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A5 FREE dec 18 to dec 24 2015 issue 05-49 editorial 403-781-1324 advertising 403-263-4940 crebnow@creb.ca
real estate news from industry experts
MONTREAL
CANADA
OTTAWA
VANCOUVER
SASKATOON
REGINA
WINN IPEG
CALGARY
VICTORIA
8%
EDMONTON
TORONTO
SHARE OF HOME SALES THAT WILL BE IMPACTED BY ...
HAMILTON
T U O FALL
Mortgage changes expected to slow housing demand in Calgary
10%
6%
4%
2%
0% Source: MLS®, CREA, Brookfield, CIBC
managing editor
L
ocal housing industry experts say a change that governs the amount buyers are required to put down when purchasing a home will significantly impact Calgary’s already sluggish market. Effective Feb. 15, 2016, the change announced by the federal government in early December will raise the minimum down payment for new insured mortgages from five to 10 per cent on the portion of the house price above $500,000. “The intent of [the change] is to pull back demand, and they’re slowing demand in a market where we’re already seeing demand slow,” said
CREB® chief economist Ann-Marie Lurie, noting resale residential sales in Calgary have already dropped nearly 20 per cent from the 10-year average. “That’s the challenge. It’s something that was blanketed to really target markets like Vancouver and Toronto, but there’s the unintended consequence in Calgary where we’re already facing slower demand. “Is it going to blow up the market? No, it’s just going to further pull back demand at a time when we already have reduced demand. We’re already facing challenges in the higher end of the market right now, and you’re causing further challenges.” The five per cent minimum down payment for properties up to $500,000 remains unchanged. Those purchasing properties priced
MORTGAGES A3
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A3
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A4
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A5
Buyer’s agreements
1995
CREB® STAFF
WEEKLY FEED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A6
1263
1217
1421
1448
1643
C
NOV13 DEC13 JAN14 FEB14 MAR14 APR14 MAY14 JUN14 JUL14 AUG14 SEP14 OCT14 NOV14 DEC14 JAN15 FEB15 MAR15 APR15 MAY15 JUN15 JUL15 AUG15 SEP15 OCT15 NOV15
880
1082
1172
2184
2190 1782
1779
1957
2145
2146
2263
2328
2664
2539
1850
2481
prices are already slipping, so it doesn’t end up being that well targeted in the case of Calgary.” Through the first 11 months of 2015, Calgary’s detached benchmark price was $514,536 with 30 per cent of yearto-date resale activity occurring in the $500,000-$999,999 range. A recent report released by Mortgage Professionals Canada showed the amount put down by first-time buyers remained nearly unchanged since 1990 at 21 per cent. The same report showed the time spent saving for that same down payment had increased from 53 to 93 weeks in the same span – time that may increase as a result of the new federal regulations.
Mortgage down payments
1439
1724
more difficult for them to upgrade.” Calgary’s housing market is at further risk due to its high proportion of high-ratio mortgages, which are defined as those with down payments of less than 20 per cent. A recent CIBC Economics report revealed nearly 10 per cent of new homes in the city priced between $500,000 and $1 million were purchased with high-ratio mortgage, twice the percentage seen in Toronto (five per cent) and four times Vancouver’s 2.5 per cent. “It’s certainly not the vast majority of houses, but to the extent that it puts a downward push on the market, Calgary is one of the cities that would be affected,” said Avery Shenfeld, managing director and chief economist for CIBC Economics. “The irony being that Calgary house
MAYOR NENSHI’S CONTENTS COMMUNITY NEWS BRIEFS RESILIENCE FUND FIVE THINGS APPROVED INDUSTRY
MLS® TOTAL SALES* NOV ‘13 – NOV ‘15
2945
CITY OF CALGARY
$1 million or more will also continue to require a minimum down payment of 20 per cent. Because the new rule will largely impact the detached sector, Lurie believes the change is likely to be felt most by move-up buyers. Based on Calgary’s detached benchmark price, the average first-time buyer would require an additional $727 under the new rule. “There are already enough challenges as it is, so what will happen is that because of this – especially in a market like we already have – people who’ve purchased…it’s going to be more difficult for them to upgrade,” she said. “So it’s really the upgrading market. Unless they have a sufficient amount of equity in their homes, it’s going to be
ouncil has approved a $30-million fund that will see a pricing freeze to many City services, including transit fares, park and recreation fees and pet services. Approved at a busy meeting that also saw several other major developments, council approved transferring $30 million from the estimated 2015 budget surplus to a newly created community economic resiliency fund within the budget savings account.
*All statistics based on monthly data compiled by CREB® via MLS® activity. Includes detached, attached and apartment.
CALGARY & AREA LAND FOR SALE
TOWN OF CHESTERMERE (Adjacent to Kinniburgh)
• 13.5 Acres in East Calgary Belvedere ASP beside East Hills Retail (Walmart) and fronting Stoney Trail (84th Street and 9th Avenue SW). $6.1 Million
• MDP proposed Retail, Single and Multi-Family. Technical data is complete. $57,000 per Acre 53 Acres $3.1 Million 140 Acres $8.05 Million 160 Acres $9.2 Million
DEBORAH HARRISON . . . . . . . . . . . . . . . . . . . A7 Holiday decorating
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