Saturday, April 29, 2006

Zero-Energy Home Plans

New homes in Canada should produce more electrical energy than they use.

We don't expect to see this happen for another 25 years, but we do think a dozen such homes could be built next year, with 1,500 more added over the next four years.

That was the challenge the CMHC threw out to the eco home-building industry at the recent National Green Building Conference in Ottawa.

Two days before Ontario residents were told their electricity costs are about to shoot up, some 300 architects, engineers, builders, environmentalists and municipal planners gathered to discuss, display and dream about designing and building homes and other buildings that will improve the health of both the human occupants and the surrounding environment.

At the conference, the CMHC unveiled its Zero-Energy Healthy Housing campaign. Thomas Green, senior researcher in housing technology for the CMHC, said his agency has to come up with a catchier name for its energy program because it won't work unless consumers jump on the bandwagon to support and demand it.

Green said the CMHC will give $50,000 grants to help a dozen multi-disciplinary teams design and build zero-energy demonstration homes, which must be standing by June 2007. He said builders must team up with architects, engineers and even municipal officials to qualify for the grants.

The zero-energy program is aimed at creating homes that will have no impact on air, land and water. The homes will have passive heating and cooling, they'll be flooded with natural daylight, will have on-site energy-generating systems and must preserve water, land and the natural habitat.

Green said there are already zero-energy demonstration houses in the United States. Natural Resources Canada estimates that each Canadian annually contributes 6 tonnes of greenhouse gas to the atmosphere, he said. Half that gas load comes from homes. The rest is mostly from transportation.

Bruce Nicol, president of Tartan Urban, an Ottawa-based, award-winning environmental builder of infill housing, says saving money by reducing energy consumption is not catching the interest of homebuyers. "There's no passion in that. Buying a home is mostly an emotional thing and if we are going to get the Energy Star story told it is going to have to be a lot more emotional," Nicol said.

Energy Star is a measuring system of energy consumption by all appliances, plus homes in general.

He agreed with Green that the CMHC needs a "sexier" name for its program. "The first thing CMHC should do is hire a private marketing firm to sell the program to builders and eventually to homebuyers."

Nicol said governments also need to push the concept by reducing property taxes for zero-energy homes, cutting development charges for builders using the program and slicing through the red tape to get the homes built.

"There's a clash of cultures between builders and various levels of government. Builders want to get the homes built and occupied. Governments want to go slow to ensure all the Ts are crossed and that rules and regulations are followed before anything happens."

That's why it is a good idea for the CMHC to give grant money only to demonstration homes that will be built by teams that include municipal officials, builders, designers and engineers, he said.

Lawyer Rodney Wilts, an official with BioRegional Development Group and, told the conference that if everybody in the world lived like Canadians, it would require the resources of five Earths to support their needs.

By the mid-1980s the world had exceeded its carrying capacity, he noted. If you divide the world's known arable land by the global population, everybody would get two hectares — but Wilts said Canadians are using more than 10 hectares per person in natural resources.

In 1992, Toronto builder Rolf Paloheimo, president of Creative Communities Research, built a CMHC-sponsored healthy home in the Riverdale neighbourhood. The semi-detached house, designed by Toronto architect Martin Liefhebber, relied on sunshine and rainwater for much of its energy consumption. It was not hooked in to the city's electrical, water or sewage grids. Paloheimo and his family still live in the house.

History of the Great US House Bubble

We are still not sure that the great bull market in US residential real estate has come to an end. What we are sure of, on the other hand, is that it isn't at the beginning.

The great US housing bubble may be dead, but it already has a certain corpse-like stink to it. The relatives are gathered in the parlour. The silver has already been packed up. The local priest is already on the scene, administering last rites.

True, we still don't know exactly how the story will turn out. But it is time to begin preparing the obituary.

We begin, like all good requiems, in the middle of it. Or at least at one of its many comic high points.

The history of the great US house price bubble: Expensive houses

In the fall of 2006, the news appeared that Donald Trump had put his Palm Beach mansion on the market for $120 million. He had bought the place less than 10 years before for less than $50 million. If he were to get his price, the profit would be about $7 million for every year he held it. Which is good work if you can get it – earning more than half a million dollars per month – just for owning one of America's greatest beach houses.

But pity the poor next owner. He'd have carrying costs of $6 million per year ($120 million @ 5% interest), plus property taxes, plus upkeep, plus staff costs and other expenses. Instead of earning money, he'll probably be out of pocket more than a million dollars per month. And here, we let the fellow in on a little secret: houses don't go up every year, especially those that rose $70 million in the last decade.

We thought The Donald had set the pace for extravagantly-priced houses when, only a few weeks later, came news that Saudi Arabia's former ambassador to the US, Prince Bandar bin Sultan, put his ranch near Aspen, Colorado, on the market for $135 million – making it the most expensive private house ever offered for sale in America; perhaps in the whole world. But that was the charm of the housing bubble; one absurdity always seems to lead to an even bigger one later on.

And all over the world, the rich were on a spending spree. They bought ranches in South America; even the Bush family bought one – a 98,000 acre estancia in Paraguay. (In the interest of full disclosure, and a confession of partial insanity, your editor admits that he, too, bought a little spread south of the Rio Plata. He is pleased that the Bushes have chosen to locate north of the river; he was concerned for property values in his area.)

The history of the great US house price bubble: Rising prices

Rich people pulled out their fat wallets and bought in Mayfair...on the Place Vendome...and at the Puerto del Sol. Prices soared, as the cost of living it up headed for the moon.

But down at the other end of the income spectrum, the lower and middle classes were having a rough time. In the 10 years leading up to 2006, they had added $5.2 trillion to their debts most of it on house loans. This was nothing to worry about, said the experts. Because their net worth also had gone up. The price of the average house in America rose approximately 60% in the period. Compared to the type of gains the rich were getting in Malibu, Manhattan and Miami, a 60% gain was peanuts. But it was enough to lift the spirits of millions of ordinary people.

Besides, in the preceding 100 years nothing like it had ever happened. Normally, house prices merely followed income and GDP gains, like a good hooker, walking 10 paces behind so no one notices. But in last 10 years of Alan Greenspan's reign, they took off at a sprint and were soon racing past everyone.

A rich man can watch his property go up in price with a calm detachment, as though he were watching a beer truck overturn. But a poor man can barely contain himself. He feels he much seize the opportunity. Before you know it he is feeling a little loose and reckless. And after a while, he becomes light in the head.

Rising property prices were caused by a lie – that the feds could increase the world's purchasing power by introducing additional 'money' into the economy. Then, the lie led to a humbug after which followed a delusion trailed by a hallucination.

The history of the great US house price bubble: The idea that houses go up in value

At the centre of all these swindles was the idea that houses actually can go up in value. Readers may be taken aback. Everybody in America now knows that houses always go up in value. But it is not true. For 100 years, from 1896 to 1996, houses went nowhere at all – merely keeping up with GDP, inflation and income growth. Then, in the following 10 years – they rose remarkably.

The homeowner didn't know what to think. Predictably, he made the wrong thing of it. He came to believe that his pile of blocks, bricks, 2 x 4s and faded paint had somehow grown in real worth – like a fine wine that had aged or a bond that had matured.

This sentiment was extraordinary for two reasons. First, it was completely at odds with the evidence before his very eyes. He had only to open them to realize that his house was not, in fact, becoming a better thing. Instead, with each passing day it became a worse thing. He knew damned well that the wooden floor joists rotted and warped. The concrete foundation cracked. The aluminum windows corroded. The shingles on the roof wore away. The gutters clogged. The pipes rusted. The carpet matted down and stained. Every item - big and small – about the house actually lost value as it aged. How was it possible that the ensemble of them went up?

As the years passed, he turned the front door knob; it squeaked. He turned on the hot water in the bathroom; the faucet leaked. He turned on the air-conditioning and it sputtered and creaked. How was it possible that the aggregated collection of all these corroding, deteriorating things put together actually became more valuable? It seemed to defy reason and good sense.

But out came the theorists, the economists, and the real estate salesmen. Property was rising, he was told, because there were so many new people coming in. But how could it be that houses in the US were rising everywhere – throughout the 50 states? Where were all these new people coming from? And it was rising, they said, because the country was running out of buildable land and building codes were more restrictive. New houses were actually becoming rare; that's why older houses were so sought after.

The history of the great US house price bubble: The US building boom

But here too, he opened his eyes and saw it wasn't so. That was the second reason he might have been sceptical. Everywhere he looked, houses were going up. There was clearly a US house building boom, not merely a house price boom. In some areas, every available lot was under construction. Single family homes went up in former cow-fields and old auto lots. In other areas, single family homes were knocked down to make room for condominiums. Acres - no square miles - of previously empty land was being converted to housing.

How was it possible – with all this new supply – that prices would go up? The very idea of it contradicted his intuition if not also his instruction. Rising supplies drive prices down...not up.

