Category: Realty (3)

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

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.