Calgary housing market experiencing positive momentum – Sales and prices forecast to rise

Calgary’s housing market is experiencing positive momentum and is a “lone shining star” in the Western Canadian real estate market, according to a report by TD Economics.

In the first edition of its Metro Beat, reviewing economic trends on a quarterly basis, TD called Calgary’s situation ideal in comparison to what’s happening in Vancouver with the resale housing market seeing sales decrease there by 26 per cent in 2012.

“(Calgary) was the only one among its peers to register positive sales growth in 2012 at 14.3 per cent,” said the report. “Calgary is also benefiting from a double digit increase in new housing starts (38.2 per cent), a sharp rebound from 2011. Residential building permits were up as well in the region, signalling more projects to come over the near term.”

TD said average home prices will rise from $411,927 in 2012 to $423,400 this year and then to $431,400 next year. Those include all residential homes in Calgary and surrounding region.

Last year there were 27,212 total MLS residential sales under the Calgary Real Estate Board’s jurisdiction — a hike of 18.84 per cent from the year before. TD said sales this year will rise to 27,700 followed by a slight dip to 27,500 in 2014.

Sonya Gulati, senior economist with TD Economics, said the economic growth overall in Calgary is quite strong.

“We’re seeing that in the housing figures. We’re seeing that in the employment figures,” said Gulati. “And that’s partly because the province is doing quite well from an economic point of view and Calgary tends to get the spillover there.”

Canada Mortgage and Housing Corp. is forecasting MLS sales in the Calgary CMA to grow by 1.37 per cent this year followed by another 2.59 per cent in 2014.

The average sale price is expected to rise by 2.59 per cent this year to $423,000 and by another 2.6 per cent in 2014 to $434,000.

© Copyright (c) The Calgary Herald

Nearly half of Baby Boomers have no intention of downsizing – Royal LePage report says single-family homes a popular choice

Despite the perception that aging Baby Boomers may create an oversupply of traditional single-family homes as they downsize into smaller residences, a new Royal LePage Real Estate survey, released Tuesday, shows that demand for suburban detached homes remains strong among Baby Boomers and Generation Y.

The poll, by Leger Marketing, found that of the 40.6 per cent of Baby Boomers (born between 1947 and 1966), who do have plans to move to another primary residence, almost half (43.5 per cent) are looking to purchase another primary residence that is a similar size or larger than their current property. Of the total responses from Baby Boomers who intend to purchase their next primary residence, 66.8 per cent said they will do so in the next five years.

“Baby Boomers are the wealthiest generation in Canadian history. They live in large homes with ample space for their many possessions. They love their garages and their yards. This study clearly indicates that contrary to popular belief, most Boomers do not intend to downsize anytime soon,” said Phil Soper, chief executive of Royal LePage Real Estate.

Male Baby Boomers, who are planning to move, are more keen on upsizing their residence than women, with 23 per cent reporting that they plan on moving to a larger residence compared with 12.1 per cent of women. Baby Boomers looking to purchase a condominium prefer less amenities and low maintenance fees (54.5 per cent) over properties that have many amenities (39.1 per cent). Seventy-eight per cent of Baby Boomers currently own their own homes.

According to the survey, a quarter of Generation Y lives rent free because of arrangements with family or friends, but that number climbs to 33.4 per cent in the Prairies, 29.7 per cent in Quebec and 27.2 per cent in Ontario.

“The adult children of Baby Boomers aren’t going anywhere fast. Good jobs have proven more difficult for them to find, they’re extending their studies and they’re living at home. It is no wonder the concept of swapping a family-sized home for a small retreat has lost its lustre,” said Soper.

Meanwhile, members of Generation Y (those born between 1980 and 1994), who plan to purchase their next residence, are most interested in single-family multi-storey homes (50.6 per cent) and bungalows (19.0 per cent). Only 15.7 per cent of Generation Y said they plan to buy a condominium or an apartment. In comparison, 22.9 per cent of Baby Boomers looking to purchase their next residence desire condominiums or apartments.

