Alberta resale housing market tops Canada in annual sales growth. – Forecast to lead the country again in 2013

Alberta will lead the country this year and in 2013 in the pace of growth in the resale housing market, according to a new forecast by the Canadian Real Estate Association.

The national association of realtors said Monday that Alberta MLS sales this year will finish up 13.1 per cent from last year to 60,800 transactions and sales will lead the country next year as well with 1.3 per cent growth to 61,600.

Nationally, sales are forecast to decline by 0.5 per cent this year to 456,300 and fall by another 2.0 per cent in 2013 to 447,400 transactions.

The Real Estate Investment Network in Canada is “hot” on Calgary’s potential and has ranked it the top investment city in Canada for 2013 to 2016, said Melanie Reuter, director of research for the organization.

“This ranking came as a result of extensive research into the underlying economic fundamentals driving Calgary’s economy as well as the current housing market’s response to these fundamentals,” she said. “The job market is strong and is poised to lead the country in job and population growth. Immigration from other parts of Canada as well as abroad is putting a steep downward pressure on vacancy rates and a strong upward movement on rents. This pressure is not predicted to ease significantly in the coming years.

“The high average-weekly-earnings in the city mean more disposable income in this PST-free province, which is creating a country leading consumer confidence level. This is creating further stimulation of the economy through consumer spending, which in turn brings increased employers, people, and demand for housing.”

The CREA forecast for sales in both Alberta and across the country is down from a previous forecast it released in September. At that time, the organization predicted Alberta annual sales growth of 13.8 per cent this year and another 1.7 per cent in 2013. For Canada, it had forecast sales to increase by 1.9 per cent this year but decline by 1.9 per cent in 2013.

On Monday, CREA said the average sale price in Alberta is expected to rise by 2.7 per cent this year to $363,100 and by another 2.3 per cent in 2013 to $371,300.

Across Canada, the national average sale price is forecast to increase by 0.3 per cent this year and next year to $363,900 and $365,100, respectively.

In November, Calgary MLS sales of 1,831 were up 10.6 per cent compared with last year while on the national level sales dipped by 11.9 per cent to 30,573.

The average sale price in Calgary rose by 3.8 per cent to $413,921 but fell by 0.8 per cent across the country to $356,687.

In Alberta, sales increased by 3.2 per cent to 4,034 transactions and the average price was up 4.3 per cent to $365,999.

“National sales activity has remained fairly steady at lower levels since mortgage rules were changed earlier this year, but that stability masks some real differences in trends among local housing markets,” said Wayne Moen, CREA’s president.

CREA on Monday also released its MLS Home Price Index of seven major Canadian markets. Regina’s annual price growth of 11.58 per cent led the nation followed by Calgary at 7.13 per cent.

The national aggregate price rose 3.5 per cent year-over-year, the seventh time in as many months that the year-over-year gain shrank and it marks the slowest rate of increase since May 2011.

David Madani, Canada Economist for Capital Economics, said the continued decline in existing home sales across Canaada supports its view that a potentially severe housing correction is underway.

“Assuming that sales continue to trend lower heading into next year, then sharper demand and supply imbalances will eventually lead to widespread home price declines,” he said. “We still think that house prices will decline by 25 per cent over the next year or two.”

© Copyright (c) The Calgary Herald

Boom in resale housing market just outside Calgary Towns see nearly 40% hike in MLS sales

The resale housing market in towns just outside the City of Calgary has seen a boom in sales this year.

According to the Calgary Real Estate Board, year-to-date MLS sales in the surrounding communities market has ballooned to 4,878 up to the end of November, a hike of 39.05 per cent compared with the same period in 2011.

In comparison, year-to-date sales of 20,128 in the City of Calgary are up 15.21 per cent compared with last year.

“I think what’s happening is the buyers can’t find necessarily what they want in the city,” said Bob Jablonski, CREB’s president. “There’s less product to look at here in Calgary. And they’re finding they can find what they’re looking for in surrounding towns for the price points and getting a bigger bang for their bucks. So they don’t mind the commute.”

In the towns market, so far this year the average MLS sale price has dipped by 0.18 per cent to $354,897 while in the city it has risen by 3.16 per cent to $428,208.

