Sales for new condos are picking up in Calgary

Sales are on the rise for new apartment-style condos and townhomes in Calgary.

This according to Urban Analytics, a market research and advisory firm that tracks the multi-family sectors in Calgary, Edmonton and Vancouver.

Total multi-family sales through Calgary’s new home market increased 11 per cent between Dec. 1, 2016, and the end of this past February, compared to the same period a year ago, says the firm. Activity also grew five per cent from the previous quarter.

Urban Analytics is actively following 126 condo and townhome projects in Calgary. Managing principal Michael Ferreira says the firm focuses on developments with 15 units or more.

“Compared to how we saw the latter part of 2016 finish, we are pleasantly surprised at how the market has come out of the gates in 2017,” says Ferreira.

“Particularly in the concrete sector, we’ve seen very little new product added to the market over the last 12 to 18 months,” he adds.

In downtown Calgary alone, it’s been 18 months since a new condo development was brought to market, says the firm.

From Dec. 1 to the end of February, there were 95 sales of apartment-style condos through concrete developments in Calgary alone, up from 72 year over year. This also marked a step up from 74 deals in the previous quarter.

“We saw some increased demand in that sector, which is always promising, because that’s generally driven, in part, by investor buyers. And if investors aren’t feeling confident about a certain market, then they just won’t buy, and that’s been the case over the previous 12 months,” Ferreira says. “But the fact that they’re back in the market, and certainly not dominating the market by any means, but they’re active participants, indicates that there is some growing confidence in the market and reason to be optimistic about the new multi-family market there, moving forward.”

For wood frame condo developments in Calgary, there were 254 sales in the most recent quarter, up from 208 year over year, says Urban Analytics. Between Sept. 1 and the end of November 2016, the previous three-month span, the segment had 261 sales.

Meanwhile, Calgary’s townhome sales from the most recent quarter rose to 195 transactions from 186 year over year. The past three months of data were also up from the previous quarter, which had 181 sales on the books, says Urban Analytics.

Ferreira says buyers in the wood frame condo and townhome sectors typically “like to see what they’re buying.”

“So we’ve seen more projects built on spec and completing prior to marketing campaigns launching,” he says.

“What you tend to see is a bit of a spike in standing inventory levels, so the completed and unsold units, as these projects complete,” he adds. “But then as the marketing campaign launches, and we see some sales occurring in them, we start to see those numbers come off again.”

Ferreira says the woodframe condo and townhome sectors in new communities belonging to the “outer south and outer north” ends of the city are part of a competitive market.

“If you’re a buyer and you’re looking in those neighbourhoods, it’s a pretty good time to be looking, because I think there’s some good selection and good value to be had.”

-Calgary Herald

House buyer beware: Landmark B.C. court ruling will shake real-estate industry.

A B.C. Supreme Court ruling will send shock waves through the arm of the Canadian real-estate market that is powered by foreign capital, say immigration lawyers.

The ruling targets a weakness in Canadian laws that often leads foreign owners of real estate in cities such as Metro Vancouver and Toronto to claim they are “residents of Canada for tax purposes” when they are not.

The landmark B.C. decision requires notary public Tony Liu to pay his client more than $600,000 because Liu failed to adequately determine whether the Vancouver house his client was buying for $5.5 million had been owned by a tax resident of Canada.

As a result, the Canada Revenue Agency did not get paid, at the time of the sale, the 25 per cent capital gains tax it charges non-resident sellers of Canadian property on any profit they make on the sale.

So the CRA later demanded the buyer pay the $600,000 in tax. The buyer, in turn, sued Liu, arguing Liu failed to discover the seller was not a tax resident of Canada.

The CRA considers people who don’t live in the country at least six months a year and don’t pay income taxes here to be foreign property investors and speculators and thus subject to capital gains taxes.

Three Canadian immigration lawyers said the CRA tax-residency rule is often not enforced, even in overheated housing markets in Vancouver and Toronto that are in part fuelled by offshore money.

The complex ruling published this month by B.C. Supreme Court Justice Kenneth Affleck strikes to the heart of a gaping hole in Canadian tax, immigration and property-transfer law, say the immigration lawyers.

The B.C. decision is a stark warning to real estate agents, notaries and lawyers who fail to ensure that sellers of properties are truly tax residents of Canada, said David Lesperance, a tax and immigration lawyer based in Toronto.

“This truly is a game changer,” said Vancouver immigration lawyer Richard Kurland.

