Adrian Sainz, David Twiddy, Daniel Wagner, Alex Veiga,
USA Today

It was — note the past tense — the worst housing recession anyone but survivors of the Great Depression can remember.

From the frenzied peak of the real estate boom in 2005-2006 to the recession’s trough earlier this year, home resales fell 38% and sales of new homes tumbled 76%. Construction of homes and apartments skidded 79%. And for the first time in more than four decades of record keeping, home prices posted consecutive annual declines.

A staggering $4 trillion in home equity was wiped out, and millions of Americans lost their homes through foreclosure.

Now take a deep breath and exhale. The worst is over.

By every measure, except foreclosures, the housing market has stabilized and many areas are recovering, according to a spate of data released in the past two weeks. Nationwide, home resales in June are up 9% from January, on a seasonally adjusted basis. Sales of new homes have climbed 17% during the same period. And construction, while still anemic, has risen almost 20% since the beginning of the year.

Even home prices, down one third from the top, edged up in May, the first monthly increase since June 2006.

“The freefall is over,” says Dean Baker of the Center for Economic and Policy Research.

The problem is that, Baker, like many economists, expects the housing market will “be bouncing around the bottom” for the second half of the year.

There are also real threats that could poison this budding recovery. The unemployment rate, which is 9.5%, is expected to surpass 10%, leaving even more homeowners unable to pay their mortgages. Mortgage rates could rise, making homeownership less affordable. And the federal tax credit for first-time homebuyers, which as lured many into the market, is set to expire on Nov. 30.

“As long as jobs are being lost, regardless of all the federal programs out there to help the borrowers, you’re still going to have problems in the housing market,” says Steve Cumbie, executive director of the Center for Real Estate Development at the University of North Carolina‘s Kenan-Flagler Business School.

True, but when you’ve got bidding wars for foreclosures in places like Las Vegas, Phoenix and Los Angeles, it’s time to call the bottom.

Northeast

Nobody knows the power of a dollar like New Yorkers.

After home on Long Island sat on the market for four months recently, the sellers’ real estate agent told them to drop the price from the mid-$600s to $599,000. The house sold the next weekend.

In Merrick, about 30 miles east of New York City, homes are starting to sell “as long as they’re priced right,” the agent said.

In January, with the ground and financial markets still frozen, few would have believed that the worst of the housing crisis in the Northeast would turn around within six months.

But the evidence is clear: home resales in the region in June hit a seasonally adjusted pace of 820,000, up 28% from the beginning of the year. Sales of new homes were also up slightly and construction in the region more than doubled.

Even the median sales price of $249,400 in June was up 10% from January and was off just 6% from year-ago levels, according to the National Association of Realtors.

“We certainly had our share of problems, but overall the severity of what happened here was far less” than what happened elsewhere, says Michael Lynch, an economist with IHS Global Insight.

Pittsburgh has the region’s strongest home market in terms of sales and prices because the city saw less of a housing bubble and the area has 7.7% unemployment rate that is below the national rate.

One of the weakest markets, by contrast, was Providence, where a jobless rate of 12% exacerbated the city’s foreclosure crisis. Too many residents took out risky subprime loans they couldn’t afford when the interest rates spiked within a few years. Today, more than one in 10 homeowners with a mortgage in the state is at least one month behind or in foreclosure.

The Northeast, more than any other region, felt the full force of the credit crisis that reshaped Wall Street. Manhattan‘s real estate market, long immune from price declines, tanked this year as tens of thousands of people lost their jobs.

Prices of for-sale apartments plunged in the second quarter by the largest amount in decades. Prices have fallen, on average, between 13 and 19%, according to four reports published recently by real estate firms.

Northeast states: Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont

Data compares June vs. January and June vs. June 2008:

• Home resales: up 28%; down 5 percent

• Median price: $249,400, up 10% from January; down 6 percent

• New-home sales: up 3%; down 11 percent

• New home construction: up 113%, down 68 percent

• Mortgage delinquencies as of March: 10.4 percent

Regional outlook: The region should experience “a nice rebound in home construction” over the rest of the year, according to IHS Global Insight, an economic research firm. Sales for new and existing homes are likely to rise. Just don’t expect your home’s value to shoot up. Rising unemployment will lead to more foreclosures, and that will keep a lid on prices.

