This means there is more confidence cited in upper-end market
CALGARY — Sales in the luxury home market have ballooned in Calgary this year.
According to the Calgary Real Estate Board, sales for upper-end residential properties are way above the pace set a year ago. As of Tuesday, there were 291 single-family MLS sales over $1 million this year compared with 234 for the same period in 2010. Also, 18 condominiums have been sold year-to-date in the upper-end price bracket, compared with 11 in 2010.
Miranda Pearson, with the Boutique Realty Group Ltd. of Century 21 Bamber Realty in Calgary, said consumer confidence has been stabilized recently by the low interest rates, making the cost of upgrading to a larger home practical.
“In general, with the softening of the market across the board taking a depreciation of 10 per cent on a $500,000 home versus a million dollar home, makes the million dollar home that much more attainable,” she said.
“Inventory selection of luxury homes has increased compared to availability five years ago. Rather than renovating their current home which may have been selected out of pressure due to lack of choice and forgoing features they desired, this is an opportunity to find a home that suits those preferences.”
Pearson also said the equity stability for buyers already owning in the luxury home market allows them to consider purchasing a second property or vacation property.
“Homeowners of higher-end properties tend to have a greater percentage of equity in their home and are somewhat insulated by market fluctuations. With low interest rates and substantial equity it is timely to leverage that equity to buy a second home.”
Sales in the upper-end peaked in 2007 with 431 single-family homes priced at over $1 million selling as well as 30 condos.
The top sales this year are $3.995 million for a single-family home in the Elbow Park/Glencoe neighbourhood and $4.1 million for a condo in Eau Claire.
“We have seen more sales in the last several months. We just see more confidence in the market,” said Sano Stante, president of the Calgary Real Estate Board. “More confidence in that upper-end.
“A lot of the product that’s moving is some value buying. And some of the new product that’s on the market in the upper-end they’re sort of testing new territory. We’re expanding our limits. We’re testing new waters with some of the prices with some of the new listings that are on.”
The highest priced listing currently in the Calgary city market is $12 million for a home in Aspen Woods. The highest priced condo is $4.195 million in Eau Claire.
Stante said that in talking with other industry members such as builders and architects they’re very busy at the upper-end.
“That indicates to me that people, upper management … have a sense of confidence. Those are the people making decisions based on what they see coming down the pipe.”
Dan Sumner, economist with ATB Financial in Calgary, said low interest rates play a big factor for higher-priced homes.
“A one percentage point difference for a condo that costs $200,000 doesn’t make near a big a difference as it does for a house that costs $2 million,” he said.
“This could be a sign — although I don’t have any direct data to support this — that maybe some of the high wage jobs in Calgary have fared quite well over this (economic) recovery.”
Sumner said the inner-city Calgary housing market has fared better than in the outskirts this year and houses closer to the downtown core tend to be priced higher.
© Copyright (c) The Calgary Herald
CALGARY — Average weekly earnings in Alberta were the highest in the country among all provinces in June, according to Statistics Canada.
And the federal agency also reported Thursday that the annual growth rate here topped all the other provinces as well.
In June, average weekly earnings of non-farm payroll employees hit $1,041.45 in Alberta, an increase of 0.5 per cent from May and a hike of 5.0 per cent from June 2010.
Statistics Canada said earnings were $876.27 across the country. That was a 0.3 per cent rise from May and up 3.0 per cent year-over-year.
“Alberta has recorded year-over-year growth in earnings above the national average since March 2010,” added the federal agency.
Year-over-year growth in average weekly earnings exceeded the national average of 3.0 per cent in two of Canada’s largest industrial sectors: professional, scientific and technical services as well as retail trade.
In the 12 months to June, average weekly earnings in professional, scientific and technical services increased 5.2 per cent to $1,242.91, said the federal agency.
“Since June 2010, a number of industries within the sector have had notable earnings growth. They included architectural, engineering and related services; management, scientific and technical consulting services; and computer systems design and related services.”
The second fastest rate of growth in average weekly earnings occurred in retail trade, where it rose 3.7 per cent to $520.26, spread across a number of industries.
Non-farm payroll employment in Alberta rose to just over 1.8 million people, representing a 0.6 per cent jump from May and an increase of 3.8 per cent year-over-year. Across Canada, employment rose to just over $14.9 million people. That’s a 0.4 per cent monthly hike and an annual increase of 1.8 per cent.
“On a year-over-year basis, the fastest growth was in the mining, quarrying, oil and gas extraction sector, where payroll employment increased by 19,800 (10.6 per cent). The bulk of the growth occurred in support activities for mining, oil and gas extraction in Alberta,” said Statistics Canada.
© Copyright (c) The Calgary Herald
Alberta repeat home buyers moving on to larger homes
This article is EXACTLY what we have been hearing over the last 6 months.
CALGARY — Repeat home buyers in Alberta are moving on to larger or more luxurious homes, according to a survey released Tuesday.
The TD Canada Trust Repeat Home Buyers Report said Albertans are the most likely in the country to feel they compromised on the layout and features of their current home and are not willing to do so again in their next house hunt.
