The price of a new home in Calgary remained flat in June according to the NHPI released by Statistics Canada today.
There was no change month-over-month (between May and June) in Calgary new home prices. Between June 2009 and June 2010, prices were up 3.2%
Canada-wide, the index was up 0.1% MoM and up 3.3% YoY.
Between May and June, the largest increases were recorded in Saint John, Fredericton and Moncton (+1.3%), Winnipeg (+0.5%), and Ottawa-Gatineau (+0.5%)
The largest increases year-over-year were in:
- Regina (+6.9%)
- Vancouver (+6.5%).
- St. John’s (+6.1%)
- Winnipeg (+4.9%)
- Ottawa-Gatineau (+4.7%)
Among the 21 metropolitan areas surveyed, 2 registered 12-month declines in June: Victoria (-3.5%) and Charlottetown (-1.8%).
CLICK TO ENLARGE. Source: Statistics Canada
About the NHPI
The New Housing Price Index (NHPI) measures changes over time in the selling prices of new residential houses agreed upon between the contractor and the buyer at the time of the signing of the contract. It is designed to measure the changes in the selling prices of new houses where detailed specifications pertaining to each house remain the same between two consecutive periods. The prices collected from builders and included in the index are market selling prices less value added taxes, such as the Federal Goods and Services Tax (GST) or the Harmonized Sales Tax (HST).
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Scotia capital report
Scotia released their Global Real Estate Trends report today which touched on new housing, so I’ll include it in this post.
Sellers of resale homes have consistently commanded greater price increases from buyers over the past decade than have new home builders. Between 2000 and the first half of 2010, the average cost of a new home increased by just over 50%.
Over the same period, the average price of a resale home more than doubled. Sales of new and resale homes are driven by the same underlying factors — primarily interest rates and employment/ income growth. Traditionally, the demand and pricing for new homes mirror, but with a lag, trends in the resale market. When resale housing selection is limited, and/or prices are increasing sharply, buyers are more likely to consider a new home purchase…
…The divergence in new and resale home prices is seen in most markets across the country, but to varying degrees. The biggest gap has opened up in British Columbia, where the lack of developable land in its largest city is a major contributor to its record high home prices.
On the other hand, new home prices have largely tracked resale prices in Alberta and Saskatchewan, where a massive influx of population attracted to the region’s booming economy, and the inherent lag in adding sufficient new housing stock, fuelled across-the-board appreciation.
You can read the report in its entirety here
CLICK TO ENLARGE. Source: Scotia Capital
Probably obvious to most people who visit Mike’s blog….but had to point out what a great snapshot the Scotia Capital charts are…couldn’t help but just shake my head….there’s nothing to see here!
6 pretty impressive assett-bubble-like trends all in a row! (albeit some bigger than others).
For the “theoretical” bubble see:
http://www.irvinehousingblog.com/wp-content/uploads/2007/06/bubble-psychology.jpg
Stock market was down a little over 2.5% yesterday on fears the Canadian and US economy is again in serious trouble financially.
“The market reaction is what one would have expected immediately
following the FOMC policy statement, which downgraded the outlook for the economic recovery and highlighted concerns about
high unemployment, weak consumer spending and a reversal of the gains made in the housing market.”
If you are not getting 25% (or more) off list for a house, why are you buying in this market at all? Sit it out and save.
The inventory of homes on RentFaster has continued to climb quite significantly throughout the summer months.
It’s now about 20% higher than the average level in 2009, which is fairly notable, because it was about 25-30% lower than 2009 levels in winter/spring of 2010. This is the highest I’ve ever seen it on RentFaster.
Of course one can’t discount the fact that maybe RentFaster has increased in popularity since 2009.
Median rent has since dropped about $50, to $1650/month for a SFH. That’s still higher than it was in 2009, when it was down to $1550 at one point (although most of the year it hovered at $1600).
2 bedroom apartments still have a median asking price of $1100/month in Calgary, and they have been that way since fall of 2009.
Not Mike F: not a great idea basing your offer on list price. It’s no feat getting a property for 25% off list price when it was listed too high in the first place…
CM: interesting that rental inventory is increasing while the amount of unoccupied listings on MLS is also on the rise over the past few months.
Another economist, another prediction – this time, contrary to CREA’s recent revised forecast stating the home prices will decline next year in Alberta, RBC is predicting an increase:
Read the entire article in the Calgary Herald here
I have noticed that the market sentiment here in Calgary is all over the map. The following is just general observations and not obvious statistical analysis.
1 – Usually on a Sat or Sunday afternoon, i will take the wife and Drive around the inner city (west Hillhurst, altadore, etc) for an hour or two and look at some open houses for general market research. The last few weeks, i have noticed houses were very, very quiet with the lack of activity and the realtors were very pushy. Initial conclusion, Aug buyer pace is following the MLS reduced sales data from July and things are truly slowing.
2 – Last weekend. Looked at a home on Bowness Rd in West Hillhurst. Nice Citycore home built in 2007. 2400 or 2600 sq*ft and Listed for 1,295,000. Very Nice, but my thinking was, Wow, what a bunch of useless adders (stone wall curved stairwell inside, Giant swinger shower in the basement), etc that only add to the overall price of the house. I calculated that you could build one through city core for $250-300K less right now (Sans stone wall staircase of course). The open house was jammed. House sold that week (it sold yesterday on Mike’s daily stats for 1,250,000. Conclusion, WTF?
3 – Today, biked to Bragg Creek, and came back home through Spring Bank, West Calgary by Westhills mall (forget the name), then CoachHill/ Cougar Ridge and then WildWood. The corners of the intersections were absolutely jammed with open house signs. There were more today then there were the past two summers, and the sheer level of open houses does not reflect the drop in listing since the peak a couple of months ago. So i either hit the hottest open house day of the year, or the sellers are starting to pressure their realtors to move their homes given some of the negative news on real estate. Either way, there was a shocking amount of showings in Calgary through several large areas that i biked through. I didn’t stop to ask about activity levels, it would have taken too many hours.
The prices growth of homes here in Calgary are unsustainable given the price of natural Gas (60-70% of the oil/gas market in AB), lack of full-time employment growth, high debt-to-income ratios, etc, etc. But as we now know that the bond markets are smoking as the “safe bet” due to the uncertain macroeconomic climate, i think we just may have another year of people going over their heads until the interest rate corrects to normal levels. So another year of CHMC ballooning. The financing of the bond/debt market can not go on forever and witnessing pt ‘2’ above scared the crap out of me that apparently no lesson was learned during the crash. People who make around 100K are still willing to pay that hefty premium for Granite and hardwood no matter what, as it will match their ‘his and her’ BMW’s along side their lack of personal savings and illiquid net worth.
Anyways, hopefully pt ‘1’ above will be more common going forward.
Koz – thanks for sharing that with us, much appreciated!
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