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Calgary Real Estate News

Mortgage Loan Insurance: Quick Reference Guide

This handy quick reference tool provides helpful information to submit applications to CMHC for homeowner and small rental loans, for all CMHC programs: Purchase, Improvement, Newcomers, Self-Employed, Green Home, Portability, and Income Property.

Benefits of mortgage insurance

Some of the benefits of CMHC mortgage loan insurance include:

  • Available for purchase of an existing residential property with or without improvements and for new construction financing.
  • Our Green Home program offers a partial mortgage loan insurance premium refund of up to 25%. Refunds are available directly to borrowers who buy, build or renovate for energy efficiency using CMHC-insured financing. Find out more with our Green Home Program.
  • Self-employed borrowers with documentation to support their income have access to CMHC mortgage loan insurance.
  • Our portability feature saves money for repeat users of mortgage loan insurance by reducing or eliminating the premium payable on the new insured loan for the purchase of a subsequent home.

Loan-to-Value (LTV) ratios

For homeowner loans (owner-occupied properties), the Loan-to-Value ratio for 1–2 units is up to 95% LTV. For 3–4 units, the ratio is up to 90% LTV.

For small rental loans (non-owner occupied), the ratio is up to 80% LTV.

Minimum equity requirements

For homeowner loans, the minimum equity requirement for 1–2 units is 5% of the first $500,000 of lending value and 10% of the remainder of the lending value. For 3–4 units, the minimum equity requirement is 10%.

For small rental loans, the minimum equity requirement is 20%.

Purchase price / lending value, amortization and location

For both homeowner and small rental loans, the maximum purchase price / lending value or as-improved property value must be below $1,000,000.

The maximum amortization period is 25 years.

The property must be located in Canada and must be suitable and available for full-time, year-round occupancy. The property must also have year-round access including homes located on an island (via a vehicular bridge or ferry).

Traditional and non-traditional down payments

A traditional down payment comes from sources such as savings, the sale of a property, or a non-repayable financial gift from a relative.

A non-traditional down payment must be arm’s length and not tied to the purchase and sale of the property, either directly or indirectly such as unsecured personal loans or unsecured lines of credit. Non-traditional down payments are available for 1–2 units, with 90.01% to 95% LTV, with a recommended minimum credit score of 650.

Creditworthiness

At least one borrower (or guarantor) must have a minimum credit score of 600. In certain circumstances, a higher recommended minimum credit score may be required. CMHC may consider alternative methods of establishing creditworthiness for borrowers without a credit history.

Debt service guidelines

The standard threshold is GDS 35% / TDS 42%. The maximum threshold is GDS 39% / TDS 44% (recommended minimum credit score of 680). CMHC considers the strength of the overall mortgage loan insurance application including the recommended minimum credit scores.

Interest rates

The GDS and TDS ratios must be calculated using an interest rate which is the greater of the contract interest rate or the Bank of Canada’s 5-year conventional mortgage interest rate.

Advancing options

Single advances include improvement costs less than or equal to 10% of the as-improved value.

Progress advances include new construction financing or improvement costs greater than 10% of the as-improved value. With Full Service, CMHC validates up to 4 consecutive advances at no cost. For Basic Service, the Lender validates advances without pre-approval from CMHC.

Non-permanent residents (homeowner loans only)

Non-permanent residents must be legally authorized to work in Canada (i.e. a work permit). Mortgage loan insurance is only available for non-permanent residents for homeowner loans for 1 unit, up to 90% LTV, with a down payment from traditional sources.

-CMHC

Calgary Real Estate News

Homeowners income was about double that of renters in 2016

According to new data from Statistics Canada’s Canadian Income Survey and Survey of Labour and Income Dynamics, the average before-tax household income, adjusted for inflation, increased 9.6% from $81,200 in 2006 to $89,000 in 2016.

Canadian homeowners’ average household income was roughly double that of renters throughout the 2006 to 2016 period. However, renters’ average household income grew more between 2006 and 2016 with a 14.4% increase compared to 9.7% for homeowners.

In 2016, Alberta had the highest average provincial household income at $107,500 while New Brunswick had the lowest at $73,200. Differences in the level of before-tax household income across provinces also existed when households were grouped into homeowners and renters.

Newfoundland and Labrador had the highest growth rate in the average before-tax household income between 2006 and 2016, at 25.8%. Alberta was the province with the lowest growth rate in the average before-tax household income over the same period, at 7.8%. The growth rate in average before-tax income varied across tenure groups.

