Brad Heath
USA Today

WASHINGTON — More than half of the nation’s foreclosures last year took place in 35 counties, a sign that the financial crisis devastating the national economy may have begun with collapsing home loans in only a few corners of the country.

Those counties, spread over a dozen states, accounted for more than 1.5 million foreclosure actions last year, a USA TODAY analysis of figures compiled by the real estate listing firm RealtyTrac shows — more than were recorded in the entire United States just two years earlier. They were the epicenter of a wave of foreclosures that have left leading banks teetering and magnified the nation’s economic problems.

“This crisis was triggered by foreclosures, and a lot of those were in a very small number of areas,” says William Lucy, a University of Virginia professor who has studied the link between lenders and faltering home loans. Banks spread the risk and “it became like a car with no reverse gear. Once it starts to go over the cliff, it’s gone.”

In other parts of the country, the foreclosure wave was barely a ripple — at least until it started swamping major banks that had invested heavily in mortgages. Banking giant Wachovia Corp., for example, was hammered after California and Florida customers of one mortgage firm it bought began defaulting at high rates. The risks of such lending were spread so broadly among financial institutions that, when the loans went bad, it drove the national credit crisis, says Christopher Mayer, who studies real estate at Columbia Business School.

A few of the 35 counties leading the foreclosure boom are in already-distressed areas around Detroit and Cleveland. But most are clustered in places such as Southern California, Las Vegas, Phoenix, South Florida and Washington, where home values shot up dramatically in the first half of the decade, then began to crumble.

RealtyTrac’s counts of foreclosure actions include default notices, auctions and repossessions by lenders, and can sometimes count the same property twice. As a result, they tend to be higher than estimates from other tracking firms. But they remain one of the best geographic measures of the nation’s housing collapse.

The Obama administration on Wednesday detailed a $75 billion plan to keep more homeowners from slipping into foreclosure by helping them refinance loans or reduce their monthly payments. But that effort could face political challenges because most of the foreclosure problem has been so concentrated in a few areas, says Brookings Institution researcher Alan Mallach.

The worst-hit counties are home to about 20% of U.S. households, but accounted for just over 50% of the nation’s foreclosure actions last year, driving most of the national increase. And even among those places, a few stand out: Eight counties in Arizona, California, Florida and Nevada were the source of about a quarter of the nation’s foreclosures last year.

In more than 650 other counties — about a fifth of the nation — the number of foreclosure actions actually dropped since 2006.

Sun

Building permits fell in January for the fourth consecutive month in Canada, led by a drop in residential activity as the sector continued to cool amid a deep economic downturn.

Statistics Canada said yesterday the value of permits fell 4.6% to $4.43-billion during the month.

The value of residential permits fell 17.5% to $2.2-billion, with declines in both multi-family and single-family applications.

Non-residential permits rose 12.2% to $2.3-billion in December.

“This was due mainly to higher construction intentions for institutional and commercial permits in Ontario,” the federal agency said. “Increases in both institutional and commercial permits were not enough to offset the decreases in the value of residential intentions in five provinces,” it said.

Charmaine Buskas, senior economics strategist at TD Securities, said the “pace of building activity in Canada has come against some pretty strong headwinds over the past few months, as economic growth has hit the skids.

“The pace of construction activity will continue to moderate in the near term as the correction gathers traction.”

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21 storeys above Burrard and Hastings, A.J.T. Taylor built one of Vancouver’s most extraordinary spaces, the two-storey penthouse atop the Marine Building

John Mackie
Sun

When it was built in 1930, the Marine Building was the tallest building in the British Empire. To show off its dazzling waterfront view, an observation deck was built on the top floor, with a huge wraparound terrace.

The cost of taking in the view was a mere 25 cents. But that proved too much for the masses during the Great Depression, and the observation deck was soon closed. By 1933, the builders were in such dire financial straits they sold the art-deco masterpiece for $900,000, a fraction of the $2.3 million it cost to build it.

