Conference board predits home prices to grow most in Calgary area – 7% and higher forecast for year-over-year hike in short-term

Calgary and area is forecast to lead the country in short-term year-over-year price growth in the housing market, according to a report released Friday by the Conference Board of Canada.

The report said prices in the Calgary region are expected to rise by seven per cent or more.

The board’s report said Calgary is now in a sellers’ market.

The board said the seasonally-adjusted annual rate of sales in Calgary of 33,264 in August was up 6.3 per cent from the previous month and a 26.3 per cent hike from a year ago.

The seasonally-adjusted annual rate of listings at 43,704 was up 2.0 per cent from July and increased by 4.8 per cent from August 2012.

The board said the average price in Calgary of $441,806 in August increased by 0.7 per cent from the previous month and by 8.0 per cent from a year ago.

According to the Calgary Real Estate Board, year-to-date for just the city, there have been 17,933 MLS sales as of Thursday, up 9.33 per cent from the same period a year ago. The average sale price has jumped by 6.93 per cent to $456,779 but new listings are down 0.8 per cent to 25,943.

© Copyright (c) The Calgary Herald

Calgary and Vancouver lead Canadian housing market boom

Strong sales in Calgary and Vancouver led to a Canadian housing market boom in August as MLS transactions across the country were up 11.1 per cent compared with a year ago, according to the Canadian Real Estate Association.

In releasing its national data on Monday, CREA said sales in Vancouver were up 53.1 per cent from last year to 2,557 while Calgary transactions rose by 28.8 per cent to 2,830.

In Canada, total MLS sales in August were 40,350.

“The year 2013 has been a very strong year for the Calgary real estate market,” said Crystal Tost, a realtor with RE/MAX Realty Professionals in Calgary. “Earlier in the year we saw the market pick up as we transitioned into a sellers’ market as a direct result of low inventory levels. The market maintained strong with low inventory right through to spring. The summer months are traditionally a bit slower than spring months, but not for 2013. The market continued on with record sales without rest as inventory levels continued a downward motion into summer months.

“There is no doubt that the flood has greatly affected the housing market in Calgary not just for sales. Workers that have flocked to the city to aid in Calgary’s rebuilding and displaced people looking for temporary housing have exhausted the inventory in the rental market and in turn we are seeing rising rental prices. The raised rental market is making it sense for some first-time buyers to enter into the market. Bank interest rates are also on the rise. We are seeing many buyers out there with great interest rate holds nearing expiration so some of those buyers will be on a time crunch to save some money in interest.”

In August, Calgary had the highest growth year-over-year in the MLS Home Price Index, which tracks typical sales in nine major Canadian centres. Calgary prices rose by 7.39 per cent compared to the national aggregate of 2.92 per cent.

As for average prices, Calgary was once again a leader with an 8.1 per cent annual hike to $432,576, while Canada saw an 8.1 per cent hike as well to $378,369.

Ann-Marie Lurie, chief economist with the Calgary Real Estate Board, said the past two months have seen sales activity in the city shoot up higher than long-term trends.

“Both in July and August, those numbers were a little stronger. Part of that I think is due to the fact of the floods (in June),” said Lurie. “Because of that if you look at June we were running really in line with long-term trends — just above it. And then floods hit and in July and August we saw that activity increase. And some of that is from that demand being pulled forward.”

But other factors have also come into play in the local residential real estate market, she said, with stronger than expected migration this year.

“We still continue to have employment growth. The overall economic situation has done fairly well,” said Lurie. “That’s all the backdrop behind it as well. And wages have been increasing.”

There’s also the added possibility of increasing mortgage rates causing people to get into home ownership sooner.

In August, Alberta saw MLS sales increase by 17.8 per cent from last year to 6,124 while the average price rose by 7.1 per cent to $381,642.

On Monday, CREA also released its forecast for the rest of this year and 2014. It said Alberta MLS sales would grow by 6.2 per cent this year, the best in the country, to 64,100 and by another 2.3 per cent in 2014 to 65,600.