South

The real estate market in the South remains one of extremes.

On one end, are oil-rich cities in Texas, Arkansas and Oklahoma that nearly skirted the housing recession altogether. Tipping the scale on the other side are foreclosure-ridden areas in Atlanta and swaths in Florida where prices are still falling annually by double digits.

Taken as a whole, home resales in the 17-state region rose 10% in the first half of this year on a seasonally adjusted basis, and are off just 4% from June of last year, according to the National Association of Realtors.

“Generally speaking, the rate of decrease, both in sales and prices, has started to bottom,” says the University of North Carolina‘s Cumbie. “But that doesn’t mean it’s going to come roaring back.”

Mass layoffs at Bank of America and Wachovia, for example, have taken their toll in their home state of North Carolina. Home price declines in Charlotte accelerated this year, and home resales in June were off nearly 30% from last year.

Home and apartment construction, a key economic engine, will also vary widely across the region. Parts of the South, notably Florida and Atlanta, were vastly overbuilt during the housing boom. So construction in the region rose a meager 7% in the first half of the year, the lowest of the four regions, according to the Commerce Department.

There was little reason for builders to start laying new foundations. New-home sales fell 2% from January to June, the only region in the country to post a decline.

“In the longer term, I’m confident that the real estate market is going to shift where buyers are coming out not only because of attractive interest rates and low prices, but because more people are getting jobs,” says Les Simmonds, president of L.G. Simmonds Real Estate Corp. in Longwood, Fla. an Orlando suburb. “But, as we speak, it’s not right. It’s going to take more time.”

Southeast states: Alabama, Arkansas, Delaware, D.C., Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia

Data compares June vs. January and June vs. June 2008:

• Home resales: up 10%; down 4 percent

• Median price: $163,200 up 14%; down 12 percent

• New-home sales: down 2%; down 34 percent

• New home construction: up 7%; down 44 percent

• Mortgage delinquencies as of March: 12.7 percent

Regional outlook: The southern market has several characteristics that could help it recover, Cumbie says. The population continues to grow and businesses continue to move into the region. But the weight of foreclosures and job losses stretching into next year could delay any meaningful recovery.

Midwest

It’s no surprise that the housing market and the auto industry are intertwined in Detroit, though, this is the first time anybody can remember that you can buy a home for less than the price of a new car.

But step out of devastated towns in Michigan, Ohio and Indiana and the housing market in the Midwest is showing some of the strongest signs of recovery in the country.

Thanks to places like the Dakotas, Iowa and Nebraska, the median sales price in the region rose almost 20% to an affordable $157,000 in June from January levels.

Sales of new homes jumped almost 38% in the first half of the year, which encouraged builders to get out their hammers. Construction, which was at a standstill in some communities, rose 86% on a seasonally adjusted basis, which accounts for typical variations in weather and other factors.

“New construction has been a good indicator for us in the past of what the general market is doing,” says Chris Collins, president of the Kansas City Regional Association of Realtors. “Our new market is not what we’ve been used to but it’s substantially better than other parts of the country.”

The home resale market, however, remains weaker than the nation as a whole. That again can be blamed on the economy. The jobless rate in the Midwest is 10.2% compared with 9.5% nationally. And if you don’t have a job you are not buying a house.

William Strauss, a senior economist for the Federal Reserve Bank of Chicago, cautioned that job cuts are still high in the region, and loss of income is the No. 1 reason homeowners default.

“We never got as bad as (other) states but nonetheless we still took a hit,” he says, and the market remains “soft in the Midwest.”

Midwest states: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin

Data compares June vs. January and June 2008:

• Home resales: up 7%, down 2 percent

• Median price: $157,000, up 20%, down 9 percent

• New-home sales: up 38%, up 6 percent

• New home construction: up 86%, down 21 percent

• Mortgage delinquencies as of March: 11.5 percent

Regional outlook: “Before we can even talk about the housing sector materially improving, we’re going to have to see these job losses get down quite a bit,” said William Strauss, a senior economist for the Federal Reserve Bank of Chicago. Financial markets must also improve, he said, so more homebuyers can qualify for a mortgage.