In 2016, Edmonton had the highest average before-tax household income in selected Metropolitan Areas at $113,500 while Trois-Rivières had the lowest at $66,500.

The average before-tax household income declined in Hamilton, St. Catharines-Niagara and London between 2006 and 2016, with the largest rate of decline of -8.8% registered in London. Other selected Metropolitan Areas experienced positive growth in the average before-tax household income over the same period, which ranged from 0.3% in Thunder Bay to 30.1% in Saskatoon.

Average before-tax household income, by housing tenure (owner and renter), Canada,1 2006 – 2016 (2016 constant dollars)

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1 The Canadian Income Survey and the Survey of Labour and Income Dynamics include all individuals in Canada except residents of Yukon, the Northwest Territories and Nunavut, residents of institutions, persons living on reserves and other Aboriginal settlements in the provinces and members of the Canadian Forces living in military camps. Overall, these exclusions amount to less than 3 percent of the population.

Source: Statistics Canada, Canadian Income Survey 2012 – 2016. Survey of Labour and Income Dynamics 2006 – 2011

Average before-tax household income, all households, selected Metropolitan Areas, 2006 and 2016 (2016 constant dollars)

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Source: Statistics Canada, Canadian Income Survey 2012 – 2016, Survey of Labour and Income Dynamics 2006 – 2011

-CMHC

Calgary Real Estate News

Real Estate Market Update

Real Estate Market Update | March 2018 

What a difference a year can make. Year-over-year we are seeing significant changes throughout real estate markets across Canada. In each of the four major markets I’ve reviewed, Sales have dropped and Active Listings are on the rise, which means Beauty Contests and Price Wars will dominate the marketplace. 

Year-over-year, Vancouver is -30% in Sales, Edmonton -12%, Calgary -27% and Toronto nearly -40%. These are noteworthy changes and deserve some evaluation but I don’t think the sky is falling. Markets change but we as professionals need to be able to change with them.

Calgary, AB

Comparing March 2018 to March 2017, sales are down just over 27% and inventory is up almost 25%.  This means as of March 2018, Calgarians are working with roughly 4.6 months of inventory.  There’s no doubt you are in a shrinking market which means there are fewer sales happening for the same amount of people.

–Richard Robbins

Calgary Real Estate News

Home sales fall nearly 17% in February from a year ago: CREA

Canada’s national average home price was down five per cent and sales volume was down 16.9 per cent in February compared with a year ago, evidence that many buyers raced to purchase before new mortgage rules came into effect.

There was also a 6.5 per cent decline in transactions between January and February, the second month-over-month decline and the lowest reading in nearly five years, the Canadian Real Estate Association reported Thursday.

CREA’s latest monthly statistics show that home sales were down in February in almost three quarters of all local housing markets tracked by the national association.

“The drop off in sales activity following the record-breaking peak late last year confirms that many homebuyers moved purchase decisions forward late last year before tighter mortgage rules took effect in January,” said Gregory Klump, CREA’s chief economist in a statement Thursday.

The number of homes sold nationally in December hit a record high, ahead of a new stress test for uninsured mortgages that requires potential buyers to show they can service their mortgage payments if rates increase.

The federal banking regulator’s tougher rules, which took effect Jan. 1, now require a stress test to be applied even to borrowers with more than 20 per cent down payment.

To qualify for federally regulated mortgages, borrowers must be able to afford interest rates that are two percentage points above the contracted rate or the Bank of Canada’s five-year benchmark rate, whichever is higher.

The stricter residential mortgage lending regulations introduced by the Office of the Superintendent of Financial Institutions were aimed at reducing risk in the market amid high housing prices.

Homebuying activity has also been dampened by the Bank of Canada’s move in January to hike interest rates to 1.25 per cent. The quarter-point increase was the central bank’s third since last summer, after hikes in July and September. In January, Canadian home sales fell by 14.5 per cent from the previous month, according to CREA’s figures.

The national average house price for homes sold in February 2018 was just over $494,000, down five per cent from a year earlier. But excluding Toronto and Vancouver, the country’s most active and most expensive markets, the national average price was just under $382,000, up 3.3 per cent from $369,728 a year ago.

The number of newly listed homes in February increased by 8.1 per cent, following a plunge of more than 20 per cent in the month prior. However, new listings across the country in February were still 6.4 per cent below the 10-year monthly average and 14.6 per cent below the peak reached in December 2017. New home listings in February were also below the levels recorded every month last year except January 2017.