In Canada, sales are expected to drop by 1.0 per cent this year to 449,900 but expand by 3.5 per cent next year to $465,600.

The average sale price in Alberta is expected to rise by 4.8 per cent this year to $380,500, the second best growth rate in the country behind Newfoundland’s 6.1 per cent. Alberta is then forecast to lead the country in 2014 with 3.4 per cent growth to $393,300.

Canadian average sale prices are forecast to grow by 3.6 per cent this year to $376,300 and by another 1.7 per cent in 2014 to $382,800.

“Sales activity dropped sharply around this time last year in the wake of tightened mortgage rules and has improved since then, so a sizeable year-over-year increase this August was expected,” said Gregory Klump, CREA’s chief economist, about the national August sales data.

“Buyers who put off purchase decisions or who were otherwise sidelined by tighter mortgage rules and lending guidelines implemented last year were anticipated to return to the housing market. That said, the upward trend and levels for activity in recent months has been steeper than expected, but that may not last.

“Recent increases to fixed mortgage rates caused sales to be pulled forward as buyers with pre-approved financing at lower rates jumped into the market sooner than they might have otherwise. That pool of homebuyers has largely evaporated so demand may soften over the fourth quarter. The outsized year-over-year gains may persist, however, due to weak sales toward the end of last year.”

© Copyright (c) The Calgary Herald

Repeat home sale prices in Calgary see biggest Canadian gain

Prices for repeat home sales in Calgary rose by the biggest percentage in Canada in August compared with a year ago, according to the Teranet-National Bank House Price Index.

The index, released Thursday, said year-over-year price growth in Calgary was 6.5 per cent while in Canada, for the 11 centres surveyed, it was 2.3 per cent.

On a monthly basis, prices in Calgary were up 1.0 per cent. In Canada, they rose by 0.6 per cent.

The index for Canada rose to an all-time high in August.

Marc Pinsonneault, senior economist with the National Bank of Canada, said the 12-month gains in the five months ending in August were the smallest since November 2009.

“By way of comparison, the Case-Shiller home price index of 20 U.S. metropolitan markets was up 12.0 per cent from a year earlier in June,” he said.

In Canada, the price rise over the 12 months ending in August exceeded the cross-country average in six of the 11 markets: Calgary, Hamilton (5.5 per cent), Toronto (3.8 per cent), Quebec City (3.5 per cent), Edmonton (2.6 per cent) and Winnipeg (2.6 per cent). It lagged the average in Montreal (0.7 per cent) and Ottawa-Gatineau (0.3 per cent). Prices were down from a year earlier for a sixth straight month in Victoria (2.5 per cent), for a 13th straight month in Vancouver (0.1 per cent) and for the first time since September 1996 in Halifax (0.6 per cent).

This year’s August prices were up from July in six of the 11 markets surveyed. The gain exceeded the national average in five markets: Toronto (1.2 per cent), Calgary, Victoria and Hamilton (0.8 per cent) and Vancouver (0.7 per cent). It lagged the average in Ottawa-Gatineau (0.2 per cent). In five markets, the most since May, prices were down from the month before: Edmonton (0.2 per cent), Winnipeg (0.2 per cent), Montreal (0.3 per cent), Quebec City (0.9 per cent) and Halifax (1.6 per cent).

The Teranet — National Bank House Price Index is estimated by tracking ob­served or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation of the index.

© Copyright (c) The Calgary Herald

Canadian farmland values reach record levels

Canadian farmland values have reached record levels this year as demand has outpaced supply in most markets, says a report released Tuesday by RE/MAX.

But the report also said lower commodity prices are expected to temper appreciation in the coming months.

