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June 15, 2009
National resale housing continues to rise in May
OTTAWA – June 15th, 2009 – National resale housing market activity returned to pre-recession levels in May 2009. The rebound in activity is being led by an increase in transactions in some of the most expensive markets in the country, which is skewing the national average price upward.
According to statistics released by The Canadian Real Estate Association (CREA), actual (not seasonally adjusted) home sales via the Multiple Listing Service® (MLS®) of Canadian real estate boards totaled 49,521 units in May 2009. This is less than one per cent below activity in the same month one year ago. Year-over-year declines have been shrinking since the beginning of the year.
The seasonal increase in activity continues to be stronger than normal. As a result, seasonally adjusted home sales rose eight per cent to 37,649 units in May compared to April. This marks the fourth consecutive monthly increase in seasonally adjusted activity. Seasonally adjusted activity in May was 43 per cent above where it stood in January 2009.
Seasonally adjusted sales were up on a monthly basis in about 70 per cent of local markets. Monthly activity gains in Toronto (nine per cent), Calgary (25 per cent), Montreal (10 per cent), Vancouver (eight per cent), and Edmonton (12 per cent) contributed most to the overall increase in monthly activity.
The national MLS® residential average sale price in May 2009 reached the highest monthly level on record. At $319,757, it was up fourth tenths of a percentage point from the previous record set in May 2008. Over the past four months, the national MLS® residential average price has recovered 16.4 per cent from the low in January. The average price for MLS® home sales climbed to new heights nationally, and in Saskatchewan, Ontario, Quebec, New Brunswick, and Nova Scotia. New records were posted in only 15 per cent of local markets in May, none of which are among the most active or expensive. The strong rebound in sales activity, not price, in Canada’s most expensive markets is driving up average prices nationally and in some provinces, just as a sharp decline in activity in these markets pushed average prices lower in late 2008.
The supply of homes coming onto the MLS® market continued to decelerate in May. Seasonally adjusted MLS® residential new listings edged lower by eight tenths of a percentage point to 65,070 units, the lowest level since December 2005. Seasonally adjusted new residential listings in May were 19 per cent below the peak reached one year ago.
With the number of sales rising strongly and new listings trending downward, the balance between supply and demand is firming up in British Columbia, Alberta, Saskatchewan, Ontario, and Quebec. This resulted in national sales activity as a percentage of new listings reaching the highest point since December 2007. Residential dollar volume for MLS® sales climbed 10 per cent from the previous month to reach $11.4 billion in May. This is more than 50 per cent above the low of $7.5 billion reported last January.
National resale housing continues to rise in May “Sales activity is now closer to the pre-recession peak than it is to the recent low point reached last January,” says Regina Broker Dale Ripplinger, President of The Canadian Real Estate Association. “Strengthening consumer confidence, low interest rates, and improved affordability are drawing buyers to the housing market across Canada,” he added.
“Fueled by a string of monthly increases in activity, the number of transactions in May reached the highest point since July 2008,” said CREA Chief Economist Gregory Klump. “Inventory levels are still high in many markets, but fewer new listings and rising sales activity suggests that the selection of homes available for sale may shrink as the year progresses. The supply of homes up for sale needs to be drawn down further before average price increases become more widespread among local markets.”
PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information from the previous month. The Canadian Real Estate Association has previously released these separately. CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighborhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.
MLS® is a co-operative marketing system used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale. The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 96,000 REALTORS® working through more than 100 real estate Boards and Associations.
MLS® resale housing market stabilizes further in March
Existing MLS® home sales activity increased for the second month in a row in March 2009, according to statistics released by The Canadian Real Estate Association (CREA). The number of new listings also continued trending lower in March, which firmed up the balance of supply to demand.
A seasonally adjusted total of 31,135 homes traded hands nationally via the Multiple Listing Service® (MLS®) in March 2009. This is an increase of seven per cent from the previous month, and builds on the 10.3 per cent activity gain in February. The number of transactions in March 2009 stands 18 per cent above levels reported in
January 2009, when activity sank to the lowest level in a decade.
The monthly increase in activity was largest in British Columbia (13.6 per cent), and Ontario (10.5 per cent). Sales were also up from February levels in Manitoba, Quebec, and Newfoundland & Labrador.
Actual (not seasonally adjusted) transactions numbered 35,225 units in March 2009. While this remains 13.7 per cent below levels reported in March 2008, it is the smallest year-over-year decline in six months.
The national average price for home sales via the MLS® remains below levels reached one year earlier, but year-over-year declines are shrinking. The MLS® average residential price for homes sold in March 2009 was $288,641, down 7.7 per cent from March 2008. This is the smallest year-over-year decline in six months.
The average price for homes sold via the MLS® set a new record in March 2009 in Manitoba, and remained above year-ago levels in Saskatchewan, Quebec, New Brunswick, Prince Edward Island, and Newfoundland & Labrador.
The national average price continues to be skewed downward by lower activity in some of Canada’s more expensive housing markets and by fewer transactions at the higher end of the price spectrum. British Columbia, Alberta and Ontario, where homes are more expensive, are significant contributors to the current downward trend in national average price. MLS® home sales activity in these provinces accounted for 69 per cent of national activity in March 2008, compared to 67 per cent in March 2009.
The price trend is less dramatic for the weighted national MLS® average price, which compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. The weighted national MLS® average sale price was down 4.7 per cent year-over-year in March, compared to a 5.1 per cent decline in February.
“Housing markets are starting to show signs of buyer interest because of lower prices and interest rates,” says Dale Ripplinger, President of The Canadian Real Estate Association. “We expect April sales activity will feel some effects from the federal government incentives announced in the last budget, including the increase in the maximum withdrawal allowed under the Home Buyers’ Plan, and the First Time Buyer Tax Credit.”
Q1 2009 Results Seasonally MLS® adjusted MLS® sales activity in the first quarter of 2009 was little changed compared to the fourth quarter of 2008, declining by less than one-tenth of a per cent.
The number of homes for sale remains high, but continues trending downward. Seasonally adjusted national MLS® residential new listings numbered 208,755 units in the first quarter of 2009. This is down 6.4 per cent from the previous quarter, and represents the third consecutive quarter-over-quarter decline. On a seasonally adjusted basis, the number of MLS® residential new listings has dropped 11.9 per cent from the peak reached in the second quarter of 2008.
With sales activity increasing and new listings trending lower, the balance between supply and demand is firming up in British Columbia, Alberta, Ontario, and Quebec. These provinces have the largest influence on the national housing picture, so a firming housing market balance there in March 2009 caused the national housing market balance to tighten for the fourth time in as many months.
“A number of major housing markets are stabilizing, as buyers respond to improving affordability,” said CREA Chief Economist Gregory Klump. “Looking back to economic recessions in the early 1980s and 1990s, national resale housing activity bottomed out before the job market or economy did,” said Klump. “It will take time for ample supplies of new and existing homes to be drawn down, but demand appears to be stabilizing.”
PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information from the previous month. The Canadian Real Estate Association has previously released these separately.
CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighborhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.
MLS® is a co-operative marketing system used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale.
The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 98,000 REALTORS® working through more than 100 real estate Boards and Associations. Further information can be found at www.crea.ca.
By Mario Toneguzzi, Calgary Herald - March 17, 2009
There were more preliminary signs Monday that the residential real estate market may be starting to pick up.
The Canadian Real Estate Association in releasing its monthly MLS numbers said housing activity in Canada was up in February from seasonally adjusted levels the previous month.
In Calgary, combined residential sales (including single-family homes and condominiums) numbered 1,392 units in February compared with 928 units in January. The average sale price last month was$370,198, up slightly from $362,143 in January. New listings for February were 3,662 units compared with 3,767 units in January.
However, when compared with year-ago levels, the number of sales in February here fell by 35.6 per cent while the average sale price was down by 10.8 per cent and new listings were off by 29.3 per cent.
"The change from the January to February period (showed) there was some strengthening in the marketplace," said Lai Sing Louie, senior market analyst in Calgary for Canada Mortgage and Housing Corp. "But I would say it would be a little too early to say that the market has bottomed and is turning up now. There have been some positive developments, though, with a pick up in sales here in Calgary. And prices appear to be a little more stable. But it's only a month of data."
Louie said CMHC expects the market to expand at some point, but it's early to make that call now.
"There are positive signs in the marketplace now. In Calgary, for example, it was only a month ago that we had 10 months' of supply (in houses for sale).Now it's been cut to between five and six months. It has improved. But still the supply levels are elevated and we're still seeing demand reduced compared to the past."
Louie said the CMHC projections are for the market to turn this year and 2010 will be a recovery year.
In February, MLS sales in Alberta were down 29.8 per cent from a year ago to 3,231 units and the average sale price fell by 9.2 per cent to $326,785.
CREA, which represents real estate agents, said 28,669 homes traded hands across the country on a seasonally adjusted basis--8.6 per cent above seasonally adjusted levels in January, and the first monthly increase in activity since September 2008. Seasonally adjusted activity in February also surpassed levels reported in November and December of 2008.
Monthly seasonal increases in activity were largest in British Columbia (14.4 per cent), Nova Scotia (12.7 per cent),and Alberta (11.9 per cent).
Actual (not seasonally adjusted) transactions numbered 25,373 units in February. This was 31 per cent below MLS sales levels a year earlier, but it is the smallest year-over-year decline since October 2008.
In a research note, Sal Guatieri, a senior economist with BMO Capital Markets, said the Canadian housing downturn is more than a year old, with sales dropping by over 40 per cent and average sale prices off by 13 per cent.
