New house prices dip in Calgary

[SpongeG]

The average national price of a new home edged higher in October, but some of Canada's priciest cities — Toronto, Victoria and Calgary — experienced a drop in prices.

In oil-rich Calgary, where double-digit increases were until recently the norm, prices dipped 0.5 per cent from September — the first fall since November, 2004, Statistics Canada said Monday.

On a national basis, Statscan said the price tag for a new home edged up 0.2 per cent in October from September — the smallest monthly increase since July, 2005. Economists were expecting a rise of 0.5 per cent.

The strength of the Alberta housing market has been unrelenting. The boom in energy prices triggered a wave of migration, leading to a surge in demand and prolonged construction times that have sent prices higher and higher.

Contractors' selling prices have jumped 11.4 per cent over a one-year period, and Calgary's bustling housing market has been a large part of the reason. One a one-year basis, Calgary has seen the largest surge in new home prices, posting a 53.5 per cent gain. Edmonton is next on the list, having posting a 41.1-per-cent rise.

The new housing price index data released Monday provides further evidence that after years of firing on all cylinders, Canada's housing market is finally cooling.

Derek Burleton, economist with Toronto-Dominion Bank, said prices are starting to flatten from what has been a very steep upward trend. “We have seen some sales slowdown in the resale markets and that appears to be making its way through to new housing.”

In central and eastern Canada, the real estate market appears to have pulled off a soft landing, while activity in Alberta and B.C. has been “unsustainably strong,” he said. Prices in major western cities including Calgary, Edmonton and Vancouver have surged rapidly, pinching affordability and pricing some home buyers out of the market.

In Calgary, there are indications that re-sale activity has started to pull back and listings are improving, Mr. Burleton said. “So while it is still an extremely tight market, it is inching closer to a balanced market.”

Calgary was not the only city where prices fell in October. In Victoria, they eased 0.5 per cent from September. Toronto new home prices dipped 0.1 per cent while Windsor saw the largest price drop — 0.7 per cent.

“As evidenced by the year over year strength, the Calgary housing market has been one of the chief driver's of the overall new home price index,” said Stewart Hall, market strategist with HSBC Securities (Canada) Inc.

The Bank of Canada “will take some comfort from the deceleration in prices given that house prices have provided some of the upside event risk to the inflation outlook (housing prices and household demand to be exact),” he said.

New home prices did rise in 11 of the 21 major metropolitan areas surveyed by Statscan. Edmonton led the price gains with a rise of 2.2 per cent, followed by Winnipeg, where they rose 0.6 per cent. In Vancouver they increased a slimmer 0.5 per cent.

“Higher costs for construction materials, labour rates and an active housing market continued to be factors driving prices,” Statscan said. “Increased lot values, mostly due to land shortages, were also a contributing factor in both Winnipeg and Edmonton.”

A government report released Friday showed that housing starts climbed less than 1 per cent to 225,000 units from 223,200 units in October. Economists were expecting a rise of 220,000.

http://www.theglobeandmail.com/servlet/story/RTGAM.20061211.whousingdata1211/BNStory/Front

[Coldrsx]

so Calgary drops the most and Edmonton rises the most....god i love Alberta.

[1ajs]

so Calgary drops the most and Edmonton rises the most....god i love Alberta.

:haha:

winnipeg has been setting records this year :cool:

[vid]

Yeah! The Average price in Winnipeg is up to $34,504! Finally edging out Thunder Bay's $33,975.

[1ajs]

Yeah! The Average price in Winnipeg is up to $34,504! Finally edging out Thunder Bay's $33,975.


lol i don't know why plp insist in this town on buying a 150k house or more thats in probly no better shape then that 20k house in the north end......

[Rusty van Reddick]

so Calgary drops the most and Edmonton rises the most....god i love Alberta.

Windsor dropped the most. Read the article.

And year-over-year Calgary destroyed every city, including Edmonton.

[Hardhatdan]

Calgary Destroyed Everyone! Destroyed Yarrrrrghhhhhhh!

[Edmonchuck]

http://www.rotten.com/library/culture/godzilla/godzilla2.jpg

/\ too funny. How soon people forget times where Edmonton was the winner and Calgary was whining...

