Thursday, November 29, 2007

West at West Point Grey by MAC Real Estate

Click here for the website or email me for a price list and suite availability.

An attack from the Left on EcoDensity

EcoDensity won't cut house prices

Straight Issues By Pieta Woolley

Mayor Sam Sullivan and his NPA colleagues want to bring densification to more neighbourhoods. Pieta Woolley photo.
Mayor Sam Sullivan and his NPA colleagues want to bring densification to more neighbourhoods. Pieta Woolley photo.

Real-estate agent Richard Morrison, who specialized in investment properties, thinks the city's EcoDensity initiative is a great way to keep property values from skyrocketing in Vancouver. He just sold a single-family home, worth nearly a million dollars, to an investor, who then tore it down and built eight 1,000-square-foot units that will sell for between $400,000 and $500,000.

"Way more density is the only way I see a softening of the market," Morrison told the Georgia Straight on November 27. "$450,000 is very affordable. Much more than buying an average home in that neighbourhood for $800,000."

The problem is that $450,000 is still double what the average Vancouver family can afford if the home doesn't have a secondary suite. With a median household income of about $56,200, according to Statistics Canada, most families max out at a $300,000 mortgage if they pay 30 percent of their incomes over a 25-year term.

According to www.mls.ca/ , $300,000 will still buy a two-bedroom condo in some parts of East Vancouver. It will also buy a three-bedroom townhouse or a small, single-family home in Maple Ridge–a long commute and the opposite of EcoDensity's goal.

At City Hall on November 27, Vancouver's director of planning, Brent Toderian, told councillors that EcoDensity won't provide housing that meets average incomes. He said that the initiative is really about keeping the market softer than it would be with less density.

"I don't think we could affect [housing] supply to the point that prices would go down," said Toderian. "Especially at the mid level."

Toderian was presenting his department's draft charter and draft initial actions on EcoDensity. It's the mayor-driven "acknowledgement that high quality and strategically located density can make Vancouver more sustainable, livable and affordable", according to www.vancouver-ecodensity.ca/ .

EcoDensity has been billed as supplying more housing through densification–laneway homes, condos on top of stores, rezoning sprawling house-oriented neighbourhoods to accommodate low-rise apartments–and prices would drop into the affordable zone.

Vision Vancouver councillors Heather Deal and Tim Stevenson slammed Toderian's draft for leaving out true affordability. Deal said EcoDensity, in this report, is no different from green bonuses for developers. Stevenson wanted to know if his "ordinary kids with ordinary jobs" will be able to afford to live in the city.

"What is ordinary may change in the future," Toderian responded.

Vancouver's developers have, in fact, been densifying Vancouver swifter than the population has grown for 15 years. And, instead of prices dropping, they've soared since 1991.

Morrison told the Straight that the rush to buy condos in Coal Harbour and Yaletown is fuelled by investors, rather than folks seeking out a primary residence. He would like to know who owns the condos downtown, and who is living in them. No one seems to know.

Vancouver senior planner Rob Whitlock told the Straight his department plans to study that as part of a rental survey in 2008-09.

"Empty housing stock is very difficult to estimate," he said. "BC Stats has previously undertaken some analysis based on hydro usage, which indicated that four percent of all downtown apartments were identified as unoccupied in 2003, with eight to nine percent of condo apartments included in that number." In addition, he said, the 2001 census found that 2,600 downtown apartments were unoccupied.

Whitlock defended the idea that building more homes leads to a softer market, if not affordability. "If the number of units had not occurred, housing prices in the city generally would have escalated at an even faster rate," he said, echoing the EcoDensity draft report. "The more difficult objective for EcoDensity will be addressing housing costs for those with lower incomes, working poor, families, and others who are unable to compete in the current market."

As Deal pointed out, there's nothing in the report that requires affordability. EcoDensity has gone on to another round of public consultation, and will be back before council February 24, 2008.

A Link to Vancouver's EcoDensity Website - An Initiative Transforming the City

Click here for more info

Monday, November 26, 2007

New Gastown Development at 62 East Pender

Email me for details!

Mantra in Kitsilano Coming to Market Soon!

Click here for the website or email me at mike@mikestewart.ca for floor plans. Sales should begin for this project in January.

More on Mantra!

