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Many homeowners are surprised to hear that water damage is the most common insurance claim. Water damage—often in the form of a flooded basement—can come out of nowhere and cause extensive damage to the house.


“Once homeowners understand the most common types of insurance claims, they can take steps to guard against them,” says John Jenner, vice-president of marketing and communications at Western Financial Group. “Measures might include making sure their home insurance policy covers sewer backup, installing a sump pump, having properly installed drainage systems, or making sure that downspouts are sending water away from their home.”


According to the Insurance Bureau of Canada, there are many circumstances that can cause a flooded basement, including tree roots growing through cracks in the waterline, overloaded stormwater and sanitary sewer infrastructure, frozen pipes, vandals blocking lines and more.


To keep your home safe, practice the following guidelines:


Have someone check on your house when you're away


When you leave home for more than three days, make sure you have someone come and check the premises. A flooded basement, leaky pipe, or a broken window can be devastating if it is not discovered immediately.


Keep drains clear


It may seem simple, but many homeowners need to be reminded to keep their basement drains clear of obstructions. That means moving large objects such as furniture and making sure the drain is not sitting under a layer of dirt or debris. In older houses, drains may need to be snaked to ensure they can do their job properly.


Install a sump pump and backflow valves


This will greatly reduce the frequency and severity of basement flooding. Backflow valves or plugs can be installed on drains, toilets and other sewer connections to prevent water from entering the home.


Move items that are in flooding prone areas


The 10 minutes spent on inspecting your home for items that are in flooding prone areas could save hours later. Make sure you store important documents and irreplaceable personal items where they will not be damaged.


“It is important for homeowners to go over their insurance policy yearly with a representative,” adds Jenner. “This will make sure you have the coverage you need.”


More information is available online at www.westernfinancialgroup.ca.



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Stephen Poloz, our new governor of the Bank Of Canada, only has to monitor the Tim Horton franchises for an economic indicator.


It seems Canadians are still choosing to spend an extra half hour in bed each morning instead of rising with enough time to have their morning coffee at home and leave their cars in their driveways and not waste their gasoline waiting in line at their local Tim’s for their morning coffee.


The economy in Canada should remain fairly stable. Canadians in general help stimulate the economy by paying 40 times more for their morning coffee and burning unnecessary gasoline while waiting in line at Tim Horton’s drive through’s every morning instead of getting up a little earlier and having their morning coffee at home.


Canada’s economy should be OK as long as the Tim Horton’s franchises continue to churn out profits.


Source: http://www.niagarathisweek.com/opinion-story/3887912-timmies-a-sign-of-economic-health/


Sidenote: Tim Hortons has not only given us the best coffee and doughnuts but they have been a part of our community and always there to help. Programs such as their Childrens Foundation and Kids Camp Day, their environmental stewardship, food drives, Timbits sports programs, and their commitment to support our local charities, and more recently their $100,000 donation and campaign to raise funds for Alberta flood relief.

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Too soon to see impact flood will have on resale statistics

The monthly statistics package is available here.

Sales activity in June exceeded growth expectations.

City of Calgary monthly residential sales totaled 2,317, a six per cent increase over June 2012 figures, and nearly five per cent higher than levels recorded in the first half of 2012. However, the impact of recent flooding is expected to trickle into the housing statistics over coming months.

“While sales and prices continue to show improvement, the city and residents of communities impacted by the recent flooding will face significant remediation challenges over the coming months,” said Ann-Marie Lurie, CREB® chief economist. “Until the extent of the damage is known, it is difficult to accurately assess the full impact this will have on the city’s housing market.”

The level of new listings totaled 3,003 units in the city, a nine per cent drop over the previous year. The rise in sales, combined with the drop in listings, is keeping overall market balance in favour of the seller.

Active listings totalled 4,584 units in June, of which more than 660 units are listed in flood-affected areas. Active listings are nearly 20 per cent less than last year.

“In the coming months, flood victims, particularly those who were planning on selling their homes, will have some big decisions to make,” said Becky Walters, CREB® President. “Will they take a discounted price? Or will they stay and fully remediate the property? Either way, in the short term, housing supply will likely be relatively tight.”

Condominium sales growth outpaced gains in the single family sector, as less availability of single-family homes priced at less than $500,000 have improved the demand for the relatively affordable condominium market.

After the first six months of the year, condominium apartment sales totalled 2,034 units a 9.5 per cent increase over 2012. Meanwhile, year-to-date condominium townhouse sales amounted to 1,672 units, up from 1,374 sales recorded in the first half of 2012.

“The tighter market conditions are placing upward pressure on pricing in all city sectors,” said Lurie. “While the areas affected by the flood may face some short-term impacts on pricing, any adjustments occurring are unlikely to outweigh the impacts on the overall city wide price growth.”

The benchmark price for condominium apartments and townhouses were a respective $264,000 and $295,000 for the month of June 2013. Condominium prices have increased by more than six per cent on a year-over-year basis, but remain below unadjusted peak levels.

