Equilibrium coming to Calgary’s housing market in 2015 says annual forecast
“With more supply in the market expected this year, buyers will likely have more alternatives in all price ranges,” said 2015 CREB® president Corinne Lyall. “It’s a nice scenario for buyers, but it also means sellers will likely have to adjust their price expectations and be realistic about the amount of time their home will be on the market.
Supply in Calgary’s housing market is expected to increase due to weaker economic conditions, said CREB®’s 2015 Economic Outlook and Regional Housing Forecast.
According to the Conference Board of Canada, Calgary’s GDP had an expected 4.5 per cent increase in 2014 dropping to an expected 1.5 per cent increase for 2015. CREB®’s economic outlook is calling for home sales to decline by four per cent in 2015 due to market uncertainty, more rental availability and a drop in employment growth and net migration to levels more consistent with “long-term trends for the city”.
“While sales activity is expected to ease in 2015, it remains consistent with long-term levels,” said the outlook. “By comparison, sales in 2014 were nearly 15 per cent higher than long-term trends for the city.”
Sales in Calgary in 2014 increased 9.4 per cent year-over-year, almost 15 per cent above the 10-year average.
“A 13 per cent annual increase in new listings in 2014 helped push the market toward more balanced conditions, but not before some significant price gains in prices,” said the CREB® outlook. “Based on an annual average, the benchmark home price totaled $451,008 in 2014, a 9.85 per cent increase over the previous year.”
Listings in Calgary are expected to increase as completions in the new home sector contribute to more resale listings. For December, the Canada Mortgage and Housing Corp. (CMHC) reported starts in the city were trending at 15,544 compared to 18,555 in November – a decrease echoed in starts across the country.
“Overall, activity in 2014 continued to be supported by employment growth and migration with starts [in Canada] remaining essentially unchanged at 189,401 compared to 187,923 in 2013,” said Bob Dugan, CMHC’s chief economist.
“These factors are expected to continue to promote stability in the pace of new home construction during 2015.”
Amidst housing number forecasts is wavering oil prices. With the decrease seen in the oil sector – prices dipped below $50 a barrel as of Jan. 8 – CREB® chief economist Ann-Marie Lurie said the decrease doesn’t necessarily have a direct relationship with housing prices.
“What we’re really watching … is what impact oil prices will have on investment, as well as unemployment, net migration, wage growth, all of those combined,” she said.
Lurie explained with lower energy prices, there should be a pullback in investment at the same time causing employment levels to ease but still remain positive.
“So there isn’t an expectation there’s going to be more job losses than gained and that’s an important thing to note,” she added.
An economic outlook from ATB Financial reported 50,000 jobs were added in the province in the 12 months leading up to November 2014 for a year-over-year increase of 2.2 per cent. The report found wages in Alberta seem yet to be affected by declining oil prices but employment in some professions, like geologists and engineers saw losses in 2014.
“Softer job creation, tighter spending controls by companies and weaker overall conditions should act to contain wage growth in 2015,” said the report.
As far as the rest of the nation is concerned, a report from TD said because of oil price forecasts, their economic outlook for GDP in Canada is expected to increase 2.3 per cent in 2015 and 2.2 per cent in 2016.
“As higher prices feed through to increased profits in the oil patch, non-residential investment is forecast to bounce back from the expected weakness over the next couple of years,” said the report. “The economy should also be supported by increased exports and eventually higher investment in machinery and equipment. Consequently, the unemployment rate is forecast to decline gradually.”