Sears Canada chief executive Calvin McDonald says: "We are not going to be the destination for hammers."
Photograph by: Aaron Lynett, National Post , Financial Post
Sears Canada Inc. hopes to woo back its customer base in suburban and rural Canada with eye-popping store displays and a sharper assortment of fashion at four refurbished locations, retrofits chief executive Calvin McDonald will roll out to the rest of the company's department stores if the chan-ges click with shoppers.
But within a few dozen feet of the entrance at this reconfigured Sears outlet in Newmarket, Ont., sits a stark reminder of the challenge the company faces - a Zellers store that in 10 months will become one of Target Canada's first 24 locations. Sears' other new-format outlets are in Barrie, Belleville and Hamilton, Ont.
"Suburban and rural com-munities are where we have a real opportunity to become relevant," Mr. McDonald told visitors on a store tour of the location Thursday, noting the business had its roots in rural Canada and only became an urban retailer with the purchase of the insolvent Eatons chain in 2000.
"Instinctively every retail nerve I have says this store is going to perform much better."
Mr. McDonald, a Loblaw executive who took over the top Sears job last summer, is under the gun to improve results at the flagging department store chain, whose profits and sales have slid annually since 2006.
In a recent analysis of retailers with the most to lose when Target opens 125 to 135 stores in Canada next year by retail analytics firm KubasPrimedia, Sears and Wal-Mart Canada Corp. topped the list.
To that end, the updated Sears store has taken a page from what merchandising maven Bonnie Brooks has done at the Bay, which also has a store in this shopping mall about an hour outside of Toronto. The aisles, decluttered of the boxes of merchandise and randomly placed racks that were long a custom at Sears, appear to be wider, and are bookended by "power towers" of popular goods.
Sears has boosted the square footage in categories it sees as strengths, or as Mr. McDonald says, "categories we can win at" - kids and baby clothing and gear is up 30% and there has been a 20% to 30% square footage expansion in footwear and accessories. Long a strength, mattresses and appliances suffered double-digit same-store sales declines last year up until September, but focusing on improving the merchandising has led to growth in the single digits, he said.
Sears has cut floor space for the categories it is weakest in, such as electronics - reduced by 30% to 40% in square footage due to lack of profit and stiff competition - and smaller hardware items.
"We are not going to be the destination for hammers," Mr. McDonald said.
Focusing on the suburbs is part of what Mr. McDonald envisions as playing to the company's roots, but it also may be a sign of the company's future real estate footprint.
Sears Canada has already sold leases for three valuable city locations back to mall landlords. Meantime, U.S. retailers such as Nordstrom and Saks are reportedly keenly eyeing space at urban department store locations in Canada, such as Toronto's Eaton Centre.
Once a decision has been made about the suburban format, it should take about 18 months to similarly reconfigure the remaining stores in the chain, said Mr. McDonald, who expects another four to six refurbished outlets should be completed in the fall before the critical holiday shopping period begins.
The new stores are making their debut a week after parent company Sears Holdings Corp., said it will slash its share holdings in Sears Canada to 51% from a current level of 95% in the form of a share spinoff to its own investors later this year.
Noting the company will have more shareholders over the next two to three months - Sears Holdings has not given an exact date for the spinoff - Mr. McDonald did not rule out a newly liquid Sears Canada would return to the practice of holding quarterly conference calls with analysts, the bulk of whom dropped coverage on the company's illiquid stock in the past five years.
"By the fall I think our investor relations strategy will be different and more open," he said.
Vancouver homeowners can be forgiven for thinking they've won the lottery.
House prices have nearly tripled in the past decade and those who successfully timed the market have earned chortling rights. Long-term owners who bought their homes in 1987 for $200,000 could sell them today for $900,000 or more; a gain in the order of $700,000 or 350 per cent!
But view those numbers like an investor would and a different picture emerges. The annualized return over the 25 years is just 6.2 per cent and that doesn't take into account annual inflation of 2.4 per cent (as calculated by the Bank of Canada). Nor does it factor in the costs associated with home ownership, such as maintenance, repairs, renovations, property taxes and insurance. Consider too that the interest charges for a conventional mortgage with 25 per cent down, a 25-year amortization and monthly payments at a rate of 4.2 per cent will amount to $122,150. Finally, there's the opportunity cost of the $50,000 down payment.
