Huffpost British Comumbia..Posted: 01/23/2013 

Bloomberg recently published a chart highlighting the relationship between Vancouver real estate and China's economy, suggesting that what happens in China has as much influence on the city's housing market as Canada's own economic policies.

Bloomberg pointed out that China's gross domestic product expanded by an annual rate of 7.9 per cent in the fourth quarter of 2012 — up from 7.4 per cent in the prior quarter and the economy's first acceleration in two years.

Their graph established a direct correlation between China's GDP and Vancouver's housing prices — as China's GDP rose, so did Vancouver's real estate prices. If the trend holds, Bloomberg predicts, Vancouver's real estate prices should also soon rise.

Correlation isn't causation — and Vancouver's real estate market is certainly complex — but the Bloomberg research supports my prediction that Chinese buyers will be back to Vancouver real estate sooner rather than later.

Some background: Over the past year, mainland Chinese investor buyers all but disappeared from Vancouver's real estate marketplace, contributing to what was already a softening market in metro Vancouver.

But why did Chinese investors disappear in the first place? During the first decade of the new millennium, real estate prices in China were astronomic — even more expensive than Vancouver. In 2009, China introduced a policy designed to cool investor speculation in real estate. This policy, which was meant to help ordinary citizens buy their own home, stipulated that buyers could purchase their first home with 30 per cent cash down, but if they bought a second property, a whopping 60 per cent down payment is required. As a result of the policy, prices in major cities such as Beijing dropped by 30 to 40 per cent, effectively halting the investor market in the country.

What the policy did was greatly reduce the amount of cash investors had to invest in real estate, both in China and overseas.

Typically, Chinese New Year is when Chinese investors visit Vancouver and go on a shopping spree, but last year, Vancouver real-estate developers and marketers noticed the absence of the mainland Chinese buyer, a telltale sign that China's policy was working and that the overall economy was slowing down.

Here's why I think Chinese investors will return. In China, the real-estate industry accounts for 11 per cent of the country's overall GDP. Including related industries like appliances and furniture, you're looking at a hefty 22 to 25 per cent of the country's GDP. The People's Republic of China simply cannot afford to have this important industry stall, which is why I believe that the Chinese government will relax the restrictive lending policies, investors will start getting back into the market and, as their assets become more liquid, we'll see them return to Vancouver.

The brisk return of China's real-estate market means many Chinese will once again look for a safe haven to park their newly regained wealth.

While China's policy change has impacted investors' cash flow in the short term, it hasn't curbed their enthusiasm for Vancouver real estate. The sudden rise and fall in real estate prices that we're seeing now in China, as well as fluctuations in the overall economy, mean that people view investing there as no less risky than placing bets on a baccarat table. For many Chinese investors, parking money in Vancouver feels as safe as investing in treasury bills.

The People's Republic of China has a new leader in Xi Jinping and historically every change in leadership brings with it new policies to create its own legacy. I believe that with this leadership change, we will see major changes in the country's mortgage-lending policies and a renewed interest in real estate investing.

Experts predict that Vancouver's real estate market in 2013 will decline slightly, not crash. And with the likely return of the Chinese investor and the news that the Bank of Canada will hold the interest rate at one per cent, the future of Vancouver's real estate may not be as bad as what the headlines would have you believe

A version of this article first appeared in B.C. Business.

For more information, please contact:

BCREA represents 11 member real estate boards and their approximately 18,000 REALTORS® on all provincial issues, providing an extensive communications network, standard forms, economic research and analysis, government relations, applied practice courses and continuing professional education (cpe). 

 “Copyright British Columbia Real Estate Association. Reprinted with permission.” BCREA makes no guarantees as to the accuracy or completeness of this information. 

For more information, please contact:

BCREA represents 11 member real estate boards and their approximately 18,000 REALTORS® on all provincial issues, providing an extensive communications network, standard forms, economic research and analysis, government relations, applied practice courses and continuing professional education (cpe). 

