Fort Langley homes feature country look with contemporary touches

Mary Frances Hill
The Province

 

Lily Terrace

Where: 23203 Francis Ave., Fort Langley

What: 24 residences on a three-quarter-acre site with 17,000 square feet of office and retail space

Residence sizes and prices: One-bedroom-plus-den, two -bedroom and two-bedroom-plus-den homes, ranging from 1,019 to 1,366 square feet; from the mid $849,900

Developer: Lanstone Homes

Sales Centre: 9054 Glover Road, Fort Langley

Centre Hours: By appointment only

Sales phone: 604 371-3899

When Sara Brown thinks about the best interests of her clients, she considers the words of admired British designer Ilse Crawford.

“We spend 87 per cent of our lives inside buildings,” Crawford once said.  “How they are designed really affects how we feel, how we behave. Design is not just a visual thing. It’s a thought process, a skill. Ultimately, design is a tool to enhance our humanity. It’s a frame for life.”

Brown brings these principles into her work on the interiors at Lily Terrace, a new residential community from Lanstone Homes in the heritage district of Fort Langley.

“I want my clients to always feel that they are coming home to a place of comfort and warmth,” says Brown, of Sara Brown and Co.

That sense of affection for the homeowner comes through in Brown’s use of modern-country influences at Lily Terrace. Brown’s respect for heritage influences, paired with more contemporary pieces, creates a feeling of warmth.

Visitors to the display space will notice the ways in which Brown brings in unexpected touches. Notably, she places a pair of narrow shelves on to each side of the oven fan in the kitchen, a spot where visitors would usually see bulkier cabinetry. The thin metal is an elegant touch that serves as a showcase for more decorative pieces and its narrow silhouette seems to open up the entire space.

“The saying ‘it’s all in the details’ could not be more true than in this scenario,” she says. “I wanted to ensure the open shelves did not feel too bulky, hence the thinner approach.”

The developers are appealing to the tastes of downsizers and professional families who are attracted to the Fort Langley’s historical features. An artist’s rendering of a Lily Terrace living area reflects something of a modern farmhouse look, with elements such as iron light fixtures. Brown sees these features, within a palette that is otherwise contemporary and light, as part of the building blocks of the character, and the “layering and building” a story.

“Keeping the walls a warm white, and upholstered pieces neutral in a natural linen colour is a great base to start any design concept, whether it be modern or traditional. Adding texture and contrast through smaller elements begins to build that story.”

Texture and sensuality are critical, she adds. “I am a huge advocate for designing for all five of the senses. Texture is such an important part of building that story.”

© 2018 Postmedia Network Inc.

Subprime borrowers on edge

Chris Fournier
REP

For many Canadians, higher interest rates are reason to grumble. But for the country’s 3.4 million subprime borrowers, they could spell disaster.

Borrowers with impaired credit histories may have limited access to emergency funds compared with their prime counterparts, giving them less wiggle room when debt servicing costs rise. That puts them on the frontline of the Bank of Canada’s recent interest rate increases.

Jason Wang, vice president of risk analytics at Progressa, an alternative lender that services mostly subprime clients, hasn’t yet seen evidence that higher borrowing costs are leading to more missed payments, but that could change, he says. Of 28.4 million “credit-active” Canadian consumers, 11.9 percent fall into the subprime category, according to estimates from TransUnion, one of the country’s two credit-reporting agencies.

Progressa’s loss rate, which measures the number of clients 90 days past due on their payments, is a lagging indicator. “I am curious to see if, in a few months, the Bank of Canada raises the rate again, if that would be trickling into our data,” Wang said in a telephone interview.

The next opportunity to gauge the impact of higher rates will come with the firm’s next quarterly risk report in July, Wang said. Depending on the results, the lender would decide what action to take and that may include adjusting its risk profile for acquiring new clients, he said.

Read more about how rising mortgage rates will squeeze Canadians

After the Bank of Canada’s three 25-basis-point hikes since July, Wang calculates, someone with a C$60,000 ($46,000) variable-rate loan would need to pay an extra C$37.50 in interest every month. And with rates bound to go higher, those costs will mount.

Implied odds from swaps trading show about a 33 percent chance of another hike at the bank’s May 30 meeting, and a 95 percent chance of two increases by the end of the year. The Bank of Canada last lifted its benchmark rate to 1.25 percent in January.

“A non-subprime person might say, ‘Well, what does that mean? That’s one dinner I could do less in a month,’” he said. “For subprime, and we see this every day, when they are budgeting down to every C$10, this is a lot.”

So far, they’ve been able to absorb the higher interest costs because the economy is doing well, and “increased income and employment prospects” are probably balancing things out, he said. “It might take another couple of rate hikes for us to see anything.”