What's more, these new houses had none of the defects of his old barrack. The paint was fresh. The doors opened and shut properly. The air-conditioning made no funny noises. The faucets didn't leak. The new houses were bigger, cleaner, brighter, more modern. How was it possible, in face of this competition, that his hulk of a house was going up in price? It should go down.

What was a house really worth, he might have asked himself. What is it, after all? It is shelter: it is a place to hang our hats. It is home sweet home. But who ever heard of home sweet home making anyone rich.

Then, his mind working on the problem like a gorilla trying to do long division, he realized that he had to look upon his house, not as a dwelling, but as an investment! Thus did another brick in the lunatic wall of the great housing bubble get laid in place. Between 2002 and 2006, in many areas of the country, residential housing rose at 20% per year or more. As an investment, it was actually a superb one, he noticed. What stock would do that? And what stock had granite countertops in the kitchen?

The more he looked at it as an investment, the more attractive it became. He could buy a house with no money down. That was another madness – which we'll get to in a minute. But let us imagine that he acted as a conservative, prudent investor. He could buy a $200,000 with a 20% down payment. So, he put down $40,000. Then, he got two forms of pay off. Like a stock or a bond, he got a 'dividend' – in the form of a place to live. A $200,000 house might rent for $2,000 a month. So, he figured he got $24,000 there. Plus, he got a capital gain – when the house went up in price. At 20% per year, this came to another $40,000. Whoa...what a bonanza! His $40,000 initial investment was throwing off $64,000 in 'profit' – every year. All he had to do was pay a loan of say, $1,000 a month...and, of course, property taxes and expenses.

The history of the great US house price bubble: Profiting from living in a house

One absurdity led to another; each one bigger than the last. The US householder began to see that not only was his house a great investment, but that he must be an investment genius for taking advantage of it. The average wage in the US in 2000 was only $37,565. He was making more than that – much more – just by living in his own house.

A thoughtful man, left alone with his private reflections, might have wondered how it was possible. He might have considered his own good fortune and thought more deeply about what actually lay behind it. How is money made, he might have asked himself? By work. By saving. He knew the answers. And he knew he was doing neither. Ah, by investing! 'Yes, that's it,' he said to himself, 'I am an investor, like George Soros or Warren Buffett.'

Only smarter. Buffett still lived in the same house he bought 40 years ago, he noticed. What a dolt! He should have traded up, flipped and refinanced.

Then, another monstrous delusion developed. The homeowner came to believe that he had the equivalent of an ATM machine in his bedroom. If his house was making him so much money, he said to himself, surely he could take some of that money out and spend it? Using home equity lines and refinancings, homeowners found that they could make regular withdrawals from the Bank of Their Own Homes. Borrowing against the house was easy – lenders saw little risk. And interest rates were low.

It seemed like a no-brainer. A house that was bringing $60,000 a year in wealth to a family could easily provide $10,000 to help the family live better. Heck, the family was still $50,000 ahead of the game. And so the money flowed. And what began as a trickle soon became an Amazon; a great river of no return. In the two years 2004 and 2005, homeowners 'took out' more than $1 trillion from their houses.

Experts told them they were being very prudent. They were shrewdly 'managing their household wealth,' it was said. House loans was cheap credit; better to borrow from a home equity line than a credit card. And besides, with their houses rising in price, how could they go wrong?

The history of the great US house price bubble: The ability to pay a loan

We answered that question in these pages. It was not the price of the house that counted; it was the ability of the homeowner to repay the loan. Yes, he could sell his house to get cash. But then where would he live? It wasn't as if his was the only house in America going up in price. The only way he could actually realize the inflated value of his house was by dying, or moving out of the country. Not many householders were ready to do that. Short of that, he had to service his loan, just like any other borrower. And as the weight of his borrowing increased, his legs began to wobble and buckle. Nor did it help that his house was pricier – his insurance, his maintenance costs, and his property taxes were rising too!

By 2002, US houses were clearly going up in price – faster than they ever had before. And the homeowner was about to swallow his next big absurdity.

The rise in US housing prices between 2002 and 2006 in certain markets – San Francisco, San Diego, Miami, Las Vegas, Washington, Manhattan – was breathtaking. By 2005, the average house in San Francisco was selling for $$820,482. In the Washington suburbs, ordinary split levels and colonials had doubling in price in five years' time. And along the California coast even trailers passed the $1 million mark.

The history of the great US house price bubble: Mobile home madness

In the year of our Lord, 2005, on the Pacific coast of the North American continent, a two-bedroom trailer was offered for $1.4 million. This was hardly a first or even a most. Other mobile homes had sold for $1.3 million and $1.8 million. Still another was on the market for $2.7 million.

Why would people pay so much for mobile homes? Well, the views were said to be spectacular and they were good investments. That is, they were good investments in a time when prices were going through the aluminium roofs. Still, unlike most single family dwellings, trailer owners don't own the land upon which their houses rest. Instead, they must rent it. In addition to the house loans trailer buyers have to pay 'space rent' which, for the $1.4 million mobile home was $2,700 a month. Not a fortune, but still a drain on your money.

And oh yes, we mentioned 'housing loans'...but housing loans are hard to get on trailers. Because the trailer might be pulled off the land...and then what would it be worth? Almost nothing. In Malibu, in 2005, the average house sold for $4.4 million. A trailer is a very simple home. But put it on a lot overlooking the Pacific and it is worth a fortune, at least in the great bull market of '96 to '06. The $1.4 million trailer, we were told, was in a gated community and on a 'triple-wide lot.' Wow.

Meanwhile, in Florida, buyers were taking up condos that hadn't even been built. In Miami, 'flipping' condos came to be a profitable speculation in the early 21st century. Speculators would buy a group of 5 or 10 condos – even before a single shovelful of dirt had been displaced. The idea was to sell the contract to another speculator while the place was being built. The second buyer would then sell to yet another buyer when it was completed. Neither the first, nor the second, nor the third buyer had any intention of living in the condo. They were just speculating.

The trouble was that the object of their speculation looked rather lonely and forlorn when it was finally put up. Driving by at night, you would notice that few of the condos had the lights on. Most were empty; waiting for the ultimate buyer, the poor sap who would actually live in the place and, presumably, pay for it.

The history of the great US house price bubble: Squeezing out the speculators

This eventually became such a problem for developers that they tried to squeeze out the speculators, insisting that buyers take up only one of the condos and move in within a specified period of time. In some projects, developers announced special offers, which had prospective buyers camping out all weekend in order to get a good place in line to buy when the doors opened on Monday morning.

While buyers were leaping from one absurdity to the next, they were provided special shoes...with the lending industry.

In the autumn of 2006, the regulators began to wonder. A group of regulatory agencies began to think they had allowed too many marginal buyers to take off. The air was full of them...and many were beginning to crash. Even Ben Bernanke, speaking just yesterday, warned that borrowers might need some flying lessons; a little more 'awareness' of lending practices was what was needed, said he.

Bernanke's comments followed the release of a new set of standards, in a report entitled "Interagency Guidance on Nontraditional Mortgage Product Risks."

And then, about the same time, the Comptroller of the Currency, John C. Dugan, spoke about the innovations of the mortgage industry:

"Lenders who originate these types of loans should follow sound underwriting practices that consider the borrower's repayment capacity."

Traditionally, the lender judged both his man and his market, we recall pointing out. If both were deemed solid, he would take a chance, lending the man a mortgage and hoping that the market was strong enough to allow him to recover his money if the man failed.

Nontraditionally, however, lenders didn't even bother with the man; instead, they judged the market and judged it foolproof. This proposition they then set off to test – by making outrageous loans to both fools and knaves.

The history of the great US house price bubble: Flourishing house loans

Reading the popular press – not to mention the advertisements in the popular press – we learned about the number and variety of non-traditional house loans that have flourished in the last six years. Adjustable rates, of course, became common. But so did housing loans with zero down payments, alluringly low starter rates, including interest-only mortgages, flexible payments, and 'stated income' applications in which the borrower is left to use his own imagination in describing his financial circumstances.

When the 21st century first budded out, only 5% of mortgages were of the so-called 'sub-prime' variety, that is, house loans to marginal borrowers. Five years later, one in four was to a subprime borrower.

Also in 2000, only 25% of these sub-prime house loans were of the 'stated income' variety. Only 1% consisted of 'piggyback loans' – junior loans designed to eliminate the need for a real down payment. And none were I.O., or interest only.

By September 2006, 44% of sub-prime loans had "limited documentation," 31% were piggyback loans, and 22% were I.O. This was the very moment at which regulators were asking the lending industry to be more careful – that is, after they had already let the weasels in the chicken yard.

Daily Reckoning readers laughed heartily at empty conceit; the stated purpose of both the US federal government's housing policy and that of the lenders themselves was to 'help Americans buy their own homes' or words to that effect. Easy credit was meant to increase homeownership. (Renting a house was a kind of social failure, like dropping out of high school or driving an old Pinto.) They had 'democratized' the credit market, they claimed; now not only rich speculators could lose their shirts. The common man could too!

