Last week, the federal government unveiled it's latest mortgage changes, which are effective December 15, 2024 (details here). 

These changes are intended to make housing more affordable in Canada, and providing first-time home buyers wider options into home ownership and increasing the price limit, for insured mortgages. 

First, there are two types of residential mortgages in Canada (broadly): 1) Insured and 2) Non-Insured - specifically speaking of insurance coverage to protect the lender (mortgage default insurance).

Insured Mortgages: for loans that are MORE than 80% of the home price, these mortgages are also known as high loan-to-value mortgages

Non-Insured Mortgages: for loans that are LESS than 80% of the home price, these are also known as 'conventional' mortgages

This mortgage default insurance protects the LENDER by providing more confidence by decreasing their risk, and can lend you more with a smaller down payment (this has nothing to do with your home insurance).

2 KEY MORTGAGE CHANGES:

1) Cap of insured mortgages increasing from $1.0 million to $1.5 million (significant in markets such as Vancouver / Toronto)

   • Down payment structure for these high-priced homes are a little different, and remain the same:

   • 5% for the portion of purchase price up to $500,000

   • 10% for the portion of purchase price between $500,000 to $1.5 million

   • This means that buyers will be able to purchase a $1.5 million dollar home with just a $125,000 down payment (a material reduction from the current $300,000 requirement for uninsured borrowers)

2) Insured mortgages (less than 20% down payment) can now amortize over 30 years (instead of the previous maximum 25 years)

   • This helps home buyers with lower monthly payments

   • Applies ONLY to new builds and first-time homebuyers

A few requirements to be eligible for this:

   1. Borrower has never purchase a home before

   2. Borrower has not owned or occupied a principal residence in the last 4 years

   3. Borrower has recently experienced a breakdown in marriage or common-law relationship, in line with the CRA's approach to the Home Buyer's Plan

Ultimate Takeaway: The federal government acknowledges the housing 'crisis' however these initiatives will further BOOST demand allowing buyers to afford more. These changes will further bolster housing demand, opening up new markets for buyers who may be just under the cusp of affordability under the current rules. Extended amortizations could increase purchasing power by ~10%, similar to a 0.90% interest rate cut, according to BMO Economists.

In addition, falling interest rates into the winter will likely see additional demand for housing across the country, from those who have been sitting on the sidelines waiting for this moment. 

More from the Government of Canada.

Ann Marie CREB Economist came to provide us an update on the status of the Calgary market this Monday, a few key takeaways to share (apologies for the lengthy email but a lot of gold nuggets in here):

1. Interest rates ease as Canadian economy slows

   • Current inflation rate of 2.5% (target of 2% per BoC)

   • Canadian GDP growth of 0.5% in Q2 2024

   • Interest rates expected to reach 4.0% by the end of this year (from 4.25% today)

2. Calgary’s rental market remains very strong

   • Rental construction in Calgary has been robust, completing nearly 7,000 apartment units YTD (2024), HOWEVER, approximately 73% of that represents exclusively for rentals and only 1,894 units are for ownership (of which ~38% is estimated to be rented out)

   • Currently there are 14,856 apartment units under construction, of which 55% represents exclusively for rentals

   • Rents in Calgary have increased by 4% since last July

3. Population growth remains KEY to housing activity

   • We’ve seen approximately 377,725 individuals move to Alberta on a NET basis since 2021, with the majority of folks moving in 2023

   • We’ve seen a slowdown in migration this year largely due to policy changes on foreigners, BUT the people that have moved here represents significant demand on our housing supply, and we’re catching up

   • Still, Alberta has seen a net migration figure of ~45,000 just from January – March this year, with more than 50% of those moving right into our city

4. Prices are expected to remain strong – fundamental metrics do not point to boom / bust cycle

   • The key for prices to drop is if supply dramatically increases, and people leaving Calgary

   • We aren’t expecting negative migration anytime soon, and prices for homes have remained very strong (likely a new floor)

   • Looking at the graph below, we can see the relationship between migration and the average detached home prices in Calgary

5. Seeing a shift in market, but inventory remains tight – current trend represents seasonal slowdown

   • We’re seeing shifts in the market with more listings coming to market (this is healthy)

   • An increase of ~37% of total inventory compared to August last year, but is still 25% BELOW the 10 year average

   • At 2.1 months of supply (balanced market is around the 3-4 months of supply)

6. Where are these listings coming from?

   • Listings growth is coming from HIGHER priced homes

   • No apartments in Calgary under $200K

   • No detached homes in Calgary under $400K

   • Below is a split of where the listings are coming from, with 78% of detached homes listed above $600K

7. Prices are showing signs of stability

   • This is a healthy sign for a sustainable market and likely sets a new floor for prices in Calgary

   • We’re seeing months of supply come back up (to 2 months), away from an extreme seller’s market (<2 months)

   • Sales are limited by lack of lower priced supply

8. People continue to move here due to 2 main reasons

   • Relative affordability

      o Calgary CMA has the highest household income relative to Edmonton, Vancouver and Toronto

   • Economic growth

      o 2024F GDP for Alberta expected to reach 1.7% (as compared to national growth of 0.5%)

9. 2024 Migration Forecast

If you have any questions or want to see the entire presentation – please reach out!

Well here we are folks, September came up quick this year – hoping everyone had a great long weekend and a short week!

