Home building moved into a higher gear in Metro Vancouver last month as the number of houses started surged to 1,402 units, twice the number posted a year earlier, Canada Mortgage and Housing Corp. said Monday. Starts in the first two months of the year were 77-per-cent higher than in the same period last year.

But the federal housing agency cautioned against getting too excited by February's homebuilding exuberance.

"The first few months of 2009 saw some of the lowest levels of homebuilding on record, so year-over-year comparisons are large," CMHC said.

"Home starts this year are forecast to be higher than 2009 but below the five-year average."

A few large multi-unit residential projects in Vancouver provided the biggest boost to February's starts, CMHC said.

Nationally, home building rose by a more-than-expected 6.1 per cent to 196,700 units in February, CMHC said.

That was up from 185,400 units in January and above economists' forecasts of 190,000 units for February.

"The gain in February housing starts was concentrated in the multiple starts segment, particularly in Toronto," said CMHC's chief economist Bob Dugan.

Urban housing starts were up nine per cent from January to 179,100 units on a seasonally adjusted basis, with multiple units rising 19.1 per cent to 89,900 and single starts increasing 0.5 per cent to 89,200 units.

Ontario recorded a 28.6-per-cent gain in February, while Atlantic Canada rose 14.3 per cent, the Prairie region increased 10.8 per cent and B.C. was up eight per cent.

Quebec saw housing starts fall 14.1 per cent. Housing starts in rural areas totalled 17,600

units in February, down from 21,100 the previous month.

Ian Pollick, economics strategist at TD Securities, said February's gain shows "the new-homes market is slowly coming back to life and may finally be benefiting from the resurgence in overall housing market activity."

"However, we caution that the pace of advance will likely be hard-pressed to eke out similar gains later in the year, mainly as a result of enthusiastic buyers attempting to close transactions ahead of the regulatory [new mortgage rules] and [harmonized sales] tax changes coming into effect mid-2010," he said.

"As such, this report likely overstates the true strength of the recovery in new residential housing, though it is safe to say that housing still remains a bright spot in Canadian economic activity."

February housing starts in Vancouver continued to bounce back from lows reached in 2009, with the number of new units breaking ground doubling last year's tally, according to the Canada Mortgage and Housing Corporation on Monday.

"Of course, last February in 2009, we were still in the darkest point before anything

started turning around. So you have to keep in mind that when you see that increase, it's back up from there," said CMHC senior market analyst Robyn Adamache. "But we are back up to a decent level of housing starts."

The CMHC pinned the February boost in the Vancouver area specifically to a few large-scale multiple-unit residential projects, plus continued strength in the number of new, single-detached residential homes. As well, more than 800 apartment homes were started.

"The important thing about what's going on is that we are seeing a level of absorption with sales of new units," said Adamache. "Builders see that not only the resale market is back, but now there are [sales] in new units. It's giving them the confidence to start new

projects."

Elsewhere in B.C., the Abbotsford area saw 37 new home starts compared to 28 a year ago. The province as a whole recorded an eight-per-cent gain in home starts compared to a national average of 6.1 per cent.

Ontario recorded a 28-percent gain in February, while Atlantic Canada rose 14.3 per cent and the Prairie region increased 10.8 per cent.

Homebuilders in B.C. and Ontario are racing to put supply on the market before the harmonized sales tax kicks in on July 1, said economist Pascal Gauthier of TDEconomics.

Added pressure is coming from buyers concerned about tighter qualifying standards on mortgages, which take effect April 19, and higher borrowing costs expected in the second

half of the year.

But February's housing starts show that supply is finally firming up at the same time that demand is poised to ease, Gauthier said.

"Come the second half and into 2011, it's likely to be a friendlier environment for buyers," he said.

With new-home supply rising and resale listings following suit, "price growth is going to soften up a bit," Gauthier said.

"If you're a buyer, you should exercise patience and look at the fundamentals.

"The five-year rate isn't going to shoot up 100 basis points overnight."

Nationally, new home construction has now roared back 76 per cent from the recession-level cyclical low, said BMO Capital Markets economist Robert Kavcic.

Few expect the current level of housing starts to be maintained.

