I think its safe to say that when many of us cheered in the New Year recently, it was as much a celebration of new beginnings as it was a relief to be rid of 2016. The year brought instability, uncertainty and – let’s face it – gloom to many in our city and around the world.
Whether it was military conflict, continuing employment instability, major political upheaval or the loss of many iconic arts and cultural figures, the past year seemed to impact our confidence. That mood and those factors were reflected in the housing market in Calgary, too.
Last year we saw prices drop, days on market rise and, in some market sectors (i.e. apartments), inventories rise to levels not seen since in decades. In fact, since the start of the downturn in late 2014, the prices of detached properties has declined nearly 5% and as much as 11% in the apartment sector.
These declines in price are largely based on how much oversupply there has been, due in part to many new multi-family construction projects hitting the market, boosting inventories even further.
However, I would like to temper this by saying that comparing prices to 2014 is a bit misleading. That year was the culmination of 24 months of steep price increases. So the 11% drop in apartment prices only takes us back to what they were in September 2013. And the 5% drop in detached actually brings the benchmark price back to what it was in just March 2014. So there was a fairly quick increase and then an equally steep decrease.
Like any new year, 2017 already feels different. We are open to renewed optimism – although it’s cautious. Amie and I attended the Calgary Real Estate Board (CREB) annual forecast this week. CREB’s Chief Economist Ann Marie Lurie thinks we are finally out of the recession and heading into a time of very modest growth. We also have two new major pipeline projects that have been tentatively approved and OPEC has finally decided to cut back oil production which has pushed the price of a barrel of oil up over $50 – and climbing. This will impact all facets of our local economy – in a good way.
Many oil and gas companies are revising their capital budgets for 2017 in anticipation of revving up dormant projects that were previously uneconomic. A lot of this economic activity will probably be reflected in the second half of the year. People who have been out of work are hopefully either going to start being rehired or will establish themselves in new opportunities and careers. The bunker-type, wait-and-see mentality is slowly lifting and it seems Calgarians are ready for action again.
So what type of growth is expected? City-wide sales are forecasted to total 18,335 units in 2017 – a 3% gain over 2016. That’s fine, but it’s still 12% below long-term averages.
In terms of prices, CREB is forecasting a very modest 0.8% rise in detached home prices this year and a 2% drop in apartment prices. The attached sector which includes duplexes and townhomes should rise by 0.5%.
We’re headed into a more balanced market this year, which means that there are still properties out there that are good value, buyers are still buying and properties continue to move.
So go ahead and be optimistic – it feels good doesn’t it? And as always, if you have any questions about specific properties, the market or want to chat about your future plans, give either myself or Amie a call. Here’s to a Happy New Year ahead!
