Buying ‘the fundamentals’ in Coquitlam

Claudia Kwan
Sun

Grand Central 2Project location: Glen Drive and Johnson St, Coquitlam Centre

Shelley Fralic
Sun

There is a theory — well-oiled and much-flogged — that home ownership in Metro Vancouver is beyond the limit of ordinary working folk.

And while there is some truth to that theory, that only the rich or lucky can afford the best neighbourhoods, it’s a promulgation fed beyond logic by those who rail about our cost of living, about leaky condos and greedy developers and non-residents driving up prices, about the average cost of a detached house in the region being too close to $1 million, and about the area’s 22 municipalities falling short on affordable housing for all kinds of residents.

Not to dash all that outrage, but surely a little clarity is in order, because the evidence suggests things aren’t quite that dire here in the promised land.

In fact, if you’ve been paying any attention at all you’ll know that house prices, at least for post-recession Metro Vancouver, are pretty decent right now. Regional sales announced this week reflect that — up 18 per cent to 3,512 sales in April, compared to the same month a year ago. Inventory is up, too, and then there are those interest rates, which are on the rise but are still historically low.

Need more proof that we’re not exactly Manhattan? Or Paris, London or Rome, for that matter?

Last Saturday, the 164-unit third phase of a condo development called Quattro, clustered near the Gateway SkyTrain station in Surrey, went on the block. Hundreds lined up to claim the smart modern units, some of which cost as little as $139,000, and half of which were priced under $200,000.

Out in Langley, according to weekend newspaper ads, a new project is offering “Euro-inspired” condos for $149,000 for a one-bedroom, $229,000 for two bedrooms.

A new home, for $139,000, for $149,000? Well, that’s the ‘burbs, you say, and who wants to live in the ‘burbs? (Besides the majority of the region’s 2.5 million population, that is.)

Saturday’s paper also advertised “downtown Vancouver’s lowest-priced concrete one-bedroom homes” on the edge of Yaletown at Nelson and Seymour, its units promising stainless steel appliances and wood cabinetry. The price? Starting at $239,000.

You mean you can put $10,000 down, snag a good mortgage rate and own a brand new place in the heart of the city for, like, $1,200 a month? Sweet.

Turns out there are a lot of sweet deals out there. The national Multiple Listing Service site has 382 listings for apartments under $300,000 in Vancouver alone, with hundreds more in surrounding municipalities.

But what about a house, you say, one that comes unattached on dirt, one for raising babies and planting perennials, one that doesn’t cost more than, oh, $500,000, which by all accounts is almost reasonable given recent local real estate history.

In Vancouver, as in Richmond and Burnaby and North Vancouver, there are only a handful of houses selling for less than $500,000, but according to the MLS on Friday, there are 88 in Coquitlam, 145 in Langley, 420 in Abbotsford, 212 in Maple Ridge and 753 in Surrey.

Many are less than $400,000. Are they ready for their Architectural Digest close up? Do they have hardwood floors and landscaped yards? Are the appliances shiny and new?

Get real.

This, of course, is where it gets tricky for many a property virgin, especially those who subscribe to self-entitlement. We want it all and we want it now, and first-time home buyers often have trouble lowering their standards, brainwashed by a spendthrift culture and HGTV.

Barring an inheritance or a winning lottery ticket, everyone has budget limitations, and that means sacrifice and compromise. It means getting over the fact that no matter how hard you work, you probably missed the boat on buying an Edwardian pile in Dunbar like the one your grandparents paid $15,000 for 50 years ago. It means you might have to buy what you can afford and not what you want.

Join the club. I was born and raised in Vancouver in the 1950s, but when it came time to buy my own home, 30 years ago, I went from a condo in Burnaby to a townhouse in Surrey to a tiny home in New Westminster, with a postage stamp yard, orange shag carpet and a basement bathroom with a dirt floor. It took years to trade up to my current home, with a lot of being house-poor and wondering how the bills would get paid along the way.

For most of us, no matter the generation, that’s the reality of first-time home ownership.

The property ladder, despite that kvetching grapevine, is not a phantom hope. Here in paradise it just requires some whittling of the wish list. You might have to save for a few more years. The kids might have to share a bedroom. Your first backyard might be a condo balcony. You will likely have to embrace the ‘burbs. The commute will be longer than you like. You might need a mortgage helper.

