OwnerList.net - Homes For Sale by Owner

10 tips for selling your own home

2009-07-25T08:10:00.000-07:00

Thinking of giving for-sale-by-owner a try? Here's what you need to know to make it a success.By Elizabeth Rogers, 50Plus.com

Private sale wasn't the first strategy that came to mind when Elaine* and her sister helped their father sell his home when he decided to move. However, a lack-lustre response from real estate agents made them think twice about using an agent at all. They figured "why not put up a for-sale sign and see what happens?"

Elaine and her sister aren't alone in their thinking. Some estimates say that as many as one in four people sell their home privately. For-sale-by-owner (also known by its acronym FSBO) is still a new idea to many people, but the increasing amount of information and services available to help is making the idea more appealing. After all, a real estate brokerage can charge five per cent or more in commission to sell your house. More people are wondering: is it really worth it to use an agent?

If you're considering a private sale, here's what you need to know to make it a success:

Think like a sales person

The best place to start is to know your product, and then figure out how to present it to its best advantage. Start by taking notes about the features of your home that a potential buyer might be interested in. Don't just consider what's in your house, but also what's around your house. Are you close to schools, shopping or other amenities? What upgrades have you made to the home, and when were they done?

Once you've got a list, it's time to start formulating your sales tactics. Not only will you need to write ads to sell your home, but you'll also want to prepare a sales pitch to respond to phone calls or unannounced visitors.

Being ready to respond to unexpected questions is also important, Elaine advises. And the more you know about your home, the better. For instance, prospective buyers might want to know how much it will cost to heat your home in the winter or how much property taxes will be. Utilities bills and tax statements can serve as proof. If you've got receipts showing when improvements were made, like a new furnace or new windows -- keep them handy as well.
Develop a budget -- and know how to spend it

Do you get to keep all of the savings in commission we mentioned before? No -- you should expect to spend a portion of that on advertising and other services that would normally be covered by an agent. As with any home sale, expect to spend money to make money.
Doing a little number-crunching before you set out can help you see where money will be well-spent. Remember, you have to pay some expenses, like hiring a lawyer and doing some repairs, whether you use an agent or not. Some services like home-staging consulting can actually add value to your home by making it more attractive to buyers. A home inspection can give you a heads-up as to what needs to be done around your home -- you might want to repair them first, or find out what their worth before you enter the bargaining process.

Research your home's market value

Property listing service PropertySold.ca warns that one of main reasons that private sales fail is that owners overprice their home. How can you get a realistic idea of what your home is worth?

-- Talk to your neighbours, particularly anyone who has recently sold a home in your areas.
-- Check the listings in the local newspaper or online (online classifieds, MLS.ca, etc) to see what homes in your neighbourhood are selling for. (Many cities now have a real estate advertising television channel such as REtv).

-- Have a professional appraisal done.

Many people invite an agent (or a few agents) in to get an opinion. The feedback can certainly be useful, but this isn't the only number you should rely on. In Elaine's case, the quoted price was too low so they used other means to estimate the home's worth.

Develop a marketing plan

Where and how will you get people's attention? If you're in a high traffic or well-travelled area, a for-sale sign might be enough to get people looking. However, you should consider a balanced approach that also includes listing your property online and taking out a print advertisement in a local publication. You may also want to consider hosting an open house as part of your plan.
Don't underestimate the importance of networking. Let your friends and colleagues know that your home is for sale, or put up a poster at your church or community centre (if allowed). Take advantage of social networking sites like Facebook where you can advertise your home.

Get organized

Keeping track of advertising, phone numbers and appointments can be tricky, so it's best to think about your strategy ahead of time. PropertyGuys.com recommends purchasing an appointment diary or calendar to help with this process.

For clarification and transparency in the process, be sure to keep track of the details such as names, dates and any next steps in the process such as where and when you take out advertising. You can also use your diary or file to keep track of your budget.

Set the stage

Most home experts agree: how your home looks will have a big impact. Potential buyers typically look for clean, spacious and bright homes. Tackling clutter is usually the first thing home stagers recommend, but some thorough cleaning and a fresh coat of paint will make your home more attractive. Stashing your personal items -- whether it's family photos, knick-knacks or every day items like your tooth brush and shampoo -- will make buyers feel less like a guest in someone else's home.

If you want some extra help, hiring a home-staging consult for an hour or two can be worth the investment. If you're looking to keep costs down, Elaine recommends bringing in a friend instead, particularly someone who will give you an honest opinion. Give them a practice tour of your home and take note of the feedback. Online articles, TV home decorating shows and magazines are also inexpensive sources for good advice.

For more tips on home staging, see MoneySense's Winning the real estate war: 10 tips from home stagers.

Prepare for negotiation

Now's the time to dust off those bargaining skills. Are you ready to negotiate the price, or handle a potential bidding war? Also, don't let the thought of deals and contracts scare you off if you're not an experienced seller. Here's where your real estate lawyer can help: They can evaluate the terms of any contract and help you evaluate any offers. They can also advise you on what you need to disclose about your home.

Another thing to consider: Just because you're not using an agent, doesn't mean a buyer won't. That agent will have to be paid somehow -- so either advertise "no agents, please" or be prepared to account for his or her commission in the asking price. You might be able to negotiate a flat fee rather than a percentage.

Think about safety

There's going to be a lot of attention on your home and its contents, and there is some risk involved when inviting strangers into your home. So what can you do to stay safe?

- Enlist help. For their own safety, Elaine and her sister agreed to both be present for appointments with potential buyers. If one or the other (or one of their husbands) wasn't available, they had a plan to invite a friend instead. Two people can provide better supervision for touring groups or open houses.

- Hide it. Anything that can be broken or stolen shouldn't be around. When it comes time to sell her own home, Elaine already has plans to find safe, temporary homes for the jewellery, electronics and other valuable items -- whether it's with a trusted friend or the safe deposit box at the bank.

- Go for the lived-in look. If you have to be away from your home for any length of time, use a timer for some lights and ask a neighbour to park their car in the driveway if necessary. Empty homes are the perfect target for thieves -- some of who may have been by the home to preview its contents.

- Protect your privacy: Consider using a cell phone or setting up a new email address to handle communications instead of giving out your personal contact information.

Stay impartial

Elaine cautions that having a thick skin is essential for the process as potential buyers won't be shy when it comes to nit-picking the details of your home -- especially when it comes to pointing down flaws that might help bring the price down. Try not to take it personally; a real estate agent wouldn't get defensive or upset.

"You have to be ready to hear criticism about your home -- whether it's the decorating or layout, or things that need to be fixed," Elaine warns. "Overall, you have to be impartial and divorce yourself from it."

Get advice

Just because you decide not to use an agent that doesn't mean to you have to "go it alone".

There are many services such as, PropertySold.ca, Bytheowner.com and For Sale By Owner that offer listings and sales tools for a modest fee. Other companies like PropertyGuys.com include marketing support and listings as part of an overall consulting package -- which is still the fraction of a cost of an agent's fee.

For more information on getting your home ready for market, the Canadian Home and Mortgage Corporation has a guide about Getting Your House Ready to Sell, as well as current market trends and outlooks.

As previously mentioned, there's a wealth of information available online, in magazines and even on TV -- not to mention the many books written on the subject which you can find at your local library or bookstore.

This method of selling your home isn't for everyone, but it might be worth a try before you turn to an agent. In Elaine's case, taking a chance paid off. They were able to sell the house quickly, and for more money than the agent initially predicted -- and they didn't have to pay a commission either.

OTTAWA (Reuters) - Sales of existing homes in Canada jumped 31.5 percent in the second quarter from the first and saw their first year-over-year quart

2009-07-15T13:25:00.001-07:00

OTTAWA (Reuters) - Sales of existing homes in Canada jumped 31.5 percent in the second quarter from the first and saw their first year-over-year quarterly increase since before the peak of the financial crisis, the Canadian Real Estate Association said on Tuesday.
The industry group said actual home sales totaled 147,351 units in the second quarter of 2009, up 1.4 per cent from the same quarter of 2008.
Home sales rose 8.7 percent in June from May on a seasonally adjusted basis. They were up 17.9 percent from June 2008, using nonseasonally adjusted figures.
"This is on par with the record for the month of June set in 2007 and is the fourth highest ever for activity in any month on record," CREA said in a report.
A total of 41,304 homes changed hands in the month.
The report is the latest piece of evidence showing that consumers are venturing back into the home market, encouraged by low mortgage rates and signs that the worst of the recession is over.
"The recovery in the Canadian housing market continued in earnest in June ...," said Millan Mulraine, economics strategist at TD Securities.
"With prices remaining quite favorable and low borrowing rates enhancing affordability, it is likely that this uptick in sale activity may continue for some time as the recovery in the housing sector takes hold," he said.
The average home price rose 3.6 percent year-over-year to a record high C$326,613 (about $287,000) in June.
On a quarterly basis, the average price was up 0.5 percent from a year earlier to C$318,696.
But CREA said strong sales activity in a handful of very expensive markets was distorting the national average to make prices look unusually high.
Sales growth in Vancouver, Toronto, Montreal, Calgary and Edmonton contributed the most to the national increase.
The inventory of unsold resale homes -- measured as the number of months it would take to sell the stock of houses at current sales rate -- fell to its lowest level since August 2007 at 4.2 months.
"Clearing out excess resale inventories is an important step toward witnessing a more material recovery in new housing construction, which is value-added and does impact GDP growth," said Derek Holt, economist at Scotia Capital.

