Calgary’s housing market should miss the worst of the recession as the city is better placed than most to weather the storm.
Some economists are softening their predictions about the depths of the downturn in the United States, said Peter Norman, vice-president of Clayton Research Associates Ltd., a national firm of housing economists.
Many think the U.S. recession won’t be as deep as thought a month ago. Canada might then have a gentler path with softer job growth. Most of the earlier softening was only in some sectors of the economy, but some now predict if the recession gets worse, it will be broader.
“We’re going to have more bad news than good and we think its more broad-based than the bad news was before,” Norman said last week.
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| Dave Olecko, Business Edge |
| Gael MacLeod of the Alberta Real Estate Foundation says improving education helps both the industry and the public. |
While there should be a fairly robust recovery in late 2002 or early 2003, the economic fallout in a year might be higher interest rates, said Norman.
The housing sector is also facing a slowdown but not a disastrous one.
Clayton Research is forecasting housing starts to decline eight to 10 per cent nationally next year. Calgary will fare better with a decline of four or five per cent. The company is also forecasting new home construction to drop to 146,000 units in 2002 from about 159,000 this year.
“Calgary builders will top 11,000 units this year and that’s exactly double what they built in 1995,” Norman said.
There’s no question that the city isn’t being hit as hard as other places, said Richard Corriveau, senior market analyst in the Canada Mortgage and Housing Corp.’s Calgary office. “Calgary leads the nation in housing starts per capita,” he said.
The CMHC forecast for 2001 was 7,100 single-family homes and 3,400 multi-family units. The building industry might top that by a few hundred units.
The forecast for 2002 is 6,550 singles and 3,250 multi-family units.
Calgary and Edmonton are still desirable places to move because they have tight labour markets. Even with lower energy prices this year, many projects on the books are still feasible.
The saving grace this year was the lowest mortgage rates since 1960.
“In the face of the downturn, it’s got people buying in droves,” said Corriveau. Low interest rates also have buyers considering more expensive properties than they would otherwise. Unless they are paying cash, house buyers look at the monthly payment, not the price of the property.
Nationally, the CMHC is looking at a 2.7-per-cent drop in new housing starts for 2002. Its economists are not as bearish on job creation, said Corriveau.
Marlene Swinton, president of the Calgary Real Estate Board and an agent with Re-Max Realty Professionals, sees a positive market.
“I don’t see any dramatic downturn,” said Swinton, also citing good interest rates.
She predicted a four-per-cent price rise for 2001 at the start of the year, and forecasts another two- or three-per-cent rise in 2002. It will be gradual, not dramatic.
“People have to price their houses right on the market,” she said.
Housing prices averaged $181,697 in Calgary in October, up $90 from September and three per cent more than October 2000.
It was the best October for sales since 1997, which was a record year.
Swinton also noted the gradual rise in the median price of home sales, from $156,000 in October 1999 to $160,500 last year and $167,500 in October 2001.
The building and selling of homes is a complex business for civilians and newcomers to the industry, but those who want to learn more now can do so, thanks to the Alberta Real Estate Foundation (AREF).
The Calgary-based foundation has spent 10 years and $4 million improving the real estate education of the industry and the public.
AREF has funded all kinds of courses, underwriting the cost of curriculum development.
Developing the curricula and delivering the courses is the role of several industry associations and the province’s post-secondary institutions, says AREF executive director Gael MacLeod.
When the Professional Home Builders Institute of Alberta wanted to put a course on CD-ROM to explain home construction and sales to builders’ staffs and real estate sellers, the real estate foundation helped out with $70,000.
The CD, Technical Aspects of Selling New Homes, is available to the general public as well as the building and real estate industries.
The home builders’ institute CD was a bit out of the ordinary, says MacLeod, and it had a double benefit.
It contained a lot of useful information from a consumer’s point of view. Licensed real estate agents who take the CD course and successfully write the exam gain 18 continuing education credits from the Real Estate Council of Alberta, the regulatory and licensing body.
AREF receives about $1 million a year from the interest on real estate agents’ trust accounts.
Barbara Robison, Alberta Real Estate Association director of education, says AREF has funded two major areas. Early on, it underwrote three-quarters of the cost of the brokers’ program. It also funded the development of continuing education courses and the development of some online courses.
The AREF website lists 90 hours of classroom or distance learning that prospective real estate agents must take and pass the final exam in order to be licensed. Subsequent courses are required for agents to become brokers.
The oilpatch’s Nexen Inc. is all together in one building after consolidating its Calgary offices in their new home.
The company’s 1,100 employees used to work out of several buildings; they now occupy 28 floors of the 36-storey former Nova tower at 801 7th Ave. S.W. Nexen’s logo was put up last spring when its move began.
Nexen is an independent energy and chemical company. It explores for, produces and markets oil and gas in the U.S., Yemen, Canada, Nigeria, Australia, Colombia and Indonesia.
