But with prices still rising in Greater Vancouver, home sellers still have advantage

Derrick Penner
Sun

Lower Mainland real estate sales dropped in March and the inventory of homes for sale rose, but not enough to push markets out of favour for sellers, statistics released Tuesday show. And prices continue to rise.

“The sales-to-active-listings ratio — the percentage sold each month — is certainly moving to more of a balanced market,” Robyn Adamache, a Canada Mortgage and Housing Corp. analyst, said in an interview.

“But we’re also still seeing very strong price growth, most still in double digits.”

In Greater Vancouver, the so-called benchmark price for a single family home rose almost 12 per cent, year-over-year, to hit $682,173. The price of a detached home in the Fraser Valley reached $509,197.

However, Adamache said sales are slowing and listings are rising at a pace consistent with Canada Mortgage and Housing forecasts.

Greater Vancouver recorded 3,582 sales through the Multiple Listings Service, an 11-per-cent decline from the same month in 2006. Total listings as of March were up 19.5 per cent to 10,356.

In the Fraser Valley, March MLS sales were down 16 per cent to 1,743 compared with March 2006. The region’s active inventory was 7,351 units in March, 46 per cent above the same month a year ago.

Adamache said a seasonal effect could be at work with buyers jumping into “an active spring market” to push prices up, but she believes the slowing in sales will moderate prices through the rest of the year.

“If we keep seeing the market getting hotter and hotter, and price growth in the double digits, we would get concerned [about] a correction on the horizon,” Adamache added.

“But the fact we are seeing the spring market ramp down is good news in terms of the pace of price growth, as we’ve been predicting, should slow.”

Brian Naphtali, newly elected president of the Real Estate Board of Greater Vancouver, said an increase in listings has been welcome after two years of a lot of potential buyers and few sellers, but the rise has been “marginal.”

“I wouldn’t say the pressure is really off,” Naphtali said, adding desirable listings are still selling with multiple offers.

In the Fraser Valley, while prices were up year over year, March sale prices in Surrey, Langley and Abbotsford were slightly lower than February’s average sale prices.

In Surrey, for example, March’s average price was $497,827 compared with $507,168 in February, but Jim McCaughan, president of the Fraser Valley Real Estate Board doesn’t believe there is any trend in the making.

“The entire picture, to me, reflects a market that is very balanced for buyers and sellers,” he said, explaining buyers having more selection and more time to make decisions.

© The Vancouver Sun 2007

Maurice Bridge
Sun

In a dramatic move to deal with homelessness, the provincial government has purchased 10 single-room occupancy hotels in Vancouver with a total of 595 rooms.

The move is part of an $80-million initiative to preserve affordable housing announced Tuesday by Premier Gordon Campbell in Vancouver.

Campbell also announced the purchase of an SRO hotel in Victoria, four other housing units in Vancouver and Burnaby, and the funding of 287 planned social-housing units in Vancouver.

In all, the province will purchase or fund a total of 996 units.

The Vancouver SRO hotels, which provide shelter for those at the lower end of the economic scale, have been at the centre of a fierce fight in recent years over homelessness and property redevelopment as soaring residential real-estate values have put increasing pressure on low-income housing stock.

Working in secrecy, the province struck deals with the hotels’ owners over the past 60 days, and acquired the buildings for about $45 million. Possession dates range from this week to mid-May.

Vancouver Mayor Sam Sullivan hailed the move and said he has been working on this project for more than a year, asking various levels of government to invest in low-income housing.

“We have the largest commitment to social housing in history,” he said. “I think today is the day we begin to turn the tide on homelessness. This is a wonderful day.”

Sullivan noted the city had already committed itself to acquiring one SRO hotel a year.

“Think about it,” he said. “In one day, we’ve done 10 years’ worth of effort.”

Rich Coleman, the provincial minister responsible for housing, promised those who occupy the rooms in the SROs will not be evicted during renovations to bring them up to standard. He said the cost of the renovations is estimated between $5,000 and $15,000 per unit, and should be completed by the end of 2007.

Campbell said the refurbished housing, which he called “supportive housing,” will come with social support for its occupants.

“Our real goal here is to make sure that people who need housing supports are finding those supports,” he said.