For instance, the down payment could have been invested in stocks. A portfolio that tracked the S&P/TSX composite index in the same time would have returned 6.1 per cent per annum with no costs other than a modest management fee for an index fund, typically less than one per cent.
One argument in favour of purchasing a home is you can't live in a stock portfolio. The amount spent on rent for com-parable accommodation will likely approximate the monthly mortgage payment, the only difference being that rent pays off someone else's mortgage rather than your own.
Besides, the stock market is seen as more speculative and volatile than a house in a good neighbourhood. Between 1985 and 2005, the annual inflation-adjusted return of a Metro Vancouver house was 5.38 per cent, compared with 5.47 per cent for stocks. However, the standard deviation for stocks - a measure of their volatility - was 16.6 per cent, more than double that of the house.
Still, like every other market, real estate can have its ups and downs. In a report last year, BMO Capital Markets identified four major price corrections in the Vancouver market: 36.1 per cent from the second quarter of 1981 to the fourth quarter of 1982; 14.4 per cent from the first quarter of 1990 to the first quarter of 1991; 20.2 per cent from the first quarter of 1995 to the fourth quarter of 1996; and 13.1 per cent from the second quarter of 2008 to the first quarter of 2009.
Another negative for the owner-occupied home as an investment is that it is immovable and illiquid. While a poorly performing stock can be sold and replaced in minutes online, a house can sit on the market for weeks or months before an acceptable offer materializes. When it does, there are commissions, often about five to six per cent of the purchase price, and legal bills, to pay.
Unlike stocks, the capital gains on the sale of a principal residence are tax exempt, a benefit of about $150,500 using the example at the top of this article. Capital gains on the disposal of stocks are taxable unless they are held in a registered retirement savings plan or a tax-free savings account.
All that being said, investing is not only about chasing yield; it's about efficient portfolio allocation to minimize the volatility of returns for any given targeted return. In a 2006 paper, Tsur Somerville, associate professor of real estate finance at UBC and director of the UBC Centre for Urban Economics and Real Estate, argued that for most investors, B.C. real estate should form at least 50 per cent of an investment portfolio that also includes Canadian equities and bonds.
Somerville says owner-occupied housing should be considered in the same frame-work as other investments because it displays the same risk-return trade-offs. It follows buyers should choose a property that is optimal for investment purposes, which might not always coincide with one's ideal of a "dream home."
Given that one of the chief objectives of asset allocation is to reduce volatility, it seems appropriate to opt for a fixed-rate mortgage. There is enough variance in real estate markets without the added concern of fluctuating interest rates.
It is important to recognize the interest cost on borrowing for investment purposes is tax deductible, but the interest cost on a mortgage is not, a significant difference from the United States, where it is. At today's low interest rates, B.C. homeowners might be inclined to let the mortgage run its course and invest savings in RRSPs or other financial products. An investor, however, is more likely to eliminate that non-deductible debt as quickly as possible. In the same vein, an investor would hesitate to refinance a mortgage (i.e., take out a second mortgage) or draw down a home equity line of credit unless the borrowing could be so arranged as to meet the Canada Revenue Agency deductibility test of being for the purpose of earning business or investment income.
The notion that one's home is an investment vehicle rather than a consumption good is a relatively recent concept and it's not one that sits comfort-ably with many homeowners. People buy houses to settle down, start a family, raise children and become part of a com-munity. It's where we conduct the business of living our lives. A house is more than a store of wealth, one homeowner opined, it is a store of memories
Symmetrical in form with a low-pitched roof line and expansive entry porch framed by heavy columns, this traditional Craftsman is on the Vancouver Heritage House Tour on June 3.
What is it about 100-year-old houses that prompts thousands of people to buy tickets to tour them, to spend entire Sundays oohing and aahing over their vintage millwork, stained glass windows and rambling staircases?
