Kent Spencer
Province

Builders and consumer groups say B.C.’s new harmonized sales tax is a “disaster” that will add $36,000 to the cost of a new $800,000 home.

Opposition is building to the province’s plans to add a seven-per-cent levy on goods and services that had been exempt from provincial tax.

“My own company just survived one of the worst recessions in a long time. I would think twice about paying an extra $36,000 house tax,” Bob Dominick, vice-president of WestStone Properties, said Sunday.

“Developers are saying the industry is getting quite badly hit. This will not encourage people to buy homes,” said Dominick, whose company is a major developer in Surrey and Langley.

The tax will add seven per cent to the cost of everyday services such as haircuts, dry cleaning and accountants’ fees, which have previously included only the five-per-cent GST.

Other items include Internet services, telephones and movie tickets.

The province said last week that it would harmonize its provincial sales tax with the federal goods and services tax, effective July 1, 2010.

The seven-per- cent PST will be combined with the five-per-cent federal GST for a single, harmonized sales tax rate of 12 per cent.

Bruce Cran, president of the Consumers Association of Canada, called the plan a “total disaster.” “Our lines are filling up with calls from disgusted people,” Cran said. “Consumers are absolutely shocked. They don’t know where this is coming from.

“Another $30,000 or $40,000 is pretty much a killer for new housing.” Under the new tax, the levy on new homes will increase from five per cent to 12 per cent.

Rebates will be offered up to $20,000, or five per cent. Taking the rebate into consideration, the actual increase in tax on new homes will be two per cent on the first $400,000 and seven per cent thereafter.

Hence, the additional tax on a $400,000 new home will be $8,000. The additional cost for an $800,000 home will be $36,000.

The Liberal government told restaurateurs in writing during the recent provincial election campaign that it had “no plans” to consider implementing the HST.

NDP finance critic Bruce Ralston accused the government of lying.

“It is flat out and out deceit. They lied,” Ralston said. “That’s what outrages people. They’re pissed off.” The province says the construction industry will save $880 million, manufacturers $140 million and the transportation industry $210 million through harmonization.

Ralston doesn’t believe reduced costs for businesses will be passed along to consumers.

“People have learned economic theory does not match economic reality,” he said.

B.C. business groups support the move, including the B.C. Business Council, B.C. Progress Board and B.C. Chamber of Commerce.

The Canadian Taxpayers Federation said the tax will simplify a complicated system.

B.C. director Maureen Bader said small businesses will benefit as a result of being able to claim a credit on their PST.

She gave an example of an artist who will receive tax credits on additional work-related items.

“The artist can now deduct the full sales tax on everything to run a business, not just paints and brushes, but computers and chairs. It’s a big benefit,” she said.

“Anything that lowers the costs to businesses will ultimately be better for consumers.” But she conceded there will be “short-term” price increases.

Restaurant owners, who will see a seven-per-cent additional tax on food, predict an average $50,000 loss in sales per business.

“There’s no question we’re going to do something to bring more attention to the issue,” said Mark von Schellwitz, spokesman for the Canadian Restaurant and Foodservices Association. “It could be a consumers’ campaign, we haven’t decided.

“This tax can mean the difference between staying in business and closing up. It’s very bad news.”

© Copyright (c) The Province

Is cramming more people into the existing space the answer?

Carmen Chai
Province

The city calls them affordable housing options that will provide more choice for hard-pressed renters.

Skeptical renters? They call them “mouse holes.” They say the city is creating a cluster of tiny, ill-thought-out housing that will pack too many people into areas with too few of the amenities that make neighbourhoods livable.

Only time will tell who’s right.

As Vancouver challenges Manhattan for its reputation as a renter’s nightmare, the city is about to allow laneway homes, more and bigger basement suites, even tiny secondary suites tucked into existing rental apartments and condo suites.

Debate has been heated and council chambers packed as council discusses the bylaw changes that it hopes will lead to more, and more affordable, housing.

The city has made it clear change is coming, and virtually everyone agrees it’s needed.

Ads circulating online give a hint at the desperate situation renters face now, as even those lucky enough to find space hustle to pay for it.

