Richard & Liz Bergeron

Calgary’s Real Estate Specialists

Richard's Cell: 403-819-2331 | Liz's Cell: 403-875-8470

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1.       This program is for first time buyer, owner occupied, insured purchases only. (speak with your mortgage agent about the definition of First Time Buyer.)

2.       The program will be accepting applications after September 02, 2019

3.       First possessions must be after November 01, 2019

4.      Maximum household qualifying income is $120,000 per year.

5.        Maximum first mortgage and buyer incentive is 4 times annual income, maxed out at $480,000.

6.      The Government Incentive is protected by a Shared Equity Mortgage ( SEM ) registered in second position on title.

7.       SEM is 5 % of the purchase price for existing homes and mobiles

8.      SEM is 10% of the purchase price for new construction homes.

9.      The first mortgage must be more the 80% loan to value and insured by one of our three mortgage insurance companies

10.   No payments are required for the SEM.

11.    SEM must be repaid upon sale or within 25 years.

12.    SEM can be paid out early without penalty.

13.    When the SEM is paid out the government is repaid 5% or 10% of the gross sale price or the deemed fair market value if paid out early.

14.   Legal fees to register, or discharge or appraisals are to the cost of the homebuyer.

15.    Minimum 5 % down payment is still required or sliding scale if purchase price creeps above $500,000.

16.   Only Traditional down payment soruces is accepted.

17.    Applicants will be approved by the mortgage insurance companies.

Benefits:

·        Home buyer’s immediate monthly ownership costs are reduced by the Principal and Interest on the SEM amount. (say a couple hundred dollars).  That has value.

Concerns:

·       The Home buyer has the Government as an equity partner with a second mortgage registered on title. Creates lots of issues down the road for refinancing, getting a Line of Credit, buying out a spouse, selling to a family member, arguing with the government about what your house is worth.

·       Using this program, home buyers qualify for a slightly smaller purchase price than if they do not use it.

·       If the home buyer puts money into home improvements prior to repaying the SEM, the increase in value from the improvements, when they sell or refinance, is shared with the government. Because repayment is based upon gross sale price, they will be paying a 5 or 10% tax on their home improvements expenditures.

The government has been conducting training sessions for industry members and providing additional information. We are happy to share this if you are interested. Contact your Jencor Representative for more information.

PS: Interest rates:

On another issue, long term sovereign debt has been offering decreasing yields the last few months and showing a sharp decrease the last two weeks. Many European and Asian countries continue to have a negative yield on their bonds. Investors have to pay a premium to buy a long-term interest bearing bond. The investor does not get a return. For example, a 6% cost on a 20 year German bond yesterday.

Our 5 year mortgage rates are going down, not as sharply, you still have to pay interest on a mortgage, but some of that worldwide decline is showing up in lower mortgage rates.

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Oversupply is slowing, but a buyers' market remains

City of Calgary, July 2, 2019 – New listings coming onto the market continued to decline in June, which is helping to reduce the oversupply of homes in Calgary.

Year-over-year, new listings saw a decrease of nearly 19 per cent. Sales activity slowed this month compared to last year by six per cent, but the pullback in new listings was enough to cause inventories to fall by 13 per cent compared to last year’s elevated levels.

“So far, the housing market has generally behaved as expected this year. Sales activity remains just below last year’s levels, prices have eased and supply is starting to adjust to the lower level of sales,” said CREB® chief economist Ann-Marie Lurie.

“However, it is mostly product priced under $500,000 that is trending towards more balanced conditions.”

While the market still favours the buyer – with 4.3 months of supply – the amount of oversupply has eased and is slowing the decline in prices. As of June, the benchmark price in the city was $425,700, nearly four per cent below last year’s levels and comparable to unadjusted prices recorded last month.

HOUSING MARKET FACTS

Detached

  • Detached sales in June declined by nine per cent compared to last year, causing year-to-date sales to ease by nearly three per cent. The decline in sales was mostly driven by homes priced above $500,000.
  • Detached homes priced under $500,000 have recorded improvements in sales and oversupply reductions. The tightening in the lower end of the market will likely start to support price growth in this sector of the market.
  • Despite city wide year-to-date sales declines, activity improved in both the South and North West districts of the city. Sales did ease across other districts, but in some of the most affordable districts (North East and East) supply-to-demand ratios are improving compared to last year. This is pushing those markets toward more balanced conditions.
  • Despite slower sales activity, the amount of inventory declined by nearly 18 per cent. The reduction in inventories occurred throughout all districts.
  • Prices have remained relatively stable over the past few months, with some modest monthly improvements. However, the oversupply scenario has left prices nearly four per cent below last year’s levels.