"A comparison of recent trends in housing indicators with historical benchmarks suggests the year-long correction in Canada's housing market is around the halfway mark,"said Guatieri. "Growing job losses and an overhang of unsold homes will continue to depress activity and prices this year.
"However, barring a long recession, the improvement in affordability will support demand, which in turn should stabilize prices and anchor a modest recovery in home-building next year."
CREA said the supply of homes for sale nationally remains high, but has been trending lower.
The housing supply is expected to continue easing, but it will take time before it realigns with lower demand, said CREA chief economist Gregory Klump. "Economic uncertainty is keeping home buyers in a cautious mood, so homes are taking longer to sell than in recent years."
The national average sales price was $281,972 in February, 9.2 per cent below February 2008.That's smaller than yearover-year declines observed in the past four months. It is also the first time that the year-over-year decline in the national average price has decelerated since July.
The national average price continues to be pushed down-ward by lower activity in some of Canada's more expensive housing markets and by fewer transactions in higher price ranges.
"Consumer confidence will continue to be depressed by a barrage of negative economic news in the months ahead," said Klump. "Heightened job insecurity will keep many potential homebuyers on the sidelines. Those who are confident about their job situation will benefit from improving affordability in a number of housing markets."
The Canadian Real Estate Association, in releasing its monthly MLS numbers, said housing activity in Canada was up in February from seasonally-adjusted levels the previous month.Photograph by: Christina Ryan, Calgary HeraldMore signs today that the residential real estate market is starting to pick up.
The Canadian Real Estate Association, in releasing its monthly MLS numbers, said housing activity in Canada was up in February from seasonally-adjusted levels the previous month.
In Calgary, combined residential sales numbered 1,392 units in February compared with 928 units in January. The average sale price last month was $370,198, up slightly from $362,143 in January. New listings for February were 3,662 units compared with 3,767 units in January.
However, when compared with year-ago levels the number of sales in February fell by 35.6 per cent in Calgary while the average sale price was down by 10.8 per cent and new listings were off by 29.3 per cent.
CREA, which represents realtors, said 28,669 homes traded hands across the country on a seasonally-adjusted basis — 8.6 per cent above seasonally-adjusted levels in January, and the first monthly increase in activity since September 2008. Seasonally-adjusted activity in February also surpassed levels reported in November and December of 2008.
Monthly seasonal increases in activity were largest in British Columbia (14.4 per cent), Nova Scotia (12.7 per cent), and Alberta (11.9 per cent).
Actual (not seasonally-adjusted) transactions numbered 25,373 units in February. This was 31 per cent below MLS sales levels a year earlier, but it is the smallest year-over-year decline since October 2008.
CREA also said the supply of homes for sale remains high but has been trending lower. National MLS residential new listings numbered 65,060 units in February 2009, down 10.9 per cent from the same month one year ago. On a seasonally-adjusted basis, new listings are down 11.4 per cent from their peak reached in May 2008.
“The housing supply is expected to continue easing, but it will take time before it realigns with lower demand,” said CREA chief economist Gregory Klump. “Economic uncertainty is keeping home buyers in a cautious mood, so homes are taking longer to sell than in recent years. Lower sales activity at the higher end of the price spectrum will keep the national MLS residential average price under downward pressure.”
The national average price for home sales was $281,972 in February, 9.2 per cent below February 2008. CREA said this is smaller than year-over-year declines observed in the past four months. It is also the first time that the year-over-year decline in the national average price has decelerated since first turning negative inJuly 2008.
The national average price continues to be pushed downward by lower activity in some of Canada’s more expensive housing markets and by fewer transactions in higher price ranges.
“Consumer confidence will continue to be depressed by a barrage of negative economic news in the months ahead,” said Klump. “Heightened job insecurity will keep many potential homebuyers on the sidelines. Those who are confident about their job situation will benefit from improving affordability in a number of housing markets.”
The Canadian housing market sprung to life in February, said Millan L. B. Mulraine, economics strategist with TD Securities.
“The report does offer some hope that the decline in Canadian home prices may have stabilized somewhat in February after appearing to have accelerated in the latter months of 2008. And the increase in sales is certainly a welcome development, though possibly influenced by the weather,” he said.
Spring is in the air in Calgary, as the city’s real estate market appears to have come out of hibernation.
Calgary realtors sold 1,392 homes in the resale market last month, compared to 928 units sold in January, says data released Monday by the Canadian Real Estate Association.
Sales were also more brisk across the entire country, as 28,669 homes changed hands in February, an increase of approximately 9% over January levels.
However, CREA president Calvin Lindberg pointed out that it’s normal for sales to pick up as spring approaches.
Bonnie Wegerich echoed these comments.
The president of the Calgary Real Estate Board said sales tend to pick up after January and to gradually increase until June and the start of the summer holiday season.
“So far, so good,” Wegerich said about sales during the first two weeks of March. She said the attitude in Calgary’s real estate market appears to now be “more positive.”
Low mortgage rates could also help explain at least some of the increase in sales, Wegerich said, noting she’s heard of five-year rates well below 4%.
But despite the seasonal uptick, sales are still significantly lower than one year ago, even though mortgage rates are decreasing and homes are cheaper than in 2008.
In Calgary, the number of unit sales was trailing year-ago levels by 36% in February, while the average MLS residential price of $370,198 was 11% lower than one year ago.
This means Calgary is still is among those cities that are continuing to see the most rapid deflation in the real estate market in Canada.
Nationally, unit sales dropped 30% in February compared to one year ago, and average prices were 8% lower at $308,142.
Unit sales in Greater Vancouver plunged by 45% in February compared to one year ago, the steepest of any Canadian city, followed closely by Saskatoon, which saw sales fall by 43%.
Commenting on the national numbers, BMO Capital Markets economist Douglas Porter said that “it looks like the category 5 hurricane, which had been pounding the home resale market, has been downgraded to ‘just’ a category 4.”
Porter said buyer’s market conditions won’t vanish any time soon.
CALGARY -- There may be an upside to Canada's emerging subprime-mortgage problem as lenders increasingly move in to foreclose on overextended homeowners: New-found investment opportunities for real-estate speculators.
And it's not just the narrow but ballooning pool of subprime-mortgage foreclosures, but the overall boom in the foreclosure business that could get investors in a buying mood and desperate homeowners more willing to sell fast.
"A lot more properties will be sitting for longer and some of the properties are going to be vacant for sure," said Kap Hiroti, who tracks foreclosure proceedings in British Columbia and operates Foreclosurelist.ca, which links sellers with potential buyers.
Although nationwide data are scare, foreclosure rates are soaring in Alberta and British Columbia. And about half of those affected received mortgages they couldn't really afford from lenders who were willing to finance people with lousy credit histories - borrowers who would be considered too risky by mainstream lenders such as the big banks and credit unions.
The rate of foreclosure proceedings has doubled in Alberta in the past two years to about 5,300 in 2008-09 and subprime lenders made up 56 per cent of foreclosures last year. In B.C., subprime lenders were responsible for 42 per cent of foreclosures last year.
The mortgage crisis in the United States saw a growing mountain of foreclosures thanks in large measure to subprime lenders, who held a whopping 22 per cent of the market.
Canada, officials crowed, had much more stringent financial rules, with subprime lenders making up just 7 per cent of the market.
Federal Finance Minister Jim Flaherty pointed out this weekend that the government has already taken steps to tighten regulations around lending, such as limiting mortgages to 35 years and requiring a 5-per-cent down payment. He shrugged off the latest subprime data as no cause for concern.
"We knew we had some of these mortgages," he told CTV Newsnet. "They are mortgages that were made to people generally who were not credit-worthy. But we did not have in Canada the kind of exotic subprime mortgages - bubble payments, low payments for 12 months and then your payments tripled - those kinds of mortgages that caused a great deal of trouble in the United States. That's not the situation in Canada."
One economist estimated that 85,000 Canadians in 2006 had subprime loans and added that subprime was becoming the fastest growing segment of the mortgage market.
Glen Mabbott easily picked up several foreclosed properties in the U.S. south and plans to flip them for a profit. But when the Calgary real-estate investor turned his attention to the Canadian market he barely got a nibble after sending out 100 letters to owners in the early stages of the foreclosure process.
"They were still wanting market price, so we just finally quit," Mr. Mabbott said.
But Mr. Hiroti said that the attitude of sellers will likely change with real-estate prices sliding amid a recession.
Gone are the days of bidding wars for properties. Using a realtor means real-estate fees eat into the amount of money recouped. That's why homeowners may increasingly opt for a private sale in the early stage of the foreclosure process, he said.
"It'll get to the point where people will be walking away from their properties."
Homebuying intentions in Alberta have rebounded and are back to 2007 levels, according to the 16th Annual RBC Homeownership Survey which was released today.
The survey found that 35 per cent of Albertans were likely to purchase a home within the next two years, well above the national average of 27 per cent and up from 29 per cent in 2008.
"Home purchase intentions in Alberta have not only shown big gains over last year, they also remain higher than any other region in the country," said Don Peard, vice-president, Mortgage Specialists, RBC. "More favourable mortgage rates and home prices may in part explain this increase, and Albertans still believe firmly in the long-term value of a home."
The survey, conducted by Ipsos Reid, found that a large majority (72 per cent) believe it is a buyer's market right now. Given current housing prices and economic conditions, most Albertans (57 per cent) believe it makes more sense to wait until next year to buy.
According to the survey, 86 per cent of those polled in Alberta said that buying a home is a good or very good investment - the largest percentage in Canada.
