Repeat Home Sales Prices in Calgary Surge in August - 3.9% Growth Highest in Canada

Mario Toneguzzi, Calgary Herald
More from Mario Toneguzzi, Calgary Herald

Published on: September 14, 2015 | Last Updated: September 14, 2015 10:18 AM MDT

 

Calgary saw Canada’s largest month-over-month increase in repeat home sale prices in August.
That’s according to the Teranet-National Bank National Composite House Price Index. Prices were up 3.9 per cent from July, and up 0.7 per cent from a year ago.
However, Calgary prices remain 0.9 per cent off their peak, set in October 2014.
Nationally, the index, for 11 major centres, was up one per cent from the previous month, an eighth consecutive monthly increase.
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.
Marc Pinsonneault, senior economist with the National Bank of Canada, said national rise exceeded the 11-year August average of 0.9 per cent.
The report said prices were up on the month in six of the 11 metropolitan markets surveyed. Besides Calgary, there were increases of  2.4 per cent in Hamilton, 1.6 per cent in Toronto, 0.6 per cent in Vancouver, Ottawa-Gatineau and Winnipeg. Prices were down on the month in Victoria (-0.3 per cent), Halifax ( 0.4 per cent), Edmonton and Montreal (−0.5 per cent) and Quebec City (−1.1 per cent).
“The composite index was at an all-time high in August for a sixth consecutive month, though only the Vancouver, Hamilton and Toronto component indexes were at an historical high in August. The resale market in those three centres is a seller’s market according to the Canadian Real Estate Association criterion of sales relative to new listings,” said Pinsonneault.
He said that in August the composite index was up 5.4 per cent from a year earlier, the highest 12-month increase since November 2014. The 12-month gain was well above the countrywide average in Vancouver (9.7 per cent), Hamilton (8.8 per cent) and Toronto (8.7 per cent). It was below the average in Victoria (3.2 per cent), Edmonton (0.8 per cent) and Calgary. Prices were down from a year earlier in Winnipeg and Ottawa-Gatineau (-0.4 per cent), Montreal (-0,5 per cent), Quebec City (-0.7 per cent) and Halifax ( 1.4 per cent), added the report.
According to the Calgary Real Estate Board, month-to-date up to and including Sunday, MLS transactions in the city of 581 are down 36 per cent from the same period a year ago while new listings of 1,433 have fallen by 9.9 per cent. The average MLS sale price of $461,032 is off by 4.8 per cent year-over-year but the median price of $426,000 is up by 0.25 per cent.
Ann-Marie Lurie, CREB’s chief economist, said the local real estate board’s price measure is slightly different than the Teranet figures. Based on the citywide benchmark price of $456,300, prices remain similar to levels reported last year and have declined by one per cent since December 2014, she said.
“The slight moderation in prices so far is partly related to the supply in the market. Moving into this cycle there was limited supply in the rental, new home and resale market,” said Lurie. “So while housing demand has eased and supply levels have risen, overall market conditions remain relatively balanced limiting some of the downward pressure on price. However, price changes can be more pronounced depending on the price range, property type and location.
“Nonetheless, further job losses are forecasted and the energy sector slowdown is now expected to extend into next year. This will continue to impact the demand/supply balance in the city, and we may start to see further downward pressure on aggregate pricing.”
mtoneguzzi@calgaryherald.com

Luxury Home Sales in Calgary Fall Sharply but Prices Hold Steady

Mario Toneguzzi, Calgary Herald
More from Mario Toneguzzi, Calgary Herald

Published on: August 31, 2015 | Last Updated: August 31, 2015 10:01 PM MDT

 

