Steve Randall
REP

When the new tighter restrictions on mortgage lending come into effect in just over two months they could spark a new trend – longer amortizations.

With OSFI’s stress test requiring borrowers of uninsured mortgages to prove they can afford payments 2% above their contract rate, fewer people will qualify.

However, switching to a longer amortization period could help offset the restriction says Ratespy.com founder Rob McLister. He told the Financial Post that the lower payments from a 35-year period compared to 25 years could enable qualification but noted that interest rates would be higher.

OSFI responded that, while it has not included amortization as part of the updated B-20 Guideline, it would be “monitoring” regulated lenders as the new rules are implemented in January.

Mortgage lenders may choose not to try to circumvent the tighter rules fearing that the regulator may intensify scrutiny.

Meanwhile, comments from the chief executive of the Canadian Credit Union Association says the rule changes will hamper competition in the mortgage market.

Martha Durdin told the Globe and Mail that the stress test will make it harder for existing homeowners to shop around for a new deal as they may not qualify for a new mortgage.

Copyright © 2017 Key Media Pty Ltd

Development situated close to amenities and transit, yet tucked away in a forested enclave

ROBIN BRUNET
The Vancouver Sun

The advantage of purchasing a new condominium in a region such as South Surrey is affordability without sacrificing convenience; but the downside is that too many times, the condos are squeezed shoulder-to-shoulder with other condo developments and any sense of the breathing room in the country is greatly diminished.

Headwaters Club by Lakewood is a different experience entirely. The development has been carefully situated so it’s close to amenities and transit, but it’s also tucked away in a forested enclave, providing security and a sense of peace.

The 88 one-, two-, and threebedroom condominiums are located in an area where farms and greenhouses once stood, on a quiet cul-de-sac just off Croyden Drive — which itself is a sedate country thoroughfare flanking the west side of Highway 99.

Access to the highway is literally a two-minute drive to the north, and several minutes south brings you to the live-work-play development of Morgan Crossing, whose upscale retail outlets and services have become a destination for shoppers from all over.

Even closer to Headwaters Club is the Southpoint Exchange Mall, easily accessed on the east side of Highway 99: it offers over 47 brand name stores.

Of course, this neck of the woods is also close to the vibrant beach community of White Rock and the unspoiled acreages of south Langley; and for commuters who don’t want to drive, a bus ride from Southpoint to downtown Vancouver can take as little as one hour.

But again, the real beauty of Headwaters Club is that at the end of the day, you merely have to turn onto that quiet cul-de-sac to escape the bustle: the sense of peace immerses you even before you open your front door. “It’s a unique setting,” says sales manager Tyra Sauriol. “There are pathways through the property itself, and you can connect to a trail that leads to Morgan Crossing.

“And while many prospective buyers have registered with us already, previews of Headwaters Club commence on October 28; that’s when everyone can find out first-hand what all the excitement is about.”

Lakewood is confident they’ll be dazzled by what they see. The Headwaters Club homes offer spacious kitchens with gas cooktops and generous islands; master suites with barn-style doors to the walk-in closet; in-floor radiant heat in the ensuites; plus lots of windows that bring in natural light throughout the living areas.

Most of the homes also have dedicated laundry rooms.

Anchoring Headwaters Club is Lifestyle Headquarters, a 6,400-square-foot amenity space that includes a fitness centre, social lounge and dining, meeting rooms, and a business/professional centre equipped with internet, fax, printers, and workstations — ideal for those who are self-employed or follow a company work-at-home plan.

It took a developer with an intimate knowledge of the neighbourhood and of high-end construction to create Headwaters Club, and Lakewood — whose previous achievements include Sync, the Heights, Fusion, and Brooklyn Village—has close to 50 years of experience building homes for new families, empty nesters, and downsizers in the Fraser Valley.

Sauriol says Headwaters Club will definitely appeal to those particular demographics as well as new buyers. She adds, “some of our homes have dens and up to 1,500-square-feet of space; the same amount of space as some single-level detached homes, but with the convenience of a lock and go lifestyle.”

