Archive for May, 2014

Historic Hotel Vancouver up for sale

Friday, May 30th, 2014

Tyler Orton

The historic Hotel Vancouver is putting up a for sale sign after Quebec’s public pension fund, Caisse de dépôt et placement du Québec, announced it was selling off the luxury building along with Toronto’s Royal York.

The fund’s real estate subsidiary, Ivanhoé Cambridge, has been selling off its hotels in recent years after determining they were not a strategic asset.

Ivanhoe spokesman Sébastien Theberge said the sale is purely related to the pension fund’s interest in doing away with all but three of its hotels.

“We used to own 70 hotels and now we’re down to seven up for sale and that was part of a long, proactive disposal of those assets,” he said, adding Victoria’s Empress Hotel is currently in the midst of a bidding process.

“At the same time, we’re increasing our investments in other asset classes.”

He pointed to Ivanhoe’s increased interest in West Coast real estate such as shopping malls.

Ivanhoe owns Surrey’s Guildford Town Centre, Metropolis at Metrotown in Burnaby and Vancouver’s Oakridge Centre. It is also behind the development of the Tsawwassen Mills shopping centre project.

Hotel Vancouver and the Royal York are both subject to management agreements with Fairmont Hotels and Resorts, which operates both buildings.

Theberge said there are clauses in the agreements that provide for a change of ownership.

“Fairmont will have a final say in the choice of the investor,” he said.

“The (potential) investor will need to meet some criteria for financial capacity to sustain what it needs to run a hotel.”

Theberge added Ivanhoe has not established an asking price for either hotel and is not releasing to the public the company’s own estimation of their value.

Instead, he said Ivanhoe is engaging in a bidding process with potential investors.

“Their location and their iconic status make them very attractive to a lot of investors,” Theberge said, adding there has been interest from parties in both Canada and Asia.

Hotel Vancouver opened in 1939 and was the third building to bear that name.

Copyright © Business In Vancouver

As pace of home demolitions quickens, Vancouver protest grows

Friday, May 30th, 2014

Kerry Gold

More than 200 people showed up Sunday to protest the demolition of the heritage “A” listed Legg Residence in the city’s west end.

Considering the torrential downpour, it was an impressive turnout, as well as a last-ditch attempt to save the doomed, once grand house at 1241 Harwood Ave. that was built in 1899. It is the second A-listed building to be demolished in the past two years, which goes to show that even valued historic treasures are not safe.

Writer and Kerrisdale resident Caroline Adderson organized the protest. Ms. Adderson’s Facebook page Vancouver Vanishes archives many of the character houses that are being torn down, including the names of the original residents and what they did for a living. Across the orange fencing around Legg House, she and fellow activists taped photos of dozens of the houses that have been demolished. Their words of outrage, mostly aimed at the city, nearly washed off the placards as the rain came down.

Although it’s been widely reported that the house had to go so that the tree could survive, that’s not the case, said Elizabeth Murphy, one of the protesters. Ms. Murphy, once a property development officer for the city, and a current member of the Character House Network, says that the city could have used existing guidelines to retain both tree and house.

“Heritage is not a priority for this council,” she says.

“They want to use their resources for other things. They’ve made that pretty clear.”

Although demolitions are occurring all over the city, to the tune of an estimated 1,000 per year, the west side of the city has taken a particular hit because the lots are bigger. Big is the current trend in new single-family housing.

Over a three-year period, 2,243 west side houses were torn down and replaced with new houses, and that figure doesn’t include Shaughnessy. Of those, 42 per cent pre-dated 1940. They had a collective value of $5.5-billion. The stats came from a 2014 property tax report focusing on new houses, as found by University of B.C. planning professor Andy Yan. Mr. Yan is one of the city’s go-to data people for housing information, which is why he’s also become an unofficial spokesperson for the city’s growing profile as a repository of global wealth, or a “hedge city,” as he coined it in the New Yorker magazine.

The challenge to saving houses is two-fold, says Ms. Murphy. City zoning changes that allowed for greater height and floor space five years ago has helped turn old, under-built houses into so-called “demo bait.” As well, the current building code makes it unnecessarily difficult to renovate an old house.

