CREB®Now sat down with CREB® chief economist Ann-Marie Lurie to reflect on the housing market and Calgary real estate in 2017.
CREB®Now: Did 2017 play out the way you expected?
Anne-Marie Lurie: For the most part. Sales activity was a touch stronger than anticipated, but citywide prices were generally in line with expectations. What was different was the path expected throughout the year. Sales activity was much stronger than expected in the first portion of the year, but the easing in the second half of the year balanced out the earlier rise.
CREB®Now: What did this year’s numbers tell you compared to 2016?
Lurie: Many of the economic indicators were pointing to modest improvements. While it was by no means a full recovery, 2017 reflected the start of the bumpy transition following the two-year recession. In the housing sector, the transition also started to occur, first by way of improving sales, followed by stability in pricing in the detached and attached sectors of the market. While the transition did start in 2017, the path of recovery is very different from the last recession, which is consistent with all other economic indicators.
CREB®Now: Did districts in Calgary react differently to economic conditions in 2017?
Lurie: Yes. Price declines in the apartment sector were fairly consistent across all districts, but when you look at the detached sector, you did see some differences. Districts that faced more competition from the new-home market struggled to record price gains, while other areas such as the west end recorded significant price growth, as there was not as much supply pressure in that district. Meanwhile, attached prices generally eased in all districts except for the city centre.
CREB®Now: Which segments of the housing market saw the biggest changes in 2017?
Lurie: Depends on what you view as the biggest change. The detached segment of the market did not face the same level of price adjustment (city wide) as the apartment sector, as there was not the same level of inventory build up in this market. Because of this, this segment has been the first to move towards more balanced conditions. Apartment condo prices continued to fall, pushing the price adjustment from peak to more than 13 per cent.
CREB®Now: What impact do you expect the federal government’s new mortgage rules to have on the Calgary market?
Lurie: Mortgage rule changes do not take hold until January. The new mortgage rules should impact the distribution of sales activity, however. As we have a sufficient amount of affordable product available in the market, we do not anticipate the change will completely derail the recovery driven by an improving economy. What is more interesting to me is the combined effect of further interest rate gains with stricter lending conditions. This can weigh on housing demand, prolonging the time it takes for our market to recover.
CREB®Now: How did migration numbers play out?
Lurie: According to the City of Calgary civic census, we had just over 900 migrants to Calgary this year. This is an improvement over the new outflows recorded in the previous year, but remains well below typical levels of migration. Nonetheless, it also reflects a transition from a shrinking economy to one that is recovering.
CREB®Now: What did the big picture for surrounding communities look like in 2017?
Lurie: The surrounding areas generally recorded improvements in sales, but rising inventories in both the new home and resale markets caused further adjustments in prices. The surrounding areas are often heavily influenced by activity in the new-home sector, and for many of the surrounding areas, new-home starts and inventories were rising, encouraging builders to offer incentives to consumers to choose new over resale.