Calgary housing market ‘seriously unaffordable’ Vancouver rated as second most expensive market in the world

An international study on housing affordability lists Calgary’s market as ‘seriously unaffordable’.

The 9th Annual Demographia International Housing Affordability Survey, which covers 337 metropolitan areas in Australia, Canada, Hong Kong, Ireland, New Zealand, the United Kingdom and the United States, employs the median multiple to rate housing affordability.

The median multiple is the median house price divided by gross before tax annual median household income.

The report said Calgary “experienced a substantial increase” from the year before as its median multiple jumped from 3.9 to 4.3 in the third quarter of 2012.

The survey explains that a median multiple of between 4.1 to 5.0 is considered in the ‘seriously unaffordable’ rating. Anything 5.1 and over is considered ‘severely unaffordable’.

Calgary was ranked number 226 on the list of 337 markets for affordability with a median price of $358,400 and a median household income of $83,900.

In November, the Housing Trends and Affordability Report by RBC Economics Research, which measures affordability by capturing the proportion of pre-tax household income needed to service the costs of owning a home at going market value, said affordability eased in the Calgary area to multi-year lows in the third quarter of 2012. Early 2009 was the last time two-storey homes had a measure this low and the measure for condominiums is at its lowest level since late 2005.

In Calgary, the measure for a detached bungalow was 38.3 per cent, down 1.5 per cent from last year. A standard two-storey home saw its measure drop by 1.0 per cent to 39.3 per cent and a standard condominium fell by 1.8 per cent to 22.7 per cent.

According to the Demographia survey, Vancouver was rated as the second most expensive market in the world with a median multiple of 9.5 which included a median price of $621,300 and a median household income of $65,200.

The most expensive market in the world was Hong Kong with a median multiple of $3,810,000 and a median household income of $282,000.

The most affordable international market was Detroit with a median multiple of 1.5 which included a median price of $75,700 and a median household income of $49,800.

The most affordable Canadian market was a tie between Fredericton and Moncton with a median multiple of 2.3 which was ranked 20th overall in the world in terms of affordability. Fredericton’s median price was $150,400 and its median household income was $65,000 while Moncton’s median price was $141,800 and its median income was $61,900.

© Copyright (c) The Calgary Herald

MLS sales growth outside Calgary outpaces city in 2012

Home sales growth in the surrounding towns and cities far outpaced the growth in the city of Calgary in 2012, ending the year up 21 per cent, according to the Calgary Real Estate Board.

Overall in Calgary, MLS sales grew by 14.66 per cent in 2012 compared with the previous year.

“When we look back at 2012, we see stronger growth and sales activity in the towns than in Calgary,” said Becky Walters, CREB’s president. “We see double-digit sales growth for the year. We’re seeing price recovery, just like in Calgary, with prices being well below the peak levels we saw in 2007.”

There were 3,970 MLS sales in 2012 just outside Calgary with the single-family average sale price at $374,136, down 0.51 per cent from 2011.

The top three towns – Airdrie, Okotoks and Cochrane – all recorded double-digit sales growth.

Airdrie’s sales of 1,152 were up 22.55 per cent with the average single-family home sale price increasing by 2.53 per cent to $370,905.

Okotoks saw sales growth of 11.85 per cent to 585 transactions and the average sale price for a single-family home rose by 0.32 per cent to $415,415.

In Cochrane, year-over-year sales rose by 25.43 per cent to 508 and the average price for a single-family home dipped by 1.24 per cent to $426,127.

For the City of Calgary, the average price of all residential properties sold, 21,207 in total, was up 3.44 per cent to $428,655 in 2012 while the average price for a single-family home increased by 3.16 per cent to $481,236.

“The surrounding towns, in general, have done well, and that’s because people are looking for affordable alternatives,” said Ann-Marie Lurie, CREB’s chief economist. “In the surrounding towns, you can get more home than what you would get in the city. The homes are larger and usually less expensive, and, with a tighter supply of single-family homes in Calgary, the surrounding towns are just more attractive to homebuyers.”

© Copyright (c) The Calgary Herald

Calgary luxury home market sales growth best in Canada

Calgary led the country in 2012 in sales growth for the luxury home market, according to firm Sotheby’s International Realty Canada.

Ross McCredie, president and chief executive of the real estate company, said Calgary is the “best performing market in Canada right now in terms of growth.”

“The trend has been upward and we don’t see any sign of that changing for awhile,” said McCredie. “There’s more and more investment coming into Alberta. More and more people are moving there. You’ve got a range of jobs. It’s not just simply oil and gas companies that are investing there.

“In the rest of the country, there’s definitely a trend going west and Alberta is probably leading that trend in terms of companies investing in key offices across Canada as well as foreign companies coming in as well.”

He predicted double-digit sales growth for Calgary’s luxury home market this year which will outstrip the performance of other major centres across the country.

“Calgary is really starting to become a city of high net worth people and investment coming into the country,” said McCredie.

