MARCHING DOWNWARD

Calgary resale housing market sees another month of declining sales

By Mario Toneguzzi

Calgary Herald  Published on: April 1, 2015

http://calgaryherald.com/business/real-estate/calgary-resale-housing-market-sees-another-month-of-declining-sales

TRY NOT TO BE SHORT SIGHTED

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

YYC & YYZ OUTPERFORM

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BLOSSOMING IN VIC PARK

Proposed downtown condo project will include apple orchard
BY DYLAN ROBERTSON
CALGARY HERALD JULY 15, 2014

Fresh apples will be ripening between two downtown condominium towers as a developer aims to give Calgary a more fruitful and dynamic city centre.

The Orchard on Twelfth is a two-tower project at the southeast corner of 12th Avenue and 5th Street S.E., just northeast of Stampede Park. Lamb Development Corp. of Toronto is planning two 31-storey buildings, which will nestle a one-acre orchard of apple trees between them on a 61,000-square-foot land parcel.

“Not only is this a public and private amenity for the city, but also a true green feature; not a stupid green roof that really in the end doesn’t do much,” said company head Brad Lamb. “It’s a phenomenal thing to have in a city, and it’s going to produce tens of thousands of apples which are going to be eaten.”

The company commissioned an Ipsos Reid survey last month which polled 1,000 Americans and 1,000 Canadians, asking them to guess the location from a digital rendering of the project with its apple orchard. Most Canadians thought the image was in Vancouver or Toronto, placing Calgary seventh out of 13 possibilities; Americans thought of Portland or New York and placed Calgary 12th.

The same poll found that 93 per cent of North Americans — especially younger adults — want greener downtowns, and would welcome projects that delivered food.

“I always try to deliver, if I can, a public amenity that the city will enjoy and the residents will enjoy,” Lamb said, comparing the Orchard on Twelth with another property his corporation is developing, 6th and Tenth, which will include a fountain park. “Our cities aren’t green enough, visually and for taking in C02.”

Richard Cho, senior market analyst with Canada Mortgage and Housing Corp., says the projects are part of an ongoing build up in new Calgary condominiums.

“We had lower inventory and now we see that being made up for,” said Cho. He noted that in last year’s January to June period, construction started for only 1,004 apartments. In the same months this year, the city netted some 4,010 starting units, and Cho says more are anticipated.

Alberta isn’t known for its apple orchards but Lamb said an agricultural firm has chosen tree species that can grow edible fruit in the area. A third party will be paid to prune the trees and harvest the fruit for sale or donation.

But for Lamb, the buildings themselves are more interesting.

“They’re rectangular, simple in design, but they’re super clean and super modern,” he said. “We’re delivering beautiful architecture and affordable apartments; these two buildings are spectacular in their own right.”

Units will range from $249,900 for one-bedroom apartments to over a million dollars for larger units. Lamb says those prices are competitive with Beltline properties. The project will cost $130 million with $170 million in expected revenue, he said.

An older house on the block will be demolished, while buildings on the fifth of the block not owned by Lamb Development will remain in place.

Lamb says his company is currently waiting for a permit, but he expects ground to be broken within the year as no zoning exception is needed. He expects the first phase to open in about three and a half years, followed by the second about five years from now.

THE SURGE

Calgary home prices continue to surge
Sustained supply imbalance pushes prices higher
BY MARIO TONEGUZZI, 
CALGARY HERALD JULY 9, 2014

CALGARY - A sustained supply imbalance is pushing residential real estate prices higher, says a new survey released Wednesday by Royal LePage.

The company’s House Price Survey and Market Survey Forecast said the Calgary market experienced strong year-over-year price increases in the second quarter of this year across all housing types.

Detached bungalows increased by 9.7 per cent to $501,200 and condominiums rose by 9.3 per cent to $286,422. Standard two-storey homes increased by 7.9 per cent to $489,589.

