Thursday, April 2, 2015

MARCHING DOWNWARD


Calgary resale housing market sees another month of declining sales


http://calgaryherald.com/business/real-estate/calgary-resale-housing-market-sees-another-month-of-declining-sales

Monday, February 23, 2015

TRY NOT TO BE SHORT SIGHTED


Realtors take long-term view, see real estate as 'strong investment'
Mario Toneguzzi, 
Calgary Herald February 23, 2015

Calgary’s housing market is the hot topic of conversation these days not only in the city but across the country.

The once-sizzling real estate sector has cooled tremendously thanks to a precipitous decline in oil prices and that has people, from economists to realtors to homeowners and potential buyers, speculating and wondering what that will do to housing prices.

And there is no lack of opinion on the topic, ranging from forecasts of a small increase in average prices for the year to a 10 per cent or more decline. MLS sales are expected to fall dramatically this year – TD recently said by as much as nearly 50 per cent – with new listings rising at a steep pace.

“There is no surprise that the range is so vast. Trying to forecast an average sale price change . . . in today’s market is impossible,” said Don Campbell, senior analyst with the Real Estate Investment Network. “Why? Simply because the most important variable is not known.

“How long oil will stay under $70 and how confident the oil industry is about it levelling at that number.  Without that knowledge, real estate market price forecasting is mathematically impossible.”

According to the Calgary Real Estate Board, year-to-date up to and including Saturday there have been 1,758 MLS sales, down 37.17  per cent from the same period last year, while new listings have risen by 24.66 per cent to 5,551. The average sale price has dropped by 2.17 per cent to $463,938.

Since 1990, the annual average MLS sale price has fallen from the previous year only four times – 1991, by 1.08 per cent; 1995, by 0.47 per cent; 2008, by 2.46 per cent; and 2009, by 4.67 per cent.

The biggest annual hike was recorded in 2006 when prices soared by 39.78 per cent from the previous year to $358,385 and then jumped another 18.25 per cent in 2007 to $423,798.

According to the Conference Board of Canada, the city’s economic growth in 2006 was 7.0 per cent – the second highest rate of growth in the past 25 years behind only the 7.9 per cent recorded in 1997.

Christina Hagerty, a realtor with RE/MAX Realty Professionals, who started in the business in 1991, said real estate in Calgary has always been a good long-term investment.

“In fact, if you look at real estate values over the course of 10 years, all have performed double to triple their value right across the board, not just in the inner core,” said Hagerty, who specializes in that area.

“So the old-timers like us who have seen a couple of decades of activity aren’t fretting.”

Hagerty said the current rental vacancy rate in the city remains low. That combined with some of the lowest interest rates in history and still good overall consumer confidence will keep the real estate market healthy.

“I would say based on this, housing prices should continue to see a slight positive gain. Unless there are reasons for sellers to take a substantial decrease, most would not do so.  Why would you want to lose 10 per cent on your real estate value when you can lease out for a premium based on such low vacancy rates?,” she said.

Ann-Marie Lurie, chief economist with CREB, said there is a wide range of price expectations for this year because there is a significant amount of uncertainty regarding the duration of lower oil prices and ultimately the impact on employment.

“Regardless if you look at average, median or benchmark prices, annual home prices within city limits declined in 2008 and 2009,” she said. “During that time several global economies were in a recession. In 2009 Calgary saw GDP contract by nearly four per cent, net migration fell, full-time jobs were being lost, there was a large amount of newly-constructed product available, and the impact of the financial crises created several changes to the lending industry.

“This year the housing market has seen sales activity fall, likely a result of reduced consumer confidence in the market.  At the same time, listings have continued to rise, driving up inventories. If this continues, this will place downward pressure on pricing. However, to reach the double-digit decline rates in housing prices, this would assume that the energy prices would stay low for this year with not much upside prospect into 2016, causing  job losses, low levels of migration, and persistent excess supply in the housing market.”

For prices to remain stable, said Lurie, the city would have to see stability in the employment sector and the pace of new listings slow.

“With this much uncertainty I think it is prudent to consider there are several factors that can drive the prices. Based on current expectations, prices are likely to remain at or just below levels recorded near the end of last year,” she added.

Hagerty said Calgary is a young city and many people are not used to the volatility of the oilpatch and its relation to the real estate market.

“So those of us who have been around for a couple of decades aren’t concerned,” said Hagerty. “We aren’t day-trading real estate. We get to live in this tangible asset as it grows in value. Savvy investors are sitting back hopeful the next seller will think the sky is falling so they can seize the opportunity. They know that Calgary’s a sure thing with strong fundamentals that make it a great investment.”

