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Home Staging: Is It Your Best Choice?

Calgary Home Staging Photo

Selling your home fast for the highest price possible.  Would home staging let you accomplish those goals?

Why Stage Your Home?

There are many reasons to stage your home.  One of the most important things staging accomplishes is that it shifts the focus away from the personal belongings that are in the house to the most positive features of the home itself.

Imagine a Calgary home for sale that has a pool table in the living room.  The family currently living in the home use the table a lot.  Overlooked is the fact that there is limited seating in the living room because playing pool is an activity the family uses to bring them all together.

When that home goes on the market, and a potential buyer walks into the living room, what would you imagine would be their first reaction?  Could it be something like “How would our furniture fit in this living room?”

Even without a pool table, it’s often very difficult for many people to look beyond the personal contents of a home to see the potential for moving their family into it.  When you stage your home, one of the goals is to “de-personalize” your living spaces to give a potential buyer the opportunity to think about how they will use the home.

Home Staging:  The Numbers Prove It Is Your Best Choice

According to the International Association of Home Staging Professionals and Stagedhomes.com, on average, 95% of staged homes sell in 23 days or less. Statistics also show that home staging can increase a property’s value by 5-11% (RESA – Real Estate Staging Association), and that a home’s price is typically reduced by 1% for every month the home remains on the market (Zillow).  Using round numbers, let’s say a home was listed at $500,000 and took 4 months to sell.  The typical price reduction might be $20,000 or more for an unstaged home and a longer selling period versus a possible 5% increase in property value for a staged home which sells much faster. Moreover, the cost of maintaining an unstaged home on the market for longer may also be considerable if one factors in property taxes, mortgage payments, condo fees, etc.

Then you need to account for the fact that the longer the house is on the market, the harder it is to negotiate a selling price closer to listed price as buyers and their Agents will want to negotiate a much lower price so will often start lower than they normally would have for a home that was just newly listed. All this boils down to one fact: when a home doesn’t appear welcoming to buyers, it often sits on the market and goes through multiple price reductions.

As a seller, you have many choices available to maximize selling price, minimize selling time, and experience a more positive selling experience before you list your home so it’s important to consult with an experienced REALTOR® to explore the options available to you.  If you want to stage your home before it goes on the market to maximize selling price, your REALTOR® can recommend a home-stager for a complimentary consult. Some home-staging companies also have contractors available if your home needs some repairs or a quick paint job so that’s a huge benefit if you are too busy to coordinate all of this yourself.

Once you understand how beneficial staging is when you’re selling a home, you’ll find that home staging doesn’t have to be time-consuming or costly.

Look for the second blog next week about home staging – learn how to do your own home staging to maximize selling price. Our Feng Shui articles will also give you helpful tips in preparing your home for sale.

 Selling Calgary Group     Elke Babiuk
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Calgary Real Estate Housing Sales Growth

Calgary Boasts Best Housing Sales Growth In Canada

If you have considered buying a property in Calgary, now could be the the ideal time to make the investment in the market. According to research by the Canadian Real Estate Association, Calgary currently offers one of the strongest real estate markets in the country in terms of the amount of property bought and sold.

Year on year, Calgary has shown the highest growth rate for property numbers sold in Canada – the city’s MLS® (Multiple Listings Service®) sales increased by 14.8 percent. While in comparison, the rest of the country witnessed drops of 15.1 percent.

From September 2011 until September 2012, the number of property sales in Calgary hit 2,054. However, despite the surge in buying, average property sale prices dropped to $402,756 in September for the city – a decrease of 0.9 percent. With property prices lower, homes are moving more quickly off the market, so if you are in the business of buying it’s time to move quickly to find your dream home.

What this means for sellers of real estate

While the slight dip in the average cost of homes represents smaller profits for sellers, the increase in buying activity could still be beneficial for some home owners. If you are able to take the 0.9 percent hit and have had your property on the market for a relatively long time, now could be the time to take advantage.

Be reasonable with your expectations; many people bought property as an investment in the boom years, intending to boost their deposit on their next house. However, the recession and flat-lining property prices mean you might not have achieved the increase you were expecting. If this is the case, ask yourself why you need to move. If new additions to the family mean you have run out of space, or you need to move for a new job, it could be impractical to say no to an offer. Seek advice regarding your personal circumstances, especially if you fear you might be in negative equity, as every homeowner has a different set of requirements.

