Investor's Opportunity

205, 2745 E Hastings Street MLS Listing: V951286 Listing Price: $306,000 Floor area: 749 Maintenance Fee: $161.14

Total number of units in building, 18residential (+ 3 commercial); 16 Residential sold. Unit #205 and #302 last two units. Currently 13 owner occupied units.

PROS

1. The location – With a car, you have access to Metro Vancouver via major corridors. Hastings takes you East to Burnaby and West to down town Vancouver. Just off highway #1 you can be on your way to North Vancouver, New West, Coquitlam and Surrey in less than 2 minutes. It is also located along a major transit route.  The Pacific coliseum, Hastings Park, Playland (PNE) and various parks are all within walking distance.
2. Investment opportunity – there is still developments to be made in the area, but progress is happening. Even with the slow, but progressive change, the community has heart. Great restaurants, little shops and local markets with reasonable prices, make it even that much affordable to live and enjoy.
3. It’s new (with no HST) – the area traditionally has older apartment buildings or detached homes. This is one of the few new developments to choose from. As such, there are some bonus features such as in-suite laundry that homeowners can enjoy. You can choose to have the whirpool packaged added or select your own appliances. The den is not completed, so you have the option to add a wall or keep the space as a dining room. The flooring and countertops give a luxury feel and there is a decent walk-in storage closet within the unit. Currently there are no storage cages, but this is being considered as an add on.
4. Cupboard space – The kitchen is roomy and has plenty of cupboard space.

CONS

1. Bedroom – Small, very small. I suspect you can only fit a queen bed and that’s it. In addition, you can only access the patio off the bedroom, not the living room.  Closet size is small, considering the fact you wouldn’t be able to have a dresser.
2. The kitchen – Separated from the main living area, therefore, the space is not an open concept. I’m also not a fan of the cupboard finish.
3. The tub – is small and low. Would have been nice to have a longer and deeper soaker option with the new build.
4. View – not much of one. Over looking Hastings Street, mind you the sound wasn’t bad (with windows closed).

There is also unit #302 available for $299,000. Smaller unit, 651sqft, but facing North with a great views of the North Shore mountains. The biggest downfall for the unit, no patio.

From my home to yours… - Irene

Ridiculous Regulation & Vancouver Affordability

Regulation Implications

Pressure was on the mortgage industry yet again this past month. There was great concern about OSFI’s (Office of the Superintendent of Financial Institutions Canada) proposal requiring owners to reapply at renewal. Immediate concern by banks, brokers and industry associations flooded the headlines describing the devastation that this regulation could do to the entire economy.

It made me wonder why such a change would be suggested. I have come to three conclusions:

1. Regulators are not familiar with the every day process that is involved with completing mortgage underwriting. 2. They wanted to show their authority and prove to lenders that they have the power to take major lending controls into their own hands. 3. They put it on the table, never thinking of implementing it, but to use as a tool to get the other changes accepted more easily.

If the reasoning were for anything other than point 3, I have my concerns for the decision makers at OSFI.

Did they truly think this through before announcing it? By requiring reapplication at renewal, the economic standards we have today would completely change. Homeownership would become even more of a lifestyle commitment, changing the way people live their life and the decisions they make for their careers.

If your mortgage was coming up for renewal and your income is no longer what it once was, for whatever reason, new job, starting a new business, staying at home to raise a family, there’s a chance that your renewal application would not support your current mortgage. Solutions may require special financing at a higher interest rates or placing people in position forced to sell. If your property value has dropped below the value of your mortgage, this also could put some borrowers in default or foreclosure risk. Would lenders be willing to lend on your mortgage value rather than the new lower property value?

Of course, this is a worse case scenario, but the point made by the professionals in the industry was, if the client has consistently made payments and the lender has no reason to believe that the client would default, why would the reapplication be necessary? It would be adding unnecessary paperwork and stress.

Leading me to the question, why put out such a threat, a seemingly ridiculous regulation that would transform our entire economy, especially at a time when Canada is one of the strongest economies around?

My hope is that they were just trying to get some other regulations passed more easily, if not, we may be dealing with a regulator body that doesn’t understand the daily operations of Canadian Mortgages…then, we might just have a bigger problem than Canadian debt levels.

