First quarter see prices, sales and listings fall compared with 2010

CALGARY — Calgary’s real estate market is in balance, with March seeing lower prices, sales and listings compared with a year ago, according to the latest report by an industry association.

That’s good news for people on the prowl for a new home as the average price for a single family home fell by two per cent from a year ago, the Calgary Real Estate Board said Friday.

The average price of $462,947 was virtually unchanged from February, the board said.

During the first quarter, sales were up four per cent to 3,309 from a year prior, driven by a combination of stable prices, low interest rates and stronger job numbers, president Sano Stante said.

“We’ve come to a period where we have a combination of good affordability, low interest rates and large selection,” said Stante. “That makes it a really attractive market to buy in to.”

Single family homes are more affordable in a wider area of Calgary, enabling people to buy into neighbourhoods which used to be out of their price range, he noted.

The less happy news for realtors is the number of single family home sales in the city slid three per cent last month from March 2010, to 1,355.

However, a 19 per cent drop in new listings, year-over-year, could support the market heading toward the spring.

Sales in Calgary’s northwest quadrant were the strongest, seeing a 13 per cent increase over the first quarter in 2010.

The most affordable quadrant in the city remains the northeast, where single family homes averaged around $282,713 during the first quarter.

Meanwhile, the southwest recorded the highest single family average home price during the quarter, at $570,748 compared with an average price of $464,990 in the northwest and $422,821 in the southeast.

The improved sales during the quarter were offset by declining condominium sales, the board said.

Condo sales dropped during the quarter by 11 per cent from a year ago, with prices sliding two per cent on average, excluding the sale of a $4.1-million condominium.

The board considers quarterly results more indicative of overall real estate trends.

More to come …

domeara@calgaryherald.com

© Copyright (c) The Calgary Herald

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Denise Deveau, Postmedia News · Mar. 30, 2011 |

Cheryl Hutton and Aaron Coates always thought getting a mortgage would be a challenge. But within 18 days of visiting a mortgage broker, they were able to close a deal on a new townhouse in Calgary without a hitch.

Now in their early thirties, both have careers in the theatre, something Ms. Hutton says has been a bit of a sticking point with banks. “In our industry we never fit the paperwork guidelines ‘for the banks.’ For some reason, people don’t think we pay our bills.”

Although it was their first home purchase, Ms. Hutton says it was surprising how easy the whole process was once they had someone who could walk them through it. “He sat us down, told us what our options were, showed us that it was possible and explained all the steps we needed to take. If it wasn’t for him, we may not have made the leap.”

Sorting through a mortgage process and negotiating rates can be overwhelming for first-time and seasoned home buyers alike. That’s why people such as Ms. Hutton and Mr. Coates turn to brokers to do the legwork for them.

Yet mortgage brokers will tell you that a good portion of home buyers out there don’t really understand what they do. “Part of the challenge we have in our world is that people aren’t really sure what a mortgage broker is,” says Gary Siegle, regional manager for Invis Inc., a mortgage brokerage firm in Calgary.

Brokers should not be confused with “rovers,” mortgage specialists attached to a specific financial institution who visit customers outside of banking hours, Mr. Siegle explains.

“They only deal with that bank’s product. A broker, however, is an intermediary whose job is to make a match between a lender and a borrower. We represent the individual, not the bank.”

About 30% of mortgages in Canada are done through a broker, according to Perry Quinton, vice-president, marketing, for Investor Education Fund, a Toronto-based non-profit financial information service.

“The reason more people don’t know about them is because the banks are so visible. It’s easy to gravitate to them when you have your savings accounts, credit cards and investments there already,” Ms. Quinton says.

Going for the comfort factor could cost you however, she adds. “A broker has access to different lenders including banks, and can shop rates and features. A half per-cent may not sound like much but that could make a difference of about $20,000 for a $250,000 mortgage amortized over 25 years. Any little bit helps.”

Mr. Siegle confirms that shopping around can deliver significant savings.

“Let’s take today’s average posted rate of 5.44%, and you get a point off that at your bank. So you think you just got a really great deal. But the vast majority of rates we deal with as brokers would be another 30 basis points lower -around 4.14%. And if you look at preferred deals that don’t offer features such as prepayment privileges, it can get as low as 3.89%. That’s another 25 basis points below what’s generally available.”

