The Detached Market in Calgary in Review

The Calgary Real Estate Board has released the December statistics package so I thought this would give me a good opportunity to review the year in real estate with you. 

Sales of detached homes in 2018 were the lowest they have been in over a decade with 9,945 homes changing ownership - the only year we were under the 10,000 sales ceiling. On the bright side, we are hoovering just below the average for new listings. Although we have been on a steady incline for the past three years, as we can see in the second graph below, we are somewhat below levels in 2008, 2011 and 2012, three of the toughest years we have seen in the past decade:

Looking at the inventory (in blue below) and sales (in green) we can see the ratio between the two is quite high. As that differential expands, typically pricing (in red) drops off considerably. We can also see in the second graph that supply is trending upward and is at a critical level, the highest it has been in five years.

All three price indicators - Benchmark, Median and Average prices – are the lowest they have been in the past four years. This is the highest inventory level we have brought into a new year in the past four, in combination with the lowest sales figures in that same period of time:

Here is a look at the detached market since 2005. As inventory levels rise, typically prices trend downward. We can also see that inventory levels usually increase from the beginning of the year to mid-year with a few exceptions. The inventory level is certainly trending upward, we may very well see a further glut in inventory this year as we move towards spring and early summer:

The numbers are certainly not looking very good heading into 2019, I do hope we are getting close to the bottom and we can see some gains shortly. I suspect we will see subtle (and maybe some not-so-subtle) changes in a variety of extraneous circumstances to the market such as slight changes to mortgage qualification, this is an interesting article in the Globe and Mail from last week. We have seen six mortgage rate increases in the past couple of years as well as qualification changes in October 2016 for insured mortgages, then again last January where all qualification rules were amalgamated regardless of the mortgage portion of a sale. It is tougher to get into the market as a first time home buyer, and that is certainly adding to the sluggish sales numbers. Perhaps some of these anticipating tweaks will set us on a more balanced course.

With all Calgary sales categories down over 20% this past year, I would imagine mortgage brokers - as well as any other real estate professionals - have seen a big financial hit in the past five years, and especially this past year. Although new home builds are not necessarily included in our MLS statistics, we will find that Builders are also seeing a similar decline in sales. I suspect we may see some builders, Real Estate Brokerages and mortgagors take a serious look at their future viability as they feel the financial pinch. It was the end of 2016 that we saw Reid Built go belly up and what a fiasco that still is! I suspect there are many companies, builders and support services that may be dealing with insolvency if we don’t see improvement in the industry early in the year.

There were some exceptional sales this year, 49 detached homes sold over a million dollars in metro Calgary. Here is a look at a few of those:

• 4328 Britannia Drive was originally listed for $5.95 million in 2013 and was on and off the market for 1,112 days, selling for $3,599,000 in early November;
• 3411 Ninth Street SW in Elbow Park sold at the end of November for $3,488,000. The seller purchased this in December 2011 for $5.05 million;
• 234 Discovery Ridge Terrace was purchased for $2.05 million in 2008 and sold in mid-November for $1,898,000;
• 126 37^th Street NW was originally listed for $1.85 million in March and sold after 232 days on the market for $1,550,000.

One of the most amazing sales to me was this one also in Britannia, it sold in February for $3,180,000. It was purchased in 2012 for $6 million, wow!

Not all of the upper echelon saw such dramatic drops in price or value. I would say, though, that many affluent buyers in this price category are taking advantage of the lacklustre market and securing some beautiful properties in anticipation of values eventually returning to values of the past. Maybe they know something we don’t know!

Regardless of the slow market, there still are buyers that are looking for a new home. Some folks are upsizing as new members are added to their families, some are looking to purchase after renting for a period of time, there are new folks coming to Calgary all the time and there are some folks looking to down size or “right size”. What IS important in such a volatile market is to have the facts so that one can make well-informed, well-researched decisions whether they are considering buying or selling.

If you are considering buying, selling or investing in real estate, let me put my experience and expertise to work for you.

The Calgary Housing Market Moving Forward

“Elevated inventory levels compared to sales are causing prices to ease further in Calgary’s housing market” CREB November 1^st, 2018.

As with any change in the real estate market – whether upward or downward – there are great opportunities for both Buyers and Sellers. We have been infiltrated with negative news for many months, and often it does seem that there is no end in sight. Here is an analysis of the market today and insight into where I feel it is heading over the next few weeks, months and years. Although at the onslaught it may seem negative and dismal, there will be many opportunities, especially if you are considering changing your current real estate position. Upsizing, downsizing or right-sizing, there is plenty of room for growth.  

Total sales across Calgary are at the lowest levels in over ten years, as a matter of fact, sales of detached homes in the city are at the lowest we have seen since the late 1990’s. Consider the population in the late 90’s had not yet reached a million, while today we are estimated at around 1.3 million! Adding to this issue is the increase in new listings. Although we have seen an “easing” of new listings over the past few months, we are still at the highest we have seen since 2014, prior to the oil price fiasco.

Looking a little closer at the inventory, we can see the ratio between the inventory and sales is still quite high. Although it looks like the ratio has been easing a bit since June, a lot of that has to do with listings being taken off the market rather than actual sales figures. Since the beginning of September there have been 4,477 listings taken off of the market across Calgary. Although many have been “re-listed”, there are still a significant portion that have stayed out of the listing pool since then. In that same period of time there have been 3,107 sales.

I have concerns regarding some of this inventory coming back onto the market early next year that was listed in the recent past, and the possibility of that coming back at a lower price point than it was when it was previously listed. In the second graph we can see that inventory has been trending up for the past five years. That, in combination with the possibility of the relisted homes returning, could point to some trying times in 2019. Many owners that are considering their selling options look very carefully at the spring market, as that is seasonally the most robust sales period of the year. Looking at the sales portion (in green) of the graph above certainly shows that was true this year. There was a steady climb in sales from January to June, sales have eased off month by month since then. In the same graph we can also see that inventory increased significantly in that same period of time, and at an accelerated rate in comparison to the sales figures.

