AYE AYE

Buoyant economy fueling Calgary condo growth
Sales and new construction expected to rise in next two years
By Mario Toneguzzi 
Calgary Herald April 2, 2014 

CALGARY - Calgary’s buoyant economy, healthy population growth and excellent affordability will keep sales of existing condominiums rising over the next few years, says a new housing report released Wednesday.

The latest Conference Board of Canada condo report, released by Genworth Canada, said good demand will also lift condo starts in the city following a pullback in 2013 that was at least partly due to flooding in the summer.

The Winter 2014 Metropolitan Condo Outlook forecast Calgary to see the best growth in prices this year, for eight cities studied, for the resale condo market with median prices rising by 3.2 per cent to $260,523.

The report said they will rise a further 3.4 per cent in 2015 to $269,508.

“A strong economy is first and foremost and everything kind of spins off that,” said Robin Wiebe, senior economist at the Centre for Municipal Studies at the conference board, of the reasons for the optimism in the Calgary market. “When the economy is strong, people come there, come out for work, and that sets in motion the whole housing chain. Starts and resales and all the rest of it.”

The report forecast resale apartment condo sales would be up 2.9 per cent this year to 4,507 units and increase by 2.1 per cent next year to 4,601 units.

Wiebe said affordability in Calgary is a factor. The city has the highest average household income among the report’s eight cities and Calgary’s apartments are not particularly expensive with a median price below Montreal, Toronto, Ottawa, Victoria and Vancouver.

“That makes housing affordability in Calgary excellent,” he said.

The report forecast new condo apartment starts of 2,601 this year, up 6.9 per cent, followed by 2,680 in 2015, up by 3.0 per cent.

It said 2013’s absorptions of 2,772 was the most since 2008 “and likely would have been even stronger were it not for the floods.”

“Accordingly, the inventory of newly completed and unoccupied apartments fell to 244 units - a marked improvement from inventories of nearly 600 units in 2010. Absorptions are forecast to pull back in 2014, but remain strong at nearly 2,400 units,” said the report.

“Modest absorption gains during the medium term are forecast to keep trimming inventories - they will dip below their 20-year average in the projection’s outer years. Falling inventories will give builders the confidence to boost housing starts.”

According to the Calgary Real Estate Board, condo apartment MLS sales in the resale market totaled 1,062 after the first quarter. Sales growth was strongest in this sector due to the availability of listings, it said. New listings after the first quarter totaled 1,722, an 18 per cent increase over the previous year. While demand continued to outpace listing growth, keeping market conditions relatively tight, inventory levels are similar to the previous year, said the board.

“Nearly 50 per cent of new listings in the apartment sector are priced in the range of $200,000 - $299,999, providing options for those looking for affordable product,” said Bill Kirk, CREB’s president.

For the first quarter of this year, the average MLS sale price for condo apartments in Calgary is $317,855, up 9.03 per cent from the same period last year.

“Some easing of the supply pressure in the condominium market is expected as new construction projects are completed,” said Ann-Marie Lurie, CREB’s chief economist. “However, thanks to Calgary’s strong economy, it is expected that most new supply can be absorbed without risk of oversupply and condominium price correction.”

Photo By: Toni Holopainen

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 AND AWAY

Calgary resale home average prices to balloon to more than half a million dollars
Report says average to hit $517,016 in 2017
By Mario Toneguzzi
Calgary Herald November 20, 2013 

CALGARY - The average price for a resale home in Calgary will balloon to more than half a million dollars by 2017, according to a new real estate report released Tuesday.

The Conference Board of Canada’s Autumn Metropolitan Housing Outlook, commissioned by Genworth Canada, said the average price for all residential property in Calgary will grow from $431,760 this year to $517,016 in 2017.

“Calgary is facing a lack of inventory in particular areas,” said Tanya Eklund, a realtor with RE/MAX Real Estate (Central) in Calgary.

“Buyers looking for land for redevelopment and homes for renovation have been in very short supply and have driven up pricing due to multiple offers and low inventory. Low interest rates, strong unemployment rates, low vacancy rates and an overall strong economy have also added to strength in the Calgary market.”
Ben Brunnen, an economic consultant in Calgary, said the city’s population has grown each year for the past four years and this has helped drive residential construction activity and home prices.

“Net-migration can have a big impact on the housing market, as an influx of people and families into our city can often increase housing demand unpredictably,” he said.

“In the current market, vacancy rates are low, rents are high and population growth is strong. Combined with a good economy and favourable job prospects, people are more willing to buy than they were a few years ago. The last time we’ve seen comparable population growth was from 2004 to 2006, when the economy entered a boom. While we won’t see similar house price appreciations due to different global economics at play, Calgary house prices should stay strong for the near future.”

Calgary’s economy and housing demand continue to thrive as energy sector activity remains healthy. Rising GDP is spurring employment growth,” said the report.

“On the resale housing market front, solid sales will lead to sound price gains this year and next. The new housing market is benefitting from strong absorptions, which are trimming unsold stocks of new units and fostering new construction. The medium term also looks decent.

“Ongoing economic growth will continue to produce gains in resale sales and prices and keep housing starts above their 20-year average. Good housing affordability, measured against local incomes, is an ongoing benefit to this market and allows single-family starts to maintain a high market share compared with other cities covered in this report.”
The report said summertime flooding in Calgary will limit Calgary’s GDP to 3.3 per cent growth in 2013, modest by recent standards. Output will rise a slightly faster 3.4 per cent in 2014, spurred by government-funded rebuilding efforts.

The job market will continue to expand, with annual growth of 2.4 per cent this year and 2.8 per cent in 2014 cutting the unemployment rate from 4.9 per cent this year to 4.6 per cent in 2014. Economic health should continue between 2015 and 2017, with GDP expanding roughly three per cent and employment rising about two per cent each year, it said.

“Calgary’s strong economic fundamentals allowed its resale market to largely shrug off the floods. Seasonally-adjusted sales and the average resale price actually rose during June, the flood month, and have subsequently advanced,” said the report.