The reason for that is simple, he says. “We offer wholesale rates, banks offer retail.”

For anyone considering a broker, Ms. Quinton advises people to do a bit of groundwork first if they have the time.

“It helps to educate yourself about options and what you can afford. Look at all your living expenses, including student loans and credit card debt. Chances are you are understating those.”

Another thing to look into is the different types of available mortgages and features, including interest rates, payment frequency, amortization, cash-back programs and the ability to make lump sum payments.

“Knowing these things before you go in can save you a lot of money,” she adds.

Any mortgage broker you choose should always meet the right licensing and education requirements, so be sure to check their registration.

If you’re not completely prepared, however, that shouldn’t be a concern when working with a good mortgage broker, Mr. Siegle says.

“After all, mortgages are pretty much all we do. So even if you come in cold, good brokers will walk you through the process and ask all sorts of questions,” Mr. Siegle notes.

“You just need to be prepared to answer them openly and honestly so they can get you the best deal possible.”

http://www.nationalpost.com/news/Experts+best+brokering+mortgage/4525573/story.html

By MYKE THOMAS, SUNMEDIA

New mortgage regulations shortening the maximum amortization period from 35 to 30 years have been in effect for more than a week and appear to have had an impact on the market, but not of the sort regulations introduced last April did.

The reason for the new regulation was federal government concerns about the rising debt-to-income ratio in the average Canadian household and the inference too many people on the edge of qualifying for a mortgage still managed to secure financing, putting them at risk.

Shortening the amortization term might keep some potential buyers out of the market, as monthly payments will increase, but over the long haul, the upside is paying a whole lot less in interest on the loan.

But back to the bigger picture — debt-to-income ratios — which a majority of Canadians don’t seem too worried about, according to the annual RBC Homeownership Study released earlier this month.

The study found Canadians are confident in their ability to continue paying down their mortgages and believe they have the means necessary to handle a drop in house prices, should that occur.

“Almost three-quarters of Canadians, or 73%, believe that they or their families are well-positioned in the event of tumbling home prices,” says the study, undertaken by Royal Bank of Canada.

Of the respondents in a poll conducted to form the study, 85% feel they are “doing a good or excellent job of paying down their mortgage, while 90% … are confident that real estate in Canada is a good investment.”

Certainly, any risk of a financial meltdown in the housing market, which some believe would lead to a U.S.-style collapse, must be taken seriously, but the actual potential of a meltdown must also be measured.

“There’s been a lot of noise around debt-to-income ratios,” said Marcia Moffat, RBC head of home equity financing. “(I find) it comforting such a large segment of Canadians said they were able to handle what is typically the biggest purchase of an individual’s life.”

The high confidence level is based on stable employment and rising incomes, said Moffat.

An earlier report from the Canadian Association of Accredited Mortgage Professionals supports the RBC study’s viewpoint.

Will Dunning, author of the CAAMP report, said Canadians have been much more careful with their finances than our American cousins.

“The essential finding of (our) research report is that Canadians — lenders and borrowers — have been highly prudent in the mortgage market … a vast majority of borrowers have left themselves considerable room to absorb increases in interest rates,” said Dunning, adding in his conclusion, “There is always risk in the mortgage market. In the Canadian experience, the major risk factor is loss of ability to pay (especially due to job loss).

“A secondary risk factor is unaffordable increases in payments. This research report concludes that this is a negligible risk factor at present and in the near-to-medium term future.”

Dunning’s report is available at http://www.caamp.org

With a mere few days left to take advantage our the “current” Mortgage rules, we have found ourselves with many questions that CMHC has addressed and taken the liberty to post on their website.  Hoping you find some value in us relaying the message over to our blog!

The following Q+A was taken from the CMHC website…

*FAQs — New Parameters on Mortgage Insurance - Canadian Mortgage and Housing Corporation

On January 17, 2011, the Government of Canada announced adjustments to the parameters governing the application of the government’s mortgage loan insurance guarantee.

What are the new mortgage loan insurance requirements?

