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

KEEP CALM AND BOOM

‘It’s boom time in Alberta’: New home construction at a five-year high (graphic)
By Mario Toneguzzi
Calgary Herald June 10, 2013

CALGARY — New home construction picked up in the Calgary region in May with Alberta’s level at a five-year high.

It’s a sign that the housing market is heating up.

Canada Mortgage and Housing Corp. reported Monday that total starts in the Calgary census metropolitan area reached 1,078 units during the month, which was an increase from 949 in May 2012.

“The trend of total housing starts increased slightly in May, due to strong construction in both the single-detached and multi-family markets,” said Richard Cho, CMHC’s senior market analyst for Calgary.

Multi-family starts rose to 519 in May from 466 a year ago while the single-detached market saw starts jump to 559 from 483 last year.

“While softer energy prices may be moderating overall economic growth this year, it appears that home builders didn’t receive the memo. Judging by the most recent statistics, it’s boom time in Alberta,” said Todd Hirsch, chief economist at ATB Financial.

Builders started construction on 41,438 new homes in Alberta in May — the highest this year and the first time since early 2008 that the figure has risen above the 40,000 mark.

“What’s more, the trend over the last several months clearly suggests that the housing market is heating up,” added Hirsch. “Between May 2012 and May of this year, housing starts are 14.1 per cent higher than they were in the previous 12-month period.

“What’s causing this boom in home construction isn’t any big mystery: population growth. Even if overall economic growth has slowed somewhat, the inflow of people into our province hasn’t.”

The latest Labour Force Survey, released last week, points to a surge in the labour force, which has grown by 59,400, or 2.6 per cent, over the last 12-months.

“Interprovincial and international migration to Alberta is driving some of the demand for new homes. High wages, low unemployment and a younger population are also contributing factors,” said Hirsch.

“The strong housing starts number ... is supported by another figure from Friday’s employment report — the number of construction jobs is also rising. Even if jobs in the energy patch and manufacturing have eased back a bit, employment in construction continues to provide some great work opportunities.”

Robert Kavcic, senior economist with BMO Capital Markets, said multi-unit housing starts in Canada came storming back in May “after falling precipitously through the winter months.”

“Still, the six-month trend in overall Canadian housing starts sits very close to demographic demand, further hinting at a soft landing,” he said.

Total Canadian housing starts rose by 13.8 per cent in May to 200,178 annualized units, the strongest pace in six months, added Kavcic.

The multi-unit segment rose by 22 per cent.

He said Alberta posted a modest gain, and activity in the province now sits at the highest level in five years.

“With the six-month moving average now more in line with the rate of household formation, May’s sharp jump in the pace of new home construction is unlikely to be sustained,” said Dina Ignjatovic, economist with TD Economics, about the national picture. “Indeed, slower price growth in the housing market could lead to lower homebuilding activity in the coming quarters. Moreover, the overbuilding that has taken place over the last 10 years could lead to new home construction falling below this demographic need for a period of time. This should, however, help to prevent further overbuilding and a consequential sharp correction in the housing market.

“Overall, we expect new home starts to gradually trend down over the next 12-18 months, suggesting that the Canadian economy will not be able to count on residential investment to prop up growth over that time frame.”

For Graphs:
http://www.calgaryherald.com/business/Calgary+region+housing+starts+trend+upwards/8503723/story.html

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

A TEXTBOOK MARKET?

What happened to the expected Alberta real estate boom?
Market influencers tempering demand
By Mario Toneguzzi
Calgary Herald April 11, 2013

CALGARY — Several ‘market influencers’ have kept the reins on the expected Alberta real estate boom, says a new report on the housing market.

The report, by Don Campbell, senior analyst and founding partner of the Real Estate Investment Network, said debate is raging about why the market isn’t booming like it did in 2006 and 2007 when the job market and population in the province were growing at the same rates as they are today.

