I can hear the naysayers already. “But they’re so cramped looking, people living in them will hear their neighbours all the time and they’ll probably look all cookie cutter when they’re done. I don’t want this in my town.”

To such people I say the following points:

-Condos, townhomes and other kinds of strata exist all over Nanaimo. They provide a lower cost alternative to houses and for many people not having a yard is a benefit, not a problem. Some people don’t have the time, the interest, and in the case of the handicapped or elderly, the ability to maintain a garden.

-I think for most people row housing would be preferable to condos as there is no strata fee/ common property to maintain. Not being part of a strata means having so much more freedom in regard to what you do with your home. (Having said that, it wouldn’t surprise me if some of these row homes were built as strata because some people would rather pay the fee than look after things themselves.)

-From what I hear from people who live in newer side by side duplexes, you don’t usually hear much from you neighbours as soundproofing design has improved a lot of the years.

-Such types of housing are more affordable. The cost of real estate compared to the average income has skyrocketed over the years/decades. Making housing that is affordable is crucial for allowing people to buy their first place while they are as young as possible. This, in turn, will allow for an easier financial life in the long term if they play their cards right.

-As for the concern about cookie cutters… well I might be throwing a rock in the pond with this comment but it has been my observation that some of the most expensive neighbourhoods in Nanaimo are practically this way.  In fact, some row housing is very beautiful. If you do a google image search for row housing you’ll see that many of the ones built in old fashioned styles are actually quite beautiful. Here is a photo of a row of houses that are a well known landmark of San Fransisco in case you didn’t recognize it.

Nanaimo’s  recently updated official community plan involves making a denser population of the next ten years. Which is something I personally applaud, as although I love space, I think it’s important to reduce the need for people to drive everywhere and develop more parts of the city where you don’t feel the need to have a car to get what you need done, done. I’ve lived in places like that and have found that in addition to convenice, it creates greater sense of community in your own area.

You can read a newspaper article about Nanaimo;s plans here.

Ryan Coffey

Below, he describes a service he offers which I think would be of benefit to any homeowner, whether you are buying a home or just trying to save some money on living in your existing one.

Ryan Coffey

Streamlining the Energy Usage of your Home

As a smart homebuyer you will likely have a home inspection completed before you complete your purchase so that you better know what to expect. But what about determining the amount of energy this home uses?

Within the next couple of years it is expected that the province will require all homes (new and resold) to have an energy audit completed before being sold. That way homebuyers will be able to intelligently compare the expected energy consumption of each home, just as we can do with motor vehicles.

In the meantime you can hire an energy consultant to help determine the relative energy efficiency of any given home. This can be done in a walk-about with the homebuyer, or the information can be provided in a written report. The advantage of walking through the home together is that the prospective homebuyer can see its relative strengths and weaknesses, learn what to look for, as well as discuss the various options of updating the home.

In some cases (such as installing a draft stopper in an open fireplace) a solution can be very inexpensive and very cost-effective.

The cost is $150, plus G.S.T.

A report can be given to that home buyer, or to all whom view the home. This costs only $50 extra.

The result is that the home buyer will be able to more intelligently compare homes and have a better idea what to expect.

For the serious home buyer who wishes to take advantage of up to $5,000 in government incentives toward energy upgrades (such as a heat pump, more insulation, a solar hot water system, etc.) a certified energy audit can be arranged.

Ian Gartshore of Shore Energy Solutions has been assisting homeowners in this way since 2004. His company also installs energy saving devices, solar hot water systems, and other renovations. Contact him at www.shoreenergy.ca or locally at 250-754-0698.

