Since the oil price crash, Calgary has faced job losses, wage reductions and tightening national housing policy. All these factors have contributed to the slower sales environment, excess supply and citywide price adjustments of 10 per cent since 2014. However, as we move into the sixth year of this cycle, we are starting to see adjustments to these conditions throughout the housing market. Job growth in traditionally lower-paid sectors, combined with recent easing in mortgage rates and price declines, is starting to bring some purchasers back into the lower end of the market.
In 2020, no change in the economic climate, steady population growth, favourable lending rates and no significant changes in the employment sector are expected to support more stable conditions in the housing market.
The shift in consumers preference toward affordable product is expected to continue at the cost of persistent weakness in the higher end of the market. However, as the under-$500,000 market reflects a larger share of total activity, the gains in this sector will outweigh the losses from the higher end, resulting in modest growth in sales and a reduction in the amount of downward pressure on prices.
The current housing market conditions are different from what was recorded prior to 2014. We are settling into a new normal of slower sales, supply choice, limited price growth and a cautious consumer.
A LOOK BACK AT 2019
- Citywide sales were slightly better than anticipated last year, as declining prices, lower mortgage rates and stronger-than-expected job growth supported a slight improvement in sales.
- While citywide sales improved by just over one per cent, this still reflects a weak level of demand, as 2018 sales were among the slowest in over two decades. Sales growth was driven by the under-$500,000 market, which grew by seven per cent.
- Meanwhile, resale sales for the over-$500,000 segment declined by nine per cent. The market did show signs of improvement in the form of reduced oversupply. However, this was mostly driven by supply adjustments, rather than improvements in sales.
- Overall, new listings eased by 11 per cent last year and were well below typical levels.
- On average, we saw 6,521 units in inventory this year. This was a significant improvement over the previous year’s average of 7,018 units, but it remains high relative to typical levels for our city.
- Months of supply also trended lower this year, falling just below five months, an improvement from last year’s levels. Despite the shift, the market remains oversupplied.
- Annual benchmark prices eased by three per cent this year, slightly higher than original expectations.