And you’ll definitely need to get over your petulance that it will always be cheaper to live in pretty much any other Canadian metropolis. It is, but then you’d have to move to Toronto, Winnipeg or Saskatoon.

So stop with the despair already. If your grail is to own a little piece of Metro Vancouver paradise, get on with it.

You may not find your dream house right out of the gate, but that’s why they call them starter homes.

© Copyright (c) The Vancouver Sun

Vancouverites are most likely to consider raising their family in a condo, TD Canada Trust survey finds

Brian Morton
Sun

If you’re a young adult looking for a condo, it might be best to approach your parents and just ask for one.

That’s one of the findings of TD Canada Trust’s Condo Poll, which shows Vancouverites not only see condos as a source of long-term income, but that 13 per cent — tied with Montreal for the highest in the country — would consider buying one for their adult children either to own or use.

“The number-one point [in this survey] is that Vancouverites believe condos provide good, affordable accommodation,” said Barry Rathburn, B.C. mobile mortgage specialist for TD Canada Trust, in an interview Wednesday. “It’s also interesting that 47 per cent of Vancouverites would invest in a condo, [mainly] for rental income. That’s the highest in the country.”

The high number of Vancouverites who would buy a condo for their children speaks to the fact that a lot of people in Vancouver have an urban lifestyle “that includes condo living,” Rathburn said.

A large number of parents now help their kids buy their first homes, perhaps with a down payment, so he said he wasn’t surprised by the survey findings.

“A certain segment would buy a condo in a major city so [their children] can attend a university. Afterwards, they could rent it out or sell it.”

According to the poll, Vancouverites continue to see the value in buying a condo, either for their own home or for their children.

The most common reason Vancouverites gave for buying a condo is affordability, with 45 per cent of residents citing that reason, compared to 24 per cent nationwide.

The two other top reasons were less maintenance (21 per cent) and wanting to downsize from a house (15 per cent).

However, respondents in Vancouver were also the most likely in the country to say that if they had more money, they would buy a house over a condo (53 per cent).

As well, Vancouverites are the most likely to consider raising a family in a condo (42 per cent versus 36 per cent nationally).

Rathburn said he’s seeing an increasing number of so-called snowbirds and other travellers who buy a condo for the summer and spend winter elsewhere.

The survey found that 66 per cent of Vancouverites would spend no more than $400,000 for a two-bedroom condo, although Vancouverites are also the most willing to pay more than $400,000 (31 per cent versus 15 per cent nationally). However, just eight per cent of Vancouver residents would pay more than $400 a month in condo fees.

The condo poll was conducted from April 14-20 in five large Canadian urban centres, with about 200 interviews in each centre.

© Copyright (c) The Vancouver Sun

Michael Hill, left, with wife Holly and sons Alex, 15, and Adam, 10. They fought to keep their home after it was auctioned off prematurely. By Bruce Flashnick for USA TODAY

 Paul Kiel
USA Today

Last November, Michael Hill of Lexington, S.C., finally got the call he’d been waiting for. Congratulations, a rep from JPMorgan Chase told him, your trial mortgage modification is approved. Hill’s monthly payment, around $900, would be nearly halved.

Except there was a problem. Chase had foreclosed on Hill’s home a month earlier, and his family was just days away from eviction.

“I listened to her and then I just said, ‘Well, that sounds good,’ ” Hill recalled. “ ‘Tell me how we’re going to do this, seeing as how you sold the house?’ ” That, he found out, was news to Chase.

Millions of homeowners face losing their homes in the continuing foreclosure crisis, but homeowners often have more than the struggling economy and slumping house prices to worry about: Disorganization within the big banks that service mortgages has made a bad problem worse.

Hill was able to avoid eviction — for now. Chase reversed the sale by paying the man who’d bought the home an extra $19,500 on top of the $86,000 he’d paid at the auction. But other homeowners say they lost their homes because the communication breakdown within the banks was so complete that it led to premature or mistaken foreclosures.

“We believe in many cases people are losing their homes when they should not have,” said Kevin Stein, associate director of the California Reinvestment Coalition, which counts dozens of non-profits that work with homeowners among its members.

In the worst breakdowns, such as Hill’s, banks — and other companies that service loans — actually work at cross-purposes, with one arm of the company foreclosing on the home while the other offers help. Servicers say such mistakes are rare and result from the high volume of defaults and foreclosures.

