Kevin D'Costa

Top Producing Realtor 

Cell: 403-605-5559 |

The sales in October in Alberta had a jump of 22.1% over October 2019 with a total of 5,696 sales. This combined with the listing inventory dropping by 16.3% to 24,867 listings across the Province has helped keep the markets balanced with 4.37 months of supply.  The recent sales increase can be attributed to lowering inventory, low interest rates, a decline in household spending and increased savings.
 
All of the larger markets showed marked improvements year over year with the exception of Grande Prairie and Fort McMurray which both experienced slower months in sales.  That being said, even with the uptick in sales over recent months, it hasn't been enough to exceed sales of 2019 except in the case of Lethbridge. The year to date adjustment in sales in the larger markets compared to last year during the same time frame are as follows:
 
City October Y/Y% Year to date %
Calgary 23% -6%
Edmonton 24% -2%
Red Deer 13% -7%
Lethbridge 35% 7%
Medicine Hat 16% -6%
Grande Prairie -16% -20%
Fort McMurray -5% -12%
 
There are many factors that will determine how long the increased sales activity will last but some highlights from the month are:
  • The unemployment rate which has now dropped to 10.7% in Alberta, down from 11.7% in September.
  • The Oil and Gas sector has had oil production creep back to within 7% of production done in 2019 ytd. The Natural Gas price has also jumped 125% compared to October 2019 but is still down from pre pandemic levels.
  • Grain Deliveries are up 96% yr/yr which puts us 2nd in the Nation.
  • Soft wood is up 4.7% yr/yr.
When looking at the sales numbers across Alberta, we are incredibly proud of all of the CIR REALTORS® who have gone above and beyond for their clients this year as CIR's sales volume was up 47.2% in October, and 24.3% ahead year to date compared to last year.  It remains to be critical to keep a positive outlook, while educating our clients with factual information to help them make the best decisions for their situation.  
 
 
 
Some quick numbers from the areas that our offices serve:

After a brief pull back in showing and sales activity in August, the Real Estate Markets picked right back up in September with sales across the Province trending above the ten year average.   
  • CIR's overall showing activity has begun to slow down coming into the Winter months, with most of the showings still occuring in the mid priced markets. While the sales across the Province were up 22.1% this October compared to last, CIR's sales were up over 47%!  We continue to greatly outperform the markets month after month.

  • Airdrie's market activity in October was the second busiest it has been in the past ten years, second only to the craziness of 2014!  There were 143 sales which is 50.5% higher year over year, and listing inventory continues to drop to 323 listings which is 29.2% below last October. This has led to 2.26 months of supply which is getting very close to sellers market territory.  The sales activity in the $300,000 to $999,000 range has greatly outperformed the sales of last year.

  • The sales in Brooks rose 54.5% year over year to 17 sales in October. This has jumped the ten year average of 12 deals for the month which has continued to help strengthen the market. That combined with a lower amount of inventory on the market has helped lower the months of supply to 4.59 months, and lowered the average days on market to 81.  The biggest improvements have been in the $200,000 to $499,999 price ranges.
      
  • Calgary sales had strong gains through this October compared to last with a 22.7% increase to 1,764 sales year over year. The sales were stronger in all price ranges this year which has helped continue to lower the months of inventory to 3.31 months. With less inventory coming onto the market, we are seeing the days on market drop to 53 days on average.  With the balancing market, it has helped rise the benchmark price to $422,600.

  • Canmore has had the busiest October in over a decade, with sales rocketing 61.7% higher than last October! With 76 sales, and the months of supply at 2.75 months it remains to be a very competitive market with steady inventory coming onto the market.

  • Cochrane's market continues to outperform the 10 year average for total volume of sales, with sales in October exceeding those of the past decade during the same month!  WIth the sales remaining strong month over month, and the listing inventory continuing to drop, these conditions will support price increases in the market.  We are starting to see that take effect as the total residential benchmark price has risen to $415,6000 which is 2.3% higher than the start of the year.

  • Crowsnest Pass has out performed the past decade for sales in October.  WIth sales rising to 18 in the month, it is 28.6% higher than last October.  This has helped maintain the balanced market conditions in the area which we anticipate to continue through the Winter months.

  • Sales in Lethbridge continue to rise with results 34.6% higher than October of last year!  With 175 sales in the month, and 21% lower inventory, the months of supply has dropped to 3.34 months helping keep the balanced sales conditions.The single family, detached homes are carrying the bulk of the market and seeing the greatest gains in value. 

  • The Real Estate market in Okotoks continues to outperform the ten year average for sales, seeing a 40.9% increase in sales this October compared to last.  The most noticeable increase year over year has been in the $400,000 to $699,999 price points. As a result, the total residential benchmark price has increased to $430,600 which is 0.5% higher than the beginning of the year.

