Steve Ladurantaye

One of Western Canada’s highest-profile resort owners has crumpled under the weight of its debt, another victim of a devastating industry slump that has derailedprojects across the country.

Victoria-based Aviawest Resorts Inc. is seeking protection from creditors to deal with problems that are common to many of the struggling resorts that have been sold this year.

Read the story in the Globe and Mail

While the broader Canadian real estate market has prospered since the recession, the resort industry has been unable to match the brisk pace of recovery. A high Canadian dollar has discouraged American buyers, and lenders who were quick to support speculative builders largely bailed on the industry through the recession and have not returned.

Prices for new units have been cut by as much as 50 per cent across much of British Columbia, as developers enrage current unit holders by offering previously unimaginable deals to new buyers in a desperate bid to generate the cash flow needed to pay bills and undertake further development. There have also been distressed sales of large resorts in Ontario, as deeply indebted owners sell at a loss to get out from under their debts.

Aviawest owns several high-end properties across British Columbia. In a statement on Wednesday, chief executive officer Jim Pearson emphasized that the company, which the Pearson family began building in the 1960s, was trying to solve its issues through the courts and eventually pay back its creditors.

“We sincerely regret any hardship that individuals and businesses may experience due to these proceedings,” he said. “Over the coming weeks and months, Aviawest will work to emerge from this process in a manner that maximizes the value returned to all stakeholders.”

In a filing to the Supreme Court of British Columbia, chief financial officer Rob DiCastri said the company has been in default with some lenders for “several years.” Its financial statements indicate the company has $88-million in assets, but most of the line items are real estate that would need to be sold to be of any practical use. It has about $2.5-million in cash, equity and “other hard assets.”

The filings indicate the company owes about $90-million to its creditors.

“The present situation has now become untenable,” Mr. DiCastri said.

The resort market has been the Canadian real estate sector hit hardest since the downturn.

“Many were built on a platform of development and sales, and when the market slowed in 2009 a lot of these projects just came to a crashing halt,” said Bill Stone, executive vice-president at property development consultant CBRE Hotels.

According to the filing, Aviawest had relied on a $14-million credit line prior to the recession, but its lender decided to get out of the resort business in 2008 and left it without the working capital it needed to push expansion plans forward.

Meanwhile, construction-cost overruns at its flagship Parkside Resort in downtown Victoria became a “significant burden,” and the market was tanking just as it needed to sell units.

Owners have also resorted to renting out vacant units as they wait for the market to turn. Even so, more than 8,000 families are vacation unit owners or fractional owners in Aviawest’s resorts, and they would continue to own their properties despite the money trouble at the broader resort company.

“What you often see here is great anxiety as they wait to see how the ownership difficulties will resolve,” Mr. Stone said.

The company said entering that creditor protection would give it time to consider its options, which could include a sale to a new owner. That would be positive news for unit owners worried about the uncertainty – two recent Ontario sales have shown that once a new owner takes possession, a new focus is brought to the resorts.

Hunstville, Ont., resort Deerhurst was recently sold, and its new owners quickly adjusted its pricing structure and found demand was strong for aggressively priced units. It was a similar situation just down the road at The Rosseau at Red Leaves, which was sold under similar conditions to those facing Aviawest.

“Without the debt burden, new owners can be more flexible,” Mr. Stone said. “That may be a sign that things have hit their bottom and may start to come back.”

The country’s professional real estate appraisers are sounding the alarm over a service that allows Internet users to receive instant estimates of a house’s worth using past appraisal data.

Zoocasa.com recently unveiled its Zoopraisal service, which allows anyone with a web connection to punch in an address and receive a valuation estimate. The estimate is generated using data provided by Centract Settlement Services, a property valuation company that has appraised millions of homes across the country on behalf of financial services companies.

Read the story in the Globe and Mail

But the Appraisal Institute of Canada says anyone who let Centract into their home wasn’t doing it so the data could be used by snoopy Internet surfers curious about property values along their street.

“Our organization has significant concerns relative to the confidentiality and custody of the data being used to populate the site,” said Keith Lancastle, the organization’s chief executive officer.

