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Calgary’s real estate market poised to turn the corner in 2012: CREB

BY MARIO TONEGUZZI, CALGARY HERALD JANUARY 4, 2012 8:05 PM

 

CALGARY — Calgary’s residential real estate market is poised to turn the corner as 2012 will signal increasing demand for housing in the city, says the president of the Calgary Real Estate Board.

“I believe it’s imminent that we’ll start to see the result of all those economic indicators come to fruition and hit the ground, get traction this coming year. It’s got to happen,” said Sano Stante in a year-end 2011 interview.

All those positive economic indicators include strong economic growth, increased net migration and continued employment growth for both the city and the province.

 

But two reports in mid-December suggested some dark clouds could be on the horizon for the overall Canadian real estate market this year.

Scotia Economics, in its Global Real Estate Trends report, said Canada’s ongoing housing boom is in its 13th year but showing some signs of cooling. It said increased economic uncertainty combined with some recent slowing in the pace of hiring could dampen demand in the new year.

 

And a report by Bank of America Merrill Lynch said Canadian home prices are now showing many of the signs of a “classic bubble” with prices nationwide overvalued by about 10 per cent.

Also a report by TD Economics forecast residential sales in Calgary to increase by 0.1 per cent in 2012 to 22,600 units but drop by 3.3 per cent in 2013 to 21,900. The report is predicting the average price to grow by 0.5 per cent in 2012 to $404,100 but dip by 1.6 per cent in 2013 to $397,800.

 

“Calgary will not be immune from the impacts of higher interest rates and in turn, we have incorporated modest price and sales declines in 2013. Relative to the national story, however, the region is expected to out-perform most others over our forecast period,” said TD Economics.

 

Don Campbell, president of the Real Estate Investment Network, said the past year’s market has been a year of recovery as the market adjusted to the job and population slowdown of 2010.

“Any job and population changes aren’t reflected in the real estate market until 18 months after they occur. Confusing signals from the market numbers were expected and that is what we experienced,” he said.

“2012, especially in the second half of the year, we will see upward pressure on demand for resale real estate, which will be a good time for owners to start moving properties.

 

Average price increases will start to be more consistent in the back half of the year as the population and job growth continues to keep the pressure and increase demand. The big upward pressure on prices will really begin in early 2013.”

Stante said 2011 was more typical than some past years in the local real estate market.

“It’s more typical of what you might expect in this cycle of a normal recovery,” he said.

“In that cycle of a typical recovery you start to have some decreasing supply and we’re starting to see that now. We’re starting to see decreasing supply and the next phase is for demand to pick up.

 

“All the economic indicators are pointing to that. We’ve been saying all year that we are due for more in-migration which is a leading indicator for real estate, for the housing market. We’ve just started to see it happen. So it’s not a matter of whether it will happen. We see oil companies are filling up space. That tells you that they’re hiring. It tells you that jobs are coming. But what we don’t know is when they’re going to hit the ground in the real estate market. It’s more a matter of when than if.”

 

In 2011, there were 13,186 single-family MLS sales in Calgary, up 9.06 per cent from the previous year while the average sale price increased by 1.14 per cent to $466,402. There were 5,382 condo sales, up 3.98 per cent, but the average price dipped by 0.94 per cent to $287,172.

Dan Sumner, economist with ATB Financial in Calgary, described the local housing market in 2011 as “slightly disappointing.”

“We definitely saw a rise in sales from 2010 but sales still remain quite slow compared to 10-year averages ... Prices have been flat for now 2 years and it really continued along in 2011,” he said.

Sumner said he’s cautiously optimistic for 2012.

 

“Overall the Canadian housing market in general I wouldn’t say it’s in a place where I’d want to put a lot of money right now if I had to bet on it,” he said. “But as far as housing markets in Canada go, I think the ones in Alberta are probably the best — Edmonton and Calgary. That’s just because the economy here is really growing quite strongly and because prices have been a little bit slower to rise over the last couple of years.

 

“The Alberta economy is performing beautifully. It continues to perform beautifully. As long as oil prices remain up where they are, it’s never a certainty, but given the fact they’ve been very resilient thus far ... then the Alberta economy is going to continue to hum along.”

