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Calgary Real Estate Market: February 2014

Sales Growth Boosted by Condominium Activity for the Calgary Real Estate Market

Calgary Real Estate Market

March, 2014 – Housing Inventory in the single family sector for the Calgary Real Estate Market continues to decline while condominium sales surge according to the Calgary Real Estate Board (CREB®).

Following double digit gains last month, sales growth in the city of Calgary totaled 1,854 units, or an 8.68 per cent increase over the same period in 2013.

Slower sales growth resulted in a reduction of listings in the single family sector.  However, single family sales still totalled 1,230 units, a 1.9 per cent increase over the previous year.

“Demand growth in the single family sector has been restricted by the availability of product,” says CREB® Chief Economist Ann-Marie Lurie.  “New listings in this sector fell for the second consecutive month, causing further tightening in an already undersupplied market.”

Despite the pull back in the single family sector, condominium sales continue to surge.  After the first two months of the year, both condominium apartment and townhouse sales increased by 28 per cent compared to last year.

“Consumers who are in the market for single family homes priced below $300,000 do not have many options, and when product does become available, it typically does not stay on the market for long,” says CREB® President Bill Kirk.  “However, nearly 54 per cent of the new condominium apartment listings this year are priced below $300,000, which is providing options for consumers looking for affordable product.”

The condominium market benefited from significant gains in new listings.  Year-to-date, condominium apartment and townhouse listings improved by a respective 17 and four per cent for a combined total of 1,737 units.

“As we move into the spring market we expect that listings will improve in all sectors,” says Kirk.  “The rise in listings will help ease some of the tightness in the market, with price growth impacts varying by community and property type.”

With no significant additions to the housing supply, resale prices continued to rise.  The unadjusted single family benchmark price totalled $482,800 in February, a 1.28 per cent increase over the previous month and a 9.1 per cent increase over the previous year.

Meanwhile condominium apartment and townhouse prices totaled a respective $283,400 and $309,700.  Condominium apartment price increases remain at double digit levels this month with a year-over-year gain of 12.4 per cent.  Despite the strong gains in condominium prices, overall benchmark prices in both the apartment and townhouse sector continue to remain below peak records set back in 2007.

“Resale market conditions have favoured the seller, and this has translated into price gains, which is strongest in the condominium sector,” says Lurie.  “However, it is important to note that condominium prices have not yet risen above previous highs, whereas single family prices recovered last year.
Our monthly Newsletter contains the full Calgary Real Estate Market report for February 2014 in addition to an article “Is the housing market going to cool down, level out or gain steam?”, and is available on our website!

The full Calgary Real Estate Market Stats from the Calgary Real Estate Board for Condominiums, Single Family, and Towns is available for February and includes graphs.

 Selling Calgary Group     Elke Babiuk
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Calgary Housing Market Sales Growth: November 2013

Rise in new Listings Boost Calgary Real Estate Sales

Market Graph photo

December, 2013 – The November Calgary Housing Market saw another month of strong sales activity according to the Calgary Real Estate Board (CREB®).

CREB® President Becky Walters said it appears that several factors are motivating buyers. “Many first-time home buyers appear to be moving now to get ahead of any further increases in home prices, rent hikes, or an increase in lending rates,” she said. “And current owners are taking advantage of the recent price gains to upgrade to a home that better fits their lifestyle.”

There were 1,823 new listings in the city in November. While this is an 12 per cent increase over levels recorded at the same time in 2012, listings remain below long-term trends and total inventory levels is lower than normal for this time of year.

“Tight market conditions have resulted in higher-than-expected price gains in all sectors of the Calgary market,” said Ann-Marie Lurie, Chief Economist. “However, these increases need to be put into context.”

Citywide, only the price of single-family homes has fully recovered and started to push above unadjusted levels recorded in 2007. Meanwhile, condominium apartment and townhouse prices remain below peak, Lurie said.

