CMHC report highlights slip in refinances, new policies

Canadian Real Estate Magazine – November 29, 2011

CMHC report highlights slip in refinances, new policies

Refinances remain down from pre-mortgage rule changes introduced this spring, according to a Q3 report from CMHC — highlighting further easing in consumer demand for debt.

“Homeowner Refinance activity initially fell by nearly 40 per cent (in the second quarter) and by the end of September was approximately 25% below the pre-implementation levels for an overall year-over-year decrease of 31%,” says the Crown corporation in a Q3 report released Tuesday.

CMHC, and the mortgage industry, as a whole, has also seen a significant slowdown in new purchase activity, according to the quarterly report.

The decline in market activity as well as changes to mortgage lending rules resulted in an 11% drop in insured volumes for the first nine months of the year compared to the same period in 2010, according to the Q3 CMHC report.

That slowdown in the rate at which consumers took on new debt may actually be a good thing: “The level of household debt remains a concern but there are encouraging signals,” said CMHC.

Still, critics of the government remain concerned that this spring’s mortgage rule changes – specifically, the reduction in loan to value maximums on refinances – have unfairly limited the options of homeowners struggling to keep a roof over their heads.

“It’s a repeat of what we saw when the government increased the down payment requirements for CMHC insurance on rental properties,” Curtis Cannon, a sub-mortgage broker with TMG The Mortgage Group in Prince George, B.C. “By decreasing its maximum loan-to- the government is basically saying, ‘We’re out of the refinance business.’ That’s regrettable because CMHC seems to have forgotten what they’re there for – to put and help keep Canadians in their homes.”

Earlier this year the Crown corporation announced that its insurance activity for refis fell 40 per cent for the quarter ended June 30, compared to “pre-implementation levels.” Moreover, the report adds, that activity has “continued to remain around this level.”

That translates into bad news for homeowners, who through no fault of their own, need to pull equity out of their homes in order to cover debts racked up by a death in the family, divorce and/or illness, said Cannon, concerned the government has abdicated its responsibility to aid those Canadians in its move to keep consumers from “using their homes like an ATM.”

“I don’t think that the new refi rules are good, at least not across the board in that the difference between accessing a LTV of 85% instead of 90%  may force someone who is in a tough situation out of their home,” said Cannon.

InvestorForum Vancouver, a smashing success

Canadian Real Estate Magazine – November 23, 2011

What can we say? The Vancouver InvestorForum was a huge success, exceeding both delegate and exhibitor expectations.

It’s all courtesy of Diamond sponsor Vision Investment Properties, which helped bring together more than 350 professional real estate investors for Canadian Real Estate`s first major event in Western Canada, at Vancouver’s Convention Centre.

Each was treated to first-class seminars featuring some of Canada’s greatest names in real estate, including Don Campbell, author of the newly released Secrets of the Canadian Real Estate Cycle; Philip DuMoulin, star of the hit TV series Urban Suburban; Peter Kinch, author of The Canadian Real Estate Action Plan; Dan and Nikki Hall, the twin brother-sister team of the W Network series Sibling Rivalry.

A real treat was the InvestorForum’s keynote speech, say the vast majority of attendees, calling Olympian-turned real estate entrepreneur Cary Mullen a moving and compelling speaker.

He took delegates on a journey through his 10-year career as a top athlete competing in international downhill ski tournaments. The presentation included video highlights of him capturing the gold in World Cup downhill competition in 1994 and setting a world downhill speed record of 156 kilometres per hour in Kitzbuhel, Austria.

Mullen outlined the ways they can apply his own training lessons to their own investment careers, the subject of his popular book How to Win.

The challenge for delegates, he said, is to overcome their fear and to “lunge forward” into their next business venture, taking their portfolios to that next level. It’s not unlike what Mullen did when he started out investing in Canadian residential properties. He’s now developed a 250-unit resort on the Pacific coast of Mexico near the city of Puerto Escondido.

In an attempt to capture some of the Forum’s most memorable moments, Canadian Real Estate has provided a brief summary of some popular sessions.

Campbell debunks real estate myths
Don Campbell, president of the Real Estate Investment Network, stepped on to the stage during the first day of the conference to dispel some widely held myths about real estate investing.

The first myth he took aim at was the seemingly blind belief many investors have in the plethora of statistics reported daily in the media, which include average prices, monthly sales and days on market.

In fact, Campbell even argued against focusing on housing starts. All too often the media gets wrapped up in reporting the next doomsday for the Canadian real estate market, based that long-term opinion on the very short-term fluctuations in the annualized rate of housing starts.
He told delegates they only need to worry about housing starts if the number falls below 197,000. They current sit 205,000.

Campbell told delegates to turn off the noise and start focusing on what really matter: economics.

In order to do that, however, Campbell homed in on another myth perpetrated by the get-rich-quick gurus; that is, the old cliché, “location, location, location.” Really, investors really need to stop focusing on aesthetics and the hunt for the next cheap neighbourhood.

“It has nothing to do with the price,” said Campbell, the owner of 171 investment properties. “Cheapness is not investing. If you’re looking at price you’re way behind me, and you’re way behind sophisticated investors.”

To find the right market, Campbell said investors only need to keep three key things in mind:
•    timing,
•    transitions
•    tactics.

Timing means understanding real estate cycles, while transitions refer to the major stages of that cycle, and, of course, tactics refers to the strategies used to deal with each cycle.

Campbell said investors who understand these three factors and use his “momentum formula,” which begins with looking at gross domestic product (GDP), employment and population growth, will be 18- to 24 months ahead of other real estate observers and the media, who remain obsessed with average prices and monthly sales statistics.

“These are the three things that you must have in a long-term sustainable real estate market,” Campbell said. “You must have economic growth. You’ve got to have job growth, and you’ve got to have population growth, because if you don’t have those three things supporting the market it doesn’t matter the price of that property is.”

Campbell told delegates committed to investing in Canada to smile. After getting back from a European tour last fall, Campbell said he was happy to report that bankers, investors and economists on that continent believe that even in a global economic slump Canada will reign supreme because of the country’s strong resource base.

That’s because the strength of Canada’s natural resource sector will steam ahead, especially in the production of what Campbell terms the “Four Fs”:

1.    food,
2.    fuel,
3.    fertilizer and
4.    forestry.

“We are going to be over the next decade the safe and secure suppl(ier) of the four Fs.”


Canadian Mortgage Trends – November 25, 2011

Four prominent economists met on a CAAMP panel Monday:

Avery Shenfeld (CIBC), Warren Jestin (Scotiabank), Stefane Marion (National Bank Financial) and Carlos Leitao (Laurentian Bank).

The eurozone crisis, employment, rates and CMHC were the topics of the day. Here’s what they expressed about each:

On Interest Rates

“It is not normal to have 2% inflation and a 1% overnight rate,” said Marion. Rates will normalize. “Do not sell (mortgages, especially shorter or variable-rate terms) to clients who may not be able to afford higher rates.”
“Prime should be the norm for variable rates.”—Leitao

Regarding rate cuts, we “can’t rule it out,” said Shenfeld.
The BoC suggests rates will stay low “for a long period of time.”—Jestin
Central banks will give inflation a longer leash (before raising rates), noted Leitao.
Despite a conditional commitment to keep rates low until mid-2013, “Don’t trust the Fed too much,” Marion advised. The Fed cannot “keep a promise on the long end of the curve” so we “can’t be too complacent.”

On Housing

The housing market is strong because rates are “at extraordinary levels,” said Jestin. “What worries me is that we’re at record levels of home ownership.”
There will come a point when rates will go up and house prices will come down, said Shenfeld. He warned: Watch out for more 5%+ annual price run-ups because “the bigger they are the harder they’ll fall.”
“Every other week OSFI is stress testing banks for falling house prices.”—Marion
If people continue to be qualified by reasonable standards then there is no housing bubble, declared Leitao.
Employment is Jestin’s #1 indicator for measuring the health of the housing market.
“I don’t pay attention to one month’s numbers on employment,” said Shenfeld. He added: Slow employment will lead to slow mortgage growth.
The “higher house prices go, the bigger mortgage [that] people need,” said Shenfeld. If prices level off it will impact originations.

On the European Crisis

“This is the first time we’ve face a sovereign global debt crisis.”—Marion.
Do you want to know if Europe is going to “blow up?” Watch the Italian 10-year yield says Shenfeld. The higher it goes, the worse the crisis gets.
Unlike European banks, there are “no liquidity issues” among Canadian banks, stated Jestin.
Shenfeld said that the mess in the rest of the world and a strong loonie have “to some extent been a friend of the mortgage consumer” (because of their depressing effect on rates). Yet, there is a point at which low rates are old news. Canadians have now started to say, “Maybe I’ve borrowed enough.”


CMHC might be worried about cities with big price run-ups (like the GTA and GVA). “Ottawa may adjust CMHC’s risk regionally,” speculated Shenfeld.
“Competition in the mortgage insurance market is not a bad thing,” said Laitao, adding that private default insurers add value in various ways.

