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Down Payment Size & a Housing Bear Market

July 03, 2011, Canadian Mortgage Trends

Housing-Correction“The housing market will eventually correct.”

That’s a quote from economist Ben Tal in this CIBC report from last week.

There’s nothing earth shattering about that because corrections are to be expected. The more interesting question is: how big will the next selloff be?

Tal’s conclusion was that the next downturn “is likely to be gradual.”

Values are “overshooting” fundamentals but that doesn’t presage a crash, says Tal. He says a crash requires one of two things:

A “significant and quick rise in interest rates…akin to the one that led to the 1991 recession and housing market correction,” and/or
A “high-risk mortgage market that is highly sensitive to any changes in economic realities, including hikes in interest rates.”

#1 is unlikely because, among other things, the Bank of Canada keeps a tight leash on inflation (which is the biggest catalyst for rising rates). Moreover, economic growth is widely projected to remain near or below the long-term average.

#2 has never been a serious threat in Canada and vigilant regulators are dead-set on ensuring it never will be.

From a numbers standpoint, Tal identifies “risky” borrowers as those individuals with total debt service ratios over 40% and equity under 20%. Those people comprise 3.2% of total mortgages, a number he says would grow to 4.5% if rates soared 300 basis points.

Yet, even in this high-debt/low-equity group, defaults have been “well below 1%,” Tal adds (which is a positive reflection of Canadian lending standards). By comparison, 8.1% of U.S. mortgages are 90 days delinquent or in foreclosure.

“Thus, short of a huge macro shock,” says Tal, “there does not appear to be the risk of large scale forced selling that would typically be the trigger for a precipitous plunge in the national average house price.”

CIBC’s report aside, most analysts seem to be projecting a minimum 5-15% price drop in the next housing downturn. Consider that if you’re putting only 5-10% down on a home purchase. Here’s why:

After five years, a household putting down only 5% on a $300,000 house (with a thirty-year mortgage at 3.75%) would be left with a $264,166 mortgage balance.
If prices dropped 10% and they paid 5% in Realtor commissions to sell (commissions vary by province), they’d owe over $9,000 more than their proceeds from selling—assuming $1,500 for legal and discharge costs.

But who cares if you don’t sell, right?

Well, even if you’re planning to buy with a long-term time horizon, life does throw us curve balls (job relocation, unemployment, a growing family, disability, divorce, etc.). When you have to sell, you need equity as a buffer and falling prices can quickly eat that up.

Notwithstanding a “gradual” home price correction, it therefore makes little sense to rush into buying if your financial outlook isn’t rock solid. For tens of thousands of Canadians who haven’t been able to sock away a 3-6 month emergency fund and a decent-sized down payment, renting is economically superior to buying…..crash or no crash.

Who wants to live forever? Scientist sees aging cured

July 4, 2011, Vancouver Sun

If Aubrey de Grey’s predictions are right, the first person who will live to see their 150th birthday has already been born. And the first person to live for 1,000 years could be less than 20 years younger.

A biomedical gerontologist and chief scientist of a foundation dedicated to longevity research, de Grey reckons that within his own lifetime doctors could have all the tools they need to “cure” aging — banishing diseases that come with it and extending life indefinitely.

“I’d say we have a 50/50 chance of bringing aging under what I’d call a decisive level of medical control within the next 25 years or so,” de Grey said in an interview before delivering a lecture at Britain’s Royal Institution academy of science.

“And what I mean by decisive is the same sort of medical control that we have over most infectious diseases today.”

De Grey sees a time when people will go to their doctors for regular “maintenance,” which by then will include gene therapies, stem cell therapies, immune stimulation and a range of other advanced medical techniques to keep them in good shape.

De Grey lives near Cambridge University where he won his doctorate in 2000 and is chief scientific officer of the non-profit California-based SENS (Strategies for Engineered Negligible Senescence) Foundation, which he co-founded in 2009.

He describes aging as the lifelong accumulation of various types of molecular and cellular damage throughout the body.

“The idea is to engage in what you might call preventative geriatrics, where you go in to periodically repair that molecular and cellular damage before it gets to the level of abundance that is pathogenic,” he explained.

CHALLENGE

Exactly how far and how fast life expectancy will increase in the future is a subject of some debate, but the trend is clear. An average of three months is being added to life expectancy every year at the moment and experts estimate there could be a million centenarians across the world by 2030.

To date, the world’s longest-living person on record lived to 122 and in Japan alone there were more than 44,000 centenarians in 2010.

Some researchers say, however, that the trend toward longer lifespan may falter due to an epidemic of obesity now spilling over from rich nations into the developing world.

De Grey’s ideas may seem far-fetched, but $20,000 offered in 2005 by the Massachusetts Institute of Technology (MIT) Technology Review journal for any molecular biologist who showed that de Grey’s SENS theory was “so wrong that it was unworthy of learned debate” was never won.

The judges on that panel were prompted into action by an angry put-down of de Grey from a group of nine leading scientists who dismissed his work as “pseudo science.”

They concluded that this label was not fair, arguing instead that SENS “exists in a middle ground of yet-to-be-tested ideas that some people may find intriguing but which others are free to doubt.”

CELL THERAPY

For some, the prospect of living for hundreds of years is not particularly attractive, either, as it conjures up an image of generations of sick, weak old people and societies increasingly less able to cope.

But de Grey says that’s not what he’s working for. Keeping the killer diseases of old age at bay is the primary focus.

“This is absolutely not a matter of keeping people alive in a bad state of health,” he told Reuters. “This is about preventing people from getting sick as a result of old age. The particular therapies that we are working on will only deliver long life as a side effect of delivering better health.”

De Grey divides the damage caused by aging into seven main categories for which repair techniques need to be developed if his prediction for continual maintenance is to come true.

He notes that while for some categories, the science is still in its earliest stages, there are others where it’s already almost there.

“Stem cell therapy is a big part of this. It’s designed to reverse one type of damage, namely the loss of cells when cells die and are not automatically replaced, and it’s already in clinical trials (in humans),” he said.

Stem cell therapies are currently being trialed in people with spinal cord injuries, and de Grey and others say they may one day be used to find ways to repair disease-damaged brains and hearts.

NO AGE LIMIT

Cardiovascular diseases are the world’s biggest age-related killers and de Grey says there is a long way to go on these though researchers have figured out the path to follow.

Heart diseases that cause heart failure, heart attacks and strokes are brought about by the accumulation of certain types of what de Grey calls “molecular garbage” — byproducts of the body’s metabolic processes — which our bodies are not able to break down or excrete.

“The garbage accumulates inside the cell, and eventually it gets in the way of the cell’s workings,” he said.

De Grey is working with colleagues in the United States to identify enzymes in other species that can break down the garbage and clean out the cells — and the aim then is to devise genetic therapies to give this capability to humans.

“If we could do that in the case of certain modified forms of cholesterol which accumulate in cells of the artery wall, then we simply would not get cardiovascular disease,” he said.

De Grey is reluctant to make firm predictions about how long people will be able to live in future, but he does say that with each major advance in longevity, scientists will buy more time to make yet more scientific progress.

In his view, this means that the first person who will live to 1,000 is likely to be born less than 20 years after the first person to reach 150.

“I call it longevity escape velocity — where we have a sufficiently comprehensive panel of therapies to enable us to push back the ill health of old age faster than time is passing. And that way, we buy ourselves enough time to develop more therapies further as time goes on,” he said.

“What we can actually predict in terms of how long people will live is absolutely nothing, because it will be determined by the risk of death from other causes like accidents,” he said.

“But there really shouldn’t be any limit imposed by how long ago you were born. The whole point of maintenance is that it works indefinite

Help customers find your website

The Vancouver Sun,  June 7, 2011

Ten very practical tips on improving your website, from Small Business BC:

1. Make sure every web page has a unique page title with keywords customers will use when searching for you. Try Google’s Keyword tool if you need ideas.

2. Make sure your About Us page title has your company name.

3. Include your company’s full business name and address on every page in the footer of the website. This will increase your chances on search engines and Google Maps.

4. Install Google Analytics and use it. How many people from your local area visited this month?

5. If you want to be found locally for a specific service, put your location in the page title of the very front page of your website. For example rather than “Acme Plumbers Inc” try “Vancouver Plumber: Acme Plumbers Inc.”

6. Start a company blog. Write about company news, industry trends, case studies and even local non-competing companies — they might return the favour.

7. Include your company phone number at the top right of every page. This instills confidence and makes you easy to find.

8. Ask your five best customers to write a testimonial for your site.

9. If you sell products online, write your own product reviews instead of cutting and pasting a manufacturer description.

10. Use videos to review products and explain your services.

Small Business BC is renovating and moving their education centre into their main floor office in Vancouver. As a result, seminars are on hold for the summer. In the meantime, check their site for more small business management tips.

The Relevance (or Irrelevance) of Mortgage Rate Expectations

Canadian Mortgage Trends, June 10, 2011

Variable-or-fixed-mortgage 61% of Canadians expect higher interest rates one year from now. 24% believe rates will stay the same.

These stats are from a recent 1,000-person CIBC-Harris/Decima survey.

Respondents were also asked: If you had to choose between a fixed or variable-rate mortgage today, which would you select? Their answers:

39% would choose fixed
32% would choose variable
25% were undecided

Mixed opinion/confusion about rate selection is pretty typical. Moreover, peoples’ opinions will change as rates change. If we were in the midst of rate hikes and you polled these same respondents, they’d lean more towards fixed rates (if history is a guide).

But rate expectations are just one criterion in mortgage planning—and a dubious criterion at that (because the forecasts upon which they’re based can change so quickly and drastically).

CIBC SVP, Colette Delaney, says mortgage decisions “should be based on how your mortgage fits with your long term financial goals, not on short term rate fluctuations.” And she’s right.

Falling-rates: Rates have dropped like an anvil. Yet, that has no bearing on rates 12 months from now. Similarly, rates 12 months from now have no bearing on rates 12 months after that.

A mortgage plan is better made by weighing the common mortgage suitability criteria. That means evaluating your 5-, 10- and 20-year financial plan, equity, job stability, projected income growth, savings, liquidity, and risk sensitivity. Generally, the more you can afford to be wrong on rates, the more you can lean towards a variable mortgage or shorter term.

