A Mortgagenomics perspective into Calgary and Vancouver

Posted on April 14, 2024April 15, 2024 by markogel@gmail.com

(April 13, 2024)

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It’s that time of the year again – the real estate spring/summer market is upon us!

Is your market hot?

The answer to this question will vary across cities in Canada, and there will be further variance within the cities spanning their regions and communities. It is crucial to align yourself with an experienced realtor who specializes in your area. Market conditions have been deceiving and complex in the past few years, and many broad-based real estate economists have found themselves revising their predictions. Stay agile and well-informed by relying on a reliable source of intel. If you require a reference in your area, feel free to reach out, and I will likely have an established contact in your neighbourhood whom I can introduce you to. Meanwhile, here are some statistics on the markets I primarily deal with: Vancouver and Calgary.

VANCOUVER Real Estate Market: (as of March 2024)

The average price of a home in the GVA (Greater Vancouver area) stood at $1,318,687, marking a 4.1% increase annually (close to the benchmark of $1,196,800). The current benchmark price is 29% higher than in 2020 but 5.2% lower than the all-time high of $1,262,600. Essentially, Vancouver is nearing an all-time high, despite its sluggish market conditions and persistently high borrowing costs. The ongoing scarcity of supply and steady population growth will likely maintain prices at or near current levels. Unlike Calgary, Vancouver doesn’t develop new communities; instead, it repurposes older properties into luxurious $2.3M starter homes (yes, I’m serious!). Vancouver’s approach to affordability lacks some crucial variables. Although a new province-wide blanket zoning policy is set to take effect in the next couple of years, substantial market corrections shouldn’t be expected. While supply will inevitably increase, it won’t do so to an extent that significantly affects affordability. Therefore, success in Vancouver’s market hinges on staying adaptable and aligning yourself with industry experts who can provide high-quality information (such as real estate agents and mortgage brokers).

Other notable points about BC:

The province imposes a Property Transfer Tax (PTT), which is due upon completion of a real estate purchase. As of April 1, 2024, the ceiling exemption for first-time homebuyers has been raised to above $500,000. This means that first-time homebuyers can now qualify for a partial PTT exemption on homes valued up to $835,000, with a maximum rebate of $8,000. Previously, the exemption ceiling was $525,000. You can download my award-winning Mortgage Mobile App and utilize the Property Transfer Tax calculator to determine how much PTT you would pay on your property purchase in your area.

If you are a temporary resident or work permit holder, be mindful of the 20% Foreign Buyer Tax and the Prohibition on the Purchase of Residential Property by Non-Canadians Act. Click Here to be redirected to a previous blog post for more information on these two regulations.

CALGARY Real Estate Market: (as of March 2024)

Calgary seems to be on everyone’s radar these days, with Ontarians and British Columbians notably considering the move to Canada’s crown jewel of affordability. Sales in Calgary have surged by 9.5% since last year, and the benchmark price has risen by 10.9% to $597,000 for an average-priced home. Even if you’re experiencing FOMO (fear of missing out), there’s still ample affordable upside from $597,000. If you think you’ve missed out after hearing about many people moving to Calgary, think again (especially if you’re from Ontario or BC, where the move to Calgary offers significant relief in terms of price points)! For roughly $700,000, you can choose between a two-bedroom condo in Vancouver or a 3-bedroom home with an attached double garage and a large yard in Calgary (you can likely purchase the latter for less). What’s not to love about Calgary? It boasts the youngest working demographic in Canada, the sunniest days of any city in Canada, and the unique chinook phenomenon, an anti-winter event. Calgary is continuously expanding and seemingly always constructing new communities en masse. It’s a well-designed city, scalable for increasing population and development (such as the ring road).

Notably, the province of Alberta does not impose a Property Transfer Tax, resulting in significant savings when purchasing a home.

Additionally, the Foreign Buyer Tax doesn’t apply in Alberta. However, the Prohibition on the Purchase of Residential Property by Non-Canadians Act, a federally legislated policy, does apply.