For those sellers who still need to achieve their asking price, this could be the encouragement needed to show off their homes at their absolute best. A fresh coat of paint and ironed bed-linen could make up for the less than one percent dip in asking price. Similarly, just because demand in the real estate sector is on the increase, there is no reason property sellers should rest on their laurels. Buyers are still in the market for their dream home, so don’t give them an obvious reason to turn down yours.

Buying in Canada

Throughout Canada, monthly property sales have increased by around 2.5 percent from August to September 2012. However the amount of sales has decreased by a significant 15.1 percent in the country since September last year. This slight boost to the numbers in the last two months hopefully represents the awakening of the lack lustre market.

The Canadian Real Estate Association blames tighter mortgage lending regulation for the industry dip. New rules mean that first time buyers across the country sometimes don’t qualify for mortgage finance where they would have in the past, so individuals and families are looking at what is actually affordable for them.

Choosing a mortgage

Home buyers are looking into sensible borrowing schemes such as the capped rate mortgages available in the UK and some other jurisdictions, so they can guarantee a rate that does not increase past a fixed point. This ensures that mortgage payers are never faced with a mortgage payment which is more than they can afford over the term of the agreement (subject to their own financial situation).

This could be a more sensible and stable route than a variable (adjustable) rate mortgage in an unstable economy in some ways, as you will never be priced out of your own home providing you can achieve the highest repayment. On the other hand, your lender may also cap the rate to which your mortgage can fall, so you might not benefit from very low interest rates.

Fixed rate mortgages offer a fixed price payment, usually over a term of several years, which means home-owners can budget more effectively as they know the mortgage payment will not change until the fixed term is up.

Article courtesy of Eve Pearce. Calgary Real Estate Market Values-Stats available for each Calgary Community.

 Selling Calgary Group     Elke Babiuk
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Long-term Fixed Mortgage rates vs Short-term Rates

There is a compelling case to be made for not locking in a long-term fixed mortgage rates. Brokers often tout their 5-year rate, but it can honestly be a disservice to their clients and can hinder potential home re-sales with large penalty payout fees. A simple calculation of interest paid year-by-year will mostly likely show a substantial savings by going short-term mortgage rates rather than long-term.  A 5-year fixed mortgage rate can be a good strategy, but it is not the only strategy.When buying a home, it’s always a good idea to seek a second opinion about mortgages before choosing one option over the other. If you are with a bank, speak to a mortgage broker and if with a broker, talk to your bank. In any case, don’t hesitate to call Elke at 403-295-3336 if you have questions!

The latest Calgary Real Estate Market Stats can be found on our blog or visit our Website for Real Estate News on Calgary Market Trends.

 Selling Calgary Group     Elke Babiuk
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Canada Housing Market Stabilizing

According to CMHC’s Housing Market Outlook, Canada Edition, First Quarter, Canada’s Housing Market is Stabilizing.

“Housing starts will moderate in all areas of Canada except British Columbia and Alberta. In 2011, starts are forecast to increase by 1.6 per cent in B.C. and will remain steady in Alberta.”

“Measures recently announced for government-backed mortgage insurance will moderate housing starts activity. Some potential buyers will have to save a larger minimum down payment in order to qualify for mortgage insurance and thus postpone their purchase. Alternatively, some potential buyers may buy smaller, less expensive homes. The new measures, however, are only a few of the many factors that will affect the new housing market.”

“MLS® sales will decline in 2011
“After moderating in the first half of the year, sales of existing homes through the Multiple Listings Service® (MLS®) have rebounded since July 2010. On an annual basis, MLS® sales will edge lower in 2011. As is the case for housing starts, we have generated a range of forecasts for MLS® sales that reflect different economic scenarios. For 2011, we forecast that MLS® sales will be between 398,500 and 485,500 units. In 2012, MLS® sales will be between 406,300 and 519,700 units. CMHC’s point forecast is 441,500 MLS® sales this year and 462,900 next year, compared to 446,577 units sold in 2010.”

“Balanced to sellers’ market conditions
“By the second quarter of 2010, the resale market returned from sellers market conditions back into balanced market territory across most markets in Canada. During this time, new listings increased while existing home sales moved lower. Recently, MLS® sales have regained strength and markets have moved back towards sellers conditions. Consequently, the average MLS® price increased by the fourth quarter of 2010, with the average MLS® price of an existing home at $343,516 compared to $339,155 in the final quarter of 2009. For 2011, the average MLS® price is expected to move up modestly to $348,900 while 2012 will see a further increase to $358,200.”