Mantra boasts a geothermal heating and air conditioning system. Unlike conventional heating and cooling systems which create heat by burning fuel or powering an electric element, this technology relies on the constant ground temperature the earth maintains throughout the year. In winter, the geothermal system transfers heat from the earth to an environmentally friendly fluid which flows through pipes installed under the earth’s surface and into the building into each suite. This heat is also used to heat the domestic hot water for the building. In summer, the system is reversed so that heat from each suite is absorbed by the earth thereby cooling each home. By using this technology, Mantra will save an estimated 52 tonnes of greenhouse gas emissions per year which is equivalent to planting 1,318 trees!*

While geothermal systems clearly help reduce the amount of greenhouse gas emissions in the air, the use of less energy also means you get the benefit of saving money! With a 650 sq.ft. home at Mantra, a geothermal heating and cooling system will be approximately a quarter of the cost of conventional systems.**

Mantra also uses a green roof system which beyond protecting the roof's membrane, this lush covering of plants improves air quality, provides sound insulation, and naturally shades and insulates the building which in turn helps save heating and cooling costs. Green roof systems also help to ease the burden on municipal stormwater systems as rain is absorbed by the plants rather than drained into our city pipes.

*Source: Tree Canada Foundation
**Source: Canada Geoexchange Colation

EcoDensity and Small Scale Development Projects on Vancouver's West Side

The City of Vancouver will launch their Ecodensity Initiative in the New Year. The intention is to increase density throughout Vancouver without disrupting the character and altering the scale of the City's neighbourhoods. A prime example of this is Art Cowie's Fee Simple Row House Demonstration Project (Click on article 122) where he is taking a low density mid-century bungalow on a large corner lot and building three Row Houses that have fee simple ownership.

Such projects are great for three reasons.


First, from an environmental standpoint increased density in Vancouver takes development pressure off green field lands throughout the region that both feed us and acts as the regions environmental sinks.

Increased density allows public transit projects such as the RAV line to operate efficiently and gets people out of their single occupant cars which are huge contributors to greenhouse gases.

Second, from a social perspective such projects offer both more housing options for area residents while creating housing for wider range of income groups.

One of the criticisms of the low density single family neighbourhood is that it only offers one housing option - large houses for families. Such neighbourhoods do not provide housing options for people throughout their life span. Young people who want to leave the family home only have basement suites to choose from. Single young professionals can rarely afford single family homes and are forced to leave the area. Empty Nesters who raised families up in the area also have to leave to find low maintenance housing to retire to.

Increased density gives all of these groups viable options to stay in their neighbourhoods. Projects such as the Fee Simple Row Houses use carriage houses to offer housing options for the young or for low income people. Busy young professionals get smaller more affordable row houses or townhouses that are new and require no renovations. Empty Nesters can downsize and stay in their neighbourhoods in low maintenance homes.

Third, such projects offer both area property owners and small scale developers a great opportunity to profit from increasing density.

The Fee Simple Row House Project is illustrative. A 3100sf house sitting on a 10,000sf lot is redeveloped into three 3000sf row houses for a total square footage of 9000sf. Factor in an estimated lot price of $1.3 million, building costs of $200/sf gives you a total cost of $3.1 million.


Such a development could conservatively sell for $500/sf, but will more realistically sell for around $600/sf. This gives a sales price of between $4.5 million and $5.4 million with costs of $3.1 million and a potential profit in the range of $1.4 million to $2.3 million.

For local homeowners options for staying in the neighbourhood and profiting from the changes are great. For example, a homeowner could strike a deal whereby they agree to sell their land at a discount in return for one of the finished row houses. Local homeowners could partner up with a developer and participate directly in the redevelopment process.


For further information about this process or to discuss the options and possibilities feel free to call me at 604-763-3136 or email me at mike@mikestewart.ca

Sunday, November 25, 2007

A Direct Link to All City Development Proposals

This link here provides a a comprehensive list of every development proposal the City of Vancouver is dealing with.

Thursday, November 22, 2007

More Good News for Western Canada's Economy!

Canada-U.S. income gap narrows

Globe and Mail Update

Growth in Canadians' real income has outpaced the U.S. rate of expansion in the last six years, a sharp reversal of fortune from the 1990s that stems largely from the boom in resources.

Statistics Canada said Thursday that per capita real income grew by 15.5 per cent between 2000 and 2006, nearly two-thirds faster than the 9.1 per cent growth in the U.S. Real income growth is a way to measure changes in a person's purchasing power that takes into consideration returns from international investment and capital consumption.

“In three short years, real income relative to the United States returned toward levels not seen since the mid-1980s,” said Ryan Macdonald, the author of the report. “And much of this has been due to the much maligned resource economy.”

