Despite record setting low temperatures and snow storms, housing market activity in Canada during the first quarter of 2014 showed year-over-year resilience in most regions, with some exceptions in atlantic Canada, Manitoba and Ontario. In urban centres, house prices continued to post gains, in large part due to a lack of inventory; price increases were also seen in regions with strong local economies driven by the resource sector and major infrastructure development.

Potential homebuyers in Toronto and Calgary continue to be frustrated by low inventory and low affordability. In Toronto, where inventory has reached a record low, average residential sale prices increased almost 8 per cent year-over-year in march. RE/MAX is predicting a similar increase throughout the remainder of 2014. In Calgary, where a typical home spent only 34 days on the market, inventory levels were 30 per cent below the threshold of a balanced market. House prices in the region increased by over 5 per cent compared to the same period last year.

Vancouver’s balanced market posted a more modest year-over- year gain, but the average selling price of $1.36 million for a single family house has priced many buyers out of the market. Low affordability in this desirable city has prompted some innovative solutions, where we are seeing entire new lines of multipurpose furniture developed for 400 square foot studios that are selling in the $150,000 price range.

Many potential first-time buyers in Calgary and toronto have decided that purchasing a home is now more attractive given the reality of rising rents and a lack of rental selection. Both cities have extremely low vacancy rates with Toronto posting a rate below two per cent and Calgary’s renters struggling with a rate of one per cent. in both markets desirable rental properties are now attracting multiple offers, creating additional frustrations for those waiting to buy.

Harsh winter conditions and power outages delayed market activity across most of Canada, but were most notable in atlantic Canada as well as parts of southern Ontario. Looking ahead, spring sales in these regions are expected to make up for the lack of activity seen during the first two months of the year as new listings help satisfy pent-up buyer demand. For example, despite consumer confidence and a strong local economy, sales in St. John’s decreased 9 per cent year-over-year in February as they experienced one of the harshest winters on record. Southern ontario also suffered from snow storms and power outages. in Windsor, which suffered its heaviest snowfall winter since 1908, total first quarter unit sales declined 15 per cent year-over-year. However, march showed signs of recovery as unit sales were only modestly down one per cent year-over-year. This scenario is being played out in many of the markets that experienced a difficult winter.
Natural resources will continue to play a crucial role in fueling the Canadian housing market in 2014, specifically in Calgary, Saskatoon and St. John’s. in new Brunswick, Saint John buyers are waiting on announcements about pipeline and oil refinery developments that could have a transformative impact on their market.
Foreign buyers looking for investment properties or second homes have been drawn to Canadian cities for a number of years due to close social and economic ties as well as confidence in Canadian real estate. more recently, a weakened Canadian dollar has created another incentive for those buyers to invest in Canada. as the country shakes off the harsh winter, markets across Canada should see healthy activity through the remainder of 2014.
 

New listings remain below expectations in the single family sector…

Click here or on the above photo to download a .pdf of the Calgary Regional Housing Market Statistics for March 2014
Residential sales activity improved across all sectors in March. However, declining new listings in the single family sector combined with further gains in sales activity decreased single family inventory to the lowest March level since 2006.
“There are several factors contributing to the growth in housing demand, including the inflow of people to our province over the past two years, strong gains in employment and tight rental conditions,” says CREB® chief economist Ann-Marie Lurie. “However, supply conditions vary amongst the different property segments, impacting the number of sales and price growth. If supply constraints persist in the single family sector, prices are expected to record further gains as we move into the spring market.”
Single family sales at the end of the first quarter totalled 3,901 units, a 9.5 per cent increase over the same period last year. Meanwhile, the amount of new listings declined by nearly five per cent. As sales growth outpaced the amount of new listings growth in the market, inventory levels dropped to just over 2,000 units.
Persistently tight market conditions prevented any relief in terms of price gains. The unadjusted single family benchmark price totalled $490,600 in March, a 9.9 per cent increase over the previous year and monthly increase of 1.6 per cent.
“With tight market conditions, particularly in the single family market, purchasers should ensure they have a clear understanding of what they can afford and what they are willing to pay for a home,” says Bill Kirk, CREB® president. “However, both sellers and buyers need to be aware that conditions are dependent on the community and price range that you are targeting.”
Condominium apartment sales totalled 1,062 after the first quarter. Sales growth was strongest in this sector due to the availability of listings. New listings after the first quarter totalled 1,722, an 18 per cent increase over the previous year. While demand continued to outpace listing growth, keeping market conditions relatively tight, inventory levels are similar to the previous year.
“Nearly 50 per cent of new listings in the apartment sector are priced in the range of $200,000 – $299,999, providing options for those looking for affordable product,” says Kirk. “However, there are far fewer options for those looking to spend less than $200,000. After the first quarter, apartment product priced below $200,000 has dropped from over 16 per cent of the market last year to 6.4 per cent.”
Condominium apartment and townhouse prices totalled a respective $287,200 and $313,100. Condominium apartment price recorded a year-over-year increase of 11.5 per cent and are the highest relative to the townhouse and single family sector. Despite strong price gains across all sectors, overall the condominium sector continues to record price levels below peak records.
“Some easing of the supply pressure in the condominium market is expected as new construction projects are completed,” says Lurie. “However, thanks to Calgary’s strong economy, it is expected that most new supply can be absorbed without risk of oversupply and condominium price correction.”
 
Click here to download a .pdf of the full report: Calgary Regional Housing Market Statistics for March 2014