Calgary luxury home resale market sets all-time record May establishes peak level for MLS sales

An all-time record has been set this month for the most sales ever for $1-million plus MLS properties in Calgary.

According to Mike Fotiou, associate broker with First Place Realty, as of late Friday afternoon there have been 88 sales in the luxury market so far this month, eclipsing the previous record of 83 set in May 2013.

There have been 85 single-family homes and three condos sold at the luxury level this month.

The most expensive sale was at $4.85 million in the Bel-Aire neighbourhood.

The neighbourhoods of Altadore/River Park and Aspen Woods are leading the way with nine luxury sales each for the month.

The Calgary residential real estate market set an annual record last year for most sales ever at that price point and it is on pace this year to break that mark.

In 2013, there were 732 MLS luxury transactions, eclipsing the previous record of 544 in 2012.


Growing rate of first-time homebuyers 55% of homes bought in 2013

Low interest rates and good economic conditions have first-time homebuyers entering the Canadian housing market in “substantial’ numbers, according to a report released Thursday by the Canadian Association of Accredited Mortgage Professionals.

Its latest consumer survey report, Looking for a “New Normal” in the Residential Mortgage Market, found that “homeowners appear to be happy with the decision to buy their home.”

“They say they feel confident they can weather a downturn in the housing market and they consider mortgage debt to be good debt. Their attitudes are the same whether they live in Toronto, Calgary or Vancouver where prices continue to rise, or in areas where home prices are stabilizing,” said the report.

The report found that 55 per cent of homes purchased in 2013 were bought by first-time buyers. It also found that 66 per cent agree in some degree that mortgages are a form of “good debt.”

More than 80 per cent of homeowners in Canada have 25 per cent or more equity in their homes, it said.

“First-time homebuyers in Calgary have been getting involved in the housing market. With relatively low mortgage rates, many of these buyers have had the opportunity to purchase their first home. Low rental vacancies and rising rents have also contributed to demand from first-time homebuyers,” said Richard Cho, senior market analyst in Calgary for the Canada Mortgage and Housing Corp.

Ann-Marie Lurie, chief economist with the Calgary Real Estate Board, said there is no way of saying with certainty how many purchasers are first-time homebuyers in the local market.

“Typically we assume that many first-time homebuyers are purchasing product at the entry prices in the market. However, there can be other groups purchasing in this price point that are not first-time homebuyers (such as) people downsizing),” she said.

“If we look at Calgary in 2013, 22 per cent of the sales were priced below $300,000, and another 27 per cent of the sales activity occurred in the $300,000 to $399,999 price range. While we do not know the exact number of first-time homebuyers that entered the market last year, tight rental markets, low lending rates, relatively favourable affordability and a positive economic outlook is encouraging consumers to consider ownership.”

The mortgage professionals’ report said the average mortgage interest rate is 3.24 per cent, a drop from the average of 3.5 per cent found in the fall 2013 survey.

“From the consumer perspective we have a picture of a very confident, healthy mortgage market,” said Jim Murphy, president and chief executive of the organization. “Key to the current stability in the mortgage market is the fact that Canadians continue to pay down their mortgage debt faster than they are required and they continue to take out five-year, fixed rate mortgages. Canadians who renew their mortgages are seeing their interest costs reduced, which is boosting their personal financial circumstances, and this will continue to be a positive force during the coming year.”

Will Dunning, the organization’s chief economist, said the housing market across Canada is slowing and has been on a downward swing since the mortgage policy change in 2012.

“While the national market may look healthy, activity in the Greater Toronto Area (including Hamilton), the Greater Vancouver Regional District and the Calgary area is skewing the numbers high,” he said. “In the rest of Canada sales activity has weakened and house prices are flat, and even falling in some communities. Housing has played a key role in driving economic growth and job creation in Canada. But looking ahead, decreased starts and slower price growth will throw off the balance between the housing market and the overall economy.”


Calgary a star performer in Canadian housing market – High prices absorbed by rising income levels

Calgary is a star performer on the Canadian housing market scene with pretty much everything going for it at the moment – a strong economy, solid demographic demand and attractive affordability, according to the latest Housing Trends and Affordability Report released Tuesday by RBC Economics Research.