“Price growth is accelerating, although increases remain far below boom-era advances. We expect the market to remain balanced and price growth to stay healthy in 2014 and over the following few years.”
The report’s forecast for average prices over the next few years and annual growth rate are: 2013, $431,760, 4.7 per cent; 2014, $451,798, 4.6 per cent; 2015, $473,470, 4.8 per cent; 2016, $497,139, 5.0 per cent; and 2017, $517,016, 4.0 per cent.

Forecast for sales in the resale market for the next few years and annual growth rate are: 2013, 28,111, 5.5 per cent; 2014, 28,793, 2.4 per cent; 2015, 29,418, 2.2 per cent; 2016, 30,027, 2.1 per cent; and 2017, 30,620, 2.0 per cent.
“Unsurprisingly, Calgary’s resale prices are rising briskly. Year-over-year growth has averaged a solid 4.6 per cent in the latest four quarters, including a first quarter jump near eight per cent,” said the report. “These increases will lift Calgary’s average price 4.7 per cent in 2013, the largest gain since 2007 and finally exceeding that year’s peak value. Similar price growth is expected between 2014 and 2016, with a slight tapering in growth to four per cent in 2017.

“These increases will slightly erode local housing affordability. Principle and interest charges on Calgary’s average resale home were under 16 per cent of average household income the last two years and are expected to remain there in 2013. But house prices will rise faster than incomes, pushing the ratio to roughly 20 per cent by 2017. This remains decent, as affordability is better only in Edmonton, Ottawa, and Winnipeg among the cities in this report.”

The report said buoyant housing demand is also energizing the new home market. Absorption of new units averaged 11,200 units in the four quarters to the second quarter of 2013, up 25 per cent from a year earlier. This included a surge to an annualized 15,000 units in the second quarter, the most since 2008. This strength will lift absorptions to a full-year total of 12,140 units in 2013, up 25 per cent from 2012. Another increase of nearly six per cent in absorptions is expected for 2014, but still trailing the peak of 13,700 units reached in 2008.

“Healthy new-unit take-up fuelled a big jump in housing starts to 13,186 units in 2012, more than double the recessionary trough in 2009, but well off peak levels of the last decade,” it said. “We expect starts to ease a modest 2.7 per cent in 2013 as an 11 per cent dip in multiple starts slightly outweighs a seven per cent gain in single-detached starts. For 2014, rebounding multiple starts will fuel a five per cent increase in total starts despite relatively unchanged single-detached construction.

“In the medium term, we expect housing starts to ease slightly, as both single-family and multiple construction dip. By 2017, we expect 11,400 units to get under way; this would slightly outpace the 20-year average of housing starts. While multiple starts are expected to increase their market share, they are forecast to make up only 52 per cent of total starts between 2013 and 2017.”

OUT OF STOCK

Sellers' market for resale in Calgary
By Claire Young
Calgary Herald November 8, 2013 

Despite a recent rise in the number of new listings, resale housing in the city remains a sellers’ market, says the Calgary Real Estate Board.

“Price growth and tighter market conditions have encouraged some of the recent rise in new listings,” says chief economist Ann-Marie Lurie of CREB in a news release.

“This is a trend worth noting as the rise is easing some of the tightness in the market. Despite some movement, sellers’ market conditions persist.”

New resale listings of all kinds of housing in Calgary totaled 2,522 units in October, up nine per cent from 2,312 during the same month last year.

New listings have been down in other months this year, meaning the number of new listings so far this year is on par with the same time last year.

From Jan. 1 to the end of October, there were 29,358 new listings compared with 29,333 during the same period last year.

In October, there were 1,953 total sales of resale housing of all kinds, up 17.7 per cent from 1,659 sales last year.

Homes also sold faster, spending on average 40 days on market in October compared with 46 days during the same month in 2012. The average sale price for homes of all kinds rose last month to $458,876, up five per cent compared with $437,030 a year earlier.

There were 1,739 new listings of single-family resale homes in Calgary in October, up 7.6 per cent from 1,615 during the same month last year.

Meanwhile, the pace of sales continued to pick up, selling in an average of 38 days last month compared to 43 days in October 2012.

The average price of single-family homes increased 4.7 per cent to $516,244 in October, up from $492,772 last year.

Sellers are commanding an extra half per cent this month on the final sale price compared to the same time last month, earning 97.78 per cent of the list price.

NORTHWEST FLEXES MUSCLES

Of the 1,336 sales of MLS-listed single-family homes in the city, the northwest quadrant of Calgary was the most popular with homebuyers in October, says the Calgary Real Estate Board

The board’s Zone A, roughly the city’s northwest, saw 463 resale houses trade hands at an average sale price of $530,892.

There were 357 sales in October in the board’s Zone C, roughly the city’s southwest, at an average price of $654,889.


Meanwhile, the board’s Zone D — roughly southeast Calgary — logged 266 transactions of single-family homes at an average price of $479,149. In the board’s Zone B, roughly the city’s northeast, 250 homes changed hands at an average price of $330,599.

AFFORDABILITY EASING

Calgary housing affordability easing
Sharp rise in household income helping
By Mario Toneguzzi 
Calgary Herald October 29, 2013

CALGARY - A sharp rise in average household income is keeping Calgary house price affordability in check, says a new report released Tuesday by Desjardins Group Economic Studies.

The report’s affordability index showed that it is only slightly under the historical average in Calgary, despite relatively high home prices of $438,793 in the third quarter.

It said the average household income of $110,000 “makes home purchases easier” in Calgary.

But the report said the Canadian housing market is now less affordable than it has been on average for the last 25 years.


“This decline stems from average home prices outpacing household income in the third quarter as well as a small hike in mortgage rates,” said the report.

TOO FEW

Lack of inventory fuelling price growth for Calgary housing market

Strong economy and influx of professionals

BY MARIO TONEGUZZI

CALGARY HERALD OCTOBER 10, 2013

CALGARY — A continued lack of inventory is fueling house price growth in Calgary.

The Royal LePage House Price Survey, released Thursday, shows strong year-over-year price increase in all housing types in the city as competition for homes is being driven by a strong economy and the influx of professionals.

