Tightened housing supply curbs sales volume
April 2, 2013
The inventory of active homes for sale in Calgary are the lowest March levels in more than five years.
The decline in new listings hampered resale sales growth, which declined by more
than two per cent in March compared to March 2012.
New listings in March are five per cent lower than levels recorded in 2012, and five per cent lower afternthe first quarter.
The overall active listings stand at just 4,006 units, up from February’s levels but well
below the number available one year ago.
“Less resale product available to consumers is ultimately limiting sales growth,” said CREB® President Becky Walters. “In addition, resale homes are selling in less time and with continued upward pressure on prices.”
Walters said buyers have grown accustomed to a market when they have more time to make decisions
because there was ample supply. But, as market conditions have tightened, if they are serious about purchasing a resale home, they can no longer significantly delay that decision, she said.
“While market conditions are a far cry from activity witnessed throughout the frenzy in 2006 and 2007,there has been a noticeable cha
nge over what became the norm over the past few years.” Walters said.Single family, year over
year sales growth declined by six per cent in March, a reflection of declining supply. Active inventory totaled 2,713 units, 22 per cent lower than levels recorded in 2012, and the
lowest March inventory level recorded since 2007. The market balance continues to trend into seller’s territory in this segment causing a year over year price increase of nearly nine per cent, for a total of $446,500 in March 2013.
“Tighter rental conditions and continued employment growth has supported housing demand growth,”
said Ann Marie Laurie, CREB®’s chief economist. “However, for those looking for more affordable single family home products, their choices continue to narrow.” She said new single family listings under $500,000 are declining at double digit rates, driving consumers at that price point to either surrounding towns, condominiums or the new home market.The condominium townhouse market is the only category to record a year over year rise in sales activity for the month.
This is in part because the level of new listings improved in March 2013 relative to March
Condominium year over year apartment sales declined by nearly three per cent in March. However, after the first quarter, sales activity totaled 830 units a 6 per cent increase over the previous year.
Condominium townhouse sales totaled 652 units at the end of the first quarter, a 15 per cent
increase over the previous year.
“The condominium apartment market remains in balance,” said Lurie. “While it has moved to the lower end of the spectrum, it remains better supplied then the single family market and the majority of product available is in an affordable price range.”
The benchmark apartment price totaled $257,700 in March, a six per cent increase over the previous year.
Meanwhile, the condominium townhouse benchmark price experienced a year over year increase of 4 per cent, to $286,800.
“Despite tighter market conditions, it is unlikely that we will have another significant run up in prices,” said Lurie. “Outside of easing economic factors expected this year, consumers have options in the total housing market.”
Imperial Oil moving Calgary office out of downtown
Quarry Park location move beginning in 2014
BY MARIO TONEGUZZI, CALGARY HERALD
CALGARY — Imperial Oil announced Friday plans to relocate its downtown Calgary offices to a campus-style office complex in southeast Calgary to consolidate and support its growing operations.
The complex will be located on a 20-acre site in Quarry Park and will bring together Imperial staff from several downtown Calgary office locations. It will contain five low-rise office buildings with 800,000 total square feet of office space, support facilities, food service, wellness centre and other employee amenities, said Imperial Oil.
“Imperial has embarked on a decade-long period of substantial growth and expansion. This new campus will provide an opportunity to consolidate our Calgary offices in one location, offer additional space for our growing workforce and provide a superior working environment for our people,” said Paul Masschelin, senior vice-president of finance and administration for Imperial Oil, in a statement. “The complex will be constructed to high standards of energy efficiency and environmental stewardship, and will promote new opportunities for employee collaboration in their daily work.”
Employees will move in two phases, beginning in 2014. Full occupancy is expected in 2016.
The company currently has about 2,300 Calgary employees spread over three downtown buildings in Calgary’s downtown.
Imperial currently leases office space in Fifth Avenue Place, on 2nd Street S.W., which used to be known as Esso Plaza. The company leases space in both towers on the site, as well as space at BP Centre, across the street.