The report said the trend in activity is sloping upward but it shows few signs that the market is getting ahead of itself.

“Home prices are rising at the fastest rate in the country, yet these increases can be absorbed fairly easily given Calgary’s high, and growing, household income levels,” it said. “Housing affordability has eroded slightly in the past year, including in the first quarter, yet it remains at historically favourable levels. All RBC’s measures for the area continue to be well below their long-term averages, which suggest that developments to date in the Calgary-area market have been quite sustainable.”

The RBC Housing Affordability Measures show the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes and utilities.

In the first quarter, RBC’s measures increased in all three categories from the last quarter: by 0.9 percentage points for bungalows (to 34.5 per cent), one percentage point for two-storey homes (to 35 per cent) and 0.5 percentage points for condo apartments (to 20.4 per cent).

The report painted a similar picture for Alberta’s housing markets on the whole with few signs of overheating.

RBC’s measures in the province rose by 0.1 percentage points to 32.6 per cent for detached bungalows and 0.4 percentage points to 20.2 per cent for condominium apartments, while the measure for two-storey homes was unchanged at 34.4 per cent.

“All RBC’s measures continue to be below their long-term average in the province,” said the report.

Across the country, RBC said home price increases in some of Canada’s largest markets further accelerated in the first quarter of 2014, boosting home ownership costs and triggering some erosion in affordability.

“Prices for single-family homes in Calgary, Toronto and Vancouver had considerable upward momentum during the first quarter, and led to the strongest annual price gains nationally in nearly two years,” said Craig Wright, senior vice-president and chief economist of RBC. “This stood in the way of any widespread improvement in affordability conditions across Canada.”

But RBC said the latest “knock to affordability” was modest and did not pose any immediate threat to the health of Canada’s housing market.

During the first quarter, affordability measures at the national level rose in two of the three categories of homes tracked by RBC. RBC’s measures edged higher by 0.1 percentage points to 43.2 per cent for detached bungalows, and by 0.3 percentage points to 49.0 per cent for two-storey homes. RBC’s measure for condos, however, fell 0.1 percentage points to 27.9 per cent, indicating that affordability slightly improved for this category of home.

“We expect the rest of the spring season to offer a pick-up in housing activity, largely owing to fixed mortgage rates that recently eased to historical lows,” said Wright. “This strength will be short-lived, though, as we believe that there is limited pent-up demand in the first place, and that longer-term interest rates will start to rise by the third quarter of this year.”


Calgary housing market positive for next two years

Record net migration and the gains in employment over the last couple of years will contribute to increasing sales and prices for the Calgary region’s housing market in 2014 and 2015, says a new report by Canada Mortgage and Housing Corp.

Richard Cho, senior market analyst in Calgary for the CMHC said the Calgary region has experienced strong net migration in the last couple of years with 31,996 in 2012 and 45,168 in 2013.

He said migration is forecast to reach 33,400 this year and 28,500 in 2015.

“Migration, along with other factors such as rising incomes and employment growth, has been a key contributor to the uptick in housing demand that Calgary has been experiencing,” said Cho. “Net migration reached another record level in 2013, after surpassing the previous record set in 2012. Calgary’s favourable labour market conditions has attracted people from all over the country. While migration in 2014 is forecast to moderate, it will still remain above historical averages.”

The Spring 2014 Calgary Housing Market Outlook, released Thursday, forecasts MLS residential sales this year to rise four per cent from the previous year, totalling 31,300 units in the Calgary Census Metropolitan Area.

“Rising incomes and low mortgage rates will continue to give buyers an opportunity to purchase a home, however slower rates of employment growth and net migration moving forward will temper the gain in sales next year. MLS residential sales are expected to reach 32,100 units in 2015, representing an increase of less than three per cent,” said the report.

The MLS residential price is forecast to rise five per cent in 2014 to an average of $459,000.

“Relatively low active listings combined with strong demand will continue to push prices upward this year. In 2015, higher active listings will offer buyers more selection, alleviating some of the upward price pressure experienced in previous years. The average price in 2015 is therefore anticipated to increase three per cent to $472,000,” it said.

According to the Calgary Real Estate Board, year-to-date up to and including May 21, total MLS sales just in the City of Calgary were at 10,287, up 13.37 per cent from the same period a year ago. The median price of $428,000 has risen by 7.20 per cent while the average sale price is up 5.94 per cent to $479,944.