“It’s a precedent. Real estate agents can now get a knock on the door from the taxman, asking for the (capital gains) taxes that should have been collected by Ottawa, because the agent failed to make adequate inquiries.”

Sam Hyman, a Vancouver immigration lawyer, said the judge’s decision alerts purchasers to “the dire consequences” of making offers on properties sold by people who may be trying to avoid capital gains tax by falsely declaring they are tax residents of Canada.

Many buyers and their agents, Hyman said, are not being diligent in making sure the seller is a physical or tax resident of Canada, while others are being “cavalier” or “engaging in wilful blindness” about it.

The immigration lawyers urged the B.C. government to end the “honour system” that leaves it largely up to sellers to state on real-estate-industry forms whether or not they are residents of Canada for tax purposes.

They said the honour-system loophole could be fixed through Ottawa and Victoria agreeing to the sharing of information among the CRA, the federal Immigration Department and the arm of the B.C. government responsible for property sales.

The B.C. Liberals, Kurland said, have stubbornly refused to solve the costly problem by reforming the government’s property-transfer forms to require sellers to answer whether they are “a tax resident of Canada.”

The B.C. government, which last summer brought in a 15 per cent tax on foreign buyers to cool Metro Vancouver’s globalized real estate market, recently began to ask property sellers and buyers to answer, “What is your citizenship?”

But citizenship is “as irrelevant as eye colour,” Kurland said.

The issue that really matters to most Canadians and the CRA, he said, is tax residency, whether a home buyer or seller pays their fair share of taxes in this country.

All three lawyers say Canada is forgoing hundreds of millions of dollars in tax revenue by not enforcing the country’s tax-residency rules, which are designed in theory to give long-term residents an advantage over foreign nationals.

The lawyers said they hope the federal government – which this week pledged to “target high-risk international tax and abusive tax-avoidance cases” – will make it a priority for CRA to audit mansion owners who pay little or no income taxes.

It would be relatively easy for the CRA, Lesperance said, to conduct “lifestyle audits” on wealthy trans-national “astronauts,” also known as “ghosts,” who pay little or no income tax in Canada while financing family members to spend lavishly on expensive homes and cars in the country.

In some cases, Kurland said, dubious immigration professionals are advising clients they can “eat their cake and have it too.”

Some property owners, for instance, are claiming to real estate officials that they are Canadian residents, so they can avoid capital gains taxes while selling houses (and to ensure they qualify for permanent resident status).

But some of the same people, at the same time, are claiming to the CRA that they are not residents under our tax law, so they don’t have to declare their global income and property holdings, and pay income taxes on them in Canada.

-Calgary Herald

Thinking about buying a home? Here are a few cold, hard facts to chew on

You want to be the king or queen of your own castle. But how do you conquer this daunting feat, given that in big cities, so-called starter castles can cost more than $1-million? To help you navigate one of the largest purchases you’ll ever make in your life, here are some answers to commonly asked questions for first-time home buyers.

How do I know if I’m money-ready to be a home owner?

Look at your lifestyle and ask yourself, “Am I ready to commit?” Do you have stable income and can you plant roots for a few years?

“With the transactional costs of real estate, you have to stay put for five years to make up your money,” says 31-year-old Sean Cooper, who paid off his $450,000 mortgage in three years and authored the upcoming book, Burn Your Mortgage.

Next, crunch some numbers to determine if you can afford the home you want. The Canada Mortgage and Housing Corporation says your monthly housing costs (mortgage payments, taxes, heating, condo fees, etc.) shouldn’t be more than 32 per cent of your gross monthly income. Use mortgage payment calculators. Ask other homeowners how much owning their homes cost. And don’t forget to add in the closing costs.

“A lot of people assume that renting costs the same amount monthly as owning a house but that’s not true,” Cooper says. “Home ownership costs come with a lot more expenses such as home insurance, repairs and maintenance. A good rule of thumb is to budget 1 to 3 per cent of the purchase price of per year to repair and maintenance.”

How the heck do I amass a down payment?

“Beg your mom and dad,” says James Laird, president of Broker of Record. “We’re seeing that family members are willing to help.”

Millennials were 47 per cent more likely than generation Xers to have received help from family for a down payment on their first home, according to a recent RateHub report.

For those who don’t have that option, it’s going to take sacrifice and hustling. See if your parents will allow you to move home temporarily — almost 40 per cent of Millennials have moved back home at some point, a TD survey says — or if you can downgrade your living expenses, for example, by finding a roommate. Do what you can to boost your income and your savings, whether that’s reducing spending or negotiating for a raise or working that side hustle.

