Back to school adds up to housing crunch for UVic students

"One of the newly renovated rooms in Sir Arthur Currie Hall is close to being ready for the new crop of students at the University of Victoria. Students are expected to start moving in on Labour Day weekend.

Claire Riddell doesn't expect to see a repeat of last year – in fact, that's the last thing she wants.

It's her job to manage the distribution of housing for students at UVic, where almost 40 per cent of those who apply for a room on campus aren't placed.



"We need more housing," she said. "It's that simple."

The school has about 2,400 beds, including 100 for staff and units for families.

Since 2007, the school has guaranteed it will provide a room to all first-years who qualify for housing – something that caused a problem last fall.

Housing Services guaranteed more beds to students than the school could actually provide -- around 120 students had to be housed in common-room lounges around campus until January.

"I think the problem was a computer glitch last year and all of a sudden there was some extra guaranteed students," she said. "But that won't be an issue this year."

But what could be a concern this year is out of UVic’s hands: Greater Victoria has one of the lowest rental vacancy rates in the country, 1.2 per cent, making it a significant challenge for students to find an affordable place to live.

Student Maine McEachern is finding this year's search to be difficult, especially since she's looking from Alberta.

The second-year law student won't be back in Victoria until the end of the month, but she has been looking for more than a week now, posting ads online and scouring Craig's List and the university's off-campus housing website for a reasonable place.

"There seems to be quite a few affordable houses, but not many are available," she said in an e-mail from Alberta. "My experience from house hunting last August was that affordable properties for rent advertised (online) would be gobbled up -- most probably by students actually in Victoria and capable of viewing the properties and meeting the landlords in person -- very rapidly."

McEachern spent all of September last year living on different friends' couches, until she found an available place for Oct. 1.

"The difficulty is being able to secure anything from afar," she said. "And I suspect that landlords are more likely to offer their properties to flesh-and-blood individuals with whom they've spoken face-to-face."

Statistics from the Canada Mortgage and Housing Corporation list that the average monthly rental rate for a two-bedroom apartment in Victoria is $1,043.

On Craig's List and UVic's off-campus housing website, it's almost impossible to find a room in the CRD for under $800. If students do find one, it's likely not conveniently close to campus.

"They may have to move farther away and take a longer bus ride, but there's always cheaper rooms and houses. Most people want to be in the (Greater Victoria Area), but Langford and Colwood are only a 20-minute to half-hour bus ride," said Leigh Urqhuart, off-campus ads clerk with Housing Services. "So there's always cheaper accommodation, you just have to be willing to move further away."

With the combination of a low vacancy rate and a high average monthly rental price, the options in Greater Victoria are not ideally suited for most students, being that many are on fixed budgets.

"August is a highly competitive time to find student housing, as tens of thousands of students are returning simultaneously, all in search of similar rental properties," said McEachern "And, because real estate is at a premium in the city, being a student on a tight budget is even more stressful because one's options are consequently severely limited."

McEachern has budgeted $500 a month to spend on rent, but, for many students, that's more than they can afford.

Craig MacBride, spokesperson for the Ministry of Advanced Education, said this year they've seen a 20 to 30 per cent increase in the number of student loan applications.

Although the final numbers aren't available, he suspects upwards of $200 million worth of student loans will be handed out across the province this year.

In 2008/09, the average amount of financial aid given to B.C. residents attending UVic was $7,583 for an eight-month term (tuition and books account for a large chunk of that). That equates to around $215 a week, below the maximum possible provincial loans of $520 for a student with dependents, and $320 for a student without dependents.

The average amount of financial aid given across all provincial institutions in the province was $7,841 over eight months.

Urqhuart, who monitors the off-campus website postings on a regular basis, says the prices now are higher than they were in May or June, but relatively consistent with what they've been in years past.

"It got off to a slow start (this year) ... The supply was greater than the demand," he said. "Landlords were reducing their prices because they thought (the problem) was price related, but it was because there's less international students coming, so there was less need for accommodation.

"But now things are normal. Most people aren't reducing. The people who are reducing are the ones in far out areas," he added.

With under three weeks to go before school is back in session, McEachern, like hundreds of other students, will continue looking for a place to live come early September. And if she can't find anything affordable by then, she’s not sure what options she’ll have.

"Very few, I fear," she said. "If worse came to worst, I could rent a place further from campus ... and I could commute everyday if I had to."

It's something many students will have to do, at least until the university solves its on-campus housing problem.

Currently one new residence is being built, but Claire Riddell said even when that opens in January 2011, it won't make a dent in what's needed.

Right now the school has a waiting list of 1,400 students hoping to secure a place on campus, on top of the 2,300 who have already been assigned a room. Riddell said that number will likely rise, and they would be lucky to see even 20 of the students on the wait list get a room in September.

For students still in need of a place, Urquhart recommends regularly checking online to see what's available, and researching your options based on a balance of affordability and suitability."

