CMHC Housing Market Outlook Spring 2013

The spring 2013 market outlook from CMHC has been released. It can be found in its entirety here.  Below are snippets from the report.

NEW HOME MARKET

Following a 38 per cent increase in 2012, total housing starts in the Calgary Census Metropolitan Area (CMA) are forecast to decline 8.9 per cent in 2013 before increasing slightly next year. While new single detached construction will see a modest increase over the next two years, the elevated pace of multi-family construction witnessed in 2012 is not expected to continue this year. Heightened supply levels and the threat of rising inventories will warrant a reduction in multi-family starts in 2013. A moderation in the pace of job creation and net migration will also warrant a lower level of starts this year.

MULTI-FAMILY STARTS

Multi-family construction this year is not expected to be as strong as 2012 when starts reached its second highest level since 1981. The increase in the number of units under construction and the prospect of rising inventories will keep starts from returning to last year’s elevated levels. In 2013, multi-family starts are forecast to total 5,500 units, a 20 per cent decline from 2012. Despite
the reduction, multi-family units will continue to be an option for a variety of buyers, such as renters looking for their first home, individuals planning to downsize, or investors seeking an income-producing property. Provided supply levels move lower and inventory levels do not escalate, multi-family starts in 2014 are forecast to increase 5.5 per cent to 5,800 units.

RESALE MARKET

Residential MLS® sales in Calgary are forecast to total 27,000 transactions in 2013, up 1.4 per cent from 26,634 in 2012. The gain in sales will not be as pronounced as in 2012 when sales increased 19 per cent, as some of the primary drivers of housing demand such as employment and migration will experience a lower rate of growth this year. In 2014, MLS® sales are forecast to reach 27,700 units, a 2.6 per cent increase from 2013. The economy in Calgary will continue to create jobs while relatively low mortgage rates and rising incomes will help buyers purchase a home.

Home prices in Calgary have not posted strong gains in the last couple of years, following the declines in average price in 2008 and 2009. As such, a number of homeowners are waiting for prices to increase further before listing their homes. With prices rising moving forward, more homeowners will look to capitalize on equity gains and list their homes. New listings in 2013 are forecast to finish the year slightly above 2012 levels at 42,500 units. For 2014, new listings are forecast to reach 43,000 units, up 1.2 per cent from a year earlier.

With higher sales and moderating listings, the sales-to-active listings ratio increased to an average of 35 per cent in the first three months of 2013, up from 28 per cent one year earlier. Under these conditions, the average MLS® residential price in Calgary is expected to rise this year and next. While the increase in demand has reduced active listings, it has also shortened the time to sell. In addition, an increase in the proportion of sales in the luxury home market will continue to contribute to the rise in the average price. Collectively, these factors will boost the average price 4.0 per cent in 2013 to $429,000, surpassing the record reached in 2007. As the market is expected to remain in balanced territory, the average price is forecast to reach $439,000 in 2014, an increase of 2.3 per cent.

Smokers Ruin Property Value

Smoking in the home may significantly affect property values, and allowing smoking in rental units is costly to landlords.

Pfizer Canada, a leading biopharmaceutical company, recently sponsored a survey of Realtors conducted by Leger Marketing, which concluded that 87 per cent of Ontario real estate agents and brokers surveyed said smoking in the home lowers resale value. Eighty-nine per cent said smoked-in homes are more difficult to sell.

Thirty-one per cent said smoking may lower a property’s value by 20 to 29 per cent, and 21 per cent said the value could drop 30 per cent or more. That’s $120,000 on a $400,000 home!

Fifty-six per cent said most buyers are less likely to buy a home where people have smoked and 27 per cent said most buyers are actually unwilling to buy a home where people have smoked.

The number one reason given was smell; number two was health (second- and third-hand smoke).