"In the second half of the year, we should observe a level of activity near the demographic needs of roughly 165,000," said National Bank economist Matthieu Arseneau.

VANCOUVER SUN

Sentiment among would-be homebuyers continues to improve in B.C., according to an annual RBC home ownership study released on Monday.

The study reported that 36 per cent of B.C. residents in a recent survey conducted by Ipsos Reid said they are likely to purchase a home in the next two years, up from 26 per cent last year.

B.C. residents outpaced respondents elsewhere in the country with plans to put down the largest average down payment

-- $92,676 -- citing good prices and low interest rates as motivators.

"What we are seeing in B.C. is cautious optimism, tempered by a healthy dose of reality," said Kevin Lutz, regional manager at RBC.

Tsur Somerville, a real estate expert at the University of B.C., welcomed the news, but added: "I tend to view 'Are you planning to buy something?' as not the most useful kind of information because, 'Am I planning to do something?' depends on what happens.

"I am a lot more interested in what happens in the economy than how many people are thinking about doing something."

"What it does do, [however], is track how people are perceiving the market, and it sounds like people are moving from, 'It's overpriced and the world is going to collapse,' to 'Oh, interest rates are very good and the world is not going to collapse.'

"It's another form of describing conditions that we already know from sales and price movements and what is going on with interest rates," said Somerville, who is director of the centre for urban economics and real estate at UBC's Sauder School of Business.

"I think if the Bank of Canada raises interest rates a whole bunch, then this survey becomes rather worthless," he cautioned.

According to the poll, respondents across the country who said they are "very likely" to purchase a home in the next two years rose to 10 per cent from seven per cent two years ago.

Respondents aged 18 to 24 were particularly enthusiastic, with those saying they were very likely to buy almost doubling to 15 per cent from eight per cent in 2009.

After the record-low interest rates, increased supply and stable prices seen at the end of 2008 and in the beginning of 2009, the real estate market in Canada has been strong during the past 12 months. The average resale home in Canada reached $337,410 in December 2009 -- up 19 per cent from a year earlier --and sales were up 72 per cent, according to Canada Mortgage and Housing Corporation.

The poll of 2,047 Canadian adults was conducted online by Ipsos Reid between Jan. 8 to 13, 2010 and is considered accurate to within 2.2 percentage points, 19 times out of 20.

With a file from Julie Fortier,

i have a buddy who figures he made about $100,000 in the housing market in the past two to three years.

that's not a bad take, but i question whether he really made that much money. no, i don't believe he's lying about what he paid for his house or what he sold it for. i just think he forgot to include a few factors -- the transaction costs associated with his move.

luckily, he's smart enough not to live in toronto, the only jurisdiction in Canada with two land transfer taxes -- one going to the municipality and the other to the province. But even without those extra charges, once you factor in real estate commissions, legal fees and other closing costs, as much as $35,000 of his profit will have been eaten away. so that leaves $65,000, you say. not really.

he made a decision to downsize. he bought his home for about $400,000 and realized about a 25% return in a very short period of time. impressive. But he also sold a previous home. if that first home was worth about $300,000 when he moved, based on a 25% increase in price, he still would be up $75,000 if he had just stayed put. the way i figure it, all this moving has cost him roughly $10,000. of course, there are other reasons for a move, such as a changing family situation, that cannot be helped and you have to bite the bullet.

But continuously selling and buying homes can lead to destruction of wealth over your lifetime.

on average, Canadians move about 4.5 to 5.5 times in their lifetime, according to the Canadian association of accredited Mortgage Professionals.

all that moving could easily wipe out $150,000 in extra costs.

so why do it? "it really depends on what you are accomplishing by the move," says Don lawby, chief executive of Century 21 Canada, pointing out if your company moves you far enough you can write off any costs they don't cover.

"sometimes, you move because of circumstances of life. a child may come along that you didn't plan on. somebody might die. You could have a health problem. there could be a divorce."

Yes, there are ways to make money by moving constantly, such as putting so-called "sweat" equity into a house, improving its value. i wish i were a fix-it guy. since there are no capital gains on a principal residence, this might be the only legal way to make money in this country without paying tax.