The RE/MAX Market Trends Report: Farm Edition 2013, highlighting trends and developments in 17 rural communities throughout Canada, found that limited inventory levels — reported in virtually all agricultural centres — continued to contribute to strong upward pressure on the price per acre in 88 per cent (15/17) of markets examined. Peak commodity values and low interest rates created the ideal climate for expansion over the past 12-month period, spurring unprecedented demand for farmland, said RE/MAX.

It said the price per acre in Central Alberta jumped from $2,000-$4,500 in 2012 to $3,400-$6,500 in 2013 while in Southern Alberta prices moved from $800-$6,500 last year to $800-$8,500 this year.

“The primary drivers in the market continue to be end-users — established farm operators expanding existing operations,” said Elton Ash, regional executive vice-president for RE/MAX of Western Canada. “Be it cashcropper or livestock farmer — the economies of scale continue to support expansion. There are many buyers waiting in the wings, but momentum is hampered to some extent by a shortage of farmland listings.

“Investors — both institutional and individual — are still active in Canadian agricultural centres, but their presence has subsided in recent months.”

© Copyright (c) The Calgary Herald

Value of building permits balloons in Calgary region – Up 116.2% from a year ago

Contractors took out building permits worth $843.9 million in the Calgary region in July, up 56.6 per cent from June, says Statistics Canada.

The federal agency reported Monday that permits were also up 116.2 per cent year-over-year in the Calgary census metropolitan area.

On a monthly basis, residential permits dropped by 4.92 per cent in Calgary to $328.8 million while non-residential permits rose by 166.6 per cent to $515.1 million.

Permits also rose to $1.6 billion in Alberta during July, up 19.1 per cent month-over-month and an increase of 50.1 per cent year-over-year.

In the province, residential permits of $818.8 million rose by 7.3 per cent from June and were up 29.8 per cent from July 2012.

Non-residential permits in Alberta saw a monthly hike of 33.9 per cent to $815.7 million or 78.0 per cent year-over-year.

Todd Hirsch, chief economist with ATB Financial, said there’s no denying the positive contribution that construction activity has on Alberta’s economy.

“Judging by the most recent statistics on building permits, it appears that our province can anticipate strong construction activity in the coming months,” he said. “July’s soaring building permits were driven mostly by non-residential projects, which jumped to $816 million. On a month-to-month basis, non-residential projects tend to display more volatility than residential permits simply because of the size and scale of certain projects. Commercial construction projects — such as office buildings and shopping centres — made up nearly all of the non-residential permits in July, increasing from $350 million in June to $626 million in July.

“But residential building is charging steadily higher in Alberta as well. Despite warning bells in other parts of Canada about over-valued real estate, Alberta’s home builders are in a more balanced position. House prices are rising, but not out of line with higher demand driven by in-migration and rising wages. That’s encouraging home builders to offer more choices onto the market for potential home buyers.”

Across Canada, Statistics Canada said contractors took out building permits worth $8.0 billion in July, up 20.7 per cent from June. It was the sixth gain in seven months. Year-over-year permits rose by 17.2 per cent.

The monthly total was the highest ever for a month, eclipsing the previous record of $7.7 billion in October 2012.

In the non-residential sector, the total value of building permits rose 45.5 per cent to $3.9 billion in July. It was up 51.9 per cent from last year.

Following a 12.8 per cent decline in June, the total value of permits in the residential sector increased 4.1 per cent to $4.1 billion in July. However, that is off by 3.4 per cent from a year ago.

“Residential permits didn’t regain full vigour, rising 4.1 per cent after a 12.8 per cent drop in June. But non-residential permits recorded a massive gain, led by an 89 per cent rise in commercial permits, across most provinces, with industrial permits also up 11.6 per cent after a huge June drop,” said Avery Shenfeld, chief economist with CIBC World Markets. “Overall, this volatile series still seems to have an upward trend heading into (the third quarter), suggesting that construction will still be a growth contributor in the near term.”

