The Sky Isn’t Falling… Prices in Calgary Come Back To Earth

The sky isn’t about to fall on Calgary home owners, although what used to be the country’s hottest housing market is poised for an uncharacteristically average year in 2008.

The price of a detached bungalow in Calgary rose 5.2 per cent in the fourth quarter of 2007 from the same quarter the year before. That compared with double-digit gains in the previous eight quarters, according to data released yesterday by Royal LePage Real Estate Services.

“People deal in relatives, and when the relative rate of price appreciation over the course of two years moves from 50 per cent to 5 per cent it feels like the market’s in decline,” said Phil Soper, chief executive officer of Royal LePage.

Calgary’s slowdown bucked the trend in much of the rest of Canada, where house prices blasted at warp speed through what is usually a holiday breather.

The national average price of a detached bungalow increased by 11.6 per cent to $337,555 from $302,497 the year before. The price of an average two-storey property rose 11.3 per cent to $399,738, and a condo unit 11.7 per cent to $240,395.

More modest gains all around should be the norm in 2008, Mr. Soper said.

However the slowdown is being felt sharply by some sellers in Calgary, where for two years price increases have blown the doors off the national average.

“People have gotten so used to their house appreciating 2 per cent every darned month, it’s taking a while for reality to set in. There’s still lots of money, there’s still lots of confidence, but there are also a lot of people out there who think they’ve got more house than they do.”

If you are wondering what your home is valued at, with the price of homes changing, give us a call or send an email!

Jared & Rebecca Chamberlain
www.ChamberlainRealty.ca

Source of Article: Report on Business.com

December 2007 Market Review

Year end sales for residential and condominium held steady in 2007, showing very slight decreases in both categories, according to figures released by the Calgary Real Estate Board (CREB®).

Year-to-date Calgary single family metro sales as of December 31, 2007 were 18,438, a decrease of 3.53 per cent from the year-end 2006 sales figure of 19,113. Single family Calgary metro sales for December 2007 were 846, a decrease of 28.91 per cent from the 1,190 sales recorded in December 2006. Single family Calgary metro new listings added for the month of December totaled, 984, a 1.55 per cent increase over the 969 new listings added in December 2006. New listings coming to the market year-to-date were 31,722, an increase of 17.44 over the 27,011 new listings brought to market in 2006.

The median price of a single family Calgary metro home in December 2007 was $406,788 showing a 10.54 per cent increase over December 2006, when the median price was $368,000. The year-to-date median price was $421,000, an increase of 16.62 per cent from the 2006 year-to-date median price of $361,000.

“As we can see from the final numbers in 2007, sales have definitely held steady. In my opinion this can only point to two things; consumer confidence and stability in the market place. Calgarians continue to have confidence in our economy and real estate market”, remarked CREB® President, Ron Stanners. “The spring of 2007 was an unpredictable market, with multiple offers and relatively low inventory. As we moved into the summer months we saw a slow down in the sales activity and an increase in the amount of inventory on the market. This was a correction in the market, which was inevitable.” concluded, Stanners.

As we move into 2008, it will be very interesting to see where the market will go. As I stated in a post yesterday with the number of listings that went off over the last month, and what could happen this spring, could make our market flooded with properties again.

Jared Chamberlain

Source: Calgary Real Estate Board Stats December 2007

Home Buyers Glossary Part 3 of 3

The last section of our Home Buyers Glossary…

PRINCIPAL:
The amount borrowed or still owing on a mortgage loan. Interest is paid on the principal amount.

REFINANCING:
Paying off the existing mortgage and arranging a new one or re-negotiating the terms and conditions of an existing mortgage.

RENEWAL:
Re-negotiation of a mortgage loan at the end of a term for a new term.

SECOND MORTGAGE:
Additional financing. Usually has a shorter term and higher interest rate than the first mortgage.

TERM:
The length of time the interest rate is fixed. It also indicates when the principal balance becomes due and payable to the lender.

TITLE:
Legal ownership in a property.