“We can take them and put them through transition with health care and addiction services and other kinds of social-support services so they can move on to other housing types.”

Coleman said the key to operating the new housing will be cooperation and consultation with non-profit groups with experience in the field.

He said the province will be talking to these groups in the next 30 to 60 days to discuss which groups will partner with the province in the operation of individual buildings. Talks will also be held with the current operators of the buildings to discuss operations and to determine whether any operating subsidies will be required.

The initiative was praised by those who have fought for low-income housing in Vancouver’s Downtown Eastside.

“I think it’s good news,” said David Eby of Pivot Legal Society. “I think it’s an important first step to preserving the housing in the Downtown Eastside that we need for low-income people.”

Mark Townsend of the Portland Housing Society, which provides low-income housing, said he was taken by surprise by the provincial move, but added he approves of it.

Although Campbell said the province was not swayed by repeated demonstrations and legal battles over low-income housing, Eby said he believes public pressure led to the hotel purchases. “I think it’s a direct result of the concerted advocacy that has taken place by Downtown Eastside groups,” he said. “I know that without the advocacy we’ve had around housing in the Downtown Eastside, this announcement wouldn’t have been made today.”

He said with continued advocacy, he expects to see the creation of additional housing units to get people off the street.

Campbell indicated there could be more such purchases in the future, but did not specify any details about such plans.

“This is not the end of this,” he said. “This is part of an ongoing program to stabilize our communities, create opportunity and affordable housing and really connect people with the services that they need.”

Provincial Opposition leader Carole James was less impressed by the premier’s announcement.

“We have to remember that it’s this government that created the crisis to being with,” James said in a telephone interview from Cranbrook.

She said the Liberals cut the housing program in 2001 when it was building an average of 1,200 units a year.

PROVINCE BUYS 10 DOWNTOWN HOTELS FOR SOCIAL HOUSING

Mayor Sam Sullivan calls the provincial government’s $80-million investment in supportive housing in Vancouver, Victoria and Burnaby “10 years’ work in one day.”

© The Vancouver Sun 2007

 

Predicted slowdown in price increases fails to materialize

Ashley Ford
Province

GREATER VANCOUVER – The Greater Vancouver housing market is humming to such an extent that realtors now won’t even hazard a guess at where it might end up this year.

“This is a crazy market. No one out there can predict what is going to happen except to say that so far it is as strong as it has ever been,” Les Twarog, a downtown and city real-estate specialist with RE/Max, said yesterday.

Most pundits predicted a slight calming of the market this year with increases in the seven- to nine-per-cent range, but they continue to race along at a double-digit pace and, in some instances, buyers are paying above the listing price. That situation has existed for the past two or three years.

“I have to admit this market is surprising every realtor,” said Twarog.

“The buying demand remains strong, resulting in double-digit increases and yet it is being 90 per cent driven by local buyer demand.”

Many buyers are also making hefty down payments and it appears buying is being driven by baby boomers who are helping out their children.

Twarog said sellers are also keenly aware of the market and are prepared to sit on their property until they get their price.

“Anything under $500,000 sells right away, especially downtown. Higher-priced properties take a little longer, but they do sell,” he said.

Twarog said a good measure of interest is that his website, www.6717000.com, receives 150,000 hits a day.

The Real Estate Board of Greater Vancouver reported yesterday that multiple-listing residential sales last month of 3,582 units actually decreased 11.2 per cent compared to 4,033 sales in March 2006.

“Consumer demand for property in the Greater Vancouver area is still very, very high and the market is heating up as a result,” said board president Brian Naphtali.

“With year-over-year, double-digit price increases pushing the average price for a single-family home to near record levels, sellers are continuing to get excellent value for their homes throughout Greater Vancouver. Despite these price increases, buyers are still not shying away from this market, either,” he said.

And even an increase in the total housing inventory won’t curb price rises as it simply opens new opportunities for buyers to get into the market, especially in the highly active condo and apartment sector.

The benchmark price of an apartment property in Greater Vancouver stood at $349,373 in March, up 14.5 per cent from a year ago.

The benchmark price of an attached unit was $428,299, up 13.9 per cent, while a detached unit was $682,173, up 11.8 per cent from March 2006.

