It has been a challenging year in Calgary’s residential real estate market due to economic headwinds still facing the city.
And as we head into a new year, experts don’t anticipate much to change in Calgary’s economic climate – and therefore for the city’s resale housing market.
“Calgary’s market remains flat due to its reliance on the oil and gas industry along with the mortgage stress test and a slow economy,” says the national 2019 Housing Market Outlook Report by RE/MAX. “This is likely to continue into 2019 and market trends will be determined by what happens with the proposed pipeline (Trans Mountain) along with the ongoing fluctuation in oil prices.”
The RE/MAX report says the average residential sale price in Calgary for 2019 “is not expected to change due to a lack of economic factors driving demand.”
According to the Calgary Real Estate Board website, year-to-date MLS sales as of Thursday in the city were 16,066 which are down 14.41 per cent compared with the same period a year ago.
Meanwhile the average MLS sale price has dipped by 1.23 per cent to $478,271.
The RE/MAX report says “Calgary’s market may shift at a moment’s notice as it is so closely tied to its dependency on the oil and gas industry.”
“Depending on what happens with the pipeline in 2019, the outlook for 2020 could shift dramatically,” says the real estate company.
It says active listings in Calgary’s resale market have been trending higher, while MLS sales have been lower due to relatively weaker economic fundamentals in the market.
The CMHC says increasing supply with decreasing demand has resulted in buyers’ market conditions. A slow economic recovery from the past recession has kept labour market conditions soft, it adds.
And we all know that a healthy employment market is a key driver for any housing market. But in Calgary the labour market has been challenged in the past few years with an unemployment rate still on the elevated side around eight per cent.
“Various factors will push and pull the demand for housing in Calgary in 2019 and 2020. On aggregate, it is anticipated that Calgary’s economy will experience stronger growth in population and employment. This will help support demand and lift MLS sales in 2019 and 2020,” says the CMHC report.
“However, it will take time for the market to transition to conditions that are more balanced. The average MLS price will continue facing downwards pressure but is expected to stabilize in 2019 and modestly rise in 2020.
“Employment growth and the continued influx of interprovincial and international migrants is expected to drive the demand for rentals over the forecast horizon in Calgary. Migration estimates for Alberta have shown positive interprovincial migration in the first half of 2018 after nearly two years of more people leaving than coming into the province. As this trend is expected to continue, population growth in Calgary is projected to increase at a faster rate through 2020.”