Campbell said real estate continues to be a strong long-term investment and income replacement.

“We have always believed that real estate is a safe long-term play. The numbers don’t lie – since prices have begun to be tracked, they have increased,” he said. “Of course we have seen short-term fluctuation with dips and corrections, but in the long term the arrow has always pointed up.

“Calgarians have hosted many an oil boom party in the past and have learned of these inevitable dips. However, because the province’s population, and the city itself, has grown at record numbers over the last two years, we have a large cohort of the population who have never experienced a Calgary ebb and flow.  That has led to an increase in knee-jerk response in the market as shown by the dramatic increase in listings.”

He said it is at about this point that strategic Calgary investors start to hunt for good deals, knowing that when the market recovers – be it in one or two years – that it will prove to be the ultimate buying window.

Friday, September 26, 2014

YYC & YYZ OUTPERFORM


Calgary and Toronto office markets outperform
Calgary has nearly 6 million square feet under construction
BY MARIO TONEGUZZI
CALGARY HERALD SEPTEMBER 25, 2014

CALGARY - Lacklustre job creation continues to impact demand for commercial real estate in Canada, but office markets in Calgary and Toronto are outperforming the rest of the country, according to the CBRE Limited’s National Office and Industrial Third Quarter 2014 Statistical Summary released on Thursday.

The report said tepid job growth has undermined office leasing activity in Canada, but has been unable to stem an historic industrial construction boom.

“The Canadian economy may not be firing on all cylinders, but the Toronto and Calgary office markets turned out quite a performance last quarter,” said John O’Bryan, chairman of CBRE. “It was a bit of a have or have not summer. The standout office markets were exactly that, while other areas were fairly quiet. One assumes that strong office leasing activity in core markets will translate into more widespread office demand in the year ahead.”

The national office vacancy rate dropped for the first time in two years, retreating 10 basis points to 10.3 per cent in the third quarter. Office vacancy had been increasing at a slower pace in recent quarters. Demand for downtown office space in Toronto and Calgary tipped the scale and resulted in a long awaited drop in vacancy, said the report.

Calgary’s overall office vacancy rate of 10.1 per cent fell from 10.6 per cent in the second quarter while in Toronto it dropped from 9.6 per cent to 9.2 per cent. Calgary’s downtown market saw vacancy drop to 9.1 per cent from 10 per cent and Toronto’s downtown market dipped to 5.3 per cent from 6.1 per cent.

In the third quarter, Calgary’s office market had 511,021 square feet of positive absorption and Toronto’s was 712,564 square feet.

Office space currently under construction is 5.6 million square feet in Calgary and 7.1 million square feet in Toronto. Nationally, there is 21.7 million square feet of office space under construction.

Greg Kwong, executive vice-president and regional managing director with CBRE in Calgary, said the drop in vacancy in Calgary is a positive sign but on the negative side the amount of sublet space in the downtown as a percentage of the overall vacancy is at a fairly high level.

For example, in the downtown that percentage was 41.6 per cent in the third quarter, up slightly from 40.4 per cent in the second quarter.

“Any time it’s over 35 per cent of the overall vacancy that means there’s a lot of companies mostly oil and gas that are giving up space. If that continues, that will create negative pressure on the downtown core,” said Kwong. “But overall there seems to be a good sense of optimism. There are deals happening.”

The CBRE report said the Canadian industrial market continues to be characterized by limited availability as tenants remain hungry for industrial space across the country. Demand outweighs supply in most areas, especially for modern distribution facilities.

The overall industrial availability rate fell 10 basis points quarter-over-quarter to 5.3 per cent. In Calgary, it is 4.5 per cent, down from 4.6 per cent in the previous quarter.

There is 4.4 million square feet of industrial space under construction in Calgary and 19.9 million square feet across the country.

“The industrial market is very solid,” said Kwong. “In every size, category or asset class, there’s leasing activity whereas a year ago that was not the case. There was only hot spots in certain size ranges.”

Tuesday, July 15, 2014

BLOSSOMING IN VIC PARK


Proposed downtown condo project will include apple orchard
BY DYLAN ROBERTSON
CALGARY HERALD JULY 15, 2014

Fresh apples will be ripening between two downtown condominium towers as a developer aims to give Calgary a more fruitful and dynamic city centre.