Pius Rolheiser, spokesman for Imperial Oil, said the Quarry Park location will have capacity for up to 3,000 employees.
“The capacity to grow and to accommodate future growth was an important consideration,” he said, adding cost was an important consideration as well but it wasn’t the only one.
“Imperial’s a company that plans to be here for decades to come. We’re just getting ready to start up the Kearl project which will operate for 40 to 50 years ... This new office complex gives us the flexibility and the room, the space, to support our growth in operations for a long time into the future.”
Cody Clayton, president of Remington Development Corporation, said the move by Imperial “signifies a massive change in the way people think of real estate for commercial real estate.”
“Obviously Calgary has been a very downtown-focused real estate market when it comes to oil and gas and to have someone of Imperial Oil’s stature choose Quarry Park to us says a lot,” said Clayton. “It immediately qualifies Quarry Park as a real alternative to companies. In the past, we’ve had other oil and gas companies look out here. We haven’t had success with them.
“But I think by now having Imperial actually make the decision to come out here, there will be others that will look at this and seriously consider it.”
Clayton said in other markets, such as Houston and Dallas, many oil companies have gone to a campus-style setting for their offices.
“People aren’t looking for necessarily being on the 50th floor of an office tower downtown,” he said.
Susan Thompson, business development manager for real estate for Calgary Economic Development, said it’s great news that Imperial is growing enough that it feels the need to develop its own facility.
“At this point, to be honest, it’s a good thing for the downtown considering (the new) Eighth Avenue Place (tower) is fully committed and they don’t start moving in until 2014 and (another project) City Centre doesn’t have tenants really taking occupancy until about the end of 2015, start of 2016,” said Thompson. “And all our forecasts are telling us our vacancy is going to be pretty tight downtown. So if Imperial Oil leaves that actually frees up some space.”
A trend to moving outside a downtown core is often spurred by companies taking advantage of low land prices, shorter development times, lower rents, plenty of parking and the ability to offer more amenities to their employees, added Thompson.
Greg Kwong, executive vice-president and regional managing director of commercial real estate firm CBRE Limited in Calgary, described the move as “huge” and could spark other oil companies to look outside the core for possible office space.
“It would be on scale with when they announced The Bow — the size of the building and the impact on the market,” he said. “It’s the first major oil company to move outside the core. But if you look at it on the grand scheme of things other major markets, oil and gas markets, like Houston and Dallas, there are many oil and gas firms located out in the suburbs.”
Quarry Park consists of 385 acres. It has 1.2 million square feet of office space already built of which there is only 1.5 per cent vacancy. There is potential for another two million square feet of office space that can be built, including the Imperial Oil project.
It also has 100,000 square feet of retail space and Remington is planning a hotel for the site.
On the residential side, about 200 single-family residences have been built and are occupied. There’s another 60 town houses built with about 40 occupied. There’s also a 144-unit rental apartment that is under construction and anticipated to be completed for the summer of next year.
Also, Remington has plans for a five-building condo project of 175 units. The first two buildings are under construction with 68 units.
Clayton said Remington also has land for another 60 town houses and 1,500 multi-family units as well as 50 vacant single-family residential lots.
Calgary is world famous for the Calgary Stampede and for Spruce Meadows and its proximity to Banff National Park.
But, according to one global real estate consultancy, Calgary is on top of the world for a reason other than mounts and mountains: returns on property investments.The 2012 IPD Global Cities Report, unveiled at a real estate conference in Paris earlier this summer, places Calgary at the top of the heap of global cities for best returns on real estate investment. The index compares 60 international cities and covers four major property types: retail, office, apartment and industrial.
According to the report, Calgary was one of the world’s most improved markets, with total returns of 8.7 per cent in 2010, but shooting up to 21.6 per cent in 2011. “An energy-driven economic boom in Alberta...generally benefitted the city, and brokers reported prime office space in the central business district to be near full occupancy at year-end,” the report states.Other global cities that performed well on returns on property investments included San Diego, Portland,
and Seattle. The three other Canadian cities on the list—Vancouver, Montreal and Toronto—ranked 8th, 9th, and 10th, respectively.Despite the modest slowdown in general economic activity in Alberta this year, commercial and industrial activity continues to be a propeller of Calgary’s economy. Returns on investment may soften, but the city continues to attract international attention by the real estate investor.
