Number of ‘rotten’ homes much higher than ex

William Boei, with files from Derrick Penner
Sun

Coastal British Columbia‘s leaky condo crisis is far from over, a recent report prepared for the provincial government shows.

The report acknowledges for the first time that thousands more strata-owned apartment units suffered water damage than the government has been estimating.

By 2012, when the leaky condo era enters its fourth decade, as many as one-third of the defective units will remain unrepaired, said the report, prepared for the province’s Homeowner Protection Office (HPO) by private consultants.

At least 45 per cent and possibly as many as 68 per cent of leaky buildings have not been repaired yet, according to various scenarios explored by the consultants.

They also revealed that of the nearly 160,000 strata-owned apartment units built during the leaky condo period — considered to date from 1982 to 1999 — 45 to 55 per cent have suffered “premature building envelope failure.”

James Balderson, spokesman for the Coalition of Leaky Condo Owners, said the report helps to reveal the magnitude of the leaky condo problem, which he always thought was being underestimated.

However, Balderson says the HPO report, written by the consulting firm McClanaghan and Associates, still underestimates the number of condominium units that are likely to suffer problems with leaks.

“I’ve been saying that for years,” Balderson said in an interview. “The Homeowner Protection Office has underestimated [and] under-reported the number of leaky, rotten condos.”

He said the number of affected units will continue to be underreported because the cut-off points for drops in value and the time frame of construction the HPO uses to determine which buildings qualify for assistance mean it excludes many leaky homes.

HPO chief executive Ken Cameron and Housing Minister Rich Coleman could not be reached for comment Tuesday.

The new report said at least 72,000 strata units leaked and suffered water damage, and possibly as many as 87,500.

The HPO and the provincial government insisted for many years that no more than 65,000 strata apartments were damaged, including all the ones that had not been discovered yet.

The report said officials now realize they still don’t know “the full extent of building envelope failure.”

The consultants made no attempt to estimate the total cost of the damage, but concluded that early estimates of the repair cost per unit — $10,000 to $15,000 — were far too low.

“Based on the HPO experience, it would appear that the actual average repair costs are approximately five times or six times higher,” they said.

By last September, repair loans the HPO makes to leaky condo owners had grown to an average of $62,000 for wood-frame apartments, and $72,000 for those in concrete buildings.

The repair costs continue to escalate because of construction cost inflation, 10 per cent last year and expected to be eight per cent this year, the consultants added.

The report’s findings were based in part on the HPO’s repair loan statistics — it has been making repair loans since 1999 — and in part on B.C. Assessment Authority records of units that suffered a sudden drop in assessed value of 15 per cent or more, a likely sign of building envelope failure.

Nearly a decade ago, the HPO estimated that the 65,000 units it then said were damaged would cost $1.5 billion to repair. The consultants did not provide a new number, but based on The Sun’s extrapolations of their scenarios, it appears the complete repair cost for strata apartments alone is in the range of $3 billion to $4 billion.

The consultants’ report was presented to the HPO last December, but was not distributed to the media and not posted on the HPO’s website, although an executive summary was posted. It took persistent requests from The Vancouver Sun to obtain a full copy of the report.

It said 159,979 strata units were built during the leaky condo period. Based on a moderate estimate of 72,000 leakers, 45 per cent of those units were defective.

The higher estimate of 87,500 problem units suggests 55 per cent of strata units built during the period suffered building envelope failure.

Some 30,000 homes have already been repaired, but at least 42,000 others still require major reconstruction, the report said. In the report’s worst-case scenario, 68 per cent of leaky condos have not been repaired yet.

Concrete highrises have been slower to show water problems than wood-frame buildings, and the report said six to 10 highrises, often with 100 or more units per building, are being added to the leaky lists each year.

“A small increase in the number of buildings from this segment could have a significant impact on the HPO reconstruction program,” it said. In a background paper, the HPO said it expected “demand for assistance will likely remain high for the foreseeable future.”

