Calgary the only major Canadian CMA still below peak housing price levels: report

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By Mario Toneguzzi, Calgary Herald – April 28, 2010

CALGARY – Calgary is the only Canadian major metropolitan area where house prices remain below their peak level, according to a report released today by Teranet-National Bank.

The report, which measures prices of all dwellings sold at least twice, said Calgary is still 10 per cent down from its peak in August 2007.

In February, Calgary prices declined by 0.4 per cent from the previous month but were up 2.2 per cent from year ago levels, according to the Teranet-National Bank House Price Index.

It was the second consecutive month of a retreat in Calgary house prices.

Nationally, the index, which measures prices in Calgary, Halifax, Montreal, Ottawa, Toronto and Vancouver, indicated prices were up 9.9 per cent from a year earlier but the 0.2 per cent month-over-month increase was the smallest in the 10 months since it began climbing.

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Spring Panic for Homebuyers

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By Garry Marr, Financial Post  April 7, 2010

Lynne Engelman and Kevin Giddings have less than 120 days to find a home.

The Calgary couple won’t be homeless if they strike out, but they will be without a near-record-low five-year mortgage rate. They were pre-approved for the 3.69% guaranteed rate just before all the major banks jacked up their rates last week.

If they had to go to the bank today to borrow, the five-year rate would be more like 4.25%, and that figure is expected to rise in the next four months.

“We knew rates wouldn’t continue to be at these all-time lows so I said, ‘let’s lock in and hopefully we can find a home,’ ” says Mr. Giddings.

Rising interest rates on the long end of the mortgage market are just one more catalyst for a spring housing market expected to reach a fever pitch. Throw in new mortgage rules in effect April 19 that will make it tougher to borrow in some cases, a new harmonized sales tax (HST) in Ontario and British Columbia on July 1, and a likely Bank of Canada hike in short-term interest rates, and buyers are getting panicked.

“We’ve started looking. We found a place but ended up in a bidding war we didn’t win,” said Mr. Giddings, who is looking to upgrade to a larger house, but says he isn’t desperate to buy. If the couple doesn’t buy a home in the 120-day period and end up facing higher interest rates, “it might change our decision,” he added.

Inventory levels remain low across the country, even after three straight months of supply slowly building. In February, the Canadian Real Estate Association said there were 4.7 months of inventory in the system on a seasonally adjusted basis, based on the rate of sales. That is a near-record low.

While sales activity in February actually dropped 1.5% compared with January, year-over-year sales for the first two months of 2010 were up 44.2%.

Low supply and strong demand continue to goose prices, with the average home selling for $328,440 this year, an 18.2% jump from a year ago.

In the greater Toronto area, figures for March released Tuesday show the average sale price soared to $434,696, a 20% jump from a year ago. Sales in the GTA jumped almost 70% compared with last year.

In Vancouver, March sales were up 38.5% from 2009, while prices in the west coast city are up just over 20% from a year ago. Even Montreal, with its relatively cheap housing stock, is on the upswing. February sales in the city were up 45% from a year ago, while the median price of a single-family home in the area reached $245,000, a 9% increase from a year ago.

“It’s extremely busy out there right now. There is clearly a shortage of properties for sale in many parts of the country,” said Michael Polzler, executive vice-president of Re/Max Ontario-Atlantic Canada.

Doug Porter, deputy chief economist with Bank of Montreal, said last week’s interest rate hikes from the banks has turned up the heat on the spring housing market. “When we first get a whiff of real mortgage rate hikes, it pushes any fence sitters,” he said.

“If anything, it will heighten an already strong spring market.”

Gary Siegle, regional manager of mortgage broker Invis Inc., said business has been “hectic” since the banks started raising rates last week.

“I would say volume was up 50% because of [the rate hike],” said Mr. Siegle, adding lenders have also been sending out word that anyone pre-approved for a deal must have a signed offer by April 19 to avoid having to qualify under tougher new mortgage rules.

The new federal guidelines require anyone buying a home with less than 20% of the purchase price for a down payment to qualify based on the posted rate for a five-year mortgage, now at 5.85%. For terms five years and longer, consumers can qualify based on the actual rate on their contract.

“The new rules are going to absolutely disqualify some people but won’t impact everybody in the marketplace,” said Mr. Siegle.

But they do provide further incentive to get a deal done now.

Another deadline looming for home buyers is the arrival of HST in Ontario and British Columbia on July 1, which will add about $2,500 to $3,000 to the average purchase.

