Posted on
November 1, 2010
by
Natasha EDEN
Calgary, November 1, 2010 – Home sales in the city of Calgary were down month-over-month in October 2010, showing signs that buyers still remain cautious, despite signs of economic recovery. Year-over-year sales continued to trend lower in the month of October, according to figures released today by the Calgary Real Estate Board (CREB ®).
The number of single family home sales in the month of October 2010 shrank by 7 per cent at 888, compared with September 2010, when sales were 958. The number of condominium sales for the month of October 2010 was 310. This was a decrease of 15 per cent from the 366 condominium transactions recorded in September 2010
.
Year-over-year, the number of single family homes sold in October 2010 in the city of Calgary were down 31 per cent. In October 2009, single family home sales totalled 1,285. Condominium sales saw a decrease of 48 per cent from the same time a year ago. In October 2009, condominium sales were 601.
“Buyers remain cautious, perhaps waiting to feel a little more confidence in Calgary’s economic growth and their own job security,” says Diane Scott, president of CREB ®.
“We believe economic recovery will build momentum into 2011 as the outlook for oil and gas and other sectors continues to improve. This, coupled with low interest rates and improved affordability, should eventually help to stimulate Calgary’s housing market,” adds Scott.
The average price of a single family home in the city of Calgary in October 2010 was $444,744, showing a 3 per cent decrease from September 2010, when the average price was $460,278, and a 4 per cent decrease from October 2009, when the average price was $462,465. The average price of a condominium in the city of Calgary in October 2010 was $287,793, showing a 1 per cent increase from September 2010, when the average price was $284,028 and no significant change over last year, when the average price was $289,155. Average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods, or account for price differentials between geographical areas.
The median price of a single family home in the city of Calgary for October 2010 was $387,900, showing a 1 per cent decrease from September 2010 when the median price was $390,000. This was a 5 per cent decrease from October 2009, when the median price was $410,000. The median price of a condominium in October 2010 was $255,000, showing a 4 per cent decrease from September 2010, when the median price was $265,000, and a 3 per cent decrease from October 2009, when it was $263,500.
All city of Calgary MLS® statistics include properties listed and sold only within Calgary’s city limits. The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the median
price.
“Our average price is being buoyed by more sales in the million dollar plus category. Despite a slowdown in certain market segments, homes sold in the city of Calgary at one million dollars or
more have actually seen an increase of more than 15 per cent when compared to the same time one year ago. This boost in sales is, indeed, a bright spot in our current market,” says Scott.
Single family listings in the city of Calgary added for the month of October 2010 totalled 1,765, a decrease of 22 per cent from September 2010 when 2,252 new listings were added, and showing a decrease of 3 per cent from October 2009, when 1,819 new listings came to the market.
Condominium new listings in the city of Calgary added for October 2010 were 721, down 22 per cent from September 2010, when the MLS® saw 921 condo listings coming to the market. This is a decrease of 16 per cent from October 2009, when new condominium listings added were 859.
“We are seeing some decline in the number of new listings coming on to the market. A continuing decline in supply will help bring the market into balance,” says Scott.
“We believe we will see a tempering of our inventory levels, as some sellers offer marginal reductions in prices, or others choose to pull their home off the market for a period of time,” notes Scott. “Homeowners should consider speaking with their REALTOR® about their current marketing strategy—there are always options in every market.”
“Overall, we’re cautiously optimistic that Calgary’s economic recovery will pick up as we move into 2011—but in-migration will be needed to fuel a sustained recovery in Calgary’s housing market,” says Scott.
For more detailed information and charts on current market trends for October visit:
Posted on
October 4, 2010
by
Natasha EDEN
Posted in
Calgary home market, Calgary home sales, Calgary Housing Market, Calgary Housing Stats, Calgary Housing Trend, Calgary Properties, Calgary Real Estate, Calgary Real Estate Market, Calgary Real Estate Stats, Market Trends, Market Update
Hello everyone!
Market Update! A bit of good news!!
For the first time in many months there appears to be a turnaround in the Calgary Housing Market! The Calgary Real Estate Board just released the stats for September and while the changes are modest, it is the first uptick in the Calgary market since April.
In short, the number of houses available for sale in the Calgary market has fallen, but the number of sales of homes has increased for the first time in six months. Along with the increase in the number of homes sold a significant indicator of possible change is that the average median price of homes sold from August to September increased by almost $15,000.00. If you would like to see the actual stats feel free to send me an email requesting a copy of the CREB Stats and I’ll forward the information to you in an email attachment.
In the homes I have had listed, I have noted and increased number of showings over the last few weeks as well. While all these indicators are modest, it is certainly a refreshing change from the six months of steady downturn we have been experiencing, and appears to show that the real estate market is beginning to come to life again.
iPhone/Android App Update
I appreciate everyone who has downloaded my iPhone App to search the Calgary MLS system. It has become quite a popular application. Don’t be afraid to explore everything it has to offer, and if you have any questions or requests about a property, you can click on the links provided in the listings on the app to notify me and I will be happy to get back to you right away. Keep in mind that if you sign into the VOW on HouseHuntingAdventures.com it opens up a special account for you where you can save all your home searches for comparables and once set up, you can do the same from your iPhone or Android as well. If you have any questions, just call!
New to Canada?
I have many clients who are new to Canada who I have guided in their real estate adventures and I understand much of what it is like when coming into a new country. I experienced coming to Canada, not knowing the languages here, first moving to Quebec and learning the French language, then to Calgary and learning English (Czech is my home language). The challenges were difficult, but also a great character builder for me, especially while raising three children on my own. I truly understand all the frustration with moving and setting down roots. My desire is to help anyone who is a client of mine to make their transition as easy and cost manageable as possible.
Keep it Drama Free!
I can really empathize with anyone when it comes to moving and all the related stresses and headaches. I’ve been there and done that on my own with my children, many times. Every move made me a little wiser and I became an organizational wizard! I understand all about moving a family, and the financial stresses and strains that can ensue.
Through my personal experiences as well as my experience as a REALTOR©, I have compiled a wonderful list of resources; from excellent mortgage brokers who are very talented at locating great mortgage rates and helping you to qualify, to home inspectors capable ensuring nothing is missed when you are looking to purchase a new home.
Please let me know if I can be of service to you. Even if you are just at the research stage in locating a new home, or you simply would like to have a current market evaluation done on your home to determine what your next step should be, I’m here for you. Please don’t hesitate to call me at any time.
My personal cell phone number is 403-399-0809, or if you prefer, my personal Email of Natasha@HouseHuntingAdventures.com.
Wishing you a wonderful Thanksgiving!
Natasha
Posted on
September 8, 2010
by
Natasha EDEN
A high inventory of homes for sale combined with a softening demand from potential homebuyers is starting to put downward pressure on Calgary MLS prices.
Preliminary and unofficial data for August month-to-date indicates prices are dropping from levels of the past few months in both the single-family and condominium market.
"We have almost the same number of buyers that we had in December but we have so many more listings," said Gary MacLean, a realtor with Re/Max Real Estate Central. "It's like having a Safeway that got two times as big but only has the same number of customers coming in the door and in order to get rid of the inventory they have to reduce the prices.
"It's a supply and demand issue. There's an oversupply of houses not only here but all across Canada and the number of buyers are decreasing."
For example, at the end of December one of every 1.6 houses listed for sale were selling. In July, that ratio jumped to one for every 6.6 listings. The month-end inventory of properties for sale in Calgary metro at the end of December was 3,258. It was 7,982 at the end of July.
MacLean said the inventory is starting to shrink but it's not as a result of increasing sales. Many people have simply taken their homes off the market.
According to preliminary, unofficial data on the website of realtor Mike Fotiou, of First Place Realty, there have been 661 single-family home MLS sales in Calgary for an average price of $441,469 month-to-date until Tuesday.
In July for the entire month, there were 915 sales for an average of $464,655 and in August 2009 there were 1,277 sales for an average of $454,130.
The average MLS sale price peaked this year in May at $483,240.
The condominium market is showing a similar story with sales so far this month at 271 for an average price of $283,485. In July, there were 396 condo transactions averaging $291,168 and in August 2009 there were 632 sales for an average price of $283,330.
The average MLS sale price for a condo peaked this year in May as well at $304,662.
Diane Scott, president of the Calgary Real Estate Board, said supply and demand is playing a role on current average prices but there's also the factor of luxury home sales.
"Homes sold over $1 million are down in numbers from last year for the same period," she said. "June to August last year we had 98 sales over $1 million. This year we've had 87 ... That will drive the average price down as well for sure."
On Wednesday, the Teranet-National Bank Composite House Price Index showed Calgary was lagging behind other major Canadian centres in the rate of change for home prices.
The index is estimated by tracking observed or registered home prices over time using data collected from public land registries and all dwellings that have been sold at least twice are considered in the calculation of the index.
The report said in June Calgary prices rose by 0.2 per cent on a monthly basis behind Ottawa (2.7 per cent), Toronto (2.4 per cent), Montreal (1.4 per cent), Halifax (1.3 per cent) and Vancouver (0.8 per cent). The national average was 1.5 per cent, the 14th consecutive month of increases.
On a year-over-year basis, the national average was 13.6 per cent growth led by Vancouver at 16.3 per cent and followed by Toronto (16.2 per cent), Ottawa (12.0 per cent), Montreal (8.7 per cent), Calgary (8.3 per cent) and Halifax (7.1 per cent).
mtoneguzzi@theherald.canwest.com
Story from © Copyright (c) The Calgary Herald Read more: http://www.calgaryherald.com/business/real-estate/High+inventory+cooling+sales+pressure+house+prices/3440610/story.html#ixzz0yyLPwgI0
Posted on
September 8, 2010
by
Natasha EDEN
Now might just be the best time to lock into a fixed-rate mortgage, especially for those homeowners on a tight budget, according to an expert broker.
The Bank of Canada hiked its overnight lending rate by 25 basis points Wednesday, and variable mortgage rate products offered through major lenders are expected to rise in step.
Despite Wednesday’s increase, variable rates -- hovering between 2.05% and 2.25% these days -- still offer savings compared to fixed-rate plans in the near term.
But there is an argument for locking into a fixed rate sooner rather than later, said Gary Siegle, a Calgary-based regional manager at Invis.
The rate for the popular five-year fixed mortgage has recently dropped to a commonly available 3.89% and is as low as 3.6% in some cases.
We haven’t seen rates this low in recent memory, Siegle said.
“There are lots of people out there who are saying: Why would you overlook the fact that we haven’t seen five-year rates this low in a long, long time?
“Why would you not take advantage of historic low interest rates?”
Unfortunately, the answer isn’t clear-cut, Siegle said.
Some people are choosing to overlook low fixed rates because the variable options are still cheaper and may be for some time.
However, mortgage holders do need to consider that variable rates do change eventually.
“And the direction everyone is predicting that they’ll go is up. It’s a question of how much and when,” Siegle said.
Floating rates have historically been the cheaper option over the entire life of a mortgage but not everyone can stomach the often dramatic swings in monthly expenses.
“It’s a question also of psyche,” Siegle said.
People who are generally nervous or who are on a tight budget might be better off locking in now, he said.
“Even though they are giving up that 1.25%, they are gaining a lot of peace of mind.”
Homeowners considering the switch to a fixed plan could look into whether there is penalty for switching mid-term, Siegle said.
Either way, both variable and fixed-rate mortgage holders can take advantage of current borrowing prices by paying down as much of the principal amount as quickly as possible. That way, as rates go up, total debt burden will be lowered come renewal time.
Whereas the central bank influences variable rates, the bond market influences fixed-rate mortgages.
The slower-than-expected economy has fuelled investor interest in the bond rally, pushing yields down and allowing banks to offer attractive fixed-rate products.
Posted on
September 8, 2010
by
Natasha EDEN
Calgary job seekers could close the year on a happier note, with one in five Calgary companies planning to hire within the next three months, a sign the city's economy is stabilizing after a rocky patch, economists say.
"It's all very positive news," said Randy Upright, CEO of Manpower's Alberta region, adding only four per cent of employers expect to cut back their labour force between October and December.
He added that the numbers show a "more conservative kind of survey" than those seen during boom times.
As well, the number looking to add employees is double what it was in the same period last year, when only 11 per cent were in that position.
And it's an eight percentage point increase over July to September when 15 per cent planned to hire.
With 71 per cent anticipating the status quo until the end of the year, "there's a continuing sense of stability overall," said Upright. "That's what we're really happy about."
In 2009, hiring intentions in Calgary sank to their lowest levels in 15 years.
Todd Hirsch, senior economist with ATB Financial, speaking generally about Calgary's economy, said stable is good after a couple years of volatility.
"The phrase I've been using lately is sunny with a chance of showers," he said to describe the situation in the city.
With some uncertainty still in the air, Hirsch said employers aren't rushing to add staff they may have to lay off should things take a turn.
Citing fluctuating oil prices and the low price of natural gas, "it's enough to rattle people," he said.
