TRY NOT TO BE SHORT SIGHTED

Realtors take long-term view, see real estate as 'strong investment'
Mario Toneguzzi, 
Calgary Herald February 23, 2015

Calgary’s housing market is the hot topic of conversation these days not only in the city but across the country.

The once-sizzling real estate sector has cooled tremendously thanks to a precipitous decline in oil prices and that has people, from economists to realtors to homeowners and potential buyers, speculating and wondering what that will do to housing prices.

And there is no lack of opinion on the topic, ranging from forecasts of a small increase in average prices for the year to a 10 per cent or more decline. MLS sales are expected to fall dramatically this year – TD recently said by as much as nearly 50 per cent – with new listings rising at a steep pace.

“There is no surprise that the range is so vast. Trying to forecast an average sale price change . . . in today’s market is impossible,” said Don Campbell, senior analyst with the Real Estate Investment Network. “Why? Simply because the most important variable is not known.

“How long oil will stay under $70 and how confident the oil industry is about it levelling at that number.  Without that knowledge, real estate market price forecasting is mathematically impossible.”

According to the Calgary Real Estate Board, year-to-date up to and including Saturday there have been 1,758 MLS sales, down 37.17  per cent from the same period last year, while new listings have risen by 24.66 per cent to 5,551. The average sale price has dropped by 2.17 per cent to $463,938.

Since 1990, the annual average MLS sale price has fallen from the previous year only four times – 1991, by 1.08 per cent; 1995, by 0.47 per cent; 2008, by 2.46 per cent; and 2009, by 4.67 per cent.

The biggest annual hike was recorded in 2006 when prices soared by 39.78 per cent from the previous year to $358,385 and then jumped another 18.25 per cent in 2007 to $423,798.

According to the Conference Board of Canada, the city’s economic growth in 2006 was 7.0 per cent – the second highest rate of growth in the past 25 years behind only the 7.9 per cent recorded in 1997.

Christina Hagerty, a realtor with RE/MAX Realty Professionals, who started in the business in 1991, said real estate in Calgary has always been a good long-term investment.

“In fact, if you look at real estate values over the course of 10 years, all have performed double to triple their value right across the board, not just in the inner core,” said Hagerty, who specializes in that area.

“So the old-timers like us who have seen a couple of decades of activity aren’t fretting.”

Hagerty said the current rental vacancy rate in the city remains low. That combined with some of the lowest interest rates in history and still good overall consumer confidence will keep the real estate market healthy.

“I would say based on this, housing prices should continue to see a slight positive gain. Unless there are reasons for sellers to take a substantial decrease, most would not do so.  Why would you want to lose 10 per cent on your real estate value when you can lease out for a premium based on such low vacancy rates?,” she said.

Ann-Marie Lurie, chief economist with CREB, said there is a wide range of price expectations for this year because there is a significant amount of uncertainty regarding the duration of lower oil prices and ultimately the impact on employment.

“Regardless if you look at average, median or benchmark prices, annual home prices within city limits declined in 2008 and 2009,” she said. “During that time several global economies were in a recession. In 2009 Calgary saw GDP contract by nearly four per cent, net migration fell, full-time jobs were being lost, there was a large amount of newly-constructed product available, and the impact of the financial crises created several changes to the lending industry.

“This year the housing market has seen sales activity fall, likely a result of reduced consumer confidence in the market.  At the same time, listings have continued to rise, driving up inventories. If this continues, this will place downward pressure on pricing. However, to reach the double-digit decline rates in housing prices, this would assume that the energy prices would stay low for this year with not much upside prospect into 2016, causing  job losses, low levels of migration, and persistent excess supply in the housing market.”

For prices to remain stable, said Lurie, the city would have to see stability in the employment sector and the pace of new listings slow.

“With this much uncertainty I think it is prudent to consider there are several factors that can drive the prices. Based on current expectations, prices are likely to remain at or just below levels recorded near the end of last year,” she added.

Hagerty said Calgary is a young city and many people are not used to the volatility of the oilpatch and its relation to the real estate market.

“So those of us who have been around for a couple of decades aren’t concerned,” said Hagerty. “We aren’t day-trading real estate. We get to live in this tangible asset as it grows in value. Savvy investors are sitting back hopeful the next seller will think the sky is falling so they can seize the opportunity. They know that Calgary’s a sure thing with strong fundamentals that make it a great investment.”

Campbell said real estate continues to be a strong long-term investment and income replacement.

“We have always believed that real estate is a safe long-term play. The numbers don’t lie – since prices have begun to be tracked, they have increased,” he said. “Of course we have seen short-term fluctuation with dips and corrections, but in the long term the arrow has always pointed up.

“Calgarians have hosted many an oil boom party in the past and have learned of these inevitable dips. However, because the province’s population, and the city itself, has grown at record numbers over the last two years, we have a large cohort of the population who have never experienced a Calgary ebb and flow.  That has led to an increase in knee-jerk response in the market as shown by the dramatic increase in listings.”

He said it is at about this point that strategic Calgary investors start to hunt for good deals, knowing that when the market recovers – be it in one or two years – that it will prove to be the ultimate buying window.

YYC & YYZ OUTPERFORM

Calgary and Toronto office markets outperform
Calgary has nearly 6 million square feet under construction
BY MARIO TONEGUZZI
CALGARY HERALD SEPTEMBER 25, 2014

CALGARY - Lacklustre job creation continues to impact demand for commercial real estate in Canada, but office markets in Calgary and Toronto are outperforming the rest of the country, according to the CBRE Limited’s National Office and Industrial Third Quarter 2014 Statistical Summary released on Thursday.

The report said tepid job growth has undermined office leasing activity in Canada, but has been unable to stem an historic industrial construction boom.

“The Canadian economy may not be firing on all cylinders, but the Toronto and Calgary office markets turned out quite a performance last quarter,” said John O’Bryan, chairman of CBRE. “It was a bit of a have or have not summer. The standout office markets were exactly that, while other areas were fairly quiet. One assumes that strong office leasing activity in core markets will translate into more widespread office demand in the year ahead.”

The national office vacancy rate dropped for the first time in two years, retreating 10 basis points to 10.3 per cent in the third quarter. Office vacancy had been increasing at a slower pace in recent quarters. Demand for downtown office space in Toronto and Calgary tipped the scale and resulted in a long awaited drop in vacancy, said the report.

Calgary’s overall office vacancy rate of 10.1 per cent fell from 10.6 per cent in the second quarter while in Toronto it dropped from 9.6 per cent to 9.2 per cent. Calgary’s downtown market saw vacancy drop to 9.1 per cent from 10 per cent and Toronto’s downtown market dipped to 5.3 per cent from 6.1 per cent.

In the third quarter, Calgary’s office market had 511,021 square feet of positive absorption and Toronto’s was 712,564 square feet.

Office space currently under construction is 5.6 million square feet in Calgary and 7.1 million square feet in Toronto. Nationally, there is 21.7 million square feet of office space under construction.

Greg Kwong, executive vice-president and regional managing director with CBRE in Calgary, said the drop in vacancy in Calgary is a positive sign but on the negative side the amount of sublet space in the downtown as a percentage of the overall vacancy is at a fairly high level.

