Moving to Calgary and Buying a Homes As Soon As Possible
This is a common question, and as usual, the way the banks / lenders want things done is exactly the opposite of what works in real life, for real people, like you.
You Want: To buy a home in Calgary, move the family in, get settled and then start the new job – RIGHT! That makes the most sense.
The Lenders want:
- You to have 1 full-cycle payslip BEFORE then will fund your mortgage and
- You to be completed the 90 day probation if you have a probationary clause in your new employment
PAYSLIP: The first full-cycle pay-slip – meaning 2 full weeks of pay – critically needs to match your employment letter / job offer at 40.00 hours; or whatever it is that you are guaranteed for pay. If it does not match, then your income is not guaranteed, and the lenders want to see guaranteed pay.
39.97 hours is not 40.00 hours; it means the 40 hours is not guaranteed and the lenders often decline to fund your mortgage.
PROBATION: In Alberta, you can be let go for no reason in the first 90 days of employment – even if you are NOT on probation. It does not matter if there is/not a reason, it is the law.
Obviously, if you just moved here, bought a home and are let go, the odds of you moving back are high. And the bank is left in the risky position of losing money on the home or making an early CMHC claim. Which is why they want to see either: NO probation, or a shortened & completed probation period, or a completed probation period.
- Workaround 1: We recommend and often see new employees specifically asking for no or short probation periods. You are taking the risk moving here, the employer is often willing to waive the probation – which can be the key to speeding a home purchase.
- Workaround 2: Depending on how your math works out, you may be able to carry 2 mortgages at 1 time. There are 2nd Home Programs that can work for situations like this, but again, the math is different for everyone.
How to make the move as smooth as possible
The smoothest way to buy a home when relocating is to start the job first. Ask for the employer to waive or shorten the probation period. Then rent, stay with friends, or anything that works for the first 2 or 3 weeks. Then when you have a full-cycle pay slip you can buy a home that works for you and take possession as soon as possible is a much smoother transaction. Otherwise you are “trying to push a rope up a hill” and the bank’s don’t like that at all.
We see issues with people buying too soon all the time. Forcing the system often backfires on new home owners. The resulting brain damage is not worth trying to do the transaction backwards in the eyes of the banks.
Mark Herman; top Calgary Alberta Mortgage Broker, with best rates
We love people that are New to Canada. New immigrants are 20% of our business. There are lots of tricks on what is needed to get a mortgage for them and not all banks do these files BUT WE ARE SPECIALISTS at it. I will upload our brochure for it here.
They can normally buy with:
- 5% down if they have a foreign credit report – England, most all of South America – including Mexico, Portugal or Spain.
- or 10% down. 5% from own savings and 5% from other possible sources – like relocaton allowances, gifts from home, etc.
- and a full time, permanent job.
Call to discuss these files. The one tough part is their files do not get rate holds so it is live deals – when you have an accepted offer to purchase – only.
Most Canadians feel immigrants are just as likely to be good citizens as people who were born here, a recent Environics survey suggests.
Canadians also don’t appear to have problems with dual citizenship or with Canadian citizens living abroad.
The telephone survey is, according to Environics, the first poll to directly ask Canadians their views on citizenship. Its results suggest Canadians have a broad, inclusive view of the concept and of immigrants in general.
“To be a good citizen, it means to contribute to the society, to obey the laws of the country, to help other citizens, to volunteer, and it’s a rewarding feeling when you do all those things,” said Sara Jhangiryan, an Armenian-born resident of Toronto who became a Canadian citizen last year.
“It’s not only to take what the country offers but to give back, as well.”
Although not part of the survey, Jhangiryan echoes the views of many of those who responded to the poll, a joint initiative of Environics, the Institute for Canadian Citizenship, the Maytree foundation, CBC News and the Royal Bank of Canada.
When asked what makes a good citizen, the top five responses were: obeying laws, actively participating in the community, helping other people, being tolerant of others and sharing or adopting Canadian values.
