Six months after Vancouver City Council approved a plan to transform the Cambie Street corridor, homes in the area have nearly tripled in value and some residents fear development will ruin the neighbourhood.

Last May the council passed a plan to bring 15,000 more people into the Cambie Street corridor through mid-rise development.

Then last month a block of 10 homes along Cambie Street near 41st Avenue sold for $3.4 million each — nearly three times their previously assessed value.

Neighbours say they’re growing tired of being pressured to sell by developers and real estate agents.

Janice Douglas says she expects a six-storey building will soon be overlooking her single family home.

“We’ve got people looking in our back yard, looking in our bedroom, and we will never see the trees again — nor will we have any more sunshine,” Douglas told CBC News.

Many residents don’t want to move and feel ignored by the city as developers move in, looking to tear down the single family homes, she says.

“People come here for the beauty. Well the beauty is rapidly disappearing,” said Douglas.
Canada Line driving changes

City planner Brent Toderian says he appreciates the concerns and the city is trying to cool down land speculation in the neighbourhood.

Toderian says the city has been meeting with developers and realtors to discuss land transactions after getting wind of some very high deals negotiated in the months after the Cambie corridor plan was approved.

He says the final prices didn’t appear to have factored in community amenity contributions the city negotiates with developers in order to pay for infrastructure and services associated with increased density

“People were overpaying for land — thus we sent messages out into the marketplace to say you’re going to have to adhere to the expectation of the plan if you wish to succeed in development.”

But he says having a new rapid transit line running through the neighbourhood means changes are coming and the city’s plan has the community’s support.

“Canada Line is a change maker and so yes — there will be some folks, and to my ear they are the minority — but there are going to be some folks that are unhappy about that,” he said.

“But most people recognize the logic and inevitability of transformation once you’ve put in a piece of infrastructure like Canada Line. The vast majority of people we heard from were very positive about the plan.”

Toderian expects construction along the corridor to begin in late 2012.

The Cambie corridor plan allows buildings up to 12 storeys in height, and leaves room for them to go even higher around the Oakridge Mall near 41st Avenue and at the southern end of Cambie Street near Marine Drive.

Preliminary plans for the 825,000-square-foot Marine Gateway Project next to the Marine Drive Canada Line station have already received city approval. It will include two residential towers with more than 400 units as well as a cinema, food and drug stores.

Source: Vancouver Sun

Vancouver Sun October 22nd, 2011

843 Union Street, Vancouver

Type: 4-bedroom, 3-bathroom detached
Size: 2,535 sq. ft.
B.C. Assessment, 2011: $815,000
Listed for: $1.075 million
Sold for: $1.05 million
Sold on: Aug. 22
Days on market: 7
Listing agent: Stephen Burke at Sutton Group – West Coast Realty
Buyer’s agent: Geoff Jarman at Sutton Group – West Coast Realty

The big sell: This heritage home in the heart of Vancouver’s Strathcona neighbourhood was purchased in 1999 for $335,000 and recently fetched more than $1 million.According to listing agent Stephen Burke, the house – it dates to 1908 — is in need of some work, but the character of the property and the location on the tree-lined Adanac bike path and opposite the Union Market were a winning combination. The three-level home sits on a high 25-by-122-foot lot and features wood floors, a large front parlour with a gas fireplace, an office/library, a country-style kitchen with eating area and gas stove, skylights and nine-foot, six-inch ceilings on the main floor. As well, it has a renovated bathroom with a two-person bathtub, a two-bedroom in-law or guest suite in the basement and a private mature garden that is overlooked by a rear deck.There are many single-family homes in the area, which is a five-minute drive to downtown.

