Calgary housing market will turn corner this year, RBC predicts

Strong market fundamentals will help the Calgary housing market turn a corner in the period ahead, says the latest Housing Trends and Affordability Report by RBC Economics Research.
Despite being one of the more affordable housing markets in Canada and “enjoying an economic renaissance,” the Calgary area was unable to sustain any meaningful momentum in home resales last year, said the report.
“The lacklustre performance in the Calgary area housing market was surprising, given the city’s labour market strength and economic renaissance,” said Robert Hogue, senior economist with RBC. “With home affordability at the best levels Calgary has seen in the last six years and a significant increase in net new jobs at the end of 2011, we expect these strong fundamentals will help spur the Calgary housing market in the year ahead.”
In the fourth quarter of 2011, RBC affordability measures in Calgary for standard detached bungalows declined by 0.7 per centage points to 36.7 per cent; for standard two-storey homes by 0.2 percentage points to 37.8 per cent; and the measure for standard condominium apartments by 0.6 percentage points to 22.5 per cent.
The RBC Housing Affordability Measure, which has been compiled since 1985, shows the proportion of median pre-tax household income required to service the cost of mortgage payments (principal and interest), property taxes and utilities at going market prices.
“Our market in Calgary has been recognizing very healthy activity with sales up. Average prices have seen modest gains in the single-family sector of 3.2 per cent,” said Claudia Walz, a realtor with Re/Max Real Estate (Central) in Calgary. “New listings are down 10.2 per cent from this same time last year. This has created a healthy demand.
“Going into our spring market, things are looking very positive and still trending towards positive recovery. Both buyers and sellers should feel very confident about their sales or purchases in Calgary.”
According to the Calgary Real Estate Board, total MLS residential sales year-to-date in Calgary and area have increased by 4.39 per cent compared with the same period last year.
In Alberta, resale growth slowed noticeably in the final stretch of 2011 despite the province’s enviable position as one of the most affordable housing markets in the country, said the RBC report.
“Housing in Alberta is the most affordable it has been since 2005 and the job market is on a roll, yet Alberta homebuyers were hesitant to sign on the dotted line in the fourth quarter of 2011,” said Hogue. “We expect that homebuyers will become increasingly confident in the year ahead with attractive affordability levels and strong job prospects spurring their interest.”
In the fourth quarter, measures for Alberta declined across all housing types to their lowest or second lowest points since 2005. The RBC measures for detached bungalows edged downward by 0.5 percentage points to 32.1 per cent while measures for standard two-storey homes declined by 0.6 percentage points to 35.2 per cent and dropped by 0.7 percentage points for standard condominium apartments to 20.5 per cent.