Taking a longer view of the market and what has happened in the market since the craziness in 2006/2007 when inventory was extremely low and demand peaked due to a large influx of new Calgarians from the rest of Canada and abroad, we can see prices jumped considerably. We can also see the continuous downward trend of price change since the oil price fiasco in late 2014. Our inventory trend is also climbing and although not at the highs we saw in late 2008, we certainly seem to be heading in that direction.

For prices to go up, we need a variety of things to happen in Calgary. To start, low oil prices in the past few weeks and the brutal price differential for our Alberta oil is taking its toll on the economy across Alberta, and especially in Calgary. The potential development of pipelines to take our oil to the coast and the international market is taking a kicking, and that is something that we need to help us on the world stage. Although we are hearing that things are getting better in that industry, the low prices since 2015 have certainly slowed exploration and the potential for more employment in Calgary and the rest of the province.

I was recently in conversation with a recruiter for a medium oil company and was told they are currently looking for quite a few full time employees, she also mentioned that many of her colleagues in other companies are in the same boat. I asked if they are finding employees from outside of Calgary and she said most have been unemployed locally for some time, or are looking to move from another local company to reposition themselves. I think this is a good start and shows that things are perhaps improving in that industry, the question is when are we going to start pulling from the national or international pool and have a significant in-migration to the city again.

Secondly, our unemployment figures are still teetering around the 10% level in the City. Our city core is close to a third empty and more commercial space will be coming online shortly as they finish up the Telus Sky, which will be the 13^th tallest building in Canada with 60 floors. The top 28 floors will be more residential space. City Council is trying to figure out how they are going to make up for the decline in down town property taxes and are looking at business in the suburbs to make up the difference.

Interest rates have gone up six times since July 2017 adding further turmoil to the real estate market, especially for first-time homebuyers. That, in combination with a stricter qualification process for new mortgages put in place the past couple of years, has also taken its toll on the market. All of this has contributed to the fact our net in-migration has been sluggish and in negative territory since 2015, although there are signs this is easing up and looks like we could possibly be heading into positive territory, although not in the numbers we have seen prior to 2015. Add to the mix the uncertainty of where our property taxes are going, many potential buyers – whether they are new to the city, or someone considering a new move – are opting to hold back to see what happens. The real estate market is driven by “urgency”, I need to buy this before prices go up, someone else buys it, etc....that urgency is also in a lull.

City Counsel has also approved 12 new communities across the city, something we have not seen since Nenshi has become our Mayor, one of his early mandates was to stop “urban sprawl”. I think their intent here is to improve the tax base, but I wonder where the new homeowners are going to come from? “If you build it, they will come”?

So taking all of this into account, one needs to wonder “why” the coming year will be better than the past few years as far as sales and urgency. These doldrums will turn around, the million dollar question is when that will be? I contend that we are talking many months, possibly years before we see positive gains in real estate. If something profound happens in the oil industry, or a fabulous new industry comes to the City, all this will change around and we will start to travel upward again. I expect further devaluation in property values for a significant amount of time, I would suggest it could take at least two years to come back to the values we have today. If we only see downward price adjustments for the next couple of years, it will take at least the same amount of time to increase to where we are today from that point.

So what is the take away from all of this information?

As a Seller, one needs to be running on all cylinders right out of the gate. A property has to be priced aggressively. That does not mean “underpriced” or priced below market value, but to be priced as close to the potential value today. The property also has to show well, both online and when someone visits and views the home. We are in a beauty contest as well as a price war to some degree. Keeping a close eye on the market in your area is also key once you are on the market to be aware of any subtle changes in the local market. What this information means is paramount, and your professional real estate advisor can provide prudent insight into those numbers.

As a Buyer, there are many choices with an abundance of inventory. Some – but not all – sellers will be more flexible in such a market. Sellers are often priced aggressively right off the bat and prices have eased over the past few years. Being aggressive and pro-active when new properties come up that meet most of your search criteria is also important as there are many interesting and well-valued homes that come on the market and are sold relatively quickly. Interest rates are creeping up, and we anticipate further increases in the coming year. It is a great time to take advantage of lower rates, which contribute to your affordability.

Regardless of whether you are a potential buyer or seller, information is key and what it actually means is most valuable. Having solid in-depth analysis and strategic insight to go along with this information will help you make an informative and well educated decision in moving forward on your real estate journey.

Calgary Real Estate Market in early 2018

We are off to an interesting start for the first two months of 2018. With the third interest rate hike in six months in mid-January and the change in the qualification process of non-insured mortgages, it was to be expected that we would see a slow start to the year. Chillier weather along with lots of snow may have also impeded sales for the early part of the year.

Although sales of all residential properties in metro-Calgary was down 11% compared to last year for properties under a million dollars, we actually saw a significant increase in sales of homes over that million dollar threshold to the tune of 45%! Combining all property sales in all price categories, year over year we saw a 10% decrease in sales for the first two months of this year:

Lifestyles of the rich and famous?

Taking a closer look at the higher end homes may give us a better prospective of what is actually happening in that sector. The highest sale so far this year was a beautiful home in Britannia that sold for $3.18 million toward the end of February. This home was originally listed at the end of 2015 for $5,995,000 and was on the market for 788 days before they found a new owner. The sellers purchased this in 2012 for a whopping six million dollars. Wow, that is a heck of a loss!

The second highest sale was in Elbow Park. It was originally listed in September 2016 for $3.7 million, they were on the market a total of 388 days and sold for three million dollars. This home was purchased in September 2017 for $3,733,050!

The third highest sale was only on the market 18 days, a bit out of the norm for this price category, originally asking $3.15 million. They sold $257,500 (-8%) below list for $2,892,500.

The fourth highest sale was also in Elbow Park and was on the market for 260 days, originally looking for $3,099,000 and selling for $2.85 million this year. This home was purchased in 2012 for $2.95 million.

