Edmonton Real Estate Blog

Active listings down in 81 per cent of markets in January

Lack of inventory will be the greatest challenge facing housing markets across the country this Spring, according to a report released by RE/MAX.

The RE/MAX Market Trends Report 2010, which examined real estate trends and developments in 16markets across the country, found that unusually strong activity during one of the traditionally quietest months of the year has led to a sharp decline in active listings in 81 per cent of markets surveyed. The threat of higher interest rates, tighter lending criteria, and in British Columbia and Ontario, the introduction of the new Harmonized Sales Tax (HST) have clearly served to kick-start real estate activity from coast-to-coast, prompting an unprecedented influx of purchasers. As a result, 87.5 per cent of markets posted an increase in sales in January. Average price appreciated in 81 per cent of markets surveyed.

Affordability is the catalyst for the vast majority of purchasers in today’s housing market. While homeownership is still within reach in many major centres, levels are slipping. There is a growing sense, on both sides of the fence, that the time to act is now.

Markets experiencing the tightest inventory levels include Toronto (- 41 per cent); Kitchener-Waterloo (-33 per cent); Ottawa (- 30 per cent); Victoria (- 30 per cent); Greater Vancouver (- 27 per cent); Halifax- Dartmouth (- 19 per cent); London-St. Thomas (- 18 per cent); Regina (- 16 per cent); and Winnipeg (- 13 per cent). Conditions were still balanced, but starting to tighten in Calgary, Edmonton and Saskatoon, particularly in the single-family detached category.

The highest year-over-year sales gains were reported in Greater Vancouver (152 per cent), Kelowna (121 per cent), Greater Toronto (87 per cent), Victoria (69 per cent), Hamilton-Burlington (58 per cent), London-St. Thomas (55 per cent) and Calgary (47 per cent). Western Canadian cities dominated the list of centres with the highest increases in price appreciation. These included Victoria at 25.5 per cent, Kelowna at 22 per cent, Greater Vancouver at 19.5 per cent, and Winnipeg at 17 per cent. St. John’s (23 per cent) and Toronto (19 per cent) were also among the frontrunners for price growth.

There have never been so many motivating factors in play at once. We’re in for a heated Spring market that will, in all probability, spill over into the summer months as the window of opportunity draws to a close. The supply of homes listed for sale has been drastically reduced, housing values are once again on the upswing, and banks and governments are moving in unison toward stricter lending policies.

While buyers are taking advantage of favourable conditions, sellers too are reaping the rewards. Competing bids are a factor in the marketplace once again, with well-priced listings-especially at the entry-level price point-experiencing multiple offers. Properties priced at fair-market value will likely sell quickly for top dollar. The overall pressure on sales and price is significant across the board – and it’s not likely to subside unless more inventory comes on-stream.

The level of frustration is growing, as pent-up demand builds. For every successful offer, there are those that will walk away empty-handed. They’re thrust back into the buyer pool and the process starts all over again. Some buyers are upping the ante, while others are considering alternate housing options. Still, purchasers remain cautious in their bids, with most careful not to max out debt service ratios.

Recent revisions to lending criteria will add fuel to the fire in the short term. Buyers considering a variable rate mortgage will step up their plans for homeownership in the next month or so just to get in under the wire. In the longer term, buyers will adjust, but move forward. Compromise has long been a reality-particularly in the larger centres. This simply means they may go smaller or further in their pursuits.

It’s been a 180 degree turnaround from this time last year. It’s clear that real estate from coast to coast has roared back to life and markets are once again firing on all cylinders. The vast majority of markets are now recovered and fully-evolved, with all segments working in tandem. At the luxury price point, activity was brisk in seventy-three per cent of centres surveyed, with momentum ramping up in the remainder. Opportunity exists in some areas, but the question is for how much longer?

Source: RE/MAX Market Trends 2010

Replace the sink: $75
These days you can buy a nice sink for under 100 bucks. The stainless steel and acrylic (some look just like white porcelain) are the cheapest, while real porcelain may be out of your range.

Refinish your kitchen cabinets: $100
This means either sanding them down and restaining them, or just painting them in a semigloss or glossy latex paint. For a bold change, ditch the white and try a pale blue, a coral red, or even glossy black for a modern look. All you need is sandpaper, paint, and equal parts elbow grease and patience.

