CMHC Housing Outlook Recap

I was graciously invited to attend the CMHC Annual Housing Outlook Conference by Lance Jakubec, Senior Consultant, Research and Information Transfer with CMHC.  He was an exquisite speaker, whom I have had the pleasure of listening to for the second time this year.  Engaging, energetic and informative.  His main objective was to promote and highlight the features of CMHC’s Canadian Housing Observer, a 150+ page document that covers an in-depth look at the housing marketing research collected by CMHC and other real estate bodies.

In fact, all the details provided by the CMHC Market Analysts at this year’s conference are available in the annual publication with additional data and related reports, articles and information.  This “best selling” book, by shear volume of publications distributed, is available for free in print and online.  Expect to see the 2012 edition to be available soon.

Here’s a summary, having three top economists and market analysts sharing some key findings from 2012 and what trends we should be expecting for 2013:

Carol Frketich, Regional Economist, CMHC Paul Fabri, Senior Market Analyst, CMHC Robyn Lake, Senior Market Anayst, CMHC

• Posted Rates are to remain between 5% and 5.75%; Variable to between 3-4%.  US expects rates to remain low into 2015.
• Employment levels are up, but have not seen the same increase in wages.
• Expect to see a positive interprovincial migration to BC for 2013 due to the unemployment gap widening unfavourably for Ontario and the price gap narrowing compared to Alberta and Ontario.
• We are still maintaining international migration, but it is shifting from investors to skilled workers.
• In 2036, Canada expects to have 1.5-Million Canadians aged 70-74 planning to live at home.  Plans need to be implemented now to develop homes that are accessible, easily adaptable, but not institutional – aka Flex Housing.
• Buyer’s Market expected at least until mid next year.  Currently sitting with 9 month supply available for sale.
• The flattening of housing prices are partly attributed to sales shifting from higher priced homes to more moderately priced homes.
• Biggest drop in single detached home sales have been seen in West Vancouver (-48%), Richmond (-45%), Vancouver West Side (-38%), White Rock (-38%), however homes in Shaughnessy, Point Grey and the University Endowment Lands have held firm with their prices.
• Supply of homes is elevated, but well below previous peak in the 1990′s.
• Home sellers are choosing to remove their listing rather than taking deep discounts.
• House prices are down moderately in all areas, except West Side Vancouver and Richmond noticing larger declines with -7% and -8% respectively, experienced mainly due to run-ups prior to the decline.
• An estimated 3.5-Billion will be spent on renovations in the lower mainland, with the expectation that home owners will try to “love it” rather than “list it”.
• Housing Starts are to remain consistent to this year’s 19,000, with household growth close to 17,000.
• Fastest growing household type is Multiple Family (more than one family living in a dwelling), with strong increases in Langley, West Vancouver, and White Rock.
• Townhomes are a potential growth market with interest coming from the baby boomers.
• Rental demand is expected to remain strong with rents rising moderately and vacancies at a low 2%.
• 20-34 Demographic experiencing higher rental rate due to mobility
• A higher percentage of adults are living at home with their parents in Vancouver in comparison to the rest of the country.  A surprising 12% of 30-34 year-olds still live at home versus 9% on a national average.  24% of 25-29 year-olds live at home nationally compared to over 30% in Vancouver.
• Investors are holding on to properties for longer periods of time (2-5 years) rather than flipping.
• The investors’ share is highest in the University Endowment Lands (48%), Downtown Vancouver, (43%), Langley (36%), City of Vancouver (34%), Port Moody (28%) and Surrey, Maple Ridge and City of North Vancouver (27%).
• New condo sales down by 52% with 11 months of supply; 1/2 as much from previous peak in 2008/09.
• Condo prices are holding well with an average price per square foot of $515, however, this does not include certain forms of discounts being offered by developers.

To learn more or get your free copy of the observer visit CMHC or call 604-731-5733.

Endless Possibilities

Admiral’s Walk 102, 10631 No 3 Road, Richmond

List Price: $229,000 Floor Area: 1158 Unit: 1 bed, 2bath Maintenance Fee: $352.27 Taxes: $1013 MLS: V975838

An oldie, but a goodie.  This 38-year-old building, although aged and not really modernized, has a vibe all on it’s own.  Once the Show Suite at Admiral’s Walk, this unit is like no other in the two building complex…or Richmond for that matter.  Nestled in the quietest southwest corner with easy access to parking, the courtyard, pool, clubhouse, community gardens and RV parking, this condo unit could be transformed into a wonderful home.  It will take work with head to toe renovations required, but with the size, layout and current design, the possibilities are truly endless.  A buyer can consider closing the den to have a second bedroom, opening the kitchen up to the dinning and living room, sectioning off the dining room to create separate dining room access, or design a custom built-in floor to ceiling cabinetry in the area between the kitchen and the dining room…and more.