Also, under the home buyers’ plan, first-time home buyers can take $25,000 out of their registered retirement savings plan and pay it back over the next 15 years without incurring any penalty. For a couple that means $50,000.

Should I wait and save up 20 per cent or just put down the minimum 5 per cent?

Buyers who put down less than 20 per cent must purchase mortgage default insurance; they also may also qualify to borrow less. So, if you’re in an affordable housing market, aim for 20 per cent. (For the average Canadian home, which costed $474,590 in December, that’s a $94,918 downpayment.)

“If you’re waiting for a 20 per cent downpayment in a big city and you don’t have parental help, you’re going to be waiting a long time,” says Kerri-Lynn McAllister of RateHub. You then run the risk of being priced out of the market if prices continue to rise. “If you’re looking at [waiting] years, then it may not make sense,” McAllister adds. “[The insurance] is not a cost that you often feel because it’s rolled into your mortgage.”

What are my borrowing options?

“Do your research and compare your rates online,” McAllister says. “Even doing that research ahead of time and bringing that number to your bank and asking if they can match it, is also very prudent. You don’t want to take the first offer.”

Shopping can be complicated so consider getting a mortgage broker — an intermediary who is connected to multiple lenders and who shops around for the best deal for you (they are paid a finders fee from the lender), she says.

Vancouver-based online lender Mogo recently unveiled a mortgage platform geared to Millennials; the digital dashboard walks users through the process and allows them to apply for a mortgage online. “The application takes four minutes,” says Chantel Chapman, a credit expert and financial fitness coach with Mogo. “It’s all about the experience with a mortgage specialist and the convenience of doing it online.”

When you’re shopping for a mortgage, don’t just look at rates. Look at the penalties if you end up breaking your mortgage and check out pre-payment privileges such as being able to make lump sum payments, increase your payments and double up on payments.

The house that I want is out of my reach. Now what?

“People have to manage their expectations,” McAllister says. “The dream of home ownership doesn’t have to be equated with a detached house because that can be a stretch in cities like Toronto or Vancouver. People should start looking at different types of homes to fulfill like that dream; town houses and family-friendly condos are good alternatives.” Consider other options such as buying outside of the core or buying with family or friends.

-Financial Post

Teranet-National Bank index: Home prices post record February increase

Canadian home prices posted a record jump for February, fuelled by sales in Toronto, Hamilton and Vancouver, according to a Teranet-National Bank survey.

The national composite house price index showed a 1.0 per cent gain for the month, the largest February increase in the 18-year history of the index.

Toronto soared a record 1.9 per cent, while Hamilton gained 1.4 per cent, also a record increase. Vancouver added 1.4 per cent.

However the story wasn’t the same across the country as seven of the 11 major cities tracked posted declines, with Calgary falling 1.3 per cent.

The Calgary Real Estate Board earlier this month reported the average price of single-family homes sold in Calgary last month rose 2.8 per cent from a year earlier, to $557,061. The median price improved by 5.2 per cent, to $492,000.

Compared with a year earlier, the Teranet-National Bank index was up 13.4 per cent, the largest 12-month increase since 2006.

The year-over-year jump was due to a record 23 per cent increase in Toronto and a 19.7 per cent gain in Hamilton, also a record.

“In order to accurately assess the Canadian home resale market, it is essential to recognize the dichotomy between markets like Toronto, Hamilton and Victoria, where price growth is in the double digits, and other markets where the progression of home prices has been much more moderate, if not negative,” National Bank senior economist Marc Pinsonneault wrote.

Prices in Vancouver, while up in February compared with a year ago, are off their highs set in September as measured by the Teranet-National Bank index. The number of sales in the city has also decreased.

The price index came one day ahead of the latest home sales figures from the Canadian Real Estate Association expected Wednesday.

-Calgary Herald

Millennial households to triple by 2036

The number of millennial households in Canada will more than triple by 2036. Projections range from 5.5 million to 7 million millennial households in 2036, up from 1.7 million in 2011.

This is according to Long-term Household Growth Projections for Millennial Generation, a Research Insight that supplements our Long-term Household Projections — 2015 update. The millennial generation refers to people born between 1981 and 2001.

The report predicts that the number of couples with children will reach 29% of all millennial households by 2036. It also predicts that non-family millennial households of 2 or more people will decrease considerably. According to the report’s projections, 72% of millennial households will own their own homes by 2036.

