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Canadian Real Estate: More Buyer Opportunity in the Calgary Real Estate Market – RE/MAX News

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The province of Alberta has faced a myriad of challenges in the aftermath of the coronavirus pandemic. In addition to a global economic downturn amid the COVID-19 public health crisis, the price of crude oil crashed to levels never seen before. It was a double whammy for the western province that affected every industry throughout the region, including the Calgary real estate market.

Are conditions beginning to normalise? The energy sector has rallied, with crude prices advancing to their best levels since March. The broader economy has rebounded as the gross domestic product (GDP) surged 6.5 per cent in June, up from the 4.8 per cent increase in May. Much of the housing market has returned to pre-pandemic levels.

Is Calgary improving, too? The real estate market is beginning to see some improvements. According to the Calgary Real Estate Board (CREB), sales of single-family and townhomes recorded year-over-year gains in August. Last month, 992 single-family homes were sold, up from 945 at the same time a year ago. Townhome transactions totaled 216 in August, up from 194 in August 2019. Overall, August 2020 sales were about on par with August 2019 sales: 1,573 to 1,580.

The residential benchmark price was $420,800, down one per cent from last year.

But while Calgary faced a somewhat different situation than other municipalities, the city is seeing a resurgence, says CREB® chief economist Ann-Marie Lurie.

“Recent national reports have shown a bounce back to new record levels over the past several months. Calgary has seen improvements over the lows recorded during the lockdowns but is far from record levels,” said Lurie in a news release. “The situation in Calgary has been slightly different as the job losses were not isolated to sectors that are typically associated with rental demand. We have started to see improvements in the job market compared to previous months as some jobs start to return.”

Does this represent a buying opportunity in the Calgary real estate market?

Canadian Real Estate: More Buyer Opportunity in the Calgary Real Estate Market

According to the latest Statistics Canada data, Calgary’s unemployment rate was the highest in the country for the second consecutive month in August. But the good news is that nearly 27,000 jobs were added last month, and the jobless rate slipped one percentage point to 11.8 per cent. The recent figures suggest that the city is on a slow but steady recovery.

What’s more, there has been increasing consternation surrounding the sight of empty commercial space and dark tower floors in Calgary and throughout the rest of the province. Although some real estate agents anticipate this to be the case for the next little while, they are not convinced that this will be the new norm.

That said, until the employment situation returns to pre-pandemic levels and the lights are turned back on within commercial premises, this could trigger a buying opportunity in the housing market since prices still sit one per cent below what they were a year ago.

CREB notes that new listings are have started to ease over the last month, which has diminished existing supply. At the same time, says the CREB chief economist, “the pace of year-over-year decline has eased as inventory levels have trended up relative to levels recorded a few months ago.” Put simply, the housing supply is picking up, and this could put downward pressure on prices if demand cannot keep up.

But the window of opportunity might be brief because Calgary is starting to see tighter market conditions in individual pockets of the real estate market. This is especially true when you consider low interest rates will inevitably draw buyers from the sidelines.

Earlier this year, the Bank of Canada (BoC) slashed the benchmark interest rate by 150 basis points to around 0.25 per cent. Plus, the central bank reduced the benchmark five-year mortgage for the third time this year to 4.79 per cent. So, whether you are a real estate investor or a homebuyer, now would be the best opportunity to take advantage of the modest downturn in Calgary real estate.

The Role of Calgary’s Diversification in its Recovery

Calgary has become diversified in recent years, relying on more than just energy to sustain the local economy. Financial services, manufacturing, aerospace, retail, and film and television are just some of the industries that have become integral to Canada’s fourth-largest city. This diversification strategy allowed the city to flourish before the pandemic, elevating the Calgary real estate market. The pandemic affected every sector, so it was no surprise that the rest of the municipal economy suffered. Now that the recovery is underway, the housing market is looking positive.

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Subversive Real Estate Acquisition REIT LP Announces Election of Directors of General Partner – Canada NewsWire

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TORONTO, Oct. 30, 2020 /CNW/ – Subversive Real Estate Acquisition REIT LP (the “REIT LP“) (NEO: SVX.U) (NEO: SVX.RT.U) (OTCBB: SBVRF) today announced that the nominees listed in the management information circular for the 2020 annual general and special meeting of holders of Proportionate Voting Units were elected as directors of Subversive Real Estate Acquisition REIT (GP) Inc., the general partner of the REIT LP. Detailed results of the votes by proxy for the election of directors held virtually on October 29, 2020 in Toronto, Ontario are set out below:

Nominee

Votes For

% For

Votes Withheld

% Withheld

Michael B. Auerbach

6,260,700

100%

0

0%

Richard Acosta

6,260,700

100%

0

0%

Leland Hensch

6,260,700

100%

0

0%

Scott Baker

6,260,700

100%

0

0%

Octavio Boccalandro

6,260,700

100%

0

0%

Craig M. Hatkoff

6,260,700

100%

0

0%

Anne Sullivan

6,260,700

100%

0

0%

Details of the voting results on all matters considered at the meeting are available in the REIT LP’s report of voting results, which is available under the REIT LP’s profile on SEDAR at www.sedar.com.

About Subversive Real Estate Acquisition REIT LP

Subversive Real Estate Acquisition REIT LP is a limited partnership established under the Limited Partnerships Act (Ontario) formed for the purpose of effecting, directly or indirectly, an acquisition of one or more businesses or assets, by way of a merger, amalgamation, arrangement, equity exchange, asset acquisition, equity purchase, reorganization, or any other similar business combination involving the REIT LP that will qualify as its qualifying transaction for the purposes of the rules of the Exchange. The REIT LP is a special purpose acquisition corporation for the purposes of the rules of the Neo Exchange Inc. (the “Exchange“). The REIT LP’s restricted voting units and rights are listed on the Exchange under the symbols “SVX.U” and “SVX.RT.U”, respectively.

