Edmonton Real Estate Blog

Emotions are a big part of the homebuying process. People have to feel good about the house they are considering purchasing.

Both physically and financially, there has to be a comfort level or the cheque won’t be signed.

The location might be perfect and the price may fit, but the house might need some work– and the cost of, say, new kitchen cabinets, flooring and windows might just be enough to break the deal.

Laura Parsons, Calgary-area manager of national business development for the Bank of Montreal, has heard this scenario countless times from those on the front lines of the real estate industry.

“I talked with one realtor who showed clients something like a hundred homes and there was always something wrong,” she says.

“They couldn’t put a deal together.”

Banks want to help realtors sell homes to get the financing business, so Parsons had to find an answer to the you-scratch-my-back, I’ll-scratch-yours problem.

In the back of her mind, there was something she recalled that might solve the problem–some financing vehicle that would help both realtors and potential homebuyers.

After much mulling, it came to her.

More than five years ago, Canada Mortgage and Housing Corp. introduced a Purchase Plus Improvement Program (PPIP) that would allow homebuyers to finance the purchase of the home plus the cost of immediate renovations–all in the original mortgage.

Because there was no big flag-waving, horn-blowing announcement of the program, it’s been under-utilized to some extent.

Parsons decided it was time to brush the dust off the PPIP–which is available through both CMHC and Genworth Financial Canada –and put it to better use.

“We wrapped our arms around how to deal with this issue and came up with mortgage staging–our way of helping people fix up their homes without spending much extra money on a mortgage payment,” she says.

In a nutshell, here’s how the PPIP works,

A home is purchased for, say, $400,000. Based on a five-per-cent down payment and a 35-year mortgage plus things like the mortgage insurance, PIT (principal, interest and taxes). and property taxes, the monthly payment would be $1,524.

But $50,000 worth of renovations are needed to bring the home up to snuff at move-in. Add this amount to the original mortgage and the monthly cost goes up just $169–less expensive than taking out a separate loan.

When the decision has been made to make an offer on a home that needs upgrading, Parsons says the offer is conditional for a longer-than-normal period to arrange for a contractor to look at the place and give an estimate for the work.

If everything is satisfactory, the timing of the work is then between the buyer and contractor.

Bart Dutchak is one of the early success stories for the program.

The 32-year-old bought a unit in a 25-year-old condo building in April, knowing ing full well he was going to be spending money to fix it up on his own–things like laminate for new countertops, as well as new flooring, crown mouldings and baseboards.

“I worked for two solid months after work to get it done,” he says.

The bill was $10,000– which, when added to his original mortgage, didn’t make all that much a difference to the monthly outlay.

He shopped around, but he says he couldn’t find a lender who would let him add the renovations onto his original mortgage.

“Then the Bank of Montreal treal said, ‘Yes,’ and I was pretty excited to be able to combine everything,” says Dutchak, who is a senior draftsman and detailer at Canam Steel. “It just made it all so much simpler.”

Elena Salikhov, Calgary based based area manager for business development for CMHC, says the program was established to help people wanting to make improvements that would increase the value of the property.

The key to the program is that the cost of the renovations must be reflected in the expected future value of the home.

In the example of the $400,000 home with $50,000 worth of renovations, CMHC or Genworth must agree the home would have a value of at least $450,000 after renovations are done.

So, with CMHC and Genworth worth firmly on side, Parsons set out to find other partners who would help increase the profile of the mortgage program.

Because she is involved with the Canadian Home Builders’ Association-Calgary Region, Parsons explained the program pro-to its Renomark committee, which represents many of the city’s renovation contractors.

Unlike Dutchak, some people don’t want the challenges of doing the renovation themselves. They’d rather hire the work out.

Paul Klassen, president of Pinnacle Group Renovations by Design Ltd., was in the Renomark audience for Parsons’ address and says the timing was uncanny.

As part of the company’s five-year strategic plan, Klassen developed a 3-D application to show people how a renovation would look when complete.

The fact a program was available to help clients pay for it was an added bonus.

“I ran out to speak to her, explaining that this was a perfect marriage for us and would be another tool in our business arsenal,” he says.

Since that meeting, he has talked about PPIP with a couple of his clients.

