Bob Ransford
Sun

If you are a property owner, at the beginning of last week you wrote a big cheque to pay your annual property taxes. You probably didn’t realize that about 10 per cent of the taxes you paid went to unelected government bodies that have no direct accountability to taxpayers.

One of those governments, the regional government known locally as the GVRD, is governed by an unelected board, it has unclear jurisdiction and is exercising authority unchecked in a way that could lead to untold impacts on the rights of property owners.

The Greater Vancouver region, with a population of more than two million people, is one of the country’s largest and most diverse metropolitan areas. The complexities of urban living and metropolitan growth management require regional planning.

Little can be achieved with a parochial approach to the big-picture decisions. Regional governments are a necessity.

Regional governments, with real authority over planning and land use, are best equipped to deal with the big-picture decisions that affect our ability to maintain a high quality of life in a fast-growing urban region.

But British Columbia’s brand of regional government is an undemocratic anachronism.

The GVRD, the largest regional district in the province, is a good example of an old concept in need of reform. Its biggest flaw is not that it has too much power, but rather that it is exercising too much power with too little authority and next to no accountability.

The GVRD merely coordinates region-wide services like the water supply, waste management and regional parks. Through a series of cooperative agreements and voluntary consensus-building mechanisms, it also pretends to manage and plan growth and development, as well as protect air quality and green spaces.

They pretend without having the full authority to do so and without the checks and balances that provide the proper level of accountability.

The fact is most probably hadn’t heard of the GVRD until now. You’ve never voted to elect its governing board. At the very least, you probably have never thought of the GVRD as yet another level of government capable of interfering in our daily lives. It is sad, but true.

Even sadder is the fact that the people you elected to your local municipal council are allowing an unelected, unaccountable regional government to usurp powers with next to no debate. Some local councillors are handing new powers to the regional district government on a silver platter.

Take Maple Ridge, for example.

Maple Ridge Council is about to surrender to the GVRD veto powers over land use regulation for more than 73 per cent of the land within Maple Ridge’s boundaries.

Maple Ridge council seems prepared to do this even though the GVRD has already informed Maple Ridge that any changes to the land within a new “green zone” Maple Ridge has drawn on its own map can only be made with the unanimous consent of the GVRD’s 21 member municipalities.

This is all playing out in what is described as the “spirit of cooperation” where each member municipality has a say in how the GVRD is run. Unfortunately, the provincial legislation that governs regional districts in this province is somewhat ambiguous when it comes to how that cooperation is supposed to work.

In the face of this ambiguity, the GVRD has been making up its own rules, as it interprets its own powers.

Earlier this year, the GVRD blocked Maple Ridge council’s decision to rezone a piece of property to make way for a new 78-unit townhouse development.

The GVRD interpreted the “green zone” in its regional plan as having supremacy over local decision making. The GVRD basically directed that the decision as to whether or not 78 new townhouses could be built on this land in Maple Ridge was now in the hands of the 21 GVRD member municipalities, any one of which could block the development.

How would Maple Ridge react to say, White Rock, vetoing a local Maple Ridge decision?

The old adage “once burned, twice shy” doesn’t seem to hold much water in Maple Ridge.

Bob Ransford is a public affairs consultant with COUNTERPOINT Communications Inc. He is a former real estate developer and a director of the Urban Development Institute- Pacific Region. Contact him at: [email protected]

© The Vancouver Sun 2005

A mortgage allows you to repay debt and invest for your future at the same time

Lesley Scorgie
Sun

Are you wavering on the fence of “to buy or not to buy?”

Maybe this will persuade you to convert to the “to buy” side of the argument.

From an investment perspective, if you rent over the course of your independent lifetime — about 50 years — at a payment of $1,000 per month, you will have spent $600,000 on rental payments and gained nothing.

This doesn’t even account for inflation.

If you paid that same monthly payment towards a mortgage rather than your landlord’s retirement fund, in 25 years you will own your home and never have to make another monthly payment.

