BOTTOMS UP?

Housing's bottom is in sight: lender
Jamie Sturgeon, Financial Post

Published: Wednesday, February 18, 2009


Canada's big banks may be hurting from the reduced demand for new mortgages, but at least one alternative lender says it sees a bottoming in the housing market and is benefitting enormously from it.
"Demand has begun to surface," said Gerald Soloway, chief executive of Torontobased Home Capital Group Inc., one of a handful of alternative mortgage lenders that remain after the U. S. sub-prime meltdown sideswiped more than a dozen competitors in Canada over the past year.
"We're starting to see it across the country."
Led by the western provinces, home prices have dropped by double-digits in many major markets year over year.
Such sharp price declines have brought buyers back into the alternative market and a degree of "stability," Mr. Soloway said in an interview yesterday after Home Capital reported a 20% increase in fourth-quarter net earnings, to $29-million.
The lender has backed up its optimism with action.
Confident that buyers are returning, Home Capital has begun tearing down the tighter restrictions it erected in the fall of 2007, as the credit crunch gathered force. "We have cautiously begun lending again," the CEO said.
A price decline in the order of between 12% and 15% year-over-year is Home Capital's tipping point. If the price has fallen within that range, the lender offers mortgages of up to 75% on uninsured mortgages.
That stands in contrast to the company's position a few months ago, when Home Capital -- like other alternative lenders caught in the throes of the financial crisis -- would barely budge for borrowers who possessed as much as a 40% down payment.
Still, while Home Capital says it is seeing a re-emergence among borrowers in the alternative market, which amounts to about 20% of all outstanding mortgages in Canada at present, there's almost universal acceptance among economists that the overall housing market is still falling.
"Our sense is that the Canadian housing market will remain under pressure for most of this year," said Sal Guatieri, a senior economist at BMO Capital Markets.
"It's not just a question of affordability any longer because of lower prices [and] lower mortgage rates. That's not the issue.
"What is the issue is the recession, which appears to be deepening."
At least another 150,000 jobs could be purged from payrolls this year, Mr. Guatieri said. "It's not the type of environment that encourages the purchase of big-ticket items, especially homes."

dVider & Conquer

I have seen decals used on interior walls on a few shows lately and have decided it was a great way to add interest a wall of mine without painting. I struggled to find something I liked until I came across dVider. Now I have to stop myself from putting something on every wall.

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dVider is the young, delicious design studio based under the bridges in DUMBO Brooklyn. The company was started in 2002 when the owner and designer, Max Darby, began prototyping her idea of a perfect modular room divider. After a couple of years in development, ‘dVider’ went into production. However, soon after, Max realized that the white fabric dVider sail, though beautifully minimal, was in need of some pizzazz and she thought a splash of color would be a welcome option. After toying with stencils, alternative sail colors, and other more permanent solutions, Max realized the ideal way to customize her room divider would be decals. She played with the concept and quickly fell in love with it, sticking the decals not only on her dVider sail but also on her windows, walls, furniture, refrigerator and even her scooter! They were easy to put up and take down. Quickly, the company began selling the stickers and dividers on their own dVider website and then to boutique stores nation wide!

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VALUE IN TIME...ALWAYS

Real Estate stocks, trusts should outperform during recovery
Garry Marr, Financial Post

