Carson shows off family-friendly credentials

Simon Briault
The Province

What do young families look for in a new home? With its latest townhome project in the Grandview Heights neighbourhood of South Surrey, Royale Properties is betting on these key components being near the top of the list: a friendly neighbourhood close to shops, restaurants and schools; quality homes equipped with smart technology and lots of open space; a touch of exclusivity; and easy access to nature.

The award-winning builder’s 40-unit Carson development is perfect for families, according to Tianne Davidson, a sales manager with Axis Real Estate Solutions Inc. who is working with Royale Properties.

“We’ve found most of our purchasers to be younger families or first-time buyers who are looking for more space than they’re currently in,” Davidson said. “We’re perfectly positioned, within walking distance between two brand new schools that are scheduled to open in September 2021 – an elementary school and a secondary school.”

“One of the things that’s great about our B-Series plans is that the homes have raised back yards,” Davidson added. “People with kids and/or pets can walk right out to their fully-fenced, private back yard from the main floor. In most townhome developments you need to go down to the ground level and out through the front door or through the garage.”

Speaking of garages, many of them at Carson can fit two cars side-by-side, a fact much appreciated by Farzeen Mawji and his partner Ryan Cuillerier, who have just moved into their new home in the development.

“We like that our home is wider than a typical townhouse,” said Mawji. “The quality of light is great, and the living area overlooks a nice open space with trees. Our windows are east-west – there’s this wonderful warm glow and we get a bit of the evening sunset.”

“The neighbourhood is very well connected,” Mawji added. “Everything we need from a living perspective is in Surrey – lots of great restaurants and grocery stores. It’s all nearby.”

“Grandview Heights is definitely a growing neighbourhood with a big pedestrian focus,” said Davidson. “There’s a downtown feel, but it’s still a very family-friendly place to be. There are lots of trails in the area and you can obviously walk to restaurants and shops as well.”

As for the homes themselves, Davidson said they’re smarter than most. They include TELUS SmartHome® automation systems and Mawji was particularly pleased to be able to get notifications on his phone when the washer and dryer are done.

“They seemed to have chosen premium finishing as well and it feels great,” he said. “We’ve only just moved in and there’s still some unpacking for us to do but it already feels like home. They’ve done a really nice job and as you live in it you notice more and more details.”

Kitchens at Carson feature flat panel cabinetry with soft-close doors and drawers, polished quartz backsplashes and countertops, full-height pantries and undermounted double-bowl stainless steel sinks. The appliance packages are by LG and include counter-depth French door refrigerators and freezers with ice and water dispensers, gas ranges and convection ovens.

Bathrooms come with imported porcelain tile flooring, flat panel cabinetry, frameless glass showers with quartz wall tiles, dual undermount sinks and quartz countertops. Second bathrooms feature deep soaker tubs with oversized porcelain tile surrounds, undermount sinks, vanity mirrors and dual-flush toilets.

“Carson has that intimate and boutique feel to it versus a big complex with 100 or 200 homes,” said Davidson. “You’ll get to know your neighbours more and you’re not going to have all that extra traffic. The other thing with a small community like this is that there won’t be years of construction right on your doorstep.”

Homes at Carson have either three bedrooms or three bedrooms and a den. They range in size from 1,361 to 1,528 square feet and are priced from $669,900.

“It’s just great to have a brand-new place with all the new appliances and everything else,” said Mawji. The finishing is a big highlight for us. It just feels like a very well-built home.”

Carson

Project location: 2328 167A Street

Project size: 40 townhomes with either three bedrooms or three bedrooms and a den, ranging in size from 1,361 to 1,528 square feet and priced from $669,900

Developer: Royale Properties

Architect: Focus Architecture

Interior designer: Kleen Design

Sales centre: 2328 167A Street, South Surrey

Hours: By appointment only

Sales phone: 604-538-3883

Website: liveatcarson.com

© 2020 Postmedia Network Inc

Global tech and service companies, are not immune to the economic downturn

Nicole Schuman
other

As of today, 33.5 million Americans have filed for unemployment. And it appears no one, even global tech and service companies, are immune to the economic downturn.