The survey said average home prices were particularly buoyant in the third quarter with detached bungalows increasing 7.2 per cent year-over-year to $465,411, standard condominiums increasing 5.6 per cent to $263,087 and standard two-storey homes increasing 3.4 per cent to $446,411.

“A sustained period of low housing inventory coupled with a healthy economy and an influx of corporate sector workers has pushed prices up further,” said Ted Zaharko, broker/owner, Royal LePage Foothills. “For some time now too many homebuyers have been chasing too few properties.”

He said inventory is low in all categories, but particularly in detached bungalows, which are much rarer in Calgary compared to cities like Edmonton.

“Buyers are acting very quickly when homes are put up for sale, which is leading to frequent multiple offer situations on all housing types,” said Zaharko. “The aggressiveness of buyers is making it very difficult for first-time buyers to break into the market.”

He said third quarter activity was the most robust the Calgary market has seen in years, with buyers eagerly making offers on the limited inventory. In addition to normal demand, there was some extra activity coming from flood victims who were looking to move to locations on higher ground.

Nationally, the average price of a home in Canada increased between 1.2 per cent and 4.1 per cent in the third quarter of 2013.

The survey showed a year-over-year average price increase of 3.7 per cent to $418,686 for standard two-storey homes, while detached bungalows rose 4.1 per cent to $381,811. During the same period, the average price for standard condominiums saw a more moderate increase, rising 1.2 per cent to $246,530. Sales volumes surged in a number of regions, as Canadians re-entered the housing market after sitting on the sidelines for more than a year — marking the end of the most significant housing market correction since the 2008-2009 global recession, said Royal LePage.

Early signs in October indicate Calgary’s housing market is continuing its trend of increased sales and prices.

According to the Calgary Real Estate Board, month-to-date up to Wednesday, there have been 624 MLS sales in the city, up 37.14 per cent from the same period last year. The average sale price has increased by 7.82 per cent to $460,509 while the median price is up 6.96 per cent to $415,000.

New listings of 850 have risen by 10.10 per cent but active listings are down by 22.73 per cent to 3,927. Average days on the market to sell have also dropped by 6.52 per cent to 43 days.

“Prices are continuing to climb because of supply and demand. We have significant demand and we have across the board limited supply regardless of the price ranges. There is not a substantial variety to choose from and in some cases, such as in the case of bungalows, there has been a short supply in Calgary and new listings often get multiple offers,” said Rachelle Starnes, a realtor with Royal LePage Foothills in Calgary.

“In support of this statement, we are seeing in the Royal LePage offices more quick sales and multiple offers in the last quarter than previous quarters. The buyers are anxious and know that once a new listing comes onto the market, they need to act quickly. Having said that, there are still good listings sitting on the market that are a puzzle as to why they are not getting the proper activity. We just listed a property in the community of Bel Aire this week that will sell for a minimum of 10 per cent more than before the flooding occurred and may even see multiple offers at the higher price. Prices in the higher ground areas are escalating with the higher demand in the central areas of the City.”

Photo By: tommaync

SIXTEEN TONS

Are you house rich or house poor?

By Jason Heath  

Financial Post September 17, 2013

According to Statistics Canada, about one-quarter of Canadians are spending too much on housing costs. “Too much” is defined by Canada Mortgage and Housing Corporation (CMHC) as 30% or more of household income. Are you house rich and cash poor?

First off, it’s important to understand what CMHC’s “household income” refers to in order to measure if you are over or under the suggested 30% threshold. They define household income as pre-tax household income, which is a questionable metric due to our tax code.

We have a graduated tax system in Canada where every taxpayer files their own tax return, so there can be a big difference in after-tax income between two households with identical household incomes. A household where two people are earning $50,000 each in Ontario, for example, has after-tax income of about $75,840. A household where one person is earning $100,000 – the same gross income as the $50,000 times 2 household – has only $69,841 of after-tax income. That’s a difference of about 8%, so not immaterial.First off, it’s important to understand what CMHC’s “household income” refers to in order to measure if you are over or under the suggested 30% threshold. They define household income as pre-tax household income, which is a questionable metric due to our tax code.

What are “housing costs”? According to CMHC, these costs include rent and utilities for renters. For homeowners, included are mortgage payments, property taxes, condo fees and utilities.

Several factors are ignored by the 30% rule of thumb. What if a couple has two cars and they drive long distances to work, so transportation costs are higher than a couple with no cars? What if they have kids? They’re not cheap either.

As a financial planner, I can say a common topic of discussion with clients relates to their current house or their next one.

With young couples, they’re often wondering if they can afford their dream home – without breaking the bank. Taking on a bigger house and a bigger mortgage can limit other things which may or may not be important. Retirement savings might need to be scaled back, but what about living for today? Big mortgage payments might make a family think twice about a vacation they might otherwise enjoy (or need).

Not surprisingly, a lot of Baby Boomers are considering a downsize of their home. In some cases, it’s because people have more house than they need once the kids grow up and move out. In others, it’s because they live in an expensive city like Vancouver and a move outside the city can help pad retirement savings.

Either way, young or old, upsize or downsize, housing costs represent a large component of household spending and a large proportion of household net worth. It’s important to evaluate the pros and cons of moving up or cashing out.

One thing I always emphasize is that rules of thumb need to be taken with a grain of salt. They can be quite deceiving and lead people to make imprudent decisions. Just because a bank approves you for a mortgage, it doesn’t mean you’re wise to take it on. And just because CMHC suggests a 30% target for your housing costs as a proportion of your household income, it doesn’t necessarily constitute sound personal financial planning – especially when today’s interest rates and the resulting mortgage payments are artificially low.

BALLOONING SALES

Calgary and Vancouver lead Canadian housing market boom
August MLS sales balloon

By Mario Toneguzzi 

Calgary Herald September 16, 2013

CALGARY — Strong sales in Calgary and Vancouver led to a Canadian housing market boom in August as MLS transactions across the country were up 11.1 per cent compared with a year ago, according to the Canadian Real Estate Association.

In releasing its national data on Monday, CREA said sales in Vancouver were up 53.1 per cent from last year to 2,557 while Calgary transactions rose by 28.8 per cent to 2,830.
In Canada, total MLS sales in August were 40,350.

