Frances Bula
Sun

VANCOUVER – The city’s oldest public housing project is headed for a massive redevelopment that will transform it into a mix of private and social housing, with significant anticipated profits for the province.

It is the first of what some anticipate will become a provincewide approach to replacing postwar social housing and generating money for new projects.

Vancouver city planning director Brent Toderian confirmed this week that the province has approached the city about a redevelopment for Little Mountain social housing, which would increase the site’s density by at least six times, if not more.

Little Mountain, built in 1954 and home to about 800 people, sits on six hectares of prime land near Queen Elizabeth Park in central Vancouver.

“The province has made clear its aspirations,” said Toderian. “And it is certainly thinking about opportunities that may exceed the current zoning.”

Toderian, city councillors and housing advocates all say the idea of redevelopment is exciting and needed. But they all want to see the province meet certain conditions in order to do it.

That includes providing at least as many social-housing units as exist now, if not more; building a complete new neighbourhood with amenities; and making sure that existing tenants are housed during any dislocation, with the right to move back.

Housing Minister Rich Coleman has been talking for months to various parties, indicating he would like to sell off portions of the land that B.C.-owned social housing now sits on in order to finance the redevelopment of its aging stock.

Toronto recently decided to redevelop its largest social-housing project, Regent Park, although it is maintaining control of the land. But private developers will rebuild the massive project one phase at a time, with the end result that 2,083 social housing units will be replaced by a mix of about 2,000 social housing units and 2,500 market ones.

Little Mountain, the oldest social housing project in B.C. and also the one with the least existing housing and most available land, is the first and prime candidate in line for that kind of redevelopment.

B.C. got control of Little Mountain last June, when the federal government handed over the 17,300 social housing units in its portfolio to B.C. as part of its 15-year effort to get out of social housing.

Coleman, who has talked about putting as many as 2,000 units on the land, did not return a call from The Vancouver Sun Tuesday.

However, Toderian said the city is preparing a report to respond to the province’s proposal, scheduled to come to council by mid-April.

The city’s housing centre director, Cameron Gray, said the six-hectare site now has only 225 residences. Current zoning would allow up to about 1,000 units in buildings of no more than four storeys.

Going to 2,000 units would require a rezoning.

Toderian said that kind of redevelopment will only happen if the new, dense neighbourhood provides a benefit for the city.

“I would be disappointed if we weren’t taking this opportunity to create a sustainable community,” he said.

Coun. Suzanne Anton, the city’s biggest advocate for its EcoDensity initiative, said she believes the province should be asked to put in more social housing units than now exist.

“I think we should maximize the social-housing component,” she said. “Given the history of the site, we should have more than the status quo.”

Alice Sundberg, executive director of the B.C. Non-Profit Housing Association, said people in her sector are watching this development closely.

They want to see the province not just replace existing units, but make sure those units go to the same mix of people they did before.

“A big problem to us is that [provincial politicians] don’t care about family housing any more.

“Our association has always been in support of redevelopment and intensifying sites to pay for that redevelopment. But what’s going to happen to the families that used to live there?”

Sundberg said the B.C. government has moved increasingly to providing housing only for people who have special needs, not low-income families, except through rent supplements, which she says don’t work well in a tight housing market such as Vancouver’s.

That’s something Magdalena Ayala knows about.

Ayala has lived at Little Mountain for 19 years. She and her husband and four children live in a three-bedroom townhouse, paying about $900 a month rent when none of their children is working.

That $900 is 30 per cent of the income in her household, between her job as an office cleaner and her husband’s construction job at the Concord Pacific towers going up over Costco downtown.

“Everybody says to me, ‘Magdalena, where you live is the best.’

” It’s peaceful, there is shopping, everything nearby.”

She can’t imagine finding anything with the kind of space she has now (the townhouses include a basement) in the neighbourhood or, in fact, anywhere else in the Lower Mainland.

Her neighbour, Ingrid Steenhuisen, agrees.

Steenhuisen, whose family moved into the complex when she was a baby in 1957, said it’s always been the kind of housing that worked well for families, giving them a chance to get on their feet economically and well designed for families.

All the kitchens look out over children’s play areas so parents can watch over their children while making meals.

Steenhuisen hasn’t been able to get any information from B.C. Housing about what will happen to Little Mountain.

“It has all been rumour. I’ve been trying to get answers since last June.

“This has always been a great place to live for families and we would like to keep that.”

© The Vancouver Sun 2007

Fewer new homes likely to be started this year, report says

Derrick Penner
Sun

British Columbians will spend more money remodelling their existing homes this year and next, and less on brand new homes, Credit Union Central B.C. predicts.

Housing starts are expected to deflate by almost a percentage point this year, compared with last year, and a further 3.2 per cent in 2008.

However, Credit Union Central is forecasting that acquisitions and renovations of existing homes to grow by 10 per cent in each of the next two years, which chief economist Helmut Pastrick said is typical in escalating markets, especially high-priced places such as Vancouver.