According to CREB, in the country residential (acreage) market, sales so far this year are 842 with an average sale price of $793,707.

Last year there were 689 sales with an average sale price of $807,764 for the same time period.

Don Campbell, president of the Real Estate Investment Network in Canada, said places like Airdrie and Okotoks experience what’s called the Doppler effect in the real estate industry.

“It’s where a centre booms and then the smaller centres around it follow either a year or a year and a half later,” said Campbell.

“But the thing that’s really affected Okotoks, and now especially Airdrie, is the transportation change. The Ring Road (Stoney Trail). For Okotoks, of course, it was the expansion of Highway 2 a few years ago that really started to drive and bring to everyone’s attention Okotoks. Because nobody really went south of Calgary. Everybody went between Edmonton and Calgary and always knew that Airdrie was there. Okotoks is now on the radar.”

With any real estate market, it’s about affordability, said Campbell, and markets like Airdrie and Okotoks, for example, were driven by potential homebuyers who felt that they couldn’t afford to live in Calgary.

Stoney Trail has had huge impact on the Airdrie market, said Campbell. Also, many new jobs have been created in the northeast part of Calgary.

“So rather than live in the northeast, people are living in Airdrie which is almost the exact length of time to get to work,” he said.

© Copyright (c) The Calgary Herald

Calgary year-over-year housing sales growth best in Canada

While most of Canada’s major centres recorded year-over-year MLS sales declines in September, Calgary went against the tide with the highest annual growth rate in the country.

According to the Canadian Real Estate Association, MLS sales in Calgary rose by 14.8 per cent from September 2011 to 2,054 transactions.

In contrast, sales across the country fell by 15.1 per cent to 32,192.

But the average MLS sale price in Calgary dipped by 0.9 per cent in September to $402,756.

Nationally, the average price rose by 1.1 per cent to $355,777.

CREA said Monday that more than half of all local markets in the country posted sales declines of at least 10 per cent on an annual basis.

“New mortgage rules continue to keep a lid on national sales activity,” said Wayne Moen, CREA’s president.

The organization’s chief economist, Gregory Klump, said national activity is likely to remain down from year-ago levels over the fourth quarter of this year.

“In the shadow of the latest mortgage rule changes, activity has ratcheted down from higher levels seen during the fourth quarter last year,” he said. “While some first-time homebuyers may no longer qualify for mortgage financing under the new rules, it is likely that many others are stepping back and reassessing how much house they can realistically afford, which is one of the things new mortgage rules were designed to do.”

In Alberta, MLS sales rose by 7.7 per cent from last year to 4,714 while the average price increased slightly by 0.2 per cent to $355,127.

On Monday, CREA also released its MLS Home Price Index. The national index rose 3.9 per cent year-over-year in September. This was the fifth time in as many months that the annual gain shrank and marks the slowest rate of increase since May 2011.

Regina led the country with a 14.2 per cent hike followed by Calgary at 6.5 per cent.

© Copyright (c) The Calgary Herald

Calgary house prices on the rise

Prices for detached bungalows and standard two-storey homes in Calgary have risen from a year ago, according to the Royal LePage House Price Survey released Wednesday.

But average prices for standard condominiums have decreased slightly.

In the third quarter, detached bungalows posted the largest year-over-year price increases, rising 6.5 per cent to $434,267. Prices for standard two-storey homes rose 4.1 per cent to $431,544, while standard condominiums declined slightly by 2.1 per cent to $249,167.

“Calgary’s real estate market was very active during the third quarter,” said Ted Zaharko, broker and owner of Royal LePage Foothills. “Despite recent changes to mortgage lending rules, we saw a variety of buyers, including first-time home buyers, enter the market.”

Zaharko said inventory levels are down slightly when compared to figures from last year. Although this shortage has resulted in some multiple offer situations, desirable listings are still lingering on the market, he added.

“I’ve seen several well-priced properties sit on the market because buyers want to explore their options,” said Zaharko. “The shortage in inventory levels has not changed this — buyers like to shop around before making an offer.”

Nationally, the average standard two-storey home in Canada increased four per cent year-over-year to $403,747, while detached bungalows rose 4.8 per cent to $366,773. Standard condominiums saw an increase of 1.8 per cent to $243,607.

