Calgary home sales to simmer, not sizzle this year

May 4, 2010, Calgary home sales to simmer, not sizzle this year

Calgary’s resale housing market is set to simmer, not sizzle in 2010, says the president of the Calgary Real Estate Board as the organization released Monday its data for MLS sales in April.

Home prices during the month dropped from March levels, but remained higher on a year-over-year basis.

The board said single-family home sales in the city rose by almost five per cent last month compared with a year ago while the average price was up by eight per cent.

There were 1,352 single-family home transactions last month for an average sale price of $460,378.

Those numbers, however, were both down compared with March, which saw 1,396 sales for an average price of $471,269.

Diane Scott, CREB president, said continued economic optimism, improved choice and price stability are all contributing to a healthy and balanced market.

“We’re very much in a spring market. We’re a little bit lower in the average price from last month but certainly higher than last year,” said Scott. “More activity, but not substantial. Both condo and single-family we’re still stable and it’s a very comfortable market.”

Condo sales in April increased by more than 10 per cent from a year ago to 639 transactions for an average of $289,588, which was up by just over four per cent.

In March, there were 609 condo sales for an average price of $296,660.

Scott said the average price is holding relatively steady.

“The pace of price increase has been tempered by the rate of new listings that has been growing faster than sales,” said Scott. “Sales levels are still well below the high demand from 2004 to 2008 mainly because we are still not seeing high job growth and unemployment has remained high.”

In April, new listings in the single-family market jumped by more than 53 per cent from last year to 3,082 while they were up by more than 38 per cent in the condo market to 1,335.

Dan Sumner, economist with ATB Financial in Calgary, said March was a “bizarre” month for the local resale housing market.

“Overall prices were up eight per cent in Calgary. That kind of stuff shouldn’t happen. It goes to show there were a lot of buyers that were all clamouring to get in there at the exact same time,” said Sumner.

“So now what has changed in April? I’m not sure anything that drastic has changed yet, but maybe it’s feeling to a lot of buyers like it’s closer to having some big changes.”

Those include tighter mortgage lending standards which came into effect April 19 and recent rising interest rates.

Sumner said the discrepancy in sales between condos and single-family homes may be a reflection of where the good deals remain.

“Over the last year, a lot of the strength in the housing market has been in the single-family side. So maybe prices there are fully valued whereas other buyers are still seeing that there’s some deals to be found in the condo market,” said Sumner.

Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp., said it is not unusual to see some fluctuations in the average price month over month, depending on the mix of homes sold.

“The average price may increase or decrease on a monthly basis. However, we don’t expect month-over-month declines to be the trend for the year,” said Cho.

“Home values have been improving since the spring of 2009 and are forecast to continue strengthening throughout 2010 and 2011.”

With the rise in interest rates and the rise in home values, demand for home ownership will moderate, added Cho.

“I think some prospective buyers will be shifting their focus towards units that are more affordable, such as condominiums. That’s why we’re not seeing the same (monthly) decline in condominiums as we did in the single side.”

Scott said Calgarians didn’t see the impact of the very low interest rates the way other areas of Canada did.

“Calgarians are also not rushing out to beat the rate increases as they are seeing less risk of rising prices squeezing them out of the market,” said Scott.

“The interest rates don’t seem to have affected the buying population very much. Everybody’s still out there because there’s still a lot of choices. Not everybody raised their rates. So that’s just giving us a very stable market.”

by Mario Toneguzzi

© Copyright (c) The Calgary Herald