For example, in the downtown that percentage was 41.6 per cent in the third quarter, up slightly from 40.4 per cent in the second quarter.

“Any time it’s over 35 per cent of the overall vacancy that means there’s a lot of companies mostly oil and gas that are giving up space. If that continues, that will create negative pressure on the downtown core,” said Kwong. “But overall there seems to be a good sense of optimism. There are deals happening.”

The CBRE report said the Canadian industrial market continues to be characterized by limited availability as tenants remain hungry for industrial space across the country. Demand outweighs supply in most areas, especially for modern distribution facilities.

The overall industrial availability rate fell 10 basis points quarter-over-quarter to 5.3 per cent. In Calgary, it is 4.5 per cent, down from 4.6 per cent in the previous quarter.

There is 4.4 million square feet of industrial space under construction in Calgary and 19.9 million square feet across the country.

“The industrial market is very solid,” said Kwong. “In every size, category or asset class, there’s leasing activity whereas a year ago that was not the case. There was only hot spots in certain size ranges.”

HOPEFUL FOR A GREEN SUMMER?

How to prepare your home for a quick, profitable, summer sale
By Melissa Leong
May 30, 2014

After a brutal winter, the heat has finally arrived and with it, expectations of a hotter real estate market. The flurry of housing activity normally reserved for early spring is extending into the summer, industry experts say.

“The pent up demand from the winter is coming to fruition. As soon as listings come out, they’re being swallowed up,” Gurinder Sandhu, executive vice-president at RE/MAX’s Ontario-Atlantic Canada Division, says.

“For buyers there are more choice and for sellers there are more buyers.”

How you price your home and how you prepare its for sale are key.

“Price trends from one neighbourhood to the next can be very different,” Gregory Klump, chief economist at the Canadian Real Estate Association. “If you price your property too high, there is a chance it’ll sit on the market without offers.”

Here’s how three recent home sellers weighed their options, and came out with the sale price they were looking for.

Original purchase price: $332,000 in 2002.

Asking price: $889,000

Sold on the first day: $889,000

Jennifer Lee, a 41-year-old public relations manager, had bought her 3,000-square foot home in Markham, Ont. brand new in 2002 for $332,000. The house had four bedrooms and four bathrooms. With the goal of moving her family to Toronto to be closer to work and loved ones, she put her house on the market on March 12.

What were your home selling goals? “My goal was to get maximum value for the home because I was going to move into a much more expensive neighbourhood. I also had a very short timeline because I wanted to match it with my kids finishing the school year.”

Describe your home selling strategy. “One of my strategies was to sell before I buy. [My brother] who has moved five or six times, said the stress he experienced buying a home first and then trying to sell his home was the worst stress of his entire life. Then you get into panicky mode: ‘I need to accept an offer.’ Then you get sellers regret: ‘Did I sell too cheap?’

We had looked at a home three doors down from us that was the exact same model that had sold last summer. They didn’t have a finished basement. It sold for $815,000. (We had spent about $50,000 to upgrade our basement.)

My agent told me that buyers in the market really like to bargain, so I thought I will price in a 5% to 10% buffer. My asking price was $889,000. I told my agent, ‘I don’t even want to hear an offer that is less than $850,000. In my head, I was thinking, I want $870,000 to $875,000.

We originally thought to hold off on offers; [our agent] said, let’s not lose momentum. If someone’s interested, let them make an offer.”

How did you prepare the home for sale? “We significantly de-cluttered. We stripped out all of the closets and did some re-painting. There were some bold colours on the main floor that we neutralized. We replaced carpet in the basement with laminate and new carpeting. Our budget for clean up was $3,000.”

What did the home finally sell for in the end? “We got an offer on the first day of the market for asking, no conditions.

“We do know that the buyer was from China and was moving to Toronto and was only in town for a week.”

Final thoughts on the process. “I’d recommend not holding off on offers. If someone wants to offer, find out what they want to offer. You can always go back to people who’ve looked at the house and see if they’re interested.

In terms of preparations, don’t get pushed around by contractors who tell you that you need to paint eight rooms and replace all mirrors. Buyers can generally see beyond paint. You don’t have to redo your whole house.”

Original purchase price: $122,500 in 2001

Asking price: $270,000

Selling price: $265,000

With Elisa Holland’s transient military career, which has included tours in Afghanistan, and her husband’s job as a consultant in Alberta’s oil patch, the couple has lived apart for eight years. They finally decided to list their Calgary home for sale on April 1 and move together to Kingston, Ont. They bought the two-storey townhouse with three bedrooms, one and a half baths and two parking spaces for $122,500 in 2001. They listed the 1,500-square foot property for $270,000.

What were your home selling goals? “We wanted to put it at a fair price to sell quickly so we could buy a house in Kingston; it allowed us to buy our dream house. Kingston is a very stable market whereas Calgary is the exact opposite. My aunt and uncle have a fully detached house with a two-car garage in Barrie Ont.; it’s listed at the same [price] as our townhouse.”

Describe your home selling strategy. “I had interviews with three realtors. You have to pick a realtor who understands your residence. The reason why we ended up going with Michelle [Russell, a realtor at Royal Lepage], she understands townhouse/condos and first-time buyers.

You want to make sure you have very neutral décor. You want it so that if someone else walks in, they don’t see that it’s your house but they can picture themselves there. If you have carpets, you want to take those up so it’s a clean line across the floor. If you have an area rug, it cuts up the space. If you have a pet, you want to remove all traces that you have one. Even before a realtor came over, I took photos and very harshly critiqued them.

Knowing when to put it on the market is key. Most people want to keep their kids in school and they’ll start looking in March/April.

What did the home finally sell for in the end? Our price that we’d be happy with was anything over $260,000. We ended up with two offers: $263,000 and $265,000. We ended up selling it for $265,000, with fewer conditions (they didn’t want a home inspection) and they already had their financing in place.

Final thoughts on the process. Go with your gut feeling, especially if you get multiple offers. Your realtor will give you a sense of what the buyer is like. The $263,000 offer that came in, I honestly felt sick to my stomach. I got a sense that there was something not quite right. Make sure you do your research on your realtor. Don’t always go by someone’s advertising. On the whole, the majority of good realtors will never have to advertise, it’s all word of mouth.

Original sale price: $245,000 in 1995

List price: $689,000

Sale price: $700,000

Asking price After living in a two-bedroom bungalow in New Westminster for 19 years, Bob Harris looked at the backyard one day and said, “I just don’t want to do it anymore.” The 68-year-old retired union rep wanted to downsize. He had bought the house for $245,000 and listed it for $689,000. Meanwhile, he saw a two-bedroom condo that he liked and he put an offer on it.

What were your home selling goals? “It seemed like a good time [to sell] in New Westminster; house prices were going up and condos were going down. The spread between the two was as good as it has been in a long time.”

Describe your home selling strategy. “The rush was on. We got it ready to show within a few days – decluttered, depersonalized it.

My real estate agent Dave [Vallee] had sold a couple [of homes] in the same shape as mine; he had sold one for $683,000. We put it at $689,000, hoping to get some competing offers.

