Housing Bulletin Monthly Report
August 2010
Issue HIgHlIgHts
10) The malaise in Canada’s housing market is deepening as record-low interest rates and a vast supply of homes prove to be insufficient incentives to entice buyers (Globe and Mail, auGusT 5, 2010). The ma
C a na da’ s P R e li M i na Ry H o u s i n g s ta R t s s l i p i n J u ly
1
Global housing recovery has cooled after a strong performance in the first quarter of 2010, and Canada has been among those most affected(CBC News, August 10, 2010).
Housing StartsEdmonton and Calgary multi-family starts up in June 2010.
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Home PricesCalgary most attractive city in Canada for real estate investment.
Page 5
Overnight Lending RateMortgage carrying costs edge higher with recent rate changes.
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• Alberta’sJuly2010totalpreliminaryhousingstartsincreased13percentoverJune2010and48.2percentoverJuly2009.* Datareflectscentreswithapopulationof10,000andoveronly.Source:CanadaMortgageandHousingCorporation
• Canada’stotalpreliminaryhousingstartsforJuly2010weredown1percentoverJune2010butwereup34.3percentoverJuly2009.AccordingtoCanadaMortgageandHousingCorporation(CMHC),thedropinnationalhousingstartswaslargelyduetoadecreaseinurbansingledetachedstarts.
• AccordingtoCMHC,thetotalnumberofseasonallyadjustedstartsacrossCanada(189,200)wasaheadofmarketexpectations,butmarkedthethirdconsecutivemonthofdeclinesandthelowestlevelofhomebuildingactivitysincethestartof2010.
Ho
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0
5,000
10,000
15,000
20,000
25,000
JUL
10
JUN
10
MAY
10
AP
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0
MA
R 1
0
FE
B 1
0
JAN
10
DE
C 0
9
NO
V 0
9
OC
T 0
9
SE
P 0
9
AU
G 0
9
JUL
09
JUN
09
MAY
09
AP
R 0
9
MA
R 0
9
FE
B 0
9
JAN
09
DE
C 0
8
NO
V 0
8
OC
T 0
8
SE
P 0
8
AU
G 0
8
JUL
08
Pre l iminary Hous ing st ar ts in A lber t a* and Canada*Ju ly 200 8 to Ju ly 20 1 0
AlbertaCanada
2
uly 31, 2010) according to CMHC, alberta is back on top in terms of detached single-family homes and total housing construction starts per capita (CalGary Herald, July 31, 2010). according to CMHC, alber
s i n g le - d e taC H e d s ta R t s Co n t i n u e t o R i s e i n a lB e R ta
M o R e M u lt i - fa M i ly u n i t s b e i n g B u i lt
• AcrossAlberta,single-detachedhousingstartsincreased67.8percentfromJune2009toJune2010.Althoughthisisanimpressiverecovery,constructionactivityremains30.9percentbelowthelevelsseenduringthehousingconstructionboominJune2007.
• FromJune2009toJune2010,housingstartsforsingle-detachedhomesincreased136.6percentinEdmontonand42percentinCalgary.
• WoodBuffaloexperiencedthelargestyear-over-yearincreaseinsingle-familystartsfrom23newhomesinJune2009to62inJune2010,anincreaseof170percent.
• ArecentreportbytheAltusGrouppredictshousingstartswilldip7percentin2011(Calgary Herald,August12,2010).
Source:CanadaMortgageandHousingCorporation
• Overall,constructionofmulti-familydwellingsdecreased15.4percentfromJune2009toJune2010acrossAlberta’smajorcentres.Incontrast,Calgaryrecordedanincreaseinmulti-familystarts,risingfrom60inJune2009to154startsinJune2010,anincreaseof156.7percent.
• Edmontonalsoreportedasubstantialincreaseinmulti-familystartsof73.6percentfromJune2009toJune2010.
• DeclinesinstartswererecordedfromJune2009toJune2010inGrandePrairie(-100percent)andRedDeer(-100percent).
• Themostnotabledeclineinmulti-familystartswasinWoodBuffalo,whereactualhousingstartsdroppedfrom294inJune2009tojusttwoinJune2010.
