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Calgary Housing Market Stats – May 2013

Calgary Home Sales Hold Momentum

Market Graph photo

Prices rise as resale market continues to favour sellers

Calgary, June 3, 2013 – City of Calgary residential monthly sales improved over the previous year, mostly driven by increased demand in the condominium market.

Sales activity in all categories totalled 2,544 units for the month, a seven per cent increase over May 2012 figures.

“We’re back to normal levels of activity,” said Becky Walters, president of CREB®’s board of directors.  “Last spring was the first time since the recession that we saw more typical levels of sales, and this spring sales recorded further growth.”

Sales growth in the city is exceeding expectations, although the rate of increase has slowed from 2012’s double digits.

There is downward pressure on inventory levels, because there are fewer than normal new listings at a time when sales volume is increasing. Inventory levels are 17 per cent lower than levels recorded in 2012.  These two factors are creating market conditions that favour the seller, causing stronger than expected price growth.

“Buyers need to have financing in place so they can act quickly when they see the right property,” Walters said.  She added that buyers also need to have a clear sense of what they can afford and what they are prepared to pay before entering negotiations.

But she noted that market conditions today are much different for sellers than the last time our market favoured them.  While properties are selling at a faster pace and at prices closer to list, buyers have a range of choice in various segments, communities and price ranges.  Furthermore, consumers today are more cautious than a few years ago.

Single-family sales totalled 1,766 units in May, three per cent higher than levels recorded in 2012.  While sales volumes are consistent with long-term averages, sales growth is hampered by the decline in new listings, especially in the lower price ranges.

The unadjusted benchmark single-family price totalled $456,900 in May, a seven per cent increase over 2012 and a one per cent increase over the previous month.

After the first five months of the year, condominium apartment sales totalled 1,672 units, a 10 per cent increase over the same time in the previous year.

“Tighter mortgage rules impacted what buyers could afford to purchase in the Calgary market,” said Ann-Marie Lurie, CREB®’s chief economist.  “And while the majority of buyers are purchasing single-family homes, the attractive price point has improved demand for condominiums.”

With less supply relative to demand in resale, condominium prices are on a path to recovery.  In May, the benchmark price for condominium apartments totalled $263,600, a year-over-year increase of seven per cent.  Condominium townhomes reached a benchmark price of $292,100, a five per cent increase over the previous year.

“Improvements in Calgary’s resale housing sector are being fueled by the combination of employment gains, migration growth and tight rental market conditions,” Lurie said.  “However, resale price growths will likely moderate, as competition in the new-home sector and sluggish economic growth expectations will weigh on the housing market.”

Our DropBox: Calgary Housing Market Stats – May 2013 – Community Stats for Single Family, Condominium, and Town and Country.

 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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