While Calgary’s housing market grew 6 to 7% in 2014, expect the outlook to return to a more balanced market (est 3% increase) in 2015.
While Calgary’s housing market grew 6 to 7% in 2014, expect the outlook to return to a more balanced market (est 3% increase) in 2015.
With national forecasts citing an overheated market in decline and calling for a further correction in real estate values, it’s curious to watch the Calgary Real Estate market out-perform most every other City and region in the country. Much of this performance is due to the hang-over from the recent run of strong net in-migration, due to a buoyant job market in Alberta. The question is when will the hang-over end and will Calgary succumb to the negative national trend despite our favourable geography and oil economy?
Calgary employment growth for 2013 is forecast to decline, yet remain positive at 2.3% with net migration for Calgary expected to slow to just over 15,000 over the next two years. This steady stream of new residents has fueled an increased demand for rental accommodation resulting in an apartment vacancy rate under 1.3%. This all points to a positive, yet somewhat reduced pace of activity that fuels the Calgary real estate market.
With the recent surge in rental activity and subsequent increase in rental rates one could be tempted to purchase rental property based on the recent higher returns, but are these rents sustainable for the long term? We advise that any rental properties are evaluated using conservative rent estimates especially those based on furnished rentals. Also note that vacancy for furnished rentals is similar to that of Hotel properties (in the 20-40% range) so don’t be fooled into using unfurnished vacancy rates and applying these to furnished properties, despite our current hot market. One exception could be buying rental properties that have a high component of land value, especially in inner city communities. These properties could derive good income from the building for many years, yet the land value may surpass its’ income value, if the trend toward inner-city community development continues.
Farmland also has potential as a solid income producing vehicle, but be sure to know what you’re buying. While crop rents have increased dramatically (proportional to crop prices), soil types, local geography, irrigation and overburdened crops all have a profound effect on the return a farmer can extract from a section of land. Again there may be other exit options for farm land such as future development potential or subdivision to smaller parcels. This can yield large returns but not for the faint of heart or uninitiated. If you are not the expert, be certain to obtain expert advice (the cost of which could yield you the best return for your investment).
One of the best strategies today for those who already hold real estate is to optimize your investment. That means reducing your operating costs and improving efficiency of the property. Some of the greatest benefits can be derived from reducing the energy requirements and greening your real estate. This not only reduces your consumption and cost of energy, but also improves the desirability of your property. Green Calgary offers a valuable home audit that provides excellent advice on greening your home and reducing its energy footprint. With the cost of solar electric continuing to decline we are now coming into an age that photo-voltaic systems are becoming cost effective. It won’t be long before you may be asking “how much energy does this property generate and how much income does it produce?” Don’t overlook these possibilities and the potential value of solar exposure when evaluating your next property.
Overall, it appears that the market may reduce from a rolling boil to a slow simmer over the next few years which calls for a return to a more sober, long term view of any real estate investment. Reducing operating costs could help you weather future bumps in the road, and exploring alternate exit strategies can add tremendous value if the need for Return Of Investment becomes more important than the need for Return On Investment.
Wondering what YYC real estate is doing in 2013? We checked out the latest trends and hot spots to keep you riding the wave.
For more insights into the Calgary real estate market or your Calgary neighborhood contact us
Calgary 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 ..
The 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:
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.
The 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.
Calgary’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.
According 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
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
According to figures released by CREB® (Calgary Real Estate Board), Calgary home prices remained stable, recording a moderate growth in average price. While the City of Calgary, year-to-date sales volume declined by 6 per cent compared to the first four months of 2010; the decline was offset by the 14 per cent decline in listings over the same period, resulting in lower inventory levels, and a more balanced spring market. This is a full description of the April 2011 Statistics.