For More information regarding the “Risks to the outlook” and “Trends Impacting Housing” like Mortgage Rates, please see CMHC’s report Housing Market Outlook, Canada Edition – First Quarter


Housing Activity to Move in Line with Demographic Fundamentals in 2011 – Ottawa, February 17, 2011

After trending lower in the second half of 2010, housing starts are forecast to stabilize at levels consistent with demographic fundamentals in 2011 and 2012, according to Canada Mortgage and Housing Corporation’s (CMHC) first quarter Housing Market Outlook, Canada Edition.1

Housing starts will be in the range of 157,300 to 192,900 units in 2011, with a point forecast of 177,600 units. In 2012, housing starts will be in the range of 154,600 to 211,200 units, with a point forecast of 183,800 units.

“Modest economic growth will continue to push employment levels higher this year and next. This, in conjunction with relatively low mortgage rates, will continue to support demand for new homes. Housing starts will remain in line with long term demographic fundamentals over the course of 2011 and 2012,” said Bob Dugan, Chief Economist for CMHC.

Existing home sales will be in the range of 398,500 to 485,500 units in 2011, with a point forecast of 441,500 units. In 2012, MLS® sales will move up and are expected to be in the range of 406,300 to 519,700 units, with a point forecast of 462,900 units.

Mr. Dugan also noted that the existing home market will remain in the balanced to sellers’ market range in 2011 and 2012. As a result, growth in the average MLS® price is expected to remain in line with economy-wide inflation in 2011 and 2012.

1. The forecasts included in the Housing Market Outlook are based on information available as of January 17, 2011. Where applicable, forecast ranges are also presented in order to reflect economic uncertainty.


January 2011 Housing Starts: Ottawa, February 8, 2011
The seasonally adjusted annual rate1 of housing starts was 170,400 units in January, according to Canada Mortgage and Housing Corporation (CMHC). This is up from 169,000 units in December 2010. According to final figures, actual housing starts for 2010 totalled 189,930 units, with activity moderating towards demographic fundamentals by the final quarter of 2010.

“Housing starts moved slightly higher in January because of an increase in rural starts,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “Single-detached and multiple starts showed a moderate decline.”

The seasonally adjusted annual rate of urban starts decreased by 1.7 per cent to 146,900 units in January. Urban multiple starts moderated by 1.5 per cent in January to 82,900 units, while single urban starts moved lower by 2.0 per cent to 64,000 units.

January’s seasonally adjusted annual rate of urban starts decreased by 19.0 per cent in the Prairie Region, by 7.9 per cent in British Columbia, and by 1.0 per cent in Québec. Urban starts increased by 13.3 per cent in Atlantic Canada and by 10.3 per cent in Ontario.

Rural starts were estimated at a seasonally adjusted annual rate of 23,500 units in January.

Click links for CMHC News Releases: Feb 17-2011, Feb 8-2011, Jan-2011 Dec-2010 Housing Report

 Selling Calgary Group     Elke Babiuk
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Bigger down payments not an option for healthy housing market!

February 16, 2010

The Honorable James M. Flaherty
Minister of Finance
Department of Finance Canada
140 O’Connor Street
Ottawa, ON K1A 0G5
fAX: (613) 943-0938, E-mail:  jflaherty@fin.gc.ca

Dear Minister Flaherty,

RE: Discussions regarding raising minimum down payment requirements for home buyers

Given your initial interview with CTV and rumors currently swirling around Ottawa regarding potentially raising the down payment requirements for homebuyers and the resulting discussion this idea has brought about in real estate circles, among economists and in the media, we are writing to urge you to reconsider such potential measures.

We understand the government of Canada is concerned about the possible destructive impacts of a hot housing market. These concerns are not without some justification. However, as REALTORS® working on the front lines of this business, we believe raising the down payment requirements for homebuyers could not only have a disastrous effect on those Canadians looking to buy their first home, but also on the health of the entire housing market.

We are not economists. We are not claiming to be. However, given that we operate a real estate business in which first time homebuyers make up a significant percentage of our clientele, our very survival as a business depends on our sharp understanding of the needs of first time homebuyers, as well as their overall contribution to a healthy and prosperous Canadian housing market.

To use a crude analogy, if the housing market were a pyramid, first time homebuyers would make up the foundation on which the entire market is based. Placing unreasonable barriers to entry on those who would otherwise help to provide the market with a solid base will cause a destructive chain reaction that will reverberate throughout a significant portion of the entire economy. To illustrate this point, if first time homebuyers are prevented from entering the market, demand for starter homes will plummet. Current owners of starter homes looking to sell their houses in order to accommodate a growing family will certainly experience greater challenges in finding buyers for their current homes. As such, they may not be able to buy those homes for their growing families, as they have significantly less buyers to sell their current ones to. In this way, the entire housing market will suffer; first time homebuyers will merely be the first to feel the effects.