With direct access to the courtyard, ample closet and storage space (one storage unit within the unit and a second located down the hall), the space feels more like a townhome than a condo.

PROS

1. Lots of living space – great potential to make the space your own.
2. Unit has capability of adding in-suite laundry (but has to be ventless dryer).
3. Lots of storage space.
4. Great location – close to amenities, shopping and transit.
5. Active and engaged strata hosting events.
6. Clubhouse with pool and private garden plots.
7. Deep freeze added to kitchen.
8. Great placement in complex with direct access to courtyard.
9. Sun room and patio area.
10. Large bedroom with two large closet spaces.
11. New piping (horizontal) being installed now.

CONS

1. Needs considerable amount of renovations, mainly new flooring and bathroom upgrades.  Possibly new wall designs and other conversions.
2. Restrictions – No pets, No rentals, 16+.
3. Wood fireplace may be changed to electric (this is not necessarily bad, but may add to costs).
4. Old building and not aesthetically appealing inside common areas.
5. Older building may have more costly improvements needed over time.
6. Condo fees are higher, however, they do include heat, hot water and sewage.

MORTGAGE NOTES

Example at 3.09%; List Price: $229,900

High Ratio Loan (less than 20% down payment); 25-year amortization Down payment (5%): $11,495 Mortgage Amount: $218,405 Default Insurance (2.75%): 6,006.14 Loan Amount: $224,411.14 Monthly Payments: $1,072.41 Approximate Income Required: $58,000

Conventional Loan (20% or more down payment); 30-year amortization Down payment (20%): $45,980 Mortgage Amount: $183,920 Loan Amount: $183,920 Monthly Payments: $878.91 Approximate Income Required: $48,000

From my home to yours - Irene

Market Direction, still to be determined

The mortgage rules implemented by Financial Minster, Jim Flaherty, are believed to be taking a toll on a variety of buyers, including first time home buyers, business-for-self, and the high end homeowners, which has negatively impacted sales.

Vancouver’s September sales plunged 15.1% from the previous year. However, sales were up 2.5% from August, the worst month on record since 1998. Toronto has also taken a hit on sales, but similarly to Vancouver, housing prices have remained steady.

The Financial Post notes that the high-rise or condo sales across the GTA for the year are 19% above the long-term average, but the remaining high-rise inventory is the second highest on record. They also mention that the low-rise homes sales are now on pace for their second-worst year ever and 35% below the long-term average, which The Building Industry and Land Development Association (BILD) is attributing to high prices, a lack of product choice in ground-related housing, and constrained land supply. They also point out that the industry launched fewer new projects over the summer, which resulted in fewer home sales in September.

Although sales are dropping across the country, Calgary and Halifax have remained strong.

Early in the month, the feeling was that Canadians were heeding the warnings of the government on debt levels. However, mid-month Stats Canada announced that the second quarter household debt levels rose to 163%; the same household debt level the United States and United Kingdom reached just before the housing crash of 2008.

RBC economist, David Onyett-Jeffries shared his thoughts with the Toronto Star:

“Household debt levels remain the number one domestic risk to the Canadian economy…However, Canadians hold fewer high-risk mortgages and have more equity in their homes than Americans had at the time the housing bubble burst south of the border…We don’t anticipate any sort of crashing in the housing market. We view some moderation, but that’s to be expected.”

Other economists, such as Capital Economics’ David Madani, have concerns that young new homeowners will feel most of the effects. David states “I’m more concerned about the newer crop of homeowners that have little equity in their property. If there’s a correction, their equity goes up in a puff of smoke and they’re underwater.”

All buyers may have more interesting times ahead as the Government continues to drop hints of raising rates and considering the removal of CMHC (mortgage default insurance) from their portfolio as a mechanism to reduce risk to the Canadian tax payers.

