For those of you who continue to keep a keen interest in Canada’s real estate market, you’ll want to keep an eye out for the Canadian Real Estate Association’s latest stats for the month of November – due out shortly.

That’s because two of the country’s largest markets appear to have had recent record increases. And that seems to be affecting the collective bottom-line when it comes to Canadian real estate prices.

According to a recent article in the Financial Post, the Greater Vancouver Real Estate Board (GVREB) is reporting a surge in sales activity of more than 252% (yes you read that right), over November of 2008 . Meanwhile, the Toronto Real Estate Board (TREB) is also boasting its “best November on record.”

I like this article because while it points out these eyebrow raising stats, it also brings us back down to earth. Why you ask? Because it mentions that although the average sale price in Canada, on the whole, is up 20% from October of a year ago – that number tends to be skewed by two usual suspects: the Greater Vancouver and Greater Toronto markets.

And Benjamin Tal, senior economist for CIBC World Markets is quick to point out that yes, this is a tremendous increase (especially given what we’ve gone through, nationally, over the last 13+ months) BUT it is also a result of a comparison with a, quote, “dead market” last year.

Also, the tail-end of the article includes some input from the Canadian Association of Accredited Mortgage Professionals (CAAMP), suggesting despite the lingering low-rates and overall real estate rebound, “in the past 12 months, only 20% of consumers opted for a variable-rate product but the overall numbers show 27% of Canadians still have mortgage tied to prime. “

As usual, time will tell. What do you think? Send me your comments

In case you missed the Calgary Herald’s recent article, which sheds light on the state of our city’s real estate market, let me give you a quick rundown on where we’re at:

Take a peek at the latest stats for November ‘09, from the Calgary Real Estate Board (CREB), and you’ll see the average, single-family, home price is up again. Sitting at just over $464,000, that average price is up 7% over this time last year. Now that’s pretty remarkable when you consider some economists, and even the CMHC, originally predicted we likely wouldn’t see this type of growth or recovery until mid 2010 at the earliest.

The stats also show single-family sales, in the metro Calgary area, are up approximately 63% over a year ago – with nearly 1100 units changing-hands last month. And condo sales rose nearly 80%, over last year, with just over 500 units sold, and an average price of more than $294,000.

Once again I’m not surprised, considering the cost of borrowing continues to remain at record-low levels and the feds seem to have reiterated their intentions to remain status-quo on the current Bank of Canada rate. And, as mentioned in several of my previous blog entries, steadily decreasing inventory (especially over the past few months) has fuelled a rise in the MLS single-family average sale price for the 4th consecutive month in Calgary. And the condo market is similar – riding an average MLS sale price increase for the 3rd month in a row.

The article also mentions Canada’s average existing home price could rise nearly 9% – 10%, next year, with actual sales volume also climbing nearly 3% as forecast in a recent report by TD Financial Group Economist Pascal Gauthier. But Gauthier also warns this trend likely won’t last beyond Q3 of 2010.

Interestingly enough, these numbers come on the heels of the latest federal report indicating Canada’s economic sector actually grew by nearly 0.5% in the last quarter of 2009, despite firm assertions our economy still has quite a ways to go, when it comes to what experts consider a ‘full-blown’ recovery.

So the real estate market, especially in Calgary, seems to be recovering quite quickly. Should we be surprised? Well yes and no. I say yes because at this time last year, there were a lot of anxious and apprehensive buyers, sellers, realtors and brokers. And even the optimistic ones weren’t sure we’d recover this soon. And on the ‘no’ side, I go back to the simple facts that we have significantly reduced inventory levels (compared with last year) and continued low interest rates, which is what ultimately got so many buyers to finally ‘get off the fence’ and make their move.

Of course this still hasn’t quieted the normal doomsayers like Garth Turner, and his blog dogs, who still think we are headed for a catastrophic real estate crash.  Even in markets like Vancouver and Toronto, where admittedly there is more surprise in how their markets are performing than people thinking they saw this coming, the simple fact remains that the run-up in prices this year brings us largely back to levels we saw pre-2008 crash.

This is explainable. We saw increased demand from low interest rates, and pent-up demand, coupled with low supply from sellers who were scared of their own shadow during the recession and the naturally occurring “herd effect”.   The herd effect is also going to temper the market as sellers will feel in 2010 they can ‘come back to the party’ just as interest rates climb moderately which, coupled with satisfied pent-up demand, will ultimately cool demand.  This moderate increase in supply at the same time as moderate decrease in demand will allow the market to be healthy and see a moderate increase in average price NOT a crash in ANY way shape or form. Enough said.

