Housing Starts Set Record Pace

A new report from CMHC says that Canadian housing starts topped 200,000 for the 32nd straight month in January, while the resale homes market has been on a seven-year winning streak, helped by low interest rates and a strong economy.

Housing starts totaled 225,481 units last year, down from 2004's 17-year high of 233,431 units, but above early forecasts for a 2005 total of about 215,000. Existing home sales set a record last year as increased immigration, younger people buying homes earlier and women opting to purchase property alone drove buying.

Housing starts rose a bigger than expected annualized 247,900 units in January, the sturdiest start to a year since 1987 while building permits hit a record high in December.

Canada Mortgage and Housing Corp expects house price increases to moderate to 5.5 percent this year and 3.8 percent next year, from 10 percent last year. Edmonton's price increases are expected to be substantially higher than the rest of the country at 8%.

Spacious West Edmonton 2-Bedroom Condo For Rent

Like new, spacious (1500 square feet!), excellent condition, 2-bedroom townhome in very attractive executive complex. Unit equipped with 5 appliances, 2.5 bathrooms, single attached garage - 2 parking spaces with lots of visitor parking. Large deck and balcony. Large, eat-in kitchen, gas fireplace, finished basement can be used as den or office. Master bedroom with huge ensuite and walk in closet with organizers. Second bedroom very spacious as well. Utilities not included. Small pets considered with pet damage deposit. Available April 1, 2006. E-mail rendicott@shaw.ca for more information.

Alberta Housing Prices Leading the Country

I found this article from the National Post, and was intrigued by the title: Centre of universe shifts West. It talks about how Alberta's economy is so strong, and the Calgary housing market is going through the roof. Calgary's average housing prices are expected to surpass Toronto this year, making them second only to Vancouver. What does this have to do with Edmonton? Well, Alberta's economy is growing, not just Calgary's, and Edmonton is a much more affordable market to invest in. The article is below...

Calgary recorded its highest housing prices ever in January, and is poised to overtake Toronto as Canada's second-largest housing market.

Garry Marr, National Post
Published: Saturday, February 18, 2006

A critical shortage of housing for sale in Calgary and a red-hot economy have driven prices to an all-time high in the city and created a panicked state among consumers looking for homes.

Sales in Calgary's existing homes market jumped almost 50% in January from a year earlier, according to the Canadian Real Estate Association. At the same time, the number of homes being put on the market for sale was down 16.2% from a year earlier. The result was a record $289,130 average price for a home sold last month, leaving prices in the city 20.2% ahead of last year and on pace to eclipse Toronto as the second-most expensive city in the country for housing.

"There is a shortage of listings in Calgary and very strong demand," said Gregory Klump, chief economist with the Ottawa-based association, which is predicting sales and prices in Alberta to outpace the rest of the country this year.

The picture of Calgary on the way up and Toronto on the way down is part of a growing dichotomy in the country that is making national statistics meaningless. "We have two different economies in the country, the one in the West and the one in the rest of the country," said Benjamin Tal, a senior economist with CIBC World Markets.

Mr. Tal said the way economies in Alberta and Ontario are working, Calgary real estate prices could easily pass those in Toronto this year. "The numbers are simply unbelievable. Look at mortgage size: It is rising. Look at wealth and income in Calgary: It is rising. Everything is stronger than Toronto. Gross domestic product will rise by 7% in Alberta this year; that is like China."

Ted Zaharko, who owns Royal LePage Foothills Real Estate Services in Calgary, has been in the business for 35 years but has never seen the market as strong as it is today. "This is different. There is a panic in the market because there is an extreme shortage of supply."

Mr. Zaharko said Calgary will usually have about 6,000 houses listed, but he thinks that number is probably near 1,000 today. Consumers are even flipping houses -- that is, buying them without ever occupying the homes.

"I was talking to a lawyer last week about a house a couple bought one day, only to have to sell it 24 hours later when the husband got transferred. They ended up selling the house one day later for another $65,000," Mr. Zaharko said. The couple who bought the house were told it was being flipped. "They didn't care, they just wanted it," the real estate broker said.