Manpower Canada's employment outlook survey released today, which includes 1,900 employers across the country, found 23 per cent in Calgary are looking to hire, compared with 21 per cent nationally. Across Canada, the number planning to cut jobs was seven per cent, with both figures are better than during the same period last year.
Manpower said it's the strongest national outlook in almost two years.
A Robert Half International employment report, which canvassed more than 1,000 executives in Canada about their hiring at the professional level, found a net 10 per cent plan to add jobs, a two percentage point increase over the previous three months.
Calgary has seen its unemployment rate start to decline, hitting 6.9 per cent in July, down from 7.5 per cent in June.
Hirsch said it looks worse than it is because Calgarians have been used to a rate of about three per cent.
However, while the province added 9,000 jobs in July, on top of 5,700 added in June, all those were attributed to the creation of part-time positions and in both months there was a decrease in full-time jobs.
In July, Canada added 129,700 part-time jobs but lost 139,000 full-time positions.
According to the Manpower Canada survey, the most optimism for job creation was seen in the mining and manufacturing-durable goods sectors, the best in a decade.
On Friday, the United States reported job gains of 67,000 in the private sector, which was better than expected, with the economy losing 54,000 jobs overall -- better than the 120,000 predicted.
Story provided by:
© Copyright (c) The Calgary Herald Read more: http://www.calgaryherald.com/business/five+Calgary+companies+plan+hiring+Economists/3488156/story.html?cid=megadrop_story#ixzz0yyIlhWth
Posted on
September 8, 2010
by
Natasha EDEN
Posted in
, Calgary home market, Calgary home sales, Calgary Housing Market, Calgary Housing Stats, Calgary Housing Trend, Calgary Properties, Calgary Real Estate, Calgary Real Estate Market, Calgary Real Estate Stats, Whitehorn
By Mario Toneguzzi, Calgary Herald September 2, 2010
An increase in active listings, combined with a cooling in housing demand, has started to push prices down in Calgary's residential real estate market.
Data released Wednesday by the Calgary Real Estate Board show single-family home sales fell by just over 32 per cent in August compared with a year ago while condominium transactions plunged by more than 42 per cent.
And the average MLS sale price in both markets dropped from what they were in July.
"If (buyers) don't have to buy they're just not doing it right now. There's just too much unrest," said CREB president Diane Scott.
"We know the traffic in the open houses has picked up in the last two weeks. We've been monitoring it very closely and the traffic is there, but the buyers are just a little leery."
Scott attributes that cautious sentiment to negative economic news and reports continuing to come before the public which create plenty of uncertainty in the marketplace.
"It's the economic situation that we happen to find ourselves in and the negative reports that keep popping up and buyers are kind of standing back, thinking it's going to go down lower," she added.
According to CREB, there were 867 single-family home sales in the city in August, down from August 2009's 1,277 sales and slightly down from the 915 sales recorded the previous month.
The average MLS sale price for a single-family home fell to $445,617, down 4.1 per cent from July and also off 1.9 per cent from a year ago. The year-over-year decline was the first month since July 2009 in which single-family home prices were lower than the previous year.
In the condominium market, sales dropped from last year as 364 properties were sold in Calgary for an average price of $286,384. The average price decreased by 1.6 per cent from July, but was up 1.1 per cent from August 2009.
"The rise in mortgage rates, more prudent lending practices and weaker net migration has contributed to the decline in sales," said Richard Cho, senior market analyst for Calgary for Canada Mortgage and Housing Corp. "In addition, the pent-up demand that helped fuel sales activity earlier in the year has also eased.
"In the last several months we have seen an uptick in the number of homes being listed on the market, providing consumers more choice and time. This, combined with the moderation in sales, has moved the market into buyers' conditions, softening price growth."
The month-end inventory of single-family homes for sale was 5,046 at the end of August, up from 3,296 in August 2009.
The month-end inventory of listings in the condo market was 2,255 in August, increasing from 1,479 last year.
Scott said the elevated level of listings plus the slowdown in sales is bound to have an impact on the average sale price.
The monthly peak for MLS sale prices was in May this year with single-family homes selling for an average of $483,240 and condos selling for $304,662.
"It's a downward type of trend. It's certainly not drastic but it is downward that I think we're going to see probably for the rest of the year," said Scott. "I think we'll have a little bit more activity as for the number of sales in September. Typical. It's seasonal and I think we'll see that in September."
In the MLS market of towns outside Calgary, sales dropped by just over 23 per cent to 312 from 406 a year ago and the average sale price increased by 0.3 per cent to $355,238 from $354,175.
The country residential market, which includes acreages, saw sales decrease by just under 17 per cent to 50 from 60 in August 2009 while the average sale price dropped by just over two per cent to $747,580.
mtoneguzzi@theherald.canwest.com
- - -
Calgary Home Sales Continue To Slide Read more: http://www.calgaryherald.com/health/Calgary+housing+sales+tumble/3472287/story.html#ixzz0yyMrfLrE
Posted on
September 2, 2010
by
Natasha EDEN
Posted in
Calgary home sales, Calgary Housing Market, Calgary Housing Stats, Calgary Housing Trend, Calgary Properties, Calgary Real Estate, Calgary Real Estate Market, Calgary Real Estate Stats, Market Trends, Market Update, Real Estate
Calgary Market Update for September 1, 2010
- courtesy of the Calgary Real Estate Board
Home sales in the city of Calgary continued to trend lower in the month of August, according to figures released today by the Calgary Real Estate Board (CREB®).
The number of single family homes sold in August 2010 in the city of Calgary was down 32 per cent from the same time a year ago, and condominium sales saw a decrease of 42 per cent from the same time a year ago.
August 2010 saw 867 single family homes sold in the city of Calgary. This is a decrease of 5 per cent
from 915 sales in July 2010. In August 2009, single family home sales totalled 1,277. The number of
condominium sales for the month of August 2010 was 364. This was a decrease of 8 per cent from the 396 condominium transactions recorded in July 2010.
In August 2009, condominium sales were 632. “Calgary’s housing market has been undergoing a
measured correction over the past 4 to 5 months. Sales are trending lower as a result of a increase in first time home buyers entering the market and a decline in pent up demand following a strong post-recession recovery,” says Diane Scott, president of CREB®.
“There has been much talk recently about the potential for a housing bubble in Canada--but the economic fundamentals at play make this scenario unlikely for Calgary. What we are seeing is an adjustment to higher levels of inventory and a shift to a buyer’s market.”
“A slower than anticipated pace of mortgage rate hikes and continued improvements in employment are more likely to bring stability rather than volatility into Calgary’s housing market as we move into 2011, ” adds Scott.
The average price of a single family home in the city of Calgary in August 2010 was $445,617, showing a 4 per cent decrease from July 2010, when the average price was $464,655, and a decrease of 2 per cent from August 2009, when the average price was $454,130.
The average price of a condominium in the city of Calgary in August 2010 was $286,384, showing a 2 per cent decrease from July 2010, when the average price was $291,168 and a 1 per cent increase over last year, when the average price was $283,330. Average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods, or account for price differentials between geographical areas.
“We expect a period of correction will continue into the fall of this year. Prices may sag in the short-term and level off as we move into 2011,” says Scott. “Homebuyers and sellers should keep in mind that market trends are unique even throughout the wider Calgary region.
A case in point is the relative strength of Calgary’s town and country market, where sales have remained at 2009 levels. Homebuyers and sellers should speak to a REALTOR® to better understand the opportunities in our current market,” says Scott.
The median price of a single family home in the city of Calgary for August 2010 was $395,000, showing a 1 per cent decrease from July 2010 and August 2009, when the median price was $400,000. The median price of a condominium in August 2010 was $260,000, showing a 3 per cent decrease from July 2010, when the median price was $268,000, and no change from
August 2009, when it was the same – $260,000.
All city of Calgary MLS® statistics include properties listed and sold only within Calgary’s city limits. The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the
median price.
Single family listings in the city of Calgary added for the month of August 2010 totalled 1,960, an increase of less than 1 per cent from July 2010 when 1,942 new listings were added, and showing an increase of 3 per cent from August 2009, when 1,910 new listings came to the market.
Condominium new listings in the city of Calgary added for August 2010 were 808, down 9 per cent
from July 2010, when the MLS® saw 890 condo listings coming to the market. This is a decrease of 3 per cent from August 2009, when new condominium listings added were 832.
“Total month end inventory for the wider Calgary region is down marginally when compared to July—a trend we expect will continue in the coming months.
New listings are also likely to recede in the coming months in response to slowing sales,” adds Scott.
Posted on
August 3, 2010
by
Natasha EDEN
Following info from the Calgary Real Estate Board
Calgary, August 3, 2010 –
The summer cool down in Calgary’s housing market continued in the month of July, according to figures released today by the Calgary Real Estate Board (CREB®).
The number of single family homes sold in July 2010 in the city of Calgary was down 42 per cent
from the same time a year ago, and condominium sales saw a decrease of 44 per cent from the same time a year ago.
July 2010 saw 915 single family homes sold in the city of Calgary. This is a decrease of 14 per cent from 1,061 sales in June 2010. In July 2009, single family home sales totalled 1,585. The number of condominium sales for the month of July 2010 was 396. This was a decrease of 11 per cent from the 445 condominium transactions recorded in June 2010.
In July 2009, condominium sales were 702. “Calgary’s housing market is cooling off after its
record-setting pace in the post-recession period. This slow-down is not all that surprising in the face of tighter mortgage regulations and rising interest rates. The post-recession rally we saw in the summer of 2009 was unique and that pace couldn’t be sustained,” says Sano Stante, CREB
® president elect.
“The sense of urgency seen last summer, fall and winter in the lead-up to tighter mortgage-lending
measures has diminished,” says Stante. “Rising mortgage rates and increased inventories will be
the primary head-wind facing Calgary’s housing market, but improving job prospects will offer some tail winds in the latter half of 2010 and into 2011.”
The average price of a single family home in the city of Calgary in July 2010 was $464,655, showing a 4 per cent decrease from June 2010, when the average price was $481,964, and showing an increase of 6 per cent from July 2009, when the average price was $436,782. The average price of a condominium in the city of Calgary was $291,168, showing no significant
change from June 2010, when the average price was $292,238 and a 2 per cent increase over last year, when the average price was $285,032. Average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods, or account for price differentials between geographical areas.
“We are seeing relative stability in our average and median prices for the Calgary market,” says Stante. “A gradual return to moderate interest rates will not trigger any kind of steep decline in prices in our housing market. Prices may soften in select markets where inventory has bulked up, but for the most part they will remain relatively sticky as the economy improves.”
“Nonetheless with the combination of historically low interest rates and a large inventory of homes, there are some great buys out there—particularly in areas where comparable stock is ample such as the condominium and multi-family market. This presents a great opportunity to get into the market or to trade up,” adds Stante.
The median price of a single family home in the city of Calgary for July 2010 was $400,000, showing a 5 per cent decrease from June 2010, when the median price was $418,900, and a 3 percent increase from July 2009, when the median price was $390,000.
The median price of a condominium in July 2010 was $268,000, showing a 1 per cent decrease from June 2010, when the median was $269,900. That’s up 2 per cent from July 2009, when the median price was $263,000.
All city of Calgary MLS® statistics include properties listed and sold only within Calgary’s city limits. The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the
median price.
There was a slowdown in the number of Calgarians putting homes up for sale in the month of July.
Single family listings in the city of Calgary added for the month of July totalled 1,942, a decrease of 29 per cent from June 2010 when 2,733 new listings were added, and showing a decrease of 7 per cent from July 2009, when 2,089 new listings came to the market.
Condominium new listings in the city of Calgary added for July 2010 were 890, down 18 per cent
from June 2010, when the MLS® saw 1,084 condo listings coming to the market. This is a decrease of 3 per cent from July 2009, when new condominium listings added were 918.
“Indeed Alberta and Calgary’s economic recovery is lagging behind the rest of the country right now. But on the bright side we see this trend reversing itself as we move into 2011. We expect Alberta to lead in economic growth and recovery—outperforming much of the country in 2011,” says Stante.
Posted on
July 15, 2010
by
Natasha EDEN
Calgary's Newsradio 660 released a short article today regarding the current real estate market in Calgary that is worth making a note of. The Chief economist with the Canadian Real Estate Board states this market will change...
Real estate activity down in Canada by Kevin Usselman and Stephanie Irvine
Activity in the Canadian housing market continued to slide in June, with Calgary and Toronto leading the decline.
The Canadian Real Estate Association reports sales were off by more than eight per cent last month, compared to May.
Year over year, the drop is even more pronounced running at almost 20 per cent.
Calgary's housing market only recently became a buyer's market.
But the chief economist with the CREA says that is going to change, with people taking their homes off the market and refusing to accept low-ball offers.
Gregory Klump tells 660News while sales and prices will continue to cool in the coming months, Alberta's energy-based economy will keep luring people to this province.
Klump says declines in prices and sales aren't shocking.