On May 5, Airbnb CEO Brian Chesky sent a message to employees, also made available for public viewing on the company’s blog, outlining the economic state of Airbnb and where it needed to go next. Unfortunately, that included layoffs. Twenty-five percent of Airbnb’s workforce, or 1,900 people out of the company’s 7,500 total staff, lost their jobs. Yet Chesky delivered the news in a way that should make most CEOs and their communications departments take notice.

The 3,374-word letter addressed employees with an empathetic tone, showcasing a passion for the company and care for the workforce. It included not only a detailed background into the financials of the company, but a description of how it came to the decision to make reductions.

Clarity and Benefits

The message also included clear language regarding severance (a hefty 14-week package of base pay, plus one additional week for every year at Airbnb), equity (waving service time requirements; now every employee is a shareholder), healthcare (all employees receive 12 months paid health insurance), and tools available for job support.

The letter also describes what will happen after the announcement, and how employees will receive their notice. Here Chesky outlines the plan for employees in the United States and Canada, with more information forthcoming regarding other countries after town-hall style meetings.

Gratitude and Inspiration

Chesky’s final words really stay with the recipient. He expresses gratitude and inspiration acquired through his employees. He acknowledges the original company motto and how it applies to the work they have done.

“Our mission is not merely about travel. When we started Airbnb, our original tagline was, ‘Travel like a human.’ The human part was always more important than the travel part. What we are about is belonging, and at the center of belonging is love.”

He also addresses those staying and those leaving separately, placing importance on those leaving and letting them know their departure is not their fault.

Respect and Courtesy

Communicating layoffs certainly is one of the hardest parts of the job for any CEO, human resources manager or PR professional. But Chesky provided a masterclass in how to address employees with respect and courtesy, making each one feel valued as individuals and simultaneously part of  the Airbnb family. This approach finds favor rather than surprising individuals with layoff calls, or deleting all appointments on an employee’s calendar without notice, creating a culture of fear and disrespect.

And employees, although certainly distressed after hearing the news, took to social media to express their gratitude for the thorough messaging, making them some of the brand’s most certifiable ambassadors. With all of the offers for job leads, social media is currently former Airbnb employees’ greatest networking tool.

© 2020, Access Intelligence, LLC.

Luxury property prices fell in the first quarter as COVID-19 takes it toll

Bloomberg

Luxury property prices in some of the world’s most popular cities fell in the first quarter as Covid-19 began to take its toll on the real estate sector.

High-end homes in New York, London, Hong Kong, Vancouver and Singapore saw their values dip versus the first three months of 2019, according to a Knight Frank LLP report released Thursday.

Compared with the December quarter, all five cities registering the weakest growth were in Asia — testimony to the spreading coronavirus in the region at the time.

By contrast, the crisis “was in its nascent stages in the U.K. and the U.S., meaning it is likely to be the second quarter before we can accurately gauge the full impact,” Knight Frank said.

But, even in the midst of a pandemic, prime home prices in some cities, including Tokyo and Stockholm, rose.

Knight Frank expects the luxury residential market worldwide to be broadly stagnant as a result of travel limitations.

“With travel restrictions firmly in place and with many solicitors and land registries largely closed we expect the second quarter to see a marked drop in sales volumes,” it said. Prices, on the other hand, may display more resilience. 

Copyright Bloomberg News

COVID-19 crisis has changed real estate procedures

Richard Robbins
REM

What will real estate look like post-COVID-19?

Richard Robbins takes a look at how the crisis has changed real estate procedures and how to prepare now for the post-COVID-19 future. The “new normal” of the real estate business is likely to be much different than the old ways of doing things.

Watch the Video

© 1989-2020 REM Real Estate Magazine

Millennials are feeling the burn from COVID-19 due to lost jobs

Kasi Johnston
Mortgage Broker News

In one way or another, we have all been impacted by the coronavirus. In fact, almost two-thirds of Canadian households suffered from loss of income due to job losses or temporary layoffs and furloughs.

While negative impact is recognized across all generations, millennials seem to have been hit the hardest. According to research by TransUnion, 76% of Canadian millennials are feeling the burn from COVID-19, largely stemming from a reduction in work hours, losing their job or a partner losing their job.

