Calgary region MLS sales and prices forecast to rise: CMHC

A report by Canada Mortgage and Housing Corp. forecasts MLS sales in the Calgary region to increase by nearly five per cent this year compared with a year ago while the average sale price will rise by just over one per cent.

The CMHC’s Spring 2011 Calgary Housing Market Outlook, released Monday, predicted MLS sales in the Calgary census metropolitan area would hit 22,000 this year, up by 4.8 per cent, and increase a further 2.3 per cent in 2012 to 22,500 transactions.

The agency forecast the average sale price to increase by 1.1 per cent this year to $403,000 while it would jump another 2.2 per cent in 2012 to $412,000.

However, the CMHC forecast total housing starts in the region to drop by 8.2 per cent this year to 8,500 units but rebound in 2012 to 9,600 units, a 12.9 per cent annual hike.

“Really right now in the housing market you’ve kind of got two opposing forces over the next couple of months,” said Dan Sumner, economist with ATB Financial in Calgary. “We’re going to have higher interest rates starting in 2011 and that’s not going to be good news but the economy is still performing quite well and it’s growing. We’re also expecting to see higher in-migration and that’s going to help things.

“Overall, it’s going to be interesting to see which kind of factor offsets the other. So far in 2011 the housing market has been pretty slow. There’s no question throughout the spring, which is usually the busy season, things have been pretty slow despite really low interest rates.”

Sumner said the Alberta economy is in good shape and it’s hard to imagine that the housing market isn’t going to improve slightly because of that.

“It’s been so slow over the last year and a half,” he said. “The market still remains quite expensive for first-time home buyers and as rates go up that’s going to definitely be a bit of a drag.”

Lai Sing Louie, regional economist with the CMHC in Calgary, said the local residential real estate market has been in a period best characterized as being a buyers’ market.

“We see the market strengthening over the forecast period,” he said. “We expect a little bit of an increase in terms of MLS sales, fractional price growth. This will transition in 2012 with a growing economy, more employment growth. It wasn’t that long ago that Calgary was in a period where employment was actually declining over the economic downturn at the end of 2008, 2009 and 2010.

“The economy is improving. We expect that will translate into more household formation and housing demand going forward.”

The CMHC report said job creation in Calgary will improve with increased activity in the energy sector and its supporting industries.

That will also give a boost to net migration which declined 50 per cent in 2010 to 11,100 people, down from 22,136 in the previous year. CMHC is forecasting total net migration to the Calgary region to rise 11 per cent in 2011 to 12,300 and another 14 per cent in 2012 to 14,000.

“Overall, anticipated migration patterns are expected to support demand for all housing types in Calgary,” said the CMHC.

For Alberta, the CMHC is forecasting housing starts to dip to 25,700 units this year from 27,088 in 2010 and to increase to 29,000 in 2012.

Total MLS sales in the province are forecast to increase to 51,300 this year and to 52,700 next year from 49,722 in 2010.

And the average MLS sale price in Alberta is forecast to jump to $354,800 this year and to $363,000 in 2012 from $352,301 in 2010.

© Copyright (c) The Calgary Herald

Calgary house prices expected to grow 5% to 7%

Short-term year-over-year price growth for Calgary’s housing market is expected to be in the five to seven per cent range, says the Conference Board of Canada.

The board’s Metro Resale Index indicates the average price in the city for a residential property in April was $407,900, up from $393,427 in March and from $395,468 in April 2010.

The board also classified Calgary’s housing market as being in balanced conditions.

The seasonally-adjusted annual rate of house sales in the city in April was 21,312, which was down slightly from March’s 21,840 and from April 2010’s 23,556.

“Tightening of federal mortgage-insurance rules hurt April resale activity,” said the board. “Sales fell from March levels in 23 of our 28 markets, and from a year earlier in 26 areas. The drop in sales in April added to vendors’ gloom. Although listings in April fell from March levels in only nine markets, they trailed year-earlier levels in 19.”

Calgary’s annualized rate of listings was 42,240 in April, up from 41,952 in March but down from 55,548 in April 2010.

The board listed the following areas as having short-term year-over-year price growth expectations of over seven per cent: Saskatoon, Gatineau, Montreal, Quebec City, Sherbrooke, Trois-Rivieres, and Saguenay.