Rental landlords know about smoker smell. Unless the new renter of the unit is a smoker too, the new tenant invariably requires the unit to be “detoxified.” This may cost $450 to paint a one- or two-bedroom unit, $100 or more to steam vacuum the carpets and maybe $100 to wipe down and clean all other surfaces (windows, mirrors, balcony doors, closet doors, kitchen cabinets, appliances). You may need to replace or repair countertops, appliances and other surfaces that have been marred by cigarette burns. In a heavily smoked-in unit, you may need to use a stain killer primer or extra paint; replace carpets; clean vents, ducts and ceiling fans; and even clean electrical sockets, where tar and nicotine can accumulate. Promising to deliver a smoke-free unit that still aggravates the new tenant could lead to further costs and a rent abatement award from the Landlord and Tenant Board.

Now add in the possible loss of the insurance deduction for a smoke-free building.

Then there are the possible complaints of neighbours, or the loss of tenants with health concerns for themselves or their children.

The Council of Canadian Fire Marshals and Fire Commissioners report that smokers’ materials and open flame (cigarettes, lighters and matches) remain the No. 1 ignition source in fatal residential fires. Between 1993 and 2002 (most recent figures available) there were 9,414 fires, more than $231 million in losses, 688 injuries and 94 deaths caused by lit smokers’ materials.

Landlords and property managers may be concerned that rejecting smoker tenants would constitute discrimination and possibly increase their vacancy rate. The former is incorrect and statistics for the latter say otherwise.

Smokers are not one of the protected groups of the Human Rights Code and, according to the Non-Smokers’ Rights Association Smoking and Health Action Foundation, it is legal for a landlord anywhere in Canada to include an enforceable no-smoking policy in their lease.

Health Canada’s Annual Canadian Tobacco Use Monitoring Survey (2011) reported that 14 per cent of Canadians smoke daily, while four per cent smoke occasionally. Daily smokers consumed an average of 14.4 cigarettes per day.

Rental landlords, take note: a survey commissioned by the Ontario Tobacco-Free Network (conducted by Ipsos Reid) that researched drifting second-hand smoke in multi-unit dwellings (March 2007), reported that 64 per cent of Ontario respondents would prefer a smoke-free building if such a choice was offered. That means that, as a rental landlord, you can either:

a) rent to the minority 14 per cent market of smokers, try to attract some of the remaining 22 per cent who appear to be indifferent to smokers, and pay the additional smoker-specific cleaning costs when re-renting a unit, or;

b) rent to the 64 per cent of smoker-intolerant tenants; try to attract some of the same smoker-tolerant 22 per cent (total 86 per cent of the market) of tenants and save the average $650 additional smoker-specific cleaning costs.

Chris Seepe is a commercial real estate broker and broker of record at Aztech Realty in Toronto, specializing in income-generating and multi-residential investment properties, retail plazas, science and technology-related specialty uses (laboratories, data centres, call centres) and tenants mandates. (416) 525-1558; Email cseepe@aztechrealty.com: website www.aztechrealty.com.

Calgary Housing Market Hits Benchmark Price!

Calgary, May 1, 2013 – The benchmark price of single-family homes reached a new high of $452,900 in April, as market conditions that favour the seller finally drove prices above the unadjusted peak of 2007.

“It’s really encouraging to see that the Calgary market remains strong,” said Becky Walters, president of CREB®’s board of directors. “It’s reassuring to both buyers and sellers to see that this area is outperforming many parts of the country.”

Single-family sales totalled 1,611 in April, nearly two per cent higher than the previous year, but year-to-date figures are similar to levels recorded in 2012. Sales growth in the first part of the year was stifled by a shortage of new listings and inventory. However, the year-over-year increase of 6.2 per cent helped support sales growth in April.

“Declining selection in the lower price range and market conditions that favour the seller in the overall single-family market has resulted in a boost in demand in the condominium market and surrounding towns,” said CREB® chief economist Ann-Marie Lurie. “Inventory levels declined across all of these segments. However, surrounding towns remain in balanced territory, as they experienced the effect of previously elevated inventory levels.”

After the first four months of the year, condominium apartment sales totalled 1,258 units, an 11 per cent increase over the previous year. Sales growth outpaced the number of new listings, causing inventory levels to decline to 893 units. This pushed the market toward a sellers’ market.

Tighter market conditions supported a year-over-year benchmark price growth of 7.35 per cent. Unlike the single-family sector, however, condo apartment prices remain well below unadjusted highs recorded in 2007.