Apartment

  • Apartment condominium sales eased in June, causing year-to-date sales to total 1,292 units. This is over seven per cent below last year’s levels. Over the same time frame, new listings eased by over 15 per cent, helping reduce some of the resale inventory in the market.
  • Resale inventory levels have declined, but the months of supply continue to remain elevated at 6.8 months. Combined with elevated inventories in the competing rental and new-home markets, this continues to weigh on resale pricing.
  • June’s benchmark price was $250,200, three per cent below last year’s levels. This is resulting in a total price adjustment of over 17 per cent since 2014.

Attached

  • Unlike other property types, sales activity for attached product continued to improve in June. Year-to-date sales total 1,955 units, nearly three per cent above last year’s levels. Improvements were driven mostly by growth in demand for semi-detached product. Attached sales improved across all districts except the North West and West.
  • New listings have eased compared to last year, which is starting to reduce oversupply in the market. Like all other sectors, the attached market remains oversupplied and this is impacting prices.
  • June’s benchmark prices were $399,700 for semi-detached and $286,300 for row product. Respectively, this represents year-over-year declines of 3.3 and 5.4 per cent.
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Spring has arrived and we’re starting to get a better sense of the real estate market in Canada this year. Sales and listings have been on the decline, but we’re still seeing small price increases in parts of the country. This isn’t a huge surprise since sales are typically slow during the winter so we may see some movement in the near future.

Recognizing that affordability is still an issue for many first-time home buyers, the federal government proposed a $1.25-billion incentive program that would help finance five to ten per cent of a prospective buyer’s mortgage as part of a shared equity program as long as they have a minimum down payment for the home purchase. They also plan to increase the amount that first-time buyers can withdraw from their RRSPs, from $25,000 to $35,000, per individual.

This news may help new buyers, but there are many other factors that all potential buyers need to consider when they start looking for a home.


Fixed vs Variable rate mortgages

Studies going back to 1950 show that, in general, borrowers tend to save money when they choose a variable rate mortgage instead of a fixed rate mortgage. A five-year fixed rate mortgage – by far the most common mortgage term in Canada – typically comes with a higher interest rate than variable rate mortgages or shorter term fixed rate mortgages.

Fixed rate borrowers pay a premium for predictability, knowing their mortgage payments won’t be upset when the Bank of Canada hikes interest rates.

Variable or floating rate borrowers, on the other hand, will see their rates rise and fall whenever the prime rate moves. These borrowers are betting that interest rates won’t rise above the current fixed rate, or that rates rise much later in the mortgage term when they’ve already made significant savings on the spread.

The variable mortgage argument has been less compelling lately as the spread between fixed and variable rates narrows.

Take Equitable Bank’s current 5-year adjustable rate mortgage of 2.95% versus its 5-year fixed mortgage rate of 3.14%. The spread is just 19 basis points and so all it takes is the Bank of Canada to increase rates by 1/4 of a percent for variable rate borrowers to see their rate surpass the fixed rate.

A good rule of thumb to follow is when the spread between fixed and variable rates is less than 50 basis points, go ahead and lock-in the fixed rate. When the spread is closer to 75 or 100 basis points, the variable rate is more attractive.

Despite the historical data which many of your clients may be aware of, now is a good time to educate them about the current interest rate environment and how it affects them so they can pick a mortgage that fits their lifestyle.


Why a Credit Score is important for home ownership

Home buyers need a strong credit profile to access the best mortgage rates and terms. That starts with a solid credit score. Typically, a borrower with a credit score above 700 will qualify for the best mortgage options. It starts to get more difficult to qualify for the best rates and terms once your score dips below 680.

Lenders don’t focus solely on the credit score, however, as they’ll also examine payment history, outstanding debts, total debt load, number of open accounts, and the age of accounts.