“What we thought was a wall (to a renovation decision) has become a door,” says Klassen.

Parsons then went in search of a supply partner. Because of prior business dealings with Rona, she received the support of Mel Anderson, manager of the retail chain’s Crowfoot location.

“We thought it would tie in well with services we were already offering at the store,” says Anderson.

Rona has an installation department that includes designers and estimators. They also have programs and facilities to assist customers with all aspects of a renovation.

“We are an option to hiring a contractor,” says Anderson. “We can walk customers through the design and buying processes right here in the store, or we can go to their residence and give them an estimate.”

With program partners on side, Parsons says consumers are able to take advantage of another federal government program that might save them money and time.

“Its been around for a long time, but few have taken advantage of it because they don’t realize the little impact it will have on them financially,” she says.

———

In Short

If you intend to buy a home that needs some immediate upgrades, the Purchase Plus Improvement Program may be the answer. A qualified mortgage consultant can guide you through the process:

– Step 1: Mortgage pre-approval– Arranging a pre-approved mortgage not only protects you if interest rates increase, it also gives you a

clear price range for your new home. At least a five-per-cent down payment is required for a PPIP mortgage.

– Step 2: Obtain cost estimates for upgrades– Once you have found a home, you need to get written quotes from licensed contractors on the planned renovations.

– Step 3: Mortgage application–For example, with five-per-cent down, your mortgage consultant would apply to a lender for whatever’s lowest: 95 per cent of the purchase price plus 95 per cent of the cost to finish the renovations, or 95 per cent of the “as improved” market value, determined by the institution which insures the mortgage after the renovations.

– Step 4: Finalize purchase–Your realtor and mortgage consultant will walk you through this part of the process. The funds for renovations will be sent to your lawyer in trust when the mortgage closes.

– Step 5: Complete upgrades–The lender will hold back funds for the renovations until the work has been completed and inspected, at which time the contractor can be paid.

———

The Buyer

Bart Dutchak.

AGE: 32.

BACKGROUND: A senior draftsman and detailer for Canam

Steel, Dutchak bought an apartment condo in a 25-year-old building that he knew needed some renovations, including flooring, baseboards, crown mouldings and countertops. Using an estimate of the renovations costing $10,000, Dutchak shopped around for a lender who would add this cost to his original mortgage through the Purchase Plus Improvements Program offered by Canada Mortgage and Housing Corp. and Genworth Financial Canada. He got in touch with a Bank of Montreal mortgage official and received approval. He did the renovations himself over the course of two months working in the evenings.

TORONTO — Canada’s residential real estate market is expected to remain unusually strong through the first half of this year after a strong finish to 2009, according to a survey published Thursday by Royal LePage.

The Royal LePage analysis is consistent with other recent reports on the state of the Canadian real estate market, which has rebounded over the past 12 months after sales dried up in late 2008 and hit a multi-year low in January 2009.

The Canadian market’s sudden plunge was sparked by a credit crunch that originated in the U.S. housing and lending industries – eventually spreading globally, causing a worldwide recession in the late summer and early fall of 2009.

However, the Canadian real estate market has been much quicker to recover than its American counterpart, in part because of a more stable banking industry, historically low interest rates and improving consumer confidence.

Royal LePage executive Phil Soper says Canada’s real estate market enters 2010 with “considerable momentum from an unusually strong finish to the previous year.”

The stimulus effect of low borrowing costs has contributed to a sharp rise in demand that has driven activity to new highs, he said in a statement.

Royal LePage says house prices appreciated in late 2009, with fourth-quarter price averages higher than in the fourth quarter of 2008.

The average price of detached bungalows rose to $315,055 (up six per cent), the price of a standard two-storey home rose to $353,026 (up 5.2 per cent), and the price of a standard condominium rose to $205,756 (up 6.4 per cent).

Regions that saw the strongest declines during the recession are now showing marked gains. Those regions include Toronto and the Lower Mainland, B.C.

Vancouver, which is frequently Canada’s most expensive real estate market, experienced a particularly robust quarter, with home prices rising across all housing types surveyed.

“No other sector of the economy has been as highly affected by economic stimulus as housing,” said Soper.