He says the numbers were artificially inflated with a rush of people into the market, buying ahead of tighter mortgage rules and rising interest rates.
Posted on
June 15, 2010
by
Natasha EDEN
Story courtesy of the Financial Post
Canada’s housing market is expected to cool off this year and next, but isn’t at risk of falling victim to a U.S.-style foreclosure crisis anytime soon, according to a new report by debt-rating firm DBRS Ltd.
DBRS said in the report that Canada will continue to fare well in comparison to its neighbour to the south when the Canadian housing market corrects itself and interest rates are tightened. That is because lending practices here are much more sound than in the U.S.
“The likelihood of us having the kind of situation they had in the U.S. is extremely low,” said Jerry Marriott, managing director of structured finance at DBRS . “It’s a combination of the lending practices prior to the peak in 2007 — they were more restrained, so there were better underwriting practices in Canada. We also think there are a number of factors in the Canadian market which have lent themselves to more prudent lending.”
Those factors includes less aggressive lenders in the market, as well as systems designed to keep people paying their mortgages.
Mr. Marriott said that a cooling effect is gradually taking hold in the housing market as credit availability begins to tighten, and the HST factors into home buying decisions in Ontario and British Columbia.
That means there’s a greater likelihood this year that there will be a correction in housing prices rather than a continued increase. Mr. Marriott said the DBRS expects the market to cool throughout the year and continue to cool into 2011. That echoes analysts expectations, who also expect prices to drop as well. A recent report by TD Bank predicts prices will fall by 2.7% in 2011.
“If you add up the factors you would look at as to whether there’s going to be further price increases or the potential for a correction, we don’t see there’s a lot of factors supporting further price increases,” Mr. Marriott said. “But there are a number of factors that show there might be some moderation in housing prices.”
That may bode well for potential buyers after a report by CIBC this week said that on average, Canadian home prices are currently 14% over their “fair” value — that represents about 1.5 million homes, or 17% of all dwellings.
The report also highlights that Canadian households continue to have a particularly high level of debt, something that the DBRS notes is part of an ongoing trend. But it tempers that by adding that household debt is not as worrying as some analysts have suggested.
“We think the measurement of household leverage is subject to a fair amount of interpretation,” said Mr. Marriott.
For instance, the debt-to-disposable income shows Canadians are generally more indebted than Americans — however, the report outlines that this doesn’t reflect certain differences between the two countries that affect income, such as the fact that the U.S. has lower taxes but that Americans pay more money toward their health-care bills.
“At the end of 2009, Canadian households remained financially less leveraged by 10% to 45% compared with U.S. households,” the report said. Overall, after adjustments, Canada had a household liabilities-to-total gross income ratio of 116.8% at the end of 2009, while the United States’s ratio was 161.5%.
But Canadian household debt is growing faster. Household liabilities increased by 29.5% in Canada between 2007 and 2009. In the use, household debt grew just 5.3% during the same period.
Overall, mortgage lending in Canada reached $958.8 billion at the end of 2009. That’s more than double the $414.1 billion ten years ago. When including home equity lines of credit, outstanding mortgage-related credit was more than $1 trillion.
Financial Post Read more: http://www.cbc.ca/fp/story/2010/05/28/3081970.html#ixzz0qwjO67re
Posted on
June 9, 2010
by
Natasha EDEN
There has been a marked decline in home sales since the new rules for mortgage approvals came into play. Following are some excerpts from the most current CREB® report.
Calgary, June 1, 2010 – Calgary home sales showed a marked decline in the month of May,according to figures released today by the Calgary
Real Estate Board (CREB®).
The number of single family homes sold in May 2010 in the city of Calgary was down 20 per cent from the same time a year ago, and condominium sales saw a decrease of 21 per cent from the same time a year ago.
...
“The first quarter of 2010 was exceptionally strong with our spring sales coming early in the wake of anticipated mortgage hikes,” says Diane Scott, president of CREB®. “We believe there are a number of factors contributing to this marked slowdown including a declining number of first time homebuyers in the market, a rise in monthly carrying costs as mortgage rates rise and to some extent market jitters in the wake of Greece’s financial crisis,” says Scott.
“Consumers are feeling a little nervous about the recent instability of the stock markets—and with mortgage rate hikes behind us, it’s understandable that feelings of urgency among buyers have lessened,” adds Scott.
Click here for the full report, including statistical analysis and charts of the latest trends.
Posted on
June 9, 2010
by
Natasha EDEN
CNN has an excellent article on rumours that we may be in for a double dip recession. Apparently, the stats indicate otherwise.
NEW YORK (CNNMoney.com) -- Europe's debt crisis. Companies still not hiring. The Gulf oil spill. These are uncertain times to say the least. But while you might think economists would be running for the hills and looking ahead to a so-called "double dip recession," that's not necessarily the case.
In fact, some economists think a double dip is even less likely than it was earlier this year.
David Wyss, chief economist with Standard & Poor's, said that even though he thinks slower U.S. growth is practically a sure thing, the odds of a double-dip actually have shrunk to 20%, from 25% earlier this year.
Same goes for Derek Hoffman, founder and editor of The Wall Street Cheat Sheet, who also puts the odds of a double dip at 20%, when just a few months earlier he saw them at 50-50.
The term "double dip" refers to a recession followed by a short-lived recovery that then slides back into a second recession. It can be measured by fluctuations in gross domestic product, or GDP -- one of the broadest measures of economic activity.
Hoffman said he changed his mind about a potential double dip after major U.S. companies reported solid profit growth in the first quarter of 2010 and European leaders approved a $1 trillion bailout package to deal with the region's debt crisis.
Granted, the picture isn't all rosy. Unemployment is still high at 9.7%. But Wyss points out that consumers are spending again. Plus, the average person on main street doesn't seem as worried about getting laid off as they were a year ago, he said.
Wyss's comments echo those of Federal Reserve chairman Ben Bernanke, who on Monday told reporters that he expects a continued economic recovery, in part because of revived consumer spending. Bernanke also said the recovery would be slow -- it "won't feel terrific," he said.
Bernanke dodged a question about whether he fears a double-dip recession, saying "nobody knows with any certainty."
To be sure, any chance of a double dip is nothing to shrug off.
Mark Vitner, a senior economist at Wells Fargo Securities, likes to call himself an optimist, but said he can't deny that when he talks to clients, he's blunt about the risk of a double dip. He calculates the chances of one happening at about 30%, whereas a few months ago, he would have said it was as low as 15%.
"We experienced the worst crisis in a generation and now there are major problems in Europe and with the oil spill. How optimistic can you expect an optimist to be?" he said.
The winding down of government stimulus programs and inventory rebuilding, which together accounted for much of the recovery, are the major factors behind a slowdown, Vitner said.
Add in geopolitical unrest and volatile global markets, and businesses, consumers and lawmakers alike will be more hesitant to make investments that could support economic growth.
"One of the things to remember is conditions do not have to be perfect for the economy to grow," Vitner said. "But there's a limit to how much bad news this economy can take."
Posted on
May 3, 2010
by
Natasha EDEN
Calgary, May 3, 2010 –
Calgary’s housing market continues at a healthy and balanced pace according to figures released today by the Calgary Real Estate Board (CREB®).
The number of single family homes sold in April 2010 in the city of Calgary was up 5 per cent from the same time a year ago, while condominium sales saw an increase of 10 per cent from the same time a year ago.
April 2010 saw 1,352 single family homes sold in the city of Calgary. This is a decrease of 3 per cent from 1,396 sales in March 2010. In April 2009, single family home sales totaled 1,290. The number of condominium sales for the month of April 2010 was 639. This was an increase of 5 per cent from the 609 condominium transactions recorded in March 2010. In April 2009, condominium sales were 579.
“Continued economic optimism, improved choice and price stability are all contributing to a healthy and balanced housing market in Calgary,” says Diane Scott, president of CREB®. “Calgary’s housing market is set to simmer, not sizzle in 2010.
We can be grateful that we are not facing any real danger of a housing bubble here in our market.”
“There has been some talk about a bubble in some parts of Canada but the rapid price increases seen in Vancouver, Victoria and southern Ontario have not been seen in Calgary,” Scott acknowledges.
“Single family house prices are coming back nicely compared to 2009,” says Scott. The average price of a single family home in the city of Calgary in April 2010 was $460,378, showing a decrease of 2 per cent from March 2010, when the average price was $471,269, and showing an increase of 8 per cent from April 2009, when the average price was $426,311. The average price of a condominium in the city of Calgary was $289,588, showing a 2 per cent decrease from March 2010, when the average price was $296,660 and a 4 per cent increase over last year, when the average price was $277,953. Average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods, or account for price differentials between geographical areas.
The median price of a single family home in the city of Calgary for April 2010 was $417,000, showing a 1 per cent decrease from March 2010, when the median price was $423,000, and a 10 per cent increase from April 2009, when the median price was $380,000. The median price of a condominium in April 2010 was $267,500, showing a 3 per cent decrease from March 2010, when the median was $275,000. That’s up 7 per cent from April 2009, when the median price was $251,000.
All city of Calgary MLS ® statistics include properties listed and sold only within Calgary’s city limits. The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given
period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the median
price.
“Our average price is holding relatively steady,” says Scott. “The pace of price increase has been tempered by the rate of new listings that has been
growing faster than sales. Sales levels are still well below the high demand from 2004-2008, mainly because we are still not seeing high job growth and
unemployment has remained high.”
Single family listings in the city of Calgary added for the month of April totaled 3,082, an increase of 3 per cent from March 2010 when 2,988 new listings were added, and showing an increase of 53 per cent from April 2009, when 2,010 new listings came to the market. Condominium new listings in the city of Calgary added for April 2010 were 1,335, down 3 per cent from March 2010, when the MLS® saw 1,376 condo listings coming to the market. This is an increase of 38 per cent fromApril 2009, when new condominium listings added were 967.
“Calgary didn’t see the impacts of the very low interest rates the way other areas of Canada did,” says Scott. “Calgarians are also not rushing out to
beat the rate increases as they are seeing less risk of rising prices squeezing them out of the market.” “In fact financially, Calgarians are in a very healthy
position. Just over 37 per cent of our median pretax household income was needed to service the mortgage on a typical detached bungalow in Calgary—that’s below the national average,” says Scott.
Article by Calgary Real Estate Board (CREB®).
Posted on
April 26, 2010
by
Natasha EDEN
The Canadian Press
OTTAWA - The Bank of Canada may be concerned about the level of debt homeowners are assuming, but consumers who have recently taken out or renewed their mortgage are not.
A new online survey of Canadians active in the mortgage market, including first-time buyers, shows the vast majority are not only comfortable with their level of debt, but two thirds think they will pay their loans off sooner than required.
The annual survey by Canada Mortgage and Housing Corporation also suggests that Canadians are savvy consumers when it comes to buying a home.
On average, consumers surveyed say they took a year to think through their decision and 89 per cent said they used the Internet to research mortgage options.
"First time home buyers, they do their homework," said Pierre Serre, the CMHC's vice president of insurance product and business development.
"The key findings are that people are getting more into the Internet, people are getting informed and people are comfortable with home ownership."
According to the CMHC, nine in 10 new buyers believe ownership is a good long-term investment and that now is a good time to purchase a home.
The housing market has been one of the mainstays of the economic recovery, with prices and sales already back, and in some markets, beyond pre-recession levels.
In a separate report Monday, the real estate brokerage firm Re/Max said luxury home sales had soared in the first quarter of 2010, with nine of 13 markets shattering records for the winter months.
Kelowna, B.C. led the way in terms of percentage increase at 700 per cent, followed by Montreal at 300 per cent and Victoria at 275 per cent. Canada's most populous city, Toronto, was not far behind with a 263 per cent advance.
"Recovery in the upper end has been nothing short of remarkable," said Elton Ash, the regional vice-president for Re/Max in western Canada.
It's been such home-buying enthusiasm that has raised concerns at the Bank of Canada about super-low interest rates luring some into taking on more debt than they can afford. Although affordability remains high, given the low rates, household debt has risen to a record $1.47 per $1 of disposable income.
Bank governor Mark Carney and his deputies have warned that buyers should make sure when they purchase a home, they can afford not only the current mortgage but payments when interest rates rise.
The central bank has hinted it may start raising its policy rate as early as June 1, but already, chartered banks have increased longer-term, closed and some variable mortgages by close to a percentage point.
On Monday, Royal Bank bumped up its mortgage rates on all its lending terms by nearly a seventh of a percentage point. It was the third mortgage rate increase in recent weeks, reflecting the rising costs of borrowing on the bond market, where banks finance their mortgage lending.
The CMCH survey of 2,500 who have actually taken out a first mortgage, or renewed their mortgage in the last year, strongly suggests they are doing so with eyes wide open.
The survey found that 81 per cent are "comfortable" with their level of debt. But even the 19 per cent who did not answer in the affirmative didn't raise a red flag - 13 per cent were neutral, five per cent were somewhat not comfortable, and only one per cent said they were very uncomfortable.
