Home Warranties

WARRANTY WARY: Educate yourself, take ownership of your plan, expert says.

Jeani Read
The Province
Sunday, April 22, 2007

While B.C. may have the best new-homebuyer protection in Canada, that's not a licence to be smug, says Jan Calkins, manager of communications for the Homeowner Protection Office.

People still need to educate themselves and take responsibility for their homes.
"People know they have to maintain their cars, but with their homes they think they're forever," says Calkins. "When they purchase a home, people don't put the same due diligence into that investment."
If owners don't do the correct maintenance on their homes, it may affect their warranties.
"Warranty providers can limit the insurance if the the proper maintenance has not been done," says Calkins. If the warranty providers want to make the coverage contingent on proper maintenance, they're required to provide a maintenance manual to the owner; if the owners fail to follow it, their insurance may be limited.
"Make sure you do it properly," says Calkins.

The Homeowner Protection Office's tips on home maintenance are available at www.hpo.bc.ca, or by calling 1-800-407-7757.

The Homeowner Protection Act was passed in 1998, and in 1999 regulations were brought into effect to give homebuyers an excellent level of protection: a two-five-10-year warranty. This means two years of coverage on labour and materials, five years on the building envelope and 10 years on the structure. Builders must be licensed with the Homeowner Protection Office and have insurance from a warranty provider before they begin construction.
But homeowners should be vigilant, Calkins says. If they don't receive documentation for their new home within a month, for example, they should get in touch with their insurer to make certain they receive it.
As well, buyers should remember strata-titled homes have two warranties: one on the unit and one on the common property. It's important to be aware that the commencement dates for the two warranties can be different.
The two-five-10 warranty goes into effect when the first unit of the development is occupied. Some owners who pre-buy into a big development that may take two years between first-occupancy and completion may only be insured for eight years, which may affect the price.

"It's good to know and ask and be informed," says Calkins. "It's a big question and a good negotiating point."
When you buy your new home, do your homework, says Calkins. Talk to the builders, developers and real estate agents. Some homes that people assume are single-family detached dwellings are, in fact, strata-titled homes, which brings up the issue of common property.

"In this hot market, people often leap before they look," says Calkins. "Ask questions and get it in writing.

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Market Review

Changing demographics won't lower house prices, report says.
Prices will double in next 20 years, CIBC report says.

Mario Toneguzzi
CanWest News Service
Thursday, April 19, 2007

CALGARY -- Fears of a decline in future house prices sparked by demographic changes in Canada are greatly exaggerated, says a report released Wednesday by CIBC World Markets.
The report, Much Ado About Nothing: Canadian House Prices Not Based on Demographics Alone, says house prices in the country will double in the next 20 years.

"Despite downward pressure from demographic forces, on average, we expect house prices in Canada to double in the next 20 years," said Benjamin Tal, senior economist, CIBC World Markets. "Fears of a decline resulting from the downsizing and increased liquidations of houses by seniors and the falling number of first-time buyers are highly exaggerated."

Prices in Canada's bigger cities, however, will likely increase even more -- and at a much faster pace, he said.
"In the large cities (in Canada), they will more than double because we see that most immigrants go to large cities. We see most economic activity happening in big cities. That's the reality of the next 20 years where big cities will be the major economic engine of the country," said Tal.

The CIBC report looks at population growth between two cycles of housing prices, from 1987 to 2006, and from 2007 to 2026.
Between 2007 and 2026, the projected 167,000 net decline in the number of first-time buyers (Canadians between the ages of 25 and 44) is marginal, at best, said Tal. Since this age group is by far the largest contributor to overall housing demand, accounting for almost 68 per cent of all home sales, this relatively modest downturn will not significantly impact housing demand.

The largest decline (2.5 million) is projected for the 45 to 54 age group, as many baby boomers move to the next age bracket. The impact of this change is also expected to be limited, given that the 45 to 54 age group accounts for only 12 per cent of total housing demand. In fact, this moderate decline in housing demand will be partly offset by the strong increase in the age group 55 to 74 and its surprisingly high housing market activity -- largely reflecting purchases of vacation and investment properties.

Tal said the Canadian housing market will have extra supply of about 250,000 houses in the next 20 years but that translates into only 12,500 homes a year during that period.
And while housing market activity will fluctuate, the report projects the average house price will mirror the performance of the past two decades.
"Assuming a two-per-cent annual inflation rate, this means that house prices in Canada are expected to double by 2026," said Tal.

