Exception to the Rule

Calgary and Alberta continue to be the exception to the rule when it comes to the Canadian housing market.

"Alberta and the rest of the country are clearly on different train tracks when it comes to the housing market," said ATB senior economist Todd Hirsch. "Back when Alberta's home prices were booming, the explanation was pretty straightforward: very high in-migration combined with strong wage growth and the introduction of 40-year mortgages." Calgary's market continues to show healthy growth. Sales activity marked a 23 per cent increase over levels recorded in October 2011, a continued improvement in sales that have pushed yearto- date sales activity to nearly 16 per cent above levels recorded last year.

"Relative to national trends, we continue to move in the opposite direction, recording both sales and price growth," said CREB® President Bob Jablonski. "However, despite the higher than anticipated sales growth this year our market is not overheating, simply returning to levels consistent with long term trends and prices still have not fully recovered after the last recession."

In retrospect, Hirsch said it was "pretty hard" to see the crash of 2008 coming but the same can't be said for today in places like Toronto and Vancouver where it's harder to see the "fundamental justifications" for the rally in home prices aside from cheap financing and rumours of offshore money.

"A bad crash isn't a certainty, and hopefully we end up with just flat home prices for awhile, but there's a good reason people are concerned and action is being taken to keep it from truly getting out of hand," he said.

Sales in the Calgary area improved over 2011 levels across all housing types in the city. Singlefamily sales growth has been the strongest, with nearly 17 per cent more year-to-date sales this year compared to last. Meanwhile, apartment condominium sales have been rising at a slower pace, with year-to-date sales nearly 12 per cent higher than last year.

New listings within city limits totaled 2,312 for October, a nine per cent decline over the same time last year. The decline in new listings relative to sales has continued to reduce total inventory levels across all sectors. However, because the fourth quarter of a year tends to be a less active period in real estate, months of supply remains within balanced levels.

The strong demand for homes relative to the supply levels has caused some significant increases in the price of single-family homes this year compared to 2011. As of October 2012, the benchmark price for a singlefamily home was $433,300, an eight per cent increase over the previous year. While there has been significant recovery in Calgary home prices, typical unadjusted home prices have leveled off remaining relatively unchanged over the past four months, and remain below the highs recorded in 2007.

Condominium apartments recorded a benchmark price of $247,000 in October 2012, losing some ground over the previous month, but still higher than the previous year by three per cent. While on average condominium apartment prices have decreased more than increased since 2007, condominium prices this year have recovered to levels comparable to 2010.

After the first 10 months of the year condominium townhouse sales totaled 2,279, 16-per-cent higher than last year. The benchmark price for a townhouse in October was $279,000, a three per cent improvement over October 2011.

"At the end of last year, the Calgary economy was growing and continued to post job growth," said Ann-Marie Lurie, CREB®'s chief economist. "However, global economic uncertainty was increasing, impacting overall consumer confidence and contributing to a significant amount of caution in the resale market.

"While many of these global economic risks remain this year, consumers' concern regarding the impact on our economy has lessened. Calgary has continued to record relatively strong economic, employment and migration growth. This combined with improving affordability has encouraged consumers to purchasing real estate in Calgary."

In their fourth quarter 2012 Housing Market Outlook, the Canada Mortgage and Housing Corporation (CMHC) says the new home market in Canada is expected to continue to moderate while activity in the existing home market is expected to hold steady.

"A weaker outlook for global economic conditions and the waning of the effect of pre-sales from late 2010 and early 2011, which contributed to support multi-family starts this year, will bring moderation in housing starts next year," said Mathieu Laberge, deputy chief economist for CMHC. "Nevertheless, employment growth and net migration will help support housing starts activity going forward."

The CMHC said on an annual basis, housing starts will be in the range of a point forecast of 213,700 units while housing starts in 2013 has a point forecast of 193,600 units.

Calgary Regional Housing Market Statistics October 2012

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