Zoocasa president Butch Langlois said the service isn’t intended to replace the services of professional appraisers or real estate agents, and the estimates are based on similar properties in a neighbourhood and not on any specific report on a specific property.

“We are not actually pulling any data on specific houses,” he said. “It’s based on sales and appraisals in the area around the home.”

Traditionally, the best way to get an estimate of a house’s value was to call a real estate agent. But as data become more available, web services such as Zoocasa are stepping in to make the process less cumbersome for consumers.

Appraisals are typically carried out when someone is looking to borrow money against a property. The Appraisal Institute of Canada has about 5,000 members who are certified to do the work. Mr. Lancastle said he was “concerned” that services such as Zoocasa’s could undermine his organization’s reputation.

“Much as a retail store blood pressure test is not a substitute for regular medical care, a web-based calculator is no substitute for a real property appraisal,” he said. “A proper appraisal comprises a number of stages – including research, analysis and interpretation – needed to provide an accurate estimate of the market value of a property.”

While some real estate agents have also expressed concern about the service, others such as George O’Neill of O’Neil Real Estate Ltd. in Toronto have welcomed it as a one more tool for consumers to use before they approach a professional for help.

“I would prefer that someone do all this research before contacting me so I can provide more value-added services rather than just provide numbers,” he said. “That may put me in the minority amongst my peers. But I’d rather spend my time getting someone the best price, because that can never be automated.”

Real estate information that was once almost impossible to get without the help of an agent is now available online, in yet another sign that the business of selling homes is rapidly changing.

Carefully guarded data on home appraisal values – once the private preserve of real-estate industry insiders – has been posted by a listings website backed by Rogers Communications Inc., which has tapped private databases to give people an instant estimate of a property’s value.

Read the story in the Globe and Mail

The move is significant for buyers and sellers from coast to coast because it is another step in weakening the position of real estate agents, who have long used their privileged access to data about local housing markets as a tool for getting customers – and for justifying commissions that usually cost about 5 per cent of the value of a home.

Last year, the federal Competition Commissioner Melanie Aitken loosened the grip of property agents on home sellers by taking on a case against the Canadian Real Estate Association, arguing that restrictive rules for using the Multiple Listing Service, through which most homes in Canada are sold, were anti-competitive.

The two sides eventually settled the case after CREA agreed to make it easier for sellers to list their homes on that website without using an agent through the entire sales process and paying a full commission.

Now Zoocasa.com has partnered with property valuation company Centract Settlement Services to make local market information available to anyone with a Web connection. By entering any address in the country and providing a few additional details, such as the number of bedrooms and bathrooms in a house, a user can get an instant price estimate. It can give them a better idea of what their own house is worth – or something to gossip about around the dinner table as they discuss the net worth of friends, family members and neighbours.

“That’s one of the fun things about this service,” says Butch Langlois, president of Zoocasa. “It’s not necessarily your own home that you are interested in pricing.”

The service is the latest assault on the traditional real estate model, which has often kept information in the hands of agents to ensure they are an integral part of any sale. As the Internet catches up with the industry, more and more services are being offered individually by smaller companies looking to fill niches.

“Hoarding data has been a crutch that has hurt agents,” Mr. Langlois said. “It’s a commodity and they have treated it as though it were not. And that has taken the focus away from their more valuable services.”

The industry has opened up considerably since the Competition Commissioner’s case. The decision caused a proliferation of flat-fee agents, who will post a house on the MLS site and then leave the consumer to handle the rest of the sale on her own, rather than pay a commission to be guided through the entire process.

As the industry evolves, a new host of à la carte services such as Zoocasa’s appraisal site are popping up to help consumers with specific portions of a deal. The service, which Zoocasa has coined a Zoopraisal, is modelled on similar features offered by American websites such asZillow.com.

Zoocasa doesn’t charge for the appraisals – it makes its money by charging real estate agents fees to have their ads pop up along with the data. The business is a portfolio company of Rogers Ventures, the business development arm of Rogers Communications.

Mr. Langlois said his site’s estimates aren’t perfect – they don’t take into account improvements such as granite countertops, for example – but they will continue to improve as the service evolves. He also believes the information will ultimately drive business to the country’s real estate agents, as consumers make faster decisions based on better information.

