Garth Turner
Sun

What does the future hold for the four-bedroom, three-garage house in the suburbs? Photograph by : Peter Battistoni, Vancouver Sun Files

Imagine listing your home for sale, but there are no buyers. You drop the price. Again. And again.

The house across the street’s now for sale. And the one two doors down, plus a dozen others in a two-block radius.

Nothing’s selling, and every time one home is reduced, all are affected. This property used to represent wealth. Now it’s a wealth trap.

, and with each day passed, it diminishes.

Imagine your first home — a dream in granite and stainless. You bought it from the region’s largest builder, for 1.5 per cent down — enough to cover closing costs — and mortgaged the rest. Months later, the economy turns abruptly. Your spouse loses his job and the monthly payments — mortgage, taxes, utilities — are crushing.

You decide to sell, but the realtor tells you the market has also turned. Your mortgage is now slightly greater than the value of the home. After paying commission, you’ll have no house, no equity, and still owe the bank more than $20,000. How could this have happened?

Far-fetched? Hardly. For millions of middle-class Americans, this is a reality as housing values collapse in the first nationwide housing meltdown since the Depression. In some markets, prices have crashed 30 per cent. In Phoenix, there are more than 20,000 new homes, vacant, unsold and unwanted. In suburban Detroit, million-dollar properties can’t fetch buyers at $300,000. Downtown, prices plunged in the first two months of 2008 by 54 per cent, to a median of $22,000.

In Florida and California, homeowners establish websites to try to sell their homes. Three million American families now have mortgages larger than their home values. Comfortable upper middle-class families with six-figure homes find their wealth evaporated as their properties languish on the market. So many foreclosed homes are for sale, it’s estimated prices will not recover for years. In fact, a recent Credit Suisse report says prices must fall another 40 per cent in Miami and 26 per cent in Los Angeles before they become affordable.

The real estate disaster now in full flower to our south is a fascinating, gripping spectacle. It’s time we looked closely. Because, one way or another, it’s coming here.

Canadians, strangely, believe this country is immune from the housing contagion sweeping America. The myth results from three powerful forces. Denial tops the list, no doubt the result of having more than 80 per cent of our net worth in one asset, the family home. Add to that the excellent communications job done by the real estate lobby — mortgage-lending bank economists and the CEOs of real estate marketing companies — who claim home values will rise forever. Finally, our belief the Americans screwed up by giving subprime mortgages to unworthy people so they could buy unaffordable homes.

But this is not so. In researching my book, Greater Fool, I was reminded again of why all booms end badly. The inflating real estate market to the south became unsustainable when average prices exceeded the ability of average families to buy homes. This inflation in turn was the result of policy decisions made after 9/11 which gave America (and Canada) the lowest interest rates in a generation. Debt was cheap, and volatile stock markets represented unacceptable risk. So, real estate became the asset of choice.

But as interest rates increased, the American economy softened and realization spread that real estate was overvalued. The bubble burst — and with a vengeance.

So, how different is the Canadian experience? In the period between 2000 and the market crash in 2006, U.S. home prices increased 74 per cent, while household income rose by just 15 per cent. In Canada, real estate prices jumped 70 per cent by the end of 2007, with family incomes ahead 14 per cent.

In other words, we’ve seen an almost identical pattern of real estate excess — familiar to anyone caught in a bidding war, or staring in disbelief at a new MLS listing. The average home in Toronto is now over $400,000, while in Vancouver it tops $700,000. Last year homes in Saskatoon raced ahead more than 50 per cent in value. A young couple in suburban Toronto with a $450,000 price limit ended up buying a $700,000 home after losing 16 competing bids.

And the Canadian response to this affordability crisis? It’s called the 40-year mortgage, which lowers monthly payments by extending the amortization 15 years beyond the traditional quarter-century and, in the process, grossly inflates the total debt to be repaid. In other words, this loan (now accounting for over 40 per cent of all new borrowings) allows people to buy homes they would not otherwise afford.

