City says leaking development at Broadway and Nanaimo is in danger of failing structurally

Fiona Anderson and Glenn Bohn
Sun

Gladys Rivas and son, Kevin, 16, live in the Gardenia Villa complex in Vancouver, where they may have to pay $160,000 toward repairs that could save part of the buildings from structural collapse. Photograph by : Mark van Manen, Vancouver Sun

Significant decay’ A December 2005, order from the City of Vancouver set off an investigation that has resulted in a possible $40-million repair job. VANCOUVER SUN

Owners in a leaky condominium project that cost $29 million to build in 1994 may now have to pony up a total of $40 million to keep the buildings standing.

The City of Vancouver ordered Gardenia Villa, at the corner of Nanaimo and East Broadway, to get an engineer’s report after an inspection showed various parts of the complex were at risk of failing structurally. The city also ordered immediate shoring to one of the buildings in the complex because of imminent danger.

Normally, it’s the strata council that decides to get an engineering report done and the city doesn’t get involved until there is an application for a building permit to do the work, Vancouver’s chief building official, Dave Jackson, said in an interview. But in this case, some of the owners complained to the city that maintenance wasn’t being done.

Following an inspection, the city was concerned that the building “might be damaged to the point where something might fall,” Jackson said.

In its order, the city also referred to “water … leaking out of structures in several locations and … algae growing extensively on the building’s exterior stucco.”

The project, designed by architect James Cheng and developed by Hong Kong-based Maple Resources Investment Co. Ltd., is a colourful elevenbuilding complex with three gated courtyard gardens and a pool on five acres of land. Two of the buildings are concrete, but the other nine are wood-frame low-rises.

According to the report by RDH Building Engineering Ltd., 63 per cent of the owners of the wood-frame units that responded to a survey said they had problems with condensation, and 41 per cent had problems with mould, fungi or mildew. Forty per cent said their apartments had leaked within the last year.

Owners of the concrete units fared a bit better, with only 26 per cent reporting condensation and 16 per cent mould or fungi. Yet 32 per cent said their apartments leaked.

The owners met Tuesday and will meet again today to discuss what steps to take next. If they decide to go ahead with all the work recommended by RDH, the average cost per unit would work out to $160,000. When they were sold in the early 1990s, the two- and three-bedroom units went for between $149,900 and $345,900.

That’s money many of the elderly Chinese owners can’t afford, said Doris Choi, whose mother is one of the owners.

“If you are going to put in $160,000 you might as well move somewhere else and get a new [apartment],” Choi said. “Why would people pay that much money on an old house?”

But for now her mother, whose unit Choi says is problem-free, will be staying put.

“Because nobody’s going to buy the apartment and we can’t afford the extra money to get another one,” she said.

“It’s not fair for the homeowners,” Choi added. “How are they going to afford more money like that?”

Gladys Rivas, whose husband and two teenaged sons live in a clean and well-kept two-bedroom unit with a study in the complex, is bracing herself for what may happen next.

The Spanish-speaking family came to Canada from their native El Salvador about a dozen years ago. Rivas, a cook in a Vancouver restaurant, and her husband, a construction worker, bought the unit in 2004 for about $185,000.

A Vancouver Sun reporter invited into their home saw no telltale signs of water damage, and so far the family is unaware of any problems in their unit. That’s why Rivas doesn’t understand how she could be facing a repair bill that may turn out to be almost as much as the purchase price of her home.
 
“It’s crazy,” she said. “I cannot afford that much money. … It’s like buying another apartment.”

Forty-year-old Howard Ng said he bought his two-bedroom apartment for about $115,000, so he doesn’t understand why the average person in the complex may be facing a bill of $160,000.

“I’m very disappointed,” Ng said in his native Cantonese. “My heart feels very uneasy.”

Options the owners will be considering today, according to a notice of the meeting, include doing nothing, proceeding with the repairs, suing the parties who designed and built Gardenia Villa, and dissolving the strata corporation and selling the land.

But legal action against the developer may prove difficult as Maple Resource Investments was dissolved in 2003 for not filing annual reports. And Jackson said doing nothing was also not an option.

“Ultimately, we expect them to do the repairs and if they don’t, we would eventually order them to,” Jackson said.

