Low inventory and strong buyer demand lead to fourth quarter price gains in Calgary
Demand created by oil patch driving multiple offers
CALGARY, Jan. 8, 2013 /CNW/ - The Royal LePage House Price Survey and Market Survey Forecast released today showed healthy year-over-year price increases for detached bungalows and standard two-storey homes in Calgary.
In the fourth quarter, detached bungalows posted the largest year-over-year price increases, rising 5.8 per cent to $440,600. Prices for standard two-storey homes rose a healthy 4.8 per cent year-over-year to $434,667, while prices for standard condominiums increased slightly by 0.6 per cent year-over-year to $250,078.
"Employment created by the oil patch continues to drive migration to Calgary and it's difficult for this group to even find rental units let alone their dream home," said Ted Zaharko, broker and owner of Royal LePage Foothills. "Detached bungalows performed the strongest because they are the preferred housing type for Baby Boomers who are typically looking to downsize the size of their home, but not necessarily the price." Zaharko commented that Calgary is one of the only regions in Canada where bungalows are more highly valued than two-storey homes.
Zaharko noted there are numerous multiple offer situations and when a good listing in a desirable area becomes available, it can attract a lot of interest.
According to Royal LePage, by the end of 2013, average house prices in Calgary are expected to increase 2.5 per cent, while most of Canada is expecting price appreciation to flatten. Zaharko commented that market activity is completely dependent on whether sellers bring listings to market since the buyer demand is there to have strong sales in the spring.
"Market activity could increase significantly in 2013, however, the listings are not materializing. A possible solution is that buyers who wanted to sell after 2007, when the market softened, may be holding on to their properties for better market conditions. If those units come online, it may provide some additional inventory for buyers," said Zaharko.
Nationally, the average price of a home increased year-over-year between 2.0 and 4.0 per cent in the fourth quarter of 2012. In the fourth quarter, standard two-storey homes rose 4.0 per cent year-over-year to $390,444, while detached bungalows increased 3.6 per cent to $356,790. National average prices for standard condominiums increased 2.0 per cent to $239,374.
As home sales volumes slowed in the second half of 2012, the average Canadian house price, for the most part, held firm. Some consumers delayed their entry into the market during 2012, faced with economic uncertainty as governments in both the U.S. and Europe struggled with debt management plans and as homes in some regions became less affordable. Compared to 2012, fewer homes are expected to trade hands in the first half of 2013, which should slow the pace at which home prices are rising.
Phil Soper, president and chief executive, Royal LePage, noted that the housing market is well into a cyclical correction and that fears of a sharp or drawn out collapse are unwarranted. Home prices have risen faster than salaries and wages for three years and the market requires time to adjust. By the end of 2013, Royal LePage expects the average national home price to be 1.0 per cent higher compared to 2012.
"A helpful comparison is to reflect on the beginning of 2009 when the country was in the grips of a very grim global recession," said Soper. "It was a bleak time, with plunging consumer confidence driven by rapidly spreading unemployment. The meltdown of the American banking and finance sector had sent their housing market into a downward spiral and our own real estate market saw home sale transactions fall dramatically. Price appreciation in Canada ground to a halt, but home values dropped only slightly. With economic fundamentals such as employment levels improving, we expect this cyclical correction to be short-lived."
About the Royal LePage House Price Survey
The Royal LePage House Price Survey is the largest, most comprehensive study of its kind in Canada, with information on seven types of housing in over 250 neighbourhoods from coast to coast. This release references an abbreviated version of the survey which highlights house price trends for the three most common types of housing in Canada in 90 communities across the country. A complete database of past and present surveys is available on the Royal LePage Web site at www.royallepage.ca. Current figures will be updated following the complete tabulation of the data for the fourth quarter 2012. A printable version of the fourth quarter 2012 survey will be available online on February 6, 2013.
Housing values in the Royal LePage House Price Survey are Royal LePage opinions of fair market value in each location, based on local data and market knowledge provided by Royal LePage residential real estate experts.
About Royal LePage
Serving Canadians since 1913, Royal LePage is the country's leading provider of services to real estate brokerages, with a network of 14,000 real estate professionals in over 600 locations nationwide. Royal LePage is the only Canadian real estate company to have its own charitable foundation, the Royal LePage Shelter Foundation, dedicated to supporting women's & children's shelters and educational programs aimed at ending domestic violence. Royal LePage is a Brookfield Real Estate Services Inc. company, a TSX-listed corporation trading under the symbol TSX: BRE.
For more information, visit www.royallepage.ca.
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