Calgary luxury home sales surge 24% from last year
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
Alberta earnings top Canadian provinces: Up 5% from a year ago
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
Calgary housing is not in a bubble
Canada housing not in a bubble
The attached PDF is from Ben Tall, one of my favorite economists. He is one of CIBC World Market’s top guys and his research shows that there really is only a risk in Vancouver and Toronto.That is great news for Alberta.
And remember, the in-migration into Alberta is what caused the dramatic price increase before. The new numbers show that Alberta is on the receiveding end of most of the migration now. That supports housing prices more than almost any where else in Canada.
Low interest rates seen sticking around – fuel for the Variable rate side
Low interest rates seen sticking around- great news for the variable rate people. Remember with a broker lender you lock-in at the best broker rate for the day when you lock in. With the banks you lock in at Posted (or Posed-1% if they pretend that they love you – and they actually love your money, not you.)
That means that for today the broker rate is 3.99% for a 5 year. Posted is 5.66%. If “the bank loves you” you get 5.66-1% = 4.66% BUT you should have had 3.99% at a broker bank.
So would you love your bank back when that happens?
MARTIN MITTELSTAEDT
Tuesday’s Globe and Mail
Interest rates have recently being going somewhere unexpected: down.
At their trough last week, the yields on 10-year U.S. Treasuries, the benchmark North American rate, touched 3.11 per cent, the lowest level in six months and more than half a percentage point below their February peak.
Yields on 10-year Government of Canada bonds have fallen, too, and are now virtually identical to their U.S. counterparts.
The sliding rates have surprised many market watchers. With the United States government bumping up against its debt ceiling, inflation ticking upward, and a growing debt crisis in Europe, most expected interest rates to be increasing.
While predicting the future for rates is notoriously difficult, some observers believe that the current low-rate environment may continue for a while. If so, it will mean pain for savers, but good news for borrowers.
A drop in interest rates is equivalent to a sale on the price of money, and corporations are already rushing to take advantage of the easy lending conditions, even if they’re in no immediate need of funds. A case in point is Google Inc., which has $37-billion (U.S.) in cash and marketable securities on its balance sheet, but raised $3-billion from a bond issue last week anyway. Mortgage rates have fallen, too – good news for homeowners looking to refinance.
But lower rates have not turned out so well for some of the market’s savviest players, including Bill Gross, the founder of Pimco, the world’s biggest bond fund. Earlier this year, he sold his U.S. Treasuries, because he thought interest rates were poised to rocket higher, which would drive down prices of bonds.
It’s difficult to fault his logic: only a few months ago, the case for higher interest rates seemed so compelling.
Governments around the world are carrying bloated deficits and massive borrowing needs. In the United States, politicians have yet to agree on any clear path to deficit reduction, despite more than $1-trillion in annual red ink. Meanwhile, oil has been trading consistently around the $100-a-barrel level, thereby lifting inflation, another bond-market negative.
And the U.S. Federal Reserve is no longer putting its thumb on the scale. In less than six weeks, it is going to end its program of quantitative easing, under which it is buying $600-billion in Treasuries to goose the economy. Many bond-market followers believe the Fed’s massive buying binge has been propping up Treasury prices and keeping yields artificially low.
So what has been pushing rates lower in recent months?
A weaker-than-expected recovery is the major culprit. “The global economy, and the U.S. economy in particular, is not on quite as solid a recovery track as people were imagining in the very optimistic days of six months or so ago,” observes Peter Buchanan, senior economist at CIBC World Markets.
A slew of recent statistics underlines that weakness, ranging from the poor state of U.S. home sales to the slowing pace of U.S. manufacturing growth. Meanwhile, the Japanese economy, the world’s third-largest, is shrinking and creating a further drag on global commerce, although few foresee a double-dip recession.
“We’re looking ahead toward a bit of a cooling in economic growth,” said Paul Dales, senior U.S. economist at Capital Economics, who foresees output in the U.S. rising about 2 per cent this year.
That level of growth won’t be “anything to celebrate but it’s nothing like the recession we saw previously,” he said.
