The decrease in oil price in the recent months is a concern for all of Alberta. But it is especially concerning to those considering buying or selling their home in 2015.
Below you will find some information on the current Calgary housing market that you may find helpful.
In 2008/09, Calgary's housing market took a painful hit. The housing market saw a 15% drop towards housing investments.
The current decrease in the price of oil has the province worried as the housing market had finally regained the house values seen in 2007. Now the housing market in Calgary is in for another adjustment.
We are not at a loss. CREB forecast shows that Calgary is in a much more promising position to make it through what looks like a 6 month drop in oil.
In 2008, the housing market decline was not only due to the oil prices falling but the entire financial market took a hit. As well the Oil & Gas industry had not adjusted in many years which had an abundance of employees, high wages and increasing spending.
Then there was the housing market. The rising cost of homes and the lack of inventory was not a sustainable equation long term.
When the oil prices dropped, there were thousands of lay offs and cutbacks on development strategies. People were leaving the city and there was a lack of new migration. There was a high rate of vacancy and the demand for housing plummeted as people exited the city.
All of this resulted in a 15% decrease in home values. However, only 4 years later the house prices recovered and we saw a strong economy in Calgary again.
And Happy Near Years – we are now in 2015! The situation is different now. Oil & Gas companies have had difficulty employing skilled employees.
Oilsands projects are funded, committed, and underway regardless of the oil price. We have learned from the past and now corporations are leaner with their employee volume. There will still be layoffs as we have already seen with companies such as Suncor but companies are more cautious now. Companies understand the cost to replacing skilled employees and retraining once the market recovers.
The housing market is in a much different situation from 2008. Between 2013 – 2014 over 45,000 people relocated to Calgary. Vacancy rates are nearing 1% and the new housing starts are at an all time high. In most communities around the city the inventory available still indicates that we are in a seller’s market. There is less than 2 months of inventory available.
This indicates that Calgary is in a much more promising place than it was in 2008. As CREB predicts the housing prices should remain fairly steady for the remainder of the year. Calgary is in a good position to handle a $50 barrel of oil for a while without seeing a significant impact like 2008.
This does mean that the drop in oil prices brings positive news for anyone looking to buy homes this year, as there won’t be a substantial increase in house prices. The pause on demand will create balance in the housing market which will allow buyers more opportunity to negotiate. There will be less competing offers which is stressful for anyone who has experienced a bidding war.
As for sellers, I encourage you to list and to list early this year as we are still taking advantage of the first quarter trends. The quicker you get your house on the market, priced competitively, the better your chance to sell before there are too many options for buyers on the market.
If you have ANY questions on the Calgary housing market trends or would like to list your home please contact me at: 403-650-1796.
Follow me on facebook to keep up to date on what’s happening in the Calgary housing market @LindaJamesCalgaryRealtor.
For more information on the topic visit CREB.com
Happy New Years and I look forward to hearing from you.