High Level of Unsold Units to Slow Housing Starts in Calgary Through 2020

Calgary’s economy will experience stronger growth in population and employment, boosting demand and sales in 2019 and 2020.

Housing starts will remain flat in Calgary for the next two years because of a high level of inventory available on the market.

The surplus inventory is largely due to unsold apartment units, which account for half of all the inventory in Calgary.

In September, there were 2,087 unsold home owner and condo units in Calgary.

The report predicts opposing forces will push and pull the demand for housing in Calgary over the next two years.

On aggregate, it is predicted that Calgary's economy will experience stronger growth in population and employment. This will help support demand and increase sales in 2019 and 2020.

However, the average MLS price will continue facing downwards pressure, but is expected to stabilize in 2019 and modestly rise in 2020.

At the moment, it remains a buyer's market for homes in Calgary.

Active listings in Calgary resale market have been trending higher, while MLS sales have been lower due to relatively weaker economic fundamentals in the market.

On a year-to-date basis, MLS sales have decreased 13.5 per cent from September 2017.
Employment growth and the continued net positive interprovincial and international migration will drive the demand for rentals in Calgary in the next two years.

Vacancy rates are expected to dip through 2020, but competition from the secondary rental market will keep vacancy rates from declining faster.

National situation moderating

The national real estate market is expected to moderate over the next two years as the growth in home prices is expected to slow to more in line with economic fundamentals.

The national housing agency said housing starts and sales are both expected to decline in 2019 and 2020.

It predicts housing starts for single- and multi-unit starts will fall to between 193,700 and 204,500 in 2019, while sales are anticipated to be between 478,400 and 497,400 units. Prices are expected to range between $501,400 and $521,600.

It expects economic indicators like income and employment to continue to help support demand for housing starts, but these fundamentals are anticipated to slow down to a more sustainable pace.

Rising mortgage rates are also expected to affect housing demand and the resale market.

By 2020, demand will continue to shift toward relatively affordable housing options like apartment condominiums versus higher-end single-detached homes.

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