“We have a nice LIVING ROOM space for rent in our apartment,” read one brutally direct ad on Craigslist on July 19.

“What are you going to find in this living-room space? A hanger where you can fit your clothes, a metallic shelf to organize your stuff, a single-sized bed and a little wooden table. The window view is facing downtown beach side. $350 a month. Davie and Bute.” The ad, just one among many, indicates that the living room is no longer just a household’s traditional meeting point.

In the Vancouver housing market, it has become a commodity in the marketplace of renters.

The shortage is a simple equation, says Brent Toderian, the city’s director of planning.

As the supply of available rental housing diminishes, the price of ownership and renting increase.

“Over half the residents in Vancouver are renters and in any expensive city having a rental stock is critical to sustainability, economic development and affordable housing,” he says.

“When prices are as high as they are, there is a push on space and people get pretty creative.” Clark Kim, a South Korean international student, knows all about creativity. He’s been sharing a living-room space since January.

Kim sleeps in the partitioned-off living room of a two-bedroom West Georgia Street apartment. Another student sleeps on the sofa bed beside his.

“I like it because it saves me money every month,” Kim said. He pays $455 a month for the fully furnished living room, which comes with wireless Internet.

“Maybe it’s because I’m a guy, but not having so much privacy doesn’t bother me.” Kim chose the shared space because of the price, the location and because he could practise his English with Canadian roommates.

“It’s good here. It’s a nice place,” he says.

The apartment is elegant, with hardwood floors, floor-to-ceiling windows and a balcony with an impressive view.

But with just a dresser and two sofa beds in the corners of the living room, it’s also spartan.

Still, a living situation like Kim’s may be the solution to meet demands on Vancouver‘s scarce accommodation.

“This is just what the market is offering,” says Tom Durning of the Tenant Resource and Advisory Centre.

“We’re becoming like Tokyo, London and New York City. We’ve got to start looking at more density in all neighbourhoods,” Durning says.

He’s heard it all — half a dozen people living in a Richmond bedroom, owners renting out garages, houses carved into six units when they are only zoned for two.

“The city can’t police all of this. Residents are risking safety to find affordable living. At least secondary suites would offer more privacy and safety,” Durning says.

Vancouver and Victoria were the only cities in the province that had vacancy rates below two per cent, according to a spring 2009 Canada Mortgage and Housing Corp. rental-market survey.

Vancouver‘s vacancy rate is now 1.9 per cent, an increase from 2008’s 0.9 per cent, but still a far cry from the three to four per cent that’s considered healthy for the market.

The city also had the highest average monthly rent in the country for a two-bedroom apartment in either new or existing structures.

The average monthly rent in Vancouver is $1,154, an $80 increase from what renters were paying in 2008.

“Clearly, now is the time that we need to be innovative. Anything that will take the pressure off needs to be done,” Durning says.

But the city’s answer to “innovative” is getting mixed reviews.

Durning calls the bylaw changes an “evolutionary good move” that will protect renters who need affordable housing. He says the secondary suites within apartments will offer students, seniors and low-income residents housing options.

Alicia Barsallo, organizer of the Coalition Against EcoDensity and For Livability, disagrees.

“They’re just terrible ideas,” Barsallo says, pointing to both the secondary suites and proposed laneway homes.

“Once you start this, it’s going to spread — and we’re going to end up like Tokyo, where people get used to living in tiny spaces. And that lowers the standard of living of our city,” she says.

Barsallo calls the secondary suites “mouse holes.” She argues that laneway homes will clutter Vancouver backyards.

And she’s angry that city council is “densifying without provision for anything else.” Her coalition, which has had as many as 60 members at most meetings, is concerned about the repercussions of the rushed decisions it says the city is making.

“They’re creating space without increasing necessary amenities like health-care facilities, pools, community centres and green areas,” Barsallo says. “We can’t ignore that the government is not creating spacious, affordable housing.” Toderian said the increase in supply will be a “gentle form of gentrification” and that critics who compare Vancouver with crowded cities are exaggerating.

He said secondary suites and laneway homes will create “invisible and hidden density.” In the city’s defence, Toderian notes that apartment secondary suites may not be available for some time.

