Calgarians are still purchasing mountain properties, but buyer demographics are changing

Despite a struggling economy, Calgarians are still buying mountain homes, whether in Alberta’s playgrounds of Canmore and Kananaskis, or in nearby B.C. hotspots in the Kootenays and Okanagan.

Canmore has always drawn people in droves, says Ann Keith of RE/MAX Alpine Realty. “The same things that have called people to the mountains have not changed,” she said.

What has changed is that buyers now find a four-season resort town with golf courses, a 77,000-square-foot rec centre and abundant opportunities for hiking, biking and rock climbing.

While Canmore remains the most expensive place to live in Alberta, Calgarians are still the main recreational property buyers, with a growing number purchasing pre-retirement and retirement homes.

“They generally have their finances in order and don’t need to borrow money,” said Keith.

While older buyers are purchasing single-family homes (generally, $600,000 and up) in areas like Three Sisters or Silvertip, Keith says younger professionals in their 40s and 50s are buying townhomes of about 1,000 square feet in the $500,000-plus price range.

“THE SAME THINGS THAT HAVE CALLED PEOPLE TO THE MOUNTAINS HAVE NOT CHANGED.” – ANN KEITH, RE/MAX ALPINE REALTY

When looking for investment or rental income, Keith cautions that some municipal zoning prevents short-term rentals.

She has seen renewed interest in Canmore, with many Alberta buyers deterred by B.C.’s new speculation tax in popular locations like Kelowna and Victoria. The tax is one per cent (of assessed value) on second homes not rented out six months each year.

However, some popular B.C. winter getaways like Radium and Invermere are currently exempt, and Kodi-Lee Logan of Royal LePage Rockies West says that while the area continues to see retirement buyers, she is also noticing several younger buyers. They want summer activities on area lakes, along with snowshoeing, skating, ice-fishing and skiing in the winter.

She says buyer numbers have been solid the last two years, with 2018 slightly down from 2017. Most Alberta buyers were looking at properties priced under $400,000, which are abundant in Invermere, where a two-bedroom condo is priced in the low $200,000s.

Kootenay Real Estate Board statistics from 2017 show Albertans are well represented among homeowners in Radium Hot Springs/Fairmont/Columbia Lake (65 per cent), Panorama (70 per cent) and Invermere (47 per cent).

By Barb Livingstone Creb Now-  Jan 18, 2019
http://www.crebnow.com/calgarians-are-still-purchasing-mountain-properties-but-buyer-demographics-are-changing/
Photo by mauro paillex on Unsplash

Royal Bank cuts 5-year fixed mortgage rate, others likely to follow suit

Biggest bank cuts benchmark rate by 15 basis points

Canada's biggest bank has cut its five-year fixed-term mortgage rate, a move that other banks are likely to try to match in short order.

Royal Bank edged the rate on its five-year "special offer" mortgage down to  3.74 per cent, a cut of 0.15 percentage points.

Though subtle, the move is likely to prompt similar actions by other major Canadian banks in the coming days, and it's actually overdue based on what's happening in the bond market, says Rob McLister, founder of mortgage comparison website RateSpy.com.

Banks finance mortgages for consumers by borrowing money from bond investors, and then lending it out to mortgage holders at higher rates. Those borrowing costs to the bank started falling precipitously in the fall, a development that has yet to filter down to customers.

In November, a five-year government of Canada bond was yielding just shy of 2.5 per cent. A few days ago, that had fallen as low as 1.75 per cent, a drop of 75 basis points.
Bond yields fell in the latter part of 2018
The yield on a five-year Government of Canada bond dipped by 75 points in a matter of weeks — a huge drop in the staid world of bonds.

RBC's cut is only 15 basis points, so with that spread still being wide by historical standard, more could be in the offing.

"Banks could've cut fixed rates weeks ago," McLister said. "The reason they held out is because they can."

Alternative lenders have already cut their rates, but since the big banks control about 90 per cent of the market, they can hold out longer.

"When people see materially better rates from non-banks online, it puts more pressure on the Big 6 to act," McLister said.

hey're also cutting now because of the time of the year. December and January are the "deadest" period for home buying, McLister notes, so RBC could be trying to drum up business while things are slow.

When asked what prompted the rate drop, an RBC spokesperson said a number of factors have impacted the Toronto-based bank's cost of funds.

