Market update Aug 2014

Calgary continues to experience a shortage of inventory with 17% fewer listings than normal for this time of year. There is only a 60-day supply of single family homes on the market. In the lower price ranges, it’s even more severe. For homes priced under $500,000, there is only a 42-day supply.

Inventory vs sales and price2

Despite the shortage of listings, it was the third-best August ever for SFH sales(second-best for overall sales due to strong condo sales).

If you had any doubts about the lack of inventory, bidding wars are still going strong with 18% of sales for list price or higher.

If you bought an average home in Calgary in Aug 2013, the price has increased $29,100 in the past year.

From the archives

What were they saying last year? Aug 29, 2013 Garth Turner at greaterfool.ca predicted: “Prices are poised to enter a multi-year melt as supply overwhelms demand in places like Calgary. Renting units will grow cheaper as more come on stream …owners will see their net worth eroded while landlords subsidize tenants.”

Tried to find a rental in Calgary lately? The vacancy rate is the lowest in the country, and rents have increased dramatically in the past year. The “melt” has resulted in a price increase of 6.5% or $29,100.

Who can you trust?

Whatever happened to conspiracy theorist Ross Kay and his secret data? Last year, he and Garth Turner were ready to blow open and “expose” the statistics reported by the Calgary Real Estate Board. I called him out  and am still  Waiting on Ross Kay’s open and full disclosure

Pure bluster. Be careful who you trust.

Market update July 2014

Inventory vs sales and price2
As always in the summer, the price dropped slightly in July. Sales activity is still strong, and more homes are being listed compared to historical averages. Inventory is still low. 19% of homes sold for list price or higher.

If you bought an average home in Calgary in July 2013, the price has increased $29,000 in the past year.

From the archives:

What were they saying two years ago(July 25, 2012): Housing market headed for 25% crash as predicted on Garth Turner’s Greater Fool blog

If the price had dropped 25%, we’d have a median price of $314,000 today. Since July 2012, the price has risen 16% to $484,900.

Market update June 30, 2014

Inventory vs sales and price2
Slightly better conditions for buyers in June

  • More homes are being listed
  • Bidding wars have eased, but are still commonplace.
  • 26% of homes sold for list price or higher in June.
  • The average amount paid over list price was $6,417.
  • The median price did not increase
  • Average DOM(days-on-market) increased by 2 days
  • Inventory is almost up to last year’s level
  • The trend is your friend: The sales-to-new-listings trend is decreasing. Last year it was increasing.

If you bought an average home in Calgary in June 2013, the price has increased $40,000 in the past year.

Where will Calgarians be buying holiday homes?

The iconic Three Sisters near Canmore, AB

The iconic Three Sisters near Canmore, AB

An article in the Invermere, BC newspaper touches on the subject of real estate values in resort communities such as Canmore and Invermere. The reporter sought input from me and the reknowned expert Garth Turner of GreaterFool.ca fame. Columbia Valley Pioneer “Real estate market in valley may not be stable expert warns.”

The market in Canmore has turned around remarkably in the past six months. Inventory is low, attractive homes are selling quickly, and Calgarians are buying them up. Prices are on the increase.

Ontarians to move to Calgary in droves

The election of the Liberal majority in Ontario has just ensured a continued shortage of housing in Calgary along with increasing prices.

The Twittersphere is choc-a-block full of disillusioned entrepreneurs, trades people and others who will be immigrating to Alberta, the land of opportunity.

“If the Liberals win a majority, I will emigrate from Onterrible.”

“Ontario will be the next Detroit. Bankruptcy on the horizon.”

“Trades will come as there will no longer be a need for them in Ontario.”

Hudak: “I’m moving to Alberta. Good luck.”

“Would the last business in Ontario please turn out the lights (if you haven’t already been cut off for not paying your exorbitant bill).”

“A corrupt government under police investigation is rewarded with a majority. The province is corrupt at this point.”

“To all the hardworking refugees, welcome to Saskatchewan. Move to a place where hard work and initiative still count for something”

“How bout Saskatchewan? Us and Alberta are the two economic powers now. We will take Ontario’s trades and businesses.”

“here is a business case for distribution centres going west, who should I talk to?”

“What other companies will move to Calgary? Debt, taxes, electricity costs, regulations, unemployment, housing costs, HST. Plus the Rockies.”

“The move to Alberta is looking more and more appealing.”

“To the thousands of Ontarians who aren’t content with decline, you’re welcome in Alberta.”

“My prediction: before Wynne is done, a national bank will move its head office to Calgary. Ontario’s have-not status is the new normal.”

“Breaking: Ontario to be renamed Detroit”

Welcome to Calgary. I hope you can find suitable housing. Our inventory of resales is low, new build inventory is low, and the rental vacancy rate is nearly the lowest in the country. Competition for the few homes available is going to be fierce.