As of June 6th, OSFI confirmed that they will not implement the re-application proposal, but did finalize some restrictions to HELOC (Home Equity Line of Credit) borrowing. Currently, borrowers are able to refinance up to 80% of their property value, the new maximum will be 65%. I’m not a fan of this new rule, but I understand the reasoning. I just hope, when the government doesn’t believe personal debt concerns aren’t so high, that Canadians will be granted access to the equity in their homes that is rightfully theirs… In the mean time, borrowers can consider mortgaging through a credit union, which are not regulated under OSFI.

When it comes to mortgages and the constant industry changes, the past two years being no exception, having a mortgage specialist on your team can help to sift through all the clutter. They can help to advise on the different types of lenders and guidelines to see what products are truly the best for your financing needs. It’s a big purchase; it’s worth getting some free advice from a pro!

Can we “afford” to live in Vancouver?

Toronto’s heated and Vancouver’s cooling markets have been big topics in the news with the affordability factor as an underlining theme.

Vancouver is well known for it’s high cost of living. RBC Economist reported that Vancouver’s combined costs of mortgage payments, utilities and property taxes requires 89.9% of pre-tax income to pay for a standard bungalow. A monster of a number, comparatively speaking, to Toronto’s 53.4% and Calgary’s 36.7%.

Prices are still trending up, but they’re not projected to last. Having experienced four consecutives months of slowing sales, many are questioning if Vancouver will experience the “pop” of the bubble…if there is even a bubble to speak of. “The bubble” is one of the great debates between economists now. For most, they believe that their will be a slow correction, for others, they believe we will experience upwards of a 25% drop in housing prices over the next 3 years.

So much speculation and so many unknowns; I believe it is good weight the pros and cons, but also believe it’s important to understand that you can’t control economical factors. You can, however, control how you manage your financial position within the economy.

I wouldn’t really say there is a wrong time to buy, but rather a wrong property to buy. The best real estate investment one can make is in a good Realtor. A Realtor that knows the market inside and out and is well aware of the “good” buildings and homes available on the market, should have an opinion on where “next hot spot” is and what plans the city has for growth projections. Don’t be sold on a property just because the Realtor is a good sales person or you feel pressured to buy. You should be buying because you found something that has value to you and that value can be passed onto future purchasers if  and when you plan to sell.

Vancouverites have to focus on whether they want to buy with long-term intentions (not having to sell in a down market) and what kind of life style they want to enjoy (willing to sacrifice space for accessibility). The Metro Vancouver area is beautiful. We are very fortunate for where we live and as such, have to pay a premium. If you want to own, be sure you are excited and would love to call that place home or would be willing to keep it as an investment property.

Vancouver will always be a national leader in the “unaffordable” bracket, and there are a number of reasons why. If you chose to buy it’s usually due, at least partially, to your belief that it’s one of the best cities in the world…and it’s worth the investment.

A Passing Grade

205, 5605 Hampton Place, The Permberley Listing Price: $338,000 Floor area: 623 Maintenance Fee: $242.70

It a lovely one bedroom unit, perfect for a student attending UBC. This particular unit is owned by a student who has completed their dentistry degree and is moving back to their home town.

The unit has an open design and has been well maintained. The kitchen is spacious with lots of cupboards. The living room, though on the smaller side, is functional and has a decent deck for additional social space or enjoyment of a morning coffee. The bedroom is a comfortable and bright with good closet space as well as direct access to the bathroom. The unit includes insuite laundry, two parking spaces and a storage locker. The building has a wonderful park like courtyard and the neighbourhood is beautiful and cozy. The place is both relaxing and stimulating for whatever you need.

There are a couple of draw backs, however:

1. It is leasehold, not a freehold lot. This means you would own the building, but not the land. The lease ends in 2034, with the possibility for extension.

2. Visitor Parking On a Saturday or Sunday there would be ample parking, but on a weekday, guest parking could prove challenging.

3. It’s close to many University facilities, shops and beaches, but all not necessarily within walking distance. That being said, the unit is priced to sell. The $338,000 is the lowest of the 30 comparables on the market now. It is listed at assessed value, which doesn’t happen often in Vancouver.

