CONSUMER CONFIDENCE

Demand Rising
Buyers get into ownershipBy Marty Hope

Calgary Herald

July 25, 2009

Just a few short months ago, the forecast for single-family building lots was about as cold as the weather--and the economy.

In the interim, though, land developers have started to move lots to support builders, who are seeing consumers warming to the idea of home ownership.

"We're well ahead of our budget for the year," says Michael Dutczak, senior vice-president of Alberta land for Carma Developers. "We're ahead of where we wanted to be by September and I'm confident we'll sell in excess of 1,100 lots this year."

Back in January, the company forecast was for 800 lots to come to the market during 2009.

But consumers responded to record low mortgage rates and lower house prices.

There was also an increase in confidence-- that maybe the economy was coming back sooner than expected.

For builders and developers, Dutczak says the increase in activity is also being helped by the strong pace of sales of used homes. Because sales are up and inventory is down, more house hunters are starting to look at new homes to get what they want.

Since January, monthly sales have more than tripled and the catalogue of available homes has dwindled to a two-month supply, down from 11months at the beginning of the year.

"A rise in demand, along with fewer listings, has helped bring supply into balance with demand," says Bonnie Wegerich, president of the Calgary Real Estate Board.

Don McLeod, chairman of the Calgary chapter of the Urban De-Development velopment Institute, is also feeling better about the industry's fortunes.

In an interview in late January,

McLeod expected a maximum of 1,000 single-family lots to be brought to the market this year, saying there was a serious lack of demand and that builders had as much inventory as they could use.

Fast forward to a recent warm day in July.

"There's some optimism out there," says McLeod. "Consumer confidence is growing, rates are still low, the resale market is moving well and the quality of traffic into builders' show homes is much better."

He is now looking at somewhere between 3,000 and 3,500 lots to be brought on the market.

While he says contractors are still working at only half their capacity, the future looks brighter.

"This is promising," he says. "There's no one large development coming on, just new phases to existing communities, but at least it's something positive."

Among the more active areas in communities surrounding Calgary, Airdrie has brought on 267 lots, with another 138 in Cochrane.

Inside Calgary, the north-central area has 420 new single-family lots, with another 610 in the south--with Carma's New Brighton accounting for about one quarter of the total, says McLeod.

It was in New Brighton where homebuyers Tyler Schlosser and Liz Fleming decided to purchase a spec house built by Carma subsidiary Heartland Homes.

Such houses are built in advance for people who don't want to order a home, then wait for it to be constructed.

The couple

started making the rounds of southeast show homes in January. Two months later, they and their golden retriever, Drako, moved into Heartland's Belvedere model.

"The house we bought was the very first one we looked at," says Schlosser. "We looked around at others, but came back to this one."

The layout of the home was what Schlosser and

Fleming were looking for--open concept with plenty of upgrades, such as tile and hardwood flooring.

"And then there was the price," says Schlosser. "We looked at others, but none could offer what we were getting for the price we paid."

This is the first home for Fleming, who was living with friends.

As for Schlosser, he moved from an 800-square-foot condo that he will continue to rent.

"We started talking about things and decided to move in together because it would be more affordable than me paying a mortgage on the condo and her paying rent on an apartment," he says.

New Brighton has proven to be successful suc-cessful for Carma because of its mix of housing styles and prices, as well as community facilities and green space, says Dutczak.

"We developed New Brighton to cater to the needs of young families either starting out or moving up in the marketplace--and having the amenities ameni-ties of McKenzie Towne next door doesn't hurt either," he says.

Carma is a long way from being finished with this southeast neighbourhood.

Dutczak estimates that another five years of work is still to be done, bringing the number of single-family homes to 4,000.

He also says that when Carma's other southeast communities, such as Cranston and Auburn Bay, are added to the mix, the developer has a 10-year supply of land.

In the north-central area, Dutczak estimates the company has enough land for the next 15 to 20 years.

Because builders are seeing the bulk of the renewed market activity in entry-level price ranges, that's the type of lots developers are bringing to the table.

But homes in higher prices are slowly resurfacing as the market gradually improves.

"It'll take time to work through this whole thing, but this is a good beginning," says McLeod.

