Calgary's housing market to stay the same in 2018, real estate board predicts
CREB forecast says higher interest rates and new mortgage criteria offsetting economic rebound
The housing market in Calgary this year will likely look much like it did in 2017, according to a forecast released Wednesday by the Calgary Real Estate Board.
CREB's 2018 forecast says stricter lending criteria introduced this year by Ottawa, coupled with slightly higher interest rates, should put downward pressure on prices.
That will offset any upward momentum that results from Alberta's continuing recovery from the recent economic recession.
"The path to recovery is expected to be bumpy, as the market adjusts to a new normal," says the report, which predicts minimal changes in sales activity in 2018 in the Calgary area.
"More balanced market conditions will be led by the attached and detached sectors of the market, while the apartment sector will continue to struggle with excess inventory in 2018."
Ann-Marie Lurie, CREB's chief economist, says that while Calgary is officially out of the economic downturn, the housing market continues to face challenges.
"So even though sales activity increased last year, there was still just too much supply," she said, noting the condo market in particular has a glut of inventory.
If net migration to Alberta continues to increase, the over supply will start to get absorbed, she added.
"The economic conditions are improving, which is helping to support our market, and our housing market as well, but what's counteracting that is, we do have almost a new lending environment," Lurie said.
In October 2017, the Office of the Superintendent of Financial Institutions extended the stress test applied to only high-ratio loans to all loans. The test requires all buyers to qualify at the greater of the Bank of Canada's five-year benchmark rate or the contracted rate plus 200 basis points (two per cent).
This change could force some prospective buyers to reconsider their housing price ranges, putting the higher range properties out of reach for more people, Lurie said.