Calgary poised to reach record highs for average home sale prices – Solid February MLS sales drive homebuying costs higher

A low inventory is continuing to drive resale housing prices upward with the city poised to set numerous all-time records from February MLS sales.

As the housing market comes to the end of another month, Calgary is on the verge of hitting new highs for average sale prices and median prices in both the overall city market and in the single-family sector.

According to the Calgary Real Estate Board, from February 1-26, the average MLS sale price for all city sales was $485,085, up 6.94 per cent from a year ago while the median price has jumped by 7.80 per cent to $425,000. Also, the single-family home market has seen the average price soar to $553,077, up 8.16 per cent from a year ago while the median price has risen by 10.98 per cent to $485,000.

“We are seeing record sale prices throughout the city and throughout various price points. Plain and simple, buyers are getting desperate,” said Tamara Pilipchuk, a realtor with RE/MAX Realty Professionals. “With low inventory and competing offers becoming more and more common, we are seeing buyers get more aggressive in their hopes to secure a property. My clients know that if an appealing property comes onto the market, we must see it within hours or they know to expect that it will be sold the same day that it is listed.

“Momentum appears to be continuing to build, especially in entry-level pricing of product in all neighbourhoods. With the median home price on the rise, first-time homebuyers and those looking to enter the market are finding the biggest challenges. There is a multitude of reasons as to why we are seeing record sale prices and all-time record highs. Coupled with record low vacancy rates, Calgarians look to purchase their own homes instead of renting because of rental prices skyrocketing. As well, investors have rejoined the buyer pool looking to purchase rental properties to capitalize on market conditions.”

According to CREB, the average monthly MLS sale price record for all city sales is $466,466 set in June last year and the median price record of $417,250 was set in January of this year.

For the single-family home market, the average sale price record of $527,634 was established in December of last year as was the median price record of $463,500.

“My clients have competed with nine and 10 other offers the first night of a property being listed which is indicative of how unbalanced the buyer pool is in comparison to inventory. Sales and home prices are rising, hitting all-time record highs. People see opportunity in the resale market as new construction and lot prices increase making building your dream home unattainable for many. Low interest rates, low unemployment rates, high net migration and a booming economy in our city is the cause of this upward trend,” said Pilipchuk.

So far this month, total MLS sales of 1,672 in the city are up by 7.59 per cent from the same period last year. New listings have increased by 1.37 per cent to 2,444 but active listings are down 19.24 per cent to 2,850.

Single-family sales have increased by 1.18 per cent to 1,114 but new listings are down by 5.11 per cent to 1,596 and active listings are off by 22.02 per cent to 1,852.

“In an unfortunate metaphor given last summer’s floods, Calgary’s housing demand dam has burst,” said Don Campbell, senior analyst with the Real Estate Investment Network. “Those sitting on the sidelines waiting for a lull, combined with renters who are witnessing dramatic rental increases in key areas of the city, are combining with regular housing demographic requirements to push the demand curve up much more quickly than the available listings.

“This strong seller’s market, in the heart of the winter, has pushed average sale prices up more quickly than would be economically expected. Given this, we should see sellers begin to move into the market to take advantage of this profit opportunity.”


© Copyright (c) The Calgary Herald

Alberta leads Canada through next wave of construction – Oilsands projects help push growth

A new report released Thursday says Alberta will lead Canada’s construction industry through the next decade, with major new oilsands projects and residential work driving job growth in virtually every year between now and 2023.

BuildForce Canada’s 2014-2023 Construction and Maintenance Looking Forward forecast said the pace of expansion has resumed, with construction employment across all markets growing past the 2008 peak by 2013.

Major resource and engineering projects lead non-residential job growth in every year over the next decade. The start-up of new major oilsands projects this year and hiring related to flood damage repair will boost hiring in 2014.

“While Alberta’s construction industry has adapted well to conditions to date, there may be recruiting challenges,” said Rosemary Sparks, executive director of BuildForce Canada, in a news release. “There’s stiff competition for skilled labour in other provinces, and meeting local needs won’t be easy. As retirements rise, we are also facing the potential loss of thousands of skilled and experienced workers.”

The report said Alberta will need to replace up to 45,000 workers, as up to 22 per cent of its workforce retires over the next decade.

It also said that Alberta leads the demand for skilled and specialized labour in major projects across Canada: the oilsands industry matures and capacity grows larger, shifting employment from new capital projects to increased ongoing maintenance work and sustaining capital projects over the long term; industrial, transportation, electricity generation and transmission and pipeline work add to labour demands with most of the current scheduled projects adding jobs from 2015 to 2019; commercial and institutional activity grows slowly from 2016 to 2019 and then provides a steady increase in jobs from 2020 to 2023; and residential construction spending and employment will exceed the 2007 peak, with a rise in renovations and repairs.