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ROAD TO RECOVERY

Calgary housing market on road to recovery
By Lisa Schmidt

July 14, 2009

CALGARY - Christina Hagerty sensed the housing market was turning around, but, after finding a home for a recent client, the Calgary realtor said the signs are now unmistakable.

"Anything we saw right away had competing offers or it was sold the next day," she said.

"It was crazy; definitely the stampede was around the $400,000 to $500,000 range."

It's not the heady days of 2007, but after last fall's doldrums, confidence is definitely returning to the housing market, both in the form of higher prices and more sales as buyers are coaxed into the market by low mortgage rates.

A report released Monday by Re/Max said recovery is well underway in Canada's key housing markets, including Calgary, as pent-up demand, cheap mortgage rates and lower prices help fuel a surge in sales.

"There's not a frenzy per se, but people are definitely feeling comfortable and, for the right property, there are competing offers," said Hagerty.

Re/Max said market conditions have become more balanced following a period in which buyers held the clear upper hand over sellers for a half year or more. It said the current sales pace might be unsustainable, but nevertheless indicates more stability for the market in the longer term.

"While sales are the leading indicator, there are other clear signals that recovery is indeed underway," Elton Ash, regional executive vice-president of Re/Max for Western Canada, said in a statement.

"Renewed consumer confidence, albeit cautious, has been key, supported by improved economic news," Ash said.

In the Calgary region, residential sales rose to 3,047 units in June, a 28 per cent increase from a year ago and the second consecutive month of annual gains.

That was the second-largest jump among the major cities, behind Vancouver, where sales jumped more than 75 per cent from last June to near record levels.

Re/Max is forecasting activity levels in Calgary will remain better than average through the summer and fall, "with overall 2009 sales edging slightly ahead of 2008 levels by year end."

There are more multiple offers, but overall prices are stabilizing, while homes are on the market for fewer days and sellers and builders are offering fewer incentives.

"Definitely there has been an improvement," said Lai Sing Louie, regional market analyst for Canada Mortgage and Housing Corp.

"We've also seen prices start to lift. Although year-over-year prices are still down, we've seen them rise from the beginning of the year. Definitely there has been a change in the marketplace . . . that's definitely an encouraging sign."

Most of the surge has been at the starter-home level, generally below the $500,000 market, he noted. As prices increase, sales have been slower and homes are spending more time on the market.

The Re/Max report follows one issued last week by one of its competitors, Royal LePage, that indicated Canada's housing market took a sharp turn to the positive in the second quarter after a sluggish winter.

Also last week, RBC Economics said greater affordability -- the result of lower house prices and falling mortgage rates--was luring buyers back into the market.

It said the overall cost to own a standard bungalow, including mortgage payment and utilities, had dropped by more than 10 per cent on average between last year's fourth-quarter and this year's first quarter.

BMO's Porter, deputy chief economist for BMO Capital Markets, said it's clear the Canadian market has taken strides forward.

That compares favourably with the U. S. housing market, which has been in decline for three to four years. Porter said the market south of the border has yet to show any clear signs of improvement.

"(U. S. markets) just haven't had the quick snap-back that we've seen in Canada," Porter said.

"(The U. S.) basically had to go through a much deeper correction, which essentially fed on itself," he added.

MARKET HEALTH

Housing construction numbers healthier
By Marty Hope, Calgary Herald

July 18, 2009

Calgary's housing market is beginning to look more like a typical residential construction environment--except for the numbers.

After two straight monthly increases in construction starts of single-family homes, there was a slight decline in June--something that historically happens at this time of year.

Work started on 374 detached homes last month--not far off the 450 starts for June 2008--a small decrease from this May's 382 starts, says Canada Mortgage and Housing Corp.

A year ago, the new home market peaked at 475 starts in May, then started a long downhill slide that would take it through to March of this year.

What also makes this look more like a normal marketplace is the fact building permits are up, an indicator of activity in the next month or so.

But this, too, should be marked with an asterisk because many of these permits were timed to get approval before new fire code regulations come into effect.

The city's development and building approvals department gave the nod in June to 386 permits for detached home construction with a value of $96.5 million.

During the same month last year, 266 permits were approved with a value of $64.9 million.

"There were a huge number of permits filed because builders had already done their design work and wanted to get moving with construction," says Graham Boyce, president of Jayman MasterBuilt.

