The stark drop in oil prices is expected to weaken the Calgary real estate market.
The Calgary Real Estate Board (CREB) released its annual forecast for the upcoming year today. It is projecting sales to drop by four per cent in 2015; however, housing prices are expected to remain stable and even increase by 1.6 per cent.
CREB admits the forecast should be taken with a grain of salt, considering the uncertainty in the province right now.
The board bases its forecast on many factors including employment levels, net migration and consumer confidence. The plunge in crude oil prices is impacting all of those factors.
"The challenge is understanding what is happening in energy. No question what happens in the energy sector influences what happens in Calgary's market," said CREB chief economist Ann-Marie Lurie. "Given energy has been so volatile, we really have to look at what people are saying about what will happen in energy."
Economists are either projecting Alberta to enter a recession this year or experience limited growth.
Several Calgary-based energy companies have announced layoffs, including Suncor which announced Tuesday it would be eliminating 1,000 jobs.
When comparing the current real estate market to 2009, Lurie said 2015 will be much better. The last recession included a U.S. recession and weakness in the energy sector.
A total of 24,503 homes are expected to be bought and sold in Calgary in 2015.
Wait and see approach
So far, many real estate agents have not noticed the market weakening because December and January are traditionally slow periods for sales. The biggest concern that real estate agents are hearing is whether or not people should list their homes.
"I think the important thing to remember is that people sell for different reasons, every motivation is different," said CREB president Corinne Lyall. "I think they really have to think about that before they put their house on the market."
Steven Schell moved to southeast Calgary from Saskatoon one year ago. He wants to buy a property in downtown, but is unsure whether now is the time to make a purchase.
"Currently I'm in a rental agreement and I'm waiting it out so that over the next year I can wait and see when the right time to buy will be."
The number of homes on the market is expected to increase in the coming months. Realtor Warren Shouldice has already noticed more houses for sale.
"Because of the energy prices in Calgary, anybody who was maybe on the fence about selling, they have seen this and said, 'Yup, this is the time to sell,'" he said.
Doubts over forecast
But CREB's forecast is already raising some eyebrows. Some experts had expected Calgary's housing prices to fall in 2015, not increase.
"I don't see that happening at all," said John Andrew, director of the Queen's University Real Estate Roundtable. "I think the Calgary and likely also the Edmonton markets are going to be hit pretty hard starting this month and that there are going to be trickle effects right across Canada."
Some believe sagging oil prices will not have a drastic impact on real estate, just cool the market.
"The thing we need to remember is that Calgary has a fairly diverse economy," said Jyoti Gondek, director of the Westman Centre for Real Estate Studies at the University of Calgary. "We have a diverse type of population and all of those people have diverse housing needs."