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Tammie and John Onslow reduced their asking price several times after the Calgary housing market dipped when the price of oil collapsed.Todd Korol/The Globe and Mail

The effects of falling oil prices are only starting to be felt in Calgary's housing market, the city's local real-estate board warned, with home prices expected to fall further as unemployment continues to rise.

Resale home prices likely will end the year 0.2 per cent lower for the year, the Calgary Real Estate Board predicted in a mid-year forecast. Home sales should end the year 22 per cent lower than in 2014.

While the picture emerging is a far cry from a housing crash, the board admitted the city's economic prospects are much bleaker than it initially expected in January, when it predicted that Calgary home prices would end the year 1.58 per cent higher.

"We didn't expect that there would be so much concern from the public and consumers and that it would last as long as it did," board president Corinne Lyall said.

Others are predicting a steeper decline for the city's home prices. In a forecast earlier in July, real-estate company Royal LePage said home prices would fall 2.4 per cent, while Toronto-Dominion Bank predicted a 1.7-per-cent price correction. Calgary's home prices already have become more affordable since the start of the year, Royal Bank of Canada said in June, although that's unlikely to encourage many more buyers to jump into the market.

Oil prices, which have slid back below $50 (U.S.) a barrel, continue to be the biggest factor putting a chill over Calgary's housing market, Ms. Lyall said. "We're not sure how long the impact on our energy sector is going to last. That is the biggest unknown and the one that's obviously going to cause us the greatest impact in the long term."

Economists now expect Calgary's economy to contract 1.2 per cent this year. The city has lost nearly 12,000 full-time jobs since January, many of them high-paid positions, the board said, while gaining about 24,000 part-time positions. Calgary could stand to lose an additional 23,000 jobs this year, the board said, citing Conference Board of Canada economic forecasts.

Home prices have been falling in the city since December as oil prices plunged and sellers rushed to put their homes on the market to get out ahead of a price correction. The city saw a surge of listings at the start of the year, but that tapered off by spring as many sellers took their unsold properties off the market. Major job losses usually take 12 to 18 months to show up in the real-estate market, Ms. Lyall said, meaning many of the homeowners who rushed to list their home in the winter weren't desperate to sell.

"There are people who have lost their jobs, but we're not seeing a large number of listings coming on as a result of those people," said Calgary Royal LePage real-estate broker Ted Zaharko. Yet, with further job losses expected and nearly 14,000 homes still under construction across the city, Calgary could see a rise in new listings later this year or into next year, the real-estate board warned.

The board predicted that the benchmark price, a measure that compares homes with the same features over time, would likely fall to $448,354 (Canadian) by the end of the year, below its earlier prediction that prices would rise to $456,346 by year's end. Benchmark prices averaged $455,133 in June.

The slowdown has hit some parts of the housing market more than others. Rental vacancy rates have more than doubled, to 3.6 per cent from roughly 1.5 per cent last year, amid rising levels of newly built apartments. The glut of new rental supply has already helped drive the benchmark price of condos down 2 per cent from last year as potential first-time buyers and condo investors sit on the sidelines.

In the market for detached homes, sales have fallen 25 per cent compared with the time last year. Much of the drop is in homes listed for over $600,000.

But some buyers remain on the hunt and there are still bidding wars for some lower-priced detached houses. Mr. Zaharko recently listed a dilapidated detached home for $220,000 that received calls from 50 realtors and five bids.

"You'd be a fool to say the market is great but it's certainly not bad," he said. "That's surprising compared to what people would have expected."

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