The process of "downsizing" - or moving into a smaller home - can open up many possibilities, but there's no question it can be daunting.
That's according to Sarah Daniels, a real estate commentator and star of HGTV's Urban Suburban, who was the keynote speaker at a recent seminar on downsizing at the presentation centre for the new-home Waterstone project in Surrey.
"What are you going to do with yourself and 3,600 square feet and two cats?" Daniels asked those in attendance.
"Dusting, polishing silver, putting away china, all those things that you don't necessarily want to be doing because there's better things to be doing with your time and so downsizing, though difficult, is something you really need to consider."
She advised people to be ruthless when they're contemplating such a transition.
"It's time to look around the house and go, okay, I don't use this bedroom any more, all we're doing is heating rooms that we don't need, mowing the lawn that we're no longer interested in mowing."
Daniels also offered some practical considerations for those moving into a smaller space, as outlined in a prepared release:
. Don't get attached to furniture, she noted, saying that it's pointless to hang on to items that no longer suit your lifestyle.
. Don't buy a house because furniture fits. Instead, buy a home that works for you in terms of size, lifestyle and price;
. If you value outdoor living space, look at developments that offers plenty of it, keeping in mind that "you still get access to the outdoors, without all the upkeep."
. Keep in mind that a smaller home means less upkeep, less responsibility, lower property taxes and lower maintenance costs.
"If you're getting to that age where you don't want to be working as much as you have been, and maybe it's time to enjoy retirement, then why spend $15,000 on a new roof for the house?" Daniels asked.
The sun sets behind a condominium tower under construction at Naniamo and Kindsway, Vancouver, July 10 2012.
Photograph by: Gerry Kahrmann , PNG
The number of new concrete condos launched in Metro Vancouver has been strong for the first six months of 2012, but not nearly as strong as earlier forecasts.
Real estate market firm MPC Intelligence had predicted in April that 7,800 new condos in concrete towers would be introduced to the market for sale in the first six months. That was down from an earlier prediction of 8,000.
However, MPC said Tuesday that by the end of June only 6,000 new concrete condominiums had been launched in the region.
“A large component came to the market, but we may have overshot it a bit,” MPC senior manager Jeff Hancock said in a Tuesday interview. “We were on pace until the end of the first quarter, but some projects ended up postponing.”
Despite that, Hancock said that the 6,000 new condos — in 31 condo projects — still represent the busiest six months MPC has recorded in concrete product since its inception in 2005.
“Six thousand is a significant number,” he noted. “Since we’ve been tracking, it’s the most we’ve seen in two quarters.”
Hancock said the pace of pre-sales has slowed in the last two months, but he expects a “large wave” of new launches in the fall.
Hancock attributes the slowdown to developers postponing projects because of market conditions, and some projects being delayed in the approvals process.
He said projects priced right and in the right location — near rapid transit — are doing well, citing strong sales at the Solo District condo project in Burnaby that started pre-sales this past weekend.
Hancock noted that 55 per cent of the concrete condos introduced to the market this year have been sold, with most sales in the first quarter and “the second quarter showing slower uptake.”
He also said it’s “too early to tell” if the slowing resale market is a factor in developers delaying projects.
According to Canada Mortgage and Housing Corporation’s June 2012 housing starts survey, which includes all types of housing, there were 9,907 starts in Metro Vancouver from the beginning of January to the end of June 2012, 17 per cent more than the 8,472 starts in the first six months of 2011.
“Overall, apartment housing starts were strong in June, particularly in the cities of Vancouver, Coquitlam and Langley,” CMHC senior market analyst Robyn Adamache said in a statement.
Meanwhile, more than 70 per cent of the 187 homes available for presales at the 23-storey Rolston, in the 1300-block Granville, have sold, while close to 80 per cent of the 303 available homes have sold at The Mark, 1372 Seymour.
On Sunday, August 15, 2010 the inaugural Steveston Sockeye Spin is being presented by the Steveston Community Society. The Sockeye Spin is a Criterium cycle race with top men and women riders competing for cash prizes on a fast, picturesque course throughout the Steveston business core.
Come out and cheer on some of British Columbia’s best riders as they cycle through the streets of histoic Steveston with races running from 8:30 am to 12:30 pm. The race circuit is from No. 1 Road west on Moncton Street, south on 3rd Avenue, east on Bayview Street and north on No. 1 Road. There is a fun kids event as well. Those that want to show off their peddle prowess can register by visiting www.cyclingbc.net.
Spain has been gripped by protests against further austerity
With most of Europe trapped in a bleak cycle of economic deterioration and despair, Stephen Harper's assertion that Canada is "a great nation rising" has a special resonance here today.
"Canada is No. 1," the editor of France's usually patriotic L'Express magazine gushed in a special edition this month that encouraged its readers to emigrate not only to Quebec but to every corner of the country.
Similar thoughts have been expressed by many ordinary Europeans during a trip I just took by rail and sea from Greece, Italy and Spain to Ger-many, Norway, France and Britain. Word is filtering out that Canada is one of the few western countries with solid finances and an optimistic long-term economic outlook.
