Alberta expected to outperform national housing markets – Tight supply conditions to lift prices

Alberta will likely outperform national housing markets in 2014, says the new Global Real Estate Trends report released Friday by Scotiabank Economics.

“Relatively firmer employment and income gains and strong population growth are expected to underpin modestly higher home sales and steady new construction, while tighter supply conditions lift prices,” said the report authored by Adrienne Warren, the bank’s senior economist and real estate specialist.

The report said Canada’s housing market in 2013 outperformed expectations. The end-year tally for national home resales will be largely on par with 2012 and in line with the average pace of the past decade, it said.

National prices are on track for roughly a five per cent annual gain “with the average skewed higher by the strong sales rebound in several high-priced markets, including Vancouver and Calgary.”

According to the Calgary Real Estate Board, year-to-date up to Thursday, there have been 23,172 MLS sales in the city, up 10.92 per cent from the same period last year while the average sale price has risen by 6.54 per cent to $456,849.

The report said “a moderately lower level of resale transactions” is expected nationally in 2014. But steady job and income gains combined with strong population growth in the key first-time homebuyer demographic will continue to underpin housing demand.

“Overall market conditions are expected to remain fairly well balanced, with sellers responsive to underlying market conditions,” said Warren. “We expect national average home prices will be relatively flat next year. Downside price risk is greater in the more amply supplied high-rise segment than for single-family homes.

“The risks to the Canadian housing market appear fairly balanced. Cautious business hiring, muted wage growth, high household debt levels and affordability pressures could lead to a sharper slowdown in housing activity in 2014. At the same time, gradually improving global growth, still-attractive borrowing costs and population growth in key demographic segments are supportive of housing demand.”


© Copyright (c) The Calgary Herald

Calgary home price growth doubles national average: CREA – Year-over-year hike of 8.82% best in Canada

Calgary year-over-year home price growth was the best in Canada in November and more than doubled the national average, according to the Canadian Real Estate Association.

The association’s MLS Home Price Index, released on Monday, said prices in Calgary have risen by 8.82 per cent from a year ago while in Canada, for 11 major centres surveyed, they were up by 4.11 per cent.

The index tracks benchmark prices in Canada’s housing markets.

CREA said MLS sales across Canada in November rose by 5.9 per cent to 32,411 units. They were up by 18.7 per cent in Calgary to 2,173 units and increased by 13.1 per cent in Alberta to 4,563 sales.

The average sale price in Canada was up by 9.8 per cent to $391,085 and increased by 7.5 per cent in Calgary to $445,114 and by 5.3 per cent in Alberta to $385,217.

CREA also released a revised residential market forecast on Monday. It said sales in Alberta this year are projected to reach 66,300 units, which is a 9.8 per cent hike from the previous year and the best growth rate in the country. Sales will rise an additional 3.5 per cent in 2014 to 68,600 units.

Across Canada, the association is forecasting 0.8 per cent growth this year to 458,200 sales and 3.7 per cent growth in 2014 to 475,000.

As for the average sale price, CREA is projecting it to rise by 4.9 per cent this year in Alberta to $381,100 followed by 3.4 per cent growth, the best in Canada, in 2014 to $393,900.

Across Canada, the association is forecasting 5.2 per cent price growth this year to $382,200 and 2.3 per cent growth in 2014 to $391,100.

“In staggering contrast to the dire forecasts early this year, precisely one of the 26 largest cities in the country has reported a drop in average prices so far this year — Victoria, with a minuscule 0.6 per cent sag,” said Doug Porter, chief economist with BMO Capital Markets. “All of the other 25 cities have recorded single-digit price gains, with the median city posting a non-threatening 3.6 per cent rise.

“When judged by total sales volumes, a measure that combines both price changes and the number of units sold, the hottest markets this year have been Calgary, Edmonton, and, against all expectations Vancouver. All three reported double-digit volume increases, the only cities in that category.”


© Copyright (c) The Calgary Herald

December weather not deterring Calgary homebuyers – MLS sales on the rise while listings fall

The weather outside may be frightful but it hasn’t had an impact on December’s residential real estate market in Calgary as sales continue to outpace last year’s numbers.

