Looks like declining oil prices have not really affected how much homes in Calgary are selling for. Sure, new listings growth is down, but prices are still holding steady.
Looking at the February real estate stats for Calgary, as released by the Calgary Real Estate Board, new listing growth slowed from 37% in January down to 9% in February, which is a clear sign the panic to sell has passed. In terms of pricing, the unadjusted detached benchmark price was $516,000 in February, a 6% increase from Feb. 2014, and a 0.5% decline from January figures.
Again, looking back to the last time oil prices plunged, in 2008 (when oil was less than US$50 a barrel), the average Calgary home price only dropped by 7% from 2007-2009.
I think that, despite what the media is reporting, sales are still happening in Calgary and even competing offers on homes as well. (The number of) sales are down for sure, but consumer confidence is growing daily. Prices have not really been affected and the forecast is for a moderate price gain by the end of the year.
With spring just around the corner, I believe more buyers will emerge from winter hibernation. However, now is certainly not a bad time to buy a home in Calgary, as there is less competition for houses.
I believe buyers now have an opportunity to get exactly what they want for a fair price. If the oil market becomes stable and a 'new normal' is well received, there is a good chance of a 'mini boom', as there are a plethora of buyers sitting on the sidelines waiting to see what happens in the market and with their employment.
Recent history shows how resilient home prices have been in Calgary during slow times in the oil and gas markets. Fortress Real Developments released a report with stats concerning the past five economic downturns in Calgary:
- Between February 1986 and December 1986, oil prices were down 49% year-over-year on average. During that same period, new house prices in the Calgary CMA increased 8% annually on average, said the report.
- Between August 1991 to January 1992, oil prices were down 29% on average, new house prices were down 2% on average.
- Between September 1997 to February 1999, oil prices declined 27% on average, new house prices increased 7% on average.
- Between June 2001 to March 2002, oil prices declined 24% on average, new house prices increased 3% on average.
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Ryan MacDonald, B.Sc. Real Estate Professional
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