Calgary’s resale housing market lost more than $4.6 billion in sales in 2015, data from the Canadian Real Estate Association show.

Calgary’s resale housing market lost more than $4.6 billion in sales in 2015, data from the Canadian Real Estate Association show.

It said the total dollar volume of MLS sales fell to $10.89 billion in 2015, from $15.5 billion in 2014 — a plunge of 29.7 per cent that was by far the largest in Canada.

The drop was the result of sales declining by 28.6 per cent to 23,994 transactions combined with the average sale price falling by 1.5 per cent to $453,814.

“The recent decline and uncertain outlook for oil prices means that housing market prospects are unlikely to improve in the near term in regions where job market prospects are tied to oil production,” said Gregory Klump, chief economist with CREA, the national association of realtors.

Across Alberta, total dollar volume in 2015 fell by 22.8 per cent to $22.2 billion from $28.8 billion the year before based on a 21.3 per cent decrease in sales to 56,477 units and a 1.9 per cent decline in the average sale price to $393,138.

Diana Petramala, economist with TD Economics, said listings are rising fastest in cities facing significant economic uncertainty including Calgary, Edmonton, Winnipeg and Saskatoon.

“Rising economic uncertainty and the lower-for-longer mantra of oil prices are likely to continue to take a toll on housing markets in economies heavily tied to the oil business,” she said.

“Calgary home prices appear on track for a 10 per cent peak-to-trough decline over 2016.”

The benchmark price, which tracks the sale price of a “typical” home, was down 2.3 per cent in the Calgary region from a year ago to $443,900.

MLS sales in the Calgary area were down 20.8 per cent in December from a year earlier. The average sale price was off by 0.4 per cent.

It was a different story nationally.

CREA statistics indicate the total dollar volume in MLS sales rose 14.4 per cent in 2015 to $224.2 billion from $195.9 billion in 2014. That was a result of sales rising by 5.5 per cent to 506,334 units while the average sale price was up 8.5 per cent to $442,857.

MLS sales in Canada were up 10 per cent in December while the average sale price rose by 12 per cent to $454,342.

-Calgary Herald

Canada housing starts deteriorate as Alberta hits 5-Year Low

Canadian housing starts fell for the third time in four months in January with construction in Alberta tumbling to its lowest level in almost five years.

The pace of work starting on new homes nationwide fell 4.1 per cent from December to 165,861 at a seasonally adjusted annual pace, Canada Mortgage and Housing Corp. said Friday.

Alberta’s unadjusted starts fell to 1,466 in January, the lowest since March 2011 and a 50 per cent decline from a year earlier. The decline coincides with a jump in the province’s unemployment rate, CMHC chief economist Bob Dugan said in the report.

The commodity collapse is increasing a drag on the national housing market, weakness that was masked over much of last year by surging demand in Toronto and Vancouver. There was evidence Friday of fresh job-market weakness that could temper housing further — Statistics Canada reported Alberta’s unemployment rate rose to the highest since 1996 at 7.4 per cent in January.

-Calgary Herald

Calgary-area population grew by 2.4% to last July, Statistics Canada estimates

While a bigger question might be what’s happened to population in the Calgary area since, the number of people living in the region grew 2.4 per cent in the year ended June 30, 2015, according to a new Statistics Canada estimate.

According to the federal agency’s latest population estimate, the growth rate in the Calgary region was second highest in the country, behind only Kelowna, which grew by 3.1 per cent.

The increase puts the population for the Calgary region at just shy of 1.44 million people — 1,439,756. But growth in the city apparently slowed — in each of the previous three years, Statistics Canada estimated growth of more than three per cent.

With continuing economic uncertainty and job losses in Calgary and Alberta since the end of June, that slowing trend could continue.

Among the country’s metropolitan areas, Statistics Canada said the senior population in the Calgary region was the smallest in the country, on a proportional basis, with just 10.4 per cent of residents aged 65 or older.

 

-Calgary Herald

Housing affordability continues to improve in Calgary market

Owning a home in Calgary at market price remains more affordable than it has been on average since the middle of the 1980s, says a new report released Monday by RBC Economics Research.

But the latest Housing Trends and Affordability Report said movements in oil prices are likely to exert a stronger influence on the market direction in the short term.

