In case you missed the Calgary Herald’s recent article, which sheds light on the state of our city’s real estate market, let me give you a quick rundown on where we’re at:
Take a peek at the latest stats for November ’09, from the Calgary Real Estate Board (CREB), and you’ll see the average, single-family, home price is up again. Sitting at just over $464,000, that average price is up 7% over this time last year. Now that’s pretty remarkable when you consider some economists, and even the CMHC, originally predicted we likely wouldn’t see this type of growth or recovery until mid 2010 at the earliest.
The stats also show single-family sales, in the metro Calgary area, are up approximately 63% over a year ago – with nearly 1100 units changing-hands last month. And condo sales rose nearly 80%, over last year, with just over 500 units sold, and an average price of more than $294,000.
Once again I’m not surprised, considering the cost of borrowing continues to remain at record-low levels and the feds seem to have reiterated their intentions to remain status-quo on the current Bank of Canada rate. And, as mentioned in several of my previous blog entries, steadily decreasing inventory (especially over the past few months) has fuelled a rise in the MLS single-family average sale price for the 4th consecutive month in Calgary. And the condo market is similar – riding an average MLS sale price increase for the 3rd month in a row.
The article also mentions Canada’s average existing home price could rise nearly 9% – 10%, next year, with actual sales volume also climbing nearly 3% as forecast in a recent report by TD Financial Group Economist Pascal Gauthier. But Gauthier also warns this trend likely won’t last beyond Q3 of 2010.
Interestingly enough, these numbers come on the heels of the latest federal report indicating Canada’s economic sector actually grew by nearly 0.5% in the last quarter of 2009, despite firm assertions our economy still has quite a ways to go, when it comes to what experts consider a ‘full-blown’ recovery.
So the real estate market, especially in Calgary, seems to be recovering quite quickly. Should we be surprised? Well yes and no. I say yes because at this time last year, there were a lot of anxious and apprehensive buyers, sellers, realtors and brokers. And even the optimistic ones weren’t sure we’d recover this soon. And on the ‘no’ side, I go back to the simple facts that we have significantly reduced inventory levels (compared with last year) and continued low interest rates, which is what ultimately got so many buyers to finally ‘get off the fence’ and make their move.
Of course this still hasn’t quieted the normal doomsayers like Garth Turner, and his blog dogs, who still think we are headed for a catastrophic real estate crash. Even in markets like Vancouver and Toronto, where admittedly there is more surprise in how their markets are performing than people thinking they saw this coming, the simple fact remains that the run-up in prices this year brings us largely back to levels we saw pre-2008 crash.
This is explainable. We saw increased demand from low interest rates, and pent-up demand, coupled with low supply from sellers who were scared of their own shadow during the recession and the naturally occurring “herd effect”. The herd effect is also going to temper the market as sellers will feel in 2010 they can ‘come back to the party’ just as interest rates climb moderately which, coupled with satisfied pent-up demand, will ultimately cool demand. This moderate increase in supply at the same time as moderate decrease in demand will allow the market to be healthy and see a moderate increase in average price NOT a crash in ANY way shape or form. Enough said.
Are you surprised by the latest stats? If so, drop me a line.
Comments
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By Jim Sparrow, December 11, 2009 @ 9:02 pm
Greg: Great post! Indeed the Calgary market has shown considerable strength, especially vs. where we were 15 months ago PRIOR to the global economic downturn (marked by Lehman Brothers filing for Chpt 11 Sept 15, 2008).
As you mentioned above, the Dr Doomsday’s of the world (Garth Turner) would have you believe there’s a huge RE bubble in Canada, but the truth is we’re simply seeing the supply/demand equation in action. The market is anywhere near as over-heated as it was during 2006-2007.
Likely we’ll see prices soften slightly over the next 6 weeks as a result of typical Christmas time slowdown, but while money is inexpensive to borrow and until listing inventory increases significantly, prices will continue to strengthen.
Jim, thanks for the comment. For my Calgary readers I recommend you checking out Jim’s blog regularly s he is a great resource for real time info. on prices and trends in the Calgary metro market. http://www.jimsparrow.com
- Greg
By Jim Sparrow, December 12, 2009 @ 1:21 am
Greg – for above post >> anywhere SHOULD BE nowhere
Cheers – Jim