Category: market (27)

sales-by-price-range-sept-2014Strong Condo sales aided by single family sales in the sub $1M range buoyed Calgary real estate market over the summer months. Buyers will appreciate that a gradual increase in inventory levels has created more selection and choice along with a less hectic pace to the process. Overall we are seeing the market calm down from the bell market we experienced over the past few years. While the forecast for jobs and in migration slows moderately over the next few years there still remains plenty of fuel for growth in the real estate market. Sectors that remain in hot demand are moderate priced homes and townhomes in walkable communities or good transit accessible areas. We also witness an increase in demand for moderate homes suitable for retirement lifestyles with amenities such as single level flats, accessibility (elevators), moderate sizes, low maintenance and security.

 

 

inventory-sept-2014We also are witnessing a greater demand for green and low energy features that are environmentally sensitive. Expect this trend to continue to grow as utilities consume a greater portion of the homeowner’s budget and concern for the environment becomes mainstream. Areas of the market we witness declining are large homes with less efficient maintenance requirements generally on acreages or not within walkable communities and usually over $1M price range. Looking forward we expect that the greater number of condo starts will begin to over supply this market over the next two year time frame. Also an increase in the cost of construction will place upward pressure on prices squeezing margins for developers. Look for a trend to more compact efficiently designed homes with a green influence along with new solutions for affordable housing including laneway housing, secondary suites and new density options for single family developers.

For detailed information of the Calgary Real estate market or a complimentary consultation call Sano Stante Real Estate at 403-289-3435

City of Calgary Tax Assessment
Each year the City of Calgary updates the Tax Assessment of the value of your home to ensure a fair and equitable distribution of the civic tax burden. You likely received your assessment notice in the mail for the upcoming tax year. Note that the Real Estate Assessment for the upcoming year is based on the market value of your home as of July 1 of the previous year. If you have questions about the value of your Assessment the City of Calgary now has a website that allows you to view assessments of other properties to compare your assessed value. There is a consultation period listed on your assessment within which you may discuss the stated value with your local City Assessor and understand the rationale for their valuation. If you do not agree with the City’s Assessment then you have the option of contesting the value before a Board that will listen to your evidence. You must be prepared to provide evidence of recently sold comparable properties to the board.

If you would like assistance understanding the myriad of factors that influence the value of your home or other real estate, please contact us. The team of experts at Sano Stante Real Estate have over three decades of experience evaluating unique Calgary Real Estate.

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.

 

 

Calculate the return

Return on real estate investment

Understanding how to calculate the return on a real estate investment can be instrumental to ensure that you make the best use of your resources. To understand the basics use the following guidelines:

The standard of measurement is to use annual net operating income (NOI) on a care-free basis when comparing real estate against other investments. That is, any costs involved in the real estate investment should be accounted for so that the real estate investment is hands-off, or “carefree”. The costs of maintenance, management or accounting, etc to manage your real estate must be deducted to arrive at the NOI. Even if you are quite capable and enjoy performing the maintenance or management of your investment real estate, you must allocate an equivalent cost for someone to perform these tasks to arrive at a net operating income. Other costs that you will want to ensure are captured will be taxes, insurance, utilities, vacancy allowance, advertising, licensing and supplies. Then when you have arrived at your true annual NOI you can calculate the capitalization rate or “cap rate”. To do this, take the annual NOI and divide this number by the current value of the property.

For example, if you purchased a rental property for $400,000 that brought:
$2200 gross rents per month or $26,400 in gross annual rent

Your expenses cost you:
Taxes  $2,300
Insurance  $500
Maintenance $1,200
Management $1,200
Vacancy Allowance $1,200
Advertising $100

Less Total Expenses: $6,600 annually

($26,400 – $6,600) Net Operating Income = $19,700

To calculate the cap rate divide the income by the value of the property:

$19,700/$400,000 *100 = 4.9%

So the cash flow from this property is returning you 4.9% on a care-free basis. This is now a good basis to measure the return of your real estate portfolio against GIC’s, stocks and other care-free investments.

What the cap rate does not anticipate or calculate is capital gains in the increase of the value of your real estate holdings and this would be in addition to the cap rate calculation. Real estate has historically appreciated in value over the long term so it is a fairly safe assumption that you will realize some additional appreciation from your investment. However, even with no capital appreciation, you may be satisfied with a reasonable cap rate.

Sano Stante is a CCIM which is the accepted gold standard for commercial investment real estate practitioners. For advice on investing in Calgary real estate contact Sano Stante real estate

 

 

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

home inspection

Home Inspection


When buying a new or used home, after negotiating the price and terms, it is typical to include a period of due diligence to ensure the Buyer that the home is sound beyond the initial appearance. This is when a Buyer will perform a home inspection of the property.

Typically a period of five to ten days is negotiated in the contract to allow for the Buyer to engage a qualified home inspector to inspect the property and produce a report. If the report is not satisfactory to the Buyer then the Buyer has the option of not proceeding with the purchase.

Sometimes the inspection uncovers issues that the Seller was unaware of and perhaps would have repaired if they were aware of the issue, especially if the issue would cause further damage if left unattended (such as a leaking toilet seal or roof leak). For issues such as these, it is common that the Seller would agree to repair them prior to closing date. This revision can be written into the agreement as a term of sale satisfying the Buyer to remove their (inspection) condition with an agreed holdback amount should the repairs not be performed by the closing date. If the issues are larger or the Buyer feels uncomfortable with the number or scope of issues uncovered then they would exercise their option to not proceed with the purchase.

If the parties are dealing in good faith, such issue should be substantial and not frivolous or repairable to exercise the option of cancelling the contract. However if the Buyer is satisfied with the inspection or new terms emerging from the inspection they are required to waive their condition within the prescribed due diligence period.

Inspections should not be used as a lever to renegotiate a new contract, except as noted above or if the issue is clearly an issue that could not have been discovered prior to an inspection and the issue is substantive. For example, an uneven floor in an early century home is not a valid reason to use for an inspection because this issue was readily apparent on the Buyer’s original visit without a home inspector. On the other hand, defects such as moisture concealed behind gypsum or mold in a crawlspace are issues that may not be readily visible on a first visit but discovered upon an inspection and are valid issues to raise with the Seller. A roof that has never leaked and is discovered to be 10 years old does not provide you an argument to renegotiate the contract in order to pro-rate the remaining value.

Remember to negotiate in good faith. The Seller is often in the same frame of mind as you the Buyer, so if issues are presented in the proper context a Seller will often thank you for discovering them so that he can repair them before they cause you both further grief and conclude the sale amicably. Sano Stante Real Estate has experts with over three decades of experience in Calgary. Call us.