In fact, despite recent winter storms, with their dropping temperatures and dumps of snow, sales in the city are actually higher than new listings this month making it a strong sellers’ market right now.

Bryon Howard, realtor with RE/MAX House of Real Estate in Calgary, said the city’s real estate market currently is characterized by a lack of inventory and good demand.

“We’re seeing multiple offers. Anything that’s priced well is selling,” he said. “The market’s great.

“I think for certain you’ll see prices move up this month.”

According to the Calgary Real Estate Board, total MLS sales in the city so far this month, up until Thursday, were 546 transactions, up 14.95 per cent from the same period a year ago. New listings of 511 are up by 1.19 per cent. Active listings of 2,865 are down 18.77 per cent.

The tight market has pushed sale prices higher this month than a year ago. The median price of $406,000 is up by 7.98 per cent while the average sale price has risen by 0.91 per cent to $457,758.

“We’re in a strong seller’s market,” said Howard. “We have no reason to think that’s going to change based on everything we know in terms of in-migration to the province and Alberta (economic) forecasts. It shouldn’t change too much.”

Howard said that while many people think nothing happens in real estate in the month of December he’s always felt it was a good month to sell.

According to CREB, the last time the city has had more sales than listings was December 2012. Before that, it was 2006. Right now, it’s looking like this December will be the 12th time since 1990 when sales eclipse new listings and seven of those have been in December.

The highest-ever sales-to-new-listing ratio was December 2005 with 1.299 sales for every listing. This year it’s sitting in fourth overall at 1.140.

So far this year, November has had the highest sales-to-new-listings ratio at 0.95.

The record for the average MLS sale price in December was set last year at $436,899 when there were 1,082 transactions for the month.

The record for total MLS sales during December was set in 2006 at 1,718 transactions.


© Copyright (c) The Calgary Herald

Calgary region sees declining rental apartment vacancy rate

The rental apartment vacancy rate in the Calgary region continues to fall.

Vacancy was one per cent in October, down from 1.3 per cent last year, in the Calgary census metropolitan area, according to the Fall Rental Market Survey released Thursday by Canada Mortgage and Housing Corporation.

“As was the case in recent years, the rental market in Calgary has continued to tighten. The vacancy rate declined for the fourth consecutive year,” said Richard Cho, senior market analyst in Calgary for the CMHC. “Calgary’s labour market continues to attract migrants from other regions in Canada and other countries. We are expecting net migration to reach another record high this year. Demand for rental units has also come from people who were impacted by the flooding earlier this year, and from gains in youth employment.

“The supply in the purpose-built rental market universe has also declined, which has also contributed to the decline in the vacancy rate. Moving forward, we are expecting to see similar conditions next year, with the vacancy rate edging higher to 1.2 per cent. Movement into homeownership, competition from the secondary rental market, and a moderation in migration, will contribute to the slight increase.”

The CMHC said the average two-bedroom rent increased by 7.2 per cent in Calgary. One-bedroom units reported an increase of 7.7 per cent, while the fixed-sample rent for three-bedroom units rose 3.1 per cent year-over-year in October.

In new and existing structures, the average two-bedroom rent in the Calgary CMA was $1,224. The highest average two-bedroom rents were reported in the Downtown and Beltline, averaging $1,357 and $1,287 per month in October, respectively, said the report.

The CMHC survey included 33,933 apartment rental units, down from 34,212 a year earlier, and represented the 10th consecutive year that the apartment rental universe in the Calgary CMA has declined on a year-over-year basis.

“Additions to the supply of purpose-built rental units since the last survey were outpaced by condominium conversions, demolitions and units moving into social housing,” said the report. “Other removals which are temporary in nature, such as units undergoing renovations and repairs, have also contributed to the decline in the apartment rental universe in 2013.”

Gerry Baxter, executive director of the Calgary Residential Rental Association, said the association has seen the rental market tighten this year.

“It’s been tightening for the last couple of years,” said Baxter. “We’ve been noticing it. It’s continuing.”

But he said the city is still not as low as it was during the height of the boom a few years ago when the vacancy rate fell to 0.5 per cent.

