Weekly Showing Report

The showing activity has had a considerable slow down across the Province. It has dropped from what was 123.3% higher last week compared to last year, down to 113.5% this week compared to the same time last year. This is obviously still quite an improvement year over year as there is still a good amount of activity in the market.
Our showing activity at CIR Realty has not seen as much of a decline week over week, however our total showings for the week were down 93 showings from 1,568 showings to 1,475 showings this past week.  The activity that we are seeing is very consistent with what we have had all year, with the bulk of the showings happening in the lower to mid markets.  The sales activity for CIR Realty is currently trending over 52% higher this October compared to last.
An interesting point to note is that while the bulk of the sales across Alberta in October are occurring in the lower to mid price points below $600,000. All of the price points above $400,000 have had an increase in sales year over year, including in the $1M plus price.  There remains a good opportunity for people who are entering the market, move up the property ladder, or pick up investment properties. 

-CIR Realty

Q3 2020 HOUSING REPORT

Third-quarter activity was far better than original expectations, as sales activity in the city improved by nearly 12 per cent over last year’s levels. 

Some of the shift in the third quarter reflects activity that likely would have occurred in the second quarter. The housing market also benefited from easing lending rates and previous price declines. Gains were driven by all property types except apartment condominiums. 

“As the economy started to re-open, we saw some improvements in the economic indicators,” said CREB® chief economist Ann-Marie Lurie. 

“Most industries are not back to pre-pandemic levels, but over the past three months we have seen notable improvement across most industries.” 

The gains this quarter did not offset all of the earlier declines, but the year-to-date decline eased to nine per cent. This is a significant improvement from the first half of the year, where sales were sitting 20 per cent below last year’s levels. 

New listings were also on the rise. It was enough to cause inventories to trend up from the lower levels recorded earlier in the year, but inventories remain well below the levels recorded last year. 

Overall, the months of supply did tighten to levels well below the past two years. Improved supply/demand balances did support some modest improvements in prices, which trended up in the third quarter compared to the second quarter and remained only one per cent below last year’s levels.

Current conditions in the housing market are surprising, but there are several reasons to still be cautious: 

  • The current job market: Unemployment levels remain exceptionally high and there is added concern regarding additional job losses coming in the energy sector. If this situation persists, it could result in weaker demand and rising listings.
  • A second wave of COVID-19 and further shutdowns: Widespread closures are currently not expected, but if they do occur, this could be problematic for many businesses that cannot survive a second shutdown.
  • Government support: The housing market and overall economy has benefited from significant government income support programs, and banks allowing homeowners to defer their mortgage. As these benefits end, there is a risk that some households will not be able to keep their home, causing a rise in new listings and pushing up supply levels. If this occurs, it could erode some of the recent gains in pricing.

-CREB

Living Long and Well- The Fear of Outliving Your Money

My goal this year is to help each and everyone of you with your financial future. This month, I have chosen to chat about the golden years and how home owners over the age of 55 can learn about their home equity and how they can put it to work in order to live the very best life they possibly can.

Learning more about longevity and how we can be best prepared for the physical, social, and financial impact of a long life is a hot topic these days.

When it comes to ageing, Canadians have much to celebrate, we are not only living longer, but we are also living longer in good health. Collectively, we are learning more about longevity and how we can be best prepared for the financial impact of a long life.

Medical advances, improved living standards and healthier lifestyles have all contributed to the gains. Also known as the golden years, the third age is for many a time of personal fulfillment and achievement.

An interesting aspect of successful longevity is that there are benefits of ageing at home in your community rather than in institutional setting. These years stand for dignity and creativity, as well recognizes the social importance and public significance for our ageing population.

With the golden year comes the fear of outliving our money, it has become a top concern for a lot of people. A significant portion of Canadians are relying almost exclusively on the Canada Pension Plan, Old Age Security, and Guaranteed Income Supplement. When you add all those up for most people, at the high end you are still looking at less than $20,000 a year. Does this sound like your situation by chance?

Cashflow can be a big concern for ageing Canadians especially with the cost of living today. Seniors that own their own home do have options to living a healthy, happy, dignified life by having the option to stay in their home if they wish to do so.

This may be the perfect time to learn about your personal financial situation and find out how your home equity can help you financially for years to come.

I am happy to help you have the best life possible, whether you would like help with your finances or any of your loved ones are fearful for their financial future, we are happy to connect you to a trusted advisor that can review your personal situation.

Regards,

Kevin D’Costa

INFOGRAPHICS: September 2020 CREB City And Region Market Reports

September sales activity jumped to 1,702 units, the strongest September total since 2014.