© Copyright (c) The Calgary Herald

Luxury condo sales boom, smashing records in Calgary – Sales of condos over $1 million already more than double this time last year

Luxury condo sales are booming in Calgary this year with MLS sales over $1 million already setting an all-time yearly record.

Year-to-date, until Wednesday, there have been 53 luxury condo sales in the city compared with 21 for the same period last year, according to the Calgary Real Estate Board.

The previous yearly record for most luxury condo sales was 36 in 2012.

Wynn Alex Carr, with Sotheby’s International Realty Canada in Calgary, has just sold an Eau Claire sub-penthouse condo for $2,862,500 — the second highest MLS recorded condo sale for this year. The sale closes on Friday.

“High-end buyers have refreshed confidence in Calgary’s upper-tier market and are committed to investing in Calgary’s buoyant real estate market. We are seeing more and more affluent buyers searching for that perfect piece of Calgary’s real estate — whether single-family homes or prestigious condominiums — offering exceptionally high levels of finishes,” said Carr. “People continue to relocate to Calgary for its strong business climate, cultural vibe and Calgary’s reputation for innovation and diversity. Affluent buyers are also taking advantage of continued attractive interest rates and gains in home equity.

“Our current luxury sales reflect the surge in demand. Calgary’s strong luxury condominium market performance is evident with the sale of 53 condominiums over $1 million with six selling for over $2 million for 2013. Buyers are snapping up properties in locations defined by select prime neighbourhoods or a specific luxury building offering lifestyle, walkability and easy access to downtown. This is yet another indication of Calgary’s real estate prowess as a leading economy in Canada.”

Three of the top five condo sales this year have been in the Eau Claire neighbourhood. According to CREB, up to Wednesday, the top sales were: Mission, $2,990,000; Eau Claire, $2,862,500; Mission, $2,790,000; Eau Claire, $2,580,000; and Eau Claire, $2,300,000.

The top five condo sales ever are: Eau Claire, $4,100,000, January 2011; Eau Claire, $3,700,000, October 2007; Mission, $3,290,000, July 2012; Mission, $3,190,000, November 2012; and Eau Claire, $3,050,000, January 2006.

The popularity in the luxury condo market is evident in yearly sales growth over the past decade. In 2004, there were only two sales at that price point and it jumped to six in 2005. But sales took a huge leap in 2006 with 29 transactions that year. Yearly luxury condo sales for the past few years are: 30 in 2007; 27 in 2008 and 2009; 21 in 2010 and 26 in 2011.

“We have a number of prospective buyers taking advantage of moving to the inner city,” said Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp. “Its proximity to various amenities makes it an attractive place to live. We have seen the selection of luxury condos rise in Calgary, giving buyers numerous options to choose from. This coupled with rising incomes and relatively low mortgage rates has helped support demand.”

© Copyright (c) The Calgary Herald

Calgary housing market booming in August – Records set for luxury home sales, median and average sale prices

Calgary’s red-hot housing market was sizzling in August as records were set for the most luxury home sales ever for the month, the highest median and average sale prices for the month and the second highest ever total MLS sales during the month.

The booming market was punctuated by another first near the end of the month. Last Friday, 12 luxury homes ($1 million plus) sold in Calgary — the most ever for a single day, according to Mike Fotiou, associate broker with First Place Realty in Calgary.

Preliminary figures by the Calgary Real Estate Board show total MLS sales for August of 2,196 in the city were up 27.53 per cent from last year; the average price rose by 8.80 per cent to $453,752; the median price increased by 6.40 per cent to $399,000; new listings were up by 7.39 per cent to 2,774; active listings were down by 24.80 per cent to 3,896; and days on market to sell fell by 17.78 per cent to 37.

Fotiou said the median and average sale prices were the highest ever for the month.

The record for most sales in the month was set in 2005 at 2,326, he said.

Fotiou said August had 64 sales in the $1-million plus price point, doubling last year’s total and a 68 per cent increase from the previous August record set in 2007.

