Vancouver Condo Info » tips

Water problems in New West condo

Kingston — Mon, 12 Dec 2011 17:47:10 +0000

Chilled wrote the following in this weekends thread:

Condo Boom?

I live in a high end New West condo that is approximately 3yrs old. They have recently had another major ‘flood.’ Fortunately I live on a floor well above the high water mark and my unit hasn’t suffered damage. Damages has been extensive. Being a renter I am not privy to the strata minutes, but I have had discussions with strata members and believe my information to be accurate.

“Defective expansion joints” are blowing out, causing main water lines to let go. Yikes!!! The strata has posted notices that “faulty expansion joints” are going to all be replaced.

Faulty? Yeah sure, probably installed by a “plumbers apprentice” without enough experience supervised by a journeyman who is hardly competent himself. As a tradesman myself, expansion joints just don’t ‘fail.’ Especially at an alarming rate and if they did, wouldn’t this be going on everywhere the product was installed leading to a subsequent recall?

Anyway, get this;

-the developer is the property management company
-the engineering company works for the developer
-the mechanical contractor works for the developer

Strata members tell me it is “warranty” but when I query them on who pays for the cleanup and restoration costs I’m told they are “not sure yet.” Basically, this will cost the strata hugh one way or the other.

Hey, any of the strata members reading this will recognize the building so read this carefully;

-call in a mechanical consulting engineer specializing in piping. You will have to bring someone in from out of province, maybe Alberta. The old boys club in Vancouver will prevent independent and impartial analysis
-FIRE the development company acting as the strata property management company. Do you see a conflict here as the building inches through the warranty period?
-take the engineering report to a legal firm willing to take the developer to task on this
-pursue the same avenue with all the other problems in the building. It is not normal to have the elevator service company on site as much as the mail man.

Finally, please stop telling us renters in the elevator “I wish I rent like you” as I know you drank the koolaid and made stupid decisions that will cost you for the rest of your lives.

But if you do happen to see the owner of my unit at an emergency strata meeting, please thank him for what is a huge rental subsidy.

Sign me,

Happily above the high tide mark.

This post was submitted by Kingston.

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Property estimates now public

Adam — Wed, 26 Oct 2011 07:01:25 +0000

Zoocasa.com is now giving public access to home appraisal values for free.

Carefully guarded data on home appraisal values – once the private preserve of real-estate industry insiders – has been posted by a listings website backed by Rogers Communications Inc., which has tapped private databases to give people an instant estimate of a property’s value.

That’s from an article over at the Globe and Mail where they go on to talk about how moves like this weakens the position of Real Estate agents who’ve used privileged access to market information to justify their commissions.

The argument against such a move has always been that it impinges on personal rights to privacy, which isn’t such a long shot when the president of Zoocasa pitches it as a fun way to find out the value of friends and neighbors houses.

By entering any address in the country and providing a few additional details, such as the number of bedrooms and bathrooms in a house, a user can get an instant price estimate. It can give them a better idea of what their own house is worth – or something to gossip about around the dinner table as they discuss the net worth of friends, family members and neighbours.

“That’s one of the fun things about this service,” says Butch Langlois, president of Zoocasa. “It’s not necessarily your own home that you are interested in pricing.”

This post was submitted by Adam.

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Maintenance and safety standards for rentals

ttul — Tue, 27 Sep 2011 14:45:51 +0000

Like many VCI readers, I have been shorting the Vancouver property market by renting. And, like many renters, I have had to contend occasionally with landlords who take an all-to-casual approach to property maintenance. In this post, I’m going to describe a new legal method I have discovered which combines the Residential Tenancy Act and a Vancouver By-law to force landlords to fix certain maintenance and building quality standards that you may not have thought were “mandatory”. This includes things like ensuring there are enough electrical outlets in each room of a suite, or that the floors be properly levelled.

It all starts with the Residential Tenancy Act (RTA), which says in section 32 that

A landlord must provide and maintain residential property in a state of decoration and repair that (a) complies with the health, safety and housing standards required by law…

This is a very powerful statement, because it forces landlords to ensure that their properties conform to every building code, electrical code, maintenance code, etc.. in effect within the jurisdiction where the property is located. In the case of Vancouver tenants, this refers to any and all building maintenance by-laws, fire safety by-laws, electrical by-laws, etc.. as well as province-wide rules and regulations concerning buildings.

