Housing market continues growth Starts, sales and prices rise, CHBA says

Housing starts, sales and prices continue to climb in Calgary and area, says an economic analysis report by the Canadian Home Builders’ Association-Alberta.

Housing starts in Calgary continue to be up year-over-year, shows the report prepared by Richard Goatcher, economic analyst for CHBA-Alberta.

For the fifth consecutive month, total housing starts in Calgary and surrounding communities increased on a year-over-year basis in February. Total starts of housing of all kinds reached 1,270 units, up 42 per cent from last February.

For the first two months of the year, total starts sit at 2,598 units, up 61 per cent during the first two months of 2013.

Single detached houses in Calgary and area increased in February by 15 per cent to 559 units from a year earlier. In the first two months of 2014, shovels were in the ground on 1,010 single-family units in Calgary alone, up nine per cent from the first two months last year.

From a recent low in 2008, of just over 4,000 single detached starts, the trend has been climbing over the past six years to just over 6,000 starts last year. This is still shy of 2006’s starts, which tallied about 10,500.

Calgary’s new homes continue to increase in price, Statistics Canada’s new house price index shows. They increased in price by seven per cent year-over-year in January, the largest since April 2007. This index of contractor selling prices was up on average by 5.3 per cent in 2013, the largest increase in Canada.

Meanwhile, Canada Mortgage and Housing Corp. reports the average absorbed (sold) new house price for Calgary and area increased by almost 14 per cent from a year earlier in January to $585,359. The number of homes selling for under $450,000 decreased during this time.

Residential MLS sales in Calgary increased in February year-over-year for the 11th month in a row. Sales of MLS-listed homes were up by 14 per cent from a year earlier to 2,363 units. Home sales were up by 14.3 per cent from the first two months of 2013 to 4,165 units.

 

 

Conference Board sees little evidence of housing bubble in Calgary

There is not much cause for alarm about a housing bubble in Calgary despite the sharp growth in prices for the city’s resale market, says a new report released Monday by the Conference Board of Canada.

The board’s initial Housing Briefing: Bubble Fears Overblown report said improvements in energy markets have boosted sales in Calgary’s resale market, and the market is approaching sellers’ conditions. Sales have not fallen on a year-over-year basis since April 2011 and price growth accelerated sharply last year.

“Fears of a housing bubble hinge on the ratio of house prices to apartment rents and house prices to incomes,” said the report. “The Conference Board’s view is that while these ratios are high, they are also misleading. Better indicators of affordability are the ratio of mortgage payments to rents and mortgage payments to incomes, and neither presents much cause for alarm about a housing bubble.”

A recent report by RBC Economics Research said 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. The Housing Trends and Affordability Report 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.

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.

According to the Calgary Real Estate Board, month-to-date from March 1-20, the average MLS sale price in the city was $484,711, up five per cent from the same time last year while the median price has increased by 7.5 per cent to $430,000.

The conference board’s report said the ratio of housing starts to population growth in Calgary has been below its 20-year average in four of the past five years. Relatively high incomes have sustained demand for single-detached units in Calgary. But multiple starts are rebounding solidly.

“Although the 2013 flood hampered starts, skewing historical comparisons, developers enjoy decent prospects,” it said.

The board’s initial report assessed six major Canadian markets – Vancouver, Calgary, Edmonton, Toronto, Ottawa and Montreal.

The report said that nationally, and in some local markets, Canadian house prices may be headed for a modest decline, but fears of a housing bubble are exaggerated.

“Mortgage costs, not just house prices, are the principal deciding factor for potential homebuyers,” said Robin Wiebe, senior economist with the board’s Centre for Municipal Studies. “Mortgage rates are expected to rise this year, but not dramatically, because the Canadian economy remains in a slow-growth mode.

“The housing market may be undergoing a correction in some regions and market segments, but it is more likely to be a soft landing than a bubble bursting.”

 

Continued strong consumer demand driving Calgary housing market – Pressure on supply of homes for sale

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.

 

© Copyright (c) The Calgary Herald

First-time homebuyers willing to break budget for right house – Rising real estate prices force many to cut back lifestyle

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.

 

© Copyright (c) The Calgary Herald

Home price growth best in Alberta over next two years – Forecast sees annual hikes of 3.9% and 2.5%

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.”

