May 1-14, 2011 Calgary Real Estate Update

As I was looking over May’s figures to date, I found a glimmer of hope that we’re about to start seeing the groundwork for a busier market. That hope slightly deflated as I remembered I was trying to find an improvement over a 2010 market that was already the slowest in a decade. But I’ll take the positives wherever I can find them, however small they may be 😉

A total of 610 Single Family Homes (SFH) traded hands in the first 2 weeks of May, almost a 16% improvement from April 1-14. However, taking seasonality out of the equation, sales were down 5.5% from the same time period last May.

Condos sales continue to lag, down over 4% from last month and year-over-year.

Sales (click to enlarge)

Going forward, it seems that SFH sales are poised to start marking year-over-year increases in the weeks ahead. Unfortunately, this is more because a of weaker 2010 market that began in the middle of last May rather than an improving market this year.

SFH weekly sales (click to enlarge)

Condo sales: bleh.

Condo Weekly Sales (click to enlarge)

My glimmer of hope for a year-over-year increase in sales for May:

SFH Pending (click to enlarge)

Condo pending sales: bleh.

Condo Pending Sales (click to enlarge)

Inventory continues to grow at a snail’s pace this spring and remains far below last year’s level. There are currently 4648 active SFHs in Metro-Calgary compared to 5521 on May 14, 2010 (-15.8%)

Condo inventory is down even more: -20% from last May (2106 compared to 2643 on May 14, 2010)

Leaky Calgary Condos

“I think the scope of the issue is far worse than what industry and government are saying,” Michael Ball, associate and senior project manager for the buildings and facilities division of Morrison Hershfield Ltd. “I could point you to at least 200 condo suites around the city that are under restoration right now that are less than 10 years old.”

Read more in today’s Calgary Herald: Calgary Condo Owners Await Solutions to Long, Soggy, Saga.

Number of Calgary Real Estate Agents Decline

Despite forecasts of a busier market in the second half of the year, it seems some agents are packing it in. The latest count as of May 13, 2011 had 4,961 associates in CREB. Back in January there were 5,141. Last May there were 5,225. Summer of 2007 had 5,495. (These figures do not include brokers)

11 responses to “May 1-14, 2011 Calgary Real Estate Update

  1. What seemed liked bad news for a seller ended up giving him at least an extra $15k in his pocket (plus probably 1/2 of the buyer’s initial deposit that was forfeited as a result of not closing)

    This Richmond Park home sold for $470,000 in March. The buyer couldn’t close on the property and so the home was relisted again in May and ended up selling in 1 day – this time for $485,000.

  2. Province promises mandatory warranties for all new homes in Alberta
    Read more in the Calgary Herald

    An interesting quote:

    The Canadian Home Builders Association, Alberta, has endorsed the idea of mandatory new home warranties, but Calgary builder Ryan Ockey, president of Cardel Homes, said he is “totally opposed” to the idea.

    “I don’t understand why they would need to have a mandated program,” he said. “There are very, very few problems in Calgary, other than the minor problems that always occur, paint touch-ups and little things like that. If it is the same thing as they have in Ontario, it would mean a bunch more costs passed onto the consumer.”

    Now why would a builder be opposed to a warranty program that protects the consumer? Let’s take a look at their BBB rating.

    He doesn’t understand why “they would need to have a mandated program”? Because not everyone is great at the voluntary process:

    -Company failed to resolve the complaint issues through BBB voluntary and self-regulatory process.
    -Company failed to respond to BBB to resolve or address the complaint issues.

  3. Back in March, I took issue with the statement CREB made:

    “I’m not convinced that new mortgage rules have been that significant in impacting our market,” said the president of the Calgary Real Estate Board. “Honestly, we don’t think that it’s going to have a huge impact,” he said.
    (Read the post and comments: Rule Changes Impacting Market?)

    Well, now that April’s numbers are out, CREA has issued a statement as reported on in the Globe & Mail:

    The Canadian Real Estate Association blamed new mortgage rules for taking first-time buyers out of the market, as it reported sales slipped 14 per cent in April compared to last year.

    The new rules brought in by the federal government, which took effect at the end of March, eliminated 35-year amortizations as a financing option. The trade association said that likely caused people to beat the change as they looked to lock in lower monthly payments.

    Changes to mortgage regulations that took effect in April 2011 likely sidelined a number of first-time home buyers,” said Gregory Klump, the association’s chief economist.

    But even with many first-time buyers sidelined, the Canadian market still finds itself mostly in “balanced” territory:

    “Based on [the ratio], more than half of local markets in Canada could be considered balanced in March, with two-thirds of the remaining markets considered to be as sellers’ markets,” CREA stated.

    Meanwhile, the number of houses for sale remained unchanged in April, at 5.6 months. That’s how long it would take to sell all of the houses, at the current rate of sales.

    “Almost half of all local markets saw the number of months of inventory shrink compared to the previous month,” CREA stated.

    While inventory didn’t shrink month-over-month in Calgary, it is still substantially below last year’s levels.