Financial Dispatch: Home prices slide 14%

2009-05-12T10:03:00.000-07:00

Andrew Torgan
CNN Financial News Producer

The steep slide in home price accelerated at a record pace during the first three months of 2009.
The national median home price of single family homes sold during the first quarter fell 13.8% to $169,000 year over year, and 6.2% compared with the last quarter 2008, according to the National Association of Realtors. That was the largest year-over-year decline in the 30-year history of the report.
The NAR attributed much of the loss to two factors: First-time homebuyers, who are often entry-level buyers, accounted for about half of all purchases during the quarter. And many buyers took advantage of the deeply-discounted prices of foreclosed properties and short sales. These “distressed properties” typically sell for 20% less than traditional homes, according to NAR. These homes also accounted for about half of all transactions.
Trade Deficit widens
The U.S. trade deficit rose in March for the first time since last July as the global recession cut sharply into sales of American exports.
The Commerce Department says the deficit widened to $27.6 billion in March, slightly lower than the $29 billion gap that economists had forecast. The politically-sensitive trade deficit with China also increased.
Ford seeks to raise cash
Ford Motor says it will offer 300 million common shares in a public offering to help meet funding requirements for retirees’ health benefits
Based on Monday’s closing stock price, the offering could raise nearly $2 billion dollars. The automaker says it will use part of the profits to pay into a health care trust for its retired workers under its agreement with the United Auto Workers union.
GM stock falls to 76-year low
General Motors stock plunged 23% to a 76-year low this morning, a day after a group of GM executives disclosed they had sold shares in the struggling automaker.
Six GM executives, led by former GM Vice Chairman and product chief Bob Lutz, disclosed Monday that they sold almost $315,000 in stock and liquidated their remaining direct holdings in the automaker.
The sale underscores the pressure on GM with less than three weeks remaining for the automaker to win deals to slash debt and operating costs with its major union and bondholders to avoid bankruptcy.
750,000 jobs by August?
The Obama Administration estimates that the economic stimulus plan will create or save 750,000 jobs by early August, a senior administration official said Monday.
The comments came as the administration’s Council on Economic Advisers released a report that explained the methodology behind its estimates for how many jobs will be created by the $787 billion stimulus package.
The report touts — as stated previously by the White House — that the plan will save or create 3.5 million jobs by the end of 2010. It also points to even bigger job creation and savings of 6.8 million jobs by the end of 2012.
Crude touches $60/barrel
Crude oil prices topped $60 a barrel level in electronic trading this morning as investors focused on signs of economic stabilization and a weaker U.S. dollar.
Oil last settled above $60 a barrel on Nov. 12, when it ended at $62.41.
Gas prices surge 10%
Gas prices have surged nearly 10% over the past two weeks.
That’s a gain of 20 cents during the past 14 days, and the national average hit $2.248 a gallon on Tuesday, according to AAA.
There is a silver lining, however: Analysts say a return to $4 a gallon gas is not on the horizon. Even though prices have been on a tear, they’re still some 46% lower from the all-time high of $4.114 a gallon hit last July.
Memorial Day travel to rebound
Despite that recent run-up, Memorial Day travel is expected to rebound this year, thanks to the overall decline from 2008’s record-high gas prices and discounts on hotels.
According to AAA, a total of 32.4 million Americans will travel at least 50 miles from home to mark the holiday weekend. That’s an increase of 1.5% from last year, when soaring gas prices cut the number to 31.9 million.
Baggage fees top $1 billion
U.S. airlines took in a record $1.1 billion in bag fees in 2008 after staring to charge for all checked luggage in an effort to cover rising energy prices, according to data from the U.S. Transportation Department.
Traditionally, airlines would only charge a fee for passengers who exceeded the baggage weight limits or who would want to check more than 2 pieces of luggage. United Airlines was the first U.S. carrier to break with the practice by charging $25 for a second checked bag starting in February 2008. US Airways announced it would start charging $15 fee for the first bag starting July 2008.
Most carriers now follow this practice of charging $15 (each way) for the first checked bag and $25 (each way) for a second checked bag.

Real estate markets differ though economies similar for Calgary and Houston

2009-05-06T12:23:00.000-07:00

Real estate markets in Calgary and Houston are different on several fronts, even though energy indsutry drives both economies.

By Mario Toneguzzi, Calgary HeraldMay 5, 2009

Major Canadian and American cities with similar economies and geographies are experiencing variable price trends this spring, according to a survey released today by Century 21 Canada.
In a comparison between Calgary and Houston, the house price survey said price levels are significantly higher and selling times are shorter in Calgary than in Houston but Calgary also has greater price declines than Houston.
The report said average prices in March were $380,737 in Calgary compared with $200,233 in Houston. Median prices in March were $340,500 in Calgary compared with $130,000 in Houston. Calgary's average and median prices declined 11 per cent and 12 per cent respectively, while Houston's average and median prices declined four per cent and six per cent respectively from a year ago.
mtoneguzzi@theherald.canwest.com
© Copyright (c) The Calgary Herald

Spring rally won't last, realtors say

2009-05-06T12:21:00.000-07:00

VIRGINIA GALT
May 6, 2009
Canadian homeowners will likely have to wait until next year to see a solid rebound in real estate prices, the heads of two of Canada's largest real estate firms said yesterday.
The brief spring rally in the Canadian housing market - although encouraging - cannot be regarded as the beginning of a full-fledged recovery just yet, and sales activity is expected to cool again this summer, Don Lawby, president of Century 21 Canada Ltd., and Phil Soper, chief executive officer of Royal LePage Real Estate Services Ltd., said in interviews.
"The spring market is usually the biggest and the best of the year for the housing industry... and there probably will be a lull during the summer," Mr. Lawby said.
What happens in the fall will depend on the economy and consumer sentiment, he added.

"If there are lots of worries about layoffs and the deteriorating economy, then we are not going to have much activity. On the other hand, we have not seen dramatic declines in house prices and I don't think we are going to," Mr. Lawby said.
Mr. Soper agreed that the spectre of rising unemployment is a concern. However, prospective home buyers tend to be more greatly influenced by low interest rates and improved affordability when it comes to making purchasing decisions, he said. Low interest rates and softer prices spurred an increase in the volume of Canadian home sales in February, March and April and - after a typical summer slowdown - will likely result in increased sales activity again in the fall, Mr. Soper predicted.
The real estate executives' views supported those of two Canadian bank economists who issued reports on Canadian real estate trends yesterday.
"We still feel there is more downside than upside risk to home sales and prices," said Bank of Nova Scotia economist Adrienne Warren.
"The significant deterioration in domestic labour markets in recent months suggests little prospect for a major resurgence in demand in the near term. Meantime, a still-high level of active listings relative to underlying demand will continue to pressure prices," Ms. Warren said.
Pascal Gauthier of Toronto-Dominion Bank said the competing forces of rising unemployment and greater affordability will cause markets to "remain quite choppy between now and the end of the recession" in most parts of the country.
Mr. Lawby and Mr. Soper said entry-level, first-time buyers have been the most active players in the Canadian real estate market this spring, while higher-end home sales activity continues to be subdued. Nonetheless, they said, the Canadian real estate market is far healthier than the U.S. market in the wake of the subprime mortgage crisis that caused the U.S. housing collapse.
"We don't have the same problems," said Mr. Lawby, who issued a report yesterday comparing housing prices in major Canadian and U.S. cities with similar economies and geographies.
While prices in both countries are down year over year in most regions, prices have not fallen as steeply in the Canadian market as in the U.S., according to the Century 21 report.
"When you compare ... so-called 'twin cities,' you see some dramatic differences," Mr. Lawby said.
For instance, the market is much stronger in Toronto than in Chicago.
"In Toronto, the average price declined 4 per cent to $394,099 and the median price dipped 2 per cent to $325,000 [between March, 2008, and March, 2009]. In Chicago, the average price fell 34 per cent to $249,901 and the median price dropped 39 per cent to $180,000. (U.S. average prices are in U.S. dollars.)
"It took an average of 37 days to sell a house in Toronto, compared to 168 days in Chicago," Century 21 said in its report.