Joining Calgary in the five to seven per cent range were Victoria, Vancouver, Fraser Valley, Edmonton, Regina, Winnipeg, Sudbury, Halifax and Newfoundland.

In the three to five per cent range were Thunder Bay, Hamilton, St. Catharines, Kitchener, Kingston, Ottawa and Saint John.

Toronto, Oshawa, London and Windsor were in the zero to three per cent category.

© Copyright (c) The Calgary Herald

Calgary has most attractive housing affordability in Canada: RBC

Calgary and Edmonton are the major Canadian cities where housing affordability is the most attractive, says a new real estate report released Friday.

But the RBC Housing Affordability report says signs are accumulating that the Calgary housing market is finally overcoming its protracted slump and entering a more vigorous phase.

“Home resales grew for the second consecutive time in the first quarter of this year, advancing the most since the middle of 2009,” says the report. “This helped remove even more of the earlier market slack and set a healthier balance between demand and supply.

“Home prices have yet to break out of their listless trends but they did rise at their fastest rate in more than a year, with detached bungalows leading the way. The firming of market conditions and higher prices had only limited impact on Calgary’s affordability, which remains among the most attractive of Canada’s major cities.”

The RBC Housing Affordability Measures show the proportion of median pre-tax household income 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.

For Calgary, in the first quarter of this year, the average price for a detached bungalow was $413,400, down 1.4 per cent from a year ago. The affordability measure was 35.9 per cent, up 0.9 per cent from the previous quarter but down 3.6 per cent from a year ago. The average since 1985 is 40.3 per cent.

A standard two-storey home had an average price of $410,900, which is a 4.9 per cent decrease from a year ago. The affordability measure was 36.8 per cent, down 0.2 per cent from the previous quarter and by 4.8 per cent from last year. The average since 1985 is 40.9 per cent.

And a standard condominium average price in the first quarter was $250,200, which is down 5.1 per cent from last year. The affordability measure was 22.2 per cent, a 0.2 decrease from the previous quarter and down 2.9 per cent from a year ago. The average since 1985 is 23.4 per cent.

RBC says Alberta’s housing market continues to be stuck in low gear as sales of existing homes and construction of new housing units are showing very modest increases at best so far this year.

“Persistent hesitation on the part of homebuyers is likely symptomatic of long-lasting payback from their overextension during the 2006-2007 boom when home prices jumped by more than 50 per cent,” says the report. “This has since driven up the rate of mortgages in arrears to a generational high in the province. Until the latter stages of 2010, plentiful supply of homes for sale combined with sluggish demand to keep home prices firmly under wraps.

“Stable or slightly declining prices, in turn, contributed to substantial improvement in affordability in Alberta last year. While market conditions have become more balanced in recent months, there remains very little pricing momentum in the provincial market at this stage, maintaining attractive affordability levels — the RBC Measures for all housing categories in Alberta stood below their long-term average in the first quarter.”

In the province, the average price for a detached bungalow in the first quarter was $339,500, up 0.3 per cent from last year. The affordability measure of 31.3 per cent was up 0.4 per cent from the previous quarter but down 2.6 per cent from a year ago. The average since 1985 is 36.4 per cent.

A standard two-storey home in the province had an average price of $363,000, down 3.0 per cent from last year. The affordability measure was 34.2 per cent, a 0.2 per cent decrease from the previous quarter and a 3.7 per cent decline from a year ago. The average since 1985 is 39.0 per cent.

And the average price in Alberta for a standard condominium was $216,000, a decrease of 3.0 per cent from a year ago. The affordability measure of 20.2 per cent was the same as the previous quarter but a 2.3 per cent year-over-year decline. The average since 1985 is 22.4 per cent.

-Calgary Herald

Luxury home sales in Calgary have soared this year compared with a year ago…

CALGARY — Luxury home sales in Calgary have soared this year compared with a year ago, according to a report released Wednesday by RE/MAX.

The real estate firm noted that 145 homes have sold from more than $1 million year-to-date until the end of April, a 51 per cent hike from the 96 sold for the same period in 2010.

