For the second week in a row I feel it might be useful to make a blog post about the latest market data. This is because the Calgary housing market seems to have undergone a “significant event” in the last 4 weeks (that event being the effect of the turmoil of the financial markets). Sales have come to a screeching halt. See chart below (click to enlarge):
The full set of weekly stats can be found here: http://www.andrewkyle.com/mlsca/home_page.php?page=weekly_stats
Two interesting articles in the financial post yesterday regarding condo overbuilding in Canada’s major centres and a housing correction that is starting to look very similar to what has been happening in most US markets the last year or two:
“Cracks appearing in condo land”:
http://www.financialpost.com/most_popular/story.html?id=917523
“Canada’s housing market ‘tracking’ U.S. boom and bust”:
http://www.financialpost.com/news/story.html?id=914783
The Bank of Canada declined to change its trend setting interest rate (aka “key policy rate” or “overnight rate”) on Tuesday July 15. It stands at 3.00% where it has been since April 22.
The Bank says that three major developments are affecting the Canadian economy at this time:
The Bank says that the first two developments are evolving roughly in line with their expectations, however commodity prices are continuing to outstrip earlier expectations resulting in higher than desired inflation.
Bond yields have come down slightly as a result of the Bank’s announcement which may bring fixed mortgage rates down slightly in the coming weeks.
Current average mortgage rates are as follows:
| Current (12-Jul-08) | Change in Last Week | Change in Last 4 Weeks | |
|---|---|---|---|
| Variable Rate | 4.35% | 0.01 % | - % |
| One Year, Closed | 6.15% | 0.00 % | 0.01 % |
| Five Year, Closed | 6.35% | -0.01 % | -0.02 % |
Source data provided courtesy of Calgary Real Estate News
Thinking of doing some renovations on your Calgary area home, but concerned about the horror stories you have seen and heard, such as on “Holmes on Homes”, the popular HGTV show? The Calgary Region Home Builders Association (CRHBA) , part of the Canadian Home Builders Association (CHBA) may have the answer for you.
CRHBA has rolled out it’s participation in Renomark (http://www.renomark.ca/Calgary) a non-profit website it says will help refer home owners to reputable home renovators in Calgary.
Renomark works, they say, by ensuring that all member contractors do the following:
I’ve begun referring clients who ask me for a referral to a renovation company to renomark.ca. It seems like a good system that weeds out the fly-by-night disaster contractors. To learn more visit http://www.renomark.ca.
The Finance Department of the Government of Canada announced on July 9 that they are changing the rules regarding government guaranteed mortgages (aka insured, or “high-ratio”, mortgages) which they say aim to at protect and strengthen the Canadian housing market.
The new measures include:
The new rules are to take effect October 15, 2008 and will apply to all CMHC mortgages.
The finance department says the motivation for these changes is “…to ensure Canada’s housing market remains strong and to reduce the risk of a U.S.-style housing bubble developing in Canada.”
The Xenex on 12th is nearing completion - a sure sign of that is they took the crane down on Saturday (see image taken from my balcony on the 10th floor of the Emerald Stone). Another sign is, well, they told me so… move-ins are scheduled to begin November-December of this year. ;o)
This building, built by Bucci Developments, features central air conditioning, titled single parking stalls, and non-titled storage lockers. One thing I like about this building, and I think they are fulfilling a niche demand here, is the units are larger than most newer highrises in Calgary - most of the 1 bedroom units are in the 700 sqft range, and the 2+dens are 1200 to 1500 sqft - these are not tiny condos!
But here is the real reason I am bringing up this building at this time… they are now offering to pay Buyer Realtor commissions, meaning you can be represented by a Realtor in the purchase of one of their remaining units. If you have been shying away from buying a new condo because the developer won’t pay Realtor fees, thus encouraging you to go unrepresented into a complex purchase then this building might be for you.
Why would you need a Realtor representing you in the purchase of a NEW condo you might ask? Well here is just one example. There is a new building in Calgary, which I won’t mention by name, which opened a year or 2 ago where each unit in the building, from the small, inexpensive 1-bed units near the ground floor, to the two 2,000 sqft penthouses, pays the exact same condo fee. So regardless of size, and value, each unit pays the same condo fee - in effect the small 1-bedroom units are subsidizing the heating bills of the penthouses which are 4 times the size and 6 times the value. Do you think this will eventually affect the value of those 1-bedroom units? I would think so. Is this legal? Yes, in Alberta it is. Was this specifically pointed out to the buyers of those 1-bedroom units in advance? I don’t know, but if they were my clients you bet it would have been pointed out to them as we poured over the condo docs together!
That is just one reason you might want a Realtor representing you when you buy a new condo. Other reasons include:
Another interesting feature of this building is the layouts are very much oriented toward “work from home” people. Most of the 1+den and 2+den units have the large den by your front door so you can meet clients without them seeing your sink full of dirty dishes. Ideal for the increasing number of folks (like Realtors amd Mortgage Brokers) who meet clients at a home office.
Check out the official website for more details, and then contact me for a rundown of the floorplans/units left and asking prices.
The June 2008 edition of CMHC’s “Housing Now” report for Calgary and area was issued on Sunday.