" You can make money [buying and selling houses] if you have lots of knowledge, but the average person doesn't. You can't pay the regular rate for a plumber, regular rate for an electrician and make money," says Mr. lawby.

Derek holt, an economist with the Bank of nova scotia, says if real estate commissions come down it would make moving more palatable. he estimates if the Canadian real Estate association's lock on home listings is broken, consumers would see a drop of about $15,000 in costs on each transaction.

the Competition Bureau has lodged a complaint with the Competition tribunal about CrEa's practices. no date has been set for the hearing as of yet.

"[Former U.s. Federal reserve chairman] alan Greenspan once made the comment that the costs of moving absorb 8% of your home equity and that's not far off the Canadian experience. it might be higher," says Mr. holt. "You don't want to do that too many times or you could blow a quarter or a third of your equity."

Despite the expense, Mr. holt said the no. 1 concern for most Canadians when they are moving is whether they can afford the carrying costs on their new home. in his own life, Mr. holt said he's trying to limit how many moves he makes.

"We moved three years ago and my next move is going to be feet first out the door," said Mr. holt. that's one move somebody else will be paying for.

DUSTY WALLET: always try to negotiate the commission rate with your real estate agent. if a buyer and seller are close to agreeing on a price, there is nothing that says the agents can't dip into their commission to bring the two par ties closer toge ther and close a deal. DW is also curious to know if consumers have found it easier to negotiate a lower commission now that the Competition Bureau has the real estate industry in its sights.

gmarr@nationalpost.com

"The outlook for housing starts in B.C. is similar to the national trend in terms of the forecast increase of housing construction," Carol Frketich, CMHC's regional economist for B.C., said in an interview.

"The difference is, we'll see a stronger rebound in housing starts. For B.C., we're forecasting a 37-per-cent increase. Nationally, it's about a 15-percent increase."

According to the report, the forecast for B.C. is for 22,050 starts this year, with a range between 20,200 and 24,500, and 26,200 starts in 2011.

That's up from 16,077 starts in 2009, but still below the 10-year average.

"B. C. saw a sharper downturn and we'll see a rebound of similar magnitude," Frketich said.

The demand for new home construction will benefit from an improved economy and labour market and lower interest rates, she said.

Nationally, rising housing starts are expected to put a lid on home prices this year after their 19-per-cent surge in 2009, CMHC said.

Canada-wide, between 152,000 and 189,300 housing starts are expected in 2010, up from 149,081 units last year.

Describing the current state of affairs as a sellers' market, CMHC said the relative lack of new listings for existing homes has pushed some of the demand into the new home market, which helps explain the forecast for higher housing starts activity in 2010.

But it added that it expects prices to remain stable in 2010 around the Multiple Listing Service average reached in January this year of $328,537, as the new housing stock brings balance back to the market.

As well, tighter requirements for mortgage lending recently imposed by Ottawa as fears of a housing bubble mounted "will help moderate housing activity as some potential buyers will have to save a larger down payment or consider a less expensive home," CMHC chief economist Bob Dugan said.

CMHC said the strong pace of existing sales over the last three quarters of 2009, a carry-over from the two previous quarters, will not be sustained as pent-up demand is exhausted and financing costs rise later in 2010.

It forecasts existing home sales will be in a range of 455,350 to 509,900 units in 2010.

In 2011, housing starts will total 156,400 to 205,600 units and prices will rise again modestly, with prices up modestly, the report said.

bmorton@vancouversun.com with a file from the Financial Post

Housing starts will rise in 2010, putting a lid on home prices this year following their 19-percent surge in 2009, the Canada Mortgage and Housing Corp. said Tuesday.

Between 152,000 to 189,300 housing starts are expected in 2010, up from 149,081 units last year, the national housing agency said.

Describing the current state of affairs as a sellers' market, CMHC said the relative lack of new listings for existing homes has pushed some of the demand into the new home market, "which helps explain the forecast for higher housing starts activity in 2010," CMHC said.

But it added that it expects prices to remain stable in 2010 around the Multiple Listing Service average reached in January this year of $328,537, as the new housing stock brings balance back to the market.