The consultants’ report said the percentage of units in leaky buildings whose owners need financial help to make repairs has risen in the last three years from just under 40 per cent to nearly 49 per cent. Eight-one per cent of HPO repair loans have been for units in wood-frame buildings, and the rest for concrete.

© The Vancouver Sun 2008

 

Back-to-back hike could point to busier work sites

Province

OTTAWA — The value of Canadian building permits rose unexpectedly in May — the second consecutive monthly gain — as an increase in non-residential construction plans outweighed a drop in the residential sector, Statistics Canada said yesterday.

Permits issued by municipalities rose 1.1 per cent to $6.6 billion during the month, the highest level since October 2007, the federal agency said.

“It was the first back-to-back increase in construction intentions since November 2006, and could point to busy construction sites in the coming months,” the agency said.

“The value of building permits has followed an upward trend since the beginning of the year.”

In dollar terms, Ontario posted the largest increase, followed by B.C. and New Brunswick. Permits in Ontario rose 3.1 per cent to a value of $2.5 billion. This was primarily driven by a 26.4-per-cent jump in the value of construction intentions for non-residential buildings, said the agency.

In May, the non-residential sector in the province was at its fourth-highest value since January 1989.

Many analysts had expected a decline of as much as six per cent in permits in May, given the recent softening in the housing market.

Non-residential permits were up 12.8 per cent to $2.9 billion in May.

© The Vancouver Province 2008

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Jeannine Aversa
USA Today

WASHINGTON — Home foreclosures will keep rising next year no matter who is elected president in November.

Even the optimism that surrounds a new president taking office can’t resurrect home values overnight, and presidents have no direct ability to reduce rising mortgage rates. Nevertheless, Democrat Barack Obama and Republican John McCain both promise help for homeowners facing foreclosure.

Obama calls for a broader role for government than McCain, but both candidates envision the Federal Housing Administration providing new, cheaper mortgages to distressed homeowners who otherwise would have difficulty refinancing into more secure government-insured loans with lower monthly payments.

For the plans to work, lenders would have to be willing to take a substantial loss by reducing the amount owed on the loan. But some would have a powerful incentive to do so because a refinancing deal could allow them to recover far more money than they would get from the costly process of foreclosing on the property and trying to resell it.

Obama supports legislation along these lines by Sen. Chris Dodd, D-Conn., which would help around 400,000 strapped homeowners. People wouldn’t have to have good credit to qualify as long as they could show they are able to afford the new payments.

“If the government can bail out investment banks on Wall Street, we can extend a hand to folks who are struggling on Main Street,” Obama said.

McCain’s plan would provide relief to 200,000 to 400,000 homeowners but would be open only to people who could show they were creditworthy when they got their original loan.

McCain said his plan offers “every deserving American family or homeowner the opportunity to trade a burdensome mortgage for a manageable loan that reflects the market value of their home.”

The FHA piece of the Dodd plan would cost close to $1 billion, which would come from diverting money in the early years from an affordable housing fund financed by the profits of mortgage giants Fannie Mae and Freddie Mac. McCain’s FHA provision is estimated to cost from $3 billion to $10 billion and would be paid for by either cutting government spending elsewhere or having the federal government borrow more. The first choice is to cut government spending, a McCain aide said.

Experts predict foreclosures will continue to climb well into 2009. Some believe there’s a chance for improvement in late 2009, but more think that won’t happen until 2010.

Why? A long-term solution is tied to a turnaround in house prices. Slumping home values are blamed for the bulk of the rising tide of foreclosures. Troubled borrowers are left owing more to the bank than their homes are worth, so they walk away from their homes. Dumping more empty houses on the market adds to the pile of unsold homes, and that drives home prices down further. It’s a vicious cycle.

“This is uncharted territory,” said Susan Wachter, a professor of real estate and finance at the University of Pennsylvania‘s Wharton School of Business.

Some predict house prices won’t turn up until the spring selling season of 2010 — at the earliest.

Lawrence Summers, a former Treasury Secretary in the Clinton administration, predicted more than 2 million foreclosures are coming over the next two years, and up to 15 million homeowners will owe more than their house is worth, as house prices continue to fall.

Fifty-seven percent of Americans say housing prices are important to them personally, according to a recent AP-Yahoo News poll. For many, their home is their biggest asset. As home prices dropped, so did Americans’ net worth — leaving people feeling less financially secure and more gloomy about the economy’s direction.

Which candidate would do a better job of handling housing prices? Twenty-five percent said Obama, while 17% thought McCain. Nearly 30% said neither.

Although most voters think the next president will have a “great deal” or “some” influence over housing prices, the reality is there’s no quick fix.

“The odds of that are slim to none,” said Cal Jillson, political science professor at Southern Methodist University. If the next president can make people more optimistic about the future, “the slow rebuilding of confidence will help to increase home values,” he said.

When it comes to handling the broader economy — the top concern of voters, 32% picked Obama, while 28% went with McCain, the poll said.

There’s another complicating factor that could push up foreclosures and that presidents don’t control: Federal Reserve action. If the Fed is forced to boost interest rates to fend off inflation that would hike payments for struggling homeowners whose mortgage rates are resetting. “We are very exposed to interest rate risks and mortgage payment shocks in 2009,” Wachter said.

Mortgage rates, including those on 30-year home loans, already have been climbing — pushed by inflation worries.

In addition to his FHA proposal, Obama calls for creation of a $10 billion foreclosure prevention fund that boosts counseling for distressed homeowners before they slide into foreclosure, helps people sell homes they bought but couldn’t afford and teams with state governments, community groups and lenders to make sure loans can be modified in a timely manner to avoid foreclosure or bankruptcy.

His approach, which reflects the traditional Democratic preference for more government intervention, also would create a 10% mortgage credit for people who don’t itemize their taxes. That would provide 10 million homeowners, most of whom earn under $50,000 a year, with an average of $500 in savings, his campaign says. And, that should help those struggling to keep up with their mortgage payments.

Obama also supports changing bankruptcy laws so that homeowners going through that process can renegotiate terms of their mortgages — just as people or investors who own multiple homes or vacation homes can do.

And, Obama also would move to combat mortgage fraud and improve mortgage disclosure. Deficiencies in those areas contributed to lax lending that allowed people to take out home loans that their incomes couldn’t support, critics say.

“This kind of transparency won’t just make our homeowners more secure, it will make our markets more stable, and keep our economy strong and competitive in the future,” Obama said.

McCain prefers a more limited government role in dealing with the housing crisis, consistent with traditional GOP leanings. The other component of his plan calls for the Justice Department to set up a task force to investigate possible wrongdoing in the mortgage industry. The Justice Department has been pursuing cases of fraud and other mortgage-related matters.

“In some cases, lenders and borrowers alike were caught up in the speculative frenzy that has harmed the housing market,” McCain said. “And it is not the responsibility of the American public to spare them from the consequences of their own bad judgment.”

Congress has been working on a broad housing rescue package that would allow the FHA to help struggling homeowners. Differences have to be worked out between Dodd’s plan, which is pending in the Senate, and a similar House-passed package by Rep. Barney Frank, D-Mass., and with the White House, too. The White House has repeatedly threatened a veto but is working behind the scenes with congressional leaders to find common ground.

The rescue plans envisioned by Obama and McCain — and Congress — would deliver short-term help but aren’t a cure-all, housing experts said.

Long-term strategies are needed to prevent a repeat of the foreclosure crisis, experts said, and that must revamp the regulatory structure to improve oversight of players and borrowers in the mortgage finance system. The political debate on such a broad overhaul has already started in Washington and will likely spill over to next president and Congress. Both Obama and McCain have indicated they favor tougher regulation.

 

Green sensibility includes low-toxicity textiles and Energy Star windows

Kate Webb
Province

If you love the forest, forget Stanley Park: Pacific Spirit is Vancouver‘s best-kept wooded secret.

Completely surrounding the University of British Columbia on Vancouver‘s western coastline, the regional treasure is a favourite among dog owners, hikers and bikers alike.

So naturally, when prolific developer Adera decided to build a new condo complex next door to the leafy paradise in the up-and-coming Wesbrook neighbourhood at UBC, its masterminds named it after the park.

The low-rise, 165-unit development, of which one building is named Pacific and the other Spirit, is all about embracing the peace and tranquility of its trailside address.

“UBC has always been one of the most sought-after places to live, and the reason is because once you pass over Alma Street, you go through the university endowment lands and it’s like a barrier,” says Eric Andreasen, vice-president of marketing for Adera.

“I call it an ethos. Everyone wants to come out here because this is the capital of smartness.”

There was a time — actually, it’s not over yet — when UBC was seen as a city within a city lacking the conveniences of urban living.

But that’s all changing now with the rapid construction of the new Wesbrook neighbourhood, which will straddle Wesbrook Mall south of West 16th Avenue.

By the time Pacific Spirit is finished and ready for move-ins in February 2010, a new Save On Foods will be open at the centre of the village, along with a bustling business district.

Most buyers at Pacific Spirit will be settled in just in time to enjoy some Olympic hockey at the new Thunderbird Winter Sports Centre on campus, and to catch the latest academic buzz as the world arrives at Vancouver‘s doorstep.

“This is where the urban aspect of UBC is going to come to life,” says Andreasen of the Wesbrook neighbourhood.

“It’s going to be vibrant, it’s going to be unique, and it’s going to be the centre of the new university community.”

With housing prices skyrocketing at UBC in anticipation of the new amenities, Pacific Spirit’s developers decided to build compact and efficient homes to maximize affordability and squeeze the most out of the materials.

The 850-square-foot display suite is high-tech without being cold or overly trendy.

“We’re trying to give the suites some warmth but also some modernism,” says Andreasen, pointing out the refreshing contrast between the wood panelling and the white high-gloss lacquer of the kitchen cabinets.

The standard package comes with granite slab counters, GE Profile appliances, striking imported porcelain tile floors and a fridge smartly located off to the side, allowing room for two cooks in the kitchen.

The environment was a key concern for Adera, says Andreasen. Most of the everyday consumptive features are automated, from motion-sensitive kitchen faucets to the bathroom lights.

In fact, the whole project was built to a gold made-at-UBC sustainability certification standard called the Residential Environmental Assessment Program, created by the university’s Sustainability Office to bring a green sensibility into all of its developments.

REAP covers everything from water- and energy-efficient appliances to Energy Star windows and low-toxicity textiles, and Adera has even thrown in a membership to Vancouver’s locally-owned Co-operative Auto Network car share to sweeten the deal.

With all that good karma helping you sleep easy, the master bedroom and ensuite washroom will certainly serve as a fitting reward at the end of a long day.

Distinctive crown moulding reflects the building’s west coast architecture, and the angled entrance to the large walk-in closet is a stylish design feature.

All the suites come with some kind of outdoor living space, big enough for a barbecue and pre-outfitted with a gas hook-up. First-floor walk-up units have a patio or deck, while upper floors get a balcony or rooftop patio.

Pacific Spirit’s grand opening was yesterday, and for a limited time buyers will get a custom kitchen appliances upgrade package that includes GE’s top-of-the-line Monogram series.

Over 40 per cent of units in the first-phase release have been sold, so better beat a path through the forest if you’re interested..

THE FACTS

What: Pacific Spirit, a 165-unit condo development in two four-storey low-rises.

Where: 5928 Birney Ave., Vancouver.

Developer: Adera

Sizes: One-bedroom-plus-den or two-bedroom-plus-den, from 661 to 1,054 sq. ft.

Prices: $449,900 to $829,900

Open: Presentation centre and display suite open at 5779 Birney Ave. every day from 12 to 5 p.m.

More Info: www.Adera.com

© The Vancouver Province 2008