By Kyle Slavin - Saanich News
Published: August 23, 2009 11:00 AM
kslavin@saanichnews.com




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Tax Hits Hard on New House Sales

By Roszan Holmen - Victoria News
August 15, 2009 8:00 AM

House buyers will take the biggest hit when the provincial government harmonizes the provincial sales tax with the federal goods and services tax next summer. Consumers across B.C. are opposing a planned seven per cent tax increase on select services and goods, including new house purchases.

In cities such as Victoria, Vancouver and Kelowna, where new houses cost more than $650,000 on average, the tax promises to cut the deepest. “This is really a big, big tax on the middle class,” said Casey Edge, executive officer of Canadian Home Builders’ Association, Victoria branch. Edge objects to what he calls the triple taxation of new houses.

The provincial government imposes a property transfer tax on a property both when it is sold to the developer, and again when it is sold to the consumer. The new harmonized sales tax will add yet another level of taxes to the sale. Last month, the B.C. government announced its intentions to harmonize the provincial sales tax with the federal goods and services tax, as of July 1, 2010. The idea is to eliminate the hassles of paying and administering two different taxes.
While some business organizations applaud the move, many consumers and industries see it as a hit to their pocketbook and their bottom line.

The reason?

Many goods and services, which are currently exempt from the PST, will soon be subject to the newly-combined 12 per cent harmonized sales tax. New houses fall into this category, so to ease the burden, the government introduced a rebate to keep taxes roughly the same.
The rebate, however, caps out at $20,000, so any new house worth more than $400,000 will be hit with the tax. In Greater Victoria, that’s the majority, as the average new single-detached home sells for $668,655.

The B.C. Real Estate Association has crunched the numbers to calculate a net tax impact of $13,433 on the average home. Add to that several thousand dollars in taxes on services associated with buying a home. Property inspection and appraisal, the real estate commission and the lawyers fee will all be taxed at 12 per cent rather than five per cent starting next summer.

How all this will affect home sales and prices is yet to be seen.

“It’s too early to say exactly what the impact will be on the number of sales as well as resale home prices,” said Bryan Yu, economist with the real estate association. “Until we know what the transition rules will be, it’s impossible to predict the impact.” The new house market, however, will be more affected than the resale house market, he said. Edge called for consultation with the industry before the government moves ahead with the tax.

“HST is a consumption tax. It’s not appropriate to put it on very large investments where people take out amortized loans because then it turns into a monster and the costs virtually double for the consumer,” he said. “One of the few manufacturing industries creating local employment is homebuilding and it doesn’t appear to be any recognition of this.”
Stephen Spector, president of Certified General Accountants of Canada, B.C. branch, said the benefits of HST will outweigh the costs. Consumers will pay more but there is relief for people of low-income, he pointed out. “If somebody is spending nearly a million dollars (on a house) don’t tell me they can’t afford an extra $20,000. “As an economist I applaud this move simply because a single value-added tax is a much more efficient tax,” he said.

Businesses, Spector added, will also benefit because they’ll be able to claim rebates on the provincial portion of their taxes, rather than just the federal portion.
In a competitive market, consumers can choose those businesses that pass the savings along, he said.

rholmen@saanichnews.com

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Bank of Canada likely to hold

No Rate Change

Frank Pingue And Ka Yan Ng, Reuters, With Files From Financial Post

The Bank of Canada will stick to its conditional pledge to keep its benchmark interest rate at its current near-zero level through the second quarter of next year, most Canadian primary securities dealers say.

Eight of Canada's 12 primary dealers polled by Reuters predicted the slow pace of economic recovery will prevent the Bank of Canada from lifting its key interest rate above the current level of 0.25%, a historic low, until after the first half of 2010.

"Given the state of the economy and the fact that we expect the recovery to be very mediocre and modest, there is really no need to tighten any earlier than that," said Carlos Leitao, chief economist at Laurentian Bank Securities in Montreal.

"In the meantime, particularly the rest of this year, the downside risks are still quite significant, so I don't see any reason for the bank to hurry up and move rates."

The central bank will announce its next rate decision Tuesday, though the result is largely a foregone conclusion because of its April pledge.

All the dealers polled said the bank will leave its key rate steady for the rest of this year, but there was little consensus on when it will next raise rates.

The forecast for the earliest rate hike was the first quarter of 2010. The forecast for the latest move is that it will not come before 2011.

After nine straight months of contraction in the Canadian economy, some dealers said gross domestic product will show signs of improvement in the last half of 2009 and translate into higher interest rates early in 2010.

"We think that during the second half of the year we will get positive GDP growth both in the U. S. and Canada and so in fact we're getting closer to the turning point as far as the recession is concerned," said Paul-Andre Pinsonnault, senior fixed-income economist at National Bank Financial in Montreal.

"Six months down the road ... by that time there will be enough signs that the economy is on a sustainable growth path, and so the bank will have to revise their commitment to keeping the interest rate at a quarter per cent."

The dealers also saw a low probability that the bank would engage in some form of quantitative easing -- printing money to buy market securities -- over the next 12 months. The median expectation of the probability of quantitative easing was 10%.

The poll was conducted after data showed Canadian consumer prices had their first annual fall since November 1994, posting their biggest downward turn in more than half a century.