Royal LePage said most cities in Canada experienced modest price appreciation in the quarter, but fewer homes were sold compared with the same period in 2011.

“A drop in the number of homes trading hands typically precedes a period of softening house prices. Where there is reduced demand, those who want to sell their homes adjust their asking price to stimulate interest. Home sales were positive in July, fell nine per cent year-over-year in August and we are expecting September to show a decline as well,” said Phil Soper, president and chief executive of Royal LePage. “We had predicted this cyclical change early in the year, a natural market reaction after a period of strong expansion. Changes to mortgage regulations, which took effect on July 9th, accelerated the correction.”

In July, the federal government announced that the maximum amortization period for insured mortgages would be reduced to 25 years from 30 years. Royal LePage said this was the fourth intervention in just four years and the most impactful. Potential first-time buyers, which in a typical market represent one third to one half of all purchase transactions, felt the changes immediately, it said.

“While hard-hit in the short-term, we expect first-time buyers to adjust to the tougher mortgage qualifications. The dream of homeownership is very much alive among young Canadians. They may remain renters for some time as they save; some will opt for less expensive neighbourhoods and some will purchase smaller homes,” said Soper. “In the meanwhile, we will feel their absence in national sales statistics.”

Queen’s University real estate expert John Andrew said he is surprised that while the number of homes sold in some most Canadian real estate markets is declining, home prices haven’t dropped as well.

“Home prices are defying logic and holding remarkably steady, or in some cases, still rising significantly, such as in Toronto and Calgary,” he said. “This will be temporary, with a normal lag of three to six months between significant sales volume changes and home price changes. The changes to mortgage rules brought in by the federal government in July seem to be having their intended effect. What’s happening in real estate markets across Canada, and what lies in store for the next few months? I predict some dramatic changes ahead.”

© Copyright (c) The Calgary Herald

Calgary resale housing activity tops major Canadian markets – 15% hike in sales from last year

Calgary’s resale housing market had the highest annual rate of sales growth among major centres in the country in August, according to the latest data released Monday by the Canadian Real Estate Association.

And it recorded the best price growth in Canada in an index that tracks price trends in the country’s major markets.

In August, Calgary’s MLS sales reached 2,198, a 15.3 per cent hike from a year ago. In contrast, Canadian sales activity dipped by 8.9 per cent from last year to 36,235 transactions. National sales in August were down 8.9 per cent from August 2011, which was the biggest year-over-year drop since April 2011.

New listings of 3,399 in Calgary were down 11.0 per cent from a year ago while they fell by 6.7 per cent nationally to 68,762.

In Calgary, the average MLS sale price was $400,277, up 1.5 per cent. Nationally, the average price rose by 0.3 per cent to $350,192.

The MLS Home Price Index tracks home price trends in five of Canada’s most active housing markets — Greater Vancouver, the Fraser Valley, Calgary, Greater Toronto, and Montreal. These five markets comprise about 45 per cent of all home sales activity in Canada.

Calgary led the year-over-year rise in the index at 6.51 per cent. The national aggregate was a 4.03 per cent hike.

David Madani, Canada Economist with Capital Economics, said the recent slump in home sales at the national level suggests that a housing correction is underway.

“Assuming that sales continue to trend lower over the remainder of this year, then the typical lag relationship between sales and prices indicates that house prices will eventually follow suit early next year,” he said. “We still think that house prices will decline by 25 per cent over the next year or two.

“Slumping home sales . . . suggests that the willingness of potential home buyers to pay seller’s astronomically high asking prices may be withering.”

In Alberta, MLS sales of 5,198 in August were up 5.3 per cent from last year; new listings fell by 12.5 per cent to 8,472; and the average sale price rose by 3.5 per cent to $356,488.

“While we always caution that housing market trends at the national level can and do run counter to trends in many local markets, the decline in activity in August was definitely the result of much of the country moving in the same direction,” said Wayne Moen, president of CREA, of the national scene.