Destroyed...interesting choice...

In reality, we will always see a swing between the cities. Plans take time to take hold, time to complete, and time to then get too crowded and level off. Alberta as a whole benefits.

[freeweed]

lol i don't know why plp insist in this town on buying a 150k house or more thats in probly no better shape then that 20k house in the north end......

Because they're in the north end, that's why.

Well, and I can tell you from experience, they probably ARE in better shape than a 20k house - obviously individual cases will vary but for the most part, there's a lot of run-down crap that should otherwise be bulldozed. You can often get lucky in a city like Winnipeg though, and find a real gem for practically nothing. Then, it's just living in the north end that's the issue - for some people.

[Surrealplaces]

so Calgary drops the most and Edmonton rises the most....god i love Alberta.

Calgary Victoria and Toronto were the ones that dropped, but this is because they're also the highest priced. Edmonton traditionally follows Calgary's house price trend, about a 6 months to a year after. In 6 months prices in Edmonton will start to level out, if they haven't already started to.

Prices levelling out aren't a bad thing either. It's nice to catch some price increases, but at some point it just becomes too expensive for the average person to buy. What I'd like to see for Calgary is prices hold steady for a while with slight increases. This would be best for the local economy as a whole.

[Elwood]

In 6 months prices in Edmonton will start to level out, if they haven't already started to
They've levelled off a tad but are up 2.2% from last month. The problem with Edmonton is lack of inventory, especially compared to Calgary. I believe Calgary has around 6500 MLS listings vs. 2500 for Edmonton. I think next spring will be another hot one for both cities.

[chuber]

Here is a similar article from the Edmonton Journal today:

Calgary house prices sag, Edmonton still hot
Eric Beauchesne, CanWest News Service
Published: Tuesday, December 12, 2006
OTTAWA - Some of the air has come out of the Calgary housing boom, with prices for new homes suffering their first month-to-month drop in two years, and one of the steepest declines among more than two dozen Canadian cities.

However, Calgary homeowners can relax -- the Statistics Canada report Monday also shows that new-home prices in the oil-rich city were still more than 50-per-cent higher than a year earlier, easily the steepest increase of any city.

And the city's housing boom will not likely go bust as it did in the early 1980s, said a housing-market consulting firm.

The surge in housing prices is similar to the city's previous boom three decades ago, said Clayton Research Associates in a separate analysis Monday.

"But several other 'giant killers' of the mid-1970s and early 1980s boom -- like escalating interest rates and plunging oil prices -- are unlikely to come into play this time around," it added in its monthly housing report.

Meanwhile, prices in Canada's other really hot housing market, Edmonton, remained hot in October, rising a further 2.2 per cent from September, the steepest increase of any city, and were 41.1 per cent higher than a year earlier, the second steepest increase.

And while overall new-house prices in Canada edged up just 0.2 per cent during the month, the smallest increase in more than a year, prices were still 11.4 per cent higher than a year earlier, although year-to-year gains in all other cities were in single digits with prices in two -- Victoria and Windsor -- being slightly lower.



And I don't get why people in Calgary like to brag so much about the increases in housing. It doesn't make you a better city. While some gain is good, too much is not. The only thing Calgary is 'destroying' is their affordability. (Edmonton too unfortunately)

[Greco Roman]

Here is a similar article from the Edmonton Journal today:

Calgary house prices sag, Edmonton still hot
Eric Beauchesne, CanWest News Service
Published: Tuesday, December 12, 2006
OTTAWA - Some of the air has come out of the Calgary housing boom, with prices for new homes suffering their first month-to-month drop in two years, and one of the steepest declines among more than two dozen Canadian cities.

However, Calgary homeowners can relax -- the Statistics Canada report Monday also shows that new-home prices in the oil-rich city were still more than 50-per-cent higher than a year earlier, easily the steepest increase of any city.

And the city's housing boom will not likely go bust as it did in the early 1980s, said a housing-market consulting firm.

The surge in housing prices is similar to the city's previous boom three decades ago, said Clayton Research Associates in a separate analysis Monday.