“The real difference this time is hidden in the strong forces of today’s market influencers. It is very true that the market drivers are all in place to support a large growth in housing purchase demand and price increases, in fact it is a textbook market for a boom,” said Campbell.

“In Alberta, the GDP and job growth have driven very strong population growth which has led to low vacancy rates not experienced in this province for many years. Street rents are jumping due to the rental supply/demand inequality. So, on the surface that means Alberta should be experiencing another one of those unsustainable booms. Well why isn’t it? And is there one still in the works?”

He said certain wild cards can throw a market off its prescribed cycle for periods of time.

“So, despite all of the market drivers being in place to push the Alberta real estate market into its next boom cycle the market continues to underperform its economics. Why? Simply, there are market influencers in play and that is why we are not yet seeing the expected rush into the market demand,” he said.

They include the once-bitten, twice-shy attitude equating into a local lack of confidence in the market. Many Albertans made their first home purchases during the previous boom. They were hit hard when the financial crash came. This has tempered enthusiasm for the market now.

Tighter mortgage qualification rules have also tempered market demand.

Overall consumer confidence in real estate is taking a hit with many recent reports and headlines on the state of the Canadian market saying it may be over-priced or overvalued.

A large portion of Alberta population growth is from two key demographics who are less likely to buy a house immediately — immigrants and ‘Echo-boomers’.

According to the Calgary Real Estate Board, total MLS sales year-to-date in the city until April 10 were 5,798 transactions, up 3.72 per cent compared with the same period last year.

The average sale price this year has risen by 8.08 per cent to $451,246 while the median price is up by 5.92 per cent to $397,000.

Ann-Marie Lurie, CREB’s chief economist, said the organization never felt the economy was about to boom, based on several factors.

“The first consideration is the economy,” she said. “In the 2005-2007 period, we had significant growth in both the oil and natural gas sector, economic growth as of late has only been driven by the oil sector. While this has helped support growth, there have been some challenges regarding bottlenecks and price discounts which has impacted employment growth prospects in the province. We also shouldn’t forget that the natural gas market continues to struggle. Our economic growth is progressing but at a slower pace, and forecasters also estimated that employment growth and net migration would ease this year, two factors pointing towards slower demand growth in housing.

“The next consideration is fundamentals in the housing market. Inventory levels were generally more elevated in the resale market, and it has taken some time to absorb some of the excess in the market. While this has occurred primarily in the single-family market, it has only started to spillover into the surrounding areas, the condominium market, and the new home market. When considering all the options available to consumers, there was sufficient choice to prevent any significant shortage in the entire housing market, which was the case in 2006-2007, causing a unsustainable jump in home prices.”

She said she is not surprised that the market didn’t boom, given the economic backdrop and current supply in the market.

Lai Sing Louie, regional economist for the Prairies and Territories for Canada Mortgage and Housing Corp., said market conditions in Alberta’s housing markets today are different from the boom.

“Some of the differences include higher household debt as well as more prudent lending conditions today. Also, some of the transactions in that period were investor driven and we have not experienced that to the same extent today,” he said.

The underlying economics and Market Drivers state that the market should be on fire, just like it was back in 2006 and 2007 – that is unless you begin to factor in these influencers, said Campbell.

“Let us make sure we are analyzing today’s markets with today’s conditions and not compare them to previous boom-bust cycles. Each cycle has its own influencers that either heat up or cool down a market and this current cycle from 2006 until today is the perfect proof of that,” he said.

“As long as the drivers are strong, the market is structurally strong, no matter what the influencers are doing. The concern should arise when the drivers are weak and the influencers are pushing the market upwards with no support. That is not what is happening in Alberta right now; in fact, the drivers remain strong despite the headlines.”

Ben Brunnen, chief economist with the Calgary Chamber of Commerce, said the province is definitely seeing all of the signs of strong economic and potentially housing growth.

