The number of homes for sale in Alberta eased slightly through the course of 2019, due to a slight increase in sales and a drop in new listings.
It wasn’t, however, significant enough to take the province out of over-supplied territory, says Ann-Marie Lurie, chief economist for the Calgary Real Estate Board and the Alberta Real Estate Association.
“The economy continues to struggle with slow growth and a weak labour market, preventing any significant change in home sales activity,” says Lurie. “While the housing supply is adjusting to slower sales, supply adjustments take time, hence the persistent oversupplied scenario and further price declines.”
Calgary and Edmonton recorded a reduction in the amount of oversupply in the market, but both cities remained oversupplied and average prices declined.
Results were mixed in the rest of the province where markets such as Central Alberta, Medicine Hat and Grande Prairie recorded growth in supply relative to sales activity, says Lurie.
“Central Alberta was hit particularly hard by job losses this year, resulting in a pullback in sales,” she says. “The pullback in sales was mitigated through the reduction in new listings, helping prevent more significant price adjustments. Meanwhile, rising oversupply levels have not yet significantly impacted prices in markets like Medicine Hat or Grande Prairie.”
In his Housing Trends and Affordability year-end review of housing markets across Canada, Robert Hogue, senior economist with RBC Economics, had this to say about Calgary and Edmonton.
Calgary: Lack of confidence a bigger issue than ownership costs
“Calgary’s modest market recovery stalled mid-year but it isn’t because ownership costs are out of line. In fact, those costs take up a slightly lower share of income (38.6 percent) compared to the area’s long-run average (40.6 percent). The stalling had more to do with the fragile state of Alberta’s economy and lacklustre home buyer demand. Frustrations over the slow pace of pipeline expansions, in particular, have taken a toll on confidence. RBC’s affordability measure edged lower by 0.5 percentage points in the third quarter — a fourth consecutive decline.“
Edmonton: Stalling market recovery reflects concerns about economy
“The nascent market recovery also lost its momentum in Edmonton. The energy sector’s woes no doubt are weighing on home buyer sentiment. A deterioration in the area’s labour market this year is likely a big factor, too. And so is the provincial government’s plan to trim the public sector. Affordability, on the other hand, isn’t much of an issue. RBC’s aggregate measure (33.5 percent) continues to be slightly below the long-term average (34.1 percent). The measure came down 0.3 percentage points in the third quarter. We see room for further declines in the near term as high inventories keep prices under downward pressure.”
