Friday, December 12, 2008
Below is a Financial Post article regarding the decision of the Bank’s to not pass on the full 75 bps rate cut. Specifically:
“In normal times, financial institutions do better when the central bank lowers the cost of funds, happily passing on cheaper loan rates to consumers to encourage them to borrow more. But when the official rate starts getting closer to zero, the dynamics start to change, as the prime rate that banks charge customers is pushed nearer to their own cost of funds.”
Simply put, we’re in unchartered territory. The BOC rate is at a 50 year low. There’s little data available to see what Bank’s have done in the past under these circumstances. So while many economists suggest a further 50 bps rate cut is going to happen January 20th, there are absolutely no guarantees the Banks will follow. We’re getting to the point where further BOC rate cuts may not have much of an impact in terms of economic stimulus.
Bay Street changes rules of rates game
Eoin Callan and Gary Marr, Financial Post Published: Tuesday, December 09, 2008
Canadian bank executives say the cost of funding in international markets remains extraordinarily high.
Bay Street's profit margins are starting to come under pressure as official interest rates creep closer to zero, prompting retail banks to change the rules of the game so customers pay more.
While the Bank of Canada on Tuesday cut interest rates to the lowest level since the 1950s, the country's five big banks indicated they would no longer march in lock step with the central bank. Instead, Bay Street is keeping the cost of borrowing for consumers more elevated in a bid to protect corporate earnings, passing on only part of the rate cut to customers.
While the decision of Bay Street to pocket part of the Bank of Canada rate cut is seen as good for shareholders and bad for customers, there is less certainty about how it will impact wider demand, partly because there are few historical precedents.
"We just don't have much experience with this," said an official at the Federal Reserve who has studied how financial institutions behave when central banks cut rates close to zero.
The central banker said data were limited but suggests retail banks remain willing to lend even when official rates fall near zero, as they tend to find ways to protect profit margins on loans.
In normal times, financial institutions do better when the central bank lowers the cost of funds, happily passing on cheaper loan rates to consumers to encourage them to borrow more. But when the official rate starts getting closer to zero, the dynamics start to change, as the prime rate that banks charge customers is pushed nearer to their own cost of funds.
This was key to Tuesday's decision by RBC, TD, Scotiabank, BMO and CIBC to cut their prime rate by 50 basis points instead of the full Bank of Canada cut of 75 basis points, according to people in the industry.
Joan Dal Bianco, vice-president of real estate-secured lending with TD Bank, said it would have left the bank without a profit if the full rate cut had been passed on to customers with variable products tied to prime.
"We are still trying to earn something on this stuff. This has been quite the roller-coaster ride and it has not been too hot on the mortgage front. We just can't take on the whole 75-point cut," Ms. Dal Bianco said.
Nancy Hughes-Anthony, head of the Canadian Bankers Association, acknowledged the decision to break step with the Bank of Canada created a public-relations challenge for Bay Street.
But she said: "The banks are still borrowing in a very volatile marketplace. The Bank of Canada rate is only one component of their cost of funding, and while the cost of borrowing in international markets has come down a bit, it is still higher than before the crisis."
John Aiken, an analyst at Dundee Securities, said banks were "starting to see margin compression" as the central bank cut rates to 1.5% from 2.25%, while banks reduced their prime lending rate to 3.5% from 4%.
"The new loans that are being put in the books are arguably at a less profitable rate," he said.
Vince Gaetano, a vice-president with Monster Mortgage, said he expects pressure will start to mount on the banks in the coming weeks to reduce prime further.
"That's what happened the last time they tried to resist rate cuts," he said.
This willingness to pass on rate cuts is critical to determining the ability of the Bank of Canada to stimulate the economy in the midst of a downturn.
The central bank's own research shows "it is the real rate of interest that is most relevant" to the purchasing decisions of households, and that it can "influence demand only to the extent that adjustments to the [official] interest rate feed through to the real interest rate.
Tuesday, December 9, 2008
As discussed in previous articles, when thinking of building you must first consider the rules of the game. All local governments use the BC Building Code but each has it's own set of Zoning and Building Bylaw regulations. A quick count of the jurisdictions from Osoyoos to Vernon would be:
1 - Building Code
12 - Building Bylaws and
over 30 Zoning Bylaws (many Regional Districts have multiple zoning areas which can have different restrictions per zone use and different definitions)
I came across an article in Fine Homebuilding to expresses the grief many designers and builders face in the valley. Although it's American based it touches on a number of areas that I believe need to be cleaned up to smooth the building process and foster sustainable development here in the valley.
