READING THE SIGNS

Alberta housing market most affordable in Canada: RBC
Resale activity picking up in Calgary
By Mario Toneguzzi
Calgary Herald May 29, 2012

CALGARY — Housing market activity in Alberta is showing increasing signs of strength as it benefits from attractive affordability and nation-leading economic growth, according to the latest Housing Trends and Affordability Report released Tuesday by RBC Economics.

RBC’s housing affordability measures for Alberta, which capture the province’s proportion of pre-tax household income needed to service the costs of owning a home at market value, remained among the lowest, if not the lowest, in the country in the first quarter of this year.

And RBC said the “long-awaited resurgence” of the Calgary-housing market appears to have been launched in recent months as home resales advanced by a “sizable” 7.4 per cent in the first quarter relative to the fourth quarter of last year, and April activity showed even greater strength.

In fact, Calgary bucked the national trend and showed improved affordability in the first quarter.

“Homebuyers in the Calgary area are motivated by a booming provincial economy, strong job creation, and attractive housing affordability,” said the report. “Despite higher resales lately, home prices so far have remained flat for the most part, with some weakness observed in condominium apartments. This has kept housing affordability in check at some of the better levels among Canada’s largest cities.”

It said affordability improved modestly in the first quarter in Calgary. RBC housing affordability measures show the proportion of median pre-tax household income that would be required to service the cost of a mortgage payment. RBC said that in Calgary measures compared with a year ago edged lower for condominium apartments (0.4 per cent) and two-storey homes (0.3 per cent), and stayed unchanged for detached bungalows.

“We expect the market resurgence to continue for the remainder of this year,” it said.

According to the Calgary Real Estate Board, MLS sales in Calgary so far this month from May 1-28 are up 27.90 per cent from the same period a year ago with 2,104 transactions and the average residential sale price in the city has increased by 3.03 per cent to $445,120.

Ann-Marie Lurie, CREB’s chief economist, said the city has experienced positive economic growth with the expansion in jobs, full-time jobs in particular.

“And this really has encouraged some demand into housing. We’ve had low interest rates . . . We’ve had a signficantly strong spring season compared to other years,” she said. “It’s also important to note that we’ve been pretty slow to recover in the first place. So there was a lot of hesitation out there.

“But as things have started to improve in the economy, people are starting to re-invest.”

Lurie said she doesn’t expect to see any change in the demand for housing in the city in the near future.

Robert Hogue, senior economist with RBC, said attractive affordability and a strong provincial economy are playing significant roles in driving Alberta’s home resale activity, up 11.5 per cent year-over-year in the first quarter and showing no sign of easing in April.

“We expect that, going forward, Alberta’s housing market will remain on this bright path, particularly as the province continues to lead the country in economic growth,” he said.

The measure for benchmark detached bungalows in Alberta rose by 0.1 percentage points to 32.2 per cent, while the measure for condominium apartments marked a small improvement, decreasing 0.3 percentage points to 20.2 per cent. The two-storey home category was the only measure that remained unchanged at 35.3 per cent.

RBC’s housing affordability measure for the benchmark detached bungalow in Canada’s largest cities is as follows: Vancouver 88.9 per cent (up 3.1 percentage points from the previous quarter), Toronto 53.4 per cent (up 1.2 percentage points), Ottawa 41.8 per cent (up 0.9 percentage points), Montreal 41.4 per cent (up 1.2 percentage points), Calgary 36.7 per cent (unchanged) and Edmonton 32.4 per cent (down 0.4 percentage points).

The following are average prices in the first quarter of this year, affordability measure, and year-over-year change in the affordability measure:

Detached Bungalow

Canada, $360,500, 43.1 per cent, 1.5 per cent.

Alberta, $347,900, 32.2 per cent, 0.1 per cent.

Calgary, $423,000, 36.7 per cent, 0.2 per cent.

Standard Two-Storey

Canada, $403,600, 48.7 per cent, 1.2 per cent.

Alberta, $372,800, 35.3 per cent, 0.2 per cent.

Calgary, $418,200, 37.5 per cent, 0.1 per cent.

Standard Condominium

Canada, $235,800, 28.8 per cent, 0.3 per cent.

Alberta, $212,300, 20.2 per cent, — 0.6 per cent.

Calgary, $248,100, 22.2 per cent, — 0.4 per cent.

