Calgary homebuyer demand ‘supercharged,’ says RBC report

Booming economy sparking housing market

By Mario Toneguzzi, Calgary Herald November 27, 2013

 

 

 

 

Calgary’s housing market is being described as “supercharged” due to the booming economy.

Photograph by: Darren Calabrese , THE CANADIAN PRESS

Homebuyer demand in Calgary has been “supercharged” by a booming economy, says the latest Housing Trends and Affordability Report released Wednesday by RBC Economics Research.
The report said modest deterioration in housing affordability in the Calgary area in the third quarter “is likely to be taken in stride by local homebuyers, because they still benefit from some of the lower ownership costs as a share of household income in Canada.”
The report said RBC’s affordability measures increased for all housing categories — between 0.2 percentage points and 0.7 percentage points. But it said the levels continue to be below the national and historical averages.
Related: Rising prices, mortgage rates hit home affordability in Canada
“Favourable affordability conditions primarily reflect high household income in Calgary rather than low home prices given that home prices in the area are among the more expensive in the country,” said the report. “While affordability is constructive for homebuyer demand, the more powerful factors driving it, no doubt, are Calgary’s hot labour market and fast-rising population, both supercharged by a booming provincial economy.
“Home resales surged to their highest level in six years in the area. The fact that this occurred despite the worst floods in memory at the end of June is quite telling of the market’s strength at this stage.”
The report said affordability levels in Alberta remained relatively attractive in the third quarter, with measures standing below their historical averages and the national averages.
“Alberta’s strong provincial economy and rapidly rising population continue to fuel housing market activity – third quarter home resales increased by 7.8 per cent from the second quarter, the fastest pace in nearly three years,” said Craig Wright, senior vice-president and chief economist of RBC, in a statement. “The province’s unrelenting economic boom bodes well for continued solid housing market conditions next year.”
RBC’s housing affordability measures capture the proportion of pre-tax household income needed to service the costs of owning a home at market values.
In Alberta, RBC’s measure for bungalows rose by 0.6 percentage points to 32.5 per cent, and the measure for two-storey homes rose 0.2 percentage points to 34.6 per cent. The measure for condominiums increased slightly by 0.1 percentage points to 19.6 per cent.
In Calgary, the measure rose by 0.7 percentage points to 33.7 per cent points for bungalows, 0.4 percentage points to 34 per cent for two-storey homes, and 0.2 percentage points to 19.6 per cent for condominiums.
In Canada, RBC’s measure for detached bungalows rose 0.7 percentage points to 43.3 per cent, while the measure for two-storey homes climbed 0.6 percentage points to 48.9 per cent. The measure for standard condominiums edged only slightly higher by 0.1 percentage points to 28.0 per cent.

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Calgary resale home average prices to balloon to more than half a million dollars

 

Report says average to hit $517,016 in 2017

 

By Mario Toneguzzi, Calgary Herald November 19, 2013 9:41 AM

 

 

 

CALGARY - The average price for a resale home in Calgary will balloon to more than half a million dollars by 2017, according to a new real estate report released Tuesday.
The Conference Board of Canada’s Autumn Metropolitan Housing Outlook, commissioned by Genworth Canada, said the average price for all residential property in Calgary will grow from $431,760 this year to $517,016 in 2017.
“Calgary is facing a lack of inventory in particular areas,” said Tanya Eklund, a realtor with RE/MAX Real Estate (Central) in Calgary.
“Buyers looking for land for redevelopment and homes for renovation have been in very short supply and have driven up pricing due to multiple offers and low inventory. Low interest rates, strong unemployment rates, low vacancy rates and an overall strong economy have also added to strength in the Calgary market.”
Calgary’s economy and housing demand continue to thrive as energy sector activity remains healthy. Rising GDP is spurring employment growth,” said the report.
“On the resale housing market front, solid sales will lead to sound price gains this year and next. The new housing market is benefitting from strong absorptions, which are trimming unsold stocks of new units and fostering new construction. The medium term also looks decent.
“Ongoing economic growth will continue to produce gains in resale sales and prices and keep housing starts above their 20-year average. Good housing affordability, measured against local incomes, is an ongoing benefit to this market and allows single-family starts to maintain a high market share compared with other cities covered in this report.”
The report said summertime flooding in Calgary will limit Calgary’s GDP to 3.3 per cent growth in 2013, modest by recent standards. Output will rise a slightly faster 3.4 per cent in 2014, spurred by government-funded rebuilding efforts.
The job market will continue to expand, with annual growth of 2.4 per cent this year and 2.8 per cent in 2014 cutting the unemployment rate from 4.9 per cent this year to 4.6 per cent in 2014. Economic health should continue between 2015 and 2017, with GDP expanding roughly three per cent and employment rising about two per cent each year, it said.
“Calgary’s strong economic fundamentals allowed its resale market to largely shrug off the floods. Seasonally-adjusted sales and the average resale price actually rose during June, the flood month, and have subsequently advanced,” said the report.
“Price growth is accelerating, although increases remain far below boom-era advances. We expect the market to remain balanced and price growth to stay healthy in 2014 and over the following few years.”
The report’s forecast for average prices over the next few years and annual growth rate are:

    2013: $431,760, 4.7%
    2014: $451,798, 4.6%
    2015: $473,470, 4.8%
    2016: $497,139, 5.0%
    2017, $517,016, 4.0%

Forecast for sales in the resale market for the next few years and annual growth rate are:

    2013, 28,111, 5.5%
    2014, 28,793, 2.4%
    2015, 29,418, 2.2%
    2016, 30,027, 2.1%
    2017, 30,620, 2.0%

“Unsurprisingly, Calgary’s resale prices are rising briskly. Year-over-year growth has averaged a solid 4.6 per cent in the latest four quarters, including a first quarter jump near eight per cent,” said the report. “These increases will lift Calgary’s average price 4.7 per cent in 2013, the largest gain since 2007 and finally exceeding that year’s peak value. Similar price growth is expected between 2014 and 2016, with a slight tapering in growth to four per cent in 2017.
“These increases will slightly erode local housing affordability. Principle and interest charges on Calgary’s average resale home were under 16 per cent of average household income the last two years and are expected to remain there in 2013. But house prices will rise faster than incomes, pushing the ratio to roughly 20 per cent by 2017. This remains decent, as affordability is better only in Edmonton, Ottawa, and Winnipeg among the cities in this report.”
The report said buoyant housing demand is also energizing the new home market. Absorption of new units averaged 11,200 units in the four quarters to the second quarter of 2013, up 25 per cent from a year earlier. This included a surge to an annualized 15,000 units in the second quarter, the most since 2008. This strength will lift absorptions to a full-year total of 12,140 units in 2013, up 25 per cent from 2012. Another increase of nearly six per cent in absorptions is expected for 2014, but still trailing the peak of 13,700 units reached in 2008.
“Healthy new-unit take-up fuelled a big jump in housing starts to 13,186 units in 2012, more than double the recessionary trough in 2009, but well off peak levels of the last decade,” it said. “We expect starts to ease a modest 2.7 per cent in 2013 as an 11 per cent dip in multiple starts slightly outweighs a seven per cent gain in single-detached starts. For 2014, rebounding multiple starts will fuel a five per cent increase in total starts despite relatively unchanged single-detached construction.
“In the medium term, we expect housing starts to ease slightly, as both single-family and multiple construction dip. By 2017, we expect 11,400 units to get under way; this would slightly outpace the 20-year average of housing starts. While multiple starts are expected to increase their market share, they are forecast to make up only 52 per cent of total starts between 2013 and 2017.”

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Calgary housing boom pushing prices to all-time high

Single-family homes average more than half a million dollars

By Mario toneguzzi, Calgary Herald November 15, 2013 10:00 AM

 

 

 