As well, tighter requirements for mortgage lending recently imposed by Ottawa as fears of a housing bubble mounted "will help moderate housing activity as some potential buyers will have to save a larger down payment or consider a less expensive home," said CMHC chief economist Bob Dugan.

CMHC said the strong pace of existing sales over the last three quarters of 2009, a carry-over from the two previous quarters, will not be sustained as pent-up demand is exhausted and financing costs rise later in 2010.

It forecasts existing home sales will be in a range of 455,350 to 509,900 units in 2010.

In 2011, housing starts will total 156,400 to 205,600 units and prices will rise again modestly, it said.

When veteran interior designer Robert Ledingham embarks on a project, he takes his inspiration not only from within the space of a building's walls, but also from what's beyond them.

Ledingham, who has provided interior-design services to local homeowners and builders and developers for four decades -- work that has generated more than 26 awards -- looks for much of that inspiration from nature: water, mountains and the flora and fauna of B.C.

"There is definitely a difference between the East Coast look and the West Coast," says Ledingham.

"In the West, people's homes reflect the indoor/outdoor relationships."

Easterners, he says, prefer a more formal living space than people on the West Coast.

"There's an organic look to home decor here ... people tend to decorate their homes casually elegant, so that it's a home where they feel they can put their feet up," says Ledingham, who owns Ledingham Design Consultants and has seen his work featured in many architectural design magazines and books, including Spectacular Homes of Western Canada.

It was Ledingham Sheila Tripp and her husband turned to when they returned to B.C. after a four-year California sojourn and decided their home on the West Vancouver waterfront was looking tired and dated.

"We rented out our home while living in California and when we returned, we realized our 20-year-old house really needed freshening up," says Tripp, who had seen Ledingham's work in a number of home and garden journals. She gave him a call, and the two met the next day.

"After a few meetings, he gave us suggestions and incorporated our vision into some designs."

Tripp loved many of the designer's suggestions, but there were some she rejected.

"Bob didn't pressure us to go with an idea we didn't like; instead, he had alternatives he presented to us," she says.

The interior designer -- the first Canadian to receive the International Interior Design Association Leadership Award, as a 2006 story on an honorary doctorate granted by his alma mater, the University of Manitoba, reports -- takes the necessary time to get to know prospective clients so that his recommendations will reflect their personalities, lifestyles, and wants and needs.

And he derives pleasure from helping clients like Tripp and her husband bring their vision to life.

"Mother Nature provided the Tripps with a stunning palette. I helped to bring that into their home," he says.

"There were many existing pieces of furniture, but soft furnishings had to be added to the living room and den," says Ledingham. "A variety of architectural modifications were suggested, as well as redesigning the outdated fireplace facades. A kitchen renovation was already in progress when we took the project on."

When asked if he's ever had to walk away from a project, he laughs and nods. He likens the relationship between an interior designer and client to that of a married couple: "it's very close and personal and often lasts for more than a year.

"When conflict arises, sometimes you both have to throw up your hands and say the best thing is to part ways," he says, noting that delays can be stressful, yet are unfortunately often unavoidable. "However, most interior designers try very hard to work through problems, but sometimes personalities conflict and it's best not to prolong it."

At Country Furniture, interior decorator Marlene Seguin of Vancouver is also in the business of helping people beautify their homes. "I like to help customers take their house and create a home," says Seguin.

She's often asked by clients to work alongside a contractor to help with layout. She may be called upon to do something as simple as accessorizing a room -- to decide what to place on a table or countertop -- or to design a room around an anchor piece.

"For example, a client had an antique sideboard inherited from their grandmother and they didn't know what furniture would look good with it," she says.

She says interior decorators and designers can offer clients a "new set of impartial eyes."

"When you walk into your house day in and day out, sometimes you can't see anything other than what you have, you can't picture any other way for the room or rooms to look," Seguin says. "I can help give a fresh perspective to a client's space and create ones that reflect the homeowner's personality.

"A home should almost scream who the person is who lives there."

With new mortgage rules, a new harmonized sales tax in some provinces and the possibility of higher interest rates set to kick in this summer, home buyers are on a tear that is likely to keep markets busy leading to this summer, according to the Re/Max Market Trends Report 2010 released Wednesday.

