Calgary Housing Update

CALGARY’S HOUSING MARKET SET TO OUTPACE 2010

Several Calgary Communities Get a Boost in Sales and Price

Calgary, November 1, 2011 – According to figures released today by CREB® (Calgary Real Estate Board), Calgary residential sales totaled 16,184 after the first 10 months of the year, an increase of eight per cent over last year.

Over 61 per cent of Calgary’s established communities saw increased sales levels compared to last year. Garrison Woods, Collingwood and Mahogany saw the largest sales increase at 170 per cent combined; nearly half of all Calgary communities recorded price increases, with Shaganappi, Chinook Park and Downtown leading the way with a combined average price increase of 55 per cent.

Top 10 Established Communities
Price Increases	%Change	Sale Increases	%Change
Shaganappi-025	139.58%	Collingwood-418	220.00%
Chinook Park-117	34.02%	Mahogany-375	150.00%
Downtown-001	33.63%	Mayfair-111	100.00%
Elboya-103	32.61%	Roxboro-100	100.00%
Scarboro-011	31.63%	Vista Heights-605	88.89%
Lower Mount Royal-010	28.00%	Hanson Ranch-517	85.00%
St Andrews Heights-413	23.22%	Sage Hill-526	84.00%
Lakeview Village-033	21.31%	Shawnee Slopes_Evergreen Est-151	79.59%
Windsor Park-107	21.14%	North Haven-500	78.57%
Rosedale-406	21.06%	Pump Hill-131	77.78%

“A boost in full time jobs throughout the year is gradually translating into improved sales in the real estate sector,” says Sano Stante, president of CREB®. “Consumers are taking advantage of price stability and a healthy variety of selection. While these gains are moderate, we are set to outpace 2010 sales.”

Single family home sales totaled 988 for the month of October 2011, an 11 per cent increase over October 2010, but continue to remain well below historical levels. Year-to-date sales totaled 11,503, a 10 per cent increase over last year.

October listings have edged upwards over last year’s levels, increasing by nearly two per cent, but year-to-date there are six per cent less listings than levels recorded last year.

“Consumers are feeling more confident about the local real estate market,” adds Stante.

The average price of single family homes for the month of October 2011 was $455,399, while the median price was $395,000, an increase of two per cent compared to last year. This is primarily due to the rise in the number of luxury homes sales. Despite the monthly price increase, however, year-to-date figures remained stable at levels comparable to the previous year.

Condominium sales for the first 10 months of the year totaled 4,681, a three per cent rise over the same period last year. Inventory levels remained at 1,935 units, resulting in months of supply pushing above five months.

“The condominium market has significantly tightened compared to last year, however, moving into winter, we expect to see a rise in months of supply,” Stante says.

Condominium year-to-date average and median prices in 2011 were $288,736 and $262,500, respectively, a slight decline over the first 10 months of 2010. The decline is mostly due to increased sales in units priced under $200,000.

“Overall, the resale housing market continues to show signs of improvement and, with no near term change in interest rates, we can expect the market will continue to see moderate and stable growth throughout the rest of the year,” Stante concludes.

Calgary Real Estate Market Forecast & Predition

According to many real estate experts, the Canadian housing market is expected to stabilize in 2011 returning to more normal long-term growth patterns after a decade-long bull run.

The housing sector has avoided two extreme bubble-and-crash scenarios over the past three years when resale prices dropped sharply in 2008, then quickly rebounded as low mortgage rates and lower prices supported the turnaround.

Record low interest rates fuelled a home buying spree in 2009 that helped pull the Canadian economy out of recession and pushed home sales back to record levels. The market cooled rapidly over the summer of 2010 as the Bank of Canada began hiking interest rates, though recent data have indicated the market may be stabilizing.

In 2011, interest rates are expected to hike further as the economy improves. While still at historical lows, any hike in interest rates have big effects on mortgage rates. If interest rates are raised too quickly, this will further dampen real estate prices. On the other hand, if the government decides to lower the rates once again, as unlikely as this may seem, then home sales might surge slightly.

