It takes a little agent to notice trends that are earning big agents alot of money ( excuse the pun) If I was a big agent listing and selling tons of houses for way over market value why would i question my food trough?
It took a couple of recent sales to sound the alarm for me.
A small kerisdale home sold in Sept for 1.489, new owner puts it back on market for 6 days in end of march for 1.598 but very soon realizes the market since Sept is way up, and changes the price on day 6 to $2.190 and sells it within a couple weeks for $2.1. The house was the same as it was in September.
Upper dundarave view bungalow with assessed value of 1.3 ish goes on market for $1.990.000 Local agents thought actual value was probably more like 1.7, it sells over asking with a clean -no subject -offer at $2.3 mill. At least one offer was an overseas buyer who is a non resident.
Did you know as a non resident most banks will give you a mortgage with no checking on your income if you put 50% down? National bank will loan you without asking proof of income for only 35% down. However the down payment money has had to have a trail and be in an account for 3 months.
Did we learn nothing from the fiasco in the USA?
If the market keeps going up, they flip and get their money out. If it tanks, who is footing the bill? Will we really be able to find these people?
It gets worse.
Banks sell those mortgages. I have heard CMHC owns billions of dollars of them. What happens when the property values go down?... hmm... this is all eerily reminiscent of the sub prime chaos. Who is checking into this?
FINTRAC is getting reports of supposedly all wired money through a financial institution. ( EFT is electronic funds transfer)
SWIFT reporting only applies if you send EFTs by transmission of a SWIFT MT 103 message, as a SWIFT member, through the SWIFT network. (SWIFT means the Society for Worldwide Interbank Financial Telecommunication. It is a co-operative owned by the international banking community that operates a global data processing system for the transmission of financial messages.)
Real Estate agents are required to report any suspicious transactions. They are also required to fill in identification forms when they are dealing with people they do not know. These files are sent to the brokerage and then sent off to the Real Estate Board. They are kept in case FINTRAC requests them. But who is checking?
Here is a far fetched example of what could happen
What if person X and person Y are friends. x buys a property for $1 mill
Now x gets his friend to buy his property for $2.5
Y putting down 35% or $875,000.
the rest borrowed from the bank.
X has made 1.5 million and heads back home waiting for Y who disappears from Canada ,leaving the bank to foreclose.
X and Y split the $625,000 profit.( ok ...less 10 % witholding tax, PTT and commissions)
At that time the house is no longer worth - because it never was - 2.5 million
So whoever bought the mortgage is on the hook.
Far fetched ? Yes but is this possible? yes. "Oh! The bank would never loan them on the inflated 2.5 value" you say? In speaking with appraisers they look at CURRENT market value, so since many homes in very specific areas have gone up ridiculous amounts, the appraisals will show the market value at that inflated amount. Not that this is happening but the fact that I imagine it could is scary enough for me.
Another scary thought-
Lets look at rent ratios.
Take a homes cost and divide that by its yearly rent.
10 used to be a good market return in years past. A $400,000 home renting for $3300 a month. Thats a rent ratio of 10.
Las Vegas has property values with a rent ratio of 6 now so thats would be seen as a good buy.
Vancouver? Try 36- 42!
That $2.5 Million home might rent for $5000 a month, that means its cost is almost 42 times its yearly rent.
Its unfortunate I am working with many buyers right now.
If I advised any sellers? Take the money and run...
Monday, May 16, 2011
Wednesday, April 20, 2011
Boomers and Boomerangs
Technically they say all of us born the generation before 1964 are boomers. I used to wonder if we are so easily catargorized , what will my kids generation be? We have heard Gen x and GenY but I think the most aptly put would be" Boomerangs". As the desireable places to live become unaffordable, our kids have a choice- Live somewhere no one else wants to, and you can afford, or move back in with mom and dad. Boomerangs will be the next trend. Kids that wander for a short while and then come back to camp out at mom and dads - where its safe, comfortable, familiar and affordable.
