Meet Jessica Yip with MMG Mortgages here in Calgary! MMG a long-standing mortgage brokerage with decades of experience here in Calgary. Tune in to our discussion about a day in the life of a mortgage broker, and how working with a mortgage broker can help you look at various offerings from different banks to suit your unique profile and requirements! More information on MMG's website or reach out for a call, she's always down to chat about the financing environment! It's definitely a hot topic nowadays.

Website: www.mmgmortgages.ca

Instagram: www.instagram.com/jy_mortgages

This report again highlights the crucial role of increasing housing supply if the goal is to make housing affordable for everyone in Canada. It also demonstrates the importance of examining both economic and demographic variables given the recent changes that have been experienced in both”.

— Aled ab Iorwerth, Deputy Chief Economist

In our latest report, Canada’s Housing Supply Shortages, we take a closer look at the gap between supply and demand in the housing system. Our goal is to determine how much additional housing supply is needed to achieve housing affordability by 2030, beyond current trends. Meeting the demand for housing in Canada is critical and increasing supply in the rental and homeownership markets is key to achieving affordability.

This report is an update to our Supply Gaps Estimate report from June 2022.

We maintain our estimate from last year, which indicates a need for 3.5 million more units by 2030 to restore housing affordability. We also present 2 alternative scenarios for consideration: a high-population-growth scenario and a low-economic-growth scenario.

The BoC HELD INTEREST RATE AT 5% TODAY, citing a weakening Canadian economy – however left the door open for further rate hikes if inflationary pressures continue to persist. 

The decision comes as good news to many, as folks were holding their breath on another hike. Last Friday, Stats Canada reported that the Canadian economy appeared to stall in Q2, as investment in housing continued to fall around the country driven by a decline in new construction projects and renovation. Stats Canada reported a CONTRACTION of the economy of 0.2%, and also revised it's forecast for Q1 2024 to 2.6% (down from 3.1% growth). (LINK)

Ironic, isn't it? The biggest hurdle of construction and renovation activity is borrowing costs. And seeing new construction slow down does not at all solve the supply / demand equation – it exacerbates the problem, particularly in Calgary...

As the rest of the country's real estate markets 'balance out', Calgary's real estate market remains resilient - almost unbelievable, of how short supplied we are right now. Two key drivers for the supply constraint: labour shortage & heightened demand for housing in Calgary.

Some anecdotal notes from CREB's monthly update for August:

1. August real estate sales surged to a record HIGH of 2,729 units transacted, largely driven by activity in the condominium sector (lower price point, higher relative inventory compared to other property types)

2. Sales-to-new listings ratio remained ELEVATED at 87% (meaning a very strong absorption rate - newly listed homes are being immediately bought up)

3. Inventory levels in August DROPPED to 3,254 units - new record low for the month of August

High Sales + Low Inventory = extremely tight market conditions and increase to prices. As a result, much of the market is seeking lower cost alternatives, putting a pressure on lower priced products, particularly in the detached home market. Across all property types, Prices have appreciated as much as 15% on average since last August.

A couple of graphics to summarize where are market is currently heading into the Fall:

As of September 5, 2023 (last 7 days):

Source: Pillar 9 MLS

Source: CREB

Things to think about if you're a BUYER in Calgary:

• Are prices really going to come down if I wait another 6 months? What is this based on, true data or feelings?
• What will happen to the resale / rental markets with new construction slowing significantly due to high borrowing costs?
• What will happen if rates stabilize? Will this lead to more or less demand for housing?
• Based on the current inventory, where will inventory be if rates stabilize and demand picks up even more?

Things to think about if you're a SELLER in Calgary:

• Will selling now or later, best position me for where I want to be in the future?
• Are you leaving a lot of money on the table if you don't sell, and the market takes an unpredictable turn?
• What can I do to make my home show the very best if I want to sell? Does that even matter right now in this market?

 The answer to most of the questions above is 'it depends'. It really depends on your current situation and where you want to be. It is evident that if the economy comes to a grinding halt, there will always be a need for housing no matter which way you look at it, the best question to ask yourself is, are you prepared?

 Give me a call if you want to chat about your situation and how we can help!