He also said there is no indication there will be much upward movement in interest rates in 2012 which will help fuel sales in the real estate sector.

 

Canada Mortgage and Housing Corp., in its Housing Market Outlook report in the fall, forecast MLS sales in the Calgary census metropolitan area to increase by 2.3 per cent in 2012 and the average sale price to jump by 2.2 per cent to $411,000.

“Many factors that support resale housing demand have become or remained favourable this year, including growth in full-time employment, low mortgage rates, and improved net migration,” said the agency. “However, competing factors such as uncertainty in the global economy has kept some prospective buyers on the fence and will continue to temper any large increases in sales.”

 

The Calgary Herald

 

Creb.com

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City of Calgary Property Assessment

 What is property assessment?

 

The City of Calgary Assessment business unit estimates the market value of your property for the purpose of distributing fair and equitable taxation.

We are governed by the Municipal Government Act of the Province of Alberta. The estimated value we place on your property comes from the measurement, analysis and interpretation of the real estate market.

Property assessment is the estimated value of a property used for Municipal and Provincial taxation purposes. The formula used to determine your property tax is:

Property assessed value x Tax Rate = Your property tax levy.

July 01, 2011 valuation date

 

Your Property Assessment Notice reflects the estimated market value of your property based on the valuation date of July 01, 2011, as set by the Municipal Government Act. Real estate market conditions may change from the time of the valuation date to when you receive your 2011 assessment. Market changes that have occurred since July 01, 2011 will be reflected on your 2013 annual market value assessment, which will be mailed in January 2012. Your 2013 assessment will be based on a July 01, 2012 valuation date.

Mass appraisal

 

Mass appraisal is the process of valuing a group of properties as of a given date using standard methodology, employing common data and allowing for statistical testing. The process is based on mass appraisal models that are an expression of how supply and demand factors interact in the real estate market.

Residential property assessment

 

When we prepare residential assessments, we will analyze market activity for similar properties in similar area that have sold during the same timeframe.  Through analyzing properties that have sold, we are able to provide market value assessments to both the sold properties and those properties that didn't sell.  This is called the sales comparison approach to valuation.

Multi-residential property assessment

 

For multi-residential property assessments we use the income approach to valuation – capitalize the income being generated by the property.

Non-residential property assessment

 

In determining non-residential assessments, we use one of three approaches to value, depending on the type of non-residential property:

  • Sales comparison approach – sales of similar properties.
  • Income approach – capitalize the income being generated by the property.
  • Cost approach – market value of land plus the depreciated replacement cost of the improvement.
     

    How property assessment relates to taxes

     

    Property assessment

     

    Market value is the most probable price that a property would sell for on the open market on a given date. An assessor reviews and measures the real estate market to establish typical market value. 

    For more information about the property assessment process please view:

    Your 2012 property assessment 

     

    Council decides what budget The City needs in the coming year. Then, using the total city-wide assessed property base, Council sets the tax rate to bring in only the funds it needs from property tax.
    Tax rate = City budgetary needs
                       ÷
                   Total assessed value of Calgary properties

    Your assessment is the market value of your property.
    Assessment = market value

    If Council approves a tax increase, your May tax levy will increase from the revenue neutral tax amount shown on your 2012 Property Assessment Notice by the same percentage as the increase in tax rates between 2011 and 2012 (subject also to changes in the provincial property tax rate).

    Your share is then calculated by applying the tax rate to your assessment.
    Individual share of tax = assessment x tax rate

    What your property taxes support

     

    Your property taxes support the delivery of key City services that ensure our vibrant, healthy city and great communities, and are the primary source of funding for The City’s operating budget. City services include transportation and transit, police and fire protection, land use planning and policy, advancing social policy, recreation, waste removal, parks and many others. Almost half of all residential property taxes (44 per cent in 2011) collected by The City are sent to the Province of Alberta to meet provincial government budgetary requirements. For more information please review Property Tax.

     

     

    Information supplied by the City of Calgary link

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