Historical research and rate simulations can also help when choosing a term. For example, as most mortgage professionals know:

– The most prominent mortgage research has shown that 77% of the time (historically speaking) a deeply discounted variable costs less than a 5-year fixed.
– Economists believe a “normal” (policy neutral) Bank of Canada overnight target rate is in the 3.00% to 3.50% range (we’re at 1.00% today)
– Prime rate has risen just over 3% on average in past rate cycles (See “Variable-rate payments Over Time.” This includes the economic cycles since the modern era of monetary policy [i.e. inflation targeting] began in 1991. Prime rate has already risen 0.75 percentage points from the lows of our current cycle.)
– Going forward (apart from occasional and relatively brief rate spikes), analysts largely expect low growth, low inflation, and overleveraged consumers to keep interest rates below their long-term average.

Mortgage planners can use this kind of information to create amortization simulations. That analysis is then used to illustrate the hypothetical borrowing costs of different rates and terms.

Mortgage-Amortization-SimulationWe do simulations like this regularly and clients love them. What these models do best is quantify the potential cost differences between terms. That helps people better understand the price of certainty. (Fixed rates and longer terms provide “certainty” but come with pricier rates up-front.)

It’s vital to remember that simulations rely on assumptions. For example, not only do you have to assume rates will go up, but you have to assume when and how high. Those inputs will invariably be wrong to some degree, and the margin of error is often significant enough to make simulation recommendations invalid. As a result, rate models are always secondary criteria to the client’s financial suitability considerations and should never be relied on exclusively.

At the moment, our rate models (based on the Big 6 banks’ rate projections, historical mortgage spreads and the best rates for each term) suggest the most value lies in a 2.99% three-year fixed — available through select brokers. After that, prime – 0.90% variables and 3.59% five-year fixed terms are neck and neck in terms of lowest hypothetical borrowing cost over five years.

As an aside, people on the fence needn’t give themselves an ulcer when deciding between fixed and variable rates. Hybrid mortgages are a great solution for providing rate diversification. That’s because you can allocate any amount of your mortgage to the fixed or variable portions. For example, you could choose 67% variable and 33% fixed if you wanted to.

If you do get a hybrid, just be sure to choose equal terms (e.g. don’t get a 5-year variable with a 2-year fixed). Otherwise, the lender might stick you with a subpar rate on renewal of the shorter term.

More survey findings: Among younger home buyers (25-34 year olds), just 27% would choose a variable-rate mortgage today. That jumps to 42% in the 45-54 age category.

Vancouver’s average rent, at $1,181, most expensive in Canada: CMHC

Vancouver Sun, June 10, 2011

Canadian apartment rents rise as demand outstrips supply.

Just how expensive are the rental housing units in Metro Vancouver? Up to close to $10,000 a month in some cases, it appears.

Find out what the average monthly rents are in Canada’s major cities according to Canada Mortgage and Housing Corp.’s April 2011 Rental Market Survey.

Demand is outstripping supply in the country’s apartment rental market, pushing the national vacancy rate lower and making it more difficult for renters to find accommodations, Canada Mortgage and Housing Corporation reported Thursday.

The vacancy rate fell to 2.5% in April from 2.9% a year earlier, the national housing agency said.

“Immigration continues to be a factor in supporting rental housing demand. Recent immigrants tend to rent first before becoming homeowners,” said Bob Dugan, CMHC’s chief economist.

“In addition, condominium completions moved lower in the past months, while rental apartment unit completions remained relatively stable. As a result, the overall demand for rental apartment units increased faster than supply for this type of housing. Accordingly, this pushed Canada’s vacancy rate downward.”

The average monthly rent in new and existing structures for a two-bedroom apartment edged up to $864 in April from $848 in April 2010.

The highest average rents were found in Vancouver, at $1,181; Toronto, at $1,124; Ottawa-Gatineau, at $1,056 for the Ontario portion; Calgary, at $1,040; Edmonton, at $1,029; and Victoria, at $1,024.

The lowest monthly rents were found in the Quebec centres of Saguenay, at $542; Trois-Rivieres, at $546; and Sherbrooke, at $577.

The major urban centres with the lowest vacancy rates were Winnipeg and Regina, at 0.7%; Quebec City, at one per cent; Toronto, at 1.6%; and Kingston, Ont., at 1.7%.

Those with the highest vacancy rates were Windsor, Ont., at 9.4%; Kelowna and Abbotsford in B.C., at 6.6 per cent; and Charlottetown at 4.9%.

Factoring out newly built structures, which carry higher rents and can skew the national average, rents across Canada’s 35 major centres rose 2.2% year over year.

Rising wealth, foreign investment drives demand for luxury homes; Metro Vancouver leading the way

Vancouver Sun, May 18th, 2011

Demand for luxury homes across Canada – especially in Metro Vancouver – is rising, with the improved financial standing of wealthy Canadians the main factor, according to a report released Wednesday by Re/Max.

“The strength of the upper-end segment continues to defy expectations,” Elton Ash, regional executive vice-president, Re/Max of Western Canada, said in a statement.

“That demand remains largely domestic speaks to the solid underpinnings of the market, while underscoring the appeal of Canadian real estate on an international stage. Western Canada, in particular, will continue to see the upside benefit of investment from abroad.”

According to the report, the improved financial standing among high net worth people is the major factor

driving strong sales activity at the top end of Canada’s housing markets,.

Re/Max examined 12 major centres and found that luxury sales have surged in close to two-thirds of housing markets between January 1 and April 30 of this year, compared to the same period in 2010.

In terms of percentage increases over the four-month period, Metro Vancouver – where foreign investment has also played a major role – lead the way with a 118-per-cent increase, from 343 $2 million-plus homes sold in 2010 to 747 $2 million-plus homes sold in 2011.

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) and Greater Toronto (nine per cent).

Six of the seven major cities – except Calgary – are poised to set new records in top-end activity by year-end.

Price points were lower in the other markets, with a luxury home in Winnipeg, for example, considered anything over $500,000.

“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.

“Despite the robust activity, housing values in the top end of the market have climbed a nominal two per cent, rising from $2,955,168 to $3,025,947 year-over-year. “Days on market have fallen to 48 from 54 one year ago, although some properties are moving within days in coveted neighbourhoods. Purchasers from the Greater

Vancouver Area and Mainland China are driving sales in the top-end, with demand strongest for properties in Vancouver’s Westside (447 sales), followed by West Vancouver (160), and Richmond (41).

“Detached properties remain the most popular type of housing [in Metro Vancouver], comprising the vast majority of luxury sales at 673 units. Condominiums are a very small percentage of the market, with 58 sales occurring over $2 million.”

The report said that while foreign investment has augmented sales activity in several Canadian markets, its influence was only significant in MetroVancouver. Most regions reported that locals were the primary drivers of demand for luxury homes.

The report suggested that there are several factors that position Canada as an attractive option for buying luxury homes, including that its real estate remains a bargain by international standards, given its ranking for quality of life, political and economic stability and the strength of its property laws.

“Three key factors – serious equity gains, stock market recovery, and improved economic performance – have

been behind the push for luxury housing product across the country,” Michael Polzler, executive vice-president, Re/Max Ontario-Atlantic Canada, said in a statement. “The combination also continues to bolster the bottom line of high net worth individuals both nationally and globally. The impact of that wealth is being seen in the demand for all things luxury—from homes to cars, collectibles and fine wines.”

Re/Max noted that the number of millionaires is rising in Canada, and will continue to do so, and that residential holdings have increased among the wealthy.

The Vancouver Heritage Foundation’s 2011 Heritage Home Tour

Vancouver Sun, May 20th, 2011

Dozens of bungalows like this one, from the late 1920s, stand on the surrounding blocks, showing the amazing range of aesthetic finishes and revival styles these homes offered; in this case, with Craftsman influences. This home features a 34 colour paint scheme with five tones on the exterior alone! The vibrant interior boasts primitive art from all over the world, family heirloom furniture and artifacts, unique antiques and beautiful art glass.

Of the many architectural styles that reflect Metro Vancouver’s young history, there is perhaps none as ubiquitous on the city’s housing landscape as the bungalow.

Roomy and square, with useful basements and, often small second-storey bedrooms, the bungalow is a utilitarian house renowned for both compact efficiency and thoughtful floor plans, twin attractions for growing families looking to settle down.

In Vancouver alone, there have been several incarnations of the bungalow – and you could argue the infamous Vancouver Special of the 1960s is one – but the first version owes its provenance to the economic uptick following the First World War.

By the early 1920s, as the city’s population began to grow and streetcars were travelling farther east into what were then the far-flung suburbs around Commercial Drive, a building boom saw the development of entire neighbourhoods boasting distinctive arts and crafts bungalows.

Somewhat less ostentatious than their westside counterparts, and crafted to conform to smaller building lots and more manageable mortgages, they were no less a testimony to a time when houses were built to last.

That’s just one of the attributes that attracted Chris Tonge and Roxanne Cave to their tidy 1927 Craftsman-style bungalow, among the dozens lining the lovely elm-shaded streets in the bungalow-heavy enclave just east of Victoria Drive and north of Broadway.

They bought the place eight years ago, and they have been transforming the house ever since, inside and out, from replacing the knob and tube wiring to installing stained glass windows to planting a now-thriving cottage garden.

For the retired 62-year-old Tonge and the still-working 55-year-old Cave, decorating their historic home is about funky vibrancy, heirloom antiques and reminders of their world travels.

It’s also about a palette so colourful that the house now boasts 36 different colours, and counting.

The exterior alone is five colours, its bright blue hue with raspberry trim something of a shock, at least at first, and sure to be a talking point when the couple opens their home to ticket-holders on the 9th Annual Vancouver Heritage Home Tour on June 5.

Every room in the 1,200-square-foot home has its own personality, whether it’s the vintage bathroom with the turquoise claw foot tub or the Taj Mahal-style master bedroom with the orange Venetian plaster.

“We’re pretty eclectic,” says Cave, something of an understatement as she points out Indonesia art, Indian pilasters, the sandstone-over-brick fireplace and the ethnic décor that is the home’s abiding theme.

They’re on the tour, they say, because they were asked, but also because they know that if the city’s housing heritage is to survive, if people are to understand that the greenest house is a house that is already built, then heritage home tours are one way to open people’s eyes.