Throughout those 25 years, your home will also appreciate in value and you don’t have to do anything but maintain it to realize that appreciation. With the exception of years 1981 to ’82 and 1990 to ’92, Canadian house prices have risen steadily over the course of 50 years.

With that being said, real estate is a surefire way to secure some of your hard-earned cash in a lucrative investment.

Over the course of four years, I’ve managed to save enough money as a down payment for a small townhome in Calgary.

I’ve been away studying marketing and finance at the University of Alberta throughout those years, and now, as I return to Calgary anticipating a successful new beginning as a young professional woman, I stare straight into the tunnel of debt. I’ve committed myself to a mortgage, a car and a few lingering mementos of my life as a student (a student line of credit).

How could a girl on track to be a millionaire by age 25 wind up in such a pit of debt?

One fact about Canadian life is that debt is a part our lifestyle.

You can’t really escape from it, seeing as our Canadian dream consists of a house, a car and 2.5 children (by the way, to raise and educate one child costs nearly $300,000).

One loan seems to roll right into another, so by the time you finish paying off a vehicle, it may be on its last legs — and another car is in order. So, after acknowledging that debt is a part of life, there is only one way to survive: You’ve got to hop the bull and ride it out as best you can.

The second fact about managing your money is that balancing is the key.

Forcing yourself into a monthly savings plan will ensure that by the time you’re waving the flag of debt-free freedom, you’ll also have some positive numbers on your balance sheet.

To put this more simply, if you want something to show for your disciplined efforts over the years, save throughout the years at the same time you pay off your debts.

If you find it exceptionally hard to save your money, owning a home forces you into savings habits very quickly. This is because as you make a monthly mortgage payment, some of it goes towards interest and some towards principle. When it comes time to realize the value of your home, the equity that you’ve paid into your home is like cash.

An even handier way to ensure more of your payment goes toward equity is by setting up an automatic bi-weekly payment (author David Bach supports this approach with his latest book, Automatic Millionaire). The secret of a bi-weekly payment is that you actually squeeze in two extra payments per year.

Another benefit of a bi-weekly payment is that you can pay your mortgage off in a shorter period of time.

Those two extra payments per year really help. You end up being out of debt faster and have a wonderful nest egg after 20 years.

© The Vancouver Sun 2005

Sun

Province

Canadian house prices — even Vancouver ones — are still rising, but at a slower rate the latest survey numbers show.

Royal LePage Real Estate Services said yesterday prices in all major Canadian cities rose in the second quarter, but the rate of increase eased as more houses came on the market.

It said the slower rise in prices is relatively good news and diminishes fears of a crash. It suggests the housing market will remain strong over the next 18 months, housing analysts say.

In Vancouver, the average price of a two-storey house jumped 7.1 per cent year-over-year to $556,833, while in Victoria, the increase was 11.4 per cent to $361,000.

The average price of a standard two-storey house across the country rose six per cent year-over-year in the April-June quarter, to $318,390.

That compares with an 8.5-per-cent increase during the previous year.

Prices for detached bungalows were up 7.1 per cent to $262,845 while the average condominium price jumped 6.5 per cent to $183,397.

“I see the moderation in price increases being good news,” said Derek Burleton, senior economist at TD Economics.

“It points to a relatively well balanced market, and runs counter to any fears that a bubble has formed in Canada‘s housing market,” Burleton said.

But he also said it raises the likelihood that prices will continue to rise down the road.

© The Vancouver Province 2005

Sun

Home prices continued to rise through the spring, but the pace of appreciation slowed in the largest, formerly hottest, housing markets of Vancouver, Montreal, and Toronto, Royal LePage Real Estate Services said Wednesday.

Nationally, the average selling price of a detached bungalow during the second quarter was $262,845, 7.1 per cent higher than a year earlier, Royal LePage’s second quarter report said. The price for a standard condominium rose 6.5 per cent to $183,397 and for a standard two-storey home 5.9 per cent to $318,390.