“The guidelines are all based on new construction,” she says. “Many of the codes for new construction really aren’t relevant to old buildings, like the rain screening. These old buildings naturally breathe. They don’t need rain screening.”

Legg House represents more than a serious loss of heritage, however. It is the poster child for a battle to protect truly affordable rental housing, as well as for sustainability in the face of senseless waste.

Most of us have heard the figure by now that an average of 55 tonnes of housing materials are going to landfill each year. Tyee writer Fiona Tinwei Lam recently wrote on the topic and cited a British study by the Institution of Civil Engineers that said a new house uses up to eight times more resources than the restoration of an equivalent old house.

Tearing down old homes is not a sustainable practice, and it wreaks havoc on the community, too. The new luxury tower will not replace the affordable rentals that the Legg House offered.

On many levels, Legg House

is a symbol for a city undergoing too much change, too quickly.

“There are all kinds of anger type issues that are rolling together on this,” says Michael Kluckner, author of Vanishing Vancouver: The Last 25 Years. Mr. Kluckner also spoke at the protest.

“The Legg House is bad for one reason and the west side stuff is bad for another reason, but there’s a general sense that people are frustrated with things just not working.

“You think of the current city council as being really policy oriented,” he continued.

“For example, they campaign on bike paths, and so they see that all the way through in the face of incredible opposition because they have this policy and that’s the way they want to govern. And along the way they endorse the heritage program, which has been in effect since 1986. But when the chips are down over the Legg House they caved. They’ve got all their other policies and wish lists and neighbourhood consultation and density and the rest of it.

“But at the end of the day, rather than supporting the primary policy, which was the A list building, they went the other way altogether and ended up with a high-rise.

“And I don’t think any of them are proud of the way that gong show happened.”

The biggest impact on the west side has been the arrival of global money that is using real estate as a “land bank,” a place to stash away money.

The phenomenon is happening in London, England, as well, with foreign investors buying up houses and letting them sit empty and fall into disrepair.

In Vancouver, the pricey homes on the west side are often demolished, rebuilt and then left empty. It is, says builder Jake Fry, the commodification of housing, which is the antithesis of building a community, laying down roots, and creating density, if that’s the goal. In other words, you don’t see much street hockey happening in neighbourhoods that are used as land banks. There aren’t many people.

“You are not adding housing,” says Mr. Fry, another protester. “Generally, you are decreasing the density when you put in these big homes.”

In order to curtail the demolitions, the city could tweak zoning and offer incentives to protect the old houses, says Mr. Fry, who builds laneway housing and advocates for smaller living spaces. The city could downzone areas to offset redevelopment and ease up on building codes for old houses to encourage restorations, he suggests. However, the standard argument against down-zoning is that there’d be outcry from homeowners who are looking to cash out at the highest dollar.

“There are two fundamental problems with that,” argues Mr. Fry.

“City council is now becoming involved in market value. They are confusing their role of governance with housing investment and return. At its core, residences are about housing and community, so they have to abandon that economic commodification of the home. That should not be their role.

“Also, they could make the old properties more valuable. Offer a mechanism that, with the house restored, you can add more value to the property, by, say, stratifying the basement suite or the laneway house, or allowing a bigger laneway house if the main house stays smaller. They could offer more carrots.”

Mr. Kluckner acknowledges that it’s a conundrum for the city, with homeowners worried that down-zoning might knock a half million or so off their property values.

“But that’s an issue that is a political decision that the city has to make,” says Mr. Kluckner. “My argument would be if you are looking at this over-arching policy of a green city and wanting to have density and wanting to be sustainable, then look at the current situation and say, ‘This is not acceptable.’ And look at the solutions and say, ‘Who will be disadvantaged?’ The way I see it, it’s the ones who are going to leave the neighbourhood [after they sell] who’ll be disadvantaged. They are cashing out anyway.”

© Copyright 2014 The Globe and Mail Inc.


Thursday, May 29th, 2014


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Bridlewood at 3470 Highlnd Drive Coquitlam by polygon

Thursday, May 29th, 2014


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25 years of technology in real estate

Thursday, May 29th, 2014

Maggie Hall

During the past 25 years, we’ve seen technology grow from typewriters and pagers to tablets and smartphones. We pick up the phone or meet friends for coffee far less often now that we text, tweet or message through Facebook. Technology has connected the world, not just socially but for everything from business to travel to real estate.

