by CREB on January 12, 2016
CREB® forecasts downward pressure on prices in 2016.
With no economic change on the horizon, demand for housing in Calgary will be weak in 2016, as sales activity is expected to fall by 2.2 per cent to 18,416 units, CREB® said today in its annual forecast. The annualized benchmark price is expected to decline by 3.44 per cent to $438,652.
Weak demand and supply gains are expected in 2016, adding to an already elevated level of inventory. In this situation, the markets ability to effectively absorb more inventory will be limited, resulting in some downward price pressure across all housing sectors.
“As we move into the second year of this environment, we expect to see additional housing supply pressure and further price declines,” said CREB® chief economist Ann-Marie Lurie. “Weakness in the energy sector is overshadowing all aspects of our economy and with more people looking for work and fewer opportunities, we could see some families making adjustments to their housing situation.”
While price declines are forecasted in each of the detached, attached and apartment markets, steeper declines are anticipated in the higher density segments, a trend which already started in the fourth quarter of 2015. This is related to the near record high level of multi-family units under construction. As these units are completed, there will be more product available for a smaller pool of buyers.
“Market intelligence really matters in today’s operating environment. Pricing trends have and will continue to vary depending on product type, price range and location,” said CREB® president Cliff Stevenson. “Sellers in this market need to have a good understanding of activity within their specific niche of the market. This is where a real estate professionals can really help navigate market conditions and real estate options, which are always unique to each consumer.”
With oil prices expected to remain lower for a longer period of time, the additional impact on employment and the extent of the spillover to other industries is still uncertain. While current forecasts expect employment weakness to persist throughout 2016, further losses are not expected beyond this year.
“The main risk to the housing outlook lies with the deepness of the pullback in demand and how that will translate into supply gains,” said Lurie. “Any sign of sustained recovery in the energy sector could limit the impact on the housing market.”
by CREB on January 04, 2016
Elevated supply levels placed downward pressure on prices in December.
With the focus shifting toward the holiday season, December sales activity slowed to 878 units in the city, 18 per cent below last year at this time and well below the five and 10-year averages.
As a result, the unadjusted benchmark price dipped to $448,800, a 0.42 per cent decline over the previous month and 2.33 year over year.
CREB® chief economist Ann-Marie Lurie noted December followed a pattern established early on in 2015, which was characterized by slower housing demand.
“Economic uncertainty, followed by weak economic conditions and job losses, contributed to slowing housing demand throughout the year,” she said.
“That said, while aggregate prices trended down in 2015, it was not to the same extent as some had speculated. Supply levels were low moving into this cycle and thus provided some cushion to absorb the inventory gains.”
In December, monthly inventory levels declined, as expected, to 4,336 units. Yet they were still 28 per cent higher than the same time last year, and at the highest December level recorded since 2008.
Inventory levels were notably up in both the apartment and attached sectors, which neared the highest December total on record.
“December showed that buyers in this market are continuing to be much more cautious as the impact of further oil price declines weighs on their confidence,” said CREB® president Corinne Lyall.
“Some sellers, meanwhile, are concerned about what supply levels may look like next year and are not delaying their decisions.”
On an annual basis, sales activity declined by 24 per cent in the detached sector and 33 and 28 per cent in the apartment and attached segments, respectively.
While months of supply in 2015 trended higher in all sectors, the apartment was the only one to average above four for the entire year. As a result, the apartment sector was also the only one to record an annual decline in average benchmark price, by 0.82 per cent.
While December prices for both the detached and attached sectors were 1.91 and 1.29 per cent lower than levels recorded at the beginning of 2015, on an annual average basis, they remained 1.35 and 1.84 per cent above 2014 numbers. “Aggregate statistics often do not provide the full story as activity varies by product type, price ranges and location,” said Lyall.
“While prices have trended down this year citywide, there are some areas of the city where prices for detached homes have improved compared to the start of the year.”