Amid a constant barrage of negative economic news these days, Calgary’s resale housing market is seeing some dramatic swings in listings and MLS sales so far in January.

 

According to the Calgary Real Estate Board website, January MLS sales are down 34.8 per cent from the same period a year ago (from 842 to 549), while new listings have risen by 42.8 per cent to 2,262 and active listings are up by 75.2 per cent to 4,311.

 

That dynamic has affected the average sale price, which is down by 0.6 per cent to $457,853. The median price has dropped slightly as well by 0.3 per cent to $412,500.

Pending sales of 87 are down by 62.7 per cent.


Buyers who are expecting that there might be an opportunity to purchase a home for a discount over recent value. So they’re delaying transactions in the hope that they see some movement in prices.

Volatility is a natural reaction to the sharp and unexpected drop in the price of oil.

The impact to the overall resale housing market of increased listings is relative to what is happening in sales activity.

 

What could happen is if you have the listings rise it gives more choice in the market but because of that if the demand isn’t there that can impact obviously that balance in the market and could push it closer towards that buyer’s territory.

 

If that demand falls and that pace of fall continues, and you still have these listings and they don’t tend to ease off, it impacts the balance in the market and obviously influences pricing as well.

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A national real estate firm is predicting prices in Calgary’s resale housing market, and across the country, will continue to increase in 2015 despite low oil prices.

In releasing its house price survey and market survey forecast Wednesday, Royal LePage said the average price in Calgary will climb  2.4 per cent from 2014 to $472,000 while the Canadian average price will see a 2.9 per cent hike to $419,318.

It said the recent drop in oil prices did not impact the overall real estate market in the fourth quarter of last year.

The Calgary market was one of the hottest in the country, with all three major housing categories seeing near double-digit price growth over this time last year.

There remains a structural imbalance between the availability of homes and number of eager homebuyers. This fundamental discrepancy between supply and demand explains why we’ve seen such aggressive price appreciation in 2014.

Inventory availability remains a major issue across the city, as frustrated buyers are chasing a limited number of homes. The one exception is condominiums, where new units are being built at a faster rate.

Nationally, the average price for bungalows rose by 6.7 per cent to $406,218. Two-storey homes were up six per cent to $443,379. Condos were also up by 4.5 per cent to $257,624.

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Despite a dip in December, total housing starts in the Calgary region finished 2014 up 36.1 per cent from the previous year and hitting a record level.

According to data released Friday by Canada Mortgage and Housing Corp., there were 17,131 starts in the Calgary area in 2014. Multi-family starts rose by 72.1 per cent to 10,637 units while single-detached starts were up by 1.4 per cent to 6,494.

In December, total starts of 840 were off by 6.3 per cent from December 2013 mostly due to a decline in multi-family of 14.1 per cent to 413 units. The single-detached market rose during the month by 2.9 per cent to 427 units.

The CMHC said housing starts in the Calgary area were trending at 15,544 units in December compared to 18,555 in November. The trend is a six-month moving average of the monthly seasonally-adjusted annual rates of total housing starts.

 

In 2015, total starts are forecast to decline 16 per cent to 14,400 units with reductions expected in both the single-detached and multiples segments of the market.


Overall homebuilding activity continues to look well behaved in Canada. In Alberta, the slide in oil prices will likely cool activity notably in 2015.

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A number of things that occurred in 2014 will have an impact on Calgary’s housing market in 2015.

The New Home Buyer Protection Act gives more protection to the consumer and CHBA endorses this legislation completely. The number of housing starts this year is led by multi-family builders, who are responding to demand from first-time buyers and homeowners looking to downsize who are looking for more affordable, convenient, safe housing that meets their needs. At the same time, this form of housing creates more choice for more people in more places and aligns with the Municipal Development Plan.

One of the changes will be a lot count survey the city will be updating monthly that will identify how much land is available for development, making it easier for developers and the city to plan for future needs.

The Smarter Growth initiative is a collaboration between CHBA-CR and the Urban Development Institute that explores and explains the development process.

Going forward, the major challenges from last year — in particular, Calgary’s dramatic growth and low housing inventory, especially rental accommodation — will affect the market this year, as will a new one, one that is difficult to predict: The price of oil.

If (a low oil price) is prolonged and severe, it will impact consumer confidence which, of course, is a prime motivator for home buying.

Canada Mortgage and Housing Corporation has forecast a slowdown to more sustainable levels this year anyway, so a drop in housing starts isn’t unexpected. The challenge will be how low (oil prices) goes.

Some changes to legislation coming in or proposed will also affect the market. While the changes will protect consumers, it will mean some changes to the way homes are built and in turn, may mean some cost increases for builders.

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