The following article is a guest post by Brennan Valenzuela, a writer for Ratehub.ca, a website that allows people to compare Canadian mortgage rates. It also features a comprehensive education centre to help address common first-time home buyer questions. Ratehub is a great source for all the latest Canadian mortgage news.
Alberta housing market overview
The oil and gas industry continues to prop up Alberta as a great destination to buy a home. According to StatsCan, Alberta has the highest median total income in Canada, excluding the North West Territories. Don’t expect to see Alberta’s cowboys in Gucci saddle straps and boots by Manolo, though!
Alberta’s biggest city, Calgary, was named the best city to buy a house by Moneyville late last year due to the attractive housing affordability and high standard of living.
Alberta home prices have remained elevated, though still below their peak 2007 levels. The province has the third highest average residential home price at $358,514 behind British Columbia and Ontario, but the actual average price is only a few dollars off the Canadian average ($358,480).
The condo market in Alberta
“The condominium market continues to favour the buyer; however, this market is trending towards balance.” – CREB
When you picture the Canadian prairie lands, towering condos aren’t exactly the first image that comes to mind. However, Albertans have taken a liking to them, especially in Calgary. From December 2010 to December 2011, condo production increased more than 300%. With that much inventory, the Calgary condo market favours the buyer; however, the Calgary Real Estate Board (CREB) believes the market is shifting from a buyers’ to a balanced market.
Browsing through BuzzBuzzHome’s database reveals that there are currently over 300 condo and townhouse projects in Alberta, ranging from preconstruction to the newly finished.
Alberta’s mortgage rates are so low they almost resembles Miikka Kiprusoff’s GAA. Currently, Alberta mortgage rates have been hovering at historic lows, so if you’re looking to buy, now may be a good time to lock in a low rate. Five-year and 10-year fixed mortgage rates can be had for as low as 3.19% and 3.89% respectively.
Other purchase costs to consider
If you’re looking to join the buyers’ market in Alberta before it returns to balance, there are a number of fees and taxes that you must take into consideration in addition to the mortgage financing. So whether you’re shopping for a ranch in Calgary or a home close to the West Edmonton Mall, you’ll need to account for the following closing costs and prepare accordingly.
Alberta Land Transfer Tax
Actually, Alberta does NOT have a land transfer tax like you may find employed in other provinces, but rather a very small Land Title fee. For example, using a land transfer calculator, the fee on a $400,000 property is only $115.
Parts of Alberta can drop to -25C in a heartbeat during the winter months. That would be an awful time to find out your newly purchased home needs a new water heater. That is what home inspections are for, to identify any flaws with regards to the electricity, heating, roofing, and any other issue that may cause for concern. An inspection can range from $300-$500.
Mortgage default (CMHC insurance) is required for high ratio mortgages where the loan-to-value ratio is greater than 80%. In other words, homes you purchase with less than a 20% down payment. The cost of the insurance is rolled into your mortgage. Normally, you would have to pay PST on the insurance out-of-pocket at closing, but Alberta does not have provincial sales tax. So, you’re home free! (Pun intended)
Most lenders will require that you get property insurance to protect against damage. Title insurance, which is mandatory, must be in place to protect you from ownership issues against the title. A real estate lawyer will typically handle setting up this insurance as well as other administrative paperwork.
First-time home buyer rebates
There are numerous costs necessary to prepare if purchasing a home in Canada’s cowboy country. However, as you’re a first-time home buyer in Alberta, you may recoup some of your spending through the First-time Home Buyers’ Tax credit of $750, which may be claimed when you file your income tax. Yee-haw!
Finding your dream home is like striking oil. But before you start planning how many cowboy hats you can fit into your walk-in closet, you need to ready your finances to cover the purchase costs. Assuming you want to ride off into the sunset with the clothes on your back.
And those awesome developments you’re seeing renderings of? Here’s a list of a few of the favourites we included here: