Calgary Realty Report - Tuesday March 9th - Reports Point to Sunny Outlook for Alberta’s Economy

The economic recovery is gaining a foothold in Alberta, according to data released March 6.  Construction of new homes is on the rise again, hiring is resuming and gains in oil prices are helping to bolster the financial markets.

Per Jacques Marcil, an economist with Calgary-based Canada West Foundation, the economy bottomed out, and is now trending upward.  Retail sales are improving, wholesale activity is increasing and the manufacturing sector is exhibiting renewed strength. Marcil said that the economic news is much better than it was at the end of 2009.

After it ground to a halt in late 2008 and early 2009, the realty market in Alberta is showing continued vitality, according to Canada Mortgage and Housing Corporation.  New-construction home starts in February were more than three times the amount posted for the same month last year.  Construction started on 743 homes last month, as compared to only 206 during the same time in 2009.  Single-family homes drove the housing-starts increase, but condominium starts also showed significant gains.  Throughout Alberta on an annualized basis, housing starts rocketed up to 25,200 in February, exhibiting a pace of more than twice that of 2009.

The province’s economic outlook is even rosier as a result of a report issued March 6 by Royal Bank, which contends that people in Alberta show more interest in home-buying during the coming two years than denizens of any of Canada’s other provinces.  This indication of confidence among consumers may be attributable to the perception that the job market has stabilized after many layoffs in the past year.

According a new survey from Manpower Inc., an increased number of businesses in Calgary plan to take on more employees this spring.  For the third quarter in a row, three quarters of those surveyed indicated they would maintain their current staff.

Calgary Realty Report - Friday February 26th - With Occupancy Rate Growth, Boardwalk REIT Curtailing Rental Promotions

Canada’s largest landlord, Board Real Estate Investment Trust, reported that the rental market remains highly competitive although incentives are beginning to subside.  The REIT, based in Calgary, advised that the rising mortgage rates and home prices are creating a positive outlook for the rental market.  Sam Kolias, Boardwalk’s CEO, said that he would probably not know of the market’s true vitality until some time this spring.  However, higher occupancy rates have allowed the company to curtail some of its promotional activity.  

In a conference call with industry analysts, Kolias said that Boardwalk provided aggressive incentives, including a $200-per-month discount on some rental units.  Although that promotion is no longer available, Boardwalk is still offering an incentive of $100 discount on selected properties in Alberta. 

The average rent in Boardwalk’s portfolio experienced a one-percent decline, to $998.  However, decreases were significantly more pronounced in Calgary, where a five-percent shortfall to $1,093 was recorded.  Accounting for more than a third of the REIT’s portfolio, Edmonton rentals fell four percent, resulting in an average rental price of $1,039.  

Genuity Capital Markets industry analyst Mark Rothschild contended that although Boardwalk is cutting back on incentives, the market has not yet stabilized.  He said that once the majority of properties are rented, extensive promotions are not needed to rent the last remaining empty units.  

Kolias believes that the Canadian government’s decision to require higher down payments on properties designated for investment will benefit the rental market.  He said that in the long run, this move would cut back on speculative condominium building construction, providing a better-balanced market. 

Calgary Realty Report - Saturday February 20th - Canada’s Inflation Rate May Inspire Early Mortgage Interest Rate Increase

Will the Bank of Canada hike the mortgage rte prior to its July target date?  Canada’s inflation rate, which rose to 1.9 percent thanks to increases in car prices, vehicle insurance rates and gas costs, may trigger such a happening.

Mark Carney, governor of the Bank of Canada is concerned because prices did not fall as much as expected in 2009 despite the economic downturn. It seems the inflation rate may outpace the recovery rate, and that is worrisome.  Derek Holt, an economist from Scotia Capital thinks he may jump ahead with the interest hike.  Other financial experts believe he will keep to the original date, as promised.  The Bank of Canada will issue its next report on March 2nd.

Benjamin Reitzes, an economist from the Bank of Montreal seems to think that prices will go down because much of that inflation comes from the higher price of gas in 2009.  Gas prices in January 2010 were 23.9 percent higher than January of 2009.  He did note that gas prices have been fairly stable since mid 2009.  He figures if gas prices were taken out of the equation, the inflation rate for Canada would be 1.3 percent.

Consumer prices did rise in all provinces in January.  Atlantic Canada saw the highest increases with Prince Edward Island leading the way at 4 percent. Nova Scotia was not far behind with a 3.1 percent increase.

The prize for the lowest annual inflation went to British Columbia, which only saw a 0.7 percent hike.

Calgary Realty Report - Tuesday February 16th - Calgary Mayor Spars with Premier on Local Funding Initiative

Despite demands made by Calgary’s mayor to resolve a $153-million budget cut, Alberta’s premier said that the city should be appreciative of the grant money it is getting in the new provincial budget.  Dave Bronconnier said he wants a meeting with Ed Stelmach to discuss why the significant cut was made to infrastructure funding.  He contends that under the terms of a signed agreement, negotiation between Calgary and Alberta would be necessary before any large funding changes.

A construction binge is in jeopardy.  The items in question are expansions to the LRT, new recreational centres, new fire halls and purchases of equipment for the city.  Bronconnier said he would consult with the city’s legal advisors to see if it is feasible to file litigation against the province. 

Stelmach said that Calgary will be the beneficiary of $3.3 billion in funds, but it may take more than ten years for that money to arrive in the city’s coffers.  He criticized Bronconnier, saying that other cities would be glad to have the kind of fiscal partnership enjoyed by Calgary.  

The initiative’s original purpose was to deliver $1.4 billion among all municipalities in the province during 2010.  This amount was approximately equal to the amount earned by the province in property tax revenue, although the province now gets a higher amount.  However, the initiative is currently set at less than $900 million, with a respective decrease to Calgary’s share.

Bronconnier took the unusual step to generate a contract that outlines the terms of monies to be delivered by the initiative.  However, he insisted that he is not setting up Calgary to get any preferential treatment.

Calgary Realty Report - Wednesday February 3rd - Tax Credit Incentive Program

Blissfully unaware that his wife wanted him to install a surround tub in the bathroom, Karl Wong's wife, Margaret, went to Home Depot to buy the tub before the federal Home Renovation Tax Credit program ends on Sunday, Jan. 31.

She is part of a wave of Canadians who are finishing up home improvements while they can still write them off as a tax credit.  Hundreds of fellow Canadians flocked to the corporate home renovation stores this past week to buy up the materials they needed.  The tax incentive program allows citizens a 15% tax break on home-supply spending of up to $1,350.

Homeowners who buy renovation materials or hire renovators between January 27, 2009, and February 1, 2010 will be allowed to claim the expense as a tax credit on their 2009 federal taxes.

This tax credit has become widely popular across the country, and the NDP has even called for the Conservative government to extend the program.  The Wong family has already replaced the cabinets and toilets under the program, and Margaret hopes that the new tub will allow them to gain a little more money back.

Hope Depot representative says that most shoppers were buying up materials for minor projects they can complete without the help of a professional.  Canadians have already spent over $135 million on over 17,000 home improvement projects under the Rona program.

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