And in the fifth spot is this bungalow in Briar Hill. It was on the market for 301 days, originally listing for $2.888 million and selling for $2.4 million. They also listed this home for 301 days in 2013/14 for $3.15 million.

So although on the outset it would seem that folks selling the elite homes in Calgary are seeing an increase in activity, perhaps what we are actually seeing are high-budget buyers taking advantage of a slower, receding market. Granted not all of the 77 sales of homes in this price category are seeing these crushing decreases in value, but it is interesting to see that those five homes sold considerably below their original expectations.  

The rest of the detached market...

When we dip below this threshold and look at homes between $600k and that million dollar mark, we can see that sales for detached homes are down 23% from the pace we set last year. I think this is a significant price category that may very well affect other home sales in lower categories. We want to keep an eye on inventory levels in relation to sales. If we see a significant increase in listings, we risk a deterioration in pricing as sellers compete with one another for a potential buyer.

From February 1st to March 5th about 460 new (or re-listed) homes came onto the market in this price category, about 41% of the current inventory of 1,125 homes. In February there were 134 sales and January there were 105 sales, obviously new listings are far out-pacing sales. Perhaps this increase in the inventory are sellers that are trying to get a jump on the spring market. If new listings slow and the pool of buyers increases as we head toward better weather, perhaps everything will even itself out.

The bulk of our detached sales in metro Calgary are between $400k and $600k. So far this year they account for just over half of our sales. Year over year transactions are down 14%, from 739 last year to 638 this year. Almost half of the current 1,837 listings have been added since the beginning of February.

We are at an interesting crossroads here, hoping the buyer pool becomes more robust as we get closer to the spring market. As per usual our Alberta real estate market is full of intrigue and uncertainty.

Looking Forward to 2018

2017 was a very interesting year in Alberta. It would seem that our economy is back on the upswing, oil prices are on the rebound and our future is so bright, we gotta wear shades… it seems those rose coloured glasses are being worn by most economists. I do hope they're right and look forward to an awesome year as well!

Before we do that, though, let’s have a closer look at how real estate fared this past year in Calgary. For, perhaps, some insight into the coming year.

The first half of 2017...

We were off to a good start in early 2017 with 12% more sales in the first six months compared to the prior year. Those numbers were looking very promising and many were predicting that we were finally moving out of the lacklustre sales period following the oil price collapse in late 2014. In that year, prior to the oil fiasco, our sales were the best in many years and very similar to our peak numbers in 2007.

In 2015, we saw a decrease of 26% in sales compared to the first six months of that prior record breaking year. 2016 also saw falling sales, dipping 10% below sales figures from the year before, and well below (a 34% decrease) compared to 2014. Although the numbers were looking good in the first half of last year, keep in mind the fact we were comparing them to two very troubling years. If we look back to the first half of 2014 and compare it to our “great” start to 2017, we were still 26% below that landmark sales period.

The rest of the year...

In the latter half of 2017 we saw three major events that deeply effected the real estate market in Calgary and all of Alberta. The first event was an increase in the Bank of Canada interest rate in mid-July. We typically see a sales decrease when we get into the summer months, however, a good portion of the 24% decrease in sales from June to July had to do with this rate increase. In the three years prior to 2017 rates decreased between 9 -14% from June to July.  The second rate increase was early September where there was a decrease in sales from August by 8%.

The third major event is the change in the mortgage qualification rules set by the Bank of Canada. The new rules, which were implemented on January 1^st, 2018, essentially dictate that all mortgagees must qualify 2% above the posted Bank of Canada prime rate, which currently is 3.2%. What that means is about a 20% decrease in buying power for those that wish to put 20% down on a home. A similar policy was put into place in October 2016 for all insured mortgages (those where less that 20% was put down by the mortgagee). This had a major effect on sales in the market in October of that year, where we saw a spike in sales that month when folks were trying to get into the market under the old rules.

Although we saw a decent sales month this past December – 8% above last years sales and 5% above the average sales figures from the prior three years – we did not see the significant sales jump that we did when the policy changed for insured mortgages two years ago.

This change in policy will certainly effect the affordability of those looking for a new home and wanting to put 20% down on the purchase. I would suggest that perhaps a portion of those buyers may decide to put less down and qualify for a higher insured mortgage, taking some of the pressure off of the downward trend in affordability. 

The first six months of this year will be crucial in seeing how the new policy affects sales and values, and how that portion of the market (conventional mortgages) reacts to the changes.

A volatile 2017...

Real Estate values have also fluctuated dramatically over this past year. The average sales price in Metro Calgary in December was $451,587, the lowest it has been since January 2013. The silver lining to that is the fact the highest average sales price in Metro Calgary – ever – were in May ($504,230) and June ($500,889). These have been the only two times we have surpassed that half a million dollar threshold. That 10% decline in average value between May and December is one of the most volatile in the past few decades as well. 

What will 2018 bring?

Inventory levels are on the increase, there were 15% more listings this December compared to last year and one of the highest inventories that we have seen in a decade. 

Sellers will need to be well aware of the market and any nuances that may effect values to maximize their equity position. There are many extraneous variables that may effect the market over the next year such as the net migration of new folks moving to Calgary, the employment rate and - of course - the price of oil. Average values will most likely deteriorate as we move through 2018 and adjust to the new mortgage rules, however, there are still exceptions to the "average". Being cognizant of the market and aware of how a property is presented and marketed will be prime components of how successful one is in the coming market.

How the Mortgage Rule Changes will affect the market

My thoughts on the new mortgage rules and how they most likely will play out... Although the qualification process will not directly affect those purchasing with cash, that is a very small percentage of the buying pool, most buyers have some sort of a mortgage or loan on a property they are purchasing.

From now until the end of December we will most likely see a bit of a frenzy in sales, especially for those buyers that have been sitting on the fence waiting to “see what happens” in the market. As of the beginning of 2018, those new rules will make a huge change in transactions. I predict sales will be down for the entire year. (Thanks Ram Sund for this image!)

