Resale homes sales in Calgary are expected to moderate this year, with volume increasing by 3.6per cent and prices up by 4.3 per cent.
CREB®’s forecast anticipates a rise in resale listings and less upwards pressure on prices. The forecast, presented at the BMO Centre at Stampede Park, predicts sales in the city to moderate, climbing to 24,335 units in total.
“In 2014, both sales activity and prices are expected to improve, but notat the same pace recorded this year,” said Lurie. “While factors influencing demand will support growth in 2014, rising listings and increased competition from the new home sector should alleviate some of the supply pressure in the market.”
For the second year in a row, city of Calgary sales growth reached double digits in 2013. However, 2013 is the first time since the recession of 2008 that sales activity rose above long-term trends. CREB®’s forecast predicts sales in the city to moderate, climbing 3.6 per cent to 24,335.
Despite the nearly 11 per cent rise in MLS® sales, new listings fell slightly in 2013, dropping by roughly one per cent for the year. The result, said Lurie, was upwards pressure on the price of Calgary homes. The benchmark price for a Calgary home averaged $411,417 in 2013, nearly eight per cent higher than 2012. In 2014, the pace of resale price growth in the city of Calgary is forecast to ease to 4.3 per cent., with a benchmark price of $418,162.
Lurie said a rise in the number of homes up for sale should also help lessen the upwards pressure on prices seen in 2013. City-wide, new listings are expected to rise by 1.7 per cent in 2014, increasing from 31,844 to 32,153.
“All factors being relatively equal year over year and with the likelihood of more listings coming onto the market along with increased supply from the new home sector we expect overall house prices will continue to rise, but the rate of increase in home prices may be slightly slower,” said CREB® President Bill Kirk.
Along with increases in the number of resale homes up for grabs, the number of new homes constructed in Calgary is also projected to increase in 2014. According to the Conference Board of Canada, builders will break ground on 6,625 single-family homes in 2014, an increase of 2.6 per cent, while multi-family starts are predicted to increase by nearly 17 per cent to 6,612.
One of the main factors that pushed demand for Calgary homes skyward in 2013 was the number of new Calgarians. Calgary’s population grew by 29,327 last year, with 19,067 of the increase coming via netmigration.
Netmigration to the city is expected to slow this year in 2014, as the City of Calgary’s estimate puts the number at 15,000.
“Stronger than expected demand was related to higher than expected migration and employment growth, while the tight rental market got tighter following the floods,” said Lurie.
Calgary’s cramped rental market was the topic of much discussion in 2013. Following the flooding that impacted several communities around the city and province, Calgary Mayor Naheed Nenshi said the vacancy rate in the city “is as close to zero as you can humanly get.” Two-bedroom apartment rents averaged $1,224 per month in October 2013, a six per cent increase over the previous year.
Despite the increase, anxious renters could see some relief in 2014, as investors move to capitalize on demand.
“As rental rates increase, so does supply from the smaller investor market,” said Lurie. “Investors may find it more enticing to purchase or reposition current assets as rental product, adding to the supply in the market.
Lurie did however provide a few words of caution as part of the forecast, discussing the possible impact of developments in the provinces’s oil industry.
“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.”
Lurie and Kirk were just two of the speakers on hand for CREB®’s 2014 forecast. The presentation also included remarks from Mayor Naheed Nenshi, CBC’s Ian Hanomansing, 2013 CREB® President Becky Walters, as well as the swearing in ceremony of CREB®’s new board of directors.