Among those who plan to purchase this year or next, 39 per cent said they will do so because housing prices look attractive. Seventeen per cent cited the need for a larger home, and another 16 per cent said they will purchase because their current home does not meet their needs.
Seventy-one per cent said they plan to purchase resale and most (63 per cent) will opt for a detached house.
CALGARY, March 2 /CNW/ - MLS(R) sales activity of single family Calgary metro homes was 825 in the month of February 2009 showing an increase of 50 per cent from 550 sales in January 2009, according to figures released by the Calgary Real Estate Board (CREB(R)). This was a decrease of 34 per cent from February 2008 when single family home sales were 1,252. The number of condominium sales for the month of February 2009 was 343, an increase of 52 per cent from the 225 condominium transactions recorded in January 2009 and a decrease of 39 per cent from February 2008 when 562 condominiums changed hands.
"Undoubtedly the global economic downturn has battered consumer confidence. But there are promising signs we are moving towards a more balanced and stable market," said Calgary Real Estate Board President, Bonnie Wegerich. "Sales are making some modest gains this month, prices are stabilizing and our inventory absorption rate is improving," adds Wegerich.
The average price of a single family Calgary metro home in February 2009 was $415,568, showing an increase of 0.6 per cent from January 2009, when the average price was $413,049 and showing a decrease of 12 per cent from February 2008 when the average price was $471,696. The average price of a Calgary metro condominium was $268,971, showing a 0.7 per cent decrease from January 2009 when the average price was $270,940 and showing a decrease of about 13 per cent over last year, when the average price was $311,812. Average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighbourhoods or account for price differentials between geographical areas.
"Affordability is the silver-lining in this market. With low interest rates, broad selection and improved affordability, buying opportunities have not been this strong in years," said Wegerich.
"And this is good news particularly for first-time homebuyers who may have felt pushed out of the market," adds Wegerich.
"First time homebuyers can take advantage of improved affordability along with the federal government's First-Time Home Buyers Tax Credit and new increases to the Home Buyers' Plan.
Single family Calgary metro new listings added for the month of February totaled 2,057, down just 0.5 per cent from the 2,068 new listings added in January 2009 and showing a decrease of 31 per cent from February 2008, when new listings coming to the market were 2,981. Calgary metro condominium new listings added in February 2009 were 892 down 5.2 per cent from January 2009 when the MLS(R) saw 941 condo listings coming to the market. This is a decrease of 28 per cent from February 2008 when condominium listings were 1,244.
The median price of a single family Calgary metro home in February 2009 was $375,000, showing an increase of 0.1 per cent from January 2009, when the median price was $374,700 and down 12 per cent from February 2008 when the median price was $428,000. The median price of a condominium in February 2009 was $249,900 up 3 per cent from January when the median was $243,000 and down 15 per cent from February 2008 when the median price was $295,000. All Calgary Metro MLS(R) statistics include properties listed and sold only within Calgary's City limits. The median price is the price that is midway between the least expensive and most expensive home sold in an area during a given period of time. During that time, half the buyers bought homes that cost more than the median price and half bought homes for less than the median price.
"Indeed the shift in the market has been challenging," said Calgary Real Estate Board President, Bonnie Wegerich. "But I am encouraged by the improved affordability for buyers and signs that we are slowly but surely returning to a more balanced market," said Wegerich.
The Calgary Real Estate Board is a professional body of 5,209 licensed brokers and registered associates, representing 252 Member offices. The Board does not generate statistics or analysis of any individual member or company's market share.
February sees positive change in Calgary real estate market By DAVE DORMER, SUN MEDIA
Housing sales in Calgary were up in February compared to the previous month, according to numbers expected to be released today by the Calgary Real Estate Board.
"It absolutely was busier than January, there's no doubt about that," said CREB president Bonnie Wegerich.
"Personally, from what I'm seeing, it's busier.
"From what I'm hearing from other people, it's busier.
"I'm down at the (Calgary Home and Garden Show) today and it's packed."
As for why sales increased, Wegerich says the slowing economy has brought prices down in some areas of the city, making buying a new home possible for many people who couldn't afford it before.
"There's affordable housing out there again and people are liking the interest rates," she said.
"There's lot of people looking right now that couldn't afford to buy last year and there's lots of product out there."
In January, Wegerich said there were 11 months of inventory available in the city, "and now we're probably down to six."
"I think it's picking up and I'm fully encouraged by what I'm seeing right now," she said.
"I think sales are happening and prices are probably levelling off."
The positive news should provide a much needed boost to the real estate industry in Calgary, which has been hit hard in recent months by the slumping economy.
"We're very happy," said Wegerich.
There were 9,225 properties for sale in the city in January, according to numbers listed on the CREB website, with 949 of them changing hands at an average price of $373,978.
January's sales numbers took a big hit compared to the same month one year before, with the number of single-family homes being sold falling nearly 50%.
Year-over-year condominium sales were also down 50% while the cost had dropped nearly 13%.
The good news for sales also follows a recent Demographia International Housing Affordability survey that pegged Canada as the second most affordable country to buy a home, ranking us just behind the U.S. and ahead of the U.K. and Ireland.
By Mario Toneguzzi, Calgary Herald - February 26, 2009
Residential real estate activity should moderate further in 2009 alongside a general weakening in domestic economic conditions, says a research report released Wednesday by Scotia Economics.
Real Estate Trends, authored by senior economist Adrienne Warren, said Canada can expect a 15 to 20 per cent decline in the volume of resales this year with a further 10 per cent drop in average prices.
"Centres with the largest supply-demand imbalance, including Vancouver, Sudbury (Ont.) and Calgary, have relatively greater downside risk," said the report.
Also on Wednesday, the Canadian Teranet-National Bank composite house price index showed Calgary experienced a 7.6 per cent drop in prices in December compared to the previous year. The index said this was the sixth consecutive month of decline in Calgary.The Calgary index has shown declines in 13 of the past 16 months, since it also declined in each of the seven months from September 2007 through March 2008, said the index report.
The Scotia Economics report said that while home sales and construction in Canada seem set to turn down further this year, the outlook for renovations is somewhat mixed.
"The industry has been growing rapidly in recent years, with inflation-adjusted outlays rising an average of 8.5 per cent annually this decade," wrote Warren.
"Spending slowed progressively through 2008, but outlays are still estimated to have increased about four per cent."
She said Ottawa's recently announced renovation tax credit for households has the potential to provide a significant boost to the industry in 2009, but the initiative's overall effectiveness in filling the construction gap may be limited.
In the commercial sector, the report said office market activity in the country is expected to cool after several years of strong growth.
Vacancy rates are expected to climb in all major centres this year.
Jennifer Hilliker for Metro Calgary 27 February 2009 05:56 A young Calgary couple says real estate agents wouldn’t give them the time of day a few months ago.
Now that it’s a buyer’s market, 21-year-old Lyndsay Peters and her common-law partner, Kyle, are glad they have waited to buy a house — they say that they now hold the power.
“Real estate agents didn’t even want to talk to us,” Peters said, in reference to just a few months ago when the economy was booming.
“They would just try to sell the house to us right away. It’s a lot easier now because we know the house isn’t going to sell in five hours anymore. The real estate agents are a lot more willing to sit down and talk to us, because they know we could walk out and find someone else.”
Calgary’s housing prices were down 7.6 per cent in December 2008 compared with the same month last year, according to the National Bank housing-price index.
Peters plans to wait until summer to buy a home, hoping that prices will drop even further.
“There’s a $15,000 to $20,000 difference in prices from when we first began looking. That’s really substantial, especially when you’re young and planning to buy your first house,” she said.
Calgary Real Estate Board president Bonnie Wegerich says the economic slowdown is actually a good thing for the housing market, as it has become more stable and balanced.
“A door may be closing, but a window is opening,” she said. “The window of opportunity couldn’t be better for buyers right now.”
Wegerich also predicted prices of single family homes will drop two per cent in 2009 for an average sale price of $451,120.
But she warns buyers like Peters not to wait too long — she predicts people will begin buying again by the latter part of the year.
By Mario Toneguzzi, Calgary HeraldFebruary 25, 2009 12:01 PMComments (5)
Residential real estate activity should moderate further in 2009 alongside a general weakening in domestic economic conditions, says a research report released today by Scotia Economics.
The Real Estate Trends, authored by economist Adrienne Warren, said Canada can expect a 15-20 per cent decline in the volume of resales this year with a further 10 per cent drop in average prices.
"Centres with the largest supply-demand imbalance, including Vancouver, Sudbury and Calgary, have relatively greater downside risk."
The report said that while home sales and construction in Canada seem sure to turn down further this year, the outlook for renovations is somewhat mixed.
"The industry has been growing rapidly in recent years, with inflation-adjusted outlays rising an average of 8.5 per cent annually this decade, three times faster than overall GDP growth," wrote Warren. "Spending slowed progressively through 2008, but outlays are still estimated to have increased about four per cent. Expenditures on home improvements and alterations (but excluding repairs) totalled close to $40 billion last year, placing the renovation industry comparable in size to new construction."
She said Ottawa's recently announced renovation tax credit for households has the potential to provide a significant boost to the industry in 2009. But the initiative's overall effectiveness in filling the construction gap may be limited. The main factors behind the boom in renovations in recent years - record existing home sales, rising home prices and equity, record homeownership rates, high new home prices, an aged housing stock, and strong job and income growth - are no longer supportive.
"By and large, we expect renovation spending in 2009 to focus on more practical projects, including efficient upgrades and preparations for selling over purely aesthetic improvements that prove more popular when home prices are rising," said Warren.