“August’s sales figures will no doubt provide comfort to policy-makers, providing the first clear indication that the recent changes to mortgage regulations aimed at cooling the market are working as intended,” said Gregory Klump, chief economist at CREA. “With previous changes to mortgage regulations, demand rose between the time changes were announced and their implementation, and invariably fell in the months immediately after being implemented, before recovering to long-term levels. By contrast, recent changes to mortgage regulations were in force more quickly after being announced, so home buyers had far less time to react. As a result, demand didn’t pick up just before the changes took effect, while sales declined once they did.”

“The broadly based decline in August sales activity suggests that some buyers may no longer qualify for a mortgage now that amortization periods for high ratio mortgages have been shortened,” added Klump. “As the linchpin of the housing market, lower first-time buying activity will have downstream effects over the rest of the market. While we expect it will likely take more time for move-up buyers to sell their current home, a few more months of data are needed to gauge the broader impact of recent regulatory changes on Canada’s housing market.”

CREA also released its latest residential forecast on Monday. For Alberta, it predicts year-over-year sales to increase by 13.8 per cent this year, the highest in the country, to 61,150 transactions and by another 1.7 per cent in 2013 to 62,200. Across Canada, sales are forecast to increase by 1.9 per cent this year to 466,900 but fall by 1.9 per cent in 2013 to 457,800.

Average sale price increases in Alberta are forecast for 2.6 per cent this year ($362,600) and 2.2 per cent in 2013 ($370,600). For Canada, the increase is forecast for 0.6 per cent this year ($365,000) but a decrease of 0.1 per cent in 2013 ($364,500).

“The Canadian housing market has indeed ratcheted down its growth pace,” said Sonya Gulati, senior economist with TD Economics. “In fact, in most local markets, it has reversed course with price and sales contractions becoming more the norm. In the absence of a catalyst like an interest rate increase or external economic shock, there really is no reason to think that the housing market will rapidly unravel from the levels currently seen.

“The U.S. Federal Reserve recently announced that it would keep interest rates at ‘exceptionally low levels’ until mid-2015. This new development will enter the Bank of Canada’s decision on when it can raise interest rates in Canada. With the level of uncertainty present in the global economy, it is difficult to precisely pinpoint when Canadian interest rates will return to more normal levels. However, the longer these low levels persist in Canada, the greater the risk that home prices move further away from economic fundamentals. As a result, low interest rates could be a short-term gain for housing in Canada, but a long-term pain if the correction journey becomes more difficult and prolonged.”

© Copyright (c) The Calgary Herald

Calgary housing market showed strong sales activity in July

Calgary residential MLS sales in July experienced one of the highest year-over-year rates of growth in the country, according to data released Wednesday by the Canadian Real Estate Association.

Also on Wednesday, the Calgary Real Estate Board released its 2012 housing market forecast update saying the city has outperformed expectations this year after the first seven months.

The national real estate association said sales in Calgary of 2,502 transactions were up 26.7 per cent from July 2011. In contrast, MLS sales across Canada rose by only 3.3 per cent to 40,863 units.

And while the national average sale price dipped by 2.0 per cent to $353,147, in Calgary the average rose by 3.0 per cent to $409,670.

In July, new listings in Calgary dropped by 5.1 per cent to 3,573 while at the national level they rose by 1.4 per cent to 74,685.

CREB’s report said the Calgary area is still short of the peak pricing of 2007 and sales are returning to typical levels of activity.

CREB president Bob Jablonski said tight conditions in the single-family market have boosted sales in the condominium market and surrounding towns. And he said more new home starts have occurred because of the lower than expected resale inventory.

“Expectations are relatively bullish in the city despite overhanging global uncertainty. However, concerns in the oil sector and continued weakness in the natural gas sector are issues that will keep consumers wary. While consumers are aware of the economic risk when it comes to housing, many are thinking about job security and long-term potential,” said the CREB report.

“Based on activity this year, consumers are comfortable purchasing in a city where the long-term outlook is prosperous and the housing industry has yet to fully recover. While the pace of growth will likely cool over the second half of the year, the resale housing market will stay on the path to recovery into 2013.”

The local board is forecasting single-family home sales this year to jump to 14,800 transactions from 13,120 in 2011 and the annual benchmark price to move to $410,123 from $398,225 last year.

It is also forecasting condo sales to increase to 5,675 this year from 5,377 in 2011 and the annual benchmark price to jump to $240,585 from $239,676.