Shore Energy Solutions Ltd is a member of the Better Business Bureau of Vancouver Island, The Canadian Home Builder’s Association, the Built Green^© Program and B.C. Hydro’s PowerSmart Alliance

As the market shifted from a seller’s market to a buyer’s market starting about a year ago, we gradually started to see more and more rental vacancies. According to what I hear, there has been a glut of properties on the rental market that are of the sort that weren’t there not so long ago. You see, as the amount a given property could sell for started to drop, there were more and more owners of such properties who didn’t want to sell their property at a lower price so they decided to rent them out until values recovered. A solid plan, but the result was that a lot of “executive rentals” came out onto the rental market at around the same time. I’m told that they were the bulk of the vacancies that drove up the percentage of vacancies in the area for a time. After all, nicer properties are expensive to rent, and if you can afford to rent a place like that, you can also afford to buy your own place. And what better time to buy your first place than in a buyer’s market with incredibly low interest rates?

The article mentions that the CMHC data they are quoting doesn’t include basement suites and condos. Which in my opinion is kind of… well.. damning to the usability of the study’s numbers. You see, they represent a rather large portion of the rental market.  Even more so in years to come as more and more homes in the Nanaimo area are being built, or modified to have suites downstairs to help people afford more home with that ‘mortgage helper’ downstairs.

And that, is my two cents for today.

By the way, despite the fact that rental vacancies are higher right now, I still think it would be a hell of a time to buy one if you are in the position to do so. As recently mentioned on this blog, interest rates are starting to go back up, and the way things are going (most of the Realtors I know, including me, are super busy right now) it might not be so long before the prices start doing the same. Better for an investor to buy in a buyer’s market than a seller’s one. Seems obvious, but so many people are wrapped up in what the TV says that they miss this one.

Ryan Coffey

Vacancies are up, but so are rents

Despite a more-than-500% jump in Nanaimo’s apartment vacancy rate, the spike isn’t expected to boost affordable housing in the city.

The average apartment vacancy rate for April was 3.3%, a huge increase from 0.6% one year ago, according to the Canada Mortgage and Housing Corporation’s twice-annual rental market survey. Although Nanaimo’s traditionally tight rental market appears to be loosening up, it’s unlikely to translate into more affordable homes. The rental market survey shows that apartment rents increased slightly in the past year, climbing an average of 4.3% for bachelor suites and 1.9% for three-bedroom homes.

One property manager said rents for other accommodations not covered in the CMHC survey — such as condos or basement suites — have dropped slightly.

Economic woes, additional secondary suites and a cold winter that could have made more people think twice about moving may be behind the sudden statistical hike in vacancies.

The average rental apartment vacancy rate in 35 major Canadian cities survey by CHMC increased to 2.7% in April, from 2.6% in April 2008. In B.C., only two cities had vacancy rates lower than 2.0%: Victoria at 1.2% and Vancouver at 1.9%.

Nanaimo single mom Jasmine Seton said she was pleasantly surprised to find a new place to rent. She and her daughter moved out of their last place after it was broken into.

“I was expecting it to be a little more difficult. The prices are a little bit high right now, but other than that it was alright,” said Seton.

It took her two weeks to find a suitable place, but other people are still having a difficult time.

Social advocate Gord Fuller was surprised to hear that the vacancy rate had climbed.

“You wouldn’t know it from the people I talk to who are looking for places and find it difficult to find anything affordable,” he said, adding he’s noticed rents have gone up.

Jim Spinelli, with Nanaimo Affordable Housing Society, agrees people on low incomes are still struggling with housing.

He’s not sure that this trend means the city’s rental rates will come down significantly.

“Over time we can watch this and see if it’s a long-term trend, but I think it speaks to the whole state of the economy,” he said.

Apartment owners likely won’t be cutting rents anytime soon, according to City of Nanaimo social planner John Horn. Normally, these companies tend to offer other incentives such as free cable TV before cutting the cost of rent.

“Once they (rents) go up they tend never to come back down again,” said Horn. “That’s part of the difficulty, it creeps up over time.”

He said the vacancy hike is a symptom of the struggling economy. Adult children who are living with their parents might choose to stay with mom and dad a bit longer to save money, while those who live with a number of people in a single house might think twice before getting their own place.

