Sales in the luxury home market have ballooned in Calgary this year.

According to the Calgary Real Estate Board, sales for upper-end residential properties are way above the pace set a year ago. As of Tuesday, there were 291 single-family MLS sales over $1 million this year compared with 234 for the same period in 2010. Also, 18 condominiums have been sold year-to-date in the upper-end price bracket, compared with 11 in 2010.

Miranda Pearson, with the Boutique Realty Group Ltd. of Century 21 Bamber Realty in Calgary, said consumer confidence has been stabilized recently by the low interest rates, making the cost of upgrading to a larger home practical.

“In general, with the softening of the market across the board taking a depreciation of 10 per cent on a $500,000 home versus a million dollar home, makes the million dollar home that much more attainable,” she said.

“Inventory selection of luxury homes has increased compared to availability five years ago. Rather than renovating their current home which may have been selected out of pressure due to lack of choice and forgoing features they desired, this is an opportunity to find a home that suits those preferences.”

Pearson also said the equity stability for buyers already owning in the luxury home market allows them to consider purchasing a second property or vacation property.

“Homeowners of higher-end properties tend to have a greater percentage of equity in their home and are somewhat insulated by market fluctuations. With low interest rates and substantial equity it is timely to leverage that equity to buy a second home.”

Sales in the upper-end peaked in 2007 with 431 single-family homes priced at over $1 million selling as well as 30 condos.

The top sales this year are $3.995 million for a single-family home in the Elbow Park/Glencoe neighbourhood and $4.1 million for a condo in Eau Claire.

“We have seen more sales in the last several months. We just see more confidence in the market,” said Sano Stante, president of the Calgary Real Estate Board. “More confidence in that upper-end.

“A lot of the product that’s moving is some value buying. And some of the new product that’s on the market in the upper-end they’re sort of testing new territory. We’re expanding our limits. We’re testing new waters with some of the prices with some of the new listings that are on.”

The highest priced listing currently in the Calgary city market is $12 million for a home in Aspen Woods. The highest priced condo is $4.195 million in Eau Claire.

Stante said that in talking with other industry members such as builders and architects they’re very busy at the upper-end.

“That indicates to me that people, upper management … have a sense of confidence. Those are the people making decisions based on what they see coming down the pipe.”

Dan Sumner, economist with ATB Financial in Calgary, said low interest rates play a big factor for higher-priced homes.

“A one percentage point difference for a condo that costs $200,000 doesn’t make near a big a difference as it does for a house that costs $2 million,” he said.

“This could be a sign — although I don’t have any direct data to support this — that maybe some of the high wage jobs in Calgary have fared quite well over this (economic) recovery.”

Sumner said the inner-city Calgary housing market has fared better than in the outskirts this year and houses closer to the downtown core tend to be priced higher.

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House prices in the Calgary region are expected to rise in the next two years, according to Canada Mortgage and Housing Corp.

In a new forecast report released Wednesday, the CMHC said the annual growth rate for MLS average prices in the Calgary census metropolitan area will be 2.2 per cent in 2011 and the same amount in 2012.

The average sale price will reach $407,500 this year and $416,500 next year.

The CMHC is forecasting MLS sales in the Calgary region of 22,000 this year, which is a 4.8 per cent hike from 2010, and 22,500 in 2012 for another 2.3 per cent increase.

However, total housing starts in the Calgary CMA this year will fall by 15.8 per cent to 7,800 units. But the CMHC says they will rebound in 2012 to 9,000, a 15.4 per cent jump.

“The housing market for 2012 looks promising,” said Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp. “The economic fundamentals are gradually improving and expected to sustain demand for housing.

“Listings in the existing home market and inventories of new apartment units have also been gradually improving. We are anticipating market conditions to be more balanced and to see more activity next year compared to what we have experienced so far in 2011.”

Cho said new construction of single-detached homes has been tempered this year as builders manage the risk of any large scale increases in inventory. This has kept inventories of single-detached units relatively low.

“We anticipate demand for new homes to improve in 2012 as the economy continues to create jobs and attract migrants,” he said. “Competition from the existing home market is also expected to ease as listings move to more balanced levels.

