Steady growth is forecast for Calgary’s housing market in the next two years, according to a new report released Monday by Canada Mortgage and Housing Corp.

The agency said MLS sales in the Calgary census metropolitan area will grow to 23,000 transactions in 2012 and to 23,700 in 2013 from 22,466 in 2011.

The CMHC said the average sale price will rise from $402,851 in 2011 to $409,000 in 2012 and $420,000 in 2013.

The optimistic forecast also translates into the new housing market.

The CMHC is predicting housing starts in the Calgary region to jump from 9,292 in 2011 to 10,300 in 2012 and 10,700 in 2013.

“Economic activity in Calgary will continue to support housing demand throughout the forecast period,” said Richard Cho, senior market analyst in Calgary for the CMHC. “Sustained investments in the energy sector will not only create jobs in the energy industry but also promote activity in other industries leading to more employment opportunities for job seekers. Employment levels in Calgary steadily rose in 2011 and the same is expected for 2012. As labour market conditions gradually tighten, we can expect to see higher migration flows to Calgary which is also an important driver for housing demand. In addition, favourable mortgage rates will also contribute to more sales in the new home and resale market.

“More single-detached and multi-family homes are forecast to break ground this year. In the past, elevated active listings in the competing resale market contributed to fewer single-detached starts. However, as the resale market becomes more balanced this year coupled with improving demand, we can expect to see more single-detached homes start construction. Multi-family construction will also pick up this year and next, mainly from higher apartment starts. Apartment inventories have come down from their elevated levels providing some builders an opportunity to start more projects and help satisfy demand.”

In Alberta, the CMHC forecasts housing starts to jump from 25,704 in 2011 to 29,100 in 2012 and 30,000 in 2013.

Provincially, MLS sales are forecast to jump from 53,146 in 2011 to 54,650 in 2012 and 56,550 in 2013. The average MLS sale price will rise from $355,808 in 2011 to $363,650 this year and $372,300 next year.

“Employment opportunities in the Prairies will continue to draw migrants, supporting new housing demand,” said Lai Sing Louie, the CMHC’s regional economist for the Prairie and Territories Region.

The CMHC report said net migration to Alberta is on an upward trend due to economic growth, job creation and low unemployment rates and the 2011 count will almost double 2010’s total of 19,613, which was a 15-year low. The CMHC estimates net migration in 2011 at 38,500 followed by 39,000 in 2012 and 39,500 in 2013.

“Over the forecast period, net migration will be close to the 10-year average with about 40,000 people added each year, increasing housing demand for rental and home ownership,” said the report.

It also said economic expansion is expected to continue supporting rental demand in 2012.

“Investments in the energy sector are promoting economic growth in Calgary, creating jobs and attracting migrants,” said the CMHC. “In addition, rental supply is not anticipated to see any large increases in the near future.”

It said the rental vacancy rate is expected to dip from 1.9 per cent in October 2011 to 1.8 per cent this year and to 1.6 per cent in 2013.

The average two-bedroom apartment rent is expected to rise from $1,084 in 2011 to $1,125 this year and $1,175 in 2013.

Todd Hirsch, senior economist with ATB Financial, said for over two years prices for newly-built homes in Calgary have remained basically unchanged.

He said it reflects stability in the housing market. Also, housing starts and existing home prices have shown similar patterns of stability in recent years.

“Alberta’s rising population and great labour market conditions are boosting housing demand. Yet that may be counter-balanced by the general belief that mortgage rates and prices will remain steady in the coming months. This may be reducing the urgency for potential buyers to jump into the market,” said Hirsch.

“This all suggests a fairly balanced, healthy market. The current stability eases any fears of inventory or price bubbles building — which pose much bigger problems when they burst.”

© Copyright (c) The Calgary Herald

A burgeoning population will spark another real estate cycle in Calgary with increased demand fuelling more MLS sales and more new home construction.

But industry experts don’t expect the next cycle to mirror the boom of a couple of years ago which experienced a frenzy of activity and fast-rising house prices due to a lack of supply.

Instead, a stable, steady growth is expected in Calgary’s real estate market.

On Wednesday, Statistics Canada reported the Calgary census metropolitan area had the highest rate of population growth in the country at 12.6 per cent between 2006 and 2011 and is now more than 1.2 million for the region.

Tim Logel, president and partner of home builder Cardel Lifestyles in Calgary, said the population data supports what the industry believes is happening in the market.

