STEADY AS REAL ESTATE GOES!

'Steady' as she goes forecast for resale
By Josh Skapin
Calgary Herald January 21, 2012

For resale house hunters, 2012 is lining up to be a year of stability.

That's the message from this week's annual forecast conference of the Calgary Real Estate Board.

"It's a nice, steady, relaxed atmosphere for buyers and sellers," says incoming president Bob Jablonski in his outlook for the coming year.

CREB's forecast includes an average sale price of $476,000 for resale homes this year, up 2.1 per cent from 2011.

It also predicts sales to reach 14,800, marking a 12.2-per-cent climb over 2010.

"Buyers have time to research and carefully consider their options without needing to be overly concerned about pricing changes," says Jablonski, a 25-year industry veteran.

Employment growth and migration are factors that are expected to help bolster the city's housing sector, says chief economist Ann-Marie Lurie of CREB.

"Calgary's job market has already recovered a lot of the jobs that were lost during the recession," she says, adding that much of the recent job creation is of the business professional variety.

"These are typically good paying jobs, which helps with growth in consumption and in housing."

Many of those who moved to Calgary for work, but lost their job during the economic downturn, left the city, says Lurie. However, people are once again moving to Calgary, she says.

"Those migrants are returning and forecasted levels remain strong relative to the long-term average," says Lurie. "Migrants coming to the city need a place to live and while their first choice is often rentals, in time, they will often move to ownership and cause a rise in demand for housing."

Going forward, Jablonski advised the realtors in attendance to listen, communicate and ask.

"Improve your skills and be the best you can be," he says.

"Build your relationships, your business and be the resource to your clients. There is always a market for wellpriced listings."

RLP PREDICTS RISE IN 2012

Expect home prices to keep rising in 2012: Royal LePage
By Derek Abma
National Post Jan 12, 2012

OTTAWA — Canada’s housing market will continue to be strong this year, with rising property values expected in all major markets, real estate brokerage firm Royal LePage said Thursday.

The company’s forecast called for prices across to country to rise 2.8% by the end of 2012, after stronger gains last year.

It said in the fourth quarter of 2011, the average price of a standard two-storey home was $375,427, up 4.2% from a year earlier. The average rate of a detached bungalow was up 6.1% to $344,392, while condominiums gained 3.6% to $234,680.

“Widespread calls for a major real estate correction in 2012 simply can’t be justified,” Royal LePage CEOPhil Soper said in a statement. “The industry has significant momentum entering the year, and buoyed by the stimulative effect of very low interest rates, we expect the market to continue to expand — albeit at a slower pace.”

Statistics Canada reported Thursday that its new housing price index rose 0.3% in November, following on a 0.2% increase in October, and was up 2.5% year-over-year.

Price increases in Toronto, Oshawa and Montreal offset declines in Calgary, Vancouver and the Ontario metropolitan regions of Sudbury and Thunder Bay, the agency said. Builders in all four areas reported lowering prices in order to stimulate sales and remain competitive, while price increases elsewhere were attributed to higher material and labour costs.

The Canada Mortgage and Housing Corp. has forecast the average price of a listed homes for resale to be $363,900 this year, up 1.2% from 2011. The Canadian Real Estate Association predicted that the average price would be relatively flat at $362,700. Both forecasts were made in November.

Royal LePage said even pricey housing markets in Vancouver and Toronto — where standard two-storey homes averaged $1.1-million and $629,188, respectively, in the last quarter — will see continued price appreciation in 2012.

However, it said stronger gains will be seen in cities benefiting from commodity-based economies, such as Calgary, Regina and Winnipeg, where price gains will be in the range of four to five per cent.

Photo by: Nkuku Fairtrade

LOOKING AHEAD TO SPRING 2011

Housing set to find even keel in spring

STEVE LADURANTAYE — REAL ESTATE REPORTER
From Tuesday's Globe and Mail
Published Monday, Nov. 15, 2010

Record low interest rates and a lack of houses on the market have rekindled demand for Canadian real estate, helping to pull the industry out of its sales slump and setting the stage for the most balanced spring market in years.

The Canadian Real Estate Association said Monday that although prices were flat in October and sales slid more than 20 per cent compared with a year earlier, the market posted its third straight month of increased sales.

In a sign of stabilization after two years of wild fluctuations, CREA said October sales were halfway between the lows of December, 2008, and the record high of December, 2009.