So we need to prepare. The asian families have long searched for large homes where multigenerational families can stay and call home. But our kids are coming and going. It is enviromentally, and financially not a good idea to build, manage, upkeep and heat! a massive home that may end up very empty for some years.
Hence back to sensitive density, flexible homes, laneway houses.
Take that square footage and divide it into a home for mom and dad, a suite that can be a rental ( sometimes) or for a teen starting out and a laneway house for a returning older child or elder parent needing some attention. Why is it so easy to build a 6000 sq ft home in West Van but heaven forbid we had a 2000 sq ft home and applied for a small 1000 sq ft lanehouse.
Why is this so difficult ?
I am so happy to hear that West Vancouver Council has approved - for public consultation- a great proposal by Michael Geller to take 3 lots -smack in the middle of all kinds of amenities in West Van- and create 3 duplexes with 3 laneway cottages. It is a beautiful quaint design that resembles the cottages of old here along the West Van coast. I really hope this community can see the benefit of this and come and support it. For more information contact me Kim@ kimlittle.ca. We dont need more high rise towers, we do need density and this is exactly the way West Vancouver can do it, in its own unique style. Kudos to Mr. Geller!
So we need to prepare. The asian families have long searched for large homes where multigenerational families can stay and call home. But our kids are coming and going. It is enviromentally, and financially not a good idea to build, manage, upkeep and heat! a massive home that may end up very empty for some years.
Hence back to sensitive density, flexible homes, laneway houses.
Take that square footage and divide it into a home for mom and dad, a suite that can be a rental ( sometimes) or for a teen starting out and a laneway house for a returning older child or elder parent needing some attention. Why is it so easy to build a 6000 sq ft home in West Van but heaven forbid we had a 2000 sq ft home and applied for a small 1000 sq ft lanehouse.
Why is this so difficult ?
I am so happy to hear that West Vancouver Council has approved - for public consultation- a great proposal by Michael Geller to take 3 lots -smack in the middle of all kinds of amenities in West Van- and create 3 duplexes with 3 laneway cottages. It is a beautiful quaint design that resembles the cottages of old here along the West Van coast. I really hope this community can see the benefit of this and come and support it. For more information contact me Kim@ kimlittle.ca. We dont need more high rise towers, we do need density and this is exactly the way West Vancouver can do it, in its own unique style. Kudos to Mr. Geller!
Tuesday, March 29, 2011
West Vancouver Development/real estate
http://www.amblesidenow.ca/ This is a quick video of West Vancouvers past 100 years. What we need to decide now is which direction we will go for the next 100.
Do we want high rise towers to increase the tax base and supply smaller scale housing? Or perhaps we want to keep developing up the mountain until the wilderness is gone? Personally I would rather go to sensitive density increase. We can build smaller homes, we can build even smaller laneway cottages in our backyards. Not every yard , but some.
I am very excited to see a local developer proposing a small scale development at Esquimalt and 20th. At first glance the homes look like cottages that once graced the north shore. This will be coming to Council on April 4th.
These type of small scale developments have little impact on our traffic. They encourage our residents to stay in the area when the time comes to downsize, and they allow for small families to move into a beautiful new home for the price of a tear down. Not everyone is a good handyman, and some will take a smaller space fully finished rather than a bigger home that needs work.
The bottom line is that the status quo is not working. Yes we live in a wonderful, quaint , quiet seaside village but we have our head in the sand. We are currently pumping sewage into the bay right out front of us, our antiquated system has been in need of an upgrade for a long time. We need funds to deal with this and unless we are prepared to pay thousands of dollars more in tax on our property then we need to address this density issue. We can go up, out or think little for a change! We certainly dont want to go the way of the Omaha Mayor who has just proposed a toilet paper tax!!!
If you like my ideas, more info at http://www.thinklittle.net/
Do we want high rise towers to increase the tax base and supply smaller scale housing? Or perhaps we want to keep developing up the mountain until the wilderness is gone? Personally I would rather go to sensitive density increase. We can build smaller homes, we can build even smaller laneway cottages in our backyards. Not every yard , but some.