“Calgary has had a serious inventory shortage dating back to the beginning of 2013, which combined with strong demand from prospective homebuyers is responsible for pushing prices skyward,” said Ted Zaharko, broker and owner of Royal LePage Foothills, in a news release. “We definitely have one of the hottest real estate markets in the country right now and all housing types are performing very well. Properties are being gobbled up as soon as they hit the market.”

But Zaharko said active listings are starting to climb.

“Slowly but surely we are seeing inventory levels creep up, which is needed to satisfy the pent-up demand after a prolonged period of insufficient supply,” he said.

Royal LePage is forecasting home prices in the city to rise by 5.5 per cent over the year compared with 2013.

“Prices are already up approximately 10 per cent year to date, and we expect this to creep up a little bit more before the end of the year,” said Zaharko. “The Calgary market is vibrant and is home to a strong local economy, fueled by the oil and gas industry. We expect the healthy real estate market to continue for the rest of this year and beyond.”

FINDING THE RIGHT FIT

Make appliances work for you
Consider needs, preferences when outfitting kitchen
BY MARILYN WILSON
FOR POSTMEDIA NEWS

Ever hear the saying the devil is in the details? When it comes to your new condo, that’s certainly true. And if you can properly accessorize, the excitement, rather than the devil, can occupy your details.

Many condo buyers want to make their lives easier. Those who have been renters until now may be happy with whatever appliances are included. Downsizers may also be just as happy with these appliances, as they are new and will mean a fresh start.

But don’t fall into the trap of just assuming that whatever appliances are included will be sufficient. Instead, comb over the model suites with care and consider upgrading appliances that you will use often or get more joy out of using.

Whether you are an aspiring gourmet chef or merely combine cereal and milk in the morning, you likely spend considerable time in your kitchen. So, what will make your kitchen more functional, user-friendly and enjoyable?

Here are a few appliances worthy of consideration, depending on your use of the kitchen.

If you’re a chef, you will want several key appliances. The first is a good hood fan, something that will keep your condo smoke-free but will not be too loud, given that noise is more concentrated over smaller floor plans. Be wary of the microwave-cum-hood fan that sits over your stove and is often featured in model suites. This combo is fine if you don’t cook much but, if you do, you’ll find you will need a real hood fan to absorb smells and steam.

Do you spend more time cooking or baking? Your answer could affect whether an electric or gas oven is best for you. Also, think about the size of the oven. If you like to host big turkey dinners, for instance, get an oven that will hold your bird.

There are many other nifty appliances to consider if you have the space. Would a warming drawer be useful to keep food, dishes and mugs warm for company, or would you end up using it as a storage drawer? Another option is a cup-warming drawer beneath your coffee maker (try Miele’s).

Frequent hosts may also like the idea of a wine fridge or a second dishwasher. No room for two dishwashers? Maybe there is enough for a half dishwasher instead.

A trend I have started noticing is below-counter microwaves to save counter space and streamline the overall look, as well as microwave drawers. Though new and popular, remember that these drawers have to be pushed closed, creating a potential for spills.

Whatever appliances you choose, make sure they represent your living needs. Purchasing appliances for resale or to please others will mean you live with wasted space in limited square footage.

Marilyn Wilson has been selling real estate for more than 24 years and owns Marilyn Wilson Dream Properties Inc. Brokerage.

NEWS THAT MAY PUT A SPRING IN YOUR STEP

As mortgage rates fall, realtors anticipate boost to an already strong market
By Mario Toneguzzi 
Calgary Herald May 28, 2014 

CALGARY - Calgary’s hot housing market has received another incentive that could boost sales activity even more in the coming days.

Mortgage rates are starting to come down again right during the busy time of the year for the industry.

Ann-Marie Lurie, chief economist with the Calgary Real Estate Board, said lower mortgage rates will help affordability in the local housing market.

“It can actually help mitigate some of the increases in pricing that we’ve seen in Calgary’s market,” she said. “We’ve had that price growth. We’re still more affordable than we have been for some time so that’s not really the issue per se. But when you have the mortgage rates come down, that can help especially as we’re facing rising pricing.

