Weekend Potpourri (Oct 9, 2009)

MLS® Inventory

“We have a tremendous shortage of listings in Calgary,” said Ted Zaharko, broker for Royal LePage Foothills Realty. “The market has made a complete turnaround. The whole year, we’ve been behind in terms of the number of listings that should be on the market. I think conservatively Calgary is short about 1,000 listings right now. Supply is diminishing and demand is pretty strong in Calgary. So prices will be and are recovering across the board,” said Zaharko.

Bonnie Wegerich, CREB president, about the low listing count, says: “People also just want to see what the market is going to do. They’re waiting for it to come back up before they put their house back on the market.” (Source: Calgary Herald, October 8th “Drop in Listings Support Calgary Real Estate)

Employment Data

Some positive news on the economic front today, as Canada’s unemployment rate fell by 0.3% to 8.4%, the first monthly decline since the beginning of the labour market downturn in the fall of 2008.

Calgary’s unemployment rate dropped slightly as well to 6.9% compared to the 7.1% recorded in August.

In the past 12 months, Alberta has shed 39,600 jobs comprising 59,500 full-time job losses and 19,900 part-time job gains. (Source 1, Source 2)

Canadian Unemployment.  Source: StatsCan

Canadian Unemployment. Source: StatsCan

Google Street View

Now available for Calgary, Street View on Google Maps takes takes you on a 360-degree virtual tour through streets and neighbourhoods.

Calgary Google Street View

Calgary Google Street View

Here are some Street View moments found by Globe & Mail readers.

Consumer Credit

Consumer insolvencies and bankruptcies  in Alberta continued to increase in August according to statistics released earlier this week.

According to a CIBC report,  household debt increased by 3.4% while personal disposable income declined by 0.2% , resulting in a higher debt-to-income ratio. Household debt is now 140% of income, up from 131% a year earlier. This figure is moving in the opposite direction than in the United States, where the ratio has fallen for the last two quarters. The article continues:

While indebted Canadians are well insulated from interest rate hikes for now, that could change if the real estate market gets too hot in the months ahead.

The Bank of Canada’s conditional commitment not to raise rates until the middle of next year hinges on a well-behaved housing market, Toronto-Dominion Bank economists Craig Alexander and Grant Bishop wrote in a report published Tuesday.

The key risk for tighter monetary policy is not an unexpected jump in consumer prices, but excessive strength in real estate prices, they argue.

The Bank of Canada will “seek to lean against signs of emerging asset bubbles,” but its view at the moment is that the recent resurgence in housing is temporary, they said.

You can read CIBC’s report: Household Credit Analysis

Mortgage Information

When it comes to staying up-to-date on your mortgage news, I don’t know of a better source than Canadian Mortgage Trends.  With posts updated frequently, they’re on top of current events.

This morning they reported:

“The 5-year bond yield is soaring over 23 basis points as we speak! It’s the biggest jump in bond rates in over a year and it comes on top of strong gains over the previous few days. The yield is now near an 11-month high, and that means fixed mortgage rate increases are around the corner.”

Just a little later today, RBC announced fixed-rate increases with other banks probably to follow shortly.

Make sure you keep their site bookmarked! (Besides this one of course 😉 )

Cochrane Bow Ridge Slippage Update
The Town of Cochrane has retained the services of Stantec Consulting Ltd. to determine the cause of ongoing Bow Ridge wall movement affecting the community of Bow Ridge Phase III, more specifically, those portions of Bow Ridge Drive, Bow Ridge Link and Bow Ridge Close, directly adjacent to the hill.  The process was initiated in May 2009 and included a geotechnical investigation to determine the extent of the distress walls, assess the cause of the movements and determine potential remedial measures.
Fore more information, please contact the Town of Cochrane at (403) 932-2075

Cochrane Bow Ridge Slippage Update

The Town of Cochrane has retained the services of Stantec Consulting Ltd. to determine the cause of ongoing Bow Ridge wall movement affecting the community of Bow Ridge Phase III, more specifically, those portions of Bow Ridge Drive, Bow Ridge Link and Bow Ridge Close, directly adjacent to the hill.  The process was initiated in May 2009 and included a geotechnical investigation to determine the extent of the distress walls, assess the cause of the movements and determine potential remedial measures.

Fore more information, please contact the Town of Cochrane at (403) 932-2075

Have a good weekend everyone, and stay warm 🙂

9 responses to “Weekend Potpourri (Oct 9, 2009)

  1. One Of A Kind

    wow a lot in one post , to comment on the 1st heading , I think the shortage on listings will later be the shortage on buyers as interest rates are now on the move as the bond market is taking off.

    Unemployment rate will change more to the downside as the full effects are not in the market yet and is lagging . Where I work we just told a couple dept. that come april they will be let go . At least we told them now , and I am betting more companies will be doing the same.

    Google street view has a lot of plus for business especially for the real estate as it will be easier for people to check out houses on the street view. So this will just compound the view that your street view really is what gets people to come inside.

  2. There is now absolutely no question mortgage rates WILL RAISE before the July 1st, 2010. In fact thanks to Australia raising prime to 3.25% (Canada is .25%) the world is looking (and pressuring) to Canada to be the next G7 country to raise our rates.