Total housing starts in the Calgary CMA are forecast by CMHC to increase to 14,600 units in 2014 before moderating to 13,500 in 2015.

“Supported by elevated net migration, continued job creation, rising incomes, and low mortgage rates, total housing starts are forecast to increase 16 per cent this year to 14,600 units, the highest level since 2006,” said Cho. “While gains are expected for both single-detached and multi-family starts, the increase will be most pronounced in the multi-family sector.”

CMHC said single-detached starts in 2014 are forecast to increase three per cent to 6,600 units due to continued strong job creation and the record level of net migration last year. But in 2015, single-detached construction is expected to moderate to 6,400 units.

“An increase in active resale listings, moderation in employment growth, and lower net migration, will contribute to the reduction in single-detached starts next year,” it said.

CMHC said multi-family starts, which include semi-detached units, rows, and apartments, are forecast to increase 29 per cent to 8,000 units this year, the strongest performance since 1981.

“The decline in multi-family inventory will provide builders an incentive to increase production and help meet demand from first-time home buyers, those looking to downsize, and investors taking advantage of the low rental vacancy rate,” added the report.

“Given low rental vacancies, additional rental construction is also expected. Multi-family starts are forecast to moderate to 7,100 units in 2015 as supply levels increase following the rise in construction this year.”


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Calgary area luxury property to be listed for $30 million – World-class equestrian facility included on 64 hectares of land

A luxury residential property, which includes a world-class equestrian facility, in Springbank, just outside Calgary, will be listed for sale for $30 million exclusively by Sotheby’s International Realty Canada.

The iconic Kestrel Ridge Farm, located on 64 hectares near the Elbow River and in Rocky View County, includes an arena, outdoor riding rings and paddocks, confirmed Corinne Poffenroth who will be listing the property with Andy Taylor.

She said the 11,000-square-foot main property is a modern concept luxury log home with six bedrooms, six bathrooms, and a garage for five cars.

It is built on the ridge overlooking the mountains, river valley and equestrian facility.

The main house includes an indoor saltwater swimming pool with hot tub, sauna and steam room. The grounds include a professional sports court for tennis and basketball.

Poffenroth said the property also includes a 3,800-square-foot guest/ranch house and a carriage house above the two-car garage and greenhouse.

“The Calgary luxury market is showing continued strong momentum as we forge into the spring market and the timing of this listing is coinciding with that strong demand not just locally but internationally,” said Poffenroth.

The Calgary residential real estate market set a record last year for most sales ever for $1-million plus MLS properties and it is on pace this year to break that mark.

In 2013, there were 732 MLS transactions at that price point, eclipsing the previous record of 544 in 2012. Last year, there were 10 consecutive months where luxury sales hit all-time highs with the exceptioin of January and February.

Every month this year has set new monthly records

According to Mike Fotiou, associate broker with First Place Realty, the first two weeks in May had 43 luxury home sales indicating the month is on pace to set not only a monthly record but it could also set the record for any month, eclipsing the peak of 83 established in May of last year.

The Kestrel Ridge Farm listing, which will not be on the MLS system, is scheduled to hit the real estate market in early June.

The property is currently owned by Calgary tech entrepreneur Tony Vysniauskas and his wife Julia.

According to the Calgary Real Estate Board, the most expensive residential MLS listing is one currently on the market for $37.88 million for the the Kettle Lakes Ranch, located in the Municipal District of Foothills, which includes a 5,000-square-foot home on 97 hectares of land.


Calgary prices for repeat home sales hit a new high 10% hike from last year

Calgary prices for repeat home sales continue to be the envy of the nation as a new report released Wednesday indicated the city had the best annual growth rate in April, reaching a new high.

The Teranet-National Bank National Composite House Price Index said Calgary’s year-over-year hike was 10 per cent compared with 4.9 per cent across the country in 11 centres surveyed.

Calgary also had the best monthly jump of 1.5 per cent while nationally it was 0.5 per cent.

The index is estimated by tracking observed or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation of the index.

The report said Calgary’s monthly advance was the third in a row exceeding one per cent and took the city’s real estate market to a new high.

