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CALGARY MARKET COMMENT:


MAY MARKET COMMENT                                                                         2017

Market Stabilization in the Shadow of $50 Oil.

Economic dynamics are in conflict; the Northern Gateway & XL pipeline pending approvals are helping our real estate market and Trump’s NAFTA attacks and China’s stumbling GDP are dragging it down. In the eye of the storm, Calgary’s single family detached market has found some footing and balance. It is starting to plateau and even increase in some select communities while the last few years have seen steady price reductions.

Yet both the federal and provincial governments are adding downside pressure to our market. From Mr. Trudeau we are getting national programs that are drenching the fires of optimism.

While the federal programs appear to be aimed at the over-heated Toronto & Vancouver markets they are stifling our housing market in the wake. CMHC’s new “stress tests” for people applying for financing went into affect this last October 17. This has eroded about 20% of the purchasing power of high ratio applicants. The repercussions from this policy shift have yet to become fully apparent. CMHC also announced last week that there will be a premium increase that will take more money out of buyer’s pockets. In addition to federal factors our provincial leadership is ever so politely showing big oil business the door as they move to greener pastures elsewhere.

 

The following chart shows how the detached single family is fairing compared to our beleaguered condominium apartment market. It is quite a contrast. The single family market seems to have found it's legs with stable prices and a healthy absorption rate (Months of Supply) in the 2 month range whreas apartment condos average about 6 months on inventory.

 

 

In their May Market Report the Calgary Real Estate Board President, David P. Brown, states that our market stability is attributable to a rise in employment. I don’t know where they are getting their numbers since just a day or two later CMHC released its statistics for the Calgary market and unemployment is higher now that it was last year. Just yesterday it was reported on CHQR that Alberta’s unemployment rate is now the worst in the country.

 

 

 

So the question remains; what is holding our market up?

After over 30 years of watching our real estate market I’d sum it up in one word, “hope”. Not that hope and optimise can ever be a bad thing but I’ve seen “dead cat” bounces in the market before. I know that people get fed up waiting and they want to move on with the lives. They see CMHC tightening their approval processes and talk of interest rate increases and decide that it’s time to jump in. A spark of encouragement from $56/barrel oil last month and we have a stable spring market. Unfortunately in the last 10 days oil has receded back to the mid $40s and over supply along with an anemic Chinese economic report points to even lower commodity prices.  

As you can tell I’m not confident of this recovery. I was listening to an oil analyst that I highly respect two weeks ago and he said that the bookends for oil are $56/barrel and $46/barrel. He said that if we hold at $56 we’ll likely go to $60+ but if we break $46 we could drop to the low $30 range. We are now at about $45/barrel. – Analysts have been wrong before.

Gad! I wish I could post a more positive report. I hate this when we are in the best province in the nation. We are the best workers and the most aggressive entrepreneurs. Albertans are resilient and tough minded. It just seems that for the next short while we have the deck staked against us.

Hang in there – it is going to be a wonderful summer with family and friends. Be sure to lend a hand and be an encouragement to someone. It I can help you real estate wise you are always welcome to call, text or email.

Always At Your Service....

Rob Johnstone
Email: rob@rjalliance.com
Cell: 403-809-6026
RJAlliance
Re/Max Mountain View

 

 

 

 

 

APRIL MARKET COMMENT                                                                   2017

CALGARY PRICES INCREASE!!!   (detached)

Yes, .4% and that is three consecutive months of "mini" advances!

The Calgary Real Estate Board reported that ”unadjusted”  detached (single family) home prices were up .4% in March compared with February. It is so nice to see a change to the downward tend and, however small, a positive “blip”. Even though it isn’t like the huge swings in Vancouver and Toronto this is the first upswing since……….. Since last month! In fact the benchmark price bottomed in January at $500,400, bounced to $501,900 in February and now the March numbers show that we have another edge up to $503,900. While a $3,500 increase is only .7% over the couple of months the question is whether it is significant. When we are hearing of 30 & 40% increases year over year in Toronto & Vancouver our little .4% upswing seems quite un-newsworthy. So what is the real context of the upswing in light or our situation, Calgary’s situation?

 

 

Analysts say that our current local real estate market trend depends on what happens with interest rates, oil prices, pipeline approvals, how fast things get approved and how fast people get to work on them, whether Rachel Notley & Justin decide to actually spend as much as they say they will, national and provincial business policies, if President Trump upsets China, alienates Russia, stirs up North Korea or upsets all the women of the earth (again). In short nobody knows because no one has a crystal ball.

In comparison to Vancouver & Toronto a .4% price increase is nothing but in light of the situation it is significant. The fact is the same policies implemented to cool Canada’s overheated Vancouver & Toronto markets are national changes so they affect our market as well. Many were expecting that under the new rules our prices would be sliding backwards, in the other direction.

Let’s look at what has happened since last September; CMHC’s stress test eroded 21% from the pocket books of first time buyers. In addition CMHC has severely increased high ratio mortgage insurance fees from 2.5% for a person with a 10% down payment to 4%. (There is a sliding scale for other amounts of down payment.) What that means is that if you are buying the ‘average’ Calgary home with 10% down payment your CMHC insurance expense has gone from $11,000 to about $18,000, a whopping $7,000 increase. The stress test changes it up like this: If you qualified under the old rules for the average benchmark priced Calgary home at $503,900 you now only qualify for $448,500. That is a huge chunk of lost buying power.  Is a change to the rules for qualifying and erodes about 20% of the purchasing power from those with less than a 20% down payment. The point about our measly 4% price increase is that when many expected steep falling price, they are not.

 

 

So why the turn-around? I suppose that’s the big question. If this sustainable or a “dead cat bounce”? Real estate is like anything else; it’s worth what people will pay. It’s a market based on perception and emotion, as all markets are.