Among first-time buyers, 85 per cent said they had a good understanding of how much of a mortgage they could afford.
The results are not surprising to CIBC economist Benjamin Tal, who recently researched the housing market for his bank. Tal's report tended to undercut concerns that Canadians were significantly vulnerable to rising interest rates.
"The number of people who are really, really vulnerable is a relatively small number," he said,"Clearly, when you have a situation of interest rates rising there will be defaults rising, but it will not be over the cliff like the U.S., it will not be a crisis."
Tal says Canadians traditionally adopt a variety of strategies to rising rates, including locking in to longer-term fixed mortgages, something he says is already occurring.
The other difference between the Canadian situation and that of the U.S., where the sub-prime crisis triggered a financial market meltdown, is that lower-income Canadians tend to be more conservative than higher-income buyers, said Tal. In reverse of the U.S. situation, lower-income Canadians tend to take out fixed-rate mortgages, he said.
Posted on
April 26, 2010
by
Natasha EDEN
From the Canadian Press
TORONTO - Mortgage rates are headed higher again as Canada's biggest bank, the Royal, is bumping up the cost of borrowing to buy a house by nearly a seventh of a percentage point.
The increase of 15-hundredths of a point on loans ranging from six-month variable to 10-year closed loans are effective Tuesday.
The third mortgage rate increases in recent weeks reflect the rising costs of borrowing on the bond market, where banks finance their mortgage lending.
Bond investors are demanding higher interest rates to part with their money because they expect rising inflation will eat away at bond returns in future.
At the Royal, a three-year closed mortgage rises to 4.75 per cent, while a five-year rate increases to 6.25 per cent and a 10-year loan jumps to 7.2 per cent.
In the last month or so, mortgage rates tied to the bond market have risen
nearly a full point in three separate rate hikes.
Mortgage loans tied to the prime rate have held steady so far but are expected to rise this summer if the Bank of Canada as expected raises its key rate and the banks follow with prime rate increases of their own.
Posted on
April 15, 2010
by
Natasha EDEN
Calgary, April 1, 2010 Market Update–
Calgary’s housing market enjoyed a healthy boost in March as homebuyers anticipate an earlier than expected rise in interest rates,according to figures released today by the Calgary Real
Estate Board (CREB®).
The number of single family homes sold in March 2010 in the city of Calgary was up 29 per cent from the same time a year ago, while condominium sales saw an increase of 37 per cent from the same time a year ago.
March 2010 saw 1,396 single family homes sold in the city of Calgary. This is an increase of 35 per cent from 1,035 sales in February 2010. In March 2009, single family home sales totaled 1,086. The number of condominium sales for the month of March 2010 was 609. This was an increase of 14 per cent from the 536 condominium transactions recorded in February 2010.
In March 2009, condominium sales were 446.
“The spring market has come early to Calgary,” said Diane Scott, president of CREB®.
“Improved economic conditions, better employment prospects, and an earlier
than expected rise in mortgage rates are all contributing to this early boost in sales this year.”
“Undoubtedly the recent announcements by all our major banks to raise mortgage rates are motivating buyers to take the plunge,” Scott acknowledges. “But Calgary’s market remains in a healthy position and our
sales are not outstripping supply. The rise in demand will also motivate sellers to consider listing this spring.”
“There has been some speculation that mortgage rate hikes will adversely affect housing demand in the longterm, but we should keep in mind that a rise in rates was fully expected. The Bank of Canada has been operating
at emergency rates as a response to the global recession.
While a rise in rates may tone down demand later this year, we don’t feel this adjustment will prevent the vast majority of buyers with healthy credit to enter the housing market,” said Scott.
“Ultimately improvements in employment and economic conditions will drive housing demand—Calgary’s economy has seen solid improvements in the
first quarter of 2010,” added Scott.
The average price of a single family home in the city of Calgary in March 2010 was $471,269, showing an increase of 3 per cent from February 2010, when the average price was $458,254, and showing an increase of 12 per cent from March 2009, when the average price was $420,354. The average price of a condominium in the city of Calgary was $296,660, showing a 5 per
cent increase from February 2010, when the average price was $282,880 and a 4 per cent increase over last year, when the average price was $284,056. Average price information can be useful in establishing trends
over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods, or account for price differentials between geographical areas.
The median price of a single family home in the city of Calgary for March 2010 was $423,000, showing a 3 per cent increase from February 2010, when the median price was $411,000, and a 13 per cent increase from March 2009, when the median price was $375,000. The median price of a condominium in March 2010 was $275,000, showing a 3 per cent increase from February 2010, when the median was $265,900. That’s up 6 per cent from March 2009, when the median price was $260,000.
All city of Calgary MLS ® statistics include properties listed and sold only within Calgary’s city limits. The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the
median price. “Our average price has edged upwards as more move-up buyers enter the market and overall demand strengthens,” says Scott. “But this is not an unusual trend during a spring market. We expect this modest
price growth to continue, but a rise in listings will likely curb this trend,” said Scott. Single family listings in the city of Calgary added for the month of March totaled 2,988, an increase of 39 per cent from February 2010 when 2,154 new listings were added, and showing an increase of 48 per cent
from March 2009, when 2,023 new listings came to the market. Condominium new listings in the city of Calgary added for March 2010 were 1,376, up 24
per cent from February 2010, when the MLS® saw 1,109 condo listings coming to the market. This is an increase of 52 per cent from March 2009, when new condominium listings added were 903.
“Overall, Calgarians should feel positive about the housing market. Sales and price growth are in line with a more balanced and normalized market. We are
seeing a return to stability and optimism in Calgary as we shake off our recessionary blues. Mortgage rates are just one factor in the housing situation—a more positive economic outlook and improved job prospects will play a bigger role in the long-term,” added Scott.
Information courtesy of the Calgary Real Estate Board.
Posted on
March 16, 2010
by
Natasha EDEN
Clarifications on Canada Mortgage Changes
An excellent article by Richard Moxley of TMG Mortgage Group Alberta Ltd.
Finally! Here are some clarifications on mortgage changes The Bank of Canada announced almost a month ago!
Effective April 19th, all terms less than 5 years that are high ratio insured mortgages (anything less than 80% Loan to Value) will be qualified using the greater of the chartered bank 5-year posted rate (5.39% currently), or the term rate (some banks have fixed rates on 5 – 10 year terms that are higher than 5.39%). Currently most banks are qualifying right around 4% on variables and will only qualify higher on fixed terms less than 3 years. So what does this mean? Until CMHC changes its mind again, 5 year fixed rates are the only rates that you won’t have to qualify on the highest rate.
The posted qualifying rate will be published by the Bank of Canada each Monday. Here’s the link: Posted Mortgage Rate (Look for series V121764.)
More not-so-good news for Canadians – Fixed rates look like they will be going up right away! How do we know? Because Canada’s 5 year government bond jumped up 18 points last week, the most in almost five months. (Bond yields guide fixed-rate mortgage pricing.) Yes, you may have heard that the Bank of Canada has kept the prime rate the same, but variable rates and fixed rates are usually influenced by different factors.
Some reasons why fixed rates may be rising very shortly:
· stronger-than-forecasted U.S. employment data
· new June maturity as the 5-year benchmark, asset rotation into stocks
· 20% increase in debt issuance announced in last week’s budget
· Increased consumer confidence
· More people spending money
A reason why rates might hold off a bit:
· Canadian employment data that usually comes out the same day as U.S. data has been held off until this week. If jobs are up, then we’ll be seeing interest rates jump up once again.
Here are some more changes happening in the industry because of the 2010 Federal Budget.
- Pre-payment Penalties: The Government will attempt to “bring forward regulations” to standardize the calculation and disclosure of mortgage pre-payment penalties. (This applies to federally regulated lenders.) This is mainly to help inform the average Canadian about clauses in their mortgages papers like Interest Rate Differential (IRD) penalties.
- Credit Unions: The Canadian government will begin “legislative framework to enable credit unions to incorporate and continue federally.” This could help Credit Unions have more of a chance to compete with big banks so that they could do other provinces then just the ones they are located in.
Posted on
March 1, 2010
by
Natasha EDEN
OTTAWA — Finance Minister Jim Flaherty tightened mortgage rules on Tuesday and, in doing so, may have taken the steam out of a housing market that had seen prices and sales activity rise rapidly over the last year.
For most consumers, the changes are unlikely to make it more difficult to get a mortgage but it could reduce the size of the mortgage an individual consumer can negotiate with a lender.
"The changes (he) announced today . . . will actually impact the experience that all Canadians have when they go into banks to get loans," said Craig Alexander, deputy chief economist at TDBank Financial Group.
Flaherty's changes apply to any mortgage backed by the federal Canada Mortgage and Housing Corp. (CMHC).
But Alexander said the practical effect of any changes to the rules around CMHC-backed mortgages is that lenders tend to extend at least some of those provisions to all mortgages.
More than two-thirds of Canadians own their own homes, a record for home ownership.
In Alexander's view, that means those who qualified for a mortgage under the old rules should still be able to get one using Tuesday's announced regulations but they may not be able to borrow as much and, as a result, might have to look at buying slightly less expensive properties.
That trend — forcing consumers to look at less expensive properties — could end up softening the sharp year-over-year price increases that have been characteristic in many cities recently. The Canadian Real Estate Association says that in December, the average selling price of a home in Canada was a little more than $337,000, a jump of nearly 20 per cent compared to the same month a year earlier.
The change most likely to affect most borrowers will be a new credit test for any CMHC-backed mortgage.
Previously a lender wanted to ensure that a borrower could make the monthly payments of a three-year fixed-rate mortgage. Now, lenders will want to see that a borrower can afford a five-year fixed-rate mortgage — even if the borrower plans to take out a mortgage with different terms that could result in a lower monthly payment.
For example, a consumer might want to borrow $200,000, amortized over 20 years, at the low rate associated with one-year fixed-rate mortgage — about 2.65 per cent right now. A monthly payment on that mortgage would be about $1,035.
But the lender must now make sure that borrower could afford the rate for a fixed, five-year mortgage — something closer to 4.5 per cent. The monthly payment on that kind of mortgage would be about $1,260.
The lender must make sure the borrower has that extra few hundred dollars a month to spare, even if the borrower is signing up for the mortgage with lower monthly payments.
Or, to flip this scenario around, if a borrower is limited to making monthly payments of $1,035, that would be enough to borrow $200,000 on the one-year fixed rate mortgage rate of 2.65 per cent but would only be good enough to borrow about $165,000 for a five-year fixed rate. Under the new rules, the consumer, in this case, would be limited to borrowing just $165,000 even if the consumer could negotiate different and cheaper terms for the mortgage.
The end result is that some potential home buyers will not be able to borrow as much from the bank and will have to buy less expensive homes.
"At the margins this will affect affordability and, in turn, activity," said Gregory Kump, chief economist for the Canadian Real Estate Association.
Flaherty also said those who wish to refinance their mortgage can only borrow up to 90 per cent of the assessed value of their home, down from 95 per cent. The intent behind that rule is to prevent a homeowner from carrying a mortgage that is worth more than the home itself.
"The underlying message is that Canadians should be prudent in the obligations they take on because we can all expect that mortgage interest rates will rise over time,"said Flaherty.
Flaherty's new rules are likely to have their biggest impact on those who buy investment properties for the rental market. Investors will now have to put up 20 per cent of the purchase price instead five per cent in order to get a government-backed mortgage to buy any property that is not the lender's own residence.
"I just don't want CMHC and the Canadian people to be in the business of guaranteeing speculative mortgages," Flaherty said.
Flaherty kept the minimum down payment at five per cent for those buying the home they plan to live in.
"The measures that I've announced this morning will not affect the ability of a Canadian family to buy a house," Flaherty told reporters in Ottawa. "It will affect those who are speculating. It will affect those who want to remortgage their house and get what is in our view an excessive amount of cash out of the house."
Though the new rules go into effect April 19, lenders are likely to begin enforcing most of these measures immediately.
"On the one hand, we don't want to discourage Canadians from home ownership. On the other hand, we do want to discourage a tendency by some to use their homes as an ATM machine, the tendency by some to buy three and four condominiums, for example, by way of speculation," Flaherty said. "We have a healthy housing market in Canada, but we want to keep it healthy."
Flaherty's new rules
Finance MinisterJim Flaherty announced new restrictions Tuesday for any borrower who wants a mortgage backed by the Canada Mortgage and Housing Corporation. Though they officially go into effect April 19, experts say lenders will likely put them into place immediately:
1. All borrowers will have to be able to demonstrate that they could make the payments on a five-year fixed rate mortgage even if they end up choosing a mortgage, such as a variable rate mortgage, that would result in smaller monthly payments.
2. The maximum amount consumers can borrow to refinance their mortgages is being lowered to 90 per cent of the value of the home, down from 95 per cent.
3. Anyone who wants a government-insured mortgage to buy a home that they will not live in will have to come up with a down payment of 20 per cent, up from five per cent.
