Thursday, February 23, 2012


Tips from Hollywood set decorator: Hang ‘what speaks to you’ on your walls
By Karen Hawthorne
Financial Post Feb 21, 2012

The penthouse living room in Tower Heist includes a 1963 Ferrari 250 GT Lusso replica from Steve McQueen's collection.

Who can afford a Warhol or Picasso for their condo? Or maybe a replica of Steve McQueen’s 1963 Ferrari 250 GT Lusso in lieu of a sculpture for the living room? If you live in a penthouse suite in a famous tower, money is no object, so certain collectibles might just fit the bill.

That was the starting point for set decorator Diane Lederman for the film Tower Heist, now out on Blu-ray. The story, shot in New York on a film stage and on-site at the Trump Towers, is about a group of hardworking guys who find out they’ve fallen victim to a wealthy businessman’s Ponzi scheme. They conspire to rob his high-rise residence. Comedy, special effects and dreamy Casey Affleck — not a bad way to spend 90 minutes.

The penthouse living room has the soft, muted less is more look to showcase the art collection.

Ms. Lederman had the budget go-ahead to go big for the set, and says there are pointers for decor that even flea market shoppers can take away. Here’s our Q&A:

Q: Great cast! Judd Hirsch, Alan Alda, Matthew Broderick, Ben Stiller … How did they react to the penthouse set with the replica of Steve McQueen’s Ferrari smack in the middle of the living room?

A: Everybody was pretty blown away by the set. The car certainly was the centrepiece and it was integral to the story. Actually seeing it in the space was very personally and professionally satisfying because it had such an impact and it was a set much larger than most stage sets get to be. It almost felt like an old Hollywood set, it’s grandeur and size, which was really fun to be a part of.

Alan Alda [who plays rich swindler Arthur Shaw], I had a lot of interaction with because it was his apartment in the story. He would come to the office and have a look at what we were doing and as we were choosing things, mostly the art which was a very important part of the apartment and really helped to show the wealth of the environment. He was very impressed and, walking around on set, I could see him really start to get into his character, which for me was really exciting.

Q: Part of the beauty of your job is how the set enhances the actor’s experience of the role?

A: Exactly. That’s the most important part of it, getting into the mind of the character that you’re trying to create an environment for, and have that reflected so that when they get there, it’s like ‘yes, this feels like my apartment, this is how I would have someone decorate it.’ It really fit, i just saw him settle right into character.

The Tower Heist penthouse set is modeled after the penthouse in the Trump Tower in Columbus Circle, now in construction.

Q: Are you on set during some of the filming, in case the director says, ‘Oh that’s not working, can we change that?’

A: Pretty much standard, when we are opening a new set, shooting for the first time, I will always be there. I always attend the first two hours, give them the chance to shoot part of the room before I move on to my next project in the movie. That will happen, for blocking, this doesn’t quite work, can we switch things around. Film is a very organic medium, so many people, so many ideas, you have to be ready to move and think on your feet, that’s part of the fun.

The morning we were to shoot the Tower’s Security Office set, there was an exterior and then just a few hours later we would come inside to shoot the office. [Director Brett Ratner] first saw it that morning, and even though this was the Trump Towers real security office, Brett felt as if it wasn’t high-tech enough and wasn’t happy. I had only three hours to completely transform this very real existing security office into a high-tech fantasy. I came up with the idea to use sound-proofing insulation foam. We covered all the walls in it, which really helped hide any and all sins. I called a computer friend who showed up with a van-load of high-tech equipment. Then we transformed the room with wire and staple guns.

Q: How did you get into the head of the Arthur Shaw character?

A: You always want to go back to the script. The clues that I was given was the apartment had to exude wealth, and he had this collectible car in the middle of his living room. so he’s a collector. That’s what he is. What would he collect that would show his wealth? Recognizable art, a collection that’s worth millions and millions of dollars.

Q: Which piece is your favourite?

