Unit sales in Canada for April rose the most in Newfoundland & Labrador at a 27 per cent gain over last year, followed by Saint John at 18 per cent, according to CREA.

While Home sellers flooded the markets in Toronto and Saskatoon last month, causing the number of listings to surge to a record level in Canada. Kitchener-Waterloo, St. John’s Newfoundland, and Thunder Bay actually saw a decrease in the number of homes on the market.

It appears that throughout most of Canada we are seeing a pull back in prices and real estate sales, a cool down. But not in Newfoundland. The only thing cool in Newfoundland right now is the temperature. Prices are continuing to rise. Buyers are continuing to flood the market and investors are still looking for rental properties.

In Saskatoon where prices are continuing to sky-rocket, buyers seemed leery about the idea of purchasing a new home. “70 per cent said it was not a good time to make a purchase.” In contrast to Atlantic Canada where 49 per cent were positive towards the idea of owning a new home.

CREA released it’s First Quarter Forecast 2008 earlier last week and as expected, MLS home sales are forecast to ease gradually in all provinces in 2008, but record-level activity in Saskatchewan and Newfoundland & Labrador during the first quarter will result in new annual records in these provinces.

Source: Homes Market Flooded by Sellers - Globe and Mail

A major residential development for downtown St.John’s has been given the green light. St. John’s City Council has given the okay for six residential condominium buildings to be located on the former Standard Manufacturing site on Water Street East. Each building will have eight units for the total of 48 and there will be one level of indoor parking. Condos of this status are much needed in the downtown core. The condos will be a great attraction for oil companies, investors and new employees moving to Newfoundland due to the oil and gas industry.

With the warm weather approaching it is the perfect time to get your lawn ready for the spring season. Your front lawn and garden is one of first features noticed on your property. These simple tips will help ensure your lawn gets a healthy start this season.

• To ensure even thawing and prevent diseases like snow mould, remove snow piles from your lawn or spread the snow evenly across the lawn.
• Clean unwanted debris that may have accumulated over the winter months.
• Be careful raking your lawn as the ground is still very damp and you can rake up more grass then needed.
• Aerate and weed your lawn to improve water, air and fertilizer uptake. Be sure the weeder removes the entire root of the weeds, not just what you see on the surface.
• Healthy, thick lawns naturally deter weeds and other pests. Choose a natural fertilizer, that is ideal for planting new lawns or repairing bare starts to give your lawn a healthy start.
• In preparation for the spring gardening season, check your equipment to ensure it is in good working condition. Don’t forget to sharpen the blades on lawn mowers and weeders.
• Purchase a composter and get started on turning household waste into organic fertilizer for your lawn and garden.

Not only will you enjoy the benefits of a healthy looking lawn, you also help maintain your homes value.

Canadians are increasingly migrating to regions where new jobs are plentiful, and they must be able to move their assets with them. Households can move their furniture and their stocks and bonds, but not their real estate investments, without substantial tax consequences. Reinvestment in real property should be facilitated so that investors can reposition existing investments without punitive tax measures. The deferral will facilitate more effective management of real estate investment portfolios in recognition of the fact that Canadians are becoming more financially self-reliant in retirement.

The Canadian Real Estate Association (CREA) is recommending to the federal government to amend the Income Tax Act to promote increased reinvestment in real property. The amendment would effect a deferral of both the capital gains tax and the capital cost allowance recovery for all real property investments when an investment property is sold and the proceeds are invested in another real property within the subsequent year. Any proceeds that are eligible but not reinvested, or where such reinvestment does not meet the criteria, would be subject to capital gains tax. (Similar to the United States 1031 Exchange)

The proposal also helps make the federal government an active participant in the regeneration and intensification of urban neighborhoods. This requires properties to be turned over at a rate that is sufficient to promote regeneration.

Income-producing properties need to have methods to determine the value of a property. The value of the investment can be determined by using some of the following formulas: net operating incomes, capitalization rate, Loan to Value ratio.

Capitalization Rate (Cap Rate) = net operating income (NOI) / market price

Net Operating Income (NOI) = Rental Income - Operating Expenses

The cap rate is used to estimate the purchase price of income producing properties. A market cap rate is determined by evaluating the financial data of similar properties which have recently sold in a specific market. It provides a more reliable estimate of value than a market Gross Rent Multiplier since the cap rate calculation utilizes more of a property’s financial detail. Typical cap rates run from 8% to 12%

Gross Rent Multiplier (GRM) = Sale Price / Monthly Potential Gross Income

Generally speaking, when comparing similar properties in similar location the lower the GRM, the more profitable the property. GRM does not take into consideration operating expenses.

Return on Investment (ROI) = (initial investment - final investment) / initial investment

Total # of Listings [Apr] = 932 (Up 7% from April 2007)

Total # of Sales [Apr] = 332 (Up 24% from April 2007)

Number of Active Listings in the NLAR MLS System = 2430

Inventory this month but so did the number of sales.Expired listings have declined by 23% Properties are still selling VERY fast and multiple offers are common in this sellers market.

Here is a break down by area for the month of April for single family homes

St. John’s Real Estate: Listings = 155 Sales = 84 Sales/Listings Ratio = 54%

Average Sale Price: $173,530 ($184,730 for April)

Mount Pearl Real Estate: Listings = 36 Sales = 16 Sales/Listings Ratio = 49%

Average Sale Price: $153,657

Paradise Real Estate: Listings = 43 Sales = 26 Sales/Listings Ratio = 60%

Average Sale Price: $188,460

East Extern Real Estate: Listings = 41 Sales = 22 Sales/Listings Ratio = 54%

Average Sale Price: $189,484

Conception Bay Real Estate: Listings = 45 Sales = 21 Sales/Listings Ratio = 47%

Average Sale Price: $165,735

Just read this article on VOCM.com discussing the increase in house prices in St. John’s and surrounding areas. Notice the jump in house price from $151,000 to $180,000 for a 1000 sqft bungalow home in St. John’s.

House Prices Continue to Rise: Survey
May 1, 2008

A new survey shows house prices in the province continue to rise, thanks to robust activity in the oil patch. The Century 21 spring survey shows that prices in Atlantic Canada over the past year have gone up by between nine and nineteen per cent in the greater St.John’s area and Grand Falls-Windsor. They were the only two areas in the province surveyed. As an example, a 1,000 sq. foot bungalow in Paradise and the west end of St.John’s that cost $151,000 this time last year now sells for $180,000, a 19 per cent increase. And it’s not only oil that’s driving things. Century 21 notes that the first year of positive migration since 1990 is also responsible for the higher real estate values.