Ashley Ford
Province

Vancouver again will hold the dubious title of having the most expensive housing in Canada next year, with prices expected to increase by five per cent, Royal Lepage says in its latest housing forecast.

But, the national real-estate company says the city won’t have the fastest growing prices in the country.

That honour will fall to Ottawa where they are expected to rise by 6.5 per cent, followed by Edmonton at 6.1 per cent.

Nationally, prices are expected to rise 3.2 per cent to an average of $210,500, compared to Vancouver‘s average $361,000, the survey shows.

However, says Bill Binnie, president of Royal LePage Northshore Vancouver, the frenetic selling pace gripping the housing market here will ease next year.

“Prices will begin to level out as affordability becomes an issue for an increasing number of buyers,” he said.

Overall, sales are expected to dip by 2.1 per cent next year to 38,000 as average prices creep up to levels beyond the reach of price-sensitive buyers.

“Unfortunately many of the rising costs we see on the Lower Mainland we can do little about,” says Peter Simpson, chief operating officer of the Greater Vancouver Homebuilders’ Association.

High costs for land, labour, and building materials are all factored into the price of a home and government-imposed development costs simply exacerbate the situation, he says.

However, Simpson pointed out that consumers are more fortunate here than in other cities because there is a wide variety of housing types available from which to choose.

Bob Rennie, of Rennie Marketing Systems, says most rising costs “are stuff we have no control over. It is very hard to keep prices down.

“Despite this, there is a continuing demand for homes, especially downtown. All our numbers keep showing no inventory and next year will remain strong,” he said.

Binnie says a seller’s market will persist, primarily because of low inventory levels, especially in the condominium sector, but “the level of appreciation will be more moderate when compared with the last few years.”

The condominium sector will continue to be the market’s main driver again next year, says Royal.

The downtown core will remain highly sought after by buyers.

First-time buyers, those purchasing second or investment homes and those looking to downsize, will continue to create strong demand in the downtown, the company adds.

– – –

PRICETAGS

– Average housing-price increases in major Canadian markets for 2004, as predicted by Royal LePage Real Estate Services:

– Halifax: 1.6% to $160,000

– Montreal: 4.2% to $172,000

– Ottawa: 6.5% to $233,900

– Toronto: 1% to $296,000

– Winnipeg: 4% to $112,332

– Regina: 1.7% to $106,500

– Calgary: 3.2% to $225,000

– Edmonton: 6.1% to $174,500

– Vancouver: 5% to $361,000

Sun

Supply has been unable to meet demand, pushing prices sharply higher

Gerry Bellett
Sun

Prices represent average monthly payments for principal, interest, taxes and utilities. The benchmark house price assumes it is a detached bungalow, a typical target home for first-time buyers. Financing calculations assume a 25-per-cent down payment and 25-year mortgage loan at a five-year fixed rate. Montreal: $1,094. Value: $155,165

This Surrey house is listed on MLS at $319,000, which represents a typical B.C. home in a study of home affordability by RBC Economics.

Prices represent average monthly payments for principal, interest, taxes and utilities. The benchmark house price assumes it is a detached bungalow, a typical target home for first-time buyers. Financing calculations assume a 25-per-cent down payment and 25-year mortgage loan at a five-year fixed rate. Vancouver: $1,914. Value: $320,637

Prices represent average monthly payments for principal, interest, taxes and utilities. The benchmark house price assumes it is a detached bungalow, a typical target home for first-time buyers. Financing calculations assume a 25-per-cent down payment and 25-year mortgage loan at a five-year fixed rate. Calgary: $1,436. Value: $228,500

Prices represent average monthly payments for principal, interest, taxes and utilities. The benchmark house price assumes it is a detached bungalow, a typical target home for first-time buyers. Financing calculations assume a 25-per-cent down payment and 25-year mortgage loan at a five-year fixed rate. Toronto: $1,874. Value: $302,187

It’s harder for the average person to afford a home in British Columbia than anywhere else in Canada, according to a study by RBC Economics.

The study released Monday shows B.C. has the highest housing affordability index in the country. The index measures the portion of pre-tax income a household must set aside each month to cover the cost of owning a home.

