Alberta almost at 4,000,000 people – they have to live somewhere

Paula Simons column in the Calgary Herald this weekend entitled “ Population Growth will Change Alberta forever” is, without a doubt, an interesting read.

 The article states  “Last year alone, Alberta welcomed almost 200,000 new arrivals (198,285 to be exact).  Most fresh Albertans came from other parts of Canada more than 110,000.”

 Paula continues the article “That breakneck pace isn’t slowing.  In June, Statistics Canada reported an estimated 26,714 people moved to Alberta from other parts of Canada in the first quarter of 2013”

All of this will keep the Alberta housing market alive and rising as all these people have to live some where. The rental vacancy rate in Calgary is now less than 1%. Expect prices to rise due to the demand.

Population growth will change Alberta forever

How low are interest rates? Really? Here is the big picture…

I just found this and thought it would be interesting for clients that call and tell me 3.49% for a 5 year fixed is way to high!

I’m not sure what you were expecting so here is a good barometer of the real picture.

• 6.5% = the 30 year average of the 5 year fixed closed, mortgage term
• 4.0% = the theoretical lowest the 5 year can go as banks need to borrow the funds, administer them and make a profit,
• 2.89% = the lowest the 5 year rate has ever been.

Now for the big picture…

Short version: rates are the lowest of all time … like a 496 year low. Is that low enough?

“in July 2012, 10-year yields in the US thus reached with 1.39% the lowest level since the beginning of records in the year 1790.

In the Netherlands – which provide the longest available time series for bond prices – interest rates fell to a 496 year low.

In the UK, ‘base rates’ are currently at the lowest level since the founding of the Bank of England in 1694.

In numerous countries (Germany, Switzerland), short term interest rates even fell into negative territory.”

SO … mortgage interest rates have never been lower and now the trend is up.

Why you should NOT renew your mortgage with the bank … The BANK has the BANK’S interests ahead of yours – ALWAYS!

Why you should NOT renew your mortgage with the bank … without checking with a broker (me) first, because the BANK has the BANK’S interests ahead of yours – ALWAYS!

Below is an article that shows the bank does not have your best interest in mind. Because they are paid to make money, not help you make the best decision for your finances.  I get calls like this every day from incorrect mortgage payoffs to bad advice overall. Now you can see how clear it is with this example.

Paying off mortgage safer than investing the cash

Study after study suggests that Canadians are having a tough time paying off their mortgages, as debt levels continue to hit record levels year after year. Why?

Could it be that there are more opportunities to spend? Could it be that some people don’t want to pay off their mortgages faster?

Or are some professionals advising alternate investment strategies, suggesting that paying off the mortgage is not the best financial strategy?

BIG MORTGAGES AFFECT RETIREMENT

Rebecca and Darcy are in their mid-50s and are starting to think about retirement planning; they would like to retire in the next five years.

One of their biggest hurdles is a $225,000 mortgage. Currently, their $2,200 monthly payment would have the mortgage paid off in 10 years.

Rebecca and Darcy recently both received increases in pay at work, allowing them to increase their mortgage payments by $1,000 per month and pay off their mortgage in just under seven years.

Just as they were working with the banker to renew their mortgage, Darcy also got news that he is going to receive a significant inheritance, which he could use to pay off the mortgage all at once. When they asked the banker what they should do, the advice concerned them.

ADVICE FROM THE BANK

The banker suggested that in a low-interest-rate environment, paying off the mortgage might not be the best thing to do with the $225,000 inheritance.

Instead, they could invest it into a mutual fund that made over six per cent over the past year and over five per cent compounded over the last five years. With mortgage rates at 2.5 to three per cent, higher investment returns would mean more money in their pocket.

The banker put together a nice graph showing Rebecca and Darcy that investing the $225,000 would give them over $315,000 in seven years at five per cent, and that their $3,000 monthly payment would mean the mortgage would be paid off at the same time.

The bank’s conclusion? Keep the mortgage and invest the lump sum for a higher return.

WHAT WOULD YOU DO?

The banker is mathematically correct, but the big “if” lies in the rate of return, which cannot be controlled or predicted. The five-per-cent return is not guaranteed; what if the next five years aren’t as generous?

I ran some numbers at two per cent for the couple, and in that scenario, $225,000 would only grow to $258,000 after seven years. Alternatively, paying off the mortgage and investing the $3,000 per month mortgage payment at the same two per cent would give them $274,000 after the same period.