The history of the great US house price bubble: EX credit

The obvious effect of EZ credit was to turn Americans into a race of housing speculators, not of homeowners. Instead of actually buying and paying for a house, marginal buyers were enticed into these innovative loan products, which were more like options to buy a house rather than an actual purchase of one. An I.O., interest-only, house loan gave the speculator the right to buy the house sometime in the future – if things went well. And as the I.O.'s, limited doc, flexible payment ARMs reached farther and farther into the general population of homeowners, fewer and fewer people really owned their homes at all. More and more of them became gamblers, betting that property values would rise fast enough for them to keep on refinancing until they actually pulled in enough dough to make a down payment.

The problem with this little pleasantry was that the joke was on the people who could least afford it – the gullible borrowers of the subprime market. Much more funny was the gullibility of the sub-prime lenders. Cheap suits, expensive suits – when you got down to it, they all fell for the same line of guff.

While the marginal lumpen took out ARMs, the hedge-fund, pension fund, and insurance fund geniuses bought MBSs, mortgage-backed securities. The securities were backed by the mortgages which were in turn backed by the imaginary incomes of the borrowers and inflated house prices. The credit agencies rightly judged the quality of the mortgages as less than perfect, BBB-. And then with the miraculous powers of modern finance these same mortgages were put into MBSs and turned into triple-A credits!

The transformation of bad credits into good ones, in front of the very eyes of Ph.D. mathematicians and hedge fund quants, must be rated along with Christ's performance at the marriage of Cana, where the Nazarene turned ordinary tapwater into wine. Scientists often suggest that the Gospels lie. But as to the veracity of modern finance, they were mute.

Asked to explain, the institutional salesmen resorted to a logic little different that of the ordinary homeowner. The component parts may be a little greasy, they said, but put together the sliced and diced, processed mortgage packages were less risky than individual mortgages. It was as if you were less likely to get sick from eating a can of Spam than from eating any particular cut of meat. How that could be was never explained. Presumably, the glop that went in didn't get any better by mixing it with more glop.

Just how bad some of this glop was became apparent only recently. After swindling themselves and each other for so many years, the real professionals decided their way into muscle into the house loan bubble.

The history of the great US house price bubble: A slowing market

As reported in Forbes:

"The real estate market has never offered such opportunity for graft. Since the US housing market started to soar in 2001, loan fraud has become the fastest-growing white-collar crime, according to the FBI. Last year crooks skimmed at least $1 billion from the $3 trillion US mortgage market.

"Now that the market is slowing, fraud is only rising. As business dries up, there's increasing pressure on lenders, brokers, title companies and appraisers to be profitable. That means loan and title documents aren't scrutinized as carefully as they might be, and courts - many of them so low-tech they resemble Mayberry - can't keep up with the volume of paper.

"Then there's the mad rush to sell, particularly by people who paid high prices for homes and suddenly can't afford the loans.

"It's like a tasting menu for con artists and grifters, so tempting that in some cities drug dealers have turned to mortgage fraud, plaguing lower-income neighbourhoods with crooked mortgages rather than crystal meth."

The Forbes article told the story – related here earlier this week - of a pair of thieves, known as the Bonnie and Clyde of house loan fraud. The two did very naughty things – pretending to be who they weren't, borrowing money to buy houses at inflated prices, forging documents, stealing identities, defrauding sellers and lenders alike - and made off with millions of dollars.

Elsewhere it was reported that lenders made millions in housing loans to inmates in the Colorado prison system. A whole group of miscreants issuing out of the Rocky Mountain state pen was able to buy 17 houses for inflated prices and take away $2.1 million in excess loan proceeds. According to the report, hundreds of houses were sold in what was called 'price puffs' – at prices above real market value.

By the autumn of 2006 these houses were going into foreclosure at the rate of 1 out of every 13. The price puffs began modestly – with buyers taking out $5,000 to $10,000 at the time of settlement. But amounts grew until they were walking away with 30% of the purchase price, or amounts over $100,000.

Then, the feds got on the case and people started going to jail again. But that is how these stories tend to end. In court, in chapters 7 and 11.

Every public spectacle ends in correction of some sort. Often, in a house of correction. And the force of the correction is equal and opposite to the deception that preceded it. This one ought to be a doozie.

Friday, April 28, 2006

Ottawa Denies Canada-US Deal On Softwood Lumber

Canada denied reports and US claims that a deal had been reached to end a longstanding softwood lumber trade row that has soured Canada-US relations.

There is no final confirmation of any agreement with the Americans.
If there should be an agreement, the prime minister will be here in a few moments or later on today to inform the members of this house of this issue.

Earlier this week, Canadian media reported a framework agreement had been reached that would see 78 percent of duties collected by the United States on Canadian lumber imports since 2002 refunded and a limit to 34 percent of the US market for future imports.

A "tentative agreement" had been reached with Ottawa late Tuesday.

Under the tentative agreement the United States would refund Canadian forestry firms 80 percent of duties collected on softwood imports or up to four billion US dollars, plus interest.

The remaining one billion US dollars in duties collected from Canadian firms would be split between US forestry companies and projects to benefit the North American lumber market or for "meritorious initiatives like housing reconstruction in Katrina affected areas.

Canadian provinces must also agree to a five to 15 percent "export charge" on softwood lumber exports to the United States.

They may opt for a 2.5 to five percent export tax, plus limit exports to 30 percent to 34 percent of the US lumber market, depending on lumber prices.

If a Canadian region exceeds its exports limits, the following year exporters in that region would pay a penalty at a rate of 1.5 or double.

Each region`s market share would be based on its average market share between 2004 and 2005.

Logs harvested from Canada`s Atlantic provinces and northern territories would be exempt.

The deal would last seven years, with an option to renew for two more years, and calls for a dispute resolution system and for "policy exits" to be determined within 18 months.

Housing Investment Will Rise a Little Further in 2006

Housing investment will rise a little further this year but ease a bit in 2007 and 2008 as higher interest rates begin to bite.

The central bank (BoC) has been a little bit surprised by the continued strength of the housing market despite the rise in interest rates

Tuesday, April 25, 2006

Bank of Canada Raises Key Interest Rate a Quarter-point to 4.0%

The Bank of Canada raised its key interest rate by a quarter percentage point to 4.0 per cent on Tuesday, continuing to increase the cost of borrowing for consumers and companies.

It's the sixth straight increase since last summer, when the central bank's overnight rate was at 2.5 per cent. And the bank hinted there may be at least one more rise in the offing.

"Some modest further increase in the policy interest rate may be required to keep aggregate supply and demand in balance and inflation on target over the medium term," the rate announcement stated.

Friday, April 21, 2006

Bank of Canada Interest Rate Announcement

On Tuesday, 25 April 2006, the Bank of Canada will announce its decision on the target for the overnight rate. A press release will provide a brief explanation of the decision.

Ottawa's Office Vacancy Rates Drop

The office vacancy rate in the Ottawa suburb dipped below 10 per cent in the first quarter for the first time since the technology bubble burst.

The Kanata market waited about six years for to come back, so it's quite significant. So it's good scenario for Ottawa.

Vacancy rates in Kanata approached zero at the turn of the millennium as fast-growing tech firms set up shop in gleaming new office buildings.

But the suburb came to resemble more of a ghost town than a boom town in the years following the bust, with vacancy rates surging above 25 per cent by 2003.

A busy first quarter of big deals drove Kanata's vacancy rate down from 11.4 per cent in the final quarter of last year to 9.3 per cent, the lowest level since the late 1990s, Colliers reported. By comparison, the vacancy rate in the first quarter of 2005 was 20.6 per cent.

The absorption of space has driven up rental rates in Kanata roughly fourfold from the post-bust low, adding that it expects the vacancy rate in Kanata to continue to fall.

Overall, Ottawa's office vacancy rate dropped to 8.8 per cent from 9.4 per cent in the fourth quarter of 2005. Most of the activity took place in west Ottawa and Kanata due to new technology tenants and the expansion of existing tech firms.

The vacancy rate in the downtown core tightened to 3.8 per cent from 4.1 per cent, while the suburban rate fell to 12.5 per cent from 13.3 per cent.

The biggest question mark remains the 900,000 square-foot former JDS Uniphase campus on Merivale Road, which Minto Developments bought last summer and renamed the Mercury Centre.

The RCMP has been rumoured to be a likely tenant, but Minto has indicated they may lease the building to multiple tenants.

It said Minto has been "actively marketing" the property.

The availability of the Mercury Centre has kept the vacancy rate in Ottawa South, including the area surrounding the Ottawa International Airport, at 24.6 per cent. Without the Mercury Centre, the rate would be 13.8 per cent.

But in the downtown core, it expects rental rates to remain unchanged due to uncertainty over the expected completion in 2007 of Oxford Properties' Constitution Square Phase III, and the vacating of other downtown properties.

Monday, April 17, 2006

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Friday, April 14, 2006

Skyrocketing Property Taxes Squeeze Out Homeowners

Critics call it the biggest and the sneakiest tax grab in recent memory.