But when asked to list what they did to be good citizens, respondents cited volunteer work, being kind/generous to others, paying taxes, obeying laws and voting.
The survey suggests Canadians see immigrants as their equals: nearly 9 out of every 10 respondents agreed that a person born outside Canada is just as likely to be a good citizen as someone born here.
“There’s no real evidence of people feeling threatened or a sense that, ‘Well, people can come live here from other countries, but they’re not quite the same,'” said Keith Neuman, executive director of the Environics Institute.
When it comes to immigration and citizenship, the views of the majority of Canadians born in the country and the 20 per cent born outside it are largely aligned. Canadian-born and foreign-born respondents were equally likely to feel fully like citizens (78 per cent versus 75 per cent).
Usha George, dean of Ryerson University’s Faculty of Community Services, says the survey’s findings confirm a lot of what those working with new Canadians know already.
The willingness of Canadians to not view a person’s foreign background as an impediment to citizenship is a product of the country’s multicultural policies and the visible effect of immigrants on the economy, George said.
Integration of immigrants has worked in Canada because the government has funded programs that teach immigrants about Canadian values and society has adapted its institutions to accommodate diversity.
“The mutual recognition that we should be respectful to each other and celebrate diversity in a genuine way, those values permeate the whole society,” said George, whose faculty trains many of those who provide social and other services to new immigrants.
Whatever Canada is doing, it seems to be positively influencing immigrants’ views of the country, the survey suggests: 88 per cent of respondents who were born outside Canada said they were very proud to be Canadian, compared with 81 per cent of those born here.
“Canadians who were not born in Canada are more proud than naturally born Canadians simply because we had the choice of being Canadian,” said Vikram Kewalramani, who immigrated to Canada in 2006 from India. “It wasn’t something that, literally, was a birthright. We consider it a privilege.”
For Amal Ibrahim, a Palestinian who became a citizen last year along with her two children, Canadian citizenship is primarily about respecting differences.
“It’s a great diverse culture where people learn how to live in harmony with each other while they have different ideas, different religions and different backgrounds,” she said.
Tolerance of others who are different was among the top five behaviours survey respondents considered a “very important” part of being a good citizen. Others were:
Treating men and women equally (95 per cent ranked this “very important”).
Following Canada’s laws (89 per cent).
Voting in elections (82 per cent – the same as tolerance of others).
Protecting the environment (80 per cent).
Immigrants’ views of what makes a good citizen were strikingly similar to those of native-born Canadians, said Neuman. In the majority of cases, the responses of the two groups varied at most by only a few percentage points.
“People might think … that newcomers are coming [into] this country … with their own sense of what it means to be a citizen, and they don’t really buy into the same perspective that native-born Canadians have,” he said.
“And this research pretty clearly suggests that they’re largely the same perspective, and the more somebody is in this country, the more immigrants buy into the native-born view.”
Canadians are generally satisfied with the rules for obtaining citizenship, the survey suggests. Only 26 per cent of respondents said the rules were not strict enough. Six per cent felt the rules were too strict, though that number tripled for permanent residents.
Canada’s willingness to allow multiple citizenships also got broad approval in the survey: 71 per cent of those surveyed felt Canadians should be allowed to hold dual citizenship.
That sentiment was even higher among 18- to 44-year-olds, with 80 per cent supporting dual citizenship, but lower for those 60 and over, at 58 per cent.
“I am equally proud of both citizenships,” said Natasha Nikolovska-Angelova, 32, who became a Canadian citizen last April. “Macedonia is more like my mother … the country where I was raised, and Canada is the country I chose to live in. It’s like the spouse you choose.… It’s the country of my future.”
Nikolovska-Angelova is part of the roughly 2.8 per cent of Canadians who hold at least one other citizenship.
Most of those surveyed also didn’t have a problem with Canadians living abroad. Sixty-six per cent of respondents who were born in Canada said it was generally a good thing to allow Canadian citizens to live abroad, compared to 55 per cent of respondents born outside of Canada.