Government and institutional lending policies will also affect real estate prices. As banks and governmental policies become increasingly strict, more people will be turned down for mortgages. At the very least these potential home buyers will need to choose from more modest homes if their mortgage is declined.

In 2011, Canada will experience an overall decline of 0.9% in home prices. Not all provinces will feel the effects of fluctuating real estate prices equally. Some provinces will have a more profound move in housing prices than others.

While real estate prices might remain fairly stable, buying activity is expected to slow down significantly. The Canadian Real Estate Association expects a 7.3% decline in home sales. This means that homeowners in a panic to sell may have to drop their prices substantially in order to liquidate. Others may need to wait longer than in previous years to sell.

The drop-off in home sales comes from an anticipated slowing of economic growth along with a reduction in consumer spending. Less free floating capital means fewer large purchases.  Ample inventory levels, steady demand, and moderate growth, both in terms of sales and prices, will characterize the market in 2011.

Federal Government changes to Mortgage Guidelines

It looks as though the federal government has decided to tighten Canadian mortgage guidelines once again. Here are the key changes: · Mortgages with amortization periods longer than 30 years will no longer qualify for government-backed mortgage insurance, which is required for buyers with less than a 20% down payment on a home. The previous limit was 35 years. · Maximum amount Canadians can borrow against the value of their homes, lowered to 85% from 90% on a refinancing · Federal government backing for home equity lines of credit, or so-called HELOCs, is removed · Adjustments on amortization and refinancing limits coming into force on March 18 · Government backing on HELOCs will be removed as of April 18 Here is the related article taken from Sunday's Financial Post: The federal Conservative government is expected on Monday to introduce new rules aimed at toughening up mortgage lending in an effort to curb further growth in record household debt levels. The key change Finance Minister Jim Flaherty is likely to unveil is a cut in the maximum amortization period, to 30 years from 35 years. Mortgages with amortization periods longer than 30 years will no longer qualify for government-backed mortgage insurance, which is required for buyers with less than a 20% down payment on a home. Government sources also told the National Post Mr. Flaherty is expected to lower the maximum amount Canadians can borrow against the value of their homes, to 85% from 90%, and remove federal government backing of home equity lines of credit, or so-called HELOCs. The sources, who spoke on condition of anonymity, add the minimum down payment, at 5%, will remain as is. Further, there will not unveil any plan to target condominium purchases by requiring monthly condo fees be added to the list of expenses that is measured against income to decide whether a buyer can afford a mortgage. The changes to the country's mortgage rules - the second in as many years - emerge amid rising concern about the record levels of household debt, which measured as a ratio of money owed to disposable income nears a startling 150% as of the third quarter of last year. That surpasses the level of debt held by American households, whose appetite for borrowing helped stoke the financial crisis of a few years ago. The Bank of Canada recently warned debt levels are growing faster than income, and the risk posed by consumer indebtedness to the domestic economy would continue to escalate without a "significant change" in how consumers borrow and banks lend. Bank of Canada governor Mark Carney said policymakers have a "responsibility" to look at the benefits of pre-emptive action. Joining the chorus have been chief executives at the big banks, most notably Ed Clark at Toronto-Dominion Bank, in publicly advocating for tougher mortgage standards. Last Friday, Prime Minister Stephen Harper acknowledged his government was considering changes to the rules governing mortgages. He said the government "remains concerned about growth in the level of household debt and will look at taking prudent steps to moderate that growth. We will look at what steps may or may not necessary. In February of 2010, Mr. Flaherty moved to toughen up the mortgage rules amid worries that Canada was in the midst of a housing market bubble. The reforms, since introduced, compelled borrowers to meet standards for a five-year fixed-rate mortgage, even if the buyer wanted a shorter-term, variable rate loan; reduced the amount Canadian can borrow against their home, to 90% of the property value from 95%; and require purchasers of rental properties to issue a 20% down payment as opposed to 5%. The moves played a role, observers say, in slowing down real estate activity. The new changes, though, reduce even further the amount people can borrow against their homes, to 85%. Also, the changes target HELOCs, which Mr. Flaherty cited as a source of concern in a recent interview. Home-equity lines of credit surged 170% over the past decade, or twice the rate of mortgage growth, and now represent 12% of overall household debt. With the new rules, Ottawa will no longer back the HELOC, as it was doing up until now through mortgage insurance. Instead, sources say, the government will signal that the banks are on the hook for any default linked to a HELOC it issued. The cut in the amortization period, or the time required to pay off the home loan, follows a 2008 move by Ottawa to stop insuring 40-year mortgages. While the federal government looks to curb borrowing, economists say the Bank of Canada may have to follow by raising its key interest rate sooner rather than later. The central bank issues its latest rate statement on Tuesday and it is expected to hold its benchmark rate at its present 1% level as signs indicate the economy may be benefiting from renewed business and consumer confidence in the United States. Stewart Hall, economist at HSBC Securities Canada, said the extraordinarily low-rate environment "provides all the incentive to consumers to borrow and spend and none of the incentive to save. You can try to [regulate] that away but that is apt to be fraught with significant frustration."