From Vancouver to Halifax, Canadian homeowners are being hit with skyrocketing property assessments -- leading to significantly bigger property tax bills -- that some can't afford.

"I think we're going to have to sell," said David Diplock, an Ontario pensioner. "I've been retired 12 years. I don't have any way of getting a raise or any increases or anything."

Diplock and his wife have lived in their Port Colbourne area house for more than 30 years. They raised 11 children there. In the last few years, they say, the assessed value of their property has gone through the roof -- almost doubling -- to $337,000. They don't believe their "lived in" house is worth that much -- and they don't want to move anyway.

Their taxes are suddenly $6500 per year. The couple lives on Diplock's monthly Canada Pension -- and that tax bill now takes half of it.

"In my heart, it hurts," he said. "We start talking about it and (my wife) breaks down and I've got to comfort her and the next thing I know, I'll be breaking down because we feel we are being kind of robbed."

It's the downside of a housing market that's been on the upswing for the better part of a decade. The people hit hardest are the ones who don't want to sell -- many are seniors living on a fixed income.

"It should never be to the point where you have to struggle to pay your taxes," said Diplock.

The Canadian Taxpayers Federation calls it a national crisis. It estimates, on average, municipal property taxes have jumped by 24 per cent nationwide since 2000. The biggest increases are in cities -- like Vancouver, Toronto and Ottawa.

"It's a problem everywhere, right across Canada, but you know, no one is talking about it," said Garth Turner, Conservative MP for Halton, Ont. "It's very destructive for individual taxpayers and for many lives it ends up pretty much destroying them."

"If I had to, I couldn't afford to buy my own house," said Robert McBean, a retiree whose half duplex in Toronto has suddenly jumped $85,000 in value, on paper.

"There's been nothing done to my house. I didn't make any improvements. All I did was cut the grass."

"People think it's a windfall but if you have to pay the tax on that it's no longer a windfall."

Film studios have moved in near McBean's home. Several new houses have sprung up on the next block. "To give them (the city) extra tax money just because somebody moved in down the street and paid an unreasonable amount for a house, it's crazy," he said.

What's more, CTV found several examples of homes assessed for even more than they are likely worth. For example, In Toronto, several residents on O'Leary Avenue are fighting their property assessments. They have no parking, no yards and no garages. One of the homes recently sold for $168,000, yet the property value has been assessed at $255,000.

"Tax increases through the back door," said Turner, who is taking rising property taxes on as an issue. "It's very insidious. I think it's very harmful and it's really going to have a very negative impact on the whole system if we don't reform it now."

Turner thinks the new Conservative government he belongs to should insist municipalities get some of the money, in any new transfer payment deal made with the provinces.

"In Ottawa we are talking about, you know, cutting the GST or cutting income taxes. We are debating how to give money back to taxpayers. This is not even on the radar -- and its got to be. But it never will be, in politics, unless we have people screaming about it."

"It is a national problem," admits James Knight, CEO of the Federation of Canadian Municipalities (FCN). "Property tax is regressive and it's not linked to the ability to pay."

The FCN insists municipalities can't cut those taxes, though, without cutting services. So, nothing much will change, Knight said, until Ottawa and the provinces give up more cash.

"There's enough revenue in the country, there's enough taxes -- but there's not enough sharing of them," said Knight. "Municipal governments need somewhat more to deliver their responsibilities."

"Who can I level my anger towards?" asked David Diplock. He's filed an appeal of his assessment, but, he said, if he loses, he and his wife will have no choice but to sell the home they love -- the home they expected to live in for the rest of their lives.

"Someone else will buy the place, and they'll pay the taxes," said Diplock. "To sneak something like this under the table and rip everybody off -- I think it's criminal, really."


Hot BC Housing Market Really a Bubble?

Vancouver, arguably the nation's hottest real estate market with year-over-year double-digit pricing increases and average homes selling for half a million dollars, economists are fearing that there are indications of a real estate bubble that is close to bursting.

"That's an eyebrow-raising price increase, but I would prefer to wait and see if it is an anomaly," said University of British Columbia real estate economist Tsur Somerville of a 22 per cent jump in housing prices over the same time last year. "I for one would be concerned if prices in the second quarter showed an equally large increase."

Craig Alexander, deputy chief economist at TD Bank Financial Group, said that booming economic conditions offer the perfect breeding ground for speculative price bubbles to form.

"That's because in such an environment, housing market participants are at greater risk of developing a case of irrational exuberance, especially if they expect that such exorbitant price gains will continue indefinitely."

He said the risks appear to be greatest in Vancouver, where on Thursday, telephone lines opened to give residents a chance to register as a potential buyer in the city's most highly anticipated condominium sale: 'Woodward's District,' a 536-unit development smack in the middle of Vancouver's notorious Downtown Eastside, otherwise known as Canada's "poorest postal code," thanks to the throngs of prostitutes, drug addicts and petty thieves that line the streets and alleys near the building's proposed site.

The actual sale for a Woodward's property starts Apr. 22, with prices ranging from $200,000 to $800,000, but only those who register starting Thursday will receive a wristband that allows them to participate in the sale. The completion date for the project is slated sometime in 2009.

But while some experts continued to warn the pace can't continue, others said there's no need to worry just yet.

"With today's data, it goes without saying that there is still not a shred of evidence that Canada's housing market is tapering off," said Marc Levesque, chief fixed-income strategist at TD Securities. "Construction activity is proceeding at a red-hot clip, resale activity remains solid, and building permits are not even hinting at a slowdown."

And that could increase pressure on the Bank of Canada to continue to nudge up its trend-setting short-term interest rate. The central bank has already boosted rates five times since last fall as a pre-emptive strike against inflation.

At the time of its last increase in early March, when central bankers raised their overnight rate to 3.75 per cent, they indicated they were almost finished tightening.

However, strong economic data -- including a record low jobless rate of 6.3 per cent in March, the lowest in 32 years -- is raising speculation that the Bank of Canada may have to raise rates a few more times to keep the economy from overheating.

Its next scheduled chance to change interest rates comes on April 25.

The CMHC report wasn't completely good news, carrying the seeds of a possible slowdown in the months ahead, with construction of apartments and condos outpacing that of single-family homes in March, which hints at some weakening to come, warned CMHC's chief economist Bob Dugan.

Toronto and Montreal in particular saw apartment starts surge last month, he said.

At the same time, "single starts decreased for a second consecutive month, suggesting that the pace of new-home starts will begin to pull back."

On a seasonally adjusted basis, urban starts rose 4.7 per cent to 219,700 units in March.

Multiple starts, or new construction of apartment and condominium buildings, rose 18.6 per cent to 123,000 units between February and March, while construction of stand-alone houses fell 8.9 per cent to 96,700 units.

Residential construction got a lift in the first quarter from unusually warm weather, adding fuel to the Canadian economy, said Scotia Economics analysts Sarah Hughes.

That could "diminish somewhat in the second quarter as declining affordability, rising construction costs and a cooling resale market tempers housing demand," she wrote in a note to investors Monday.

But other factors will continue to prop up the market, Hughes added.

"While starts are expected to trend downward in 2006, Canada's generational-low unemployment rate and respectable wage gains should continue to support a historically high level of residential construction."

For the first three months of the year, actual urban starts were up 19.1 per cent from the first quarter of 2005, with all regions of the country gaining on last year.

Single-home starts were up 16.7 per cent, while multiples were up 21.1 per cent.

In March, a jump in apartment construction in Montreal meant the Quebec region led Canada with a 21.2 per cent increase in urban housing starts, to 48,100 units.

Urban starts declined in the Atlantic region and Ontario, and were virtually unchanged in British Columbia.


Ottawa Houses Selling Like Hotcakes

A record number of homes were sold in major Canadian cities during the first quarter. In Ottawa, records were set for the number of new listings and average listing price.

On a seasonally adjusted basis, the number of homes listed and sold on the MLS totalled 86,861 during the first three months of the year.

That's up 2.3% from the fourth quarter, and is one-tenth of a percentage point above the previous record, set in the third quarter of 2005.

The strength of the housing market this year continues to surprise, despite rising home prices and slightly higher interest rates.

The number of new listings broke records in Ottawa, Victoria, Toronto, St. Catharines and Saint John, and, across the country, new listings in March of 46,265 represented the highest level since May 1991. Klump credited several factors for the market's buoyancy, including affordable mortgages and rising incomes.

Thursday, April 13, 2006

Hot Housing Market Remains Superheated

The surge in housing prices for new homes is now nearing the increases of the late 1980s housing boom, and will likely start putting upward pressure on inflation.

New house prices continued to rise strongly in February, as the New Housing Price Index rose 0.7 per cent, down slightly from January's increase of 0.9 per cent.

New house prices prices were up seven per cent on a 12-month basis compared to 6.6 per cent the previous month, the steepest year-over-year increase in 16 years.

New house price gains are moving up toward levels not seen since the real estate boom of the late 1980s.

