CREB 2010 Forecast

Every year, CREB puts together a breakfast for all members of the real estate industry and talks about the forecast for the coming year. Take a look at what some of the forecasts are for this year in Calgary.

Calgary #1 Place To Invest in Alberta – REIN

I received my top ten cities report the other day, and guess what… Calgary is now the best place in Alberta for real estate investors.  This is good for a couple reasons:

1. The average prices and growth in the city will continue
2. This will be great for buyers in the next couple months as they are now purchasing into a potential steady market
3. Buyers over the past couple years who have seen a loss in their house may see some appreciation in their house value

What Don Campbell’s report shows is that after Calgary’s predictable correction of the last couple years we are at a point now where we have more affordable housing conditions, a stabilized economy and renewed optimism. This all bodes well for the next three plus years for Calgary to see above average growth in property values, in-migration and general happiness for Real Estate investors.

If you are in looking to make a real estate investment purchase, please let us know how we can help you out!

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RE/MAX Housing Outlook 2010 – Calgary Alberta

While economic concerns dominated headlines through-out much of the year, Calgary’s residential real estate market quietly staged a comeback. As a result, overall housing sales are expected to top 26,000 units by year-end, an increase of 12 per cent from 2008 levels. Recovery has largely been driven by first-time buyers, many of whom had been priced out of the market in recent years. Pent-up demand, rock-bottom interest rates, greater affordability, and improved selection all served to entice purchasers early in the year who seized upon entry-level product priced under $400,000 in established communities in the southwest, northwest, south central, and north central.

The subsequent surge in activity placed upward pressure on affordable housing stock, causing values to climb eight to ten per cent from record low levels reported earlier in the year. Average price, however, remains off last year’s pace, hovering at $385,000 down five per cent from 2008.

As of October 2009, the number of homes sold in Calgary had surpassed levels reported during the same period in 2008. More balanced market conditions existed, with tight inventory levels reported in certain hot pocket areas. While some move-up activity was underway, the top-end of the market remained relatively soft—despite the sale of two $10 million properties last Summer.

Volatility in the energy market and the uncertainty south of the border served to drag down economic performance in Calgary this year. Expenditures and associated costs have been reduced, with only two projects moving forward are Kearl and the expansion of the Athabasca Oil Sands. But real GDP, forecast to slip about 2.8 per cent by year-end, should head into positive territory in 2010. A number of factors support an upswing in GDP growth next year. Calgary’s population is expected to climb by about 1.7 per cent in 2010, representing an influx of close to 18,000 people. Government stimulus in the form of infrastructure spending should also help. It’s anticipated that 2010 will be a year to re-establish economic traction, with both Calgary and the province better positioned for stronger growth in 2011.

Balanced market conditions are expected to prevail in Calgary’s residential real estate market in 2010. Prices are projected to firm up, with values edging upward for the first time in almost two years. An ample supply of homes should be listed for sale, with inventory levels limited in high demand areas. First-time buyers will lead the charge for housing, followed by move-up buyers taking advantage of favorable market conditions. Affordable alternatives such as condominiums priced under $300,000 will continue to be popular with entry-level buyers. Upscale properties, priced from $800,000, are expected to gain momentum next year, as purchasers in this segment of the market regain confidence. By year end, sales are forecast to climb eight per cent to 28,000 units, while average price is expected to record a five per cent increase at $403,000.

Canadian Housing Markets Buck Recession and Trend Upwards

With the worst of the recession over, residential real estate markets in major Canadian centres are poised for growth in the final quarter of 2009, according to a report released today by RE/MAX.

The RE/MAX Bricks and Mortar Report found the bounce back that began in early Spring has made this recession one of the shortest on record. Low interest rates, pent-up demand, and improved affordability levels have all played a role in the recovery now well-underway. Percentage increases in unit sales from January to August 2009 were led by Vancouver, (up a substantial 14 per cent to 23,158), Victoria (up 7.4 per cent to 5,266), Edmonton (up 6.2 per cent to 13,691), Regina (up five per cent to 2,597), Ottawa (up 2.4 per cent to 10,830) and Toronto (up 1.8 per cent to 58,421). Housing values are already ahead of record-breaking 2008 levels in seven of the 11 markets surveyed, including Newfoundland-Labrador (18.1 per cent year to $203,584), Regina (6.4 per cent to $244,088), Halifax-Dartmouth (3.5 per cent to $239,633), Winnipeg (3.5 per cent to $207,006), Ottawa (3.3 per cent to $301,684), and Toronto (up 0.3 per cent to $385,978). Nationally, average price hovers at $312,585, up 0.5 per cent over one year ago.