The availability of information has changed the way society functions. We’ve seen there truly is no limit to technology. The question is, where will it lead us in the next 25 years?

“Technology was very much in its infancy in 1989,” says Lorne Wallace, CEO of Lone Wolf Real Estate Technologies. “An IBM Selectric typewriter was the state-of-the-art technology at that point. Very few people had PCs or anything like that.”

Des O’Kelly, president of Lone Wolf, says, “Agents had just started dabbling in computers. Maybe two per cent of them had PCs. Now, you can’t find a real estate agent without at least a laptop, let alone a smartphone and a tablet too.”

At the time, O’Kelly was running his own brokerage and was one of Lone Wolf’s first clients. “The software developed for my office was way ahead of its time. Every agent had a computer on their desk, every agent had access to look up listings from their computer and they could print offers. Back then this was unheard of.”

Fast forward to 2014 and the real estate industry has completely changed again. Agents once had to go into the office just to see which listings were new to the market and which were sold. Now they can go weeks without stepping foot inside their office doors.

Though agents spend less time in the office, tools such as virtual office programs are reinforcing the value of the broker by keeping the brokerage connected and information flowing 24/7.

The Internet and technology has played a huge role in the availability of information to home buyers and sellers as well. A study by the National Association of Realtors found that 90 per cent of consumers search for their dream home online. Twenty five years ago, listing information was only available if you called an agent and asked how much the property down the street was selling for.

Another study by Abacus Data, a public opinion and marketing research firm, found that in the last year only 28 per cent of Canadians attended open houses. This proves that consumers now spend more time searching online before making any commitment to viewing a property or working with an agent.

Consumers want more information at the tip of their fingers. They now have access to listing information on the spot through mobile websites and applications like mobile keywords. Not only are consumers more equipped but these tools are also enabling real estate agents to be more connected and provide immediate service to clients not available online, further increasing the value of the agent in a competitive marketplace.

“Voice technology is going to change everyone’s world entirely,” says Wallace. “Smart technology and smart systems in place will enable us to be more in control of our lives.”

It is the role of the real estate agent to stay one step ahead. Be aware of what is to come in the industry, continue to learn and implement tools and technology to provide clients with even more information to help in their decision-making process. This will truly differentiate the good from the great in a highly competitive industry, leading to further success in the next 25 years.

Copyright © REM 2014

Mortgage battle escalates as Scotiabank offers 2.97% five-year rate

Wednesday, May 28th, 2014

Tara Perkins

Bank of Nova Scotia is the latest lender to push the envelope on mortgage rates, offering a five-year fixed rate of 2.97 per cent.

That’s the lowest five-year fixed rate among the big banks, and comes in slightly below the 2.99 per cent rate that Bank of Montreal has sparked controversy with in recent years (Bank of Montreal’s current five-year fixed rate is 3.29 per cent).

When Bank of Montreal and Manulife Bank dropped their five-year fixed rates below 3 per cent in the spring of 2013, they raised the ire of then-finance minister Jim Flaherty, who was trying to curb growing consumer debt levels. But current Finance Minister Joe Oliver has signalled that he wants to be less involved in the mortgage market than his predecessor was.

There are lower rates in the market. Earlier this month Investors Group had a 1.99 per cent promotion, but that was on three-year variable-rate mortgages. Five-year fixed rates are important because the government requires consumers who are taking out an insured mortgage of less than five years to pass a test that shows they could afford a five-year fixed-rate mortgage. So it’s the five-year fixed rates that could, in theory, cause more concern in Ottawa about consumer debt levels.

David Stafford, Scotiabank’s managing director of real estate secured lending, makes a case for why he thinks Ottawa should not be worried: he says the bank is telling consumers to use the low rates that are available in the market today to pay down their mortgage faster, rather than taking advantage of the low rates to buy a more expensive house than they otherwise would.