Of Headwaters Club’s 88 homes, all homes are expected to be sold out immediately with unprecedented pricing from the high $290,000’s — so to take advantage of this rare lifestyle opportunity before it’s too late, visit www.headwaters.club or phone 778 545-9333 — and by all means visit the presentation and display home at 15428-31st Ave., South Surrey.

© 2017 Postmedia Network Inc

Evolv35 townhomes incorporate a feature that’s anything but ordinary: the ‘lock-off suite’

Michael Bernard
The Vancouver Sun

Evolv35

Project location: 312 Moody Ave., North Vancouver

Project scope: 35 four-bedroom townhomes situated in Moodyville, a new, award-winning master-planned community. Homes range from 1,554 to 2,070 sq. ft., with legal suites.  Some models have expansive rooftop decks with city views.  All homes are built to Passive House Canada standards and 2032 energy codes, reducing energy usage by 90 per cent annually. Located close to Lonsdale Quay and Spirit Trail, North Shore Mountains and community amenities

Prices: From $1.3 million  

Developer: Guildford Brook Estates

Architect: Scott Kennedy at Cornerstone Architecture

Interior Design: Theresa Yuen at I.D. Lab

Marketing and Sales:  rareEarth Project Marketing

Sales Centre: ‪100 E. 3^rd St., North Vancouver (3rd and Lonsdale)

Hours: Previewing by private appointment

Telephone: 604-770-4399

Website: ‪www.evolvedliving.ca

Completion Date: Spring 2019

Evolv35, a new housing project in North Vancouver, comes by its name honestly. Not only is it being built in a newly evolving neighbourhood on the North Shore, it has taken on new energy standards and a flexible approach to design that accommodates the lifestyle cycle that many families are experiencing today.

“We have received a fantastic response so far,” says James Askew, whose firm rareEarth Project Marketing came up with the name and the promotional campaign for the four-bedroom townhomes to be situated in the award-winning master-planned community of Moodyville.

Moodyville, located about half way between the Ironworkers Memorial Bridge and Lonsdale Quay, was one of the first communities to be developed in the 1800s by a sawmill owner named Sewell Moody. It faded into obscurity, largely ignored by motorists on their way to somewhere else, until the city of North Vancouver saw the potential, and decided to think through a master plan for developing more than 1,800 multi-family homes. That plan led to the rezoning of the former neighbourhood of single-family post-war homes that had seen better days. The master plan, which includes a five-acre park and pathways, also garnered the city three awards in the process.

Moodyville has also emerged as a viable alternative for West and North Vancouver families who want to downsize from large single-family homes, but stay on the North Shore, Askew said.

“These are designed as four-bedroom four-bathroom townhomes, something in huge demand on the North Shore. People really want them, particularly row-style homes rather than stacked ones, where you have no one above you and no one below you. And you have your own attached garage, rather than parking underground.”

Many North Shore downsizers have previously looked to Yaletown and the downtown, where prices are much higher, he said. They now have the option of remaining on the north side of the harbour where they raised their families.

The new neighbourhood’s location has proven a hit for other developers, Askew said. He noted the sold-out signs for other projects up and down 3^rd Street east and west of Evolv35.

The other demographic that Askew says the contemporary-styled homes appeals to is young families looking to graduate from condominiums without the stress of stretching to buy into an older, single-family home and building a “mortgage helper.’’

 

There is 1.5-inch concrete flooring separating the residences’ “lock-off suite” from the main home, cutting down on sound transmission.

The city developed the lock-off suite program to encourage developers to build potential rental accommodation by offering them density bonuses. That is providing much-needed rental suites in a community that Askew says has one of the lowest vacancy rates in Canada. He estimated rentals fetch about $3 a square foot in North Vancouver, which translates into $1,800 a month or better for the average lock-off suite at Evolv35.

True to the “Evolv” concept, though, the lock-off suite can be used for other purposes, something that attracted West Vancouverite Blair Peters to look into the project this past week.