Walters said a move to a sellers’ market will encourage those who have been waiting for price recovery to put their homes on the market. This, in turn, will provide more choices for buyers.

“New listings have been declining for the last few years as prices had not recovered,” she said. “People who did not have to sell chose to hold off. Price improvement can encourage new listings, easing some of the tension on the supply levels.”

There were 3,497 new residential listings in the city, an eight per cent increase relative to 2012. Sales activity also increased to a total of 2,376. Residential year-to-date sales improved by nearly four per cent compared to the same time in 2012. Meanwhile, citywide benchmark prices totalled $406,000 a seven per cent rise over the previous year.

“Calgary’s housing market continues to defy national softening trends as gains in the employment sector, migrant growth, rising wages and low interest rates are translating into growing demand for housing,” Lurie said.

For the first time since 2007, conditions favour the seller. However, economic conditions today are vastly different, making it unlikely that Calgary will see a repeat of those conditions, Lurie said. Our economy faces some challenges this year, and consumers still have options in both the new home market and surrounding towns, all factors that will temper price growth.

Provided from CREB

Interview Questions To Ask Your Next Realtor

Although there are many other selling options, the majority of Canadians choose to use a real estate agent to sell their home. Most Realtors are qualified, educated, and well versed in contract law. They can also have localized expertise in your neighbourhood or market. It is absolutely critical that the Realtor you choose has the skills to get the job done. Selling a home is not luck. There is a reason why 20% of the Realtor do 80% of the work. There is also a reason why year after year the same Realtors are consistent Top Producers. When interviewing your next Realtor to sell your home here are some questions for you to ask him or her;

* How long have you been selling real estate?

* How many homes did you sell last year?

* Are you a full-time agent?

* Is it the right time to sell?

* Do you work solo or as part of a team?

* How do you price a home?

* For the homes you listed in the past year, what was the average number of days they spent on the market?

* For the just mentioned list of homes, what was the average difference between the listing price and the selling price?

* How do you market the homes you list?

* Do you do any social media marketing?

* How do you use the Internet?

* Do you offer virtual tours of listed homes?

* What websites will you use to advertise the home?

* Do you have a website?

* Do you have a feedback system for potential buyers and their Realtors?

* Before you list a house, do you give clients ideas on how to make their home more marketable?

* When you’ve listed a home, how do you report back to your sellers regarding activity on the property?

* Do you have access to other professionals that clients need during the selling process?

* How do you handle negotiations?

* Do you attend inspections and appraisals after an offer is in place?

* How much do you charge?

* Will I have to pay any hidden costs?

* How accessible are you?

* How does it benefit a client if he uses you to sell?

* Why should someone list with you over other Realtors in the area?

* How much professional training do you get every year?

* If a client is unhappy with your service, can he terminate your contract and the listing?

* Do you have a list of references for potential clients?

* What are your thoughts on the real estate market today?

* What else should a client ask you that he hasn’t already asked?

This is just a start, but hopefully it will help you in interviewing Realtors better. Good luck,

Is buying a condo for your college student a good idea?

Sometimes a parent decides to buy a place for their children while they hit the books in university or college. It can be a good alternative to paying thousands of dollars toward residence fees or rent. Just look at the math:

Student rent of $500 a month = $6,000 a year = $24,000 over 4 years of school.

That money could go to your mortgage instead as an investment for you.

In Ottawa, for example, you can buy an older one-bedroom condo for about $195,000. Or, buy a 2-bedroom for $240,000 and let your child’s roommate help cover the mortgage by paying rent. Let’s assume you pay 20 per cent down. Here’s an example of what your monthly costs could total when morgage rates are low:

Cost	1 Bedroom	2 Bedroom
Mortgage payment	$800	$1,000
Condo fees	$350	$450
Property taxes, maintenance	$300	$400
Total	$1,450	$1,850

Think about it: if your child rents a place, your money is helping the landlord pay his or her mortgage and other costs. If you buy a place instead and rent it to them, you have a real estate investment with a guaranteed tenant: your child. If the investment goes up in value, you will make money. Just remember that those gains will be taxed.

Also remember, mortgage rates and other costs change, and these changes will impact the numbers and your decision.

