Alberta housing market most affordable in Canada: RBC
Resale activity picking up in Calgary
By Mario Toneguzzi
Calgary Herald May 29, 2012
CALGARY — Housing market activity in Alberta is showing increasing signs of strength as it benefits from attractive affordability and nation-leading economic growth, according to the latest Housing Trends and Affordability Report released Tuesday by RBC Economics.
RBC’s housing affordability measures for Alberta, which capture the province’s proportion of pre-tax household income needed to service the costs of owning a home at market value, remained among the lowest, if not the lowest, in the country in the first quarter of this year.
And RBC said the “long-awaited resurgence” of the Calgary-housing market appears to have been launched in recent months as home resales advanced by a “sizable” 7.4 per cent in the first quarter relative to the fourth quarter of last year, and April activity showed even greater strength.
In fact, Calgary bucked the national trend and showed improved affordability in the first quarter.
“Homebuyers in the Calgary area are motivated by a booming provincial economy, strong job creation, and attractive housing affordability,” said the report. “Despite higher resales lately, home prices so far have remained flat for the most part, with some weakness observed in condominium apartments. This has kept housing affordability in check at some of the better levels among Canada’s largest cities.”
It said affordability improved modestly in the first quarter in Calgary. RBC housing affordability measures show the proportion of median pre-tax household income that would be required to service the cost of a mortgage payment. RBC said that in Calgary measures compared with a year ago edged lower for condominium apartments (0.4 per cent) and two-storey homes (0.3 per cent), and stayed unchanged for detached bungalows.
“We expect the market resurgence to continue for the remainder of this year,” it said.
According to the Calgary Real Estate Board, MLS sales in Calgary so far this month from May 1-28 are up 27.90 per cent from the same period a year ago with 2,104 transactions and the average residential sale price in the city has increased by 3.03 per cent to $445,120.
Ann-Marie Lurie, CREB’s chief economist, said the city has experienced positive economic growth with the expansion in jobs, full-time jobs in particular.
“And this really has encouraged some demand into housing. We’ve had low interest rates . . . We’ve had a signficantly strong spring season compared to other years,” she said. “It’s also important to note that we’ve been pretty slow to recover in the first place. So there was a lot of hesitation out there.
“But as things have started to improve in the economy, people are starting to re-invest.”
Lurie said she doesn’t expect to see any change in the demand for housing in the city in the near future.
Robert Hogue, senior economist with RBC, said attractive affordability and a strong provincial economy are playing significant roles in driving Alberta’s home resale activity, up 11.5 per cent year-over-year in the first quarter and showing no sign of easing in April.
“We expect that, going forward, Alberta’s housing market will remain on this bright path, particularly as the province continues to lead the country in economic growth,” he said.
The measure for benchmark detached bungalows in Alberta rose by 0.1 percentage points to 32.2 per cent, while the measure for condominium apartments marked a small improvement, decreasing 0.3 percentage points to 20.2 per cent. The two-storey home category was the only measure that remained unchanged at 35.3 per cent.
RBC’s housing affordability measure for the benchmark detached bungalow in Canada’s largest cities is as follows: Vancouver 88.9 per cent (up 3.1 percentage points from the previous quarter), Toronto 53.4 per cent (up 1.2 percentage points), Ottawa 41.8 per cent (up 0.9 percentage points), Montreal 41.4 per cent (up 1.2 percentage points), Calgary 36.7 per cent (unchanged) and Edmonton 32.4 per cent (down 0.4 percentage points).
The following are average prices in the first quarter of this year, affordability measure, and year-over-year change in the affordability measure:
Detached Bungalow
Canada, $360,500, 43.1 per cent, 1.5 per cent.
Alberta, $347,900, 32.2 per cent, 0.1 per cent.
Calgary, $423,000, 36.7 per cent, 0.2 per cent.
Standard Two-Storey
Canada, $403,600, 48.7 per cent, 1.2 per cent.
Alberta, $372,800, 35.3 per cent, 0.2 per cent.
Calgary, $418,200, 37.5 per cent, 0.1 per cent.
Standard Condominium
Canada, $235,800, 28.8 per cent, 0.3 per cent.
Alberta, $212,300, 20.2 per cent, — 0.6 per cent.
Calgary, $248,100, 22.2 per cent, — 0.4 per cent.
Photo By: woody1778a