  • The Olds real estate market is one of the few across the Province that saw a slow down in October compared to last year.  With 9 sales for the month, it was 18.2% slower year over year but the inventory has also been dropping helping the inventory levels drop to 10.11 months.  This continues to be a more challenging market where marketing a home with a compelling sales price is a must.

  • Red Deer's Real Estate market had gains of 12.9% in sales this October compared to last. This was due to both the detached and semi detached markets showing noticeable improvement.  The Row and Apartment sectors continue to struggle, as is the high priced market.  There has been marked improvement in the $200,000 to $399,999 price points, and significant improvement for sales in the $400,000 to $499,999 price points. This activity has helped lower the months of supply to 5.01 months which moves it closer to balanced market conditions.

  • Rocky Mountain House had a very comparative month in October compared to the same time last year. With steady sales activity, and declining inventory, we are seeing the months of supply drop to 10.38 months. We are hoping to see this trend continue through the Winter months to bring more balanced markets to the area.  Until then, when selling a home in this type of market, having a compelling price is a big component to any marketing strategy.
     
  • The Strathmore market outperformed the ten year average for sales in October.  With the higher sales volume, and less inventory coming onto the market, it has edged closer to balanced markets in the area.  Most noticeable were the increases in sales in homes priced under $200,000, and the homes in hte $400,000 to $500,000 price range. Overall, the market in Strathmore does appear to be more balanced through 2020 than what was experienced in 2019.  

  • Sundre had a 60% increase in sales this October compared to last which greatly exceeded the ten year average for sales in the month. With lowering inventory, Sundre has entered into a more balanced market with 4 months of supply of inventory. This is an incredible number as the last time the months of supply was so low was in September 2012 when it was at 3.73 months. 
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The weekly trend for showing activity across the Province continues to slow as we enter into the Winter months.  The total showing activity has dropped to 7.4% over the amount of showings at this time last year. This is a normal trend for the Alberta Real Estate market.
 
The showing activity for CIR Realty's listings has also slowed seeing a 1,431 showings which is down -44 from the previous week. The highlight in this is that there was a higher than average amount of showings in the $700,000 - $800,000, and $1M+ markets. The sales activity for CIR also trended down, but remained much higher through the last week of October compared to last year during the same time period. 
 
With the slowing markets, pricing will remain critical as the decline in sales volume is slowly catching up to the decline in listing inventory.  
 
-CIR Realty 
 
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The showing activity has had a considerable slow down across the Province. It has dropped from what was 123.3% higher last week compared to last year, down to 113.5% this week compared to the same time last year. This is obviously still quite an improvement year over year as there is still a good amount of activity in the market.
 
Our showing activity at CIR Realty has not seen as much of a decline week over week, however our total showings for the week were down 93 showings from 1,568 showings to 1,475 showings this past week.  The activity that we are seeing is very consistent with what we have had all year, with the bulk of the showings happening in the lower to mid markets.  The sales activity for CIR Realty is currently trending over 52% higher this October compared to last.
 
An interesting point to note is that while the bulk of the sales across Alberta in October are occurring in the lower to mid price points below $600,000. All of the price points above $400,000 have had an increase in sales year over year, including in the $1M plus price.  There remains a good opportunity for people who are entering the market, move up the property ladder, or pick up investment properties. 
 
-CIR Realty 
 
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Third-quarter activity was far better than original expectations, as sales activity in the city improved by nearly 12 per cent over last year’s levels. 


Some of the shift in the third quarter reflects activity that likely would have occurred in the second quarter. The housing market also benefited from easing lending rates and previous price declines. Gains were driven by all property types except apartment condominiums. 


“As the economy started to re-open, we saw some improvements in the economic indicators,” said CREB® chief economist Ann-Marie Lurie. 


“Most industries are not back to pre-pandemic levels, but over the past three months we have seen notable improvement across most industries.” 


The gains this quarter did not offset all of the earlier declines, but the year-to-date decline eased to nine per cent. This is a significant improvement from the first half of the year, where sales were sitting 20 per cent below last year’s levels. 


New listings were also on the rise. It was enough to cause inventories to trend up from the lower levels recorded earlier in the year, but inventories remain well below the levels recorded last year. 


Overall, the months of supply did tighten to levels well below the past two years. Improved supply/demand balances did support some modest improvements in prices, which trended up in the third quarter compared to the second quarter and remained only one per cent below last year’s levels.