The Orchard on Twelfth is a two-tower project at the southeast corner of 12th Avenue and 5th Street S.E., just northeast of Stampede Park. Lamb Development Corp. of Toronto is planning two 31-storey buildings, which will nestle a one-acre orchard of apple trees between them on a 61,000-square-foot land parcel.

“Not only is this a public and private amenity for the city, but also a true green feature; not a stupid green roof that really in the end doesn’t do much,” said company head Brad Lamb. “It’s a phenomenal thing to have in a city, and it’s going to produce tens of thousands of apples which are going to be eaten.”

The company commissioned an Ipsos Reid survey last month which polled 1,000 Americans and 1,000 Canadians, asking them to guess the location from a digital rendering of the project with its apple orchard. Most Canadians thought the image was in Vancouver or Toronto, placing Calgary seventh out of 13 possibilities; Americans thought of Portland or New York and placed Calgary 12th.

The same poll found that 93 per cent of North Americans — especially younger adults — want greener downtowns, and would welcome projects that delivered food.

“I always try to deliver, if I can, a public amenity that the city will enjoy and the residents will enjoy,” Lamb said, comparing the Orchard on Twelth with another property his corporation is developing, 6th and Tenth, which will include a fountain park. “Our cities aren’t green enough, visually and for taking in C02.”

Richard Cho, senior market analyst with Canada Mortgage and Housing Corp., says the projects are part of an ongoing build up in new Calgary condominiums.

“We had lower inventory and now we see that being made up for,” said Cho. He noted that in last year’s January to June period, construction started for only 1,004 apartments. In the same months this year, the city netted some 4,010 starting units, and Cho says more are anticipated.

Alberta isn’t known for its apple orchards but Lamb said an agricultural firm has chosen tree species that can grow edible fruit in the area. A third party will be paid to prune the trees and harvest the fruit for sale or donation.

But for Lamb, the buildings themselves are more interesting.

“They’re rectangular, simple in design, but they’re super clean and super modern,” he said. “We’re delivering beautiful architecture and affordable apartments; these two buildings are spectacular in their own right.”

Units will range from $249,900 for one-bedroom apartments to over a million dollars for larger units. Lamb says those prices are competitive with Beltline properties. The project will cost $130 million with $170 million in expected revenue, he said.

An older house on the block will be demolished, while buildings on the fifth of the block not owned by Lamb Development will remain in place.

Lamb says his company is currently waiting for a permit, but he expects ground to be broken within the year as no zoning exception is needed. He expects the first phase to open in about three and a half years, followed by the second about five years from now.

Thursday, July 10, 2014

THE SURGE


Calgary home prices continue to surge
Sustained supply imbalance pushes prices higher
BY MARIO TONEGUZZI, 
CALGARY HERALD JULY 9, 2014

CALGARY - A sustained supply imbalance is pushing residential real estate prices higher, says a new survey released Wednesday by Royal LePage.

The company’s House Price Survey and Market Survey Forecast said the Calgary market experienced strong year-over-year price increases in the second quarter of this year across all housing types.

Detached bungalows increased by 9.7 per cent to $501,200 and condominiums rose by 9.3 per cent to $286,422. Standard two-storey homes increased by 7.9 per cent to $489,589.

“Calgary has had a serious inventory shortage dating back to the beginning of 2013, which combined with strong demand from prospective homebuyers is responsible for pushing prices skyward,” said Ted Zaharko, broker and owner of Royal LePage Foothills, in a news release. “We definitely have one of the hottest real estate markets in the country right now and all housing types are performing very well. Properties are being gobbled up as soon as they hit the market.”

But Zaharko said active listings are starting to climb.

“Slowly but surely we are seeing inventory levels creep up, which is needed to satisfy the pent-up demand after a prolonged period of insufficient supply,” he said.

Royal LePage is forecasting home prices in the city to rise by 5.5 per cent over the year compared with 2013.

“Prices are already up approximately 10 per cent year to date, and we expect this to creep up a little bit more before the end of the year,” said Zaharko. “The Calgary market is vibrant and is home to a strong local economy, fueled by the oil and gas industry. We expect the healthy real estate market to continue for the rest of this year and beyond.”

Thursday, June 5, 2014

FINDING THE RIGHT FIT


Make appliances work for you
Consider needs, preferences when outfitting kitchen
BY MARILYN WILSON
FOR POSTMEDIA NEWS

Ever hear the saying the devil is in the details? When it comes to your new condo, that’s certainly true. And if you can properly accessorize, the excitement, rather than the devil, can occupy your details.

Many condo buyers want to make their lives easier. Those who have been renters until now may be happy with whatever appliances are included. Downsizers may also be just as happy with these appliances, as they are new and will mean a fresh start.

