Derrick Penner
Sun

Metro Vancouver’s new-home prices have followed the resale-home market upward to previous peaks during real estate’s rebound, developers and consultants have noted.

Statistics Canada reported on Thursday that by April the region posted the strongest year-over-year gain in newhome prices among the major markets it examines in its monthly new-housing price index.

Metro Vancouver saw prices edge up 0.4 per cent in April from March; they were six per cent higher than the same month a year ago.

“Year-over-year, for new, six per cent [up] sounds about right,” Neil Chrystal, president of Polygon Homes Ltd., said in an interview. “Because the market really started moving last spring after a dreadful winter and fall.”

Michael Ferreira, a principal at the consulting firm Urban Analytics, said that premiums are now creeping back into new-home prices over resale prices whereas a year ago developers had to discount prices to be more competitive with resale values.

Ferreira expects that situation could change in the coming months as sales in the resale market have cooled a bit and inventories of unsold homes have increased significantly.

“[However] there isn’t really a lot of standing inventory [of new homes] that would force developers to follow the resale pricing trend that quickly or closely,” Ferreira said.

Chrystal added that while new-home prices may have reached new peaks, the cost to service mortgages for purchases is still below the cost to pay down mortgages at the previous peak, thanks to the current low mortgage interest rates.

Chrystal said home sales have slowed, but are “slowing from a very high level.”

Elsewhere in Canada, only St. John’s, N.L., in the midst of an oil-induced boom, recorded almost as strong a gain, with a 5.9 per cent year-over-year increase. Winnipeg was next with prices up 4.9 per cent from April 2009.

On the West Coast, Victoria’s newhome prices on the Statistics Canada index remained below pre-recession levels with its index value in April 3.8 per cent lower than the same month a year ago, although it is still showing month-to-month gains.

In April, Victoria’s new-home prices were up 0.2 per cent from March, according to Statistics Canada.

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Bid to preserve parkland dashed by approval of $118m plans

Lena Sin
Province

Bowen Island. Photograph by: Handout, PNG

A piece of pristine private property that was used for decades as a public playground for Bowen Island residents is now being subdivided into a multimillion-dollar residential development.

The Cape on Bowen is a $118-million luxury development spanning 248 hectares on the southwest tip of Bowen Island, which is 20 minutes by ferry from West Vancouver.

The waterfront property, known by locals as the Cape Roger Curtis lands, will be subdivided into 59 lots of about four hectares each, with prices starting at $1.75 million.

For years, the subject of development on the property was contentious, with some residents hoping to see it preserved as parkland.

But after six years of back-and-forth negotiations between the Vancouver-based developer and the municipality, the developer is now proceeding with its original plan.

“We are basically pretty comfortable that this is the best use of the land. Because of the low density, we can preserve the pristine nature of the land,” said Edwin Lee, owner of Leeda Development Group.

The development is a joint venture between Leeda Development and Don Ho’s Trans City Group. The developers bought the property in 2004 for $16 million and the 2010 B.C. Assessment valued the property at about $27.5 million.

The land was previously owned by two families who too had considered developing the property as far back as 1977.

But over the years the idea didn’t go anywhere and the land was passed on from one generation to the next, according to Bowen Island Coun. Alison Morse.

“The previous owners were very generous and allowed the public to walk through there. The community was used to seeing this as their own park,” said Morse.

When the idea of subdivision was met with opposition, the developers were invited by council to come up with an alternative.

The developers proposed preserving a large part of the land as a park and providing other amenities in exchange for higher density of about 600 housing units.

But Mayor Bob Turner says the public was “overwhelmingly” opposed, with critics saying the housing density was excessive.

Lee and Ho are now proceeding with the original proposal, which is compliant with existing zoning regulations.

When the property first went up for sale at least two groups were interested in purchasing the land for conservancy, including the Cape Roger Curtis Trust Society, which could not raise enough funds before the developer put in its bid.

Jean Jamieson, a board member of the society, says she’s still hopeful they can raise enough funds to purchase some of the land for preservation.

“It’s a big disappointment the development was approved,” said Jamieson.

Sales for the first phase of Cape on Bowen started last week, with the prices averaging $2 million.

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Alan Zibel, AP Real Estate Writer
USA Today

WASHINGTON — The foreclosure crisis leveled off in May as the number of people facing foreclosure was nearly flat from a year ago, according to RealtyTrac, a private foreclosure listing service.

A third fewer people are receiving legal warnings that they could lose their homes. And foreclosures are receding in some of the hardest-hit cities, the report says.

Still, the number of foreclosures remains extraordinarily high. Experts caution that a big reason for the stabilization is that banks are letting delinquent borrowers stay longer in their homes rather than adding to the glut of foreclosed properties on the market. New consumer protection laws, which vary by state, have also meant borrowers can spend more time in their homes.

A new wave of foreclosures could be coming in the second half of the year, especially if the unemployment rate remains high, mortgage-assistance programs fail, and the economy doesn’t improve fast enough to lift home sales.