Is it the thrill of stepping back in time in a venerable building that has survived The Great Depression, world wars, industrial and technological revolutions and a hurricane or two?
Is it the opportunity to bear witness to the transformative power of a homeowner’s sweat equity, the kind of commendable commitment that turns a teardown into a 21st-century gem?
Is it the thesis that the greenest house is a house that is already built, and that in a region as young as ours, we should view our heritage roots through the lens of both nostalgia and eco-consciousness?
Diane Switzer, executive director of the Vancouver Heritage Foundation, says it’s all the above, and then some.
The VHF, founded in 1998, held its first Vancouver home tour in 2003 and is busy preparing for the organization’s 10th annual tour on June 3. There are 10 homes featured this year, including two that are marking their centenary.
Switzer says the unwavering popularity of the tour reflects a growing awareness, and appreciation, of Vancouver housing stock that has stood the test of time, and the realization that it’s simply not sustainable to endlessly demolish and build new houses in our cities, especially given a StatsCan tidbit she cites that notes 50 per cent of Canadian buildings were constructed before 1970.
“The notion of a 100-year-old house starts to give our city a sense of history ... it’s emotional, that sense of place, but it’s also practical, with reuse and rehab. There’s some cachet to saying you live in a 100-year-old house. All of a sudden you speak with pride about that, about recycling houses.”
There’s no question, she says, that the city’s beautiful old homes are the lure of the tour, or that many tour-goers sign up in the hopes of taking away ideas for their own DIY projects. But some, she adds, just want to learn more about know their city’s history.
There is also heightened interest these days in different house styles, from different eras. Additional tours offered by the VHF this year include the already sold-out mid-century modern bus tour, the Vancouver Special tour (Sept. 22) and the laneway house tour (Oct. 20).
The notion of opening private local homes to the public was hatched in New Westminster, where the annual heritage home tour and tea is celebrating its 33rd outing on May 27. Its 1,500 tickets are nearly sold out.
Catherine Hutson of the New Westminster Heritage Preservation Society says the tour’s popularity has remained strong over the years, but the organization has also witnessed a sea change.
The tour began, she says, in response to the wholesale demolition of old homes that began in the Royal City in the late 1970s, prompting a group of activists to launch the tour as a means to convince the public — and government officials — that the 1,000 or so heritage homes in the community are civic treasures worth preserving.
“When it first started, there was a need to save and highlight heritage and restoration, to save the city’s old homes. It was almost activism. But now it’s different.”
For one thing, says Hutson, the tour crowd is younger. While many ticket buyers are looking for rehab tips for their old homes, more and more tour-goers are interested in decorating and home improvement, fuelled by televisions shows on networks like HGTV.
And while city’s assortment of stately Queen Anne, Victorian, Edwardian and craftsman homes continues to be a huge draw on the New West tour, Hutson also says there is an increasing appetite for a wider range of “newer” old houses, which is why this year’s lineup features a house built in 1956.
Not to be forgotten, of course, is the other reason that home tours have us lining up around the block: Human nature dictates that we are hardwired snoops, perpetually curious about how others live and the places in which they do that living.
Or, as Hutson, says: “It’s a lookie-loo’s dream.”
The 10th annual Vancouver Heritage Foundation Heritage House Tour takes place on Sunday, June 3 from 10 a.m. to 5 p.m. The tour price is $40; go to vancouverheritagefoundation.org for more information.
For information on the New Westminster Heritage Tour & Tea, which takes place on May 27, go to newwestheritage.org.
Convenience tops the list of why Canadians are drawn to condos. Six in 10 say the main reason they bought a condo is that it involves less maintenance than a house and another quarter say they like the amenities a condo offers. These results are from the 2012 TD Canada Trust Condo Poll, which surveyed Canadians who bought or considered buying a condo.
The amenities and the worry-free upkeep of a condo do come at a price however: the condo fees.
Just how much are Canadians willing to pay each month for the perks of condo living? According to the poll:
. Up to $400: 79 per cent
. Up to $600: 11 per cent
. Up to $800: 6 per cent
Furthermore, most Canadians are comfortable with the idea that their fees could increase. Twenty-nine per cent have even built some cushion into their monthly bud-get to account for a potential fee increase.