More Canadians plan to do holiday shopping online

The Vancouver Sun –  November 28, 2011

Online shopping is gradually becoming more mainstream with a new survey showing almost half of Canadians asked say they’ll access the web for some of their holiday gift purchases this year.

The survey, commissioned by Bank of Montreal, had 46 per cent of respondents saying they would buy gifts this year over the Internet, up from 41 per cent in a poll done last year.

“This is a growing trend, with almost half of all Canadians now doing at least some of their holiday shopping online,” Douglas Porter, deputy chief economist for BMO Capital Markets, said in a statement.

Most of the gains between this year and last were with women, with 43 per cent in the latest survey indicating they would do some online shopping compared with 34 per cent last year. With men, 49 per cent said they planned to shop online this holiday season, unchanged from last year’s poll.

Such results were released on Cyber Monday, primarily a U.S. phenomenon but becoming more of an event in Canada. It is the first Monday after the American Thanksgiving and is usually the busiest online shopping day of the year.

The BMO survey was done online by Leger Marketing between Oct. 17 and 20, using a survey of 1,508 Canadians. BMO said a random sample this size would be representative of the population within 2.5 percentage points, 19 times out of 20.

Stuck in ‘decision quicksand’ – why we get mired in trivial choices

Vancouver Sun, November 14, 2011

Second only to the Bermuda Triangle, lengthy restaurant menus surely claim the most lost souls. You go in with plans for a simple meal, but it’s not long before the question of chicken or fish, salad or french fries, becomes a full-blown existential crisis.

Writing in the Journal of Consumer Research, investigators call this “decision quicksand.”

You presume a choice will be easy but get confounded by other factors and thus spend more time on it than expected. And the more time you spend, the more meaningful the decision feels, causing you to sink deeper into contemplation — whether it’s ordering an entree, choosing a flight or selecting a brand of toothpaste.

“People experiencing a conflict in choice make an implicit inference that the decision must be important, because of this association we all have between importance and difficulty,” explains lead author Aner Sela, an assistant professor of marketing at the University of Florida.

In fact, in an 80-person survey, 91 per cent of people indicated that important choices are generally more difficult and require more time than unimportant ones. Sela remarks that this belief is so strong that people will artificially complicate big decisions that seem too easy, in order to feel they’ve done “due diligence.”

But what he and the University of Pennsylvania’s Jonah Berger sought to test was why, and how, people get mired in trivial choices.

The pair conducted four studies using hundreds of participants and different types of choices, each framed as either important or unimportant. Confounding factors included giving people too many options, setting up too many trade-offs (for example, do you want a toothpaste that brightens but doesn’t clean well, or one that cleans well but leaves your smile looking dull?), and using fonts that were hard to read.

While difficulty had relatively little effect on decisions that already seemed important, they found it led people to spend more time on unimportant decisions.

“Like quicksand,” they write, “the additional effort that people exert to resolve the situation can lead them to get caught up even further.”

It was only after the participants regained their perspective, and realized the decision was inconsequential, that regret sank in.

“Getting sucked in will eventually make people less satisfied with the overall experience, and maybe even less happy with the product,” says Sela. “It can make us feel kind of stupid in hindsight.”

Fortunately, quicksand can be escaped. The study suggests that if people make themselves aware of potentially confounding factors in advance, and take a step back during decision-making, they can avoid getting tripped up.

“Distract yourself. Make a joke to someone. Look at the big picture,” says Sela. “Then come back to the decision and you’ll be surprised how refreshed your outlook will be.”

Luxury Home Sales Surge in Metro Vancouver

REW, November 12, 2011

From January 1 to the end of September of this year, 953 homes sold in Greater Vancouver for $2.5 million or more each, according to Eugene Klein, president of the commercial division of the Real Estate Board of Greater Vancouver. “That is almost as many as the three previous years combined,” Klein said.

The eye-popping sale prices have spurred considerable international interest, with the Board interviewed by major news outlets from the US, Europe and Asia, Klein said.

The demand for luxury homes is not seen just in the traditional high-end markets, such as West Vancouver or Vancouver’s West Side, but is also in the new home market from the Fraser Valley to Greater Vancouver, according to studies.

The Teranet-National Bank composite new home index shows that the typical price for a new home in Metro Vancouver increased 9.9 per cent as of August, compared to a year earlier. This is the highest increase for new home values in Canada.

“The strength of the upper-end segment continues to defy expectations,” said Elton Ash, regional executive vice-president, Re/Max of Western Canada, which profiled the luxury market in a study earlier this year.

According to the report, the improved financial standing among high net worth households is the major factor driving strong sales activity at the top end of Canada’s housing markets. The report notes, though, that foreign buyers also account for a number of luxury home sales in BC.

Re/Max examined 12 major Canadian centres and found that luxury sales surged in close to two-thirds of housing markets in the first four months of 2011, compared to the same period in 2010.

In terms of percentage increases over the period, Metro Vancouver — where foreign investment has also played a major role — led the nation with a 118-per-cent increase in luxury home sales, which ReMax defined as prices of $2 million or more.

That was followed by:

• Ottawa (59 per cent)

• Calgary (51 per cent)

• Halifax-Dartmouth (27 per cent)

• Winnipeg (24 per cent)

• Hamilton-Burlington (13 per cent)

• Greater Toronto (9 per cent).

“Greater Vancouver’s luxury market continues to show unprecedented strength, with the number of sales over $2 million more than doubling in the first four months of 2011,” the report said.

New home buyers should not be deterred by all the action in the high-end market. A tour of new home projects shows that there are many new condominiums, townhouses and even detached houses priced well below the seven-figure range.

Canadians likely more cautious than U.S. holiday shoppers

Financial Post, November 14, 2011

Canadians will be more cautious holiday shoppers than their U.S. counterparts this season, while sales at some U.S. retail stores operating in this country are weaker than the stateside division.

Average retail sales in the U.S. are projected to grow 5% in November and December, Sal Guatieri, vice-president and senior economist at BMO Capital markets, said in the firm’s annual holiday sales outlook on Monday. That is down from 5.7% in the same period last year.

In Canada, holidays sales are projected to grow 2.5% in the period, compared with growth of 3.1% a year ago.

“Consumer spending after inflation in Canada has downshifted quite meaningfully form a year ago and is running weaker than the U.S. pace,” Mr. Guatieri said. In real terms Canadian consumer spending is expected to slow to 1.2% for the fourth quarter of the year, down from 3.2% in the fourth quarter of 2010. In the U.S., real consumer spending growth in the fourth quarter is expected to be 1.7%, down from 3% a year ago.

While consumers on both sides of the border are both cautious, analysts said, Americans are spending more on discretionary items, reflecting a pent-up demand, but are still less willing to splurge on big-ticket items.

Like Americans, “we have also built up a lot of debt in the past decade and we are starting to cool our pace of spending to more modest rates and I expect that to continue in the holiday season.”

That means a lot of retailers are offering Canadians unexpected early deals, said apparel market analyst John Morris.

“We are finding the Canadian portions of the businesses in apparel have been below expectations and weak through the period,” a trend that began during the back-to-school period and is expected to continue into the new year, he said. “The Canadian performance in apparel retail has been below commensurate business in the U.S., with retailers such as TJX Cos. (owner of the chains Winners, Home Sense and Marshalls) and Abercrombie & Fitch Co. noting softer than anticipated sales in this country. “Lululemon we expect to continue to perform very well,” he said of the popular Vancouver-based sportswear retailer.

But any caution on the part of consumers might not take too much of a toll on retailers, who have inventory levels 5% to 10% below that of last year due to higher fabric costs and higher labour costs in the far east, Mr. Morris said. “Retailers do not want to be stuck with a lot of carry over goods at the end of the season.”

A popular retail trend this season will see customers getting a gift with their purchases, Mr. Morris said, citing such incentives from retailers including Aeropostale, Victoria’s Secret and Children’s Place.

Toy analyst Gerrick Johnson said real growth in the category, generally considered to be “recession proof,” will be flat, “about as weak as it gets in the toy category.” With low inventories on the retail side, however, it won’t lead to deals; many retailers could be out of stock on popular selling toys well before Christmas, he said.

Why use a mortgage broker?

Globe & Mail, November 10, 2011

Buying her first house and getting her first mortgage was an overwhelming experience for Roslyn Judd.

She had signed a deal to buy a new house, she had put down her deposit, and she was pre-approved for a mortgage. Now she had to sign a final deal with her bank to lend her hundreds of thousands of dollars.

“I had never applied for a mortgage before and I found that [to be] the most intimidating part of the home-buying process, so I was procrastinating,” she says. “I think it was the enormity of the money that you are asking somebody to lend you.”

Then a friend in the building where she works suggested she check out her company’s website, RateSupermarket.ca to compare mortgage rates and talk with one of the mortgage brokers featured on the site.

So she did, and her mortgage broker was able to get her a deal with a seasoned lender whose rate was much better than what her bank had offered.

“It was the best because it was so personal,” she says. “It was like someone was holding your hand all the way through the process.”

Rona Birenbaum, a certified financial planner with Caring for Clients in Toronto, recommends all her clients seek the help of a mortgage broker when it comes time to buy a house, or refinance or renew a mortgage.

