Calgary Real Estate Forecast 2016
2016: Looking Ahead to the Calgary Housing Market in the New Year
Given the current conditions of the Calgary housing market, it is clearly a buyer’s market, with inventories high and prices dropping. Predictions for 2016 indicate that this trend is not likely to change any time soon.
The Impact of Oil on the Housing Market
Currently, there is nothing to indicate that 2016 will be any different from 2015 in terms of the oil industry, which means demand for housing in Calgary is likely to remain weak in the New Year. Similarly, net migration is expected to fall short of 2015 levels in 2016. Whereas 2015 saw 14,951 in net migration, 2016 is expected to see just 11,747. This is mostly due to a lack of higher-paying employment opportunities. In short, ongoing problems within the oil industry will continue to impact the Calgary housing market, including both property purchases and rentals. Furthermore, rising vacancy rate will put downward pressure on rental rates throughout the year. In turn, this is expected to decrease ownership demand from investors.
Sales and Prices.
Overall, total sales activity is expected to remain 2.2 percent below 2015 levels with 18,416 units anticipated. At the same time, new listings are expected to increase in 2016. This combination will lead to high inventories in the rental, new home and resale markets, placing downward pressure on prices. The annualized benchmark prices in Calgary are also expected to fall, with currently predictions showing a 3.44 percent drop to $438,652.
Continuing Trends from 2015
2015 saw a drop in new home starts, a trend that is expected to continue into 2016. Despite the drop in new home starts, the new home inventory has been on the rise. Nonetheless, absorption levels have remained above 95 percent. If this continues into 2016, it can help to prevent a large spike in inventory levels in the New Year. On the other hand, the large number of multi-family units still under construction means inventory levels of this type of housing may rise and further increase supply of housing options. This, in turn, can bring prices down even further in 2016.
Just as higher-end homes struggled with finding buyers in 2015, this trend is also likely to continue in 2016. Specifically, homes in the $500,000 to $600,000 range are expected to experience downward pressure as the weak economy continues to weigh heavily on the segment. Meanwhile, the attached segment is also expected to experience downward pressure, with benchmark prices falling 3.5 percent to $342,101.