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Hot-Real-Estate-Market
Wondering what YYC real estate is doing in 2013? We checked out the latest trends and  hot spots to keep you riding the wave.

  1. Tighter Inventory and a faster moving market: While the rest of the world took a real estate holiday the Calgary real estate market has been chugging along quite well (thank you very much) and steadily chewing up any over supply of  inventory left over from the 07 bump. Inventory has been steadily dropping across all categories but most noticeably in the single family mid-range market.
  2. Gentrification is the new normal: Mature, inner- city communities and those with plenty of walkable amenities are blushing with all the attention they’re getting. Buyers are not shy about knocking down modest homes on good lots or renovating homes that have the bones and adequate floor plate.
  3. Mortgage rates will remain low: However, banks have not opened up the taps to ease the flow of cash to new buyers. This is keeping the brakes on the market nationally and puts a squeeze on first time buyers or those who need to refinance. This keeps a lid on the entry level market but upper end buyers have capital so expect some cautious expansion in the premium and luxury arenas.
  4. An ample supply of starter homes and apartments: Condo prices rose the least over any other sector this past year due to a fairly competitive market and a good supply of new developments. Developers are upbeat and many national developers are focusing their effort in Calgary bringing some fresh products and new innovation to this market.
  5. Price Increases will be moderate for Condos: The condo markets experienced a 3% increase last year. Expect that this steady price increase will continue and likely accelerate this year. Rising construction costs and the depletion of cheaper land will bear on the prices as developers have nowhere to go except pass on these increases to buyers.
  6. Rental Boom: There, we said the B word, and it applies right now to the rental market. A tighter mortgage market lends to a better rental market. It also appears that many of the new local hires are provided a leased property to supplement their 2 or 3 year employment contracts. As a result, the market for both bare and furnished rentals has boomed over the past couple years. This had the positive effect of absorbing some excess inventory that Buyers purchased in 07, and keeping many properties off the market that otherwise would be currently available for sale. Be cautious to purchase investment property based on inflated rental rates unless you have good reason to believe they are  sustainable. Keep an eye on this trend, as it will be interesting to see what our real estate market will look like in 2015-16 when many of these rentals come back to market.
  7. Bedroom Communities are wide awake: Developers have discovered that it’s cheaper and easier to develop in neighboring communities than more expensive and onerous Calgary subdivisions. With City Hall levying higher taxes on suburban builders to more reflect the real cost of services they tap into, Developers are voting with their feet and developing where they can get the best leverage. This means more focus on these bedroom communities outside the City and that’s where we saw much of the action this past year. Expect this to continue in the short term until these bedroom communities start to realize they face the same challenges as Calgary (and implement similar solutions to pay for infrastructure).
  8. Infills get better: Attached is the new normal and three storey infills become more common. Accompanying this trend, look for builders to provide (roughed in) elevators as a new standard to accommodate a broader demographic of Buyer. Cottage homes above garages will receive more attention, as well as underground basement access from the home to the detached garage. These tunnels can be used for additional space, storage, wine rooms and such and don’t add to your development footprint.

For more insights into the Calgary real estate market or your Calgary neighborhood contact us

calgary-sunsetCalgary real estate resembled a more vibrant market in 2012 with a good kick start in the early months of spring and finished the year with strong, yet cautious momentum. This sales trend was most noticed in the Luxury home category which picked up dramatically in the spring and has recently coasted into a bit of a lull. The mid and lower end home market gained traction and has calmed in recent months but remains the bread winner. A drop in the number of available MLS listings in this low/mid category has kept the supply in check and prices relatively firm. Condo apartment prices crept up 3% year to date and the recent influx of new condo builds is maintaining a good supply of product and holding the prices competitive. Continue reading ..

calgary-skylineThe media has been ripe lately with stories of how the real estate market in Canada is over-valued and is now cooling. If you lived in Vancouver of Toronto, you would think that this is a pretty accurate indication of reality. However, if you reside in Alberta or Saskatchewan, you are probably wondering what kind of drug these reporters are on because their world is bustling with jobs and activity. So what is the real story in the local Calgary real estate market?

First, the real estate market is local. Like the weather, listening to a report that the Canadian real estate market is preforming poorly is like hearing that the weather in Canada is bad. Certainly Calgary is influenced by the national economy, just as we are by the global economy (now more than ever). However, real estate is a local story. Calgary is leading the nation in job growth and net in-migration, which leads to demand for residential real estate. While the rest of the nation (even the western world) is struggling to create jobs, we can’t seem to find enough people to fill the posts. So, when you hear that the real estate market is cooling down, its akin to having your head in the freezer and your feet in the fire. On average your temperature is may be moderate or dropping, but it doesn’t accurately reflect what’s happening locally.

Our research indicates that we will continue to have strong demand for residential real estate for the next two years. Price gains should be gradual and moderate, however lately we are concerned about a reduction in available listings, bringing our months of inventory to under 3 months for single family and townhouse listings. If inventory continues to decline, this could cause some pressure on prices to increase. Keep in mind that although prices have been rising, they have been stable for the past quarter.