From our own experience with our clients, we know how difficult it is for them to raise enough money for their down payments, as they are often saving while also paying rent to reside in their current dwellings. We warn that any increase in minimum down payment requirements would bar more than just a few potential buyers from entering the market. As such, we worry that the government is underestimating just how destructive any increases in minimum down payment requirements could be for first time homebuyers and by extension, the entire housing market. Furthermore, creating unnecessary barriers to entry for first time homebuyers would naturally affect any business dependent on a healthy housing market. Not only would our business feel the effects, but contractors we work with, from renovators to builders to painters would take a hit, as would home staging companies and retailers that sell goods required to sustain a home. These include durable goods like furniture and appliances.

We believe it is also worth mentioning, that measures to raise minimum down payments could have large destructive effects while failing to provide an economic upside.

We would like to emphasize that there is still a great deal of diverging opinion among economists as to whether we need to fear a potential housing bubble at all, let alone whether raising minimum down payment requirements would help avoid one. In an interview with The Globe and Mail, Benjamin Tal with CIBC World Markets expressed his worry that such measures could result in the government overshooting its goal. Tal communicated his belief that housing prices will moderate as new housing starts help to increase the supply of homes, thus stabilizing the market. New Canada Mortgage and Housing Corporation figures on housing starts seem to support Tal’s argument, given that the country saw 174,500 new housing starts in December (seasonally adjusted annual rate), beating analyst expectations, and 186,300 units in January. On the heels of the December data, Canadian Real Estate Association chief economist Gregory Klump told the Canadian Press he believes such fresh infusions of supply will stabilize the market, particularly in the latter half of 2010 and that the current surging market represents a natural part of the real estate cycle, not a housing bubble. On the same day, Bank of Canada official David Wolf, delivering an address on behalf of deputy governor Timothy Lane, warned that talk of a potential housing bubble is premature.

Given our frontline industry experience, coupled with what Canadian economists are telling us, we believe that any potential decision to raise minimum down payments would be, at best, a perverse ‘solution’ to a temporary concern. As such, we strongly advise against adopting such measures. We welcome any further discussion on this matter from you, as well as from the general Canadian public as we strongly believe there are other options open to the Government.

Sincerely,

Elke Babiuk, REALTOR®,
Maxwell Realty, Maxwell Canyon Creek
Member, Calgary Real Estate Board,
Alberta Real Estate Association
Canadian Real Estate Association

 Selling Calgary Group     Elke Babiuk
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Housing Bubble Talk Premature

So, if federal Finance Minister Jim Flaherty is set to potentially raise down payment requirements as a way to avoid a possible housing bubble, thereby making it harder for you to buy your first home, wouldn’t you expect he’d be reasonably sure that a bubble would actually be on the way?

Interestingly enough, he’s not. Nobody is.

Canadian Real Estate Association Chief Economist Gregory Klump recently stated very bluntly to 660 AM Radio News business reporter James Munroe that a housing bubble is not in store for Canada, even after receiving data showing December was the strongest month on record for Canadian real estate.

Klump also pointed out that a new supply of homes will help to stabilize currently surging prices due to high demand for housing. Figures from the Canada Mortgage and Housing Corporation suggest new supply is on its way into the market. That new supply is no small number. We’re talking about 174,500 new units nationally in December alone. That figure beat analyst estimates by about 10,000 units. Klump argues this is just more evidence of a normal stage in the housing cycle, not the bubble Minister Flaherty fears. So, why is Minister Flaherty still toying with the idea of barring so many potential first time homebuyers from entering the market by buying their first home?

Klump isn’t the only dissenting voice out there either. Benjamin Tal with CIBC World Markets has also told The Globe and Mail that he too, believes new housing units coming into the market will help stabilize prices. He also warned that the government could overshoot its goal, saying: “You do not kill a fly with a hammer.”

Interestingly enough, there’s even dissension from the Bank of Canada itself! Bank of Canada official David Wolf recently delivered an address in Edmonton on behalf of deputy governor Timothy Lane. In the address, he warned that any talk of a housing bubble at this point was “premature.”

We hope Minister Flaherty is listening to the counsel he’s getting and does away with this idea, before it affects the dreams of so many first time homebuyers and our valued clients. We’ll have even more on this topic in the next little while so keep checking!

Elke Babiuk and Michelle Larcher
MaxWell Canyon Creek Realtors

 Selling Calgary Group     Elke Babiuk
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Housing Bubble in Canada – we don’t think so!