Basically, if the return on investment is greater than the interest cost on the mortgage, then the math would tip toward investing money. If the return on the investment is lower than the interest rate on the mortgage, then the math would tip toward paying off the mortgage.

We could complicate the calculation with after-tax returns, but we’ll keep things simple for this column.

The bottom line is paying down the debt is a more conservative option. It puts more control, flexibility and security in the hands of Rebecca and Darcy. Investing is always great when the returns come, but a good return is not guaranteed.

The banks make money when you keep a mortgage and they also make money when you invest in their mutual funds. Could that have any influence over the banker’s advice here?

There is no right or wrong solution here. Both investing and paying down a mortgage are financially responsible.

I tend to err on the conservative side, so if I were in Rebecca and Darcy’s shoes, I would pay off the mortgage, then invest the $3,000 per month for retirement. What would you do?

Jim Yih is a financial expert. Visit his award-winning blog, RetireHappyBlog.ca

© Copyright (c) The Edmonton Journal

Calgary housing market smashes records in May

The people that buy high end homes are often “job creators” and able to see what is happening in their business. They can see that things are going well now and are looking better in the future. All great for our continued economic prosperity in Calgary.

Prices and luxury home sales reach new lofty levels

CALGARY — Calgary’s resale housing market set a number of records in May.

According to preliminary, unofficial data on the Calgary Real Estate Board’s website, new levels were reached during the month for median and average MLS sale prices in the single-family market as well as for total residential sales in the city.

Also, the month had the highest level ever for luxury home sales of properties more than $1 million, according to Mike Fotiou, associate broker with First Place Realty in Calgary. There were 84 luxury home sales in May, besting the record for any month which was previously 80 in May 2012.

Kaitlyn Gottlieb, a realtor with Century 21 Bamber Realty in Calgary, said the upper-end market is seeing an increased demand for inner-city luxury homes with areas such as Hillhurst, Crescent Heights, Capitol Hill, Altadore and Parkdale some of the most coveted for homebuyers who are seeking the level of craftsmanship and detail you traditionally find in estate-style homes. It’s a development trend that shows no signs of slowing down.

“Today’s Calgary’s real estate market continues to show positive growth with steady price increases which are especially apparent in the starter to average single-family home sales, signalling a high level of confidence in both buyers and sellers,” said Gottlieb. “Inventory is increasing, although remaining lower than last year and properties particularly under $500,000 are selling very close to asking price in a shorter period of time, as buyers are prepared and ready to move on properties as they become available. We are also seeing an increase in competing offer situations as a result of the high demand and the lower inventory currently on the market.

“As we move into a more balanced market, buyers are also seeing great opportunities in Calgary’s market and as prices increase, the inventory increases, offering more choices for buyers. Calgary’s growing economy coupled with the tightening rental market and recent rental increases (contribute) to the market’s activity as renters move away from renting and into home ownership.”

The average sale price of a single-family home in May reached a record of $521,887, eclipsing the previous mark of $518,604 which was set in March of this. Average sale prices during the month were up 4.03 per cent from a year ago. The median price was also a record at $454,400, up 4.24 per cent from last year. The previous median price record was $450,000 in March of this year.

Record prices were also set in May for total MLS residential sales in the city with the average price at $462,161, up 3.85 per cent from last year, and the median price at $406,500, up 4.23 per cent from May 2012.

Previous record prices for total MLS residential sales were set in March of this year at $460,903 for the average and $403,000 for the median.

“With Calgary’s moderate but steady increases in the average home price and increasing number of sales, both buyers and sellers can expect a positive and opportunistic spring market. Overall these factors equate to a positive housing market and long term sustainability for Calgary,” added Gottlieb.

In May, total MLS sales in the city of 2,543 were up 6.80 per cent from last year while single-family sales of 1,766 increased by 3.46 per cent.

Meanwhile, a special housing market report released Monday by TD Economics, said resource-based economies, like Calgary, are facing better economic prospects over the next two years.

“Known for better job opportunities, more and more new immigrants and Canadians are choosing Calgary as their main destination,” said the report. “The inflow of people is expected to help support housing demand and help mop up some of the large amount of new homes currently under construction in the metro area.”

