Brady Layton, BComm, CFP

CALGARY — Alberta will be the only province next year to buck the national trend for housing starts across the country.

According to an October 2011 Housing Forecast report released Tuesday by Altus Group, only Alberta is expected to see an increase in housing starts in 2012.

Subdued economic growth will take the “sizzle” out of Canadian housing starts in 2012 and deteriorating global economic conditions leading to lower Canadian growth expectations will constrain housing demand across the country, said the report.

“Based on recent data, the Canadian housing sector is performing at a very high level, with elevated housing starts, steady prices, and steady resale markets. Interest rates are also no longer expected to increase over the next year,” said Peter Norman, chief economist, Altus Group. “But at the same time a number of risk factors are emerging, especially deteriorating economic conditions and tighter mortgage rules. Canadians can expect lower levels of housing construction in most areas of the country next year.”

But the report said Alberta has seen job conditions and interprovincial migration rise sharply this year at the expense of Ontario and British Columbia, positively affecting housing demand next year.

Alberta will see housing starts in 2012 rise to 27,800 units from 24,881 this year. In 2010, there were 27,088 housing starts in the province.

Across Canada, housing starts will hit 192,000 units this year and dip to 181,600 units in 2012. There were 189,930 starts in 2010.

The Altus Group report said only Calgary and Edmonton, among major markets in Canada, will see a rise in housing starts next year. Calgary will jump to 9,400 units from 8,400 in 2011 while Edmonton will see a rise to 9,400 units as well from 8,900 this year.

In 2010, Calgary had 9,300 housing starts while Edmonton had 10,000.

mtoneguzzi@calgaryherald.com

© Copyright (c) The Calgary Herald

A report listed Calgary third, after Toronto and Vancouver, among the most attractive real estate markets in Canada.Photograph by: Grant Black, Calgary Herald, For Postmedia NewsVolatile stock markets and minuscule returns from fixed income have investors looking at global real estate. But rather than single-family residential property, the hot ticket these days is multiplefamily dwellings.

At a luncheon for financial analysts with the Edmonton CFA Society, Eric Bonnor, senior vice-president with Brookfield Asset Management in Toronto, quoted from the publication Emerging Trends in Real Estate 2012, a survey of 950 real estate executives by the accounting firm PricewaterhouseCoopers and the Urban Land Institute.

“Canadian real estate remains the most stable in North America,” Bonner said. “Canadian investors fed up with disappointing stocks and low-yielding bonds sit on lots of funds, looking for long-term cash flowing assets like real estate, and are having trouble placing the funds that they have. Investors condition themselves to accept lower domestic returns, or go outside the country and chase higher yields.”

The booklet lists Toronto and Vancouver as the most attractive real estate markets in Canada, being 24-hour destination points for businessmen and other visitors. Calgary is rated third and Edmonton fourth.

It is written that Edmonton and Calgary are oilsands markets, but Edmonton “quietly prospers in less of a see-saw mode, historically cushioned by the presence of the provincial government.” And the commercial tenancies differ, in that Edmonton features “more stable engineering companies and not so many wildcatters.”

The research adds that Edmonton has a tight industrial real estate market with low vacancy rates, that retail building is strong as people “earn big bucks in the oilsands country and spend in local malls and power centres, including one of the world’s largest in west Edmonton.” Homebuilders do well due to appetites from people with ample salaries. And local governments hike development assessments because “it’s good political optics versus raising property taxes.”

But there are problems with residential real estate in North America. The S&P Case-Shiller index shows house prices in 20 U.S. cities are down 3.8 per cent in the 12 months ending Aug. 31, and have fallen 31 per cent since their 2006 peak. With three or four years of unsold inventory in the country, there are no signs of immediate reversal in prices. In Canada, there are concerns that a housing bubble in certain parts of the country could cause homes in those areas to fall 20 per cent in value.

To avoid the risk of buying additional residential homes, people are looking at investing in commercial and industrial properties. And presenters at the luncheon said multiple-family dwellings have become treasures, filled by people leaving their homes because they can’t keep up mortgage payments, plus those unable to afford buying a house at all.