“In the second quarter, we began to see an inversion of the established geographic trends observed in the Canadian housing market over the past few years,” said Royal LePage president Phil Soper.

“Markets such as Vancouver, Toronto and Montreal, where there has been frenetic activity, experienced a softening in the acceleration of price increases.”

However, the slowdown in the pace of price increases is not due to any decline in demand for homes, he added.

“In fact, strong economic fundamentals and low interest rates have kept demand for homes among Canadians resolutely high, and this will continue to drive prices higher,” Soper said.

Royal LePage noted that in the second quarter of this year, there were double-digit price increases in Victoria and Winnipeg, while in Atlantic Canada where the increases were the most moderate, there was a greater balance between buyers and sellers, it said.

In Alberta, a vigorous provincial economy, the flow of people into the province and the ensuing increased demand for housing boosted prices in both Calgary and Edmonton, the latter market getting an extra nudge from corporate relocations into the city and a shortage of homes for sale which “frustrated” buyers, it said.

Average price gains moderated in Vancouver and Victoria, although multiple offers remained common, it said.

In one deal, TransGlobe gains long-sought presence in B.C.

Fiona Anderson
Sun

TransGlobe Property Management made a dramatic entry into the B.C. apartment market Wednesday, purchasing approximately 900 rental units in 18 buildings throughout the Lower Mainland.

“I’ve been trying to break into the Vancouver market for a while, but it’s a very tightly held city to break into,” TransGlobe president Daniel Drimmer said in an interview.

“And for us to go into a new city, we need to have a certain critical mass. This was the first opportunity I got to get my critical mass, to make a significant splash and [get] a foothold in Vancouver,” Drimmer said.

The 18 properties, which include nine buildings in Richmond and the Ocean Park Place tower at 990 Broughton St. in Vancouver, were purchased from one vendor whom Drimmer refused to name, but described as a prominent Vancouver businessman.

The purchase completes the company’s coast-to-coast expansion, Drimmer said. Six weeks ago, TransGlobe purchased 23 residential buildings in Halifax, bringing its portfolio — including the Vancouver properties — to 10,000 apartments and four million square feet of office space across Canada.

TransGlobe, a family-owned company started in Ontario 11 years ago, specializes in affordable housing.

“We’re an expert in providing for that affordable housing market, and that’s what we liked about Vancouver,” Drimmer said. “There is definitely a need for people to have affordable housing in an apartment building.”

Average monthly rent for the apartments, which TransGlobe will also manage, is $800 to $900, Drimmer said.

“The target market for my tenants is affordable housing, and . . . we provide a very good quality apartment for that,” Drimmer said.

TransGlobe hopes to expand further in B.C., both in the residential and commercial sectors.

“We’re using this as a stepping stone to expand further in the Vancouver area and the west coast in general,” Drimmer said.

The recent spike in apartment building sales is nothing new, Tsur Somerville, at the UBC Centre for Urban Economics and Real Estate, said in an interview. Last year, there was a huge run-up in purchases of apartment buildings, spurred largely by falling interest rates.

© The Vancouver Sun 2005

No signs of strong market slowing down

Bruce Constantineau
Sun

Lower Mainland house sales soared to near-record levels in June, with Greater Vancouver sales reaching the fourth-highest level ever posted on the Multiple Listing Service while Fraser Valley sales had the second strongest month on record, the Greater Vancouver and Fraser Valley real estate boards reported Tuesday.

Greater Vancouver sales rose to 4,333 units in June — a 23.6-per-cent increase over June 2004 — and Fraser Valley sales increased by 38 per cent to 2,517 units. Fraser Valley house sales hit the highest level in more than 14 years and the Greater Vancouver total for June included an all-time monthly high of 708 sales of attached units.