But in terms of sales, he says that the pace of activity is stronger than he expected.

"I think what you're seeing is people who are trying to buy at the bottom of the market

and take advantage of the current mortgage rates," says Boyce. "But if they miss the bottom by ten grand, it doesn't matter because rates are so appealing."

A typical Calgary housebuilding market has a decline coming into the summer, with an increase in activity in the fall for buyers looking to get into a new home before Christmas.

"Looks like we're on track for an increase in construction coming into the fall," says Richard Corriveau, manager of market analysis for CMHC. "The building permits figures are a positive sign."

The housing industry is beginning to right its ship, which was getting a severe list to it.

Show home interest and sales are showing a renewed strength, while Guide the inventory of complete but unoccupied homes is on the decline.

CMHC figures show the inventory of available homes was 652 at the end of June, down from 754 in January.

"The resale market is continuing to increase activity and affordability--because of low mortgage rates and house prices-- and is gaining traction in the marketplace.

"I see an improvement in housing starts as we move toward the fall," he says. "It's still in a decline, but not as pronounced as it was." Comparing June to the same month last year, the decline is just 17 per cent. Back in January, the monthly comparison showed a gap of 44 per cent.

"Low mortgage rates and recent price declines are supporting new home sales, which should lead to further improvement in the months ahead," says regional economist Lai Sing Louie of CMHC.

For the first half of this year, work started on 1,549 detached homes, a decline of 34 per cent from a year ago.

Across the province, single-family home construction was down less than eight per cent in June compared to the same month last year, with work starting on 844 homes.

SIGNS OF STRENGTH

Signs of strength in Canada's housing market
Updated Thu. Jul. 9 2009 10:05 PM ET
CTV.ca News Staff

New data suggests the Canadian housing market has already bottomed out as there was an 8 per cent rise in housing starts in June, the first consecutive monthly increase this year.

While new home construction remains about a third lower than last year, a report from TD Economics says the new numbers are encouraging.

The figures "provide more evidence that the Canadian economy has certainly passed the worst of what can be expected in terms of residential investment contraction," TD said in a report released Thursday.

Sales have picked up dramatically in a number of cities, including Edmonton and Toronto.

The Edmonton Real Estate Board said June's sales were third highest ever for the month.

Regionally, there was a 59.4 per cent increase in urban housing starts in the Prairie regions, a 25 per cent gain in B.C. and a slight 3.1 per cent increase in Ontario.

Analysts point to lower price and better interest rates for the spike in home sales.

However, it wasn't good news straight across the country as housing starts in Quebec fell 6.3 per cent and 3.1 per cent in Atlantic Canada.

Immigrants fuelling market

A new report from Scotiabank says that recent immigrants have been driving housing demand in the country.

The reports says census Data shows what 72 per cent of immigrants lived in home owned by someone in their family in 2006, up from 68 per cent in 2001.

Canadians born in the country only saw an increase of 2 per cent of those living in a home owned by a family member, from 73 to 75 per cent.

"Given Canada's aging population and relatively low fertility rates, longer-term household formation and housing needs will be largely determined by immigration," Scotiabank senior economist Adrienne Warren said.

Warren said immigration could account for 75 per cent of growth for Canada's population in a decade.

PROJECTED PROJECTS

Calgary leads jump in building permit values
South Health Campus fattens value in May
By Lisa Schmidt

Calgary Herald

With Files From Canwest News Service

July 8, 2009

Calgary led a surge in building permits across the country, with the value doubling in May, Statistics Canada reported Tuesday.

But the pace still lags 2008 levels, with the value of construction projects at $1.5 billion, down about one-third from the same time last year.

Construction permits worth $626 million were issued in Calgary in May, twice the amount handed out in April.

Most of the increase came from institutional and commercial permits, as the value of non-residential applications jumped fivefold. That was due in most part to the South Health Campus, with permits totalling about $388 million.

"We got a huge boost from that hospital," said Lai Sing Louie, market analyst with Canadian Mortgage and Housing Corp.

The value of residential permits fell about 40 per cent to $101 million, largely due to a virtual standstill in condominium construction.

"There were 58 in May taken out -- it wasn't a lot in terms of units overall," said Louie.

In Alberta, the value of construction permits jumped nearly 50 per cent to $1.1 billion in May. So far this year, permits are down more than 40 per cent to $3.6 billion.

