Monthly Archives: November 2008

Calgary Real Estate Predictions for 2008 – Who got it right? (Sneak Peek)

Posted on November 27, 2008 | 4 Comments

Seeing that we haven’t crossed over into December yet, this article might be a little premature. However, I thought it would interesting to take a peek at predictions from this time last year.

Below are predictions on what would happen to Calgary average prices in 2008 (Source 1, Source 2):

RE/MAX: 0% growth
CMHC: + 7.7%
REIN: + 12%
Royal Lepage: + 4%

Back in December 2007, FindCalgary.com had the poll: What will happen to Calgary home prices? Here were the results of those that responded to the poll:

14% Price will stabilize
21% Rise Slowly
6% Skyrocket
34% Drop slowly
23% Plummet

What really has happened so far in 2008?

Average Prices

Year-to-date (Jan 1 to Nov 26, 2008) the average SFH in metro-Calgary has cost $461,890. In 2007, the average price during the same time period was $473,418.

Year-to-date, the average condo has cost $303,142. In 2007, the average price during the same time period was $316,845.

Sales Volume

There have been 12,937 Single Family Home sales year to date. Last year during the same period there were 17,396 sales.

Same story for condos – this year there have been 5,424 sales. In 2007 during the same time period there were 7,754 sales.

Inventory

There are currently 5378 SFH’s for sale, and 2544 condos. That’s up from the 4984 and 2196 that was recorded from November 2007′s month-end.

Vacant/New Inventory is up too. Today there are 1608 SFH’s and 955 condos compared to the 1237 SFH, 669 Condos in December 2007 (when I first started recording that stat)

I have anecdotal evidence to suggest that the inventory will be spiking in early Spring. Many homeowners that have requested CMA’s from me, or had been trying to sell, have said they are going to “wait until the Spring until the market improves” to sell or relist.

Inventory Absorption Rate

Using the inventory and sales volume MTD, we are currently at a 9 month absorption rate for Single Family homes and over 10 months for condos. That means if no more homes were listed and sales continued at the same pace, it would take 9 & 10 months respectively to clear the inventory.

If you know of any other earlier predictions, please post the news links in your comments. Thanks!

→ 4 Comments

Posted in Calgary Real Estate Discussion

Tagged 2008 calgary predictions, 2008 calgary real estate, 2009 calgary real estate, calgary real estate, calgary real estate predictions, housing market predictions, real estate predictions

Question Box: What is a Special Assessment? Reserve Fund?

Posted on November 27, 2008 | 1 Comment

Short answer: A special assessment is a request for additional money beyond the monthly condominium contributions due.

There are various circumstances that may require a Special Assessment, but the most likely is if major or urgent repair or replacement expenses for the common property need to be funded and there is not sufficient money in the Reserve Fund, the Condo Board must levy a Special Assessment so that all the Unit owners contribute their fair share of the funds needed to deal with the problem.

What is a Reserve Fund?

Tehnically called the Capital Replacement Reserve Fund, it’s created from a portion of the Condominium Fees that’s paid by all the Unit owners. It’s set aside and managed by the Condominium Corp. to pay for major repairs or the replacement of common property elements.

Condo’s are required to have a Reserve Fund Study completed every 5 years in order to create a Reserve Fund Report, and Plan.

As was mentioned in my blog article: Buyer’s Guide: Condo Documents, Get them Reviewed! the Reserve Fund amount, Report, and Plan are part of the Condo Document package that you are provided with prior to your purchase of a condo. You can see why it’s imperative to look these over with a professional Condo Document Review company to see the financial shape of the corporation. The healthier the Reserve Fund, the more of an unexpected crisis the Condo’s bank book can handle, and hopefully won’t result in a Special Assessment.

When Condo Owners Strike Back

Interesting legal case of what transpired between a group of condo owners and the developer of the condo: read it here

Some ‘Special Assessment’ News Articles

November 22, 2008 – Calgary Herald
Buyer faces extra costs after purchasing condo unit

February 21, 2008 – Calgary Herald
Soggy condo owners face $10M repair bill

→ 1 Comment

Posted in Calgary Real Estate Discussion, Question Box

Tagged calgary real estate, capital replacement reserve fund, condo fees, condo repair, condominium fees, reserve fund, special assesment, special assessment, special assessments

Real Estate Investments – Protect yourself!

Posted on November 25, 2008 | 3 Comments

They’re everywhere - ads in the newspapers, on billboards, radio commercials – I’m talking about real estate investment opportunities. “Up to 18% interest!”, “12% annually!”, “RRSP eligible!”

Flags to look for at real estate investment seminars

Real estate investment companies may invite potential investors to a “seminar” which will include a motivational speaker, an investment expert, or a self-made millionaire who may give advice on investing and will explain how investors can get involved.

The real estate investment/trust fund might be promoting above average returns with little or no risk. Remember, no investment is risk free – and that is especially true with real estate. No one can forecast where prices will be in 1, 2, 5 years so how can they guarantee you an annual ROI? They can’t, which is why there are fine print lines such as: “actual results, performance or achievements could differ materially from those expressed by us.”

“That’s a red flag,” says Mark Dickey, senior communications adviser for the Alberta Securities Commission. “It’s easy for them to say, ‘It didn’t work out the way we thought.’ If that happens, you could lose your money.”

Another flag is claiming they have a “secret” or “exclusive technique” for investing in real estate. The salespeople at seminars can make misleading claims that entice you to sign up right away, and may involve a “limited time offer” or a “limited number of investors.”

Do Your Research!

Don’t let anyone pressure you into making any financial decisions without getting independent financial advice from a lawyer or registered financial adviser.

To begin with, you can check the websites below to see if any action has been taken against the companies or their promoters. Remember that even if ASC or RECA have not taken any action to date, this does not mean the opportunity is suitable for your risk level.

Alberta Securities Commission(ASC) This is a great website with a LOT of information on how to protect yourself, file a complaint, sign up for investor fraud alerts and more! Here’s the link to show how you to do a background check on a company to get started.
Real Estate Council of Alberta(RECA) The Real Estate Council of Alberta (RECA) is responsible for ensuring that consumers who use the services of industry members are adequately protected. Disciplinary decisions are posted on that website.
Canadian Securities AdministratorsNational CTO Database

For an interesting read, check out this Order from ASC regarding a company with an office in Calgary:

Enforcement Order by the Alberta Securities Commission which is talked about in the November MoneySense article: click here to read

It’s your money – protect it.