Single-family sales activity totaled 1,638 units in June, a two per cent increase over 2012. However, after the first two quarters, single-family sales totaled 8,573 units, a one per cent increase over last year.

The single-family market moved into seller’s territory ahead of the condominium market, supporting stronger price growth. As of June the single-family benchmark price reached $459,700, a 6.7 per cent increase over the previous year.

“Prior to the events of the flood, our market was demonstrating tight supply levels, particularly for lower price product,” said Lurie.

Meanwhile economic indicators supported the growing demand in the city. Both the economic fallout and housing impact are yet to be seen. However, long-term economic prospects remain favourable for Calgary.

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It sure didn’t take long for the questions to start coming in on how the flooding will affect the real estate market. While we at the Real Estate Investment Network were focusing on doing whatever we can to provide updates/answers/an information hub/support/insurance info throughout the weekend – in the background the real estate questions began to come in.


Of course, we have been focusing initially on the flood’s effect on the obvious first priority: people (Dr. Paul Stoltz's Insights on Flood Adversity). We have also begun our preliminary analysis on the economic and real estate side of the equation. Its impact will be felt for months and will ripple into many areas of the economy. Here’s what we should see in the coming months (more detail to come as more facts are known):


#1 Housing Market

The most important fact for everyone to remember throughout the next few months is that Housing sales, number of listings, days-on-market, average sale prices/ building permits will no longer reflect the true ‘direction’ of the market. These numbers will all be skewed by the after effects of the floods. Sounds rather obvious when you think about it; however, watch what happens in the coming months as the numbers are released and those who love to scare the world to get attention will use these skewed numbers to support their very weak real estate arguments that the market is collapsing/over-valued etc. Chuckle a little bit when you read it, but don’t get drawn in to the drama; know that the numbers are just not normal.


Skews even “Canadian Housing Numbers”

As we know, Calgary was on a nice and steady growth curve that matched the underlying economics, and this is no different now. Over the coming months, the number and quality of the sales transactions will not be on trend and should actually be ignored, or at least ‘seasonally adjusted’ in your big picture analysis. The next few months, the housing stats will not be indicative of market health. As people focus their attention to getting their lives together, getting their properties together and resetting their housing goals, selling or buying a property won’t be top of mind as priorities shift.


Calgary’s market strength over the last number of months has helped to support the “National Averages” often used as bell-weathers of the “Canadian Real Estate Market.” With Calgary’s market knocked off track, its influence could put negative pressure on the national number. Watch for this influencer create unsupported headlines and arguments.


Days On Market To Be Skewed To Higher Ground

Following this, we should see a ‘shift’ to higher ground. After a traumatic event such as this, many will sit back and evaluate their lives, as well as their housing choices. Most will choose to remain in the same neighbourhood; however, there will be a larger than average cohort who will make the decision to move from flood risk areas. The impact of these decisions won’t be felt all at once in the market; yet, there will probably be an increase (over average) of listings in these areas in the following 12 months. Increasing the number of ‘days-on-market,’ while at the same time decreasing the ‘days-on-market’ in higher ground un-affected regions of the city as both new-comers and those wishing to change residence in the city will have the ‘flooded regions’ at the top of mind.


Insurability Clause To Be Increasingly Important

Because the human memory is short, this shift will really only be felt over the next 12 months or so. However, insurance company’s memory is much longer and will have an effect on insurance rates and companies that will cover properties in the flood zones. That is why it is going to be increasingly important to add the clause to your Purchase and Sale Contract; “Subject to Buyer Confirming Acceptable Insurability of Property.” Many buyer leave insurance discussions until close to closing, and from now on they need to be asking this question at the beginning of the purchasing process.


New Migrants to Calgary

For the next 6 – 12 months, new migrants to the city and surrounding towns will have the sight of the floods etched in their brains. This experience will push many of them to ‘higher-ground’ purchases, increasing the demand further for these areas. Following this period, you will also see ‘relocation specialists’ reminding professionals being moved in by their companies about focusing on higher ground as part of their due diligence. This, or a similar map, will begin to play a role in housing market decisions:


The bottom line is this: the results of this flood will play a role in the housing numbers for at least 12 months in all cities and towns affected by it and will skew the market health readings. Strategic investors will understand this and not get too excited when numbers show extra strong in higher ground areas, or too distraught if numbers come in ‘off trend.’


#2 Rental Market

The Calgary and region rental vacancy rate, already near zero, will hit absolute zero and affordable housing options will quickly disappear. This is due to the combination of current demand from new residents coming into the region for economic reasons, combined with the temporary rental demand from insurance backed home-owners who need a place to live during their renovations/repairs on their homes PLUS displaced current renters. In fact, there just won’t be enough local rentals available to fit demand.