Real Estate Board of Greater Vancouver president Georges Pahud said positive factors that create a strong real estate market remain in place — including consumer confidence, a strong economy, immigration to the region and affordable interest rates.

“The market is strong, it has been strong for a long time and more and more people are coming here to live,” he said.

The benchmark price of a detached Greater Vancouver home has increased by 10.2 per cent in the past year to $533,100, the Greater Vancouver board said. The benchmark price of an apartment condominium rose by 14.1 per cent to $261,800 while the benchmark price of a townhouse increased by 10.6 per cent to $333,000.

Pahud said some properties, especially single-family homes, receive multiple offers now and end up selling for more than the original asking price.

“It’s a healthy situation for sellers, but obviously a concern for buyers,” he said. “They have to make sure they have the right advice and stay within their [pricing] comfort level. Unfortunately, multiple-offer situations make it hard for buyers to do the due diligence they would do in a slower market.”

Fraser Valley board president Jake Siemens said the number of active listings in the board’s region has declined by about 14 per cent in the past year, meaning demand is starting to outstrip supply, so some properties are bound to command higher prices than they would have received a year ago.

“If the demand remains strong and the supply goes down, you’ll see further price increases,” he said in an interview. “Frankly, I’m surprised at the amount of activity we saw in June, which normally does not bring in these kinds of numbers. I have a funny feeling we’re in for record months in July and August as well.”

Siemens noted that one Surrey condominium tower had 283 MLS sales in June but even without those sales, it still would have been the strongest June on record.

“The amount of phone calls and activity going on out there now is absolutely insane and it doesn’t seem to be losing any steam,” he said.

The average price of a detached Fraser Valley home has increased by 12.5 per cent in the past year to $389,300 while the average price of an apartment condominium in the region has increased by 35 per cent to $187,300. Fraser Valley townhouse prices have increased by 1.8 per cent in the past year to an average of $230,000.

[email protected]

JUNE BOOM:

Sales of attached homes in the Real Estate Board of Greater Vancouver region reached a high in June. At the same time, detached home sales reached the second-highest number in 10 years.

Sales in REBGV region, June 2005

Attached: 708

Detached: 1,851

Apartments: 1,774

Total: 4,333 (up 23% from June 2004)

Source: Real Estate Board of Greater Vancouver

© The Vancouver Sun 2005

Purchase of Kerrisdale apartment building part of bigger plan to buy at least 1,000 rental units in Vancouver, president says

Fiona Anderson
Sun

Grosvenor Capital Corp. is venturing into the Vancouver residential rental market as the next step in its ever-expanding portfolio of worldwide real estate investments.

The Vancouver-based company hopes that its purchase of the 67-suite Bermuda Manor apartment building in Vancouver‘s Kerrisdale neighbourhood for $12.9 million last week is just the first purchase of what will be the acquisition of at least 1,000 rental units in Vancouver, Dan Walsh, president of Grosvenor, said in an interview.

The company has already embarked on a similar acquisition plan in Seattle where it currently owns 300 rental units and is negotiating for more.

Grosvenor has also set its sights on other coastal cities in California.

The move into the rental market will provide the company with a steady cash flow to enable it to fund its other projects, Walsh said.

“A large part of our activity is investment properties where we require rental cash flow,” Walsh said. “So we are very active developers but we also need investment properties. It’s an adjunct to our development business.”

Grosvenor is currently involved in a number of development projects in various stages of planning in North Vancouver, Vancouver and Surrey that involve 2,000 residential units, but none of them rental.

However, the company is aiming to change that and is in discussions regarding a site on which it hopes to build a rental building, Walsh said. But where in the Greater Vancouver area that building may be, Walsh refuses to say.

“It would give it away,” Walsh said.

Grosvenor, which is part of Grosvenor Group Holdings Limited, a private international property company based out of England and started by the Duke of Westminster, branched out into the residential market from strictly industrial and office projects five years ago.