Another factor driving rates lower has been the early May rout in commodities, which dampened some of the worry on the inflation front. In addition, the recent sluggish performance of the stock market suggests that investors are getting nervous and growing more willing to buy super-safe government bonds.
Mr. Dales believes the current trends have room to run, and that rates will surprise to the downside.
He predicts U.S. 10-year Treasury yields could slip to 2.5 per cent in the low-growth, less inflation-spooked environment he foresees ahead.
If growth continues to be slow, lower rates might be staying around for a while.
Mr. Buchanan says the most likely scenario, given the poorer economic outlook, is for the Fed to hold off on raising rates until 2013. He believes the yield on Treasuries will rise gradually, instead of falling further, getting back to 3.4 per cent by the end of this year and to 4 per cent by the end of 2012. http://www.theglobeandmail.com/report-on-business/economy/interest-rates/low-interest-rates-seen-sticking-around/article2032075/
Refinance your mortgage to reduce debts now with low rates
Most everyone in the mortgage industry knows rates are on their way back up for good – but when? Bay Street says there is a 100% chance that the Bank of Canada will raise rates in June.
Now is the perfect time to refinance and take advantage of the tail end of the low rates before they head back to their long term average of 6.5% for the 5 year fixed.
Why not a variable? Rates are going back up for sure. Locking in now will get you the lowest 5 year fixed possible.
Locking in at at a big 5 bank – they lock you in at Posted or Posted -1%. Posted today is 5.66% today. If the bank “loves” you and gives you Posted -1% you lock in at 4.66%. If you were with a broker bank you lock in at their best rate – for today is 4.25% to 3.99%. Big difference!
Debt Consolidation:
In the wake of lessons learned from the recession, there has largely been a shift in Canadian attitudes towards debt. Many studies and polls currently show that paying down debt is a top priority for many Canadians- in fact a survey BMO released earlier this year, indicated that 26% of Canadians were pulling funds prematurely from their RRSP’s to pay down debt. In another poll, they found that 32% of Canadians were intending to use tax refunds to pay down costly consumer credit.
Using available equity in your home to both maximize on interest savings and strategically attack debt is responsible borrowing at its’ best.
Call now for a chat about how to consolidate your debts. Mark Herman @ 403-681-4376.
Experts best at brokering mortgage
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
TD Canada Trust releases 2011 Home Buyers Report
TORONTO (March 7, 2011) – When homebuyers browse the listings and hit the open houses this spring, will they be looking for brand-new homes that won’t need any work or fixer-uppers that they can renovate to suit their taste? According to the 2011 TD Canada Trust Home Buyers Report, Canadians are divided with men and women sitting on opposite sides of the fence.
Half of Canadians would prefer a new home because everything will work perfectly (25%) and it hasn’t been lived in before (24%), while the other half prefer older homes, which they feel offer better quality (34%) or have more character (17%). The TD Canada Trust Home Buyers Report found that men are more likely than women to prefer a fixer-upper because it is more affordable (14% versus 8%) and because they can renovate to their taste (37% versus 29%).
“If you are willing to do the renovations or upgrades, buying a home that needs some work can give you the ability to transform the space into your dream home,” says Farhaneh Haque, Regional Manager, Mobile Mortgage Specialists, TD Canada Trust. “However, if you decide to go the renovation route, it’s important to understand the costs of the upgrades you intend to make and factor those in when deciding on the price range for a home that is realistic for you.”
The most important factors in deciding what home to buy:
Whether it’s brand new or older with charm, Canadians say the most important consideration when buying a home is cost (97%). Women are more likely to say this is a very important consideration (82% versus 70% of men). Other important factors are features of the home (94%), size (93%), security and safety (92%) and location (91%).
“When house-hunting there are some factors, like the features of the home, which can be adjusted once you’ve made your purchase. Other factors, like the location, cannot be changed. Finding the right home is about getting the right balance – and at a price you can afford,” says Haque. “Canadians wisely say that that cost is the number one consideration for a home purchase, evidence that Canadians realize that in order to truly be comfortable in their home, they need to comfortably be able to afford it!”