June 2008 Housing Now - http://www.cmhc-schl.gc.ca/odpub/esub/64167/64167_2008_M06.pdf
We have reached a new record of multi-family (apartment condos, townhouses and semi-attached homes) homes under construction. The total in May was 11,915, of which 9,432 were apartment-style condos. This is worrisome considering the condo market stands at an Absorption rate of 5.2 this week, There are already considerably more condos on the market than buyers. The silver lining though is that the inventory of “completed but not occupied” units actually decreased from April to May – 655 new units were completed but 673 units were absorbed (by sales or rentals). The fairly healthy rental market (2.0% vacancy rate currently) is perhaps saving most condo investors from grief in the short term.
It remains to be seen if the record number of multis under construction is going drive the condo market down even further. The construction of apartment-style condos in particular are very susceptible market slowdowns as we are in right now. This is because of the long construction times of these complexes. Developers simply cannot react to market swings when the development time of a complex is 3 years or more.
So expect to see more and more developers of new condos offering to pay Realtor commissions to buyers who chose to have the protection of being represented by one, This is to ensure they do not get stuck with too many units that they cannot sell. An example is the “Xenex on 12th“ which is now offering Realtor commissions for Buyer’s Realtors. So it is a great time for the buyer who has been interested in a new condo but has stayed away from them for want of the protection a condo Realtor can give them.
As for the question I asked in the title of this article, “Too Many Condos Coming on Stream, Too Few Buyers?” The answer right now is clearly “Yes” as evidenced by the Absorption Rate for condos being 5.2, but it remains to be seen if the situation will get worse before it gets better because of the record number of condos under construction. Can young professionals migrating to the city for all the jobs the oil boom is providing absorb the record number of new apartment condos currently under construction? That is the key – time will tell.
- Andrew Kyle
Figures are copyright CMHC.
I added a cool new feature to all the listings on AndrewKyle.com this morning - a WalkscoreTM assessment. Walkscore is a site that estimates the walkability of a given property by it’s proximity to stores, entertainment, restaurants, parks and so on.
Here’s an example for the Emerald Stone condo in Connaught:
And here it is on my listing pages:
There was a nice rundown in the Calgary Herald today on the city’s farmers markets. And since I am a GoogleMaps nut, I decided to put all of them on a Google map - see below. Left-click on the icon for the market’s hours and directions.
If you think this is a useful map then please click on “View Larger Map” and then “Rate This Map”, so it will show up for others on GoogleMaps.
Happy and healthy shopping! Remember, it’s all about quality of life!
- Andrew
I love this website:
http://calgaryrealestatemarketblog.wordpress.com/
He has some really cool examinations and opinions on real estate trends in Alberta. If you have an interest in the finer points of real estate market trends then I think you will find it very interesting.
I think it is the best non-Realtor real estate website in Canada.
- Andrew Kyle
The Fraser Institute recently released it’s take on Alberta Schools based on 2006-07 provincial testing results.
You can look up any school by name in their database and see it’s report card. It’s a great tool for checking on neighbourhoods you are considering moving to.
Look up an Elementary School:
http://www.fraserinstitute.org/reportcards/schoolperformance/schoolfinder.aspx?prov=AB&lv=E&l=A
Look up a High School:
http://www.fraserinstitute.org/reportcards/schoolperformance/schoolfinder.aspx?prov=AB&lv=S&l=A
The database includes, public, seperate and private schools.
The Fraser Institute uses Grades 3 and 6 test results to grade elementary schools, and uses diploma examination results, grade-to-grade transition rates, and graduation rates to grade high schools.
The Institute itself urges parents not to put too much emphasis on the last year’s score or ranking, and I agree. Look at the last 5 years scores to get a more accurate picture. Also the Institute uses arrows (up or down) in the right-most column to indicate trends (if any) in the school’s performance over 5 years - that can be more useful than just the last year’s ranking or score.
- Andrew
It’s been announced that Jaume Plensa, arguably the world’s most renowned living public sculpture artist has been chosen to create a work for the Encana Bow Tower currently under construction on 6 Ave downtown. The tower will be the tallest building in western Canada when it is complete. The full story:
http://calsun.canoe.ca/News/Columnists/Platt_Michael/2008/06/16/5890296-sun.php
Here’s some of Plensa’s other works:
An interesting little article in the Herald today. The Stampede is proposing an extension of 17 Ave across the LRT tracks into the road system of the Stampede grounds.
Full article: http://www.canada.com/calgaryherald/news/story.html?id=f35bea4f-df2c-4a64-a498-50a5c567ea25
I could see that eventually causing a revitalization along 17 Ave between McLeod Trail and 2 St SW, which has some vacant lots and older light-industrial/commercial businesses such as a body shop or two. Would the red mile eventually shift to the east I wonder? I think it might, as a matter of fact I am sure it would as the restaurants and bars closer to the Dome and Stampede Grounds take advantage of the closer proximity.
It’s an interesting proposal. The one concern i would have is traffic backing up 17 Ave at Rush hour, like it sometimes does on 25 Ave, because of the trains coming by every 3 or 4 minutes on average.
- Andrew Kyle
© 2008 Andrew Kyle. Excerpts require a link back to AndrewKyle.com or AndrewKyle.com/blog
