Calgary strongest major housing market in Canada

Calgary has reclaimed its title as the strongest major housing market in the country after correcting several years ago, says a new report released Thursday by BMO Economics.

The report, Canadian Housing Update: Tale of Four Cities, examined the state of the housing markets in Canada’s four largest cities: Vancouver, Calgary, Toronto and Montreal.

Sal Guatieri, senior economist with BMO Capital Markets, said listings are lean in the city, giving sellers the upper hand right now on prices.
“Three main factors. Strong economy. Strong population growth. And good affordability. Those are all driving Calgary’s housing market now and likely in the future,” said Guatieri.

“We don’t see bad things happening to Calgary’s economy any time soon, barring a big drop in oil prices for example. And we think Alberta for one will definitely lead economic growth perhaps for the next couple of years riding the energy boom. As a result, Canadians from across the country will likely continue to migrate to Alberta and Calgary looking for work. That can always support the housing market.”

According to the Calgary Real Estate Board, year-to-date up to Wednesday, there have been 22,489 MLS sales in the city, up 10.85 per cent from a year ago. New listings of 31,366 are up by 0.75 per cent but active listings of 3,034 are down 19.27 per cent. So far this year, the median selling price of $400,000 has increased by 5.26 per cent while the average sale price of $456,680 has risen by 6.60 per cent.

“Calgary’s resale housing market has been strong this year,” said Ben Brunnen, an economic consultant in the city. “A lot of people are moving to our city and finding that rents are high but the economy is good. Under these conditions, homeownership makes sense.
“Unlike the last housing market expansion a lot of current homeowners are staying put, which keeps inventories low. Strong confidence in Alberta’s economic prospects and the threat of higher housing costs in the future could also be pushing more people into the market.”

The BMO report said new home construction has picked up but housing starts have barely kept pace with an exploding population.
“Inventories of new homes are very low, while benchmark prices are climbing the fastest among major cities and have now all but retraced the 16 per cent collapse from 2007 to 2009, said BMO.
Guatieri said that despite “heady price gains” they remain reasonable at about four times the median family income and mortgage costs “consuming a manageable” 23 per cent of earnings.

“About half of the increase in prices is supported by rising income. Hourly wages in Alberta are up 4.4 per cent year over year in the first 10 months of the year, double the national rate,” he said.
BMO said immigrants and young Canadians are flocking to the city, drawn by better job prospects, faster wage growth, and healthier housing affordability than in Vancouver and Toronto.
“Strong economic and population growth will encourage an upward trend in Calgary’s house prices, though higher borrowing costs will moderate the gains,” added Guatieri.
 

The report listed Calgary’s median family income at $100,500. The other three cities surveyed had median family incomes of $72,400 in Toronto, $72,800 in Vancouver and $73,200 in Montreal.
The ratio of house prices to annual family income in Calgary was 4.1. It was also 4.1 in Montreal, 6.6 in Toronto and 8.3 in Vancouver.
The mortgage service costs as a percentage of family income were: 23.1 in Calgary, 39.3 in Toronto, 50.2 in Vancouver and 23.1 in Montreal.

                                                                                                                                                                                   By Mario ToneguZzi, Calgary Herald

Factors combined to boost Calgary housing market in 2013

                                                                                                                                  By Amanda Stephenson, Calgary Herald December 29, 2013

Calgary’s housing market grew twice as fast as expected in 2013, the result of what some realtors have dubbed a “perfect storm” of market factors.

Calgary Real Estate Board president Becky Walters said it’s unlikely 2014 will see the same kind of growth witnessed this year, when a combination of the June flood, a tight rental market, and an influx of newcomers to the city drove sales and prices higher.

As of Dec. 29, Calgary housing sales year-to-date were up more than 10 per cent from the year before. The average selling price was $456,686, up 6.5 per cent from 2012. “They were pretty much double what we had anticipated, and that was probably the biggest surprise to us this year,” Walters said.

Darren Abrahamson, a realtor with Royal LePage, said 2013 “hasn’t been what anybody expected.”
The June flood took an estimated 500 secondary suites off the market and forced more than 1,000 Albertans to seek temporary accommodation — driving down the rental vacancy rate and driving up the demand for homes to purchase.

A second surprise in 2013 was migration. In a report released early in the year, the Calgary Real Estate Board predicted a net increase of 15,000 new Calgarians this year. But the latest figures from the Canada Mortgage and Housing Commission show a projected net increase of 30,000 by the end of 2013. Those unexpected newcomers are adding to the tight rental market and driving home sales even higher.

“It was almost like the perfect storm, really,” Abrahamson said. “Everything just kept coming and taking away from the supply.”
Still, Calgary’s housing sales have not yet reached the heady levels of 2006 and 2007, when nearly every deal was met with multiple offers. That’s good, said Abrahamson, though he acknowledged affordability is becoming a concern for buyers.

“Even as a realtor, when you see first-time buyers spending $450,000 to $500,000 on a first home, you’re like, ‘This is nuts.’ But the thing is, our wages and salaries are a lot higher than other places in Canada,” he said. “So I don’t think the growth we’ve seen this year has been crazy.... And that’s good, because nobody wants to have crazy growth.”

The Calgary Real Estate Board expects sales growth to continue in 2014, but at a more sustainable rate — likely in the range of 3.5 per cent. Price growth is expected to increase 4.3 per cent.
“It is still very affordable in comparison to income levels, so we feel it is something we’ll be able to sustain,” Walters said. “The economy in general is so strong here.”

Earlier in December, BMO Economics called Calgary the strongest real estate market in the country, beating out Vancouver, Toronto and Montreal. The financial institution predicted a strong economy and further population growth will continue to drive a healthy Calgary housing market into the future.
Still, Abrahamson cautioned that the local real estate market is still hugely influenced by the energy sector. And he said housing prices could suffer if Alberta oil producers continue to struggle to get their landlocked bitumen to market.
 

“That’s why I think it really hinges on one of these (proposed) pipelines,” he said. “If one of these pipelines goes through, then things will continue. And I hate say it, but if none of these pipelines goes through, then in the next year or two I think we’re definitely going to have a problem.”

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