First nine months see rise in Vancouver area housing

Province

Increases in condo construction led to an increase in homebuilding activity in the Vancouver area for the first nine months of the year, Canada Mortgage and Housing Corp. reported yesterday.

Housing starts in the Vancouver area rose 5.3 per cent from the same period last year, CMHC said yesterday.

That increase came despite a slowdown in building activity in September, when overall starts fell by 6.4 per cent, CMHC said.

Healthy increases in multi-family-unit activity in Coquitlam, Surrey and the city of Vancouver drove the growth in home construction, CMHC senior market analyst Robyn Adamache said.

“Employment and population growth will support demand for new homes,” Adamache said.

“However, consumer uncertainty and high home prices will temper the effects of these positive

factors.”

The well-supplied resale housing market also will move some demand away from new housing, Adamache said.

Peter Simpson, CEO of the Greater Vancouver Home Builders’ Association, said the 5.3-per-cent rise over 2007 is significant because 2007 was the best year for starts since 1993.

“Even if starts levels drop below last year’s levels over the next three months, due to slower sales, housing starts would still average 19,000 per year over the past five years,” Simpson said.

The Abbotsford area has been enjoying rapid growth in housing starts, CMHC said.

Year-over-year homebuilding activity in Abbotsford soared by 120.3 per cent last month, the Crown corporation said.

For the first nine months of the year, Abbotsford housing starts rose 33.3 per cent from the same period last year.

In Chilliwack, housing starts fell by 44 per cent during the first nine months of this year from the same period in 2007.

Across urban B.C., starts fell by 14.3 per cent in September and rose by 1.3 per cent year to date.

Nationally, starts edged up last month to an annual seasonally adjusted pace of 217,400, thanks to increased apartment and condo building activity, CMHC said.

Urban starts were up 0.1 per cent, as a 5.5-per-cent increase in apartment and condo building activity more than offset an 8.1-per-cent drop in single-family starts.

For the first nine months of 2008, however, actual starts in rural and urban areas combined were down 5.7 per cent from the same period last year. Activity on key single-family homes fell 15.6 per cent, offsetting a gain of 12.2 per cent in the more volatile multiple-unit sector.

Analysts applauded the recent strength in overall housing starts, but warned it won’t last.

“Despite the surprising strength in starts over the past two months, we expect new residential construction activity to moderate in the coming months as tighter lending conditions and a weak domestic economy temper demand for housing,” said TD Securities economic strategist Millan Mulraine.

© The Vancouver Province 2008

 

Rainbow development has sub-market-value lots, homes for residents

Brian Morton
Sun

A $400-million residential development project in Whistler will include affordable housing options aimed at alleviating a housing crunch for workers.

“This is probably the only integrated residential neighbourhood in Whistler planned to integrate full-time residents and part-time residents together, along with a seniors’ unit,” Ann Chiasson, a partner with project developer Whistler Rainbow Joint Venture, said in an interview. “This project is designed as an integrated, master-planned community.”

The Rainbow development, which will include 35 single family lots priced from $825,000 to $1.7 million, and three multi-unit villas that are expected to sell for $15 million each, will ultimately provide 200 housing units in an 18-hectare area about 5.5 kms north of Whistler Village between the subdivisions of Alpine and Emerald Estates.

Rainbow will include designated parks and riparian areas, as well as pedestrian and bike trails. There will be a commercial core with a grocery store, retail outlets, local pub, cafe and daycare.

Whistler Coun. Gordon McKeever, who is also chairman of the Whistler Housing Authority, said the Rainbow project will provide about 1,000 beds to local workers, although many won’t be available until after the 2010 Olympics.

“Rainbow is a very big initiative, with roughly 85 per cent resident-restricted housing, and 15 per cent market housing,” McKeever said in an interview. “But we won’t get all 1,000 before the Games, which is a problem. It’s a complicated project, and it took longer to get rezoning and get it off the ground and going.”

Chiasson said that while the market lots will sell for up to $1.7 million each, 70 smaller lots marketed to residents who work in Whistler will sell for about $110,000, with finished single-family homes selling to local residents for between $550,000 and $675,000 — far below market value.

As well, 80 half-duplexes will be sold to full-time Whistler residents for between $400,000 and $450,000. There will also be apartments and seniors’ residences.