Over the years I have noticed that stalled slow markets cause stalled slow lives held on hold. In short markets affect people’s lives. People that want to move sit on the sidelines holding out for the bottom. Time plods on and eventually impatience eats at people and over-rules market fundamentals. Something (or a few things) happens that encourages people to rationalize making a move. In this case it is the “Trump bump” - oil prices holding above $50 - pipeline approvals. There’s plenty to get excited about but ultimately the cold hard reality is that none of these economic influences have lead to jobs in Calgary. It’s the emotion and the lives affected that is spurring the market along.

The next question is whether this is legitimate? Is emotional stimulus credible or an alluring enticement down the rabbit hole? Have you ever heard the market phrase “buy on rumour, sell on news”? Part of the reason that this is good advise is because of the fact that the emotional aspect of markets (including real estate) are influenced by the decisions of everyday people. I’ve noticed over the years that hose that are the most positive about the market usually do the best.

Is this the best time to make your move? Has the market bottomed? No one really knows tomorrow but one thing for sure is that making your move this year is better than in 2015. Will it be better that 2018; time will tell. 

The market remains relatively balanced with consistent sales  and you can be confident of a great selection to choose from when buying in most communities. It's a safe tiime to think about buying or selling. You are most welcome to call, email or text if you would like to discuss your next move.

Always At Your Service....

Rob Johnstone
Email: rob@rjalliance.com
Cell: 403-809-6026
RJAlliance
Re/Max Mountain View

 

 

 

 

 

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MARCH MARKET COMMENT                                                                   2017

AND THE BEAT GOES ON!!!  
Another positive month for Calgary real estate sales.

It is refreshing to hear some good news about Calgary home sales. While last month the Calgary Real Estate Board reported a 24% increase in sales this month is another winner with a 19% sales increase. Keep in mind that these are sales numbers and not prices like the whopping 27% increase in Toronto last month. And what is even more sobering is that fact that these sales numbers are bouncing off of terrible numbers from the 2015 and 2016 markets. The Calgary Real Estate Board announced that while sales are up they are far below the 10 year average. As you can see from the graph the ten year average looks to be pegged at about 1700 sales year to date whereas we are now at 1407 for this year’s detached market. So we remain about 20% below average. That makes it hardly seem like party time.

So what will happen this year with our detached market? The collective analyst’s opinions range from a couple of percent lower to a couple higher. I suppose the consensus would be that we will have a temperate, moderate market. Ann-Marie Lurie, the chief economist at CREB, is anticipating a one to three percent increase in detached prices while all other sectors lag behind.

I believe that much of the reason for the recent bump in the market is because Calgary home buyers are tired of waiting and the recent stability of oil prices has been enough to spur many to action. I think that the next couple of months will be the very best this year for home sellers and there will be good inventory for the buyers to choose from. As is typically seasonal, pricing will increase moderately up to July and August. Over the summer selling will be a bit more difficult and there will likely be some pressure on prices. The fall will bring a plateau in the market and then pricing will be more competitive for sellers through the winter. So all-in-all the market will likely end up right about where Ann-Marie Lurie predicted. 

The town home and apartment sectors will not fair as well. Town homes will trail behind the single family detached market with some possible gains but there may be not appreciation at all. Apartments on the other hand have far more inventory to absorb and a slower pace of sales. This sector will likely experience lower prices yet at the end of 2017.

Ann-Marie’s predictions are pretty much being echoed by the street this year. The single family detached market under $550,000 is very busy. The months of supply or “absorption rate” of detached homes has dropped from about 4.5 months to a comfortable 2.5 months. Keep in mind that 2 months is considered balance so we are still in buyer’s market territory. Also as usual certain pockets are experiencing more growth and buyer activity than others.

The attached, semi-detached and row housing markets (which now accounts for duplexes and town homes) is fairing better than last year also. The absorption rate of these groups of properties has rebounded from approximately 5 months of inventory to currently about 4 months on the market. Although fairing much better than last year these figures confirm that this sector is firmly a buyer’s market. As mentioned apartment condominium numbers are not doing well with about 6 months of inventory available for buyers to choose from. Although quite negative the apartment absorption rate has represents a significant decrease and is about 25% better than last years numbers.

A CBC report on Calgary’s population was interesting. In April 2016 Calgary’s population was pegged at 1,235,171 people which was actually up from 2015 by 4,256. That is amazing when you think of the thousands of people that left, estimates are at 6,527. So therefore our fair city gained 10,783 more little people than it lost in that year.

I find this report fascinating as well as encouraging, Of course being a born and bred Calgarian, when I was a little tyke Calgary was about 10% the population that it is now. Over the years Calgarians had an expectation that once we reached a million people that our real estate market would flourish along side those of Toronto and Vancouver. That somehow the synergy of a million people would catapult us to true world real estate status. It is encouraging that the effect of that magical synergy is actually working how-be-it at a smaller scale. Yet we all know that with our home prices sitting at about half of Toronto and Vancouver that the scale is muted and the result disappointing to some. But when I listen to the problems that those cities are experiencing I feel that we can all give a collective sigh that our prices have not doubled and be thankful that we live in this wonderful city!

 

With a relatively balanced market this is one of those rare times when you are able to sell in a reasonable amount of time and you can be confident buying with a great selection in most communities. You are most welcome to call, email or text if you would like to discuss your next move.

Always At Your Service....

Rob Johnstone
Email: rob@rjalliance.com
Cell: 403-809-6026
RJAlliance
Re/Max Mountain View

 

 

 

 

 

 

 

 

 

 

 

FEBRUARY MARKET COMMENT                                                                 2017

SALES UP 24% FROM LAST YEAR!!!  
But not quite champagne time.

This month’s Calgary Real Estate Board’s News Release was well written with balance; the radio and television reports were a bit more sensationalized. Listening to talk radio (660 and 770) I was jubilant when I heard the headliner that January sales were 24% above last year. It’s easy to get excited over a huge jump like that, as one should, but “now it’s time for the rest of the story”.

