The Calgary Real Estate Board recently held its annual forecast breakfast with predictions for the 2017 housing market. Here are the top 5 factors in which to focus
1) Modest Rebound: With declines in total number of sales the past three years, the forecast is for the Calgary market to rebound, if ever so slightly, in 2017. Sales in every quadrant and market segment is predicted to reach 18,335 (up from 17,809 in 2016) which is approximately a gain of 3%. A gain over last year but still 12% below the 10-year average. Specifically, single-family unit numbers should hit 11,550 – attached units and condos 4,002 and 2,783.
2) Price Growth: Small as it may seem, CREB® projected 0.3 per cent price growth for 2017 follows a much more significant decline in 2016 (3.84 per cent). CREB® credits overall growth to Calgary’s detached sector, where prices are expected to grow by 0.8 per cent. Prices in the city’s attached sector are predicted to increase by 0.3 per cent. Following a decline of 5.99 per cent in 2016, price declines in Calgary’s apartment sector are expected to moderate to just two per cent for the year.
3) Price of Oil: The price of oil is something that can’t be disregarded when predicting economic conditions in Calgary. The price in January 2016 was around $29.01 US and then climbed during the year to $40 or $50 per barrel depending on the day. CREB’s crystal ball says that oil prices should stabilize in 2017 and should stay over the $50-$55 mark. Currently, WTI sits close to $52.
4) Unemployment Rate: Calgary’s unemployment rate is predicted to decline in 2017 to 7.8 per cent after topping 10 per cent in the later stages of 2016. While this will not compensate for all the losses in the past year, softer unemployment rates should help prevent any further contractions in housing demand, said CREB®.
5) Net Migration: Fewer newcomers came to the city last year. In 2016, we lost 6,527 people but CREB forecasts 2017 will be a year of recovery with 1,600 moving to Calgary.
The Calgary Herald reported that Don R. Campbell, a senior analyst for the Real Estate Investment Network, pointed out that several economists also believe that the economy in Alberta will begin to improve in 2017. That broad brush-stroke doesn’t mean that real estate in Calgary will also recover.
He noted that real estate can be a lagging indicator of the state of the economy and that it can take 1.5 to 2 years for the market to catch up. Factors like Alberta’s carbon tax, tighter mortgage guidelines courtesy of CMHC need to be taken into account.
Campbell said it will take time for the negative momentum of the dying days of 2016 to come to a halt before real estate specifically joins the rest of the economy in our city.