Improving economy could signal time to move from variable rate.

Toronto- Longer term fixed mortgage rates may soon be a better deal than variable rates for home buyers, says a new report by BMO Capital Markets.

BMO chief economist Douglas Porter and senior economist Benjamin Reitzes say that historically, choosing a variable mortgage rate has been more “cost-effective” than locking in on a five-year fixed rate, but this may no longer be the case as signs of an improving economy continue.

It has been long anticipated that both the Bank of Canada and the U.S. Federal Reserve will move to hike interest rates in 2015.

“True, it may have seemed that markets and economists have played the role of the Little Boy Who Cried Wolf on higher interest rates in recent years,” says the report release Thursday.

But there are emerging signs that the tide is finally turning for rates, especially with the U.S. economy  poised to accelerate.  The bond market has sent out loud warning signals over the past year that the era of low-interest rates may finally be drawing to a close.”

Currently, a five-year fixed mortgage rate from on of the big Canadian banks hovers above three per cent, with variable rates ranging below that.

As bond yields rise they will put pressure on borrowing costs and long-term mortgages, Porter and Reitzes say. “So, even if variable rates take some time to climb, we may not see such low fixed rates again any time soon.” their report says.

Most affected by potential hikes, they said, are those who are already stretched too thinly in the housing marking, so locking in at a higher rate may help this group weather any drastic increases.

“For those who don’t have much financial flexibility and would run into difficulty  form a pronounced upswing in interest rates (typically first-time homebuyers), any potential extra cost for peace of mind now appears to be a price well worth paying,” the report says.

Earlier this week, the Teranet National Bank national composite price index found that home prices are rising steadily.

In February, Canadian home prices rose 0.3 per cent.

The index found that prices were up in all five  markets surveyed in Western Canada  and were down in all eastern markets except Montreal.

– Edmonton Journal – Business B3-Friday March 14, 2014 – The Canadian Press

Wall beds come out of hiding!

Comfortable space savers are turning rooms into multitaskers.

“The clients came to interior designer Laura Casey with a space dilemma: They did not want to give up the guest room in their suburban home, yet they needed a place for their child to play.

Casey came up with a solution often used in small urban apartment: a Murphy Bed. It takes up less space than a sofa sleeper or futon and – unlike many of those – uses a standard mattress, so guests including elderly grandparents, have a more comfortable stay.

“The did not want to compromise the quality of the mattress,” said Casey, owner of Laura Casey Interiors in Charlotte N.C.

The Murphy bed – which tucks into cabinetry when not in use – is enjoying new popularity as a stylish space-saver in many kinds of homes, not just studio apartments.

“It is an interesting trend,” said Chris Fahy, vice president of The Bedder Way Co. in Indianapolis, which makes Murphy beds ans has seen sales rise in recent years. He says many customers are Baby Boomers, empty nesters, and other homeowners who want to turn a bedroom into a hobby room or exercise room but still need a place for grown children, grand children or other guests to sleep.  Fahy’s Murphy beds range in price from $1300-$3100. California Closets, which also makes custom wall beds, has seen the same upward trend, said Ginny Snook Scott, vice president for sale and marketing.

– Edmonton Journal – Homes – Section H – Helen Metella – Saturday March 8, 2014

Were you looking for a space-saving tip, or a multitasking room option. Why not look into a Murphy bed?

It’s all the buzz….St. Albert has topped MoneySense’s annual Best Places to live ranking. 

“Who says size matters? If you’re looking for the best place in Canada to live, perhaps it’s time to think small. Really small. It’s easy to think residing in a modest-sized town means giving up access to all the services and amenities you need or desire, but that doesn’t have to be the case. Satellite communities around major centres are evolving to deliver small-town flare with big-city conveniences. In that way, many of these communities aren’t just great places to live: they’re Canada’s best-kept secrets. Take St. Albert, a community of just 64,000 on the edge of Edmonton that few Canadians have likely ever heard of. They have now, because St. Albert tops MoneySense’s annual Best Places to Live ranking.

The surge of the west is a prominent trend in our ranking. Nearly half the top 20 cities on our list are west of Winnipeg. It’s no fluke. Consider what’s happening in cities like Calgary, which comes in second overall (and was last year’s number one). In addition to offering plenty of opportunities to land high-paying jobs, the city is rapidly expanding its transit system and growing its cultural scene. The tilt westward doesn’t come without some casualties in the east. Orillia and Owen Sound in Ontario are two prime examples. Growth in these cities is stagnant and the job outlook is dim compared to the rest of the country.”

In case you were wondering how they go about reaching these rankings here are some facts from MoneySense:

“In total, we consider 34 different factors before arriving at our winner. To do this, we collect reams of hard data on each city from Environics Analytics and other partners. Then we tease out factors that make a community a truly great place, thereby creating a level playing field. The result is a completely unbiased look at the biggest 201 cities in Canada. ”

“So exactly how does St. Albert, a small city on the fringe of Edmonton, beat out every other city in Canada? Take your pick. Unemployment sits at just above 4%, incomes are among the highest in the country, crime rates are steadily falling, and while its winters can be skin-splittingly cold (averaging 28 days a year with a minimum temperature below -20˚C), there’s plenty of sun all year round.

