CITY OF CALGARY RESIDENTIAL RESALE MARKET UPDATE

A balancing act: Calgary resale market set to simmer

AGENDA: RESALE MARKET UPDATE

CALGARY ECONOMIC DRIVERS

Overview Employment Migration Interest rates and wages

CITY OF CALGARY RESIDENTIAL RESALE MARKET

Single family market Condominium market

FORECAST SUMMARY QUESTIONS / DISCUSSION

agenda: resale market update city of calgary residential resale market update

september 2011

CALGARY ECONOMIC DRIVERS

ENERGY SECTOR PRIMARY DRIVER OF THE ALBERTA ECONOMY distribution of albertas export sectors in 2010

Forestry Other 3% 3% Manufacturing 6%

Agriculture 9%

Chemicals/ Plastics 8% Energy 71%

source: Statistics Canada and World Trade Atlas

calgary economic drivers - overview city of calgary residential resale market update

september 2011

FUTURE INVESTMENT DRIVEN BY OIL SANDS ACTIVITY alberta conventional oil & gas and oilsands capital expenditure

calgary economic drivers - overview city of calgary residential resale market update

september 2011

OIL REBOUNDS WHILE NATURAL GAS REMAINS FLAT west texas intermediate oil and henry hub natural gas prices
($U.S. / BBL) ($U.S. / MMBTU)

140

14

120

12

100

10

80

60

40

20

West Texas Intermediate Oil Price (U.S. $)

Henry Hub Natural Gas Price (U.S. $)

Source: Statistics Canada

calgary economic drivers - overview city of calgary residential resale market update

september 2011

MAJORITY OF EXPORTS GO TO US, LEAVING ALBERTA VULNERABLE distribution of albertas export destination by region in 2010

United States 87% Other, 13%

Japan 14%

China 27%

Europe, Middle East, Africa, 15%

Other Asia 20%

Latin Amercia 14%

Europea n Union 11%

source: Statistics Canada and World Trade Atlas

calgary economic drivers - overview city of calgary residential resale market update

september 2011

A SECOND U.S. RECESSION?

U.S. Economy Concern U.S. may slip into another recession Limited ability to use fiscal or monetary stimulus to boost economy Downgrade in economic growth expected Impact on Alberta growth

calgary economic drivers - overview city of calgary residential resale market update

september 2011

CALGARY HAS STRONG LONG TERM FUNDAMENTALS

Not all Negative.. Calgary continues to remain the energy capital and long term growth prospects are positive Energy companies are actively pursing pipeline expansions providing the ability to tap into emerging markets Energy companies may delay expansion plans, but may avoid further employment cuts Alberta and Calgary growth may slow in the near term, but remain in positive territory
calgary economic drivers - overview city of calgary residential resale market update

september 2011

FULL-TIME EMPLOYMENT ON THE RISE calgary cma full-time and part time employment growth
40,000 8% 7% 6% 20,000 5% 10,000
4%

30,000

3% (10,000) 2% (20,000) 1% 0%

(30,000)

Full-Time Changes in Jobs (Y/Y)

Part-Time Changes in Jobs (Y/Y)

Unemployment Rate

Seasonally Adjusted Data, 3 month moving average, Source: Statistics Canada

calgary economic drivers - employment city of calgary residential resale market update

september 2011

ALMOST ALL FULL-TIME JOBS LOST HAVE BEEN REGAINED calgary cma full-time employment growth
6,000

4,000

24,000 JOBS LOST

2,000

(2,000)

(4,000)

20,000 JOBS GAINED

(6,000)

(8,000)

Seasonally Adjusted Data, 3 month moving average, Source: Statistics Canada

calgary economic drivers - employment city of calgary residential resale market update

september 2011

EMPLOYMENT GROWTH EXPECTED FOR THE NEXT FEW YEARS calgary cma total employment
Average Annual Employed Y/Y % Change

800,000

10%

750,000 8%

700,000 6% 650,000

600,000

4%

550,000
2% 500,000

0% 450,000

400,000 2003
Employed

-2% 2004
% Change (Y/Y)