The report, which surveyed Canadians who recently bought or intend to buy a home that is not their first, found that 59 per cent of Alberta repeat buyers are moving on to larger or more luxurious homes. And even though many are upgrading, they are among the least likely to need a mortgage to finance the purchase (58 per cent versus 69 per cent nationally).
“If you are moving because you want more room or certain features in your home, a renovation could be an option to save the expense of moving by making your current home work for you,” said Jessy Bilodeau, Mobile Mortgage Specialists, TD Canada Trust.
The TD Canada Trust Repeat Home Buyers Report found that seven-in-10 Alberta repeat buyers were moving earlier than they expected (40 per cent) or had no intention of moving but now find themselves on the house-hunt again (30 per cent). The number of people intending to buy a home that is not their first in the next two years increased 21 percentage points over 2010 (84 per cent versus 63 per cent in 2010).
The large majority of Albertans (84 per cent) plan to sell their current home before buying a new one. More than one-in-five (22 per cent) say market conditions played a factor in their decision to buy another home and 69 per cent expect to sell their home at or above asking price, said the report.
“The reality is that it’s still a buyers’ market, and homes need to be priced correctly to sell,” said Bilodeau.
Albertans are more likely this year to say they are keeping their current home as a rental property (46 per cent versus 25 per cent last year) or that they will stay in their current home and the new home will be a rental property (41 per cent versus 25 per cent last year).
© Copyright (c) The Calgary Herald
This is good news for those looking to buy. Prices are stable and affordable.
Owning a home in Calgary became more expensive in the second quarter of this year but housing in the city is one of the most affordable among major cities in Canada, says a report released Monday.
“The long hoped for rebound in the Calgary-area market that appeared to be on track earlier this year lost some momentum in the second quarter,” says the RBC Housing Trends and Affordability report.
“After posting two successive increases, home resales edged down during the April-June period, providing little impetus to prices, which continued to move sideways for the most part.
“With such absence of price pressure, the loss of housing affordability was minimal in the quarter. The RBC measures for the Calgary area rose between 0.4 and 1.1 percentage points, representing a smaller deterioration among major Canadian cities. Owning a home in the area, therefore, continues to be close to the most affordable that it has been in almost six years.”
The RBC Housing Affordability Measure, which has been compiled since 1985, shows the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes and utilities. The higher the measure, the more difficult it is to afford a house. For example, an affordability measure of 50 per cent means that home ownership costs take up 50 per cent of a typical household’s pre-tax income.
In the second quarter, Calgary’s measures were 37.1 per cent for a detached bungalow, 38.5 per cent for a standard two-storey, and 23.0 per cent for a standard condominium. The measures increased by 0.6 per cent (bungalow), 1.1. per cent (two-storey) and 0.4 per cent (condo).
However, they are lower than a year ago by 3.1 per cent for a bungalow, 2.9 per cent for a two-storey and 1.6 per cent for a condo.
“Notwithstanding the latest bout of uncertainty, we believe that the strong economic fundamentals of Alberta and Calgary will find their way into the housing market and will support homebuyer demand in the period ahead,” says the report.
RBC says the average bungalow price in Calgary declined by two per cent year-over-year in the second quarter to $411,700 while a two-storey dropped by 1.6 per cent to $415,200 and a condo fell by 1.1 per cent to $249,000.
Sano Stante, president of the Calgary Real Estate Board, said prevailing negative economic conditions will restrain any increases in interest rates for awhile.
“Those are increases that we fully expected prior to these events and they’ve now been abated,” said Stante. “That was our biggest risk of deteriorating affordability.
“With an assurance that interest rates are going to stay low for the next 12 months anyway — and there’s somewhat of an assurance — then it really looks like we’re going to lead the nation in affordability especially when we start to get increased employment and in-migration towards the end of this year. That should really lend to a more robust real estate market.”
Robert Hogue, senior economist with RBC, said he too expects Calgary’s affordability to remain about the same.
“Previous to a few weeks ago we expected higher interest rates would start really putting more and more pressure across the board in Canada including in Calgary on the monthly costs of home ownership,” he said. “Now we’ve pushed everything out to the middle of next year.
“For the next few months or quarters I think chances are that affordability is probably will go sideways, the same as the housing market.”
© Copyright (c) The Calgary Herald
This last blip in the stock market has taken the wind out of the world’s recovery sails. It now looks like rates are going to stay the same or go DOWN!?! for the 12 months or so.
The USA has said for the 1st time ever that they are not going to change their rates until 2013. They have never given a date in the past and this IS a big deal. It means that Canadian rates are going to have to track closely to the USA rates or our dollar will skyrocket and quickly slow our growth and path to recovery.
That would mean that while fixed rates have NEVER been better in 111-years, variable rates are also super attractive because Prime (P) will now stay close to 3% (where it is today) and the rate of P-8% = 2.2% for a mortgage is CRAZY low now that we know it is going to stay around there for 2 more years!
