CREB®'s mid-year update cites tough start to 2016, forecasts continued challenges moving forward

Calgary's housing market will continue to battle recessionary conditions during the second half of 2016, but the worse might be behind it.

That's the word from CREB® as it released a mid-year update to its annual Economic Outlook & Regional Housing Market Forecast.

"With no near-term changes expected in the economic climate, housing demand is expected to remain weak for the second consecutive year as resale activity is forecasted to decline by eight per cent in 2016," said CREB® chief economist Ann-Marie Lurie, who authored the report.

CREB® chief economist walks through often-overlooked housing statistics

Months of supply is a statistic that often gets lost in today's housing market, yet it is an important indicator of the relationship between supply and demand, says CREB® chief economist Ann-Marie Lurie.

"It gives us one indication of balance in the market," she said of months of supply, which is the amount of time it would take to sell current inventory.

"If the number is really high – so you have a higher level of months-of-supply – that essentially just means that there's more supply than demand in the market and it generally correlates with declining prices in the market.

Monthly prices decline for fifth consecutive month: CREB

February sales totaled 1,127 units in Calgary, a 6.63 per cent drop over last year and 37 per cent lower than long-term averages for the month, according to CREB®.

In its monthly housing summary, CREB® reported citywide unadjusted benchmark prices totaled $445,000 last month, a 0.63 per cent decline over January and 3.45 per cent lower than levels recorded last year.

"Slow sales and elevated housing inventory has resulted in further price declines," said CREB® chief economist Ann-Marie Lurie. "Given the current economic environment, it is no surprise that consumer confidence and housing demand is being impacted."

Understanding the lingo

CREB® released its regional housing market statistics earlier this week for January, showing the residential housing market is continued to be challenged by energy sector uncertainty. But what does it mean for homeowners?

CREB®Now breaks down the lingo in this week's "Five Things" feature.

Sales
CREB® reported that sales of all housing types in Calgary are down 13 per cent from last January to 763 units. By segment, however, a slightly different story begins to unfold. While sales in the detached market decreased by an identical 13 per cent, the attached sector dropped by just over 10 per cent, while the apartment sector fell by a precipitous 16 per cent. For sellers, this shows which segments are more active than others – keeping in mind that the detached sector still represents nearly two-thirds of all sales activity.

Housing stats indicate some buyers still sitting on the sidelines

Calgary's resale residential housing market picked up where it left off in 2015, with buyers' conditions prevailing through every major category last month, according to CREB®.

Yet with many homebuyers still sitting on the fence, local housing officials caution that historically it's been difficult to find a utopian moment to enter the market.

"Buyers, especially first-time buyers and investors, will do their best to time the bottom, but I think that will be really difficult," said CREB® president Cliff Stevenson, noting that few were able to do so during the last recession in 2008/09 when the upturn happened quickly. "I think this year it will be a guessing game as to when will be the best time to get into the market."

Weak sales activity relative to inventory places downward pressure on prices

Persistently high inventory levels within Calgary's residential resale housing market, combined with weak sales activity, contributed to buyers' conditions in November, according to CREB®'s monthly housing summary, released Tuesday.

Monthly sales totaled 1,263 units, a 28 per cent decline from last year and nearly 20 per cent below the 10-year average.

Meanwhile, the amount of new listings in the market increased by five per cent over last November, and moved five per cent above 10-year average.