Single Family Homes (SFH)
For the 5th straight month average prices continued to climb, reaching $489,482 in May. That a 2% increase from April and a year-over-year increase of just over 1%.
Median prices also made gains, ending up at $423,000. That’s a $3000 increase (+0.7%) from both the previous month and May 2010.
A total of 1313 properties changed hands in May which was an almost 8% increase from April and up 4% YoY.
The end of May saw active inventory at 4616. That’s up 5% from the end of April (4395) but down a significant 18% from May 2010 – over 1,000 less listings (5649)
This means the inventory absorption rate remains in “balanced” market territory, dropping slightly from April’s 3.6 to 3.5 months in May.
Pending sales are elevated over last year’s levels and so it looks like the SFH market hasn’t peaked yet in terms of sales. Here’s which months the market peaked in previous years:
2010: March
2009: June
2008: June
2007: March
Condominiums
The average price for condominiums in May was $287,384. This was down a slight -0.6% from April, but down -5.7% year-over-year when the average price was $304,662.
The median price made a month-0ver-month gain of $8,500 or +3.3% to reach $268,500. However, this was down -4% from May 2010.
503 units changed hands in May. This was down from the 535 that sold in April and from the 518 sold in May of last year. This marked the 13th consecutive month of year-over-year declines in sales.
There were a total of 2092 units on the market at the end of May, a marked decrease from the 2656 that were listed a year ago (-21%) Between April and May, inventory increased 4% (April: 2005 listings)
The inventory absorption rate sits at 4.2, meaning it has entered into a market which is starting to favor Buyers. In April it the IAR was at 3.7 and in May 2010 it was at 5.1
Alberta to lead country’s economic growth in 2012: BMO
With the province’s energy sector “humming” again, Alberta is expected to lead the country in Real GDP growth in 2012, according to a report released Wednesday by BMO.
The first edition of the BMO Blue Book, a joint publication of BMO Capital Markets and BMO Commercial Banking, says the province is expected to reclaim its position at the top of the growth leaderboard after a brief hiatus during the commodity price correction.
“Real GDP is expected to expand 3.6 per cent this year before moderating to 3.4 per cent in 2012,” says Robert Kavcic, an economist with BMO Capital Markets. “Labour markets will tighten in the process, but we’re unlikely to see the labour shortages of the pre-recession period any time soon.”
Read more: http://www.calgaryherald.com/business/Alberta+lead+country+economic+growth+2012/4874257/story.html#ixzz1O2WJBclS
Average debt for Canadians: $25,597
A TransUnion study suggests Canadian debt loads grew at an average 4.5 per cent in the first quarter compared to a year-earlier, signalling appetite for debt is undiminished.
The credit bureau’s analysis found that total debt per consumer, excluding mortgages, grew to $25,597 in the first quarter of 2011, up from $24,497 in the same quarter of 2010.
Read more in the Globe & Mail
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Edit: You can read more at TransUnion’s website here
Hi Mike,
According to your previous sales record, a condo sold in May 28 for $170,000 in Coach hill was previously soldfor $270,250 in 2007, and a condo sold in May 26 for $ 153,000 in Temple was previously sold for $242,000 in 2007.
These shows more than 36% price drop in 4 years.
What happened to these condos ?
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Mike Fotiou says: A combination of being bought at the peak and being sold as a foreclosure. You can read more about similar properties in a past post: Peak Buyer’s, Today’s Sellers.
Broker: ‘Habitual refinancers’ facing forced listings
There’s strong indication new mortgage rules have begun to cull the number of “habitual refinancers” said one 20-year veteran of the broker industry, suggesting spike in the number of forced listings should soon follow.
“Among our team of six brokers, we’re seeing about three to four clients a month who we would identify as habitual refinancers – meaning they typically have refinanced their credit card debt back into their mortgages every two years,” Bob Smith, broker/owner for Verico K-W Mortgage, told MortgageBrokerNews.ca. “But what we’re seeing now is that those clients are now finding that they can no longer do that.”
For that group, frustration is setting in as they watch their disposable income shrink and are forced to use more of their income to service debt. Compounding that discomfort, said Smith, is “each transaction has added to their principal with an increased insurance premium, which has whittled away at their equity. It means that with a forced listing, they will have little or no equity available to downsize after legal and selling expenses.”