Some of your clients might consider cancelling open credit cards or reducing credit limits, but that could be a mistake and can actually lower their credit score. Reducing the amount of credit you have access to lowers your credit utilization – a key component that makes up 30% of your credit score. Cancelling a credit card – especially an older card – reduces the average age of your accounts, and the credit bureaus prefer to see accounts with a long established history of credit use.

If your clients want to increase their credit score before buying a home, they could check their credit report for any errors, keep all credit accounts open, increase the credit limit on any existing accounts (to lower their overall utilization), pay off bills on time, and keep their credit balances at no more than 30% of available credit. They’ll also want to avoid applying for new credit, as an inquiry can lower their score temporarily by 10 points or so.


Picking a mortgage that works for your client in decreasing rate environment

Interest rates have been on the rise with five rate hikes between mid-2017 and last fall. But now, Bank of Canada Governor Stephen Poloz is signalling a slow down and has even left the door open for stimulative rate cuts.

Picking a mortgage in a decreasing rate environment can be equally as tricky as selecting one while rates are rising. Borrowers don’t want to leave money on the table by locking in to a higher rate, only to watch rates fall in the near term.

That’s where a shorter term mortgage can come in handy. While as many as two-thirds of borrowers choose a five-year fixed rate mortgage term, Canadians do have the option to select a one or two year mortgage term.

Possible advantages to selecting a short term fixed rate mortgage include that short term mortgage rates are typically lower than longer term rates. A short term also preserves the borrowers negotiating power rather than locking it in for five years. In a decreasing rate environment, the more opportunities one has to negotiate their rate, the more money they’ll typically save over the long term.


Imagine locking into a 1-year fixed rate mortgage at 2.99% when the 5-year rate is at 3.14%. If rates have fallen when it’s time to renew the following year, your clients may have the option to lock-in for five years at a lower rate, or continue to go with a shorter term as they ride the rate curve down even further.
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City of Calgary, May 1, 2019 – There have been no significant changes occurring in sales activity, but the number of new listings coming onto the market continues to ease relative to 2018 levels. 

The decline in new listings was enough to start chipping away at overall inventory levels, which have eased slightly compared to last year.

The slight adjustment in supply levels has helped support further reductions in the months of supply, which was 4.6 months in April. While this level still represents oversupply in our market, it does reflect improvement from the nearly seven months of supply that we saw at the start of the year.

“Demand remains relatively weak in the resale market. However, if supply levels continue to adjust, this could help reduce the amount of oversupply and eventually support some price stability,” said CREB® chief economist Ann-Marie Lurie.

As of April, the total residential benchmark price in Calgary was $415,900. This is slightly higher than last month, but still nearly five per cent lower than last year’s levels.

Citywide sales were 1,547 units in April, two per cent higher than last year’s levels. Year-to-date sales remain nearly six per cent lower than last year and are 26 per cent below longer-term averages.

“Sales have been improving mostly in the lower price ranges, causing tighter supply conditions in that segment.  This will likely have a different impact on price trends in the lower price ranges depending on location,” said Lurie.


HOUSING MARKET FACTS

Detached

  • Detached sales improved by nearly three per cent in April compared to last year, due to gains in homes priced under $500,000. However, with 930 sales, activity still remain 24 per cent below long-term averages.  Recent gains were also not high enough to offset pullbacks earlier in the year, causing year-to-date sales to fall by over five per cent.
  • Improving sales did not occur across all districts. In April, there was growth in the North East, North West, South and South East districts of the city. Despite some signs of sales improvement, overall sales activity remains well below 10-year averages throughout every region in the city.
  • April detached inventories citywide continue to remain just above levels recorded last year. Months of supply remain relatively unchanged at four months.
  • The amount of oversupply has varied significantly depending on the area of the city. Months of supply has only risen in the City Centre, South and West districts of the city.
  • Despite some of the adjustments occurring in the detached sector, overall April prices remain lower than last year’s levels across all districts. Year to date, the largest year-over-year declines occurred in in the City Centre, North West and South districts.

