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Wednesday, May 30, 2012

Crystal Ball Time - Calgary housing prices are going up

Today's Calgary Herald had an article about how MLS sales had gone up substantially in May. How much? 27.9% as of May 28th. Year over year we are up over 7% from 2011. What does this mean for the Calgary housing market? Housing prices have already started to go up and are about to jump. What makes me feel confident that this is about to happen? There are a number of factors which lead me to believe this. 1- oil prices are sitting around $100 +. This means that the oil sands projects are profitable , conventional oil is profitable and so there's cash being spent. We are already seeing news articles on a shortage of trained workers. This means we will see more British ex-pats and Americans coming to Calgary. They will need housing. 2- Jim Flaherty seems to feel that mortgages are bad debt and keeps tightening the rules. I heard that he is going to lower the maximum allowable amount for home equity lines of credit (HELOC's) to 65% from 80% Any tightening of the rules will make fence sitters jump. 3 - While there are new homes being built, if demand goes up too quickly, builders will not be able to keep up and existing homes will increase in value. 4- finally as values for existing homes near the 2007 peak, people who bought homes at that time who want to move will put their homes up for sale and look for new digs. Remember, in Calgary, your average person moves once every 3 years. There are probably thousands who are chewing at the bit and ready to move as soon as they see they wont' lose on selling their present home. What does this mean for you? If your mortgage is coming due in the next 24 months, it is time to look at renewing. Mortgage rules are tightening and interest rates are going up as soon as the Bank of Canada feels Canadians are confident and the economy is secure. If you want to apply for a early renewal or are looking for a pre approval so that you can go house hunting , click here . Approvals are quick and easy when you use David Cooke as your Calgary mortgage broker.
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Wednesday, May 16, 2012

Canada is not the United States

Recently the Calgary Herald issued a story entitled. "Mortgage arrears rate highest in Alberta" . Reading this you would think that Alberta was going to be the next foreclosure capital of Canada. Following in the footsteps of our American brethren to the south with foreclosure signs on every block. The article goes on to say that the Canadian average for people who are in arrears which means they are 90 days behind on their mortgage payments, is .4%. That's 4 tenths of one per cent. Alberta is almost twice as high at .7% . Based on these numbers Alberta appears to be in trouble. However, if you look farther back you will see that arrears at their lowest in Alberta were at .35% in 2006 and 2007. While this is twice that number it is still below 1%. It should also be noted that the difference between the national average of .4 and the Alberta average of .7 is only .3 or 1/3 of one per cent. Now let's compare that to the US. The latest numbers for Nevada are from the last quarter of 2011. In Nevada in Q1, 19% of households were in arrears. Here's a graph
showing Nevada's arrears This means that someone in Nevada is 27 times more likely that an Albertan to be in arrears. It's time for people including journalists to take a chill pill and not over react to numbers. We are okay. If you want to know more about Canada's arrears or get help with your mortgage you can contact CMHC or contact me
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