A report released this week showed real estate prices had dropped 1.9 per cent in Calgary in July and 2.3 per cent year-over-year.Jeff McIntosh/The Globe and Mail
Calgary's real estate watchers are turning their backs on a miserable first half for 2015 and looking to September for a sign of recovery.
In its midyear forecast, the Calgary Real Estate Board surveyed the bleak landscape and concluded that, "rising unemployment levels and limited job opportunities far outweigh the benefits of a lower lending rate and will continue to keep housing demand weak in the months ahead." It forecast that, by the end of the year, overall sales activity in the city would fall by 22 per cent.
The Teranet-National Bank house price index, released this week, showed prices had dropped 1.9 per cent in Calgary in July and 2.3 per cent year-over-year.
On Friday, the Canadian Real Estate Association reported that, year-over-year, prices were up a mere 0.14 per cent in July, the smallest gain in almost four years. But it also pointed out that "activity was nonetheless running roughly in line with five– and 10-year averages for sales during the month of July."
Individual real estate agents looking for positive signs of a market revival have managed to find a few.
"For median sales prices, the only quadrant we've seen impacted negatively is the southwest, where we find more expensive homes," Jim Sparrow, Royal LePage Solutions realtor, says.
"Lower-priced homes are still moving," he says. "I expect a bounce in sales in September."
Peter Norman, chief economist for Altus Group, a real estate advisory firm, said in an interview this week that positive sings are emerging "now that the dust is settling on the energy sector."
"A lot of people might be surprised by why it hasn't come down more," he said in an interview this week on BNN. "And also why the supply and demand remain so much in balance that we haven't seen much of a change in pricing."
Altus Group's second quarter review zeroing in on the Calgary new condo market concluded that the sector had, "found its footing over the second quarter of the year following the initial shock of the energy sector downturn." It found new condominium sales volumes "up significantly" in the second quarter" but still 29 per cent lower than the average over the past three years. "That said, the current market remains substantially stronger than the depressed levels seen during the financial crisis [2008-10]."
Ben Myers, senior vice-president of market research and analytics for Fortress Real Developments, says that the market is likely to remain flat leading into 2016, with continued job loss and unemployment expected in the coming months.
"I don't see any huge rebound in the market necessarily, but also no major pull-back," Mr. Myers says.
A stagnant economy in the coming year will undoubtedly impact the real estate market further, he says.
With fewer people migrating to the city in light of the oil decline, Mr. Myers foresees an impact on consumer confidence, but believes that any decrease in spending will be short-lived.
"I see the sales and prices improving as confidence returns to the market and people see that it's not all doom and gloom, " Mr. Myers says.
"In reality, if you look at other businesses and industries and how they are operating, it's just not as bad as it looks."
A veteran of the oil and gas industry, Mr. Sparrow agrees, saying that oil prices have had a detrimental, but temporary, effect on the market but that the outlook remains positive.
"Oil has a huge impact on the city, and even though it's a larger downturn than we first expected, it's nowhere near where it was 20 to 30 years ago," he said.
"The oil prices always come back, we just can't predict whether that might be one week from now, or one year, or three."
Mr. Sparrow has noted an influx of first-time buyers in downtown condos, as the prices in that market have taken the greatest hit city-wide.
With more inventory available in apartment-style condos than the detached market, and more developments under way, a number of buyers are taking advantage of the lower prices and entering the real estate market for the first time.
"For a first-time buyer – people who couldn't necessarily afford a half-million dollar house – a $300,000 condo is a viable option," Mr. Sparrow said.
The signs pointing to a rebound are there already, he says.
"Month-to-date, 60 per cent of homes in Calgary have gone for list price or more," he says. "That doesn't indicate a market that's weak."