Office Update

Office Rents Hit a High

Derrick Penner
Vancouver Sun
Tuesday, April 17, 2007

Downtown Vancouver office rents are now at a record high, a major commercial realtor reports, with still-high demand meeting ever-shrinking supply.
Vacancy in Vancouver's core is hovering between 3.1 per cent and 4.1 per cent, according to estimates of two major commercial realtors, and the province's economy keeps humming along at a better-than-average clip.
So rents for all classes of office space have climbed as much as 30 per cent over the past two years, with Class-A rates hitting an average of $23.90-per-square-foot per year, the second highest lease rate in Canada after Calgary, commercial realtor CB Richard Ellis reported in its first-quarter assessment of the Vancouver office market.

CB Richard Ellis said Class-AAA rents, of which there are only a few buildings in the city, are hitting an average of $30.95 per square foot, with some landlords receiving over $40 per square foot for prime-view spots.
"It continues to get tighter downtown," Chris Clibbon, a senior analyst at CB Richard Ellis, said in an interview.
"Vacancy has been lower before, at the height of the tech boom," Clibbon added, "but rents are as high as they've ever been in downtown Vancouver."

Between the estimates of two major commercial realtors, CB Richard Ellis and Colliers International, downtown office vacancy hovers between a high of 4.1 per cent and a low of 3.1 per cent.
Clibbon said he anticipates downtown's vacancy will continue to be squeezed down, his estimate is to 3.5 per cent from his current projection of 4.1 per cent, as tenants of recently signed leases occupy their space.
And there is still little new supply officially on the books, although the City of Vancouver said it is in pre-application discussions with three potential developers.

Only the Jameson House, a primarily residential tower on West Hastings street, includes about 55,000 square feet of office space which should come on stream by the summer of 2010.
Clibbon added that in previous office-market cycles, some developer would have had a new office project on the books with vacancies this low.

"We don't have that scenario, [so] this is an exceptional period in the office market cycle," he said.
The big push to build new offices is still out in the suburbs, with CB Richard Ellis counting some 2.6 million square feet of new office space under construction, in planning or pre-planning phases.
However, rents in the new suburban office complexes are approaching the highs of downtown Vancouver's lease rates, particularly in Burnaby.

RENTS AT THE TOP

High demand and lack of supply have pushed downtown Vancouver rents to levels never seen before, and second to only high-flying Calgary. Below are some examples of the price for Class-A space (per square foot):

Downtown $23.90
Broadway corridor $17.63
Burnaby $18.23
Richmond $13.96
North Shore $19.02
Surrey $18.25
New Westminster $18.25

Market Update

Real estate sales dip slightly.
But with prices still rising in Greater Vancouver, home sellers still have advantage.

Derrick Penner
Vancouver Sun
Wednesday, April 04, 2007

Lower Mainland real estate sales dropped in March and the inventory of homes for sale rose, but not enough to push markets out of favour for sellers, statistics released Tuesday show. And prices continue to rise.
"The sales-to-active-listings ratio, the percentage sold each month, is certainly moving to more of a balanced market," Robyn Adamache, a Canada Mortgage and Housing Corp. analyst, said in an interview.
"But we're also still seeing very strong price growth, most still in double digits."

In Greater Vancouver, the so-called benchmark price for a single family home rose almost 12 per cent, year-over-year, to hit $682,173.
However, Adamache said sales are slowing and listings are rising at a pace consistent with Canada Mortgage and Housing forecasts.

Greater Vancouver recorded 3,582 sales through the Multiple Listings Service, an 11-per-cent decline from the same month in 2006. Total listings as of March were up 19.5 per cent to 10,356.

Adamache said a seasonal effect could be at work with buyers jumping into "an active spring market" to push prices up, but she believes the slowing in sales will moderate prices through the rest of the year.
"If we keep seeing the market getting hotter and hotter, and price growth in the double digits, we would get concerned [about] a correction on the horizon," Adamache added.

"But the fact we are seeing the spring market ramp down is good news in terms of the pace of price growth, as we've been predicting, should slow."
Brian Naphtali, newly elected president of the Real Estate Board of Greater Vancouver, said an increase in listings has been welcome after two years of a lot of potential buyers and few sellers, but the rise has been "marginal."