The subsidized homes and lots will be sold through a Whistler Housing Authority project, which restricts price increases.

“It’s a complex formula, but [prices] go up according to the cost-of-living index,” added Chiasson. “It’s about two to three per cent a year, compared to between five and seven or 10 per cent [for market homes].”

As well, she said, the workers’ homes will be smaller than the market-value homes. “It’s for people who work in Whistler. They’re getting equity, but it’s lower.”

Chiasson said Rainbow’s market-value lots have just been put up for sale, and 35 of the non-market-value homes will be ready before the 2010 Olympics.

Chiasson said she’s not concerned about the downturn in the economy.

“We just put [the market lots] out this weekend and we’ve already sold one. The economy is a strange thing. Being a resort town, of course we’re affected. But the people who tend to look at these things can afford them anyway.

“[The market’s] soft like most areas, but people with money are still looking. There’s very good deals in Whistler right now,” added Chiasson, who is also president of Sea to Sky Premier Properties.

“We’re not dealing with Americans now. They’re buying in the U.S. because it’s such a deal [there].” Interest these days is coming from Canada, Europe and, increasingly, China.

Chiasson said she expects investment to rise significantly after the 2010 Olympics, because of the exposure.

She said international buyers are also looking elsewhere in the Sea to Sky corridor, especially Squamish because of its proximity to both Vancouver and Whistler. “There’s a lot of interest, particularly in Squamish. When that road is finished, Squamish is going to be a gem.”

© The Vancouver Sun 2008

 

Falling housing market tough for both sides – Buyers plagued by doubts even as sellers lower their prices

Derrick Penner
Sun

Maple Ridge management consultant Mike Smith and his wife Tanya thought they were being shrewd in April by listing their house for sale at a price below its assessed value, but ran smack into the Lower Mainland’s real-estate slowdown anyway.

By October, even after reducing the asking price three times to $799,900 from an initial $839,900, the Smiths’ 4,000-square-foot house on an acre of land in east Maple Ridge (with a 2008 property assessment of $842,000) is still on the market waiting for an offer.

“People keep saying, ‘We’ve got to sell our house first’,” he said.

The Smiths knew the real estate market was softening when they decided it would be best to sell and downsize, but “we didn’t realize the bottom was going to drop out as quickly as it did.”

“It was amazing how fast everything around us came down,” he added. “Even swimming downstream is tough.”

Although B.C.’s economy is in better shape than many jurisdictions, Lower Mainland real estate markets have slowed, with sales falling and prices declining from high points earlier this year.

University of B.C. real estate economist Tsur Somerville recently completed research showing that Metro Vancouver housing values had gotten out of equilibrium and that there was room for prices to come down.

However, in an interview, Somerville said that the unfolding world financial crisis has added more downward pressure to the market.

In his study, Somerville estimated that a standard, detached two-story house in Greater Vancouver was 11 per cent over its equilibrium point. However, the Greater Vancouver benchmark price has declined 15 per cent from its peak.

“Markets tend to overreact in the other direction,” he added.

Luckily, the Smiths have found a homebuilder willing to reduce the price on the house they want to buy, allowing them to make reductions on the home they’re selling.

Ron Antalek, the Smiths’ realtor with Re/Max Ridge Meadows, said that is an example of the deals buyers can negotiate in the current market.

Mark Dinsdale was luckier selling his family’s two-story east Vancouver house they bought five years ago for $366,000.

He added that they had detached themselves from the notion they were going to get last year’s price, and took the advice of their realtor, Lorne Goldman of MacDonald Realty Lorne Goldman, to not “chase the market down” on price.

The result was a sale within 10 days at $628,500, which was still about three per cent below asking.

“We looked at it as a shame we hadn’t been selling a year ago,” Dinsdale said. “But we’re happy we were selling now as opposed to six months from now.”

As buyers, Ray and Lori Keyland are a little nervous about falling prices, but decided that with a young son, they couldn’t wait to buy a house any longer.

“I think if I might have waited, I might have got a better deal,” Ray Keyland said, referring to the three-bedroom, 1,779-square-foot house they picked up for $399,000.

However, Keyland added that he also worried they might run into higher interest rates.

Now that they’re in the house, “We’re in it for the long haul.”