CMHC will implement the following new measures to all applications for mortgage loan insurance:

Effective March 18, 2011:

• Reduce the maximum amortization period from 35 to 30 years for new insured mortgages with loan-to-value ratios of more than 80 per cent.
• Lower the maximum amount Canadians can borrow when refinancing  a 1 – 4 unit owner-occupied property from 90 to 85 per cent of the value of their homes.

Effective April 18, 2011:

• Mortgage loan insurance will no longer be available for non-amortizing secured home equity lines of credit, or HELOC.

I already have an insured mortgage. How will these changes affect me?

CMHC mortgage insurance is good for the life of the mortgage. Borrowers renewing an insured mortgage will not be affected by these changes. For example, if a borrower had a 40 year amortization and there are 37 years remaining on the mortgage, the mortgage can be renewed with a 37 year amortization, as long as no new funds are being added to the mortgage.

What is required to qualify for an exception to the new parameters?

If the approved lender has documentation of a binding purchase and sale, financing or refinancing agreement and that agreement was dated before March 18, 2011, CMHC will not apply the new parameters, even if the application for insurance is received by CMHC on or after March 18, 2011.

Will a purchase and sale agreement dated prior to March 18, 2011 be considered binding if there are outstanding conditions that have not been fulfilled prior to March 18?

Yes, if the date on the purchase and sale agreement is earlier than March 18, the new parameters will not apply, even if the conditions of the agreement have not been waived.

Will the new refinancing rules allow a borrower with a mortgage above 85 per cent loan-to-value (LTV) to refinance by extending the amortization period?

No. Effective March 18, 2011, borrowers will not be permitted to refinance a mortgage above an  85% loan-to-value, unless the borrower has a binding refinance agreement dated prior to March 18, 2011.

I have a written mortgage pre-approval from a lender, dated before March 18, 2011 with a 35 year amortization. Will I still be eligible for a 35 year amortization if I don’t sign an agreement of purchase and sale until March 18 or later?

No, a mortgage pre-approval is not considered to be a “binding agreement”. You may have a 35 year amortization only if your agreement of purchase and sale is dated before March 18, 2011.

Will the new parameters apply to assignment (“switch” or transfer) of a previously-insured loan from one approved lender to another?

No. As long as the loan amount and amortization period are not increased, the new parameters will not apply to a switch/transfer/assignment of mortgage to a different approved lender.

If I sell my current home and buy another, will the new parameters apply if I transfer the outstanding balance of my CMHC-insured mortgage to the new home?

As long as the outstanding balance of the insured loan, the loan-to-value ratio and the remainder of the amortization period are not increased, the new parameters will not apply when the CMHC mortgage insurance is transferred from one home to another.

What if I need to increase the amount of my insured loan when I sell my current home and buy another?

In this situation the new parameters will apply for any insured loan.

Is it only new Home Equity Lines of Credit (HELOCs) that are affected by the new parameters or existing HELOCs as well?

As of April 18, 2011, CMHC  will no longer offer mortgage loan insurance on non-amortizing lines of credit to approved lenders, such as HELOCs. However, if a HELOC is already CMHC insured then it remains insured for the  life of the mortgage.

HELOCs will no longer be insurable as of April 18, 2011. Is there any situation which would quality for an exception (e.g. binding agreement) to allow for these loans to be insured?

* FAQs — New Parameters on Mortgage Insurance – Canadian Mortgage and Housing Corporation

For additional clarification on the upcoming new Mortgage Parameters, please see link below:

http://www.cmhc-schl.gc.ca/en/corp/faq/faq_008.cfm

It’s important for us here at Verico Canada First Mortgage to relay the sadness we feel that comes from the devastation that has occurred during this frightening natural disaster in Japan.  Before we get into any talks about “economic effects” from what has occurred, we firstly wish to send our thoughts and prayers to all who are affected by the earthquake.  We hope for safety and speedy recoveries…Godspeed.