Are you surprised by the latest stats? If so, drop me a line.

There’s a comedic line that goes, “it’s like deja-vu, all over again.” And maybe that’s appropriate as we continue to watch, not only Calgary’s housing market, but also the national real estate market as a whole.

Here we are a little more than a year after local and national markets each took their respective nosedives, and in most of these same markets, we’ve seen a return to pre-October 2008 values, if not growth (in some cases record growth) above and beyond previous levels.

In fact, a recent Scotiabank report is suggesting Canada may once again be on the verge of another housing bubble. Now, at the time I composed this article, I went online to Scotiabank.ca and searched through their latest media releases and the link for this latest report was yet to be published. But according to a recent CBC write-up , Scotia’s economic experts say the signs are pointing towards a housing bubble of national proportions.

One statistic that jumps out for me is the report’s claim that Canadian real estate prices have jumped an average of 86% over the last decade. This is based on comparing current and past prices but it’s still an impressive number. Housing prices seem to have ‘weathered the storm’ and remain stronger than ever. And Scotiabank economists seem to think this will be how things stay for at least several years to come.

The report says Toronto and Vancouver have helped lead the way when it comes to this overall real estate boom. I’m inclined to think Calgary, Edmonton, Victoria and Ottawa can’t be too far behind either, since all 5 of these larger centres have seen prices rise significantly, and the average and median price (especially in Calgary, Toronto, Vancouver) return to or surpass some 2007 & 2008 levels.

The article is quick to remind us the Bank of Canada (BOC) seems to be holding steadfast to its pledge to keep interest rates the same until at least Q3 of 2010. And a quote from the Scotia report says, “low interest rates are driving healthy affordability right now, but this effect will wane in the next two to four years.”

On a micro-scale, I’ve said, since September of ‘08, that if Calgary’s real-estate supply remains the same or lowers (this means that we don’t suddenly get an influx of new listings on the market) we’d see another rise in average and median prices. Low and behold, that’s been the case over the last year – and it’s also the case on the national level. Supply of homes on the market seems to be limited and that’s creating increased demand for what’s available – thus inflating real estate prices as well.

Also, as the article mentions, and something I’ve talked about before, innovations in the mortgage market, adapting to the economic conditions of the time, have brought more buyers into the market – especially in the last 5 years. Apparently the Scotia report outlines 18% of Canadian mortgages are amortized for periods of longer than 25 years. 10% are amortized for over 35 to 40 years.

And the report seems to suggest we won’t see a slump in values or this ‘real estate bubble,’ as it were, anytime soon. It seems to show that, if anything, we’ve learned from the mistakes of our counterpart to the south, and the U.S. subprime crisis which helped drive one of the worst economic recessions in history, will not be associated with any sort of risk or ‘bursting of the bubble’ in the future.

Does this surprise you? What do you think? Send me your comments

I remember predicting, awhile ago, that if inventory levels continued to remain low, and buyers and sellers finally decided to harness the courage to ‘get off the fence,’ we’d see Calgary’s real estate market recover to one of a more balanced nature.

Sure, that might seem like an obvious forecast, in theory. And yes, some of you would argue Calgary’s housing market has basically been balanced since April or May of this year. But it’s interesting to see, now, the experts are using the city’s recent real estate numbers to show a return to levels quite similar to what we experienced before the sharp decline starting in Q4 of 2008.

According to the latest stats from the Calgary Real Estate Board (CREB) and an article from the Calgary Herald, sales and prices here have definitely recovered. CREB points to October’s numbers as strong evidence the Calgary real estate market has turned a corner.

For instance, the average, single-family sale-price, for October of 2009, is just under $462,500 – that’s up almost 10% over this time last year and up roughly 1% from September. It’s also, according to the Herald, the highest on record and more than $10,000 higher than October of 2007, when the housing market was still booming.

The CREB numbers also demonstrate both single-family and condominium sales are each up more than 50% over October of 2008, with 1285 single-family homes sold and 601 condo-units changing hands, respectively.

So is this a surprise? Well yes and no. Very few people here, including the top realtors, industry analysts, and market experts predicted the Calgary market would seemingly bounce-back this quickly. In fact, rewind back to last December and most of these experts were feeling grim about the near future.

Now, here we are a year later, and the combination of mortgage affordability, low-rates, more affordable carrying costs and a flood of buyers into the market, and we’re essentially back to pre-recession levels in the Calgary market.