Sales in Calgary’s luxury home market may have fallen sharply from last year but properties have tended to hold their prices, says a new report released by RE/MAX.
The luxury market report said sales of properties over $1 million in the Calgary region have dropped by 28 per cent year-over-year from 2014 levels as the city grapples with the impact of falling oil prices.
Elton Ash, regional executive vice-president for RE/MAX of Western Canada, said the uncertainty in the oilpatch is impacting the luxury home market in the city.
“The question I’ve really got is if it’s only at 25 per cent roughly the volume decrease why aren’t prices moving more downward?,” he said.
“What we’re seeing in Calgary is that luxury buyers are not witnessing a notable decrease in prices, but there is less pressure and stress for buyers during the negotiation process. We’re seeing that normal conditions like home inspection and financing, which were rarer when buyers were frequently in competing offer situations, have become part of the normal negotiation process again. Buyers don’t have to make up their minds on the spot.”
Ash said Calgary now has a more diversified economy than it had in the 1980s “when the last hellish incident occurred.” That is somewhat sheltering the blow to the housing market from the oilpatch downturn.
“So I think overall the diversification has certainly muted the initial response to the oil price woes at this point,” he said.
The RE/MAX report said $1-million plus MLS transactions dropped to 517 year-to-date from January 1-July 31 — down from 715 for the same period a year ago. Sales of $2-million plus are down to 48 units from 77 last year and in the $3-million plus price point sales have fallen from 17 in 2014 to 14 this year.
It said a “healthy” 2.3 to 2.5 months’ supply of inventory in the $1 million plus range has brought a more balanced market to Calgary.
Rick Campos, a realtor with RE/MAX First in Calgary, said the housing market in general is seeing less activity these days.
“The market being soft has actually provided buyers the opportunity to move up who maybe couldn’t get into the (luxury) market last year or the year before,” he said. “There’s a different buyer out there today than there was a year ago or two years ago. So we have move-up buyers now where I think for a couple of years we were dealing with what I call power couples — young professionals who some of them were buying their first home. Now our luxury market isn’t going basically to first-time buyers, it’s going to move-up buyers.
“Our prices haven’t really suffered overall at this point.”
The RE/MAX report said a trend in Calgary’s luxury market is for buyers to purchase properties near the city’s core and then hire a builder to tear them down and construct a new home.
“Another thing in our luxury market that’s holding its own is lake properties. Like inner-city, there’s a limited supply … of lake community properties. So whether you’re talking Lake Bonavista or Midnapore those properties are still holding their value very well. If you were to drive around all the lakes in Calgary, you wouldn’t find too many properties for sale at this time.”
mtoneguzzi@calgaryherald.com

Alberta Housing Market Forecast to Rebound in 2016

Mario Toneguzzi, Calgary Herald
More from Mario Toneguzzi, Calgary Herald

Published on: August 20, 2015 | Last Updated: August 20, 2015 6:00 AM MDT

After a tough year in 2015, Alberta’s resale housing market is expected to rebound in 2016, according to a report by RBC Economics.
The bank’s senior economist, Robert Hogue, is forecasting sales in the province to dip by 17.8 per cent this year from 2014 to 59,000 transactions – the largest drop in the country.
But Alberta is then expected to see the biggest year-over-year hike in sales in 2016 of 7.1 per cent to 63,200 units.
Despite the drop in sales this year due to a slumping economy and continued depressed oil prices, the average sale price in Alberta is forecast to climb by 0.7 per cent to $378,500 and grow by another 2.1 per cent next year to $386,600.
However, the news isn’t that good for new home construction. Hogue is calling for an annual decline of 12 per cent in 2015 to 35,700 units followed by another 15.1 per cent decrease in 2016 to 30,300 units.
At the national level, the RBC report said the number of resales in the country would jump by five per cent this year to 505,400 this year but drop by 0.7 per cent next year to 501,800.
Hogue is expecting the national average price to rise by 4.6 per cent this year to $392,600 and by 3.2 per cent in 2016 to $405,100.
As for housing starts, Canada will mirror what is happening in Alberta but at a lesser scale. Starts this year are expected to drop by 1.9 per cent year-over-year to 185,800 units and fall by another 2.1 per cent next year to 181,500 units.
mtoneguzzi@calgaryherald.com

Calgary at Low Risk of Housing Correction, says CMHC

                                                                                        Real estate listing in Calgary. Calgary Herald

Mario Toneguzzi, Calgary Herald

 