Senior Economist, ATB Financial
Calgary's healthy housing market
Will van ‘t Veld
Economist, ATB Financial
September 6, 2012
After a spring of defying the negative national housing market sentiment, the Calgary market cooled a bit in August. But, Alberta’s largest city remains one the nation’s most solid real estate markets. Back in February, the inventory-to-sales ratio in Calgary began to dip, as sales increased faster than new listings, indicating the market had quickly dipped into sellers’ territory. Buyers have since reversed that trend slightly, with the Calgary Real Estate Board reporting that monthly
sales in August dipped 11.6 per cent month-over-month.The swing in housing market activity can be seen in average residential price changes. That average residential price nudged down to $417,000 in August, a 2.2 per cent drop from July, which is nonetheless 3.1 per cent higher than a year ago. The MLS also computes a benchmark price, which is less volatile. The benchmark price adjusts for specific features, such as lot size, bedrooms and location. The jump in the MLS benchmark price index through 2012 has been pretty impressive, up 6.5 per cent on a year-over-year basis. Activity in the single family detached home market has been particularly strong over the past year, with the MLS benchmark index jumping 7.8 per cent yearover-year in August. This is the main reason the overall residential home price index has increased so noticeably, as detached homes make up the vast majority of residential sales.
For their part, condo and town home prices have been plodding along, with the benchmark price increasing 3.3 and 2.6 per cent, respectively, on an annual basis.
Calgary housing market among Canada’s most affordable: RBC Stronger home resales and new construction
Calgary housing market among Canada’s most affordable: RBC
Stronger home resales and new construction
BY MARIO TONEGUZZI, CALGARY HERALD
CALGARY — The Calgary-area housing market remains one of the most affordable in Canada, according to a report released today by RBC Economics Research.
The latest Housing Trends and Affordability Report said the local market has enjoyed the best of all worlds recently: stronger home resales and home building, moderately rising prices, and attractive and improving affordability.
“Such a combination is a rare feat, but it follows years of sluggish performance in the aftermath of the area’s mid-2000s boom,” said the report. “In the second quarter of 2012, a sharp drop in the costs of utilities provided unusual help to affordability in the area. Utilities and property taxes—two small components of home ownership costs—typically do not sway affordability, but the sudden reversal of earlier electricity rate increases led to a substantial 17 per cent quarterly decline in utilities, which was more than enough to move the affordability needle.”
In the second quarter, the RBC measures edged lower for condominium apartments and two-storey homes by 0.6 percentage points and 0.4 percentage points, respectively, while the measure for detached bungalows was unchanged in Calgary.
“Such general amelioration kept housing affordability in check at some of the better levels among Canada’s largest cities,” said the report.
The RBC Housing Affordability Measure, which has been compiled since 1985, shows the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes, and utilities.
In the second quarter, RBC measures for Calgary edged lower for condominium apartments by 0.6 percentage points to 21.6 per cent and for two-storey homes by 0.4 percentage points to 37.2 per cent. The measure for detached bungalows remained unchanged at 36.7 per cent.
RBC said significant drops in the prices for electricity and natural gas in the second quarter of 2012 in Alberta “further solidified this province’s position as the market with the lowest home ownership costs as a share of household income in Canada.”
The RBC measures eased by 0.6 percentage points for both two-storey homes and condominium apartments, while the measure for detached bungalows edged lower by 0.3 percentage points, it said.
“Alberta experienced a 17 per cent decline in utility costs, which was the largest contributor to across-the-board improvements in housing affordability in the most recent quarter,” said Robert Hogue, senior economist, RBC. “Attractive affordability and a vibrant provincial economy are providing powerful incentives for Alberta homebuyers – second quarter home resales were at the best level in five years, surging 18 per cent over the same period last year.”