“It’s the most efficient way to get the best-priced and best-structured mortgage,” she says. “Bottom line.”

“So rather than shopping at multiple financial institutions and negotiating with each financial institution and arm wrestling them to give you the best deal, it’s one phone call and they do the rest for you.”

Vancouver mortgage broker Jessi Johnson says a mortgage broker can help you with all aspects of a mortgage, from figuring out how much you can truly afford, to determining the best mortgage product for you, to finding ways to save you money and pay off your mortgage faster.

In addition, you should expect your mortgage broker to review your mortgage a few times a year to see how you can pay it off faster, whether it’s still the right product for you, and if it’s still competitive. “It’s very rare that you’re going to get that service from a bank,” he says.

For people who are inexperienced with negotiating, who aren’t sure what the best mortgage product is for them or have a less-than-stellar credit rating, they can save time, money and hassle by using a mortgage broker, says Ms. Birenbaum.

“For the average person who would maybe not feel comfortable negotiating, who might feel as though they are not in the position to ask for a better rate, they definitely will [save],” she says. “A half per cent over a 20-year mortgage, is tens of thousands of dollars. It could be potentially huge money.”

But those interested in using a mortgage broker need to do some research, says Ms. Birenbaum.

The brokers she recommends are people with whom she has developed a professional relationship, and she knows they will do a good job because they’ve worked with her clients.

“There’s a wide range of experience, qualifications and quality in this particular industry,” she says. “So reputation and experience are extremely important.”

People ask their financial adviser to recommend a mortgage broker, or they can turn to others who recommend their broker.

Mr. Johnson says you should look for someone with several years experience, who is licensed, and has the title AMP – accredited mortgage professional.

Mortgage brokers are regulated provincially so you can check with your provincial regulator on the website for the Canadian Association of Accredited Mortgage Professionals. The organization also has an online directory that can help your search for a broker.

“Like every industry there are rookies, so be careful when researching your broker, get a good idea about their experience before proceeding,” he suggests.

Many brokers now do the bulk of their work online, Mr. Johnson says, and that’s not an issue as long as there’s enough communication with the client either via e-mail or over the phone – and their online application process is secure.

“To be honest, the majority of our clients don’t leave their living room, and I don’t blame them,” he says.

If a broker asks for a retainer of any sort or any payment made out to them personally, that should be a warning sign, Ms. Birenbaum says.

Mortgage brokers are paid their fee by the lender, not by the person who is using the mortgage broker’s service, says Mr. Johnson. “There’s no cost for the client.”

Be aware though, whether you’re doing a new mortgage, a refinancing or renewal, to ask whether there are any legal or appraisal fees, he says. Legal fees for a new mortgage can be about $1,000, but sometimes a lender may cover both legal and appraisal fees; you just have to ask.

Right now, one of the big questions for those looking for a mortgage is whether to go for a fixed or variable mortgage, says Mr. Johnson. While historically variable mortgages have had better rates than fixed mortgages, that’s not necessarily the case right now.

“Any time the fixed and variable rates are very close I do recommend going fixed and they are close right now,” he says. Up until recently about 90 per cent of the mortgages he arranged were variable, but now more are fixed.

My Real Estate Listing Site gets Launched

Origin Mortgage Advisors are working to help their best referral partners promote their newest real estate listings with a digital listing that can be easily shared and found online. It also doesn’t hurt for each listing to become its own unique URL, improving the Google rankings and other search engine optimization. In addition each listing has links back to current mortgage rates and demonstrates to prospective buyers their monthly payments and income required for qualifying based on varying down payments.

Each web page can be custom designed to display a photo of the home together with links to virtual tours, floor plans, photo arrays and blogs to name a few. These links always go back to the realtors main website. The ability to share these web pages on social media networks like Facebook and Twitter is as simple as one click of a button. If you are looking at new and improved means to promote your real estate listings, expand their reach, and provide prospective buyers with details on the ease of acquiring the home through mortgage terms, you should check out this new website at www.myrealestatelistingsite.com and if you like what you see talk to your Mortgage Advisor about getting your profile set up on this exciting new site.

Canadian existing home sales up 2.7 per cent in September

Reuters, October 17, 2011

Sales of existing homes in Canada picked up in September after three months of stable activity, led by strong sales in Toronto, the Canadian Real Estate Association (CREA) said on Monday.

The industry group said sales rose 2.7 percent from August and were up 11 percent from September 2010, a period of relatively weak activity.

The national average price in September rose 6.5 percent from a year earlier to just under C$352,600, which was below the record level heights reached earlier this year, CREA said. The year-over-year increase was the smallest since January.

“The Canadian housing market remains a bright spot against a backdrop of mixed headline news about the global economy,” Gary Morse, CREA president, said in a statement.

“Low mortgage rates continue to draw buyers to the housing market, while recently tightened mortgage regulations are working as intended.”

The number of newly listed homes nationally was little changed from each of the previous two months. New listings were up from August in Toronto, Montreal, Ottawa, Oakville, Ontario, and Vancouver, offset by fewer new listings in markets such as Edmonton and British Columbia’s Fraser Valley.

The monthly rise in sales resulted in a tighter national housing market but one that is still well balanced, CREA said. The national sales-to-new listings ratio, a measure of market balance, stood at 52.8 percent in September, up from 51.6 percent in August.

Based on a sales-to-new listings ratio of between 40 to 60 percent, nearly two-thirds of all local markets in Canada were in balanced market territory in September, with an even split of buyer’s and seller’s markets among the remainder, CREA said.

The number of months of inventory stood at 6.1 months at the end of September on a national basis, little changed from the 6.2 months at the end of August.

Protesters remain at Occupy Vancouver, Victoria

CBC News, October 17, 2011

Protest camp didn’t affect traffic in downtown Vancouver on Monday morning.

Protesters who occupied the lawn of the Vancouver Art Gallery and Victoria’s Centennial Square over the weekend say they’ll stay “as long as it takes” to fight corporate greed and social inequity.

Thousands gathered in front of the art gallery in downtown Vancouver over the weekend, but on Monday morning about 65 tents remained.

The demonstrations are part of the global wave of Occupy protests staged in more than 80 countries around the world. They have been inspired by the month-long Occupy Wall Street protest in New York City.

Vancouver police Const. Jana McGuinness said police had no problems with protesters over the weekend.

“We’re just monitoring it as far as how many resources we need to safely manage the situation and keeping an eye on things, but it’s pretty festive in terms of the atmosphere, there seem to be no issues for us at all right now,” she said on Sunday.

Police will continue to monitor the situation as long as protesters are gathering, said McGuinness.

The protest did not affect traffic in downtown Vancouver on Monday morning.

The protesters say they plan to hold a general assembly on Monday to plan their next steps.

In Victoria, about a dozen tents about remained in Centennial Square following the weekend protests.

Demonstrators in Victoria held a meeting Sunday to organize for what they expect will be a long stay.

Some of the practical issues discussed include setting up a bank account for any expenses and arranging a field kitchen to accept food donations and prepare meals for the tent city occupants.

So far, police haven’t enforced the city’s no camping bylaw and residents and businesses have donated food and blankets.

“We are not here to break the law. We are here to be law-abiding citizens and make our point and stand as one,” said Don Cameron, one of the people camped out in Victoria.

Similar protest camps also remain in place in Toronto, Montreal, Ottawa, Halifax, Edmonton.

Meanwhile, political commentators expect the Occupy movements in Vancouver and Victoria will have a lasting impact.

“A cynic would say it’s a temporary fad and it will go away and I suppose some people actually hope it will,” said Patrick Smith, a political science professor at Simon Fraser University.

“But it seems to me that they’ve gotten down to a nub of an issue, which is broadly around inequality in our economy and that seems to me to have the potential to resonate across a much broader spectrum.

“If you think back to the spring and the only people protesting were the Tea Partiers, and they were saying give us less government and let the rich get richer, this is a counter to that.”

The protestors have been speaking out about several issues, including what they see as a widening gap between rich and poor.

Norman Ruff, a professor emeritus in political science at the University of Victoria, said the protests prove young people are not disengaged from politics, just from mainstream political parties.

“They were talking about economic unfairness. They’re talking about the inequality in our societies,” said Ruff.

“The other thing that struck me was the preponderance of young people. Those age groups aren’t voting in federal or provincial politics. Clearly it’s a mistake to say the young are apathetic and have removed themselves from politics. They’re taking part in another form of political activity.”

Ruff said politicians should be paying attention.

“Any politician who just dismisses this as an isolated protest could be in for a surprise down the line … what I think is happening here is a change in the political agenda.”

Dunbar Haunted House moves to new location after its huge success spooks the neighbours

Vancouver Sun, October 15, 2011

Will success spoil the Dunbar Haunted House?

When Brad Leith, Gideon Flitt and their families and friends first set out to scare their neighbours at 50th and Dunbar on Halloween in 2004, it was because the previous year had seen fewer kids than you can count on 10 fingers show up to claim candy in the trick-or-treat tradition that the grown-ups so loved from their own childhoods.

