The world’s most expensive condo – a mere $440 million!

August 22nd, 2014

$440-million penthouse comes with chauffeur, caterer and infinity pool

Even by the sky-high standards of Monaco, a penthouse at the top of the Odeon Tower is set to fetch a vertiginous price, according to developers.

Tour Odeon, which is under construction and when finished will be the principality’s first skyscraper since the Eighties, will be topped with a five-floor penthouse that would cost a potential owner 300-million euros ($440-million), making it the most expensive in the world.

The penthouse will have several swimming pools, including a large infinity pool with a slide leading from a dance floor in the rooms above.

The 35,000 square-foot apartment will also come with a private chauffeur, a caterer, three staff bedrooms, a 24-hour concierge service and access to a health centre.

Tour Odeon, which will house 36 more luxury flats, will be Monaco’s first skyscraper since Prince Rainier banned tall buildings on the shoreline to avoid overshadowing the city. Instead he encouraged the development of wider, lower buildings built on an extension into the sea. His decision was reversed in 2009 by his son and successor, Prince Albert, and plans for the 560-foot Tour Odeon were drawn up.

One in three of Monaco’s 38,000 residents is a millionaire, according to a study by Spear’s magazine and WealthInsight.
Irene Luke, of Savills, the estate agency, who moved to Monaco in 1990 from London, said it was becoming increasingly popular with wealthy Britons.

“It’s becoming more and more like London by the sea,” she said.

Tax changes in some areas of Switzerland are also “making Monaco look like a very safe, stable place,” Miss Luke added.

The penthouse is expected to go on the market next year. So far, 26 flats have been sold.

Source: The Telegraph and Financial Post

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Canadian home sales rise for 6th straight month

August 15th, 2014

From a year earlier, sales rose 7.2%, the Canadian Real Estate Association said.

Sales of existing homes in Canada rose in July to their highest level since March 2010, notching their sixth straight monthly increase after a slow winter, the Canadian Real Estate Association (CREA) said today.

CREA, the industry group for real estate agents, said sales were up 0.8% last month from June, surpassing June’s downwardly revised 0.6% increase. Actual sales for July, not seasonally adjusted, were up 7.2% from July 2013.

Canada’s housing market has roared back to life after an especially brutal winter that hurt home building, sales and prices. The bounce-back has been bolstered by low mortgage rates, which are not expected to rise significantly until 2015.

“The (recent decline in mortgage rates) will prove to be the more important determinant over the rest of the year,” Mazen Issa, senior Canada macro strategist at TD Securities, said in a research note.

“While we do expect that higher rates will curtail housing market activity, the magnitude remains small,” he added.

“The true catalyst will be the next stage of the policy normalization process by the Bank of Canada, which we do not expect will happen until the second half of 2015,” Issa said.

CREA’s home price index rose 5.3% from July 2013, little changed from June’s 5.4% gain. The national average price for homes sold in July, not seasonally adjusted, was $401,585, up 5% from the same month last year.

“Low mortgage interest rates continue to bolster home sales activity,” Gregory Klump, CREA’s chief economist, said in a statement.

“With the Bank of Canada widely expected to hold interest rates steady until next year, mortgage financing will remain attractive over the second half 2014 and continue to support Canadian economic growth, while waiting for Canadian exports and investment to improve.”

The national sales-to-new listings ratio was 53.6% in July, little changed from 53.4% in June and firmly entrenched in what is considered balanced territory.

There were six months of inventory at the end of July, unchanged from June and May, but half a month below the inventory level at the beginning of 2014, CREA said.

Source: Andrea Hopkins, Reuters

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Handy tips for first-time homebuyers

August 13th, 2014

Prepare yourself ahead of time before you seek a loan this year.

With mortgage rates near all-time lows and the government of B.C. saving first-time buyers up to $7,500 by increasing the First Time Home Buyer’s Property Transfer Tax limit from $425,000 to $475,000 (and partial savings up to $500,000), now could be the perfect time to finally take the plunge into home ownership.

If you are thinking of obtaining a loan of any kind, like a new mortgage, vehicle loan or any other loan, it is important to understand how the banks think. By setting up your finances as optimally as possible, you can increase your chances of getting approved instead of declined. Here are some tips for increasing your borrowing power in 2014.

