CALGARY — Calgary led the country in February with the best annual price growth in the MLS Home Price Index released by the Canadian Real Estate Association on Friday.
But the Calgary market followed a national trend of declining MLS sales in February.
However it was at a much lower pace. Nationally, sales were off nearly 16 per cent from a year ago but they were down only two per cent in Calgary.
The association also on Friday released an updated forecast in which both sales in Canada and Alberta were revised downward for this year from its previous forecast of December 2012.
CREA said price growth in Calgary was 8.0 per cent year-over-year “marking some of the strongest price growth that city has seen since the spring of 2010.”
In the seven markets surveyed for the HPI, the national aggregate was 2.69 per cent year-over-year price growth. Regina was second to Calgary at 5.93 per cent.
Real estate boards believe the HPI provides a more accurate measurement of pricing trends by comparing the price of properties with similar attributes while averages can distort price changes as sales volumes vary in different price categories.
Ann-Marie Lurie, chief economist with the Calgary Real Estate Board, said Calgary’s housing prices have been supported by improved economic conditions and a tighter market with less listings than a year ago.
“Particularly in the single-family market. Because it’s much tighter, that’s supporting some of these price gains that we’ve seen,” said Lurie. “And a lot of those price gains have been occurring in the single-family sector. We’re just starting to see a pickup in the condos as well.”
CREA reported that MLS sales in Calgary of 2,071 for February were down 2.0 per cent from a year ago while sales across Canada dipped by 15.8 per cent to 31,123.
Lurie said it’s important to keep in mind that last year was a leap year, with one extra day, and if that day was taken out of the comparison single-family sales were the same this year as last year and condo sales were actually higher.
She said very strong migration, a low unemployment rate combined with continued job creation, and a tight rental market have buoyed house sales in the city.
Diana Petramala, economist with TD Economics, said it is becoming clearer that the Canadian housing market has hit a soft landing with existing home sales continuing a downward trek that began in April 2012.
“Much of the weakness seen over the last eight months can be chalked up to the change in mortgage insurance rules implemented on July 9, 2012, which had the same impact on housing affordability as a one per cent increase in interest rates,” she said. “Changes to mortgage insurance rules tend to weigh on growth in home sales for up to three-quarters, and as such, the impact is expected to wane in the coming months.
“Nonetheless, the Canadian housing market appears to have gone through what many having been calling a soft landing. The good news is that sales are now at levels that we feel are well supported by underlying employment and population growth. In turn, existing home sales are likely to stabilize in the coming months. Prices are expected to continue to weaken as demand for Canadian housing remains modest.”
She said the Calgary housing market already went through its correction in 2009 and firmer prices and sales are likely to be supported by an above average labour market performance and strong in migration flows.
According to CREA, the average sale price in Calgary in February jumped by 8.2 per cent to $438,755 but across the country it fell by 1.0 per cent to $368,895.
Alberta was the only province in the country to experience year-over-year sales growth as there were 4,512 MLS transactions during the month, up 0.8 per cent from last year. The average sale price rose by 5.3 per cent to $378,685.
Also on Friday CREA released a forecast for the next two years and it predicted Alberta would have the best annual price growth in Canada in 2013 and 2014.
Average sale prices are expected to rise 3.6 per cent this year to $376,400 and by 3.9 per cent next year to $390,900 in the province.
In Canada, the forecast is for a 0.2 per cent drop this year to $362,600 but an increase of 1.7 per cent next year to $368,700.
As for sales in Alberta, CREA predicted an increase of 0.4 per cent this year to 60,600 units and another hike of 3.5 per cent in 2014 to 62,700 transactions in the province.
In Canada, the forecast is for sales to decline by 2.9 per cent this year to 441,500 but rebound with a rise of 4.5 per cent in 2014 to 461,200.
“Mortgage rules are expected to remain as they are, so sales should be less volatile than they have been in recent years,” said Gregory Klump, CREA’s chief economist. “Interest rates are also expected to remain low as the economy grows and adds jobs, which is supportive for the resale housing market.”
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