Monthly Archives: May 2012

House Price Index (HPI): April 2012

(Note: Beginning with this report, Teranet will be releasing the index one month earlier. It will now appear within one month of the end of the period covered. Thus this release dated May reports index results for April rather than for March)

Calgary home prices continued to increase throughout the spring months according to the Teranet–National Bank National Composite House Price Index™ released today.

Between March and April, the index for Calgary rose 1.4%. Calgary’s month-over-month gains were bested only by Halifax (1.6%) and Edmonton (1.5%).

Year-over-year, prices in Calgary were up 1.9%. Markets were described as “on the tight side” in Toronto, Hamilton, Winnipeg & more recently Halifax, Calgary and Edmonton.

HPI: April 2012

The Teranet–National Bank House Price Index™ is estimated by tracking ob­served or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation of the index. This is known as the repeat sales method

All indices have a base value of 100 in June 2005. For example, an index value of 130 means that home prices have increased 30% since June 2005

May 1-28, 2012 Calgary Real Estate Update

The long-awaited resurgence of the Calgary-housing market appears to have
been launched in recent months,” writes RBC in their latest Housing Trends and Affordability report released today.  “Homebuyers in the Calgary area are motivated by a booming provincial economy, strong job creation, and attractive housing affordability…We expect the market resurgence to continue for the remainder of this year.

While the report covers Q1 activity with a mention of April sales, this resurgence has obviously carried into the current month.

Through four weeks of May, Calgary home sales are up 26.52% over last year with 1503.

Calgary SFH Sales

Prices in April were up a paltry 0.77% year-over-year, but it looks like it’s getting some traction this month.  The average price is currently up 3.12% to $503,694  and on track to set a record for the month of May –  falling just short of the all-time record set in summer of 2007.  The median is up 3.57% y/y to $435,000.

Single Family Home Prices

The upper-end market continues to perform strongly with 67 single family homes selling for a million dollars or more, far above previous levels seen in May.

Million Dollar+ Sales


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For more information and statistics including condominium average and median prices, please visit:

FindCalgary

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Questions? Ready to buy or sell real estate? I can be contacted at mike@findcalgary.com or 403-554-2284

Mortgages in Arrears Declining In Canada

(Note: The arrears figures for 2011 and some of 2010 have now been revised with the latest report released today)

In Canada, the arrears rate was 0.37% in March with 16,043 residential mortgages in arrears by 3 or more months.  That’s down from the 17,974 recorded in March 2011 that made up 0.43% of the total number of mortgages.

At 0.37%, it’s at the lowest percentage since January 2009.

Canada – Mortgages in Arrears

In Alberta, there were 3,609 mortgages in arrears in March representing 0.69% of the total residential mortgages.   Compare that to 4,150 (0.82%) from March 2011.  At 0.69%, it brings us back to October 2009′s level.

Between February and March, Alberta and BC were the only 2 provinces to record a month-over-month increase in the percentage of arrears to total mortgages.

Alberta Mortgages in Arrears

The CBA 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)

You can view the source data for all of the provinces here

Analyst Insight On Calgary Real Estate

Ben Rabidoux, an analyst and strategist with M Hanson Advisors and author of the TheEconomicAnalyst.com, recently took a look at real estate in Canada`s largest cities.

Below is his take on Calgary`s market:

Calgary underwent a market correction staring in 2007. Resale prices have nearly returned to their previous highs but the fundamentals remain stretched. I often liken Calgary real estate to a high price-to-earnings growth stock where future earnings potential is being reflected in current prices.

In Calgary, it’s clear that prices reflect the popular belief that the province will continue to experience strong economic growth. If this happens, it’s possible that prices will continue to move sideways – or slowly rise – while fundamentals catch up. But if the expected economic growth fails to materialize, there would be quite a bit of dead air between prices and underlying fundamentals.

In terms of supply and demand, the city looks pretty strong with sales rebounding off their lows but still well below the highs of the boom years. Inventory levels also remain healthy suggesting that over the short term, there is strong support for resale prices in the city. In April, resale prices rose a paltry 0.8 per cent on a year-over-year basis but this pace could quicken slightly in the coming months.

For the full article in the Globe & Mail which he provides insight on other cities including Vancouver, Toronto, Ottawa, and Montreal, please click here

Greek Contagion

The events unfolding in a small nation halfway around the globe will have far reaching effects that will impact the financial & economic markets.  While Canada’s direct trade exposure to Europe is only 10%,  TD examined what a potential Greek exit from the euro would mean on our economy.

On Canada’s housing market specifically, TD writes:

While corporate balance sheets remain strong, household  debt has become excessive and the housing market is in our view 10-15% overvalued, leaving households more vulnerable to a negative economic event.

A global financial crisis could be a major catalyst for a sharp housing market correction and household deleveraging – albeit to a lesser extent than was evident in the U.S. during the past recession.

Moreover, Canadian governments would have less room to stimulate compared to the first crisis in 2008-2009. While Canada’s economy would probably still fare better than most in the eurozone under this scenario, it would likely underperform that of the United States.

In a worse case scenario, the Canadian economy would likely endure a severe recession, with the decline being substantially worse than that experienced during the recent recession as both exports and domestic spending contract heavily.

