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.