The survey of 2,376 adults was conducted between Nov.18 and Dec. 17 and has an overall margin of error of plus or minus two percentage points 19 times out of 20 (+/- 4.3 percentage points for the foreign-born subsample group). Only households with landlines were surveyed.
Burgeoning Calgary population to fuel demand in housing market & the West is now bigger than the East!
The migration West continues! Just yesterday Canada Census noted that for the first time in history the West has more people than the East – sure it is only by 0.1% but hey … it’s official.
The migration continues mostly for jobs in energy and all those people need homes to live in. This supports prices and continued demand – but unfortunately fills up the roads and parking lots too.
New home construction and MLS sales on upswing
CALGARY — A burgeoning population will spark another real estate cycle in Calgary with increased demand fuelling more MLS sales and more new home construction.
But industry experts don’t expect the next cycle to mirror the boom of a couple of years ago which experienced a frenzy of activity and fast-rising house prices due to a lack of supply.
Instead, a stable, steady growth is expected in Calgary’s real estate market.
On Wednesday, Statistics Canada reported the Calgary census metropolitan area had the highest rate of population growth in the country at 12.6 per cent between 2006 and 2011 and is now more than 1.2 million for the region.
Tim Logel, president and partner of home builder Cardel Lifestyles in Calgary, said the population data supports what the industry believes is happening in the market.
“What’s positive about it is that as more people move to Calgary then more of the inventory or the supply that we’ve been working on reducing gets absorbed,” said Logel. “And it gets absorbed quicker and gets us closer to being in a higher demand environment where we’re being asked to produce more new housing products of all types for the market … Over the next year with this in-migration, the extra supply will be absorbed.”
Logel said a new real estate cycle has been started in the city. The last one finished in the spring of 2007 in the Calgary market.
Ann-Marie Lurie, chief economist for the Calgary Real Estate Board, said the growing population will help support increased demand for housing in the resale market as well.
“In the resale market, especially moving forward, we think this will also help really take up some of that inventory that is in the market because we had some out-migration in the past few years. 2010 in particular, in-migration levels were extremely slow and so that impacted our housing market as well,” said Lurie.
CREB is forecasting single-family MLS sales activity to increase by 12.2 per cent this year from 2011 levels and condo transactions to jump by 5.9 per cent. Its forecast is also for average sale prices of single-family homes to rise by 2.1 per cent and by 1.7 per cent for condos.
“It’s much more of a stable growth than it was during the last boom. I just don’t see us moving there,” said Lurie. “We’re not moving into that scenario. It’s a much more stable growth and we have a good supply of inventory right now in the resale market and frankly on the new home market they do have some room to improve in some of their construction.
“They’ve got some room to grow and build more to help meet with those household formation numbers.”
Already in January some real estate data, released Wednesday, is indicating support for increased activity in the market as housing starts and residential building permits showed impressive increases compared with a year ago.
According to Canada Mortgage and Housing Corp., housing starts in the Calgary census metropolitan area totalled 786 units in January, up 52 per cent from 518 units a year ago.
In the region, 336 single-detached units broke ground in January, up 14.7 per cent from the 293 units started in January 2011.
“This represents the sixth consecutive month where starts have increased on a year-over-year basis,” said Richard Cho, senior market analyst in Calgary for the CMHC.
Multi-family starts, which include semi-detached units, rows and apartments, increased to 450 units in January, up from 225 units a year earlier.
“As was the case in the last several months, apartment construction continues to be elevated, averaging more than 340 starts per month since August 2011,” said Cho.
Also, the estimated construction value of building permit applications for the residential sector in Calgary rose by 42 per cent in January compared with a year ago.
In releasing its latest data on Wednesday, the City said residential values increased to $153 million compared with $108 million in January 2011. This represents 651 new residential units, a 73 per cent increase compared with the January 2011 total of 376.
“The overall gain in residential value and number of new residential units can be attributed to increases in the apartment and townhouse sectors,” said Kevin Griffiths, chief building official with the city’s department of development and building approvals.
