As Canada Mortgage and Housing Corp.’s market analyst for Calgary, Richard Cho is tasked with keeping tabs on the housing market in one of Canada’s most dynamic cities.
CREB®Now caught up with Cho to talk about the economy, what’s in store for Calgary’s real estate sector and why he enjoys calling the city home.
CREB®Now: How are current energy prices affecting the city of Calgary?
CHO: A large part of Calgary’s economy is tied to the performance of the energy industry. The decline in oil prices has posed some challenges for many oil companies, resulting in reductions to capital expenditures, hiring freezes, and layoffs. This has also impacted many other industries, from large companies to small business owners, that either directly or indirectly benefit from the energy sector. While there are still areas of Calgary’s economy that are holding steady and creating jobs, overall economic activity is expected to slow down this year.
CREB®Now: In turn, how is that affecting the Calgary housing market?
CHO: Activity in Calgary’s housing market will slow down this year with job creation, migration, and income growth expected to moderate. Low oil prices have also impacted prospective buyers’ confidence and outlook for the housing market. This has kept many buyers on the sidelines who are waiting for conditions to improve. One of the last things a buyer wants to be concerned about before purchasing a home is the state of economy. As such, we are forecasting a decline in both
resales and new home construction this year.
CREB®Now: Is there a certain segment of homebuyer (first-time, established) who is more affected by the current economy, and why?
CHO: The change in activity so far this year has been more apparent among luxury homes compared to other segments of the market. Supply has increased, homes are taking longer to sell, and prices for some luxury homes have not been able to hold their ground compared to some starter or move-up homes. While we have seen the activity in the luxury home market slow down, many other areas of the housing market have also been impacted by the effect of low oil prices. Home sales have declined in all price ranges this year, but more so in the higher price points.
CREB®Now: How do you see Calgary’s housing market trending in the next two years?
CHO: Housing activity will continue to feel the effects of relatively low oil prices, but more so in 2015 compared to 2016. Economic activity is expected to make some modest gains next year, but we are not anticipating any sharp rebounds in housing sales and starts. New home construction in 2016 is forecast to decline for the second consecutive year, while sales and price growth in the existing home market will remain fairly flat.
CREB®Now: What’s the best thing about living in Calgary?
CHO: One of the best things about Calgary is that there is usually blue skies and sunshine, regardless of the time of year.
CREB®Now: What, if anything, is the worst thing about living in Calgary?
CHO: I could do without the really cold winter days and battling traffic when we get a lot of snow.
CREB®Now: What’s the best way to spend a day off?
CHO: Doing something outside, whether it is taking advantage of all the walking/bike paths, going to the zoo, or floating down the bow river on a raft – with your life jacket on of course.
CREB®Now: What, if anything, is Calgary’s best-kept secret?
CHO: I think one of Calgary’s best kept secrets is the diversity of the people that live here. Calgary is filled with people from different nations, cultures, beliefs, and walks of life. There is so much we can learn, appreciate and celebrate. One of the many benefits is that it has greatly enhanced the food scene in Calgary. There are so many wonderful cuisines from around the world that we can enjoy, plus all the different produce and foods that are available at the market.