Saturday 30 April 2011

Average prices in Calgary declined from peak

CALGARY — A report released Friday by Capital Economics, an economic research group, suggests Calgary’s housing market has turned to “bust.”

The report titled ‘Housing bubble a national problem’ cited a survey released earlier this week showing Calgary as the only major market in the country to show a decline in year-over-year prices in a survey of homes sold more than once.

The Teranet-National Bank National Composite House Index said in February, Calgary prices declined 3.5 per cent from a year ago. It was the fifth consecutive month of 12-month deflation for the city.

The decline “is perhaps not so surprising once we factor in the 40 per cent plus annual growth in Calgary home prices during 2006 and 2007,” said the Capital Economics report. “Vancouver and Toronto are normally the cities mentioned as potential bubble areas, but Calgary was the original and by far the biggest regional bubble, which has now turned to bust.”

Calgary house prices peaked a few years ago. The highest monthly MLS average for a single-family home was $505,920 in July 2007 while the highest for a condominium was $332,237 in May 2007.

According to the website of realtor Mike Fotiou, of First Place Realty, so far this month up to and including Thursday, the average MLS sale price of a single-family home in Calgary was $480,200 on 1,128 transactions while for condos it was $289,980 on 471 sales up to and including Wednesday.

For the entire month of April 2010, the single-family average price was $460,378 on 1,352 sales while it was $289,588 for condos on 639 sales.

Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp., said prices toward the end of 2010 and the beginning of this year did moderate as the resale market shifted in favour of the buyer in the middle of last year.

“Elevated active listings had taken some pressure off prices but recent market conditions have been improving and the average price has started to stabilize,” said Cho. “So we expect to see stronger price growth in the second half of the year when the market becomes more balanced. Overall, the average price in Calgary is forecast to increase above 2010 levels.”

The CMHC is forecasting an annual price increase in the Calgary census metropolitan area of 0.6 per cent.

“At the time (of the Teranet National Bank index), we were still more in buyers’ conditions so it’s not surprising to see some declines in prices during that time but we are seeing some improvement and we’re expecting to see prices to continue improving throughout this year,” added Cho.

The Teranet National Bank index, which looks at six metropolitan areas in the country, is estimated using data collected from public land registries. All dwellings that have been sold at least twice are considered in the calculation.

On a year-over-year basis, prices were up 7.6 per cent in Halifax, 6.9 per cent in Montreal and Ottawa, 4.8 per cent in Vancouver and 3.4 per cent in Toronto.

On a monthly basis, prices dropped 0.5 per cent in Calgary, the fifth decline in the last six months.

Prices increased 0.3 per cent in Vancouver and 0.5 per cent in Montreal and Ottawa. They also declined on a monthly basis in Toronto by 0.1 per cent and in Halifax by 0.4 per cent.




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