West

For years Las Vegas symbolized the boom, as mile after mile of desert gave way to three-bedroom homes and swimming pools. Then came the crash and it symbolized something else: a decade of speculation and excess.

Now, Las Vegas is one of the hottest housing markets in the region again. This city has always profited from others’ misfortune, and the same can be said of the current housing market.

In Clark County, Nev., home to Sin City, one in every 11 homes had received at least one foreclosure-related notice in June, according to RealtyTrac. The glut of deeply discounted foreclosures has almost doubled sales activity for most of this year.

“In January the market was busy, and since that time, it’s gone a little haywire,” says Brad Snyder, an agent with ZipRealty in Las Vegas. “There’s (sales) activity now that we haven’t seen even since ’04.”

The situation is similar in California‘s Riverside, San Joaquin and San Bernardino counties, where one out of every 14 homes was in foreclosure.

After falling 18% in the second half of 2008, monthly home prices were flat in the first half of this year, on a seasonally adjusted basis, according to the National Association of Realtors.

Markets like these have seen a surge this year in all-cash buyers, many of them investors, scooping up the sharply discounted properties. It’s not uncommon to see multiple offers on a single property, and that’s helped slow the rate of price declines a little. The demand also has helped whittle down the inventory of homes for sale to the lowest level since the boom.

“We have seen such a steep decline in supply right now, that when a home comes on the market it’s first day there could be seven or eight or 10 people there in a matter of hours,” Snyder says.

To lure buyers away from foreclosures, homebuilders have slashed prices or are simply tearing down vacant homes. New-home sales jumped almost 59% in the first half of the year, while construction in these grossly overbuilt markets slid 12%.

In the Pacific Northwest and states such as Utah, by contrast, housing markets are on a different timer than the rest of the West. Home sales and values held up better and longer while markets in the Southwest were already in decline. These markets also haven’t seen as many foreclosures wreaking havoc with home prices.

States in the region: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming

Data compares June vs. January and June 2008:

• Home resales: down 1%, up 12 percent

• Median price: $214,800, flat, down 25 percent

• New-home sales: up 59%, down 10 percent

• New home construction: down 12%, down 42 percent

• Mortgage delinquencies as of March: 12 percent

Regional outlook: The recession remains the region’s wild card. Unemployment is at 10.2% in the West, but that could go higher if the economy worsens. If that happens, expect more foreclosures and a slower turnaround.

Adrian Sainz reported from Miami, Alex Veiga reported from Los Angeles, Daniel Wagner from Washington, and David Twiddy from Kansas City. AP Data Specialist Allen Chen contributed to this report.

Copyright 2009 The Associated Press. All rights reserved.

More condos will be released in the fall and developer is in talks to add 10 more floors

Lena Sin
Province

The Facts

What: Cosmo, 253 apartments and townhouses.

Where: Georgia and Beatty, Downtown Vancouver

Developer: Concord Pacific

Builder: Centreville

Sizes: From 455 sq. ft studios to two-bedroom plus den units that are 790 sq. ft. – 939 sq. ft. Only five townhouses are still available, from 1,017 sq. ft. – 1,139 sq. ft.

Prices: Studios, $218,800 – $258,900; 1 bed, $259,900 – $316,900; 1 bed plus den, $289,800 – $374,400; 2 bed plus den, $369,800 – $513,800. Only five townhouses are still available, priced from $500,000 to $639,000.

Open: Presentation centre is open from 10 a.m. to 5 p.m. daily at 88 Pacific Boulevard (at Carrall)

More info: cosmovancouver.com

There’s an art to selling real estate, especially during troubled economic times. But while most sales and marketing experts fear peddling their wares during much-dreaded recessions, Grant Murray thrives.

So when Concord Pacific hit the pause button on launching Cosmo last October, Murray set himself the task of redefining the downtown Vancouver condo development into something consumers would buy even in uncertain times.

“What we’re all about is not just designing a single building. Any developer can pick a spot and put a high-rise in. What we’re about is defining what the consumer’s looking for,” says Murray, vice-president of sales for Concord Pacific. “When you create something where people actually want to be, first of all you have sustainability, and then you have value. You can create value in troubled times.”