About the Home Buyers Report:
TD Canada Trust commissioned Environics Research Group to conduct a custom online survey of Canadians who had either purchased a home within the last two years or intend to purchase one in the next two years. Between December 22 – 29, 2010, a total of 1,001 interviews were completed.
fixed or variable – what is better
| The security of fixed-rate or the cost savings of adjustable-rate — which mortgage is better for you? | |
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All mortgages are not created equal. In addition to principal amount, interest rate, amortization period, prepayment options and whether the mortgage is “open” or “closed,” the remaining major characteristic is whether the interest rate is fixed or adjustable.
Both fixed and adjustable-rate mortgages have consistent monthly payments that blend interest costs and principal repayment. They differ in how the payment is applied between interest and principal. On a fixed-rate mortgage, the proportion of the payment applied to interest and principal changes over time according to a standard schedule. In the early years of a mortgage, more of each payment is applied to interest, and less to the principal. In later years, less is applied to interest and more to reducing the principal. With a adjustable-rate mortgage, the amounts applied to interest and principal vary [from the standard schedule] as the interest rate moves up or down. As rates increase, more of the payment is applied to interest and less goes to principal. When interest rates go down, less is applied to interest costs and more to principal. Which is right for you depends on your risk tolerance. If an increase of 0.25 per cent in the interest rate would concern you, or substantially affect your budget, then a fixed-rate mortgage may be a better choice. However, today, the security of a fixed rate comes at a slightly higher price. Research suggests adjustable-rate mortgages benefit consumers. From 1950 – 2000, Milevsky found that homeowners with a $100,000 mortgage (15 year amortization) would have saved approximately $22,000 in interest costs by borrowing at the prime rate instead of the five-year rate. Further, he found that choosing the adjustable rate benefited the homeowner during 88 per cent of the period studied. To find out more about fixed versus adjustable mortgages or to see what solution best suits your needs, contact me today! |
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Canada’s banking system healthiest in the world
Canada’s banking system healthiest in the world
| Tuesday, 1 June 2010
Canada’s banking system is a model for the United States and European countries struggling to cope with mountains of debt accumulated through a series of market crises, massive bailouts and recession according to a report in the Washington Post this morning.
The International Monetary Fund and World Economic Forum (IMF) is showcasing Canada for having the healthiest banking system in the world. . The IMF, in probing what made Canada’s mortgage lending system so resilient during the crisis, concluded that it was “boring” compared with the complicated, sophisticated and expensive financing system in the U.S., but nevertheless effective and safe.
Canada and its banks were barely touched by the 2008 financial crisis that nearly brought down the U.S. banking system and led to the biggest recession since the Great Depression.
Canadian bank losses were so low, and their cushion of reserves so high, that the banks managed to post profits for months in the aftermath of the 2008 crisis while major U.S. banks were teetering on the brink of insolvency and getting $250 billion in Treasury bailouts to cover burgeoning losses on bad mortgage loans.
“The Canadian experience showed that more prudent lending and borrowing played a big part in preventing the housing bubble that proved the near-undoing of the American banking sector,” said Robert Elliott, a Canadian banking lawyer at Fasken Martineau.
Though major U.S. banks have been recapitalized by the government and are posting profits again, “all the fresh capital in the world may not prevent another cycle of misery down the road” unless the U.S. also adopts more prudent lending practices, he said
A good overview of perceived impacts of the EU situation to the US economy.
From the Investment Advisory Service I subscribe to. A good overview of the perceived impacts of the EU situation to the US economy.