Ann-Marie Lurie, chief economist at the Calgary Real Estate Board, said the report is basically in line with the organization’s price growth data.

“It’s a reflection of all the positive conditions in Calgary that have been supporting the housing market,” said Lurie. “It’s all the net migration. That’s the main driver I would think at this point. How many people came into this city over the past two years. It’s fuelling so much of this demand and basically supply hasn’t kept pace and that’s why we’ve seen those big price increases.

“However, we are starting to see some of that turn. We’re starting to see some of those listings pick up and I think that’s going to continue as we move into spring. That will help ease some of the (price) growth. It doesn’t mean it’s going to reverse the growth because there still is enough demand and support for demand growth but hopefully it should start to cause that (price) growth to kind of slow.”

According to Canada Mortgage and Housing Corp., net migration to the Calgary census metropolitan area was 31,996 in 2012 and 45,168 in 2013.

Month-to-date between May 1-13, CREB data indicates 1,276 MLS sales in the city, up 21.64 per cent compared with the same period last year. New listings have risen by 14.92 per cent to 1,956 but active listings of 4,185 are down 11.58 per cent from a year ago.

The median price in the city is up by 7.92 per cent to $432,750 while the average sale price of $483,686 has grown by 5.39 per cent.

Diana Petramala, economist with TD Economics, said the Teranet report indicates that home price growth in Canada is picking up steam.

“Lack of homes for sale in many of Canada’s major markets appears to be a key reason for mounting price pressures. Indeed, the cities with the sharpest price growth – Vancouver, Calgary and Toronto – are currently in seller’s markets, meaning seller’s hold most of the bargaining power.”

Annual price growth in Vancouver was 9.0 per cent and it was 5.8 per cent in Toronto.

“Home prices have maintained more momentum through 2014 than we had originally anticipated,” Petramala added. “We continue to believe that home price growth will moderate in the second half of 2014. There are a record number of new homes currently under construction, and the completion of these units should help bring key markets back into balance. However, with the recent decline in mortgage interest rates, there is considerable risk that housing heats up during the spring months.”


Calgary downtown condo boom includes rental market

It is reminiscent of the condo boom of a few years ago but today’s real estate construction frenzy has one major difference.

Nearly half of all proposed or under construction developments in the downtown area are for rental use.

Figures supplied to the Herald from the Altus Group Limited indicate there are 2,184 proposed condo units, 2,038 in the pre-construction stage and 1,762 under construction for a total of 5,984 in the combined area of Eau Claire, West End, East Village, Downtown and the Beltline.

Proposed developments include those publicly announced but not having submitted an application for development approval. Pre-construction consists of projects with development approval submissions.

And under construction refers to projects with a building permit in place and site excavation started.

For rental units, there are 2,116 in the proposed stage, 2,638 in the pre-construction stage, and 828 under construction for a total of 5,582 units.

The Altus report also said there are 575 units under pre-construction and 306 under construction that have yet to be determined as to their use.

Ian Meredith, consultant with residential advisory services with the Altus Group, said that with a total of 12,447 units, and assuming an average of two people per unit, it would be equivalent of the population of Okotoks in an area basically between the Bow River and 17th Avenue.

“It’s a significant number no doubt,” said Meredith. “Basically what it’s telling us is that Calgary is a strong growth market nationally and an excellent place to invest and there’s a mix of condominium developers looking to capitalize on the current market and rental developers looking to capitalize on the long-term growth position of the market.

“The rental segment has been a growing segment . . . (Construction) is comparative to the peak of the last development cycle around late 2006, 2007. The difference though is that this time around we’re seeing half of those 12,500 units made up of rentals. We saw no rentals during the last cycle.”

He said a large portion of the net migration numbers to Calgary are made up of professionals, earning high incomes, moving to the inner-city. Another factor is that the decision to purchase a home is being delayed along with family formation. And people born after 1981 appear to be less accepting of a suburban lifestyle than the generations that preceeded them.

Lai Sing Louie, regional economist for the Prairies and Territories region with Canada Mortgage and Housing Corp., said net migration to the Calgary census metropolitan area in 2013 was a record 45,168.

“Net migration is a key driver of housing demand. Rental market conditions usually tighten when migration is on the rise,” he said. “Due to the large influx of people over the past two years, Calgary has been experiencing low vacancy rates and rising rents.