The report, which examined real estate trends in 16 markets across the country, found that unusually strong activity in January -- traditionally one of the quietest months of the year -- has led to a sharp decline in active listings in 81 per cent of markets surveyed. Too many buyers and not enough homes will probably be the problem, according to the report.

Markets experiencing the tightest inventory levels include Toronto (down 41 per cent), Kitchener-Waterloo (down 33 per cent), Ottawa (down 30 per cent), Victoria (down 30 per cent) and Metro Vancouver (down 27 per cent), which also had some of the highest year-over-year sales gains.

The highest year-over-year sales gains were reported in Metro Vancouver (152 per cent), Kelowna (121 per cent), Greater Toronto (87 per cent), Victoria (69 per cent), Hamilton-Burlington (58 per cent), London-St. Thomas (55 per cent) and Calgary (47 per cent), the report said.

However, those figures for Metro Vancouver represented a slowing in sales in January when compared to the overheated final quarter of 2009, Cameron Muir, chief economist for the B.C. Real Estate Association, said in an interview.

"If you look at the sales-to-active-listings ratio, which is the measure of hotness or coolness of the market, we saw that come down in January," Muir said.

Metro Vancouver's ratio of sales listings hit 26 per cent in January, meaning that sales for the month were the equivalent of 26 per cent of the total inventory available, which is almost within balanced market conditions, according to Canada Mortgage and Housing Corp. definitions.

During the last three months of 2009, sales equalled 31 to 33 per cent of homes available in inventory, which was seller's-market territory.

Muir said the last time Metro Vancouver's sales-to-active-listings ratio was as high as it was in the fourth quarter of 2009 was midway through 2006. January's year-over-year decrease in active listings was compared to a month that had a high number of houses on the market.

"But last month we saw sales edge lower, we see active listings edge a bit higher and new listings are fairly healthy in the marketplace," he said.

Western Canada dominated the list of centres with the greatest increases in price, with Victoria home prices jumping 25.5 per cent in January compared with the same month a year before. Kelowna jumped 22 per cent and Greater Vancouver rose 19.5 per cent. St. John's saw an increase of 23 per cent and Toronto rose 19 per cent.

depenner@vancouversun.com

British Columbia's commercial real estate market is starting to look more like a seller's market moving through 2010, with more capital available for investors, and investors willing to accept lower returns, according to one commercial realtor.

Avison Young this week released its 2009 year-end results, which saw commercial real estate transactions gather steam in the latter half of the year, particularly among retail offerings.

Avison Young counted 16 retail-property sales worth more than $5 million in the second half of 2009. The largest were the sale of Surrey's Grandview Corners for $182 million to RioCan REIT and the Canada Pension Plan, and the sale of a half-interest in Nanaimo's Woodgrove Centre for $103 million.

"I think it's going to be a very active market [in 2010]," said Bob Levine, a principal in Avison Young's Vancouver office.

"There's lots of [investment] money looking, and probably more vendors out there than there have been for a couple of years, because the perception is that [capitalization] rates are reasonably low."

A lower capitalization rate means that buyers are willing to pay higher prices and accept a lower rate of return. Capitalization rates at the start of 2010 are almost as low as they were at their lowest point in early 2008, Levine said.

Levine said the return of institutional and investment-trust capital to the market has helped drive demand for investment real estate.

The recovery of stock markets has bolstered the stock holdings of institutional investors, giving them more leeway to consider real estate investments, Levine said. Likewise, he added, real estate investment trusts have been able to raise new pools of capital.

Levine said banks have even been more willing to extend commercial mortgages, albeit with substantial down payment requirements. "I would say private capital has always been [in the market], but the institutional capital and public capital has come available because of the rebound in the stock market," he said.

Levine said he is untroubled by the shrinking capitalization rates, particularly in Vancouver, because there is still relatively little supply of unleashed commercial properties available for buyers to purchase.

