A thriving economy continues to drive housing sales across the country, especially in the booming Alberta, British Columbia and Ontario markets.

Edmonton real estate agents are bracing themselves for another busy year.

"2004 was a record year, and we think we'll be able to do the same in 2005," says Jim Kulak, president of the Edmonton Real Estate Board (EREB).

"Last year we had $3.7 billion in sales and over 21,000 transactions. The average sales price (for a single-detached home) was around $201,000, and we're expecting a six-per-cent increase this year, so we're getting closer to that $214,000 or $215,000 mark."

Oil-industry activity in northern Alberta and Edmonton remains strong and Kulak says this should continue for the next few years, which in turn will fuel home buying.

"We may not be setting records every year, but we're going to have very good years in the future," Kulak says.

And there is no question that Calgary's housing market has enjoyed the run of its life in recent years. Industry officials believe little will change in 2005.

On a total dollar volume basis, 2004 sales surged by almost 15 per cent to more than $5.9 billion.

Marilyn Jones, president of the Calgary Real Estate Board (CREB), says when she crunches the numbers she sees another record year in terms of unit sales and the average sales price.

"I think we're going to see the number of sales go up about 1.5 per cent, and I think we'll see the listings go up about the same," Jones says.

The average sales price, meanwhile, rose 5.5 per cent to $222,860 in 2004. Jones predicts that number will increase again this year to around $233,500, representing a 4.8-per-cent jump.

The Canada Mortgage and Housing Corp. (CMHC) predicts the number of units sold in Calgary will be lower, falling by about 5.5 per cent this year from 2004.

But the CREB president sticks by her guns, pointing to strong oil and gas prices expected to fuel Calgary's burgeoning economy.

"I know CMHC feels that sales will drop off a bit, but when I look at the overall picture I can't see that they will ... When you look at the way the city's going, people have got to live somewhere," Jones says.

Jim Kulak

Across Canada, the Western Canadian housing market stands out as being particularly strong, Re/Max says.

"Alberta certainly stands to benefit from strong global demand for crude at close to $50 US a barrel," Elton Ash, vice-president and regional director for Re/Max of Western Canada, said in a news release. "Foreign demand is also expected to bolster coal mining projects in British Columbia."

Cameron Muir, CMHC senior market analyst in B.C., expects 2005 prices to increase at only about half the rate they did last year, which was about 13 per cent, largely because fewer investors and first-time home buyers will enter the marketplace.

Nevertheless, he believes "the real estate market will remain robust through 2005 because we're looking at very strong fundamentals in the marketplace."

Muir says those fundamentals include continued job growth in the major urban centres - Vancouver, Kelowna and Victoria - especially among so-called knowledge and scientific workers.

The British Columbia Real Estate Association (BCREA) also credits the B.C. government for helping to create a favourable investment climate and a diversified economy, especially in the Lower Mainland.

While the BCREA doesn't produce forecasts, association president Gordon Maroney says that conversations with the province's different real estate boards have revealed a bright 2005. "To a person, they've all said the market is still very active and very buoyant, so if you want my own personal feeling, I don't think we'll do the numbers in terms of unit sales that we did in 2004, but we'll still have a very good year," Maroney says.

The total amount spent on residential home sales in B.C. topped $27.8 billion in 2004, a 15-per-cent increase over 2003. The BCREA says that 96,316 units sold in 2004 compared to 93,126 in 2003.

"The best year on record for unit sales was 1992, and we saw 2004 exceed that by about 2,700 units," Maroney says.

The CMHC forecasts that in Vancouver, the number of sales will remain the same this year compared with 2004 at around 38,000, while the average sales price will leap to $390,000 from $373,000 in 2004.

In Victoria, the average price for a home is expected to rise to $320,000 from about $314,000, the CMHC predicts.

In Canada's largest metropolitan centre, low interest rates are a key reason why demand continues to grow. The Toronto Real Estate Board (TREB) also cites housing affordability, well-paying jobs and secure employment as other factors.

"People dream about owning their own home," says Ron Abraham, TREB president. "And it's good-paying jobs and low interest rates that are helping to make that dream a reality.

"(Home) prices continue to rise, but salaries are rising, too."

The TREB reports that 83,501 single-family dwellings changed hands in 2004, representing a rise of six per cent from the 78,898 sold in 2003. Abraham adds that 2004 prices jumped seven per to $315,231 from the previous year.

The CMHC is also bullish about the city's real estate scene.

"We're looking at a much healthier market in terms of the supply-demand ratio," says Ted Tsiakopoulos, senior market analyst at CMHC for Toronto.

Tsiakopoulos adds that the average amount of household income used to pay down mortgages in Toronto has crept up slightly in recent years.

Today, roughly 35 per cent of household income is absorbed by housing payments.

"Affordability is eroding somewhat, but compared to 15-20 years ago it's looking pretty good," Tsiakopoulos says.

The CMHC anticipates the average house price in Toronto will rise to around $330,000 this year, a five-per-cent increase over 2004.

However, the Crown corporation projects that unit sales will dip by around two per cent to 82,000 in 2005.

While Abraham puts a lot of faith in the CMHC forecast, he's not convinced unit sales will fall, based on January results.

"Our initial statistics put (unit) sales higher than last year; we're up about 18 per cent," he says.

In its own survey, Re/Max says national home sales are expected to climb two per cent to 477,800 units by year-end. The average price should increase by about six per cent, bringing the value of a Canadian home to $237,900 in 2005, which would top 2004's record of $224,729.

Meanwhile, the commercial real estate market will strengthen in 2005, says Colliers International in its recent forecast for 2005.

The firm predicts that even a gradual rise in interest rates cannot deter the strong desire to own Canadian investment property, while foreign investors will continue to take advantage of high returns and above-average conditions of the Canadian market.

Certain industrial markets will experience a small development boom starting in 2005, with Toronto's new supply surpassing the 10- million-sq.-ft. mark again.

Vancouver and Calgary will both see significant build-to-suit and speculative development activity pushing national totals to their highest levels in several years, the study notes.

Canada's office vacancy rate will decline by a full percentage point, based on recent trends in markets such as Toronto, where the downtown rate has dropped for two successive quarters, and Vancouver, where the office market has also turned the corner, Colliers says.

(John Ludwick can be reached at ludwick@businessedge.ca)