Outside factors will impact housing market through 2016

With the sun in Calgary rising and falling relative to the price of a barrel, it should be no surprise that the city's real estate market will continue to be impacted by economic realities beyond its control, say housing analysts.

Following a first half that can best be described as turbulent, the remainder of 2015 looks to bring more of the same for the city's housing market, with CREB®'s mid-year forecast update suggesting decreases across the board, including moderate price contraction.

"Further job losses are expected in the second half of the year," said CREB® chief economist Ann-Marie Lurie.

"These employment changes, combined with overall weakness and slower-than-anticipated recovery of oil prices, are expected to keep housing demand relatively weak for the rest of 2015.

Roller-coaster ride to start 2015 ended with more balanced conditions

The arrival of 2015 was bound to signal a change of pace for Calgary's resale real estate industry, which had just wrapped a bow around a banner 2014.

In fact, with oil prices showing signs of deteriorating toward the end of 2014, December's four per cent sales decline – following 11 consecutive months of sales increases –was really a sign of things to come.

"Changes in the economic climate are expected to cool housing market conditions in 2015, and December activity may be the first indication of this shift," said CREB® chief economist Ann-Marie Lurie at the time.

That change came early and it came swift, with sales falling by more than 30 per cent in January to five-year lows even though new listings maintained their upward momentum by increasing by 37 per cent compared to the same period last year.

Dissecting the detached category

Sales activity declines in Calgary's detached resale housing segment over the first half of 2015 resembled that posted during the global economic crisis in 2009, according to CREB®'s mid-year forecast update.

Yet experts warn aggregate prices in Calgary's largest housing segment, which have started to fall, are being skewed by higher-priced markets, which experienced a more dramatic drop during the first half of the year.

"This year, we have seen sales decline in all price ranges. However, the decline in the luxury home market has been larger compared to lower-priced homes," said Richard Cho, principal of market analysis for Canada Mortgage and Housing Corp. (CMHC).

Detached sales totaled 6,203 units, a 25 per cent decline relative to the previous year, noted CREB®.

Today, CREB® unveiled its 2015 mid-year forecast update that indicated the Calgary regional resale housing market is in for a turbulent ride over the second half of the year as some economic realities set in.

Here are five takeaways from the 24-page document:

Not just a drop in the bucket
CREB®, citing a number of economists, warns that the broader effects of oil price shocks have yet to be fully realized in both the energy and non-energy sectors. Oil prices are expected to average $55 US per barrel, which is nearly 13 per cent lower than expectations from the end of 2014. What that means is all sectors, including housing, will likely face more downward pressure heading into 2016.

Weaker resale demand
Despite more favourable lending rates, housing demand will be weaker than we've have become used to. CREB® attributes that to further job losses expected this fall, rising unemployment levels and weaker migration numbers to the city. Overall, sales activity in the city is forecasted to decline by 22 per cent to 19,798 units in 2015 and prices will contract by 0.2 per cent.

Prices expected to remain stable

Continued weakness in housing demand will limit downward pressure on supply levels and cause prices to ease in the second half of the year, CREB® said in its 2015 mid-year forecast. Despite this anticipated retraction, Calgary's benchmark prices are only expected to decline by less than one per cent on an annual basis.

"Further job losses are expected in the second half of the year," said CREB® chief economist Ann-Marie Lurie. "These employment changes combined with overall weakness and slower than anticipated recovery of oil prices is expected to keep housing demand relatively weak for the rest of 2015. However, with the initial shock of oil price declines having dissipated, the pullback in sales activity in the second quarter is not expected to be as dramatic as the first part of the year," said Lurie.

Overall sales activity in the city of Calgary is forecasted to total 19,780 in 2015, a 22 per cent decline relative to last year, but only six per cent lower than average activity over the past five years.

From shipping containers to crowd funding

A continuous decline in affordable housing, along with an increase in the populations who need it, is forcing Calgary agencies to seek creative solutions.

"I'm looking for anything that can help us provide housing in a more economical way," said David Watson, president and CEO of Attainable Homes Calgary, a not-for-profit that helps Calgarians at a moderate income level get on the property ladder. "The more ideas we can bring to the table to reduce the costs of houses, the better."

The citywide benchmark price for homes in Calgary in June totaled $455,400, a figure that puts housing firmly out of reach for many vulnerable Calgarians.

Meanwhile, the average rent for a two-bedroom apartment in the city rose by almost six per cent in the 12 months leading up to April 2015, according to Canada Mortgage and Housing Corp.

To address the crisis, Watson's organization is looking at all its options, including repurposing surplus shipping containers from China that are brought in by rail from Vancouver to Alberta. Carstairs-based Blocks Modular, for example, is currently turning the containers into stackable living spaces at a fraction of the cost of traditional homes.

Big data key to improving traffic flow, say officials

Big data is becoming a big deal when it comes to city traffic planning.

In April, Toronto Mayor John Tory announced a specialized team to analyze the movement of traffic to help alleviate his city's ongoing gridlock problem.

Traffic planners will look at data collected from GPS signatures pulled from smartphones and other electronic devices to figure out how traffic moves around Toronto.

Other cities such as Amsterdam, Stockholm and Barcelona are already using big data to help ease congestion on their streets, and Tory said Toronto is eager to join the ranks of what he calls 'Smart' cities.

Out West, Calgary has been using data to analyze traffic habits for the past four years.

Renovations outpacing new home construction

Canadians spent more on improving homes in 2014 than they did on building new ones, according to a new report by real estate consultant Altus Group.

Spending in Canada reached an estimated $67.8 billion in 2014, reported Altus. In comparison, Canadians spent just $48 billion on new home construction during the same year.

While the number represents a 3.2 per cent increase over 2013, it pales in comparison to the 8.7 per cent annual averages that were seen from 2000 to 2007. Over the last seven years, renovation spending has levelled off to an average increase around three per cent.

Now that the southwest ring road is a go, the long-awaited community of Providence south of Tsuu T'ina Nation is finally beginning to take shape.

In May, the federal government approved a land-swap deal with the nation that transferred land designated for the roadway to the province.

And in July, both Tsuu T'ina and the Alberta government vowed to have the throughway completed within the next seven years.

All this means City of Calgary officials have had to dust off the area structure plan (ASP) for the adjacent land.

Plans for a new cemetery in the southeast aims to bring burial into the 21st century, serving as more than just a repository for the departed

Stretching over rolling hills, a 65-hectare plot of land adjacent to Ralph Klein Park is an idyllic refuge from the frenetic energy of urban life.

Yet the parkland on the edge of Calgary's southeast quadrant is intended to be much more than a place to take the dog for a walk amongst spectacular mountain vistas. It's the site of the city's newest cemetery, the first to be constructed in more than 75 years.

Yet to be officially named, it represents a 21st century approach to death, aimed at making an important-but-often-underused public space in a rapidly growing urban environment into a vital hub for the communities it serves.

"It certainly will have a more multi-purpose use," said Jim Klimes, the lead architect for the City of Calgary on the project. "We don't want it cut off from society; we want it integrated into the community."