Without question, price was the key factor as Concord Pacific realized the development would no longer fetch the predicted $800 per square foot. Instead, prices were lowered to between $500 to $600 per square foot. Two factors made the price decrease less painful than it could have been for the developer. Concord Pacific had bought the land back in 1988; also, the flagging economy meant lower construction costs.

Murray was insistent that a sense of luxury was vital even as prices were coming down. So he went to architect James K. M. Cheng, whose resumé includes designing Vancouver‘s Shangri-La hotel and residence, with the challenge of creating high-living within an affordable price point.

Among the changes made to the Cosmo building over the past six months was the addition of a hotel-worthy lobby and a rooftop lounge and a bowling alley.

Judging by the sales of Cosmo, which nearly sold out over three days recently, Murray and his team got the design and sales brief right.

“The testament of our success is the fact that people bought it. It doesn’t matter what it is, the bragging rights are if you sold the building that well, you must’ve done something right,” he says.

Located at the corner of Georgia and Beatty, Cosmo sits on one of the last pieces of developable land immediately adjacent to the business district. Murray has dubbed the location “Funtown,” with Gastown and Yaletown just minutes away and BC Place, GM Place and the Queen Elizabeth Theatre at its doorstep.

It’s obviously the place to be — but Cheng has also made it the place to be seen — with a luxurious lobby outfitted with furnishings from designer Giorgio Armani’s furniture line, Armani Casa. Cream, leather-stitch chairs face an $8,000 geometric coffee table, while a fireplace is set against a marbled wall.

“We wanted to make the building more upscale,” explained Murray. “It’s one way on Georgia Street so as you’re coming down and driving out, what do you see? You see Cosmo. So you’re looking square into the lobby. So we said we wanted to make that visually exciting.”

Cheng also designed a rooftop deck with a hot tub and fire pit to give those living on lower floors access to a space with a view.

The building also boasts a two-lane bowling alley and residents will get access to the pool at Spectrum, Concord Pacific’s award-winning development next door to Cosmo.

With 10 years experience of building 50 condo towers spanning 200 acres in False Creek, Concord Pacific knew the time was right to release Cosmo two weeks ago as inquiries into the building were mounting.

There are now just five loft-style townhouses left, some of which feature an arresting design element of a shallow pool of water in the front courtyard and a stone pathway leading to the front door. The sizes are from 1,017 sq. ft. to 1,139 sq. ft. and priced from $500,000 to $639,000.

For those still hoping to get in on a condo, there will be a chance in the fall, when nine suites still available on the 22nd floor and the penthouse suites on the 23rd floor will likely be released. The reason for the hold-back is that Concord Pacific is in talks with the city to potentially add another 10 floors to the building.

Cosmo is expected to be completed by summer 2012.

© Copyright (c) The Province

Loonie can buy lot of U.S. house

Garry Marr
Sun

There is something about a bargain that few of us can resist. Is there any better sale going on right now than U.S. homes? The subprime meltdown has devastated the United States, leaving behind a sea of foreclosures and empty homes — all ready to be snapped up by frost-bitten Canadians with a red-hot currency.

The Washington D.C.-based National Association of Realtors says 23.6% of all international homebuyers in the United States last year were Canadian, up from 11% in 2007.

It’s no wonder. During the same period, the median price of U.S. vacation homes fell to US$150,000, for a 23.1% drop in price.

Tannis Dawson, a Winnipeg-based tax and financial planning expert with Investors Group, says Canadians are accustomed to looking to the United States for deals, so why should real estate be any different? But she cautions the ramifications of a property acquisition have to be carefully considered. “Every day I get one or two e-mails [about buying U.S. property]. I get way more calls than I ever used to,” Ms. Dawson says.

The first thing to consider before buying is how much it’s going to cost you to carry your property. A major component of your carrying costs will be property taxes and that’s a thorny issue in some states for foreign investors.

“In Florida, there is a maximum that they can increase property taxes for residents, but if you’re not a resident they can go higher,” says Ms. Dawson.