Economists said October’s data likely means the market bottomed out in July; while prices won’t rocket to previous highs any time soon, it’s unlikely they have much farther to fall.

“It seems to me the Canadian housing market has been either feast or famine,” said BMO Nesbitt Burns economist Douglas Porter. “But now buyers are facing low rates on one hand, and daily volleys about how bad the market is on the other. That should keep things from getting overly hot, and gives me reason to believe we could have a balanced market in the year ahead.”

After slowing in the recession of 2008, sales activity reached a fevered peak in December, 2009, as buyers rushed back into the market.

Average resale prices peaked at an all-time high $346,881 last May, causing concern that cheap money was driving prices to unsustainable levels. The average resale price in October was $337,842, CREA said.

The market came to an abrupt halt last July, with major regions such as Vancouver and Calgary posting sales drops of nearly 45 per cent and prices pulling back from May’s high. Several factors were cited for the decline: The federal government introduced rules that made it more difficult to qualify for a mortgage, and Ontario and Quebec introduced harmonized sales taxes that made the services associated with buying a home more expensive.

Would-be buyers also faced a barrage of warnings from organizations such as the Bank of Canada, the OECD and International Monetary Fund, all of which have cautioned that as interest rates rise, many Canadians might not be able to make their mortgage payments.

But mortgage rates have actually dropped in the past three months and now sit at all-time lows. A survey by the Canadian Association of Mortgage Professionals released last week showed that Canadians are confident they could shoulder higher mortgage payments without too much difficulty, with 84 per cent saying a $300 monthly increase was no problem.

“There are many reasons to now be optimistic,” said TD Bank senior economist Pascal Gauthier, who called for prices to fall 10 per cent from peak to trough but now expects to issue a more upbeat forecast later this week. “I think there are now limits to both the upside and the downside – things may have firmed up quicker than we expected.”

With the number of houses listed for sale sharply lower than in July, prices are expected to stay firm as buyers compete the few homes available. The months of inventory – the amount of time it would take to sell everything that is for sale, at the current rate of sales – sat at 6.2 months in October, down a full month compared with the July figure.

That doesn’t mean prices are likely to catch fire again in the spring, when activity traditionally accelerates, but it should help keep prices from dropping as buyers and sellers hit the market in equal numbers.

“Affordability drives sales and record low mortgage rates are driving affordability,” said Phil Soper, the chief executive officer of Brookfield Real Estate Services. “I think next year should look a lot like the recent market – with relatively flat prices and fewer overall transactions.”

Photo By: Clara Hinton

WHEN WILL YOU SAVE?

Low interest rates to power Calgary housing market
By Mario Toneguzzi
Calgary Herald
March 3, 2010

Low mortgage rates will continue to fuel activity this year in the local housing market.

A forecast by Canada Mortgage and Housing Corp. released on Tuesday said sales in both the new home and resale housing markets are expected to increase this year and next year in Calgary and for Alberta.

As well, average MLS sale prices will climb over the next two years.

"Calgary housing markets will benefit from a stronger economic outlook and historically low mortgage rates," said Richard Cho, senior market analyst in Calgary for the CMHC.

"We are expecting to see more activity this year compared to 2009. This momentum is expected to carry through into 2011 as the economy strengthens."

In releasing its 2010 housing market outlook report, CMHC said the Calgary census metropolitan area will see total housing starts rise by 20.3 per cent this year to 7,600 units, followed by a 21.1 per cent hike in 2011 to 9,200 units.

MLS sales in the Calgary area are expected to climb by 10.9 per cent to 27,600 this year and another 3.3 per cent in 2011 to 28,500.

The average MLS sales price in the Calgary region is forecast to jump by 5.5 per cent this year to $407,000 and by another 3.9 per cent next year to $423,000.

Low interest rates continue to drive Canadian housing markets, something that could continue for much of 2010, said Dan Sumner, economist with ATB Financial in Calgary.

"Although interest rates are certainly going to go up eventually, they are rising from a very low level and will probably not be back to neutral levels until 2011," he said.

"However, with home prices near the top edge of some affordability metrics, there could be little room for significant price increases in the near term."

The government of Canada announced recently a number of measures to support the stability in the housing market, said Cho.