“It’s not anything like a recovery yet,” says Rick Sharga, a senior vice president at RealtyTrac.

RealtyTrac reported Thursday that nearly 323,000 households, or one in every 400 homes, received a foreclosure-related notice in May. That was up 0.5% from a year earlier and down 3% from April. The report tracks notices for defaults, scheduled home auctions and home repossessions.

But in a sign that the crisis is far from over, the number of homeowners who lost their homes to foreclosure hit a record of nearly 94,000 in May. That number may finally peak next year, as lenders try to work their way through millions of delinquent loans.

Economic woes, such as unemployment or reduced income, are the main catalysts for foreclosures this year. Initially, lax lending standards were the culprit. Now, homeowners with good credit who took out conventional, fixed-rate loans are the fastest growing group of foreclosures.

A record high of more than 10% of homeowners with a mortgage had missed at least one payment as of the end of March, according to the Mortgage Bankers Association. But the number of homeowners just starting to show trouble is trending downward as the economy improves.

“That’s a very good thing,” said Thomas Lawler, an independent housing economist in Virginia. But he noted that even with that positive trend, “you are highly likely to see an acceleration in the number of actual completed foreclosures.”

Lenders are offering to help some homeowners modify their loans. But many borrowers can’t qualify or they are falling back into default. The Obama administration’s $75 billion foreclosure prevention effort has made only a small dent in the problem.

About 25% of the 1.2 million homeowners who started the program over the past year had received permanent loan modifications as of April. About 23% of those enrolled dropped out during a trial phase that lasts at least three months. Many more are in limbo.

Among states, Nevada posted the highest foreclosure rate in May. One in every 79 households there received a foreclosure notice. However, foreclosures there are down 16% from a year earlier.

Arizona, Florida, California and Michigan were next among states with the highest foreclosure rates. Rounding out the top 10 were Georgia, Idaho, Illinois, Utah and Maryland.

Las Vegas continued to be the city with the nation’s highest foreclosure rate, but activity there was down 18% from a year earlier. And nine out of the top 10 cities with the highest foreclosure rates posted annual declines. The exception was the Vallejo-Fairfield area in California, where foreclosures were up 1% from a year ago.

Foreclosed homes are typically sold at steep discounts, lowering the value of surrounding properties. That’s a concern for communities, and a drag on the economic recovery.

In recent months, home prices have started to sink again after stabilizing last summer. Economists at Goldman Sachs predicted in a report last week that prices will fall about 3% nationally over the next year, with the largest declines in cities where mortgage defaults are rising.

“The housing market remains plagued by enormous excess supply,” wrote Goldman economist Sven Jari Stehn.

Foreclosure filings in May

Source: RealtyTrac

Copyright 2010 The Associated Press. All rights reserved.

Development group to turn southwestern tip of island into expensive subdivision

Derrick Penner
Sun

Bowen Island will soon have its own multi-million-dollar subdivision on this parcel of land.

A Vancouver-based development group is proceeding with plans to turn the southwestern tip of Bowen Island into a multi-million-dollar subdivision after an alternative proposal for a comprehensive community, including a park, collapsed last year.

The Cape on Bowen, a joint venture between Edwin Lee’s Leeda Development Group and Don Ho’s Trans City Group, launched sales last week for the first 14 premium 10-acre sites in what will be a 59-lot, $118-million development.

“It’s 35 minutes from downtown Vancouver, and a rare opportunity to own this kind of south-facing oceanfront estate-home site,” Lee said, promising the community will retain the area’s pristine natural state as much as possible.

“Our intent originally was to subdivide it,” Lee said in an interview about his and Ho’s purchase of the 248 hectares, known as Cape Roger Curtis, in 2004 for $16 million. (In 2010, BC Assessment valued the property at $27.7 million.) “So this is pretty much what we wanted to do.”

That proposal, however, wasn’t popular with the community when the developers first proposed it in 2004.

In an interview with BowenTV, which has a channel on YouTube, Lee said “there was a lot of opposition” to the subdivision application when it was first submitted.

In the same BowenTV video, Ho said the group was encouraged to consider a more comprehensive community with more housing types than single-family lots for millionaires, as well as a substantial park in an undeveloped area that has become coveted by the public.

Ho said the developers put considerable effort into establishing the community’s wants for a park and amenities and developed a comprehensive community plan that satisfied his company’s development needs with density, which it submitted for rezoning consideration in September 2008.

The proposal, however, proved to be “too large for the community,” Bowen Island Mayor Bob Turner said in an interview.

The developers were looking for significant density in exchange for reserving a large portion of the property as a park. It called for more than 600 housing units, Turner said, which was in excess of Bowen Island’s official community plan for the Cape Roger Curtis property.

“[The plan] had its supporters and opponents,” Turner said, but by the time Bowen’s municipal government considered it in May 2009, “by every way council could measure community support, indicators were that there was dominant opposition.”

Lee’s group withdrew the rezoning application and proceeded with its subdivision.