Current conditions in the housing market are surprising, but there are several reasons to still be cautious: 


  • The current job market: Unemployment levels remain exceptionally high and there is added concern regarding additional job losses coming in the energy sector. If this situation persists, it could result in weaker demand and rising listings.
  • A second wave of COVID-19 and further shutdowns: Widespread closures are currently not expected, but if they do occur, this could be problematic for many businesses that cannot survive a second shutdown.
  • Government support: The housing market and overall economy has benefited from significant government income support programs, and banks allowing homeowners to defer their mortgage. As these benefits end, there is a risk that some households will not be able to keep their home, causing a rise in new listings and pushing up supply levels. If this occurs, it could erode some of the recent gains in pricing.

-CREB

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Can you even believe rates are this low?

If you are looking for a great Mortgage Advisor that will work with your best interest at heart. Give Lorrie a call.

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September sales activity jumped to 1,702 units, the strongest September total since 2014.

New listings in September improved over last month, but levels remained comparable to the previous year. The increase in sales relative to new listings did prevent any monthly gains in inventory levels, but supply in the market is still down 12 per cent compared to last year.

“The recent rise in new listings, combined with low lending rates and softness in prices, has helped support some of the recent upward trend in sales,” said CREB® chief economist Ann-Marie Lurie.

“However, conditions vary significantly based on the price range and property type.”

The adjustment in supply relative to demand has caused the housing market to move toward more balanced conditions. The current 3.7 months of supply represents the most balanced conditions seen for September in over five years. This has helped support some of the recent monthly gains in prices.

Total residential benchmark prices have trended up over the past three months, resulting in September prices that are similar to prices recorded at the same time last year.  

Despite some of the recent improvements, the impact of COVID-19 is still present. Year-to-date sales remain nearly nine per cent below last year’s levels, while city-wide prices are still over one per cent lower than last year. Considerable risk also weighs on the housing market due to economic uncertainty and a struggling labour market.


HOUSING MARKET FACTS


Detached

With significant gains in the $400,000 – $600,000 range, September sales are the highest they have been since 2014.

Improving sales and easing new listings resulted in further reductions in inventory levels and caused the months of supply to ease to balanced territory. Recent improvements in the supply/demand balance have supported some upward price movements. As of September, the benchmark price was nearly one per cent higher than last year.

However, the year-over-year gains have been driven by the more affordable end of the market, as prices remain well below last year’s levels in both the City Centre and West districts of the city.


Semi-Detached

Given some recent monthly gains in new listings, sales in this sector improved in September, but at a slower pace than both the detached and row sectors. This could be related to the significant pullback in inventory.

September inventory levels were nearly 21 per cent lower than last year, the largest percentage decline in inventory among all property types. This shift in supply, along with improving sales, has started to help reduce the oversupply in this sector and ease the downward pressure on prices.

September prices remain nearly two per cent lower than last year’s levels, but prices have started to improve in the South, South East and East districts of the city.


Row

Sales in this sector have continued to trend up for the past several months and September sales were significantly higher than last year’s levels.

While it was not enough to offset the pullback that occurred during the COVID-19 shutdown, row sales activity is four per cent lower than last year’s levels. The growth in sales could be related to the significant price adjustment that has occurred in this sector.

Prices in this sector have eased by seven per cent compared to last year and remain nearly 17 per cent below previous highs.


Apartment Condominium

All other sectors have seen some recent year-over-year gains in sales, but this sector continues to trend in the other direction. Year-to-date sales declined by 16 per cent, the largest decline among all property types.

At the same time, new listings continue to rise, which is causing further inventory gains. This is keeping the months of supply above seven months.

There have been some districts showing signs of price stabilization, but overall, year-to-date prices have eased by more than two per cent, amounting to a total adjustment from 2014 highs of over 18 per cent.


REGIONAL MARKET FACTS


Airdrie

For the fourth consecutive month, year-over-year sales improved. As a result, year-to-date sales for the city total 1,055 units, a nine per cent increase over the previous year.

While new listings did rise this month, the improvement in sales outpaced the gains in new listings, preventing any significant shift in monthly inventory levels.  However, inventory levels are over 20 per cent lower than last year’s levels. And the months of supply has fallen to levels not seen since 2015. While prices remain below previous highs, tighter market conditions over the past four months have supported several months of price growth and September price levels are nearly one per cent higher than last year. These price gains were enough to cause year-to-date levels to stabilize relative to last year.


Cochrane

A reduction in new listings limited sales growth in September compared to August. However, September sales remain higher than last year and contributed to a year-to-date gain of nearly nine per cent.

Rising sales and easing inventories have kept the months of supply below four months, the lowest level seen since 2014. Tighter market conditions have supported an upward trend in prices over the past three months. The recent price gains did translate to year-over-year gains in September, but were not enough to offset earlier pullbacks, as year-to-date prices remain nearly two per cent lower than last year’s levels.


Okotoks

September sales continued to improve from the low levels recorded earlier in the year and levels recorded last September.

