Property buying mania hits western Canada

The intense competition for a place to call home has sent prices in Western Canada soaring in the past 12 months, with Calgary rocketing an incredible 43.6 per cent and Vancouver surging 23.7 per cent, making it the priciest market in the country where the average home costs more than half a million dollars.

The figures released yesterday by the Canadian Real Estate Association also show big gains in the national numbers, as the average price of a home cracked the $300,000 mark for the first time, reaching $303,836 in May. That figure is a 12.9-per-cent increase from May of last year.

Last month, the average price of an existing home in Calgary hit $358,214, just a few thousand dollars shy of the Toronto average of $365,537, which was up 5.5 per cent from a year earlier.

If the current trend continues -- and there is no reason to think it will end -- Calgary will soon take Toronto's long-held place as the second most expensive market in the country.

But hunting for a house in Canada's hottest market is becoming a round-the-clock activity, with buyers keeping track of new listings on BlackBerrys and computers, ready to drop everything to take a look at a home.

"We call it just-in-time inventory. It's the first time I've ever seen anything like it in my 27 years in the business," said Rick Bumphrey, owner of Re/Max Realty Professionals in Calgary.

Mr. Bumphrey said agents are sending out e-mail alerts on new listings just as soon as they happen in hopes that their clients might get an edge in a market where multiple offers are becoming a way of life.

Too many buyers chasing too few listings is leaving everyone with some pretty frayed nerves, Mr. Bumphrey said. Agents are reluctant to turn off their pagers and are putting summer holidays on hold. "The sellers are making all the rules. It's creating a lot of stress."

One real estate executive said he has heard of agents equipping their clients with BlackBerrys so they can send them up-to-the-minute alerts. "It's 24/7," said Elton Ash, executive vice-president with Re/Max Western Canada. "They are saying, drop what you are doing, we are going to have a look at that property."

When listings do come out, would-be buyers are waiving conditions and rushing to make offers that are often thousands of dollars over the listing price. "There's no time to sleep on anything," said George Bamber, president of Century 21 Bamber Realty Ltd. "We are seeing a lot of unhappy people who are missing deals.

National sales volumes in May also hit a new record, with 37,460 homes changing hands, up 4.4 per cent, with the previous record set in May of last year.

On a seasonally adjusted basis, the increase was more modest at 2.4 per cent. There also are signs the market is cooling. So far in the second quarter, the pace of sales has moderated from the strong levels of the first quarter, said J.P. Morgan economist Ted Carmichael. Volume for April and May is down 2.6 per cent from the first three months of the year, he said.

But there is no sign of easing when it comes to pricing. Several markets in the West experienced double-digit price increases last month. Average prices were up almost 23 per cent from last year in Edmonton, 12.5 per cent in Winnipeg, 11.5 per cent in Saskatoon and 10.3 per cent in Regina. Elsewhere in the country, average prices in Saint John and Sudbury also have risen by more than 10 per cent in the past 12 months.

"Price increases in Western Canada are driving up the national numbers,' said Gregory Klump, chief economist with the Canadian Real Estate Association. Mr. Klump said the spike in prices in centres such as Calgary is creating a shortage of product in the lower price ranges. He expects the decline in affordability will eventually help to slow volume and bring the market back into balance.

Some say they are seeing early signs that this may already be happening, thanks in part to the huge losses many potential buyers have suffered recently in equity markets.

"That will take a little wind out of our sales," Mr. Bamber at Century 21 Realty said. Buyers may think twice, he said, after taking losses on their investments and watching the value of their stock options fall.

Mr. Bamber, who has seen business soar 70 per cent this year, expects things may slow somewhat in the higher end of the market as a result, but he expects mid- and lower-priced properties will remain in high demand.

He said he would welcome an easing of the current pace and a return to a more balanced market. "Everybody would get a chance to take a deep breath."

(prepared by Elizabeth Church/Globe & Mail)