I am very excited to see a local developer proposing a small scale development at Esquimalt and 20th. At first glance the homes look like cottages that once graced the north shore. This will be coming to Council on April 4th.
These type of small scale developments have little impact on our traffic. They encourage our residents to stay in the area when the time comes to downsize, and they allow for small families to move into a beautiful new home for the price of a tear down. Not everyone is a good handyman, and some will take a smaller space fully finished rather than a bigger home that needs work.
The bottom line is that the status quo is not working. Yes we live in a wonderful, quaint , quiet seaside village but we have our head in the sand. We are currently pumping sewage into the bay right out front of us, our antiquated system has been in need of an upgrade for a long time. We need funds to deal with this and unless we are prepared to pay thousands of dollars more in tax on our property then we need to address this density issue. We can go up, out or think little for a change! We certainly dont want to go the way of the Omaha Mayor who has just proposed a toilet paper tax!!!
If you like my ideas, more info at http://www.thinklittle.net/
Tuesday, March 1, 2011
Vancouver- a bike city?
It was so exciting when the bike lanes went it. I imagined life like back in my home country with masses of bikes everywhere. Going out for dinner with 2 or 3 of us on a bike- ok we aren't in Amsterdam but it sounded so good. Now, driving across the Burrard bridge or Downtown streets I see an empty lane with planters alongside. At most I have counted 3 bicycles. " If you build it they will come" hmmmm .....second part of that is......
" if its not raining, hailing or snowing"
which... doesn't leave alot of free days to ride. But the idea was right and the direction was right so how can we fix it. Whats part 2?
Perhaps they could be convertible lanes with winter driving use and summer full bike lane. People will argue that its dangerous and drivers will get confused but we have championed the mixed use lane with counterflow on our Lions Gate bridge and tunnel. Its not ideal but maybe an option.
Perhaps we could have bikes at various positions in the city that you rent and take out of the rack with your credit card and can return anywhere else into another secure rack. This way if it poured in the morning you could jump on a bus and when the sun came out you could do your errands and afternoon commute on a bike. These systems already exist in other Cities.
But the darn helmet. If we could make the lanes safer with less juxtipositioning with vehicles maybe helmets wouldnt be necessary? I am hearing the backlash from paramedics already..... but sometimes we have to get out of our paradigm of thinking and go WAY out, to be able to come back in and think of solutions.
On the North Shore Mayor Mussatto tried in vain to get a bike elevator approved so that people cycling lower North Van could easily access central and upper Lonsdale, lets just say he is still trying. The system was from Denmark I believe, an innovative track that carried your bike up hill - with a little swipe of your CC of course.
The coolest new option to get people on a bike http://www.yikebike.com/ a foldable electric bike. The question is will they let us ride this in the bike lane? I hope so.You will get there faster so you wont get as wet!. The exercise will come from carting it around. And the bonus is, that at approximately $3600 USD its way cheaper than a car and now you can convert that 2 car garage into..... a laneway house!
hows that for a segway... hey, Segwey thats another option and another story.......
" if its not raining, hailing or snowing"
which... doesn't leave alot of free days to ride. But the idea was right and the direction was right so how can we fix it. Whats part 2?
Perhaps they could be convertible lanes with winter driving use and summer full bike lane. People will argue that its dangerous and drivers will get confused but we have championed the mixed use lane with counterflow on our Lions Gate bridge and tunnel. Its not ideal but maybe an option.
Perhaps we could have bikes at various positions in the city that you rent and take out of the rack with your credit card and can return anywhere else into another secure rack. This way if it poured in the morning you could jump on a bus and when the sun came out you could do your errands and afternoon commute on a bike. These systems already exist in other Cities.
But the darn helmet. If we could make the lanes safer with less juxtipositioning with vehicles maybe helmets wouldnt be necessary? I am hearing the backlash from paramedics already..... but sometimes we have to get out of our paradigm of thinking and go WAY out, to be able to come back in and think of solutions.
On the North Shore Mayor Mussatto tried in vain to get a bike elevator approved so that people cycling lower North Van could easily access central and upper Lonsdale, lets just say he is still trying. The system was from Denmark I believe, an innovative track that carried your bike up hill - with a little swipe of your CC of course.