In the commercial real estate sector, the report said office market activity in the country is expected to cool this year after several years of strong growth.
"Demand for office space is weakening alongside slowing office-based employment . . . tighter credit availability and sharply lower institutional investor activity," said Warren. "Meanwhile, substantial new supply will come on the market in 2009-2011, primarily in Toronto and Calgary, as a result of major new office tower developments currently underway."
Vacancy rates are expected to climb in all major centres this year, putting downward pressure on rents.
"Still, the sector appears better positioned than during the early-1990s downturn given a high pre-lease ratio and low starting vacancy rate," added Warren.
She said the retail markets will be pressured by weak consumer spending as well as significant new supply. An estimated 15 million square feet of new retail space is coming on the market in 2009, the most in a decade.
"Prime downtown locations will likely outperform more saturated suburban markets."
Book says real estate always a good long-term investment By NICOLE MCLAWS, SUN MEDIA - Feb 25, 2009
For long-term investment purposes, you can't beat real estate -- even in today's economy.
According to Don R. Campbell, president of the Real Estate Investment Network and author of Real Estate Investing in Canada 2.0, it's always the right time to buy, as long as investors do their homework.
"People need to be realistic," he says. "The last three years in Alberta have been the Tiger Woods years of real estate. No matter what you did, you won, but that can't sustain forever."
Indeed, the bloom is off the rose in Calgary's real estate market today, with many buyers hesitant about putting their money where their mouth is.
Campbell, however, says that hesitation is unfounded, as "the book is designed to work in hot or cold markets."
And Alberta, he says, is one market that won't remain cool for long.
"Alberta still has the three things the world is going to need when the recovery hits. It has food, fuel and fertilizer and those are the things the world needs and needs in abundance," Campbell says.
"This next 18 months will feel like an emotional and economic roller coaster, but if you're realistic, you'll find you can make money in an up market, a down market or a flat market."
What it starts with is accepting that real estate investing is not for everyone.
While it's bound to make money over the long term, people looking to make a quick buck are sure to be disappointed.
"Look at your financial goals," Campbell says. "Think about what you really, really want with your money and once you've figured that out, go to the next level. What investment will let you have that freedom? For 75 percent of people, it's a piece of real estate."
The reason, he says, is it's the only investment that is controlled by the investor.
"You can add value by doing light renovations, by making it more energy-efficient, by increasing the rent," Campbell says. "You have direct impact over what the property is going to do over five or 10 years.
"If you have a window of less than five years, though, real estate is not for you. Real estate is not get rich quick --it's a business, a long-term outlook."
Ideally, he says, the market should be neither too hot, nor too cold, and should be increasing by 6% annually.
However, he adds, in economies where things aren't perfect, it's still possible to find the right property. All it takes is a little legwork, know-how and patience.
"The book forces you not to buy poor pieces of property," Campbell says.
It appears Calgarians are cashing in on a slumping real estate market. Rose Matjasic and Kevin Knight are looking to buy a new home. They currently own and live in a downtown condo purchased before the real estate market took off. Now Matjasic says they feel it's the perfect time to get something bigger.
"Now that the prices have come to something a little bit more reasonable, it's a great time to start looking."
Matjasic feels it's the perfect time to take advantage of what many are calling a buyer's market.
"A lot of people right now are so scared to buy, but what they're not realizing is it's a great time to buy because you know, sellers are going to be a little more reasonable on their prices and there's a lot more room to negotiate, so hopefully somebody who wants to buy my condo will think the same way."
Elizabeth Huculak, Homes by Avi General Manager, says in the last month or so, show homes are busier, and sales are up.
"We're definitely selling and that's definitely encouraging. Obviously people have come to an understanding that there's a bit of a market difference than what it's been like the last couple years. February is three times as good as January as far as numbers are concerned."
Homes by Avi owner, Avi Amir, says the real estate market is cyclical and he believes the current trend will continue.
"There was some changes made in the market. I guess there was some price adjustment and besides there is, I believe, a pent-up demand in the market. People haven't been buying for a long time and nobody is really leaving the city."
The most recent statistics show the average price of a single family home in Calgary last month was $413,049. That compares to $455,297 in January of 2008.
Maybe it was the weather, maybe it was wanting to start the new year on an optimistic note, or maybe people were just being spontaneous.
Whatever the reason, as January moved along there seemed to be more open house signs popping up around the city -- and "for sale" signs with "sold" stickers slapped on them.
By the end of the month, January was slightly stronger for sales than December.
The Calgary Real Estate Board says 550 single-detached homes inside the city limits changed hands in January, up from 449 in December.
As well, 225 condominiums were sold, 20 more than the previous month.
Outside the city in the rural communities, sales in January reached 148, up from 113 for December.
"Indeed, it is a tough market (for sellers), but I'm pleased to see sales picking up over December," says CREB president Bonnie Wegerich. "Although numbers are down from January 2008, we are seeing increased activity and more interest from buyers."
Ron Stanners, a past-president for the board and broker/owner of Max-Well South Star Realty, says activity among realtors in his office picked up in January by about 55 per cent from December.
"Sales are up, that's a good sign," he says.
"And the flow of listings has slowed. I think a large number of investors have sold or rented their properties, which is one of the issues that has been affecting the market."
The number of new single-detached resale home listings added to the market last month totalled 2,068, down from 3,023 for the same month a year ago--with the comparative month-end inventories almost unchanged at about 4,000.
The condo inventory also held steady at near 1,900.
"While there's still a good selection of homes to choose from, we are seeing a slow but steady decrease in our inventory," says Wegerich. "As the inventory is reduced, we will see a return to a more stable market."
Stanners has been in the business long enough to know there will always be ups and downs, particularly in the Calgary marketplace.
"This market is not that bad -- price declines were minimal from December," says Stanners.
For January, the board reports the average price at $413,049,down from$417,398 in December. The condo average slipped to $270,940, declining from $274,919.
But Stanners says that because 2006 and 2007 were so volatile, it's difficult to make comparisons.
He says that 2004 and 2005 were "good years" and compared to them, the 2008 market was only about 20 per cent off.
From a financial aspect, Stanners also says buyers should be getting into the market sooner than later.
"If you bought a home today and the price dropped 10 per cent in the next year and mortgage rates went up one per cent, it would still cost you less to buy today -- and you'd have the home paid off a year earlier," he says.
The number of properties sold via the MLS® systems of real estate boards in Canada slipped further in January 2009, according to statistics released by The Canadian Real Estate Association (CREA).
Seasonally adjusted residential MLS® sales activity numbered 26,376 units in January 2009. This is 3.1 per cent below activity in December 2008, and a decline of 37.3 per cent in activity compared to January 2008.
Monthly percentage declines in seasonally adjusted activity in January 2009 were on par with those in December 2008 (-2.4 per cent month-over-month), and moderate by comparison to October (-14.9 per cent) and November 2008 (-11.8 per cent).
Monthly declines in seasonally adjusted sales activity in British Columbia and Ontario pulled national activity statistics lower, and offset monthly increases in MLS® residential sales activity in Manitoba, and Newfoundland & Labrador.
Actual MLS® resale housing activity totaled 16,343 sales nationally in January 2009, down 40.9 per cent on a year-over-year basis. Only Prince Edward Island recorded an increase in residential units sold, up two per cent compared to January 2008.
The supply of homes for sale remains high, but is trending lower nationally. The decline in new MLS® listings is trending lower in line with sales activity in many regions. Seasonally adjusted new MLS® residential listings numbered 69,875 units in January 2009. This is down three per cent from the previous month, and 13 per cent below the peak reached in May of last year.
The actual (unadjusted) number of new listings on the MLS® systems of real estate boards in Canada posted the largest year-over-year decline on record in January 2009, falling 14.2 per cent from the level in January 2008.
The decline in supply to meet lower demand is expected to help stabilize the resale housing market balance and put a floor under prices. “There is no doubt the market is not as active as it was last year, but there are certainly buyers and sellers in the Canadian residential market,” says the President of the Canadian Real Estate Association, Calvin Lindberg of Vancouver. “In many markets, transactions have a tendency to take longer because of negotiations between the two. Realistic pricing is the key to the sale of residential property in this market. Conditions also vary from one neighbourhood to another, so buyers and sellers should know those details.” CREA’s President is also confident federal budget initiatives for homebuyers will have an impact later in the year.
“The increase in the Home Buyers’ Plan and the First-Time Home Buyers’ Tax Credit to cover closing costs are both important for first time home buyers, and they are an important factor in an active housing market.”
The national average price for home sales via the MLS® in January 2009 is down 11.3 per cent compared to January 2008. This national average price continues to be skewed lower in large part by fewer sales in British MLS® home sales ease in January Columbia, Alberta and Ontario, where homes are more expensive and demand has softened most. The MLS® average home sale price was up from year-ago levels in Saskatchewan, Manitoba, Prince Edward Island, and Newfoundland & Labrador.
The price trend is similar but less dramatic for the weighted national (and major market) MLS® average price, which compensates for changes in provincial (and major market) sales activity by taking into account provincial (and major market) proportions of privately owned housing stock. The weighted national MLS® average sale price was down 6.2 per cent year-over-year in January. The weighted major market MLS® average home sale price was down 4.6 per cent year-over-year in January. The major market MLS® residential average price declined by less than the national average on a year-overyear basis. Major markets in which the average price declined by less than the national average include Toronto, Kitchener-Waterloo, St. Catharines, Sudbury, Hamilton-Burlington, Edmonton, London & St. Thomas, and Windsor. Seasonally adjusted residential dollar volume for MLS® sales totaled $7.4 billion in January 2009, down 3.7 per cent from the previous month and the lowest level since May 2003.