The survey found that more than half of Generation Y planning to purchase their next residence, intend to purchase in the suburbs (55.7 per cent) compared with the downtown core of a city (21.7 per cent).

“The young people who make up Generation Y are our first-time home buyers. Like their parents, they dream of owning a lovely house in the suburbs, which provides value as well as access to parkland for children to play and the perception of greater family safety,” said Soper. “Even as condominium living becomes more popular across Canada, the study results do not point to a corresponding decrease in demand for traditional single-family homes. For the Baby Boomers that do head downtown, there is a generation waiting to move in.”

Among Baby Boomers who plan to downsize when they purchase their next residence, the most popular reasons are to reduce maintenance (73.7 per cent), free up money for retirement (48.1 per cent) and for travel (30.9 per cent).

© Copyright (c) The Calgary Herald

Calgary listed as one of the more affordable housing markets in Canada – RBC report says city market experiencing a ‘renaissance

Calgary experienced a housing market renaissance in 2012, reaping the benefits of strong provincial GDP and in-migration, which propelled home resales in the area, says a report released Monday by RBC Economics Research.

The latest Housing Trends and Affordability Report listed Calgary as one of the more affordable housing markets in Canada.

“Calgary-area buyers enjoyed significantly lower home ownership costs as a share of income than they faced at the market peak in early 2007 and the bar fell even further in 2012,” said Craig Wright, senior vice-president and chief economist of RBC. “In fact, it is the only major city in Canada where RBC measures are lower than their historical averages, suggesting that Calgary is one of the more affordable markets in the country.”

Thanks to improvements in previous quarters, all RBC measures stood below their previous-year levels in the fourth quarter. There was some minor deterioration in the latest period, however, with the measure for detached bungalows rising by 0.2 percentage points. But the measure for two-storey homes remained flat, and that for condominium apartments fell by 0.1 percentage points.

The RBC housing affordability measures capture the pre-tax household income needed to service the costs of owning a home at market values.

In Calgary, the average price of a detached bungalow in the fourth quarter of 2012 was $440,600 and the affordability measure was 38.1 per cent. The average price for a standard two-storey home was $434,700 with a measure of 38.6 per cent and for a standard condominium the average price was $250,100 with a measure of 22.2 per cent.

“It’s an exciting time for buyers, borrowing is very affordable right now. I’m seeing this affect the first-time homebuyer and investor market the most lately,” said Shayna Nackoney-Skauge, realtor with RE/MAX Rocky View Real Estate.

“Last week we listed a house that is in relatively original condition in the Varsity area. Within the first eight hours we had 15 showings and two offers. Buyers are flocking to scoop up new competitively-priced listings and investors are quick to pick up well-priced homes for their lot value in high-demand inner-city areas. It’s definitely keeping us on our toes to keep up with what is coming on and off the market on a daily basis.”

RBC said Alberta’s housing market remained vibrant in the final quarter of last year, buoyed by attractive affordability levels, accelerating population growth, a healthy labour market and a strong provincial economy. Although the pace of home resales slowed in the closing months of 2012, the housing market tightened up as fewer properties were listed for sale, it said.

“While homes are not particularly cheap in the province, Albertans boast the highest household incomes in Canada, which helps ensure that the share of their budget taken up by home ownership costs is easily manageable,” said Wright. “Barring an unexpected shock to the economy, housing market conditions in Alberta should remain positive in 2013.”

The RBC housing affordability measures for the province fell across all three housing types tracked by RBC. RBC’s measures for the benchmark detached bungalow and the standard two-storey fell by 0.2 percentage points to 32.1 per cent and 34.7 per cent, respectively. The measure for condominium apartments fell by 0.1 percentage points to 19.7 per cent. Average prices were: bungalow, $357,900; two-storey, $378,800; and condo, $213,300.

Nationally, affordability measures dropped by 0.2 percentage points for both bungalows (42.1 per cent) and condos (28.0 per cent) and by 0.3 percentage points for two-storey homes (47.8 per cent). Average prices in Canada in the fourth quarter of 2012 were: bungalow, $363,400; two-storey, $410,600; and condos, $237,600.

