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March 01, 2013

Calgary’s economy boosts new home market

CMHC predicts housing starts, prices to increase in 2013

Deanna McArthur

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While not a banner year, 2012 housing starts were up significantly from past years, buoyed by our strong economy, the senior market analyst for Canada Mortgage and Housing Corporation said.

And that should continue this year, Richard Cho told close to 675 members of Canadian Home Builders’ Association – Calgary Region at its annual Economic Forecast Dinner Meeting in January.

“For 2013 the housing market will benefit from a growing economy,” said Cho. “Employment growth will continue to increase, net migration will be fairly steady, the new home market will see single-family starts remaining comparable to 2012, and the multi-family starts will see a slight decline.”

CMHC reported 5,961 single-family starts in 2012, up about 14 per cent from 2011, and is expecting 5,900 in 2013. On the multi-family side, 2012 saw 6,880 starts, up 38.8 per cent from 2011 and CMHC is expecting this number to level off at 6,000 in 2013, a 14 per cent decrease.

As a comparison, 2008 had 4,387 single-family home starts; 2009 had 4,775; and 2011, 5,084. These numbers are a far cry from the record 10,482 recorded in 2006.

Absorbed price in Calgary has been gradually increasing since 2010. The absorbed price of a single-detached home in 2012 was about $570,000, up close to six per cent from 2011 — largely due to the strength of the luxury home market, he said.

“In 2013 we are forecasting the average price (for single-detached homes) to be about $580,000, which is above the record that was set in 2008.”

Watch for another year of employment growth in Alberta and Calgary, and an economy that is once again expected to be amongst the strongest in the country.

A trend since mid-2010, employment growth in Calgary reached 3.7 per cent last year, which represents 27,000 new jobs.

“A number of the new jobs have been in full-time employment, which means good news for the housing market and good news for housing demand. The labour market in Calgary has been improving, and it has been improving at a faster rate compared to the national average, attracting more people to Calgary.”

Net migration has been very positive, coming in at an estimated 20,000 for last year and expected to be 18,000 this year — even though slowing slightly, that amount of people continues to increase the demand for housing, Cho said.

The resale market is expected to see some slight increases in 2013. Sales are forecast to total 26,500, up from 21,206 reported by the Calgary Real Estate Board for 2012. The average price is forecast to rise from $383,850 in 2012 to $422,000, said CMHC.

 


STRONG, SLOW RECOVERY
Calgary shines on economic platform

Condo Living spoke to some of the industry’s leaders to get their thoughts on where they think the Calgary housing market is headed this year. Here’s what they say:

Monte Kendall - CEO
Homes by Avi

“2012 was a year of milestones for Homes by Avi. We broke through the 1,000 sale mark and closed more houses with customers than ever before, which places us among the top three producing builders in the province. This sale achievement almost doubled our sales performance in 2011, and we look forward to holding these numbers in 2013.

I believe customers in Calgary and Edmonton will continue to receive great value for their purchasing dollar in 2013, however as land supplies get tighter in Calgary, due to the vibrant housing economy fueled by in-migration and the limitation on new lot positions being provided to the industry, there is a definite risk of prices escalating faster than earnings and home affordability becoming a bigger issue.”

Tim Logel - President and Partner
Cardel Lifestyles

“The market looks positive for 2013 for the new home industry. Calgary currently has lower then normal mls inventory. Also, strong job growth and an increase in migration to the city has increased the demand in housing. Calgary also has higher paying jobs as a result of a strong local economy as companies look to look to hire. In summary Calgary continues to buck the national trend where other cities are seeing lower sales and construction starts. I expect to see a solid year ahead.”
 
Doug Owen - General Manager
Brookfield Homes’ Multi-Family Division

All of Brookfield’s multi-family developments are all well underway this year and uniquely positioned in mature, amenities rich communities, such as McKenzie Towne, Cranston, and Auburn Bay. Generally our developments will begin to pick up in sales pace after show homes have been completed and potential homeowners can see, with excitement, things taking shape on site. Unfortunately buyers this year may begin to see some underlying market constraints in the Calgary market begin to affect the availability and affordability of housing choice in certain market segments. Potential homebuyers hoping for a quick possession should also note that a strong sales start to 2013 and end to 2012 has absorbed most of the planned newly built inventory and has continued to depress MLS listings.

In respect to plans for 2013, we at Brookfield are excited to continue to move forward with development plans for several new projects as well as several new prototypes that build off our award winning designs.

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