The fact is that yes we had a massive jump in “single family detached” sales volume (not prices) from last year. BUT sales remain 21% below the 10 year January average. So that leaves me thinking that last January must have been absolutely horrible and it was. Last January was one of the worst per capita adjusted sales months on record. So I suppose that the miracle isn’t the jump in sales this year but that home prices didn’t crumble even more than they did in 2016. The benchmark average price retracted just 2% over the year from $510,700 to $500,400 this January. Also while still in buyer’s market territory the months of inventory (absorption rate) has improved from 5.4 months to 3.2 months. That is significant and encouraging for 2017 but not an indication that we are going to see prices increase in the detached sector.

 

 

While this is the case over-all in the city there are areas that have dropped more than others and a couple that have actually seen prices moderately increase.

 

 

The apartment condominium market continues to be plagued with excessive inventories relative to sales. Pricing is cut-throat for sellers and buyers are brutal with offers.

 

 

 

 

 

 

 

It is difficult to predict 2017 but as was reported last month it appears that it will be a year of uncertainty. Real estate health is often directly linked to interest rates. When they go up housing prices go down and visa versa. How can it be possible to predict the market when predictions of anticipated interest rate policy fluctuate with each tweet from Trump? While the Bank of Canada pretends to have their hand on the rudder the fact is that Canadian interest rates will be determined south of the 49th parallel.

I find it quite fascinating that the CMHC stress test and increased fees do not seem to of had very much effect on the market. Those most affected by the changes would be first time buyers since they tend to more often have less than 20% down payment and rely more on CMHC than second and third time purchases. I have a few buyers that are looking for single family detached homes priced under $550,000. This would be considered the first time buyer’s price range. The fascinating thing is that this market segment is very tight with few listings and often competing multiple offer situations.

First time buyers are the fertilizer for the residential real estate market. Their purchases allow the second and third time buyers to move up to their next homes. Without first time buyers the market cannot move ahead. With this healthy base of buyers remaining steady we may well see a fairly healthy 2017 market. Yet unemployment, dwindling severance packages and Ms Notley’s carbon tax erode the confidence of many. This leads me to believe that 2017 will be a reasonably market that will lean to the buyer’s advantage for the most part.  There should be good opportunity to sell and slightly more fertile ground for buyers.

 

 

 

  Always At Your Service,

    Rob J

 

 

                               403-809-6026                                  RJAlliance1@gmail.com

 

 

 

 

 

 

 

 

2016 YEAR END MARKET UPDATE                                 January 2017

Volatility in 2016 – Uncertainty in 2017

Looking back over 2016 words that come to mind are volatility and resilience. After working through Brexit the stock markets became numb to turmoil and calamity. In the months to follow threats of the collapse of Italy’s largest bank and increased numbers of terrorist murders didn’t even cause a market ripple.

2016 was a tumultuous year with Alberta's new NDP at the helm. They usher in their politically appropriate carbon tax while Mr.Trudeau sings Ms Notley’s praises not to mention the unsettledness ahead with a Donald Trump's presidency. Looking ahead the one word that I feel will characterize 2017 is “Uncertainty”. Trump heralds approval of the Keystone pipeline, billions if not trillions of dollars pumped into the economy causing increasing U.S. interest rates, renegotiating NAFTA and who knows what else he might have up his sleeve. OPEC meetings seem to have been positive with some agreement. It seems that the history of OPEC is that countries give lip service to production cutbacks while only honouring a portion of what was agreed to. Distrust, greed and need are powerful. In any case even the notion of cutbacks has opened a dam of refreshing pent-up optimism.  


While stabilizing oil prices are cause for celebration other challenges have not disappeared.

-     CMHC changed mortgage approval rules: As of October 17 Canadians with less than a 20% down payment for a home purchase have about 20% less buying power. I talked about this in last month’s newsletter.

-     Provincial & federal government’s attitude towards business: Rachel Notley & Justin Trudeau are not gong anywhere for awhile.

-     National & provincial carbon taxes will erode consumer buying power. The provincial tax began this January 1st and is estimated to cost Alberta families about $50/month.

-     China’s restrictions on capital outflow: Chinese money is no longer flowing out to North American real estate as previously. There was some hope that Chinese investors displaced by the 15% foreign investor tax in British Columbia would begin buying in Alberta. Apparently restrictions will likely curtail that.


I’ll leave the macro and micro economics for the experts but it appears that in Alberta and Calgary sentiments are gradually improving with news of the West Coast pipeline approval and optimism about oil price stability. One thing that I have noticed over the years is that those that wait for a definitive sign that things are improving often miss  the turn around altogether.

 


 

The CREB year end statistics package shows some positive signs of market recovery in the detached residential sector but we have not broken the downward trend of real estate prices.  Month over month figures can be a bit unreliable but even looking at the year to year numbers we can see positive indications. In the single family detached sector sales volumes are down a mere 2.65% while listing inventory is down a comparable 3.13%. This is reflected in the rate of turnover (Absorption Rate) holding on at the same rate as last year of 2.9 months. While the benchmark price has declined about $16,000 the other numbers suggest that we could be nearing the end of the downward trend.


The condominium apartment market statistics tell a different story. Sales are down 15% and listing inventory is up 15%. With sales dropping and inventory accumulating pressure on prices will likely continue for the foreseeable future.

 


The detached benchmark price is $502,242 YTD. It was last at this level in May 2014 when it was $504,300.  At the peak of the 2006 – 2007 market run up the benchmark price topped out at $506k. Calgary detached homes prices have now retracted back to the market high pricing of about 10 years ago. That should be a nice place to see our market base and poise for a 2017 turn around!!

 

Here's to a properous 2017!!

 

 

 

     Always At Your Service,

    Rob Johnstone 
            403-809-6026                                  RJAlliance1@gmail.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DECEMBER MARKET COMMENT                                                      2016

WHAT A DIFFERENCE A DAY MAKES! 
In this case a few weeks.  -  It’s time for “cautious” optimism.

