Hot Housing Market Continues

And the prices go up... if you've been out in the Edmonton market lately, you know it's hot. Excerpts from this article from CanWest News Service proves it...

Eric Beauchesne, CanWest News Service
Published: Saturday, April 29, 2006

OTTAWA - Home sales and prices hit all-time highs in the first quarter of this year, according to a report Friday which will add to puzzlement, and possibly more inflation worries, at the Bank of Canada.

There were 125,142 existing homes sold from January through March, up 2.4 per cent from the fourth quarter of last year, and 0.2 per cent above the previous record high set in the third quarter of last year, the Canadian Real Estate Association said.

Earlier in the week, Bank of Canada governor David Dodge said ``we're a little bit surprised'' at the strength of the housing market considering the steady climb in interest rates and prices since last summer.

And real estate association chief economist Gregory Klump agreed it was a surprise that sales hit new record highs.

``Rising household incomes and upbeat consumer confidence are keeping resale housing activity on a tear, even with rising home prices and interest rates,'' Klump said.

The industry association reported sales reached their highest level of any quarter on record for both the number of units sold and the total dollar volume. The value of sales reached $33.4 billion, a 5.8 per cent increase from the final quarter of 2005, and the highest level ever, with records set in most provinces.

New quarterly sales records were set in Alberta, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.

While sales slipped in March, the average home price continued to rise to reach a record $274,163, up 12.4 per cent from a year earlier. The average price in the quarter was up 12.1 per cent from the same quarter in 2005, which was the steepest increase since the 1980s housing boom, which eventually went bust.

In March, the average price of a home was at an all-time high in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, and Prince Edward Island. And during the quarter, the average price was at an all-time high in every province except Quebec.

The average price of a home sold in March was highest in British Columbia at $383,712, up nearly 20 per cent from a year earlier. The steepest increase in the average price was in Alberta at 24.7 per cent to $267,641.

While most analysts continue to predict housing sales should eventually slow this year and price increases moderate, they say that unlike during the 1980s, there is no housing bubble to burst.

``Interest rates are widely expected to be near their peak,'' Klump noted. ``The continued ability to negotiate rates is also helping to keep sales activity high by keeping monthly payments down and affordability reasonable.''

The posted five-year closed mortgage rate is now 6.6 per cent, which is up less than a full percentage point from a low of 5.7 per cent last July, before the Bank of Canada resumed raising rates.

``It's not a substantial increase,'' Klump said, noting a recent survey by mortgage brokers found even with the higher rates, families are finding their housing payments manageable.

Alberta and BC Join Forces and Become No. 2 Economy

Just found this article in the Vancouver Sun. It's a huge deal, and I can't believe it hasn't been picked up by more of the media. Alberta and BC have officially opened their borders to become the 2nd largest economy in Canada! Here is the article:


Miro Cernetig and Fiona Anderson, Vancouver Sun; with files from Canadian Press
Published: Saturday, April 29, 2006

B.C. and Alberta have announced they will form a new trading bloc to create a regional economy within Canada that will usurp Quebec as the country's No. 2 economy and be second only to Ontario as the country's economic engine.

The agreement, endorsed by B.C. Premier Gordon Campbell and Alberta Premier Ralph Klein in Edmonton Friday, promises to give workers and companies free access to Canada's two westernmost provinces, now in the midst of an oil, commodities and real estate boom.

"We have become the second-largest economy in Canada," Campbell said shortly after signing the deal. "This will be noticed across the country."

The deal, signed after years of negotiations, and in the midst of the bitter lumber war between Canada and the U.S., promises "the most open economies in Canada, if not North America."

It says "investment rules will be the same in each province; businesses only need to register once for both provinces; standards and regulations will be reconciled, transportation will be streamlined and workers certified for an occupation will have their qualifications recognized in both provinces."

It is also, according to the B.C. government, going to translate into economic growth.

In dollar terms, Campbell estimates that after the deal is put in place, by 2009, B.C. will see about $4.8 billion a year in benefits and the creation of 78,000 new jobs. But there's also a long-standing political message: With its booming commodity-based economy, its increasing population and with a prime minister who has his base in the West, there's a power-shift away from the east.

"We're perhaps seeing the building a B.C. and Alberta political axis in Confederation," said Norman Ruff, a political scientist the University of Victoria. "Of course, we'll have to see if it continues after Campbell and Klein [leave power]."