Fear trumps low interest rates for Canadian consumers

2009-03-10T08:27:00.001-07:00

by Julian Beltrame, THE CANADIAN PRESSFriday, March 6, 2009provided by
OTTAWA - Jim Rawson says it's a great time to buy a house.
The regional manager of Invis mortgage brokerage firm in Toronto has been in the business since 1978 and has never seen interest rates, both variable and fixed, so low. Pair that with falling housing prices and it's a no-brainer.
"People have to have somewhere to live and whether you are paying for a mortgage or paying rent, you still have to be paying to live somewhere," Rawson explains.
But something is missing in the equation. As prices for most consumer goods, cars and homes decline - in some cases plunge - and the cost of borrowing falls, Canadians have been hesitant to buy.
The Bank of Canada did its part this week to lure consumers and businesses out of their fox hole, dropping the overnight rate down to an unheard of half per cent - virtually zero.
Canada's chartered banks lowered their prime rate to 2.5 per cent on Tuesday, shortly after the central bank moved, and by the end of the week were lowering other lending rates.
TD Canada Trust, for one, is reducing several of its posted fixed-term mortgage rates on Saturday. TD's biggest decrease was with its two-year mortgage, which falls to 5.0 per cent from 5.75 per cent.
Scotiabank went even further, lopping nearly two full percentage points off the advertised price for its 10-year mortgage, which fell to 5.25 per cent from 7.15 per cent, effective Friday.
By almost every measure, Canadians have slowed down borrowing and spending, most visibly in the auto sector, which saw sales volume crash by 28 per cent in February.
The Canadian housing market, for years a source of boundless growth, has come crashing to earth with sales, prices, and construction of new homes all down, in many cases by double-digits.
Consumers have also stopped discretionary purchases, as the 5.4 per cent contraction in retail sales in December - the largest in 15 years - shows.
"I think they're scared out there," says Bruce Cran of the Consumers' Association of Canada. "Consumers are tapped out and frightened of over-spending. They are going back to being savers."
Bank of Canada deputy governor Pierre Duguay may have a point in saying there is a danger of "irrational fear" taking hold, but there are also very real reasons to be concerned.
Canada lost 129,000 jobs in January, the third straight month of decline, and announcements of future layoffs are being posted almost daily. Everyone is predicting the Canadian economy has much further to fall after contracting 3.4 per cent in December.
There is also fact that the days of easy money are over. Chartered banks are being more choosy who they lend to and interest rates - low as they are - are higher than they might be given the central bank rate and non-existent inflation.
Variable rate mortgages, for example, formerly could be had below the banks' prime rate. The prime rates have fallen, along with the Bank of Canada's moves, but now banks' variable mortgage rates are well above prime.
Individuals have also cut back on borrowing, hence spending. TD Bank chief executive Ed Clark said this week that overall demand for loans is coming down.
Under normal times, economists would say that is a good thing. Rampant buying, particularly in the United States, was a major contributor to the financial sector meltdown that brought the world low.
Americans have now pulled back big time making matters worse, even though the Federal Reserve rate at 0.25 per cent is lower than the Bank of Canada's. The U.S. once lamentable savings rate has shot from just above one per cent to five per cent in a matter of months.
The amount of debt Canadians held as a ratio of their income increased last year to 136 per cent from 130 per cent. What kept them solvent is that low interest rates made the cost of servicing that mounting debt at affordable levels.
That is as long as jobs, incomes and the economy were advancing. In a recent CIBC World Markets report, economist Benjamin Tal showed the squeeze was underway.
Canadians assets fell by $160 billion in the third quarter, he noted, adding that with house and equity values falling, Canadians would likely be another $180 billion poorer in the fourth quarter. Values haven't gotten better since.
As well, debt is rising and consumer bankruptcies are jumping - 13.5 per cent last year with expectations they could hit 30 per cent growth this year. Mortgage arrears are also on an upward path, rising from a record low of 0.24 per cent to the current 0.33 per cent, the highest in six years.
But the big number, says Tal, is the number of Canadians who have lost their job and the much bigger number that are for the first time in many years afraid of losing their job.
"The issue is confidence," he said. "People talk about the unemployment rate going to eight and nine per cent, but the focus should be on the 91 per cent of people who are employed and are concerned about their jobs."
Tal and most economists believe that Canadians will start spending again because they no longer can put off purchases. But he doesn't believe they will spend with the reckless abandon of the recent past.
"After the crisis is over, consumer spending will be stronger but not like it used to be because it was artificially strong before, using borrowed money," Tal said.
Rawson believes that time is coming soon, at least in the housing market.
Applications for mortgages in his Toronto office have doubled since December, Rawson says, with many in the pre-approved market. That usually involves first-time prospective buyers making sure all their ducks are lined up before taking the plunge.
"These are people who haven't bought yet but they will buy in the future," he says.

National home sales to drop 17 per cent in '09; prices predicted to fall 8 per cent

2009-02-10T07:01:00.000-08:00

By The Canadian Press

OTTAWA - House prices are expected to fall eight per cent across Canada this year and sales are predicted to slip nearly 17 per cent, according to a new report from The Canadian Real Estate Association.

The association, known as CREA, said sales on the benchmark Multiple Listings Service fell 17.1 per cent in 2008. It said sales are expected to fall another 16.9 per cent to 360,900 units in 2009 - which would be the lowest level for national sales activity since 2000.
Sales are expected to fall in every province, led by declines in British Columbia, Alberta and Ontario.

CREA predicts sales to rebound by 9.9 per cent to 396,600 units in 2010, with the biggest recovery forecast for B.C. and Alberta.

Prices are expected to drop eight per cent this year, with figures falling most in Western Canada and Ontario.

Meantime, the average home price in Newfoundland & Labrador is forecast to rise 4.8 per cent in 2009.

CREA said it expects prices to stabilize in 2010, with annual price increases of one per cent or less in five provinces.

The report comes the same day Canada Mortgage and Housing Corp. said housing starts slipped by 10.9 per cent to 153,500 units in January, compared to the month before.
Economist say that is the largest per cent monthly drop since March 1995.

Real estate: Where to buy now in Canada

2008-12-09T08:13:00.000-08:00

by Duncan Hood, Moneysense
Thursday, June 19, 2008provided by

Real estate agents like to tell you that what matters is location, location, location. They're partly right. But what also matters is timing, timing, timing. Every city moves to its own economic rhythms. Smart real estate investing is a matter of knowing when to jump into the market and when to stay out.

How do you know when the time is ripe? Rather than relying upon gut feel, we decided to take a more scientific approach to the question. We compiled data on the 35 major markets tracked by Canada Mortgage and Housing Corp. We analyzed each market in three different ways — by Value, by Momentum, and by Economic Strength. We assigned each market a letter grade in each of the three categories, then combined all that info into one overall grade. We awarded an A to the top 20% of cities. Average prospects had to make do with a B, while lacklustre prospects were handed a C or worse.

Many individual factors went into each grade. To calculate Value, for instance, we began by comparing average rents to average home prices, since we figured that the most basic indicator of a home's value is how much rent it can put in your pocket. High rents indicate that, if you were hit by a financial crisis, you could rent out your home for a reasonable sum. Even if you never plan to rent out your home that is still a comforting thought.

To help us gain an even better sense of a city's Value, we looked at local wages and figured out the number of years of average household income that it would take to purchase the typical local home. We downgraded communities where local residents couldn't afford to buy homes easily; we gave highest marks to cities where they could. Our reasoning was that places where homes are affordable are places where real estate prices are solidly rooted in economic fundamentals and are therefore unlikely to plunge. The differences between communities can be huge. In Regina, a typical family needs two-and-a-half years of income to buy a home; in Vancouver, a typical family needs nearly eight years of income. Talking strictly in terms of bang for buck, Regina is a much better place to buy.

But, of course, Value isn't everything. Some cities have enjoyed surging real estate markets for reasons that have little to do with local rents or typical wages. Some of these red-hot markets are cities that have lured outsiders with their natural beauty (think Vancouver); others are communities that have enjoyed bonanzas because of skyrocketing oil prices (that's you, Calgary).

To give these cities their due we rated each of our 35 cities on Momentum, a measure of how hot each market is. To gauge Momentum, we looked at home sales in comparison to new real estate listings — a high number of sales-to-listings indicate that homes are selling relatively quickly and market momentum is therefore high. We also looked at how much home prices in each city have gone up over the last year and over the last four years. To top things off, we considered how much rents have gone up over the past four years, since rapidly rising rents indicate a community with pent-up demand for housing. If you've been following the real estate news, it probably won't surprise you to learn that the runaway winners in our Momentum survey are Regina and Saskatoon.

The problem is that the same forces that conspire to drive up prices in a city can also turn in the opposite direction. To avoid being taken in by cities with weakening economies, we devoted our final grade to Economic Strength. We looked at how fast each community grew between 2001 and 2006 (the most recent year for which figures are available). We also factored in unemployment rates (based on 2007 data) and discretionary income levels, as well as a forecast from Canada Mortgage and Housing for unemployment in each city in 2008. The Economic Strength grades that resulted from all this number crunching held some surprises: it turns out that mighty Toronto and bustling Calgary have weaker economic outlooks than Fredericton and Barrie, Ont.

Finally, we rolled our grades for Value, Momentum and Economic Outlook into one overall grade for each community. We had no runaway winners, but we did find seven cities that deserve an A-. They're a diverse lot. At the top are three Prairie cities — Regina, Saskatoon and Winnipeg — with relatively low home prices, strong momentum and good economic prospects. Just behind is Barrie, where home prices are higher and momentum is weaker, but the economic outlook is outstanding. By comparison, Sudbury, another mid-sized Ontario city, offers better home prices and stronger momentum, but dimmer economic prospects. Finally, Fredericton and Moncton demonstrate that New Brunswick has a lot to offer bargain hunters, especially as the province’s economy shows signs of life.

Our analysis suggests you can find decent prospects in each part of Canada. We caution you, though, to use our results with care. Nobody can gauge what a city's economy will be like in 10 years. Our research, though, can help you analyze each city's current strengths. And that's a good starting point for any investor.

Go West, young investor
Three Prairie cities top our list of best places to buy now

World markets await U.S. interest rates decision

2008-10-26T09:57:00.000-07:00

OTTAWA -- It will be tales of two shrinking economies next week, here and in the U.S., with analysts warning it won't be pretty whether viewed from north or south of the border.

But the focus for the U.S., here and the rest of the world will be on how far the U.S. Federal Reserve will go to in cutting interest rates to revive an economy that most analysts now agree is already in a recession.

"We see the Fed as having no reason to go light on its rate cut," said Avery Shenfeld, economist at CIBC World Markets, which expects a half-point cut on Wednesday after its two-day rate review meeting.

And that's even before economists see the third quarter gross domestic product (GDP) report, which comes out Thursday. The consensus among economists is that the report will show the U.S. economy contracted at an annualized pace of 0.5%.

"Even without the latest GDP data in hand, a steady stream of grim economic data, including nine consecutive months of non-farm job losses, has made it abundantly clear that the United States is in recession," said Meny Grauman, another analyst at CIBC, which projects the shrinkage will be an even greater 0.7%. "This makes the expected drop in third quarter real GDP growth less of a surprise and more of a confirmation of an open secret."

But the big picture report on the U.S. economy will be only one of a string of bad reports out of the U.S. through the week, which analysts say will include further declines in new home sales, house prices, consumer confidence, durable goods orders, and personal income and spending.

Canadians will get the bad news about their economy Friday, with analysts expecting a Statistics Canada report on August GDP to show a 3% drop in overall industrial output.

"We look for a significant retracement in August from the surprising surge in the prior month," said Douglas Porter, economist at BMO Capital Markets, which is more pessimistic than the consensus and is projecting a 0.5% contraction in GDP during the month.

"In fact, there has been a sea of red from almost all the preliminary indicators for August," he said. "Manufacturing sales were down 3.7%, wholesale trade fell 3.3% and retail sales were down 0.3%, all pointing to a marked decline in the broader economy."