Another 34 per cent said they would need to cut back a bit - but could afford a fee increase.
"Your housing costs, which include the mortgage, utilities, renovation savings, condo fees and more shouldn't leave you living paycheque to paycheque," says Farhaneh Haque, the director of mortgage advice for TD Canada Trust.
"It's encouraging that Canadians are giving themselves some breathing room in case their condo fees increase. Managing your living expenses is about prioritizing your needs and budgeting accordingly. It's clear that the convenience of condo living is important to many Canadians who are being responsible and leaving room in their budget for the necessary fees."
Condo marketing guru Bob Rennie has a simple response to talk that Metro Vancouver's real estate market is headed for a hard landing because of sky-high prices.
"It's not a bubble," Rennie, director of Rennie Marketing Systems, said in an interview following his keynote address Thursday to the Urban Development Institute.
"With 80 per cent of the [condo] market that traded in [Metro] Vancouver last year, you only needed a household income of $52,800 to purchase.
That's not a bubble story."
Rennie, who spoke to a full house, said aging baby boomers with billions of dollars in equity will become a much greater force in the condo market as they increasingly downsize from expensive single-detached homes, and put money aside for their children.
He noted the number of people aged 55-64 will increase 38 per cent between 2009 and 2018, those 65-74 will increase 56 per cent, while those 35-54 will only increase by 4.6 per cent.
Because of that, he said, developers should shift their thinking into providing more larger one-bedroom condos to accommodate the downsizing boomers.
"Baby boomers are sitting on $88 billion in equity in Greater Vancouver and they're looking at their retirement years.
"That equity will be freed over the next 15 years [and] when they sell their home, they'll buy down and help their kids."
Rennie said there were about 19,000 condo sales in Metro Vancouver in 2011. While the average price for 80 per cent of those condos was $315,000, the overall average price was $427,000, which required an income of $66,000 to finance (with a 25-per-cent down payment).
Rennie noted that proximity to transit is paramount for today's homebuyer.
"In the '70s and '80s it was location, location, location. In the '90s through mid-2000s, it was timing, timing, timing. From here forward, it's transit, transit, transit."
He also called for more regional planning to make homes more affordable.
Tsur Somerville, director of the centre for urban economics and real estate at the University of British Columbia's Sauder School of Business, said he also doesn't believe there's a real estate bubble, largely because there's not an explosion in housing starts, typical for real estate bubbles.
Somerville said while the affordability numbers have been skewed by the higher end parts of the market - "there were double-digit increases in Richmond, Vancouver, Burnaby and West Vancouver, with single-digit increases every-where else" - the region is still expensive compared to other cities in Canada.
"Compared with other cities, that income [$52,800] gets you a house," he said.
"Here, it gets you a condo. That means we're expensive, but that's the reality of what we are. "It's still an expensive place to live, but it's not unaffordable. You'll end up smaller and further away from the core."
Average selling price in Vancouver down 9.8 per cent compared with a year ago at $735,315, according to a recent report.
Photograph by: File photo , THE RECORD
The demand for high-priced housing was strong in most Canadian markets in the first months of this year, with records set in 10 of the 16 markets it tracks.
Vancouver was one of the six markets where the luxury market has cooled off after an especially hot period last year but demand in Toronto remained high.
The price of luxury housing depends on the market, from a low of $500,000 in mid-sized cities such as St. John's, N.L., and Halifax to a high of $2 million in the Vancouver area.
In the case of Regina, which had the biggest increase in luxury sales this year, there was a 56 per cent more sales of at least $500,000.
In Canada's most expensive market, Vancouver, there was a 31 per cent decline from last year's peak with 393 luxury homes sold in the first quarter.
By contrast, Toronto's market has been hotter than last year, with 412 homes sold for at least $1.5 million each — a 49 per cent increase from early 2011.
Two-thirds of Canadians between the ages of 18 and 34 are pondering buying their first home, RBC says.