In total, for sales of commercial property worth more than $5 million, Avison Young counted $1.36 billion worth of sales in B.C. in 2009, up from $1.27 billion in 2008.

depenner@vancouversun.com

I wrote in early January about the "bubble" economy in British Columbia, which, despite the Olympics-related building, still resulted in a massive collapse in the construction industry in tandem with the recession. Construction jobs contracted by 11.9 per cent in the province in 2009, as we were one of the last districts in Canada to feel the effects of the global economic meltdown.

Although January construction numbers are up to 198,600 jobs, it is below the 202,100 jobs from a year ago, and a far cry from the 220,800 jobs during the boom.

The good news is that new construction is on the rise in the province, with the seasonally adjusted annual rate of housing starts reaching 186,300 units in January, a 5.8-per-cent increase from December.

That's much better than the 149,081 housing units to begin 2009, but the construction starts have progressed steadily until now, according to the Canada Mortgage and Housing Corp. It's even better than the figure that economists from financial institutions had been predicting.

In cities, housing starts are up 4.4 per cent, and within those numbers the increase of multiple urban starts [like condos] also increased by 5.7 per cent. All of those numbers show a recovery from the recession, with confidence in the housing market improving, and home sales rising again.

But the victory may be short-lived, with experts predicting the bubble will pop when the harmonized sales tax kicks in on July 1.

Homebuyers will likely advance their demand for houses before the HST is implemented, meaning fewer purchases in late 2010 and early 2011.

This is forecast by the Canadian Real Estate Association itself, which says that not only the 12-per-cent HST, but also higher interest rates, which must inevitably rise after historically prolonged lows, will push real estate down in 2011.

B.C.'s housing resale market is forecast to jump 19.8 per cent for 2010, with average home prices going up by 4.2 per cent to $485,500. But the bulk of those sales will be before the HST and the Bank of Canada interest rate revisions.

Interest rate increases are likely to further dampen the housing market in 2011, with an expected decline of 7.1 per cent in the number of units sold. B.C.'s market is forecast to see the largest decline of 12.9 per cent to 88,800 units sold in 2011.

Even though the market is expected to fall in 2011, the prices of homes in B.C. are expected to decline only 1.8 per cent, meaning that investors will still be making a profit with the dip. That means there's no relief for homebuyers who were hoping the astronomical prices of an average home in Vancouver would go down.

The median sale value of a home in Vancouver in 2009 was $540,900, while median household income was $58,200. According to The Demographia International report which calculates home affordability in an index that divides the price of a home by household income, Vancouver is the most expensive city among 272 metropolitan markets in Canada, the U.S., the U.K., Australia, New Zealand and Ireland.

The "Median Multiple" gives Vancouver an index of 9.3 in affordability, much higher, for instance, than Kamloops, where the median family income is $67,434 while the price of a home is $257,242, giving a Median Multiple of 3.8.

Adrian MacNair is a Vancouver writer who also writes under his middle names, Raphael Alexander.

Almost everyone who has contemplated buying or selling a house has at least a nodding acquaintance with MLS, the Multiple Listing Service system of the Canadian Real Estate Association. Roughly 90 per cent of residential property transactions involve MLS to some degree, mainly because it offers the most comprehensive database of properties for sale in the country.

In order for real estate agents to post listings on the MLS system they must be members of the Canadian Real Estate Association (CREA) and pay annual dues. A member -- there are 98,000 of them -- is entitled to use the term Realtor, which is a CREA trademark. A Realtor listing a property on the MLS system must act as agent for the seller.

Now, there's nothing wrong with a private club restricting access to its members; however, MLS is no ordinary club. CREA says 465,251 homes were traded through the MLS system in 2009, while the average residential sale price was $320,333. That works out to an annual $149 billion, which is bigger than Canada's petroleum industry.

Too big to ignore, the MLS system was targeted by the federal Competition Bureau in 2007. In the bureau's view, CREA's rules regarding the MLS system "prevented or lessened competition" in the market for residential real estate brokerage services, such that brokers wishing to offer fewer services at a reduced cost were unable to do so, limiting consumer choice.

Unable to negotiate a settlement with CREA, the bureau has filed a complaint with the Competition Tribunal, which has the power to strike down rules deemed to be in violation of Canada's Competition Act.