The problems happen even among servicers participating in the administration’s $75 billion foreclosure-prevention program. Servicers operating under the year-old program are forbidden from auctioning someone’s home while a modification decision is pending.

It happens anyway.

Consumer advocates say the lapses continue because they go unpunished. “We’ve had too much of the carrot, and we need a stick,” Stein says. The Treasury Department has yet to penalize a servicer for breaking the program’s rules. The program provides federal subsidies to encourage modifications.

Treasury officials overseeing the program say they’re aware of the problems and have moved to fix them. Some states are going further to protect homeowners, however, with recent rules that stop the foreclosure process if the homeowner requests a modification.

Many homeowners, seeing no other option, have gone to court to reclaim their homes. At least 50 homeowners have recently filed lawsuits alleging the servicer foreclosed with a loan mod request pending or even while they were on a payment plan.

Long waits for help

In good times, banks and other servicers —Bank of America is the biggest, followed by Chase and Wells Fargo— were known mainly to homeowners simply as where they sent their monthly mortgage payment. But the companies have been deluged over the past couple years by requests for help from millions of struggling homeowners.

Homeowners commonly wait six months for an answer on a loan mod application. The federal program for encouraging loan mods includes a three-month trial period, after which servicers are supposed to decide whether to make the modifications permanent. But some homeowners have waited as long as 10 months for a final answer.

The experience of Hill, married with two children, typifies the delays and confusion. After the mistaken foreclosure, he began the trial modification last December. He made those payments, but two months after his trial period was supposed to end, Hill is still waiting for a final answer from Chase.

The miscommunications have continued. He received a letter in January saying that he’d been approved for a permanent modification, but he was then told he’d received it in error.

His family remains partially packed, ready to move should the modification not go through. “I’m on pins and needles every time someone’s knocking on the door or calling,” he said.

Christine Holevas, a Chase spokeswoman, said that Chase had “agreed with Hill’s request to rescind the foreclosure” and was “now reviewing his loan for permanent modification.” She said Chase services “more than 10 million mortgages — the vast majority without a hitch.”

Communication breakdowns occur because of the way the servicers are structured. One division typically deals with modifications and another with foreclosures. Servicers also hire a local trustee or attorney to actually pursue foreclosure.

“Often they just simply don’t communicate with each other,” said Laurie Maggiano, the Treasury official in charge of setting policy for the modification program. Such problems were particularly bad last summer, in the first few months of the program, she said. “Basically, you have the right hand at the mortgage company not knowing what the left hand is doing,” said Mark Pearce, North Carolina’s deputy commissioner of banks. Communication glitches and mistakes are “systemic, more than anecdotal” among mortgage servicers, he said.

“We’ve had cases where we’ve informed the mortgage company that they’re about to foreclose on someone.” The experience for the homeowner, he said, can be “Kafkaesque.”

“We’re all human, and the servicers are overworked and trying their best,” said Vicki Vidal, of the Mortgage Bankers Association. She said foreclosure errors are rare, particularly if struggling homeowners are prompt in contacting their servicer.

Frances Gomez, of Tempe, Ariz., lived in her house for over 30 years. Three years ago, she refinanced it with Countrywide, now part of Bank of America, for nearly $300,000. The home’s value has declined dramatically, said Gomez, who put some of the money from the refinancing into her hair salon.

Last year, the recession forced her to close her shop. Gomez fell behind on her mortgage, and after striking out with a company that promised to work with Bank of America to get her a loan mod, she learned in December that her home was scheduled for foreclosure.

So Gomez applied herself. She twice succeeded in getting Bank of America to postpone the sale date, and she said she was assured it would not happen until her application was reviewed. Gomez had opened a smaller salon and understood there was a good chance she would qualify for a modification.

She was still waiting in March when a Realtor, representing the new owner of her home, showed up. Her house had sold at auction — for less than half of what Gomez owed. “They don’t give you an opportunity,” she said. “They just go and do it with no warning.”

It’s not supposed to work that way.

Under the federal program, which requires servicers to follow a set of guidelines for modifications, servicers must give borrowers a written denial before foreclosing. When Gomez called Bank of America about the sale, she said, she was told there was a mistake but nothing could be done. She did get a denial notice — some three weeks after the house was sold and just days before she was evicted.