A.J.T. Taylor ran the British Pacific Building Co., the new owner. He decided to install the company offices on the 19th floor, then came up with an ingenious idea for the observation deck: to convert it into a penthouse apartment for himself, his wife and their two kids.

The Marine Building penthouse became one of the legendary spaces in Vancouver, a two-storey art deco wonder. Incredibly, it’s still more or less intact, although it’s now used as an office.

The current tenant is Phil Boname of Urbanics Consultants. He will be hosting a $100-a-pop fundraiser for Heritage Vancouver at the penthouse tonight, and even allowed The Vancouver Sun in to take a peek.

It doesn’t disappoint.

“It’s special because it’s part of the whole experience of the Marine Building, that jazz-age art-deco style,” says Don Luxton of Heritage Vancouver.

“Taylor had amazing taste. He was inspired by Rockefeller Center [in New York]. It has that kind of high-art deco movie-set feel to it.”

The observation deck was originally one big room, with a 20-foot-high ceiling. Taylor installed a mezzanine on the western side which contained two bedrooms and an open sitting area. Underneath the mezzanine were the dining room and kitchen.

He raised the floor two feet in the living room so that you could take in the panoramic views through the windows while sitting in a chair. But the living room still has an 18-foot ceiling, and with light streaming in through the 12-foot-high windows, it’s a very dramatic space.

“It’s very inspirational,” says Boname.

“People tell me my voice changed when I moved in here. The tone became philosophical, softer.”

He laughs like a guy who can’t believe his luck. So would you, if you got to work in a drop-dead gorgeous space with a teak floor, an enormous black marble fireplace and a curved built-in bookcase.

There have been some changes, of course. The Marine Building underwent some questionable renos in the early 1980s, when some teak walls and a teak balcony were either removed, covered with drywall or painted white. A glass wall was installed in the mezzanine, breaking up the open plan and cutting off the air circulation. The original chandelier was even replaced with a more modern one.

Thankfully, the upstairs bathroom survived, completely intact. It is out of this world, with walls done up in green, gold, black and blue tiles, an aquamarine floor and a butter-coloured tub. There’s a button to call the help, a stainless steel rack to heat the towels and a window that gives you a deadly view of the harbour.

One of the quirks of the space is that the mezzanine windows are the top of the first floor windows, so they’re all at floor level. Another quirk is that you step down from the living room into the old dining room and kitchen, because it’s at the original level of the floor. The dining room is now an office, but the galley kitchen is still there.

You access the terrace through a door in the old dining room. Sadly, city planners allowed the new Fairmont Pacific hotel/condos to be built directly north, which cuts down the water view. But the vistas are still breathtaking, whether you’re looking up Hastings, Burrard, or out to Coal Harbour.

The coolest aspect of the terrace is a pair of lion statues on the eastern side. Taylor was part of the consortium that built the Lions Gate Bridge and developed the British Properties; the statues are small “maquette” versions of the lions Charles Margera sculpted for either end of the bridge.

Taylor didn’t live there long; his wife apparently hated living on the top of an office building, even after Taylor installed a small private elevator so you didn’t have to walk from the 18th floor to the 20th. After Taylor moved out, the city directory lists a Mrs. Mary Fisher in the penthouse from 1941 to 1944. In 1947 the penthouse was converted to an office by the Spencer department store family, and it’s been an office ever since.

Still, with a bit of imagination it’s easy to see it as your own art deco mansion in the sky. There may be bigger and more opulent modern penthouses in Vancouver, but none are cooler.

The Heritage Vancouver fundraiser takes place from 5:30 p.m to 7:30 p.m. tonight. For information, go to the Heritage Vancouver website: www.heritagevancouver.org/, phone 604-331-8430 or e-mail [email protected].

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Pre-fabricated modular homes could be temporary now, permanent later

Michael Geller
Sun

Should really poor people be living next to really rich people in expensive housing on Vancouver‘s waterfront?

This is a question on many peoples’ minds following the recent revelations about the cost of the southeast False Creek social housing.

