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Calgary on of the Top of the Canadian Real Estate Market.

Housing price disparity growing between major centres, rest of Canada

TARA PERKINS - REAL ESTATE REPORTER

The Globe and Mail

Published Friday, Nov. 07 2014, 5:00 AM EST

Last updated Friday, Nov. 07 2014, 7:21 AM EST

The gap between how quickly home prices are growing in Toronto, Calgary and Vancouver, compared with the rest of the country, is growing.

That’s one of the things that Brookfield RPS found when it crunched some numbers for The Globe and Mail to look at the increasing disparity between those three major cities, which represent one-quarter of Canada’s housing stock, and the remaining places that form the bulk of the national market.

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It found that average property values in Toronto, Calgary and Vancouver areas combined have risen by 83 per cent over the past decade, from $345,000 to $634,000, while those in the rest of the country have risen by 60 per cent, from $205,000 to $327,000.

In the past year average property values in the three cities have risen by 9 per cent, from $578,000 to $634,000, while those in the rest of the country have risen by 3 per cent, from $317,000 to $327,000.

The two recent periods where values in Toronto, Vancouver and Calgary seem to have really accelerated over the rest of the country were in the first quarter of 2009, just after the worst of the financial crisis, and in the second quarter of 2013, when mortgage rate wars started to heat up, Brookfield points out.

“While these major markets have seen very strong growth, there is still 75 per cent of the Canadian market that generally follows a different trend-line,” it said.

Drilling down further, the price growth in the three cities has really been driven by detached homes in the downtown areas.

To study this in detail Brookfield looked at just the 416 area code in Toronto, Vancouver without areas such as Richmond and Burnaby, and Calgary without areas such as Airdrie and Rocky View. In Toronto, detached downtown houses saw prices rise 75 per cent over the past decade, from $425,000 to $742,000, in Vancouver detached downtown houses saw prices rise 174 per cent from $585,000 to $1.6-million, and in Calgary prices rose 99 per cent from $267,000 to $530,000.

“On an overall weighted basis, these three sub-segments of the Canadian market combined grew by about 100 per cent over the last decade,” Brookfield says.

Toronto has about 275,000 detached homes, representing 2.1 per cent of the total Canadian housing stock. Calgary has 249,000, making up 1.9 per cent, and Vancouver (without Richmond, Burnaby and North and West Vancouver) has a mere 48,000, about 0.4 per cent of the overall stock.

In other words, the detached homes that are adding so much fuel to overall average Canadian home price growth make up only 4.4 per cent of the country’s housing stock.

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Second highest MLS sales ever for the month

CALGARY - Calgary’s booming resale housing market showed no signs of slowing down in October as MLS sales reached their second highest level ever for the month while prices continued to gain year-over-year.

According to preliminary, unofficial data from the Calgary Real Estate Board, total MLS sales in the city during the month increased by 10.27 per cent from last year to 2,148. The median price was up by 5.33 per cent to $430,550 while the average sale price rose by 6.49 per cent to $486,411.

New listings of 2,919 were up 15.79 per cent from October 2013 and active listings at the end of the month increased by 15.23 per cent to 4,425.

“October showed little sign of the housing market slowing down as sales momentum continued this month. Positive sales growth throughout the housing sector was demonstrated largely in part by the record number of luxury home sales as well as a steady resale market,” said Kaitlyn Gottlieb, a realtor with Century 21 Bamber Realty Ltd. “Net migration and population growth, coupled with Calgary’s vast employment opportunity together with comparatively high wages, remain the driving factors behind the price growth Calgarians continue to see.

“Although still below historical norms, improvements in Calgary’s inventory levels and the easing of market tightness has added to listing growth and furthered stability, alongside sales this quarter. As we approach the end of fall, we continue to see a firm confidence in both homebuyers and investors adding to the anticipation that sales will remain at a positive level moving into the winter months.”

Mike Fotiou, associate broker with First Place Realty, said October sales were just behind the all-time record of 2,204 set in 2005 for the month.

Average sale prices in October neared the all-time records of $492,136 for the city which was set in June this year and $567,653 in the single-family market which was established in September.

In October, the single-family home market saw sales of 1,463, up 9.75 per cent year-over-year. The median price rose by 8.41 per cent to $490,000 while the average sale price was up by 7.50 per cent to $555,114.

The condo apartment category had 385 transactions, up 14.24 per cent. The median price rose by 4.04 per cent to $283,000 and the average sale price increased by 4.18 per cent to $322,357.

In the condo townhouse segment, sales of 300 were up by 7.91 per cent from last year. The median price of $333,766 and the average sale price of $376,227 were up 4.71 per cent and 3.70 per cent respectively.

And in the towns outside Calgary market, MLS sales climbed by 27.13 per cent to 492 transactions as the median price was up 7.57 per cent to $387,250 and the average sale price rose by 7.40 per cent to $419,508.

Ann-Marie Lurie, chief economist with CREB, said overall demand continues in the local real estate market.

“We’ve had the strong employment growth. The migration that we’ve seen over the past few years. And now there’s been listings. So there’s been some selection in the market and that’s really encouraged some of that demand,” said Lurie. “We still are in a period of favourable lending rates. All of that is encouraging the sales activity that we’ve seen.

“It hasn’t shown any sign of slowing because we’ve had the listings. What’s really shifted is that the market is more balanced now than it was even three to six months ago.”

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