Why I hate zoning regulations
I hate American zoning regulations because they make it illegal for me to work next door to where I live. They also limit what I can design as an architect, how it looks and where it can go. And the problem is hardly limited to suburban Washington, D.C., where I work. All over the country, the patchwork of regulations that has resulted from decades of amendments and overlays is doing more harm than good. Zoning regulations that began in response to health and safety issues during the Industrial Revolution have become a catchall for every sort of specialized concern from traffic management to aesthetic conformity.
Sprawl wastes land and energy
I don’t like what zoning regulations are doing to our land and to our environment. As more and more Americans have pursued the dream of house, yard and car, our communities have spread out, consuming more and more land and requiring more and more roads. No single word regarding land use terrifies the general populace more than “density” (although “traffic” comes in a close second). If density is bad, the argument goes, then more density is worse. Although the argument fails to explain the fear of density, it seems to stem from our midcentury abandonment of the American city.
The opposite of density, however, is sprawl: a smaller number of houses consuming more land, demanding more roads and producing more traffic traveling over greater distances. Perhaps if commuters understood that the hour they spend in the car going to and from work every day is the equivalent of spending six workweeks in their cars every year, they would rethink the joys of sprawl.
By simply using zoning regulations to increase density (decreasing lot size per house), we could shorten commuting distances, create less pollution and consume less land and less energy. While virtually every land planner knows this to be true, the political nature of the zoning process makes it tough to accomplish. Too often, zoning decisions result from input by remarkably vocal and frequently unsophisticated developers, politicians and landowners. Consequently, sprawl goes unchecked, and every year, more land is given over to a landscape littered with houses and roads.
Zoning segregates society
I don’t like what our zoning regulations do to society. In equalizing lot size in any given residential zone, zoning regulations determine the size of the house to be built, its cost and the owners’ income, segregating our society in the process. Our system essentially requires aging couples to leave the community in which they have raised their children in order to downsize their housing as their retirement approaches.
I don’t like what zoning does to our days and to our families. I don’t like the fact that we must leave our homes to go to work. With the number of two-worker families on the rise, the result is less parental involvement in children’s lives and communities empty of adults during the day.
By separating living and working through zoning regulations, we go entirely against the current trend of telecommuting and home offices. Even zoning laws permitting home offices severely limit the number of employees allowed in the office. Again, it’s all about traffic. But does a small office of four people generate more traffic than an active family driving to soccer practices and Girl Scout meetings, or even several teenagers with driving privileges? Furthermore, employees who are commuting to home offices likely are cross-town or reverse commuting, therefore reducing the burden on busy in-and-out commuter routes.
Many jurisdictions now are struggling to find a way to deal with home-office issues, and the answer is not to develop Byzantine restrictions on trips per day or number of deliveries allowed. The solution is to allow more and restrict less. We are not talking about tanneries here, and the general population (including many of my clients) is going to work at home anyway. It’s a movement. It’s not going away, and patchwork zoning regulations will have no effect. While we’re at it, why can’t we create communities that include single people, childless couples or retirees by allowing for a diversity of house sizes through the creation of smaller lots or accessory buildings on existing lots?
Many regulations are poorly written
Poorly conceived or written regulations often have unintended results. In one local jurisdiction, an attempt to limit accessorybuilding sites ended up prohibiting swimming pools. By increasing setbacks for buildings over a certain length, the zoning regulation inadvertently snared swimming pools in the category of accessory buildings. With a single inept move, thousands of single-family lots in an affluent community effectively were prevented from having a swimming pool. When this problem was brought to the attention of the local zoning officials, they replied that it would take county and council approval to revise the unintentional flaw.
In another imprecise zoning regulation, measuring building height to a midpoint between the eave and the ridge would perversely allow a 70-ft. tall pyramid in a zone with 35-ft. height limits.
As communities seek more and more involvement in their planning and design issues, zoning laws are being overlaid with attempts to limit the bulk, the height or even the design of the new structures that are being built. Ironically, many of these new zoning regulations are written in a way that would have prevented the construction of many of the much-admired historic houses that already exist in the same community.