The City of Vancouver has an omnibus By-law simply titled, “Standards of Maintenance” (https://vancouver.ca/bylaws/5462c.PDF), which is “A By-law for prescribing standards for the
maintenance and occupancy of building sites within the City of Vancouver to ensure that such buildings and sites are free from hazard and are maintained continuously in conformity with accepted health, fire and building requirements.” This bylaw applies to, “all land and all buildings in the City, and, unless otherwise specified, the owner of said land and/or buildings shall be responsible for carrying out the work or having the work carried out in accordance with the requirements of this By-law.”

With that out of the way, let’s see how the RTA can be combined with By-law 5642 to force your landlord to fix certain things that you may never have thought needed to be fixed:

– Electrical Safety (see 5642 section 19)

+ Yes: Plenty of electrical outlets! “Every habitable room in a dwelling shall have at least one electrical duplex outlet for each 120 square feet (11.2m5) of the floor space; for each additional 100 square feet (9.3 m5) of floor space a second duplex outlet shall be provided. Every kitchen shall have at least two electrical duplex outlets which shall be on separate circuits.”

+ Lots of light! “Adequate levels of artificial lighting shall be maintained in good working order at all times as in Table 19A” — this includes specific lumens of light output in each type of room.

– Landlord storing his old junk in the back yard? Section 4 says, “All land shall be kept clean and free from rubbish or debris”

– Walkway old and cracked? Section 4 says, “Suitably surfaced walks shall be available on all land leading from the main entrance of each building to the street or driveway”

– Bed bug infestation? “If pests have infested land, or any building or accessory building on it, the owner of the land must eliminate the infestation”

– Breezy doors or windows? “Exterior doors, windows, skylights, and hatchways shall be maintained in good repair and weathertight.”

– Crappy floors? “Floors shall be maintained in a clean and sanitary condition, reasonably smooth and level and free of loose, warped or decayed boards, depressions, protrusions, deterioration or other defects which are health, fire or accident hazards.”

– Crappy walls or ceilings? “Interior walls and ceilings shall be maintained in good repair and free from holes, or loose or broken plaster that may create health, fire or accident hazards.”

The laws are there to protect us all. Don’t let your landlord convince you that he doesn’t have to fix the flaking plaster in your character living room just because “it’s an old house”. Show him the law, and get some fixing going on!

This post was submitted by ttul.

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Hawaii 50% Off Sale

The Pope — Sun, 10 Jul 2011 08:58:57 +0000

Ready to Pop pointed out this article about Canadians buying property in Hawaii now that the Canadian dollar is strong and some homes and condos are selling for half what they were worth in 2008:

“In some areas prices have dropped 40 to 60% and it’s as bad as Phoenix.”

He gets calls and emails from Canadians daily.

“Some are waiting for a bell to ring that says we have hit absolute bottom,” he jokes. “Others have pulled the trigger because in Maui we’re having a half-off sale.”

The loonie, valued at 62 cents US almost a decade ago, hit $1.05 in April. That means a million-dollar property in Hawaii, that would have cost a Canadian about $1.6 million in 2002, is now under a million.

The best values are on the big island.

“In Maui, you need two wallets — on Hawaii you can survive on one,” Dinits says. “You can get a nice house on Hawaii today, six blocks from the ocean, for $66,000. That would be a bank owned foreclosure, or REO (Real Estate Owned) deal.”

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Just cuddle up.

The Ant — Tue, 26 Apr 2011 08:02:42 +0000

Here’s one way to deal with overpriced housing: share your home and mortgage with a friend or stranger! You get all the comfort of renting with roommates combined with the excitement of being responsible for repairs!

“I learned it from Sesame Street,” said Rob O’Dea, who co-owns a heritage-style home in Strathcona with his wife, Sharon Petty, and a close friend, Chris Allen.

It may not be popular -it may even be downright frightening to think about -but sharing space, land title and financial responsibilities can work.

“It’s kind of like getting in bed with someone (or more than one someone),” said Ryan McKinley, Mortgage Development manager for Vancity: it’s probably a good idea to be on the same page as to what kind of relationship you’re committing to.

