Take a quick drive through a Calgary neighbourhood such as Altadore and the explosion of new housing development, single and multi-family, shows economist David Bond is telling no tales when he says demand for inner- core property in Calgary is on the rise.

What you don't see in neighbourhoods such as this is equally telling, since For Sale signs aren't needed to sell property that's snapped up before it even hits public lists.

Bond, who teaches at the University of British Columbia and is a senior fellow with the Canada West Foundation, took centre stage at last week's annual Forecast Breakfast, sponsored by the Calgary Real Estate Board (CREB) at the Coast Plaza.

Buoyed by low interest rates, high employment and a strong economy stoked by high energy prices, Bond predicted Alberta will lead the nation's economy in 2005.

Marilyn Jones

That bodes well for this city's real estate industry, but Bond signalled a note of caution, too. He says the City of Calgary cannot afford to support the outward spread of its residential communities, a fact of life that gives Calgary the same "footprint" as New York City, with a fraction of its population of eight million people.

Barring a serious commitment to municipal revenue sharing by the provincial or federal governments, which Bond predicted is unlikely to occur, cities such as Calgary will need to start "charging for services on the basis of distance from the city centre, because the cost of servicing the suburbs is a lot higher."

He added he expects that to push up demand for inner-core property.

Demand for residential housing close to the city centre will also get a major boost from an aging population.

Bond said people aged 55 and older form the country's fastest-growing demographic cohort and he expects this group to want what he calls "direct, ground-access housing" in the city's core communities. That cohort's impact is likely to be felt within the next five years, as a large group of baby boomers reaches retirement age or begins to downsize its residential housing needs.

The demographic shift coincides with another economic issue, the ever-shortening gap between labour and demand. Current unemployment rates in Alberta hover around four per cent and are, from an economist's perspective, "pretty close to full employment," with job skills or job locations not matching available labour.

The labour shortage will worsen as baby boomers step out of the workplace, noted Bond, whose presentation followed an address by Marilyn Jones, a long-time realtor and CREB president for 2005.

Jones' presentation foreshadowed Bond's predictions of an economically strong 2005, but zeroed in on Calgary's housing market. Even with Bond suggesting 5,000 fewer housing starts in Alberta (for a total of 30,200) in 2005 than 2004, Calgary's total MLS residential dollar volume is expected to hit $6.5 billion in 2005, up from just under $6 billion in 2004.

CREB data suggest the average MLS price for single-family homes in Calgary will hit $256,000 in 2005, an increase of 4.5 per cent over 2004. Average MLS prices for condominiums will also increase over the coming year. The average is expected to reach $174,700 in 2005, up five per cent over the previous year, said Jones.

CREB forecasts MLS listings and sales for single-family homes will increase 1.5 per cent over 2004, with 30,500 homes hitting the market and 19,586 sales.

The condominium market anticipates even more action, with 11,600 listings and 7,132 sales, year-to-year increases of three and two per cent, respectively. (These increases are significant, given that 2004 saw the highest number of sales ever recorded for a one-year period.)

Jones also noted other signs of economic strength in the Calgary economy. These included Bentall Real Estate Service's recent decision to build Calgary's newest office tower (440,000 sq. ft. planned for the Eau Claire district) coupled with ever-tighter vacancy rates in the Beltline (expected to reach 8.5 per cent by yearend) and an industrial space vacancy rate of under four per cent.

Organized by CREB, this year's sold-out Forecast Breakfast attracted 750 realtors and included the first-ever real estate conference and trade show.

The fourth-largest real estate board in the country, CREB is more than 60 years old and has more than 4,600 members.

(Joy Gregory can be reached at joy@businessedge.ca)