Calgary home prices expected to fall slightly this year
Calgary Real Estate Board says sales down 22 per cent, but prices not falling dramatically
Housing prices in Calgary won't be dropping dramatically despite fewer sales and uneasiness about the slumping economy, says the local real estate board.
The Calgary Real Estate Board (CREB) released its mid-year forecast Wednesday, predicting the residential benchmark price will settle at $448,354, down 0.20 per cent from last year.
"We do anticipate that housing sales will remain weak due to these slow employment levels in the second half of the year," said Ann-Marie Lurie, chief economist with the CREB.
"Further contraction in employment is what has been forecasted. This will continue to have that downward pressure on sales activity."
The board is forecasting almost 20,000 sales in Calgary this year, down 22 per cent from last year.
"Inventory will be a key as to what happens in pricing," she said. "Even though our inventories have risen, they aren't as high as we saw in the 2008, 2010 market... this makes this market behave slightly different."
No double-digit drop
Home prices are expected to fall slightly in the second half of this year. But Lurie isn't expecting the double-digit drop some buyers are holding out for.
Prices depend a lot on demand in the neighbourhood and how many homes are for sale, said CREB president Corinne Lyall. In some neighbourhoods there are just as many buyers looking for homes as sellers, creating price stability.
In neighbourhoods with more homes for sale than buyers, sellers may have to adjust their expectations, she said.
Price range is also a factor, with less demand for higher priced homes.
"Some buyers still have the impression they'll get significant price reductions in this market, but that's not always the case," Lyall said.
"Many that were in a position to buy are now taking advantage of the greater selection and, of course, the lower lending rates. Others are sitting on the sidelines still and feeling unsure whether right now is the right time to jump back into the market."
Another factor to consider is the vacancy rate in Calgary, which is starting to rise, with a two-bedroom apartment vacancy at 3.5 per cent, up from 1.5 per cent last year.
"Consumers will have more options to stay in rental," Lurie said. "That limits that pressure for them to go into home ownership."
Lurie says the severity of the economic downturn and how long it lasts will determine when the real estate market will pick up again.