Citizens struggle to put a roof over their heads, survey says

Province

Vancouverites pay the highest rents in Canada and have a tough time putting a roof over their heads, Canada Mortgage and Housing Corp. says.

Monthly rents in the Vancouver area in April averaged $1,154 for two-bedroom apartments in new and existing structures, CMHC said yesterday in its spring rental-market survey.

Just behind Vancouver were Calgary at $1,106, Toronto at $1,093, Edmonton at $1,059 and Victoria at $1,043, CMHC said.

Rents in existing buildings in the Vancouver area rose 2.7 per cent between April 2009 and the same month a year earlier, just below the national average of 2.9 per cent for 35 major centres, CMHC said.

The Vancouver area’s vacancy rate of 1.9 per cent for April and Victoria‘s rate of 1.2 per cent were among the lowest rates in the country, CMHC said. The two cities were the only centres in B.C. with rates below two per cent.

The Vancouver area had a vacancy rate of 0.9 per cent a year ago.

On the other hand, Abbotsford, where the vacancy rate of 4.8 per cent for April 2009 was the country’s third highest, offered some of Canada‘s best apartment-hunting conditions.

Nationally, condominiums are turning renters into buyers, sending the national average of apartment vacancies up in April over the previous year, CMHC said.

The survey shows vacancy rates in Canada‘s major centres were up slightly in April to 2.7 per cent from 2.6 per cent a year earlier.

“Completions of condominiums, which continue to attract renter households looking to move into home ownership, are decreasing demand for rental housing,” CMHC chief economist Bob Dugan said.

“Also, some of the completed condos compete with rental units if they were purchased by investors who then rent them out.

“These two factors have put upward pressure on the vacancy rate,” he said. “However, this has been balanced by higher levels of demand for rental housing.”

The tightest rental markets in Canada were in Quebec City, which boasts the lowest vacancy rate, at 0.6 per cent; Regina, at 0.7 per cent; and Winnipeg at 0.9 per cent.

The best places for apartment hunting are in southern Ontario — Windsor, Ont.’s vacancy rate was 15.5 per cent and St. Catharines-Niagara, Ont.’s 5.3 per cent.

Across the country, rent increases were highest in Saskatchewan, up 15.5 per cent in Saskatoon and 11.4 per cent in Regina.

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Province

OTTAWA — Despite a stream of negative economic news, most Canadians who’ve recently bought a home have confidence in their decision, according to a poll by the Canada Mortgage and Housing Corp.

A national consumer survey released yesterday said 90 per cent of recent home purchasers believed that a house is a good long-term investment. Almost 70 per cent of respondents also said they felt that this is a good time to buy a home.

BMO economist Robert Kavcic said he’s not surprised that consumers might feel this way. “We’ve seen house prices come down across the country, and mortgage rates are bouncing around record lows,” he said. “The cost of having a home right now looks very low relative to the past five or six years.”

Consumers’ confidence in the housing market is a good sign for the overall health of the economy, because it implies employment and low interest rates, said Kavcic.

But he cautioned that the country’s job growth should also be taken into consideration. “Canada hasn’t experienced an increased job growth,” he said.

“Until we have that, we won’t see sustained rebound in the housing market.”

Kavcic said that this confidence expressed in the housing market can also be a sign that the worst of the economic crisis is behind us. “But we’re not exactly on an upswing yet.”

The survey of 2,500 people who had recently bought a home or refinanced or renewed their existing mortgage was conducted online from mid-March to mid-April.

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Stephanie Armour
USA Today

The pace of prime borrowers going into foreclosure is accelerating, especially in states with mounting unemployment or property values that saw a big run-up during the housing boom.

It’s a marked shift from earlier this year, when foreclosures were driven by defaults on subprime loans. And it has major implications — ravaging the credit scores of borrowers who once had unblemished records and dragging down property values in more affluent neighborhoods.

It also threatens to undermine the housing recovery.

“It’s definitely a concern,” says Brian Bethune at IHS Global Insight. “(Unemployment) is a major driver of foreclosures, and it will frustrate the housing recovery process.”

In the first quarter, almost half of the overall increase in the start of foreclosures was due to the increase in prime, fixed-rate loans, according to the Mortgage Bankers Association (MBA). At the end of the fourth quarter, 2.4% of prime mortgages were seriously delinquent, more than double the 1.1% at the end of March 2008, according to a report by the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

“In the beginning, the higher-end (homes) were a bit isolated,” says Kevin Marshall, president of Clear Capital, a provider of real estate asset valuation. “But in the last several months, we’re seeing a significant erosion in the higher-end homes. It’s reached into the prime loans.”

California, Florida, Arizona and Nevada represent 56% of the increase in foreclosure starts, including half of the increase in prime fixed-rate foreclosure starts, according to the MBA.

That coincides with states reporting some of the highest unemployment rates. In California, the unemployment rate in April was 11%, according to the Department of Labor. In Nevada, it was 10.6%.

Economists fear that further increases in unemployment could lead to more defaults on prime, fixed-rate loans.

That’s what happened to Marvin Clayton, 47, of Waco, Texas. He lost income after his wife had a stroke and was unable to work. Then he lost his job a year ago. He’s now behind on his 30-year, 5.78% prime loan and is facing foreclosure in July. He is currently trying to get another job in retailing.

“I was trying to make it off one income but was struggling to make payments,” Clayton says. “I’m still hoping for a modification from my bank.”

