“When we look at the overall marketplace, there might be pockets of vulnerability but we remain quite comfortable,” said Gordon Nixon, chief executive officer of Royal Bank of Canada “Frankly, I’d like to see the rhetoric come down a little bit.”

According to CMHC, April saw the highest number of new housing starts nationally since September 2007. Nearly two-thirds of new homes last month were multifamily units, which includes condominiums — a 27% increase year-over-year on a seasonally adjusted basis.

“Wow. This report reflects unbelievable strength in Canadian housing starts, and all of the gain was in multiples again which reflect the ongoing condo craze,” Scotia Capital economist Derek Holt said in a research note.

In Toronto, sales of new condominiums in Toronto reached 6,070 units in the first three months of the year, a record for the first quarter. As many as 40 new projects with more than 11,000 units could come on the market in the second quarter, a trend that may cause inventory of unsold units to approach a record set in 2008.

In Edmonton we've seen lower than normal sales of condos for some time, but builders are busily adding new condo inventory to the market. A report from CMHC released yesterday states:

[In Edmonton] Multi-family starts, which consist of semi-detached units, rows, and apartments, increased in April by 47 per cent year-over-year to 474 units. Gains were most notable among semi-detached units where
foundations were poured for 196 units in April, up from 124 a year earlier. Multi-family housing starts within Edmonton City totalled 256 units, up from 217 starts in April 2011. The remaining areas of the CMA saw strong growth with 218 multi-family units breaking ground, more than double the amount of activity of a year previous. “With 1,596 units to the end of April, multi-family starts across the Edmonton CMA were almost 50 per cent higher than the first four months of 2011, accounting for half of all housing starts so far this year,” added Butchart.

So why are there so many new condos going up in Edmonton? I'm not sure to be honest but I have a few ideas...

• As single family home prices increase, condos become more attractive.
• Babyboomers trade in their large single family homes to free up some cash and enjoy maintenance free condos living.
• New immigrants choose to live close to jobs and cultural centres until they get established.
• New condo inventory is actually decreasing.

According to a report released by CMHC in March, Multiple unit inventories across
Greater Edmonton stood at 868 units in February, representing a 17 per cent decrease from the second month of last year and the lowest level since November 2010. Total new multi-family supply, which includes unabsorbed inventory plus units under construction, stood at 6,444 units in February compared with 5,533 units a year prior. Multiple unit supply hit a cyclical peak of 6,860 units in October of last year and has been moving downward in the past four months.

So... are new condos selling better than resale? Are new condo prices more attractive than resale condos? An answer to those questions would be purely subjective at this point.

I don't always use buyer brokerage agreements, but there are instances where I will require a signed agreement.  I'm not sure how appealing working for free is to you but its not very appealing to me. Nathan in our office recently had clients who were buying a property for their daughter, and since they were paying for it they weren’t really concerned with what she wanted. What they did want was to see almost everything on the market - house, condo, anywhere in Edmonton between $350,000 and $450,000. At last count they had been out looking 9 times and had viewed about 50 properties and written several offers that were not accepted.

In this day of mere postings the likelihood of them picking a listing that offers the buyer's agent $1.00 in compensation for all their time and effort isn't that unlikely.  In fact I almost think that it's a law in real estate that the more time I spend with someone who is looking to buy a property, the more likely it is that they will choose a property offering $1.00 in compensation. In a nutshell, that’s why I would consider using a buyer brokerage agreement in this case. It spells out what I’ll be paid and what my clients expect of me for that compensation. If you are a buyer like this, it will be increasingly more difficult to find an agent who will work as they used to (on the promise of compensation) without the protection of a buyer brokerage agreement. 

This is one of the main reasons buyer brokerage agreements will become more common place.  The competition bureau seems to want to model the Canadian real estate industry after the U.S. industry (cause that's worked so great for the U.S.).  In the States buyer brokerage has been common place for well over a decade.  In the end I won't be surprised if our MLS® looks like the states in a few years as well and thats a whole other story.

Summerside, Edmonton (photo from Edmonton Journal)

These associations or the agreements governing them are usually registered on title by way of a restrictive covenant. Some HOA’s are proactive socially and do lots of community events, while some are just doing the minimum to maintain what they are obligated to maintain. 