“As consumer confidence has improved, Canadians have shown a lingering reluctance to acquire depreciating assets such as consumer durables, but have embraced the opportunity to invest in real property.”

Royal LePage estimates that Vancouver’s real estate prices will rise a further 7.2 per cent this year, although February may be soft because of the Olympic Winter Games that will be held in the city and nearby Whistler, B.C.

Detached bungalows in Vancouver sold for an average of $828,750 in the fourth quarter, up 11.4 per cent from the same period last year. Standard condominiums in Vancouver went up 11.8 per cent year-over-year to an average of $452,750. Prices of standard two-storey homes in Vancouver rose 9.6 per cent year-over-year, selling at $917,500.

In Toronto, the average price of a standard condo rose 2.9 per cent to $309,316, detached bungalows rose 9.9 per cent to $446,214 and standard detached homes increased 3.5 per cent to $564,175.

In Montreal, the average price of a detached bungalow rose to $245,125 (up 3.1 per cent; a condo increased to $216,667 (up 16 per cent) and a two-storey house increased 12.3 per cent from a year earlier to $345,789, Royal LePage said.

The Greater Montreal Real Estate Board reported Thursday that the number of sales last year increased 41,802, up three per cent from 2008. The median price of a single-family home was $235,000 last year, up four per cent from 2008.

“Although sales decreased the first four months of 2009, Montreal’s real estate market rebounded and finished the year on a positive note,” said Michel Beausejour, the Montreal board’s chief executive.

The group that represents Toronto-area realtors reported Wednesday that there were 87,308 transactions last year through the Multiple Listing Service, a 17 per cent increase over 2008.

In December, there were 5,541 sales in the Greater Toronto Area (average price $411,931), up from 2,577 sales in December 2008 (average price $361,415), according to the Toronto Real Estate Board.

The Toronto board also said the number of sales of existing homes rebounded in the latter half of 2009 after a slow start at the beginning of last year.

Royal LePage’s average price estimates for other Canadian cities include:

-St. John’s, N.L.: Detached bungalow, $217,167 (up 14.3 per cent); standard two-storey house $298,833 (up 14.1 per cent).

-Halifax: Detached bungalow, $238,000 (up 10.7 per cent); standard two-storey homes, $265,333 (up 1.8 per cent).

-Charlottetown: Detached bungalow, $160,000 (up 1.9 per cent); standard two-storey $195,000 (up 3.7 per cent).

-Saint John, N.B.: Detached bungalow, $228,000 (up 1.3 per cent); standard two-storey $299,000 (up 1.5 per cent).

-Moncton, N.B.: Detached bungalow, $152,300 in the fourth quarter (up 1.5 per cent); standard two-storey home, $131,000 (up 4.0 per cent)

-Fredericton: Detached bungalow, $182,000 (up 12.3 per cent); standard two-storey, $210,000 (unchanged).

-Ottawa: Detached bungalow, $332,417 (up 3.4 per cent); standard two-story home $331,917 (up 3.7 per cent).

-Winnipeg: Detached bungalow, $241,650 (up 9.9 per cent); standard two-storey home $275,500 (up 10 per cent).

-Edmonton: Detached bungalow, $299,286 (down 0.7 per cent); standard two-storey home, $340,557 (down 1.2 per cent)

-Calgary: Detached bungalow, $412,478 (up 0.5 per cent); standard two-storey home, $427,067 (up 2.3 per cent).

By David Paddon Copyright © 2010 The Canadian Press

Extreme cold weather can be hard on both you and your home. Here are some tips to put into practice when freezing weather, snow, and ice hit your area.