“The year 2013 has been a very strong year for the Calgary real estate market,” said Crystal Tost, a realtor with RE/MAX Realty Professionals in Calgary. “Earlier in the year we saw the market pick up as we transitioned into a sellers’ market as a direct result of low inventory levels. The market maintained strong with low inventory right through to spring. The summer months are traditionally a bit slower than spring months, but not for 2013. The market continued on with record sales without rest as inventory levels continued a downward motion into summer months.

“There is no doubt that the flood has greatly affected the housing market in Calgary not just for sales. Workers that have flocked to the city to aid in Calgary’s rebuilding and displaced people looking for temporary housing have exhausted the inventory in the rental market and in turn we are seeing rising rental prices. The raised rental market is making it sense for some first-time buyers to enter into the market. Bank interest rates are also on the rise. We are seeing many buyers out there with great interest rate holds nearing expiration so some of those buyers will be on a time crunch to save some money in interest.”

In August, Calgary had the highest growth year-over-year in the MLS Home Price Index, which tracks typical sales in nine major Canadian centres. Calgary prices rose by 7.39 per cent compared to the national aggregate of 2.92 per cent.

As for average prices, Calgary was once again a leader with an 8.1 per cent annual hike to $432,576, while Canada saw an 8.1 per cent hike as well to $378,369.

Ann-Marie Lurie, chief economist with the Calgary Real Estate Board, said the past two months have seen sales activity in the city shoot up higher than long-term trends.

“Both in July and August, those numbers were a little stronger. Part of that I think is due to the fact of the floods (in June),” said Lurie. “Because of that if you look at June we were running really in line with long-term trends — just above it. And then floods hit and in July and August we saw that activity increase. And some of that is from that demand being pulled forward.”
But other factors have also come into play in the local residential real estate market, she said, with stronger than expected migration this year.

“We still continue to have employment growth. The overall economic situation has done fairly well,” said Lurie. “That’s all the backdrop behind it as well. And wages have been increasing.”

There’s also the added possibility of increasing mortgage rates causing people to get into home ownership sooner.

In August, Alberta saw MLS sales increase by 17.8 per cent from last year to 6,124 while the average price rose by 7.1 per cent to $381,642.

On Monday, CREA also released its forecast for the rest of this year and 2014. It said Alberta MLS sales would grow by 6.2 per cent this year, the best in the country, to 64,100 and by another 2.3 per cent in 2014 to 65,600.

In Canada, sales are expected to drop by 1.0 per cent this year to 449,900 but expand by 3.5 per cent next year to $465,600.

The average sale price in Alberta is expected to rise by 4.8 per cent this year to $380,500, the second best growth rate in the country behind Newfoundland’s 6.1 per cent. Alberta is then forecast to lead the country in 2014 with 3.4 per cent growth to $393,300.

Canadian average sale prices are forecast to grow by 3.6 per cent this year to $376,300 and by another 1.7 per cent in 2014 to $382,800.

“Sales activity dropped sharply around this time last year in the wake of tightened mortgage rules and has improved since then, so a sizable year-over-year increase this August was expected,” said Gregory Klump, CREA’s chief economist, about the national August sales data.

“Buyers who put off purchase decisions or who were otherwise sidelined by tighter mortgage rules and lending guidelines implemented last year were anticipated to return to the housing market. That said, the upward trend and levels for activity in recent months has been steeper than expected, but that may not last.


“Recent increases to fixed mortgage rates caused sales to be pulled forward as buyers with pre-approved financing at lower rates jumped into the market sooner than they might have otherwise. That pool of homebuyers has largely evaporated so demand may soften over the fourth quarter. The outsized year-over-year gains may persist, however, due to weak sales toward the end of last year.”

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.

MORTGAGE INSURANCE NEWS

CMHC could be pulled out of mortgage insurance business, Flaherty says
By Garry Marr
Financial Post Apr 27, 2012

Finance Minister Jim Flaherty would consider taking Canada Mortgage Housing Corp. out of the mortgage default insurance business he told the National Post’s editorial board.

“Over time, I don’t think it’s essential that a government financial institution provide mortgage insurance in Canada. I think what’s key is that mortgage insurance is available at a reasonable cost in Canada. I think there is a role to regulate but whether we, the Canadian people, have to be the owners and shareholders of a financial institution to do this is a question. I don’t think it’s essential in the long run.”

He offered no timetable on when the government could get out of mortgage default insurance business, just offering it up as a possibility. “We have a list of Crowns, Crown agencies that are being reviewed,” said Mr. Flaherty.

In a wide-ranging discussion on the housing market, he said he has no plans to increase CMHC’s current $600-billion loan limit, ruled out any possibility of regulating foreign real estate investment and made it clear his focus is on the governance of Crown corp. which controls about 75% of the mortgage default insurance business in the country.

“For some time now I’ve had concerns about the large commercial role that CMHC now plays. CMHC has become a significant Canadian financial institution. As you know, historically it was created with a mandate post-war to advance housing in Canada. It’s become much more that.”

The finance minister moved this week to tighten control of CMHC, placing it under the authority of the country’s banking regulator, the Office of the Superintendent of Financial Institutions. Previously, it fell under the watch of the Department of Human Resources and Skills Development.

The shift comes with CMHC closing in on the $600-billion limit the government has for how much of its portfolio will be backstopped by the taxpayer. Three years ago it was $450-billion.

By law, consumers must buy mortgage default insurance if they have less than a 20% down payment on a home and are borrowing from a federally regulated financial institution.

But CMHC has not been insuring just those loans, it has agreed to step in and insure loans — with the premiums paid by financial institutions — for lower-ratio mortgages, or what is called “portfolio” or “bulk insurance.”

He said the head of OFSI will now have the power to look at the books of CMHC the way she looks at the books of other private financial institutions in Canada. Already, the government has placed the deputy minister of finance on the board of CMHC.

“We have quite a bit of information about what the banks do and don’t do. [Superintendent] Julie Dickson had to go to some of them in the last year and say ‘you must ensure that your board policies on residential lending mortgages are carried through,” he said. “She’s quite a strict supervisor which is good for our country.”