“Multi-family construction is also expected to see a lift in 2012. Elevated apartment inventories are holding back some new construction this year. However, apartment inventories have been declining, providing an opportunity for builders to increase production in 2012. In addition, as prices and mortgage rates move higher, demand for multi-family units will improve as some prospective buyers consider more affordable alternatives.”

In the single-detached sector, the CMHC is forecasting starts to reach 5,000 this year, a 13.5 per cent decline from 2010 but increase by 10 per cent in 2012 to 5,500 units.

In the multiple-family sector, the forecast is for a 19.5 per cent decline this year to 2,800 units but increase by 25 per cent in 2012 to 3,500 units.

“The activity in the energy sector is anticipated to fuel economic growth,” said Cho. “This will contribute to job creation, growth in wages as well as attract people from other provinces and countries and in turn support housing demand. Mortgage rates are also anticipated to remain favourable for prospective buyers.

“We are forecasting the average resale (MLS) price to post modest gains this year and next. The housing market is expected to experience improved market balanced over the remainder of the forecast period as sales rise and new listings moderate.”

Meanwhile, changing economic and market conditions have spurred the Calgary Real Estate Board to significantly revise downward its annual forecast for MLS sales.

In its August market update, CREB predicts 13,100 single-family home sales for the year. While that’s an increase of 7.7 per cent over 2010, it’s down from the 14,500 sales predicted in its annual forecast, which was released in January.

Condo sales are now expected to decline 1.51 per cent, with 5,100 forecast – CREB’s January numbers had called for 6,000 sales, a 15.8 per cent year-over-year increase.

The new numbers suggest an average single-family sale price of $470,000, down from $480,000 predicted in January, but still 1.89 per cent higher than the average price in 2010.

Condo prices, meanwhile, are expected to rise 0.04 per cent, with an average price of $290,000. CREB forecast an average price of $295,900 in January.

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Owning a home in Calgary became more expensive in the second quarter of this year but housing in the city is one of the most affordable among major cities in Canada, says a report released Monday.

“The long hoped for rebound in the Calgary-area market that appeared to be on track earlier this year lost some momentum in the second quarter,” says the RBC Housing Trends and Affordability report.

“After posting two successive increases, home resales edged down during the April-June period, providing little impetus to prices, which continued to move sideways for the most part.

“With such absence of price pressure, the loss of housing affordability was minimal in the quarter. The RBC measures for the Calgary area rose between 0.4 and 1.1 percentage points, representing a smaller deterioration among major Canadian cities. Owning a home in the area, therefore, continues to be close to the most affordable that it has been in almost six years.”

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

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

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

“Notwithstanding the latest bout of uncertainty, we believe that the strong economic fundamentals of Alberta and Calgary will find their way into the housing market and will support homebuyer demand in the period ahead,” says the report.

RBC says the average bungalow price in Calgary declined by two per cent year-over-year in the second quarter to $411,700 while a two-storey dropped by 1.6 per cent to $415,200 and a condo fell by 1.1 per cent to $249,000.

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

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

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

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

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

“For the next few months or quarters I think chances are that affordability is probably will go sideways, the same as the housing market.”

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MLS sales and average prices are forecast to increase in Alberta this year and next year, according to the Canadian Real Estate Association.

In a new forecast released Tuesday, CREA said sales in the province will increase by 7.3 per cent this year over last year to 53,350 units and rise by another 6.8 per cent in 2012 to 57,000 sales.

The year-over-year percentage hikes are the highest in Canada in each of the next two years.

The association also predicts the average sale price in Alberta will jump by 1.5 per cent this year to $357,500 and by another 1.8 per cent next year to $364,000.

At the national level, CREA is forecasting overall sales across the country to increase by 0.9 per cent this year to 450,800 units but fall by 0.7 per cent next year to 447,700.

It is forecasting the average MLS sale price in the country to rise by 7.2 per cent this year to $363,500 and remain flat at $363,600 in 2012.

“Even though our stats are looking stronger this year over last it is still a buyer’s market with so much inventory to choose from,” said Tanya Eklund, a realtor with RE/MAX Real Estate Central in Calgary. “Pricing a home properly to begin with is very important.

“I am hopeful that the fall market will be stronger than the summer market has been as buyers will settle back into work from vacationing and be seriously looking to purchase. Next year’s market is hard to say as the U.S. economy is struggling. I am hopeful Alberta’s oil and gas sector will continue to bring strength to our real estate market.”