Are you thinking about moving to Alberta? Deciding to relocate is a major life choice, and finding the perfect destination that aligns with your aspirations and values is essential. Calgary, a city nestled in the heart of Alberta, offers a myriad of opportunities and a unique lifestyle that has attracted people from all walks of life. If you're contemplating a move, let's explore why Calgary might just be the perfect place for you...

Thriving Economy and Employment Opportunities

Calgary's economy has historically been closely tied to the energy sector, but in recent years, the city has diversified its economic landscape. Boasting a diverse range of industries such as technology, finance, healthcare, and creative arts, Calgary offers a robust job market for professionals seeking growth and innovation. The entrepreneurial spirit is alive and well in this city, making it an ideal destination for career-driven individuals.

Unmatched Natural Beauty

Nestled against the backdrop of the stunning Rocky Mountains, Calgary's natural beauty is awe-inspiring. With easy access to national parks like Banff and Jasper, outdoor enthusiasts will find themselves in a haven of adventure. From skiing in the winter to hiking, biking, and kayaking in the summer, Calgary provides year-round opportunities to connect with nature and explore the great outdoors. With Banff and Canmore just one hour away from the city's core, the mountains are a surreal retreat from everyday life, promoting an active lifestyle and unmatched natural beauty.

Cultural Vibrancy and Festivities

Calgary's cultural scene is vibrant and diverse, offering a rich tapestry of art galleries, theaters, music venues, and cultural festivals. The Calgary Stampede, known as "The Greatest Outdoor Show on Earth," is a world-renowned event that celebrates the city's Western heritage and is a must-attend experience for both residents and visitors. The city's commitment to the arts and culture ensures that there's always something new and exciting to explore. Calgary's Central Library, Bell Studio, and numerous theatre productions are just a few stops on the must-see list. A wide variety of music festivals also make a visit to Calgary, including Country Thunder, Calgary Folk Festival, Chasing Summer EDM Festival, in addition to regular stops by world-renown artists – there's something for everyone!

Quality of Life and Community

Calgary consistently ranks as one of the world's most livable cities, and for good reason. Its low crime rates, excellent healthcare system, and strong education options make it an appealing choice for families and individuals alike. The city's friendly and welcoming atmosphere fosters a strong sense of community, making it easy to build meaningful connections and forge lifelong friendships.

Proximity to Adventure

Living in Calgary means having access to an abundance of adventure just a stone's throw away. Whether it's embarking on a road trip to the majestic Rocky Mountains, exploring the Badlands, or enjoying the serenity of the Bow River and the rolling Foothills, opportunities for exploration and relaxation are endless.

Make the Move!

Moving to Calgary is more than just a change of location; it's an opportunity to embrace a dynamic lifestyle, abundant opportunities, and a strong sense of community. From its diverse economy to its breathtaking natural landscapes, Calgary offers the perfect blend of urban living and outdoor adventure. Whether you're seeking career growth, a higher quality of life, or the chance to surround yourself with natural beauty, Calgary welcomes you with open arms, promising a fulfilling and enriching life journey.

Make sure you reach out for more information on how to make the move as smooth and seamless as possible with a local Realtor!

Canada's annual inflation rate rose 0.6% in July (from June), kicking up the July inflation rate to 3.3% (from 2.8% in June) - more importantly, our inflation rate is now higher than the U.S. for the first time since the pre-pandemic days. Keep in mind, the Bank of Canada's inflation target is 1–3%.

Contributors to this increase were due to shelter (+0.7% Y/Y) fueled by a +2% surge in mortgage interest costs (now +30.6% Y/Y) and utilities (+2.3% Y/Y). Airfare and travel services were also strong due to the summer travel season. Gasoline prices are on track to rise over 5% in August.

Impact: This is not a good report for the Bank of Canada, while they did expect a 'back-up' in headline inflation (i.e., sticky down trend), July's result is already at the Q3 expectation, with August's readings to date expected to be even higher. The silver lining here is that CORE inflation is slowing. With the increase in unemployment and clear signs of cooler spending, some economists expect the BoC to PAUSE in September to give prior rate hikes some time to settle in - however, this month's reporting makes it a tough call. 

 (Inflation Report Here)

Canadian existing home sales were also reported to be balanced across Canada - except for the Calgary market. Sales-to-new listings ratio is running hot at 82%, and prices are now 5% higher than the early-2022 high! On the flip side, Toronto's sales-to-new listings ratio is at the lowest in all markets at 44%. Relative pricing across the country continues to point to the Calgary market as the most affordable market heading into the pandemic boom and remains cheap coming out of it.

Impact: At a feeral level, the housing market is balanced, except for our outlying market here in Calgary. The inflation backdrop continues to argue for higher rates to remain well into next year - meaningful near-term mortgage rate relief looks unlikely. The challenge of higher mortgage rates and possible increase unemployment rate will be battling against strong demographic demand for housing. However, buyers seem to be adjusting to higher rates.

 (Housing Report Here)

Source: Bank of Canada, Statistics Canada

The news is out – the Bank of Canada raised interest rates (again) by 25 bps, largely consistent with consensus estimates. Stronger than expected consumption and stubbornly tight labor markets drove inflationary pressures to remain persistent for services, leading to the expected hike. 

The BoC revised its forecast to show a slowdown in inflation to take longer than expected, now to hover around 3% for the next year, before easing to the 2% target in the middle of 2025.

BoC Policy Rate (Last 25Y)

What does this mean?

• This represents the highest Bank of Canada interest rate over the last 22 years!
• There has been a total 475 bps increase to interest rates since the March low rate of 0.25%
• Cost of mortgages will adjust accordingly, as well as all other loan products

How does this affect me?

• Individuals with large debt balances will feel the pinch, with further costs going to interest payments
• Barrier for the mortgage stress test would increase along side mortgage rates (now need to qualify at yet another higher rate)

How will this affect the housing market?

• If only we had a crystal ball... but from what we can see from the real estate side of things, those who were thinking to sell, without previously locking in an interest rate for the anticipated move, will likely avoid selling (have to now qualify at a higher rate) - further lack of inventory
• Market will likely continue as a Sellers' Market for some time, until the demand equation balances out (i.e., hike of interest rates have put off buyers enough to offset the impact of lower inventory)
• There is a potential for more properties to come onto the market, however in Calgary the outlook may an the outlier
• Particular to Calgary – economic and job growth continues to be strong, especially in Alberta, relative to the rest of Canada; belief here is that the strength of the economy is enough to handle the increase in cost of borrowing
• Those who cannot qualify to buy will have to turn to the rental market – expect a continued tight market in the rental space for some time

What can I do to protect myself?

• Watch debt balances and be aware of what interest rate you're being charged and how that has changed over time
• If you're looking to buy, best advice now is to work with a mortgage broker that is tapped into the market to provide the best opinion possible
• Challenging times ahead but hopefully rates will hold flat for sometime after this, as most economists are expecting
• Work with a realtor that is tuned-in to the market dynamics and knows how to navigate this turbulent market

Hope you found some value in this update. As always, we're here to help if you have any questions about buying / selling. You can never time the market perfectly, but it will be prudent to get as well-informed and positioned as you can to achieve your goals. 

f you've been a prospecting buyer in today's market, you know very well how Calgary's real estate market has performed over the last little while, and have probably been wondering -- what the heck is going on? 

There are several factors leading to today's problems, ultimately driven by a lack of supply for housing: 

 1. Supply Issue #1: COVID Hangover

A significant impact to home builders and housing providers nonetheless, to the rest of the world. Uncertainty led builders to sit on their hands, wondering what is happening to the market (slowing / halted market activity), with people adjusting to a new lifestyle (working-from-home), and looking to move away from dense urban centres.

2. Supply Issue #2: Exponential Increase to Interest Rates Since COVID (Homeowners Reluctant to Sell)

Canada'sovernight rate went from 0.50% in March 2020 to now 4.75% in June 2023 - that is a 9.5x increase to borrowing cost to consumers! The insanity of exponential rate increases has led to many who have locked in record-low interest rates, hold onto their homes (and mortgages), ultimately reducing supply that would otherwise be coming onto the market.

Not only would there be heavy penalties associated with breaking fixed mortgages, sellers would have to qualify in a dramatically different rate environment, with their dollars not going as far as it use to.

3. Supply Issue #3: Inter-Provincial and International Migration Favour Alberta

In Q4 2022 alone, Alberta saw >19,000 net migrants from other provinces, largely due to job growth in Alberta paired with a lower cost of living (further details below). A total population add of >58,000 migrants including internationals in only the last 3 months of 2022!

At the time of this email, there are ~1,300 single family detached homes for sale in Calgary, a ~43% decline from the same time last year. 