I’ve been listening to the news and watching the brewing storm of events that will affect Calgary’s real estate market. In just the last week we’ve seen relative consensus on oil production cut-backs from OPEC’s and non-OPEC nations which gives Albertans have some cause for celebration. The price of oil is hovering in the mid-$50 range and with it there is hope that the Alberta recession may begin to lose its grip on the economy.

 

I believe that over-all the Trump presidency will workout as a positive for Alberta. Trump is a proponent of the Keystone Pipeline and in addition his proposed infrastructure spending should push the value of the American dollar higher. A higher dollar will increase the profits of Canadian exports like oil. We’ll have to wait and see how a renegotiated NAFTA agreement affects us. Also Trump’s promised push for increased shale oil production will hold oil prices down and limit sales of Alberta crude to the US. 

 

 

 

While stabilizing oil prices are cause for celebration international oil supply agreements can be sketchy and other challenges remain:

-     CMHC changed mortgage approval rules: As of October 17 Canadians with less than a 20% down payment for a home purchase have about 20% less buying power. I talked about this in last month’s newsletter.

-     Provincial & federal government’s attitude towards business: Rachel Notley & Justin Trudeau are not gong anywhere for awhile.

 

 

 

-     National & provincial carbon taxes will erode consumer buying power. The provincial tax begins January 1st and is estimated to cost Alberta families about $50/month.

 

 

 

 

-     China’s restrictions on capital outflow: Chinese money is no longer flowing out to North American real estate as previously. There was some hope that Chinese investors displaced by the 15% foreign investor tax in British Columbia would begin buying in Alberta. Apparently restrictions will likely curtail that.
 

 

 

 

 

 

 

 

 

The real estate market is a big ship to turn and it does not change over night. Last month I mentioned that sales activity had increased about 16% over last year and that it was likely due to the new mortgage approval rules that were imposed by CMHC. Sure enough that was the case and November’s sales figures were back in the same trend. 

 

 

 

 

People don’t buy real estate if they are not working and Alberta employment dropped off by about 13000 jobs in November negating recent gains.

 

 

 

In addition last week’s Alberta crown lease auction was the worst that it has ever been since the lease auction started back in the 1970’s. This lease auction is a precursor of the Alberta economy.

 

 

 

 

One thing for sure is that IF they can hold oil above $50 per barrel it will cure most of the other issues in our housing market. We'll see things begin to turn around and 2017 should be a stable year for home prices also. 

Let me know if you would like to review some of the source material for this month’s newsletter and I would be happy to email you a copy.

 

Timing the market:

The two most frequent questions that I hear from clients are; “When is the best time to sell?” and “When is the best time to buy?” Usually clients are planning to sell their home and buy another in the city which makes the question almost mute. Common sense tells us that the advantage of market timing cannot work both ways simultaneously nor can it work if there are influences that unduly motivate the client to buy or sell at the wrong time. Negating the nuances of micro market variances timing the market for advantage can be gained only when approaching one side of the transaction with the ability to buy or sell at that optimum time. Of course if you are buying it’s best to pick the bottom and when you are selling the opposite is true and you aim for the top of the market. As simple as that sounds it is extremely difficult. One thing for sure is that buying now is better than if you bought last year. At the end of November the detached single family benchmark price was $498,300. It has not been below $500k since March 2014. 

 

May the gift of love and laugher warm your soul this holiday season.

 

Merry Christmas & Happy New Year!

 

 

     Always At Your Service,

    Rob Johnstone 
            403-809-6026           RJAlliance1@gmail.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOVEMBER MARKET COMMENT                                                      2016

New Mortgage Rules Eat Away Affordability

I commented on this last month but I wanted to mention it again after my meeting with Don Letterio. Don is an appraiser with Residential Valuation Services here in Calgary. He is highly respected and is often called upon for his opinion as an expert witness and to review appraisal reports for the courts. He said that the appraisal community is struggling with determining how Calgary home prices will be affected by the new CMHC Stress Tests that were implemented a few weeks ago on October 17th.

As a review: In a nutshell if home buyers have less than 20% down payment they will have to qualify for a mortgage at the Bank of Canada Posted rates which are about 4.64% instead of rates that range from 2.15 to 2.7% for a 5 year term. That will really erode first time home buyers ability to qualify for the home that meets their needs. This measure will seriously downgrade the buying power of anyone placing a mortgage with less that a 20% down payment. (High ratio mortgage)

 

Don’s calculations indicate that after October 17th anyone applying for a high ratio mortgage will qualify for 21% less under the new rules. That is a big chunk of buying power that is no longer available. So what will happen to prices according to Don?                             

Don said that there are so many other factors in the over-all big picture that would need to be considered when it comes to how this will ripple through our local real estate market. For example; of course this does not affect buyers that have 20% and more for a down payment. Also it’s not like people will quit buying homes because of the new policy.

 


Some buyers will no longer qualify for what they want so will choose to sit on the sidelines renting a little longer. Others will just buy less expensive homes. Don pointed out that a healthy real estate market does depend on a steady flow of first time buyers and that this will definitely cut down those numbers. Another source canadianmortgagetrends.com says that they foresee about 1 in 6 high ratio buyers being sidelined.

 

Don said that from his experience a policy change like this one will typically take about six months to work through the economy. Ultimately we can only guess at the implications but he estimates that we could see as much as 10 to 12% adjustments due seen as a result. Whether this actually happens depends on all of the other macro factors that influence our market.

 

 

Sales Up 16%....  WOW!

Don’t celebrate yet…. It’s the short-term gain of the new CMHC Stress Test policy that went into affect on October 17th. It only makes sense that there would be an increase in activity as some buyers moved up their plans to purchase their new homes under the old rules while they still could.

 

Sale Falls Apart At Closing - Lawyer finds seller incompetent.

