RESALE MARKET TO EASE AS PRICES GROW IN 2013
Slower job growth among likely factors
Calgary and area’s resale housing market is expected to grow at a slower pace in 2013, while prices will grow moderately, says the Calgary Real Estate Board in a preview of its annual forecast.
Sales growth in the city and area will ease to two per cent, CREB predicts. Slower employment growth and migration levels in 2013 will contribute to a moderate demand for housing, says chief economist Ann-Marie Lurie of CREB.
A return of consumer confidence is one of the main highlights of the forecast, says president Bob Jablonski of CREB.
“The buyers feel confident that they can buy something, and the sellers feel confident that they can sell, which is a big difference from the years before with the ups and downs of the overheated market,” he says.
The balanced market gives buyers the opportunity to make an informed decision on a potential purchase.
While sales activity has been strong this year, Lurie says the market is only now returning to more typical levels of activity.
“We have had some stronger price growth in the singlefamily market. That’s mostly because the levels of listings have gone down and there’s less selection,” she says.
“That has really helped push up pricing, but we still remain off-peak pricing. In single family, that spread is about three per cent below the peak, while in condos, it’s probably about 13 per cent.”
Affecting the growth of the housing market is employment growth, which is not expected to be as strong next year, having slowed down in the second half of this year.
Employment is expected to grow 3.5 per cent this year and 2.5 per cent next year.
Net migration levels are also expected to ease next year. They were exceptionally strong this year, with about 20,000 people likely moving to Calgary during 2012, declining to about 15,000 next year, says Lurie.
Construction starts of homes has been quite strong, but the prediction for next year is for starts to remain at typical levels.
The concern is whether builders are constructing too much — creating additional supply in the market, which could have downward pressure on prices. “Overall, we expect their prices to improve as the market remains balanced,” says Lurie.
The resale housing market is affected by economic risk.
“On the upside, the news over these (energy company) takeovers and how much that might encourage investment can be a positive and improve people’s confidence. You can’t ignore, on the downside — that there are global economic concerns. It’s a lot less risk than it was last year. There was a lot of talk then about double-dip recessions. That doesn’t exist as much today.”
With Calgary’s energy sector-driven economy, various issues are at play.
“If commodity prices continue to ease, that’s a downside risk,” says Lurie. “Pipeline capacity constraints in the oil sector — if some of those issues aren’t addressed, you’re going to see some more scaling back of new investment, which ultimately creates new employment. On the upside, if various pipelines get approved, that can boost us further than we anticipate.”
CREB will release its full forecast at its annual conference on Jan. 16.