If you’re not renting out your property, there is no impact on your personal taxes. If you are renting, there is withholding tax on the income that has to be paid to the Internal Revenue Service on a monthly basis. The likelihood is your expenses will outweigh your income and you’ll get that tax back, but you still have to file a U.S. tax return. You then have to report the income on your Canadian tax return but you will get a foreign tax credit.

Another key consideration, especially if you’re buying a condo, is the financial situation of the building you’re moving into. The housing crisis has meant consumers have walked away from their units — and condo fees. If the apartment you’re buying is in a complex where 30% of the units are in arrears on their condo fees, the other owners are going to have to pick up the slack.

Then there are capital gains, which most Canadian investors are expecting to be based on today’s prices. In the United States there is a flat fee of 15% on capital gains to the U.S. federal government, not to mention any state tax. There is a also a 10% flat tax for non-residents.

You still want to go ahead? Forget about financing any property. It’s almost impossible for Canadians to borrow in the United States, so you’ll have to use cash.

None of this seems to be stopping Canadians who are now being targeted with advertising blitzes by the U.S. real estate industry.

Kimberly Kirschner, past president of Realtor Association of Greater Miami and the Beaches Inc., expects even more Canadian activity this year because of the low prices. “You can get a two-bedroom apartment on the beach for US$150,000,” says Ms. Kirschner, talking about a unit near Hollywood, Fla., a popular Canadian snowbird destination about 30 minutes north of Miami.

The maintenance cost, basically your condo fee, can easily top US$500 a month for that unit. Add in another US$5,000 in tax and you are well above US$10,000 a year to carry a US$150,000 unit. Rent the same property and it might cost you US$1,500 a month.

“People are betting on capital appreciation now that prices have gone down,” says Ms. Kirschner.

But should you take that bet? “I don’t think you buy a second property to make money,” says Halifaxbased financial planner Hugh Smilestone, who has a number of clients who own real estate in Maine.

Prices have dropped by about 10% in the region, not as much as the sunbelt, but it has encouraged some buying.

“I think a vacation property starts out as a luxury. I never tell people to count on it as an appreciating asset,” he says. But Canadians may be thinking otherwise these days.

Dusty Wallet Last week’s DW dealt with the risky practice of using your credit card for car insurance, noting the practice does not cover drivers for a number of risks that may arise from an accident. An alternative that one sharp DW reader pointed out is to get a special add-on to your regular car insurance. The addition lets you take the insurance from your car and transfer it to a rental car when you’re on vacation. The extra insurance is less than $100 per year on most policies. One drawback is the additional coverage is usually limited to the United States and Canada.

© Copyright (c) The Vancouver Sun

Ottawa made Victoria an offer it couldn’t refuse on HST — $1.6 billion in cash

Peter Simpson
Sun

Okay, in my July 18 column I said I would take a bit of a breather and my Westcoast Homes column would return at the end of August. Well, during the past week or so things have changed dramatically, and quickly, in B.C., and I felt I just had to comment on them.

First they said they wouldn’t, and then they did. The B.C. Liberal party, after stating before the provincial election it did not plan to introduce a harmonized sales tax, the HST, has done so.

On July 23, the federal and provincial finance ministers signed a six-page memorandum of understanding on HST. Included in the agreement, right up there in paragraph two, was the root of it all — the feds would pay B.C. $1.6 billion for jumping aboard. That’s way too tasty a carrot to resist.

The subsequent government news release offered this explanation for the switch to HST, effective July 1, 2010: “The [provincial sales tax] is an outdated, inefficient and costly tax, some of which is hidden in the price of goods and services and passed on to and paid by consumers.”

Here’s the thing.

Before the election, the Greater Vancouver Home Builders’ Association asked all major parties for their positions on HST.

The New Democratic Party responded it had no plans to introduce harmonization. The Liberal party said harmonization “would reduce the provincial government’s ability to unilaterally adjust sales tax rates and make it harder for future provincial governments to lower or raise sales tax rates, which reduces flexibility.”

Here’s another thing.

The home building industry and its customers are significant contributors to the provincial economy, yet the HST application on new housing, appearing in afterthought fashion, was referenced way down in paragraph eight of the news release, two paragraphs below feminine hygiene products.