“The costs make it very difficult to retrofit existing buildings. We’re anticipating that it will largely be a new opportunity for new construction,” he says.

But laneway homes and basement suites are economical options now, he insists.

Toderian even argues that building a basement suite or a laneway home during the economic downturn would be a wise investment, because construction costs are lower and rental rates are high now.

“It’s a simple thing ordinary homeowners can do as opposed to developers who can be strongly affected by the market and the economy.” Jake Fry, owner of Smallworks, a local company that designs laneway homes, says he’s built about 24 studios in the last three years.

Fry is anticipating a slow, steady, one-per-cent increase in business per year.

“It will be modest in its uptake. You’re going to see a few dozen go up right away,” Fry says.

“But there will be an initial rush with families who need them for aging parents or extended family.”

© Copyright (c) The Province

Province

Vancouver is promising that its three-pronged approach to creating more housing in existing lots will offer more rental choices for seniors, students and low-income residents — and ease the financial burden for property owners.

– City council approved internal secondary suites in existing apartments on Tuesday.

Suites can be as small as 200 square feet. They’ll be allowed in apartment blocks and mixed-use buildings in commercial areas along main roads in downtown Vancouver and Southeast False Creek.

They must be equipped with a full kitchen and at least one bathroom. The suite must have a separate entrance into a corridor or to the outdoors, and a shared internal door that can be locked off.

Secondary suites are not allowed to be strata titled separately from the main unit. The suite within the apartment can only be used for tenant or family use.

No additional vehicle parking places are required for the suite, but they must provide bicycle parking.

The inspiration? Simon Fraser University introduced the idea five years ago at UniverCity, a condo development that included 25 250 square-foot, “locked-off” secondary units that were quickly scooped up to rent out at $400 a month.

– The debate on laneway housing continues Tuesday night.

Under the proposal, the freestanding homes could be as small as 205 square feet and as large as 500 square feet for studio and one-bedroom units.

Height would be limited to 1.5 storeys and the house’s footprint would be the size of a two-car garage. Like secondary suites, laneway homes would not be strata titled and are designed for rental use only. Laneway homes could exist with a main house or a house with a secondary suite.

– Basement suites in single-family homes have also been approved, and will allow for larger basement suites after residents argued to council that existing single-family zoning barred them from creating livable suites. — Carmen Chai

© Copyright (c) The Province

Lena Sin
Province

Richards has just proved there’s still life after the deep freeze.

Following a dismal winter in which B.C.’s housing market came to a standstill, the Richards condo project was the first downtown Vancouver development to take the plunge and attempt a pre-sale amidst economic turbulence this year.

The gamble paid off: With 80 per cent of the units sold, Richards has just become the poster boy for pre-sale success during economic uncertainty.

“The majority of it sold in two-and-a-half weeks,” says Bob Rennie, whose firm Rennie Marketing Systems is handling the sales.

It’s a complete reversal from the picture in September 2008, when Richards, located at Richards and Helmcken, attempted its first launch to depressing results.

At an average asking price of just under $800 per square foot, only 32 units sold.

“By the time we were approaching September ’08 there was just this huge, hard stop in the market. We only got to 32 sold. So then we just sort of manned the presentation centre, trying to make a decision,” said Rennie. ” We went to all of our developers and said if you haven’t started building, abstain. Nobody could’ve predicted what was going to happen.”

The U.S. banking crisis had hit B.C. hard, with local developers running out of cash as Canadian and U.S. banks turned off the credit tap. Meanwhile, a global recession was setting in and the U.S. housing market was showing no signs stabilizing.

Rennie believes the global financial crisis of 2008 represented a major economic shift.

So, in order for business to continue, developers needed to make a similar shift.

In the case of Richards, that came down to one key factor: Price.

Today, the units are priced at an average of $600 per square foot, a price drop made possible by lower construction costs.

Rennie believed the time was right to relaunch in late May as there were few developments for sale in Downtown Vancouver and there were signs that consumer confidence was returning.

The timing proved to be right on track. There are now just 38 units still available out of 226.

Francesco Aquilini, owner of the Vancouver Canucks, is the developer behind Richards, which is targeting first-time buyers attracted to the Yaletown location.