 

© Copyright (c) The Calgary Herald

Calgary homebuyers return to housing market bidding wars

Prospective Canadian homebuyers are more willing to enter into a bidding war this year for properties they want to purchase, says a new report released Wednesday by BMO.

And Calgary’s hot housing market is proving to be a good example of that as nearly 20 per cent of MLS residential sales in the city in February were for above list price.

The BMO Home Buying Report said 34 per cent of Canadians are willing to enter a bidding war when it’s time to buy a home, an increase of six points, or 21 per cent, from a year ago.

The report, conducted by Pollara, said that in major city centres, the appetite for competitive bids is the highest in Toronto and Vancouver (44 per cent and 41 per cent respectively). In Calgary, it is 38 per cent and in Alberta, it is 30 per cent.

“While many suspect bidding wars are triggered by sellers who deliberately price their homes below market, the report shows that just 15 per cent of owners have that motivation, with those on the Prairies and in Toronto the most likely to pursue this strategy – but even then the numbers are modest at 24 per cent and 22 per cent respectively,” said BMO, which says average home prices across Canada continue to rise, gaining momentum in the past year, with the average transaction price up nearly 10 per cent year-over-year in January. The average home sale price in Canada is currently just over $400,000.

“Calgary’s market continues to see the strongest fundamentals; Vancouver has rebounded from a soft patch; while Toronto’s market remains relatively balanced overall, though the condo market is more amply supplied,” said Robert Kavcic, senior economist with BMO Capital Markets, in a statement. “Overall, sales are expected to hold relatively steady in the year ahead, with price growth in the low single-digit range, below the rate of income growth.”

Laura Parsons, mortgage expert with BMO Bank of Montreal, said the competition for real estate in Canada, particularly in hotter markets, can be fierce and turn into an emotional frenzy.

“A shortage of inventory is driving a lot of it,” said Parson of the Calgary market. “It’s such an emotional thing. When you see it, you get it. I remember the days when there were lineups of people behind each other. The minute you see that your heart starts to race and you want to not lose.

“Lots of people are prepared. They know what their high is . . . Calgary has the biggest income so we’re willing to spend more if we have to and hopefully we’ve been conservative before we go in and we know we have that room to bid higher.”

Parsons said many people don’t understand that they can renovate a home and build it into the purchase price.

For some people, she said, there’s a need to move before spring and they’re feeling the pressure.

Data released Monday by the Calgary Real Estate Board indicates all-time records, for any month, were set in February in the average city sale price ($482,530) and the median city price ($424,900) as well as in the single-family sale price ($550,312) and the single-family median price ($480,000).

“Calgary has been in a statistical sellers’ market since February 2013,” said Robyn Moser, a realtor with CIR Realty. “As time has passed, the sellers’ market has become increasingly aggressive. This has caused buyers to see lower and lower levels of inventory, placed into competing offers and homes selling in days if not hours. This cause is speculated to be the lack of available new home inventory due to Calgary sewer lines that are needing to be upgraded. This has placed metro Calgary real estate values into statistical unsustainable levels until the sewer line upgrade is complete.”

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.”

 

© Copyright (c) The Calgary Herald

Condo sales skyrocket in Calgary

Home buyers who are being priced out of the housing market are turning to condos—sparking a huge influx in sales.

In the first two months of 2014, condo and townhouse sales have jumped 28 per cent compared to 2013 numbers.

“Consumers who are in the market for single family homes priced below $300,000 do not have many options, and when product does become available, it typically does not stay on the market for long,” said Calgary Real Estate Board president Bill Kirk. “However, nearly 54 per cent of the new condominium apartment listings this year are priced below $300,000, which is providing options for consumers looking for affordable product.”

Buyers also have a number of options, with condo listings up 17 per cent, while townhouses are up four per cent. However, the strong sales still don’t compare to the numbers seen back in 2007, during the boom.

“Resale market conditions have favoured the seller, and this has translated into price gains, which is strongest in the condominium sector,” added CREB chief economist Ann-Marie Lurie. “However, it is important to note that condominium prices have not yet risen above previous highs, whereas single family prices recovered last year.”

The average price of a condo in Calgary sits at $283,400, while buyers will have to fork over an average of $309,700 for a townhouse.

 

-Global News