“At least the decreases are more gradual than what we saw back in the boom time,” said Baxter. “For that I’m relieved and happy that that’s the way it’s gone because the last time was as hectic as anybody would see in a market.”


© Copyright (c) The Calgary Herald

Calgary housing prices forecast to stabilize in 2014

The Calgary Real Estate Board is forecasting house prices and sales to continue to grow in the resale market in 2014.

On Tuesday, the board released its preliminary forecast, saying prices are expected to rise by 4.3 per cent next year and MLS sales are expected to climb by 3.6 per cent from 2013.

Ann-Marie Lurie, CREB’s chief economist, said strong migration levels over the past two years have combined with strong employment and wage growth to support further gains in 2014.

According to the board, year-to-date up to Monday, there have been 22,710 MLS sales in the city which is a 10.97 per cent hike from the same period a year ago. The median price has risen by 5.30 per cent to $400,150 while the average sale price is up by 6.51 per cent to $456,762.

Lurie said both sales and price growth this year exceeded expectations.

CREB’s full annual forecast takes place January 15.


© Copyright (c) The Calgary Herald

Calgary region housing starts soar in November – New home construction up 71% from last year

Housing starts in the Calgary region soared in November, sparked by a surge in new multi-family construction, according to Canada Mortgage and Housing Corp.

The agency reported Monday that total starts in the Calgary census metropolitan area jumped by 71 per cent from a year ago to 1,693 units during the month.

Multi-family construction rose by 129.2 per cent year-over-year to 1,098 units while single-detached starts were up 16.4 per cent to 595 units.

“There was an elevated level on residential construction in November, primarily due to higher row and apartment starts,” said Richard Cho, senior market analyst in Calgary with CMHC. “Relatively low inventories and continued demand for housing has contributed to the gains recorded last month.

“Despite the increase, multi-family starts in 2013 are forecast to remain below 2012 levels, but rebound in 2014. Multi-family starts in 2014 are forecast to rise, reaching 6,600 units.”

CMHC said housing starts were trending at 13,949 units in November compared with 12,547 in October. The trend is a six-month moving average of the monthly seasonally-adjusted annual rates of total housing starts.

“The trend in total housing starts increased in November for the fifth consecutive month, primarily due to an elevated level of multi-family construction,” said Cho.

Year-to-date, total starts in the Calgary region of 11,688 are down by 2.4 per cent compared with the same period last year. Multi-family construction is down by 12.9 per cent to 5,701 units but single-detached starts have risen by 10.2 per cent to 5,987 units.

Nationally, housing starts fell three per cent in November to 192,200 annualized units.

“Alberta, however, surged to just shy of the best level since early 2008 — starts in that province are up 7.1 per cent year-over-year through November, best in Canada, as demand and price trends continue to outperform,” said Robert Kavcic, senior economist with BMO Capital Markets.

According to CMHC, total urban starts in Alberta year-to-date are 30,141, up from 28,481 for the same period last year. Single-detached starts have risen to 15,035 from 13,973 last year while multi-family starts have jumped to 15,106 this year from 14,508 last year.


© Copyright (c) The Calgary Herald

Calgary strongest major housing market in Canada: BMO – Sellers have upper hand on prices

 Calgary has reclaimed its title as the strongest major housing market in the country after correcting several years ago, says a new report released Thursday by BMO Economics.

The report, Canadian Housing Update: Tale of Four Cities, examined the state of the housing markets in Canada’s four largest cities: Vancouver, Calgary, Toronto and Montreal.

Sal Guatieri, senior economist with BMO Capital Markets, said listings are lean in the city, giving sellers the upper hand right now on prices.

“Three main factors. Strong economy. Strong population growth. And good affordability. Those are all driving Calgary’s housing market now and likely in the future,” said Guatieri.

“We don’t see bad things happening to Calgary’s economy any time soon, barring a big drop in oil prices for example. And we think Alberta for one will definitely lead economic growth perhaps for the next couple of years riding the energy boom. As a result, Canadians from across the country will likely continue to migrate to Alberta and Calgary looking for work. That can always support the housing market.”