It was time to scare up some more visitors. An easy afternoon’s worth of preparation in ’04 led to Flitt standing in a driveway “graveyard” built from scrap lumber, portraying the only spook in sight and scaring about a hundred kids who showed up for the fun.

In 2005, Leith and Flitt led a growing team of family, friends and neighbours in building setpieces and props, stitching costumes and playing various creepy characters. The effect was electric. Over the course of a couple of weeks preceding Halloween, hundreds of people showed up nightly and, on Spook Night itself, 500 folks lined up to file through a maze of monstrous effects.

About $5,000 was raised for the B.C. Fire Fighters’ Burn Fund.

Then all hell broke loose. From 2006, the Dunbar Haunted House started to take weeks to set up and hundreds of zombie-hours of labour for what was truly a tour to the dark side. People were now lining up around the block for hours to get in, and donations to good causes began growing to the point that, in 2010, $67,000 went to the Burn Fund, the Vancouver Police Union Charity Foundation and the Lower Mainland Christmas Bureau.

“Now it’s basically a yearround, all-consuming hobby,” Leith says. “I’ve been working 12-to 16-hour days since June 1 and, I mean, I have a day job teaching at Vancouver Film School.”

Success is a slippery slope, and the Dunbar Haunted House has simply become too big to remain on its original site.

Leith learned that the hard way last year when the city of Vancouver’s special-events office reared its bureaucratic head.

“At least a quarter of all the people who volunteer have come from the neighbourhood,” says Leith, “but a couple of neighbours didn’t like it, and they pushed the buttons at city hall.”

Leith and his team were ordered to attend a meeting with building inspectors, fire and police representatives and special-event officials.

“It felt strange,” Leith recalls. “They started out by kind of reading us the riot act, and after about five minutes of it I said, ‘You make us feel like we’re a grow-op or sex-trade smugglers; we’re just trying to do a community event and raise money for local charities.'”

Leith and his team scour the city for free materials, call on their friends to donate expertise in building sets or engineering the animatronics, and even come up with the coin needed to attend hauntedhouse trade shows in the U.S. in search of spooky masks and special props. They decided to be proactive about their problem and Leith set out to find a warehouse where neighbours wouldn’t be a worry.

The special-events office now lent a helping hand, but Leith’s only option proved to be a long-term lease on the Shaughnessy Street building. For the first time the Dunbar Haunted House will charge admission instead of simply collecting funds for charity, and so this year’s donations will be diminished by the amount needed to pay rent.

Sitting in an industrial district beneath the Oak Street Bridge, the warehouse can only be accessed by walking down a narrow alley between buildings. Flitt assures visitors that a couple of dozen of the 120 volunteers will devote their time to helping people park south of  Marine Drive, from Shaughnessy along Kent Avenue to the short spur of Oak Street below the bridge, and showing them the way to “Barbaric British Columbia.”

“I can’t reveal too much,” says Flitt of this year’s theme, “or else you’ll kill the surprise, but I can definitely say that you will be very amused and spooked at the same time.”

Dunbar Haunted House goes out of its way to be kid-friendly. On weekends, families can visit during the day and for a $5 fee, the wee ones can go through as many times as they like.

The volunteer spooks start their shift at 7 p.m., but even then the emphasis is on a good laugh.

“What we do is called lowimpact spooking,” Flitt says, “so we don’t terrorize people. It’s more fun than it is scary.”

Flitt warns that the coming week is the best time to visit if you don’t like crowds, because the week leading up to Halloween can see waiting times of up to an hour to get in.

For more information, go to dunbarhauntedhouse.com.


When: 7 p.m. to 10 p.m., Sunday through Thursday evenings; 7 p.m. to midnight, Fridays and

Saturdays; 11 a.m. to 7 p.m., Saturdays and Sundays, to Oct. 31

Where: 8934 Shaughnessy St., south of Marine Drive next to the Oak Street Bridge

Tickets: $5 unlimited access during the day; $10 ($5 for children 11-and-under) after 7 p.m.

Clarity needed on transition from the HST; Building industry has questions, but it could be folly for consumers to wait to buy new home

Greater Vancouver Home Builders Association, September 26, 2011

If you think British Columbians, in general, are fed up to the teeth with the HST debacle, many members of the residential construction industry are biting through their lips to keep from screaming.

I mean, enough already; when is this stomach-churning, roller-coaster ride going to stop?

First, the provincial government said it would be implementing the HST, when prior to the election it said it would not. Then, despite considerable angst from consumers, the HST was implemented. Things settled down for a while, then talk of a referendum fanned the embers. The referendum was held, the result announced, and we are again mired in uncertainty as transition back to GST/PST is underway.

A transition time frame of 18 months has been announced. During that period, British Columbians will likely still fix a leaky roof, get haircuts, purchase electronic gizmos and dine out, but will they sit on their wallets instead of buying a new home or starting a major home renovation?

No one knows what the transition rules will look like, not even, it seems, our elected officials. A long-serving Liberal MLA called me a couple of weeks after the referendum result was announced. He said he is fielding many calls from his builder constituents who express concern they will not be able to sell any homes during the next year or so, and did I have any details I could share with him. I told him I am just as much in the dark on this issue as everyone else.

Hopefully, provincial Finance Minister Kevin Falcon sees the light and is pressing the feds to quickly draft the transition rules. He has indicated he will work closely with the business community to provide input into those rules, a welcome promise.

It is apparent that very little spadework was done on the transition file prior to the referendum result, so it’s time to pick up the pace. The HST was rolled out in lightning speed, so why can’t it be rolled back just as expeditiously?

Home builders and renovators across the province are sounding the alarm. Before I get into their concerns, here are some points of clarification that might provide comfort to some homebuyers. Resale homes are not subject to HST, but buyers will pay HST on fees from realtors, lawyers, etc.

If you are considering a new home or condo priced under $525,000 there is some impact, but you will not be paying much more for your home under HST than you will under the GST/PST system. Check with your builder or realtor to determine how, if at all, your home purchase is impacted. Some builders are offering incentives.

By the way, it could be folly to wait to buy a new home priced above the $525,000 threshold in order to save the HST. During the next 18 months, it is possible that interest rates, municipal development charges, and land, labour and building material costs could rise, pushing up home prices and offsetting a big chunk of tax savings gained by a return to the GST/PST system. And homes in prime locations will undoubtedly be sold by the time you get around to making a decision.

Although there is no HST on resale homes, new-home construction creates thousands of jobs, and this is where uncertainty over the HST transition rules has a profound impact. I am hearing that some folks considering homes priced above $525,000 are indeed delaying their purchase decisions, not just here in the Vancouver region, but throughout B.C. Homeowners, too, are putting off major renovations until more clarity is provided on the HST transition rules.

Consumer resistance could have a calamitous impact on the economy. For example, in Metro Vancouver, the 16,300 housing starts and $4.4 billion in home renovation expected this year will create nearly 70,000 jobs, generating about $3.5 billion in wages. Even higher numbers are expected in 2012.

As I wrote in an another column recently, a firing-on-all-cylinders residential construction industry is essential to our region’s economic growth and durable prosperity. A member of your family, a neighbour or friend probably earns a living in an industry sector that has a direct or indirect link to residential construction. If the tools are idle, many livelihoods will be affected.

In response to a province-wide survey, the Canadian Home Builders’ Association of B.C. (CHBA-BC) received scores of emails and letters from residential contractors worried about their companies, their staff and the many sub-trades and suppliers they put to work on their projects. The correspondence has been sent to Premier Christy Clark, Housing Minister Rich Coleman, Falcon and other ministers.

Accompanying the correspondence was this message from CHBA-BC president Vicki Gerrits, a small-volume home builder from Summerland: “You will read first-hand testimonials from small-business owners like me who are contributors to the province’s economy. Their correspondence will demonstrate their anxiety. Be bold, we need immediate meaningful action.”

CHBA-BC is requesting two actions: One, remove the PST portion of the HST on new homes, including second homes. Two, introduce a two-per-cent tax rebate on all renovations completed by renovators registered for HST, and four per cent on “green” carbon-footprint-reducing renovations.

I would add one. Reduce the property transfer tax on new homes to a level that neutralizes the current impact of HST. The province doesn’t have to wait for the feds’ transition rules to do this.

The following are excerpts from correspondence from worried contractors around the province:

“I have a $50-million project going into pre-sales. Purchasers will not want to pay the HST. Should I delay the project and lay everyone off, or can Falcon announce the transition rules now?”
“The uncertainty of the HST has devastated new home sales. I have two grown daughters who are fed up. One has moved to Alberta, the other one is moving this month. If the HST doesn’t get dealt with soon, there will be huge repercussions in the workplace.”
“The province needs to bring in some form of rebate immediately and have it run until the PST takes effect, or there will be a severe slowdown in construction that could trigger a provincial recession.”
“I am a builder who deals with more than 150 trades and suppliers on a regular basis. They rely on me for their employment. Without houses being built, many workers will lose their jobs.”
“It has been a difficult couple of years for my company and my workers. The introduction of the HST has been a major factor, and now the rescinding of the HST has made things worse.”
“We have had to lay off 60 employees in the past year and a half, and we are looking at laying off considerably more. Our company does 80 per cent new homes and 20 per cent home renovation.”

