Housing Bulletin Monthly Report

March 2011

Issue HIgHlIgHts

ancing). canadians believe in the long-term benefits of owning a home, including the value it can provide, both personally and as a long-term investment (RBc Head of Home-equity financing). cana

A lB e R tA’ s p R e li M i nA Ry H o u s i n g s tA R t s i n c R e A s e d M o n t H - ov e R - M o n t H i n F e B R uA Ry 2 0 1 1

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The recovery in Canada is proceeding slightly faster than expected, and there is more evidence of the anticipated rebalancing of demand( Bank of Canada).

Building PermitsBuilding permit values decline in Alberta.

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Consumer Price IndexCPI continues to climb across Western Canada.

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Net MigrationTotal net migration declines in Alberta.

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* Data reflects centres with a population of 10,000 and over.Source: Canada Mortgage and Housing Corporation

• InFebruary2011,Canada’stotalpreliminaryhousingstarts increased one per cent overJanuary2011anddeclined seven per cent comparedtoFebruary2010.

• AcrossAlberta,preliminaryhousingstartsdeclined20percentfromFebruary2010toFebruary2011.Month-over-monthhousingstartsincreased21percent.

• AccordingtotheCanadaMortgage and Housing Corporation (CMHC), housing starts across Canada movedhigherinFebruarymainlyduetoincreases in Ontario and the Prairie provinces.

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Pre l iminary Hous ing st ar ts in A lber t a* and Canada*February 200 9 to February 20 11

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der wraps (ciBc). We continue to expect a softening in overall housing starts, particularly with the anticipated higher interest rates and a slower second half of the year keeping home prices under wraps (ciBc). We contin

s i n g le - d e tAc H e d H o u s i n g s tA R t s s H ow M i x e d p eRF o R M A n c e Ac Ro s s A lB eRtA’ s s ev en M A j o R c en t Re s

M u lt i - FA M i ly H o u s i n g s tA R t s i n c R e A s e M o d e R At e ly i n c A l g A Ry

• InJanuary2011,single-detachedhousingstartsfellacrossAlberta,averagingadeclineof27.7percentyear-over-year.

• InCalgary,Edmonton,GrandePrairieandMedicineHat,single-detachedhousingstartsfell29.1percent,48.4percent,5.9percentand63.6percent,respectively,fromJanuary2010toJanuary2011.

• InLethbridge,RedDeerandWoodBuffalo,single-detachedhousingstartsincreased over the same period.

• ComparedtoJanuary2009,single-detached housing starts increased in six ofAlberta’ssevenmajorcentres,atanaverageof35.7percent.

Source: Canada Mortgage and Housing Corporation

• InJanuary2011,multi-familyhousingstartsincreasedinfourofAlberta’s sevenmajorcentres,Calgary,GrandePrairie,LethbridgeandWoodBuffalo, averaging an increase of 31.3 per cent year-over-year.

• InEdmonton,multi-familyhousingstartstotalled158unitsinJanuary2011,representingadeclineof12.2percentfromthe180unitsbuiltinJanuary2010.

• InCalgary,multi-familyhousingstartstotalled225unitsinJanuary2011,a 122.8percentincreasefromthe101 unitsbuiltinJanuary2010.

Source: Canada Mortgage and Housing Corporation0

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CalgaryCMA EdmontonCMA GrandePrairieCALethbridgeCA MedicineHatCARedDeerCAWoodBuffaloCA

Actua l Hous ing st ar ts – Mul t i -Fami ly Dwel l ings ( January Year - Over-Year 200 6-20 11)

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desjaRdins economics). there is no doubt that the upward trend in employment growth is continuing as jobs lost during the recession have now been completely recovered. in the coming months, we should expect thejob market to show more sustainable, long-term growth (desjaRdins economics). there is no doubt that: the upward

e d M o n t o n R e s A le p R i c e s d i p y e A R - ov e R -y e A RYear- to-Year Compar ison of Hous ing Resa le Act iv i t y in

edmonton in the Month of February

s i n g le - FA M i ly H o M e s A le s R i s e w H i le co n d o M i n i u M s A le s co n t i n u e t o FA ll i n c A l g A Ry