Canada has never presumed that it was or could be the economic equal or superior of Spain or Italy, let alone France, Britain or Germany. But with much of Europe in what looks like terminal decline, and Asia keen to purchase staggering amounts of Canadian natural resources, one way or another Canada is going to end up with a more influential role in the world.
The crushing 10-and 13-digit numbers (billions and trillions) that describe Europe's stupendous debt have begun to have an effect. Canada's books - while hardly pristine - are far cleaner than those of every European country except Nor-way and perhaps Germany. The Bank of Canada trimmed its growth estimates for the country a bit this week, but this is like a hiccup compared to the squeeze that Europe's contracting economies face.
Recent headlines from European newspapers hint at the storm:
"Spain is in the danger zone." "Eurozone is warned 4.5-mil-lion jobs are at risk." "Spain is bigger, scarier and harder to solve than Greece." "Britain facing zero economic growth." "Hollande paints bleak picture of French economy." "Monti says Italy faces war." "Italian debt still hangs in the balance." "Portugal: Please switch off the lights when you leave."
There are so many dire fore-casts out there today about so many different countries that it is impossible to track or measure them all. Or their dramatic consequences for pensioners and on schools and hospitals.
The British army is losing 20,000 soldiers and must abandon or amalgamate many of its storied regiments. Hospitals were closed in Portugal for several days last week because of strikes by medical staff protesting health care and wage cuts. France's Peugeot is to close one of its biggest car manufacturing plants. Bargain-hunting Chinese are buying prime vineyards and much else at discounted prices across the continent. Qatar - whose women appear in very conservative Islamic dress in public - is purchasing Italy's Valentino design house. Rich families from Greece and Italy are boosting already sky-high real estate prices in London's fanciest boroughs as they scramble to find a comfortable bolt hole for themselves and their fortunes. The top civil servant in Britain, where the debt will reach more than $2 trillion in four years, claims a decade of spending cuts is coming.
Life is grand in oil-and gas-rich Norway. Danes are thriving. Germans are doing well, too, although they are full of angst over how so many of the European Union cousins have designs on their money. The south is a wreck everywhere, with youth unemployment at catastrophic levels. Many, per-haps most, businesses that still survive there are reeling.
The fear - and it is expressed more often now than when I was in Europe six months ago - is not whether but when Europe turns from anger to mayhem. Frustration is already spilling over in Athens. Despite a huge, constant police presence, there have been riots. Economic and genuine refugees from the Third World have become easy initial targets of right-wing extremists.
Twice earlier this week in Madrid, I was trapped in whistle-blowing flash mobs. As riot police watched and followed, thousands of protesters marched down the Gran Via and through the grand plazas of this imperial city, declaring their opposition to drastic austerity measures announced last week to lower Spain's budget deficit by $80 billion.
The unwelcome calculations include a hike to 21 per cent of what Canadians would call the GST; sharp cuts to unemployment benefits; and an across-the-board seven-per-cent cut in civil service wages that includes King Juan Carlos I and his family.
In an ominous new development, many individuals are to lose their savings, having trusted their money to banks that made improvident investments.
Some economists believe Europe has not yet gone nearly far enough to address its problems. Others are convinced that spending more money is the only way out of the crisis.
Whichever school is right, there is general agreement that the continent's downward arc has only just begun. It is inevitable that Canada - by virtue of relatively prudent fiscal management and nature's generous bounty - will take on greater responsibilities and have more influence because it is one of the few western bulwarks in a time of widespread economic gloom.
Many strata corporations hire property-management companies to run their strata complexes.
It's an understandable move, says Sandy Wagner, president of the Vancouver Island Strata Owners' Association.
"Just look at the demographics of strata dwellers," Wagner says. "We either have seniors who are tired of working or young people who have no time to be involved because they have two jobs." Sometimes, hiring a property-management company is the only way things get done. Condo owners pay a proportional share of common expenses. The monthly fees typically pay for taxes, insurance, janitorial services, landscape maintenance and bank and legal fees. Some of the assessment goes toward a reserve fund for short-and long-term replacement items, such as carpeting and roofs.
If the work doesn't deter hardy individuals, dealing with the legal complexities that come with running a strata might. With 58 pages of regulations and 126 pages of fine print, the B.C. Strata Property Act is not a light bedside read.
But hiring a management company is not without pitfalls.
While there are 1,176 individuals in B.C. who are licensed in strata management, there is no rating system to weed out the bad ones.
The Real Estate Council of B.C. regulates the licensing of strata managers in this province. The licensing requirement has been in effect since 2006. The educational component of the course is via correspondence through the University of B.C. Sauder School of Business and takes about a year to complete.
Having a licence doesn't guarantee that someone is a good man-ager, however, says Heidi Mar-shall, communications manager of the Vancouver Island branch of the Condominium Home Owners Association of B.C. She says stratas need to ensure whoever they hire is the best one for them.
The contract should spell out what is expected by all parties. Depending on the tasks they are asked to perform, professional strata management companies charge $25 to $40 per unit per month. While the fee adds up for mid-size to large complexes, many companies turn down requests to manage strata of 10 to 12 units.