The deal which comes into effect April 1, 2007, and includes a transition period to April, 2009 promises some major changes on the right of workers to cross the provincial border. Reducing inter-provincial trade barriers has been a long-standing goal among provinces, but B.C. and Alberta have come up with specific details that would make it easier to do business between the provinces or even transfer technical skills without having to undergo the complex, time-consuming and expensive business of re-certification.

"Frankly, it's a groundbreaking agreement for both provinces and the country," said Campbell. "It will mean a flow of people and services back and forth across the border without impediment.

"We've talked in Canada about free trade across the country. It's time we actually did something about it."

The new agreement was unanimously applauded as a positive step forward.

"I don't think this is earth-shaking stuff, but you are moving in the right direction when you start removing those barriers," Laura Jones, vice-president of the Canadian Federation of Independent Business for B.C. and the Yukon said in an interview.

"And any time you are talking about regulatory barriers often the progress that you make in a specific area can seem kind of small but the whole overall regulatory burden is so large it is important to make these small steps."

"It can't hurt and it hopefully will be a model for other provinces to follow," Jones added.

Dave Park, chief economist, Vancouver Board of Trade also called the agreement a step in the right direction and hopes it will eventually extend across the country.

"Basically we are able to trade between the U.S. and Canada at this point for the most part better than we can between provinces," Park said. "The freer the trade [and] the fewer the impediments the better it is for the economies on both sides."

A DONE DEAL

The agreement between B.C. and Alberta will create a combined economy that:

n Is the second-largest in Canada, with joint gross domestic product 30 per cent larger than that of

Quebec.

n Could potentially add $4.8 billion to its joint GDP.

n Could lead to 78,000 new jobs in B.C. alone.

FREE-MOVING PROFESSIONS

Current regulations restrict the movement between B.C. and Alberta of certain occupations that require licensing in each province, such as lawyers and dentists. The provinces have agreed to amend their regulations by April 2009 so 65 professions will be able to move freely between the two provinces. Besides lawyers and dentists, the affected occupations include:

Teacher

Architect

Chiropractor

Forester

Funeral director

Geo-scientist

Elevator Constructor

Medical laboratory technologist

Motor vehicle salesperson

TWO ECONOMIES JOIN FORCES

Separately, here's how the provinces compare:

B.C. Alberta

Population in 2005 4,254,500 3,256,800

GDP in 2005 $168 billion $216 billion

Number of employees March 2006 1,748,400 1,504,800

Average wage March 2006 $19.71 $20.76

Source: Statistics Canada

Five Key Questions Condo Buyers Should Ask

To avoid buying a "bad condo," whether it is brand-new or a resale unit, smart condo buyers ask at least these five key questions:

1.) HOW DO THE MONTHLY CONDO FEES COMPARE WITH COMPETITIVE NEARBY CONDO COMPLEXES?

Smart prospective condo buyers first ask, "What is included in the monthly assessment fee?" and then compare it with the fees charged at nearby competitive condo complexes.

However, be sure to compare apples with apples. To illustrate, the condo that I own includes winter heat in the monthly fee, but not summer air conditioning. Similar nearby condos include these major expenses, but some include neither because their condo units have individual heat and cooling units.

Closely related is the issue of adequate replacement reserves. Wise condo buyers carefully review the latest financial reports of the condo homeowner's association. If it is an older complex, the reserves should be relatively high per unit to provide for unexpected repairs. However, newer complexes usually don't need high maintenance reserves.

2.) WHAT IS THE FINANCIAL CONDITION OF THE HOMEOWNER'S ASSOCIATION? ARE THERE ANY EXPECTED SPECIAL ASSESSMENTS?

Before purchase, condo buyers must be given a copy of the CC&Rs (conditions, covenants, and restrictions), by-laws, rules, and latest financial reports of the homeowner's association. In addition, smart buyers ask for and read the board of director's minutes for the last six meetings.

A key question prospective buyers should ask is, "Are any special assessments under discussion or planned?"

For example, I recently had lunch with a very successful real estate broker who told me about a condo he recently sold for an elderly seller. He explained that only after the sale was almost ready to close, it was discovered the condo owner's association planned to levy a $20,000 special assessment on each owner to pay for deferred maintenance.

There is no specific maintenance reserve guideline. But two general rules are a) $2,000 to $3,000 per unit, and b) 25 percent of the annual gross income of the association should be in the reserve account.

3.) IS THE CONDO ASSOCIATION PROFESSIONALLY MANAGED?

