Alberta’s housing market continues to feel the effects of the last “oil price shock” but things should begin to pick up as early as next year, a senior analyst with Canada’s national housing agency said Monday.
Canada Mortgage and Housing Corporation’s James Cuddy said a weak economy, unemployment, out-migration and lower investment levels sucked a lot of energy out of the housing market following the recession in 2015.
In its housing market outlook released Tuesday, the agency said total housing starts in Edmonton in 2018 are projected to decline from 2017 and remain flat in 2019 but new housing starts are expected to make modest gains in 2020 as inventory levels decline.
In the new home market in 2015 there were 17,050 housing starts in Edmonton. That number dropped to 10,036 in 2016 but climbed to 11,435 in 2017. The low-end forecast for 2018 is 10,600 but the high-end estimate puts it closer to 11,400.
“Builders have recognized that inventory levels aren’t quite high as a result of lower demand and therefore (we are) expecting them to pull back the amount of activity in terms of new housing starts going forward,” Cuddy said.
“The inventory is the big part of the story.
“Once the economy starts to pick up again and some of the units become absorbed, further down the road in 2020, activity will pick up in the new homes sector. There will be a moderation in activity in general.”
The number of sales in 2015 peaked at 20,888, then dropped to 19,432 in 2016 before climbing to 19,529 in 2017. For 2018, the low-end forecast is estimated at 18,500 and 19,300 at the high end of the spectrum.
The report goes on to say that average home prices have dropped 1.5 per cent from Sept. 2017 and prices are estimated to be lower at year-end compared to 2017.
Through nine months of 2018, the average price in Alberta was approximately $390,000, down 2.6 per cent from the same period in 2017.
The report adds that “Edmonton is currently experiencing elevated levels of completed and unabsorbed inventory in the homeowner and condominium segment that are largely being driven by single-detached units.”
“On the demand side, we’ve seen a lot of positive signs in recent months,” Cuddy said pointing to improved employment growth numbers, growth in earnings and a “resurgence” in interprovincial migration.
“Ultimately it should help to absorb more units that come onto the market.
“But if you look at the market as a whole, it is moving in the right direction in terms of balancing supply and demand.”