“For the month of January we accepted six apartment applications for 193 new units compared to zero last year, and 20 townhouse applications for 122 new units, compared to only seven townhouse applications totalling 44 units for the same period last year.”
© Copyright (c) The Calgary Herald
Below is a commentary on the possible new rules for Canadian mortgages. Anyone looking at buying with 5% down (which is about 80% of our clients) or using a 30 year amortization (75% of our clients) should look at buying sooner than later.
Comparing New Amortization & Down Payment Rules
Government mortgage restrictions instituted from 2008-2011 have not achieved their goal, suggests Desjardins’ Senior Economist Benoit Durocher.
He wrote this on Thursday: “…The third series of [government mortgage rules] was announced nearly a year ago now, and we must conclude that the tightening introduced to date has not
slowed the market enough.
Under these conditions, it is likely, and perhaps even desirable, that the federal government will shortly announce a fourth series of measures to further limit mortgage credit.”
It almost sounds like Durocher has some inside info.
He adds: “Among other things, the government could be tempted to once again raise the minimum down payment on new loans (it went from 0% to 5% in October 2008).”
Many believe a down payment increase would have a more chilling effect on home prices than the other option being talked about: a reduction in the maximum amortization from 30 to 25 years.
The difference in impact would depend, however, on the degree of rule changes.
For example, raising the minimum down payment from 5.0% to 7.5% (a possibility that’s been discussed) would require that entry-level homebuyers come up with $8,700 more on a typical Canadian home purchase. For most, that’s not totally out of reach.
A five percentage point increase to the minimum down payment is a somewhat different story. Requiring 10% down equates to $34,780 on an average home. That’s beyond the means of a sizable minority of first-time buyers.
First-time buyers are essential to home price stability. They account for 1/2 of unit demand according to Altus Group research. While the latest data suggests that average down payments are somewhere around 30% (an estimated $104,000), first-time buyers put down far less.
That means stricter down payment rules could potentially hurt home values at the margin, if other things are held equal.
In terms of amortization, a government-imposed reduction—from 30 to 25 years—would lower a typical family’s maximum purchase price by roughly 9%. (That’s based on today’s 5-year fixed rates, normal qualification guidelines, median incomes, and average consumer debt.)
To put this in perspective, a reduction in amortization from 30 to 25 years would cut a typical buyer’s maximum possible purchase price by ~$31,000 (again, based on an average income, average debt, a 5% down payment, etc.).
Fortunately, most people don’t need a 30-year amortization to buy a home. Despite 41% of homebuyers choosing extended amortizations, the majority could have qualified with a standard 25-year mortgage. (That said, this doesn’t mean that cutting amortizations across the board is justified. Well-qualified borrowers deserve a carve-out in the rules because they utilize extended amortizations for legitimate cash-flow management purposes. But that’s a topic for another day.)
This is cool.
Containers are built to ISO 9000 standards so they are all the same and made to the same standard. Neat.
The Glennon family’s retirement home might just look like a stack of shipping containers of all different colours from the outside.
But once it’s complete, it will be a sprawling, 5,000-square-foot, four storey building — two levels above ground, a walkout basement and another level below — with four bedrooms, five bathrooms, a games and media room, garage and workshop, and two enclosed decks.
A massive garden with a potato crop, chickens, and a trout pond, will surround the residence on the eight-hectare property just outside Rimbey, about 180 kilometres north of Calgary.
And the shipping containers won’t be visible forever — the plan is to cover the exterior with stucco.
“It’s just going to look like a regular home,” said homeowner Bill Glennon.
Except most regular homes aren’t made of Sea-Can shipping containers — and the Glennon’s might be the only one in North America built with the containers from the footings all the way up to the roof, he said.
After years of touring show homes, checking out homes on the market, and attending home and design shows, Glennon said he never found anything he liked under $1 million.
By chance, his wife Roseann spotted a newspaper article about a shipping container home several years ago, which sparked their interest.