Meanwhile, something that could shed light on whether Canada is on the way to economic recovery will be May's retail sales numbers, to be released on Wednesday.

Sal Guatieri, senior economist with BMO Capital Markets, said he's expecting a 0.7% monthly gain in retail sales. That would be an improvement from the 0.8% decline for April, which followed three straight monthly gains.

Mr. Guatieri said part of that sales boost will result from higher gasoline prices, but there are other factors as well.

"We know that new motor-vehicle sales were up in May about 1%," he said. "It looks like consumers have turned the corner after retrenching at the turn of the year. They're still far away from a spending spree, but it looks like they're starting to spend a little more freely now."

Millan Mulraine, economics strategist for TD Securities, went so far as to predict a 1.5% gain in retail sales. Beside higher gasoline prices and more car sales, he reasoned that household-related items have been selling better, given the recent strength of home sales.

Also in the coming week, Statistics Canada will release May's wholesale trade numbers today, and several companies such as Shoppers Drug Mart, Suncor Energy, EnCana and Loblaw will be providing quarterly financial results in the days that follow.

Call us we'd love to chat.

Krista

Lawless Brown - Accredited Mortgage Professionals

Victoria-area house sales take off

Multiple offers are starting to return as buyers flock back to the market

By Carla Wilson, Times Colonist July 3, 2009

Victoria area house sales are taking off.

Buyers returned to the market in droves last month, as the total number of property sales in Greater Victoria hit the fifth-highest monthly level since 1991.

June saw 946 sales through the Greater Victoria Real Estate Board's Multiple Listing Service. The sales represented mostly capital region residential properties, but also included some out-of-town properties and a dozen commercial sales.

Everything from single-family homes to lots and manufactured homes is included.

"I was quite astounded," Michael Holmes, Pemberton Holmes managing broker, said yesterday.

The robust market, where multiple offers are showing up again, likely reflects pent-up demand and low interest rates, Holmes said, adding strong sales in other parts of the country translate into sales in the capital region when people move to Greater Victoria.

In the capital region's most recent real estate boom, in May 2007, sales hit 963, followed by June of that year at 949.

The previous high was set in May 1991 with 1,083 sales, while April 1991 saw 1,003 sales, said Chris Markham, Victoria Real Estate Board president.

"We're on fire," Markham said.

The total value of all June sales was $447.6 million.

"This takes me right back to 2006-2007," he said, referring to years when the local market was hot.

June sales reflect a 31 per cent increase from 723 in June 2008, and are up by seven per cent from May 2009, when 879 properties changed hands.

Markham said the market has been growing stronger for the past couple of months as many people who were waiting to see which direction the market would move have decided it's time to buy.

"Housing that we didn't sell last year, we are seeing multiples [offers] at the same price level."

This isn't a market of speculators, Markham said. Normally, 75 per cent of buyers are from within the region, but he believes that number is higher now.

After a "brutal" January and February, sales numbers have been steadily climbing.

The strongest part of the market is in the $600,000-and-lower price range, Markham said.

Many condominium projects were built in the capital region and inventory is "clearing out nicely," Markham said.

The average price of a single-family house sold through the board's Multiple Listing Service increased to $588,186 last month, up from $573,442 in May. The median in June was $529,900.

Saanich East led the region in the number of total single-family sales, at 94, followed by Langford at 60, and Victoria at 42.

The average price for condominiums edged down to $298,200 in June. May's average was $306,971. The median in June was $275,000.

Victoria had the highest number of condo sales, at 99, followed by Langford at 40.

Townhomes saw an average price increase, rising to $413,218 in June, up from $400,788 in May. The median remained the same month-over-month at $375,000.

Last month brought 26 sales of more than $1 million, including one Uplands home sold for more than $5 million, the board said.

Inventory has tightened up since June of last year, helping drive demand. Last month, there were 3,794 properties for sale, a decrease of 16 per cent from the 4,513 on the market in June 2008.

"The drop in available inventory is also reflected in the price increases for single-family homes and townhomes that we saw

last month," Markham said.

cjwilson@tc.canwest.com

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BC Housing Market Stabilizes

A year-long buyers’ market in B.C. real estate came to an end in May, according to Central 1 Credit Union’s analysis of the lastest market activity.

Tumbling prices have kept many sellers off the market, and new listings are now at their lowest level in six years, but sales have now climbed for five consecutive months. For the first time in more than a year there is now one sale for each two new listings, an indicator of a market where neither buyers nor sellers have a distinct advantage.

“Record low mortgage rates together with last year’s price declines have driven up affordability and demand, while supply has come down from the highs of 2008,” Central 1 says in its weekly economic briefing.

But credit union economists say the the stronger MLS housing market is likely to cool off again by this fall, before the B.C. economy is expected to begin growing again by early 2010.

“Pent-up demand left over from last year’s slowdown will ease, likely within a few months. Two- to five-year fixed mortgage rates are forecast to rise 30 to 40 basis points by year-end, disqualifying some low-equity buyers.”

Tri-City News

Respectfully,

Krista and Sherri
Lawless Brown Mortgage Team

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