Source:CanadaMortgageandHousingCorporation
0
200
400
600
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1,000
1,200
JUNE 2010
JUNE 2009
JUNE 2008
JUNE 2007
JUNE 2006
100
300
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700
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1,100
CalgaryCMAEdmontonCMAGrandePrairieCA
LethbridgeCAMedicineHatCARedDeerCAWoodBuffaloCA
Actua l Hous ing st ar ts - s ing le Det ached(June 200 6 to June 20 1 0)
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JUNE 2010
JUNE 2009
JUNE 2008
JUNE 2007
JUNE 2006
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s
CalgaryCMAEdmontonCMAGrandePrairieCALethbridgeCAMedicineHatCARedDeerCAWoodBuffaloCA
Actua l Hous ing st ar ts – Mul t i - fami ly Dwel l ings ( June 200 6 to June 20 1 0)
3
over the next six months, key economic indicators will continue to bolster consumer confidence to help ensure a fundamentally healthy housing market (CalGary Herald, auGusT 7, 2010). over th
s u B t le i n C R e a s e i n a B s o R P t i o n s ac ro s s a lB e R ta a s d e M a n d P i C k s u P
n ew H o M e P R i C e s H o ld i n g g R o u n d
* Theterm“absorbed”meansanewlybuilthousingunitisnolongeronthemarket.Thisusuallyoccurswhenabindingcontractissecuredbetweenabuilderandaqualifiedpurchaserbyanon-refundabledeposit.** Q1=January-March,Q2=April-June,Q3=July-September,Q4=October-December.Source:CanadaMortgageandHousingCorporation
majorcentresinAlberta.ThelargestincreaseshaveoccurredinRedDeer(55percent),Calgary(38percent),andEdmonton(37percent).* Dataincludescentreswithapopulationof50,000andover.WoodBuffaloinformationisnotincluded.CanadaMortgageandHousingCorporationanticipatestoincludedataforWoodBuffaloin2010,as
accordingtothe2006Census,thisregionnowmeetsthepopulationcriteriaforthisreport.Note:Datareflectstheaverageunitpriceofnewlycompletedandunabsorbedsingle-detachedandsemi-detacheddwellings.Source:CanadaMortgageandHousingCorporation
• FromQ1**2010toQ2**2010,absorptionsofnewlyconstructedhomesincreased30percentacrossAlbertawiththemostnotableincreasesinRedDeer(60percent),Lethbridge(57percent)andCalgary(54percent).
• FromQ2**2008toQ2**2010newhomepurchasesthroughoutAlbertafluctuatedalongwiththeriseandfallintheeconomyanddemandfornewhousing.
• MedicineHatexperiencedthelargestdropinabsorptionsovertheQ2**2008toQ2**2010period(-50percent),followedbyEdmonton(-37percent).
• Newhomepricescontinuedtostabilizeoverthepastyear,withonlyslightincreases.RedDeerandMedicineHatshowedthelargestyear-over-yearpriceincreasesat19.3percentand8.2percent,respectively.
• AccordingtoarecentreportbytheScotiaBankGroup,newhomepriceshavelargelytrackedresalepricesinAlbertaandSaskatchewan,whichareamongtheonlyprovincesthatdonotshowdivergencebetweenpricesofnewandresaleproperties.
• FromJuly2007toJune2010,theaveragepriceofanewlycompletedhomehasincreasedacrossallofthe
0
250
500
750
1,000
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1,750
2,000
2,250
Q2 2010
Q1 2010
Q4 2009
Q3 2009
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Q1 2009
Q4 2008
Q3 2008
Q2 2008
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Quar ter ly Absorpt ions* o f s ing le-det ached Homes Across A lber t a (Q2** 200 8 to Q2** 20 1 0)
CalgaryCMAEdmontonCMA
GrandePrairieCALethbridgeCA
MedicineHatCARedDeerCA
Av
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Ag
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$250,000
$300,000
$350,000
$400,000
$450,000
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$600,000
JUN
10
MAY
10
AP
R 1
0M
AR
10
FE
B 1
0JA
N 1
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09
NO
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9O
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09
AU
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9JU
L 09
JUN
09
MAY
09
AP
R 0
9M
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09
FE
B 0
9JA
N 0
9D
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08
NO
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8O
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8S
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08
AU
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8JU
L 08
JUN
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MAY
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JUL 07
Average Pr ice o f Newly Completed s ing le and semi-det ached Dwel l ings in A lber t a ’s Major Cent res* ( Ju ly 2007 - June 20 1 0)
CalgaryCMAEdmontonCMA
GrandePrairieCALethbridgeCA
MedicineHatCARedDeerCA
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H i g H R e s a le i n v e n t o R i e s d a m p e n e d M o n t o n M a R k e tyeAr-to-yeAr C o m pAr i s o N o f H o u s i N g r e sAle ACtiv ity i N e d m o Nto N
i N tH e m o NtH o f J u ly
eal esTaTe board) Calgary’s housing market is cooling off after its record-setting pace in the post-recession period (CalGary real esTaTe board). Calgary’s housing market is cooling off after
CalgaRy MaRke t Co oli ngyeAr-to-yeAr C o m pAr i s o N o f H o u s i N g r e sAle ACtiv ity i N CAlgAry
i N tH e m o NtH o f J u ly
sINgle-fAMIly DwellINg CoNDoMINIuM
month New days month New days Average end listings on the Average end listings on the price inventory Added sales market price inventory Added sales market
Jul 07 $505,920 4,510 2,548 1,495 35 $318,582 1,634 1,117 603 33
Jul 08 $456,380 6,038 2,559 1,313 52 $285,032 2,888 1,183 535 52
Jul 09 $436,782 3,314 2,089 1,585 43 $285,032 1,587 918 702 50
Jul 10 $464,655 5,525 1,942 915 45 $291,168 2,457 890 396 51
• Thenumberofsingle-familyCalgaryhomessoldinJuly2010fell42.3percentcomparedtoJuly2009,whilepriceswereup6.4percent.