“Weak sales activity in January follows the CREA forecast that national MLS® sales activity will be well below the activity of last year,” says CREA Chief Economist Gregory Klump. “Affordability has improved and will be better during the spring home buying season in many markets compared to last year. However weak consumer confidence is likely to continue squeezing sales activity during the spring home buying season.”
PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information from the previous month. The Canadian Real Estate Association has previously released these separately.
CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighborhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.
MLS® is a co-operative marketing system used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale. The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 98,000 REALTORS® working through more than 100 real estate Boards and Associations.
Jason Markusoff -Calgary Herald - Thursday, February 12, 2009
Mortgage broker Adnerys Armstrong, who specializes in high-risk borrowers, says she's taking extra time to warn customers of the dangers of foreclosure, as the global financial crisis has made banks more wary of lending risks.
More Calgarians are defaulting on mortgages and losing their homes in a toxic stew of rising job losses, falling house prices, the credit crunch and ill-timed investments.
Up-to-date statistics on foreclosures are hard to come by, but the number of Albertans who have fallen at least three months behind in mortgage payments has jumped to 1,771 from 649 in 11/2 years.
Since November, lenders have begun 949 foreclosure proceedings at Calgary's courthouse--more than in the six months before that, according to court data collected by Foreclosures Canada Information Systems, an investment company. And increasingly, those proceedings aren't ending in the borrower's favour because their property value has eroded, says company founder Wade Fenner.
"They're going to throw in the key or walk away," Fenner said.
The most prominent foreclosure law firm in Calgary said business roughly doubled from 2007 to 2008, and that growth hasn't shown signs of relenting.
"Foreclosure rates are rising at a disturbing rate," said Harold Vickers of Vickers and Associates.
"We've been a firm that has been doing foreclosures for 25 years, and we have never seen this many foreclosures."
It used to be that courts, banks and mortgage lenders only had to close in on a handful of disaster cases: bad divorces, addicts, marijuana grow operations and people who otherwise fell apart. In good times, many could get emergency financing by borrowing against the steadily increasing value in their homes.
But now values are eroding.Foreclosures are claiming Calgarians who've invested in multiple homes or only had one, with good credit and with bad, Vickers said.
In a growing number of cases, Vickers finds borrowers who owe more than their home is worth.
And here's a recession-time twist: at a time when layoffs stalk offices throughout Calgary, his company has had to boost staff by more than 30 per cent to handle the bigger workload.
The Calgary Real Estate Board lists about 125 condos and single-family houses for court-ordered sale, according to estimates by Mike Fotiou of First Place Realty. In his blog, he noted the Multiple Listing Service had only eight last March, including some grow ops.
Current foreclosure listings are as diverse as the market itself: inner-city condos, old bungalows, three-year old houses in new neighbourhoods, and mil-lion-dollar properties. There are 13 foreclosures in one condo complex alone.
Some Calgarians facing foreclosure have stumbled dangerously behind in mortgage payments after getting laid off, said Adnerys Armstrong, a mortgage broker who specializes in high-risk borrowers.
Or in many cases, clients borrowed to purchase a second or third home to flip for easy profit, as many did before the market dipped in 2008. When that sale didn't come, they were stuck with multiple mortgages and a shrinking pool of collateral.
"Throughout all the excitement, I think most people weren't thinking, because of the price of oil," she said.
With her pool of would-be homebuyers shrinking, Armstrong said she's taking extra time to warn customers about the dangers of foreclosures, as the global market meltdown and U.S. housing crisis have made banks more wary of risk.
Often, bad decisions mix with bad circumstances. Armstrong tells the story of one client who got sick just as the market did.
In late 2007, months after the market had peaked, the woman and her pensioner mother added to the debt on their Calgary home to finance a second one in the northwest. As they rented the main floor to a friend for less than the mortgage's cost, they renovated the basement and listed the home.After six months, nobody bought. Worse, the woman fell ill and missed work for three months and has fallen more than two months behind on her own home and one month behind on the investment property.
Armstrong is trying to find them help, but since both homes are shedding value, "neither residence or both combined are going to get them out of trouble."
Dianne Brown used to see a smattering of foreclosures, and now they make up about 15 per cent of her business.
"It started picking up a year and a half ago, and accelerated dramatically in the past eight months," she said.
Although some agents hype foreclosures as elusive bargains--many bear the "handyman's special" tag in listings --Brown cautions the court and lenders still have to get a fair price to recoup debt, and apply extensive conditions, limiting the liability.
Vickers said his caseload shows no signs of growing thinner, although he said lenders are trying hard to work with homeowners to stave off the emotion-wrought process of foreclosure.
"Lenders aren't wolves trying to take people's property," he said.
By Kathy McCormick, Calgary HeraldFebruary 7, 2009
To paraphrase Charles Dickens, it may not be the best of times, but it's not the worst of times, either.
Calling today's economic turmoil "unprecedented times," the Bank of Montreal's senior economist and managing director said, nonetheless, "it's not the Great Depression."
In fact, "my feeling is that the U. S. recession will be officially over by September of this year, and stocks will bottom out before the recession ends," Michael Gregory told more than 600 members of the Canadian Home Builders' Association-Calgary Region at a recent economic forecast,
Additionally, the Canadian economy will fare better, he said.
"Canada's recession will be shorter and shallower than many countries, including the U. S."
He's predicting that Canada will start to see positive growth by the third quarter of this year.
That's the good news.
The bad news: the recovery won't be fast.
"Even when the recovery starts, it will be slow and sluggish. Even globally, it won't be as robust."
By this time next year, he's predicting that "no-one will be talking about the recession, but they'll be lamenting on how slow and fragile the recovery is--one to two per cent growth for a while."
Canada will fare better than the U. S. for two reasons--the Canadian banking system and our housing markets.
"Canada's housing market is much more fundamentally sound," says Gregory.
"Canadians have increased debt, but also increased assets. Equity in homes is hovering at 70 per cent, so when prices fall, it doesn't create economic convulsions where consumers are mortgaged to the hilt. That will be a cushion for the downturn."
In Alberta, "prices increased 40 to 50 per cent" in a short time, leading to some of the most expensive housing in Canada.
"That has cooled quite considerably, but it hasn't crashed--and it's not a bad adjustment."
Canadian banks, too, "are still healthy," he says.
However, credit conditions have tightened up everywhere and that won't reverse until the U. S. economy pulls out of the recession by the end of the year and there is a stabilization and modest improvement in commodity prices, says Gregory.
"So it will be the end of this year or early 2010 before it becomes easier."
Meanwhile, over at the Urban Development Institute, residential land developers and related businessmen were hearing what another economist had to say.
"There needs to be a return of consumer confidence before things will get better," says Adam Legge, vice-president and chief economist with Calgary Economic Development.
"Liquidity is the oil that greases the gears of the economy," says Legge, noting that even when things turn around, "it will take three to five years before economic growth is at the three to five per cent mark each year."
Even so, Calgary is in the best position.
"There is a strong labour base, and there is still demand. Calgary is the energy capital and it has a head office economy. There are a number of multi-year projects to keep construction workers and investment here; and the Canadian banking system has strength and stability."
The average price of a single-family home in Calgary remained largely unchanged last month.
The Calgary Real Estate Board said yesterday that in January, the average MLS price in that category totalled $414,466, which is less than 1% lower than the price the same home would have fetched in December.
Sales of single-family homes, however, rose nearly 20% in January to 538 units, compared to 449 units sold in December last year.
December usually is a month of slow sales as people focus on Christmas. Inclement weather and poor driving conditions had further driven sales below normal levels.
As of yesterday, there were 4,056 active listings of single-family homes in the Calgary metro area. CREB anticipates new listings, which have been declining slowly since peaking last May, will rise again this spring, leading to what realtors call a "buyers' market," or plenty of choice for potential buyers.
Mount Royal, one of the oldest communities in Calgary, was the most expensive in which to purchase a home in 2008, says the Calgary Real Estate Board.
Originally an enclave for the city's American-born business elite, the neighbourhood was known as American Hill.
These days, the name is long forgotten, but the inner-city community continues to attract high-income buyers.
Mount Royal posted an average selling price of $1.79 million on 33 single-detached home sales in 2008.
In 2007, Bel Aire was the priciest neighbourhood with an average of $1.95 million, while Mount Royal recorded an average of nearly $1.7 million.
As for sales, CREB reported 13,455 sales last year, nearly 5,000 fewer than in 2007.
The board's zone A, which takes in much of the city's northwest, was again the busiest quadrant with 4,850 sales--down from 6,484 the previous year.
"Overall, I think 2008 was a reasonable year for real estate in Calgary," says Ed Jensen, outgoing president of CREB. "However, our third quarter really hurt us for unit sales."
Year-end statistics from the Calgary Real Estate Board also show that the two most active communities in the city were in zone A:
-North-central Coventry Hills, where 479 homes changed hands over the course of 2008 with an average selling price of $372,459;
-Tuscany in the northwest, where 458 sales brought an average of $475,064.
From a price perspective, the highest average in the zone was in Lynx Ridge, which averaged $1.56 million on three sales.
The next most expensive was Varsity Estates, where 17 deals averaged $963,411.
Moving over to the board's zone B, which roughly covers Calgary's northeast and some of the southeast, the most busiest neighbourhood was Taradale --where 259 homes changed hands at an average price of $364,738.
Saddleridge was second in sales, with 231 homes at an average selling price of $383,706.