These key supply issues are compounded by further demand for housing in Alberta:

1. Alberta's Economy is Strong

Alberta's Energy Sector accounts for the majority of economic growth, and the rebound in oil and gas prices have allowed companies who operate here, to invest in human capital and big projects that require skilled labour.

Not only that, but Alberta has began to diversify its economy, with new ventures vested towards diversifying Alberta's economy, creating even more job growth, attracting a larger swath of diversified skilled labour.

2. Lower Cost Attraction

Despite the increased inflation pressures across the country, Alberta's cost of living remains well below other major cities in Canada (Toronto, Vancouver, etc.). This has further attracted those who can move, decide to move to Alberta, allowing their dollars to go further out here.

3. Refugees Coming to Live in Calgary

The large spike in immigration has come from refugees settling in Calgary. >20,000 displaced Ukrainians will make Alberta home, with half of them settling in Calgary. This is on top of ~6,000 Afghan refugees that fled to Calgary before, and not accounting for many others from around the world.

What does this all mean?

Well, all signs are pointing to high real estate prices going higher, and also staying there. This isn't driven by price speculation that we've seen in places such as Vancouver - this is driven by pure fundamentals (supply and demand). Until the Energy Sector takes a significant and prolonged hit and interest rates are prohibitively high, will we see prices start to stabilize and come down (maybe). Remember we still have migrants that are looking to house their families, despite the economy.

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The good news is that we're seeing inflation come down (slightly). Its a move in the right direction, with Core CPI at 3.7% year-over-year in May. We know the Bank of Canada has a target CPI of ~2%, so rate increases aren't completely off the table (further supply squeeze). On the flip side, if we see the BoC cut rates in 2024, there will be a dramatic upturn in home prices here in Alberta given the pent-up demand - so our view is that either way, prices may continue to increase and stay elevated.

What should I to do?

There's a saying in real estate: it's not about timing the market, but time IN the market. As much as I'd like to take an unbiased view, much of Alberta's fundamentals are pointing to buying real estate, and buy soon. Get a rate locked in with a lender so you have the option to buy with a favourable interest rate in case they continue to increase.

There is also nothing wrong with renting. The rental market is strong, and given the increase in home prices, this will push a lot of folks into the rental market, from being a potential buyer. Rents will continue to climb given the supply-demand imbalance, so you have to do what makes sense for you and your family (we're happy to help guide you through a buy or rent analysis). 

We're here to help!

We pride ourselves on providing the best insights, advice, and customer service with those we work with. Don't hesitate to reach out if you have any questions about how to navigate the housing market, buy / selling process - we're here to help you move forward.

Link

Calgary's real estate market continues to outperform the rest of the country as indicted by the Teranet National Bank House Price Index in May showing a year-over-year drop across Canada (Y/Y Calgary: +8.34%, Y/Y National Index: -7.63%)

Source: Teranet

Sales for the month also rose to a record high in Calgary as indicated by the Calgary Real Estate Board (CREB) – 3,120 transactions occured in May 2023.

What are the driving forces behind the momentum in prices?

• Record levels of migration last year from both international and inter-provincial has lead to enormous demand with limited supply
• A strong job market largely as the result of a stabilizing and improving energy sector continues to lead to high paying professional jobs

How are buyers making sense of the high interest rate environment?

• It really depends on where the buyers are coming from. Relative affordability in Calgary has offset the higher interest rates particularly for inter-provincial migrants coming from a higher cost of living area such as BC and ON.

Any possibility of momentum continuing?

• It all comes down to supply. Without seeing the supply landscape change, we'll continue seeing price, momentum to the upside. The rental market continues to benefit from a lack of supply and continued demand growth. 

Movement within Calgary happening?

• No doubt it has been a challenge to move up in Calgary. The restricted level of new listings is contributing to the supply crunch. However, the apartment and condominium sector has seen some improvement with some more supply choice recently. There continues to be at least a 50% decline in current active listings relative to last year.

How will this play out if Canada were to hit a recession?

• It really depends on the segment of the market a recession would impact. The energy sector represents the key economic driver for the province, and with sector improvement as we've seen since 2020 with continued job growth, Alberta may not be as accutely impacted by a nation-wide recession.

