Several reports have sounded the alarm our real estate market is grossly overvalued, but industry watchers contend Calgary isn't poised for the big crash some are forecasting

Reports suggesting Calgary's housing market is over-valued, supported by recent price corrections, are missing many of the obvious indicators saying otherwise, say experts.

The metrics used to measure affordability simply do not back up the argument that Calgary's real estate market is highly overvalued and ready for a precipitous drop in home values, said Robert Kavcic, a senior economist with Economic Research BMO Capital Markets in Toronto.

"One of the (metrics) we look at is the average mortgage payment as a share of income, and right now that's a little bit above the long-run norm of 27 per cent at about 29 per cent," he said.

Outside factors will impact housing market through 2016

With the sun in Calgary rising and falling relative to the price of a barrel, it should be no surprise that the city's real estate market will continue to be impacted by economic realities beyond its control, say housing analysts.

Following a first half that can best be described as turbulent, the remainder of 2015 looks to bring more of the same for the city's housing market, with CREB®'s mid-year forecast update suggesting decreases across the board, including moderate price contraction.

"Further job losses are expected in the second half of the year," said CREB® chief economist Ann-Marie Lurie.

"These employment changes, combined with overall weakness and slower-than-anticipated recovery of oil prices, are expected to keep housing demand relatively weak for the rest of 2015.

Roller-coaster ride to start 2015 ended with more balanced conditions

The arrival of 2015 was bound to signal a change of pace for Calgary's resale real estate industry, which had just wrapped a bow around a banner 2014.

In fact, with oil prices showing signs of deteriorating toward the end of 2014, December's four per cent sales decline – following 11 consecutive months of sales increases –was really a sign of things to come.

"Changes in the economic climate are expected to cool housing market conditions in 2015, and December activity may be the first indication of this shift," said CREB® chief economist Ann-Marie Lurie at the time.

That change came early and it came swift, with sales falling by more than 30 per cent in January to five-year lows even though new listings maintained their upward momentum by increasing by 37 per cent compared to the same period last year.

Improved sales to new listings ratio reduces inventory gains

After the fifth consecutive monthly benchmark price decline in Calgary, the number of new home listings eased to 3,064 units in April, an 18 per cent decrease over the previous year.

"With fewer buyers making purchase decisions and improved selection for resale, new home and rental property, sellers have been either adjusting their expectations on price or delaying their plans about when to list their home," said CREB® president Corinne Lyall.

First quarter activity reflects economic uncertainty

Elevated inventory levels and low sales for three consecutive months caused unadjusted benchmark prices to ease by 0.44 per cent in March, relative to the previous month, for a total of $454,300. Based on first quarter statistics, conditions are consistent with buyers' market conditions.

Typical home prices have declined by 0.59 per cent in the first quarter of 2015, compared to the fourth quarter of 2014. The sales to new listings ratio also dropped to 41 per cent and months of supply averaged 4.03 for the quarter. This is a significant change from one year ago when the market was facing inventory shortages and price gains.

Energy prices influencing choices in Calgary housing market

Jordan Meloches and his fiancée Ashley Hopkins didn't hesitate when they recently purchased a condominium in the northeast community of SkyView Ranch.

In fact, while many Calgarians were dissuaded from entering the resale housing market in January by lingering low oil prices, the couple said the current economic climate was the farthest thing from their minds.

"The market to us now really wasn't a concern. We bought in SkyView, which is still developing, so I think our value will only increase as the land out there develops," said Meloches, who cited the condo's proximity to their work and future potential as a rental property as factors when settling on a decision.

CREB's monthly stats show Calgary sales in January total 880 units, below typical activity
Low oil prices throughout January, combined with a shifting outlook in the energy sector, caused unease for consumers. As a result, monthly housing sales activity fell to levels not seen in five years.

"Economic conditions this year are expected to be weaker than original estimates provided in December 2014," said CREB® chief economist Ann-Marie Lurie.

Will add 'consistency' to housing stock numbers

Seeking to provide consumers and industry experts with a better picture of Calgary's housing market, CREB has altered some of the categories in its monthly housing report.

Prior to the changes, which will appear on the January housing update, the city's housing stock was separated into three categories: single-family, condominium apartment and condominium townhouse.

Yearly records set as monthly sales see slight decline

It was a record setting year for Calgary's condominium apartment and townhouse sectors, as sales reached new annual highs despite year-over-year residential sales declines of 7.5 per cent in December.

Single family sales totaled 708 units in December, a year-over-year decline of 8.3 per cent. Meanwhile, total condominium sales also declined by six per cent over the same time frame, but overall activity remained consistent with long-term averages.

Improving inventories help ease price growth pressure

Calgary's residential resale housing market posted relatively strong November activity reaching 1,782 units, a three per cent increase over the previous year, and nearly 13 per cent above long term averages.

"Relative to other major centres, economic growth in Calgary remains one of the strongest in the country," said CREB® chief economist Ann-Marie Lurie. "Employment opportunities and relatively higher wages have encouraged people to move here, supporting the demand growth in our housing sector."

Meanwhile, new listings growth continues to outpace the gains in sales, supporting a 22 per cent year-over-year rise in November inventories to 3,849 units. While inventories have recorded significant gains, they remain below long-term averages for the month.