Jana Zylich and John Sinal, who live in a 1932 bungalow just a block away and who also agreed to invite hundreds of strangers into their house on this year’s tour, hold a similar perspective.

They bought their house a decade ago, and while “it has never had as full charmectomy,” says Zylich, they have undertaken an ambitious renovation, including ripping away stucco to reveal original cedar siding, removing panelling, linoleum and mouldy carpet, re-righting the porch and converting a basement area into a spacious studio for Sinal, a professional photographer.

“Nothing had even been done to the house,” says Zylich, “and at some point it must have been loved, but when we bought it, it was really awful. It looked so cute from the outside, but it was really run down.”

The couple – she’s 43, he’s 45 and they have two young children – kept the original floor plan, but worked room by room to open things up and restore as many of the original features as they could. They stripped and stained – all the doors had been painted brown – and salvaged windows and doors from elsewhere. They also redid the kitchen, which overlooks an expansive back deck.

Today, the house is a bright, livable space for a modern family, but still retains the character and feel of its 1930s roots.

If these two east-side bungalows represent the modest aspirations of early Vancouver development, and the dedication of their 21st-century owners, the tour’s other seven homes are also a nod to the rich diversity of the city’s vintage housing stock.

From Strathcona to Shaughnessy, ticket-holders this year can check out several Craftsman-style homes, a Tudor revival and a restored Edwardian with a laneway house.

The 9th Annual Vancouver Heritage House tour is Sunday, June 5, from 10 a.m. to 5 p.m. Tickets for the self-guided tour are $40. More information about the tour, and ticket purchasing, can be found on the Vancouver Heritage Foundation website: www.vancouverheritagefoundation.org.

Lance Armstong and Ryan Giggs: A tale of two athlete brand scandals

Canadian Business, May 24th, 2011

One’s a legendary soccer player, the other a legendary cyclist. But the images of seven-time Tour de France champ Lance Armstrong and Manchester United star Ryan Giggs have both been splashed over sports media in the last few days.

Giggs is a player whose amazing talent has been coupled with a squeaky clean image, garnering the 38-year-old Welshman endorsements reportedly worth more than $37 million. But the player is now embroiled in an adultery scandal that, thanks to British libel law, made it all the way to the House of Commons. His recent tale has plenty of soap opera-ish plot points – alleged affair with reality TV star who blabs to tabloids, pay-offs to media and court injunctions to have his name removed from the story, having his alleged indiscretions repeated over Twitter by more than 75,000 people and then have his dirty laundry aired in parliament. And all this before the coveted Champions League Final game on Saturday against Barcelona.

It’s a lot to withstand but despite the tabloid media maelstrom, not many are suggesting Giggs’ sponsors will jump ship. A little philandering in pro sports these days is more akin to a pulled hamstring than to career suicide, and Giggs’ alleged transgressions are hardly Tiger Woods-ian in scope. Chances are it will end up a chuckle-inducing footnote to the career of someone many consider the greatest player Manchester United has ever seen.

Mr. Armstrong, on the other hand, is a different story altogether. Long followed by accusations of doping, the cycling champ and cancer survivor has continued to thrive as a spokesperson both for his Livestrong Foundation and sponsors like Nike. But on this week’s episode of 60 Minutes, former teammate Tyler Hamilton said he saw Armstrong take performance-enhancing drugs. While it may seem like just another accusation to be beat, some are wondering if his images as The Cyclist and The Cancer Activist can be separated. An AdAge poll got everything from “Livestrong just died hard” to “the brand is way bigger than he is now.”

Dave Zirin writes in The Nation that because Armstrong’s popularity and brand strength come from a place deeper than traditional sports fans, his reputation will survive anything that former teammates or federal prosecutors can throw at him. Are Livestrong’s annual revenues of more than $50 million enough for people to forgive or ignore any questionable behaviour in sports? For many, it is. As Livestrong CEO Doug Ullman told Fast Company last year, “In the sports world, he’s a very polarizing figure. In cancer, he’s not.”

Two very different stories, similar only in that these are two athletes that get paid millions of dollars to not only ply their trade in sport but also represent a multitude of marketers. It’ll be worth watching brands and fans continued reaction to both.

RBC Specialist Fires Low Blows & Goes Viral

Canadian Mortgage Trends – April 19, 2011

RBC-Mortgage Banks have extensive policies governing what their representatives can tell the public. The alleged actions of RBC mortgage rep Corinne Schindler demonstrate why.

Schindler has reportedly been circulating this flyer, which grossly mischaracterizes mortgage brokers in relation to bank specialists. It’s a document that demonstrates a stunning lack of knowledge, professionalism and discretion.

The piece, which displays RBC’s logo and web address, has gone viral and caused a PR embarrassment at the nation’s biggest bank. Incensed brokers from across the country have demanded that RBC retract the misstatements on the specialist’s behalf.

Here is a sample of the distortions attributed to Ms. Schindler (our perspectives follow each line):

1. Brokers charge “set-up fees” and “other hidden costs”

· Truth: Broker fees are exceedingly rare on prime residential mortgages. When fees or borrowing costs are warranted, provincial regulations require full disclosure.

2. “Ask a broker what their compensation will be for completing your mortgage.”

· Truth: Broker compensation is geared primarily to the term and secondarily to the rate. As with any incentive-based model, conflicts can exist, but no more so than with various bank rep models that pay more commission for selling a higher rate.

3. Misrepresentation. Brokers pick lenders “based on only the lowest rate, no other factors”

· Truth: Rates are commodities so successful brokers always prefer to leverage trusted advice and relationships. To build each, brokers become experts in their craft, which includes term selection, product comparison (from multiple lenders…key point) and strategic mortgage planning.

4. Brokers…”cannot fit your mortgage solution together with your overall financial plan.”

· Truth: Needs assessments are a fundamental tool that brokers utilize. Brokers are trained to uncover future needs that financing might have to address.

5. “Brokers will not be there in a few months when you need to ask questions about your mortgage or change the terms of conditions”

· Truth: Referrals are a broker’s lifeblood and maintaining relationships is impossible without exceptional post-closing support.

6. “You have to be careful to deal with an institution that will give you a great rate term after term.”

· Truth: Banks’ renewal models are designed to maximize profit. That’s done through selective pricing (i.e. not offering the best rate to everyone up front). It’s a fallacy that banks reward loyalty with great rates. (Here’s some relevant research).

After poking around at RBC, this piece appears to be Schindler’s own doing. This advertorial is definitely not in RBC’s marketing library we’re told. Moreover, RBC’s corporate materials are far more polished (i.e., generally no grammar or formatting issues, missing slogans, mistruths, etc.).

From what we hear, Schindler violated RBC compliance guidelines and sent it out without RBC’s or her manager’s consent.

In response to all this, RBC provided us with a comment:

“The opinions expressed in the document by the mortgage specialist do not reflect the positions, strategies or opinions of RBC. We are following up directly with this mortgage specialist to ensure future collateral accurately reflects the RBC brand.”

We have a better idea. How about no “future collateral” from this individual period?

Fiduciaries that mislead the public for personal gain are hazards and liabilities to their employers. Anyone who would author this sort of content should be sent packing because Lord only knows what she’s telling clients in private.

Spam Bill C-28 – Lender & Broker Implications

Canadian Mortgage Trends – April 21, 2011

Canada recently enacted a new anti-spam law called Bill C-28. It’s expected to come into force later this year.

Proponents say C-28 will lighten the spam load on all of us.

At the same time, it could turn many businesspeople into spammers themselves!

As a mortgage broker, for example, it’s not uncommon to send out e-mails or newsletters to current or former clients. In some cases, you may not have had contact with a client for years.

If that kind of scenario applies to you, C-28 will change your email habits. For brokers, mortgage specialists and lenders, it pays to know the implications in advance.

Here are a few key points about Bill C-28:

* It was formerly known as the “Fighting Internet and Wireless Spam Act” (FISA)
* Royal Ascent was granted in December and it’s anticipated to come into force in late summer/early fall.
* Enforcement is overseen by the CRTC, Competition Bureau and Office of the Privacy Commissioner
* Violators could see fines as high as $1 million for an individual or $10 million per violation for an organization
* The bill is broadly-defined to include all commercial electronic messages, which include email, SMS text, sound, voice or image messages.

“It’s going to have a significant impact on the mortgage broker side of things, but also for anybody who sends messages that have a commercial purpose, in whole or in part,” said Nicole Kutlesa, a senior associate with Osler, Hoskin & Harcourt LLP in Toronto.

Red email connection symbol key on a laptop“It introduces an entirely new standard in terms of consent that we didn’t have in Canada previous to this legislation.”

The key to this legislation is that is introduces a standard of express, or “opt-in” consent, Kutlesa says. “That’s pretty significant and different from what companies are doing today.”

Here’s how it works:

If you have an existing business relationship with a client (eg. you’ve sold them something or have brokered their mortgage), you are permitted under this legislation to send commercial electronic communications to that person for the duration of the working relationship, even if the messages are unrelated to the deal.

For brokers, Kutlesa said the business relationship would last for the duration of the mortgage term, as long as it’s not renegotiated early elsewhere.

At the end of the business relationship, you still have up to two years to send them commercial communications without the need for further consent.

By the end of the second year, however, you’ll need the express consent from that client that they want to continue receiving your communications. The exception is when you’ve engaged in another commercial activity with that client, in which case consent can be implied under the legislation. Kutlesa said this can be done in the form of a check-box embedded in the communication, though it’s important the box is left blank until it is checked by the client (hence the “opt-in” criteria).

What’s important in all cases is that the communication you send, be it an e-mail, e-newsletter or other electronic marketing material, needs to identify yourself, include contact information (which must be valid for at least 60 days after the message was sent) and an unsubscribe mechanism in accordance with the legislation.

Spam1“It’s very serious because the penalties under the statute are significant,” Kutlesa said, referring to the maximum fines of $1 million for individuals and $10 million for companies found in violation of the law. On top of that, the bill allows for both a private right of action (if there have been losses or damages as a result of an unsolicited message), as well as directors and officers liability.

While Kutlesa says the intent of the legislation is to crack down on real spammers, she said that doesn’t mean the enforcement authorities wouldn’t be willing to make an example of a legitimate company in violation of the legislation.