McKinley has helped plenty of odd couples -sets of couples, parents and kids, siblings, single friends -get into the market with non-traditional “mixer mortgages,” but he cautions that an air-tight legal agreement is part of the deal.

“It’s definitely more commonplace today, and it was born out of necessity. If you are going into a single, detached house in Vancouver you either need a significant income, an inheritance or a friend who is willing to make an investment with you.”

Anybody know what SFH is supposed to stand for?

This post was submitted by The Ant.

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Buying a flip? Budget for taxes.

The Pope — Thu, 24 Feb 2011 04:33:20 +0000

As you’re probably aware, flipping real estate is a business and the Canada Revenue Agency is going to want their cut whether you’re a Canadian citizen or not. But what if they can’t track down the foreign seller? Then they’ll get it from the buyer. That’s right, if you’re buying property from a foreign seller there’s a small but important detail you should be aware of:

Under section 116 of the Income Tax Act, when a non-resident disposes of taxable Canadian property, the purchaser “is required to withhold 25 per cent of the purchase price…until such time as a certificate of compliance is obtained by the non-resident vendor.”

The non-resident vendor is required to notify Canada Revenue of the disposition either prior to the sale or 10 days after the disposition date.

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The Big One

The Pope — Thu, 27 Jan 2011 09:01:03 +0000

If you like to worry, here’s something else to add to your list: Those new condo towers might not hold up so well in the event of an earthquake.

Many recently constructed highrise buildings in British Columbia could topple or crumble in a major earthquake, according to a new study made public on Wednesday.

The University of British Columbia Earthquake Lab study found buildings made with six-inch concrete support walls aren’t as resistant to earthquakes as previously believed, despite being fully compliant with building codes.

The news comes on the 311th anniversary of one of the strongest earthquakes ever recorded on North America’s Pacific Coast, in 1700. About 460,000 B.C. residents marked the anniversary by participating in the country’s largest simultaneous earthquake preparedness drill ever executed.

In his study, UBC’s Prof. Perry Adebar looked at the devastating 8.8-magnitude Chilean earthquake in 2010, comparing it to what could happen if a quake hit B.C. He found many of Chile’s older buildings stayed intact, while newer buildings were more likely to crumble.

The use of thinner walls has become popular in Chile and North America – where building codes are very similar – in order to fit more spots in underground parking garages and create more interior space.

Put on your helmet and read the full story over at CTV.

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Rent VS. Buy Mortgage Calculator

The Pope — Wed, 08 Dec 2010 09:39:17 +0000

There are a lot of Mortgage calculators already out there, but the problem is they don’t necessarily take into consideration all the details that affect the Rent vs. Buy decision. Most of them are overly simplified, or worse – they’re US based and make assumptions on tax write-offs that aren’t available to the Canadian buyer.

With that in mind Joycer has a created a more detailed mortgage calculator that lets you try out a number of situations and variables to factor into your rent vs. buy decision, particularly here in Vancouver. We’ve put the calculator on it’s own page, with all the details.

Go to http://VancouverCondo.info/rentvsbuy to check it out.

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They’re making more land.

The Pope — Thu, 16 Sep 2010 08:36:47 +0000

..or at least one crazy guy off the coast of Cancun is:

Richart Sowa lives on an island THAT HE MADE. From plastic bottles.

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advice: lock in for 25 year term

The Pope — Thu, 09 Sep 2010 15:45:29 +0000

There’s like, this article in the Vancouver Sun, and it’s like, from last week but it’s pretty interesting.

A home you like, can afford trumps market

For example, for someone contemplating borrowing $400,000 with a rate of three per cent, the interest cost over 25 years with a 25-year amortization would be just under $170,000. If the rate increases to six per cent, the cost would be $373,000, an increase of more than $200,000.

That’s an important point to consider whether you’re holding off on buying or signing up for a mortgage. If you go to renew in 5 or 10 years will you be able to afford the payments based on higher interest rates? The solution is obvious. Lock in to a 3 percent mortgage rate for the entire 25 year term of your mortgage.

The only problem with this advice is that it’s impossible. Try offering to lock in to your mortgage for 25 years at 3% and see how your bank reacts.

As long as we’re offering nice but impossible advice, I’d like to suggest you only buy a 8 bedroom house so that you have room to expand and pay no more than $400 so that you have lots of money left over for travel and hobbies.

