The requirements of the new act came into force on Sunday

Derrick Penner
Sun

Any manager handling the affairs of B.C. condominium owners, or holding some of the estimated $1 billion in strata fees that are being held in trust for owners at any one time, is now breaking the law if he or she isn’t licensed with the province’s real-estate regulator.

The B.C. government enshrined the licensing requirement into law last January with the adoption of a new Real Estate Services Act.

The requirement came into force Sunday.

Anthony Cavanaugh, communications director for the Real Estate Council of B.C., said there will be a short grace period for those who have not already applied for licences, however “by ‘short,’ I mean a matter of a few weeks, not a few months.”

Cavanaugh estimates that most of the province’s strata managers are now in compliance. He added that the council expects that the public will pass on the names of those managers who are not in compliance, which the council will forward to B.C.’s Superintendent of Real Estate for enforcement action, which could include criminal prosecution.

Cavanaugh said the licensing measure was brought in because up until now management of strata corporations, estimated by the Condominium Homeowners Association of B.C. to number 30,000 covering 1.1 million condominium units, was unregulated, leaving owners little recourse when problems arose.

“There was no consumer protection mechanism for consumers dealing with strata management,” Cavanaugh said. “Up until this time, there was no consumer protection mechanism.”

Cavanaugh added that the recommendation to license strata managers came out of the Barrett Commission into B.C.’s leaky condominium crisis.

From now on, everyone managing strata-titled property on behalf of its owners is required to have passed a licensing exam and be registered with Real Estate Council of B.C. making them subject to specific regulations, and subject to council oversight and discipline.

Cavanaugh said licensed realtors who also manage rental property only have to take a supplemental exam dealing with strata property issues.

Those who were not previously licensed will have to take a specific course on strata management before writing the exam.

However, Cavanaugh added that strata corporations that are self managed by their property owners will be exempt from the licensing requirement.

Tony Gioventu, executive director of the Condominium Homeowners Association of B.C., said the licensing regulation will bring a welcome level of professionalism to the industry.

Gioventu added that the property management firms licensed as rental managers have delivered good service, however since there was no requirement for strata managers to be licensed, a segment of unlicensed firms attracted some untrained and underqualified employees.

He said problems that strata corporations ran into as a result ranged from poor maintenance of their properties and non-performance of repair contracts to the misappropriation of reserve funds.

“[Strata owners] had no recourse at all, unless they wanted to go to court,” Gioventu said.

Gioventu said that while there have not been many misappropriations, they gave the whole management industry a black eye.

Cavanaugh said that as of Friday, the last business day of 2005, the Council had licensed 145 brokerages and 529 individuals to be strata managers, which he believes will represent most managers. However, the number of unlicensed managers is not known.

He expects that number will climb as applications that were in the works late last week are processed.

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THE NUMBERS:

30,000: Estimated number of strata corporations in B.C.:

15,000: Estimated number of strata corporations that hire outside managers. One manager can administer many strata corporations.

$1 billion: Estimated amount of money from strata fees held in trust on behalf of owners:

The rules:

Requirements to become a licensed strata manager:

– Licensed rental managers: Complete strata-management supplemental exam by Jan. 1, 2007.

– Unlicensed managers currently managing strata properties: Complete strata-management supplemental course and exam by Jan. 1, 2007.

– Unlicensed individuals entering the industry: Complete full strata-management licensing course and exam.

The costs:

– Full strata-management-licensing course: $875

– Exam: $47

– Two-year licence: $1,050

Source: Condominium Homeowners Association of B.C/

Real Estate Council of B.C.

© The Vancouver Sun 2006

REAL ESTATE: No ‘bubble’ here

Ashley Ford
Sun

First the good news. Greater Vancouver’s amazing housing construction and marketing race will continue for yet another year.

And now, the really good news. Housing-price increases in the most expensive market in the country are only expected to be around 4.8 per cent to six per cent in 2006, far less than the double-digit increases that have been the norm in the last half decade.

And if all that isn’t enough, according to RBC Financial Group, housing is getting slightly more affordable here.

Despite dire warnings of a pending “real estate bubble” — emphatically rejected by senior Vancouver marketing analyst for Canada Mortgage and Housing Corporation Cameron Muir — about the only possible cloud standing in the path of another very strong housing market is the possibility of a spike in interest rates.

