The economic situation in Alberta has impacted all aspects of the economy, including housing demand. However, price declines have been only slightly lower than expectations, as easing amounts of new listings has prevented steeper gains in supply levels, CREB® said today in its 2016 mid-year update.
Benchmark prices have trended down this year and there is no expected change in direction for the remainder of 2016. City-wide annual benchmark prices are expected to contract by 3.8 percent this year. Since the start of the downturn, monthly prices have declined by nearly five per cent, with the most severe pullbacks in the apartment sector.
“While the market as a whole continues to be challenging for home sellers, the highest price declines are typically in the neighbourhoods and sectors where the largest amount of supply has built up, either from the resale market or the competing new home market,” said CREB® president Cliff Stevenson. “In this kind of market, both buyers and sellers continue to be forced to adjust their expectations. Not all districts and product segments are reacting the same way.”
With no near-term changes expected for Alberta’s economy, housing demand will remain soft for the second consecutive year. Overall sales in Calgary are expected to contract by eight percent this year, following a 26 percent decline in 2015.
“The scope of this economic downturn has been worse than original estimates,” said CREB® chief economist Ann-Marie Lurie. “Job levels have contracted more than expected, which means we have more people looking for work and more people making the decision to leave the city—not exactly an environment that supports growth in housing demand.”
Layoffs, weak employment prospects, and low oil prices are expected to challenge our market for the remainder of 2016. The risk to the housing market lies mainly with additional resale inventory and new home supply.
“There are some roadblocks in this market, but people still need to buy and sell real estate, regardless of the current operating environment,” said Stevenson. “The big thing is making sure consumers are well informed about how the market is reacting in specific segments and within specific communities, so they can make sound decisions. That’s the unique value add of a real estate professional.”