Calgary new home prices remained unchanged between October and November according to Statistics Canada’s New Housing Price Index released today. Year-over-year prices were up 0.8% in November.
Canada-wide, prices were up 0.3% from October and up 2.3% from the previous year.
Source: Statistics Canada (click to enlarge)
With the publication of the December 2010 reference month scheduled for February 10, 2011, the base year of the New Housing Price Index (NHPI) will be changed from 1997 to 2007. Thoughts on what this change means?
Here’s what the past several years have looked like using 1997 as the base year:
Calgary NHPI (click to enlarge)
And here’s what it looks like going back to 1981:
(click to enlarge)
In case you were curious, here’s the response I received from Statistics Canada as to why the base year is being changed from 1997 to 2007:
My interpretation:
“People find it difficult to relate to index levels which are very high and which, more likely, carry a time base in the distant past”
- We’re going to make it seem like simple math is difficult to allow us to marginalize data that’s relevant and alrming
“Secondly, time bases are changed, to establish a reference date that is more suited to a particular application. For instance, if a user wanted to see quickly how prices for a commodity have grown from a certain year, then the relevant index could have its time base shifted to that year. ”
- It would be shocking to show people “commodity” price of homes as gone up 2 – 3 fold since 1997 while wages have gone up a fraction of that. Let’s set a baseline at an unrealistically high number to show there’s nothing to worry about in the data set.
BTW, happy new year Mike. Keep up the good work in 2011!
ALE, thanks for your post – that’s definitely one way to interpret it. A 2007 base will certainly mute the drastic price increases seen over the past several years.
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Don Campbell is live at the Globe & Mail answering questions. Some comments he has made thus far:
“A bubble doesn’t exist if you actually analyze the underlying economic fundamentals (rather than screeching about housing market numbers)…….”
Love the irony. In his rant he provides no reference to fundamentals to support his claims, then goes on to screech about housing.
In the past three decades there have been several large bubbles in housing prices, so yes, it’s worth talking about regularily.
The reason people scream about our current credit levels, home prices, and the associated risks is because nobody listens. Baffons like this guy get all the airtime and rational observers are left to toil on the blog rolls.
He tags folks concerned with housing prices as “chicken littles” then goes on to condenscendingly talk about civil discourse. Guys like this are easy to discredit but, alas, noone would be listening anyway.
All the best to his readers.
Whenever I see Don Campbell in the news I can’t help but think of his comment in the herald a few years back that ‘the top irish banks are buying here ‘ (here as in Alberta). His books, while favourably reviewed, often read as boosterism for real estate investing and suggest rates of return are attainable that I have not seen anywhere (like annual rent is 1/10 purchase price). Here is a pasted in article quoting Don Campbell from 2008. When insulting those with other opinions on the real estate market, perhaps Don should revisit his totally discredited comment on the investment success of the Irish banks.
Copyright Southam Publications Inc. Mar 1, 2008
The residential real estate market in the city right now is “self-cleaning,” says one of the leaders in real estate investing in Canada.
“It shakes out the pretenders and allows long-term, as in five-to-seven year investors, to buy and succeed,” says Don Campbell, president of Canada’s Real Estate Investment Network (REIN), which has a membership of real estate investors across the country.
He provides advice and information on his website, http://www.realestate investingincanada.com, and has written three books on the real estate market.
His latest book, 51 Success Stories from Canadian Real Estate Investors (John Wiley and Sons Canada, Ltd., 2008), has just been released.
Based in Calgary, Campbell says the market was unsustainable and is simply “coming back to reality.”
Still buoyed by the Alberta economy, he sees the opportunities as price pressures have eased. “It’s a wonderful time to buy, especially in Edmonton,” says Campbell.
“Then just sit and wait. By 2010, it will be very good.”
In fact, Campbell’s list of the top places in Canada to invest in real estate long term have Edmonton at the top, followed by Grande Prairie, then Calgary.
“The top real estate drivers are people, who create demand, infrastructure to support that growth, and economics, which includes jobs and government supporting job creation.”
Alberta has it all, even if it’s not as strong as it has been, he says.
“International investors are definitely buying. Calgary and Edmonton real estate is hot in Europe and the U.S., more than I’ve ever seen before in all my years involved in real estate. The top banks in Ireland, for instance, are buying here. They see it as safe, secure and good for the long-term, compared to other options.”
While he says the number of sales won’t be anywhere near the record levels of the immediate past, “most cities in the world would cry for what is still forecast for here.”
Canada Mortgage and Housing Corp., in its housing outlook for 2008, is calling for 11,000 new home starts this year, including condo units.
That’s down from 13,505 total starts last year.
On the resale side, the forecast is for 30,500 homes in both single-family and multi-family categories to change hands over the year, compared to 33,304 last year.
The huge inventory of condos under construction in the city right now — pegged at over 9,000 units by CMHC — could mean “stagnant demand” in the multi-family market, he says. “Prices might have to come down.”
Even so, people want the condo lifestyle, and that demand is increasing in Calgary as people move in from other centres where it’s one of the first choices, particularly from an affordable point of view, he says. “In Calgary, anywhere from 36- to 40 per cent of the average income before taxes goes to monthly payments for a mortgage for those buying real estate (a single-family home), whereas in Vancouver, it’s 72 per cent. Affordability is an issue.”
Campbell’s top spots to invest in real estate in Alberta, in order, are: Edmonton, Grande Prairie, Calgary, Red Deer, Sturgeon County and Strathcona County (tied), Lacombe and Sylvan Lake (tied), Okotoks and High River (tied), Devon and Fort McMurray (tied), St. Albert, Cochrane, and Lethbridge.
In Canada, the first three remain the same — Edmonton, Grande Prairie and Calgary — then the Ontario triangle of Kitchener, Waterloo and Cambridge, followed by Red Deer, Brantford and Hamilton, Ontario, Strathcona and Sturgeon Counties in Alberta, Lacombe, and Sylvan Lake.
Credit: Calgary Herald
[Illustration]
Colour Photo: Calgary Herald Archive / Author Don Campbell of the Real Estate Investment Network. ;; Caption:
Indexing (document details)
People: Campbell, Don
Author(s): Kathy McCormick
Document types: Business
Section: New Homes
Publication title: Calgary Herald. Calgary, Alta.: Mar 1, 2008. pg. I.19
Source type: Newspaper
ISSN: 08281815
ProQuest document ID: 1438681971
Text Word Count 595
Document URL: http://proquest.umi.com/pqdweb?did=1438681971&Fmt=3&clientId=58921&RQT=309&VName=PQD