“Net inter-provincial migration, population growth is up. Unemployment is low and GDP growth is relatively high,” said Brunnen. “I think we’re seeing probably a bit more of a cautious consumer out there. I do think we’ll see some strong real estate activity happening in Calgary but not like in the boom.

“I think there continues to be some caution in the market for a number of reasons. While Alberta’s economy is good, the global economy continues to be shaky, especially Europe and the United States. So people don’t have that strong confidence per se that this economic activity is going to be sufficiently robust that they should buy a house.”

SOTHEBY'S EXPANSION

Luxury realtor Sotheby’s to expand into Canmore, Banff
By Mario Toneguzzi
Calgary Herald November 22, 2012

CALGARY — Sotheby’s International Realty Canada is expanding its luxury real estate brand to other parts of Alberta, the Herald has learned.

Ross McCredie, president and chief executive of Sotheby’s International Realty Canada, said the Calgary office, which opened in June of last year, has been a smashing success and now the firm has plans to expand its presence in the market.

“That office is performing incredibly well ... Right now we have about 30 people. We probably won’t add much more to the Calgary operation,” said McCredie.

“We are going to be opening very shortly in Canmore and we’ll have a marketing/gallery office in Banff opening very shortly as well. We are currently in discussion with a number of people in Edmonton and we’re actively looking for locations in Edmonton right now.”

The company is targeting some time in 2013 for the opening of an Edmonton office.

The luxury home market in Calgary has been booming with no signs of letting up.

The city experienced a record-breaking month in October with 51 MLS sales of properties over $1 million in Calgary, which was the most ever for an October, and that pushed year-to-date sales in the luxury market to 459, one more than previous record set in 2007 for the entire year.

Last year, there were 35 luxury home sales in October and year-to-date in 2011 there were 395 sales in the luxury market up to the end of October.

According to the Calgary Real Estate Board, the following are the highest sales for luxury homes outside of this year: 2007 — 458; 2011 — 446; 2008 — 369; and 2010 — 365.

“Talk of fiscal cliffs and budget deficits has done nothing to curb Calgarian’s appetite for luxury homes with sales still going strong in November,” according to Mike Fotiou, associate broker with First Place Realty, on his blog.

“Between November 1-20, there have been 29 single family homes sold in Calgary for a million dollars or more. That’s on pace to set a record high for the month of November, after already setting an October high last month and a total record high earlier this year in May.”

Recently, it was announced that 360 VOX Corporation has acquired the real estate businesses known as Sotheby’s International Realty Canada, Sotheby’s International Realty Quebec and Blueprint Global Marketing.

“It really elevates our platform,” said McCredie of the merger.

360 VOX is a publicly-traded company, incorporated under the laws of Ontario and listed on the TSX Venture Exchange. It is engaged in the business of managing and developing international hotel, resort, residential and commercial real estate projects.

TOP MARKETS

Calgary and Edmonton displace Toronto and Vancouver as top real estate markets
Limited supply in Calgary pushes rents higher
By Mario Toneguzzi
Calgary Herald November 6, 2012

CALGARY — Calgary and Edmonton have displaced Toronto and Vancouver as the top-ranked cities for overall real estate prospects, according to the Emerging Trends in Real Estate 2013 report released Tuesday.

The report, by PwC and the Urban Land Institute, said the Canadian real estate market is expected to remain steady with “modestly good” investment and development prospects across most property sectors for 2013, reflecting expectations of solid supply and demand.

Calgary was the top-ranked city in the country followed by Edmonton, Toronto, Vancouver and Ottawa.

In this year’s survey, Calgary ranked first in both investment and development prospects and second in homebuilding prospects.

“Growth characterizes Calgary’s future; it displaces Toronto as the top ranked city for 2013,” said the report. “This has made it challenging to acquire high quality real estate in Calgary, absorption of prime properties has reached record levels, and rents are being pushed due to limited supply.

“This trend will continue in 2013, especially in office and industrial employment space. Construction will increase in the housing and non-residential arenas, but nowhere near pre-crisis levels.”

