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.