Condo Fees & Budget Underestimated By 60-70% By Builder

Multi-family construction in Calgary is booming with starts last month posting a 397.2 per cent year-over-year increase to 1,780 units. Of those 1,780 starts, 1,410 were apartments, bringing the total number of apartment starts to 4,010 to the end of June and the number under construction to almost 7,000.

That means there are going to be a lot of units for sale in the next couple years and I wanted to share an experience that will help educate buyers of new condos.

Another Calgary REALTOR® recently related this story:

“A client of mine just called to inform me that the brand new condo I sold her (that she has been in for 6 months) will need an increase in the condo fee by 60% to fund the budget that was estimated at almost 70% under the actual costs. The owners will also need a cash call of approximate $1,200 per unit to catch up to the current expenses.  Did I mention that this building is 6 months old!! She would never have purchased the unit of she knew the condo fees would be in the mid to high $400 range.  The builder has built many similar developments and should have a better idea of the cost to operate these buildings.”

Sadly, this isn’t just a one-off.   The budget and condo fees marketed by some developers are oftentimes woefully low.   I liken it to car commercials that brag about their model getting a certain gas mileage.  Have you ever had a vehicle that came close to attaining the specs advertised?  Likewise, there’s a chance that the promotional fees and budget forecast isn’t going to be enough to run the condominium once it’s built.

Calgary real estate lawyer Lou Pesta with Walsh LLP has this tip:

“Unfortunately this is a fairly common occurrence with new condominium developments (to a greater or lesser extent)…In advising buyers of new condominiums it would be wise to advise them that the budget is likely to be understated and final numbers will not be known until the owners take over the management of the complex and determine what level of services they would like.”

Site of Future School: Buyer Beware


A major factor affecting most families decision on where to move is the proximity of schools for their children.

In Calgary, new subdivisions have signs that read something to the effect of  “Site of Future School.”  Many are discovering how long in the future that might be.

The Calgary Board of Education has this warning to potential buyers moving into a new(er) community:

“A sign that reads ‘Site of Future School’ in a new developing subdivision does not mean that a school is funded and scheduled to be built. Developers are required to set aside a certain amount of green space for parks, community centres and public and separate schools. These signs inform potential area residents that the new development has land set aside for schools. The developers, not the school boards, install the signs.”

Follow this link to the Schools Under Development page for the list of projects in process:


Calgary School Catchment Areas

To find out which school your children will be currently assigned to, you can search by address here.


Calgary Board of Education website
Calgary Catholic School District website

School Rankings

You can compare the academic performance of schools in Alberta here.

Calgary 2014 Civic Census

To download the entire census along with additional tables in PDF and EXCEL formats, click here 

2014 Civic Census Overview

From the City of Calgary, a summary of the results from the 2014 Civic Census are as follows.

1. TOTAL POPULATION: for 2014 is 1,195,194 up 38,508 residents from 2013.

  • Calgary’s population grew from 1,156,686 in April 2013 to 1,195,194 in April 2014. This represents an increase of 3.33%. This level of population growth is similar to what was experienced in 2013.
  • Saddleridge leads the way in growth with a population increase of 2,373 residents. Seven other communities also had an increase of more than 1,000 residents.

The communities with a population increase of more than 1,000 are:

  • Auburn Bay (2,242 additional residents)
  • Cranston (1,858 additional residents)
  • Skyview Ranch (1,759 additional residents)
  • Evanston (1,704 additional residents)
  • Panorama Hills (1,384 additional residents)
  • Aspen Woods (1,095 additional residents)
  • Beltline (1,091 additional residents)

2. NATURAL INCREASE: for the 2013-2014 period was 10,491, similar to the level of naturally increase seen in 2013.

  • Natural increase is a result of the excess of births over deaths. The natural increase was 10,491 persons, up 231 from the previous period of 2012-2013.

3. NET MIGRATION: experienced similar levels as seen in 2013 resulting in 28, 017 additional residents moving to Calgary.