RBC says that includes the rate the bank pays in the bond market, increasing regulatory costs and market volatility.

he impact on consumers will be small, but could grow if it's the start of a trend.

James Laird, president of mortgage brokerage Canwise Financial, calculates a $400,000 mortgage at the old five-year fixed rate of 3.89 per cent would cost a homeowner about $2,080 a month. At the new rate, that monthly mortgage payment would drop to $2,048 — $32 a month cheaper or an extra $384 per year.

"RBC is the largest mortgage lender in Canada, so whenever they move their mortgage rates, we can expect that the other four banks will follow suit," Laird said.

The trend downward in fixed mortgages is even more interesting considering what's happening in the variable market, which is more pegged to the Bank of Canada's rate than the bond market.

Because variable rate mortgages are inching higher.

RBC nudged the rate for its five-year variable mortgage to 3.55 per cent on Wednesday, up from 3.30 per cent.

"The current stable interest rate environment is causing lenders to reduce the discounts being offered on variable rate mortgages," Laird said.

Pete Evans · CBC News · Posted: Jan 17, 2019 9:13 AM
https://www.cbc.ca/news/business/mortgage-rates-1.4981657

Canadian Home Prices See Healthy Gains in the Fourth Quarter as Market Begins Recovery from the Most Significant Housing Correction in a Decade

• National home prices rose 4 per cent in the fourth quarter of 2018 compared to previous year
• Secondary cities outperform larger cities led by Windsor, Kingston, and Moncton
• Greater Montreal Area continues to lead the Greater Toronto Area and Greater Vancouver in price appreciation
• Toronto recovery led by strong price gains in condominiums

TORONTO, January 11, 2019 – According to the Royal LePage House Price Survey[1] released today, year-over-year home prices made healthy gains in many regions across Canada in the fourth quarter of 2018, continuing the recovery from the most significant housing correction since the financial crisis. Once again, the Greater Montreal Area saw the highest year-over-year home price appreciation rate of the three largest Canadian metropolitan areas studied.

The Royal LePage National House Price Composite[2], compiled from proprietary property data in 63 of the nation’s largest real estate markets, showed that the price of a home in Canada increased 4.0 per cent year-over-year to $631,223 in the fourth quarter of 2018. When broken out by housing type, the median price of a two-storey home rose 3.9 per cent year-over-year to $745,007, while the median price of a bungalow climbed 1.5 per cent to $516,950. Condominiums continued to see the highest rate of appreciation nationally when compared to the detached segment, rising 7.2 per cent year-over-year to $447,915.

Royal LePage projected modest home price appreciation in 2019 in its recent forecast, expecting the aggregate price of a home in Canada to rise 1.2 per cent in Canada over the next year.

“The invisible hand that guides our complex economy hit the real estate reset button in 2018 and that is a good thing,” said Phil Soper, president and CEO, Royal LePage. “Major market home price inflation through much of the decade had led to dangerous overheating in our most populous regions. Government regulatory intervention and rising interest rates, when combined with property price overshooting, triggered the correctional cycle we find ourselves working through today.”

On January 9th, the Bank of Canada decided to maintain its target for the overnight rate and reduced its forecast for annual GDP growth from 2.1 per cent to 1.7 per cent.

“While some economists are adjusting their forecast for the economy as a whole, Canada’s real estate market is beginning to emerge from the correction that began a year ago. The national real estate market is stable and should see modest price gains by the end of the 2019,” said Soper.

The Canadian economy is performing well overall, with pockets of uncertainty. Persistently weak oil prices driven by domestic market access bottlenecks and global supply gluts have hit Western Canada hard, and trade tensions between China and the U.S. in particular are impacting consumer confidence across the continent.

“House prices and home sales volumes were soft and slow last year; expect modestly better results in 2019,” said Soper. “That said, the underlying Canadian economy, and employment in particular, continues to impress. Job creation is beating expectations handily. The unemployment rate of 5.6 per cent is a 43-year low.

“A silver lining in this cloud of uncertainty is the opportunity for young families to enter the market,” Soper continued.