While Canada, unlike the U.S., should continue to avoid a technical recession at least through the third quarter thanks to a strong start to the quarter, Mr. Porter warned the evidence since suggests the economy will go into recession in the final quarter of the year and continue to continue to shrink through the first half of the year.

Meanwhile, there will be a continuing stream of corporate earnings reports through the week that won't likely inspire any investor confidence, including those of oilpatch giant Suncor Energy and from bacteria battered Maple Leaf Foods.

The reading of the overall mood of corporate Canada, however, will come Tuesday when Statistics Canada releases the results of its latest quarterly survey of thousands of businesses.

Export Development Canada won't likely lighten the mood with its latest global export forecast, also being released Tuesday.

Eric Beauchesne, Canwest News Service Published: Friday, October 24, 2008

Canada: Alberta poised to hit 4 million people by 2031

2008-10-24T21:03:00.000-07:00

By MARKUS ERMISCH

CALGARY -- Estimates of Alberta's population breaching the five-million mark are almost certainly exaggerated, but the province is poised for continued growth, says the research director of the Canada West Foundation.

Robert Roach told the 1,300 delegates at the Calgary Real Estate Forum yesterday that by 2031, Alberta's population will have grown by more than 880,000 people to reach 4.14 million, most of whom will flock to the province's urban centres.

Immigration especially is a "highly urban phenomenon," he said, noting that 8.4% of international migrants arriving in Canada move to Alberta.

Calgary, however, still trails Toronto, Montreal and Vancouver as a magnet for new arrivals in Canada.

Roach didn't explain what impact the growing population will have on Calgary's real estate market, but real estate professionals, including officials from the Canada Mortgage and Housing Corporation, consistently point to shifting demographics as one of the main underpinnings of the province's housing market.

Roach said that Canada's demographic weight, together with the economic weight, is gradually shifting toward the western provinces, most notably Alberta and B.C.

"That's where the action is," he said.

Bank of Canada warns of slumping economy, cuts interest rate one-quarter point

2008-10-21T08:50:00.001-07:00

By Julian Beltrame, The Canadian Press

OTTAWA - The Bank of Canada trimmed its trendsetting interest rate by a quarter percentage point Tuesday, saying Canada needs the stimulus to ward off the headwinds from a global recession.

The reduction, following a surprise 50 basis point reduction two weeks ago, drops the overnight interest rate to 2.25 per cent, a hair above the record low two per cent level reached in 2004.

But the bank's failure to chop by at least half-a-point left economists disappointed given the gloomy prospects for the Canadian economy.

"The entire statement was written in a remarkably dovish way as if to justify a 50-or 75-point cut and they fell short on execution," said Scotia Capital economist Derek Holt.

"I think they should have stepped more firmly in front of the problems ahead and cut more aggressively."

With the economy sharply slowing, Canada's central bank did hint that it may have to cut further at the next scheduled announcement in December.

Bank governor Mark Carney characterized the headwinds hitting Canada from deteriorating global conditions as "profound" and now projects the economy will only advance 0.6 per cent this year and by the same amount in 2009.

That's as close to a recession as possible without actually falling into one and sharply lower than the bank's July forecast, which was for a one per cent advance this year and relatively robust 2.3 per cent growth in 2009.

The central bank now says Canada won't emerge from the malaise until 2010, when it predicts growth will rebound to 3.4 per cent.

"The weaker outlook for global demand will increase the drag on the Canadian economy coming from exports," the bank stated.

"Lower commodity prices will also dampen the outlook, working through a deterioration in Canada's terms of trade to moderate domestic demand growth."

As well, the bank said "tightening in Canadian credit conditions in recent weeks will restrain business and housing investment."

In Toronto, the main stock index fell Tuesday as a lower crude price depressed the TSX energy sector, lower bullion prices pushed down gold stocks and most of the bank stocks fell.

The Canadian dollar was down 1.05 cents to 82.72 cents US at midmorning.

Carney surprised some observers by declaring that the U.S. is already in recession - something Washington has only hinted at - and that the global economy is heading there.

Given the gloomy outlook, labour economist Erin Weir of the United Steelworkers union said there was no reason for Carney's cautious monetary policy.

He added that the federal government has a role to play through its fiscal policy.

"The Government of Canada should rebuild the country's infrastructure, enhance employment insurance benefits, and invest more in other public priorities," he said.

"Fiscal policy can stimulate the economy regardless of whether chartered banks are willing to reduce borrowing costs or of whether households and businesses choose to borrow from them."

When the Bank of Canada cut its key rates by half a point on Oct. 8, banks initially balked at dropping their prime rate by the full amount until the federal government agreed to inject more liquidity into the system by buying up mortgages on their books.

But inter-bank funding rates have eased somewhat since and Tuesday's more modest quarter-point cut is expected to make it easier for chartered banks to follow through this time.

The central bank noted Tuesday that not all recent developments have been bad for Canada's economy.

Positive factors include the recent slide in the value of the Canadian dollar, which will make exporters more competitive in the global market, and efforts by major economies to bail out their banking sectors and stabilize financial systems.

BMO economist Michael Gregory said it may have been the uncertainty about how all the factors will impact on Canada that convinced Carney to take a more cautious approach.

But most economists said Tuesday's action increased the chances of another cut on Dec. 9, the next time the bank is scheduled to set interest rates.

The Bank of Canada's principal objective in adjusting interest rates is to keep Canada's inflation rate within a one-to-three per cent range, and as close to the two per cent target as possible.

It now says inflation has ceased to be a significant problem.

Although the consumer price index remains slightly elevated above three per cent, the bank said excess supply will bring price increases down to about one per cent by the middle of 2009 before returning to close to the target by the end of 2010.

"In line with the new outlook, some further monetary stimulus will likely be required to achieve the two per cent inflation target over the medium term," the bank said.

U.S. jitters

2008-10-18T17:15:00.000-07:00

Buy if you intend to stay in the home for a long time

Imran Syed, Citizen Special

Published: Saturday, October 18, 2008

Q: My wife and I are thinking about buying a larger home in Ottawa, but are concerned with the recent financial crisis in the United States.

Do you think that it will spread and do you advise holding off?

A: I'm sure if you are like most people you are concerned about the volatility in U.S. markets and the potential for it to spread across the border to Canada.

As you may be aware, this is a result of the subprime crisis in the U.S. banking sector.

The latest studies indicate that most Canadian banks would have very little, if any, exposure to subprime debt. As well, Canadian banks are very heavily regulated and subject to strict capital reserve and lending requirements. Unlike many of the U.S. banks affected, our banks generate much of their revenue through retail banking profits. Many of the U.S. banks are very active in investment banking.

So even though most of our financial institutions should not be exposed to the U.S. subprime situation, expect a fair amount of volatility as the uncertainty in the market sorts itself out.

At this stage it's hard to predict what the impact will be on residential real estate values.

One leading economist predicted a decline in real estate values, while another mentioned that in most of Canada, although real estate values are high, they are not necessarily over-inflated.

If you are buying this home as your principal residence and plan to live there for the long term, then perhaps, like your long-term stock market investments, short-term price volatility shouldn't concern you.

I do recommend that you consider other factors, including job stability and your debt service ratio before making a final decision.

This article provides general information. Please seek independent advice before implementing any of the strategies discussed.

Imran Syed CFP CFSB is an independent fee-based Certified Financial Planner and can be reached at feebasedadvisor.ca.

© The Ottawa Citizen 2008

Dealers predicted the Bank of Canada will lower interest rates next week

2008-10-18T17:09:00.000-07:00

By Frank Pingue

TORONTO (Reuters) - Nearly all of Canada's primary securities dealers predicted on Friday that the Bank of Canada will lower interest rates next week as the slowdown in the global economy shows little sign of easing.

Six of Canada's 12 dealers, surveyed by Reuters, forecast Canada's central bank would cut its key overnight rate by 50 basis points at the next rate-setting date on October 21. Three called for a 25-point cut, and three expect no move.

The bank's key overnight rate is now 2.50 percent.

Most dealers agree that the bank will lower its key rate by at least 50 basis points by the end of the year, but some differed on whether it would come in one 50-point cut on Tuesday or in a 25-point cut on Tuesday and then another in December.

"It's clear that some rate-cutting does need to occur and I don't see what the motivation would be to drag that out over the span of months," said Eric Lascelles, chief economics and rates strategist at TD Securities. "I think they are much better suited getting there quite quickly."

Just last week, the Bank of Canada unexpectedly cut its key interest rate by 50 basis points in a coordinated move with other central banks to help calm ailing financial markets.

But with concerns that the global economy is teetering on the verge of a recession that would cut demand for major Canadian exports such as oil, rate cuts in Canada remain firmly on the table.

"The U.S. outlook is really darkening day by day ... they are in a recession and now the question is how deep of a recession is the United States in," said Carlos Leitao, chief economist at Laurentian Bank of Canada in Montreal.

"So if the Bank of Canada is going to act, it's now. There is no point in waiting until December. Why wait? Do it now."

In the past two weeks a pair of Canadian banks have forecast the Canadian economy will slide into a recession during the first quarter of 2009 as the global financial crisis saps growth.

Seven dealers said the Bank of Canada would move to cut rates on December 9, the bank's subsequent scheduled policy announcement date. Four expected a 25-point cut, three called for a 50-point cut, and five dealers expected no move.

For the January 20 policy announcement date, 10 of the dealers expect the Bank of Canada to leave the key rate steady, while two expect a 25-point cut.

Calgary home prices fall 8%

2008-09-09T09:29:00.000-07:00

Alberta slump leads decline across nation

Mario Toneguzzi, Calgary Herald

Published: Friday, August 15, 2008

Falling prices in Calgary and Edmonton are dragging down Canada's housing market, according to a report released Thursday by the Canadian Real Estate Association.

Led by declines of eight per cent in Calgary and five per cent in Edmonton, average house prices in Canada dropped 3.6 per cent overall in July compared with a year ago, according to the report.