Photograph by: Getty Images , News Canada
Searching for your first home is exciting, but can also be over-whelming, both financially and emotionally. You may have a lot of questions such as: Do I qualify for a mortgage? What's a pre-approval? And what is amortization and why does it matter?
According to recent RBC Royal Bank research, 67 per cent of Canadians between the ages of 18 and 34 are looking to purchase their first home within the next two years.
"You will benefit by doing your research in advance and by setting a budget to help avoid any last-minute surprises," says Melissa Jarman, director of client strategies for RBC.
"Online tools and calculators along with advice from a mortgage adviser can help you prepare for any unforeseen costs and assess which payment options best fit your financial situation."
Jarman gives us three more tips to get started:
. Prepare a budget - a bud-get will help you live within your means and avoid unnecessary debt upon purchasing a home. To help alleviate financial stress, set a maximum budget and financial parameters. Online budgeting tools such as myFinance-Tracker (www.rbcroyalbank.com/ myfinancetracker) can help track where your money is going.
. Know your financial options - many first time homebuyers do not know the options avail-able when it comes to financing a home. By speaking with a mort-gage specialist, you can explore a variety of financial avenues and set your financial goals.
. Find an affordable mort-gage payment - mortgage payment calculators can help deter-mine how much your monthly payments will be, based on the amount borrowed, interest rates, mortgage term and payment schedule. This link may be helpful: www.rbcroyalbank.com/ products/mortgages/mortgage_ calculators.html.
Further advice and tips can be found at www.rbcadvicecentre. com, or join the discussion about purchasing your first home at Facebook.com/rbcroyalbank.
Home construction is feeding a stable Metro Vancouver housing market with an increase in multiple-family starts offsetting fewer single-detached starts last month, according to Canada Mortgage and Housing Corp.
"It's steady as she goes," noted CMHC senior market analyst Robyn Adamache of their latest report on residential construction intentions, which concluded there were 1,332 starts in April, about the same as April 2011.
However, starts were up 16 per cent to 5,963 for the first four months of 2012 compared to the first four months of 2011. Multi-family starts are up 20 per cent in that period to 4,987, while single-detached home starts are up one per cent to 976.
Adamache said that although the local market is doing well, she sees no danger of a potential glut of new condos saturating the market.
"I don't see it," she said. "The numbers are rising, but they're nowhere near the numbers in 2007-08, when there were 20,000 units under construction. Now, we're just over 11,000."
Cameron Muir, chief economist for the B.C. Real Estate Association, agreed.
"The numbers can be volatile on a month-to-month basis, [but] overall consumer demand is trending on a 10-to-15 year average. We're looking at the total housing starts for B.C. up 1.5 per cent over last year and up 3.3 per cent in Metro Vancouver. There have been moderate gains in construction activity. But, at this point, we don't see that [a condo oversupply]."
Adamache noted that if the rest of 2012 plays out like it has so far, there would be 18,400 starts for the year in Metro Vancouver, just under CMHC's forecast of 18,500 and above the 17,867 starts in 2011.
There are about 1,700 new condos unsold in the region, she added, far less than the mid-'90s peak when there were twice that many.
"All in all, the condo market is stable. Prices have been flat for some time and sales have been steady."
Adamache said that the cities of Vancouver and Surrey continue to record strong new home construction activity, with condominium apartments accounting for most of the starts in Vancouver and townhouses the main type of new homes in Surrey.
Other hot spots, according to Canada's national housing agency, include White Rock, New Westminster and Maple Ridge. For urban B.C., the seasonally adjusted annual rate rose 6.3 per cent to 22,100 in April, up from 20,800 in March. Actual numbers for urban B.C. in April were 1,867, slightly lower than 1,898 in April 2011.
Nationally, housing construction starts blew past expectations in April, with CMHC saying there was a season-ally adjusted annual rate of 244,900 housing starts last month. That was up 14 per cent from the previous month.
"While unseasonably warm weather has been helping starts in recent months, April's return to more normal seasonal temperatures still saw home building soar," CIBC World Markets economist Emanuella Enenajor said in a research note.
Construction on multiple-housing units in urban areas drove the overall gains. They were up 27.4 per cent to a rate of 158,500. Urban singles saw a gain of 0.6 per cent to 67,700.