 “Copyright British Columbia Real Estate Association. Reprinted with permission.” BCREA makes no guarantees as to the accuracy or completeness of this information. 

From civicsurrey.com

A retail leasing document for PCI’s King George Station development is revealing new details about the City’s rapid transit future. Retail floorplans in the document show that the mixed-use, transit-oriented development has been planned to accommodate two rapid transit stations. On the north end of the property, adjacent to the SkyTrain, a light rail station is being planned, with service east to Langley along Fraser Highway. The development also re-orients King George Boulevard, reducing the northbound roadway to two lanes, while re-allocating the remaining space to two bus-only lanes. A station on the western edge of the property will be reserved for a bus rapid transit service down King George to South Surrey/White Rock.

Major developments like this spend a lot of time working with staff and planners to accommodate the City’s anticipated needs, like rapid transit stations, well before the application comes to Council, meaning it is in here for a reason.

This new information points to a softening in positions by both the City and TransLink. Up until now, the City has firmly supported Light Rail, insisting that it is the only technology able to shape growth and serve growing transit demand today and tomorrow. Meanwhile, TransLink has been adamant that Bus Rapid Transit is sufficient to support the South Fraser out to 2040.

Perhaps this new solution – one LRT and one BRT – is a new compromise both parties can agree to. Light Rail on Fraser would support TransLink’s regional goals of faster and better connections to Regional Town Centres, while still improving transit on the busy King George route. Surrey would be able to obtain at least one Light Rail line, showcasing the technology and its possibilities for future routes. A busway on King George could be adapted to LRT relatively easily at a later date if public demand warrants it.

ROBERT MCLISTER

Special to The Globe and Mail

It would seem that regulators want to dissuade Canadians from buying homes with nothing down. Yet despite all of the recent changes, buyers can still get into the real estate market with little cash on hand Ottawa did away with Canada Mortgage and Housing Corp .-insured 100 per cent financing back in 2008. Home buyers with few savings searching for an alternative were left with cash-back down payment mortgages. (That’s where a lender gives you your 5 per cent required down payment, in exchange for a higher rate.) But those didn’t last long because in 2012, regulators barred banks from offering cash back for down payments.

Purchasing a home without your own down payment is often risky. One exception is when a borrower is well-qualified (apart from the down payment), has enough potential resources to withstand a loss of income and falling home prices, and is better off owning than renting. But exceptions are just that, and not the rule.

Young people use alternative down payment sources more often than most. Why? The main reason is a lack of savings. At a time when the average national home price has jumped to $356,687, the Canadian Association of Accredited Mortgage Professionals finds that more than one in four renters have less than $5,000 saved for a down payment. Yet, many of these folks are dead set on owning a home, so they end up using one of the down payment methods listed below.

Borrowing from other credit sources When buying a home, you generally need at least 5 per cent of the purchase price as a down payment. Ottawa prohibits you from borrowing that 5 per cent from your mortgage lender if that lender is a bank or federal trust company.

Meanwhile, you’re free to borrow your down payment from a line of credit, personal loan or even a credit card. That’s right, if you’re creditworthy you can throw your down payment on a VISA at 20 per cent interest. Mind you, not all lenders allow this and the ones that do check that you can afford the extra debt payment.

One obvious problem with borrowing your down payment is the higher interest cost. Even if you use a line of credit, the interest rate on your down payment loan can be much higher than a regular mortgage, or have a riskier variable rate.

“Borrowing a down payment from less suitable sources is a potential issue,” acknowledges Gord McCallum, broker and president of First Foundation Inc. “Often times, with new mortgage regulations there can be unintended consequences that are worse than the problem they’re purported to solve, and this may be one of them.”

Getting a cash-back down payment mortgage In many provinces, lenders that aren’t federally regulated (like credit unions) can still offer cash-back down payment mortgages. The few that actually do will give you 5 per cent cash to use for your down payment. You then need to cough up only your closing costs, which include legal and inspection fees, the land transfer tax and so on.