Meanwhile, down payments have become almost optional. One of Ottawa‘s largest new home builders routinely allows young couples to move in by paying just closing costs, and financing the other 98.5 per cent of the purchase price. With virtually no equity in the home and substantial carrying charges, any market downturn means they owe more than they own.

So, how exactly do American subprimes differ from Canadian 40-year mortgages? How are mortgage lenders here more prudent when they allow appraisals based on postal codes rather than home inspections? Why should Canadian real estate values, as inflated now as were those to the south two years ago, hold when our families are no better off? As a global economic slowdown and an American recession take hold, what impenetrable barrier is wrapped around this country?

Meanwhile, what about the future? Won’t nine million house-rich and pension-challenged boomers be forced to dump billions in real estate over the coming decade? Won’t runaway energy costs and the uncertainty of climate change breed a popular taste for smaller, more efficient, more urban housing, rendering four-bedroom, three-car-garage suburban palaces unsaleable?

Most of all, won’t those who understand what’s clearly coming, and sell now, rejoice that they found a greater fool?

Garth Turner is the MP for Halton, Ont. Greater Fool: The Troubled Future of Real Estate is his eighth book, published by Key Porter Books.

© The Vancouver Sun 2008

‘Subsidizing families where they live, without stigma of social housing’

Kent Spencer
Province

Coquitlam single mom Brooke Aydon — seen here with daughter Mai Anh, 7 — says the B.C. government’s rental subsidies have given the two ‘a way better quality of life.’ Photograph by : Jason Payne, The Province

Starting tomorrow, new eligibility rules will make it easier for low-income renters to qualify for rental supplements from B.C. Housing.

“I’m really pleased with this program,” Housing Minister Rich Coleman said yesterday.

“It gets families a quiet subsidy. They don’t have the stigma of living in social housing.”

The income ceiling will be raised to $35,000 from $28,000 and the maximum monthly benefit for a family of four will rise to $765 in Metro Vancouver and $621 in other parts of the province. Further details are available at www.bchousing.org or by phoning 604-433-2218 or 1-800-257-7756.

Coleman said raising the income threshold will allow more people to collect.

Brooke Aydon, a Coquitlam single mom, knows how much the aid can help those who are struggling.

“It’s a great program for people working just as hard, but not making quite as much,” said Aydon, 27, a fulltime restaurant server.

She said new digs have made a world of difference to her seven-year-old daughter, Mai Anh.

Aydon qualified for $394 monthly assistance after noticing a brochure at a Coquitlam pool last year.

The pair moved from a small basement suite to a townhouse with lots of space for her daughter.

“The basement suite wasn’t ideal. The townhouse is so much better. It’s a really nice neighbourhood. There’s a great school. My daughter can play outside with other kids.

“We have a way better quality of life. We just love it here,” she said.

The new place costs $1,140 a month. It comes with things the basement suite didn’t have, such as closets, new carpets, a washer and a dryer. She’s even proud of the quality of the doorknobs.

Aydon encourages those who need help to inquire.

“Don’t be embarrassed. People who are working — they’re trying. I’m so glad I found the brochure. I’m sure there are other people who don’t know. It’s quite a bit of extra money,” she said.

About 4,800 families are in the year-old program, which receives about $20 million annually from the province. Coleman said it provides faster help than building new or renovating social-housing units.

“I wanted to subsidize people where they live,” he said. “It brought immediate results. If someone had said to me a year ago we’d have almost 5,000 families enrolled, I would have been ecstatic. You can’t build 5,000 [units] in one year.

“People are telling me the change in their lives is remarkable. One woman said her son was playing soccer and nutrition in the household had gone up. It’s working in places as small as New Denver and as large as Vancouver.”

The program can handle up to 15,000 families. “We’re hoping to attract more,” said Coleman.