New listings in September improved over last month, but levels remained comparable to the previous year. The increase in sales relative to new listings did prevent any monthly gains in inventory levels, but supply in the market is still down 12 per cent compared to last year.

“The recent rise in new listings, combined with low lending rates and softness in prices, has helped support some of the recent upward trend in sales,” said CREB® chief economist Ann-Marie Lurie.

“However, conditions vary significantly based on the price range and property type.”

The adjustment in supply relative to demand has caused the housing market to move toward more balanced conditions. The current 3.7 months of supply represents the most balanced conditions seen for September in over five years. This has helped support some of the recent monthly gains in prices.

Total residential benchmark prices have trended up over the past three months, resulting in September prices that are similar to prices recorded at the same time last year.  

Despite some of the recent improvements, the impact of COVID-19 is still present. Year-to-date sales remain nearly nine per cent below last year’s levels, while city-wide prices are still over one per cent lower than last year. Considerable risk also weighs on the housing market due to economic uncertainty and a struggling labour market.


HOUSING MARKET FACTS

Detached

With significant gains in the $400,000 – $600,000 range, September sales are the highest they have been since 2014.

Improving sales and easing new listings resulted in further reductions in inventory levels and caused the months of supply to ease to balanced territory. Recent improvements in the supply/demand balance have supported some upward price movements. As of September, the benchmark price was nearly one per cent higher than last year.

However, the year-over-year gains have been driven by the more affordable end of the market, as prices remain well below last year’s levels in both the City Centre and West districts of the city.

Semi-Detached

Given some recent monthly gains in new listings, sales in this sector improved in September, but at a slower pace than both the detached and row sectors. This could be related to the significant pullback in inventory.

September inventory levels were nearly 21 per cent lower than last year, the largest percentage decline in inventory among all property types. This shift in supply, along with improving sales, has started to help reduce the oversupply in this sector and ease the downward pressure on prices.

September prices remain nearly two per cent lower than last year’s levels, but prices have started to improve in the South, South East and East districts of the city.

Row

Sales in this sector have continued to trend up for the past several months and September sales were significantly higher than last year’s levels.

While it was not enough to offset the pullback that occurred during the COVID-19 shutdown, row sales activity is four per cent lower than last year’s levels. The growth in sales could be related to the significant price adjustment that has occurred in this sector.

Prices in this sector have eased by seven per cent compared to last year and remain nearly 17 per cent below previous highs.

Apartment Condominium

All other sectors have seen some recent year-over-year gains in sales, but this sector continues to trend in the other direction. Year-to-date sales declined by 16 per cent, the largest decline among all property types.

At the same time, new listings continue to rise, which is causing further inventory gains. This is keeping the months of supply above seven months.

There have been some districts showing signs of price stabilization, but overall, year-to-date prices have eased by more than two per cent, amounting to a total adjustment from 2014 highs of over 18 per cent.


REGIONAL MARKET FACTS

Airdrie

For the fourth consecutive month, year-over-year sales improved. As a result, year-to-date sales for the city total 1,055 units, a nine per cent increase over the previous year.

While new listings did rise this month, the improvement in sales outpaced the gains in new listings, preventing any significant shift in monthly inventory levels.  However, inventory levels are over 20 per cent lower than last year’s levels. And the months of supply has fallen to levels not seen since 2015. While prices remain below previous highs, tighter market conditions over the past four months have supported several months of price growth and September price levels are nearly one per cent higher than last year. These price gains were enough to cause year-to-date levels to stabilize relative to last year.

Cochrane

A reduction in new listings limited sales growth in September compared to August. However, September sales remain higher than last year and contributed to a year-to-date gain of nearly nine per cent.

Rising sales and easing inventories have kept the months of supply below four months, the lowest level seen since 2014. Tighter market conditions have supported an upward trend in prices over the past three months. The recent price gains did translate to year-over-year gains in September, but were not enough to offset earlier pullbacks, as year-to-date prices remain nearly two per cent lower than last year’s levels.

Okotoks

September sales continued to improve from the low levels recorded earlier in the year and levels recorded last September.

However, recent improvements were not enough to offset earlier pullbacks. Sales remain three per cent lower than last year’s levels, but this could be related to reduced inventory in the market.

Reductions in supply relative to demand have caused the months of supply to decline to three months. The tighter market conditions have caused prices to trend up over the past four months. However, both September and year-to-date prices remain lower than previous year’s levels.

Terence Leung 

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Weekly Showing Report

The showings across the Province have slowed slightly week over week.
The activity for CIR Realty’s listings have also slowed slightly with -85 less showings week over week. The mid price points seem to have slowed the most, while the lower price points picked up slightly. The sales have also slowed moderately, but continue to be above those compared to the same time last year.  

September 2020: home sales rise along with supply

September sales activity jumped to 1,702 units, the strongest September total since 2014.