How to Deal with Frozen Pipes

• Disconnect and drain garden hoses.
• Cover outside faucets with insulating foam covers.
• Turn off water to outside faucets, if available, and open valves on faucets to allow them to drain.
• Turn off sprinkler system and blow compressed air through the lines to drain them.
• Close or cover foundation vents under house and windows to basements.
• Close garage doors.
• Insulate exposed pipes (both hot and cold) under house with foam pipe insulation.
• Open cabinet doors under sinks.
• Drip hot and cold faucets in kitchen and bath. Drip single control faucets with lever set in middle.
• Set icemaker to make ice if the water line to it runs under the house.
• Don’t forget to check on pipes to your washing machine in the laundry room
• Locate water main cut-off valve, and have a cut-off key handy.
• Use a hair dryer, heat lamp, electric heat tape, or a portable space heater to thaw frozen pipes that have not burst.
• Keep the faucet open when thawing frozen pipes to allow water to begin flowing through it.
• After the weather has warmed above freezing and any frozen pipes have thawed, turn off dripping faucets and monitor your water meter to check for unseen leaks.

How to Keep Warm in Your Home

• Have your furnace inspected before cold weather arrives. Inspect the heat exchanger for cracks, install a clean air filter, and check the thermostat to see if it’s working properly.
• Inspect fireplaces, and chimneys before using, and have them cleaned if needed.
• Keep drapes and blinds closed, except when windows are in direct sunlight.
• Put up storm windows, or install sheet plastic window insulation kits on the inside of windows.
• Cover or remove any window air conditioners.
• Insulate electrical outlets and switches on exterior walls with foam seals available at home centers.
• Caulk any cracks or holes on the outside of your house.
• Repair or replace weather stripping and thresholds around doors and windows.
• Run paddle ceiling fans on low in reverse (clockwise when looking up) to circulate warm air.
• Put draft snakes on window sills, between window frames, and against doors.
• If you heat with propane or fuel oil, make sure the tank is full.
• If you heat with wood or coal, have plenty of fuel on hand.

How to Protect the Outside of Your Home

• Clean your gutters and downspouts before cold weather arrives to prevent ice from forming in them.
• Spray an ice repellent solution on steps and walks before freezing weather arrives
• Check antifreeze levels in cars. Add if needed, and run engine to circulate new antifreeze in the crankcase.
• Add freeze resistant windshield wiper fluid, and spay to circulate it in lines.
• Check air pressure in tires, since cold weather causes the pressure to lower.
• Bring in container plants, add mulch around plants, and cover plants that are prone to frost damage. Remove covering when temperatures warm above freezing.
• Drain birdbaths and fountains
• Gently sweep snow off plants and shrubs in an upward motion with a broom.
• Use rock salt, sand, or clay based kitty litter on walks and drives (NOTE: Salt can damage grass and other plants).
• Don’t overdo it when using a snow shovel.
• Stay off your roof during freezing weather, but once the ice and snow have melted, inspect your roof for any damage.

How to Stay Safe in an Ice or Snow Storm

• Stockpile nonperishable food and water.
• Refill prescription medications in advance of storm.
• Fill car with gas.
• Charge cell phones.
• Have flashlights, batteries, a weather radio, and a manual can opener on hand.
• A portable generator can come in handy when the lights go out, but take precautions to avoid carbon monoxide poisoning when using.
• Make sure you have working smoke and carbon monoxide alarms and the batteries powering them are fresh.
• Have a working fire extinguisher on hand for emergencies.
• A chain saw can come in handy for removing broken limbs after an ice storm.

by Danny Lipford www.dannylipford.com

Edmonton, January 5, 2010: Residential sales through the Edmonton Multiple Listing Service® were at the second highest level ever for December (after a record number of sales in 2006 of 1,074). Sales of single family homes, condominiums, duplexes and other residential property totalled 948 units for the month. Total sales of all types of real estate for December was 1,066, also a second place finish for monthly sales.

The price of residential property remained stable in December with single family homes dropping just  one third of a percent and condos increasing 5.4% to reverse the 2.5% drop in November. An average* priced single family property in the Edmonton area sold for $366,761 in December; down from $368,018 in November. The average price for a condo was $244,174; up from $231,684 the previous month. The all-residential average price at the end of December was $319,201.

“Strong year-end sales put a crown on a year that started slow but ended big,” said Charlie Ponde, president of the REALTORS® Association of Edmonton. “We entered 2009 with a global recession at our backs and a real estate meltdown to the south. However consumer confidence in Alberta started to return in the second quarter and the real estate market in Edmonton was the first place in the country to show signs of the recovery.”

There were 19,139 residential sales in 2009 with record setting sales in June and July after the slowest start since 1996. From September to December residential sales were just below record sales set in 2006.

