Alberta Housing Prices Leading the Country
Calgary recorded its highest housing prices ever in January, and is poised to overtake Toronto as Canada's second-largest housing market.
Garry Marr, National Post
Published: Saturday, February 18, 2006
A critical shortage of housing for sale in Calgary and a red-hot economy have driven prices to an all-time high in the city and created a panicked state among consumers looking for homes.
Sales in Calgary's existing homes market jumped almost 50% in January from a year earlier, according to the Canadian Real Estate Association. At the same time, the number of homes being put on the market for sale was down 16.2% from a year earlier. The result was a record $289,130 average price for a home sold last month, leaving prices in the city 20.2% ahead of last year and on pace to eclipse Toronto as the second-most expensive city in the country for housing.
"There is a shortage of listings in Calgary and very strong demand," said Gregory Klump, chief economist with the Ottawa-based association, which is predicting sales and prices in Alberta to outpace the rest of the country this year.
The picture of Calgary on the way up and Toronto on the way down is part of a growing dichotomy in the country that is making national statistics meaningless. "We have two different economies in the country, the one in the West and the one in the rest of the country," said Benjamin Tal, a senior economist with CIBC World Markets.
Mr. Tal said the way economies in Alberta and Ontario are working, Calgary real estate prices could easily pass those in Toronto this year. "The numbers are simply unbelievable. Look at mortgage size: It is rising. Look at wealth and income in Calgary: It is rising. Everything is stronger than Toronto. Gross domestic product will rise by 7% in Alberta this year; that is like China."
Ted Zaharko, who owns Royal LePage Foothills Real Estate Services in Calgary, has been in the business for 35 years but has never seen the market as strong as it is today. "This is different. There is a panic in the market because there is an extreme shortage of supply."
Mr. Zaharko said Calgary will usually have about 6,000 houses listed, but he thinks that number is probably near 1,000 today. Consumers are even flipping houses -- that is, buying them without ever occupying the homes.
"I was talking to a lawyer last week about a house a couple bought one day, only to have to sell it 24 hours later when the husband got transferred. They ended up selling the house one day later for another $65,000," Mr. Zaharko said. The couple who bought the house were told it was being flipped. "They didn't care, they just wanted it," the real estate broker said.
Toronto sales prices appear to have stalled based on the January stats. The average price of a home sold in the city was $332,670 last month, only a 2.9% jump from a year ago.
"Central Canada is just not seeing the same sort of volume that we are," said Elton Ash, a vice-president with Re/Max Western Canada. Vancouver continues to be the most expensive market in the country.