New home warranties and a market update

Earlier this year, the Alberta government legislated changes in the home-warranty industry that provide additional security to home buyers. In the past, most builders provided a 1-year warranty for items in the house and a 5-year structural warranty.

The new minimums for all builders in Alberta apply to all types of real estate (single-family, townhome, condominium, even modular) and are as follows:

– 1 year for labour & materials

– 2 years for delivery & distribution systems (e.g. heating, plumbing)

– 5 years for building envelope (e.g. roof, exterior)

– 10 years for building structure (e.g. foundation, framing)

Home Warranty

The building envelope section of the warranty is a much-needed change in my opinion, especially for condominiums. We have seen so many condo buildings have issues with water penetrating the exterior shell, causing costly repairs that often require a special assessment levied to each of the owners in the complex. At times, the assessment has been upward of $20,000 per owner.

I am hopeful that the 5-year envelope warranty will put more pressure on builders to construct a properly sealed building exterior and that we will see fewer issues down the road.

This new website from the Alberta Government is quite helpful, complete with infographics!

www.homewarranty.alberta.ca

The website also includes a link to the new public registry, which has information on all new homes built February 1, 2014, and later and can be a useful tool for home buyers that would like to know how much coverage remains on a home they are looking to purchase.

In other news, though the Calgary market continues to present strong numbers, it has taken a bit of a breather from the break-neck pace of spring 2014.

The single-family sector has continued to see slight price increases every month this year, but the number of sales and listings has dropped from a high of 2,025 sales and 2,945 new listings in May to 1,398 sales and 2,148 new listings in September. The average days on market to sell has risen from 25  in April to 35 last month.

The number of both sales and new listings in the apartment-condo sector has remained fairly steady for the past six months, fluctuating between 432 and 511 sales and 650 to 804 new listings per month. The Benchmark price for condos has been virtually flat for the past four months and the average days on market has risen from 31 in March to 39 in September.

We continue to see competing offers in select situations when highly desirable properties are priced to sell, but we are also seeing some houses sitting on the market for 90 days or more and, at times, reducing their price more than once.