Fraser Valley rises 24% as spring spurs market

Bruce Constantineau
Sun

Spring home-buying activity kicked into high gear last month with Greater Vancouver housing sales increasing by 37 per cent over February, while sales in the Fraser Valley rose 24 per cent, real estate boards in the two regions reported Tuesday.

“The number of listings has gone up, but our inventory is still too low and we’re still getting multi-offer situations on some properties in certain areas,” Real Estate Board of Greater Vancouver president Rick Valouche said in an interview.

The board said 4,033 home sales were recorded on the Multiple Listing Service in March, a 2.4-per-cent increase over March 2005, and 37 per cent higher than February sales. Fraser Valley MLS sales increased by eight per cent over March 2005 to 2,072 sales — 24 per cent higher than February sales.

Valouche noted the number of MLS properties for sale in March rose to 5,767 units, a 13-per-cent increase over March 2005, but still not enough to create a balanced market and give buyers more time to make decisions.

“There’s more balance happening on the west side [of Vancouver], but multi-offers are still happening in outlying areas like Burnaby, Coquitlam and Maple Ridge because prices are more affordable,” he said. “It’s not necessarily the best market to work in. If I have a buyer and see a listing, by the time I get them an appointment, it probably has four other buyers looking at it. It can be a rushed market and that’s not good for everybody.”

The Greater Vancouver board said the benchmark price of a detached home has increased by 21.3 per cent during the past year to $610,382. The price of a benchmark attached property rose by 17.6 per cent to $375,919, while the price of an apartment increased by 22.6 per cent to $305,002.

Fraser Valley board president David Rishel said the number of new listings in March fell by 10 per cent to 2,540, creating a situation where demand outpaced supply. The board said the average selling price of a detached Fraser Valley home has increased by 19.4 per cent in the past year to $442,726.

“Sales are going up and listings are going down, but the market is holding its own, so there’s no need to panic,” Rishel said.

He said price increases have levelled off in recent months so future annual price growth figures could drop from current levels.

© The Vancouver Sun 2006

 

Affordability ‘deeply eroded’ by 22% leap

Michael Kane
Sun

An eye-popping 22-per-cent jump in housing prices last year is raising the risk of a real estate bubble in Vancouver, a TD Bank economist said Tuesday.

But others cautioned that the price spike could be short-lived, and concerns about speculation remain limited to the condominium market.

“That’s an eyebrow-raising price increase, but I would prefer to wait and see if it is an anomaly,” said UBC real estate economist Tsur Somerville. “I for one would be concerned if prices in the second quarter showed an equally large increase.”

Data on properties being resold within a year suggest that speculation in Greater Vancouver is far less rampant than at previous real estate market highs in 1981 and 1989.

Craig Alexander, deputy chief economist at TD Bank Financial Group, said Tuesday that booming economic conditions offer the perfect breeding ground for speculative price bubbles to form.

“That’s because in such an environment, housing market participants are at greater risk of developing a case of irrational exuberance, especially if they expect that such exorbitant price gains will continue indefinitely.”

He said the risks appear to be greatest in Vancouver, where average prices are rising at a 22-per-cent year-over-year pace and have now reached close to half a million dollars.

“This has deeply eroded affordability, and it has likely contributed to the decline in the B.C. personal savings rate deep into negative territory.”

In an interview, Alexander said he was comparing average Vancouver area house prices in December, January and February with the same period last year. If he simply compared February’s average price of $490,000 with last February’s average of $387,000, he said the gain would be 26 per cent.

“All of our indicators are telling us that the Vancouver market is really hot and speculation is present in the market. But you still can’t say it is a bubble. The only way you know you have a bubble is when the bubble bursts.”

Elton Ash, regional director of Re/Max Western Canada, agreed that there is speculation in Vancouver, particularly in the downtown condo market where he said some people are buying two or three properties in the hope of flipping one or more for a profit.

“I would suggest they be careful,” he said. “It is not a bubble. We are not going to see a drop in prices, but they are probably not going to see a big return on their investment.”

Ash expects to see a more balanced housing market in Western Canada in the second half of this year, while Cameron Muir, senior market analyst with Canada Mortgage and Housing Corp. in Vancouver, is calling for prices to start levelling off early next year as more people are squeezed out of the market.