As usual, Coral Springs had the highest average price in the zone. For the year, it was $462,874 on 31 sales.
Castleridge Estates had the next highest average price at $396,333 on three sales.
In the board's zone C, which roughly covers the diverse southwest area of the city, the highest number of sales for the year was recorded in Evergreen.
The community had 380 sales at an average of $424,154. Bridlewood was the next most active, tallying 294 sales averaging $388,188.
While Mount Royal registered the highest selling price not only for zone C but for the whole city, Roxboro was a close second. A pair of deals there last year averaged $1.74 million.
Covering the rest of the southeast quadrant is the board's zone D.
Leading the way in sales for that area was McKenzie Towne, which had 368 at an average price of $386,836.
Next came Cranston, where 292 sales averaged $445,183.
From the price perspective, a couple of estate neighbourhoods were one-two. Leading the way was Lake Bonavista Estates, which had an average price of $790,067 on 37 sales, while Willow Park Estates had about $682,053 on 15 deals.
Not only were there fewer sales and lower prices last year, but because of the large selection, consumers took their time deciding whether to buy--as well as where and what to buy.
It took an average of between 45 and 48 days to seal a deal last year, compared with an average in 2007 of between 31 and 35 days.
"After starting out in favour of the seller, 2008 shifted over to the buyer about midway through and stayed that way through the remainder of the year," says Jensen. "Then market volume started to drop, falling 29 per cent from 2007."
For weeks Premier Ed Stelmach and his government seemed impervious to the pain being felt across the country and around the world.
It's like they were walking against an ever-increasing economic storm with not a worry in the world.
Sure there were warning signs. The sudden disappearance of multi-billions in oilsands and upgrader investments that went on all last fall, almost too numerous to name.
Then there was the bizarre energy strategy document released by Steady Eddie's struggling Energy Minister Mel Knight before Christmas.
Nearly two years in the making, it did nothing to stem the flow of raw bitumen, upgrader projects and jobs to Illinois, Ohio and Texas.
For which Mel and his cabinet buddies got rewarded with a 30% wage boost in June. And there's more where that came from.
The disturbing tumble in house prices is more evidence of tough times ahead.
It's getting so bad the Edmonton and Calgary real estate boards now appear to be fudging the stats after the Edmonton single-family dwelling price peaked at $426,028 in May 2007. The Calgary SFD crested at $505,920 two months later.
Last week both boards reported their December numbers. In Edmonton the price had tumbled $74,158 since the happy times. Calgary's average single-family dwelling haircut came in at $88,322.
This comes out of the calculator as a 17.4% loss of equity for both big cities.
Clearly some folks who got in at the top of the boom are getting close to negative-equity territory. When the mortgage is more than the value of the house, bad things can start happening.
Edmonton Real Estate Board prez Marc Perras claimed the capital city's housing market was "responding in an orderly manner."
His Cowtown counterpart Ed Jensen insisted 2008 was a "reasonable year." But Jensen also noted that "consumers are sitting tight at the moment."
I wonder why?
Yesterday Statistics Canada reported "significant 12-month declines" in new house prices for both Edmonton and Calgary in November.
Edmonton's 7.9% drop was the largest since May 1985 while Calgary's 2.5% tumble hadn't happened since November 1991.
But a lot of that is paper profits. You don't lose it unless you are selling.
And there's nothing wrong with buyers hanging in for a lower price.
It was Statistics Canada's Labour Force Survey last Friday where the rubber really hit the road.
"While employment edged down in most provinces," the Ottawa number crunchers noted, "Alberta recorded the largest loss."
But aren't we supposed to be recession-proof?
It gets worse when the survey reveals that, of the 34,000 job losses across the country, 16,000 came from Alberta, where the PCs' Oilsands Gone Wild policy built a boom that was never supposed to end.
OK, at 4.1% unemployment we're still the lowest in the country. And we also had the highest hourly wage at $24.50. Don't hit the panic button just yet.
Meanwhile the premier and Finance Minister Iris Evans are ramping up to declare a "technical deficit" so the government can start spending the $7.7 billion sustainability fund, while at the same time preaching restraint in the February budget.
Talk about a mixed message. And that's before news of the MLAs next little salary increase leaks out.
The same problem plaguing both Edmonton and Calgary city councils hits home in the legislature when MLAs are scheduled to get another 5.5% wage increase on April 1, unless the Alberta Weekly Earnings Index crashes between now and then.
Big city councillors are already taking heat over showering themselves with wage hikes, while property taxes are being jacked up, because of the wage index formula that was originally invested by House Speaker Ken Kowalski.
This comes after Kowalski's member services committee quietly rewarded MLAs with large wage hikes in June (over and above the April 1, 2008 4.5% boost), allegedly because of extra committee work.
And a few days later cabinet declared Christmas in June for the premier and his ministers.
There will be some moderation. But we will avoid a meltdown, analysts say By ERIC BEAUCHESNE, Canwest News Service
The Canadian housing market is cooling but is not facing a U.S. style meltdown, builders here say.
"A few commentators have drawn a parallel between the Canadian housing situation and the extreme difficulties in the housing market in the United States," the Canadian Homebuilders said in a report yesterday that dismisses such comparisons.
"There is absolutely no merit in drawing such a parallel," it said in the report, which contends the pace of housing construction in Canada is merely returning to a level that is consistent with underlying housing requirements following the boom of recent years.
"The housing situation in Canada is totally different from that of the U.S.," it said. "There will be some price moderation in some markets, but there is nothing to suggest that housing markets in Canada are vulnerable to the oversupplies and plunging prices that characterize many markets in the U.S.
"We did not experience the same housing boom conditions that occurred in the U.S., and there is no reason to expect that we are in for the serious pain they are currently suffering," it said.
The moderation of house prices will improve affordability and create opportunities for first-time home buyers, it said. Meanwhile, existing homeowners have little to fear.
"For those selling a home and buying another, the moderation of housing prices should be relative - there should be no significant gain or loss from the easing of house prices," it said
"For those who have owned a home for some period, their equity will be substantial, given the rising prices of the past few years," it said.
"For those who purchased their home recently, there should be few worries about a modest temporary reduction in value."
To support its argument that the Canadian housing market is not going the way of the U.S. market, it cited a variety of differences:
Unlike in the U.S., underwriting standards for qualifying mortgage borrowers in Canada have been maintained at prudent levels, resulting in mortgage borrowers here being much more creditworthy.
Canadian mortgage lenders never offered low initial "teaser" rate mortgages that led to most of the difficulties for mortgage borrowers in the U.S.
Most mortgages in Canada are held by their original lender, not packaged and sold to third parties as is typical in the U.S., and consequently, Canadian mortgage lenders have a vested interest in ensuring that their mortgage borrowers are creditworthy and not likely to default.
Only 0.3 per cent of Canadian mortgages are in arrears vs. 4.5 per cent in the U.S. and what even before the start of the U.S. housing meltdown two years ago was two per cent.
Canadians tend to pay down mortgages faster than in the U.S., where mortgage interest is deductible from taxes, which encourages U.S. homeowners to take equity out of their homes to finance other spending, a difference that is reflected in the fact that in Canada mortgage debt accounts for just over 30 per cent of the value of homes, compared with 55 per cent in the U.S.
In Canada, home prices are down 9.8 per cent from a year earlier, compared with an 18-per-cent drop in the U.S. from what were already deeply depressed prices a year ago, the latest real estate industry figures show.
Most analysts here agree that Canada should avoid a U.S. style housing market meltdown.
Michael Gregory, senior economist with BMO Capital Markets, said recently that "we won't even come close'' to what is happening in the U.S. thanks to stronger employment and income growth here as well as a banking system that "continues to make mortgages" available to Canadian consumers.
But he cautioned that if unemployment rises in Canada, there will be a larger fallout for the domestic housing market.
"Anyway you slice it, if you don't have a job, you can't get a mortgage and you can't buy a house," Gregory said.
Mario Toneguzzi Calgary Herald CREDIT: Herald Archive, Reuters
The need to reduce prices has become an unwelcome reality for many people trying sell homes in a buyer's market.
Fiona Warren admits she and her husband, Andy, picked a bad time to sell their house, in the slumping Calgary real estate market.
In the past six years, the couple has sold a few single-family homes in a matter of 24 to 48 hours on average.
This time, their 1,900-plus square foot, two-storey home in Regal Terrace has been listed for sale for almost three months and there have been only two viewings to potential buyers. The house was originally listed for $729,000. Now it's $699,000.
"We did anticipate it was going to be slower, but perhaps maybe not as slow as this," said Fiona Warren, adding the couple would like to stay in the same area in either a renovated older bungalow or build a new home. "We had also hoped to slide in. I think we missed it by two or three months."
On Tuesday, the slide was evident as the Calgary Real Estate Board officially released its MLS year-end data for 2008. Total sales are the lowest they have been since 1996. Single-family home sales (13,455) were down 27 per cent from a year ago while the average sale price fell 2.5 per cent to $460,327 and the median price dropped by 2.9 per cent to $409,000.
The condominium market fared worse. Sales plunged by 31.3 per cent to 5,661 compared with 2007 while the average sale price dropped by 4.4 per cent to $302,408 and the median price, at $279,500, was off by 5.3 per cent from 2007.
December was a brutal month for weather in Calgary, but the chill was particularly felt in the residential real estate market.
Sales of single-family homes plunged by 46.9 per cent to 449 compared with December 2007, while condo sales fell by 47.8 per cent to 205.