And so it goes, more than 60 pages of comments, anxiety the common thread.

On Thursday, Premier Clark announced her job-creation initiative – Canada Starts Here: The BC Jobs Plan. The premier needs to be mindful of the possibility that while she announces employment opportunities at the front door, construction-related workers could be disappearing out the back door.

She might need a new plan.

Cruise-ship cabins inspire design for small houses

The Vancouver Sun, September 19, 2011

‘Mi-Pads’ incorporate elements such as built-in bunk beds and wooden lockers

When pondering how to construct smaller homes that young adults and renters could afford, homebuilder Tom Hignite turned his attention from the land to the sea. Cruise ships, to be exact.

He studied how the essentials of living were shoehorned into a small space in cruise-ship cabins, then figured out ways to incorporate some elements – such as built-in bunk beds and wooden lockers instead of closets – into a house containing a little more than 1,000 square feet. The result is what Hignite, owner of Miracle Homes, calls the “Mi-Pad” – a home with three bedrooms, 2.5 bathrooms and a fireplace for as little as $89,000.

“They’re contemporary in look,” Hignite said. “They are little bit more in size than a garage. But they’re extraordinarily compact, using cruiseship technology and cruise-ship design architecture to create cabins instead of bedrooms.

Some of the bedrooms are six feet by nine feet and they sleep two.”

While a far cry from the roomy McMansions that sprang up during the U.S. housing bub-ble of the last decade, Hignite’s houses pack lots of amenities in a small space. One model includes a 10-foot-by-12-foot attic play loft for children.

Master bedrooms are shaped to handle queen-size beds. High ceilings help to blunt the smallness of the homes, which, facing the road, are only 26.5 feet wide. Patios are out the back door.

Although construction of houses the size of the Mi-Pad was common during the 1950s in Milwaukee and many suburbs, houses got bigger in the years that followed.

Now, such huge homes have become harder to sell in a weak U.S. housing market and atmosphere of high unemployment and wide-scale foreclosures.

The final cost of a Mi-Pad varies depending on what’s included and where the lot is located.

One model can be developed to have five bedrooms, Hignite said.

“These are targeted at renters. There’s a one-car attached garage,” Hignite said.

“They are meant for people who have a no-car garage right now,” he quipped.

“There’s a large marketplace in rentals that could segue into this for the same cost as rent.”

Mike Ruzicka, president of the Greater Milwaukee Association of Realtors, said Hignite may be on to something.

“It sounds like he might fill a niche,” Ruzicka said.

Ruzicka said construction of such small homes presents a “back to the future” scenario because small homes were built en masse in the post-Second World War era.

They could be an alternative by offering an all-new product instead of a foreclosed property that may need repairs, he said.

Houses selling for less than $100,000 often are foreclosed properties that need a lot of work.

“We kind of looked at repo prices and decided to create a product line that would compete with that sort of repo price area of $90,000 to $150,000 – and get you a new home,” Hignite said.

Because of the Mi-Pad’s small size, he said, “they work well on urban lots” as well.

“There are little pockets around that allow it,” he said.

Hignite has been known among southeastern Wisconsin homebuilders for sometimes quirky innovations.

Previous high-end models have included a movie theatre and themed children’s bedrooms, for example.

Hignite made headlines six years ago when he hired almost a dozen laid-off animation artists from Walt Disney Co. to create Miracle Studios, which intended to make TV commercials and a feature film starring his company’s mascot, Miracle Mouse.

The studio at his Richfield, Wis., headquarters has shrunk to “one or two” artists, Hignite said, but there still are plans to produce the movie.

“Of course our main business is still homebuilding, and everybody has a passion beyond their main passion or job,” Hignite said.

The Mi-Pad houses on Gates Street in Mount Pleasant, Wisconsin – which include extra features and finished spaces beyond the base-price models – are the only two in existence so far, Hignite said.

He wants to see if they catch on before building any more on speculation.

“It’s a launch, and we’re looking to see whether the public will accept it, because there haven’t been 1,000square-foot houses built in many years,” he said.

‘Green is good’ the mantra for builders of city’s new office

The Vancouver Sun, September 26, 2011

Credit Suisse plans to construct 30-storey building to highest LEED standard

In the race to build multimillion-dollar commercial office buildings in downtown Vancouver, the prevailing mantra appears to be a new take on an old expression.

Green is good.

The latest manifestation of a sustainable office building is being proposed by global financial giant Credit Suisse, which is jumping in with a $200-million plan to build a structure that will vie to be among the world’s greenest.

Among other things, the building at the corner of Howe and Pender — to be completed by 2015 — is targeted to achieve LEED (Leadership in Energy and Environmental Design) Platinum and ‘Living Building’ certifications with cutting-edge features such as on-site waste water treatment and reuse, energy consumption at a rate about half that of similar towers, a high-efficiency heating and cooling system, storm water retention and reuse, and solar thermal panels.

And tenants will be able to open their windows on warm summer days.

“It will be a very distinctive building,” Selwyn Dodd, partner with design group Iredale Group Architecture, said in an interview. “This won’t be your cookie-cutter Vancouver office tower.”

Credit Suisse, through one of its real estate funds, has secured the 1929 Stock Exchange building, along with an adjacent property on Pender, and is proposing to build the 30-storey, 400,000-square-foot tower incorporating the heritage stock exchange building.

The investment firm is now unveiling plans for its tower, the latest in a growing number of office projects in downtown Vancouver that are aiming for the LEED rating system, a third-party certification and internationally accepted benchmark for the design, construction and operation of high-performance green buildings. Platinum is the highest rating.

The planned tower is Credit Suisse’s first B.C. investment and would be the tallest in the company’s real estate inventory of 260 buildings.

There is an open house today at the Terminal City Club, 837 West Hastings, and the group will apply for rezoning within two weeks.

Although constructing a LEED Platinum building will increase construction costs by 10 to 15 per cent, Herbert Meier, director of real estate asset management for Credit Suisse, said building green reduces operating costs and attracts clients seeking out sustainable offices.

“It’s not the highest building. It’s not on the waterfront. But it’s the best package.

“We really believe green buildings are the most sustainable investment.”

Franz Gehriger, president of minority investor Swissreal Investments Ltd., said his group will utilize local materials from local contractors as much as possible.

“There’s a light manufacturing company in Langley that makes advanced [energy-efficient] LED lights. We’re talking with them about making the whole building LED.”

Gehriger added: “We believe this is a great way for Credit Suisse’s real estate fund to expand into Vancouver, the greenest city in Canada.”

Others are also aiming for LEED Gold or Platinum standards.

Last month, the British Columbia Investment Management Corp launched its 24-storey, 745 Thurlow St. office tower, making it the second of three other anticipated major office projects in downtown Vancouver to jump onto a construction timeline.

That project — scheduled for completion in 2015 — follows Oxford Properties’ announcement that committed its pension-fund sponsor to build 1021 West Hastings, a 25-storey tower to be built by 2014.

Another building is the 22-storey, 500,000-square-foot office tower that is part of Telus Corp.’s $750-million redevelopment of the entire city block bounded by Robson, Georgia, Seymour and Richards streets, which the company and developer Westbank Projects aim to complete in 2015.

Blue Chips Climb 272 Points

Wall Street Journal, September 26, 2011

Stocks jumped and blue chips staged their biggest percentage gain in more than a month, as investors bet that efforts will be taken to stem Europe’s sovereign-debt crisis.

The Dow Jones Industrial Average climbed 272.38 points, or 2.5%, to 11043.86, clawing back more than one-third of last week’s losses. The measure leapt to an early triple-digit gain, gave back almost all of it midsession and then moved higher in the afternoon. The action follows the Dow’s biggest weekly point drop since October 2008, spurred by worries of a Greek default and turmoil in global markets.

The Standard & Poor’s 500-stock index gained 26.52 points, or 2.3%, to 1162.95. The Nasdaq Composite was the laggard, gaining 33.46 points, or 1.4%, to 2516.69, after spending much of the day in negative territory. Trading volume was slightly above the recent average, with 4.55 billion shares changing hands in New York Stock Exchange composite volume.

Stocks closed near session highs following reports that a “special purpose vehicle” to help stem Europe’s debt contagion was in advanced development. Those reports followed a European Central Bank official’s endorsement of a more aggressive bailout plan and another official’s remark that the ECB can’t rule out an interest-rate cut.

“The market was in the mood to have a bounce, [even though] it’s just talk and more talk, a lot of supportive talk,” said Tony Norris, co-manager of the Wells Fargo Advantage International Bond Fund in London. “Unless we see more action, it’s going to be a very short respite.”

The financial sector was the strongest in the S&P 500, rising 4.4% in a reflection of easing European debt worries. J.P. Morgan Chase was the strongest blue chip, rising $2.06, or 7%, to $31.65, followed by Bank of America, which gained 29 cents, or 4.6%, to 6.60.