Make your own fabulous hardware: $1 a piece
If the hardware you want is out of your range, transform the stuff that’s in it. “One woman wanted brass switch plates in her kitchen but they were $8.00 each, and she needed 27 of them and she couldn’t justify paying all that,” explains Paul Ryan, host of Kitchen Renovations on the DIY Network. “So, we got her metal switch plates for 47 cents each, and some shiny Krylon brass paint.” So instead of spending $216 on switch plates, she spent $22 for the switch plates and a can of paint. The savings: almost $200.

Buy inexpensive under-cabinet lighting: $50
If you can’t afford new lighting, consider lighting you can attach under the cabinets, suggests certified kitchen designer Judy Scott, an associate for Home Depot.. Ikea sells a number of affordable types and sizes — like the Grundtal ($49) and the Didoder (just $39) — that plug into wall outlets instead of the electrical wiring in your kitchen.

Add a kitchen lamp: $40
For a cost far less than permanent track lighting, add a flea market find or pop-bright colored table lamp or a hanging kitchen chandelier, to change the whole look of the room. “I put a lamp in mine,” says L.A.-based interior designer Jennifer Delonge, “and it really warms up the kitchen and makes it feel like a whole new room.”

Replace the countertop: $90
Not all countertops are made the same — or cost the same. “You can buy a 10-foot piece of laminate countertop for $89,” says Scott. (You also need a saw, which you can rent from a local hardware or big box store). It won’t add value to your house, but it can do wonders as a short-term solution.

Paint the refrigerator: $60
If you can pull that ’70s-style olive green fridge out of its hole, you can transform it, explains Scott. Clean it, then degloss it by sanding it down with a piece of $1.49 sandpaper so that the primer will stick. Finally, prime it and spray it with a high-gloss spray paint. Voila! A brand-new fridge! (It’s tempting, but you can’t paint the gas range too. Ranges get too hot and will cause your paint to peel; the only high-heat paint you could use is the black matte they use for unshiny barbecue grills. In other words: yuck.)
Get more renovation tips from the experts at The Nest
Photo credit: Ellen Silverman

— Amy Spencer of www.TheNest.com

Taking a DIY approach will save you on labor costs and the mark-up contractors charge for materials. If you’re feeling handy, here are some doable fix-ups:

Refinish or Reface Kitchen Cabinets
Consider either refinishing existing cabinet doors with paint, stain, or laminate; or reface them, which means putting new doors on existing kitchen boxes. Hint: Order one door and one drawer front before ordering the whole set so you know they’ll really work. Check out more budget-friendly kitchen renovation tips.

Buy New Knobs for Cabinetry
Replace wood knobs with modern stainless ones, or swap cold metal ones for antique colored glass knobs (Anthropologie always has a great assortment).

Add Track Lighting
Because these are lights that go on the surface of the ceiling, as opposed to “pot” or “can” lights that are recessed, you can install these yourself.

Insulate the Attic and Other Energy-Sucking Areas
Caulk around windows and spaces between the floor and baseboards. Service your furnace so it produces the most for the least, and insulate your visible pipes for heat loss. Buy a “draft stopper” or “draft guard” for the bottoms of your doors (a cheap fix from $10 per door) so wind or heat doesn’t slip through. 

Tile the Bathroom Floor or Kitchen Backsplash
Make sure your surface is flat and dry surface — like a cement or plywood subfloor, an even wall, or a tiled surface you want to cover with new tiles. Use spacers between tiles and the notched trowel to create even ridges on the mortar under the tiles.

Replace Faucets and Fixtures
A new, modern faucet can make a sink in your kitchen or bathroom look brand new again. As long as the new fixtures don’t require a smaller hole in the furniture or sink than the one that’s already there, it’s an easy upgrade. 

Add Wainscoting 
What looks like an intricate wall design is actually a straightforward DIY project, provided you’re working with even walls in good condition. Basically, you just need to purchase the wainscoting (according to your measurements) along with a coordinating baseboard and rail, and some glue or nails to put it up. For tips, click here.

Paint
Is it obvious? Yes. Is it an easy solution to changing the entire look of a room in an instant? Yep, that too. Paint a whole room, add a bold accent to a wall, or do some fresh, glossy white trim for the cost of a few gallons of paint.

Nestperts Judy Scott of The Home Depot; Tom Silva, general contractor for This Old House; Jennifer DeLonge, an LA-based interior designer

— Amy Spencer of www.TheNest.com

Well we are off to another good week in the Edmonton real estate market, as the market is getting stronger every day.