This local/national example also applies to your local neighbourhood and what is happening in Calgary does not always reflect what is happening in your local community, or your particular street. If you zoom into this level the trends that we’ve witnessed generally are:

  • In increase in demand and firming of prices in the inner city
  • Increased demand for lifestyle properties and walkable communities
  • Increased demand in adjacent, bedroom communities like Airdrie
  • Cooling of demand and softening of prices in the outlying suburbs.
  • Slowing demand for acreage properties
  • A trend to smaller, more practical and energy efficient homes

As well there are the usual seasonal trends, and of course you could discover trends for pockets within your community. An experienced real estate expert can assess all of these variables that affect the value of your property and more. If you would like to stay current on the values in your local neighborhood, we will send you updates of the sales and listing activity monthly in a convenient email report. If you would like a current market evaluation of your property, simply call us and we will be pleased to provide this for you, so can make the best most informed decision on your real estate investment.

 

mortgage-clamp-down-Sano-Stante-Real-EstateIn an effort to cool the consumers appetite for debt in this current low interest climate, the Fed’s have further tightened the screws on Bank lending. The Canadian Government’s “Financial Stability Board” has published new guidelines for underwriting mortgages. Following is a summary of the proposed changes which may take effect by September 2012:

  • Lines of credit should not exceed 65% of the homes value. While a customer can still borrow 80% LTV, at least 15% will need to be in an amortizing segment. Existing clients may be grandfathered but there will be some cases as it relates to structural changes in an existing loan plan where the new rule may apply.
  • For debt service coverage (TDS) at a minimum. the qualifying rate for all variable interest mortgages regardless of the term and fixed rate mortgages with a term of less than 5 years should be the greater of the contracted mortgage rate of the five year benchmark rate (Bank of Canada).
  • GDS Calculations will require supporting documents (tax, utility bills, etc) or clear and consistent benchmarks that adequately assess these additional costs.
  • Banks will be required to clearly define “non-conforming loans”. This may include some forms of equity, low documentation etc. In these cases LTV should not exceed 65%.

If you are contemplating taking a HLOC at 80% LTV now is the time to get your application processed before the new guidelines take effect. You may not need to use all the money, but better to have access to it and not use it, than to be clamped down to 65% LTV.

For more information on this, or other Calgary real estate facts call us anytime 403-289-3435

Tighten Your Belt - AusterityThe grumbling in the hall is that the latest action by the Feds will temper home prices. What they are referring to is Finance Minister Jim Flaherty’s four point move: to to reduce the maximum amortization period of a CMHC insured mortgage to 25 years from 30 years. The maximum amount of equity homeowners can take out of their homes in a refinancing is being reduced to 80 per cent from 85 per cent. The availability of government-backed mortgages will be limited to homes with a purchase price of less than $1-million and the maximum gross debt service ratio will be fixed at 39 per cent and the maximum total debt service ratio at 44 per cent.

Many major banks economists have heralded forecasts that this latest move could reduce home prices by a further 3 to 6 percent, a forecast that may hold some weight in the major centers of Toronto and Vancouver, but not for the reasons cited. Some reports go as far as adding a disclosure that this only applies to the Toronto and Vancouver markets.

While we agree that the Vancouver and Toronto markets are set for a retraction (we’ve been waiting) it would not be due to any of the actions of Mr Flaherty. These major centers have been overheated for the past few years driven primarily by some heavy in-migration from Asia and India. Insiders reveal that officials have tightened down on the flow of new immigrants and this has has an immediate impact on the bidding wars that wealthy Asians have created (often amongst themselves) in Vancouver.  I have some difficulty believing that a reduction in the amortization of  CMHC loans has much to do with this retraction in Vancouver but the public and some media will speculate on the cause and effect. Calgary (Alberta and Saskatoon) is poised to buck the retraction that is predicted for Vancouver and Toronto because these regions (rich in resources) are set for a massive surge in new employment and in-migration that will fuel the local housing markets for several years.

In our practice we advise Buyers to obtain mortgages below the 25 year normal amortization period to save a tremendous amount of interest. Buy the perfect home – even pay more for a better home that will serve your family for a lifetime and mine your mortgage internally for massive savings in interest.  These savings are compounded after tax because the dollar you don’t need to spend on a mortgage payment is a dollar fifty that you don’t need to earn. The practise of placing a down payment of a minimum 25% is also prudent and ensures buyers don’t buy before they can actually afford to own.

In all,  the four point measures introduced by the government to blow off some steam on the housing market relate to good sound financial planning for all Canadian households. These measures will guide new home-buyers to be more patient, a bit more prudent in their finances and not to overstep their ability to repay their debt if and when interest rates increase. When the current low interest rate regime loosens this should allow homeowners to afford the slight increases we  expect in the future without a major disruption to their finances and they can continue to enjoy owning the homes they worked so hard to acquire. In the Calgary market we expect the resulting impact to be minor. In fact, the immediate impact may be an initial rush of fringe buyers and the long term impact merely a healthy restraint to the real estate market.