Not surprisingly, the interest rate on cash-back mortgages is well above a normal mortgage. But when you factor in the “free” cash, the overall borrowing cost isn’t that horrible. The main downside of a cash-back mortgage is that you have little equity cushion if home prices fall and you need to sell. And if you break the mortgage early, your lender can take back much or all of the cash it gave you.

Going forward, the days of cash-back down payment mortgages may be numbered. There is speculation that they’ll be eliminated in 2013–by either mortgage insurers, provincial regulators or both. For now, however, a handful of credit unions still offer them to people with strong credit, with Ontario-based Meridian Credit Union being the biggest such lender.

Using a gifted down payment If you’re a young home buyer with a generous relative, you may be lucky enough to get your down payment as a gift. Most lenders will consider a gifted down payment if the donor is a parent, grandparent or sibling.

Unfortunately, while not an epidemic problem, it’s no secret that a small number of borrowers fraudulently claim their down payments as “gifts,” even though they fully intend to repay the money. That raises the risk level for lenders because the borrower’s debt obligations increase. Of course, both the borrower and giftor must attest in writing to gifted funds being non-repayable, but that is hard to police after closing.

RRSP Home Buyers Plan (HBP) First-time buyers can borrow up to $25,000 from their RRSP as a down payment. But this is a very different kind of loan, for three reasons:

1. You’re borrowing from your own retirement savings, as opposed to a third party.

2. You don’t have to start repaying the loan until the second year after the year you make your withdrawal.

3. Even though Revenue Canada wants the funds paid back in 15 annual instalments, lenders don’t include those repayments in a borrower’s debt calculations. As a result, some people get approved for a mortgage only to find themselves caught in an annual cash crunch because they didn’t budget for their HBP payment.

The RRSP HBP comes with other perils. By draining your retirement savings, you risk losing years of tax-deferred investment gains. That’s a decision that some will later regret.

Moreover, any instalments that aren’t paid back on time are taxed as income in that year. And as many as one-quarter of HBP participants have missed or underpaid their instalments in the past.

Special lender and government programs Various provinces and municipalities provide down payment assistance grants. These programs are typically for people with low or moderate income. Despite these borrowers being higher risk, in some cases, they’re permitted to buy a home with nothing down.

There are also specialized programs at individual lenders. For example, Canada’s biggest credit union, Vancity, currently finances an affordable condo project in Vancouver whereby it lends 90 per cent of the purchase price while the developer provides a 10 per cent second mortgage with no interest and no payments.

All of these down payment alternatives have one thing in common. They all come with some degree of added risk. It’s curious how Ottawa encourages people to have their own skin in the game, yet sanctions various substitutes to the traditional 5 per cent down payment.

If you do use one of these down payment alternatives, remember these two things: Buying a home without your own cash is not a decision to take lightly. And qualifying for a mortgage doesn’t mean can successfully carry one.

Rob McLister. "Canadians can still buy a house without saving their pennies." January 18, 2013.

Vancouver, BC –January 14, 2013. The British Columbia Real Estate Association (BCREA) reports that a total of 67,637 residential sales were recorded by the Multiple Listing Service® (MLS®) in BC during 2012, a decline of 11.8 per cent compared to 2011. Total sales dollar volume declined 19.1 per cent to $34.8 billion over the same period. The annual average MLS® residential price in the province was $514,836 in 2012, down 8.3 per cent from 2011.

"A notable pullback in consumer demand in Vancouver and the Fraser Valley during 2012 was more than enough to offset increases in home sales in the Okanagan, Kootenays and BC Northern regions,” said Cameron Muir, BCREA Chief Economist.

“At least half of the 8 per cent decline in the BC average home price was the result of fewer luxury homes selling in Vancouver and fewer overall Vancouver home sales relative to the rest of the province in 2012.”

