LISTINGS DOWN, PRICES UP

Listings remain down in Calgary resale housing market
Pressure on prices which continue to rise
By Mario Toneguzzi 
Calgary Herald February 3, 2014

CALGARY - Pressure on prices in Calgary’s resale housing market continued in January as MLS listings remained at lower levels compared with a year ago.

According to the Calgary Real Estate Board, new listings of 2,393 for the month were down 4.01 per cent from January 2013 and active listings were off by 18.16 per cent to 2,524.

With sales growing by 17.17 per cent to 1,440, that help spike prices to record levels for the month.

CREB said the median price jumped by 6.71 per cent to $417,250 while the average MLS sale price rose by 5.09 per cent to $462,168. The board, in releasing its official statistics on Monday, said the overall benchmark price in the city, which if what it calls typical property sales, rose by 9.46 per cent to $429,100.

According to Mike Fotiou, associate broker with First Place Realty, January also set a record for most luxury home sales for the month. There were 41 MLS transactions of at least $1 million, eclipsing the previous record of 36 set in 2007.

Last year, Calgary experienced a record year for total luxury home sales of 727 with 10 months setting records. The only months in 2013 that didn’t set luxury home sale records were January and December.

Grace Yan, a realtor with RE/MAX Real Estate (Central) in Calgary, said property inventory has steadily declined over the past year due to a high volume of migration of people to the city, a low unemployment rate and better job opportunities.

“As a result, turnkey properties that are well priced, whether it’s a condo, fixer-upper, starter homes to high-end luxury homes, are selling within days and realtors are lined up outside taking turns for showings resulting in competing offers selling well above list price,” she said. “The market is currently so competitive that we are seeing unconditional or minimal condition offers and I’ve recently seen offers even as high as $70,000 over list and selling within the first day.

“The shortage of listings is really tough on buyers and disappointing when they place their best offer on their perfect home and not to even be close to other competing offers. On the other hand it’s excellent for the sellers who are pleasantly surprised what their properties are selling for. We typically see listing inventory rise come the spring and summer. Real estate, like any other investment, has its ups and downs. It’s just trying to find the right time and the right place in the current hot market.”

The inventory of active listings in Calgary year-over-year hasn’t been positive since February 2011.

Ann-Marie Lurie, CREB’s chief economist, said the overall trend of a declining inventory in the resale housing market has been around since March 2011.

“They had actually too much for a period of time. There was really an excess amount of inventory,” she said. “And a lot of that was working through the system . . . There was over supply in the market at that time frame.

“It’s really over the past year and into this year that we’ve seen those levels to continue to decline . . . They’ve been falling. What I’ve been watching has been that rate of decline which had actually started to ease . . . Towards the beginning of 2013, and into 2012, we were in those high 20 per cent declines, like almost 30 per cent declines, over the previous year. As you go through the later portion of 2013, the levels came off a bit. It’s still declining but not declining as much.”

She said sales have been increasing at a greater rate than the level of new listings.

In January, MLS sales for different housing categories and their percentage increase from last year were: single-family, 974, 10.93 per cent; condo apartment, 260, 27.45 per cent; condo townhouse, 206, 40.14 per cent; and towns, 251, 2.45 per cent.

The average sale prices and their annual hikes were: single-family, $520,686, 4.80 per cent; condo apartment, $314,678, 12.36 per cent; condo townhouse, $371,638, 15.92 per cent; and towns, $379,053, 8.54 per cent.

The benchmark prices and their year-over-year growth were: single-family, $476,700, 9.11 per cent; condo apartment, $280,600, 11.66 per cent; condo townhouse, $308,100, 8.72 per cent; and towns, $346,500, 5.26 per cent.

“Listings are low in Calgary due to a number of factors. However one of the biggest is the lack of housing options available in Calgary and region due to the combination of increased demand through population growth, the flood zone financing and insurance issues and lack of new product readily available,” said Don Campbell, senior analyst with the Real Estate Investment Network.

“This reduction in housing options brings pause to the homeowner who was considering selling their homes to move within the city or region. When homeowners do not have confidence that they will be able to find an appropriate property to replace the one they are considering to sell, then they delay the decision.”

Also on Monday, TD Economics released a housing report forecasting sales in Calgary to grow by 5.8 per cent this year and by another 2.1 per cent in 2015. It forecast the average price for existing home sales to rise by 3.5 per cent this year and by 1.2 per cent next year.

