Blog › September 2011

When friends, family become partners


Fixed mortgage rates keep going down, variable rates keep going up... the gap between the two hasn't been this narrow in a long time. Unless a buyer is buying for the short term it's getting pretty hard to recommend anything but a fixed rate.

When friends, family become partners

When buying a home in Vancouver with friends, think of them as business partners. Make sure to draft a legal contract that addresses unexpected issues.

With home prices moving ahead at a healthy clip, some single residents of Vancouver are choosing to purchase a property with a friend or relative.

"I've had a number of clients over the years enter into this type of agreement," says Nadine de Palma, financial advisor.

"A lot of individuals, particularly younger adults, feel as if they have been priced out of the market so go in with a friend or a sibling to purchase the property. I see that as a trend that is going to gain momentum."

However, whether you are purchasing with a friend or relative, Ms. de Palma says this is essentially a business deal.

"If you're looking at buying a property together, friends are no different from business partners. Consult a lawyer and consider what you are doing," says Ray Leclair, real estate lawyer and vice-president of Title Plus at Law Pro. "The parties could enter into an agreement ... they should consider that they are business partners. The business is owning a house."

Mr. Leclair says the agreement should cover who pays for what in terms of purchasing and maintaining the house, as well as how the property will be divided if the friends decide to go their separate ways.

"With two young people starting out, if one dies or becomes incapacitated, you can be sure that the parents or the brothers or sisters are going to be in there," Mr. Leclair says. "That's where you want to have the agreement in place. If you don't have the agreement, you get a family member or litigation lawyer to settle the issue and that's never a good thing. It is worth talking to a real estate lawyer prior to, and not litigation lawyers after the fact."

Ms. de Palma says planning is key.

"I always start off by saying we cannot predict life so we have to plan for it. I recommend two plans ... your financial plan and your risk management plan," she says.

The financial plan covers how best to finance the purchase as well as examining how one party would continue to live in the home if the other owner wanted out of the agreement, Ms. de Palma explains.

"The other plan that I feel is important is a risk management plan. [There is the] possibility of becoming disabled or suffering a critical illness before aged 55. While most recover, it can be financially devastating," Ms. de Palma says. "I encourage individuals to look at life insurance, disability and critical illness. It allows that individual to maintain their half" of the property.

Mr. Leclair says individuals buying property together should take this as an opportunity to look over all their documentation.

"They should be looking at their domestic contract if they have one, their wills, their powers of attorney to make sure they are consistent," Mr. Leclair says. "If in my will I say everything goes to 'Jane,' yet my interest in my property I want to go to the person I am buying with, they would not be consistent at that point. Make sure all of your legal documents deal with the same assets in the same way." © Copyright (c) National Post



Vancouver real estate no bubble says economist. Real Estate in Vancouver.


B.C.'s real estate market may be slowing down, but there is no sign Vancouver's sky high prices are caught up in a bubble that is about to burst, according to a new report

The Central 1 Credit Union report forecasts the Vancouver's real estate market will slow this year and total sales will drop slightly from 2010, but prices will continue to rise an estimated 6.8 per cent in 2012.

According to the report's author economist Brian Yu, low interest rates that show no sign of rising quickly and the limited supply of land will keep values rising – all familiar arguments.

But Yu says there is another important reason to believe prices in Vancouver are unlikely to collapse. Market speculation —commonly known as flipping — currently accounts for only about two or three per cent of the market.

Yu says that is a normal level, which shows most people are living in the homes they buy.

"Our research shows few signs that speculators are overly active in the Vancouver market, which means we are unlikely to see a speculation-induced bust," he said.

"Even if the economy slows and employment slows, we expect to see individuals hold on to their homes, rather than sell them in a weaker market," he said.

Prices may be way up for detached homes in Richmond, Vancouver and Burnaby, but Yu insists there hasn't been a price surge across the region and concerns about a possible dramatic price drop in Vancouver are overblown.

"Price jumps that have received media attention have been in localized areas and we have not seen a region-wide price surge," he said.

Market balanced.

That's backed up the Canadian Real Estate Association's monthly report, also issued on Thursday, that found a record 70 per cent of all local markets across the country are considered to be in balance.

Vancouver and Toronto's share of provincial and national sales activity reached "unusually elevated" levels earlier this year, but has since pulled back into normal seasonal variations, the group said.

However, some observers said the market is eventually headed for a drop.

Fannie Fong of TD Economics said a peak-to-trough drop of roughly 10 per cent for both home sales and prices is expected, though that change isn't expected until the Bank of Canada begins hiking interest rates in earnest in early 2013.

BMO Capital Markets raised the spectre of a Vancouver price correction, but with a caveat: as long as immigrants with money continue coming to Vancouver, and interest rates stay low, prices in will stay high, said the BMO report.



Recently Sold Listing 13 - 168 6th Street, New Westminster, BC


V907055 - 13 - 168 6th Street, New Westminster, BC, CANADAI have just recently sold this listing at 13 - 168 6th Street, New Westminster.

Housing starts to hold steady in 2011 and 2012


Canada Mortgage and Housing Corporation says housing starts should hold steady for the rest of 2011 and into next year.

The agency said its national point forecast is for 183,200 units started in 2011, with about 183,900 next year.

It's third-quarter housing market outlook says starts have been strong in the last few months, but are expected to moderate closer in line with demographic fundamentals.

It said that immigration and low mortgage rates are supporting Canada's housing sector, despite the recent financial turmoil in the markets.

CMHC's point forecast for existing home sales is 446,700 units, which is essentially the same level as last year.

It says sales are expected to grow “modestly” in 2012, with a point forecast of 458,000 units.

The average price increased in the first half of the year due to more higher-end homes being sold, but the average price is expected to moderate in the end of 2011.

It says growth next year should be more modest.