Published: Saturday, February 07, 2009

Gail Mifsud, a Blackmont Capital analyst, says there has been a major transition in the capital markets that should change the way investors value real estate companies and trusts.
Ms. Mifsud says the focus for investors used to be on productivity and innovation before shifting to interest in companies with hard assets and base materials as well to financial stocks. Now, she says, investing is about to become looking for companies with consumable goods and services with a focus on stocks that provide physical and personal infrastructure.
"For real estate investors, this is a likely to bode well for stocks focused on rental apartments, senior care, recreational travel, self-storage and general merchandise landlords," says Ms. Mifsud.
As far as real estate, she predicts a drop-off in public and private real estate transactions and capital markets investment activity, and an increase in debt spreads and lower asset prices. Real estate fundamentals including occupancy, rents, margins, and funds from operations will also weaken.
"We would advise clients in the short-term to under weight the Canadian REIT sector," says Ms. Misfud.
"However, we continue to believe in the long-term investment merits of the sector as our analysis has shown that real estate stocks underperform leading into a recession, but outperform during the recovery."
Her top picks are Boardwalk REIT (BEIun/TSX), Canadian REIT( REFun/TSX), Dundee REIT (Dun/TSX), and Morguard REIT( MRTun/TSX).
"Our selected top picks offer very compelling double-digit total returns, reflecting investor panic-selling of all stocks. Our top picks are trading at significant discounts to underlying value and very depressed pricing multiples relative to peers," says Ms. Mifsud.

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DANDELION GRAPHIC DRESSER
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REBOUND BY MID-YEAR?
Central bank projects growth in late '09

Alia McMullen, National Post

Published: Friday, January 23, 2009

Chris Wattie, ReutersBank of Canada governor Mark Carney yesterday said a quick economic recovery is expected because the country entered the recession with lower unemployment than in previous years.
Canada likely will begin to emerge from recession by the middle of this year, the Bank of Canada said yesterday amid signs the paralyzed financial system has begun to respond to the extensive actions by the world's governments and central banks.
However, unemployment problems are expected to persist. "Stabilization of the global financial system is a pre-condition for economic recovery," Mark Carney, governor of the Bank of Canada, said at a press briefing in Ottawa yesterday.
He said governments and central banks around the world continued to introduce "bold" measures to address the financial crisis and that there were signs these measures were "starting to gain traction."
These signs included a reduction in global credit spreads and a drop in Canadian mortgage rates.
In an update to its October Monetary Policy Report, the central bank said yesterday the country is in a worse recession than previously thought, but its duration would be shorter and the recovery process faster than the past two downturns.
The Bank of Canada forecast the economy to contract 1.2% in 2009, much worse than the 0.6% decline it predicted in October. However, it expects growth to resume in the second half of this year, and rebound to 3.8% in 2010.
It said the current recession, which started in the fourth quarter of 2008, would last nine months, making it shorter than the downturn of the early 1980s, which dragged out for 18 months, as well as that of the early 1990s, which lasted one year.
For some economists, the Bank of Canada's predictions appear overly optimistic.
"There's significant room for the Bank to be disappointed by the coming data, which may yet prompt further [monetary policy] easing," said Benjamin Reitzes, an economist at BMO Capital Markets.
James Marple, an economist at TD Financial Group, had similar reservations and said the Bank would likely need to cut interest rates to 0.5% when it next meets in March, and keep rates low right into 2010.
"In our view, the recovery in the Canadian economy is likely to be more protracted and the growth rebound will not likely be quite as robust in 2010," Mr. Marple said.
Mr. Carney said the quick recovery was expected because Canada entered the recession with lower unemployment and a stronger fiscal position than in previous years.
He said the Bank of Canada's interest rate cuts, which have lopped 3.5 percentage points from the key rate since December, 2007, would also be "very stimulative."
On Tuesday, the central bank cut the benchmark interest rate by half a percentage point to 1%.
He said the federal government's 2009 budget, due on Tuesday, would also stimulate consumption and investment. "We do expect a substantial fiscal package in Canada," he said.
Economists agreed with the Bank of Canada that many Canadians would continue to grapple with unemployment throughout 2009. Mr. Carney said the economy would begin to recover before the job market because it would take some time for businesses to build up new orders, use excess inventories and regain the confidence to hire again.
"People are going to lose their jobs, the unemployment rate is going to rise, and it is going to take longer to find a job in that situation, whether you want to change jobs or whether you've lost your job and you want to return to work."
Mr. Carney would not estimate a peak for the unemployment rate, but said it would not be as high as in the early 1990s' recession. The unemployment rate, which rose to 6.6% as of December, reached 11.4% in 1993, Statistics Canada figures show.