“Alberta’s skilled labour requirements far exceed those of other provinces, and that makes building a strong, permanent workforce a must,” said Sparks. “There’s a real need to continue promoting skilled trades careers as well as ensuring training and retention programs are sufficient to support the next generation of workers.”


© Copyright (c) The Calgary Herald

Calgary housing affordability improves despite high prices

Calgary is one of the few markets in Canada where affordability conditions look better than their historical norms, despite continued price growth, and it’s keeping housing in the city attractive relative to other major centres in the country, says a new report by RBC Economics Research.

The Housing Trends and Affordability Report, released on Tuesday, said homebuyer demand in Calgary continues to benefit from attractive affordability levels, a hot labour market, a fast-rising population and a booming provincial economy.

“This is not to say that home prices are cheap in the area – they are in fact the third-highest in the country after Vancouver and Toronto – it is instead a reflection of just how strong household incomes are in Calgary,” said Craig Wright, senior vice-president and chief economist for RBC.

The RBC affordability measures show the proportion of median pre-tax household income that would be required to service the cost of mortgage payments, property taxes and utilities.

In the fourth quarter, RBC measures for Calgary eased by 0.3 percentage points to 34.2 per cent for two-storey homes and by 0.2 percentage points to 33.8 per cent for bungalows. The measure for condominium apartments inched slightly higher by 0.1 percentage points to 20.0 per cent.

“Calgary’s housing sector remains strong and stable as demonstrated by the steady and encouraging rate of price growth alongside the consistent market activity and buyer confidence we are currently seeing, comparable to what we experienced last year. While prices continue to increase, buyer’s confidence and enthusiasm has remained unwavering, as sales activity consistently climbs alongside the housing prices this year,” said Kaitlyn Gottlieb, a realtor with Century 21 Bamber Realty Ltd. in Calgary.

“The luxury market continues to have a considerable influence on the upward sales curve coupled with Calgary’s continued growth economically; the upswing in oil and gas prices; and our substantial inner-city development. With another strong year of forecasted net migration, we are seeing an influx of multi-family housing, as infills and four-plexes take the place of previous rental properties, helping to drive up prices through new development in established inner-city neighbourhoods.”

Gottlieb said Calgary remains an affluent city with a strong economy, attracting higher than expected net migration and enticing both local and foreign investors with attractive interest rates, limited rental availability and high economic growth which is driving both prices and activity upwards as the market moves into the busy spring season.

In Alberta, affordability measures declined by 0.5 percentage points to 34.6 per cent for two-storey homes and by 0.2 percentage points to 32.7 per cent for bungalows. The measure for condominium apartments edged slightly higher by 0.1 percentage points to 19.9 per cent.

“Affordability levels in Alberta continue to compare favourably against both historical averages in the province and nationally,” said the RBC report. “We expect that constructive affordability conditions, a booming provincial economy, and strong population growth will continue to fuel demand for housing in Alberta in the year ahead.”

Nationally, the affordability measures for both bungalows and two-storey homes edged lower by 0.2 percentage points to 43.1 per cent and 48.7 per cent respectively. The measure for standard condominiums fell 0.1 percentage points to 28.0 per cent.


© Copyright (c) The Calgary Herald

Calgary housing prices forecast to rise in short-term – Year-over-year growth of 5-6.9% predicted

 The short-term expectation for year-over-year MLS price growth for the existing home market in Calgary is one of the highest in Canada, according to a report released Monday by the Conference Board of Canada.

The board said Calgary housing prices in the short-term can expect to see annual growth in the range of five to 6.9 per cent as the city is in a seller’s market at this time.

The report said the seasonally-adjusted annual rate of sales in the city in February was 29,844, up 6.6 per cent from January and 13.7 per cent year-over-year.

However, listings of 39,564 are down 3.8 per cent both on an annual and a monthly basis.

The price in February was up to $455,785, representing a 5.8 per cent hike from a year ago and a 1.4 per cent increase from the previous month.


© Copyright (c) The Calgary Herald

Sizzling Calgary housing market remains hot – Annual price hike the highest in Canada

Calgary’s sizzling resale housing market is showing no signs of cooling as the city recorded the highest year-over-year hike in prices across the country in January – and early indications show February is experiencing a continued escalation in what it costs to buy a home.

The Canadian Real Estate Association released its monthly MLS data on Friday and listed Calgary as the top centre in the country for annual growth in the MLS Home Price Index at 8.98 per cent. Nationally, prices, in the 11 centres surveyed, rose by 4.83 per cent.

Crystal Tost, a realtor with RE/MAX Realty Professionals in Calgary, said the city’s housing market has started 2014 with a bang. The market has not slowed down at all from the healthy pace it set in 2013.