Calgary Buyers’ Remain Cautious

Calgary Buyers’ Remain Cautious

Sales of million dollar plus homes a bright spot in 2010 market

Calgary, November 1, 2010 – Home sales in the city of Calgary were down month-over-month in October 2010, showing signs that buyers still remain cautious, despite signs of economic recovery. Year-over-year sales continued to trend lower in the month of October, according to figures released today by the Calgary Real Estate Board (CREB®).

The number of single family home sales in the month of October 2010 shrank by 7 per cent at 888, compared with September 2010, when sales were 958. The number of condominium sales for the month of October 2010 was 310. This was a decrease of 15 per cent from the 366 condominium transactions recorded in September 2010.

Year-over-year, the number of single family homes sold in October 2010 in the city of Calgary were down 31 per cent. In October 2009, single family home sales totalled 1,285. Condominium sales saw a decrease of 48 per cent from the same time a year ago. In October 2009, condominium sales were 601.

“Buyers remain cautious, perhaps waiting to feel a little more confidence in Calgary’s economic growth and their own job security,” says Diane Scott, president of CREB®.

“We believe economic recovery will build momentum into 2011 as the outlook for oil and gas and other sectors continues to improve. This, coupled with low interest rates and improved affordability, should eventually help to stimulate Calgary’s housing market,” adds Scott.

The average price of a single family home in the city of Calgary in October 2010 was $444,744, showing a 3 per cent decrease from September 2010, when the average price was $460,278, and a 4 per cent decrease from October 2009, when the average price was $462,465. The average price of a condominium in the city of Calgary in October 2010 was $287,793, showing a 1 per cent increase from September 2010, when the average price was $284,028 and no significant change over last year, when the average price was $289,155. Average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods, or account for price differentials between geographical areas.

The median price of a single family home in the city of Calgary for October 2010 was $387,900, showing a 1 per cent decrease from September 2010 when the median price was $390,000. This was a 5 per cent decrease from October 2009, when the median price was $410,000. The median price of a condominium in October 2010 was $255,000, showing a 4 per cent decrease from September 2010, when the median price was $265,000, and a 3 per cent decrease from October 2009, when it was $263,500.

All city of Calgary MLS® statistics include properties listed and sold only within Calgary’s city limits. The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the median price.

“Our average price is being buoyed by more sales in the million dollars plus category. Despite a slowdown in certain market segments, homes sold in the city of Calgary at a million dollars or more have actually seen an increase of more than 15 per cent when compared to the same time one year ago. This boost in sales is, indeed, a bright spot in our current market,” says Scott.

Single family listings in the city of Calgary added for the month of October 2010 totalled 1,765, a decrease of 22 per cent from September 2010 when 2,252 new listings were added, and showing a decrease of 3 per cent from October 2009, when 1,819 new listings came to the market.

