Province

The price of new homes in Vancouver edged up 0.6 per cent between February and March — slightly ahead of the national pace, Statistics Canada says.

On a year-over-year basis, new houses in the city climbed 6.1 per cent — matching the national average, StatsCan said yesterday.

In Victoria, new house prices showed no change between February and March, while year-over-year prices climbed 1.2 per cent, the federal agency said.

Nationally, prices for new homes edged up just 0.2 per cent in March, as a weakening Alberta market tempered strong growth in some other regions.

The lower pace was widely expected after only a 0.3 per cent rise in prices in February.

On a year-over-year basis, prices rose by 6.1 per cent in March from the same month in 2007. That’s down from a 6.2-per-cent rise in February from a year ago.

“This deceleration continues a downward trend that started in September 2006 due mainly to the softening market in Alberta,” the federal agency said.

In Edmonton and Calgary, builders lowered prices to generate interest and stimulate sales.

House prices were higher in Saskatoon, Regina and Winnipeg “as a result of increased material and labour costs, as well as a strong market and high demand for new housing,” StatsCan said.

On the east coast, “a strengthening economy, coupled with increased material and labour costs, contributed to record increases in Nova Scotia,” StatsCan said.

Halifax saw year-over-year prices rise 12.8 per cent in March, up from a year-over-year rise of 11.4 per cent in February.

In St. John’s, prices posted a 12- per-cent gain from March 2007.

“The Canadian housing market continues to show sign of moderation as the sector adjusts to a more sustainable level of activity,”said Millan Mulraine, economics strategist at TD Securities.

© The Vancouver Province 2008

 

As demand grows, lenders do an about-face and make it easier for people to buy

Suzanne Beaubien
Province

Taking on a second mortgage is not a step most homeowners take lightly. But with more people seeking out second properties where they can escape the city, the financing of recreational properties is a market that has expanded in recent years.

More options are opening up to people ready to purchase.

Mortgage brokers say traditionally lenders have seen recreational properties as less desirable investments.

“In general, it’s a much more narrow niche,” explains Todd Fralic, Mortgage Intelligence’s assistant vice-president for the Prairies.

“At one point, it was nearly impossible to get a recreational property with CMHC.”

Consequently, the requirements for financing a second home were more stringent, requiring larger down payments — as much as 25 per cent — and ensuring the home met certain specifications.

But Canadian mortgage insurers became less conservative in their practices as competition increased and baby boomers sought out second homes. Now new products from the Canada Mortgage and Housing Corp. and Genworth make it easier for buyers to invest in a recreational property — provided they meet a few conditions.

Under CMHC’s mortgage loan insurance, approved lenders can offer recreational property buyers up to 100-per-cent financing if the second home is accessible year-round and has the proper facilities to house residents 24/7.

But if the buyer plans on renting out the property, he or she is excluded from using CMHC’s second-home product, says John McWilliam of CMHC.

Nor are time-shares eligible.

McWilliam cautions buyers that not all recreational properties are covered under CMHC’s mortgage loan insurance; only those that qualify as true second homes.

Genworth offers a similar product for secondary homes, which it classifies as “Type A” to a maximum of $700,000. Type B properties, meanwhile, need not be winterized or accessible year-round but are financed up to 90 per cent and to a maximum of $350,000.

Calgary mortgage broker Michael Boyle of the Mortgage Group says most of his clients still aren’t making use of these new products.

“Typically, people buying recreational homes have the money to put 25 per cent down,” Boyle says.

That’s what Jon Dick did when he and his wife bought their Timber Ridge cabin in Invermere, seven years ago. They put $75,000 down on the $300,000 home. They loved the location and could see back then the Columbia Valley would become the vacation destination it is today. They subsidized their mortgage by renting it out. Today, the property is worth $600,000.

“I’m glad we bought when we bought,” says Dick, vice-president for Pine Ridge Mountain Resort. “It’s way easier to do today. Obviously, you have the have the income to support what you do.

There are other options. Both Boyle and Fralic say most of their clients are taking equity out of their first homes, and putting it into their second to defray the costs of buying a recreational property.

Then, buyers aren’t subject to the same restrictions on usability, which means a cabin that can only be accessed by boat isn’t out of the question. It’s a common practice, even for buyers shopping for a second home abroad.

Calgary accountant Mesh Dayal says he found financing his condo in Puerto Penasco, Mexico, no harder than financing his primary residence.