In less than a week, we had an open house on a Sunday. The next day there were three offers, all higher than the asking price…$692,000, $699,000 and $700,000.”

Knowing when to put it on the market is key
What did the home finally sell for in the end? “Two of them were subject to financing. The [homebuyer offering] $695,000 had the money in cash. Her real estate agent was there that night at the house presenting the offer and she was waiting in the car. We said, ‘Would she be willing to move to $700,000 to meet the other offer?’ and she did.”

Final thoughts on the process. “It helps to have a realtor who knows the area that you’re buying and selling in. In going to a lot of open houses, you’d go to ones where the realtors were from outside the area – so there were a lot of questions they couldn’t answer.

If something needs painting, paint it. I went to some places and they were messy. It just doesn’t make you necessarily want to buy. The place that I did buy ironically, the person had been relocated back east and said, ‘Take it as it is.’ They probably could’ve asked for more if they had done a few things.”

Article Source: Financial Post
Illustrations by Chloe Cushman, National Post

A BIG HIKE

Calgary house price growth outpacing rest of Canada
9.6% annual hike for repeat home sales to record level
BY MARIO TONEGUZZI 
CALGARY HERALD MARCH 12, 2014

CALGARY - Calgary’s housing market continues to shine compared with the rest of the country as local residental real estate prices showed the highest growth rate in Canada in February, according to a report released Wednesday on repeat home sales.

Calgary prices rose by 9.6 per cent year-over-year and by 1.1 per cent month-over-month - both the best in the country and to an all-time high for the city, said the Teranet-National Bank National Composite House Price Index.

Nationally, of 11 centres surveyed, prices were up 5.0 per cent from last year and by 0.3 per cent from January.

The index is estimated by tracking observed or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation.

The trend in price increases in Calgary does not appear to be changing in March. According to the Calgary Real Estate Board, so far this month from March 1-11, the average MLS sale price in the city is up 5.28 per cent from the same time a year ago to $480,345 while the median price has increased by 7.25 per cent to $429,000. CREB stats indicate there have been 796 MLS sales so far this month, up 10.71 per cent from last year but new listings are down 4.05 per cent to 1,114 and active listings are off by 18.80 per cent to 3,049.

The Teranet-National Bank report said that for the second month in a row, prices for Canada as a whole rose to an all-time high, though new records were set in only two of the 11 metropolitan markets surveyed - Vancouver (for a fourth straight month) and Calgary (for the first time since September 2007).

The gain from a year earlier was well above the cross-country average in two of the 11 markets, Calgary and Vancouver (7.7 per cent). It was slightly above the average in Toronto (6.1 per cent) and Edmonton (5.3 per cent), equal to the average in Hamilton (5.0 per cent) and below it in Winnipeg (3.5 per cent) and Montreal (1.9 per cent).

In Halifax (4.7 per cent) and Ottawa-Gatineau (0.6 per cent), prices were down from a year earlier for a second consecutive month. In Victoria (3.4 per cent), home prices have been down from a year earlier for 12 months now. Quebec City posted its first 12 month deflation in 15 years (2.0 per cent). It is the first time since October 2009 that there is price deflation in at least four of the regions covered, said the report.

“In February the east-west dichotomy became more pronounced than ever,” it said.

Home prices were up from the month before in all five markets of Western Canada - Calgary, Vancouver and Victoria (0.9 per cent), Edmonton (0.6 per cent) and Winnipeg (0.5 per cent). The rise in Victoria ended a run of four consecutive monthly declines. For Vancouver it was the 10th consecutive monthly increase. In the six markets of central and eastern Canada, the only monthly rise was in Montreal (0.7 per cent), the second advance after six months of flat or declining prices. Prices were down 0.1 per cent in Toronto, making February the fourth month without a gain in the last six. For Ottawa-Gatineau (0.8 per cent) it was the sixth decline in a row, for Quebec City (1.7 per cent) the sixth in seven months. For Halifax (1.7 per cent) it was the third decline in a row, said the report.

AT WAR

Calgary homebuyers return to housing market bidding wars
BMO report says Canadians willing to pay more to get what they want
BY MARIO TONEGUZZI, 
CALGARY HERALD MARCH 5, 2014

CALGARY - Prospective Canadian homebuyers are more willing to enter into a bidding war this year for properties they want to purchase, says a new report released Wednesday by BMO.

And Calgary’s hot housing market is proving to be a good example of that as nearly 20 per cent of MLS residential sales in the city in February were for above list price.

The BMO Home Buying Report said 34 per cent of Canadians are willing to enter a bidding war when it’s time to buy a home, an increase of six points, or 21 per cent, from a year ago.

The report, conducted by Pollara, said that in major city centres, the appetite for competitive bids is the highest in Toronto and Vancouver (44 per cent and 41 per cent respectively). In Calgary, it is 38 per cent and in Alberta, it is 30 per cent.

“While many suspect bidding wars are triggered by sellers who deliberately price their homes below market, the report shows that just 15 per cent of owners have that motivation, with those on the Prairies and in Toronto the most likely to pursue this strategy - but even then the numbers are modest at 24 per cent and 22 per cent respectively,” said BMO, which says average home prices across Canada continue to rise, gaining momentum in the past year, with the average transaction price up nearly 10 per cent year-over-year in January. The average home sale price in Canada is currently just over $400,000.

“Calgary’s market continues to see the strongest fundamentals; Vancouver has rebounded from a soft patch; while Toronto’s market remains relatively balanced overall, though the condo market is more amply supplied,” said Robert Kavcic, senior economist with BMO Capital Markets, in a statement. “Overall, sales are expected to hold relatively steady in the year ahead, with price growth in the low single-digit range, below the rate of income growth.”

Laura Parsons, mortgage expert with BMO Bank of Montreal, said the competition for real estate in Canada, particularly in hotter markets, can be fierce and turn into an emotional frenzy.

“A shortage of inventory is driving a lot of it,” said Parson of the Calgary market. “It’s such an emotional thing. When you see it, you get it. I remember the days when there were lineups of people behind each other. The minute you see that your heart starts to race and you want to not lose.

“Lots of people are prepared. They know what their high is . . . Calgary has the biggest income so we’re willing to spend more if we have to and hopefully we’ve been conservative before we go in and we know we have that room to bid higher.”

Parsons said many people don’t understand that they can renovate a home and build it into the purchase price.

For some people, she said, there’s a need to move before spring and they’re feeling the pressure.

Data released Monday by the Calgary Real Estate Board indicates all-time records, for any month, were set in February in the average city sale price ($482,530) and the median city price ($424,900) as well as in the single-family sale price ($550,312) and the single-family median price ($480,000).

“Calgary has been in a statistical sellers’ market since February 2013,” said Robyn Moser, a realtor with CIR Realty. “As time has passed, the sellers’ market has become increasingly aggressive. This has caused buyers to see lower and lower levels of inventory, placed into competing offers and homes selling in days if not hours. This cause is speculated to be the lack of available new home inventory due to Calgary sewer lines that are needing to be upgraded. This has placed metro Calgary real estate values into statistical unsustainable levels until the sewer line upgrade is complete.”