Condominium new listings in the city of Calgary added for October 2010 were 721, down 22 per cent from September 2010, when the MLS® saw 921 condo listings coming to the market. This is a decrease of 16 per cent from October 2009, when new condominium listings added were 859.

“We are seeing some decline in the number of new listings coming on to the market. A continuing decline in supply will help bring the market into balance,” says Scott.

“We believe we will see a tempering of our inventory levels, as some sellers offer marginal reductions in prices, or others choose to pull their home off the market for a period of time,” notes Scott. “Homeowners should consider speaking with their REALTOR® about their current marketing strategy—there are always options in every market.”

“Overall, we’re cautiously optimistic that Calgary’s economic recovery will pick up as we move into 2011—but in-migration will be needed to fuel a sustained recovery in Calgary’s housing market,” says Scott.

courtesy of CREB.

Calgary Economic Outlook

Provided below are economic outlooks provided by both Calgary Economic Development and the City of Calgary. I encourage everyone to follow the link and read the full report. I have highlighted specific parts that pertain to this blog.

Calgary Economic Development

Highlights

"Calgary will experience a Charlie Brown economy in 2010; an economy that
experiences variable performance with ups and downs, similar to the pattern on his shirt. This is a result of Calgary’s economy being dependent upon the state of the U.S. economy and energy markets."

"Calgary, despite best efforts, is still essentially an oil and gas economy, reliant upon the state of energy markets. So, ultimately, as energy prices rise and fall, so does the economic activity in Calgary. We try hard to find new economic activities to strengthen, such as technology or creative industries. We work to put strategic infrastructure in place to make Calgary a more attractive place to work and live, such as airport enhancements and public transit. We are the volunteer capital of Canada. However, we can’t escape a global recession. When oil and gas prices fall and capital dries up, the economy is affected as companies cut spending and jobs. All across the value chain the impacts are felt. Cuts to oil sands capital expenditure result in the loss of work and jobs for engineers, lawyers, accountants, financiers, manufacturers, and transporters. When wages are lost or cut, housing markets are affected and retail spending is curtailed."

"There is great risk in believing that this economic recession is done and gone, for that may create complacency. We risk going back to our former ways. Some people have been more greatly impacted than others - mostly those that have lost jobs - but, in Calgary, for 93 per cent of the labour force, very little has changed in the grand scheme of things. Humans learn from mistakes by adapting behaviour. If we assume all is well there is a risk that we will not have learned our lesson well enough. It is interesting to reflect that we will never claim that we are in recession until there is irrefutable proof of at least two consistent quarters of negative performance. Yet, before we are actually even out of recession we proclaim we are out of recession. Human nature. Cautious on the negative; optimistic on the positive. Again, this approach sets us up for greater challenges ahead, if we don’t truly reflect on the impacts, and adapt behaviour accordingly. More meaningful and sustained recovery is ingrained in a greater and more robust scorecard than currently being watched by the majority of the developed world. We celebrate with one day’s worth of positive data, only to sink the following day on negative performance of some other data."

"Recovery is going to happen. When exactly, no one knows. Balance sheet recessions, like the one we are in, have proven historically to be longer and slower to recover. It might take another 6, 12 or 18 months before we can truly say that the worst might be behind us. And when it does, it likely will be a slow, steady recovery that will look incredibly modest. In the long-term however, more modest growth rates might become the new norm, and ultimately be what we need to keep us honest."



City of Calgary

Highlights

"The Calgary market is struggling with opposing forces. Investors and builders wish to see continued and sustained price increases. First-time buyers in 2010 are facing increased prices that are testing their ability to pay while new federal legislation has more stringent mortgage qualifying requirements. The downturn in energy prices has also put a pause on the residential market while anticipated interest rate hikes are resulting in a short term increase in demand as buyers seek to get in while they still can."