Muir noted that about 20 per cent of condos are being traded within a year, compared to 30 per cent in 1989 and about 50 per cent in 1981. The annual average over the past 25 years is 14 per cent.

“To date, the amount of speculation out there has not given us the kind of red-light indication that you would expect in a housing bubble,” he said. “We would be in what I would term a yellow-light area if it gets above the 20-per-cent range. Obviously there would be increasing speculation in the marketplace.”

Helmut Pastrick, chief economist at the Credit Union Central of B.C., said research by Landcor Data Corp. shows that “flippers” who buy and sell for a quick profit are most prevalent in the condo market, both downtown and in nearby suburbs, but are still far less active today than at previous market highs.

He said the annual average increase in the house price index for the Greater Vancouver and Fraser Valley Real Estate Boards was 13.4 per cent in 2005 compared to 17.1 per cent in 2004.

“So we are seeing some price moderation and I am calling for further moderation this year and again next year.”

B.C.’s strong economy is providing solid support for the housing market and will limit any softening in prices but 20-per-cent-plus gains are not reasonable, Alexander said. “The question then is when it comes back down to earth, does it come crashing back down or is it a gradual moderation?

“In Toronto, there was a lot of concern that the market was overheating over the past couple of years and we have seen it cool down. The speculation seems to have disappeared and we’ve had what I would characterize as a soft landing because we haven’t actually had falling prices and it doesn’t look like we will. That tells you that you can moderate from really hot activity without it necessarily ending in tears.”

© The Vancouver Sun 2006

 

March sales numbers show strength in both city and Valley

Ashley Ford
Province

Greater Vancouver’s housing market may have “bubble-like qualities,” but if there is indeed one, it isn’t about to burst any time soon, housing experts say.

In its latest report, Housing Bubble Watch, TD Economics says that Vancouver “is clearly vulnerable to any deterioration in buyer sentiment.”

It says with prices rising at a 22-per-cent annual pace in the first quarter and average home prices reaching close to $500,000, “affordability is deteriorating to the worst level in the country.”

But it also acknowledged vulnerability doesn’t mean any collapse is on the horizon. “The good news is that the economic fundamentals for Vancouver are likely to remain solid over the coming years, limiting any softening in the price environment.”

David Baxter of the Urban Futures Institute of Vancouver bluntly says there is “no bubble” in Vancouver.

“A bubble is something that when you prick it there is nothing in the middle. The housing market here is simply not like that,” he said.

“Yes, in the past there have been price fluctuations, the most prominent being in 1981 when interest rates reached 18 per cent. The result was prices fell,” Baxter says.

That is not the situation today and, unless there is a sudden dramatic rise in interest rates, which nobody foresees, or a recession, again which no one sees, the housing market will be all right, he said.

The best probability, he said, is a plateauing of rates and prices. What will continue to drive the market is incomes and the economy and the latter shows few signs of slowing.

Bob Rennie of Rennie Marketing Systems says: ‘I don’t see any bubble. I look at supply and economic confidence. The fact is we don’t have any oversupply and the fundamentals of a good market are there,” he said.

The latest real-estate numbers — featured on Page A29 — back up Rennie’s assessment. For the 10th month in a row, real-estate sales increased in the Fraser Valley last month with 2,072 properties being sold compared to 1,922 a year ago.

The eight-per-cent increase in sales contrasts with a decrease in the number of listings and a decrease in the overall number of active listings indicating there is still very strong consumer demand.

Active listings closed at 5,037, which is 20 per cent fewer than one year ago.

The strong performance was mirrored in Greater Vancouver, where March sales of detached, attached and apartment properties climbed 2.4 per cent to 4,033 units from 3,938 the same month a year ago.

“By investing in real estate, homebuyers are demonstrating confidence in our economy and confidence in the high reputation of the Vancouver housing market,” says Real Estate Board of Greater Vancouver president Rick Valouche.