Most experts agree it would be prudent to a consult a lawyer before signing any management contract. Licensing with the Real Estate Council of B.C. means managers have insurance for errors and omissions, as well as an avenue for strata councils to lodge complaints.
Fresh from reporting the latest on Sheriff Joe Arpaio's investigations into Barack Obama's birth certificate, the Drudge Report Wednesday shocked its readers with an even more shocking shock story: Canadians Now Richer Than Americans. The headline ran beneath an Obama election poster from 2008, emblazoned with the slogan (oh irony!): Progress.
The basis for this was a story in U.S. News about a column for Bloomberg View citing a report in the Globe and Mail on a study by Environics Analytics. The study shows that, indeed, as of 2011 the aver-age net worth of households in Canada had pulled ahead of the United States by about $43,000, or 14 per cent, from a deficit of roughly $60,000 five years earlier.
If, for Drudge, this was an opportunity to blame Obama, in Canada, it was the reverse: proof at last that, as the columnist for Bloomberg View, the Canadian novelist Stephen Marche put it, "the Canadian system" - something he called "hard-headed socialism" - "is working; the American system is not." The National Post's Jon Kay went further, divining within that single statistic nothing less than the destruction of Canadian conservatism, which he identified as "at heart, wealth-envy of the United States."
Of course, the same systems were in place in both countries in 2006, when Canadian wealth-envy would have been well advised. What changed in the interim, to produce such a remarkable turnabout? Did Canadians suddenly turn into wealth-creating dynamos? No: productivity growth in Canada is among the slowest in the OECD; average labour productivity in Canada remains about 70 per cent of U.S. levels. Did we become conspicuously thrifty? No. Not a day goes by without some report agonizing about allegedly extravagant Canadian household debt levels.
What happened, then? Three things. First, the U.S. housing market collapsed, while ours continued to rise. Practically all of the roughly $75,000 decline in U.S. household assets in the Environics study was a result of the nearly one-third drop in the value of their real estate holdings. Practically all of the roughly $64,000 increase in Canadian household assets was derived from the 25 per cent rise in their real estate portfolio.
Second, commodity prices, on which Canada's economy is notably dependent, rose sharply. Oil prices, for example, climbed from roughly $65 a barrel in 2006 to more than $100 in 2011. That improvement in our terms of trade made an obvious and direct contribution to increasing Canadian household wealth.
And, third, flowing in part from that, the Canadian dollar also soared: from about 88 cents US in 2006 to about $1.02 in 2011. Indeed, its value is considerably overstated, by the measure economists use: that is, relative to its "purchasing power parity" level (the level at which a basket of goods and services would cost the same in each country, after converting). The University of British Columbia's Sauder School of Business, for example, calculates the dollar is about 20 per cent overvalued, relative to its U.S. counterpart.
Add up a one-third drop in U.S. real estate, a 50 per cent rise in oil prices and a 15 per cent increase in the value of the Canadian dollar and it's hardly surprising to find the financial position of Canadian house-holds has improved, measured against the Americans. It would be astonishing if it hadn't. But how exactly does this make the case for the comprehensive superiority of "the Canadian system," let alone "hard-headed socialism?"
I get the "hard-headed" part: the brutal cuts in social spending Paul Martin pushed through in the mid-1990s (having come to power denying any such cuts were needed), which is more or less what the Tea Party is calling for these days. But social-ism? Compared to what? Are we to suppose the U.S. does not have any comparable programs: no unemployment insurance, no social security? Ah yes, there's always health care - on which the Americans spend more public dollars than we do (counting the tax deduction on health care premiums), not only per capita, but as a percentage of GDP.
Well, there is one thing we got very right and they got very wrong: financial industry regulation. Wasn't it that same Paul Martin, as Marche and Kay both note, who bravely for-bade the banks to merge? Yes, it was, and it was good policy: Canada needs more banking competition, not less. But it had absolutely nothing to do with sparing Canada from the housing bubble, collapse, and associated financial follies the Americans (and Europeans) endured. Or if it did, neither argument nor evidence of it are presented.
So far as the two countries' approach to financial regulation diverge, they more usually reflect a lighter hand on the Canadian tiller than the opposite.
We have no counterpart to Fannie Mae and Freddie Mac, the government-sponsored enterprises that own more than half the mortgages in the U.S., nor any of the detailed intervention in lending practices to which the U.S. is given. We let our banks spread across the nation, historically, rather than confining them within state boundaries as the Americans did.
If we did not see the same growth in "shadow banking" as the Americans, it is in part because we let our banks buy up most of the investment houses in the deregulation exercise of the 1980s.
So far as our banks showed greater caution than most in the last decade, it may have been because they were still nursing a hangover from the early 1990s, when they nearly blew them-selves up in the Third World debt crisis. Etc. Etc.
That system may be many things, but "socialism" isn't quite it. And while it's a fine, though hardly novel ambition to combine a productive economy with a decent safety net, we have a lot of work to do on both.
On July 9, federal Finance Minister Jim Flaherty's latest round of new mortgage guidelines kicked in. Shortly after, the Office of the Superintendent of Financial Institutions announced it was getting closer to finalizing its new guidelines for federally regulated banks.