Single-family benchmark prices totaled $470,600 in November, 8.5 per cent higher than one year ago. Meanwhile, condominium apartment and townhouse unadjusted benchmark prices totaled a respective $279,600 and $305,700 in November, 6 per cent below 2007 peak pricing.

Year-to-date, single-family sales totalled 15,533 units, eight per cent higher than the previous year. The higher-than-expected rise in sales activity is due to stronger activity in the second half of the year.

Tightness in the condominium apartment market eased in November, as the year-over-year growth in November new listings of 23 per cent outpaced the sales growth of 20 per cent. While overall inventory levels remain 26 per cent lower than levels recorded in 2012, this is an improvement over the declines recorded throughout recent months. Year-to-date sales activity totaled 3,787 units, a 15 per cent increase over the previous year.

Condominium townhouse sales totaled 3,002 units after 11 months, a 21 per cent increase over the previous year. While this sector remains the smallest out of the Calgary housing types, it has recorded the largest gains in sales.

“Overall, sales growth in surrounding communities outpaced the city,” said Walters. “They offer the family friendly attractions of small towns, and they’re more affordable.”

Lurie noted the vibrant employment market has encouraged a large number of net migrants into the city over the past two years. “This, combined with tight rental conditions and optimism over the long term outlook of the city, has supported the significant growth in housing demand this year. Lurie said that concerns over affordability are often linked to potential house price corrections, but, “despite recent gains, Calgary’s housing market is still more affordable today than it was six years ago.”

The full Calgary Housing Market Report from the Calgary Real Estate Board for Condominiums, Single Family, and Towns is available for November and includes graphs.

 Selling Calgary Group     Elke Babiuk
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Calgary Housing Market Sales Still Strong: September 2013

Rise in new listings prevents further tightening of resale housing market

Market Graph photo

October, 2013 – The Calgary Housing Market saw an increase in new listings inventory in September.

“The increase in new listings has given buyers more choice,” said Becky Walters, CREB® President.

Although Calgary’s market still remains in seller’s territory, a shift has occurred with new listings to market. While monthly levels of new listings have been declining since 2011, over the past three months the levels of new listings have improved. The inventory growth was not enough to cause any significant changes, but it has helped prevent further tightening in the market.

First-time home buyers are significantly affected in this housing market as the housing selection is limited in the lower price ranges for single family homes. However, choice has improved for the higher-priced homes.  Sales activity varies by community, property type and price. First-time home buyers searching for lower-priced single family homes often have to adjust expectations or consider alternative communities further out from the core, or property types such as condos.

While many buyers think the seller’s market conditions should lead to a significant price premium for their property, consumers remain price sensitive. “Tight market conditions have supported price growth in the Calgary market,” said Ann-Marie Lurie, CREB® chief economist. “But the pace of unadjusted monthly growth has eased in September.”

“While prices show strong year-over-year gains, if the level of new listings continues to improve relative to sales activity, prices should level off for the remainder of the year.”

“The impact of the floods likely boosted sales throughout July and August, and it appears as though some of that additional demand is starting to ease,” said Lurie. “Nonetheless, sales growth remains strong, in part because net migration has been stronger than anticipated and rental product is in short supply.”

Condominium apartment and townhouse sales totaled a respective 3,147 and 2,494 after the first three quarters of the year. Year-to-date sales growth is more than double the levels recorded in the single family sector.

“The condominium market offer affordable options for consumers in the city, and the growth reflect that,” said Walters. “But keep in mind condominiums still represent less than one-third of residential sales within city limits.” Single family sales totaled 13,006 units after the first three quarters of the year, a 6.7% increase over the previous year.

Single family sales increased in the third quarter, while the first two quarters were on pace with activity in 2012.

Condominium apartment prices totaled $272,900 in September, a 9.5% increase over 2012 and 0.9% higher than August figures.

Meanwhile, single family and condominium prices totaled a respective $463,700 and $299,100, similar to unadjusted levels recorded in August and more than seven% higher on a year-over-year basis.