“We are seeing multiple offers in all price points. Obviously the lower the price point, the larger pool of buyers there is and hence a greater likelihood of multiple offers in the lower price points,” she said.

But it’s also taking place in the luxury market with 63 homes sold for more than $1 million and eight of those sales involving bidding wars, including a $3.5 million home, added Tost.

“Eager buyers that want to find a home will have to make sacrifices to get to the homes the day they are listed in order to have a chance at buying the home of their dreams. While true average days on market are currently at 40 days, this is not the case in most sales,” she said. “Homes that offer a good location, in desirable areas, priced reasonably will sell in hours to a few days in the current marketplace.”

In January, CREA said Calgary MLS sales of 1,802 were up 14.6 per cent from a year ago while in Alberta they rose by 5.6 per cent to 3,681 transactions. Across Canada, there were 23,636 sales, up 0.4 per cent.

The average MLS sale price in Calgary in January rose by 6.0 per cent to $444,153 while in Alberta it was up 7.3 per cent to $388,073. In Canada, the average of $388,553 represented a 9.5 per cent hike from a year ago.

According to the Calgary Real Estate Board, between Feb. 1-13, there have been 794 MLS sales month-to-date in Calgary, which is up 2.72 per cent from the same period a year ago. The average sale price of $496,665 has increased by 9.35 per cent and the median price is up by 8.42 per cent to $428,250. Active listings of 2,717 are down 19.47 per cent while new listings are off by 1.57 per cent to 1,253.

Tost said in-migration to the city continues to contribute to the already busy real estate market and there is more activity from move-up buyers who have the ability to upgrade because of more equity in their homes now as the prices have gone up.

“With an estimated 30,000 people moving to Calgary for 2014 our housing market and rental markets will remain strong throughout the balance of the year,” said Tost, adding the current market is not ideal for buyers.

“It places so much stress on them to make fast decisions, life changing decisions on a 10-minute visit to look at a home. Sellers still have to be mindful when pricing their home. Smart savvy buyers won’t over pay on an overpriced home, but are more likely to bid in a bidding war on a home that seems like a fair offering.”

Francis Fong, senior economist with TD Economics, said January was the fifth consecutive month in which sales have fallen across the country, marking the longest string of monthly declines since the recession in 2008.

“No doubt the frigid temperatures and heavy snowfall across much of the country prevented many from diving in to the January market,” said Fong. “As such, when the spring thaw . . . makes its way across Canada, a bounce back in sales activity would be entirely unsurprising. Indeed, the upcoming spring market could get an additional boost as prospective buyers lock-in to the recent pullback in mortgage rates.”

Doug Porter, chief economist with BMO Capital Markets, said Canadian home sales are coming back down to earth after a short-lived burst last summer.

“Of the 26 biggest cities, 13 reported double-digit moves from a year ago, with seven on the plus side and six on the downswing,” said Porter, adding that prices remain surprisingly sturdy.


© Copyright (c) The Calgary Herald

Allied Properties REIT continues Calgary buying spree – Art Central and Fashion Central buildings transformed

Calgary has become an attractive place for commercial real estate investment for Toronto-based Allied Properties REIT.

In fact, the bulk of the company’s Canadian acquisitions in 2013 took place in the city and its president and chief executive says Allied foresees continued growth in its Calgary portfolio.

“The consolidation in Calgary has been very successful for us,” said Michael Emory, president and chief executive of Allied, who was in Calgary this week. “We wouldn’t have expected going in, to be honest, that we’d be able to put together such a good concentration of properties so quickly. But we have. It’s gone very well. We like the market . . . We’ve really been pleased with what we’ve been able to accumulate here.”

Allied’s first acquisition in Calgary was the downtown Lougheed Building in the second half of 2010. Today, it owns 19 properties in Calgary with 915,834 square feet of rentable area. In January, it announced the acquisition of two additional properties which are scheduled to close later this month, increasing the number of properties to 21 and the rentable area to just over one million square feet.

“Basically what Allied does is acquires office property that is either in or very close to the core. That’s number one. Number two, has very distinctive internal and external attributes. And third, is available to our tenants at lower overall occupancy costs. It’s anywhere from 35 per cent to 50 per cent lower than the cost in the conventional office towers,” said Emory.

“If we look at 2013, the bulk of our growth was actually in Calgary and so far this year we’ve announced three acquisitions, two of them are in Calgary. We’ve announced about $90 million in acquisitions and about $60 million are here . . . Our coming here has given the owners of these kinds of assets the opportunity to achieve liquidity and they’ve taken advantage of it. I hope to see continued growth . . . and we’re very keen on the Calgary market.”