Also, having all of your documents ready may allow you to make a more competitive offer on a timesensitive deal like a foreclosure in real estate. Here are some of the documents you will likely need: Two years of T1 Generals (tax returns filed to the CRA); Two years of Notice of Assessments (document sent back from the CRA once income taxes have been filed); Job letter and paystubs if an employee; Mortgage statements and lease agreements if you own real estate; And more, depending on your circumstances.

Find out what your credit score is

It is always a good idea to obtain a copy of your own credit bureau report ahead of time. Every time a lender does a credit inquiry, your credit score will take a small hit. Learning ahead of time whether your credit score is good or bad will allow you to prepare and fix anything that may appear on your credit rating.

You can obtain a copy of your own credit rating yourself at

Get pre-approved

If you plan on purchasing real estate or a vehicle in 2014, it would be a good idea to discuss your options with your broker or bank to learn more about what you qualify for. You don’t want to be wasting your time looking at making a major purchase only to find out you won’t qualify for the loan you need to make that purchase.

If looking to obtain a mortgage, get a pre-approval so that you will have a sense of what your borrowing cost will look like and lock in your interest costs.

Investigate RRSPs

If you are a first-time homebuyer, you can pull out up to $25,000 per person out of your RRSPs to be used towards the purchase of your first home. Important points about the first time homebuyer plan are: The $25,000 is tax free, but must be repaid into the RRSP over a 15-year period.

The funds have to be in the account for 90 days before you pull them out, so make sure if you plan on buying a house in the spring, you make an RRSP contribution this fall.

You can create “money out of thin air” by making an RRSP contribution shortly before purchasing because of the tax refund.

Example: If you deposit $20,000 into your RRSP and earn between $30,000 and $62,500 annually, you will get an approximate $6,500 tax refund once your taxes have been filed. You will now have $26,500 available for the down payment, not $20,000.

Filing your taxes

Generally, the sooner you file your taxes, the better. There are some exceptions, however.

Lenders will generally use either your minimum guaranteed income (common for salaried employees) or what you have averaged for the past two years on your income taxes (the net income on Line 150 on your taxes).

So, if you had a very good year in 2013 and have a variable income (self employed, or a large amount of your annual income is derived from commissions, bonuses, etc.) you should file ASAP. However, if 2013 was a very poor year, you can still get away with using your 2011 and 2012 income taxes to qualify for a mortgage or other loan until the summer. If you had a bad year, you may want to buy in the first half of 2014 instead of waiting.

Presales completing in 2014

If you have a presale completing in 2014, it is important to prepared ahead of time. The developer will usually give you an idea of the estimated closing date well in advance, but the dates often change.

Make sure you are prepared in advance. Once the developer is ready to close, they usually only give about 10 business days’ official notice which means you should already have your financing arranged. Rates can be held for 90-180 days depending on the lender (most lenders are 90-120 days) so start early to make sure you get the best possible rate by the completion date.

If you are buying a new presale that doesn’t complete until after 2014, make sure you find out if the developer has arranged a rate hold guarantee with a bank. The rate will usually be higher than current market rates but it’s important to have a worst-case scenario. Financing is harder than it has been in a long time. Make sure you get the update on what is new and how some of the new rules may impact you. Particularly for real estate investors, it is much more difficult to qualify for rental properties.

Source: Kyle Green is a mortgage broker with Mortgage Alliance Meridian Mortgage Services Inc.

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Vancouver home sales and prices continue to climb in July

August 5th, 2014

Residential property sales in Greater Vancouver saw a 3.9% increase from a year earlier.

The number of homes sold in Canada’s most expensive market topped 3,000 in July, marking a fourth straight month sales have hit that level.

The Vancouver sales market has not been this strong in three years, according to the Real Estate Board of Greater Vancouver.

“The Greater Vancouver housing market continues to see slightly elevated demand from homebuyers, steady levels of supply from home sellers and incremental gains in home values,” said REBGV, in a release.

Residential property sales in the Greater Vancouver area through the Multiple Listing Service reached reached 3,061 last month, a 3.9% increase from a year earlier. Sales were also 3.8% above the 10-year average for the month. Sales were down 10.1% from a month earlier.

