A PLEASANT FORECAST IN CALGARY?

Strong 2012 forecast for city's housing market
By Mario Toneguzzi
Calgary Herald December 7, 2011

Fuelled by low interest rates and job security, demand for residential real estate in Calgary is on the upswing, says the Re/Max Housing Market Outlook 2012 report published Tuesday.

And the real estate firm says Calgary will be a Canadian leader next year in the annual growth rate for MLS sales.

By year-end 2011, 22,500 homes are expected to change hands, an eight per cent increase over the 20,801 sales reported in 2010, it said.

And the average price in Calgary is forecast to appreciate as well, rising a "modest" one per cent to $405,000 in 2011, up from $401,186 one year ago.

The report forecasts the average MLS sale price will jump by three per cent in 2012 to $417,000, while sales will rise by five per cent to 23,600 units.

Lowell Martens, of Re/ Max Real Estate (Mountain View) in Calgary, said any hesitation on the part of some buyers in the city is more than likely a direct reflection of the uncertainty in the European economic situation.

He said commercial realestate construction taking place in Calgary "tells us the long-term feeling out there is very positive for Calgary."

"We have a very stable market over the next little while. We don't anticipate any big upswings, but at the same time we don't anticipate any big downswings either. It's going to be very stable," he said.

Buyers in the city are cautiously optimistic after more than two years of recession, making their moves while interest rates are at historic lows and housing values are affordable, said the report.

"Single-family homes remain most popular with purchasers, representing close to 60 per cent of total residential sales. Demand is greatest for entry-level product, priced between $350,000 and $450,000," it said. "Con-dominium apartments and town houses have also experienced solid momentum in recent months, with the lion's share of activity occurring from $200,000 to $300,000. Luxury home sales - priced over $1 million - have been particularly brisk, up approximately 25 per cent over 2010 levels."

While global concerns still loom, the market appears to be gaining some traction moving into the new year, said the report. Re/Max said Canadian residential realestate defied conventional logic and outperformed expectations in 2011, posting another solid year of housing activity virtually across the board. The trend is expected to carry forward into 2012 as Canadians "continue to demonstrate their faith in home ownership, despite concerns over the European debt crisis and its impact on the global economy."

"What 2011 proves is that real estate continues to have momentum," said Elton Ash, regional executive vice-president, Re/Max of Western Canada, in a statement.

"The economic underpinnings support ongoing demand, particularly as job creation efforts continue and unemployment rates edge down further."

Photo by: Hypnotic Love

WHAT TO KNOW ABOUT THE BOOM

What you need to know about Canada’s booming housing market
By Christine Dobby
November 15, 2011

With sales of existing homes in Canada rising in October to the highest level since January, the Canadian Real Estate Association boosted its forecast for resale activity for 2011.

The industry group released data on October sales activity as well as a revised forecast for the year on Tuesday.

National sales of existing homes increased 1.2% from the previous month, building on a gain of 2.5% in September. Price gains however cooled to 5.5%, the smallest gains since January.

A total of 397,561 resale units have traded hands so far this year, CREA said, up 1.8% from levels in the first 10 months of 2010.

Here’s what you need to know about the booming Canadian housing market:

Ontario leads the way

Third-quarter sales activity in the province was stronger than forecast, while the rest of the country came in broadly in line with expectations, the CREA said.

It was the strength of activity in Ontario that prompted the CREA to boost its annual forecast for 2011 to 1.4%, up from 0.9%.

The industry group now predicts national sales of 453,300 for the year, compared with 446,915 in 2010.

198,000 of 2011′s residential sales are expected to come from Ontario, with Quebec and British Columbia expected to have sales of 77,000 and 76,600, respectively.

Home prices are still up but showing signs of cooling down

CREA kept its national average home price forecast for the year little changed at $362,700. That’s an annual increase of 7.0% compared with $339,049 in 2010.

Prices are expected to remain flat next year, with the CREA forecasting $362,700 again for 2012.

The industry group pointed to moderating prices in Vancouver in the third quarter compared with the first half of the year, with sales of multi-million dollar properties in that city returning to “more normal levels.”

CREA said the national average price in October rose 5.5% from a year earlier to just under $362,899, the smallest increase since January.

The balance of supply and demand is tight but the market remains on solid footing

October’s monthly rise in sales resulted in a slightly tighter balance of supply and demand, but the national housing market remains “firmly rooted in balanced territory,” the CREA said.

The national sales-to-new listings ratio, a measure of market balance, stood at 53.4% in October, up from 52.8% in September.

Low interest rates continue to bolster the market

CREA also revised its forecast for 2012 upward slightly, predicting a smaller easing than previously expected of 0.5% to 451,200 units.

The uptick is largely due to expectations that Canada’s interest rates will stay low until well into 2012, CREA said.

But domestic and global economic headwinds could put pressure on the sector

“A number of factors will keep Canada’s housing market in check as interest rates remain low,” said Gregory Klump, CREA’s chief economist.

He pointed to tightened mortgage regulations, high household debt and slower economic and job growth as possible headwinds.

However, Mr. Klump noted that persistent news of global economic uncertainty has put only minor dents in consumer confidence to date.

“How confidence evolves depends on how global turmoil plays out over the coming months,” he said.