Good demand for new housing in some metropolitan areas also contributed to higher price levels while land-value increases contributed to price hikes in 10 of the 21 metropolitan areas surveyed.

Fifteen of the 21 metropolitan areas posted monthly gains, led by Calgary at 2.2 per cent.

Construction material and labour cost increases were the main factors pushing price levels up nationally.

Tuesday, April 11, 2006

Electric Bill Too High? Get Your Own AIR-X Windmill.

Ever look at your electric bill and wish you could do something about it besides running around turning off lights?

This summer Southwest Windpower, will introduce a wind turbine just 45 feet high. The turbine will produce electricity even at modest wind speeds. Suitable for properties as small as half an acre. It could extend the windmill option to a much larger portion of the Canada.

Main Features:
All of these features are primarily found within the body of the turbine. The new microprocessor based speed control results in increased performance, improved battery charging capability and the reduction of “flutter” noise from the machine. The controller allows for peak-power tracking of the wind by optimizing the alternator's output on all points of the cubic curve and then efficiently delivers the energy to the battery. The turbine’s smart controller allows it to actually control blade rotation speed thus eliminating the buzzing noise commonly found with the AIR 403 and 303 in high winds. Furthermore, a new series of carbon-reinforced blades with a modified pitch angle further increases power production. The new electronics are a considerable improvement over the AIR 403 controller that consists of diode-rectification and a simple off/off voltage switch.

Much Lower Noise: Previous AIR wind modules relied on their aero-elastic blade design for protection in high winds, causing loud flutter noise in winds above 35 mph (16 m/s). AIR-X’s circuit monitors the wind speed and electronically slows the blades as it reaches its rated output preventing it from going into flutter. This results in a much quieter wind turbine. In high winds, the AIR-X will continue to produce power at a reduced level until the wind decreases, at which point maximum output will resume. The Benefit: Quieter and neighbor friendly operation.

Improved battery charging: Previous AIR designs required 300-400 amp hour battery banks so the trickle charge of the wind turbine could be adequately absorbed. The AIR-X’s charge controller periodically stops charging, reads the battery voltage, compares it to the voltage setting and if the battery is charged, it completely shuts off all current going to the battery. This function is performed within a few milliseconds. The closer the battery is to reaching its full state of charge, the more often the AIR-X’s circuit repeats this action. This means any size battery bank from 25 to 25,000 amp hours or higher can be charged safely. When the battery has reached its charged state, the AIR-X will slow to an almost complete stop. Only when the battery has dropped below its voltage set point will it startup and resume charging. The Benefit: Extended battery life, no overcharging.

Lower stress design: AIR-X limits power on the input side of the electronics by controlling the torque from the blades. The power no longer has to be dissipated by the electronics resulting in lower stress on the circuit, bearings and other materials. Furthermore, stress on wind turbines occurs primarily in high winds. Under these conditions, the electronic stall design reduces the blade speed to 600 rpm, thereby significantly reducing turbine and tower loading while still producing power. The Benefit: Greater confidence in turbine operation in high wind conditions without manually operating the stop switch. Note: A manual stop switch control is an available option for the AIR-X.

Internet Attack On the Brokerage Commission

Finding the house is probably 75 percent of the work. Why not give buyers 75 percent of the commission?

Today 77 percent of home buyers start their search on the Internet. Other sites provide comparison home value estimates and information about town and neighborhood facilities.

With their clients doing much of the grunt work, the new Internet "rebaters" are happy to take less for the services that the buyers still require – such as scheduling appointments with listing agents, preparing documents, guiding clients through closings and more. One of the main duties of a traditional buyer's agent is to drive clients around to listings.

For the brokers, it means a much more productive business model. One agent can do several transactions a week, while traditional agents do several transactions a year.

But traditional brokers hate these new business model. It threatens their livelihood. They'll be blackballed from the industry and other agents wouldn't show houses to our clients.

Monday, April 10, 2006

Apartments and Condos Drive Up Housing Starts

Construction of apartments and condos outpaced single-family homes in March 2006. Toronto and Montreal in particular saw apartment starts surge last month. At the same time, single starts decreased for a second consecutive month, suggesting that the pace of new-home starts will begin to pull back.

Multiple starts, or new construction of apartment and condominium buildings, rose 18.6 per cent to 123,000 units between February and March, while construction of stand-alone houses fell 8.9 per cent to 96,700 units.

Sunday, April 09, 2006

Canada's Housing Market is Heating Up

The U.S. housing market may be rolling over, virtually all Canadian cities remain undervalued (with the exception of BC). The Canadian housing market did heat up in the first quarter of 2006 and remain robust. The real estate conditions are relatively tight in aggregate. As a result, the national average price of existing homes continues to climb at a vigorous pace. These national figures significantly mask a great divide emerging from a regional perspective. It can also create the perfect breeding ground for speculative housing price bubbles to form. That's because in such an environment, housing market participants are at greater risk of developing a case of `irrational exuberance,' especially if they expect that such exorbitant price gains will continue indefinitely. The "soft landing" in Ottawa housing market has already begun to occur. Currently the price is trending higher because the price has remained above its long-term (2-year) moving average since Jun. 1997. The great 1997-2006 price advance is over and a reasonable scenario is for prices to drift into the mean or long-term moving average, giving us that healthy soft landing.

Ottawa Building Permits Down Sharply So Far This Year

Building intentions in Ottawa are running well behind 2005 levels, in sharp contract to continuing gains in construction activity in the rest of the country.

Statistics Canada reports the value of building permits issued in Ottawa for the first two months of the year was down 36.9 per cent compared to last year. It is likely however that the 2005 figures were skewed by a large number of projects booked early in the year.

Non-residential construction is down almost 60 per cent from last year, with declines in all sectors---industrial, commercial and institutional building. The value of residential permits is up 8 per cent for the first two months of the year, with gains in both single and multi-family construction.

It's a different story across the country however, where the agency reports a rebound in construction intentions in February.

It says municipalities handed out $5.2 billion in permits, up 3.6 per cent from the previous month. Non-residential permits rose 14.4 per cent, after a 13.4 per cent decline in January.

Homebuilders, on the other hand, took out $3.4 billion in permits, down 1.5 per cent and the second consecutive retreat from the record high set in December. The value of single-family permits fell for the first time in eight months.

Still, February's level of residential activity was 5 per cent above the monthly average for all of 2005.

Regionally, 22 out of the 28 cities surveyed by Statscan showed faster starts than in 2005. Calgary, Edmonton and Vancouver showed the largest gains, thanks to their dynamic housing sectors. The six cities posting declines were all in Ontario.


Mild Weather Gave Canada's Housing Market a Solid Start to 2006

Mild winter weather prompted Canadians to buy more homes than usual in the first 3 months of the year, pushing house prices even higher. The country's hot housing market hasn't lost all its steam yet, although it's being propped up largely by Western Canada. The year has started very strongly and it shows no signs of slowing as the peak spring market approaches.

Quick Action is Very Important After the Flood

For homeowners, few natural events cause greater or more lasting damage than a flood. But what many of us may not know is that much of the worst damage can actually occur after the water has drained away.
If your home has been flooded, the best way to protect your property, your belongings - and the health of your family - is by getting rid of the water and drying your house as quickly as possible. Whether you do the work yourself or hire a contractor, a few important precautions should always be taken before you begin:
  • Put safety first. Avoid electrical shock by wearing rubber boots, keeping extension cords out of the water and shutting off power to the flooded area.
  • Record the details of the damage with photos or video if possible, and contact your insurance agent and register with your municipality as soon as possible.
  • Set up a step-by-step action plan to remove all remaining water, mud and other debris, dispose of contaminated household goods, rinse away contamination and disinfect contaminated surfaces, and dry out your house and salvageable possessions.
  • Assemble all the equipment and supplies you'll need in advance, including gloves, masks, pails, mops, squeegees, plastic garbage bags, unscented dishwashing detergent and large containers for soaking bedding and clothing.
  • Store valuable papers in a freezer until you have time to work on them.

Then, during the clean up, keep a checklist of chores close at hand to make sure the work is carried out in an order that will help minimize the damage, including:
  • Remove standing water with pumps or pails and a wet/dry shop vacuum, and remove all soaked and dirty materials and debris, including wet insulation and drywall, residual mud and soil, furniture, appliances, clothing and bedding.
  • Work from the top down, breaking out ceilings and walls that have absorbed water, removing materials at least 500 mm above the high-water line and replacing any flooring that has been deeply penetrated by flood water or sewage.
  • Hose down and thoroughly rinse all surfaces wetted by the flood water, and wash and wipe down with a solution of dishwashing detergent and water. Rinse. If the surfaces do not appear clean, repeat the washing down with detergent, scrubbing as needed, then rinse again.
  • Clean surfaces not directly affected by the flood water with the detergent solution and allow to dry.
  • Ventilate or dehumidify the house until it is completely dry.