Recently one of our clients was contemplating not buying a home they liked because it had HOA fees, while some of the other properties listed for sale in the area didn’t have any HOA fees listed on the MLS® feature sheet. Our client wondered why some owners in an area have to pay fees and some don’t - they didn’t want to pay an HOA fee when their neighbours weren’t. In reality, everyone in the subdivision pays the fee, it just wasn't included on the information sheets for some of the properties. One more reason to make sure you see the title for a property before making an offer.

On a recent post one of our regular readers was lamenting about a Calgary real estate agent who reduced their listing by $100.00. He added that real estate agents will do all kinds of tricks to get clients. In fairness, I don’t know anything about the situation or the agent but of course I’ve got my 2 cents to throw in.

First of all I don’t know whether the $100 it was client directed or something the agent came up with. Having a lot of clients I can tell you they don’t all think the same or have the same strategies - the diversity in personalites is immense. I have had clients list their properties at $301,000 - a huge mistake in this day and age of internet search - but ultimately the decision is theirs. I too have had clients request weird amounts for price reductions (and even stranger amounts for counter offers, but that's a whole other topic). However, when you think about what the seller and agent did by reducing their price by $100.00, while annoying it is actually a little savvy depending on what they are trying to do.

For example, MLXchange (the REALTOR® interface with MLS® data in Edmonton and Calgary) will automatically email that property out to buyers who have searches set up by their agents (if the agents have selected the option to inform their clients of properties that are reduced in price). This is one of several options that agents have available to them when setting up their clients searches.

So if the property in question was getting lots of looks and activity but its starting to slow down (we track all the online activity of our properties on REALTOR.ca, www.EdmontonRealEstate.pro and countless othersites) then they may have wanted people to take another look who have recently seen the property. If on the other hand there is little to no activity on the property, and they want to get an offer on it, then they are probably pissing into the wind so to speak if their intention is to actually sell the property.

I do know that it's my job to do what I can for my clients, and that sometimes means thinking outside of the box. As long as its allowed, it I don’t see the problem with it, although in this case it's probably not what I would've recommended.

Recently I had one such experience where one of the parents told me quite emphatically the property my client wanted to buy in Westmount was WAY over priced. I’m a seasoned negotiator and have been in this position before so I didn’t bite all they way. I explained why I thought it was in the value range, but I could tell they were having none of that. It reminded me of that cartoon where you see the buyer who sees the home as a phone booth, the agent sees it for what it is and the seller sees it as the Taj Mahal.

Anyway, my client loved the property and was pretty disheartened and decided not to make an offer that night but she did call me a couple of days later ready to move forward on it. Unfortunately that very night while we debated the value of the home, the sellers and another buyer came to terms only $3000 thousand less than the list price.

Part of the process of looking at homes, is getting a feel for the market and understanding the current value of homes. After a few times out even the greenest buyers can start to pick out the over and under priced homes. When the parents come on the scene at the last minute, they haven't had the benefit of the research their children have put in to finding a home. So, if your parents are going to have a say in the home you purchase, be sure to bring them along on some of the house hunting trips, so they can get a feel for what is available in your price range. 

The education budget is determined by the province, but the levy is collected by the municipalities (along with property taxes) on behalf of the province. 

With huge class sizes and major layoffs last year, I can understand the need for the increase. So just how much is the education levy going to increase?

• Province-wide the increase is $120 million compared to last year
• In St. Albert the increase is $2.5 million, or 9.64% ($8/month more)
• Spruce Grove and Leduc will see a 12% increase (the maximum amount the province will increase the levy in any year)
• Edmonton - 10.8%
• Strathcona County - 9.8%
• Sturgeon County - 8%
• Provincial average - 6.4%

The majority analysts polled expect some sort of tightening of mortgage rules this year - it could be an increase in the minimum downpayment (currently 5%), a decrease in the amortization period, or other restrictions designed to reduce household debt levels in Canada. Although the analysts agree that housing is overvalued only in Toronto and Vancouver at this time, household debt levels hit an all time high last year in this country.

It is expected that any changes to mortgage rules will come before the spring housing market, some say between now and the federal budget (expected at the end of March). Assuming the rules are tightened, how will this affect our housing market in Edmonton?

Looking at our sales chart below, it is easy to see the annual pattern - sales tend to increase month-over-month for the first half of the year, and decrease month-over-month for the second half of the year (peaking in May or June).