Toronto sales prices appear to have stalled based on the January stats. The average price of a home sold in the city was $332,670 last month, only a 2.9% jump from a year ago.

"Central Canada is just not seeing the same sort of volume that we are," said Elton Ash, a vice-president with Re/Max Western Canada. Vancouver continues to be the most expensive market in the country.

Assumable Mortgages

The Edmonton Real Estate Board recently published the following article on assumable mortgages. One thing is for certain, the days of assuming a mortgage without first qualifying are over...

A mortgage in Alberta is (as we lawyers say) a covenant that runs with the land. In other words, the mortgage attaches itself to the land and stays there even if the ownership of the land changes. In that sense, all mortgages are assumable. Anyone who purchases a piece of land is bound by the mortgage that stays on Title when the land is transferred to the new owner. A careful reading of most mortgages in Alberta whether conventional or high ratio,will reveal a paragraph that says something like the following: “Should the Mortgagor transfer the property to a new owner the Mortgagee has the right to require the new owner to qualify and has the right to declare the mortgage due in full.”

In 1974, the Royal Bank relied on a similar “due on sale” clause and commenced foreclosure proceedings against the new owner. The Court decided the clause was valid and enforceable. However, the purchaser asked the Court to exercise its discretion and provide relief from the enforcement of this clause. The Courts agreed with the homeowner and a stay of the bank’s foreclosure was ordered. That is where matters have remained since 1974. The clause is valid. However, the Courts in Alberta have yet to allow a foreclosure through to completion on the sole basis of the “due on sale” clause – until recently.

During the past year several lenders have been increasingly relying on the “due on sale” clause in their mortgage. They have been monitoring their mortgages and when they see a new owner they are stepping forward to force the new owner to qualify. And if the new owner does not qualify the lender will call the mortgage. In most cases, the lender is able to “convince” the borrower that their life will be pretty miserable if they do not pay off the mortgage.

In addition, with the recent cases of real estate fraud, the courts are willing to enforce the “due on sale” clause in the appropriate circumstances.

The bottom line is that mortgages in Alberta are all assumable. However, you may wish to caution every client they may have to apply to the Court and a decision from 1974 could, in different circumstances, be reversed. All in all, not a happy experience for anyone involved.

During the past year several lenders have been increasingly relying on the “due on sale” clause in their mortgage. They have been monitoring their mortgages and when they see a new owner they are stepping forward to force the new owner to qualify. And if the new owner does not qualify the lender will call the mortgage. In most cases, the lender is able to “convince” the borrower that their life will be pretty miserable if they do not pay off the mortgage.

In addition, with the recent cases of real estate fraud, the courts are willing to enforce the “due on sale” clause in the appropriate circumstances.

The bottom line is that mortgages in Alberta are all assumable. However, you may wish to caution every client they may have to apply to the Court and a decision from 1974 could, in different circumstances, be reversed. All in all, not a happy experience for anyone involved.

Stan Galbraith & Stacy Maurier
Galbraith Law

Fri, Feb 10, 2006 13:13

Alberta Unemployment Rate Drops to Lowest in 24 Years

According to an article in the Edmonton Journal today, the unemployment rate is the second lowest on record, and the lowest it's been in 24 years. It now sits at 3.5% - the lowest it's ever been was 3.3% in 1981.

"It's a wonderful time for many workers," said Ian Glassford, chief financial officer at Capital City Savings. "Young people have the opportunity to build careers."

"I don't think you can expect it to go much lower," said economist Dianne Keefe, with Keefe Taylor & Associates management consultants.

Three per cent may be only "frictional unemployment" of people who are changing jobs, she said.

"Alberta is the poster child for what a red-hot economy looks like," according to CIBC World Markets Inc. economists Warren Lovely and Leslie Preston, who believe the province will enjoy economic leadership for years to come and post a seven-per-cent expansion this year.

"Persistently high oil and gas prices mean Alberta's economic edge should prove much more lasting than the one it saw in the late 1970s (and) early 1980s," the economists predict. Unemployment rose after 1981, reaching more than 11.1 per cent in 1985.