  4. Similarities or complete difference and not even comparable?

    March 3, 2006
    Luxury Home Sales Soar

    Broker Coldwell Banker reports record sales in 2005 of homes costing more than $1 million.

    NEW YORK ( – Luxury homes sales soared across the United States in 2005, according to a report released Thursday by Coldwell Banker, one of the largest real estate brokers in the nation.

    The firm reported its total sales of homes costing $1 million or more reached $55.9 billion, up 24 percent, compared with $45.1 billion in 2004.

    May 18, 2011
    Demand for luxury homes intensifies amid rising Canadian and global wealth

    Record or near-record activity reported in most major centres from coast-to-coast. Improved financial standing among high net worth individuals is the major factor driving strong sales activity at the top end of Canadian housing markets, according to a report released today by RE/MAX.

    RE/MAX Ontario-Atlantic Canada and RE/MAX of Western Canada examined 12 major centres from coast-to-coast and found that luxury sales have surged in close to two-thirds of housing markets between January 1 and April 30 of this year, compared to the same period in 2010.

    Leading in terms of percentage increases over the four-month period were Greater Vancouver (118 per cent)—where foreign investment has also played a major role—Ottawa (59 per cent), Calgary (51 per cent), Halifax-Dartmouth (27 per cent), Winnipeg (24 per cent), Hamilton-Burlington (13 per cent) and Greater Toronto (nine per cent).

    Six of the seven major cities—with the exception of Calgary—are poised to set new records in top-end activity by year-end. Several are just short of peak levels reported in 2010, such as Victoria, Regina, and London-St. Thomas.

  5. Subprime lending is back, with institutional players positioning themselves ahead of the expected spike in B business.

    Read more at Mortgage Broker news

    The rule change that forced buyers to qualify for a 5-year fixed rate regardless of what term they chose had a much more profound effect on first-time buyers, suggesting it has greatly reduced their buying power and effectively prevented them from getting into the market. Many are now waiting it out, hoping for a price correction that might not come.

    “Many clients are hoping the slowing activity will force prices to drop and that will allow them to buy,” the seven-year veteran told “But I doubt that will happen in big markets like Toronto.”

    Brokers in British Columbia are now grappling with the same decrease in originations, as first-time buyers find themselves increasingly frustrated.

    Read more at Mortgage Broker News

  6. From RBC today:

    Alberta — No bubble here

    The Alberta market continues to be stuck in low gear, as both sales of existing homes and construction of new housing units are showing very modestincreases at best so far this year. Persistent hesitation on the part of homebuyers is likely symptomatic of long-lasting payback from their overextension during the 2006-07 boom when home prices jumped by more than 50%.

    This has since driven up the rate of mortgages in arrears to a generational high in the province. Until the latter stages of 2010, plentiful supply of homes for sale combined with sluggish demand to keep home prices firmly under wraps. Stable or slightly declining prices, in turn, contributed to substantial improvement in affordability in Alberta last year. While market conditions have become more balanced in recent months, there remains very little pricing momentum in the provincial market at this stage, maintaining attractive affordability levels – the RBC Measures for all housing categories in Alberta stood below their long-term average in the first quarter

    Read the entire report here

    Here’s a different outlook:

    Calgary in a coal mine

    Home prices in Canada continue to defy gravity, rising another 8.9% in the 12 months to March 2011, on top of what most economists already consider overvalued levels. The appreciation was still greater in the major cities, except for one: Calgary. Average resale prices there fell 4% in the first four months of 2011 compared with the same period in 2010, according to the Calgary Real Estate Board. Does this reflect the unique dynamics of one market, or will the city become, like Washington, D.C., in 2006, the first domino to fall in a coast-to-coast crash?

    “Calgary may be the first and others may follow,” muses David Madani, Toronto-based economist for Capital Economics, among the most bearish economic consultancies on the subject of Canadian real estate. While acknowledging that “the volatility in Calgary is a little more pronounced” than other cities, Madani reiterates his firm’s view that all of Canada is probably in for a U.S.-style housing contraction, and soon.

    Read this article here

  7. One of Bob’s readers noticed an error in the above news article from Canadian Business Magazine:

    Read more here

  8. CanuckDownUnder

    Am I the only one having trouble with the “Sales of the Day” links? All I get is the clock graphic telling me to please wait but it never loads. It’s been like this all week.

    Mike Fotiou says: I haven’t had anyone else mention anything. I’ve just logged in with different browsers and my phone, and they all loaded…

  9. I have the same problem for more than week now.
    I might be network security issue.
    Mike you do not have this problem maybe because you are close to you your website server.

    Mike Fotiou says: Sorry to hear you’re having the same issue too. May I ask what browser/version you’re using? I’ll check and see if tech support is aware of any problems.

  10. CanuckDownUnder

    Thanks Mike. I’m using Firefox 4.0.1

  11. CanuckDownUnder:

    I downloaded Firefox 4.0.1 and got the same error as you.

    If you click on “Printer Friendly” (either “all pages” or “this page”) you should then be able to view.

    Please let me know if that works for now.

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