A: Art expresses personality much more than many other things. This collection had to be so powerful, so I picked many of my personal favourites. The Francis Bacon triptych in the hallway. It was very important to Brett that we had a Francis Bacon, we both love his work, and on a reality-based idea, there was a piece that sold a couple years ago at auction for a hundred million dollars, so very highly collectible. He is mysterious and soulful, his work is breathtaking.

The art was a big part of that set, many months of work, clearance rights to use the work, we asked the artist or their estate for high-res images. We made copies and we had to film the works being destroyed, so it’s a long. arduous process.

The kitchen in the Tower Heist penthouse set — modern, muted and fabulous.

Q: Back to the car. Does it actually work and did you get to drive it?

A: No. the prop masters wrangled the cars more than I did. These were all built for us. Because of a lot of the stunts, the guts were taken out of these cars. It had to hang on the side of the building, so special effects, a new challenge for me because I hadn’t had much experience with special effects, that was great. Colour is very important, so there are colours you can’t use because it will interfere with the process — any greens because everything was done with green screen. You have to be really careful with reflective surfaces, and we had a giant wall of glass, so we had to work that out.

Q: For research purposes, have you ever stayed in a penthouse suite? This larger than life feel with the magnificent view — how did you translate that with your set?

A: I have to say I live in one, it’s considerably smaller, and I have a miraculous view of Manhattan. It does make life a little more interesting. That particular apartment was modeled after, when it’s completed, the penthouse suite in the Trump Tower in Columbus Circle.

For me, tasteful choices usually mean less is more. I think we tried to stick to that in creating this apartment … modern, minimalist look, muted tones, dark wood floors, natural textures, stone, metal, beiges, grays, neutral tones are the bones of your environment. Then filing the room, get the colour, get the interest through the furnishings — through the decor, the textiles, rich colour through carpet, throw pillows, then create interest with the collection.

When I work with people in their personal homes, that’s what I try to do as well. To make the space theirs. Pick things that interest you, that express your personality. Don’t worry about the design as much. You can create the design through the walls and floors. When it comes to personal decor, pick things that express who you are. That goes without saying about art as well. You don’t have to be a millionaire to have an interesting art collection. You can go to a flea market and find a $10 painting. If something speaks to you and it’s meaningful to you, it will express that when you hang it on your wall.

Make a statement in the hallway with art, even if you can't afford to shell out the big bucks.

Q: That said, for the film, you did extensive research about how the very elite live?

A: We looked a photographs and we were invited to certain people’s homes. It was exciting to get behind those closed doors. One person had an extensive snow globe collection, like hundreds of them.

Q: What did you love about work on this film?

A: Building these amazing sets made this job different from others, especially when there’s money to recreate- picasso, richard priince, warhol, you don’t often get that opportunity, the size of the set, the complexity, buidlng a facade of the building, building an elevator shaft with two working carriages, the pool, we built the pol and then special effects inserted it in the top of the building.

Q: What’s your next project?

A: A pilot for ABC called The Gilded Lillies, set in 1895 New York.


House at show simply pre-fabulous
By Josh Skapin
Calgary Herald February 17, 2012
Kurt and Kris Goodjohn will never be accused of being conventional.

The creative Calgary brothers are the brains behind Karoleena Homes, a pre-fab home builder whose latest creation will be showcased Thursday, Feb. 23 to Saturday, Feb. 25 at the Calgary Home and Garden Show.

Rather than building from scratch on a lot, Karoleena constructs components for houses, offices and cabins inside a state-of-the-art facility that accommodates about 12,000 square feet of built projects.

The components or segments are delivered by truck to the lot and quickly assembled together, cutting construction times from months to a matter of days or hours.

The company has brought single- and multi-family housing to Calgary communities such as Erlton, Marda Loop, Ramsay and Capitol Hill.

However, the homes are built to be transported on any North American road and have been moved to locations across Canada.

Karoleena’s latest creation, the Kensington, will be showcased as the dream home at this year’s home and garden show, slated for the BMO Centre on the Stampede grounds.