“Alberta’s housing market is still feeling the impact from the oil price shock,” said Craig Wright, senior vice-president and chief economist, RBC. “That said, the dust began to settle this spring, and we saw a gradual recovery in confidence, which helped rebalance demand-supply conditions. Home re-sales started to turn around, and sellers no longer rushed to list their properties.”

RBC said prices remained under slight downward pressure for the most part in the second quarter, which helped keep the cost of home ownership in the province on a descending course from the first quarter.

The RBC Housing Affordability measures, which capture the proportion of pre-tax household income needed to service the costs of owning a home at market values, fell slightly in Calgary for both two-storey homes, by 0.8 percentage points to 31.9 per cent, and bungalows, by 0.4 percentage points to 32.4 per cent. The measure for condos stayed relatively the same, rising by 0.1 percentage points to 19.5 per cent.

Across the province, the measures fell 0.5 percentage points to 32.5 per cent for two-storey homes and 0.1 percentage points to 31.7 per cent for bungalows, while rising 0.2 percentage points to 20.1 per cent for condos.

In the second quarter, RBC said national affordability measures rose by 0.7 percentage points to 43.3 per cent for bungalows and by 0.4 percentage points to 48.3 per cent for two-storey homes. The measure for condominiums remained unchanged at 27.1 per cent.

RBC’s Housing Affordability measure for the benchmark detached bungalow in Canada’s largest cities was: Vancouver 88.6 (up 3.0 percentage points); Toronto 59.4 (up 2.1 percentage points); Montreal 36.0 (down 1.2 percentage points); Ottawa 35.4 (unchanged); Calgary 32.4 (down 0.4 percentage points); Edmonton 32.5 (down 0.4 percentage points).

“With home resales beginning to turn around and sellers no longer rushing to list their properties in the spring, there was evidence that confidence slowly returned to the Alberta market in the second quarter following the hard blow delivered by the oil price plunge in the previous two quarters,” said the report.

“These developments helped rebalance demand-supply conditions; however, prices still remained under slight downward pressure for the most part in the second quarter, thereby contributing to keep the cost of home ownership on a generally downward course in the province.”

It said recovery in oil prices in the second quarter boosted buyers’ confidence to jump back in play and reduced sellers’ eagerness to get out.

“However, this boost to market sentiment may be short lived if a resumption of the slide in oil prices in the third quarter persists,” it said.

 

-Calgary Herald

Housing prices to ease in second half, CREB® forecasts

Continued weakness in housing demand will limit downward pressure on supply levels and cause prices to ease in the second half of the year, CREB® said in its 2015 mid-year forecast. Despite this anticipated retraction, Calgary’s benchmark prices are only expected to decline by less than one per cent on an annual basis. 

“Further job losses are expected in the second half of the year,” said CREB® chief economist Ann-Marie Lurie. “These employment changes, combined with overall weakness and slower than anticipated recovery of oil prices, are expected to keep housing demand relatively weak for the rest of 2015. However, with the initial shock of oil price declines having dissipated, the pullback in sales activity in the second quarter is not expected to be as dramatic as the first part of the year,” said Lurie.

Overall sales activity in Calgary is forecasted to total 19,798 in 2015, a 22 per cent decline relative to last year, but only six per cent lower than average activity over the past five years.

Dramatic swings in new listings during the first half of the year caused inventory levels to rise, but by June, they remained below previous highs. Over the second half of the year, inventory levels traditionally ease as we move toward the fall and winter markets. However, this year housing supply levels are expected to remain relatively elevated due to improved selection in the rental markets, completion of projects under construction, and an easing in the rate of decline in resale new listings. 

While some price moderation is expected moving forward, it should be noted that it’s not going to be the double-digit decline that some have suggested. In part, this is related to the limited supply in the market moving into this next cycle. Also, the forecasted pullback in employment and migration is not going to be as severe as what occurred last time we recorded significant price declines. The City of Calgary residential benchmark price is expected to average $448,354 for 2015, a modest 0.20 per cent decline over the previous year.