The HST, in its proposed form, will add significant cost to new homes and home renovation. What choked industry leaders most was the fact there was zero consultation before the announcement.

And the timing couldn’t be worse. Canada Mortgage and Housing Corp. reported that B.C. housing starts during the first six months of 2009 were 5,287, down 69 per cent from the 17,101 recorded during the same period last year.

In the Vancouver region, January-to-June starts totalled 3,342, down 67 per cent from the 10,178 starts reported during the same period in 2008.

The government should have sought builder feedback on how the tax would impact their businesses and their customers, the home buyers, who always pick up the tab.

The recent HST bunfest in Ontario, where there was also no industry input, should have taught them the value of consultation.

The B.C. HST program calls for partial rebates for new homes priced up to $400,000, while homes priced above that threshold will receive a flat rebate of $20,000.

That might be acceptable if you live in Podunk, B.C. but if you reside in, say, the high-priced Vancouver region, the rebate is insufficient. The rebate threshold should be raised and indexed, so in future it rises along with price increases.

Last week I, along with business leaders from a wide range of industry sectors, attended an HST roundtable discussion convened by Premier Gordon Campbell and Finance Minister Colin Hansen.

Apart from a chorus of objections from the Canadian Home Builders’ Association of B.C, the Urban Development Institute, representatives from the restaurant industry and me, the event was a love-in, with business leaders high-fiving each other all over the place.

That’s okay; the HST will benefit some industry sectors by helping them to improve productivity, boost business investment and create jobs. I understand and respect that. It’s just that there is a lot of work to be done on the housing side.

We asked the premier and finance minister if they would work with the home building industry to ensure tax neutrality, so that home buyers do not pay any more tax than they do now. The response from the premier was speedy — “There is no promise for neutrality.” Campbell did, however, offer to work with specific sectors to try to find ways to soften the more onerous impacts.

“I get that there are problems,” said Campbell.

“We need to identify them and do what we can to mitigate them.”

One of the problems is the transition rules, such as how the HST will be charged on sales contracts written before July 1, 2010 but completed after the HST launch date. One upset builder said his projects typically take two years to complete and if he had known about this new tax he would have reconsidered his launch date.

We would like to meet Minister Hansen, although I believe, somewhat misanthropically, there will be little room for flexibility, except for the transition rules.

What was rolled out is likely how it will be. I hope I am wrong. Home buyers deserve better.

The tax burden on buyers of new homes has become patently unreasonable. In addition to the GST (soon to become HST) there are development cost charges imposed by regional and local governments, provincial property transfer tax, and an assortment of fees and levies.

As well, tax pyramiding — or tax on tax, when one tax is embedded in the price of a good and subsequent taxes are applied to that price — has become a growing concern across Canada.

The Altus Group, a Toronto-based economic consulting firm, was commissioned by the Canadian Home Builders’ Association to examine tax pyramiding.

Its soon-to-be-released report states that “tax-on-tax schemes score poorly in terms of principles of good taxation, including equity and fairness, simplicity, accountability, certainty, stability, transparency, visibility and neutrality . . . It is neither ethical nor fair to ask taxpayers to pay tax on top of taxes already levied.”

Zeroing in on the report’s last principle of good taxation, neutrality, which we are seeking in the provincial government’s treatment of HST, the Altus Group offers that “a good tax system should minimize effects on taxpayers’ economic decisions. The tax system should interfere as little as possible with individual decisions made in the marketplace.”

So many tax collectors, only one taxpayer.

One final thought. The proposed HST undoubtedly will fuel an already burgeoning underground economy in home renovation, characterized by cash deals, no contracts, no permits or inspections, no adherence to building codes, no liability insurance and no WorkSafeBC compliance.

B.C. homeowners are expected to spend nearly $7 billion on home renovation and improvement this year. They should resist the lure of cash deals and deal only with professional renovators, particularly those who agree to abide by the 10-condition code of conduct mandated by the RenoMark program.

Now I am taking a bit of a breather and my column will return at the end of August. Honest.

