Spring 2016 update
The city of Calgary is currently experiencing market conditions that we have not experienced since 2009-2010. Shortly after the historic financial crisis in the US early in 2008, the price of oil collapsed and the Calgary real estate market had to adjust to slower activity and more cautious banking practices. The effect was to slow down the market and increase the supply of homes on the market.
Fast forward to 2016 and we are now two years past the latest peak in the price of oil. We are experiencing very similar market conditions. The Calgary real estate market has slowed, the banks have become more cautious of the Alberta real estate market and the inventory of properties on the market has increased.
So what can we learn from this repeat in market cycles?
- That prices are still adjusting to this new market cycle.
- That increased housing inventory means there is a greater selection of properties for buyers to choose from.
- We can see that some areas have corrected more dramatically than others. Higher priced homes and the downtown condo market are seeing the most dramatic price corrections. In comparison, the lower priced homes appear to be protected by buyers staying within their budgets and interest rates as low as 2.5% for 5 year mortgages.
- We expect prices to continue to weaken until the end of the year, and some neighbourhoods will weaken more than others.
- Don’t be surprised to see home prices stabilize early next year.
- Last time this occurred, buyers came back to the market, picking off the best homes in great locations at more affordable prices. People that purchased in 2009 – 2011 have done well.
As in every real estate market, homes are purchased and sold in strong and weak pricing conditions. Our team continues to have good success working with our sellers to find the right marketing mix to obtain the buyers they are looking for. As for our buyers, they are delighted with selection of properties they are able to view and are finding excellent homes at reduced prices.
If you are thinking about real estate, let us help you. Please feel free to contact any of our team members at http://www.calgaryconnection.com/Contactusnow.ubr
As you can see from the charts below, house prices do not react as radically as the price of oil but the influence the price of oil has on the housing market is definitely correlated.
10 year Chart of price of spot oil.
10 year price history and 10 year average and median price of residential properties in Calgary