Timing the housing market is always a tough game to play, but those who waited for this spring to buy are completely off their timing. But does an overheated spring housing market mean a possible crash come fall?

“There is a risk of [a greater fall]. I like to believe the underlying economy will have improved and help cushion the blow and the HST is only a factor in half the country,” said Mr. Porter. “But there is an increasing risk that we are going to get a mini boom/bust.”

Mr. Polzler also believes the inventory shortage this spring will ease up by then. “Things will slow down a little by fall,” he said.

© Copyright (c) National Post

Economic optimism spurs Alberta homebuyers: poll

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By Lisa Schmidt, Calgary HeraldApril 11, 2010 7:42 AM

Despite rising mortgage rates and surging home prices, Charmaine and Everett Buhler didn’t hesitate to make an offer on a house in Varsity.After an 18-month search, the Calgary couple snapped up the home the same day they looked at it.

“This house was maybe something we might have considered a couple years down the road, but it just came up at the right time and it was a good price for the area,” said Charmaine.

“Interest rates are still such a good deal. To us, it wouldn’t hold us back from buying.”  That sentiment is echoed in a new survey that shows a majority of Albertans are still confident about home-buying.

Nearly two-thirds of consumers think now is a good time to purchase a home, according to the latest PricewaterhouseCoopers survey, conducted by Leger Marketing and provided to the Herald.

That comes as they also expect interest rates will rise. Many banks have hiked mortgage rates half a percentage point in advance of expected broader rate increases by the Bank of Canada this summer. Homebuying continues to be the strongest index in results that show overall consumer confidence remains cautiously optimistic. The survey responses translated into a housing index of 143. An index above 100 reflects an optimistic sentiment. That was down a couple notches from January, which may signal consumers aren’t feeling any urgency to buy ahead of rising borrowing costs, said Ian Gunn, Calgary-based partner and leader of PwC’s private company service practice. Despite a gradual decline since peaking at 147 in November, the index is more than twice the lows reached in early 2007, when home prices were soaring.

“You weigh all factors, this is a very strong indicator that supports that confidence in the marketplace,” said Gunn.

Calgary’s housing market has rebounded from last year’s lows, when the recession chilled demand.

Single-family home sales were nearly 30 per cent higher in March than a year ago, while sales of condominiums are up 37 per cent, according to the Calgary Real Estate Board.

A report by Royal LePage last week shows city home sale prices, on average, are running about 10 per cent ahead of last year’s levels.

The surge in prices — and pockets of even larger spikes in some neighbourhoods — is a result of far fewer listings on the market and more buyers on the hunt, said Ted Zaharko, a broker with Royal LePage Foothills. “Fourteen months ago, when there were 12,000 listings on the market, you didn’t see any spikes,” he said. “Today it’s around 3,000 — it’s just not enough.”

There’s also been a surprisingly strong jump in building permits for new homes in Calgary, another sign of future housing demand. It’s interesting to see developers obviously still do see some upside,” said Dan Sumner, economist with ATB Financial in Calgary.

Other homebuyers said the timing of their homebuying decision is a result of their personal situations.

First-time homebuyers Aliah and Kyle Knopf are relocating from Edmonton after Kyle landed a job here. The couple also needs space for their growing family. Their first child is due in a couple of weeks. Affordability is an issue, said Aliah, and the house search so far has been a little discouraging. “The market’s pretty daunting for first-time homebuyers,” she said. “We’re looking at $400,000 or more for a home, which is more than we were expecting at this point.” Even at that price level, homes for sale often need a lot of work or major updating, she said. “That’s a little bit disheartening,” she said. “It’s tough when you are looking at spending that much money.”

The survey, conducted between March 15 and 23, also found consumer and business confidence remain positive. Overall, the consumer confidence index dropped slightly to 110, the same level as one year ago.

“It is trending back down, which may be an indicator of some conservatism from consumers,” said Gunn of PwC.

“There may be a nervousness around. ‘Are we really out of it; is there a correction to come that they haven’t the confidence to see beyond the next few months?”

Other highlights of the survey include:

-The overall business confidence index held steady at 115, its highest level since the survey started in February 2007.

-Businesses were most optimistic about the job market, reaching a high of 156 in March.

-Consumers also expected a lower unemployment rate in 12 months, with the index now double year-ago levels.

-Consumers were less sure of future household income and making major household purchases.

The survey polled 900 Albertans. It also conducted an online survey of 237 Alberta business leaders.

The margin of error is plus or minus 3.3 per cent, 19 times out of 20.

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