011, aims to boost the city’s aging and static stock of rental housing. It offers an increase in building density as an incentive to developers.

Architect Gregory Henriquez, whose firm is working on three STIR projects, argues the density increase at the Marpole site is not as significant as some might think.

Langolf argues the STIR program isn’t so vital because older rental buildings in the area have more affordable and spacious units than new suites.

Henriquez estimates of the 172 rental units proposed, 110 would be approximately 500-square-foot one-bedrooms and 62 approximately 780 square-foot two-bedrooms. He expects a one-bedroom would rent for $1,075 a month, a two-bedroom for $1,677.

He’s mainly heard concerns about the loss of the liquor store, which he believes would be included in a redevelopment, and about the need for open space. His firm is looking at incorporating two “pocket parks” into the design.

A lane will run behind the Safeway to keep delivery trucks off Granville, he added. The application includes a traffic report.

He and Toderian emphasized that the proposal is in its early stages so residents should attend the open house Sept. 20. It runs from 5 to 8:30 p.m. at the Marpole/Oakridge Community Centre, 990 West 59th Ave. with remarks from Toderian, Henriquez, Langolf and the head of the Marpole business association at 6:30 p.m. and a question and answer session at 7:30 p.m.

A community information meeting and open house about the Marine Gateway project at the southern foot of Cambie Street runs tonight, Sept. 15, at 8515 Cambie St. from 5 to 8 p.m.

© Copyright (c) Vancouver Courier

Greater Vancouver Real Estate Board Stats For August 2010

Friday, September 3rd, 2010

Other

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Cracking the code of a marketing craze

Wednesday, September 1st, 2010

Vancouver firm uses new technology to turn smartphone users into environmental activists

Gillian Shaw
Sun

Darren Barefoot, a partner at Capulet Communications, is behind the Big Wild campaign that uses posters bearing a strange code. People who scan the so-called QR code using a smartphone are directed to an online petition to save the Flathead River Valley. Photograph by: Bill Keay, Vancouver Sun, Vancouver Sun

There are mysterious symbols popping up on Vancouver lamp posts. It’s a secret code that only initiates of new technology can unravel. And unravelling they are — pointing at the symbols with their smartphones, which read the two-dimensional code and deliver a message.

QR stands for quick response. It’s a technology that’s only starting to reach Main Street, North America. Perhaps the most visible example is a giant billboard in New York City that displayed a cryptic code viewers had to scan with their smartphones — to reveal a Calvin Klein ad showing lithe, underwear-clad models.

In Canada, the Big Wild has become the first environmental organization to tap into the QR craze. It is hoping to build an online and offline buzz and prompt people to sign a mobile-friendly petition aimed at saving British Columbia’s Flathead River Valley.

While QR codes may only be understood by the more technologically inclined, their use is growing and they can be found anywhere from flyers to posters to restaurant bills.

“It’s huge in Japan,” said Darren Barefoot, a partner at Vancouver’s Capulet Communications, which created the QR campaign for the Big Wild, a conservation movement founded by Mountain Equipment Co-op and the Canadian Parks and Wilderness Society. “My favourite example in Japan are the QR codes on burger wrappers,

which you can scan to get nutritional information.”

The codes can draw a link for users between their online and offline experience.

“We’re always looking for new angles, new strategies and new approaches to get people’s attention,” Barefoot said of the decision to poster Vancouver with the Big Wild’s cryptic message. The campaign is also being rolled out in seven other Canadian cities.

“We wanted to try out a campaign with these QR codes and add an element of mystery,” said Barefoot. “They are unbranded posters.

“The idea was that we would entice people; the people who might scan the codes are technologically minded so they would know about the code and know what to do with it.”

It’s an inexpensive way to deliver a message.

A QR code could link to a phone number, a web address or a short text message. Among QR services are ones that let you put a code on your contact information, so people could scan the code with their smartphone

and automatically add you to their contacts.

The codes are used in Japan for commerce, allowing such transactions as scanning at a vending machine and having the charge go straight to your phone bill. And it’s now possible to pay some bills here simply by using your smartphone as a scanner.

