Calgry listed as an "out-performer" in Canadian real estate market

 

Pace predicted to be moderately lower for the rest of Canada

 By Mario Toneguzzi, Calgary HeraldMarch 11, 2013

 

Calgary realtor Kaitlyn Gottlieb of Century 21 Bamber Realty Ltd.

Photograph by: Colleen De Neve Colleen De Neve, Calgary Herald

CALGARY — Canada is expected to embark on a gradual, modest, downward housing market adjustment over the next three years with a “measly” two per cent annual price gain over the next decade, says a study released Monday by TD Economics.
But the bank has also listed Calgary as an “out-performer” in Canada for the long-run rate of return on Canadian real estate. Compared with the national picture, Edmonton, Vancouver, Victoria and Toronto were also listed as out-performers for the future.
“With the slowdown in the Canadian housing market well entrenched, many are worried about the future value of their homes. This is not surprising as real estate is the largest financial asset most Canadians have in their possession,” said TD Economics.
“The housing market is prone to cyclical ups and downs and we should embark on a gradual, modest, downward adjustment over the next three years. We project a 3.5 per cent annual rate of return on real estate to prevail beyond 2015 – this is the long-run rate of increase for home prices in Canada. However, this pace will be moderately lower than they have been historically (5.4 per cent).”
Derek Burleton, vice-president and deputy chief economist with TD Economics, said Calgary had a run-up in prices before the recession and then a sharp decline during the recession.
“I guess prices didn’t come back too much but certainly sales fell back and now you’re getting a bit of a cyclical bounce,” he said, adding a long-term forecast takes into account key economic drivers like population growth and the potential of the economy to generate income.
“Based on some of the key drivers of growth, Calgary ranks right up there at the top and that should stand the housing market good stead. At least continue to drive above average price gains over the long run.”
The average MLS sale price in Calgary was $180,420 in 2000. That climbed to a peak of $423,770 in 2007 before dipping to $394,064 in 2009. From then, it has steadily climbed, reaching an all-time record of $428,644 in 2012.
Becky Walters, president of the Calgary Real Estate Board, said the Calgary market is really strong this year due to the in-migration it has been getting over the past 12 months.
“It’s not maybe as strong this year as it was last year but it’s certainly strong,” said Walters. “We’re seeing a nice steady growth. We’re seeing prices starting to come up a little bit not tons.”
For example, according to CREB, year-to-date until March 10, there have been 3,595 MLS sales in the city, up 4.66 per cent from the same period a year ago, and the average sale price has jumped by 9.23 per cent to $451,189.
However, at the national level, TD said a string of lacklustre performances over the next few years will mean that the annual rate of return for real estate in nominal terms will be a “measly” two per cent over the next decade, meaning home price gains should simply match the pace of inflation.
“Our research at REIN Canada is showing that for the coming five years, outperforming markets will be those based not in speculation or foreign investment, they will be those markets supported by underlying economics,” said Don Campbell, senior analyst and founding partner of the Real Estate Investment Network. “The Canadian real estate market is too broad and too diverse to paint with one story or byline and will become an increasingly regional story. Supporting economics such as increasing jobs, increasing population through migration — especially those areas which are attracting a younger, working age cohort — and increasing incomes will play a larger role in market demand and value than it has in the last five years.

“Despite Calgary and Edmonton’s value moves already experienced, they are both rated in the most affordable major centres in the country because average incomes are also higher than in most other regions. This, along with the younger age of in-migrants to these cities from other parts of the country, will be strong and supporting factors for these market for the coming years.”
Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp., said in the Calgary region the average price in 2013 is expected to reach $423,000, up 2.6 per cent from 2012.
“The rate of growth is anticipated to be higher here than in many other areas of the country as the average resale price in Canada is forecast to increase by only one per cent in 2013,” he said. “Supply of homes in Calgary’s resale market has come down from a year earlier while sales have been fairly stable. The resale price in 2014 is forecast to continuing rising in Calgary, averaging $434,000.”
mtoneguzzi@calgaryherald.com

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60% of 1st time home buyers surprised by costs - Survey

Today , TD Canada Trust issued a customer survey. The item that caught my eye was that 60% of home buyers did not know all the costs associated with the purchase of their home.


“From being more thorough in their budget to exploring their mortgage options carefully, many first time buyers think they could have prepared better for their house-hunt,” says Farhaneh Haque, Director of Mortgage Advice, TD Canada Trust. “Prospective buyers can learn from other buyers’ mistakes. If you think you’re ready for home ownership, do your research and make sure you know as much as you can about the process and on-going commitment.”
    I was shocked by this figure. I know that when I have a first time buyer, I always go over the costs with them. I've put together a info letter on all the steps from pre-approval up to possession. Some people have rented their whole lives and don't know anything about buying a home and the costs involved. In addition, Canada and the United States are countries that attract large numbers of immigrants. The home buying process is very different in other countries and these people need to be educated in order to make proper decisions.
   You may think of legal costs, appraisals and surveys as being common knowledge but it really isn't. Many people are in the dark about the whole home buying process. I find the hardest thing for first time homebuyers to get their heads around is reconciliation of the property taxes. They don't quite get the part about the sellers having paid next years' taxes and that they have to re-pay the seller for this.
  How niave are people? I had a lady contact me 4 years ago. She said she wanted to buy a home and she had 3 children and a well behaved dog. I wondered why she would include this information in her email to me. Then the penny dropped, this woman has always rented and having a well behaved dog is important to landlords.
   I responded to her and asked her where she was going to live and what sort of a budget did she have. She asked me what houses I had available. I then realized that this lady thought that a mortgage broker and a realtor were the same thing. I wrote her back and suggested she contact a realtor and that I would only be able to help her with the financial side of the home buying process.
    If 60% of first time homebuyers in Canada feel that there were hidden costs that they had not budgeted for then banks and mortgage brokers are not doing their jobs properly. By asking just one more question;-Do you know all the costs involved in buying a home? - 60% of home buyers would be feeling satisfied now.
  If you have any questions about the TD Survey
contact me via my website

My question for you, my readers , is - What did a first time home buyers say or do that surprised you, even though you are a real estate professional?