“Most people have a plan or very good idea of where they will live when they get to Calgary. A key segment of the housing market is the rental market. Most people rent before purchasing a home. Over time, migrants tend to have a similar homeownership profile as those born here. When Calgary experiences high levels of migration, this tends to impact the rental market immediately and supports housing demand in the resale and new home market. When looking to buy, condominium apartments tend to have a price advantage over single-detached homes. For some, it is also about location and lifestyle. Combined, these factors make condominium ownership an attractive choice.”

According to the CMHC, net migration in the Calgary region was 31,996 in 2012. Previous to the past two years, the biggest net migration figure was in 2006 at 25,120 people.


Home warranty organization strives for satisfaction in new home buying experience

It’s been 40 years since a delegation of Alberta home builders disrupted a national industry conference by putting forward a motion to allow the establishment of home warranty programs that would be operated by provincial associations and without federal government involvement.

It was 1974, the same year OPEC removed its oil embargo, heiress Patty Hearst was kidnapped by the Symbionese Liberation Army, and U.S. president Richard Nixon resigned, so it’s no surprise this made-in-Alberta, industry-changing announcement didn’t rate front-page coverage. What the fledgling New Home Certification Program of Alberta, the first provincial home warranty program in Canada, did do was forever change the relationship between builder and homebuyer across Alberta.

Today, as the Alberta New Home Warranty Program (ANHWP), it continues to ensure both buyer and builder retain a healthy relationship during and after construction.

John Martin, named vice-president of business development for the builder-funded ANHWP just two weeks ago, has as part of his mandate the responsibility to not only attract new members, but to keep a watchful eye on the two-way relationship.

“I want to ensure the satisfaction level of the builder-membership and quarterback any needs they have,” he says from his Calgary office. “And I also want to be diligent in making sure everyone, builder and homebuyer, is happy.”

Martin, who has 15 years experience in the home warranty sector, mostly with the rival National Home Warranty Program Ltd., was named to his newly created position by John Kozole, ANHWP’s president and chief executive.

“(ANHWP) is very focused on our ability to provide exceptional service to our customers. This position is entirely new to our organization and we are excited to have someone with John’s experience lead the way on this initiative,” says Kozole, who heads up the 700-member organization.

Still settling into his new role, Martin says there is much to do in the days ahead to make sure ANHWP maintains its standing as the “premier provider” of home warranty protection in Alberta and Canada.

“I have always had respect for what this program does for the homeowners, as well as for its builder members,” he says. “The after-sale service provided through the program has always been great, and it will be part of my responsibility to get even better at it by focusing on what we can do better for the homeowner, and for the builder.”

The ANHWP mandate is to provide an array of warranty products that offer comprehensive protection and provide builders and homeowners with the resources to resolve issues, honour specific industry standards, and to become better educated about the new home construction process. Among its services are pre-possession insurance, 10-year protection against structural defects and other coverages ranging from one to five years. It also offers arbitration and mediation services. And with the implementation earlier this year of mandatory warranty coverage, ANHWP played a key role in forming the new coverage levels required by the Alberta government, something Kozole says is “validation of the strength” of ANHWP.

“In the world of mandatory warranties, we continue to thrive, so in that way it’s business as usual,” says Martin, who adds that ANHWP’s products and services being offered exceeds the mandatory levels.


Sales of homes over $1 million hot in Calgary

Money is on the move in Alberta and it’s showing up in Calgary’s luxury market.

A recent report by Statistics Canada — to no surprise — says Alberta tops all provinces in weekly earnings. On average, Albertans pull in $1,128.31 per week. This number includes overtime pay and is seasonally adjusted. The next highest earners are on the east coast, where people in Newfoundland and Labrador bring in a weekly cheque of $967.98. Saskatchewan comes in third with $961.90 weekly.

Like any area, it’s easy to see where the big money jobs are based on the health of its luxury home market. And in the Calgary area, it checks out just fine. Calgary is noted as a haven for corporate head offices, where presidents and chief executive officers preside.