And as I’ve pointed out before – for the last 7-8 months, if anything, we’ve seen inventory levels drop and remain low, while demand has increased. And as this continues, that’s what’s driving prices back up. But it’s also important to point out (and the Herald article doesn’t adress this) that most of the increase in sales activity in Calgary is happening in the $200,000 – $500,000 range, and also, interestingly, in the $1,000,000+ category. So not every price-point is seeing noticeable growth.

Overall, don’t expect prices to keep rising dramatically. And certainly don’t expect the double-digit price increases to return to what we experienced in the ‘good old days’ of ‘07 and most of ‘08. But, all signs point to a strong. stable, spring-market, after we wade through the usual winter slowdown.

What do you think? Send me a reply.

As some of you may know, one of my more consistent ‘go-to’ sources, when it comes to talking about the economy, is Benjamin Tal. And as we carry through Fall of ‘09, the latest buzz seems to centre around, dare we say it, recovery. But when & how do we raise the flag that officially signals we’re in the recovery phase of economic growth? Well it depends on who you talk to.

Tal is quick to remind us that the true definition of a recovery is, “when GDP (Gross Domestic Product: the size of our economy) begins to grow again—not just for a single quarter, but on a trend basis.” By that definition, he says Canada is on the brink of the ‘r-word,’ by virtue of the latest numbers indicating Q3 growth. Couple that with the latest U.S. growth trend, over the last  6-plus months, and many economists are convinced the word ‘recession’ will soon be replaced with recovery.

On the other side of that proverbial coin (read: loonie) Tal points out a great deal of Canadians are quick to point to the unemployment rate as a primary economic indicator. And until the job losses stop or more jobs are created, recovery will be significantly delayed – perhaps as long as two years. And Tal alludes to a still weakened global economy coupled with a Canadian unemployment rate expected to hover at nearly 9% until at least 2011, as reasons to question whether recovery will happen sooner than expected.

“Even if the growth in GDP over the next couple of quarters is larger than we project, it likely won’t be enough to lower the unemployment rate. US house prices and credit markets remain challenged, Canadian and US consumers are still cautious given their earlier wealth losses, and businesses are hoarding cash rather than buying equipment.”

The good news seems to be that Canada’s national housing market is in recovery, with the auto industry targetted to strengthen further as well, over the coming months. And Tal says interest rates won’t “be tied to when economists declare “recovery”, but to when the unemployed see a recovery too.” He adds that if the Bank of Canada’s benchmark rate remains well below 2%, in 2010, we shouldn’t expect any significant interest rate hikes in the near future.

So the tendency to trade one ‘r’ word for another (that being the word recession with recovery) will vary depending on who’s doing the talking. Certainly, we’re starting to see signs of things returning to some level of normality – or at least subtle to significant improvement. Meantime, we’ll keep monitoring the usual indicators to see where we measure-up.

Thoughts? Drop me a line.

As we edge towards the beginning of a new decade, I can’t help but think about the ‘good old days’ of 2007/2008. Real estate was booming. Calgary’s economy was one of the strongest in the country. The unemployment rate here was minuscule, thanks to increased migration of workers to the ‘Heart of the New West.’ And the oil and gas industry was a part of a global trend of unprecedented profit margins and record-breaking growth.

Now here we are, just a couple years later and as our economic situation seems to be in a state of recovery, we seem to be slowly shaking off the rust, licking our wounds and moving forward. While some of the biggest scars are evident in the housing market, unemployment rate, and the oil and gas industry, it’s the latter which should continue to be a significant measuring-stick for what’s to come.

A recent article in the Edmonton Sun alludes to oil and gas taking a slow and steady approach towards recovery. Oil prices are up significantly over the lows experienced just months ago, and the new low in prices reached during the worst recession we have had since the depression surprised many,  and as oil prices stabilize (which forecasters are saying they will continue to do) heavy oil, produced in the Alberta oilsands, will also fetch a higher price.

The article also hints at the possibility that some of the upcoming oilsands projects, which were originally scrapped due to the sharp economic downturn, will be put back on the table. And that will likely mean more jobs, more net migration to Alberta, and more provincial economic dollars churned-out by the oil industry here.

Add to that notion the fact that steady growth in the oil industry will likely mean more foreign investment as well, and we’re slowly but surely setting ourselves back up for success – well at least on the oil side anyway. Natural gas, as the article illustrates, has certainly been a harder commodity to predict lately.