Overnight, most buyers purchasing power will drop about 20%!! The question is how that will affect the value of properties in the beginning of the year. I would suggest that values will not drop 20% overnight, but will see a steady decline for the first few weeks and months of the year. It will take much longer for the change to make a big difference in pricing. What WILL happen is a huge drop in the number of sales. First off, January, February and often March typically see a lower number of sales due to the season and the inclement weather associated with deep winter. So the seasonal slow down along with the new mortgage process will grind sales figures even further.

Normally, we see an increase in sales when the weather turns to spring (whenever that may be!) and the bulk of our sales are from late spring to early summer. This is prime time for sales and how we do in that short period of time will dictate how the rest of the year goes. If we still see dismal sales figures in April, May and June, it could trigger sellers to become more anxious causing further price reductions pushing values down as sellers compete with other sellers for the shallow buying pool.

Future interest rate increases will undoubtedly further complicate our challenges. Although we had a reprieve this week when the Bank of Canada kept lending rates in check, they did hint that an increase is likely in the foreseeable future.

So what does this mean “now”?

The next couple of weeks may be key for a buyer making a new purchase to maximize their buying power. That same period of time is also going to be key for a seller to maximize their equity position for the next few weeks, months and possibly years.

The time is NOW!

Looking Forward in the Real Estate Market

I have had the opportunity to chat with a wide variety of home owners over the past few weeks regarding the current real estate market in Calgary and area and thought I would share some of the information I have gathered. I have been reading in the news that many economic experts feel that we have “turned a corner” from the economic downturn we have been experiencing in Alberta since the chaotic fall of oil prices in late 2014. I am still looking for evidence of that in the real estate market…

The first half of this year did seem to see somewhat of a recovery in sales numbers when compared to our dismal market from October 2014 to the end of 2016. Buyers were coming back to the market in droves and for a few weeks supply had a difficult time keeping up with this new demand. I would suggest that a good portion of this wave of new buyers was from the pent up buyer pool created in the past two years. Many potential buyers were on the fence for a long period of time waiting “to see what happens”, those buyers contributed to the great run of sales in the first few months of this year. This large pool of buyers that had been accumulating in that time has quickly diminished as many found their new homes and many new listings were added to the inventory as sellers saw a great influx of sales – and increased values.
In the first three months of this year, inventory levels were between 25 and 32% below the same period of time last year. Moving in the opposite direction, single family sales increased 19% year over year in the first quarter. This increase in sales in combination with the lower inventory helped flame the buying frenzy.

Then a couple of increases in the Bank of Canada rate added to the turmoil, but contributing in the opposite direction… The first increase of a quarter percent in July was partially responsible for the 27% decrease in sales across the board from June to July. Granted we often see a seasonal decrease in sales this time of year – last year there was a 13% drop and in 2015 we saw an 8% decrease – but doubling last years rate and tripling the drop from the year before is concerning. The second increase in lending rates in September has contributed further to lower sales figures and an ever increasing level in inventory, there are now more detached homes for sale than we have seen in the past three years.

Looking at a few communities for a micro view of the market, we see similar trends throughout the city. In Panorama Hills, the largest community in Calgary, there are currently 90 detached homes for sale. This year there have been an average of about 16 sales per month, very close to the same as last year. Last month there were only seven sales, half of the 14 sales from last September. Next door in Evanston there are 88 active listings and they had 12 sales last month. In Hidden Valley there are 23 active listings and there were four sales in September. In my own community of Hanson Ranch, the last sale was back in August, there are currently eight active listings (although I did see a property inspector at the listing up the road from me today!)

Back in June I sold an apartment styled condo in Country Hills Village, a community comprised completely of multi family buildings. I noticed that the most recent sale in the area was a very similar sized home in the same building as my own sale. Back in June, my listing sold for $244,700, this last sale a couple of weeks back was 5% lower at $233k.

Looking south at Cranston, they have faired better than the Northern Hills. Although there are 100 active listings there today, they did see 25 sales in September, very close to the average of 26 sales per month they have maintained this year. A quick look through the seven sales so far this month brought me to the sale of a two storey home on Cranbrook Crescent that sold on Friday for $635k… this home had been on the market since late April when they originally were asking $698,888. The home was purchased only a year earlier for $670k, so looks like the sellers lost quite a bit of equity. Although this is not the “norm” in the area, it does go to show that there are some of these scenarios where ever we look.

Switching over to Killarney just west of the City Centre, there are 21 active listings. The nine sales there since the beginning of September averaged two months on the market and sold, on average, $47,560 below their original listing price.

Complicating the market further is the potential pending change in the qualification process for ALL mortgages, regardless of how much the seller is putting down. On a conventional mortgage with 20% cash down, that could mean up to a 20% decrease in one’s buying power. We are also heading into a typically slower sales season as we head toward winter. I suspect the average days on the market will increase week by week, creating a more anxious seller. If we continue our path of an ever increasing inventory and slowing sales, we could certainly be in for some challenging times in the coming weeks, months and possibly years.

Every neighbourhood has a different set of circumstances, and as you can see above, some areas of the city are doing better than others. There are still buyers, even though the sales pace has certainly slowed, and there are still good investment opportunities. In a volatile market such as our current situation, it is imperative that one is well-informed to the nuances of the market so that you can make well-researched and educated decisions on how to proceed with your real estate asset whether you are considering selling, or buying. 

Western Gold Real Estate is a premium boutique real estate brokerage dedicated to a client-centric approach to listing and buying real estate. We pride ourselves in offering in-depth analysis and strategic insight into selling, marketing and purchasing your real estate investment. A trusted real estate advisor is a huge asset and a prudent member of your team!

For more insight into the current real estate market, please do not hesitate to contact me at your convenience for a complimentary real estate consultation.