The average national MLS residential sale price last month was $327,020, while in Calgary it was $402,788. In Edmonton, it was $335,100, said the report.

MLS sales dropped 10.9 per cent in Canada in July.

In Calgary, sales were down 13.1 per cent compared with July 2007, according to the CREA report.

"Canada's housing market is running into some seriously foul weather amid the weakest affordability in nearly two decades," wrote Douglas Porter, deputy chief economist with BMO Capital Markets Economics in a commentary on the CREA numbers.

"While we still doubt that Canada will stage an instant replay of the trauma in U.S. markets, even a mild version would be bad news."

"Mounting consumer caution" prompted the national decline in existing home sales and the "steady drum-beat of double-digit sales declines" this year is beginning to "weigh more heavily on prices," Porter wrote in his analysis.

"We opined a month ago that 'given the steep run-up in new listings, double-digit sales declines and the sharp drop in consumer sentiment, price declines may become a more common feature across the country in the months ahead.' These latest figures simply pound home that point."

Statistics by the Calgary Real Estate Board for July showed the average sale price of a single-family home in the city dropped 9.79 per cent compared to July 2007, to $456,380, while the average price of a condo decreased 6.98 per cent, to $296,338.

It is also taking longer for homes to sell. In July, the average number of days on the market for single-family homes was 52, compared with 35 a year ago. For condos, it was also 52 -- up from 33 days.

Laurie Hicks has had her home for sale in the northeast Mayland Heights neighbourhood for nearly three weeks on the WeList.com system for sale by owner. The completely renovated home, listed at $489,000, will go on the MLS market on Monday through the Re/Max real estate firm.

Considering the current market conditions, she is still confident the house will sell.

"For us, we honestly believe there are enough young professionals that want to be within five, 10 minutes of downtown. I believe the right buyer is going to walk in there and say, 'You know what, nothing has to be done to this house for 10 or 15 years,' " said Hicks, who has owned the house for more than a year.

"So, we are optimistic, but having said that, we need to have the right buyer," she said.

"We know what we could have got last year but we were a little bit unfamiliar with what happened with the housing prices until just now."

The inventory of homes for sale in Calgary has declined for two consecutive months, which is a good sign in the real estate market, but it is still "extremely high," said Ted Greenhough, with Re/Max Realty Professionals in Calgary.

"We still have a lot of inventory to work through before we're going to approach what would be called a balanced market," he said. "So, in my opinion there's still downward pressure on prices. This high inventory problem is not something we're going to work through in a month or two. I think it's a long-term problem. At the least, the market conditions will remain the same for the next several months."

Year-to-date until the end of July, existing home sales in the country are down 13 per cent from the same period a year ago. Calgary leads the country with a 30.1 per cent decrease in sales followed by Greater Vancouver at 24 per cent and Edmonton at 23 per cent.

Nationally, the average sale price is up 2.2 per cent year-to-date to $338,586.

In Calgary, the year-to-date average sale price is down by 0.1 per cent to $414,213. "The combination of a larger inventory of homes for sale and fewer home sales means less upward pressure on home prices in many markets," said Calvin Lindberg, CREA president. "The challenge for many sellers is determining the right price for today's market conditions. There is no doubt the Canadian real estate market is pulling back from the record sales and price increase levels of 2007."

Porter said, "pricing power is in full-scale retreat across many major markets."

July's year-over-year decline on a national level followed a small dip (0.4 per cent) in June, the first drop in almost a decade, said Porter.

"We downplayed June's price decline, since it was so narrowly based," he said. "However, the drop in July spread to a number of cities, including even the previously untouchable Vancouver market."

mtoneguzzi@theherald.canwest.com

Prepare for home prices to drop

2008-09-09T09:20:00.000-07:00

Vancouver houses overvalued by 11 per cent, according to a UBC study of real estate

Derrick Penner, Vancouver Sun

Published: Tuesday, September 09, 2008

With Metro Vancouver past the peak of its current real-estate market cycle, more discussion is emerging about what the cycle's downside will look like.

The latest discussion points lean towards a price correction in the double digits, with one study showing current Vancouver house prices overvalued by 11 per cent on a particular measure and an economist observing that prices are falling at a rate of 10 per cent or more this year.

University of B.C. real-estate economist Tsur Somerville was lead author of a study that evaluated the cost to rent a detached, mid-market home in nine Canadian cities, versus the cost to own, to find a balanced price.

The study's conclusion was that in the second quarter of this year, Metro Vancouver's average house price, $754,500, was 11 per cent higher than the balance point.

However, Regina, Winnipeg, Ottawa and Montreal are 25 per cent out of equilibrium, considering prices and rents in those markets. Halifax house prices are 20 per cent out of balance.

Titled Are Canadian Housing Markets Overpriced? the study observes that housing affordability is a severe problem in some Canadian cities, limiting the ability of markets to continue to rise.

Calgary prices showed as being seven-per-cent higher than balance.

Only Toronto showed prices in balance with rents, and Edmonton, which has already seen price declines, would need to see prices climb again by eight per cent to be in balance.

"I was surprised the Vancouver number is as low as it was," Somerville, director of the centre for urban economics and real estate at the Sauder School of Business at UBC, said in an interview.

He added that the rent-versus-own measure is a narrow observation that treats homes like a financial asset and does not take other measures of affordability or valuation into account.

And what eventually happens in the Vancouver market, Somerville said, will depend on a host of variables ranging from changes in mortgage rates to changes in the long-term average appreciation of housing prices and economic conditions.

"What you can identify is where the pressures are," Somerville added. "How the market plays out is very different."

Prices do not have to fall for the market to correct, Somerville said. Prices can simply stagnate over a period of time, like Vancouver experienced through the mid-1990s until 2001.

However, Somerville added that Vancouver has built new homes at a much higher rate than household formation in the city during the up-cycle, and the inventory of unsold homes in the market has ballooned rapidly, which make Vancouver more susceptible to price declines.

"Those are two big warning signs," he said.

Somerville said another unknown in the declining market is what the buyers of pre-sale condominiums that are now under construction will do once the units are complete.

If a significant number of investor-buyers of those condominiums decide to sell them right away, that would put more downward pressure on prices.

However, at this point there is little evidence of "calamity in the housing market," said Helmut Pastrick, chief economist for Central 1 Credit Union, formerly known as Credit Union Central B.C.

The new way to make money in real estate

2008-06-15T09:38:00.000-07:00

The secret to successful real estate investing over the past decade has been simple: buy property, then sit back and watch it rocket up in value. With prices shooting skyward at double-digit rates in many Canadian cities, how could you not make money? Unfortunately for would-be Donald Trumps, making money over the next decade may not be quite so straightforward. A recent housing affordability report from Royal Bank proclaimed “easy money no more,” and warned that prices in both Calgary and Edmonton have “soared well above their fundamentals to unsustainable levels.” Meanwhile, the latest numbers from the Organisation for Economic Co-operation and Development say that Canadian homes are now more expensive than their U.S. counterparts, when you measure them in terms of their relationship to incomes and potential rents. Nobody is yet predicting a U.S.-style real estate collapse in Canada, but all the data suggest that the red-hot market of the past few years is likely to soon come off the boil.
If the housing market cools, the old way of real estate investing will stop working, and investors who rely on rising home prices for their profits will start losing money. Luckily, there’s another way to invest in real estate, and it works no matter what the market does.

Using this method, Dan Young made his first million by the time he was 34. He started investing in properties in his home town of Midland, Ont., when he was just 24, and made most of his money on a four-plex, a six-plex, and a 12-plex.

His secret was nothing more than a systematic method for evaluating potential investments. Rather than betting on possible gains in real estate prices, he made sure that the rent he received from a property put cash into his pocket each and every month, from the very first day he bought a property. “When things are going well, when interest rates are declining and property values are going up, then it’s really easy to look like you’re smart,” he says. “But when things go the other way, it’s really easy to lose money too. That’s why you need a long-term strategy based on some realistic expectations.”

To be honest, Young’s way of investing isn’t really all that new at all — it has just fallen out of favour over the past decade. David Southen has been using it for 24 years. He’s now 48 and he and his partners own 125 residential units in Southern Ontario worth about $7 million. He can sum up his secret in just three words: positive cash flow. “You need to be making enough from renting your property out so that after all of your expenses are paid and your contingencies are allowed for, you can pay the mortgage and still put a few shekels in your jeans,” says Southen from his London, Ont., home. “If you’re not, then it’s not a viable investment.”

If you want to generate a reliable stream of cash from your real estate investment, rather than just gamble that prices will go up in the future, Southen says you need to carefully assess each property before you buy it. Your fate as a landlord will be largely determined at the moment of purchase — pay too much and your mortgage and expenses will eat up all of your profits. Southen says there’s a simple three-step way to calculate the right price to pay for an investment property:

• First, get an honest estimate of the total income you can expect from renting it out each month

• Second, get an honest estimate of the expenses involved in running the property

• Third, figure out how much money your property will have to spin off after expenses to pay the mortgage and provide you with a profit

Once you know those three numbers, evaluating how much to pay for potential real estate investments is easy. Of course you’ll only get a trustworthy result if you use trustworthy numbers to begin with, and that’s the catch. Getting a grip on the true rental income you can expect and the true expenses associated with a property can be tough — mainly because the seller will supply you with a long list of bogus numbers. “There’s a well-known saying in real estate investing,” says Southen. “‘Trust — but verify.’ Getting a handle on the property taxes and insurance is easy. But people will lie to you about everything else.”

Sleuth out the real rents

If you want to get past the lies and figure out how much your potential investment is really worth, start by estimating the total rental income that the property can generate. Ask the seller for the “rent roll,” which tells you how much rent is being collected from each unit. Then scan the local papers to find out the typical rents being charged in your area. As a double-check, look for the rental market reports published by the Canadian Mortgage and Housing Corporation (see www.cmhc-schl.gc.ca) and find out the typical rents in your area. If the rents charged to the tenants in your building are lower than the local average, that’s good. It means there’s room to raise rents in the future. “However if the average two-bedroom is renting out for $850, and the units in your potential investment are renting out for $1,000, watch out,” says Southen. “They might be filled with the seller’s relatives, who will leave the second you close on the property. That’s an old favourite.”