Except for very small condo associations up to six units, every condo association needs a professional property manager. Prospective buyers should be wary of buying a condo in a complex that is self-managed, often by the owners or directors living in the property.

A related question is, "How long has the complex been managed by the same company?" The longer the better. The condo association where I own my condo has had the same professional management firm for 30 years. The property manager assigned to our property has managed our property over 20 years. Needless to say, we are very satisfied.

Professional managers usually "earn" their fees from expense savings. For example, our insurance policy recently came up for renewal. The professional manager shopped among many insurers. Since he also manages other condo complexes, he controls lots of potential business for insurers. Not only did he negotiate a big reduction in our premiums with the same coverage, but he also got the insurer to lock-in the same rate for up to three years, and we are free to shop among other insurers at each annual renewal.

4.) WHAT IS THE PERCENTAGE OF RENTERS IN THE CONDO COMPLEX?

If the answer is more than 10 percent, buyers should be cautious. If there are more than 20 to 30 percent renters, that's a very bad sign because mortgage lenders will either refuse to make loans in that complex or they will charge higher interest rates. Too many renters can hurt future condo sales.

A key reason to avoid condo complexes with more than a few renters is absentee owners often don't care about maintenance of the property. The result can be declining quality of maintenance. Complexes with anti-renter rules are considered very desirable and often bring premium resale prices.

5.) ASK SEVERAL CURRENT RESIDENTS, "WHAT DO YOU LIKE BEST AND LEAST ABOUT LIVING HERE?"

A closely related question to ask is, "Would you buy a condo here again?"

Most condo owner-occupants are very friendly and willing to share their good and bad experiences. While you are asking questions, don't hesitate to inquire, "How is the soundproofing here?" Poor soundproofing between condo units, upstairs and downstairs, as well as adjacent, is the number one complaint of condo owners.

Lastly, when making a condo purchase offer, be certain it contains a contingency clause for a professional property inspection. After the condo seller accepts your offer, be sure to accompany your professional inspector to determine if there are any undisclosed defects in the unit or the complex that might cause you to reject the inspection report.

The above article was written by Bob Bruss, from Inman News.

A Taste of Today's Edmonton Housing Market

There is no better position to be in right now in Edmonton, than to be selling your home. There are half as many listings as there were at this time last year, and twice as many people wanting to relocate here. We have clients trying to buy homes, offering list price or higher and continually missing out in multiple offer situations.

It is a frenzied feeling out there, one in which you definitely want experienced representation. We recently helped clients purchase a privately listed home, on which there were multiple offers; all other buyers were not professionally represented and our client won out, at well under current market value. In the few days while conditions were being removed the seller had 40 other people interested in the property and was hoping our buyers would back away. Our buyer definitley won in that situation, and had the seller been represented they would likely have gotten far more money for their property.

Ok...enough about that...Here are some exerpts from an article in the Edmonton Sun today called Hot Housing Market Leaves Out-of-towners Out of Luck. This really demonstrates how challenging the market is right now...

Already stoked by hot demand, the Edmonton real estate market is now being fired on the supply side by fewer homes on the selling block. The inventory of listed homes has fallen by nearly half from last March, to 2,333 units versus 4,444 a year ago, says the Edmonton Real Estate Board.

Re/Max realtor Pat Liviniuk blames the shortage on an influx of newcomers, and on construction delays in building new houses, which mean buyers are staying in their old homes longer, keeping them off the market.

"We have four to five buyers going for each home and people who are relocating, unless they're here sitting with me 24/7 to get into these houses, they have no chance," Liviniuk said.

Eric Nielsen, who moved here recently from Calgary, quickly discovered how tough it was going to be to buy a home in Edmonton. They wanted an executive home with three bedrooms up, two bathrooms and enough room to raise any future children in a nice neighbourhood close to good schools and a short commute to downtown jobs.

After spending eight months viewing nearly 100 homes and writing five offers, the couple finally found a house for $5,000 above the listed price in the upscale Glenora neighbourhood. It's still not their dream house, but it will do for now, says Nielsen.

"You can do it in just a day or two but you're not going to get what you want," Nielsen said.

Relocations are a growing segment of Edmonton real estate buyers. Alberta's population grew by 25,100 people in the final three months of 2005 -- a high not seen since the oil boom of 1979-80 and more than five times the national average, according to Statistics Canada.

Royal LePage Relocation Services noted: "We've seen almost 100 per cent growth in relocations to Alberta or in Alberta in the last three years," said Tim Verbic, director of business and marketing for Royal LePage.