Throughout the year the average single family sale prices varied from a low of $347,000 in February to $373,000 in July; a $26,000 or 7.5% spread. The average year-to-date value was $364,032. Condo prices varied within a 9% range from $227,000 in February to $247,000 in June. The average year-to-date price was $240,322.

There were 1,118 homes listed in December resulting in a sales-to-listing ratio of 85%. The average days-on-market was 50 days and total residential sales were valued at $302 million for the month. Overall, the MLS® System had total sales of all types of property of just under $7 billion in 2009 as compared to $6.6 billion in 2008.

“We predicted residential sales of 15,550 this year and exceeded it in early October,” said Ponde. “We anticipated that single family prices would end the year at $352,000 and condos would be at $222,500. We are pleased that the year ended up better than we had anticipated and look forward to the stable market continuing into the next decade.”

Source: REALTORS® Association of Edmonton

Weekly rate minder provided by: Souchita Rattanarasy Dominion Lending Centres Optimum 780-932-2225. Explore Mortgage Scenarios with Helpful Calculators on http://www.souchita.com/

You are about to invest in your most valuable asset. Many home buying steps are standard yet there might be slight variations depending on the real estate laws and regulations where you live. Here are our top 10 recommendations to make you more confident as you embark on your home buying journey.

1. Your Credit Rating
Getting your finances in order is probably the most important step you should take. Your credit reports are an ongoing look at how you manage your finances. You must know exactly what your credit reports say about your financial history before you apply for a mortgage, because the reports play an important role in the mortgage approval process and in determining the interest rate and other loan terms that a lender offers you.

2. Understanding How Mortgages Work
Get familiar with the mortgage laws, structure and options. That way, you will be able to decide on the right loan and lender — crucial to your home buying success. It’s up to you to determine which lender is best for your needs, and it’s always a good idea to have at least a bit of background about the loan process before you talk to a lender.

3. Getting a Mortgage Pre-Approval
Do you know how much house you can afford? Probably not, unless you’ve talked with a lender. Pre-approval helps you in other ways. Consider this scenario. A home seller gets two similar offers. One is accompanied by a letter from the buyer’s bank that states she is pre-approved for a mortgage in the amount of the offer. The other has no supporting documents. Which offer do you think the seller will consider first?

4. Sorting Out Your Needs and Wants
Buying a home isn’t as difficult as you might think, even if you’re short on funds. But the process will go a lot smoother if you get familiar with your real estate market and narrow down your wants and needs before you start looking at houses.

5. Preparing to Work with Real Estate Agents
Real estate agents represent buyers, sellers, or both — and in some states they can work as neutral facilitators for either party. It’s essential to understand agent duties and loyalties before you make that first phone call.

6. The Great Home Search
The Internet is a great tool — you can spend endless hours searching the public version of the Multiple Listing Service website. Plus, your agent will give you multiple listing sheets to study. You can also pick up House For Sale magazines and read classified ads in your local newspapers. You might even plan afternoon drives to preview neighbourhoods. These are all excellent ways to see what’s available out there.

7. Pre-Offer Investigation
Deciding whether or not you want to buy a house involves a look at its structure and its features, but there are many other topics that are every bit as important to your purchase. Appoint a professional to conduct the home inspection. Study what kind of house is it — site built, modular or manufactured. Consider its market value and resale potential. Do others have a right to use the property? Can you live with the deed restrictions? Is the reported square footage accurate? Is the heating system efficient? And so on.

8. Making the Offer
There’s no one set of instructions that can cover all the differences in real estate laws and customs that exist throughout, so the mechanics of making an offer and its specific contingencies depend greatly on your location. That’s why you should sit with your agent, attorney or advisor to fine-tune your offer and take care of all the contractual considerations.

9. Avoiding Last-Minute Changes
As your closing date nears, everyone involved in your real estate transaction should check its progress on a daily basis, because staying on top of things means you’ll know immediately if there’s a problem that must be dealt with.