    Thus, if you are going to buy a house at these high prices, you have better think if you can afford it at a 8-10% mortgage when you renew in 5 years.

    Mike

  3. UPDATE on my Oct 11th post. —-

    Seems we are even closer now to raising interest rates in Canada.

    See Toronto Star’s article:

    Loonie’s rise sparks fear of rate hikes
    Bank of Canada seen moving sooner than expected as dollar flies past 96 cents (U.S.) to one-year peak

    “RBC Capital Markets said Monday that investors should sell the U.S. dollar against its Canadian counterpart on prospects the Bank of Canada will increase interest rates sooner than the Federal Reserve.

    “It will become increasingly clear that the Bank of Canada will raise interest rates well ahead of the Fed and once it embarks on the normalization path, rate hikes will likely be more aggressive than the Fed,” Sue Trinh, a senior currency strategist in Sydney”

    If I were to enter a mortgage contract today I’d be seriously considering a 10 year FIXED rate.

    But I would DEFINATELY recommend sitting on the fence on RE to watch where the rates go in the next couple of months. Historicly RE prices go down as interest rates go up. Remember the historical Canadian 5 year mortgage rate is around 8%. So bank on that happening in “normal times” and up to 23% interest rates in “recession times”. What times do you think we are in and going into? 8% or 20%

    Mike

  4. Mike (the realtor): that pending average/median looks scary ($510/$420).

    I notice it seems to have been higher than the ‘month to date’ average/median for a while, but that doesn’t seem to affect the stats.

    Would you be able to give us some insight into how long it takes for the pending sales to be reflected in the month-to-date stats?

    In other words, with the pending stats we see now, is that likely to be what the current average/median are in 2 months time ?

  5. CM,

    There are currently 19 sales pending that are $1M or more. Without those, the average pending price would be $447k. You can likely expect an increase in the average price if those sales firm up within the next couple weeks, but with a 97% LP/SP ratio, they won’t be hitting those pending price levels.

    Sales usually remain pending for around 1 week, perhaps slightly longer for condos if documents are being reviewed. Each sale has its own unique circumstances that dictate how long the condition date is set for.

    You also have to remember that not all pending sales firm up, and not all sales go through the C/S stage first.

    As well, the deeper we get into the month with more sales recorded, the less impact the pending sales will have on the month-end stats.

  6. canadianmortgagetrends.com scares me, Mark. Check this link: http://www.canadianmortgagetrends.com/canadian_mortgage_trends/smith-manoeuvre.html

    The number one rule of a happy retirement is to not mess with the equity in your home. Mortgaging the house in return for a possible, uncertain tax break is a risk-adjusted loser for any middle-class borrower, and suggesting it to any but the truly rich is a misconduct.

    If you want tax-deductable interest, then borrow secured by your portfolio assets.

    Oh, and to offer an opinion on your question on rates, I don’t think that interest rates are going anywhere in Canada any time soon. With the loonie rising on USD weakness, an increase in interest rates will drive CAD even higher, drawing hot money into Canada, driving CAD higher, and so on…. The Bank of Canada is in a tough place, and I don’t think it can risk momentum capital inflows.

    Yet the currently low rates are heating up a housing market that must cool. I think, if the BoC and the government are serious about acting in the public interest, that they will require higher down payments, end “cash-back” style mortgages, revert to 25 year amortizations, and/or nudge banks into higher credit spreads on mortgages. Any/all of these changes would reduce home prices, which is in the public interest.

    But nothing the government has done over the past year indicates that the public interest has a seat at the table, alas. Interest rates will rise materially eventually, but maybe not next year.

  7. Sorry, Mike. I meant, “Mike” above and typed “Mark”.

  8. Hello Newalgier,

    I’m not sure which Mike you were speaking to, but… (Other Mike, can you please change your posting name to make it a little easier?)

    CanadianMortgageTrends supplies great information on various topics, even stating regarding the Smith Manoeuvre that:

    The Smith Manoeuvre is indeed a powerful strategy, but it’s not for everyone. There are both investment risks and serious tax risks. Your returns could be insufficient, CRA could invalidate your application of the strategy, or you could wind up in a negative amortization scenario if your house value falls.

    Therefore, always consult a licensed financial and tax advisor before considering it. Find an advisor that will work closely with your mortgage planner, offers free consultations, and charges no out-of-pocket ongoing fees.

    And with interest rates – the BoC is certainly in a predicament. Rising Loonie on one end, and risk of fueling a bubble on another.

  9. Mike Fotiou, yes, they did put some caveats in there to cover themselves. What makes my head explode is that the strategy is completely inappropriate for 99% of Canadians (and I don’t exaggerate). The only reasonable way to responsibly talk about the Smith Manoeuvre is in the context of a crazy idea that you should never, ever attempt unless you are certain that you are in the top 1%ile of wealth. So, it’s not only, “Not for everyone,” but I’d say that it’s not for anyone .

    Oh, and the other thing about that paragraph that annoyed me: never find an advisor who charges no fees. Make sure that you pay your advisor (and it’s expensive!!); otherwise, he makes his money by jamming you into inappropriate, high-fee investments that goose his trailer fees. It’s a dirty business.

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