“There are lots of people doing very well in Calgary right now and when they do well they tend to buy expensive homes,” says Canada Mortgage and Housing Corp. regional economist Lai Sing Louie. During the first two months of 2014, about eight per cent of new homes absorbed were priced $1 million and higher, says CMHC. During the same time last year, it was five per cent. Absorption refers to the time in which a buyer takes possession of their home.

“I think what you’re seeing is people in the oil and gas sector, when wages rise in that area, the economy is doing well,” says Louie. “We’ve had oil hovering at over about $100 a barrel for a while now. That’s creating a lot of income for a lot of people.”

Look at the construction crews covering lots in high-end communities in and around the city. Builders say show-home traffic at their big-ticket homes is on the upswing.

“The interest in million-dollar-plus homes is robust,” says Jordan Tetreau, director of sales and marketing for Trickle Creek Custom Homes. The company is part of the builder group in Watermark.

“One major driver is that the supply of developable land is scarce in and around the City of Calgary, while demand for new and pre-owned homes remains high, thanks to a strong economy and steady population growth,” adds Tetreau.

“This demand is driving up the cost of land and subsequently the price of new homes. For instance, in highly sought-after neighbourhoods like Altadore and Marda Loop, a well-situated 50-foot wide building lot will likely sell for over $700,000.”

Between Jan. 1 and the end of April, 265 homes sold for at least $1 million on the resale market. This is 13 per cent more than the 235 million-dollar homes that changed hands a year earlier.

Louie says Calgary’s tight housing market has allowed sellers to reel in sizable equity. They take these dollars and turn to something in a higher price bracket.

“There’s a lot of opportunity for move-up buying now,” says Louie, adding it wasn’t long ago the city was in buyers’ market conditions. In 2012, the market saw balanced conditions before shifting to a seller’s advantage today.

“People are getting more than the list price,” adds Louie. “We’re hearing about multiple offers on homes and that’s putting upward pressure on prices and supporting the move-up buying market.”



Calgary new home price growth tops Canada – 7.5% year-over-year hike in March

The Calgary region continued to experience the biggest hikes in new home prices in March, leading the country, according to Statistics Canada.

The federal agency reported Thursday, through its New Housing Price Index, that prices in the Calgary census metropolitan area rose by 0.8 per cent on a monthly basis and by 7.5 per cent year-over-year.

Nationally, prices were up 0.2 per cent from February and by 1.6 per cent from March 2013.

“The metropolitan region of Calgary was the top contributor to the (national) gain, marking the third consecutive month it has led the way in Canada. The region also experienced the largest monthly price gain, up 0.8 per cent over February. Builders reported that higher material and labour costs, market conditions and the cost of developed land were the primary reasons for the increase,” said Statistics Canada.

“The year-over-year increase in Calgary was the largest since July 2007.”

And a report released Thursday by the University of Calgary’s School of Public Policy suggests the city could see even higher prices in the coming years due to limitations on suburban growth.

The report entitled ‘Calgary and Edmonton on Divergent Development Paths: Municipal Policy is Densifying Calgary’ said traditionally the two cities have focused on suburban expansion to accommodate their growing populations, but those cities are now moving down different development paths.

The report, by authors Zack Taylor, Marcy Burchfield and Anna Kramer, said that beginning in the late 1990s, Calgary shifted its focus to livability and sustainability, a move that saw policies introduced to promote urban intensification and greater transit use.

“If you keep putting more people on the same land that’s available, land prices are going to go up,” said Jack Mintz, director of the School of Public Policy.

“There’s some value to intensification. You don’t want to empty out the core . . . But there’s a balance you need to think about and I think Calgary from all the stories you hear about lack of development and things like that, we could be in for very significant price inflation over the coming year or two.”

Todd Hirsch, chief economist at ATB Financial, said that while Calgary continues to shine with strong new home price growth, Edmonton prices have fallen flat.

Prices in Edmonton are about 0.1 per cent lower than a year ago.

He said prices in Edmonton are nearly 10 per cent lower than they were in 2007.

“The contrast between prices in the major cities is puzzling,” said Hirsch. “Both cities continue to fare well economically. Edmonton actually holds a slight advantage in the labour market: its unemployment rate in March was 4.8 per cent, slightly lower than Calgary’s 5.0 per cent rate.

“Some of the difference could be explained by the ongoing recovery from last year’s floods, which is still having an impact on material prices and building costs.”