Brian Morton
Sun

A new report suggests a housing recovery is underway in key Canadian markets, with Metro Vancouver and Toronto leading the way.

“Growing consumer confidence levels have prompted a serious upswing in home-buying activity in the Greater Vancouver Area, with sales in June (4,259, up 75.6 per cent from the same time last year) the second highest on record for the local real estate board,” according to the Re/Max Market Recovery Report released on Monday.

“From White Rock to Vancouver, radiating out to the Fraser Valley, bidding wars are breaking out on well-priced product. In Kitsilano, an estimated 50 per cent of housing is selling in multiple offers.”

Derek Thorvaldson, Re/Max assistant regional director, said in an interview the real estate organization started seeing a noticeable rise in buyer confidence in March.

“It was led by first-time buyers,” he said. “Prices were down, interest rates were down. That really stabilized home prices. Since then, buyers have realized that prices were firming and interest rates went up.

“They [buyers] started moving in waves.”

However, Thorvaldson added that prices are still down from the same time last year, and that “we’re still cautious [because] the recovery is slow.”

The report maintains that pent-up demand has bolstered sales in Metro Vancouver, and that the 2010 Olympics and the completion of the Canada Line will further push demand. “Home buying activity, as a result, is forecast to continue at a healthy pace for the remainder of the year, with year-end sales slightly ahead of 2008 levels,” the report said.

Helmut Pastrick, chief economist, Central 1 Credit Union, said in an interview that housing sales in Metro — largely due to lower interest rates — have been moving up since January, and that he expects the trend to continue. He also said that sales are not just being driven by first-time homebuyers.

“There will be some temporary setbacks, but I think the worst of the housing market is behind us.”

Pastrick also said that prices are moving up. “We’ve seen three monthly increases now for the Lower Mainland in general. I think the market will do well in the coming months. Prices should also continue to rise.”

According to the Re/Max report, the surge in resale activity can be attributed to three key factors: pent-up demand, low interest rates, and greater affordability.

“The combination — in conjunction with declining inventory levels — has created heated market conditions in hot-pocket neighbourhoods, prompting a resurgence in multiple offers in June,” the report said. “Average prices are holding steady or climbing, days on market are down, and inventory levels continue to tighten, especially at entry-level price points.”

The report stated that while average price is still significantly lower than a year ago, declining inventory levels have been placing greater upward pressure on values.

“First-time buyers are driving freehold housing sales at the $600,000 price point, while those looking at more affordable alternatives are considering condominiums starting at substantially less,” the report said. “Pent-up demand has also been building, with local purchasers and international investors both active in the market.”

Elsewhere, the Re/Max report noted that 11,000 homes changed hands in Toronto in June, up 27 per cent from a year ago.

Meanwhile, an RBC Economics report released last week said that while housing affordability has improved significantly in B.C. during the first three months of the year, it’s still well above the national average.

It noted that Canadians, on average, need to pay 39.4 per cent of pre-tax income to service the purchase of a detached bungalow, compared to 59 per cent in B.C. and 62.6 per cent in Vancouver.

© Copyright (c) The Vancouver Sun

Home sweet homes

Derek Abma
Province

OTTAWA — Another real-estate organization is declaring an end to Canada‘s housing-market downturn.

Re/Max said yesterday a recent surge in housing sales, particularly in Canada‘s biggest cities, is “a clear signal that the housing sector has shifted into recovery mode.”

It supported its argument by citing resales in the Toronto and Vancouver regions last month, which were among the most robust levels ever seen. Toronto‘s sales of almost 11,000 units, up 27 per cent from a year earlier, set a new record for June. Vancouver‘s sales of almost 4,260 units were up more than 75 per cent from last year and just short of a new June record.

“While sales are the leading indicator, there are other clear signals that recovery is indeed under way,” Elton Ash, regional executive vice-president of Re/Max for Western Canada, said in a press release.

“Renewed consumer confidence, albeit cautious, has been key, supported by improved economic news.”

Ash also said there is a shrinking gap between sales prices and asking prices and, in a number of cases, the former is exceeding the latter.

Michael Polzler, Re/Max’s executive vice-president for Ontario and the Atlantic region, said: “Canadians believe in home ownership, a fact best illustrated by the purchasers who ventured forward in recent months and snapped up some of the best real-estate deals this market has seen in years.”

Re/Max said market conditions have become more balanced following a period in which buyers held the clear upper hand over sellers for a half-year or more. It said the current sales pace might be unsustainable, but nevertheless indicates more stability for the market in the longer term.

The Re/Max report follows one issued last week by one of its competitors, Royal LePage, that indicated Canada‘s housing real estate took a sharp turn to the positive in the second quarter of this year after a sluggish winter.