CREB released it's monthly market update, with a notable shift in market conditions moving from an extreme sellers-market to a little bit more buyer-friendly with total housing supply nearing two months (levels not seen since the end of 2022). Up to this point, we've had total supply under 2 months, and even under 1 month at certain times. 

Increase in new-home construction and new listings supported the improved supply, HOWEVER our supply remains LOW - particularly with lower priced properties (under $600K), and will take time for supply levels to return to balance. 

Benchmark prices across property types remained relatively flat month-over-month, and still represent some material appreciation from last year (9–16% in price growth!).

More below from CREB:

Detached

• Benchmark Price: $762,600 (-0% MoM, +9% YoY)

• Total Sales: 1,278 (-20% MoM, -14% YoY)

• Total New Listings: 1,721 (-7% MoM, +5% YoY)

• Sales-to-New Listings: 64%

• Months of Supply: 2.0 Months (+40% YoY)

• Days On Market: 26 Days (+8% YoY)

Semi-Detached

• Benchmark Price: $681,200 (-0% MoM +10% YoY)

• Total Sales: 172 (-12% MoM, -12% YoY)

• Total New Listings: 297 (+13% MoM, +26% YoY)

• Sales-to-New Listings: 58%

• Months of Supply: 2.0 Months (+57% YoY)

• Days On Market: 25 Days (+10% YoY)

Townhomes

• Benchmark Price: $461,700 (-0% MoM, +12% YoY)

• Total Sales: 384 (-9% MoM, -15% YoY)

• Total New Listings: 384 (+11% MoM, -15% YoY)

• Sales-to-New Listings: 60%

• Months of Supply: 1.7 Months (-34% YoY)

• Days On Market: 25 Days (+26% YoY)

Apartments

• Benchmark Price: $346,500 (-0% MoM, +16% YoY)

• Total Sales: 604 (-24% MoM, -31% YoY)

• Total New Listings: 1,001 (-0% MoM, +12% YoY)

• Sales-to-New Listings: 60%

• Months of Supply: 2.4 Months (+120% YoY)

• Days On Market: 32 Days (+7% YoY)

If you have any questions at all, please reach out to our team to help guide you, wherever you are in the process!

As widely expected, the Bank of Canada cut it's key policy rate by 25 basis points to 4.25% TODAY. 

Today is the THIRD cut since June, in response to near-zero economic growth in 2H 2023. We're seeing stronger economic growth this year (2.1% growth in Q2 2024), and is expected growth will remain flat for the remainder of 2024 with continued progress easing inflation. 

Key target for inflation is 2% per year. 

Another key concern for the Central Bank is the current unemployment rate, which rose to 6.4% in June and stayed there in July. Hiring has been weak, and particularly acute to youth and newcomers to Canada. 

Next Bank of Canada Key Date: October 23, 2024

As it relates to the real estate market here in Calgary, we've seen an improvement in total inventories near end of summer (always the case given the season), and based on the work I've been doing for my clients, this has been the best time to buy with more selection. That said, great properties are still lasting less than 1 week on market! 

In relative terms, our total active listings remains~21% below the 5-year average, and sales are ~8% above the 5-year average – long story short, market remains robust going into the fall (see below). 

With the busy spring market behind us, we are starting to see some shifts in supply levels. With 2,380 sales and 3,604 new listings, the sales-to-new listings ratio fell to 66 per cent, supporting a gain in inventory.

Total inventories rose to 4,158 units (still 33% below typical July), but is the first time they pushed above 4,000 units in two years. Majority of supply coming from homes listed over $600,000. This shift has moves us slowly away from an extreme sellers' market earlier this year.

There still continues to be enormous demand for properties under $600,000. Summer months are typically slower (folks on holidays, enjoying summer), so this trend is the norm. Slower sales have however increased supply to 1.8 months, but still remains a sellers' market (for buyers this is a STRONG sign to push now, take advantage of the opportunity heading into the Fall and the BoC announcement in September). 

Further details below:

Detached

• Benchmark Price: $767,800 (+0% MoM, +11% YoY)

• Total Sales: 1,278 (-14% MoM, -8% YoY)

• Total New Listings: 1,721 (+5% MoM, -8% YoY)

• Sales-to-New Listings: 64%

• Months of Supply: 1.8 Months (+23% YoY)

• Days On Market: 24 Days (+6% YoY)

Semi-Detached

• Benchmark Price: $687,900 (+0% MoM +12% YoY)

• Total Sales: 200 (-14% MoM, -5% YoY)

• Total New Listings: 262 (-14% MoM, +6% YoY)

• Sales-to-New Listings: 100%

• Months of Supply: 1.5 Months (+21% YoY)

• Days On Market: 22 Days (+11% YoY)

Townhomes

• Benchmark Price: $464,200 (+0% MoM, +15% YoY)

• Total Sales: 423 (-12% MoM, -9% YoY)

• Total New Listings: 578 (+0% MoM, +18% YoY)

• Sales-to-New Listings: 73%

• Months of Supply: 1.3 Months (+51% YoY)

• Days On Market: 20 Days (+4% YoY)

Apartments

• Benchmark Price: $346,300 (+0% MoM, +17% YoY)

• Total Sales: 791 (-17% MoM, -15% YoY)

• Total New Listings: 1,043 (-6% MoM, +13% YoY)

• Sales-to-New Listings: 63%

• Months of Supply: 2.1 Months (+44% YoY)

• Days On Market: 27 Days (-4% YoY)

If you have any questions at all, please reach out to our team to help guide you, wherever you are in the process!