I’d like to see current zoning regulations completely replaced with very general restrictions that are flexible enough to allow for a variety of solutions to any program and site. Limit the bulk by relating building area to lot size (as most commercial zones do), not by arcane formulas for number of stories, measuring points and so on. Limit height with a simple overall dimension, not with averages. Simply put (and it should be simple), let the lot size determine the house size, and let the house size determine the program (whether there can be an apartment or a home office in the building, for instance).
So what's the answer?
It’s perfectly appropriate for communities to want to control growth and protect the environment, but the current trend of tightening controls through band-aid legislation is the wrong way to go. Instead, we need to overhaul the entire system. We need to examine what kinds of communities we really want, which means acknowledging who we really are.
We are a people of great ethnic, economic, age and cultural diversity. We need to build new communities that acknowledge this fact, and we need to transform the old ones as well. We need neighborhoods that create a real sense of community by encouraging walking or biking over driving, by allowing for a mix of living and working situations, by integrating diverse incomes and age groups, and by allowing for a richer range of architectural expression.
Every year, millions of Americans travel to Colonial Williamsburg in Virginia and to other similar places, wishing for a taste of what life was like in colonial times. The lively mixed-use streetscape where the blacksmith’s shop sits next to an upscale house, the variety of building types (shops, houses, barns and sheds), and the engaging mix of formal and informal architecture appeal to us. And yet the most that we seem to learn from the place is what colors colonists painted their houses. We didn’t start out boring; it took a while to get there. Zoning regulations had a lot to do with it.
Thursday, November 20, 2008
Embarking on a large build project, even a good one, will be one of the most exciting and taxing experiences on your families emotional limits. I’ve seen many relationships seriously tested and some ended by a project that went too long or over budget. It is not to time to build when you are having issues in your marriage or under extreme pressures from work or family commitments.
To help avoid problems you first need to sit down with your spouse and discuss the budget and how you are going to make payments and how much liquid assets do you have available. If you are counting on investments such as your stocks (if you have any left) to carry you through then you may want talk that one through with a financial advisor. Having a good relationship with your lender and thoroughly understanding your borrowing limits and what their expectations are for the project will also help you avoid many sleepless nights.
Some other items to review to reduce your stress levels and whether you should run your own project are:
Do you and your spouse make a good team or is there conflict when a decision needs to be made.
Who should take the lead, you are your spouse. Stats show that 75% of renovation decisions are by females.
Are you planning to live in the house during your reno (remember the divorce dust syndrome). Will you need to live with your in-laws?
Do you have flexibility in work schedule to run your project.
Do you have enough construction knowledge to run the show and make critical decisions.
Are you good working with others and giving directions.
Are you a good at problem solving and are organized.
Can you hold your tongue in a heated discussion with the builder, trades or inspector.
Can you make more money at your job then what you could taking time off to run your job?
Next step – Getting the right people on the bus.
Wednesday, August 6, 2008
Some of it's advantages:
• 100% asphalt-free and won’t break down over time like many other products.
• Non-toxic and non-carcinogenic so won’t leach chemicals into the ground or ground water, making it an environmentally friendly choice.
• The membrane resists the attack of fungus, algae and bacteria and maintains its superior performance properties when exposed to chemicals and gases found in the soil.
• The product has a lifetime limited guarantee.
As far as the National Building Code is concerned, Rub-R-Wall meets the intent of Part 5, Section 5.8.2 – Protection from Moisture in the Ground and Part 9, Section 9.13 – Dampproofing, Waterproofing and Soil Gas Control, a copy of which is included with this letter. (Contact your local building authority for further review)
Rub-R-Wall is an excellent product and prevents the passage of water under hydrostatic, dynamic or static pressure and its uses include foundation walls, parking garage decks and ramps, plazas, podiums and pedestrian concourses, elevator shafts, tunnels and bridge decks.
Rub-R-Wall Waterproofing of BC Inc. is also the BC dealer for other Advanced Coatings products including air/vapour barrier, drainage membranes, spray insulation and other products. You can visit their website at www.rubrwallbc.com for further details.
For information or if you would like to discuss using Rub-R-Wall for your projects, please contact:
Bruce H. Gordon
Waterproofing of BC Inc.
Friday, August 1, 2008
A few tips to consider when planning for a mobile storage unit.
• Decide what contents you want to place in the unit in order to determine which size you should order:
o We typically recommend a 10ft for 1 bedroom apartments or suites and a 20ft for 2-3 bedroom dwellings.
o When in doubt, go bigger - too much space is better than not enough!