According to survey participants, Canada’s real estate market will follow along in a seeming state of near-perpetual equilibrium compared with other more volatile regions studied in the report, including most obviously the United States.

“The results of this year’s Emerging Trends report reflects the fact that the Canadian real estate community understands real estate fundamentals and knows how to react to fluctuations in monetary policy and capital markets. Canada’s real estate industry continues to operate well despite uncertainties in domestic and global economies,” said Lori-Ann Beausoleil, PwC Canada’s Real Estate Leader.

The report said Calgary’s expanding economy is requiring a larger and more highly-skilled workforce. Employment forecasts indicate growth of 2.8 per cent next year and 2.9 per cent in 2014.

“This growth, driven mostly by the oil and gas industry, has made it challenging to acquire high-quality real estate in this market,” said the report.

“Absorption of prime properties has reached record levels and rents are continuing to be pushed due to limited supply.”

The report said potential approvals of controversial pipeline projects to the United States and into British Columbia would boost real estate construction projects further in Calgary.

The strength of Calgary’s real estate market is evident in both the residential and non-residential sectors.

According to the Calgary Real Estate Board, year-to-date as of Monday, total MLS sales in the city of 18,905 are up 15.56 per cent from the same period last year.

Canada Mortgage and Housing Corp. is forecasting total housing starts in the Calgary census metropolitan area to finish at 12,400 units this year, an increase of more than 33 per cent from 2011 and the highest level since 2007.

RealNet Canada recently said Calgary has experienced the second best ever year for commercial real estate transactions for the first nine months of the year with $3.394 billion in sales so far this year.

And a recent report by Jones Lang LaSalle suggested a downtown office development boom in Calgary could be on the horizon.

MAKING PARKS A PRIORITY

Milke: Cities thrive when parks are a priority, not megaprojects
By Mark Milke
Calgary Herald October 26, 2012

Mayors and councillors across North America regularly spend taxpayer cash trying to revitalize neighbourhoods or entire cities. They often do so in expensive and ineffective ways: grand schemes that wipe away existing neighbourhoods or street markets, only to be replaced with massive convention centres (mostly unused by locals), or costly new arenas for professional sports teams.

Such attempts are almost always costly and misallocate tax money; they rarely revitalize cities to the extent advertised by proponents. After all, when is the last time you grabbed a coffee and went for a walk around the edge of a hockey, basketball or football stadium? Most people prefer to hoof it around a lake, along a river, by the ocean, or in local parks and on pedestrian-friendly streets with cafes and shops.

Too often, such tax-financed developments just create mammoth parking lots surrounded by mostly dead zones once some three-hour game or daylong convention is over.

Politicians thus too often forget the tried-and-true basics for livable and attractive cities: keep the streets safe, collect the garbage, ensure the taps pump out clean water, that good schools exist and that playgrounds and parks are tidy and desirable.

They also occasionally ignore the importance of not overtaxing their citizens or discouraging business, also critical for a city’s health. Every city, ultimately, has a commercial basis: people need to first make a living, and only afterward can they (and their governments) spend money on the niceties. Discourage the first and you get less of the second.

If all of the above seems obvious, the reality is that desirable urban features can be foregone in the pursuit of civic megaprojects; they can also be crowded out by too-powerful city unions that unreasonably divert tax dollars from pleasant amenities for all to above-market compensation for the few.

But some recent stories, in Edmonton, and in New York City, where Central Park just received a $100-million gift, should give city lovers the hope that a refocus on the basics of city life is possible.

In Edmonton, city council turned down Edmonton Oilers’ owner Daryl Katz’s demand for another $6 million a year in taxpayer subsidies, this for a proposed new half-billion-dollar NHL arena. (The demand was on top of the hundreds of millions of dollars in previously promised taxpayer funding.)