This year I have been thrown into a few oddball situations and this is another one. The end of August I had a sale fall part because in the seller’s lawyer’s opinion the seller did not understand the transfer paperwork that she was signing, therefore the lawyer was not able to submit the title transfer paperwork. We could have closed the transaction one or two weeks late but the buyers were not able to accommodate the late closing so they pulled out of the deal. The seller was in financial difficulty and needed to have the transaction go ahead. As it turned out I was able to sell the property for more money and just a week after the first deal fell apart so it all worked out okay.

I don’t mention this transaction gone wrong to toot my horn but rather to highlight that even after a real estate purchase or sale is firm, while not probable, it is possible that it may not close. Although quite rare, things can happen as with my sale that went sideways. A party to the transaction could be hospitalized and not able to proceed or someone could pass away. Also most people are not aware but if you read the paperwork a lender’s mortgage approval is conditional. If something happens like, for example, the buyer’s financial situation changes the lender has the right to pull out of the deal. This could happen if the buyer financed a new car purchase or lost his/her job prior to closing. I had one case where the day before closing a lender’s representative requested to view the sold property. I asked him what would happen if the property was not suitable to the lender and he said that they would not transfer funds that next day. As it turned out the property was approved and there was not an issue but what a mess it would have been if they did not fund! These are the kinds of unfortunate situations that court cases are made of since it wouldn’t be clear as to who could sue who and for what types of damages.

Let me know if you would like a calendar for the New Year.
I`d be happy to send you one

 

 

     Always At Your Service,

    Rob Johnstone 
            403-809-6026           RJAlliance1@gmail.com

 

 

 

 

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MAY MARKET COMMENT                                             2016

FIRST THINGS FIRST:
Even those that voted NDP have to be shocked at the lack of compassion shown by Rachael Notley over the plight of Fort McMurray residents. After pulling 80% from the provincial fire fighting budget and as flames were licking at the doorsteps of the city she accuses Brian Jean (opposition leader) of fear-mongering and then laughed at him for strongly stating that the city needed immediate help. Then after realising that she might be looking bad she muzzles the reports about the inferno and has the reports go through her office to give the impression that she’s all knowing and caring. Brad Wall (premier of Saskatchewan) offered support for Fort McMurray before Notley or any other political leader! A big bravo to Mr Wall! Justin Trudeau spends $1.6 billion on Syrian refugees and flips a quarter to Alberta by offering to match Red Cross Donations. 

Enough complaining….. Time to roll up the sleeves. I am so proud to be Albertan as I see the huge out pouring from everyone. So many are stepping up to the plate!

If you are not aware the Alberta Real Estate Association is also pledging to match Red Cross Donations. Interesting that they are doing as much as our prime minister. (Sorry back to complaining.) And on a local level AREA has setup a Facebook group, “REALTORS® Support Fort McMurray” to connect displaced families with anyone that would offer accommodation. 

DOWN TO BUSINESS:
As oil finds its footing and there seems to be a light at the end of the tunnel this month I thought the we would mix in a few other real estate topics besides what is plastered all over the media.

AND THE FIRST SHALL BE LAST:      
             CREB has new statistics reporting that’s just great!

IF IT LOOKS TO GOOD TO BE TRUE:     
             When selling a home you need to accentuate the positive; this is a bit much.

COMPETITION TRIBUNAL WANTS TO TELL EVERYONE WHAT YOU PAID FOR YOUR HOUSE:          
             The Toronto Real Estate Board is being pressured to release all sales data to the public. Do you want that?

 

 

AND THE FIRST SHALL BE LAST:
The Calgary Real Estate Board has restructured the statistics reporting and are now including a breakdown of the numbers between the various market zones within the city. (There is also a zone map below) The “months of supply” is a reliable indicator of market strength. As you can see the higher the Benchmark Price the higher the months of supply sitting on the market.  The Calgary market continues to favour the lower priced parts of the city. In general the traditionally “HOT” communities are getting beaten up and that’s where the bargains are if you’re a buyer and where prices are most vulnerable for sellers.

If you hadn’t noticed CREB started is using a new zone map.

 

COMPETITION TRIBUNAL WANTS TO TELL EVERYONE WHAT YOU PAID FOR YOUR HOUSE:

Several years ago the Competition Bureau forced the Toronto Real Estate Board (TREB) to release all active MLS listings to the public and allow discount brokers and individuals to list their properties for sale on their MLS system. Soon after all Canadian real estate boards followed suit. Now they are wanting to push the issue on home sales information. Up until now it has been illegal to release bulk sales information publicly because of personal privacy rights. READ MORE

 

AND IN CONCLUSION

If it looks to good to be true.....

I had a client go out to drive by this acreage near Crosssfield yesterday. $609k for 4.8 ac and a decent 1240 sq ft bungalow. He was pretty excited about it when he read the comments and saw the pastoral photo that the realtor had posted. (Top photo.) After driving out he sent me the second photo below. LOL!

 

 

 

Remember Fort Mac….

 

Always At Your Service,

    Rob Johnstone 
                       403-809-6026           RJAlliance1@gmail.com

 

 

 

 

 

 

 

 

 

 

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NOVEMBER MARKET COMMENT:                                                             2015

 

 

There’s not a lot of sense belabouring the point: The recently released CREB October real estate announced more of the same. Inventory is up and sales are down. Prices have dropped and they are expected to drop some more before the inevitable bounce back. I met a geologist today that is happily building decks and fences as he confidently waits for a spring bottom in the industry. It was refreshing to feel some optimism in the wake of a title wave of pessimism.

 

 

So let’s talk about an issue that isn’t front page news. There was a recent advertisement on QR770 and other news articles about Radon Gas exposure in your home. Why should you care? Well you should.