© The Vancouver Province 2006

 

ATHLETES VILLAGE: City carries no risk in Millennium Properties plan

JOHN BERMINGHAM AND DAMIAN INWOOD
Province

The City of Vancouver is selling a 2.4-hectare parcel of city land along Southeast False Creek for $193 million, which includes the site of the 2010 Olympic Athletes Village.
   Councillors last night unanimously chose Millennium Properties Ltd. to develop the Olympic Village, following an eight-month selection process.
   “We see it as a wonderful opportunity to partner with the city,” said Hank Jasper, general manager of Millennium. “These sorts of things in our business don’t come along too often.”
   The proposal by Millennium, one of three bidders for the site, guarantees the city carries no financial risks in development of the Athletes Village, which during the Olympics will be home to about 2,800 athletes and officials.
   After the Games it will be converted to 1,000 residential units, including 250 affordable housing units, a community centre, daycare centre, retail spaces and underground parking.
   The parcel, south of False Creek to First Avenue between Ontario and Columbia streets, will be part of a large-scale redevelopment of Southeast False Creek.
   Staff recommended Millennium Properties over Concord Pacific Ltd. and the Wall Financial Corp. after a detailed review by an evaluation committee. The city’s project manager, Jody Andrews, said Millennium was the highest bidder for the land, and produced a six-point plan for market housing on the site that’s affordable.
   “They will design and construct all the buildings in the first phase of the project,” said Andrews. It includes a child-care centre, community centre and marina and 250 units of social housing.
   The city will pay the construction costs for those facilities plus a fee of $5 million.
   The deal includes a “green building strategy” and a commitment to provide jobs and business opportunities for people in the Downtown Eastside. Millennium pledged to create training and jobs for the aboriginal community.
   Millennium will pay the city 15 per cent of the $193,000 as downpayment, and pay the balance when Millennium gets title to the land in 2010.
   Staff will now work with Millennium to come up with a housing plan for the site, and bring a rezoning application back to council in the fall for a public hearing.

Boom has roots

Eric Beauchesne
Province

OTTAWA — The odds of a housing-price correction are rising, a major bank is warning.

However, chances that the current seven-year boom will turn to a bust are still low because, while it has run longer than most, the 40-per-cent increase in prices is not excessive by historical standards, the run-up in interest rates has been relatively modest and unemployment is low, Scotiabank said in a report yesterday.

“From a historical perspective, the duration of the current upswing in home prices is relatively long,” said Scotia economist Adrienne Warren, noting that over the past 50 years there have been three other major housing booms, each lasting five to six years.

“The magnitude of the current price gain, however, is not out of the ordinary, with the rise in real home prices essentially in line with the average 44-per-cent increase recorded over the prior three cycles.”

Housing prices still appear to be well supported by economic fundamentals, being driven by tight supply-demand conditions, not investor speculation, the report said. In contrast, during the 1985-89 housing boom, which went bust, price increases were much larger than would otherwise be expected, given overall market fundamentals.

The current housing boom is also more diverse regionally than previous ones, especially the 1980s boom, when average home prices were driven up by a spectacular — albeit unsustainable — 84-per-cent inflation-adjusted surge in Ontario, Warren said. In the current cycle, all regions of the country are contributing to the rise in average house prices, and no province has yet experienced an after-inflation appreciation in excess of 60 per cent.

The current low and stable inflation environment is also reducing the risk of a large price correction, the report said, noting that in only seven of the past 50 years has there been an actual drop in housing prices.

Any drop in inflation-adjusted prices this time will likely occur through a gradual erosion by inflation, rather than a drop in actual prices, it said.

© The Vancouver Province 2006

 

Not unusual, officials say, as problems will rise with increased activity in the market

Fiona Anderson
Sun

The Real Estate Council of British Columbia expects to receive 400 complaints against its licensees this fiscal year, a 16 per cent increase over last year.

But that’s not surprising given the hot pace of the market, RECBC spokesman Anthony Cavanaugh said in an interview.

“As a result of the increased activity in the real estate market, there has been an increase in the number of complaints received at our office,” Cavanaugh said.

In its last fiscal year — from July 1, 2004 to June 30, 2005 — there were 345 complaints.

But the number of complaints is very small compared to the number of transactions there have been, Cavanaugh said.

