Oil price jitters are firmly settling into Calgary's housing market, keeping buyers on the sidelines during what is normally the start of the hottest season in real estate.
Calgary home prices slumped for the second month in a row in March, having slid 0.85 per cent since the start of the year, the Calgary Real Estate Board reported.
The benchmark price was $454,900 in March, down from $458,800 in January. The modest drop in prices masks a much steeper drop in home sales, which fell nearly 30 per cent compared with a year earlier.
"Concerns in the energy sector continue to persist, and employment figures are starting to support those concerns," the board's chief economist, Ann-Marie Lurie said in a statement.
Job losses in the energy sector have been offset by employment growth elsewhere, although many of those have been lower-paying service jobs, Ms. Lurie said. "If this trend continues, it may influence the composition of housing demand."
Calgary was Canada's hottest real estate market for most of last year, with buyers fighting over a dearth of new listings. Oil woes have turned the city into a buyer's market in 2015, as inventory levels, or the number of months needed to absorb homes on the market, rose from 1.34 months last March to 3.26 this year. The average number of days on the market also jumped last month compared with the previous March, from 28 to 39.
Sellers are no longer panicking as they did at the start of the year when the number of new listings skyrocketed. New listings fell nearly 4 per cent in March compared with a year earlier. However, inventories of unsold homes remain nearly 70 per cent higher than the same time last year.
Within the region, the City of Calgary is bearing the brunt of the slide in home prices even as prices have continued to rise in the suburbs. Calgary's condo market was hit the hardest. Condo prices slid nearly 2 per cent since the start of the year. There were six months' worth of unsold condos on the market in March, triple the number at the same time last year.
Prices of detached homes, meanwhile, have dropped less than 1 per cent as sales shifted toward more modestly priced homes. Sales of homes more than $1-million fell by nearly 50 per cent this year compared with last year.
Despite falling home values, prices of both condos and houses are still higher than they were a year ago, the echoes of a hot housing market in the first half of 2014.
Economists warned that the oil-price rout has pushed Canada toward a two-speed housing market: Toronto and Vancouver versus the rest of the country.
Prices have jumped more than 9 per cent in Toronto and Vancouver since last year, while the recent downturn in Alberta has whittled down annual growth in Calgary to around 3 per cent. Prices have dropped more than 4 per cent in Regina, while prices have either stagnated or fallen in markets east of Toronto.
"Suffice it to say that strong Canadian home price gains are now almost purely a two-city phenomenon and the so-called soft landing (harder in Alberta and Saskatchewan) is well under way across most of the country," wrote Bank of Montreal senior economist Robert Kavcic.