In the past I’ve shared my opinion that once we see the price of oil continue to climb higher, inflation will set in, and that’s when you’ll see not only the Bank of Canada push the benchmark interest rate higher, but also, interest rates in the mortgage market will follow-suit. And that means it will almost certainly cost you more to borrow money to buy a home or property.

So keep an eye on the oil industry as one of your key economic indicators – not just for big business, but also for everything from the housing market, mortgage rates, and your overall cost of living as well.

Thoughts? Concerns? Opinions? Send me yours.

No matter what business you’re in, respect and reputation are paramount. In the real estate game, they’re what separate the ‘haves’ from the ‘have-not’s.’ The ‘top-producers,’ from the ‘flop-producers.’ You get the picture.

And these days, it’s not easy for any realtor or mortgage broker to pin-point or target the next economic trend, without keeping a constant ear-to-the-ground. Or is it? Take a closer look, and the best of the best seem to position themselves for long-term success. And their secret is easier than you think.

In fact, a recent article posted on RIS Media, points out the strongest realtors and brokers are becoming more than just sales people – they’re becoming trusted, reliable, astute, advisors. The reason? They focus on the fundamentals. But it’s their vigilance in pursuing and understanding these fundamentals that truly pays big dividends – especially for the consumer.

For instance, in order to know where you’re going, you need to understand where you’ve been. But you also need to separate fact from fiction, truthful information from misinformation, and so on. And that means understanding the story behind the story.

The article wisely points out the majority of consumers base their buying decisions (or lack thereof) on what’s going on in the news and media. But so often those stories are taken at face-value, by a ‘follow-the-herd’ mentality. And unless someone’s willing to peel back the layers of the onion, the actual facts of the story seem to get lost in translation. The result is things, then, get blown out of proportion, consumers panic (or worse they get careless) and real estate takes a hit.

The top ‘real’ experts continually monitor the future by being aware of what worked (and what didn’t) in the past. By better understanding why these factors contribute to the state of any given real estate market, at that time, these realtors and mortgage brokers immediately become better, more efficient, prognosticators when it comes to the future.

The second part of their secret is staying on top of current government programs, incentives, policies and procedures. From updated tax breaks, to breaking news on lending guidelines. From federal incentives, to the latest stimulus packages, good realtors and brokers become great, when they’re the authority on what’s going on financially right now – as well as properly preparing buyers for what’s waiting in the wings. The best experts are able to keep their clients informed, with things like market updates, blog entries, website commentaries, links to the latest statistics and insight into the latest government initiatives. And they’re able to explain why and how these politics will affect the consumer.

Thirdly, the pros simply know their customers. They tell them why they should buy or why they shouldn’t. They counsel them on what makes sense versus what might be a leap of faith. They separate first-time, move-up, vacation, and revenue buyers. And they provide phenomenal, timely and money-saving advice that ensures not only repeat business, but also clearly defined leadership, respect, admiration and long-term success.

It’s as simple as this: the top real estate agents and the top mortgage brokers diligently focus on history, politics and truly knowing their customers. And in these dynamically diverse economic times, the ones who position themselves based on the above criteria, stand to gain the most. And so will the consumers who seek them out.

What do you think? Send me your thoughts.

Call it a tale of two hemispheres. The Bank of Canada’s recent decision to leave it’s benchmark interest rate at 0.25% comes on the heels of a noticeable rate hike Australia. And that’s got some of our nation’s top analysts talking – especially in the wake of the strengthening loonie.

A recent article in The Globe and Mail, illustrates the general consensus amongst Canada’s top penny-pinching pundits and prognosticators is one of cautious optimism.

On the one hand, they suggest that the closer the Canadian dollar inches toward parity, with its U.S. counterpart, the tougher it will be on economic growth here. On the other, they surmise that rushing into any sort of hasty interest-rate hike, akin to the latest hike Down Under, would be premature at best.

So what does that mean for business and the consumer? I guess the biggest challenge is what is “normal” policy anymore?  How can we plan and forecast when there is so much uncertainty coupled with the inability to forecast what the Bank of Canada will do.

Right now, the current state of our national housing market is certainly more balanced and stronger than it’s been since last winter. But both financial experts and critics point out that this recent real estate rebound is being increasingly overshadowed by a sluggish rebound in the economy.

Overall the BOC’s latest actions seem to reiterate it isn’t willing to play the role of ‘copycat’ just yet – even despite the constant concern that a rising loonie, especially above parity, will likely be bad for business.

