Steady and positive economic fundamentals are good news for Calgary’s resale housing market in 2018.
The Conference Board of Canada has painted a fairly rosy picture for the Calgary economy for this year and beyond – although it won’t be at the blistering, nation-leading 6.9 per cent annual growth it experienced last year.
“In line with continued gradual oil price gains and modest investment intentions in the oil sands, economic growth is forecast to ease to a more sustainable pace this year in both Calgary and Edmonton,” says Alan Arcand, Associate Director, Centre for Municipal Studies, The Conference Board of Canada. “We expect growth to remain in the mid-two per cent range over the next five years.”
In its Metropolitan Outlook, the board forecast Real GDP in Calgary to rise 2.5 per cent this year.. Employment is forecast to rise two per cent, cutting the unemployment rate to 8.2 per cent from 8.7 per cent in 2017.
“Higher oil prices fuelled a big rebound in Calgary’s economy last year, as real GDP growth surged 6.9 per cent, although the city did not fully recoup the losses experienced after the oil price collapse in 2014. That task should be accomplished this year . . .”
While the economic factors are positive coming off two years of recessions in 2015 and 2016, Arcand said that there wasn’t much of a recovery in the housing market in 2017 like the overall economy.
“Even in 2018 with the economy expected to moderate I wouldn’t expect the recovery to start this year either. There’s too many headwinds to recovery in the resale housing market,” he said.
“The macro economic numbers are supportive of housing market activity. I think things will remain pretty stable. That’s what happened in 2017. We saw a small rebound from 2016 but not much and I would expect the same sort of things this year. A lot of the headwinds are related to slower economic growth but also mortgage rates are on the rise but they still remain low and new mortgage rules make it tougher to qualify for a mortgage and another factor is there are so many newly-completed and unabsorbed homes in Calgary because a lot of the competition is on the new side. With all these things together I would expect a stable outlook for the resale housing market at best.”
Other factors steadying the resale housing market this year will be population growth forecast to be 1.8 per cent, retail sales to rise by 2.6 per cent and household income per capita to increase by 2.9 per cent to $65,943.
One of the key factors in the housing market is consumer confidence. Calgary has gone past the two years of recession and is on a path of growth. The labour market has stabilized after thousands of jobs were shed during the recession years. Positive economic indicators buoy consumer confidence and spending as witnessed in the rising retail sales. All good solid foundations for a stable resale housing market in 2018.
The positive conference board report released just this past week sets the stage for the busiest time of the year for the city’s real estate market. Spring is just around the corner and that means a heightened sense of activity for the resale housing sector.
According to the Calgary Real Estate Board, there were 18,882 MLS sales in the city in 2017 rising from 17,796 in 2016.
The board’s chief economist, Ann-Marie Lurie, forecasst sales to dip only slightly this year to 18,853.