VARIABLE-RATE MORTGAGE:
A mortgage with fixed payments, but fluctuates with interest rates. The changing interest rate determines how much of the payment goes towards the principal.

VENDOR TAKE-BACK MORTGAGE:
When the seller provides some of all of the mortgage financing in order to sell their property.

So that does it for our Home Buyers Glossary… If you have any questions, please let us know at www.JustAskJared.com

If you have and real estate needs, please give us a call today!

Regards,

Jared & Rebecca Chamberlain
www.ChamberlainGroup.ca
Email Us!
403-247-5171

Home Buyers Glossary Part 2 of 3

Here is the second part of the Glossary that you should know when purchasing a property…

HIGH-RATIO MORTGAGE:
A mortgage that exceeds 80% of the home’s appraised value. These mortgage must be insured for payment

INTEREST RATE:
The value charged by the lender for the use of the lender’s money. Expressed as a percentage.

MATURITY DATE:
The end of the term, at which time you can pay off the mortgage or renew it.

MORTGAGEE:
The person or financial institution that lends the money.

MORTGAGOR:
The borrower, or yourself.

MORTGAGE INSURANCE:
Applies to high-ratio mortgages. It protects the lender against loss if the borrower is unable to repay the mortgage.

MORTGAGE LIFE INSURANCE:
Pays off the mortgage if the borrower dies.

OPEN MORTGAGE:
Allows partial or full payment of the principal at any time, without penalty.

PORTABILITY:
A mortgage option that enables borrowers to take their current mortgage with them to another property, without penalty.

PRE-APPROVED MORTGAGE:
Qualifies you for a mortgage before you start shopping. You know exactly how much you can spend and are free to make a “firm” offer when you find the right home.

PREPAYMENT PRIVILEGES:
Voluntary payments in addition to regular mortgage payments.

If you have any Real Estate needs, please contact us directly!

Regards,

Jared & Rebecca Chamberlain
www.ChamberlainGroup.ca
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Home Buyers Glossary Part 1 of 3

The Home buying process can bring many questions. This glossary may be a great way to help outline and understand what it is those around you are talking about.

AMORTIZATION PERIOD:
The actual number of years it will take to pay back your mortgage loan

APPRAISED VALUE:
An estimate of the value of the property. Conducted for the purpose of mortgage lending by a certified appraiser. This appraisal is not to be confused with a building inspection.

ASSUMABILITY:
Allows the buyer to take over the seller’s mortgage on the property.

CLOSED MORTGAGE:
A mortgage that locks you into a specific payment schedule. A penalty usually applies if you repay the loan in full before the end of a closed term.

CONDOMINIUM:
The owner has title to a single unit, as well as a share in the common elements such as elevators
or surrounding land.

CONDOMINIUM FEE:
A common payment among owners which is allocated to pay expenses.

CONVENTIONAL MORTGAGE:
A mortgage loan issued for up to 75% of the property’s appraised value or purchase price, whichever is less.

DOWN PAYMENT:
The buyer’s cash payment toward the property. The difference between the purchase price and the amount of the mortgage loan.

EQUITY:
The difference between the home’s selling value and the debts against it.

Stay tuned for the rest of the list…

Regards,

Jared & Rebecca Chamberlain
www.ChamberlainGroup.ca
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Sub-Prime Gloom Won’t Last Forever

Canada’s sub-prime market will experience more blows in the coming months as a result of the US credit crunch, but the effects won’t be permanent, predicts Ben Tal, senior economist with CIBC World Markets.

In an interview with CMP, Tal admits the US market’s effect on Canada was greater than he initially predicted but, because the issues facing Canadian lenders are sparked by panic, the situation will settle down within six to eight months.

“Six months from now, the sun will rise on the US market. It’s not that the sub-prime problems will disappear, but the risk and the fear of the market will disappear and common sense will prevail,” he says. “And at this point, people will look at the fundamentals of the Canadian market and realize that it’s not even close to what we’ve seen in the US in terms of the types of mortgages issued to sub-prime borrowers in Canada.”