When comparing to a freehold unit listed on other side of UBC, 106 5632 Kings Road, the price per square foot, $770.50 is considerably higher than the $542.50 for this Hampton Place unit. Taxes for KingRd. are $2010 versus $849 for Hampton Pl. There are differences to be factored, such as year built (2007 vs. 1997), location (central vs. outlining), layout, etc.; however, there are still considerable savings to be expected when buying leasehold. This can be beneficial to buyers who want in the market, but have financial barriers to the normal Vancouver housing costs. The question would be, will the land lease get extended, and if not, would the depreciating asset be worth anything at the end?

If interested in the UBC area, I would recommend asking a number of questions and get a good understanding of leasehold versus freehold options in the area. Visit open houses and get different Realtors opinions if you are not able to speak to someone you know who has owned leasehold before.

From my home to yours… -Irene

Study: People prefer walkable communities

This short article, Study: People prefer walkable communities, by Rebecca at MSN Real Estate gives a quick review of why people are changing their minds about moving to the suburbs.  Though it focuses on the American lifestyle, I think Canadians are starting to weigh in on similar concepts: 1. Willing to choose a smaller home to commute less to work 2. Want their homes to be walkable to stores and shops, not needing to get in a car to go shopping 3. Want to limit the gas expense and the time wasted sitting in traffic

I really liked the idea of “Find your walk score“.  I think this is a great link for homebuyers to consider as part of their buying process, especially if looking in areas that are not familiar.

This intrigued me to investigate further, to see what would be considered the most walkable cities in Canada.

West Jet’s UP! had a panel of judges determine Canada’s most walkable Cities 2010.  With no surprise, Vancouver was named number 1.  However, I found this list some what disappointing.  Within Canada we don’t have many large metropolitan communities, so in all fairness, it would seem that there isn’t much to compete against.  If Calgary can make number 8 on the list, then I think we may need to rethink what means walkable – or alternatively, to expand the concept of “city”.  Although the bustling Albertan community is making “pathways” of change with their recreational path along the Bow and Elbow river, that doesn’t mean that the extensive sprawl of community developments encourage people to live closer to where they work, drive less, or walk to a shop to pick up milk.  The Calgary philosophy is still to get in your car to go anywhere or get anything.

There are a number of other cities in Canada that may have been bypassed in this contest.  For example, there are a number of cities in BC alone that are “walkable”.  Such communities as Port Moody, Kelowna, Vernon or Revelstoke.

However it is decided, the hope is that these types of lists encourage cities to continuously make efforts to build and develop with densities that support transit, shops and recreation within walking distances.

Lessons learned from Canada’s real estate trenches

Diane Nice from the Globe and Mail summarizes a 4-part series on Buyers Diaries.

Week 1: House hunters not impressed by what a hefty price tag gets Week 2: DIY mistakes a turn-off for house hunters Week 3: The dirty tricks sellers play to push up real estate prices Week 4: Lessons learned from Canada’s real estate trenches 

Buyers blogged from Toronto, Winnipeg, and Burnaby about their month long experience.  Interesting challenges emerged from each city, however, the common underlining theme was disappointment and discouragement.

Buying a home is supposed to be a pinnacle point in your life; The transition from renter to owner, family upgrade, rewarding oneself for personal achievements or going through a necessary life adjustment.

In all cases, you need support. Connect with experts that can make it the process the way you need and want.  Understandably, there are fears and insecurities to the transition and the costs associated with buying, but that’s why building a team can help you make the right decisions and improve the likelihood of an enjoyable experience.

Find a Realtor that you like and trust.   They are your personal shopper, so make sure you like what they are doing for you, if not, get a new one.  There are 18,000 Realtors in the lower mainland, only a few are really good at what they do.

Find a Mortgage professional to review your mortgage options and see if there are other considerations to explore.  If you provide the financial details, your mortgage professional should be able to provide you with a few alternatives that can work for you.

Lastly (which should actually precede all others), consider spending some time with a financial planner to create a plan.  A plan that fits with your life goals and determines a strategy for owning, investing and budgeting accordingly.