A couple of Allied’s downtown Calgary properties are undergoing transformation. The Art Central building, which was acquired in 2011, is set for demolition to begin in July to make room for an office and residential skyscraper.

Fashion Central, which was also bought in 2011, could have its name changed after the concept of several retailers under a fashion theme – by the previous owner – has not worked out.

Fashion Central has 27,183 square feet of rentable area, 18,408 square feet of which is used by retail tenants and 8,775 square feet by office tenants. There are six retail tenants on the main/street level and five retail tenants on the lower level.

“It really wasn’t working well on the second level for retail users. There wasn’t enough traffic prepared to go up to a second level in order to give the retailers the volume of activity they needed,” said Emory. “What we have done is we took the retailers who were up there, who wanted to stay in the building, down to the main level and the level below. Then we basically made from the second floor up office space and it’s a very high-end, high-calibre office environment.”

The change in focus for the building has Emory contemplating a change in the building’s name. A possibility is to call it the Alberta Block, which is the historic name of the building, but Emory said the REIT is in discussions with tenants on their input.

“If the retail tenants think it’s important to continue to name the building Fashion Central, we will,” he said. “If it’s a matter of indifference to the tentants then we’d prefer to change it to the Alberta Block . . . It’s a bit of a misnomer. It isn’t Fashion Central. There are other parts of downtown that might legitimately call themselves Fashion Central. This building can’t really carry the name to be very honest.”

Susan Thompson, business development manager of real estate for Calgary Economic Development, said the older-type buildings typical of Allied Properties portfolio provide tenants with a “funky character space that some smaller creative businesses like.”

“Obviously that’s going to attract a certain type of company,” said Thompson. “They’ll love that price point. And they’ll love the look and the feel of that space.”


© Copyright (c) The Calgary Herald

High demand lifting Calgary region housing market – Outlook strong for increased starts, sales and prices

A high level of demand will continue to lift housing starts, MLS sales and average house prices this year in the Calgary region, according to a report released Thursday by Canada Mortgage and Housing Corp.

The agency’s first quarter 2014 Housing Market Outlook said housing starts in the Calgary census metropolitan area will reach 14,100 units in 2014 before declining to 13,500 in 2015. They were at 12,584 last year.

The report said a record level of migration in 2013 will help lift MLS sales from 29,954 in 2013 to 31,300 units in 2014 and to 32,100 in 2015 and the high level of demand is expected to be met by more supply which will help lift the average price from $437,036 in 2013 to $449,000 in 2014 and to $460,000 in 2015.

“Calgary has experienced a large inflows of people and employers are projected to continue to expand their payrolls. This will be an active year for the Calgary real estate market,” said Lai Sing Louie, the CMHC’s regional economist for the Prairie and Territories Region in Calgary.

The level of MLS sales is below but approaching the record of about 33,000 transactions in 2006.

“Tight conditions in the resale market will have some buyers looking to the new home market to meet their needs this year. By 2015, it is expected that supply levels in the new home market and a wider selection of listings in the resale market will help moderate new construction activity.”

CMHC is forecasting the rental vacancy rate in the Calgary region to climb from 1.0 per cent in 2013 to 1.2 per cent this year and to 1.5 per cent in 2015. It also forecasts the average rent for a two-bedroom apartment to rise from $1,224 in 2013 to $1,280 this year and to $1,320 next year.

“Calgary’s housing market is one of the strongest in the country, and is expected to remain so for the foreseeable future,” said Ben Brunnen, an economic consultant in Calgary. “The increased demand for housing is being driven by strong fundamentals such as robust population growth, low vacancy rates, high rents, and growing wages. These underlying conditions provide confidence that the price and sales growth we’re seeing right now are economically sustainable.

“Looking ahead, with the low Canadian dollar and stronger housing demand in the U.S., watch for price appreciations in the cost of new housing, which could put increased pressure on Calgary’s housing market.”

The Calgary and Alberta housing markets will be buoyed in the coming years by strong net migration numbers. CMHC estimates net migration to the province in 2013 will be 103,000 people followed by forecasts of 71,000 in 2014 and 63,000 in 2015.

In Alberta, after reaching 18,431 units in 2013, single-detached starts are projected to increase to 19,100 in 2014 and remain near this level at 18,800 in 2015. After increasing to 17,580 units in 2013, multi-family starts in Alberta are projected to rise further to 18,000 units in 2014 and then moderate to 17,600 units in 2015, said the CMHC.

In the resale market, MLS sales are projected to rise from 66,080 units in 2013 in Alberta to 68,500 in 2014 and to 70,100 in 2015. The average MLS price in the province will increase from $380,969 in 2013 to $391,100 in 2014, and then rise to $401,000 in 2015.


© Copyright (c) The Calgary Herald