© The Vancouver Province 2008

Tony Gioventu
Province

Dear Condo Smarts:

Our strata recently experienced a serious water leak damaging several floors in our building.Our insurer and restoration company did a great job. However, we have a problem resulting from the repairs. The restoration company has advised that asbestos has been discovered in the “mud” used to finish the drywall.

We have been unable to confirm the claim with a written report and there is no record of testing of the materials. The restoration company has refused to provide copies of the testing procedures and results.

So now what do we do for disclosure ? We cannot obtain any proof of the asbestos, owners are aware of the information and buyers are asking questions.

How can the strata or owners disclose a potentially hazardous condition in the building with no proof ?

— WC, North Vancouver

Dear WC: Industry generally stopped using asbestos in drywall mud around 1985. The problem with the asbestos is that it is a low risk in its inert state in the mud, but once the walls are saturated or construction disrupts the surface through renovations or demolition the problems begin.

The asbestos can become airborne resulting in a risk to the contractors on site and the residents in the building. A contractor has a duty to inspect and test for asbestos if the conditions are right.

If asbestos is discovered they are required by law to comply with the WorkSafe (WCB) regulations for the protection of their crew. But how does the strata corporation find out what’s going on?

Reputable contractors and restoration companies willingly provide copies of all testing, identify who conducts the testing, and testing protocols. Both the strata corporation and the insurer are the clients and they are entitled to all of the information. Once you obtain this information it will be incumbent on the strata corporation to report it to the owners and subsequently to potential purchasers on request.

Here are some questions that a strata corporation should ask the contractor or testing authority.

n What is the concentration of asbestos in our building materials?

n Does the asbestos pose a health threat to our residents if it’s undisturbed?

n Are there special precautions we should take during construction or renovations?

n Are there additional steps that our strata corporation has to undertake to comply with WorkSafe standards and regulations?

If the contractor refuses to co-operate you may want to contact an independent testing facility to verify the claim.

For more information on asbestos go to the WorkSafe web site at: www.WorksafeBC.com and enter Asbestos into the search window at the top of the home page.

Tony Gioventu is executive director of the Condominium Home Owners Association.

E-mail him at [email protected]

© The Vancouver Province 2008

Sun

In her recent book, Hot Property: Easy Home Staging to Sell Your House for More Money in Any Market, design writer Alex Newman makes it clear that first impressions count.

Here are five quick and easy tips from her book, certain to dress up your home:

– Clean your windows, inside and out (no, she’s not kidding, and yes, you’ll see the difference).

– Make your front entrance inviting. Create an attractive vignette with an urn, paint your front door or repair crumbling steps.

– Dress up the garden. Remove dead plants, trim back overgrown shrubs and position attractive solar lights or statuary to add interest (gnomes need not apply).

– Power-wash the house’s exterior. Pressure washers can be rented from building supply stores — just go easy with the pressure, to avoid damaging finishes or driving water up behind siding.

– Create an intimate seating area on a porch or deck. Two lounge chairs beside a small table or urn are all you need to say “welcome.”

Newman’s book is available from Wiley and sells for $26.99.

© The Vancouver Sun 2008

Reserve plays host to luxurious homes

Michael Sasges
Sun

The Signature Estate households will reside in four differently sized townhouses. The A-plan homes at the bottom of the site plan are three-storey homes and, at about 3,000 square feet, are the largest homes in the development. The B-plan homes at the top of the site are the smallest homes.

Mosaic tile from Italy on the tub surround, porcelain tile on floors and walls and polished limestone on the vanities are among the accessory contributors to the luxury content of the ensuite display in the Signature Estate sales office. Separate tub and shower and double-bowl vanities are the principal contributors: they proclaim room to move. The Takaya development company has specified Grohe fixtures for the kitchens and bathrooms.