© Copyright (c) The Calgary Herald

Calgary region to see MLS sales and prices rising for next two years – CMHC report says average price to hit $434,000 in 2014

The Calgary region can expect to see increases in both sales and average MLS prices for the next two years, according to a housing forecast released Friday by Canada Mortgage and Housing Corp.

The agency said sales in the Calgary census metropolitan area will grow by 1.37 per cent this year to 27,000 units followed by another 2.59 per cent growth in 2014 to 27,700 transactions.

The average sale price is expected to rise by 2.59 per cent this year to $423,000 and by another 2.6 per cent in 2014 to $434,000.

Christina Hagerty, a realtor with Sotheby’s International Realty Canada in Calgary, said she has had a very busy start so far to the year.

“With Calgary’s industries continuing to hire, I see many people coming from other Canadian centres and the U.S,” said Hagerty. “Specializing in the inner-city market, most of the people we meet are either job transfers and want no commute to work, first-time buyers and empty nesters.”

She said rental vacancy rates are at an all-time low and interest rates have remained historically low as well which have been factors in increasing housing demand.

“All the indicators are continuing to confirm our projections last year that Calgary will be leading the nation,” she said. “Affordable mortgages, record low vacancy rates, continued inward migration and low inventory going into the Spring market makes for a year of healthy growth ahead.”

According to the Calgary Real Estate Board, year-to-date until February 21, total MLS sales in the city of 2,498 are up 11.57 per cent compared with the same period last year and the average sale price has risen by 10.63 per cent to $448,635.

For Alberta, the CMHC is forecasting MLS sales to increase from 60,369 in 2012 to 61,000 in 2013 and to 62,400 in 2014.

In the province, the average MLS sale price is forecast to increase from $363,208 in 2012 to $371,200 this year and to $380,700 next year.

The CMHC report also forecast that housing starts in Alberta will fall from 33,396 in 2012 to 31,800 in 2013 but then rise to 32,200 in 2014.

In Calgary, starts are expected to fall from 12,841 in 2012 to 11,800 in 2013 and then rise slightly to 11,900 in 2014.

“The resale market in Calgary is anticipated to remain in balanced territory over the forecast horizon,” said Richard Cho, senior market analyst in Calgary for the CMHC. “Sales in 2013 are forecast to rise for the third consecutive year but at a more tempered pace compared to the previous year. Low mortgage rates, rising incomes and employment growth will continue to help support housing demand. Some sales will also come from renters who migrated to Calgary in the last couple of years.

“The average price has been gradually trending up, and is expected to continue in 2013. Active listings have declined, lowering the selection of available homes and putting pressure on prices.”

© Copyright (c) The Calgary Herald

Calgary housing market sales growth best in Canada MLS transactions rise 20.2% in January

While Canadian home sales dipped in January, particularly in major centres like Toronto and Vancouver, Calgary’s housing market remained strong and posted the best year-over-year growth in the country for MLS transactions.

The Canadian Real Estate Association reported Friday that Calgary MLS sales during the month were 1,572, up 20.2 per cent from January 2012 while sales across the nation dropped by 5.2 per cent to 23,579 transactions.

The average sale price in Calgary rose by 9.5 per cent to $418,938 while in Canada it was up 2.0 per cent to $354,754.

Calgary’s housing market has felt the benefit of an overall healthy economy in the past year.

“While the energy sector is still the most critical factor of growth within Alberta, growth has been tempered at the margin by the still-uncertain development of the pipelines going East and Keystone. That said, it’s still going to be a good year for Calgary and Alberta,” said Sydney Suchla, a realtor in Calgary with Century 21 Bamber Realty Ltd. “One of the biggest indicators of prosperity for our province is really the size of population we can expect for 2013. The housing market in Alberta has been improving and is expected to be one of the leaders in growth, although we still need to be cautiously optimistic as active listings are down … from a year ago (and) new listings being marginally lower from last year.