However, recent improvements were not enough to offset earlier pullbacks. Sales remain three per cent lower than last year’s levels, but this could be related to reduced inventory in the market.

Reductions in supply relative to demand have caused the months of supply to decline to three months. The tighter market conditions have caused prices to trend up over the past four months. However, both September and year-to-date prices remain lower than previous year’s levels.


Terence Leung 


creb-infographics-calgaryDownload


creb-infographics-reginalDownload

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The showings across the Province have slowed slightly week over week.
 
The activity for CIR Realty's listings have also slowed slightly with -85 less showings week over week. The mid price points seem to have slowed the most, while the lower price points picked up slightly. The sales have also slowed moderately, but continue to be above those compared to the same time last year.  
 
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For many, home is the place where they feel the safest and most at ease. However, there are many hazards within the average house or apartment that can have dangerous, and even deadly, consequences if left unchecked. Luckily, most of these threats are easy to identify and even easier to avoid with just a little bit of knowhow.

Here are 12 common household hazards and how to eliminate them:

Dryer lint

Emptying your dryer’s lint screen/trap seems like a simple task, but it’s also one that’s easy to forget. Unfortunately, lint buildup in the dryer is a major fire risk. Be sure to empty your dryer’s lint trap after each use and clean out the vent that leads outside regularly as well.

Gas appliances

Improper use of gas appliances (e.g., gas range, furnace, barbecue, etc.) can lead to a fire or explosion. However, these appliances also pose a threat of carbon monoxide (CO) poisoning. CO, the most common source of poisoning death, is the result of incomplete combustion and can build up in your home if you’re not careful. Ensure your gas range is vented properly, your furnace is serviced at recommended intervals and you have a working CO alarm installed.

Extension cords

While they seem relatively benign, extension cords are a tripping hazard and damaged cords are the source of many fires each year. Ensure your extension cords are used properly (do not overload your home’s circuits) and that all cracked or fraying cords are replaced immediately.

Leaky air conditioner

Older AC units that are broken or malfunctioning can start leaking freon, a gas used as a refrigerant that is toxic if inhaled in large quantities. Make sure to check your unit for leaks regularly, and if you detect one, call a professional ASAP.

Household cleaners

I shouldn’t have to tell you not to eat or drink household cleaning products, but just in case you were considering it, many of these innocuous looking sprays and creams are poisonous if ingested. Mixing cleaning agents without doing your homework is just as hazardous. For example, mixing any product that contains bleach with another that contains ammonia can create a variety of toxic fumes, including chlorine gas.

Painting without proper ventilation

Paint fumes are toxic in high concentrations and highly flammable, so make sure you think about ventilation before you decide to slap on a new coat. Spray paint in aerosol cans adds the additional risk of explosion to the mix, so be careful not to place them near a heat source.

Candles

Candles are great for setting the mood, but don’t forget about them, as they are a relatively common sources of house fires. Make sure you never leave lit candles unattended and try to limit the number of candles you use at once.

Real Christmas trees

Nothing really feels (and smells) like the real thing when it comes to Christmas trees. However, if not properly cared for, these symbols of holiday cheer are a major fire hazard. A dried-out Christmas tree is effectively kindling, and strings of Christmas lights can quickly become a fire starter under the right conditions.

The roof

Whether you’re up there to clean out eavestroughs, put up Christmas lights, inspect shingles or shoo away a particularly pesky pigeon, climbing up to your home’s roof can be a risky business. Proceed with caution, and remember that it’s usually best to leave any labour-intensive roof work to the professionals.

Blocked chimney

If you have a wood-burning fireplace, soot can build up on the inside of your chimney over time. Without proper cleaning, this buildup can block smoke from escaping, creating a risk of house fire, lung damage and CO poisoning.

Damaged electrical outlets

A damaged electrical outlet can result in electrocution if you’re not careful. If you spot any damage, do not use the outlet and be sure to call an electrician. Alternately, if you’re feeling handy, you can attempt to replace the outlet yourself – just remember to turn off the power to that area of your home (or cut the breaker to the whole home) before you do it.

Old smoke and carbon monoxide alarms

These vital safety tools are your first line of defence against house fires and CO poisoning, but they’re useless if they’re not working. Make sure you test your alarms regularly and replace them every 10 years.


-Tyler Difley

CREB NOW

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September sales activity jumped to 1,702 units, the strongest September total since 2014.

New listings in September improved over last month, but levels remained comparable to the previous year. The increase in sales relative to new listings did prevent any monthly gains in inventory levels, but supply in the market is still down 12 per cent compared to last year.


“The recent rise in new listings, combined with low lending rates and softness in prices, has helped support some of the recent upward trend in sales,” said CREB® chief economist Ann-Marie Lurie.

“However, conditions vary significantly based on the price range and property type.”