Technology stocks were the session’s underperformers. Apple lost $1.13, or 0.3%, to $403.17, after Wall Street analysts speculated that the company is planning iPad production cuts. Also weighing on the technology sector, Freescale Semiconductor Holdings lowered its quarterly sales outlook, adding to recent warning signs from chip companies. The stock fell 12 cents, or 1%, to 12.12.

Boeing advanced 2.50, or 4.2%, to 62.01, after the aerospace and defense company delivered its first 787 Dreamliner to Japan’s All Nippon Airways on Sunday.

Does the recent volatility in the markets indicate the death of equities? Paul Vigna makes a stop on Mean Street to discuss.

Amid this week’s volatile market activity and over economic uncertainty, are we seeing a replay of the 1930s. MarketWatch columnist Mark Hulbert explains.

Berkshire Hathaway’s Class B shares gained 5.72, or 8.6%, to 72.09. The company’s board approved a plan to buy back its stock, an indication that Chairman Warren Buffett believes the shares are undervalued.

Clorox lost 2.96, or 4.3%, to 66.44, after billionaire investor Carl Icahn withdrew his 11 nominees to replace the household-product company’s board after determining his plan to sell the company would be opposed by shareholders.

Eastman Kodak slumped 64 cents, or 27%, to 1.74, after the imaging company late Friday said that it borrowed $160 million against its credit line, which raised fears of a cash shortage.

MELA Sciences surged 1.75, or 55%, to 4.93, after the company received an approvable letter from the Food and Drug Administration for its MelaFind device, used to diagnose melanoma.

Macy’s added 1.70, or 6.6%, to 27.32. The retailer said it plans to add 4% more seasonal workers for this holiday season, bucking forecasts for sluggish retail industry hiring.

Odyssey Marine Exploration gained 20 cents, or 7.5%, to 2.86. The deep-sea exploration firm said it confirmed the identity and location of the British shipwreck SS Gairsoppa, which was carrying seven million ounces of silver when it was torpedoed by a German U-boat in 1941. Odyssey will be able to keep 80% of the cargo.

In economic data, new-home sales fell for the fourth straight month in August. The Federal Reserve Bank of Chicago’s National Activity Index showed a weak reading for August.

B.C.’s home sales, property values to slow as job growth ebbs: BCREA

The Vancouver Sun, August 25, 2011

Slower job growth in British Columbia’s economy will mean slower increases in home sales and property values through to 2012, the B.C. Real Estate Association said Thursday.

And by the end of 2012, the association expects the high-flying prices in some of B.C.’s bigger markets to show small declines.

Home sales through the realtor-controlled Multiple Listing Service should hit 74,640 by the end of 2011, which is up four per cent from 2010, and then rise to 80,300 in 2012, association chief economist Cameron Muir said in his report.

However, those estimates are below B.C.’s long-term average for sales and the forecast for 2011 represents reduced expectations from Muir’s forecast from earlier this year that B.C. should see 78,200 sales this year.

“Following a decade where unit sales broke all records, consumer demand for the next few years will be relatively moderate,” Muir said in releasing the report.

A positive note, however, is that weaker global economic growth and uncertainty in world financial markets are signals that interest rates, including mortgage rates, will remain low and “help underpin housing demand.”

Across the province, Muir is forecasting that the average home price, which has been heavily influenced by strong sales in the more expensive pockets of Metro Vancouver, to hit $559,179 by the end of 2011.

However, by the end of 2012, Muir is forecasting that the average price will fall back 2.5 per cent to $545,964.

The 2012 price declines, however, are expected to show up primarily in the Lower Mainland Markets, which influence the overall provincial averages.

Muir expects Metro Vancouver’s average price to slip 3.5 per cent in 2012 to $742,000. However, that will be a decline off 2011, which Muir predicts will end with the average price having shot up 14 per cent to $769,000.

And Muir is forecasting that the Fraser Valley will see its average price in 2012 dip 1.4 per cent to $498,000. But that follows 2011, where he expects the average price will have gained 12 per cent from the previous year to hit $505,000.

HST Referendum: Voting with Spleens Instead of Brains

BC Business, August 26, 2011

The HST is dead. Long live the new tax regime, which will be exactly the same, only in two parts and much more expensive.

So, the HST goes down, knifed in one of the greatest examples of emotions ruling heads in B.C.’s long history of emotional politics.

As one (sorry, unnamed – he doesn’t want hate mail) economist said after the results, “This is the most ludicrous economic action I’ve ever seen.”

What an unholy alliance went into the defeat of the HST in the recent referendum. A mixture of me-first and the hell-with-the-rest-of-you thinking, hatred of the governments and political enemies, all willing to give up all principles of community and what could only be described as a “mad as hell and I’m not going to take it any more” form of road rage.

But then, I guess that’s what amounts to public discourse in the modern age. The “people” get their say, even if they don’t know what they’re saying.

This wasn’t a referendum on a tax – that was only the excuse. Anybody with an ounce of sense could tell it was the only fair way out for a government that has to raise money for the ever-increasing demand for services such as health care.

It was a referendum on anger and “class” (big business vs the little guy) and hatred of those supposed big shots who seemed to be ruling our lives.

The tax was doomed the minute Gordon Campbell, who said no HST in B.C. during an election, turned around afterwards and said, Oh darn, we just discovered we have to put in an HST. If there was one person in B.C. who believed that, I’d like to meet him or her.

But cynical politicking is nothing new in this country. We’ve seen it for years. It’s just that no one ever could do anything about it.

Now they could. Modern communications allows a version of discourse to reach into all aspects of society. Social media has told everyone they have a right to voice their opinion, no matter how knee-jerk, bilious, and vacuous it is.

Anyway, what’s done is done. HST is dead.

Not taxation, however. Now we return to a tax system that will cost every B.C. resident far more than the HST ever would have.

One good thing that might come out of this ridiculous excuse for a vote on an important issue: maybe when they bring back the PST, they’ll fix it so it actually works. It’ll be the HST, but split into two parts.

Of course, then everyone will hate that. But who are they going to vent their spleen on then?

B.C. residents have unrealistic hopes of shedding debt: poll

The Vancouver Sun, August 30, 2011

B.C. residents have high hopes of retiring debt-free, but for many, this reality show has an unhappy ending.

While most B.C. residents believe they’ll be debt-free by age 58, fewer than one-third of B.C. residents aged 45 to 64 don’t owe any money, according to a Harris-Decima poll conducted for the Canadian Imperial Bank of Commerce.

About one-quarter of B.C. residents report that they’ve abandoned hopes for a debt-free retirement. Fourteen per cent believe they will pay off all debts in their 70s and one in 10 says they will never be debt-free, the poll found. That compares with only four per cent of Alberta residents who believe they’ll carry debt into their 70s.

Part of the problem is that many Canadians who have a financial plan don’t factor in their debts, said Mike Stevenson, CIBC senior vice-president, Western Canada. For example, polling shows that about three in five Canadians meet with a financial planner to talk about financial goals and retirement strategy, but only one in five incorporates a debt repayment plan into that strategy.

“Many people lack a comprehensive and cohesive plan or strategy,” he said.

On the bright side, 37 per cent of all B.C. residents are debt-free, compared to 21 per cent nationally, the poll found.

The trend of more British Columbians carrying debt into retirement is one that Scott Hannah, president and CEO of B.C. Credit Counselling, has noticed.

People have a higher tolerance for debt because interest rates are very low, Hannah said. Compounding the problem, many are unwilling to make the hard choices required to dig themselves out of debt.

“People have to make some sacrifices, and the more severe your financial situation is, the bigger the sacrifice you’re going to have to make,” Hannah said, using the example of a cash-strapped family going from two cars to one.

“But none of us wants to give up what we have.”

The poll showed that people tended to predict they would have all their debt paid off 10 to 15 years from now. For example, those 18 to 24 picked 32 as the average age for being debt-free, those 25 to 34 said 44, people 35 to 44 said 54, 45- to 55-year-olds said 60, and 55- to 64-year-olds said 65.

Rob Abboud, an Ottawa-based financial planner with Raymond James, said many people underestimate the effect of 30-year amortizations, consumer debt, their children’s education and various things that can come up, such as buying a new car.

Hannah advocates setting up a financial plan that involves debt repayment and retirement savings coming out of the account first.

“What you’re probably going to find is that the amount of funds that a person has available for discretionary spending is somewhat limited,” he said. “But at least you’re taking care of your financial goals and those things that are most important to you first, as opposed to doing it after the fact.”

Many homeowners who are mortgage-shopping still ask how much they can get instead of how much they can comfortably afford, he pointed out. “For a lot of people who put themselves into a tight spot, it makes it difficult to get ahead,” he said.

It’s not only expensive real estate that has British Columbians cash-strapped.

One in five B.C. residents who responded to an ING Direct survey released Monday said their biggest monthly expense — besides mortgage or rent payments — was loans and credit card payments, compared to 16 per cent nationally. Half of B.C. respondents reported that they could not afford to save $25 more per week.

Are you getting the most out of your RESP?