TD has written several reports on what a possible Greek exit from the euro would have. Click below to read each report:

Lawyer’s Corner: Mortgage Assumptions

Are you selling your home and thinking about allowing someone to assume your mortgage?  Perhaps you have a great mortgage rate that buyer’s would find enticing.  The article below written by Lubos K. Pesta, Q.C, Walsh Wilkins Creighton LLP is directed towards agents handling this scenario, but I thought you would find it informative as well.

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Mortgage Assumptions

With interest rates steadily dropping over the past number of years, there hasn’t been much incentive or demand for buyers to assume existing mortgages from sellers.

Since it appears that interest rates have “bottomed out” and most experts expect mortgage rates to rise in the near future, the demand for mortgage assumptions is likely to increase. As a result, this is a good time for a refresher on how to handle mortgage assumption transactions.

First of all I need to dispel a couple of common misconceptions. The belief that:

  • all mortgages are assumable in this province; and
  • a seller’s liability under a high ratio insured mortgage ends upon the buyer making twelve consecutive payments or upon the renewal of the existing mortgage term.

In the past, it was difficult for banks to prevent their mortgages from being assumed.  However, for close to a decade the courts in Alberta have been enforcing “due on sale” clauses (the obligation of the home owner to secure the bank’s consent for a change of ownership) as part of the fight against mortgage fraud.

What this means is that if a homeowner transfers the title without the involvement of the mortgage lender, the lender can foreclose on the property for that reason alone even if all the other obligations of the borrower (including all mortgage payments) have been honoured.

It is for the foregoing reason that the standard AREA Residential Real Estate Purchase Contract was amended in 2006 to incorporate an automatic “mortgage assumability” condition in clause 8.3. This condition ensures that if the lender does not consent to the Buyer assuming the mortgage, then the contract will terminate.

It should be noted that this condition is unique in a couple of respects. First of all, the condition is triggered automatically by the insertion of a dollar amount in the Assumption of Mortgage line of paragraph 2.2. Even if the parties overlook paragraph 8.3 and do not insert a Condition Date, the condition will still apply.

Without a specified date, the condition will extend for a “reasonable” length of time. It goes without saying that the better practice is to insert a certain date for the expiry of the condition in order to avoid disputes. Secondly, this condition is specified to be for the mutual benefit of both the Buyer and the Seller and, as a result, has to be waived by both parties to firm up the contract.

In order to avoid disputes respecting the terms of the mortgage being assumed
(interest rate, payments, remainder of term) the relevant portions of the Financing Schedule should be completed and the Schedule incorporated into the contract by checking off the relevant box in paragraph 7.5.

If the mortgage being assumed is conventional (non-insured), then this is as far as industry members need to go. The lawyers handling the closing of the transaction will order an assumption statement from the lender, adjust the purchase price and payments and handle the rest.

If, however, the mortgage being assumed is high-ratio insured, then extra caution should be exercised by industry members. The Seller will remain personally liable for any deficiency on the mortgage for the remaining life of the mortgage (including all renewal terms).

The twelve months payment rule, which was internal policy at CMHC only, no longer exists. The reality is that the Seller’s liability will only end upon the mortgage being repaid in full, and the Seller has to understand this risk prior to signing the acceptance of the offer.

The only possible way in which the Seller would be protected against the risk of future default by the Buyer would be if the mortgage lender was prepared to “release” the seller from liability. While a Seller’s condition respecting the securing of such a release could be inserted into the contract, this is likely a waste of time as mortgage lenders have little or no incentive to grant it.

To ensure that the Seller’s problems do not become the problems of the listing agent, a written acknowledgment confirming the Seller’s understanding of continuing liability under the high ratio insured mortgage being assumed should be obtained prior to the execution of the contract and kept in the Brokerage file.

Lubos K. Pesta, Q.C.
Walsh Wilkins Creighton LLP
Phone: 403.267.8432 Fax: 403.264.9400

The comments expressed in this article are for information purposes only and serve to highlight general principles. REALTORS® must remember to work in the client’s best interest, whether representing a buyer or a seller client. Each situation is different and you should seek legal counsel before pursuing any particular course of action. These articles do not create a client/lawyer relationship and do not constitute legal advice. The opinions expressed herein are those of the author and not of AREA.

Copyright Alberta Real Estate Association. Reprinted with permission. AREA makes no guarantee as to the accuracy or completeness of this information.

May 1-21, 2012 Calgary Real Estate Update

The May long weekend didn’t distract focused buyers as 394 single family homes sold in the third week, matching the previous week’s tally.  With 370 sales in the first week and 394 in both week 2 & 3, it brings the month-to-date total to 1158 which is a 23.85% increase y/y.

(click to enlarge image)

This month’s high-end market activity is continuing at a spirited pace and has  already matched last May’s month-end total of 51 single family homes selling for $1M or more.

(click to enlarge image)

Average prices this month continue to tread above $500,000.   Calgary’s average price has only once eclipsed the $500,000 mark at month-end: back in July 2007.   In any case, prices are on track to set a new May record.

(click to enlarge image)

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For more information and statistics including condominium average and median prices, please visit:

FindCalgary

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Questions? Ready to buy or sell real estate? I can be contacted at mike@findcalgary.com or 403-554-2284