Seamus Foran, a senior vice-president with Brookfield Asset Management, said the U.S. real estate market has $180 billion of known distressed assets, and that “the shining star for U.S. real estate today has been the multi-family market; as U.S. home ownership continues to decline, the multi-family market has been there to reap the benefits. However we need to be cautious as new development has started in this sector.”

He noted that in most U.S. apartment buildings, the turnover ratio of tenants on a year-to-year basis is at least 50 per cent, considerably higher than in Canada.

“There’s a reluctance to make a long-term commitment to buy residential houses” in the U.S., Foran said. “And the multi-family market really benefits from short-term leases, because it gives the owners opportunities to bring rents up, each time those leases fold.”

As for Canada, the Emerging Trends booklet says:

“The multi-family residential sector will stay tight as continuing immigrant flows sustain demand in the major cities. Even if job growth declines and home-buying cools, apartments should be ‘a safe haven.’ When people have less, they rent.

An increasing number of younger adults delay buying houses; they simply cannot afford them after recent price spikes. Aging demographics also favour more apartment demand; empty nesters and seniors move out of suburban homes into smaller, easier-to-maintain units with urban conveniences.”

In summary: “Investors can never get their hands on enough apartments. And everybody has the same idea. When you get some, hold onto them.”

David Glicksman, a partner with PwC, said that foreign investors in U.S. property should be aware of whether they have to file U.S. income tax returns, or whether it’s done through a firm or fund. They also need to know how to declare income or losses on their Canadian tax returns, if there are withholding taxes, if there are U.S. taxes on the sale of the investment, and whether you get a foreign tax credit in Canada.

© Copyright (c) The Calgary Herald

Read more: http://www.calgaryherald.com/business/Calgary+listed+third+most+attractive+real+estate+market+Canada/5740149/story.html#ixzz1eOut6FXW

Tuesday, November 8, 2011
Sharon Singleton | Money
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Facebook Digg Del.icio.us Google Stumble Upon Furl Newsvine Reddit Technorati Blinklist Yahoo Ma.gnolia Simpy Squidoo Blogmarks Netvouz Scuttle Comment Tailrank Sitejot Those costly home-reno projects may be paying off, according to RE/MAX.

The billions Canadians have spent on upgrading properties and building new houses over the past decade have improved the quality of real estate and helped almost double prices during the period.

The value of a Canadian home has risen from $163,951 in 2000 to $339,030 last year, the real estate giant said. It found that in 10 out of 16 major markets studied, prices have more than doubled.

Over the past 10 years, about $340 billion worth of new housing permits have been issued, while Canadians have spent an estimated $450 billion on renovations. RE/MAX estimates that Canadians spend about $60 billion annually on home improvements.

“Revitalization, renovation and new construction have been largely underestimated in terms of overall impact on rising average price,” said Elton Ash, regional executive vice president, RE/MAX of Western Canada.

“Yet, outside of supply and demand, these have been among the foremost variables influencing real estate values. The overall result is tremendously positive for real estate and our major centres — and there’s much more to come.”

Canada’s housing market has so far remained solid despite the global economic turmoil. A report by the Canada Mortgage and Housing Corporation last week predicted that sales will continue to rise next year. Prices will also increase, though at a slower pace.

The new construction has expanded the boundaries of Canada’s cities, creating new sought-after suburban pockets, while in urban centres old structures are being rebuilt to maximize values, RE/MAX said.

The real estate chain said often properties haven’t kept pace with the value of the land they have been built on in inner cities. So plots of land with a bungalow on them are now highly sought after for their redevelopment potential.

The other main game changer in the Canadian property market has been condo construction, RE/MAX said. In B.C. and Alberta, condos now account for about 25 to 50% of residential sales.

“As the product has gained widespread acceptance, it’s upside effect on the housing mix stands out, keeping homeownership within reach for first-time buyers, creating trendy urban pockets coveted by young professionals and offering aging baby boomers exciting advantages from low-maintenance living, to an active lifestyle and even luxury, with some suites now commanding prices in the millions,” Ash said.