Putting his construction abilities to work, the former scaffolder and carpenter started drawing up plans to build his own home out of 30 shipping containers, each weighing about 5,000 kilograms with a load capacity of about 30,390 kilograms.
Besides being “really tough,” the containers are economically sound and structurally practical, Glennon said, though it can be a challenge to cut and grind materials, he added.
The couple, in their late 50s, started excavation in September 2009. A month later, 30 containers were shipped from Calgary to their property for a cost of about $3,000 per container.
Ever since, the couple and their 19-year-old daughter Kala, with help from Glennon’s brother Bruce and sister Colleen, have been hard at work welding, putting in the insulation and roof truss system, painting, installing weeping tile, lighting, and tending to the garden.
The family also hopes to live “off the grid completely” and has installed energy efficient windows, a wind generator, a 4.8-kilowatt solar panel system. A solar hot water heater, which will be their main source of heat, will come later, Glennon said.
The wooden interior walls will be insulated for extra warmth, though the fact that much of the home is underground means it will be fairly easy to heat in the winter, he added.
“Right now, we’re trying to insulate the outside, and we’re still waiting for the concrete to be poured on the roof, backfill the garage, and get some plumbing in,” Glennon said last week. “We’ve got a long ways to go.”
Glennon declined to disclose the exact cost to build the entire structure, though he offered that it works out to about $125 per square foot.
He indicated he hoped to have the entire exterior finished by next spring.
The long-term goal is to convert the residence into a bed and breakfast. After all, the Glennons already receive enough guests — both friends and strangers — driving in to catch a glimpse.
“We’ve got a lot of people come up from Calgary just to see it,” he said. “They think it’s pretty incredible.”
Comment – all the in-migration is what caused the home prices to boom form 200k to 400k in 6 months in 2006 and 2007. This is all happening again right now – as noted below.
The outcome will not be prices going to 600k but well priced homes will move quickly and there will be upward price pressure until most of the excess inventory is moved.
Alberta continues to be a draw for people in other parts of the country.
And that’s good news because in recent months there has been more talk about looming labour shortages in the future.
According to Dan Sumner, economist with ATB Financial in Calgary, 4,720 Canadians relocated to Alberta during the second quarter of 2011, largely unchanged from the 5,275 that moved here during the first quarter. But Alberta is on pace for about 20,000 net-interprovincial migrants in 2011, which if achieved will be the highest annual pace for net interprovincial migration since 2006.
Sumner says the largest net migration gain in the second quarter was from Ontario. Alberta was by far the largest benefactor of net-interprovincial migration in the country with Saskatchewan in second place gaining only 1,239 net migrants.
“Interprovincial migration can be a difficult variable to predict; however, with the unemployment rate lower in Alberta, wages higher, housing prices relatively affordable and the provincial economy expected to grow among the fastest in the country, it’s hard to imagine that more Canadians won’t be calling Alberta home over the near future,” adds Sumner.
“While more skilled workers is essential for the continued development of Alberta’s economy, it also puts pressure on social and institutional resources. As a former premier of this province once stated, ‘when people move to Alberta, they don’t bring their schools and hospitals with them’.”
Her comments below are right on.
Globe and Mail Blog
Posted on Monday, September 19, 2011 6:40PM EDT
A report that showed Canadian household debt levels have topped U.S. ones should be taken with a grain of salt, according to one economist.
In a note released Monday, National Bank of Canada’s Matthieu Arseneau says the Canadian government’s indicator on household debt “does not lend itself well to such an international comparison owing to the considerable differences between the social safety nets of the two countries.”
At first glance, personal disposable income levels appear much lower in Canada than in the United States. Mr. Arseneau attributes that to higher tax levels in Canada that are used, in part, to fund our national health care system.
Americans, meanwhile, must allocate nearly 20 per cent of their personal disposable income to paying for health care, he says. “If we adjust for this factor, the debt ratio of U.S. households exceeds that of their Canadian counterparts by 12 per cent.”