“What’s positive about it is that as more people move to Calgary then more of the inventory or the supply that we’ve been working on reducing gets absorbed,” said Logel. “And it gets absorbed quicker and gets us closer to being in a higher demand environment where we’re being asked to produce more new housing products of all types for the market … Over the next year with this in-migration, the extra supply will be absorbed.”

Logel said a new real estate cycle has been started in the city. The last one finished in the spring of 2007 in the Calgary market.

Ann-Marie Lurie, chief economist for the Calgary Real Estate Board, said the growing population will help support increased demand for housing in the resale market as well.

“In the resale market, especially moving forward, we think this will also help really take up some of that inventory that is in the market because we had some out-migration in the past few years. 2010 in particular, in-migration levels were extremely slow and so that impacted our housing market as well,” said Lurie.

CREB is forecasting single-family MLS sales activity to increase by 12.2 per cent this year from 2011 levels and condo transactions to jump by 5.9 per cent. Its forecast is also for average sale prices of single-family homes to rise by 2.1 per cent and by 1.7 per cent for condos.

“It’s much more of a stable growth than it was during the last boom. I just don’t see us moving there,” said Lurie. “We’re not moving into that scenario. It’s a much more stable growth and we have a good supply of inventory right now in the resale market and frankly on the new home market they do have some room to improve in some of their construction.

“They’ve got some room to grow and build more to help meet with those household formation numbers.”

Already in January some real estate data, released Wednesday, is indicating support for increased activity in the market as housing starts and residential building permits showed impressive increases compared with a year ago.

According to Canada Mortgage and Housing Corp., housing starts in the Calgary census metropolitan area totalled 786 units in January, up 52 per cent from 518 units a year ago.

In the region, 336 single-detached units broke ground in January, up 14.7 per cent from the 293 units started in January 2011.

“This represents the sixth consecutive month where starts have increased on a year-over-year basis,” said Richard Cho, senior market analyst in Calgary for the CMHC.

Multi-family starts, which include semi-detached units, rows and apartments, increased to 450 units in January, up from 225 units a year earlier.

“As was the case in the last several months, apartment construction continues to be elevated, averaging more than 340 starts per month since August 2011,” said Cho.

Also, the estimated construction value of building permit applications for the residential sector in Calgary rose by 42 per cent in January compared with a year ago.

In releasing its latest data on Wednesday, the City said residential values increased to $153 million compared with $108 million in January 2011. This represents 651 new residential units, a 73 per cent increase compared with the January 2011 total of 376.

“The overall gain in residential value and number of new residential units can be attributed to increases in the apartment and townhouse sectors,” said Kevin Griffiths, chief building official with the city’s department of development and building approvals.

“For the month of January we accepted six apartment applications for 193 new units compared to zero last year, and 20 townhouse applications for 122 new units, compared to only seven townhouse applications totaling 44 units for the same period last year.”

© Copyright (c) The Calgary Herald

The value of building permits in the Calgary region soared in December, according to the latest data released Tuesday by Statistics Canada.

The federal agency said permits in the Calgary census metropolitan area ballooned to $666 million during the month, an increase of 115.1 per cent from a year ago and up 100 per cent from the previous month.

In Alberta, total building permits rose to $1.3 billion, up 31.5 per cent on a monthly basis and an increase of 50.6 per cent on an annual basis.

Residential building permits in the province of $643.7 million rose by 7.0 per cent from November and jumped by 37.8 per cent from December 2010.

Non-residential building permits in Alberta increased by 69.2 per cent from November and by 65.6 per cent from a year ago to $661.9 million.

Across Canada, Statistics Canada said municipalities issued building permits worth $6.8 billion in December, up 11.1 per cent from November and up by 21.1 per cent from December 2010.

This is the highest level since June 2007.

The residential sector saw permits jump to $4.5 billion, up 16.1 per cent from November and up 19.4 per cent from December 2010.

The non-residential sector experienced a monthly increase of 2.8 per cent and a year-over-year hike of 24.3 per cent to $2.4 billion.

“In Calgary, the advance was largely due to construction intentions for commercial buildings and single-family dwellings,” said Statistics Canada.

Will van’t Veld, economist with ATB Financial, said much of the public infrastructure stimulus in Alberta is winding down so the “surge” in building activity in the province is likely related to “corporate optimism” — meaning corporations gearing up for increased activity in Alberta’s energy sector.

© Copyright (c) The Calgary Herald