With reports predicting doom and gloom for much of the Canadian housing market, Calgary continues to chug along, and should continue to be one of the country’s top performers in 2013.
According to BMO’s first housing panel of the year, the word is Calgary will continue to buck national trends while the rest of Canada will experience a “soft landing” after a decade long boom.
“Home sales and housing starts will continue to moderate and prices will generally stabilize in most regions in 2013,” said Sal Guatieri, senior economist, BMO Capital Markets. “In the year ahead, the housing market will be supported by moderate job growth, steady immigration, growing demand from echo boomers entering their price first-time home buying years, and a gradual shift toward more single- person households.”
The BMO report comes at the same time as new numbers from The Canadian Real Estate Association (CREA) show that national sales activity plunged 17.4 per cent in December from a year earlier. According to CREA, every market surveyed – with the exception of Calgary – experienced a year-over-year decline in December, including Vancouver where December sales dropped by a staggering 31.1 per cent. In Calgary, year-over-year sales rose by 7.2 per cent in December.
“National sales activity continues to hold fairly steady at lower levels since mortgage rules were changed earlier in 2012, but there are still some real differences in trends between and within local housing markets,” said CREA President Wayne Moen.
Heading into 2013, BMO’s Guatieri added Alberta – particularly Calgary – and Saskatchewan could buck the national trend and see higher prices due to continued economic growth and wage increases while Toronto and Vancouver are likely to have a bumpier go of things with prices declining.
“Calgary and the Alberta market are looking quite positive, with the region leading the country in economic growth over the next year and continuing into the future,” said Charron Ungar, president of the Canadian Homebuilders’ Association — Calgary Region. “And despite the continuing strength, we still have a high level of affordability in Calgary, although that may begin to change over time.”
With a positive economy comes workers attracted from not only the rest of Canada but also the rest of the world, workers who are going to need places to live. Between April 2011 and 2012 net migration to Calgary was 19,658, numbers similar to those seen during the boom of 2007. The Calgary 2012 Civic Census reported those net migration numbers outpaced natural increase by more than double.
“We’re looking at an expected net migration numbers of 18,000 people coming into Calgary this year. By 2017, just under 120,000 people will have chosen to call Calgary home,” said Ungar. “Those numbers are staggering for our marketplace, and we are going to face some challenges in housing supply.”
Those challenges have the potential to include a dwindling vacancy rate for Calgary homes which in turn could result in an increase in home prices. Conrad Zurini, broker of record, RE/MAX Escarpment Realty said affordability could be the reason first-time buyers avoid the market for the first half of 2013 however, homeowners looking to upgrade will still dominate given lower interest rates.
“People who are into walking, lifestyle and entertainment, the farm-totable trend and buying local are going to fuel that market for the first half of the year,” he said.
Guatieri said the real estate market will likely benefit from continued low interest rates with the Bank of Canada likely on hold for another year and the U.S. Federal Reserve’s quantitative easing keeping a lid on longer-term mortgage rates.