Tal says there is still plenty of potential for growth in Canada’s sub-prime market and, although it may stall in the coming months, the market is still on target to grow by approximately 10-15% in the coming years.

The US crisis will probably leave some permanent scars on Canada’s sub-prime arena including more expensive mortgages due to the repricing of risk but this might actually be a blessing in disguise, he says.

“We probably won’t see teaser rates,” he says. “Maybe if there wasn’t a crisis in the US, they would have caught fire here as well.”

While Tal says tying a home purchase to the state of the housing market isn’t usually a wise decision, he says borrowers looking to purchase a sub-prime mortgage will be better off seven or eight months from now.

“Sub-prime borrowers will still be able to finance their debts, but down the road the situation will be better,” he says.

So really it’s a matter of waiting out the storm, and understanding that this too shall blow over…

Regards,

Jared & Rebecca Chamberlain
www.ChamberlainGroup.ca

Article Source: November 2007 (re-printed from Canadian Mortgage Professional magazine)

Townhouse vs. Single Family

By June Fletcher
From The Wall Street Journal Online

Question: I can’t decide whether I should buy a town house or a single-family home that’s about the same size. Which appreciates faster?

June Fletcher: Pop quiz: What’s the difference between a town house and a condominium?

Answer: The truth is, sometimes they’re the same and sometimes not.

The answer matters because some local data collectors arbitrarily group price and sales statistics on town houses with those of single-family detached homes; others include them with condominiums. Either way, it’s likely that at least some town-house developments in any city have been put into the wrong group.

The confusion comes because a town house, which is simply a multi-story, attached residence, can be owned one of two ways — either with or without the lot. If the developer includes the town house’s lot in the sale, ownership is “freehold” or “fee simple,” just like most single-family detached homes. If the lot isn’t included in the sale, the town-house development is considered either a condominium — where owners own everything up to party (or shared) walls individually, but share ownership of the land and common elements like pools and swimming pools with other neighbors — or a co-op, where individuals receive a fractional stake in buildings, land and common elements that are owned and controlled by an association.

The way a property is owned has a big impact on payments for insurance, maintenance and homeowners’ association fees. So it doesn’t make much sense to try to compare a condominium or co-op town house with a fee-simple single-family house merely on the base of purchase price.

Other factors, like finishes, location and demographics, muddy the comparison, too. For instance, will a 2,000-square-foot urban town house with granite countertops, crown molding and marble floors, targeted to empty-nesters, build up equity faster than a same-sized house with a big yard way out in the suburbs, built for young families? It depends on whether there are more empty-nesters in the area looking for homes at the time you want to sell, or more young families.

If you have already narrowed your search to a particular town house and single-family house, it may be worthwhile to check public records at your local municipality or online. But don’t assume that these rates will be constant forever (even though some economists make that very assumption when they make their pricing prognostications). A change in traffic patterns that creates gridlock might make an urban town house more valuable to buyers in the future than a comparable suburban tract house; conversely, an uptick in crime in a neighborhood may cause buyers to flee to the ‘burbs. Since such events are inherently unpredictable, you might as well just buy the house that you like best.

– June Fletcher is a staff reporter at The Wall Street Journal and the author of “House Poor” (Harper Collins, 2005).

If you have any questions on this, or anything Real Estate, give us a call!

Jared & Rebecca Chamberlain
www.ChamberlainGroup.ca
403-999-9694

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Condominiums Achieve Unprecedented Favor

After more than three decades of slow but steady growth, the condominium concept has finally clicked with Canadian homeowners. The lifestyle has proven to be a solid investment in housing markets across the country, chalking up some of the most impressive gains in residential real estate in 2007, according to the RE/MAX Condominium Report.

Their universal appeal is substantiated, with every market reporting increased momentum in condominium sales volume over 2006 levels. In fact, 80 per cent of markets surveyed reported double-digit gains in sales year-over-year, with 53 per cent reporting increases over 20 per cent. The greatest growth was experienced in Canada’s small to mid-sized markets. Leading the country, in terms of percentage increase in sales so far this year, are Kitchener-Waterloo (+59%), Regina (+57%), St. John’s (+54%), and Saskatoon (+33%).

