The city plans to turn an old prison into social housing in the Downtown Eastside, but it should consider this edgy alternative first

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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.

OTTAWA — 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.

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The Ottawa-based group, which represents 100 boards across the country, said July sales plunged 6.8% on a seasonally adjusted basis from a month ago, a decline “almost entirely the result of fewer sales in British Columbia and Ontario.”

The slowdown had been expected as consumers rushed to buy homes ahead of the July 1 implementation in those provinces. The HST only applies to services used in purchasing and selling an existing home, such as real estate commission, and not the actual sale price.

In British Columbia sales dropped 14.1% from a month ago on a seasonally adjusted basis and Ontario the decline was 8%. The two provinces accounted for 85% of the the change in national activity.

“The soft sales figures we’re seeing right now can be attributed in part to accelerated home purchases earlier in the year,” said Georges Pahud, CREA president.

The group noted the drops in sales was smaller than in previous months with the Prairie provinces and Quebec staying even with June levels.

However, sales are showing they cannot keep pace with the blistering activity of the second half of 2009. Actual July sales dropped 30% from a year ago when activity set a record for the month. Still, for the first seven months of this year sales remain up 5.6% from a year ago. CREA warned activity will be off for the rest of of 2010 on a year-over-year basis.

“Activity may remain at lower levels for some time, but ultimately we expect a more stable market to emerge, with demand coming back into line with economic fundamentals, said Mr. Pahud. “While the outlook for economic and job growth remains generally positive nationally and in all provinces, the pace of the recovery will vary by region.”

The housing market continues to get a boost from supply dropping which is expected to keep prices stable. The seasonally adjusted number of new residential listings fell 7.2% in July from June — the third consecutive month-over-month decrease and the steepest drop in more than a decade.

But the impact on prices, which are the now relatively flat, was minimal. The average price of a homes sold in July was $330,351, just a 1% increase from a year. Again, CREA said the lack of activity in B.C. and Ontario, which included two of the country’s most expensive marketed, likely skewed average prices down.

On province-by-province basis, prices also dropped in Nova Scotia and Prince Edward Island but every other province had gains above the national average.

Overall inventory is climbing. The number of months of inventory, which represents the number of months it would take to sell current inventories at the current rate of sales activity, was seven month in July. A year ago the number was 4.4 months.

gmarr@nationalpost.com

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This is what John Ruskin knew more than 100 years ago: “There is nothing in the world that some men cannot make a little worse and sell a little cheaper, and he who considers price only is that man’s lawful prey.”

When someone perhaps not properly informed is preyed upon, buying business by offering lower prices is relatively easy.  This is the essence of real estate commoditization, and in my opinion, using the cost of selling is the laziest and riskiest method to market with.

The home buying and selling public do not always understand a real estate sales professional’s value, and in many cases they believe all real estate agents do the same thing.

When the consumer is presented the full spectrum of service models (and credentials) to understand and make an informed choice, value versus price commoditizing will win every time and besides, the risks that can accompany a bungled transaction far outweigh the costs.

In “Balanced” and “Buyers” markets there are many Sellers getting in “pennywise, pound-foolish” situations, and it has been proven time and time again that far too many lose.

The real estate industry commonly offers the public something called, “Full Service”, which is a bundled package that is generally undefined.

Even some of these generically named, “Full-Service” real estate models will provide for economizing consumers, but can only maximize the ROI with some regularity in a “Sellers” market.

Selling using William’s “fee for service” model certainly won’t guarantee that a Seller doesn’t face additional commission fees. If a Seller posts through William for $109 and the buying party is using a real estate agent, commission fees based on the selling price will likely apply.

Research findings of Richard Robbins International show that a Buyers representative spends on average 32 hours with a Buyer. When the other costs are figured in, that Buyers representative will expect to be fairly compensated if they deliver a pre-approved Buyer to the Seller.

Offering a low Buyer’s commission is counter intuitive if a Seller wants to attract pre-approved, qualified Buyers.

Despite being unaware of the many issues that can complicate a sales transaction, some sellers using low cost fee for services are successful in getting what they pay for.

An “economical” sale is more likely to cost unsuspecting consumers more money, take up much more time than selling with a professional, and has additional risks.

The time spent planning, preparing (the home itself, making signs, printing feature sheets, etc), advertising (newspaper, Internet, etc), taking or returning phone calls, arranging showings (to sell an average home requires 12-20 showings, each showing takes 30-45 minutes), etc., is daunting.

Unlike a Realtor, the public is not covered by errors and omissions insurance and will face the risks of showing the home and everything in it to unqualified buyers.

Many buyers who do look at private sales are bargain-hunters looking to save, and don’t kid yourself, they are well informed and expect the full commission deducted from the sales price.

What if, like the majority of unassisted sales, your house undersells by 3 or 4% because of the discount mentality? Ouch!

If by chance (or because it was priced too low) you were able to obtain multiple offers are you able to deal correctly with them?

Don’t forget the fact that dealing with unqualified buyers often leads to private Sellers having numerous offers collapse.

A discounted service that loses sales, reduces marketability, results in a lower selling price, or misses any opportunity, could be a very expensive lesson.

When you lower your commission, you essentially have two choices – to reduce your profit margin, or to cut back on what you use to get the home sold. Neither scenario is very attractive or helpful in guaranteeing you earn the highest possible price for that home.

Think about how much you really saved in commissions? What other experts offering low cost solutions do you know?

Remember that a Realtor offering fee concessions has already given away a part of their commission before they’ve even started. Do you really want them negotiating for you?

Your choice of Realtor could be the best investment you make as either a Buyer or Seller.  Why compromise?  Well it is your money and it is your choice, so choose wisely.