Below is taken directly from the TD’s economic release:

“TD - This Weeks Bottom Line“…

United States
• An 8.9 magnitude earthquake wreaked havoc on Japan last night, pushing Asian and European stocks lower.
It is too soon to accurately assess the impact on the global economy, so markets may exhibit some volatility
in the coming days as additional information becomes available.
• Debt downgrades in Europe, possible signs of slowing growth in China and ongoing discord in the Middle
East also cast a shadow of uncertainty on the global economy.
• U.S. data was generally positive as consumer credit and retail sales continued to grow.
• We don’t expect the Fed to change its policy stance at next week’s monetary policy meeting. But, we will
be looking very carefully for any changes in the Fed’s language on exit strategies and inflation.
Canada
• After dramatic swings over the past few years, this week’s economic data painted a picture of an economy
going through a normalization process.
• At 181,300 units in February, housing starts were largely in line with demographic fundamentals. Meanwhile,
Canada posted a merchandise trade surplus for a second consecutive month in January.
• The labour market added a disappointing 15,000 jobs in February, and the unemployment rate stalled at
7.8%. Nonetheless, on a trend basis, jobs gains have been consistent with healthy, relatively sustainable
economic growth.
• International risks intensified this week, pushing the S&P/TSX index down 4.5%. The Canadian dollar was
relatively flat, supported by still elevated commodity prices.

Andrew Pyle, On Friday March 4, 2011,

The Bank of Canada has now kept its official interest unchanged at 1 per cent for the fourth meeting.

Those with floating-rate debts will no doubt be relieved; however, economists were looking for a signal from Mr. Carney and crew that improving economic conditions were paving the way for a return to rate hikes sometime soon.

Had this week’s policy meeting taken place a few weeks ago, it’s likely we would have received that signal. Indeed, most indicators have pointed to stronger-than-expected activity in Canada and the U.S., while emerging economies have maintained a torrid pace of growth.

That would have been before the recent developments in Egypt, Tunisia, Yemen and now Libya. The grassroots uprising against incumbent regimes might be welcome from a democratic ideal perspective, but it has created a rift in energy markets.

Crude awakening

After dipping briefly below $85/barrel in February, the price of crude oil has now broken above $100 for the first time since October 2008, testing $103.40 last week — the 61.8 per cent retracement mark from the July-December 2008 collapse.

A close above this level will increase the odds of a move to $120 (recall that $147.27 was the intraday high from July 2008). And if you thought the recent spike in pump prices was unnerving, gasoline futures have already crossed above the 61.8 per cent retracement level and are trading above three bucks (US) a gallon.

In July 2008, futures broke above $3.70/gallon. Even if prices simply hold near current levels, average pump prices in Canada could easily gravitate towards $1.30/litre. That’s not good news for those planning to drive to their March break vacation spots, or for those returning snowbirds.

One might suspect the Bank of Canada would see the boost to inflation, that will come from commodities like oil and gasoline, as something that needs to be worked against through tighter monetary policy, but that’s old school.

These commodities, like food (which is also seeing some inflation strain), are essentials and represent a significant share of our non-discretionary spending. Unless incomes rise by the same amount as the cost of these essentials, everything else being different, there will be less to spend on discretionary goods and services. In other words, real consumption growth in Canada could slow.

Not so fast

How much of a slowdown we experience in consumer spending (and let’s throw in housing expenditures too), depends greatly on that above-mentioned phrase “all other things being equal.”

If employment grows at a decent clip and wages go with it, then the affect on spending will be less pronounced. As of the end of 2010, average weekly earnings in Canada were up 4.5 per cent over the same period a year ago, which was the fourth-best growth rate in earnings since records started in the early 1990s.

To put this in perspective, when crude oil was climbing towards $150 back in the summer of 2008, weekly earnings growth was heading in the opposite direction.

There were other headwinds facing Canada back in 2008, including the cost of borrowing. When oil reached its peak, the 5-year conventional mortgage rate in Canada was above 7 per cent. Today, it sits near 5.5 per cent. The 1-year rate was also close to 7 per cent (yes, we had a very flat yield curve before the walls came tumbling in), compared to 3.5 per cent today.

Now, I’m not suggesting that we’re going to stay in interest rate limbo forever, but the Canadian consumer is in better shape to handle higher pump prices today than back two years ago.

How long can they sit on the fence?

What the Bank of Canada has to be careful of here is the oil price shocks emanating from across the pond turn out to be temporary and there is no slowdown in consumption growth. Bank economists are already looking towards 2012 as the likely period where excess capacity in Canada’s economy disappears and inflation returns to target (using the core inflation measure).