PDF Version of This Articles

 © The Vancouver Province 2007

Without it, many consumers would have to lower their expectations

Keith Woolhouse
Sun

Scraping together the down payment on your first house or condo has been increasingly difficult in recent years because rising property prices often meant that no matter how fast a couple saved, the price of the cherished home kept creeping out of reach.

Still, as tough as it has been, the opportunity to buy into the housing market has seldom been brighter, thanks to the relaxation of stringent lending conditions.

First, the lending institutions extended the number of years over which a mortgage can be repaid to 40 years from 25. Then they introduced no-down-payment mortgages and cash-back mortgages to ease the burden of being unable to save and simultaneously pay rent.

The most sought-after assistance, however, is the default insurance program that all lenders require from homeowners unable to provide the 25 per cent minimum down payment of a property’s purchase price.

Since it introduced mortgage-loan insurance in 1954, the Canada Mortgage and Housing Corp. (CMHC) has stood as guarantor in the purchase of nine million homes. In 2005 — the latest year for which statistics are available — the national housing agency was the guarantor for 746,157 mortgage insurance premiums.

Without it, cash-strapped consumers would have had to lower their expectations or continue to chase the elusive 25 per cent down payment required by the Bank of Canada.

When buyers cannot provide this, they must have insurance approval to protect the lending institution against the possibility of defaulting on the loan. That’s when the CMHC steps in, offering to guarantee the loan and providing the lending institution risk-free protection.

“By providing the default insurance, we remove the risk from the lending institution. What we’re also doing is giving people the opportunity to purchase a home with a lower down payment,” says Mary Stergiadis, CMHC principal of business development.

The insurance guarantee does not come without a price to the borrower, but it is well worth it, she says.

“We all know that it takes a heck of a long time to save up the 25 per cent down payment and, for most couples, it can be quite a struggle, so we give them the opportunity to get into a home sooner by paying a very small one-time premium. The premium is added to their mortgage, so it is very cash-flow friendly, and it makes sense to the consumer,” said Stergiadis.

Here’s how it works:

With $50,000, a couple can buy a home of up to $200,000 without the mortgage insurance.

But if a couple has, for example, only $30,000, which represents 15 per cent on a $200,000 home, the loan must be guaranteed. CMHC’s insurance premium on the mortgage balance ($170,000) is 1.75 per cent. This requires a one-time payment of $2,975 (170,000 x 1.75), which is tacked on to the mortgage.

“Because the insurance premium is added to the mortgage, it enables Canadians to buy a home much sooner than if they had to wait on the sidelines saving up to reach that magical 25 per cent mark,” Stergiadis said.

“The mortgage insurance gets them into a home, plus lets them take advantage of today’s prices and today’s interest rates and become a homeowner and start to realize the benefits of home ownership.”

The CMHC is more than just a mortgage insurer, however. The agency has a wealth of knowledge and expertise on the housing front, plus other invaluable programs:

– The Homeowner Residential Rehabilitation Assistance Program

The Homeowner RRAP offers forgivable grants to low-income households to enable them to bring their dwellings up to a minimum level of health and safety.

Homeowners are eligible if the value of their house is below a specified figure; and their household income is at, or below, established limits based on household size and area. Properties must be lacking basic facilities or require major repair in one or more of five categories: structural, electrical, plumbing, heating and fire safety.

– Home Adaptations for Seniors‘ Independence (HASI)

This program has forgivable loans up to $3,500 for minor renovations that help low-income seniors live in their own homes independently.

Homeowners and landlords may qualify for assistance as long as the occupant of the dwelling is 65 and older, has difficulty with daily-living activities brought on by aging, total household income is at or below a specified limit and the dwelling is a permanent residence.

The renovation work should be minor items that meet the needs of seniors with an age-related disability. They could be handrails, easy-to-reach work and storage areas in the kitchen, lever handles on doors, walk-in showers with grab bars, bathtub grab bars and seats.

– – –

CMHC publications, many of them free, include step-by-step buying guides for house and condominium buyers, seasonal home maintenance guides and fact sheets that cover many aspects of owning, maintaining and renovating a home. Readers can order online (www.cmhc.ca) or by calling 1-800-668-2642.

© The Vancouver Sun 2007

Keith Woolhouse
Sun

Buying a home should be among the happiest moments in life, but unexpected problems can transform it into something more like a nightmare.