In Vancouver, Mobio Identity Systems is using the technology to deliver everything from snacks to football fans to payments for pizzas.

“If you download a scanner to your phone and scan a bar code it is going to take you to a website,” said Mobio founder and chief executive Clovis Najm. “Ours go on to managing the interaction for the user.

“For example, Habitat for Humanity uses our bar codes on T-shirts that people working on their restoration sites wear. When you scan the bar code you can donate money immediately.”

Mobio also counts NFL and NBA teams among its clients. Fans of the Jacksonville Jaguars will be able to order food to their seats, simply by scanning in the code on their program. Scanning the code will produce a menu, let the buyers choose an order, then the items will be delivered to their seats.

“The QR bar code is great for basically signifying to somebody they are going to go to the Internet on one level, but when people see the Mobio sign, they know there is some sort of interaction or transaction that will occur,” said Najm.

Several Vancouver stores, restaurants and businesses use Mobio, either as part of a promotion or for such transactions as paying for a meal.

A list of locations that use the Mobio application can be found at getmobioid. com/locations. The Mobio iPhone app is at getmobioid. com.

© Copyright (c) The Vancouver Sun

Forecast of Metro house sales downgraded

Wednesday, September 1st, 2010

National housing agency hedges May prediction

Derrick Penner
Sun

Canada Mortgage and Housing Corp. has reduced its expectations for Metro Vancouver’s housing markets, a prediction that speaks as much to the mad rush of sales in late 2009 as it does to the slowing of sales in mid 2010.

The national housing agency predicts that Metro Vancouver will see 34,000 sales in the region’s home-resale market by the end of 2010, a 6.2-per-cent decline from 2009. And that is down from the forecast of 35,000 sales the national housing agency released in May.

For 2011, Canada Mortgage and Housing is forecasting 33,000 Metro Vancouver sales, a decline of almost three per cent from 2010.

“It’s not a huge change in terms of the forecast,” Robyn Adamache, Canada Mortgage and Housing’s senior analyst for Metro Vancouver, said in an interview.

Adamache said the region did see a surge in sales in the spring, before the implementation of the HST on new-home sales and ahead of new mortgage-qualification rules designed to keep new buyers from over-extending themselves.

Sales have slowed since then, with a corresponding increase in new listings from sellers attracted by high prices.

“I think the market is coming in line with what the economy is doing and what population growth is doing,” Adamache said.

Adamache forecasts B.C.’s population to grow by an average of 28,000 households per year due to immigration, with a majority settling in Metro Vancouver, which will bolster demand for both rental accommodation and new homes.

“As the provincial economic recovery gains traction, job gains will shift to full-time from part-time, bolstering income growth and home ownership demand,” the report said.

Canada Mortgage and Housing is forecasting that Metro Vancouver housing starts will hit 12,000 for 2010, up almost 44 per cent from 2009′s collapse of starts.

For 2011, the agency predicts Metro starts will rise to 14,000 units.

Adamache’s forecast anticipates that Metro Vancouver’s average home price will hit $655,000 by the end of 2010.

That will be almost 11 per cent ahead of the overall 2009 average price of $592,441.

© Copyright (c) The Vancouver Sun

Housing prices threaten growth

Wednesday, September 1st, 2010

There are reasons why Vancouver has become forbiddingly expensive, and they are no mystery

Michael Goldberg
Sun

‘We did it: We are the least affordable city in North America.”

Those are the words of Sun columnist Don Cayo, who recently wrote a series of articles about housing prices in Metro Vancouver. Much of his discussion focused on growing housing demand from people moving here to enjoy our globally renowned quality of life, resulting in higher prices.

In a normal market, rising prices create new supply to meet demand and prices typically abate. Indeed, in most markets there are periods of undersupply followed by oversupply as developers overreact to prices and overproduce, pushing prices down. In Metro Vancouver this oversupply cycle is damped so we have not seen major price drops. So let’s look at supply.

But first, congratulations are in order. Vancouver is now the least affordable city among 272 in Australia, Canada, Ireland, New Zealand, the U.K. and the U.S., according to the 2010 Sixth Annual Demographia International Housing Affordability Survey.