 

 

early-signs-of-spring-marketCalgary’s warm weather is pushing up more than daisies this spring. Home buyers appear to beating a steady path to Calgary in search of new employment and the new optimism in Alberta’s economy is providing traction to our real estate sector.

Last month, single family home sales increased 17% over March 2011 and Condo sales increased over 7% from the previous year. Coupled with an overall reduction of 1.8% in new listings the effect is to shift the advantage from a Buyers’ market to a Seller’s market in many sectors. We”ve witnessed a marked increase in the inner city especially in the market for 50’ sub-dividable lots which is now attracting multiple offers on properties which are priced correctly. Overall, we expect the resurgence in the market to continue to gain solid momentum this year as demand continues to pick up with increased in migration to supply new jobs. The only speed bumps in sight for the near term would be significant increases in mortgage interest rates. For more details view the full CREB market update.

MLS-Home-Price-IndexAbout the MLS® Home Price Index

The MLS® Home Price Index (HPI) provides time-related indices on residential housing markets of participating real estate boards in Canada. The MLS® HPI is the best and purest way of determining price trends in these markets. Pioneered by the real estate boards of Calgary, Fraser Valley, Greater Montreal, Greater Vancouver, and Toronto and the Canadian Real Estate Association. In 2009, the partners contracted with Altus Group to develop the MLS® HPI, which launched the MLS® HPI in January 2012.

Why an MLS Housing Price Index?

Typically the public has relied on measures such as average or median price. These real estate boards wanted to develop an improved method to capture and analyze Canadian home prices based on both quantitative and qualitative housing features. Quantitative features captured by the index are, for example, number of rooms and bathrooms, living area above-ground and the age of the home. Qualitative features captured include finished basement, new or resale, and the home’s proximity to schools, golf courses, parks, etc. Essentially the HPI is an index that compares a particular property (say a Calgary bungalow in Mt Pleasant) and tracks it’s change in value over time – a much improved indicator of any typical homes value.

The MLS® Housing Price Index (MLS® HPI) gauges prices relative to January 2005 (an arbitrary benchmark date which happened to contain an abundance of data), and tracks price trends for these benchmark housing types: ▪ Single family homes ▫ 1-storey ▫ 2-storey ▪ Townhouse/row units ▪ Apartment units Benchmark homes are based on typical homes in each neighbourhood. The Benchmark home price is a constant quality home price measure.

Why does it matter? Average and median home prices are often misinterpreted, are affected by changes in the mix of homes sold, and can swing dramatically from month-to-month (based on the types and prices of properties that sold in a given month). The MLS® HPI overcomes these shortcomings. Compared to all other Canadian home price measures, the MLS® HPI identifies turning points sooner, is the most current, and is the most detailed and accurate gauge for Canadian home prices.

The MLS® HPI is based on homes sold by Realtors® and is provided as a service from participating real estate boards to its members and the public. For the best and most accurate market data on your property contact us at 403-289-3435 or email [email protected].

For public information visit MLS® HPI

Calgary-real-estate-valuesHome sales in the City of Calgary are off to a cautious start in January 2012, according to figures released today by CREB®. While the year-over-year volume of residential sales in the City of Calgary dropped, the available inventory homes declined even faster in January 2012 which points to a more balanced market ahead. While the current market favors buyers, this could signal a shift if the trend continues into the spring. For more detailed information on your niegborhood, call us 403-289-3435 or view the full statistics package at creb.com

longview3According to figures released todayby CREB® (Calgary Real Estate Board), Calgary residential sales in 2011 increased eight per cent over last year, with 18,568 sales for 2011 compared to 17,267 in 2010.

Sales activity was tepid in the first half of the year, however, early improvement in employment and migration resulted in a pickup in housing demand in the second half of the year. By the end of June 2011, year-to-date sales activity had only increased by two per cent compared to the second half of the year, where residential sales improved by 15 per cent.

“While sales activity in 2011 remained below the long run average by 17 per cent, monthly figures point towards the trend of this gap narrowing,” says Sano Stante, president of CREB®.

To view the full report see creb.com

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According to figures released today by CREB® (Calgary Real Estate Board), residential sales surged in the month of June 2011 to 1,953 units.  While this indicates a third more sales than June 2010, the year-to-date increase proved a moderate 2 per cent.   The single family market has shown signs of improvements throughout the first half of this year and this is the first time since April 2010 that condominium sales have recorded a year-over-year increase.   “Buyers in this market expect value and many are taking advantage of some affordable buys in both the single family and condo markets. It highlights using a skilled REALTOR® to properly price your home for your unique market area,” For more information see the full statistics report at Creb.com