The fun of searching for and finding the home is quickly overtaken by unwelcome surprises that may linger long after moving day. They crop up all the time, and in every price bracket, but with a little careful planning they can be avoided.

“One of the biggest mistakes is made during the search for a home,” says Angelo Toscano of Re/Max Metro City Realty Ltd., in Ottawa, who has been in the business 15 years.

“Most people don’t consider the likelihood that the day will come when they’ll want to sell the home, so they don’t search in regards to location and resale. Instead, they end up buying in a neighbourhood that has little or no resale value. That’s one of the biggest mistakes that most people make.”

If that sounds contradictory — because every property on the market eventually gets sold — it’s not, says Toscano.

“In Ottawa, which has a lot of corporate transfers, parliamentary comings and goings and military deployments, the average family stays in a home for only three years. That may not be the case in other cities, but the reality is that wherever you live, you have to look into the future and decide how long you’re likely to stay in the neighbourhood where you’re looking to buy.

“It gets back to resale value. You don’t want to be in a place for just a few years and find out when it comes time to sell that it hasn’t gone up that much in price, while property in other neighbourhoods has increased. It’s important that the equity in your house keeps pace with rising real estate prices and you’ll be able to sell at a good profit.”

It’s an important consideration yet “about 99 per cent of buyers don’t do that,” says Toscano. When buying a property, think as an investor. If you don’t, it can be a very costly, he says.

Take to heart the real estate agent’s mantra: Location, location, location. Given the choice of a property that is overlooked by neighbouring homes or one that is secluded but backs onto a busy street, for instance, most will choose the latter, says Toscano.

The choice could cost you dearly.

“They need to be aware that the resale on property which backs onto the busy street will not fetch as much,” says Toscano. “A lot of people have the misconception that because there are no neighbours at the back, it should be more expensive. That’s not the case.”

The reluctance of buyers to have a home inspection is another error high on the list. “Many buyers genuinely resent paying for a home inspection when they’re buying a $250,000 property,” says Toscano.

“My answer to that is, ‘You’re buying a quarter-of-a-million-dollar property, why don’t you put a clause in the offer that will protect you against damaging information an inspection would reveal.’ An inspection costs around $450 to $500. That’s not much to pay to discover that there’s a crack in the furnace heat-exchanger that will cost $2,800 to repair.”

© The Vancouver Sun 2007

 

Rosemary Mccracken
Sun

Canada’s baby boomers are planning to downsize their homes — a trend that could have a huge impact on the housing market and home financing if even part of the nine-million-strong cohort move to smaller accommodations.

Signs of the boomers’ downsizing are evident in Royal Bank of Canada’s 14th Annual Homeownership Survey, says Catherine Adams, RBC’s vice-president, home equity financing, in Toronto.

The 2007 survey shows that, of Canadian homeowners who are planning to purchase a home in the next two years, a dramatically increased number said this year that they will be looking for smaller homes — 33 per cent compared with 20 per cent in 2006 and 19 per cent in 2002.

“The baby boomers have built up a lot of equity in their homes,” notes Keith Tongue, senior director, broker and mobile sales, at Vancity Savings and Credit Union/Citizens Bank of Canada in Vancouver. “Many of them got into the housing market years ago and their homes, especially here on the West Coast, have gone up dramatically in value. Many will want to tap that equity in one way or another.”

In its latest survey of financial security, released in December, Statistics Canada found the total value of Canadians’ assets rose 42.4 per cent between 1999 and 2005. The main contributor, StatsCan says, was the increase in the market value of real estate, largely the result of price increases. “The single most important asset for Canadians is their principal residence,” the report adds.

Net worth generally increases with age, partly, StatsCan notes, because many older people live in mortgage-free homes. The survey shows the median net worth of “elderly families” (age 65 and over) was $443,600 in 2005 (up from $343,000 in 1999), while the median net worth of “non-elderly families” was $204,000 (up from $155,000).

But the generation ahead of the boomers, people now in their 70s or older, “has already done much of its home downsizing,” Tongue says. “They’ve moved into condos or smaller bungalows. And the generation following the boomers bought when prices were much higher.”

The boomers may be planning to tap their equity, perhaps moving to smaller homes, but the home financing industry is confident they will remain in the housing market and many will require home financing for years to come.