Photo By: woody1778a

MAY it be a GREAT YEAR!

May MLS sales in Calgary up substantially
Calgary Herald
May 29, 2012

It’s been a good spring so far for the local real estate industry with sales moving ahead of last year’s pace at a good clip.

And so far in May sales have continued to be quite healthy.

According to the Calgary Real Estate Board, from May 1-28, there have been 2,104 MLS residential sales in the city, up 27.90 per cent from the same period last year and the average sale price has increased by 3.03 per cent to $445,120.

The single-family home market has seen year-over-year growth of 26.52 per cent in sales to 1,503 with the average price rising by 3.12 per cent to $503,694.

That average sale price is flirting with the all-time monthly record of $505,920 set in July 2007.

In the condo apartment category, sales of 345 are up 31.18 per cent from last year and the average price has risen by 4.03 per cent to $275,382.

Also, in the condo townhouse category, sales in May are up 31.96 per cent from last year to 256 transactions and the price has increased by 5.29 per cent to $329,969.

BOW WOW

Calgary's The Bow: a new skyline symbol

NATHAN VANDERKLIPPE
CALGARY— From Wednesday's Globe and Mail
Published Tuesday, Nov. 16, 2010
 
More than 200 metres above Calgary’s streets, a crane swings a long metal beam atop the West’s new architectural crown.


The five-tonne length of steel is designed to support the upper reaches of the Bow, a building that is a study in superlatives: the largest building in the Canadian West and the biggest steel project in Canadian history


Kerry Gillis watches the beam move, and shrugs.


“Piece of cake on this job,” says the chief operating officer of Ledcor Construction Ltd., which is building the Bow and has hoisted steel pieces three times as heavy.

Earlier this month, Ledcor finished assembling the building’s steel. The building’s diamond-shaped “diagrid” supports will be completed by year’s end; the walls of glass will be installed by late spring. The Bow, the largest North American construction project outside of New York’s Freedom Tower, will then be externally complete.

There is a certain hubris that comes with building a two-million-square-foot tower that, long before workers had so much as dug the first spadeful of earth for its parking garage, was expected to become the new calling card of Calgary. Even competitors say the Bow is an icon for the city, a glass-covered fist thrust in the face of the recession.

It did not escape the downturn unscathed – financing problems by owner H&R Reit resulted in the suspension of plans for a second building. But construction on the main tower never stopped, and the money issues were eventually resolved with a $425-million financing deal last April.

Now, the building’s upper reaches are taking shape at a time of resurgence for Calgary, which has profited from a new wave of development in the oil sands, driven by sustained strength in crude prices.

As some of the final beams are lifted into place, Mr. Gillis glances across the skyline – or, more properly, down on it, from the lofty heights of what will soon be the new headquarters of Encana Corp. and Cenovus Energy Corp. Several blocks away, crews have pushed another huge new tower, the million-square-foot Eighth Avenue Place, high into the sky. It, too, is a construction monument in a city that is nearing completion on two new landmarks.

But Mr. Gillis scoffs at that tower, too.

“Piece of cake over there. This,” he says, casting a glance around the complicated work of erecting the Bow’s curving structure 58 storeys into the sky, “is real construction.”

The Bow contains 45,000 tonnes of steel connected with 45 tonnes of welding and 800,000 structural bolts, some of them so big they barely fit in a man’s hand. It has 40 elevators and is so tall workers talk about the different climate at its summit. From the ground, its enormous walls of glass – which span an area the size of 14 CFL fields – swallow the sky.

For its builders, all of those attributes have combined to make the Bow Canada’s most prominent billboard – a building that remains on budget, although it may be completed slightly later than expected. It’s a feather in the cap that Ledcor’s most ardent competitors have acknowledged.

“I would call the Bow a signature building in Calgary,” said Roger Dootson, the vice-president and district manager for PCL Construction Management Inc., who also chairs the Alberta Construction Association. “And signature and iconic buildings do help out a company’s résumé for future projects.”

Ledcor has a long history in Alberta. Founded in 1947, it has grown into one of Canada’s largest construction companies, with $2-billion a year in revenue. But in Calgary, the Bow has been a coming-out party of sorts for Ledcor, whose efforts in Western Canada have focused largely on the less-glitzy work of building pipelines and oil sands projects. For Ledcor, the Bow has become something of a marketing exercise for its bread-and-butter business of putting together industrial structures.