In its Top-Tier Real Estate Report, a biannual study highlighting market trends for the most expensive homes in Canada’s largest urban centres, Sotheby’s said the market for luxury homes is expected to gain momentum and “to generate increasing demand from both local and international buyers given strong economic fundamentals, historically low interest rates and a national unemployment rate that has hit a record four-year low.”

In Calgary, compared with the same July to December period in 2011, listings over $1 million were up 38 per cent and sales of real estate in the same category were up 21 per cent in the second half of 2012.

“The average days on market for homes over a million dollars increased slightly to 66 days and the percentage of properties selling over asking price dropped slightly to five per cent,” said the report. “High-end neighbourhoods like Elbow Park and Glencoe were among those to see strong demand.”

According to the Calgary Real Estate Board, the city experienced a record for MLS sales over $1 million each in 2012 with 544 transactions, eclipsing the previous record of 458 in the housing boom of 2007. In 2011, there were 446 luxury home sales.

In 2012, the luxury home market had 508 single-family home sales and 36 condo sales compared with 420 and 26 respectively in 2011.

CREB said 1,533 homes were listed for sale in Calgary over $1 million in 2012 — 1,408 single-family and 125 condo. In 2011, there were 1,352 luxury home listings — 1,253 single-family and 99 condo.

In 2007, the luxury home market had 1,242 listings for the year, comprised of 1,159 single-family homes and 83 condos.

“We saw such an increase in activity in the last two quarters of 2012,” said realtor Christina Hagerty, who recently joined Sotheby’s in Calgary. “The momentum was building up all last year and it continued over the holiday season. This should be a good indicator of the year ahead. With the dwindling supply, and the strong pulse on the street that ‘Calgary is where you need to be,’ properties priced at market, are selling. Buyers are not wasting any time. They have done their research and are ready to make an offer when the right one hits the market.”

© Copyright (c) The Calgary Herald

Alberta resale housing market tops Canada in annual sales growth – Forecast to lead the country again in 2013

Alberta will lead the country this year and in 2013 in the pace of growth in the resale housing market, according to a new forecast by the Canadian Real Estate Association.

The national association of realtors said Monday that Alberta MLS sales this year will finish up 13.1 per cent from last year to 60,800 transactions and sales will lead the country next year as well with 1.3 per cent growth to 61,600.

Nationally, sales are forecast to decline by 0.5 per cent this year to 456,300 and fall by another 2.0 per cent in 2013 to 447,400 transactions.

The Real Estate Investment Network in Canada is “hot” on Calgary’s potential and has ranked it the top investment city in Canada for 2013 to 2016, said Melanie Reuter, director of research for the organization.

“This ranking came as a result of extensive research into the underlying economic fundamentals driving Calgary’s economy as well as the current housing market’s response to these fundamentals,” she said. “The job market is strong and is poised to lead the country in job and population growth. Immigration from other parts of Canada as well as abroad is putting a steep downward pressure on vacancy rates and a strong upward movement on rents. This pressure is not predicted to ease significantly in the coming years.

“The high average-weekly-earnings in the city mean more disposable income in this PST-free province, which is creating a country leading consumer confidence level. This is creating further stimulation of the economy through consumer spending, which in turn brings increased employers, people, and demand for housing.”

The CREA forecast for sales in both Alberta and across the country is down from a previous forecast it released in September. At that time, the organization predicted Alberta annual sales growth of 13.8 per cent this year and another 1.7 per cent in 2013. For Canada, it had forecast sales to increase by 1.9 per cent this year but decline by 1.9 per cent in 2013.

On Monday, CREA said the average sale price in Alberta is expected to rise by 2.7 per cent this year to $363,100 and by another 2.3 per cent in 2013 to $371,300.

Across Canada, the national average sale price is forecast to increase by 0.3 per cent this year and next year to $363,900 and $365,100, respectively.

In November, Calgary MLS sales of 1,831 were up 10.6 per cent compared with last year while on the national level sales dipped by 11.9 per cent to 30,573.

The average sale price in Calgary rose by 3.8 per cent to $413,921 but fell by 0.8 per cent across the country to $356,687.

In Alberta, sales increased by 3.2 per cent to 4,034 transactions and the average price was up 4.3 per cent to $365,999.

“National sales activity has remained fairly steady at lower levels since mortgage rules were changed earlier this year, but that stability masks some real differences in trends among local housing markets,” said Wayne Moen, CREA’s president.

CREA on Monday also released its MLS Home Price Index of seven major Canadian markets. Regina’s annual price growth of 11.58 per cent led the nation followed by Calgary at 7.13 per cent.

The national aggregate price rose 3.5 per cent year-over-year, the seventh time in as many months that the year-over-year gain shrank and it marks the slowest rate of increase since May 2011.

David Madani, Canada Economist for Capital Economics, said the continued decline in existing home sales across Canaada supports its view that a potentially severe housing correction is underway.

“Assuming that sales continue to trend lower heading into next year, then sharper demand and supply imbalances will eventually lead to widespread home price declines,” he said. “We still think that house prices will decline by 25 per cent over the next year or two.”

© Copyright (c) The Calgary Herald