There is not much cause for alarm about a housing bubble in Calgary despite the sharp growth in prices for the city’s resale market, says a new report released Monday by the Conference Board of Canada.
The board’s initial Housing Briefing: Bubble Fears Overblown report said improvements in energy markets have boosted sales in Calgary’s resale market, and the market is approaching sellers’ conditions. Sales have not fallen on a year-over-year basis since April 2011 and price growth accelerated sharply last year.
The report said that nationally, and in some local markets, Canadian house prices may be headed for a modest decline, but fears of a housing bubble are exaggerated.
Although additional resale housing inventory is expected to hit the Calgary market in the spring, a new real estate report says it will be absorbed by strong consumer demand.
The report by Sotheby’s International Realty Canada, released Tuesday, said the outlook for Calgary’s real estate market is positive based on key economic indicators and demand is being driven by low interest rates, tight rental and resale real estate markets and strong economic fundamentals.
Calgary’s marketplace demand is due to a number of factors including high incomes and strong net migration to the city.
The Calgary region experienced the highest annual growth rate in new home prices across the country in January.
The Statistics Canada said Thursday that the New Housing Price Index rose by seven per cent from January 2013 in the Calgary census metropolitan area - its highest annual rise since July 2007.
The NHPI was also up 1.3 per cent on a monthly basis.
Nationally, the NHPI rose 0.3 per cent in January - the largest since May 2012 and mainly the result of strong gains in the Prairie region. On an annual basis, it was up 1.5 per cent.
Housing starts in the Calgary region soared in February compared last year on the strength of a whopping increase in the multi-family sector, according to Canada Mortgage and Housing Corp.
The agency reported Monday that total starts in the Calgary census metropolitan area was up by 41.7 per cent from a year ago to 1,270 units. The single-detached market rose by 15.0 per cent to 559 units while the multi-family market up by 73.4 per cent to 711 units.
The CMHC also added housing starts were trending at 14,993 units in February compared with 14,322 in January. The trend is a six-month moving average of the monthly seasonally-adjusted annual rates of total housing starts.
A low inventory is continuing to drive resale housing prices upward with the city poised to set numerous all-time records from February MLS sales.
As the housing market comes to the end of another month, Calgary is on the verge of hitting new highs for average sale prices and median prices in both the overall city market and in the single-family sector.
According to the Calgary Real Estate Board, from February 1-26, the average MLS sale price for all city sales was $485,085, up 6.94 per cent from a year ago while the median price rose by 7.80 per cent to $425,000. Also, the single-family home market has seen the average price soar to $553,077, up 8.16 per cent from a year ago while the median price has risen by 10.98 per cent to $485,000.
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