“Consumers view rate as a proxy for cost,” he says. “But the actual cost of the mortgage is the dollars that you spend in interest. There are three things that drive that: how much you borrow, at what rate, for how long. And the most expensive part of the mortgage right now is time, not the rate… “If you were to make a payment on your mortgage as if rates were 4 or 4.5 per cent, then that 3 per cent rate goes to work for you.”

Banks normally stoke competition in the mortgage market towards the start of the all-important spring home selling season, but Scotiabank’s rate promotion comes relatively late. That’s a sign that the traditional spring selling season was delayed, in large part by bad weather.

“The mortgage market started late this year, it was a late spring,” Mr. Stafford says.

Scotiabank’s head of Canadian banking, Anatol von Hahn, told analysts that the mortgage market is not growing the way it has in previous years, and noted that mortgages are the largest item on the big banks’ balance sheets.

“We’ve had a bit of a slower start to the mortgage season,” Royal Bank of Canada president Dave McKay told analysts last week.

Mr. Stafford says he remains optimistic that business is picking up, and says there have been steady increases in mortgage volumes week-over-week.

“There’s going to be a burst of activity,” he says of home sales.

© Copyright 2014 The Globe and Mail Inc.

Canadian home affordability caught in a tug of war

Tuesday, May 27th, 2014

Tara Perkins

The affordability of homes in Canada is caught in a tug of war between rising prices and lower mortgage rates. But the country’s biggest bank predicts that that’s all about to change.

Royal Bank of Canada will release its latest affordability study Tuesday, and it shows that higher prices won the latest round, with Canadian home prices rising at their fastest pace in almost two years. Calgary, Vancouver and Toronto led the charge, causing houses to become less affordable despite a reduction in mortgage rates.

But RBC chief economist Craig Wright tells me he thinks the dynamics will shift. He expects that, industry-wide, five-year fixed mortgage rates will likely rise by about 0.75 percentage points this year, followed by further increases next year. The growth in prices, meanwhile, is expected to simmer down.

While the tug of war will change, the end result is still likely to be further erosion of affordability.

“With prices levelling off, that will be neutral to maybe slightly negative for affordability, but as rates go higher, that will make affordability a bit more of a challenge,” Mr. Wright says.

RBC looks at what proportion of a typical household’s monthly pre-tax income must go to the cost of owning a home. Its measure rose 0.3 percentage points to 49 per cent for two-storey homes and by 0.1 points to 43.2 per cent for detached bungalows.

The measure for condos fell by 0.1 points to 27.9 per cent. (RBC, by the way, believes that affordability is the main reason why condos are becoming more popular).

But Canada’s housing market is made up of very different regions. RBC’s affordability measure for a two-storey home in Vancouver stands at a jaw-dropping 86.5 per cent, up by 0.6 percentage points in the latest quarter. In contrast, even though prices are picking up in Calgary, residents there are only spending about 35 per cent of the typical household’s pre-tax income on two-storey homes (that’s up 1 per cent).

Ottawa, and some markets in Saskatchewan, Manitoba and Atlantic Canada, actually saw affordability improve for at least some types of houses.

© Copyright 2014 The Globe and Mail Inc.

Housing in Vancouver Becoming Even Less Affordable

Tuesday, May 27th, 2014

Emma Crawford Hampel

Rising real estate prices in Vancouver are helping to increase market confidence, but are leading to housing becoming even less affordable, RBC announced May 27.

According to the bank’s Housing Trends and Affordability Report, the percentage of pre-tax income that the average Vancouverite needed to service the costs of owning a home in 2014’s first quarter has increased overall.

The report also said that home re-sales fell 6.5 per cent in the quarter, which is 8.5 per cent below the 10-year average.

Bungalow owners need to spend 82.4 per cent of their income—an increase of 0.9 percentage points over the previous quarter. Those who own two-storey homes must spend 86.5 per cent of their income, which is up 0.6 percentage points.

The only home type that became more affordable was condos, with owners spending 39.9 per cent of pre-tax income – a 1.0 percentage point dip.

“The upside from current resale levels may be limited given the market’s long-standing poor affordability conditions,” said RBC senior vice-president and chief economist Craig Wright.

“With prices back in growth mode, the improvements we’ve seen in Vancouver’s affordability levels over the last two years will be difficult to replicate.”

