Housing starts and prices flat in short term: CMHC
Calgary ’s sluggish economic recovery will keep housing start numbers and prices in the city mostly static in the coming two years, said a federal real estate monitor.
A glut of housing will rein in growth in the sector, said the Canada Mortgage and Housing Corp. report.
“With elevated levels of completed and unabsorbed inventory, housing starts will remain flat in Calgary,” said the CMHC’s Housing Market Outlook for 2019-20.
An overabundance of apartment units will play the largest role, it added.
And while a slowly improving economy should fuel an influx of new residents and boost housing sales in the next two years, “the average MLS price will continue facing downward pressure but is expected to stabilize in 2019 and modestly rise in 2020.”
Calgary is still recovering from a deep recession that hit four years ago with the collapse of energy prices, with the city’s unemployment rate of around eight per cent among the highest in Canadian cities, said Anne-Marie Lurie, chief economist with the Calgary Real Estate Board.
“Sales activity has remained quite slow, a lot lower than anticipated — we’ve pulled back quite a bit,” she said, adding some of those in the industry were expecting an unemployment rate closer to six per cent.
“We just haven’t seen a pick up in our economy, in fact we’ve had job losses in the past two quarters.”
While oil prices in general have recovered, the discount in the price differential hitting western Canadian oil has been steep and investment in the industry lagging, which is being felt in the city ’s housing market, said Lurie.
“Those impacts are going to continue into the next year,” she said.
As of last September, there were 2,087 unsold homeowner and condominium units in the greater Calgary area, while 7,630 apartment units were under construction, a 32 per cent increase from the previous year.
“Given the current level of inventory and units under construction, it is anticipated that total housing starts in 2019 and 2020 will be similar to production in 2018,” said the CMHC.