Call to discuss if you have any questions on this. 403-681-4376: Mark
A 180 Degree Change in Rate Views
- 46% probability of a rate cut Sept. 7.
- 100% probability of a rate cut by year-end.
That amounts to a 180 degree swing in market psychology. Just a few weeks ago traders were pricing in a rate hike by January.
“As we’ve seen, markets can swing and perception can swing quite aggressively, and we could well be back to a fall expectation [of a rate hike] in a month’s time,” said RBC economist Eric Lascelles to the Globe & Mail.
Lascelles counterpart at Scotiabank, Derek Holt, says: “Any talk of the Bank of Canada hiking this year is just foolish in my opinion.”
Peter Gibson, chief portfolio strategist at CIBC World Markets notes: “I think it’s clear that there are a lot of serious problems still in the world and it’s more likely that we’re setting the stage for a sustainably low level of interest rates for a very long time.”
And that is the takeaway here.
Despite the roller coaster of emotions as of late, this about-face in rate assumptions reminds us of the necessity to focus on long-term trends. Long-term, North America’s prognosis still seems compatible with low-growth and low-inflation. That’s an environment where fixed mortgage rates typically underperform.
This is good news for people in variable rates AND fixed rates.
It all means that mortgage rates are going to stay low for longer than expected. Prime will stay lower longer partly because the US has for the 1st time said that they will leave the very low rates until 2013 to give the market something solid to work from.
That will also cause the fixed rates to stay lower, longer.
Good news all around.
By Ka Yan Ng
TORONTO (Reuters) – A dovish U.S. Federal Reserve will likely force the Bank of Canada to keep its interest rates lower for longer, but market bets on a Canadian rate cut by year-end are unlikely to pay off.
Analysts said a rate cut would send all the wrong signals for an economy that is growing, albeit slowly, and could hurt the central bank’s credibility.
“In the current situation, a rate cut by the Bank of Canada would mean that you have a second recession in Canada,” said , Charles St-Arnaud, Canadian economist and currency strategist at Nomura Securities International in New York.
“And that’s not something that we see happening.”
Expectations for Canadian interest rates have swung wildly in recent weeks. As recently as July 19 traders priced in higher expectations of a rate increase this year, following unexpectedly hawkish language from the Bank of Canada.
A July 20 survey of primary dealers showed most saw a rate hike in September or October.
But tightening expectations fell sharply as the U.S. debt ceiling debate and the downgrading of the U.S. credit rating by Standard & Poor’s fueled fears of a recession there, triggering some of the worst stock market selloffs since the collapse of Lehman Brothers in 2008.
Canadian overnight index swaps, which trade based on expectations for the Bank of Canada’s key policy rate, and short-dated government debt began to show expectations of a rate cut rather than an increase.
The Canadian dollar also fell more than a nickel against the greenback as the outlook for monetary policy moved from tightening to easing.
Rate cut expectations were reinforced by the U.S. Federal Reserve’s unprecedented announcement on Tuesday that it would likely keep rates near zero for another two years.
Analysts said the Bank of Canada is likely to keep interest rates lower for longer than previously expected because of the Fed move. One issue is that widening the rate differential between the two countries could cause an unwelcome appreciation in the Canadian dollar.
But they caution that swap markets, which are pricing in a quarter-point rate cut before year end, have it wrong.
Analysts said a cut is not needed because the Canadian economy, though highly dependent on the big U.S. market, is still growing. The central bank’s key policy rate, currently at 1.0 percent, is also seen as still being very accommodative. The rate was cut to a record low of 0.25 percent after the financial crisis.
HOUSING, RISK TO CONFIDENCE FACTORS
Those emergency rates provided conditions for the domestic housing market to surge to bubble-like proportions in some parts of the country, and allowed Canadians to take on massive personal debt loads.
Analysts said a rate cut could reignite these two segments of the economy, risks that have already been flagged by the central bank.
“The bank is going to need a lot more evidence that the downside risks are going to stick with us before they totally rewrite their script from the last statement and move toward outright easing,” said Derek Holt, an economist at Scotia Capital, noting that dovish language would inevitably have to accompany a decrease in the central bank’s key rate.
“That would be a blow to business and consumer confidence in the country as opposed to the more supportive role, which would be essentially to just stay off on the sidelines and not do anything on rates for a long time yet.”
Holt is already the most bearish among Canada’s 12 primary dealers — institutions that deal directly with the central bank as it carries out monetary policy — and is comfortable with his call that the next rate hike will be in the second quarter next year.
If anything, it could be later, “if the Fed is true to its word in terms of maintaining stimulative policy all of next year and into 2013,” he said.
Analysts said the risk of a rate cut is now more likely than an increase, given Canada’s trading ties to the United States and the risk that a recession there would also pull Canada’s economy lower.
“It is probably appropriate to price in some risk of the next move by the BoC being more a cut than a hike, just at this stage,” said Michael Gregory, senior economist at BMO Capital Markets.
“But I think that fades within six months and you start to believe that is going to skew to the next risk being a hike rather than a cut.”