“Anticipate A Market Correction This Year”, Price Recovery By 2020

City of Calgary Corporate EconomicsCalgary & Region Economic Outlook has released the Calgary and Region Economic Outlook for 2015-2020.

Below are some excerpts from the report:


The city’s population has grown steadily over time, even in situations where oil prices were declining. Over the period from 1971 to 2014, there were only two episodes of population decline: 1983 (-2,441 persons) and 1984 (-878 persons). The impact of the 2008/2009 world-wide recession was observed in the city’s population data in 2010, when the population increased by just 6,060 persons.

Despite the severity of the recession, population growth remained positive. Based on these observations, Calgary’s population is expected to grow over the 2015-2018 period

Residential Real Estate

The MLS sales-to-listing ratio is a leading indicator for resale house prices. The indicator is trending downwards, signalling that the average price for re-sale houses has reached a period peak and will decline moderately in coming periods. ƒ The sales-to-listing ratio is a reasonable proxy for the demand/supply balance in the re-sale market. A fall in the ratio indicates that listings (quantity supplied) are growing relative to sales (quantity demanded).

The sales-to-listing ratio bottomed out in 2009, while house prices bottomed out in 2010-2011. If this pattern holds, house prices should decline slightly in the coming periods. Some of the decline will come from fewer multi-million dollar sales and some from a general lowering of prices. We anticipate a market correction this year and for average prices to recover to around last year’s level by 2020.

New Home Construction

Housing starts will not tumble quite as much as they did in 2009. In the previous oil price collapse, Alberta’s rate of household formation had been exceeded by its rate of new home building for several years. Consequently, there was an issue of oversupply in Alberta’s housing market. This time around, Alberta does not have a glut of new homes. Housing starts have actually lagged the rate of household formation since the 2009 recession, leaving most markets in a comparatively favourable position.

Average home prices in Calgary are expected to fall -9.4% in 2015 and then gradually recovery in 2016-2020. (see chart below)

You can download the entire report here pdf

City of Calgary forecast

City of Calgary forecast

2 responses to ““Anticipate A Market Correction This Year”, Price Recovery By 2020

  1. As much as I’d like to think we can recover by next year, I’m wondering what City of Calgary Corporate Economics base their predictions on? Most economists have readily admit they’re not sure when this will end. I hope it’s by next year, but no one really knows. Great time for buyers though- I’m still trying to figure out why people are selling their house in this market (exception being losing employment), and not just waiting it out until market conditions get better?

    Thanks for the updates Mike!

  2. Life happens, people get married, divorced, have more kids, kids go off to university…life goes on despite a downturn…and it’s all relative to when you purchased your home…some homeowners are still ‘up’ from their purchase and/or can tolerate less return on their current home for an aspirational purchase (generally softer pricing as you go up in the market)

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