The estimates are based on data collected by Centract, an appraisal company owned by Brookfield Residential Property Services that has inspected more than 4 million Canadian homes on behalf of banks and other financial services companies in need of valuation data before writing mortgages.

“This information isn’t meant to replace a professional appraiser by any means,” said Rob Soja, vice-president of business development at Centract. “But it’s a pretty fun tool that can give people a pretty good idea of a property’s value.”

While Mr. Langlois said he’s been surprised by the generally warm reception the service has received from agents since quietly launching last week, there are some who feel the site could give homeowners an inflated sense of worth.

“Homes that are priced too high to start have a good chance of selling for less than they would have if it had been priced right in the first place,” said Sara Hamilton, a Century 21 agent in Unionville, Ont. “It also encourages people to not have adequate representation, which can make them more susceptible to being taken advantage of by a buyer looking for a deal.”

Barack Obama, faced with 14 million unemployed workers and a jobless rate that won’t budge, is tackling the U.S. economic crisis by focusing on where it began: the housing market.

The White House threw a lifeline on Monday to millions of frustrated middle-class homeowners who are struggling to pay their mortgages and who now owe more than their homes are worth. A new government program will allow them to refinance their loans at lower rates with less difficulty than before, putting more money in their pockets in the hope that they will spend it and give the economy a much-needed boost.

Read the story in the Globe and Mail

The move comes at a time when many economists are seizing on the U.S. housing bust as a major reason the world’s largest economy is recovering so slowly from a recession that ended more than two years ago, and why the labour market has been so slow to heal from that event. More than six million people in the U.S. have been unemployed for longer than six months.

Interest rates have plunged in recent months, thanks to a poor economic outlook and relatively low inflation. But millions of Americans with relatively clean credit histories are stuck paying higher interest rates than currently available because their mortgages were struck prior to the housing correction. They are unable to take advantage of lower rates because a drop in real estate values has left them owing more on the house than its appraised value, meaning few banks want to issue a new loan.

That has left them paying hundreds of dollars more a month in payments than necessary, and has forced tens of thousands of homeowners to sell their homes at a loss when their mortgages come due because they can’t strike a deal with a lender on a new mortgage.

The White House’s plan makes it easier for them to both stay in their houses and have more disposable income. “However many homeowners are going to be helped by this, they will be very grateful for the assistance that will allow them to refinance at today’s low rates,” White House spokesman Jay Carney said Monday.

Among the key changes: Homeowners who refinance will no longer need to have the property appraised before getting the new rate. This is important because under an earlier government plan, a homeowner could see the perceived value of his home drop by hundreds of thousands of dollars simply because of nearby foreclosures that saw neighbouring properties sell at massive discounts.

The White House said changes to the Home Affordable Refinance Program will make it easier for homeowners to stay in their homes by ensuring that creditworthy owners can get loans without being penalized for declining property values. The new rules apply to homeowners with federally-guaranteed mortgages who are current on their payments.

“There aren’t too many people who could come up with the difference” between what their mortgage balances and the appraised value of their homes, said Rhonda Porter, a mortgage originator in King City, Wash., who helps families refinance loans. “That really does change everything because people don’t need to take a loss because of something that happened next door.”

Karl E. Case, a professor of economics at Wellesley College, said in a recent paper that the decline in house prices from 2005 to 2009 lowered consumer spending by some $240-billion – equal to about 1.7 per cent of all of the country’s economic activity.

The plan relaxes eligibility standards, and presents refinancing as a possibility for those who are 25 per cent or more “underwater” – that is, whose mortgages are at least 25 per cent larger than the value of their homes. To qualify, a homeowner must have taken the mortgage before June, 2009. The loans also must be owned or backed by government-controlled mortgage buyers Fannie Mae and Freddie Mac.

The program doesn’t help anyone who is behind on his payments – all applicants must be up-to-date on their loan.

The initial program, which was launched in 2009, targeted four million Americans. But by August, only 894,000 homeowners had refinanced at lower rates because of all of the conditions attached to the assistance. The White House said there was no way to know how many homeowners may try to refinance under the modified plan.