Apartment

  • Despite the affordability of apartment condominiums, sales activity continues to fall across the city and in most districts. There have been 714 apartment condominium sales so far this year, the lowest level since 2001.
  • The decline in new listings has started to outweigh the sales decline, causing inventories to ease. As of April, resale apartment condominium inventories totaled 1,546 units, 16 per cent lower than inventory levels last April.
  • The easing inventories have also caused the months of supply to decline to just above six months. While this is still a buyers’ market, this trend could help ease the downward pressure on prices if it continues.
  • Apartment condominium prices in April totalled $250,400, comparable to last month, but over two per cent below last year’s levels and nearly 17 per cent below 2014 highs.

Attached

  • Attached sales activity improved compared to last year’s levels for the second straight month, almost offsetting the declines occurring in the first two months of the year.  Year-to-date sales were 1,113 units, nearly one per cent below last year’s levels, and 14 per cent below long-term averages.
  • Year-to-date sales have improved in all districts except the City Centre, North West and West.
  • Improved sales and easing listings have helped prevent further inventory gains in this sector and overall months of supply have trended down to five months.
  • Following several months of prices trending down, semi-detached benchmark prices in April rose over the previous month. However, prices remain over five per cent below last year’s levels at $395,300.
  • Row prices were $284,900 in April, over five per cent below last year’s levels.


REGIONAL MARKET FACTS

Airdrie

  • Stronger sales in March and April offset earlier declines, causing year-to-date sales to total 363 units, similar to levels recorded last year. New listings continue to decline, causing April inventories to ease compared to last year. Months of supply remain elevated at five months, but this is a notable improvement compared to last year, when months of supply was over six months.
  • Rising sales and easing inventories helped prevent further price declines in April compared to March. However, overall, April prices remained nearly four per cent below last year’s levels. Prices have eased across all property types, with the largest year-to-date decline in the apartment sector at eight per cent.

Cochrane

  • Despite improving sales in April, year-to-date sales in Cochrane eased by six per cent compared to last year. However, new listings have also eased, helping reduce some of the inventory in the market.  While inventories and months of supply remain elevated, for the first time since June 2018, the months of supply fell below six months.
  • Some improvement with oversupply has likely prevented further monthly declines in prices. As of April, total benchmark prices remain over three per cent below last year’s levels for a total of $415,100.

Okotoks

  • Despite some recent improvements in sales, year-to-date sales activity slowed compared to last year. New listings have also eased, but it was not enough to prevent further inventory gains, keeping months of supply above five months.
  • The amount of oversupply has impacted prices. April residential prices totalled $406,700. This is nearly four per cent below last year’s levels. Price declines were slightly higher in the attached sector, with a year-over-year decline of nearly five per cent.
 
 
             
 
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Beautifully upgraded 2 bdrm PLUS Den, 2 1/2 bath, estate sized suite, high atop “A” tower at Eau Claire Estates! Enjoy lovely expansive views in all directions - Mountain & River views plus city skyline! All baths and kitchen are renovated, extensive built-ins and cabinets by Legacy Cabinets are throughout the suite, gorgeous stainless steel appliances in the kitchen with sunny nook area, solid surface countertops throughout, engineered wood floors, fireplace in the den, luxurious en-suite bath with double sinks and huge two person shower! There are two separate titled parking stalls included. AAA building amenities include 24 hr concierge service, plenty of guest parking, renovated indoor swimming pool & spa, fitness facility, huge south side terrace on the main level, car wash bay, gorgeous manicured courtyard & a putting green. Condo fees include everything! Come live the lifestyle you have been waiting for.

#condocalgary #condoscalgary
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NEW LISTING! $439,900

505, 110 7 ST. SW - LA CAILLE PARKE PLACE

SW sunny & bright corner suite w/1026 SF, 2bdrms & 2 full baths in the prestigious LaCaille Park Place! You’re sure to love the large wall of curved floor to ceiling windows in the living room that provides plenty of natural light & lovely city skyline views. Cozy up to the gas fireplace, enjoy the hardwood floors, entertainment style kitchen with luxurious granite countertops, under cabinet lighting & stainless steel appliances, large master retreat w/5 pc ensuite bath with soaker tub, separate shower stall & double sinks, second bdrm, 2nd bath with oversized shower! Don’t forget the suite is fully air conditioned, includes 1 titled parking stall & a storage locker. Building amenities include concierge service, car wash bay. Condo fees include electricity & the building is pet friendly! This is a fabulous Eau Claire location, just steps to the Bow River & River Pathways, steps to shops & restaurants and the indoor +15 walkway network. Start to enjoy your inner city lifestyle and book your viewing today!
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NEW LISTING!

