Friday, January 29, 2021 / by Sergey Korostensky
Calgary Real Estate Board chief economist Ann-Marie Lurie expects home sales to increase by five per cent over 2021
It won’t be a banner year for real estate in Calgary, but according to the city’s association of realtors, 2021 will likely be marked by more balance among buyers and sellers.
That’s good — but not great — news, according to the Calgary Real Estate Board’s CEO and president Alan Tennant.
“It’s human nature that we find optimism,” he said recently about what he’s heard among the board’s more than 5,000 members.
Optimism does not quite “capture the mood. I think everybody is more concerned,” he adds.
Cautious optimism better reflects the key thrust of the Calgary Real Estate Board 2021 Forecast, released Tuesday.
It forecast the benchmark price of a home in Calgary will increase by one per cent this year over 2020. While modest, it would be notable, marking the first year of positive price growth since 2015.
CREB chief economist Ann-Marie Lurie explained sales growth momentum from the second half of 2020, which outpaced sales data from the last few years, should continue into the first few months of 2021.“But listings will then rise to meet that demand … that should limit some of that upward pressure on prices.”
Additionally, the pandemic and uncertainty over the energy sector add question marks that only will be answered as 2021 progresses. Still, employment growth is forecast at more than five per cent, compared with a decrease of six per cent last year. Unemployment is expected to remain above 10 per cent, slightly better than 2020 at about 11.6 per cent.
Historically low mortgage rates, however, should still drive housing demand. So while sales fell by one per cent in 2020 due to a slow spring because of the shutdown, 2021 could see sales grow by five per cent, the report noted.
Most of that will come from the low- to mid-range market, particularly single-family detached homes, Lurie said. But “tightness” in the segment may push more sales in “the semis, the rows and apartment condo.”
Both the townhome and semi-detached segments last year were relatively flat for sales growth over 2019. But the apartment segment continued to struggle, dropping more than 10 per cent.
Additionally, the $600,000-plus price range sales for all home types will likely lag, with lower price points.
“One of the challenges is in the upper price ranges is we have seen some sales improvement this past year because prices have been coming down,” she said. “While we expect overall aggregate price growth, I don’t expect that in the same way in the upper price ranges.”
All these factors together, the report forecast the market will likely be balanced between buyers and sellers — a key change after several years of buyers’ market conditions.
While the forecast is cautiously optimistic, realtor Tim Jones is feeling so based on recent activity.
Even in the “last 10 days, the real estate market has heated up considerably,” he said, adding some properties are receiving multiple offers.
“We are in a market situation we have not seen for many years,” said the broker/owner of Re/Max Prime. He further added conditions are “reminiscent” of 2005 to 2007 when demand was very high.
Tennant cautioned, however, that conditions here won’t emulate Toronto and Vancouver, which saw significant price gains last year.
“That old cliche that all real estate is local really does apply,” he said. What’s more he worried about future federal government regulation.
“We continue to be concerned with federal policy that paints the country with the same brush,” he said, referring to the mortgage stress test, aimed at cooling demand in larger centres but only further hurt Calgary’s struggling market.
Still, Lurie noted conditions appear fair. Affordability is up with borrowing costs 20 per cent below what they were two years ago. Similarly, home prices are lower, too.
But she remained circumspect, advising buyers and sellers to think beyond the next few months.
“What happens to future growth?” she said. “That can really influence your decisions as you move forward.”