The adjustment in supply relative to demand has caused the housing market to move toward more balanced conditions. The current 3.7 months of supply represents the most balanced conditions seen for September in over five years. This has helped support some of the recent monthly gains in prices.

“THE RECENT RISE IN NEW LISTINGS, COMBINED WITH LOW LENDING RATES AND SOFTNESS IN PRICES, HAS HELPED SUPPORT SOME OF THE RECENT UPWARD TREND IN SALES – ANN-MARIE LURIE, CREB® CHIEF ECONOMIST

Total residential benchmark prices have trended up over the past three months, resulting in September prices that are similar to prices recorded at the same time last year.

Despite some of the recent improvements, the impact of COVID-19 is still present. Year-to-date sales remain nearly nine per cent below last year’s levels, while citywide prices are still over one per cent lower than last year. Considerable risk also weighs on the housing market due to economic uncertainty and a struggling labour market.


HOUSING MARKET FACTS

Detached

With significant gains in the $400,000 – $600,000 range, September sales are the highest they have been since 2014.

Improving sales and easing new listings resulted in further reductions in inventory levels and caused the months of supply to ease to balanced territory. Recent improvements in the supply/demand balance have supported some upward price movements. As of September, the benchmark price was nearly one per cent higher than last year.

However, the year-over-year gains have been driven by the more affordable end of the market, as prices remain well below last year’s levels in both the City Centre and West districts of the city.


Semi-Detached

Given some recent monthly gains in new listings, sales in this sector improved in September, but at a slower pace than both the detached and row sectors. This could be related to the significant pullback in inventory.

September inventory levels were nearly 21 per cent lower than last year, the largest percentage decline in inventory among all property types. This shift in supply, along with improving sales, has started to help reduce the oversupply in this sector and ease the downward pressure on prices.

September prices remain nearly two per cent lower than last year’s levels, but prices have started to improve in the South, South East and East districts of the city.


Row

Sales in this sector have continued to trend up for the past several months and September sales were significantly higher than last year’s levels.

While it was not enough to offset the pullback that occurred during the COVID-19 shutdown, row sales activity is four per cent lower than last year’s levels. The growth in sales could be related to the significant price adjustment that has occurred in this sector.

Prices in this sector have eased by seven per cent compared to last year and remain nearly 17 per cent below previous highs.


Apartment Condominium

All other sectors have seen some recent year-over-year gains in sales, but this sector continues to trend in the other direction. Year-to-date sales declined by 16 per cent, the largest decline among all property types.

At the same time, new listings continue to rise, which is causing further inventory gains. This is keeping the months of supply above seven months.

There have been some districts showing signs of price stabilization, but overall, year-to-date prices have eased by more than two per cent, amounting to a total adjustment from 2014 highs of over 18 per cent.


REGIONAL MARKET FACTS

Airdrie

For the fourth consecutive month, year-over-year sales improved. As a result, year-to-date sales for the city total 1,055 units, a nine per cent increase over the previous year.

While new listings did rise this month, the improvement in sales outpaced the gains in new listings, preventing any significant shift in monthly inventory levels.  However, inventory levels are over 20 per cent lower than last year’s levels. And the months of supply has fallen to levels not seen since 2015. While prices remain below previous highs, tighter market conditions over the past four months have supported several months of price growth and September price levels are nearly one per cent higher than last year. These price gains were enough to cause year-to-date levels to stabilize relative to last year.


Cochrane

A reduction in new listings limited sales growth in September compared to August. However, September sales remain higher than last year and contributed to a year-to-date gain of nearly nine per cent.

Rising sales and easing inventories have kept the months of supply below four months, the lowest level seen since 2014. Tighter market conditions have supported an upward trend in prices over the past three months. The recent price gains did translate to year-over-year gains in September, but were not enough to offset earlier pullbacks, as year-to-date prices remain nearly two per cent lower than last year’s levels.


Okotoks

September sales continued to improve from the low levels recorded earlier in the year and levels recorded last September.

However, recent improvements were not enough to offset earlier pullbacks. Sales remain three per cent lower than last year’s levels, but this could be related to reduced inventory in the market.

Reductions in supply relative to demand have caused the months of supply to decline to three months. The tighter market conditions have caused prices to trend up over the past four months. However, both September and year-to-date prices remain lower than previous year’s levels.

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Rate has been creeping up for about six years straight and now sits at 28.7

Calgary's office towers have been slowly losing tenants for several years, and vacancy now sits at nearly 30 per cent. (Submitted by Leslie Kramer)
 

Calgary's downtown office vacancy rate has crept up to a new high of nearly 30 per cent.

According to real estate brokerage company CBRE, downtown office vacancy rose from 27 per cent in the second quarter of this year to 28.7 per cent in the third.