“I raised three daughters, two of them in university now, and one of them is at home in Grade 11,” said Peters, who has lived in West Vancouver since 1996 in a single-family home, noting that the lock-off suite would give his family some flexibility if and when the daughters return home.

He says he has also watched as nearby Lower Lonsdale has developed into a “real vibrant community” with an art gallery, the SeaBus, shopping and other amenities.

“The other thing that was really attractive is we have a daughter going to school in the U.S., and she is in fourth year in illustration. There is a real vibrant arts community in Vancouver and we are trying to attract her to come home.

“She really doesn’t want to live under her mother’s and father’s thumb any more. But this has a locked-off suite with its own kitchen. We would love it if she, or another daughter, now at McGill, came home.”

“You could also make it a home office or as a fourth bedroom for guests,” Peters said.

Peters said he is also attracted to the energy saving standards incorporated into the homes, which are designed to reduce energy consumption by up to 90 per cent annually.

Cornerstone Architecture, one of Canada’s leading Passive House designers, has built in several features, including super-insulated exterior walls, high-quality triple-glazed windows, a fresh air ventilation system and airtight qualities that do away with drafts and hot and cold spots.

The homes come with either one- or two-car private garages, and some have expansive rooftop decks. Inside, there is laminate flooring throughout and the kitchen has polished quartz countertops, soft-close cabinets and drawers, and a wall oven and a 30-inch induction cooktop by KitchenAid. Like the wall oven, the microwave is situated at a convenient height. The stainless steel fridge is by Fisher & Paykel.

The bathrooms feature glass bath/shower stalls, 24-by-24-inch porcelain tiles and Kohler hand-shower hardware.

The legal suites have a separate entry for privacy, and are either studios or one-bedrooms depending on the model. They come equipped with KitchenAid fridge and cooktop, a stainless steel dishwasher, a Panasonic microwave speed oven and combination front-loading washer-dryer.

© 2017 Postmedia Network Inc.

Canada housing agency concerned by unregulated lenders’ growth

MATT SCUFFHAM
The Vancouver Sun

New rules meant to cut out risky lending by Canadians banks are pushing home purchasers into the arms of unregulated lenders, the head of the nation’s housing agency said on Friday, adding that steps could be taken to curb their growth.

The Office of the Superintendent of Financial Institutions said this week it will introduce a stress test on all uninsured mortgages to test borrowers’ ability to pay back their debt if interest rates rise. That announcement has sparked concerns that borrowers rejected by banks could turn to unscrupulous private lenders that charge sky-high rates.

“Right now, the level of activity (by unregulated lenders) is relatively low, but we’ve created an incentive for it to be higher,” Evan Siddall, chief executive of the Canada Mortgage and Housing Corp, said in an interview with Reuters ahead of a speech in New York.

“To the extent that we continue to shrink the space, then riskier loans just move outside of our purview and we need to think about what that means,” he said.

Siddall said the CMHC was researching how much of Canada’s $1.4-trillion mortgage market was being served by unregulated lenders and investigating whether their activity posed a systemic threat to the broader market.

“There are two factors involved — one is the level of activity and the other is the risk of contagion,” he said. “The first thing we do is just watch. We can move pretty quickly but we’re in the middle of watching right now.”

Siddall said his main concern about the country’s housing markets related to supply issues in Toronto and Vancouver, citing a number of factors including restrictions on open land around Toronto, the slow pace of regulatory approvals, and developers’ speculatively owning land without building on it.

“All those factors together are a problem,” he said, adding that the forthcoming National Housing Strategy will look to address them.

Siddall echoed comments earlier this week by the top banking regulator that sufficient action had been taken to tighten mortgage lending standards at federally regulated lenders.

Authorities have introduced a range of measures over the past 18 months intended to cool housing markets, including slapping special taxes on foreign buyers in Toronto and Vancouver and adopting tougher tests on borrowers’ ability to meet repayments.