-Globe & Mail

Calgary Real Estate News

Condominium Property act. New changes April 1.18

RECA News

Beginning April 1, 2018, if a consumer is buying a new condominium in Alberta from a developer – an Alberta lawyer must hold the buyer’s purchase deposit in trust while the condominium is being built. Service Alberta announced this change in October 2017.

Prior to April 1, a real estate brokerage or the condominium developer could hold a buyer’s deposit in trust.

Real estate professionals who are representing buyers during their purchase of a new condominium from a developer should confirm the developer uses a lawyer who is an active member of the Law Society of Alberta, and that they operate a trust account under the Legal Profession Act. You must also ensure your clients write their deposit cheques to the developer’s lawyer, in trust, and not to the developer or a real estate brokerage.

Under this new rule, a developer who receives a buyer’s deposit must ensure their lawyer deposits it in the lawyer’s trust account within three business days of receiving it. If the developer agrees, a buyer can have their own lawyer hold their deposit in trust.

Take a few minutes to review the Condominium Developer Info Sheet from Service Alberta for more information about additional Condominium Property Act changes coming on April 1.

Real Estate Council of Alberta

T: 1-888-425-2754

F: (403) 228-3065

communications@reca.ca

www.reca.ca

Calgary Real Estate News

How to choose the right Agent Part 3 – Things you need know before you list your home

Over the last two days we have talked about your Realtors networks and Passive vs. Active Marketing but there are a few things that you should know about listing your home that will set you up for success when you are ready to put your house on the market!

  1. Neat and Tidy

We know that you love your home, and you might have kids and kids can be messy, or maybe you have pets and sometimes pets smell. Realtors have homes, with all of these same things, I promise we don’t all live in pristine real estate marvels, in fact if you walk into my house I can promise you will be tripped by a hockey stick or a dog toy, BUT I cannot emphasize this enough, your home needs to be spotless for photos and for showings. it sucks, we all know this, it is hard to keep your home in show home shape, but it will not sell if it isn’t. Try and have it “show home” clean when you have your Realtor interview so that they can get a clear picture of what your home looks like on its best day!

2. Listen to your Lister

You are obviously going to have a conversation with your Realtor about the listing price of your home. Realtors have tools that they use to identify what your home should be listed at, these tools (called CMA, which we will talk about in a later post) combined with a savvy understanding of the current market conditions your Realtor can usually pin point pretty close what your home should be listed at and ultimately what it should sell for. One fatal flaw in home owners is that they don’t listen to this number, typically because they think their house is worth more. Some Realtors will push back because of knowledge and expertise, some will take the listing at a higher price tag, simply to get your listing… when this happens you can find yourself in a vortex of price dropping and haggling with offers when and if they come in. If your home is priced right (not too high or too low) it will sell. Don’t be afraid to ask questions about list price, but ultimately if your Realtor has stats to back the price point… take their advice.

3. Clear the Clutter 

This is your home, of course you would have personal touches, nik naks and frames. maybe some crazy feature walls, or novelty rooster collections. We know you love these items, we do too. BUT potential buyers don’t. Most people when viewing a home cannot look past the esthetic and see true potential of their own items in a home, in fact they have the same problem with empty spaces. This is why a staged home will always sell faster 10/10 times. You can start this by packing up any personalized items and clutter. particularly toys, and collections, photos and other chachkeys that can be distracting for the potential buyer. Think of it as a head start on packing for your move out!

4. Be flexible and realistic

Thinking about upcoming showings can be overwhelming and daunting, but showings are good, they are the pass that takes you right to the touchdown, showings is where your offer will come from. The worst part; showings aren’t typically a 9:00-5:00 job. Now, this is still your home, you call the shots. It is really important that you are as flexible and realistic when setting schedules with your agent. If you have a 2 year old, maybe any showings after 7:00pm aren’t acceptable, maybe you need 24 hours notice before a showing, these are normal requests and completely acceptable! it is your home after all. Set clear expectations with your agent, but be mindful that if they call you and someone wants to see your house in the next 3 hours and you say no… that could have been the person who wanted to buy it.

5.  Be patient, and communicate 

If you have questions about your listing, the market, the last showing… the weather you need to know that you should be asking! Your agent should be keeping you informed about your listing, but if you’re not getting what you need, call them! Some agents even have review software that will generate feedback immediately following a showing, really good agents follow up with the buyers agent to try and close a deal, or at the very least find out why they didn’t choose your home, and the Great agents bring in their own buyers… from that network we talked about!