Also, since CMHC numbers don’t include the “informal” rental stock, such as basement suites, the hike may indicate that more people are putting secondary suites into their homes. Horn said that over the past year or two there have been more applications for basement suites — legalized by the city in 2005 — as part of building permits.

“Maybe we’re just getting to the point when a lot of them are now coming on-stream.”

Purpose-built rental housing is also more likely to be affordable compared to condos or secondary suites, said Robyn Adamache, a senior analyst with CMHC. But rents are unlikely to drop because they are already on the low-end.

Lindsay Widsten, property manager with Realty Executives, deals mostly with single-family homes and duplexes for rent. He said that the market started to get soft in November, but puts the vacancy rate of his business at about 2%.

He said there have been some “insignificant” price drops of about $25-$50 per month to make the properties more appealing to renters.

Widsten suspects that a “long, harsh winter” is behind Nanaimo’s rising vacancy rate as people put off moving until the weather warms up. He said things began picking up again in May, and many of his vacant homes are now being rented.

Adamache, however, said weather wouldn’t skew CMHC’s statistics because the corporation compares April-to-April results that seasonally should be the same.

DWalker@nanaimodailynews.com

250-729-4244

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By the numbers

Nanaimo average rents: 2008 2009

Studio: $488 $509

1 bed: $617 $594

2 bed: $748 $730

3 bed: $902 $885

Nanaimo vacancy rate:

April, 2008: 0.6%

April, 2009: 3.3%

For many homeowners, nothing symbolizes summer quite like getting outside and grilling up some tasty treats on the barbeque. As we dust off our hamburger flippers and prepare for another grilling season, however, it’s important to remember that when used or maintained improperly, barbeques can cause serious damage to property and to people. Here are a few simple recommendations to help keep your family safe as you enjoy your barbeque this summer:

Positioning the Grill

• Position your grill a minimum of five feet away from the house and any flammable objects in your yard.
• Make sure your grill is stable and on level ground, so there is no risk of it toppling over.
• Grills or stoves should be situated far enough from the windows and doors so that smoke from cooking will not waft inside.
• Burning charcoal produces carbon monoxide which is highly toxic, so never burn charcoal in any kind of enclosed area.

Proper Use & Maintenance:

• Check for grease build-up and clean your dripping pan frequently, as excessive grease can cause unexpected flare-ups.
• If you have a gas grill, remember that propane tanks require sophisticated valve equipment to keep them safe for use. To check your hoses and connections for gas leaks, spray them with soapy water and look for bubbling.
• Remember to close the tank valve when you’re finished using it.
• Check for rusted and corroded burners. These parts wear out quickly, but they are easy to replace.
• If your grill bottom has vent holes, be certain that it also has an ashcan to catch hot embers that might fall through onto the surface below.
• Embers and coals should be completely extinguished before disposal. Coals can smolder for hours and can cause fires if thrown away with flammable materials.
• Always store propane tanks outside in a well-ventilated area.

To learn more tips on how to keep your home safe this summer, please contact your local Pillar To Post office.

RITA TRICHUR

BUSINESS REPORTER

Canada’s biggest banks are hiking key mortgage rates at a time when the bond market is worried about risk and the longer-term threat of inflation.

Royal Bank of Canada, Bank of Montreal, Toronto-Dominion Bank, Bank of Nova Scotia and Canadian Imperial Bank of Commerce increased their posted rates on five-year, fixed-rate mortgages by 0.2 per cent to 5.45 per cent. The changes at RBC and BMO took effect yesterday, while new rates at TD, Scotiabank and CIBC will be available today.

RBC, BMO and Scotiabank, however, also have “special offers” on five-year closed mortgages at 4.15 per cent. Those promotional rates, subject to change without notice, also reflect a 0.2 per cent increase.