Among the allegations is that CREA requires those using the MLS system to offer an entire suite of brokerage services at full price, which on average is five per cent of the purchase price, although it varies among local real estate boards. But you won't find such a restriction in CREA's rule book. Instead, you'll find an expectation of high standards of business practice, providing assurance for consumers that services provided will be of a certain quality, and that there is an avenue of recourse if they are not.

To be sure, MLS has the appearance of a monopoly. But appearances can be deceiving. The real estate brokerage business is highly competitive and discount brokers, such as One Percent Realty in British Columbia, have been offering an alternative for consumers for many years. If they are breaking the rules, then CREA must be looking the other way.

The fact is that new communications technologies and innovative business models are changing the business, without government intervention. CREA will be presenting rule amendments to its membership next month that provide greater flexibility for real estate agents and consumers alike.

Soon, we hope more data will be made available to the public, such as sale prices of properties in specific neighbourhoods, and street addresses in those jurisdictions where this information is not yet offered. The liberalization of information and its dissemination through conventional means as well as mobile devices will benefit the industry and consumers. These developments bear a striking resemblance to the restructuring of the financial services industry, where both full-service brokers and discount online brokers have prospered (often under the same corporate umbrella), while consumers have been given a broad range of services and prices.

If the Competition Bureau has served as a catalyst to accelerate change in the real estate business, bravo. Now it should step back and let the market finish the job.

Scott Hannah sees a lot of young families that are having trouble paying their bills.

He is the president and CEO of the Credit Counselling Society, a non-profit organization that helps people who are drowning in debt.

Last year, they fielded 40,000 calls for assistance and signed up 9,000 new clients in British Columbia. So he is always looking for anything that offers relief for people who have waded in over their heads.

Naturally, Hannah listened with interest when the provincial government announced in the speech from the throne earlier this week that it was preparing a new lifeline for young families.

But from what he's seen so far, he's not impressed with a new program that would let parents with children 18 and under defer payment of their municipal property taxes.

While there are no details, the Family with Children Property Tax Deferral Option is described as being similar to the one already available for seniors.

It allows them to put off paying property taxes until their home is sold, while paying below market rates on the unpaid balance.

For seniors who have little income and who live in homes that have increased in value, it can be a useful option for allowing them to stay put.

But what makes sense for seniors does not translate well into meeting the needs of young families.

Deferring property taxes doesn't make home ownership more affordable, even though it may create that illusion for a short while.

For seniors, deferring taxes may make sense because the effect is essentially to reduce that net value of their homes. That will mean their children will have less to inherit, but it is unlikely they will ever have to pay back the deferred taxes out of their income stream.

For young families, the opposite is true.

"Giving them the ability to defer taxes for a long period of time is not going to make the debt go away," Hannah points out. "It just becomes a bigger burden to deal with."

The recession has pushed more middle-class families to the brink, Hannah says. In 2008, the average consumer debt carried by people seeking credit counselling was $20,000 to $25,000. Last year, it jumped to $33,000 to $40,000.

Hannah says that the increase was because the people getting into financial trouble had higher incomes and were able to borrow more: "So it's a growing problem."

Hannah says for people who understand the ramifications of what they are doing and who are facing a short-term crunch, tax deferment may be useful.

But for people who already have trouble managing money, it may only add to their troubles.

Many young families have large mortgages obtained at historically low interest rates. As those rates inevitably rise over the next couple of years, they will face what are in many cases dramatically higher payments. If they defer taxes now, the added burden of paying them later will be compounded by the pain of higher interest rates.

"All you are doing is mortgaging future paycheques," he says.

If the option is available, it will be taken by people who don't fully understand what they are doing.

"If you look at typical consumer behaviour, they are going to take the path of least resistance," he says.

The only real way to make taxes less of a burden for young families is to reduce them. That isn't happening.

So if people find they can't afford to pay their taxes, they may have to take a hard look at whether they can really afford to own their own home.

That's not an easy question to face, but for most people, deferring taxes will only make it harder.

cmcinnes@vancouversun.com

There's little doubt about this view. It's shared by economic analysts, bankers and even by Canada's real estate industry itself. In fact, the Canadian Real Estate Association has just predicted a national drop in home prices next year.