The Globe & Mail, August 30, 2011

Convinced that a registered education savings plan was the best way to save for her child’s future, Lisa Nabieszko opened one shortly after her daughter was born in 1999.

Twelve years later, Ms. Nabieszko says she has since had problems with the account, which has lost money in market downturns.
More related to this story

“I really believe in RESPs,” says the Toronto freelance consultant. “My big challenge was finding a place to move my RESP to … where my principal would be protected.”

RESPs, investment accounts to save for your kids’ college or university tuition, can be topped up by grants from the government and grow tax-free. They have been around in their current form since 1998.

Mike Holman, the author of The RESP Book and writer of the Money Smarts blog, says that since more kids with bigger accounts have started attending post-secondary education, withdrawing from RESPs has emerged as a major issue for parents. “When accounts were small, there was not enough money to cause problems. But people with larger accounts might run into tax issues,” he says.

Despite the 13-year run of RESPs, there is still plenty of confusion around how they work. Independent financial planner Rona Birenbaum says RESPs are popular with her clients, who don’t want their kids to graduate with the burden of debt.

Their appeal lies with not with their tax-sheltering aspect, but with the government grant. “When people understand that that they get a 20 per cent gift from the government,” she says, “it becomes a no-brainer.”

But many RESP investors think the money must be used solely for tuition, to pay for university or college, and that’s a huge source of confusion, says Ms. Birenbaum. In fact, as long as people can provide evidence that their child is enrolled in an eligible institution, the money can be used for any aspect of their support, including lodgings, books, technology needs or travel.

Parents, she adds, do not need to hang on to receipts: “The Canada Revenue Agency is not auditing every single expenditure they will make with money from their REPS. They acknowledge that parents will be responsible for using this money for a wide range of needs.”

Some investors don’t know that the last year to make an RESP contribution is when their child is 17, while others are under the mistaken impression that a contribution to an RESP will generate a tax refund for them, Ms. Birenbaum says. In reality, the government money is never in your hands – it goes straight into the RESP.

Other parents, like Ms. Nabieszko, struggle to figure out how to invest their RESP funds and where they can and cannot open an RESP account. “I would go to websites for different banks, try to find out who offers them and who did not. That became an exercise in frustration.”

Mr. Holman says most financial institutions offer RESP accounts, but others, including ING and PC Financial, do not.

His advice for parents is to make sure the RESP is invested in safe investments such as GICs, high-interest savings accounts, short-term bond funds and money-market mutual funds.

“When your child is young, it is okay to take on some risk and invest in stocks and mutual funds,” Holman says. “When the child is about to attend school, there is not enough time to make up any investment losses and the money should be invested in safe securities.”

When it comes to withdrawing, some of the money is taxable and some is not, Mr. Holman says, so parents should do their own research and consult a qualified adviser.

Other useful things to know are that withdrawals can be made before your child starts classes and that as long as he or she is still eligible for grants, you can continue to make contributions and receive grants in the RESP account, even while doing withdrawals.

Top four RESP misconceptions

1. RESP grants are only available for families with very low incomes
Wrong. The income thresholds for these grants are surprisingly high. If your family’s net income is $83,088 or lower, you might be eligible for additional RESP grants.

2. Only parents can open an RESP account for their child
In fact, RESP accounts can be opened by anyone, even if they are not related to the child. Permission from the parent is needed by the parent, though, for someone else to open an account.

3. RESPs are just for full-time college or university programs
Actually, RESPs can be used for a wide variety of trade or business schools. Part-time education is also eligible. Click here for a list of eligible institutions.

4. Contribution room is determined by birthday
Contribution room is actually determined by calendar year. If a child is born on the last day of 2010, they will be eligible for $500 of RESP grants for 2010. Once 2011 rolls around, they are eligible for another $500 of grants for 2011. The last day a child is eligible for an RESP grant is December 31st in the year during which they turn 17 years of age.

5. Siblings can only share RESP money in a family RESP
Not true. Siblings can share RESP money between individual accounts if the account subscriber is the same on both accounts.

Canadian banks shifting rate hike views into 2012

Financial Post, August 12, 2011

Canadian banks, which only last month expected the Bank of Canada to resume tightening this fall, are pushing rate hike forecasts into next year following some of the worst financial market turmoil since 2008.

RBC Capital Markets and BMO Capital Markets, both Canadian primary dealers, confirmed on Friday that they now see interest rates on hold until the second quarter next year.

They join TD Securities and Scotia Capital, who were early movers on seeing rate hikes in 2012 based on the deteriorating global economic and fiscal conditions. Other forecasters have also indicated their economic outlooks are under review.

“We just think that given the fact that inflation has receded, and the disappointing U.S. recovery and the fact that this financial market turmoil will likely hit growth temporarily, we just don’t see the bank moving this year,” said Doug Porter, deputy chief economist at BMO Capital Markets.

Just three weeks ago, traders were pricing in higher odds of a rate increase this year, following unexpectedly hawkish language from the Bank of Canada.

A July 20 survey of primary dealers, institutions that deal directly with the central bank as it carries out monetary policy, showed most saw a rate hike in September or October.

The swings in the market, mixed economic data, and the twin debt crises in Europe and the United States were all factors behind changing forecasts.

Some forecasters were already leaning towards delayed rate hikes, but cemented their views after the U.S. Federal Reserve pledged on Tuesday to keep interest rates low for at least another two years.

Traders of Canadian overnight index swaps, which are based on expectations for the Bank of Canada’s main policy rate, have been more aggressive in their view of where the economy might be headed.

The swaps market has largely priced in odds of a 25 basis point rate cut later this year on mounting fears of a global slowdown. However, the odds have been pared back in recent sessions as stock markets rebounded.


While more economists now expect Canadian interest rates to stay lower for longer, few expect an outright cut. They warn this would send all the wrong signals for an economy that is growing, albeit slowly, and could hurt the central bank’s credibility.

“I don’t think the market pricing is wildly unreasonable. There is a far outside risk that the bank could cut in a real emergency whereas it’s very tough to see them raising rates,” said Porter, who expects interest rates to rise three times next year, once per quarter starting in the second.

RBC Capital Markets said late on Thursday in a report that based on current conditions, the priced-in rate cuts appear “wholly unjustified.”

“While the underlying domestic growth picture is little changed since the BoC initiated (and strengthened) its tightening bias — the prospective growth path has changed dramatically,” RBC said in the report.

“The bank also laid out a pretty clear criteria for acting upon this bias — a containment of the sovereign debt crisis, continued strong business investment and supportive net exports — these pre-conditions are far from being met at present and are unlikely to be in place before mid-2012.”

Gasoline expert: Expect to pay less at the pump this fall

Vancouver Sun, August 15, 2011

20% dip in oil not reflected at the pumps

With stock portfolios in shock given the markets’ recent gyrations, consumers have at least one thing to look forward to: The slump in oil prices happening in neartandem with the stock market blowout means motorists should see pump prices drop, if not immediately.

The benchmark price for crude oil is now about $86 US a barrel in New York – rebounding from an almost 12-month low below $80 a barrel last week – after reaching $110 US in early May. That marks a decline of about 20 per cent, raising the question of why gas prices haven’t followed.

Looking at different gauges of gasoline prices in Canada, the average price at the pump has come down less than 10 per cent over that same period.

Kent Marketing Services’ – formerly known as MJ Ervin and Associates – weekly Canadian gas price survey showed the average price for regular fuel this week nationally was a little more than $1.25 a litre and $1.15 in Calgary.

Kent’s records show the average pump price hasn’t been less than $1.20 since February and was as much as $1.35 in May.

During the financial crisis in 2008, while many lost money on the stock market or even their jobs, consumers got a big break on pump prices.

Crude oil fell from more than $145 US a barrel that summer to less than $45 US by the end of the year. The average price for gasoline went from more than $1.40 a litre to just more than 70 cents by the end of the year.

Jason Parent, senior consultant with Kent Marketing Services, said people often mistakenly think gasoline prices are supposed to move in direct correlation to the cost of crude oil, which is one of many factors that determines the price of gasoline.

He said refiners tend to get bigger profit margins on the finished gasoline product during the summer because there is more demand for it.

“In general, the refining margins over the last couple of months have been high,” Parent said. “Normally, this time of year, in the spring or the summer months, refining margins – or crack spreads, as people like to call them – come up and retail prices come up accordingly. It’s just a supply-and-demand thing.

“More people are driving in the spring and summer months, so demand tends to increase and that puts pressure on supply.” Parent said because quoted oil prices are usually for shipments due the next month, drivers should not expect an immediate effect on gasoline prices.

There is good news, however, with Parent saying the combination of lower demand for fuel and slumping prices on oil due for delivery next month likely bringing about lower pump prices in the fall. He declined to speculate how far gas prices would fall, but said it would likely be too optimistic to expect the average Canadian rate to fall to $1 a litre or less.

Tom Kloza of the U.S.-based Oil Price Information Service said gasoline prices will probably hit bottom by November and then climb.

“The rest of the world’s appetite for oil is growing,” Kloza said. “Notwithstanding what we are seeing now, the chances for a very robust winter-spring price increase are very high.”

