What does the housing industry have in store for 2018?
According to the 2018 Calgary Economic and Housing Outlook, released by the Calgary Real Estate Board (CREB) yesterday, the housing market will repeat much of the same from last year.
CREB’s 2018 forecast says stricter lending criteria introduced this year by Ottawa, coupled with slightly higher interest rates, should put downward pressure on prices. That will offset any upward momentum that results from Alberta’s continuing recovery from the recent economic recession. “More balanced market conditions will be led by the attached and detached sectors of the market, while the apartment sector will continue to struggle with excess inventory in 2018.” [CBC Calgary]
Some of the main contributors to stability in the housing market for 2018 include:
- Improving economic conditions in Calgary
- Increased employment rates
- Migration gains
- Steadying vacancy rates in the rental space
- Market affordability
- Improving confidence in our city’s economy
When it comes to the new home market in Calgary, improving conditions were seen in 2017, a trend that is expected to continue into 2018.
Gains in the detached market were supported by improved confidence in the market, along with easing inventories in the resale sector in the early part of the year. In 2018, detached starts are expected to remain comparable to 2017 levels, well below longer-term averages. Activity in the multi-family sector is expected to continue to adjust, as demand has not kept pace with the supply in the market. The rise in new- home inventories in 2017 was mostly due to gains in the multi-family sector, which accounts for nearly 78 per cent of the units in inventory. While units under construction have eased, oversupply persists in the higher-density areas, impacting both ownership and rental prices. [CREB]
According to the Conference Board of Canada, Calgary CMA starts are expected to total 11,475 in 2018, which is slightly down from 2017. However, detached starts are forecasted to improve in 2018. Overall, economic conditions will continue to improve which is going to ease pressure on new home inventory. Eventually, the multi-family market will rebalance itself as well, once demand catches up with the current supply in the market.
To read more about the 2018 CREB forecast for housing and the economy, click here.