What does it mean for you? If you aren't sure, you aren't alone. A recent BMO study revealed that only about half of Canadians understand the new mort-gage guidelines and how they may affected by them. Here is a quick summary of the changes:
Effective July 9 on insured mort-gages (more than 80 per cent financing):
1. Maximum amortization to shrink to 25 years from 30 years. This will increase mortgage payments by about 12 per cent on average.
2. Limit on debt servicing for GDS (Gross Debt Service, which is all property-related expenses such as mortgage payments, taxes, heating, condo fees and so on), to 39 per cent from 44 per cent.
3. Ban on mortgage insurance on properties over $1 million.
4. Refinancing restricted to 80 per cent, down from 85 per cent.
Effective, likely in October, for federally regulated banks: 1. Home equity lines of credit reduced to 65 per cent, although it appears an additional 15 per cent is allowed (to 80 per cent) if that 15 per cent is amortized.
2. Banks required to qualify all variable terms and terms of less than five years at the Bank of Canada five-year benchmark rate (typically RBC's five-year posted rate). Today, many banks will qualify shorter terms at the actual rate if the deal is conventional (more than 20 per cent down payment).
3. All "Stated Income" borrowers must provide reasonable income verification such as a Notice of Assessment.
4. Cash back will not be allowed to be used toward a down payment. Currently a few banks allow five per cent cash back to be used towards down payment (making it effectively a $0-down deal). Of all of the rules put forth, this one makes the most sense in today's economy.
WHO WILL BE AFFECTED?
1. Homebuyers hoping to get a "zero-down" mortgage using cash back.
2. Homebuyers who were very close to their maximum qualifications before the rule changes.
3. Purchasers in the $1-million price range with less than 20 per cent down payment.
4. Self-employed borrowers who write off a lot of their income.
5. Existing homeowners who have an amortization longer than 30 years, less than 20 per cent equity in their property and would like to shop around for a better mortgage rate.
FIRST-TIME BUYERS FEEL PINCH
So far, banks seem comfortable lending to those needing less than 80 per cent financing on 30-year amortizations, but this could change.
So for now, those who will really feel the changes are first-time home buyers or those hoping to consolidate other debts with their mortgage in the near future.
The average purchaser with less than 20 per cent down will qualify for about 17 per cent on their next purchase with the revised amortization and debt servicing guidelines.
There is a silver lining, however. Mortgage rates are still extremely low, with many lenders offering close to three per cent for five-year fixed terms, and rates even lower for shorter terms.
For many first-timers, it can be cheaper to own than to rent, as it is only $478 a month per $100,000 borrowed for their mortgage payments.
Perhaps more attractive is that a whopping $222 of that $478 per month (46.5 per cent) goes toward principal on the very first payment. Assuming even a zero per cent appreciation in real estate prices for the next five years, it could be a smart move to own strictly from a monthly payment perspective.
Insurers have already tightened the screws and are declining more deals than before. Don't get too hung up on getting the best interest rate - be more worried about get-ting the money in the first place.
Susan Wright (left) and Lynne Margetts are neighbours in a building on Vancouver's False Creek. The building's residents work at making it a community where people know their neighbours.
Photograph by: Ward Perrin, PNG , Vancouver Sun
Over dinner and drinks at a cantina in Mexico last December, two couples grappled with a problem that had been niggling at them for months: What could be done, they wondered, to make their False Creek apartment building more friendly?
They returned with a plan. Lynne Margetts and Meg Clarke - who had organized their Mexican excursions independently and only later realized they were staying in the same region at the same time - were the ringleaders.
Margetts kicked things off by organizing a yard sale at the end of May. About a dozen building residents set up tables outside the building and neighbours milled about, introducing themselves and chatting.
The next day, Margetts, Clarke and others put on a "Get to know your neighbours" social that was attended by 55 people from the 158-suite building. They had sign-up sheets available for various activities such as cycling, bridge and yoga. The idea was to give building residents with common interests a reason to spend time together, Clarke said.
"A lot of people said to me, 'Boy, I've been waiting for something like this,' " she said of the social.
In the space of a few hours, a friendly building was born.
The activity groups have been a godsend for building resident Susan Wright, who moved to Vancouver from Toronto a little over a year ago.
"I'm thrilled to see it and really enjoy the social aspect of it," she said, adding that she has joined the cycling, yoga and reading groups.
There is nothing distinctive about the design or layout of the building that encourages a sense of friendliness, Wright said. Rather, it is having neighbours like Margetts and Clarke who are willing to step forward, put a sign on the door and invite people to get to know each other, something she was unlikely to do as a newcomer, Wright said.
It also helps to have in-house building managers, Margetts added. The managers have lists of all the contacts for the activity groups to pass on to new residents when they move in, Clarke said.
Urban design consultant Frank Ducote said architectural features can also make a difference in encouraging or dissuading interaction between neighbours.
Lobbies are one example. Common areas of some buildings - such as that of a Chinatown complex that was initially marketed to immigrants from Hong Kong in the mid-1990s - are "rather ridiculously small," Ducote said, while others feel like living rooms and feature plush, inviting furniture that is tastefully arranged.