Losing Balance, Regaining Control

Information gathered from a presentation by Todd Hirsch, ATB Financial's Chief Economist - September 9th, 2015

There have been serious imbalances in Alberta's economy over the past five years or so, and Albertans are worried... we have been relying on high oil prices and a stable and expanding energy sector to grow our economy and province. The recent extended period of lower oil prices is certainly a major contributor to the current economic environment we are seeing in Alberta, and across the nation. Make no mistake, low energy prices is a National issue, not just a provincial challenge! Last year at this time the cost of a barrel of oil was around $97, today we are looking at the mid $40's. Aside from the obvious effect that has on exploration and new capital expenditures, it also affects the Federal and Provincial Governments coffers.

To regain an economic balance, four things need to happen...

1) There must be some rebound in the price of oil. Reaching and sustaining around $60 a barrel should stabilize the industry, and contribute to our economic recovery. There is much debate regarding the question of whether or not we are in an economic recession in Alberta. We will not know for sure until April of next year whether or not we did see two consecutive months of economic retraction as that is when those figures are released.

2) There must be a re-balancing of wages. In the past decade the average earnings in Canada increased 29%, for that same period Albertans enjoyed an increase of 48%... here is the real kicker though, the average wage in the oil and gas industry increased 56%!  With many capital projects being put on hold in the energy sector, there should be downward pressure on wages as more contractors compete for less work.

3) We must see strong performances in other sectors of the economy. Agriculture, forestry and tourism should benefit from the lower Canadian dollar and lower gas prices. The US economy is also on an upswing, including new housing development contributing to the demand of products from our forest sector.

4) The value of the Canadian dollar needs to remain where it is. The lower value of the Canadian dollar is giving a bit of a cushion to lower oil prices, contributes to tourism from other countries and adds value to other exports such as forestry products.

The energy sector will need to adjust to these lower oil prices, and diversifying into other resources and alternate energy will be prudent going forward. I am sure we will find that we indeed have been in a recession this year, the question is to the extent of this retraction. Albertans are a resilient bunch and will persevere through this economic crunch. This should be a modest recession and we will most likely see a below average growth rate in the coming year. Generally people will be cautious in their investment and spending habits in the next few months, however, this should be a softer downturn than we saw in 2009-2010.

The new norm will be lower growth rates, right across the world. The rebalancing of income will start in the petroleum sector and move into other sectors of the economy leading to softer commodity prices, including real estate. Price corrections are most likely inevitable, however, should not be severe.

Real Estate Photography

Visual content in an important tool as a medium for customer retention and good real estate sales. It is of prime importance to have high quality photography to stand out from the competition. Great images not only determine the success of property sales, but also the website on which the properties are listed. Online content with compelling imagery quite simply attracts more viewings.

 

 

Homes that show well online with superior photos are also more likely to sell faster than homes with low quality photography and little or unimaginative staging. Quality is not the only factor though, it is also important to offer a variety of interesting and outstanding photos to keep a potential clients interest piqued. Without a doubt, most buyers today will research a property online prior to booking an appointment to view, or stopping by an open house. Keeping a buyer engaged through interesting and a wide variety of great photos is so important in bringing potential buyers to the table.

When buying a home, or any investment real estate property for that matter, a good portion of our decision is influenced by emotional factors such as our first impressions. We often are most likely to buy a property based on the feelings it gives us rather than the actual value it provides. Developing a consistent and obvious style with high-quality photography and staging will engage more buyers and help ensure the success of the seller regardless of their price category.

Alberta Economic Outlook 2015

I had the opportunity to sit in at an ATB presentation by their chief economist, Todd Hirsch, last week for some of his insights into how he see's our economy faring this coming year. Some great information that I will implement with my own thoughts here. To paraphrase Todd, the secret to good "economic forecasting" is to revise it frequently!

First and foremost on our minds is the question of how the orange tide and their political philosophy will influence the Alberta economy. Our political structure over the past four decades has been so entrenched in conservative thought and procedure, it will take some major work to completely change the path we have been travelling. The "machine" that runs each political portfolio within the system has a myriad of components and positions that have been filled by the previous conservative regimes. Making changes within this structure will be a long process ensuring that any major change in philosophical direction will take a fair bit of time and effort. Premier Notley has given us no indication that she sees any major policy changes in our immediate future.

The Alberta Economy has been slowing rapidly with the decline of the price of oil, a major component of our provincial economy. Our GDP growth rate is the lowest it has been in five years, certainly raising the level of anxiety amongst Albertans. We may have not seen the bottom of the market yet, although we have seen the price of crude increase over the past couple of weeks. Investors are still skittish and this nervousness will contribute to the volatility in the market over the next few weeks, leading into the summer. Prices should improve by the end of the year, however, the price will most likely still be lower than the actual cost per barrel of many Alberta projects. There will need to be some major re-adjustments and cost-cutting within the industry and this will be an uncomfortable and painful process possibly leading to more layoffs and lowering of contractor costs.
We will also see a discouraging job environment in all sectors of the economy. The labour market for new graduates will decrease as all industries adjust to the economic slowing process. The rate of "in-migration" to Alberta should also slow significantly as we see a decrease in employment opportunities.

Another concern we should be aware of is the record level of Canadian personal debt, last week at 163.3% of earnings. The good news is that we seem to have reached a plateau with that level.
NOW SOME GOOD NEWS...

The Loonie has decreased in value over the past year, however, this is more of an American Dollar story than a decrease in our own value. Where we are set today is actually good news as it contributes to our value as an exporter, especially to the United States. Costs of goods shipped to the US are lower for them when our dollar is lower. Our economy would be in a far worse position if we were closer to par. The Canadian dollar is in a "monetary easing" position whereas the US is moving into a tightening position.

Our dollar position should also increase tourism from our neighbours to the south. That in combination with lower gas prices at the pump will be appealing for many vacationers, especially folks with travel trailers and motor homes.

Other secondary industries in our province, such as forestry, will have the opportunity to find top notch employees due to the slowing of the oil industry. It is difficult for secondary industries to compete for manpower when oil prices are high. Other industries will also benefit from the low cost of fuel... imagine the increase in the bottom line for the trucking industry.