The higher the index, the more difficult it is to afford a home.

In B.C. it costs the average household 41.2 per cent of pre-tax income — or $1,604 a month — to pay for a home, compared to the national average of 31.8 per cent or $1,260 a month, says RBC economist Carl Gomez.

The city of Vancouver tops the country with an affordability index of 45.3 per cent or $1,914 — a two-per-cent increase over the previous quarter.

Toronto‘s affordability index is 38 per cent ($1,874), Montreal is 29.7 per cent ($1,094), and Calgary is 29.3 per cent ($1,436).

The housing affordability index, which RBC has compiled since 1985, is based on the costs of owning a detached bungalow, a typical target home for first-time buyers and includes mortgage payments, taxes and utilities.

In B.C., the index is based on owning a detached bungalow worth $321,000 — the highest benchmark in the country.

It is also based on B.C.’s average household income of $51,000 a year.

Calgary has the lowest affordability index because housing prices haven’t increased at the rate of Vancouver‘s, while household incomes are higher at $59,000 a year.

“It’s a case of good news producing bad news in B.C.,” said Gomez.

“The good news is that housing demand is so strong that it’s produced a pent-up demand that’s being released by low interest rates.

“But the bad news is that supply has not been able to keep up and this is pushing home prices sharply higher, which has caused an erosion in affordability,” said Gomez.

The result is that new home buyers wanting to live in Vancouver will have to be prepared to spend more of their income on a home or move to the Fraser Valley and find something cheaper, he said.

“The erosion in affordability in B.C. was the steepest of all regions and firmly leaves the province as the least affordable in Canada,” said Gomez.

“Market conditions will remain tight as strong demand, the shortage of resale listings, and low new home inventories in urban markets such as Vancouver and Victoria, continue to push housing prices higher. 

“However, the situation is expected to stimulate even more new residential construction next year, keeping it a strong growth driver of the province’s economy,” he said.

According to the report, eroding affordability will be a key constraint on domestic B.C. homebuyers over the long term.

Still, B.C. housing markets will continue to retain considerable interest from out-of-province investors and buyers, said Gomez.

While the study uses B.C.’s average household income of $51,000, Gomez said this would be insufficient in itself to qualify for a bank mortgage.

“To finance a $321,000 bungalow or condo, you’d need an income of about $75,000 a year using a down payment of about $80,000,” he said.

Gomez warns that further erosion of affordability could occur when interest rates go up.

© Copyright  2003 Vancouver Sun

Downtown hotel keeps four coveted diamonds but only Sutton Place and Pan Pacific in rarefied ranks with five

Bruce Constantineau
Sun

The upscale Four Seasons Hotel in Vancouver has lost its prestigious Five-Diamond rating from the influential American Automobile Association after securing the top award for 27 consecutive years.

The Pan Pacific and the Sutton Place hotels in Vancouver retained their Five-Diamond ratings, the only hotels in Canada to be so honoured.

Four Seasons Hotel general manager Ruy Paes-Braga said the AAA cited “numerous physical detractors” at the 28-year-old hotel in downgrading it to Four-Diamond status.

He stressed the hotel’s service levels and food and beverage operations were all rated as Five-Diamond quality, but the building’s physical limitations prompted the downgrade.

“We were built 28 years ago and things have evolved and styles have changed,” Paes-Braga said. “Of course we’re disappointed, but many Four Seasons hotels don’t have a Five-Diamond rating and they are some of the top hotels around. This is just one of those things.”

He said the AAA cited several physical reasons for the downgrade — including the “dated” appearance of the hotel’s lower lobby, no separate showers in guest bathrooms, no spa facility and a lack of decorative ceiling trim in guest rooms.

The rating organization also said desks in guest rooms were too small, and felt public restrooms in the hotel lacked an “upscale appearance” due to dim lighting and metal stall doors.

Paes-Braga said the hotel will do what it can to rectify the problems cited by the AAA, but admitted it will be difficult to do it quickly.

“We’ve been thinking about building a spa on one of our lower floors, but the economy isn’t the greatest right now so it’s a tough time to make an investment like that,” he said. “It would cost about $3 million.”

