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