This achievement was made possible by a potent mix of dysfunctional local policies, processes, public attitudes and a wanton disregard for the economic realities of present and future residents and of the future ability of the region to attract and retain jobs.

Supply is severely restricted by low densities over most of Vancouver compared with other cities our size. Height, setback and view corridor rules further limit supply. Add to this lengthy and costly approval processes and the result is a significant continuing restriction in supply, which, faced with growing demand, means rising prices. An unintended but predictable result of limiting supply with rising demand is gentrification, killing what little affordable housing is left as people seek out new and affordable neighbourhoods, in the process making them unaffordable to current residents and later to others.

Witness South Main Street (SoMa), Woodward’s and Northeast False Creek inexorably gentrifying the Downtown Eastside (not a bad thing necessarily) and the likely gentrification of Fraser Street and the Great Northern Way slopes.

The solution is expanding supply and potential supply more rapidly than demand expands. This by no means implies widespread destruction of single-family neighbourhoods. Quite the reverse: It means raising residential and commercial densities in strategic areas. If done properly, this takes pressure off single-family neighbourhoods and helps preserve them and stabilize their prices.

What would such a targeted density-raising strategy look like? First, densities around rapid transit stations will rise significantly. The most under-zoned areas are Broadway-Commercial, Broadway-Cambie and Oakridge, with Cambie and Southwest Marine Drive following closely behind.

The Marine Gateway proposal at Cambie and Southwest Marine Drive is a current and particularly egregious example of planning restrictions destroying large amounts of much-needed potential rental housing. Building rental housing economically requires density. At the Marine Gateway project, the developer originally planned a dense development on the southeast side of Cambie and Marine Drive on underused industrial land. The developer wanted to create more than several hundred rental units. After density and building-size reductions, 85 per cent of the rental units were cut, a significant loss of badly needed rental units. Similar, if less extreme examples abound in Metro Vancouver with potential housing supply being greatly reduced, it will lead to higher prices as demand continues to grow.

More broadly, density increases should be considered at major bus-route intersections, especially on commercial streets, with much higher densities allowed where buses meet rapid transit stations. This densification strategy would spread density increases widely so that all neighbourhoods add to supply and choice and reduce pressure to rezone interior parts of single-family areas.

To a very modest extent, this has occurred in Kerrisdale and Dunbar along West 41st Avenue. The aggregate potential supply of such widely dispersed strategic upzoning can add many thousands of housing units across Vancouver, draining off price pressures, making us more competitive economically and reducing forces to gentrify and erode affordability in single-family areas.

Vancouver has 25 per cent of Metro’s population, so similar strategies are needed across the region, such as those on the Millennium and Expo lines at Metrotown, Brentwood and New Westminster and notably, the exemplary transit-oriented development at Surrey city centre.

Failure to pursue major densification policies will result in pricing ourselves out of global markets as newcomers, hoping to fill tomorrow’s jobs, cannot to afford to live here.

Michael Goldberg teaches at the Sauder School of Business at the University of British Columbia.

© Copyright (c) The Vancouver Sun

Controversial apartment project delayed for further consultation

Wednesday, September 1st, 2010

Doug Ward
Sun

Mayor Gregor Robertson has placed the controversial plan to build a 22-storey apartment project in the West End on hold to allow further community consultation.

Robertson’s profanity-laced remarks in July about neighbourhood opponents of the tall rental tower proposed for 1401 Comox Street being “NPA hacks” created a political crisis for Vision Vancouver, which enjoyed strong support in the West End during the last election.

The mayor announced Monday that the rezoning application for the site won’t proceed to a public hearing until a special advisory committee develops planning priorities for the already dense West End.

Robertson said in a media statement that he told developer Westbank and Peterson Group that it would “not be appropriate” to move forward without more community input.

The Comox tower is one of several projects proposed under the city’s Short Term Incentives for Rental (STIR) program, which provides increased density and other incentives for developers.

The STIR program is Vision Vancouver’s attempt to create affordable rental housing — something the private sector has been unwilling to do since the ’70s when developers began building more profitable privately-owned condominiums.