At the end of August, year-to-date, there have been 524 luxury home sales compared with 370 for the same period last year, said Fotiou. In 2012, the annual record for luxury home sales was set at 544 transactions.

Grace Yan, a realtor with RE/MAX Real Estate (Central) in Calgary, said the real estate market rapidly changes from week to week.

“It is currently quite a strong sellers’ market. We are seeing properties go on the market then within a day will be sold with competing offers and at times I have seen properties that have gone competing offers and sold for $100,000 over list price,” she said, adding good properties that are listed at market value are sold quickly.

“We are finding that the market is currently buoyant due to the small ratio of listings. We still have quite a few people relocating to Calgary due to a strong job market and strong economy. Prices continue to rise as there is currently high demand and low supply of housing inventory. So when those good properties come on the market they are being snapped up fast.”

© Copyright (c) The Calgary Herald

Calgary condo price and sales growth forecast for 2014

Record growth is not in the foreseeable future of the Canadian condo market, but it is also likely the sector will be able to avoid a major downturn, according to the latest Conference Board of Canada condo report released Wednesday by Genworth Canada.

The Summer 2013 Metropolitan Condo Outlook suggests population growth and employment gains will help maintain demand levels to absorb supply inventory.

Calgary starts will be hampered in the third quarter by the flooding earlier in the year, but as the “youngest” city in the survey, it is expected to enjoy the highest growth in starts and resale volumes in 2014, with price growth at a moderate level of two per cent to 3.5 per cent over the next few years, said the report.

The report forecast the median price for a resale condo apartment in Calgary will rise this year by 2.8 per cent, the highest in Canada, to $251,237 and by another 3.3 per cent in 2014 to $259,640.

However, it is forecasting sales to drop by 11.6 per cent to 3,508 units this year but rebound by 10.2 per cent in 2014 to 3,867 sales.

“Whether it’s first-time homebuyers entering home ownership, empty nesters looking to downsize or professionals seeking a shorter commute, condos appear to remain a popular option for urban Canadians,” said Brian Hurley, chairman and chief executive of Genworth Canada.

The report said economic factors affecting the housing market, such as employment, interest rates and population growth, will only undergo moderate changes. Employment is expected to rise modestly in the medium-term and interest rates are expected to increase gradually, while population expansion and demographics will continue to support demand in regional markets.

“As condo starts near past averages and inventories edge closer to demand, we are seeing the condo market stabilize both in terms of the price of existing units and the volume of new construction,” said Robin Wiebe, senior economist at the Centre for Municipal Studies at the Conference Board of Canada. “Softer prices and positive economic factors continue to make condos an affordable way for Canadians to achieve home ownership.”

The report said condo sales in Calgary had been doing well before the flood, averaging over 3,900 units at an annual rate in the fourth quarter of 2012 and the first quarter of 2013.

“Active apartment listings had tapered off, hovering below 1,000 units in the fourth quarter of last year and the first quarter of 2013,” said the report. Still, for 2012 as a whole, active listings averaged 1,263 units, up 30 per cent from 2011. The flood has presumably damaged at least some actual or potential apartment listings. This will cut active listings in the third quarter by 10 per cent and lead to a 26 per cent decline in listings for all of 2013.

“The lower listings last autumn lifted the sales-to-active-listings ratio slightly above 35 per cent, its highest level since 2009 and likely approaching sellers’ market conditions. The ratio is forecast to stabilize near 34 per cent in the third quarter of 2013 and end the year at 31 per cent. A solidly balanced market featuring a sales-to-active-listings ratio between 33 and 35 per cent is our call for between 2014 and 2017.”

According to the Calgary Real Estate Board, year-to-date until August 27, there have been 2,767 MLS condo apartment sales in the city, up 14.20 per cent from a year ago. The median price has risen by 3.60 per cent to $259,000 while the average sale price has increased by 7.01 per cent to $297,954.

© Copyright (c) The Calgary Herald