Although additional resale housing inventory is expected to hit the Calgary market in the spring, a new real estate report says it will be absorbed by strong consumer demand.

The report by Sotheby’s International Realty Canada, released Tuesday, said the outlook for Calgary’s real estate market is positive based on key economic indicators and demand is being “driven by low interest rates, tight rental and resale real estate markets and strong economic fundamentals.”

Ross McCredie, president and chief executive of Sotheby’s International Realty Canada, said Calgary’s marketplace demand is due to a number of factors including high incomes and strong net migration to the city.

“People feel pretty confident more than any other market in Canada in terms of the future of it,” he said. “The new product that’s out there, the existing product and if you look at all of the data that supports it, it’s not as if you have an over-supply of product . . . Calgary is not that big of a market compared to say Toronto or even Vancouver. You do have a significant demand out there. You’ve got a lot of people looking for high quality real estate. When people make money they typically try to buy real estate. That hasn’t changed.

“If you look at the Calgary market, probably more than any market you’ve got more pressure on supply than any market in Canada.”

According to the Calgary Real Estate Board, month to date from March 1-17, there have been 1,264 MLS sales in the city, up 13.26 per cent from the same period last year. But new listings of 1,782 are down by 1.44 per cent and active listings of 3,126 are off by 20.17 per cent.

The median price has jumped by 9.0 per cent to $433,000 while the average sale price has risen by 6.25 per cent to $482,307. And the average days on the market to sell a home has dropped to 27 from 35 last year.

“Low inventory and high demand from buyers have resulted in bidding wars, multiple offers and an increase in sales above asking prices for single-family homes both in the city and its surrounding areas. Low vacancy rates are also encouraging first-time buyers into the market, driving specific demand for homes in the $300,000 to $700,000 range with the effect trickling up to homes at higher price points,” said Sotheby’s Housing & Economic Outlook report.

“In recent years, Calgary has stood out as a pillar of strength among Canada’s major urban centres, bolstered by continued economic growth and record-breaking real estate market performance. This resilience helped the city’s housing market recover from the effects of widespread flooding that took place in June and July 2013, described by the provincial government as the worst in Alberta’s history.”

It said Alberta in the year ahead is expected to lead the country in total capital investment growth driven largely by oil and gas extraction and pipelines.

The report said anticipated regulatory approval of any one of the many proposed pipeline projects will also contribute positively to the momentum of the city’s economic performance in 2014.

The percentage of first-time home buyers in Calgary who are willing to break their budget for the right house is the highest in Canada, according to a new report by BMO.

The 2014 First-Time Home Buyers Report, released Tuesday, said 54 per cent of those in Calgary would do so compared with the national average of 33 per cent.

They are also expecting to pay more.

The report said 50 per cent of Calgary buyers say their time line has been delayed due to rising real estate prices and 68 per cent have made cutbacks to their lifestyle in order to save for their first home.

The BMO survey found that first-time buyers in Calgary have a budget of $363,400 for a new home. For Canadians, their budget this year is $316,100 which is up from $300,000 the year before. The BMO report did not look at budget expectations on a city level for its survey last year.

Laura Parsons, mortgage expert with the BMO Bank of Montreal in Calgary, said in Calgary many parents are helping their children get into homeownership.

“The biggest thing I’m seeing . . . they are just cautious and they’re afraid,” said Parsons. “I don’t think it’s too far out of their reach. There’s lots of condos available. Townhomes . . . But the like the up and coming Y Generation they are actually picky about where they move. They’re also cautious . . . It’s a big leap.

“What people are finding, especially the generation today, is they don’t even know how to get into homeownership.”

Parsons cautioned that first-time buyers should get pre-approved mortgages and not enter into something they can’t afford, particulary now in the Calgary market with low inventory levels raising overall prices and in some cases creating bidding wars for some homes that are for sale.

“Truthfully, I think the only thing in the way of most people getting out of renting is a strategy and feeling that they’re in control and they know what they’re doing,” said Parsons.

In February, the average MLS sale price in the city of Calgary was $482,530. It was $407,540 in Alberta and $406,372 in Canada.

The BMO report said first-time home buyers in Calgary expect to make a downpayment of 16.8 per cent. Also, 30 per cent are expecting parents/relatives to help with their purchase.

For Albertans, the price range for first-time buyers is $364,700, down from $378,685 last year, with a downpayment of 15 per cent. In Alberta, the survey said 37 per cent are willing to break their budget for the right house and 40 per cent have made cutbacks to their lifestyle in order to save for their first home. Also, 26 per cent in the province are expecting parents/relatives to help with their purchase.