New listings in September improved over last month, but levels remained comparable to the previous year. The increase in sales relative to new listings did prevent any monthly gains in inventory levels, but supply in the market is still down 12 per cent compared to last year.

“The recent rise in new listings, combined with low lending rates and softness in prices, has helped support some of the recent upward trend in sales,” said CREB® chief economist Ann-Marie Lurie.

“However, conditions vary significantly based on the price range and property type.”

The adjustment in supply relative to demand has caused the housing market to move toward more balanced conditions. The current 3.7 months of supply represents the most balanced conditions seen for September in over five years. This has helped support some of the recent monthly gains in prices.

“THE RECENT RISE IN NEW LISTINGS, COMBINED WITH LOW LENDING RATES AND SOFTNESS IN PRICES, HAS HELPED SUPPORT SOME OF THE RECENT UPWARD TREND IN SALES – ANN-MARIE LURIE, CREB® CHIEF ECONOMIST

Total residential benchmark prices have trended up over the past three months, resulting in September prices that are similar to prices recorded at the same time last year.

Despite some of the recent improvements, the impact of COVID-19 is still present. Year-to-date sales remain nearly nine per cent below last year’s levels, while citywide prices are still over one per cent lower than last year. Considerable risk also weighs on the housing market due to economic uncertainty and a struggling labour market.

HOUSING MARKET FACTS

Detached

With significant gains in the $400,000 – $600,000 range, September sales are the highest they have been since 2014.

Improving sales and easing new listings resulted in further reductions in inventory levels and caused the months of supply to ease to balanced territory. Recent improvements in the supply/demand balance have supported some upward price movements. As of September, the benchmark price was nearly one per cent higher than last year.

However, the year-over-year gains have been driven by the more affordable end of the market, as prices remain well below last year’s levels in both the City Centre and West districts of the city.

Semi-Detached

Given some recent monthly gains in new listings, sales in this sector improved in September, but at a slower pace than both the detached and row sectors. This could be related to the significant pullback in inventory.

September inventory levels were nearly 21 per cent lower than last year, the largest percentage decline in inventory among all property types. This shift in supply, along with improving sales, has started to help reduce the oversupply in this sector and ease the downward pressure on prices.

September prices remain nearly two per cent lower than last year’s levels, but prices have started to improve in the South, South East and East districts of the city.

Row

Sales in this sector have continued to trend up for the past several months and September sales were significantly higher than last year’s levels.

While it was not enough to offset the pullback that occurred during the COVID-19 shutdown, row sales activity is four per cent lower than last year’s levels. The growth in sales could be related to the significant price adjustment that has occurred in this sector.

Prices in this sector have eased by seven per cent compared to last year and remain nearly 17 per cent below previous highs.

Apartment Condominium

All other sectors have seen some recent year-over-year gains in sales, but this sector continues to trend in the other direction. Year-to-date sales declined by 16 per cent, the largest decline among all property types.

At the same time, new listings continue to rise, which is causing further inventory gains. This is keeping the months of supply above seven months.

There have been some districts showing signs of price stabilization, but overall, year-to-date prices have eased by more than two per cent, amounting to a total adjustment from 2014 highs of over 18 per cent.

REGIONAL MARKET FACTS

Airdrie

For the fourth consecutive month, year-over-year sales improved. As a result, year-to-date sales for the city total 1,055 units, a nine per cent increase over the previous year.

While new listings did rise this month, the improvement in sales outpaced the gains in new listings, preventing any significant shift in monthly inventory levels.  However, inventory levels are over 20 per cent lower than last year’s levels. And the months of supply has fallen to levels not seen since 2015. While prices remain below previous highs, tighter market conditions over the past four months have supported several months of price growth and September price levels are nearly one per cent higher than last year. These price gains were enough to cause year-to-date levels to stabilize relative to last year.

Cochrane

A reduction in new listings limited sales growth in September compared to August. However, September sales remain higher than last year and contributed to a year-to-date gain of nearly nine per cent.

Rising sales and easing inventories have kept the months of supply below four months, the lowest level seen since 2014. Tighter market conditions have supported an upward trend in prices over the past three months. The recent price gains did translate to year-over-year gains in September, but were not enough to offset earlier pullbacks, as year-to-date prices remain nearly two per cent lower than last year’s levels.

Okotoks

September sales continued to improve from the low levels recorded earlier in the year and levels recorded last September.

However, recent improvements were not enough to offset earlier pullbacks. Sales remain three per cent lower than last year’s levels, but this could be related to reduced inventory in the market.

Reductions in supply relative to demand have caused the months of supply to decline to three months. The tighter market conditions have caused prices to trend up over the past four months. However, both September and year-to-date prices remain lower than previous year’s levels.