Smith is one for the first brokers to identify a phenomenon many saw coming when the Central Bank announced it would lower the loan-to-value ceiling on refinances to 85 per cent from 90, among other key changes.
Read the rest of the article at Mortgage Broker News
Calgary Single Family Sales Improve
Calgary Herald, June 2, 2011
“We had a bit of a late start in the spring,” said the president of CREB. “I think our season might be a little delayed. We might see a stronger June and maybe I dare even say July, but I’m cautious to say that.
“I’m optimistic that we’re going to see some strength in the market still and we might even go through the summer without retracting which, seasonally, it usually does.”
Read more: http://www.calgaryherald.com/business/Single+family+home+sales+improve/4878923/story.html#ixzz1O7ysUL00
Calgary housing market still in the doldrums
ATB Financial, June 2, 2011
Calgary’s housing market has moved counter to the rest of the provincial economy since the recession. Throughout the latter half of 2009 and early 2010, housing sales activity surged, then, around this time last year, it started to slow. Thus far into 2011, activity remains tepid.
Moving forward, there remain two opposing forces preventing the Calgary housing market from either improving or deteriorating by very much. On the one hand, supporting the market, the broader Alberta economy remains quite strong. On the other hand, limiting upside potential, interest rates are set to rise from very low levels later this year.
Read the entire article here
Is Calgary’s Boom Back?
Consumer Confidence Seen Climbing “with a vengeance”
Calgary Herald, June 3, 2011
From BMWs to Bentleys to a good bottle of wine, Calgary consumers are opening their wallets in what’s being described as more than just a recovering economy – with some even willing to say the word “boom” again
Read more: http://www.calgaryherald.com/business/Calgary+boom+back/4886179/story.html#ixzz1ODhoLZGs
Inventory Supply to Tighten
“Right now we have a low number of housing starts,” remarked CREB President. “That low number of housing starts will lead to a tighter supply of inventory by year-end. That, coupled with the in-migration and job creation that we expect, will bolster Calgary’s housing market by year-end.”
Read more in this weeks issue of CREN (June 3-9 edition)
Also in this issue:
CREB’s midyear forecast citing that the current housing situation is a “rest stop on the road to recovery.”
It continues: “Recovery of sales will continue to come first to single family homes in the city, followed by condos, and then single family homes in the outlying towns.”
As we approach the mid-way point of the year, let’s take a look at another of CREB’s forecasts, this time for new housing starts.
CREB predicted that single family starts would increase +7% while the multifamily sector would jump 10%.
Of course it’s nowhere near that. Infact, overall starts are expected to drop -21%. (See below)
Construction Expected to Ease
Calgary Herald, June 3, 2011
Construction is expected to start on fewer single-family homes this year than last.
This bit of news isn’t actually anything the industry wasn’t expecting.
Matter of fact, some of the players have already written this year off and are making plans for 2012.
Not to paint everybody with the same brush because there are those who are having solid sales, but overall activity will likely decline 21 per cent compared to a year ago, says Canada Mortgage and Housing Corp. in its Calgary housing market outlook report.
As this year progresses, the pace of sales and construction will improve gradually, but the damage has already been done.
Work will likely start on about 5,200 detached single-family homes this year before climbing to 5,700 in 2012, says senior market analyst Richard Cho of CMHC.
“Although new construction is anticipated to improve later this year, the slowdown in the first half — partly due to heightened competition from the resale market — will keep the annual tally below 2010 levels,” he says.
Read the rest of the article here
Quotable
“But they will come back to the marketplace eventually — maybe this year when they realize new home prices aren’t going down.”
Looking at the summary statistics in the monthly CREB report there are substantial year over year falls in the median prices for condos, towns, country residential and rural land. This really looks like a tale of two markets, one being SFHs (mostly inner-city?) which are holding up or steady while the rest of the market languishes.
I’m a little confused by this statement coming from CREB: “Recovery of sales will continue to come first to single family homes in the city, followed by condos, and then single family homes in the outlying towns.” Doesn’t this contradict their messaging of recent times where the recovery was going to start at the bottom end of the market (i.e. condos, satellite towns) and then filter up through the higher-end properties?
What’s going on in the western acreage communities of Bearspaw, Springbank and Elbow Valley? There as been an explosion of listings in those areas, particularly Elbow Valley. Most of these are not brand new homes. Why are these communities suddenly so unattractive to the people who live there that they’re trying, en masse, to sell their homes?