Surrounding region’s housing market to be similarly impacted by sluggish economy: CREB®
The resale residential housing market surrounding Calgary is expected to feel the pinch from a sluggish provincial economy, with prices facing downward pressure from slower sales activity.
In CREB®’s 2016 Economic Outlook & Regional Housing Market Forecast, chief economist Ann-Marie noted Airdrie and the Rockyview and Foothills regions will face similar conditions as that within Calgary.
“The resale residential housing market outside of Calgary will face the same macro-economic influences on housing demand as those within the city in 2016,” she said, noting each area will have its own set of circumstances that will influence supply, demand and prices.
Town of Cochrane planning and engineering manager Jared Kassel expects 2016 to be a year of transition for the local housing market.
“Probably all municipalities in our region are going through a bit of a transition with the downturn of the economy,” he said. “We certainly expect a downturn. I guess it’s just to what degree?”
More than 90 per cent of sales in Cochrane occurred in the detached and attached markets. While CREB® noted sales activity in the town declined in 2015, the annualized benchmark price of $443,225 was still 6.81 per cent high than 2014.
Inventory is likely to remain high in Cochrane thanks to completions in the new home sector – particular in communities such as Riversong, Fireside, Sunset Ridge and Heartland. Another neighbourhood plan for Southbow is waiting for zoning approval and is expected move forward in 2016.
Census numbers had Cochrane’s population at just over 23,000 in 2015 while experiencing an average 12 per cent growth over the last three years.
“We certainly don’t expect that for 2016, but we just don’t know to what degree that will be diminished,” said Kassel.
“If I was a betting man …, we would still experience six or seven per cent. We experienced eight per cent growth in 2009 during that recession, so it’s still considerable.”
Sales activity in Chestermere, meanwhile, also slowed in 2015 from record 2014 levels, yet remained well above long-term averages, according to CREB®. New listings increased, causing some upward inventory pressures and, ultimately, weaker absorption levels. The annual benchmark price increased year-over-year by 5.71 per cent to $488,142.
In the Foothills region, Okotoks sales activity declined by 27 per cent to 558 units in 2015.
“While sales declined in most price categories, unlike other centres, the composition of sales pointed toward a larger share occurring in properties price over $400,000,” said CREB®.
In High River, sales increased following the 2013 floods, but were still 16 per cent below the 10-year average. The benchmark price remained 1.32 per cent higher than 2014.
Airdrie, meanwhile, saw sales activity decline by 16 per cent to 1,424 units in 2015 after coming off a record year. Yet CREB® noted levels remained 19 per cent above the five-year average and 27 per cent above the 10-year.
The annual benchmark price in 2015 was $373,467, 2.88 per cent higher than 2014.
Bounded by a steady stream of housing projects, new listing levels increased by 4.6 per cent, according to CREB®, which came as no surprise to Airdrie planning and development team leader Wilf Richter.
“When I look at the development permits I’ve been tracking since May/June all the way to December, I haven’t really seen a slow down,” he said.
“I would say, right now, it’s business as usual to a certain extent. We’ve had a couple of major projects that were approved to the end of 2015 and they’ve come in for building permits.”
In particular, several phases of Southwinds and Coopers Crossing on the southwest side are coming online in 2016. Neighbourhood structure plans from the Vesta Properities’ South Point project, Brookfield Residential’s Chinook Gate and two multi-family Genesis Development plans are also close to being approved early this year.
“We’re still finding Airdrie is certainly a great place for affordability from a housing perspective,” said Richter, noting the city’s population in 2015 increased by 6.92 per cent to 59,000.
“When I look at the pricing (from Airdrie to north Calgary)…it’s somewhere between a $40,000-to-$50,000 differential in a lot of cases.
“We’re also looking at our population projection and think by the end of 2017 we will hit 65,000. We really haven’t any reason to suggest that that may not occur.”