“Do I think we need further measures in the federally regulated space? No, I actually don’t. Not for now,” Siddall said. “The risk in that space has gone down. We’ve done our job.

“Now we’re looking at the result of the consequence of moving that out of the federally regulated space and should we, can we do something about it,” he added.

© 2017 Postmedia Network Inc.

Neil Sharma
Canadian Real Estate Wealth

While rent-to-own purchases are becoming more popular, it’s important to know who you’re dealing with, and to balance the risks and rewards.

According to Bob Aaron, a real estate lawyer with Aaron & Aaron, rent-to-owns typically surge in popularity during market downturns, and  they’re also one of the few options people with bad credit have available to them. However, Aaron also says that it’s his preference to advise clients against entering such arrangements.

One way in which buyers get short-shrifted is by paying above-market rental prices than they would for a similar house, which, if the buyer chooses not to purchase the home, cannot be recovered.

“Rent-to-own helps when the seller can’t sell and when buyers can’t get approved for mortgages, but the way it often works is the seller gets the lump sum from the buyer/tenant which is used to underwrite the down payment,” said Aaron. “So if the buyer decides not to close, or can’t close, or can’t get a mortgage, all that money they paid up front and along the way is down the drain.”

He also says another problem with rent-to-owns is there aren’t any industry standard forms.

The buyer/tenant isn’t the only party at risk, though.

“A defaulting owner can stick the landlord-/investor with all kinds of arrears, mortgage taxes, utilities, and damages to the house, and the landlord/owner/seller is going to be stuck with those arrears and damages,” said Aaron, adding the courts don’t recognize rent-to-owns under the tenancy act.

“If the buyer- occupant is in default, it’s very difficult to get rid of them.”

There have been stories of unscrupulous rent-to-own companies in the media, but one in particular has taken a unique approach to the rent-to-own model, and has a 100% success rate of turning its renters into homeowners.

Dale Monette, CEO of Homeowners Now, explained to CREW that by empowering renters with everything they need to improve their credit scores, save money, and eventually own their homes, the rent-to-own model can become an exceptionally successful way to help families achieve homeownership.

Homeowners Now endeavors to get their clients both financially- and emotionally- invested in their future homes by holding tenants’ down payments in trust. The company takes a client-first approach, which entails allowing the client to choose the home they want to live in and purchasing it for them.

“Some rent-to-own companies do a $0 down payment, but we want to get them financially invested by placing an initial down payment, typically 3% of the purchase price, and holding it in trust for them,” said Monette. “Based on our research, $0 down programs have a higher likelihood of the client walking away from the property, because they weren’t financially invested.”

Homeowners Now made the internal decision to return down payments should their clients default, but with a 100% success rate that’s never happened. One reason is the company does everything in its power to make sure its tenants have everything they need at their disposal.

“We actually pay for home inspection reports and appraisal reports, as well as the closing costs for our clients,” he said. “They don’t have to give us any more money for closing costs or legal fees – they just provide the down payment and monthly rent. We take care of the rest. When working with us, essentially our clients are working with a team of self-employed entrepreneurs, like realtors and mortgage brokers, so they stay directly in touch. We even help our clients with grants when they experience hardship, which ultimately helps them become successful in the rent-to-own transaction.”

As Aaron says, it’s important to have all documents perused by a lawyer. Equally as important is selecting a company that invests in its clients as much as it does in properties.

Copyright © 2017 Key Media Pty Ltd

Ephraim Vecina
Canadian Real Estate Wealth

The newest set of mortgage restrictions announced by the Office of the Superintendent of Financial Institutions (OSFI) will hit home buyers looking to upgrade to new properties the hardest, according to BMO financial group chief economist Doug Porter.

OSFI’s latest rules state that even home buyers who don’t require mortgage insurance because they have a 20% down payment will have to prove they can make meet their commitment if interest rates rise above the five-year benchmark rate published by the Bank of Canada or 2% higher than their contracted mortgage rate, whichever is higher.