Year- to-Year Compar ison of Hous ing Resa le Act iv i t y in Ca lgary in the Month of February

sIngle-FAMIlY DwellIng COnDOMInIuM

Month new days Month new days average end listings on the average end listings on the Price inventory added sales Market Price inventory added sales Market

Feb 07 $448,557 2,032 2,206 1,942 29 $301,812 654 889 895 28

Feb 08 $471,696 4,985 2,981 1,252 39 $311,812 2,301 1,244 562 45

Feb 09 $415,568 4,352 2,057 825 51 $268,971 2,065 892 343 51

Feb 10 $458,254 3,106 2,154 1,035 34 $282,880 1,741 1,109 536 43

Feb 11 $461,786 3,504 2,268 1,169 45 $290,145 1,750 971 468 52

• Thenumberofsingle-familyhomessoldinCalgaryincreased12.9percent and the average resale price increased0.8percentyear-over-yearinFebruary2011.

• InFebruary2011,thenumberofcondominiumssoldinCalgaryfell12.7percentyear-over-year,whilepricesincreased2.6percentoverthe same period.

• Newlistingsincreased5.3percentforsingle-familyhomes,anddecreased12.4percentforcondominiumsfromFebruary2010toFebruary2011.

average PriCe average Year to Monthly date single- days sales to sales to family duplex / on the residential residential listings listings dwelling Condominium rowhouse Market listings sales ratio ratio

Feb 07 $376,273 $248,493 $314,518 27 3,857 3,487 92 90

Feb 08 $383,251 $263,963 $297,042 56 4,843 2,440 37 50

Feb 09 $349,810 $229,685 $281,406 64 3,876 1,875 42 48

Feb 10 $371,467 $232,425 $321,570 49 3,615 2,223 52 61

Feb 11 $359,934 $230,911 $303,440 62 4,769 1,866 39 39

• Theaveragepriceofasingle-familydwellinginEdmontondecreased3.1percentfromFebruary2010toFebruary2011.Overthesameperiod,the average price of condominiums fell0.7percentanddecreased5.6 per cent for duplexes and rowhouses.

• AhomeinEdmontonspentanaverageof62daysonthemarketinFebruary2011,anincreaseof26.5percentoverFebruary2010.

• ResidentiallistingsinFebruary2011areup31.9percentyear-over-year;however, sales are down 16.1 per cent.

Source:CalgaryRealEstateBoard

Source:Realtors’AssociationofEdmonton

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da) While the value of single-family and multi-family permits have moved in opposite directions, overall, the total value of permits fell in 21 of 34 census metropolitan areas in canada (statistics canada). Wh

B u i ld i n g p e R M i t vA l u e d e c li n e s i n c A l g A Ry a n d e d M o n t o n

p R o p o R t i o n o f M o R t g Ag e s i n A R R e A R s co n t i n u e d u p wA R d t R e n d i n d e c e M B e R 2 0 1 0

Source: Statistics Canada

*DataforNorthwestTerritoriesandNunavutareincludedinAlberta.Source:CanadianBankersAssociation

• ResidentialpermitsissuedinAlbertainJanuary2011totalled$665.5million,adecreaseof23.2percentoverDecember2010.Year-over-year,thevalueofresidentialpermitsissuedinAlbertaincreased 10.3 per cent.

• InJanuary2011,thetotalvalueofEdmontonresidentialbuildingpermitsfell22.5percentmonth-over-monthand33.9percentyear-over-year.

• InJanuary2011,thetotalvalueofCalgaryresidentialbuildingpermitsfell41.3percentmonth-over-monthand36.6percentyear-over-year.

• Both Vancouver and Ottawa experienced anincreaseinresidentialbuildingpermits,withayear-over-yearincreaseof4.0percentand83.7percent,respectively.

• AcrossCanada,mortgagearrearsremainlow, at less than half of one per cent. AsofDecember2010,0.44percent of mortgages in Canada were in arrears, amonth-over-monthincreaseof 2.3percent.

• InAlberta,0.83percentofmortgageswereinarrearsinDecember2010comparedto0.75percentofmortgagesinDecember2009and0.4percentofmortgagesinDecember2008.

