Posts from May 2015

The Canada Mortgage and Housing Corporation (CMHC) has recently reported on updated results of their House Price Analysis and Assessment (HPAA) framework. According the CMHC, the analyses attempts to “detect the presence of problematic conditions in Canadian housing markets”. These conditions can range from factors like overbuilding, and overvaluation, to acceleration of home prices, and overheating. The article backgrounder found HERE explains in detail the rubric used in the study.

The CMHC article explains further:

“The HPAA is a comprehensive framework that is designed to assess housing market conditions by taking into consideration the economic, financial and demographic drivers of housing markets. The use of multiple indicators of housing conditions, which incorporate various data sources and prices measures, provides a robust picture of overall housing market conditions.”

The study, which was originally published in November of 2014, reviews the market on both a national level overall, as well as focusing on the major influential centres of Vancouver, Calgary, Edmonton, Toronto, Ottawa, Montreal, Québec and Halifax.

The HPAA considers the incidence, intensity and persistence of these four main risk factors that may provide an early indication of the potential for a sharp decline in house prices.

The CMHC concluded in the original report that there was a “modest” overvaluation on a national scale, with that condition persisting in some census metropolitan areas more than others. Edmonton and Calgary were not present amongst the CMA’s listed for overvaluation, showed no indication of overheating, and presented no risk of acceleration.

Late this spring the framework was revisited, as reported by the EREB, to provide an update on the landscape of the Canadian real estate market. Edmonton again fared surprisingly well in the face of a booming market, risk assessments being categorized as “low” overall. Calgary has apparently been showing indicators of overvaluation, however the CMHC goes on to explain that the Alberta’s economic boom and bust cycles are tending to naturally govern problematic factors:

“MLS^® sales have declined in recent months in [Edmonton and Calgary], pushing the sales-to-new listings ratio to buyers’ market levels, reflecting the impact of lower oil prices on housing demand in these oil-producing centres. This is expected to place downward pressure on house price growth, which could lessen the current risk of overvaluation in Calgary.”

The EREB also indicated that despite market growth in April, with 1597 sales, the city is showing a slight overall decline in residential sales. REALTORS® association of Edmonton President Geneva Tetreault comments on the current market:

“Sales are definitely down this year, but the sales numbers are still higher than 2011. It is unlikely that anyone would call 2011 a bad year for housing sales. It’s just in comparison to last year, we are not quite as busy. Prices are stabilizing and inventory is robust. We will continue to see increases in sales as we move into the selling season”

The CMHC report would indicate that presently, Edmonton one of the few Canadian CMA’s not presenting market risk factors.  CLICK HERE if you are interested in searching for a property or connecting with a Re/Max agent.

Image Credit: Calgary Herald

Just over a month ago the provincial budget was released and now that citizens have finally had the time to sift through the comprehensive report, there is a new awareness of how it will affect personal financial choices. From the perspective of the real estate market, the largest impact will be seen in land title fee increases.

This will affect buyers most directly in terms of closing costs. Additionally, homeowners looking to refinance will also be hit by these additional fees. As explained by DBB LLP land title fees are part of the larger category of disbursement fees, as distinct from the actual legal fees. Disbursement fees are the hard costs incurred by the law firm as result of the real estate transaction. This makes the government fee less than immediately apparent, and a careful review of cost breakdowns may be necessary. Obtaining and transferring land titles is an integral part of a real estate deal, as well as legally necessary, therefore there is no means of avoiding this new government incurred expense.

Though the fee hike is not immediate, it will come into effect on documents registered on or after July 1, 2015, approximately 90 days after the budget announcement which, in real estate terms, will come up quite quickly.

It is important to note these dates are not impacted by possession date, only registration date is a factor.

As of July 15th the variable fee will increase from $1.00 to $6.00 while the flat fee (for land title and mortgage registration documents) will increase to $75.00 from a previous $50.00. These numbers appear to be quite negligible, especially as an additional cost on a property deal worth hundreds of thousands of dollars. However when applying these increases to examples, the additional costs become immediately apparent:

A summary of cost impact courtesy of DBB LLP Law.

For potential buyers, or owners considering refinancing, this fee hike could be seen as a motivator to move quickly on a decision as there is still ample time to close a deal before the deadline arrives. However, due to increased activity in the summer months, as much time as possible is necessary for lawyers and the land title office to complete registrations within the time frame.

CLICK HERE to connect with a Real Estate agent who can answer all your home-buying questions.