Don't forget vacancies

“The vendors will tell you the property is fully rented with a waiting list, so they don’t have any vacancy or bad debt,” says Southen. “But it’s not true. Every landlord has vacancy and tenants who skip out without paying.” When calculating your expected rental income, subtract 5% from the total income the building will generate at full occupancy to offset your expected losses from vacancy and bad debt. Then add in any additional income from laundry or parking. That will give you your “gross effective income.”

Add up the small stuff

The next step is to estimate expenses. Your first big cost is property management. If you’re buying a larger property, you’ll probably want to hire a professional property manager to rent out the units, keep the books, and oversee basic maintenance. If you’re buying a smaller property, you may want to do all that yourself — but you should still subtract your time as an expense because you may not want to do the chores forever. Southen suggests you count on paying 6% of your rental income for management in larger buildings and more in smaller ones.

Then there are maintenance and repair costs. “That’s where you’ll run into the biggest fudge factors,” says Southen. “The landlord will tell you: ‘I do all the repairs myself, so there’s no cost.’” Don’t believe it. You can count on spending at least $800 a year on maintenance for each apartment or townhouse. On top of that, you should budget separately for any major capital expenses, such as replacing the roof or upgrading an elevator. Have the property professionally inspected and do an environmental audit before buying to avoid nasty surprises.

Utilities, your next expense, can be an opportunity. “If I go into a building and see that it’s stuffed full of old incandescent light bulbs, then I know right away that I can peel 10% to 20% a year off the bill just by changing the bulbs,” Southen says. Similarly, old furnaces and boilers, old toilets and leaky showerheads offer you the chance to improve your annual income from the property with a few lost-cost upgrades.

To get a good idea of what you’ll be paying for heating, water and electricity, ask for at least one year’s worth of bills. “A lot of people will say they don’t have them,” says Southen, “but utility companies will provide a summary of the previous year’s charges if the owner asks for it.”

Don’t forget the cost of advertising for new tenants. If you have a lot of units like Southen has, you can count on paying about $400 a month for newspaper ads and the like. If you have a single triplex, the expense can be negligible.

Your final three expenses — property taxes, insurance and bank charges — are usually straightforward, but Southen offers a couple of tips. With property taxes, watch out if you’re paying a lot more for the building than it was last assessed for, because the very act of purchasing it could trigger a new assessment and higher taxes. With insurance, make sure the building isn’t underinsured. If it is, be prepared to pay more for a better policy.

By now, you’re probably starting to see why inexperienced real estate investors would rather just focus on rising house prices. Getting a good grip on your true income and expenses is a lot of work, and you may feel like you’re worrying about nickels and dimes when there’s big money to be made from rising property values. But remember that you want an investment that doesn’t depend on rising home prices to make you money.

If you diligently tote up all your various costs, you’ll be astonished by what you find. Almost always, vacancies and expenses eat up a full 50% of your gross rental income, though many sellers will deny it. “Underestimating how much it’s going to cost to run a building is the No. 1 mistake made by inexperienced investors,” says Southen. And it’s the No. 1 reason why investments that look good on paper can end up costing you tens of thousands of dollars in the long run.

So what's your return?

You’re now on the home stretch to determining what your building is worth. Subtracting vacancies and expenses from your rental income will give you what’s called your “net operating income” for the property. You use that to determine the return from your property, commonly referred to as your “cap rate.” The cap rate is simply the cash yield you get from your property, after accounting for all expenses but before mortgage payments. In other words, it’s your net operating income divided by the price of the property. It has to be higher than the interest you’re paying on the mortgage or you won’t make any money. These days, Southen says he looks for cap rates between 7% and 8%. “If someone came to me with an honest 8%, I’d buy all day,” he says. “A 7.5% would be okay, but a 7% … well, I’d have to think long and hard about it if it were a 7%.”

And the true market value is…

Now that you have your cap rate, you can calculate what you should pay for your building. Just subtract the expenses from the annual rental income, then divide by the cap rate. For instance, if the building has four units renting for $900 a month each, expenses that eat up 50% of your gross income, and a cap rate of 7.5%, you can quickly calculate that you should pay about $290,000 for the building, tops. If you pay more, it’s probably not a good long-term investment.

We know what you’re thinking: “Where on earth am I going to find a four-plex that’s going for less than $300,000?” Certainly not in Vancouver, where the average detached house is now selling for north of half a million. Probably not in Toronto, Calgary or Edmonton either.

But that doesn’t mean the calculations are wrong. What it means is that now may not be a great time to buy. Your annual return is essentially the spread between market rent and the cost of buying and owning a property. In many cities, property prices have been climbing by as much as 10% a year. Rents have been edging up far less. Thus, the rising prices have squeezed the profit potential right out of the buildings.

If you’ve read books or attended seminars on buying real estate, this may surprise you. Many gurus talk up how easy it is to succeed in real estate and offer up tricks that are guaranteed to make money. They chatter about the power of leverage, the secrets of bargain basement financing, and how to identify up-and-coming neighbourhoods. All of those tactics can help you get more out of a decent investment. But none of them will help you if you pay too much for your property. It’s almost impossible to turn around a true money-loser — which is why positive cash flow is king, and all other considerations are secondary.

David Southen and Dan Young made a killing in years past because they bought when prices were lower. Southen says that since then, prices have surged too high. “I’d like to buy right now,” he says. “I’ve got lots of money available to buy with. But I’ve found that there’s really nothing to buy that’s reasonable.”

Young largely concurs. His first investment was a four-plex in the Midland area that he bought back in 1998 for just $135,000. His second investment was a six-plex that he bought in 1999 for $190,000. He’s not seeing many prices like that today. In fact, he’s been looking to buy a new property for seven years.

He thinks he may have finally found a prospect. It’s a nine-plex in Midland that he’s had his eye on for some time, although it wasn’t officially for sale. He liked it because he knew that the landlord was charging lower-than-market rents, which meant that Young could raise the rents as the tenants rolled over. Not only that, but the landlord had been paying for the utilities. Young knew that the units were separately metered, so he figured he could also download the utility expense to new tenants, who could pay their utilities directly. On the off chance he could persuade the owner to sell, Young asked his real estate agent to inquire. “The owner was interested, so I moved in fast,” he says. “Really fast.”

Young’s latest adventure shows the challenges of investing in this market. At first, the price for the property looked too high, but once Young factored in the artificially low rents and the effect of downloading the utilities, he found that the building could carry itself at a decent cap rate. “It’s really hard to find investments that make any sense right now,” he says. “But there are some. You just have to wait and persevere.”

Source: http://ca.pfinance.yahoo.com/ca_finance_general/727/the-new-way-to-make-money-in-real-estate/

Calgary: Million buck club growing

2008-01-05T16:07:00.000-08:00

Home sweet home has gotten a lot sweeter among the city's elite real estate.

Calgary's explosive economy has multiplied the number of city homes valued at more than $1 million by 10 since 2005 -- from 815 to 8,146.

That's according to the city's market value assessment data, released yesterday, that also showed nine neighbourhoods' median assessments exceeded $1 million with the southwest Eagle Ridge area the priciest, coming in at $1,865,000 based on July 1, 2007 figures.

And the city now counts two properties worth more than $1 billion -- downtown office complexes Bankers Hall and the Petro Canada Centre.

City assessor Stuart Dalgleish called it a good news indicator.

"It says our economy in Calgary has been really, really strong and healthy and there's continuing confidence in our economy," said Dalgleish.

Only about 4% of the change in property worth is due to the construction of pricier homes, the rest is from gains to the value of existing property, say city officials.

Eagle Ridge is also one of only two neighbourhoods -- the other being inner city Roxboro -- where homeowners can expect to swallow a tax increase of 20% or greater this year.

A rock-bottom downtown vacancy rate and huge demand for office space has fuelled the $1 billion price tags, said Amy Enfield, city assessment spokeswoman.

"It's possible Calgary has the most expensive office space in the country," she said.

While Dalgleish said the number of challenges to residential assessments hasn't increased in recent years, Ald. Ric McIver said there's a downside to the process and to some of the rise in values.

"Some people are cash-poor and property-rich and that's the problem with seniors," said McIver.

He noted the city is still determining if any residents on fixed incomes have been forced from their homes by steep tax hikes.

McIver also said the system punishes people for upgrading their homes by taxing them more "and rewards you for letting your property run down."

But Dalgleish said the system, now into its 10th year, has proven an equitable, revenue-neutral model that's being eyed by an increasing number of other jurisdictions.

"We have a good system and we have stability ... changes are more incremental than if we did the assessment less frequently," he said.

Source: http://calsun.canoe.ca/News/Alberta/2008/01/05/4753951-sun.html

Calgary: Cooling trend hits homes

2007-12-29T09:45:00.000-08:00

Although the real estate market sprinted out of the 2007 gates with all the hunger and gusto of 2006, it couldn't keep up the manic pace, the Calgary Real Estate Board said yesterday as it looked back on the year that was.

In terms of real estate, the first half of 2007 seemed to have all the makings of another blistering year, with the average price of homes and the volume of sales reaching record values, said CREB president Ron Stanners.

To the benefit of the market, 2007 ended in a more moderate tone, he said.

"My colleague described 2006 as the perfect real estate storm, and he's right," said Stanners.

"In the beginning, 2007 tried to mimic 2006 but it couldn't do it."

Unprecedented labour demands, lack of inventory and a sudden increase in immigration sparked fever in the 2006 market and although residual effects were still being felt well into the summer, 2007 managed to settle down long enough in the fall to find a stable balance, said Stanners.

Sales during the first half of the year were higher year-over-year from 2006, with swelling median and average prices dominating the market, he said.