Prices also continue to rise with the board’s MLS Home Price Index composite benchmark price for all residential property reaching $628,600, a 4.4% increase from a year earlier.

“Today’s activity continues to put Metro Vancouver in the upper reaches of a balanced real estate market,” said Darcy McLeod, the board’s president-elect, in a statement.

The sales-to-active-listings ratio reached 19.6% in Metro Vancouver in July, having hovered between 18% and 20% over the last four months.

New listings reached 4,925 in July, a 1.5% increase from a year ago. However, it was a 7.8% decline from a month earlier.

The total number of properties currently listed was 15,617, a 6% decline from a year ago and a 2.5% decrease from a month earlier.

Source: Garry Marr, Financial Post

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Vancouver’s Shaughnessy Heights is B.C.’s wealthiest neighbourhood

July 28th, 2014

Vancouver’s Shaughnessy Heights is B.C.’s wealthiest neighbourhood

It may not be the wealthiest city in Canada, but Vancouver is certainly one of them. And it’s also one of the most expensive to live in.

The city’s Shaughnessy Heights area – located west of Granville Street, from West 29th to West 39th avenue – is the country’s third-priciest real estate market with an average house price of $3.09 million, according to Canadian Business magazine.

The publication ranked Shaughnessy Heights as the fourth-wealthiest area in Canada and the wealthiest in B.C. in its Top 25 of Canada’s Richest Neighbourhoods, for 2014. It also had the highest average house price of the ranking’s top five neighbourhoods.

“In the nosebleed-inducing world of Vancouver real estate, Shaughnessy Heights still manages to stand out,” the ranking says. According to Canadian Business, the area has an average household net worth of $12.00 million – hefty, but not nearly as much as those above it.

Toronto, Montreal, and Vancouver were the only cities in the top 10, perhaps not surprisingly.

Toronto also had the top three on the list, with Sunnybrook (average household net worth, $20.82 million) and York Mills-Windfields ($21.55 million) coming behind The Bridle Path, a neighbourhood with an average household net worth of $22.27 million.

“The residents of the wooded manors in Canada’s richest neighbourhood are as likely to be found abroad as at home,” reads the writeup on CB, noting that The Bridle Path’s residents are often on vacation or in Toronto at the city’s high-culture scene at galleries or the ballet.

“With one recently-auctioned 14-bedroom, two-pool mansion on Park Lane Circle being modelled on the Palace of Versailles, it’s clear that the residents of Bridle Path have a cultured eye for the world’s best things.”

York Mills-Windfields has the country’s highest average house price, at $3.40 million.

Other Vancouver neighbourhoods in the top 25 were No. 7 Kerrisdale (average net worth of $10.59 million, house price of $2.79 million), No. 11 Kerrisdale Park ($9.26 million and $1.89 million), No. 13 West Bay and Sandy Cove ($8.19 million, $2.90 million) in West Vancouver, and No. 14 Shaughnessy Centre ($7.82 million, $2.47 million).

Winnipeg and Calgary also had neighbourhoods in the top 25 for 2014.

The magazine’s rankings are based off its calculated average household net worth for each postal code – “the total net worth of all the households in each neighbourhood, divided by the total number of households,” it says.

“Net worth figures are compiled using publicly available census data as well as Environics Analytics market intelligence… The neighbourhoods themselves are defined by Statistics Canada.”

Source: Kolby Solinsky – BC Local News

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Canadian property prices set to rise 5.7%

July 8th, 2014

Canadian property prices set to rise 5.7% this year

The Canadian Real Estate Association (CREA) has updated its forecast for home sales activity and prices for 2014 and 2015.

Little is expected to change on the sales front but nationally average home prices are expected to increase by 5.7% in 2014 but by such 0.7% in 2015.

The CREA report says that an extraordinarily bleak winter resulted in slow start to 2014 national sales activity. As the first quarter ended, sales momentum heading into spring was constrained by a continuing shortage of listings in a number of local markets. However, the rise in newly listed properties in April and May supported an increase in sales activity.

Overall, the deferral of sales and listings reflects a delayed start to the spring home buying season, with combined sales for the period from March to May coming in largely as anticipated and at average levels. These deferrals are now likely to have been largely depleted, which suggests that the strength of sales momentum heading into the summer may be transient.