The coolest new option to get people on a bike http://www.yikebike.com/ a foldable electric bike. The question is will they let us ride this in the bike lane? I hope so.You will get there faster so you wont get as wet!. The exercise will come from carting it around. And the bonus is, that at approximately $3600 USD its way cheaper than a car and now you can convert that 2 car garage into..... a laneway house!
hows that for a segway... hey, Segwey thats another option and another story.......
Thursday, February 24, 2011
vancouver real estate update
affordability shrinking again
New lending rules scheduled to take effect next month are stimulating housing sales, according to local mortgage brokers. first-time home buyers are trying to arrange financing for 35-year mortgages.
The federal government’s decision to reduce the maximum amortization period for government-insured mortgages from 35 to 30 years, effective March 18 will reduce affordability, particularly for first-time buyers, because monthly payments increase when the lending period shrinks.
If the average person earns around $50,000 per year. With a five-percent down payment, they can generally afford a $280,000 home at a four-percent interest rate and with a 35-year amortization period.
If the mortgage is reduced to 30 years, the same buyer can only afford a $260,000 home( and if interest rates rise, as many observers predict, they’ll put an even greater squeeze on first-time buyers.)
At 30 years with a five-percent rate, this same buyer would only be able to buy a home worth $230,000.
That could buy you a small closet in the sky, or a nice little laneway home if someone can give you their backyard.
And speaking of the closet in the sky. There is alot of hype about pre sales and entire developements selling out. But sometimes this is all a facade.Be careful of falling prey to the hype that surrounds some presales.
note here a supposed craigslist ad
******************************************************************************
CraigsList ad:
Presales often come with a cutom designed contract- favouring the developer. There are so many things to lookout for - always hire your own agent and always get some legal advice on the contract.
for example. In a phased developement, did you know that if phase 1 was built before new home warranties and you buy in phase 4 with full warranty- you will be required to pay for any remediation required in phase 1 as you are all 1 strata! Or what if you buy phase 1 and phase 3 will have a great pool, rec centre etc.. but developer elects not to build anymore phases, what recourse do you have?
Always get independant advice. Here is Wendy Mesley learning how they create the hype in presales and learning to get sober second advice:
http://www.youtube.com/watch?v=SNyltNIHhgs
Feel free to follow my real estate blog at http://www.thinklittle.net/ as well
The federal government’s decision to reduce the maximum amortization period for government-insured mortgages from 35 to 30 years, effective March 18 will reduce affordability, particularly for first-time buyers, because monthly payments increase when the lending period shrinks.
If the average person earns around $50,000 per year. With a five-percent down payment, they can generally afford a $280,000 home at a four-percent interest rate and with a 35-year amortization period.
If the mortgage is reduced to 30 years, the same buyer can only afford a $260,000 home( and if interest rates rise, as many observers predict, they’ll put an even greater squeeze on first-time buyers.)
At 30 years with a five-percent rate, this same buyer would only be able to buy a home worth $230,000.
That could buy you a small closet in the sky, or a nice little laneway home if someone can give you their backyard.
And speaking of the closet in the sky. There is alot of hype about pre sales and entire developements selling out. But sometimes this is all a facade.Be careful of falling prey to the hype that surrounds some presales.
note here a supposed craigslist ad
******************************************************************************
CraigsList ad:
*PEOPLE NEEDED TO LINE UP FOR NEW CONDO PROJECTThe question is did they really want the spots held for overseas buyers or did they already sell units over there and wanted it to look like it was in demand?
Just as the title says, we need people to hold spots and line up for a new condo project located in Burnaby (Kingsway/Willingdon Ave). Line up may start as early as weds/thurs night. Grand opening is Saturday February 19, 2011.
Warm beverages and washrooms will be provided by the developer.
Shifts are determined on how long you would like to stay. (preferably 8hours+)
Get paid cash quickly for sitting in a line up!