Interest Rates Overview:

Currently, variable-rate mortgages are priced as high as 1.5% higher than fixed rates, and this spread isn’t expected to narrow until June or July. I don’t subscribe to the “higher-for-longer” argument; I believe the Prime rate will begin its descent in June and continue throughout the year. If I were the Bank of Canada, I would also withhold any indication of rate reductions until the actual announcement day. Since the rate hike commenced during COVID, consumer sentiment has been heavily influenced by post-announcement messaging from the Bank of Canada Governor rather than the scheduled announcement itself. The post-announcement press conference holds significant weight as it shapes and influences Canadians’ behavior leading up to the next scheduled announcement. Therefore, expect the hawkish messaging to persist, with the Bank of Canada avoiding overly optimistic post-announcement conferences (hinting at lower rates ahead) for fear of reversing any progress made in preceding months with inflation. The most recent announcement on April 10 has served its purpose; the Bank of Canada has left the overnight rate unchanged, avoiding any unwanted momentum in the spring housing market. However, Governor Macklem hinted at future adjustments, leading many economists and policymakers to anticipate a 0.25% rate cut in June. Not long ago, homebuyers favored variable-rate mortgages due to their qualification advantages; however, today, the opposite holds true. The default qualification method is now fixed-rate mortgages, as they offer higher qualification amounts. Variable rates currently range from 6.20% to 6.40%, while fixed rates can be as low as 4.89%. The end game with interest rates? I believe fixed rates are establishing a new standard as they hover in the high 4’s. Fixed rates are likely to stabilize in this range for the foreseeable future until the spread with variable rates diminishes more significantly. However, due to the intricate nature of interest rate pricing, you can still expect to find numerous rates in the low to mid 5’s. To qualify for special discounted rates, your mortgage typically needs to be large (over $500k), insured (less than a 20% down payment), or within 45 days of closing/completion.

Want to discuss further? Call or text Marko Gelo right now at 604-800-9593, or Click Here to schedule a free, no-obligation phone call with Marko. You can also call Marko on WhatsApp.

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Contact Marko, he’s a Mortgage Broker!

604-800-9593 cell/text | Vancouver (Click Here to schedule a call with Marko!)

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PODCAST: Calgary Real Estate – Buyer, Seller or Balanced Market…and Bridge Financing

Posted on February 24, 2018March 1, 2018 by markogel@gmail.com

Single family homes in Calgary from the $300’s to the $800’s…Calgary real estate has it all

Subscribe to Mortgagenomics Canada Podcast via Apple Podcasts, Stitcher, or Google Play

Calgary still packs some good punch

head offices, quality of life, legendary entrepreneurial spirit

February 23, 2018
(Podcast Transcripts)

<Music Intro>“Cheap Money”…performed by MG

Today we’re going to point the spotlight on Calgary’s real estate market…we’re going to talk with, Realtor, John Darel of Maxwell Canyon Creek in Calgary and cover all 4 sections (north, south, west, east) of the city in terms of residential real estate statistics and trends.

It appears that any upward momentum that may have resulted from Alberta’s continuing recovery could very well be negated by the now infamous mortgage rule changes that were proposed on the first day of 2018…not to mention the ongoing volatility with anything oil-related.

Calgary may currently not be the powerhouse it once was, but STILL, it CERTAINLY pulls some substantial weight:

124 head offices still firmly entrenched in Calgary’s downtown core
second highest concentration of small businesses in Canada
according to The Economist Intelligence Unit, Calgary has consistently ranked in the TOP 5 most livable cities in the world since 2009
the most rapid transit service per million residents of any major Canadian city
branch office representation of nearly every major bank and investment bank in the world
and despite all the decade long recession-like environment, Calgary and Edmonton have still maintained the highest average weekly earnings of all Canadians at just over $1100

So, in many ways it’s definitely an economic gauge or precursor for the rest of the country…absolutely a market worth following and knowing about.

So let’s get right to it and hear what John Darel has to say…

Abbreviated Transcripts for John Darel interview:

Marko:
From what I’ve read recently in an article, it appears that Calgary South is leading the way for the month of January (2018)

John:
That’s correct, Calgary South topped all sections of the city with 113 single family unit sales, of which the community of Evergreen lead all others with 9 sales…so anyone living in Evergreen with intentions to sell, now is a good time aa there are a good number of buyers looking to purchase. The benchmark price for Calgary South $471,500. Lake Boavista Downs was the area (in Calgary South) with the greatest price appreciation for the month of January (7% increase to benchmark price, year over year).