“It’s a two sided coin when talking about pricing for buyers and sellers,” said CREB® president Corinne Lyall. “Some buyers have the expectation that they will get significant price reductions in this market, but that’s not always the case. In some areas, supply levels are more balanced with demand and that creates price stability. On the other hand, in most situations, it will be the sellers who need to adjust expectations, particularly if they have to compete with a large amount of comparable product in the neighbourhood.”

While slower demand is impacting all sectors of the market, the apartment sector is expected to record the largest pull-back in both sales and price growth in the second half. Challenges in this segment are linked to the rising supply in competing markets. There is more selection is the detached and attached segments, which makes it difficult to attract buyers. Sellers also faced added competition from new apartment units and increased selection in the rental market. 

Meanwhile, activity in the detached segments will continue to vary based on price and location. Continued weakness in demand relative to supply levels, particularly in the higher price ranges, are expected to cause aggregate detached benchmark home prices to decline in the second half of this year. However, annual prices are expected to remain relatively unchanged compared to last year. Overall, detached sales are expected to total 12,105 units in 2015, a 19.8 per cent decline over last year.

“It’s important for active housing consumers to understand what type of comparable property is available by product type, community and price range,” said Lyall. “While some degree of competition exists in every market condition, most sellers in the current environment will need to take extra care in setting realistic expectations to attract a good crop of potential buyers. This kind of smart pricing may encourage buyers who are sitting on the sidelines to consider entering the market if they are in a position to do so.”

As with any market forecast, there are several factors that could influence the outlook. On the upside, if there is no further deterioration in the economic climate, it’s possible that the pullback in housing demand could be less severe. In this scenario, potential buyers who are in the market may decide to take advantage of higher supply levels and overlook short-term risks in favour of the positive long-term outlook. This possibility could keep market conditions relatively balanced in the second half and prevent any further price declines.

 “Ultimately, what happens to prices will depend on supply levels and how much they go up or down against demand,” said Lurie. “The duration of this economic downturn and the resulting job loss will determine which direction supply will go in the months ahead.

-CREB

Texas oil tycoon T. Boone Pickens has something he wants to say to us: Calgary, I’m so sorry about the Keystone pipeline

Not every day you get an apology from a billionaire, but here it is.

To my friends in Calgary and across Canada: I apologize on behalf of my fellow Americans for the United States government’s actions.

Why? Because after years of poring over the engineering, design, geology and the contents of the proposed Keystone XL pipeline, President Barack Obama chose to make a political statement and vetoed a bill to allow construction to begin.

I feel bad about this.

I lived in Canada in the 1960s. You have a great country, and it’s a great place to operate in the oil and gas sector. We should have done better by you.

You may not follow the ins and outs of the U.S. Congress as much as we do, but you probably know Keystone was a bipartisan bill. Republicans and Democrats in the U.S. House and Senate voted for it. That was big news, as Democrats and Republicans working together on anything over the last 10 years has been rare.

There was no good explanation for Obama’s decision to veto the bill. The U.S. Department of State reported previously the environmental effects of the pipeline would be minimal. In its January 2014 report, the department stated: “emissions (from pipeline activities) would be equivalent to greenhouse gas emissions from approximately 300,000 passenger vehicles operating for one year.”

There are 250 million passenger vehicles operating in the U.S.

Keystone would have the effect of adding about 1/10th of one per cent to the fleet.

Because the pipeline crosses national boundaries, the State Department is charged with producing reports. Yet, after State made its report, the White House went “agency shopping” and asked the Environmental Protection Agency (EPA) to take another look at Keystone. To no one’s surprise, the EPA fired off a letter objecting to pipeline construction, citing concerns of increasing greenhouse gas emissions.

Where the EPA went wrong, however, was calculating the effects on greenhouse gases “from the extraction, transport, refining and use of the 830,000 barrels per day of oilsands crude that could be transported by the proposed project at full capacity.”

The problem with the EPA’s math is that Canadians don’t need permission from the U.S. to recover that oil and sell it. Canadians will extract it and ship it overland by train or via pipeline and tanker, not south to the United States, but west to Asia, or elsewhere.

When oil prices come back up, Korea, Japan, China and others will benefit from the Canadian oilsands, not the U.S.