If Kensington sounds familiar to Calgarians, that’s definitely not by accident.

The builder selects names of neighbourhoods from Canadian cities as titles for its models.

This marks the third year Karoleena has displayed at the Calgary Home and Garden show.

“We love it. It’s a lot of fun,” says Kurt of the show.

Last year, Karoleena showcased its Karo Cabin.

And there will be few similarities between last year’s showing and the Kensington.

“We stepped it up,” says Kurt. The model is 1,750 square feet, about three times the size of the cabin.

The Kensington’s design is the vision of Seattle Balance Associates, an architectural firm that has worked with Karoleena on several occasions.

“We really pushed the envelope on design and showing people what we can do,” says Kurt. “I think that people are going to be blown away.”

Karoleena Homes takes pride in disproving the stereotype of poorly-designed modular homes, he says.

“We’re showing people, ‘Look at what you can do,’” he says.

“It’s an architecturally beautiful home and it’s all built in a controlled building environment.”

The home boasts a layout of two bedrooms, two bathrooms, an ensuite and full guest bathroom. Its eye-catching exterior features an array of fibreglass lift and slide glass walls.

Inside, the home is not short on space, offering an open concept floor plan and ceilings that range in height from eight to 12 feet.

The home has natural stone, hardwood and tile flooring. Its kitchen uses HanStone quartz countertops and stainless-steel appliances.

The closets are European-influenced custom cabinets that are built-in.

There are also large storage spaces throughout the home, along with separate laundry and utility rooms.

The Kensington starts at $525,000, but the Calgary Home and Garden dream home — which includes upgrades — is priced at $650,000.

With green-friendly practices that drive Karoleena’s building practices, the Kensington is no exception to the rule.

“The biggest energy usages is our homes — the heating and the cooling,” says Kurt. “I think as a company, we have taken the stance that we owe it to society to do something a bit better and be cognizant of that.”

The model includes energy-efficient finishes, low-flow plumbing fixtures, no-VOC (volatile organic compound) wood cabinets, an eco-friendly gas fireplace, and spray-foam interior walls and doors.

“Spray foam gets into every nook and cranny,” says Kurt. “It expands and fills the space. It’s a total seal on the house.

People with recreation properties or larger lots are most likely the ones to take interest in this model, says Kurt, adding he thinks it won’t be seen as a starter home.

Karoleena Homes built another dream home that will be displayed at the B.C. Home and Garden Show at BC Place Stadium in Vancouver Wednesday to Sunday.

The home, called the Kitsilano, is two levels with two bathrooms and one bedroom.

Like the Kensington, it includes lift and slide glass doors and a package of eco-friendly features.

Karoleena Homes has grown in leaps and bounds over the past year.

One year ago, it consisted of Kurt, Kris and Kelly Doody, the company’s sales and marketing manager, based out of a home office.

Now, Karoleena has 30 staff and tradespeople, in addition to 12 sales representatives across Canada.

Karoleena opened its 17,000-square-foot factory in southeast Calgary last year after outsourcing its modular designs with factories in Lethbridge and Altona, Man.


Project: The Kensington, which is the dream home at this year’s Calgary Home and Garden Show at the BMO Centre.

Builder: Karoleena Homes.

Price: This 1,750-square-foot model starts at $525,000, not including GST.


More than 650 home and garden specialists will be showcased at an annual Calgary event.

The Calgary Home and Garden Show returns to the BMO Centre next Thursday to Saturday. Exhibitors will provide insight on everything from renovation to home design.

The show will also feature appearances by Bryan Baeumler and Corbin Tomaszeski.

Baeumler hosts the renovation show Disaster DIY on HGTV, while Tomaszeski serves as a food expert on the Food Network’s Dinner Party Wars.

For more information, visit the website at


Two Calgary brothers haven’t looked back after entering the world of pre-fab homes in 2005.