Express consent is not always required, however. There are some exceptions including:

* On-going client support – you can continue to send communications that provide notification or factual information related to an existing client’s account.
* Inquiries – if you receive an inquiry from someone seeking information or an estimate, you are permitted to respond.
* Business cards – if someone has handed you their business card, which discloses their e-mail, you can send them communications relevant to their business role provided they have not otherwise indicated they do not wish to receive unsolicited messages.
* Family – communications may be sent to people with whom you have a personal or family relationship, which is expected to be defined in the regulations to include family and friends.

The bottom line is companies are going to have to go through their databases of contacts and in many circumstances may need to get any previous clients to expressively opt in if they want to continue marketing to these contacts, Kutlesa said. She added that it’s likely companies will lose some contacts as not everyone will take the time to give their consent or may simply decline.

Rebecca Chan, a partner with Borden Ladner Gervais LLP, is also fielding a lot of questions about the new bill and recommends companies start preparing sooner rather than later.

“We are telling our clients in the financial services industry to not wait until the legislation is in force to start thinking about how to comply with it,” she said. “Mortgage brokers, like others, will need to sort out a process for addressing prospects, existing clients and past clients.”

Chan noted that the process will likely need to be sorted out with internal or external IT providers, which is why she recommends companies get an early start.

“That can’t usually be done overnight, which is why we suggest that the review process start before the in force date.”

Foreign buyers buoy Vancouver housing

Globe and Mail – April 24, 2011

On a recent trip to Vancouver, Jin Wang, a Chinese businesswoman, toured a large home – six bedrooms and seven baths – listed at $3.6-million in the British Properties, a wealthy enclave on the north shore overlooking the ocean and the city.

Ms. Wang and her husband, Hui Huang, made their money in the import and export of electronics, leveraging government connections in Beijing to do business in Shanghai. The Chinese nationals also expanded their business to domestic real estate in China.

Now, they’re looking to invest more heavily in Vancouver real estate. Three years ago, the couple first bought a $2.1-million home on Vancouver’s west side and rented it to a local family. Its value has since hurtled past $3-million. Back this month to scout more buys, Ms. Wang closed a deal for a $3-million home on Chartwell Drive in the British Properties and mulled the additional $3.6-million home on the same street.

Investments by Chinese buyers such as Ms. Wang and Mr. Huang are playing a role in helping to buoy the hottest real estate market in Canada, according to local realtors. Canadian realtors do not tally data on foreign investment in residential real estate, unlike the national realty association in the U.S., but widespread anecdotal reports from local players suggest investment cash from China is a small but significant factor, especially in the market for expensive homes. The additional demand may be helping to underpin a market whose prices seem to impossibly levitate above the typical local incomes in the region.

And it may increase, as more affluent Chinese aim to move, as well as invest their money abroad. There are nearly 600,000 high-net people worth at least $1.5-million in China this year, according to the consultancy Bain & Co. About 10 per cent of them have already left, another 10 per cent are planning to apply for immigration, and about 30 per cent are considering it, according to results based on Bain’s survey of 2,500 rich Chinese released last week.

The method of exit is to qualify abroad as an “immigrant investor.” In Canada, that means an immigrant must have a net worth of $1.6-million and make an $800,000 investment – figures that are twice what they were last year. The Vancouver region has already welcomed about half of 10,000 or so immigrants who come to Canada annually under such programs.

Yolanda Chen and Simon Yang arrived earlier this year as immigrant investors. The couple, and their six-year-old daughter, came for the same reason cited by a majority of people from China: a better education system. Ms. Chen, who was a television executive in Shanghai, has purchased a $2-million home in White Rock, south of Vancouver.

“It’s a better, and healthier, life here,” she said.

While realtors cite the influence of rich immigrants and investors on markets such as Vancouver, data suggest that the absolute number of buyers in such categories is small.

In the U.S. the most recent figures show that foreigners are a factor in real estate markets but not a massive one. Foreigners spent $41-billion on U.S. real estate from April, 2009, to March, 2010, about 4 per cent of the American market. Canadians accounted for about quarter, roughly $10-billion, of that total. Buyers from China counted for $3.3-billion, behind Mexico and the United Kingdom.

Of the properties purchased, half of them were bought as a primary residence, with only about a quarter for investment purposes.

The U.S. figures are the result of a survey by researchers at the National Association of Realtors. In Canada, there are no comparable numbers, “because there wasn’t demand for us to collect these statistics,” said Pierre Leduc, a Canadian Real Estate Association spokesman.

But the U.S. market results echo what realtors in Vancouver are seeing. Ian Gillespie, head of Vancouver developer Westbank Projects Corp., just opened a Shanghai office. In the company’s last major project, the $450-million Fairmont Pacific Rim luxury condo-hotel tower on the harbour, completed last year, Mr. Gillespie said about one-third of the apartments went to people with roots in China, largely for residences rather than investments.

“They’re not coming in to speculate, throwing money at things. They’re not trying to flip. They probably flip less than anybody,” said Mr. Gillespie.

Ms. Wang – who was scouting another home in the British Properties – buys for investment purposes, and although she and her husband don’t plan to move to Canada, the desire for a stronger education is a factor. Ms. Wang’s 17-year-old daughter lives in Vancouver, where she attends private school, a motivation for the family’s investment in the city.

“The weather is good, the scenery is good, and the education is good,” said Ms. Wang, speaking in Mandarin in an interview. “For the next generation, Canada is a more fair country.”

Last year’s Winter Olympics has sparked additional interest from overseas, said John Lichtenwald, whose Metro Vancouver Properties sold $3.7-billion of residential real estate in 2010 under the Re/Max banner. He estimated that about of a sixth of his firm’s buyers are foreign, led by those with China roots.

“The Olympics was a great advertisement program for all of Vancouver, it really helped,” he said.

Quickly rising home prices have led conservative commentators to point to the role of foreign buyers, though there is no evidence investment money is a primary fuel for the hot market. Peter Ladner, a business leader, recent mayoral candidate for the city’s conservative-leaning party and former city councillor, this month suggested foreign ownership of local real estate should be restricted to discourage “overseas property speculators.” The high cost of living hurts businesses looking to attract workers, he said.

The price of a “standard” two-storey house in the city and on the north shore jumped 10 per cent to $1.1-million in the first three months of 2011, according to research last week by real estate agency Royal LePage. The figure puts Vancouver at triple the national rate for a typical two-storey residence – an average of $379,000, up 4 per cent in the past year.

The city’s most recognizable real estate face, the condo marketer Bob Rennie, insists Vancouver has become a multipart market. There are some neighbourhoods, such as the west side, that can’t be judged on traditional metrics such as income to house price.

And while Mr. Rennie says prices in some areas such as the west side are “pretty frothy,” he leans on another exhortation common among realtors: In a city bounded by the mountains to the north, the water to the west and the U.S. to the south, hot neighbourhoods with spacious homes are rare.

“Even if it slows down, where is the supply?” Mr. Rennie said. “It’s not like we’re producing mansions.”

It is a message embraced by Guo Tai Sun, a 48-year-old who works in real estate and building materials in Guangzhou near Hong Kong. In April, he came to visit friends who had moved to Vancouver and to look at real estate investments. He’s not moving here but made an offer on a $2.5-million home on the city’s west side, popular among China buyers for the quality schools in the area.

“They told me it was a beautiful city,” Mr. Sun said. “I look at the potential of a city. I think Vancouver has great potential.”

Loonie could slow growth for years: BoC

Business News Network – April 13, 2011

The strength of the Canadian dollar is turning Canada’s economic performance into a boomerang, with the recent growth spurt giving way to a gradually slower pace that could persist for years as a currency well north of parity restrains exports.

In its quarterly monetary policy report Wednesday, the Bank of Canada suggested that the risk of “greater headwinds” from the loonie gives policy makers more time before inflation is an issue, even as it said the slack from the recession will be absorbed by mid-2012, six months sooner than anticipated.

While that new timeline would normally imply a faster-than-planned path to higher borrowing costs, the central bank’s focus on the loonie suggests the next interest rate hike may be farther away than many were predicting.

“The stronger economic expansion observed in recent quarters is projected to give way to a more modest pace, as the particularly strong rebound in exports observed recently is unlikely to be sustained, given ongoing competitive challenges including headwinds from the Candian dollar,” the central bank said. “The recovery in exports will be subdued relative to earlier global recoveries.”

Though the central bank sees faster Canadian growth this year than it did in January – upping its 2011 projection to 2.9 percent from 2.4 percent – much of that increase is explained by a 4.2-percent expansion from January through March, on an annual basis, capping the momentum carried into the year by a 3.3-percent growth rate in the last quarter of 2010. Those impressive results were due in large part to a surge in exports which, it is now increasingly clear, has not continued.

The current quarter will see a significant slowdown to a 2-percent pace of growth, the central bank said, a rate that would be closer to 2.5 percent without the Japanese earthquake’s estimated impact on North American supply chains. Growth will then pick up, while remaining below 3 percent and gradually slipping to just above 2 percent by the end of 2012.

All told, growth in 2012 will come in a bit lower than what the bank predicted in January, at 2.6 percent instead of 2.8 percent.

The currency is helping to keep a lid on inflation by making imports cheaper for Canadians, including for firms actively working to boost productivity by purchasing state-of-the-art machinery from foreign suppliers. But it is also making Canadian goods and services more expensive abroad, cutting into companies’ ability to crack new markets in a fiercely competitive post-downturn global economy.

The central bank, which in January listed for the first time in memory a currency at parity with the U.S. dollar as one of the “assumptions’’ behind its forecast, said the latest projections factor in a loonie trading at an average level of $1.03 (US). While that is not a prediction per se, it is factored into the bank’s forecasts for growth and inflation through to the end of 2013.

Wednesday’s report also assumes that oil will trade above $100 (US) a barrel throughout the projection period, and at $109 (US) per barrel for three quarters starting with the second half of this year, as well as “persistently strong’’ prices for non-energy commodities, all of which fuels the loonie since Canada is a key producing nation.

At the same time, while commodity prices are causing global inflation pressures to increase, and even as Canadians chafe at higher gasoline and food costs, the central bank’s preferred measure – which strips out volatile items such as fresh fruit and energy – has been dropping. The so-called core rate will rise “gradually” to the bank’s 2-percent goal by mid-2012, policy makers said, suggesting little meaningful inflationary pressure until then.