“But that’s not the real story. Vacancy rates, being at less than one per cent and rent increasing, is ultimately putting pressure on the housing market like we saw in 2005. City hall’s policies restricting new developments on the outlining parts of the city are also putting pressure on prices. The satellite cities are booming as a result. Single-family homes are seeing the most pressure on prices while the condo market tends to be six months behind. With declining economic activity in the rest of Canada, Calgary’s net migration tends to be stronger in such circumstances contributing to housing demand.”

Alberta had the best sales growth of any province in Canada in January with MLS transactions 12.1 per cent higher than last year at 3,486. The average sale price also grew by 5.5 per cent to $361,524.

And Calgary’s housing market is showing no signs of slowing down in February. Month-to-date from February 1-14, total MLS sales in the city of 847 are 11.01 per cent higher than for the same period last year and the average sale price has increased by 8.33 per cent to $455,386, according to the Calgary Real Estate Board.

“Economic activity in Calgary has been stronger compared to other regions in the country and many of the factors that support house demand has seen some impressive gains,” said Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp. “Employment in 2012 rose 3.7 per cent in Calgary, which was more than three times higher compared to the national average of 1.2 per cent. Average weekly earnings have also increased at a faster rate, and net migration for Calgary is at record levels. This in turn has helped our housing market outperform many other centres.”

Regions like Calgary, which are showing strong economic strength, are beginning to feel that reflected in the housing market, said Don Campbell, senior analyst and founding partner of the Real Estate Investment Network.

“Calgary’s economy, increasing rents, population growth and consumer confidence are all contributing factors to the performance of the market,” he said.

On Friday, the national real estate association also released its MLS Home Price Index of seven major Canadian centres. Regina led the country with an 8.82 per cent hike from a year ago followed by Calgary at 8.03 per cent. The aggregate indicated prices were up 3.12 per cent on an annual basis in the seven centres.

© Copyright (c) The Calgary Herald

New Calgary condo sales soared in 2012 26% increase from the previous year

New condo sales in Calgary in 2012 reached their highest level since 2006, according to a report by consulting firm AltusGroup.

The report said new multi-family sales were 4,180 units, which was 26 per cent higher than 2011’s 3,317.

Sales peaked in 2005 at 5,868.

“The strength in the market was felt equally in the downtown and suburban markets with both sectors of the market seeing increased demand in 2012,” said the report, authored by Matthew Boukall. “Particularly strong demand was seen for highrise condominium units in the downtown and townhouse units in the suburbs. The stronger sales seen in 2012 was a result of the introduction of new, affordably-priced projects which boosted the available inventory in the market and gave consumers considerable choice in terms of product, location, and price.”

The report said the new product entered the market as consumer and investor demand increased, with strong population growth, a strengthening economy and improved consumer confidence encouraging more consumers to purchase a new home in 2012.

It said sales activity was strongest in the downtown and inner-city market where over 1,800 new homes were sold, almost double the rate in 2011.

“Condominiums have been a good option for many buyers, especially those looking for their first home, or looking to downsize,” said Richard Cho, senior market analyst in Calgary with Canada Mortgage and Housing Corp. “With the decline in inventories for condos in the resale and new home market, along with some price growth, some buyers have decided to move ahead with their buying decision.”

AltusGroup said suburban townhouse sales were particularly strong during the year, accounting for 32.5 per cent of the sales in the market.

“The strong sales in the past year absorbed more units than were introduced into the market despite the more than 25 new projects, which introduced 1,600 new units into the market in 2012,” said the report.

“The key metrics to watch in 2013 will be the supply of available inventory and price movement of apartment product in the downtown region. Lower levels of inventory and higher prices are expected to modestly slow sales in 2013 to more historic levels with approximately 3,500 sales forecast for the year.”

In the resale housing market, the Calgary Real Estate Board statistics indicate condo apartment sales in 2012 rose by 11.53 per cent from the previous year to 3,501 transactions while the condo townhouse category saw sales increase by 16.09 per cent to 2,597 units.

© Copyright (c) The Calgary Herald