Kurt and Kris Goodjohn have grown Karoleena Homes from a small three-person operation to 10 full-time employees and up to 30 people on their shop floor in less than a year.

Karoleena constructs system-built homes, cabins and offices inside a facility attached to their southeast Calgary office.

Once built to completion at Karoleena’s shop the home is transported by truck to the owner’s lot. The practice cuts the costs related to weather-related construction delays.

For more information on Karoleena Homes, visit

Wednesday, February 22, 2012


Community unites to transform old Marda Loop school into vibrant new arts hub
Visionary plan for King Edward School
By Stephen Hunt
Calgary Herald February 16, 2012

Calgary's arts community just got a sturdier foundation under its feet.

That's how it felt when a jubilant group of arts administrators, philanthropists, politicians and community representatives gathered at King Edward School in Marda Loop on Friday to talk about plans for the transformation of the 100-year-old school into an arts incubator.

"It's a phenomenal plan," says Ald. John Mar. "This is very, very avant-garde in its design and concept, and the community, fortunately, has been very, very positive and welcoming towards the concept of creating an arts hub for the community of Marda Loop."

The ambitious, visionary plan calls for a mixed-use development with a rehabilitated King Edward School at 30th Avenue and 17th Street S.W. as its focal point.

That building will house a mixture of arts groups, community non-profits and social entrepreneurs, in addition to providing rehearsal space and possibly studio space for artists and arts groups.

The goal of an arts incubator is to provide long-term stability for arts organizations, as well as to develop a synergy with the community inside the building, in addition to the community at large.

Evangelos Diavoltsis is involved with two organizations - Quickdraw Animation and the Caravan Dance Company - that have expressed interest in moving into the King Edward School arts incubator when it opens.

"A lot of energy goes into creating stability" for arts groups, he says. "I don't want to always problem solve month to month over how to create it because I think it's a bare bones thing to just have a space - it's kind of like survival. Humans, if they're not surviving, all they're thinking about is surviving - forget about creating."

There will also be a substantial real estate development where the playground now is, in addition to extra space created by knocking down extensions to the school that were built in the 1950s and 1960s.

The sale of the playground to private developers will help finance the anticipated $19-million to $21-million cost of rehabilitating King Edward School. The project hopes to begin the rehabilitation in 2013, with the development taking several years to complete.

It's all part of the vision shared by a group that includes Calgary Arts Development Authority (CADA), cSPACE, the Calgary Foundation and various representatives from the arts community, who are actually daring to dream a little about the day when their organizations can spend less time dealing with surviving and more on creating and thriving.

The excitement over the proposed King Edward arts incubator stems from a partnership forged by the Calgary Foundation and Calgary Arts Development, who teamed up to enable Calgary Arts Development to buy the school site for $8 million.

For Eva Friesen, president and CEO of the Calgary Foundation, the project works three different ways: providing stability for arts groups, engaging the community and preserving a heritage building.

"Triple win," Friesen says. "Four years ago, maybe even five, one of our priority areas was arts and heritage. We were working on, what are the needs of the community? What is something transformational that the Calgary Foundation can put their support behind to make happen for a big impact in this community in that area?

"Parallel to our efforts, CADA was asking the same questions."

The Calgary Foundation was first in, making a $3-million loan to cSPACE, the artspace development arm of Calgary Arts Development, and following that with bridge financing to allow them to purchase the school and adjoining land.

"You always need that trigger investor," says cSPACE president and CEO Reid Henry, "that first organization that's willing to put the risk capital first and they've really stepped up to the plate. They're (the Calgary Foundation) our funder, our partner, our financier and our shareholder in cSPACE.

"That's sort of where we began.

"Long story short," adds Henry, "they (the foundation) really extended themselves, and are trying new things for them as a philanthropic organization, so they're leading the way."

Henry has worked on various arts incubator projects across Canada, most notably Artscape in Toronto, which has rehabilitated several buildings and helped that city's arts community to withstand a long real estate boom.

