Calgary by Kevin Saff
Calgary’s latest housing statistics aren’t much cause for joy. Calgary is the only city in the country that posted a year-over-year house price decline in a national survey of repeat home sales in six major urban centres. Is it only a short-term phenomenon caused by economic turmoil in the world? And what are the city’s housing prospects?
Alberta to Lead Canada’s Home Sales Growth
According to the Canadian Real Estate Association (CREA), Alberta’s sales activity will be the highest in the country in 2011 and 2012 by a percentage. Sales are expected to increase by 7.3 per cent to 53,350 units this year and in 2012 by 6.8 per cent (57,000 units). The average sale prices won’t rise much — only 1.5 per cent in 2011 and 1.8 per cent next year. However, the forecasted price of $364,000 will be the third highest in the country, slightly above Canada’s average.
“Even though our stats are looking stronger this year over last it is still a buyer’s market with so much inventory to choose from,” said Tanya Eklund, a realtor with RE/MAX Real Estate Central in Calgary. “I am hopeful Alberta’s oil and gas sector will continue to bring strength to our real estate market.”
MLS Sales to Increase in Calgary
“National sales activity is forecast to reach 450,800 units in 2011, up less than one per cent from levels in 2010,” says the report. Next year, overall sales will fall by 0.7 per cent to 447,700. Calgary’s prospects are positive as well. The Calgary Real Estate Board (CREB) predicts a 7.7 per cent (13,100 units) increase of single family sales, while condo sales are expected to decrease from 5,177 units to 5,100 in 2011. The decline is consistent with expectations of a weakening condo boom.
“Consumers no longer have a sense of urgency, but are looking for value and spending time researching and viewing more options in the market place,” says CREB’s latest market update.
Home Prices to Rise
House prices in the Calgary region are expected to rise in the next two years, according to Canada Mortgage and Housing Corp (CMHC). The annual growth rate for MLS average prices in the Calgary census metropolitan area is forecasted at 2.2 per cent in 2011, and the same increase is predicted in 2012, so the average sale price will reach $407,500 this year and $416,500 next year. Housing starts in the Calgary CMA will fall by 15.8 per cent in 2011, but they will rebound in 2012 by 15.4 per cent increase.
“The housing market for 2012 looks promising,” said Richard Cho, senior market analyst in CMHC. “The economic fundamentals are gradually improving and expected to sustain demand for housing.”
Calgary Among Most Affordable
A report by RBC Economics says that affordability in Calgary is better than the national average for detached bungalows, standard two-storey homes, and standard condominiums. If interest rates remain as low as they are, Calgary’s affordability will improve.
Sano Stante, president of the Calgary Real Estate Board, claims: “With an assurance that interest rates are going to stay low for the next 12 months anyway – and there’s somewhat of an assurance of that — then it really looks like we’re going to lead the nation in affordability especially when we start to get increased employment and in-migration towards the end of this year.”
RBC calculated the RBC Housing Affordability Measure; the higher the measure, the more difficult it is to afford a house. Calgary’s measures were 37.1 per cent for a detached bungalow, 38.5 per cent for a standard two-storey, and 23.0 per cent for a standard condominium in the second quarter — all three numbers much lower than Canada’s average.
Calgary’s prospects are still very positive. However, looking at the global economic situation, from the US to Europe, we can’t be sure what will happen in the future. There isn’t any estimate predicting where the debt troubles will lead and how they will affect Canada’s market.