The strength of the residential housing sector cross-country has taken many economists and housing analysts by surprise once again. In terms of its impact on the resale market, by historical standards, this recession was one of the mildest. The resilience of bricks and mortar has been demonstrated time and again. While there may still be some challenges down the road, the worst is definitely behind us in the housing industry.

The recovery of Canada’s resale housing markets speaks to the tremendous value Canadians place on the importance of owning a home. The number of Canadians overall who own a home has increased since 1981 from 62.1 per cent to 68.4 per cent, with some markets posting even higher homeownership rates — Calgary (74.1), St. John’s (71.5), and Regina (70.1). Significant gains have also been made over the same period in markets such as Ottawa, where levels rose from 51.4 per cent to 66.7 per cent, and Toronto, where levels rose from 57.3 to 67.6 per cent.

Public sentiment can perhaps best be illustrated by a recent Angus Reid Omnibus Survey* that asked the question “In which do you feel more comfortable investing your money? The stock market or real estate.” Out of 1,000 respondents from coast-to-coast, 77 per cent chose real estate. The results of the RE/MAX Bricks and Mortar Report are clearly representative of this national dynamic at work.

Markets are heating up across the country as purchasers take advantage of affordable prices and rock bottom interest rates. Those who missed the boat in years past have found that sitting on the sidelines can be a costly move. Prices are on the upswing and inventory levels are tightening, so the push toward homeownership is expected to continue throughout the Fall and possibly into early 2010.

Over the past thirty years, the Canadian residential real estate market has experienced three major downturns – 1981, 1989, and 2008. While there have also been regional fluctuations throughout the years, return on investment over this period has been substantial, with Vancouver, Victoria, Toronto, Regina and Ottawa leading the country in terms of price appreciation.

The overall stability of real estate as an investment has also played a role. Markets like Halifax-Dartmouth, Regina, Ottawa, Winnipeg and London have provided steady returns (especially in recent years), with minimal fluctuation.

* The Angus Reid Omnibus Survey was conducted on September 15, 2009 and yields a margin of error of +3.1 per cent, 19 times out of 20.

Sellers Can’t Move… Period!

We have been noticing a trend happening lately with the sellers that we have been dealing with.  The number of listing presentations that we have done recently is very high… Many sellers, those who have purchased in the last 2-3 years, are having a difficult time versus those who purchased 3-4+ years back.

Of the sellers that have purchased 2-3 years back, some of them are wanting to upgrade their home, and some are even wanting do downsize…  But here’s the thing… Majority of them can’t do either!  With the market swinging the way it has over the last year, prices have gone back to the values of early 2007.  The sellers don’t have enough equity in their homes to make either move.  It’s hard to see the ones who are wanting to downsize, as their payments are a bit high for them currently, but they simply can’t.  Those who are venturing to sell, they are selling $30,000 – $50,000 below what they paid for the home, and in some cases even more.

What will this mean?  I think we will see condo prices and sales increase over the coming months, as their are many and I mean MANY new buyers now buying.  But the upper end single family homes, we will probably not see as great of an increase for some of the reasons above…

What are your thoughts?

Is Real Estate Spring Upon Us?

As you may or may not be aware of, there is a cycle that happens in the Real Estate Market each year.  Spring, Summer, Fall and of course Winter.  Just as you experience different seasons throughout the year, the Real Estate Market also experiences different seasons through the year.

In the Summer months, it tends to be slower as potential buyers and sellers are off prancing in the sun and on holidays.  During the fall, we see a rise in the number of sales and typically this is  good time to try selling your home.  Then we have Winter.  This usually happens from December through to February where again, buyers and sellers are staying indoors, because our Canadian winters are so cold!  And during these months there are some days where I will sit and rip styrofoam cups to speed up the global warming process… but it never works, and I wouldn’t suggest it, as it gets really messy too.  Rebecca’s not happy with me when I try this.

Then we have Spring.  This is usually the best time of year to sell your home, as many buyers come out of hibernating, and are looking for a new nest. Over the past year, in 2008 and even into 2007, we haven’t really seen any normal cycles.  Will this year be different?  We are starting to feel a buzz out in the market place with many buyers, and first time buyers coming out of hibernation and starting to look for a new home.  Only time will tell if we will have a ‘normal’ spring season.

What Does The Future Hold?

This is always the big question… When should I sell my house or when should I buy?  There are normal cycles in the Real Estate market that take place, but when the market isn’t normal, they cycles aren’t there… they happen when they want to…  Last year was a year of declining prices, and frustrated sellers… For 2009, what will happen?  CREB (Calgary Real Estate Board) did a forecast breakfast a couple weeks ago, and they predicted that over 2009 we will see a 2% decline in the average price of single family homes and a 5% decrease in condos.

Below are some graphs to take a look at…

You can download the entire presentation here!