It is no surprise to Canadians that Canada is the U.S.’s largest oil-trading partner. But it is a surprise to many U.S. residents. I have long been a supporter of the idea of building on the North American Free Trade Agreement by establishing a North American energy alliance to include Canada, the U.S. and Mexico.

The reason oil prices are not bouncing up and down with every piece of news out of Iraq, Iran and Israel is the U.S. and Canada are using the latest innovative technology to recover oil and natural gas — from sands and shale. Additional production from those sources has provided an international energy price shock absorber. For U.S. consumers, lower gasoline and diesel prices have been like getting a $300-billion bonus. The effect in Canada has likely been similar.

So, why is Obama so opposed to the Keystone XL pipeline?

As my dad used to say, “Son, it’s kind of like murder. It’s tough to explain.”

Politics is the most likely answer. The veto lets the president throw a bone to his political left while thwarting a win for the Republican-controlled House and Senate on their bill.

The silver lining is this: Obama’s veto didn’t kill the Keystone XL pipeline. He delayed it. Sooner or later, good planning will trump bad politics and the project will get the green light — we hope.

My Canadian friends, please have patience. The Keystone pipeline will happen.

T. Boone Pickens is the architect of the Pickens Plan, an energy plan for America. He is also chairman and CEO of BP Capital.

-Calgary Herald

Bank of Canada- Prime Reduction

The Bank of Canada announced today that it has reduced its overnight rate by a quarter of a percent. Therefore the Prime lending rate has been reduced to 2.65%. At this time only one lender has announced that they are also dropping their Variable rates but only by 10 basis points and not the full 25 basis point drop indicated by the Bank of Canada. Typically other lenders will follow.

Total CPI inflation reflects price declines for consumer energy products. The Bank’s estimate of growth in Canada for 2015 has been marked down considerable from it’s prior expectations. However, growth is expected to resume in the 3rd and 4th quarters.

With all that being said, both variable and fixed rate mortgages are still at record lows. If you’re in the market for a new mortgage-or if you have a question about your existing one-please don’t hesitate to reach out.

With the Prime rate falling, we are continuing to recommend that clients stay in their existing variable rate mortgages. The date of the Bank of Canada’s next announcement is scheduled for September 9 2015

Calgary house prices forecast to decline 2.4% this year

Average prices in major housing categories have remained relatively flat in Calgary for the first half of this year but they are forecast to decline by 2.4 per cent in 2015 compared with 2014, says a new report released Tuesday by Royal LePage.

The real estate firm’s House Price Survey and Market Survey Forecast said that in the second quarter the standard condominium category gained 1.6 per cent year-over-year to an average price of $291,022. Over the same period, standard two-storey homes declined 3.1 per cent to $474,239 and detached bungalows  were down 0.9 per cent to $496,689.

Ted Zaharko, broker and owner with Royal LePage Foothills in Calgary, said predictions of gloom due to low oil prices and the change in the provincial government are proving to be premature.

“I think the City of Calgary, the economy of Calgary generally, is bigger than people expect it to be,” said Zaharko. “We were in a kind of limited inventory situation. Interest rates have been attractive. I don’t think people are as pessimistic about the future as a lot of other people think they are.

“Things are just balanced and I think that’s good.”

The report said the average house price sale in Calgary will drop to $449,500 this year from $460,584 in 2014. It was $437,036 in 2013.

“We’re going to continue to see a situation of what we’re going through right now. The inventory levels are not being replenished. We could be in kind of an awkward inventory situation where there’s limited inventory in all these price ranges and the buyer wants to see houses for sale,” said Zaharko.

According to the Calgary Real Estate Board, in the first half of 2015, there were 10,197 MLS sales in the city, down by 26.4 per cent compared with the same period last year. New listings also fell by 7.7 per cent to 18,678. The inventory of homes for sale at the end of June of 5,457 listings is up 53.1 per cent. The sales-to-new listings ratio of 0.55 dropped by 13.9 per cent. The days on the market to sell a listed property has gone up from 29 in 2014 to 40 this year.

Nationally, Royal LePage said the detached bungalow segment had the highest national increase in the second quarter, rising 7.5 per cent year-over-year to $438,938, while standard two-storey homes appreciated 6.8 per cent to $471,002. During the same period, the average price of a condominium rose 3.9 per cent to $268,583, it said.