The white picket fence, sprawling green lawn and tidy urban bungalow has become an unattainable ideal for many first-time buyers—especially in the West. By necessity, condominiums have become the only practical means to homeownership for a growing segment of the population. Today’s entry-level purchasers aspire to manageable mortgage payments, sunset city views, and the non-stop action and amenities of central core living, all packed into 600 to 800 sq. ft. The momentum of the market in recent decades has redefined the home buying process.

While price appreciation on freehold properties, in particular, was the primary factor in the upswing, the strong desire among baby boomers to lead an active, carefree lifestyle has also driven the concept to unprecedented popularity. The RE/MAX Condominium Report identified Greater Vancouver as the strongest market in the country – where close to 60 per cent of all residential sales now involve a condominium. Condominium presence is also on the rise in centres such as Toronto, Edmonton, Calgary, Regina, Ottawa, and Hamilton-Burlington, where condos now represent 20 to 30 per cent of all MLS sales.

Deteriorating affordability levels in major Canadian centres have lead to the resurrection of the condominium lifestyle in recent years. Condominiums are clearly the answer to the skyrocketing cost of land and shelter that has all but eradicated the dream of homeownership for many first-time buyers.

Condominium values were also up from coast-to-coast in 2007, with all major markets reporting an increase in average price. Thirty-three per cent of cities surveyed reported double-digit price appreciation. The most dramatic hikes were seen in Western Canada’s red-hot housing markets, led by Saskatoon (+24%), Calgary (+22%), Edmonton (+19%), Kelowna (+16 % for town homes, +12% for apartments), Vancouver (+14 % for town homes, +11% for apartments), and Victoria (+9% for town homes, +12% for apartments).

At the top end of the market, condominium ownership has been equated with lifestyle. Throughout 2007, aging baby boomers fuelled demand for luxury condominium units. Upper-end activity was reported to be on the rise in all markets examined, with the greatest appreciation occurring in Edmonton (+154 %), Greater Toronto (+98 %), Victoria (+85 %), Winnipeg (+58%), Vancouver (+49%) and Kitchener-Waterloo (+39%). The maintenance-free factor, the ability to travel and to enjoy the best the city has to offer—from restaurants to recreation—were citied in overall condominium appeal.

In years past, there seemed to be a ceiling in terms of what buyers were willing to pay for this type of product. Widespread acceptance has seen that philosophy tossed out the window. In the upper-end especially, buyers have demonstrated a willingness to set new benchmarks, and in some cases, are spending more than what a detached home might cost. Multiple offers, once unheard of, have become a reality in some centres.

New benchmarks for the most expensive apartment-style condominium units ever sold through MLS have been reported in several cities in 2007, including Vancouver ($18 million), Calgary ($3.7 million), Edmonton ($2.3 million), Winnipeg ($1.25 million), and Kitchener-Waterloo ($670,000).

Given solid demand through all price ranges, it comes as no surprise that investors have been very active in the majority of markets surveyed, hoping to snap up a piece of the pie while demand remains at peak levels. Yet, with a growing number looking for a quick return on investment, swelling inventory levels have become a serious concern in several markets, most notably in Calgary and Edmonton, and to a much lesser extent, Kelowna.

The impact of speculation, especially in Canada’s largest condominium markets, have yet to be determined, but concerns for the future are relevant. In downtown Vancouver, an estimated 50 per cent of sales activity is attributed to investors, whereas as much as 60-85 per cent of new condominiums sales in Toronto’s downtown core reportedly involved investors in 2007. This is a major factor that could influence prices in years to come.

For now, a number of market fundamentals point to increased growth in sales, prices and demand well into 2008. These include vibrant economies, Canada’s aging population, rising prices, and higher levels of immigration, to name a few.

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RE/MAX of Western Canada (1998) Inc. Condominium Report issued November 14th, 2007.

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