Month: November 2011

Calgary Real Estate News

Alberta’s housing market most affordable in Canada: RBC Economics Calgary ranks among Canada’s most affordable cities

Alberta’s housing market is showing increasing signs of strength, due to impressive employment gains and a strong provincial economy so far this year, and remains the most affordable province in the country, says the latest Housing Trends and Affordability Report released Friday by RBC Economics.

“In the third quarter, provincial home resales and housing starts picked up some steam, reaching their highest levels in more than a year,” said Robert Hogue, a senior economist with RBC. “This renewed demand for Alberta’s housing was partly a result of being an easily affordable market – in fact, the most affordable in Canada.”

RBC’s housing affordability measures for Alberta – which capture the province’s proportion of pre-tax household income needed to service the costs of owning a home at market values – have remained the lowest among the provinces, said the report.

For a detached bungalow, the measure was 32.8 per cent in Alberta, down 0.8 per cent from a year ago. A standard two-storey saw its affordability measure fall year-over-year by 0.8 per cent to 36.0 per cent and a standard condominium also fell by 0.1 per cent from a year ago to 21.3 per cent.

For Calgary, the affordability measures and year-over-year change were: bungalow, 37.6 per cent (— 0.4 per cent); two storey, 38.2 per cent (— 0.7 per cent); and condo, 23.2 per cent (— 0.1 per cent).

At the national level, the affordability measures and year-over-year change were: bungalow, 42.7 per cent (1.1 per cent); two storey, 48.8 per cent (1.1 per cent); and condo, 29.0 per cent (0.4 per cent).

“Going forward, we expect that positive underlying fundamentals will continue to underpin home resale activity in the province,” said Hogue.

“Despite some slight deterioration in affordability, Calgary continues to be one of the most affordable major cities in the country.”

The RBC Housing Affordability Measure has been compiled since 1985. The higher the reading, the more costly it is to afford a home based on going market values. For example, an affordability reading of 50 per cent means that home ownership costs, including mortgage payments, utilities and property taxes, take up 50 per cent of a typical household’s monthly pre-tax income.

“The good news is that the Calgary market regained some momentum in the third quarter after somewhat of a lull in the second quarter,” said the report. “Both home resales and prices picked up again for most housing categories in the area. The Calgary market has been invigorated by strengthening local employment where more than 25,000 net new jobs (a 3.7 per cent increase) have been created so far this year.

“The flip side of renewed momentum, however, has been an erosion of affordability.” Compared to the previous quarter, the affordability measure for a detached bungalow in Calgary has risen by 0.5 per cent and by 0.2 per cent for a condo. It has dropped by 0.3 per cent for a two-storey home.

According to the Calgary Real Estate Board, year-to-date until the end of October, single-family MLS sales have increased by 9.89 per cent compared with the same period last year to 11,503 transactions and the average price is up 0.49 per cent to $468,844.

In the condo market, sales are up by 2.92 per cent to 4,681 transactions while the average sale price has dipped by 0.69 per cent to $288,736.

© Copyright (c) The Calgary Herald

Calgary Real Estate News

Calgary house prices increase 126% in past decade- Residential building permit value third highest in Canada

Strong in-migration, population growth and a vibrant oil and gas sector have pushed Calgary average house prices to an increase of 126 per cent in the past decade, says a new report released Monday by Re/Max.

The report said renovation spending and new construction have been “considerable” secondary factors propping up values throughout the city between 2000-2010.

The report also said the total value of residential building permits in the city during that period was the third highest in the country at $23.1 billion behind Toronto ($77.3 billion) and Vancouver ($35 billion).

“A few reasons I believe Calgary has seen such growth in the last 10 years is simple due to our strong economy from natural resources which has been a driving force in migration into Calgary for jobs,” says Tanya Eklund, a realtor with Re/Max Real Estate Central. “This has resulted in growing our population to well over one million, low unemployment rates, a strong GDP and the demand for housing.

“We are highly affected by inventory levels in real estate. When inventory is low and the demand is there, prices increase . . . We had a very balanced market in this time period and saw huge economic growth which proved significant gains in the housing sector.”

In Calgary, the average price rose from $176,305 in 2000 to $398,764 by year-end 2010.

The Re/Max Housing Evolution report said the average residential price in Canada rose by 106 per cent in the past decade, led by Regina which saw a hike of 173 per cent.

Regina was followed by Edmonton (165 per cent), Saskatoon (163 per cent), Winnipeg (158 per cent), Kelowna (156 per cent), St. John’s (149 per cent), Greater Vancouver (128 per cent) and Calgary.

The report said investment in Canada’s housing stock is at an all-time high in the 16 Canadian residential real estate markets surveyed.

“Revitalization, renovation and new construction have been largely underestimated in terms of overall impact on rising average price,” said Elton Ash, regional executive vice-president of Re/Max of Western Canada. “Yet, outside of supply and demand, these have been among the foremost variables influencing real estate values.