The first profile I ever had to write was about Earl McRae. I was in my second year of college, and the teacher handed each student a name and a deadline that was three months away. Fifteen hundred words sounded like a million, and after reading Earl’s columns all through high school I was ridiculously intimidated.

Some poor student drew his name every year, and there were horror stories about his aloofness and scorn for the unprepared. Scary stuff for someone whose biggest interview to date was the guy who ran the bursary program at the college

But in our research class, we were reading a book about interviewing skills that featured a column Earl had written a decade or so earlier. In it, he made the case for exhaustive background work in even the most basic of situations. Prior to his gig at the Sun, he was writing amazing long-form magazine profiles and he said the last person he would interview when writing a profile was the subject.

He preferred to work circles around his protagonist. Talk to family, friends, enemies, neighbours, old classmates, coworkers, paperboys. And when he finally sat down with his subject, he’d hold the best of his recognizance for last. He’d use it to lull the poor bugger into a trap, or to surprise them into talking more than they had intended because they were impressed with his depth of knowledge.

We met at the Newport Tavern, and it was immediately clear the horror stories were all bullshit. He bought the beer, he ordered some food. I had done my homework, and he tested me a few times by suggesting he wouldn’t answer a question. But each time, I already knew the answer. So I’d dangle it out, just like his book said. And if I maintained eye contact, he’d answer.

By the time we did the interview, we were starting to think of our internships. I was the editor of the school paper and had pretty good marks, so a position at the Ottawa Citizen was assured. But Earl did a little background work of his own before meeting with me – he knew my father was a Citizen veteran and asked me why I’d want to work at the same paper as dad.

“No matter how good you are,” he said, “everyone will always say the old man got you the job.”

It wasn’t the last time he’d give me career advice – he’d later encourage me to leave the contract job at the Sun in favour of full-time work at the Ottawa Business Journal, and four years later to take a job in Peterborough to break back into daily papers.

I told the program administrator the day after my initial meeting with Earl that I wanted my placement to be at the Ottawa Sun. He told me I was an idiot, but within days I found myself steady work at the tabloid care of our journalism teacher Mick O’Reilly, who just happened to be city editor at the paper.

For the first few weeks I didn’t see Earl at all. But one night I was working a routine story on the cop desk, and he came over. Reading over my shoulder, he asked me where all the good stuff was.

I said it was just a small little cop thing, and he laughed. He asked me questions about it – nothing deep, just quirky little followups I hadn’t thought of. He patted my shoulder as he walked away, and said “just remember that the three people in that story think it’s the most important thing that’s ever been written in the English language, OK?”

He’d be around more in the year or so that I ended up sticking on at the Sun. It was always the same – he’d walk over, read over my shoulder and ask me some questions. He never tried to teach, he never gave advice. He just talked about the story, regardless of how stupid it was. And for a new reporter, having someone take interest just for interest’s sake was priceless.

He was also amazing to watch work. After seeing him work the phones one day, I asked how many calls he’d made. He wasn’t sure, but knew it was more than 20. He quoted two of the sources in his column – but nobody’s contribution was wasted. He said the other interviews lent him an air of authority he could never achieve on his own. It’s one of the most important newsroom lessons I’ve ever learned.

He also taught me the second most important lesson – few people are brave enough to block the way of a man with a clipboard and sense of purpose. His trick gained him access to all sorts of closed areas, and I’ve done the same dozens of times to slip past security personnel – it’s amazing what a clipped stride, clipboard and cellphone can do.

One piece of advice stands out most, though. I had spent two weeks methodically researching a story about a shooting at a local bus depot. I had broken some news early on, and worked the story hard in the weeks that followed. I handed all my stuff to a veteran columnist, who was supposed to pull it all together.

The next day, my byline wasn’t on the piece. Neither was my fellow intern’s, who also busted her ass on the story. The columnist, who is no longer a columnist, gave us “files from” at the bottom of the piece. We were absolutely crushed. Earl wandered over, he knew what happened.

“Don’t let the bastards get you down,” he said. “And as you’ve learned here today, the world is absolutely full of bastards.”

He wasn’t one of them.

Earl died in the newsroom on October 15. It was a Saturday night. He was 69.