The year ended with Calgary’s housing market continuing its downward slide with total sales in December down by 15% from the 10-year average. There were 1,100 real estate transactions recorded in December 2016.
The Calgary Real Estate Board says the total number of MLS sales for 2016 was 17,809 which was 5.5% fewer sales than 2015. The benchmark price in Calgary dropped 3.8% year-to-year to $440,650.
The number of sales in 2015 actually dropped more dramatically than they did in 2016 – down 26% over 2014 figures. The last time sales numbers fell like this was in 2010 according to Ann-Marie Lurie, CREB’s chief economist and spokesperson.
Looking back to January 2016, CREB had an optimistic forecast for the year and sales ended up being weaker than they’d predicted. It was though that the market would drop by just 2.2% over 2015 sales but the ongoing unemployment situation in Alberta, which did not improve in 2016 put a spanner in the works.
Stats Canada reports that in January 2016 the unemployment rate in our city was 7.4%, already a concerning number. By November that figure rose to an alarming 10.3%.
Benchmark prices for single-family homes dropped an average of 3.2% over 2016 to $502,242. It was not a good year to try and sell an apartment-style condominium as the benchmark fell by 6% - almost double the damage – to $277,217.
In her year-end report, Lurie said one of the reasons why housing prices didn’t really go south was because of the tight inventory. There wasn’t a flood of new listings coming on line. In fact, new listings contracted in 2016 by 4.7%.
Predictions for the Year Ahead
On January 11, CREB held its annual forecast breakfast and announced its 2017 predictions before members, economists, investors and media. Here are some of the highlights:
- Rebound: With declines in total number of sales the past three years, the forecast is for the Calgary market to rebound, if ever so slightly, in 2017. Sales in every quadrant and market segment is predicted to reach 18,335 (up from 17,809 in 2016) which is approximately a gain of 3%. A gain over last year but still 12% below the 10-year average. Specifically, single-family unit numbers should hit 11,550 – attached units and condos 4,002 and 2,783.
- Price Growth: In trying to be as conservative and realistic as possible, CREB believes than in 2017 we will see a price growth of 0.3%. After a 3.84% decline in 2016, the Board believes this will be achieved due to growth in the single-family market with 0.8% price growth and 0.3% in the attached market. Losses are predicted to continue in the apartment market with a drop in prices of 2% which Lurie believes is better than the 5.99% decline experienced in 2016.
- Oil Prices: The price of oil is something that can’t be disregarded when predicting economic conditions in Calgary. The price in January 2016 was around $29.01 US and then climbed during the year to $40 or $50 per barrel depending on the day. CREB’s crystal ball says that oil prices should stabilize in 2017 and should stay over the $50 a barrel mark, rising no higher than $55.
- Unemployment: It’s important to factor in Calgary’s job loss rate as this has a direct impact on housing in our city. CREB believes that after the alarming 10-plus % unemployment rate in 2016 that it will come back down to 7.8%. Still not a great number however it should mean some stability in terms of demand.
- Net Migration: Fewer newcomers came to the city last year. In 2016, we lost 6,527 people but CREB things 2017 will be a year of recovery with 1,600 moving to Calgary.
The Calgary Herald reported that Don R. Campbell, a senior analyst for the Real Estate Investment Network, pointed out that several economists also believe that the economy in Alberta will begin to improve in 2017. That broad brush-stroke doesn’t mean that real estate in Calgary will also recover.
He noted that real estate can be a lagging indicator of the state of the economy and that it can take 1.5 to 2 years for the market to catch up. Factors like Alberta’s carbon tax, tighter mortgage guidelines courtesy of CMHC need to be taken into account.
Campbell said it will take time for the negative momentum of the dying days of 2016 to come to a halt before real estate specifically joins the rest of the economy in our city.