• Determine where you wish to place the unit:
o Pick a location as close as possible to the entrance you will use to load the unit in order to save time and work
o Decide which way you want the doors of the storage unit facing
o It is ALWAYS best to place the unit on your own property
o Units can be placed for short periods of time at the side of City Roads, but a permit must be obtained from the municipality
• Ensure that the delivery truck will have enough room to deliver your storage unit:
o 10ft unit (10’L x 8’W x 8.5’H) requires 10’W by 50’L drop area
o 20ft unit (20’L x 8’W x 8.5’H) requires 10’W by 60’L drop area
o The width of residential streets may be included in above drop areas
• When packing a unit:
o Place heavy contents at the bottom, lighter items on top
o Put items you won’t need at the back of the unit, keep more useful items near the doors
o If possible, leave an aisle down the centre or side of the unit to allow access to most items if you will not be moving the loaded unit
• Once the unit is loaded:
o Place a good lock inside the steel lockbox on the doors
o Keep unit doors shut unless accessing contents
o Unit can be moved off-site for storage if required (extra delivery and storage fees will apply)
Secure-Rite Mobile Storage provides a range of secure and weatherproof Mobile Storage units. Our new or used containers are available for purchase, lease or rent at competitive prices, and we can deliver anywhere...anytime. When you need to protect your valuables and household items from the risk of damage during a renovation or restoration project, mobile storage is the solution! By having storage on-site, you have all the protection you require with the advantage of instant access to anything you might need. Secure-Rite is committed to providing every one of our customers with clean, well-maintained, esthetically-pleasing storage units. Our mobile containers are a light, neutral colour that blends well into neighbourhood locations and reflects most of the heat from the Okanagan sun.
Our rental rates are very cost-effective:
• 10ft storage unit $110/mth + GST + PST (one month minimum)
• 20ft storage unit $135/mth + GST + PST (one month minimum)
• Empty delivery and pickup: $90 each + GST
• Loaded delivery and pickup: $120 each + GST
Wednesday, July 30, 2008
Selecting the right hardwood floor is sometimes a battle between color and performance. Quite often we do not give enough consideration towards how you need your floor to perform for example in a powder room or laundry room tile or lino seems to make the most sense but in the open floor plan which is the majority of today's home design,breaking up the flow of color can be a conundrum.
For the most part hardwood placed in a small powder room on the main floor seems to be the popular choice. Also another performance consideration is the family pet or young children with heavy traffic use. To counter effect the inevitable we often add distressing to the floor prior to stain and finish giving the floor character along with our wide plank and random width.
Humidity levels also play a key factor when selecting flooring. Having a controlled humidity level is important in the Okanagan and solid hardwood should not be placed below grade and only certain species are suitable for radiant heated floors.
Most consumers are unaware that there is a transformation in attitude taking place with the manufacturers in that green certification and registered wood acquisition is becoming more and more main stream. Such certifications are FSC standing for Forest Stewardship Council or certifications that require an audited chain of custody certificate. These wood products are managed with consideration to sustainability and fair trade practices. There are finishes that have been available for many decades in Europe used on toys and furniture alike that are very environmentally friendly such as our Osmo hardwax oil. These oils are derived from a plant base and have been used in commercial applications such as airports and train terminals. The oil finishes are more flexible as opposed to a standard al/ox polyurethane finish which is hard and brittle. Oils penetrate the surface of the wood as opposed to placing a plastic film over the surface. The advantage of oil is the grain of the wood becomes more prevalent and a deeper more natural look is achieved. The oils are considered environmentally friendly by using a sustainable plant as a base and the VOC content is almost 100% free.
VOC 's are volatile organic compounds these are the nasties that off gas and are placed in a finish to make it flow onto the surface smoothly and decrease the drying time. Green products are available if we choose to use them and in searching for the products we found ourselves looking towards the European market place. Some 3 short years ago no one in North America had heard of an oiled floor. Now after attending the Surfaces Flooring Show almost all manufacturers have some form or another of these products to offer.
Koeda Forest Products have been manufacturing custom wide plank random width hardwood floors for the past 3 years using environmentally friendly finishes right here in Kelowna and a portfolio can be viewed at www.koedawood.com
Friday, July 18, 2008
OTTAWA – The Bank of Canada today announced that it is maintaining its target for the overnight rate at 3 per cent. The operating band for the overnight rate is unchanged, and the Bank Rate remains at 3 1/4 per cent.