But in the end, the city's real estate sector behaved largely as predicted and closed the year at a more manageable level, he said.

"We anticipated that the market would grow and it did," said Stanners. "We anticipated that condos would increase their market share and they did.

"What we did not anticipate was that the average price in Calgary would surpass $500,000 and it did, but only for a short while."

Going into the new year, the market has reached a healthy, less-volatile stride, where sellers can get good returns on their investment and where buyers, thanks to increased inventory, can take their time looking for property, said Stanners.

"There's no panic to buy, as there was in 2006," he said.

"It looks like the number of sales will be down slightly this year from 2006, the market place cooled in terms of buyers and a number of people saw the median price cool off a bit and realized that they could afford to wait and that there was no rush."

Although down more than $50,000 from their high in the early summer, the average price of homes in Calgary is still higher, at more than $460,000, than this time last year. Year-end real estate figures for 2007 are expected to be tabulated before the new year.

By PABLO FERNANDEZ, SUN MEDIA

US: Bill Coming Due on Sinking Home Equity

2007-12-06T00:15:00.000-08:00

Homeowners started losing hold of their homes years before spiking foreclosures and the housing slump slammed the economy.

Piece by piece, some gave away their homes by tapping equity to take cash out to pay for cars, weddings and vacations. Others never owned one brick. During the country's most recent housing boom, the term "homeowner" became a misnomer as lenders offered 100 percent or more home financing to some buyers.

Now, slipping home prices threaten to further erode the value of many Americans' single largest asset, curbing consumer spending and jeopardizing retirement assets.

Thanks in large part to mortgage-related tax deductions and a drumbeat of advice that everyone should own their home, the U.S. homeownership rate rose steadily in recent decades. It peaked at 69.2 percent in 2004 before backing down to 68.2 percent at the end of the third quarter, according to the Census Bureau, which has collected the data since 1965.

But that small decline masks a much larger plunge in the amount of equity homeowners hold. This figure, equal to the percentage of a home's market value minus mortgage-related debt, fell to an average of 51.7 percent at the end of the second quarter, down from 62 percent at the end of 1990, the Federal Reserve reported, even as the average home value surged 139 percent during that period.

Some economists believe the home equity number will drop below 50 percent by the end of next year, marking the first time homeowners will owe more than they own since the Fed started recording the data in 1945. The central bank is set to release the third-quarter equity figure Thursday.

"Although homes increased hugely in value, homeowners were borrowing against them as fast if not faster than the appreciation," said Dean Baker, co-director for the Center for Economic and Policy Research. "And when people were buying new homes, they were getting them with as a little as 5 percent, 2 percent down, even nothing at all."

Thirteen percent of first mortgages originated in 2005 and 2006 had down payments of less than 10 percent, according to the Mortgage Bankers Association. Another 1 percent of the mortgages surpassed the value of the property.

"How much people put down on the home has always been an important variable for the performance of a loan," said Thomas Lawler, a former official at mortgage lender Fannie Mae who is now a private housing and finance consultant.

"Mortgage lenders lost sight of its importance because most of the loan level data they used came from the latter 1990s to the early 2000s when very few places in the country weren't seeing house appreciation," he said.

A recent report from online real-estate information company Zillow Inc. showed home values declining 5.7 percent year-over-year in 83 metropolitan areas. A 20 percent down payment would have provided a cushion from these price declines.

The drop in average value is particularly bad news for homeowners who treated their homes as piggy banks instead of as savings accounts. They drained $468.7 billion out of their homes in 2004 through home equity loans or cash-out refinancings, according to a report this year from former Fed Chairman Alan Greenspan and Fed senior economist James Kennedy. Fifty-eight percent of that cash went to home improvements and personal spending, while another 27 percent paid off credit card debt.

They felt confident that housing prices would continue to rise, replenishing the equity they took out.

"To deal with your single biggest asset like that is risky," said Jim Gaines, research economist at The Real Estate Center at Texas A&M University. "Those things should be paid for by current earnings, not savings, which is what your house is."

Catherine Alexander, 61, who lives near Plano, Texas, first dipped a toe into home equity before taking a plunge.

After her husband died four years ago, Alexander moved from Seattle to Texas to be closer to her children, buying $172,000 four-bedroom house with life insurance money.

For more than a year, she shredded countless home equity checks sent to her unsolicited by Beneficial, a member of HSBC Group. She finally cashed one for $6,000 to meet expenses after being unemployed for over a year. That in turn led to phone calls from Beneficial recommending a larger equity loan.

At the end of 2005, Alexander took out a $50,000 equity loan to pay for day-to-day expenses and charges related to her son's wedding. To satisfy that loan and to pay off her Ford Escort, she took out another home equity loan the next year, this time for $93,000.

Alexander, who now works for Neiman Marcus Inc., put her home on the market in May after her home and loan expenses became too costly. Even though she felt lured into the loans, she also blames herself.

"A lot of it has been my ignorance and being naive about my finances and in trusting people," she said. "I shouldn't have had a loan that size for my income and I should've been more reasonable in the house I needed."

An HSBC spokesman said in general "our real estate loans require that customers receive a reasonable, tangible net benefit." The company doesn't comment on individual customer cases.

Fortunately, Alexander will receive more than half of the proceeds from a sale if she gets her $189,900 asking price.

For other homeowners who took equity out, what remains is scant. Thirty percent of the home equity loans issued in 2005 and 2006 left homeowners with less than 10 percent of equity in their homes, the MBA said. Another 3 percent now owe more than the value of the house.

A home equity loan is another close-ended loan on top of a mortgage, whereas an equity line of credit is an open-ended loan. Both use houses as collateral. A homeowner can also refinance for more than what is owed on the current mortgage and pocket the difference.

Many of these homeowners have little savings to fall back on, making matters worse. According to Moody's Economy.com, nearly one-third of homeowners who took out home equity lines of credit had a savings rate of negative 9 percent this year. The rate hasn't been positive for this group since the turn of the decade.

Now, homeowners trapped in unmanageable mortgages with little equity can't refinance or sell their houses at a price to cover what they owe. Many of them face foreclosure.

Dropping home prices also threatens retail spending as the equity well runs dry. Homeowners won't be able to tap equity as easily for big-ticket purchases and may put more toward saving than spending as housing values fall.

The long-term ramifications could be worse. As prices continue to decline or remain flat, homeowners' total net worth could be wrecked, especially for those who sucked money out of their homes.

Residential real estate represented 39 percent of a household's total assets in 2004, according to the Fed, whereas retirement accounts made up 11.4 percent and stocks just 6.3 percent.

No type of national bailout will replace that lost equity. Those who depended on it will have to rely on meager savings and other investments. Younger homeowners have more time to replenish the equity. But for Baby Boomers who took out cash from their homes every time home prices went up, their retirement income may not cut it.

"For lower- to middle-income homeowners who are relying on their homes as a source of savings, this will be very tough with declining home values," said Mark Zandi, chief economist for Economy.com. "Particularly in context of reining in Social Security, Medicare and Medicaid. It's one more financial problem on top of mounting ones as they approach retirement."

(This version CORRECTS percentages of first mortgages originated in 2005 and 2006 and of the home equity loans issued in 2005 and 2006.)

Source: http://ap.google.com/article/ALeqM5jme9IEjhlt0SmPMcTu5OjX_Xka_QD8TBH1P00

Edmonton real estate flips to buyer's market

2007-12-06T00:12:00.000-08:00

Edmonton realtors say it is now officially a buyer's market as home prices fell 5.3 per cent in November, the biggest drop so far this year.

Carolyn Pratt, president of the Edmonton Real Estate Board, said the market is correcting itself after reaching a peak in the spring when there was little to choose from and houses were selling quickly.

The city's market fell across the board last month:

Single-family homes sold on average for $376,267, down 5.3 per cent.
Condo sales averaged $252,277, down four per cent.
Duplex/rowhouses sold on average for $311,193, down 15.4 per cent.

It now takes an average of 51 days to sell a home.

"Everybody is just taking a little more time now to buy because they are not feeling pressured as they did in the spring season," said Pratt.

"The economy as you know is the strongest in Canada, so there's no reason to think that we won't continue to have a very good real estate market."

Pratt says the average house price in Edmonton is still 12 per cent higher than it was one year ago.

The last largest monthly decrease was 3.2 per cent in August.

Source: http://www.cbc.ca/consumer/story/2007/12/04/buyers-market.html#skip300x250

When will the real estate bubble burst?

2007-11-09T00:08:00.000-08:00

News of a bursting bubble and increasing foreclosure rates is daily fare in reports of the American real estate market - unless it's New York City's market that's being discussed. Then the picture seems oddly stable; some would even say sunny for the foreseeable future.

The average sale price for a home in the city climbed to $782,000 in the third quarter of 2007, an increase of 20 percent from the same period in 2006, according to figures released yesterday by the Real Estate Board of New York.

"New York City is still considered a cool place to be, and everybody wants a part of it," said Richard Grossman, executive director of downtown sales for Halstead Property. "I have friends from all over country trying to move here."

"Unless banks stops lending we [the local real estate market] is not going to fall," he said.

Grossman pointed out a number of factors contributing to the city's seeming immunity from the national real estate crisis.

Foremost, he said, is that the city does not have a high proportion of the subprime loans blamed for many recent foreclosures. Co-op apartment buildings tend not to accept them, and in general New Yorkers make more money than the typical subprime borrower.

A weak dollar is also keeping the local market strong by attracting foreign investors in city real estate, Grossman said. Then, there is the age-old factor of supply and demand.

"Even with all the construction going on, you just can't build housing fast enough in this city," he said.

Yesterday's report found prices were highest in Manhattan, where the average home sold for $1.33 million, or around $1,176 per square foot. The average cost of a home went up in every borough except Staten Island, which saw a 2.8 percent drop.