It is easy, however, to accelerate that trip back to zero excess and just as easy to push the economy into a situation of excess demand.

Coming back to the Bank’s decision this week, it may have been surprising to see it lean against speculation of near-term tightening. But, it would be a mistake to assume the Bank can’t and won’t pull the trigger on rates before the summer.

There are two policy meetings left this half (April and May), so if Mr. Carney and crew wake up and realize there is too much potential inflation risk in leaving rates unchanged, they will need the April meeting to deliver the guidance towards a May rate hike — something economists thought was going to happen this week.

And if energy price shocks don’t intensify and the Bank fails to deliver such guidance, don’t be surprised if the bond market creates the guidance for them. http://ca.finance.yahoo.com/news/Central-bank-still-hike-rates-yahoofinanceca-1276928971.html

The following was taken directly from the Department of Finance Canada and speaks of the next phase of Canada’s economic plan…

Ottawa, March 2, 2011
2011-019

The Honourable Jim Flaherty, Minister of Finance, announced today that the next phase of Canada’s Economic Action Plan, to be introduced in Parliament on March 22, will focus on keeping Canada’s economy growing and creating better jobs for Canadians.

“As we transition to the next phase of Canada’s Economic Action Plan, measures in this budget will focus on the Harper Government’s key priority of the economy,” said Minister Flaherty. “We will continue to encourage growth and carefully manage government spending in order to balance the budget in the medium term.”

All of the economic output and jobs lost during the recession have been recouped. In fact, over 465,000 jobs have been created since July 2009, more than offsetting all of the jobs lost during the recession. With the global economic recovery still fragile, the Government remains focused on creating jobs and economic growth for Canadians.

“With a recovery now taking hold across the country, the next phase of the Economic Action Plan will focus on strengthening the economy and creating good jobs for Canadians,” said Minister Flaherty.

http://www.fin.gc.ca/n11/11-019-eng.asp

February 28, 2011 By Peggy Mackenzie Moms on Money Toronto Star

When mortgage rates are falling, banks will vie for your business. But in times like these when rates are rising, you have to shop around and negotiate to get the best rate.

This was the situation I faced in 1994 when we bought our first home. This strategy saved us tens of thousands of dollars over the last 17 years. By shopping around and going back to my bank with better deals offered by their competitors we managed to keep getting better deals. The lesson is to do your homework, a bit of research and don’t be afraid to ask.

Rates were at a 30-year low when Jeff and I first started house hunting in 1994. We were long-time Royal Bank of Canada customers, but we went to a different bank for a quote in the hopes that we’d get some bargaining power. Canada Trust quoted us half a percent below the posted rate of 7.25 per cent, provided we moved our business to them. We went back to RBC and they matched the rate and kept our business.

Three years later, rates fell, and I wanted to renegotiate the mortgage.  I shopped around and was offered 1.5 per cent below our RBC rate.  RBC ’s penalty was  three months’ interest (roughly $1500) but they offered a compromise of 1.25 per cent below our current rate and extended the five-year term. They  kept our business.

We successfully used this same strategy twice more  and were down to 4.64 per cent in 2003 but we still paid our mortgage as though our rate were 2 percentage points higher.

Our mistake happened in the fall of 2008 at renewal. Rates were rising and RBC said their best rate was 5.55 per cent for “preferred” customers. I shopped around firmly believing that others would want our business. Scotiabank and TD Canada Trust didn’t. President’s Choice Financial offered the lowest rate at 5.2 per cent and RBC would not match it. We took our mortgage to PCF.

The mistake is that we should have gone with a variable rate, according to Moshe Milevsky’s
column.  He says that homeowners - like us - who have substantial equity in their home and have a diversified portfolio of financial assets, should go variable. But I knew that would keep me awake at night, worrying about how much of our payments was going to interest and how much to the principal. We locked our rate for five years and watched rates plummet six months later.

Recently I tried my mortgage-breaking tactics with PCF and asked how much the penalty would be. They used interest rate differential which is far higher than three months’ of interest payments. See Ellen Roseman’s excellent article on “How mortgage penalties can hurt you.”