“Being in a high priced market, there is a greater tendency to seek the renovation alternative than go out and buy and relocate,” Pastrick said.

Of course the age of housing stock is another factor in the need for repairs to existing homes, and Vancouver also has a larger proportion of older homes than outlying regions such as Kelowna.

The pace of spending on new homes and renovations, however, represents a slowdown from the frenzied pace of a year ago when British Columbians poured $13 billion into residential construction (an 18-per-cent increase from 2005).

And the pace of new investment outweighed depreciation on aging homes so that the value of B.C.’s housing stock increased 12 per cent to hit $174.7 billion at the end of 2006, according to Statistics Canada’s initial estimate. That was the biggest gain in B.C.’s housing capital since 1989. The value of residential housing has increased every year since at least 1941, Credit Union Central said.

Pastrick expects, thanks to renovation, that spending on residential construction to increase 6.8 per cent this year and 5.6 per cent last year even though housing starts are expected to decline.

“This adjustment process . . . will be more drawn out than we’ve seen in previous [market] adjustments,” Pastrick said, “but I view it as a healthy market response [that] does help to wring out some of the excesses that may have existed, and will help to extend the health of the market over the longer term.”

© The Vancouver Sun 2007

 

Jay Bryan
Sun

As Canadians read alarming headlines about overstretched U.S. homebuyers threatening that country’s financial system, they can keep one comforting thought in mind: It’s simply not happening here.

The term “subprime,” once an obscure bit of financial jargon, has become a staple of business news reporting over the past few weeks.

It refers to those with marginal credit who have nevertheless managed to participate in a huge American residential real estate boom, thanks to lenders who stretched lending standards to the limit and past.

Now, these shaky mortgages are going sour, just in time to hit the U.S. economy when it’s slowing.

Canada has its own economic strains, and if these housing problems take down the stock market or the U.S. economy, we’ll certainly feel some pain.

But not as much as our neighbours, largely because mortgage and housing markets, which are fundamental to the financial position of consumers, look quite solid in Canada.

Benjamin Tal, an economist at CIBC World Markets, has kept a close eye on the mounting stresses evident in the U.S. mortgage market and has come to two key conclusions.

First, there’s no excuse for anybody to be surprised at the troubles in the U.S., which could be predicted months ago in much the same way as the arrival of a freight train that’s already visible on the horizon.

Second, there’s no parallel in Canada, whose mortgage lenders remained safely stodgy even as those in the U.S. went wild in a speculative market where it seemed impossible to lose money — until the market crumbled last year.

Says Tal: “They really pushed the envelope. We didn’t even touch the envelope.”

Some of the worst excesses exploded in the overheated market that arrived in 2004: Interest-only mortgage loans that required no repayment of principal; “liar loans” that didn’t require borrowers to provide proof of income; and option ARMs — adjustable-rate mortgages that let borrowers forgo payments, piling new debt on top of the original amount.

A particularly widespread abuse was the offer of ultra-low “teaser” interest rates — including to those with poor credit — that could be reset as much as several percentage points higher after two or three years.

Obviously, any already stretched borrower would be unable to withstand a huge jump in interest payments, but by the time the defaults began, these mortgages had usually been packaged into bond-like securities and peddled to other financial institutions.

Tal was among those warning of the coming wave of mortgage problems last year. Five months ago, he noted the huge wave of adjustable-rate mortgages that climaxed in 2004 and 2005, as housing prices peaked, would have their interest rates reset upward beginning in the autumn of 2006, leading to two years of severe stress on borrowers.

How severe? Well, the value of mortgage loans now being reset is $2 trillion (yep, 12 zeros) and Tal’s estimate is that mortgage payments on these loans will jump by an annual average of $35 billion to $40 billion through late 2008.

This alone isn’t enough to tank the huge U.S. economy, but it’s plenty stressful to those exposed to this large chunk of loans. And if the stresses trigger problems in broader financial markets, all bets are off.

But for once, Canadians can be happy to be boring. Many of us might have been happy to take one of these free-lunch mortgages with a hidden bellyache, but our banks didn’t let us.

That helped keep household debt from exploding as it did in the U.S. (up nearly 70 per cent in the past four years versus 40 per cent in Canada.)

For example, subprime loans make up 22 per cent of new mortgages in the U.S. versus just five per cent here. Interest-only mortgages, a product that can help a borrower stretch her borrowing to the limit, amounted to 20 per cent of new loans last year in the U.S; but only one per cent in Canada.

One result: House prices didn’t explode here because the ultra easy money to finance a bubble wasn’t available. So it’s a little like 2001, when the collapse of the tech bubble brought a recession in the U.S. but not in Canada, largely because we didn’t have a big tech sector.

Today, real estate accounts for 31 per cent of U.S. household assets, much of it financed by shaky loans. It accounts for just 21 per cent in Canada, and only a tiny percentage of mortgage loans is of dubious quality.

© The Vancouver Sun 2007

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