© The Vancouver Sun 2008

Shelley Fralic
Sun

One of the oddest things about the Vancouver-area housing market, and it was never more so than in the current dark economic shadow of the American subprime mortgage crisis and the dizzying roller-coaster ride that is the stock market, is that everyone thinks of real estate in terms of investment.

We chart local housing starts with zeal, from the shoebox condo towers popping up like glass teeth in Yaletown to the million-dollar mansions being bulldozed out of mountainsides in Whistler, hanging on every word about upswings and downward trends uttered by the growing legion of housing experts.

Next to latte addiction and breaking and entering, real estate is the hottest hobby in town.

Everyone wants to know what’s selling and where, for how much and who’s buying, so we take mental notes on house prices, follow neighbourhood listings, bookmark sites like mls.ca, eyeball mortgage rates, pop into open houses and, of course, chat endlessly about real estate in the Safeway produce aisle and on the cocktail circuit. And the conversation, these days, goes something like this:

“Did you see the Smith place is up for sale? Would have been $100,000 more last year.”

“This so-called correction is killing my equity.”

“Do you think it’s going to get worse before it gets better?”

Geez. Doesn’t anyone buy a house just to live in any more?

There was a time, and I’m not making this up, when Metro Vancouver wasn’t always real-estate mad. There was a time when people actually scrimped and saved, went to the bank with a down payment and signed a 25-year mortgage.

Time was, you bought a house, you stayed put.

Oh, Mom and Dad knew their house was the family’s biggest asset, but it’s not like they sat around studying equity tables in the glow of The Ed Sullivan Show.

No question we pay a mighty high price to live in paradise. Which is why it’s so strange of late that we’ve been collectively bemoaning the downward blip in the value of local real estate instead of celebrating, for the first time in recent memory, an actual buyers’ market in B.C., with lots of inventory and more affordability, especially for first-time buyers.

Does it matter so much that your home’s value might fluctuate in price over time, or that the profit on its future sale won’t be the bonanza we expect?

If you’re smart enough, or perhaps just lucky enough, to own a home here, or this soft market means you might finally be able to buy a home, then think of it as winning the lottery and stop worrying about that which you can’t control.

Simplistic? Perhaps.

But if we could somehow revisit the nostalgic notion that a house is a home, worth working for and worth hanging on to, instead of an odds-on chip at a poker table or an IOU on instant wealth, we might all sleep better at night.

© The Vancouver Sun 2008

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Sun

OTTAWA — Canadian building permits fell far more than expected in August as both the residential and non-residential sectors registered big declines, Statistics Canada said Monday.

The value of construction permits fell 13.5 per cent to $5.6 billion in August from the previous month, the federal agency said. Most economists had expected a decline of between 1.3 and 1.5 per cent in August.

On an annual basis, permits were down 0.7 per cent from August 2007, the agency said.

The residential sector posts a 9.3 per cent decline to $3.4 billion in August from the previous month. “This decline was mainly due to a 17.5 per cent drop in multi-family dwellings, coupled with a 3.8 per cent decline in single-family dwellings,” it said. “New Brunswick (up 42.5 per cent), Saskatchewan (up 2.6 per cent) and Prince Edward Island (up 1.5 per cent) were the only provinces with increases in the residential sector.”

The value in the non-residential permits fell 19.3 per cent to $2.2 billion as a result of declines in all main areas — industrial, commercial and institutional.

“After double-digit increases in April and May, the value of non-residential permits declined for the second time in three months,” Statistics Canada said.

Charmaine Buskas, economics strategist at TD Securities, said the report shows overall economic activity is cooling.

“It is now not only a slowdown in the housing market, but also a slowdown in the non-residential sector,” she said. “As fewer factories and warehouses are built, it suggests that underlying demand on the business side of the economy is weakening.”

© The Vancouver Sun 2008

Jeff Lee
Sun

Vancouver‘s Olympic legacy is at risk due to the economic uncertainties sweeping the world.

Tumbling stock markets, tightening credit lines and slumping investor confidence could erode many of the gains that Olympic organizers are hoping will flow from the 2010 Games, economists warn.

B.C. Finance Minister Colin Hansen acknowledged Monday the growing pressure on the Olympic legacy, saying no place, including British Columbia, will be unaffected by what he called a financial “storm.”