10. Before Closing
Most of your home buying concerns are behind you now and you’re on your way to closing, also called settlement, or the event that transfers ownership of the property over to you. You will encounter issues specific to your location and your transaction, issues that can best be explained and handled by your local real estate agent, your lender, your attorney, your closing agent, or others who are helping you complete the home buying transaction.

Never hesitate to ask questions. Ask as many questions as necessary to help you understand the entire home buying process. You are making a long term commitment and spending a major amount of money–you’ll feel much better about the transaction if you stay informed and understand what’s happening every step along the way.

The HGTV.ca Editorial Team

If you didn’t buy a house in July, the best time to buy may be running out, according to a new consumer-confidence survey.

The November Alberta consumer confidence index, released Saturday along with its sisteconomyer survey measuring business optimism by Leger Marketing and PricewaterhouseCoopers, show both groups expect continued economic recovery.

But while jobs will be more plentiful, consumers increasingly believe real estate will become more expensive in the near future.

The index of Albertans who believe buying a house in the near future is the best time to do so decreased to 147 in November, continuing its fall from a July peak of 164.

Survey questions in the study were used to produce index scores representing respondents’ confidence in a component of the economy. An index score above 100 represents an optimistic sentiment, and scores below 100 indicate pessimism.

“With signs of economic revival and potentially a real estate recovery, consumers may become less enthusiastic about purchasing a house in the future,” said David Bryan, an advisory partner at PriceWaterhouseCooper’s Edmonton office.

The overall consumer confidence index was 111, down slightly from 112 in September.

Consumers also continue to expect interest rates to rise as reflected by an index score of 63, steady from 65 in September.

Consumers’ optimism about the job market continues to increase. The future unemployment index improved for the fifth consecutive month to 106 in November, the report said. Confidence about employment crossed the 100 mark for the first time since May 2008.

“Overall, consumers are optimistic about the job market,” Bryan said. “Consumers continue to see these times as a good opportunity to buy homes and other major purchases, although to a lesser extent than in the previous quarter.”

But consumers remain conservative about major household purchases, with a November index score of 121, compared with 125 in September.

Meanwhile, businesses continue to become more optimistic about the economy: their overall confidence index rose for the fourth straight month to 109 in November.

In Alberta, 297 business leaders were surveyed in November, and 900 consumers were interviewed by phone. The margin of error is plus or minus 3.3 per cent, 19 times out of 20.

By Bill Mah, Edmonton Journal

The Canadian housing market is getting dangerously close to “bubble territory” and is likely headed for a correction in the second half of 2010, according to a top economist.

“We are certainly at risk of a full-blown bubble,” said BMO Nesbitt Burns deputy chief economist Doug Porter, who expects to see a “modest” market correction next year with prices taking a hit.

The extent of the correction depends on how much prices increase in the next six months, he said. After dropping at the start of the year, resale house prices have surpassed the peaks of the past year. Research by the bank to be released Wednesday says housing valuations are likely “richer than equity valuations” in the current market.

“The higher we climb, the bigger the risk of a correction,” Porter said.

He said characteristics of a bubble economy include speculative buying, a massive amount of credit on the market, and sales and prices of homes “going north without the economy tagging along.”

Cities such as Vancouver and Toronto, which have had significant activity, stand the most risk of a correction, he said. “You are seeing a lot of line ups at sales centres and speculative buying in those cities.”

Existing home sales rose for the third straight month in November, up 73 per cent from 2008, according to figures released Tuesday.

A total of 36,383 homes sold in November, according to the Canadian Real Estate Association. That figure is just under a percentage point short of equalling the November record for home sales set at the peak of 2007. The average price of a home was up 20 per cent year over year to $368,665.

In Toronto, sales hit 7,466, about double the total from last November, when the financial crisis set in.

The volatility means homebuyers continue to be nervous about the economy, according to a poll released Tuesday by Royal LePage of their 1,225 agents across Canada.

“This kind of unsustainable volatile market really creates uncertainty in people’s minds,” said Phil Soper, president and CEO of Royal LePage.

According to the poll, 38 per cent of Royal LePage agents say economic factors such as job security are the number one issue with buyers. Another 23 per cent said their clients fear they wouldn’t be able to get the price they wanted for their home, and 12 per cent said some customers are hesitant to sell because the market had not hit bottom. About 20 per cent said they had no concerns from clients.

