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Residential real estate outlook balances, experts say

While there is no way to know the future of any industry with complete certainty, many groups still do their best to predict how the real estate market will unfold in the new year. According to a real estate forecast from Calgary Real Estate Board, 2018 is expected to look much like the year prior in the Alberta City. That said, new laws and economic changes could have some influence on residential real estate pricing.

Downward pressure is expected on residential real estate pricing due to stricter lending criteria introduced in Jan. 2018. The Calgary Real Estate Board expects this to be offset by the upward momentum seen in Alberta as it continues to recover from the economic recession. Between these two factors, the forecast predicts a plateau in 2018 that will result in neither a major increase nor decrease in house sales.

Young Canadians opting out of residential real estate market

Much of the news surrounding home ownership amongst younger Canadians suggests that they are not buying due to financial constraints. However, some young professionals in Calgary, Alberta have shared that they are renting despite having the ability to buy a house. They say the low cost of renting in the area and the unsure returns on residential real estate investments have led to this decision.

This Alberta residential real estate trend signals a generational divide. Home ownership rates for those under 35 have been down for the past 10 years, bottoming out at 50.6 percent in the 2016 census. Baby boomer and older generations, meanwhile, have increased home ownership rates with 83.1 percent owning their own residence.

Residential real estate trends make 3-bedroom condos unfeasible

There are a multitude of trends developers consider when deciding on the type and location of homes to build. In Calgary, Alberta, a proposed condominium development raised the question of whether three-bedroom condos were feasible to add on 16th Avenue NW. However, the managing principal of the development company shared that the demand is too low to justify the high price of building this type of residential real estate.

According to the managing principal of the company, land price is the number one factor influencing this decision. Construction costs, including financing costs, interest, profit and regulatory costs from government bodies are also a factor. In this case, three-bedroom condominiums would cost more to construct than two-bedroom condos because they are harder to fit in a smaller plot of land.

Residential real estate values vary by property type in Alberta

For those looking to buy a home, there are many options available. As the value of single-family houses rebound in Calgary, Alberta, the assessed value of condos has gone down in the city. These trends may influence those who are looking to purchase residential real estate in the area.

According to assessment notices mailed to property owners by the City of Calgary, the median assessed value of a condominium in the Alberta City for 2018 is down $10,000 compared to last year. This is the third year these values have declined from the peak median value of $290,000 in 2015. Other types of residential real estate saw a dip due to economic issues following 2015; though, unlike condominiums, the value of stand-alone homes increased between 2016 and 2017.

Steps first-time residential real estate buyers should take

There are many questions about whether younger Canadians will be able to purchase and own a home. While many Alberta millennials continue to rent, others are looking at home ownership as a way to invest in their future. Those who are considering entering the residential real estate market should take a few steps before making this major purchase.

The first thing a prospective Alberta home buyer should do is consider his or her financial situation. This can include reviewing credit scores, looking at income and setting savings goals. Following this financial review, first-time home buyers will be able to set a budget for an affordable home. This budget should allow for the home owner to still save for retirement and to have an emergency fund for things that may break in the house.

Increase in real estate transactions involving condos predicted

As the Alberta real estate market continues to shift, new trends are emerging across the country. In Edmonton, downtown condominiums are becoming increasingly popular choices downtown buyers. Experts say that proximity to amenities and a downsized living space are among the reason they foresee an increase in real estate transactions involving condos in 2018.

In 2017, the trend toward condominiums in Edmonton took off. Eight-six percent of all real estate transactions involving high-rise condos in the city took place in the downtown area in that year, with 4,031 sold in the region between Jan. and Nov. 2017. Many foresee a continuation of this trend as people seek to downsize and live closer to downtown without paying the price of a detached home. Condo hot spots in the coming year may include Old Strathcona, Oliver and the southwest.

Fort McMurray sees sharp increase in foreclosure claims

A natural disaster coupled with economic challenges has led to difficult times for many Fort McMurray homeowners. Courts in the Alberta oil town saw 105 foreclosure claims between April and Oct. 2017. This sharp increase amounts to nearly double the claims compared to the prior fiscal year.

Foreclosure statements of claim are claims filed to court by a bank to begin repossessing a property. A judge must rule in favour of the claimant and issue a foreclosure order before the matter can proceed. So far, these orders have been issued for 19 of the 105 claims between April and Oct. 2017.

Will the residential real estate market take a hit with new laws?

Many factors can impact the performance of the housing market in Canada. While Alberta residents typically look to the economy to determine the outlook of the residential real estate market, legal changes may be having the biggest impact in the new year. The new mortgage stress test, which comes into law in Jan. 2018, has caused the Canadian Real Estate Association to forecast a 5.3 percent drop in national sales in 2018.

The 2018 forecast from the Canadian Real Estate Association prior to the passing of new mortgage law projected 8,500 more residential real estate sales than the adjusted estimates. The Association also predicts that the national home price will slip by 1.8 percent in the new year. Part of the reason for the change is the high number of home buyers who entered the market in late 2017 in order to buy residential real estate before mortgage laws came into effect.

Residential real estate construction increases by 22 percent

Economic factors can have a big impact on property and development in Canada. This can be seen in Alberta, where residential real estate development grew 22 percent in the last quarter. This is led primarily by 37 percent growth in single-family homes. The increase comes after two years of decline in the residential construction sector.

While the growth in the third quarter of 2017 was substantial, construction activity is still below its 2014 peak. While experts say full recovery will take time, growth is expected to continue through 2018. Along with the building of new residential developments, the resale market is also seeing a recovery as Alberta emerges from its recession levels.

Technical glitch may impact Alberta real estate transactions

Technology plays a significant role in many industries now, and when that technology stops working, it can have a major impact. This is the case in Alberta, where the land titles portal was knocked offline during an update over a late November weekend. Buyers are advised pay close attention to any real estate transactions that take place while the land portal is down.

The glitch occurred during the last week November, a time of the month when many Alberta real estate transactions come to fruition. Calgary and Edmonton land titles offices were closed on the Tuesday following the system outage as support teams worked to fix the problem. Service Alberta says that sensitive user information remained secure during the outage, and the disruption was due to a data processing issue caused by a routine system update.


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