"You can't force people to be friendly, but you can encourage them or discourage them and that's the art."
Staircases are another potential hub for social interaction, especially in Europe, where there is usually one set of stairs for an apartment building rather than the two that building codes here tend to require, Ducote said. But staircases in North America are typically given short shrift by architects and designers, he noted.
"Walking in a fire stair, a concrete ... vertical box, is not very much fun," he said. "It's useful, but it doesn't encourage you to come and go a lot on them, whereas if you go to a grand belle époque building seven storeys tall in Paris, beautiful winding stairs are open to the skylight ... and that's your option versus this little cage elevator [that] you and your dog and one other person could fit in."
One local exception is the staircase at BCIT's downtown campus on Seymour Street, which is a central feature of the building and given the most window space, Ducote said.
"You just want to run up and down it," he said. "You can bet it's designed with interaction in mind. Not just exercise, saving the elevator space and all that, but running into your professor, running into fellow students, hanging out on the landing and talking."
When it comes to fostering a sense of community in apartment buildings, size also matters, according to Vancouver-based architect and developer Michael Geller, who studied the issue while working at the Canada Mortgage and Housing Corp.
"The feeling was that if you had up to 60 units ... there was a greater likelihood of people knowing their neighbours and interacting with their neighbours. If we were doing a larger project, we would often design it so that it might break down into 60-unit modules," he said. "I do feel that there is a correlation between the size of a building and the number of suites and the sense of community."
Apartment and condo buildings could learn something about community building from assisted living facilities for seniors, where residents have their own suites, but there are communal dining facilities, a card room and regularly scheduled activities, Geller said. He is also an advocate of co-housing, where residents sacrifice a little bit of living space for communal facilities such as a group dining room.
Features like indoor play rooms for children and coed saunas also build ties between neighbours, he said. He recalls living in a building in Ottawa some years ago that included the latter feature, which by default became a nude sauna.
"While it didn't attract everybody in the building, those of us who used it regularly generally became very good friends," he said.
While the False Creek building is lacking in nude saunas, the cycling group meets at 4: 30 every Thursday afternoon, a building resident who is a professional yoga teacher offers regular classes on a pay-what-you-can basis and others are chiming in with new ideas, such as holding a regular movie night in the social room.
In the fall, Clarke is arranging for someone from the city to come and talk about emergency preparedness and a woman who recently emigrated from Kuwait will offer Mediterranean cooking classes.
The group's efforts to promote socializing between neighbours have paid off in other ways, Clarke said.
"I simply feel more willing when I meet somebody I don't know to say, 'Hi, my name's Meg.' "
Matthew Lee, manager of residential sales for Macdonald Realty, says luxury home prices haven't fallen dramatically.
Photograph by: Arlen Redekop, PNG , Vancouver Sun
A banner year in 2011 is making 2012 look sluggish for Metro Vancouver's luxury home market.
But although sales are slowing, 2012 is still on pace to be the second-best year ever for luxury home sales.
A semi-annual report by Macdonald Realty concluded that luxury sales - homes worth $3 million or more - are down by nearly half compared with the first six months of 2011.
The report noted that 243 homes priced at more than $3 million sold between January and the end of June, compared with 466 in the first six months of 2011.
A total of 691 luxury homes were sold in all of 2011, followed by 375 in 2010, with Macdonald Realty forecasting that the 2010 totals will be topped by this year's total sales.
Of the 243 sales so far this year, 60 sold for more than $5 million, including four condos.
One reason for the drop in sales is that the wave of Asian investment that propelled much of the 2011 market has largely disappeared.
"We're not seeing the international buyers like before," said Matthew Lee, Macdonald Realty's manager of residential sales. "We've seen some down-ward pressure on prices, but it's not been a lot."
Cameron Muir, chief economist for the B.C. Real Estate Association, said it's no surprise that sales are down.
"Last year, in the first half there was a sizable jump in sales of luxury single detached homes. So I'm not surprised to see some large declines year over year. It was an anomaly last year [and] it's returning to normal."
Macdonald Realty's report noted that the most expensive home sold so far this year was for $19.8 million.
According to the property research firm Landcor Data Corp., a house at 4803 Belmont Ave. in the West Point Grey area of Vancouver sold for $19.75 million on June 14, more than $5 mil-lion above the price of the second most expensive home.
The Landcor data also showed that seven of the 10 most expensive homes sold so far this year were in Vancouver, two in West Vancouver and one in the University Endowment Lands.
In 2011, the most expensive home sold was for $16.8 million, also in Vancouver.
The most expensive condo sold so far this year was for $5.9 million, with 25 condos selling for more than $3 mil-lion this year, the survey added.
According to Macdonald Realty, most neighbourhoods affected by wealthy Chinese buyers over the past few years - Vancouver's west side, Richmond and West Vancouver - now have high inventories with lower sales.
As for prices, Lee said buyers and sellers are in a standoff. Buyers have seen prices rise sharply in the past couple of years and don't believe they will rise much higher, so they are delaying making offers.
Many sellers, however, can afford to hold out for the prices that they want.