Also I recommend the end to war and famine.

hat-tip to supersogs for the link!

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Income properties: $65k per bedroom

The Pope — Mon, 06 Sep 2010 08:36:58 +0000

Wondering how to get rich off real estate? Simple! Just make sure you don’t pay more than $65k per bedroom:

“I’ll even go so far as to determine the value of a property by dividing it up per bedroom, with a limit of $65,000 per bedroom,” he says. “If you can build an addition or add a bedroom for $65,000 or less, over time it will pay for itself. That’s what has made me the most money so far.”

From an article on property investing 101 over at the Financial Post pointed out by realpaul.

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Treasure trove of mortgage data

The Pope — Mon, 19 Jul 2010 09:27:06 +0000

VHB pointed out this site on Thursday: Canequity provides actual data for their mortgages across Canada including here in Vancouver. One of the frustrations of anyone trying to study the housing market in Canada is the dearth of publicly available data compared to the United States, so it’s nice to find a source of some data when it comes to Canadian mortgages. Here’s their chart of product inquiries as one example:

Take a look through all the data they make available – here’s Toronto and here’s Alberta. Locally there’s info for BC and Vancouver. If anyone wants to do a breakdown of anything interesting that they find, we’ll be happy to publish that here.

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The Big Difference

The Pope — Thu, 08 Jul 2010 09:14:29 +0000

What a difference a few months can make in the Vancouver real estate market. Inventory is high and prices are falling, no longer are we seeing the bidding wars of the past. In fact, it’s starting to look like reverse bidding wars as sellers compete for sharper pricing to snag the last of the boom-buyers. We’re starting to see some big asking price discrepancies on similar units in the same building.

Girlbear pointed out this first example in Arbutus walk:

MLS V837889 vs MLS V839019 – both penthouse units.

847 sq feet asking $494,900 vs. 950 sq feet asking $439,000.

Anonymous pointed out this second example down near gastown:

MLS V831995 vs. MLS V831904 – both 5th floor townhouse units.

1,236 sq feet asking $548,000 vs. 1,202 sq feet asking $649,000.

Buyers who bought before the big run up in prices can afford to sell at a much lower price and still make money compared to those who bought more recently. I guess this is what they mean when they say ‘buy low, sell high’.

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Preparing for falling prices

The Pope — Tue, 29 Jun 2010 09:21:47 +0000

Canadian Mortgage Trends has an article about getting your mortgage approved before prices fall.

When home prices do fall, it makes it tougher for certain people to qualify for a mortgage—especially for refinances. When prices start dropping, appraisals come in lower, insurer valuation systems become more conservative, and lenders tighten up in general.

Vince Gaetano, a broker with Monster Mortgage, tells the Financial Post that people are already trying to get approved “before there is a correction in the real estate market.”

Of course prices may fall in the rest of Canada, but we all know they won’t fall here in Vancouver right guys?

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Financial advice for mortgage rates

The Pope — Mon, 07 Jun 2010 09:16:50 +0000

Woodrow pointed out this excellent article over at News1130.com on how to get a good deal with these new high interest rates. Here are a couple of gems:

The easiest thing to do is to put down a larger down payment, which will help you pay less interest over the life of your mortgage — or make payments weekly or bi-weekly.

Well that’s easy! Just put down more money! But what if the credit card companies won’t let me take out another cash advance? Do you have any other advice on how to save money on a mortgage, perhaps in a jumbled form?

Bank of Montreal’s Carolyn Heaney says within in the next couple of years we’ll see more increases in the prime lending rate, so people may want to consider a fixed rate mortgage. “Let’s say we take an average 30 year and reduce it to 25, how much interest can we potentially save off on a $200,000 mortgage? The answer to that is roughly around $53,000.”

Heaney explains another thing people can do is cut their amortization by five years, from 30 to 25. She says potential homeowners can save over $50,000 on a $200,000 mortgage.

..Perhaps we’re all just too busy flipping condos to edit the news?

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Thieves working at open houses

The Pope — Wed, 19 May 2010 08:05:51 +0000

No, not the Realtors®. Thieves have been posing as prospective ‘buyers’ and stealing small valuable items from homes being shown for sale including jewelry and electronics. There have been a rash of thefts from Langley open houses according to a bulletin sent out to all FVREB Realtors. I wouldn’t be surprised to hear of similar problems in Vancouver. If you’re holding an open house you might want to keep an eye on your stuff:

Multiple thefts at Langley open houses and private showings

Langley RCMP are asking members to be on the lookout for suspicious “buyers” targeting showings in the City and Township of Langley and to remind homeowners to secure their valuables.

