Calgary maintains its status as buyers’ market, with hints of move toward balance
When it comes to Calgary’s housing market, the glass is half full. That’s one of the biggest takeaways of a recent report from one of Canada’s leading providers of real estate market analysis.
The latest National Housing Market Assessment report by Canada Mortgage and Housing Corp. (CMHC) for the fourth quarter of 2018 suggests the city’s real estate market is far from being overheated. And while it’s trending toward balance — good news for sellers — it’s still dealing with over-supply.
“Where we are now is in buyer’s market territory,” says James Cuddy, senior analyst for CMHC.
“There are a lot of options on the market so a lot of people have listed properties, but not a lot of people looking to buy those listed properties.”
Also driving the supply is the considerable number of units under construction — a hangover from the previous oil boom that ended in 2014.
“Leading up to the recession there was a lot of activity and demand in the market, and that was pushing some of the valuations in the market toward the threshold (of being overheated),” he says.
Industry responded with many developments that launched just as the economy tanked with oil prices falling to lows unseen since the 1990s.
Cuddy says all told it was a perfect storm of negative conditions to push real estate prices down.
“There were migration outflows to B.C. and Ontario, which drove down demand and led to more unsold inventory on the market.”
Now oil prices have recovered and so, too, has Calgary’s economy. By no means is the city seeing boom times again, but Cuddy notes migration for the first half of 2018 was positive for Alberta. And the recovery in conditions is reflected by a declining trend in housing inventory.
“A lot of these units are being sold, so Calgary is moving in the right direction in terms of balancing out,” he adds.
And that means sellers could see better prices coming.
Another positive is builders and developers have taken the hint. The number of starts is moderating, and that should also help ease oversupply concerns, Cuddy adds.
Generally, the best performing sector of the market this year has been apartment — both condo and rental — despite a bevy of supply.
“Lots of (buying) activity is occurring downtown.”
Cuddy adds this may reflect buyers — particularly younger ones — seeking more affordable housing, due to tightened borrowing rules, yet having the benefit of a lot of supply to choose from, including more sought-after areas of the city.
Among the worst performing segments is semi-detached, or side-by-sides. So for buyers seeking affordability and a little bit of a yard, they will find good value in this segment for the time being.
Cuddy also says the apartment sector, while in demand, is trending toward balance, but it should remain attractive to buyers for the foreseeable future because it remains an active segment for builders.
“Ultimately, though, the whole market overall is moving in the right direction,” he says.
There were migration outflows to B.C. and Ontario, which drove down demand and led to more unsold inventory.