CREA’s forecast for sales activity in 2014 is largely unchanged from its previous forecast published in March. At that time, interest rates had been expected to start to edge higher in the second half of the year. However, it now appears that interest rates may not begin to rise until closer to the end of the year, which remains supportive for home ownership affordability over the balance of 2014.

Sales are forecast to reach 463,400 units in 2014, representing an increase of 1.2% compared to 2013. This is little changed from CREA’s forecast of 463,700 sales, a rise of 1.3%, published in March.

Activity is still expected to remain in line with its 10 year average and to hold within fairly short reach of 450,000 units for the seventh consecutive year.

British Columbia is forecast to post the largest year on year increase in activity at 8.3% and make the biggest contribution to the increase in national sales activity. B.C.’s projected increase in sales this year largely reflects a slow start to 2013.

Alberta’s annual sales are projected to rise by 3.8% in 2014, while activity in Saskatchewan, Manitoba, and Ontario is expected to be roughly in line with 2013 levels. Sales are forecast to fall by 1.7% in Quebec, by 4.2% in New Brunswick, by 5.1% in Nova Scotia, and by 2.6% in Newfoundland and Labrador.

In 2015, the outlook for the economy, jobs and incomes is one of further improvement, accompanied by a slow and gradual increase in fixed and variable mortgage interest rates.

On balance, these two opposing factors should most benefit housing markets where sales are currently softer but prices remain more affordable. Sales in relatively less affordable housing markets are likely to be more sensitive to higher fixed mortgage rates, whether from the standpoint of higher monthly mortgage payments or qualification for mortgage financing based on the posted five year mortgage interest rate.

As such, provinces east of Ontario are expected to post the largest gains in activity in 2015 in the range of around 2.5% to 5% while sales in provinces from British Columbia to Ontario are forecast to remain little changed.

National activity is now forecast to reach 467,800 units in 2015, representing a further annual increase of 0.9%. This would result in sales staying in line with the 10 year average for the eighth year in a row.

Average prices have remained firm and continue to reflect a rise in the share of national sales among some of Canada’s most active and expensive markets compared to last year. Additionally, prices have been heating up in some markets, particularly in Calgary and Toronto where single family properties remain in short supply.

The national average home price is now projected to rise by 5.7% to $404,300 in 2014, with similar sized gains in British Columbia, Alberta, and Ontario. More modest changes in average prices are forecast for all other provinces this year.

The national average price is forecast to edge up a further 0.7% in 2015 to $407,300. Alberta and Manitoba are forecast to post average price gains of2% in 2015, followed closely by Ontario at 1.2%. Average prices in all other provinces are forecast to remain stable, edging up by less than 1%.

Source: PropertyWire

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Changes to B.C.’s Property Transfer Tax would help home buyers

June 10th, 2014

Shifting the tax burden: proposed changes to property transfer tax.

If you’ve bought a home in Metro Vancouver in recent years, you’ve probably felt the sting of the Property Transfer Tax. But the B.C. Chamber of Commerce thinks it has a solution to ease some of that tax pain and it involves shifting the tax burden from British Columbians to deep-pocketed foreign investors.

Currently, home buyers pay one per cent on the first $200,000 of a home’s sale price and two per cent on the rest.

The Chamber wants to shift the tax burden, with a new proposal that would have B.C. residents pay one per cent of the entire purchase price and foreign investors pay two per cent.

“It basically says if you are not a resident of B.C. and Canada and you are a property owner, you will pay more in effect than those who are residents of British Columbia,” said John Winter, B.C. Chamber of Commerce CEO.

Under the new proposal, the Chamber says the B.C. government would still collect the same amount of money, close to $1 billion a year.

However, the B.C. Finance Minister is not buying it. Mike de Jong says the province wants and needs foreign investment.

“I think that’s the best way to chase people away,” said de Jong, “People have choices, and we can decide in British Columbia to welcome the world, to welcome investment and the jobs it creates, or we can chase people away. I know which strategy I prefer.”

B.C.’s property transfer tax is the highest home tax in Canada, brought in by former premier Bill Vander Zalm when the average price of a home in Vancouver was just under $150,000.

The B.C. Chamber of Commerce is not the only organization trying to force changes to the 27-year-old tax. The Real Estate Board of Greater Vancouver wants to see the PTT threshold raised from $200,000 to a more realistic $525,000.