"But several other 'giant killers' of the mid-1970s and early 1980s boom -- like escalating interest rates and plunging oil prices -- are unlikely to come into play this time around," it added in its monthly housing report.

Meanwhile, prices in Canada's other really hot housing market, Edmonton, remained hot in October, rising a further 2.2 per cent from September, the steepest increase of any city, and were 41.1 per cent higher than a year earlier, the second steepest increase.

And while overall new-house prices in Canada edged up just 0.2 per cent during the month, the smallest increase in more than a year, prices were still 11.4 per cent higher than a year earlier, although year-to-year gains in all other cities were in single digits with prices in two -- Victoria and Windsor -- being slightly lower.



And I don't get why people in Calgary like to brag so much about the increases in housing. It doesn't make you a better city. While some gain is good, too much is not. The only thing Calgary is 'destroying' is their affordability. (Edmonton too unfortunately)

Once again, part of the "Alberta Advantage" I hate with a passion :hell:

[Stephen Ave]

And I don't get why people in Calgary like to brag so much about the increases in housing. It doesn't make you a better city. While some gain is good, too much is not. The only thing Calgary is 'destroying' is their affordability. (Edmonton too unfortunately)

Most of us Calgary forumers don't like the price increases, and would be happy if prices stayed where they are.
From my point of view, the prices are high enough that it has spurred on strong high rise residential development, but they're to the point where a decent house isn't affordable anymore.

They've levelled off a tad but are up 2.2% from last month. The problem with Edmonton is lack of inventory, especially compared to Calgary. I believe Calgary has around 6500 MLS listings vs. 2500 for Edmonton. I think next spring will be another hot one for both cities.

Inventory is the key for sure. Calgary's house prices got ridiculous, and many people are holding off buying, which has allowed the listings to increase. Housing starts and population growth isn't much different than last year, but affordability is much different, and that's the key.

[Rusty van Reddick]

Yeah, I think "destroy" is an appropriate term. That or "pwned."

[Coldrsx]

im really curious to see 2007 in edm/cal......with net influx of people and sizzling economy....and new focus from outside investors....i dont see it cooling.....i just dont.....which is a really BAD thing IMO>

Even Edmonton condos are pushing $400sqft from just $200 3 yrs ago.

[freeweed]

And I don't get why people in Calgary like to brag so much about the increases in housing. It doesn't make you a better city. While some gain is good, too much is not. The only thing Calgary is 'destroying' is their affordability. (Edmonton too unfortunately)

Well, in theory increased cost of living eventually leads to increased wages to compensate. If companies cannot find staff at the current wage (because no one can afford to move here from, say, Halifax), then they have to increase the wage to attract that staff.

In theory, these increased wages work their way through the ranks until everyone benefits. Many large O&G companies have pretty rigid salary structures, so oftentimes if your cubemate gets a raise, so do you.

In theory, higher basic cost of living combined with higher wages means higher disposable income, on average.

Obviously this doesn't apply in every case, and really only works when companies are continuing to hire new employees. Fortunately with the boomers retiring en masse starting this year, we should see 20 steady years of hiring, even IF the economy slows down a lot.

Lots of theory, lots of unknowns. In my personal case, I could live in, oh, say, Winnipeg mortgage free right now. With the difference in wages, however, I'd STILL have less in my pocket at the end of the day, even with the mortgage payment entirely gone.

Not everyone's in the same bboat, obviously, but right now there are more than enough people here who are benefitting from the "theory" above. It's when it stops working that we have a problem. Short of a complete and utter implosion of the North American economy, we might just stay the course for a long time to come.

[Elwood]

In theory, higher basic cost of living combined with higher wages means higher disposable income, on average.

I agree that it should work that way but this theory doesn't seem to apply to Vancouver. Wages in my field are close to what I make today but, for the most part, are lower. I suppose it's because people are willing to sacrifice for the west coast lifestyle and climate.

[Coldrsx]

^bingo...hence the TDR for housing in van at 65% or something nuts and in AB more like 30%

[1ajs]

Because they're in the north end, that's why.