"We're looking for long-term stability now," Henry says. "This place, this school, this site will be a pretty significant anchor for a big, broad range of the cultural community, whether you're working in the community sector, traditional non-profit stream or doing some sort of enterprise."

They likely won't have a problem finding tenants: 45 members of the arts community responded when Henry put out a request for an expression of interest in the project.

For CADA president and CEO Terry Rock, his organization's successful effort to purchase King Edward School reflects a broader support across every spectrum of the city.

"The thing that I find most interesting about this process since starting CADA in 2005," he says, "is that we have champions all over the place - in elected positions, corporate Calgary and they were really looking for someone that could take on projects like this, that are exciting projects that show the promise of the arts to a city.

"We're really excited," he adds, "that we've got tangible ways to do this now with this new organization (cSPACE)."

When it comes time for the arts groups to move in, it's safe to say they'll be getting a warm welcome from the surrounding community.

"From a personal point of view, it's fantastic," says Marda Loop community association president Marc Doll. "As an association, when it was approached before the entire project had any legs at all, our reaction was, 'Fantastic idea.'

"It provides for access and is going to be something the community can use, on the bottom floor. It brings life back to a dead building."

Thursday, February 9, 2012


Burgeoning Calgary population to fuel demand in housing market
New home construction and MLS sales on upswing
By Mario Toneguzzi
Calgary Herald February 8, 2012

CALGARY — A burgeoning population will spark another real estate cycle in Calgary with increased demand fuelling more MLS sales and more new home construction.

But industry experts don’t expect the next cycle to mirror the boom of a couple of years ago which experienced a frenzy of activity and fast-rising house prices due to a lack of supply.

Instead, a stable, steady growth is expected in Calgary’s real estate market.

On Wednesday, Statistics Canada reported the Calgary census metropolitan area had the highest rate of population growth in the country at 12.6 per cent between 2006 and 2011 and is now more than 1.2 million for the region.

Tim Logel, president and partner of home builder Cardel Lifestyles in Calgary, said the population data supports what the industry believes is happening in the market.

“What’s positive about it is that as more people move to Calgary then more of the inventory or the supply that we’ve been working on reducing gets absorbed,” said Logel. “And it gets absorbed quicker and gets us closer to being in a higher demand environment where we’re being asked to produce more new housing products of all types for the market ... Over the next year with this in-migration, the extra supply will be absorbed.”

Logel said a new real estate cycle has been started in the city. The last one finished in the spring of 2007 in the Calgary market.

Ann-Marie Lurie, chief economist for the Calgary Real Estate Board, said the growing population will help support increased demand for housing in the resale market as well.

“In the resale market, especially moving forward, we think this will also help really take up some of that inventory that is in the market because we had some out-migration in the past few years. 2010 in particular, in-migration levels were extremely slow and so that impacted our housing market as well,” said Lurie.

CREB is forecasting single-family MLS sales activity to increase by 12.2 per cent this year from 2011 levels and condo transactions to jump by 5.9 per cent. Its forecast is also for average sale prices of single-family homes to rise by 2.1 per cent and by 1.7 per cent for condos.

“It’s much more of a stable growth than it was during the last boom. I just don’t see us moving there,” said Lurie. “We’re not moving into that scenario. It’s a much more stable growth and we have a good supply of inventory right now in the resale market and frankly on the new home market they do have some room to improve in some of their construction.

“They’ve got some room to grow and build more to help meet with those household formation numbers.”

Already in January some real estate data, released Wednesday, is indicating support for increased activity in the market as housing starts and residential building permits showed impressive increases compared with a year ago.

According to Canada Mortgage and Housing Corp., housing starts in the Calgary census metropolitan area totalled 786 units in January, up 52 per cent from 518 units a year ago.

In the region, 336 single-detached units broke ground in January, up 14.7 per cent from the 293 units started in January 2011.

“This represents the sixth consecutive month where starts have increased on a year-over-year basis,” said Richard Cho, senior market analyst in Calgary for the CMHC.