Published on: August 13, 2015 | Last Updated: August 13, 2015 4:53 PM MDT

Calgary’s housing market is not under threat of a correction despite a downturn in the local economy, Canada Mortgage and Housing Corp. said in an analysis Thursday.
Its assessment of 15 metro markets lists Calgary as “low risk” while Toronto, Regina and Winnipeg were rated “high risk.” The review considered four factors — overheating; acceleration in house prices; overvaluation; and overbuilding — as of the end of March.
“The low price of oil has affected many different sectors of the economy, affecting employment and income growth, and increasing the unemployment rate. Weaker labour market conditions have also slowed migration to the region,” CMHC said of the Calgary-area market.
It said acceleration in prices and overbuilding were considered stable, while the threat of overheating had decreased. The risk of overvaluation rose to moderate.
“Given the information we had at that time, we’re seeing a modest amount of overvaluation,” said CMHC chief economist Bob Dugan. “If there were to be some sort of an economic event to cause the fundamentals to change dramatically that could affect our assessment.”
Toronto was added to the CMHC’s list of troubled markets, with rapid price growth and overvalued home prices putting the country’s biggest real estate market at high risk of a correction, CMHC said. Regina and Winnipeg were previously placed in the high-risk category in April.
In Regina, price acceleration, overbuilding in the condo market and overvalued home prices are responsible for the heightened housing market risk, according to the report, although CMHC said price growth is beginning to wane. In Winnipeg, overvalued home prices and overbuilding have been flagged as concerns.
Meanwhile, Vancouver — one of the country’s priciest real estate markets — was deemed low risk, even as home prices there continue to soar. The benchmark price of a detached home in metropolitan Vancouver hit $1.1 million in July, up 16.2 per cent from a year ago, the Real Estate Board of Greater Vancouver said last week.
Don Campbell, senior analyst with the Real Estate Investment Network, said Calgary’s low-risk rating was interesting given the year-long decline in oil prices that could cause the local market to become “more volatile.”
“The lack of rental properties in that mid-range size and price is holding back many people from selling their homes in Calgary, however, as the pain deepens in the oil and gas market, many will be forced to sell as this downturn does not seem to be short in nature,” he said. “This adds risk to average price drops and demand, especially in the coming November to February market window.”
Statistics Canada said Thursday that new home prices in the Calgary area rose 0.1 per cent in June.
“Higher land prices were largely offset by builders reducing prices because of market conditions,” the federal agency said. Prices were up 0.7 per cent year-over-year.
In its latest report, the Calgary Real Estate Board said the average MLS sale price for July was $476,446, down about 1 per cent from a year ago while the median price of $435.000 grew by 2.35 per cent. The benchmark price, which CREB identifies as a typical property sold in the market, was largely unchanged at $455,400.
With files from The Canadian Press
mtoneguzzi@calgaryherald.com

The Perfect Storm to Create a Rental Unit in Your Property

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Garry Marr | August 7, 2015 1:30 PM ET
More from Garry Marr | @DustyWallet

 

Between the Conservatives' proposal to bring back the home renovation tax credit and CMHC's change to allow rental income to count toward your mortgage, why wouldn't you consider adding an income suite?

The renovation market, already at record levels in terms of spending, could get a major boost from Conservative plans to introduce a tax credit worth up to $750.

Experts are divided on what impact a federal Conservative promise to revive a home renovation tax credit could have on the real estate industry, with some predicting it could add more fuel to red-hot housing markets while others say it likely wouldn’t have any impact at all

'Playing with fire': How the Tories' renovation tax credit may affect Canada's housing market

One area that money could get funnelled into is secondary rental units, like basement apartments, which are also set to get a major lift because of changes made by Canada Mortgage and Housing Corp.
“I think people do a fair amount of it,” said Peter Norman, chief economist of Altus Group, referring to how much of the annual $68 billion renovation market goes into creating income suites. “(A new tax credit) obviously comes into play into the renovation numbers, but it’s a small amount. There are lot of reasons why someone might create a basement apartment suite and lots of reasons not to.”
If you’re on the fence, Norman says one reason you might shy away from creating a rental suite is that you would lose a portion of the principal residence exemption on capital gains. But, at the same time, the extra income is attractive to people struggling with house prices in cities like Toronto and Vancouver, where the average home is selling for about $1 million and $1.4 million respectively.
CMHC, the Crown corporation that is the larger provider of mortgage default insurance in the country, announced changes in July that will make that rental income even more attractive for homeowners. It will allow homeowners to count all the income from their secondary units when qualifying for a loan instead of the current limit of just 50 per cent of income.
In order to qualify under the changes, which take effect Sept. 28, secondary units must be legal and conform to local municipal codes — all the more reason to do a legal renovation instead of something under the table with cash. Altus has found about 40 per cent of respondents in a recent survey  believe small renovation jobs (under $5,000) are done with cash.
The promise from Stephen Harper to reintroduce the Home Renovation Tax credit and make it permanent would also likely encourage legal renovations because in order to qualify for the credit you need receipts. The credit would be for 15 per cent of major home renovations  between $1,000 and $5,000 annually.
CMHC says one reason for changing its rules is that secondary suites create more affordable housing. Vacancy rates across the country remain low, and the Crown corporation reported in June that the national average for vacancies in the country’s 35 largest markets was just 2.9 per cent.
But not everybody thinks further boosts to the housing market is a good thing. Allowing homeowners to count income from rental units could create larger loans, raising prices.
“The Conservative campaign pledge to introduce a new home renovation tax credit if elected this autumn is possibly more misguided than the NDP and Liberal pledges to raise taxes during a recession,” said David Madani, Canada economist for Capital Economics. “With renovation investment and household debt at record highs, encouraging households to invest more at a time when housing is widely believed to be hugely overvalued would create even greater imbalances in the economy.”
gmarr@nationalpost.com