The affordablity measures in Alberta were: 32.0 per cent for detached bungalows; 34.8 per cent for two-storey homes; and 19.7 per cent for condominiums.
In Canada, they were: 43.4 per cent for bungalows, up 0.2 per cent; 49.4 per cent for two-storeys, up 0.6 per cent; and 28.8 per cent for condominiums, unchanged.
How the RBC Housing Affordability Measures work
The RBC Housing Affordability Measures show the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes, and utilities on a detached bungalow, a standard twostorey home and a standard condo (excluding maintenance fees) at the going market prices.
It’s taking less time these days to sell a home in Calgary compared with last year.
According to the Calgary Real Estate Board, so far this month from August 1 to August 20, the average days on market to sell an MLS residential property in the city is 43. That’s a drop of 12.24 per cent from the same period a year ago when it took an average of 49 days to sell.
Each housing category has seen a decline in average days on market.
For single-family homes, it’s dropped by 12.77 per cent from 47 days to 41 this month.
The condo apartment category has seen a drop of 11.32 per cent to 47 days from 53 last year.
And the condo townhouse sector has seen a slight decline of 3.77 per cent from 53 days last year to 51 so far this month.
http://diane-richardson.com/buying.html Calgary Real Estate Resources & Statistics
Average house prices in Calgary region to jump by $20,000 in next two years
CALGARY — The average MLS residential sale price in the Calgary region will climb by more than $20,000 over the next two years, according to Canada Mortgage and Housing Corp.(http://www.cmhc-schl.gc.ca/odpub/esub/64339/64339_2012_B01.pdf?fr=1344960776770)
In its third quarter 2012 Housing Market Outlook, released Tuesday, the CMHC said the average MLS sale price in the Calgary census metropolitan area will jump from $402,851 in 2011 to $413,000 this year and then to $424,000 in 2013.
The report also said MLS sales in the Calgary CMA will increase from 22,466 in 2011 to 25,200 this year and 25,800 next year.
And housing starts in the region will rise from 9,292 in 2011 to 12,000 this year but fall back to 11,700 in 2013.
“The economy in Calgary has improved compared to the previous year and the trends that we have seen thus far are expected to continue in the months ahead,” said Richard Cho, senior market analyst in Calgary for the CMHC. “Job growth, relatively low mortgage rates and higher average earnings will all contribute to housing demand. Net migration will also be a key contributor and we have already seen some encouraging numbers at the provincial and city levels.
“Whenever we have an influx of people move to a region, naturally they are going to look for a place to live. Some will look to the rental market while others may choose to buy an existing home or build a new one. Housing demand this year will be supported by a number of different fronts.”
Cho said the resale market has moved into more balanced levels this year and that is supporting price growth.
“Supply in the existing home market has declined from the previous year while sales have increased,” he added.
In Alberta, economic growth and job creation are supporting housing demand, said the CMHC. By year-end, single-detached starts are projected to reach 17,600 units, up over 15 per cent from 2011. In 2013, single-detached starts will rise five per cent to 18,400 units.
“Existing homeowners will see the value of their property rise and this will help with move-up buying,” said the agency.
Multi-family starts will increase by 35 per cent in 2012 to 14,200 units. To reduce the risk of rising inventory in the next few years, developers will moderate multi-family starts in 2013 to 13,800 units, it said.
“In Alberta’s resale market, MLS sales will increase by 11 per cent to 59,800 units in 2012. In 2013, resale transactions in Alberta are forecast to increase to 61,000 units. MLS sales in Alberta will rise this year and next year, as employment and income growth provide the means to purchase,” said the report.
“With a transition to balanced market conditions unfolding, expect price growth to increase over the forecast period. The average resale price in Alberta is projected to rise by 2.5 per cent in 2012 to $362,200, and nearly three per cent to $372,300 in 2013. Both of Alberta’s largest markets, Calgary and Edmonton, have experienced improved market balance this year.”