Randy Helten, a member of West End Neighbours, which opposes the project, praised Robertson for putting the breaks on the rezoning.

“This will allow more time for proper discussion in the community about this important site,” said Helten, who was one of the speakers who sparked Robertson’s potty-mouth tirade during a council meeting in July on the West End apartment development.

“Who are these f—ing … who are these hacks, man? Are they … NPA hacks?” Robertson was caught saying when a microphone was left on after the meeting wrapped up. The outburst was posted on YouTube — and a chastened Robertson quickly issued an apology.

Helten said postponement of the rezoning could lead to a “win-win” compromise, which could prevent the “rapid and radical rezoning” of the West End while allowing developers to create “affordable and profitable” housing in the community.

“Nobody opposes rentals. The question is what type of buildings are being built.”

Helten said that community outrage over the project forced Robertson and Westbank to step back and review the project.

Vision Vancouver, added Helten, has had “very strong support previously in the West End and so I’m sure is very concerned with an election year approaching.”

Vision Vancouver councillor Geoff Meggs said that the dispute over the Comox project points to the greater challenge of how to develop more affordable and dense housing while allowing neighbourhoods to control their futures.

“We are going to have to find a balance between the citywide responsibility neighbourhoods have to help create a sustainable city and right of every neighbourhood to have oversight over its future,” said Meggs.

“And I think many neighbourhoods are telling us that they don’t think the balance is there.”

© Copyright (c) The Vancouver Sun

home you like and can afford trumps the market

Wednesday, September 1st, 2010

Craig McInnes
Sun

Are we in a housing bubble that’s about to burst? Most real estate analysts don’t think so. But it’s still a pretty scary prospect for homeowners who owe what may be more than their house is worth if we have an American-style crash here.

And the prospect of a 20-to 30-per-cent decline in the cost of housing in Vancouver certainly raises the anxiety level for people who are now on the brink of buying their first home. It may even persuade some people that housing is now too risky an investment for the money they have been saving up for a down payment.

On Monday, a report from the Canadian Centre for Policy Alternatives argued that prices have floated into the bubble zone. It warned the bubble could burst if we get too rapid a rise in interest rates from their current historic lows.

In one scenario, the report considered an American-style collapse in prices of 30 per cent in a single year.

On Tuesday, the C.D. Howe Institute followed with an analysis that looked at the differences between the U.S. market and ours and found that there is little chance of us falling into the kind of dark hole that has crushed the dream of so many homeowners south of the border.

But no one can rule out a correction in prices here, even though most real estate analysts aren’t predicting any major decline. We’ve had them in the past, when prices have gone flat or fallen year over year. And the prospect of a 20-per-cent fall in the value of a $500,000 condo or a $1 million house, no matter how unlikely, could easily be enough to scare off first-time buyers.

But making a purchasing decision based solely on what you fear will happen to the shortterm value of real estate in Vancouver might be a mistake.

It would overlook the fact that what most people pay for when they buy a property is not the property itself but the money they borrow to complete the purchase. That means what you should be looking at is not just the risk to the value of your prospective home, which, if history is any guide, may go down in the short term but will gain value over time.

You should also be looking at what happens to your cost of borrowing if you put off your purchase over fears of a shortterm decline in prices.

With interest rates at historic lows, the cost of borrowing will almost certainly go up. For people who put off buying a home now because they fear real estate prices will fall, there is a good chance that the increase in borrowing costs will represent an even larger hit to their net worth by the time they finish paying off their mortgage.

For example, for someone contemplating borrowing $400,000 with a rate of three per cent, the interest cost over 25 years with a 25-year amortization would be just under $170,000. If the rate increases to six per cent, the cost would be $373,000, an increase of more than $200,000.

Is a three-point increase in interest rates over the next few years more likely than a major price correction? I think so, but lacking a crystal ball, I still believe the best advice is to give up trying to time the ups and downs of the housing market. I think the best advice is to buy a home when you can afford it and you find one you like. After a few decades, you’ll still have a home, no matter what kind of investment it turns out to be.

© Copyright (c) The Vancouver Sun