“Population growth is a central to housing evolution, supporting steady household formation, which in turn will boost revitalization, new construction and investment in Canada’s housing stock for years to come. Ultimately, a rising population bolsters the health of the real estate sector and fuels the trends that lead to continued average price growth on all fronts.”

A Housing Market Outlook by Canada Mortgage and Housing Corp. said many factors that support resale housing demand in Calgary have become or remained favourable this year, including growth in full-time employment, low mortgage rates and improved net migration.

“However, competing factors such as uncertainty in the global economy has kept some prospective buyers on the fence, and will continue to temper any large increases in sales,” said the CMHC.

The average price for a residential property in the Calgary census metropolitan area this year is forecast to be $402,000, up 0.8 per cent from 2010.

As the supply in the resale market moves lower and conditions become more balanced, stronger price growth is expected next year, said the CMHC.

In 2012, the average price is anticipated to rise 2.2 per cent to $411,000.

© Copyright (c) The Calgary Herald

Calgary Real Estate News

Brookfield Residential cites strong Canadian housing market

Brookfield Residential Properties Inc. says there is continued strength in the Canadian housing market.

“The Canadian operations are performing well as a result of the stable economy, and in particular due to continued strong job growth in Alberta,” said Alan Norris, chief executive of Brookfield Residential, in a statement, as the company on Wednesday announced its 2011 third quarter financial results for the period ended September 30.

Brookfield, a North American land developer and homebuilder with an office in Calgary, said the results “reflected continued strength in the Canadian markets while challenges remained in the U.S. markets.”

For the nine months, revenue totalled $644 million US compared with $655 million for the same period in 2010. For the three months ended September 30, revenue totalled $228 million compared with $240 million for the same period of 2010. Fewer home closings resulted in the decrease in revenue during the third quarter of 2011, partially offset by an increase in lot sales, added Brookfield.

Brookfield Residential’s net income for the three months ended September 30, totalled $19 million or 19 cents per share, compared with net income of $35 million or 29 cents per share for the three months ended September 30, 2010.

Net loss for the nine months ended September 30, was $19 million or 19 cents per share, compared with net income of $91 million or 75 cents per share for the nine months ended September 30, 2010.

Brookfield Residential comprises the assets formerly owned by Brookfield Office Properties’ residential land and housing division and Brookfield Homes Corporation. Brookfield Residential currently sells from 22 active land communities and 34 active housing communities. It is active in 10 principal markets with over 100,000 lots controlled.

© Copyright (c) The Calgary Herald

Calgary Real Estate News

Calgary described as Canada’s ‘hot growth mecca’

The big question for the future of Calgary’s commercial real estate market is whether the United States approves a new oilsands pipeline through Alberta and south of the border in the face of environmental challenges, says a report released Tuesday.

“A go signal could rev up the market to another level,” says the PricewaterhouseCoopers and Urban Land Institute’s new forecast in Emerging Trends in Real Estate 2012, a survey of experts in the field.

TransCanada Corp.’s $7-billion Keystone XL oil pipeline would transport hundreds of thousands of barrels of oil per day from the province to Texas Gulf Coast refineries.

The real estate report listed Canadian markets to watch and their prospects for commercial and multi-family investment and development. It rated Canadian cities on a scale from 1 to 9 or from abysmal to excellent.

For investment, Toronto led the country at 6.70 followed by Vancouver (6.61), Calgary (6.33) and Edmonton (6.24). For development, Vancouver was in the lead at 6.43 followed by Toronto (5.92), Calgary (5.64) and Edmonton (5.47).

“Canada’s hot growth mecca, Calgary can boom and bust suddenly,” says the report. “Down last year in the midst of a too-much-new-development ‘train wreck’, the city rebounds overnight with resurging regional energy companies.

“If you want to gauge Calgary’s prospects, just keep tabs on energy prices.”

For 2012, the Canadian real estate market recovery could taper off, only sustained by modest and “not stellar” income growth, says the report.

“Canadian consumers who have been on a spending and home-buying spree, encouraged by low interest rates, could see their self-assurance ebb and job growth has decelerated in response to all the noise about European and U.S. debt woes. Sensing a general slowdown, respondents to our survey are taking a ‘better-to-be-cautious’ investment approach for 2012,” said Lori-Ann Beausoleil, PwC Canada’s Real Estate Leader.

In its 33rd year, Emerging Trends in Real Estate 2012 reflects the views of over 950 of the real estate industry’s experts, including investors, developers, lenders, brokers and consultants in Canada, the U.S. and Latin America.

While the report calls for flat to slight growth in 2012, many of the Canadian interviewees believe “we’re more immune from shocks and less tied to the U.S. hip than ever before.”

Canadian respondents are concerned about overall jobs growth in 2012, says the report.

© Copyright (c) The Calgary Herald