Source: CMHC (projections) and adapted from Statistics Canada (population projection 2014)

In 2036, an estimated 60% of millennial households will live in single-detached houses, replacing apartments as the most common dwelling type.

Proportion of millennial generation dwellings by type, Canada

Source: CMHC (projections) and adapted from Statistics Canada (population projection 2014)

Credit Card Delinquencies Soar In Canada’s Oil Provinces

Canadians are increasingly putting it on plastic, but those in the recession-riddled oil patch are also increasingly having a hard time paying it off.

Ninety-day credit card delinquencies soared by 23 per cent in Alberta in the fourth quarter of 2016, compared to a year earlier, credit bureau TransUnion said Wednesday. They were up 22.7 per cent in Saskatchewan.

credit card delinquencies

TransUnion had earlier warned that the job slump in some western provinces would result in double-digit increases in credit card delinquencies, “a risk that current data confirm has indeed been realized,” the company said in its report.

A larger number of Canadians are using credit cards, and the total balance on those cards rose 3.3 per cent in the past year, to a total of $94.2 billion in the fourth quarter of 2016.

But the number of credit cards in use in Canada actually declined by some 814,000 over the past year, to 43.4 million cards. TransUnion suggested this has to do with greater customer loyalty to their existing cards.

“Some lenders appear to be increasing credit lines to their customers to capitalize on this loyalty effect,” TransUnion’s VP for product innovation and analytics, Chris Dias, said in a statement.

“We may expect more lenders to evaluate increasing credit lines to cardholders in response to this higher demand.”

non mortgage debt

Overall, TransUnion described Canadians’ non-mortgage debt situation as “sound,” but noted there is a risk of interest rates rising.

“However, this scenario has yet to deter the Canadian consumer, and we believe the far majority of them will be able to weather the impact of these increases,” TransUnion said.

-Huffington Post Canada

Most Chinese buyers want Calgary real estate for own use, review finds

The top reason foreign buyers from China want to get into the Canadian housing market is education, not investment, according to data from a popular global real estate listings website.

Figures released Tuesday by the Chinese website Juwai.com in partnership with Sotheby’s International Realty Canada found schooling was the primary motivation for potential Chinese homebuyers who viewed property listings in major Canadian cities in 2016.

It found housing needed for educational purposes was the most cited reason 46 per cent of Chinese users were looking at properties in Montreal, followed by 44 per cent in Vancouver, 41 per cent in Toronto and nine per cent in Calgary.

The second most common motivator was “own use,” which could mean the home would be used as a second or third property. Sixty-two per cent of those looking for homes in Calgary cited this was their main reason, followed by 37 per cent for Toronto, 25 per cent for Vancouver and 34 per cent for Montreal.

Investment was the top reason listed by a quarter of home seekers, with 27 per cent saying it was the main reason for their property searches in Vancouver and Toronto, 23 per cent in Montreal and 21 per cent in Calgary.

Brad Henderson, president at Sotheby’s International Realty Canada, says the figures show that there have been misconceptions about why Chinese homebuyers look to Canadian real estate.

“I really think a lot of perception that people have around foreign buyers and specifically buyers from mainland China are informed by more anecdotal information and not statistics,” he said.

The data also indicated the majority of Chinese property searches were for Canadian homes priced below $655,050.

“While home buyers from mainland China have been identified as a notable segment of foreign purchases within the luxury property markets of Vancouver and Toronto, Juwai.com data dispels the assumption that Chinese interest is limited to the high-end segment,” said the report.

“Instead, it implies that conventional real estate dominates demand.”

The figures also found the implementation of a 15 per cent foreign-buyers tax last August in Vancouver had a swift impact on the interest of those searching for Canadian properties.

Juwai.com says that immediately following the announcement of the tax in July, its listing inquiries for Vancouver plummeted 81 per cent year-over-year and 78 per cent in August year-over-year when the tax came into effect.

It also saw that listing searches increased in other Canadian cities, with property inquiries soaring 1050 per cent and 420 per cent year-over-year in Calgary during August and September.

Even so, Henderson says he anticipates the number of Vancouver searches to pick up again, citing a modest increase in the number of inquiries in the last quarter of 2016 which he attributed to prospective buyers having digested the impact of the foreign-buyers tax.

“So we believe that in 2017, we’ll probably see an increased interest in properties in Vancouver.”

The data also found that Canada ranked third by users as the most popular destination for international homebuying, after the United States and Australia.

Juwai.com says the data was compiled over the course of 2016 from its more than two million monthly Chinese visitors.

-Calgary Herald