Additional information is located at www.subversivecapital.com/reit.

SOURCE Subversive Real Estate Acquisition REIT LP

For further information: INVESTORS: Subversive Real Estate Acquisition REIT LP, [email protected]; MEDIA: Conscious Communications Collective, Leland Radovanovic, [email protected], 845-200-5349

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Canada real estate: RBC Economics reports condo listings on the rise as investors look to sell – The Georgia Straight

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RBC Economics reported on October 15 that condo prices have “stagnated over the past six months”.

Previous to this, the bank’s economics section on September 30 predicted that condo prices could “weaken in larger markets next year”.

Another thing is happening as well with the condo market in Canada.

In its latest housing report, RBC Economics noted that the real-estate market is awashed with condo supply.

According to economist Robert Hogue, “condo investors are looking to sell”.

“As rents soften and vacancies rise, condo listings are spiking in Toronto, Montreal and Vancouver—albeit from low levels,” Hogue reported on Wednesday (October 29).

In the City of Toronto, condo listings in September 2020 increased 133.9 percent compared to supply in the same month last year.

For the rest of the Greater Toronto area, condo listings last month posted year-over-year growth of 81.5 percent.

In the island of Montreal, listings rose 41.4 percent in September compared to the same month in 2019.

However, for the rest of the Greater Montreal area, listings declined 32.8 percent year-over-year.

In Greater Vancouver, listings of condo properties rose 20.9 percent in September 2020 compared to the same month last year.

In contrast, listings for detached homes in all Toronto, Montreal, and Vancouver metropolitan regions decreased year-over-year in September.

“New, stricter regulations in Toronto are adding to the impulse to sell – at a time when new condo completions are bringing more units to the Toronto and Vancouver markets,” Hogue noted in his October 29 report.

Hogue’s report covered in broad strokes how the COVID-19 pandemic is affecting the Canadian housing market.

“Rural and suburban areas that once lagged desirable city addresses are now roaring hot as homebuyers wearied by lockdowns seek bigger yards and larger living spaces,” Hogue wrote.

Meanwhile, “Tight downtown condo markets that previously commanded expensive rents are now thick with supply.”

Hogue also stated that “rent is now declining in Toronto, Montreal and Vancouver, especially in higher density, downtown locations”.

“Underlying the shift,” according to the bank economist is a “surge in rental supply as the short-term rental business dries up and new purpose-built rental and condo units are completed”.

As well, “Big-city living has lost some of its luster with social distancing measures severely restricting cultural life and socializing opportunities.”

“Meantime, affordability issues are driving many Canadians further afield into smaller towns and cottage country, where larger living spaces are available,” Hogue wrote.

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The Importance of Mortgage Loan Insurance

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Mortgage Loan Insurance is meant to shield the borrower from default on the borrower’s part, both straightforward and easy. However, the Canada Mortgage and Housing Corporation (CMHC) has built mortgage loan insurance to cover more than just banks. The CMHC needed homeowners to be better able to reach the housing market at an earlier time and better results. After all, more privately-owned housing means more employment, more market activity, more money invested, and so on. If there are more jobs and more investment, the economy will gain. In short, the risk to lenders has been eliminated, leaving them in a stronger position to offer lower interest rates and lower payments.

When the CMHC developed its Mortgage Loan Insurance (MLI) plan, it had a stipulation that if the borrower had less than 20% of the purchase price as a down payment, the insurance was necessary. Before introducing MLI, the Canadian Bank Act restricted federally controlled lending institutions from lending to those with less than 20% of loans. Banks will now fund up to 95 percent of the purchase price, given that MLI is purchased. The move meant that so many more people, who had previously given up on owning a house, now had hope.

MLI offers choices for those who already own a house for those who want to renovate, refinance, or move to another place. CMHC MLI’s are portable from an existing home to a newly purchased one, often without paying the initial premium for a new home. Besides, self-employed individuals looking to fund the purchase of a new home are now in a position to do so without offering conventional forms of proof of income. And those new to Canada are eligible. Current homeowners who choose to integrate energy-efficient elements into their home (the NRCan Energy Assessment Rating must increase by at least five points) are entitled to an extended amortization period-without a surcharge and with a 10% insurance premium rebate. There are also more incentives for borrowers to buy a second home or income land.

Now that we know the value of MLI, how do we translate it into numbers? Ok, it depends on a few equations, for instance. Your lender will do it for you, but if you want an idea ahead of time, start measuring the Gross Debt Service (GDS). The GDS estimates the most expenses you can afford per month, particularly those related to running your house. The cumulative GDS need not be more than 32% of your gross household income to apply for an MLI. Next is your Total Debt Service (TDS) estimation, which calculates the most debt cost your payment can cover. The TDS should not be more than 40% of your total monthly household income. Use the online mortgage calculator to enter the details and your gross monthly income, along with other factors, and you will be presented with the maximum allowable mortgage you apply for.

The MLI premium rate will then be measured as a percentage of the overall loan, taking into account the down payment size. For example, if you need the lender to fund 80% of the property’s cost, your fee would be 1 % of the total loan. If the purchase requires 95 percent of the lender’s funding, the price would be 2.75 percent of the total amount of the loan. The lower the sum financed, the lower the insurance premium.

Also, the harder homeowners work to pay off their mortgage, the more equity they create in their house. The ability to buy earlier than was traditionally feasible (through the MLI), homeowners took the opportunity to go faster than even the lender had expected. As of 2009, the CMHC estimated that Canadian homeowners’ equity status was, on average, 74 percent, while that of its American counterparts was 43 percent. The importance of the MLI is obvious now.

 

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