If Edmonton’s refusal torpedoes a taxpayer-financed rink, great; maybe that will allow everyone to concentrate on what can actually revitalize a neighbourhood.

It doesn’t take an urban development specialist to figure out what can attract people to a neighbourhood, including a willingness to pay top dollar for nearby real estate: beautiful urban parks. Think Stanley Park in Vancouver, Mount Royal in Montreal, the relatively new Millennium Park in Chicago, or one of the world’s premier urban parks, Central Park in New York City.

Recall New York and Central Park in particular. In the 1970s, New York was an overtaxed, crime-ridden, in-hock-to-government unions, falling-apart metropolis. Central Park, a magnificent late 19th century creation, was dilapidated in part because of misplaced political priorities.

New York was a classic example of what happens when those in charge of cities forget what makes them desirable for citizens.

Space doesn’t permit detail on all the reforms enacted in New York, most of which started with the election of Rudolph Giuliani as mayor in 1993. Here’s a snapshot: a crackdown on petty crime, reform of civic spending, making the city more business friendly and less corrupt, and a reduction in taxes.

One pre-Giuliani reform was the restoration of Central Park. The genesis for that began in 1980, when a group of New Yorkers formed the Central Park Conservancy. Shortly thereafter, the conservancy, a charitable foundation, took over management of the park in a public-private partnership with the city.

As an example of what can happen when private citizens drive reform, consider that since 1980, $600 million has been raised for restoring Central Park to its former glory; $470 million of that came from private sources (with the recent $100-million gift a nice top up). At present, the park’s annual operating budget is $46 million, with 85 per cent financed out of conservancy funds. Central Park is again magnificent. That’s because it’s not run as part of a big-city bureaucracy, part of the problem pre-1980.

When local politicians ignore street-level concerns, or wrongly focus on what doesn’t work (megaprojects), or engage in sweetheart deals with civic unions at the expense of more efficient services or needed capital expenditures, the result is a less-than-attractive city. That was a lesson New York learned the hard way.

More positively, when politicians and citizens focus on improving the amenities citizens need and use every day, parks being the best example, a city can thrive as a pleasant and desirable metropolis.

Photo By: surrealplaces

FUEL EXPANSION

Calgary and Edmonton to lead Canadian economic growth
Energy-related investment to fuel expansion
By Mario Toneguzzi
Calgary Herald September 18, 2012

CALGARY — Calgary and Edmonton are forecast to be the fastest growing economies in Canada over the next four years, according to the Conference Board of Canada’s Metropolitan Outlook-Autumn 2012 released Tuesday.

“Energy-related investment in Alberta is expected to stay vibrant throughout the next four years. For instance, about $29-billion worth of energy-related projects are now underway in the province, and nearly $86-billion worth of projects are proposed for the future,” said Mario Lefebvre, Director, Centre for Municipal Studies, for the board.

“All this investment will continue to be a boon to Calgary’s economy, which remains the services hub of the province’s energy sector.”

The board is forecasting Calgary to have the best economic growth in the country over 2013-2016 at an average of 3.7 per cent followed by Edmonton’s average annual real GDP growth at 3.5 per cent during the forecast period.

For this year, the board is predicting Edmonton will lead the country with 4.6 per cent growth followed by Calgary at 3.8 per cent.

“Without a doubt, I expect that Alberta is going to be the envy of the country moving forward into closing out 2012 and into 2013,” said Ben Brunnen, chief economist with the Calgary Chamber of Commerce. “While the growth will be the strongest in the country, particularly for our cities, that doesn’t necessarily mean that we’re in great economic times.

“There are some storm clouds on the horizon. I expect fully we’ll see a recession in Europe. The Chinese economy is slowing substantially. And the U.S. has its election coming forward. What this means is there’s going to be a dampening on economic growth globally and as a consequence it’s going to affect Canada. That said, the investment in the province has been strong to date and should continue to be strong.”