Also, average and median sale prices continued to drop from year-ago levels. For single-family homes, the December 2008 sale price (at $417,398) was off by 6.2 per cent and the median price of $380,000 was down by 6.6 per cent from a year ago.
Condos had a harder hit as average sale price was down 9.8 per cent to $274,919 and the median price of $254,000 was off by 11.2 per cent compared with December 2007.
The market has dramatically shifted from what it was just a year and a half ago. Average sale prices for both condos and single-family homes have fallen by more than 17 per cent from their peak in 2007.
Average sale prices for singlefamily homes peaked at $505,920 in July 2007 and for condos at $332,237 in May 2007.
It is also taking longer for people selling their homes. For 2008, it took an average 47 days on the market to sell a singlefamily home in Calgary, up from 33 days in 2007.
For condos, it was 50 days in 2008 compared with 32 days last year.
But those numbers continue to climb. In December, it took 61 days on average for a sale in both the condo and single-family home markets.
For sellers such as the Warrens, they may be faced with some tough decisions in the near future.
When asked what it's going to take to sell in this market, she replied: "Some pretty hardcore marketing and maybe some more creative sales approaches.
"The second would be obviously to drop the price, but it gets to a certain point where if you drop the price too much then there's no point in selling.
Real estate in Calgary went beyond the point of affordability and when the average price of a singlefamily home exceeded$ 500,000 in July 2007, it was beyond the ability of the average family to afford it, said real estate author Garth Turner, adding there naturally should have been a correction.
But that correction was delayed for two reasons: the high price for oil and the existence of zero-down, 40-year mortgages.
"You had the greatest commodity bubble in oil ever happen in 2008. That gave the illusion of wealth and the illusion of future wealth in Alberta," he said.
The zero-down, 40-year mort-gages were in full effect until Oct. 15 and many people were able to buy "because of these Canadian subprimes, which is essentially what they were."
Turner said the Calgary market went beyond the point of sustainability and the correction was only inevitable when people were not able to afford homes on their incomes, oil prices collapsed and cheap mortgages were taken off the table.
"To talk about a rebound in the middle of 2009 is a complete myth. We are in the middle of a North American meltdown, which is not going to be rescued in 2009," said Turner.
"Many people took their houses off the market waiting for the spring. One of the big surprises of 2009 will be that there is no spring market. It will be dismal."
He predicted listings are going to explode in Calgary beginning in March, with the greatest number of listings in April and May. He expects local prices will drop a significant 15 per cent but won't hit bottom until 2010.
In early December, Re/Max released its housing market outlook, which forecast MLS sales in 2009 in Calgary to increase by two per cent from 2008 while there would be no change in the average sale price.
An outlook by Canada Mortgage and Housing Corp. forecast MLS sales in the Calgary census metropolitan area to increase by 2.8 per cent in 2009 while the aver-age sale price would increase by less than one per cent to$406,000, which includes both single-family homes and condos.
"The marketplace was oversupplied," said Lai Sing Louie, senior market analyst in Calgary for the CMHC.
The residential real estate market will likely be slow in the first part of this year as consumers are hesitant to make big-ticket purchases, said Todd Hirsch, senior economist with ATB Financial in Calgary, adding the market should pick up in the latter half of the year.
"At a certain point there will be so much pent-up demand that people will pull the trigger."
Prices drop 11 per cent across Canada after scaling a peak of $316,896 in May
Brenda Bouw The Canadian Press VANCOUVER
Canada's housing market made skeptics proud and put eternal optimists to shame in 2008 as the favour turned quickly to buyers, after years of smug sellers having the upper hand.
The shock was how quickly the tables turned. House prices across Canada have dropped 11 per cent since hitting a peak of $316,896 in May 2008, down to $280,880 in November, according to the latest figures from the Canadian Real Estate Association.
The drop is weighed heavily by cities such as Vancouver, Canada's most expensive housing market, where prices have also fallen almost 13 per cent since May.
Across Canada, prices have dropped 10 per cent since November 2007, when the average home cost $311,485. Sales slipped 42 per cent year-over-year.
Estimates for the Hamilton market call for average home prices to fall about 4 per cent in 2009 after climbing an average of 4 per cent last year. November prices were up 6 per cent compared to the same month in 2007.
With consumer confidence at 25-year lows and the economy in recession, potential home buyers are staying on the sidelines until prospects brighten. Banks are also more reluctant to lend money to finance home purchases in markets where prices have been falling.
"It was back to reality in 2008," said CIBC World Markets economist Benjamin Tal. "The realization was that house prices can fall, and will fall."
Tal said we moved from a seller's market to a buyer's market "in a matter of months."
"This was a transitional year. A reflection of not a subprime-type meltdown, not of a bubble, but rather of recessionary conditions," said Tal.
The puncturing of the real estate bubble in 2008 has happened before. In the early 1990s, property values fell between 10 per cent and 20 per cent in many Canadian markets. In the 1980-81 recession, interest rates of more than 20 per cent in Canada squeezed inflation out of the economy but also caused thousands of homeowners to lose their houses because they couldn't afford their new payments when they refinanced their mortgages.
In both cases, recessions were followed by a runup in house prices when economic recovery came.
Tal expects national house prices to drop about 10 per cent in the next 12 months as the recession deepens. He said prices will drop the most in Western Canada, because that is where they had the biggest run up in the decade-long housing boom.
"The decline is going to be significant, but it's not going to be a freefall," Tal said. "The U.S., minus subprime, equals Canada."
In the United States, housing prices have fallen by 20 per cent since their peak in mid-2006, and up to 40 per cent in some cities.
The market crashed as a result of risky and reckless mortgage practices which led to billions of dollars in defaults, and in turn caused millions of Americans to lose their homes. A second wave of mortgage renewals is expected to hit in 2009.
While many real estate experts say Canada does not have the same problem with risky lending practices, Merrill Lynch Canada economist David Wolf maintains Canada is following the same path as the U.S., but with a two-year lag. He said while mortgage defaults might seem low at 0.29 per cent of about 3.9 million mortgages as of September, it's a 17 per cent year-over-year increase. It's also larger than the 0.18 per cent of defaults in Canada in 1990, "right around the peak in house prices and just after the cyclical trough in unemployment."
He also cited a Bank of Canada study released a year ago that said mortgage default rates would rise to 2.25 per cent under a "very extreme" scenario of a 23 per cent aggregate drop in house prices.
"In sum, the relatively low level of mortgage arrears in Canada is of no comfort to us," said Wolf, who in recent reports has turned bearish on the Canadian housing market.
Gregory Klump, chief economist at the Canadian Real Estate Association, said he has been struck by how quickly sales have dropped in recent months. He said many buyers are nervous about the current economy, but he is also seeing the impact of "very cautious" lenders.
Klump said he is hearing more stories than ever before of people with pre-approved mortgages who don't get the money from the bank when it comes time to close the deal.
Scotiabank economist Adrienne Warren said she too expects the housing market in Canada to soften next year, particularly in the next six months as the recession creates higher unemployment.
Total housing starts in the Calgary Census Metropolitan Area (CMA) declined 26 per cent from 776 units in November 2007 to 575 units in November 2008. Through the end of November, total housing starts amounted to 11,035 units this year, down nearly 15 per cent from the same period in 2007.
Single-detached starts amounted to 338 units in November 2008, down 43 per cent from the 591 starts in November 2007. On a year-to-date basis, 4,104 foundations have been poured this year compared to 7,385 starts in the same period the year before. CMHC expects singledetached starts to end 2008 at 4,300 units and then rise to 4,500 units in 2009. A decline in new home inven- tories in the coming months and less competition from the resale market next year will be two important factors supporting higher single starts next year.
In November, completions amounted to 353 units while 327 units were absorbed. As a result the inventory of single-detached units increased by 26 to 688 units. The inventory of completed and unoccupied units consisted of 350 show homes and 338 spec units. There are currently 2,761 single-detached units under construction in the Calgary CMA of which five per cent are estimated to be speculative construction.
The average absorbed price of a single-detached unit in the Calgary CMA was $616,656 in November, up 19.7 per cent from a year earlier and to a record high. Note, the absorbed price reflects units absorbed in the current month but in most cases negotiated and priced before construction began. Meanwhile, multi-family starts, which include semi-detached units, rows, and apartments, were up year-overyear in November. Multi-family starts amounted to 237 units this November, up 28 per cent compared to the 185 starts in November 2007. The higher level of multi-family starts in November can be attributed to new affordable housing rental project which amounted to 150 units. Through to the end of November, 6,931 multi-units were started this year, up 26 per cent from the 5,519 units started one year ago.
Strong sales momentum in 2007 led to high levels of condominium construction in 2008, but changing market conditions this year will moderate condominium construction and lower multi-family starts to 2,500 units next year.
In November, multi-family completions amounted to 438 units while absorptions reached 432 units. As a result, the completed and not absorbed inventory increased by six to 329 units, up 145 per cent from a year earlier. There were 8,880 multifamily units under construction in November and, as these units are completed, there is a risk that the inventory of completed and unoccupied multi-family units will increase.
To say this hasn't been a typical market is to say Calgary got a light dusting of snow last weekend.
With just one month left in the year, figures from the Calgary Real Estate Board reveal that while November showed all the historical signs of a slowdown in seasonal activity, it was also a reflection of what has been happening all year: - The month-end inventory was up just a tad from a year ago, but the 5,083 homes on the list is the lowest count since back in February and well off the peak of 7,099 in May. - The number of new listings recorded by the board last month, 1,567 of them, was off nearly 20 per cent from November of 2007 and for the year to date are down just a bit more than one per cent. - As for the number of homes changing hands, last month saw just 670 deals finalized, down from 1,103 a year ago. So far this year, 13,011 sales have been made compared with 17,592 for the same period last year. - The average selling price for November rang in at $435,471, a drop of almost six per cent from 12 months earlier.
