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.

Construction declines won't diminish market, says industry

Calgary's new housing market in 2016 will be characterized by a gradual slowdown, with highlights coming from first-time buyers, a resurgent luxury sector and continued multi-family growth, say industry insiders.

Canada Mortgage and Housing Corp. (CMHC) forecasts a 16 per cent decline in Calgary housing starts to 10,000 units, following a 23.9 per cent decline Calgary in 2015.
For single-family homes, that means only 4,000 starts this year — the lowest since 1988 – from 4,138 in 2015.

Multi-family starts are predicted to fall to 6,000 units from 8,895 last year.

Despite the slowdown, Canadian Home Builder's Association-Calgary president Wendy Jabusch believes Calgary's housing market will continue to remain healthy, especially as net-migration numbers to the city continue to be positive. The Conference Board of Canada forecasts levels will total 11,747 in 2016, compared with 14,951 in 2015.

Resale housing market expected to navigate ominous conditions in 2016

The year was 2014. The price of oil was soaring sky high, and, like so many other sectors, Calgary's housing market was along for the ride.

What a difference a few years make.

Following the collapse of worldwide oil prices and subsequent cooling of the city's once red hot housing market, the arrival of 2016 now finds Calgary in a time of uncertainty.

In its 2016 Economic Outlook & Regional Housing Market Forecast, CREB® expects resale sales activity to decline by 2.2 per cent from 2015 levels to 18,416 units, and the benchmark price by 3.44 per cent to $438,652.

Vacancy rates spike as downturn makes its presence felt

Calgary's commercial sector has not been spared from prevalent weakness in the provincial economy, with prime spaces in the city left empty for most of 2015.

Vacancy rates in Calgary's commercial office sector increased by 5.8 per cent from the beginning of the year to the end, noted commercial real estate firm Avison Young. In downtown specifically, vacancy jumped 7.2 per cent, which accounted for approximately three million square feet.

In comparison, office vacancy rates tripled from four to nearly 12 per cent during the last economic downturn in 2008/09.

Alternative forms of transportation dominates headlines in 2015

Joe Starkman was contemplating buying a car for his daughter while she attended university in Halifax. To his surprise, she wasn't interested.

"That twigged us," said Starkman, president of Knightsbridge Homes, the builder behind N3 in East Village, Calgary's first carless condo. "We started to do some research, and our research showed there's a market in that Generation Y demographic for which car ownership is not a priority.

"We're not trying to change the world, we're just responding to a world that's changing."

Elevated supply levels placed downward pressure on prices in December  

With the focus shifting toward the holiday season, December sales activity slowed to 878 units in the city, 18 per cent below last year at this time and well below the five- and 10-year averages, according to CREB®'s final monthly housing summary of 2015.

As a result, the unadjusted benchmark price dipped to $448,800, a 0.42 per cent decline over the previous month and 2.33 year over year.

CREB® chief economist Ann-Marie Lurie noted December followed a pattern established early on in 2015, which was characterized by slower housing demand.

Experts believe higher-priced home market is not out for the count

Despite ongoing oil patch uncertainty that plagued the province's economy for much of 2014, Calgary's luxury housing market is still alive and well, say industry insiders.

While experts acknowledge the sector is going through a rough patch, they say the industry is undaunted, instead pushing ahead in hopes that Alberta's infamous cyclical economy is due for another upswing.

A look back at secondary suites in 2015

City council made gains over the past year on encouraging development of legal and safe secondary suites in Calgary, but the topic continued to be a contentious issue for many.

While council approved relaxations to secondary suites regulations in two areas in late November, it also rejected a bid earlier in the year to legalize suites in four central wards.

This year also saw the introduction of a registry program and development permit exemption, both initiatives aimed at bringing more safe properties to the city.

The year according to CREB®'s Ann-Marie Lurie

With the calendar set to turn on what's been a turbulent year in the city's real estate industry, many will wondering what to expect in 2016 and beyond. To help provide a little clarity on just how we got here, as well as a hint as to where we're headed, CREB®Now enlisted CREB® chief economist Ann-Marie Lurie to provide some end-of-year insight.

CREB®Now: ?How would you sum up 2015 in Calgary real estate?

Lurie: It has been a year of weaker demand – definitely challenging economic times resulting in weaker demand. As a result there has been some more inventory than we are used to in the market and there has been some downward regression on pricing. It's completely consistent with what the economic situation has been.