The unemployment rate is about half of where it was during the financial crisis. It is also important to note that actual retail-market rates for a five year fixed term mortgage, the most popular offering in Canada, sit at approximately 3.5 per cent today versus approximately 5.9 per cent a decade ago; a full forty per cent lower.[3]

“Employment is high, rates are low, and home prices are essentially flat. 2019 is shaping up to be a year of rare opportunities,” Soper concluded.

Tight rental markets, record levels of immigration, and a wave of Millennials looking to buy their first homes are putting pressure on limited housing stock in many of Canada’s metropolitan regions.

“Despite the price corrections and low sales activity we saw in 2018, it is important that policymakers don’t take their eye off the ball when it comes to housing supply. That would be a huge mistake,” added Soper. “In down markets, construction tends to slow, exasperating our housing shortage problems. From there it is simple supply and demand; if we don’t build more homes, we risk another housing crisis and a return to runaway prices in our major markets.”

During the fourth quarter, buyers in Ontario continued to look beyond the GTA in search of affordability. Despite some price relief in the suburbs surrounding Toronto, buyers from the region are still venturing out to other Southern Ontario cities where price points are significantly lower.

Of the regions studied in the Royal LePage National House Price Composite, Windsor and Kingston saw the highest appreciation rates in Ontario, rising 14.7 and 13.8 per cent year-over-year, respectively. Meanwhile, regions including Ottawa, Kitchener/Waterloo/Cambridge, and London saw strong aggregate price gains of 9.3 per cent, 9.0 per cent, and 8.9 per cent, respectively.

The GTA was a story of contrasts. The City of Toronto experienced a strong rebound in the fourth quarter, while the surrounding areas remained relatively weak year-over-year. Prices in Toronto saw sizable increases, rising 8.8 per cent compared to 3.4 per cent gains for the GTA more broadly. Some of the surrounding suburbs, which saw rapid price increases in recent years, continued to slow, with declines in areas like Markham, Pickering, and Richmond Hill of 7.1 per cent, 5.6 per cent, and 4.9 per cent, respectively.

“The market correction in the suburbs of Toronto has been more significant than elsewhere in the country, because price increases in recent years were more extreme,” said Soper. “Even as prices in the core of the nation’s largest city begin to rise again, we expect prices in the region known as the ‘905’ to remain soft, providing new families with an unexpected entry opportunity into some of the most sought-after communities in southern Ontario.”

In Quebec, the Greater Montreal Area’s real estate market continues to set the pace among Canada’s largest metropolitans, supported by continued high demand, healthy household income and population growth. Despite positive economic fundamentals, price appreciation for real estate in most of the province’s regions outside of the GMA still continue to be dampened by worker shortages as small businesses struggle to attract workers to their communities. On the other hand, worker shortages tend to put upward pressure on salaries, which could improve affordability.

In the fourth quarter, the aggregate price of a home in the Greater Montreal Area passed the $400,000 mark, rising to $407,230, an increase of 4.1 per cent from the same period last year.  This represents a higher rate of appreciation than that seen in both the GTA and Greater Vancouver, and above the national aggregate percentage increase. During this period, the median price of a two-storey home in the Greater Montreal Area rose 3.5 per cent year-over-year to $517,190, after surpassing the half-million-dollar mark for the first time in the third quarter. The condominium market in the area continued its solid performance this quarter compared to last year, rising 4.9 per cent to $328,254.

British Columbia has been an economic outperformer in recent years, but economists are beginning to forecast slowing growth because of the cooling housing market. The relative unaffordability of major markets and the implementation of mortgage stress tests and provincial tax policies have dampened price growth in the province. Home price appreciation in Greater Vancouver grew at a modest pace rising 2.1 per cent in the fourth quarter from the year before, to an aggregate price of $1,274,831. More affordable suburbs like Langley, Surrey, and Coquitlam that had seen double digit price growth in previous quarters grew at a more modest pace rising 2.4 per cent, 2.3 per cent, and 0.4 per cent respectively.

Despite weak oil prices and uncertainty in the energy industry, all cities studied in Alberta posted year-over-year price increases, with the exception of Fort McMurray, which saw a 9.4 per cent decline. The aggregate price of a home in Calgary and Edmonton rose 1.3 per cent and 1.6 per cent, respectively, to $484,462 and $385,550.