"These changes for government-backed mortgage insurance will moderate housing activity," he added. "Changing the qualifying mortgage rate will help ensure homebuyers have a cushion to protect against the risk of increased payments when their mortgage is up for renewal. Some prospective buyers may postpone their purchase while they save for a larger down payment, while others may consider purchasing a less expensive home."

Housing Market Outlook

2010 Y/Y change 2011 Y/Y

Alberta housing starts 24,500 20.7% 29,900 22%

Calgary housing starts 7,600 20.3% 9,200 21.1%

Alberta MLS sales 64,000 10.8% 66,500 3.9%

Calgary MLS sales 27,600 10.9% 28,500 3.3%

Alberta MLS avg. price $358,500 5.1% $372,500 3.9%

Calgary MLS avg. price $407,000 5.5% $423,000 3.9%

Source: Canada Mortgage and Housing Corp.

Photo By: Nikkinoguer

TIME TO MOVE

Price, sales records expected this year
Could reignite calls for tighter lending rulesGarry Marr, Financial Post
Published: Tuesday, February 09, 2010

Canadian real estate sales and prices are poised to set records this year, according to a new forecast that is bound to reignite calls in some quarters for tighter lending rules.

The Canadian Real Estate Association, which represents 100 boards across the country, said yesterday it expects existing-home sales to reach 527,300, a 13.3% increase from a year ago and a 1.2% increase from the record high set in 2007.

The new-home market appears to be picking up steam, too. Canada Mortgage and Housing Corp. said there were 186,300 starts in January on a seasonally adjusted annualized basis, the highest level of new construction since October 2008.

Bank of Canada governor Mark Carney has warned about rising levels of household debt, which is reaching record levels. Finance Minister Jim Flaherty has suggested he is prepared to tighten mortgage requirements and continues to monitor the market.

"One of the legitimate concerns of the Finance Minister might be if you make qualifying for mortgage default insurance prematurely restrictive that it will quell housing activity even as erosion in affordability continues," said Gregory Klump, chief economist with CREA.

There are have been some rumblings that the government is considering new rules that would require buyers who need mortgage insurance to have at least 10% down and amortize their mortgage over just 25 years instead of the current 35 years.

Anybody with less than a 20% downpayment must get mortgage insurance, if they are borrowing from a financial institution governed by the Bank Act. Mr. Klump's group contends the market is going to correct on its own in the second half of 2010. CREA has called for sales to drop 7.1% in 2011. The group says that while prices will rise by 5.4% in 2010, to a record high of $337,500, they will drop by 1.5% in 2011.

That view of the housing market is not out of step with some economists, who say that once interest rates rise and inventory levels increase, price increases will shrink. Year-over-year price increases in some markets, such as Toronto, have been around 20% for the past few months.

"There is still a sense of urgency to get into the market. The market will continue to be strong over the next few months," said Benjamin Tal, senior economist with CIBC World Markets, adding he could see new construction also touching 200,000 starts before beginning to fall.

Part of that urgency in the housing sector is being driven by the introduction of the harmonized sales tax in Ontario and British Columbia on July 1. The tax would apply to real estate services and could increase the cost of buying a home by a few thousand dollars.

"It's a factor fuelling a higher level of activity in Ontario and British Columbia," Mr. Klump said. "What's more Canadian than avoiding taxes?"

Elton Ash, vice-president of Re/ Max of Western Canada, said he thinks the forecast put out yesterday was a little optimistic for 2010, specifically the 4.2% price increase for British Columbia. "But I also think the market will be better in 2011 [than CREA]."

Mr. Ash is actually in favour of some measures to cool the market, such as reducing the amortization period back to 25 years. But he wonders whether increasing the downpayment will take some people out of the housing market.

"I think leaving it at 5% would be okay," Mr. Ash said.

Photo by: Janet Leadbeater

HOUSING STARTS SHY

Housing starts show rebound
Figure still shy of level seen in 2008
By Dan Healing, Calgary Herald
February 9, 2010

The home building industry in Calgary staged a strong rebound in January from last year's 18-year depths, but failed to recoup all the ground lost since the same month in 2008.

According to Canada Mortgage and Housing Corp., total housing starts in the city reached 514 units last month, more than double the 243 in January 2009 but 28 per cent lower than the 711 units started in January 2008.

Richard Cho, CMHC's senior market analyst for the city, said the general direction for new housing is stable.