Also last week, RBC Economics said greater affordability — the result of lower house prices and falling mortgage rates — was luring homebuyers back into the market.

It said the overall cost to own a standard bungalow, including mortgage payment and utilities, had dropped by more than 10 per cent on average between last year’s fourth quarter and this year’s first quarter.

Douglas Porter, deputy chief economist for BMO Capital Markets, said it’s clear the Canadian housing market has taken strides forward since it was essentially “frozen over” late last year and in the early part of this year.

That compares favourably to the U.S. housing market, which has been in decline for three to four years.

Porter said the market south of the border has yet to show any clear signs of improvement as it has in Canada, and that reflects largely how much more severe the U.S. housing market has been.

“[The United States] just hasn’t had the quick snap-back that we’ve seen in Canada at all,” Porter said.

“I don’t believe our market ever got as overextended as the U.S. did. [The U.S.] basically had to go through a much deeper correction, which essentially fed on itself,” he added, explaining how that contributed to severe job-market losses, which in turn hurt the housing market even more.

© Copyright (c) The Province

Developer sees photographs, agrees there are ‘areas of concern’

Wendy Mclellan
Province

After stalling for more than two weeks, Vancouver’s Olympic Village developers and city officials met early yesterday with the union that blew the whistle on shoddy pipe insulation at the site.

The hastily arranged meeting between Millennium Development, the city and the International Association of Heat and Frost Insulators and Allied Workers Union Local 118 came after The Province learned that workers were tearing down walls at the site to wrap water pipes that should have been insulated before the drywall was put up.

The Province first reported allegations of improperly insulated water pipes at the Olympic Village site two weeks ago. Since then, the city and the developer have insisted there are no problems at the site, but they also wouldn’t meet with the union to see their evidence.

That all changed yesterday.

“They said they wanted as much information as they can to identify problems and correct any that are there,” said Lee Loftus, business manager for the Vancouver-based union local.

“They wouldn’t agree there were problems, but they’re going to investigate the photos and take care of any problems they can confirm.”

Loftus said the union brought all of their photos to the meeting at a Denny’s restaurant and described each example of poorly insulated pipes. Some of the photos show drywall installed over bare pipes, others show pipes that are insulated where they’re visible outside the walls and others show pipes that are mostly insulated, but not completely.

Insulating hot-water pipes reduces energy loss; insulating cold-water pipes prevents condensation from pooling behind walls where it will create mould and mildew problems for condo owners a few years from now.

Loftus said he agreed to provide more details today about the photographs so Millennium could direct its contractors to the problem areas.

Contractors have been at work the past couple of weeks, on wrapping pipes already hidden behind drywall.

“They have been going at it in finished suites,” according to one tradesman working on the Millennium Water development on Southeast False Creek. “We saw them taking down drywall, cutting through walls, and the insulators waiting to put in the insulation.”

Several workers had reported the activity on the construction site, but were worried they would be fired if their employer learned they had spoken to the media.

The union made the issue public after trying — and failing — to get the developer to respond to their concerns. The Province first reported the union’s allegations June 28 and Millennium responded with a promise to review its construction- review process at the village.

Millennium’s preliminary report was delivered to city hall July 3, showing no evidence of uninsulated water pipes. Millennium was expected to deliver a final report this Friday, and the city had promised to make the results public, but Roger Bayley, design manager for Millennium, said there will not be a final report. He said the site will be continually assessed during the construction process.

“We have identified some areas the union had expressed concern about and instructed that those things be rectified,” Bayley said.

After telling reporters last week the union’s allegations were an “unsubstantiated rumour,” Vancouver Mayor Gregor Robertson said yesterday the city had taken the issue seriously and, after the developer checked further, pipe- insulation problems were found.

“The issues raised by the union definitely moved us to further the due diligence and as a result of the cross-checking, we’ve identified areas for improvement and the developer is making those improvements and giving new instructions to the contractors, so that taxpayers can rest assured that their investment is being managed appropriately,” Robertson said.

After yesterday’s meeting, Loftus said he is confident construction practices improved but only after the issue was brought to public attention.

“I believe construction practices have been better in the last couple of weeks, and I expect they will fix what wasn’t done right,” Loftus said.

“I think this [publicity] has made a difference.”

© Copyright (c) The Province

Most of the 400 units are in the city of Vancouver

Rebecca Tebrake
Sun

Metro Vancouver is planning to raise rents in hundreds of district-owned housing units.

Metro’s regional housing manager Don Littleford told The Sun the hikes could be as high as 40 per cent over a three-year period for at least 300 units.

Later, he said his proposal had been rejected by the region’s top administrator, and a new plan is being worked out that will be in place by July 24.

The Metro Vancouver Housing Corporation, the regional housing authority, says the units are undervalued, some by as much as 40 per cent, and the money is needed to keep pace with mounting repair costs.