Regionally, there was a surge of 56.5 per cent in urban housing starts in Quebec, and increases of 12.2 per cent in Ontario, 6.3 per cent in the Prairies, and 2.6 per cent in Atlantic Canada.
Alexis Lum, a 28-year-old high school French teacher, is building a laneway home in his parents' backyard. He will share the home with his older brother Antoine.
Photograph by: Gerry Kahrmann, PNG , Vancouver Sun
Alexis Lum is building a laneway house in his parents' backyard for three reasons: It's more affordable than a two-bedroom apartment; he can rent it out if he decides not to live there; and he can have privacy and independence from his parents, while being close enough for regular family dinners.
"I do love Mama's cooking," he said, adding he's sharing the investment with his brother, Antoine, 31. Lum, 28, is a secondary school French teacher at Southpointe Academy in Tsawwassen.
Lum's situation is typical: laneway houses have been allowed in Vancouver since 2009, and usually they are built as a way for parents to help their adult children enter the pricey Vancouver housing market.
Lum was raised in the Dunbar house behind which he's now building the laneway house for about $270,000, and he's excited to take the keys.
"I love it. It's absolutely fantastic. It's a beautiful, small house," Lum said of the two-bedroom home in his parents' backyard.
Michael Lyons, vice-president of marketing for Smallworks, a builder of laneway homes in Vancouver, said at least half his customers are building these small houses at the back of their lots for the next generation.
"They can't afford to buy in the neighbourhood where they grew up. People want to stay close to their family," he said.
The cost to build a laneway home is usually between $250,000 and $270,000; that price includes pre-construction costs of $11,500, excavation and site work of $30,000 to $35,000 and another $175,000-$200,000 for the construction, Lyons said.
"By the time the dust has settled, you're in the $250,000-$270,000 range."
For that, you can have a 500-square-foot house with one bedroom and one bathroom, plus a garage, on a regular 33-by-122 lot in Vancouver, Lyons said. A 50-by-122 lot can accommodate a 750-square-foot house, plus garage, with two bedrooms and two baths.
They can be built on the west side of the city; 80 per cent of Vancouver properties fit the necessary R1 or R5 zoning, Lyons said.
With the benchmark price for all residential properties in Greater Vancouver sitting at $679,000 and housing affordability a significant problem in the Lower Mainland, a laneway house could be considered a bargain.
You cannot stratify or subdivide to sell the house separately; it rides with the property like a basement suite, Lyons said. However, co-owners can have a contract between them that splits the ownership, based on what-ever terms they agree to.
For financing, although the land owner's name must always be on the documents, some banks, including Vancity, have created mortgages specifically designed for laneway homes. Vancity waives the legal and appraisal fees for these mortgages and gives two-per-cent cash back to people who bring another mortgage to Vancity for a laneway home, according to Colin Lawrence, mortgage development manager at Vancity.
"We made a decision to support laneway homes as a way to make home ownership more affordable and also to build the city's rental stock," Lawrence said.
Lawrence has worked on financing about 20 laneway homes and says demand is growing as people are starting to catch on to the idea. He cautioned families to obtain independent legal advice if their intention is to share ownership, so that everyone is protected.
The next generation can finance themselves and pay the mortgage, Lyons said, adding right now a laneway house adds about $300,000 to the value of a property.
For homeowners looking for rental income, a laneway home would also be a good investment.
The mortgage on $250,000 would cost about $1,200 a month, Lyons said, but laneway homes can rent for as much as $2,000 a month on the west side, or $1,700 a month on the east side.
"Basement suites are renting for $1,600 or $1,700 a month for a two bedroom on the west side of Vancouver," he said. "It's not surprising a detached house - where you don't have to live below someone with their kids running around or playing piano above your head - would rent for more.
"You have lots of light, you have two floors and you have two bathrooms. It's going to be valuable."
Additional costs are property taxes, which will add about $25 per month, and insurance which could also tack on about $25 per month.
Lyons said laneway houses are freeing rental suites because often the people who live in a laneway house would otherwise be renting.