The board said Calgary is coming off a “very strong performance” in 2011 with economic growth at 5.0 per cent. The strong growth expected during the forecast period will be “helped along by strong consumer spending and spinoff benefits from the energy sector.”

Employment growth is forecast for 4.1 per cent this year in Calgary followed by annual growth rates of 1.9 per cent, 2.6 per cent, 2.5 per cent, and 2.1 per cent from 2013 to 2016. And retail sales are forecast to grow by 9.2 per cent this year followed by growth of 6.2 per cent, 5.3 per cent, 5.3 per cent and 4.8 per cent during the forecast period.

Also on Tuesday, a report by TD Economics said Canada will likely experience a shift from household and government-led growth towards exports and investment, but global headwinds appear to have delayed this transition until the first half of 2013.

In the meantime, the report said, the economy will be stuck in neutral and Canada’s economic expansion will be constrained to a pace near two per cent.

“In the first half of 2012, governments constrained their spending while households pared back their rate of borrowing and spent at a miserly pace. While most major housing markets have held up reasonably well, there are signs — most notably in Vancouver — that markets have reached a peak,” said TD Bank Group’s chief economist Craig Alexander. “And in the near term, the slowdown is expected to broaden across the country, following the implementation of tighter rules on insured-mortgage lending this past summer.

“Canada’s economy has turned out a relatively strong performance in recent years, but the growth has not been broadly based and imbalances have amassed. On the plus side, governments and households, which have been pulling Canada’s economy along by the coat-tails for years, have begun to address their debt challenges. Recent changes to mortgage borrowing rules will help to address part of the over-valuation in housing markets. Going forward, it will be equally critical for the economy to transition to more export and investment-led growth.”

Photo By : Bulliver

LESS WILD, MORE URBAN

Alberta housing leads nation: CMHC
Latest forecast predicts more construction in Western Canada
By Lewis Kelly
Edmonton Journal August 15, 2012

The Canada Mortgage and Housing Corporation forecast Tuesday that housing construction and sales will increase modestly in 2013 in Alberta while activity in most of the country slows down.

The Crown corporation's latest housing market outlook predicts 400 more housing starts in 2013 in Alberta than 2012. That represents just 1.25-per-cent growth, but CMHC predicts national construction activity to decline 6.8 per cent over the same period.

"The economy in Alberta has been improving and is expected to be one of the leaders in economic growth," said Richard Cho, senior market analyst with CMHC's prairie division. "That will naturally support the housing market."

Cho said CMHC's forecast for Alberta hinges on continued job production, international and interprovincial immigration boosting population growth, and the price of oil staying high enough to encourage continued investment in the province's energy sector.

Oil has been trading around $90 a barrel since early August after reaching a yearly low of $79.69 in June. CMHC forecasts employment growth of 2.5 per cent in Edmonton and 2.9 per cent in Calgary in 2013, and net migration growth of 28 per cent to 57,800 in the coming year.

Tuesday's edition of the corporation's outlook, released four times a year, predicts just over 32,000 housing starts in the coming year for the province, 11,000 of those in Edmonton. The forecast calls for the resale market to also grow, reaching 59,800 by the end of this year and 61,000 in 2013.

Cho said the market has favoured buyers until recently and should move to a balanced state, boosting price growth in the process. The CMHC's forecast calls for prices to rise 2.5 per cent this year and 2.8 per cent in 2013 across Alberta, bringing the average home sale to $372,300.

The provincial picture differs from the national numbers. CMHC predicted 193,100 units of housing will get built across Canada in 2013 - down around seven per cent both from previous forecasts and 2012's forecast numbers.

Cho said the new federal mortgage rules introduced in July, which knock five years off the maximum amortization period, will soften demand for housing, but other factors ultimately carry more weight in real estate.

"The rules will certainly have an impact on housing demand, but it isn't the only factor" he said. "Housing demand is also supported by growth in employment and earnings as well as migration flows and relatively low mortgage rates."

