Provincial levels in fourth quarter steady; up on annual basis

Non-residential construction levels in the province surprised many in the fourth quarter of 2015, remaining relatively flat when compared with the same period the previous year at $2.74 billion, according to Statistics Canada.

"Signs of the economic slowdown are all around us in Alberta, but the one surprising indicator where we have yet to see much downturn is construction activity," said ATB Financial chief economist Todd Hirsch.

"Indeed, if a Martian landed in downtown Edmonton or Calgary today, it might well assume that the province is booming."

CREB®Now sits down with incoming president Cliff Stevenson 

Softness in the provincial economy is expected to challenge Calgary's resale residential housing market in 2016. How will the market react?

CREB®Now recently had a chance to sit down with CREB®'s incoming president Cliff Stevenson to ask him five questions about the local housing industry in the year ahead.

CREB®Now: ?How will buyers and sellers react in what's expected to be a down economy?

Stevenson: Sellers are going to be more choosy with their timing in this calendar year. Someone who is working with a real estate professional is going to spend a lot more time on strategy with respect to pricing and timing. And buyers, especially first-time buyers and investors, will do their best to time the bottom, but I think that will be really difficult. So, I think this year it will be the guessing game by first-time buyers and investors of when will be the best time to get into the market. But I would suspect there are going to be some challenges with that.

A recap from social media

It's all over for another year.

CREB® recently wrapped a bow on its 2016 Forecast & Tradeshow at the BMO Centre, where nearly 1,000 real estate professionals and industry partners gathered to hear from experts on what the local housing market could look like in the year ahead.

In addition to hearing from much-anticipated keynote Stefan Swanepoel and CREB® chief economist Ann-Marie Lurie, guests to this year's show had an opportunity to hear from incoming CREB® president Cliff Stevenson, hear from representatives from the Canadian Real Estate Association (CREA) and take in afternoon panel discussions with Conference Board of Canada, Alberta Department of Energy, Brookfield Residential, the City of Calgary and more.

Here is a snapshot of what attendees were saying about this year's event:

Calgary vacancy rate could go even higher in 2016, say experts

Renters in Calgary stand to gain the most from the energy sector's misfortune, with vacancy rates expected to increase after already jumping almost five-fold over the past year.

According to the Canada Mortgage and Housing Corp.'s (CMHC) Fall Market Report released in early December, Calgary's vacancy rate rose from 1.4 per cent in fall 2014 to 5.3 per cent in October 2015.

The national average was 3.3 per cent.

"We expect the vacancy rate to edge even higher in 2016," said CMHC principal of market analysis Richard Cho. "And with higher vacancy rates, tenants will have more choice in the market and landlords will have to do more to attract renters, naturally putting more downward pressure on rents.

Beleaguered sector takes brunt of economic downturn

Apartment-style condominiums were the hardest hit within Calgary's resale residential housing market in 2015, with price drops and inventory gains that outpaced both attached and detached products

On an annual basis, the apartment benchmark price slide by 0.4 per cent to $292,818 by the end of November, according to CREB®. In comparison, year-to-date benchmark prices in the detached and attached sectors during the same period actually increased by 1.7 and 2.1 per cent, respectively.

Yet more telling is how apartment prices reacted during the year, as it dropped by four per cent from $298,700 in January to $287,000 in November. During this period, benchmark prices in the detached and attached sectors declined by a more modest 1.5 and one per cent, respectively.

Commercial vacancy rates represent market outlook

Nearly one out of five floors in the office towers that make up Calgary's famous skyline now sit empty, according to CBRE, which anticipates vacancy rates to increase further in 2016.

"Oil and gas companies on every level – from junior start-up to intermediate to major companies – everyone has gone through some form of layoff and therefore and have excess space," said Greg Kwong, managing director at the commercial real estate services firm.

Calgary's downtown office market ended 2015 with vacancy rates topping 17.4 per cent – nearly double from 9.8 per cent in 2014, according to CBRE's 2016 Commercial Real Estate Market Outlook.

Surrounding region's housing market to be similarly impacted by sluggish economy: CREB®

The resale residential housing market surrounding Calgary is expected to feel the pinch from a sluggish provincial economy, with prices facing downward pressure from slower sales activity.

In CREB®'s 2016 Economic Outlook & Regional Housing Market Forecast, chief economist Ann-Marie noted Airdrie and the Rockyview and Foothills regions will face similar conditions as that within Calgary.

"The resale residential housing market outside of Calgary will face the same macro-economic influences on housing demand as those within the city in 2016," she said, noting each area will have its own set of circumstances that will influence supply, demand and prices.

Global glut for oil means Alberta economy is expected to struggle in 2016 – and Calgary's housing market along with it

Alberta's energy sector has only felt the tip of the blade, say experts, who anticipate the worse is still to come.

"Unfortunately, the story is not positive – and it's not over for Calgary by any stretch of the imagination," said CIBC deputy chief economist Benjamin Tal.

"I think that 2015 was just the pre-show, and we're going to see most of the damage, at least, in the first of half of 2016."

Several major projects in Calgary expected to capture headlines in 2016

Calgary is expected to look a lot different by the end of this year thanks to the opening of several highly anticipated developments that promise to reshape the local landscape, say officials.

"It was a good year in 2015, and the projects continue to come in for 2016," said Kevin Griffiths, director of inspections and permit service at the City of Calgary.

The National Music Centre, a new international terminal at the Calgary International Airport and the new central library are just a handful of the projects that could see their doors open in 2016.

While acknowledging downtown office construction projects have slowed, Griffiths said the pace for other commercial projects have increased. He singled out the Residence Inn by Marriott and SilverBirch Conference Centre, planned for the former site of the Alberta Boot Company on 10th Avenue S.W.

Comparing Calgary's current downturn to history

Calgary's infamous boom-bust economy is at it once again.

Just as it did in the 1980s and late-2000s, economic conditions have once again turned sour.

But does this downturn feel different from those that came before?

Yes, says CREB® chief economist Ann-Marie Lurie.

In CREB®'s 2016 Economic Outlook & Regional Housing Market Forecast, Lurie notes that while some have tried to compare this year to the early 1980s – in terms of its perfect storm of low oil prices and high unemployment – the underlying conditions are, in fact, much different.