Interest Rate Cut Could Give Slumping Calgary Housing Market a Boost

Interest rate cut could give slumping Calgary housing market a boost

Mario Toneguzzi, Calgary HeraldMore from Mario Toneguzzi, Calgary Herald

Published on: January 30, 2015Last Updated: January 30, 2015 5:41 AM MST

 

Lower interest rates could provide a boost for Calgary’s slumping resale housing market.
The BMO Home Buying Report, released on Friday, said 62 per cent of Calgarians are planning to purchase a home within the next five years and 16 per cent said the recent decrease in interest rates will allow them to afford a home sooner than anticipated.
The report also said 52 per cent of Albertans are planning to purchase a property within the next five years.
Laura Parsons, mortgage expert with BMO Bank of Montreal, said lower interest rates could boost housing activity.
“Overall the interest rates how much they’ve gone down it’s going to lower their (mortgage) payments,” she said. “The survey clearly says there’s people that are out there that are looking to buy and it’s going to nudge some of them. These rates aren’t going to stay this low for that long . . . I can’t see it not being somewhat of an inspiration for those people outside looking to get into homeownership.
“These months are traditionally slow anyway but I think this is going to be a really good nudge for some of those people and remember too for some of the people who have outside debt that have a home and have some equity this also too will mean maybe they can reduce some of their interest costs by re-writing and collaborating into a mortgage product.”
Just this week BMO dropped its five-year variable mortgage from three per cent to 2.85 per cent.
“Homeownership is still better than renting and with these rates and the (mortgage) payments that probably will actually end up being lower than a standard rental,” added Parsons.
Calgary’s resale housing market has taken a beating in January. So far this month up to Thursday, there have been only 793 MLS sales in the city, down 37.3 per cent from the same period last year. New listings have risen by 43.6 per cent to 3,082 while active listings are up by a staggering 89 per cent to 4,710. The average MLS sale price has dropped by 0.08 per cent to $461,637 while the median price of $422,000 is up by 1.69 per cent.
The BMO report also found that: 47 per cent of Calgary residents (34 per cent in Alberta) feel the lower interest rates will have a positive impact on their overall financial situation; 35 per cent of Calgarians (34 per cent Albertans) say they are now more likely to pay off their current debts, while only 13 per cent (Albertans) and 18 per cent (Calgary residents) will be influenced to take on more; 47 per cent of Calgary residents (62 per cent Albertans) said the change will have no impact on their plans to buy a property.
Sal Guatieri, senior economist with BMO Capital Markets, said that low rates will support activity in the housing market and improve affordability in Canada’s hotter urban markets.
“Given the negative impact of lower oil prices on the Canadian economy, interest rates are likely to remain low for some time, supporting home sales – especially in Vancouver and Toronto where affordability is an issue,” he said.
mtoneguzzi@calgaryherald.com

Calgary economy receives a top international ranking

Mario Toneguzzi, Calgary HeraldMore from Mario Toneguzzi, Calgary Herald

Published on: January 22, 2015Last Updated: January 22, 2015 9:11 AM MST

The lunch hour on Stephen Avenue in downtown Calgary, Alberta Tuesday, June 3, 2014.  Stuart Gradon Stuart Gradon / Calgary Herald    

Calgary is ranked as Canada’s top city for economic performance in 2014 and 53rd internationally in a new survey by the Brookings Institution and JP Morgan Chase.
It was also ranked 14th overall for GDP per capita.
The Global MetroMonitor looked at GDP per capita and employment growth of 300 major metropolitan markets around the world in 2014.
The international ranking for other Canadian cities was: Edmonton, 62nd; Vancouver, 74th; Quebec City, 80th; Toronto, 197th; Ottawa, 229th; Winnipeg, 279th; and Montreal, 285th.
The top five centres in the world in order were Macau, Izmir, Istanbul, Bursa and Dubai.
The top North American centre was Austin, Texas at 38th.
When measuring the largest differences in growth between a metropolitan centre and its country, Calgary was fifth in the world for GDP per capita growth. The report said the city measured 3.1 per cent in 2014 compared with 1.2 per cent for Canada for a difference of 1.9 per cent.
Edmonton topped all international cities with a 3.4 per cent difference in employment growth. The city’s employment growth was 4.0 per cent compared with 0.6 per cent nationally.
The report said Calgary’s GDP per capita was $64,540. The top centre was Zurich at $82,410 while the top place in North America was San Jose at $77,440 which placed it third overall.
mtoneguzzi@calgaryherald.com

Real estate firm predicts Calgary housing prices will rise despite oil slump

Mario Toneguzzi, Calgary HeraldMore from Mario Toneguzzi, Calgary Herald

Published on: January 14, 2015Last Updated: January 14, 2015 10:18 AM MST

Aerial view of suburbs in southwest Calgary.
Grant Black / Calgary Herald

 