As of this morning there were 1.669 single family dwellings for sale in Edmonton proper.  That is a slight increase from last weeks inventory level of 1,607.  I expect the inventory to continue to increase as we get closer to spring time.

In the last 30 days there were 517 single family dwellings sold in Edmonton proper.  That also is a slight increase from last weeks level of 478.

To most important and relevant part is our listing to sales ratio… they are dropping.  This week’s ratio is 3.23:1 in comparison to last week’s ratio of 3.36:1.  So two things here are important.  Number one is the fact that the ratio is dropping and showing us a trend.  Number two the ratio is below the 4:1 that we need for a stable or neutral market.

So expect valuations to start rising.  If you are a first time buyer don’t wait call your realtor now and see what your options might be even if you don’t have your down payment.  Also if you are thinking of moving to a bigger or more expensive home again the sooner you make your move the further ahead financially you will be.

Please call me if you have any questions about this, or anything else related to Real Estate. I would love to help you out. (780) 634-8151

Serge Bourgoin founding and managing partner of Team Leading Edge at RE/MAX Elite

Team Leading Edge… Leading the way with extraordinary service

Home ownership has become a political — and economic — hot potato. Politicians are handling it with care.

Buying a house is about a great deal more than providing you and your family with permanent shelter or making an investment. Home ownership is one of the most fundamental economic and political pillars of society — which is precisely why the government of Canada is being so terribly careful not to mess with it.

Amid increasingly vocal concerns (from none other than the CEOs of Canada’s chartered banks and former Bank of Canada governor David Dodge) about the possibility of a housing bubble developing in Canada, Finance Minister Jim Flaherty has just introduced measures designed to cool the market down — at least a little bit

Because the central bank has committed to keeping interest rates low for the first half of 2010 in order to help stimulate the battered domestic economy, the worry is that Canadians are taking on massive new debt loads that they won’t be able to service when rates eventually rise.

All the latest data from the real estate sector reinforces such fears. According to the Canadian Real Estate Association, existing home sales in January were up 58 per cent from the depths of a year ago. But more critically, prices were up almost 20 per cent in that period to an average of $328, 537. That despite the fact that the economy is hardly blazing and unemployment continues to be a stubborn problem, despite some recent improvements.

All of this led Finance Minister Jim Flaherty — who, as recently as January, insisted he saw no evidence of a housing bubble — to announce some changes to the way that real estate lending is managed in Canada.

As of April 19, there will be some new, standardized criteria for mortgages. But it’s nothing that’s going to drastically affect the affordability of real estate — especially for first-time buyers — this spring. All the changes apply to mortgages backed by government-backed mortgage insurance (from Crown corporation Canada Mortgage and Housing Corporation) — a mandatory insurance when a buyer’s down payment is less than 20 per cent.

Here’s a rundown of the new criteria:

• To qualify for mortgage insurance new borrowers will have to meet the criteria for a five-year, fixed-rate loan rather than just a three-year loan. The borrower doesn’t have to take those terms — although the five-year rate is currently the most popular. It’s just a test to be certain they could still carry that amount of debt against gross income (the acceptable ration is 42 per cent allocated for housing costs from gross income) in the event interest rates pop.
• Folks who plan to refinance their houses to improve liquidity or eliminate higher cost credit card debt, can now only borrow up to 90 per cent of the value of their home, rather than the previously allowable 95 per cent.
• Those who buy non-owner-occupied residential rental properties for speculative or investment purposes now have to plop down 20 per cent of the price rather than just five per cent.

In other words, these measures are more about the perception of action than a major credit crackdown. It’s a way for the federal government to flag its concern and to take some proactive measures without really dislocating the real estate market.

At the very most, the careful steps taken by Mr. Flaherty are expected to take some of the heat out of markets where ferocious bidding wars have been steadily driving up prices for houses and condominiums.

It’s part of a gradual process that started in July 2008. Although Mr. Flaherty continues to deny there’s a housing bubble, Ottawa announced back then that CMHC would only insure mortgages when there was at least a five per cent down payment. That basically squeezed out the zero-down loans which often saw purchasers borrow as much as 103 per cent of the value of their house (land transfer and other associated charges were folded into the mortgage).

At the same time, the government stipulated that mortgages could only be amortized over 35 years rather than 40 years. Flaherty is hoping to reverse the sudden increase in 2006 of amortization periods (before this, the long-time standard was 25 years).