-CREB

Weekly Showing Report

The showing activity across the Province has continued to taper off as we enter into the Fall months. This is a typical trend coming into the fourth quarter, however the activity remains to be much higher than the same time last year.  The showing activity across Alberta is still showing a 128% increase year over year.
The showing activity on CIR’s listings also experienced a modest slow down in most price ranges, the largest drop being in the higher price points. Overall the showing activity remains relatively balanced, unlike the sales activity. Through September, CIR Realty has trended over 45% higher in transaction volume compared to September 2019. This is the fourth straight month that sales activity for CIR Realty has not only out performed the year previous, but also the industry itself.  
While we enter into what is anticipated to be slower months, it remains our responsibility to help educate clients to help them make the best decision based on their circumstances. There continues to be many moving parts in today’s markets which we will address more in the monthly Real Estate Summar.

-CIR Realty

How Mortgage Penalties are Calculated

When you’re shopping for a mortgage, what’s the most important thing? Most Canadians will say getting the lowest mortgage rate. While getting a low mortgage rate certainly matters, it’s important to recognize that there are other things to consider as well.

There’s a difference between getting the lowest mortgage rate and the lowest cost of borrowing. Getting the lowest mortgage rate is just that, the mortgage with the lowest rate. Whereas, getting the lowest cost of borrowing factors in other things like prepayments and penalties. In this week’s article, we’re going to talk about the latter, penalties.

When you sign up for a mortgage, probably the last thing on your mind is breaking it. But sometimes life happens and you’re forced to break it sooner than anticipated. It could be for many reasons: relocating for a job promotion, job loss, divorce, and the list goes on. If you didn’t take the time to ask about mortgage penalties when you first signed up for your mortgage, you could find yourself blindsided by a big penalty.

In this article, we’ll look at how mortgage penalties are calculated for variable-rate and fixed-rate mortgages. After reading this article, you’ll have a much better understanding of how mortgage penalties work and what to look for.

“Roughly 2 out of 3 people break their mortgage early, at an average of 33 months”

Dustan Woodhouse

Dustan Woodhouse President at Mortgage Architects

Variable Rate Mortgage Penalties

If you’re signed up for a variable (or adjustable) rate mortgage, the penalty is pretty simple. You’ll pay three months’ interest for breaking your mortgage early. This is the most favourable mortgage penalty calculation (besides paying no penalty at all of course). Whether you’re with one of the big banks or a monoline lender, your penalty will be three months’ interest.

For example, let’s say your mortgage rate is 2.49% percent and you have a $500,000 mortgage balance. In this case your mortgage penalty would be:

2.49% × $500,000 × (3 months/12 months) = $3,113

Pretty simply wouldn’t you say? Whether you break one month into your mortgage over four years, three months in, your mortgage penalty is the same.

Fixed Rate Mortgage Penalties

If you sign for a fixed rate mortgage like most Canadians, the mortgage penalty calculation is a little more complicated. You’ll pay the greater of three months’ interest or something called the “Interest Rate Differential” or IRD for short. If you’ve read stories in the media about Canadians paying huge mortgage penalties, the IRD is most likely the reason why.

Using the same numbers as above, even though your mortgage rate is only 2.49%, if you’re with one of the big banks whose posted rate is let’s 4.79%, that’s when it can really inflate your penalty.

Let’s say you have three years left on your mortgage and your lender’s three-year fixed mortgage rate is 2.25%. If we use the IRD, your mortgage penalty would be:

$500,000 × 36 months × 2.54% (difference between 4.79% and 2.25%)/12 months = $38,100

Because the IRD penalty calculation is greater than the three months’ interest calculation, you’d have to pay a penalty of almost $40k to break your mortgage early. I don’t know about you, but that’s a lot of dough!

The example we showed here is using one version of IRD known as Standard IRD which is based on the current posted rate for a similar comparable term. There are many other versions of IRD and penalty calculations. Some Lenders calculate their penalties on the posted rate at the time you got your mortgage, some deduct the discount you originally received of the posted rate, some require you to pay back the cash-back you originally received, some calculate penalties entirely differently, like 12 months interest or 3% of balance. The only true way to find your exactly penalty is asking your lender. 

The Bottom Line

It’s important to ask about mortgage penalties up front so you’re not forced to pay a penalty out of pocket like this later on.

If you want a fixed rate mortgage, but don’t want to get stuck paying a huge penalty out of pocket, you may consider taking out a fixed rate mortgage with a monoline lender instead of the big banks. Monoline lenders don’t have high posted rates like the big banks, so your mortgage penalty is likely to be a lot lower when breaking your mortgage with a monoline.