According to CREB’s 2019 Calgary Economic & Housing Outlook report released yesterday, Calgary’s real estate market in 2019 is firmly entrenched in a buyer’s market — and the city’s economic recovery will take most of 2019.
The report is quite clear about the cause of Calgary’s real estate market woes: economic uncertainty, oversupply, and stricter mortgage rules.
In a somewhat grim portrait for what’s in store in 2019, the report predicts that “slower economic growth, weak consumer confidence, persistently high unemployment and a lack of job growth in higher paid industries summarizes the economic climate expected in Alberta this year.”
The biggest culprit? The energy sector.
Though Alberta’s economy is not as reliant on the energy sector as it once was, last year’s fluctuations in global oil prices still hit the province pretty hard. This means that despite a growing national economy, the energy sector is still relatively weak and this sector is expected to only have a weak recovery in 2019. The light at the end of the tunnel is that the Calgary Real Estate Board and various economists are more optimistic about 2020.
The biggest culprit? The energy sector. The next biggest culprit? The 2018 mortgage stress test.
The next biggest culprit? The 2018 mortgage stress test.
Last year’s mortgage stress test and increases in Bank of Canada’s overnight interest rates couldn’t have come at a worse time for Alberta. With a struggling economy, stagnant wages and high unemployment, it’s no wonder oversupply dominated the detached market in 2018 and is expected to continue until at least the end of 2019.
On the other hand, due to Alberta seeing a recovery in net migration, and stricter ownership conditions, the rental market saw a marked improvement in 2018.
Rental unit vacancy rates in Calgary fell from 6.7% for two-bedroom units to 4.2%. This trend is expected to continue throughout the year even though more people are moving into the province. That’s because these new residents are not expected to become homeowners immediately.
The good news for hopeful homeowners is that they will have an easier time purchasing a home in 2019. Home prices are expected to fall by 2.34% across the city for all property types, with attached homes experiencing the biggest decline of a predicted decrease of 2.49%.