The annual Calgary Real Estate Board (CREB) forecast breakfast was this morning, and while the outlook reiterated much of what has been proliferate as late in the media, there were some interesting take-aways.
Firstly, CREB, like everyone else, is predicting modest price declines across all sectors due to a slower than expected recovery in commodity prices, namely oil – estimating an average of 2.2%. The multi-family segment – which is slowest to respond to market indicators due to the timelines involved in the planning and production process, will likely see the greatest price declines. There is considerable inventory coming to market as well as numerous purpose-built rental projects which have not been economically viable in previous years, all of which point to softening prices for new, resale and rental units in the multi-family sector.
One should note that this is not all bad news. Homes available in 2016 will become slightly more affordable than their predecessors and coupled with attractive lending rates, it will be easier for buyers to enter the market.
Another area we see opportunity for the coming year is in the inner-city land segment. Builders with high inventory and low cash reserves will be forced to make some tough decisions with their holdings. Investment land and properties with building potential once listed at a premium, will be sold in 2016 at much reduced prices – allowing for more opportunities for the builder/investor.
Our advice to you? Heed the words of CREB President Cliff Stevenson, an industry veteran, “Market intelligence really matters in today’s operating environment. Pricing trends have and will continue to vary depending on product type, price range and location,”. The softening of prices in many market segments is very specific to circumstances and the age-old-adage of location – location – location still holds true. In this confusing market, intelligence is king. We suggest now more than ever; it is important to work with qualified industry professionals, those with specific market intelligence and a proven track record of helping clients and investors alike.
Our second piece of advice; start researching your market, you don’t want to miss your opportunity. Things can change quickly and so often those that wait too long are those who aren’t able to capitalize in the downturns. Calgary is a boom and bust economy, and while people say it is different this time, which it likely is due to the global interconnectedness of our economies, every challenge poses an equal opportunity for those who are willing to do their homework and take calculated risks.