Marko:
The highest transaction segment came from the prices ranging in $400k to $500k…the sweet spot of Calgary?

John:
Yes, extremely active price point in Calgary, and typical, too. As of the last 30 days there have been 206 sales and 578 active listings…this puts it on the low end of a balanced market (that’s about 2.8 months of supply) and potentially bumping in to a potential sellers market.

Marko:
With the anticipation leading up to the mortgage stress test rules on Jan 1, 2018, has January been more abundant than years past? Have you found that buyers rushed in to the market because of the new rules?

John:
Not really. We are basically on pace with 2017 numbers (January 2017)…2 more single family home sales during the same time last year and a nominal price increase of just over $700, so basically 0% change (in single family homes). But definitely an increased rate of activity and confidence to end 2017…we will probably see these number later on in the year when deals complete.

Marko:
Let’s move westward were the benchmark price is at $727,200. How has West Calgary been performing?

John:
The west Calgary region is a confident and consistent market. Aspen leads the region with price appreciation (4%) and highest benchmark price ($977,000). Also, a very positive indicator when you look back at how hard this upper market was hit during the down turn.

Marko:
And finally, what the vibe with East Calgary?

John:
Generally speaking, East Calgary is the most reasonably priced area. It lead the way with additions to the market for January with 39 additions to the market (18% increase year over year)….with West Calgary falling in a close second. Also hoping for the absorption rate to increase, as well.

Marko:
So 2018 for Calgary…expect much of the same as we saw in 2017?

John:
Ya, so year over year…no big surprises. Same amount of transactions, prices are similar…areas like any year…different factors that drive different things in certain areas (i.e. Altadore seems to maintain a very high level of interest and luxury properties in some areas selling less than 30 days)

Marko:
It’ll be interesting to see how things shake out for the rest of the year…let’s connect again, soon!

And now for the Mortgage Minute:

Bridge Financing is a common adder to an existing mortgage approval, basically, it’s an extended feature of your mortgage that is temporarily in effect to finance the equity trapped in your existing residence because the closing date is scheduled to occur AFTER the closing date of your new property. A bridge loan application always involves 2 properties; the one you currently reside in but not yet moved out of and the one you have purchased but not yet moved in to.

For example, let’s say your closing date for the purchase of your new home is 15 days before the closing date for the sale of your old home. Because the equity from your old home is still not available as it hasn’t officially closed, a bridge loan provides you with a short term loan to meet this shortfall. The bridge loan funds are exclusively for the down payment of your mortgage contract, thus, enabling the rest of your mortgage principle to fund. Once the sale of your old home is complete the bridge loan is paid off from the proceeds of the sale.

Bridge loans will typically extend for a period of 90 days and perhaps longer depending with the lender. Interest on the bridge loan is charged daily with an interest only payment (typically in the range of Prime +2 to as high as Prime +6).

Ending Note and Credits:

Alright, well that’s a wrap… I hope you got value out of todays episode. (and by the way, if you wanted to reach out to John Darel of Maxwell Canyon Creek in Calgary, for all your real estate needs, you can reach him at 403-861-2733 or visit his website at www.johndarelrealty.ca). And of course, feel free to reach out to me if you’d like to discuss anything we talked about in greater detail…or any other mortgage related matter, you can find me at markogelo.com or follow me on Facebook by searching Mortgagenomics Canada Podcast. Also, please don’t hesitate to share and tell your friends about Mortgagenomics Canada…the more listeners the better.
Thanks again for your time, talk to you later.

<Music Outro> “DJ Super Agent”…performed by Sleeping Lorry

PODCAST – Are Calgary millennials giving up on home ownership?

Posted on February 6, 2018March 1, 2018 by markogel@gmail.com

Young Calgarians and home ownership

A recent CBC news article interviews 3 young Calgarians and their thoughts on home ownership. All three agree that the benefits of renting a home outweigh owning one. Host, Marko Gelo, discusses some of the advantages of home ownership with John Darel (Calgary Realtor, Maxwell Realty).

Also, with all the recent mortgage changes…there’s been little talk about the impact on qualifying for investment rental mortgages. If would-be buyers get squeezed out of the market, then perhaps this might open the door for some to consider purchasing a rental investment property in anticipation of affluent tenants.