Paula Roberts, a mortgage broker with Mortgage Intelligence, says rates are rising from “abnormally low” levels. Consumers, she added, still have plenty of opportunity to take advantage of lower borrowing costs because not all lenders have repriced loans.

“Even lenders that we were told were going to increase still haven’t,” Roberts said. That means both first-time homebuyers and those with mortgages coming up for renewal can still snag deals.

When asked about the best rate that she could fetch on a five-year, fixed-rate mortgage, Roberts replied: “On a quick close (within 30 days) we can still get 3.69 (per cent). On a 120-day rate hold, we can still get 3.79 (per cent).”

Five-year, fixed-rate mortgages are traditionally the most popular option for homeowners. Borrowing costs on the bond market largely influence consumer rates.

Yields on longer-term bonds have soared in recent weeks, driving up the cost of borrowing for lenders. Experts say yields are rising because the bond market is focusing on risk and the future prospects for inflation.

Central banks usually try to control inflation by raising interest rates. The Bank of Canada’s overnight rate is currently sitting at 0.25 per cent and it has signalled plans to hold it there well into 2010, depending on inflation.

The bond market, though, sees a risk that interest rates may change down the road, said TD economist Grant Bishop.

“Certainly there is the recognition that interest rates are going to have to go up both because of the need to rein some of this monetary stimulus in – once the economy gains traction – and the level of debt that is being issued by governments.”

Yields are also climbing because the market is “a little less pessimistic” about the economic outlook, said David Power, a vice-president in RBC’s corporate treasury department. If bond yields continue to rise, that will impact the industry’s pricing of both mortgages and deposits, he said.

Statistics Canada, meanwhile, reported yesterday that household demand for credit dropped “significantly” in the first quarter. Household demand for funds in the January-to-March period totalled $65 billion, down from $91 billion in the fourth quarter of 2008. Canadians, it seems, opted to save rather than spend.

“Despite the decrease in the five-year mortgage rate, net new mortgage borrowing also contracted during the first three months of 2009, as investment in residential construction and activity in the resale housing market continued to decline,” StatsCan said.

Bank of Canada data, meanwhile, suggest household credit rose 1.1 per cent in April over March, mostly with growth in mortgages and lines of credit. “Even through these uncertain economic times, falling house prices and favourable mortgage rates appear to have successfully attracted new homebuyers,” TD’s Bishop noted last week.

For more on the process of buying and subjects clauses have a look at this post.

Ryan Coffey

Property/Fire Insurance and You

Whether you are buying your first home, or have been through the process before, and are now searching for a second home, or trading up or down because of a change in the your life such as the birth of a child or older children leaving home, one thing you must find before you get the keys to your new house is fire and/or property insurance.

In British Columbia, insurance clauses are actually written into purchase contracts, with language that reads, “This offer is subject to the Buyer obtaining approval for fire/property insurance, satisfactory to the Buyer, by (DATE). This condition is for the sole benefit of the Buyer.” Even if it isn’t included in the contract as a requirement of sale, however, there are many reasons to make obtaining insurance a top priority. Here are several:

• Your lender requires it:  In order for a mortgage to be finalized, you must prove that you have adequate coverage on your home.
• You will be protected from financial loss: Your property insurance will pay you for any personal effects that are stolen from your home, or will replace appliances covered under the policy, as well as fund the restoration of your home and garage should a fire or other disaster damage the structure. In the event that your home becomes unlivable, your home insurance will cover accommodations and some of your living expenses while repairs are underway.
• You will have liability coverage: If a guest to your home is injured, your property insurance will cover court costs and any settlement that is ordered. In addition, your insurance gives you financial protection against accidental damage to another’s property, for example if you live in a condominium and your toilet or bathtub overflows and causes damage to a neighbour’s home.

It should be fairly obvious, then, that property/fire insurance is something every homeowner needs, but what if you live in a rental home? And what if you live in a condo?

