Calgary Home Prices Rise in 2013, in 2014 Will it Continue
Thursday, February 6, 2014
As 2013 came to a close, home prices continued to increase at a robust pace in Alberta's most-populated city, according to new numbers released by real estate brokerage firm Royal LePage.
In its House Price and Market Survey Forecast for the final quarter of last year, the report found that average prices for detached bungalows rose nearly 6.5 percent compared to the same three-month period in 2012, or approximately $468,970. Meanwhile, for two-story homes, they averaged nearly $461,100 after increasing just over 6 percent. The most substantial price appreciation was observed among standard condominiums at 7 percent, to put the average price at just under $269,780.
"Prices in the Calgary market have gone up across the board in the fourth quarter," said Ted Zaharko, an owner/broker of the Foothills chapter of Royal LePage. "There are three good reasons for this: a long-standing shortage of inventory, the steady influx of individuals to the area and the city's healthy economy."
Employment has been particularly strong in Alberta when compared with other provinces. Statistics Canada reported recently that in November, the number of people working in the province rose by 11,000, following two months of stagnant growth. And in December, the unemployment rate was among the lowest in the country at 4.8 percent.
Supply didn't match demand
As the economy relates to the housing sector specifically, Zaharko indicated that the sector likely would have been even better in Calgary between October and December were there enough available houses for how many people that were buying.
"There is a tremendous amount of pent up demand from would be buyers looking to purchase a home in Calgary," said Zaharko. There are simply not enough homes for sale to meet the needs of the market."
It's this limited supply that could lead to home prices rising even more substantially over the course of the next year. Royal LePage forecasted that should inventory conditions continue at their present pace, selling prices could jump by 5 percent. Zaharko stressed that the price rise would likely be less significant should there be a sudden surge in the number of homes that become available, either through construction or people leaving their present properties and opting to rent.
Phil Soper, president and chief executive of Royal LePage, said that he expects conditions to favor sellers through the first six months of 2014.
"We expect a market tipped decidedly in favor of sellers for the first half of the year, after which we project a shift to a more balanced market," said Soper.
He added that what will likely be the biggest variable in how high home prices go is dependent on whether those who put off buying a house in the spring of last year decided to re-enter the market sometime between March and June, traditionally one of the busiest periods for real estate purchases.
"We expect no landing, no slowdown, and no correction in the near-term," said Soper. "Conditions are ripe for as strong a market as we saw in the post-recessionary rebound of the last decade."
For those who intend to buy a house in 2014, or are at the very least considering it, the Canada Mortgage and Housing Corporation has some tips that may be helpful for those who are new to the buying process. It goes over what homeowners should think about when deciding what their needs are for a residence, as well as what to bring when applying for a mortgage, such as proof of employment and a home insurance policy. Typically, lenders require property insurance so that they can guarantee that they'll be paid back should the borrower default.