In 2005, there were more than 106,000 residential sales in the province through the multiple listing service, an increase of 10.3 per cent from 2004. That number does not include private and commercial sales, nor sales made through brokers that do not use MLS. The value of those sales — $35.3 billion — was an increase of almost 27 per cent from a year earlier.

But while the increase in complaints may outstrip the increase in sales that doesn’t take into consideration the rising number of realtors and licensees that are regulated by the RECBC, Cavanaugh said.

Since 2002 the number of licensees has steadily increased, with more than 17,000 registrants currently in B.C., Cavanaugh said. Included in these new numbers are about 250 companies and 800 individuals licensed as strata managers, a requirement that came into effect Jan. 1, after much lobbying by the RECBC.

But the new strata rules haven’t led to any complaints yet, Cavanaugh said. Last week the RECBC suspended the licence of strata and rental property manager Dedicated Property Management Ltd., but that suspension arose from the RECBC’s own investigation and not from a complaint, he said.

Fraser Valley Real Estate Board president David Rishel does not think the number of complaints is a concern. “It’s not as a result of the fact that realtors are getting worse, or more realtors are doing wrong things,” Rishel said in an interview. “It’s strictly a numbers game. The more transactions you do the more the likelihood that something can go sideways.”

“[And] when there’s more money at stake there are more chances for issues to come up,” he said.

Multiple offers on properties, and competing bids may also leave more room for error, he said.

Carmen Maretic of the Consumer Advocacy and Support for Homeowners Society — an organization aimed at protecting “housing consumers” according to its website — says the number of complaints means little by itself but when the increase in complaints outstrips the increase in sales, that raises a “red flag.”

Maretic says there are a lot things the RECBC could do to improve consumer confidence, such as adding a consumer advocate to its board of directors and increasing penalties handed out to offenders.

The RECBC can suspend or cancel licences and impose fines of up to $10,000 for an individual and up to $20,000 for a brokerage, Cavanaugh said.

© The Vancouver Sun 2006

Are you ready for robotic parking? Your car will be hung by its tires

Jeani Read
Province

Downtown Vancouver rocks more than any of us ever thought it could.

Today, spots that might once have been considered too downtown — like Jameson House’s 800-block West Hastings address — have hopeful waiting lists of buyers, says condo czar Bob Rennie.

That’s because that too-downtown Jameson House location has an Urban Fare opening two-and-a-half blocks west, the new seawall close by, the Terminal City Club across the street and the SkyTrain a block away.

“It’s all of a sudden very convenient,” says Rennie. “Our inadequate highway system has forced us to live where we work — and created an animated city,” he says. “Our city is so livable.”

We asked Rennie what else besides great location makes Jameson House hot.

Q: What’s special about the project?

A: “Foster and Partners [architects] have a reputation for heritage restoration and contemporary design. Here, they will do a heritage reno in and out of [neighbouring] Ceperley House and the Mining Museum, keep high-end retail on the street and [several] floors of office space. And then there are 132 great condos. These places are right off the dial. They’re very minimal. It’s so sexy.”

Q: What are people liking?

A: “[Jameson House] is attracting people with an appreciation for architecture, an absolute esthetic precision. Buyers have known [Jameson] was coming up, and have been waiting for it. Also, it’s a completely new definition of condominium. We can’t keep producing the same product, so just when you think you’ve seen it all, you find something like this.”

Q: Details?

A: “The kitchens are from Italy, an extremely minimal design, the upper cabinets an opaque white glass, the floors a travertine [stone] right through the living area and out to the deck. The island becomes very important in terms of the great room. In the larger suites both ends of the island are on hydraulics so you can lower them for kids or office space, or raise them. There’s in-floor radiant heat, so no baseboard heaters. The rooms are so big the gentle curve of the walls does not interrupt the living space. There are three sizes of kitchens, three choices of colour scheme. The bathrooms come in four sizes, very modular.”

Q: Amenities?

A: “With ownership comes a membership in the Terminal City Club across the street.”

Q: Parking?

A: “It’s a first for Canada — robotics parking. Your car is whisked away on a conveyor belt. It’s lifted by the tires. It’s so smart. These are all over the place in Europe — we’re behind the times. But not any more.”

Q: Selling?