  • Net migration is the difference between the total population growth recorded and the natural increase. At 28,017, there was an increase in net migration from 2013’s net migration of 26,201.

4. HOUSING: housing stock continues to rise with an increase of 9,865 dwelling units, bringing the total number of dwelling units in the city to 478,223, an increase of 2.06%.

  • The number of vacant dwelling units in Calgary is now 9,315, a decrease of 2,467 from the 11,782 vacant units in 2013. A vacant dwelling is defined as a dwelling that is suitable and available for occupancy and does not include those dwellings under construction or renovation.
  • The overall vacancy rate in the city is 2.01%, down from 2.59% in April 2013.
  • The number of dwellings under construction is 8,873, up 823 from 8,050 in 2013.
  • There are now 453,626 occupied dwellings. Of this number, 311,782 or 68.73% are owner-occupied. In 2013, the comparable percentage was 68.50%.

July 1-21, 2014 Calgary Real Estate Market Update

Calgary home sales are on pace for the second best July month on record while average and median prices are up across all three housing categories.

A total of 1,548 home have sold month-to-date, a 3.13% year-over-year increase.  Price growth remains robust despite a 20% rise in new listings and a nearly 12% jump in active listings from the same period a year ago.

Single family
Average price: +3.25%,  $17,280
Median price: +9.49%, $41,750

Average price: +13.25%, $42,909
Median price: +12.56%, $36,825

Average price: +14.68%, $41,933
Median price:  +10.79%, $27,750

Sales to New Listings Ratio

Calgary home sales

Calgary home sales

Calgary luxury home sales

Calgary luxury home sales

Calgary Stats Summary

Calgary Stats Summary

Alberta Mortgages In Arrears Back At 2008 Levels

A total of 1,941 Alberta residential mortgages were behind in payment by three or more months in April, according to statistics released by the Canadian Bankers Association.   That’s a -15.7% drop from the 2,303 mortgages in arrears the previous year.

Alberta’s mortgage arrears rate now stands at 0.35%, the lowest it has been dating back to October 2008 and below the twenty year average of 0.46%.

Historical Alberta Mortgage Arrears

Historical Alberta Mortgage Arrears 

Note: Gray line in chart above is just to help visualize how April compares to previous months, it does not represent the 20 year average.

You can download the data for all the provinces here pdf

If you want an EXCEL spreadsheet, you can find it on CBA’s webpage here.

The CBA report includes data from BMO, CIBC, HSBC Bank Canada, National Bank of Canada, RBC Royal Bank, Scotiabank, and TD Canada Trust, Canadian Western Bank, Manulife Bank (as of April 2004) and Laurentian Bank (as of October 2010)

July 1-14, 2014 Calgary Real Estate Market Update

The Canadian housing stats for June were released today and with it came a host of cautious if not pessimistic commentary from the banks.  Sales are expected to slow nationwide and “in the near term, affordability will be strained by home prices outpacing income gains in key markets such as Toronto, Vancouver and Calgary.”    That’s the outlook going forward.  Let’s review what’s currently happening in our market.

The sales-to-new-listings ratio remains above 60% indicating that Calgary is still in a seller’s market.  It’s not a stretch to expect that prices are still rising then.

sales to new listings ratio - July 14 2014

Price growth for condos are showing double-digit percent gains year-over-year.   Month-to-date, condo-apartment average prices are up 19.01% while the median increased by 11.94%.   Condo-Townhome average and median prices are both up exactly the same: 12.37% (That’s pretty neat, heh)

Single family home average prices are up a mere 0.36% y/y.   After setting back-to-back all-time luxury sales records in May and June, high-end sales this month have cooled off.  If you take a look at the luxury chart below you’ll see that $1M+ sales are trailing both 2013’s and 2007’s month-to-date tally.   To be sure, a new all-time luxury sales record will not stretch to three consecutive months and the market will be hard pressed to set a new monthly record as has been the case for every previous month in 2014.  The median price of a single family home is showing an 8.63% annual gain.