Condo Insurance

While it is usual for each condo corporation or complex to carry insurance, you will still need property insurance of your own, because the corporation’s policy only covers the basic structure of the building. In order to have coverage for any upgrades, carpeting, or wood flooring that you’ve installed, or to have coverage in case of damage to or theft of your personal belongings, or liability in case of injury to a guest in your home, your own policy is required. Special condo owners policies are available.

Renter’s Insurance

Also referred to as tenant insurance, this is similar to a condo policy, but designed for renters. Again, it doesn’t cover the structure of your home, only the interior, including upgrades, personal possessions, and liability in the case of injuries to visitors.

When shopping for your new insurance policy, whether you are insuring a single family home, a condominium, or an apartment, one thin to bear in mind is that policies differ from insurer to insurer. Make sure you compare coverage amounts as well as the cost of the insurance, in order to get an accurate quote.

Being a Realtor I have an inside perspective on one detail of the bill which I think misleads people. It is understandable why the taxing system works the way it does and I also understand why so many people have the misconception that they do. That being that the assessed value of a property is accurate enough to be used as part of their decisions making processes of buying or selling real estate. I am not trying to blame anyone, I just want to clear up this all too common misconception.

Quite often people will tell me the assessed value (for taxes) of their property, or they will ask about the assessed value of a property on the market that they have some interest in. My answer is that although the prices are generally in the right ballpark, that they are not usually so accurate and in many cases way off the mark. Not everyone takes me for my word, and thanks to my university years I am in the habit of being able to back up what I claim. So when someone challenged me on it one day I pulled up a large sample of recently sold properties and compared the sale prices to the assessed values and created an average by use of a computer program Realtors have access to.

Not five minutes ago, I did this again for the purpose of this post. Read on if you are skeptical, curious or the sort who likes stats and numbers.

According to the program us Realtors use known as “Interface”, there were 111 properties that sold in the Nanaimo area from April 26th until May 26th this year. There were five properties that didn’t have assessed values attached to them so they were removed from the list. I averaged the numbers on all of these listings and here is the pertinent info I found:

Average List Price:                  $347,555

Average Sale Price:                 $333,170

Average Assessed Value:        $313,811

Of course, we know that the people making these assessments have not been inside the properties so they have no idea what the places are like. As I understand it, hey have a budget that needs to be payed for and they have to find ways to justify the way they collect it. Now before you start complaining, think of how much more it would cost to run the system if they went to each home and made sure it was totally accurate. I don’t know about you, but I’m glad they don’t. Again, I’m not saying the system needs to change, I just think people should know what these assessments are NOT for: pricing a property that’s to be sold.

I might be labouring the point, but here are some of the more notable differences I found in that list of recently sold properties. You’ll notice that they tend to under value the properties rather than overvalue. Not a bad thing for the home owner whose home value is inaccurately assessed.

Sold Price Assessed Value

$65,000             $108,000

$272,380           $105,000

$360,000           $340,000

$370,000           $311,000

$384,000           $440,000

$400,000           $446,000

$515,000           $207,788

$718,000           $557,000

$1,500,000        $983,000

Ryan Coffey

My first contest!

I guess my blog has grown to the level where it is attracting more than just readers. I feel like I should get it a virtual birthday cake or something. I was recently approached by a company called CSN lighting about doing a free giveaway of one of their light fixtures in exchange for posting a short article about their product on this blog. Being me, always trying to make the world a bit greener,  I asked them what their greenest product was. I wanted to at least give away something green if I could! According to them, the light fixture we’ve arranged to give away is their greenest product. Have a look at it by clicking here. Those prices are in US dollars so we’re not talking about a cheap light fixture here.

How to enter:

-Go to my contact page on my main website

-Fill out the contact form with your correct email address and phone number and the subject “Light Fixture Giveaway”.

-I’ll select the winner with the help of a random number generator . The contest is only open until 5pm PST on Friday May 15th 2009 and you MUST live in the US or Canada to enter.