OSFI has already been looking into CMHC and established one of the key issues for the organization is governance. “OFSI are certainly of the view there are necessary governance improvements we can do,” said Mr. Flaherty.

He made it clear there are no plans to extend CMHC’s $600-billion limit. “For a while,” said Mr. Flaherty, about how long the Crown corporation would have to exist under that limit. It was at $541-billion at the end of the third quarter of last year but business has slowed as the agency culled its portfolio business.

Mr. Flaherty’s own opinion on the housing market is that has been fuelled by low interest rates which he says he does not control. “Cheap money,” he said, noting he did talk to the banks about being unhappy about their mortgage rate wars earlier this year which had reduced the rate on a five-year closed mortgage to below 3% — an all-time low.

As to whether the market has been in part fueled by foreign buyers, as many in the real estate industry have suggested, Mr. Flaherty said his government will not get involved in that aspect of the market. “No,” he said, pausing to emphasize the point. “I don’t think there is [a role]. They key in housing from my point of view is to get the best information on housing.”

BLAZING AHEAD

Canada’s housing market steams ahead
Reuters  Oct 11, 2011

TORONTO — Canadian housing starts jumped much more than expected in September, helped by a surge in the condominium sector, suggesting Canada’s property boom stayed intact last month and should help the economy avert recession.

Canada Mortgage and Housing Corp. said on Tuesday that starts rose to seasonally adjusted annualized rate of 205,900 units last month. August starts were revised up to 191,900 from 184,700.

September starts far exceeded the consensus expectation of analysts, who had called for 188,000.

Driving the gains were a jump in construction of multi-residential buildings such as condominiums.

“Housing starts picked up in September due to an increase in multiple starts in the Atlantic region, Quebec and in British Columbia,” Mathieu Laberge, a deputy chief economist with CMHC said in a statement.

“Multiple housing starts are expected to move back toward levels consistent with demographic fundamentals in the near term.”

The agency said urban starts increased by 8% to 185,900 units in September, with multiple urban starts up by 14.2% to 118,000 units. Single family housing starts in urban areas decreased by 1.5% in September to 67,900 units.

Rural starts were estimated at 20,000 units.

CIBC World Markets economist Emanuella Enenajor said in a note to clients that while multiple starts are widely expected to scale down in the months ahead, residential construction could be a plus for GDP in the third quarter.

Canada’s economy contracted marginally in the second quarter, partly due to the supply chain impact of Japan’s earthquake and tsunami. There had been fear the economy could shrink again in the third quarter, meeting the textbook definition of a recession.

But recent data has been encouraging. A report on Friday showed Canada created six times as many jobs as expected in September, helped by an economy that is largely humming along even as other rich nations struggle with debt and slumping confidence.

Canada’s housing sector has played a major role in the recovery. The country avoided the subprime housing boom that drove the United States into recession and helped trigger the global financial crisis.

Property prices and sales briefly weakened after the crisis. But the Bank of Canada’s decision to cut interest rates to a record low, which pulled mortgage rates lower, fueled a fresh boom.

The housing boom was helped along by the fact Canada’s conservative banks escaped the crisis largely unscathed and were able to keep lending.

The fear now for many policymakers is a fresh asset bubble could be in the works.

OH, CANADA!

Housing market defies expectations

Garry Marr, Financial Post
Aug. 17, 2011

July proved to be a another strong month for Canadian home sales with the Canadian Real Estate Association now predicting 2011 will see an increase in sales as opposed to a previous forecast for a drop.

Actual sales last month were up 12.3% from a year ago while year-to-date sales are 1.6% lower than the same period for 2010.

Prices also continue to have some upward movement, al-beit some of the increase year over year being attributed to the introduction of the HST in British Columbia and Ontario, and tighter mortgage regulations in 2010.

The national average price for homes sold in July 2011 was $361,181 - the lowest level since January - but rep-resented a 9.3% increase from a year ago.

Greg Klump, chief economist at CREA, cautioned not to read too much into the average price statistics.

"Changes in the national average home price are open to being misinterpreted," Mr. Klump said. "They often signify changes in the mix of sales activity across and within local markets, rather than a rising or falling price trend for typical homes in a specific market."

However, the Ottawa-based group, which represents 100 boards across the country, says the scales have now tipped modestly in favour of 2011 outpacing 2010.

CREA is predicting 450,800 sales in 2011, just under a 1% increase from a year ago. The group had been forecasting a decline of 1%. Sales are expected to drop less than 1% in 2012.

Prices in Vancouver continue to affect the country, as they helped push CREA's forecast for the average sale price in 2011 to $363,500, a 7.2% increase from a year ago. This was also an increase from a previous forecast. Next year, prices are expected to be flat.

The group noted longtalked-about increases in interest rates have failed to materialize in the market.

"While there had been some talk of potential interest-rate increases, that hasn't happened," said Gary Morse, president of CREA. "In fact, rates have actually come down, and are now expected to remain low for the remainder of this year and into 2012."

Douglas Porter, deputy chief economist at Bank of Montreal, said the housing market just seems to keep surprising everybody.

"In a world seemingly awash in negative economic surprises in 2011, one positive surprise has been the resiliency of Canada's housing market," said Mr. Porter, adding few analysts were predicting the kind of price increases the market has seen.

"Canadian housing remains surprisingly robust, thanks to still-low interest rates and solid job growth. While the recent financial market turmoil may temporarily weigh on activity, sales should ultimately find support from continued exceptionally low borrowing costs."

Phil Soper, chief executive of Royal LePage Real Estate Services, said his company's recent forecast was for a 2% decline in sales and 3% increase in price for 2011. He doesn't anticipate that changing.

"I think we're going to start to see it's not so much the strength of the market but the weakness last year. The market had run out of steam at this point last year," Mr. Soper said. "I think we are seeing a more normal curve to the market, with the exception of the Vancouver market."

A GOOD BUY IN CALGARY?

Calgary housing among most affordable
By Mario Toneguzzi
Calgary Herald August 23, 2011

Owning a home in Calgary may be expensive for many people but a report suggests housing affordability in the city is among the lowest in the country for major centres.