E-mail me your phone number + e-mail for more details. job-syk6p-2212992997@craigslist.org
********************************************************************
Presales often come with a cutom designed contract- favouring the developer. There are so many things to lookout for - always hire your own agent and always get some legal advice on the contract.
for example. In a phased developement, did you know that if phase 1 was built before new home warranties and you buy in phase 4 with full warranty- you will be required to pay for any remediation required in phase 1 as you are all 1 strata! Or what if you buy phase 1 and phase 3 will have a great pool, rec centre etc.. but developer elects not to build anymore phases, what recourse do you have?
Always get independant advice. Here is Wendy Mesley learning how they create the hype in presales and learning to get sober second advice:
http://www.youtube.com/watch?v=SNyltNIHhgs
Feel free to follow my real estate blog at http://www.thinklittle.net/ as well
Friday, January 28, 2011
ATTN all REALTORS ( R)
You have all heard the saying at your local burger joint " would you like fries with that?" Well get ready to use that idea in your real estate career. Now you can get a new home for $150,000! on any existing RS1 or RS5 property in City of Vancouver, and soon in North Van City. These beautiful state of the art mini homes are back yard cottages that can be built in a few months on your back lane.( http://www.kimlittle.ca/ for info) So the next time you show a buyer a nice place for sale ask if they want a laneway house with that.
RBC and Vancity currently have programs in place to pay for the cost of building your laneway -so a little extra mortgage upfront and you can get a great rental, or home for aging parent or footloose teenager. Smallworks has 3 plans from contemporary, midcentury modern to traditional exterior. The interior can be a studio, 1 bedroom or a flex between the two.Heated floors, fire sprinkler, full kitchen and bathroom are all included and for $150k that covers HST too.
Big houses are so yesterday.
RBC and Vancity currently have programs in place to pay for the cost of building your laneway -so a little extra mortgage upfront and you can get a great rental, or home for aging parent or footloose teenager. Smallworks has 3 plans from contemporary, midcentury modern to traditional exterior. The interior can be a studio, 1 bedroom or a flex between the two.Heated floors, fire sprinkler, full kitchen and bathroom are all included and for $150k that covers HST too.
Big houses are so yesterday.
Wednesday, December 22, 2010
alternative housing or the future of real estate?
The City of Vancouver allows any RS1 and RS5 zoned property to put in a laneway house provided it meets some siting criteria. That same house can already be built to its maximum FSR and still be eligible. It can have a self contained secondary suite and still be eligible. So that is now turning a single family dwelling into a 3 family dwelling. This is a good thing, That original home would be worth over a million in all likelihood, add the cost of a suite and laneway and you are at 1.4 easily. If someone had a big down payment they could buy it and rent out the 2 extra dwellings to pay off the mortgage. But how can this help the average Joe, starting out with a decent paycheck and working hard but no chance to buy a 1.5 mill property!?
Joe probably has friends in the same boat. If those 3 friends each bought a part of the property. Joe could get into home ownership ( without starting in a closet in the sky) for about $500,000.! These arrangements can be created by contract. All 3 parties are on title in an undivided interest and a seperate legal contract spells out what percentage each owns. Harder to get a mortgage, yes, harder to sell, yes but Joe can own! and plant what he wants in the garden and change the kitchen cupboards and all those delightful things that come from home ownership.All 3 parties have the pride of home ownership . Coming to a neighborhood near you? perhaps the next Real Estate wave, if the mortgage brokers can find any easy way to structure this.
Joe probably has friends in the same boat. If those 3 friends each bought a part of the property. Joe could get into home ownership ( without starting in a closet in the sky) for about $500,000.! These arrangements can be created by contract. All 3 parties are on title in an undivided interest and a seperate legal contract spells out what percentage each owns. Harder to get a mortgage, yes, harder to sell, yes but Joe can own! and plant what he wants in the garden and change the kitchen cupboards and all those delightful things that come from home ownership.All 3 parties have the pride of home ownership . Coming to a neighborhood near you? perhaps the next Real Estate wave, if the mortgage brokers can find any easy way to structure this.
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