Greg Kwong, the company's managing director in Calgary, said it's not how high the vacancy rate has climbed but the length of time it has been so high that is noteworthy.

"Typically, if we look at the last three or four recessions, whether they be oil based or the global financial crisis, those typically lasted anywhere from 18 months to three years," he said. "We are just finishing off our sixth year of high vacancy rates in Calgary."

The vacancy rate in Calgary's core has now risen from about 10 per cent at the end of 2014 to nearly 30 per cent today.

Kwong said there is no "one industry" that will be able to fill the towers emptied by the retraction in the oil and gas, and now COVID-19.

"In this type of environment, Alberta, specifically Calgary, has to be pulling on all the levers," he said. "And that's promoting the tech sector, converting office buildings, quite frankly demolishing some office buildings that are perhaps at the end of their useful life."

On the flip side, Kwong said, Calgary's industrial market is faring better.

He said as more people shop online, demand for more warehouse space continues to grow.

Kwong also expects to see more office space come onto the market as oil and gas companies begin to evaluate the prospects of potential mergers and acquisitions.

Tax implications

The downturn in the downtown affects Calgary's bottom line and creates a shortfall in municipal tax revenue.

The value of the core's non-residential properties fell by more than $12 billion in three years, sinking city tax revenues by $300 million.

Big drops in property assessments mean fewer tax dollars flowing from downtown office towers, but the city still has the same revenue demands.

That shortfall needs to be made up — and that's putting political heat on local councillors and creating concern for businesses outside the core now faced with picking up the slack. 

 
-CBC News 
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The showing activity across the Province has continued to taper off as we enter into the Fall months. This is a typical trend coming into the fourth quarter, however the activity remains to be much higher than the same time last year.  The showing activity across Alberta is still showing a 128% increase year over year.
 
The showing activity on CIR's listings also experienced a modest slow down in most price ranges, the largest drop being in the higher price points. Overall the showing activity remains relatively balanced, unlike the sales activity. Through September, CIR Realty has trended over 45% higher in transaction volume compared to September 2019. This is the fourth straight month that sales activity for CIR Realty has not only out performed the year previous, but also the industry itself.  
 
While we enter into what is anticipated to be slower months, it remains our responsibility to help educate clients to help them make the best decision based on their circumstances. There continues to be many moving parts in today's markets which we will address more in the monthly Real Estate Summar.
 
 
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When you’re shopping for a mortgage, what’s the most important thing? Most Canadians will say getting the lowest mortgage rate. While getting a low mortgage rate certainly matters, it’s important to recognize that there are other things to consider as well.

There’s a difference between getting the lowest mortgage rate and the lowest cost of borrowing. Getting the lowest mortgage rate is just that, the mortgage with the lowest rate. Whereas, getting the lowest cost of borrowing factors in other things like prepayments and penalties. In this week’s article, we’re going to talk about the latter, penalties.

When you sign up for a mortgage, probably the last thing on your mind is breaking it. But sometimes life happens and you’re forced to break it sooner than anticipated. It could be for many reasons: relocating for a job promotion, job loss, divorce, and the list goes on. If you didn’t take the time to ask about mortgage penalties when you first signed up for your mortgage, you could find yourself blindsided by a big penalty.

In this article, we’ll look at how mortgage penalties are calculated for variable-rate and fixed-rate mortgages. After reading this article, you’ll have a much better understanding of how mortgage penalties work and what to look for.


 
 

Variable Rate Mortgage Penalties

If you’re signed up for a variable (or adjustable) rate mortgage, the penalty is pretty simple. You’ll pay three months’ interest for breaking your mortgage early. This is the most favourable mortgage penalty calculation (besides paying no penalty at all of course). Whether you’re with one of the big banks or a monoline lender, your penalty will be three months’ interest.

For example, let’s say your mortgage rate is 2.49% percent and you have a $500,000 mortgage balance. In this case your mortgage penalty would be:

2.49% × $500,000 × (3 months/12 months) = $3,113

Pretty simply wouldn’t you say? Whether you break one month into your mortgage over four years, three months in, your mortgage penalty is the same.

Fixed Rate Mortgage Penalties

If you sign for a fixed rate mortgage like most Canadians, the mortgage penalty calculation is a little more complicated. You’ll pay the greater of three months’ interest or something called the “Interest Rate Differential” or IRD for short. If you’ve read stories in the media about Canadians paying huge mortgage penalties, the IRD is most likely the reason why.

Using the same numbers as above, even though your mortgage rate is only 2.49%, if you’re with one of the big banks whose posted rate is let’s 4.79%, that’s when it can really inflate your penalty.