“We’re not in any concern of overheating our market but with new listings starting to improve this can actually help some of those people who were really on that cusp. They can get into the market.”

Scotiabank announced this week it was lowering its fixed five-year mortgage rate to 2.97 per cent and its five-year variable rate to 2.47 per cent. The rate is effective until June 7.

Investors Group recently offered a 1.99 per cent rate for a 36-month closed, variable-rate mortgage, but Scotiabank is the first of the big banks to push its fixed rate down below three per cent in recent months.

According to CREB, year-to-date until May 27, there have been 10,805 MLS sales in the city, up 13.38 per cent from the same period last year. The median price has risen by 7.03 per cent to $428,000 while the average sale price is up 5.85 per cent to $480,416.

“Housing activity in Calgary has been fairly robust supported by a variety of factors. Along with employment growth, rising incomes and strong net migration, relatively low mortgage rates has also contributed to the demand for housing,” said Richard Cho, senior market analyst in Calgary with Canada Mortgage and Housing Corp. “Mortgage rates have been low for a couple of years and this has helped people, such as first-time home buyers, purchase a home.

“A decline in mortgage rates alone will not necessarily lead to an increase in sales. The decision to purchase a home often involves both personal and financial considerations.”

So far in May, MLS monthly sales in Calgary are up 17.74 per cent compared with a year ago to 2,489 transactions. New listings have also risen by 17.82 per cent to 3,756 but as of Tuesday active listings were down 5.76 per cent from the same time last year to 4,481. The median price in May of $435,000 has increased by 7.41 per cent and the average sale price is up by 5.40 per cent to $485,866.

“Will this (lower mortgage rates) affect the market in Alberta? Absolutely not. The market already is strong, the sales moving well, supply is an issue and Calgary is poised to be the hottest market in the country again this year,” said Don Campbell, senior analyst with the Real Estate Investment Network. “These lower rates will have a lot of people talking, but little or no measurable effect in this part of the world. Out East, it will as that market needs stimulus.”

Campbell said the biggest problem with some mortgages is hidden in the restrictive terms. These low rates will spark increased traffic to the banks, but consumers must be wary before signing asthe penalties and restrictions are often prohibitive, he added.

“Spring is prime fishing season in Calgary, and not just for trout. With the recent surge of new listings, I think we’re seeing a little fishing from sellers, too,” said Scott Bollinger, broker with ComFree Commonsense Network. “Sellers are recognizing the main market factors — good economy, strong housing price gains, tight inventory, seriously low average-days-on-market — and some seem to be fishing for their price rather than settling for market price. They’re trolling the waters for motivated buyers, and my advice to these buyers is: do your homework and stick to a neighbourhood’s comparable numbers to avoid taking the bait.

“Calgary buyers are smart. They know when cheap money is cheap money. And sub-three per cent five-year fixed rates are cheap. It’ll only add fuel to the hot housing market. The open question is: how much and for how long? Will Calgarians see this as a temporary phenomenon, flock to the banks, and boost the market in the short term? Or will they see it a longer-term trend and bide their time, which would reduce the urgency and the immediate impact on the market? Either way, the rates give motivated and qualified Calgarians more purchasing power in what’s still a relatively affordable market. I think that points to steady price gains throughout 2014.”

CONDOMINIUM ACT OVERHAUL

Province’s condo law to get an overhaul
Bill 13 includes new process to resolve disputes
BY BILL MAH AND MARIO TONEGUZZI 
CALGARY HERALD MAY 8, 2014

A proposed overhaul of Alberta’s condominium law, including a way to better resolve disputes, is being hailed as long overdue for the province’s booming condo market.

“The original condominium act was introduced in 1969, and it’s had a couple of minor amendments, but really the condominium developments that are being built and the complexity of the relationships has far exceeded the legislation written in 1969,” Service Alberta Minister Doug Griffiths said Wednesday in outlining the changes.

“It was time to update and modernize it.”