But he warns, “It takes a little bit longer to go through the legal process in Mexico than in Canada.”

— Calgary Herald

© The Vancouver Province 2008

 

From Sweden to San Francisco, municipalities, individuals and businesses have come up with some innovative ideas

Lena Sin
Province

1. BOKLOK

Trust Ikea to come up with cheap, good-looking homes.

Pronounced “Boo-Clock,” the concept was born in Sweden in the 1990s as an effort to tackle affordable properties.

Furniture giant Ikea joined forces with Swedish construction firm Skanska to create good-quality flat-pack houses at low prices.

The timber-framed houses and flats have high ceilings, open plans and large windows.

Sweden builds 800 BoKlok homes a year and the concept has been introduced in Finland, Norway and Denmark.

In 2007, the U.K. gave the green light to build 120 BoKlok homes in the community of Gateshead, all priced within reach of households earning between $24,620 and $59,088 per year.

A second BoKlok development in the U.K. has just been announced.

2. REINVENTING THE ‘COMPANY TOWN’

The private sector got into the housing game as far back as the early 20th century, when company towns ruled the new frontier.

Today, some U.S. companies are reinventing that concept.

With companies now situated in urban areas where the geographic relationships are more complex, companies have begun developing employer-assisted housing programs, according to the American Planning Association.

Employers provide workers with a zero-interest forgivable loan to help cover down payments. For each year the employee stays with the company, 20 per cent of the loan is forgiven, wrote Tim Sullivan in a 2004 article for the APA.

One Minnesota-based company, Bremer Financial Corp., has adopted a similar program and made it available to employees at all of the company’s 100 locations in Minnesota, Wisconsin and North Dakota.

3. LAND BANKING

Land banking is all about strategy.

The idea is for an organization or jurisdiction to acquire land — even though there’s no immediate plan to build affordable housing on it.

The concept is for a city to be prepared for affordability problems down the road.

Whistler acquired a substantial “land bank” from the provincial government, which gave the resort Crown land for hosting the 2010 Games.

It is being saved for development in the future as demand for affordable housing grows, says Whistler Mayor Ken Melamed.

Land banking is just one of eight affordable housing “tools” recommended by Whistler Coun. Tim Wake, who co-authored a report titled Creating Market and Non-Market Affordable Housing.

– For more information on the report, visit www.smartgrowth.bc.ca and click on “New Affordable Housing Toolkit.”

4. COHOUSING

An idea that originates from Denmark, cohousing made its debut in North America in 1988, according to the Canadian Cohousing Network.

These projects consist of private homes — ranging from just a few to 20 or 30 — that are self-sufficient but also have access to a large common space with a kitchen, dining room and other amenities.

Typically, a group of individuals with a common vision of shared and private space work together to find an affordable property and pool funds to build it.

B.C. has a number of cohousing developments including Cranberry Commons in Burnaby, Pacific Gardens in Nanaimo and Quayside Village in North Vancouver.

– For more information, visit www.cohousing.ca.

5. CO-OP HOUSING

Some still lament the days when Ottawa funded co-op housing.

The basic premise for co-operative housing is that residents purchase shares in the building and participate in managing the affairs of the building.

There is no outside landlord. In a typical Canadian co-op, member’s approve of the co-op’s yearly budget and set monthly fees. Co-ops try to operate as close to cost as possible and members can live there as long as they want.

In Canada, the federal government through the Canada Mortgage and Housing Corp. started to fund co-operative homes in the early 1970s by providing startup funding and loans. Federal funding, however, ceased in the 1990s.

In Finland, co-op membership is the prime form of real estate. Sweden has also widely used co-op housing to tackle affordability.

6. TEACHER NEXT DOOR

The Teacher Next Door Loan Program in San Francisco provides down-payment assistance loans to accredited teachers employed by the San Francisco Unified School District.

The loans are forgivable according to the number of years the teacher remains in the school district.

Coming Thursday: Realtor Bob Rennie has a solution to the housing pinch

© The Vancouver Province 2008

 

Lena Sin
Province

Three years ago, Vancouver came close to introducing an affordable-housing project aimed at middle-income workers.

City councillors looked at dividing the Olympic Village three ways: one-third for social housing, one-third for middle-income workers and one-third for people with high incomes.

But, by the time details were finalized in 2006, the plan had changed drastically to 20 per cent social housing, 10 per cent rental suites and 70 per cent luxury condos, now selling for up to $6 million.

