2014 Expected to Bring More Growth to Housing Market

Looking to 2014, Calgary's housing market is expected to continue growing, with sales and prices going up.

CREB®'s chief economist, Ann-Marie Lurie said that sales growth in the city is expected to be 3.6 per cent and prices are expected to increase 4.3 per cent. Over the past two years, strong migration levels and strong employment and wage growth have supported further gains in sales.

"Both sales and price growth exceeded our expectations in 2013," said Lurie. "Stronger than expected demand was related to higher than expected migration and employment growth, while the tight rental market got tighter following the floods," she said. "Meanwhile, supply levels didn't keep pace with rising demand, which pushed the market to favour sellers and created stronger than expected price growth."

The month of November showed MLS® sales in Calgary were up by 19 per cent over the same month in 2012.

The benchmark prices for single- family homes totaled $470,600 in November, which is 8.5 per cent higher than one year ago. Condominium apartment and townhouse unadjusted benchmark prices were six per cent below 2007 peak pricing, at $279,600 and $305,700 respectively.

Rising listings and increased competition from the new home sector should alleviate supply pressure and push the market toward more balanced conditions in the later part of 2014, but tight market conditions may be around in the near term.

"This combined with potential increases in long term lending rates should take some of the steam off the exceptionally strong price growth of eight per cent, which we've recorded so far this year," said Lurie.

The energy sector could be at risk in 2014, while other sectors are expecting growth.

"If market access issues persist for the energy sector, and further softening in global economic conditions continue, it would likely impact investment activity and employment opportunities," she said. "This affects confidence and ultimately housing demand. However, if there's positive progress made regarding market access, it could boost consumer confidence and support stronger than expected housing growth."

Growth levels are expected to ease from the double digits that were seen this year, but activity will remain above long term trends for the city, said Becky Walters, president of CREB®'s board of directors.

"The price growth in the market has also encouraged growth in new listings," said Walters. "As of November, the citywide benchmark price totaled $424,600, pushing above unadjusted previous highs," she said. "While not all communities have seen full price recovery, rising prices and tight market conditions have encouraged sellers to list their home."

The full forecast will be released at CREB®'s annual conference on Jan. 15, 2014.