Going into a real estate transaction few people understand what (value) they are getting, which has contributed to a belief by some that Realtors are overpaid.

You should question the value of the business model that you choose for your real estate services because most REALTORS work on a contingency basis, which means they don’t get paid unless you are successful.

The value of loyalty offered by REALTORS working on a contingency basis (versus, “fee for service”) to consumers in a real estate transaction is unquestionable and underestimated.

Sure, we’re more expensive than the competition, but there’s a good reason for that …

All things are not equal and I set myself apart from the low cost, minimal care and short service providers, and I will not compromise my reputation, or my customer’s best interests.

We’re certainly not about to start compromising our reputation by downgrading our service and offering concessions, or most importantly our results.

If you’re looking for cursory services you’ve obviously come to the wrong place. I really want to help people who are interested in what I have to offer (real value for money).

Delivering the high-level of service the customer pays for and the results expected, is where the real differentiation begins.

The most important question we can ask is, “What do our customers expect?” How could I possibly be fulfilling my professional obligations, working in the customer’s best interest, without knowing this?

Through an interview and assessment process I want to clearly understand what a prospective customer expects at the outset.

Then I put together a customized but flexible project plan in writing for the prospective customer to clearly understand what they will get, and if the plan needs to be changed it will be.

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Photograph by: GORD WALDNER, Canwest News Service

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Photograph by: Files, Vancouver Sun

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The national mortgage insurer counted 1,173 new homes across Metro Vancouver in May, a dramatic 150-per-cent improvement on the same month a year ago, which was still in the doldrums of B.C. housing downturn.

For the year to date at the end of May, builders have started work on 5,631 new homes, which is 103 per cent more than for the same period a year ago.

However, Robyn Adamache, Canada Mortgage and Housings senior analyst for Vancouver, said the annualized pace of construction, the estimate for the number of starts that will occur by the end of the year, had slowed some seven per cent compared with April.

Adamache said builders are likely taking their cue from the housing resale market where sales, while still brisk, have eased off their torrid pace of late 2009 and price gains have slowed.

Its the resale market that sets the tone for whats happening in new housing, Adamache said. I think builders are looking at that and will be adjusting accordingly.

Construction of single-family homes has been particularly strong, Adamache said, with the 424 starts in May a 102-per-cent increase from May 2009. Surrey alone accounted for 180 of those single-family starts.

And in Surrey, single-family starts topped multi-family (townhouse and condominium) housing starts both in May, when there were 74 multi-family starts, and for the year-to-date with 921 single-family homes versus 569 multi-family housing starts.

In Vancouver, by contrast, single-family starts are up dramatically, but the 78 homes builders started work on last month and the 261 begun by May 31 were still overshadowed by the 324 multi-family starts in May and 1,306 started as of May 31.

Adamache said the strength of single-family starts, which are higher than their 10-year average for this time of year, was not a surprise given the dynamics of the recent housing downturn.

She added that single-family housing starts slowed the least when builders scaled back construction plans and were the first to come back because single-family construction projects are the easiest to stop or start.

The multiple-unit sector remains below their 10-year average, although market indicators still suggest that the new-home construction market is in balanced conditions, Adamache added.

Vancouver saw the highest number of multi-family starts in May with 324 compared with only 20 in the same month a year ago. For the year-to-date at May 31, Vancouver recorded 1,306 multi-family starts and 1,567 total housing starts.

Peter Simpson, CEO of the Greater Vancouver Home Builders Association, said his members are cautiously optimistic about the future and are launching new projects while keeping one eye on whats happening around them.

They are concerned about where interest rates are going, thats kind of very much up in the air, Simpson said. They’re concerned about the HST [harmonized sales tax] impact.

However, the builders he’s talked to are confident about the projects they are launching and sales they are making.

Deborah Calahan, vice-president of sales and marketing for Morningstar Homes, said the company has seen solid sales at its developments, including North Delta and Abbotsford, and we don’t see that changing.

The market is cyclical, you get your ups, you get your downs, Calahan said. We address the market at whatever point it is at, and always do it in a very positive way.

depenner@vancouversun.com

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CMHC is forecasting that Metro Vancouver will see 35,000 property sales cleared through the realtor-controlled Multiple Listing Service, a 3.5-per-cent decline from 2009 and will slip another three per cent to 34,000 transactions in 2011.

“Certainly the market recovery we saw over the past year, at least anecdotally, a lot of that seems to have been first-time homebuyers taking advantage of the lower [mortgage] rates combined with lower prices,” Robyn Adamache, a market analyst with CMHC said in an interview.

And with prices rebounding past their previous peaks and with mortgage rates having begun to creep up, Adamache added that it makes sense 2010 and 2011 sales will be dominated by move-up buyers.

On prices, CMHC is forecasting that Metro Vancouver’s average price to top $655,000 in 2010, up 10.6 per cent from 2009. In 2011, however, the federal mortgage insurer estimates price growth will edge up 3.1 per cent to $675,000.

Adamache added that an improving economy, which has shown a steady trend of job growth in recent months, along with anticipated strong population migration, should support steady housing sales.

Nationally, CMHC said tougher mortgage rules, higher borrowing costs and rising inventories will help cool what has been a red-hot market.

CMHC forecast housing resales in 2010 to hit 497,300 units, up by seven per cent from last year, then easing 4.8 per cent to 473,500 in 2011. Sales were up 7.7 per cent to 464,730 last year after plunging 17.1 per cent in 2008.

Bob Dugan, CMHC’s chief economist, said the existing-home market will move toward balanced conditions over the next two years as inventory increases. Figures released Monday by the Canadian Real Estate Association showed April inventories at record levels.

With files from Canwest News Service

depenner@vancouversun.com

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