Calgary’s housing market making a dramatic comeback
Posted on Jun 27, 2014 in Mortgage Market Updates and NewsGarry Marr
The Calgary housing market is so hot that an economist reported Tuesday that only 15 condominiums in the city remained built and unsold last month.
It’s been a dramatic comeback for the oilpatch’s housing market which saw prices peak in 2007 with that high only recently reached again.
“Those people who bought at the peak just barely got out of the ditch,” said Doug Whitney, president of the Calgary chapter of the Canadian Home Builders’ Association.
He said now that people are out from under water, they are ready to sell and move up which should help create inventory and relieve some pressure on the new home housing market.
Sal Guatieri, an economist with Bank of Montreal, issued a warning to anyone thinking of moving to Calgary for work.
“Thinking of moving to Calgary’s red hot, job-spinning economy and settling right into a brand spanking new home? Good luck. The available supply of completed new units dropped below 500 for only the third time on record (back to 1992) in April, and only 15 new condos were on the market,” Mr. Guatieri said in an economic note.
He pointed out the resale market has been just as tough for prospective buyers with the benchmark price of a home up 10.6% in May from a year earlier.
The Calgary Real Estate Board did say this month that while market conditions continue to favour the seller, there is some sense supply is improving. May new listings were up 16.5% from a year earlier.
“Strong sales activity is a reflection of improving fundamental conditions such as a growing population, favourable lending rates and rising wages,” said chief economist Ann-Marie Lurie with CREB, in a statement on the market.
Mr. Whitney said there has been a shortage of serviced land for builders to put new developments on and that has contributed to supply problems.
“Most of it has been just being able to put shovels into the ground to meet the increase in the velocity in demand,” he said. “The reality is there are 12,000 approved lots in the city, it’s a matter of getting things going.”
Mr. Guatieri said there are just so many people moving to Calgary for work that the housing market cannot keep up.
“There were over net 100,000 people moving to Alberta from other provinces last year from across Canada and other countries,” said the economist. “I’m assuming a good portion of those people ended up in Calgary.”
The attraction is 4% annual job growth and a 5% unemployment rate. “Those type of numbers just suck people in like a vacuum, you can’t build homes fast enough when your population grows like that,” said Mr. Guatieri, adding if prices get too out of line it could turn people off from moving to the city.
There’s not much room in the rental market either based on the latest set of numbers from Canada Mortgage and Housing Corp. which found the vacancy rate in October in Calgary was around 1% for condominium rentals.
One byproduct of the rising prices could be rising debt. A report from credit agency Equifax Inc. found demand for credit in the fourth consecutive quarter was higher in Western Canada than any other region in the country.
“The economic indicators do look a little better in the West,” said Regina Malina, senior director, decision insights, Equifax Canada. “When people feel confident about their financial situation, unemployment is low and income is high and the forecast for the region in terms of the economy is positive, it wouldn’t be surprising that people would be more comfortable taking [debt] on.”