The new mortgage stress test. What is it?
And how is it going to affect you? For Calgary real estate in May,
what was the good, the ugly,
and what can you expect if you were a buyer getting into the Calgary real estate
market, or even a seller putting up a Calgary home for sale.
In my video today,
I will cover all these things as well as share some important news within the
Calgary real estate market. And if you're new to our channel,
my name is Felix Chan, Calgary realtor,
and mortgage broker with the LiveInnerCity real estate team in Calgary,
Alberta. And this is the best Calgary real estate channel,
where we share tips and honest advice if you want to buy,
sell Calgary real estate or learn about mortgages.
So if you don't want to miss out on valuable information for your journey,
then make sure you hit subscribe and the notification bell so you know,
when our videos come out next. Okay,
let's talk about the new mortgage stress test rules.
What is the more stress test? Well,
it is the rate in which boards must qualify at in order to get a mortgage.
The reason why this was implemented is so that if rates are higher at your
renewal, compared to what you're paying now,
the financial institution wants to make sure that you're able to pay your higher
mortgage payments. On June 1st,
the minimum qualifying rate for a mortgage in Canada went from 4.79% to
5.25% or the mortgage contract rate plus 2%,
whichever is higher.
The contract rate is the rate the bank is offering you the tighter more stress
test rules will apply to both uninsured,
those putting at least 20% down or more and insured mortgages,
those putting less than 20% down.
What this means for you is it reduces your buying power by about 4.5%.
Now, here are my thoughts about it. Uninsured mortgages,
our mortgage brokerage finds that those putting 20% down or more don't typically
maximize their qualifying amount.
So the impact for these borrowers will be minimal if any, at all.
This new stress test mortgage rule was really meant for hot Canadian markets
like Vancouver and Toronto. Unfortunately,
this blanket policy for the entire Canadian real estate market really hurts
those who are trying to save their 5% down and are first time home
buyers, I find that these are the buyers who are maxing out their buying power,
unlike those with 20% down or more. And if that's you,
then in order to qualify, then you'll need a bigger down payment,
more income and/or have a co-signer to help you out as a mortgage broker for the
last 12 years,
my team and I can help you figure out what you can qualify for and what your
mortgage options are.
So you can feel free to reach out to me so we can build a roadmap on how to
successfully purchase your home. Okay,
let's talk about what the Calgary real estate market did in May. Sales.
We saw a total of 2,989 homes sold in the city!
Up by a whopping 177% from the year before.
This was a record setting May if you compare to the month,
dating back from 2007.
Sales rose across all property types. Now,
what is interesting is that the homes above $600,000 represented a
large share of the sales,
this upper end of the market reflected 16% of the sales in may of
2020,
but now in 2021 represents 26% of all sales.
We are heading towards a positive outlook for the rest.
Of the year. Inventory. Overall.
We did have an increase of 88.6% new listings from the same time last
year, add 13.6 more active listings year over year.
Now the inventory gain still not enough to offset the demands so the market
continues to favor the seller.
I did see a surge in apartment listings in the inner city and these numbers,
which I will share with you in a second and confirmed that.
Here's the inventory for property type detached was plus +6%, semi-detached,
-11%
Row and townhouses +16% apartments +38%.
Pricing. Now.
Increased demand equals increased pricing for all property types.
Benchmarks sales price finished off at $455,200
which is 10.6% increase year over year.
Now these price gains encourage more people to sell their homes.
So we may see more listings as a result.
If you're thinking about selling your home and you want more clarity on the
selling process,
step-by-step with a flow chart with timelines between each milestone,
then make sure you check out my video here.
I'll also leave it in the description below. So for detached, we're +12.2%, Row
and townhomes + 7.9, Semi
detached +9.9 and apartments, +4.9.
Now I'm going to share what our team is seeing with streets,
working with buyers and sellers and the challenges that some of our clients are
facing. But first, I want to talk about the months of supply. Now,
this metric determines what kind of market we're in a buyers sellers,
we're about abandoned smarter.
The definition of months of supply means that based on last month sales,
how many months would it take for the Calgary real estate market to absorb all
that inventory.
In Calgary between two and a half and four months of supply means we're in a
balanced market, anything less than two and a half months,
it's a seller's market. Anything more than four months, it is a buyer's market.
So here it is for detached is 1.67,
semi-detached 1.98, Row andtownhouses,
2.54, and apartment 5.18.
Advice for buyers.
Our buyers looking for detached homes are finding it pretty tough to find a home
that they like. And when they do find something that they like,
we end up going into multiple offers. By the way,
if you want to learn more about multiple offers on how to position yourself in
the best way to win in a high stakes like that,
then make sure you watch Jaz's video on how to deal with multiple offers here.
Our buyers looking for townhomes,
especially three bedrooms up and two full bathrooms.
They don't really have a lot of choice out there and just like detached homes,
they're going into multiple offers.
But if you're looking for a condo, you.
Actually have lots to choose from. But if you find something that you like,
we recommend acting on it sooner than later, because you know,
it's not common that condos are going into multiple offers,
but it can still happen as it did with one of my condo listings last.
Month. Advice for sellers. Now for most sellers.
You're in a pretty good position, a little bit less.
So if you have a condo to sell.
Here is the interesting part about condos for a one bed,
one bath condos that are newer in the Downtown, Calgary, Beltline, east
village area. There were 10 sales for May,
but for two bedroom, two bath condos, there were 21 sales in May.
So more than double than one bedroom condos. I currently have three,
two bed,
two bath Calgary Connor for sale downtown with another listing coming up in a
week between $450,000 and $500,000.
And they're getting more showings than my one bedroom,
One bath condo that is listed at $285,000.
I believe that this is attributed to the fact that people still want to be
downtown, but need more space because they're working from home. Now,
if you want to sell your condo,
check out our listings and videos to see if you would like our team to market
your home differently,
to bring you more visibility and exposure to your Calgary condo. By the way,
as a seller,
you can leverage our team's listings because if a buyer isn't feeling the
listing that they saw,
I can encourage them to see our other listings because they're all in similar
size, price and location. For other news,
condo prices remain 16% below 2014 levels.
Now I do believe over the longterm the condo market will recover because one
thing the pandemic will never take away is the lifestyle that downtown
provides. You can't replicate the energy,
the vibe or convenience it has to offer.
And although working from home may be the new norm,
most would probably be required to go into office periodically.
Advice for investors,
time and time again,
the one type of investment property that generates the most cash flow is the
easiest and most simple property to buy and manage is the half duplex with the
legal basement suite. If you're a subscriber,
then you know which one we're talking about.
It's the one that cash flows $400 to $600 per month and is really
hard to get that anywhere else.
Plus you get two years of free property management. If you buy through our team.
I'm going to leave a link above and in the description below and Jaz,
and I are going to be coming out with a new video,
giving you a tour of this exact property for around $500,000 that
You can take advantage of locking in today's pricing so that when you take
you can buy. possession at the end of the year,
you would have already built an equity and you can start building your net worth
with the cash flow you get on a monthly basis.
Give us a call if you're interested,
we are expecting prices to continue to go up. Okay, guys,
if you found this valuable,
then make sure you hit the subscribe and the notification bell,
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Make sure you check out our real estate investing playlist or real estate tips
playlist. My name is Felix Chan, Calgary Realtor,
and mortgage broker with the LiveInnerCity real estate team,
helping you keep real estate simple. And we'll see you in a few seconds.