Standing on top of the Bow, the reason is obvious. In its nearly-complete shadow stand the head offices of much of corporate Calgary. Suncor Energy Inc. is a next-door neighbour. TransCanada Corp. is so close that Ledcor once received a call from a safety executive at the pipeline company, who had spotted a lapse on site through his office window. The problem was quickly fixed.

Ledcor has toured all of its major corporate clients through the construction site, in hopes of creating a profitable halo effect from the building.

“It’s expertise. They can see that we’re not just a one-line company,” said Bob Scott, the Ledcor senior project director who has led the Bow project.

And there is little denying the scale of the Bow construction effort. Because it was building in the middle of a crowded urban environment, Ledcor had little spare space to work with – and has had to warehouse most of its construction materials at a large offsite yard. The company was obligated to turn delivery timing into an art form.

Another unique aspect: To save time and costs, each of the restrooms in the building was built in Ontario as a fully-finished, fully-furnished unit inside a container. Each container was then shipped, lifted into place and connected to plumbing, ready for use. Even the light bulbs were screwed in several thousand kilometres away.

Ledcor also had to contend with hiring up to 1,250 staff – the Bow’s peak labour requirement – in a province that was, when construction began, suffering from an overheated economy. But it got lucky: The downturn came just as construction ramped up. Suddenly, workers from Fort McMurray became available.

That doesn’t mean the Bow has been Ledcor’s most profitable endeavour.

“These big trophy assets are difficult, and at the end you say, ‘I could have made more money building 10 smaller towers,’ ” said Greg Kwong, regional managing director for CB Richard Ellis in Calgary. “But at the same time, you need these big trophy assets as far as stars on your chest are concerned, to help promote your company.”

6 SUGGESTIONS - DO THE MATH!

Six suggestions for avoiding mortgage fraud

DIANNE NICE
Globe and Mail Update
Published Monday, Oct. 18, 2010

Whenever the housing market starts to heat up, so does mortgage and real estate fraud. Buyers rush through deals to avoid losing out, but can end up being scammed if they’re not careful.

While there are no statistics on these types of fraud in Canada, in the United States, it is estimated to cost victims between $4-billion and $6-billion (U.S.) a year.

“Mortgage scams are carried out in all different forms and involve a multitude of people, some who don't even know they're being taken advantage of,” says Diane Scott, president of the Calgary Real Estate Board.

Ms. Scott says at least two types of mortgage fraud have occurred in Calgary this year. One is property flipping, in which a dishonest seller artificially inflates the value of a property using a phony appraisal and then sells it for a large profit. The phony appraisal often remains with the property through multiple transactions, making it difficult to determine the property's true worth, and the end buyer is left paying for a mortgage that is much higher than the home's value.

The other involves “straw buyers,” who are offered money to lend their identity and good credit record for use on fraudulent mortgage applications. The fraudster uses the information to apply for a loan, then disappears with the money, leaving the straw buyer on the hook for the mortgage payments.

Other types of real estate scams include title fraud, where your identity is stolen and used to assume the title of your property, which can then be used to sell your home or get a new mortgage. The criminal takes the mortgage money and runs. You may not even find out about the fraud until the lender contacts you or someone pulls up in a moving van, claiming to be the new owner of the house.

And there’s also foreclosure fraud, in which a homeowner having trouble paying a mortgage is offered a loan in exchange for up-front fees and an agreement to transfer the property title to the scammer, who is then able to take the victim’s loan payments, sell the house or remortgage it and leave with the money.

While a lawyer, realtor or licensed mortgage broker can help ensure all legal precautions are taken, it’s still important to do your homework before you buy, Ms. Scott says. Here’s her advice on how to avoid becoming a victim of fraud:

1. Beware of unusual offers. Never lend your identity to anyone or sign documents you do not fully understand. “If it sounds too good to be true, then it probably is,” Ms. Scott says.

2. Do the math. Look at the listing history on the property and do a comparative market analysis. Check the number of sales and price ranges for the community. If the home’s listing price is much higher than the average value of neighbouring homes, it could mean someone is flipping the property or has had it fraudulently appraised.

3. Don’t assume the seller is honest. Get your own realtor or independent representation for your purchase. If the seller objects, something is wrong.

4. Do a land title search. This will show the name of the property owner, any mortgages or liens registered on the title, as well as previous sales and transfers. You can also buy title insurance to protect against title fraud.