Paes-Braga said the hotel just doesn’t have the physical space to build separate showers in all guest rooms, and noted he would have to close the hotel to take out all the red floor tiles in the lower lobby and replace them with marble or granite.

“We’ll do the best we can as far as the physical detractors are concerned, but they have to make sense,” he said. “We are running a business here. We’re a large company with shareholders and we have to do it properly.”

The AAA evaluates more than 30,000 hotel properties throughout North America every year, and the 2004 list includes just 82 Five-Diamond properties, which are considered the ultimate in luxury and sophistication.

AAA representative Janie Graziani said there are a huge number of guidelines for properties to follow and when a downgrade occurs, it usually means the hotel has “missed the mark” on several guidelines, not just one.

She noted hotels are always told of a pending downgrade and given a chance to improve their standards to retain their rating.

“But sometimes properties decide that they don’t want to go to the expense or the time to make those improvements,” Graziani said. “It’s an enormous commitment of time and money to keep up with the standards.”

Former Pan Pacific Hotel general manager Susan Gomez said the hotel worked very hard to regain its Five-Diamond rating when it lost the award in 1996 and 1997.

“It was important for us to get it back because we were not a known entity like the Four Seasons, which can almost stand alone on its name because the company has such a great reputation,” she said.

Gomez said new hotels with outstanding facilities have raised the standards for everyone in the industry.

“It’s almost physically impossible for some of the older hotels like the Four Seasons to meet those standards without gutting the whole place,” she said.

The Pan Pacific Hotel at Canada Place and the Sutton Place Hotel on Burrard Street both opened in 1986, about 10 years after the Four Seasons opened on Georgia Street. The Pan Pacific’s Five Sails restaurant has also received a 2004 Five-Diamond rating from the AAA, making it the only hotel in Canada to receive both honours.

Vancouver hotel analyst Angus Wilkinson doubts the downgrade will hurt the Four Seasons in Vancouver because the hotel will still appeal to many clients who are loyal to the Four Seasons brand.

“It’s the brand they believe in, whether it’s in London or New York or San Francisco or Vancouver,” he said.

– – –

‘IMPECCABLE STANDARDS’ REQUIRED

*****

Definition of coveted five-diamond status, according to the American Automobile Association: These establishments reflect the characteristics of the ultimate in luxury and sophistication. Accommodations are first class. The physical attributes are extraordinary in every manner. The fundamental hallmarks at this level are to meticulously serve and exceed all guest expectations while maintaining an impeccable standard of excellence. Many personalized services and amenities enhance an unmatched level of comfort. Only two, the Sutton Place and the Pan Pacific, get this ranking in Vancouver.

****

Four diamonds are still impressive. The AAA puts it this way: These establishments are upscale in all areas. Accommodations are progressively more refined and stylish. The physical attributes reflect an obvious enhanced level of quality throughout. The fundamental hallmarks at this level include an extensive array of amenities combined with a high degree of hospitality, service and attention to detail.

These local hotels rate four diamonds: Four Seasons, Marriott Pinnacle, Le Soleil, Metropolitan, Sheraton Vancouver Wall Centre, Fairmont Hotel Vancouver, Fairmont Waterfront, Westin Bayshore, Westin Grand, Wedgewood.

© Copyright  2003 Vancouver Sun

First-time buyers lower expectations as province ranks costliest in nation

Adrienne Tanner
Province

Wendy Hansen longed for a garden and her husband Glenn Jorgensen always wanted a dog.

But until recently, the Ladner couple could not afford to buy a house.

“It was out of the question,” said Hansen, 39, an office administrator.

So like many people struggling to buy a home in Canada‘s least affordable housing market, the couple started off with a condominium.

After six years of saving, Hansen and Jorgensen were finally able last week to sell their Steveston apartment and buy their first house.

“It needs major repairs, but it was low enough priced that we’re going to be able to afford the repairs over time,” Hansen said.

British Columbia‘s real- estate market is the least affordable in Canada.

Its top ranking position was cemented last quarter as soaring house prices and slightly higher interest rates pushed B.C.’s housing affordability index rating from 41.2 per cent to 42.2 per cent. That means the average household in B.C. would have to spend 42 per cent of its pre-tax income to own a home, according to an RBC Financial Group study.

