July 10, 2008

CMHC Pulls 40 Year Mortgages

Financial Post:  Garry Marr reports that CMHC, in fear of following the US mortgage crisis, has removed zero money down and 40 year mortgages.  The new rules, which begins on Oct. 15, 2008 will require borrowers to have atleast 5% down payment with a maximum of 35-year amortization.  Any borrower who has less than 20% down payment will be required to get mortgage insurance.  

May 31, 2008

CANADA FOLLOWING THE STATES?

Financial Post:  Jacqueline Thorpe reports that Garth Turner states that Canada is following the US in sub-prime mortgage lending.  Turner states that there is currently a decline in housing sales because prices are now beyond the reach of the average buyer.  Like the US, in order to keep the industry going, mortgage companies will start subprime lending.  Turner also stated that the trend is already beginning with the 40 year mortage that has just recently started in Canada.  However, Derek Holt, vice-president of Scotia Capital dismisses Turner's claims citing that Canada has a much more rigourous standard than its southern neighbour.  Furthermore, demand for living space has always been driven by income and wealth.

May 14, 2008

BC INCREASES IN INVENTORY

BCREA:  Cameron Muir reports that residential unit sales declined by 11% while average residential price increased by 11%.  Residential listings in BC has also increased by 37%.  Homebuyers can take advantage of this situation as they now face less compeition.

June 27, 2007

Coleman to Commit the “Giuliani Sweep” for Downtown Eastside

Although the province recently purchased several hotels for single room occupancy, David Eby of Pivot Legal Society believes that this was only done through public pressure.  Premier Gordon Campbell had only indicated that there maybe more similar purchases in the future.  However, there are no details about such plans.  Off an interview with the Vancouver Sun, Provincial Housing Minister Rich Coleman states that the eventual solution for the homeless is relocation to another community starting with Downtown Eastside in Vancouver.   Coleman insists that relocating the people with mental health issues or addictions will give them a chance to escape their addiction cycle and bring them back to the mainstream. 

By reducing the number of homeless people in the area, it can create a better neighborhood in Downtown Eastside.  Safer neighborhoods would also result in an increase in property value. 

Relocation is not unheard of, and has been performed in the past.  Most notably, in New York in the 1990’s when ex-mayor Rudy Giuliani performed the “Giuliani Sweep” through the streets of New York.  With police enforcement, homeless were swept off the streets and were relocated in areas outside of New York or were arrested and jailed for misdemeanor charges through his “Quality of Life” campaign such as marijuana-related offenses or disturbance of peace.  The median prices for real estate in New York by 12% between the last quarter of 1993 and the first quarter of 1994 as cited by New York Times in July of 1994 and continued steadily throughout his tenure of reform with New York’s poverty programs and relocation.

Such relocation program will definitely help improve the property market in Vancouver.  In theory, it will reduce crime rate and improve the marketability of a neighborhood.  Furthermore, it will drive up the property value of Downtown Eastside