For the January to November period, the $461,886 price tag is off more than two per cent from last year's $473,551. And the median price differences are almost identical. - As for the total price tag of homes bought and sold so far this year, the dollar volume to the end of last month was just a bit over $6 billion compared with $8.3 billion in 2007.
"We're coming into the homestretch and market activity typically slows down during the end of any year," says board president Ed Jensen. "However, this isn't a typical year, so the slowdown that we're seeing is somewhat magnified."
What has been happening is due to uncertainty among consumers-- and that uncertainty isn't limited to the real estate sector, but has infiltrated other parts of the economy, he says.
Much the same story can be told in the condominium portion of the city's resale market. Inventory at the end of November was up by about 200 units, but new listings for the month were down from a year ago.
Sales took a hit in November, down more than 42 per cent from the same month a year ago while year-to-date figures are off 30 per cent.
As for the average sale price, it was off 8.6 per cent last month compared to the same period last year, declining to $285,820 --and is down more than four per cent for the 11 months of this year compared to 2007.
The boom is over and bad news is everywhere. Carnage on the stock markets. People losing their savings, jobs and even their homes. Here in Alberta, we’re coming out of one of the most overheated growth periods the city has ever experienced. The downsides of that boom have been well-documented, from the housing shortage and miserable customer service to the long work weeks and low quality of life. A bust brings bad news of its own, but we wanted to take a break from the endless news of economic doom and gloom to start a new conversation: are there opportunities in this economic slowdown? What are they? Could the bust actually be a good thing for Calgary in some ways? The wallet may slim a bit in the coming months, but read on for some things worth smiling about.
AFFORDABLE HOUSING
Calgary housing prices skyrocketed by nearly 40 per cent in 2006. “Builders were running at 120 per cent of their capacity,” recalls Ed Jensen, president of the Calgary Real Estate Board. “And guess what? They couldn’t get staff. Prices went up, everything went up and it hurt affordability.” Now inventory has increased while prices and interest rates have come down, putting home ownership within reach for more people. “Buyers are in the driver’s seat,” says Jensen. “They can negotiate. They couldn’t negotiate two years ago.” And what about people who already own and want to move? “If your house went up in value, so did the one you’re going to buy,” Jensen says. “If your house went down in value, so did the one you want to buy. So there’s no harm in this marketplace.”
Are there opportunities in the economic slowdown? Published November 27, 2008, by Jeremy Klaszus in News Fast Forward Weekly
Federal statistics released Thursday said home prices in Calgary fell by 1.6 per cent year-over-year in October - the city's largest drop since November 1991. New house prices in Calgary declined by 1.6 per cent in October on a year-over-year basis - the largest decline for this metropolitan area since November 1991, says Statistics Canada.
The New Housing Price Index, released today by the federal agency, showed that on a national level the year-over-year increase was 1.5 per cent, a slower pace than the 2.1 per cent advance recorded in September and the smallest annual increase since October 1999.
On a monthly basis, prices decreased 0.4 per cent between September and October, the first monthly decrease at the Canada level since September 1998.
Prices declined by 0.6 per cent in Calgary on a monthly basis.
The largest year-over-year increases were in Regina (22.8 per cent) and St. John's (22.3 per cent).
Edmonton recorded a 12 month drop of 7.7 per cent, which was the largest annual decline since May 1985, Prices declined by 1.7 per cent in Edmonton from September to October 2008.
The federal agency said that on the West Coast prices were down 0.4 per cent in Vancouver on a year-over-year basis, the first annual drop since April 2001. Vancouver was also down 1.1 per cent on a monthly basis. In Victoria, contractors' selling prices decreased 1.1 per cent year-over-year, down from an annual increase of 0.2 per cent in September.
Alberta's housing conditions have softened since prices peaked in 2007, with declining prices restoring some of the affordability lost during the boom, according to the latest housing report released today by RBC Economics.
The RBC Affordability measure for Alberta, which captures the proportion of pre-tax household income needed to service the costs of owning a home, improved across all home segments with the benchmark detached bungalow dropping to 43 per cent, the standard townhouse to 32.1 per cent, the standard condo to 28.2 per cent, and the standard two-storey home to 46.4 per cent.
The report said peak prices led to a rush of new sellers and a move to the sidelines by would-be buyers, loosening Alberta's market conditions considerably since the summer of 2007. Sales-to-new listings ratios are lower, demonstrating a better balance between buyers and sellers. In the third quarter, further price declines in most housing segments contributed to affordability conditions improving between 0.8 and 2.2 percentage points. However, affordability measures still remain high, suggesting the province's housing markets remain overvalued, at least relative to household income, said the RBC report.
The report said housing markets have "retreated significantly" since the start of the year. In the first 10 months of 2008, sales of existing homes have plummeted 26 per cent in Calgary and 14 per cent in Edmonton. Compared to the third quarter last year, the market value of all four housing types RBC tracks has dropped between six and 11 per cent in Calgary and nine and 17 per cent in Edmonton. "Sellers are no longer in the driver's seat."
In Alberta, "as stiff headwinds blow on the provincial economy and erode consumer confidence, homebuyers will be reluctant to step into play until affordability improves more significantly," said Robert Hogue, senior economist at RBC. "The province's housing affordability conditions still have a fair way to go before returning to long-term averages."
"As concerns mount about the economy, spurred by the sharp drop in energy prices that sent shivers down homeowners' spines, the housing markets in both Calgary and Edmonton are expected to retreat even further in 2009."
RBC's Affordability measure for a detached bungalow for Canada's largest cities is as follows: Vancouver 74.8 per cent, Toronto 53.3 per cent, Calgary 47.3 per cent, Ottawa 43.3 per cent and Montreal 40.4 per cent.
The Housing Affordability measure, which RBC has compiled since 1985, is based on the costs of owning a home. The higher the reading, the more costly it is to afford a home. For example, an reading of 50 per cent means that homeownership costs, including mortgage payments, utilities and property taxes, take up 50 per cent of a typical household's monthly pre-tax income.
Global economic uncertainty weighed heavily on residential real estate activity in most major Canadian centres during the latter half of 2008 and although the forecast for 2009 promises more of the same, most markets are expected to weather the storm, says real estate firm Re/Max.
In its Housing Market Outlook for 2009 report released Wednesday, Re/Max said MLS sales in Calgary will drop by 30 per cent this year to 22,500 units, compared with 32,176 sales in 2007, but the firm forecasts a rise of two per cent in sales for 2009 to 23,000 units.
Re/Max also said that the average MLS sale price in Calgary for 2008 will be one per cent lower than 2007,dropping from$414,066 to $410,000. It also forecasts no change in the average sale price for 2009.
Nationally, 440,000 homes are expected to change hands in 2008, down 15 per cent from record 2007 levels. Canadian housing values are expected to be about $300,000, a three per cent decline from a year ago. By year-end 2009, Re/Max said unit sales should match 2008 levels while the average price is forecast to fall another two per cent to $293,000.
Earlier this week, the Calgary Real Estate Board released its latest MLS data. Up until the end of November, single-family home sales in Calgary metro are down by 26.04 per cent this year compared to a year ago while the average sale price has dropped by 2.46 per cent to $461,886. In the condominium market, year-to-date sales are off by 30.43 per cent while the average sale price has dropped by 4.25 per cent to $303,476.
In Calgary, the Re/Max report said stock market volatility and the threat of a global economic recession deflated consumer confidence in the fall. The slide in sales is expected to continue. According to CREB, sales in the single-family home and condo markets fell by 39.26 per cent and 42.74 per cent respectively in November compared with November 2007.
"Fluctuations in oil and gas prices have been cause for concern in Alberta,"said the Re/Max report, adding the province is starting to see some pullback on energy projects.
"That said, Calgary is better positioned to weather the storm ahead than most other major centres in Canada. The city has one of the strongest unemployment markets in the country, with an unemployment rate of 3.7 per cent. The city's economy grew at an estimated rate of 3.2 per cent in 2008 and is expected to exceed the national average in 2009.Netmigration is also forecast to improve in 2009 with an estimated 18,500 interprovincial migrants moving to Calgary. The influx should serve to bolster demand for real estate in the city." The report said housing stock will continue to be a drag on Calgary's residential real estate market for the first six months of 2009 but conditions should start to improve by mid-year as the market makes its way through excess inventory.
"Buyer's market conditions are expected to prevail during the first half of the year, with home sales under$400,000 most active. More than 50 per cent of activity will occur under this price point as first-time buyers move to realize home ownership," said the report.
"Trade-up activity will also strengthen as buyers take ad-vantage of the narrowing spread between what their homes will sell for and what they can buy. The top-end of the market, while slower than last year, is forecast to experience solid demand as a result of in-migration and corporate relocations. More balanced market conditions should exist for single-family homes by fall 2009."
The report also said Calgary's highrise condominium market, propped up by speculation in recent years, is more vulnerable to new market realities. "Thousands of new units are expected to come on-stream in 2009, which could create a glut of listings. Some developers have already moved to mitigate their losses by stopping new projects."
I was born right here in Calgary and have been a full-time member of the Calgary Real Estate Board since April of 2000. I consistently outperform the industry averages and am a member of CIR Realty's "Executive Platinum Award Club", a notable achievement which is approximately equivalent to the Real Estate Boards MLS® Million Dollar Award Club.