“I’d like to see British Columbians have a fairer tax, one that’s based on not what the conditions were in 1987 but the conditions of today,” said Ray Harris, president of the REBGV.

The chief economist for the B.C. Real Estate Association also has some ideas on how to make the PTT fairer. Cameron Muir suggests indexing the tax to some sort of inflationary measure, so British Columbians don’t have to pay more and more as prices rise.

The B.C government has recently changed the PTT threshold to ease the burden for first time home buyers and the Finance Minister has told CTV News, he’s now looking at finding additional relief for all buyers.

“Probably the thresholds are the more effective and realistic way to do that and we’re looking at that now as part of the budgeting process for next year,” said de Jong.

Still, the Clark government is hoping to deliver another balanced budget and reducing the PTT would mean reducing the cash flow into general revenues.

Source: Lynda Steele and Sandra Hermiston, CTV Vancouver

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It’s a seller’s market in Greater Vancouver for the first time in 3 years

June 4th, 2014

It’s a seller’s market in Greater Vancouver for the first time in three years.

A gauge closely monitored by the real estate sector, called the sales-to-active-listings ratio, reached 20.4 per cent last month – the first time since June, 2011 that Greater Vancouver’s housing market has crossed into seller’s territory.

The industry deems it a balanced market when the ratio ranges from 15 per cent to 20 per cent. It is considered a buyer’s market below 15 per cent and a seller’s market above 20 per cent.

The number of properties changing hands is edging up while active listings are slipping, the Real Estate Board of Greater Vancouver said Tuesday.

Residential housing sales rose to 3,286 in May, up 14 per cent from 2,882 resale properties that sold a year earlier. Despite the rebound, the latest monthly sales still lagged the 10-year average of 3,514 for May. There were a total of 16,072 active listings last month, down 6.7 per cent from May, 2013.

Some housing watchers have said Ottawa’s shutdown of the federal immigrant investor program in February might erode sales volume, especially for high-end properties. But so far, the impact has been muted, said Shaadi Faris, vice-president at Vancouver-based Intergulf Development Group.

“The perception about people who have no connection to B.C. arriving to flood the market with investment properties is overblown,” he said in an interview. “The immigrant investor program being removed didn’t have as large a ripple as some might have thought.”

Greater Vancouver’s average price for single-family detached homes sold last month was $1,218,772, up 4.2 per cent from a year earlier.

Mr. Faris said that as prices for detached houses continue their march upward, prospective first-time buyers are increasingly looking for townhouses and condos in the suburbs.

Intergulf oversees the Grand Central condo project in Coquitlam, where the developer completed the first high-rise in 2009 and the second in 2012. A third tower, the highest at 37 storeys, is set for completion later this year.

“Three or four years ago, there were a lot of new projects that came on. There was an oversupply in Coquitlam, and it took time to get through that inventory,” Mr. Faris said.

Coquitlam condo prices have dipped 4.1 per cent since May, 2011, but have risen 3 per cent in the past year. The Evergreen SkyTrain line, scheduled to open in the summer of 2016, will have a stop near the Coquitlam Centre shopping mall. “Evergreen isn’t pie in the sky any more,” Mr. Faris said.

Combined index prices, which strip out the most expensive resale properties on the Multiple Listing Service, climbed 4.3 per cent year-over-year to $624,000 last month for Greater Vancouver’s detached homes, condos and townhouses. The index price for detached homes in May was $966,500, up 5.4 per cent over the past 12 months. The townhouse index price gained 3.1 per cent to $469,100, while the condo index price rose 3.2 per cent to $377,500.

Ray Harris, president of the Real Estate Board of Greater Vancouver, said statistics on existing homes sold show that demand is strong. The region’s housing market is the most active it has been since the spring of 2011, he said.

For detached properties, three neighbourhoods made the million-dollar club in May’s home price index: Vancouver’s West Side saw its price index increase 7.8 per cent over the past year to $2,229,800, West Vancouver’s gained 8.1 per cent to $2,009,200 while Burnaby South’s advanced 4.7 per cent to $1,007,400.