“Ultimately, the community preferred the low-density subdivision option that zoning allowed,” he added. “So we are quite comfortable that this provided the best option for the land.”

Though there will be no park, Lee said the subdivision will include a public one-kilometre shoreline trail and public access trails to some of the most popular public spots — the Cape Roger Curtis light, Cape Roger Curtis Beach and Collingwood Point.

Lee added that there will be other internal trails within other phases of the development that connect with the island’s trail systems.

“So actually, there is plenty of opportunity for residents to enjoy the property,” he said.

However, there is a sentiment that islanders missed an opportunity to get more out of the development to help build a more comprehensive community.

Neil Boyd, prominent Simon Fraser University criminologist and longtime Bowen resident, said there are probably people who like the subdivision because its low-density character helps restrict access to the island.

“I don’t think you build a community that way,” Boyd, a former Bowen Island councillor, said in an interview.

He also doubts that over time the Cape Roger Curtis project will remain a 59-lot development, because buyers will have rights to subdivide their lots.

Boyd said he understands the position that the proposed increase in density was perhaps too much for residents to accept, but he thought the trade-off of parkland, amenities and housing that would be more affordable to more people was worth it.

“To me the tragedy is just that there was not a compromise [between the community plan and 59-lot subdivision],” Boyd said.

© Copyright (c) The Vancouver Sun

Derrick Penner
Sun

The pace of new-housing construction in Metro Vancouver eased off in May from that of previous months yet remains at a level “in line with market conditions,” Canada Mortgage and Housing Corp. reported Tuesday.

The national mortgage insurer counted 1,173 new homes across Metro Vancouver in May, a dramatic 150-per-cent improvement on the same month a year ago, which was still in the doldrums of B.C.’s housing downturn.

For the year to date at the end of May, builders have started work on 5,631 new homes, which is 103 per cent more than for the same period a year ago.

However, Robyn Adamache, Canada Mortgage and Housing’s senior analyst for Vancouver, said the annualized pace of construction, the estimate for the number of starts that will occur by the end of the year, had slowed some seven per cent compared with April.

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Homes are a long-term investment

Garry Marr
Sun

‘You know, you’re making the biggest mistake of your life. The housing market is going to fall.”

I got this great piece of advice from another journalist at the Financial Post, who has since left the newspaper, after buying my first home. Not exactly the type of thing you want to hear after taking on huge debt and making the biggest financial decision of your life.

Lucky for me, I didn’t heed that advice about Toronto’s red-hot real estate market — in 1998. I’m not going to say I made a shrewd business decision 12 years ago, or even six years later when I bought a larger house.

For me, it wasn’t a case of not following what turned out to be bad advice from a fellow business journalist. Nor was it about trying to time the market.

I was simply following the same pattern as most Canadians: I got married and decided to stop renting and buy something. Later came the need for a bigger home when the second kid was on the way.

Which brings us to today. The supply of housing is rising fast as people try to list their homes for sale before the market “crashes.” This is happening at the same time that demand is starting to wane. Economists and even the real estate industry, are all predicting a correction — the only argument being how severe it will be.

So, the question for anyone buying is: should you wait?

Don Lawby, chief executive of Century 21 Canada, thinks the strategy of waiting for a crash is not going to work during this economic cycle. “For a market to crash, you have to have people who are desperate to sell,” says Mr. Lawby. “People

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will [only sell] if they can’t afford their mortgage or they don’t have a job.” He doesn’t see a decline in prices, “unless you are predicting that mortgages will renew at a hefty premium — which is not the case — or a whole bunch of people are going to lose their jobs.” Mr. Lawby believes neither will happen.

And, he adds, you are really into a risky game if you are timing the market. “A house is a home. If all you are doing is looking at it as an investment — that’s what happened the last 15 years — it’s not just that. It’s a place to live and a place to raise a family,” says Mr. Lawby. Even Benjamin Tal, a senior economist with CIBC World Markets, who, last month, said in a report that Canadian housing is 14% overvalued, has doubts about playing the market. But he suspects that’s exactly what some Canadians will do.

“Is there a sense that prices will go down and people will wait? I think it might be an issue,” says Mr. Tal. “It won’t be the main reason [people don’t buy], but it will happen at the margins. The fact that people sell at the peak and wait to buy is a normally functioning market.”

But even if you do make the right call on housing prices, it could end up backfiring on you in other ways. For example, if interest rates rise fast enough, any gains you make on price could be erased by interest charges, says Mr. Tal. Edmonton certified financial planner Al Nagy says you need to think of your house the way you think about any long-term investment. “Whether it’s an investment for use in your retirement or a house to live in, it’s a long-term thing. The timing becomes less critical than it would be if it is a speculative [investment].”

And he says making a call on the housing market is as tricky as any other investment call. “It’s very rare you catch the bottom. You can’t let the market dictate when it’s time to buy. The time to buy is when you can afford it,” says Mr. Nagy.

I’m not sure that philosophy would fly with my former colleague, but the problem with timing the market is: what if your timing is off ?

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