Sun

A B.C. realtor who refused to pay income tax, claiming the Income Tax Act applied only to corporations, has been sentenced to 20 months in jail and fined $98,211. John Loosdrecht of Kent filed income tax returns for 2001 to 2004, but failed to report any income or deductions, claiming that as a “natural person,” rather than a corporate entity, he was not subject to tax. At the same time, his employer reported that Loosdrecht earned commissions totalling $758,228, the Canada Revenue Agency said in a news release. Taking into consideration reasonable expenses, the CRA determined Loosdrecht owed $98,211 in federal income tax. Loosdrecht was found guilty of income tax evasion in absentia in November after he failed to appear for the continuation of his trial. Loosdrecht was discovered in Cancun, Mexico, in December and was detained pending his extradition to Canada in April.

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Homes ‘not expected to rebound sharply’

Fiona Anderson
Sun

Housing starts in British Columbia are near record lows, dropping again in May while starts in much of the country bounced back after a gloomy April.

Builders started 809 homes in urban centres in the province last month, compared to more than 3,000 a year earlier. Annualized and seasonally adjusted — removing seasonal variation and multiplying by 12 to reflect annual levels — that works out to 9,400 starts, down five per cent from the 9,900 urban starts in April, according to numbers released Monday by the Canada Mortgage and Housing Corporation (CMHC). Including rural centres, starts dropped from 11,700 in April to 11,200 in May. In May 2008, annualized starts in B.C. were 38,500.

Across Canada starts rebounded 9.2 per cent to 128,400 from 117,600, annualized and seasonally adjusted. Last May starts were 222,800.

Starts in the province are now “near record low levels seen in the early-1980s and late-1990s, giving the province the distinction of having arguably the nastiest residential construction recession this cycle,” BMO Capital Markets economist Robert Kavcic wrote in a note.

The early 1980s and late 1990s “were pretty bad recessions in Canada,” Kavcic said in an interview. “So it speaks to just how bad this downturn has been in B.C. It’s been pretty bad across the country but in particular in B.C. it’s been very deep and very fast.”

While starts in Alberta have come down by the same amount as in B.C., B.C.’s drops have come in half the time, Kavcic said. “So it’s a little more dramatic in that sense.”

Kavcic does not expect starts to bounce back quickly.

There has been overbuilding across Canada for about six years, especially in B.C. “where the real estate market was a lot hotter than the rest of the country for a good part of that six years,” he said.

“So we’ll probably see housing starts chug along at a lower level as opposed to rebounding sharply back up,” Kavcic said. “We’ll see a bit of rebound from these recession levels but you’re not going to get back to 2005 or 2006 levels any time soon.”

Carol Frketich, B.C. regional economist with CMHC believes that while B.C. is at low levels of activity “there are signs of change.”

Listings in the resale market have gone down and sales have been going up, moving the market back toward balance, Frketich said.

CMHC forecasts that new home construction will pick up later in the year, with new home starts of 19,725 this year, a 43-per-cent decline compared to 2008, followed by a 10 per cent increase in 2010.

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Poor showing vs. Central Canada but builders ‘cautiously optimistic’

John Bermingham
Province

On the job yesterday, carpenter Chris Law says he’s glad that he’s still working. Though housing starts across Canada are signalling an economic turnaround, they have slowed in B.C. SAM LEUNG — THE PROVINCE

New-housing starts are at near-record lows as B.C. became the only province in the country to record a decline in urban housing starts last month.

Figures released yesterday by the Canada Mortgage and Housing Corp. showed B.C. housing starts are down five per cent for May, at 809 homes.That means seasonally-adjusted housing starts in B.C. are 11,200 for the year. In 2008, there were 34,321 housing starts.

Meanwhile, housing starts across the country rose to 128,400 units in May, compared to 117,600 in April. Housing starts are up 22 per cent in Ontario, 16.8 per cent in the Prairies.

“That is a very low level of housing starts in B.C.,” said CMHC regional economist Carol Frketich yesterday. CMHC predicts new-housing starts in B.C. should improve to 19,725 by the end of the year, which would still be down 42 per cent from 2008 levels.

But next year, she added, housing starts should recover, and rise 10 per cent to 21,700.

“It certainly has slowed,” said Peter Simpson, CEO of the Greater Vancouver Home Builders Association. The inventory of unsold homes is falling, he said, and banks are not lending to builders in the way they used to.

“Everybody is holding the reins back,” he said. But Simpson figures the decline is bottoming out, and lower mortgage rates should entice wait-and-see buyers into the market.

The mood among builders is “cautious optimism.”

Despite the downturn, shovels are already breaking ground on new-housing projects.

Home-builder Dale Barron sold eight homes last Saturday, each for about $500,000, in a 78-home project in Cloverdale.

He also sold 19 homes last month at another project in Coquitlam, where prices range between $650,000 and $800,000. “We have to be near the bottom,” said Barron, of Morningstar Homes. “Prices will firm up.”

Most cities in B.C. have experienced massive drops in new construction of single-family houses and condos. In the first five months, housing starts were 2,771 in the Lower Mainland, compared to 8,448 for the same month last year.

In the Fraser Valley, foundations were poured for 208 homes, as against 1,259. Kelowna starts are down 91 per cent, from 1,600 to 139 starts.

“We have seen some indication that the resale market is starting to improve, and sales are picking up,” said CMHC senior market analyst Robyn Adamache. “Once we see the number of unsold homes fall, then builders will feel that it’s time to build new homes again.”

B.C.’s housing starts are near the record-low levels of the early-1980s and late-1990s, says BMO Capital Markets economist Robert Kavcic. “They had one of the strongest housing booms in the country,” he said.

“Now, economically, the province is getting hit particularly hard. You are not going to get a sustained increase in new buying activity until the job losses stop, Kavcic said.”

TD economist Pascal Gauthier said B.C. is dramatically off its peaks of 55,000 starts just a few years ago. “It seems to be finding bottom,” added Gauthier.

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