Multi-family starts, which include semi-detached units, rows and apartments, increased to 450 units in January, up from 225 units a year earlier.

“As was the case in the last several months, apartment construction continues to be elevated, averaging more than 340 starts per month since August 2011,” said Cho.

Also, the estimated construction value of building permit applications for the residential sector in Calgary rose by 42 per cent in January compared with a year ago.

In releasing its latest data on Wednesday, the City said residential values increased to $153 million compared with $108 million in January 2011. This represents 651 new residential units, a 73 per cent increase compared with the January 2011 total of 376.

“The overall gain in residential value and number of new residential units can be attributed to increases in the apartment and townhouse sectors,” said Kevin Griffiths, chief building official with the city’s department of development and building approvals.

“For the month of January we accepted six apartment applications for 193 new units compared to zero last year, and 20 townhouse applications for 122 new units, compared to only seven townhouse applications totalling 44 units for the same period last year.”

Friday, February 3, 2012


Calgary luxury condo unit pre-sells for record $8.3 million
The River development also has two sales over $5 million
By Mario Toneguzzi
Calgary Herald January 25, 2012

CALGARY — Calgary condo sales have reached new heights after a luxury unit fetched a record $8.3 million, before construction has begun.

The 5,260-square-foot condo will cover the entire 12th floor of the 15-storey development called The River, located along the Elbow River, which flows through the southern portion of the city.

Already, more than $30 million in real estate has been spoken for in the project, which includes 38 residences — 27 units in the tower and 11 town houses.

Anne Clarke, director of sales for The River, said eight sales have been completed and three deals are pending.

"These (buyers) are business leaders. They are leaders in not only business, but in our community," Clarke said.Other sales in The River have included units for $5.7 million and $5.5 million.

The top-floor tower unit is listed at $9 million.

"It signifies we really do have a need for this type of product," Clarke said.

The buyer of the $8.3-million condo was not identified, but is described as a longtime Calgary oil and gas executive.

The highest MLS condo sale previously in Calgary was $4.1 million in 2011.

The most ever paid for a single-family home was $10.3 million, in 2009.

The River concept is luxury estate condominiums that offer the benefits of an estate home without the challenges of security and maintenance, said Clarke.

Construction is expected to start by April, with completion in early 2014, said Chris Bourassa, chief operating officer of Ledcor Properties Inc. The River is being developed by 26th Avenue River Investments Inc., an affiliate of Ledcor.

The Calgary Real Estate Board recorded 422 single-family sales of more than $1 million in 2011, up from 346 in 2010.

Twenty-six condos last year sold for more than $1 million, up from 21 in 2010.

"We've had this site for quite some time. We were able to watch what's happened over the last five years," said Bourassa.

"The starter condo market and the mid-market is very well served. But we found there was a hole in the luxury market.

"In talking to our buyers and our focus groups over the last 18 months, it became very clear that there was a lot more demand for larger units."

Thursday, February 2, 2012


Will An Open House Help Sell Your Home?
Mark Weisleder September 02, 2011

I am often asked whether a seller should agree to open houses when they put their home up for sale. Some say it helps the agent find new clients and does nothing to sell the home. Others say it is necessary to find the largest number of potential buyers. Which is correct?

In practice, there are two kinds of open houses. One is limited to real estate agents, so they can conduct research in the area and be able to recommend the right homes to their buyer clients. The second is open to the general public. This can include nosy neighbours who just want to see your home, buyers who don’t have nearly enough money to consider putting in an offer and even criminals who are there to either steal something from the home during the open house or check out the security system so they can come back later.

Open houses will lead to more exposure for your home and more feedback from potential buyers. On the other hand, since we have so much information available to buyers on the Internet, such as video tours of the entire home, wouldn’t it make more sense to wait for a truly interested buyer to schedule a private appointment to see your home? That shows more commitment.

Still, in a seller’s market, where there are more buyers than available properties, open houses are a good idea so the maximum number of buyers can see the property in a very short time period.