• Listingsforsingle-familyhomesweredown7percentfromJuly2009toJuly2010andweredownmoderately(7percent)fromJune2010toJuly2010.
• Theaveragepriceforasingle-familyhomeinCalgaryinJuly2010was$464,655,wellbelowthe2007boomwhenaveragepricestoppedat$505,920.
AverAge priCe Average year to monthly date single- days sales to sales to family duplex / on the residential residential listings listings dwelling Condominium rowhouse market listings sales ratio ratio
Jul 06 $304,805 $188,322 $232,762 20 2,207 1,972 89 91
Jul 07 $415,860 $274,379 $341,680 30 4,548 1,459 32 58
Jul 08 $376,231 $253,206 $321,516 58 3,594 1,761 48 41
Jul 09 $373,294 $243,869 $296,521 47 3,060 2,223 72 58
Jul 10 $378,979 $240,371 $304,032 51 2,955 1,294 43 46
• Theaveragepriceofasingle-familydwellinginEdmontonincreased1.5percentfromJuly2009toJuly2010.Overthesameperiod,theaveragepricefell1.4percentforacondominiumandincreased2.5percentintheduplexandrowhousesector.
• ListingsinJuly2010decreased3.4percentoverJuly2009,andsalesweredown41.8percent.AccordingtothePresidentoftheRealtors’AssociationofEdmonton,increasinginventoryisgivingbuyerschoice.Asaresult,manybuyersaretakingtheirtimeandpricesarebeginningtosoftenslightly.Atthesametime,somesellerswhohavebeenstandingfirmhavebeenpushedtodroptheirinitiallistprice.
• Condominiumsalesfellby43.6percentfromJuly2009toJuly2010.TheaveragepriceforacondominiuminCalgarywas$291,168inJuly2010,2.2percenthigherthan2009levels($285,032)but8.6percentbelowthepeakpricesof2007($318,582).
Source:CalgaryRealEstateBoard
• AhomeinEdmontonsatonthemarketforanaverageof51daysinJuly2010,anincreaseof8.5percentoverJuly2009.
Source:Realtors’AssociationofEdmonton
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• TheRealEstateInvestmentNetwork(REIN)createsarankingoftopCanadianinvestmentcitiesbyanalyzingkeyeconomicvariablestoidentifycitiesandregionswithafuturelong-termrealestateinvestmentpotential.OfthetopelevenCanadianrealestateinvestmentcities,Albertahasfourcitiesintheranking:Calgary(1),Edmonton(3),St.Albert(7)andRedDeer(9).•TheREINrankedCalgaryasthenumberonecityforinvestment
inreal-estate,accreditingtheadjustmentperiodfollowingthelasteconomicdownturnforprovidingastrongfoundationtobuild
upon.AccordingtotheREIN,strongin-migrationcombinedwithrenewedaffordabilitywillpropelthemarketinthe
comingyearswhileremaininginlinewithhealthymarketfundamentals.•Edmontonrankednearthetopofthelist(in
thirdplace)duetothediversityofitseconomythatwillencouragejobgrowthandattractmigrants.AccordingtoREIN,thiswillbuild
thefoundationsforrealestatedemand,withoutthefrenzyofthelastboom,whichendedin2008.
Source:RealEstateInvestmentNetwork(REIN)
P R o P o R t i o n o f a lB e R ta M o R t g ag e s i n a R R e a R s e d ge d u P wa R d i n J u n e 2 0 1 0
and renewed affordability (rein) Calgary is in a unique economic and geographic position to take advantage of strong in-migration and renewed affordability (rein). Calgary is in a unique economic an
C a l g a Ry R a n k e d # 1 a s M o s t at t R aC t i v e c i t y i n C a na da f o r l o n g -t e R M R e a l - e s tat e i n v e s t M e n t
• TheCanadianBankers’Associationconsidersamortgagetobeinarrearswhenthreeormoremonthsofpaymentsareoverdue.