Move-up buyers would be disproportionately impacted because they would be most likely to have home equity and qualify for an uninsured mortgage, Porter explained.

The economist noted that last year’s restrictions took 5% to 10% out of the housing market’s buying power, and that OSFI’s latest changes will have a comparable effect.

The guidelines, similar to OSFI’s draft release in July, are scheduled to take effect on January 1, 2018.

“This is potentially more wide ranging and it will dampen the housing market in 2018, probably more significantly than we saw (with) the earlier federal measures,” Porter told the Toronto Star.

However, he emphasized that the changes are “another reason to believe the [Bank of Canada] will hold off on rate hikes this year. Between the uncertainty around NAFTA and between these measures I think the bank will take a bit of a pause at this point.”

And although the Canadian economy is projected to experience some slowdown in 2018, the housing market’s fundamentals remain robust.

“We have strong population growth, we still have relatively low interest and job growth has been robust. Consumers are confident, so it’s not as if this will drive the market down abruptly but it will have a significant dampening impact,” said Porter.

For the past half-decade, the OSFI has been tweaking underwriting standards for home loans amid the introduction of cooling measures in Vancouver and Toronto by both federal and provincial authorities.

“Our mandate is focused on the safety and soundness of the federally regulated financial institutions,” OSFI superintendent Jeremy Rudin said, adding that he might re-evaluate the stress testing as market conditions change.

Copyright © 2017 Key Media Pty Ltd

Homebuyers beware

Neil Sharma
REP

While it’s unlikely the next interest rate hike, expected December 6, will be too cumbersome for homeowners, especially those on fixed-rate mortgages, prospective homebuyers will feel the heat.

According to Brad Henderson, president and CEO of Sotheby’s International Realty Canada, the rumoured interest rate increase is believed to be in the neighbourhood of 25 basis points – which is about $13.50 for every $100,000 of mortgage per month.

“If it’s only 25, and done in a more leisurely way over time, it won’t have a jolting impact because, first of all, anybody who has a fixed-rate mortgage won’t be affected,” said Henderson. “Only people with variable mortgages and mortgages coming due will be affected.”

Henderson added that a rate increase, while almost certain to have a headwind effect on the residential real estate sector, won’t cause undue pressure.

“If somebody has a $750,000 mortgage, it will cost them another $100 a month if interest rates go up by 25 basis points,” he said, “so it’s not trivial, but by the same token, most homeowners could afford to withstand that.”

However, the outlook for homebuyers is capricious.

This week’s announcement by the Office of the Superintendent of Financial Institutions (OSFI), concerning changes to mortgage underwriting rules, may preclude a plenitude of prospective homebuyers from attaining homeownership.

OSFI has mandated a 200 basis point stress test to the face rate.

“If you look back at that $13.50 for every $100,000, adding 200 basis points is the equivalent of multiplying that by eight, so now you’re over $100 per month of what people have to qualify,” said Henderson. “The confluence of all of those factors will definitely push people either from one price down to a lower price, or from owning to renting, and that’s particularly problematic in cities like Toronto and Vancouver, where the vacancy rate of rental-purpose buildings is less than 1%.

“The policies, whilst well-intended, will have unintended consequences of putting pressure on people who can’t afford to buy being pushed into a rental market, which has an abnormally low vacancy rate.”

Copyright © 2017 Key Media Pty Ltd

Steve Randall
Canadian Real Estate Wealth

The changes to OSFI’s B-20 guideline which will tighten mortgage lending criteria from January has not been widely welcomed, but Fitch says it’s a good thing.

The ratings agency says that the banking system is still vulnerable to “a growing tail risk of a sharp correction in the housing market” and that the tightened underwriting should lead to more conservative decisions and will be “constructive for the banking industry by further supporting the long-term sustainability of Canada’s residential real estate market.”

Fitch notes that some borrowers may be tempted towards riskier lenders but expects that overall the rule changes will cool the market, a “positive development” in the overvalued market, especially in Toronto and Vancouver.

Copyright © 2017 Key Media Pty Ltd