But don’t fall into the trap of just assuming that whatever appliances are included will be sufficient. Instead, comb over the model suites with care and consider upgrading appliances that you will use often or get more joy out of using.

Whether you are an aspiring gourmet chef or merely combine cereal and milk in the morning, you likely spend considerable time in your kitchen. So, what will make your kitchen more functional, user-friendly and enjoyable?

Here are a few appliances worthy of consideration, depending on your use of the kitchen.

If you’re a chef, you will want several key appliances. The first is a good hood fan, something that will keep your condo smoke-free but will not be too loud, given that noise is more concentrated over smaller floor plans. Be wary of the microwave-cum-hood fan that sits over your stove and is often featured in model suites. This combo is fine if you don’t cook much but, if you do, you’ll find you will need a real hood fan to absorb smells and steam.

Do you spend more time cooking or baking? Your answer could affect whether an electric or gas oven is best for you. Also, think about the size of the oven. If you like to host big turkey dinners, for instance, get an oven that will hold your bird.

There are many other nifty appliances to consider if you have the space. Would a warming drawer be useful to keep food, dishes and mugs warm for company, or would you end up using it as a storage drawer? Another option is a cup-warming drawer beneath your coffee maker (try Miele’s).

Frequent hosts may also like the idea of a wine fridge or a second dishwasher. No room for two dishwashers? Maybe there is enough for a half dishwasher instead.

A trend I have started noticing is below-counter microwaves to save counter space and streamline the overall look, as well as microwave drawers. Though new and popular, remember that these drawers have to be pushed closed, creating a potential for spills.

Whatever appliances you choose, make sure they represent your living needs. Purchasing appliances for resale or to please others will mean you live with wasted space in limited square footage.

Marilyn Wilson has been selling real estate for more than 24 years and owns Marilyn Wilson Dream Properties Inc. Brokerage.

HOPEFUL FOR A GREEN SUMMER?

How to prepare your home for a quick, profitable, summer sale
By Melissa Leong
May 30, 2014

After a brutal winter, the heat has finally arrived and with it, expectations of a hotter real estate market. The flurry of housing activity normally reserved for early spring is extending into the summer, industry experts say.

“The pent up demand from the winter is coming to fruition. As soon as listings come out, they’re being swallowed up,” Gurinder Sandhu, executive vice-president at RE/MAX’s Ontario-Atlantic Canada Division, says.

“For buyers there are more choice and for sellers there are more buyers.”

How you price your home and how you prepare its for sale are key.

“Price trends from one neighbourhood to the next can be very different,” Gregory Klump, chief economist at the Canadian Real Estate Association. “If you price your property too high, there is a chance it’ll sit on the market without offers.”

Here’s how three recent home sellers weighed their options, and came out with the sale price they were looking for.


Original purchase price: $332,000 in 2002.

Asking price: $889,000

Sold on the first day: $889,000

Jennifer Lee, a 41-year-old public relations manager, had bought her 3,000-square foot home in Markham, Ont. brand new in 2002 for $332,000. The house had four bedrooms and four bathrooms. With the goal of moving her family to Toronto to be closer to work and loved ones, she put her house on the market on March 12.

What were your home selling goals? “My goal was to get maximum value for the home because I was going to move into a much more expensive neighbourhood. I also had a very short timeline because I wanted to match it with my kids finishing the school year.”

Describe your home selling strategy. “One of my strategies was to sell before I buy. [My brother] who has moved five or six times, said the stress he experienced buying a home first and then trying to sell his home was the worst stress of his entire life. Then you get into panicky mode: ‘I need to accept an offer.’ Then you get sellers regret: ‘Did I sell too cheap?’

We had looked at a home three doors down from us that was the exact same model that had sold last summer. They didn’t have a finished basement. It sold for $815,000. (We had spent about $50,000 to upgrade our basement.)

My agent told me that buyers in the market really like to bargain, so I thought I will price in a 5% to 10% buffer. My asking price was $889,000. I told my agent, ‘I don’t even want to hear an offer that is less than $850,000. In my head, I was thinking, I want $870,000 to $875,000.

We originally thought to hold off on offers; [our agent] said, let’s not lose momentum. If someone’s interested, let them make an offer.”

How did you prepare the home for sale? “We significantly de-cluttered. We stripped out all of the closets and did some re-painting. There were some bold colours on the main floor that we neutralized. We replaced carpet in the basement with laminate and new carpeting. Our budget for clean up was $3,000.”