Ottawa Housing Events Scheduled for the Week of April 10-14

TUESDAY, April 11
In Ottawa, Statistics Canada releases figures on 2006 first-quarter investment in non-residential building construction. Statistics Canada releases the February new housing price index.

Ottawa Condominiums Still Provide Best Housing Value

Condominiums continue to offer Ottawa homeowners the most bang for their home-buying dollar, and the best chance for a big jump in price.

In the seven Ottawa markets the average price of a standard condominium showed the greatest appreciation, rising by 3.5 per cent in the past year to $173,750. The average price of a standard two-storey home increased 2.6 per cent to $271,286 while a detached bungalow rose 1.9 per cent to $275,887.

In the South End, the average price of a standard condominium increased by 8.5 per cent, year-over-year, to $153,000. In the city's East End, the average price of standard condominium jumped by 8.1 per cent to $146,000, year-over-year. In Kanata however, a standard condominium appreciated by only 0.6 per cent to $161,000, year-over-year.

Ottawa's housing market will continue to experience balanced conditions; a healthy local economy and a strong job market have continued to attract new buyers into the market, maintaining healthy price appreciation.

Across the country, the greatest price appreciation in detached bungalows, which jumped 11 per cent in price in the past year to an average of $282,059.

Standard two-storey properties increased 9.2 per cent to $340,956 and standard condominiums rose 8.8 per cent to $195,909.

Heated Ottawa Housing Market May Cool, But Not Bust

The odds of a housing price correction are rising, a major bank is warning.

However, the chances that the current seven-year boom will turn to a bust are still low because, while it has run longer than most, the 40 per cent increase in prices is not excessive by historical standards, the run-up in interest rates has been relatively modest and unemployment is low, Scotiabank said in a report Monday.

"From a historical perspective, the duration of the current upswing in home prices is relatively long," said Scotia economist Adrienne Warren, noting that over the past 50 years there have been three other major housing booms, each lasting five to six years. "The magnitude of the current price gain, however, is not out of the ordinary, with the rise in real home prices essentially in line with the average 44 per cent increase recorded over the prior three cycles."

Housing prices still appear to be well supported by economic fundamentals, being driven by tight supply-demand conditions, not investor speculation, the report said. In contrast, during the 1985-to-1989 housing boom, which went bust, price increases were much larger than would otherwise be expected, given overall market fundamentals.

The current housing boom is also more diverse regionally than previous ones, especially the 1980s boom, when average home prices were driven up by a spectacular albeit unsustainable 84 per cent inflation-adjusted surge in Ontario, Warren said. In the current cycle, all regions of the country are contributing to the rise in average house prices, and no province has yet experienced an after-inflation appreciation in excess of 60 per cent.

The current low and stable inflation environment is also reducing the risk of a large price correction, the report said, noting that in only seven of the past 50 years has there been an actual drop in housing prices.

Any drop in inflation-adjusted prices this time will likely occur through a gradual erosion by inflation, rather than a drop in actual prices, it said.

And the housing market may get a demographic lift down the road, as the "baby echo" generation begins to enter the housing market, the report said.

Meanwhile, economic growth and employment prospects are reasonably good, supported by energy-related and productivity-enhancing business spending and multi-year government-sponsored infrastructure projects, it said. Foreign investment is also on the rise, and the housing market is a clear beneficiary.

Unlike the end of past housing booms, there has not been a pronounced run-up in interest rates, as the strong dollar and global competitive pressures have been keeping a lid on inflation for the Bank of Canada, allowing it to leave rates at what are still relatively stimulative levels, the report continued.

Past housing price declines have usually been preceded by a pronounced increase in shorter-term interest rates or a marked deterioration in labour markets, it noted.

While the housing market will likely cool, it's expected to result in a gradually slower pace of price appreciation, Warren said. Regionally, prices will likely remain firmer in the western provinces, supported by their relatively stronger labour markets, tighter housing markets and a continuing influx of people from other provinces.

The Fly Off Effect of The Real Estate

You don't have to be affluent to fly off to your weekend getaway anymore -- with the rise of discount flyers like JetBlue and Southwest Air, second-home buyers have expanded their target areas outward.

In a survey last year, found that 60 percent of respondents planning to buy a second home were looking more than 500 miles away from their primary residence.

"Every year we watch as distance becomes less of a factor," says David Hehman, CEO of

"The traditional second home," says Paul Prescott, national director for Deloitte & Touche residential development department, "was two or three hours drive away. People felt it had to be that close to get enough use of it to make it worthwhile."

Most vacation home communities were clustered within a short drive of major cites. It's what made the Catskills the weekend home of choice for New Yorkers, Cape Cod the vacation spot of choice for Bostonians and the Jersey Shore the pick of Philadelphians.

But it's now possible for New Yorkers to fly to Burlington, Vermont quicker than they can drive to the Catskills. And fares as low as $45 make it eminently practical.

Leslie Gauff, a real estate broker with Carlson Real Estate in Stowe, Vermont, says that inexpensive air fares have had an impact on her business.

"The Bostoners drive up for the weekend," says Gauff. "It's about three hours. But many New Yorkers fly." That's in lieu of a five-hour drive. "I've had people say that it's just as easy, in some ways easier, to fly up here than to drive to the Hamptons."

Stowe home prices have increased about 18 percent a year for the past three years, according to Gauff.

Western resorts are even more dependant on air transport.

JetBlue flies from Long Beach to Las Vegas for $44. Southwest flies to cities within Texas for $49 and anywhere within California for $59.

"Salt Lake City is a good example," says Prescott. "Someone in San Francisco can fly to Utah and be on the slopes at Park City faster than they can drive to Tahoe."

According to Hehman, it's not merely the low fares; it's also ease and speed. "People are just more comfortable flying now. And fighting traffic to get to a weekend place really detracts from the experience," he says.
Will U.S. airlines ever emulate Europe?

Although some of the fare deals sound pretty great, American carriers are still way behind the Europeans. In Europe, low air fares are transforming the vacation-home market. It's now possible to fly from one European country to another for less than the cost of riding the bus to the airport.

The UK's Abbey National Bank estimates that some 1.2 million Brits now own second homes in France and on the Iberian Peninsula. Germans own some 300,000 homes in Spain. The French are even buying homes in Britain, to the tune of about 20,000.

A sample of prices posted on the Web site of RyanAir, the leader in discount European fares helps explain why:

* A one-way ticket from London to Dublin cost £0.79. That's less than $1.39 in U.S. dollars.

* One way from Glasgow to Paris – £4.49, about $7.86 U.S.

* How about London to Berlin -- free, that's $0.00 in American money.

RyanAir has maintained its profitability by relentlessly slashing costs and by unbundling services (such as meals and baggage checks) and charging for them. It is also starting to host gambling games onboard. The company claims that more than half its seats or more will be free within a few years.

RyanAir is not the only bargain carrier flying European skies; easyJet, for example, flies passengers from England all the way to Ibiza, off Spain's Costa Blanca, for £30.99, about $54. Other carriers helping to make air fares practically irrelevant, even for budget travelers, include Air Berlin, Wizz Air and SkyEurope.

There's nothing comparable in the United States – at least, not yet. A JetBlue spokesman, Bryan Baldwin, does not think that his company will start to mirror the kind of prices (or lack thereof) that RyanAir is putting up in Europe.

If the trend to really low airfares becomes even more widespread, it could have a heavy impact on second-home markets.

As Prescott points out, the expectations of the boomer generation is much different than those of their parents. "The whole nature of second home ownership is changing," he says. "My pre-conceived notion of a second home is a cabin on a lake. Today the second home experience often includes a planned community or activity -- golfing or skiing for example -- that may not be available near the primary residence."

And there's one more way that low air fares affect home sales; they attract tourists. Jess Reid, president of Jess Reid Real Estate in Park City, says, "Tourists visiting Park City are the target market for home sales. They come for a visit, love the place and buy a home. If air fares are low, we see more tourists and make more sales."

Savory's Fine Foods Coming to Bayshore Mall

Bayshore Shopping Center has annonced that Savory's Fine Foods will be replacing Market Fresh at Bayshore Mall. Savory's Fine Foods will be carryng fresh produce and traditional groceries, as well as unique speciality products, including gourmet take-out meals, hand-made chocolates, fresh-baked breads, international cheeses, and organic meats. THe new store is expected to open later this May 2006.

Homeless Women in Ottawa Filling City Shelters

Shelters across the city are seeing a growing number of homeless women, a crisis that's leaving their resources stretched.

At the downtown Shepherds of Good Hope, an outreach program originally mandated to help men and women with chronic mental illness, now has a new population of women who suffer addictions or are sex trade workers.


There are no drug addiction services for these women and the staff isn't properly trained to deal with the complexity of their problems, said Joanne Hansen, senior manager of shelters at the Shepherds of Good Hope.

"All we're providing is a bed, a roof over their heads and meals. We need more," she said.

The Shepherds' Hope Outreach program has 40 beds and 30 of them are used by women.

Often, up to three women a night are turned away because there's no room and the resources aren't sufficient.