Saskatchewan’s housing market was negatively affected by the weakness in the natural resources sector in the fourth quarter. The aggregate home price in Regina increased 0.1 per cent year-over-year, while the aggregate home price in Saskatoon decreased 1.7 per cent year-over-year. This represents a quarter-over-quarter decrease of 1.9 per cent and 0.5 per cent, respectively.

Atlantic Canada remained strong, posting some of the largest price gains in the country in the fourth quarter. Moncton and Charlottetown posted the highest home price growth in the region, rising 12.6 per cent and 7.1 per cent, respectively, year-over-year. St. John’s was notably weak, with prices falling 2.6 per cent from the year before.

Aggregated regions and the Royal LePage National House Price Composite* (.PDF)

Energy Efficiency Alberta Rebates

Planning a reno or home improvements?  Need new appliances? Check out some of the rebates on the Energy Efficiency Alberta website. 

 This is the new Government of Alberta agency dedicated to helping the province save energy. Their mandate is to raise awareness among energy consumers of energy use and the associated economic and environmental consequences; promote, design and deliver programs and carry out other activities related to energy efficiency, energy conservation and the development of micro-generation and small scale energy systems in Alberta, and; promote the development of an energy efficiency services industry in Alberta.

Home Energy Plan 

If you book and receive a Home Energy Evaluation you will be eligible for greater savings on your home upgrades including a $1000 bonus rebate for completing three or more upgrades to your home.
View here

Home Improvement Rebates

Work with a participating Alberta contractor to increase your at-home energy efficiency with improved insulation, upgraded windows and tankless water heaters—all at a great discount.  Save up to $500 on Drain Water Heat Recovery, up to $3500 on Iinsulation, up to $1500 on Windows and up to $1000 on a Tankless Hot Water Heater.
View here 

Online Rebates for Appliances

If you are ready to replace your outdated refrigerator or clothes washer with an energy-efficient model or if you are ready to upgrade to a smart thermostat there are rebates available online. Save $75 on Furnaces, Refrigerators, Clothes Washers or Smart Thermostats.

Purchase any eligible, energy-efficient refrigerator, clothes washer, smart thermostat or furnace with high efficiency motor (ECM), then use go to the link below to fill out an application form to input your information and upload your receipt.

These rebates are helping to make energy-efficient appliances more affordable for Albertans. And, once you’ve purchased an energy-efficient refrigerator, clothes washer, smart thermostat, or furnace with ECM, you’ll immediately begin to save money on your energy bills too.
View here 

Help save the environment and reduce your costs. 

Affordable Housing in the Bow Valley

While our Team is keen to celebrate appreciating property values, particularly representing Sellers, Buyers can also benefit (in the future).

HOWEVER, for Can~morons (an affectionate term we call ourselves) that live here full-time, we know too well that any increase in the value of real property impacts rental rates for residential properties. One bedroom condo rentals have moved from $900/month in 2011 back to pre-2009 prices of $1300. Two bedroom condos rent for $1800-$2000/month.

That is why both the Towns of Banff and Canmore have, for years, contributed land and invested through Housing Corporations to build Affordable Housing projects.

Many millions of dollars have been contributed by three levels of Government to provide more affordable housing in our two communities. As an example the Town of Canmore has collected a Perpetually Affordable Housing (PAH) fee on property taxes that funds the various programs of the Canmore Community Housing Corporation (i.e. McArthur Place, Mine Side, Coyote Ridge, Hector, Hawks Bend and others). Private developers are now either partnering with the Town or on their own recognizing there is a business case for apartment style rental units. In the next two years over 200 new rental units will be added to inventory on Old Canmore Road behind the Coast Hotel. On Oct. 3, 2017, council approved a Development Permit for a 90 unit multi-family apartment building within the Coast Apartment Direct Control District. There are 40 one-bedroom units and 50 two-bedroom units planned.

Land Use Zoning has also provided housing opportunities for those working a minimum of 20 hours a week in the valley, not permitting occupancy to those looking for recreational properties. In the Townsite of Banff the National Parks Act restricts ownership and rentals of property to those who have either a business in Banff or a need to reside through employment.

Accessory dwelling units can be:

• Located within the same home (e.g. a basement suite)
• In the backyard as a free-standing garden suite 
• Combined with a garage   

Since Canmore has high housing costs and a housing shortage, accessory dwelling units can help improve housing affordability and supply. They can also support affordability for those living in existing neighbourhoods where transit, cycling, and walking are more available and practical.