Between May 2 and 10, thieves stole jewellery (rings, necklaces and watches), designer sunglasses and electronics on counters and in drawers. No suspects have been identified.

Please report any suspicious activity to the Langley RCMP at 604.532.3200.

Hat tip to chilled for the link.

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Strata: Whose bills are you paying?

The Pope — Tue, 20 Apr 2010 08:23:16 +0000

April 19th has come and gone bringing with it strong listings and weak sales. As of last night there are now at least 16,071 places available for sale in the REBGV area causing some to celebrate. Time will tell if the Vancouver market is fragile enough to see a price top coincide with these rule changes. Every market cycle needs a top and a bottom – those that buy at the top help to pay the bills of those that buy at the bottom.

Speaking of paying other peoples bills.. Strataman has an interesting post in the forum for anyone looking to buy into a strata property. Apparently many condos have common areas where the utilities are billed directly to the strata without any sub-metering. This can be a problem for residential condos with commercial properties attached that have heavy utility usage.

Once caught out the commercial strata will try to share the costs on a sq.ft division. Needless to say this is also a scam as restaurants, stores like Urban Fare, Costco use substantially more of “the common area” utilities per sq.ft, then a residential strata.Most combination strata s are weighted heavily in favor of the attached Commercial Strata. To actually solve this problem the residential strata has to manage all the utilities like they are a service provider. They have to pay for and install sub-meters where possible, pay for consultants such as myself to construct legally binding contracts,and generally fight fo recovering costs spent on SOMEBODY ELSE’S PROPERTY.

I have NEVER found a declaration in the strata titles that indicate the fact that services are supplying OTHER properties. The City of Vancouver refuses to discuss the issue.As all strata developments are signed off by the developers architects and engineers, no impartial inspection is ever done until exorbitant costs bring the strata to a consultants door. I have also never found a building inspector that does condo purchase inspections even slightly aware of this.Property managers are gradually becoming aware of this.

Tip: Buy only into single strata developments like one strata on ONE piece of land. Multiple RESIDENTIAL strata have the same problem. (Spectrum is three residential strata lots for instance).

Read the whole thread on this issue in the Forum, and if you’ve got questions or comments about strata living issues feel free to make your own thread in the new strata living forum. This is where Strataman will be posting his tips and commentary about strata and building maintenance issues in the future.

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Quit your job and start flipping

The Pope — Tue, 13 Apr 2010 08:34:31 +0000

Here’s a handy financial planning tip: Quit your job and start flipping condos.

You can not go wrong with this simple plan my friend, just look at the facts:

1. BC Jobs don’t pay well. look at this chart, just look at it. Our incomes have gone up, but not by as much as in Alberta or Ontario, both of whom get paid much better than us. At least our houses cost more.

2. Your job may leave you. Quit it before it quits you. In January 2009 the Metro Vancouver unemployment rate was 4.9%. Now it’s 7.8%. See which way that’s going? hint: it’s the opposite of house prices. Make your own secure future in the real estate biz today!

3. The Government wants you to. If the government didn’t want you to be speculating on real estate they wouldn’t hold interest rates at .25% and insure your mortgage with just 5% down (which the bank will give back to you in cash!) would they? It’s a pretty clear message, the only real road to riches is REAL ESTATE baby! We can all be Donald Trump!

4. Real Estate Never Goes Down. This is self explanatory. Prices have risen tremendously in Vancouver which clearly means it’s a hot sector whose track record is proven. In March 2010 the REBGV benchmark house price dropped by $455 to only $800,341. I smell a buying opportunity!

Does this sound exciting to you? Then YOU are the kind of financial intellect I’d like to work with!

I’m willing to offer you a very special deal for a limited time only. Send me $15,000 and I will send to you, absolutely free, a handsome inkjet print of these words on a 8.5 x 11 inch piece of paper suitable for framing. This will empower you to REMEMBER and BELIEVE the words so that they may bring you happiness day after day, even in the event of a completely unforeseeable market collapse.