If you do agree to conduct an open house, here are some tips:

• Make sure proper home staging is done in advance so your home appeals to the maximum number of potential buyers.

• Do not stay in the house during the open house. You are more than likely to volunteer too much information, including why you are selling. This will hurt your negotiating position later.

• Make sure your agent will be there the entire time.

• It is not against the law to ask for identification in order to allow someone to enter your home. If they refuse to provide it, tell your agent to refuse them entry.

• Sometimes criminals will come in pairs; while one distracts the salesperson, the other is going through drawers. If a lot of people are expected make sure your agent brings an assistant.

• Ask your agent to check all windows and doors before they leave your home to make sure everything is properly secured.

• Remove all valuables or store them in a safe, if you have one in the home. This includes your laptop and any discs that may have your personal information on them.

• Keep all of your bank and credit card statements out of view, as this could lead to identity theft if someone takes them.

• Take pictures of each room so you can check later if something is missing or damaged during the open house.

Whatever you decide regarding an open house, make sure you are properly prepared in advance.


Why it’s a good time to buy a home
By Mark Weisleder
Toronto Star  Jan 27 2012

I believe there has never been a better time to buy a home. I’ve been in the industry for 28 years as a lawyer and I haven’t seen so many positive signs for housing, whether you are thinking or buying or locking in a mortgage.

Here’s why:

Mortgage rates at historic lows: They can’t get any lower. Four to five-year fixed mortgages at 3 per cent are unheard of. It is lower than the variable rate that most Canadians have been paying for years. Rates have nowhere to go but up, either later this year or next. If you are paying a variable interest rate, lock in now.

Canada’s appeal: This country has everything going for it — a stable banking and political environment, steady real estate market, the natural resources people want and few social tensions. That makes us a safe haven in a volatile world.

Our immigrant draw: Because of the above, we’re a draw for immigrants, often wealthy ones. When they get here, they need a home. So in my view while the real estate market may level off in some areas of Ontario, it should stay strong in most of the GTA and likely Canada’s other large urban centres as well.

Mortgage defaults: According to CMHC, over 99 per cent of Canadians pay their mortgages on time. It quite a different picture in the U.S. where 7 million homes are in foreclosure and perhaps another 7 million homeowners are under water. This represents almost 15 per cent of all homes. So while the American housing market will likely be weak for the next few years, this should not occur in Canada. Our banks are not dumping homes onto the market, so there is no downward pressure on prices.

Recourse Mortgages: In many U.S. states, if you can’t pay your mortgage, the only thing the bank can do is foreclose; they cannot sue you for any shortfall. So when homes go under water, owners give the keys back to the bank. In Canada, loans are almost all Recourse, meaning if you don’t pay and there is a shortfall, the lender can sue you for the difference. This is another reason why, in my opinion, even if times do get tough, Canadian homeowners will find a way to make the payments until things improve.

Income-to-price ratio: Another misleading statistic is that in major markets, like Toronto, the average price of a home is now 4.6 times the income of the average Canadian. This same statistic was found just before the U.S. and UK markets went into the tank. However, if you look at median incomes of Canadians against the median cost of homes, this average comes down to around 3.5, which is not dangerous. Using averages are wrong. A person receiving social assistance will not buy a home, and should not be included in any relevant statistic.

High consumer debt: The warnings about rising debt ratios must be examined carefully. The Governor of the Bank of Canada is worried that the average personal debt ratio is now 156 per cent in Canada. This means a household making $100,000 per year, owes $156,000, two-thirds of which is mortgage debt. Why is this so bad? At an interest rate of 3 or even 5 per cent, the amount needed to service the debt is manageable. Most people do not pay off their mortgages in one year. Still, this is another good reason to consolidate your debt now, at these low interest rates, and lock in.

No guarantees: Nobody can predict the future and there’s always the possibility of a major economic shock. Yet, in a U.S. presidential election year, politicians will do whatever is necessary to prevent it. If the economy goes into the tank, so do re-election chances. The U.S. is already showing signs of economic recovery.