"They're not in a position where they need to make a panic sale," Lee said. "It's not a high-leverage sector. They have the financial means to wait it out and they'll make the decision [to sell] when the time is right for them."
Dan Scarrow, Macdonald Realty's vice-president of corporate strategy, said the luxury real estate market is much more unpredictable than the entry-level market because it's disconnected from economic fundamentals like income.
He also said buyers are more cautious because of the faltering real estate market in China, economic uncertainty in Europe and current high prices.
"[Buyers of luxury homes] tend to have a lot of wealth and they put in a lot of equity," Scarrow noted. "Their buying patterns aren't set by how much they can borrow, whereas the traditional market is set by interest rates and income."
He added that while there are fewer Asian buyers of luxury homes, a lot of wealthy locals are still buying.
The Conference Board of Canada says the peak of Chinese immigration to Vancouver was in 2005, matched by a peak in home sales.
Photograph by: Ian Smith, PNG Files , Vancouver Sun
A new commentary by the Conference Board of Canada is reigniting a debate over just how much influence China's economy has over Metro Vancouver's housing market.
Robin Wiebe, a senior economist with the Centre for Municipal Studies in Ottawa, offers the assessment in a column published by the Conference Board, warning that expectations of a slowing Chinese economy "could be considered as big a drag on the Vancouver housing market going for-ward as anything else, including the city's notoriously poor affordability."
Wiebe's view is that Vancouver's housing market has historically followed Chinese growth, with the accelerating Chinese economy over the past decade accompanied by surging Vancouver price increases.
"There is a clear correlation between Chinese immigration and real estate activity in Vancouver," Wiebe said in his column. "In fact, the Chinese immigration peak of 2005 was matched by a peak in existing home sales in that same year. The 42,000 resale transactions that year were nearly 50 per cent above the previous decade's average and remain a record high for this market."
Similarly, Wiebe said the pendulum is now swinging the other way with a slowing Vancouver housing market coinciding with reports that China's economy is cooling.
However, Cameron Muir, chief economist for the B.C. Real Estate Association, said that immigration from China has a far greater effect on Metro Vancouver real estate than foreign investors, and he doesn't see the local market being greatly affected by a slowing Chinese economy.
"The vast majority of sales are generated by people who live, work and raise families here," said Muir. "A [Chinese] slowdown might translate into some weakness, but foreign investors account for just a small percentage of sales."
However, Muir noted that a slowdown might have some impact on areas that wealthy Chinese investors prefer, like Vancouver's west side or Richmond.
The latest Real Estate Board of Greater Vancouver survey indicates that the number of residential property sales in Metro Vancouver hit a 10-year low in June.
The report noted that Vancouver's west side, for instance, saw 769 single-detached homes sell in the first six months of 2012, down substantially from the 1,310 that sold there in the red-hot first half of 2011, while Richmond, another of 2011's Metro Vancouver's hot spots, saw 603 single-detached sales from January to June compared with 1,111 for the same period of 2011.
Wiebe added in an interview that there are "wealth spill-overs" from China around the Pacific Rim, including Vancouver, as the wealthy diversify their assets away from Chinese real estate. But it's not just investors who are affected by changing fortunes, he noted, as Chinese immigrants to Canada also have less money to spend on housing locally when China's economy falters.
He said the financial crisis of 2008 was hard on both Chinese growth and Vancouver house prices, but by 2010 both were once again in double digits.
Wiebe noted that offshore investors do not need to live in Canada to own a property in Vancouver and it is possible to arrange property management by a professional or a family member.
"Accordingly, Chinese wealth probably has a larger affect on the Vancouver housing market than immigration numbers alone suggest, since Chinese investors can buy homes here while remaining there."
Wiebe noted that China is typically the largest source of immigrants to Vancouver, accounting for nearly a quarter of all arrivals in 2010.
"These immigrants need a home and have supported housing demand growth in British Columbia for several years. Some come to B.C. with a significant amount of wealth and, thus, a strong appetite to invest in the housing market.
"Catering to Chinese residential demand is big business out here; the Chinese Real Estate Professionals Association of BC lists over 200 members on its website."
Starting Monday, lenders can only issue home equity loans up to a maximum of 80% of a property’s value — down from 85%.
Photograph by: Stock photo , Getty Images
TORONTO — New mortgage rules go into effect today in Canada but a recent survey suggests many people are unfamiliar with the changes.
Starting Monday, lenders can only issue home equity loans up to a maximum of 80% of a property's value — down from 85%.
The maximum amortization period also drops to 25 years from 30 years — giving borrowers less time to repay the debt in full.
In addition, the federal government is capping the maximum debt ratios for households and limiting government insurance to mortgages on homes with a purchase price of less than $1-million.
A poll conducted by Pollara for Bank of Montreal found only about half of those surveyed were familiar with the changes brought in by the federal government.
And only 45% of those surveyed June 29 to July 4 were aware that the maximum amortization period has been shortened by five years.
Finance Minister Jim Flaherty announced the new rules on June 21.
"The adjustments we are making today will help [households] realize their goals, build on the previous measures we have introduced to keep the housing market strong, and help to ensure households do not become overextended," Jim Flaherty, federal minister of finance, said in a release.