The Calgary Housing Market Report with Sales Market Data from the Calgary Real Estate Board for Condominiums, Single Family, and Towns is available from our dropbox.

 Selling Calgary Group     Elke Babiuk
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Calgary Condo and Home Sales surged in June 2011

Market Graph photoResidential sales surged in the month of June 2011 and indicated a third more sales than June 2010. This is the first year-over-year increase in monthly condominium sales since April 2010 according to figures released in July by the Calgary Real Estate Board (CREB®). However, the year-to-date increase proved a moderate 2%.  The CREB® release stated that “Strong monthly increases does not imply a housing boom, as it is important to put into perspective that sales activity remains below long term averages. While the single family market has shown signs of improvement throughout the first half of this year, this is the first time since April 2010 that condominium sales have recorded a year-over-year increase.”

“Improved housing demand is being fueled by a younger demographic and, with the affordability of homes in Calgary, we are continuing to see young Calgarians pursue ownership over rentals,” says Sano Stante, president of CREB®.

“Historically, Calgary’s average family income has been higher than the national average and a younger more mobile demographic has been attracted to good paying professional jobs in Calgary. As the economy continues to build momentum, we expect this same trend will support a balanced and healthy housing market in the second half of 2011 and into 2012.”

With 581 sales for the month of June 2011, the condominium market improved by 31% over June of 2010, however year-to-date figures show a 5% decrease over the same period last year.

“Condo sales bounced back this month, and we now have less than four months of supply on the market. Stronger condo sales, combined with a decline in inventory, will lend more balance to this market in the months to come,” says Stante.

After the first half of the year, average prices of condominiums are still slightly lower than levels recorded last year, as more buyers bought condominiums under $200,000 in 2011 compared to 2010 for the same period.

“Buyers in this market expect value and many are taking advantage of some affordable buys in both the single family and condo markets. It highlights using a skilled REALTOR® to properly price your home for your unique market area,” says Stante.

The single family market recorded 1,398 sales in the month of June 2011. This is an increase of 32% when compared to June 2010 when 1,059 single family homes sold in the city of Calgary. With a total of 7,231 sales after the first half of the year, year-to-date single family sales are 6% higher than last year.

“While new listings are still lower than levels recorded last year, the rate of decline has eased. With the market shifting to more balanced conditions in recent months, sellers are feeling more confident to list their home. Overall our absorption rate has remained relatively stable, staving off any significant rise in prices,” says Stante.

Year-to-date average price of a single family home in Calgary is $472,330, while the median price is $410,000, virtually unchanged over levels recorded in the previous year. The distribution of sales by price range has not shown any significant shift compared to last year, pointing to continued stability in the market.

“After the first half of the year, it appears the recovery in the housing market is starting to find its footing. This gradual leveling has been fueled by growth in employment, and in particular growth in full time jobs. Improved job prospects, combined with an increase in the number of people moving to Calgary, will give lift to our housing market for the remainder of this year and into the next,” says Stante.

 Selling Calgary Group     Elke Babiuk
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Bigger down payments not an option for healthy housing market!

February 16, 2010

The Honorable James M. Flaherty
Minister of Finance
Department of Finance Canada
140 O’Connor Street
Ottawa, ON K1A 0G5
fAX: (613) 943-0938, E-mail:  jflaherty@fin.gc.ca

Dear Minister Flaherty,

RE: Discussions regarding raising minimum down payment requirements for home buyers

Given your initial interview with CTV and rumors currently swirling around Ottawa regarding potentially raising the down payment requirements for homebuyers and the resulting discussion this idea has brought about in real estate circles, among economists and in the media, we are writing to urge you to reconsider such potential measures.

We understand the government of Canada is concerned about the possible destructive impacts of a hot housing market. These concerns are not without some justification. However, as REALTORS® working on the front lines of this business, we believe raising the down payment requirements for homebuyers could not only have a disastrous effect on those Canadians looking to buy their first home, but also on the health of the entire housing market.