“We’re not going to see the economic growth that we forecast a year ago. There is no question that B.C. is not immune to what is going on out there in the market,” he said. “But in this storm there is no better place to be. The bottom line is that we will fare better as a result of hosting the Olympics than we would otherwise.”

Although Vancouver is in better shape than other host cities — including London, which is battling soaring construction costs as it prepares to host the 2012 Games — it is not fully insulated from the economic crisis.

“What is in doubt is the bottom line,” said James Brander, an economics professor at the University of B.C.‘s Sauder School of Business. “The Olympics can lose or make money. If a recession is on its way . . . it is much more likely that the Olympics will lose money.”

The recession could deter would-be sponsors now being courted by the Vancouver Organizing Committee from signing up, he said. And it is also likely that people who last week might have bought tickets to the Games now are rethinking their plans.

“There is no question it will be much harder for Vanoc to convince sponsors, and for it to sell all its tickets,” he said.

That could spell trouble for the provincial government, which is legally on the hook for any deficit at the end of the Games. Hansen said he’s not worried that taxpayers may have to bail out Vanoc. “I think they have managed their risks well.”

However, Ed Mansfield, an associate partner at PricewaterhouseCoopers, believes the turbulence in the market is more likely to chill post-Games opportunities for tourism and business. He’s less concerned about Vanoc’s financial stability than the long-term benefits supporters and governments expect to reap from the Olympics.

“My take on this is Vanoc is in very good shape. Things are good or very good for them, and they have much of their money already committed,” he said.

“Where I have concerns is in the economic leveraging of the Olympics and the impact of tourism after the Games,” Mansfield said. “If there is a lot of economic uncertainty in the market, there may be far less interest from business leaders who come here to visit who might otherwise forge new business relations.

“On the tourism front, the vision was that media exposure would attract a lot of new visitors. But that becomes a little more difficult if people are worried about whether they have enough discretionary funds to make those trips.”

Hansen said the province is redrafting its economic forecast and expects there will be fewer tourism and business benefits arising from the Games as a result of the recession.

Vanoc last week said it had raised $735 million of its $760 million domestic corporate sponsorship target. It has also received commitments for most of the other major sources of funding, including broadcast revenues, and sponsorships directed through the International Olympic Committee.

However, Vanoc’s financial plan is still exposed in two significant categories: it expects to raise $231.9 million in ticket sales, which started last week, and another $110 million in “other” revenues, about a quarter of which is to come from a $28.5 million “patron’s program.” If either of those two areas develop trouble, Vanoc could find its budget out of whack.

Vanoc declined a request for interviews Monday. Instead, it issued a short statement from Dave Cobb, its executive vice-president of revenue, marketing and communications, saying the continuing meltdown in the economy has not affected its $1.63 billion operating budget.

“We recognize the current economic challenges but we remain confident in Vanoc’s financial position, which is due in part to having already secured the majority of funding commitments required to stage the Games,” the organizing committee said.

“Our venue construction is almost finished and on-budget; we’re in a positive position with our operating budget; interest from companies for remaining sponsorship opportunities has been strong since the Beijing Games, and we’re extremely pleased with the strong interest in Olympic tickets after the program launched on Friday.”

The potential trouble for the Olympic legacy comes as Vancouver city staff sought to quell concerns about the status of construction of the Athletes Village in False Creek.

Last week city council was given a routine in-camera briefing about the $1 billion, 1,100-unit project, which is being built in several phases. Mike Flanigan, the city’s director of real estate services, said councillors were told the project is about $60 million, or six per cent, over budget because of cost pressures. However, he said the amount is being funded by the developer, Millennium Development Ltd., and the city is not concerned about the project’s viability.

Flanigan said the city’s $190 million financial guarantee to Millennium underwriter, Fortress Investment Group, is not in danger of being exercised and that work on the village is proceeding uninterrupted.

Mayor Sam Sullivan wouldn’t discuss the meeting, but said the developer has not asked the city for help.

However, the issue raised the concern of Gregor Robertson, the mayoral candidate for Vision Vancouver, who called for more transparency about the inner workings of the athletes village deal.

Vanoc also said in its statement that is “confident in the city’s fiscal management” of the Olympic project. It long ago transferred all of its risk in the project to city taxpayers by giving Vancouver $30 million in venue financing it received from the provincial and federal governments.