$224,900 in Sunalta! 1810 11 Ave SW

STYLISH & CHIC, RENOVATED, 728 SF top floor corner suite thats ready for you to MOVE IN! Boasting a great location 1 block to the LRT stop in Sunalta, PLUS with TWO underground parking stalls included this 2 bdrm suite is amazingly priced for the first time buyer or savvy investor. You are sure to feel right at home when you see all this suite has to offer – entertainment style, completely renovated kitchen with island, granite counter tops, mocha cabinets, gorgeous backsplash & stainless steel appliances. There is new contemporary lighting throughout, laminate flooring & patio doors off the living room lead to the NE balcony with city skyline views. The reno’d bath showcases full tile surround, soaker tub & oversized vanity. Master bedroom has a wall of closets (YES!) & the second bedroom is perfect for a room mate or home office. Don’t forget the in-suite laundry. Call to view today because all that’s missing is you!
#buycondocalgary #condoscalgary
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Video Tour of 201C 500 Eau Claire Ave SW $418,900
https://youtu.be/W6bb1ux5djE
Lovely 2 bdrm & 2 full bath suite on the 2nd floor w/sunny south facing balcony PLUS a SUPER LARGE Private 2nd Patio (25’8 x 14’5) overlooking the courtyard! Beautiful new kitchen w/white quartz countertops, deep stainless steel sink, stainless steel appliances & glass tile backsplash, fabulous new ensuite bath w/double sinks, spacious 2 person glass shower & recessed lighting. The living room is very spacious & offers a wood burning fireplace, corner windows, separate dining area & sliding doors to south facing balcony. Large master with tons of closet space, too. At 1338 SF this lovely floorplan offers all the space you need! Condo fees cover everything incl. electricity & basic cable! Building amenities: concierge service, indoor pool & spa, fitness facility (all recently renovated!), car wash bay, huge south side patio, magnificent courtyard & outdoor garden planters for residents. All on the banks of the Bow River with pathways, restaurants, shops, services & the DT core just outside your door.
#condoforsalecalgary #calgarycondo
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Mortgage Professionals Canada welcomes aspects of the housing affordability component of today’s Federal Budget.
 
The announcement of a new CMHC First-Time Home Buyers Incentive Plan represents a shared equity mortgage program that would give eligible first-time homebuyers the ability to lower their borrowing costs by sharing the cost of buying a home with CMHC.

The incentive would provide funding (equity sharing) of up to five percent of the purchase price of an existing home, or 10 percent of a newly constructed home. No ongoing monthly payments are required. The buyer would repay the incentive, for example at resale. The government has budgeted up to $1.25 billion over the next three years to support this program.
 
For example, if a borrower purchases a $400,000 home with five per cent down and a five per cent CMHC shared equity mortgage ($20,000), the size of the borrower’s insured mortgage would be reduced from $380,000 to $360,000, helping to lower the borrower’s monthly mortgage bill. This would make it easier for Canadians to buy homes they can afford.
 
The program limits eligibility to households earning a maximum of $120,000 annually, and lets them borrow no more than four times their annual household income. This limits a home purchase to roughly $505,000. This Incentive Plan will be discussed more fully in the coming days, but it is not expected to begin until fall, 2019. In principle, the increased equity share eligibility for newly constructed homes will help incent new construction and supply across Canada.

Further analysis is needed, however, some aspiring homebuyers, especially at the lower end of the economic ladder, will have greater opportunities to purchase a home with the assistance of this new program.

Also of note is an increase in the eligible RRSP withdrawal amount through the Home Buyers’ Plan (HBP). Previously $25,000, this has been increased to a maximum to $35,000.
 
The budget included a lengthy defense of the current stress tests but does suggest that adjustments may be made in future. Our association will continue to discuss this issue with policymakers.
 
While we did not see immediate movement on the stress tests, and the new Home Buyers Incentive Plan can be seen as an alternate and more targeted response than an insurable 30 year amortization, we are encouraged by the announcements made today.

The forthcoming federal election will provide opportunities to continue the conversations with policymakers and candidates in the coming months. We will continue our ongoing market analysis and maintain our support for a stable housing market for our members and their customers.


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