Overall activity is brisk with month-to-date sales only one off from 2005’s leading pace.  Year-over-year, sales are up 8.99%.

Calgary home sales, July 1-14, Y/Y comparison

Calgary home sales, July 1-14, Y/Y comparison

Calgary luxury home sales, Y/Y comparison

Calgary luxury home sales, Y/Y comparison

Calgary & Area Stats Summary

Calgary & Area Stats Summary

Canadian Housing Market Report: June 2014

Download the full CREA statistics report for June: here pdf

Report Highlights

• National home sales rose 0.8% from May to June.
• Actual (not seasonally adjusted) activity stood 11.2% above June 2013 levels.
• The number of newly listed homes was little changed from May to June.
• The Canadian housing market remains in balanced territory.
• The national average sale price rose 6.9% on a year-over-year basis in June.
• The MLS® Home Price Index (HPI) rose 5.4% year-over-year in June.

Bank Commentary

TDTD Economics: Gains in the Canadian housing market over May and June have represented more than just a bounce back from weather-related weakness following the winter months. Mortgage interest rates hit record low levels in June, helping to fuel an acceleration in housing activity – including sales, prices and  homebuilding. Existing home prices (average and on a quality adjusted basis) are on track to outstrip  income growth for a second straight year in 2014 which only adds to concerns of an already-overpriced market.

Looking beyond the near-term boost from low interest rates, we are still of the view that the Canadian housing market will cool later this year and into 2015. For one, interest rates are not expected to remain this low for much longer with economic conditions forecast to pick up. Affordability, even at low interest rates, is already becoming an obstacle in many markets – particularly Toronto.  (Read full commentary here pdf)

bmoBMO Economics: Canada’s housing market continues to look balanced overall, with stark disparities persisting at the regional level. That said, it is a tad concerning that prices are running firmly ahead of income growth in a few major cities. Calgary is understandable and Vancouver is shaking off a mild correction, but Toronto might be getting too hot for its own good.  (Read full commentary here pdf)

scotiaScotia Economics:  Ultra-low borrowing costs and aggressive rate discounting continue to support housing affordability and demand, notwithstanding weak job growth and record high home prices. Activity is also benefitting from pent-up demand generated by a harsh winter, and increased supply as listings improve. However, the more moderate sales gain in June suggests the impact of these temporary factors may be waning.

While historically low interest rates continue to support homebuying activity, Canada’s housing market has more downside than upside risk over the medium term.  Valuations are stretched in many centres, and the eventual shift to a higher interest rate environment will reinforce a deterioration in affordability, particularly for first-time buyers in Canada’s largest urban centres.  The underlying pool of potential new buyers also appears limited, with homeownership rates at or near record levels across most age cohorts.  (Read full commentary here pdf)

RBC Economics: The housing story so far this year in CanaRBCda is as much about supply as it is about homebuyer demand. Scarcity of ‘quality’ listings this winter limited the choices available to buyers, many of whom consequently opted for the sidelines until more suitable offerings came along. Strong increases in new listings this spring widened the array of buying possibilities and no doubt contributed to fuel the spring season, late as it may have started. Attractive mortgage rates likely provided further motivation for homebuyers.

We believe that the run-up in resale activity since April likely satisfied any pent-up demand that emerged this winter when supply was short. Going forward, we expect resales to moderate gradually from recent monthly levels. The basis for this moderation primarily will be growing housing affordability pressure. In the near term, affordability will be strained by home prices outpacing income gains in key markets such as Toronto, Vancouver and Calgary. Later this year and into next, we expect higher interest rates to erode affordability more broadly. On the price front, we expect a modest gain of 3.4% in 2014 at the national level, followed by virtually no change (-0.1%) in 2015.  (Read full commentary here pdf)