The leaves have fallen, but Calgary’s real estate market continued to heat up in October.
Residential sales activity in the city totaled 1,953 units last month. That is still lower than levels seen during the mid-2000s, but it’s an 18 per cent rise over 2012 and pushing year-to-date volume increases to just over 10 per cent.
October also saw a rise in the number of homes up for grabs in Calgary, as the number of new listings reached 2,522 units in October, a nine per cent increase over the previous year.
“Price growth and tighter market conditions have encouraged some of the recent rise in new listings,” said Ann-Marie Lurie, CREB® chief economist. “This is a trend worth noting as the rise is easing some of the tightness in the market. Despite some movement, seller’s market conditions persist.”
First-time homeowner Sarah Maynes can attest to the market conditions greeting current buyers in the city. Having just moved into her Inglewood home in late October, Maynes said her experience came with some anxiety.
“Finding our house was actually a lot more stressful than we had anticipated,” said Maynes. “Our REALTOR® took us out to look at a bunch of properties so we had a good idea of what was out there in our price range. There were quite a few places but most didn’t meet our expectations. When a decent listing came on the market they seemed to get snatched up right away.”
Maynes, who along with her boyfriend had been planning on buying sometime in the next year after saving for a down payment, eventually put in an offer on a home that had been put up for sale just hours earlier. Getting the home for just under the asking price, Maynes said the couple was even willing to relax some of their priorities to secure getting the home they wanted.
“Finding a property that allowed pets was a high priority for us. Our complex luckily allows us to do so but with so few homes available at a lower price point in the inner city we would have given up getting a dog for the right place.”
Accompanying the snow that fell during the month was a drop in the length of time the average home spent on the market.
Year-to-date, the average residential home was on the market for 37 days before selling, 16 per cent less time than last year. Despite the drop, the time on market is still nearly double the span seen in 2006, when the average home spent just 20 days on the market.
“Some people have noticed that properties are selling quicker, and at times above list,” said Becky Walters, CREB® president. “But in spite of very positive signs, we are not seeing a repeat of 2006.”
On a year-to-date basis, citywide sales remain far below transaction levels recorded between 2005 and 2007.
Lurie said the current prosperity being seen in the city is tied to the number of people moving to the city.So far this year, Calgary’s population increased by 30,000, for an annual growth rate of 2.6 per cent.
“Employment growth, strong net migration, lack of rental product and low mortgage rates have contributed to the rise in housing demand over the past two years,” said Lurie.
The trend of more people moving to the city is expected to continue. According to a report released by the City, Calgary’s population is projected to reach 1.274 million by 2018, up from 1.149 million in 2013. Over the next five years, the population is expected to grow by 124,200 persons – or by 24,800 persons annually, up from the annual average increase of 21,300 from 2008 to 2013.
The Canada Mortgage and Housing Corporation (CMHC) predicts that by the end of 2013, home sales in Calgary will reach 29,200 units, up 10 per cent from 26,634 in 2012. In 2014, MLS® residential sales are forecast to increase 2.7 per cent in 2014 to 30,000 units.
The demand for homes in the Calgary is causing an upward trend in prices. Unadjusted benchmark prices in Calgary increased in October relative to both September of this year and October 2012. Single-family prices benchmarked at $468,000, while the benchmark prices for condominium apartment and townhouse were a respective $276,100 and $302,200 in October.
During the first 10 months of 2013, a total of 14,340 single-family homes were sold in Calgary, a seven per cent increase over the previous year.
With supply levels in the resale market not increasing quick enough to meet the current demand, the number of new homes being constructed in the city is expected to rise in the coming months.
According to CMHC’s Fall 2013 Calgary Housing Market Outlook, total housing starts in Calgary are forecast to moderate to 11,700 units in 2013 before rising to 13,100 in 2014.
“Following a nine per cent reduction in 2013, total housing starts in 2014 are forecast to rebound with gains in both single-detached and multi-family construction,” said Richard Cho, CMHC’s senior market analyst for Calgary, adding that continued job creation and heightened net migration will contribute to the demand for new homes in the near future.