Calgary’s resale housing market had its worst September in five years as continued low oil prices limit confidence in the market.
The Calgary Real Estate Board recorded 1,448 sales in September, a decline of 32.4 per cent from a year ago. The average sale price was $457,658, down nearly six per cent and the biggest year-over-year drop this year. The median sale price for September was flat at $425,000. New listings were down 4.9 per cent to 3,081, while active listings were 21.2 per cent higher, at 5,526.
Robert Hogue, senior economist with RBC Economics, said low oil prices and resulting layoffs in the energy sector have affected home sales.
“I think the bad news on the job front will impact the housing market,” he said. “I’m not sure it’s going to be the same kind of hit we saw earlier this year. I think it was a bit of an element of surprise at the time because suddenly in December and early January oil prices fell quite precipitously.”
The Calgary housing market has posted declines in year-over-year MLS sales and average sale prices every month this year.
“We’ve had lower sales volumes for three-quarters of the year now and they continue to be soft,” said Phil Soper, president and chief executive of Royal LePage. “I would expect as the year plays out we’ll see continued softness in Calgary prices. The real question is how soft?”
Soper said people still believe in the Calgary market and that this is a temporary shift rather than a permanent reset of property values. Unless they are distressed sellers, having to sell, people are taking their houses off the market or not listing their properties, he said.
“Until we see the number of listings starting to climb, I think prices will be protected in the marketplace. People simply won’t be willing to let their properties go with what they perceive as a distressed pricing level,” said Soper.
The real estate board said the benchmark price in the city — what it describes as a typical property sold — was down 0.26 per cent year-over-year to $457,658.
“Rising unemployment and persistent weakness in the local economy is impacting housing demand,” said Ann-Marie Lurie, CREB’s chief economist, in releasing the data. “However, unlike earlier this year when consumers were reacting to uncertainty, recent activity reflects current economic conditions.”
James Hankle, a 50-something software engineer sporting blue jeans and a Green Party T-shirt, is explaining his fix for Vancouver’s runaway property prices when he’s interrupted by an eavesdropping passerby: “Stop allowing people from China to buy our houses and leave them vacant,” she says and walks away.
Despite British Columbia’s aversion to pipelines and affection for pot, housing affordability has pushed both aside as the number one issue raised by area residents in the run-up to Canada’s election this month. It’s not completely surprising given that Vancouver has become North America’s most expensive city.
Surging purchase prices have triggered protest movements like #donthave1million, started by a group of young professionals frustrated at being shut out of home ownership. They complain of having to delay starting families as they remain bunked in with roommates, often into their 30s and beyond.
The affordability issue speaks to broader campaign themes: the difficulty young people face getting established in the labor market, the economic anxieties of the middle class, growing concerns about income inequality, support for families with children. Residents also increasingly point fingers at wealthy Chinese immigrants and investors whose lavish embrace of the Pacific metropolis of 2.5 million has inspired reality TV shows with such gaudy names as “Ultra Rich Asian Girls in Vancouver.”
Vancouver, with its C$2.23 million ($1.7 million) average price tag for a detached home is playing an unusual role in the national election to be held Oct. 19. British Columbia is the only place where all four national parties are competitive -- the Conservatives, Liberals, New Democrats and Greens -- and, given the tightness of the race, its choices could spell the difference. As of now, the New Democrats and Liberals look likely to take some seats away from the Conservatives in the region, according to poll aggregator ThreeHundredEight.com.
Campaign FodderThe top contenders for prime minister, incumbent Conservative Stephen Harper, Liberal Justin Trudeau and New Democrat Tom Mulcair, have all given voice on campaign stopovers to the city’s particular anxiety by promising they will, if elected, gather data on foreign ownership of its pricey condos and bungalows. “There are real concerns that foreign, non-resident real estate speculation is the reason some Canadian families find house prices beyond their budgets,” Harper said Aug. 12 in Vancouver. “That is a matter we can and should do something about.”
Though no expert on the subject, Hankle, like just about everyone else across the city, is obsessed with the topic and increasingly resigned to never owning a house himself. Standing in Yaletown, a one-time industrial site where nearby two-bedroom apartments can go for C$1.8 million, he calls on political parties competing for his vote to build more low-cost housing and introduce programs to guarantee people a livable minimum income.
He also picks up on the theme of the passing woman, saying governments need to begin collecting data on exactly who’s coming into the city and their impact on affordability. “There’s a huge concentration of wealth and it just isn’t sustainable,” he says.
Bubble UnburstUnlike the U.S., Canada didn’t experience a housing price collapse with the global recession and has defied predictions ever since that the bubble is about to burst. With the exception of declines in 2009, 2012 and 2013, housing prices have risen in each of the past 15 years, with the cost doubling from August 2005 to 2015, according to the Real Estate Board of Greater Vancouver, out-pacing wage gains.
“Our big challenge is affordable housing,” said Vancouver Mayor Gregor Robertson, in a Sept. 25 interview at Bloomberg headquarters in New York. “It’s been difficult to deal with more affordable housing for a younger work force in particular.”
The Economist Intelligence Unit has named Vancouver the most expensive city to live in North America and a 2014 study by consultancy Demographia cited it as the second-least affordable housing market in the world after Hong Kong. Rising prices in Vancouver pushed housing affordability to “risky levels” in the second quarter as the costs of owning a bungalow rose to an unprecedented 86.9 percent of household income, an August report by RBC Capital Markets said.
“There’s national trend on affordability and it gets especially bleak in Vancouver,” said Paul Kershaw, an associate professor at the University of British Columbia who studies the impacts of public policy on housing. “The dynamic is signaling a change in the standard of living and home ownership that has been the norm for previous generations.”
Vancouver’s 25-to-34 year old cohort earns less and carries more debt than a generation ago, Kershaw said, meaning it now takes 10 working years to save for a down payment versus two years back then.
Although harder pressed, Vancouver families are in good company in borrowing more and more to get ahead. The debt of the average Canadian household now stands at a record 165 percent of disposable income, according to Statistics Canada, about 30 points higher than before the recession and matching the levels of U.S. debt when its housing market crashed. Still, in Vancouver at least, prices are galloping ahead so quickly, they “make it a stretch” for a typical household to get into the market.
“It’s possible to live decently here as long as you’re single and don’t have dependents,” said Scott McFadyen, a 38-year-old audio designer in the video game industry who moved to Vancouver from Alberta. “Truthfully, I’m thinking twice about starting a family here.”