Based in Calgary, Jeff James is vice-president and head of TD’s Commercial Real Estate Group for the Prairies. A graduate of the University of Manitoba, James is also a black belt and instructor in Brazilian Jiu Jitsu. He is currently in the process of opening his own school, which will focus on teaching an anti-bullying program for kids aged nine to 15. CREBNow recently sat down with James to discuss everything from the current market to what he thinks is Calgary’s best-kept secret.
CN: Could anyone have predicted the current market?
JJ: If you look back at the economic forecasts from the last 12 months, you can see that no one was predicting oil would drop from approximately $100 to $50 per barrel. In addition, the Bank of Canada’s decision to drop interest rates in January took most economists by surprise. So I think it’s safe to say people were caught off guard.
CN: Should buyers and/or sellers be concerned?
JJ: I don’t believe “concerned” is the right word. I think “cautious” or “prudent” are more appropriate in the current climate. I think there is going to be an increase in new listings on the market in 2015, so it will unfold more as a buyer’s market. As such, if you are planning on listing your home this year, you should expect the number of days on the market to increase, simply due to supply.
CN: Will Calgary’s real estate industry be a bull or bear market in 2015? Why?
JJ: I think we can expect the number of home sales in Calgary to drop in 2015. I also believe that home values will come off just slightly. Perhaps a five per cent softening in home values for the Calgary market in 2015. It’s a simple fact of supply and demand, and there’s going to be more supply in the market. So listings will increase but buyers will be more cautious. I also suspect some will be taking their time, in the hopes to find a bargain.
CN: How will the U.S. economy help or hurt Canada in 2015?
JJ: U.S. economic recovery appears to be on a firm footing. We are expecting the U.S. market to grow by about three per cent in 2015. Consumer loan delinquencies in the U.S. are at a record low. And lower gas prices will benefit consumers, putting more disposable income back in their pockets. In addition, unemployment in the U.S. is the lowest it has been since 2008. All of these factors will boost U.S. consumer demand. Traditionally, that gives Canadian exports a boost and provides some lift to our economy. Of course, this benefit will be a lagging effect, but it will still bring growth.
CN: Which housing market segment are you watching most closely?
JJ: At the moment, we are keeping an eye on the highrise condo market. There is an abundant supply of new highrise condo inventory that will be coming on to the market in the next 12 to 18 months. The volume will definitely outpace demand, so we can expect some downward pressure on values. There’s also some concern regarding the investor component in this asset class. We don’t know definitively how deep the investor pool is, compared to units purchased by end-users (i.e. people who purchase the unit and actually live in it). If the investor pool is too deep, then we can expect a number of these condo units to appear on the rental market, and that will drive up rental vacancy rates. So I think some caution in this part of the market is appropriate, at least until we see how things flesh out.
CN: What, if anything, do you think is Calgary’s best-kept secret?
JJ: Actually, I think Calgary is one of Canada’s best kept secrets. There is always plenty to see and do here. There are some really neat little shops that have opened along West 85th Avenue S.W. in West Springs in the last 18 months or so. It’s a great neighbourhood to browse on a Saturday afternoon.