Calgary real estate
Despite December being the slowest month of the year it is usually front-loaded with activities because of the holidays. During the first week of December, Calgary home sales were above the 10-year average by 3% and up 6.6% YOY. Although the sales to new listing ratio usually indicates market of the seller, this year it has cooled down significantly when compared to the same period in 2013 thanks to a 24.92 additional homes and 28.85 increase in new listings on the Calgary real estate market. In one week only the median and average price of the Calgary homes for sale are up over 9 percent YOY. However those statistics can be skewed away easily later in the month because of the minimal sales sample used.
Will the Prices Increase as the Calgary Home Price Growth continues to shoot up?
Now that the double digit price hikes is behind us, will we be experiencing declining home values soon? The benchmark price of Calgary homes peaked at 11% yearly growth in June but it slowed down to 5% in November and is now peaking up again. Additionally readings that followed from both Teranet-National Bank House and New Housing price index showed that the gains were accelerating from the levels witnessed earlier in the year .
However all eyes are now on the potential fallout of Calgary’s economy and if the oil prices of about 70% per barrel continue to shoot up. Benjamin Tal a CIBC economist says City of Calgary had a considerable real estate price correction during the recession and is now generally shooting up despite various small challenges. The key aspect here in Calgary is the oil prices. If the oil prices are high the economy is likely to grow more and more individuals will find it more affordable to buy new homes.
Employment in city of Calgary rose by 0.6% or 4,700 people between Oct and Nov and the unemployment rate slowed down by 4.4%. This means more and more people within the area are likely to find it more affordable to buy new homes hence making the real estate business in the area a booming one soon. An economist with BMO Rober Kavcic also notes that migration into Alberta could increase by 25% in a year or so because of the increase in oil prices. In turn this would cause Calgary home prices to increase but not to dramatically overshoot.
If the net migration in flows is hiked by over 20% what does this mean for the Calgary real estate market? Keep in mind that CMHC is expecting the new home statistics to reach only 17,200 units by the end of the month which surpasses the record 17,406 in 2006.This is likely to result in the market being swamped with more buyers with fewer homes in play. This literally means the homes are going to be in high demand soon.
According to Oct data by CMHC there was an inventory of about 15,600 homes that were under construction which surprisingly is the highest ever witnessed at the end of the month in over 30 years. Interesting times ahead for home sellers as the oil prices continue to shoot up creating a considerable amount of jobs, increased migration and an undersupply of homes. Is this going to decrease the interest rates in 2015 thus boosting affordability in the Calgary real estate market? Let’s wait and see.
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