According to CREB, as of Tuesday, there were 2,893 active MLS listings in the city which was down 20.15 per cent from a year ago. Year-to-date, sales have increased by 11.77 per cent to 3,551 transactions.

Mike Fotiou, associate broker with First Place Realty, said Calgarians were so determined to buy a home in February that nearly one in five paid above the asking price.

“Of the 1,854 properties that sold during the month, 364 or 19.6 per cent of buyers paid higher than list price. Compare that to the 10.4 per cent of buyers from a year ago or the 6.1 per cent from February 2012 that paid above asking,” Fotiou wrote on his blog.

“As sales rise and inventory continues to decrease year-over-year, it’s to be expected that buyers will find themselves in more situations where multiple offers are involved.”

SALE PRICE JUMP

Calgary repeat home sale prices rise 7.1%
Second biggest jump in Canada behind Vancouver’s 7.5%
By Mario Toneguzzi 
Calgary Herald February 12, 2014

CALGARY - Calgary had the second best year-over-year growth rate in prices for repeat home sales in January, according to the latest Teranet-National Bank National Composite House Price Index released Wednesday.

It said Calgary’s annual increase was 7.1 per cent which was behind only Vancouver’s 7.5 per cent.

The national composite, of 11 major centres surveyed, rose by 4.5 per cent.

The index is estimated by tracking observed or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation.

Toronto saw an annual increase of 5.8 per cent.

Sonny Scarfone, economic analyst with TD Economics, said the index surprised on the upside with a larger gain in momentum than expected across the country.

“Home price gains are still exceeding income growth by a considerable margin, especially in larger real estate markets like Toronto and Vancouver. A low supply of new listings is an important contributor to the upward pressure on prices,” said Scarfone.

“However, as U.S. and Canadian economic growth accelerates and the Federal Reserve continues to taper its quantitative easing program, North American bond yields are likely to rise over time and this will be reflected in mortgage rates. As a consequence, the current stronger-than-expected prices are likely to soften over the medium term.”

The index nationally rose 0.4 per cent from December to an all-time high. It was the largest monthly rise in five months.

The gain from a year earlier exceeded the cross-country average in four of the 11 markets: Vancouver, Calgary, Toronto and Hamilton (5.1 per cent). It was close to the average in Edmonton (4.4 per cent) and Winnipeg (3.9 per cent). It was minimal in Montreal (0.8 per cent) and Quebec City (0.6 per cent). Prices were down from a year earlier in Victoria (5.7 per cent), Halifax (2.9 per cent) and Ottawa-Gatineau (0.6 per cent). The 12-month decline was a first for Ottawa-Gatineau, the 11th straight for Victoria and the fourth in six months for Halifax, said the report.

On a monthly basis, price increases were led by Vancouver (1.1 per cent), Toronto (0.5 per cent) and Quebec City (0.5 per cent) led the composite index. Calgary equalled it. Hamilton prices were up 0.3 per cent, Winnipeg and Montreal prices 0.2 per cent. Edmonton was flat on the month. Prices fell 0.3 per cent in Victoria, 1.1 per cent in Ottawa-Gatineau and 1.7 per cent in Halifax. The January rises in Montreal and Quebec City interrupted runs of five consecutive monthly declines. For Ottawa-Gatineau it was the fifth straight monthly decline, for Victoria the fourth and for Halifax the second. For Vancouver it was a ninth straight monthly rise, for the composite index the 10th in 11 months, said the report.

“There are signs that national house price inflation is close to peaking. The earlier strength in existing home sales, triggered by fears of higher mortgage rates, has begun to fade,” said David Madani, economist with Capital Economics. “January’s preliminary data reported by the regional real estate boards indicate that national home sales declined for a fourth consecutive month.

“The drop back in the months’ supply of inventory is already consistent with annual house price growth rate remaining around 4.0 per cent. If we are correct about home sales drifting lower this year, it will once again start to put downward pressure on house price inflation.”

MAKING GAINS

Calgary house price gain again best in Canada
By Mario Toneguzzi
Calgary Herald January 15, 2014 

CALGARY - Another day and another real estate report indicating Calgary’s housing market is showing the best year-over-year price growth in the country.

On Wednesday, the Canadian Real Estate Association released its MLS Home Price Index which indicated Calgary prices in December were up 8.74 per cent from a year ago while the aggregate across the country, encompassing 11 major markets, rose by 4.31 per cent. 

The CREA report followed Tuesday’s Teranet-National Bank National Composite House Price Index report which said Calgary led the nation with a 6.5 per cent hike in prices for repeat home sales.

In December, CREA said Calgary MLS sales were up nine per cent from last year to 1,464 transactions while the average sale price rose by 4.7 per cent to $439,389.
 For Canada, MLS sales during the month increased by 12.9 per cent to 23,215 units and the average sale price jumped by 10.4 per cent to $389,119.

In Alberta, sales of 3,135 were up 9.8 per cent from a year ago and the average sale price rose by 4.7 per cent to $380,477.

On an annual basis, the number of sales and percentage increases were: Calgary, 29,954, 12.5 per cent; Alberta, 66,080, 9.5 per cent; and Canada, 457,893, 0.8 per cent.

On an annual basis, the average sale price and percentage increases were: Calgary, $437,036, 6.0 per cent; Alberta, $380,969, 4.9 per cent; and Canada, $382,466, 5.2 per cent.

UP OVER 18%

Calgary helps fuel strong MLS sales in Canada

National transactions up more than 18% Y/Y

BY MARIO TONEGUZZI

CALGARY HERALD OCTOBER 15, 2013

CALGARY — Led by gains in Calgary, Edmonton, Greater Vancouver and Greater Toronto, Canada’s housing market experienced soaring MLS sales in September compared with a year ago.

The Canadian Real Estate Association said Tuesday that national sales of 38,147 during the month were up 18.2 per cent from September 2012.

That is roughly on par with the 10-year average in September. The 18.2 per cent increase compared to year-ago levels reflects weakened activity at that time, said CREA.

In Calgary, sales rose by 20.5 per cent to 2,475 transactions.

“Currently it is still a strong sellers’ market wherein we are seeing properties in prime locations come on the market and within a day being sold unconditionally for above listed price when priced accordingly,” said Grace Yan, a realtor with RE/MAX Real Estate (Central) in Calgary.

“We are still experiencing vast amounts of relocations from all parts of the world as Calgary’s oil and gas economy remains strong. We are expecting the rest of the year to remain a strong, healthy resale market due to the limitation of suburban developments and the long periods of time to obtain building permits for new builds along with limited public transportation in suburban areas.”

In September, sales year-over-year sales increases were 64.3 per cent in Vancouver (2,524 sales), 26.1 per cent in Toronto (7,411), and 24.8 per cent in Edmonton (1,712).

“Year-over-year increases in the sales over the past couple of months highlights how activity softened across much of the country following the introduction of tighter mortgage rules last summer,” said Gregory Klump, CREA’s chief economist.