After Vancouver, Toronto has the second-least affordable housing, at 56.1 per cent of pre-tax income—an increase of 0.2 percentage points, followed by Montreal (38.9 per cent, up 0.1 percentage points, and Ottawa (36.4 per cent, down 0.5 percentage points).

Affordability also fell across the province as a whole. The average British Columbian must spend 68.4 per cent of their income for housing – up 0.9 percentage points compared with Q4 2013.

The index takes into account mortgage payments, utilities and property taxes.

© 2014 Real Estate Weekly

$400m North Vancouver Waterfront Project Closer to Reality

Tuesday, May 27th, 2014

Glen Korstrom

The City of North Vancouver and Concert Properties are finalizing an agreement that would pave the way for Concert to build a $400 million mixed-use project along the waterfront in conjunction with Knightsbridge Properties.

Ken Bogress, Concert senior vice-president of development, told Business in Vancouver that he expects the city to “button up” loose ends and give the Harbourside project final approval by summer to allow for what would be an 18-building, 800-home revitalization of what is now about 12 acres of primarily vacant space between the Lions Gate Bridge and Lonsdale Quay.

“We went through public hearings on April 1 and got second and third reading approval on April 14,” he said. “Now we’re at the stage where we’re working through agreements with the city and staff.”

With the project essentially approved, Bogress is looking ahead to what could be a year-long, city-led design process for a park and the foreshore of Burrard Inlet.

“We’ll be working on our design development of the project through that period,” he said.

So, pre-sales are likely in summer 2015, and Bogress’ target is to break ground before the start of 2016.

The contentious project has been in Concert’s sights since the Vancouver developer bought the land in 1996. It has progressed despite critics, who say the proposal clashes with the city’s goal to put density along Lonsdale Avenue and the Marine Drive corridor and not in less accessible areas with little public transit.

TransLink runs a shuttle service between the site and Lonsdale Quay during peak periods. Concert has promised to fund a private shuttle service that will operate when TransLink does not.

That’s not enough for North Vancouver Coun. Pam Bookham, who along with Coun. Rod Clark has consistently voted against the project only to be outvoted by Mayor Darrell Mussatto and four other councillors.

She said Concert’s plans to widen the Fell Avenue overpass to include a turn lane, improve traffic signals and build bike lanes between the site and Lonsdale Quay come up short and will create traffic congestion and parking problems.

“It is also a site that is prone to flooding,” Bookham said. “And it is dangerous for kids who would live in the development and would have to cross a busy road and railway tracks on the way to school.”

But Bogress said foreshore improvements will help reduce the flood risk and that rail crossing upgrades will improve safety.

Seaspan’s shipbuilding yard is west of the site, and there had been speculation that the site could be used by companies that need to service Seaspan operations.

Bookham would prefer that the site become industrial space or be used for something else that creates jobs.

“We are creating jobs,” Bogress said.

He estimated that Harbourside development will create 4,500 jobs during construction and an additional 1,500 jobs at site amenities, such as a 100,000-square-foot hotel, more than 40,000 square feet of retail space and more than 200,000 square feet of office space.

“The economic spinoff,” he said, “will be $2.3 million in annual property tax revenue to the city.”

© 2014 Real Estate Weekly

Mortgage Companies Gain as Bubble Talk Spurned: Corporate Canada

Thursday, May 22nd, 2014

Greg Quinn

Mortgage insurer Genworth MI Canada Inc. (MIC) and lender Home Capital Group Inc. (HCG) are surging as investors wager the country will avoid a housing bubble and the companies pick up business vacated by the government’s housing agency.

Genworth, Canada’s largest private residential mortgage insurer, has advanced 54 percent over the past year while Home Capital, the country’s biggest non-bank mortgage lender, has returned 69 percent. That eclipses the 18 percent gain in the Standard & Poor’s/TSX Composite Commercial Banks Index which includes Toronto-Dominion Bank and Royal Bank of Canada.

The companies are poised to benefit as Canada Mortgage & Housing Corp. scales back taxpayer exposure and the market defies predictions from some economists for a slump after prices jumped 29 percent nationwide in the past five years.

