The Calgary real estate market, languid as it’s been the last few years, is headed for greener pastures.
So says a report from Urban Analytics, which determined that the city’s real estate market should enjoy a strong second half of the year thanks, in part, to a slew of investor-driven project launches.
“Buyers adjusted to the impacts of the stress test, and we also see in the Calgary market, in particular, that there has been a bit of pent up demand based on the amount of new projects launched in the inner city,” said Kimberly Poffenroth, a senior market analyst with Urban Analytics.
“We’re seeing more inner city project launches. The inner city was pretty slow in 2017, in terms of project launches, but another reason we anticipate higher sales is we do see increased investor activity.”
The first quarter of 2018 was one to forget for Calgary, but sales ameliorated in the second quarter by 28%. However, year-over-year, sales decreased 13% in Q2.
“We attribute that decrease to the new mortgage interest rates and the stress test, which have made it a little more difficult, especially for first-time buyers, to qualify for a mortgage,” said Poffenroth. “That being said, we have seen an increase in sales in the outer submarkets where there are more price-sensitive product types. We’ve seen a lot more first-time homebuyers in those submarkets. It does relate back to the fact that they are able to qualify at a more price-sensitive point.”
While Q2 marked a return to the housing market for first-time homebuyers, there was substantially more downsizer activity, according to the Urban Analytics report—even though they’re having trouble selling their homes because younger purchasers have reduced buying power.
Renewed demand in the multi-family sector prompted developers to bring new projects to market after kicking their feet the last couple of years.
However, Jesse Davies, a sales representative with REMAX House, believes that the numbers indicating market rebound are an aberration. Not only is the uptick in Q2 sales typical of spring—especially after long, cold Calgarian winters—the city is highly dependent on the oil and gas sector, which hasn’t been hiring like it was years ago.
“Our numbers aren’t very strong right now,” said Davies. “The only reason there’s an uptake in sales is because, historically, this time every year you’re going to see an uptick in sales. But if you look at the numbers we’re seeing in 2018 compared to 2017, which I’d call a down year, we’re down in sales and inventory levels are up. It’s a perfect storm.”
Moreover, Davies believes that the provincial NDP government is a deterrent for investment in the province.
“We haven’t seen huge hirings, and with the government we have in place, a lot of investment is leaving for the States.”
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