In December, BC residential sales dollar volume was down 28.6 per cent to $1.5 billion, compared to December 2011. Residential unit sales declined 26.4 per cent to 3,011 units, while the average MLS® residential price was down 3 per cent to $498,205 over the same period.

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For more information, please contact:

BCREA represents 11 member real estate boards and their approximately 18,000 REALTORS® on all provincial issues, providing an extensive communications network, standard forms, economic research and analysis, government relations, applied practice courses and continuing professional education (cpe).

by Eric Putnam, PFP, RQIC

A September 2012 Harris/Decima survey asked Canadians how confident they were about being able to raise $2,000 within a month if an unexpected need arose. Some 92 per cent said they’d have to consider borrowing to come up with some of the cash, and only 45 per cent said they’d never faced a debt problem. The poll results come as Canadian debt-to-income ratios sit at a record 152 per cent and officials issue warnings to start paying down debt before interest rates rise. But those survey findings suggest consumers have been unmoved by warnings and that the resulting financial burden could sink some households This is the third part of a CMP series regarding debt solutions. Based upon discussions our team has had with mortgage professionals acrossCanada, there are many myths regarding how debt solutions affect Canadians’ finances and their credit profiles. We hope to clarify these myths so as a trusted adviser you are better prepared to assist your clients.

The truth on Credit Counselling and Debt Management Plans

Non-profit credit counselling agencies offer “debt management plans” (or DMPs) generally collect fees of up to $49 per month from consumer for 36 - 60 months until 100per cent of the enrolled debt is repaid. Each lender determines a “fair-share contribution” as a percentage of what is remitted by the agency. Creditors are not required to participate.

Impact on credit bureaus: Enrolled debts are reported by lenders to credit reporting agencies as R-7 or I-7. As per their purge rules, Equifax will remove a debt in a DMP three years after completion and TransUnion will remove it two years after completion.

The truth on Debt Settlement
Debt settlement firms have become active inCanada following their development in theUnited States.Alberta andManitoba passed legislation pertaining to debt settlement firms after the U.S. Federal Trade Commission passed regulations in 2010 that banned upfront fees to protect consumers. Unless a “bad debt,” it is often unlikely a creditor will approve a settlement offer. Creditors can refuse to participate and still pursue legal action to collect.

Impact on credit bureaus: If successful, a debt is reported by lender as “settled” and rated as R-9 or I-9. As per Equifax’s and TransUnion’s purge rules, the debt will remain as a trade line for six years from the date that the final payment is reported as “received,” whether settled or not.

The truth on Consumer Proposals

To qualify for a consumer proposal regulated by the federal government’s Office of Superintendant of Bankruptcy (OSB), Canadians must be “insolvent.” The OSB defines insolvency as “the condition of being unable to pay one’s debts as they become due, or in the ordinary course of business or having liabilities that exceed the total value of assets.” (In simple terms a consumer proposal could be considered a court-protected form of debt settlement.)

Consumer proposals have been an alternative to bankruptcy since 1992 inCanada. A trustee, licensed by the OSB, must show the consumer’s unsecured creditors they will receive more by accepting a proposal than a bankruptcy. If creditors representing the majority of dollars owed vote to accept the proposal all other unsecured creditors are bound under the same terms regardless of their vote.

A mortgage or other secured loan cannot be “called” due to filing a proposal. Mortgages for those consumers in a proposal are most often renewed by the current lender as long as they are paid as required.

Interest stops on filing and repayment can be for a maximum of 5 years. Payments can accommodate seasonal income, commissions, etc.Saleof an exempt asset or assistance from family can be used to partially or fully fund a proposal.

Unless co-signed filing of a proposal does not affect a spouse.
Impact on credit bureaus: Debts included in a proposal are rated R-7 or I-7 and remain on credit reports for 3 years after completion per Equifax and TransUnion’s purge rules.

