By Mario Toneguzzi, Calgary Herald
CALGARY — Fuelled by low interest rates and job security, demand for residential real estate in Calgary is on the upswing, says the RE/MAX Housing Market Outlook 2012 report released Tuesday. And the real estate firm says Calgary will be a Canadian leader next year in the annual growth rate for MLS sales. By year-end 2011, 22,500 homes are expected to change hands, an eight per cent increase over the 20,801 sales reported in 2010, it said.
And the average price in Calgary is forecast to appreciate as well, rising a “modest” one per cent to $405,000 in 2011, up from $401,186 one year ago. The report forecasts the average MLS sale price will jump by three per cent in 2012 to $417,000 while sales will rise by five per cent to 23,600 units. Lowell Martens, of RE/MAX Real Estate (Mountain View) in Calgary, said any hesitation on the part of some buyers in the city is more than likely a direct reflection of the uncertainty in the European economic situation.
He said commercial real estate construction taking place in Calgary “tells us the long-term feeling out there is very positive for Calgary. “We have a very stable market over the next little while. We don’t anticipate any big upswings but at the same time we don’t anticipate any big downswings either. It’s going to be very stable,” he said. Buyers in the city are cautiously optimistic after more than two years of recession, making their moves while interest rates are at historic lows and housing values are affordable, said the report. “Single-family homes remain most popular with purchasers, representing close to 60 per cent of total residential sales. Demand is greatest for entry-level product, priced between $350,000 and $450,000,” it said.
“Condominium apartments and town houses have also experienced solid momentum in recent months, with the lion’s share of activity occurring from $200,000 to $300,000. Luxury home sales — priced over $1 million — have been particularly brisk, up approximately 25 per cent over 2010 levels.” While global concerns still loom overhead, the market appears to be gaining some traction moving into the new year, added the report. “First-time buyers are expected to continue to capitalize on low interest rates, while move-up buyers cautiously enter the market in the mid-range price points. Sales in the upper-end are expected to remain robust,” said the report.
A recent housing market outlook by Canada Mortgage and Housing Corp. forecast a 2.3 per cent increase in MLS sales in 2012 for the Calgary census metropolitan area to 22,700 transactions and a 2.2 per cent hike in the average sale price to $411,000. “Many factors that support resale housing demand have become or remained favourable this year, including growth in full-time employment, low mortgage rates and improved net migration,” said the CMHC. “However, competing factors such as uncertainty in the global economy has kept some prospective buyers on the fence, and will continue to temper any large increases in sales.”
RE/MAX said the Canadian residential real estate defied conventional logic and outperformed expectations in 2011, posting another solid year of housing activity virtually across the board. The trend is expected to carry forward into 2012 as Canadians “continue to demonstrate their faith in home ownership, despite concerns over the European debt crisis and its impact on the global economy.” By year-end, an estimated 460,000 homes are expected to change hands, up three per cent from the 447,010 units reported in 2010. Sales are expected to climb one per cent to 464,500 units in 2012. The value of a Canadian home is set to climb to $363,000 by year-end — an increase of seven per cent over the $339,030 posted one year ago. By year-end 2012, the average price in Canada is forecast to appreciate two per cent to $371,000, added RE/MAX.
“What 2011 proves is that real estate continues to have momentum,” said Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada, in a statement. “The economic underpinnings support ongoing demand, particularly as job creation efforts continue and unemployment rates edge down further.”