But it was also a question being asked in 1975 when plans were being completed for the first phase redevelopment of the south shore of False Creek.

And it was asked again in the early 1990s when the Westin Bayshore Hotel parking lot was rezoned for a new community.

To better understand the current situation, it is helpful to look back at these earlier projects. On the south shore False Creek, planners socially engineered a broad mix that replicated the income profile of the region with one-third low-, one-third mid-, and one-third high-income residents. However, it did not cost the city a lot of money since ample subsidy dollars were available from the federal and provincial governments.

And, in the words of former CMHC assistant regional director Keith Tapping, the poor were not really that poor. Rather, many were the “deliberate poor” — teaching assistants, writers and artists, excited about the opportunity of living in an innovative waterfront community environment.

Today, many of the original residents are still living in their government subsidized housing, some maintaining “primary residences” on the Gulf Islands. But the idea of income mixing was firmly established, and it has become a trademark of Vancouver‘s major projects in subsequent years.

By the 1990s the federal government had withdrawn its subsidies and the province and city targeted limited subsidy dollars to those in greatest need. At Bayshore, the Non-Partisan Association council of the day insisted that 20 per cent of the units be occupied by low-income families and seniors. As the development manager, I questioned the appropriateness of housing low-income families in this prime area, with little social infrastructure and few affordable shops.

Eventually, led by Libby Davies, council agreed, and the developer was required to make a cash payment-in-lieu of building the family housing. A few years later, after raising money to pay for facilities the city would not fund, the highly successful Performing Arts Lodge was approved as the low-income seniors’ component.

In the rest of Coal Harbour and the Concord lands, the 20-per-cent requirement for low income housing has continued. However, due to a shortage of funds, many of the Concord social housing sites have remained vacant.

From this perspective, I cannot see how the city can justify spending more than $450,000 per unit to house the poor in southeast False Creek. Instead, I would recommend that the units be sold as “affordable ownership” housing to cover the cost over-runs. This will still result in income-mixing and more cost-effective units can be built on future sites in the area.

I would also like to see the city and Victoria fund truly affordable housing to house the truly homeless. For the price of one southeast False Creek unit, governments could build 10 homes using pre-fabricated modular homes. They could be set up on public and privately owned vacant sites around the city while permanent social housing is built.

I know there is often nothing more permanent than a temporary solution. However, once the sites are required for other purposes, the modular homes and residents could be relocated to other sites. Eventually, the units could be set up as permanent housing elsewhere around the region or province.

I appreciate that many will fear these developments might look like suburban trailer parks. However, through creative design, including stacking and colourful murals, they could be very attractive.

Indeed, some have now expressed the fear that the housing might be too attractive, and deter governments from building permanent projects.

While this concern cannot be ignored, I believe factory-built, relocatable housing could be a cost-effective and quick solution to getting people into homes.

I have estimated the cost between $38,000 and $45,000 a unit, depending on whether there are private bathrooms.

Support services would be provided by qualified non-profit organizations.

If we start now, we could have a couple of demonstration projects underway and the first residents in place by Labour Day. Now, that would be something to celebrate.

Michael Geller has a background in architecture, planning and development. He serves on the adjunct faculty of Simon Fraser University‘s Centre for Sustainable Community Development.

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Court gives Jameson House developers two months to raise more money

Derrick Penner
Sun

Attempts to refinance and resurrect construction of the landmark Jameson House condominium project in downtown Vancouver are alive until at least April 30, although a group of pre-sale buyers is fighting the process in a bid to get out of their contracts and recover their deposits.

B.C. Supreme Court Chief Justice Donald Brenner on Wednesday signed an order allowing Jameson House developers to secure $6 million in interim financing to start work on the 37-storey tower’s parking garage.

Brenner also extended until April 30 the developers’ court protection from creditors under the Companies Creditors Arrangement Act allowing them to try to replace the construction financing they lost last November when a key lender pulled its support for the $180-million tower.

