Calgary a Star Performer in Canadian Housing Market

Calgary a star performer in Canadian housing market

High prices absorbed by rising income levels

By Mario Toneguzzi, Calgary Herald May 27, 2014                          

 

CALGARY - 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.”
mtoneguzzi@calgaryherald.com
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Calgary Housing Market Postive for Next Two Years: Report

Calgary housing market positive for next two years: report

MLS sales and prices, and new construction, on the rise

 

By Mario Toneguzzi, Calgary Herald May 22, 2014

 

 

Calgary’s housing market continues to be very strong.

Photograph by: Mikael Kjellstrom (Kjellstr¿m) , Mikael Kjellstrom (Kjellstràm)

CALGARY - 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.”
mtoneguzzi@calgaryherald.com
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Calgary Prices for Repeat Home Sales Hit a New High

Calgary prices for repeat home sales hit a new high

10% hike from last year

 

By Mario Toneguzzi, Calgary Herald May 14, 2014                         

 

Calgary’s housing market continues to see rising prices.

CALGARY - 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.”
mtoneguzzi@calgaryherald.com
Twitter.com/MTone123

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Province’s condo law to get an overhaul

Bill 13 includes new process to resolve disputes

By Bill Mah and Mario Toneguzzi, Calgary Herald May 8, 2014                          

 

 

Doug Griffiths, Service Alberta Minister, says it’s time to modernize the Condominium Property Act.

A proposed overhaul of Alberta’s condominium law, including a way to better resolve disputes, is being hailed as long overdue for the province’s booming condo market.
“The original condominium act was introduced in 1969, and it’s had a couple of minor amendments, but really the condominium developments that are being built and the complexity of the relationships has far exceeded the legislation written in 1969,” Service Alberta Minister Doug Griffiths said Wednesday in outlining the changes.
“It was time to update and modernize it.”
After years of consultations with industry and condo groups, the government tabled Bill 13, the Condominium Property Amendment Act, in the legislature for first reading on Tuesday. The bill, which must still undergo scrutiny from MLAs before being voted on, contains 50 amendments.
These include the creation of a new condo dispute tribunal; clearer and expanded disclosure to buyers of initial condo fees and other information by developers; improved governance for condo corporations and harsher penalties for “particularly unfair actions by developers.”
Griffiths said the current condominium law lacks enough tools to deal with challenges, such as disputes that arise between owners, condo corporations, builders and other stakeholders and is needed in Alberta, where there are more than 8,000 condo corporations, accounting for about 20 per cent of homes sold annually.
“We’re going to incorporate the dispute resolution process, a new mechanism that means that people don’t have to resolve things in court, which is a costly, lengthy, confrontational process,” Griffiths said.
Work on the regulations, which will include details about the dispute tribunal and clarification of insurance obligations for corporations and owners, will begin shortly.
June Donaldson, co-founder of the Alberta Condominium Owners Association, said the amendments are desperately needed.
“The fact that there’s going to be a tribunal where the average condo owner can go, and in a very constructive and collaborative way, hopefully remedy it in a way that addresses the issues that are causing them worry, money or stress … is so big,” Donaldson said.
“Condominium living in Alberta has changed so dramatically over the past 10, 15 years and the legislation has not kept up with the market,” said lawyer Robert Noce, a partner at Miller Thomson, who handles condo legal matters.
The amendments will help protect consumers, offer a way to deal with issues more swiftly and give owners and corporations a clearer understanding of their roles and obligations, he said.
Jim Rivait, CEO of the Alberta Chapter of the Canadian Home Builders’ Association, said most builders and developers are reputable and won’t have to change their practices. However, the new legislation will offer added protection to buyers, he said.
“It’s quite a complex piece of legislation, and only part of it really affects the building part of it,” he said. “A lot of it is the management and how they run the condo board, answering a lot of the issues.
“There’s some transparency things that they want to build in as people get into the whole condo business, so that people are aware. And we’re all for that.”
Condos, often more affordable than single-detached homes, are a growing sector, with 55 per cent of housing starts classed as multi-family in the first three months of 2014, Rivait said.

“From an industry standpoint, it’s becoming more and more important, not less important, because affordability causes people to enter into the market through condos as their first homes and that’s usually their first experience.”
Calgary Real Estate Board president Bill Kirk said realtors welcome the new condo legislation because added consumer protection will make condo ownership a more attractive option.
“If it’s good news for condo owners, it’s good news for the real estate industry because they’re our clients, and if it’s clearer for them how they’re going to operate, it’s just great news for us,” he said.
CREB data show 1,611 MLS sales of condo apartments in the city through Tuesday, a 20 per cent increase from the same period a year ago.
In the condo townhouse category, sales are up about 18 per cent to 1,245 units.
“The condominium review and act revisions will increase disclosure to the consumer and remove some of the uncertainty in the market,” said Matthew Boukall, director of residential advisory services for Altus Group.
“Condominium development is still a relatively new and growing housing option in our market and many consumers may be unfamiliar with the concept.
“Changes that improve disclosure and provide consumers with more information, and remove some of the hidden risks to condominium ownership should improve confidence in the built form, and may attract more consumers who were uncertain about buying a condo in the past.”

 
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