Canada's Housing Bubble

With spring in the air, Candice Jaworski thought this would be the ideal time to sell her home.

Residential real estate reports released Monday confi rmed that feeling.

MLS sales are up compared with a year ago and so are average prices. With an improving economy and increasing demand, Jaworski, who was looking to downsize, listed her two-storey Coventry Hills home on the market last week with realtor Claudia Walz of Re/Max House of Real Estate.

"I think the prices of houses are going to start going up or at least stabilized from what it had been doing," said Jaworski. "And it's promising for the economy, that's for sure."

More homeowners, such as Jaworski, are putting their properties up for sale.

According to the Calgary Real Estate Board, active listings in the single-family and condo markets hit monthly lows in December 2009, at 2,054 and 1,204, respectively.

Since then, they have been climbing. As of Monday, the real estate board's website showed 3,655 active listings for single-family homes and 1,970 for condos.

Board president Diane Scott said the local market typically sees its biggest inventory of listings in the spring.

"Prices are up a little bit. That's one reason (for this year's growth in listings)," said Scott. "And the interest rates could go up and maybe the seller is thinking that might slow the economy down in another month or so."

So far this month, Calgary's real estate market indicates continued increasing sales and prices.

According to the website of Mike Fotiou of First Place Realty, as of Sunday, month-to-date, there have been 575 single-family home sales for an average price of $464,370 while there have been 247 condo sales for an average of $296,659.

For the entire month of March 2009, Calgary experienced 1,086 single-family sales for an average of $420,354 and 446 condo sales for an average of $284,056.

The Calgary housing market continues to be attractive, with affordability measures at or below long-term averages, said RBC Economics in a report released Monday. The report said the strong rebound in resale activity slowed last summer and has reversed since the fall. However, the tight availability of homes for sale in Calgary has continued to provide a slight advantage to sellers, moving housing prices in a slight upward trend.

"With the exception of townhouses, price gains in the Calgary market have still been relatively modest and below the highs seen in 2007," said Robert Hogue, senior economist with RBC.

RBC's housing affordability report, released Monday, measures the proportion of median pre-tax household income required to service the cost of mortgage payments (principal and interest), property taxes and utilities.

In the fourth quarter of 2009, those measures and average prices were as follows: 37.1 per cent for a detached bungalow, $412,500; 39.2 per cent for a standard two-storey home, $427,100; 29.8 per cent for a standard townhouse, $332,400; and 23.4 per cent for a standard condominium, $256,100.

The averages since 1985 for the affordability measure in the Calgary market are: 40 per cent for a detached bungalow, 40.5 per cent for a standard two-storey home, 28.9 per cent for a standard townhouse and 23.1 per cent for a standard condominium.

Across the province, the report said housing affordability improved in the fourth quarter of last year amid slower economic recovery compared with other regions across the country.

"The downturn in the housing market has created a large surplus of homes available for sale. This has held back the pace of price increases in the province since the market rebound took effect," said Hogue. "This subdued pace has kept Alberta's affordability in check."

Also on Monday, the Canadian Real Estate Association said housing markets across the country are becoming more balanced, with average prices continuing to rise along with new listings.

The association said February sales in Canada are up 44 per cent from a year ago, with new listings increasing just over 10 per cent and the average sale price up 18.2 per cent to $335,655.

"There are still a number of major markets where sales negotiations favour the seller due to a shortage of inventory, but supply has begun rising. Further expected supply increases will continue to take the steam out of housing markets as the year progresses," said Gregory Klump, chief economist at the real estate association.

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MLS Housing Sales In February

Sales Change* Avg. price Change*

Calgary 1,913 37.4% $389, 388 5.2%

Alberta 4,077 26.3% $343,748 5.1%

Canada 25,197 44.0% $335, 881 18.2%

- Year over year Source: Canadian Real Estate Association