Calgary Real Estate Mid-Year Update
It was a turbulent first half of the year for Calgary’s regional housing market. Low energy prices impacted 30,000 consumer confidence early in the year, causing a significant pullback in sales and a sharp rise in supply levels. As we moved into the second quarter, there 20,000 was some calming in the housing market. This change was partially driven by 15,000 easing concerns over the likelihood of worse case scenarios of $30 US per barrel 10,000 oil prices.
While the initial shock of declining oil prices has dissipated, housing market activity is likely to be guided by economic realities in the second half of the year. The long-term outlook continues to Detached remain optimistic, but short-term expectations have changed from the previous forecast.This is related to slower than anticipated recovery of oil prices and the impact that it’s having on Alberta’s economy.
Many economists warn that the effects of falling oil prices have yet to effect the non-energy sectors. The impact they are having on capital investment, Alberta GDP growth forecasts for 2015 have been revised down, ranging from a 1.5% contraction to moderate growth of 0.4%. In Calgary, both the Conference board of Canada and the City of Calgary corporate economics groups anticipate economic growth to contract by more than one per cent in 2015. This will place further downward pressure on employment and migration.
Despite the recent decline in interest rates, resale housing demand will continue to remain weaker than what we have become accustomed to in Calgary. While the decreasing lending rates typically support remain growth, further job losses are expected in the fall of this year. Rising unemployment levels and limited job opportunities far outweigh the benefits of a lower lending rate and will continue to keep housing demand weak in the months ahead. Overall, sales activity in the city is forecasted to decline by 22 per cent for a total of 19,798 units in 2015.
Meanwhile, the pullback in new residential construction, combined with some moderation of new listings, will help lessen the impact on housing supply. However, inventory imbalances in some sectors of the market are still expected to weigh on housing prices in the second half of the year, causing residential prices to contract by an estimated 0.2 per cent on an annual basis in 2015.
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Report from CREB (Calgary Real Estate Board.)