Carlos Montes Calgary Real Estate

Home prices slide in Calgary despite national increase

Canada’s housing market is a mixed bag. Although home prices increased in January for the first time in three months, the news locally wasn’t as positive as prices in Calgary slid 0.12 per cent over the previous month and had dropped 0.83 per cent the past six months.

That’s according to the new MLS Home Price Index. Introduced by the Canadian Real Estate Association, the price index analyzes housing prices in five major urban markets: Calgary, B.C.’s Fraser Valley, Vancouver, Montreal and Toronto. Together, those markets account for about half of Canada’s total real estate market.

Nationally, the home price index jumped 0.27 per cent in January to 149.3 compared to the previous month. That represents a 5.2 per cent increase compared to January 2011.Instead of relying on median and average home prices, the new MLS Home Price Index shows how typical properties are valued in their respective markets.

Reasons for Calgary’s decline in prices

More lower-priced homes were sold compared to the previous year, which accounts for the local year-over-year price decline, according to the Calgary Real Estate Association.

Single-family average sales prices in January were down 3.34 per cent to $438,683; average condo prices dropped 6.86 percent to $268,526, according to CREB’s monthly MLS data for January.

Price gains in January were best in Montreal at 0.7 per cent. The Fraser Valley experienced the biggest drop, 0.14 per cent, of the five markets covered by the index. Toronto prices rose 0.3 per cent, and Vancouver prices rose 0.06 per cent.

New index intended to be a more-accurate reflection of market trends

The new index measures changes in prices for a respective neighborhood based on factors like square footage and lot size, along with features such as number of bathrooms, fireplaces, etc. The goal is to provide a better gauge of the local or national housing market. The previous method, which relied solely on average home prices, could fluctuate wildly, depending on a surge or big drop in sales.

That’s where much of the criticism came into place. High-end transactions, for example, could throw monthly sales data out of whack. CREB’s chief economist called the former price index misleading.

 Record-low mortgage rates

The news comes as mortgage rates in Canada lingered near record lows. Policymakers fear Canada is ripe for a fresh housing bubble crisis, as the recession nears an end and lending rates remain low. Those fears were underscored after Canada’s major banks dropped five-year fixed mortgage rates to 2.99 per cent, a historic low.

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