Prior to 2000, the resource economy was waning, commodity prices were weak and the loonie was depreciating. The earnings foreigners received from their investments in Canada were larger than those that Canadians earned from their foreign investments. As a result, real income growth failed to keep pace with real GDP growth.

Various economic indicators, including income measures, pointed to a long-term decline in the Canadian economy relative to its U.S. counterpart.

“All that has changed with the commodity boom that Canada experienced after 2000,” Mr. Macdonald said.

Since then, export prices have jumped relative to the prices of imports and the loonie has surged. Income flowing from abroad into Canada has increased dramatically, relative to payments abroad.

“At the same time, China and India emerged as important players in the world economy, contributing to a dramatic increase in real income growth in Canada relative to GDP growth,” Mr. Macdonald said.

Rising commodity prices, a skyrocketing loonie and falling prices for manufactured goods has improved Canada's terms of trade in the last four years, while U.S. measures of real income were far less impacted by these factors.

“The performance of the Canadian economy post 2000 has shown the advantages of having a diversified economy with a not-insignificant resource base,” Mr. Macdonald said. A diversified economy has some of the same advantages of a diversified stock portfolio, with some sectors declining gradually for long periods of time, only to have a sharp and sudden change in fortune.

Tuesday, November 20, 2007

Some reference articles and interesting websites on Inflation and its effect on investment

http://www.bankofcanada.ca/en/rates/investment.html

http://www.socialstudieshelp.com/Eco_Inflation.htm

Lower interest rates coupled with low inflation should put upward pressure on prices in Vancouver's real estate market.

Loonie nibbles away at inflation

Globe and Mail Update

A strong dollar put the brakes on Canada's inflation rate last month as retailers began to cut prices, underscoring expectations that the Bank of Canada will cut interest rates.

Both core and overall consumer prices came in below expectations. The consumer price index slowed to a 2.4-per-cent pace in October, dipping from the 2.5-per-cent pace in September, Statistics Canada said Tuesday.

Core prices, which strip out the most volatile prices in the index, hit a 16-month low of 1.8 per cent amid discounts for buying and leasing cars. Car makers such as BMW Canada and Mercedes-Benz Canada started issuing rebates last month as the dollar traded above parity. Retailers such as Zellers and Canadian Tire also cut prices in October as Canadians increasingly shopped across the border.

“There will likely be more price damping in November's consumer price index and beyond, as the loonie's flight above parity caused a ‘social epidemic' of cross-border price comparisons and much less willingness to accept the large discrepancies between Canadian and U.S. prices,” said Michael Gregory, senior economist at BMO Capital Markets in a note.

“It's looking more likely that [Bank of Canada Governor] David Dodge's swan song will be rate cuts,” Mr. Gregory added.

Economists had expected the overall rate last month would be 2.8 per cent and the core rate 2 per cent.

“Inflation pressures in Canada have clearly come off the boil,” said Jacqui Douglas, economics strategist at TD Securities. “The odds are certainly tilted towards rate cuts in Canada, and possibly as soon as the next fixed-announcement date on Dec. 4.”

The cost of buying and leasing a car fell 2.4 per cent “the main factor in dampening the rise in consumer prices,” Statscan said, noting that manufacturers offered more discounts on 2007 models.

The strong dollar may be keeping a lid on import prices. Prices for fresh vegetables tumbled 14.6 per cent in October — the largest annual drop in 11 years, following a 9.2-per-cent decline in September.

Prices for computer equipment and supplies also cooled inflation.

Upward pressure on inflation still exists. Gasoline, mortgage interest costs and homeowners' replacement cost were the main sources of October's increase, Statscan said. Prices at the pump rose 13.5 per cent compared with the same month in 2006, mostly because of a drop in prices last year.

Mortgage interest cost inflation hit a 16-year high of 6.7 per cent, “more a reflection of increases in amounts borrowed because of higher new housing prices than of increases associated with the renewal of mortgage loans at higher rates,” the government agency said.

Higher property taxes also weighed on inflation, along with restaurant meals, which are rising amid higher minimum wages and rising dairy costs.

Among provinces, inflation remains high in Alberta, at 5 per cent. Higher gasoline prices also put pressure on the Atlantic provinces. In Quebec, Manitoba and B.C., however, annual consumer prices are running below 2 per cent.