1206 – 138 East Esplanade, North Vancouver

Type: 1-bedroom, 1-bathroom apartment
Size: 626 sq. ft.
B.C. Assessment, 2011: $388,000
Listed for: $429,000
Sold for: $410,000
Sold on: Aug. 16
Days on market: 27
Listing agent: Tyler MacDonald at Century 21 In Town Realty
Buyer’s agent: Jay McInnes at Macdonald Realty

The big sell: Buying a home that is affiliated to a hotel can pay dividends, especially when residents have access to the hotel’s amenities — as is the case with this condo in the Premiere at the Pier building. The hotel in question is the Pinnacle, which features a five-lane indoor swimming pool, a Jacuzzi, steam room, sauna, and fully equipped exercise room. This unit takes in panoramic southwesterly views of the water, city and the North Shore mountains. It has an open floor plan with white oak hardwood floors, central air conditioning, an electric fireplace, stainless-steel appliances, granite countertops and a balcony. The revitalization of this area four years ago transformed the neighbourhood from a shipyard site into a bustling community, and provided access to this portion of the city’s waterfront for the first time in 100 years. The location is close to the SeaBus, shopping, and eateries in what is now known as Lolo – the Lower Lonsdale area.

19341 0 Ave., Surrey

Type: 4-bedroom, 4-bathroom detached
Size: 3,205 sq. ft.
B.C. Assessment, 2011: $1,213,700
Listed for: $1,849,900
Sold for: $1.6 million
Sold on: Aug. 18
Days on market: 98
Listing agent: Bruce Copp at Sutton Group – West Coast Realty
Buyer’s agent: Brent Silzer at Sutton Group – West Coast Realty

The big sell: You cannot get much closer to the U.S. than this property on 0 Avenue in Surrey. Although neighbours to the south would be impressed if they could see this home, it is hidden from view via a winding driveway that is lined with tall cedar trees. It was built in 1971 in a traditional West Coast style that comprises split cedar, glass and vaulted ceilings. The interior is modern with tiled floors, a floor-to-ceiling stone fireplace, a 24-by-12-foot chef’s kitchen, media room, solarium, wine room, library and a 1,200-square-foot deck. With five acres to enjoy, there is plenty of room for a horse barn, pastures, and a guest cottage with a fireplace and view of the mountains. One of the most enticing features of the property is the lush vegetation that surrounds the home. It includes mature flower gardens, a pond and waterfall, and a variety of birds attracted by the flora.

© Copyright (c) The Vancouver Sun

While Canada doesn’t idealize home ownership to the extent the U.S. does, it is still perceived as preferable to renting. Owning is seen as permanent, renting transient, the implication being that ownership contributes more to community stability.

Owners are thought to be more involved in community activities than renters, adding to social cohesion. The pride of ownership is viewed as a motivator for owners to maintain their properties, while renters supposedly lack this incentive. There is scant research to support any of these contentions.

In any case, Canadians have pursued the holy grail of home ownership with as much zeal as their American cousins and have achieved similar rates of both ownership and indebtedness.

Canadian households, on average, now carry nearly $1.50 of debt for every dollar of income. Most of that debt is mortgage debt. Historically low interest rates have enticed buyers to get into the real estate market or to upgrade to more expensive homes. That, along with increasing real estate investment from outside Canada, especially from mainland China, has driven home prices in B.C. to record levels.

Is the market overpriced?

Vancouver lays claim to the highest median house prices in Canada and Forbes magazine ranks the city’s real estate market as the sixth most overpriced in the world. (Forbes calculated an annualized rate of return on property based on cash flows from renting, then flipped the result to produce the equivalent of a price-to-earnings ratio. Vancouver’s was 26.8; Monaco was No. 1 at 74.1.)

Each quarter RBC publishes an affordability index that examines the cost of ownership relative to household income. Most recently, it found the cost of mortgage payments, utilities and property taxes for a detached bungalow in Vancouver amounted to 92.5 per cent of a typical household’s monthly income.

“Vancouver’s housing market is without a doubt the most stressed in Canada and is facing the highest risk of a downturn,” Wright said in the affordability report.

That real estate in Vancouver is expensive is not news.

A 2008 study by Tsur Somerville, professor of real estate finance at the Sauder School of Business at the University of British Columbia, and his research assistant, Kitson Swann, determined that house prices in Vancouver would have to fall by 11 per cent to be in balance with rents; in other words, for the price-to-rent ratio to be in equilibrium.

The study assumes that the housing market is in equilibrium when the ratio of house rents to prices equals the sum of mortgage rates and cost of holding a house minus the expected long-run rate of price appreciation. House prices above their equilibrium level doesn’t guarantee they will fall, the study says. But the potential for decline is greatest in cities that have built more units than can be absorbed by the growth in households.