2005

2006

2007

2008

2009

2010

2011 (F)

2012 (F)

Seasonally Adjusted Date, 3 month moving average Source: Statistics Canada, Conference Board of Canada Forecast

calgary economic drivers - employment city of calgary residential resale market update

september 2011

ECONOMIC RECOVERY OFFERS A WARMER WELCOME calgary cma total net migration
30,000

25,000

20,000

15,000

10,000

5,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 (F) 2012 (F)

Source: Statistics Canada, Conference Board of Canada adjustment, Conference Board of Canada Forecast

calgary economic drivers - migration city of calgary residential resale market update

september 2011

INTERNATIONAL MIGRANTS TO DRIVE GROWTH calgary cma net migration

20,000

15,000

10,000

5,000

0 2007 2008 2009 2010 2011 2012

(F)

(F)

-5,000

Net international Migration

Net Interprovincial Migration

Source: Statistics Canada, Conference Board of Canada adjustment, Conference Board of Canada Forecast

calgary economic drivers - migration city of calgary residential resale market update

september 2011

AFFORDABILITY CLIMATE WILL CONTINUE canadian lending rates

25%

20%

15%

10%

5%

0%

Canada; Average residential mortgage lending rate: 5 year

Canada, Prime Lending Rate

Source: Statistics Canada, Conference Board of Canada Forecast

calgary economic drivers - lending rates & wages city of calgary residential resale market update

september 2011

CITY OF CALGARY RESIDENTAIL RESALE MARKET - SINGLE FAMILY

SINGLE FAMILY SALES ON THE PATH TO RECOVERY city of calgary single family market
20,000 19,000 18,000 17,000
16,000

45% 40% 35% 30%

25%

15,000 14,000 13,000 12,000

11,000

20% 15% 10% 5%

0%

10,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (F)

-5%

Single Family Sales

10 year average

Average Y/Y Price Change (%)

Source: CREB, CREB Forecast

city of calgary forecast - residential resale market, single family city of calgary residential resale market update

september 2011

LOWER LISTINGS WILL CONTRIBUTE TO MARKET BALANCE city of calgary single family sales and listings
4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 -

Single Family Listings

Single Family Sales

Source: CREB

city of calgary forecast - residential resale market, single family city of calgary residential resale market update

september 2011

SUPPLY LEVELS CONTINUE TO DECLINE city of calgary single family inventories and sales to new listings ratio
8,000 7,000 6,000 5,000 0.80
4,000

1.40

1.20

1.00

0.60 3,000 2,000

1,000

0.40

0.20

Single Family Month End Inevntory

Single Family Sales to New Listings Ratio

Source: CREB

city of calgary forecast - residential resale market, single family city of calgary residential resale market update

september 2011

BALANCED CONDITIONS IN THE SINGLE FAMILY MARKET city of calgary months of inventory relative to average price changes
10 9 8 7 6 5 4 3 2 1 -20% 0% 10% 30% 40%

20%

-10%

Single Family

Average Price Y/Y % change

Source: CREB

city of calgary forecast - residential resale market, single family city of calgary residential resale market update

september 2011

RELATIVELY STABLE PRICE CHANGES REFLECTIVE OF MARKET BALANCE city of calgary single family average and median price: year over year change
60% 50% 40% 30% 20% 10% 0% -10% -20%

Single Family Average Price change

Single Family Median Price Change

Source: CREB

city of calgary forecast - residential resale market, single family city of calgary residential resale market update

september 2011

MARKET OFFERS ATTRACTIVE PRICE POINTS city of calgary single family sales by price range year to date
45% 40%
35%

30% 25% 20% 15% 10% 5% 0%

>$300,000 $300,000 -$ 349,999
Aug-10 Aug-11

$350,000 $449,999

$450,000 $549,999

$550,000 $699,999

$700,000 +
Source: CREB

Aug-08

Aug-09

city of calgary forecast - residential resale market, single family city of calgary residential resale market update

september 2011

PRICE STABILITY EXPECTED city of calgary single family average price

500,000 450,000 400,000 350,000 300,000 250,000 15% 200,000 150,000 100,000 50,000 10% 5% 0% -5% -10% 45% 40% 35% 30% 25% 20%

