If you’re thinking of buying or selling a home this year, make your plans accordingly. The Calgary Real Estate Board has gazed into its crystal ball and says there’s no place to go but down.
If nothing changes in Alberta’s economic landscape this year, the downward pressure on real estate prices will cause residential sales to fall by 2.2%. The tally by the end of 2016, according to CREB®’s annual forecast, will be 18,416 residential units in Calgary. Further, the magic number revealed for the annualized benchmark price will slump by 3.44% to $438,652.
Down but not out
For those Calgarians who have weathered many storms since the volatile 1980s, these numbers may not seem catastrophic. And certainly, they are not catastrophic but for some, particularly those with residential properties valued at more than $500,000 and high mortgages, it could be uncomfortable if it becomes necessary to sell in 2016.
CREB® further announcements that 2016 will see a weaker demand for housing and fewer units will enter the pool of inventory that is already pretty high. With so many properties on the market it will be difficult this year to absorb even more which will contribute to the downward trend of home prices in every segment of the market. Lots of selection for buyers who are taking their time in making decisions.
Ann-Marie Lurie, chief economist with CREB® who issued this 2016 forecast via media release, says there are more people looking for work and families thinking of making some housing adjustments as Calgary moves into a second year of a weak energy sector and economic drift. Reading between the lines, this means more houses on the market as mortgages become unaffordable.
As was seen in the last months of 2015, luxury homes over $1 million took a big hit and will likely continue to experience the steepest declines. As well, multi-family units may take a sharp drop. While these are often the most affordable options in most housing markets, there are also a record number of condos and townhouses under construction in our city, answering the call for density but hanging up on supply and demand variables with a relatively small number of buyers out looking.
Not all gloom and doom
The outlook for 2016 is based on current conditions and is a blanket statement of what may be unfolding in 2016. Certainly, some communities in Calgary will see properties changing hands at prices that buck the trend, throwing market predictions right out the window. Product type, the price and location, location, location are always wild cards. Playing the market intelligently and real estate professionals that understand how to navigate, negotiate and nullify negative buzz will help home sellers and home buyers get what they really want in full understanding of what’s real in this market.
Oil prices are predicted to remain lower and perhaps drop even more in the long term. The Canadian dollar may reach 59 cents U.S. this year. What this means for Calgary in terms of job losses in oil and gas or even in other industries remains to be seen.