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Calgary Real Estate: Post Flood Review

Posted by Jim Sparrow on Monday, July 1st, 2013 at 10:39am.

Calgary Post Flood Real Estate Review

Elbow Park mansion in SW Calgary after June 22 2013 flood

Flooded Elbow Park Home - SW Calgary

As Southern Alberta continues to recover from the devasting flood experienced June 22 2013, the effects have already started impacting the metro Calgary real estate market. Everyone has an opinion - this is ours.

While flooding in the city made international headlines, the number of neighbourhoods affected by the disaster account for less than 12% of all Calgary communities. Areas that saw flooding were those along the banks of either the Bow and Elbow Rivers along with adjacent low-lying communities. Most of Calgary remained high & dry. The Calgary Real Estate board estimates roughly 14% of metro housing stock has been impacted, as many high density condos in the inner city were flooded.

... throughout the next few months housing sales, number of listings, days-on-market, average sale prices & number of building permits will no longer reflect the true direction of the market -- Don Campbell, Real Estate Investment Network Canada

Over the next few months Calgary market numbers will be skewed. Prices in affected areas may slip, while those in non-affected areas will rise. Keep in mind that short-term metrics following a disaster deviate from the longer term trend, and it will be some time until equilibrium returns.

Without question some flooded districts have properties that will see price discounts, while listings in unaffected areas will command higher prices as the number of active listings falls. The already low level of listings will shrink as buyers purchase properties not impacted by the flooding:

"In the short term, we anticipate that the level of listings will fall, and any transactions that do go ahead in the impacted areas will face some price discounts. However, increased demand in the unaffected areas, combined with already tight supplies, would support further price gains. This will offset any declines recorded in the impacted areas." - Ann-Marie Lurie, Chief Economist - CREB 

Calgary Market Results: June 2013 vs 2012

Sales & prices of Calgary real estate have been exceeding year-over-year numbers since early 2012, and up until the recent flood 2013 had been a seller's market for most areas of the city. Strong economic growth resulting from continued oil sands development has made the city a magnet for thousands, and the rebuilding will only increase these numbers.

Becky Walters, President of the Calgary Real Estate Board, believes "Calgary's resale market is strong enough to weather this terrible event"

Metro Calgary Sales - June 2013 vs 2012
   June 2013  June 2012  Change (%)
 Total House Sales  1,639  1,606  + 2.1%
 Total Condo Sales  677  592  +14.4%
 Total Metro Sales  2,316  2,198  + 5.4%
 Average Sale Price House  $527,107  $489,346  + 7.7%
 Median Sale Price House  $450,000  $430,000  + 4.7%
 Average Sale Price Condo  $320,059  $311,766  + 2.7%
 Median Sale Price Condo  $286,000  $271,000  + 5.5%
 Active House Listings  3,243  3,817  -15.1%
 Active Condo Listings  1,397  1,898  -26.4%
 Total Active Metro Listings  4,639  5,715  -18.8%

Despite losing nearly a week of normal business due to the disaster, metro Calgary sales house sales were still 2.1% higher and 14.4% more condos sold vs June of last year. Prices for both houses & condos were up by a significant percentage, while active listings were down by double digit percentages vs last June. The level of listings is 2 months of house inventory & 2.1 months of condo inventory. 

Calgary Year-to-date Sales: 2013 vs 2012

As of the end of June, total sales in metro Calgary are 4.5% higher than the same period last year: 12,285 (2013) vs 11,752 (2012). Most of this increase comes on the back of a 14.5% increase in condominium sales. Home (house) sales are up 0.7% vs. 2012.

  • Average single family home (house) price has risen 7.7%: $517,221 (2013) vs. $480,257 (2012)
  • Median single family home (house) price has risen 4.2%: $448,00 (2013) vs. $429,900 (2012)
  • Average condo price has risen 7.2%: $316,885 (2013) vs. $295,467 (2012)
  • Median condo price has risen 7.4%: $281,500 (2013) vs. $262,000 (2012)

Legal side of closing flood impacted properties

Calgary lawyer Lou Pesta of Walsh Wilkens discusses a number of challenges facing buyers & sellers trying to close on properties in the flood-impacted areas of Calgary & southern Alberta. Lou shares his thoughts about the challenge of not being able to

  • access client files due to lawyers being evacuated from their offices, 
  • delayed walk-throughs due to inaccessible properties, 
  • legal recourse for damage to properties, 
  • overland flooding & insurance, 
  • frustration of contract, 
  • funding for damaged properties, 
  • breach of contract as a result on inability to close on damaged property
  • inability to find contractors & materials to repair properties
  • lack of city inspectors & proper permitting for both new construction & renovations
  • price gouging by contractors
  • condominium insurance & special assessments

 

 

2nd Half 2013 Outlook

We're predicting the 2nd half of 2013 will continue to see strong numbers overall in Calgary as buyers scramble to find the right home from the shrinking pool of available listings. The number of damaged properties in the inner city & along the rivers will further erode the number of available properties in the next few months.

  • Number of sales and prices in flooded communities will fall over the short-term, returning to normal within 6-12 months.
  • Sales & prices for uneffected properties in impacted communities might also suffer as banks & insurance companies may be reluctant to fund & insure any properties in these areas
  • prices in unaffected communities will increase as buyers - especially migrants fearful of the flooding - seek housing on higher ground
  • all sales numbers, prices as associated statisctics will be skewed. Ignore pundits who suggest the sky is falling. Equilibrium will return to the market(s), likely far more quickly than some may think
We'd be pleased to answer any questions you may have about flood impacted areas or specific properties, and as always can be reached most hours of the day. If we can't answer your question we'll put you in touch with someone who can.

 

Stay strong Calgary

If you're looking to sell or buy, do not hesitate to contact us.

We are prepared to work hard ensuring that your needs are met and that the result is more than you were hoping for. Nothing gives us more pleasure than your success and being with you through major life changes.

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