"Housing activity is encouraging in January. It's a good start to the year," he said.

"We're still seeing a fair number of singles being started, if not the same level of activity we saw in the latter part of 2009. The momentum is still being carried over to this year."

He said fewer incentives are expected to be available for buyers this year due to the stronger market, but higher interest rates expected at midyear will tend to prevent the market from growing beyond a sustainable level.

Todd Hirsch, senior economist for ATB Financial, agreed 2010 will be stable, noting a cold January also likely slowed housing start statistics.

"It's coming off a bit of a surge we saw in fall of last year . . . (but) there's no sign that housing starts are collapsing at all," he said. "They're up from where they were a year ago, so that's positive, and overall I think we'll have a balanced year of housing starts."

He said there will be fewer construction jobs on commercial projects this year, but more in home building and institutional and infrastructure projects.

Both single-detached and multi-family housing starts were up in January, with builders starting work on 413 homes, versus 204 units a year earlier, and 101 multifamily units breaking ground, up from 39 units in the previous year.

Cho said there were no apartment units started, reflecting the oversupply of inventory in Calgary. He predicted the trend this year will be toward medium-density housing.

The peak January for single-family starts came during the overheated economy of 2006, when 838 houses contributed to 1,086 housing starts.

The more volatile multifamily sector posted its biggest January in 1978, when 1,718 units were started.

Provincially, housing starts in Alberta's seven largest centres totalled 1,271 units in January, up 52 per cent from January 2009.

Nationally, the seasonally adjusted annual rate of housing starts reached 186,300 units in January, up from an annual rate of 176,100 units in December.

According to final figures, housing starts for 2009 totalled 149,081 units, with activity improving as the year progressed.

In the Prairie region, the seasonally adjusted annual rate of urban starts decreased by 4.8 per cent in January from the previous month.

Also on Monday, the Canadian Real Estate Association revised its forecast for MLS home sales in 2010.

It forecasts national sales activity will reach 527,300 units in 2010, up 13.3 per cent from 2009. This would represent an annual record -- 1.2 per cent above the previous peak in 2007.

Sales in Alberta are forecast to be 63,050, up 9.1 per cent from 2009.

THE BREAKDOWN

Breakdown of CREA's residential market forecasts
Posted: February 08, 2010, 2:36 PM

by Damien Lynch
The Canadian Real Estate Association on Monday revised its forecast for home sales via the MLS Systems of Canadian real estate boards in 2010, and extended the forecast to 2011.

Here is a breakdown on CREA's residential market forecast for unit sales and average prices:

BALANCE IN 2010

CREA forecasts record home sales in 2010
Garry Marr, Financial Post
Published: Monday, February 08, 2010

The Canadian Real Estate Association now says 2010 will be a record year for home sales.

The Ottawa-based group, which represents about 100 boards across the country, said sales this year will climb 13.3% from 2009. The market will also surpass the 2007 peak by 1.2%.

"Low interest rates are expected to boost housing demand in the first half of the year, resulting in strong annual sales growth in nearly all provinces in 2010, led by British Columbia and Ontario," said CREA in a release.

Part of the reason for the surge in activity in the first half of 2010 is being attributed to the harmonization sales tax that comes into effect in Ontario and British Columbia on July 1. Consumers are expected to try and beat that deadline.

However, by 2011, rising interest rates are forecast to put a dent in the housing market. CREA sales will drop by 7.1% in 2011.

"Although interest rates are expected to rise, they will still be low enough to keep affordability within reach for many homebuyers requiring mortgage financing, and support overall housing demand," said Dale Ripplinger, president of CREA.

Prices will rise by 5.4% in 2010, bringing the average price to $337,500. The national average price continues to be skewed by strong markets in B.C. and Ontario which has the two most expensive cities in the country to live in. By 2011, the national average price will drop by 1.5%.

"Improved financial market stability and recovering global economic growth mean that home sales activity in 2010 is unlikely to repeat the dive it experienced in late 2008 and early 2009," said Gregory Klump. chief economist at CREA. "A downward trend in national sales activity combined with an increase in listings will result in a more balanced market. Although builders are understandably more upbeat than they were during the depth of the recession, speculative building will likely continue to be held in check. As a result, while the real estate market will become more balanced, Canada will continue to avoid the massive realignment in housing supply and demand experienced in the U.S."

Photo by: 2composers