Tamara Pilipchuk, a realtor with RE/MAX House of Real Estate in Calgary, said some key factors contributing to the rise in the luxury market are the resurgence of the oil and gas industry, the recovery of the stock market and the overall economic performance of the city.

“Like other major western cities who are experiencing this same increase, we can attribute it to the demographic of Calgarians,” she said. “We are a city full of entrepreneurs and corporate executives who are fuelling the demand for the luxury home market. The public as a whole are reaping the benefits of very reasonable interest rates and we are seeing a renewed confidence in the overall market. Finally, there is a general lack of supply for the luxury market.”

RE/MAX said improved financial standing among high net worth individuals is the major factor driving strong sales activity at the top end of housing markets across the country.

“Calgary’s luxury housing market has emerged relatively unscathed from the recent recession, thanks to affluent purchasers, who continue to drive demand for home prices over $1 million across the Metro area,” said the report.

“The top end of the market has bounced back with a vengeance as a result, particularly in recent months, with sales rivalling peak levels reported in 2007. Benchmark sales so far this year include the most expensive condominium ever sold in the Calgary area at $4.1 million and two sales over the $3 million price point.”

The report said million-dollar properties are becoming increasingly popular with high-end pockets no longer limited to the inner city. Luxury areas are now spread throughout Calgary including suburban and outlying neighbourhoods such as Lake Bonavista, Aspen, Cranston, Discovery Ridge, Springbank Hill, Patterson, Rocky Ridge and Signal Hill.

“Traditional strongholds like Mount Royal and Elbow Park are experiencing revitalization as older properties are renovated and/or rebuilt,” said RE/MAX. “Local business people, entrepreneurs and professionals are behind the push for upscale properties and the trend is expected to continue as economic performance improves in both the province and the city.”

So far this year, the highest priced single-family home sold in the city was for $3.995 million in Elbow Park/Glencoe while the highest sale for a condo was $4.1 million in Eau Claire.

“We’re seeing activity in the upper end. So it indicates confidence in the economy and perhaps in the oilpatch and we hope that’s going to translate down market,” said Sano Stante, president of the Calgary Real Estate Board.

“All the indications are there’s going to be continued strength in the high end of the market.”

Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp., said “there are good opportunities for prospective buyers looking for a luxury home and some of these buyers were not as impacted by the economic slowdown.”

“Improving economic conditions, gains in equity and the positive outlook in the housing market has helped support demand,” he said.

RE/MAX Ontario-Atlantic Canada and RE/MAX of Western Canada examined 12 major centres from coast-to-coast and found that luxury sales have surged in close to two-thirds of housing markets between January 1 and April 30 of this year, compared with the same period in 2010.

Leading in terms of percentage increases over the four-month period were Greater Vancouver (118 per cent) — “where foreign investment has also played a major role” — Ottawa (59 per cent), Calgary (51 per cent), Halifax-Dartmouth (27 per cent), Winnipeg (24 per cent), Hamilton-Burlington (13 per cent) and Greater Toronto (nine per cent), said the company.

Six of the seven major cities—with the exception of Calgary—are poised to set records in top-end activity by year-end. Several are just short of peak levels reported in 2010, such as Victoria, Regina, and London-St. Thomas, it added.

“Three key factors—serious equity gains, stock market recovery, and improved economic performance—have been behind the push for luxury housing product across the country,” said Michael Polzler, executive vice-president, RE/MAX Ontario-Atlantic Canada. “The combination also continues to bolster the bottom line of high net worth individuals both nationally and globally. The impact of that wealth is being seen in the demand for all things luxury—from homes to cars, collectibles and fine wines.”

Elton Ash, regional executive vice-president of RE/MAX of Western Canada, said the strength of the upper-end segment continues to defy expectations.

“That demand remains largely domestic speaks to the solid underpinnings of the market, while underscoring the appeal of Canadian real estate on an international stage,” he said. “Western Canada, in particular, will continue to see the upside benefit of investment from abroad.”

© Copyright (c) The Calgary Herald

Calgary rental demand set to increase

CALGARY — Employment and population growth in the Calgary region will spike rental demand and lower the city’s vacancy rate.