The report said the average price of a home in Canada will increase 6.1 per cent for the full year to $432,960 when compared to 2014’s price of $$408,068. It was $382,466 in 2013.

“The robust national average home price increases that we have seen in the second quarter are heavily influenced by activity levels in Toronto and Vancouver,” said Phil Soper, president and chief executive of Royal LePage, in a statement.  “Looking to Canada as a whole, 2015 is shaping up to be a record year for housing, despite the cloud of economic uncertainty caused by low oil prices and twitchy global economies.

“While the oil shock has been a troublesome drag on our economy this year, it seems premature to ring the recession alarm bells now, injecting further monetary stimulus. The country’s all-important real estate market simply does not need a rate cut. I worry that stoking this engine further could move us from a perfectly manageable major market expansion into a more difficult correction, as price levels decouple from more household incomes.”

-Calgary Herald

BEWARE ‘Guaranteed Sale’ Programs. A NOTE ABOUT ‘GUARANTEED SALE’ PROGRAMS

If the real estate agent or broker you’re interviewing offers you a ‘guaranteed sale’ program as an enticement to list with them, ask yourself three questions:

1) How much below what your home is really worth will they have to price your home to get it sold in the timeframe they are promising? And if the super-low price doesn’t net a buyer in the allotted time,

2) How much of your equity are you giving up when the broker ‘buys’ you out at the sales price THEY picked? Finally,

3) How will you feel if your home sells for tens of thousands of dollars more than you received shortly after your broker buy-out?

If you’ve thought through this and are willing to potentially leave that kind of money on the table, then a guaranteed sale program may be right for you. But if you’re not, your best bet is to get the finest representation available in your marketplace.

Pick the agent that you feel is the most professional, competent and compatible with you. AFTER you’ve picked your agent, THEN price your home.
There are future consequences for every decision you make with regards to selling your home. Let us show you how our second-to-none listing consultation can prepare you to tackle these consequences head on and with your eyes ‘wide open.’

-Willow

Calgary housing market a low overall risk: CMHC

Calgary is at a low risk of a housing correction, says Canada Mortgage and Housing Corp. in an assessment of market conditions across the country.

Its House Price Analysis and Assessment, released Thursday, said Calgary has an increased risk of overvaluation, but is stable or unchanged in three other areas — overheating, price acceleration and overbuilding.

The report said declining sales in recent months — a reflection of lower oil prices — has pushed the city’s sales-to-new listings ratio to a buyers’ market.

“This is expected to place downward pressure on house price growth, which could lessen the current risk of overvaluation in Calgary,” the CMHC said. The threat of price overvaluation reflects strong growth in house prices and modest gains in personal disposable income.

“The economy is being impacted by lower oil prices and slower inflows of migrants that will likely contribute to an expected slowdown in the rate of price growth in 2015,” it said.

CMHC said Regina and Winnipeg were deemed the riskiest markets in the country. Toronto and Montreal — where the number of condo units under construction is near historical highs — were rated a moderate risk as was Quebec City. Others considered low risk were Edmonton, Vancouver, Saskatoon, Ottawa, Halifax and St. John’s.

The Calgary Real Estate Board said April sales, through Wednesday were down 23 per cent from a year ago. New listings are up 19 per cent to 2,935. The median price has dropped 2 per cent to $420,000 while the average sale price is down by 1.5 per cent to $468,411.

“We are expecting slower sales as well as reduced pressure on prices,” said Felicia Mutheardy, acting principal market analyst for Calgary for CMHC.

Don Campbell, senior analyst with the Real Estate Investment Network, said a perfect storm is poised to hit the Alberta real estate market with the slowdown normally associated with spring breakup in the oilpatch coinciding with the 10th and 11th months of the oil price drop.

“The numbers are about to get pretty ugly, so prepare yourself,” he wrote recently on his website.

“Although we are seeing slight drops in average sale prices in the larger cities we are not yet witnessing the ‘panic selling’ that can have a very negative effect on average sale prices.

“However, those who listed their property in November, December or January will now be feeling the pressure to either lower their price or take it off the market. This, if they do need to sell, will lead to lower average sale prices.”

-Calgary Herald