Calgary is also starting 2013 from a stronger position than some other markets. Calgary’s housing market peaked in late 2007, at which point the market looked to be overpriced and overbuilt, said TD Economics.

“But, the housing market went through its correction once the recession struck in 2009 and there has been less froth in the market since. Existing home sales are down 32 per cent from the peak experienced in 2007, while home prices have remained relatively flat since 2009 – helping to stabilize the home price-to-income ratio,” it said.

“Growth in Calgary home prices is likely to moderate from the current pace, but should remain slightly positive over the forecast horizon. Furthermore, home sales are likely to continue to grow moderately and housing construction ought to occur at the pace of household formation.”

mtoneguzzi@calgaryherald.com

Only Calgary and Edmonton have increasing real estate markets!

A better headline would be: Name the 2 biggest cities in the Province that has the most in-migration, oil & gas jobs and projects, youngest and highest educated work force making the highest per person weekly wage in the country.

Calgary and Edmonton buck national housing market trend of declining sales

 Only two major markets to see growth in existing home sales

CALGARY — A soft landing is underway in the Canadian housing market and should continue but Calgary and Edmonton are bucking the trend with sales rising compared with a year ago, says a new report released Tuesday by BMO Capital Markets.

The report, by Sal Guatieri, senior economist for BMO, said the Canadian housing market is “calming not crashing.”

“In most regions, sales have fallen at double-digit rates this year from high levels last year,” said Guatieri. “But the rate of decline has slowed recently.

“By contrast, Alberta enjoys decent sales growth.”

As of April, the three month moving average of sales in the existing home market was down 10.9 per cent across the country. However, Calgary and Edmonton were the only two major markets to see growth at three per cent and 1.2 per cent, respectively.

Also, while the average sale price across Canada rose by only 1.0 per cent, Calgary led the nation with a 7.5 per cent hike. Edmonton was up 3.2 per cent.

Guatieri said Calgary’s resale prices are “supported by good valuations, following the 2008 correction, and strong job growth.”

“The upward trend should continue, as Alberta is expected to lead the nation’s economic performance in 2014,” he said.

According to the Calgary RealEstate Board, year-to-date until May 27, there have been 9,541 MLS sales in the city, up 3.89 per cent compared with the same period a year ago. The average sale price has risen by 6.6 per cent while the median price has increased by 5.51 per cent to $399,900.

At the national level. Guatieri said tighter mortgage ruls have slowed credit growth, helping to cool the housing market in an orderly fashion.

“Lack of pent-up demand, with homeownership rates near 70 per cent, and elevated household debt have abetted the slowing,” he said.

“Nationwide, sales are expected to stabilize this year amid steady job growth. Although long-term interest rates are likely to rise moderately next year, they should remain relatively low for some time.”

mtoneguzzi@calgaryherald.com

Twitter.com/MTone123

© Copyright (c) The Calgary Herald

Canada: #1 housing, 3rd Overall in Quality of Life!

Canadians best-off in housing, 3rd overall in new OECD “Quality Of Life” survey!

How typically Canadian, we do really well in the survey of best Quality of Life then say … well we’re 3rd so, you know, that’s just fine, sort of … at least we are pounding our mortgages out in 1/3 less time than we thought we needed. Maybe it is time for the government to let the tourniquet off of the mortgage rules for a bit so we can buy our homes again. 

OTTAWA — Canada is among the best places in the world to live, according to a new quality of life measure from a leading international organization that compared rich industrialized nations.

Canadians are paying off mortgages quickly — so is Ottawa’s crackdown really necessary?

Canadians end up paying off their mortgages in about two-thirds of the time originally intended, according to a new survey which questions whether Ottawa’s crackdown on the real estate market is needed.

The “Better Life Index” from the Organization for Economic Co-operation and Development launched Tuesday finds Canada among the leaders in most of the 24 indicators measured, everything from hard data dealing with jobs and income, to perceptions of something the OECD calls “life satisfaction.”

Canada ranked first in a couple of minor sub-indicators. For example, with 2.6 rooms per person, Canadians are on average the best housed by that measure, and they are also among the safest, reporting the fewest assaults.

The Paris-based organization does not give an overall ranking, but if all the indicators are added up and given equal weighting, Canada would come in third behind Australia and Sweden.

 Ironically, Australians don’t see themselves so blessed. On the life satisfaction measure, Australians gave themselves a 7.2 out of 10, while Canadians were at 7.4. Residents of Switzerland topped the indicator with a 7.8.