Nationally, the average downpayment percentage has remained unchanged from last year at 16 per cent.

The report said 30 per cent of Canadian first-time buyers expect parents or family to assist in their purchase; 61 per cent have made cutbacks to their lifestyle in order to save for their first home; 60 per cent say their home-buying timeline has been delayed, with 39 per cent citing rising real estate prices as the main reason for delay.

“In a real estate market such as Canada’s, where prices have been consistently rising, those who put off their purchase need to ensure that the rate at which they are saving outpaces price gains. Otherwise, they may find themselves further behind in the long run,” said Parsons.

According to the Calgary Real Estate Board, year-to-date, until March 17, the following were the average MLS sale prices by category and percentage increase from the same period last year: total city, $476,079, 5.54 per cent; single-family, $541,364, 6.08 per cent; condo apartment, $318,790, 10.22 per cent; condo townhouse, $370,514, 12.39 per cent; and towns outside Calgary, $404,218, 13.29 per cent.

The following are the median prices: total city, $424,900, 7.57 per cent; single-family, $475,000, 12.29 per cent; condo apartment, $283,000, 10.98 per cent; condo townhouse, $332,545, 12.18 per cent; and towns outside Calgary, $378,500, 11.18 per cent.

Alberta will lead the country with the highest annual growth rate in prices over the next two years in the resale housing market, says a new report released Monday by the Canadian Real Estate Association.

CREA’s report said average MLS sale prices will climb in the province by 3.9 per cent this year to $396,000 and by another 2.5 per cent in 2015 to $406,000.

Nationally, prices are expected to rise by 3.8 per cent this year to $397,000 and by 1.1 per cent in 2015 to $401,400.

The association said Alberta will see annual sales activity increase by 0.8 per cent this year to 66,600 and then lead the country in 2015 with 3.9 per cent growth to 69,200 sales.

It said Canadian MLS sales growth is expected to be 1.3 per cent in 2014 to 463,700 units and 1.2 per cent in 2015 to 469,400 units.

In its report, CREA said Calgary continues to lead the country with 9.10 per cent year-over-year growth in the MLS Home Price Index in February compared with the national aggregate of 5.05 per cent for the 11 major centres surveyed.

Robert Kavcic, senior economist, with BMO Capital Markets, said Calgary’s housing market is “heating up quickly again” and the 3.5 months’ supply of inventory across Alberta matching the lowest level since 2007.

He said the benchmark prices in the city surpass the 2007 peak, “with a strong economy, demographics and tight supply helping.”

Robert Hogue, senior economist with RBC Economics, said Calgary and Edmonton are still among the few areas in the country “where supply appears to be tight relative to demand.”

In February, MLS sales in Calgary rose by 14.1 per cent from a year ago to 2,363 units. They were up by 1.8 per cent in Alberta to 4,595 and by 1.9 per cent in Canada to 31,677.

The average MLS sale price in February saw yearly increases of 4.9 per cent in Calgary ($460,338), 7.6 per cent in Alberta ($407,540) and 10.1 per cent in Canada ($406,372).

Diana Petramala, economist with TD Economics, said the overall Canadian existing home market continued to show signs of a soft landing in February as sales are 9.3 per cent below the peak levels reached in August 2013.

“The performance of Canada’s housing market over the last few months is largely reflective of a cooling in Canadian housing demand,” said Petramala. “Sales are moving at a pace that is neither too hot, nor too cold. A drop in interest rates over the first two months this year . . . will likely help contribute to a modest pick-up in sales activity in the months ahead, but activity is likely to remain below the robust pace of the last five years.

“The only thing that has not happened yet is a slowing in Canadian home price growth – but that too will likely come. For one, home price growth is being supported by too few homes for sale in many major markets – giving sellers more of the bargaining power.”

According to CREB, as of Tuesday, there were 2,893 active MLS listings in the city which was down 20.15 per cent from a year ago. Year-to-date, sales have increased by 11.77 per cent to 3,551 transactions.

Mike Fotiou, associate broker with First Place Realty, said Calgarians were so determined to buy a home in February that nearly one in five paid above the asking price.

“Of the 1,854 properties that sold during the month, 364 or 19.6 per cent of buyers paid higher than list price. Compare that to the 10.4 per cent of buyers from a year ago or the 6.1 per cent from February 2012 that paid above asking,” Fotiou wrote on his blog.

“As sales rise and inventory continues to decrease year-over-year, it’s to be expected that buyers will find themselves in more situations where multiple offers are involved.”