• Alberta’sproportionofmortgagesinarrears remains the highest in Canada. InBritishColumbiaandtheAtlanticprovinces,0.46percentand0.45per cent of mortgages are in arrears, respectively.Mortgagearrearsinthe restofCanadafallbelowthe Canadian average.

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alberta’s strong net asset position combined with solid expected growth should mean that alberta is able to regain its fiscal footing in a relatively short period of time (Royal Bank of canada). albe

(f )Albertagovernmentforecastsforthecalendaryear.Source:RoyalBankofCanada

• Thechangeinthepricelevelofconsumer goods and services increased acrossWesternCanadabetween2009and2010andisforecasttoriseoverthenexttwoyears.

• TheconsumerpriceindexinAlbertaremainsthehighestinWesternCanada.AcrossWesternCanada,pricesrose1.1percentinAlberta,1.6percentinBritishColumbia,1.2percentinSaskatchewan,and0.7percentinManitobabetween2009and2010.

• AccordingtoStatisticsCanada, onayear-over-yearbasis,pricesincreasedinsevenoftheeightmajorcomponents of the consumer price indexinJanuary2011.

t H e co s t o f g o o d s a n d s e Rv i c e s co n t i n u e s t o c li M B Ac R o s s w e s t e R n c A nA dA

i n t e R e s t R At e s R e M A i n s tA B le i n M A R c H 2 0 1 1

* Theratesshownaremosttypicalofthosechargedbythemajorcharteredbankonresidential5-yearmortgages,onthelastWednesdayofthemonth.Source:BankofCanada

• ThetargetfortheovernightlendingrateisthemaintoolusedbytheBankofCanadatoconductmonetarypolicy.WhentheBankchangesthetargetfortheovernightrate,thischangeusuallyaffects other interest rates, including mortgage rates and prime rates charged bycommercialbanks.

• TheBankofCanadaannouncedthat it is maintaining its target for the overnight rate at 1 per cent.

• AccordingtotheBankofCanada, therecoveryinCanadaisproceedingslightlyfasterthanexpected,andthereis more evidence of the anticipated rebalancingofdemandforhousing.

• Whileconsumptiongrowthremainsstrong, there are signs that household spending is moving more in line with the growth in household incomes.

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mail) alberta is confidently projecting another energy boom that would drive a return to surplus and claim the province a spot at the forefront of canada’s economic recovery (gloBe and mail). alberta is con

R e l At i o n s H i p B e t w e e n t h e H o u s i n g i n d u s t Ry a n d e co n o M i c g R ow t H

Alberta’seconomyisexpectedtoshiftfromrecoverytoexpansionfrom2011onwardsatahealthygrowthratenear3percentannually.• HousingstartsinAlbertarecordedastrongrecoveryin2010drivenbytheimprovingeconomyandhistoricallylowinterestrates.Provincialhousingstartsareexpectedtocontinuetorise,albeitataslowerpace,whichismoreinlinewithdemographicrequirements.

(f )areAlbertagovernmentforecastsforthecalendaryear.

Source:AlbertaFinanceandEnterprise

• GDPasanindicatorcanbeused to determine the overall healthofaneconomy.

• Economistsgenerallyagreethatarangeof2to3percentgrowth is optimum as it is not so fast that it causes rapid inflation or too slow sothatindividuals’standardof living declines.

• Alberta’seconomicrecoveryin2010wasstrongerthaninitialforecastspredicted.Astheoilsectorcontinuestopickup,

R e c e s s i o nA Ry t o ll o n n e t M i g R At i o n i n A lB e R tA’ s M A j o R c e n t R e s

• NetmigrationtoWoodBuffalopeakedin2007asoilsandsinvestmentcontinuedtoincrease.From2009to2010,netmigrationtoWoodBuffalofell62percent,duemostlytoalossof1,701interprovincialmigrants.

Sources:AlbertaFinanceandEnterprise

• Accordingtoaspecial March2011reportbyAlbertaFinanceandEnterprise,netmigrationtoEdmontonandCalgarypeakedin2006,particularlyasoilsands capital investment increased.

• From2009to2010,followingtheglobalrecessionandweakenedlabourmarkets, net migration saw a sharp declineof48percentinbothCalgaryandEdmonton.

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AverageAnnualRealGDPGrowth(%change)AverageAnnualHousingStarts(000s)

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