It's the same situation facing Cornerstone Women's Shelter.

Each night, Cornerstone's beds are full and staff is forced to turn away women.

Director Sue Garvey said another reason they are turned away is because the chronically mentally ill who suffer addictions present behavioural problems that Cornerstone can't handle.

"We have the support for men, but with women, we are very much behind," Garvey said.

Last year, 1,267 women stayed in local shelters, up from 2004 when 1,221 women used shelters.

Contributing to this increase is the surge in drug use among homeless women.

More women on the streets are turning to crack, and crystal meth use is also on the rise.

"For homeless women, addiction is so critically dangerous in the city right now and we really need to find a solution to this," Garvey said. "The more vulnerable they are, the more vulnerable they are to getting caught up in this issue."

Mayor Bob Chiarelli is developing an integrated drug strategy that will see community groups across the city come together.

Garvey wants Cornerstone to be part of that action group.

The Shepherd's Hope Outreach program has asked the city's housing program for about $300,000 to expand its program.


The money will help change its physical structure by segregating the women from the chronically mentally ill.

Funds would also go toward providing addiction services to these women, as well as training staff to properly deal with those with behavioural problems.

"We really want to improve the system so we can get them out of the system," said Garvey.

Bisiness Owners Take Train Pass

Slater and Albert streets will be so cramped in some spots with a north/south light rail line that city officials have asked some building owners if they'd be interested in housing passenger stations on their ground floors.

According to the city's request for proposals for the light rail line, there are locations on Albert and Slater where "it is difficult to accommodate the waiting area, the boarding area and the pedestrian sidewalk." The space is even more limited for bus stations, the RFP says.

So, city officials asked more than a dozen building owners and managers, where bus and rail stations are likely to be built, whether they would be interested in leasing ground floor space to the city for "a waiting area and possible concession uses."

There were no takers.

Rejean Chartrand, the city's director of economic development and strategic projects, said the offer was made on the remote chance that one of the owners would be able to or interested in doing so.

"We didn't have high expectations, but we offered it because we figured that the city would have an interest if there was any interest from the private sector guys," Chartrand explained.

Several business and property owners on Slater and Albert streets have been vocal in their opposition to having both buses and light rail on their streets. The unhappy businesspeople banded together last year to form a coalition to make their voices heard at City Hall.


All of which makes the need for the city -- and the consortia vying for the contract to build the system -- to make local building owners comfortable with the design.

Building owners and managers are looking for flexibility when it comes to the design of the bus or rail stations that will be built in front of their buildings. Some want them to incorporate architectural elements of the buildings themselves.

"There's a basic design that the station is supposed to have," one landlord told the Sun. "The difficulty we have is we don't want to have a cookie cutter and that's a general consensus of most of the landlords on these two streets."

Chartrand pointed out the city has had consultations with the owners and managers since well before the procurement process began. The owners were also able to meet with each of the three consortia vying for the contract to express their concerns and expectations.

Chartrand said the stations will have a "common element" and "theme" but "the look and feel we would try to match with the facade (of the building) as much as we could."

Grapevine Go Out of Business

Naturally I am sorry to see the Grapevine Company go out of business after 8 years of service, and I am equally sorry to give up my personal association with this company of which I am very proud. But I sincerely believe that there are advantages to municipal operation which are very compelling. Of course there must be proper management, but of this I have no worry, for Ottawa has never lacked for public spirited citizens possessing both integrity and ability."

1 April Fool's

Ten Digit Dialing Arrives in Ottawa 613 Area Code

The simple act of dialing a telephone number is becoming more complicated, as of today.

Ten-digit local dialing – which requires users to dial the area code before a local number – is now in place within the 613 area code, as well as in the 450, 514 and 819 area codes in Quebec and the 519 area in southwestern Ontario.

As of June 17, users who do not dial the 10 digits will hear a recorded message prompting them to dial the area code followed by the seven-digit local number. Their call will then proceed, but this message could disrupt communications such as fax or Internet transmissions.

The changeover means both consumers and businesses will have to re-program their telephones, dial-up Internet connections and alarm systems, adding the area code to the local number.

For business, here is a partial checklist of things to consider:
  • pre-programmed cell phone numbers and other wireless devices
  • fax machines
  • speed-dialing lists
  • dial-up Internet connections
  • telephone options such as call forwarding and call blocking
  • alarm and security systems
  • company databases and phone lists
Businesses are also advised to update work documents such as letterhead and business cards, invoices, brochures and catalogues as well as signage, vehicles, directory listings and websites. Adjustments should be made before the June 17 deadline.

Local 10-digit dialing has been introduced to meet the high demand for new telephone numbers. In the National Capital area, it will allow the same seven-digit phone number to be used in both the 613 and 819 area codes.

The telephone companies have set up a special website at to provide more information.

Garbage Business Smells Sweet

When Baseline Councillor Rick Chiarelli says the city has to pay more attention to trash collection in Ottawa, he knows what he's talking about.

After all, garbage collection is big business around here, and with the pending expansion of the Carp Road landfill site, it's only getting bigger.

"We have to be fair to the business sector," explains the councillor, who supports the proposed expansion and continuation of the Carp Road landfill, whose trademark bulge is quickly becoming a Kanata landmark.

"Because this a legitimate business that we need, and business owners have rights too."

Indeed, it may come as a surprise to some, but the business of dumping in Ottawa is booming. And according to lobby groups it's the private hauling companies – companies like the Tomlinson Group or Waste Management, which runs the Carp Road site – that benefit the most.

Ottawa has four major landfill sites – Carp Road, Trail Road, Navan Road, and Springhill Road. Three are owned and operated by private garbage hauling. Only Trail Road is operated municipally.

"The city's whole theme is 'If Carp closes tomorrow, what are we going to do with all this garbage?'" says John MacMillan, president of West Capital Aviation and one of the minds behind, a local landfill watchdog.

"But the problem right now is that the City of Ottawa gets an artificially low price of $38 per tonne to dump at Carp," continues Mr. MacMillan, who admits his bias – he lives close to the Carp dump and wants to see it closed. "This is a huge disincentive for waste diversion and new technology efforts."

Even the issue of inflated population growth figures – the bane of some local developers hit with thousands of dollars in inflated infrastructure fees – have played into the city's decision to keep dumping at Carp, say observers.

The Centre for Spatial Economics, which produced the data for the city's current official plan, has already released updated projections predicting a smaller 2015 population of 979,000, compared to current official city estimates of over 1.1 million.

Observers like Alex Munter say the city is using these inflated numbers to justify expanding the Carp dump, when in reality no such growth exists.

"The city knows the numbers in its official plan are just plain wrong – but refuses to fix them," says Mr. Munter. "The promoters of an expanded Carp landfill are being handed a free pass by the city's own numbers that inflate Ottawa's projected population by over 120,000 people."

Dumping, or tipping, fees vary wildly from facility to facility, but for comparison's sake, dumping fees at the city's own landfill on Trail Road equate to $73 per tonne across the board. That is, for residential, commercial, and even hazardous waste.

That's almost double the price of what Waste Management charges the city to dump at Carp. And according to Mr. MacMillan, it's not by accident – that same low price, he says, is the only thing keeping Waste Management's Carp dump operation in business.

Waste Management officials declined comment on the matter.

"The low price means the city has no motivation to change, because they're getting a good deal," he says, adding that other cities in Canada, like Halifax, set their landfill dumping rates artificially high (Halifax sits at around $115 per tonne) to promote diversion and renewable technologies like plasma waste conversion. The technology incinerates garbage while creating energy for electricity.

But Coun. Chiarelli says Mr. MacMillan's allegations are nonsense. "These things generally come from people who want to shut down the dump," he says. "Waste Management is a private sector company and the element of city trash that goes to the Carp dump was negotiated on the open market. And prices will vary, depending on a whole range of things.

"No matter which alternative we pick, it's going to cost more," he says. "Traditional incineration costs three times the price, after selling the emissions for power.

"But even if we move at lightning speed, we won't see a full-scale alternative till the other side of five years," he continues. "And that means we need to find a place to put the garbage, unless, of course, people want to keep it at home."

Outaouais Housing Plan in Quebec Raises Alarms

The Quebec Ministry of Natural Resources is investigating reports today that a developer has begun a 60-lot housing development near a wetland south of Lac St-Pierre in Val-des-Monts, without provincial approval.

Some Val-des-Monts residents say too much cottage country north of Ottawa is being cleared for permanent houses without municipal or provincial government permits and with no input from residents.

Ministry spokesman Michel Bergeron said officials from the Quebec government will examine the site within the next few days to determine how close the houses would be to fish habitat. He said the ministry became concerned about the housing development after it rejected an application from developers Bernard and Richard Marenger to blow up a beaver dam and drain the wetland.

The developers face a maximum possible $300,000 fine if they damage fish habitat, Mr. Bergeron said. He said they are clearing roads and lot sites, even though they have no municipal permits to develop the 28 hectares of mixed forest, south of Lac St-Pierre off Highway 307, north of Gatineau.