Now go quit your job and start flipping condos.

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You should have rented.

The Pope — Thu, 08 Apr 2010 08:22:30 +0000

There’s a book excerpt by Moshe Milevsky over at Globe Investor that makes the argument that many people would be better off renting and not buying their first home until age 50. When housing is a hot investment sector many people overpay and the return to fundamental value hurts many. In the US about 25% of homeowners owe more on their mortgage than their house is worth. This is an obvious reason why renting early in life can be a better long term economic move, but it’s not the crux of the authors argument:

So, where does this leave us in terms of practical housing advice? For one, I think that a large proportion of individuals within the population should not own a house, or they should at least push off the purchase as long as possible, and instead rent. Anyone that followed this advice in the U.S. over the last few years, possibly the last few decades, would be much better off today. This is not just me being preachy or dispensing with advice that–with hindsight–proves correct. If you actually go back to one of the first principles I discuss in this book, namely Long Division and the spreading of resources over time, you can arrive at the same conclusion, but the reason is not as simple as you might think. It isn’t because housing is a “bad investment” or has performed poorly relative to other asset classes. Instead, it relates to the investment characteristics of your human capital when you are young and as you age.

In a number of recent studies, a variety of mathematical economists have developed a control theory model to derive the optimal or rational approach to housing over the life cycle. (I discussed Dynamic Control Theory in the Introduction.) You can think of their research as exploring how Mr. Spock (from Star Trek), who knows all the odds and can act completely logically, would behave. According to these researchers, most “typical” people under the age of 40 shouldn’t own a house but should rent, instead. But again, this isn’t recommended for the reasons you might think. Here’s the Spock argument against home ownership early in life: When you are young the vast majority of your true wealth is locked up in human capital, which is illiquid, nondiversified, and definitely nontradable. It therefore makes little sense to invest yet another substantial amount of total wealth in yet another illiquid and nondiversifiable item like a house.

Sure, if you could buy a house that has a bedroom in New York City, a bathroom in Los Angeles, and a kitchen in Chicago and perhaps a garage in Las Vegas, yes, your home would be diversified. Buying a house as an investment has strong similarities to someone being convinced that stocks are good investment in the “long run,” but they decide to buy only one stock for their portfolio. I don’t care how reliable that one stock is, or how large are the dividends, that stock portfolio is not diversified. The same goes for housing.

Read the full excerpt over at the Globe Investor website.

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You’ll need to earn more money

The Pope — Tue, 30 Mar 2010 09:55:07 +0000

Joycer posted this on the weekend, but it got held up in moderation and is worth a second look. According to his analysis the new CMHC qualification rules for rental income are going to have a big impact for anyone counting on a ‘mortgage helper’ to qualify for a larger mortgage. If your eyes don’t glaze over at the math, see if you can see any holes in this reasoning:

Since we’re talking about how the new rules will affect rental income, I thought I’d do some math to see the net result. For those of you who aren’t interested in the math, here’s the punchline:
After April 19th your annual qualifying income is reduced by 30x(monthly rent).

For example, suppose there is a house for sale with a rental suite that generates $1000/month. If the potential buyers need an annual income of 70K to qualify for the loan before April 19th, then they will need to make 100K for the same loan under the new rules.

Here’s the math:
According to CMHC’s website, monthly housing expenses (which include taxes and heating) must not exceed 32% of your gross monthly income.

m = mortgage payment
r = rental income
i = gross monthly income
h = heating expenses
t = taxes

Under the current rules:
(m – 0.8r) + h + t = 0.32i

Under the new rules:
m + h + t = 0.32(i + 0.5r)
m + h + t = 0.32i + 0.16r
(m – 0.16r) + h + t = 0.32i

Comparing the changes, the difference between the old and new rules is (m – 0.8r) vs. (m – 0.16r). To qualify for the equivalent loan under the new rules the rental income would have to increase by 5 times. Since 50% of rental income is added to your gross income, that means your gross monthly income needs to increase by 2.5 times rent. For an annual salary that means 2.5 x 12 = 30 x rent.

You can verify this on the CMHC’s own calculator:
http://www.cmhc-schl.gc.ca/en/co/buho/buho_007.cfm

For example if you are using the $1000/month rent example it will increase your maximum monthly mortgage payment by $800 with the old rules.