And with interest rates now expected to remain at a low level, Calgary's affordability will continue to be remain that way, say industry experts.

A report by RBC Economics, released Monday, said Calgary's housing affordability actually deteriorated in the second quarter of this year compared with the previous quarter but affordability in the city is better than the national average for detached bungalows, standard two-storey homes and standard condominiums.

Sano Stante, president of the Calgary Real Estate Board, said prevailing negative economic conditions will restrain any increases in interest rates for awhile.

"Those are increases that we fully expected prior to these events and they've now been abated," said Stante. "That was our biggest risk of deteriorating affordability.

"With an assurance that interest rates are going to stay low for the next 12 months anyway - and there's somewhat of an assurance of that - then it really looks like we're going to lead the nation in affordability especially when we start to get increased employment and in-migration towards the end of this year. That should really lend to a more robust real estate market."

Robert Hogue, senior economist with RBC, said he too expects Calgary's affordability to remain about the same.

"Previous to a few weeks ago we expected higher interest rates would start really putting more and more pressure across the board in Canada including in Calgary on the monthly costs of home ownership," he said. "Now we've pushed everything out to the middle of next year. "

The RBC Housing Affordability Measure, which has been compiled since 1985, shows the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes and utilities. The higher the measure, the more difficult it is to afford a house. For example, an affordability measure of 50 per cent means that home ownership costs take up 50 per cent of a typical household's pre-tax income.

In the second quarter, Calgary's measures were 37.1 per cent for a detached bungalow, 38.5 per cent for a standard two-storey, and 23.0 per cent for a standard condominium. The measures increased by 0.6 per cent (bungalow), 1.1. per cent (twostorey) and 0.4 per cent (condo).

However, they are lower than a year ago by 3.1 per cent for a bungalow, 2.9 per cent for a two-storey and 1.6 per cent for a condo.

Housing Affordability Q2 2011

Detached bungalow

Legion Avg. price YoY chg. Affordability* Q/Q chg.

Canada $347,600 5.2% 43.3% 1.7%

Alberta $339,500 -2.6% 32.8% 0.7%

Calgary $411,700 -2.0% 37.1% 0.6%

Standard two-storey

Canada $393,100 5.0% 49.3% 1.8%

Alberta $370,300 -1.1% 36.4% 1.3%

Calgary $415,200 -1.6 % 38.5% 1.1%

Standard condominium

Canada $230,000 3.4% 29.2% 0.8%

Alberta $216,200 1.0% 21.3% 0.5%

Calgary $249,000 -1.1% 23.0% 0.4%

*Shows the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes and utilities. Source: RBC Housing Trends and Affordability report

MARKET BLOOMS

City's housing market blooms in June
Condo market posts first gain of the year
By Mario Toneguzzi, Calgary Herald
July 5, 2011

Calgary's residential real estate market experienced a significant late spring upswing.

Single-family MLS sales last month finished up 32 per cent, to 1,398 homes, from June 2010's 1,059 transactions, according to data released Monday by the Calgary Real Estate Board.

Condo sales -up almost 31 per cent -were up year-overyear for the first time since April 2010. The real estate board recorded 581 sales last month, compared to 445 in June 2010.

While sale prices continue to lag and 2011 sales are up only two per cent over the first six months of 2010, the late spring swoon has brought tempered optimism of a continued turnaround.

"We had a late spring maret this year. It's all starting to come together in June," said Sano Stante, president of the Calgary Real Estate Board.

"Last year we had an exuberant market early on and it died in June.

"So to draw comparisons year-to-year for that month shows an exaggeration of the trend."

The average sale price for a single-family home in June remained almost flat, falling to $479,580 from $481,960 a year ago.

Condominium prices, on average, rose to $296,501, the highest since May 2010, from $292,182.

On a year-to-date basis, single-family home sales for the first six months are up more than 5.5 per cent, while condo sales are down almost five per cent.

"Strong monthly increases does not imply a housing boom, as it is important to put into perspective that sales activity remains below longterm averages," the real estate board said in a statement.

However, there are signs the local housing market is starting to find its footing, said Stante.

"This gradual levelling has been fuelled by growth in employment, and in particular growth in full-time jobs," he said.

Improved job prospects, combined with an increase in the number of people moving to Calgary, will give lift to our housing market for the remainder of this year and into the next."

Dan Sumner, an economist with ATB Financial in Calgary, said a year-over-year comparison may be misleading as to the strength of the Calgary housing market given that June is often one of the busiest months for sales, even though the same month last year was abnormally slow.

"Fuelling sales is a stronger economy specifically in Alberta, which feeds through into consumer confidence and that's making Albertans more comfortable with home purchases again," he said, adding low interest rates are also luring buyers.

HIGH-END HEALTH

High-end resale sign of health
By Marty Hope
Calgary Herald May 27, 2011

Overall, Calgary’s housing markets have been struggling to regain ground lost to the economic downturn — and it’s been a tough fight.

The resale industry found itself saddled with a huge inventory when consumers turned fickle and decided the housebuying binge of the early part of this decade was ending.

They went into hibernation and are now gradually coming back into the market.

The economic fundamentals — job creation, migration and salaries — are improving and in general, so is the housing outlook.

A look at one specific segment of the resale sector is proof the economy is coming back.

A few years back, I had a chat with a realtor who told me that as long as the high end of the resale market was active, the economy was in good shape.

People buying in those price categories wouldn’t be spending that kind of money if they had any notion the economy was in trouble.

If figures from the Calgary Real Estate Board are any indication, everything is humming along.

For the first four months of this year, 437 resale properties priced at $700,000 or more changed hands compared with 368 for the same period last year — and were selling faster.

On the heels of these impressive numbers came a report from Re/Max regarding activity at the upper end of housing markets in 12 major centres in Canada.

The report says that improved financial standing among people with high net worth is the major factor driving strong resale activity at the top end of Canadian housing markets.

It found that luxury home sales surged in nearly two-thirds of housing markets from January to April compared to the same period in 2010.