Let’s say you have three years left on your mortgage and your lender’s three-year fixed mortgage rate is 2.25%. If we use the IRD, your mortgage penalty would be:

$500,000 × 36 months × 2.54% (difference between 4.79% and 2.25%)/12 months = $38,100

Because the IRD penalty calculation is greater than the three months’ interest calculation, you’d have to pay a penalty of almost $40k to break your mortgage early. I don’t know about you, but that’s a lot of dough!

The example we showed here is using one version of IRD known as Standard IRD which is based on the current posted rate for a similar comparable term. There are many other versions of IRD and penalty calculations. Some Lenders calculate their penalties on the posted rate at the time you got your mortgage, some deduct the discount you originally received of the posted rate, some require you to pay back the cash-back you originally received, some calculate penalties entirely differently, like 12 months interest or 3% of balance. The only true way to find your exactly penalty is asking your lender. 


The Bottom Line

It’s important to ask about mortgage penalties up front so you’re not forced to pay a penalty out of pocket like this later on.

If you want a fixed rate mortgage, but don’t want to get stuck paying a huge penalty out of pocket, you may consider taking out a fixed rate mortgage with a monoline lender instead of the big banks. Monoline lenders don’t have high posted rates like the big banks, so your mortgage penalty is likely to be a lot lower when breaking your mortgage with a monoline.

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If you’re a first-time homebuyer, many aspects of the purchase process can be confusing and stressful, including financing. While the mechanics of a mortgage are relatively simple, choosing the right mortgage product can be far from it, as many of the choices available to buyers are obscured by complex and unfamiliar terminology.

To help you cut through the jargon, here’s an alphabetical list of common mortgage terms and their definitions:


Amortization Period

The amount of time it will take to pay off your entire mortgage, usually ranging from 15-25 years (although some lenders offer 30-year amortization periods). A longer amortization period means lower monthly payments, but more interest paid over the duration of the mortgage. Meanwhile, a shorter amortization period will cut down on the amount of interest paid, but monthly payments will be higher.


Closed Mortgage

A mortgage that cannot be fully paid off before the end of the term without penalty. It often comes with strict rules about lump sum payments outside the regular payment schedule. These usually have lower interest rates than open mortgages.


Conventional Mortgage

A mortgage where the loan amount does not exceed 80 per cent of the property’s value (i.e., the down payment is 20 per cent of the purchase price or higher). These mortgages do not require mortgage insurance.


Down Payment

The amount of money a buyer must produce upfront to secure a mortgage. The minimum down payment for a home purchase in Canada is five per cent. A minimum down payment of 20 per cent is required for a conventional mortgage (one that does not require mortgage insurance).


Equity

A property’s market value minus the value of the outstanding mortgage loan on the property. Equity increases as a property’s value rises and the mortgage principal decreases. Once a mortgage is paid off in full, the homeowner has 100 per cent of the equity in their home.


Fixed Rate Mortgage

As the name lets on, this is a mortgage where the interest rate stays constant for the duration of the mortgage term, which generally ranges from six months to 10 years. They are beneficial for the risk averse, as well as anyone who wants their mortgage payments to remain constant. They are also a good option for anyone who thinks interest rates will increase before the end of their mortgage term. A five-year fixed mortgage is the most common mortgage type in Canada, especially among first-time homebuyers.


High-Ratio Mortgage

A mortgage where the loan amount exceeds 80 per cent of the property’s value (i.e., the down payment is less than 20 per cent of the purchase price). This type of mortgage requires mortgage insurance, which is commonly provided by Canada Mortgage and Housing Corp. (CMHC).


Home Equity Line of Credit

A home equity line of credit (HELOC) can serve as the only loan used to finance a home purchase or as a second mortgage. In practice, they function more like a personal line of credit than a traditional mortgage product. However, homeowners must have at least 35 per cent of the equity in their home to receive a HELOC.


Interest

The cost of borrowing money. It is paid to the lender at a previously agreed upon rate on top of the principal mortgage amount.


Interest Rate

The rate at which you pay interest. Lenders generally adjust their interest rates in response to shifts in the Bank of Canada’s overnight rate (https://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/).


Maturity Date

The date that your mortgage term ends. When your term ends, you can either repay the remaining balance of your mortgage or renegotiate a new term at current interest rates.


Mortgage Insurance

In Canada, mortgage default insurance is required for all high-ratio mortgages (those with a down payment of less than 20 per cent). Because these mortgages are higher risk than their conventional counterparts, insurance protects the lender if the borrower defaults.


Open Mortgage

A mortgage with no prepayment restrictions. It can be fully paid off at any time without penalty. These tend to have higher interest rates than closed mortgages, but they can be a good choice for homeowners who plan to sell soon.


Portability

A type of mortgage that allows the homeowner to transfer their current mortgage conditions from one home to the next.