For older Canadians looking to help their families cope with financial burdens due to COVID-19, many may consider withdrawing from retirement savings, or selling assets to generate cash. While these strategies can certainly increase liquidity, there are risks and long-term impacts that should be considered.

“These strategies could negatively impact their future retirement income. But selling off their assets in such an unpredictable environment only adds risk and uncertainty to the equation” said Agostino Tuzi, National Director, Mortgage Broker Channel at HomeEquity Bank.

One potential solution to consider would be taking a reverse mortgage. It’s an option that’s been helping Canadians in their sunset years access cash for several reasons, whether it’s travel, paying off debts or helping family members out. In fact, even before the pandemic, a record number of Canadian seniors were tapping into their home equity to help pay their debts.

Reverse mortgages have been growing by over 28% annually across the country. In 2019, HomeEquity Bank reported a record $820 million in reverse mortgages originations, up from $309 million just five years ago. They offer the CHIP Reverse Mortgage, previously known as The Canadian Home Income Plan, which allows borrowers 55 years and older to access up to 55% of their homes value without having to sell, and use those funds to help support family members. This is a long-term solution that is flexible, allowing homeowners to withdraw funds either in a lumpsum or monthly installments, and it doesn’t require any payments before moving or selling.

“That’s something people often forget,” said Tuzi. “Because we don’t require any regular mortgage payments until the homeowner moves, sells their home or passes away, a reverse mortgage is essentially a lifetime deferral plan.”

While the CHIP reverse mortgage has become a popular option among retirees who just wanted to reach a bit deeper into their pockets, it’s now becoming an increasingly important solution for families who want to lend a helping hand to their loved ones. For many Canadian seniors, their home is their greatest asset, but also their greatest source of comfort and wellbeing. Now, through a reverse mortgage, that very home can also be a source of multigenerational relief, as families come together to make it through the tough times.

Copyright © 2020 Key Media

Any long-term predictions will be inherently unreliable – CMHC

Ephraim Vecina
Mortgage Broker News

As the COVID-19 pandemic continues to wreak havoc on global markets, Canada Mortgage and Housing Corporation (CMHC) said that the housing sector will see pre-recession prices only after three years, at the earliest.

CMHC Chief Economist Bob Dugan said that any long-term predictions will be inherently unreliable as the coronavirus is turning previously known quantities like income and immigration levels into “unknown variables.”

“But for Canada and for Ontario, I think, the best case we’re looking at … house prices getting back to their pre-recession levels, at the earliest, by the end of 2022,” Dugan said.

CMHC will thus be revising its earlier, far more optimistic estimates, according to chief executive Evan Siddall.

“We did, back in January, look at a pandemic scenario that was not as severe as this,” Siddall said. “And I’m sure that you’d understand that the realm of plausibility has expanded significantly as a result of all the experience we’ve had. … Tens of thousands of Canadians are having trouble meeting their mortgage commitments.”

However, the Crown corporation said that it has solid enough foundations in the interim to continue supporting affordability nationwide.

“In 2019 we have demonstrated commitment to the sound management of resources. This enables us to pay dividends to the government while helping to create new and affordable housing for Canadians as well as promote market functioning through our mortgage insurance and mortgage funding activities,” said Lisa Williams, chief financial officer with CMHC.

Siddall said that CMHC will be focusing on financial stability and risk management as the situation continues to shift.

“[2019] has put us on solid ground so that today, amid the evolving COVID-19 crisis, we are not losing sight of our ultimate goal: that by 2030 everyone in Canada has a home they can afford and that meets their needs,” Siddall said.

Copyright © 2020 Key Media

Alternative lenders sought by landlords in distress

Ephraim Vecina
Mortgage Broker News

The alternative lending sector is seeing a growing contingent of landlords seeking help as banks are turning them away amid the COVID-19 pandemic, according to analysts.

With the economic situation unlikely to normalize over the next few quarters, the market should brace itself for an increase in the volume of “distressed sales” of properties throughout much of the year, said Roelof van Dijk, CoStar Group’s director of market analytics.

“If you’re a landlord, and looking to refinance, you can’t get that,” van Dijk said in an interview with Reuters. “So you’re probably going to have to sell. But they’re also limiting new owners who might want to buy that space.”