5. Get your own appraisal. You may want to include, as part of your offer to purchase, the option to have the property appraised by a member of the Appraisal Institute of Canada.

6. Secure your deposit. Make sure your money is being held in a real estate trust account by a realtor or lawyer. This will ensure your money is safe until the deal closes.

Photo by: Barnesnet

BARGAIN BASEMENT MORTGAGE BINS?

Money is on sale!

Ted Rechtshaffen
Special to Globe and Mail Update
Published Friday, Oct. 15, 2010

This month, a client locked in a five-year mortgage at 3.49 per cent.


They could have done the same in 2001, but it would have been about 7 per cent.

In 1982 it would have been 18 per cent.

Even in the low-rate days of 1952, it would have been about 5.5 per cent.

Borrowing costs are lower than any time in modern history. This represents an incredible opportunity for those with the foresight (or fortitude) to take advantage.

Here are five strategies to consider:

1) When borrowing, lock in today’s rates. I know that at most times a variable rate is a better solution than fixed. Today is not "most times." If you are getting a new mortgage, lock it in. Even if it is only for three years, you can get a three-year mortgage today for under 3 per cent. The best three and five-year variable rates today are 2.25 per cent, but the Bank of Canada is almost certain to begin hiking rates again within six months. With such a narrow gap between a variable rate and a fixed rate, it simply isn’t worth the risk.

2) If you own a house, consolidate all your debts against your home. While credit card debt remains as high as 19 per cent in many cases, and other unsecured debts might be in the 5-per-cent to 7-per-cent range, you may have an opportunity to move those debts to your mortgage and gain significant savings. Even having a line of credit at prime + 1 per cent (4 per cent) can be consolidated into a mortgage for real savings. As an example, if your home is worth $500,000, and you have a mortgage balance of less than $400,000 (80 per cent), you will likely be able to consolidate other debts in your mortgage, up to 80 per cent of your home’s appraised value.

3) Start a business. As a business owner, I know that getting capital is not easy. The most common response I heard when I was looking many years ago was “use a line of credit secured by your house.” This might not be right for everyone, but I can assure you that you will not find a lower-cost source of capital (except those interest-free loans from family). In fact, I would look at using a fixed-rate mortgage as opposed to a line of credit if you require a larger amount of funds up front or want to secure the rate.

4) Borrow to invest. While some believe this is gambling, I can assure you that, unlike at the Las Vegas tables, the odds are tilted toward you. If you borrow to invest, the interest cost becomes tax deductible. In today’s market, you could do a five-year mortgage at 3.5 per cent, and if you are in the top tax bracket, this will effectively cost you less than 2 per cent a year. Over the past 60 years, the Toronto Stock Index has averaged annual returns of over 10 per cent. I am not saying you can count on these returns every year, but if your borrowing cost is under 2 per cent, and a dividend portfolio can pay 4 per cent a year just on the dividends, it can be a very powerful wealth-building strategy.

5) Borrow to buy more real estate. Imagine having an $800,000 house in Vancouver or Toronto and having no debt. You decide to buy a beautiful ocean-front property in Florida or California. The new property costs $300,000 – and they want cash. You can take out a mortgage on your Canadian property to possibly make the real estate purchase of a lifetime. If you are considering this, be sure to use a foreign-exchange dealer to save on exchange costs, and look into the tax issues of owning real estate in the United States.

Just for fun, you might want to file away this article and open it up in about five years. You may just wish you took the plunge when money was on sale.

Photo by: Dreamer7112

RESALE PACE TO CLIMB

Resale home pace expected to climb
By Marty Hope, Calgary Herald
October 16, 2010

With a struggling economy and housing sector, anything the least bit positive is a good thing.

So it has been for the past couple of weeks -- a scrap of good news here and there.

Statistics Canada was first out of the chute with news that the Calgary area's unemployment rate for September declined to 6.6 per cent -- down from 6.7 per cent in August and declining even further from the 6.9 per cent in September 2009.

That being said, there were 1,400 fewer jobs created last month compared with August 2010.

But since the first of the year, job creation is still ahead of 2009, says Statistics Canada.

Job creation is good news for the new and resale housing sectors for obvious reasons.

The Calgary Real Estate Board has also chipped in with its good news.

In its latest activity report, the board reported sales of both detached single-family homes and multi-family condos climbed in September compared to August.