© The Vancouver Sun 2008

 

Athletes’ housing already faces extra expenses of $60m to $65m

Katie Mercer, The Province; with files from reporter Kent Spencer
Province

The Olympic Athletes Village is facing cost overruns of between $60 million and $65 million, the city of Vancouver‘s real-estate director, Michael Flanigan, said yesterday.

“Our project is being managed very well, but we have seen some increases and they have to be dealt with,” said Flanigan.

“Those cost increases are being dealt with, but by Millennium Development and their lender.”

The Millennium group leads a consortium of 17 firms building the Olympic Athletes Village, a $1-billion, 1,100-unit development over seven city blocks in southeast False Creek.

Fortress Investment Group, a New York-based hedge fund and private-equity company, is financing the development. In case of a default by Millennium, Fortress has said it has the resources to complete the project, said Flanigan.

“They have their profit out front, their equity in the deal, their entire corporate guarantees on the line, personal guarantees on the line,” he said. “All this will be exhausted before the taxpayer will ever be exposed for a dime.

“We don’t see there is a risk with taxpayers.”

The city is responsible for seeing the development through to completion. It has signed a deal with the Vancouver Organizing Committee for the 2010 Olympic and Paralympic Winter Games to hand over the keys to the village by November 2009.

Flanigan said there is what he called a “doomsday plan,” in which the city would step in and fund the project. He did not want to talk about it.

Councillors discussed the development in-camera last week. Flanigan would not say what was discussed, but said the city is providing oversight between Millennium and Fortress.

Mayoral candidate Gregor Robertson said it sounds like there are more problems between Millennium and Fortress than the city is letting on.

“I’m calling for a transparent process,” said Robertson. “The public has a right to know what the potential dangers are . . . We need to understand what has taken place here.”

Mayoral candidate and city councillor Peter Ladner called the situation “distressing.” He said Millennium is currently negotiating with Fortress for further funding.

“This is one of many projects around the city and the world that have been challenged by the current credit crisis,” he said.

“The city is secured not only by guarantees from Millennium, but by this project’s status as one of the most desirable real-estate locations and most sustainable developments in the world.”

Provincial NDP Olympic critic Harry Bains said Vancouver and VANOC are keeping people in the dark.

“I’m very concerned about behind-closed-door meetings [of Vancouver city council],” he said. “Many people are worried about their own finances. They may have to come up with more money.”

Millennium could not be reached for comment.

The athletes’ village will feature some of the highest green-building standards on the continent. The units will become private residences after the Games.

In Richmond, the Olympic oval, budgeted at $155 million in 2004, jumped to $178 million. VANOC will contribute $63.2 million, with all the other costs to be contributed by the City of Richmond.

© The Vancouver Province 2008

 

Up 13.3 per cent, down across province and nation

Province

The Vancouver area bucked a downward trend across most of the rest of the country in the value of building permits issued in August, Statistics Canada said yesterday.

The value of building permits rose 13.3 per cent between July and August to $481.8 million, StatsCan said.

For B.C. as a whole, however, building permits fell 6.9 per cent to $828.7 million as the value of residential permits dropped six per cent and that of non-residential permits lost nine per cent, the federal agency said.

Across Canada, building permits fell more than expected in August as both the residential and non-residential sectors registered big declines, StatsCan said.

The value of construction permits fell 13.5 per cent to $5.6 billion in August from the previous month, the federal agency said. Most economists had expected a decline of between 1.3 and 1.5 per cent in August. On an annual basis, permits were down 0.7 per cent from August 2007, the agency said.

The residential sector posts a 9.3-per- cent decline to $3.4 billion in August from the previous month.

“This decline was mainly due to a 17.5- per-cent drop in multi-family dwellings, coupled with a 3.8-per-cent decline in single-family dwellings,”it said. “New Brunswick (up 42.5 per cent), Saskatchewan (up 2.6 per cent) and Prince Edward Island (up 1.5 per cent) were the only provinces with increases in the residential sector.”

The value in the non-residential permits fell 19.3 per cent to $2.2 billion as a result of declines in all main areas — industrial, commercial and institutional.

“After double-digit increases in April and May, the value of non-residential permits declined for the second time in three months,” Statistics Canada said.

Charmaine Buskas, economics strategist at TD Securities, said the report shows overall economic activity is cooling.

© The Vancouver Province 2008