Single Family Average Price

Average Price Y/Y % Change

Source: CREB

city of calgary forecast - residential resale market, single family city of calgary residential resale market update

september 2011

CITY OF CALGARY RESIDENTAIL RESALE MARKET - CONDOMINIUM

SALES AND PRICES REMAIN COMPARABLE TO 2010 LEVELS city of calgary condominium market
9,000 8,000 40% 7,000
6,000 30%

50%

5,000 20% 4,000 3,000 2,000 0%

1,000

10%

2001
Condo Sales

-10% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (F)

10 year average

Average Y/Y Price Change (%)

Source: CREB, CREB Forecast

city of calgary forecast - residential resale market, condominium city of calgary residential resale market update

september 2011

INVENTORIES MOVING IN THE RIGHT DIRECTION city of calgary condominium inventories and sales to new listing ratio
3,500 3,000 2,500 2,000 1,500 1,000 500 1.40 1.20 1.00 0.80 0.60 0.40 0.20 -

Condo Month End Inevntory

Sales to New Listings Ratio

Source: CREB

city of calgary forecast - residential resale market, condominium city of calgary residential resale market update

september 2011

MARKET MOVING CLOSER TO BALANCED RANGE city of calgary months of inventory relative to average price changes
10 9 8 7 6 5 4 3 2 1 -20%
0%

40%

30%

20%

10%

-10%

Condominium

Average Price Y/Y % change

Source: CREB

city of calgary forecast - residential resale market, condominium city of calgary residential resale market update

september 2011

MORE PEOPLE PURCHASING AT THE LOW END OF THE MARKET city of calgary condominium sales by price range year to date
60%

50%

40%

30%

20%

10%

0%

>$200,000
Aug-08 Aug-09 Aug-10

$200,000 - $299,999
Aug-11

$300,000 - $399,999

$400,000 - $599,999

$600,000+
Source: CREB

city of calgary forecast - residential resale market, condominium city of calgary residential resale market update

september 2011

STABLE PRICES AS HIGH END SALES BALANCED BY LOW END SALES city of calgary condominium average price
350,000 50%

300,000

40%

250,000 30%

200,000 20% 150,000 10% 100,000

0%

50,000

-10%

Condominium Average Price

Average Price Y/Y % Change

Source: CREB

city of calgary forecast - residential resale market, condominium city of calgary residential resale market update

september 2011

FORECAST SUMMARY

FORECAST SUMMARY: CITY OF CALGARY MLS RE-SALES

2009

2010

2011 (F)

Change Forecaster

Single Family Sales

Single Family Listings Single Family Average Price Condominium Sales Condominium Listings

14,429
22,447 442,329 6,321 10,320

12,091
25,698 461,132 5,177 11,423

13,100
24,500 470,000 5,100 10,800

7.70%
-4.89% 1.89% -1.51% -5.77%

CREB
CREB CREB CREB CREB

Condominium Average Price

283,620

289,890

290,000

0.04%

CREB

forecast summary city of calgary residential resale market update

september 2011

FORECAST RISKS: UPSIDE / DOWNSIDE

DOWNSIDE U.S. and European economic recovery worsens or there is another recession Market uncertainty delays corporate expansion, reducing employment growth expectations Consumer confidence declines, causing a delay their decision to purchase a home UPSIDE Investment into Alberta energy continues at greater than expected pace Lower interest rates combined with employment growth boosts activity
city of calgary forecast - residential resale market city of calgary residential resale market update

september 2011

QUESTIONS?
Ann-Marie Lurie Senior Economist Direct: 403.781.1372 Email: ann-marie.lurie@creb.ca

September 2011

city of calgary residential resale market update

september 2011

CITY OF CALGARY RESIDENTIAL RESALE MARKET UPDATE

A balancing act: Calgary resale market set to simmer