Calgary in the Air
by Dhinakaran Gajavarathan
Although analysts are skeptical about Canada’s housing market, most agree that Calgary’s prospects aren’t unfavourable. The Calgary area, spanning 726.5 square kilometres, is ideally located, and the well developed energy sector provides many business opportunities and attracts immigrants seeking employment. This in turn supports the city’s housing market. Let’s see what’s new in the Calgary real estate market.
According to the Calgary Real Estate Board (CREB), after the first seven months of the year, residential sales totaled 11,798. This is a 5 per cent year-to-year increase, signalling recovery. However, overall sales levels are still 17 per cent below the ten-year average for this period. “Improving market conditions may have signalled some sellers to be overly optimistic regarding pricing, resulting in a disconnect between seller and buyer expectations,” says Sano Stante, president of CREB.
Condominium sales grew by 14 per cent over last year, totalling 453 in July, but are down 3 per cent from July 2010. The condo boom of the last several years in Canada is probably moderating since there is an excess of supply and lower demand. Year-to-date listings of single family sales remain lower than last year, and as a result, inventories were lower than in 2010 as well.
The average prices of condos and single family homes have barely changed over the year. “Interest rates will likely remain low for the remainder of the year. This factor, combined with relatively stable housing prices and wage growth, will help support affordability levels and promote a healthy housing market in Calgary,” explains Stante.
The Canada Mortgage and Housing Corp. (CMHC) released figures showing that total starts in the Calgary census metropolitan area in July were down 43.6 per cent from July 2010. Single-detached starts rose by 15.8 per cent to 507, units while multi-family starts decreased 73.2 per cent to 151 units. According to Todd Hirsch, senior economist with ATB Financial in Calgary, in Alberta, housing start construction totalled 22,200 (seasonally adjusted at annualized rates) in July — only a slight improvement over the 21,800 in June.
Although labour market conditions and mortgage rates are positive, prices are almost unchanged. What are the reasons for such low numbers? The global stock market volatility and plunging oil prices make potential buyers too hesitant. “The confidence or ability to commit to a large purchase has not been there like it has in spring markets of other years,” says Dave Hooge, president and general manager of Stepper Homes Inc. Moreover, the resale market is still a strong rival that negatively impacts home sales and home starts.