The proposed increase would apply to higher-income tenants who receive no rent subsidies, renting apartments and townhomes in complexes that offer a mix of subsidized and non-subsidized units.

“Nobody wants a rent increase, but people that can afford to pay them need to pay them to keep this whole system afloat,” said Littleford.

Approximately 2,200 of the authority’s 3,500 units are supposed to be rented at market rates, Littleford said.

At least 300 to 400 of the 2,200 units are below market rates, and will see rent hikes to bring them into line.

Increases will vary according to the location and nature (number of bedrooms, type of housing) of the units.

The bulk of the underpriced housing is in the City of Vancouver, and tenants in those homes can expect the greatest increases, Littleford said.

A two-bedroom townhouse in east Vancouver now rents for as little as $725 per month, an estimated $200 under market value. The same type of home in the west side of Vancouver, now renting for as little as $1,200 per month, would have to see rent hikes to $1,400 to reach market value.

Subsidized tenants will not be affected by the increases, Littleford said.

All tenants facing rent hikes will have the chance to qualify for a subsidy if the increase means they will spend more than 30 per cent of their income on rent. This will prevent low-income renters from losing their homes, Littleford said.

The Tenants Resources and Advisory Centre, a tenant advocacy group, hasn’t seen Metro Vancouver’s proposal yet, but executive director Martha Lewis said rent increases are fair as long as people aren’t evicted.

“We understand the reason why they are wanting to do this. Money is a problem and they want to be able to afford subsidies for tenants who need subsidies,” Lewis said.

She does question how the authority will determine a fair market rate.

“A few percentage points one can understand, but 40 per cent? What impact is that going to have on the people living there in an economic downturn?” Lewis asked.

The authority had independent consultants determine the market rents around Metro. It has had no problem renting test suites with rents set at market rates, Littleford said.

For decades, rents were kept low by federal regulations.

But with the federal government turning affordable housing responsibilities over to the province, BC Housing is allowing Metro Vancouver to raise the rents, he said.

Any rent hikes will be used for much-needed repairs for complexes like Vancouver‘s Earle Adams Village, where tarps have been used to patch leaky roofs for years.

The region has spent more than $2 million on roof repairs alone in the past two years.

Many of its complexes are 25 to 30 years old and will need major upgrades soon, Littleford said.

Metro Vancouver‘s capital budget for housing ranges from $3 million to $4 million a year, said Littleford.

Eighty per cent of the repair budget comes from rent. The remaining 20 per cent comes from the provincial and federal governments.

© Copyright (c) The Vancouver Sun

Top tips for buyers

Barb Livingstone
Province

Valerie Rasmussen, assistant vice-president, credit services, for First Calgary Savings, offers the following advice to home buyers.

Q What are your top tips for people thinking of getting a mortgage and buying a house/condo today?

A Buying your first home can be an overwhelming and daunting process. Getting the right information before you begin can alleviate stress and increase confidence as you go through the process.

Here are some tips:

– Evaluate your financial situation. Understand your current credit history, and your monthly debt obligations. This will help you plan a budget with realistic expectations and a comfortable mortgage payment that you can live with.

– Get pre-approved. Let the personal banking representative do all the work for you and don’t hesitate to ask questions.

– Educating yourself on the variety of mortgage loan options and how the application and approval process works can equip you with the knowledge you need to chose the right product.

– Get all your figures and approvals in order before you get to far into the buying process. Then you can be sure to be looking at homes within your means of affordability.

– With your figures in mind, don’t push your finances to the max of your ability to pay, this could become overwhelming later. Everyone has heard the term, “house poor.” This can be avoided with the right planning and information prior to choosing your home.

– Wait until the time is right for you. If you plan to live in the home, you do not need to look at a home as a speculator or investor would. Market predictions can be wrong and should not prevent you from purchasing your first home. However, once you have reviewed your budget, and perhaps met with a personal banker, you may make the decision that, for example, one more year of saving could get you a better down payment and lower mortgage payments. Do what will work for you.

Q What is the biggest mistake homebuyers can make in relation to getting a mortgage?

A Borrowing too much can be the biggest mistake new home buyers can make. Many people will hear that they are approved up to a maximum limit of X dollars and immediately begin looking for the maximum priced homes they can afford. First-time homebuyers need to understand just how expensive home ownership can be — and many bills and fees are not planned for. There are lawyers fees (closing costs), insurance set up, utilities, taxes and moving costs, and for condos, such things as condo fees and so on. Adhering to a realistic budget can help new home buyers avoid the stress of being overextended.

© Copyright (c) The Province

There’s a recession? Nobody told us

Douglas Cowell
Sun

OCEANSIDE VILLAGE RESORT

Project location: Parksville.