A: “We’re previewing, with sales starting mid-April.”

Q: Occupancy?

A: “Fall of 2008.”

QUICK FACTS

JAMESON HOUSE

What: 132 units on 23 floors

Where: 838 West Hastings

Developed by: Jameson Development Corporation

Sizes: 598 sq. ft.-3,200 sq. ft.

Prices: $450,000-$5.35 million (penthouses)

Open: Noon to 6 p.m. daily except Fridays at 830 West Pender St., 604-339-0707

© The Vancouver Province 2006

 

Divide widens between renters and owners, international buyers and locals, as the wealthy drive up the price of a piece of paradise

PETE McMARTIN
Sun

 Here’s an uncomfortable question: For whom are we building this city?
   Here’s another:
   To what purpose have the local, long-established residents of this region paid some of the highest taxes in the world to keep the air clean, the water pure, the streets safe, the parks manicured, the schools and hospitals modern and the pristineness of our unparalleled environment preserved?
   “Well,” said Rick Valouche, president of the Real Estate Board of Greater Vancouver, “it’s a loaded question. And I’d hate to answer it.”
   Me, too. This is dangerous ground, especially in this part of the world, where immigration has managed to revolutionize the demographics in 20 short years.
   These are questions where one can find oneself wading into the quagmires of ethnicity and nationality all too easily.
   But they are questions that came to mind earlier in the week at a GVRD seminar on the high cost of housing. It was there that a real estate consultant said Vancouver, in effect, was a victim of its own success, that, because our enlightened environmental and governmental ethos had made it such a wonderful place to live in the world, the world now wanted to live here. Local buyers had to compete with international buyers from Asia, the U.S. and Europe, he said, and those international buyers often had the advantage of lower tax regimes and less stringent environmental and labour controls in their home countries. Wealthy foreigners could make their fortunes outside of Vancouver, then buy a piece of paradise here.
   Exactly how much of the market is now taken up by international (or out-of-province) buyers is not known precisely, because real estate boards have always been touchy about tracking buyer origin. That quagmire thing.
   But this may soon change.
   There have been so many questions about the subject, and the issue has become so prominent, Valouche said, that the board has started to try to put together a database that would track buyer origin. Privacy issues are a concern, he said, but a system might be up and running in “a year or two.”
   In the meantime, all of the information on buyer origin is anecdotal. There is some uniformity to that evidence, however.
   Valouche said that in his business, Amex Broadway West Realty, which has a staff of 190 people and a region-wide reach, “25 to 30 per cent are not local buyers.” Bob Rennie, the condo king, gave a similar figure of 25 per cent on “signature, high-end properties” — most especially on downtown, waterfrontview properties. In some companies, which target the offshore market, however, the percentages are much higher. Manyee Lui, of Macdonald Manyee Lui Realty, and who specializes in high-end West End and downtown properties, said 70 to 80 per cent of her clients came from outside of B.C.
   This is an enormous slice of the pie, whichever way you cut it. And all the realtors and developers I talked to said that, yes, competition from international buyers for the limited supply of existing housing stock had contributed to the high price of housing here.
   And Rennie — to his credit, I thought, because, after all, it’s his livelihood — said he saw that effect on the market as “a double-edged sword.”
   On the one hand, he said, there is a natural amount of resentment.
   “We’re always jealous of people that have more than us.”
   On the other hand, Rennie said, those buyers are creating wealth and local jobs, and contributing to a more vibrant cultural scene. Vancouver is richer for them.
   This is undeniably true, and often overlooked. (I remember getting a phone call some years ago from an elderly gentlemen who had just sold his Kerrisdale home to Hong Kong immigrants for a huge sum, but he was upset that his old neighbourhood was changing so quickly. Our conversation was shortened when I asked him if anyone had put a gun to his head to force him to sell his house to them.)
   But I would argue that the Vancouver area becoming richer is true only for some of us, and that wealth is not always measured by dollars and cents.
   According to the GVRD’s February, 2006 report on affordable housing, the income needed to afford an averagepriced condo in Greater Vancouver was $67,000. For a townhouse, it was $81,000. For a detached home, it was $122,000.
   For local middle-income families, that means carrying onerous mortgages. On average, homeowners in the Greater Vancouver area devote 56 per cent of their income to household expenses. That is easily the highest in the country.
   But for renters, the situation is even more dire. According to the GVRD report:
   “The average household income for renters is approximately half that of owner households, and disparity in income levels has continued to increase over the last 20 years. The disparity in wealth (measured by assets or net worth) between owners and renters also continues to grow. Combined, these growing disparities translate into markedly different affordability thresholds for owner and renter households, and for the ability of renters to move into home ownership.”
   In other words, the place we used to know is fracturing along fissures in the housing market, between the local city and the global one, between the owner and the renter, and those fissures are getting bigger, not smaller.
   Harder to call a place home, I’ve always thought, when you have a house divided.
   Have an opinion on housing in Greater Vancouver? If so, contact me at [email protected] or 604-605-2905.

