The Media has had a great time placing its opinions on the forecast of the real estate market in Calgary. When the market is strong, we are considered to be over-inflated. When the market slows down, media claims a massive market crash. Instead of listening to these dramatic opinions of the media, take a look at the numbers.

The downturn in the Alberta economy caused by a huge decline in oil prices has everyone watching the impact on the housing market these days – and more precisely what that environment will do to prices.

Some economists have forecast a correction of up to 10 per cent in Calgary should the low oil price environment persist.

A new report by Sal Guatieri, senior economist at BMO Capital Markets, expects prices in Calgary “to decline moderately this year as layoffs in the energy sector spur some reversal in migration flows.”

In January, Calgary led the country with a 7.8 per cent year-over-year hike in its benchmark price.

Guatieri classified Calgary as being in a buyer’s market and the previously-hot region has lost its sizzle due to the collapse in oil prices.

The report found that the city’s price to median family income ratio has risen from 2.8 in the fourth quarter of  2001 to 4.3 in the fourth quarter of 2014. During the same period, mortgage payment as a percentage to median family income has grown from 17 per cent to 24 per cent.

According to the Calgary Real Estate Board, active MLS listings have seen a steady increase recently in the city’s housing market. At the end of December they were 3,233 but climbed to 4,655 at the end of January. Month-to-date in February until Wednesday, they were at 5,379.

The Calgary housing market has continued its slide from January. So far in February, MLS sales of 728 are down 33.2 per cent from the same period last year while new listings have increased by 18 per cent to 1,943 and the average sale price has declined by 5.4 per cent to $464,245.

In January, sales were down nearly 39 per cent from a year ago and average sale prices dropped by 0.5 per cent while new listings rose by 37 per cent.

 

-Calgary Herald

 

Canada Mortgage and Housing Corp. expects Calgary region home prices to rise over the next two years, albeit at a slower pace than previously forecast.

In an updated outlook Friday, it said the average price locally will rise from $460,584 last year to $469,000 in 2015 and $479,000 in 2016.

CMHC Prairies market analyst Felicia Mutheardy said price growth forecasts are now expected to be in line with inflation.

“Given lower sales and the pronounced recent increases in new listings, market conditions in Calgary are expected to rebalance, easing the pressure on prices for 2015 and 2016,” she said.

However, sales are expected to fall from 33,615 in 2014 to 32,500 this year and 32,700 in 2016.

“The previous quarterly forecast called for higher existing home sales in Calgary through 2016, though with some moderation in the rate of growth due to slightly weaker employment growth and reduced inflows of migrants,” said Mutheardy. “Since the 2014 fourth-quarter forecast, the price of oil has moved significantly lower.

“Should current prices persist, this could further reduce net migration and employment growth, resulting in weaker than expected demand.”

In its annual forecast last month, the Calgary Real Estate Board said overall MLS sales would fall by four per cent while prices would rise by 1.6 per cent.

CMHC expects housing starts in the Calgary region to drop from 17,131 last year to 13,600 in 2015 and to 12,100 in 2016.

“Similar to the reasons for a decline in existing home sales, the outlook for reduced starts will be attributed to slower employment growth and lower net migration,” said Mutheardy.

“Rising supply levels in the competing existing home market will also contribute to an overall decline in production” largely in the multi-family category, she said.

For Alberta, the agency forecasts housing starts will decline from 40,590 last year to 36,000 this year and 34,500 in 2016.

MLS sales for the province are expected to dip from 71,773 in 2014 to 71,100 in 2015 and then rise slightly to 71,600 in 2016.

Richard Goatcher, economic analyst with the Canadian Home Builders’ Association-Alberta, said the province’s home builders expect 2015 starts will be reduced 15.5 percent from 2014 levels, although the provincewide total of 34,300 units should still exceed the five-year average of 32,500 units started between 2010 and 2014.

He said a sample of members polled in January found most of the slowdown in 2015 is expected in the multi-family segment, where starts are expected to decline by 20 per cent to 16,840 units. Single-detached starts this year are expected to reach 17,460 units provincewide, representing an 11 per cent reduction from 2014 totals.

 

– Calgary Herald