YOU'RE HOT & YOU'RE COLD!

Hot Toronto, cold Vancouver have competing effects on Canadian housing market
By Sunny Freeman
CANADIAN PRESS May 15, 2012

TORONTO – The Canadian housing market gained momentum in April as strong sales in the Toronto offset weakness in Vancouver, the Canadian Real Estate Association said Tuesday.

April seasonally adjusted home sales on CREA’s Multiple Listing Service gained 0.8 per cent compared with March.

On a year-over-year basis, the association said there were 49,480 homes sold in April, up 11.5 per cent from 44,370 a year ago, when sales slowed following a tightening of mortgage lending rules including the elimination of 35-year amortizations came into effect in March 2011.

Two of Canada’s largest markets are having opposite effects on the national average, with slowing sales and falling prices in Vancouver dragging, and soaring sales and prices in Toronto exerting upward pressure.

The average home price in Canada in April was up 0.9 per cent from a year ago at $375,810.

“It bears repeating that the national average price was skewed higher last spring by record level high-end home sales in Vancouver’s priciest neighbourhoods, and that a replay of this phenomenon was not expected this year,” said Gregory Klump, CREA’s chief economist.

The average selling price in Vancouver was down 9.8 per cent compared with a year ago at $735,315, while the average price in Toronto was up 8.4 per cent at $517,556. April sales in Vancouver slid 13.2 per cent while Toronto sales picked up 14.5 per cent compared to a year ago.

“Trends in Vancouver and Toronto continue to diverge. These two housing markets have an obvious influence on national statistics and a high profile, but Canada is a big place,” said Wayne Moen, CREA President.

Excluding Toronto and Vancouver, the average price in Canada was up 3.1 per cent from a year ago.

Gains in Montreal, Winnipeg, Edmonton, as well as London and St. Thomas, Ont., also contributed to the increased sales, offsetting declines in Ottawa, Windsor-Essex, Quebec City, the Fraser Valley, and Vancouver.

Continued strength in the housing market, largely due to the staying power of low interest rates, has led some economists to warn the market is overvalued. That could make homeowners vulnerable to a downturn, especially those who have used low interest rates to borrow more than they could otherwise afford.

TD Bank estimates Canadian home prices are 10 to 15 per cent overvalued, with the excess most evident in Toronto and Vancouver, said TD economist Diana Petramala.

“With mortgage rates still at rock bottom through the early part of this year and job creation heating up through March and April, it’s not that surprising to see continued growth in Canadian home sales,” she said.

“Still, growth in home prices and sales will likely be limited as the overvaluation has led to a deterioration in affordability. Overall, we anticipate the Canadian housing market to remain relatively flat in the coming year with home prices to rise just another two per cent this year, following gains of seven per cent in each of the last two years.”

The number of newly listed homes pared back 0.2 per cent from March to April, which, combined with slightly higher sales resulted in a tighter national housing market, but remains firmly entrenched in balanced market territory,” CREA said in a release.

A total of 157,804 homes have traded hands so far this year, up 6.4 per cent from levels reported in the first four months of 2011.

That’s also about four per cent higher than both the five- and 10-year averages for sales during the first third of the year.

Sales on CREA’s Multiple Listing Service was either up or held steady in half of all local markets, with Toronto and Calgary posting the biggest monthly increases for the second consecutive month.

Toronto home sales in 2012 have been particularly strong, up 9.5 per cent from year ago levels at 31,639 homes sold so far this year. But sales in Vancouver, a market that was bustling with high-end home purchases last year, are down 19.9 per cent so far this year at 9,935 homes sold.

“While these two cities are garnering most of the attention, Calgary is quietly becoming a market to watch,” said BMO economist Robert Kavcic, adding that sales in the city jumped 30 per cent year-over-year in April.

“If oil prices remain high enough to continue supporting strong economic growth and migration flows, Calgary could again become Canada’s real estate hot spot in short order.”