After years of consultations with industry and condo groups, the government tabled Bill 13, the Condominium Property Amendment Act, in the legislature for first reading on Tuesday. The bill, which must still undergo scrutiny from MLAs before being voted on, contains 50 amendments.

These include the creation of a new condo dispute tribunal; clearer and expanded disclosure to buyers of initial condo fees and other information by developers; improved governance for condo corporations and harsher penalties for “particularly unfair actions by developers.”

Griffiths said the current condominium law lacks enough tools to deal with challenges, such as disputes that arise between owners, condo corporations, builders and other stakeholders and is needed in Alberta, where there are more than 8,000 condo corporations, accounting for about 20 per cent of homes sold annually.

“We’re going to incorporate the dispute resolution process, a new mechanism that means that people don’t have to resolve things in court, which is a costly, lengthy, confrontational process,” Griffiths said.

Work on the regulations, which will include details about the dispute tribunal and clarification of insurance obligations for corporations and owners, will begin shortly.

June Donaldson, co-founder of the Alberta Condominium Owners Association, said the amendments are desperately needed.

“The fact that there’s going to be a tribunal where the average condo owner can go, and in a very constructive and collaborative way, hopefully remedy it in a way that addresses the issues that are causing them worry, money or stress … is so big,” Donaldson said.

“Condominium living in Alberta has changed so dramatically over the past 10, 15 years and the legislation has not kept up with the market,” said lawyer Robert Noce, a partner at Miller Thomson, who handles condo legal matters.

The amendments will help protect consumers, offer a way to deal with issues more swiftly and give owners and corporations a clearer understanding of their roles and obligations, he said.

Jim Rivait, CEO of the Alberta Chapter of the Canadian Home Builders’ Association, said most builders and developers are reputable and won’t have to change their practices. However, the new legislation will offer added protection to buyers, he said.

“It’s quite a complex piece of legislation, and only part of it really affects the building part of it,” he said. “A lot of it is the management and how they run the condo board, answering a lot of the issues.

“There’s some transparency things that they want to build in as people get into the whole condo business, so that people are aware. And we’re all for that.”

Condos, often more affordable than single-detached homes, are a growing sector, with 55 per cent of housing starts classed as multi-family in the first three months of 2014, Rivait said.

“From an industry standpoint, it’s becoming more and more important, not less important, because affordability causes people to enter into the market through condos as their first homes and that’s usually their first experience.”

Calgary Real Estate Board president Bill Kirk said realtors welcome the new condo legislation because added consumer protection will make condo ownership a more attractive option.

“If it’s good news for condo owners, it’s good news for the real estate industry because they’re our clients, and if it’s clearer for them how they’re going to operate, it’s just great news for us,” he said.

CREB data show 1,611 MLS sales of condo apartments in the city through Tuesday, a 20 per cent increase from the same period a year ago.

In the condo townhouse category, sales are up about 18 per cent to 1,245 units.

“The condominium review and act revisions will increase disclosure to the consumer and remove some of the uncertainty in the market,” said Matthew Boukall, director of residential advisory services for Altus Group.

“Condominium development is still a relatively new and growing housing option in our market and many consumers may be unfamiliar with the concept.

“Changes that improve disclosure and provide consumers with more information, and remove some of the hidden risks to condominium ownership should improve confidence in the built form, and may attract more consumers who were uncertain about buying a condo in the past.”

HOME OF THE BRAVE

More Albertans willing to brave rising prices and purchase a home
People confident in getting into the real estate market
By Mario Toneguzzi 
Calgary Herald April 10, 2014 

CALGARY - Despite high real estate prices, Albertans have a renewed interest in buying a home, according to the 21st Annual RBC Home Ownership Poll.

The poll, which was released Thursday, said the number of those intending to buy a home in the province is up from 22 per cent in 2013 to 28 per cent this year, “showing a renewed strength in the market from last year.”