The central bank acknowledged that its latest survey of Canadian businesses showed a growing number of companies bracing for hotter inflation in coming months – expectations which, in some cases, are already translating into higher prices for consumers. But policy makers rightly pointed out that the survey also found the share of firms having trouble filling open positions “remains well below historical averages,’’ in keeping with a 7.7-percent unemployment rate and a slow recovery in hours worked.

All of which suggests wages, often the biggest driver of inflation, won’t take off anytime soon.

The global recovery is “becoming more firmly entrenched,’’ the bank said, as growth in the United States solidifies, the European expansion strengthens, and global financial conditions “remain very stimulative and investors have become noticeably less risk averse.’’ The world economy will grow 4.1 percent this year, one tick higher than the central bank’s January forecast of 4 percent, and 3.9 percent in 2012.

The central bank cut its outlook slightly for the United States, while expressing optimism that the rebound in Canada’s main export market is solidifying as businesses invest and the labour market recovers, despite an “acutely challenged’’ housing market and efforts by households and governments to trim debt. The U.S. economy will expand 3 percent this year instead of 3.3 percent, the bank said, maintaining its 3.2 percent call for 2012.

Policy makers remain concerned about the sovereign-debt troubles in Europe, but nonetheless boosted their projections for the euro area for this year and next, to 1.8 percent and 1.7 percent compared with their January prediction of 1.5 percent in both years.

For Canada, inflation could be quicker if commodity prices are higher than expected due to rapidly growing emerging markets failing to keep their economies from overheating, or if Canadian households spend more than anticipated after bringing their borrowing back in line with income growth. On the other hand, inflation could be slower due to the effects of the strong loonie, if household spending slows more than the central bank anticipates, or if the housing sector weakens suddenly.

On Tuesday,  Carney said left his benchmark rate at 1 percent and said further hikes “would need to be carefully considered,’’ repeating language he has used since last October when he paused his tightening campaign after three increases.

Canadians under 35 most intent on buying homes: survey

Financial Post – April 7, 2011

Canadians younger than 35 are most intent on buying a home over the next two years, according to a survey released Thursday.

However, most of those in this age group, which included people 18 to 34, indicated in the Royal Bank of Canada’s annual home-ownership survey that it would be better to wait until next year to make a purchase.

Fifty-five per cent of respondents in this age category said it makes sense to wait until next year before buying a home, compared to 45 per cent of respondents overall who felt this way.

“In a more balanced housing market, it makes sense that younger and first-time homebuyers are waiting to assess all of their options and do their research before buying a home,” said Bernice Dunsby, RBC’s director of home equity.

“It’s also important to get expert advice on what you can afford and leave yourself with a little extra wiggle room in your budget so you don’t become house poor, as home maintenance and lifestyle costs can add up.”

Overall, 29 per cent of respondents said they planned to buy a home within two years. The rate was 43 per cent for those 18 to 34. Those 35 to 54 were in line with the overall average, at 29 per cent, while just 17 per cent of respondents 55 and older planned to buy a home over the next two years.

The results were based on online polling conducted by Ipsos Reid between Jan. 12 and 17 of 2,103 Canadians.

While the sample was weighted to match Canadian demographics, RBC said an unweighted sample of this size would yield results that accurately reflect the population within two percentage points, 19 times out of 20.

10 top trends for basements

Vancouver Sun

Upping the ante in the lower level

Big screens and even bigger sound, designer chairs and smart lights that slowly dim as the movie starts rolling make basement home theatres more sought-after then ever.
Photograph by: Jenelle Schneider, Vancouver Sun

What’s hot in the home’s coolest area? Here’s what the pros consider the top 10 must-haves.

1. HOME THEATRES Big screens and even bigger sound, designer chairs and smart lights that slowly dim as the movie starts rolling make home theatres more sought-after then ever. Perfect for cocooning after a rough day in the big world.

2. BELLY UP De rigueur in 1960s rec rooms, sweet watering holes are back. Now they’re bigger and better, says Norm Lecuyer, president of Just Basements. Full-on pub-style bars with pull taps, granite counters and subtle lighting mean you may never want to leave home

3. WINE CELLARS Temperature-controlled with glass doors and an ultra-sleek look — a fine vintage never had such a good friend.

4. FULL KITCHENS Some families do nearly all their cooking below stairs, reserving the main floor kitchen for show or entertaining, says Donna Correy, owner of Ottawa’s KISS Design Group. In fact, she created an entire basement kitchen f or the million-dollar-plus dream home that’s the main prize in this year’s Children’s Hospital of Eastern Ontario lottery.

5. PLAYROOMS Play structures, toy storage areas and other kid-friendly features give new meaning to an old term.

6. FUN AND GAMES Fuzzball, air hockey, pool and Ping-Pong tables: basement games rooms are on the rise. One of Correy’s clients even set up an entire floor hockey rink using old NHL boards and glass.

7. FITNESS ROOMS With the advent of compact, affordable exercise equipment, fitness buffs are increasingly trucking downstairs instead of down to the gym. However, Correy notes that many men still prefer the gym, while women often like the privacy of home workouts.

8. HOSE-DOWNS Spa-like bathrooms with steam and body-jet showers, whirlpool tubs, and high-end fixtures: just the thing after a sweaty session in the fitness room.

9. CONCRETE FLOORS Old-school, yes, but up-to-the-minute when you add cosy, radiant floor heat and tart up the concrete with stained, stamped or stencilled pizzazz. Also in vogue: engineered hardwood and ceramic tile.

10. BRIGHT WORLD Reds, blues, yellows, oranges, greens: be bold when painting, especially accent walls which can splash your basement with colour and character. Wall sconces at a little over six feet and casting light downward can create the illusion of greater ceiling height, says the experts. If you need to sometimes close off your stairwell, use a light-transmitting French door.

Songs for Japan CD Benefitting Those In Japan

To help raise money for those in Japan who’ve been affected by the devastating earthquake and tsunami, a compilation CD with 38 tracks entitled Songs for Japan has been put together by four different record label companies, currently available on iTunes for only $9.99.

All of the proceeds will go towards the Japanese Red Cross Society’s disaster relief efforts. The physical version will be released as 2-CD’s on April 4th.

artists included on the album include Beyonce, Sade, Michael Buble, Enya, Elton John, Sting, Norah Jones and others.

To purchase the album through iTunes, click here.

Here’s the complete track list:
John Lennon, “Imagine (Remastered)”
U2, “Walk On”
Bob Dylan, “Shelter From the Storm”
Red Hot Chili Peppers, “Around the World (Live)”
Lady Gaga, “Born This Way (Starsmith Remix)
Beyonce, “Irreplaceable”
Bruno Mars, “Talking to the Moon (Acoustic Piano Version)”
Katy Perry, “Firework”
Rihanna, “Only Girl (In the World)”
Justin Timberlake, “Like I Love You”
Madonna, “Miles Away (Live)”
David Guetta, “When Love Takes Over (feat. Kelly Rowland)”
Eminem, “Love The Way You Lie (feat. Rihanna)”
Bruce Springsteen, “Human Touch”
Josh Groban, “Awake (Live)”
Keith Urban, “Better Life”
The Black Eyed Peas, “One Tribe”
P!nk, “Sober”
Cee Lo Green, “It’s OK”
Lady Antebellum, “I Run to You”
Bon Jovi, “What Do You Got?”
Foo Fighters, “My Hero”
R.E.M., “Man On the Moon (Live)”
Nicki Minaj, “Save Me (Clean Version)”
Sade, “By Your Side”
Michael Buble, “Hold On (Radio Mix)”
Justin Bieber, “Pray (Acoustic)”
Adele, “Make You Feel My Love”
Enya, “If I Could Be Where You Are”
Elton John, “Don’t Let the Sun Go Down On Me”
John Mayer, “Waiting On the World to Change”
Queen, “Teo Torriatte (Let Us Cling Together)”
Kings of Leon, “Use Somebody”
Sting, Steven Mercurio & The Royal Philharmonic Orchestra, “Fragile (Live in Berlin)”
Leona Lewis, “Better In Time”
Ne-Yo, “One In a Million”
Shakira, “Whenever, Wherever”
Norah Jones, “Sunrise”

IRD Penalty Comparison Rates

Canada Mortgage Trends March 24, 2011

The much-unloved Interest rate differential (IRD) penalty is a mystery to most of the natural born population.

People loathe it, largely because they don’t understand it. We continually come across folks who read their entire mortgage contract and are still confused by the IRD calculation.

Fortunately, federal disclosure guidelines are on their way later this year. These guidelines are supposed to standardize the explanations of IRD penalties to make them more comprehensible.

There is one element of the IRD calculation, in particular, that gets people all tied in knots. It’s called the “comparison rate.”

Here’s a real-life example of how the comparison rate can spoil your day:  Customer fee to pay out mortgage doubles (CBC News).

The story features a regular guy (Mohsen Movahed) who learned how to calculate an IRD penalty…the hard way.

It seems Movahed relied on a penalty quote, only to find some months later that his penalty had doubled.

The culprit, says his bank, was the comparison rate used in the IRD calculation.

Comparison-Rate-IRD-Penalty
A comparison rate is the rate a lender compares to your current contract rate in order to calculate the IRD penalty on a fixed-rate mortgage.

The comparison rate is usually the lender’s rate for the term that most closely matches your remaining term.

For example, if you have 22 months remaining on your fixed mortgage, a lender will typically (there are exceptions) use a 2-year term as your comparison rate.

The kicker is that banks often subtract the discount you received at origination from their posted (comparison) rate—which makes the interest rate differential and penalty even worse!

Some lenders use bond yields for their comparison rates (example). This method can sometimes be far more costly depending on yields and mortgage spreads.

Conversely, some non-bank lenders use regular discounted rates for their IRD calculations, which can be more favourable for the customer.

In any case, Mr. Movahed discovered that the comparison rate can drop considerably as time goes by. That drop can boost the interest rate differential and cost you thousands more.

As a sample test, we ran a quick penalty calculation for breaking a hypothetical $250,000 mortgage. Our example was based on actual historical and current bank rates. It assumed the customer had about 2.5 years remaining on their term and had received a 1.50% discount off posted rates.

Depending on the effective date of the penalty calculation, a bank could quote the penalty based on either a 2-year or 3-year comparison rate. That’s relevant because the penalty difference between these two comparison rates (as of today March 24, 2011) is more than $3,700!

