Calgary housing prices hold firm despite weak energy prices
Diversifying economy helps home prices remain steady, according to Royal LePage survey
Calgary's housing prices continue to hold steady despite weak energy prices, according to a Royal LePage House Price Survey released today.
The report cites a diversifying economy as the reason aggregate house prices rose 0.8 per cent from last year to $465,374.
- ANALYSIS | Calgary house prices: Nothing stays up forever
- Calgary average home prices slide 6% in September
Here's the breakdown in median prices based on house types in Calgary:
- Single-family two-storey home prices rose one per cent on a year-over-year basis to $522,052
- Bungalows dropped slightly by 0.4 per cent to $451,937.
- Condominiums experienced an increase of three per cent to $310,665.
The report is part of a newly introduced Royal LePage National House Price Composite, which looks at house values in 53 of Canada's largest real estate markets.
The average two-storey house price in Calgary in the second quarter was $509,937, while bungalows sold on average for $452,970 and condominiums $304,624. The average overall price was $457,894.
"Economic slowdowns in energy-dependent markets, most notably in Western Canada, have in part been offset by both renewed industrial activity in other parts of the country and the Bank of Canada's recent interest rate cuts," said Phil Soper, chief executive officer of Royal LePage, in a news release.
Don Campbell, senior analyst with the Real Estate Investment Network (REIN) says the city's flat housing prices shouldn't come as a shock.
"The current Calgary real estate market conditions are disappointing but unsurprising," said Campbell.
The oil price slide is in its 15th month, after all, he says. And previous forecasts stated prices would begin to slide from November 2015 to February 2016 amid mixed signals in the market.
"The drop in oil prices which brought layoffs and lower consumer confidence have been the largest factor in today's market conditions, prices held steady due to a lack of real desperation to sell," says Campbell.
Add to the mix, what Campbell calls "a lack of clarity" from Rachel Notley's newly elected government, regarding taxes, regulation, or an economic strategy.
"These two main factors have pushed the listings up substantially while keeping the buyers on the sidelines."
According to Calgary MLS, the current detached home listings in September were 3,012 17 per cent more listings compared to the same period last year. Though, the Calgary Real Estate Board reports total residential sales in the city were 1,448 units in September, well below typical activity levels for this time of year. Year-to-date Calgary sales remained below both the five- and 10-year year averages by a respective 10 and 26 per cent.
But Campbell says two other major factors are keeping a cap on housing prices – the growing population in the region before oil prices went south and the rental market.
"These new citizens have supported both the housing re-sale market as well as the rental market," he says. This is directly connected to the second factor – high rents and very low vacancy rates in the region.
He suggests that if homeowner were thinking of selling their home but wanted to stay in the city, when they did the math, they found that it was cheaper to stay put. "This lack of next home lowered the motivation level of those who listed their property and thus many were willing to stand firm on their price which in turn stabilized the average sale price."
But he says to expect lower prices with increased motivation from November to February with more vacancies but oil prices still sitting low.
"In line with recent quarters, strong national home price increases are largely being driven by continued double-digit percentage increases in the Greater Toronto Area and Greater Vancouver, where housing affordability is already becoming a growing challenge for many individuals and families," Soper said.
Both the Toronto and Vancouver markets continued to see huge price increases.
Greater Toronto Area (GTA) home prices had an aggregate year-over-year increase of 11.3 per cent across housing types surveyed, to a price of $612,261, while the price of a home in the City of Toronto climbed 11.2 per cent to $639,970.
In Greater Vancouver, house prices jumped 12.9 per cent year-over-year to $928,532.
Nationally, the price of a home jumped 8.0 per cent year-over-year to $502,643 in the third quarter. The price of a two-storey home rose 9.9 per cent year-over-year to $615,304, and the price of a bungalow increased 6.8 per cent to $421,757. During the same period, the price of a condominium increased 2.7 per cent to $338,945.