Ania Boddy

[dropshadowbox]

[/dropshadowbox]

BUSINESS BASICS

Started as a Realtor in: 2010, but was working in commercial real estate since early 2006.

Specialization: Downtown Vancouver & surrounding areas

One-piece of advice for your clients: Buyers: shop around, feel comfortable & informed. Be confident in the purchase you are making. Sellers: Get educated on your local market; especially with comparable properties and current pricing. In today’s challenging market, a solid marketing plan and fair price will get your home sold.

Why Sotheby’s Canada? Ania took her time to figure out what firm she wanted to work with and represent. Sotheby’s reputation and quality was key. It took three interviews to complete the hiring process and she feels this speaks volumes about her and the company. Sotheby’s and Ania go above and beyond, investing time and the right marketing tools for their clients. Even though Sotheby’s offers high-quality and reputable service it doesn’t come at a higher fee, something she thinks is a common misconception with the brand.

“Working with Ania has truly been remarkable. Her knowledge, experience and uncanny ability to listen and understand her clients, exemplify what the buying and selling of a home should be: excellent and professional.” David Hung, Realtor, Sotheby’s Canada

Q & A

1. What differentiates you from the 11,000 licensed real estate agents in the Greater Vancouver area? I care and take time with my clients. It’s all about finding the right space for them. Most of my business is based in & around downtown and this requires a good eye; the market here is flooded with poorly planned spaces. Whether you are an investor or the space is for you; this is a big investment and it should be done right.

I like to keep things fun. I’m a causal person in general and I spend a lot of time with my clients so it’s important that I build trust, rapport and communication with them.

I love to shop and I always like getting a deal. It’s a trait that fits well with the job. Sometimes making an informed decision requires a good amount of research, viewings & negotiations. It’s an exciting and rewarding experience.

I also try to exceed all required educational components of the job and incorporate social media, real estate blogs and news articles to stay current.

2. Who has been your most interesting client? One of my first clients, was full of surprises. First, it was the type of property she was interested in. She fell in love with the idea of a Gastown loft, not commonly sought after by the 50-60 year-old demographic. Secondly, she really appreciated architecture; it was important to her for her home. Lastly, she was very decisive. She knew exactly what she wanted and was quick to make decisions.

3. What was your favorite success story? My clients were renting a unit Downtown and their landlord decided to sell. They wanted to stay. We were in a multiple offer situation and we lost. But it actually ended up being a huge blessing in disguise. After a number of weeks of viewing properties, we found a fantastic townhouse in Fairview with a roof top deck and amazing city views. They were able to get financing for purchase + improvements and did some fantastic renovations before they moved in. They now have a much larger space that will likely be suitable to them to grow into for a number of years. The value was incredible; I haven’t seen anything like it, at a similar price point, on the market since. They found a much better value per square foot when compared to the multiple offer location and were able to make the place their own with the renovations.

4. What inspired you to be a Realtor? My life coach. I was already four years into the commercial real estate industry and had always considered becoming a commercial broker. Through a series of sessions and reflection we realized that residential real estate would be a better fit for me. I’ve never looked back.

“Ania was a fantastic guide on our journey to our first home–from the late night bids to the final touches on our renovation. We really valued Ania’s advice, support and her great taste! We look forward to working with her again.” Kim and Morgan, Clients

PERSONAL SNAP SHOT

 About: Ania is from the Burnaby/Coquitlam area, but has lived downtown for the past 7 years. She loves the city and the active, outdoor lifestyle that Vancouver offers; it is home to her. Recently married, she hopes to stay and raise her family there if the means allow at that time. Her life is full of social events, friends, and skiing. She and her husband enjoy heading up to Whistler often enough that they now dream of adding a vacation home there one day.

She has a strong background in commercial real estate, but knows that residential homes are her passion.

She’s Unique because…

1. She is trilingual; English, Polish & French

2. If she weren’t a Realtor she would likely be in a specialty sales representative role selling something she knows and enjoys; most likely one of her favorite beauty products. Although she is tech-savvy, she would most definitely not be software sales!

Likes (If you had more time, what would you do more of):  She likes cooking, a new acquired inspiration courtesy of her husband. Her mom was very busy – working full time and raising two kids, so she grew up eating the same dinners all the time. She now has a new appreciation as her husband has opened her eyes to many new foods over the years.

She is getting into golf and plans to take lessons. It’s a challenging sport yet quite peaceful at the same time. Also in the plans this year is more time on the ski hill. She has her eyes set on keeping up with a people (in particular) and this will require more skill and confidence.