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RENT THE SLUMP OUT

Tough times can turn homeowners into landlords

By Melissa Kossler Dutton
THE ASSOCIATED PRESS

When Dave and Gina Schudi of Phoenix went house hunting last year, they knew the time was right to buy - not sell - a home.
So when they did purchase a new one, they rented out their old home. "It all depends on the market," said Dave Schudi, who plans to sell the old house eventually. "We've got good renters in there."
Falling house prices and a slow market are forcing more homeowners to consider renting their properties.
It's something Tampa, Fla., realtor Julia Vakulenko suggests to potential clients.
"Basically, we ask all the people who contact us, 'Must you sell it right now?"' she said. "Most likely, it will just sit there or maybe sell below the market value."
For many, the role of landlord is something they'd never considered. If done right, however, renting out a home can help the owner ride out the housing slump, said Vakulenko, of Tampa4U.com. But the process does require doing some research, said Vakulenko, who owns five rental properties.
She often refers clients to property management companies who can determine what their home would rent for and whether there's a market for it. Homeowners are often disappointed to learn that their home would rent for less than their mortgage payment, added John Nuzzolese, president of the Landlord Protection Agency in East Meadow, N.Y.
"Whether it's for sale or for rent, it's only worth what people are willing to pay for it," he said. "People have to be realistic and put themselves in the tenants' shoes."
Real estate analyst Danielle Babb often sends people to www.rentometer.com to see what the going rent is in their area. The website allows users to see what comparable properties in the area charge.
Once you've set a rent range, determine your demographic - students, families, young professionals - and market the house to them, said Babb, author of "The Accidental Landlord" (Penguin Group, 2008). Babb, who has owns 27 rental properties, wrote the book after watching friends and colleagues trying to rent out houses they couldn't sell.
"You've got to think like a renter. There's lots of availability," she said. "They're going to choose the most exciting option."
Babb, Nuzzolese and Vakulenko offered the following suggestions for homeowners who are considering renting their home:
-Familiarize yourself with local laws dealing with rental properties. It's important to understand the eviction process, how to handle security deposits and what type of access you have to the property once it's rented.
-Determine whether you want to select the tenant and handle property issues or hire a company to do it. If you take on the responsibility, you are obliged to fix any problems (leaky faucets, broken furnace, etc.) or find professionals to do it.
-Develop a rental application. Ask questions on the application that will help you quickly determine whether you want this person for a tenant. Consider asking about pets, smoking and employment, for example.
-Ask for references. Call former landlords and ask about the person's rental history. Verify that the references listed are really landlords and not the applicant's friends posing as landlords.
-Screen potential tenants. Once you've narrowed your field of potential tenants, hire a service to run a criminal and financial background check on the applicants. Be wary of tenants with previous evictions or bankruptcies
-Consult with a lawyer or your provincial landlord-tenant boards before writing a lease. A well-written lease is crucial to protect your property. It will help you evict a tenant or hold them accountable for damage if necessary.
-Collect a security deposit equal to one month's rent. This will help cover any damage to the property and protect you if a tenant moves without paying rent.
-Perform a walk-through of the property with the tenant before he or she moves in. During the walk-through, make notes and take photos of any property damage such as chips in the tile, spots on carpeting, etc. You and the tenant should sign the paper as an acknowledgement of what condition the property was in at the start of the lease.
- Check on the property. Drive by at least once a month and look for signs of trouble such as garbage in the yard, extra cars in the driveway, or excessive wear and tear. Make arrangements to walk through the property three months into the lease to see how well the tenant is caring for it. (Make sure you give the proper notice required for entering the property.)
-Do not accept partial rent payments. Accepting money from tenants who are not paying the full rent can make it more difficult to evict them.


Check out: http://www.rentfaster.ca/