 

 

Radon - What you need to know

Radon is radioactive, and potentially carcinogenic if enough of the gas builds up. It is estimated that radon exposure is responsible for about 10 per cent of lung cancer cases in Canada, second only to smoking. Health Canada estimates that 1,900 Canadians died in 2006 from lung cancer resulting from radon exposure. In the United States they have been testing homes for Radon for decades. It was considered to not be a problem in Canada because we are further north and protected by the Canadian Shield.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20 % Calgary homes (that’s 1 in 5) have been found to have dangerously high levels of Radon Gas. Radon is a radioactive gas found naturally in the environment. It is produced by the decay of uranium found in soil, rock or water. Radon is invisible, odourless and tasteless and emits ionizing radiation. As a gas, radon can move freely through the soil enabling it to escape to the atmosphere or seep into buildings. When radon escapes from the bedrock into the outdoor air, it is diluted to such low concentrations that it poses a negligible threat to health. However, if a building is built over bedrock or soil that contains uranium, radon gas can be released into the building through cracks in foundation walls and floors, or gaps around pipes and cables.  (Health Canada)

http://globalnews.ca/news/2319847/calgary-homeowners-urged-to-test-for-cancer-causing-gas/

http://www.hc-sc.gc.ca/ewh-semt/radiation/radon/radon-eng.php

http://www.crea.ca/sites/default/files/Radon.pdf

http://calgary.ctvnews.ca/radon-on-radar-of-calgary-cancer-researchers-1.1649324

 

 

Why Getting A Home Inspection Before You Buy Doesn’t Work:

 

I spoke specifically about the Radon Gas issue with my most trusted home inspector, Rick Strand from Strand Inspections. He said that inspecting for Radon Gas is not practical in the scope of a home inspection. The reason is that the test takes several days and there is no way to monitor the test when there is not a representative watching your interests during the entire test time. An open window or a summer fan switch being turned on in the home will nullify the results so there is no point in doing a Radon test until after you own your home.

 

 Rick Strand (Strand Home Inspections) http://www.strandhi.com/

 

My suspicion is that many of the people that feel they are victims of second hand smoke are in reality victims of Radon poisoning. It is a real and serious issue that will not go away by ignoring it.

 

That said…. Hey have a VERY MERRY CHRISTMAS!!

Keep your family and yourself safe and healthy in 2016 by getting a Radon test while you’re taking time off over the holidays.

All The Best and don’t forget your favourite realtor!  That’s me… 

 

 

 

 

  Always At Your Service,

    Rob J

 

 

 

 

 

 

 

 

 

OCTOBER MARKET COMMENT:                                                             2015

Just last week, In this month’s news release, the Calgary Real Estate Board almost said that prices are falling and that we should be expected a continued price decline. Hooray! If there is any consistency in the world then this means that the end is likely near. For years I’ve watched CREB and they never seem to admit that prices will fall until they’ve already fallen and they don’t forecast that it’s a buoyant investment time until prices are half way through the next cycle. So Hooray! I’d expect that we’ll hit bottom with a bounce in the next six months.

“It’s always darkest before the dawn.”

 

This is an excerpt from last week’s CREB statistics press release. I had to read it twice to get the point; inventory (listings) are up and sales are down, this is causing prices to drop. (So much for simplicity.)

 

 

 

Actually the stats reveal that in the over-all Calgary market sales are down 32% from last year and inventory is up 21%. The detached market  (not just single family any longer, we’ll talk about this more in a bit) is fairing a bit better but following the same trend with a 60% increase in the absorption rate that is a result of a 26% drop in sales that is compounded by a 17% increase in listings. As severance packages deplete and oil prices remain stubbornly low, without a sudden turn around, these numbers are a foreshadowing to anticipated real estate price declines in our near future. It appears that the safety net of hope in a quick recovery is giving way to a collective acceptance of prolonged dismal oil prices that fall short of sustaining our energy industry. BUT do not dispair “It’s always darkest before the dawn.”


 

 

Insider News Stuff:

Numbers, Fumbers all mixed up……….

 

A few months ago the Calgary Real Estate Board forcibly switched out the old MLXchange software that realtors used to research the real estate database to the new and improved MATRIX system. This in itself is not a big deal; Other than it is driving almost every Calgary realtor around the bend with beta issues that should have been dealt with before the grand unveiling. One significant thing that it means to the general public at large is that the detached and attached categories in the CREB stats reports do not mean the same thing as they did a few months ago. The little known fact is that the detached and attached categories now include condominiums. Yes that’s right, single family detached condominiums are out there and now they are in the detached database AND half duplex attached properties are now lumped in with town homes and visa versa. I must admit that our most knowledgeable chief economist at CREB (Ann-Marie Lurie) has sorted it out and worked around the old figures as masterfully as the wizard from OZ. The issue is going forward and working out pricing for clients we have a dog’s breakfast of numbers that are not as accurate and revealing as they once were. So this is progress?

Yup – best have a great realtor price your property if you are planning to sell.

 

 

 

  Always At Your Service,

    Rob J

 

 

 

 

 

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SEPTEMBER MARKET COMMENT:                                                   2015

Once again the top news story affecting the market is Alberta's economic slide into the abyss caused by the low oil prices. The Canadian Petroleum Association has reported that there have been 35,000 lay-offs in the oil patch with more to come. Recently Penn West Petroleum and Conoco Phillips cut loose more than 900 workers. Bob Schulz, professor of strategic management with the University of Calgary’s Haskayne School of Business, said the economic situation in Alberta will lead to more job layoffs in the oil patch as companies are in the first draft phases for their 2016 annual budgets. The economic ripple from these reactions to economic events will be exponential as is inevitable from experience from past recessions.

Yet I report once again, in defiance, the Calgary real estate market is holding its own. Yes, things are pretty much status quo; lower priced homes are selling reasonably well while the upper end price ranges struggle. Amazingly, things continue to hold pretty much like a lady’s corset after Thanksgiving turkey dinner. As we await the inevitable conclusion, a prophetic vision fuelled by common sense, let’s not re-hash the numbers this month. Let’s cover some new ground as we wait patiently for the other shoe to drop.