Ania also enjoys spending time with her family and cute little nephews! She is excited to start a family of her own one-day… although adamant that it is still a few years away.

Loves (can’t live without): A small latte from JJBean or 49th Parallel. Coffee has a special place in her heart.

She loves getting together with friends and having a great meal out. Preferably at a restaurant that is creating a buzz around town.  Overall she just wants to always be active and refuses to be lazy!

THE EXTRAS

Ania’s favorite part of her job is when it comes time to provide her clients with the keys to their new home or leaving her sellers with a congratulatory parting gift. She knows it’s an exciting time for the client; but she shares in that emotion.

Her clients have typically been first-time homebuyers or people looking to make an upgrade on the home front.

Although there can be challenges in the job, such as dealing with unknowledgeable, unprofessional and disorganized Realtors, she believes that one of her best features is that she is a very positive person and it rubs off on her clients and associates. She’s known as a fun and enjoyable person to spend time with; an attribute that is key when spending many hours together on the hunt for a new space or negotiating the sale of a home.

Contact Ania

Family Home Renovations

My client, Robert, has a can-do attitude like no other. As I have gotten to know Robert over the last seven months, it shouldn’t have surprised me the type of home he and his wife chose for their first purchase. In business-for-self and raising a family of two young children, 1 and 3, I have to say it still shocked me when I pulled into his driveway to meet him in person for the first time.

Right beside his family car in the driveway, a large disposal bin sat nearly full of housing rubble. He was still hard at work, so it took a few attempts of knocking on the door to get his attention.

The house was completely transformed from the pictures I saw in the MLS listing three months prior. Within four weeks of taking possession, they had all the major renovations complete on their three-story house. It took another two weeks for the finishing touches; the cabinets, counter tops and dishwasher to be delivered and installed.

Robert and his wife selected a great community to raise their family in, with plans to stay for the long-term. They saw many nicely renovated homes in the area, but felt that this home gave them the beginnings of something that they really wanted to make their own.

The family was able to live in their previous residence for four weeks while the major renovations took place. Robert made himself available on site each day. He’s aware that many people don’t have this opportunity, but stresses the importance of being on site and available. “I couldn’t imagine not being there,” says Robert. “If you can, be there.”

He continues to share stories of why this is so important; “My wife and I had picked a laminate flooring for my main floor thinking it would work well. One day I had come in shortly after the installation had started and it looked different together than it did individually. It really wasn’t going to look good for the entire floor so I asked them stop while they were already halfway through the dining room. I was really lucky as this was product they had in stock and they did not buy specially for this job. So it ended up costing me $500 for material & labour instead of it being a big disaster. After that I was sure to buy a box of the flooring I was interested in; laid it out all together before making the big purchase.”

“Another example was the back splash in the kitchen. I got a good deal on a product I had bought earlier, before we had picked most of the other supplies. It was one of the last things to be done in the house. I happened to not be home when it was installed and when I got back I realized that it didn’t look right. All the renovations were done now, but we didn’t like this prominent piece. I sucked it up and started smashing it all out. We had the drywall repaired and a new back splash installed – one we liked. Again, if we would have double checked the sample we would not have gotten in trouble.” Robert recalls. “It’s things like this that should keep others motivated to check on their renovations every day, at least once a day.”

Even with those challenging experiences the family was able to spend some quality weekend hours working together building their home. The renovations gave the family the opportunity to truly make each room their own, building a part of their family story from the ground up.

The whole home, except for the basement, was renovated and crafted with their family in mind. The total cost for this amazing transformation was $75,000 – approximately double what Robert had originally budgeted. The costs, however, could have easily been even higher, nearing $150,000. It was through Robert’s connections in the construction industry and partnership with a fantastic general contractor that he managed to source much of his supplies at better than market prices.

Negotiating great prices on supplies and participating in the daily work may not be an option for every family. If you are planning to do renovations with a future home purchase, there is a mortgage product, Purchase + Improvements (to be covered in a later blog), that can help roll the costs of renovations into your mortgage.

Robert and his family are very proud of their work, as they should be. The project truly turned their house into a home. Prepare to be amazed…

BEFORE	AFTER
Ensuite 1
Ensuite 2
Half Bath
Kitchen
Living Room 1
Living Room 2