The impact of lower oil prices on Alberta’s economy has some nervous homeowners in the province scrambling to unload their properties.
January housing data show sales dropping more than 25 per cent 30 per cent in Calgary and Edmonton, while new listings jumped more than 30 per cent.
“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,” the Calgary Real Estate Board (CREB) said in releasing its January numbers.
Sales in Calgary fell by almost 40 per cent in January compared to the same month last year, while new listings soared almost 40 per cent.
“A lack of recovery in oil has many concerned about their employment status and this concern is reflected through the weaker sales activity in Calgary’s January resale figures,” says CREB chief economist Ann-Marie Lurie.
The average home price in Calgary was $459,100 in January, up 7.7 per cent from last year but on par with December values.
“Housing decisions will likely continue to be postponed for many consumers until they can see what happens with the economic climate in the spring,” says Lurie. “Nonetheless, if supply levels continue to rise at levels that exceed the pace of demand growth, we can expect this will start to impact prices in the city.”
Lower prices would be a long-awaited buying opportunity for some in the once-hot Calgary market.
“It looks like the market is swinging in favour of buyers,” says BMO Capital Markets senior economist Sal Guatieri. “We’ll have to see what happens in coming months.”
In Edmonton, listings were up nearly 30 per cent in January versus the same time last year, while sales fell 26 per cent 30 per cent. Sales dropped 13.5 per cent since December. Inventory increased 35 per cent inventory month-over-month and about 17 per cent from the same time last year. The average price rose 3.75 per cent year-over-year to $362,394.
“We are likely seeing the effects of oil prices and a feeling of economic cautiousness amongst some buyers,” says REALTORS® Association of Edmonton President Geneva Tetreault.
Still, Tetreault is expecting the market to pick up in Edmonton in the spring. “Low interest rates will continue to drive the housing market,” she says.
Economists are also forecasting national housing sales to rise in the months ahead, driven by lower interest rates, especially since the Bank of Canada has cut its benchmark rate on Jan. 21. Banks have slashed their mortgage rates in response.
Some markets have picked up even before the rate cut.
In Toronto and Vancouver, which together account for about one quarter of the market, sales increased year-over-year in January
Sales in Metro Vancouver increased 8.7per cent last month, compared to the same time last year, but fell 9.6 per cent since December, according to the Real Estate Board of Greater Vancouver.
The average home price in Metro Vancouver last month was $641,600, up 5.5 per cent from a year earlier. When only detachment properties are considered, the benchmark price soared 8.4 per cent to $1,010,000 in January, compared to a year ago.
In Toronto, sales were up 10 per cent for the first half of January (the latest data available), compared to the same time last year.
“Despite the cold weather, home buyers remained quite active during the first two weeks of the New Year,” says Toronto Real Estate Board (TREB) president Paul Etherington.
The average selling price was $510,532, which is down slightly from last year due to a “different mix of homes,” Etherington says.
**Editor’s Note: Corrects to show accurate sales figures for Edmonton