More evidence emerged Wednesday that it’s becoming more affordable to buy a home in the Calgary area.

Contractors’ selling prices for new homes in Canada dropped the most in Edmonton and Calgary in January compared with a year ago, according to Statistics Canada’s new housing price index.

And a national report by real estate firm Re/Max said first-time homebuyers are now the driving force in the resale housing market because of the drop in MLS prices.
Statistics Canada said prices for new homes declined 2.8 per cent in Edmonton and 2.1 per cent in Calgary from December to January. Across the country, the drop was 0.6 per cent.

On a year-over-year basis, the two Alberta cities led in price declines from January 2008 to January 2009 — a 10.4 per cent decrease in Edmonton and a 6.5 per cent drop in Calgary.

Among surveyed cities, the largest year-over-year increase was registered in St. John’s, N.L., at 24.1 per cent

That was followed by Regina at 21.7 per cent.

The peak for year-over-year overall change in new home prices was in August 2006 at 60.6 per cent for the Calgary census metropolitan area.

The Calgary CMA includes the city, Airdrie, the Municipal District of Rocky View, Chestermere, Cochrane, Irricana, Beiseker and Crossfield.

Entry-level purchasers are now the engine driving home buying activity in almost every major centre in the country, said the 2009 Re/Max first-time buyers report, highlighting firsttime buying in 32 residential housing markets across Canada. It found improved affordability is prompting many first-time buyers to get off the fence, out of rental, and into the market.

When the Calgary Real Estate Board released its February MLS data recently, president Bonnie Wegerich said: “Affordability is the silver-lining in this market. With low interest rates, broad selection and improved affordability, buying opportunities have not been this strong in years.

“And this is good news particularly for first-time homebuyers who may have felt pushed out of the market. First-time homebuyers can take advantage of improved affordability along with the federal government’s f irst-time homebuyers tax credit and new increases to the homebuyers’ plan.”

The Re/Max report said that, in Calgary, improved affordability levels are bringing firsttime buyers into the residential real estate market. Close to 60 per cent of year-to-date sales have taken place in the under $400,000 price point — a 20 per cent increase over last year.

“Spurred by lower housing values, falling interest rates, and a greater selection of homes listed for sale, purchasers are approaching home ownership with caution,” said the report.
The price of a single-family home in Calgary has fallen by close to 11 per cent to $414,663 year-to-date compared with last year while condo prices have dropped by more than 13 per cent to $269,751 in February.

“First-time buyers are active in the lower end of the market where listings are a little tighter and prices have less flex. The most sought-after communities for single-detached housing include the city’s East End, starting at $250,000,” said the report.

“And ample supply of condominiums are currently listed for sale in Calgary’s northwest, southeast and north central neighbourhoods, with units prices as low as $200,000. As the traditional spring market approaches, demand for housing in Calgary is expected to increase.”

In a research note, the Bank of Nova Scotia said home builders are trying to burn off inventory across the country. “Inventories are now at levels not seen since 1995 as housing demand retrenches while the number of tradesmen available for work has risen substantially. While we are expecting a further 10 per cent drop in average prices this year, rising unemployment, moderating wages and increased job uncertainty will all likely keep prospective homebuyers on the sidelines.”

Ian Pollick, economics strategist with TD Securities, said the national monthly decline in new home prices was bigger than the market consensus for a 0.2 per cent drop.

“This is the largest seasonally adjusted monthly decline in prices since 1991, and eight of the last 12 months have posted monthly declines,” he said.

The year-over-year retreat was the first decline in prices since 1997, he added.

“ This f urther corroborates the widely held view that the Canadian housing market continues to cool,” said Pollick.


“On balance, this is a weak report and highlights the continued pace of moderation currently afflicting the Canadian housing market. . . . However, the price moderation taking place in Canada is still much slower and to a shallower depth than the correction taking place in the U.S.”