Peter Simpson is the chief executive officer of the Greater Vancouver Home Builders’ Association. E-mail:[email protected]

© Copyright (c) The Vancouver Sun

Critics call the move ‘a betrayal’ of condo owners whose units haven’t been fixed

Derrick Penner
Sun

The provincial government is scrapping a program that for the past decade has provided leaky-condo owners with interest-free loans to pay for repairs.

Housing and Development Minister Rich Coleman said the loan program has more than run its course and is no longer sustainable.

The program was established as condo-owner advocates called on the government — whose building codes and regulatory programs were blamed by some for the problem — to foot the entire bill for the repairs, which is estimated at several billion dollars or more.

Critics called the move “a betrayal” of condo owners whose units have not been repaired yet.

Coleman said he has asked the government’s Homeowner Protection Office, which administers the loan program, to review its operations and determine “what other programs may or may not be necessary.”

His ministry confirmed that the HPO’s chief executive, Ken Cameron, is leaving his job.

In addition to the loan program, the HPO runs education programs for the construction industry, sets standards for and licenses homebuilders, renovators and strata management companies, and monitors the homebuilding industry home warranty program that was brought in after the leaky-condo crisis collapsed the existing program.

Established by the then-NDP government in 1998, the program was initially envisioned as a 10-year, $250-million effort to help owners repair leaky buildings built before 1999.

The HPO has loaned out almost $670 million to the owners of 16,000 condo, primarily on the South Coast.

“I think the moral responsibility was met by successive governments by continuing the program longer than it was intended to go, and by funding it at a much higher level than it was intended to be,” Coleman said in an interview.

Opposition housing critic Shane Simpson called it a bad decision that leaves current owners of leaky condos high and dry.

“I think it’s nothing short of a betrayal of leaky-condo owners by the premier, by the minister and the government,” Simpson said in an interview.

“The government made a commitment some 10 years ago to help people to deal with these leaky condos, and they’re now turning their backs on who knows how many people who are still facing this problem.”

Simpson added that there is a continued demand for the loans.

The HPO will stop taking new applications immediately and process the 100 or so pending applications it has in hand, with a view to wrapping up the program by Dec. 31.

Coleman said the government will introduce legislation in the next session to officially end the program.

He added that the province topped up the loan program with $9 million to make sure it could fund its pending obligations after the HPO hit the limit of its financing earlier this year and had to stop awarding loans.

The loan program was funded by a $750-per-home levy on new construction, but the sharp drop in housing starts resulted in a drop in revenue to the program. Coleman said the levy will remain in place since loans are still outstanding.

He said the majority of applications the HPO now receives are from buildings that have leaked because of poor maintenance rather than construction failure.

“That’s not what the program is for, so basically what we’ve done is said it’s time to sunset this program,” Coleman said.

However, more than a year ago the HPO received a report from consultants McClanaghan & Associates that estimated some 45 to 55 per cent of the 160,000 strata-owned apartments built in B.C. during the leaky-condo period — considered between 1982 and 1999 — had suffered “premature building envelope failure.”

The report’s authors estimated that between 45 and 68 per cent of the leaky units had not yet been repaired, and that by 2012, up to one-third of them would still need fixing.

Pierre Gallant, an architect with engineering consulting firm Morrison Hershfield, said it is hard to estimate the number of buildings that still need repairing, but said the loan program was “hugely successful and very helpful” in encouraging homeowners to take action on their problems with leaky condos.

“Not all [buildings] have been repaired,” Gallant said. “Probably the majority have been repaired, but what does that mean? Fifty-one per cent, or 90 per cent?”

Gallant’s concern is that without the loan program, owners will be more reluctant to address their problems with leaks and buildings will go longer without repairs.

Coleman said the government would have to look at further evidence and determine if there was a “different problem that we need to address.”

Advocates for leaky condo owners were outraged.

“I think it’s atrocious,” said James Balderson, a long-time advocate for leaky-condo owners. He said he could not understand why the provincial government can’t extend a loan program when the government of Canada can bail out General Motors.

Friday’s decision also did not sit well with former premier Dave Barrett, who headed a commission that looked into B.C.’s leaky condo problem.

© Copyright (c) The Vancouver Sun