Source: Ann-Marie Lurie, Chief Economist, CREB

Purchasing your first home is an exciting milestone, but it can also be a daunting process. As a first-time home buyer in Calgary, there are specific tips and tricks that can help you navigate the local real estate market with confidence. In this post, we will share some valuable insights to assist you in making informed decisions and finding your dream home in Calgary.

Determine Your Budget

Before diving into the home buying process, it's crucial to establish your budget. Evaluate your financial situation, including your savings, income, and expenses. Consider getting pre-approved for a mortgage to determine the price range that suits your financial capabilities. This step will help you focus on homes within your budget and avoid any unnecessary disappointments.

Research Calgary's Neighborhoods

Calgary boasts a diverse range of neighborhoods, each with its unique character, amenities, and lifestyle. Research different areas of the city to find the one that aligns with your preferences and needs. Factors to consider include proximity to work, schools, transportation, recreational facilities, and community services. Exploring neighborhood options will help you narrow down your search and find the perfect location for your new home. Leverage your Realtor for where the best areas are based on the life you wish to live!

Work with a Knowledgeable Realtor

Partnering with a professional Realtor specializing in first-time home buyers is invaluable. A Realtor with local expertise can guide you through the entire process, provide market insights, and negotiate on your behalf. They will help you find properties that meet your criteria and navigate the complexities of real estate transactions, ensuring a smooth and successful experience.

Understand Additional Costs

Beyond the purchase price, it's essential to factor in additional costs associated with homeownership. These include property taxes, utility bills, home insurance, maintenance, and potential condo fees. Be sure to consider these expenses when determining your budget to avoid any financial surprises after purchasing your home. Don't forget closing costs!

Home Inspection is Crucial

Never underestimate the importance of a home inspection. Hire a reputable home inspector to thoroughly assess the property's condition and identify any potential issues or repairs. This step will provide you with peace of mind and may save you from costly surprises down the line. If any concerns arise during the inspection, work with your Realtor to negotiate repairs or price adjustments with the seller.

Attend Open Houses and Ask Questions

Attending open houses is a fantastic opportunity to explore different properties and get a feel for the market. Take the time to visit open houses in neighborhoods of interest. Ask questions to the listing agent or the seller, and don't hesitate to request additional information about the property. This firsthand experience will enhance your understanding of the market and help you make more informed decisions.

Conclusion

As a first-time home buyer in Calgary, being well-prepared and informed is key to a successful home buying journey. By establishing your budget, researching neighborhoods, working with a knowledgeable Realtor, understanding additional costs, conducting a thorough home inspection, and attending open houses, you'll be well-equipped to make confident decisions and find the perfect home in Calgary. Remember, buying your first home should be an exciting and rewarding experience, and with the right approach, you'll be on your way to homeownership in no time.

As a real estate agent in Calgary, I've seen firsthand how challenging it can be for buyers in a seller's market. With limited inventory and high demand, it's easy to feel overwhelmed and frustrated. But fear not, there are ways to navigate this market and come out on top. Here are some tips for buyers in a seller's market in Calgary:

1. Get pre-approved for a mortgage: In a seller's market, homes can sell quickly, sometimes within hours of being listed. By getting pre-approved for a mortgage, you'll know exactly how much you can afford and be ready to make an offer when the right home comes along.

2. Be prepared to act quickly: When you find a home that meets your needs, don't hesitate to make an offer. In a seller's market, time is of the essence, and delaying could result in losing out on your dream home.

3. Work with an experienced agent: A knowledgeable real estate agent can help you navigate the market, identify homes that meet your criteria, and negotiate on your behalf. They may also have access to off-market properties that you wouldn't otherwise know about. Ask us how we can help!

4. Be flexible with your search criteria: In a seller's market, you may need to be more flexible with your search criteria. Consider expanding your search area or looking at homes that need some work but have the potential to become your dream home.

5. Don't get caught up in bidding wars: While it's tempting to get caught up in a bidding war, it's important to remember your budget and not overextend yourself financially. Your agent can help you navigate the negotiation process and make a strong offer without breaking the bank.

6. Be patient: In a seller's market, it's not uncommon for it to take several offers before you find the right home. Don't get discouraged, and keep working with your agent to find the perfect property.

Buying a home in a seller's market can be challenging, but with the right approach, you can find your dream home with our help. Get pre-approved, be flexible with your criteria, have a bit of patience, and give us a call!