CREB's Economic Forecast - Summarized by Calgary Herald

[tpurcell4]

CREB is forecasting 1.60% growth in Calgary Real Estate this year, even with the current oil markets. This comes from their annual Forecast Breakfast that took place on Wednesday at the BMO Centre.

Have a read through this article released by the Calgary Herald: Article

Please post your insights and feedback! Do you agree with the outlook?

[ExtraSlow]

It's interesting that people seem to widely report two different metrics for real estate. Average sale price, and number of sales.
So, they are predicting the number of homes sold to fall 4%, and average price to increase 1.6%.


Not sure I'd call that combination an overall growth situation.

[masoncgy]

The only way there's even a remote possibility of price growth in Calgary is if oil prices completely do a 180 and rebound.. and quickly... and given we haven't seemed to have reached the bottom yet, I highly doubt that'll occur.

I haven't actually reviewed recent statistics myself, but I have read elsewhere that sales activity is dropping off quickly and new listings are exploding... how that scenario would result in price increases is beyond me!

[rage2]

Average price increase of 1.6% is still below inflation, so realistically it's still a pullback.

[BigMass]

Originally posted by masoncgy
The only way there's even a remote possibility of price growth in Calgary is if oil prices completely do a 180 and rebound.. and quickly... and given we haven't seemed to have reached the bottom yet, I highly doubt that'll occur.

I haven't actually reviewed recent statistics myself, but I have read elsewhere that sales activity is dropping off quickly and new listings are exploding... how that scenario would result in price increases is beyond me!

it can happen. People in this city are still holding the idea that if they bought a home last year for 600k they should be able to sell it for 3.4 million today. And if they cant, they'll either let it sit on the market for years or take it off the market. People in this city have no reason or pressure to sell as of yet. Until there is a real pressure to sell (no job/no money) There won't be a price decrease even with a huge increase in listings and lack of buyers. Yes, there will be less sales, but not necessarily a price drop. So far this is exactly what I'm seeing. Buyers are drying up and listings are stale but nobody will willing to lower their price.

1) Keep it listed and forget about it
2) De-list
3) Rent it out
4) lower price

number 4 is not even on the radar for most people so far.

[ExtraSlow]

I don't think you'll see inflation this year. I'm predicting very close to 0% for 2015 on a national level.

[civic_rida]

Going to be a tough year for realtors

[lasimmon]

These guys have a vested interest in seeing prices continue to go up.

Its pretty hard to take their word without taking it with a grain of salt.

[masoncgy]

Originally posted by BigMass


it can happen. People in this city are still holding the idea that if they bought a home last year for 600k they should be able to sell it for 3.4 million today. And if they cant, they'll either let it sit on the market for years or take it off the market. People in this city have no reason or pressure to sell as of yet. Until there is a real pressure to sell (no job/no money) There won't be a price decrease even with a huge increase in listings and lack of buyers. Yes, there will be less sales, but not necessarily a price drop. So far this is exactly what I'm seeing. Buyers are drying up and listings are stale but nobody will willing to lower their price.

1) Keep it listed and forget about it
2) De-list
3) Rent it out
4) lower price

number 4 is not even on the radar for most people so far.

I don't agree. While we're not re-living the 2008 financial crisis, the real estate market in Calgary tanked pretty quickly once the buyers started to get cold feet. That's all it takes. There might be people listing for high prices in the hope someone gets sucked in and pays the price, but there will always be the people who have to sell quickly to get out, for whatever reason, and they will be the first ones to drop pricing to get a sale and start the market decline.

I don't expect a catastrophic housing crash... but I do expect the gains seen over the last couple years to vaporize. Job losses mean less migration and less demand.

I had entertained a return to Alberta this spring in pursuit of a new opportunity, but that's now been shelved for the time being. I am certain I am not alone in that decision. We're not coming for the weather after all... haha.

[Feruk]

2014 YTD vs 2015 YTD: Sales down 30%, new listings up 37%, average price down 2.3%, pending sales down 44%. Stats below. Hope you don't got a condo as they're down 12% YTD.
http://www.creb.com/Buyer_Resources/Housing_Statistics/

This "caution" is happening before any real layoffs have started. My prediction is if oil prices stay low we see sales stay at 30-40% below 2014 numbers for the next 6-12 months but less than a 5% price drop. Companies will shed 10%, cut projects back 20%, and have very little overall impact.

If oil prices have not recovered in 12 months, I'd expect major layoffs in 2016, and I'd bet on at least a 20% drop in 2016.

[cloud7]

Had a good laugh at the article... it is good comedy. I can't see how prices can increase from prices we saw last year with the state of the Calgary economy right now. With people getting laid off, some getting wage frozen/cut, and small companies in the O&G sector going under, I think their forecast is a bit optimistic...

[blownz]

If oil prices don't turn around soon, I doubt there will be a price increase anywhere in the province.

Too many people nowadays build a house or buy a new house long before selling their old house as the prices have been increasing nicely for a long time. I bet there are a ton of people that will be worried about carrying two places and will lower their prices.

I know one guy in Calgary that put his house up for sale in December (over $2M) and has had no response even though the realtor told him it would be an easy sale. Now he is being told he should consider a 10% drop in price to move the place before things get worse.

I still don't expect a huge drop but like I mentioned before, we are due for a year of no increase in value or even a small decrease.


Something else to note is that even when the US housing was crashing, real estate boards all over the pace were making statements that it was a good time to buy and they were projecting price increases. It is just what they do. People need to remember they are not independent.