“I’m seeing a lot of baby boomer clients capitalizing on the equity they’ve built up in their homes,” says BMO Financial’s Laura Parsons. The bank’s Calgary-area manager, business development group, says the boomers are using home-owner lines of credit and other means of financing to:

– Renovate their homes;

– Purchase vacation homes;

– Assist their children to buy their own homes;

– Purchase investment properties, such as downtown condominiums for rentals;

– Invest in the stock market.

“There has recently been some dampening of housing demand, which could have an impact on construction and house prices,” says Paul Ferley, assistant chief economist at BMO Financial in Toronto. “But the housing market is not just dependent on demographics. Income generates strong economic growth. We see increased demand in coming years for vacation properties, adult-lifestyle communities and high-end condominiums as the boomers move into the downtown areas from the suburbs.”

“A lot of vacation property is now being built, especially in British Columbia, for people who are planning to retire and perhaps spend winters out of the country,” Adams adds.

Interest rates are expected to drift moderately higher this year and next, says Ferley. “Beyond that, interest rates are expected to remain relatively steady although this is contingent on inflation remaining close to the Bank of Canada’s mid-point target of two per cent.”

Adams notes the RBC study shows that an overwhelming majority of Canadians believe purchasing a home is a good investment. “And the ‘buy now’ message is coming through loud and clear across all age groups — from 25 through 55-plus.”

Of Canadians planning to buy a house within two years, an increasing number are looking at a shorter purchasing window. “More than half, 58 per cent, of them are saying buy now, don’t wait for next year,” Adams notes.

Recent changes in the mortgage market have made mortgage accessibility better than ever. Amortization of up to 40 years, instead of 25 years, has become available. “The good thing is this allows people to get into the housing market because monthly payments are lower over the longer amortization period,” Adams says. “But the total interest costs are higher over the longer term. Total interest costs over the life of a 35-year mortgage are 50 per cent more expensive than over a 25-year period. It’s a good temporary strategy, but I worry that some people are only thinking about the lower payment and not seeing the entire picture.”

Tongue says homeowners in older demographic groups are now opting to extend their mortgages over longer periods. “We’re seeing some younger boomers, say in their late 40s while their cash flow is still strong, moving into bigger houses and taking out equity to upgrade the property. The boomers have always enjoyed displays of status and a home is most people’s biggest status symbol.”

And 100 per cent financing has been around for a few years. “The fit is for young, professional couples just out of university who have income to support a mortgage but no money for a down payment,” says Parsons. “Although they would only qualify for 25- 35-year amortization, we would help them understand how they can combat interest costs of a longer amortization by increasing payments and making lump-sum payments.”

Canada’s mortgage industry is primed to help the country’s aging population with their housing and retirement needs. Home ownership and home equity lines of credit allow them to finance travel, family needs and retirement living expenses by using the equity in their real estate to secure a higher credit limit at interest rates as low as prime. “Why run up expensive credit card debt when you can have debt at prime?” Adams asks.

A wealth of products are available to encourage first-time homebuyers. Vancity’s mixer mortgage, for instance, allows family members or friends to share the cost of buying a home. “All parties go on title, so you’ll see parents going on title with their adult children and helping them with their mortgage payments,” Tongue says.

Combinations of mortgages and operating lines of credit are also available. “As homeowners pay down the mortgage, they have more money available to them in the operating line,” Parsons notes.

“We’re also helping clients customize their new and existing homes to accommodate them as they age with features such as framing for future elevator shafts, and more accessible bathrooms and kitchens,” she adds.

Adams believes reverse mortgages will grow in popularity in coming years. “For many Canadians, their homes are their largest investment and they’ll need them to finance their retirement,” she says. “They can do this by downsizing to a less expensive home, or by remaining in the home and taking out reverse mortgages.”

Available in Canada to those age 62 or older, reverse mortgages provide holders with lump-sum payments of up to 40 per cent of the appraised value of the home up to a maximum of $500,000 based on age and life expectancy. For those who use them for living expenses, the payouts are tax-free.

