Calgary residential MLS sales in July experienced one of the highest year-over-year rates of growth in the country, according to data released Wednesday by the Canadian Real Estate Association.
Also on Wednesday, the Calgary Real Estate Board released its 2012 housing market forecast update saying the city has outperformed expectations this year after the first seven months.
The national real estate association said sales in Calgary of 2,502 transactions were up 26.7 per cent from July 2011. In contrast, MLS sales across Canada rose by only 3.3 per cent to 40,863 units.
And while the national average sale price dipped by 2.0 per cent to $353,147, in Calgary the average rose by 3.0 per cent to $409,670.
In July, new listings in Calgary dropped by 5.1 per cent to 3,573 while at the national level they rose by 1.4 per cent to 74,685.
CREB’s report said the Calgary area is still short of the peak pricing of 2007 and sales are returning to typical levels of activity.
CREB president Bob Jablonski said tight conditions in the single-family market have boosted sales in the condominium market and surrounding towns. And he said more new home starts have occurred because of the lower than expected resale inventory.
“Expectations are relatively bullish in the city despite overhanging global uncertainty. However, concerns in the oil sector and continued weakness in the natural gas sector are issues that will keep consumers wary. While consumers are aware of the economic risk when it comes to housing, many are thinking about job security and long-term potential,” said the CREB report.
“Based on activity this year, consumers are comfortable purchasing in a city where the long-term outlook is prosperous and the housing industry has yet to fully recover. While the pace of growth will likely cool over the second half of the year, the resale housing market will stay on the path to recovery into 2013.”
The local board is forecasting single-family home sales this year to jump to 14,800 transactions from 13,120 in 2011 and the annual benchmark price to move to $410,123 from $398,225 last year.
It is also forecasting condo sales to increase to 5,675 this year from 5,377 in 2011 and the annual benchmark price to jump to $240,585 from $239,676.
Ann-Marie Lurie, CREB’s chief economist, said Calgary is sensitive to significant changes in the oil sector and that has a “domino effect on employment, migration, consumer confidence and ultimately the housing sector.”
“Our fundamentals on the economic side are very strong . . . We have very strong GDP growth. We’ve got investments into our province and our city and this is creating full-time employment growth. Significant full-time employment growth. All of these factors are contributing to that growth in the housing market.”
At the national level, some first-time home buyers may have difficulty qualifying for mortgage financing due to shortened amortization periods included in recent changes to mortgage regulations, said Gregory Klump, chief economist for CREA.
“As the linchpin of the housing market, lower first-time buying activity will have knock-on effects over the rest of the market. It will likely take more time for move-up buyers to sell their current home,” he said.
The MLS Home Price Index, which tracks home price trends in five of Canada’s most active markets, rose 4.5 per cent year-over-year in July. The largest increase was in Greater Toronto at 7.1 per cent followed by Calgary (6.0 per cent), the Fraser Valley (2.5 per cent), Montreal (2.1 per cent) and Greater Vancouver (0.6 per cent).
CREA says these five markets comprise about 45 per cent of all home sales activity in Canada.
In Alberta in July, MLS sales of 5,819 were up 16.5 per cent from a year ago, the average sale price rose by 2.7 per cent to $363,924 and new listings fell by 3.3 per cent to 9,315.
Francis Fong, economist with TD Economics, said the recent slowdown in housing activity at the national level is a reflection of a Canadian household that is increasingly wary of taking on more debt.
“Job growth has effectively stalled over the last few months, owing to an uncertain outlook for the global economy,” said Fong. “Meanwhile, new mortgage lending rules are making it more difficult for Canadians to access credit, despite interest rates still at historic lows.
“TD Economics has been calling for a modest correction in housing activity to the tune of 10-15 per cent for some time. (Wednesday’s) report provides some evidence that that correction is now beginning to take place.”
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