Financing for multi-unit (5+ unit) residential buildings comes in two varieties:

* CMHC Insured
* Non-CMHC Insured

People with healthy down payments frequently ask why they’d ever want to pay the CMHC premium if they can simply get a conventional mortgage.

Let’s take a $500,000 loan at 75% LTV, for example, on a 5-unit building. CMHC’s premium is 2.25% for a 25-year amortization. That’s $11,250—not exactly chicken feed.

But here’s the thing. Lenders consider multi-unit financing to be much safer when it’s insured. That means there’s less of a risk premium and borrowers get better rates on CMHC-backed deals. “There is a 200 basis point difference between that and a conventional loan,” First National’s, Jeremy Wedgebury, told BrokerNews.ca.

What many don’t realize is that this 2% rate differential translates into big dollars. On that same $500,000 mortgage, a 2% lower 5-year rate would save almost $34,000 after accounting for the $11,250 premium and CMHC’s $750 application fee. Moreover, the property cash flows better because the payment is 16% lower.

In sum, with multi-unit apartments, “pay to save” is often a good motto.

http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2009/07/cmhc-insured-multi-residential-financing.html

reviewed by MOISHE ALEXANDER, CFC Canadian Funding Corp CEO

Housing starts across British Columbia remained depressed in the first quarter of 2009, falling almost 70 per cent compared with the same quarter of 2008, Canada Mortgage and Housing Corp. reported Wednesday.

While housing starts ticked up slightly in March on a national basis, builders in B.C. started work on 2,517 new homes in the first three months compared with 8,532 in 2008.

“Developers and homebuilders in B.C. are starting fewer new homes in response to a well-supplied resale market and weaker housing demand,” Carol Frketich, Canada Mortgage and Housing’s regional economist for B.C., said in a news release.

The declines in starts ranged from almost 93 per cent in Kelowna, where builders started on 72 new homes compared with 985 in the first quarter last year, to 31 per cent in Nanaimo, where builders started on 170 new homes vs. 247 in the same months a year ago.

And the pace of new-housing construction slipped in March to a pace that would see builders across urban B.C. start work on 10,000 units in 2009, compared with a pace of 12,000 units seen in February.

In the Lower Mainland, Metro Vancouver saw starts fall by two-thirds, 1,829 units compared with 5,131 in the first quarter of 2008.

Across Metro Vancouver, West Vancouver saw the steepest drop in the first quarter at 92 per cent, with the Tri-Cities and Surrey not far behind at 91 per cent.

Delta was the only municipality to see an increase in housing starts. Builders there started work on 81 new housing units, an increase of 55 per cent in the first quarter from a year ago.

“The slowing housing starts trend that began in the last part of 2008 will continue,” Robyn Adamache, Canada Mortgage and Housing’s senior analyst for Metro Vancouver, said in a news release, also citing well-supplied resale markets and a growing inventory of unsold new homes as the reasons builders are holding off on new development.

Across Canada, home construction rose unexpectedly in March, led by Ontario and Quebec, Canada Mortgage and Housing Corporation said Wednesday.

There were 154,700 housing starts on an annualized basis during the month, up from a revised 136,100 units in February, the government agency said.

Many economists had expected housing starts to dip to 130,000 units in March.

“Higher multiple starts in Ontario and Quebec were the main contributors to the rise in new construction activity in March,” said Bob Dugan, CMHC’s chief economist. “While the multiples segment experienced the largest increase, the overall boost in starts was broad based, encompassing the singles segment as well.”

http://housing-analysis.blogspot.com/2009/04/from-vancouver-sun-housing-starts.html

reviewed by Moishe Alexander, CFC CEO

B.C. real estate – and specifically Vancouver real estate – has long been subject to boom-and-bust cycles. Speculation arrived on the Granville townsite with the railway in the 1880s, flourished with the influx of investors from Asia in the 1980s and gave legs to the mortgage scams and leaky condos of the 1990s. This time round, easy credit fed the boom – most spectacularly stateside, but also extending to the U.K. and the emergent economies of eastern Europe and Asia.

Vancouver took its place on the global stage as developers and marketers turned here for expertise in selling their latest projects, and in short order “super, natural British Columbia” became the best place on earth to buy property. While the first cracks in the global property boom started appearing in 2005, it wasn’t until the bankruptcy of Lehman Bros. on Sept. 15, 2008, that the problem of tightened credit really hit home, cutting off the lifeblood of local developers – most notably Millennium Development Group, builder of the Vancouver Olympic Village – and driving a nail through the heart of consumer confidence.

In our 2009 review of the local real estate market, we look at three themes or projects that defined the boom – the international marketing of Vancouver, transit-related densification across the Lower Mainland and the landmark Olympic Village development – and ponder how well they might hold up in what could be the toughest year for B.C. real estate in over a decade.