While not as hot a market as Calgary, the prices and shortage of houses in Edmonton still shocks many newcomers, especially those from cooler markets, said Liviniuk.

For those relocating, it's often a matter of coming in for four or five days, powering through homes and putting an offer on the best of the lot, she said.

The Nielsens tried that, but after looking in vain on two weekends, they decided to rent a house they found on one trip and based their search from there.

Nielsen advises other newcomers to find a realtor by referral, as he eventually did, and ask about the neighbourhoods the agent specializes in.

"And I'd just pull the trigger," Nielsen said. "Instead of thinking about it, if I saw something that was even the least bit reasonable, I would have just bought it. Just act fast."

Finding a home in Edmonton's frenzied housing market is becoming increasingly competitive. The unusual numbers tell the story:

- Brisk sales: In March, homes sold in an average of only 19 days, a record. A year ago the average was 40 days.

- Rising prices: The average price for a single-family dwelling hit $256,159, up 18.5 per cent from last year.

- Date Edmonton hit $1-billion mark in sales in 2006: March 21

- Date to hit $1-billion mark in sales in 2005: April 19

Alberta Population Booming

We all know Alberta is booming, more and more people are moving here. Calgary is seeing huge gains in population and traffic jams... Edmonton is growing at almost the same speed, but the traffic isn't... Here are some exerpts from an aritcle in today's National Post on the subject:

John Cotter, Canadian Press
Published: Sunday, April 02, 2006

EDMONTON -- With its prosperity cheques, low taxes and voluminous pages of help-wanted ads, Alberta has become the Big Rock Candy Mountain to thousands of Canadians seeking a better life.

Recent figures from Statistics Canada show the province's population is increasing at more than five times the national average, and there's no end in sight to the migration.

But as the booming economy gobbles up every worker it can find, the newcomers are bloating Alberta's structural waistline to the bursting point. And the riches are causing tummy rumbles as communities struggle to deal with the influx.

"The traffic everywhere in Calgary is bumper to bumper and if anything goes wrong, we hit gridlock pretty fast," says Calgary Ald. Gord Lowe, who notes the city is hundreds of millions of dollars behind in housing, roads, schools, hospitals, libraries and recreational facilities.

"The third-largest city in Canada last year was all the people who moved to Calgary. That sums it up."

Nor are the inherent problems associated with massive growth limited to Calgary's gleaming office towers.

Forests of construction cranes mark the horizons of Red Deer, Edmonton, Grande Prairie and Fort McMurray as those cities ride the swollen crest of high oil and natural gas prices.

In January, the government had so much cash it sent out $400 prosperity cheques to just about every man, woman and child in the province.

Housing all the newcomers represents another challenge.

Firms are short of carpenters and other trades needed to build new homes, apartments, sewage and water systems.

Real estate prices and rents are climbing dramatically in many communities -- if a place to live can be found at all.

While housing prices aren't as high as in Vancouver or Toronto yet, they are on the march. And rental rates are among the highest in the country.

Average rent for a two-bedroom apartment in the oilsands capital of Fort McMurray in December was $1,478. That compared to just over $1,000 for a similar apartment in Toronto or Vancouver.

The average selling price of a home in Calgary last month was $305,000 -- up almost 25 per cent in one year.

"We are getting tremendous pressures on housing prices," says Darrell Toma, president of the Alberta Chambers of Commerce.

The province is trying to meet the challenges of explosive economic growth head-on, but it's hard to keep pace when its population of more than three million people grew by more than 25,000 last fall alone.

The provincial government has earmarked $13.3 billion for infrastructure projects over the next three years -- a total bigger than the entire budgets of many provinces.

That doesn't include money for new primary or secondary schools, however.

But Toma says while the challenges are daunting, he wouldn't trade Alberta's situation for the problems of less economically robust parts of Canada.

"We have a debt-free economy and people are fully employed. Wages and house prices are going up. It is a great problem to have."

As civic leaders beam with pride at Alberta's astonishing economic muscle, there are inklings of fear that the rich gravy train might not chug along forever.

Lowe shudders at memories of the way Alberta's last big boom -- fuelled in large part by the energy industry -- quickly melted in the 1980s like snow during a chinook when oil prices fell.

"Those of us who went through that are keeping a very wary eye about what is going on," he says.

"But all the studies from the banks and think-tanks suggest the boom is going to continue for the next six to 10 years."