Three major developments are affecting the Canadian economy: the protracted weakness in the U.S. economy; ongoing turbulence in global financial markets; and sharp increases in many commodity prices. The first two developments are evolving roughly in line with expectations in the April Monetary Policy Report. However, commodity prices are continuing to outstrip earlier expectations. This has led to further increases in Canada's terms of trade and real national income, and has altered the outlook for global and domestic inflation.
Although Canadian economic growth in the first quarter was weaker than expected, final domestic demand continues to expand at a solid pace. The economy is judged to have moved into slight excess supply in the second quarter of this year; excess supply is expected to increase over the balance of the year. High terms of trade, accommodative monetary policy, and a gradual recovery in the U.S. economy are expected to generate above-potential growth starting early next year, bringing the economy back to full capacity around mid-2010. Canadian GDP is projected to grow by 1.0 per cent in 2008, 2.3 per cent in 2009, and 3.3 per cent in 2010.
Total CPI inflation over the next year is expected to be much higher than projected at the time of the April Report. Assuming energy prices follow current futures prices over the projection period, total CPI inflation is projected to rise temporarily above 4 per cent, peaking in the first quarter of 2009. As energy prices stabilize and with medium-term inflation expectations remaining well anchored, total inflation is then projected to converge to the core rate of inflation at the 2 per cent target in the second half of 2009. Core inflation is projected to remain well contained and broadly in line with earlier expectations, averaging close to 1.5 per cent through the third quarter of this year and then rising to 2 per cent in the second half of 2009.
The three major developments affecting the Canadian economy pose significant upside and downside risks to the Bank's base-case projection. Weighing the implications of these, the Bank views the risks to its base-case projection for inflation as balanced.
Against this backdrop, the Bank judges that the current level of the target for the overnight rate remains appropriate. The Bank will continue to monitor carefully the evolution of risks, together with economic and financial developments in the Canadian and global economies, and set monetary policy consistent with achieving the inflation target over the medium term.
The Bank's detailed projection for the economy and inflation, and its assessment of risks to the projection, will be published in the Monetary Policy Report Update on 17 July 2008.
The Bank of Canada's next scheduled date for announcing the overnight rate target is 3 September 2008.
"Your Mtg Gal leading the way to a better mortgage"
Accredited Mortgage Professional (AMP)
Mortgage Intelligence Inc.
Fax (250) 712-0209
July 9, 2008 at 4:36 PM EDT
OTTAWA — The federal government says it will no longer guarantee 40-year mortgages, one of a handful of measures aimed at guarding against a U.S.-style housing bubble.
The Finance Department said Wednesday in a news release that the government will guarantee no mortgages with durations longer than 35 years. The government also will demand a minimum down payment equal to 5 per cent of the value of the home.
"Today's announcement marks a responsible and measured approach by the government to ensure Canada's housing market remains strong and to reduce the risk of a U.S.-style housing bubble developing in Canada," the Finance Department said.
The government hastened to emphasize that Canada's housing and mortgage markets were performing much better than in the United States.
Canadian housing prices are in line with economic factors such as low interest rates, rising incomes and a growing population and the demand for residential housing remains buoyant at more than 200,000 housing starts a year, it said.
The percentage of bank mortgages in arrears is also stable at 0.27 per cent, the lowest levels experienced since 1990 and well below the highs of 0.65 per cent in 1992 and 1997.
"The historically prudent and cautious approach taken by Canadian financial institutions to mortgage lending, combined with a sound supervisory regime, has allowed Canada to maintain strong and secure housing and mortgage markets," it said.
It nonetheless noted "accelerated financial innovation" in the mortgage markets since the fall of 2006, for example, allowing loans up to 100 per cent of the value of the house and increasing amortization periods to 40 years from 25 years.
The government will now require a consistent credit score for mortgages it backs, and a minimum level of loan documentation standards to ensure evidence of the reasonableness of property values and the borrowers' income.
In addition, government guarantees will not be allowed for high-ratio mortgages where amortization is not required in the first few years – e.g., mortgages that begin with interest-only payments.
Finally, it will set a maximum of 45 per cent on a borrower's debt-service ratio – the proportion of gross income that is spent on debt service and housing-related fixed or essential payments.