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What home prices will look like in Calgary in 2018

Posted by Kirby Cox on Tuesday, December 19th, 2017 at 1:43pm.

Last week, the Royal LePage Market Survey Forecast was released, with some notable predictions for the year ahead in real estate in Canada. The survey measures home prices in 53 major Canadian cities, and in terms of nationwide predictions, the average home price in Canada is expected to jump 4.9 per cent to $661,919 by the end of 2018.

One of the most significant regulatory interventions in the housing industry in years is the incoming Office of the Superintendent of Financial Institutions (OSFI) mortgage financing stress test, which will take effect on January 1, 2018. The stress test targets existing and prospective homeowners applying for a mortgage, requiring them to meet stricter criteria when seeking new financing. With a large number of existing homeowners potentially failing the test when refinancing next year, a temporary reduction in consumer confidence may further stagnate price growth as potential buyers and sellers take a ‘wait and see’ approach. Moreover, some potential move-up buyers will likely delay listing their homes as they will not be able to access sufficient financing for their desired next purchase. With further diminished affordability, it is likely that demand for entry-level properties will surge. In most urban centres, this will be most evident in the condominium segment. c

Those numbers are largely inflated by the hot markets in Toronto and Vancouver, so things are different when we dial in on Calgary specifically. For our city, home prices are predicted to increase 2.3 per cent in 2018, which would bring the aggregate price to $494,109. Royal LePage attributes this to stabilizing oil prices and improving employment rates in our city. 

While it could take several years for the economy to improve to pre-downturn levels, Alberta is poised to be one of the fastest growing economies in 2018. In turn, this will likely further improve consumer confidence. While the energy sector will continue to be the most important factor influencing the housing market, the region has seen growth in non-energy sectors helping to mitigate risk through a more diversified economy. Though the incoming OSFI stress test is expected to slow sales at the beginning of the year, buyers and sellers are expected to adjust, and the delayed market could result in brisker sales beginning in late spring, potentially finishing strong at the end of the year. 

Home prices in Calgary are forecast to increase 2.3 per cent in 2018, rising to an aggregate price of $494,109 as the region further emerges from recovery. The region’s housing market has been supported by stabilizing oil prices and improving employment rates. While it could take several years for the economy to improve to pre-downturn levels, Alberta is poised to be one of the fastest growing economies in 2018. In turn, this will likely further improve consumer confidence. While the energy sector will continue to be the most important factor influencing the housing market, the region has seen growth in non-energy sectors helping to mitigate risk through a more diversified economy. [Royal LePage]

If you have any questions about pricing your home or buying a home, please don't hesitate to contact us!

 

Kirby Cox

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