Analysts project Home Capital will rise 12 percent to C$51.05, according to the average of 11 estimates compiled by Bloomberg, while Genworth is expected to gain 7 percent, according to the average of nine estimates. Home Capital fell 1.2 percent to C$45.47 at 10:08 a.m. in Toronto while Genworth was little changed at C$38.15.

“People had put a significant discount on these two housing names over the perception there would be a significant issue in Canadian housing, which is proving not to be the case,” said Asim Imran, equity analyst at Macquarie Capital Markets Canada Ltd. in Toronto, by telephone.

Prices Jump

Home Capital, which focuses on underserved customers such as the self-employed and immigrants who make up 20 percent of the housing market, reported first-quarter adjusted profit of C$1 a share, exceeding (HCG:US) the 98-cent average estimate compiled by Bloomberg. Genworth reported first-quarter earnings of 96 cents a share that exceeded the 89-cent average estimate.

Average home prices rose 7.6 percent in April from a year earlier, the Canadian Real Estate Association said May 15. Prices are up 29 percent in the five years through April, according to CREA. Housing starts also rose faster than economists forecast in April on gains in multiple-unit projects, CMHC said May 8.

“It may be expensive but people seem to be able to afford what they are buying,” Home Capital Chief Executive Gerald Soloway said in a May 15 telephone interview. He reiterated the Toronto-based company is targeting 15 percent profit growth in the next year. “The experts that were saying Canada’s housing market had to follow the U.S. were wrong, just plain wrong.”

Building Slows

The companies’ earnings could grow further after CMHC said last month it would stop insuring mortgage loans on second homes and for people who are self-employed and can’t provide outside verification of their income. It was the latest in a series of steps taken to reduce taxpayer risk and cool the housing market.

CMHC’s shrinking role in the housing market “has presented an opportunity for us to step up, broaden our role,” Genworth CEO Brian Hurley said by telephone May 16. “The soft landing we were looking for has materialized.”

Hurley said there are only “pockets” of concern in the housing market and Oakville, Ontario-based Genworth has scaled back some financing for condominiums, an area policy makers have said is at greatest risk of overbuilding.

“We like how the builders have intentionally slowed down their deliveries,” he said.

Toronto has more condo towers under construction than any other North American city, according to industry researcher Emporis GmbH.

Elevated Leverage

Other observers, such as Fidelity Investments portfolio manager David Wolf, say parts of the housing market are overvalued. The Organization for Economic Cooperation and Development said May 6 Canada should take further steps to stabilize housing, citing a 90 percent price gain since the start of 2000, second only to 97 percent in New Zealand. The International Monetary Fund said April 8 that “elevated household leverage and house prices remain a key vulnerability.”

Home Capital stands to benefit more from faster growth for uninsured mortgages, while Genworth’s growth for insured loans will be slower, Imran at Macquarie said. Canada requires mortgage insurance where the down payment is less than 20 percent of the purchase price.

Home Capital has “brighter” prospects than Canada’s big chartered banks according to Fred Westra, equity analyst at Industrial Alliance Securities. Rising immigration may give the company an advantage over bigger banks in coming years as new Canadians are less likely to qualify for a standard mortgage, he said.

Loan Losses

“Everything is better with Home Capital than the Canadian banks,” he said said by telephone from Montreal. Home Capital has loan “losses that are probably three times lower than the Canadian Banking Association average, their return on equity is 24 percent, which is better than the Canadian banks, they are growing at a faster pace than the Canadian banks.”

Home Capital’s common equity tier 1 capital ratio of 16.8 percent was higher than the average of 12 percent among major banks and the federal banking regulator’s minimum of 7 percent, the company said at its May 14 annual general meeting.

Triggers for a housing crash, such as a rise in unemployment to 12 percent, are unlikely, said Westra. Canada’s jobless rate currently stands at 6.9 percent.

One key policy maker who agrees with the soft landing scenario is Bank of Canada Governor Stephen Poloz, who says he’s tracking consumer debt burdens that are stabilizing after reaching record highs. Household debt rose 4.5 percent in the final quarter of 2013, the slowest pace since 2001, data released in March showed.

“You are going to see a solid performance at both these companies driven by low loss ratios,” Imran said. “I just don’t see a crash happening.”

©2014 Bloomberg L.P.