Buyers of homes priced at over $1 million will no longer be able to get government-backed mortgage insurance, effective july 9, 2012

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Recommendations include community land trust

Mike Howell
Van. Courier

The city may create a housing authority, expand zoning to allow more forms of housing such as row houses and upgrade decaying rental housing stock to create so-called affordable homes for middle to moderate income earners.

Mayor Gregor Robertson announced those recommendations Monday and others, including the creation of a community land trust to acquire and hold land for cheaper housing, as part of his task force on housing affordability. “There is no quick fix for affordable housing in Vancouver,” the mayor told reporters at city hall. “This is many decades of decline and challenging circumstances mounting and we’re not going to fix it overnight here.”

But, the mayor said, the focus of the task force, which he co-chaired with former provincial Liberal cabinet minister Olga Ilich, is to zero in on what city hall can do to put a dent in what he called “an affordability crisis.” The recommendations, which will be open to public feedback before going before council in September, are aimed at finding housing for people earning between $21,500 and a combined $86,500 per year.

The report notes two sobering facts:

• Vancouver has the highest housing prices in Canada and the vast majority of households in the city have incomes well below those required to purchase even a modest condo.

• Nearly 50 per cent of households in Vancouver headed by people under 34 years old spend more than 30 per cent of their income on housing.

For the city to have any impact on the city’s market-driven real estate, the task force recommends broadening forms of housing to allow for more townhouses, row houses and laneway homes to achieve greater density. By extension, new forms of housing would increase the diversity and affordability of housing. Building that housing near transit is also key, according to the report, noting the benefits of lower transportation costs, proximity to jobs and easy access to child care, schools and parks.

The current state of housing in Vancouver exists largely in two forms—single-family homes on single lots and apartment buildings.

“There is little in the continuum of housing beyond these two forms to meet the needs of families and smaller households,” said the report, which was developed by a range of people including developers, non-profit housing providers, a First Nations leader and city councillors Raymond Louie and Geoff Meggs.

Other recommendations include investigating building affordable housing in partnerships with non-profits, foundations, unions, religious organizations and philanthropists.

“Such partnerships acts as ethical investment vehicles, committed to providing financing at less than market returns for non-profits undertaking affordable housing projects,” the report said.

The task force identified a need for a city-owned housing authority that would be tasked with developing social and affordable housing. Similar authorities already exist at Metro Vancouver, in Edmonton, Winnipeg and Toronto.

As for rental housing, the city is currently reviewing four community plans—in Marpole, the West End, Grandview-Woodlands and the Downtown Eastside—where a vast amount of market rental housing is decaying.

David McLellan, the deputy city manager who oversaw the work of the task force, said deciding how best to re-invest in that housing stock will or is included in the reviews.

Neither the mayor nor McLellan provided any costs of implementing the recommendations.

© Copyright (c) Vancouver Courier

Trouble In CondoLand Toronto Life’s Compelling Exposure Of An Industry Gone Array

Charles Hanes
Other

I am frequently called by the media to add input and perspective on articles and/or television shows focusing on the Toronto condo industry.  With over 34 years of day to day, hands-on involvement in this multi-billion dollar industry I have extensive “insider knowledge“, and quite frankly, I know where the bodies are buried!

If you are thinking of buying a Toronto condo to live in or as an investment, you will want to get your hands on this “must read” expose written by Philip Preville.  I must disclose that I am mentioned a few times in the article and I can tell you that a great deal of the research set out in this article was initiated by me during numerous lengthy telephone conversations.

I’ve got to say that I am extremely impressed with both Philip’s writing style, and more so, the unprecedented integrity that he brought to the challenge of peeling back the onion skin and layers on layers of confusing rhetoric to get to the heart of the challenge.

The article is concise and reads as a “believe it or not” novel!  The scary thing is that the examples set out in the article are but scratching the surface of a distasteful exploitation of consumers that has gone on for decades, all of the decades that I’ve been involved in the sales and marketing of residential condos in this city.

Much of the support material underscoring this article can be found in the archives of my blog.  I’ve been quietly exposing many of the issues for decades now!  That’s what brought Philip to me in the first place!