 “Canada performs exceptionally well in measures of well-being, as shown by the fact that it ranks among the top countries in a large number of topics in the Better Life Index,” the organization says in its profile of the country.

 “In general, Canadians are more satisfied with their lives than the OECD average, with 82% of people saying they have more positive experiences in an average day than negative ones.”

Canada’s high ranking comes about because it scores inside the Top 10 in most of the major ones and above average overall among the 36 advanced countries studied.

Perhaps surprising, Canadians also appear to trust their governments more than many others. According to the OECD, 67% say they trust their political institutions, well above the 36-country average of 56%.

 However, when it comes to voting, Canadians fell well below the OECD average of 72% with a record of only 61%.

On more mainstream criteria, Canada ranked in the Top 10 in terms of household disposable income, wealth, educational attainment, self-reported health — although the 81-year life expectancy is middle of the pack.

Overall, the OECD comparison is more flattering to Canadians than the recent Human Development Index from the United Nations, which had Canada slipping to number 11 in 2012

The OECD measure appears more broad-based, with 11 major categories of well-being measured, as opposed the UN’s three — health, education and living standard.

Both, however, include subjective elements that have given rise to skepticism about their usefulness for public policy. While many of the OECD indicators are based on hard data, such as incomes, employment rates and life expectancy, it also includes self-reporting evaluations of such subjective criteria as life satisfaction, state of personal health and water quality.

While mostly positive, the OECD analysis of Canada is not all glowing. It points out that despite a high income level, Canada also has a high level of income disparity.

As well, Canada gets a below average score on job security, with 11% of employees working on a “contract” of six months or less, slightly higher than the OECD average of 10%.

Canadian Press

$1,111.20 in March – Alberta tops provinces for average weekly earnings

Alberta tops provinces for average weekly earnings,  $1,111.20 in March

CALGARY — Alberta topped all provinces for average weekly earnings of non-farm payroll employees in March and had the second highest year-over-year growth rate in the country, according to Statistics Canada.

The federal agency reported Wednesday that average weekly earnings for the province reached $1,111.20 during the month, which was a 4.6 per cent hike from a year ago.

Only Saskatchewan’s 5.5 per cent jump was better than Alberta’s.

On a monthly basis, earnings in Alberta rose by 1.1 per cent.

Nationally, average weekly earnings were $914.80 in March, up 0.7 per cent from the previous month and an increase of 3.1 per cent year-over-year.

Alberta also had the best year-over-year growth in total non-farm payroll employment which grew by 70,700 people in the past 12 months, or 3.7 per cent. Growth was flat, though, from the previous month as it increased by only 800 people.

Across Canada, total non-farm payroll employment decreased by 22,100 in March after edging up by 2,900 in February.

In March, the number of payroll employees declined most notably in ‘other services’ such as repair and maintenance and personal and laundry services; professional, scientific and technical services; public administration; and health care and social assistance. These losses were partly offset by increases in educational services and manufacturing, said Statistics Canada.

On a year-over-year basis, the number of non-farm payroll employees rose by 180,900, or 1.2 per cent.

Among all sectors, construction posted the highest 12-month growth rate in payroll employment, at 5.8 per cent, followed by real estate and rental and leasing (4.4 per cent), as well as mining, quarrying and oil and gas extraction (3.7 per cent). The most notable declines were in information and cultural industries (3.5 per cent) and in forestry, logging and support (3.3 per cent), added the federal agency.

Calgary Home Prices on the Rise.

Calgary region new home prices on the rise

Top contributor in March to national advance

CALGARY — The Calgary region was the top contributor in March to the increase in new home prices across the country, says Statistics Canada.

The federal agency reported Thursday that the New Housing Price Index for the Calgary census metropolitan area rose by 0.3 per cent in March from February. It was up 0.1 per cent nationally.

On a year-over-year basis, the NHPI in the Calgary region increased by 4.3 per cent while it went up 2.0 per cent across the country.

“Calgary was the top contributor to the advance in March, up 0.3 per cent from February. Builders indicated that increases in material and labour costs as well as market conditions were the main reasons for higher prices,” said Statistics Canada.

“In Calgary, annual prices rose 4.3 per cent, following an identical increase in February and several consecutive months of accelerating annual price increases.”

mtoneguzzi@calgaryherald.com