“While the momentum for sales activity began improving a few months ago, it may be losing steam after having only just climbed back in line with an average of the past 10 years. Even so, one can see large year-on-year changes when comparing activity to a month like September 2012, when sales dropped to the lowest level for that month in more than a decade.”

CREA also said Calgary had the highest year-over-year increase in the MLS Home Price Index at 7.28 per cent. The aggregate for the 11 centres surveyed across Canada was 3.13 per cent. The index looks at benchmark properties in those centres.

Calgary average MLS sale price rose just slightly under the national average in September. It was up 8.2 per cent year-over-year to $435,934. Across Canada, the national average sale price was up 8.8 per cent to $385,906.

CREA said MLS sales in Alberta increased by 20.8 per cent in September to 5,694 while the average sale price was up 7.4 per cent to $381,308.

Diana Petramala, economist with TD Economics, said no two major markets in the country are the same.

“Momentum may prove more lasting in markets with fewer excesses, like Calgary and Edmonton where homes appear fairly valued and sales are being supported by decent labour markets and population growth,” she said.

Robert Kavcic, senior economist with BMO Capital Markets, said sellers in Calgary still have a slight upper hand.

Photos By: Nacoki

A SELLERS' MARKET

Calgary area housing market has best price growth expectation
7% and higher forecast for year-over-year hike in short-term
By Mario Toneguzzi 
Calgary Herald September 20, 2013

CALGARY — Calgary and area is forecast to lead the country in short-term year-over-year price growth in the housing market, according to a report released Friday by the Conference Board of Canada.

The report said prices in the Calgary region are expected to rise by seven per cent or more.

The board’s report said Calgary is now in a sellers’ market.

The board said the seasonally-adjusted annual rate of sales in Calgary of 33,264 in August was up 6.3 per cent from the previous month and a 26.3 per cent hike from a year ago.

The seasonally-adjusted annual rate of listings at 43,704 was up 2.0 per cent from July and increased by 4.8 per cent from August 2012.

The board said the average price in Calgary of $441,806 in August increased by 0.7 per cent from the previous month and by 8.0 per cent from a year ago.

Scott Bollinger, broker for the ComFree Commonsense Network, said the strong housing market in the city is due to a strong outlook for the economy.

“We’ll outperform most of the country, and that creates significant demand for housing. Interest rates are low, and the Bank of Canada is unlikely to move them till 2015,” he said. “Personal incomes are high and growing. Oil prices are strong and stable. Our growth in the 20-44-year-old demographic is second fastest in the world, behind only India. And our cost of living is lower than Toronto or Vancouver.

“That all adds up to this: More Calgarians can afford to buy a home, and more can afford to move up in the market.”

Bollinger said the strong price growth in the Calgary market is due to confidence — people who are confident about their employment and future wages.

“Confidence in housing is a good investment. Confidence in the city’s economic strengths and the strength of the market, in the face perhaps of news from other cities that a housing bubble is on the horizon. Real estate is local, and Calgarians are smart and savvy enough to realize that,” he said.

“I think we can expect this to continue because of those strong economic fundamentals, and because growth in optimistic buyers is outpacing growth in listings. It’s the old supply-and-demand.”

According to the Calgary Real Estate Board, year-to-date for just the city, there have been 17,933 MLS sales as of Thursday, up 9.33 per cent from the same period a year ago. The average sale price has jumped by 6.93 per cent to $456,779 but new listings are down 0.8 per cent to 25,943.

“The average price in Calgary is forecast to increase almost six per cent this year to $435,000,” said Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp., about the census metropolitan area. “Part of the gains in the average price thus far is due to the high number of luxury homes sold this year. There has also been more pressure on prices as active listings have moved lower as well as days-on-market. Price growth is expected to continue into 2014 but at a more modest pace.”

LIVIN' RIGHT

Toronto fourth most livable city in world: Economist

Vancouver, Toronto and Calgary keep their high rankings on The Economist's list.

By: The Star Staff

Torornto Star August 28, 2013

Three of the top 10 most livable cities in the world are Canadian.

Vancouver, Toronto and Calgary are third, fourth and fifth, respectively, on the list compiled annually by the Intelligence Unit of the business and political weekly magazine The Economist. That’s also where they stood last year.

Both Toronto and Vancouver won perfect 100-point scores for stability, healthcare and education. The 100-point score for infrastructure The Economist gave Melbourne and Vienna propelled them to first and second place on the list.

Melbourne has been the top city on the livability list since 2011, when it squeezed out Vancouver. Toronto and Calgary have traditionally been in the top five as well.

The Economist bases its ratings of 140 cities on 30 factors across five categories: stability, healthcare, culture and environment, education and infrastructure.

Seven of the top 10 cities are in Canada and Australia, which the Intelligence Unit points out reflects them being mid-sized cities in wealthier countries with relatively low population density and good healthcare and education.

The other cities on the top 10 list, from fifth through ninth, are Adelaide, Sydney, Helsinki and Perth.

Half of the bottom 10 cities are in Africa: Douala, Cameroon; Tripoli, Libya; Algiers, Algeria; Harare, Zimbabwe and Lagos, Nigeria.

Syria’s capital of Damascus ranks dead last because of the civil war tearing apart the country. Damascus also registered the biggest decline in livability over the last five years, by more than 20 per cent.

The livability list also highlights the cities with the most improved scores over the last five years. Bogota, Colombia, improving the most: by 7.9 per cent since 2008, because of an end to violence created by the drug trade and guerrilla activity.

Top ten cities (overall score)

Melbourne, Australia 97.5

Vienna, Austria 97.4

Vancouver, Canada 97.3

Toronto, Canada 97.2

Calgary, Canada 96.6

Adelaide, Australia 96.6

Sydney, Australia 96.1

Helsinki, Finland 96.0

Perth, Australia 95.9

Auckland, New Zealand 95.7

Photo by: stephenk1977

PROVINCIAL 2ND QUARTER AFFORDABILITY

Alberta's housing market continues as one of Canada's most affordable: RBC Economics

RBC Economics

 Aug. 27, 2013, 2013 (Menafn - Canada NewsWire via COMTEX)

Alberta homebuyers continued to enjoy a relatively affordable housing market in the second quarter, despite some increases in ownership costs in late 2012 and early 2013, according to the latest Housing Trends and Affordability Report issued today by RBC Economics Research.

"Despite the fact that the market has kicked into higher gear since spring - thereby boosting prices and increasing ownership costs - Alberta continues to be a relatively affordable market," said Craig Wright, senior vice-president and chief economist, RBC. "We will likely see some disruptions in market activity trickle through in summer data from the floods in southern Alberta; however, we anticipate the strong provincial economy will endure, supporting further housing growth in 2014."

In the second quarter of 2013, RBC's housing affordability measures, which capture the province's proportion of pre-tax household income needed to service the costs of owning a home at market values, edged higher for all three categories tracked (an increase in the measure represents deterioration in affordability).

RBC's affordability measure rose by 0.7 percentage points to 32.4 per cent for bungalows and 0.4 percentage points to 34.5 per cent for two-storey homes. The measure for condominiums rose slightly by 0.1 percentage points to 19.6 per cent. All measures stood at a level below their long-term average, indicating that homeownership in the province remained historically attractive.