-BONUS: You can enter a second time if you send me proof (ie. a screenshot or a link) that shows you’ve shared the link to this post on your twitter, facebook or some such social networking site or website.

Ryan Coffey

Here is the article they wanted to me to post for them:

Eco-friendly ENERGY STAR Lighting
For the past few years, “green” has been the color on everyone’s mind. Given the state of the environment today, the demand for green products is greater than ever. ENERGY STAR is a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy that is designed to help consumers cut energy costs and at the same time help protect the environment.
According to ENERGY STAR, in 2008, Americans were able to save $19 billion on their utility bills by using ENERGY STAR compliant products. ENERGY STAR estimates that “families can save about a third on their energy bill without sacrificing style or comfort.”
Look for the ENERGY STAR logo on a full range of household products and appliances - everything from home lighting and personal computers to washers, dryers and furnaces.
As one of ENERGY STAR’s charter partners, Sea Gull Lighting further solidifies its reputation in the lighting industry by offering consumers high quality, stylish and environmentally friendly products. Sea Gull’s line of energy-saving fluorescent products is available in chandeliers, pendants, wall sconces, vanity bath lights, outdoor lighting and more.
ENERGY STAR compliant fluorescent fixtures use 75% less energy than incandescent fixtures. They are also cooler and last on average, about 9 years. The Metropolis Fluorescent Wall Sconce comes with a beautiful brushed nickel finish and a satin etched glass shade. When it comes to lighting your home, stylish and green is the way to go!

Ryan Coffey

What the rate cut means for mortgages

The latest rate cut means consumers buying a house can borrow for as little as 3% interest on their loan if they are willing to buy into the Bank of Canada’s statement Tuesday that it won’t be changing rates until June, 2010.

If you don’t believe the bank will hold steady on its promise, you can lock into five-year, fixed-rate mortgages for as low as 3.85% on a discounted basis — the lowest rate in Canadian history.

But all of that may amount to nothing when it comes to soothing a Canadian housing market in which new construction has fallen below 200,000 on an annualized basis for the first time in seven years. March existing-home sales were off 13.7% from a year ago.

“What is 25 basis points among friends? It’s really nothing,” said Benjamin Tal, senior economist with CIBC World Markets. “This is not something that is going to change the course of the market. It only helps at the margin.”

Mr. Tal did say mortgage refinancings have risen dramatically in the past few months as Canadians who might have borrowed at 5.75% just over two years ago are ready to eat any interest rate penalty because a five-year rate mortgage is now so low.

The penalty to break an existing mortgage is the greater of three months interest or what is called the interest rate differential. The interest rate differential is the lost interest between your current rate and market rates.

Mr. Tal says while there is not much lower for variable-rate mortgages to go, the gap between short-term money and long-term money is still significant enough that the temptation is not to lock in.

“You might do better the first two years [of a five-year mortgage] but not the remaining three. I’m convinced long-term interest rates will rise. I can see [long-term] rising 200 basis points. These are emergency rates and at some point this emergency will end,” says the economist.

John Turner, the director of mortgages at the Bank of Montreal says he’s never seen anything like what is going on in today’s market.

“There is a possibility of another drop,” says Mr. Turner. “But does your tummy feel good about something that has a higher possibility of going up than going down any further.”

He is convinced these lower rates will boost the housing market. The 13.7% decline in home sales in March was the smallest year over year decline in six months. “I think there is a segment of the market that couldn’t afford a home before,” said Mr. Turner.

Don Lawby, chief executive of Century 21 Canada, said while rates are declining, banks are getting tighter with how they hand out credit.

“If you are self-employed, the banks are demanding more documentation. Appraisals are getting harder too. It’s not what you bought the house for but what it’s appraised for,” said Mr. Lawby, who also heads up a mortgage broker business. “There is not a lot of subprime out there for people with any credit problems in their history.”