Calgary best performing real estate market in CanadaCalgary was the only major Canadian market to see a year-over-year rise in MLS residential sales in December as the national market plunged and the city finished 2012 with the best annual sales growth in the country, according to the Canadian Real Estate Association.
In releasing a report Tuesday, the association’s data indicated Calgary MLS sales in December of 1,343 were up 7.2 per cent from December 2011 while Canada saw a decline of 17.4 per cent to 20,538 sales.
The average sale price in Calgary in December rose by 6.9 per cent from last year to $419,811 while Canada’s average jumped by 1.6 per cent to $352,787.
On an annual basis, Calgary sales of 26,634 were up 18.6 per cent year-over-year while they fell by 1.1 per cent throughout the country to 453,372.
The average annual sale price in Calgary rose by 2.3 per cent to $412,315 in 2012. It was up by 0.3 per cent in Canada to $363,740.
“Calgary bucked the national trend in 2012 as the market began to come alive, while others began to enter a long sleep. This occurred because of two main influences,” said Don Campbell, senior analyst and founding partner of the Real Estate Investment Network. “Over the previous three years, Calgary had not over-performed its underlying economic fundamentals like many other major markets across the country, especially Toronto and Vancouver. A lack of new housing being poured into the market also helped to keep the average sale price in check.
“Population growth in Alberta neared a record high in 2012 as many moved here to take advantage of the job growth. This expansion of the number of citizens who call Calgary home, whether temporarily or permanently, put upward pressure on the rental market in the city. This increase in (rents) pushed many into the purchase market and therefore began the upward demand on the home-purchase market. This trend will continue, and inevitably get stronger, in 2013.”
Calgary’s market is showing no signs of letting up in January. According to the Calgary Real Estate Board, month-to-date from January 1-14, there have been 375 MLS sales in the city, up 9.97 per cent from the same period last year while the average sale price has jumped by 11.75 per cent to $428,063.
“A reason why the resale market in Calgary outperformed many other areas in Canada is largely rooted in the relative strength of our economy,” said Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp. “The economy in Calgary has grown along with the labour market. Many have been able to find full-time employment, see their incomes grow and take advantage of low mortgage rates. Migration to the region has also helped support housing demand.”
In December, sales in Alberta fell by 1.9 per cent to 2,855 transactions and the average sale price went up by 4.8 per cent to $363,340. Over the year, sales in Alberta in 2012 rose by 12.3 per cent, the highest of any province, and the average sale price increased by 2.8 per cent to $363,208.
CREA’s Home Price Index in December, of seven major Canadian markets, saw the average benchmark price increase by 3.32 per cent in Canada. Regina led the country with 10.53 per cent growth followed by Calgary at 7.37 per cent.
“Similar to what we saw in September, December sales had fewer business days compared to the same month last year and most other years,” said Gregory Klump, CREA’s chief economist, about the national picture. “It factored into December’s year-over-year decline in sales activity.”
But he also said that “successive rounds of tightening mortgage regulations have kept the housing market in check during what has become an extended low interest rate environment.”
Sonya Gulati, senior economist with TD Economics, described 2012 as a lacklustre year for the Canadian housing market.
“With the whopping 17.4 per cent year-over-year change in sales seen in December, we suspect that the impacts from the mortgage rule tightening in July are now fully priced in,” she said. “We expect the Canadian housing market to stabilize at current levels over the next few months. When looking at previous mortgage rule tightening episodes, the housing market impacts have been temporary in nature. There is no reason to think that this time will be any different.”
Benjamin Reitzes, senior economist with BMO Capital Markets, said the Canadian housing market continues to cool.
“While some will focus on the deep dive in sales from a year ago, it looks as though prices are providing a better read on the health of the sector, as homeowners are in no rush sell,” he said. “Prices are easing gently, consistent with a soft landing through much of the country.”