Home Sales Hit New Highs

Average sale price hits $363,574.

House sales in Alberta reached the highest level for any month on record in May, according to data released Thursday by the Canadian Real Estate Association. Sales in May were up 3.7 per cent across the province compared with May 2006 — an increase from 8,300 units to 8,606. Also, the average sale price in Alberta jumped by 28.1 per cent to $363,574, from $283,813 in May 2006.

A report by Genworth Financial Canada also released on Thursday says the average new home price in Calgary will increase 16.3 per cent this year to $505,571, edging close to the average price of a new home in Toronto ($518,401). Nationally, for the second consecutive month, MLS residential sales activity, new listings, average prices and dollar volume all reached new heights.

“May 2007 was a very strong month for resale housing activity in Canada and the national MLS residential market shattered all previous records for a second consecutive month,” said CREA President Ann Bosley. “Resale housing is one of the major engines driving the national economy, and activity remains on track to a new national record in 2007. “The recent increase in mortgage interest rates may encourage prospective homebuyers to jump off the fence and into the market. I also expect that many prospective buyers across the country who have pre-approved mortgages will take advantage of these lower interest rates and purchase a home in June.”

According to the Calgary Real Estate Board website on Thursday, the average sale price of a Calgary single-family home in the past 30 days was $493,885 and the median price was $440,000. In the past 30 days, total sales for single-family homes in the city were 1,852 and the current active listings are 4,251.

The Genworth report predicts average prices in the Calgary resale market will increase 18.5 per cent this year. Nationally in May, total MLS sales increased 11 per cent from a year ago to 60,735 units and the average sale price rose by 10.8 per cent to a new record of $314,258 from $283,641 in May 2006.

The Summer 2007 Metropolitan Housing Outlook by Genworth predicted a reduced rate of price increases in Alberta this year because of slightly lower demand. The report said that Alberta this year will experience 18.4 per cent growth in new home prices to an average price of $449,420. Resale homes are forecast to increase 18.3 per cent this year to an average price of $338,559. Last year, Albertans saw a 36.9 per cent increase in new home prices and a 30.9 per cent hike in resale home prices, said the report. The report says Alberta new home prices are expected to increase more moderately at about five per cent in 2008, then about 3.9 per cent annually through 2011, while resale homes are expected to climb in price by nine per cent in 2008, 6.2 per cent in 2009 and then an average of 4.5 per cent annually through 2011.
“Alberta’s booming economy has really fuelled extraordinary price increases, meaning that affordability has been stretched for many prospective buyers, but now we’re seeing what looks like more manageable growth over the next half-decade in what is still a great housing market,” said Peter Vukanovich, president of Genworth Financial Canada.

The report says new home prices in Calgary are expected to average $505,571 by the end of 2007. In 2006, Calgary new home prices skyrocketed 43.6 per cent over the previous year. Calgary new home prices are then forecast to climb 5.5 per cent in 2008, before settling in at about four per cent annual growth through 2011. Growth in Calgary resale home prices is forecast to be 18.5 per cent this year, down from a stunning 38.6 per cent hike in 2006. Calgary resale home prices are expected to rise 7.3 per cent annually on average through 2011.
Source: Calgary Herald

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New Home Prices Up 40%

EDMONTON – Soaring land values pushed Edmonton’s new-housing prices up 40.5 per cent from April 2006 to April 2007 — the biggest bump in Canada. Calgary was a distant second place, with prices up 27.4 per cent. Nationally, the rise was 8.9 per cent.

Edmonton land prices rose 54.5 per cent over the 12 months, while residential construction costs rose 34.3 per cent, Statistics Canada reported Monday. Today’s price for a 33-foot-wide lot in Mill Creek, a trendy older area, can be as high as $350,000 said Jamie Thompson, a partner in The House Company.

Prices in new subdivisions also have escalated, partly because of speculation in raw land, said Michael Mooney, executive director of the Urban Development Institute. Beyond just the land, “every component that goes into the ground has had inflation,” he said. “There have been tremendous price increases in concrete pipe, plastic water pipe, asphalt, even hydrants and
manhole covers.”

The City of Edmonton now requires developers to pay for four traffic lanes connecting each new subdivision to an arterial road. Until recently, they paid only for two lanes. “Further increases have been suggested for fire halls and libraries,” Mooney said. “The province’s sustainability report suggested more levies, as well as land transfer taxes. We have been decrying this as pushing new housing costs up.”

Richard Goatcher, senior market analyst with Canada Mortgage and Housing Corp., said the city has become more insistent on “ensuring that new developments are not causing environmental or traffic problems.” In Edmonton’s housing industry, “the volumes have increased so rapidly that the whole system is under stress,” Goatcher said. “The city hires planners and the private sector poaches them away. They’re always understaffed and overworked.” Mooney praised city staff for working with industry to streamline the processing of development applications.

“The best way to limit price increases is to increase the supply on the market,” he said. “We have been getting tremendously good co-operation from all city departments.” City council’s executive committee will receive a planning department report on Wednesday on strategies to process development applications more quickly with clearer requirements for area plans,
reviews by several departments proceeding simultaneously, fast-tracking of simple applications, improved web-based handling of applications, and holding public meetings while applications still are being reviewed.

The construction share of new housing prices is largely driven by builders’ labour and subcontractor prices, Thompson said. “Our carpenters’ wages are up 50 per cent in the last two or three years, from $18 per hour to $27.” Subcontractors also are charging more.
“I suspect they are paying more to employees to keep them and, in times like these, why would they take minimum profits?” he asked.

Vince Laberge, president of the Canadian Home Builders Association, Edmonton region, said the costs of capital and materials also are up. “It takes longer to build homes because of trades shortages, so there are more financing costs.” High prices for oil and natural gas have driven up the costs of vinyl flooring and siding, and asphalt shingles, he explained. Concrete prices have been pushed up by competing demand from commercial builders.

Because housing starts have slowed in the United States, “lumber is one of the few commodities that has stayed level or gone down over the last couple of years,” Laberge said.
Source: Edmonton Journal.

For more information about Real Estate in Lethbridge and Alberta, please visit: www.TeamMiller.ca