Lower oil prices aren’t just bringing the price of a liter of gasoline down in Calgary. They’re also bringing home prices — and total sales — down as well. There are high inventory levels for homes, leading to a buyers’ market. Normally, this would lead to a feeding frenzy for buyers, pushing prices back up, but the buyers aren’t showing up. In November 2015, sales were a full 28 percent below their November 2014 level. The month saw 1,263 units go, which is about 20 percent below the 10-year average. New listings had gone up by 5 percent both month-over-month and year-over-year in November.
In Calgary, November saw the unadjusted benchmark price drop to $450,700, 0.5 percent less than October and 2 percent less than November 2014. The detached house benchmark fell to $510,700 in November, a 0.6 percent drop from October and a 1.52 percent drop from November 2014. Attached homes fell to a benchmark of $287,000 (0.5 percent less than October and 4.6 percent below November 2014.
While there is a lot of inventory for sale in Calgary, though, there is still a good bit of room for growth before levels get near those November highs from 2008. Inventory at that point was 27 percent higher, and the current housing prices have not fallen as steeply as they did during that recession.
It’s difficult to say where the market is going to go in Calgary. The drop in oil prices has been sustained, despite the efforts of some of the OPEC nations to manipulate supply and bring prices back up — not to those $100+ levels per barrel, but out of their current depths. The North American exploration and development companies have been able to extract oil and gas through fracking technology that is keeping supply robust for the time being, and there is no real sense as to how long this boom in supply will last. One telling statistic comes from the moving industry, as such companies as Premier Van Lines are primarily booking moves out of the city, with a lot of residents heading out, either because their positions dried up or because they’ve decided to go ahead and retire early. However, their returning trucks don’t have the usual business bringing households to Calgary.
Interest rates, though, are almost sure to start climbing with some vigor now that the U.S. Federal Reserve is raising its key rate. This means that if you are considering going from renting to buying in Calgary, now is a particularly good time. Prices are low, and financing is as inexpensive as it is likely to be for the foreseeable future. If you are looking for an investment property to lease out to tenants, this is also a good time to take advantage of a market in which more people are continuing to rent rather than buying, especially if their employment is in the oil and gas field or one of the peripherally related industries.
Are you considering purchasing a home in Calgary, either for yourself or as an investment? Talk to one of our mortgage specialists at Amansad Financial today. We’ll analyze your numbers and give you an idea of the size of mortgage you can expect to take out and connect you with realtors on the ground in Calgary who can find the best property for your needs.