 

Welcome to my happy Grow-Op home:

A few months ago I had a seller request that I list his apartment condominium and I found out inadvertently that it was a remediated illegal grow op; it was used to grow illegal drugs. I was quite surprised that an apartment would be used as a grow-op. So in reality any property that is purchased could have been a grow-op. I spoke with the seller and he was adamant that he did not want to disclose that it was a grow op to buyers. So I had a chat with my broker who, surprisingly, told me that there is no need to disclose. Apparently the legal profession is taking the stance that a remediated grow-op is comparable to any other situation in a home that needs to be corrected. This would be similar to a minor flood repair due to not putting a downspout in position or a leaky roof that had the shingles replaced. Once the situation is repaired then there is no need to reveal it because it has been dealt with. I told my broker that I was uneasy with selling a previous grow-op property and not disclosing it to buyers. I passed on the listing and some other realtor put it up for sale.

I have seen pictures of grow-op properties where the mould was so intense that it had worked its way out through the exterior siding. In most cases the lender ends up taking a busted grow-op property back and then "remediates" it and after remediation the Alberta Health Authority approves the home for occupancy. Then the home is put up for sale. This is the process whether there was one plant grown or a thousand.

The fact remains that whether one plant or a thousand all properties are "remediated" and put up for sale. I do not know of any home that has been bulldozed and rebuilt; they are all "remediated". Whether disclosed or not the buyer has no way of knowing the intensity of the grow operation that took place.    

My question is if we can rely on the remediation process enough to risk our family’s long term health?

I consider it a red flag that there are only a couple of lenders that will finance a property that they know was a previous Grow Op. I find it peculiar that lenders have remediated properties for sale but that most are not confident enough in the process to re-mortgage them after remediation; I wonder why?

If you purchase a remediated Grow-Op knowingly, as a buyer, how do you know if the property has been properly remediated? I don’t think that we can rely on the lender’s air quality tests; that’s like the fox guarding the chicken coup. The lenders employ the testing companies and I would expect that there might be some pressure, if even unspoken, that a clear test would result in more business from the lender. Case in point: I spoke with 3 realtors in my office that had independent air quality tests done for their buyers of remediated grow-op properties. One of the 3 found that the air quality mould spore concentrations where above the health limit.

I discovered another point a couple of weeks ago when I was talking with my insurance broker about Poly-B pipe, aluminium wiring, asbestos and the like. I brought up remediated grow op properties and the broker said that it is very difficult to insure a former grow-op home. Apparently they rely on the homeowner to inform the insurer if the home was a grow op. So this is another industry that is wary about remediated grow op homes.

This all being said, even if I’d be on the “right side of the law” and my buyer doesn’t care whether a property is a grow op or not it would still be in a buyer's best interest to investigate it; if not for health concerns then to get proper value for my client. The fact is that the lenders and insurers apprehension towards remediated grow ops does affect the property’s market value. While attitudes may change over time if the issue is known then lenders and insurers current perceptions as well as the general public’s will affect the current value and potentially the resale value of the property. The last thing I would want is for one of my buyers to find out that their new home was a grow–op from a friendly neighbour after they had moved in.  The fact is that most neighbours know (or suspect) what’s going on next door. I think that its better that buyers know up front before they purchase.

While non-disclosure of grow-ops seems to be the new reality I don’t know of any buyer that wouldn’t want to know if a home was a previous grow-op. I find it puzzling that realtors are not using a Grow Op disclosure clause on their Purchase Agreements to protect their buyers. While standard practice just a few short years ago the clause seems to have gone out of vogue. Since the time that I turned down the apartment grow-op listing I’ve had the pleasure of working on about 20 offers that have come in on properties that I have had for sale. Only one of the 20 purchase agreements requested that the seller disclose if their property had been a former grow-op. Also since that time I have uncovered two undisclosed grow-op properties for my buyers.

Usually you can tell if a home was a grow-op by checking if the electrical power meter had been by-passed but sometimes there is no way to tell. In the case of the listing that I turned down I would never have guessed that an apartment condo would be a grow-op but it seems that there are an abundance of creative people out there that want to make a fast buck. So, in reality, anything that you might buy today could potential have been a grow-op.

My property inspector says that he used to check the Health Region web sight when he inspected a home. Although he said that now that the remediated properties are being removed shortly after they are past the process the sight isn’t nearly as useful as it was previously. He said that for some reason they have now buried the link and made it difficult to find so he sent it to me. Here it is if anyone would like to have it.

http://www.calgaryhealthregion.ca/publichealth/envhealth/orders_calgary_zone.html

Just to checkout what I could do to investigate I looked on SPIN (the Alberta online title search sight) at the registrations on title of a current grow-op and the Notice of Health Hazard Registration is pretty obvious. So I checked a property that has been remediated and that is tougher because, as discussed, the Notice of Health is removed. I looked at the historical registrations from title around the time when I guessed the property would have been remediated. I could see that there was a Discharge of Instrument that was registered which again I would guess took place after the remediation. I assume that this would likely be the old Notice of Health Hazard Registration that was discharged and removed. If that is the case then even if there are no other public records I can use SPIN (the Alberta online title search sight) to screen out many of the old remediated grow-ops by pulling any Discharge of Instruments.

If you don’t want to buy a grow-op property without knowing it then be sure that your realtor uses a disclosure clause in your Purchase Agreement. Of course that will not guarantee that a Grow Op will be disclosed but at least the question will be presented. Not all grow-ops are reported and sellers may choose to not disclose. Checking historical registrations is an effective way to confirm if you are suspicious.

 

Always At Your Service....