According to the Calgary Real Estate Board, year-to-date up to Wednesday, there have been 22,489 MLS sales in the city, up 10.85 per cent from a year ago. New listings of 31,366 are up by 0.75 per cent but active listings of 3,034 are down 19.27 per cent. So far this year, the median selling price of $400,000 has increased by 5.26 per cent while the average sale price of $456,680 has risen by 6.60 per cent.

“Calgary’s resale housing market has been strong this year,” said Ben Brunnen, an economic consultant in the city. “A lot of people are moving to our city and finding that rents are high but the economy is good. Under these conditions, homeownership makes sense.

“Unlike the last housing market expansion a lot of current homeowners are staying put, which keeps inventories low. Strong confidence in Alberta’s economic prospects and the threat of higher housing costs in the future could also be pushing more people into the market.”

The BMO report said new home construction has picked up but housing starts have barely kept pace with an exploding population.

“Inventories of new homes are very low, while benchmark prices are climbing the fastest among major cities and have now all but retraced the 16 per cent collapse from 2007 to 2009, said BMO.

Guatieri said that despite “heady price gains” they remain reasonable at about four times the median family income and mortgage costs “consuming a manageable” 23 per cent of earnings.

“About half of the increase in prices is supported by rising income. Hourly wages in Alberta are up 4.4 per cent year over year in the first 10 months of the year, double the national rate,” he said.

BMO said immigrants and young Canadians are flocking to the city, drawn by better job prospects, faster wage growth, and healthier housing affordability than in Vancouver and Toronto.

“Strong economic and population growth will encourage an upward trend in Calgary’s house prices, though higher borrowing costs will moderate the gains,” added Guatieri.

The report listed Calgary’s median family income at $100,500. The other three cities surveyed had median family incomes of $72,400 in Toronto, $72,800 in Vancouver and $73,200 in Montreal.

The ratio of house prices to annual family income in Calgary was 4.1. It was also 4.1 in Montreal, 6.6 in Toronto and 8.3 in Vancouver.

The mortgage service costs as a percentage of family income were: 23.1 in Calgary, 39.3 in Toronto, 50.2 in Vancouver and 23.1 in Montreal.


© Copyright (c) The Calgary Herald

Staying put: More than half of homeowners in floodways reject offers to relocate

Close to 60 per cent of Alberta homeowners who live in provincially designated floodways have rejected the government’s offer to relocate their homes, according to new figures released Monday.

The province wrapped up its application period for disaster recovery funding for flood-affected homeowners and businesses on Nov. 30.

By deadline, close to 10,000 Albertans applied for funding, including 1,380 small businesses.

The province has so far paid out almost $175 million in preliminary disaster relief to help municipalities and First Nations start to rebuild.

According to the province, 101 homeowners who live in areas designated floodways — about 40 per cent of the total 254 homes — have expressed interest in the province’s offer to relocate.

So far, 46 offers have been accepted, at a price tag of $42 million.

The policy has come under criticism from some flood-affected homeowners inside and outside the floodway zone who question the maps it’s based on and how effective it will be if only a home here or there takes up the offer to move.

Homeowners who reject the offer won’t receive DRP support if another flood strikes down the road.

Other provincial flood statistics highlights:

— More than 9,860 Albertans have applied for funding through DRP. The province will accept applications postmarked by the November 30 deadline.

— More than 7,600 DRP applicants have had at least one on-site assessment.

— Nearly 4,000 DRP payments have been issued to applicants totalling close to $25 million.

— More than 2,100 DRP applications are on hold awaiting assessments from insurance companies.

— There are just over 1,000 people still out of their homes and living in temporary accommodation, including:

— 565 in the Saddlebrook temporary neighbourhood in High River;

— 69 in the Great Plains temporary neighbourhood in Calgary;

— 326 in relief shelters on the Siksika First Nation; and,

— 49 people in hotels or other accommodations.

— Of the 985 kilometres of provincial roads closed due to flood damage, 909 kilometres (92 per cent) have reopened.

— Three schools remain closed due to flood damage, affecting about 900 students. In High River, 42 modular classrooms are in use by about 700 students. Twelve more modular classrooms have been completed in Calgary and will soon accommodate about 200 more students.

