2008 CREB® president Ed Jensen remembers ‘one of the toughest years in Calgary real estate history’
In his final message as CREB® president, Ed Jensen summed up 2008 at the time as “one of the toughest years in Calgary real estate history.”
Even looking back at it now, he is still pragmatic about what went on in that year, which was largely marred by a global financial crisis rooted in the collapse of the U.S. housing sector, accompanied by weakening energy prices.
“Our economy had been building rapidly and prosperously, but it started to slow down in the fall of 2007,” he said. “In 2008, there was a shift from a sellers’ market to a buyers’ market. It happened gradually, over the
By year’s end, MLS® sales had decreased by 28 per cent to 18,894, while the benchmark price dropped by less-dramatic 3.7 per cent to $496,067, according to CREB®. (By the end of 2009, the price had dropped to $362,400 before rebounding in 2010.)
While 2006 and parts of 2007 were boom times for Calgary’s real estate market, characterized by rising prices and multiple offers on properties, 2008 presented more opportunities for buyers, said Jensen. A large number of listings were available on the MLS® System that year, with new listings rising year-over-year by nearly 60 per cent to 7,991. (By the end of 2009, listings had decreased to 5,096.)
The housing market faced another blow in October 2008 when the federal government tightened rules for guaranteed mortgages, including reducing the amortization period from 40 to 35 years and adding a minimum down payment of five per cent.
“A combination of low interest rates and declining prices made home ownership in our city more affordable than it was for many years.”
The changes were to “ensure Canada’s housing market remains strong and to reduce the risk of a U.S.-style housing bubble developing in Canada,” the government said in a statement at the time.
“It slowed the market immediately,” recalled Jensen.
Yet while 2008 had its share of challenges, Jensen also remembers many people suspected things would be much worse than they turned out to be.
In fact, he points to many of the upsides that year, notably affordability.
“A combination of low interest rates and declining prices made home ownership in our city more affordable than it was for many years,” he said.
Affordability was actually on ongoing theme during Jensen’s presidency. In April, CREB® Charitable Foundation’s Crestwood Affordable Housing Development officially opened. Industry members raised more than $1.5 million through CREB®’s Charitable Foundation for the project in southeast Calgary.
“We’d just come off of several years where prices were high. There needed to be affordable housing out there,” said Jensen.
The year also saw renewed focus in Calgary on managing urban sprawl. Jensen recalled a large transit-oriented development around the Brentwood C-Train stop – now called University City – passed its first hurdle in 2008 when the City of Calgary’s planning commission approved the Brentwood Station Area Redevelopment plan.
“Past growth had been out and out and out, with no emphasis on the core or rebuilding the inner city,” he said.
Not all projects were successful, however.
“Developers shifted their focus to multi-family condo projects, but many got caught in the market shift and stopped construction,” said Jensen.
While Jensen believes different factors are driving the current slowdown, compared to what happened in 2008, he still notes many similarities.
“We’re seeing the same thing now with consumer confidence,” he said. “People who are worried about their own financial security are reluctant to make large changes, so sales are slower.”
The upside, just as it was in 2008, is plenty of choice for buyers, he added.
“Lots of people looking are waiting for the market to be bottomed out, but if you’re buying a property for your family in this environment, it’s home for the long term,” said Jensen.
“Don’t worry about being at the bottom. Purchase now when you can get the better location, where you can negotiate better.”