The monthly gain in building permits is encouraging, said one economist, suggesting this echoes other signs the worst of the recession may have passed.

"However, the good news should be tempered with a liberal dose of caution," Todd Hirsch, senior economist with ATB Financial, said in a release.

All of the gains were concentrated in a few large projects in Calgary, he noted.

"Since it is just one month's worth of permits, it's hard to argue that this is the beginning of a trend. Outside of Calgary, building permits remain rather weak, particularly for residential construction."

Across Canada, the number of building permits issued in Canadian municipalities "soared" in May, but economists warned the flurry of activity won't last.

Statistics Canada said the value of building permits issued in May surpassed the $5-billion mark for the first time since October.

That represents a "whopping" 14.8 per cent hike over April, according to Charmaine Buskas, senior economics strategist with TD Securities.

"This report is at odds with expectations, but can be mostly explained by the massive increases in two main sub-components--multi-family units and institutional permits," Buskas said Monday. "Clearly, builders were not scared off by the weak macroeconomic backdrop, and in fact were helped by government spending."

However, she also cautioned, "This pace of rising activity is unlikely to continue."

Municipalities approved 13,087 new dwellings in May, an increase of 22.1 per cent.

Statistics Canada says that reflects a 40.5 per cent increase, or 7,948 multi-family units. The number of single-family units approved rose 1.5 per cent to 5,139.

"All provinces, except for Nova Scotia, reported increases in multifamily construction intentions," Statistics Canada said. "Intentions nearly doubled in Ontario compared with April."

It's the third consecutive month of increases in the value of permits in the residential sector.

Residential building intentions rose 14.4 per cent to $2.6 billion.

In the non-residential sector, the value of permits rose 15.3 per cent to $2.4 billion following a 12.9 per cent decrease in April.

The building permits survey covers 2,400 municipalities representing 95 per cent of the population and provides an early indication of projected building activity.

OWNING A HOME IS NOT A FAIRYTALE FOR SOME ANYMORE

Home ownership getting more affordable: RBC
By Derek Abma

Financial Post

July 8, 2009

OTTAWA — Weaker home prices and lower borrowing costs are attracting buyers back into the housing market, according to a report Wednesday by RBC Economics.

"Declining costs of home ownership during the last year were driven by significant cuts in mortgage rates along with the federal government taking an active role in supporting the mortgage securities market," RBC said. "In the first quarter, monthly payments on a typical detached bungalow in Canada had decreased by close to 17 per cent from a year earlier."

The average cost to own a bungalow in this year's first quarter was $1,350 a month, down from $1,520 in 2008's fourth quarter and $1,620 in last year's first quarter.

RBC's affordability index — the percentage of pre-tax monthly household income needed to maintain a home, including mortgage payments, utilities and property taxes — improved across all housing segments in Canada.

The average affordability for a bungalow in the first quarter was 39.4 per cent, down four points from 2008's fourth quarter. It was 44.7 per cent for a standard two-storey (down five points), and 27.1 per cent for a condominium (down 2.8 points).

The average cost of maintaining a detached bungalow in Vancouver was 62.6 per cent of household income during the first quarter, while in Toronto it was 45.9 per cent, RBC said. Ottawa affordability was 39.1 per cent, Montreal 36.5 per cent, Calgary 35.1 per cent, and Edmonton 34 per cent.

From a provincial standpoint, RBC said housing affordability in British Columbia saw its biggest improvements since 1991, with the percentage of income required for various housing types dropping between 3.4 and 7.4 percentage points during the quarter. In Ontario, RBC said housing sales activity has returned to levels seen in mid-2008, largely as a result of improved affordability.

"With the turmoil in financial markets partially subsiding and the flow of credit increasing, home resale activity has rallied impressively since the late winter," said Robert Hogue, RBC's senior economist. "What's most impressive is how widespread this rebound has been, with all major cities in Canada experiencing a revival.

""With property values stabilizing and the effect of the steep drop in mortgage rates likely behind us, further improvement in affordability will depend on greater gains in family income," Hogue added. "Those gains will be dictated by the speed of the economic recovery expected during the second half of this year."

The RBC's assessment follows a separate report this week from real estate agency Royal LePage that said improved housing-market conditions in this year's second quarter points to a better overall performance in 2009 than previously anticipated.