We are not economists. We are not claiming to be. However, given that we operate a real estate business in which first time homebuyers make up a significant percentage of our clientele, our very survival as a business depends on our sharp understanding of the needs of first time homebuyers, as well as their overall contribution to a healthy and prosperous Canadian housing market.

To use a crude analogy, if the housing market were a pyramid, first time homebuyers would make up the foundation on which the entire market is based. Placing unreasonable barriers to entry on those who would otherwise help to provide the market with a solid base will cause a destructive chain reaction that will reverberate throughout a significant portion of the entire economy. To illustrate this point, if first time homebuyers are prevented from entering the market, demand for starter homes will plummet. Current owners of starter homes looking to sell their houses in order to accommodate a growing family will certainly experience greater challenges in finding buyers for their current homes. As such, they may not be able to buy those homes for their growing families, as they have significantly less buyers to sell their current ones to. In this way, the entire housing market will suffer; first time homebuyers will merely be the first to feel the effects.

From our own experience with our clients, we know how difficult it is for them to raise enough money for their down payments, as they are often saving while also paying rent to reside in their current dwellings. We warn that any increase in minimum down payment requirements would bar more than just a few potential buyers from entering the market. As such, we worry that the government is underestimating just how destructive any increases in minimum down payment requirements could be for first time homebuyers and by extension, the entire housing market. Furthermore, creating unnecessary barriers to entry for first time homebuyers would naturally affect any business dependent on a healthy housing market. Not only would our business feel the effects, but contractors we work with, from renovators to builders to painters would take a hit, as would home staging companies and retailers that sell goods required to sustain a home. These include durable goods like furniture and appliances.

We believe it is also worth mentioning, that measures to raise minimum down payments could have large destructive effects while failing to provide an economic upside.

We would like to emphasize that there is still a great deal of diverging opinion among economists as to whether we need to fear a potential housing bubble at all, let alone whether raising minimum down payment requirements would help avoid one. In an interview with The Globe and Mail, Benjamin Tal with CIBC World Markets expressed his worry that such measures could result in the government overshooting its goal. Tal communicated his belief that housing prices will moderate as new housing starts help to increase the supply of homes, thus stabilizing the market. New Canada Mortgage and Housing Corporation figures on housing starts seem to support Tal’s argument, given that the country saw 174,500 new housing starts in December (seasonally adjusted annual rate), beating analyst expectations, and 186,300 units in January. On the heels of the December data, Canadian Real Estate Association chief economist Gregory Klump told the Canadian Press he believes such fresh infusions of supply will stabilize the market, particularly in the latter half of 2010 and that the current surging market represents a natural part of the real estate cycle, not a housing bubble. On the same day, Bank of Canada official David Wolf, delivering an address on behalf of deputy governor Timothy Lane, warned that talk of a potential housing bubble is premature.

Given our frontline industry experience, coupled with what Canadian economists are telling us, we believe that any potential decision to raise minimum down payments would be, at best, a perverse ‘solution’ to a temporary concern. As such, we strongly advise against adopting such measures. We welcome any further discussion on this matter from you, as well as from the general Canadian public as we strongly believe there are other options open to the Government.

Sincerely,

Elke Babiuk, REALTOR®,
Maxwell Realty, Maxwell Canyon Creek
Member, Calgary Real Estate Board,
Alberta Real Estate Association
Canadian Real Estate Association

 Selling Calgary Group     Elke Babiuk
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Housing Bubble Talk Premature

So, if federal Finance Minister Jim Flaherty is set to potentially raise down payment requirements as a way to avoid a possible housing bubble, thereby making it harder for you to buy your first home, wouldn’t you expect he’d be reasonably sure that a bubble would actually be on the way?

Interestingly enough, he’s not. Nobody is.