For those people like Mr. Dodge, who’s been publicly fretting about the sustainability of the Canadian housing market for at least four years now, Mr. Flaherty’s cautious changes may not be quite as tough as hoped. But that issue brings us to the political heart of the matter.

Being elected is a popularity contest. Maintaining a favourable home buying climate is one of the most important things a government can do to maintain that popularity. Nothing says we’re working on your behalf like voters who are able to live their dreams.

It’s also conventional wisdom that home ownership is good for both a society and an economy. People who own homes are considered to be more stable and more politically engaged — they are more likely to feel like stakeholders in their communities. Which means they vote, pay taxes and generally get involved in positive things.

Home ownership also means that there is a reliable, fixed workforce available for businesses. And homeowners are the consumers who are constantly spending the money that makes GDP go round — for appliances, furniture, home renovations and so on.

All of this — along with a remarkably resilient period of general economic prosperity — has led to a pretty deeply-ingrained set of expectations around housing. In North America, there’s not much question that home ownership has come to be viewed as an inalienable right.

Because politicians – and governmental institutions like CMHC — are among those who’ve encouraged that fundamental sense of entitlement, they have to be very careful not to rock the boat — especially when conditions are already choppy. For that reason, Mr. Flaherty has borrowed a page from central bankers’ playbook and he’s essentially trying to “jawbone” the housing market into cooling down rather than taking more Draconian steps.

Let’s hope it works before Canadians hear the loud popping noise that confirms a real estate bubble not only existed, it’s now exploded.

Source: MSN Money – By Deirdre McMurdy, February 19, 2010

Planning on building, buying or improving your home this year? Chances are you’re thinking smaller, smarter and more family-centric.

“We continue to see a ‘cents and sensibilities’ approach when it comes to buying or improving a home, said Eliot Nusbaum, Better Homes and Gardens‘ executive editor for home design.

Nusbaum made the comment while presenting the results of the magazine’s Next Home Survey at the National Association of Home Builders’ International Builders Show in Las Vegas last month.

Price, energy-efficiency, organization and comfort are top priorities of potential new home buyers and homeowners who are planning improvements in the next few months, he said.

“Today’s homeowner is also looking for a home that fits the entire family-from a multi-tasking home office, to expanded storage space, to a living room that can adapt to advancements in home entertainment and technology,” said Nusbaum.

Later, speaking by phone from his office in Des Moines, Iowa, he said: “When someone says their highest priority is an efficient HVAC system, you know we’re not living the same dream as three years ago. That dream was having a showplace home-a McMansion with the emphasis on two stories, big public spaces and an expensive fit-and-finish kitchen.

“Now, those things have drifted to the back burner. Today it’s ‘what I need’ versus ‘what I want.’ People are being sensible and practical. They want low-cost improvements that pack a big punch,” he said.

There were no major surprises in the survey results, “Though I thought it was interesting the number of people-85 per cent-who expressed a desire to have a separate laundry.”

And Nusbaum was mildly surprised that 70 per cent of those surveyed wanted low-maintenance landscaping, “when gardening is supposed to be America’s top hobby.”

NEW-HOME TRENDS

Here are some of the results of Better Homes and Gardens’ Next Home Survey, and some of the trends that may influence new-home building and home-improvement projects in 2010:

87 per cent of respondents said a greener, more-energy efficient home is a priority.

68 per cent wanted an outdoor grilling and living area.

59 per cent wanted a home office.

36 per cent said their next home would be “somewhat smaller” or “much smaller.”

75 per cent said the economy has impacted their home-improvement plans.

52 per cent said now is the time to spend on needed repairs and maintenance, rather than major home-improvement projects.

Source: Better Homes and Gardens

This won’t hurt a bit, homebuyers.

The mortgage rule changes announced Tuesday by Financial Minister Jim Flaherty will weigh a bit on real estate speculators and heavily indebted people who want to fold their high-rate credit card debt into a lower-rate mortgage. But for rank and file homebuyers, the changes will barely be perceptible when they take effect on April 19.

“This should have a limited impact on what I see daily,” mortgage broker Peter Majthenyi said in an e-mail he fired off after Mr. Flaherty’s announcement. “I believe it’s more a message that ‘Big Brother’ is watching and cares.”

Olympics aside, the favourite Canadian diversion of the moment is to debate whether there is a bubble in the housing market. Those most worried about the housing market plunging have urged Mr. Flaherty to raise the minimum down payment for a home and reduce the maximum payback period.

