Calgarians playing a role in driving home sales outside of the city

Founded largely by intrepid pioneers who ventured west on the then fledgling Canadian Pacific Railway, Calgary is now seeing another western excursion.

With home sales in the city facing downward pressure as a result of a weakening labour market, markets west of the city – small and large – are seeing increased activity, thanks in part to Calgarians continued urge to drive westward.

From as near as the Rocky Mountains to as far as the West Coast, Calgarians are being pointed to as contributing factors in real estate markets outside of the city.

As the developer behind Canmore's Spring Creek, a $38-million "active lifestyle community" for seniors, frank Kernick has seen the impact of Calgary buyers outside of the city.

"From the demand point of view, the last three months in Canmore have probably been the strongest January, February and March I've seen in 10 years," said Kernick.

Unemployment impacting housing activity

Home prices declined further in March as economic conditions weigh on Calgary's housing market, according to CREB®, which released its monthly housing summary today.

Calgary's benchmark price totaled $442,800 in March, a 0.49 per cent decline over February and 3.51 per cent lower than levels recorded last year.

"With no improvement in the labour market, it's no surprise that we continue to face downward pressure on housing sales activity and prices," said CREB® chief economist Ann- Marie Lurie.

A guide to distinguishing average, median and benchmark prices

Sellers and potential buyers in today's residential real estate market can be understandably excused if they are confused about what's happening with housing prices.
After all, for both, price changes in the market are supremely important. Plus, CREB® gathers price information that, to the untrained eye, can tell different stories.
For example, in February, CREB® reported the benchmark price in the city for all MLS® properties that were sold was $445,000, or down 3.45 per cent from February 2015. However, the average MLS® sale price increased by 2.72 per cent to $472,529 while the median price was unchanged at $420,000.
From top to bottom, that's a difference of close to $30,000.

"It's looking at values based on criteria such as square footage, total bedrooms and bathrooms, location, property type."

So what should one look at if they are either selling a home in this tough market or hoping to buy one?
A good start would be by looking at what each price category entails, said CREB® chief economist Ann-Marie Lurie. For example, the median price looks at every sale that has occurred in the market, ranking them from lowest to highest. The median price is the midpoint of all the sales.
Lurie said the average sale price is adding up the total dollar sum of the purchases divided by the number of total sales.

Monthly prices decline for fifth consecutive month: CREB

February sales totaled 1,127 units in Calgary, a 6.63 per cent drop over last year and 37 per cent lower than long-term averages for the month, according to CREB®.

In its monthly housing summary, CREB® reported citywide unadjusted benchmark prices totaled $445,000 last month, a 0.63 per cent decline over January and 3.45 per cent lower than levels recorded last year.

"Slow sales and elevated housing inventory has resulted in further price declines," said CREB® chief economist Ann-Marie Lurie. "Given the current economic environment, it is no surprise that consumer confidence and housing demand is being impacted."

Calgary, Edmonton tied for second

Calgary continued to be one of Canada's fastest-growing cities in 2015.

Growing in size even in the face of a struggling energy sector, Calgary tied with Edmonton as the second- fastest-growing cities in all of Canada.

According to Statistics Canada, Calgary and Edmonton posted identical population gains of 2.4 per cent between July 1, 2014 and June 30, 2015, placing the two centres behind only Kelowna, B.C. as the fastest-growing cities in Canada.

The average growth nationwide was 1.2 per cent, with five centres (Thunder Bay Ont., Peterborough Ont., Saguenay Que., Sudbury Ont., Saint John NB) posting populations declines over the surveyed period.

Beleaguered sector takes brunt of economic downturn

Apartment-style condominiums were the hardest hit within Calgary's resale residential housing market in 2015, with price drops and inventory gains that outpaced both attached and detached products

On an annual basis, the apartment benchmark price slide by 0.4 per cent to $292,818 by the end of November, according to CREB®. In comparison, year-to-date benchmark prices in the detached and attached sectors during the same period actually increased by 1.7 and 2.1 per cent, respectively.

Yet more telling is how apartment prices reacted during the year, as it dropped by four per cent from $298,700 in January to $287,000 in November. During this period, benchmark prices in the detached and attached sectors declined by a more modest 1.5 and one per cent, respectively.

Comparing Calgary's current downturn to history

Calgary's infamous boom-bust economy is at it once again.

Just as it did in the 1980s and late-2000s, economic conditions have once again turned sour.

But does this downturn feel different from those that came before?

Yes, says CREB® chief economist Ann-Marie Lurie.

In CREB®'s 2016 Economic Outlook & Regional Housing Market Forecast, Lurie notes that while some have tried to compare this year to the early 1980s – in terms of its perfect storm of low oil prices and high unemployment – the underlying conditions are, in fact, much different.

Vacancy rates spike as downturn makes its presence felt

Calgary's commercial sector has not been spared from prevalent weakness in the provincial economy, with prime spaces in the city left empty for most of 2015.

Vacancy rates in Calgary's commercial office sector increased by 5.8 per cent from the beginning of the year to the end, noted commercial real estate firm Avison Young. In downtown specifically, vacancy jumped 7.2 per cent, which accounted for approximately three million square feet.

In comparison, office vacancy rates tripled from four to nearly 12 per cent during the last economic downturn in 2008/09.

Canadians are choosing to invest in home renovations over new home purchases

Canadian renovation activity is on the rise as the economic lull in the real estate market has left some homeowners reluctant to move, instead opting to update.

In a recent report, Scotiabank senior economist Adrienne Warren found spending on home additions, new installations and replacement of equipment rose six per cent year-over-year through the first half of 2015, with renovation spending up in most provinces and outlays on track to total $53 billion this year.

Warren said current homeowners looking to upgrade are seeing renovations as an attractive option, as industrial price inflation for many renovation-related construction materials, equipment and household goods – such as kitchen cabinets, appliances and furniture – remain consistent.