Although we are in the midst of a slowing economy, Albertans should not be overly worried. That is not to say we should ignore what is going on around us. It is not "business as usual", we should be making prudent, educated life decisions. The biggest threat to the economy is fear... fear leads to irrational decision making. This year will be a flat year for growth as we adjust to the new economic realities, however, we should return to normal levels of growth by 2017.

"My life has been full of terrible misfortunes, most of which never happened" Michel de Montaigne 

 

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www.atb.com/economics

Inventory Climbs in Calgary's Housing Market

Reposted from the Calgary Real Estate Board February Statistics Package

Calgary, March 2, 2015 - Year-over-year new listings growth eased from 37 per cent last month to nine per cent in February. However, as sales activity remained below long term averages for the month, Calgary inventory levels rose to 5,474 units in February.

"While housing supply levels continue to be higher than we have seen in this market for some time, they remain below February 2008 record highs of nearly 7,000 units" said CREB® chief economist Ann-Marie Lurie. "If the pace of growth in new listings continues to ease, this could place some downward pressure on the supply growth in the resale market."

After the first two months of the year, there have been 6,236 new listings come onto the Calgary market. However, the new listings gains have varied depending on price range and segment. Detached homes have continued to see a decline in new listings in the under $400,000 segment, while both the apartment and the attached product have recorded listing growth in the over $300,000 price range.

"It’s really important for consumers to consider what segment of the market they are buying or selling in when they make any real estate decisions," said CREB® president Corinne Lyall. "The inventory, demand and price movement will vary based on the community, price range and product type."

City of Calgary sales totaled 1,217 in February, a 34 per cent decline over the previous year’s activity. While sales fell across all product types, the rate of decline was higher in the apartment and attached sectors of the city.

"Everyone has different reasons for making a move and so it’s difficult to predict how buyers will react to this market," said Lyall "Buyers who have been waiting for more inventory to come on the market may find what they are looking for today. If they are in a position to make a buying decision they certainly can take advantage of the lower interest rates."

Months of inventory remain elevated at 4.5 months due to supply gains relative to slower sales in February. This placed downward pressure on pricing over the past month.

Unadjusted detached benchmark prices totaled 516,000 in February, a year-over-year increase of six per cent, but a 0.5 per cent fall over January figures.

Meanwhile, attached and apartment benchmark prices totaled 354,600 and 296,000 respectively. Both represented a decline over previous month’s levels.

The variation in price is more extreme when considering the average price. In February the average price rose by 0.3 percent relative to January, but fell by 4.2 per cent compared to last year. This does not come as a surprise given how the composition of the sales influences the change. Benchmark prices provided changes over time on similar properties, providing a clearer indication of pricing trends.

"Expectations vary significantly when talking about the impact that lower oil prices will have on the housing market," said Lurie. "This wide range in forecasts is often related to assumptions about how long the cycle will last and the resulting impact to employment and net migration."

"These differences in expectations will likely persist until there is some firm data to support assumptions about Calgary’s employment levels," said Lurie.

Essential Moving Tips

Reposted from Luna Grace, follow her here: http://lunagrace8.tumblr.com/

                        

Changing homes is extremely stressful, especially because you have to pack and then carry all your belongings from one place to another… It may not be the best fun you’ve ever had, but at least you can make it memorable! For this to happen, you surely need to take baby steps and have a great attention to details!
So, you need to move and you’re excited, until you realize the huge amount of things you have to pack! But don’t worry, you can hit two birds with just one stone – make it fun and effective too!
Even though planning this action with some months in advance may be time-consuming at a first glance, it will get to be less stressful and simpler if you don’t rush! By following these rules your stress level will decrease drastically! So, just enjoy your move!

Moving tips. Helpful checklist!

Main rule: Don’t take with you the things that you don’t need! Now it is the perfect time for you to have a mass declutter. Take advantage and get rid of the things that you don’t use! They’ll just occupy space in your new home as they did until the present moment, in your old one!
Here are some tips for you:

• Plan-ahead

After a tiring and stressful period, when you have probably sold your old house, now the time for you to move has finally come! Even though the stress is not over yet, don’t let things get too dramatic – there is a way for you to keep everything under control and the safest way is to plan ahead! Get the clear picture of the entire process and decide when and how you should manage this situation! A fact is certain – packing up your entire life and possessions will not be something that you’ll manage to do in one single day, therefore you need to arm yourself with a lot of patience! You’ll certainly need it!
Hint: Don’t panic!

• Stay organized

More than ever now it is the perfect time for you to show your organizational skills! Write down everything that you have to do and where you put every object. The boxes need to be labeled both with their content but as well with colors assigned for each and every room. Manage your inventory very carefully, you’ll thank yourself later on!
The thrills or frustrations of this whole situation may be disturbing to you, but stay focused! This is what you need now! Staying organized will save you time later on!
Hint: Don’t rush, take it all slow or you’ll end up mixing everything up!

• Get the right boxes

Planning in advance requires getting boxes of all sizes and shapes! Keep in mind that lighter objects should always be placed on top! What is more, you should also make sure you won’t leave empty spaces inside the box because objects will slide down and you’ll probably have a huge surprise when you’ll start unpacking!
Hint: Shake your boxes to see if any objects are misplaced and be careful not to make the boxes too heavy to lift either!

• Use colors for labelling

Colors may help you stay organized. Use a different color for every room; markers will be of great help! This way the unpacking process will become much more bearable and simpler too!
Hint: Keep it all visually appealing; you need to remember this entire experience as a step forward for you! Do everything when you are relaxed and fresh!

• Charity?

Maybe the time to do a good deed has come. You’ll probably stumble upon things you have completely forgotten about, so why not donate them all? You clearly don’t need them. Take your move as a fresh start and don’t bring useless things with you. You’ll just end up throwing them instead of reusing them. No junk, please! Take a big breath and see which objects are pointless to you!
Hint: Don’t throw away things you don’t use anymore, donate them! Others may be in great need of those particular items!