A report released last week showed that Canadian household debt rose to a record high in the second quarter, surpassing levels seen in the United States since the start of the year.
Statistics Canada said last Tuesday that the ratio of household credit-market debt – which includes mortgages, consumer credit and loans – to personal disposable income climbed to 149 per cent from 147 per cent in the first quarter. That’s the highest level since Statscan started gathering figures in this category in 1990.
The government agency attributed the growing debt to higher mortgages and increased consumer credit borrowing.
With interest rates slated to remain at low levels for the foreseeable future, Canadians are taking on both mortgages and consumer loans. Policy makers have expressed concerns about high household debt levels and warned against what could happen if rates were to rise.
In his note, Mr. Arseneau also noted that the Statscan ratio represents only one facet of the financial health of households.
“If we consider the ratio of debt to net worth, which is still markedly higher in the United States, we understand why household deleveraging is ongoing south of the border whereas nothing of the sort is happening in Canada,” he said.
Mr. Arseneau concluded his note by warning of the need to be vigilant, because excessive household debt levels “could represent a risk factor for Canada’s economic stability down the road.”
House prices to get burst of energy
Where oil goes, so goes Calgary.
As much as we like to say the city isn’t as dependent on black gold for its health and prosperity, the fact is, we are.
With oil prices regaining strength and with hiring happening in the oilfields, the economy is beginning to strengthen — and it’s pulling consumer confidence along with it.
A real estate axiom says that when the economy is good, the pace of home sales at the higher end of the market increases.
People in those income brackets aren’t likely to buy if there is an indication the economy is headed south.
“That’s probably true,” says Norb Park, managing broker with Sotheby’s International Realty Canada. “The business-minded are probably saying the economy is heading in the right direction, the oilpatch is in good shape, so this isn’t a bad time to deal.”
Resale housing statistics from the Calgary Real Estate Board tend to agree.
From the start of the year to the end of August, 948 homes priced at $700,000 and more changed hands, up from 779 for the same eight-month period in 2010.
In August, sales in that price range totalled 104 compared with 67 for the same month a year ago.
“There’s a mindset that when oil is doing well, then the economy must be good,” says Park. “That, in turn, increases consumer optimism — and right now, people are feeling positive.”
But not all of us can afford homes that expensive.
Matter of fact, nearly 50 per cent of single-family homes sold this year and last were priced between $300,000 and $450,000.
“With Calgary’s energy sector slated to grow, it is expected to lift the city’s employment, income and in-migration — and in turn help contribute to growth in the resale market,” says Sano Stante, president of the Calgary Real Estate Board. In-migration refers to the migration of people to the city.
“We expect price growth to improve as we approach the end of 2011 and move into 2012,” he says, adding the market is seeing a boost in sales at both ends of the market.
“Improving economic conditions, coupled with affordability and price stability, has given Calgary a boost in buyers for upper-end homes and entry-level condos,” he says.
CREB also reports the average price for single-family resale homes reached $468,051 by the end of August, a one-per-cent increase compared to last year.
Taking a page from the RBC affordability reports, Stante says: “When looking at Canada’s major cities, Calgary is one of the most affordable regions for homeownership in the country. Buyers are benefiting from improved selection at all price ranges in the market.”
The single-family home market had 1,106 sales in August, an increase of 28 per cent when compared to the same month last year — which, by the way, was the lowest for August since 1994.
Sales of 9,485 for the start of the year to the end of August are 10-per-cent higher than the same period last year.
Condo sales totalled 468 units in August 2011, with a year-to-date total of 3,885 — similar to levels recorded in the first eight months of 2010.
Just like the sale of used single-family homes, the pace is also quickening for resale condos.
As of the end of August, 834 units sold at prices below $200,000, well up from 596 for the same eight-month period in 2010, says the Calgary Real Estate Board. But condo prices continue to remain one per cent lower than last year’s figures with an average price of $288,167 for January to August.
© 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