NEW HOMES

Project Profile

The Signature Estates at Raven Woods

Project location: Tsleil-Waututh Indian Reserve, North Vancouver

Project size: 48 townhouses

Residence size: 2,287 sq. ft. — 3,300 sq. ft., 3, 4 bedrooms

Prices: From $848,000

Sales centre location: Dollarton Highway and Raven Woods Drive, North Vancouver

Hours: noon — 5 p.m., Tue., Thurs., Sun.

Telephone: 604-929-1915

Web: ravenwoods.com

Developer: Takaya Developments

Architect: Howard Bingham Hill

Interior design: False Creek

Occupancy: December 2009

It is not wrong to locate The Signature Estates at Raven Woods on Burrard Indian Reserve #3, above the intersection of Dollarton Highway and Raven Woods Drive.

It is insufficient, however.

It is better, perhaps, to locate the Signature Estates townhouses at an intersection of aspirations.

On one approach to the intersection is the vendor, a dispossessed first nation that has “begun to reintegrate itself into the Lower Mainland economy,” in the words of the Signature Estates sales literature.

On the other are 48 individual households who will make their next home in a new-construction, low-maintenance residence at the base of Mount Seymour and at the head of Burrard Inlet, barely 15 minutes from downtown Vancouver (during off hours).

The townhouses are the 10th Raven Woods development from the Tsleil-Waututh people in almost 15 years. About 800 households reside in those nine developments.

The Signature Estate townhouses are not the first townhouses the Tsleil-Waututh have sold, but they are the first since they introduced themselves to the new-home shopper with townhouses in the ’90s.

They are also the most luxurious homes the band has ever brought to market, says Harry Wong, senior development manager of the Takaya development company.

With the smallest Signature Estates residence just under 2,300 square feet, the townhouses are big, the ultimate expression of luxury residency locally.

They will receive the commensurate steel-and-stone treatment more typically reserved for downtown and waterfront apartments: two refrigerators, for example, one of them an under-the-counter, 46-bottle wine fridge; engineered quartz on the kitchen counters; tile on the backsplashes and, in the ensuites, on the tub surrounds.

The townhouses in the inaugural Raven Woods development, in contrast, were comparatively spare because their purpose was not to attract luxury-residency buyers, but buyers, period.

“When we first started building on leasehold land and selling it to the market, we were pioneers: there was nothing like it,” Wong says.

“So we were very cautious. We were building good buildings, but we weren’t spending a lot of money on finishes. What we wanted to provide people was good value and a product that was not available in the

District of North Vancouver.”

In the subsequent eight projects, all involved in Raven Woods bumped up the exterior and interior finishes. The grounds the visitor to the Signature Estates sales centre passes are lovely, for example, not just lawn and beds, but ponds and bridges.

“Leasehold” residency is, perhaps, better known today than 15 years ago because of its role in introducing homes on the campuses of Simon Fraser University and the University of B.C.

The Queen (God Bless Her!) does not easily surrender her interest in public land. Atop Burnaby Mountain and on Point Grey, provincial law governs her largesse.

On Burrard Indian Reserve #3, federal law governs how she might admit to residency on the reserve those among us who are not registered Indians under the Indian Act.

The Queen “owns” the reserve land in trust, for the use and benefit of the Tsleil-Waututh people.

She, and the Tsleil-Waututh people, are not selling any reserve land; they are granting it to the developer, the Takaya development company, under a “head lease” of 99 years’ duration.

The developer, in turn, is selling “subleases,” the townhouses. The owners of these subleases can, in turn, ”assign” them, or sell them.

The ”head lease” rent has been prepaid by Takaya. A rent that has been prepaid is a rent that cannot change over the duration of the lease.

The Tsleil-Waututh people can cancel the head lease if the developer fails to meet its contractual obligations. (No surprise there!) But “provisions on default are oriented to remedies other than termination,” the sales literature reports.

Once the developer has built all the Signature Estate townhouses, it will transfer its head lease to a company the sales literature calls a homeowners’ corporation.