A national real estate firm is predicting prices in Calgary’s resale housing market, and across the country, will continue to increase in 2015 despite low oil prices.
In releasing its house price survey and market survey forecast Wednesday, Royal LePage said the average price in Calgary will climb  2.4 per cent from 2014 to $472,000 while the Canadian average price will see a 2.9 per cent hike to $419,318.
It said the recent drop in oil prices did not impact the overall real estate market in the fourth quarter of last year.
Royal LePage said Calgary saw healthy price increases in all categories in the fourth quarter with average prices for detached bungalows jumping 9.1 per cent year-over-year to $511,889 and standard two-storey homes increasing 8.5 per cent to $500,320. Standard condominiums also experienced robust growth, rising 9.1 per cent to $311,644, it said.
“The Calgary market was one of the hottest in the country, with all three major housing categories seeing near double-digit price growth over this time last year,” said Ted Zaharko, broker and owner of Royal LePage Foothills, in a news release. “There remains a structural imbalance between the availability of homes and number of eager homebuyers. This fundamental discrepancy between supply and demand explains why we’ve seen such aggressive price appreciation in 2014.
“Inventory availability remains a major issue across the city, as frustrated buyers are chasing a limited number of homes. The one exception is condominiums, where new units are being built at a faster rate.”
Nationally, the average price for bungalows rose by 6.7 per cent to $406,218. Two-storey homes were up six per cent to $443,379. Condos were also up by 4.5 per cent to $257,624.
“For our 2015 forecast, we could not ignore the potential impact of the steep decline in the price of oil on housing markets across Canada,” said Phil Soper, president and chief executive of Royal LePage. “In the immediate term we anticipate that the natural slowing of home price appreciation we called for in the third quarter of 2014 will be delayed in Central Canada and accelerated in the West by recent developments in the energy sector.”
Zaharko said fourth-quarter MLS sales were up from the same period last year but down from the “heightened” levels seen earlier in the year.
“While we expect price rises may moderate in 2015, the upward trend we’ve seen over the past few years is unlikely to reverse without a meaningful increase in inventory,” said Zaharko.
“Oil is a major economic influence in Calgary, so the recent price drop is worrying. While we believe there may be some immediate term impact on the local housing market in the form of slowed appreciation, there would need to be prolonged low oil prices for any spillover into the housing market to be significant.”
mtoneguzzi@calgaryherald.com

Luxury home market hit new heights in Calgary

Mario Toneguzzi, Calgary HeraldMore from Mario Toneguzzi, Calgary Herald

Published on: January 7, 2015 Last Updated: January 7, 2015 6:52 AM MST

The most expensive MLS residential listing in Calgary right now is this property for $20 million.  Calgary Herald    

 

Calgary’s luxury residential real estate market soared in 2014 but the recent slump in oil prices has raised questions about the potential impacts on high-end properties in 2015.
Homebuyers last year had an appetite for luxury product — from the resale market to new projects not yet built, like The Concord, a proposed development near the banks of the Bow River in Eau Claire, where a condo sold last fall for $7 million.
“We’re roughly close to 50 per cent sold in the first tower and we’re not even breaking ground until late March,” said Grant Murray, vice-president of sales for The Concord.
“I think in most cases our buyers are very mature and investment savvy. They’re kind of in the range where I don’t think, unless there was a prolonged period where the oil prices were going to stay down, I don’t think it’s having any effect on these people.”
Murray said five of seven estate penthouses in the development at 6th Street and 1st Avenue S.W. have sold for between $3.5 million and $7 million.
Vancouver-based developer Concord Pacific plans to build 218 luxury residences in two towers, including a $13-million penthouse. Construction on the 14-storey, 105-suite West Tower is expected to start in March with completion by fall 2017. The East Tower — 113 units over 17 storeys — is to be completed six months to a year after the first tower.
A Sotheby’s International Realty Canada report, released Wednesday, said fluctuations in oil prices introduced uncertainty into Calgary’s top-tier market in the fall, but had a nominal impact on sales as of the end of 2014.
It said historically low mortgage lending rates, a solid Canadian economy and ongoing migration and foreign investment into the country’s major cities offer the luxury market some stability heading into 2015.
“Continued uncertainty in the oil market will impact Calgary real estate over $1 million, however, the degree of influence is still unknown. If employment and migration into the city remain at expected levels, sales are expected to remain on pace into early 2015,” the report states.
Calgary saw a 14 per cent increase in property sales over $1 million in the second half of 2014 compared with a year earlier, it said, despite the sudden decline in global oil prices.
Ross McCredie, president and chief executive of Sotheby’s International Realty Canada, said there is cautious optimism heading into 2015.
“No one is panicking right now,” he said McCredie, adding most buyers of high-end properties have built their wealth over a number of years.
“Those buyers understand cycles. They’re resilient. I think they know that $50 a barrel oil is not going to be the long-term outcome here … They’re pretty confident that things will come back,” he said.
Ann-Marie Lurie, chief economist with the Calgary Real Estate Board, said there is always going to be demand for certain types of homes.
“It’s a matter of what will happen because of oil prices,” she said. “It’s not really about the oil prices. It’s about the demand and what happens if incomes are affected. And really we’re looking at what’s going to happen to corporate bonuses and what will that do for people who are looking to move up? Some people it really doesn’t impact that much. So it depends on their financial situation.”
Lurie said the share of luxury resale homes to the overall market in Calgary has kept increasing over the past few years. Currently, it’s about six per cent. In 2008, it was about 3.6 per cent of the market.
According to CREB, MLS sales of properties more than $1 million reached a record 854 transactions in 2014, up from 726 in 2013 and 544 in 2012.
mtoneguzzi@calgaryherald.com