“I would urge the Bank of Canada to be really careful with future rate movements,” Wang said. 

Copyright Blomberg News

Copyright © 2018 Key Media Pty Ltd

BoC five-year fixed mortgage rate increased

other

It just became slightly tougher to qualify for a mortgage, as Canada’s central bank just upped the rate used to stress test new borrowers.

The Bank of Canada hiked its conventional five-year fixed mortgage rate on Thursday, May 10^th, from 5.14 to 5.34 per cent. Now, mortgage applicants who are paying less than 20 per cent down on their home purchase must prove they can qualify at this rate in order to receive home financing. Borrowers who are making larger down payments must now either qualify at this rate, or their contract rate plus 2 per cent – whichever is higher.

What is the BoC’s Conventional 5-Year Mortgage Rate?

While not the actual rate used by consumer lenders, the BoC’s conventional 5-year mortgage rate reflects the current standard interest rate for five-year fixed mortgages. It is determined by averaging the five-year fixed posted rates offered by each of Canada’s Big Six lenders – and they’ve been on a hiking spree as of late.

TD started the upward trend, increasing its rate 45 basis points to 5.59 per cent in April – an abnormally large hike that the bank attributed to the “competitive landscape, cost of lending, and mortgage risks”. And, because the big banks tend to move in lock-step, the remaining five followed suit, with increases between 5 – 20 basis points for their five-year fixed posted products.

Why Are Fixed Mortgage Rates Rising?

Fixed mortgage rates are on the rise because the yields on government bonds have also been on an upward trend. These bonds are used as a funding method by the banks; when yields rise, that signals lower investor demand, and so they increase their fixed borrowing products to fill the gap.

Bond yields have been steadily ticking higher since June 2017, and are currently at 2.2 per cent – the highest in six years. For perspective, in 2015 – 2016, when fixed rates were at record lows, yields trended below 1 per cent.

While this may sound odd, this upward movement is actually in response to a strengthening economy, and more specifically, the Bank of Canada hiking its Overnight Lending Rate (it has done so three times since July 2017, to the current 1.25 per cent), as well as hikes from its U.S. counterpart, the Federal Reserve. Bond investors aren’t big fans of tighter monetary policy – when rates rise, it immediately devalues the return they can expect to receive on their investments (also called a coupon). For this reason, rate hikes lead to bond sell offs, which in turn lead to higher yields, and, ultimately, higher fixed mortgage rates.

How Should Mortgage Borrowers Prepare for Higher Rates?

With both variable and fixed mortgage rates on the rise, along with the qualifying criteria for stress tests, it’s more important than ever to build a financial buffer into your shelter costs.

While the 20-basis-point increase to qualifying criteria isn’t enough to make or break a mortgage application, the stress test – which came into effect on January 1^st – in general reduces the average buyer’s affordability by roughly 20 per cent. For a new borrower, this could mean downsizing home buying expectations, either purchasing a home at a lower price point, or house hunting in a more affordable market.

For existing fixed-rate borrowers, lenders hiking their rates won’t have an immediate impact – but they may need to contend with a higher interest rate environment when they come up for renewal (those refinancing their mortgages, or switching to a new lender upon renewal will indeed be stress tested).

And, while recent fixed-rate increases aren’t applicable to variable-rate borrowers, the fact that the Bank of Canada is on an upward trend – at least one more rate hike is expected before 2018 is through – means monthly payments are likely to rise in the medium-term.

© 2015-2017 Zoocasa Realty Inc.

What economic impact assessment has been done in terms of job impacts

Victor Godin
The Vancouver Sun

The B.C. government coalition has made it unequivocally clear that its intention is to cool the housing market and lower sales prices. What isn’t so clear is what economic impact assessment has been done in terms of job impacts.

Housing construction is a job bonanza for skilled trades. In April, B.C. celebrated Skilled Trades Month and the province’s post-secondary institutions promoted their growing skilled-trade programs. Students are increasingly attracted to these education options. Therefore, the question of the impact on jobs of the government’s housing-price-reduction mission is critical.

The jobs that could be affected by slowing sales and squashing prices are significant. The Canadian Home Builders Association states that in Greater Vancouver there are over 56,000 well-paid jobs in homebuilding trades, generating $3 billion in salaries annually. How many of those jobs will be lost?

The potential job impact goes beyond Vancouver. The government reports that 140 communities throughout B.C. rely on a strong forest industry. Has there been a calculation of how much of that wood comes into the B.C. homebuilding market? Does government know how many of those small-town jobs will be lost if the homebuilding market is smothered. Then there are the 80-plus First Nations in B.C. who have dependence on logging. For some of them, that’s their only economic option. Has anybody assessed the impact of the housing policies that will shrink their market opportunities?