In other words, if our hypothetical customer waited until she had slightly less than 2.5 years remaining in her term, the bank could apply the lower 2-year comparison rate (instead of a 3-year) and her penalty would increase 28%.  (A lower comparison rate makes the IRD bigger.)

The moral is that timing matters when calculating an IRD penalty. A good mortgage advisor can help you plan properly to minimize the IRD, if and when you have to pay it.

Can I Really Afford To Go Organic?

Globe & Mail, March 25, 2011

Grocery shopping with children in mind can be complicated.

It’s not just, “This looks tasty, let’s get it.” First, it’s the question of what they should eat – food groups, vitamins and all that. Then, it’s what they will eat, which for some children, can be quite a narrow range of consumables. When you add an attempt to move to an organic diet (not to mention rising food prices across the board), grocery shopping for a growing family can be a frustrating and expensive endeavour.

Organic food costs more than regular food – there’s just no getting around that. My family of four definitely felt the pinch when we decided to move to a more organic diet. To keep things affordable, we go organic for some food items, but not others. For example, in our home, milk and yoghurt are always organic, but fruits and vegetables? Sometimes. Meat – yes, bread – no. (A caveat to that: Our kids get organic meat and poultry, but we don’t. I only eat fish, and my husband Sean says he figures he already has mad cow anyway, so he generally gets whatever is on sale.)

Do you really have to buy everything organic to be sure your children are growing up healthy?

I asked Adria Vasil for advice. She’s the author of green-living bible Ecoholic Home: The Greenest, Cleanest and Most Energy-Efficient Information Under One (Canadian) Roof. Ms. Vasil agrees that buying all organic is out of most people’s budgets, so you have to pick and choose. For example, when it comes to produce, it doesn’t have to be all or nothing.

“As a general rule, if a piece of produce has skin or husks you remove before eating, like onions, avocado, corn or pineapple, it’ll be pretty low on the pesticide-contamination index, so you’re OK to buy it non-organic. There are some surprises on the low pesticide list too, like asparagus and broccoli. They’re nice to buy organic to support greener agriculture, but not as necessary for your health.”

Ms. Vasil says fruits with the highest pesticide residues are the ones with thin, delicate skins like peaches, strawberries, apples and grapes, so it’s worth spending your money on them. And the top-three pesticide-tainted veggies? Celery, spinach and bell peppers.

“For any produce you just can’t afford to buy organic, and even the organic kind, wash it all in a solution of one part vinegar to three parts water. That helps get rid of some of the surface pesticides and 98 per cent of bacteria,” said Ms. Vasil.

But there are some areas where she feels it’s important to splurge on the clean stuff.

“Always buy certified organic chicken since conventional chicken has been shown to be floating in antibiotic-resistant bacteria – aka super bugs,” she said. “Even antibiotic-free chicken has been shown to be contaminated. None of them will make you sick if you cook your chicken thoroughly, but most people get sick from cross-contaminated surfaces.”

But what’s a cash-strapped family to do? Ms. Vasil has plenty of tips for trimming your food budget while still eating clean food. Firstly, eat less meat. “North Americans eat 50 pounds more meat, chicken and fish per person per year than we did 50 years ago, so we can certainly afford to shave some meat out of our diets,” she said.

Ms. Vasil also suggests saving on produce by signing up for a share in a local organic farm. The concept is called “community supported agriculture” – customers pay a flat fee for 14 to 18 weekly vegetable shares delivered to your neighbourhood or front door.

“You can get a bountiful share from, say, Plan B Organics in Ontario or the Organic Farm in Newfoundland starting at just $16 to $25 a week, depending on who you buy from,” she said.

As well, Ms. Vasil says you can save on organic items like flour, oats, nuts and beans by frequenting the bulk store or aisle, where items are much cheaper without the packaging. And she advocates the time-honoured tradition of coupon-clipping and flyer-scouting when it comes to sniffing out bargains.

“This week I noticed organic pears and cauliflower on sale at Sobey’s for the same price as the conventional versions. And remember that lot of discount stores like No Frills carry a few organic items these days, so scout them out for good deals.”

When it comes to pricey organic meat and fish, Ms. Vasil says you can save by buying discounted food that is close to the expiry date. And if you don’t think you’ll use it by then, pop it in the freezer and thaw it when you need it. And if there’s no “30 per cent off” sticker on nearly expired food, ask the department manager about getting a discount.

As for fish, Ms. Vasil says it’s not worth shelling out for European organic farmed salmon (something we’ve done to the tune of $30 for a couple fillets). Wild west coast salmon is the safest choice, she says, but it’s still expensive unless you get it canned (a surprising tip: all canned salmon is wild!). If you want fresh fish, Ms. Vasil says farmed rainbow trout is a great eco-friendly and health-conscious alternative to salmon.

Lastly, Ms. Vasil says we can save a lot by buying less than we think we need. And if my heaping compost bin is any indication, she’s right on the money.

“North Americans throw out 30 per cent of the food that we buy because it wilts, rots or goes stale. Write up a weekly meal plan so every organic red pepper and head of spinach is accounted for – that way you’re making the most of the organics you do buy.”

Bank of Canada rate to reach two per cent by year end: RBC

Mortgage Broker News, March 11, 2011

As part of its economic outlook for 2011, RBC projects that the Bank of Canada overnight rate will rise from one per cent to two per cent by year-end.

The gradual pace of rate increases combined with anchored inflation expectations will result in less upward pressure on long-term interest rates, added the Economic Outlook released by RBC Economics.

On the back of solid net exports in the final quarter of 2010, Canada’s economy finished the year on a high note recording stronger than expected gains. The biggest support for the economy came from net exports, which added a full 4.5 percentage points to the quarterly growth rate. Continued consumer spending also played a vital role in driving overall GDP, marking the fastest increase in spending since late 2007.

RBC expects real GDP to increase at 3.2 per cent in 2011, as U.S. demand for Canadian exports increases. Growth in 2012 is forecast to rise by 3.1 per cent.

The report also stated labour market conditions will remain firm in 2011and disposable income is expected to post a 4.1 per cent gain that will provide continued support to consumer spending.

“Consumers’ earlier confidence in taking on increasing amounts of debt was based on a combination of lower interest rates, a strengthening labour market and a 4.6 per cent rise in disposable income,” explained Craig Wright, senior vice-president and chief economist, RBC Wright. “An expected slowing in the housing market, rising interest rates and tightening mortgage lending standards all add up to a levelling out in consumer debt relative to income.”

At the provincial level, RBC forecasts Saskatchewan will lead the country in growth this year. Alberta is expected to return to a top three placing, closely trailing growth in Newfoundland and Labrador. Ontario and Manitoba will hover close to the national average while both Quebec and British Columbia will fall slightly below. Nova Scotia, New Brunswick and Prince Edward Island are still projected to lag behind at the lower end of the scale for 2011.

Portobello West moves into the Olympic Village

Vancouver Sun, March 9, 2011

Portobello West has undergone a dramatic face lift just in time for its spring launch. The monthly market of local artisans and designers has become a non-profit society, moved to Creekside Community Centre in the Olympic Village and hired a new coordinator from Montreal.

It will open in the new location with 75 vendors including some regulars and some new faces the last weekend in March.

Rosemary Marland Lennox will take over from founder Carlie Smith who is expecting her first child. Smith started Portobello West five years ago in the Plaza of Nations and soon moved to the Rocky Mountaineer. She modeled the business after Portobello Market in London and showcased hundreds of designers and artisans over the years.

Smith says that as a non-profit, shoppers won’t see much difference, but behind the scenes she expects the vendors to take on a bigger role in the organisation and she is pleased to work more closely with the city. The big difference is that the society will provide educational opportunities for the artisans to develop their businesses.

“That is a real weakness for a lot of the vendors,” she says. “We will give them more support to get them beyond being a hobby artist to becoming a profitable business.”

Lennox comes to Portobello West with a background in both the arts and in non profit organisations. Smith will remain on the board.

Unlike the Rocky Mountaineer, the new location is on several major bus routes and the Skytrain. It boasts a lot of natural light and will invite walk and cycle-by business because it is right on the seawall.

“The new venue is so beautiful,” says Smith. “The Rocky Mountaineer served us well, but we feel like it is time for a change.”

Portobello West’s spring launch happens March 26 and 27 at the Creekside Community Centre from 11am-5pm, admission is $2 for non-members. After this the market happens the last Sunday of every month (with two day markets in November and December). For more information please visit www.portobellowest.com.

Vancouver’s luxury home sales surge, largely due to influx of offshore money

Vancouver Sun, March 14, 2011

Mainland Chinese buyers a major factor, but European, U.S. purchasers also attracted to city

If you think Vancouver’s housing prices are overdue for a major price adjustment, tell that to the surging number of luxury home buyers.

According to MLS statistics provided by Macdonald Realty, a record 375 homes -including nearly 50 condos -sold for over $3 million in 2010, breaking the record of 209 set in 2009 and more than double the 167 sold in 2008.

Of those, 73 homes sold for over $5 million.

The sales were primarily, but not exclusively, on Vancouver’s west side, with the priciest home going for $17.5 million at 3489 Osler.

The second and third priciest homes -the second also on Osler and the third on Point Grey Road -both sold for about $11 million.

As well, Macdonald Realty says, if current patterns hold, the number of $3-million-plus homes is expected to reach 550 this year, raising the spectre that in some neighbourhoods a $3-million home may no longer be considered particularly exclusive.

In 2000, just 10 properties in Metro Vancouver sold for over $3 million, none of them condominiums.

The market for luxury homes is now “insanely hot,” with mainland Chinese buyers -who are also impacting the Richmond market in a big way -the primary purchasers, said Dan Scarrow, Macdonald Realty vice-president of corporate strategy.

“Ninety-per-cent [of the luxury home purchases] are on the west side, probably some in West Vancouver,” he said in an interview. “But it’s incredibly striking, when you think what the prices were 10 years ago.”

Scarrow said that while a $3-million house has always been categorized as “luxury,” he no longer knows if that’s the case in key West Side neighbourhoods, including Shaughnessy and Point Grey.

“We’re part of a global luxury market by the ultra-wealthy,” he said. “And from the buyers’ perspective, prices here are cheap for what you get.”