Calgary Real Estate News

How to choose the right Agent Part 2 – Active Marketing

How important is marketing in Real Estate you ask? In short… it is incredibly important, in fact it can mean the difference between a sale and you sitting frustrated on your property for months, it can also be the difference in your listing becoming stale in the market because it sits for too long with little to no exposure.

I like to think that every Realtor has their own tips and tricks that they use to generate business, employ smart marketing techniques and do the very best for their client. The truth is, at the end of the day it breaks down to two types of agents. Active and Passive Marketers.

  • Passive Marketing

Every Realtor does this, and some pawn it off as highly effective marketing tools, but at the end of the day they are waiting for the business to find them. Waiting for the buyer to call. Passive marketing is listing the home on MLS, putting it on a website, (that may or may not generate google ad words). There is nothing wrong with passive marketing, and every Realtor should do it because there is always the online buyer who shops around and can and will find you on MLS, but it isn’t exceeding expectations and it isn’t going above and beyond.

  • Active Marketing 

Active marketing is when the rubber meets the road. We talked in my previous post about SELRES_9462f936-7d9e-4c3b-a82d-5fcb73a642d1NetworksSELRES_9462f936-7d9e-4c3b-a82d-5fcb73a642d1and this has a lot to do with that. Active marketing is when your Agent is actively searching the market for a buyer for your home. They can do this through their network, through lead capture services that they can deploy through various social media channels, and their website. Your Realtor should create a brand for your home. Does your Realtor use a professional photographer? are they a professional photographer? do they do home staging? what do they charge for home staging? All of these tools tie together and make your home sale something extra special, not just another MLS number on the proverbial YYC Real Estate shelf. Now, marketing costs money! The right kind of marketing costs lots of money! This is why you hire a Realtor, so you don’t have to navigate this alone. Always make sure to ask what the price tag is attached to any marketing plan when you are discussing commissions, offering photos and home staging is great, but ensure you know what that will cost you in the end. We will talk about where your money is going in a later post!

Kevin D’Costa Fun Fact! Did you know that I am an accredited staging professional RE. Did you also know that I offer this service to all of my clients? The best part, you rarely have to run out and buy thousands of dollars worth of furniture, usually just some minor esthetic and décor items are enough!

The point I am trying to make is this; When you’re interviewing a Realtor do not be afraid to ask them what exactly they are going to do for you? how are they going to market your home? Now that you know if you get the “I have a great webpage and I will list it on MLS” are the wrong answers, you can ask for more. expect more!

Calgary Real Estate News

2014 looks strong for Airdrie real estate market

The Airdrie housing market had a very strong year in 2013 with pricing returning to the peak levels of 2007.

Now looking to 2014 the Calgary housing market is expected to continue growing, which should push Airdrie housing prices up further as well.

As homes get less affordable in Calgary, buyers will look for less expensive options and head out to the smaller centers.

With our location and with so many amenities, Airdrie is often many buyer’s No. 1 choice as their place to call home. To put some perspective to the affordability, we’ll look at benchmark pricing (benchmark means the typical home).

For a look at what is considered typical please see our blog dated Jan. 6 at airdrieliving.ca

Through the third quarter of 2013 the typical home in Calgary was selling for $470,600 while in Airdrie the typical home sold for $365,900 for a difference of almost $105,000. However, in Airdrie we all know that two storeys are king and what builders will continue to build.

So it certainly makes sense to look at benchmark pricing for the typical two-storey home as well.

The typical two- storey home in Calgary sold for $508,400 and in Airdrie sold for $402,200 for a difference of more than $106,000.

With these kind of savings on the largest investment most people will ever make, it is easy to see why so many buyers are willing to move out of the city and why Airdrie continues to grow by 11 people a day, with half of them coming from Calgary.

To add to rising prices, in 2014 the Calgary real estate board is predicting an increase of 4.3 percent for the city of Calgary with the first half of the year being stronger than the second half.

This along with interest rates expected to climb slightly, Airdrie’s affordability will remain high compared to Calgary, which should also continue driving prices up here.

Another key factor for the Airdrie market will be housing starts.

If starts increase, this will help alleviate some of the pressure on resale homes.

However, if starts remain around the same then we will continue to see a low number of available homes on the market, which again could push prices up even further.