"We have been unable to contact municipal officials about this," Mr. Bergeron said. He said Mayor Marc Carriere, who also is warden of the MRC des Collines and a Quebec public servant, suddenly doesn't want to answer questions about how this could happen," Mr. Bergeron said. "He has simply disappeared."

Workers continued to clear the forest yesterday, even though Mr. Carriere told Chemin Marecage resident Tammy Hogan on Tuesday that he ordered the developer to stop work.

Ms. Hogan said Val-des-Monts did nothing to stop the work during the past month, even though municipal officials knew the property was zoned for housing, but lacked other permits.

Residents don't necessarily object to the development, but they are concerned that the municipality hasn't consulted them about how it will be done. Ms. Hogan said 300 more houses and a golf course are planned near Lac St-Pierre, and some residents are concerned the development will mean heavy traffic near an elementary school on Highway 307.

She said that project, and others near Lac Bonin and Lac McGregor, could go ahead without public input because the municipality is keen to fill the demand from city people for permanent lakeside homes and sees no need to consult residents.

The Citizen was unable to contact the mayor at his office in Val-des-Monts, at the MRC des Collines in Chelsea, or at his provincial government office in Gatineau.

"We have asked for months whether the developer had submitted a proposal and were told each time he had not," Ms. Hogan said.

"We were told they were good guys, but they were cutting trees without a permit," said Ms. Hogan.

"Municipal officials told me nobody in the community knows about the development because they eliminated public consultation seven years ago, when they found people in the municipality were stalling development."

She said municipal workers told her they can't talk to her about the project and all questions must go through the mayor.

"A few people in the Quebec government have explained to me this is the flavour of Val-des-Monts because the mayor roughshods his way through developments."

Ms. Hogan said the municipality's planning document, City Living, shows the municipality wants more housing in its undeveloped sections. The document is "temporarily unavailable" on the municipal website,

Pierre Ricard, director of Quebec's Ministry of Municipal Affairs in the Outaouais, said the province requires municipalities to consult the public when a developer applies for a zoning change, but no public consultation is required for planning details.

Taking Out the Trash

There's plenty of stink over plans to expand a west-end Ottawa dump, but we have yet to hear a viable option for what to do with the tonnes of garbage that we collectively drag to the ends of our driveways every day.

Residents closest to the Carp Rd. landfill have trained their sights on Waste Management, the private-sector company that operates the dump just a couple of hundred metres off the westbound Queensway.

They would be better advised to start demanding answers from members of Ottawa City Council, who seem to have found their voices on the garbage issue only now, with a municipal election a scant eight months away.

Waste Management is doing exactly as it has been asked to do by the city -- taking in and processing roughly 1,000 tonnes of garbage daily at its Carp site.

Could the company build and operate an incinerator to destroy some of the garbage? Of course it could.

But the city would first have to build that option into its garbage disposal plans. And so far, Waste Management officials told members of a Sun editorial board yesterday, the city's policy calls for "land-based facilities only" -- what the rest of us would call dumps.

Opponents of the Carp landfill point to an incinerator in Brampton as the model to follow, but Mike Walters, a senior official at Waste Management, noted the cost of processing garbage through the 18-year-old plant is $105 per tonne -- roughly three times the tipping fee the city of Ottawa pays to use the Carp site. Hard-pressed ratepayers aren't likely to embrace a solution that is going to cost them even more on their property tax bills.

We need the mayor and councillors to show leadership on the garbage disposal issue and we also need ordinary citizens to play a role. Far too much of what we should be recycling and composting is still going out with the trash.

But until we're doing a much better job of cutting back what we toss away, properly run landfills will remain an important part of the total solution.

And another thing ...

There's a glimmer of hope that pro football will return to Ottawa this summer. Edmonton real estate executive Bruce Urban will be in the national capital next week to check out the franchise, and tells the Sun's Barre Campbell he's convinced he can make it work.

"We'll have to turn it around fan-by-fan," says Urban. We'll be keeping our fingers crossed.

Spreading the Garbage Gospel

There's an almost evangelical aura surrounding Mike Walters when he talks garbage.

As he speaks, he becomes increasingly animated, obviously excited about the topic, polished in his delivery.

Tanned, with his French-cuffed, crisp white shirt open at the neck, Walters -- the senior district manager of landfills with Waste Management -- talks in feverish and fast tones when speaking about all things garbage.

It's almost hard to believe all he's talking about is trash.

That's everything from the stuff you throw out, to the stuff you shouldn't be throwing out, like recyclables and compostable materials.

As excited as he gets, his problem is that in the final analysis, it's still garbage and it seems no one wants it in their backyard, in their neighbour's backyard, or anywhere near their neighbourhood.

Faced with opposition to expanding its landfill at Carp Rd. which refuses to go away, Waste Management is taking its dog and pony show on the road, putting a positive spin on their plans to enlarge the landfill.

Four senior employees with Waste Management met yesterday with members of the Sun's editorial board.

With politicians at both the provincial and municipal levels dithering, with neither a real vision or some solid leadership showing the way, Waste Management is left to its own devices to put a positive spin on the expansion of the Carp Rd. dump.

Er, make that the Carp Rd. landfill.

"It's not a dump," one of the suits says.

Dump. Landfill.

You say po-tay-toes, I say po-ta-toes.

To be clear, Waste Management is in the business of making money. And they do that through hauling, landfilling and recycling garbage in cities across the country.

So they clearly have a vested interest in people's acceptance of the lowly landfill.

It's a lot easier to do their job if they don't have the public working against them; if they don't have residents ranting and raving about living next to a landfill; if they can work in partnership with the different levels of government they must work with.

That's why they meet with members of the media, that's why they're involved in public education, why they even go so far as to spread their message of good waste management in the school system.

And it's part of the reason that when they're in front of Ottawa city council, and politicians like Goulbourn Coun. Janet Stavinga decide it's appropriate to badmouth them publicly, they do their best to just sit there, to grin and bear it as best they can.

"It's all part of the process," one says.

"It's an election year," says another in explaining their silence.

Playing politics is clearly part of what they do.

So they don't fight back -- publicly, at least -- when their reputation is besmirched.

And they certainly don't go on the attack, as they could.

Sure, they hold their ground.

(Okay, they did diss some CUPE members who attended a public meeting, suggesting they were mouthpieces for mayoral candidate Alex Munter, but that's as nasty as they got.) Truth is, and they know it and Ottawa city council knows it, the garbage has to go somewhere.

Just what would happen if they threw their hands up in disgust, and said fine, you don't want the landfill site, we won't take your garbage.

What then? Here's the thing.

Waste Management, and we can only presume companies like them, know that Ottawa city councillors haven't done nearly as much as they should have in working to solve the ongoing and mounting garbage crisis.

They don't say that, not exactly, but it's relatively easy to read between the well-rehearsed lines.

"Ottawa has a strong integrated waste management plan," several officials from Waste Management say, almost in unison at one point during the meeting, and several times throughout.

Problem is, of course, that while the strategy is a good one, it's not being implemented as quickly or as well as it should be.

No doubt about it.

If it's a campaign between government and Waste Management, score one for WM.

A Whack at MPAC

We've known for years that there was something seriously flawed about the property assessment system in Ontario.

We have complained often about a bureaucracy that was heavy-handed and adversarial and just plain unfair to taxpayers -- here in Ottawa and across the province.

But until yesterday even we didn't realize just how screwed up the system is and how badly it needs not just a tune up but a complete overhaul.

Appealing a property assessment in Ontario is a "David versus Goliath" battle against a byzantine, self-important Crown corporation that's been thwarting frustrated taxpayers for years, says the province's ombudsman.

Andre Marin's scathing report on the Municipal Property Assessment Corp. describes the property assessor as an elitist operation with a "superiority complex" and "questionable practices" that result in thousands of incorrect evaluations each year.

Wow. And we thought that we'd been tough on these guys.

The key part of the problem is that it's almost impossible to win a case against these assessment police, who have a bank of data to back them up and seem to consider property owners as adversaries to be defeated at any cost.

Disagree with them at your peril but then the onus will be on you to prove them wrong. And do it before a deadline that they set or you're out of luck.

"This is not a match-up, it's a slaughter -- and it's happening in tens of thousands of cases every year," Marin said in releasing his report.

He got the attention of Finance Minister Dwight Duncan, who is promising taxpayers an immediate extension in this year's appeal process and demanding MPAC develop an agenda to reform the system.

But that's the easy part. Dealing with a Crown agency that has been used to getting its own way for so many years is going to require the government to stand its ground and demand fairness for taxpayers. This is not a time for vague promises.

Marin has shown us where the system is broken. Let's fix it.

And another thing ...

Pamela Anderson is the latest in a string of celebrities wishing to meet with PM Stephen Harper to discuss the seal hunt.

While it may be a more tempting offer than a tete-a-tete with Brigitte Bardot or Paul McCartney and his wife, we doubt even Pammie will break through Harper's no-celebrity policy.