Calgary's housing market moving forward despite flood adversity.

The flooding that hit Calgary at the end of June did not appear to have slowed Calgary's housing market progression in the second quarter of 2013, says RBC. On a quarterly basis, home resales in the area posted a 12 per cent gain - their second-strongest improvement in four years.

"Though prices are now on a steeper upward trajectory, the effects have yet to undermine affordability in a material way. In fact, affordability levels in Calgary continue to be among the best in Canada," said Wright. "Demand for Calgary housing will continue to benefit from a strong provincial economy, solid labour market, fast-rising population and attractive affordability."

RBC measures for Calgary showed little movement across all housing categories in the second quarter of 2013. RBC's measure for two-storey homes rose by 0.5 percentage points to 33.6 per cent and for condominium apartments edged lower by 0.2 percentage points to 19.4 per cent; the measure for bungalows remained unchanged at 33.0 per cent.

RBC's housing affordability measure for the benchmark detached bungalow in Canada's largest cities is as follows: Vancouver 82.1 per cent (up 2.2 percentage points from the previous quarter); Toronto 54.5 per cent (up 0.5 percentage points); Montreal 38.1 (down 0.7 percentage points); Ottawa 37.1 (up 0.5 percentage points); Edmonton 34.0 (up 1.8 percentage points); Calgary 33.0 (unchanged).

The RBC Housing Affordability Measure, which has been compiled since 1985, is based on the costs of owning a detached bungalow (a reasonable property benchmark for the housing market in Canada) at market value. Alternative housing types are also presented, including a standard two-storey home and a standard condominium apartment. The higher the reading, the more difficult it is to afford a home at market values. For example, an affordability reading of 50 per cent means that homeownership costs, including mortgage payments, utilities and property taxes, would take up 50 per cent of a typical household's monthly pre-tax income.

Highlights from across Canada:

--British Columbia:
affordability takes one step back

Homeownership of single-family homes in the province became less affordable in the second quarter of 2013 amid a surge in resale activity since early spring following a near two-year long cooling stretch. RBC measures rose by 1.1 percentage points for bungalows, by 0.8 percentage points for two-storey homes, and by only 0.1 percentage points for condominiums.

--Saskatchewan:
seesaw affordability pattern endures

Affordability in the province continued to experience a seesaw-like pattern which has characterized this market in recent years. RBC measures rose modestly by 0.9 percentage points for bungalow and 0.5 percentage points for two-storey homes in the latest period, while the measure for condominiums inched lower by 0.3 percentage points.

--Manitoba:
housing affordability a mixed bag

The province's second quarter housing affordability developments proved to be a mixed bag with RBC's measure for the two-storey home category rising by 1.8 percentage points, the measure for bungalows down slightly by 0.2 percentage points, and the measure for condominiums edging up by 0.2 percentage points.

--Ontario:
steady as she goes

There was little change in housing affordability in Ontario in the second quarter. RBC's measures for both bungalows and two-storey homes rose by 0.2 percentage points relative to the first quarter, while the measure for condominiums remained flat.

--Quebec:
bucking the deteriorating affordability trend

The Quebec housing market bucked the national trend by enjoying a broad-based improvement in affordability in the second quarter. RBC affordability measure for the province fell by 0.5 percentage points for bungalows and 0.4 percentage points for condominiums; the measure for two-storey homes remained unchanged.

--Atlantic Canada:
affordability stuck in neutral

Atlantic Canada's housing affordability levels remained relatively static at neutral levels in the second quarter of 2013. Affordability measures moved marginally in all categories tracked by RBC: bungalows and condominiums edged lower by 0.1 percentage points and 0.2 percentage points, respectively; two-storey homes edged up by 0.1 percentage points.

ONE UP

Canada’s new home prices tick up 1%, led by Calgary 
By Greg Quinn
Bloomberg News 13/07/11

Canada’s new home price index rose in May led by Calgary and cities in Ontario, the government statistics agency said.

The 0.1% national gain was led by a 0.9% increase in Calgary, Statistics Canada said Thursday in Ottawa. Prices also rose 0.6% in the Ontario cities of St. Catharines-Niagara, Sudbury and Thunder Bay.

Economists predicted the index would rise 0.2% on the month, according to the median estimate in a Bloomberg survey with nine responses. From a year earlier, new home prices increased 1.8% in May.

Other reports this week have shown housing-market strength as officials warn consumers not to become overextended with mortgage debt. Building permits rose a fifth month in May while housing starts fell less than economists predicted in June.

Thursday’s data showed prices in Toronto, the nation’s largest city by population, increased 0.2%. Montreal, the second largest, saw house prices climb 0.3% while those in Vancouver, the third-largest, fell 0.2%.

BY COMPARISON

Calgary prices for repeat home sales on the rise
Nationally annual hike is smallest since November 2009
By Mario Toneguzzi
Calgary Herald May 14, 2013

CALGARY — Prices for repeat home sales in Calgary were up 5.5 per cent in April compared with a year ago, according to the Teranet-National Bank National Composite House Price Index.

The index, released Tuesday, also said prices in the city increased by 1.2 per cent from the previous month.

The index is estimated by tracking ob­served or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation of the index.

Nationally, in 11 markets surveyed, prices were up 2.0 per cent on an annual basis and by 0.2 per cent month-over-month.

The year-over-year hike in Canada was the smallest 12-month rise since November 2009.

“By way of comparison, the Case-Shiller home price index of 20 U.S. metropolitan markets was up 9.3 per cent from a year earlier in February (the latest available reading),” said the Teranet-National Bank report.

In Canada, the rise over the 12 months ending in April exceeded the cross-country average in seven of the 11 markets surveyed for the national composite index: Quebec City (6.1 per cent), Calgary (5.5 per cent), Hamilton (5.4 per cent), Winnipeg (4.4 per cent), Toronto (4.3 per cent), Edmonton (3.6 per cent) and Halifax (2.8 per cent).

The report said price increases lagged the average in Ottawa-Gatineau (1.5 per cent) and Montreal (1.3 per cent). Prices were down from a year earlier in Victoria (3.3 per cent) and Vancouver (1.5 per cent). For Vancouver it was the ninth month of 12-month deflation.

Amna Asaf, economist with Capital Economics, said house price growth in Calgary and Edmonton have continued to accelerate, following from their housing downturn of two years ago.

“Although house prices rose in most of the cities, we suspect that as home sales drop, the former will eventually respond,” said Asaf. “Based on the figures already reported by the regional real estate boards, both Toronto and Vancouver posted fewer existing home sales in April compared to a year ago, although the pace of decline has eased. We suspect that national existing home sales . . . may have dropped at a more modest pace of around two per cent year-on-year.

“If we are correct about declining home sales this year, the month’s supply of inventory is likely to rise much further. Accordingly, we suspect that house prices will eventually begin to decline outright.”

On Tuesday, federal Finance Minister Jim Flaherty said he has no plans to intervene in Canada’s housing market, which he says is unfolding in a healthy way.

While some observers are expressing fears the bubble is about to burst, Flaherty said the market is responding the way he envisioned when he tightened lending rules last year.