According to the Calgary Real Estate Board, there are 4,766 single-family and 2,068 condominium current active listings in the local MLS market.

According to CREB data, up to the end of July, there have been 8,380 single-family MLS sales in the city for an average price of $469,902 so far this year. Sales are up 8.0 per cent while the price has increased by 0.56 per cent compared with the same period a year ago.

In the condo market, year-to-date sales for the first six months of the year are 3,418, down 2.73 per cent, while the price is $288,548, down 1.22 per cent.

In July, CREA said Calgary had 1,975 MLS sales for an overall average price of $397,613. Sales were up 22.5 per cent from July 2010 while the price was down 1.3 per cent.

Across Canada, overall MLS sales for the month increased by 12.3 per cent from last year to 39,420 units while the average sale price jumped by 9.3 per cent to $361,181.

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Short-term and long-term expectations for housing starts in the Calgary region are positive, says the Conference Board of Canada.

In its Metropolitan Monthly Monitors report released Friday, the board said the seasonally-adjusted annual rate for housing starts for the Calgary census metropolitan area was 5,977 units in July.

Jane McIntyre, an economist with the board, said short-term expectations are based on residential permits data while long-term expectations are based on demographic requirements.

She said building permits continue to rise for Calgary.

“Over the longer term we look at economic fundamentals. Population. Economic growth. Employment. All those things,” she said.

“We look at the Calgary (economic) forecasts and we see over the next few years we’re going to have some stable growth and population still increasing. So as part of our housing starts forecast we have housing starts rising in Calgary over the next few years.”

The forecast is good news for the homebuilding industry as starts have fallen so far this year.

A year ago, the conference board said the seasonally-adjusted annual rate for starts in the Calgary CMA was 10,908 units.

According to Canada Mortgage and Housing Corp., year-to-date, up to the end of July, total housing starts in the Calgary CMA are down 27.6 per cent from the same period last year to 4,188 units. A year ago, builders started 5,783 homes in the region.

Year-to-date, single-detached starts have dropped 27.4 per cent to 2,857 units from 3,937 for the same period a year ago while multiple-family starts have fallen by 27.9 per cent to 1,331 units from 1,846 last year.

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Calgary’s housing market continues to gradually strengthen, with sales for July and the year-until-now up over last year.

Sales of single-family homes and condos neared 12,000 for the first seven months of 2011, a five per cent increase over 2010, but still 17 per cent below the 10-year average, the Calgary Real Estate Board reported Tuesday.

“I would underline the improvement is gradual and measured,” CREB president Sano Stante said. “We’re getting a good balance of listings and buyers. We’re not seeing too many buyers and no listings or too many listings and no buyers.”

“It’s more of a healthy recovery.”

For Jen Hosie, who will be moving into first home next month with husband Danny, the foray into the real estate market was smooth.

“It was very, very fast,” she said of a process that ended with the possession of a three-bedroom home in New Brighton. “I looked at 15 houses in one day and by the end of the day picked one I loved.”

After her husband had checked it out and also approved, they stopped looking.

“There were lots and lots to choose from,” she said of the housing selection. “And tons within our price range.”

The Hosies spent less than the average price of a single family home in July, which was just over $455,000.

Condo sales averaged just over $286,000.

Stante said prices remained relatively consistent with where they were last year, but he cautioned that some sellers, viewing the market a little too optimistically, were pricing their homes too high.

“Stuff that’s priced accordingly sells relatively quickly. There seems to be a good bit of product that’s not priced according to the current market that seems to be sitting,” he said.

Cody Battershill, with Re/Max House of Real Estate, said last month was his busiest July in about three years.

“It’s the craziest July I’ve had in years, even though in summer things slow down,” he said. “I think there’s optimism in the business community, in job growth.

“I think more people are buying, but the listing still has to be priced well to sell.”

According to the real estate board numbers, there were 11,798 sales in the first seven months of the year, up five per cent over the same period in 2010. If single-family homes are broken out, they rose eight per cent, while condo sales dropped by three per cent.

While the July numbers jumped over last year — condo sales were 14 per cent higher — Stante cautioned that last year was very slow for that month, as well as June.

He also pointed out that listings so far this year are lower than last year, leading to smaller inventories. That has dropped the condo inventory from a more than six-month supply last year just above four months this year.

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