October 1-21, 2014 Calgary Real Estate Market Update

If I were to describe Calgary’s real estate market as “robust”, “exhibiting strength”, with “tight” conditions – would you get the sense I was alarmed or worried?

Today, the Bank of Canada released October’s Monetary Policy Report which touches on the housing market on page 22 & 23.

Apparently to the Globe & Mail, the adjectives used at the outset of this post indicate that the Bank of Canada has “suddenly raised red flags about the Toronto, Calgary and Vancouver housing markets.

Aside from the click-bait title, here’s the portion in the Globe article I had an issue with:

“In its monetary policy report today, the central bank said housing markets in eastern Canada “appear to show signs consistent with a soft landing,” given slower price increases and sales volumes.

But here’s the crucial line: “This contrasts with major cities in Ontario, Alberta and British Columbia, where housing markets are generally robust and much tighter.”

Bank of Canada Governor Stephen Poloz and his colleagues did not say Toronto, Calgary and Vancouver were necessarily heading for a hard landing, but the distinction was noteworthy, nonetheless.”

Since when is the opposite of a soft landing a hard landing?  The Bank of Canada was describing the regional differences and that some markets were still climbing.  Ro·bust (rōˈbəst,ˈrōˌbəst/) adjective  1. strong and healthy; vigorous.

In the original Globe & Mail story that I took a screen capture of here, the article conveniently omitted the following statement from the Bank of Canada that explains:  “a good part of the strength can be explained by favourable demographics and strong employment gains in parts of the country.”  The Bank of Canada continues by adding that “nonetheless suggests that household imbalances could increase further.”

We’ve been hearing about household imbalances for years now, but the part that the housing market’s strength in areas (ie. Alberta with its strong employment gains) has fundamental support is what’s noteworthy.   Furthermore, there wasn’t even one specific mention of Calgary, Vancouver or Toronto in the Bank of Canada report at all.

I tweeted my annoyance to the Globe author for skipping the perhaps most relevant detail from the report because it didn’t fit the narrative.    I have to give him credit – he has now updated the article to include it and the following caveat: “The central bank did not cite specific cities. Nor did it say they were headed for trouble. But I took it as a warning sign.”

(Update: The article has been edited and parts rewritten once again.)

A little disconcerting that so much of that article was based on opinion/bias rather than just reporting on what the Bank of Canada actually wrote.

When reading news (or even my blog posts for that matter) I urge you to read the reports the articles are based on so you have the complete picture and not just a cherry-picked interpretation of it.   What I find important and highlight in my posts might not be what you do.   That’s why I always link to the full bank commentary or report for you to read through yourself and come to your own conclusions.

Alright, with that out of the way – onto the weekly update :)  Sales in Calgary through three weeks are robust but are no longer on track for beating 2005’s record for October.

Helping ease the pressure of the 9.85% y/y increase in sales are new listings which have jumped 16.64%.  Even with the hike in new listings and 733 additional homes for sale compared to this time last year, the overall market is at a 71% sales-to-new-listings ratio which indicates conditions still favor sellers.

Average and median prices are both up over 5% year-over-year with most of the gains attributed to the single family segment.

 

Sales-to-new-listings-ratio October 21 2014

Calgary home sales , Oct 1-21, Y/Y comparison

Calgary home sales , Oct 1-21, Y/Y comparison

Calgary luxury home sales, October 1-21, Y/Y comparison

Calgary luxury home sales, October 1-21, Y/Y comparison

Calgary real estate stats summary, October 1-21, Y/Y comparison

Calgary real estate stats summary, October 1-21, Y/Y comparison (click to enlarge)

Calgary’s Luxury Home Market Breaks Annual Sales Record

A total of 732 properties have sold for $1 million or more so far this year, breaking the year-end record of 726 set in 2013.   Luxury sales year-to-date represent 3.3% of the homes sold on MLS® compared to 3.1% in 2013 and 2.4% in 2012 during the same period.

Calgary luxury home sales have set a new monthly record every month so far this year with an all-time high of 104 sales in June.

Bear in mind that these sales records are despite two direct measures taken by CMHC at buyers of $1M+ properties.  The first was two years when CMHC stopped insuring mortgages on homes worth $1M+ if the buyer didn’t have at least a 20% down payment.  The second measure was enacted at the end of July when CMHC stopped offering mortgage insurance for homes that cost $1M+ altogether, even if the buyer made a deposit of 20% or more.

Calgary Luxury Homes Sales, Y/Y Comparison

Calgary Luxury Homes Sales By Year.  2014 sales only YTD.

Calgary Community Real Estate Statistics: September 2014

Calgary Zone Map (click to enlarge)

Calgary Zone Map

McKenzie Towne was far and away the most active community during September with a total of 64 properties changing hands, followed by Connaught (51), Cranston (43), Tuscany (41), Bridlewood (40), Coventry Hills (39),  and Panorama Hills (38).

Through nine months, there have been 607 sales in McKenzie Towne. The next highest YTD sales total was Cranston with 422 and Evergreen with 418.

To download the Calgary Community Real Estate Statistics for September 2014: click here pdf

Historical Community Statistics

Historical statistics are now available at the community level going back to 2007 for monthly, or to 2004 by quarter.   You’ll be able to see how your neighborhood has been trending over the years instead of relying on general market statistics based on all of Calgary.