It may soon be a lot harder to buy your first home, if federal Finance Minister Jim Flaherty has anything to say about it.

In an interview with CTV just before the Christmas holidays, Minister Flaherty mentioned that he’s considering raising minimum down payment requirements to “more than they are now.” He also said he was looking at decreasing amortization periods on mortgages to “something less.” In case we haven’t made ourselves clear enough, he wasn’t exactly forthcoming with specific numbers.

The Finance Minister is concerned about a possible real estate bubble burst. He worries that too many people could get into the market when interest rates are low, only to have the Bank of Canada raise interest rates later on this year, leaving many unable to pay their mortgages.

We understand why he’s worried. We can lay a great deal of blame for the 2009 financial crisis on a housing bubble in the United States. But there’s little evidence to suggest that could happen this year in Canada.

There’s a lot of experts who disagree with Minister Flaherty (more on that in later blog posts), but we want to devote this entry to explain why we think it’s a bad idea.

A significant number of our valued clients are first-time homebuyers who we want to support in purchasing their first home – a place where you can build your dreams and grow your family.  Getting in is not easy for most. We know many of our clients can take a while to save up enough money for their down payment, usually because they have to pay rent to stay in their current place while they build up what they need to move into that special first home. Raising down payment requirements only puts more strain on potential first time homebuyers, who are so crucial for a healthy housing market.  Here’s why:

First time homebuyers form the basis of a pyramid of sorts for the housing market. Eventually those who were first time homebuyers a few years ago need a bigger place to comfortably grow their family. Who are they going to sell to if those looking to buy their first home can’t get into the market anymore? Your guess is as good as ours. In this way, the effects of limiting first time homebuyers are felt all the way to the top of the market.

But it doesn’t stop there. Many businesses we work with, as well as our own, would take a serious hit as well. We work with many contractors, from those who renovate your kitchens to those who paint your house, who would feel the effects of Minister Flaherty’s proposed measures. Retailers would feel the pinch too, as fewer people would be buying the furniture and appliances that go into that first house.

We’ve got a lot more information to share with you on this topic, so bookmark us! In the meantime, we encourage you to write a letter to your MP if you want to speak out against these measures. Until next time!

Elke Babiuk
MaxWell Canyon Creek
[now with CIR Realty]

 Selling Calgary Group     Elke Babiuk
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Buying Land around Calgary

Thinking of escaping the hustle and bustle of a big city and buying land around Calgary that you can call your own? You are not alone. Our Real Estate team receives plenty of requests from people looking to buy raw land.  However, for many people, it remains a remote dream due to the financial requirements of lenders.

One of the first questions we ask when people express an interest in purchasing land in the Municipal Districts of Rural Rockyview or Rural Foothills, is if they are pre-approved for a land mortgage and if they have a builder lined up to build. The reason the answer to those questions are important is because most people do not know that they usually need to have a  50% down-payment when buying land. The lender’s risk is higher for raw land so that’s why the 50% down is required by most lenders and it is one of their mortgage requirements for qualification. Alberta Treasury Branches often make exceptions where you will need only 35% down but that depends on circumstances.

One of the exceptions that lenders make to the 50% down rule is if the piece of land is in an existing subdivision with services already there and/or if there is a building commitment deadline on the title. For example, subdivided acreage parcels like in the Springbank or Bearspaw areas, for example, may have builders that you are required to use when building. They usually also have a building time-line attached to the Title of the property in addition to architectural controls. Moreover, many of these parcels would have services already to the land. With an established subdivision with time-lines and services in place, Lenders will then advance mortgage funds in stages as the home is being built and buyers don’t require 50% down.

A caveat on the title for a building commitment could be that the home must be built within two years of the land purchase. If you can’t meet the building time-line, then you will lose the land. This is also something Lenders look at when granting mortgage approval, so the other questions we  ask are: do you need a property without building commitments on it, or do you need special zoning for the acreage (eg, commercial, agricultural, etc)?

If it’s strictly a raw land purchase not in an established subdivision, lenders know that it could cost buyers $100,000 or more to bring services to that parcel of land – septic, well water, power, heating, a road, etc – so they take that into consideration as well when lending for raw land purchases.

If you are still looking to purchase land around the Calgary area, while it’s important to get pre-approved for a mortgage, it’s also equally important to find a REALTOR® who can help you achieve those land-ownership goals. Please don’t hesitate to contact Elke if you have any questions or if we can assist you in purchasing acreage properties – 403-295-3336.

 Selling Calgary Group     Elke Babiuk
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