Canadian employment held steady for the second consecutive month in June while the National unemployment rate ticked down by 0.1 points to 7.2 per cent. Year-over-year, Canadian employment was 1 per cent higher than June 2011. The BC economy added 3,200 jobs last month, including 2,400 full-time positions. Higher payrolls combined with a large drop in the labour force to push the BC unemployment rate down 0.8 points to 6.6 per cent. However, the provincial unemployment rate has been unusually volatile in recent months and we expect that June's big decline is mostly temporary. June employment numbers were 2.3 per cent higher compared with 2011.
South of the border disappointing jobs creation continued with just 80,000 new jobs added in June, falling well short of already diminished expectations of 100,000 new jobs. The US unemployment rate held steady at 8.2 per cent.
Although one prominent forecaster recently warned that a substantial drop in housing prices is on the horizon, other analysts continue to have a more optimistic outlook.
More likely, the average price in Canada will be about flat for the foreseeable future, says economist Robert Hogue, who follows real estate for the Royal Bank.
Hogue agreed with Craig Alexander, chief economist at the TD Bank, that home prices have outrun income growth for years, bringing a decline of 10 to 15 per cent within the realm of possibility.
But he didn't agree with Alexander that such a drop is probable - or that tough new mortgage-lending rules will be enough to trigger it now.
Economist Adrienne Warren at the Bank of Nova Scotia is also moderately optimistic. New rules that require an insured mortgage to be paid off more quickly will increase mortgage payments, but "I think this will just cool the market faster for first-time buyers," not tip prices into a decline, Warren believes. That's not to say that prices will remain steady across the country. Homes in Vancouver are out of reach for many and those in Toronto seem headed in that direction, making these cities considerably more vulnerable to a fall in values.
But Montreal and most other cities are not significantly over-valued as long as mortgage rates remain low, says Sal Guatieri, an economist at BMO Capital Markets. "What that means is that the market has time to correct," he believes, without the need for a big reversal.
Outside of the two highest-priced markets, Guatieri thinks national home price gains will sputter to a halt over the coming year, then plateau for a few years.
Indeed, most analysts had expected to see prices stabilizing earlier this year. This hasn't happened, perhaps because warm weather and promotional rates on mortgages in the spring stimulated some sales that would otherwise have occurred this summer.
But sales figures for May showed a sales drop in most cities, including Toronto and Vancouver, while the average national price advanced by a moderate 5.2 per cent. True, Toronto sprinted ahead by 7.9 per cent, but Vancouver prices rose by just 3.3 per cent and those in Montreal by 2.2 per cent.
Warren thinks it would likely take a recession to tip prices into a significant decline across Canada. That's not the prediction of most forecasters, who see modest growth continuing.
A more typical pattern in a moderately overvalued market like Canada's, she says, would be "a long period of weak price gains" until rising incomes caught up with steadier home values. In the past, such stagnation has lasted for as much as a decade, she notes.
And even in this scenario, markets in resource-rich areas like Alberta and Saskatchewan could keep seeing gains if commodity markets remain healthy.
It's important to note that the difference between Alexander's prediction of a price drop and other analysts' scenario of stagnant prices is merely a question of how fast prices will adjust, not whether they will.
There's widespread agreement that Alexander's estimate of average overvaluation in Canada is close to the mark - some-where close to 10 or 15 per cent. There's also general agreement that Vancouver and Toronto are the most overvalued markets.
The disagreement is about how the real estate market will react as Canadians approach the limit of their borrowing power - just as new lending rules make a mortgage even more expensive to carry. Both will make the number of eager buyers dwindle.
There's no doubt that in an expensive housing market, prices can fall. But usually, there's a clear cause: Canada's recession brought a one-year slump, while irresponsible lending, speculation and a banking crisis in the U.S. created a much deeper crash that has yet to heal.
But without a powerful prod, homeowners are famously stubborn about avoiding a loss. Many will simply hold off selling if prices are too far below what they expected.
"There's very little pressure on homeowners" apart from the few forced to sell by a transfer or loss of a job, notes Guatieri. So the market normally just stagnates for a while.
But stagnation isn't the same thing as avoiding a loss; it's merely a way of slowing it down. Every year that a home's price rises by less than the rate of inflation, its true value falls a little. Meanwhile, incomes creep up. After a while - maybe a long while - the market returns to balance.
June sales were the lowest total for the month in the Greater Vancouver region since 2000 and 32.2 per cent below the 10-year June sales average of 3,484, the report shows.
VANCOUVER -- The number of residential property sales has hit a 10-year low in Metro Vancouver leading the Real Estate Board of Greater Vancouver to declare a buyer’s market.
The announcement is significant since the board has in recent months been calling the market “balanced.”
According to the board’s June report, sales of houses and apartments dropped to 2,362 last month, a 27.6 per cent decline compared with 3,262 sales in June 2011, and a 17.2 per cent drop over the previous month of May.
“Overall conditions have trended in favour of buyers in our marketplace in recent months,” said Eugen Klein, the board’s president, in a news release on Wednesday.
“This means buyers are facing less competition and have more selection to choose from compared to earlier in the year.”