With the noisy pile driving finished, workers can begin putting in some 3,000 truckloads of what insiders call ‘engineered dirt’ — and the bare rubble look will at last start to disappear

Frances Bula
Sun

The insider name for it is “engineered dirt.” We in the general public know it as concrete, that denser-than-fruitcake grey stuff that’s the foundation for everything in this city from Vancouver Specials to the 600-foot Shangri-La tower.

And it’s the featured material these days at the Vancouver convention-centre expansion now that the pile-driving is slowly but surely coming to an end.

With the pile work finished on the east end of the site, crews have started the 16-month job of pouring and placing the equivalent of 3,000 truckloads of concrete that will form foundation for the new centre.

If you drive past the site the waterfront road, you’ll see the bare rubble starting to disappear.

Instead there is a swarm of workers building forms for concrete to be poured into, embedding the reinforcing bars, directing the pours, and then carefully covering and watering the concrete to ensure that it sets properly.

If you drove past on some nights during the winter, you might even have seen them working then too.

The centre’s unique waterfront site, which is a metre lower than other buildings on the shore, has meant that high tides routinely wash over the concrete work.

Which, as it turns out, is much more of a science than many of us might have suspected.

The first thing that usually surprises the average non-construction-type gawker, Rob Karchewski tells me, is that concrete is basically crushed rock.

Apparently people think it must be more complicated than that. But it’s not.

It’s rock and gravel that’s been pulverized into a powder finer than espresso, then mixed up with a few other things like limestone and calcium, heated to 1,482 degrees Celsius, and mixed with water. The chemical reaction between the water and the minerals makes it set.

On the other hand, this very basic product — something the Greeks and Romans used before the technology was lost for a few hundred years until it was revived in 1700s Britain — has also been seriously tinkered with in recent decades.

Or, as Rob tells me, it’s “highly technical.” That’s engineering speak for lots of extra things have been added to it. (Rob is in fact an engineer, with a degree from Lakehead University in Thunder Bay before he was dragged kicking and screaming out to the West Coast four years ago and now the construction manager for Graham Construction and Engineering.)

The process for making concrete isn’t all that environmentally friendly, what with having to heat the rock up to several degrees more than your average oven.

So, now the manufacturers add waste products from other manufacturing processes, like the flyash that’s a byproduct of coal-burning power generators (which we import from Centralia, Wash., and Alberta) and silica.

As well, manufacturers add a lot of superplasticizer, which makes it a little more fluid and that helps with the pouring.

Plus there are other things in there that make the concrete today considerably stronger than what old Joseph Aspdin was coming up with back in 1700 and whatever.

Old-time concrete — perhaps the very concrete used to construct the 1980s building I’m currently in, for all I know — only had a strength of 3-4,000 psi. Now it’s up to 14,000 — or 20 to 100 megapascals, Rob explains to me helpfully.

And there will be a lot of it underneath the dance floor at the convention centre — three layers in fact.

There are the long concrete bars laid on top of the piles — the pile caps. Then there are pre-cast concrete platforms set on top of those piles. And at the end, Kawchewski and his crew of 60 will ice the whole confection with another 10,000 square feet of additional concrete.

Now there’s something comforting to think about when you’re in a future crowd of 5,000 or so on the public plaza outside the centre and you start to wonder exactly what is holding all of you up.

© The Vancouver Sun 2006