Cameron Gray, Vancouver‘s housing centre director, says city council decided there simply wasn’t enough money to fund middle-income housing.

And with a growing homeless crisis, social housing must be the priority, he said.

With the sale of the Athletes Village land in southeast False Creek to a developer, the city bought 12 sites elsewhere for social housing.

Vision Vancouver Coun. Raymond Louie says the original plan was “a lost opportunity.”

“We knew this challenge for our middle class was coming,” he says.

John Irwin, a geography professor at Simon Fraser University, says it would have set a precedent for Metro Vancouver.

“It would only have helped a fraction of people, but with Vancouver considered a leader sometimes, it could have potentially been replicated over time in the Lower Mainland.”

TERM ‘AFFORDABLE’ HAS MANY MEANINGS

The term “affordable” is one that can mean different things.

The Metro Vancouver regional government defines it as “housing that should not cost more than 30 per cent of a household’s gross income, regardless of whether they are living in market or non-market housing.”

SmartGrowth B.C. defines it as a home with a purchase price that is affordable to those in the lowest 60 per cent of income distribution, as defined by Statistics Canada.

Affordable in this context means monthly mortgage costs should not exceed the average monthly rent for the region.

© The Vancouver Province 2008

 

Vancouver weighing options

Lena Sin
Province

Of all the problems facing Vancouver today, few are as complex as this one: Take a finite piece of land and make it affordable for the seemingly infinite number of people who want to live on it.

Other oceanfront cities — San Diego, San Francisco, Portland and Seattle — are still struggling to figure it out.

But Vancouver lawyer-turned-developer Howard Rotberg believes what’s been done in Whistler — or a variation of it — can be introduced in the Lower Mainland.

“The idea that there’s nothing that can be done is very anti-progressive. It’s a matter of social justice that working people can live near where they work,” says Rotberg.

Vancouver is at risk of becoming richer and poorer all at once as its teachers, day-care workers, even accountants and police — many of the occupations long considered the building blocks of communities — are being squeezed out to the suburbs where there, too, they face affordability problems.

Yet anyone who’s tried to tackle affordability knows the massive hurdles that must be overcome.

Whistler’s program evolved largely through trial and error — with mistakes along the way.

“There’s no solution here that you can just transplant to another city,” says Whistler Coun. Tim Wake, who is also an affordable-housing consultant. “But you can take parts of it and modify it.”

In Langford, one of Victoria‘s bedroom communities, an affordable-housing scheme introduced in 2004 has had limited success.

The program requires developers of new subdivisions to build one affordable home for every 10 single-family lots subdivided. But by mid-2007, only a dozen such homes had been built.

Critics say if small communities like Whistler and Langford have experienced problems, just imagine the issues that would arise in a vastly more complex marketplace like Vancouver.

What is ultimately behind the affordability issue is not whether government has the ability or the money to help solve the problem — it’s whether it should.

“Few cities have gone significantly far in really trying to regulate the marketplace in really aggressive ways. Approaches like that always have their ups and downs, and you always have to factor in the unforeseen consequences,” says Brent Toderian, Vancouver‘s director of planning.

Indeed, when Hong Kong announced in 1997 that it was introducing housing schemes with a goal of achieving 70-per-cent homeownership in a city where real estate is among the most expensive in the world, the impact was devastating on the local economy.

A fall in home prices led to huge outcry from business circles and individuals who saw a meltdown of their assets.

To date, EcoDensity is the biggest initiative to come out of Vancouver to address affordability.

The idea is to increase the density of the city — by building smaller homes — to make homeownership more attainable.

But Toderian is frank about who this will help: “EcoDensity was not started to make Vancouver affordable — it was meant to make it more affordable than it otherwise would have been.”

In an ideal world, the federal and provincial governments would lead the way to an affordable-housing strategy. At the same time, Toderian recognizes the city can’t wait forever. The question now becomes how much Vancouver wants to get into managing the market.

“You can’t get more complex than changing the nature of affordability in a city where everybody wants to own,” says Toderian. “You’re dealing with the No. 1 downside of success to a city — everybody wants to be here.”

© The Vancouver Province 2008

Working people can afford homes more easily

Lena Sin
Province

Chris Quinlan doesn’t look like the kind of guy who would own a spacious, ski-in, ski-out condo perched on the side of Whistler’s Blackcomb Mountain.

