Calgary Real Estate predictions?

[AFireInside]

Originally Posted by albertGQ

I don't agree with this since most condo fees include some or most utilities. For regular homes, its not like the utilities are included in the debt servicing ratios for qualifying

Hmm, that is interesting.. However, there are some places where the condo fees are ridiculously high. I know of a place that has units around 1100 sq ft, and the prices look great at 230,000. However looking closely the condo fees are around 700/mth... Situations like that need to be looked at more carefully.

[bizaro86]

Condo fees also include a provision for maintenance, which isn't part of the calculation for a single family home. Maybe it should be, but it doesn't seem fair to calculate maintenance/water&sewer/landscaping as costs for condo mortgages but not house mortgages.

[Mike Oxlong]

Originally Posted by macker

PITH = principle, interest, taxes, heat + 1/2 condo fees....

That is sort of correct but it depends on the Condo.
IF heat is included in your condo fees then the formula is just Principle, Interest, taxes +1/2 condo fees.

But if heat isn't included in your condo fees (most townhomes don't include heat) then you are correct with Principle, interest, taxes, heat +1/2 condo fees.

[chemgear]

Mike Fotiou has another great informative summary blog article:

http://calgaryrealestatereview.com/2...atalyst-noose/




Brad Lamb, a real estate broker and developer, says: “All it is a knee jerk reaction by idiot bankers pressuring idiot politicians.”

[bomber317]

^^^

Interesting chart. I would like to see some other macro charts for those time periods to see if it is a combination of changes that lead to the rise of housing.

ie: price of oil, migration of workers to calgary, TSX chart, etc.

If the price of oil going up causes the migration of workers to calgary, causing a rise of salaries, causing more money to spend and bidding up houses, which then leads to first time home buyers not be able to afford homes, which leads to loosening of credit policies to help those first time home buyers.... which then leads back to bidding up home prices because of easy access to credit.....

That is all speculation and I have nothing to back that up. Just throwing that out there to see what other thoughts there are.

[Mike Oxlong]

Looks like the government is set to introduce new mortgage rules tomorrow morning.

• Mortgage amortization periods will be reduced to 30 years from 35 years.
• The maximum amount Canadians can borrow to refinance their mortgages will be lowered to 85 per cent from the current 90 per cent.
• The government will withdraw its insurance backing on lines of credit secured on homes, such as home equity lines of credit.

http://www.ctv.ca/CTVNews/TopStories...-rules-110116/

Surprised how fast they acted on this.

[albertGQ]

Wow. That is crazy. No warnings whatsoever.

When they made the changes last April, how much notice did they give?
Two months? Three months?

[Travis Munroe]

Glad to see these changes happening as quick as they are!

[Winsor_Pilates]

Agreed. A warning just creates buying frenzies of people trying to beat the changes. This is the way to do it.
If someone already has a pre-approval for 35 years, can that still be used?

[Street Pharmacist]

Originally Posted by bizaro86

Condo fees also include a provision for maintenance, which isn't part of the calculation for a single family home. Maybe it should be, but it doesn't seem fair to calculate maintenance/water&sewer/landscaping as costs for condo mortgages but not house mortgages.

Maybe, but the purpose of the exercise is to see how much a person reasonably can borrow. Seems to me guaranteed expenses like condo fees should be included

[macker]

Originally Posted by albertGQ

Wow. That is crazy. No warnings whatsoever.

When they made the changes last April, how much notice did they give?
Two months? Three months?

http://www.cbc.ca/canada/story/2010/...s-warning.html

The warning came on December 13, 2010 as noted above. Carney gives several warnings that the party is over and "cheap money is not a long-term growth strategy" he warned. Flaherty was even more clear on his warning as he pointed out that the government has twice tightened mortgage rules, in 2008 and early 2010, and will do so again if it becomes necessary. That was over a month ago and it has now become necessary. No surprise at all.

Also, rates are likely not going up as soon as originally thought : http://www.bloomberg.com/news/2011-0...da-credit.html
I think the strong CDN currency has such an effect on manufacturing etc that it acts as an interest rate increase to the degree that Carney can afford to put off rate increases if the CDN $ stays strong.

[albertGQ]

Looks like the changes won't be coming into effect until March and April so we will see that frenzy afterall.

[chemgear]

Originally Posted by albertGQ

Looks like the changes won't be coming into effect until March and April so we will see that frenzy afterall.

omgomgomg panic sales/purchase rush!

Yup, numbers will probably be a little wonky (on the upside I'd imagine) for several weeks.

EDIT:

Originally Posted by fotze

It says they will not back HELOC's etc, anymore? What will that mean? The banks will start jacking up the costs to cover the additional risks?

Perhaps a larger spread from the "prime" interest rate? What is it for most people, a full point?

[chemgear]

Originally Posted by albertGQ

Looks like the changes won't be coming into effect until March and April so we will see that frenzy afterall.

I believe I read somewhere that they HAVE to give at least 60 days notice before making such changes (no choice apparently.)

Here is another update and a very good post:

http://calgaryrealestatereview.com/2...l-estate-blog/

Let’s take a look at the number of SFHs that sold at or above list price in 2010 by quarter with what percentage it made of the total amount sold during that same time period in brackets.

January-March: 404 (12.7%)
April-June: 291 (7.3%)
July-September: 141 (5.1%)
October-December: 151 (6%)

Of those that sold at or above list price, at least 153 had a price reduction within the same listing period. The average price reduction of those 153 was $31k. (Reductions ranged between $900 and $341,000, median reduction was $20k)

Others expired or terminated and then relisted for a lower price before they sold at or above LP

[oilyfan]

Originally Posted by albertGQ

Looks like the changes won't be coming into effect until March and April so we will see that frenzy afterall.

I am wondering the same thing...

[macker]

Good article from The Globe on this....
http://www.theglobeandmail.com/repor...rticle1872727/

Flaherty video spells things out....
http://www.theglobeandmail.com/repor.../?from=1872727



Surprised NA isn't selling off more here as over 50% of their business is Heloc based.....RY and the other 4 big banks are holding up well also, thus far....market is not sure yet....

[macker]

The first of these changes to become effective on March 18, 2011 for amortization and refinancing rules and the Home Equity Line of Credit to take effect on April 18, 2011.

Basically two to three months to take action if you want to play by the easy rules....They had to do something as the current system was just adding to the debt issues that are facing Canada today....Good move in the long run....

[photon]

So what's the deal with existing HELOCs? Will they still be business as usual? It's not like everyone with a 35 year mortgage all of a sudden has to get a 30 year mortgage.

[photon]

Oh ok, I'll probably be ok then, back when other HELOCs were being bumped up to prime + whatever mine stayed at prime - 0.5%, so I hope there's no changes again.

I guess I should call them though.

[macker]

Originally Posted by photon

So what's the deal with existing HELOCs? Will they still be business as usual? It's not like everyone with a 35 year mortgage all of a sudden has to get a 30 year mortgage.

Changes are for new applicants only. You can stay the course and won't need to come up with money at renewal but your ability to pull equity is limited.
Government insurance was intended to help buy a house not buy other stuff with the home as collateral so these changes should help stop that. Maybe more credit card debt though.....and higher debt servicing so that banks may do well on that side...