• AsofJune2010,0.42percentofmortgagesinCanadawereinarrears,keepinginlinewiththedownwardtrendwhichbeganinMarch2010.
• InAlberta,0.75percentofmortgageswereinarrearsasofJune2010.
• Alberta’sproportionofmortgagesinarrearsfirstmovedabovethenationalaverageinJuly2008,andhascontinuedtoclimbeversince.Despiteaslight
reprieveinAlberta’smortgagearrearsfromJanuarytoMay2010,recentdataindicatesareturnofthecontinuedupwardtrendinarrears.• Withthechangestomortgagerulesannouncedearlierin2010andrecentincreasesininterestrates,mortgagearrearsandloanlossesarepredictedtofallastherearefewer‘badloans’approved.AccordingtoananalystatBarclay’sCapital,creditqualitycontinuestoimproveaseconomicconditions,thoughchallenged,havelargelystabilized(CanadianPress,August22,2010).
* DataforNorthwestTerritoriesandNunavutareincludedinAlberta.Source:CanadianBankersAssociation
ST. ALBERT
RED DEERSURREY
MAPLERIDGE
KITCHENER
SIMCOESHORES
HAMILTON
#7#9#4
#5
#3
#11#1
#2 #6
#8#10
top Canadian Rea l -est a te Investment C i t ies (20 1 0-20 1 5)
0.0%
0.1%
0.2%
0.3%
0.4%
0.5%
0.6%
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0.8%
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MAY
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JUN
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MAY
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JUN
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AY 07
Per cent o f tot a l Mor tgages in Ar rears A lber t a* vs . Canada
( June 2007 - June 20 1 0)
Canada Alberta
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2010) Competition among banks for new business along with falling bond yields have meant mortgage rates have been largely unaffected by bank of Canada moves (Globe and Mail, auGusT 5, 2010). Compet
vaC a n C y R at e s i n C H l ow e R i n e d M o n t o n
• TheCMHC’sSpring2010surveycompletedinApril2010recordedavacancyrateof5.2percentinEdmonton.TheCBRichardEllis(CBRE)July2010MarketUpdatereportshowsthevacancyrateinEdmontonat2.9percentandreportsanecdotalevidencethatlandlordsarebeginningtoeliminateincentivesfornewtenants.
• AccordingtoCBRE’sresearch,theaveragetwo-bedroomrent
inEdmontoninQ2*2010was$1,003,verymuchinalignmentwithCMHC’sSpring2010rentalmarketdata,whichreportedanaveragerentof$989foratwo-bedroomunit.CBREexpectsrentalratestoclimbinthelatterhalfof2010.
* Q2=April-June.** Averagevacancyrateforallunittypes(i.e.,Bachelor,1-Bedroom,2-Bedroomand3-Bedroom+).***CBRE’smulti-housingmarketviewisbasedonasurveyof32,000unitsin331building.Source:CBRichardEllis
Ba n k o f C a na da H i k e s R at e s f o r s e Co n d t i M e i n 2 0 1 0
• AsofAugust1,2010,theadvertised5-yearconventionalmortgageratestoodat5.79percent,and1-yearmortgageat3.5percent.• EconomistspredicttheBankofCanadawillraisetherateagainbytheendof2010.Sources:BankofCanada
• ThetargetfortheOvernightLendingRateisthemaintoolusedbytheBankofCanadatoconductmonetarypolicy.WhentheBankchangesthetargetfortheOvernightLendingRate,thischangeusuallyaffectsotherinterestrates,includingmortgageratesandprimerateschargedbycommercialbanks.
• Julymarkedthesecondtimein2010thattheBankofCanadaraiseditstargetfortheOvernightLendingRateby0.25percentagepointsto0.75percentonJuly20,2010.
Av
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vA
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y r
At
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$1,100
2002 2003 2004 2005 2006 2007 2008 2009 Q2 2010
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
Vacancy and Rental Rates in edmonton (2002 - Q2* 2010)
EdmontonVacancyRate**EdmontonAverageRentalRate(2-Bedroom)
BA
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NA
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8%
JUL 1
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JAN
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JUL 0
9M
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JAN
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NO
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JUL 0
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AY 0
8M
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JAN
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NO
V 07
SE
P 07
JUL 07
MAY
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N 07
NO
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JUL 0
6M
AY 0
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06
JAN
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NO
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JUL 0
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05
Bank of Canada In terest Rates , January 200 5 to Ju ly 20 1 0
OvernightLendingRateTargetConventional1-yearMortgageConventional5-yearMortgageRate