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