Pre-approval

A mortgage pre-approval guarantees a specific loan amount to a buyer before they have even begun looking at homes. Although not necessary, a pre-approval can hasten the purchase process once an offer is submitted and accepted.


Prepayment

When a homeowner pays off their mortgage in full before the maturity date. Many mortgage types levy penalties against homeowners for prepayment – usually, three months of interest or the interest rate differential.


Principal

The full amount of a mortgage loan, not including interest.


Refinancing

Mortgage refinancing involves securing a new loan that is then used to pay off an existing loan. This is often done to switch lenders and secure a lower interest rate. It can also be done as a way of tapping into home equity to pay off higher-interest debt sources, such as credit cards.


Term

The duration of the mortgage agreement between borrower and lender. Mortgage terms generally range from six months to 10 years. During the term, payments remain fixed, while interest rates may or may not follow suit, depending on whether the homeowner has chosen a fixed or variable rate.


Variable Rate Mortgage

A mortgage where the payments remain constant, but the interest rate will change based on market conditions. As a result, when interest rates rise, a larger portion of the payment will be applied to interest. However, when interest rates fall, a larger portion of the payment will be applied to the principal.



- Tyler Difley

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The showing activity across the Province climbed slightly week over week. The showing activity continues to be well above this time period last year, currently sitting at 130.6% more showings compared to last year.
 
The showing activity for CIR's listings also experienced a slight uptick week over week, with 1,995 showings. The majority of the activity remains to be in the mid points of the markets with a slight decline in the lower price points. The showing activity of weeks passed continues to translate into sales as CIR's transactions are up 31.4% in the first two weeks of the month compared to the first two weeks of September 2019.
 
The property ladder has been in full motion over the past three and a half months. With the uptick in the lower price points, it has freed up buyers that had homes they needed to sell to make their next purchase. We have seen the sales volume climb upwards on the price scale as a result.  We do anticipate to see slower activity as we enter into the late Fall, and early Winter months as we do each year but as of right now, the lower inventory combined with heightened sales continues to help balance many markets.
 
-CIR Realty 
 
 
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Calgarians have had more than their share of weather challenges this summer, including several nasty bouts of hail. Thankfully, a little preparation can help your home’s roof emerge unscathed the next time golf-ball-sized ice chunks starts falling from the sky.

“Hail eats standard laminate architectural shingles like sugar eats kids’ teeth,” said Anthony Babin, owner of A.B’s Roofing & Contracting. “The best protection is found in metal, rubber and tile roofs, followed by those with Class 3 or Class 4 high-impact-resistant shingles.”

Of course, protection comes at a cost. While standard shingles will run a homeowner around $2.30 – $3.50 per square foot, depending on the contractor, impact-resistant shingles range from $3.50 – $5.00 per square foot. Rubber, metal and tile come in at $5.00 – $8.00 per square foot.

Fortunately, most roofs are built to last, so that upfront cost can be a solid investment.

“The average lifespan for standard architectural shingles is 15 – 25 years, and the majority come with a limited lifetime warranty,” said Babin. “While warranties for other material like rubber, metal and tile differ among manufacturers, they generally range from 25 – 50 years.”

“HAIL EATS STANDARD LAMINATE ARCHITECTURAL SHINGLES LIKE SUGAR EATS KIDS’ TEETH.” – ANTHONY BABIN, A.B’S ROOFING & CONTRACTING

The choice of material will also impact ease of installation. All asphalt shingles are fairly easy to install, as is rubber, while metal can be more technical.

“With asphalt, you put underlay on and install the shingles right over top, but metal requires a different underlay and strapping on the roof deck,” said Babin “This allows you to elevate the roof and still have the ability for air to transfer through the space, avoiding issues with mould or condensation. Tile roofs can equal metal in terms of complexity, depending on the design.”

Apart from choosing the right roofing material, the key to proper protection during the next hailstorm comes down to general maintenance.

“So many homes are way past due for maintenance, so the biggest thing I stress is being proactive with your property,” said Babin. “We see the most problems with older homes, and often with rental properties where the owner may be trying to squeeze every dollar they can from the property without doing maintenance.”

Homeowners are encouraged to regularly inspect their property and have a roofer or contractor with verified credentials examine their roof if they believe there might be an issue.

“Spring is a good time to look at your roof, as it has just gone through the freeze/thaw cycle that can cause a lot of damage to shingles.”

As with any house-related project, owners should do their homework before hiring a professional.

“Check references on a contractor and ask to see their portfolio, then check that they have general liability insurance and WCB coverage,” said Babin. “At the end of the day, this will ensure that the work is done properly and at a reasonable price.”

-CREB Now

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The trademarks MLS®, Multiple Listing Service® and the associated logos are owned by The Canadian Real Estate Association (CREA) and identify the quality of services provided by real estate professionals who are members of CREA. Used under license.
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