The Calgary housing market faced numerous challenges in 2018.
Some were expected, but weakness in the first half of the year was supposed to be somewhat offset in the second half of the year, as the economy and job market improved. Instead, Calgary faced job losses in the latter portion of the year and confidence in the market fell due to concerns over oil prices and pipelines.
The result was a steep decline in sales activity and a persistently oversupplied market. With too much supply, prices slid further in 2018, erasing any progress made towards recovery in 2017.
Much of the concern plaguing the market in 2018 will continue this year. Weakness in the labour market will persist throughout 2019, further weighing on demand. However, there are signs that supply is adjusting. If this trend continues, by the end of 2019, oversupply in the housing market should ease and the rate of price declines should slow.
By the numbers: 2019 Forecast
- Sales in 2019 are expected to total 15,882 units. This is comparable to last year, but still well below historical levels.
- The resale market is expected to remain oversupplied, as adjustments to supply levels will be slow due to weak expectations of economic activity.
- Persistent oversupply will weigh on prices throughout most of the year, causing an annual price decline of 2.34 per cent.
- New supply is expected to ease, as price adjustments will cause some consumers to delay moving into another home. This should help slow inventory gains in the latter portion of 2019 and reduce the amount of oversupply in the resale market.
- The market is expected to move towards more balanced conditions, but the transition will likely take most of the year.
A look back at 2018:
- Citywide sales totalled 16,144 in 2018. This is nearly 15 per cent below the previous year and 20 per cent below long-term averages.
- Inventories rose above levels recorded throughout the 2015 – 2016 recession, but remained below peaks from 2008.
- Months of supply ranged from a low of 4.7 months to a high of 6.3 months, averaging over five months for the entire year. This is well above the long-term average of three months.
- New listings eased compared to the previous year over the last two quarters, but it was not enough to offset earlier gains.
- Persistent oversupply in the market caused prices to trend down throughout most of the year, with steeper declines occurring in the last two quarters. On an annual basis, benchmark prices totalled $431,375, 1.5 per cent below 2017 levels.
- Sales declined in almost all price categories, but the share of activity shifted from higher-priced product to more affordable stock compared to 2017. Product priced under $300,000 grew from 18 per cent of the sales to 20 per cent of the sales. Product priced in the $600,000 – $999,9999 range fell from 18 per cent of the sales to 16 per cent of the sales.