Sam Kolias, chief executive of Calgary-based property manager Boardwalk Real Estate Investment Trust, said its current occupancy rate is probably the highest it’s ever been at the 97.5-98 per cent range across the portfolio.

“We have on average higher occupancy than the marketplace because we’ve been more competitive and flexible with our price,” said Kolias prior to the REIT’s annual general meeting in Calgary on Thursday.

“As a landlord, we hope that inventory will be absorbed this year and the statistics reflect that it could be if we continue to see the trends of more in-migration and job creation and population growth that we are currently seeing right now (in Calgary and Alberta).”

In the first quarter of this year, Boardwalk’s revenue was $102.6 million, down 1.5 per cent compared with the same quarter last year. Its average stabilized rent was $988, down $15 and its funds from operations was $28.1 million for the quarter, which was off 3.5 per cent from a year ago. Per unit FFO was 54 cents, down 1.8 per cent.

At the end of March, Boardwalk had 35,277 units in its portfolio, 5,234 of which were in Calgary and area.

Units in the REIT were up 46 cents or 0.97 per cent to $48.09 at the close of trading Thursday on the Toronto Stock Exchange.

Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp., said the agency is currently conducting its regular rental market survey for April and the results won’t be available until June.

“But just from what we’ve been hearing and what we’ve been seeing so far, we’re anticipating rental demand to improve throughout this year,” said Cho. “In October the vacancy rate was 3.6 per cent. So we do expect to be a bit lower than that in October of 2011.

“One of the main drivers for the rental demand that we are expecting to see this year is increased net migration levels. Generally when people move to a new city they typically tend to rent before they buy. So with the labour market improving especially in the energy sector that should draw more people to our province and to this region and with that contribute to higher demand for rental accommodations.”

According to the Conference Board of Canada, the Calgary census metropolitan area will see employment growth of 3.0 per cent this year followed by annual growth rates of 3.8 per cent, 2.4 per cent, 2.1 per cent and 1.8 in the following years to 2015.

That employment growth will lead to more people moving to the region. The conference board forecasts 1.7 per cent population growth this year followed by 2.1 per cent. 2.0 per cent, 2.0 per cent and 1.9 per cent annual growth in the following years to 2015 with the city’s population reaching 1.368 million by then.

© Copyright (c) The Calgary Herald

Alberta will lead the country next year in the annual percentage growth for MLS sales…

Alberta will lead the country next year in the annual percentage growth for MLS sales, according to the Canadian Real Estate Association.

The association on Monday said the province will see MLS sales increase by 6.7 per cent in 2012 to 56,650 units following a 6.8 per cent gain this year to 53,100 units.

At the national level, CREA is forecasting MLS sales to decline by 1.3 per cent this year to 441,100 transactions and rebound with 2.6 per cent growth in 2012 to 452,500 units.

The association is predicting the average MLS sale price in Alberta will rise by 0.1 per cent this year to $352,500 followed by a 1.6 per cent jump next year to $358,100.

Nationally, CREA said the average price will increase by 4.0 per cent this year to $352,500 followed by an increase of 0.9 per cent in 2012 to $355,800.

“Homebuyers expect mortgage interest rates to rise and are mindful of their current and future debt levels. They’re doing their homework to better understand how their mortgage payments and family budget might change down the road before they make an offer,” said Gary Morse, CREA’s president.

Gregory Klump, CREA’s chief economist, said that while interest rates are expected to rise later this year they will still be within short reach of current levels and remain supportive for housing market activity.

“Continuing job growth will underpin housing demand, keeping the housing market in balance and stabilizing home prices,” he said.

Year-to-date until the end of April, there have been 4,523 single-family MLS sales in Calgary, a decrease of 0.33 per cent compared with the same period last year. The average sale price of $465,076 is up 1.1 per cent. For condos, year-to-date sales of 1,882 are down 12.78 per cent from a year ago while the average price of $286,777 has declined by 0.66 per cent.

“All in all, the positive investments we are seeing in the energy sector and our economy will begin to translate into improved job prospects and growth for Calgary,” said Sano Stante, president of the Calgary Real Estate Board. “This will help contribute to a stronger demand for housing and a stable real estate market.”

© Copyright (c) The Calgary Herald