Project size: 140 cottages

Residence size: 865 sq. ft. – 1,100 sq. ft.

Prices: from $249,000

Telephone: 250-248-6766

E-mail: [email protected] [email protected],

Web: osvr.ca www.osvr.ca

Developer: Shorewater Estates Ltd.

– – –

A recession is raging around the world, huge corporations are crashing, banks are being propped up and governments are diving into deep pools of debt.

But Mike Hill and his family, owners of Oceanside Village Resort in Parksville on the east coast of Vancouver Island, can’t complain.

“We’re very happy,” he reports. “In fact, we’re ecstatic with how we’ve survived the downturn. Last year was a good one for us, but the market has not been great over the last 12 months. We’ve continued to have sales, however, and over the last month or six weeks we’ve really seen it pick up.”

Situated a short walk from the beach, Oceanside Village is a quiet enclave of detached cottages set in the forest.

“We wanted to make it easier for people to be more sociable so we built the cottages on crawl spaces. That raises them up so people feel comfortable to sit out on their deck,” Hill explains.

To further foster sociability, the family has built a cafe, art gallery, spa and salon and indoor swimming pool.

It certainly seems to have worked. On a stroll through one recent summer morning children were playing together, women sat out front of the little coffee shop sipping their lattes and chatting. Three men were doing likewise on the patio of one of the cottages. Life was peaceful.

Mike and brother Rob Hill started construction four years ago. Eventually they intend to build 140 cabins, with five floor plans ranging in size from 865 square feet to 1,100 square feet. They’re either two-bedroom layouts or one bedroom and a loft. They are anything but rustic.

They all have large windows and vaulted pine ceilings, carefully chosen carpets, ceramic tile bathrooms and kitchen, multiple televisions and electric fireplaces. The kitchens have the full complement of quality appliances and are large enough to host family celebrations and supper with the neighbours. One of the most-loved features, whether you’ve just spent a summer’s day on the sand flats or a chilly day on the slopes at Mount Washington is the washer and dryer stack in each cottage.

The area is zoned by the City of Parksville as a tourist resort area and thus no one can live in any of residences for more than 180 days a year. Although it’s completely up to each owner what they do with their home, rentals are a big part of what goes on.

Kathy Fraser, the resort manager, explains that of the 70 current owners, 20 never rent out their cottages. Some she’s never seen; they bought to rent out. Some come only in winter or the shoulder seasons and rent all summer long.

“Winters are getting really busy,” she says. “More and more retirees are coming for two to even four or five months. They settle in each year and set up networks and groups of friends that reconnect every year.”

Fraser explains that the economic downturn has definitely had an impact on the rental bookings. “Yeah, we’re going to have a busier summer this year than last. People started booking a month earlier. Because of the economy, the kids aren’t going to get to Disneyland this year. They’re coming here.”

It’s not surprising that people might choose to take their kids to cottage in the summer, but there are more people showing up than just families with children. Some of the reasons for booking aren’t what would first come to mind.

“A lot of people seem to travel with their pets, and there’s very few places in this area that allow pets,” Fraser reports. ”It’s entirely up to the owner of each unit whether they want to allow pets, but quite a number do.”

Another customer base is Europeans who tour Western Canada in larger family groups. They often rent two or three cottages at a time.

Another similar type of booking is apt to show up any time of year. That’s family reunion groups. Word seems to be getting out that Oceanside Village is a great place to hold a reunion. So far, Fraser has rented up to five units at a time for reunions.

The money available to owners from such rentals plays an important role for many of them in being able to afford to own a cottage.

Each owner is different. Most spend a few weeks in summer and several weekends over the year in their holiday homes and many also loan them out to family and friends. Typically, the rest of the time their units are available to rent.

A few keep winter homes in the U.S. and come to Parksville for the summer.

Every winter the snowbirds arrive. Retired couples, mostly from the prairie provinces keep the place busy in what for many resorts is the off-season. Mostly they stay for at least a couple of months. Some as long as five months.

“Some of them don’t do much. They just come and relax,” Fraser reports. “Some are golfers, and with about half a dozen good golf courses around here, they can keep themselves entertained.”

Many of these people come back every year; they’ve developed a good circle of friends and so a sense of community automatically develops.

Two groups that have grown up in the off-season have surprised her a bit: card players and square dancers. “There’s quite an active square dance club in Parksville so some of our people are out dancing two or three times a week.”

So Mike Hill is hiding his pain without too much difficulty. “Lots of people buy real estate as an investment and here on Vancouver Island is probably as safe as anywhere. It looks like we’re going to keep doing pretty well for our investors here at Oceanside. Besides, it’s a fun place to be.”

© Copyright (c) The Vancouver Sun