"Alberta's growth advantage will be equally pronounced in 2007 ... a province-leading six-per-cent gain ... and above-average growth further out," according to CIBC.

Over the past 12 months, Alberta gained 39,700 jobs -- for a total of 1,780,200.

"The economy is being driven by oil and gas investments," said Bob Ascah, vice president of research and analysis at ATB Financial.

The energy sector itself gained 8,400 jobs.

But the planning for Alberta energy projects creates work for professional, scientific and technical services -- which gained 25,500 jobs in the past year.

Energy projects require construction, which "flows into fabrication and transportation," he said.

And workers in those sectors buy hotel rooms and restaurant meals. The projects also require real estate, banking and insurance services.

While 40,000 jobs are welcome, the low unemployment rate also reflects slow growth in Alberta's labour force, as the province struggles to attract immigrants.

"One thing that drives immigration is relative unemployment rates," Keefe said.

With seasonally adjusted unemployment of only 6.6 per cent across Canada, and a strong British Columbia economy, many workers have little reason to move to Alberta.

"And we do not attract a high percentage of international immigrants," Keefe said.

"There seem to be more jobs being created than filled," Ascah agreed.

He said one problem is that immigrant engineers and other foreign professionals face obstacles in applying for Alberta credentials.

While Canada gained 269,000 jobs in the past 12 months, the goods-producing sector actually declined.

Manufacturing shed more than 120,000 jobs.

"That's largely a result of the high Canadian dollar," Glassford said.

Alberta manufacturers lost 14,200 jobs but Glassford thinks their future is strong because, unlike central Canadian manufacturers, they do not face foreign competition in a time of a high Canadian dollar.

"Many of our manufacturers are energy-related."

Edmonton had 4.3 per cent unemployment in January, compared to 2.3 per cent in northwest Alberta and 4.4 per cent in Calgary.

Over the past year, Alberta aboriginal people living off-reserve held 62,700 jobs -- well up from 55,300 one year earlier.

As more aboriginal people entered the workforce, their unemployment rate rose to 10.6 per cent from 9.4 per cent.

rchalmers@thejournal.canwest.com

BACK IN 1981 ...

The last time Alberta posted a lower unemployment rate was in August 1981. Here are some other things that happened that year:

- Alberta government raises minimum wage by 30 cents to $3.50 an hour (Current rate is $7 an hour).
- West Edmonton Mall opens doors for first time.
- Federal energy minister Marc Lalonde, in referring to the battle between Alberta and Ottawa over energy pricing, says: "It has become a shootout between the good guys and the bad guys, a struggle between the forces of darkness and light, a battle between right and wrong."
- Edmonton's food bank, the first in Canada, is incorporated.

What will $1 Million Get You?

Century 21 Canada did a survey of Canadian markets, investigating what $1.1 million will get you. Here are some of the results:

Toronto: two-bedroom, 1,400-square-foot apartment in Toronto's Harbourfront district which comes with a penthouse panoramic view of Lake Ontario.

Saint John, N.B.: 11-bedroom, 81/2 bathroom Queen-Anne-style mansion of 7,000 square feet on 1.4 acres -- plus a 1,446-square-foot townhouse in the city centre, with a harbour view.

East Saanich, B.C. near Victoria: 10,000 square feet for $995,000 - just for the ocean-view lot, no house included!

Edmonton: five-bedroom, four-bathroom home on Ada Boulevard, overlooking the river valley.
The 5,500-square-foot home, on a large lot, has air conditioning, multiple fireplaces, six-car garage, gym, hot tub, wine cellar and nanny suite.

Regina: $735,000 will buy you a 3,700-square-foot home in the Wascana View neighborhood. The bungalow sits on a 14,700-square-foot lot, has four fireplaces, a four-car garage and a swimming pool. Leaving you enough cash to buy a $229,000, 1,000-square-foot cottage on Pasqua Lake, 45 minutes from Regina.

Calgary: the city has seen a jump in the number of homes selling in the $1-million range. This month alone, eight houses have sold for $1 million already where supply is not keeping up with demand - more than half of sales are going for over list price.

Search all Edmonton MLS Listings.