Tsur Somerville, director at the centre for urban economics and real estate, Sauder School of Business at the University of B.C., said in an interview that just because there are more homes selling for over $3 million doesn’t mean they’re not luxury homes.

“It’s pretty subjective,” he said. “But $3 million is an expensive home. And just because it’s on a small lot doesn’t mean it’s not a luxury house.

“And the fact that there’s a whole lot more [$3-million homes] than a decade ago, with the price increases, there’d better be.”

Somerville also said that China is a huge source of immigrants to B.C. and that mainland Chinese immigrants tend to be investors and entrepreneurs.

“Clearly, there’s a very targeted demand for higher-end properties that many associate with the mainland Chinese market.”

But he said there’s an absence of clear data on the specifics of those buyers, whether it’s primarily immigrants or investor money from China. As an indication of how the luxury condominium market has grown, Scarrow said that last year a total of 49 condos sold for over $3 million – including seven for over $5 million – with the top three closing in on $6 million each, the priciest at Two Harbour Green, 1139 West Cordova, in Coal Harbour, for $5.8 million and the other two at the Shangri-La in downtown Vancouver.

Scarrow said many more properties are crossing the $3-million threshold, which now buys a new or newer house in the 2,500-to 3,000-square-foot range on a smaller west side lot.

“Now, you see multiple $3-millionplus homes on every block. I’d say $5-million is now where you’re going for that luxury range.”

‘CHINA IS MORE EXPENSIVE’

Alice Zhang, who moved from Hangzhou, China, to Vancouver two years ago, now lives in one of six properties that she and her husband have purchased in Vancouver since moving here.

Zhang, who has two children, is waiting to move into a new home they’re constructing on a Shaughnessy lot that they bought for about $3.1 million. The house is expected to cost another $3 million, which Zhang believes is a good deal.

“We moved from the most beautiful city in China to Vancouver, which we consider more beautiful,” said Zhang, whose family owns hotels and a real estate development company in China.

“I think that compared to other Canadian cities, Vancouver is expensive. But, China is more expensive [than Vancouver].

“And the air is very fresh here and it’s very green. You feel like you’re in a garden.”

Scarrow cited another client who purchased a 2,600-square-foot condo in Coal Harbour for about $1,600 a square foot.

“[She and her family] has homes all around the world. In Knightsbridge, London, a flat was sold to her for $8,000 [Cdn] per square foot. Their flat in London was 3,000 square feet and they paid $24 million for it.”

She also has two homes in Hong Kong, one in Lake Tahoe, one in San Francisco, one in New York and one in Madrid, Spain, Scarrow said. “They all say their Vancouver property is their favourite home. They think it’s the best value.”

Macdonald Realty manager Matthew Lee, whose firm sold the three most expensive homes in Vancouver in 2009 and two of the five most expensive homes in 2010, believes that it’s not just mainland Chinese who are fuelling the luxury market, “but buyers from Europe and the U.S. are willing to pay these prices as well. Globally, Vancouver is still seen as a relatively good bargain.”

While the west side of Vancouver had the largest number of luxury homes sold, other areas in B.C. have also seen some very expensive sales, including the Fraser Valley’s top three sales between $5.3 million and $6.1 million, the Okanagan, from $5.4 million to $10.7 million, and Victoria, from $3.9 million to $6.8 million.

And while Vancouver has seen some very expensive homes sold over the past decade, including one for $17.5 million in 2008 and one for $17 million as far back as 2004, it’s the sheer numbers that are striking. In 2000, just 10 homes sold for over $3 million, and 78 in 2005.

Housing sales “will gain traction” in 2011

REW Week of Feb 25 – Mar 3, 2011

Canadian housing sales will gain traction in the second half of this year, according to the Canadian Real Estate Association (CREA), which has released a more bullish outlook on the market than its earlier forecast at the end of 2010. CREA now estimates there will be 439,900 existing homes sold in 2011, down 1.6 per cent from 2010, but better than the 9 per cent decline that CREA had forecast in December. The association is also taking a more positive view of pricing, with the national average price now expected to rise by 1.3 per cent in 2011 to $343,300. CREA had earlier predicted that the national average home price in 2011 would fall by 1.3 per cent from last year to $326,000. Meanwhile, Canada Mortgage and Housing Corp. reports that the pace of new-home construction in Canada increased slightly last month, rising to 170,400 units, up from 169,000 in December on a seasonally adjusted annual rate. That puts the country on a pace for about 10 per cent fewer housing starts than last year. Krishen Rangasamy, an economist at CIBC World Markets said housing starts will likely soften over the coming months as home prices moderate and the Bank of Canada resumes its tightening cycle by mid-year. Some economists have warned that a combination of higher interest rates and new mortgage rules that go into effect March 18 could put a chill on demand in the later months of this year. CREA, however, predicts that the market will gain traction in the second half of 2011 as economic conditions, job and income growth and consumer confidence improve, in contrast to 2010 when economic growth slowed.

Rising mortgage rates may fire market

Fraser Valley realtors say the recent hike in mortgage rates may fire up the housing market as buyers try to get in before rates rise higher and new mortgage rules kick in next month. Major banks, led by TD Canada Trust and CIBC, have raised some of their fixed-term mortgage rates by as much as a quarter of a percentage. This means the TD five-year fixed rate mortgage, a popular choice among buyers, increased by a quarter of a percentage point to 5.44 per cent. CIBC hiked its mortgage rates similarly, increasing its five-year closed mortgage by 0.25 percentage points to 5.44 per cent. The hikes come one month after the federal government announced changes to lending rules, made in an effort to control skyrocketing household debt levels in Canada. Finance minister Jim Flaherty reduced amortization periods to 30 years from 35. He cut the amount of mortgage refinancing to 85 per cent from 90 per cent of home value. He also announced the federal government would no longer back home equity lines of credit.

Majority of Canadians still confident they can service mortgage payments: BMO

Friday, 25 February 2011

Two in three Canadian homeowners believe they will still be able to service their mortgage payments if interest rates go up, according to a survey by Bank of Montreal (BMO) Financial Group.

While some were unsure, another 18% of Canadians said they would not be able to afford higher payments, although the survey didn’t ask how high the payment would have to be to become unaffordable.

“Despite high prices, housing remains reasonably affordable due to record low interest rates,” said Sal Guatieri of BMO Economics. “That said, Canadians should prepare for interest rates to eventually return to historic norms.”

BMO has forecase that the Bank of Canada will raise interest rates by one percentage point before the end of the year. But such an increase would not put undue stress on the housing market, the report said.

A typical Canadian homebuyer uses a third of total household income to service their mortgage, said the BMO report. But that’s not off from historic norms.

Top 25 grants and rebates for property buyers and owners

Vancouver Sun February 25, 2011

1 HOME BUYERS’ PLAN

Qualifying home buyers can withdraw up to $25,000 (couples can withdraw up to $50,000) from their RRSPs for a down payment. Home buyers who have repaid their RRSP may be eligible to use the program a second time. For more information: www.cra.gc.ca. Enter ‘Home Buyers’ Plan’ in the search box.

2 GST REBATE ON NEW HOMES

New home buyers can apply for a rebate of the federal portion of the HST (the 5% GST) if the purchase price is less than $350,000. The rebate is up to 36% of the GST to a maximum rebate of $6,300. There is a proportional GST rebate for new homes costing between $350,000 and $450,000. For more information: Canada Revenue Agency www.cra-arc.gc.ca. Enter ‘RC4028’ in the search box.

3 BC NEW HOUSING REBATE (HST)

Buyers of new or substantially renovated homes priced up to $525,000 are eligible for a rebate of 71.43% of the provincial portion (7%) of the 12% HST paid to a maximum rebate of $26,250. Homes priced at $525,000+ are eligible for a flat rebate of $26,250. For more information: www.hstinbc.ca/making_your_choice/ faqs/new_housing_rebate/

4 BC NEW RENTAL HOUSING REBATE (HST)

Landlords buying new or substantially renovated homes are eligible for a rebate of 71.43% of the provincial portion of the HST, up to $26,250 per unit. www.hstinbc.ca/making_your_choice/ faqs/new_housing_rebate/

5 BC PROPERTY TRANSFER TAX (PTT) FIRST TIME HOME BUYERS’ PROGRAM

Qualifying first-time buyers may be exempt from paying the PTT of 1% on the first $200,000 and 2% on the remainder of the purchase price of a home priced up to $425,000. There is a proportional exemption for homes priced up to $450,000. For more information: www.rev.gov. bc.ca/rpt

6 FIRST-TIME HOME BUYERS’ TAX CREDIT (HBTC)

This federal non-refundable income tax credit is for qualifying buyers of detached, attached, apartment condominiums, mobile homes or shares in a cooperative housing corporation. The calculation: multiply the lowest personal income tax rate for the year (15% in 2010) x $5,000. For the 2010 tax year, the maximum credit is $750. For more information: www.cra.gc.ca/hbtc

7 BC HOME OWNER GRANT

Reduces school property taxes by up to $570 on properties with an assessed value up to $1,150,000. For 2011, the basic grant is reduced by $5 for each $1,000 of value over $1,150,000, and eliminated on homes assessed at $1,264,000. An additional grant reduces property tax by a further $275 for a total of $845 for seniors, veterans and the disabled. This is reduced by $5 for each $1,000 of assessed value over $1,150,000 and eliminated on homes assessed at $1,319,000+. For more information: www.rev.gov.bc.ca

8 BC PROPERTY TAX DEFERMENT PROGRAMS

Property Tax Deferment Program for Seniors. Qualifying home owners aged 55+ may be eligible to defer property taxes. Financial Hardship Property Tax Deferment Program. Qualifying low-income home owners may be eligible to defer property taxes. Property Tax Deferment Program for Families with Children. Qualifying low income home owners who financially support children under age 18 may be eligible to defer property taxes. For more information: www.sbr.gov.bc.ca and enter ‘Property tax deferment’ in the search box or contact your municipal tax office.