“We saw a drop in purchasing intent last year in Alberta, so this renewed intent in 2014 shows that people in the province are confident in their ability to get into the market and invest in a home,” said Don Peard, regional vice president and mortgage specialist with RBC.

“There’s a couple of key factors. Number one being, certainly we were predicting a year ago and even more than that an increase in interest rates and that really hasn't transpired. Even if it does transpire, I don’t believe it will be as severe as some people were anticipating. That’s a huge factor in affordability and certainly impacts peoples’ intent to purchase.”

Peard said discussion about the levels of consumer debt has had an impact on peoples’ savings habits with better results in recent years, which means they are able to have enough money for down-payments.

“And of course in Alberta, comparatively speaking, affordability still remains very well particularly when we compare pricing and affordability with other larger centres in Canada. Alberta still remains very affordable. There’s no question the intent to purchase has increased,” said Peard.

Recently, the Canadian Real Estate Association said Alberta will lead the country with the highest annual growth rate in prices over the next two years in the resale housing market.

It said average MLS sale prices will climb in the province by 3.9 per cent this year to $396,000 and by another 2.5 per cent in 2015 to $406,000.

The association said Alberta will see annual sales activity increase by 0.8 per cent this year to 66,600 and then lead the country in 2015 with 3.9 per cent growth to 69,200 sales.

In February, MLS sales were up by 1.8 per cent year-over-year in Alberta to 4,595 and the average MLS sale price saw a yearly increase of 7.6 per cent in the province to $407,540.

“The volatility and fluctuations in some of the other larger Canadian cities we just don’t experience that in Alberta. There’s good, solid general appreciation in home values but it’s certainly not big spikes and bubbles,” said Peard.

“Lots of fear and talk of real estate bubbles in the past two or three or four years and I think the general consensus now is that’s really probably not going to happen at all and there’s lots of good empirical data to support that and we've seen good positive changes in the Vancouver and Toronto markets and of course we’re just that much more fortunate here in Alberta with having one of the best economies in the country.”

Photo By: Danielle Nanni

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

A BIG HIKE

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

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

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

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

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

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

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

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

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

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

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

AT WAR

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LISTINGS DOWN, PRICES UP

Listings remain down in Calgary resale housing market
Pressure on prices which continue to rise
By Mario Toneguzzi 
Calgary Herald February 3, 2014

CALGARY - Pressure on prices in Calgary’s resale housing market continued in January as MLS listings remained at lower levels compared with a year ago.

According to the Calgary Real Estate Board, new listings of 2,393 for the month were down 4.01 per cent from January 2013 and active listings were off by 18.16 per cent to 2,524.

With sales growing by 17.17 per cent to 1,440, that help spike prices to record levels for the month.

CREB said the median price jumped by 6.71 per cent to $417,250 while the average MLS sale price rose by 5.09 per cent to $462,168. The board, in releasing its official statistics on Monday, said the overall benchmark price in the city, which if what it calls typical property sales, rose by 9.46 per cent to $429,100.

According to Mike Fotiou, associate broker with First Place Realty, January also set a record for most luxury home sales for the month. There were 41 MLS transactions of at least $1 million, eclipsing the previous record of 36 set in 2007.

Last year, Calgary experienced a record year for total luxury home sales of 727 with 10 months setting records. The only months in 2013 that didn’t set luxury home sale records were January and December.

Grace Yan, a realtor with RE/MAX Real Estate (Central) in Calgary, said property inventory has steadily declined over the past year due to a high volume of migration of people to the city, a low unemployment rate and better job opportunities.

“As a result, turnkey properties that are well priced, whether it’s a condo, fixer-upper, starter homes to high-end luxury homes, are selling within days and realtors are lined up outside taking turns for showings resulting in competing offers selling well above list price,” she said. “The market is currently so competitive that we are seeing unconditional or minimal condition offers and I’ve recently seen offers even as high as $70,000 over list and selling within the first day.