Of course, governments always claim that they have economic studies to prove their policies are growth generators. This is what a former Clinton Whitehouse adviser and Princeton economics professor, Alan Blinder, calls “ The Lamppost Theory.” He defines it in a new book as follows: “Politicians use economics like a drunk uses a lamppost for support, not for illumination.”

So undoubtedly, some government economist in Victoria was sent to his cubicle to create a model to support the government’s housing-market gambits. It’s fluff.

Regarding the contention that building multiple-family units will cover the job losses resulting from stagnating private home building, it is risible. The jobs per-square-meter comparisons between single and multiple-family units in the building phase aren’t even close.

As for the job generation stemming from upkeep expenses, the gap is even wider. A homeowner routinely has tradespeople doing upgrades, redecorations and repairs. On the other hand, the occupant of a highrise unit might buy rubber washers for the kitchen sink every five years.

What is clear is that the affordability problem will increase and killing a job-creating sector isn’t a solution. Three factors will drive this. First, technology will affect job growth. When Elon Musk, founder of Tesla, described his new battery plant, which will be the biggest factory in the U.S., he said, “ It will be a building where machines build machines.”

Add to that the growth of what we call gig jobs, as well as the move to shared workspaces. Combined, this means fewer people producing more.

To get a glimpse of this future, it’s interesting to see the announcement this month by Cisco, a leading high-tech company. Cisco said it was donating $60 million Cdn to help with a homeless problem in a particular urban centre. That place is Silicon Valley, the technology heart of the U.S., where 8,000 people are sleeping on the street.

The real solutions to the affordability issue come down to making B.C. an attractive investment climate and for local governments to be an active part of that mission. It doesn’t seem on the radar for either.

Money walks. When governments erect investment barriers, money walks elsewhere. While preening about erecting barriers to home ownership, governments should also be asked to define their strategies for encouraging large business investments that create thousands of well-paying jobs.

© 2018 Postmedia Network Inc.

Vancouver luxury property cooling fast: Real estate report

Cheryl Chan
The Vancouver Sun

It’s tough times at the top for Vancouver’s priciest homes. 

Prices in the top end of residential real estate in the city have dropped 7.6 per cent over a six-month period to March, making Vancouver the second-worst performer during that period among global cities, according to the Knight Frank Prime Global Cities Index, which monitors price growth of the top five per cent of the housing market in 43 cities.

Only Stockholm performed worse than Vancouver, recording a nine per cent plunge in price while Seoul and Cape Town in South Africa topped the list with six-month price growths of 20 per cent and 8.6 per cent.

Data from the Real Estate Board of Greater Vancouver show a similar downward trend for the single-family detached market.

In April, the benchmark price for a single-family detached home in the west side, where Vancouver’s most expensive homes are located, was $3.4 million, a six per cent drop over a six-month period.

Homes in East Vancouver, where the benchmark price is $1.5 million, experienced a 1.4 per cent decrease over the same time period.

April saw more inventory in the detached home market but fewer sales, said REBGV president Phil Moore.

There are approximately 1,800 properties over $3 million currently for sale in the region, with 262 sold between January 1 to April 30 — less than half of the 561 homes sold during the same time period in 2017.

“There’s a lot of a supply and buyers have a lot of choice,” said Moore. “I see more price reductions happening in the high price range. There’s a lot more inventory.”

Factors for the price drop include new mortgage stress tests and hikes on the foreign-buyers tax and the property transfer tax, said Moore. “We’re starting to see the trend as these new government intervention policies come into play,” he said.

Vancouver’s slower rate of growth is likely the outcome of the province’s “macro prudential measures” and the rising borrowing costs for investors, Kate Everett-Allen, Knight Frank’s head of international residential research, said in an emailed response to questions. In Vancouver, the study looked at properties starting at about $3.5 million, she said.

The quarterly Knight Frank report shows prices in Vancouver for this top segment stayed relatively stable on a year-over-year basis, posting a modest 0.2 per cent increase and placing it 31st on the index.

Steve Saretsky, of Sutton Group West Coast Realty, said the downward push on Vancouver’s detached home prices has been going on for a while.

“Most people are just figuring it out now,” he said. “I think realtors know prices have been dropping for about a year. If you have a 30-year low in sales, it’s no surprise prices are falling.”

Saretsky said the trend started well before the NDP provincial government implemented its market-cooling measures. He believes the price drop has more to do with the introduction of the foreign buyer tax and stricter Chinese government capital controls which contributed to a reduction in foreign investment in Canada.