“A housing bubble does not exist in Greater Vancouver,” Muir told CMHC’s recent annual outlook conference, which is closely followed by the real-estate and development industry. “Speculative activity and growth in home prices are less than in any previous market cycle.”

There may be some fall-off in starts this year, but it will be mainly due to builders already at capacity being extremely careful about starting new projects, so they can keep their vital skilled trades schedules in line.

Muir says the market is entering a second wave of consumer demand backed by strong economic fundamentals. He has the strong backing of the BMO Financial Group about the economy.

Rick Egelton, chief economist at BMO Financial Group, said late last week that growth in B.C. and Alberta will be even stronger than 2005, propelled by B.C.’s construction boom, which is partly related to the approaching 2010 Winter Olympics and rising oil production and oilsands construction in Alberta.

“Next year, the westward tilt is expected to continue, although Newfoundland and Labrador will be the exception to the rule as major developments in the mining and oil sectors ramp up to full production,” he said.

While housing markets elsewhere in Canada may falter due to consumer demand being better met, they won’t here. The great unknown is interest rates, but Egelton expects them to keep rising.

BMO predicts the Bank of Canada will raise its trend-setting overnight rate, now at 3.25 per cent, to four per cent by April and 4.5 per cent by next fall.

While every increase knocks some buyers out of the market, the Canadian Real Estate Association believes rates will not rise more than 100 basis points this year.

Gregory Klump, chief economist at the association, points out that most expected larger interest-rate increases in 2005 and it didn’t really happen.

Additionally, Klump points out that even with the increases that did come, much sought-after five-year mortgages are available at around 6.15 per cent, only slight ahead of where they were in mid-summer of 2005.

© The Vancouver Province 2006

Barbara Hagenbaugh, USA TODAY
Other

WASHINGTON — The number of previously owned homes on the market rose last month to the highest level in more than 19 years, while sales fell for the second-consecutive month, raising concerns that a housing bubble might be about to burst.

But many economists said the increase in homes for sale was actually a sign that the housing market was gradually cooling rather than threatening to implode.

More than 2.9 million homes were on the market in the USA in November, the National Association of Realtors said.

That was up 14.3% from November 2004, and the highest level since April 1986.

At the current sales pace, it would take five months to sell the available houses, the longest period since June 2003. The NAR estimates that the number of buyers equals the number of sellers when it takes about six months to clear the backlog.

Some economists warned that the greater supply could signal a rapid end to the lofty home price increases seen in recent years and perhaps a decline in prices in some parts of the country. “The overhang is becoming a real threat,” Joel Naroff, president of Naroff Economic Advisors said in a note to clients.

Naroff called the inventory figure for November a “real major warning flag for prices.” But he noted that with mortgage rates still historically low, the softening in housing will likely be “orderly.”

The average rate for a 30-year fixed mortgage was 6.26% last week, down from 6.33% in November, according to Freddie Mac. Although that is higher than the 5.75% seen a year earlier, rates exceeded 8% as recently as 2000.

NAR chief economist David Lereah welcomed the inventory gain: “Air is coming out of the balloon, slowly. That’s very healthy.”

Global Insight U.S. economist Brian Bethune said, “A potentially damaging ‘housing bubble’ event is less likely.”

For home buyers, the slowing could mean the end to bidding wars and a greater ability to negotiate on price.

Phyllis Foster, 57, closed this month on a three-bedroom condominium near Detroit. She paid $237,000 for the unit, which had been on the market for six months and originally listed at $264,000.

Her own home sold, but only after recently spending heavily on renovations — money she did not recoup on the sale. “The market here is terrible,” Foster says. “Nobody is buying.”

Nationwide, the number of previously owned homes sold in November fell 1.7% from the prior month to a seasonally adjusted annual rate of 6.97 million, the NAR said.

Prices also declined. The median price for a home in the USA in November was $215,000, down 1.4% from the prior month, but still up more than 13% from a year ago. The median is the point at which half the homes sold for more and half sold for less.

But prices in the West, the most expensive housing market in the USA, rose to a median $328,000, a record high and up more than 19% from a year ago. Prices in the Northeast and the South fell in November and were flat in the Midwest.