Feb 10, 2011, Alberta housing sales growth forecast to lead country

Resale housing market activity has picked up in Alberta since last summer but “it still has some way to go before we can confidently declare it out of its lethargy,” says a report released Thursday by RBC Economics.

It predicts resales in the province to grow by a nation-leading 9.5 per cent this year. Also, the average sale price of a detached bungalow is forecast to grow by a nation-leading 4.2 per cent in 2012.

“After showing signs of renewed vigour in 2009, home resales fell back to near decade-low levels mid-year 2010 which were just modestly higher than those reached at bottom of the 2007-2008 market downturn,” says the report authored by Robert Hogue, senior economist at RBC. “Demand has gradually strengthened in the past several months, thanks to a provincial economy that finally gained traction and stronger net migration especially from abroad.”

Hogue said Alberta’s market is among the more affordable in the country and with growth in the economy expected to accelerate this year and the job market to improve more substantially, demand for housing will rise in the province.

RBC projects resales to increase by 9.5 per cent this year to 54,400 units and by a further 4.2 per cent in 2012 to 56,700 units. They fell by 13.6 per cent in 2010 to 49,700 units.

The gains however still leave the province well short of the average of more than 72,000 units in 2006-2007 at the climax of Alberta’s housing boom.

At the national level, RBC forecasts sales to decline by 0.2 per cent this year to 446,200 units and to increase by 0.3 per cent in 2012 to 447,700 transactions. Overall sales decreased by 3.9 per cent in 2010 to 447,000 units.

Alberta had the smallest annual increase in the average price of a detached bungalow in the country in 2010 at 3.1 per cent to $340,500. RBC is predicting the average sale price to rise by 0.2 per cent this year to $341,200 and then jump by a nation-leading 4.2 per cent in 2012 to $355,400.

“Although a rebound in the sales-to-new listings ratio in recent months indicates that market conditions have tightened a little, this development is unlikely to alter the directionless trend significantly in 2011,” says the report. “Our view is that neither sellers nor buyers will emerge with the upper hand, therein leaving prices little changed.”

At the national level, RBC is forecasting average prices to increase by 0.5 per cent this year to $328,200 and by 1.3 per cent in 2012 to $332,500. This comes following an 8.3 per cent hike in 2010 to $326,500 for a detached bungalow.

On Tuesday, the Canadian Real Estate Association forecast MLS sales in Alberta to increase by 5.9 per cent this year to 52,650 transactions and by another 5.0 per cent in 2012 to 55,300 units. This comes after a 13.6 per cent annual decline in 2010 to 49,723 sales.

As for the average MLS sale price, CREA predicts a 1.4 per cent drop in the province in 2011 to $347,300 followed by a 1.4 per cent rise in 2012 to $352,300. In 2010, the average price rose by 3.1 per cent to $352,301.

At the national level, CREA’s forecast is for sales to decrease by 1.6 per cent this year to 439,900 units followed by a 3.0 per cent increase in 2012 to 453,200 units. In 2010, sales fell by 3.9 per cent to 447,010 units.

CREA is predicting the average sale price across the country will increase by 1.3 per cent this year to $343,300 and by another 1.3 per cent in 2012 to $347,900. This followed a 5.8 per cent hike in 2010 to $339,030.

By Mario Toneguzzi, Calgary Herald