If you put in $5000 for the monthly income (does not matter tax/heat you use), then change it to 5000 + 2.5 x 1000 = 7500 you will see the maximum monthly mortgage payment increases by $800 just like under the old rules. The difference though is an income of 60K vs. 90K!

Addendum: Above are the two formulas I came up with, one as change in principle under the new rules, and the other the change in rent. It’s interesting to play around with the numbers, for example a $600,000 mortgage requires $2650/month over 35 years at 4%. Assuming this is a typical detached mortgage for someone with a suite that generates $1250/month, the same people will now qualify for 22% less mortgage or 130K less. In order to make up the gap previously they need to increase their monthly income by $2500.

One change I can see coming from this is how the suites are valued when selling a home. In my example above, the suite adds an extra 130K to the mortgage a potential buyer can qualify for compared to the new rules. The only way around the rules of course is to come up with 20+% down… maybe Flaherty did effectively raise the minimum down payment for homes with suites to 20%.

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Deal of the week!

The Pope — Tue, 09 Mar 2010 05:27:36 +0000

This fixer-upper is conveniently located near the center of Vancouver BC host city of the 2010 Olympic and Paralympic games. Just minutes from downtown, it can be yours for only $579,900. You may be slightly put off by the pictures, but remember, many investors won’t be able to recognize a diamond in the rough, so you might not have to bid too much over asking price to put this baby in your portfolio of investment properties.

First time buyers, Investors, Builders. Corner lot with lane. Nice residential street. Close to everything. Central location. Handy man special. Needs TLC. Mainly Land Value. 21st Avenue and Prince Albert St. 10 mins to Downtown Vancover.

Thanks to crash and tincup for finding this gem!

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Rennie ‘guarantees’ post Olympic values

The Pope — Mon, 18 Jan 2010 11:32:14 +0000

Bob Rennie is the quintessential salesman and like most marketers he knows how to talk his product up. Here he is expounding on the wonders of Vancouver condos on the Chinese news site xinhuanet.com. This follows the template of most of his ‘news’ releases but includes one very interesting quote about the post-games market here in Vancouver:

“I’ll guarantee it won’t hurt our values. I’ll guarantee it will maintain our values. The frightening part is if values go up too much. We don’t have financial sector head office jobs, no manufacturing. If we are basing things on local incomes, how does housing keep up with local incomes if we have a shortage? We have to be very careful on the affordability side.”

This is a very generous offer. If anyone has the financial resources to ‘guarantee’ that your condo won’t drop in value it’s Bob Rennie. This could be exactly what anyone who fears the fallout of a housing bubble needs to get them to buy property in Vancouver. After all, many people are leery of buying in a market where prices are near record highs and there are no ‘financial sector head office jobs’ and ‘no manufacturing’, particularly when that city has a history of volatility in house prices and has seen market crashes of up to 50% in the past. Watching people in cities around the world go into foreclosure or make mortgage payments that are far beyond the current value of their property doesn’t exactly instill confidence either, even if it IS different here.

I’m not sure exactly what the contract on this deal would look like but I imagine that you’d ‘lock in’ your purchase price and it would be held on record for any future point you decide to sell. If the market goes up, you’ve made free money. If the market goes down, I’m guessing Bob Rennie would write you a cheque to cover the difference between your purchase price and the price you were able to sell for.

Nah, that’s just silly… he’d probably have an employee write you the cheque.

I’m not sure if there are any catches, but with a deal like that how could you possibly go wrong?

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BC 2009 Property Tax Assessments

The Pope — Tue, 05 Jan 2010 04:47:23 +0000

Yep, property tax assessments are out and the Vancouver Sun asks how did you do?

This year — unlike in January of 2009 when the system was turned on its ear by political interference — it’s fairly easy to figure out if you’ll win or lose when your tax bill comes out in July.

Let me illustrate with an example that, on the surface, looks scary: Say your assessment notice shows a 15-per-cent increase in the value of your home or business. What to do?

First, don’t panic. Take a moment to read this column, check our website and figure out what this really means.

You’ll find a 15-per-cent increase is no big deal if your home is in New Denver, Kitimat or Clearwater, or your business is in Peachland, Sparwood or Smithers. Because in these places the average assessment — not just yours — is up about 15 per cent. So the impact will be nil. Any hit on your tax bill in July will be due solely to increased municipal spending.

