Energy prices influencing choices in Calgary housing market
Jordan Meloches and his fiancée Ashley Hopkins didn’t hesitate when they recently purchased a condominium in the northeast community of SkyView Ranch.
In fact, while many Calgarians were dissuaded from entering the resale housing market in January by lingering low oil prices, the couple said the current economic climate was the farthest thing from their minds.
“The market to us now really wasn’t a concern. We bought in SkyView, which is still developing, so I think our value will only increase as the land out there develops,” said Meloches, who cited the condo’s proximity to their work and future potential as a rental property as factors when settling on a decision.
While Meloches and Hopkins made the decision to purchase their first home, many other would-be buyers continued to evaluate their options in January. Year-over-year sales in the city declined by 39 per cent to 880 units, and corresponded with a 37 per cent increase in new listings over the same period, according to CREB®.
“This change is partly connected to continued low energy prices, which impact consumer confidence,” said CREB® chief economist Ann-Marie Lurie, noting January sales were the lowest for that month in five years.
“A lack of recovery in oil has many concerned about their employment status and this concern is reflected through the weaker sales activity in Calgary’s January resale figures.”
Compared to the 10-year-average, sales levels for the month were down across all three sectors in the city (attached, detached and apartment), and more than 35 per cent overall.
The apartment sector recorded the largest gain in new listings, increasing by 52 per cent to 745 units, relative to a 41 per cent decrease in sales to 155 units. The detached sector, meanwhile, saw a 32 per cent increase in listings to 1,843 versus a 38 per cent decline in sales to 535 units.
Lastly, the attached sector witnessed a 38 per cent increase in listings to 700 units, yet sales decreased by 40 per cent to 190 units.
Despite a less-active market, prices remained relatively stable. Year-over-year benchmark prices increased 7.7 per cent to $459,100 in January, yet were similar to December figures.
Detached benchmark prices totaled $518,600 in January, similar to December levels, but a 7.9 per cent increase relative to January 2014. Meanwhile, the attached and apartment unadjusted benchmark prices in January totaled a respective $356,000 and $298,7000, similar to prices recorded in December.
Given current conditions, Lurie said many consumers may hold off on their decision to move until Alberta’s economic picture becomes clearer, with the possibility of price implications on the horizon.
“Housing decisions will likely continue to be postponed for many consumers until they can see what happens with the economic climate in the spring,” she said. “Nonetheless, if supply levels continue to rise at levels that exceed the pace of demand growth, we can expect this will start to impact prices in the city.”
Meloches, meanwhile, believes the makeup of Calgary’s housing market, in general, will shift if oil prices continue to freefall.
“I think it’s going to be a buyers’ market coming up,” he said. “With the decline in oil (prices) … people are going to be trying to downsize. And with the new developments around the city, they’re going to want to try and fill them so they’re not losing out.”