Initial forays were limited to developing and financing residential complexes that sold its units.

The purchase of the Kerrisdale apartment building and the buildings in Seattle, are the company’s first involvement with rentals.

The company moved into residential real estate because it felt the potential for residential was the best of all property types both in Vancouver and elsewhere in North America, Walsh said.

What made these cities especially attractive was their excellent population growth, which translates into a predictable rental market.

“And our timing has borne that out thus far,” Walsh said.

Demand for office space, on the other hand, Walsh said, is less strong than it was 10 or 20 years ago.

Helmut Pastrick, chief economist with Credit Union Central of B.C., agrees that the rental market in Kerrisdale is a good place to invest.

“The rental market particularly in Vancouver and Kerrisdale is solid.

“It’s typically been amongst the lowest vacancy rates in the region.

“Also the demographics in Kerrisdale is such that renters tend to be older than average, and that means a very stable rental market. So they have certainly chosen a very good market to get into.”

The company’s first investment in the area was the purchase of Annacis Island in 1953.

© The Vancouver Sun 2005

Brian Lewis
Province

The house-buying mania and soaring price frenzy we’re seeing locally, nationally and globally is now described as an “economic bubble.”

And, like all bubbles, sooner or later it’s going to burst.

And when that happens, many homeowners — especially newer ones — may be in danger of owning a mortgage larger than the asset value of the home. It’s happened before, with devastating consequences.

Other signs support the concern that this frenzy has reached bubble proportions.

There’s a prevailing “I-can’t-lose” attitude among buyers, along with a “get-in-at-any-cost” or “quick-flip-for-profit” mentality.

Banks and credit unions are spiking their mortgage cocktails with easier and easier terms, while some homeowners now use their home equity like ATMs to extract extra cash.

Consequently, household debt in Canada and elsewhere has smashed all previous records. But some analysts and self-serving realtors say “don’t worry” because much of that debt is supported by rising real-estate values.

The fact is, as The Economist magazine warned recently in a special report titled “After The Fall,” the global housing boom is the biggest financial bubble in history — bigger than the late 1990s global stock-market bubble or the U.S. stock-market bubble of the 1920s.

“Prepare for the economic pain when it pops,” the magazine said.

Its most compelling evidence that homes are over-valued is the diverging relationship between house prices and rents.

In the U.S., for example, the ratio of prices to rents is 35 per cent above its average level during 1975-2000.

Although no figures were provided for Canada, The Economist says property is over-valued by 50 per cent elsewhere, such as the U.K.

In fact, the bubble is already beginning to burst in Britain and Australia — despite current low interest rates. This runs contrary to conventional wisdom that it will take higher interest rates to slow the housing boom, the magazine warns.

More importantly, it says a U.S. housing slowdown may only be a year or two behind the U.K. and Australia.

If that happens, it’ll impact the global economy significantly, a recent International Monetary Report says, since the global housing boom pulled the world out of the 1990s stock-market bust in the first place.

This should concern Canadians, since the U.S. is by far our largest trading partner. It’s a larger concern for B.C.’s forest sector, which ships 75 per cent of its lumber to the U.S. market.

There are also signs that the U.S. economy is beginning to slow. In a recent report, the TD Bank said this year will be its “last hurrah” and that a mid-cycle slowdown is on tap for 2006.

And we’re seeing early signs of a slowing housing market in Canada where, in May, national starts fell by five per cent. On a year-over-year basis, resales also have fallen, while house prices are increasing at a slower rate.

And, even though the Greater Vancouver real-estate market is still very healthy, there are early signs that it’s slowing down.

As for the housing bubble bursting, The Economist says it’ll be more like a “slow puncture.” The first sign will be when higher prices begin to force out those over-exposed investors.

But whether a bubble bursts or implodes slowly, it usually happens when least expected. So, when you borrow for a home, be careful and be conservative.

© The Vancouver Province 2005