“Recent data,” it adds, “suggests that Vancouver is most at risk in this regard.”

A two-bedroom-plus-den, two-bathroom, 1,500-square-foot townhouse in North Vancouver was recently listed for rent at $2,200 a month. Another townhouse of similar size in the same complex was offered for sale at $649,900. The price to rent ratio of 24.6 suggests that either the property is overvalued or the rent is too low. Trulia.com, a U.S. real estate website, says a ratio of 21 or more means it’s better to rent than to buy.

Analyze this data as an investor would by dividing the annual rent by the capital cost of the property and the return — or rental yield — is 4.1 per cent. With Government of Canada benchmark bond yields trending below three per cent, an investor might consider this an adequate ROI. But mortgage payments with 25 per cent down, a 25-year amortization and a variable interest rate of three per cent would amount to roughly $2,300, which turns this into a losing proposition, even before taxes and maintenance expenses.

According to Forbes magazine, “the relationship between rental yields and housing costs matters because a low rental yield is a good indication of a stretched market — one that has a bubble — since these markets are more likely to face downward price pressures or grow at a slower rate.”

Based on the numbers then, one might draw the conclusion that Vancouver is a real estate bubble. But bubbles don’t always burst; sometimes they slowly deflate. A few analysts believe that fate awaits Vancouver.

TD Bank, for instance, forecast this summer that average house prices in Metro Vancouver will decline by 14.8 per cent by the end of 2013, but will still be worth more than they were in 2010.

A place to call home

Would-be buyers and renters can while away hours by Googling the term “buy or rent calculator” and working through various scenarios.

However, the majority of home buyers aren’t thinking about the return on investment on an asset, they’re looking for a place to raise a family, close to schools and shopping, maybe with a yard, a deck for the barbecue and a basketball hoop on the garage: a place to call home.

These misty-eyed buyers might do better than you imagine.

Consider that North Vancouver listing with the high price-to-rent ratio and low yield. If they were to rent at $2,200 a month with annual rent increases of two per cent, they’d pay $289,072 over 10 years.

If they could come up with $162,500 (for 25 per cent down) and borrow $480,000 at today’s historically low rate of three per cent (and pay $900 a year on upkeep), they’d pay $281,589.

If the house appreciated by seven per cent a year and the cost of selling it was seven per cent, the appreciation value would be $1,278,451. They’d come out ahead by $867,080.

It would take a savvy investor to beat that under current stock, bond, currency or commodity market conditions. At the same time, it is risky to have so much capital tied up in a single immovable and relatively illiquid asset.

In the final analysis, whether it is better to buy or to rent depends not so much on interest rates and ratios but rather on an individual’s goals in life. For some, home ownership is a ball and chain; for others, it is fulfilment of a dream.

Odds are that if you’re asking the question, you’ve already made up your mind.

Source: Harvey Enchin, Vancouver Sun

In a report earlier this year, Royal Bank of Canada chief economist Craig Wright suggested home ownership for a growing number of Canadians has become an impossible dream. That’s certainly true in Vancouver, where the affordability index is at record highs, with the average home price at nearly 10 times the median income.

But perhaps ownership has been oversold as an aspirational goal. As thousands of Americans have discovered, sometimes the dream becomes a nightmare.

In the United States, home ownership wasn’t just a dream, it was held up as an inalienable right. Washington pressured financial institutions to lend money to almost anyone who asked, giving rise to the NINJA mortgage (no income, no job, no assets).

Because mortgage interest was (and still is) tax deductible, homeowners did not bear the full burden of borrowing. Financial institutions turned to the wizards of Wall Street to devise derivatives that might mitigate the heightened risk.

The U.S. government had already sanctioned mortgage-based securities, having set up the Government National Mortgage Association (Ginnie Mae) in 1968 and the Federal Home Loan Mortgage Corp. (Freddie Mac) in 1970 to expand the secondary market for mortgages.

Inevitably, homeowners without the means to repay their debts defaulted on their mortgages and the derivatives based on them, including mortgage-backed securities and collateralized debt obligations, became worthless. Not knowing the extent of exposure to toxic debt, financial institutions became reluctant to lend to each other.