While I wish I had a working crystal ball and could tell you exactly what’s going to happen, that is just not the case. We live in a world of ever changing factors and in Alberta we are of course dependent on oil.

If oil goes up then housing prices will probably go up, if they go down then pricing will likely all relative. If you sell when prices are high chances are you will buy when prices are high.

Same goes when the market is low. So when people ask me, ‘when is it the best time to list my house?’ my answer is always ‘when you want to sell because you never know when the right buyer for your house is out there looking and if you are not on the market they will not find you.’

So regardless of pricing make the decision based on your needs.

So the good news is all factors are leading towards a strong 2014.

-Airdrie Echo

Calgary Real Estate News

Calgary area new home prices on the rise to record level – Single-detached average forecast to reach nearly $600,000 this year

A number of factors has pushed new home prices in the Calgary region higher with a forecast of the average absorbed price for a single-detached property to rise to nearly $600,000 this year, which would be a record.

Canada Mortgage and Housing Corp. measures prices in the new home market when a property is “absorbed” which means the unit is no longer on the market as it has been sold or rented.

The federal agency is forecasting the single-detached average absorbed price in the Calgary census metropolitan area to increase to $598,000 this year from a forecast $583,000 in 2013 and $580,135 in 2012.

Doug Whitney, vice-president of sale for Crystal Creek Homes and president this year of the Canadian Home Builders’ Association-Calgary Region, said a number of factors will lead to higher new house prices this year.

He said the industry is seeing pressure on its own prices for materials such as drywall, concrete, heating, insulation – a lot of the components that go into building a home.

“There’s an uptick in the U.S. housing construction industry. So there’s a little more competition for materials,” said Whitney. “It’s a supply and demand thing. They’re a bigger market than we are and they’re starting to come alive. It’s going to drive up those basic costs for us here.”

He said most of the builders have been absorbing a lot of the cost increases from 2012 and 2013 but with the current sellers’ market in the resale sector, characterized by low supply and high demand, that will also impact decisions made by some builders on prices this year.

“Probably one of the biggest components that builders have to be aware of is the upward pressure on land prices, which is a huge component in the price of a home,” added Whitney.

“So if it’s costing a developer more to bring land to market, or if there’s a shortage of (land) and they’re charging more, the house price is going to be higher,” said Whitney.

Teresa Centanni, area sales manager for Douglas Homes in the Kinniburgh community in Chestermere, said prices are going up for a number of reasons including a strong economy, attracting more people moving here, which is driving up housing demand. Also, there is a low inventory of active listings in the resale market these days.

She said homebuyers like the idea of a builder’s warranty on a new home and having the ability to have some input on the home’s specifications before it is built.

“We already had a price increase on September 1. Our trades increased their prices due to the flood (in June) and there’s going to be another three to four per cent price increase they’re predicting for March, April. We’re trying to do our best to keep our prices.”

According to the CMHC, the number of single-detached absorptions in the Calgary CMA until the end of November was 5,622. It’s the latest data the agency has for the market. In 2012, there were 5,429 absorptions which was up from 2011 at 4,733.

The following is the Calgary CMA single-detached absorbed price for each year back to 2000, according to the CMHC: 2000, $225,996; 2001, $239,454; 2002, $242,525; 2003, $267,106; 2004, $285,321; 2005, $315,796; 2006, $353,662; 2007, $474,511; 2008, $581,800; 2009, $547,795; 2010, $514,466; 2011, $547,670; 2012, $580,135; 2013 (forecast), $583,000; and 2014 (forecast), $598,000.“We’re starting to see growth in prices for new homes. There’s a number of factors contributing to this,” said Richard Cho, senior market analyst in Calgary for the CMHC. “One is our economy has been growing so with that we’re seeing stronger demand for housing. Also, with the supply in the resale market coming down as well, we’re seeing more people look to the new home market for their housing needs.

“Also, with the new home price, we’re also seeing more pressure on costs, materials, labour. That’s also contributing to the increase in the home price.”

He said labour market conditions, demand for materials and land costs are expected to maintain upward pressure on home prices this year.

As a comparison, the following is the average yearly MLS sale price for single-family homes in the city of Calgary, according to the Calgary Real Estate Board: 2000, $194,202; 2001, $201,137; 2002, $221,028; 2003, $237,081; 2004, $251,558; 2005, $287,125; 2006, $400,081; 2007, $471,852; 2008, $460,057; 2009; $442,828; 2010, $461,420; 2011, $466,509; 2012, $481,259; and 2013, $517,887.

 

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