The truth on Bankruptcy

Since September 2009, a first bankruptcy with surplus income as defined by the OSB guidelines is not discharged for 21 months. Canadians filing bankruptcy can keep assets exempt from seizure as set by the resident province or territory. Since 2008, RRSP contributions more than 12 month prior to filing any insolvency are exempt from seizure. Many are able to keep “non-exempt” assets by paying the trustee the asset value on a payment plan. A second-time bankruptcy will not be discharged for at least 36 months.

Impact on credit bureaus: Per Equifax and TransUnion’s purge rules, first-time bankruptcy remains on credit reports for six years from the date of discharge and a second bankruptcy remains for 14 years.

The truth on Statute of limitations

Each province’s statute of limitation determines how long a lender has to take legal action to collect consumer debt. For example, inOntarioandAlbertalenders cannot obtain judgment where nothing has been paid within 24 months prior. Other provinces vary from three to six years. Note the debt remains on credit reports for six years from date of last payment or activity per Equifax and TransUnion collection purge rules.

Fraser Valley’s real estate market in 2012 will be remembered as the year buyers and sellers took a breather reflecting quieter sales, an average number of new listings and prices overall remaining flat.

The president of Fraser Valley’s Real Estate Board, Scott Olson, says, “The last half of 2012 was like a Mexican stand-off. Buyers kept hoping for greater price drops while sellers who didn’t have to sell just took their home off the market rather than lower their price.

“With the economy so stable, we’re not in a situation where people have to sell their home, so they’re not. It’s a very different market than in 2008 when listings were at an all-time high and sales were at historical lows.”

The Board’s Multiple Listing Service® processed 13,878 sales in 2012 compared to 15,529 the previous year, a decrease of 11 per cent, while the number of new listings remained about the same – 31,009 in 2012 compared to 31,592 in 2011. Over the year, the number of active listings for buyers to choose from dropped by 3 per cent going from 7,399 properties in December 2011 to 7,187 in December 2012.

Although 2012 ranks the second slowest year for sales in Fraser Valley since 2003, the volume of new listings finished in the middle of the pack. Scott Olson, says, “Inventory levels are down, which is a sign of a healthy market where insufficient demand leads to reduced supply. This is also keeping prices in most areas either flat or down only slightly.”

In December, the benchmark price of a detached home in the Fraser Valley was $539,000, an increase of 1.2 per cent compared to $532,700 in December 2011 and a decrease of 1.0 per cent compared to November.

For townhouses, the benchmark price in December was $296,400, a decrease of 2.2 per cent compared to the same month last year when it was $303,000 and down 0.8 per cent compared to November. The benchmark price of apartments in December was $200,100, an increase of 1.6 per cent compared to December 2011 when it was $196,900 and a decrease of 1.3 per cent compared to November.

Average prices year over year show detached homes down 3 per cent – $576,709 in 2012 compared to $594,402 in 2011. The average price of townhomes increased by 3.7 per cent, going from $316,259 in 2011 to $327,935 in 2012 and the average price of apartments decreased by 0.2 per cent going from $218,235 in 2011 to $217,843 in 2012.

For more information, please contact:

BCREA represents 11 member real estate boards and their approximately 18,000 REALTORS® on all provincial issues, providing an extensive communications network, standard forms, economic research and analysis, government relations, applied practice courses and continuing professional education (cpe). 

“Copyright British Columbia Real Estate Association. Reprinted with permission.”

Tax assessments are just that, assessments of value done by someone who has probably never seen the home and is going by average increases or decreases of homes sold in the area. The do not take into account updates that may have improved your homes value or conversely the updates the homes that sold had done that improved the value of those homes but not yours.

Remember this is the value estimated on July 1^st 2012 so it is already 6 months behind so the actual value may have gone up or down since then.

You can appeal this assessment, but do it fast as you are only allowed a few days after the assessment in issued.

These are really just an estimate of your homes value and do not in reality have any effect on the sale value of you home the only true test is by selling the home, the price a buyer is the only true value you can assign to your home, soon to be theirs!