Source:Department of Finance
Posted on
November 1, 2010
by
Natasha EDEN
Calgary, November 1, 2010 – Home sales in the city of Calgary were down month-over-month in October 2010, showing signs that buyers still remain cautious, despite signs of economic recovery. Year-over-year sales continued to trend lower in the month of October, according to figures released today by the Calgary Real Estate Board (CREB ®).
The number of single family home sales in the month of October 2010 shrank by 7 per cent at 888, compared with September 2010, when sales were 958. The number of condominium sales for the month of October 2010 was 310. This was a decrease of 15 per cent from the 366 condominium transactions recorded in September 2010
.
Year-over-year, the number of single family homes sold in October 2010 in the city of Calgary were down 31 per cent. In October 2009, single family home sales totalled 1,285. Condominium sales saw a decrease of 48 per cent from the same time a year ago. In October 2009, condominium sales were 601.
“Buyers remain cautious, perhaps waiting to feel a little more confidence in Calgary’s economic growth and their own job security,” says Diane Scott, president of CREB ®.
“We believe economic recovery will build momentum into 2011 as the outlook for oil and gas and other sectors continues to improve. This, coupled with low interest rates and improved affordability, should eventually help to stimulate Calgary’s housing market,” adds Scott.
The average price of a single family home in the city of Calgary in October 2010 was $444,744, showing a 3 per cent decrease from September 2010, when the average price was $460,278, and a 4 per cent decrease from October 2009, when the average price was $462,465. The average price of a condominium in the city of Calgary in October 2010 was $287,793, showing a 1 per cent increase from September 2010, when the average price was $284,028 and no significant change over last year, when the average price was $289,155. Average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods, or account for price differentials between geographical areas.
The median price of a single family home in the city of Calgary for October 2010 was $387,900, showing a 1 per cent decrease from September 2010 when the median price was $390,000. This was a 5 per cent decrease from October 2009, when the median price was $410,000. The median price of a condominium in October 2010 was $255,000, showing a 4 per cent decrease from September 2010, when the median price was $265,000, and a 3 per cent decrease from October 2009, when it was $263,500.
All city of Calgary MLS® statistics include properties listed and sold only within Calgary’s city limits. The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the median
price.
“Our average price is being buoyed by more sales in the million dollar plus category. Despite a slowdown in certain market segments, homes sold in the city of Calgary at one million dollars or
more have actually seen an increase of more than 15 per cent when compared to the same time one year ago. This boost in sales is, indeed, a bright spot in our current market,” says Scott.
Single family listings in the city of Calgary added for the month of October 2010 totalled 1,765, a decrease of 22 per cent from September 2010 when 2,252 new listings were added, and showing a decrease of 3 per cent from October 2009, when 1,819 new listings came to the market.
Condominium new listings in the city of Calgary added for October 2010 were 721, down 22 per cent from September 2010, when the MLS® saw 921 condo listings coming to the market. This is a decrease of 16 per cent from October 2009, when new condominium listings added were 859.
“We are seeing some decline in the number of new listings coming on to the market. A continuing decline in supply will help bring the market into balance,” says Scott.
“We believe we will see a tempering of our inventory levels, as some sellers offer marginal reductions in prices, or others choose to pull their home off the market for a period of time,” notes Scott. “Homeowners should consider speaking with their REALTOR® about their current marketing strategy—there are always options in every market.”
“Overall, we’re cautiously optimistic that Calgary’s economic recovery will pick up as we move into 2011—but in-migration will be needed to fuel a sustained recovery in Calgary’s housing market,” says Scott.
For more detailed information and charts on current market trends for October visit:
Posted on
October 4, 2010
by
Natasha EDEN
Posted in
Calgary home market, Calgary home sales, Calgary Housing Market, Calgary Housing Stats, Calgary Housing Trend, Calgary Properties, Calgary Real Estate, Calgary Real Estate Market, Calgary Real Estate Stats, Market Trends, Market Update
Hello everyone!
Market Update! A bit of good news!!
For the first time in many months there appears to be a turnaround in the Calgary Housing Market! The Calgary Real Estate Board just released the stats for September and while the changes are modest, it is the first uptick in the Calgary market since April.
In short, the number of houses available for sale in the Calgary market has fallen, but the number of sales of homes has increased for the first time in six months. Along with the increase in the number of homes sold a significant indicator of possible change is that the average median price of homes sold from August to September increased by almost $15,000.00. If you would like to see the actual stats feel free to send me an email requesting a copy of the CREB Stats and I’ll forward the information to you in an email attachment.
In the homes I have had listed, I have noted and increased number of showings over the last few weeks as well. While all these indicators are modest, it is certainly a refreshing change from the six months of steady downturn we have been experiencing, and appears to show that the real estate market is beginning to come to life again.
iPhone/Android App Update
I appreciate everyone who has downloaded my iPhone App to search the Calgary MLS system. It has become quite a popular application. Don’t be afraid to explore everything it has to offer, and if you have any questions or requests about a property, you can click on the links provided in the listings on the app to notify me and I will be happy to get back to you right away. Keep in mind that if you sign into the VOW on HouseHuntingAdventures.com it opens up a special account for you where you can save all your home searches for comparables and once set up, you can do the same from your iPhone or Android as well. If you have any questions, just call!
New to Canada?
I have many clients who are new to Canada who I have guided in their real estate adventures and I understand much of what it is like when coming into a new country. I experienced coming to Canada, not knowing the languages here, first moving to Quebec and learning the French language, then to Calgary and learning English (Czech is my home language). The challenges were difficult, but also a great character builder for me, especially while raising three children on my own. I truly understand all the frustration with moving and setting down roots. My desire is to help anyone who is a client of mine to make their transition as easy and cost manageable as possible.
Keep it Drama Free!
I can really empathize with anyone when it comes to moving and all the related stresses and headaches. I’ve been there and done that on my own with my children, many times. Every move made me a little wiser and I became an organizational wizard! I understand all about moving a family, and the financial stresses and strains that can ensue.
Through my personal experiences as well as my experience as a REALTOR©, I have compiled a wonderful list of resources; from excellent mortgage brokers who are very talented at locating great mortgage rates and helping you to qualify, to home inspectors capable ensuring nothing is missed when you are looking to purchase a new home.
Please let me know if I can be of service to you. Even if you are just at the research stage in locating a new home, or you simply would like to have a current market evaluation done on your home to determine what your next step should be, I’m here for you. Please don’t hesitate to call me at any time.
My personal cell phone number is 403-399-0809, or if you prefer, my personal Email of Natasha@HouseHuntingAdventures.com.
Wishing you a wonderful Thanksgiving!
Natasha
Posted on
September 8, 2010
by
Natasha EDEN
A high inventory of homes for sale combined with a softening demand from potential homebuyers is starting to put downward pressure on Calgary MLS prices.
Preliminary and unofficial data for August month-to-date indicates prices are dropping from levels of the past few months in both the single-family and condominium market.
"We have almost the same number of buyers that we had in December but we have so many more listings," said Gary MacLean, a realtor with Re/Max Real Estate Central. "It's like having a Safeway that got two times as big but only has the same number of customers coming in the door and in order to get rid of the inventory they have to reduce the prices.
"It's a supply and demand issue. There's an oversupply of houses not only here but all across Canada and the number of buyers are decreasing."
For example, at the end of December one of every 1.6 houses listed for sale were selling. In July, that ratio jumped to one for every 6.6 listings. The month-end inventory of properties for sale in Calgary metro at the end of December was 3,258. It was 7,982 at the end of July.
MacLean said the inventory is starting to shrink but it's not as a result of increasing sales. Many people have simply taken their homes off the market.
According to preliminary, unofficial data on the website of realtor Mike Fotiou, of First Place Realty, there have been 661 single-family home MLS sales in Calgary for an average price of $441,469 month-to-date until Tuesday.
In July for the entire month, there were 915 sales for an average of $464,655 and in August 2009 there were 1,277 sales for an average of $454,130.
The average MLS sale price peaked this year in May at $483,240.
The condominium market is showing a similar story with sales so far this month at 271 for an average price of $283,485. In July, there were 396 condo transactions averaging $291,168 and in August 2009 there were 632 sales for an average price of $283,330.
The average MLS sale price for a condo peaked this year in May as well at $304,662.
Diane Scott, president of the Calgary Real Estate Board, said supply and demand is playing a role on current average prices but there's also the factor of luxury home sales.
"Homes sold over $1 million are down in numbers from last year for the same period," she said. "June to August last year we had 98 sales over $1 million. This year we've had 87 ... That will drive the average price down as well for sure."
On Wednesday, the Teranet-National Bank Composite House Price Index showed Calgary was lagging behind other major Canadian centres in the rate of change for home prices.
The index is estimated by tracking observed or registered home prices over time using data collected from public land registries and all dwellings that have been sold at least twice are considered in the calculation of the index.
The report said in June Calgary prices rose by 0.2 per cent on a monthly basis behind Ottawa (2.7 per cent), Toronto (2.4 per cent), Montreal (1.4 per cent), Halifax (1.3 per cent) and Vancouver (0.8 per cent). The national average was 1.5 per cent, the 14th consecutive month of increases.
On a year-over-year basis, the national average was 13.6 per cent growth led by Vancouver at 16.3 per cent and followed by Toronto (16.2 per cent), Ottawa (12.0 per cent), Montreal (8.7 per cent), Calgary (8.3 per cent) and Halifax (7.1 per cent).
mtoneguzzi@theherald.canwest.com
Story from © Copyright (c) The Calgary Herald Read more: http://www.calgaryherald.com/business/real-estate/High+inventory+cooling+sales+pressure+house+prices/3440610/story.html#ixzz0yyLPwgI0
Posted on
September 8, 2010
by
Natasha EDEN
Now might just be the best time to lock into a fixed-rate mortgage, especially for those homeowners on a tight budget, according to an expert broker.
The Bank of Canada hiked its overnight lending rate by 25 basis points Wednesday, and variable mortgage rate products offered through major lenders are expected to rise in step.
Despite Wednesday’s increase, variable rates -- hovering between 2.05% and 2.25% these days -- still offer savings compared to fixed-rate plans in the near term.
But there is an argument for locking into a fixed rate sooner rather than later, said Gary Siegle, a Calgary-based regional manager at Invis.
The rate for the popular five-year fixed mortgage has recently dropped to a commonly available 3.89% and is as low as 3.6% in some cases.
We haven’t seen rates this low in recent memory, Siegle said.
“There are lots of people out there who are saying: Why would you overlook the fact that we haven’t seen five-year rates this low in a long, long time?
“Why would you not take advantage of historic low interest rates?”
Unfortunately, the answer isn’t clear-cut, Siegle said.
Some people are choosing to overlook low fixed rates because the variable options are still cheaper and may be for some time.
However, mortgage holders do need to consider that variable rates do change eventually.
“And the direction everyone is predicting that they’ll go is up. It’s a question of how much and when,” Siegle said.
Floating rates have historically been the cheaper option over the entire life of a mortgage but not everyone can stomach the often dramatic swings in monthly expenses.
“It’s a question also of psyche,” Siegle said.
People who are generally nervous or who are on a tight budget might be better off locking in now, he said.
“Even though they are giving up that 1.25%, they are gaining a lot of peace of mind.”
Homeowners considering the switch to a fixed plan could look into whether there is penalty for switching mid-term, Siegle said.
Either way, both variable and fixed-rate mortgage holders can take advantage of current borrowing prices by paying down as much of the principal amount as quickly as possible. That way, as rates go up, total debt burden will be lowered come renewal time.
Whereas the central bank influences variable rates, the bond market influences fixed-rate mortgages.
The slower-than-expected economy has fuelled investor interest in the bond rally, pushing yields down and allowing banks to offer attractive fixed-rate products.
Posted on
September 8, 2010
by
Natasha EDEN
Calgary job seekers could close the year on a happier note, with one in five Calgary companies planning to hire within the next three months, a sign the city's economy is stabilizing after a rocky patch, economists say.
"It's all very positive news," said Randy Upright, CEO of Manpower's Alberta region, adding only four per cent of employers expect to cut back their labour force between October and December.
He added that the numbers show a "more conservative kind of survey" than those seen during boom times.
As well, the number looking to add employees is double what it was in the same period last year, when only 11 per cent were in that position.
And it's an eight percentage point increase over July to September when 15 per cent planned to hire.
With 71 per cent anticipating the status quo until the end of the year, "there's a continuing sense of stability overall," said Upright. "That's what we're really happy about."
In 2009, hiring intentions in Calgary sank to their lowest levels in 15 years.
Todd Hirsch, senior economist with ATB Financial, speaking generally about Calgary's economy, said stable is good after a couple years of volatility.
"The phrase I've been using lately is sunny with a chance of showers," he said to describe the situation in the city.
With some uncertainty still in the air, Hirsch said employers aren't rushing to add staff they may have to lay off should things take a turn.
Citing fluctuating oil prices and the low price of natural gas, "it's enough to rattle people," he said.