Ann-Marie Lurie, CREB’s chief economist, said Calgary is sensitive to significant changes in the oil sector and that has a “domino effect on employment, migration, consumer confidence and ultimately the housing sector.”

“Our fundamentals on the economic side are very strong . . . We have very strong GDP growth. We’ve got investments into our province and our city and this is creating full-time employment growth. Significant full-time employment growth. All of these factors are contributing to that growth in the housing market.”

At the national level, some first-time home buyers may have difficulty qualifying for mortgage financing due to shortened amortization periods included in recent changes to mortgage regulations, said Gregory Klump, chief economist for CREA.

“As the linchpin of the housing market, lower first-time buying activity will have knock-on effects over the rest of the market. It will likely take more time for move-up buyers to sell their current home,” he said.

The MLS Home Price Index, which tracks home price trends in five of Canada’s most active markets, rose 4.5 per cent year-over-year in July. The largest increase was in Greater Toronto at 7.1 per cent followed by Calgary (6.0 per cent), the Fraser Valley (2.5 per cent), Montreal (2.1 per cent) and Greater Vancouver (0.6 per cent).

CREA says these five markets comprise about 45 per cent of all home sales activity in Canada.

In Alberta in July, MLS sales of 5,819 were up 16.5 per cent from a year ago, the average sale price rose by 2.7 per cent to $363,924 and new listings fell by 3.3 per cent to 9,315.

Francis Fong, economist with TD Economics, said the recent slowdown in housing activity at the national level is a reflection of a Canadian household that is increasingly wary of taking on more debt.

“Job growth has effectively stalled over the last few months, owing to an uncertain outlook for the global economy,” said Fong. “Meanwhile, new mortgage lending rules are making it more difficult for Canadians to access credit, despite interest rates still at historic lows.

“TD Economics has been calling for a modest correction in housing activity to the tune of 10-15 per cent for some time. (Wednesday’s) report provides some evidence that that correction is now beginning to take place.”

© Copyright (c) The Calgary Herald

Calgary region new home prices on the rise Prices in Calgary are up 0.3% in May

New home prices in the Calgary region continued to rise in May, according to Statistics Canada.

The federal agency reported Thursday, in its New Housing Price Index, that prices in the Calgary census metropolitan area were up 0.3 per cent from April. Prices were also up 0.8 per cent on a year-over-year basis.

Nationally, the NHPI rose by 0.3 per cent and prices were up 2.4 per cent from May 2011.

“The metropolitan regions of Toronto and Oshawa, and Calgary were the top contributors to the increase in May. The impact of these regions on the overall index was slightly offset by the decrease observed in Victoria,” said Statistics Canada.

“In Toronto and Oshawa as well as in Calgary, the rise in prices was predominantly explained by market conditions.”

From April to May, the aggregated metropolitan regions of Sudbury and Thunder Bay (1.6 per cent) posted the largest monthly price advance, followed by Toronto and Oshawa and by Regina (both 0.5 per cent), said the federal agency.

The most significant monthly price declines were recorded in Victoria (0.8 per cent) and Charlottetown (0.4 per cent).

The largest year-over-year price increases were recorded in Toronto and Oshawa (5.5 per cent), Winnipeg (4.4 per cent) and Regina (4.3 per cent).

Among the 21 metropolitan regions surveyed, three posted 12-month price declines in May, with Victoria (3.2 per cent) recording the largest decrease.

Earlier this week, Canada Mortgage and Housing Corp., said housing starts in the Calgary CMA totalled 1,184 units in June, compared with 719 units in June 2011. In the first half of the year, total housing starts in the Calgary CMA increased to 7,044 units, up 99.5 per cent from the 3,530 units for the same period last year.

“After six months, both single-detached and multi-family starts have risen from the previous year. Low mortgage rates, full-time employment gains, positive migration flows, and a more balanced resale market have contributed to the demand for new homes,” said Richard Cho, senior market analyst in Calgary for the CMHC.