— Over 500 submissions have been made to the Heroes of the Flood program. The deadline for nominations is December 20, 2013.


© Copyright (c) The Calgary Herald

Low inventory pushes up Calgary house prices in November

 A low inventory of active listings combined with increased sales has pushed Calgary home prices once again in an upward direction to a record high in November.

Statistics from the Calgary Real Estate Board indicate MLS sales in November rose by 18.74 per cent year-over-year to 1,730 transactions with the average sale price increasing by 5.56 per cent to $458,053 and the median price climbing by 8.50 per cent to $406,875.

The average sale price is a record for the month, eclipsing the $433,931 set in November 2012. The all-time high for any month is $466,495 in June this year.

Although new listings rose by 11.70 per cent to 1,823, active listings at the end of the month of 3,156 were down 17.62 per cent from a year ago. And days on the market to sell a home fell by 22 per cent to 39.

“Throughout the fall we have seen the market stay consistently strong as it has for the rest of 2013, with quick sales turnover and a low inventory of homes actively on the market. Coming into the winter months and even into the new year it doesn’t look like the market’s going to slow down backed by Calgary’s striving economy,” said Megan McCormick, realtor with Century 21 Bamber Realty Ltd.

“Prices and sales have continued to quickly rise with a large majority of new homeowners joining the marketplace, many leaving the tight rental market sooner than anticipated. A booming economy, record high employment rates, and homeowners being displaced by the flood are also pushing this high demand of Calgary homebuyers.”

According to Mike Fotiou, associate broker with First Place Realty, November set another record for luxury home sales as 50 properties sold in the $1-million plus price range, breaking the monthly record of 48 set last year. It’s the 10th straight month of a new monthly peak.

Fotiou said there have been 689 luxury home sales this year until the end of November, up 36.4 per cent from the 505 recorded for the same period in 2012. The previous annual record was 544 set last year.

In November, CREB’s stats show single-family home sales were up 18.99 per cent to 1,197 with the median price rising by 8.33 per cent to $455,000 and the average sale price increasing by 5.76 per cent to $516,447.

The condo apartment category saw sales of 305 during the month, up 20.55 per cent from last year. The median price rose by 3.85 per cent to $270,000 but the average sale price dropped by 1.1 per cent to $307,078.

In the condo townhouse category, sales increased 15.15 per cent from last year to 228. The median price was up 7.15 per cent to $310,150 and the average sale price rose by 12.07 per cent to $353,445.

Sales in the towns outside of Calgary rose by 17.78 per cent to 318 with the median price up by 8.64 per cent to $368,250 and the average sale price up by 15.61 per cent to $392,022.

CREB tracks what it calls benchmark prices for typical properties sold in the market. The benchmark prices in November with their year-over-year change were: total MLS city, $424,600, 9.21 per cent; towns, $347,900, 5.62 per cent; single-family, $470,600; 8.53 per cent; condo apartment, $279,600, 12.74 per cent; and condo townhouse, $305,700, 8.10 per cent.

Ann-Marie Lurie, CREB’s chief economist, said the low inventory in the Calgary residential market is a result of continued strong sales.

“It’s continued to push down inventory,” she said. “The level of new listings adds to supply and it hasn’t kept pace . . . Basically demand hasn’t let up.

“Another factor is also what’s happening in the new home sector. When you do tend to see inventory start to increase significantly sometimes it’s because there’s just too much in the new home market too . . . But because we’ve had such a strong influx of people and there’s been enough demand, even what they’re doing in the new home sector isn’t enough to push up inventory levels.”

Scott Bollinger, broker with the ComFree Commonsense Network, said what’s really striking about this month’s numbers is the big drop in inventory.

“New listings are up, for sure, but not enough to close the gap,” he said.

“Fall – well, let’s be honest, winter – timing is partly what’s at play here. It’s a low-volume time for Calgary real estate and even the bullish numbers can’t coax homeowners by the thousands into selling when it’s cold and snowy, especially when they’re confident the market will be just as strong in the spring. Most homeowners don’t want to sell and move during the winter, and that’s as good a reason as any that low inventory will persist till the snow melts.”


© Copyright (c) The Calgary Herald