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Edmonton Landlords & Investors Newsletter

 April 2007

                                                                                                 Volume 1, Issue No. 1

IN THIS ISSUE

Residential Property Values Continue to Rise

 Association for Landlords

Condos in High Demand by Investors

Investor Mortgages with 10% Down!

Housing Shortage in Edmonton

March Labour Force Indicators

Global Real Estate Markets

 

MORTGAGE RATES

Effective April 12, 2007

Term

Rate

1 year

5.10%

2 years

5.15%

3 years

  5.2%

5 years

  5.09%

10 years

  5.6%

Prime: 6.00% less .90

As published by Centum.

 

MARCH EREB STATS

In the first three months of 2007, the average selling price of a SFD* in the Edmonton area is up 16.5%.

 

6%

Increase in Average Selling Price of SFD

2,653

MLS Sales in March 2007

$325,339

Residential Average Price

$398,476

SFD Average Selling Price

$246,719

Condo Average Selling Price

$323,322

Duplex/Row- house Average Selling Price

*SFDâSingle Family Dwelling

 

RELATED LINKS

Website:

Welcome to our First Issue!

In our work as Realtors, Irv Bennett and I have encountered many Landlords and Real Estate Investors who appreciate relevant, timely information on the changing marketplace. Accurate information is important in making decisions on managing investment properties, so we hope the information we present here will be of value to you. Please provide us with feedback!! 

Phone (780) 893-4958 or e-mail me at marsha@polarissells.com. Next issue we will start our "Landlords Forum" where we answer your specific questions on Landlord and Investor issues. We hope to hear from you. The more feedback we receive, the better we can offer you information you need to know.

Thank you.

        Marsha

Marsha McKelvie, Realtor

Residential Property Values Continue to Rise

Thereâs just no stopping Edmontonâs real estate boom. March figures from the Edmonton Real Estate Board (EREB) show a 6% increase in the average selling price of single family dwellings in the Edmonton area, which brings the increase since January to 16.5%.

The chart above shows the increases in property values for each of condos, duplex/row houses and single family detached homes. As you can see, the trend is very steadily upward in all categories.  

The principals of supply and demand are definitely at work in the Edmonton market. Inventory of residential properties is much lower than it has been for several years now, with a steady decline since about April of 2005.

This chart shows the trends of available properties at the end of each month since January of 2004. That month, Edmonton's inventory stood at 3,986. The highest point was May of 2005, which saw 5,077 properties available on the market.

Since December 06, we have seen the number of listings inching upward. At the end of March we had 2,574 available properties - at least that's about 500 more than we had from December 06 to February 07.  Traditionally, activity picks up in the spring, whatever the market. If this tradition continues, we may see a better supply than we have for a while now.

Association for Landlords

If you are new to the role of landlord, you may not know about the Edmonton Apartment Association (EAA). Before you skip past this article at the word "apartment" - read on! This is ..."an organization that unites people involved in the ownership, management and operation of residential rental properties to promote professionalism, education and equity in all aspects of the Residential Rental Business for the benefit of industry members and tenants."

So if you own an investment property of any description - a single family detached home, a condominium, a duplex or a row house, the EAA is worth checking out. They offer many benefits to members, including:

  • an effective lobby group that works with all levels of government on rental property issues
  • discounts of up to 35% from industry suppliers
  • on-going education and information programs
  • social and network programs

The EAA Newsletter, The Rental Gazette, offers relevant, current information on the rental property industry. Topics of interest in past issues include:

  • Apartment Financing StrategiesÂ
  • Market Forecasts - Where the Market is HeadingÂ
  • Mail and ID TheftÂ
  • The Impact of High Heating Costs on your InvestmentÂ

Check out the .  You can never have enough resources to help you manage your investments profitably.

Condos in High Demand by Investors

Properties continue to sell quickly â in March, the average number of days-on-market (DOM) was 24. That is down from last yearâs hectic pace of 19 DOM, but still considerably quicker than the 40 and 44 DOM averages in 2005 and 2004.  

A growing segment of the condominium market comes from condo conversions.

This is where an older apartment building is condominiumized. In this process, the building is registered as a condominium with separate title for each apartment. The units are usually renovated, and put up for sale.

With the bullish real estate in Edmonton, there is high âand growing â interest by investors to get a piece of the action. Such condominiumized apartments often appeal to investors, as the unit will be in demand by renters. The growing number of individual houses, apartment condos and townhouses owned by investors are not only comprising a larger segment of the market, but also contribute to net losses in the rental market.

Condominium conversions have several effects:

à        a conversion means the number of rental units in the market has decreased, since many are purchased and occupied by Owners; it also means opportunities for investors to own and rent the units;

à        units purchased as investments often see hefty rent increases, as the investor seeks to cover his costs; 

à        the cumulative effect on Edmonton is continued low vacancy rates â meaning investors shouldnât have any trouble filling their rental properties, and achieving  higher rents from tenants.

 

Edmonton's Housing Shortage:                     Rents on the Rise

Edmontonâs housing shortage is reaching crisis proportions. The annual vacancy rate was pegged at 1.2% in December - with the release of CMHC's annual fall survey results back in December. Not much has changed since then to affect those numbers.  

Any time there is that kind of shortage for rental properties, rents go up. In Alberta, there is currently no legislation addressing how much rents can be increased. Stories abound of dramatic rent increases of hundreds of dollars, and low income tenants and seniors on fixed incomes receiving rental increase they simply cannot afford. Needless to say, various groups are calling for the Alberta government to rectify that situation., and introduce legislation capping rent increases.

Alberta law currently allows rent increases every 6 months, with any increase requiring three months notice to the tenant.

Currently, B.C. and Ontario are the only two provinces with rent increase caps. In B.C., rents can be raised by the current inflation rate plus 2%. In Ontario, the limit is restricted to the annual inflation rate alone.    

Investor Mortgages with 10% down!

Typically, buying an investment residential property has required a 25% down payment, with mortgages offered for up to 75% of the property value. CMHC has offered a rental property program that insures such mortgages with a 15% down payment, if you meet all their criteria. There is a $600 application fee, which is only partially refunded if the application is not approved.

An article in the EREB Real Estate Weekly, (see full article here) highlights the recent announcement by Genworth Financial that they will now insure rental properties up to 90% of the value of the property, both for purchase and refinance mortgages. There is NO application fee.

While borrowers much prove income to qualify for the mortgage, Genworth allows an 80% rental offset for qualification purposes.

This is good new for investors. Naturally you will require a good credit history, but it is certainly worth checking out with your mortgage broker.    

March Labor Force Indicators

Stats Canada latest figures show Alberta is still in the forefront of economic good times in Canada:

  • à        Albertaâs unemployment rate of 3.5% is the lowest in the country

  • à        99,900 new full-time jobs in Alberta over the last year

  • à        5.4% increase in employment

  • à        hourly wages are up 5.4%

Global Real Estate Markets

Canada, and especially Alberta, have strong economies. Alberta is booming, and real estate is proving to be a tremendous investment right now.

So how does the rest of the world fare? According to a report published in the Jerusalem Post, global real estate investments provided a USD 6.6% return, compared to 2.04% for global equities, and 1.29% for global bonds â as of the end of the first quarter of 2007.

Their forecast? A 9% - 15% return for global property markets in 2007. For more details, See full article here.