Calgary Real Estate Board predicts housing sales to drop in 2015

The stark drop in oil prices is expectedto weaken the Calgary real estate market.

• Toronto home prices to lead Canada in 2015: Royal LePage

The Calgary Real Estate Board (CREB) released its annual forecast for the upcoming year today. It is projecting sales to drop by fourper centin 2015;however, housing prices are expected to remain stable and even increase by 1.6 per cent.

CREB admits the forecast should be taken with a grain of salt, considering the uncertainty in theprovince right now.

The board bases its forecast on many factors including employment levels, net migration and consumer confidence. The plunge in crude oil prices is impacting all of those factors.

"The challenge is understanding what is happening in energy. No question what happens in the energy sector influences what happens in Calgary's market," saidCREBchief economist Ann-MarieLurie. "Given energy has been so volatile, we really have to look at what people are saying about what will happen in energy."

Economists are either projecting Alberta to entera recession this yearor experience limited growth.

Several Calgary-based energy companies have announced layoffs, includingSuncor which announced Tuesday it would beeliminating 1,000 jobs.

When comparing the current real estate market to 2009, Luriesaid 2015 will be much better.The last recession includedaU.S.recession and weakness in the energy sector.

A total of 24,503 homes are expected to be bought and sold in Calgary in 2015.

Wait and see approach

So far, many real estate agents have not noticed the market weakeningbecause December and January are traditionally slow periods for sales.The biggest concern that real estate agents are hearing is whether or not people should list their homes.

"I think the important thing to remember is that people sell for different reasons, every motivation is different," said CREB president Corinne Lyall. "I think they really have to think about that before they put their house on the market."

Steven Schell moved to southeast Calgary from Saskatoon one year ago. He wants to buy a property indowntown, but is unsure whether now is the time to make a purchase.

"Currently I'm in a rental agreement and I'm waiting it out so that over the next year I can wait and see when the right time to buy will be."

The number of homes on the market is expected to increase in the coming months. RealtorWarren Shouldicehas already noticed more houses for sale.

"Because of the energy prices in Calgary, anybody who was maybe on the fence about selling, they have seen this and said, 'Yup, this is the time to sell,'" he said.

Doubts over forecast

But CREB's forecast is already raising some eyebrows. Some experts had expected Calgary's housing prices to fall in 2015, notincrease.

"I don't see that happening at all," said John Andrew, director of the Queen's University Real Estate Roundtable. "I think the Calgary and likely also the Edmonton markets are going to be hit pretty hard starting this month and that there are going to be trickle effects right across Canada."

Some believe sagging oil prices will not have a drastic impact on real estate, just cool the market.

"The thing we need to remember is that Calgary has a fairly diverse economy," saidJyotiGondek, director of theWestmanCentre for Real Estate Studies at the University of Calgary. "We have a diverse type of population and all of those people have diverse housing needs."

A report byRoyal LePagesuggests house prices in Calgary couldincrease2.4 per centthis year.