This will drive ‘street’ rents up quickly as suites turn-over, but it will also limit the turnover of current tenants who will choose to stay in their current rental longer as choice of movement will be severely restricted. Sadly, it will also spur increased number of stories of ‘landlords taking advantage of tenants.’ Many of these new renters probably haven’t rented for years if not decades and their requirements and expectation of quality may differ from the current renter cohort; landlords need to be aware of this.


Secondary Suite Debate Comes To The Front of The Line

This increased demand and reduced supply should re-start the whole ‘secondary suite’ discussion in the City of Calgary. It will be an impetus to getting that program approved and implemented more quickly in order to help provide the required affordable rental options for the city. Let us hope that, during this time of increased demand, that City inspectors are a little more empathetic towards the needs of the renters instead of forcing them out of temporary suites.


Building Permits

There will be a massive influx of building permit requests presented to the city planning and permit departments due to the large number of repair and renovation projects required after the flood waters recede. The responsible home-owner and renovation expert will require proper permits to ensure future sale value. This will also lead to an increased demand on the city building inspectors to get work inspected and approved. Staffing and streamlining of processes are going to be required at the city to ensure that home-owners and renters get back to their homes as quickly as possible.


IMPORTANT NOTE: For future purchasers, it will be extremely important to ensure that proper permitting and inspections were done on properties you purchase in the coming years. Because of the high demand and requirement of expediency during this time, some of the work MAY not be completed as well as you would like it to be. So PLEASE ensure that you get confirmation of any repair/reno work done before you remove conditions.


#3 Retail Sales

Retail Sales in the area will begin to start spiking over the coming months as insurance backed home-owners and renters replace their lost goods. Although retail sales are a much more accurate indicator of consumer confidence than are the oft quoted ‘confidence surveys’ (see this analysis report here), during these coming months they should not be used for this purpose as the retail sales/automotive sales/renovation sales numbers will be skewed much higher due to the replacement (not consumption) of goods.


Retailers, renovators and building supplies providers must be made aware that social media is a powerful tool and if you are even remotely thinking of ‘taking advantage’ of this situation you will be named and shamed by those you take advantage of.


#4 Renewed Focus on Insurance Coverage

This natural disaster will hopefully put a new focus on the importance of proper home insurance, for both property owners as well as renters. And although a direct flood as we have seen here is not often covered in policies, many assumed that it was. In fact many who do have insurance really don’t understand what is covered and what is not. This flood will really bring to the forefront that no two policies are alike and price should never be the only determining factor for insurance choice.


As the waters recede and the repairs begin, we encourage all homeowners and renters to review their policies in detail… even if you weren’t affected by this round of flooding. Find out what is real in your coverage (without assuming) so you can make informed decision on whether to keep coverage the same or find something more comprehensive or competitive.


For instance, right now there will be landlords who will not be collecting rent for a number of months as their suites will be uninhabitable. With some insurance you can get ‘rental replacement’ coverage meaning the insurance company pays you equivalent rent; with many policies this does not exist. With some policies you are only covered for a 30 day vacancy, while others this is extended for months. Some have sewer back-up coverage, while many do not. These are just a few of the important differences that will become very apparent in the coming weeks.


Oh yes, disasters like this don’t go unnoticed, so please be prepared for the following potentialities:

a. Overall Insurance Premiums to increase to cover the costs of this disaster
b. YOUR insurance premiums to increase if you are making a large claim
c. Potential of some insurance companies no longer wishing to provide coverage in flood-potential zones (or if they do, making the premiums very expensive).


#5 Traffic & Transit

Transit has come to play such a major role in Calgary (and will continue to). However, the flood damage to the tracks will be causing large increases in certain auto-traffic corridors. This commuting difficulty could lead to some areas (even in higher ground areas) having a slowdown in the number of units purchased. This will provide a long-term thinking-investor an opportunity as demand slows in some of these key transit oriented areas.


Luckily (if there are any silver linings at all), this flood occurred after the school year was over. Imagine the traffic chaos if it had occurred during the middle of the school year, with families displaced to all corners of the city yet students having to commute back to their schools every morning. Calgary’s already infamous traffic would have been a nightmare every day.\



When the ‘flood’ headlines die down, and attention is once again brought back to pipelines, protests and politics – the skewed numbers will remain. It will be especially important from now on to ensure that that you actually do complete that extra level of diligence as you buy, no matter what city you are in across this great country of ours.


That extra 10% effort will make all of the difference, whether it is in deciding where to buy, or what insurance to get, or what tenants to rent to. Knowledge is King and diligence is Queen. Together they can make your portfolio Royal – without them you can be left standing outside knocking on the door of the ‘financial castle.’


Cover photo source: www.thestar.com

Source: http://www.donrcampbell.com/the-alberta-flood-effect-on-real-estate-preliminary-analysis

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View my June 2013 E-Newsletter Ecozine Issue #4 with tips for the spring season like killing weeds, getting rid of those pesky pests like ants and mosquitos (the safe and natural way of course!), housing stats, and some interesting news and tips!


Click Here to read Ecozine #4 now!

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