– – –

TYPES OF MORTGAGES

Fixed-rate mortgages: Their interest rates won’t change over the term of the mortgage. “They’re great for first-time homebuyers,” says Catherine Adams, Royal Bank of Canada vice president, home equity financing. “There’s no surprises, no volatility. But if you want to pay the mortgage off early, there’s a penalty for breaking the mortgage contract.”

Variable-rate mortgages: The interest rate fluctuates as the prime rate goes up or down. “If interest rates go up, your payment stays the same, but more of it goes into paying the interest so your amortization period increases,” Adams says. “But studies have shown this works in your favour over time — that you’ll have your mortgage paid off faster with a variable than with a fixed-rate mortgage. Canadians, however, have their mittens on and are still shy of variable-rate mortgages. The 2007 survey shows only 13 per cent of those surveyed wanted variable-rate mortgages.”

Open mortgages: This offers holders the flexibility to make large payments or pay off the entire mortgages without penalty. Interest rates are usually higher for this privilege. “Open mortgages are good if you know some cash will be coming your way, but we see very few of them ever getting paid off,” Adams says.

Closed mortgages: Rate of interest and length of term will not change over the term of the mortgage, and they’re generally less expensive than open mortgages, Adams says. Most closed mortgages allow the holder to pay off up to 15 per cent of the mortgage once a year without penalty.

Hybrid, convertible or combination mortgages: These allow holders to change the type of mortgage during its term. “You can have part of your mortgage in a variable- and part in a fixed-rate mortgage to diversify the risk of your interest rate rising,” Adams says.

Conventional mortgages, she notes, have down payments equal to 25 per cent or more of the purchase price of the home. “If you have less than 25 per cent down, you’ll need mortgage insurance,” she says. “One hundred per cent financing is available, but your credit must be clean and you must show you can cover the closing costs.”

© The Vancouver Sun 2007

 

U.S. banks issue, but don’t hold, mortgages

Ray Turchansky
Province

EDMONTON — The havoc that subprime mortgage lending practice is wreaking on the United States housing industry won’t likely be an issue in Canadian housing.

“Last year I made fun about how they gave away money, and anybody would get these mortgages, these low-documentation loans,” said Brad Willock, senior portfolio manager with RBC Asset Management Inc., speaking to the Salloum Wealth Management Group.

“If you want a mortgage, we’ll give you an interview. How much would you like?”

Willock said subprime is not a big issue in Canada.

“In the States, the banks write the mortgage but don’t care if they get the money back because they don’t hold it any more, they package it up and off it goes. Most of the risk is held in the hands of hedge funds. These mortgages were put into baskets and sold off as a bond, typically a high-

yielding bond, and most of the buyers were wealthy folks who put their money into hedge funds, and pension plans. A lot of hedge funds bought insurance against defaults, and some are going to prosper because of it.

“But in Canada, the Royal Bank keeps your mortgage, the TD keeps your mortgage. You have to pay them, or they’ll come and get you and take your house. Also, there are five major banks in Canada. In the U.S. there are 3,000. You can get mortgages online from people who aren’t even banks.”

Benjamin Tal, senior economist with CIBC World Markets, says there will not be a direct effect on Canadian housing.

“The U.S. really pushed the envelope when it comes to providing exotic mortgages,” said Tal. “We have a very boring market in Canada.

“The subprime market is only five per cent of mortgages in Canada and interest-only [with no principal paid down] is only one per cent, as opposed to 20 per cent in the U.S. But the mortgage market in Canada five or 10 years from now will be very different from what it is now.”

© The Vancouver Province 2007

 

Seniors to downsize, employ home equity for retirement, help kids buy in

Rosemary McCracken
Province

Canada’s baby boomers are planning to downsize their homes — a trend that could have a huge impact on the housing market and home financing if even part of the nine-million-strong cohort move to smaller accommodations.

Signs of the boomers’ downsizing are evident in Royal Bank of Canada’s 14th Annual Homeownership Survey, says Catherine Adams, RBC’s vice-president, home equity financing, in Toronto.

The 2007 survey shows that, of Canadian homeowners who are planning to purchase a home in the next two years, a dramatically increased number said this year that they will be looking for smaller homes — 33 per cent compared with 20 per cent in 2006 and 19 per cent in 2002.

“The baby boomers have built up a lot of equity in their homes,” notes Keith Tongue, senior director, broker and mobile sales, at Vancity Savings and Credit Union/Citizens Bank of Canada in Vancouver.