The Canadian dollar was little changed Tuesday after sliding more than a cent a day earlier, trading at $1.0157 (U.S.). The U.S. dollar, meantime, slid to a fresh low against the euro and declined against the Swiss franc and the pound sterling, amid concern over the U.S. economy.

While the Canadian currency has weakened over the past week, it has still risen 18 per cent this year.

Friday, November 16, 2007

Lower Interest Rates will fuel to Vancouver's Real Estate Market.

Interest rate-cut chorus grows

Globe and Mail Update

A growing number of economists now expect the Bank of Canada to cut interest rates in the coming months as a strong dollar takes a bite out of trade.

Weaker-than-expected reports on international trade and manufacturing over the past week show the Canadian economy likely withered in the third and fourth quarters, they say.

At the same time, the strong currency is reducing import prices and causing retailers to cut prices on their goods — putting a damper on inflation.

“We now expect that the Bank of Canada will need to cut its policy rate by 25 basis points on each of its next four decision dates through April,” said Ted Carmichael, chief economist at J.P. Morgan Securities Canada on Friday. That would bring the rate to 3.5 per cent from the current 4.5 per cent.

Royal Bank of Canada and UBS AG were the latest to weigh in on Friday, predicting lower interest rates in the next months.

“Net trade, thanks in part to the past decline in U.S. dollar versus the Canadian dollar, is going to weigh heavily on Canadian gross domestic product growth in the second half of this year and beyond,” it said in a note.

“With that in mind, the BoC is laying the foundations for an eventual rate cut by steadily increasing the concern over the impact of Canadian dollar strength on output and inflation.”

UBS strategists, meantime, expect the central bank to reduce rates by 50 basis points next year.

Their predictions come in the same week that Bank of Canada deputy governor Paul Jenkins warned that if the dollar stays high, economic output and inflation would be “significantly” lower.

The Canadian dollar traded at $1.0301 Friday in the most volatile week the currency has had in at least a decade.

The central bank's next meeting is Dec. 4.

Wednesday, November 14, 2007

How Assignments Work.

An "Assignment" is a term that is much bandied about in Vancouver's property market these days. This is a result of the large volume of suites sold by Developers prior to the construction of the suites (pre-sales) caused by the rise in Vancouver's urban property market. Investors and pre-sale buyers have been buying and selling i.e. "assigning" these suites before they are completed.

What is an Assignment?

An Assignment in the real estate context is when the rights under a contract are transferred from one party to another.

When you buy a pre-sale suite from a Developer, you sign a contract where you promise to pay a deposit by a set time and then the balance of the purchase price upon completion of the building. Under this same contract, the Developer promises to build you a suite by a set time.

It is also possible to assign a contract on a property which is built. I will describe this in another post.

How do Assignments Work?

If the Developer agrees (This is critical) you, as the buyer of the pre-sale, may then sell the rights under the contract for your pre-sale to another person.

When the buyer of the pre-sale sells and transfers the rights under the contract between the buyer and Developer is called an Assignment of Contract. Its called this because when you sell an Assignment you as the seller assign your rights under the contract with the Developer to the buyer of the Assignment.

The buyer of the Assignment (henceforth the Assignee) reimburse the seller of the Assignment (Assignor) any deposits the Assignor has with the developer. The Assignee then gives the Assignor the profit (or 'lift") they agree on. When and how this "lift" is paid is completely negotiable.

How they REALLY work!

This all may sounds quite straightforward and easy (if my explanation doesn't make sense call me and I can explain). In practice Assignments are not.

The Developer has to agree to the Assignment for a legal transfer to occur. In many cases the Developer may even require you get their permission to even advertise your suite. Developers strictly control how assignments are marketed and sold and have all the documents required to assign your suite. Most important of these is the actual contract you will need to transfer ownership.

A good relationship with the Developer is key in selling an Assignment as the Developer is under no obligation to consent to an assignment. A bad relationship with the Developer can result in expensive delays at best and your inability to sell your pre-sale at worst.

A strong grasp of contracts is also very important in either buying or selling Assignments. When buying an assignment it is critical that the contract contains subjects and clauses that ensure the buyer receives all of the documentation on the Assignment as well as an escape hatch if it turns out the documentation is not available or not satisfactory.

Strong negotiating skills are also a must to get the best deal when buying or selling Assignments. All of the variables, vagaries, and details inherent in Assignments are all critical to getting you the best deal possible. Don't leave any detail out or once again you can be out of pocket huge amounts of money or face possible legal action.

I hope this post sheds light on this topic. Feel free to post your comments or drop me a line if you have any questions.