It’s 30 Below, Let’s Go Buy a House

Posted by Alan Zunec on Thursday, February 13th, 2014 at 11:55am.

The freezing temperatures that have been hanging around Calgary have done little to cool that city’s housing market. Despite the bone chilling weather, prospective buyers put on their mukluks and toques, hopped, well maybe not hopped, into their cars and went house hunting. The result was a 17 percent increase in MLS home sales this past January, compared to January the prior year. Looking at the condominium market alone, the increase for the time period was 33 percent. Single family homes edged up 11 percent, an increase figure not seen since January of 2008.

It wasn’t only the sales volume that was heating up. Prices were in sizzle territory as well. Single family homes saw a 5 percent increase January to January with the average unit coming in at $520,686. Condo prices saw a 12 percent rise with a per unit average price of $314,678. Townhome style condos saw a 16 percent increase with average prices coming in at $371,638.

The inventory on MLS went from the preferred three to four month supply to an average two month supply. This puts this into seller’s market territory, the perfect scenario for bidding wars and price increases. A study showed that in 98 percent of transactions the asking price or more was paid. Condominiums and townhouses did see an increase in listings but most sold as soon as they hit the market. The MLS listings for the two housing types were down by 10 percent and 25 percent, respectively. Single family homes saw 9 percent fewer listings, with the MLS availability down by 20 percent. Single family homes were only listed for an average of 40 days this January, compared to 47 in January 2013.

New home markets are also feeling the heat. Though the survey of this market was less formal, those in the know, particularly the builders in and around Calgary were citing the market in varying degrees of warmth. None of those builders asked commented that the current market trend was below normal. A number of spec homes are available so builders are waiting to add to that inventory. More and more builders are finding themselves in the driver’s seat and are starting to control their sales which, along with slowing down house production, tends to increase prices.

Analysts are studying the situation and some are concerned about this trend to slow down housing starts. The rental vacancy rate is close to zero and people are still migrating to Calgary at a tune of about 60,000 people per year because of the healthy job market. The flooding in June didn’t help the housing availability but that is just part of the story. So far the analysts are not worried that the sales figures and prices would reach the atmospheric levels of the boom in 2006 and 2007. Of course we all know what happened shortly after those boom years. But so far the signs of another slip and slide in the market are just not there.

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