The report said Calgary’s sales to new listings ratio was 70.2 per cent in 2013 and forecasts that to rise to 73.1 per cent in 2014 before falling back to 69.9 per cent in 2015.

TD also said the percentage of income an average household would have to devote to mortgage payments in Calgary in 2013 was 24.9 per cent in 2013 and it is forecast to rise to 25.0 per cent this year but fall back to 24.6 per cent in 2015.

Diana Petramala, economist with TD Economics, said current interest rates are likely unsustainable, nor are they expected to increase to more normal levels in the near future.

“Overall, given the expectations of a modest increase in interest rates, home prices are likely roughly 10 per cent overvalued,” she said of the national housing market. “Housing is very regional, and some markets are more vulnerable than others. For instance, the overvaluation in Toronto, Vancouver, Montreal and Ottawa is likely more significant than that found in markets in the Prairie and Atlantic Regions.

“Looking forward, the combination of softer demand and rising supply of homes for sale on the market will likely pull some steam out of home price growth. Slower home price growth, rising incomes and only modestly rising interest rates will help keep housing in check over the next few years.”

Photo By: Sepehr Ehsani

SALE PRICE JUMP

Calgary repeat home sale prices rise 7.1%
Second biggest jump in Canada behind Vancouver’s 7.5%
By Mario Toneguzzi 
Calgary Herald February 12, 2014

CALGARY - Calgary had the second best year-over-year growth rate in prices for repeat home sales in January, according to the latest Teranet-National Bank National Composite House Price Index released Wednesday.

It said Calgary’s annual increase was 7.1 per cent which was behind only Vancouver’s 7.5 per cent.

The national composite, of 11 major centres surveyed, rose by 4.5 per cent.

The index is estimated by tracking observed or registered home prices over time using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation.

Toronto saw an annual increase of 5.8 per cent.

Sonny Scarfone, economic analyst with TD Economics, said the index surprised on the upside with a larger gain in momentum than expected across the country.

“Home price gains are still exceeding income growth by a considerable margin, especially in larger real estate markets like Toronto and Vancouver. A low supply of new listings is an important contributor to the upward pressure on prices,” said Scarfone.

“However, as U.S. and Canadian economic growth accelerates and the Federal Reserve continues to taper its quantitative easing program, North American bond yields are likely to rise over time and this will be reflected in mortgage rates. As a consequence, the current stronger-than-expected prices are likely to soften over the medium term.”

The index nationally rose 0.4 per cent from December to an all-time high. It was the largest monthly rise in five months.

The gain from a year earlier exceeded the cross-country average in four of the 11 markets: Vancouver, Calgary, Toronto and Hamilton (5.1 per cent). It was close to the average in Edmonton (4.4 per cent) and Winnipeg (3.9 per cent). It was minimal in Montreal (0.8 per cent) and Quebec City (0.6 per cent). Prices were down from a year earlier in Victoria (5.7 per cent), Halifax (2.9 per cent) and Ottawa-Gatineau (0.6 per cent). The 12-month decline was a first for Ottawa-Gatineau, the 11th straight for Victoria and the fourth in six months for Halifax, said the report.

On a monthly basis, price increases were led by Vancouver (1.1 per cent), Toronto (0.5 per cent) and Quebec City (0.5 per cent) led the composite index. Calgary equalled it. Hamilton prices were up 0.3 per cent, Winnipeg and Montreal prices 0.2 per cent. Edmonton was flat on the month. Prices fell 0.3 per cent in Victoria, 1.1 per cent in Ottawa-Gatineau and 1.7 per cent in Halifax. The January rises in Montreal and Quebec City interrupted runs of five consecutive monthly declines. For Ottawa-Gatineau it was the fifth straight monthly decline, for Victoria the fourth and for Halifax the second. For Vancouver it was a ninth straight monthly rise, for the composite index the 10th in 11 months, said the report.

“There are signs that national house price inflation is close to peaking. The earlier strength in existing home sales, triggered by fears of higher mortgage rates, has begun to fade,” said David Madani, economist with Capital Economics. “January’s preliminary data reported by the regional real estate boards indicate that national home sales declined for a fourth consecutive month.

“The drop back in the months’ supply of inventory is already consistent with annual house price growth rate remaining around 4.0 per cent. If we are correct about home sales drifting lower this year, it will once again start to put downward pressure on house price inflation.”