Manpower Canada's employment outlook survey released today, which includes 1,900 employers across the country, found 23 per cent in Calgary are looking to hire, compared with 21 per cent nationally. Across Canada, the number planning to cut jobs was seven per cent, with both figures are better than during the same period last year.
Manpower said it's the strongest national outlook in almost two years.
A Robert Half International employment report, which canvassed more than 1,000 executives in Canada about their hiring at the professional level, found a net 10 per cent plan to add jobs, a two percentage point increase over the previous three months.
Calgary has seen its unemployment rate start to decline, hitting 6.9 per cent in July, down from 7.5 per cent in June.
Hirsch said it looks worse than it is because Calgarians have been used to a rate of about three per cent.
However, while the province added 9,000 jobs in July, on top of 5,700 added in June, all those were attributed to the creation of part-time positions and in both months there was a decrease in full-time jobs.
In July, Canada added 129,700 part-time jobs but lost 139,000 full-time positions.
According to the Manpower Canada survey, the most optimism for job creation was seen in the mining and manufacturing-durable goods sectors, the best in a decade.
On Friday, the United States reported job gains of 67,000 in the private sector, which was better than expected, with the economy losing 54,000 jobs overall -- better than the 120,000 predicted.
Story provided by:
© Copyright (c) The Calgary Herald Read more: http://www.calgaryherald.com/business/five+Calgary+companies+plan+hiring+Economists/3488156/story.html?cid=megadrop_story#ixzz0yyIlhWth
Posted on
September 8, 2010
by
Natasha EDEN
Posted in
, Calgary home market, Calgary home sales, Calgary Housing Market, Calgary Housing Stats, Calgary Housing Trend, Calgary Properties, Calgary Real Estate, Calgary Real Estate Market, Calgary Real Estate Stats, Whitehorn
By Mario Toneguzzi, Calgary Herald September 2, 2010
An increase in active listings, combined with a cooling in housing demand, has started to push prices down in Calgary's residential real estate market.
Data released Wednesday by the Calgary Real Estate Board show single-family home sales fell by just over 32 per cent in August compared with a year ago while condominium transactions plunged by more than 42 per cent.
And the average MLS sale price in both markets dropped from what they were in July.
"If (buyers) don't have to buy they're just not doing it right now. There's just too much unrest," said CREB president Diane Scott.
"We know the traffic in the open houses has picked up in the last two weeks. We've been monitoring it very closely and the traffic is there, but the buyers are just a little leery."
Scott attributes that cautious sentiment to negative economic news and reports continuing to come before the public which create plenty of uncertainty in the marketplace.
"It's the economic situation that we happen to find ourselves in and the negative reports that keep popping up and buyers are kind of standing back, thinking it's going to go down lower," she added.
According to CREB, there were 867 single-family home sales in the city in August, down from August 2009's 1,277 sales and slightly down from the 915 sales recorded the previous month.
The average MLS sale price for a single-family home fell to $445,617, down 4.1 per cent from July and also off 1.9 per cent from a year ago. The year-over-year decline was the first month since July 2009 in which single-family home prices were lower than the previous year.
In the condominium market, sales dropped from last year as 364 properties were sold in Calgary for an average price of $286,384. The average price decreased by 1.6 per cent from July, but was up 1.1 per cent from August 2009.
"The rise in mortgage rates, more prudent lending practices and weaker net migration has contributed to the decline in sales," said Richard Cho, senior market analyst for Calgary for Canada Mortgage and Housing Corp. "In addition, the pent-up demand that helped fuel sales activity earlier in the year has also eased.
"In the last several months we have seen an uptick in the number of homes being listed on the market, providing consumers more choice and time. This, combined with the moderation in sales, has moved the market into buyers' conditions, softening price growth."
The month-end inventory of single-family homes for sale was 5,046 at the end of August, up from 3,296 in August 2009.
The month-end inventory of listings in the condo market was 2,255 in August, increasing from 1,479 last year.
Scott said the elevated level of listings plus the slowdown in sales is bound to have an impact on the average sale price.
The monthly peak for MLS sale prices was in May this year with single-family homes selling for an average of $483,240 and condos selling for $304,662.
"It's a downward type of trend. It's certainly not drastic but it is downward that I think we're going to see probably for the rest of the year," said Scott. "I think we'll have a little bit more activity as for the number of sales in September. Typical. It's seasonal and I think we'll see that in September."
In the MLS market of towns outside Calgary, sales dropped by just over 23 per cent to 312 from 406 a year ago and the average sale price increased by 0.3 per cent to $355,238 from $354,175.
The country residential market, which includes acreages, saw sales decrease by just under 17 per cent to 50 from 60 in August 2009 while the average sale price dropped by just over two per cent to $747,580.
mtoneguzzi@theherald.canwest.com
- - -
Calgary Home Sales Continue To Slide Read more: http://www.calgaryherald.com/health/Calgary+housing+sales+tumble/3472287/story.html#ixzz0yyMrfLrE
Posted on
September 2, 2010
by
Natasha EDEN
Posted in
Calgary home sales, Calgary Housing Market, Calgary Housing Stats, Calgary Housing Trend, Calgary Properties, Calgary Real Estate, Calgary Real Estate Market, Calgary Real Estate Stats, Market Trends, Market Update, Real Estate
Calgary Market Update for September 1, 2010
- courtesy of the Calgary Real Estate Board
Home sales in the city of Calgary continued to trend lower in the month of August, according to figures released today by the Calgary Real Estate Board (CREB®).
The number of single family homes sold in August 2010 in the city of Calgary was down 32 per cent from the same time a year ago, and condominium sales saw a decrease of 42 per cent from the same time a year ago.
August 2010 saw 867 single family homes sold in the city of Calgary. This is a decrease of 5 per cent
from 915 sales in July 2010. In August 2009, single family home sales totalled 1,277. The number of
condominium sales for the month of August 2010 was 364. This was a decrease of 8 per cent from the 396 condominium transactions recorded in July 2010.
In August 2009, condominium sales were 632. “Calgary’s housing market has been undergoing a
measured correction over the past 4 to 5 months. Sales are trending lower as a result of a increase in first time home buyers entering the market and a decline in pent up demand following a strong post-recession recovery,” says Diane Scott, president of CREB®.
“There has been much talk recently about the potential for a housing bubble in Canada--but the economic fundamentals at play make this scenario unlikely for Calgary. What we are seeing is an adjustment to higher levels of inventory and a shift to a buyer’s market.”
“A slower than anticipated pace of mortgage rate hikes and continued improvements in employment are more likely to bring stability rather than volatility into Calgary’s housing market as we move into 2011, ” adds Scott.
The average price of a single family home in the city of Calgary in August 2010 was $445,617, showing a 4 per cent decrease from July 2010, when the average price was $464,655, and a decrease of 2 per cent from August 2009, when the average price was $454,130.
The average price of a condominium in the city of Calgary in August 2010 was $286,384, showing a 2 per cent decrease from July 2010, when the average price was $291,168 and a 1 per cent increase over last year, when the average price was $283,330. Average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods, or account for price differentials between geographical areas.
“We expect a period of correction will continue into the fall of this year. Prices may sag in the short-term and level off as we move into 2011,” says Scott. “Homebuyers and sellers should keep in mind that market trends are unique even throughout the wider Calgary region.
A case in point is the relative strength of Calgary’s town and country market, where sales have remained at 2009 levels. Homebuyers and sellers should speak to a REALTOR® to better understand the opportunities in our current market,” says Scott.
The median price of a single family home in the city of Calgary for August 2010 was $395,000, showing a 1 per cent decrease from July 2010 and August 2009, when the median price was $400,000. The median price of a condominium in August 2010 was $260,000, showing a 3 per cent decrease from July 2010, when the median price was $268,000, and no change from
August 2009, when it was the same – $260,000.
All city of Calgary MLS® statistics include properties listed and sold only within Calgary’s city limits. The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the
median price.
Single family listings in the city of Calgary added for the month of August 2010 totalled 1,960, an increase of less than 1 per cent from July 2010 when 1,942 new listings were added, and showing an increase of 3 per cent from August 2009, when 1,910 new listings came to the market.
Condominium new listings in the city of Calgary added for August 2010 were 808, down 9 per cent
from July 2010, when the MLS® saw 890 condo listings coming to the market. This is a decrease of 3 per cent from August 2009, when new condominium listings added were 832.
“Total month end inventory for the wider Calgary region is down marginally when compared to July—a trend we expect will continue in the coming months.
New listings are also likely to recede in the coming months in response to slowing sales,” adds Scott.
Posted on
August 3, 2010
by
Natasha EDEN
Following info from the Calgary Real Estate Board
Calgary, August 3, 2010 –
The summer cool down in Calgary’s housing market continued in the month of July, according to figures released today by the Calgary Real Estate Board (CREB®).
The number of single family homes sold in July 2010 in the city of Calgary was down 42 per cent
from the same time a year ago, and condominium sales saw a decrease of 44 per cent from the same time a year ago.
July 2010 saw 915 single family homes sold in the city of Calgary. This is a decrease of 14 per cent from 1,061 sales in June 2010. In July 2009, single family home sales totalled 1,585. The number of condominium sales for the month of July 2010 was 396. This was a decrease of 11 per cent from the 445 condominium transactions recorded in June 2010.
In July 2009, condominium sales were 702. “Calgary’s housing market is cooling off after its
record-setting pace in the post-recession period. This slow-down is not all that surprising in the face of tighter mortgage regulations and rising interest rates. The post-recession rally we saw in the summer of 2009 was unique and that pace couldn’t be sustained,” says Sano Stante, CREB
® president elect.
“The sense of urgency seen last summer, fall and winter in the lead-up to tighter mortgage-lending
measures has diminished,” says Stante. “Rising mortgage rates and increased inventories will be
the primary head-wind facing Calgary’s housing market, but improving job prospects will offer some tail winds in the latter half of 2010 and into 2011.”
The average price of a single family home in the city of Calgary in July 2010 was $464,655, showing a 4 per cent decrease from June 2010, when the average price was $481,964, and showing an increase of 6 per cent from July 2009, when the average price was $436,782. The average price of a condominium in the city of Calgary was $291,168, showing no significant
change from June 2010, when the average price was $292,238 and a 2 per cent increase over last year, when the average price was $285,032. Average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods, or account for price differentials between geographical areas.
“We are seeing relative stability in our average and median prices for the Calgary market,” says Stante. “A gradual return to moderate interest rates will not trigger any kind of steep decline in prices in our housing market. Prices may soften in select markets where inventory has bulked up, but for the most part they will remain relatively sticky as the economy improves.”
“Nonetheless with the combination of historically low interest rates and a large inventory of homes, there are some great buys out there—particularly in areas where comparable stock is ample such as the condominium and multi-family market. This presents a great opportunity to get into the market or to trade up,” adds Stante.
The median price of a single family home in the city of Calgary for July 2010 was $400,000, showing a 5 per cent decrease from June 2010, when the median price was $418,900, and a 3 percent increase from July 2009, when the median price was $390,000.
The median price of a condominium in July 2010 was $268,000, showing a 1 per cent decrease from June 2010, when the median was $269,900. That’s up 2 per cent from July 2009, when the median price was $263,000.
All city of Calgary MLS® statistics include properties listed and sold only within Calgary’s city limits. The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the
median price.
There was a slowdown in the number of Calgarians putting homes up for sale in the month of July.
Single family listings in the city of Calgary added for the month of July totalled 1,942, a decrease of 29 per cent from June 2010 when 2,733 new listings were added, and showing a decrease of 7 per cent from July 2009, when 2,089 new listings came to the market.
Condominium new listings in the city of Calgary added for July 2010 were 890, down 18 per cent
from June 2010, when the MLS® saw 1,084 condo listings coming to the market. This is a decrease of 3 per cent from July 2009, when new condominium listings added were 918.
“Indeed Alberta and Calgary’s economic recovery is lagging behind the rest of the country right now. But on the bright side we see this trend reversing itself as we move into 2011. We expect Alberta to lead in economic growth and recovery—outperforming much of the country in 2011,” says Stante.
Posted on
July 15, 2010
by
Natasha EDEN
Calgary's Newsradio 660 released a short article today regarding the current real estate market in Calgary that is worth making a note of. The Chief economist with the Canadian Real Estate Board states this market will change...
Real estate activity down in Canada by Kevin Usselman and Stephanie Irvine
Activity in the Canadian housing market continued to slide in June, with Calgary and Toronto leading the decline.
The Canadian Real Estate Association reports sales were off by more than eight per cent last month, compared to May.
Year over year, the drop is even more pronounced running at almost 20 per cent.
Calgary's housing market only recently became a buyer's market.
But the chief economist with the CREA says that is going to change, with people taking their homes off the market and refusing to accept low-ball offers.
Gregory Klump tells 660News while sales and prices will continue to cool in the coming months, Alberta's energy-based economy will keep luring people to this province.
Klump says declines in prices and sales aren't shocking.