In terms of detached homes, 958 changed hands, up from 867 in August.

As for condos, the September sales total was 366, two more than were sold in August.

But compared to the same month last year, sales numbers for September were off.

CREB president Diane Scott took the positive road in her September summary, saying fall sales "should improve slightly" to reflect the latest Statistics Canada report.

"There are signs that September may mark a gradual, if not slight, uptick for Calgary's housing market," she says. "We are seeing a modest improvement since the market's decline that started in April of this year."

In the earlier part of the year, home-buyers -- first-timers for the most part -- decided to move up their purchase dates to beat expected hikes in interest rates and changes to mortgage rules.

When both these factors came into play, people who hadn't bought stepped back from the market, taking a wait-and-see attitude.

There were also those who continued to be concerned about the strength -- or lack of strength -- in the economy.

Here again was a bit of good news. Mortgage rates have not moved dramatically and the average price of used homes is holding fairly steady.

"The Bank of Canada is in no hurry to raise interest rates to any significant level and affordability continues to improve in key segments of the Calgary housing market," says Scott. "These factors, along with great selection, have clearly tipped this market in favour of the buyer."

The average price of detached single-family homes in September within Calgary was $460,278, up three per cent from August but almost unchanged from $459,085 in the same month last year.

The average selling price for condos inside Calgary was $284,028 last month -- down one per cent from August and two per cent from September 2009.

While the market, itself, appears to be undergoing a slight change, the makeup of the buyer is also getting a facelift.

"Clearly, there is a shift in the types of buyers entering the market," says Scott.

"It was first-time buyers who drove the late market recovery last fall and this spring.

"While lower-priced home sales have declined, sales over $1 million have actually increased by two per cent this year compared with the same period last year."
- - -
MILLION SALES UP

For the first nine months of this year, million-dollar-plus sales of used homes totalled 286, up from 229 during the same period last year, says the Calgary Real Estate Board.

But the highest volume of sales of detached single-family resale homes are occurring in Calgary in homes priced between $300,000 and $399,999.

They amount to nearly 38 per cent, a slight improvement over 2009. Meanwhile, the vast majority of condo sales -- more than 47 per cent -- were priced from $200,000 to $299,999.

A year ago, this category accounted for nearly 51 per cent of all condominium sales. "While consumer confidence has strengthened and the unemployment picture has improved, economic jitters will continue to impact Calgary's housing market," says president Diane Scott of CREB. "More and more home buyers will eventually return to the marketplace, but for the moment, they remain moderately cautious."

Photo By: Dave van Hulsteyn

JUST STAY STRONG

Housing market momentum to carry strong sales volume into 2010: Scotiabank
By Mario Toneguzzi
Calgary Herald
March 23, 2010 9:02 AM

CALGARY - The momentum in the Canadian housing market has carried through to early 2010, with the volume of sales transactions in January and February only slightly below the near-record levels of late 2009, says a report released today by Scotiabank.

And the average MLS sale price in Canada will reach a record level this year.

"Strengthening labour markets are underpinning confidence, while generationally low mortgage rates

— and expectations that borrowing costs will soon be headed higher — are adding a sense of urgency," said the Global Real Estate Trends Report authored by economist Adrienne Warren.

"Milder-than-usual temperatures across much of the country may also have put a bit of spring into the
typically slow winter sales season. Average prices too are testing new highs, both for new and resale homes. A steady increase in the number of listings in recent months alongside a sharp increase in new construction is restoring a much better balance to the overall market compared with the latter half of 2009."

But the report said sellers’ conditions persist in most major centres.

The report said continued strong demand and pricing is expected through the spring, especially given an expected rush of buyers hoping to pre-empt tighter qualifying criteria for insured mortgages effective mid-April as well as the July 1 introduction of the HST (Harmonized Sales Tax) in Ontario and British Columbia.

"However, this should give way to more subdued activity in the second half of the year, as higher interest rates and higher home prices erode affordability. The incentive among builders to add substantial new housing stock should likewise fade as supply increases and prices cool."

The report expects the volume of MLS sales to hit about 510,000 this year, up 10 per cent from

2009 but still a touch shy of the 2007 record at the national level. Average prices are forecast

to increase about eight per cent to a record $345,000 in Canada.

Housing starts are estimated at 190,000, up from 149,000 last year.

Photo by: _Caitlyn