“The shortage of listings is really tough on buyers and disappointing when they place their best offer on their perfect home and not to even be close to other competing offers. On the other hand it’s excellent for the sellers who are pleasantly surprised what their properties are selling for. We typically see listing inventory rise come the spring and summer. Real estate, like any other investment, has its ups and downs. It’s just trying to find the right time and the right place in the current hot market.”

The inventory of active listings in Calgary year-over-year hasn’t been positive since February 2011.

Ann-Marie Lurie, CREB’s chief economist, said the overall trend of a declining inventory in the resale housing market has been around since March 2011.

“They had actually too much for a period of time. There was really an excess amount of inventory,” she said. “And a lot of that was working through the system . . . There was over supply in the market at that time frame.

“It’s really over the past year and into this year that we’ve seen those levels to continue to decline . . . They’ve been falling. What I’ve been watching has been that rate of decline which had actually started to ease . . . Towards the beginning of 2013, and into 2012, we were in those high 20 per cent declines, like almost 30 per cent declines, over the previous year. As you go through the later portion of 2013, the levels came off a bit. It’s still declining but not declining as much.”

She said sales have been increasing at a greater rate than the level of new listings.

In January, MLS sales for different housing categories and their percentage increase from last year were: single-family, 974, 10.93 per cent; condo apartment, 260, 27.45 per cent; condo townhouse, 206, 40.14 per cent; and towns, 251, 2.45 per cent.

The average sale prices and their annual hikes were: single-family, $520,686, 4.80 per cent; condo apartment, $314,678, 12.36 per cent; condo townhouse, $371,638, 15.92 per cent; and towns, $379,053, 8.54 per cent.

The benchmark prices and their year-over-year growth were: single-family, $476,700, 9.11 per cent; condo apartment, $280,600, 11.66 per cent; condo townhouse, $308,100, 8.72 per cent; and towns, $346,500, 5.26 per cent.

“Listings are low in Calgary due to a number of factors. However one of the biggest is the lack of housing options available in Calgary and region due to the combination of increased demand through population growth, the flood zone financing and insurance issues and lack of new product readily available,” said Don Campbell, senior analyst with the Real Estate Investment Network.

“This reduction in housing options brings pause to the homeowner who was considering selling their homes to move within the city or region. When homeowners do not have confidence that they will be able to find an appropriate property to replace the one they are considering to sell, then they delay the decision.”

Also on Monday, TD Economics released a housing report forecasting sales in Calgary to grow by 5.8 per cent this year and by another 2.1 per cent in 2015. It forecast the average price for existing home sales to rise by 3.5 per cent this year and by 1.2 per cent next year.

The report said Calgary’s sales to new listings ratio was 70.2 per cent in 2013 and forecasts that to rise to 73.1 per cent in 2014 before falling back to 69.9 per cent in 2015.

TD also said the percentage of income an average household would have to devote to mortgage payments in Calgary in 2013 was 24.9 per cent in 2013 and it is forecast to rise to 25.0 per cent this year but fall back to 24.6 per cent in 2015.

Diana Petramala, economist with TD Economics, said current interest rates are likely unsustainable, nor are they expected to increase to more normal levels in the near future.

“Overall, given the expectations of a modest increase in interest rates, home prices are likely roughly 10 per cent overvalued,” she said of the national housing market. “Housing is very regional, and some markets are more vulnerable than others. For instance, the overvaluation in Toronto, Vancouver, Montreal and Ottawa is likely more significant than that found in markets in the Prairie and Atlantic Regions.

“Looking forward, the combination of softer demand and rising supply of homes for sale on the market will likely pull some steam out of home price growth. Slower home price growth, rising incomes and only modestly rising interest rates will help keep housing in check over the next few years.”

Photo By: Sepehr Ehsani

SALE PRICE JUMP

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

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

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

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

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

Toronto saw an annual increase of 5.8 per cent.