He says the numbers were artificially inflated with a rush of people into the market, buying ahead of tighter mortgage rules and rising interest rates.
Posted on
June 15, 2010
by
Natasha EDEN
Story courtesy of the Financial Post
Canada’s housing market is expected to cool off this year and next, but isn’t at risk of falling victim to a U.S.-style foreclosure crisis anytime soon, according to a new report by debt-rating firm DBRS Ltd.
DBRS said in the report that Canada will continue to fare well in comparison to its neighbour to the south when the Canadian housing market corrects itself and interest rates are tightened. That is because lending practices here are much more sound than in the U.S.
“The likelihood of us having the kind of situation they had in the U.S. is extremely low,” said Jerry Marriott, managing director of structured finance at DBRS . “It’s a combination of the lending practices prior to the peak in 2007 — they were more restrained, so there were better underwriting practices in Canada. We also think there are a number of factors in the Canadian market which have lent themselves to more prudent lending.”
Those factors includes less aggressive lenders in the market, as well as systems designed to keep people paying their mortgages.
Mr. Marriott said that a cooling effect is gradually taking hold in the housing market as credit availability begins to tighten, and the HST factors into home buying decisions in Ontario and British Columbia.
That means there’s a greater likelihood this year that there will be a correction in housing prices rather than a continued increase. Mr. Marriott said the DBRS expects the market to cool throughout the year and continue to cool into 2011. That echoes analysts expectations, who also expect prices to drop as well. A recent report by TD Bank predicts prices will fall by 2.7% in 2011.
“If you add up the factors you would look at as to whether there’s going to be further price increases or the potential for a correction, we don’t see there’s a lot of factors supporting further price increases,” Mr. Marriott said. “But there are a number of factors that show there might be some moderation in housing prices.”
That may bode well for potential buyers after a report by CIBC this week said that on average, Canadian home prices are currently 14% over their “fair” value — that represents about 1.5 million homes, or 17% of all dwellings.
The report also highlights that Canadian households continue to have a particularly high level of debt, something that the DBRS notes is part of an ongoing trend. But it tempers that by adding that household debt is not as worrying as some analysts have suggested.
“We think the measurement of household leverage is subject to a fair amount of interpretation,” said Mr. Marriott.
For instance, the debt-to-disposable income shows Canadians are generally more indebted than Americans — however, the report outlines that this doesn’t reflect certain differences between the two countries that affect income, such as the fact that the U.S. has lower taxes but that Americans pay more money toward their health-care bills.
“At the end of 2009, Canadian households remained financially less leveraged by 10% to 45% compared with U.S. households,” the report said. Overall, after adjustments, Canada had a household liabilities-to-total gross income ratio of 116.8% at the end of 2009, while the United States’s ratio was 161.5%.
But Canadian household debt is growing faster. Household liabilities increased by 29.5% in Canada between 2007 and 2009. In the use, household debt grew just 5.3% during the same period.
Overall, mortgage lending in Canada reached $958.8 billion at the end of 2009. That’s more than double the $414.1 billion ten years ago. When including home equity lines of credit, outstanding mortgage-related credit was more than $1 trillion.
Financial Post Read more: http://www.cbc.ca/fp/story/2010/05/28/3081970.html#ixzz0qwjO67re
Posted on
June 9, 2010
by
Natasha EDEN
There has been a marked decline in home sales since the new rules for mortgage approvals came into play. Following are some excerpts from the most current CREB® report.
Calgary, June 1, 2010 – Calgary home sales showed a marked decline in the month of May,according to figures released today by the Calgary
Real Estate Board (CREB®).
The number of single family homes sold in May 2010 in the city of Calgary was down 20 per cent from the same time a year ago, and condominium sales saw a decrease of 21 per cent from the same time a year ago.
...
“The first quarter of 2010 was exceptionally strong with our spring sales coming early in the wake of anticipated mortgage hikes,” says Diane Scott, president of CREB®. “We believe there are a number of factors contributing to this marked slowdown including a declining number of first time homebuyers in the market, a rise in monthly carrying costs as mortgage rates rise and to some extent market jitters in the wake of Greece’s financial crisis,” says Scott.
“Consumers are feeling a little nervous about the recent instability of the stock markets—and with mortgage rate hikes behind us, it’s understandable that feelings of urgency among buyers have lessened,” adds Scott.
Click here for the full report, including statistical analysis and charts of the latest trends.
Posted on
June 9, 2010
by
Natasha EDEN
CNN has an excellent article on rumours that we may be in for a double dip recession. Apparently, the stats indicate otherwise.
NEW YORK (CNNMoney.com) -- Europe's debt crisis. Companies still not hiring. The Gulf oil spill. These are uncertain times to say the least. But while you might think economists would be running for the hills and looking ahead to a so-called "double dip recession," that's not necessarily the case.
In fact, some economists think a double dip is even less likely than it was earlier this year.
David Wyss, chief economist with Standard & Poor's, said that even though he thinks slower U.S. growth is practically a sure thing, the odds of a double-dip actually have shrunk to 20%, from 25% earlier this year.
Same goes for Derek Hoffman, founder and editor of The Wall Street Cheat Sheet, who also puts the odds of a double dip at 20%, when just a few months earlier he saw them at 50-50.
The term "double dip" refers to a recession followed by a short-lived recovery that then slides back into a second recession. It can be measured by fluctuations in gross domestic product, or GDP -- one of the broadest measures of economic activity.
Hoffman said he changed his mind about a potential double dip after major U.S. companies reported solid profit growth in the first quarter of 2010 and European leaders approved a $1 trillion bailout package to deal with the region's debt crisis.
Granted, the picture isn't all rosy. Unemployment is still high at 9.7%. But Wyss points out that consumers are spending again. Plus, the average person on main street doesn't seem as worried about getting laid off as they were a year ago, he said.
Wyss's comments echo those of Federal Reserve chairman Ben Bernanke, who on Monday told reporters that he expects a continued economic recovery, in part because of revived consumer spending. Bernanke also said the recovery would be slow -- it "won't feel terrific," he said.
Bernanke dodged a question about whether he fears a double-dip recession, saying "nobody knows with any certainty."
To be sure, any chance of a double dip is nothing to shrug off.
Mark Vitner, a senior economist at Wells Fargo Securities, likes to call himself an optimist, but said he can't deny that when he talks to clients, he's blunt about the risk of a double dip. He calculates the chances of one happening at about 30%, whereas a few months ago, he would have said it was as low as 15%.
"We experienced the worst crisis in a generation and now there are major problems in Europe and with the oil spill. How optimistic can you expect an optimist to be?" he said.
The winding down of government stimulus programs and inventory rebuilding, which together accounted for much of the recovery, are the major factors behind a slowdown, Vitner said.
Add in geopolitical unrest and volatile global markets, and businesses, consumers and lawmakers alike will be more hesitant to make investments that could support economic growth.
"One of the things to remember is conditions do not have to be perfect for the economy to grow," Vitner said. "But there's a limit to how much bad news this economy can take."
Posted on
May 3, 2010
by
Natasha EDEN
Calgary, May 3, 2010 –
Calgary’s housing market continues at a healthy and balanced pace according to figures released today by the Calgary Real Estate Board (CREB®).
The number of single family homes sold in April 2010 in the city of Calgary was up 5 per cent from the same time a year ago, while condominium sales saw an increase of 10 per cent from the same time a year ago.
April 2010 saw 1,352 single family homes sold in the city of Calgary. This is a decrease of 3 per cent from 1,396 sales in March 2010. In April 2009, single family home sales totaled 1,290. The number of condominium sales for the month of April 2010 was 639. This was an increase of 5 per cent from the 609 condominium transactions recorded in March 2010. In April 2009, condominium sales were 579.
“Continued economic optimism, improved choice and price stability are all contributing to a healthy and balanced housing market in Calgary,” says Diane Scott, president of CREB®. “Calgary’s housing market is set to simmer, not sizzle in 2010.
We can be grateful that we are not facing any real danger of a housing bubble here in our market.”
“There has been some talk about a bubble in some parts of Canada but the rapid price increases seen in Vancouver, Victoria and southern Ontario have not been seen in Calgary,” Scott acknowledges.
“Single family house prices are coming back nicely compared to 2009,” says Scott. The average price of a single family home in the city of Calgary in April 2010 was $460,378, showing a decrease of 2 per cent from March 2010, when the average price was $471,269, and showing an increase of 8 per cent from April 2009, when the average price was $426,311. The average price of a condominium in the city of Calgary was $289,588, showing a 2 per cent decrease from March 2010, when the average price was $296,660 and a 4 per cent increase over last year, when the average price was $277,953. Average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods, or account for price differentials between geographical areas.
The median price of a single family home in the city of Calgary for April 2010 was $417,000, showing a 1 per cent decrease from March 2010, when the median price was $423,000, and a 10 per cent increase from April 2009, when the median price was $380,000. The median price of a condominium in April 2010 was $267,500, showing a 3 per cent decrease from March 2010, when the median was $275,000. That’s up 7 per cent from April 2009, when the median price was $251,000.
All city of Calgary MLS ® statistics include properties listed and sold only within Calgary’s city limits. The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given
period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the median
price.
“Our average price is holding relatively steady,” says Scott. “The pace of price increase has been tempered by the rate of new listings that has been
growing faster than sales. Sales levels are still well below the high demand from 2004-2008, mainly because we are still not seeing high job growth and
unemployment has remained high.”
Single family listings in the city of Calgary added for the month of April totaled 3,082, an increase of 3 per cent from March 2010 when 2,988 new listings were added, and showing an increase of 53 per cent from April 2009, when 2,010 new listings came to the market. Condominium new listings in the city of Calgary added for April 2010 were 1,335, down 3 per cent from March 2010, when the MLS® saw 1,376 condo listings coming to the market. This is an increase of 38 per cent fromApril 2009, when new condominium listings added were 967.
“Calgary didn’t see the impacts of the very low interest rates the way other areas of Canada did,” says Scott. “Calgarians are also not rushing out to
beat the rate increases as they are seeing less risk of rising prices squeezing them out of the market.” “In fact financially, Calgarians are in a very healthy
position. Just over 37 per cent of our median pretax household income was needed to service the mortgage on a typical detached bungalow in Calgary—that’s below the national average,” says Scott.
Article by Calgary Real Estate Board (CREB®).
Posted on
April 26, 2010
by
Natasha EDEN
The Canadian Press
OTTAWA - The Bank of Canada may be concerned about the level of debt homeowners are assuming, but consumers who have recently taken out or renewed their mortgage are not.
A new online survey of Canadians active in the mortgage market, including first-time buyers, shows the vast majority are not only comfortable with their level of debt, but two thirds think they will pay their loans off sooner than required.
The annual survey by Canada Mortgage and Housing Corporation also suggests that Canadians are savvy consumers when it comes to buying a home.
On average, consumers surveyed say they took a year to think through their decision and 89 per cent said they used the Internet to research mortgage options.
"First time home buyers, they do their homework," said Pierre Serre, the CMHC's vice president of insurance product and business development.
"The key findings are that people are getting more into the Internet, people are getting informed and people are comfortable with home ownership."
According to the CMHC, nine in 10 new buyers believe ownership is a good long-term investment and that now is a good time to purchase a home.
The housing market has been one of the mainstays of the economic recovery, with prices and sales already back, and in some markets, beyond pre-recession levels.
In a separate report Monday, the real estate brokerage firm Re/Max said luxury home sales had soared in the first quarter of 2010, with nine of 13 markets shattering records for the winter months.
Kelowna, B.C. led the way in terms of percentage increase at 700 per cent, followed by Montreal at 300 per cent and Victoria at 275 per cent. Canada's most populous city, Toronto, was not far behind with a 263 per cent advance.
"Recovery in the upper end has been nothing short of remarkable," said Elton Ash, the regional vice-president for Re/Max in western Canada.
It's been such home-buying enthusiasm that has raised concerns at the Bank of Canada about super-low interest rates luring some into taking on more debt than they can afford. Although affordability remains high, given the low rates, household debt has risen to a record $1.47 per $1 of disposable income.
Bank governor Mark Carney and his deputies have warned that buyers should make sure when they purchase a home, they can afford not only the current mortgage but payments when interest rates rise.
The central bank has hinted it may start raising its policy rate as early as June 1, but already, chartered banks have increased longer-term, closed and some variable mortgages by close to a percentage point.
On Monday, Royal Bank bumped up its mortgage rates on all its lending terms by nearly a seventh of a percentage point. It was the third mortgage rate increase in recent weeks, reflecting the rising costs of borrowing on the bond market, where banks finance their mortgage lending.
The CMCH survey of 2,500 who have actually taken out a first mortgage, or renewed their mortgage in the last year, strongly suggests they are doing so with eyes wide open.
The survey found that 81 per cent are "comfortable" with their level of debt. But even the 19 per cent who did not answer in the affirmative didn't raise a red flag - 13 per cent were neutral, five per cent were somewhat not comfortable, and only one per cent said they were very uncomfortable.
