Economic Recovery for Calgary – Will it happen again?
Albertans have Confidence
Now that Alberta is seeing increased confidence as the oil and gas market starts its recovery, the wheels are in motion for Calgary real estate. Market indicators show that first-time and luxury home buyers are looking to get in and up. They have faith that life will get better.
According to the CMHC – Market Movement
Even with increased interest rates and new mortgage rules, first-time and move-up home buyers are leading the residential charge in multi-family residences and luxury homes, respectively. Meanwhile, Millennials and younger couples are balancing the condo market.
Over-building – Looks to be Subsiding
Senior market analyst with CMHC, James Cuddy, says, “Over-building has started to come back a bit.” Also, vacancy for rentals fell from 6.3 per cent in October 2017 to 3.9 per cent in the same month in 2018. “Last year was the first year we saw positive price increases in terms of rental rates” since 2014.” says Cuddy. This is good news for the housing market.
Cuddy notes, “Ultimately in Calgary, it will get to a point where renters are making that trade-off decision between the cost to rent and the cost to buy.”
Absorption Rates – Percent Rising
CREB statistics for May show a positive market indicator of absorption rates – the number of sales vs. the number of homes listed. CREB chief economist Ann-Marie Lurie explains that the sales of real estate has remained low compared to historical activity for May, but, “the easing prices have brought some people back to market, while also preventing some others from listing their homes.”
New listings in May pulled back significantly from previous year’s levels. Combined with an improvement in sales, this resulted in inventories declining from 4,504 units last May to 3,921 units this month. This is the first time since May 2017 that year-over-year inventories declined.
Altus Group – Indicator of Market Improvement
Altus Group released its 2019/2020 forecast this month revealing the city’s struggling housing market should benefit from growing migration, which will elevate demand for housing and boost starts. Calgary’s slumping real estate market appears to be headed toward recovery near the end of this year and into next, according to a new report.
“We will probably see more of the same for housing from last year into this year initially,” says Peter Norman, vice-president and chief economist of research, valuation and advisory. He adds that the conditions look like they will slowly improve into 2020. “Yet the slump in prices also creates greater affordability, which along with strong job growth expected in 2020 —15,600 new jobs — will drive demand amidst falling inventories.”
Luxury Market
CREB’s current files show that in 2018, the most expensive house sold for $5 million and, so far in 2019, a sale price has hit $4,587,000. It is worth noting that an all-time Calgary luxury market sale happened in the 2013 heyday when one Calgary home sold for $11.1 million. You may want to check out my blog on the luxury market back in 2014. “Huge Appetite for Calgary’s Best Homes”: https://yourhomeinalberta.wordpress.com/2014/05/02/74/
Office, Commercial and Industrial Sectors – Trend also UP!
A Price Waterhouse Coopers (PwC) report states that Calgary’s industrial real estate market continues to gain momentum, showing positive absorption in 2018. There is a flight to quality in office so landowners are getting creative by developing unique, collaborative spaces to target Millennials, Start-ups and Tech Firms. Some are dog-friendly, offer perks such as a basketball courts putting greens as well as dog spas and outdoor dog parks.
yourhomeinalberta 