In the Fraser Valley, total residential, commercial and retail sales last month climbed to 1,633, up 18.4 per cent from May, 2013. Last month’s index price for detached homes in Fraser Valley, which includes the sprawling suburb of Surrey, rose 3.1 per cent to $566,400.

Source: Brent Jang, The Globe and Mail

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Why do Vancouver and Toronto have such high housing prices?

May 18th, 2014

Preventing urban sprawl could push up house prices.

Recent news that Toronto has caught up to Vancouver with single detached homes averaging more than $1 million raises an interesting question as to why these two cities have such high housing prices relative to the rest of Canada.

High housing prices are surely affected by low mortgage rates, but this is true for all housing markets in Canada. Yet, the most expensive housing markets experience price acceleration that is faster than other cities. According to the Canadian Real Estate Association, for the period March 2013 to March 2014, average house prices have risen 7.3 and 5.6 per cent respectively in Toronto and Vancouver, which is more than the 4.9 and 1.5 per cent in Calgary and Edmonton respectively.

It is all about demand and supply. If demand rises faster than supply, housing prices increase, as in many western provinces and Ontario metropolitan cities. If demand is less than supply, housing prices will fall, as in the case of Quebec City and Halifax.

Demand for housing depends on population growth, demographics and investors looking for property investments in Canada.

Calgary (4.3 per cent) and Edmonton (3.8 per cent) have one of the fastest population growth rates among metropolitan areas in the country. Toronto and Vancouver are less at 1.5 and 1.4 per cent respectively, which is more typical for Canada as a whole.

Those cities, with younger populations becoming homeowners for the first time, will also push up demand — Calgary and Edmonton have the youngest populations in Canada. Marriage breakdowns also increase the demand for housing. So will investors who buy houses to rent out, hoping to cash in on higher prices in the future. Rental vacancy rates in 2013 are least in Calgary at one per cent. Vacancy rates are below two per cent in Toronto, Vancouver and Edmonton.

Yet, Toronto and Vancouver prices continue to rise faster than Edmonton and Calgary. Why is that so, since demand factors suggest that prices should be booming most in Calgary? To answer this question, one needs to look at supply conditions for home building.

The cost of new homes will drive up housing prices since new supply will not be forthcoming unless prices are sufficient to cover costs. The 2009-12 Canada Mortgage and Housing Corp. new housing price index has risen fastest in Toronto, while Vancouver’s, Calgary’s and Edmonton’s has been more muted, although Calgary’s new housing prices have risen sharply recently at 4.9 per cent.

An important factor influencing the cost of new homes are land prices, since building costs per square metre don’t differ as much across cities. Toronto and Vancouver have quite high land prices, which is why detached homes are so expensive there.

Land prices are heavily influenced by zoning and urban growth policies. A recently released paper by Calgary’s School of Public Policy provides a comparison of policies adopted in Calgary and Edmonton with those of Vancouver and Toronto. While the authors, Zack Taylor, Marcia Burchfield and Anna Kramer, do not examine the impact of urban growth policies on housing affordability, their analysis provides some important food for thought for urban planning in the future.

In the past two decades, Vancouver has followed intensification strategies, requiring new housing to be built on an existing area of land and greater transit use. Toronto has also pursued intensification in recent years, although some suburban expansion has continued. In contrast, Edmonton has followed an expansionist strategy, although with some densification in the past decade. Calgary’s urban growth has been expansionist, similar to Edmonton, although it has adopted an intensification strategy since 2009.

An intensification strategy provides a number of benefits to communities by making more efficient use of land. The inner city is less hollowed out since the population cannot move further from the centre. Density increases to accommodate new demand and growing cities develop new business centres, not just those at the core. Greater use of transit helps reduce environmental costs related to pollution.

As desirable as it is for urban planning to prevent urban sprawl, intensification has consequences that should not be ignored. Calgary’s younger and migrant families prefer houses with land that are typically more affordable in the suburbs. Without expansion, housing which is desired by new owners will become less accessible, driving up prices for detached homes, like has happened in Toronto and Vancouver in the past decade.

After all, if more people are added to the same available land, it is bound to push up land costs for housing. Only if the city releases existing land in its boundaries for housing development will it be possible to bring on enough supply to keep housing prices sufficiently low. Otherwise, higher housing prices per square metre will force people to live in smaller houses to maintain affordability, or move to surrounding areas beyond the urban border where housing is cheaper.