What do you think? Drop me a line with your thoughts.

Well here we are a year later, after trudging through arguably the worst financial crisis in history, and the economy is still making headlines. The Dow Jones is up, past 10,000 once again, for the first time in more than 12 months. And the loonie is destined for parity against its southern counterpart – the U.S. dollar (USD). So what now?

Well for Canadians, the general consensus seems to be “uh-oh, a declining American dollar means more job losses here – not to mention undesirable, rising costs for our nation’s exported goods.”

But if we take a more educated approach, a devalued USD will ultimately be the key to stabilizing and balancing the world’s economic situation. And that’s what Kevin Carmichael touches on in a recent article in The Globe and Mail.

Sure, the weakening of the USD is due in large part to the fact the U.S. is still wrestling with some unprecedented debt – to the tune of nearly $1.5 trillion dollars (yes, you read that right). But some experts are willing to acknowledge that countries like China, India, Brazil, and yes, even Canada, stand to benefit economically from a recent shift set to change the world’s economy into something more resistant to financial meltdown.

Despite the USD’s decline, the article suggests the American economy will see a 1.5% increase in 2010, compared with 9% growth in China and 6.4% in India, alone. And as confidence, within the global economy, strengthens the U.S. will certainly feel some short-term pain, there is no doubt.

Here in Canada, Carmichael points out the Bank of Canada expects rates to remain at rock-bottom levels until the summer of 2010, even with several major Canadian banks recently hiking their 5-year mortgage rates by 35 basis-points, to 5.84%. And there are rumblings that’s putting upward pressure on the Bank of Canada raise it’s key interest rate, which would likely, then, pinch the U.S. dollar even further downward.

And in Australia, a recent rise in that country’s key interest rate was spurred by strengthening global markets in Asia – again, putting more pressure on the American greenback.

So what can we expect in the next 12 months?  Expect more stability to be sure, and expect more of the economic ‘pie’ to be shared or divided more thoroughly amongst the rest of the world. And it will happen because of the recent slip of the USD.

There is much talk these days about whether we are headed for deflation, or inflation.  In fact, just the other day a friend approached me and said “are you for inflation or deflation” which I thought was an odd question coming from this friend, specifically because our relationship doesn’t generally involve these type of questions.  So I think my main point is that this topic is making it to main street and sadly either way you look at it the result is not positive.

Ok so let’s address it.  First, my answer is that I think as I have repeatedly said, we are headed for inflation, and in fact it could be hyper-inflation which would likely be as bad as deflation, except of course if you are a real estate speculator.

Why, do you ask?  Well the main reason is, and I have been steadfast in this assertion, through the recession the governments across the world, but specifically in the USA, have been printing money at a breakneck pace.  With all that excess money in the economy the only plausible result will be inflation.  When?  As soon as that money starts to flow into the economy.  Yes, the tail end of a recession will always make people and more importantly institutions (banks) hoard their money. But hold on and fasten your seat belts when that money starts flowing.

Would you like to have the inside track on when inflation will trend up?  Book mark this page and return periodically to track  the M1 money multiplier graph.  The money multiplier measures how much money is circulating in the economy, and as you can see it has fallen steadily since the 80’s but fell off a cliff at the beginning of our severe recession.  Note: the Grey bars are all the past recessions.

Economists like Benjamin Tal have repeatedly reminded us of this law of economics, when money supply rises, which it has significantly, then inflation will follow.  Look for the M1 money multiplier to rise in the next 12-18 months will bring inflation.

Now, for all you people who have an insatiable appetite for real estate speculation, please don’t use this post to justify more real estate speculation.  To be clear, there is much to much risk in today’s inflated market to be involved in speculation.

Finally, and this from Peter Schiff, if you don’t know who he is you should.  Peter is one of the only experts who called the real estate disaster in the U.S.  He is currently saying that gold will hit $5,000 an ounce, due to what he believes to not only be inflation, but hyperinflation.  Why?  Because in is mind he thinks Bernanke, the federal reserve chairman, is keeping interest rates artificially low, to continue to save the housing and stock markets, at the expense of long term pain for the entire economy in hyper-inflation.

Where do we go from here?

1) Watch the M1 graph.

2) Buy any big ticket items you want (i.e. a house) now, as inflation will drive up both the prices, and the interest rates, which brings a net effect of substantially reducing affordability.

3) If you are tight on your budget, lock in your existing mortgage Tuesday.  Rates WILL rise, and likely will continue to do so, for some time.