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

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

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

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

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

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

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

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

MAKING GAINS

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

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

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

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

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

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

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

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

Booming luxury market pushes Calgary house prices to records

Booming luxury market pushes Calgary house prices to records

Average sale and median prices at unprecedented levels

BY MARIO TONEGUZZI
CALGARY HERALD, JANUARY 2, 2014

CALGARY - A booming luxury market, and tight overall conditions with listings not keeping pace with demand, has pushed Calgary house prices to unprecedented levels.

Average sale and median prices hit all-time records for the city in 2013 for both total MLS transactions and in the single-family home category, according to data released Thursday by the Calgary Real Estate Board.

The average sale price for total MLS reached $456,703 for the year, up 6.54 per cent from 2012, while the single-family average price rose by 7.61 per cent to $517,887.

The median sale price for total MLS was $401,000 and it was $450,000 for single-family homes. The median price rose by 5.53 per cent from the previous year for total MLS and it was a 7.14 per cent hike in the single-family market.

Also, December capped a solid year for the residential real estate market with the highest-ever monthly average sale price at $527,764, eclipsing the previous record of $526,546 set in June 2013.

"Momentum was building from the last quarter of 2012," said Christina Hagerty, a realtor with RE/MAX Realty Professionals in Calgary. "We approached 2013 with low interest rates, one of the lowest unemployment rates in the country and the lowest vacancy rate in the past decade. Employment growth and higher than expected net migration into the city helped support the demand for housing and increased sales and pricing. 2013 was an extremely busy year for us with informed and prepared purchasers.

"People talk about the flood adding to this, but I focus on the amazing ability for a city to rebound in a very short period of time. Something that may have devastated other major centres. I believe that this is largely due to the sense of community and the job market allowing people the ability to rebuild."

The previous records for average sale prices were set in 2012 at $428,649 for total MLS and $481,259 for single-family homes. The previous records for median prices were set in 2007 at $382,000 for total MLS and in both 2007 and 2012 at $420,000 for the single-family market.

Average prices in the city ballooned this year as a result of a strong luxury market that set a record for most transactions ever at $1 million or more.

devastated other major centres. I believe that this is largely due to the sense of community and the job market allowing people the ability to rebuild.”

According to Mike Fotiou, associate broker with First Place Realty, there were 727 luxury home sales in 2013, which was a 33.6 per cent hike from the previous annual peak in 2012. The year was marked by 10 consecutive months of new monthly sales records. Only January and December did not set records in 2013.

Total MLS sales in the city reached 23,489 units in 2013, up 10.78 per cent from the previous year. New listings of 32,153 were up 0.97 per cent but active listings at the end of December were down by 17.80 per cent to 2,235.

"Companies are recruiting professionals across Canada and globally and this has put Calgary on the map as a thriving metropolis of opportunity and a safe place to raise their families," said Hagerty. "With vacancy rates at one per cent and an abundance of job opportunity, there is a confidence in the city. 2014 looks to continue with solid growth fueled by sound fundamentals."

MLS sales and percentage increase from 2012 for different housing categories were: single-family, 16,302, 7.92 per cent; condo apartment, 4,007, 14.45 per cent; condo townhouse, 3,180, 22.40 per cent; and towns, 4,516, 13.81 per cent.

Average sale price and percentage increase from 2012 were: single-family, $517,887, 7.61 per cent; condo apartment, $299,517, 5.17 per cent; condo townhouse, $341,116, 7.73 per cent; and towns, $381,884, 9.55 per cent.

Median price and percentage increase from 2012 were: single-family, $450,000, 7.14 per cent; condo apartment, $261,000, 3.78 per cent; condo townhouse, $306,000, 6.45 per cent; and towns, $355,700, 6.18 per cent.

Scott Bollinger, broker with the ComFree Commonsense Network, said prices in Calgary climbed because of increased sales and listings not keeping pace with the demand.

"Most notably in 2013 we saw rising wages, low interest rates and record in-migration. So it’s not surprising after three to five years of relatively little price growth, and despite the steady employment and the wage growth along with record low interest rates, that prices surged this year," he said.