While accelerating housing prices have not yet occurred in Calgary, which faced an economic recession in 2009, housing affordability may become an issue if insufficient new housing is being built. This could lead to increased demand for low cost housing, which could be partly relieved by relaxing regulations such as those with respect to secondary suites.

Calgary’s policy regime is not built in stone since it is so different from the past. If housing becomes much less affordable in the future, the voters may demand from its mayor and council a new approach that provides better balance between intensification and expansion.

Source: Jack Mintz, Calgary Herald

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Spring is home-buying season. Steps you can take to avoid buying a lemon.

May 13th, 2014

Spring is home-buying season and buyers need to be extra careful when checking out potential homes. You don’t want to buy a lemon.

There are two main options when buying a home: Either you buy new – a completely new build – or you buy used.

If you’re buying a new home, make sure you check out the builder, their track record and speak to people who have bought their home from the same builder.

Were they happy with their new home? Did they have any problems within the first year? Second year? What types of problems were they? Did they require major fixes, like a leaking basement, a problem with the HVAC or electrical issues? How helpful was the builder when it came to fixing the problem?

Just because a house is new doesn’t mean it won’t have issues. I’ve seen brand new homes, not even five years old, with major fixes that nearly bankrupt the homeowner. A new home shouldn’t have major problems, but too many times it does.

If you’re looking at used homes, be careful with ones that were flipped. These homes are especially a problem because they are deliberately made to look good, but aren’t necessarily built or renovated to be good. They take advantage of homebuyers’ lack of knowledge when it comes to picking out shoddy workmanship.

Looks are deceiving. A home that’s been flipped banks on it.

I don’t like flips because most of them are done with one purpose: To make a profit. In most cases, the homeowners don’t care about quality because they won’t be living there. Their top priority is to sell fast to save on mortgage payments. And once it’s sold, any problems in the home become the responsibility of the new owners.

How do you know if it’s a flip? There are some warning signs, but again, it comes down to doing your homework. Most people think you need to be a pro to pick out the warning signs, but a lot of it is just common sense.

For example, if the homeowner tells you that they just finished renovating the kitchen and bathroom, how much do you want to bet that they had enough money to do both renovations right?

A standard kitchen renovation done properly will cost at least $30,000. A bathroom reno can cost close to $20,000. If the only reason for renovating was to sell, I would be cautious on how the work was done. Good work takes time, and it isn’t cheap. Ask the homeowner details about the reno, such as how long it took to find the right contractor, set up the job, choose materials and for the work to be done. If all it took was a few weeks, I would be cautious.

If a home looks like it’s been renovated, do a search for any permits on work completed. If changes were made to the plumbing, electrical or structure, permits needed to be pulled.

Also look for cheap materials, such as MDF for cabinetry or laminate flooring. Keep an eye out for bad trim and sloppy paint jobs — these are red flags for quick and cheap renos. When the trim is off or doesn’t line up, you can bet that the workmanship isn’t top quality. If they fumbled on the finishes, they probably cut corners on the stuff they know most buyers will not see — the stuff behind walls and below flooring.

If windows were replaced, check to make sure that they are at least Energy Star rated. If the home has bad windows, you will pay for them for years in extra energy costs. And the cost of replacing them will run you at least $10,000. So if they need replacing, as a buyer, you need to know.

One last thing home buyers can look into is getting a home-history report on a property. Some home inspectors even include this service as part of their basic home inspection. A home-history report uses municipal, provincial and federal data to gather the most up-to-date property information. It’s an extra tool that helps protect a home buyer, so you know exactly what you’re walking into.

A home-history report can tell you the home’s previous sales price, sale dates, building permit information, information on structure or any previous insurance claims related to the property. You should know if a home you’re looking at had major water damage, flooding, a fire or damage from a natural disaster. Some home-history reports can even tell you if a house was ever used for illicit purposes, like a grow-op or meth lab.

The more information you have on a property, the better. You will know if the electrical or plumbing needs to be looked at by a professional to make sure it’s safe, or if the structure of the home has been modified or undermined. It puts you in a better position to buy the right home and buy it smart.

Source: Mike Holmes, Postmedia News

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