The Calgary Real Estate Board’s chief economist sharpens her pencil every month and weighs in on real estate activity in Calgary and surrounding communities. Ann-Marie Lurie is voice of CREB® in the media and recently sat down to record her thoughts on what a “wild ride” 2016 was. From the buyer’s market throughout the entire year to changes in who is moving to Calgary and who is buying, she offered her opinion on what happened in the market in the past 12 months.
- When 2016 began, most experts in Calgary real estate thought that the economy in Alberta would improve. Therefore, home sales ended up being weaker than originally predicted because the economy didn’t improve. Most people at the Board thought that prices for apartments would drop, however they fell at a faster pace than expected. One aspect of the market that was expected was for the number of new listings in Calgary to increase as more people either losing their jobs or leaving the city would put their properties on the market. That didn’t seem to happen. In fact, the number of new listings actually contracted which was a positive as it kept prices relatively stable.
- The fact that Calgary remained a buyer’s market throughout 2016 was not a surprise. However, Lurie felt that sales fell more than what was anticipated, so that kept the market somewhat unbalanced as opposed to a huge increase in listings. The result was the same – a market with the advantage on the buyer’s side. The pathway was not the one Lurie anticipated it to be.
- Average prices for single-family homes fell below $500,000 in the last month of 2016. This is the first time since January 2014 that prices dipped under the half million mark. Lurie noted that price adjustments were higher than she anticipated but not by more than she originally thought. Single-family homes fell by 4% with sharper drops in luxury neighbourhoods of as much as 15% with almost too much inventory and almost no adjustments in neighbourhoods with more modestly-priced homes where there aren’t as many properties on the market.
- Even though different neighbourhoods experienced different levels of price adjustments and offered varying levels of inventory, no area of the City remained unscathed. As previously mentioned, the severity of the average price reduction was based on inventory. 2015 was a weaker year than 2016 and in 2017, Lurie predicts a further 6% loss across the board.
- After 2015 when luxury home sales started to slide downhill at an alarming rate, the high-end market rebounded in 2016 with 92 more $1 million-plus homes selling year-over-year. It’s still a far cry away from the sizzling market of 2014 when 800 luxury homes sold January to November. Lurie says this uptick in activity is due to big price adjustments. Even with some of the city’s highest paid professionals having either lost their job or left the city, there is still interest in million-dollar properties in Calgary. In new construction, developers slowed down schedules based in 2015 numbers making way for more consistent sales in 2016.
- Net migration in Calgary was predicted to slow down in 2016. The number of people moving here actually dropped with more folks leaving Calgary than moving here. Within the country, more people moved to Ontario and B.C. from Alberta where in previous years, the reverse was true. The only thing preventing that statistic from crossing into negative numbers was international migration. However, people leaving Alberta and flowing in may have impacted Calgary’s rental market more than home sales.
- Communities around Calgary (Cochrane, Aidrie, Chestermere, Okotoks, High River) had a tremendous amount of growth prior to 2016 which carried the real estate market through the year. These areas still experienced a drop in sales and high inventory, especially in new construction. High inventory in new construction affected prices in the respective resale markets as well. Communities such as Cochrane saw a shift away from high-end homes to more activity in the condo and attached markets, mirroring what occurred in Calgary in 2016. From a municipal perspective, Patricia Matthews – mayor of Chestermere, said the slow down of activity in her community is almost welcome as it allows city planners to catch their breath and prepare for the future. The mayor of Okotoks, Bill Robertson, echoed those thoughts noting that infrastructure for water and other regional services requires some intervention and a slow down in new housing starts will allow municipal leaders to catch up.