That kind of pad retails in the neighbourhood of $750,000 — way more than what most bachelors can afford, let alone one who earns his crust running a coffee shop.

But that’s exactly what Quinlan does for a living as the 44-year-old owner of a funky little cafe in the heart of Whistler Village.

So how did he do it?

For starters, Quinlan didn’t pay market value when he took possession last August — he paid $172,000.

The deal was made possible through a unique program in Whistler designed to ensure homes are kept affordable for the ordinary, working folk who make the town run.

To date, 4,200 people have taken advantage of the program, offered through the Whistler Housing Authority.

What this means is 75 per cent of Whistler’s workforce now lives in the resort — not bad for a town better known for its million-dollar chalets than affordable housing.

“The idea is when you drive people out of your community, you stand to lose the heart and soul of your community,” said Gordon McKeever, a city councillor and longtime Whistler resident.

Long before Vancouver‘s current housing squeeze on families and first-time homebuyers, Whistler was already grappling with how to retain its teachers, nurses and tourism workers in the face of skyrocketing prices.

Fears of “Aspenization” throughout the 1990s led the municipal government of the day to take the bold step of getting into the housing game.

In 1997, the Whistler Housing Authority was created as an arm of the municipal government.

Its mandate was to oversee the development of price-controlled real estate available only to resident employees and their families.

Condos, townhouses and single-family homes were built and sold at cost — and continue to be today.

The catch? Once you buy through the housing authority, resale prices are capped at below-market values.

“It truly is a legacy of affordable housing that will continue in perpetuity,” says Marla Zucht, general manager of the housing authority.

Without the program, couples like Jacki Bissillion and Ken Roberts would’ve been forced out long ago.

“We’re people who started out working in the front desk and maintenance and moved up the ladder and are the typical people who are making this town run,” says Bissillion. “But we were looking at leaving a few years ago because the free market [housing] just was not an option.”

Bissillion works at a local TV station while her husband is an engineer and volunteer firefighter.

They recently purchased an 1,800-square-foot, three-bedroom home, “which we’re in the process of populating,” laughs Bissillion, who is pregnant with their first child. Through the housing authority, the home cost $360,000.

Bissillion is more than OK with the cap on her real-estate investment.

“I don’t want to be that person that has to jump into a car everyday to go to work and jump in the car to go home,” she says. “Certainly living in the Lower Mainland, if you want a family, that’s what you’d have to do — and it’s just not the kind of impact I want on the environment.”

The model set up in Whistler has been used throughout the U.S and parts of Canada as a creative solution for middle-income workers who make too much to qualify for social assistance, yet not enough to afford a home.

The launch in Whistler, however, was not an easy road to go down. The mayor and city council of the day found themselves the target of outrage and NIMBYism as residents feared the kind of undesirables who would find a toehold in their neighbourhoods.

The developers, the primary builders of these homes sold without profit, weren’t too happy, either.

Rod Nadeau, a Whistler developer, says he knows developers who have lost money building in the resort, although he has not.

“Just because you’re building social housing doesn’t mean the guy selling you two-by-fours is going to sell it for cheaper,” he notes.

Max Maxwell, 57, says that to the city council’s credit, it persevered and moved forward with the program.

For sure, mistakes were made along the way.

Today the program is far from perfect, with more than 700 people on the wait list — some have been waiting as long as four years.

But Maxwell, a local columnist, believes it has also made thousands of people’s dreams come true, including his own.

Maxwell and his wife left the corporate rat race in Toronto 16 years ago. They headed west to find their future and landed in Whistler, because “let’s face it, being a ski bum is way better than being a banker.”

“I throw my skis on my shoulders and walk to the mountain.

“How many people can say they get to do that?” he asks.

– – –

HOW IT WORKS:

Raising the funds to build affordable homes in Whistler is done a number of ways.

First, a housing trust fund was established. Developers paid into it for every new commercial, industrial and tourist development that increased the number of workers in town.

The cash was then used to build rental suites or homes to be sold at cost.

More recently, city council has favoured using “density bonusing” to negotiate with developers.

For allowing developers to build more units than what city council would normally approve, the developer in return sells a portion of the suites at cost.

“Their profit on the market side is enough to have them interested,” says Mayor Ken Melamed.

How are you coping with the real estate crunch? What should be done to ease it? Send your story and suggestions to [email protected]

© The Vancouver Province 2008