In terms of percentage gain, the largest growth occurred in Greater Vancouver at 118 per cent, followed by Ottawa at 59 per cent and Calgary at 51 per cent.

Greater Toronto was well down the list at nine per cent.

On the new homes front, Calgary builders continue to cater to a growing number of buyers looking for large homes in inner-city communities, estate neighbourhoods in the suburbs, and acreages in rural areas surrounding the city.

“The upper end of the market is vibrant,” says Jim Quinn, president of QuinnCorp Holdings Inc., which is developing Aspen Estates on the west side of the city.

“Calgary has a deep pool of wealth. It’s quiet, reserved and subtle, but it’s there.”

PRICE IS RIGHT

The pace of the resale market is growing for homes with larger price tags, says the Calgary Real Estate Board.

“We are seeing improvements in the sale of homes in the higher price points,” says board president Sano Stante.

“Homes above $700,000 are selling within an average of 41 days. This is consistent with pre-recession levels.”

STATS ON STARTS

Housing starts jump in February
Ka Yan Ng, Reuters
Tuesday, Mar. 8, 2011

TORONTO - Canadian housing starts rose a better than expected 6.6% in February from January, thanks to a jump in condominium construction, though analysts warned the strength is unlikely to carry into coming months and could be a mild drag on overall economic growth.

Housing starts climbed to a seasonally adjusted annualized rate of 181,900 units in February from a revised 170,600 units in January, Canada Mortgage and Housing Corp said on Tuesday. January starts were revised up slightly from 170,400.

Analysts, on average, had forecast 173,000 starts in February.

“The details reflected somewhat of a lack of breadth, so we discount the strength on volatility concerns and are not convinced this is a sustainable break from a lower trend,” wrote Scotia Capital economists Derek Holt and Gorica Djeric.

Urban starts rose by 9.4% to 161,000 units, CMHC said, driven by a 14.5% rise in construction of multiple-unit buildings, mainly condominiums, accounting for 94,900 units.

Analysts said strength in the condo market may not continue as there has been a recent drop in building permits issued for the sector.

The closely watched single-family homes segment edged 3.0% higher to 66,100 units in February.

Despite the month-to-month swings in the volatile multi-unit group, the underlying trend suggests housing starts are averaging 176,000 units a month.

“Activity appears to be stabilizing around a level consistent with demographic demand,” said Robert Kavcic, economist at BMO Capital Markets.

Compared with global trends in the face of the financial crisis, Canada’s housing market has been resilient, due mainly to a strong banking system and low interest rates. After a brief retreat during the crisis, the residential housing sector was able to post double-digit price gains in late 2009 and early 2010.

But Canada’s economic recovery is now seen depending less on consumer-driven growth and more on business and export growth. Analysts expect that a rise in interest rates later this year and tighter mortgage rules will combine slow the housing sector.

“We continue to expect a softening in overall housing starts, particularly with the anticipated higher interest rates and a slower second half of the year, keeping home prices under wraps,” said Krishen Rangasamy, an economist at CIBC World Markets.

Atlantic Canada saw the biggest decline in urban housing starts in February with a 24.7% drop, CMHC said, while Quebec followed with a 7.1% fall. British Columbia was down 5.9%.

Urban starts increased by 29.3% in Ontario and by 26.1% in the Prairie provinces.

Rural starts were estimated at a seasonally adjusted annual rate of 20,900 units in February.

LIVING UNDER JUNE

Construction of new homes in Calgary soared in June
By Mario Toneguzzi,
Calgary Herald July 9, 2010

CALGARY - Housing starts in the Calgary census metropolitan area soared in June compared with a year ago.

According to preliminary data released today by Canada Mortgage and Housing Corp., total starts during the month were 685, up by 57.8 per cent from June 2009.

Single-detached starts jumped to 531 from 374 last year, a 42 per cent hike while multiple-family starts rose by nearly 157 per cent from 60 in June 2009 to 154 last month.

To the end of June housing starts have increased in both categories year-to-date. There have been 4,617 total starts in the first half of this year compared wtih 1,981 for the same period a year ago. In the single-detached category, starts have increased from 1,549 last year to 3,335 this year while the multi-family category has seen a rise from 432 last year to 1,282 this year.

"This marks the 12th consecutive month where single-detached starts have increased on a year-over-year basis," said Richard Cho, senior market analyst for Calgary for the CMHC. "Builders in the last several months have taken the opportunity to replenish their inventory levels."

But Cho added that the year-over-year gains have started to moderate.

He said that despite the rise in multi-family production activity so far this year is behind last year's level.

"Elevated apartment inventories have contributed to fewer apartment projects breaking ground, keeping multi-family production below historial averages," said Cho.

In Alberta's seven largest cities, housing starts increased 33 per cent in June from 1,446 units in 2009 to 1,926 last month.

PEAKING YOUR INTEREST

Housing may have peaked
Gary Marr, Financial Post
Published: Thursday, April 15, 2010

The spring homebuying season has reached a fever pitch with a record number of "for sale" signs being placed on Canadian lawns for the month of March.

But there are indications the market has reached the peak with nowhere to go but down.

The Canadian Real Estate Association said yesterday that 97,663 properties were put on market last month, a 25% increase from the number of new listings in March a year ago. Since the beginning of the new year, there have been 233,402 homes put on the market, the best-ever first quarter for new listings.

With demand still strong, sales continue to soar. There were 49,256 units that traded hands in March, the second-best March on record, and a 40.8% rise from a year earlier.

Yet despite the huge increase in year-over-year sales, March was the fifth straight month that the percentage increase has declined. In some markets, sales are already falling. Seasonally adjusted sales in British Columbia dropped 17.8% from a quarter earlier and Alberta sales dropped 9.7% during the same period.

Phil Soper, chief executive of Royal LePage Real Estate Services, said affordability and consumer confidence drive the market. "The former has not eroded enough to affect the market and the latter has improved considerably," he said.

Still, he concedes the spring market may be the top for real estate. "It will be the top from an industry-volume perspective. It's the last hurrah for the pent-up demand in the market," said Mr. Soper, who expects prices to continue to rise, but more slowly.