For example, here’s a snapshot for West Hillhurst total:

West Hillhurst monthly statistics

Snapshot of what data is included in the community report

If you’d like the most recent report, please fill in the form below with your name, email address and the community of your choice. This part isn’t automated, so please allow for some time for me to download the report and send it to you.

Contact me at 403-554-2284 for at mike@findcalgary.com when you’re ready to buy or sell real estate and I would be glad to assist you.

Canadian Housing Market Report: September 2014

Download the full CREA statistics report for September: here

September 2014 Report Highlights

house• National home sales fell 1.4% from August to September.
• Actual (not seasonally adjusted) activity stood 10.6% above September 2013 levels.
• The number of newly listed homes declined by 1.6% from August to September.
• The Canadian housing market remains balanced.
• The MLS® Home Price Index (HPI) rose 5.3% year-over-year in September.
• The national average sale price rose 5.9% on a year-over-year basis in September.

Bank Commentary

BMO Economics:  Canada’s real estate market has become so localized that there’s little value in looking at the broader trends these days… It is well documented that the big-three (Vancouver, Calgary and Toronto) are where home price gains are concentrated. Indeed, Vancouver prices continued to accelerate in September, up 5.3% y/y (MLS HPI), while Toronto was up a strong 7.8% and Calgary a massive 10.1%, though the latter could cool with recent developments in the oil market… The good news is that the wide disparities in Canada’s housing market largely reflect economic, demographic and supply/demand fundamentals at work, all but eliminating any fears of a widespread ‘bubble’.  (Read full commentary here pdf)

TDTD Economics: While the housing market continues to defy expectations in 2014, we still remain of the view that housing activity will eventually cool from current levels. With home prices continuing to rise above incomes, affordability will become an obstacle to housing demand once interest rates do eventually begin to rise  (Read full commentary here  pdf)

RBCRBC Economics: Canada’s housing ‘split personality’—whereby a trio of markets (Calgary, Toronto and Vancouver) show a fair degree of heat and the majority of others are more temperate or even soft—continues to be in evidence. The relatively good news in September, however, was that resales inched lower even in ‘hot’ markets, which if sustained, would go some way into reducing the risk of overheating. Given these markets’ large share of the national total, this moderation also would alleviate concerns at the national level.  (Read full commentary here pdf)

Calgary Repeat Home Sale Prices Rise For 9th Consecutive Month

Calgary home prices rose for the 9th consecutive month and led the nation in annual price growth in September according to the Teranet-National Bank House Price Index released today.  The index is estimated by tracking sale prices of dwellings that have been sold at least twice.

Calgary prices climbed 1.1% between August and September and increased 9.5% year-over-year.  Both the monthly and annual price gains were the highest across Canada.

The composite 11 index has been up year-over-year for 60 months now, since September 2009.   Toronto is the only market in the index to match that run.   On a monthly basis, it was the 10th month in a row in which the national composite index did not fall, a feat matched only by Edmonton. (Calgary is at 9 straight months)

Calgary Index

Source: housepriceindex.ca

October 1-14, 2014 Calgary Real Estate Market Update

The stock market is correcting, oil prices are falling and the loonie is tumbling to multi-year lows – and Calgary’s real estate market is on track for a record October.  Go figure.

Month-to-date sales are up 10.65% year-over-year to 977, and just a smidge above October 2005’s peak pace of  963 sales.

The overall market remains in seller’s territory with only condo-apartments looking balanced at this point, and we’re seeing annual price gains across all three housing categories.

Calgary’s high-end market is still booming and is only two sales away from setting a new annual record.   A total of 725 properties have sold for $1M+ YTD at the time of writing, compared to 726 for all of 2013.  Caveat: I noticed an entire townhome complex sold for a couple million dollars, but the agent posted the sale three separate times (The units were originally listed separately, but then they were sold altogether in a package deal) I’ve sent a data error report to the audit dept.

Sales-to-new-listings ratio Oct 14 2014

Calgary home sales - October 1-14 2014

Calgary home sales – October 1-14 2014

Calgary luxury home sales - October 1-14 2014

Calgary luxury home sales – October 1-14 2014

Calgary-Stats-Oct-14-2014

Calgary real estate stats summary: October 1-14 Y/Y comparison

Calgary’s Housing Boom: Factors & Risks

Report Housing BoomCanada’s housing boom effectively ended a few years ago after the recession and several rounds of mortgage rule tightening,  but three cities made a “Lazarus-like” recovery and are making rapid price gains according to a feature report by BMO released yesterday.

Senior Economist Sal Guatieri outlines several factors why Calgary, Vancouver, and Toronto are still hot markets while the rest of the country has cooled. Contributing factors include:

  • rapidly growing population
  • solid job growth
  • cheap financing
  • younger people driving demand

However, there are risks to the outlook.  The report concludes:

 “But worsening affordability suggests all three cities will simmer down when borrowing costs rise.  Pricey Vancouver and Toronto are likely to face moderate price declines, while still-affordable Calgary could get off more lightly. Vancouver and Toronto are vulnerable to a severe correction in the event of a recession or spike in interest rates—a risk that builds the longer that prices outrun income. Calgary isn’t immune to a downturn either, as a further slide in oil prices would stem its jobs bonanza. When oil prices plunged in the 2008 recession, Calgary’s house prices sank 18%, though they have since more than recovered their losses.”

To read the entire report, click here pdf  (begins on page 6)