BY MARIO TONEGUZZI, CALGARY HERALD
Calgary’s housing market continued in May to shine compared with the rest of the country as the city’s year-over-year price growth was the best in Canada and the increase in MLS sales activity topped all other major markets.
According to the Canadian Real Estate Association’s MLS Home Price Index, which was released Monday, prices in Calgary were up 6.87 per cent from a year ago. Nationally, the index rose by 2.3 per cent.
Calgary MLS sales also increased by 8.9 per cent in May from a year ago to 3,247 transactions while the market overall in Canada saw a decrease in sales activity of 2.6 per cent year-over-year to 51,764.
“The real estate market in Calgary is supported by three important factors, any of which would support a robust market independently and yet we enjoy all three,” said Cody Battershill, a realtor with RE/MAX House of Real Estate in Calgary. “The underlying variable that ties all three together is the desirability and quality of living we enjoy in Calgary.”
The first factor is strong migration to Calgary and Alberta.
“The second is Calgary’s demographics. We are Canada’s youngest major city with the average Calgarian being in their mid to late 30’s. This is important as first-time buyers kick start the property ladder and enable existing homeowners to sell and move up,” he said.
“The third factor is that Calgary is a head office leader and business hub that is recognized internationally for our experience, technical prowess and leadership. Calgary has more head offices per capita than anywhere else in Canada and is the world’s 17th most competitive financial centre.”
In May, Calgary saw average MLS sales price growth of 2.6 per cent from last year to $440,675 while in Canada average sale prices rose by 3.7 per cent to $388,910.
In Alberta, sales rose by 3.2 per cent year-over-year to 7,209 units and average sale prices jumped by 2.9 per cent to $385,702.
“Until recently, it seemed that the only debate on Canada’s housing market was whether the landing was going to be of the soft or rough variety,” said Doug Porter, chief economist with BMO Capital Markets. “Well, it appears that housing may not be so keen on landing at all at this point.”
The surprises on the sales data have consistently been on the high side of expectations recently, he said.
“Far from plunging, most price measures have in fact firmed a tad in recent months. Sorry to inform you, but ‘The Great Real Estate Crash of 2013’ has been postponed until 2014, or until further notice. More seriously, we believe housing remains on track for a fabled soft landing,” added Porter.
Diana Petramala, economist with TD Economics, said that overall the Canadian market remains well balanced, with slower home price growth and sales remaining at a level that is consistent with demographics and income growth.
“Looking forward, housing activity momentum is likely to be tempered by a deterioration in affordability. Canadian longer term interest rates have increased notably over the last month, which is being reflected in higher mortgage interest rates,” she said.
“The Canadian housing market still appears to be clearing a soft landing, with sales and prices growing at more sustainable levels than had been the case through 2010 and 2011.”
On Monday, CREA also released its forecast for the rest of this year and 2014. It predicted sales across Canada will dip this year by 2.5 per cent (443,400 units) but rebound and grow by 4.7 per cent next year (464,300). In Alberta, sales are expected to rise by 4.2 per cent this year (62,900 units), which will be the best provincial growth in the nation, and then increase by 3.5 per cent (65,100) in 2014.
“Canadians remain confident about the value of home ownership,” said Gregory Klump, CREA’s chief economist. “Job market trends and low interest rates remain supportive for Canada’s housing sector, so we remain upbeat about prospects for sales and average prices this year and next.”
CREA is forecasting average price gains of 2.1 per cent in Canada to $370,900 this year and another 1.8 per cent in 2014 to $377,700. In Alberta, prices are expected to rise by 4.2 per cent this year to $378,400 and by a nation-leading 3.4 per cent in 2014 to $392,200.