Calgary Alberta Mortgage and Real Estate News

Canadian new-home construction unexpectedly accelerated in November, as builders began work on more apartments and condominiums.Housing starts rose to 225,000 from 223,200 in October, the Canada Mortgage and Housing Corp. said today in Ottawa. Economists predicted housing starts would decline to 220,000 units, according to the median of 20 estimates in a Bloomberg News survey.

Starts of urban multifamily units increased 5.7 percent to 105,600 units. Urban single-family housing starts fell 4.2 percent to 87,900 units.

Today’s report adds to other signs this week of a stronger Canadian housing market. Canadian building permits surged unexpectedly to the second-highest ever in October, led by multifamily houses and commercial buildings such as hotels and restaurants, Statistics Canada said Dec. 6.

The Bank of Canada said in a Dec. 5 interest-rate announcement that risks to Canada’s economy are balanced between faster-than-expected consumer spending and home price gains, and a U.S. slowdown that crimps exports. The central bank kept its benchmark rate unchanged at 4.25 percent for the fourth straight meeting, after seven consecutive increases from September 2005 to May.

The value of Canadian building permits soared to near record highs in October, propelled by an increase in demand for multi-family and commercial dwellings. 

Strong performances by Alberta and British Columbia pushed construction intentions past the $6 billion mark for the second time on record. 

Calgary has already set a record for yearly totals with two months left to go. The last time the value of Canadian permits was this high was last December, when they were valued at $6.3 billion. 

In Toronto, the value of building permits rose by 3.5 per cent from September to pass the $1 billion mark for the second time this year. 

But despite the city’s strong performance, the picture was murkier in Ontario as the value of permits declined by 1.8 per cent from $1.96 billion in September to $1.92 billion this month. 

“In the non-residential sector, which drove the decline in October, basically it’s the industrial component that declined because commercial and institutional were up,” said Etienne Saint-Pierre, an analyst at Statistics Canada. 

Saint-Pierre noted the value of Ontario’s industrial sector permits fell by 40 per cent from September to $119,300,000 in October. Hurting Ontario, he notes, is its struggling manufacturing sector. 

“I think the big picture is construction is slowing east of Manitoba,” said housing analyst Will Dunning. 

Though Ontario is still close to the peak in construction it experienced during the last two years, Dunning said, “it’s likely to slow a little bit but only very gradually the coming year.” 

On the other hand, Ontario’s residential fortunes have continued to rise as permit values showed a 2.6 per cent increase based on strong gains in proposals for multi-family dwellings. 

In a separate report, the Toronto Real Estate Board said the GTA’s resale housing market remained strong in November.About 6,281 homes were resold last month, compared with 6,646 last year. 

“The market is holding very steady as we progress through autumn and we are seeing a good level of activity across the board,” said Dorothy Mason, president of the board.

OTTAWA — A new study reports that Canadians are spending a greater proportion of their incomes on housing than they used to.
The Statistics Canada report says the vast majority of households live in suitable and adequate housing, but 1.7 million — or 14 per cent — spent 30 per cent or more of their budgets on shelter costs in 2004.
Traditionally, affordability has been based on a ratio of housing costs to total household income, with a household paying 30 per cent or more of its pre-tax income for housing considered to have affordability problems.
The study found 12 per cent of those spending more than the traditional limit spent between 30 and 50 per cent of their incomes on housing, and two per cent spent 50 per cent or more on housing.
The study found that people who rented were more likely to experience affordability problems.
Almost a third (31 per cent) of people who rented spent 30 per cent or more of their budgets on shelter compared with only six per cent of those who owned their homes, and most of them were living alone, relying on government assistance, or had low incomes.
The average shelter cost in 2004 was $9,400, about 15 per cent of the average household budget.

Real estate bidding wars in Calgary have shifted from the residential sector to the office sector.

With virtually no space available for lease in the downtown, the city’s office rental market is on fire. A study from real estate firm CB Richard Ellis Ltd. also added a new title to the oilpatch: most expensive office market in Canada.

Occupancy costs in Calgary climbed to US$53.51 a square foot per annum in the third quarter, according to the real estate company.

That was higher than Toronto, which had occupancy costs of US$52.80.

“It’s extraordinarily tight,” said Damien Mills, a partner with Cresa Partners, a real estate company that represents tenants. “If we get 5,000 sq. ft. come on the market, we will have multiple bidders going for it.

“Calgary needs space and it needs it now.”

CB Richard Ellis surveyed 176 cities around the world and the good news for Canada is only two cities — Toronto and Calgary — cracked the top 50 markets in terms of expense.

Occupancy costs, calculated in U.S. dollars, included base rent, taxes and operating expenses such as heat and hydro.

“Canadian cities remain very, very competitive on the world scene when it comes to occupancy costs,” said Blake Hutcheson, president of CB Richard Ellis.

The most expensive district in the world continues to be London’s West End, where occupancy costs are US$212.03 per sq. ft. Tokyo’s inner central district finished second at US$145.68 per sq. ft. Midtown Manhattan was the most expensive North American district, with occupancy costs of US$62.07 per sq. ft.

While Alberta’s booming energy market has helped spur growth and made demand for office space soar, along with base rents, the real estate company says the city is still a bargain by international standards.

“As would be expected from the continuing high growth in Western Canada, Calgary is the most expensive city in Canada, but is still very, very low in costs when compared with other leading world business centres,” Mr. Hutcheson said.

Edmonton has also benefited from the energy boom, the study says.

Occupancy costs climbed to US$29.58 from US$17.45 two quarters ago.

Toronto’s slip to second place came despite the fact it remains one of the most heavily taxed jurisdictions that CB Richard Ellis studied.

The real estate company said 23% of occupancy costs in Toronto come from taxes, compared with 8% in Calgary.

“Toronto remains highly competitive in terms of costs and would be even more competitive if our commercial real estate taxes were lower and more in line with those of other cities around the world,” Mr. Hutcheson said.

A Clarkson couple is circulating a petition this weekend asking the Ontario government to help prevent real estate fraud. Bill and Muriel Chudiak already have 200 signatures on the petition, which was initiated by Barrie-Simcoe-Bradford MPP Joe Tascona to support his Private Member’s Bill, called the Restore the Deed Act.

Muriel, an insurance broker, hopes to have 300 signatures by Monday.

“This bill is peace of mind for all of us that own our own houses,” she said. “We won’t have to worry about someone taking it out from underneath us.”

Government Services Minister Gerry Phillips has introduced his own bill intended to ensure that ownership of a property cannot be lost as a result of the registration of a falsified mortgage, fraudulent sale or forged power of attorney.

Liberal Bill 152 amends 53 pieces of legislation, including the Land Registration Reform Act and the Land Titles Act, as they affect property owners.

However, Tascona said Phillips’ bill, “does not establish any system to ensure that people with fraudulent intentions don’t still go on the land registry system.”

Tascona said his bill, “prevents the fraud by restricting access to registration of documents to licensed real estate professionals who carry liability insurance.”

It also establishes a system of “no dealings” in which landowners can mark their title, and it can only be removed by them using a Personal Identification Number prior to the property being transferred or mortgaged.

Officials with First Canadian Title, a leading provider for title insurance in Canada, said over 15 per cent of all real estate fraud in the country is committed in Peel, due to the strong housing market here.