Once the strata does the repairs, the city will require letters from structural engineers to ensure it has taken care of the safety issues related to the structure, Jackson said. The city will also need letters from envelope specialists that repairs meet minimum standards of the Vancouver building code.

Tony Gioventu, executive director of the Condominium Home Owners’ Association would not talk specifically about the Gardenia Villa project. However, he did say other projects with large assessments have been able to spread the repairs over a number of years, “which eases the financial burden on the owners.”

Also, some owners may be eligible for interest-free loans from the Homeowner Protection Office, to help pay their share of an assessment.

 © Vancouver Sun 2006

What’s debatable is how sharp or sudden the change in the housing market will be

Michael Kane
Sun

What’s debatable is how sharp or sudden the change will be. Photograph by : Vancouver Sun

The recent pace of price gains in the Vancouver housing market is unsustainable, but that doesn’t mean we’re headed for a real estate crash.

Experts expect the market to trend toward historic norms, with annual gains averaging five per cent over the next 25 years, about one percentage point higher than the national average.

“That doesn’t mean it is going to be five per cent year in and year out,” Craig Alexander, deputy chief economist at TD Bank, said in an interview. “It means things like 20 per cent, zero, two per cent, then 15 per cent. It will be all over the map.”

Alexander said Vancouver’s price increases to date can be justified by economic fundamentals, but the recent rate of double-digit gains is “completely unsustainable” and will eventually come back to earth when the market becomes more balanced.

“Nobody can predict whether home prices are going to gradually decelerate and come in for a perfectly soft landing, or whether you are going to get a pullback in prices,” he said.

“You can’t rule out the possibility you could have a 20-per-cent gain and then a mild decline, and then a gain again another year. You can’t rule out the possibility you are going to get cycles in housing. But over the long haul, if you are thinking about a long-term investment in real estate, I think the answer is that you are going to see prices rise.”

Tsur Somerville, director of the Centre for Urban Economics and Real Estate at the University of B.C.’s Sauder School of Business, also said there is no reason to suppose that 15- to 20-per-cent annual price increases are normal.

“We would expect those rates to come down dramatically, but that is not the same as saying that I would predict that in any given time period that prices are going to fall,” Somerville said.

“We ought to come back to some sort of historical norm or long-term trend, but how we get there — whether it will be a period of declining prices or just a period of below-average price increases — is hard to figure out.”

The recent rate of home price increases cannot be sustained because it is not matched by similar growth in household incomes, said Cameron Muir, senior market analyst with Canada Mortgage and Housing Corp. in Vancouver.

“While we expect the market to trend to more balance over the next 12 months, the solid economic outlook for B.C. and greater Vancouver will sustain demand in the sense that we don’t expect any significant price reductions,” he added.

That view is echoed by David Baxter, executive director of Vancouver’s Urban Futures Institute, who said the impact of lower interest rates, and home equity gains that have allowed some buyers to move into more expensive homes without taking on a bigger mortgage, has largely been captured in current prices.

“There is not a lot upside left in the housing market beyond inflation,” Baxter said. “I would argue that all of the risks are on the downside in the sense that interest rates aren’t likely to go down again and the economy in terms of being a commodity-driven economy isn’t likely to get much better than it is. Having said that, I don’t think there is a lot of risk in either scenario.”

While Vancouver home prices rose by an annual average rate of 6.8 per cent between 1981 and 2005, that era included periods of high inflation. With central banks holding inflation in check, Alexander anticipates average annual gains of about three per cent, plus two per cent inflation, during the next 25 years.

For the country as a whole, he expects annual gains totalling four per cent but said the largest cities will continue to experience above-average price gains with Vancouver and Toronto in particular benefitting from an increasing reliance on immigration to fuel population growth.

He noted that B.C. is is blessed with both a mild climate and a strong economy to attract migrants and is forecast to lead Canada’s population growth through 2030.

In a report released Thursday, Alexander concludes that fears an aging population will significantly depress home price growth are overblown. Although slowing population growth will act as a constraint on price gains, the impact will be offset by higher home ownership rates, tighter labour markets that boost incomes, and more modest new home construction.

