File photo of new housing construction in Calgary.Jeff McIntosh/The Globe and Mail
Calgary's housing market is showing signs of fracturing amid a fresh wave of layoffs announced by major energy companies in the city.
Home sales plunged 27 per cent in August from a year earlier, while the benchmark and average resale prices both fell, the Calgary real estate board said Tuesday.
The benchmark price slipped 0.09 per cent to $456,300. The average resale price in the city tumbled nearly 2 per cent to $466,570. On a year-to-date basis, average prices fell roughly 1.7 per cent while benchmark prices rose about 2.4 per cent as the number of new listings eased.
But overall inventories are swollen at 44 per cent above the same period in 2014 so far this year, pointing to more weakness ahead as job losses in the oil and gas sector mount. Total sales so far this year are down 25 per cent.
"While we've managed to come through the spring market with not a lot of change, because there is further expectations of softness in the employment market, these things will start weighing on the housing market as we move into the end of the year," said Ann-Marie Lurie, chief economist with the board.
The weakening housing market is another symptom of oil's collapse to under $50 a barrel from more than $100 (U.S.) last year – a sharp drop that has forced the city's energy industry into survival mode.
U.S.-based ConocoPhillips Co. and Calgary-based Penn West Petroleum Ltd. on Tuesday shed a combined 900 positions, adding to thousands of job losses that have piled up as companies dial back spending and halt drilling projects.
Alberta's oil-dependent economy is now expected to contract by 0.6 per cent this year and its deficit could top $6.5-billion (Canadian) as the downturn intensifies, the province's NDP government said this week.
However, the deteriorating outlook has yet to fully register across the city's residential real estate market. For example, detached houses priced between $400,000 and $500,000 are still changing hands at a brisk pace, Ms. Lurie said. That contrasts with sluggish sales and falling prices for apartments.
Still, houses are languishing on the market for longer periods – a situation that could worsen as layoffs spread from field operations to head offices in the city's downtown.
"If people have lost their jobs and they can't replace them over a period of time, and or can't replace them at a similar salary, that's when it starts to have that trickledown effect into the housing market," she said.