CALGARY - Calgary’s booming housing market is pushing average prices to record levels as single-family home sales so far this year are averaging well above half a million dollars.
“The residential real estate market is holding strong for sellers,” said Grace Yan, a Calgary realtor with RE/MAX Real Estate (Central).
“It usually slows down for Christmas season but we are realizing that it remains at a steady rise. We are still finding a shortage of listings, lots of activity with shorter days on the market. We are finding from fixer uppers, inner-city properties to turnkey luxury high-end homes in demand. We anticipate the steady market to continue to heat up for the new year.”
As of Thursday, according to the Calgary Real Estate Board, the average MLS sale price for all residential property in the city so far this year has been $457,123. The annual record is $428,649 set last year. In 2004, average sale prices in the city were $227,269.
So far this year, the average MLS sale price for a single-family home is $517,598. The annual record price of $481,259 was set last year. In 2004, the average was $251,558.
On Friday the Canadian Real Estate Association released its latest MLS data for October showing that Calgary had the best year-over-year gain in the country in the MLS Home Price Index.
CREA said prices in Calgary, for homes tracked by the index, rose by 8.17 per cent from last year while the national average of 11 markets surveyed was up by 3.52 per cent.
Scott Bollinger, broker with the ComFree Commonsense Network, said there was a little softness in the market last year because of the introduction of tighter mortgage rules.
“But the Calgary numbers we’re seeing today show this is the strongest and healthiest housing market since the 2006 boom,” he said. “That said, this isn’t the boom — and that’s a good thing. 2006 was marked by some things we’re not seeing today — a massive inventory crunch, irrational exuberance and confidence that the market would stay strong indefinitely, and almost unthinkable economic growth. We saw six and seven per cent growth in 2006.
“Our economy today is growing at a nice, measured, healthy rate — three, three-and-a-half per cent. So we’re still seeing confidence, but it’s not the same extreme. There’s a collective memory in this city of the boom, so I think this strength we’re seeing is more sustainable. Houses are still selling quicker, but they’re nowhere near the frenzied pace we saw in 2006, when the average time on market dipped to 20 days.”
In October, Calgary had 2,510 MLS sales, up 19.3 per cent from last year. Alberta registered 5,588 sales, up 16.1 per cent, and Canada had 39,039 MLS sales for an annual hike of 8.3 per cent.
Average sale prices in October and their year-over-year increase were: Calgary, $436,216, 4.2 per cent; Alberta, $377,084, 3.8 per cent; and Canada, $391,820, 8.5 per cent.
Calgary’s real estate market is showing no signs of slowing down in November. Month-to-date including Thursday, there have been 830 MLS sales in the city, up 34.30 per cent from the same period a year ago, according to CREB. The average sale price has also climbed by 7.47 per cent to $463,126.

Doug Porter, chief economist with BMO Capital Markets, said there are two notable splits developing in Canada’ housing market - larger cities are hot, while smaller cities are generally not, and sales in the West are strong, but are weakening in much of the East.
“When judged by total sales volumes, a measure that combines both price changes and the number of units sold, the hottest markets this year are Calgary, Edmonton, and, against all expectations, Vancouver,” he said. “All three have reported double-digit volume increases, the only cities in that category.”
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By Karin Olafson
The City Blog   

6 Things You Didn't Know About Development in Calgary

Which communities are growing the fastest and which is the biggest overall

Everyone knows that Calgary is booming. But do you know the details? Kevin Froese, the coordinator of Calgary’s New Community Planning, shares some statistics from the 2013 Civic Census.

1. Overall Community Growth

The five communities that saw the biggest population growth are all in developing areas. Evanston tops the list, followed by Auburn Bay, Cranston, Skyview Ranch and Panorama Hills.

Evanston  +1,680

Auburn Bay  +1,632

Cranston  +1,578

Skyview Ranch  +1,519

Panorama Hills  +1,358

2. Growth in Developed Communities

Coventry Hills saw the biggest population growth out of Calgary’s developed areas. Bridlewood and Beltline were second and third in terms of population growth, followed by the downtown commercial core and Martindale.

Coventry Hills  +611

Bridlewood  +518

Beltline  +513

Downtown Commercial Core  +411

Martindale  +410

3. Calgary's Biggest Community

Panorama Hills is still Calgary’s most populous community. This community is home to 23,605 people.

4. Population Growth in Calgary

So far in 2013, Calgary has grown by 29,327 people. This is a 2.62 per cent increase from last year and 36 per cent above the annual average from the past decade.

5. The Rate of Housing Growth

The rate of housing growth (7.5 per cent) was more than double the rate of population growth (2.6 per cent).

6. Calgary's Developing Areas

“Suburban Residential Growth 2013-2017” identifies 27 communities in Calgary’s developing areas. These communities grew by 19,635 people, which accounts for 67 per cent of the total population growth for the city.

 

Five Good Reasons to Buy a Home

Five good reasons to buy a home                

Laura Parsons, BMO Bank of Montreal

First posted: Wednesday, November 06, 2013 02:00 AM MST

Experts say the “right” time to buy should primarily reflect your personal and financial readiness.