Philip brought a certain naivete to the challenge which was exactly what was needed.  A total outsider perspective and the shock of learning what developers have been getting away with since the real estate Act changed from involving ground, to include the air above the ground, resulting in the term “condominium” back in the early 1970’s.

I started in this business in 1978 as a sales trainer, brought in by the Reichmann Family to turn around their failed efforts to introduce luxury condos to Toronto.  I remember Charles (“Hunter“) Milbourne, one of the top developer sales agencies in the city today, sitting in Harbour Square with his twelve slide show projector sales presentation trying to sell condos at $50,000 (today those very same units sell at over $500,000)!

No-body new what a condo was!  And Torontonians were very hesitant to jump on the band wagon, thus the Reichmann’s were forced to bring in a high powered, high pressure sales professional to try to turn things around, and turn them around I did.  I’ve been selling condos ever since!

For years I represented developers and was frequently called in by developers when they realized they were in trouble!  I was always offended by what I saw developers getting away with, but my job was to sell their units for them and sell them I did!

About twelve years ago I had had enough and I started feeling guilty for slamming people into condo dreams that more frequently turned into night mares!  Florida had just introduced the concept of “Buyer Agency” and Canadian Realtors were terrified of the concept!

So, as usual, I concluded that Buyer’s Agent was what I should be.  In 1989 (prior to the Internet, World Wide Web, Windows Operating System, PC and all the related technology that has evolved since) I had already produced a very sophisticated interactive multimedia CD-ROM in DOS, designed to sell Toronto condos in Hong Kong.  The market in Toronto had crashed and the Communists were taking over Hong Kong so I, in my entrepreneurial vision, put the two isolated components together and came up with digital real estate!

So, a decade or so later, in 2000 I launched simplycondos.com representing only Buyer’s of condos.  The site skyrocketed to over 40,000 “Hits” Per Day!  With over 20 years of experience in 2000 I knew all of “the good, the bad and the ugly” (to use Clint Eastwood terminology) condo buildings which is the most significant reason that any astute buyer would choose a Realtor to be their Buyer’s Agent.

And for the past twelve years I’ve knocked myself out representing buyers and enjoying every minute of my seven day a week from morning to night career choice!

The one constant spur under my saddle was the audacity by which developers exploited buyers.  Promising everything under the sun and delivering “minimum standard” is the foundational lie underscoring this industry!  I’ve written countless blogs exposing unethical developers and faced numerous threatened law suits, wasted endless numbers of hours defending myself (I don’t hire lawyers) against frivolous law suits initiated by developers to shut me up.  A simple reading of the archives of my blog can show you many developers that buyers/investors should keep away from!

It’s about time that a journalist actually do what journalists are supposed to do!  I commend Philip Preville for his precedent setting initiative that led him to write this article!  It is a start!  I also commend Rosario Marchese, Toronto MPP (“Minister of Parliament”) for Trinity-Spadina who, earlier this year introduced a private member’s bill at Queen’s Park to amend to Condominium Act, something that I’ve been lobbying for since 2000!

This is the fourth time that Mr. Marchese has tried to amend the Act; each previous attempt was brushed aside by the Liberal Government.

The whole industry has to be revamped!  The Tarion Warranty Program is a sham!  The Condo Act protects only the developers and property managers (who support them and proliferate the shell game that is pre-construction condo sales)!  City inspectors don’t inspect workmanship, rather they show up after the fact when everything is closed up and assume that proper workmanship and materials were used!  The Municipality of Toronto (the City) is as fixated on the cash grab as are all the other players!

The industry is a scam with everyone making out like bandits with the distinct exception of the consumer, whom, it is represented as being the reason all these institutions existence!

Let’s home this Toronto Life article kicks in some common sense into an industry that operates totally out of control and with implied, if not explicit impunity!

I’m volunteering to head up the organization to oversee the horrific challenge of taking this bull by the horns!  I am reassured and cautiously optimistic that Philip’s hard work and journalistic integrity may just have cracked the invisible glass wall that shuts consumers out of the “happy ever after” scenario that historically has benefited only developers in this industry.

Stay tune!