• Get rid of the dust

Hygiene is important and taking into account that you have to pack everything up, why not cleaning them first? You won’t want to get dust and dirt into your new home. Take it all step by step and make it all right from the early beginning. Think about it – one way or another at a certain point you’ll have to clean up your things so why not now? Chances are you’ll be too tired later on to clean everything!
Hint: A microfiber cloth is highly recommended!

• Newspapers, anyone?

You’ll need to fill up every box and wrap every object for protection. Therefore, try to purchase in advance enough packing paper!
Hint: When the time for unpacking comes, unpack only by room! Your entire effort to keep it all organized will become useless if you create chaos now!

• Separate the essential things

When you’ll get to your new place, you’ll firstly need certain objects so make sure you have them all together in a box at a close reach! You wouldn’t want to search for scissors or papers and not find any one of them!
What should you consider? For instance, think about – paper towels, phone chargers, trash bags or toilet paper!
Hint: Make a list with other objects and make sure you have them all in one single place!

• Pre-clean the new house

Before getting all your stuff in, try to clean up the house. Once you have the furniture in, it will much more difficult to Q-tip everything! This will save you a lot of trouble!
Hint: Take at least one week to make sure the house is clean and hygienic before bringing in your stuff! You’re looking for a fresh start, aren’t you? Then, make it look fresh!

• Vertically or horizontally?

Depending on the type of objects you are carrying, pay attention to how you place them! For instance, your plates should be placed vertically! Why? There are less chances they’ll break under pressure!
Hint: Take some time and think about every object you intend to transport, thus you’ll figure out the right place and a way to bring it ‘safe and sound’!

• Correspondence

Don’t forget to change your correspondence address with at least two weeks prior to the day you move! This way you’ll be sure no personal papers will get into the hands of the wrong people! Check the utilities you’re responsible for and make sure every important person knows how to reach you!
Hint: Don’t forget to make the switch from time!

• Get help

You are surely not going to be able to do everything all by yourself. Some may call their friends while others may call for professional help. There is always a way for whatever budget you may have, however you may be sure an expert will always be of much more help for you!
Hint: If you choose to do it all by yourself, you’ll need to have nerves of steel and a lot of patience. This entire experience is extremely stressful!

• Sort, sort, sort

In order to stay organized you surely need first of all to sort all your stuff! You clearly don’t need chaos now because the stakes are high and there are a lot of things going on. Try to be in control of everything and at all times, this way you’ll have a peaceful and exciting move!
Hint: The more time you dedicate to organizing your things, the easier it will be when you unpack!

• Separate valuables

From another point of view specialists utterly suggest you need to separate your valuables in order not to regret it later on. Among all the things you have to carry, there is enough space for mistakes to happen, this is why it is better to take precautionary measures!
 Hint: Try to stay organized and set your priorities. Your valuables and important papers should always be with you!
Knowing what things need to be done and most importantly when, will save you from a lot of painful headaches! Remember: you shouldn’t let everything on the last day! You’ll panic and you’ll not be able to face up the stress!
When the details of such an important event tend to overwhelm you, take a break! You need to relax and think clearly – a bit of organization will only help you in moments like this one!
All in all, moving may become a really great experience if you know how to handle things! Don’t hurry, this is clearly not the time for this! Take it all step by step and just enjoy!

Where is the real estate market going in 2015?

Every day there seems to be more doom and gloom reported for the economy and the real estate market in Calgary and beyond. What can we expect over the next year, will we boom or bust?

There are many factors that will contribute to the impending market in 2015. The first, of course, is how long oil prices will stay low and how that will affect the resource industry in our province. Without a doubt, oil and gas are important factors in how we fare in Calgary and Alberta. Many oil and gas giants have already decided to pull back the reins on spending and have cut costs and budgets. Aside from impending layoffs, what I find even more troublesome is the fact that many projects and future expansion have been put on the backburner in anticipation of the oil price recovery. This will mean a decline in "employment growth" within this sector.

One of the major contributing factors in real estate growth is a steady influx of "in migration" from other parts of Canada, and the rest of the world. If employment growth is hindered, will that slow the population growth in Calgary and the rest of the province? It could very well mean we will have less folks moving to our neck of the woods. It can take quite some time for a slumping market to affect the new home industry, I would suggest we will start to see some of that affect happening over the next few months with a slowing in the new build aspect of the market.

Over the past year we have seen outstanding growth in our luxury home market (see previous Blog) that was a major contributor to our average and median price growth. I suspect that this portion of the market has a finite pool of potential buyers, and I would suggest that many that may potentially be in this pool this year may very well decide to hold off on purchasing a home and take a "wait and see" stance moving forward due to the uncertainty of the economy. If we see a significant decrease in this sector of the market, it will adversely affect the average and median prices right across the board.

This week saw a drop in the Bank of Canada lending rate. "This decision is in response to the recent sharp drop in oil prices, which will be negative for growth and underlying inflation in Canada." (Bank of Canada) This drop in lending rates, in combination with a lower Canadian dollar and lower costs of gas at the pump may very well trigger economic growth in the manufacturing sectors, mostly based out of Ontario. Will that further pull people from our province to Central Canada is search of employment?

Perhaps the most concerning news over the past while for the real estate market is the fact that sales are significantly lower for the first three weeks of the year, as a matter of fact, the second worst in 15 years! (Check out my Tweet earlier today!) That, in combination with a large increase in new listings may be a harbinger for the months to come. Customarily, the first two months of the year are seasonally slower than the rest of the year, however, it would seem that many potential sellers are trying to get in front of the curve with the turbulent media reporting's of the economy and where we are headed. I would further suggest that many that would typically wait until spring to list their property may be listing early.

We will need to keep a close eye on the inventory to sales ratios in the weeks and the months to come. If potential sellers see a glut of inventory, many may very well decide not to list. Others may find themselves in a position where they have to sell their homes, whether it be due to finance, layoffs, relocation or perhaps they have been building a new home over the past few months.  We also need to pay special attention to buyer confidence over the next few weeks. As I mentioned above, many may decide to wait to see how things work themselves out in anticipation of "getting a better deal" if the market retreats. What is important is to retain a certain sense of urgency so that we don't have a huge amount of "fence sitters" as we did in late 2008 and 2009.

