Eric Beauchesne
Sun
OTTAWA – Some of the air has come out of the Calgary housing boom with prices for new homes suffering their first month-to-month drop in two years, and one of the steepest declines among more than two dozen Canadian cities.
However, Calgary homeowners can relax, as the Statistics Canada report Monday also shows that new home prices in the oil-rich city were still more than 50 per cent higher than a year earlier, easily the steepest increase of any city.
And the city’s housing boom will not likely go bust as it did in the early 1980s, said a housing market consulting firm.
The surge in housing prices is similar to the city’s previous boom three decades ago, said Clayton Research Associates in a separate analysis Monday.
“But several other ‘giant killers’ of the mid-1970s and early 1980s boom — like escalating interest rates and plunging oil prices — are unlikely to come into play this time around,” it added in its monthly housing report.
Meanwhile, prices in Canada’s other really hot housing market, Edmonton, remained hot in October, rising a further 2.2 per cent from September, the steepest increase of any city, and were 41.1 per cent higher than a year earlier, the second steepest increase.
And while overall new house prices in Canada edged up just 0.2 per cent during the month, the smallest increase in more than a year, prices were still 11.4 per cent higher than a year earlier, although year-to-year gains in all other cities were in single digits with prices in two — Victoria and Windsor — being slightly lower.
The real estate industry expects housing sales this year will reach a sixth straight record high despite what has been a slowdown in sales in recent months.
While the housing boom has faded in most parts of the country, homeowners have had a good run, and not just in the increases in the value of their homes.
Homeowners have also seen their incomes rise over the past decade and half, something which renters haven’t, according to a separate report Monday into the state of housing in Canada by Canada Mortgage and Housing Corp.
A modest 3.3-per-cent increase in real after-tax median household incomes between 1990 and 2003 masks divergent trends for owners, who saw their incomes rise 4.5 per cent, and renters, who saw theirs fall 4.8 per cent, CMHC said.
Meanwhile, the housing market has not only been good to homeowners, but good for the overall economy as well, CMHC also said.
“The housing sector made a significant contribution to the Canadian economy in 2005, with strong employment growth, rising incomes and low mortgage rates fuelling sustained housing demand and high levels of new construction, resales, renovation and mortgage lending activity,” it said.
The strength of housing construction in recent years, the highest since the late 1980s housing boom, has also occurred in spite of a slowing in population growth and an aging of the population, it noted.
“With population growth slowing, and immigration typically in excess of 200,000 per year, net international migration now accounts for approximately two-thirds of population growth in Canada,” it said, suggesting that will continue.
© The Vancouver Sun 2006
