Condo sales down for 10 straight months

BY MARIO TONEGUZZI, CALGARY HERALD MARCH 1, 2011

Single-family home sales increased in February for the second consecutive month.

CALGARY - Single-family home sales and average prices were up in February compared with a year ago.

According to the Calgary Real Estate Board, sales in the single-family market hit 1,169 transactions last month for an average sale price of $461,786. In February 2010, there were 1,035 sales for an average price of $458,254.

It was the second consecutive month of year-over-year growth in sales.

However, the condominium market is still experiencing a slowdown in activity. For the 10th consecutive month, year-over-year sales are down. In February, there were 468 condo sales for an average price of $290,145 compared with 536 transactions at $282,880 in February 2010.

"Many prospective buyers have been taking advantage of the historically low interest rates and the wider selection of homes on the market," said Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp. "In addition, there is some optimism regarding the outlook for the economy and the housing market, which is encouraging some buyers to make a purchase."

Sano Stante, CREB's president, said the convergence of affordability, low interest rates, a good selection of inventory and improved confidence in Alberta's energy sector is building the foundation for a "sustainable housing recovery."

"Sales of single-family homes priced below $400,000 are driving the gradual recovery with the expectation that as the year progresses we should see the sales shift to homes priced in the mid range of the market."

Also on Tuesday, a report by Scotiabank senior economist Adrienne Warren said broad factors supporting housing demand in Canada - historically low interest rates and steady employment growth - remain in place for further gains.

"Indeed we expect continued brisk sales activity with the February and March reports as homebuyers attempt to beat pending mortgage rule changes effective mid-month," said Warren. "Nonetheless, several factors will likely reinforce a somewhat softer housing trend later in the year and into 2012."

First is a lack of pent-up demand following the record-breaking housing boom of the past decade. Second is the further tightening in mortgage lending rules announced in mid-January. And third is reduced affordability.

"While average mortgage carrying costs as a share of household income are at historically low levels, average home prices relative to incomes are at historic highs. As borrowing costs move up, affordability will be increasingly strained," added Warren.