So there's no doubt that Canada's housing market is in a bubble, right?

Wrong. All the agonizing over a possible bubble is actually very strong evidence that we don't have one.

We do have an overheated market, and that means prices could stall or ease down within the next year. But that's exactly what they should do in a normal real-estate cycle, points out economist Michael Gregory of BMO Capital Markets. After all, widespread worry about a bubble is the opposite of what drives a real one: the disappearance of normal caution, replaced by a near-universal delusion that no matter how costly an asset, it's a good buy because prices can only go higher.

This delusion can last for years, as with the stock market's tech bubble. It was 1996 when U.S. Federal Reserve chairman Alan Greenspan warned of "irrational exuberance" in the market. But prices kept soaring until the collapse began in 2000.

After that came the U.S. housing bubble, which peaked in 2005 and may finally have hit bottom after prices fell for more than three years, losing an average of more than 30 per cent.

This was characterized by the very same mass denial of reality. Even Greenspan denied that a housing bubble was forming, and ordinary wage-earners became real estate speculators with borrowed money, reasoning that house prices never fall.

Now, there's simmering worry about a Canadian housing bubble, based on the remarkably fast rebound of house prices here after a brief, violent crash triggered by the 2008 U.S. financial crisis. This week, the concern got more visibility when the venerable Wall Street Journal, where big Canadian stories are rare, belatedly reported it in a front-page article. But the large volume of hot air expended on this issue doesn't seem to be matched by an equal quantity of careful analysis.

The most prominently quoted source in the Journal article, for example, wasn't an economist or real-estate expert. It was Garth Turner, a former politician who wrote a book two years ago predicting the collapse of housing prices in Canada. It didn't happen and economists never took Turner's analysis seriously, but he keeps making the same prediction.

There are many cooler heads around, but their comments make less exciting media fare, since they don't foresee any dramatic catastrophe.

Gregory, for example, has just taken another look at the supposed bubble and agrees with many other analysts that home prices have certainly risen too high by historical standards. But he also concludes that there's no bubble and, furthermore, that there is very little chance one will appear.

Instead, Gregory finds, prices are being driven higher by factors like credit conditions that are temporarily too loose and a shortage of listings to meet the strong demand generated by record-low lending interest rates.

But there are at least a couple of buckets of cold water about to hit this overheated market. First, interest rates are expected to start rising this summer or fall. Second, a new tax on real estate will hit two of Canada's biggest, hottest markets, B.C. and Ontario, in July.

In any event, he believes, there is no evidence of the kind of speculative activity that always accompanies a bubble. We don't see speculators flipping homes for a fast buck or people buying two or three homes, hoping to sell later for a profit.

When this kind of stuff is happening, the volume of mortgage loans soars, but in Canada, mortgage volume is growing sedately, at about the same pace as prices.

Finally, Gregory notes that once supply rises enough to satisfy demand more adequately, price gains should cool. And that's just what is starting to happen.

His prediction: talk of a housing bubble, which has become a bit of a bubble itself, should deflate by summer.

"Indeed, the potential is there for home-buying conditions to actually become easier over the next one to two years via sharply lower average commission rates that are more in keeping with choices south of the border," said its note, written by economists Derek Holt and Karen Cordes.

Holt and Cordes argue that the savings from reduced real-estate commissions could be substantial, and could make up a large part of the difference on a down payment if it is changed from a five-per-cent minimum to a 10-per-cent minimum.

For example, a typical five-per-cent commission paid against the average resale price of $345,000 would result in a commission of $17,250. The same home sold at rates offered by the still-tiny discount-broker segment would result in a commission of $1,500, a difference of $15,750.

"Thus, through the interplay between potential shifts in mortgage rules and the Competition Bureau's challenge, Ottawa is likely to at worst leave buying incentives on neutral terms, or could even instead drive even more stimulative terms, given a low probability of changes to mortgages rules."

Wednesday, the Canadian Real Estate Association announced it would ask its members to bow to pressure from the Competition Bureau of Canada to allow easier and possibly cheaper access to the Multiple Listing Service.