But the 35-year amortization, favourite of first-time buyers across this land, remains. So does the 5-per-cent down payment, which is heavily relied upon in high-cost cities like Vancouver, Calgary and Toronto.

All the measures announced by Mr. Flaherty affect mortgages covered by government-backed mortgage insurance, where the buyer puts less than 20 per cent down. The key change for typical home buyers is that, regardless of what term or type of mortgage they choose, they’ll have to be able to afford the five-year rate.

This is a sensible way of building some slack into the system as we look ahead to a cycle of rising interest rates. If someone chooses a variable-rate mortgage, where the interest rate can be as low as 2 to 2.25 per cent today, they’ll have to be able to handle the payment at the current five-year rate. Right now, the posted rate at the big banks is 5.39 per cent.

You won’t have to actually make the higher payments required by the five-year mortgage. You’ll just have to theoretically be able to carry them and still remain within the limitations lenders set out on how much of your gross income can be consumed by debt (it’s 42 to 44 per cent, just so you know).

Mortgage brokers report that a lot of lenders were already ensuring clients could afford the payments on a three-year mortgage. So bumping up that up to a five-year term will only have a marginal effect.

“Are we going to see the odd borrower have to come up with more money or not buy they house they want? Absolutely,” Mr. Majthenyi said. “But will it have a dramatic effect? No.”

Another reason why the changes won’t be jarring is that a huge number of homebuyers are actually choosing five-year mortgages these days. A study issued by the Canadian Association of Accredited Mortgage Professionals last month showed that fixed-rate mortgages accounted for 86 per cent of mortgages in set up in 2009 and, of those, 70 per cent were for a five-year term.

People who borrow to buy investment properties to either flip for a quick profit or to generate income are also affected by Tuesday’s announcement. If you buy a property you’re not going to live in, then you’ll have to put down a minimum 20 per cent to qualify for mortgage insurance. That’s up from 5 per cent.

But Mr. Majthenyi said not all lenders even require clients to have mortgage insurance if they put 20 per cent down. He also said that stiff mortgage insurance premiums already discouraged people from putting 5 per cent down on an investment property.

“In my office of 10 brokers, I don’t think I know of one client we’ve processed on a high-ratio rental property,” he said.

The final mortgage change restricts the ability of existing homeowners to refinance their mortgages to take on more debt. The new ceiling is 90 per cent of the value of your home, compared to the current 95 per cent.

Mortgage broker Jas Grewal said one group that will be affected by this is recent buyers who made a small down payment and are struggling with high credit card balances and other debts. By folding these debts into their mortgage, they can reduce their interest rate from as high as 19 per cent down to something closer to 3 or 4 per cent.

“Let’s say you put 10 per cent down – if we go from 95 to 90 per cent, you’re not going to be able refinance,” Mr. Grewal said. “You’re going to have to wait until your house value goes up and gives you some equity.”

Source: Rob Carrick of the Globe and Mail (www.TheGlobeandMail.com)

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The Honourable Jim Flaherty, Minister of Finance, today announced a number of measured steps to support the long-term stability of Canada’s housing market and continue to encourage home ownership for Canadians.

“Canada’s housing market is healthy, stable and supported by our country’s solid economic fundamentals,” said Minister Flaherty. “However, a key lesson of the global financial crisis is that early policy action can help prevent negative trends from developing.”

The Government will therefore adjust the rules for government-backed insured mortgages as follows:

• Require that all borrowers meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term. This initiative will help Canadians prepare for higher interest rates in the future.
• Lower the maximum amount Canadians can withdraw in refinancing their mortgages to 90 per cent from 95 per cent of the value of their homes. This will help ensure home ownership is a more effective way to save.
• Require a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation.

“There’s no clear evidence of a housing bubble, but we’re taking proactive, prudent and cautious steps today to help prevent one. Our Government is acting to help prevent Canadian households from getting overextended, and acting to help prevent some lenders from facilitating it,” said Minister Flaherty. “If some lenders aren’t willing to act themselves, we will act. These measures demonstrate the Government is committed to taking action when necessary to support the long-term stability of a sector that is so vital to our economy and the financial well-being of Canadian families.”

These adjustments to the mortgage insurance guarantee framework are intended to come into force on April 19, 2010.

Source: Department of Finance Canada

If you are thinking of buying you need to buy now.  Call us today to get pre-approved for a mortgage and help you find that perfect home for you today. 780-634-8151

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