“I just want people to know what they’re doing,” Gomez, now living with family members, said.

After being contacted by ProPublica, Bank of America reviewed Gomez’s case. Bank spokesman Rick Simon acknowledged that Gomez might not have been told her house would be sold and that the bank made a mistake in denying Gomez, because it did not take into account the income from her new salon business. Simon said a Bank of America representative would seek to negotiate with the new owner of Gomez’s house to see if the sale could be unwound.

Simon said the bank regrets when such mistakes happen due to the “very high volume” of cases and that any errors in Gomez’s case were “inadvertent.”

Even avoiding a mistaken sale can also be a stressful process.

One day in February, a man approached Ron Bermudez of Emeryville, Calif., in front of his house and told him his home would be sold in a few hours. This came as a shock to Bermudez; Bank of America had told him weeks earlier that he’d been approved for a trial modification and that the papers would soon arrive. He made a panicked phone call to an attorney, who was able to make sure there was no auction.

To contest a foreclosure under the federal program, Maggiano, the Treasury official, said a homeowner should call the HOPE Hotline, 888-995-HOPE, a Treasury Department-endorsed hotline staffed by housing counselors. Those counselors can escalate the case if the servicer still won’t correct the problem, she said.

That escalation process has saved “a number” of homeowners from being wrongfully booted out of their homes, Maggiano said. Hill, the South Carolina homeowner, is an example of someone helped by the HOPE Hotline.

Of course, the homeowner must know about the hotline to call it. Gomez, the Arizona homeowner who lost her home to foreclosure, said she’d never heard of it.

Many homeowner advocates say the government’s effort has been largely ineffective at resolving problems with servicers.

“I uniformly hear from attorneys and counseling advocates on the ground that the HOPE Hotline simply parrots back what the servicers have said,” said Alys Cohen, an attorney with the National Consumer Law Center. Cohen said she’d voiced her concerns with Treasury officials, who indicated they’d make improvements.

Offering more protection

Under the current rules for the federal program, servicers have been barred from conducting a foreclosure sale if the homeowner requested a modification but are allowed to push along the process, even set a sale date. That allows them to foreclose more quickly if they determine the homeowner doesn’t qualify for a modification.

As a result, a homeowner might get a modification offer one day and a foreclosure notice the next. As of March, servicers were pursuing foreclosure on 1.8 million residences, according to LPS Applied Analytics.

Maggiano, the Treasury official, said that’s been confusing for homeowners. Some “just got discouraged and gave up.”

New rules issued by the Treasury in March say the servicer must first give the homeowner a shot at a modification before beginning the process that leads to foreclosure.

They also require the servicers to adopt new policies to prevent mishaps. For instance, the servicer will be required to provide a written certification to its attorney or trustee that the homeowner does not qualify for the federal program before the house can be sold.

Maggiano said the changes resulted from visits to the servicers‘ offices last December that allowed Treasury officials to “much better understand (their) inner workings.”

The rules, however, don’t take effect until June. Nor do they apply to hundreds of thousands of homeowners seeking a modification for whom the process leading to foreclosure has already begun. And Treasury has yet to set any penalties for servicers who don’t follow the rules.

Maggiano said Treasury’s new rule struck a balance to help homeowners who were responsive to servicer communications to stay out of foreclosure while not introducing unnecessary delays for servicers. Some borrowers don’t respond at all to offers of help from the servicer until they’re faced with foreclosure, she said.

Some states, such as North Carolina, have recently gone further to delay moving toward foreclosure if a homeowner requests a modification. State regulators there recently passed a law that requires a servicer to halt the process if a homeowner requests a modification.

Pearce, the North Carolina official, said the rule was prompted by the delays homeowners have been facing and puts the burden on the servicer to expeditiously review the request. “They’re in total control.”

Stopping the process not only removes the possibility of a sudden foreclosure, he said, but also stops the accumulation of fees, which build up and can add thousands to the homeowner’s debt as the servicer moves toward foreclosure.

In California, state Sen. Mark Leno, a Democrat from San Francisco, is pushing a bill that would do something similar. The servicers “should be working a lot harder to keep homeowners in their home,” he said.