The board's findings is based on data collected by the city and includes all condominimums, co-ops and one- to three-family homes sold in July, August and September. Despite the glowing data, some cautioned against being too optimistic about the market's apparent strength.

Gregory Heym, chief economist with Halstead, pointed out that there is the forecast of a downturn on Wall Street.

"Obviously, we don't know what is going to happen with the Wall Street bonuses," he said. "That is very important not just to real estate but to the whole economy of the city. If Wall Street starts to lay off large groups of workers, the market could turn."

The Associated Press contributed to this story.

Citywide
2007: $782,000
2006: $652,000
Percent change: +20

Manhattan
2007: $1.331 million
2006: $1.139 million

Percent change: +17

Brooklyn
2007: $621,000 2006: $575,000
Percent change: +8

Queens
2007: $503,000
2006: $475,000
Percent change: +6

Bronx
2007: $440,000
2006: $414,000
Percent change: +6

Staten Island
2006: $463,000
2007: $450,000
Percent change: +3

Source: The Real Estate Board of NY, Inc.

Q&A with Michael Slattery, senior vice president of research for the Real Estate Board of New York

Bottom line ...how and when might New York City finally cool off?

I don't think there's a time--to the extent that we continue to have job growth, population growth, I think we are a city that's going to continue to see real estate growth.

What about the possibility that the cut in Wall Street bonuses, economic slowdown next year could create a downturn?

The bonuses they may be less but they're still going to be there. Those are going to fuel activity.

Should people in the market jump in, or wait until next year?

Given the trend and what the expected increases are I think you need to move quickly, and I think you need to jump in.

What neighborhoods are most vulnerable to a downturn?

I think the neighborhoods that are always the most vulnerable to a significant economic downtown are those that are up-and-coming. Those don't have the sustained history of housing activity. Even if there's a dip in the market, the decent neighborhoods that have been here a long time are going to come back.

How is this market different from the last time real estate soared, in the late 1980s?

The city is certainly in much better shape than it was in the mid 80s. The quality of life is better, the streets are safer and our schools are better. Although we did see a good housing market (in the 80s), the fundamentals weren't as solid as they are today.

Is it really worth living in the city anymore? Are you kidding? We've projected a population of 9 million people. We have a million people that can't wait to get here. Of course (it's worth it). It's the quality of life, it's the excitement, its the assets here -- the theater, the sports. This is a place to be.

Source: http://www.amny.com/am-realestate-1108,0,5851850.story?page=1&coll=nyc-ent-topheadlines-left

USA prof: Don't judge areareal estate market by national trends

2007-10-29T07:54:00.000-07:00

Don't judge the local real estate market by what's going on nationally, advises Don Epley, real estate professor at the University of South Alabama.

Mobile's economic activity is at its highest point since 1990, and the area economy is projected to grow almost 9 percent annually, according to a report released by Epley, director of the Center for Real Estate Studies at USA.

Plus, he said, "We're showing 8 to 9 percent nominal growth in Baldwin County, which is very good for what is basically a rural county that has been branded as a retirement and commuter area to Mobile."

When evaluating the health of the real estate market, Epley urged attention to local trends, not the gigantic swings in home appreciation and sales in states such as Nevada and California.

Mobile and Baldwin are lumped together with areas in the Northwest, regions of the Northeast and southern Florida in most national real estate surveys, when the local market should be compared to similar coastal regions, according to Epley.

Over the years studied, Mobile had no dramatic changes in appreciation rate, except for the time after Hurricane Katrina in August 2005 when the appreciation rate hit 18 to 20 percent, Epley said.

"But that was not normal," he said.

Mobile's housing stock has appreciated at an average 6.6 percent for the past three years, the report showed.

"In Mobile, our real estate market is very steady, but steady is beating all the other real estate economies in the nation." said Richard Weavil of The Weavil Co., who is chairman of the real estate center's 31-member advisory board.

Quarterly reports

Sunday, October 28, 2007

By KATHY JUMPER

Real Estate Editor
Source: http://www.al.com/business/press-register/index.ssf?/base/business/1193563720221640.xml&coll=3#continue

A 3-point strategy for better housing

2007-10-28T04:35:00.001-07:00

TheStar - Canadians really didn't need a United Nations envoy to tour the country and announce that Canada urgently needs to tackle its affordable housing crisis. The signs of it are everywhere, from homeless beggars on the streets of Canada's major cities to overcrowded shelters and rotting public housing buildings.

But the visit last week by Miloon Kothari, the UN's special rapporteur on adequate housing, did shine a spotlight on the shocking lack of affordable housing options in a country as rich as Canada. Successive federal and provincial governments have pledged to address the problem, but all have fallen far short of meeting the growing demand for reasonably priced housing for low-income families and individuals.

What is lacking is a co-ordinated federal-provincial housing strategy, in effect a national plan that would ensure every Canadian has a decent place to call home.

Such a blueprint must take a three-pronged approach: new construction of affordable homes, rent subsidies and renovation of existing homes.

The three areas need to be tackled together, not in isolation or in any prescribed order. Rather, a holistic approach is best suited to addressing the problem.

As a key leg of the three-pronged strategy, it is imperative that Ottawa kick-start a renewed national housing program with a goal of building up to 200,000 affordable and co-operative housing units over the next 10 years. The homes are needed in cities, rural areas and native reserves.

Ottawa effectively got out of the affordable housing sector in 1993 when it downloaded the area to the provinces. Because of that, only a few major programs have been funded. The result is that in the past decade, fewer than one new affordable rental unit has been built for every 100 new homes. And overall rental construction is lagging. Across Ontario, up to 12,000 new rental apartments are needed annually, three times what has been built each year between 2000 and 2005.

The consequences are felt most acutely in the Greater Toronto Area where only 2,000 new affordable rental units have been built in the past five years, while more than 67,000 people remain on waiting lists.

The second leg of the strategy should be a greatly expanded rent supplement program. Obviously, new affordable housing cannot be built fast enough to meet existing demand. That's why paying subsidies to put low-income residents into vacant rental units is necessary. While some housing advocates view rent supplements as a short-term measure that does not solve the overall problem, such subsidies do provide temporary support and needed housing for those in desperate need.

Currently, a family of four receives a shelter allowance of only $544 to cover rent. However, the average market rent in Toronto has risen to $1,052 for a two-bedroom apartment. During the recent election campaign, Premier Dalton McGuinty promised a new $100-a-month rent supplement program to help 27,000 Ontario families. That is a welcome first step, but it should only be an initial step. More assistance will be needed because McGuinty's plan will still leave thousands of families scrambling for help to pay their rent.

The third part of the strategy would be a major commitment to renovate public housing that is aging and falling into disrepair. In Toronto alone, the city's 58,000 units of public housing require an estimated $300 million in repairs. Many of those buildings are now more than 50 years old, with plumbing that leaks and ceilings that are cracked.

The preferred way to deal with this issue is for Queen's Park to upload the cost of renovations. When the Conservative government under Mike Harris downloaded the cost of social housing to municipalities in 2001, it refused to give the cities the money needed to deal with repairs. McGuinty should make reversing this policy the first priority of his re-elected government.

Together, these measures would form the basis of a federal-provincial affordable housing strategy that would go a long way toward helping the neediest among us – those who cannot work, single parents and the working poor – have a better life.

Vancouver has the most expensive housing market in Canada

2007-10-28T04:12:00.000-07:00

VANCOUVER: On a recent Wednesday evening at the Gotham Steakhouse in the city center here, about 100 people gathered around an open bar for a party given by Ian Watt, a Century 21 broker, who had invited clients to thank them for buying property in the city.

One of the guests was Annu Gill. With her fiancé, Rick Gill, who coincidentally has the same last name, she had bought a 1,200-square-foot, or 110-square-meter, condominium at the Sheraton Wall Center, a 42-story hotel with 74 units in the center of Vancouver. The condo cost 1 million Canadian dollars, or $1 million.

"When I try to explain to friends in the States how much it costs here, they don't believe me," Annu Gill, 29, who is a real estate broker, said of the city's high prices. "They say, 'You're lying.' "

But 830 dollars a square foot - which is how much the couple paid for the condo - is not unusual these days.

The center of Vancouver is the most expensive housing market in Canada, according to a survey of 21 cities worldwide released last April by Century 21. The average sales price for a condo in Vancouver has been about 408,500 dollars this year, up 14.6 percent from last year, according to Royal Le Page Real Estate Services. The average sales price in Toronto, Canada's largest city, was about 235,300 dollars, up 15.7 percent from last year, and in Montreal, 196,400 dollars, up 4.6 percent.

The number of homes in Vancouver selling for almost 2 million dollars also rose this year, by 48 percent, according to Re/Max Associates. The higher prices reflect years of price gains of 15 to 20 percent, according to Helmut Pastrick, the chief economist for the Credit Union Central of British Columbia.

Not everybody is enthusiastic about Vancouver's growth. To make room for some projects, hundreds of single-room-occupancy hotel rooms for low-income residents have been lost, said David Eby, a lawyer with the Pivot Legal Society, a legal advocacy group. High prices are pushing out middle-income renters and buyers, he added.

Gordon Price, the director of the City Program at Simon Fraser University, said the city had erred in abandoning its commitment to maintaining a 33 percent low-income housing mix in the Southeast False Creek site. The development is being built initially to house athletes during the Olympics. Later, it is to be converted into condominiums and town houses selling for 584,000 dollars to 5.8 million dollars.

The city reverted to a 20 percent low-income housing mix because of concerns about cost, said Jennifer Young, a city spokeswoman, explaining that there had been a drop in government financing for low-income housing.

Darek Cole, for one, said he felt lucky to afford a home in the city. "Vancouver is a difficult place to get into, compared to other cities," said Cole, 26, who works for a marketing company. He paid almost 263,000 dollars for a 600-square-foot condo in the city's Downtown Eastside neighborhood.

"I knew it would be a good investment," he said.

Linda Baker / International Herald Tribune