Phew! But it’s a different story if you own property in a major urban center.

However, if this hypothetical 15-per-cent increase is for property in most urban centres — almost all of the Lower Mainland, the Capital Region or the Okanagan — then now might be a good time to panic. Because the average in these places hovers just a few points above or below zero. And if you have a significantly higher-than-average change in value, you get a bigger tax bill.

It’s how the change in your assessed value compares to the average for other properties in your community — not the absolute value of your assessment — that matters to your tax bill.

Well, I guess we’ll just have to hope that Vancouver City Council doesn’t want to raise any more tax money in the near future. You can check the assessment online here if you haven’t received any mail yet.

UPDATE: Don and Larry point out that the REBGV stats package PDF for December is now available online.

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Inside the CMHC and interest rates rising

The Pope — Tue, 22 Dec 2009 01:06:34 +0000

Canadian Mortgage Trends has an interesting interview with Pierre Serre, the Vice President of Insurance Products and Business Development at CMHC. The upshot of the interview is that the CMHC has plenty of dough in reserve and poses no threat to the Canadian taxpayer in the event of a housing market crash. There are some other interesting figures in that interview: currently 9% of Canadian mortgage holders have less than 10% equity in their home. They also remark on default rates during previous rate increase periods, which seems topical since Carney is planning on raising the benchmark rate by 500% in 2010 (from a rock bottom .25% to a still low 1.5%)

CMT: Can you tell us, what were default rates in past periods of large rate increases (like 1980-81 or 88-89)?

Pierre: According to the Canadian Bankers Association, the highest rate of mortgage arrears—which is, greater than 90 days–occurred in 1982 and in 1983. The rates were 0.96% and 1.02% respectively, compared to today’s rate of 0.43%.

CMT: Mortgage arrears are currently around 0.4% in Canada—exceptionally low, especially for a recession. I assume CMHC’s risk analysts have calculated what would happen in a worst-case scenario of mass defaults?

Pierre: CMHC internal analysis supports CMHC being able to cope with a variety of economic scenarios, including some rather severe ones.

By ‘rather severe ones’ I assume he means a US-style cliff diving real estate market. Speaking of cliff-diving and on a whole different topic, check out this graph of US commercial real estate.

Thanks to Don for the links!

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Say hello to the decision makers

The Pope — Mon, 14 Dec 2009 06:45:02 +0000

This post is all about contacting your representatives in government – getting clarification on where they stand regarding housing economics, and letting them know where you stand as a voter. Many readers on this site have mentioned the importance of writing to your MP, so I figure it’s high time we do a story thread where we can share ideas and contact information.

First off a list of Vancouver area members of Parliament including email links and mailing addresses. (thanks Drachen for the link)

Now a few questions / opinions I have for my MP. I should clarify these are just points for discussion and not intended to be copy and pasted into an email. Writing a letter in your own words will likely be more effective than a form letter.

The Canadian Mortgage and Housing Corporation
I believe that the CMHC is flooding too much cheap credit into the housing market temporarily driving up prices. Where do you stand on the CMHC and how effective do you feel they are addressing their mandate of making housing affordable to Canadians? Is ‘affordability’ measured best as temporarily low monthly payments or as total debt load?

OSFI Conversion to International Financial Reporting Standards
The Office of the Superintendent of Financial Institutions Canada (OSFI) has a draft advisory (pdf) that is set to be put into effect at the end of this year. There has been some opposition to implementing these changes at this time. Where do you stand on the OSFI advisory, specifically on taxpayer funded securitization of mortgage debt?
* You may wish to contact the Honorable James M. Flaherty on this topic

Bailouts for speculators and negative equity homeowners
As housing prices fell in the US, there were a number of government bailouts and stimulus measures that tried to prop up the market. These measures have so far failed to keep house prices from falling more than %50 in cities like Las Vegas and Miami. Where do you stand on bailouts or other measures that attempt to prop up housing markets? If foreclosure rates rise further in Vancouver, what sort of action would you take if any? Would you support or oppose bailouts?

So what do you think? What do you want your MP to know and what issues do you want them to clarify their stand on? Are there other Government entities that you think would be worth contacting? Post your thoughts, letter excerpts and ideas in the comment section below.

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