Copyright 2010 USA TODAY

Canadians bitten by home-buying bug

Province

With Canada’s economic recovery appearing to be in full swing, a study released Wednesday shows more people becoming interested in buying a home.

A survey by research group TNS Canadian Facts shows the proportion of people intending to buy a house or condominium was 14 per cent across the country in March, compared with 11 per cent in September.

But much of the previously measured demand remained “unsatisfied,” as nearly two-thirds of those who were planning to purchase in September still had not bought by March.

TNS linked the increased willingness of people to enter into home ownership with the economy’s improving prospects, noting that its other research shows consumer confidence has recovered to levels around what was seen before the economic crisis hit in the fall of 2008.

Low interest rates are also a factor, TNS said. The survey showed 12 per cent of renters in the country intending to buy homes to take advantage of low mortgage rates, while 22 per cent of existing mortgage holders are looking to renegotiate their terms.

TNS noted that the survey was taken March 18 to 25, before new federal regulations took effect that require higher down payments to qualify for mortgages, and before Canada’s major banks began a series of hikes to their mortgage rates.

The research firm predicted that the new federal rules would have a “mild dampening effect” on housing demand.

A separate survey released Tuesday by the Bank of Montreal found that B.C. residents are more likely than other Canadians to have bought a home because they were convinced prices will continue rising.

In B.C., 18 per cent bought a house because they believed its value would increase, compared with seven per cent in Atlantic Canada, six per cent in Quebec and five per cent in Ontario.

At 22 per cent, the proportion of B.C. homebuyers who consider resale potential was almost double the 11 to 15 per cent for other provinces, BMO said.

In its monthly report, the Fraser Valley Real Estate Board reported close to record listings for April.

The board’s 10,635 active listings last month were second only to the 11,891 listings recorded for April 1995.

The board saw 1,793 units change hands in April, up 38.7 per cent from a year earlier.

The Real Estate Board of Greater Vancouver said that its benchmark price for all homes rose 18.9 per cent to $593,419 in April from $499,021 a year earlier.

© Copyright (c) The Province

Long-term residents shocked to learn about sale

Denise Ryan
Sun

When tenants of an apartment building at 288 East 14th in Vancouver found out their landlord had sold the 33-unit building, they were shocked to discover the units they had been living in were condominiums — and that the new owners planned to put them on the market immediately.

Lindsay Elliot, who moved into the building three years ago with her six-year-old daughter, said she would not have moved in if she thought her apartment could be sold out from under her — as a mother, she values stability.

Elliot said there has been little communication about the pending sell-off with residents, some of whom have lived in the building for 25 years.

“I got a call out of the blue from a real estate agent saying my place was valued at $270,000 and did I want to buy it. I don’t even know what’s going on,” said Ian Andrews, who has lived in his 475-square-foot unit for about five years.

Elliot said the tenants have been told the new owners, who are essentially flipping the units, are from Alberta. “They have no ties to the community, no interest other than making a profit.”

Although tenants may have the right to stay out their lease, buyers of high-priced properties can find ways to increase rents if their costs exceed the income the property generates.

It’s yet another way in which affordable rental stock in the city is being eroded, said Martha Lewis, executive director of TRAC, the Tenants Resource and Advisory Centre. Middle-income earners priced out of the buyers’ market are now being priced out of the renters’ market, she said.

“There is a complete disconnect where investors are over-paying for real estate, and as a consequence, rents shoot up,” said Lewis. “In several American cities average income earners are being priced out of the city and forced into the suburbs.”

The result, an urban centre of homeowners and high-income renters, changes the flavour of the city, and not in a good way. Lewis cites San Diego, where most average-income earners like nurses, teachers and police officers have been priced out of the city in which they work.

“Buyers are coming in from the U.S., from Calgary, from China. They’re looking for a safe haven to invest in, and that forces the prices up,” said COPE city councillor Ellen Wordsworth.

Youth, young families, single parents and many new Canadians are being forced out of the city, she said.

“We are in a desperate situation,” said Wordsworth. “We’ve got availability, but no affordability. Unless the federal and provincial governments step in, we can’t do a thing to change it.”

Andrews said, “I’ve saved for six years to try to put together a down payment, what with the cost of living in Vancouver being so high, it’s nearly impossible. I don’t know if I’ll be able to afford to buy my place — or any place in the city.”

© Copyright (c) The Vancouver Sun