Among first-time buyers, 85 per cent said they had a good understanding of how much of a mortgage they could afford.
The results are not surprising to CIBC economist Benjamin Tal, who recently researched the housing market for his bank. Tal's report tended to undercut concerns that Canadians were significantly vulnerable to rising interest rates.
"The number of people who are really, really vulnerable is a relatively small number," he said,"Clearly, when you have a situation of interest rates rising there will be defaults rising, but it will not be over the cliff like the U.S., it will not be a crisis."
Tal says Canadians traditionally adopt a variety of strategies to rising rates, including locking in to longer-term fixed mortgages, something he says is already occurring.
The other difference between the Canadian situation and that of the U.S., where the sub-prime crisis triggered a financial market meltdown, is that lower-income Canadians tend to be more conservative than higher-income buyers, said Tal. In reverse of the U.S. situation, lower-income Canadians tend to take out fixed-rate mortgages, he said.
Posted on
April 26, 2010
by
Natasha EDEN
From the Canadian Press
TORONTO - Mortgage rates are headed higher again as Canada's biggest bank, the Royal, is bumping up the cost of borrowing to buy a house by nearly a seventh of a percentage point.
The increase of 15-hundredths of a point on loans ranging from six-month variable to 10-year closed loans are effective Tuesday.
The third mortgage rate increases in recent weeks reflect the rising costs of borrowing on the bond market, where banks finance their mortgage lending.
Bond investors are demanding higher interest rates to part with their money because they expect rising inflation will eat away at bond returns in future.
At the Royal, a three-year closed mortgage rises to 4.75 per cent, while a five-year rate increases to 6.25 per cent and a 10-year loan jumps to 7.2 per cent.
In the last month or so, mortgage rates tied to the bond market have risen
nearly a full point in three separate rate hikes.
Mortgage loans tied to the prime rate have held steady so far but are expected to rise this summer if the Bank of Canada as expected raises its key rate and the banks follow with prime rate increases of their own.
Posted on
April 15, 2010
by
Natasha EDEN
Calgary, April 1, 2010 Market Update–
Calgary’s housing market enjoyed a healthy boost in March as homebuyers anticipate an earlier than expected rise in interest rates,according to figures released today by the Calgary Real
Estate Board (CREB®).
The number of single family homes sold in March 2010 in the city of Calgary was up 29 per cent from the same time a year ago, while condominium sales saw an increase of 37 per cent from the same time a year ago.
March 2010 saw 1,396 single family homes sold in the city of Calgary. This is an increase of 35 per cent from 1,035 sales in February 2010. In March 2009, single family home sales totaled 1,086. The number of condominium sales for the month of March 2010 was 609. This was an increase of 14 per cent from the 536 condominium transactions recorded in February 2010.
In March 2009, condominium sales were 446.
“The spring market has come early to Calgary,” said Diane Scott, president of CREB®.
“Improved economic conditions, better employment prospects, and an earlier
than expected rise in mortgage rates are all contributing to this early boost in sales this year.”
“Undoubtedly the recent announcements by all our major banks to raise mortgage rates are motivating buyers to take the plunge,” Scott acknowledges. “But Calgary’s market remains in a healthy position and our
sales are not outstripping supply. The rise in demand will also motivate sellers to consider listing this spring.”
“There has been some speculation that mortgage rate hikes will adversely affect housing demand in the longterm, but we should keep in mind that a rise in rates was fully expected. The Bank of Canada has been operating
at emergency rates as a response to the global recession.
While a rise in rates may tone down demand later this year, we don’t feel this adjustment will prevent the vast majority of buyers with healthy credit to enter the housing market,” said Scott.
“Ultimately improvements in employment and economic conditions will drive housing demand—Calgary’s economy has seen solid improvements in the
first quarter of 2010,” added Scott.
The average price of a single family home in the city of Calgary in March 2010 was $471,269, showing an increase of 3 per cent from February 2010, when the average price was $458,254, and showing an increase of 12 per cent from March 2009, when the average price was $420,354. The average price of a condominium in the city of Calgary was $296,660, showing a 5 per
cent increase from February 2010, when the average price was $282,880 and a 4 per cent increase over last year, when the average price was $284,056. Average price information can be useful in establishing trends
over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods, or account for price differentials between geographical areas.
The median price of a single family home in the city of Calgary for March 2010 was $423,000, showing a 3 per cent increase from February 2010, when the median price was $411,000, and a 13 per cent increase from March 2009, when the median price was $375,000. The median price of a condominium in March 2010 was $275,000, showing a 3 per cent increase from February 2010, when the median was $265,900. That’s up 6 per cent from March 2009, when the median price was $260,000.
All city of Calgary MLS ® statistics include properties listed and sold only within Calgary’s city limits. The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the
median price. “Our average price has edged upwards as more move-up buyers enter the market and overall demand strengthens,” says Scott. “But this is not an unusual trend during a spring market. We expect this modest
price growth to continue, but a rise in listings will likely curb this trend,” said Scott. Single family listings in the city of Calgary added for the month of March totaled 2,988, an increase of 39 per cent from February 2010 when 2,154 new listings were added, and showing an increase of 48 per cent
from March 2009, when 2,023 new listings came to the market. Condominium new listings in the city of Calgary added for March 2010 were 1,376, up 24
per cent from February 2010, when the MLS® saw 1,109 condo listings coming to the market. This is an increase of 52 per cent from March 2009, when new condominium listings added were 903.
“Overall, Calgarians should feel positive about the housing market. Sales and price growth are in line with a more balanced and normalized market. We are
seeing a return to stability and optimism in Calgary as we shake off our recessionary blues. Mortgage rates are just one factor in the housing situation—a more positive economic outlook and improved job prospects will play a bigger role in the long-term,” added Scott.
Information courtesy of the Calgary Real Estate Board.
Posted on
March 16, 2010
by
Natasha EDEN
Clarifications on Canada Mortgage Changes
An excellent article by Richard Moxley of TMG Mortgage Group Alberta Ltd.
Finally! Here are some clarifications on mortgage changes The Bank of Canada announced almost a month ago!
Effective April 19th, all terms less than 5 years that are high ratio insured mortgages (anything less than 80% Loan to Value) will be qualified using the greater of the chartered bank 5-year posted rate (5.39% currently), or the term rate (some banks have fixed rates on 5 – 10 year terms that are higher than 5.39%). Currently most banks are qualifying right around 4% on variables and will only qualify higher on fixed terms less than 3 years. So what does this mean? Until CMHC changes its mind again, 5 year fixed rates are the only rates that you won’t have to qualify on the highest rate.
The posted qualifying rate will be published by the Bank of Canada each Monday. Here’s the link: Posted Mortgage Rate (Look for series V121764.)
More not-so-good news for Canadians – Fixed rates look like they will be going up right away! How do we know? Because Canada’s 5 year government bond jumped up 18 points last week, the most in almost five months. (Bond yields guide fixed-rate mortgage pricing.) Yes, you may have heard that the Bank of Canada has kept the prime rate the same, but variable rates and fixed rates are usually influenced by different factors.
Some reasons why fixed rates may be rising very shortly:
· stronger-than-forecasted U.S. employment data
· new June maturity as the 5-year benchmark, asset rotation into stocks
· 20% increase in debt issuance announced in last week’s budget
· Increased consumer confidence
· More people spending money
A reason why rates might hold off a bit:
· Canadian employment data that usually comes out the same day as U.S. data has been held off until this week. If jobs are up, then we’ll be seeing interest rates jump up once again.
Here are some more changes happening in the industry because of the 2010 Federal Budget.
- Pre-payment Penalties: The Government will attempt to “bring forward regulations” to standardize the calculation and disclosure of mortgage pre-payment penalties. (This applies to federally regulated lenders.) This is mainly to help inform the average Canadian about clauses in their mortgages papers like Interest Rate Differential (IRD) penalties.
- Credit Unions: The Canadian government will begin “legislative framework to enable credit unions to incorporate and continue federally.” This could help Credit Unions have more of a chance to compete with big banks so that they could do other provinces then just the ones they are located in.
Posted on
March 1, 2010
by
Natasha EDEN
OTTAWA — Finance Minister Jim Flaherty tightened mortgage rules on Tuesday and, in doing so, may have taken the steam out of a housing market that had seen prices and sales activity rise rapidly over the last year.
For most consumers, the changes are unlikely to make it more difficult to get a mortgage but it could reduce the size of the mortgage an individual consumer can negotiate with a lender.
"The changes (he) announced today . . . will actually impact the experience that all Canadians have when they go into banks to get loans," said Craig Alexander, deputy chief economist at TDBank Financial Group.
Flaherty's changes apply to any mortgage backed by the federal Canada Mortgage and Housing Corp. (CMHC).
But Alexander said the practical effect of any changes to the rules around CMHC-backed mortgages is that lenders tend to extend at least some of those provisions to all mortgages.
More than two-thirds of Canadians own their own homes, a record for home ownership.
In Alexander's view, that means those who qualified for a mortgage under the old rules should still be able to get one using Tuesday's announced regulations but they may not be able to borrow as much and, as a result, might have to look at buying slightly less expensive properties.
That trend — forcing consumers to look at less expensive properties — could end up softening the sharp year-over-year price increases that have been characteristic in many cities recently. The Canadian Real Estate Association says that in December, the average selling price of a home in Canada was a little more than $337,000, a jump of nearly 20 per cent compared to the same month a year earlier.
The change most likely to affect most borrowers will be a new credit test for any CMHC-backed mortgage.
Previously a lender wanted to ensure that a borrower could make the monthly payments of a three-year fixed-rate mortgage. Now, lenders will want to see that a borrower can afford a five-year fixed-rate mortgage — even if the borrower plans to take out a mortgage with different terms that could result in a lower monthly payment.
For example, a consumer might want to borrow $200,000, amortized over 20 years, at the low rate associated with one-year fixed-rate mortgage — about 2.65 per cent right now. A monthly payment on that mortgage would be about $1,035.
But the lender must now make sure that borrower could afford the rate for a fixed, five-year mortgage — something closer to 4.5 per cent. The monthly payment on that kind of mortgage would be about $1,260.
The lender must make sure the borrower has that extra few hundred dollars a month to spare, even if the borrower is signing up for the mortgage with lower monthly payments.
Or, to flip this scenario around, if a borrower is limited to making monthly payments of $1,035, that would be enough to borrow $200,000 on the one-year fixed rate mortgage rate of 2.65 per cent but would only be good enough to borrow about $165,000 for a five-year fixed rate. Under the new rules, the consumer, in this case, would be limited to borrowing just $165,000 even if the consumer could negotiate different and cheaper terms for the mortgage.
The end result is that some potential home buyers will not be able to borrow as much from the bank and will have to buy less expensive homes.
"At the margins this will affect affordability and, in turn, activity," said Gregory Kump, chief economist for the Canadian Real Estate Association.
Flaherty also said those who wish to refinance their mortgage can only borrow up to 90 per cent of the assessed value of their home, down from 95 per cent. The intent behind that rule is to prevent a homeowner from carrying a mortgage that is worth more than the home itself.
"The underlying message is that Canadians should be prudent in the obligations they take on because we can all expect that mortgage interest rates will rise over time,"said Flaherty.
Flaherty's new rules are likely to have their biggest impact on those who buy investment properties for the rental market. Investors will now have to put up 20 per cent of the purchase price instead five per cent in order to get a government-backed mortgage to buy any property that is not the lender's own residence.
"I just don't want CMHC and the Canadian people to be in the business of guaranteeing speculative mortgages," Flaherty said.
Flaherty kept the minimum down payment at five per cent for those buying the home they plan to live in.
"The measures that I've announced this morning will not affect the ability of a Canadian family to buy a house," Flaherty told reporters in Ottawa. "It will affect those who are speculating. It will affect those who want to remortgage their house and get what is in our view an excessive amount of cash out of the house."
Though the new rules go into effect April 19, lenders are likely to begin enforcing most of these measures immediately.
"On the one hand, we don't want to discourage Canadians from home ownership. On the other hand, we do want to discourage a tendency by some to use their homes as an ATM machine, the tendency by some to buy three and four condominiums, for example, by way of speculation," Flaherty said. "We have a healthy housing market in Canada, but we want to keep it healthy."
Flaherty's new rules
Finance MinisterJim Flaherty announced new restrictions Tuesday for any borrower who wants a mortgage backed by the Canada Mortgage and Housing Corporation. Though they officially go into effect April 19, experts say lenders will likely put them into place immediately:
1. All borrowers will have to be able to demonstrate that they could make the payments on a five-year fixed rate mortgage even if they end up choosing a mortgage, such as a variable rate mortgage, that would result in smaller monthly payments.
2. The maximum amount consumers can borrow to refinance their mortgages is being lowered to 90 per cent of the value of the home, down from 95 per cent.
3. Anyone who wants a government-insured mortgage to buy a home that they will not live in will have to come up with a down payment of 20 per cent, up from five per cent.
Source:Department of Finance
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