Soper says that unlike the U.S., rapid price rises have been “a matter of weeks” during the second half of the year, compared with south of the border, where the bubble developed over more than four years.

“The market has a way of sorting through things and we hope it’s in a measured way. As affordability erodes one thing you will see is that more people won’t qualify for lending and activity will ease off,” said Soper.

Some good news for buyers is that the return of strong demand means that more sellers are returning to the market. Seasonally adjusted new listings rose 5 per cent on a month over month basis in November, the biggest monthly increase since January of last year.

Tony Wong
BUSINESS REPORTER

Weekly rate minder provided by: Souchita Rattanarasy Dominion Lending Centres Optimum 780-932-2225. Explore Mortgage Scenarios with Helpful Calculators on http://www.souchita.com/

EDMONTON – More houses and condos will be built, more existing homes sold and it will be a little harder to find an apartment to rent next year.

And existing homes and rents are expected to cost more in 2010, a comprehensive new report on Edmonton’s housing market said Monday.

This strong rebound predicted for 2010 comes after housing starts in the Edmonton area hit bottom this year — the third straight year of decline, the Canada Mortgage and Housing Corp. said Monday.

Builders are on pace to begin construction on 5,000 homes, 24 per cent fewer than the year before, said the national housing agency’s Fall 2009 Housing Market Outlook for the Edmonton census metropolitan area.

It is the lowest level of activity for the region’s homebuilders since 1997, said the report, and follows a 56-per-cent decline in total housing starts in 2008.

“While single-detached construction has staged a modest recovery since the summer, a continued downturn in the multi-family sector will hold down this year’s numbers,” the report said.

For 2010, the agency expects continued growth in single-family detached homes and a moderate rebound in multiples, boosting total starts by 29 per cent to 6,450 units. While that would be a considerable improvement over this year, it compares with an average of more than 10,600 units started every year from 1999 to 2008.

For 2009, a new single-detached home in Edmonton will be an average of $535,000, up 4.5 per cent over 2008.

Still, the CMHC predicts the average price will soften in 2010 by 2.8 per cent to$520,000 because of a “lagged effect” of when homes are priced and when they are completed.

On the other hand, the agency forecasts pressure for higher negotiated selling prices in 2010 from builders who had cut their margins over the past year to clear inventory. “With better economic times ahead, land and labour costs as well as material prices such as lumber and concrete are expected to increase.”

In the resale market, the CMHC predicts residential Multiple Listing Service sales will increase this year by eight per cent to 18,750 units. Last year was the slowest for Realtors since 2003, with saw sales falling 15 per cent to 17,369 homes.

“Provided the economy and interest rates perform as expected, CMHC looks for the upward trend to remain in place during 2010,” the agency said. Total MLS sales are forecast to rise another 9.3 per cent to 20,500 homes in 2010, which would approach the level in 2007, which was the second-best year on record.

The average residential MLS price will end 2009 close to $322,000, down 3.3 per cent from the 2008 average.

A balanced market in 2010 is expected to translate into modest price gains all year, with the average resale price rising 3.4 per cent to about $333,000, CMHC said.

Home-ownership costs will likely rise in 2010 as mortgage rates are at rock bottom and prices set to increase, the agency added.

In rentals, apartment vacancy rates across Greater Edmonton will continue to trend up this year. “But landlords should see a turnaround in 2010, provided economic conditions improve,” the report said.

The vacancy rate for October was an estimated four per cent, compared to 2.4 per cent a year earlier. It was the highest fall vacancy rate since 2005.

Factors in dampening demand for rental apartments were rising unemployment, more demand for home ownership and a steady influx of condominium units.

The agency sees the rental vacancy rate falling to 3.5 per cent amid fewer new apartments and strengthening demand.

CMHC expects its fall survey to show rents largely unchanged from October 2008. “With vacancy rates starting to subside in 2010, property owners will be looking to raise rents to offset rising operating costs, in particular utilities and property taxes,” the report said.

A typical two-bedroom apartment will rent for nearly $1,070 by October 2010, up about $35 a month on average compared with October 2009.

By Bill Mah, edmontonjournal.com