Things to consider before you decide:

You can buy the property in your name, in your child’s name, or both. If you buy the property in your name, you should consider:

• The rental income you charge can pay a lot of your costs. Just remember you have to declare that income on your tax return.
• As a landlord, you can also claim many of your expenses, including mortgage interest. Assess your costs carefully before you buy. They will vary with the local real estate market, mortgage rates and other factors.
• Plan for some vacancies. Your child (or their roommate) may not stay in the condo over the summer break. Are you really going to ask them to pay rent if they are living somewhere else for a few months?
• Remember that you will own a greater share of the equity as you pay off the mortgage. And, the value of the condo may rise over time. This can offset your costs. But whether you do more than break even depends on what happens to housing prices in the area.

There are other benefits, too. Your child won't need to look for a different place to live each year. They also won’t have to worry about subletting every summer. And their furniture won’t be coming back with them if they live at home over the summer break. Not a bad deal.

Remember: you may not make money if you buy a student condo.

But there are other reasons you may decide to go ahead. At the very least, you can provide your child with a nice place to live in a good neighbourhood while they go to school.

Calgary Housing Update

CALGARY’S HOUSING MARKET SET TO OUTPACE 2010

Several Calgary Communities Get a Boost in Sales and Price

Calgary, November 1, 2011 – According to figures released today by CREB® (Calgary Real Estate Board), Calgary residential sales totaled 16,184 after the first 10 months of the year, an increase of eight per cent over last year.

Over 61 per cent of Calgary’s established communities saw increased sales levels compared to last year. Garrison Woods, Collingwood and Mahogany saw the largest sales increase at 170 per cent combined; nearly half of all Calgary communities recorded price increases, with Shaganappi, Chinook Park and Downtown leading the way with a combined average price increase of 55 per cent.

Top 10 Established Communities
Price Increases	%Change	Sale Increases	%Change
Shaganappi-025	139.58%	Collingwood-418	220.00%
Chinook Park-117	34.02%	Mahogany-375	150.00%
Downtown-001	33.63%	Mayfair-111	100.00%
Elboya-103	32.61%	Roxboro-100	100.00%
Scarboro-011	31.63%	Vista Heights-605	88.89%
Lower Mount Royal-010	28.00%	Hanson Ranch-517	85.00%
St Andrews Heights-413	23.22%	Sage Hill-526	84.00%
Lakeview Village-033	21.31%	Shawnee Slopes_Evergreen Est-151	79.59%
Windsor Park-107	21.14%	North Haven-500	78.57%
Rosedale-406	21.06%	Pump Hill-131	77.78%

“A boost in full time jobs throughout the year is gradually translating into improved sales in the real estate sector,” says Sano Stante, president of CREB®. “Consumers are taking advantage of price stability and a healthy variety of selection. While these gains are moderate, we are set to outpace 2010 sales.”

Single family home sales totaled 988 for the month of October 2011, an 11 per cent increase over October 2010, but continue to remain well below historical levels. Year-to-date sales totaled 11,503, a 10 per cent increase over last year.

October listings have edged upwards over last year’s levels, increasing by nearly two per cent, but year-to-date there are six per cent less listings than levels recorded last year.

“Consumers are feeling more confident about the local real estate market,” adds Stante.

The average price of single family homes for the month of October 2011 was $455,399, while the median price was $395,000, an increase of two per cent compared to last year. This is primarily due to the rise in the number of luxury homes sales. Despite the monthly price increase, however, year-to-date figures remained stable at levels comparable to the previous year.

Condominium sales for the first 10 months of the year totaled 4,681, a three per cent rise over the same period last year. Inventory levels remained at 1,935 units, resulting in months of supply pushing above five months.

“The condominium market has significantly tightened compared to last year, however, moving into winter, we expect to see a rise in months of supply,” Stante says.

Condominium year-to-date average and median prices in 2011 were $288,736 and $262,500, respectively, a slight decline over the first 10 months of 2010. The decline is mostly due to increased sales in units priced under $200,000.

“Overall, the resale housing market continues to show signs of improvement and, with no near term change in interest rates, we can expect the market will continue to see moderate and stable growth throughout the rest of the year,” Stante concludes.