Calgary prices post-flood

It’s enlightening to look back and see what the experts were predicting about Calgary real estate immediately after last June’s flooding. One got it right, one got it wrong. Mike has the details on his blog http://calgaryrealestatereview.com/2014/06/08/june-1-7-2014-calgary-real-estate-statistics-trends/

Profit in past year: $37,000

Market update for May 2014

If you bought an average-priced house in May last year, you’ve just made a profit of $37,000. The median price has risen from $453,000 in 2013 to $490,000 today. If you bought at the previous peak in 2007, you’re now up $55,000.

Inventory vs sales and price2

With 31% of homes selling for list price or higher, it’s still a frenzied market for buyers, but a sign of hope: new listings are up by 12%.

For a more detailed summary of the month-end stats , go to my website

Why didn’t Vancouver’s bubble burst?

Maybe there was no bubble. To the surprise of many who follow real estate, Vancouver’s bubble didn’t burst, and in fact prices are still climbing. This article explains that just because prices look out of whack doesn’t mean there’s a bubble. It also raises the question, should foreign buyers be charged a premium for the luxury of owning real estate in Canada? It begs the question, is foreign money playing a role in Calgary’s real estate?

It goes on to describe the positive and negative effects of foreign money on the locals.

“A recent report by Sotheby’s International Realty Canada examined more than twelve hundred luxury-home sales in Vancouver in the first half of 2013 and found that foreign buyers accounted for nearly half of sales.”

“Vancouver isn’t an obvious superstar. It’s not home to a major industry—as New York and London are to finance, or San Francisco to tech—and it doesn’t have the cultural cachet of Paris or Milan. Instead, Vancouver’s appeal consists of comfort and security, making it what Andy Yan calls a “hedge city.” “What hedge cities offer is social and political stability, and, in the case of Vancouver, it also offers long-term protection against climate change,” he said. “There are now rich people around the world who are looking for places where they can park some of their cash and feel safe about it.” A recent paper by two Oxford economists bears this out, showing a tight correlation between London house prices and turmoil in southern and Eastern Europe. The real-estate boom in Miami has been magnified by political unrest in Venezuela. And Vancouver, which has a large Chinese population, easy access to the Pacific Rim, and nice weather, has become a magnet for Chinese investors looking for insurance against uncertainty. A Conference Board of Canada report found that Vancouver’s real-estate market is tightly connected to what happens in the Chinese economy.”

Read more in the New Yorker Real estate goes global.

Alberta…#1 in the world

The Conference Board of Canada rates the Alberta, Saskatchewan, and Newfoundland economies as the best in the world. Canada’s overall economy comes in at #5 when compared to other countries. econ2014_over_tb1 “Alberta, Saskatchewan, and Newfoundland and Labrador are “A+” economies—they rank higher than any advanced country in our analysis,” said Glen Hodgson, Senior Vice-President and Chief Economist. “Rising income in these provinces has led to higher consumer spending, which has boosted the services sector and real estate activity.”

Read more Resource-rich provinces earn top grade.

What are the implications for the Calgary housing market considering we already have low inventory?

It should be noted that the Conference Board of Canada, like all economic forecasters, has not had a stellar track record when it comes to accurate predictions. Perhaps they are one of the few who have been “less-wrong.”

What’s really behind Calgary’s higher home prices

Has Mayor Nenshi’s desire to see Calgary build “up” rather than “out” resulted in a lack of land on the outskirts of the city for new builds?  The director of the University of Calgary’s School of Public Policy, economist Jack Mintz thinks so…

“Calgary now has moved towards what’s called an intensification strategy. And it’s a good thing to have some intensification because you don’t want to hollow out the middle of the city,” says Mintz.

“But you have to have some balance and if there’s no more expansion that’s going to be allowed, maybe we have to close down parks to make way for new housing. Otherwise prices are going to go up because you’re simply going to have higher land prices.”

Mintz says the city needs to think carefully about limiting new housing development if it wants to make housing more affordable.

“The prices can be policy induced. and if you think of it being artificially high that can happen if you’re no longer getting enough supply relative to the number of people who want to move into Calgary.”

ATB economist Todd Hirsch has a different theory…

“I think that’s part of the reason building costs and material costs and labour costs are a little bit elevated in Calgary still because again we’re not seeing the same impact in Edmonton. So I think Calgary’s flood last year still having some residual carry over effect to these new home prices even today.”

Hirsch says once the flood rebuilding is complete, building costs will come down — and we will likely see more moderate growth in new home prices.

Read more Curbing urban sprawl, flood driving up new home prices

What we didn’t hear in this story is that Calgary is inundated with thousands of new residents every year.  Last year alone, net migration to Alberta from the rest of Canada totalled almost 45,000. Would there be a problem with supply, and higher prices, if we weren’t growing so fast?