Calgary Resale Housing Market Sets Annual Price Record

Calgary resale housing market sets annual price record

Mario Toneguzzi, Calgary HeraldMore from Mario Toneguzzi, Calgary Herald

Published on: January 2, 2015Last Updated: January 2, 2015 4:13 PM

It was a year of record prices for the Calgary resale housing market and the fourth most active year on record, but 2014 ended on a bit of a sour note for the real estate sector as it began to feel the effects of slumping oil prices.
For the year, total MLS sales in Calgary were up 9.3 per cent, at 25,664. The average sale price of $483,079, was a record for the city and an increase of 5.8 per cent over 2013. The local market also saw new peaks for condo apartment and townhouse sales.
But as the year ended, the market was showing signs of shifting.
“Changes in the economic climate are expected to cool housing market conditions in 2015, and December activity may be the first indication,” said CREB’s chief economist Ann-Marie Lurie. “However, any pullback that may occur needs to be kept in perspective, as 2014 housing activity far exceeded our expectations.”
Robert Kavcic, senior economist with BMO Capital Markets, said December will likely foreshadow what is in store for the Calgary housing market in 2015.
“Obviously the oil price story is going to have a pretty big impact there,” he said. “If you look at our economic outlook for example, for 2015, we’re looking at 1.8 per cent (economic) growth (in Alberta) and that’s actually going to be below the national average (2.2 per cent) for the first time since the recession.
“For the housing market, what that probably means is that the big inward flow of migrants that we’ve seen in the last couple of years like 30,000 or 40,000 per year is probably going to get cut in about half. So you’re not going to have that much migration supporting demand in Calgary.”
Todd Hirsch, chief economist with ATB Financial, also said the December sales slump is a sign of things to come in 2015.
“Starting in December, and going forward, we’re going to start to see the effects of the lower oil prices. We haven’t really seen too much of it yet. Usually these data are lagged a bit. But in November and December we started to see some of it,” said Hirsch. “We saw it in December housing sales.
“I’m still not expecting any kind of crash but I think we are in for several months of soft numbers and probably year-over-year dips.”
December marked the first month in close to two years that MLS sales were down compared with previous-year numbers — breaking a string of 20 consecutive year-over-year gains. However, average sale prices rose for the 35th consecutive month. Total sales in December of 1,083 were down by 7.5 per cent from a year ago while the average price of $475,036 was up by 4.5 per cent.

      

     In 2014, overall records were also set for the benchmark price of $411,417 and the median price of $427,000.
Annual single-family home sales of 17,185, the fourth highest ever, were up by 5.5 per cent from 2013. Record prices were established in all categories. The prices and their annual increases were: benchmark, $458,017, 7.8 per cent; median, $484,000, 7.6 per cent; and average, $553,147, 6.9 per cent.
Condo apartment sales reached a new record of 4,742, up 18.4 per cent from the previous year. The prices and their annual increases were: benchmark, $266,350, 8.7 per cent; median, $285,000, 9.2 per cent; and average, $324,122, 8.2 per cent. Average and median prices established new records.
Condo townhouse sales also set a new peak with 3,737 transactions, up 17.7 per cent from the previous year. Record prices were established in the average price and the median price.
The prices and their annual increases were: benchmark, $294,692, 6.3 per cent; median, $330,000, 7.8 per cent; and average, $362,571, 6.1 per cent.
“2014 was interesting from a couple of points of view. One of them, the key one we ended up talking about most of the year, was how condominiums have taken an ever-growing market share of residential sales and actual residential supply of homes under the $400,000 mark,” said Bill Kirk, CREB’s president.
Kirk said there was a “dearth” of single-family homes under $400,000 available in the Calgary market, which also helped the growth in condo sales in 2014.
In the towns surrounding Calgary, the stats for each category and percentage annual change were: sales, 5,513, 24.2 per cent; benchmark price, $342,325, 6.2 per cent; median price, $385,000, 8.2 per cent; and average price, $396,812, 7.4 per cent.
The real estate board’s full 2015 forecast will be released January 14 at its annual Forecast Conference and Tradeshow.
mtoneguzzi@calgaryherald.com