"After dropping 14 per cent from peak prices in July 2007, average prices in Calgary rose throughout 2009 by 5.4 per cent, which is almost double the average price appreciation experienced in the 1990’s. Th e wildcard for the future is interest rates. If they go up too high too quickly they will dampen sales activity, but our expectations are for the prime interest rate to be stepped up in small increments, with a muted impact on posted mortgage rates over the next year. The outlook for housing prices in Calgary is a short run-up in anticipation of increased interest rates, then a market pause after June and a normal annual cyclical pattern returning to the market with September being the hot month of the year for sales. Continued weakness in job creation may pose a downside risk to the forecast."

Summer Cool Down Continues in Calgary Housing Market.

Calgary, August 3, 2010 – The summer cool down in Calgary’s housing market continued in the month of July, according to figures released today by the Calgary Real Estate Board (CREB®).

The number of single family homes sold in July 2010 in the city of Calgary was down 42 per cent from the same time a year ago, and condominium sales saw a decrease of 44per cent from the same time a year ago.

July 2010 saw 915 single family homes sold in the city of Calgary. This is a decrease of 14 per cent from 1,061 sales in June 2010. In July 2009, single family home sales totalled 1,585. The number of condominium sales for the month of July 2010 was 396. This was a decrease of 11 per cent from the 445 condominium transactions recorded in June 2010. In July 2009, condominium sales were 702.

“Calgary’s housing market is cooling off after its record-setting pace in the post-recession period. This slow-down is not all that surprising in the face of tighter mortgage regulations and rising interest rates. The post-recession rally we saw in the summer of 2009 was unique and that pace couldn’t be sustained,” says Sano Stante, president-elect of CREB®.

“The sense of urgency seen last summer, fall and winter in the lead-up to tighter mortgage-lending measures has diminished,” says Stante. “Rising mortgage rates and increased inventories will be the primary head-wind facing Calgary’s housing market, but improving job prospects will offer some tail winds in the latter half of 2010 and into 2011.”

The average price of a single family home in the city of Calgary in July 2010 was $464,655, showing a 4 per cent decrease from June 2010, when the average price was $481,964, and showing an increase of 6 per cent from July 2009, when the average price was $436,782. The average price of a condominium in the city of Calgary was $291,168, showing no significant change from June 2010, when the average price was $292,238 and a 2 per cent increase over last year, when the average price was $285,032. Average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods, or account for price differentials between geographical areas.

“We are seeing relative stability in our average and median prices for the Calgary market,” says Stante. “A gradual return to moderate interest rates will not trigger any kind of steep decline in prices in our housing market. Prices may soften in select markets where inventory has bulked up, but for the most part they will remain relatively sticky as the economy improves.”

“Nonetheless with the combination of historically low interest rates and a large inventory of homes, there are some great buys out there—particularly in areas where comparable stock is ample such as the condominium and multi-family market. This presents a great opportunity to get into the market or to trade up,” adds Stante.

The median price of a single family home in the city of Calgary for July 2010 was $400,000, showing a 5 per cent decrease from June 2010, when the median price was $418,900, and a 3 per cent increase from July 2009, when the median price was $390,000. The median price of a condominium in July 2010 was $268,000, showing a 1 per cent decrease from June 2010, when the median was $269,900. That’s up 2 per cent from July 2009, when the median price was $263,000.

All city of Calgary MLS® statistics include properties listed and sold only within Calgary’s city limits. The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the median price.

There was a slowdown in the number of Calgarians putting homes up for sale in the month of July. Single family listings in the city of Calgary added for the month of July totalled 1,942, a decrease of 29 per cent from June 2010 when 2,733 new listings were added, and showing a decrease of 7 per cent from July 2009, when 2,089 new listings came to the market.

Condominium new listings in the city of Calgary added for July 2010 were 890, down 18 per cent from June 2010, when the MLS® saw 1,084 condo listings coming to the market. This is a decrease of 3 per cent from July 2009, when new condominium listings added were 918.

“Indeed Alberta and Calgary’s economic recovery is lagging behind the rest of the country right now. But on the bright side we see this trend reversing itself as we move into 2011. We expect Alberta to lead in economic growth and recovery—outperforming much of the country in 2011,” says Stante.

courtesy of CREB.