Even with the increase in the supply of homes, sales are expected to remain strong this spring as homebuyers scramble before tougher mortgage rules, rising interest rates and the new HST in Ontario and British Columbia come into play - all by July 1.

Many in the industry concede, however, the spring market could be the last gasp before housing sales start to drop, along with prices. Few, however, are predicting a U.S.-style crash.

"If this isn't the top, we are very close to it in terms of sale activity and price," said Gregory Klump, chief economist with CREA.

Mr. Klump doesn't predict the market will reverse dramatically, but says year-over-year comparisons are going to continue to shrink for sales and prices.

Mr. Klump said prices at the high end of the market are going to start driving down because consumers in that segment are trying to beat the clock on all the changes ­coming.

New mortgage rules, which go into effect on April 19, will force consumers to borrow based on the five-year posted rate if they are locking in for a term less than five years. Previously, they could use the actual rate on their contract, meaning they could borrow more.

Banks have also raised long-term mortgage rates in the past two weeks, with a five-year, fixed-rate closed mortgage rising from 5.25% to 6.10%. The Bank of Canada is expected to raise its own benchmark rates shortly and that will affect consumers with floating-rate mortgages now based on a prime rate of 2.25%.

And the introduction of the harmonized sales tax on July 1 will raise costs for some services associated with buying a house, such as a real estate commission. It is coming only to British Columbia and Ontario, but Toronto and Vancouver are the most expensive real estate markets in the country and skew the national averages.

For now, the market still has some wind behind it. "Negotiations still favour sellers during the home-buying process in a number of major Canadian housing markets," said Georges Pahud, CREA's president.

"The rise in new listings means that buyers may shop around more before making an offer."

Photo by: Erik Twight

WHEN WILL YOU SAVE?

Low interest rates to power Calgary housing market
By Mario Toneguzzi
Calgary Herald
March 3, 2010

Low mortgage rates will continue to fuel activity this year in the local housing market.

A forecast by Canada Mortgage and Housing Corp. released on Tuesday said sales in both the new home and resale housing markets are expected to increase this year and next year in Calgary and for Alberta.

As well, average MLS sale prices will climb over the next two years.

"Calgary housing markets will benefit from a stronger economic outlook and historically low mortgage rates," said Richard Cho, senior market analyst in Calgary for the CMHC.

"We are expecting to see more activity this year compared to 2009. This momentum is expected to carry through into 2011 as the economy strengthens."

In releasing its 2010 housing market outlook report, CMHC said the Calgary census metropolitan area will see total housing starts rise by 20.3 per cent this year to 7,600 units, followed by a 21.1 per cent hike in 2011 to 9,200 units.

MLS sales in the Calgary area are expected to climb by 10.9 per cent to 27,600 this year and another 3.3 per cent in 2011 to 28,500.

The average MLS sales price in the Calgary region is forecast to jump by 5.5 per cent this year to $407,000 and by another 3.9 per cent next year to $423,000.

Low interest rates continue to drive Canadian housing markets, something that could continue for much of 2010, said Dan Sumner, economist with ATB Financial in Calgary.

"Although interest rates are certainly going to go up eventually, they are rising from a very low level and will probably not be back to neutral levels until 2011," he said.

"However, with home prices near the top edge of some affordability metrics, there could be little room for significant price increases in the near term."

The government of Canada announced recently a number of measures to support the stability in the housing market, said Cho.

"These changes for government-backed mortgage insurance will moderate housing activity," he added. "Changing the qualifying mortgage rate will help ensure homebuyers have a cushion to protect against the risk of increased payments when their mortgage is up for renewal. Some prospective buyers may postpone their purchase while they save for a larger down payment, while others may consider purchasing a less expensive home."

Housing Market Outlook

2010 Y/Y change 2011 Y/Y

Alberta housing starts 24,500 20.7% 29,900 22%

Calgary housing starts 7,600 20.3% 9,200 21.1%

Alberta MLS sales 64,000 10.8% 66,500 3.9%

Calgary MLS sales 27,600 10.9% 28,500 3.3%

Alberta MLS avg. price $358,500 5.1% $372,500 3.9%

Calgary MLS avg. price $407,000 5.5% $423,000 3.9%

Source: Canada Mortgage and Housing Corp.

Photo By: Nikkinoguer

RESALE NUMBERS

Canadian resale housing market up 58% from year-ago levels
By Mario Toneguzzi
Calgary Herald
February 17, 2010

CALGARY - National activity in the resale housing market declined in January from the previous month but was up 58 per cent from year-ago levels, when national home sales activity reached the lowest level in a decade.

In releasing its January MLS data on Wednesday, the Canadian Real Estate Association said the average price of all homes sold through the MLS systems of Canadian real estate boards last month was $328,537, which was up 19.6 per cent from a year ago.

"In January 2009, the average residential sale price fell to the lowest level in almost three years," said the association which represents more than 96,000 realtors working through more than 100 real estate boards and associations.

"Year-over-year average price gains are being stretched by weakness one year ago, and are expected to shrink beginning next month."

In Calgary, MLS sales in January increased by 52.5 per cent from last year to 1,466 units for an average sale price of $397,518, up by 5.8 per cent. New listings fell by 6.7 per cent to 3,919 units and dollar volume jumped by 61.4 per cent to $582.8 million.

MLS sales in Alberta were up by 34.6 per cent from a year ago to 2,934 units. The average sale price increased by 6.4 per cent to $343,264. New listings dropped by 2.4 per cent to 8,162 units and the total dollar volume for the month of January was up by 43.2 per cent from a year ago to just over $1 billion.

Nationally, new listings were up by 3.4 per cent to 64,561 units and the total dollar volume increased by 89.3 per cent to $8.4 billion.

"January results suggest that the national resale housing market may be past the recent peak," said Gregory Klump, CREA's chief economist. "One car doesn't make a parade, so a few more months of results showing a cooling trend will be required before talk of a Canadian housing bubble begins to fade.

"It could take until the second half of the year before a cooling trend becomes evident, since home buying activity may continue to be accelerated in the first half of 2010 by expected interest rate increases and by the introductioni of the HST in Ontario and British Columbia on Canada Day."