The Teranet-National Bank index said the national monthly change was the weakest in the 15 years since the inception of the index with the exception of April 2009 when the country was in recession.

“In three markets considered lively, the monthly gain exceeded one per cent: Winnipeg (1.3 per cent), Edmonton (1.3. per cent), Calgary (1.2 per cent). Excluding these three regions, the Composite index would have been flat in April. Lesser monthly increases were recorded in Hamilton (0.6 per cent), Montreal (0.5 per cent) and Toronto (0.4 per cent). Prices were down from the month before in five markets: Vancouver (0.8 per cent), Quebec City (0.5 per cent), Ottawa-Gatineau (0.2 per cent) and Victoria and Halifax (0.1 per cent).”

Photo By: Poshmoggy

ON THE HUNT

Get ready condo flippers, Canada Revenue Agency is hunting you
By Garry Marr
Financial Post April 20, 2013

You just sold your condo, you made a hefty profit and know you have to pay your taxes.

The bill might be more than you think.

If it’s your principal residence, there’s no tax, as long as you have the paperwork to prove it. The Canada Revenue Agency is taking a closer look at the condominium sector in what some in the industry have dubbed the “Condo Project.”

Even if you own up to it being an investment property, you may not be allowed the capital gains tax break and that means a bigger hunk of your profit going to Ottawa.

Let’s say your gain is $100,000 and your tax bracket is 46%. Capital gains are taxed at 50% so you would only owe $23,000 on that profit.

Not so fast! If the CRA says you are in the business of flipping condominiums, get ready to pay based on the gain being counted as income for a tax bill of twice the amount at $46,000. And, it gets worse. You could also face a fine of up to 50% of the tax owed for making a false disclosure.

With the deadline for filing taxes coming up April 30, you might want to think very carefully about how you record that housing sale you made in 2012.

Sam Papadopoulous, senior public affairs advisor-manager with CRA’s Ontario region, acknowledges that the strength of the condo sector has attracted the attention of the taxman.

“We do from time to time target some sectors more closely than others,” he said. “We look at the real estate market in general. Of course, [there is more focus], it’s a hot market.”

People in the industry have a different view.

Some suggest it fits in with the recent budget when Jim Flaherty, the finance minister, announced his government was taking a closer look at loopholes and tax cheats — hoping to shrink its deficit in the process.

One of the issues attracting the attention of the CRA is assignment clauses, where one person agrees to purchase a condo before it is built but ultimately sells his or her right to buy that condo before the building is even registered.

Builders usually collect a fee for that privilege but ultimately when title is registered at the land registry office the original purchaser’s name is nowhere to be found.

While most builders are unlikely to voluntarily supply a list of properties in their building that were assigned, they could be forced to cough it up if they are audited by the CRA.

Those people who have assigned their units to another buyer are going to be hard pressed to prove they planned to use the unit as an investment property rather just flipping — meaning the CRA is highly unlikely to allow them to count money made at the lower capital gains rate.

“If you keep [assigning property] then it is not capital gains, that’s trade and that’s income,” said Mr. Papadopoulous, adding you do it a “couple of times” and it’s income. “Of course, that’s part of [what they are investigating].”

The warning to people flipping property and thinking they can get away without reporting the gain is pretty clear.

“We live in the information technology age,” said Mr. Papadopoulous, who wouldn’t get into how CRA is tracking down the tax evaders. “We are putting our resources to work and following the trail where we can.”

Robert Kepes, a Toronto tax lawyer at Morris Kepes Winters, said he’s seen the CRA go after people who have been living in a property and still question it as a principal residence.


CRA starts with a letter to a taxpayer asking them for details about when and why they sold their property and people often fill out the questionnaire without legal advice.

The issue goes all the way back to 1971 when there was no tax at all on capital gains so everybody tried to avoid counting gains as income.

Mr. Kepes says the distinction between income and capital is as simple as the difference between a tree and the fruit that it bears.

“The tree is capital and it produces a fruit and the income is the profit that is derived when that fruit is sold,” he says.

If your condo is that tree and your rental income is the fruit and you make a profit from that rental income, that’s taxed as full income. You eventually sell the tree for more money and that’s just a capital gain, taxed at the 50% rate.

If your entire businesses is just trading trees and not producing fruit, that’s business income.

“The Income Tax Act asks what was your intention when you bought that condo,” said Mr. Kepes. “These principles are easy to describe but harder to prove in fact.”

The law is like a civil case, a judge doesn’t have to believe you beyond a reasonable doubt, but a judge does have to conclude you are more believable than the CRA.

“We have to bring all kinds of intrinsic evidence,” says Mr. Kepes, noting some clients will produce something as simple as a change in address on their driver’s licence to show they were using their condo as a principal residence.

If you never actually moved into the condo, it’s going to be tough to prove that it was principal residence.

You may never have produced income from the profit but that’s not to say you didn’t plan to, so perhaps you could get the capital gains exemption.

“The question can be ‘how did they come to sell the property,’” said Mr. Kepes, adding the CRA might look at whether you were advertising the property for sale.

Brian Johnston, chief operating officer of Mattamy Corp., says the CRA has ways to get information on sales.

“They audit real estate companies, look at the name on the contract and look at the final deed and see a difference,” said Mr. Johnston. “They see Bill Smith bought it and Joe Blow is on the deed. They want to know how this happened and follow the paper trail.”

He has some sympathy for consumers confused about the whole process.

“I think the government should make it a little simpler in terms of filing for principle residence exemption,” said Mr. Johnston. “It’s a real gray area of the law. The government has not done a good job for Canadians trying to specifically identify all the rules around [selling homes and paying taxes]. People might have inadvertently made mistakes.”

Condominium developer Brad Lamb, who has been audited several times, said ultimately it’s better to be more conservative when you’re filing — meaning just count the gain as income if you are in doubt.

“If you are prolific buyer or seller of properties, whether it’s condos or not, you have to govern yourself accordingly. If you don’t, you’ll get caught and be fined,” said Mr. Lamb. “I decided many years ago when I started buying condominiums, after talking with my accountant, you can pay [lower tax] or you can fight 50 years with Revenue Canada.”

http://business.financialpost.com/2013/04/20/get-ready-to-pay-income-tax-on-your-condo-profit/

CHECK OUT THESE PIPES!

Canada new housing prices up 0.2 percent on strength in Calgary
Reporting by David Ljunggren; Editing by Theodore d'Afflisio
Thu Apr 11, 2013

OTTAWA (Reuters) - New home prices in Canada rose by 0.2 percent in February, the 23rd consecutive month-on-month increase, pushed up by a buoyant market in the western city of Calgary, Statistics Canada said on Thursday.

The advance matched analysts' expectations. Calgary prices rose 1.0 percent from January - the largest month-over-month increase since May 2007 - on higher material and labor costs. Calgary is the center of Canada's booming energy industry.

Overall, prices rose in 10 cities, stayed unchanged in nine and fell in two. On a year-over-year basis new housing prices in Canada rose by 2.1 percent in February, down from 2.2 percent in January.

The Canadian government, which imposed tighter mortgage rules last July, and the Bank of Canada have long expressed concerns the housing market might overheat.