Single-detached starts increased 18 per cent to 531 units in June, up from 450 units in the previous year. To the end of June, single-detached starts in the Calgary CMA rose 20 per cent to 2,830 units from a year earlier. Multi-family starts, which include semi-detached units, rows, and apartments, totalled 653 units in June, up from 269 in June 2011. After six months, builders have started 4,214 multi-family units in the Calgary CMA, an increase from the 1,118 over the same period in 2011.

Also this week, the Royal LePage House Price Survey and Market Survey Forecast showed varied year-over-year resale house price increases in Calgary.

In the second quarter, detached bungalows posted the largest average year-over-year price increases, rising five per cent to $432,322. Prices for standard two-storey homes rose a modest 2.5 per cent year-over-year to $425,456. Standard condominiums declined slightly by 0.8 per cent year-over-year to $247,056.

“Despite the recent changes to mortgage lending rules, mortgage rates and packages still remain very attractive to buyers at all levels,” said Ted Zaharko, broker and owner of Royal LePage Foothills. “Market activity has increased approximately 30 per cent compared to the same period in 2011 and we are seeing every type of buyer making purchases.”

According to Royal LePage, by the end of 2012, average house prices in Calgary are expected to increase 6.5 per cent. Market activity is forecast to be the strongest in Canada with 2012 unit sales expected to rise 18.0 per cent higher than they were in 2011.

© Copyright (c) The Calgary Herald

Calgary house sale activity sparks memories of 2007 MLS market sees sales and prices on the rise

Recent activity in the Calgary real estate market has discount realtor Roy Almog thinking back to the frenzied days of 2007.

In late June, he listed a “modest” house in the northwest neighbourhood of Mount Pleasant. In less than 24 hours, it had 14 showings and nine offers. The house sold for close to $30,000 above the asking price in less than 20 hours on the market.

“It was like 2007 all over again,” said Almog of 2% Realty.

“It’s been very busy this spring and summer. Very steady activity. We’re not seeing so much a huge increase in price but just the speed of sales. The properties are not lasting as long. They’re usually selling quite quickly. The days on market are a lot lower and getting lower.”

Almog said that’s the first step to seeing prices on the upward swing. Inventory is not lasting as long. People are starting to lose out on properties so they get a bit nervous.

“And the latest thing which I think really took it over the top was the mortgage rules that have just changed where a lot of people were rushing in to lock in their mortgage before the new rules commence in early July,” he said of the federal changes recently announced to tighten lending across the country.

Total MLS residential sales in the city, according to the Calgary Real Estate Board, rose by 12.12 per cent in June from a year ago to 2,202 transactions and the average sale price jumped by 3.61 per cent to $441,418. Days on market to sell a home dropped from 45 in June 2011 to 40 last month.

“The sky is not falling. Despite the fact of everything else that’s going on in the States, in Europe, with Greece, with this and that, I think we’re still humming along,” said Almog. “We’re always a bit sheltered and a little bit more buffered than some of the other places that are susceptible to these spikes up and down. We’ve still go a very strong economy. The banking system. Interest rates aren’t going anywhere. All of those contributed to a healthy market and encouraging people to get out and purchase.”

Single-family home sales increased in June year-over-year by 16.17 per cent (1,609) while the average sale price rose by 1.87 per cent ($489,271). The condo apartment market saw sales rise by 0.89 per cent (340) and the average sale price jump by 9.03 per cent ($300,806). And the condo townhouse category had a sales hike of 4.55 per cent (253) and a price hike of 0.40 per cent ($326,053).

“There are a couple of reasons leading to the increase in sales that we seeing this year compared to 2011,” said Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp. “Mortgage rates are still relatively low and home prices are experiencing some upward pressure with the market more balanced. The growing economy and tighter labour market conditions has also helped lift income levels for many prospective buyers.”

Ann-Marie Lurie, CREB’s chief economist, said recent mortgage rule changes may dampen some of the gains in the resale market.

“But this is not expected to cause a full reversal of either sales or price growth, provided the global economic situation does not significantly worsen,” she said.

“Our housing market is returning to normal levels of activity, supported by the improvements in our employment sector and rise in migration.”