Also, a number of local markets saw sharp spikes in sales last month, including Toronto, Ottawa and Edmonton, where new sales records were set for June.

Percentage of gross income required to own a standard bungalow in first quarter of 2009 (change from previous quarter):

British Columbia 59.0 (-6.0)
Alberta 33.2 (-4.6)
Saskatchewan 42.0 (-3.3)
Manitoba 35.3 (-2.9)
Ontario 38.6 (-4.2)
Quebec 32.3 (-2.5)
Atlantic 31.3 (-2.9)
Canada 39.4 (-4.0)
Source: RBC Economics

YOU ALWAYS HAVE CHOICES...

Top five tips to getting best mortgage
Expert has advice on avoiding pitfalls

By Barb Livingstone
Calgary Herald

July 4, 2009

The following are answers by Valerie Rasmussen, assistant vice-president, credit services, for First Calgary Savings, to questions by New Homes editor Barb Livingstone:

Question: What are your top five tips for people thinking of getting a mortgage and buying a house/condo in this market?

Answer: Buying your first home can be an overwhelming and daunting process.

Getting the right information before you begin can alleviate stress and increase confidence as you go through the process.

Here are some tips:

-Evaluate your financial situation. Understand your current credit history, and your monthly debt obligations.

This will help you plan a budget with realistic expectations and a comfortable mortgage payment that you can live with.

-Get pre-approved. Let the personal banking representative do all the work for you and don't hesitate to ask questions.

Educating yourself on the variety of mortgage loan options and how the application and approval process works can equip you with the knowledge you need to chose the right product.

-Get all your figures and approvals in order before you get to far into the buying process. Then you can be sure to be looking at homes within your means of affordability.

-With your figures in mind, don't push your finances to the max of your ability to pay, this could become overwhelming later.

Everyone has heard the term, "house poor." This can be avoided with the right planning and information prior to choosing your home.

-Wait until the time is right for you. If you plan to live in the home, you do not need to look at a home as a speculator or investor would.

Market predictions can be wrong and should not prevent you from purchasing your first home.

However, once you have reviewed your budget, and perhaps met with a personal banker, you may make the decision that for example one more year of saving could get you a better down payment and lower mortgage payments.

Do what will work for you.

Question: What is the biggest mistake homebuyers can make in relation to getting a mortgage?

Answer: Borrowing too much can be the biggest mistake new home buyers can make.

Many people will hear that they are approved up to a maximum limit of X dollars and immediately begin looking for the maximum priced homes they can afford.

First-time homebuyers need to understand just how expensive home ownership can be -- and many bills and fees are not planned for.

There are lawyers fees (closing costs), insurance set up, utilities, taxes and moving costs, and for condos, such things as condo fees and so on.

Adhering to a realistic budget can help new home buyers avoid the stress of being overextended.

Question: What is different this year that people should keep in mind in terms of buying a house and getting a mortgage?

Answer: There are many differences this year as opposed to last

when first-time homeowners are looking for a mortgage.

They will now have to come up with a minimum of five per cent down as Canada Mortgage and Housing Corp. has discontinued the 100 per cent mortgage.

In addition, the longest amortization has been decreased from 40 years to 35.

Some of these changes will make it harder for people to get into the home owners market.

But with that said, the housing market currently is a buyers market, meaning decreased home prices.

Low prices of homes, coupled with historically low mortgage rates, are making it much easier for first-time homebuyers to get into the market -- and with plenty of choice.

Question: How long have you been a mortgage broker and how do you compare the current market for buying a house to past years?

Answer: I have been in lending for over 20 years. I am currently the AVP of credit services for First Calgary Savings.

With the low rates, the vast variety of mortgage products and options, and the prices of homes with plenty to choose from, I believe there hasn't been a better time to buy.

First-time homebuyers are now getting in at phenomenal rates compared to years ago, when first time homebuyers would sign up for rates of 18 per cent.

This is incredible value makes it easier to pay down mortgages faster than ever if a proactive approach was taken.

Question: If you had one piece of advice for first-time homebuyers, what would it be?

Answer: Get the right assistance working for you--from realtors, to your banker.

The more educated and prepared you are, the better decisions can be made and the sooner you can be enjoying living in your new home.