He said the decline in price is a “good thing” for the long-term sustainability of the province and the city.

“People may be a bit worried about equity but housing booms and busts are part of a real estate cycle. It is good to have pull backs,” he said.

Vancouver Mayor Gregor Robertson called the decline “a necessary step” to restoring stability in the local housing market.

“We welcome a more stable period now,” he said in an interview at Bloomberg News headquarters in New York Tuesday. “There’s some concern if values drop and impact homeowners’ equity, but the gains have been so massive for so many years that some softening was to be expected.”

© 2018 Postmedia Network Inc

?Perception and fear trump fundamentals? in pre-sale condo market

Frank O’Brien
Western Investor

High-profile real estate developers, marketing executives and real estate agents are bracing for a sustained downturn in the housing market after sales in April – usually one of the most active months of the year – plunged by double-digits across Metro Vancouver.

Vancouver lawyer Richard Bell, executive vice-chair and founder of Avesdo Inc., told a real estate seminar May 8 that the Vancouver new home market has seen an “incredible run over the past 10 to 15 years.” But, he added, “We all knew it would come to an end and the end is nigh.”

In April, just 43 per cent of pre-sale condos offered in Metro Vancouver sold, compared to 94 per cent in January, 83 per cent in February and 63 per cent in March, said Cameron McNeil, a partner in MLA Canada, the real estate marketing firm that hosted the Pre-Sale Pulse seminar at Olympic Village.

In the resale sector, April sales of detached houses plunged 34% through the Real Estate Board of Greater Vancouver, compared with a year earlier, while townhouse and condo sales were down 25 per cent and 24 per cent in the same period.

“I have been seeing more and more price reductions in the detached housing market,” said Tina Mak, a top-producing Vancouver agent with Coldwell Banker Wesburn Realty. Mak, founding president of Asian Real Estate Association of America, Vancouver Chapter, said investors should not expect a quick return on investment if they had bought recently.

“All you can expect is capital gain.  However, as long as the NDP is in power, I strongly believe the double-digits gain honeymoon is over. On top of that, there are many different new taxes, stricter rental rules,” Mak stated in a missive to clients this week.

“This would be the seventh cycle since I got into the business in 1992,” she said. “The fact is when the market swings back up again, the next peak is always higher than the previous peak.”

Meanwhile, she is “looking for U.S. investment opportunity for many of my investors.”

Like Mak, McNeil said the fundamentals remain in place for a strong Metro Vancouver housing market: an estimated 40,000 immigrants arriving annually, relatively low mortgage rates, low unemployment and a robust economy.

“Our industry, though, is driven by fear and perception, and fear and perception trumps fundamentals every time,” he said. McNeil said condo developers can expect slower sales over the next few months.

An estimated 11,000 new condos will start marketing this year in Metro Vancouver, McNeil said, but this “will barely scratch the surface” of the true demand. He added that, like the last downturn in 2008, people would likely be surprised at how quick the recovery will be.

“This is Vancouver,” agreed Bell. “It will come back.”

© Copyright 2017 Western Investor

Steve Randall
Canadian Real Estate Wealth

Canada’s millennials are focused on homebuying and their intentions are driving the real estate market.

A new report from mortgage insurer Genworth Canada reveals that 59% of millennials are already homeowners, with 30% having bought a home in the past two years (including first-time buyers and repeat buyers).

hat means more than three times as many Canadian millennials bought a home in the last two years as older Canadians (9%).

Among non-homeowners 30% say they intend to buy in the next two years.

Millennial finances appear strong

The National Financial Fitness and Homeownership Study was conducted in association with the Canadian Association of Credit Counselling Services (CACCS) from February 8 – March 27, 2018; and asked several questions about financial well-being and intentions.

Among those who said their finances are in good shape are 68% of first-time buyers; 58% of first-time intenders; 59% of repeat buyers; and 62% of repeat intenders.

“It is encouraging to see the high level of financial confidence coming from first-time homebuyers and homeowners. As a company that is committed to providing financial literacy education to aid those looking to achieve homeownership, these results demonstrate that this segment of Canadians are doing the necessary homework to support their financial future,” said Stuart Levings, President and CEO of Genworth Canada.