“I’m satisfied [the developers] are making reasonable progress,” Brenner said about the developers’ attempts to shore up their financing and put construction on track for a Dec. 31, 2010, completion date that would satisfy terms of the project’s pre-sale contracts with buyers.

And keeping those pre-sale contracts in place, John Sandrelli, the developers’ lawyer argued, is essential for refinancing the project.

But a substantial minority of those buyers, initially enamoured of Jameson House’s design by world-famous architect Norman Foster, petitioned the court on Wednesday not to allow a continuation of the developers’ court protection so they could try to rescind their contracts and get their deposit money back.

Diana Becker, one of the buyers who fell in love with the Jameson’s design and specifications, said she and others have lost confidence that the developers, Vancouver‘s Pappajohn family under the name Jameson House Properties Ltd. and Jameson House Ventures Ltd., can deliver the project.

“I clearly believe the reason the building didn’t go forward [although] it had all the components of being a beautiful building, a landmark building for the city of Vancouver, was because the developers did not have the capital required,” as they stated in the project’s disclosure statements, she said.

Michael Bertoldi, the lawyer acting for a number of the buyers, argued that after four months of trying to come up with a plan to carry construction forward, his clients didn’t see enough evidence that a plan was even possible.

The developers halted construction when the project, on Hastings Street between Hornby and Burrard, was a hole in the ground. A unique truss structure holds a two-storey heritage building, being restored as part of the project, suspended in mid-air.

Becker is also skeptical that the luxury tower can be delivered as promised within its now approximately 18-month timeline for completion.”It’s never been done before,” she said.

But Brenner’s decision noted the buyers’ deposits made were held in trust and protected, and they had binding contracts that give the developer until the end of 2010 to deliver on them.

Brenner said the purpose of the CCAA is to allow a company time to work with its creditors on a plan to carry business forward, and at this point the Jameson’s creditors are co-operating with a plan.

Sandrelli, the developers’ lawyer, said they hope to have a plan complete by the beginning of April that would be approved by the end of April. So far, he said, four key creditors in the project’s consortium of lenders, have not opposed measures proposed for the plan.

Reports to the court from the Jameson project’s CCAA monitor, Ernst & Young, said the developer had reached an initial agreement to bring another developer, Bosa Properties, in as a partner in the project.

A definitive agreement, to be finalized within the extended protection period, would see Bosa acquire an equity interest in the project, take part in management of construction, offer guarantees to the senior construction financiers and fund part of a subordinate loan that would add to the financing needed to resume construction.

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Derrick Penner
Sun

Falling home prices have a growing number of Canadians thinking about buying a home, according to a new poll done for RBC by Ipsos Reid.

The 16th annual RBC/Ipsos Reid housing poll, released Wednesday, found 27 per cent of Canadians surveyed said they would be likely to purchase a home within the next two years, although most surveyed believe housing prices will continue to drop next year. In B.C., 26 per cent said they would be likely to purchase a home within the next two years.

The number of people who reported they were likely to purchase in the next two years was up four percentage points from last year’s poll, the largest gain since 2001.

“But Canadians are split on whether buying conditions will change to be more favourable within the next year,” the report said, “such that it makes more sense to wait” to purchase.

The Mortgage Brokers Association of B.C. said in a news release Wednesday that signs of slowly emerging optimism are beginning to surface in the B.C. real estate market.

“MBABC members are experiencing an increase in mortgage lending activity as a direct result of lower home prices and record interest rates,” MBABC president Brian Peterson said in the release. “This new trend appears to be reflecting a slow growth in consumer confidence.”

Overall, some 65 per cent of Canadians said they believe the current real estate market is a “buyers’ market.” The “buyers’ market” sentiment rose to 78 per cent in B.C., the highest level in Canada.

Ipsos Reid conducted the online survey among 2,026 respondents on behalf of RBC from Jan. 6 to 9. The poll has a margin of error of plus or minus 2.2 percentage points, 19 times out of 20.

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