STILL A SELLER'S MARKET
March real estate sales slowed compared with the same month last year, but prices are still on the rise. Comparisons are below:

Greater Vancouver

Sales 3,582 -11.2%
Inventory 10,356 +19.5%

Vancouver East: $622,714 +10.7%
Burnaby: $675,677 +11%
Maple Ridge: $424,848 +11.2%*

* Real Estate Board of Greater Vancouver benchmark price of a so-called typical sale.

CMHC makes first-home buying easier

CMHC makes first-home buying easier.

Keith Woolhouse
For CanWest News Service
Tuesday, April 03, 2007

Scraping together the down payment on your first house or condo has been increasingly difficult in recent years because rising property prices often meant that no matter how fast a couple saved, the price of the cherished home kept creeping out of reach.
Still, as tough as it has been, the opportunity to buy into the housing market has seldom been brighter, thanks to the relaxation of stringent lending conditions.

First, the lending institutions extended the number of years over which a mortgage can be repaid to 40 years from 25. Then they introduced no-down-payment mortgages and cash-back mortgages to ease the burden of being unable to save and simultaneously pay rent.

The most sought-after assistance, however, is the default insurance program that all lenders require from homeowners unable to provide the 25 per cent minimum down payment of a property's purchase price.
Since it introduced mortgage-loan insurance in 1954, the Canada Mortgage and Housing Corp. (CMHC) has stood as guarantor in the purchase of nine million homes. In 2005 -- the latest year for which statistics are available -- the national housing agency was the guarantor for 746,157 mortgage insurance premiums.
Without it, cash-strapped consumers would have had to lower their expectations or continue to chase the elusive 25 per cent down payment required by the Bank of Canada.

When buyers cannot provide this, they must have insurance approval to protect the lending institution against the possibility of defaulting on the loan. That's when the CMHC steps in, offering to guarantee the loan and providing the lending institution risk-free protection.

"By providing the default insurance, we remove the risk from the lending institution. What we're also doing is giving people the opportunity to purchase a home with a lower down payment," says Mary Stergiadis, CMHC principal of business development.

The insurance guarantee does not come without a price to the borrower, but it is well worth it, she says.
"We all know that it takes a heck of a long time to save up the 25 per cent down payment and, for most couples, it can be quite a struggle, so we give them the opportunity to get into a home sooner by paying a very small one-time premium. The premium is added to their mortgage, so it is very cash-flow friendly, and it makes sense to the consumer," said Stergiadis.

Here's how it works:
With $50,000, a couple can buy a home of up to $200,000 without the mortgage insurance.
But if a couple has, for example, only $30,000, which represents 15 per cent on a $200,000 home, the loan must be guaranteed. CMHC's insurance premium on the mortgage balance ($170,000) is 1.75 per cent. This requires a one-time payment of $2,975 (170,000 x 1.75), which is tacked on to the mortgage.

"Because the insurance premium is added to the mortgage, it enables Canadians to buy a home much sooner than if they had to wait on the sidelines saving up to reach that magical 25 per cent mark," Stergiadis said.
"The mortgage insurance gets them into a home, plus lets them take advantage of today's prices and today's interest rates and become a homeowner and start to realize the benefits of home ownership."

The CMHC is more than just a mortgage insurer, however. The agency has a wealth of knowledge and expertise on the housing front, plus other invaluable programs:

1) The Homeowner Residential Rehabilitation Assistance Program
2) The Homeowner RRAP offers forgivable grants to low-income households to enable them to bring their dwellings up to a minimum level of health and safety.

Homeowners are eligible if the value of their house is below a specified figure; and their household income is at, or below, established limits based on household size and area. Properties must be lacking basic facilities or require major repair in one or more of five categories: structural, electrical, plumbing, heating and fire safety.

Home Adaptations for Seniors' Independence (HASI)

This program has forgivable loans up to $3,500 for minor renovations that help low-income seniors live in their own homes independently.
Homeowners and landlords may qualify for assistance as long as the occupant of the dwelling is 65 and older, has difficulty with daily-living activities brought on by aging, total household income is at or below a specified limit and the dwelling is a permanent residence.

The renovation work should be minor items that meet the needs of seniors with an age-related disability. They could be handrails, easy-to-reach work and storage areas in the kitchen, lever handles on doors, walk-in showers with grab bars, bathtub grab bars and seats.

CMHC publications, many of them free, include step-by-step buying guides for house and condominium buyers, seasonal home maintenance guides and fact sheets that cover many aspects of owning, maintaining and renovating a home. Readers can order online (www.cmhc.ca) or by calling 1-800-668-2642.