Internet Killed the Video Store

BCBusiness, August 1, 2011

Online retail and downloading are slowly killing our traditional movie and music stores. And as with friends, virtual video stores just aren’t the same as the real thing.

Particular time periods can often be identified by their trappings and technology. See a photograph with a zeppelin and you know it was taken between the two world wars. A movie with a rotary-dial phone was likely set pre-1990. A Pacer or a Gremlin signifies the malaise era. The Berlin Wall marks the period from 1961-1989. A mullet should suggest you are in costume for an ’80s night, although unfortunately this is not always the case.

We are nearing the point where video stores will become the new zeppelins. The movie rental era that began in the 1980s with a proliferation of new storefront video shops, some of them surely located in former AMC dealerships, may now be coming to a close. The possible Berlin Wall moment for retail movie rental shops arrived in May when the Canadian arm of Blockbuster Video Inc., that monolith, went into receivership.

Not many locals got weepy over that development. Blockbuster stores were the 7-Elevens of the rental world – character-free franchise outlets that added nothing to a neighbourhood save convenience (and sometimes offered edited movies to boot). But tears were surely shed for other announcements, notably the pending demise of Videomatica, Vancouver’s primary repository of hard-to-find film and television. At press time business partners Graham Peat and Brian Bosworth estimated that their West Fourth Ave. movie rental store would soldier on for a few more months until the steady decline in business resulted in its final closing. Not long before that, Happy Bats, a distinctive video-rental shop on Main, unexpectedly shut its doors. Downloading, it seems, has killed the video store.

The Internet meteor strike has been blamed for more than one retail extinction. Online competition certainly explains the relative dearth of porn theatres in B.C. these days – when it comes to that product line, the Internet is what you might call handy. But before you raise a toast to the web for an inadvertent bit of urban renewal, consider the victims that followed. Just as Videomatica was announcing its pending demise, Ardea Books and Art shut its doors just up the street, the latest Vancouver independent bookseller to drop out of that ever-shrinking retail category. Music shops are not yet completely gone, but if you scan the business page archives for years back, you won’t find any start-ups in that particular line either.

Netflix, iTunes, Amazon and SmuttyJoe’sStripperama.com may never have had urban redevelopment in mind. But the web, the invisible landscape that exists everywhere and nowhere, has reshaped our neighbourhoods. From A&B Sound to Duthie Books to Videomatica, online competition has at least hastened the downfall of many a Vancouver business landmark.

But those tears I mentioned are a very localized precipitation. The rise of Netflix et al. has been a boon for smaller communities. Lonely movie buffs in Castlegar and Prince Rupert couldn’t care less about the fate of Videomatica. They just know that given an Internet connection, they have pretty much the same access to movies and books as anybody in Kitsilano. The demise of bricks-and-mortar shops has been a triumph for retail democracy. Living in small towns simply doesn’t come with the same cultural penalties in the 21st century.

Still, I will shed tears for Videomatica, Castlegar be damned. Its demise will leave a gap and it doesn’t seem to me that the gap has been filled by online sources quite yet. Plus, I still resent the constant technological demands of the new online retailing realities. Those who don’t constantly upgrade equipment suffer for it.

And I had friends at Ardea Books and Videomatica. Not Facebook friends, either. Kits won’t be the same without them.

The Merits of Word-of-Mouth Marketing

BCBusiness, August 1, 2011

Some 10 years ago, word of mouth emerged as a form of guerrilla marketing to help cash-strapped small businesses get noticed in the marketplace. Word-of-mouth marketing aims to generate buzz about a business, with the hope that it will eventually reach those who actually need whatever the business is selling. One Vancouver company has raised word-of-mouth marketing to new levels as it has expanded over the past decade. And it’s doing it in an industry that hasn’t changed substantially in 100 years.

The Problem
Nurse Next Door Professional Homecare began as a home-care business that wanted to shake up an industry that has operated in the same way for more than a century: caregivers provide nursing services in the homes of clients instead of in hospitals. But how would Nurse Next Door, which uses franchisees to deliver its services, let potential customers know it was disrupting this traditional industry?

The Solution
Brand Defense: John DeHart chooses blogging over litigation after a perceived slight

Co-founders Ken Sim and John DeHart decided to avoid traditional marketing altogether, opting instead for a guerrilla approach. Following a technique postulated by the writer Seth Godin, they relied almost exclusively on word-of-mouth marketing to build their business.

Sim and DeHart outfitted their six initial caregivers with pink cars and encouraged them to park them in their driveways and at strategic locations around the city. The cars were instantly recognizable and created curiosity in passersby, who mentioned them to friends who needed such a service. The pink cars have now become a staple marketing method for the company.

Believing that a recommendation from a friend, neighbour or authority is the ultimate form of marketing, Sim and DeHart also worked diligently to build relationships with doctors and hospital workers. Their only conventional marketing material was a brochure.

Nurse Next Door didn’t advertise, didn’t go to trade shows and didn’t do any of the other kinds of marketing done by other home-care providers or franchise businesses. Today, the company has 43 franchises in Canada and one new franchise in the U.S., where it hopes to expand further.

Even today, the company has no traditional marketing materials. However, it does recognize that new technology such as social media can greatly amplify its word-of-mouth technique. Claiming to be the “loudest” and “boldest” operation in the industry, it uses Twitter as a brand builder.

This recognition of the power of social media stood the company in good stead earlier this year when a more traditional competitor slagged it on a website. Nurse Next Door linked to the website, and answered with a description of its model. Then it spread the word on the Internet, and asked everyone to pass it on.

The campaign earned Nurse Next Door publicity in a Wall Street Journal blog and Inc. magazine. This coverage in turn became fodder for more word-of-mouth marketing.

• Be choosy. Marketing today, especially for smaller businesses, is about talking with not just anyone, but with those who appreciate your approach and style.

• Think in real time. Keep an eye on events, and when you find one that might fit your philosophy and style, act fast. Do what’s needed to get people talking about you.

• Replace money with creativity. In word-of-mouth marketing, talk about you flows from the bottom to the top and covers all points in between. Using it is much more cost-effective than trying to sell to people directly from the top down.

Housing bubble fears over-inflated

Vancouver Sun, July 27, 2011

Savvy shoppers can still do relatively well in Vancouver by searching for the right unit in the right location.

Vancouver’s existing housing market seems to defy economic logic. The Conference Board’s Metro Resale Index shows that Vancouver remains a balanced market. Since neither buyers nor sellers should have bargaining advantage under these conditions, prices should grow near their trend rate.

But the average resale price was up more than 20 per cent from a year earlier in both May and June, the latest in a six-month string of double-digit price hikes, and well above the six-percent long-term trend of price growth.

Sales have recovered from a dip in 2010, but are easing gently. This has steadily eroded the sales-to-listings ratio. With few signs that the market is going to cool significantly, there is chatter that Vancouver’s housing market is a bubble waiting to pop.

Yet, the situation facing homebuyers seems somewhat less dire than at first glance. Vancouver’s average resale price has been skewed upward by trading of expensive units in tony neighbourhoods and by a modest shift toward single-detached homes that carry higher price tags. Those seeking shelter, both physically and from high prices, can still find relatively affordable units and decent bargaining conditions if they are careful, knowledgeable, flexible and ready to shop around.

Vancouver’s housing market certainly is top-heavy. The clearest signal is a widening difference between Vancouver’s average price, which exceeds $800,000, and its median price (the price of the middle unit when houses are ranked by price), which was below $600,000 during the first quarter of 2011 (the latest data available).

Why the significant gap between the average and median price? Segments – and regions – of Vancouver’s housing market are boosting the average price. Single-detached units, which are higher priced, are taking a bigger bite of the market. Singles have a relatively high sales-to-active listings ratio and strong price increases. The expensive West Vancouver district is also gaining market share – its first quarter sales-to-active listings ratio was at a four-year high, and prices are rising robustly.

Fortunately for those on tighter budgets, market conditions in all price ranges below $500,000, which includes many apartment condominiums and row units, have shifted in favour of purchasers. Resale markets for both town houses and apartments were either in or near a buyers’ state (where a large supply of listings gives buyers more choice and bargaining power) during the first quarter, with correspondingly modest price growth.

As well, the market is softer in more affordable areas like Maple Ridge, Port Moody and Coquitlam, which have lost some market share over the past year. Median price growth is relatively subdued here – Coquitlam’s median price fell both last autumn and over the winter.

In light of these facts, the prevailing wisdom that Vancouver has a housing bubble should perhaps be reconsidered. Certainly normal metrics, like the ratio of average price to income, are extraordinarily high and could well be in danger territory. But, existence of more affordable geographic pockets in the Lower Mainland where buyers’ conditions prevail, and softness among apartment and townhouse dwellings, suggest that some markets are much less inflated.

In sum, price growth due to a changing composition of sales (and rising prices in individual neighbourhoods) does not necessarily produce a housing bubble. Savvy shoppers can still do relatively well in Vancouver by searching for the right unit in the right location, which after all, is the whole mantra of real estate.

Robin Wiebe is a senior economist with the Conference Board of Canada.