Will an increase in vacancy rates push down housing demand? 

Calgary has long had a reputation as a difficult place to rent – a reputation confirmed for much of last year when the city's vacancy rate hovered below one per cent.

Yet market uncertainty brought upon by oil patch woes have painted a much different picture in 2015, with Canada Mortgage and Housing Corp. (CMHC) reporting vacancy rates in the city as high as 3.2 per cent.

While good news for renters, it poses as potential bad news for home sellers, notes ATB Financial chief economist Todd Hirsch.

ATB Financial chief economist Todd Hirsch recently spoke at CREB®  to outline some of his predictions for Alberta in 2016. During the talk, Hirsch discussed some causes for the current state of the provincial economy and factors that will need to change before Albertans see a rosier economic picture. CREB®Now examines some of the main talking points discussed during his visit.

Earnings:

Rather than simply pointing out the decline in the price of oil, Hirsch focused on the wages being earned by some Albertans as one of the factors affecting Alberta's current situation. Playing a massive role in province's employment picture, the average weekly earnings for Albertans had improved by 48 per cent over the last 10 years compared to 29 per cent nationally, with workers in the energy sector taking home 56 per cent more than a decade ago.

Several factors contributing to more favourable conditions

Calgary's rental market is emerging as an early winner this year as the result of improved vacancy rates, added inventory and a more conservative appetite among buyers in the resale housing sector.

CREB®'s mid-year forecast update, released earlier this week, notes more choice and less upward pressure on rents has, and will continue to, impact the resale market as more consumers choose to keep renting.

An April report from the Canadian Mortgage and Housing Corp. (CMHC) showed two-bedroom apartment and row vacancy rates rose to 3.6 per cent in 2015 – the highest level since 2010 – from 1.5 per cent the year prior.

How the future of oil and gas in Alberta will affect Calgary's housing market

The plummeting price of oil is unlikely to affect Calgary's housing market in the immediate future, but a prolonged slump could eventually leave its mark on the local landscape, say Canadian economists.

"If the recent slide in oil prices turns down the migration taps, construction activity could begin to soften again in Calgary," said BMO senior economist Robert Kavcic, noting that, in the interim, Calgary's housing market remains red hot.