 

 

While tighter lending policies and economic uncertainty may be keeping some prospective first-time home buyers on the wait-and-see list, there are factors that make today an attractive time to take the plunge.
Keep in mind that the “right” time to buy should reflect your personal and financial readiness — not an attempt to time the market.
Consider these five factors that could make this the time to buy:
1. Financing rates and terms are attractive. Not only are interest rates near the lowest they’ve been in decades, but low rates are available over longer terms.
2. Affordability is improving. Real estate prices have been levelling off in many markets and for certain types of properties, keeping affordability in check.
3. Less pressured buying process. Cooling markets mean fewer bidding wars — a huge relief to first-time buyers who find the process intimidating.
This can mean more opportunity to inspect properties, view comparables, or add conditions to an offer.
4. More to choose from. For certain types of housing, there may be more listings to look at. This greater choice may improve the chances of finding a property that has the features you want in a location that suits you.
5. You feel ready. Your personal situation should be the ultimate trigger: Do you want to put down roots, make space for a growing family, or fulfil a life goal? If you have already set aside a down payment, are prepared to make a long-term financial commitment and know what you want, these can be reasons enough to find a house to call your own.
I can walk you through the mortgage and financing side of the home-buying process ahead of time, so you’ll know what you can afford and can search for a home with confidence.
(The information in this publication was prepared by Ariad Communications and the views expressed are those of Ariad Communications and do not necessarily reflect the policy or views of Bank of Montreal.)
Laura Parsons is an area manager of mortgage specialists at BMO Bank of Montreal. If you have a question about home financing, reach her at laura.parsons@bmo.com

Calgary Housing Market Soaring with Sales and Price Hikes

Calgary housing market soaring with sales and price hikes (with graphic) 

Strong sellers’ conditions as listings down

 

By mario toneguzzi, Calgary Herald November 1, 2013 10:22 AM

 

 

                 

Calgary’s resale housing market continued to soar in October with strong year-over-year hikes in both sales and prices.
According to preliminary data from the Calgary Real Estate Board, MLS sales of 1,953 for the month were up 17.72 per cent from a year ago as the average sale price rose five per cent to $458,876 while the median price saw an increase of 5.96 per cent to $409,000.
“The October Calgary real estate market kept a consistent absorption rate between two to 2.2 months worth of inventory. This places us in a strong sellers’ market,” said Robyn Moser, a realtor with CIR Realty in the city.
“Attributes of a sellers’ market are, competing offers, listed home selling in the first two weeks or sooner, sellers being able to dictate the terms of the negotiations and not having to settle for much less than realistic asking prices. All consistent with our October experiences.”
Although new listings for the month were up 9.08 per cent to 2,522, active listings at the end of the month were down 16.18 per cent to 3,840.

Calgary single-family homes Calgary condo apartments Calgary condo townhouses | Infographics

The average days on the market to sell a property dropped from 45 a year ago to 40 in October.
Moser said housing activity in Calgary may be fuelled by a number of factors: seasonal fall peak activities with people wanting to purchase and move into homes before winter sets in; investor speculators coming into the market due to the flood impact in June; corporations reorganizing and centralizing back to Calgary and Edmonton; and rental rates increasing.
“Buyers had to react to this market by acting quickly when homes came available for sale, being prepared to pay asking price or above and ensuring they were prequalified and prepared for condition days of seven days or less in order to get their offers accepted,” said Moser.
Sales and prices were up across all housing categories in the city during the month.
In the single-family home market, there were 1,336 MLS sales, up 14.29 per cent from last year with the average sale price increasing by 4.76 per cent to $516,244 and the median price rising by 5.12 per cent to $452,000.
The condo apartment category saw sales rise by 24.35 per cent to 337. The average sale price was up 6.76 per cent to $309,414 and the median price rose by 8.80 per cent to $272,000.
In the condo townhouse market, sales of 280 were up 27.85 per cent with the average price rising by 13.49 per cent to $365,036 and the median price up by 8.29 per cent to $319,450.
The towns surrounding Calgary saw sales jump by 23.64 per cent to 387 with the average price increasing by 13.51 per cent to $390,580 and the median price up 8.11 per cent to $360,000.
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