The building will be located on the same site of Vancouver’s long-standing iconic nightclub, Richard’s on Richards, which had its last show on Sunday. (The club will be moving to a new location on Seymour Street.)

The remaining condos available range in size from 607 sq. ft. to 1,096 sq. ft., and are priced between $349,000 to $488,900 respectively. There are also several townhouses available, ranging in size from 1,055 sq. ft. to 1,235 sq.ft. They are priced between $599,900 to $633,900.

The only downgrade made to the suites to keep prices down was a switch from designer Eggersman kitchen cabinets to a no-name brand that features the same rich, walnut colour and soft-close cabinetry to prevent the slamming of doors.

In addition to building the 19-storey concrete-and-glass tower, Aquilini Development is also restoring two 100-year-old heritage homes that currently front onto Richards Street. Until recently, one of the houses belonged to Linda Rupa, a long-time resident who bought her yellow house in 1962 for $16,000. After holding out for years, Rupa relented two years ago and sold her property for $6 million.

Rupa’s former home and another heritage home will be restored and moved to the corner of Richards and Helmcken, forming a row of heritage homes on Helmcken that pay homage to a Yaletown of the past.

The two houses are zoned live/work and are asking $1.379 million and $1.5 million.

The Facts

What: Richards, 226 condos and townhouses and two detached heritage homes.

Where: 1066 Richards St., Vancouver

Builder/Developer: Aquilini Development

Sizes: Remaining condos, 607 sq. ft. to 1,096 sq. ft; Townhouses, 1,055 sq. ft. to 1,235 sq. ft; Heritage homes, 1,489 sq. ft. and 1,783 sq. ft.

Prices: Remaining condos, $349,000 to $488,900; townhouses, $599,900 to $633,900; heritage homes, $1,379 million and $1.5 million.

Open: Presentation centre is currently being moved. Please call 604-688-2875 for details.

More info:

www.richardsliving.com

© Copyright (c) The Province

 

Stephanie Armour
USA Today

Home sales rose for the third-consecutive month in June, a promising sign that stability in the housing market could help jump-start the economy.

Home sales last month rose 3.6% to a seasonally adjusted annual rate of 4.89 million properties with gains seen in all major regions of the USA, according to a Thursday report by the National Association of Realtors (NAR).

But overall home prices continued to slide. The median price on existing homes in June was $181,800, down 15.4% from June 2008.

“The numbers are encouraging and show some stability,” says Bernard Baumohl at the Economic Outlook Group. “Given that the economic crisis all began with the collapse in the housing market, it’s encouraging to see this sector starting to improve.”

The inventory of homes for sale also dropped, meaning there is less of a glut on the market. Total housing inventory in June represented a 9.4-month supply at the current sales rate, down from 9.8 months in May. Compared with a year ago, the number of homes on the market is down 15%.

Federal Reserve Chairman Ben Bernanke also said recently that the housing crisis seemed to be moderating.

Home prices are being dragged down by the large number of distressed homes for sale. Distressed sales — which include sales of foreclosed homes — accounted for about a third of sales in the second quarter. About 30% of sales in June were distressed sales, down from about 50% through March of this year.

First-time buyers in June accounted for 29% of transactions, unchanged from May, according to a separate survey by NAR. Patrick Newport, an economist at IHS Global Insight, says that it’s too soon to say the market for homes is turning around. The economy is still shedding jobs, credit is tight, and a tax credit of up to $8,000 for first-time home buyers that has boosted sales will expire at the end of November.

Rates also are inching up. The 30-year fixed-rate mortgage averaged 5.20% for the week ended July 23, up from last week when it averaged 5.14%, according to Freddie Mac.

“Sales will sag until the labor market turns around. This will not happen until next year,” Newport said in a statement.

And foreclosures are continuing to mount. June marked the fourth-consecutive month that foreclosure filings surpassed 300,000, according to RealtyTrac. A total of 1.9 million foreclosure filings were reported in the first half of this year, up 15% from the first six months of 2008.

Also on Thursday, the Federal Reserve proposed changes in mortgage broker commissions. The changes would no longer let brokers earn greater compensation when offering pricier loans.