I’m Charles Hanes

Other

1971 to 2006

Homeownership increased quickly with the age of the owners in the period before they reached the age of 40. Thereafter, homeownership continued to climb, though at a slower pace until it reached a plateau as owners neared retirement age.

The homeownership rate changed little in the early years of retirement, but started declining when people reached their late 70s. Thus, the majority of seniors continued to receive services associated with homeownership for more than 10 years after the age of 65.

This study, based on data from censuses of population conducted between 1971 and 2006, showed a strong consistency in the age profile of homeownership across generations of Canadians.

It found that the level at which homeownership plateaued has risen steadily across birth cohorts since the 1970s. The peak level of ownership increased from 73% for those born in the 1910s to 78% for those born during the Second World War.

This trend appears to be continuing as the early baby boomer group, those born in the late 1940s and early 1950s, achieved higher ownership rates before age 60 than had earlier generations.

Family income has been closely related to both the level of homeownership and the increase in homeownership since 1971. There was a substantial difference in homeownership across income quintiles throughout the period.

This difference increased over time, as a result of the fact that the homeownership rate declined for the lowest-income group but rose for higher-income groups.

Families with children were the most likely group to own a home in 1971. This trend continued into 2006. However, the difference with other groups in this respect has declined over time.

The likelihood of homeownership increased at a greater rate for couples without children and for non-family individuals over this period. The proportion of these two groups in the overall population also increased over this period. These two groups still were less likely to own a home than were couples with children. However, the increase in the ownership rates of these two groups offset the effect of the shifting composition of the overall population to the two groups with lower ownership rates.

Owned homes provide shelter and associated local amenities for both owners and non-owners in the same household. Young adults in their 20s and 30s, particular young men, tend to benefit the most from the housing services that derive from homes owned by others, in most cases, their parents. The tendency of adult children to remain living with their parents has increased over the last three decades.

Note: This study uses data from eight censuses between 1971 and 2006 to examine the extent to which Canadians of different ages, incomes, and family structures (including couples with and without children) acquire and retain homeownership, particularly after the age of 65.

This release uses the term “homeowners” rather than the formal census terminology of “household maintainers”. The “household maintainer” variable was used in this study as it is the best available measure of homeownership though in some instances the owner of the dwelling may not be the household maintainer. For example, where adult children are living with their parents, it is possible that the children are the maintainers, but not the owners.

Definitions, data sources and methods: survey number 3901.

The research paper “Homeownership over the Life Course of Canadians: Evidence from Canadian Censuses of Population,” part of Analytical Studies Research Paper Series (11F0019M2010325 free), is now available from the Key resource module of our website under Publications.

Similar studies from the Social Analysis division are available at (www.statcan.gc.ca/socialanalysis).

For more information, or to enquire about the concepts, methods or data quality of this release, contact Feng Hou (613-951-4337; [email protected]), Social Analysis Division.

Susan Pigg
Other

This home at 56 Simpson Ave. in Toronto’s Riverdale neighbourhood first sold for $1,200 in 1906. It went for $825,000 in Nov, 2011

If Toronto fireman Alexander Gunn was alive today, he might well feel like the Warren Buffett of his times.

The semi-detached home he bought in Toronto’s Riverdale neighbourhood for $1,200 in 1906, sold in November for $825,000.

Conventional wisdom has it that buying a home is one of the smartest things we can do. If you have been lucky enough to live in the Greater Toronto Area, especially in the last 10 years when house prices have doubled, that would be true.

But over the long run, is home ownership such a great deal? To find out Moneyville took a close look at Gunn’s house over the last 105 years.

Here’s what we found: Adjusted for inflation, an investment in the stock market would have yielded a better return, including all the ups and downs — starting with the 1929 stock market crash that ushered in the Great Depression.

Toronto was still rebuilding from the Great Fire of 1904 when Alexander Gunn was promoted to district captain after years of climbing the ladder at the city’s No. 3 firehall at Yonge and Carlton Sts. With his new responsibilities came a pay hike, from $850 to $1,000 a year.

It was the nod he needed to buy his first home.

The three-storey house in what is now known as Riverdale was brand new, part of a development on what had been fields where locals grew food to sell at market. It promised good luck: A shamrock had been crafted into its soaring gable, most likely by Irish immigrants who helped build these turn-of-the-century subdivisions.

