Calgary is expected to continue at a slow pace on its road to real estate recovery, as the housing market is stabilizing but supporting economic conditions are falling short of driving it forward.
By the end of the year, annual resale transactions in the city are projected to increase 3.3 per cent year-over-year to a total of 18,401 units, while price growth is slated to stall for the remainder of 2017, according to the Calgary Real Estate Board’s Mid-Year Update report, published last week.
“While the shift is welcome news for many, we continue to expect that process of recovery will be slow and dependent on the property type and location within the market,” says Ann-Marie Lurie, CREB chief economist, in a statement.
After emerging from a recession over the first half of the year, CREB says Alberta’s economy appears to be shifting to recovery thanks to rising oil prices. The process, however, is expected to be a slow one.
How quickly the city’s housing market recovers will depend on a number of factors, including stability in the energy sector, improvements in the labour market, growth in migration levels and changes to lending rates.
In Calgary’s resale market, improved economic conditions in the first half of 2017 have helped to drive sales in the first six months of the year though sales activity has remained at below long-term averages.
With consumer confidence rising in the city, sales have increased and new listings have eased, helping push the market toward more balanced territory.
With these improvements, home prices have increased most notably in the attached and detached sector.
Since January 2017, city-wide benchmark prices have been on the upswing but with supply expected to sit at an elevated level, CREB forecasts overall prices for the rest of the year to remain relatively stable, increasing 0.2 per cent year-over-year.
“We saw many of those consumers who delayed any purchasing decisions willing to re-enter the market as concerns regarding the economy eased,” says CREB president David P. Brown, in a statement.
“More potential buyers on the market helped move some of the product in inventory and started to create some price stability,” he adds.
While prices are expected to sit at levels comparable to last year in Calgary’s detached sector, the same cannot be said for the apartment sector.
Although year-to-date sales have improved, transactions are not keeping pace with rising resale apartment listings.
With an abundance of apartments in the market, easing migration levels and weaker economic conditions have slowed down the absorption of apartments in the city.
According to CREB, apartment prices are projected to see an annual decline of three per cent.
Calgary’s rental market is expected to end the year with record-high rental vacancy rates and easing rental prices, says CREB.
As additional supply from purpose-built rentals and owner-supplied units continues to enter the market and weak migration slows absorption, large gains in rental rates are unlikely for this year.
In the city’s new home market, inventories remain near historic highs with a surge of multi-family product being completed.
Many new condos that were under construction prior to the recession are now complete and sitting on the market, increasing the amount of current supply and placing further downward pressure on prices.
With modest growth expectations for the year, new home inventories are slated to stay elevated and, in turn, place some limits on price growth in the resale market.