		Total	Home- owner	Non Home- owner	First-Time Buyers	First-Time Intenders	Repeat Buyers	Repeat Intenders	Intend DP<20%	Intend DP 20%+
Great/good financial shape		53%	60%	38%	68%	58%	59%	62%	59%	69%
	I am in great financial shape – I have set clear financial goals that I am well on my way to achieving	14%	17%	7%	19%	14%	17%	16%	17%	15%
	I am in pretty good shape- I have a general notion of what I want to achieve with my finances, and things are more or less going in the right direction	39%	43%	30%	50%	44%	43%	46%	42%	54%
I am neither in great shape nor poor shape – I try to save when I can but I don’t seem to be getting ahead		30%	28%	34%	25%	34%	30%	23%	29%	22%
	My financial fitness is not very good – I know that I haven’t been able to achieve the financial goals that I should have by now	10%	8%	14%	3%	4%	6%	10%	9%	5%
	My financial fitness is very poor – I feel like I am always falling behind and/or that I don’t know where to turn for help	6%	3%	11%	3%	2%	2%	4%	1%	2%
Very poor/not very good		16%	11%	25%	6%	6%	8%	14%	10%	7%
Don’t know/not sure		2%	1%	3%	0%	3%	2%	1%	2%	2%

DP= Down payment

This week Genworth Canada has a series of educational webinars in celebration of their annual Homeownership Education Week event where industry professionals can learn more about this and other topics.

Copyright © 2018 Key Media Pty Ltd

Housing starts buckle

Mortgage Broker News

Canada Mortgage and Housing Corp. says the annual pace of housing starts in April slowed compared with March.

The seasonally adjusted annual rate of new home construction, which is seen as a measure of the health of the housing market, fell to 214,379 units in April compared with 225,459 in March.

The move came as the pace of starts in urban areas fell 4.7 per cent in April to 198,090.

The rate of multiple urban starts, which includes apartments, townhouses and condominiums, fell 2.7 per cent to 141,032, while the rate of single-detached urban starts dropped 9.3 per cent to 57,058.

Rural starts were estimated at a seasonally adjusted annual rate of 16,289.

The six-month moving average of the monthly seasonally adjusted annual rates edged down to 225,696 in April compared with 226,942 in March. 

Copyright The Canadian Press

Copyright © 2018 Key Media

REP

Scotiabank has joined its Big Five banking peers in raising its benchmark fixed-rate mortgage rate.

Canada’s third-biggest lender raised the posted rate for a five-year fixed-rate mortgage from 5.14 per cent to 5.34 per cent, effective Tuesday, while also increasing the posted rates for other terms.

Late last month, TD Bank was the first of the Big Five lenders to raise the benchmark rate, increasing it to 5.59 per cent, due to factors including the competitive landscape, the cost of lending and management of risk.

Royal Bank later raised its benchmark rate to 5.34 per cent, followed by CIBC which raised its posted rate for five-year fixed term mortgages from 4.99 per cent to 5.14.

The Bank of Montreal earlier this month upped the benchmark rate slightly to 5.19 per cent.

The mortgage rate increases from Canada’s biggest lenders come as government bond yields rise, signalling higher borrowing costs for corporations. 

The Canadian Press

Copyright © 2018 Key Media Pty Ltd

Digital platforms touted for accurate valuations

Neil Sharma
Canadian Real Estate Wealth

Market Score, an online platform that provides users accurate real estate valuations, could make determining the viability of property investments a breeze—especially if used in tandem with its sister platform, Rent Score, to ascertain monthly returns.

By entering an address, square footage, postal code and price, an instant valuation predicated on a complex set of algorithms is delivered.

“As an investor in real estate, you would first use Market Score to determine a reasonable purchase price and, at the same time, use Rent Score to figure out how much you can earn on that investment property going forward,” said Market Score’s Chairman Roman Fedchyshyn. “The two are complimentary. You would look at both at the same time—how much will it cost me to acquire this property, and then how much can I earn in monthly rent? Having those two pieces of information will help you make an informed real estate decision.”

Fedchyshyn  added that Rent Score takes cap rates into consideration as well.

“Investors can use Rent Score in concert with Market Score to determine an expected rate of return,” he said. “Under the covers, it does a bunch of stuff, including using cap rates, so it gives accurate estimates about reasonable rents in reasonable markets.”

Both Market Score and Rent Score have proven popular with real estate agents. Rosie Gimeno, a sales agent with REMAX Specialist Estate Group, uses the platform with her clients.

“I use it a lot for investors to be able to show them what they can expect when purchasing their properties so that they can forecast their budget,” said Gimeno. “They find it a great tool to utilize without me having to send them comparables and so forth.Even if they wanted to do some background leg work on their own, it offers them the opportunity to do that.”

Gimeno has even been able to close transactions for real estate investors using the two tools.

“It’s a great tool for when they’re comparing properties to be able to come to that quick decision as to what a bona fide property investment is,” she said.

Copyright © 2018 Key Media Pty Ltd