PCF wasn’t concerned that I would pay the penalty and leave. Instead they wondered if I’d be interested in a line of credit? As readers know from my line of credit woes, that’s the last thing I wanted! I’m still paying the same rate, but the banks should be worried when I renew. I may well be able to self-fund through my RRSPs and leave them asking why they lost a “preferred” customer. http://www.moneyville.ca/blog/post/944882–how-i-saved-thousands-on-my-mortgage?bn=1

Malcolm Morrison, The Canadian Press

Volatile oil prices, the latest word from the Bank of Canada on interest rates and a report on economic growth at the end of last year will give investors plenty to chew over this week. The central bank is widely expected to keep its key interest rate unchanged at one per cent.

Economists have said that the central bank probably will not raise rates until the middle of the year, but governor Mark Carney’s decision of exactly when has been made more difficult by the wild swings in oil prices.

“This turmoil that we have seen in North Africa and the spike in energy prices does introduce another element of risk to the global economy and specifically to the U.S. economy,” said Doug Porter, deputy chief economist at BMO Capital Markets.

He said the task was much more straightforward for the central bank before the unrest in the Mideast because recent economic data has been so strong, including the trade balance moving into a strong surplus and a better than expected employment report for January.

“So the attention is going to turn to whether they drop any hints or start to sound a bit more upbeat and I think they will allow that the economic environment has improved a bit in the last couple of months. But I think overall they will sound quite cautious.”

Meanwhile, investors are looking for some good news from Statistics Canada Monday when the agency reports on economic growth for December.

TD Economics forecast that gross domestic product is expected to show a solid (annualized) advance of three to 3.5 per cent in the final quarter of 2010, significantly stronger than the 2.3 per cent pace the bank expected in December. http://ca.finance.yahoo.com/news/Surging-oil-prices-Bank-capress-582423359.html?x=0

CALGARY - A year ago, the new condo market in Calgary was “mired in a slump” but today it’s “starting to show more life,” says a residential real estate report by the Altus Group.

The economic consulting firm said the success of the planned University City project at the Brentwood Village shopping centre shows that LRT stations offer potential opportunities for condominium apartment developers.

Last fall, the first two phases of the project - two 18-storey towers of 216 units each - sold out within a matter of days.

“The experience at University City demonstrates that transit-oriented development can attract buyers if the product is well designed and priced for the location,” said the Altus Group. “There should be opportunities for transit-oriented development in cities with existing and/or planned LRT lines.”

The report said condominium apartment sales in Calgary began to recover in 2010 reaching almost 1,500 units, up from about 600 in 2009.

“However, the pattern throughout the year was somewhat erratic - the year started out with strong sales in the first quarter, then waned for the next six months before picking up again in the fourth quarter, largely due to the opening of the first phases of University City,” said the report.

It said 15 buildings were launched in 2010, up from six in 2009.

“An impressive 62 per cent of the approximately 1,000 units released for sale in 2010 were sold by the end of the year, boosted by over 400 sales in University City. Only two other buildings launched earlier recorded more than 50 sales in Calgary in 2010.”

The Altus Group said about 1,800 of the total of about 6,300 units in active condominium projects remained unsold at the end of 2010 and those projects are split about equally between highrise and low-rise buildings.

“In Calgary, the market should continue to recover, but the strength of the recovery will depend in part on the ability of developers to offer attractively priced product in superior locations,” added the report.

In the resale market, the Calgary Real Estate Board said there were 5,181 MLS condo transactions in 2010, down 18.13 per cent from the 6,328 in 2009. The average sale price, though, rose by 2.1 per cent on an annual basis from $283,734 in 2009 to $289,697 in 2010.

The resale condo market continued its slow pace in January, according to CREB, with only 302 sales, off 19.68 per cent from the 376 sales in January 2010. The average price year-over-year jumped by 2.0 per cent to $288,291 from $282,639.

According to the website of realtor Mike Fotiou, of First Place Realty, there have been 281 condo MLS sales so far this month from Feb. 1-17 for an average sale price of $287,397. In February 2010, for the entire month, the average sale price was $282,880 on 536 transactions.

mtoneguzzi@calgaryherald.com

© Copyright (c) The Calgary Herald

Read more: http://www.calgaryherald.com/business/Calgary+condo+market+showing+signs+life/4307825/story.html#ixzz1EndlIb66