At the midway point of the year, the following are year-to-date sales and average prices for the city market and percentage change from the same period last year:

Total MLS — Sales 11,752 (15.78 per cent); Average price $429,453 (2.53 per cent)

Single-Family MLS — 8,520 (18.53 per cent); Average price $480,294 (1.68 per cent)

Condo Apartment MLS — Sales 1,858 (7.15 per cent); Average price $278,040 (1.24 per cent)

Condo Townhouse MLS — Sales 1,374 (11.89 per cent); Average price $318,947 (3.18 per cent)

CREB also released Tuesday its benchmark prices for the month of June. Benchmark prices indicate how typical properties are valued in the market and are calculated using a statistical model that estimates prices based on several factors. Benchmark prices in June and their percentage change from a year ago were: Total MLS for the city, $385,800, 5.87 per cent; Single-Family, $430,800, 7.35 per cent; Condo Apartment, $246,300, 1.48 per cent; and Condo Townhouse, $278,000, 3.27 per cent.

“Overall the Calgary market is trending towards long-term stability,” said Bob Jablonski, CREB’s president. “Activity levels are consistent with our expectations, and are not demonstrating an overheated market. We’ve seen a slight lack of supply in single-family homes, but this is not the case in the broader residential market, including surrounding towns.

“Homebuyers are confident about long-term prospects in our city, and continue to search for homes in those communities that align with their needs. People who are in the market to buy right now have to make their decisions quicker, but they are well informed and they continue to seek out value for their money.”

© Copyright (c) The Calgary Herald

Mortgage Lending Changes

I’m sure most of you have heard Finance Minister Jim Flaherty’s announcement yesterday regarding the changes to the new mortgage rules. These are the changes:

o The maximum amortization will be reduced to 25 years from 30 years. This will make things a little tougher for buyers forcing them to qualify on a 25 year amortization. On the plus side home owners will benefit by paying down more principal over the term of their mortgage.

o The maximum refinance limit is reduced to 80% of your home value from 85%. This limits the ability to access the equity in your home.
o You must have 20% or greater for down payment on purchases over $1 million dollars. CMHC will not insure mortgages on purchases in excess of $1m.

o Flaherty also moved to cap the maximum gross debt service ratio at 39 per cent and the maximum total debt service ratio at 44 per cent in order to get CMHC insurance. Those two ratios are technical limits on how much debt a borrower is allowed to take on as a percentage of their overall income. This move, too, is aimed at making sure a borrower can’t bite off more than he or she can chew.
o These rules go into effect July 9th 2012.

o In addition to these changes the Office of the Superintendent of Financial Institutions Canada (OSFI), announced later this year that they will drop the maximum limit on Home Equity Line of Credits (HELOCS) to 65% loan to value from 80%. This will limit borrowers who leverage HELOCs for investment purposes.

1) If I already have an approval in place on my purchase, renewal or refinance, will my amortization have to be 25 years? The 25 year amortization only applies to new applications created on July 9th 2012. These new changes do not affect you if you already have a approval in place for your mortgage on a purchase or refinance. If you do not have an offer in place and you want a 30 year amortization you must make an offer by July 6th 2012, given that the banks are closed over the weekend of the 7th & 8th of July.
2) If I have a pre-approval in place for my purchase do I have to now qualify on a 25 year amortization? Yes, you must now qualify on a 25 year amortization if you make an offer after July 6th 2012. If anyone has a pending pre-approval in place you must contact me to see what your new approved limit is now that you have to qualify with a higher payment on a 25 year amortization. On a $300,000 loan based on today’s 5 year fixed rate the payment on a 25 year amortization VS. a 30 year is over $150 more a month. This will impact your ability to purchase a more expensive home.

3) If I am coming up for renewal on my mortgage will I now have to take a 25 year amortization? If you do not need to refinance your mortgage and take new money out by way of refinance you can renew on your existing amortization. So if you took a 35 year amortization 5 years ago, and you’re up for renewal you can continue on the same amortization schedule and take a 30 year amortization. This is provided you do not make any changes to the mortgage balance or who is registered on the current title.
4) If I already have a HELOC at 80% loan to value, will the bank reduce my limit to 65%? No, existing HELOCs are not affected by these changes so you can remain at 80% loan to value. Moving forward, OSFI indicated you can combine a 65% loan to value HELOC with a 15% amortized mortgage. This will give you 80% loan to value with a hybrid of a 15% mortgage and 65% HELOC.