9 CANADA MORTGAGE AND HOUSING (CMHC) RESIDENTIAL REHABILITATION ASSISTANCE PROGRAM (RRAP) GRANTS.

This federal program provides financial aid to qualifying low-income home owners to repair substandard housing. Eligible repairs include heating, structural, electrical, plumbing and fire safety. Grants are available for seniors, persons with disabilities, owners of rental properties and owners creating secondary and garden suites. For more information: www.cmhc-schl.gc.ca/en/co/prfinas/ prfinas_001.cfm

10 CMHC MORTGAGE LOAN INSURANCE PREMIUM REFUND

Provides home buyers with CMHC mortgage insurance, a 10% premium refund and possible extended amortization without surcharge when buyers purchase an energy efficient mortgage or make energy saving renovations. For more information: www.cmhc.ca/en/co/ moloin/moloin_008.cfm#reno

11 ENERGY SAVING MORTGAGES

Financial institutions offer a range of mortgages to home buyers and owners who make their homes more energy efficient. For example, home owners who have a home energy audit within 90 days of receiving an RBC Energy SaverT Mortgage, may qualify for a rebate of $300 to their RBC account. For more information: www.rbcroyalbank.com/products/mortgages/energy-saver-mortgage.html

12 LOW INTEREST RENOVATION LOANS

Financial institutions offer ‘green’ loans for home owners making energy efficient upgrades. Vancity’s Bright Ideas personal loan offers home owners up to $20,000 at prime + 1% for up to 10 years for ‘green’ renovations. RBC’s Energy Saver loan offers 1% off the interest rate for a fixed rate installment loan over $5,000 or a $100 renovation on a home energy audit on a fixed rate installment loan over $5,000. For information visit your financial institution or go to : www.vancity.com/Loans/BrightIdeas/ or www.rbcroyalbank.com/ and in the search box enter ‘energy saver loan’.

13 LIVESMART BC: EFFICIENCY INCENTIVE PROGRAM

Home owners improving the energy efficiency of their homes may qualify for cash incentives through this provincial program provided in partnership with Terasen Gas, BC Hydro, and FortisBC. Rebates are for energy efficient products which replace gas and oil furnaces, pumps, water heaters, wood stoves, insulation, windows, doors, skylights and more. The LiveSmart BC program also covers $150 of the cost of a home energy assessment, directly to the service provider. For more information: www.livesmartbc.ca/rebates

14 BC RESIDENTIAL ENERGY CREDIT

Home owners and residential landlords buying heating fuel receive a BC government point-of-sale rebate on utility bills equal to the provincial component of the HST. For more information: www.sbr.gov.bc.ca/documents_library/notices/HST_ Notice_010.pdf

15 BC HYDRO APPLIANCE REBATES

Mail-in rebates of $25 – $50 for purchasers of ENERGY STAR clothes washers, refrigerators, dishwashers, or freezers until March 31, 2011, or when funding for the program is exhausted. For more information: www.bchydro.com/rebates_savings/appliance_rebates.html

16 BC HYDRO FRIDGE BUY-BACK PROGRAM

This ongoing program rebates BC Hydro customers $30 to turn in spare fridges in working condition. For more information: www.bchydro.com/rebates_savings/ fridge_buy_back.html

17 BC HYDRO WINDOWS REBATE PROGRAM

Pay no HST when you buy ENERGY STAR high-performance windows and doors. This offer is available until March 31, 2011. For more information: www.bchydro.com/rebates_savings/windows_offers/ current_offers.html

18 BC HYDRO MAIL-IN REBATES/ SAVINGS COUPONS

To save energy, BC Hydro offers rebates including 10% off an ENERGY STAR cordless phone. Check for new offers and for deadlines. For more information: www.bchydro.com/rebates_savings/coupons. html

19 TERASEN GAS REBATE PROGRAM

A range of rebates for home owners include a $50 rebate for upgrading a water heater, $150 rebate on an Ener-Choice fireplace (both good to March 31, 2011) and a $1,000 rebate for switching to natural gas (from oil or propane) and installing an ENERGY STAR heating system (good to Feb. 29, 2012). For more information: www.terasengas.com and in the search box enter ‘rebates’.

20 TERASEN GAS EFFICIENT BOILER PROGRAM

For commercial buildings, provides a cash rebate of up to 75% of the purchase price of an energy efficient boiler, for new construction or retrofits. For more information: www.terasengas.com and in the search box enter ‘gas efficient boiler program’.

21 CITY OF VANCOUVER SOLAR HOMES PILOT

This rebate of $3,000 (about 50% of the cost) is for a Vancouver home owner upgrading to a solar hot water system from a gas system. Offered by the City of Vancouver, SolarBC, Terasen Gas and Offsetters on a first come, first served basis to March 2011 until the City reaches its target of 30 solar homes. For more information: www.vancouver.ca/sustainability/SolarHomes.htm

22 CITY OF VANCOUVER RAIN BARREL SUBSIDY PROGRAM

The City of Vancouver provides a subsidy of 50% of the cost of a rain barrel for Vancouver residents. With the subsidy, the rain barrel costs $75. Buy your rain barrel at the Transfer Station at 377 W. North Kent Ave., Vancouver, BC. Limit of two per resident. Bring proof of residency. For more information: www.vancouver.ca and in the search box enter ‘rain barrel program.’ Other municipalities have similar offers.

23 VANCITY GREEN BUILDING GRANT

In partnership with the Real Estate Foundation of BC, Vancity provides grants up to $50,000 each to qualifying charities, not-for-profit organizations and co-operatives for projects which focus on building renovations/retrofits, regulatory changes that advance green building development, and education to increase the use of practical green building strategies. For more information: www.vancity.com

24 LOCAL GOVERNMENT WATER CONSERVATION INCENTIVES

Your municipality may provide grants and incentives to residents to help save water. For example, the City of Coquitlam offers residents a $100 rebate and the City of North Vancouver, District of North Vancouver, and District of West Vancouver offer a $50 rebate when residents install a low-flush toilet. Visit your municipality’s website and enter ‘toilet rebate’ to see if there is a program.

25 LOCAL GOVERNMENT WATER METER PROGRAMS

Your municipality may provide a program for voluntary water metering, so that you pay only for the amount of water that you use. Delta, Richmond and Surrey have programs and other municipalities may soon follow. Visit your municipality’s website and enter ‘water meter’ to find out if there is a program.

Origin Goes Mobile

As the UK rock band chicagobearsjerseyspop “The Who” once professed in one of their Top hit songs….we’re going mobile!

We have just launched a mobile website for our client and referral partners to LONG-TERM quickly access rates, calculators and news updates from their mobile phone and it is properly formatted to enhance your By viewing experience. Check it out at http://m.origingroup.ca and bookmark it for future mobile reference.

Watch for our Steelers Mortgage Advisors to get on the mobile band wagon in short order with personalized mobile You sites for you to d’Allaiton access and preview for prospective clients.

Metro Vancouver, rest of B.C. show sharp differences in housing price changes

The Vancouver Sun,  February 14, 2011

B.C.’s real estate market appears to be morphing into two categories: Metro Vancouver and the rest of the province.

While Metro Vancouver saw a strong increase in the average home price over the past year – up 19.6 per cent in January compared to January 2010, from $638,000 to $763,000 — that’s not the case for most other regions of B.C., according to a survey released Monday by the B.C. Real Estate Association, which represents 11 real estate board across the province and 18,000 realtors.

Except for Metro Vancouver, the Fraser Valley and – for this month, at least – the Kootenays, the province has seen average prices fall, in some cases substantially, in every region in January compared to the same month last year.

“There’s certainly a divergence in the market [between] the south coast and the rest of the province,” BCREA chief economist Cameron Muir said in an interview Monday. “There’s very strong market activity in parts of Vancouver. And that’s skewing the average price higher.”

Despite the difference between Metro Vancouver and the rest of the province, Muir said the numbers can be misleading because the huge increase in Metro Vancouver’s average price was largely because of a surge in purchases of luxury, executive homes in Richmond and the west side of Vancouver.

He said the “benchmark” price — the price of a typical home in Vancouver — actually rose just a bit more than two per cent over the year. He did not have information on benchmark prices for elsewhere in the province.

According to the BCREA survey, the average price of a home in B.C. rose 11.5 per cent, to $548,183, in January compared to January, 2010.

The BCREA also said that Multiple Listing Service sales climbed seven per cent in January from December 2010, on a seasonally adjusted basis.

Compared to January of last year, home sales were down 10 per cent, to 4,137 units.

The survey noted that the inventory of homes for sale remained below 47,000 units for the third consecutive month in January, down 14 per cent from the spring of last year.

While the south Okanagan saw prices drop 8.9 per cent, from $310,000 to $283,000, the Okanagan Mainline (from Kelowna north) saw prices drop 2.9 per cent, from $387,000 to $376,000.

Vancouver Island prices dropped 5.7 per cent, from $328,000 to $309,000, while Victoria prices fell 4.5 per cent, from $510,000 to $486,000.

B.C. Northern prices fell 4.6 per cent, from $215,000 to $205,000, Chilliwack dropped five per cent, from $289,000 to $275,000, and Kamloops prices dropped 1.5 per cent from $314,000 to $309,000.

Powell River saw the steepest drop in the province, 29.6 per cent, from $301,000 to $212,000, while Kootenay bucked the trend in January with a 4.7-per-cent increase, from $264,000 to $276,000.

Muir said Vancouver is doing better because its economy is more diversified that the rest of B.C. and also has the advantage of significantly more immigrants, many of whom are in the investor class and typically buy a house upon arrival.

Muir noted that the Okanagan is in buyers’ market conditions, with 22 months of housing supply, meaning that it would normally take 22 months to use up the existing inventory.

“In Vancouver, it’s 6.1 months of supply. A balanced market is typically five to seven months.”

As well, he noted, one of the Okanagan’s main source of buyers – Alberta investors – has dried Sports up, with many looking south of the border for cheaper recreational properties.

Carol Frketich, B.C. regional economist for Canada Mortgage and Housing Corp., said in an interview that while a one-month snapshot doesn’t tell the whole story, Metro Vancouver has generally done better than the rest of the province.

“And Vancouver’s employment has been stronger than the provincial average. That provides a solid basis for the housing demand.”

Frketich noted that housing starts in the Vancouver CMA (census metropolitan area) saw a 57-per-cent hike in January to 1,436 from 917 in January 2010, with the Abbotsford and Kamloops CMAs also saw increases.

On average, urban centres saw a 15-per-cent rise over that period, although Frketich cautioned that one month doesn’t indicate a trend.

Meanwhile, Muir said he expects home sales to moderate this year as higher interest rates push mortgages up, impacting affordability.

He said there should be a “moderate improvement” in interior home prices in 2011.