This company is the medium through which the leaseholders will exercise management of the common areas of the development. Each leaseholder will have a share in the company. Only leaseholders may serve as company directors.

It is not a strata corporation. And that’s because strata corporations are a creature of provincial legislation. On federal land in British Columbia, like Burrard Indian Reserve #3, provincial legislation like the B.C. Strata Property Act cannot apply.

Accordingly, the developer will not collect the provincial property transfer tax when it sells a townhouse.

The band, not the provincial government, will collect property taxes. The B.C. Assessment Authority will provide the assessments of value, under a contract with the band. The band will set the mill rates and they are subject to federal government approval.

Title will not be recorded in the provincial land registry, but in a federal registry in Ottawa.

The developer will collect the federal goods and services tax on the sale of the townhouses. That’s because the Tsleil-Waututh people have waived their Indian Act entitlement to tax-free purchases of goods and services on the reserve.

“The decision to forgo their inherent tax right … is a reflection of the progressive and forward-thinking nature of the Tsleil-Waututh First Nation,” the sales literature says.

—

An Industrious people — then and now

In The Signature Estates at Raven Woods sales literature, “colonial isolation” on Burrard Indian Reserve #3 is the point of departure for the Tsleil-Waututh people on their road to reintegration with the larger economy.

Here, from the annual report for the year ending March 31, 1909 of the Indian agent (a federal government official) responsible for the band, are textual manifestations of isolation for a colonial or conquest purpose. The writer was responsible for the management of six bands and was reporting on all six.

– “They keep their houses and surroundings in a sanitary condition, and most of them have been vaccinated.”

– “They are engaged chiefly in hunting, fishing, logging and loading lumber in ships at the sawmills. They also do some farming and gardening.”

– “Their houses are well constructed frame buildings. They have some good stock, and a fair supply of farm implements.”

– “They are industrious people and are making satisfactory progress.”

– “Some of them are fond of liquor, but they are strictly moral.”

Also in 1908, and according to vancouver.ca on the Web:

– Members of the B.C. Mountaineering Club made the first known ascent of Mount Seymour.

– The first North Shore hospital opened, a six-bed facility at St. Andrews and 15th Street.

– A developer cleared and constructed Grand Boulevard and conveyed it to the City of North Vancouver to encourage development. More than two dozen residences on the city’s heritage inventory have Grand Boulevard addresses.

—

Peaking interest

Among the many architectural styles that might inspire the look and feel of a new home or a new-home community on the North Shore are two that were nurtured locally. One is called West Coast Modern. The other might be called Alpine Rustic or Mountain Rustic.

Bringing the outdoors inside

The Signature Estate townhouses will broadcast Mountain Rustic influences.

Their roofs especially speak of a robust possession of a higher-elevation site on the windward, storm-lashed side of the Coast Mountains or the North Cascades.

Their pitches will begin the movement of water away from the buildings with dispatch.

Their numbers and intersections will eliminate those long expanses, across roof and facade, that stop the full fury of a Pacific storm at a structure. The Signature Estate roofs will deflect it.

The same architectural practice, Howard Bingham Hill, has designed all 10 Raven Woods developments.

© The Vancouver Sun 2008

Another hotel added to low-cost roster

Sun

The provincial government has bought another Downtown Eastside hotel to help protect low-cost housing stock.

A press release from BC Housing said the province paid $2.4 million for Tamura House, a 110-room unit at 398 Powell St.

The hotel is now owned by St. James Community Services Society. The purchase price is equal to the balance of the mortgage, the release states.

“By buying this hotel, we are ensuring the smooth transition of existing low-cost housing from one non-profit operator to another, and providing tenants the opportunity to live in a stable housing situation,” Rich Coleman, the minister responsible for housing, said in the statement.

The building will be managed by Lookout Emergency Aid Society, which already provides support to tenant in about 35 of the units.

© The Vancouver Sun 2008