The feds have made changes to the lending rules three times in recent years, and each time they have given Canadians advance notice of the changes. In October, 2008, the maximum amortization was dropped from 40 years to 35 years and the minimum down payment was increased from 0% to 5%. We almost always see sales drop between August and September, and that year there was a jump in sales in September (and then the global financial crisis happened). In April, 2010, changes were made to HELOCS and refinancing, investors were required to put a minimum of 20% down, and they introduced a rule that you had to qualify at the 5 year fixed rate even if you were going to take out a different mortgage (with lower interest rates). That year the sales peaked early (in April) and trailed off for the rest of the year. In April, 2011, the maximum amortization period was dropped to 30 years, and it really didn't seem to affect our market at all.

We will have to wait and see what changes, if any, are made to the lending rules before we can make much of a prediction on how the changes will affect our real estate market in Edmonton. At this point, we have the lowest unemployment rate in the country, and the fastest growing population which tends to lead to a strong housing market. I'm not sure these changes will have any affect on our market at all, other than to push some buyer's plans forward slightly. 

"There is some genuine concern that the housing market and households have been overstretched," TD Securities economist Mazen Issa said. "But in the absence of several triggers for a housing market decline, which are not likely to be forthcoming until at least the middle of next year, the underlying theme is of gradual moderation."

Triggers could include rising mortgage rates, or a sharp increase in unemployment.

"I would say aside from those two cities [Vancouver and Toronto], there's really little evidence whatsoever that the market has gotten ahead of itself," Doug Porter, deputy chief economist at BMO Capital Markets, said.

"Whatever strength we've seen in most cities has simply been the flip side of the decline in borrowing costs.

"Provided we don't get hit with an interest rate shock, then I think the market can adjust to a moderate backup in rates over time."

As we've mentioned a few times in the past few months, we expect Toronto and Vancouver to drag down the national housing numbers for the next while, just as it dragged them up for the past couple of years. The national real estate market gets a lot of press, but it really does little, if anything, to show what is happening in markets across the country. National stories can certainly have an affect on consumer confidence, so we will have to wait an see whether or not our strong, local economy over powers the national media.

Seriously though, it has often amazed me that even though Edmonton and Calgary brokerages are governed and regulated under the same Act, the way business is transacted in each city differs in a number of ways. Now I’m not trashing one city over another (besides Edmonton is clearly better) I'm just pointing out a difference in practice. The Calgary Real Estate Board recently decided that members no longer have to report pending sales, whereas in Edmonton we haven't had to report pending sales for quite some time.  (When a conditional offer has been accepted by all parties it is considered pending). Once the conditions are removed then it's unconditional.

So whats the big deal?

Well, like many things it depends on perspective. If you are trying to sell your property and it's reported as pending, then it will not show up when agents search for properties unless they search for active and pending listings. In many cases a buyer might not be interested in viewing a property where the seller has the leverage of another deal, or they might not want to get emotionally invested in a property that already has a potential deal in place. So there would be a good chance your property would receive reduced activity. I say good chance because I can’t prove it definitively, but our experience shows it will not receive the full attention of the market place.

From the buyer's perspective you may want to know about all the homes on the market, whether they are pending or not. You could actually be looking at a pending listings and not even know it. If the seller is cautious that it is not a done deal, possibly because of the terms, or the buyer, or buyer's agent's credibility, or just a hunch, the seller may instruct their agent not to disclose other offers.

Whatever the case may be, this is one of those areas where Calgary and Edmonton have operated differently until now. Some other differences between practices in the two cities include:

• In Calgary it is quite common for buyers to have a walkthrough prior to closing on resale properties. This is unheard of in Edmonton. In fact, when I have had lawyers from Calgary handling the conveyancing they have questioned the lack of a walkthrough on the contract. My simple response is that you would have a hard time getting an offer accepted with a walkthrough (unless you are dealing with a private seller).
• In Calgary they regularly use the CBS codes on their keyboxes. This is an additional code that the buyer's agent must obtain from the sellers agent in order to open the keybox for a specific property. When I have used the CBS code here, not only have I had to teach every agent how to use the code, I get a fair bit of negative blowback on that extra step and in some cases miss out on showings.

These are just a couple of minor examples. I can’t even say one association is more proactive than the other; at times Edmonton has blazed the trail adopting new technologies and practices, and at other times Calgary has led the way. No matter what, it's still fun to tease my Calgary counterparts.