| Investment Comments
The generally benign market environment of the 1990s and low volatility experienced throughout much of the first decade of this century (until 2008) sometimes leaves investors unprepared for normal volatility that has characterized the market throughout history. As a result, investors panicked earlier this year when the Dow slipped over 900 points in three weeks. Over the next 2-1/2 months, the Dow moved up a strong 1500 points. The Dow has now given up about 1000 of those hard earned points in another three weeks. Volatility is the norm for investors, but it is still uncomfortable. In the middle of what appears to be a market “correction” that happens in most years, even in a rising market, the Dow dropped over 500 points in ten minutes on May 6. Clearly this was not normal. It appears that “high-frequency traders” set off an avalanche. The term “high-frequency traders” refers to computerized techniques used by Wall Street firms and hedge funds to analyze short-term data and make trades faster than a human being could. It is said that over 70% of U.S. equity trades come from these traders. While such trading makes money for their sponsors, it also increases trading volume and is helpful to the market. During a period of high market volatility the afternoon of May 6, it appears that many traders simply turned off their screens and stopped participating. The market for many ETFs (exchange-traded funds, which are unmanaged baskets of stocks) became quite thin, and there were far more sellers than buyers. Some of these supposedly safe index funds actually traded for a few pennies per share. This caused speculators to sell the underlying stocks that make up the ETF indexes because the index itself was much cheaper than the sum of its parts. The overall market dropped 5% in just ten minutes. This is the kind of traumatic drop that one might associate with a terrorist attack or assassination of a world leader. However, these were the actions of speculative traders and their computerized techniques, not of rational investors. The broader trigger for the recent volatility is the growing concern over the status of the European Union (EU) and its currency, the euro. Market wags use the term PIGS to lump the troubled economies of Portugal, Italy, Greece and Spain into a convenient package. Greece accepted a massive bailout ($145 billion) from the EU as world markets were in turmoil. The EU and the International Monetary Fund (IMF) unveiled an even bigger rescue plan of $955 billion for any EU member country. Greece does have its problems, but Portugal is taking the responsible approach of cutting spending and raising taxes, rather than looking for a global bailout. However, Greece and Portugal are a relatively small part of the global economy. To become a problem for the U.S., the problems would have to spread to Italy and Spain. Hopefully the size of the EU/IMF bailout will prevent this in the short-term, but longer term the presence of bailout money makes it easy for weak economies to avoid real reform. The fundamental problem is that the euro is a flawed currency where 16 individual European countries devise economic policies under EU guidelines, but with little enforcement. European economies are simply too diverse for a single set of rules. Some countries, particularly the southern European ones, have historically taken on debt instead of paying their bills. The debt would keep piling up and the countries would experience currency weakness and devaluations as a way of inflating their way out of debt problems. This doesn’t jive with the stricter economies and stronger currencies that have historically come from countries like Germany. So far the U.S. has been affected in three significant ways. The value of the dollar has skyrocketed, especially versus the euro. This can hurt U.S. exports as they become more expensive when denominated in euros, but it also helps keep inflation in check because import prices tend to fall. Second, global investors have flocked to U.S. Treasuries, helping our government fund its debt at much lower interest rates. Lastly, global oil prices have come down sharply, more than 20% in just a few weeks. As scary as this volatility might be, it is fairly normal in a historical context. The global market reaction reminds us of the “Asian Contagion” in 1997-1998. Concern over Asian economies caused the value of their currencies to decline sharply, triggering a worldwide panic. Russia defaulted on its debts. There was also the bankruptcy of a large hedge fund that controlled 5% of the world’s bonds. Yet, economic growth continued, and the U.S. stock market was up by more than 20% in each year. While these types of events seem very significant at the time, the passage of time typically allows cooler heads to prevail. U.S. economic statistics are starting to move from “encouraging” to “impressive.” An amazing 290,000 jobs were created in April, although the unemployment rate edged up as previously discouraged workers reentered the workforce and were now counted as unemployed. First quarter Gross Domestic Product grew at an annualized rate of 3.2% and consumer spending was even stronger. The factory sector is strong, although off of a weak base from early 2009. Factory orders were up in March for the eleventh time in the past twelve months. Consumer behavior is solid, with personal income rising in March for the ninth straight month. Personal spending grew even faster for the sixth straight month. Inflation remains well contained. The recent events in Europe will likely have some impact on the U.S. economy, but we don’t expect it to be severe. Euro-zone economies make up only 14% of U.S. exports, and most companies indicated in their first quarter results and conference calls that Asia is booming. Hopefully, recovery in the U.S. and strong growth in Asia will be enough to offset continued weakness in Europe. We don’t see any reason at this point to believe this will turn into anything long lasting. |
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