No matter what, do not take on a monthly payment higher than what you can afford. Meet with your lender or mortgage broker in advance to figure out what you can afford before you start looking for a home. It may be the best time to buy, but you need to buy smart.

Photo By: alykat

Wednesday, February 1, 2012


CMHC backing fewer loans
By Garry Marr
National Post Jan 30, 2012

Canada Mortgage and Housing Corp. is cutting back on mortgages it insures as the Crown corporation edges closer to a $600-billion cap imposed on it by the federal government, the Financial Post has learned.

A CMHC spokesman confirmed that it had approached a number of lenders at the end of 2011 about reducing its “bulk or portfolio insurance” after third-quarter results showed the agency had committed to back $541-billion in mortgages. CMHC, which guarantees mortgages held by financial institutions, is ultimately backed by the federal government and needs approval to go over the $600-billion limit — something that would create greater risk for taxpayers should the housing market collapse.

“CMHC has recently received an unexpected level of requests for large amounts of CMHC portfolio insurance.” said Charles Sauriol, a spokesman for the Crown corporation, in an email.

“To ensure equitable access to portfolio insurance within CMHC’s annual limits, an allocation process is being established which has caused some delays. Portfolio insurance provides lenders with the ability to purchase insurance on pools of previously uninsured low ratio mortgages and does not impact CMHC’s transactional business.”

Financial institutions are required to have mortgage-default insurance when a consumer has less than 20% equity. However, the banks have been seeking insurance on loans with even high downpayments — something not required by law — so they can securitize those bulk lending loans, thereby getting them off their balance sheets and reducing their capital requirements. In those cases in which the loans to value is less than 80%, the bank pays the insurance charge instead of the consumer.

“One of the things that has got them [to the limit] faster than expected is they are doing a lot of conventional insurance for lenders,” said one source. Just three years ago, CMHC had $450-billion in loans it was backstopping and had to go to the government to get that increased to $600-billion.

“I think as a taxpayer you should care. The policy question is why should the Canadian taxpayer take that type of meltdown risk within CMHC,” the source said.

The risk to the taxpayer would be a collapse in the market leading to a defaults like the U.S. saw. If CMHC couldn’t cover those defaults, Ottawa is on the hook for 100% of any shortfall.

On the surface, insuring conventional loans may not appear as risky as traditional mortgage default insurance because it comes with more equity. The banks have been demanding ultra low fees on the conventional mortgages, arguing the equity position makes them a lower risk. However, lenders are skimming their portfolio to load up mortgages that are 70% to 80% debt to equity and may also have other problems, said a source.

With mortgage defaults well below 1%, some might argue the risk to CMHC is negligible. “If you look at what is backing [CMHC’s] guarantee, it should be more than enough to cover any downturn in the market,” said one banking source, who asked not to be identified, about CMHC’s cash reserves. “Besides, what will the government do, not increase their limit? This could kill the entire housing market.”

CMHC gave no indication it would seek an increase in its limit.

“CMHC’s mortgage loan insurance limit in force is $600-billion. CMHC manages its mortgage loan insurance business in accordance with this limit,” said Mr. Sauriol.

The Crown corporation would be going to the government looking for an increase in its limit at a time when both Bank of Canada Governor Mark Carney and Finance Minister Jim Flaherty have been casting a wary eye at the housing market.

“We watch the housing market carefully and we are prepared to intervene if necessary. Having said that, we’re not about to intervene in the housing market now,” said Mr. Flaherty this month. For his part, Mr. Carney said “we see that in a number of real estate markets in Canada, valuations are at a minimum, firm; in others, they’re probably overvalued. So there are risks there.”

Sources have indicated the government is already considering tough new measures for calculating how the self-employed qualify for loans and tightening regulations for condominium buyers, so there is probably little appetite for backstopping even more debt from CMHC. In addition to CMHC, the government has a $300-billion limit for private mortgage default insurers.