Repeat Home Sale Prices in Calgary Swing Upward

Mario Toneguzzi, Calgary Herald
More from Mario Toneguzzi, Calgary Herald

Published on: July 14, 2015 | Last Updated: July 14, 2015 3:40 PM MDT

Calgary experienced one of the highest rates of growth for prices of repeat home sales in June, according to a new report released Tuesday.
The Teranet — National Bank National Composite House Price Index said prices in Calgary rose by 2.5 per cent month-over-month following a record monthly drop of 3.3 per cent in May. Only Victoria, at 2.6 per cent, had a bigger monthly gain.
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.
Nationally, the index for 11 major centres surveyed in Canada reached a record level — up 1.4 per cent from the previous month, a sixth consecutive monthly increase. The rise was slightly above the June average of 1.3 per cent over the last 10 years., said the report.

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On a year-over-year basis, prices were up 0.2 per cent in Calgary. They rose by 5.1 per cent nationally.
The report said Calgary prices remain 2.7 per cent below their peak in October 2014.
mtoneguzzi@calgaryherald.com

Chestermere Runs Counter to Housing Market Downturn

 

Mario Toneguzzi, Calgary Herald
More from Mario Toneguzzi, Calgary Herald

Published on: July 7, 2015 | Last Updated: July 7, 2015 9:53 AM MDT

Chestermere set a record for MLS home sales in June. Lorraine Hjalte Lorraine Hjalte / Calgary Herald     

Home sales in Chestermere bucked the regional trend by setting an all-time sales record in June, according to Mike Fotiou, associate broker with First Place Realty in Calgary.
Fotiou said in his real estate blog that 64 homes sold during the month, which is a 49 per cent increase from a year ago. It was also more sales than the entire first quarter of this year.

“For the city overall, prices were up from a year ago by all three measures: the benchmark price increased 7.4 per cent from $458,900 to $493,000; average price was up 2.5 per cent from $532,071 to $545,509; median price posted a 1.5 per cent gain, climbing from $512,500 to $520,000,” he said.
Fotiou said there were 125 properties for sale at the end of June which was six more than a year ago but 20 less than the previous month.

“The Chestermere market enters the summer on solid footing: under two months of supply and a sales-to-new-listing ratio of 0.86,” he said.

By contrast, total MLS sales in Calgary were down by 18 per cent, to 2,183 last month, the slowest pace of year-over-year decline in 2015. New listings also fell by 18 per cent to 3,122. The average sale price of $483,398 was down 1.67 per cent, while the median price rose 0.7 per cent to $430,000, according to the Calgary Real Estate Board.
In the surrounding areas around Calgary, total MLS sales in June of 560 were down by 14.86 per cent from last year. However, all price indicators were positive. The benchmark rose by 4.12 per cent to $435,000. The median was up 0.8 per cent to $407,750 and the average increased by 6.4 per cent to $499,561.

“Transportation and access improvements via the ring road as well as affordability and lifestyle choice are all playing a role in the strength of the Airdrie and Chestermere real estate marketplaces,” said Don Campbell, senior analyst with the Real Estate Investment Network. “The lifestyle choice that these two regions provide versus an increasingly busy and congested Calgary, have helped them become a destination of choice for those wishing to settle in the Calgary region.
“In addition, they have become magnets for long-term Calgarians who have sold for economic reasons … The ripple effect is in full force as we are also witnessing long-term Chestermere and Airdrie residents pulling up stakes to even smaller, less busy, centres even farther out.”
Fotiou said Airdrie home sales improved in June but a greater number of new listings nudged inventory to its highest level since 2011.

The 166 homes sold last month was a 8.5 per cent increase from May but a 16 per cent drop year-over-year.

“Airdrie’s red-hot seller’s market from last year had ping-ponged to a buyer’s market in January and then into a balanced one by June with 2.31 months of supply and a sales-to-new-listing ratio of 0.68,” said Fotiou.

He said the benchmark price annual growth slowed to 2.9 per cent in Airdrie, the smallest increase since November 2012 and a far cry from the double digit gains experienced through most of 2014. It was $374,900 in June. The median price of $387,400 dropped by 0.7 per cent from last year while the average price was up 2.6 per cent to $394,320.
mtoneguzzi@calgaryherald.com