The result was a credit crisis that plunged much of the world into recession.

The housing crash that crippled the U.S. didn’t happen in Canada for several reasons. For a start, more prudent lending practices prevented the emergence of a significant subprime mortgage market. Canada’s regulatory regime acted as a rudder that kept the financial services industry on an even keel. And besides the capital gains exemption on the sale of a principal residence, there is no particular tax advantage in owning a home in Canada.

Measures mistakenly introduced to loosen mortgage lending rules — such as interest-only loans and 40-year amortizations — were quickly reversed, forestalling a flood of overly leveraged households.

Source: Harvey Enchin, Vancouver Sun

The Bank of Canada will keep rates on hold until the third quarter of next year amid slow global growth and the risk that Europe’s debt crisis will linger on, according to a Reuters survey released Tuesday. The poll of 40 economists and strategists showed the median forecast for the next interest-rate increase was pushed back by three months from the second quarter of 2012 projected in an August poll.

Analysts said the central bank need to raise borrowing costs is less than they previously thought because the domestic economy has not recovered strongly and the European debt crisis still dampens the global outlook. “There is slightly more slack left in the Canadian economy than where it was presumed a couple of months ago, based on how the second quarter panned out,” said Mark Chandler, head of Canadian fixed-income and currency strategy at Royal Bank of Canada.

Source: Financial Post

Canada’s banks, which emerged from the financial crisis mostly unscathed, stole the spotlight as they were recognized as the world’s strongest, but there’s a good argument to be made that our real estate market deserves some glory, too.

Consider: for the better part of a decade house prices have been on the rise — apart from a brief decline in early 2009 — in most major cities across the country. If you zoom in on certain regions like Calgary or, say, Ontario cities like Windsor that have been hit by troubles in the auto industry, the curve gets a bit bumpy, but on a national basis Canadian real estate looks pretty good. Compared to the rest of the world, it’s a bastion of stability.

The U.S. market is a basket case. Since 2006 prices have tumbled more than 30% across the country and even now distressed sales account for more than one-third of total transactions, according to Moody’s.

In Europe the numbers are even more dramatic. In Spain, prices almost doubled between 2000 and 2006 but over the past three years they’ve fallen as much as 25% in some regions. House prices in Ireland have fallen below the level they were at in 2003, according to Bloomberg. Meanwhile, the U.K. market has been treading water since 2010 with some economists calling for a steep decline as the troubled economy begins to bite.

The Canadian housing market “is like the fountain of youth,” said one analyst. Rising real estate values, he explained, have helped drive consumer spending and provided fuel for the home building industry, a major source of jobs. According to the CMHC, residential development represents about 20% of the domestic economy.

Importantly, residential mortgages are the biggest single asset on bank balance sheets. When the global meltdown that started in 2008 began to threaten the banks in this country, the federal government stepped in by buying up billions of dollars of mortgages from lenders while the CMHC boosted its securitization program. The move effectively moved the risk of default from the banks to the government, providing banks with incentive to increase mortgage lending. Which they did.

But by boosting the level of securitization the government provided a buffer between the housing market and the banks, allowing them to benefit from rising prices but at the same time protecting them from potential losses in the event of a correction.

The good news is that at least for the moment a correction does not appear to be in the cards.

“The housing market is quite healthy,” said Mathieu Laberge, deputy chief economist at the CMHC. “Despite the financial uncertainty in global markets, economic fundamentals remain supportive of the housing market in Canada.”

Indeed, according to Capital Economics, things are about to heat up again. Growth in housing investment “appears to have re-accelerated again in the third [quarter],” the research group said in a recent note, adding that overall residential investment could get a boost for at least one or two more quarters and possibly more.

Source: John Greenwood, Financial Post

BC home sales rose nearly 9% in September compared to the same month last year, with the average price increasing 6% to $524,000, the B.C. Real Estate Association said Friday.

The BCREA reports that multiple listing service sales in the province rose 8.8% to 5,995 units and that sales edged up 3% in September compared to August on a seasonally adjusted basis. A total of 55,616 homes were listed on the multiple listing service at the end of September.