This year it will be more important than ever to be sure a house is priced aggressively. Overpriced homes will sit on the market longer, and may very well become stigmatized the longer they sit around. Due to many economic factors, there will most probably be a "price correction" early in the year, so we must be very aware of previous sales and competitive listings. If a home is priced correctly right off the bat, they will be less likely to have to catch up with a potential falling market.

A listing will also have to set itself apart from other similar listings. Aside from appropriate pricing, staging, presentation and marketing will be paramount when competing for a buyer. A buyer will expect more for their investment.

If you would like to discuss the market further, I would be happy to sit with you to go over your specific needs. It will be an interesting year ahead!

Calgary Housing Market - 2014 in Review - part one of two!

What a crazy run we have had in the Calgary housing market over the past year. Inventories in some sectors of the market were extremely low, and the average price of homes in the City increased 7% from the previous year. It is interesting to note that sales of homes over a million dollars increased by 21% and sales of all homes over $600k increased by over a third! Sales of homes under the $600k plateau, which includes entry level homes affordable to first time home buyers, increased by only 2%. As a matter of fact, homes under $400k saw a dramatic drop in sales by over 25%!

 

I believe there were a few contributing factors to all of these facts and figures…

Although the upper echelon of sales seems to have taken off this past year, looking at a good number of these sales actually show dramatic decreases in the originally anticipated value of the properties. In most of the communities I was involved with this past year, I saw some amazing price reductions. In Hanson Ranch in the NW there were two homes that were reduced over $100k with similar stories in West Springs, Mount Pleasant and Bridgeland. Although there were some high sales, many saw reductions from their original pricing by well over the $100k mark, some reductions were over 25%. Assuming the original listing prices were accurate when the homes first went to market, that is a dramatic reduction in market values. So even though we saw many high sale prices, keep in mind a good portion of these were well below their original anticipated values.

A second point to ponder would be the fact that the higher priced sales was a major factor contributing to the “average” and “median” price gains. The question remains, did we see an actual increase of value of 7% in across the board, or have the sales of high-end homes skewed the numbers?

Looking at the entry level home, - let’s say under $400k - we can actually see a decrease in sales by over a quarter year over year. Does this mean that prices are moving out of this category throughout the City? A couple of thoughts here… the first is the fact there have been some policy changes both from the federal government and the major banks. For example, it is now much tougher to purchase a second home as an income stream. Many banks require a 30% deposit by the purchaser. This has reduced the pool of first time and “Ma and Pa” investors to the market. This sector of the market is typically in that lower price category.

It is also tougher to qualify for a new mortgage, so many potential “move up” buyers from the lower priced homes may have decided to stay put for the time being, until they build a little more equity into their investment either by an increased value, reducing their mortgage, or both. A couple of months ago I was dealing with three competing offers for a lower priced home. It is interesting to note that, even though all of the bidding buyers knew there were other offers on the table, all three offers were within $5,000 of one another, even after negotiating for the final sale. Buyers (and Banks) are not like they were in 2006 where bids were many thousands above asking price… Buyers are well informed and are willing to pay only what they feel the value of the property is, perhaps a small percentage above that. They are much more patient than they were eight years ago and are more willing to wait for the next property.

Having said that, buyers have also been very quick to react to a property they feel is priced appropriately over the past year… although they don’t want to abundantly overpay, they have been willing to pull the trigger very quickly.

Another type of buyer has been formed over the past little while, that would be the middle to larger builder. Many of the major builders in the city have formed companies that are redeveloping within the city, most specifically in the city core. With the municipal policy of reducing much of the “urban sprawl” we have seen in past – largely due to the capacity of our waterworks system – builders are looking to a different income stream in redevelopment. This sector of the market is looking strictly to land value within a specific area, and whether that value sustains a new development within a community. This buyer is different than a buyer looking for their own home as there are a completely different set of perimeters. Often this past year we saw competing offers in “prime communities” specifically for this type of land.

 

Many factors have contributed to our success this year in the Calgary housing market, including my thoughts above. What are we in of in the coming year? Will we be able to sustain our growth? Will oil prices and a dampening economy change our direction? Stay tuned for my next segment, "what to expect in the coming year!"

Why Location Is Important in Selecting Property

Why Location Is Important in Selecting Property

Another good perspective by fellow Blogger Jonas Swain
http://bizcityarea.com/?p=1365

Selecting or buying a property means that you have some income on your side that you would like to invest your money into real estate that can offer you better options in the future.


Hence, you have make sure that you are buying the right kind of property that can offer you better features and options and advantages. The location of the property plays a crucial role when you are selecting any real estate because you want to make sure that there are many advantages that you get in the near future. Here we take a quick look at some of the top reasons why location is important when you are selecting commercial or residential property.

Accessibility

This is the most crucial thing that you must look out for when you are buying property for your business or even for your personal residential. It is always recommended that your property should be close to means of transport so that it does not take time for you to reach the property. If your property is not accessible you will end up having transport problems especially if you don’t have your own vehicle to reach the destination. This is important both from business and personal point of use because in both cases you will need your property in a location where you can reach easily. Similarly, your property should be close to various other important locations in the city so that you can reach those places in short time and conveniently.

Environment

The environment of the locality is also equally important when you are looking for property and therefore you have to make sure that you have the right location. If you are looking for business property you should make sure that the location of the property is ideal from business environment and similarly when you are looking for residential property you need to ensure that the property is in safe and secure environment. If the location of the property does not offer you the right kind of location you are probably buying the wrong property that will not offer you the right advantages.

 

Financial Gain

Since you are investing in property you also want to make sure that the price of the property offers you better advantage in the future. When you are buying residential or commercial property you consider location of the property because you believe that the location of the property is important and it will impact the property price positively in the future. Buyers that buy property from investment point of view focus on location because they want to see their property price grow in the future so that they can sell it at the right price and profit from it.
By Jonas Swain