In Vancouver, where the average house price is $321,000, the index was higher.

There, home ownership costs, including mortgage payments, taxes and utilities, would eat up 45.3 per cent of the average family income.

“One of the reasons why this index is so high for Vancouver, relative to other places is there is a . . . shortage of single detached bungalows. There’s not a lot of land,” says Carl Gomez, a RBC economist.

Toronto‘s affordability index is lower at 38 per cent due to slightly lower average housing prices ($302,000) and higher average family incomes ($60,000 as compared to $50,000 in Vancouver.)

Most banks will not approve a gross debt-service level of more than 33 per cent, which means in B.C. a house is out of reach for most first-time buyers, says Gomez.

“Looking at these numbers, first-time buyers will probably have to look at something like a one-bedroom condo.”

That is the reality for Jacqueline Connor, 37, who recently bought the Richmond condo previously owned by Hansen and Jorgensen.

“I wanted to get into the market. But I can’t afford a house.”

Connor was living in Vancouver‘s West End and had no plans to leave.

But recently she felt the neighbourhood was starting to slide.

“I have been looking to move because I just don’t feel safe any more. I feel unsafe going into my underground parking in the morning when I’m going to work.”

Despite the high prices, real estate sales are brisk, says Andrew Peck of Royal Pacific Realty Group and first vice-president of the Greater Vancouver Real Estate Board.

People find a way to buy, he said. Some wait to buy their first home. Others have family members able to help with down payments.

New rules that require a minimum down payment of only five per cent have helped, says John McLennan, a realtor with Remax in Vancouver.

Clayton Rocko, 29, and his partner were forced to move when their landlord took advantage of the hot real- estate market and sold.

“It was a little push into the deep end,” Rocko says, describing their decision to buy.

They opted for a new house and a moderate commute.

They recently bought their first home in Port Coquitlam, a do-able drive to their workplaces in North Vancouver and south Burnaby.

“We were having a hard time finding a home in our price range. We had to really look at dollars and cents,” Rocko said.

The couple opted for a new home with a basement suite. Rocko was looking ahead, to a time when interest rates could rise. “Having the rental income is a safety net of sorts.”

© Copyright 2003 The Province

Sun

Sun

Did you know that a home purchased in Dunbar cost just over $10,000 in 1960? In 2000, that home cost just over $540,000. It is anticipated, according to CMHC manager Charles King, the same home in Dunbar will sell for a whopping $1.45 million by the year 2020.

King was the first of a series of speakers at the CMHC Housing Outlook Conference, November 5, in Vancouver

Carol Frketich, CMHC’s BC regional economist, forecast the continuation of a strong housing market for 2004 and beyond. Housing starts are expected to rise slightly above 2003 levels of 25,500 to 26,200 in 2004, with single detached starts rising from 12,200 in 2003 to 12,500 in 2004, and multiple units from 13,300 in 2003 to 13,700 in 2004.

Frketich expects the housing resale market to achieve comparable levels to 2003, which will also continue to have a positive affect on the renovation and construction markets.

The BC economy will rebound in 2004, with a favourable labour market outlook, Frketich said. Interest rates are expected to remain low, and consumer confidence is expected to remain strong. While affordability issues and rising building costs pose risks, developers are responding with affordable condo solutions.

Keynote speaker Bob Rennie, of Rennie Marketing Systems, talked about the dynamic downtown condo market – who’s developing what, and who’s buying.

Over 75 per cent of MLS sales west of Main Street and over 35 per cent of East Vancouver sales are condos, he said. The East Vancouver market will continue to be particularly active, Rennie said, since empty nesters and first time buyers want to remain in their neighbourhood and will be looking to condos as either an affordable or more utilitarian housing alternative.

He also said that over 40 per cent of all downtown condos are being purchased by investors, a majority of whom are US buyers.

“Investors have become a very noticeable demo-graphic in our market. They’ve become the key rental suppliers,” Rennie said. “Investors are looking to own a piece of the rock; they’re looking for capital appreciation.”

Sun