What does Perpetually Affordable Housing (PAH) mean? 
PAH is a community investment in Canmore's housing infrastructure, which allows CCHC to provide homes at below-market prices to eligible households. To ensure that the community's investment and the "perpetual affordability" are retained for the benefit of future residents, resale and rental price formulas are used. This means that if you own your PAH home, a resale price formula indexed to inflation is used to calculate how much your home may increase in value each year. If you rent your PAH home, current rental rates are at least 10% below market rental rates.

Affordability Index
While Calgary traditionally has seen greater affordability of housing compared to wages than say Vancouver with lower average wages and higher cost of living, Canmore suffers from affordability. The large number of Tourist sector jobs and high cost of living means our Affordability index is quite low. Many workers here engage in more than one job in order to make ends meet.

New projects in Banff ~ Two young Albertans are turning shipping containers—also known as Sea-cans— into hotel suites, affordable housing units, staff accommodation and even cottages. They use the Sea-can as a shell and join and stack them like building blocks to create a comfortable place to live.

“It is narrow, but that’s only one. And you put two or three together with the proper floor plan and it opens it up just like it would a house,” said Chris Van Arnam, co-founder of Blocks Modular.

The Carstairs-area business is also in discussions with the Banff Hotel Commission to build Seacan staff accommodations for workers, to ease the housing crunch there.
https://www.cbc.ca/news/canada/calgary/alberta-banff-buffalo-mountain-lodge-1.4408678 

New projects in Canmore completed in 2018 are “The Peaks”, 148 rental rate restricted apartments at 1451 Palliser Way.

New Projects in Banff include:

“The Courtyard Project will add 33 affordable housing units on YWCA Banff property. For release on October 23rd, 2018 in Banff, Alberta.

YWCA Banff is pleased to announce a major milestone in the funding of its Courtyard Project, receiving both federal and provincial contributions for its proposed housing units. Cameron Westhead, MLA for Banff-Cochrane, representing Lori Sigurdson, Minister of Alberta Seniors and Housing, announced the provincial government’s significant contribution of $2.6 million for the sustainable housing complex. The federal government through the National Housing Strategy’s Affordable Housing Innovation Fund is also providing YWCA Banff with a major contribution. The Honourable Kent Hehr, Member of Parliament for Calgary Centre, on behalf of the Honourable Jean-Yves Duclos, Minister of Families, Children and Social Development, made a significant commitment of $1.35 million to the Courtyard Project. The overall cost of the Courtyard Project is estimated to be just under $9 million. YWCA Banff will cover 20% of the total cost with a contribution of land for the project.

We are just delighted at the financial investments of both the federal and provincial governments are making for the Courtyard Project,” said Connie MacDonald, CEO of YWCA Banff, “It’s an investment on so many levels, for the town of Banff, our environmental commitment to Banff National Park and of course the families and individuals who are unable to find suitable housing.” The new funding by the Provincial and Federal governments will be used to build housing for residents who face barriers to finding suitable accommodation.

The Courtyard Project will bring in families with multiroom housing units, ranging from studio to four-bedroom apartments. The Courtyard will be ideal for women, new and extended families, individuals, and people with accessibility challenges.

http://ywcabanff.ca/wp-content/uploads/2017/07/YWCA-Courtyard-Project-FINAL-PRINT6-boards-opt_Page_1.jpg

Effect on Rates of Private Rentals

Impacts on Recreational Property
For years the Town of Canmore has largely turned a blind eye to the use of Recreation Property zoned for short-term stays only (up to 30 days at a time) for long-term rentals. This has been due to the scarcity of rental accommodation now sitting at 0% and also that after the economic collapse of 2009, many Visitor Accommodation condos sat empty, costing their owners a ton of money in lost revenue.

Now however, with in excess of 4 million visitors coming through the Bow Valley each year, occupancy levels for Visitor Accommodation units has reached levels unheard of before, approaching 65%, year-round. With nightly rentals upwards of $500 per night, depending on size and quality of Visitor rental, it makes good sense for owners to be utilizing these condos for what they were intended; personal use and legal nightly rentals. Taking long-term rentals out of inventory does however put pressure on demand and increasing rental rates.