By Mario Toneguzzi, Calgary Herald
After a tough year in the housing market, activity is expected to pick up in Calgary and in the province in 2010, says Canada Mortgage and Housing Corp.
Photograph by: Herald Archive, Calgary HeraldCALGARY - After a tough year in the housing market, activity is expected to pick up in Calgary and in the province in 2010, says Canada Mortgage and Housing Corp.
In releasing its third quarter outlook Thursday, the national housing agency said new home construction starts, sales of existing homes and the average MLS sale price will all rise in 2010 after decreasing this year compared with 2008 levels.
Generally, in 2008 going into this year, there were buyers market conditions right across the province, said Lai Sing Louie, regional economist for the CMHC in Calgary.
This year we saw some transition in moving from buyer's market conditions to balanced market conditions, he said. Thats obviously a good sign for the real estate market. That means thereā€™s some price pressure. Demand is back. Markets are no longer oversupplied as they were earlier in the year and in the previous year.
He said that in 2010, these balanced market conditions will coincide with economic growth, which will be a key driver in the upswing in the residential real estate market.
We're looking at an economy that is expanding and housing demand improving in 2010, said Louie.
Just this week, a report by the Laurentian Bank forecast Alberta economic growth in 2010 at 2.5 per cent following a decline of 3.1 per cent this year. Warren Jestin, chief economist with Scotiabank, has estimated that Alberta economic growth next year will be about three per cent.
Louie said Calgary has experienced full-time job growth for the past three months.
There are signs that things are turning around and improving, he said.
The CMHC is forecasting housing starts in the Calgary census metropolitan area to decline by 58 per cent this year from a year ago to 4,800 units, but then increase in 2010 by 12.5 per cent to 5,400 units. For Alberta, the forecast is for a 44.8 per cent drop in housing starts this year to 16,100 units with a 13.4 per cent hike next year to 18,250 units.
As for MLS sales, the CMHC forecast is for a two per cent decline this year in Alberta to 55,250 transactions and for a 1.5 per cent decrease in the Calgary census metropolitan area to 22,800. The housing agency expects sales to pick up slightly next year by 3.2 per cent in the province to 57,000 and by 3.1 per cent in the Calgary area to 23,500.
The average MLS sale price is also expected to rise in 2010. After experiencing a forecasted 4.4 per cent drop provincially to $337,500 and 5.5 per cent in Calgary to $383,000, the CMHC said prices will rise by 3.1 per cent both in Alberta and in Calgary next year to $348,000 and $395,000 respectively.
Alberta is still a net recipient of interprovincial migration, which has a positive impact on the housing industry, said Todd Hirsch, senior economist with ATB Financial in Calgary.
People continue to move to Alberta despite the fact that our economy is a little bit soft. . . . That's providing some support to that housing market.
But we should be careful not to think that the real estate market has rebounded back to 2007 levels, he cautioned.
We're nowhere near that 2006 and 2007 were record highs. Everything came crashing back down in 2008 and now we're seeing a little bit of a rebound. A healthy rebound, but it's still going to be well below the 10-year trend, said Hirsch. We'll take the rebound, but it's all in the context. It's still going to be a relatively weak year.
The CMHC report said price declines, government incentives and low mortgage rates will lead to stronger activity in new home construction in Alberta over the balance of this year. In 2010, lower inventories in both the new and resale markets, as well as a strengthening economy, will support a healthy increase in single-detached construction.
The housing agency said recent price declines, historically low interest rates and various government incentives have also helped fuel the resale market in the past few months. The CMHC said this momentum should continue and the sales increase expected in 2010 across the province will be the first one in four years.
The provincial average MLS price decrease this year will be the second straight decline.
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