“The numbers, though, don’t begin to describe the appeal St. Albert holds, especially for young families. At a time when some cities seem to be going to war with kids looking to play a little shinny on the street, St. Albert stands out as a place where cars don’t always come first. Street hockey is encouraged and if you want to close the street for a neighbourhood party, go right ahead. Give the city 10 days’ notice and they’ll barricade the street—the city’s Neighbourhood Watch and Citizen’s Patrol teams will even bring the food.”

So there you have it! St. Albert ranks 1st in the Best Places to Live in Canada.

MoneySense Magazine, by Mark Brown ,March 12th, 2014, From the April 2014 issue of the magazine

From the early 1990s to the beginning of this century, “bigger is better: certainly was the mantra of the home-building industry.  But according to new data, home buyers are seeking less space today but more in green amenities.

Research by the Canadian Home Builders Association has found that many people now desire smaller homes with multi-purpose rooms and energy-saving features. Plus, a survey of International Furnishing and Design Association members forecasts more emphasis will be placed on smaller, more eco-friendly homes.  Family rooms will grow larger, as will kitchens.  Other rooms in the home will disappear, including the living room.

Many homeowners and potential home buyers realize that with girth  comes a cost.  In today’s fragile economy, the ability to cash in on the dream of homeownership may come at the compromise of a smaller, better planned home. According to Tim Bailey, the manager of Avid Canada, a research and consulting firm for the building industry, “While many consumers are willing to forgo space, they are not equating this with having to forfeit functionality.  Design creativity is requisite to adapt to this changing preference.” Here are some thing you will and will not find in newer homes moving forward.

– The dining room is becoming extinct, with larger eat-in-kitchen/entertaining spaces the norm.  The kitchen will be the main room of the home and be renamed the “Kitchen lounge”.

– Seperate rooms are evolving into spaces that serve many different purposes.

– Although the sizes of bathrooms may be scaled back, the amenities will not. Spa-style bathrooms with luxurious products, high-tech features  and televisions will be on the rise.

– The master bedroom suite may not shrink in size, but it could be combined to form a home office and exercise space.

– Expect to see more high-tech offerings, such as voice-or motion activation devices in the home.  Lighting, entertainment gear, heating/cooling systems, and even blinds could be hooked up to a master control system.

-Thanks to an increasing number of people working from home, the presence of a dedicated home office is a given in newer homes.  Nearly 40 per cent of industry forecasters say that they expect one in every home.

– Home storage solutions will also be a vital component of new homes.  Builders will create clever solutions for mixing storage into more compact spaces.

– With aging baby boomers comprising a larger segment of home buyers, expect to see more one level homes, or at least homes where there is a master suite and the majority of the living space on the first level.

Smaller, more efficient homes require less in terms of heating and cooling energy.  They need less furniture, and new materials made from sustainable products help further fuel green initiatives in the building industry.  Energy efficient homes are a main priority for buyers.  Although the homes may be smaller, they will not be miniscule.

-Metro Creative Services, St. Albert Gazette – Article

“Fears of an office glut are increasing in Alberta’s Capital as the City of Edmonton and developers bid to build more towers on spec in a city where much of the new space remains vacant.  The current vacancy rate in downtown Edmonton is around 8.5 per cent, which is considered a “healthy market”, but analysts warn that if all the Class A space being planned proceeds, landlords could soon get a sinking feeling.

With new developments such as the Kelly Ramsey Building underway and slated for completion in 2016 and other proposed developments, there is potentially 1.1 million square feet of Class A office space that would be added to current inventory,” DTZ Barnicke reports.  Based on current absorption, it would take 10 years for the office market to return to a healthy state, the report concludes.

Since it was built three years ago, the Epcor Tower downtown remains 30 percent empty with 188,000 square feet vacant.  As well, the 174,000 square-foot office tower at 9888 Jasper Avenue, the former ATB Tower, is completely vacant after ATB relocated.

Over the past decade, Edmonton has seen 75,000 square feet to 100,000 square feet of office space leased up each year on average, but in 2013 the downtown experienced negative absorption of 253,000 square feet.

Still, the potential building boom would represent the biggest in 30 years.  “There is more serious consideration of new development in the office market right now than at any time since the early 1980’s,” said Avison Young prinicipal Cory Wasnack, who notes that only one new office tower – Epcor – has been built  since 1990.

“We predict that 2014 will be a game changing year for the office market – one that will bring excitement from a development perspective and challenges for older existing inventory that faces a new competitive frontier,” Wosnack said.

That could be a wild frontier, especially if the city proceeds with a 450,000 square foot high-rise at 101 Street and 104 Avenue.  The city plans to take 350,000 square feet in the building and deliver the rest as spectacular office space.  If the tower proceeds – it would be built with Katz Group and WAM Developments – about 300,000 square feet of city leased space in other parts of the city could go dark.  At present, the city leases offices various locations around the downtown, including Chancery Hall, TD Tower, HSBC Bank Place and Scotia Place.  If a greenlight were given, the City of Edmonton tower would complete in 2017.

Office lease rates in the downtown are already softening, agents note, and could fall further if a glut of space emerges.  Class A rental rates now average $23.50 per square foot, according to DTZ, down from $30.59 in 2008.

Avison Young forecasts a recovery in the Edmonton office market this year, with a projected 250,000 square feet leased up in the downtown and another 125,000 square feet absorbed in surburban markets. …..

–  WESTERN INVESTOR, MARCH 2014, ALBERT SEC. B.11 –