Financing will prove especially difficult in the commercial sphere as higher rates in the alternative space would add more pressure to small- and medium-scale ventures, van Dijk said.

“To be eligible for the [rent relief] program, you have to prove that your tenant has had a dramatic loss of business, and is really suffering,” van Dijk said. “[But] then to go to the banks, and say, ‘Don’t worry, the tenant is going to continue doing business when we get out of this,’ is a hard sell.”

And this new status quo is not likely to shift any time soon; Dream Office REIT CEO Michael Cooper said that commercial landlords might need to hold on for at least three years before the financial system adapts to the impact of the coronavirus and yields more agreeable market conditions.

“People talk about what percent of rent they got in April. That was only two weeks of the economic shutdown,” Cooper said in an interview with BNN Bloomberg. “Really, 2022 is going to be a time frame where you can look at what the value of a building is and deal with it with confidence. … Hopefully it will work out over time, but it won’t be working out smoothly.”

Copyright © 2020 Key Media

Cash strapped owners seeking reverse mortgages in the land of COVID-19

Clayton Jarvis
Mortgage Broker News

As ready as Canadians are to move on from the past two months of COVID-19 coverage, disruption and distress, there are few signs that a return to normal is imminent. The Canadian Federation of Independent Business is predicting “tens of thousands” of job losses and the Conference Board of Canada recently surveyed the level of confidence among the country’s business leaders and found it to be the lowest ever recorded.

In such an unpredictable economic climate, where housing prices could just as easily spike as crash, Canadian homeowners in need of cash flow are finding it increasingly risky to leverage strategies that would have worked only weeks ago.

Most homeowners have been savvy enough to avoid selling their properties at a time when buyers, realtors and appraisers can’t even view homes in person. Sales declines in April in Toronto (67% lower than a year before) Edmonton (55% lower), Hamilton (63%) and Victoria (59%) illustrate both a colossal lack of demand on the part of buyers and a lack of seller faith in the market.

Homeowners who have diversified their portfolios with equities are facing a similar situation. With the S&P 500 already having lost approximately 15% in 2020, selling off shares into such an unstable market may be a less than ideal option, especially at a time when so much has already been lost.

According to Paul von Martels, Vice President of Prime and Reverse Mortgage Lending at Equitable Bank, it’s little surprise that a growing number of Canadians are now considering reverse mortgages as an alternative solution, one that removes many of the variables that can result in even further financial discomfort.

“Given the complexities and challenges presented by our current situation, it’s reasonable to expect a short-term shift in how Canadians access their property wealth,” von Martels says. “Homeowners and advisors alike may view reverse mortgages as a means to optimize equity preservation while ensuring funds are accessible for essential needs.”

Reverse mortgages, von Martels explains, address many concerns homeowners may be feeling. The lower rates – Equitable’s range from 3.94% to 4.84% depending on the reset term – appeal to virtually anyone, and the possibility of the process being successfully carried out remotely using e-signatures and virtual appraisals means clients dedicated to social distancing can still complete their transactions while contributing to the health of their communities.

“Clients really can source a reverse mortgage in a confident and convenient manner, entirely remotely,” von Martels says.

Demand for reverse mortgages is also being driven by one of the fastest growing segments of the population, seniors, who have found in reverse mortgages a financing solution that allows them to keep their homes, age where they’re most comfortable and ensure their and their families’ financial well-being.

“Longer-term, we believe the preference to age in place will grow relative to alternatives like retirement care facilities,” says von Martels. “The COVID-19 situation has highlighted key advantages of having your own home. And, more and more, businesses will keep emerging to provide critical home delivery-like services to help people live more efficient, comfortable and independent lives on their own.”

With the market need for real estate liquidity at an all-time high, and traditional methods of creating liquidity facing unprecedented constraints, von Martels encourages brokers, especially those who take a financial planning approach to their business, to seriously consider incorporating reverse mortgages into their planning programs.

“It creates a real opportunity,” he says.

Copyright © 2020 Key Media

The net profit from a rental property is minimal

Chris Seepe
REM

The financial situation of every rental property is as different as a fingerprint. Every operator applies their level of experience, understanding, operating sophistication and personal values of what’s most important to them in owning and operating a rental property.

Therefore, the numbers below can only very roughly approximate the breakdown of costs of owning and operating a rental property. Nevertheless, the overarching conclusion, regardless of what numbers you use, is that the net profit from a rental property is much less than tenants, media and the government believe, and it’s these same entities who collectively think residential landlords are rich and can afford to carry all the consequent losses caused by COVID-19.

Here’s a rough breakdown of where each investment dollar goes in a six- to 20-unit multi-residential investment property using an average of two six-plexes, one nine-plex, one 11-plex, and two 12-plexes in Oshawa, Ont., arguably levying the third-highest property tax of 444 municipalities in Ontario:

• $1.00 rental income (no HST)
• 18.8 cents – property tax
• 2.2 cents – building insurance
• 3.5 cents – electricity (common area only)
• 3.4 cents – gas heating (included in rent)
• 3.4 cents – water/sewer (included in rent)
• 8.8 cents – repairs & maintenance
• 3.1 cents – property management, janitorial, placement fees
• 1.4 cents – professional fees
• 44.6 cents – operating expenses
• 39.8 cents – principal & interest (5-yr closed fixed, 25-year am, 75 per cent LTV, three per cent interest)

84.4 cents total costs

• 15.6 cents – net profit before corporate taxes (cash flow)
• 7.8 cents – corporate tax (50 per cent “passive” income)

7.8 cents – net profit after tax BEFORE capital costs (new roof, furnace, boiler, windows, etc.)

So, on $100,000 of gross income from an average nine-plex rental property, the owner takes home about $7,800 before paying for hopefully infrequent capital costs. Factor in capital costs such as replacing the windows every 30 years, say, $50,000. Keeping the numbers super-simple, that’s $1,667/year; boiler at 20 years and $20,000 = $1,000/year, roof 15 years and $10,000 = $667/year totaling $3,334/year capital costs – paid from the $7,800 annual take-home pay.

The above is overly simplistic and subject to many sophisticated cost-reduction management techniques and best practices to streamline those expenses and maximize return. It’s just a baseline value.

A new boiler may reduce gas consumption by 30 per cent, resulting in a notable equity increase: for example, a $2,000 gas savings might add $40,000 (at a five per cent cap rate).

Depreciation (capital cost allowance) will reduce the taxable income too but the money must all be paid back when the property is sold so it’s a tax deferral scheme, not a tax write-off.

A higher amortization period for financing will improve cash flow but you pay more interest over the term. You could pay off your mortgage quickly, which would substantially improve your cash flow (profit) but then all that equity is “dead” money, which is not working to help you create asset wealth.

I have been receiving insurance quotes for multiple buildings these past three months and every company has been quoting 11 to 15 per cent higher premiums than the previous year, despite not making any claims for more than five years, notable investments in improvements and no explanations from the companies explaining this industry-wide cash grab in a time of enormous financial upheaval.

Ontario’s electricity rates went up 55 per cent last November but the increase was hidden by a 31.7 per cent short-term rebate.

My local water/sewer costs went up about 40 per cent in the past five years. But rental income was “allowed” to increase about 17 per cent over the same five years.

I couldn’t find a quotable statistic on the number of investment properties that are financed but I remember hearing that perhaps 85 per cent of rental properties have some amount of a mortgage.

How much money is left over for a landlord to meet all their obligations in the midst of pandemic emergency measures?

Say a “modest” 10 per cent of tenants don’t pay their rent. Which companies and government agencies have offered relief or forgiveness on the above costs? What will deferral of interest payments accomplish if there’s no increase in rent? How long will most or all of the landlord’s income we live on go towards the forced extended loans and accumulated interest payments?

COVID-19 may be the catalyst but it wouldn’t be the culprit of a collapsing rental property industry. The attraction of leveraging real estate to create asset wealth is a powerful lure but the best advice may be to shed the “bonds” of interest-tyranny and reduce your dependency on lenders.

Many of our risks were artificially and unnecessarily created by ill-conceived, short-term, simple-minded legislation enforced by a fundamentally dis-“membered” Landlord and Tenant Board. In the rental housing industry, ignorance of the law may turn out to be the single greatest “excuse” for financial ruin.

© 1989-2020 REM Real Estate Magazine