Well, and I can tell you from experience, they probably ARE in better shape than a 20k house - obviously individual cases will vary but for the most part, there's a lot of run-down crap that should otherwise be bulldozed. You can often get lucky in a city like Winnipeg though, and find a real gem for practically nothing. Then, it's just living in the north end that's the issue - for some people.


the north end's problem is the slum loards who don't care.............. thats the problem theres all sorts of hiden gems and pockets of beutilfull well kepted homes. all these habbitat homes that are built as infill are POS i would rather see programs like RB rusuels building construction program were they gut and bring the house back up to snuff then habbitat building infill next to an abandond house or taring down a perfectly good house that just needs some TLC.........

[drew]

Lots of theory, lots of unknowns. In my personal case, I could live in, oh, say, Winnipeg mortgage free right now. With the difference in wages, however, I'd STILL have less in my pocket at the end of the day, even with the mortgage payment entirely gone.
.


What industry do you work in that has that high a disparity in wages?

From what I know of wages in the engineering jobs available both in Manitoba and Alberta and the current housing prices in Calgary and E-town the wage difference doesn't come CLOSE to making an equal footing in terms of house costs.

[freeweed]

What industry do you work in that has that high a disparity in wages?

From what I know of wages in the engineering jobs available both in Manitoba and Alberta and the current housing prices in Calgary and E-town the wage difference doesn't come CLOSE to making an equal footing in terms of house costs.

IT. All depends on what you do, obviously. Having 2 incomes here is an absolute MUST, unless you're making damn good money. I'd barely be able to afford a 1 bedroom condo out in the boons otherwise. That being said, with a decent house in Winnipeg well over 100,000 these days, I'd almost be in that situation back home anyway.

I'm surpried that you don't see a huge premium for engineering out here; the 'geers I talk to (only a handful, admittedly) are seeing anywhere from 50-100% higher offers in Calgary and I assume Edmonton is close.

Winnipeg's an odd case, because it depends on how you look at affordability. There are still enough $20-40,000 houses that the *average* house price is easily affordable, if you're willing to live in the north end or a complete dump (no offense to those who've gotten lucky with cheaper houses). Calgary has very little of the low end, so while the average price here is insanely higher, on a house-for-house basis you're looking at *maybe* 2x the cost. All depends on what you're looking for in a home, obviously. I've heard of 900 sq ft bungalows (not exactly a McMansion) in River Heights hitting the $150,000+ range. If that was the low end of Winnipeg, the average house price would be far higher.

Running the numbers - yeah, my mortgage payment is $1000 more than it would be in Winnipeg. That's $12,000 more a year that I need to net. Let's ignore the tax differences, which are in the range of $2-300 a month if you can believe it. Even without that, I need to gross maybe $20,000 more annually to handle the mortgage. Everything else is gravy (including the aforementioned tax benefit). Keep in mind, double the mortgage payment doesn't mean you need double the income. Everything else is comparable price-wise, so if you actually DID get double the income, you'd be rolling in disposable cash. Which is what is driving the current stupidity out here (don't get me started on the shopping season!).

What's really killer here is not the actual mortgage payment - it's being able to qualify for it in the first place. With one income you have to be almost in the $100,000 salary range before the bank will even talk to you, unless you're willing to look at 30-40 year mortgages, or have a huge downpayment. I'm also completely ignoring the "having kids" factor, as that messes with everybody's finances enough that my simple model of living doesn't compute :)

It's a mixed bag. If you work for the government, moving here is suicide. If you work for McDonald's, even at $10/hr, you're screwed unless you're willing to move in with a few roommates. But for many professional jobs, yeah, I've seen $40k become $65k. 20k become 45k. 50k become 75k. That sort of thing. You also wouldn't BELIEVE the benefits. Only 2 weeks holidays that you don't get to take in your first year - which seemed standard in non-union jobs in Winnipeg? Almost unheard of here.

Overall though, I now tell my single friends "don't even think about it, unless you're willing to sacrifice a LOT". Those that do pretty quickly realize how hard it is to get ahead when you're paying $1500/month in rent. But for couples, or those willing and able to work their asses off? If you're making decent income this place is a goldmine. On average. :)