He said the stars are also aligned for Calgary and Edmonton to experience above-average price growth thanks to favourable economic prospects, lower tax rates, stronger projected population growth and a younger population than many other provinces.

Conversely, less supportive demographics suggest Halifax, Kitchener and Waterloo, London, Ottawa, Gatineau and Quebec City will experience slower than average growth for resale prices over the next 25 years.

© The Vancouver Sun 2006

Fears of baby boomers selling homes ‘overblown’

Ashley Ford
Province

Looking for home price relief?

Forget about it for the next 25 years.

Average house prices will rise four per cent annually over the next quarter of a century across Canada — and likely more than that in Greater Vancouver, TD Economics said in a report released yesterday.

“Our report confirms the old adage that real estate is all about location, location, location,” said Craig Alexander, deputy chief economist of TD Bank Financial Group.

In centres such as Greater Vancouver where land is scarce, the price hikes will be above average, TD said.

Victoria, Toronto and Montreal are also expected to see larger-than-average annual price jumps.

But Alexander hedges his bets on the immediate future for Western Canada’s three major cities.

“There is no question that the recent dramatic price growth in Vancouver, Calgary and Edmonton is unsustainable, and this poses risks in the near-term,” he said.

“Nevertheless, over the long haul, property values in these urban centres should do well,” he said.

Slowing population growth will be offset by rising home-ownership rates, growing personal income, a lower long-term rate of unemployment and more modest construction of new homes, TD said.

“Fears that baby boomers will severely depress housing markets as they sell their properties are overblown,” Alexander said.

Separately, the Conference Board of Canada’s latest Metropolitan Outlook also sees few economic clouds ahead for Greater Vancouver.

It projects economic growth of 3.5 per cent this year and next, 3.4 per cent in 2008, 3.5 per cent in 2009 and 3.4 per cent in 2010.

© The Vancouver Province 2006

Sun

As summer vacations drew to a close, August home sales in BC eased from 2005 figures. Even so, a comparison of year-to-date totals demonstrates the strength of the current market.

The British Columbia Real Estate Association (BCREA) reports 8,402 homes, worth more than $3.36 billion, were sold across the province on the Multiple Listing Service® (MLS®) in August 2006. This represents a 3.57 per cent decrease in dollar volume and a 19.38 per cent decrease in the number of units sold during August 2005. August 2006 figures do not include statistical information from the Kootenay Real Estate Board.

“The figures are consistent with the fact that August is traditionally a slower month for home sales,” says BCREA President Kelly Lerigny. “With many people on vacation or enjoying quality time in their communities, we tend to see a slower market toward the end of the summer.”

From a year-to-date perspective, 2006 unit sales are nearly on pace with the record totals seen in 2005, with this year’s figures down a little more than 5 per cent. Year-to-date dollar volume figures are up more than 12 per cent from last year (see below). This year also marks the highest year-to-date dollar volume and the second-highest year-to-date unit sales totals in the last decade (see attached).

“Despite recent decreases in homes sales, the market remains quite healthy,” says Lerigny. “Whether you’re a first-time buyer or a seasoned homeowner, a REALTOR® has the know-how and experience to help you buy or sell your home.”

A study prepared by Clayton Research Associates Limited found the average BC home sold on the MLS® between 2002 and 2004 triggered nearly $28,000 in additional spending, including legal fees, moving expenses, furniture and appliance purchases and taxes. Using that figure, BC homes sold on the MLS® in 2006 have already generated almost $2 billion in additional spending.

BCREA represents 12 member real estate boards and their more than 16,000 REALTORS® on all provincial issues, providing an extensive communications network, standard forms, government relations, required post-licensing courses and continuing education. To demonstrate the profession’s commitment to improving Quality of Life in BC communities, BCREA supports growth that encourages economic vitality, provides housing opportunities and builds communities with good schools and safe neighbourhoods.

For detailed statistical information, contact your local real estate board. MLS® is a cooperative marketing system used only by Canada’s real estate boards to ensure maximum exposure of properties listed for sale.

Multiple Listing Service® – August 2006* – BC Residential Sales Data

*Figures do not include August 2006 statistical information from Kootenay Real Estate Board.

‘Comparables’ link on realtors’ websites will display properties of a similar type

Billian Shaw
Sun

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