[BigMass]

Originally posted by blownz


I know one guy in Calgary that put his house up for sale in December (over $2M) and has had no response even though the realtor told him it would be an easy sale. Now he is being told he should consider a 10% drop in price to move the place before things get worse.
do. People need to remember they are not independent.

curious when he purchased the house and how much he paid. I hear a lot of stories like this then you find out that they purchased the place a few years ago and want to flip it for a million dollar profit then bitch about dropping their asking price %10 which still makes it overpriced. Not saying this is what is happening with this guy, but there are some seriously greedy fucks out there that feel entitled to this. If he purchased his place for 1 million a few years ago and is asking 2 million now, is %10 really a price decrease? It's still ridiculous

[Xtrema]

CREB Spokesperson.....

Originally posted by Feruk
If oil prices have not recovered in 12 months, I'd expect major layoffs in 2016, and I'd bet on at least a 20% drop in 2016.

All knee jerk reactions has been done already and I don't think it's that bad.

Next 6 months will be the fall out of nobody spending a dimes and EI, exit packages running out. Everyone are forced to sell or foreclosed at that point.

This time next year is probably the bottom of Calgary real estate market, I expect down 10-12% on average.

20% off will be on $1M+ home or outside of Calgary. But I don't see 400K-$1M home losing more than 15% as they are the target of downsizing when people can't afford $1M+ home no more or will be turn over by the banks on cheap on foreclosure.

But this time next year, everyone should feel better about $50-$60 oil and start projects accordingly. Everyone will work for less and make all prices affordable to start again.

[rage2]

Originally posted by Xtrema
20% off will be on $1M+ home or outside of Calgary. But I don't see 400K-$1M home losing more than 15% as they are the target of downsizing when people can't afford $1M+ home no more or will be turn over by the banks on cheap on foreclosure.

That was what I thought as well during the last downturn, when I was hoping to upgrade on the cheap. In the end my 600k house dropped to 500k, and none of the 1M+ houses budged on price. They'll sit for a year unsold and nothing. My boss's house sat on the market for 2 years, didn't care. These homes are all owned by folks that can afford to let it sit till the economy recovers.

The 400k-1m home owners are more susceptible to lost of income, hence the drop in value as inventory spikes. I don't think I've seen 1m+ foreclosures in Calgary.

[Isaiah]

Originally posted by rage2
I don't think I've seen 1m+ foreclosures in Calgary.

http://www.realtor.ca/PropertyDetail...rtyId=15155657

http://www.realtor.ca/PropertyDetail...rtyId=15066036

Both are currently in foreclosure.

[Xtrema]

Originally posted by rage2

The 400k-1m home owners are more susceptible to lost of income, hence the drop in value as inventory spikes. I don't think I've seen 1m+ foreclosures in Calgary.

There are many $1m+ homes that are owned by couples working in o&g that pulls in $250k to $300k together with less than 50% equity.

I knew one in Aspen estate that were foreclosed during last recesSion. $1M house sold for $750k, damn good deal if I weren't so attached to dirty NW.

[Feruk]

Originally posted by Xtrema
All knee jerk reactions has been done already and I don't think it's that bad.

Next 6 months will be the fall out of nobody spending a dimes and EI, exit packages running out. Everyone are forced to sell or foreclosed at that point.

But this time next year, everyone should feel better about $50-$60 oil and start projects accordingly. Everyone will work for less and make all prices affordable to start again.

What we've seen to date is minor 10% layoffs and hiring freezes. Agree that these are completely unimportant knee jerks. Most companies are at least somewhat hedged for 6 months to a year. The issue is that at $50-$60, a lot of the projects won't meet economic hurdles even with 10%-15% discount in costs (what we're forecasting). All but the worst companies will survive, but the activity level will be severely diminishes, which means they'll need a lot less people. I think in 2015 companies will watch and see where oil goes while holding onto staff that they've sunk money into. But make no mistake, if oil is at $50-$60 this time next year with no sign of rising, expect to see huge staffing cuts across O&G. Working for less has very little impact on project economics when you have no project.

I'd say 50/50 that we're in for something way worse than 2008/2009.

[blownz]

Originally posted by BigMass


curious when he purchased the house and how much he paid. I hear a lot of stories like this then you find out that they purchased the place a few years ago and want to flip it for a million dollar profit then bitch about dropping their asking price %10 which still makes it overpriced. Not saying this is what is happening with this guy, but there are some seriously greedy fucks out there that feel entitled to this. If he purchased his place for 1 million a few years ago and is asking 2 million now, is %10 really a price decrease? It's still ridiculous

Asking is almost 20% more than what was paid 1.5 years ago. Not far off the the average increases. Drop would take him to about 10% increase in 1.5 years.

I do agree with you that there are many delusional people out there. Buy a house for $X, spend 10% on reno's, sell for more than 50% extra.

[BigMass]

Originally posted by blownz


Asking is almost 20% more than what was paid 1.5 years ago. Not far off the the average increases. Drop would take him to about 10% increase in 1.5 years.

I do agree with you that there are many delusional people out there. Buy a house for $X, spend 10% on reno's, sell for more than 50% extra.

if oil is at $45 and layoffs are happening, I'd argue that the the economic situation of today is far worse than it was 1.5 years ago. Heck, 1.5 years ago I had a great job with a great future, now laid off with a bleak outlook. So IMO the price should be far less than what it was 1.5 years ago not more.