“Many of them got into the housing market years ago and their homes, especially here on the West Coast, have gone up dramatically in value. Many will want to tap that equity in one way or another.”

In its latest survey of financial security, released in December, Statistics Canada found the total value of Canadians’ assets rose 42.4 per cent between 1999 and 2005. The main contributor, StatsCan says, was the increase in the market value of real estate, largely the result of price increases.

“The single most important asset for Canadians is their principal residence,” the report adds.

Net worth generally increases with age, partly, StatsCan notes, because many older

people live in mortgage-free homes. The survey shows the median net worth of “elderly families” (age 65 and over) was $443,600 in 2005, up from $343,000 in 1999, while the median net worth of “non-elderly families” was $204,000, up from $155,000.

But the generation ahead of the boomers,

people now in their 70s or older, “has already done much of its home downsizing,” Tongue says. “They’ve moved into condos or smaller bungalows. And the generation following the boomers bought when prices were much higher.”

The boomers may be planning to tap their equity, perhaps moving to smaller homes, but the home-financing industry is confident they will remain in the housing market and many will require home financing for years to come.

“I’m seeing a lot of baby-boomer clients capitalizing on the equity they’ve built up in their homes,” says BMO Financial’s Laura Parsons. The bank’s Calgary-area manager, business development group, says the boomers are using homeowner lines of credit and other means of financing to:

– Renovate their homes;

– Purchase vacation homes;

– Help their children to buy their own homes;

– Purchase investment properties, such as downtown condominiums for rentals;

– Invest in the stock market.

“There has recently been some dampening of housing demand, which could have an impact on construction and house prices,” says Paul Ferley, assistant chief economist at BMO Financial in Toronto.

“But the housing market is not just dependent on demographics. Income generates strong economic growth.

We see increased demand in coming years for vacation properties, adult-lifestyle communities and high-end condominiums as the boomers move into the downtown areas from the suburbs.”

Canada’s mortgage industry is primed to help the country’s aging population with their housing and retirement needs.

Homeownership and home-equity lines of credit allow them to finance travel, family needs and retirement living expenses by using the equity in their real estate to secure a higher credit limit at interest rates as low as prime.

RBC’s Adams believes reverse mortgages will grow in popularity.

“For many Canadians, their homes are their largest investment and they’ll need them to finance their retirement,” she says. “They can do this by downsizing to a less expensive home, or by remaining in the home and taking out reverse mortgages.”

Available in Canada to those age 62 or older, reverse mortgages provide holders with lump-sum payments of up to 40 per cent of the appraised value of the home up to a maximum of $500,000 based on age and life expectancy.

For those who use them for living expenses, the payouts are tax-free.

© The Vancouver Province 2007

 

Kent Spencer
Province

A decision has been made to move St. Paul’s Hospital to the False Creek Flats, concerned West End residents charged yesterday.

Claiming to have “new information”, Aaron Jasper of the Save St. Paul’s Coalition said the hospital has made a business case for the move to Station and Prior streets.

“According to our information, they will move the hospital out of downtown to False Creek. The only thing left at St. Paul’s will be the bricked Burrard building,” Jasper told The Province before speaking at a public forum.

“There will be no acute care or surgery. Two-thirds of the site will be sold off to fund the new building and what’s left will offer things like services to drug addicts.

“There will be public consultation but it will be a sham — a sales pitch. We think it’s all about real estate,” said Jasper.

He said the new hospital would take over surgical operations currently done at St. Paul’s. Many West End residents are keen to keep the hospital in their community.

Jasper said the move could go to the provincial government for approval as early as next fall. The hospital would be moved by 2014.

But hospital spokesman Shaf Hussain called Jasper’s information “blatantly false.”

“No decision has been made. The business case will not be forwarded to the province until a complete consultation process has taken place,” he said.

St. Paul’s Hospital is run by a Catholic non-profit agency. It has been operating for more than a century.

Hussain said St. Paul’s vision is for a “brand-new research and hospital facility” on the False Creek flats. He said the West End site would continue to be a clinic.

But he differed on whether the move was a sure thing.

“The ministry will decide what to do. It will involve hundreds of millions of dollars,” he said.

© The Vancouver Province 2007