For individual markets, Metro Vancouver saw an average price increase of 10.5% to $751,000 in September compared to September 2010. That compares to Kamloops, which saw an increase of 11% over the same period to $286,000, and Okanagan Mainline, which saw the average price drop 6.6% to $376,000.

“Housing demand last month was bolstered by persistent low mortgage interest rates and a surge in employment,” BCREA chief economist Cameron Muir said in a statement.

Source: Brian Morton, Vancouver Sun

Vancouver Sun October 1st, 2011

2801 – 1483 Homer Street, Vancouver

Type: 2-bedroom, 2-bathroom apartment
Size: 1,106 sq. ft.
B.C. Assessment, 2011: $961,000
Listed for: $928,800
Sold for: $928,800
Sold on: July 29
Days on market: 9
Listing agent: Mario Felicella at Sutton Group – West Coast Realty
Buyers agent: Karin Smith at RE/MAX Select Properties

The big sell: The Waterford building was built by Concord Pacific in Yaletown’s Beach Crescent neighbourhood in 2003. As one of the first towers built in the area, it secured a prime position next to David Lam Park and the seawall and overlooking False Creek. This 28th-floor suite with two bedrooms and a den has views of all three, and has two full bathrooms, air conditioning, nine-foot ceilings, granite countertops, a breakfast bar and a built-in sound system. The dining area is opposite the kitchen and living area and looks onto the balcony. In-suite storage is enhanced by custom-made closet organizers. The unit also comes with a storage locker. The building has 24-hour concierge and the Club Viva fitness centre, with an 80-foot indoor swimming pool, squash courts, screening and theatre rooms, a billiards lounge, massage and spa rooms, a hobby and crafts workshop, and a guest suite.

8320 Osgoode Drive, Richmond

Type: 4-bedroom, 3-bathroom detached
Size: 1,848 sq. ft.
B.C. Assessment, 2011: $753,800
Listed for: $838,000
Sold for: $815,000
Sold on: Aug. 4
Days on market: 35
Listing agent: Patsy Hui at RE/MAX Westcoast
Buyers agent: Jesse Virk at Omax Realty Ltd.

The big sell: This three-level split home was built in 1975 in Richmond’s Rideau Park community on a lot of almost 7,000 square feet. The original owner had listed it, but not before ensuring some upgrades had been installed, including a high-efficiency furnace, a hot water tank, Bosch dishwasher, builtin microwave, and new sink and faucets in the master ensuite bathroom. In a prescient move around 15 years ago, the owner had also undertaken some substantial renovations to the property and installed an aggregate concrete patio, 10-person hot tub on the east-facing rear deck, detached workshop, central vacuum system, two gas fireplaces, security alarm system, new carpet and floor tiles, updated kitchen cabinets, and ample storage space. The property is close to No.3 Road, transit, parks and shopping.

1877 West 37th Avenue, Vancouver

Type: 4-bedroom, 1-bathroom detached
Size: 2,337 sq. ft.
B.C. Assessment, 2011: $1.631 million
Listed for: $1.398 million
Sold for: $1.5 million
Sold on: July 18
Days on market: 0
Listing agent: Karel Palla and Darryl Sjerven at RE/MAX Select Realty
Buyers agent: Josh Zheng at Royal Pacific Realty Corp.

The big sell: Proving the popularity of Vancouver’s westside homes is the sale of this Quilchena home the first day it appeared on the market. Four offers were received, with the winning bid coming in subject-free at $102,000 over the asking price. According to listing agent Karel Palla, the buyer was attracted by the location and the school catchment area, with Quilchena elementary and Point Grey secondary school easily accessible. Even the presence of an oil tank buried in the back yard did not deter the buyers, who will assume responsibility for any costs incurred by its removal. The house was built in 1913 and has original woodwork, a claw-foot bathtub, and separate family, living and formal dining rooms, with the latter two fitted with wood-burning fireplaces. As is stated in the property description, the home is livable, but the value is mostly in the land. With a level, 33-by-120-foot lot and RS5 zoning, there is the potential to increase the house to around 70 per cent of the lot size.

© Copyright (c) The Vancouver Sun