"This allows people to live closer to where they work, play and go to school. It also provides more rental units in a city that is very short on rental houses," Lyons said. "People are [becoming accustomed] to seeing these in their neighbourhood. People see them and think, 'That would be really good for us.' "
Real estate sales in April sunk to the lowest levels for the month since 2001.
Photograph by: Ian Smith, PNG , Vancouver Sun
Local homes sales are at their lowest levels for the month of April since 2001, according to a monthly report released Wednesday by the Real Estate Board of Greater Vancouver.
A local real estate analyst said the April numbers are consistent with a longer-term trend of slowing sales, and that a market correction might be underway.
"This is certainly consistent with a correction," said Tsur Somerville, director, centre for urban economics and real estate, Sauder School of Business at the University of B.C. "The first place you'd see that is in falling sales."
Somerville noted that for seven consecutive months - since October 2011 - sales have dropped compared to the same month a year before, and that the size of the drop has steadily increased.
"It's a clear indication of a significantly weakening market on the sales side. But there's no clear economic reason. It's not like interest rates are going up dramatically or the economy has slowed dramatically.
"People just seem less willing to pay the prices now than they were eight to nine months ago."
The benchmark price for all residential properties in April was $683,800, up 3.7 per cent from April 2011.
According to the REBGV report, the market is in a balanced state.
"Although April sales were below what's typical for the month, we continue to see, with a sales-to-active listing ratio of nearly 17 per cent, a balanced relationship between buyer demand and seller supply in our marketplace," said REBGV president Eugen Klein in a statement.
However, the report noted that Metro Vancouver sales totalled 2,799 in April, a 13.2-per-cent decline com-pared to the 3,225 sales in April 2011 and a decline of 2.6 per cent compared to the 2,874 sales in March 2012.
New listings for detached, attached and apartment properties totalled 6,056 in April, a 3.6-per-cent increase compared to both March 2012 when 5,843 homes were listed and April 2011 when 5,847 homes were listed for sale.
At 16,538, the total number of homes listed for sale increased 8.5 per cent in April compared to last month and 16 per cent above this time last year.
Meanwhile, the Fraser Valley Real Estate Board said there were 1,435 sales in April, down five per cent from April 2011, but up slightly from 1,412 sales in March.
In April, the board added seven per cent more new listings compared to one year ago, up to 3,134 from 2,918, pushing the number of properties for sale to 10,312, the highest since July 2010.
The benchmark price for a detached Fraser Valley home rose 5.3 per cent in the year to $576,600 last month.
BC Business Online, April 27, 2012
The Hotel Tonight app made their business model work by going an inch wide and a mile deep.
A new last-minute hotel-booking service in Vancouver shows that focusing your business to a narrow niche pays off.
Every adviser tells entrepreneurs who are determined to start successful new businesses to find an unfilled niche in a market, then fill it.
Sometimes entrepreneurs actually take that advice. And they become successful.
I was thinking of this while speaking to Sam Shank, CEO of Hotel Tonight, a last-minute hotel-booking application that has conquered the United States and launched its international division yesterday by making the service available in Vancouver and Toronto.
Hotel Tonight is a business built for the last-minute travel crowd, whether they’re constant travellers who find themselves in a city and decide to stay for an extra night, or are in from the suburbs and don’t want to make the long drive home
Each day at noon, Hotel Tonight offers three same-day hotel deals in each of its destinations, with discounts of up to 70 per cent off. Hotel rooms can be booked (up to 2 a.m.) in less than 10 seconds – not by phoning the hotel or going through its website (and getting the normal rate), but through a mobile app on the iPhone or any Android device.
In Vancouver, those rooms are at the Moda Hotel and the Pan Pacific hotel. Three different types of rooms – basic, hip or luxe – are offered.
What interested me about this was Shank’s business strategy; he ignored the usual hotel business methodology of wide-ranging service and 70 per cent bookings, because it was too broad and expensive.
Instead, he figured out how to access that remaining 30 per cent and turn it into a niche that no one had bothered to fill. And he didn’t bother connecting with everybody. Instead, Hotel Tonight can only be accessed by smartphone mobile apps, because Shank realized that his target market – constant travellers and last-minute decision makers – were probably younger, and therefore more likely to use mobile devices.