"Add to that the Alberta and Calgary economies outperformed almost every other region in Canada in 2013 by a wide margin, which had the effect of attracting all of those people. But the interesting thing is that 70 per cent of the net migration to Calgary in particular was international. And the other thing about the migration was that we set a record this year for the growth of the cohort of ages between 25 and 45 and those people, along with the international crowd, are most likely to engage in household formation."

Bollinger said he is surprised that the listings didn’t catch up with the sales. He said the market might expect to see more of a reaction from the listing side early in the new year.

"If we don’t see that increase in listings, I think we’re going to continue to see farily significant price increases," said Bollinger.

In a statement, Ann-Marie Lurie, CREB’s chief economist, said sales growth exceeded expectations in 2013, pushing above long-term trends.

"Two consecutive years of elevated levels of net migration, combined with an improving job outlook and confidence surrounding long-term economic prospects, supported the demand growth," she said.

"In 2014, both sales activity and prices are expected to improve, but not at the same pace recorded this year. While factors influencing demand will support growth in 2014, rising listings and increased competition from the new home sector should alleviate some of the supply pressure in the market."

Those factors, combined with potential increases in long-term lending rates, should take some of the steam off the exceptionally strong price growth recorded in 2013, said Lurie.

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.

FAVOURING THE SELLER

Calgary housing market soaring with sales and price hikes
Strong sellers’ conditions as listings down
By Mario Toneguzzi 
Calgary Herald November 1, 2013

Calgary’s resale housing market continued to soar in October with strong year-over-year hikes in both sales and prices.

According to the Calgary Real Estate Board, MLS sales of 1,953 for the month were up 17.72 per cent from a year ago as the average sale price rose five per cent to $458,876 while the median price saw an increase of 5.96 per cent to $409,000.

“The October Calgary real estate market kept a consistent absorption rate between two to 2.2 months worth of inventory. This places us in a strong sellers’ market,” said Robyn Moser, a realtor with CIR Realty in the city.

“Attributes of a sellers’ market are, competing offers, listed home selling in the first two weeks or sooner, sellers being able to dictate the terms of the negotiations and not having to settle for much less than realistic asking prices. All consistent with our October experiences.”

Although new listings for the month were up 9.08 per cent to 2,522, active listings at the end of the month were down 16.19 per cent to 3,841.

The average days on the market to sell a property dropped from 45 a year ago to 40 in October.
Moser said housing activity in Calgary may be fuelled by a number of factors: seasonal fall peak activities with people wanting to purchase and move into homes before winter sets in; investor speculators coming into the market due to the flood impact in June; corporations reorganizing and centralizing back to Calgary and Edmonton; and rental rates increasing.

“Buyers had to react to this market by acting quickly when homes came available for sale, being prepared to pay asking price or above and ensuring they were prequalified and prepared for condition days of seven days or less in order to get their offers accepted,” said Moser.

Sales and prices were up across all housing categories in the city during the month.

In the single-family home market, there were 1,336 MLS sales, up 14.29 per cent from last year with the average sale price increasing by 4.76 per cent to $516,244 and the median price rising by 5.12 per cent to $452,000.

The condo apartment category saw sales rise by 24.35 per cent to 337. The average sale price was up 6.76 per cent to $309,415 and the median price rose by 8.80 per cent to $272,000.

In the condo townhouse market, sales of 280 were up 27.85 per cent with the average price rising by 13.49 per cent to $365,037 and the median price up by 8.29 per cent to $319,450.

The towns surrounding Calgary saw sales jump by 22.04 per cent to 382 with the average price increasing by 10.54 per cent to $380,350 and the median price up 8.11 per cent to $360,000.

“Price growth and tighter market conditions have encouraged some of the recent rise in new listings,” said Ann-Marie Lurie, chief economist at the real estate board. “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.”

Employment growth, strong net migration, lack of rental product and low mortgage rates have contributed to the rise in housing demand over the past two years, she said.

“Meanwhile, supply levels have not kept pace, causing prices to push up,” added Lurie.

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.