June sales were the lowest total for the month in the region since 2000 and 32.2 per cent below the 10-year June sales average of 3,484, the report shows.
New listings for detached, attached and apartment properties totaled 5,617 in June, a three per cent drop from the year before and an 18.9 per cent decline compared with the 6,927 new listings reported in May 2012.
“Today, our sales-to-active-listings ratio sits at 13 per cent, which puts us in the lower end of a balanced market,” said Klein.
He said the ratio has been declining in the market since March when it was 19 per cent.
The benchmark price for detached properties increased 3.3 per cent from June 2011 to $961,600, while apartments increased 0.3 per cent to $376,200.
Daljit Thind ( L ), President and CEO of Thind Properties Ltd., John Skender ( C ), head of marketing and Fred Moy, head of sales Thind Properties, at Skyway Tower site on Kingsway in Vancouver
Photograph by: GLENN BAGLO , VANCOUVER SUN
East Vancouver’s Kingsway Avenue has long been known for its steady stream of auto dealerships, strip malls, fast-food restaurants, cut-rate motels and as a quick route to somewhere else.
In what’s regarded by many as part of the area’s renaissance, a 12-storey condominium tower in the 2700-block of Kingsway is now being marketed as part of a city plan to take advantage of the Norquay neighbourhood’s central location and turn it into a more people-friendly place emphasizing higher densities, newer shops and services, wider sidewalks and other public amenities.
Skyway Towers, the first highrise development under the Norquay Village Neighbourhood Centre Plan, is a 130-unit project that includes nine commercial units to be built on the site of the old Wally’s Burgers.
It includes two buildings – the 12-storey tower and a four-storey building – with a 13-metre-wide breezeway between them.
“We’ve sold about 50 per cent [of the units] in pre-sales,” says John Skender, head of marketing for Thind Properties Ltd., Skyway’s developer. “Construction should start as soon as we have a building permit, within the next two months. We’re looking at early 2014 for occupancy.
“I think it fits in beautifully [with the Norquay plan].”
But Skyway is just one of many new buildings anticipated for the area.
“Some major tracts have been purchased and there will be some huge developments going up,” said Skender, whose Skyway project is aimed at affordability with most units priced between $245,000 and $475,000. “Change is always a little difficult, but there are sections of the city where densification will improve the neighbourhood. This is one of them. Nothing much has changed there in the last 30 years. I see [Norquay] doing a 180-degree turn.”
Under the Norquay plan — which was approved in 2010 despite opposition from many residents critical of highrises in their neighbourhood — Kingsway will experience more housing variety, including towers with a maximum 12 storeys in the plan area, and low-rises, townhomes and duplexes behind them.
It aims to maintain a single-family residential character in key areas, a concern of critics.
The plan for the east Vancouver neighbourhood – between Gladstone in the west to Killarney in the east and 41st in the south to 29th in the north — also includes greater affordability, safer pedestrian amenities and good transit and bicycling connections.
However, the plan also encountered opposition from residents opposed to the densification.
Hubert Culham, for example, wrote in The Vancouver Sun in November 2010 that council’s approval of the plan “sealed the fate” of his neighbourhood.
“At that moment Norquay ceased to exist as a cohesive, livable, medium-density and very ‘green’ neighbourhood,” Culham wrote. “This gave the city planning department the right to chop Norquay up, level it and festoon it with highrises, effectively a mass rezoning to much higher density.”
Today, Culham said, his concerns remain and he’s not keen on towers such as Skyway in his neighbourhood. “The situation hasn’t changed. It shouldn’t be there. It doesn’t fit with the community, which to me is important. I don’t want the city to look like Manhattan.”
However, East Vancouver resident and city councillor Kerry Jang said the Skyway Tower provides “a real need” and fits well with the plan.
“We’re trying to bring life, livability and vibrancy to the area,” he said. “Now, it’s a provincial highway [and] it’s a bit run down. It can take a lot more density, but we want to be sensitive to single family dwellings. So we’ve limited [towers] to 12 storeys.”
Jeff Hancock, senior manager for real estate market intelligence company MPC Intelligence, believes east Vancouver and the Kingsway area particularly, is a great opportunity for developers as the area changes.
“The land is cheaper, relatively speaking, and there’s great access to the city and Burnaby. There’s well-established Vietnamese and Chinese communities and they’re big buyers.”
Matt Shillito, the city of Vancouver’s assistant director of planning, said the Norquay plan will feature a “transition” of housing types starting with highrises on Kingsway, four-storey apartment buildings behind them, and row homes, townhouses and duplexes behind them.
He noted while the Skyway plan had considerable support, there was also concern about its height. “But people recognize it’s an area in need of revitalization [and] it’s very much in conformity with the plan.”
He said although the plan stipulates a maximum of 10-12 storeys on Kingsway, there are a couple of areas within the plan where towers could go 14 stories and that the city has received one such application on the Canadian Tire site at Gladstone and Kingsway.
“We want to encourage the redevelopment of blocks on Kingsway to improve the retail environment, the streetscape and the public realm,” said Shillito, who said it will take up to 25 years to complete the plan. “Right now, it’s very hostile to pedestrians.”