To me, this is the way we should all be thinking today. The days of trying to be everything to everyone are over, unless you’re some big megacorp with the scale that can service this kind of broad-based market.
But too many startups – tech-related or not – still try to serve a large market. Their reasoning is that, by going a mile wide and an inch deep, they will have more chance of survival.
But the opposite is true: you’ll have a much better chance by focusing intensely.
Go an inch wide and a mile deep.
Much of the effort that is being expended to try to conquer the housing affordability challenge in Metro Vancouver is focused on assisting buyers or renters in one way or another, or on providing more subsidized housing in different forms. Mean-while, not enough effort is focused on lowering costs of traditional market housing.
Perhaps we should be looking for ways to lower the cost of housing to the consumer by identifying ways to plan, design, approve, permit, engineer, construct and market housing differently.
A good place to start would be to look at the time that it takes to deliver new housing to the market.
The majority of housing buildings in Metro Vancouver today is multi-family housing - condominium apartments, townhouses and forms of housing other than the detached single-family home. I know from experience that in most jurisdictions in Metro Vancouver, it can take more than twice as long to plan, design and obtain the necessary land use and construction approvals for new multi-family housing than it takes to construct that housing.
That means it can take as long as four and a half years from the time a parcel of land for a new multi-family development project is identified and acquired by a developer until the day when the new homeowner moves in, especially where the property has to be rezoned and the building is a concrete structure. Where the zoning is already in place, a new townhouse development or wood-frame condominium apartment development might be able to be completed in just over half that time, from the time the property is first identified. But we're still talking about an awfully long time.
A lot can change in three to four years. Remember the meltdown in the global economy that happened less than four years ago? Change and the uncertainty that comes with pro-longed time periods means risk. To compensate for risk, those who risk their money whether they be the developers who risk their personal and corporate equity or the lenders who finance new developments with debt, all need to be paid a reward or return.
Without a return that matches the risk and uncertainty, no one would make capital available for new housing projects. To understand that time is money, consider that for every month that passes, it costs around $2,500 just in normal bank interest for every $500,000 a developer risks while waiting for a project to be approved.
When the average home price is well in excess of $500,000, these costs add up quickly.
These costs - a significant cost component of new housing - can be mitigated with shorter time periods during which capital is at risk.
Homes can also be built faster if innovative construction practices are used, such as pre-fabricating components, sections and even entire buildings in a controlled environment. We haven't seen a lot of factory-built housing in this part of the world, but perhaps it is time we explored this alternative to building on-site.
That means changing and adapting building codes and other regulations, as well as changing construction practices. Not only can pre-fabricated housing reduce construction time, it can also mean better quality control and less construction waste, both of which make home building more cost-efficient.
Changing building technology can mean reducing costs, but it can also mean increasing the cost of building a home. While construction methods have been slow to change over the last half century, new technology has emerged in energy systems in particular that promise efficiencies in long-term operating costs and reduced environmental impacts. It makes total sense to embrace these new techno-logical innovations if they are proven to be cost effective.
But the new costs associated with incorporating new technology in a home needs to be accurately weighed against all of the benefits. We have to be cautious about not trying to use the home as a showcase for technology when the real purpose of the home is to provide shelter. New technology makes sense if it can be deployed efficiently and cost-effectively short term and long term.
Not a lot has changed in the way we market housing over recent decades and there is also room for innovation in this cost centre, as well.
Social media and other digital technology are just starting to shape the real estate marketing industry. There will always be a concern that purchasers must be protected in making a transaction as big as buying a new home, therefore there will likely always be a role for a professional intermediary.
Nonetheless, it is worth exploring how far technology and other innovations can go in connecting buyers to sellers and reducing marketing costs. These costs can amount to as much as five or six per cent of the cost of a new home.
This is not a small amount when we are considering homes that sell in excess of $1 million.
What are some of the other areas where savings can be achieved in sup-plying new housing? I welcome your ideas. Housing affordability depends as much on costs as it does on other factors