Each day on his way to work, Gunn would have headed down Broadview Ave. with its sweeping view of the downtown and watched the burned-out city being rebuilt.

He would have kept warm at night in front of the house’s wood-trimmed fireplace and watched through its lead-glass windows as thousands more homeowners flocked to the area after 1912 when Danforth Ave. was paved and, later, the Bloor Viaduct erected across the Don Valley.

Gunn paid just a little more than a year’s salary for the modest house on a 20 foot by 112.5 foot lot. Today, a buyer would pay a fortune, relatively speaking — about five times their annual income given that the average price of a GTA home in October was $465,000 and the average household income $82,000, according to the Canada Mortgage and Housing Corp.

Gunn and his family lived at 56 Simpson Ave. for more than four decades, through two World Wars, the Great Depression and the remarkable transformation of Toronto.

The house changed hands just four times before its most recent sale. And the average annual gain over the 105 years, adjusted for inflation, was just 3.9 per cent.

“If I had to give new homebuyers some advice, it’s that houses aren’t always the ultimate investment. You should never bet the farm on the house, so to speak,” says Francis Fong, an economist with TD Economics.

Fong and his colleague Sonya Gulati helped Moneyville adjust prices for inflation and compare the appreciation of the home against Toronto Stock Exchange returns.

The challenge was to compare apples to apples. We had the home’s sale price going back to 1906, but the Bank of Canada’s inflation records don’t begin until 1914. Toronto Stock Exchange records start in 1919.

So we opted to track gains from 1947 onward, seven years after Gunn’s death, when the house sold for $6,300. We found that in those 64 years, the house appreciated at an average annual rate of 2.3 per cent, adjusted for inflation. (Inflation averaged 3.9 per cent during the same period, largely because of spikes in the 1970s and early ’80s.)

The TSX, on the other hand, did marginally better — producing average returns of about 3 per cent.

But when the everday costs of a house were included, things likes taxes, maintenance and upkeep, 56 Simpson fared much worse

“A house is not a good investment. It is a roof over your head,” says James McKellar, director of the real estate and infrastructure program at York University’s Schulich School of Business.

These days, homeowners in hot markets like Toronto and Vancouver may feel they have hit the jackpot: Most Toronto homes have virtually doubled in price over the last decade and in Vancouver they have almost tripled.

But once you factor in the other costs — interest on the mortgage, new kitchens, bathrooms, furnaces and electrical updates, “you’re lucky to make anything,” says McKellar. Studies have shown that it’s $800 a month cheaper to rent a 1,000-square-foot home than to own it, he notes.

“By any empirical study, houses do not inflate. They are a cost. But we all have to live somewhere.

“Calling a house a good investment is a process of rationalization. The last thing you want to admit is that, ‘I bought the house because I fell in love with it.’”

Catharine Grossi is proud to admit that. She and her husband Paul bought 56 Simpson for $462,500 back in 2001 because they were keen to move back to the city from the suburbs.

“When I saw that so much of the original house was there, and it was updated . . . That was good for me. I loved it as soon as I saw it.”

She became fascinated by the home’s history — she spent a day at the City of Toronto archives — and details such as its original fireplace, century-old exposed brick, the shamrock.

The house proved to be the perfect place for Grossi’s two sons and daughter to drop their bags after university or stints abroad.

Grossi wasn’t thinking so much about the gains she’s made, but rather the life she’s lived at 56 Simpson when the house sold Nov. 4. She and Paul are downsizing into a home two doors from their daughter and her newborn twins.

Grossi asked just one thing when her realtor called to say there had been an offer at asking price: “Do they love the house?”

James McKellar gets that.

He has lost money in the housing market: About $25,000 in the wake of the oil patch bust in Calgary in 1983 and $35,000 on a Boston home during the ’90s recession.

He now owns a home in Moore Park.

“The big drawback of renting is that it doesn’t give you the emotional satisfaction of owning,” he says with just the slightest chuckle.

“At the end of the day, when you go home and make dinner and relax, the numbers really don’t matter.”

Other

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