The new housing price index excludes condominiums, which the government says are a particular cause for concern.

Photo by: Leo Reynolds

OUT-PERFORMING IN AB

Calgary listed as an “out-performer” in Canadian real estate market
Pace predicted to be moderately lower for Canada
By Mario Toneguzzi
Calgary Herald March 11, 2013

CALGARY — Canada is expected to embark on a gradual, modest, downward housing market adjustment over the next three years with a “measly” two per cent annual price gain over the next decade, says a study released Monday by TD Economics.

But the bank has also listed Calgary as an “out-performer” in Canada for the long-run rate of return on Canadian real estate. Compared with the national picture, Edmonton, Vancouver, Victoria and Toronto were also listed as out-performers for the future.

“With the slowdown in the Canadian housing market well entrenched, many are worried about the future value of their homes. This is not surprising as real estate is the largest financial asset most Canadians have in their possession,” said TD Economics.

“The housing market is prone to cyclical ups and downs and we should embark on a gradual, modest, downward adjustment over the next three years. We project a 3.5 per cent annual rate of return on real estate to prevail beyond 2015 – this is the long-run rate of increase for home prices in Canada. However, this pace will be moderately lower than they have been historically (5.4 per cent).”

Derek Burleton, vice-president and deputy chief economist with TD Economics, said Calgary had a run-up in prices before the recession and then a sharp decline during the recession.

“I guess prices didn’t come back too much but certainly sales fell back and now you’re getting a bit of a cyclical bounce,” he said, adding a long-term forecast takes into account key economic drivers like population growth and the potential of the economy to generate income.

“Based on some of the key drivers of growth, Calgary ranks right up there at the top and that should stand the housing market good stead. At least continue to drive above average price gains over the long run.”

The average MLS sale price in Calgary was $180,420 in 2000. That climbed to a peak of $423,770 in 2007 before dipping to $394,064 in 2009. From then, it has steadily climbed, reaching an all-time record of $428,644 in 2012.

Becky Walters, president of the Calgary Real Estate Board, said the Calgary market is really strong this year due to the in-migration it has been getting over the past 12 months.

“It’s not maybe as strong this year as it was last year but it’s certainly strong,” said Walters. “We’re seeing a nice steady growth. We’re seeing prices starting to come up a little bit not tons.”

For example, according to CREB, year-to-date until March 10, there have been 3,595 MLS sales in the city, up 4.66 per cent from the same period a year ago, and the average sale price has jumped by 9.23 per cent to $451,189.

However, at the national level, TD said a string of lacklustre performances over the next few years will mean that the annual rate of return for real estate in nominal terms will be a “measly” two per cent over the next decade, meaning home price gains should simply match the pace of inflation.

“Our research at REIN Canada is showing that for the coming five years, outperforming markets will be those based not in speculation or foreign investment, they will be those markets supported by underlying economics,” said Don Campbell, senior analyst and founding partner of the Real Estate Investment Network. “The Canadian real estate market is too broad and too diverse to paint with one story or byline and will become an increasingly regional story. Supporting economics such as increasing jobs, increasing population through migration — especially those areas which are attracting a younger, working age cohort — and increasing incomes will play a larger role in market demand and value than it has in the last five years.

“Despite Calgary and Edmonton’s value moves already experienced, they are both rated in the most affordable major centres in the country because average incomes are also higher than in most other regions. This, along with the younger age of in-migrants to these cities from other parts of the country, will be strong and supporting factors for these market for the coming years.”

Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp., said in the Calgary region the average price in 2013 is expected to reach $423,000, up 2.6 per cent from 2012.

“The rate of growth is anticipated to be higher here than in many other areas of the country as the average resale price in Canada is forecast to increase by only one per cent in 2013,” he said. “Supply of homes in Calgary’s resale market has come down from a year earlier while sales have been fairly stable. The resale price in 2014 is forecast to continuing rising in Calgary, averaging $434,000.”

SECOND TO ONE

Calgary’s 8th Avenue S.W. second most expensive street for office space in Canada
Toronto’s Bay Street tops in average street rent
By Mario Toneguzzi
Calgary Herald November 28, 2012

CALGARY — Calgary’s 8th Avenue S.W. strip is the second most expensive street in Canada for office space, according to a report by Jones Lang LaSalle.

The company said Toronto’s Bay Street comes in at No. 1 with average rents running at around $68.91 per square foot and the top rent on the street at $82.28 per square foot.

Calgary’s 8th Avenue S.W. follows with average office rents of $55.33 per square foot and the top rent on the street at $76.50 per square foot.

“It is clear from our ranking that companies are keen to pay a premium to be in the most prestigious locations,” said Brett Miller, president of Jones Lang LaSalle Canada. “Our figures also prove that demand is not abating and rents have moved up year-over-year in every city confirming the strength of the Canadian office market.”

Calgary’s 8th Avenue S.W made its debut this year to reach second on the list. Last year, Calgary’s 3rd Avenue S.W. was in fourth place.

This year’s list after 8th Avenue S.W. with their average street rent and top street rent includes: Vancouver’s Burrard Street, $54.75, $65.41; Ottawa’s Albert Street, $53.18, $53.18; Edmonton’s 101st Street NW, $49.40, $55.25; Montreal’s Rene-Levesque Boulevard West, $46.46, $56.19; and Halifax’s Upper Water Street, $35.57, $35.78.

Maggie Schofield, executive director of the Calgary Downtown Association, said the high Calgary rent along 8th Avenue is due to the existence of office skyscrapers Bankers Hall and Eighth Avenue Place.

“We’re certainly not surprised that the rates would be very high. It’s all about location. These are very, very high demand properties and the market is certainly driving it. There’s a great deal of appetite for high level, the top class, real estate in the downtown core from the office perspective,” said Schofield.

“A number of companies are trying to take advantage of the fact that they can now get into some of these newer properties and get contiguous space which has been a real challenge for a lot of companies that are trying to expand. So they’re looking at these opportunities and they’re willing to pay that price to get all their people in the same office building rather than being scattered in three or four or five separate towers depending on which company you are.”

Other advantages include the number of amenities along 8th Avenue, particularly in retail, great access to transit and available parking spaces in newer buildings, she said.

Commercial real estate firm CBRE said the vacancy rate in the downtown Calgary office market for Class AA space was 0.5 per cent in the third quarter of this year. It has dipped after being 10.6 per cent at the end of 2009.

According to CBRE, the average net asking rent for Calgary downtown Class AA office space was $23.50 per square foot in the second quarter of 2000. It peaked at $54.48 in the second and third quarters of 2008 then dipped to $33.78 in the first quarter of 2010.

In the third quarter of this year, the average net asking rent for Calgary downtown Class AA office space was $42.00.

The Jones Lang LaSalle report indicated that the differences between the average market rents and the average street rents this year were 133 per cent for Bay Street and 63 per cent for 8th Avenue S.W.

In 2011, it said Bay Street had an average street rent of $52.09 with a top street rent of $78.19. For 8th Avenue last year it was $49.94 for the average street rent and $54.19 for the top street rent.

Photo By: Tony Tran