Canadian Real Estate Association Chief Economist Gregory Klump recently stated very bluntly to 660 AM Radio News business reporter James Munroe that a housing bubble is not in store for Canada, even after receiving data showing December was the strongest month on record for Canadian real estate.

Klump also pointed out that a new supply of homes will help to stabilize currently surging prices due to high demand for housing. Figures from the Canada Mortgage and Housing Corporation suggest new supply is on its way into the market. That new supply is no small number. We’re talking about 174,500 new units nationally in December alone. That figure beat analyst estimates by about 10,000 units. Klump argues this is just more evidence of a normal stage in the housing cycle, not the bubble Minister Flaherty fears. So, why is Minister Flaherty still toying with the idea of barring so many potential first time homebuyers from entering the market by buying their first home?

Klump isn’t the only dissenting voice out there either. Benjamin Tal with CIBC World Markets has also told The Globe and Mail that he too, believes new housing units coming into the market will help stabilize prices. He also warned that the government could overshoot its goal, saying: “You do not kill a fly with a hammer.”

Interestingly enough, there’s even dissension from the Bank of Canada itself! Bank of Canada official David Wolf recently delivered an address in Edmonton on behalf of deputy governor Timothy Lane. In the address, he warned that any talk of a housing bubble at this point was “premature.”

We hope Minister Flaherty is listening to the counsel he’s getting and does away with this idea, before it affects the dreams of so many first time homebuyers and our valued clients. We’ll have even more on this topic in the next little while so keep checking!

Elke Babiuk and Michelle Larcher
MaxWell Canyon Creek Realtors

 Selling Calgary Group     Elke Babiuk
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Housing Bubble in Canada – we don’t think so!

It may soon be a lot harder to buy your first home, if federal Finance Minister Jim Flaherty has anything to say about it.

In an interview with CTV just before the Christmas holidays, Minister Flaherty mentioned that he’s considering raising minimum down payment requirements to “more than they are now.” He also said he was looking at decreasing amortization periods on mortgages to “something less.” In case we haven’t made ourselves clear enough, he wasn’t exactly forthcoming with specific numbers.

The Finance Minister is concerned about a possible real estate bubble burst. He worries that too many people could get into the market when interest rates are low, only to have the Bank of Canada raise interest rates later on this year, leaving many unable to pay their mortgages.

We understand why he’s worried. We can lay a great deal of blame for the 2009 financial crisis on a housing bubble in the United States. But there’s little evidence to suggest that could happen this year in Canada.

There’s a lot of experts who disagree with Minister Flaherty (more on that in later blog posts), but we want to devote this entry to explain why we think it’s a bad idea.

A significant number of our valued clients are first-time homebuyers who we want to support in purchasing their first home – a place where you can build your dreams and grow your family.  Getting in is not easy for most. We know many of our clients can take a while to save up enough money for their down payment, usually because they have to pay rent to stay in their current place while they build up what they need to move into that special first home. Raising down payment requirements only puts more strain on potential first time homebuyers, who are so crucial for a healthy housing market.  Here’s why:

First time homebuyers form the basis of a pyramid of sorts for the housing market. Eventually those who were first time homebuyers a few years ago need a bigger place to comfortably grow their family. Who are they going to sell to if those looking to buy their first home can’t get into the market anymore? Your guess is as good as ours. In this way, the effects of limiting first time homebuyers are felt all the way to the top of the market.

But it doesn’t stop there. Many businesses we work with, as well as our own, would take a serious hit as well. We work with many contractors, from those who renovate your kitchens to those who paint your house, who would feel the effects of Minister Flaherty’s proposed measures. Retailers would feel the pinch too, as fewer people would be buying the furniture and appliances that go into that first house.

We’ve got a lot more information to share with you on this topic, so bookmark us! In the meantime, we encourage you to write a letter to your MP if you want to speak out against these measures. Until next time!

Elke Babiuk
MaxWell Canyon Creek
[now with CIR Realty]

 Selling Calgary Group     Elke Babiuk
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