Rob Johnstone
Email: rob@rjalliance.com
Cell: 403-809-6026
RJAlliance

Re/Max Mountain View

 

 

 

 

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Why I use the benchmark price:

The Benchmark price was implemented in the last few years because it smoothes out some problems inherent with the average price. With the average price if there are a disproportionate number of higher priced homes that sell those sales change the average artificially. That is that although it would appear that your house value had increased that would not be the case. That’s right; there were just more big homes sell. The same works in reverse when a bunch of lower priced homes sell – the average goes down artificially.  What the benchmark number is based on is the value of the “average” house in the market not the “average” price of all sales. So the economist for CREB figured out what the average house is worth and this becomes the “benchmark” for the value. It really doesn’t matter how they figured out what the average house is in the area. For our purposes it’s just a typical home in the area. But looking at the average house value takes out those anomalies that the average price has, the high and low influences of inconsistent numbers of sales in different price ranges. In any event the benchmark is a more reliable number than the average or median price. 

 

What The Numbers Mean:             

Absorption Rate:

The Absorption Rate is often called the rate of turnover. This is the rate is which properties are selling in the current market. It is calculated by assuming that no new properties are put on the market for sale and that they continue to sell at the same rate as in the previous month. So the Absorption Rate is calculated by dividing the current inventory (properties for sale) by the number of sales over the previous 30 days. The result is the time frame that it would take to “absorb” the inventory. This momentum indicator is much more reliable than the old “Sales To Listing Ratio” that used to be used and it is a fairly reliable indicator of market direction. Therefore it is a reasonable tool to use to help you to price your property relative to the recent sales and current competition.

In a healthy “balanced” market you would expect to see an Absorption Rate in the 1.5 to 2.5 month range. Below the 1.5 month range is considered a seller’s market and above 2.5 months is a buyer’s market.

Vacancy Rate:

I have started to calculate the competitive market Vacancy Rate because it is an obvious indicator of market motivation. When there are many properties on the market that are empty sellers are having to carry the expenses and could potentially have an insurance risk if there was to be a problem with vandalism, fire or winter freezing.

In a suburban market it is reasonable to expect that 10% to 15% of properties might be vacant. More than that puts negative stress on the market. In the inner city condominium market it is typical to see Vacancy Rates higher, often in the 30% to 40% range. This is because more of these units are owned by investors that see benefits in selling when the units are not occupied by tenants. Never-the-less it does stress the market as well.

90 Day Odds of Sale:

The 90 Day Odds of Sale uses the full market activity of the previous 90 days to calculate the odds of selling during that period. I use this number in conjunction with the Absorption Rate to judge how competitive the market is for selling. It is calculated by taking all market activity and dividing it by the number of properties sold during the previous 90 days.

A resulting ratio in the 1 in 2 range indicates a healthy market. Below 1 in 2 leans towards being a sellers market and above 1 in 2 favours the buyer.

 

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Selling your house ... how long will it take?

How long will it take to sell your house? Realistically the length of time your home is on the market is dependent on many variables. Some are within your control but many are not. The key to a faster sale is to take an honest look at your specific situation in light of the following market influences.

The Averages: The average time that it takes to sell a house in your community and price range is a "rule of thumb" measurement. Don’t put too much weight on it. In determining a framework on which to base your expectations, you need to be aware of other market factors.

The major market influences are:

Timing: Timing is everything. In your golf swing, turkey cooking and real estate sales. The basis of strength in the housing market is no different than most markets and that is supply and demand. In real estate, supply is the number of homes on the market and demand is the number of buyers for those homes. Of course this effects market momentum which will determine how long your home takes to sell. Supply and demand are constantly in flux as conditions change. Depending on when your home is for sale, supply and demand can work either for or against you. Barring other extenuating circumstances, the real estate market tends to trend with the seasons. The early spring is typically the very best time to sell your home, followed by early fall. November, December, June, July and August are usually slower months.

Competition: In a competitive environment a sale occurs when one product beats out another, either by price or superior features. Most homebuyers are not impulsive, but shrewd comparative shoppers. Your decisions about other factors will determine how well your home will stack up against the competition.

Price: Ultimately the selling price is an agreement between the seller and buyer as to value. Many things contribute to this final agreement, including timing and competition. What is the right price? The right price is the sale price. One thing we do know, if the comparable properties will sell at a lower price, buyers will buy them before your home.

The Property: On occasion, some sellers forget what it means to be a buyer. Sellers are often reluctant to invest $500 for a needed paint job that will yield $1000 net and possibly lead to a faster sale. It usually comes down to a choice of either correct it or adjust the price. Furthermore, in some cases a property may have negative influences to overcome. Some might be corrected while others may not be. Examples are; busy streets, a poor floor plan or even unkempt neighbouring homes. If an influence cannot be corrected it must be compensated for in some way.

The Economy: An adverse financial atmosphere slows markets. Interest rates are a barometer that reflects the health of the housing market because it directly determines the dollars that buyers can spend for your home. Also a negative outlook and unstable work environment will effect your home sale dramatically.

Marketing: You can have the best home on the market but if nobody sees it your home won’t sell. Evaluating market conditions is the door that leads to a faster sale but exposure is the key that will open that door. More exposure means a faster sale. Print ads, Internet presentation, open houses – they all play their part. The fact is though that professional, full-time realtors sell most homes and how your home is presented to realtors can make or break your sale. There is a powerful sales force of 4500 realtors in Calgary that can be working towards the sale of your home through the multiple listing service. You are at a disadvantage if they do not know about your home. Picking the right agent to represent you is critical. A reputable agent that works with a recognised company will help. If an agent has a reputation of embellishing the facts his peers may not believe him when he describes your beautiful home. Experience plays a part as well. Your realtor can have all the right tools but if the skill is not there the job may not get done. A creative and effective marketing plan, understanding market nuances and negotiating abilities are all honed over time.

If you are considering a move, you are welcome to call for a consultation about your home. It would be my pleasure to be considered as your real estate professional. I believe in getting the job done efficiently and effectively. My plan to market your home is not like the average realtor’s plan and it results in far better than average results. My commitment to you is backed up by my performance guarantee, "If I don’t do what I say you can cancel our agreement on the spot."

 


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