What did the home finally sell for in the end? “We got an offer on the first day of the market for asking, no conditions.

“We do know that the buyer was from China and was moving to Toronto and was only in town for a week.”

Final thoughts on the process. “I’d recommend not holding off on offers. If someone wants to offer, find out what they want to offer. You can always go back to people who’ve looked at the house and see if they’re interested.

In terms of preparations, don’t get pushed around by contractors who tell you that you need to paint eight rooms and replace all mirrors. Buyers can generally see beyond paint. You don’t have to redo your whole house.”


Original purchase price: $122,500 in 2001

Asking price: $270,000

Selling price: $265,000

With Elisa Holland’s transient military career, which has included tours in Afghanistan, and her husband’s job as a consultant in Alberta’s oil patch, the couple has lived apart for eight years. They finally decided to list their Calgary home for sale on April 1 and move together to Kingston, Ont. They bought the two-storey townhouse with three bedrooms, one and a half baths and two parking spaces for $122,500 in 2001. They listed the 1,500-square foot property for $270,000.

What were your home selling goals? “We wanted to put it at a fair price to sell quickly so we could buy a house in Kingston; it allowed us to buy our dream house. Kingston is a very stable market whereas Calgary is the exact opposite. My aunt and uncle have a fully detached house with a two-car garage in Barrie Ont.; it’s listed at the same [price] as our townhouse.”

Describe your home selling strategy. “I had interviews with three realtors. You have to pick a realtor who understands your residence. The reason why we ended up going with Michelle [Russell, a realtor at Royal Lepage], she understands townhouse/condos and first-time buyers.

You want to make sure you have very neutral d├ęcor. You want it so that if someone else walks in, they don’t see that it’s your house but they can picture themselves there. If you have carpets, you want to take those up so it’s a clean line across the floor. If you have an area rug, it cuts up the space. If you have a pet, you want to remove all traces that you have one. Even before a realtor came over, I took photos and very harshly critiqued them.

Knowing when to put it on the market is key. Most people want to keep their kids in school and they’ll start looking in March/April.

What did the home finally sell for in the end? Our price that we’d be happy with was anything over $260,000. We ended up with two offers: $263,000 and $265,000. We ended up selling it for $265,000, with fewer conditions (they didn’t want a home inspection) and they already had their financing in place.

Final thoughts on the process. Go with your gut feeling, especially if you get multiple offers. Your realtor will give you a sense of what the buyer is like. The $263,000 offer that came in, I honestly felt sick to my stomach. I got a sense that there was something not quite right. Make sure you do your research on your realtor. Don’t always go by someone’s advertising. On the whole, the majority of good realtors will never have to advertise, it’s all word of mouth.


Original sale price: $245,000 in 1995

List price: $689,000

Sale price: $700,000

Asking price After living in a two-bedroom bungalow in New Westminster for 19 years, Bob Harris looked at the backyard one day and said, “I just don’t want to do it anymore.” The 68-year-old retired union rep wanted to downsize. He had bought the house for $245,000 and listed it for $689,000. Meanwhile, he saw a two-bedroom condo that he liked and he put an offer on it.

What were your home selling goals? “It seemed like a good time [to sell] in New Westminster; house prices were going up and condos were going down. The spread between the two was as good as it has been in a long time.”

Describe your home selling strategy. “The rush was on. We got it ready to show within a few days – decluttered, depersonalized it.

My real estate agent Dave [Vallee] had sold a couple [of homes] in the same shape as mine; he had sold one for $683,000. We put it at $689,000, hoping to get some competing offers.

In less than a week, we had an open house on a Sunday. The next day there were three offers, all higher than the asking price…$692,000, $699,000 and $700,000.”

Knowing when to put it on the market is key
What did the home finally sell for in the end? “Two of them were subject to financing. The [homebuyer offering] $695,000 had the money in cash. Her real estate agent was there that night at the house presenting the offer and she was waiting in the car. We said, ‘Would she be willing to move to $700,000 to meet the other offer?’ and she did.”

Final thoughts on the process. “It helps to have a realtor who knows the area that you’re buying and selling in. In going to a lot of open houses, you’d go to ones where the realtors were from outside the area – so there were a lot of questions they couldn’t answer.

If something needs painting, paint it. I went to some places and they were messy. It just doesn’t make you necessarily want to buy. The place that I did buy ironically, the person had been relocated back east and said, ‘Take it as it is.’ They probably could’ve asked for more if they had done a few things.”

Article Source: Financial Post
Illustrations by Chloe Cushman, National Post